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

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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Genus Power Aims for 1.5M Smart Meters Monthly!

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 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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Jindal Steel & Power Q1 FY26: Profits Surge on Operational Gains and Strategic Growth

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - February 13, 2024

Vibhor Steel Tubes IPO Overview

IPO Details:

Price Band: ₹141 – ₹151 per share
Lot Size: 99 shares
Cost per Lot: ₹14,949
Issue Size: Approx. ₹72 crore

The offer and objects

➡️The offer includes a fresh issue of up to 4,779,444 equity shares at the upper price band of Rs 151 and 5,118,411 equity shares at the lower price band of Rs 141, totaling Rs 72.17 crore.

➡️The company intends to use the net proceeds from the fresh issue to meet the company’s working capital needs, totaling Rs 62 crore, with the remaining funds allocated for general corporate purposes.

Company Overview

Vibhor Steel Tubes Ltd is engaged in the manufacturing and supply of steel pipes and tubes to various industries in India. The company’s product portfolio includes Mild Steel/Carbon Steel ERW Black and Galvanized Pipes, Hollow Steel Pipes, and Cold Rolled Steel (CR) Strips/Coils.

Manufacturing Units and Workforce

Currently, the company operates two manufacturing units and one warehouse located in Raigad, Maharashtra, and Mahabubnagar, Telangana. The Raigad unit serves as an ideal location for 100% export of the company’s products. As of September 2023, the company employs a total of 636 individuals, including laborers.

Association with Jindal Pipes for 6 Years

The company has entered into a strategic agreement with Jindal Pipes Ltd for a duration of six years to manufacture and supply finished goods under the brand name “Jindal Star.” The agreement stipulates two main terms: 1) a minimum order of 1,00,000 MT per annum and 2) a turnover discount of 2% of the net sales price to Jindal Pipes Limited. This collaboration provides the company with a stable business outlook for the next six years.

Terms and conditions of the Agreement with Jindal Pipes

➡️The selling price will be determined periodically through mutual agreement, taking into consideration the prevailing market prices for the end product. However, it shall never fall below the sum of raw material costs (steel plus consumables) and variable expenses (labor and power).
➡️JPL commits to placing orders with a minimum quantity of 1,00,000 MT per annum to maximize the utilization of Unit I & Unit II capacities of our Company.
➡️In case of any shortfall in off-take by Jindal Pipes Limited or in supply by Vibhor Steel Tubes Limited, the defaulting party will compensate at the rate of Rs. 2,000 per MT for the deficit. This compensation obligation ceases once the minimum order quantity is achieved.
➡️Vibhor Steel Tubes Limited agrees to grant a turnover discount of 2% on the net sales price to Jindal Pipes Limited.
➡️The duration of this agreement is six years from April 01, 2023, with the option for renewal if mutually agreed upon by both parties.

Revenue Concentration Risk – 93% Sales from Jindal Pipes

The company’s revenue heavily relies on its top customer, Jindal Pipes, contributing to 93% of the total revenue for FY23. While this concentration poses a risk, minimum offtake clauses help mitigate potential downsides. Other customers include De Wit Bouwmachines BV and Macro Metal Handelsgesellschaft MBH.

Capacity Utilization stood at 71.6%

Over the past three years, the company has increased its capacity utilization from 41.82% to 71.68%, indicating a growing demand for its products. Despite this improvement, the plants are not operating at full capacity, with a 30% reserve to meet future demand.

Negative Cash Flow Impact on Working Capital

The company reported negative cash flows from its operating activities in H1FY2024 and FY2021. The steel business’s working capital intensity poses a challenge, and insufficient cash flows may adversely affect working capital requirements.

Expansion Plans in Telangana and Odisha

Vibhor Steel Tubes plans to enhance manufacturing and galvanizing capacity at the Telangana plant and establish a new plant in Odisha. The company has added new products to its portfolio, such as crash barriers and square pipes. The total capex for these expansions is approximately Rs 60 crore, funded through a mix of debt and internal accruals.

Peers of Vibhor steel tubes

1.APL Apollo Tubes Limited
2.Hi-Tech Pipes Limited
3.Rama Steel Tubes Limited
4.Goodluck India Limited (listed)

These companies operate in the same industry, manufacturing similar products to Vibhor Steel Tubes. However, it’s important to note that while they are part of the peer group, they are not direct competitors. This is because these companies sell their products in the open market, whereas Vibhor Steel Tubes has a unique business model. Vibhor Steel Tubes exclusively serves one customer, Jindal Pipes Limited, and supplies all finished goods/products on behalf of Jindal Pipes Limited.

Particulars	Total Income	EPS	PE ratio	ROE
Vibhor steel Tubes	1,114	14.85		22.6
APL Apollo Tubes	16,213	23.15	70.39	21.36
Hi-Tech Pipes	2,388	3.06	27.66	9.01
Goodluck India	3,086	33.31	17.82	14.16
Rama Steel Tubes	1,336	1.22	28.93	10.97

Financials and Valuation

For FY2023, consolidated sales increased by 36% to Rs 1113.12 crore. The OPM rose by 50 bps to 4.1%, leading to a 54% increase in OP to Rs 45.59 crore. The FY2023 EPS on post-issue equity is Rs 11.1, and at the upper price band of Rs 151, the P/E works out to be 13.7. Compared to its listed peers, Vibhor Steel Tubes demonstrates competitive financials with an EBITDA margin of 4.2% and ROE of 25.5%.

Key Financial Performance	FY23	FY22	FY21
Revenue	1,113	818	510
Total Income	1,114	818	511
EBITDA	47	30	20
EBITDA%	4.21%	3.69%	3.90%
PAT	21	11	0.6
PAT%	1.89%	1.39%	0.13%
CFO	7	-34	45
Net Worth	93	72	60
Net Debt	127	106	59
Debt Equity ratio	1.63	1.77	1.23
ROCE%	16.48%	12.09%	9.90%
ROE%	25.51%	17.11%	1.14%

Conclusion

Vibhor Steel Tubes Ltd operates in the steel pipes and tubes manufacturing sector, with a strategic collaboration with Jindal Pipes providing a stable revenue stream. While facing a concentration risk with 93% of sales from Jindal Pipes, the company shows positive signs of growth, increased capacity utilization, and expansion plans in Telangana and Odisha. However, negative cash flows and the highly competitive market warrant careful monitoring of its financial performance.

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India: Infrastructure Set to Outpace IT as the Growth Engine

Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports - January 3, 2024

Reliance's Strategic Investment Sparks 20% Surge in Alok Industries Stock

Reliance’s Strategic Investment Sparks 20% Surge in Alok Industries Stock

On January 2nd, Alok Industries experienced a significant upswing in its stock, witnessing a remarkable 20% surge to reach its highest level in 52 weeks at Rs 25.80. The driving force behind this surge was the substantial investment made by Reliance Industries Ltd in non-convertible redeemable preferential shares, amounting to a substantial Rs 3,300 crore.

The intraday trading session for Alok Industries was dynamic, with the stock opening at Rs 21.65 and reaching a high of Rs 25.80. The stock also encountered a low of Rs 21 during the session. The closing price settled at the day’s peak of Rs 25.80, representing a notable 20% change from the previous closing figure of Rs 21.50. As of now, the market capitalization for the company stands impressively at Rs 12,852.15 crore.

Trading volumes in the counter saw a significant uptick, with a staggering 11 crore shares changing hands on the exchanges. This heightened activity is indicative of the heightened investor interest in Alok Industries. Furthermore, the stock has demonstrated a substantial 31% increase in the last month, underlining the positive sentiment surrounding the company.

Upon the successful receipt of the substantial subscription money of Rs 3,300 crore from Reliance Industries Limited, the Company promptly allocated 3,300 crore non-convertible redeemable preference shares. These preference shares, carrying a 9% interest rate, were issued at a face value of Rs 1 each for cash at par. The terms and conditions of this allocation were previously approved by the shareholders of the Company through a special resolution passed on December 23, 2023.

At the end of the September quarter, Reliance Industries Limited already held a significant stake in Alok Industries, amounting to 40.01%. In addition, JM Financial Asset Reconstruction Co controlled a noteworthy 34.99%. These ownership structures provide insights into the strategic alliances and interests that have played a pivotal role in shaping Alok Industries’ recent financial landscape.

It’s crucial to delve into Alok Industries’ recent history to understand the context of its financial developments. In pursuit of ambitious expansion goals, the company had undertaken substantial borrowing, accumulating debt up to a staggering Rs 30,000 crore. However, the company faced challenges in meeting its financial obligations, ultimately leading to its classification as one of the 12 stressed units under the amended Insolvency and Bankruptcy Code (IBC). The subsequent declaration of insolvency marked a significant chapter in Alok Industries’ corporate journey.

Alok Industries is a prominent integrated textile company with operational plants located at Vapi in Gujarat and Silvassa, a Union territory near Vapi. The company boasts a diverse and expansive customer base spanning the globe, including global retail brands, importers, private labels, domestic retailers, garment and textile manufacturers, as well as traders. The company’s presence as a popular penny stock, trading near Rs 25, adds another layer of intrigue to its narrative.

Reliance Industries, in its stock exchange notification, emphasized that the acquisition of these preference shares constituted a related party transaction. Importantly, this transaction had received prior approval from the shareholders of Alok Industries and was conducted on an arm’s length basis. It’s noteworthy that neither the promoter nor the promoter group and group companies were directly involved or held interests in this transaction. Equally significant is the disclosure that no governmental or regulatory approvals were required for the completion of this transaction.

In conclusion, the recent developments in Alok Industries’ stock and financial landscape, particularly the strategic investment by Reliance Industries, underscore the intricate dynamics at play in the corporate realm. The company’s journey, from insolvency to attracting substantial investments, reflects the resilience and adaptability required in the ever-evolving business landscape. Investors and industry observers will undoubtedly continue to monitor Alok Industries’ trajectory as it navigates the challenges and opportunities that lie ahead.

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Murae Organisor Reports Promising Q1 2026 Results: A Positive Start to the Fiscal Year

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - December 28, 2023

API & Intermediates Fuel 58% Growth in Q2FY24 for Aarti Pharmalabs

Company Overview:

Aarti Pharmalabs Ltd is a subsidiary of Aarti Industries Ltd, involved in the manufacturing and distribution of pharmaceuticals and chemicals. The company operates in three business verticals: API & Intermediaries, CDMO & CMO Services, and Xanthine derivatives & allied. It is the largest Indian manufacturer of Xanthine Derivatives, widely used in beverages, cosmetics, and pharmaceuticals. The company boasts 150+ products, including 52+ patented files, and operates six manufacturing units in Gujarat and Maharashtra.

Topline dipped due to price reductions in certain products

In the recent quarter, the standalone revenue of the company declined by 11.96% YoY (-0.56% QoQ) to 356 Cr. This dip was attributed to the decrease in prices of certain products. However, the decline in selling prices was offset by an increase in volume and a decrease in raw material costs, resulting in an overall margin improvement across earnings levels.

Q2 EBITDA dips YoY, yet margins expand by 85 bps

The company witnessed an 8.18% YoY decrease in EBITDA, amounting to 74 Cr compared to the previous quarter’s 71 Cr. Surprisingly, the EBITDA margin expanded by 85 bps, reaching 20.72%. This margin growth, despite a drop in EBITDA, was fueled by increased volume and reduced raw material costs. On a QoQ basis, EBITDA increased by 3.19%, driven by lower raw material costs and operating expenditures.

APIs and Intermediates drive impressive 58% growth in Q2

Among the three business verticals, API & Intermediate emerged as the primary growth driver, contributing 58% to the revenue in Q2FY24. The remaining 42% was attributed to other verticals, such as CDMO & CMO Services and Xanthine derivatives & allied. The company foresees a robust growth trajectory in the CDMO / CMO pipeline, maintaining its significance in overall revenue.

Promising Future Outlook: Anticipated Growth Opportunities Ahead

The company is actively progressing on greenfield projects in Atali, Gujarat, expecting completion in H2 of FY 24-25. This project, with a total Capex plan of 350-500 Cr in phase 1, is set to increase capacity and introduce 40+ value-added products annually. Anticipating operating leverage in FY26, the company projects an EBITDA growth of 10-15% in FY24.

Valuation and Key Ratios

As of now, the stock trades at a multiple of 23.3x EPS (TTM) of Rs 20.9, with a market price of 488. The industry PE stands at 33.6x, while the company values the stock at 2.66 times its book value of Rs 183 per share. The EV/EBITDA multiple is at 13.47x, compared to the industry median of 18.62x. The trailing twelve months ROE and ROCE are 13.2% and 16.1%, respectively, with a robust interest coverage ratio of 14.2x, indicating strong solvency.

Q2FY24 Result Update: Standalone

➡️Standalone revenue witnessed an 11.96% YoY decline (-0.56% QoQ) to 356 Cr in Q2FY24 due to a drop in product prices.

➡️Gross profit decreased by 6.41% YoY (-1.48% QoQ) to 165 Cr, with gross margin expanding 275 bps YoY due to lower raw material costs.

➡️EBITDA decreased by 8.18% YoY but grew 3.19% QoQ to 74 Cr, driven by margin expansion. EBITDA margin expanded 85 bps YoY and 75 bps QoQ to 20.72% due to operating leverage.

➡️Operating profit (EBIT) decreased by 12.67% YoY (+2.50% QoQ) to 57 Cr, with EBIT margin expanding by 13 bps YoY and 48 bps QoQ to 16.14%.

➡️PAT decreased by 9.21% YoY (-1.44% QoQ) to 41 Cr, while the PAT margin expanded by 35 bps YoY to 11.73%.

➡️Earnings per share (EPS) for the quarter stood at 4.61 Rs, compared to 4.68 Rs in the previous quarter.

Conclusion

Aarti Pharmalabs Ltd, despite facing a decline in standalone revenue attributed to product price drops, showcased resilience with strategic measures. The focus on API & Intermediate business, upcoming greenfield projects, and favorable margins position the company for future growth. The financial indicators, along with ongoing expansion plans, suggest a promising trajectory, making Aarti Pharmalabs a noteworthy player in the pharmaceutical and chemical industry.

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Talbros Automotive Components Accelerates to New Highs on ₹580 Crore Order Win

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - December 28, 2023

LG Balakrishnan's Solid Profitability Amid Margin Pressures

LG Balakrishnan’s Solid Profitability Amid Margin Pressures

Company Overview:

LG Balakrishnan & Bros Ltd specializes in manufacturing chains, sprockets, and metal formed parts for automotive applications. The company operates in two business segments: transmission and metal forming. In the transmission segment, products include chains, sprockets, tensioners, belts, and brake shoes. Metal forming products encompass metal sheet parts, machined components, and wire drawing products.

Q2 Sees Growth in Transmission, Metal Forming Lags

In Q2, the transmission segment exhibited strong performance with a robust 15.64% QoQ revenue growth (+4.47% YoY), while the metal forming segment faced challenges, experiencing a moderate decline of 0.36% QoQ (+8.86% YoY). Overall, standalone revenue witnessed a growth of 12.66% QoQ (+5.17% YoY).

Revenue up, but Year-over-Year margins dip

Despite a 5.17% YoY increase in revenue, margins faced pressure due to a significant rise in raw material costs and operating expenditure by 5.36% and 5.29%, respectively. EBITDA margins dropped by 13 bps YoY, and gross margins decreased by 9 bps YoY and 91 bps QoQ.

37% QoQ PAT Soars: Strong Topline and Operational Efficiency Drive Growth

Profit After Tax (PAT) surged impressively by 37.2% QoQ (+16.72% YoY), driven by robust topline growth and stable interest costs and depreciation. Interest costs remained stable, growing by 0.26% QoQ, while depreciation increased moderately by 0.50%.

Valuation and Key Ratios

The stock currently trades at a multiple of 16.5x Earnings Per Share (EPS) (TTM) of Rs 82, with a market price of 1,315. The industry PE stands at 32.2x, and the company values the stock at 2.81 times its book value of Rs 468 per share. The EV/EBITDA multiple is at 8.63x, compared to the industry median of 13.19x. The trailing twelve months ROE and ROCE are 19% and 24.2%, respectively, with a robust interest coverage ratio of 46.4x, indicating strong solvency.

Q2FY24 Result Update: Standalone

➡️Standalone revenue witnessed a 5.17% YoY growth (+12.66% QoQ) to 573 Cr, driven by robust growth in the Metal Formation segment.

➡️Transmission segment revenue grew by 4.47% YoY (+15.64% QoQ) to 478 Cr, while the metal formation segment surged by 8.86% YoY (-0.3% QoQ) to 95 Cr.

➡️Gross profit increased by 5% YoY (+10.77% QoQ) to 305 Cr, but gross margins dropped by 9 bps YoY and 91 bps QoQ to 53.29%.

➡️EBITDA grew by 4.41% YoY (+19.08% QoQ) to 102 Cr, with EBITDA margin down by 13 bps YoY and up 96 bps QoQ to 17.87% due to operating leverage.

➡️Operating profit (EBIT) increased by 6.52% YoY (+23.74% QoQ) to 85 Cr, with EBIT margin expanding by 19 bps YoY and 133 bps QoQ to 14.84%.

➡️PAT surged by 16.72% YoY (+37.2% QoQ) to 76 Cr, while the PAT margin expanded by 130 bps YoY and 236 bps QoQ to 13.21%.

➡️Earnings per share (EPS) for the quarter stood at 24.11 Rs, compared to 17.57 Rs in the previous quarter.

Conclusion

LG Balakrishnan & Bro’s Ltd demonstrated a mixed performance in Q2, with robust growth in the transmission segment but challenges in metal forming. While revenue showed a positive trend, margins faced pressure due to increased costs. Despite this, the company exhibited strong profitability with a significant surge in Profit After Tax. The valuation metrics and key ratios indicate a solid financial position, suggesting a potential for sustained growth. Investors may closely monitor the company’s strategies to address margin challenges in the metal forming segment.

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Oswal Pumps IPO: 34x Subscription Sparks Confidence!

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - December 21, 2023

Q2FY24 Snapshot: Roto Pump's Stellar Rise in Revenue and Profits

Q2FY24 Snapshot: Roto Pump’s Stellar Rise in Revenue and Profits

Company Overview:

Roto Pump Ltd is dedicated to the manufacturing of Progressive Cavity Pumps, offering efficient and reliable pumping solutions across diverse industries, including wastewater, sugar, paper, paint, and more. The product portfolio encompasses Progressive Cavity Pumps (PCP), Twin Screws Pumps, and additional Positive Displacement (PD) pumps such as AODD and Gear pumps. The company boasts a global presence, exporting products to 55+ countries and achieving installations of 2,75,000 pumps worldwide.

Q2 Demonstrates Resilient and Impressive Topline Expansion

In the second quarter, the company experienced substantial consolidated revenue growth of 45.06% YoY (+49.48% QoQ), reaching 81.4 Cr. However, a simultaneous increase of 72.44% YoY (+87.28% QoQ) in raw material costs resulted in a gross profit of 49.8 Cr, accompanied by a contraction in gross margin by 600 bps YoY and 780 bps QoQ.

First-half struggles: Cash conversion lags behind expectations

During the first half of the year, the company faced a significant challenge in cash conversion, standing at 60% of the cash profit (EBITDA). Despite reporting an EBITDA earning of 33 Cr in H1FY24, operating cash from activities amounted to only 21 Cr, reflecting a 60% conversion of EBITDA. This indicates a notable decline from the previous year’s cash conversion rate of 98%, primarily attributed to an increase in trade receivables in the first half.

First-Half Gross Debt Sees Decline

In H1FY24, gross debt decreased by 21%, reaching 30 Cr compared to 38 Cr in H1FY23. However, net debt (gross debt-cash) increased by 46.32% in the first half compared to the previous year, standing at 15 Cr. Cash equivalents declined by 47% to 15 Cr in H1FY24 compared to the same period in the previous year.

EBITDA Skyrockets 78% YoY on Strong Margin Growth

In Q2FY24, consolidated EBITDA demonstrated an impressive growth of 78.55% YoY (+63.11% QoQ), reaching 20 Cr. This surge was propelled by margin expansion, with EBITDA margin expanding by 470 bps YoY and 211 bps QoQ to 25.24%, showcasing strong operating leverage. The company’s EBITDA margin surpasses that of its peer companies.

Valuation and Key Ratios

The stock is presently trading at a multiple of 30.4x EPS (TTM) of Rs 12.9, with a market price of 391, and an industry PE at 30.4x. The company values the stock at 1.02 times its book value. The EV/EBITDA multiple stands at 17.8x, while the industry median is at 20.5x. The trailing twelve months ROE and ROCE are 22.4% and 30.4%, respectively, and the interest coverage ratio is a robust 14.9x, indicating strong solvency.

Q2FY24 Result Update: Consolidated

➡️Consolidated revenue grew 45.06% YoY (+49.48% QoQ) to 81 Cr in Q2FY24 vs. 54 Cr in the previous quarter.

➡️Gross profit increased 31.81% YoY (+32.54% QoQ) to 50 Cr, with gross margin dropping 600 bps YoY and 780 bps QoQ due to higher raw material costs.

➡️EBITDA grew 78.55% YoY (+63.11% QoQ) to 20 Cr driven by margin expansion. EBITDA margin expanded 470 bps YoY and 211 bps QoQ to 25.24% led by operating leverage.

➡️Operating profit (EBIT) increased 83.14% YoY (+74.36% QoQ) to 17 Cr, with EBIT margin expanding by 440 bps YoY and 300 bps QoQ to 21.21%.

➡️PAT surged 77.98% YoY (+70.47% QoQ) to 13 Cr, and the PAT margin expanded by 290 bps YoY and 193 bps QoQ to 15.71%.

➡️Earnings per share (EPS) for the quarter stood at 4.07 Rs, compared to 2.39 Rs in the previous quarter.

Conclusion

Roto Pump Ltd demonstrated robust topline growth in Q2FY24, driven by an impressive surge in consolidated revenue and EBITDA. Despite poor cash conversion in the first half, the company showcased resilience with a decline in gross debt and notable margin expansion. The stock’s valuation appears favorable, and strong financial ratios, including ROE and ROCE, underscore the company’s solid performance. Overall, Roto Pump Ltd presents a promising outlook with a strategic focus on diverse industries and a global footprint.

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Sensex Jumps 450 Points Amid Renewed US-China Trade Hopes and Strong Sectoral Buying

Business, Equities, Expert Views, Investor Forum, IPO research, Market News, Markets, Research, Research Reports, Result Updates - December 21, 2023

Unlocking opportunities: Muthoot Microfin IPO analysis

Unlocking opportunities: Muthoot Microfin IPO analysi

Muthoot Microfin Ltd – IPO Note

Price Band: Rs. 277-291

Issue Date: 18th Dec-20th Dec

Recommendation: Apply

Company Overview:

Muthoot Microfin Limited, a subsidiary of the Muthoot Pappachan Group, is a microfinance institution dedicated to empowering women in rural areas across India. Specializing in micro-loans, the company offers a diverse portfolio of financial products, including group loans for livelihood solutions, individual loans, and life betterment solutions such as mobile phone and solar lighting loans. Additionally, it addresses health and hygiene needs through sanitation improvement loans. Muthoot Microfin Limited also provides secured loans in the form of gold loans and its unique Muthoot Small & Growing Business (MSGB) loans, emphasizing support for small businesses. The company’s focus on social impact is evident in its commitment to fostering economic growth and improving living standards in underserved communities.

Company Profile:

Muthoot Microfin Limited is a leading microfinance institution in India, with a strong focus on serving women entrepreneurs in rural areas. The company is a part of the Muthoot Pappachan Group, a diversified conglomerate with a presence in various sectors.
Muthoot Microfin is the fourth largest NBFC-MFI in India in terms of gross loan portfolio. The company has a wide reach across 18 states and UTs, with over 1,340 branches and 3.19 million active customers. Muthoot Microfin has a robust IT infrastructure and a focus on digital collections. The company also has a strong presence in Tamil Nadu, with a market share of over 16%.
In recent years, Muthoot Microfin has been expanding its operations beyond South India. The company has opened over 700 branches in North, West, and East India, constituting 52.76% of its total branches. This expansion is a key part of Muthoot Microfin’s strategy to become the leading microfinance institution in India.
Muthoot Microfin is a well-established and respected company with a strong track record of financial performance. The company is well-positioned to continue to grow and expand in the future.

The Objects of the Issue:

Fund existing operations and exciting new initiatives like tech upgrades and geographic reach.
Boost capital to meet future needs and ensure growth.
Gain stock market visibility and access future capital.
Facilitate sale of shares by existing investors.

Outlook and Valuation:

Historically concentrated in South India, Muthoot Microfin has recently expanded its operations into North, West, and East India.
As of March 31, 2023, the company has 596 branches in North, West, and East India, representing 50.85% of total branches.
This expansion strategy is aimed at increasing the company’s footprint and customer base across diverse regions in India.
Growth Strategy: The company’s strategy of expanding across various geographies in India is expected to contribute to its ongoing growth in the coming years.
Competitive Landscape: According to the Red Herring Prospectus (RHP), Muthoot Microfin identifies Equitas Small Finance Bank Limited, Ujjivan Small Finance Bank Limited, CreditAccess Grameen Limited, and Suryoday Small Finance Bank Limited as some of its listed competitors.
Understanding the competitive landscape helps investors assess the market dynamics and positioning of the company.
Valuation and Peer Comparison:

The company’s valuation is compared with peers in the microfinance and small finance banking sector.
Peers’ average P/E (Price-to-Earnings) ratio is 18.22x, ranging from 6.33x to 26.67x.
Muthoot Microfin’s P/E multiple, based on post-issue diluted FY23 EPS of Rs.11.54, is 25.23x at the higher price band.
The assessment suggests that, compared to peers, the issue is considered fully priced in or fairly valued.

At the higher price band, Muthoot Microfin’s listing market capitalization is projected to be approximately – Rs.4159.96 crores.

ISSUE OFFER
Price band (INR)	277-291
Bidding date	DEC 18 – DEC 20, 2023
Total IPO size (Cr)	960
Fresh issue (Cr)	760
Offer for sale (Cr)	200
Market lot	51
Face value (INR)	10
Listing on	NSE, BSE
Retail Allocation	35%
Rating	Subscribe

Competitive Strengths:

Strong Brand and Market Leadership: Backed by a highly established financial services conglomerate, ensuring trust and brand recognition. Holds a significant market share in India, demonstrating experience and operational expertise.
Reliance on rural economies makes the company susceptible to agricultural downturns and economic fluctuations. Fosters income generation and economic activity in rural areas.
Focus on underpenetrated regions and product diversification indicates significant growth potential.
Aligns with social responsibility goals, potentially attracting ESG-conscious investors.
Wide geographical reach with over 1,340 branches, ensuring customer accessibility.
In-house technology development facilitates efficient loan disbursement and monitoring.
“Mahila Mitra” app promotes convenient payment methods for customers.
Offers various loan products, mitigating risk and catering to diverse needs.

Key Strategies:

Expand branch network and identify borrowers across India, not just South.
Build user-friendly platforms for smooth loan access and service.
Offer new loans and leverage referrals to grow customer base.
Diversify Funding: Tap new investors beyond traditional channels to fuel expansion.
Highlight social impact and invest in talent for sustainable growth.

Key Concerns:

Rural Vulnerability: Microfinance primarily serves rural populations, susceptible to agricultural downturns, weather fluctuations, and economic shifts. These external factors can impact borrowers’ repayment capacity and expose the company to loan defaults.
Regulatory Risks: The microfinance sector faces evolving regulations, some potentially affecting interest rates, loan sizes, and lending practices. Adapting to these changes without compromising profitability could be challenging.
Competition: The microfinance space is increasingly competitive, with established players and new entrants vying for market share. Maintaining a competitive edge in terms of interest rates, customer service, and technology could be costly.
High Credit Exposure: Muthoot Microfin’s loan portfolio is concentrated in a specific market segment. This concentration, while offering potential rewards, also exposes the company to higher risks if economic conditions in that segment deteriorate.
Customer Risk: Microfinance institutions (MFIs) often serve customers in the lower-income segments. Economic uncertainties or shocks affecting these customers may impact their ability to repay loans, leading to increased default risks.
Interest Rate Risk: The microfinance industry is vulnerable to interest rate fluctuations. Changes in interest rates can affect borrowing costs for both the MFI and its customers, influencing repayment dynamics.

Non-Performing Assets (NPA) Risk: An increase in non-performing assets or provisions can adversely affect the company’s financial health. This may result from economic downturns, borrower distress, or other factors impacting the repayment capacity of the customer base.

Company	Total income (ML)	EPS	P/E	NAV	Face value/Share
Muthoot Microfin Limited	14463.44	14.19	20.5	139.15	10
Peer group				1
Equitas Small Finance Bank Limited	48314.64	4.71	17.57	46.44	10
Ujjivan Small Finance Bank Limited	47541.90	5.88	6.33	20.25	10
CreditAccess Grameen Limited	35507.90	52.04	26.67	326.89	10
Spandana Sphoorty Financial Limited	14770.32	1.74	381.72	436.58	10
Bandhan Bank Limited	183732.50	13.62	17.32	121.58	10
Suryoday Small Finance Bank Limited	128811	7.39	22.31	149.28	10
Fusion Micro Finance Limited	17999.70	43.29	12.60	230.74	10

PARTICULARS (In millions)	FY23	FY22	FY21
Equity share capital	1401.98	1333.33	1141.71
Other equity	14856.51	12032.46	7757.19
Net worth	16258.49	13365.79	8898.90
Total Borrowings	51230.25	32969.85	25382.26
Revenue from Operations	12906.45	7286.23	6227.84
EBIDTA	7884.86	4256.60	3272.17
PBT	2128.70	647.21	90.55
Net profit	1638.89	473.98	70.54
PAT	1639	474	70.4
Total assets	85292	55915	41839

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BEML Surges by 7.86% on Likely Upgrade to Navratna Status

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - December 18, 2023

Record-breaking CPCU Conversions Propel Affle India's 21.06% Revenue Growth

Record-breaking CPCU Conversions Propel Affle India’s 21.06% Revenue Growth

Company Overview:

Affle India is a leading IT company engaged in providing mobile advertisement and software development services. The company operates in two business segments: Consumer Platform, delivering consumer recommendations and conversions through relevant mobile advertising, and Enterprise Platform, enabling offline businesses to go online through app development, O2O commerce, and data analytics. Affle India has a robust global reach in North America, Japan, Korea, and Australia.

Consumer Platform Thrives, Enterprise Platform Faces Challenges

In Q2FY24, the cost per converted user (CPCU) business model drove 92.9% of revenue, with the Consumer Platform segment growing 16.61% YoY. The Enterprise Platform revenue declined by 23.24% YoY, resulting in a standalone revenue surge of 15.51% YoY. The robust growth in the CPCU business model offset the slowdown in the enterprise platform segment during the quarter.

Record-breaking CPCU Conversions Propel Revenue Growth

During the quarter, the CPCU business achieved 72 Mn conversions, compared to 64.7 Mn in the same quarter last year. The average CPCU rate was 55.6 Rs, contributing to robust revenue growth of 21.06% YoY, reaching 400 Cr in Q2FY24.

Resilience Amid Challenges: Impact of Online Gaming and Fintech

Despite a combined impact of about Rs. 250 million from online gaming in India and the Fintech vertical in developed markets, the company delivered its highest revenue and EBITDA ever in this quarter and in the CPCU business. Regulatory changes towards the applicability of GST in the online gaming industry in India caused a pullback effect of about Rs. 110 million.

Valuation and Key Ratios

As of now, the stock trades at a multiple of 66x earnings per share (EPS) (TTM) of Rs 19.8, with a market price of Rs 1,244. The stock is valued at 10.4 times its book value of Rs 120 per share. In terms of EV/EBITDA, the company ranks 4th with a multiple of 46.61x, compared to the industry median of 17.88x. The trailing twelve-month return on equity (ROE) and return on capital employed (ROCE) stand at 18.5% and 20.2%, respectively. The interest coverage ratio is robust at 20.2x, indicating the company’s solvency.

Q2FY24 Result Update: Standalone

➡️In Q2FY24, standalone revenue grew 15.51% YoY (-2.41% QoQ) to 134Cr, driven by robust growth in the CPCU business.

➡️Consumer platform segment reported revenue of 131 Cr, growing 16.61% YoY, while the enterprise segment showed a slowdown in revenue by 23.24% YoY, resulting in a 15.51% growth in standalone revenue.

➡️EBITDA surged 25.16% YoY (+20.39% QoQ) to 21 Cr, driven by the consumer platform segment. EBITDA margin improved 120 bps YoY and 300 bps QoQ to 15.86%.

➡️Operating profit (EBIT) increased by 27.59% YoY (+22.83% QoQ) to 19 Cr, with an EBIT margin jumping by 130 bps YoY and 290 bps QoQ to 14.33%.

➡️Profit after tax (PAT) saw a remarkable surge of 22.69% YoY (+16.63% QoQ) to 18 Cr, and the PAT margin expanded by 80 bps YoY and 220 bps QoQ to 13.58%.

➡️Earnings per share (EPS) for the quarter stood at 1.30 Rs, compared to 1.11 Rs in the previous quarter.

Conclusion

Affle India’s Q2FY24 results reflect a strong performance driven by the robust growth in the CPCU business model, offsetting challenges in the enterprise platform segment. Despite external impacts from online gaming and Fintech, the company achieved its highest revenue and EBITDA, showcasing resilience and adaptability. The valuation and key ratios underscore the company’s solid financial standing. Affle India continues to demonstrate its position as a leading player in mobile advertising and software development services.

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BHEL Secures Major Power Project Contracts from Adani Group

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - December 15, 2023

BDL Lands Massive Rs 750 Cr Army Missile Order

Company Overview:

Bharat Dynamics Ltd is a government entity under the Ministry of Defence, Government of India. The company is actively involved in manufacturing and supplying guided missiles, underwater weapons, airborne products, and other allied defense equipment for the Indian Army. Currently, it operates three manufacturing facilities in Hyderabad, Telangana, Bhanur, and Vishakhapatnam, Andhra Pradesh. Recently, BDL secured a significant supply order of Anti-Tank Guided Missiles (ATGM) worth Rs 750 Cr from the Indian Army.

Robust New Order Book in Q2:

In Q2FY24, Bharat Dynamics Ltd experienced a surge in new orders, totaling Rs 1,659 Cr from April 23 to September 30, 2023. This strengthened the company’s total order book to an impressive Rs 20,766 Cr as of September 30, 2023. Notable orders include the ATGM order (Rs 750 Cr), upgraded version of Akash Missiles (Rs 247 Cr), LBRM (Rs 254 Cr), and ULPGM (Rs 105 Cr).

Robust Sequential Revenue Growth

During Q2FY24, the standalone revenue from operations witnessed remarkable growth, increasing by 106.84% QoQ and 15.15% YoY, reaching Rs 616 Cr. This substantial revenue growth was attributed to the higher order book of Rs 1,659 Cr in Q2FY24. While the Cost of Goods Sold (COGS) rose by 118.41% QoQ and 13.88% YoY to Rs 271 Cr, the gross profit for the quarter surged by 98.55% QoQ and 16.17% YoY, amounting to Rs 344 Cr. The gross margin experienced a YoY increase of 50 basis points but declined by 230 basis points QoQ.

Improved Performance QoQ:

BDL’s Q2FY24 performance was impressive, partially attributed to the realization of some lagged revenue from FY23. Key highlights include a 42.8% YoY increase in EBITDA to INR 1.3 billion, with an EBITDA margin improvement of 422 basis points to 21.8%. Other expenses rose by 41% YoY due to repairs and provisions. Billed receivables increased, offset by a decline in unbilled receivables. Other income rose by 74% YoY to INR 783 million. The order book at end-September 2023 stood at INR 200 billion, indicating a robust book-to-bill ratio of 9.3x.

Valuation and Key Ratios

As of now, the stock trades at a multiple of 59.4x earnings per share (EPS) (TTM) of Rs 23.2, with a market price of Rs 1,381. The stock is valued at 7.47 times its book value of Rs 184 per share. In terms of EV/EBITDA, the company ranks 3rd with a multiple of 33.9x, compared to the industry median of 22.4x. The trailing twelve-month return on equity (ROE) and return on capital employed (ROCE) stand at 11.3% and 15.6%, respectively. The interest coverage ratio is robust at 175x, indicating the company’s solvency.

Q2FY24 Result Update: Consolidated

➡️In Q2FY24, standalone revenue grew 15.15% YoY (+106.84% QoQ) to 616 Cr, driven by the strong new order book in the quarter.

➡️Gross profit increased 16.17% YoY (+98.55% QoQ) to 344 Cr, while gross margin dropped 230 bps QoQ (+50 bps YoY) to 55.92%.

➡️EBITDA surged 42.82% YoY (-510.66% QoQ) to 134 Cr, driven by robust growth in topline and margin improvement. EBITDA margin improved 400 bps YoY to 21.77%.

➡️Operating profit (EBIT) increased by 60.75% YoY (-335.44% QoQ) to 116 Cr, with an EBIT margin jumping by 530 bps YoY to 18.94%.

➡️Profit after tax (PAT) saw a remarkable surge of 94.02% YoY (+251.76% QoQ) to 147 Cr, and the PAT margin expanded by 970 bps YoY and 980 bps QoQ to 23.89%.

➡️Earnings per share (EPS) for the quarter stood at 8.04 Rs, compared to 2.28 Rs in the previous quarter.

Conclusion

Bharat Dynamics Ltd demonstrated a robust performance in Q2FY24, marked by substantial revenue growth, a strengthened order book, and improved margins. The company’s strategic positioning in the defense sector, coupled with a solid financial foundation, reflects positively in its valuation metrics. With a significant order pipeline and efficient financial management, BDL remains well-positioned for sustained growth in the defense manufacturing sector.

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