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PFC Withdrawals May Impact Zero-Coupon Bond Market
Research, Research Reports, Result Updates - August 20, 2024

IREDA Q1FY25 Sees Record Loan Disbursement of ₹25,089 Crore

IREDA Q1FY25 Sees Record Loan Disbursement of ₹25,089 Crore

Company Overview:

Indian Renewable Energy Development Agency Ltd (IREDA) is an Indian public sector company that provides financial backing and additional assistance for projects related to renewable energy sources, energy efficiency, and conservation. Established in 1987, IREDA is a Navratna institution under the administrative jurisdiction of the Ministry of New and Renewable Energy, owned by the Indian government. IREDA was listed on the NSE and BSE following its initial public offering (IPO) in November 2023.

IREDA, a public limited company under government ownership and a non-banking financial institution, is committed to the development, encouragement, and funding of projects related to energy efficiency, conservation, and new and renewable energy sources. The company holds the status of a Mini Ratna (Category I).

Industry Overview & Growth Drivers:

India’s Green Financing Scenario: According to the International Renewable Energy Agency’s (IRENA) 2023 global ranking, India ranks fourth in the world for installed capacity of renewable energy, fourth for installed capacity of wind power, and fifth for installed capacity of solar power.

Bidding activity in other renewable energy sectors also increased in FY24:

  • The Government of India secured contracts for approximately 412,000 MTPA of green hydrogen production, with a 30-month timeline for commissioning.
  • Production of electrolysers: Under the Strategic Interventions for Green Hydrogen Transition Scheme (Tranche-I), a production capacity of approximately 1,500 MW was granted.
  • Solar PV production: Under the Solar PLI Scheme (Tranche II), letters of award were issued for 39,600 MW of fully and partially integrated solar PV module manufacturing plants.
  • Battery production: Under the Advanced Cell Chemistry PLI Scheme, a request for proposals was issued for a 10 GWh production capacity, which was later approved in April 2024.

Key Drivers for Growth in Solar and Wind Segments:

  • The budget for grid-based solar power projects in 2024–2025 is ₹10,000 crore, compared to ~₹4,757 crore in 2023–24, according to updated estimates.
  • In 2024–25, wind power was allocated ~₹930 crore, compared to ~₹916 crore in 2023–24.
  • Utility-scale solar and onshore wind: 50 GW of yearly bids for utility-scale solar and onshore wind have been planned, with allocations distributed among SECI, NTPC, NHPC, and SJVN, and a minimum of 10 GW of wind capacity announced for the period of 2023–2028.
  • Additionally, 50 solar parks with a combined capacity of more than 37,490 MW have been approved by the MNRE across 12 states, with about 10,401 MW of that power already put into service.

Hydropower: Depending on their scale, hydropower projects are categorized as large or small. In India, hydropower facilities with a capacity of 25 MW or less are classified as small hydro projects and fall under the purview of renewable energy. Following a government notification in 2019, large hydropower projects (>25 MW) have also been classified under renewables.

Important government initiatives promoting growth include:

  • Budgetary Focus: Aggregation machinery will help meet the mandate to combine CBG with piped gas and CNG, reducing the cost of LNG imports and enabling greenfield capacity development.
  • PLI for Manufacturing of High-Efficiency Solar Modules & Electric-Mobility Promotion Scheme 2024 (EMPS 2024)
  • Waiver of Interstate Transmission System (ISTS) charges for solar PV manufacturing capacity
  • ₹564.75 crore allocated under the scheme from FY 2023–2024 to FY 2026–2027.

Q1FY25 Quarterly Results:

  • The company’s highest-ever disbursement of ~₹25,089 crore in FY24 led to an incremental rise in its loan book to ~₹59,698 crore at the end of FY24.
  • Interest on loans increased by 44.84% in FY24 compared to FY23, contributing to the 42.56% increase in total income in FY24 over FY23.
  • Finance costs rose by 51.51% over FY23, primarily due to higher borrowing to meet the increasing demand for lending operations.
  • Interest expenses on borrowings increased by 70.59% due to additional funding raised through term loans from banks and other financial institutions at attractive domestic market rates.
  • Loans increased by 27.14% in FY24, mainly due to an increase in net disbursement.
  • The company achieved an all-time high PAT of ~₹1,252.23 crore and increased its net worth to ~₹8,559.43 crore in FY23.
  • The company’s capital adequacy is well within RBI guidelines, with a CRAR of 20.11% compared to the minimum allowable floor of 15%.
  • The debt-to-equity ratio decreased to 5.80 times in FY24 from 6.77 times in FY23 due to a new stock issue and retained earnings that were greater than the debt increase at the end of the fiscal year.
  • Operating profit margin grew by 3.76% in FY24 to 32.92% from 32.69% in FY23, driven by an improvement in net margin due to higher interest income.
  • The net profit margin increased from 24.82% in FY23 to 25.22% in FY24, primarily due to a 1.61% increase in the interest income margin.

Sanctions and Disbursements:

  • A 14.63% rise was observed over the ~₹32,586.60 crore sanctioned in the previous year. During FY24, loans totaling ~₹25,089.04 crore were disbursed, marking a 15.94% increase over the ~₹21,639.21 crore disbursed in the previous year.

Loan Book and Disbursement:

  • During FY24, loans disbursed reached ~₹25,089.04 crore, a 15.94% increase from ~₹21,639.21 crore the previous year. This marks the largest yearly payout in the company’s history.
  • The company’s loan book increased by 26.81% from ~₹47,075.52 crore as of March 31, 2023, to ~₹59,698.11 crore as of March 31, 2024.

Key Financial Ratios:

Ratios 30, June 2024 31, Mar 2024 30, June 2024
Rate of Return on Loan Assets% 10.01%

 

 9.97%

 

 9.64

 
Percentage charged for borrowings % 7.78%

 

 7.81%

 

 7.83%

 
Spread of Interest% 2.23% 2.16% 1.81%
Margin of Net Interest (%) 3.29

 

 2.85%

 

 3.23

 
Ratio of Debt to Equity 5.83

 

 5.80

 

 6.35

 
CRAR (%) 20.11% 19.52%

 

 19.95%

 
EPS (Rs) 5.16

 

 1.43

 

 

 1.29

 

Net Non-Performing Assets (NPAs):

  • The company’s NPAs decreased to 0.99% in FY24 from 1.66% in FY23, a significant 40.36% decrease from the previous year.
  • Additionally, the company saw a 32 basis point increase in interest spread, with the net interest margin rising to 2.85% in FY24 from 2.82% in FY23.
  • The company achieved a ten-year low of 0.99% for the Net NPA ratio at the end of FY24, compared to 1.66% at the end of FY23.
  • The company’s systematic recovery procedures resulted in a drop in GNPA and NNPA to 0.99% and 2.36%, respectively.
  • A strong emphasis on recovery and resolution measures led to the net removal of three loan accounts from the NPA list and the recovery of ₹212.70 crore from NPA loans, of which ₹90.68 crore is owed towards the principal and ₹122.02 crore towards interest income, including ~₹58.39 crore in recovered written-off assets.

Future Outlook:

Prospects for India’s Green Finance Industry and Government Initiatives: India’s green finance industry is expanding rapidly, driven by significant government initiatives and a global commitment to enhancing renewable energy capacity. By 2030, up to ~₹46 lakh crore is expected to be invested in India’s renewable energy sector. The FY25 Union Budget allocation for renewable energy has increased by 46% over the previous year to reach ₹14,980 crore, reflecting the country’s commitment to this sector.

Key Policies Announced for FY24:

  • Utility-Scale Solar and Onshore Wind: SECI, NTPC, NHPC, and SJVN have been allocated shares of the 50 GW yearly bidding cycle, including at least 10 GW of wind capacity for the 2023–2028 period. The MNRE has also approved 50 solar parks with a combined capacity of around 37,490 MW across 12 states, with 10,401 MW of that power already operational.
  • Rooftop Solar: The PM Surya Ghar Mufti Bijli Yojana was introduced, with an initial investment of ~₹75,021 crore, covering 10 million households. Under the program, each household will receive 300 free units of power per month, resulting in annual savings of approximately ₹15,000 to ₹18,000 per household.
  • Hydropower: Developers are provided with the option to determine tariffs by backloading, provided they extend the project life to 40 years, shorten the debt repayment period to 18 years, and implement a 2% escalating tariff. For hydroelectric projects where the construction work is awarded and a PPA is signed until June 30, 2028, ISTS charges have been partially waived, with the waiver available in increments of 25% from July 1, 2025, to July 1, 2028.
  • Offshore Wind: The MNRE has announced a bidding trajectory for 37 GW of offshore wind capacity, while CTU has completed the planning for transmission infrastructure for the first 10 GW of offshore capacity (5 GW each off the shores of Gujarat and Tamil Nadu). Additionally, regulations for offshore wind leases have been published, offering the possibility of extending the lease duration to 35 years.

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Strategic Partnerships Fuel One97’s Financial Turnaround

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Prestige Group Plans ₹42,000 Crore Housing Launches in FY26 Amid Real Estate Boom
Research, Research Reports, Result Updates - August 20, 2024

Robust Profitability and Asset Quality Improvements Highlight Repco Home Finance's Q1 FY25

Robust Profitability and Asset Quality Improvements Highlight Repco Home Finance’s Q1 FY25

Repco Home Finance’s Q1 FY25 performance shows robust growth and improved financial metrics across various segments.

The company’s credit book grew by 8.3% year-over-year to Rs. 13,701 crores, with AUM reaching Rs. 13,513 crores as of March 31, 2024. Credit sanctions increased slightly by 0.2% to Rs. 727 crores, while disbursements slightly decreased to Rs. 680 crores.

Total income surged by 13.6% to Rs. 416 crores, with NII growing by 8% to Rs. 175 crores. Net profits showed significant advancement, rising by 18% to Rs. 105 crores. The company maintained a solid loan spread of 3.4%.

KEY INDICATORS FOR Q1 FY25: (Figures in Rs. million)

METRICS Q1 FY25 Q1 FY24 GROWTH %
Sanctions 7,272 7,258 0.2%
Disbursements 6,804 6,843 -0.6%
Net Interest Income 1,749 1,619 8.0%
Operating Revenue 4,078 3,645 11.9%
PBT 1,366 1,198 14.0%
PAT 1,054 891 18.3%

RELATIVE PERFORMANCE – Q O Q:

Particulars Units Q4 FY24 Q1 FY25
Sanctions Rs. Mn 9,777 7,272
Disbursements Rs. Mn 8,946 6,804
Net Interest Income Rs. Mn 1,723 1,749
PAT Rs. Mn 1,081 1,054
NIM % 5.1 5.1
Yield on Assets % 11.7 12.0
Cost of Funds % 8.3 8.6
Spread % 3.4 3.4
Return on Assets % 3.2 3.1
Return on Equity % 16.5 16.3

 

Profitability metrics improved, with return on assets increasing to 3.1% from 2.8% and return on equity rising to 16.3% from 15.8%. The credit portfolio remained diversified, with non-salaried segments accounting for 51.6% and salaried segments for 48.4%. Housing loans comprised 74.3% of the outstanding loan book, while home equity products made up 25.7%.

Income & Earning Growth QoQ: (Amt in Rs. Mn)

Metrics Q1 FY24 Q4 FY24 Q1 FY25
Income from Operations 3,645 3,926 4,078
NII 1,619 1,723 1,749
Net Profit 891 1,081 1,054
Net Worth 24,050 26,771 27,709

 

Asset quality showed improvement, with GNPA decreasing to Rs. 583 crores from Rs. 695 crores year-over-year, although slightly up from Rs. 552 crores in the previous quarter. The GNPA ratio improved to 4.25% from 5.5% year-over-year, while the NNPA ratio decreased to 1.7% from 2.8%. The company maintained strong provision coverage, with expected credit loss provisions at Rs. 519 crores or 3.8% of total loan assets.

Asset Book: (Amt in Rs. Mn)

Type Q1 FY24 Q4 FY24 Q1 FY25
Sanction 7258 9777 7272
Disbursements 6843 8946 6804
Loan Book

1.       Salaried

2.       Non salaried

 126554 135134 137011
51.8 51.4 51.6
48.2 48.6 48.4
Mix of Loan Portfolio

1.       Home Loan

2.       Home Equity
76.9 74.7 74.3
23.1 25.3 25.7

ECL PROVISION (Amt in Rs Mn):

Particulars Jun 23 Mar 24 Jun 24
Gross Stage 3 6947 5516 5826
% portfolio Stage 3 5.5% 4.1% 4.3%
 ECL Provision  Stage 3 3571 33597 3600
 Net Stage 3 3376 1918 2226
Coverage ratio Stage 3 51.4% 65.2% 61.8%
Gross Stage 1 & 2 119607 129618 131185
% portfolio in Stage 1 & 2 94.5% 95.9% 95.7%
Total ECL Provision 5240 5179 5193

Repco Finance maintained a robust capital position with a capital adequacy ratio of 34%, well above the regulatory requirement of 15%. The company’s distribution network expanded to 181 branches and 42 satellite centers across 13 states and union territories.

Profitability Ratios: (Amt in Rs. Mn)

Metric Q1 FY24 Q4 FY24 Q1 FY25
Net Interest Margin 5.1% 5.1% 5.1%
Spread 3.3% 3.3% 3.4%
Return on Equity 15.1% 16.5% 16.3%
Return on Assets 2.8% 3.2% 3.1%

This comprehensive improvement in growth, asset quality, and profitability metrics positions Repco Home Finance well for sustained performance in FY25, despite potential market challenges such as elections and heatwaves. The company’s focus on retail lending in both housing and home equity segments, coupled with a strong capital base, provides a solid foundation for navigating the evolving financial landscape.

Quarterly Performance Analysis:

Repco demonstrated strong execution in Q1 FY25. The company’s credit book grew by 8.3% year over year to Rs. 13,701 crores, while total income surged by 13.6% to Rs. 416 crores. Net interest income increased by 8% to Rs. 175 crores, and net profit showed significant improvement, rising by 18% to Rs. 105 crores. The company maintained a solid loan spread of 3.4%. Asset quality improved, with the GNPA ratio decreasing to 4.25% from 5.5% year over year, despite a slight increase in the GNPA amount due to factors like elections and heatwaves. Profitability metrics also improved, with return on assets increasing to 3.1% and return on equity rising to 16.3%. The loan portfolio remained diversified between non-salaried (51.6%) and salaried (48.4%) segments, with housing loans comprising 74.3% of the outstanding loan book. Repco Home Finance maintained a strong capital position with a capital adequacy ratio of 34%, well above the regulatory requirement. These results indicate robust growth and improved financial metrics across various segments, positioning the company well for the financial year despite potential market challenges.

In the transition from Q4 FY24 to Q1 FY25, Repco Home Finance experienced some changes in its financial metrics. Loan sanctions decreased from Rs. 9,777 million to Rs. 7,272 million, while disbursements also declined from Rs. 8,946 million to Rs. 6,804 million. However, the company’s Net Interest Income slightly increased from Rs. 1,723 million to Rs. 1,749 million. Profit After Tax (PAT) saw a notable decline from Rs. 1,081 million to Rs. 1,054 million. The Net Interest Margin (NIM) remained stable at 5.1%. The Yield on Assets improved from 11.7% to 12.0%, while the Cost of Funds increased from 8.3% to 8.6%. Despite these changes, the company maintained its spread at 3.4%. Profitability measures showed a slight decrease, with Return on Assets dipping from 3.2% to 3.1% and Return on Equity declining from 16.5% to 16.3%. These figures suggest that while Repco Home Finance faced some challenges in loan growth, it managed to maintain relatively stable performance in terms of interest income and overall profitability.

 

Net Sales increased by 11.89% from Rs. 364.48 crore in June 2023 to Rs. 407.83 crore in June 2024. Quarterly Net Profit increased by 17.91% from Rs. 95.44 crore in June 2023 to Rs. 112.53 crore in June 2024. EBITDA increased by 14.38% from Rs. 326.38 crore in June 2023 to Rs. 373.32 crore in June 2024. Repco Home’s EPS grew from Rs. 15.26 in June 2023 to Rs. 17.99 in June 2024.

Industry Overview:

The global economy remains strong, with steady growth and inflation gradually returning to targeted levels. Although risks persist, such as potential price surges due to geopolitical tensions in regions like Ukraine and Gaza, and ongoing core inflation driven by tight labor markets, the overall global outlook remains relatively balanced. Global GDP is projected to grow by 3.1% in FY24 and 3.2% in FY25, while global headline inflation is expected to decrease from 6.9% in FY23 to 5% in FY24, and further to 3.4% in FY25. However, differences in disinflation rates across major economies may lead to currency fluctuations, affecting financial sectors. Additionally, high interest rates may have a more pronounced cooling effect than anticipated, potentially leading to financial stress as fixed-rate mortgages reset and households struggle with high debt levels.

India continues to be one of the fastest-growing economies globally, with an estimated GDP growth of 8.2% for FY24, up from 7% in the previous year. The IMF projects a growth rate of 6.8% for FY25, driven by public investment and strong domestic demand. Contributing factors include high capacity utilization in manufacturing, government capital expenditure, FDI inflows, and strong financial and corporate sector balance sheets, which are expected to support a positive economic cycle. Digitalization initiatives are expected to enhance formalization, financial inclusion, and economic opportunities, contributing to India’s sustained rapid growth. India’s large and young population offers opportunities for growth, employment, and consumption-driven expansion, with investments in education and skill development being crucial for inclusive progress. However, challenges persist, such as geopolitical tensions, volatility in global financial markets, geo-economic fragmentation, and extreme weather events, all of which pose risks to the economic outlook. To mitigate these risks, ensuring resilience through the diversification of trade partners and strengthening domestic capabilities will be critical. Contributing factors include a decline in rural consumption due to an uneven monsoon and crop yield in FY24, as well as a potential slowdown in government capital expenditure early in FY25 ahead of the general elections. Geopolitical tensions and financial market volatility continue to pose risks to the inflation outlook, with the Reserve Bank of India projecting CPI inflation at 4.5% for FY25.

Asset Quality:

The asset quality of Repco Home Finance has shown a mixed trend over the past year, as reflected in both the graph and the provided data. The Gross Non-Performing Assets (GNPA) ratio has generally improved, decreasing from 5.5% in June 2023 to 4.3% in June 2024, despite a slight uptick from the March 2024 low of 4.1%. In absolute terms, GNPA amounted to Rs. 583 crores as of June 30, 2024, down from Rs. 695 crores a year earlier, but up from Rs. 552 crores at the end of March 2024. This marginal increase was attributed to the impact of national elections and prevailing heatwaves during the quarter.

ECL PROVISION (Amt in Rs Mn):

Particulars Jun 23 Mar 24 Jun 24
Gross Stage 3 6947 5516 5826
% portfolio Stage 3 5.5% 4.1% 4.3%
 ECL Provision  Stage 3 3571 33597 3600
 Net Stage 3 3376 1918 2226
Coverage ratio Stage 3 51.4% 65.2% 61.8%
Gross Stage 1 & 2 119607 129618 131185
% portfolio in Stage 1 & 2 94.5% 95.9% 95.7%
Total ECL Provision 5240 5179 5193

SECTOR WISE MOVEMENT (Amt in Rs. Mn):

Particulars Jun 24 Jun 23
  AUM % AUM %
Stage 1 1,15,222 84.0% 1,01,622 80.3%
Stage 2 15,963 11.7% 17,985 14.2%
Stage 3 5,826 4.3% 6,947 5.5%
Grand Total 1,37,011 100.0% 1,26,554 100.0%

 

Similarly, the Net Non-Performing Assets (NNPA) ratio has shown improvement, declining from 2.8% in June 2023 to 1.7% in June 2024, with a slight increase from the 1.5% recorded in March 2024. In monetary terms, NNPA stood at Rs. 223 crores as of June 30, 2024, a significant reduction from Rs. 338 crores a year ago, though up from Rs. 192 crores at the end of the previous quarter.

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Strategic Partnerships Fuel One97’s Financial Turnaround

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Torrent Power Q2 FY26: Profit Surges ~50%, Powered by Strong Generation and Lower Finance Costs
Research, Research Reports, Result Updates - August 19, 2024

REC Ltd. Achieves 30% YoY Growth in Net Interest Income for Q1FY25

REC Ltd Achieves 30% YoY Growth in Net Interest Income for Q1FY25

 

Current Market Price INR 579.65
Current Market Cap INR 1,53,938 Cr.
High/Low INR 654/ INR 231
BSE Code 532955
NSE Code RECLTD
Bloomberg Code RECL:IN
P/BV 2.1

About the Stock:

REC Ltd., formerly known as Rural Electrification Corporation Limited, is an Indian government-owned public sector company under the Ministry of Power. Established in 1969, REC Ltd. was initially tasked with funding and promoting rural electrification initiatives throughout India. Over time, the company’s scope has expanded to include funding projects related to power generation, transmission, and distribution in both urban and rural areas. REC Ltd. has consistently demonstrated strong financial performance, characterized by solid profitability, liquidity, and solvency. The majority of its revenue comes from interest income on loans to companies within the power sector, supported by a robust capital structure.

Price Performance:

1 Month -6.16 %
3 Month 7.12 %
1 Year 159.76%
3 Year 408.96%

Industry Overview:

The power sector has thrived during the post-pandemic recovery phase, driven by increased demand and a focus on energy transformation. In the fiscal year 2023–2024, total power generation reached 1,738 BU, representing a 7% increase compared to the previous year. However, renewable energy sources, including hydropower, accounted for 364 BU, marking a 2.2% year-over-year decrease. Notably, large hydro generation experienced a significant 17.8% slowdown despite a 10.9% increase in renewable energy generation. Total power generation from non-fossil fuels stood at 412 BU, a 1.4% decrease from the prior year, resulting in non-fossil energy comprising 24% of the total. Additionally, the fiscal year saw a 26 GW increase in installed electricity capacity, bringing the total to 442 GW by the year’s end. Remarkably, renewable energy accounted for 73% of the new capacity. The non-fossil capacity share increased from 43% to 45% year-over-year, with peak power consumption reaching a record-breaking 240 GW, up from 215.9 GW the previous year.

Q1FY25 Financial Performance Analysis:

In Q1FY25, REC Ltd. reported a 19% year-over-year growth in total income, rising from INR 10,981 crores in Q1FY24 to INR 13,037 crores. This impressive growth is likely due to an expanded loan book and higher interest revenue, reflecting the company’s strong operational performance. Net interest income (NII) increased by 30% YoY, from INR 3,612 crores in Q1FY24 to INR 4,713 crores in Q1FY25, underscoring REC Ltd.’s ability to effectively manage interest rates and boost lending income.

REC Ltd.’s net profit grew by 16% YoY to INR 3,442 crores in Q1FY25, up from INR 2,961 crores in Q1FY24, highlighting its strong profitability driven by increased revenue and lower expenses. Total comprehensive income, which includes net profit and other comprehensive income, rose by 12% YoY to INR 3,525 crores in Q1FY25, further demonstrating the company’s enhanced equity value and overall financial health.

Disbursements:

  Q1FY25

(INR in Cr.)

 Q1FY24

(INR in Cr.)
Generation 4,667 4,446
Renewables Incl Large Hydro 5,351 1,534
Transmission 1,443 837
Distribution 20,714 22,411
a) Distribution Capex 1,980 1,863
b) LPS & LIS 3,007 9,551
c) RBPF 15,727 10,997
I&L – Core 5,753 3,605
I&L – E&M 2,229 890
STL/MTL 3,495 410
Total Disbursements 43,652 34,133
% Increase in Q1FY25 over Q1FY24 28%

Sanctions:

  Q1FY25

(INR in Cr.)

 Q1FY24

(INR in Cr.)
Generation 35,552 15,519
Renewables Incl Large Hydro 39,655 24,985
Transmission 7,169 6,808
Distribution 7,600 33,861
a) Distribution Capex 4,200 11,341
b) LPS & LIS – 13,620
c) RBPF 3,400 3,500
d) Special Loan – 5,400
I&L – Core 19,815 5,810
I&L – E&M – 3114
STL/MTL 3,000 700
Total Sanctions 1,12,791 90,797
% Increase in Q1FY25 over Q1FY24 24%

The company’s loan book exhibited robust growth, increasing by 17% YoY from INR 4.54 lakh crores in Q1FY24 to INR 5.30 lakh crores in Q1FY25. This expansion indicates REC Ltd.’s successful operations and its ability to finance major projects. Moreover, asset quality improved as net credit-impaired assets declined from 0.97% YoY to 0.82% of total assets in Q1FY25, reflecting better credit risk management and effective recovery procedures.

REC Ltd.’s net worth significantly increased from INR 60,886 crores in Q1FY24 to INR 72,351 crores in Q1FY25, representing a 19% YoY rise. This growth indicates a strong equity foundation, enhancing the company’s financial stability. The capital adequacy ratio (CAR) for Q1FY25 was a robust 26.77%, well above the regulatory requirement. With Tier I at 24.27% and Tier II at 2.50%, this solid CAR highlights REC Ltd.’s strong capital structure and its capacity to absorb losses while expanding its business.

In summary, REC Ltd.’s Q1FY25 results demonstrate solid and well-managed financial performance, marked by significant growth in revenue, profitability, and asset quality. The company’s strategic focus on expanding its loan book and efficient cost management has led to improved interest rates and net interest margins.

Over the past seven quarters, from December 2022 to June 2024, the financial institution’s asset quality has steadily improved. Gross credit-impaired assets have consistently decreased, from 3.63% in December 2022 to 2.61% by June 2024, indicating a substantial reduction in the risk associated with the loan portfolio. Similarly, net credit-impaired assets, which consider impairments after provisions, have significantly declined from 1.12% in December 2022 to 0.82% by June 2024, showcasing effective provisioning and recovery efforts.

Borrowings:

Particulars Q1FY25

(INR in Cr.)

 Q4FY24

(INR in Cr.)

 Q1FY24

(INR in Cr.)
Domestic Borrowings:
Institutional including Subordinated Bonds 1,93,011 1,81,471 1,60,325
Loans from Banks, FIs, NSSF, etc 75,043 79,806 85,492
54EC Capital Gains Tax Exemption Bonds 43,246 42,356 38,908
Tax Free Bonds 8,999 8,999 10,307
Infra Bonds 4 4 4
Total Domestic Borrowing 3,20,303 3,12,636 2,95,036
Foreign Currency Borrowings:
External Commercial Borrowings (Bonds & Term Loans) 1,08,644 1,00,169 83,464
FCNR (B) Loans 29,847 25,139 19,082
Total Foreign Currency Borrowings 1,38,491 1,25,308 1,02,546
Grand Total 4,58,794 4,37,944 3,97,582

During the same period, the provision coverage ratio, which measures the extent to which provisions cover impaired assets, fluctuated. It started at 69.11% in December 2022, peaked at 70.64% in March 2023, and then slightly dipped before stabilizing in the subsequent quarters at around 68-70%. While the ratio remains relatively high, the slight decline towards the end suggests that even as the bank’s asset quality improves, it may be slightly reducing its provision buffer, possibly due to increased confidence in asset quality.

The yield on loan assets for Q1FY25 was 9.99%, slightly higher than the 9.82% recorded for Q1FY24. This yield stability indicates that REC Ltd. has maintained profitability in its lending operations, whether through favorable changes in loan terms or a stable interest rate environment.

Key Ratio & Analysis:

Yield on Loan Assets (%) 9.99
Cost of Funds (%) 7.05
Interest Spread (%) 2.94
Net Interest Margin (%) 3.64
Return on Net Worth (%) 19.51
Interest Coverage Ratio (Times) 1.54
Debt Equity Ratio (Times) 6.27

In Q1FY25, the cost of funds decreased to 7.05%, down from 7.23% in Q1FY24. This reduction in financing costs may be attributed to better debt management or favorable borrowing terms, thereby enhancing the company’s profitability.

The interest spread, which is the difference between the cost of funding and the yield on loan assets, improved from 2.59% in Q1FY24 to 2.94% in Q1FY25. This suggests that REC Ltd. has increased the margin between what it pays for funds and what it earns on loans, indicating more profitable lending operations.

The net interest margin (NIM) grew to 3.64% in Q1FY25, up from 3.28% in Q1FY24. The growth in NIM, a critical indicator of a company’s profitability, demonstrates REC Ltd.’s effective allocation of interest income against its interest expenses.

Return on net worth (RoNW) decreased slightly from 19.98% in Q1FY24 to 19.51% in Q1FY25. Although the decline is minor, it suggests a slight drop in the company’s return on equity, possibly due to slower net income growth or an expanded equity base.

During Q1FY25, the interest coverage ratio remained steady at 1.54 times, compared to 1.53 times in Q1FY24. This stability indicates consistent performance in managing the company’s debt obligations, demonstrating its ability to meet interest commitments from earnings.

The debt-to-equity ratio in Q1FY25 was 6.27 times, slightly lower than the 6.42 times noted in Q1FY24. A lower ratio indicates that REC Ltd. has marginally reduced its reliance on debt financing, leading to a more balanced capital structure.

Future Outlook:

REC Ltd. is strategically positioned as a key financier of power infrastructure projects across India. Given the Indian government’s ambitious infrastructure development plans, including rural electrification and renewable energy expansion, REC Ltd. is expected to continue playing a crucial role in funding large-scale power projects. The government’s commitment to achieving universal electricity access and enhancing the reliability of power supply, particularly in rural and underserved areas, ensures a steady flow of projects and opportunities for REC Ltd.

As India strives to meet its renewable energy targets, REC Ltd. is likely to focus more on financing projects related to solar, wind, and other renewable energy sources. This shift aligns with global trends and India’s commitments under international agreements like the Paris Accord. By supporting the transition to a greener energy mix, REC Ltd. can diversify its portfolio and position itself as a leader in financing sustainable energy projects, potentially enhancing its reputation and attracting new business.

REC Ltd. has consistently demonstrated strong financial performance, driven by the size of its loan portfolio, steady revenue growth, and profitability. The company’s sound financial management practices and substantial capital base provide a solid foundation for future growth. As India’s economic development, urbanization, and industrialization progress, REC Ltd.’s loan disbursements are expected to increase, further boosting profitability and shareholder value.

Conclusion

REC Ltd. is well-positioned to benefit from India’s ongoing infrastructure and energy development initiatives. Its strong financial base and focus on funding critical power projects contribute to a positive long-term outlook. However, the company must navigate sector-specific challenges and adapt to evolving market conditions to sustain its growth trajectory.

 

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 16, 2024

Power Grid Strengthens Southern Grid with Successful Project Completion

Power Grid Strengthens Southern Grid with Successful Project Completion

The nation’s top power transmission provider, Power Grid Corporation of India Limited (POWERGRID), has successfully commissioned a project for “Augmentation of Transformation Capacity in the Southern Region,” marking a critical milestone. The objective of this effort is to improve grid stability and strengthen the electricity transmission infrastructure in the southern states of India.

Project Specifics and Advantages:
Power Grid has not made the project’s details available to the general public. On the other hand, we may deduce the following from the project title:

Emphasis on Transformers: It is probable that this project entailed the installation of either new or upgraded transformers. Transformers are essential for efficiently transmitting power over long distances by stepping up or down voltage levels.
Enhanced Capacity: The project intends to “augment” transformation capacity, implying an expansion of the southern grid’s total capacity to handle power. This means that more power can be sent, meeting the rising demand and making it easier to integrate renewable energy sources.

Enhanced Grid Stability: The upkeep of grid stability depends on a strong transmission infrastructure with sufficient transformation capacity. For businesses and homes in the southern area, this means fewer power outages and higher-quality power supplies.

Importance to the Southern Area: The southern part of India has grown significantly in the last several years, which has increased demand for power. In order to meet this rising need, this initiative will:

Enabling electricity Transmission: By facilitating the transmission of extra electricity from generation sources to distribution networks, the increased capacity will guarantee that customers will always have access to power.

Integration of Renewable Energy: The South has a lot of potential for renewable energy sources, such as wind and solar power. By strengthening the grid’s infrastructure, this initiative makes it possible to seamlessly include these renewable energy sources into the overall power mix.

Enhanced Power Quality and Reliability: The project will minimise power outages and disruptions by improving power quality and reliability through increased grid stability.

The Commitment of Power Grid to Sturdying the Country’s Grid

Power Grid is essential to the development and upkeep of the national transmission network in India. The accomplishment of this project successfully highlights the company’s dedication to:

Infrastructure Expansion: To fulfil the nation’s rising demand for power, Power Grid is constantly modernising and expanding the nation’s grid.
Grid Resilience: By funding initiatives that increase transmission capacity and stability and reduce the likelihood of power outages, the corporation prioritises grid resilience.
Integration of Renewable Energy: Power Grid is actively engaged in building infrastructure to enable the integration of renewable energy, acknowledging the significance of this energy source in India’s energy mix.

Financial performance of the company:
The P/E ratio of 7.66 and the P/B ratio of 1.90 indicate a moderate value for this firm. Positive valuation indicators are further shown by its P/S ratio of 3.45 and EV/EBITDA ratio of 6.83. The firm has grown steadily over the last three years, with a three-year compound annual growth rate (CAGR) of 9.89% for sales and 19.22% for net profit. The firm has strong interest coverage ratios of 4.20, while having a debt to equity ratio of 1.52. However, with a current ratio of 0.91 and a quick ratio of 0.88, liquidity ratios show some pressure. The ROCE of the firm is a commendable 12.81%. With a gross profit margin of 88.85%, an operating margin of 59.60%, and a net profit margin of 34.00%, the company is clearly exceptionally profitable. With respect to book value per share (excluding Reval Reserve), it is Rs. 119.01. Basic EPS and Diluted EPS are both Rs. 22.10. With a face value of Rs. 10, a substantial dividend of Rs. 18.75 per share is given out. With a market valuation of Rs. 251,255 crore, the business has a strong position in the market and investor trust.

The “Augmentation of Transformation Capacity in the Southern Region” project has been successfully put into service, signifying Power Grid’s dedication to fortifying the national grid and streamlining the integration of renewable energy sources. This initiative should help Power Grid’s long-term growth prospects and investor value, even if an exact valuation impact cannot be calculated without particular financial information.

India’s economic growth and energy security depend heavily on Power Grid’s efforts on modernising and expanding its grid and infrastructure. The project’s successful completion establishes a favourable precedent for next initiatives and establishes Power Grid as a major participant in India’s changing energy environment.

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Waaree Energies Surges Over 11% on FTSE Index Inclusion Buzz
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 16, 2024

Mahindra Lifespaces Acquires New Land to Expand Its Presence in Bengaluru

Mahindra Lifespaces Acquires New Land to Expand Its Presence in Bengaluru

Leading Indian real estate developer Mahindra Lifespaces Developers Ltd. (MLDL) has furthered its presence in Bengaluru by purchasing a plot of property in the desirable Whitefield neighbourhood, totalling about 2 acres. The statement demonstrates MLDL’s dedication to the booming residential sector in the city.

Specifics of the Land Acquisition and Project Prospects:
It is anticipated that the recently purchased property tract has 0.2 million square feet of developable potential, or saleable area. Mid-premium residential flats are anticipated to be featured in the project, which has an estimated Gross Development Value (GDV) of ₹225 crore. This acquisition is emphasised by MLDL as a critical step in realising their goal of building sustainable urban communities.

Specifics of the Land Acquisition
• Land size: around two acres
• 0.2 million square feet of saleable area is the developable potential.
• Gross Development Value (GDV): Approximately $27 million, or ₹225 crore.
• Focus of the project: mid-range residential properties

Latest Information & Updates:
MLDL is benefiting from this land acquisition in Bengaluru, which increases their potential for land bank expansion to ₹2800 crore in FY24 (according to ICICI direct analysis). This graphic illustrates the company’s diversification strategy by including a Mumbai rehabilitation project. Analysts see this land bank expansion positively, suggesting that MLDL is concentrating on growing the total scope of its business

Recent Developments and Market Position:
This land acquisition in Whitefield marks MLDL’s second such move in the area for FY24. Earlier this year, they secured a larger land parcel of 9.4 acres. This strategic focus on Whitefield highlights their confidence in the locality’s potential for residential development
Mahindra Lifespaces’ third-quarter net income increased 33% to Rs 33.21 cr, or Rs 198 cr. Mahindra Lifespace Developers Ltd, a real estate company, recorded a 33% rise in its consolidated net profit for the quarter that ended in December, coming in at Rs 33.21 crore.
Its net profit for the previous year was Rs 25.02 crore.According to a regulatory filing, total income increased significantly to Rs 198.14 crore in the third quarter of the current financial year from Rs 33.32 crore in the same period last year.

From April to December of current fiscal year, net profit increased to Rs 100.88 crore from Rs 17.67 crore during the same time the previous year. Additionally, total revenue increased from Rs 253.22 crore to Rs 389.30 crore in the first nine months of FY23. The company’s market capitalization stands at Rs. 9,095 crores. Despite its sizeable market cap, the financial metrics paint a mixed picture of its performance. The stock opened at Rs. 579.00, slightly higher than the previous close of Rs. 564.90. Over the past year, it has seen highs of Rs. 632.80 and lows of Rs. 316.00, indicating significant volatility. In terms of profitability, the company faces challenges with negative gross profit margin (-9.42%) and net profit margin (-2.52%). However, it manages to achieve a modest return on equity of 5.61% and return on assets of 2.80%. The return on capital employed (ROCE) is negative at -3.81%, suggesting inefficiencies in capital utilization. The company maintains a healthy current ratio of 1.52, indicating its ability to cover short-term liabilities. However, the quick ratio is relatively low at 0.35, reflecting potential liquidity concerns. On the positive side, the debt-to-equity ratio is low at 0.15, indicating a conservative capital structure. Interest coverage ratios stand at -5.24, indicating a potential inability to cover interest expenses with earnings. The asset turnover ratio is low at 0.15, suggesting inefficiencies in asset utilization. Over the past three years, the company has experienced a significant decline in net profit at a CAGR of -70.01%. Despite this, the stock trades at a relatively high P/E ratio of 53.67 and P/B ratio of 3.02, indicating possibly overvaluation. The EV/EBITDA ratio is negative at -98.69, which may suggest distress or undervaluation. The company’s total asset value is Rs. 3,610 crores, reflecting the scale of its operations.

There is a lot of demand in the Whitefield real estate market in Bengaluru. With their well-timed land acquisitions, MLDL is well-positioned to benefit from this expansion. Potential purchasers may be certain that a well-designed and well-executed living environment will be provided by their experience in creating high-quality residential projects. With the recent purchase of property in Bengaluru, Mahindra Life spaces has increased their footprint in a significant market. The project’s capacity to build mid-premium residential flats will help meet the expanding need for high-quality housing in the city. MLDL has a solid financial position and a track record, which will help them build this project effectively.

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Torrent Power Q2 FY26: Profit Surges ~50%, Powered by Strong Generation and Lower Finance Costs
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 16, 2024

Reliance Industries enters into PPA with Adani Power subsidiary

Reliance Industries enters into PPA with Adani Power subsidiary

Reliance Industries Limited (RIL) has entered into a significant power purchase agreement (PPA) with Mahan Energen (MEL), a subsidiary of the Adani Power. This 20-year deal, valued at Rs 50 crore, marks a strategic collaboration between two of India’s industrial giants. The crux of the agreement lies in APML supplying electricity to RIL for a period of 20 years. The deal likely involves bulk power supply to cater to RIL’s vast energy requirements across its refineries, petrochemical plants, and other operations. The agreement signifies a Rs 50 crore investment from RIL, likely towards securing a stable and reliable power source for the next two decades. This strategic move can potentially lead to cost savings for RIL in the long run, especially considering the rising costs of conventional power generation.

Company Overview

Reliance Industries Limited (RIL), has a diversified presence across sectors like petrochemicals, refining, retail, telecom, and now increasingly, renewable energy.


Market Capitalization of RIL is ₹ 2,010,621 Cr. TTM EPS is 103.41. TTM PE is 28.74. P/B is 2.45. ROE is 8.94 % and ROCE is 9.14 %. Share Price of the company opened at ₹2,985.75 and closed at ₹2971.70. For Q3 of FY24: Revenue of the company is ₹2,48,160 cr. Net profit is ₹19,641 cr. EBITDA is ₹44,678 cr. Capital Expenditure is ₹ 30,102 Cr. Cash & Cash Equivalents is ₹ 192,371 Cr.


Adani Power is an Indian multinational power and energy company situated in Khodiyar, Ahmedabad, India. It is a subsidiary of the Adani Group. It is a privately owned thermal power producer with a 12,450 MW capacity. It also runs a 40 MW mega solar facility in Naliya, Bitta, Kutch, Gujarat.


Market Capitalization of Adani Power is ₹205,883 Cr. TTM EPS is 60.50. TTM PE is 8.82. P/B is 12.55. ROE is 44.8 %. ROCE is 15.8 %. Share price of Adani Power opened at ₹520.00 and closed at ₹533.80 For Q3 of FY24: Revenue is ₹12,991.44 Cr. EBITDA is ₹5,059 cr. Profit After Tax is ₹2,737.96 Cr. EPS is 6.61. Total assets are ₹88,289.84 Cr.


The RIL-APML deal holds immense significance for India’s power sector. It highlights a growing trend of collaboration between private players to ensure efficient and reliable power supply. The deal could potentially pave the way for further consolidation within the power sector, with other companies exploring similar arrangements. The agreement might indirectly propel both companies to prioritize renewable energy sources in their future endeavors, considering India’s ambitious clean energy targets.

RIL might secure a competitive electricity tariff compared to prevailing market rates through this long-term agreement. This could lead to significant cost savings over the 20-year period, particularly if energy prices rise in the future. RIL, with its vast energy requirements across its various ventures, might be seeking to diversify its power procurement sources. This agreement could be a strategic move to hedge against potential price fluctuations or secure a reliable backup option. APML, a prominent player in the Indian power sector, assures a reliable source of electricity for RIL’s operations. This can minimize disruptions and ensure smooth functioning of RIL’s facilities.

The Reliance-Adani Power PPA presents a captivating development in the Indian energy sector. The long-term benefits in terms of cost optimization and reliability are remarkable. deal signifies a strategic alliance with long-term implications for both companies. This collaboration, coupled with the focus on renewable energy, paves the way for a more sustainable and secure energy future for India.

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IRFC Results updates
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 14, 2023

Indian Railways Finance Corporation Result update Q1FY24

Indian Railways Finance Corporation Result update Q1FY24

Overview:

Indian Railway Finance Corporation (IRFC) Ltd, established in December 1986, serves as the financing arm for the Indian Railways. Registered as a non-deposit taking NBFC and infrastructure finance company with the RBI, its primary goal is to secure funds from the financial market for the acquisition and creation of assets, which are then leased to the Indian Railways and other entities. IRFC issues both taxable and tax-free bonds and obtains term loans from banks and financial institutions for its borrowing and lending activities within the Ministry of Railways (MoR).

Diversified Borrowing Mix :

 IRFC boasts a diverse funding profile, encompassing taxable and tax-free bonds, term loans, commercial papers, and external commercial borrowings (ECB). Its strong CRISIL/ICRA ratings (AAA/A1+) have allowed it to secure low-cost borrowings. As of June 30, 2023, the company’s total debt stood at INR 4,10,099 crore, comprising ECB bonds (45%), term loans (32%), ECB (16%), and other sources. IRFC enjoys a margin of 40 bps/35 bps over the weighted average cost of borrowing for financing Rolling Stock and Project Assets, respectively, for FY23.

 Clientele:

In addition to lending to the Indian Railways, IRFC extends loans to other entities within the Ministry of Railways, such as Rail Vikas Nigam Ltd and IRCON International Limited.

 

Financial Performance:  

Robust AUM Growth in Q1FY24:


In Q1FY24, IRFC’s Assets Under Management (AUM) reached INR 4,66,251 crore, reflecting an 8% YoY growth and a 5-year CAGR of 23.88%. These assets are diversified across railway assets (47.53%), rolling assets (38.10%), project assets (13.30%), and other assets (1.06%). With 98.94% of AUM exposure to the Ministry of Railways, the credit risk is minimal. However, Q1FY24 disbursements have declined over the last three years.

Cost of Borrowing Increase during FY22-23:

The weighted average cost of IRFC’s borrowings for rolling stock increased to 7.51% p.a. in 2022-23 from 6.62% in the previous year, attributed to the RBI’s rate hikes. Despite this, IRFC maintains a margin over its borrowing costs for FY23, and its Net Interest Margin (NIMS) stood at 1.33% in Q1FY24.

Zero Taxation, Nil GNPA + Robust Capital Adequacy:

IRFC’s lending to the Ministry of Railways, with an exposure of 98% of its AUM, results in a credit cost of Nil. This has led to a robust capital adequacy ratio of 627.57% in Q1FY24, contributing to high credit ratings from CRISIL (AAA) and ICRA (A+). The company’s tax-free status since FY19 has added value to its earnings.

Valuation and Key Ratios:

IRFC’s stock is currently trading at 2.30x FY23 (TTM) book value of INR 36 per share, with a market value of INR 82.8. Although the return ratios (ROE/ROA) have slightly decreased to 12.69%/1.33% in Q1FY24 from 14.83%/1.59% in Q1FY23, the company’s strong AUM growth, zero GNPA, healthy capital position, and cost-plus model suggest potential for higher valuations in the upcoming quarters.

Q1FY24 Results:

In Q1FY24, IRFC reported a notable 18.69% YoY increase in revenue, primarily driven by a 25% growth in interest income and a 15% growth in lease income. However, interest expenses also increased by 29.22% YoY due to rising borrowing costs, resulting in a 5.90% YoY decline in Net Interest Income (NII) to INR 15,882 million. Net profit decreased by 6.32% YoY to INR 15,565 million, with NIMS standing at 1.33% in Q1FY24. The EPS for the quarter was INR 1.19, reflecting a 6% YoY decrease.

 

Conclusion:

IRFC’s diverse borrowing mix, robust AUM growth, low credit risk, and favorable tax status position it as a strong player in the financing of Indian Railways and related projects. Although recent increases in borrowing costs have affected profitability, its capital adequacy and credit ratings remain strong, suggesting potential for future growth and improved valuations.

 

Astral Pipes posted a net profit of Rs. 96 Cr.

 

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Gabriel India Stock Rockets Nearly 80% in 13 Sessions: What’s Driving This Surge?
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 30, 2023

Shriram Finance Business Update Q1FY24

Shriram Finance Result update Q1FY24

Overview: Shriram Finance, a key constituent of the Shriram Group conglomerate, is a prominent non-banking financial company (NBFC) in India, specializing in a wide range of credit solutions including commercial vehicle, two-wheeler, car loans, home loans, gold loans, and small business financing. The conglomerate underwent a strategic consolidation in November 2022, merging Shriram Transport Finance, Shriram City Union Finance, and Shriram Capital to form Shriram Finance. This merger solidified its position as one of the largest NBFCs in the country with an impressive Assets Under Management (AUM) of INR 1,85,683 crore.

Operational Presence :

 As of June 30, 2023, Shriram Finance boasts a robust presence with an extensive network of 2,930 branches across India. The company’s workforce stands at 66,343 employees, servicing a substantial customer base of approximately 7.54 million. This extensive reach covers rural, semi-urban, and urban areas, thereby facilitating a comprehensive market outreach.

 Market Penetration and Position:

Shriram Finance holds a dominant position in the market for second-hand truck financing. Despite this, the market remains under-penetrated, with around 55-60% still served by private financiers and money lenders charging high-interest rates. This presents an opportunity for formal players to incrementally enhance their market share. Shriram Finance, leveraging its domain expertise, is strategically positioned to capitalize on this potential, thus cementing its foothold in the industry.

Financial Performance:  

In Q1FY24, Shriram Finance exhibited commendable financial performance. Interest income surged by 13.3% YoY (+3.5% QoQ) to INR 76,880 million. Correspondingly, interest expenses witnessed an increase of 18.1% YoY (+7.5% QoQ) amounting to INR 34,875 million. Net Interest Income (NII) exhibited a robust growth of 9.7% YoY, reaching INR 42,004 million. The Net Interest Margin (NIM) contracted by approximately 25 basis points (QoQ) to 8.3%, attributed to declining yields and an uptick in borrowing costs.

Profitability and Efficiency:

The Profit After Tax (PAT) exhibited impressive growth, surging by 25.1% YoY (+28% QoQ) to INR 16,754 million. However, it’s noteworthy that the Cost-Income ratio stood at approximately 31% (compared to the previous year’s ~27%) due to a notable 33% YoY increase in employee expenses. This reflects the company’s focus on expansion and enhancing operational capabilities.

Valuations:

As of June 30, 2023, Shriram Finance’s Price to Book Value stands at 1.60, a notable improvement from 2.2 in FY22. Return on Equity (ROE) and Return on Assets (ROA) exhibited year-on-year improvements of 70 basis points and 30 basis points, reaching 15.19% and 3.08%,

Asset Quality:

A significant highlight of the quarter was the notable enhancement in asset quality. Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) ratios demonstrated improvement, declining to 6% and 3.1%, respectively, from 6.2% and 3.3% in the preceding quarter (Q4FY23). Additionally, the Provision Coverage Ratio (PCR) for Stage 3 loans witnessed a substantial increase of around 240 basis points (QoQ) to approximately 52%, underscoring prudent risk management practices.

Conclusion:

Shriram Finance’s merger-driven consolidation, comprehensive market outreach, dominant position in second-hand truck financing, commendable financial performance, and focused approach towards profitability and asset quality reinforce its stature as a leading player in the NBFC landscape. The company’s strategic maneuvers and operational excellence position it advantageously to harness future opportunities and navigate challenges, further bolstering its credibility and standing in the financial industry.

 

Astral Pipes posted a net profit of Rs. 96 Cr.

 

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Wales government to discuss with welsh companies on investing in gift city in kochi: The Kerala government has agreed on a student exchange programme and is sending the healthcare workers to Wales, which is held by the government. A Kerala chief minister has been on a tour of Europe, including a stop in London to promote a programme that will send health workers from Kerala to Wales, as well as student exchanges through the taith program. The Taith programme is a five-year Welsh government initiative that brings students and educators from all over the world to Wales.with the aim of raising its benefits to the country’s international profile. Earlier, Kerala industries minister Veena George had been welcomed to Cardiff, in Wales. According to officials, chief minister Pinarayi Vijayans, who was part of the Wales ministerial delegation from Kerala, stated that the government will take the initiative to discuss with companies about investing in the gift city, which will be launched in Kochi, which is located in the southern state. The chief minister officer stated in a statement that a decision was also made to sign a memorandum of understanding with the Welsh government for the purpose of sending health professionals from Kerala to the European country.and also said that the first batches of health professionals under the memorandum of association are expected to arrive in Wales by next year. The discussion was held in between the Kerala delegation, which was held by the chief minister, Pinarayi Vijayan, and interaction with the first minister of Wales' government, Mr. Mark Drake, as well as with the other members of his government, including along with the Welsh health minister and social service minister, Eluned Morgan. Furthermore, the CMO stated that, according to a study conducted by the school of architecture, the problems highlighted by the port city of Kochi were noise pollution, water pollution, traffic, and other general pollution, among other things, faced by pedestrians.There should be a need to maintain biodiversity etc.
Business, Economy, Editorials, education, Equities, Investor Forum, Market News - August 29, 2023

Wales government to discuss with welsh companies on investing in gift city in kochi:

Wales government to discuss with welsh companies on investing in gift city in kochi:

The Kerala government has agreed on a student exchange programme and is sending the healthcare workers to Wales, which is held by the government. A Kerala chief minister has been on a tour of Europe, including a stop in London to promote a programme that will send health workers from Kerala to Wales, as well as student exchanges through the taith program.

The Taith programme is a five-year Welsh government initiative that brings students and educators from all over the world to Wales.with the aim of raising its benefits to the country’s international profile. Earlier, Kerala industries minister Veena George had been welcomed to Cardiff, in Wales.

ministerial delegation:

According to officials, chief minister Pinarayi Vijayans, who was part of the Wales ministerial delegation from Kerala, stated that the government will take the initiative to discuss with companies about investing in the gift city, which will be launched in Kochi, which is located in the southern state.

The chief minister officer stated in a statement that a decision was also made to sign a memorandum of understanding with the Welsh government for the purpose of sending health professionals from Kerala to the European country.and also said that the first batches of health professionals under the memorandum of association are expected to arrive in Wales by next year.

The discussion was held in between the Kerala delegation, which was held by the chief minister, Pinarayi Vijayan, and interaction with the first minister of Wales’ government, Mr. Mark Drake, as well as with the other members of his government, including along with the Welsh health minister and social service minister, Eluned Morgan.

Furthermore, the CMO stated that, according to a study conducted by the school of architecture, the problems highlighted by the port city of Kochi were noise pollution, water pollution, traffic, and other general pollution, among other things, faced by pedestrians.There should be a need to maintain biodiversity etc.

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Vakrangee Q1 FY@3 Result Update
Business, Equities, Expert Views, Markets, Research, Result Updates - August 28, 2023

Fixed Income Portion of the Portfolio Should Stabilize the Overall Returns.

Fixed Income Portion of the Portfolio Should Stabilize the Overall Returns.

 

Mutual funds have gained business over the last few years as a safe form of investment alternative. Mindfulness of the performance and benefits from different equity and hybrid mutual fund schemes witnessed an upsurge over time. As a regulator, SEBI took several measures to simplify the categorization of investments and the AMFI helped to disseminate the idea of mutual funds through an easy to understand advertising campaign. Mutual funds as a legal mechanism can provide debt holders with a tax arbitration, provided that assets kept for three years through mutual funds are eligible as LTCG. Nevertheless, awareness of equity schemes are much more as compared to debt investments due to various uncertainties in the financial market investors obliged to put more attention in fixed income investments.

 

Taboo of Fixed Deposits:

Equity investment is much more risky than debt instruments and fixed earning investments but it has been observed that people tend to invest in Fixed earning asset class. Most investors are used to investing in fixed bank deposits, in which they are aware of their interest rate or total return on investment.

 

Volatility in Market:

It is easy to understand. In debt mutual fund investments, investors tend to rely on the yield from the portfolio depending on the past returns, which may not be the correct index for future returns. Although, debt funds invest in securities or bonds that provide mostly fixed coupons or interest payments but securities prices fluctuate to alter the return on investment during the investor’s holding period. The bond price can fluctuate because interest rates or the credit profile of the issuer change in the economy. Bond markets can also often become illiquid, contributing to lower prices for bonds in general. Investors need to be aware that the bond fund will fetch them returns which are close to their Portfolio Rate and which are adjusted to their expenses if things do not change much during their investment horizons. However, the situation completely changes and investors may get higher or lower return than their expectations.

 

Liquidity concern:

In the past, the world of fixed-income investors has been astounded by a variety of credit events, resulting in large write-downs in the fund values. Though we observed many uncertainties in a financial market over the years, the size of defaults was comparatively low and does not impact much in the investing pattern of the investors and even there was no such significant effect on mutual fund schemes. However, in recent times due to the massive problem of liquidity, investors tends to invest in fixed earning instruments. Investors have expressed a great deal about their disappointment that while the return on portfolio has captured the credit risk of the investment, the return on the portfolio is not at all worthy.

Therefore, when a scheme faced major redemptions, the scheme avoided accepting new subscriptions or redemptions which would lead the customer’s investment being illiquid. Based on this experience, investors are likely to reject credit risk or high yield funds which are unfortunate because any developed market requires a market where liquidity is stable and investors can evaluate and then take part in high yield trades. This dimension needs to be closely examined by the regulator, as failure to fix problems at ground level will lead to a fragmented market with less issuers locking up all liquidity.

Investments with fixed revenue will produce strong returns at least on a periodic basis. If the economy slows and inflation is not at its height, a central banker will try to lower interest rates, increase the money in the system, and encourage banks to loan to the real economy by lowering alternative deployment rates.
In these situation, value bonds have been observed at peak and investors get the capital gains added to their portfolio return. So if equity funds do not perform well, fixed-income funds are a perfect sanctuary for any portfolio. On the contrary, if rates increase instead of decreasing due to a decreased rating or an unregulated fiscal expansion, portfolios with a fixed income may produce returns lower than portfolio produce. Nevertheless, capital is not in danger of being frozen out forever because there is no chance of illiquidity.

 

Synopsis:

A good investment consultant, with some common sense and some history should be able to recognize the various risks linked with debt fund schemes and properly evaluate the client’s risk profile and identify schemes of better-managed funds and avoid obvious mistakes. Although, a fixed-income portfolio contains many moving parts. A competent adviser is usually able to separate all the advantages and disadvantages. The portfolio’s fixed income portion should add stability to the overall returns and not to results in anxiety and concern.

 

 

The History of the Modern Portfolio

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