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D-Mart's Q3 Results Miss Estimates, Faces Margin Pressure and Leadership Change

DMart Q2FY24 Working Capital Boost: Inventory and Payable Days Decrease

DMart Q2FY24 Working Capital Boost: Inventory and Payable Days Decrease

Company Name: Avenue Supermarts Ltd | NSE Code: DMART | BSE Code: 540376 | 52 Week high/low: 4,229/3,292 | CMP: INR 4,062 | Mcap: INR 2,64,411 Cr | PE: 113

Company Overview:

Avenue Supermart is primarily engaged in the business of retail supermarts under the brand name “D-Mart.” The company offers products in three categories at its stores: Food, Non-food, and Merchandise & Apparel. The Food category includes groceries, dairy, staples, beverages, fruits, and vegetables. Non-food comprises home care, personal care, toiletries, and general merchandise, while Merchandise & Apparel includes bed & bath, toys & games, garments, and footwear. Over the last year, the number of stores increased by 34, bringing the total count to 336, with a presence across 22 cities in India as of September 2023.

Q2 Sees Surge in Topline Growth Despite 9.09% YoY Dip in PAT

In Q2FY24, D-Mart reported an 18.67% YoY growth in topline, while PAT was down 9.09% YoY to 623. The slowdown in PAT was attributed to an increase in operating expenditure (up 18.2% YoY) and tax rate (up 18.5% YoY). This led to a decline in PAT margin by 150 bps YoY and 60 bps QoQ to 4.94% in Q2FY24. The sudden increase in tax expenses is due to the absence of a tax benefit in Q2FY23.

Q2 Maintains EBITDA Stability Amid Margin Decline

The company reported an EBITDA of 1,005 Cr, growing 12.66% YoY but declining 2.93% QoQ. The EBITDA margin during the quarter dropped 42 bps YoY and 75 bps QoQ, primarily due to higher COGS and operating expenditure. Purchase stock increased by 19.3% YoY to 10,771 Cr, while operating expenditure grew 18.2% QoQ to 847 Cr.

Accelerate Working Capital: Optimize Inventory and Payable Days

Lower inventory and payable days led to a faster working capital cycle. Inventory days reduced by 2.1 days to 30.3 days in Q2FY24, and payable days declined 1.2 days to 6.4%. This resulted in a Net working capital day (Inventory days – Payable days) of 23.9 days in H1FY24 compared to 24.8 days in H1FY23, indicating improved working capital efficiency.

Key Operating Metrics

Total bill cuts grew 36% half-yearly to 14.7 Cr in H1FY24. Revenue from sales per retail business area sq ft increased by 5% half-yearly to 16,729 in H1FY24. Like-for-like growth, representing the growth in revenue from the sale of the same store, stood at 8.6% in H1FY24 compared to 41.6% in H1FY23.

Valuation and key ratio

The stock is currently trading at a multiple of 113x EPS (TTM) 35.9 Rs, at the current market price 4,062 with an industry PE at 61.7x. The company’s stock is valued at 15.2 times its book value of 268 Rs per share. In EV/EBITDA multiple, the company holds the 1st position with a multiple of 67.43x, surpassing the industry median of 27.64x. Trailing twelve-month ROE and ROCE stood at 16% and 20.1%, respectively, while the interest coverage ratio demonstrated the company’s solvency at 53.3x in Q2FY24.

Q2FY24 Results Updates – Consolidated

➡️In Q2FY24, Revenue grew 18.67% YoY (+6.4% QoQ) to 12,624 Cr, driven by an increase in volumes.

➡️Gross profit increased 15.13% YoY (+2.8% QoQ) to 1,852 Cr, while gross margin declined 45 bps YoY and 50 bps QoQ to 14.67%.

➡️EBITDA surged 12.66% YoY (-2.93% QoQ) to 1,005 Cr, driven by increased revenue, with EBITDA margin dropping 42 bps YoY and 75 bps QoQ to 7.96%.

➡️Operating profit (EBIT) increased 13.77% YoY (-4.87% QoQ) to 831 Cr, while EBIT margin declined 28 bps YoY and 78 bps QoQ to 6.58%.

➡️PAT was down 9.09% YoY (-5.37% QoQ) to 623 Cr due to the decline in margins, with PAT margin dropping 150 bps YoY and 60 bps QoQ to 4.95%.

➡️EPS for the quarter stood at 9.58 Rs compared to the previous quarter at 10.12 Rs.

Conclusion:

D-Mart showed growth in Q2FY24 with an 18.67% YoY increase in revenue, but PAT declined by 9.09% due to higher operating expenses and tax rates. EBITDA remained robust, although margins dipped. The company demonstrated improved working capital efficiency, and key metrics like total bill cuts and like-for-like growth exhibited positive trends. Valuation metrics suggest a premium stock, and Q2FY24 results indicate a focus on volume-driven revenue growth.

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India's Inflation Soars in November: A Look at the Drivers and Policy Response

India’s Inflation Soars in November: A Look at the Drivers and Policy Response

Introduction:

In November, India experienced a notable rebound in inflation, primarily attributed to a surge in food prices. The increase, marked by various factors, poses challenges to the ongoing efforts to maintain price stability. This report delves into the key contributors to the inflation rebound, its implications, and potential considerations for policymakers.
➡️India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 5.70% in November 2023, driven by higher food prices.
➡️This marks a rise from 4.87% in October and brings inflation closer to the upper end of the Reserve Bank of India’s (RBI) target range of 2-6%.
➡️The increase in food prices, which account for nearly half of the inflation basket, was led by items like onions, tomatoes, and pulses.
➡️Core inflation, which excludes volatile food and energy prices, remained subdued at 4.3%.

REASONS FOR THE INFLATION REBOUND:

I. Unfavorable weather conditions: Heavy rains and unseasonal hailstorms in key agricultural regions disrupted crop production and led to supply-chain disruptions.
II. Festive season demand: Increased demand for food items during the festive season put a strain on existing supplies, pushing prices higher.
III. Global factors: The ongoing war in Ukraine and other geopolitical uncertainties continue to impact global commodity prices, including food and energy.

IMPLICATIONS:

I. Impact on Consumer Purchasing Power: The rise in inflation, particularly driven by higher food prices, could potentially erode consumer purchasing power. This may have implications for household budgets and discretionary spending, impacting overall economic activities.
II. Policy Challenges: The inflation rebound poses challenges for policymakers tasked with maintaining a delicate balance between price stability and supporting economic growth. Policymakers may need to reassess monetary and fiscal measures to address emerging inflationary pressures.
III. Interest rates: It can lead to higher interest rates, which can make it more expensive for businesses to borrow and invest.

POLICY RESPONSE TO INFLATION:

I. Monetary Measures:
The Reserve Bank of India (RBI) has proactively responded to the inflationary pressures by implementing a series of repo rate hikes. Since May 2023, the central bank has raised the repo rate four times. This monetary tightening is a strategic move aimed at curbing inflation and maintaining price stability.
II. Future Monetary Policy Outlook:
Given the persistent inflation challenges, there is a likelihood that the RBI will continue its monetary policy tightening in the upcoming months. The objective is to bring inflation back within the central bank’s target range, demonstrating a commitment to inflation control.
III. Government Intervention:
Apart from monetary measures, the government is expected to take initiatives to address supply-chain disruptions and enhance agricultural productivity. These interventions are crucial in tackling the root causes of the inflationary pressures, particularly in the context of rising food prices.
IV. Supply-Chain Management:
Government efforts may focus on fortifying supply chains to minimize disruptions and ensure the smooth flow of essential goods. Enhancing the resilience of supply chains is essential for stabilizing prices and mitigating the impact of supply-side shocks.
V. Agricultural Productivity:
To address inflation at its source, the government may implement policies aimed at boosting agricultural productivity. This could involve investments in technology, infrastructure, and agricultural practices to improve output and reduce dependency on imports.

FUTURE OUTLOOK:

I. The future trajectory of inflation will depend on several factors, including global commodity prices, weather conditions, and the success of government policies.
II. Experts predict inflation could stay above 5% in the next few months due to seasonal factors and possible supply-side bottlenecks.
III. The RBI’s policy decisions will be crucial in managing inflation and ensuring economic stability

CONCLUSION:

In conclusion, November’s inflation surge, led by higher food prices, poses a significant challenge to India’s price stability objectives. The RBI’s repo rate hikes signal a proactive approach to control inflation, complemented by expected government interventions targeting supply chains and agricultural productivity. Future inflation trends hinge on global factors and policy effectiveness. With projections indicating inflation above 5%, the RBI’s decisions will be pivotal for sustaining economic stability.

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RBI Charts Course for Sustainable Growth: Inflation Control as the Key

Interest Payment Burden to reduce in FY26

RBI Charts Course for Sustainable Growth: Inflation Control as the Key

RBI Charts Course for Sustainable Growth: Inflation Control as the Key

Introduction:

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) conducted its review on December 2023-2024, assessing both global and domestic economic conditions. The committee made decisions pertaining to key interest rates and provided insights into the outlook for the economy.

KEY DECISIONS:

In response to the prevailing and evolving macroeconomic conditions, the Monetary Policy Committee (MPC) convened on December 8, 2023, and arrived at several key decisions. The committee opted to maintain the policy repo rate at 6.50 percent within the liquidity adjustment facility (LAF). Additionally, the standing deposit facility (SDF) rate was held steady at 6.25 percent, while both the marginal standing facility (MSF) rate and the Bank Rate remained unchanged at 6.75 percent.

The MPC’s strategic focus is on gradually eliminating accommodation to ensure that inflation steadily approaches the set target. At the same time, the committee intends to offer the essential assistance for economic growth. These actions are consistent with the broader goal of meeting the medium-term target for Consumer Price Index (CPI) inflation, which is set at 4% within a +/-2% band, and thereby contributing to the development of sustainable growth.

GLOBAL ECONOMIC LANDSCAPE:

1. Global Growth: The committee acknowledged a varied deceleration in global growth among economies.
2. Inflation: Global inflation showed a downward trend but remained above target levels, with persistent underlying inflationary pressures.
3. Market Sentiments: Positive developments were noted since the previous MPC meeting, marked by declining sovereign bond yields, US dollar depreciation, and strengthened global equity markets. However, emerging market economies faced ongoing challenges with volatile capital flows.

DOMESTIC ECONOMIC OVERVIEW:

1. Economic Resilience: The domestic economy demonstrated resilience, evidenced by a robust 7.6 percent year-on-year growth in real GDP in Q2:2023-24. This growth was supported by strong investment and government consumption, mitigating the impact of net external demand.
2. Prospects for Consumption and Investment: Continued strength in manufacturing, buoyant construction, and a gradual rural sector recovery are anticipated to brighten household consumption prospects. Healthy balance sheets of banks and corporates, normalized supply chains, and rising public and private capital expenditure are expected to bolster future investments.
3. GDP Growth Projection: Taking into account various factors, the MPC projected real GDP growth for 2023-24 at 7.0 percent, with Q3 at 6.5 percent and Q4 at 6.0 percent. Projections for Q1:2024-25 are 6.7 percent, Q2 at 6.5 percent, and Q3 at 6.4 percent, with risks evenly balanced.

INFLATION OUTLOOK:

1. CPI Inflation: Headline inflation fell to 4.9 percent in October 2023 due to corrections in vegetable prices, fuel deflation, and broad-based moderation in core inflation. Risks include uncertainties in food prices, base effects, and volatile crude oil prices.
2. Inflation Projection: CPI inflation is projected at 5.4 percent for 2023-24, with Q3 at 5.6 percent and Q4 at 5.2 percent. Q1:2024-25 is expected at 5.2 percent, Q2 at 4.0 percent, and Q3 at 4.7 percent, with risks evenly balanced.

MPC DECISIONS AND RESOLUTIONS:

1. Policy Rates: The MPC unanimously voted to keep the policy repo rate unchanged at 6.50 percent.
2. Focus on Inflation Alignment: The majority of the MPC expressed commitment to withdrawing accommodation to align inflation progressively to the target while supporting growth. One member, Prof. Jayanth R. Varma, expressed reservations on this aspect.

FORWARD GUIDANCE:

The MPC emphasized the need for sustained disinflation, monitoring food price pressures, and remaining vigilant to potential challenges in crude oil prices and financial markets. The current policy stance is actively disinflationary, with preparedness for timely policy actions if warranted.

CONCLUSION:

In conclusion, the RBI’s Monetary Policy Review for December 23-24 reflects a cautious approach, balancing the need for inflation control with support for economic growth amidst a dynamic global and domestic environment.

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Beyond boundaries: G20 Influence elevates Indian markets to new peaks

British Fashion Titan ASOS Makes Exclusive Indian Debut Through Ajio

Strategic Expansion: Trident Plans 14,470 Mn CAPEX by March 2024

Strategic Expansion: Trident Plans 14,470 Mn CAPEX by March 2024

Company Name: Trident Ltd | NSE Code: TRIDENT | BSE Code: 521064 | 52 Week high/low: 43.8/25 | CMP: INR 36.2 | Mcap: INR 18,427 Cr | PE: 40.4

Company Overview:

Trident Ltd is a textile company engaged in the manufacturing, trading, and selling of textile products such as yarn, terry towels, and bed sheets. Additionally, the company also manufactures paper and chemicals. It operates in three revenue segments: Bath & Bed Linen, Yarn, and Paper. With a presence in 150+ countries globally and a workforce of 13,000+, Trident Ltd is a prominent player in the industry.

Robust Revenue Growth Driven by Increased Demand

In Q2FY24, the company experienced a significant revenue growth of 24.1% YoY (+20.06% QoQ), reaching 1,761 Cr. This surge was attributed to the rising demand for textile and paper products. The Textile segment’s revenue grew by 21.48% YoY to 1,465 Cr, while the Paper segment witnessed a 13.43% YoY increase, reaching 296 Cr. Notably, Bed & Bath Linen contributed 57% to the total revenue, with Yarn and Paper contributing 27% and 17%, respectively.

Margin Improvement – EBITDA/EBIT/PAT – 350 bps/390 bps/445 bps YoY

The company’s profitability margins saw improvement in Q2FY24, driven by strategic initiatives such as higher retail price points, a focus on specific product categories, increased plant capacity utilization, and the development of new products. EBITDA margin jumped 350 bps YoY to 13.6%, while EBIT and PAT margins expanded by 390 bps YoY to 8.6% and 445 bps YoY to 7.25%, respectively.

Company Plans CAPEX of 14,470 Mn to Increase Capacity in All Segments by March 2024

Trident Ltd plans a substantial capital expenditure of 14,470 Mn to boost capacity across its segments. In the Yarn segment, there is a targeted increase in capacity by adding 98,496 spindles by December 2023 and 94,848 spindles by March 2024. Bath Linen and Chemical segments also have planned capacity expansions, requiring investments of 11,000 Mn and 1,000 Mn, respectively.

Profitability Grew 222% YoY (+41% QoQ) Led by Lower Input Prices and Demand Scenario

The company reported a remarkable 222% YoY growth and 41% QoQ growth in profitability (PAT), reaching 127 Cr during Q2FY24. This robust performance was fueled by margin improvement, lower input prices, and increased demand. PAT margin increased by 445 bps YoY and 110 bps QoQ, reaching 7.25% in Q2FY24, with a one-time exceptional gain of 36 Cr impacting the quarter.

Valuation and key ratio

As of now, the stock is trading at a multiple of 40.4x EPS (TTM) at the current market price of 36.2, with an industry PE at 27x. The company’s stock is valued at 4.4 times its book value of 8.14 Rs per share. In EV/EBITDA multiple, Trident holds the 4th position with a multiple of 18.65x, surpassing the industry median of 15.21x. In H1FY24, the ROE and ROCE stood at 10.5% and 11.1%, respectively, while the interest coverage ratio demonstrated the company’s solvency at 7.52x.

Q2FY24 Results Update: Standalone

➡️In Q2FY24, the company witnessed a revenue growth of 24.1% YoY (+20.06% QoQ) to 1,761 Cr, driven by an increase in the retail price point. Textile revenue increased by 21.48% YoY, while paper revenue increased by 13.43% YoY.

➡️Gross profit increased by 42.5% YoY (+13.84% QoQ) to 847 Cr due to a moderate rise in raw material costs. While gross margin improved by 620 bps YoY, it declined by 260 bps QoQ to 48.08% due to an increase in COGS QoQ.

➡️EBITDA surged by 67.54% YoY (+5.05% QoQ) to 240 Cr, with EBITDA margin expanding by 350 bps YoY but declining by 190 bps QoQ to 13.6% in Q2FY24.

➡️Operating profit (EBIT) grew by 131.13% YoY (+7.7% QoQ) to 152 Cr, with EBIT margin increasing by 395 bps YoY but declining by 99 bps to 8.6% in Q2FY24.

➡️PAT grew by 221.89% YoY (+41.36% QoQ) to 127 Cr, driven by margin improvement and an increase in prices. PAT margin jumped by 445 bps YoY and 110 bps QoQ to 7.25%.

➡️EPS for the quarter stood at 0.25 Rs, compared to the previous quarter’s 0.18 Rs.

Conclusion:

Trident Ltd showcased robust Q2FY24 results, marked by substantial revenue growth, margin improvement, and strategic expansion plans. With a strong global presence, diversified product portfolio, and prudent financial metrics, the company is poised for continued success in the textile industry. Investors may find the stock’s current valuation and key ratios favorable, reflecting Trident’s solid performance and growth prospects.

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Strategic Partnerships Fuel One97’s Financial Turnaround

India: Infrastructure Set to Outpace IT as the Growth Engine

Beyond boundaries: G20 Influence elevates Indian markets to new peaks

Beyond boundaries: G20 Influence elevates Indian markets to new peaks

Introduction:

The recent rally in key benchmark indices, particularly in the Indian stock market, has caught the attention of market experts and participants. This is a significant milestone, marking the first time the index has crossed the 20,000 mark. It took 52 sessions for Nifty to climb from 19,000 to 20,000, indicating a steady and sustained upward trend. Sensex regained the 67,000 mark, this further emphasizes the positive sentiment in the market, with both major indices reaching new highs. Nifty reached a new peak of 20,008 after 36 sessions.

This surge is attributed to a participatory rally involving Foreign Institutional Investors (FIIs), Domestic Institutional Investors (DIIs), and Indian retail investors. Additionally, recent triggers, including the success of the G20 summit, have played a pivotal role in attracting global investors to the Indian markets.

Participatory Rally by Diverse Investors:

The driving force behind the rally in Indian indices can be attributed to the collective participation of various investor groups. FIIs, DIIs, and Indian retail investors have all played significant roles in contributing to the upward momentum. The continuous inflows from these diverse sources have created a robust and inclusive market environment.

• FIIs Inflows: Foreign Institutional Investors have been actively participating in the Indian market, attracted by the country’s economic resilience and growth potential. The influx of foreign capital has not only provided liquidity but has also signaled global confidence in the Indian market.

• DIIs and Retail Investors: Domestic Institutional Investors, along with a surge in participation from retail investors, have added depth to the market rally. Increased retail investor activity, facilitated by easier access to markets and digital platforms, has injected vitality into the markets.

G20 Success and Global Investor Confidence:

The recent success of the G20 summit has acted as a significant catalyst, drawing global investors’ attention towards the Indian markets. The resounding success in addressing global economic challenges and fostering cooperation among nations has positioned India as an attractive investment destination. The G20’s success has injected momentum into the markets, yet valuations have room to surpass previous peaks. Increased bilateral trades, particularly in segments like pipes and cables, are anticipated. Sectors such as Railways, Shipping, and Logistics stand to gain from recent announcements. With strengthened corporate earnings, indices are poised for further growth in the near to medium term. Market euphoria has propelled indices past the 20,000 mark, eyeing 20,500 levels this month. Optimism, fueled by India’s strong showing at the G20 summit, is a key driver.

The Nifty has hit 20,000 in its second attempt after July 2023, propelled by strong domestic investment flows and mixed or negative overseas flows. In the face of global concerns, India’s achievement in space and foreign diplomacy has strengthened confidence. Despite their strong advance, smallcap and midcap companies warrant a reassessment of asset allocation and consideration of profit booking or capital raising.

• International Perception: The positive outcomes of the G20 summit have enhanced the international perception of India as a stable and growth-oriented economy. This has instilled confidence among global investors, leading to increased allocations to Indian equities.

• Attractiveness of Emerging Markets: Amid global uncertainties, emerging markets, including India, are viewed as promising investment destinations. The G20 success has underscored India’s commitment to economic reforms and sustainable development, further elevating its status among emerging market economies.

Conclusion:

The global financial markets have witnessed a remarkable phenomenon in recent months, with many key indices reaching unprecedented all-time highs. This surge has captured the attention of investors, analysts, and policymakers alike. The participatory rally in the Indian stock market, driven by the collective involvement of FIIs, DIIs, and retail investors, is a testament to the overall confidence in the country’s economic trajectory. The success of the G20 summit has amplified this sentiment, attracting global investors seeking stable and promising opportunities. As the Indian market continues to evolve, monitoring the sustained inflows and the impact of global events will be essential for investors and market participants to navigate and capitalize on emerging opportunities.

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Strategic Partnerships Fuel One97’s Financial Turnaround

AEL Resilient Q2 Performance in Energy and Airport Sectors

AEL Resilient Q2 Performance in Energy and Airport Sectors

AEL Resilient Q2 Performance in Energy and Airport Sectors

Company Name: Adani Enterprise Ltd | NSE Code: ADANIENT | BSE Code: 512599 | 52 Week high/low: 4,190/1,017 | CMP: INR 2,362 | Mcap: INR 2,69,240 Cr | PE: 103

Company Overview:

Adani Enterprise Ltd, a key player in the Adani Group, operates in the sectors of energy & utility, road & transport, FMCG & digital, and primary industries. The business is divided into two segments: Incubating Business (energy, airport, and road) and Established Business (retail, digital, and mining). AEL manages 8 airports in India, serving 23% of the total passenger base, and has 14 ongoing road projects covering 5000+ lane km. In the energy sector, the existing cell & module plant capacity is 2 GW, with an additional 2 GW in the new plant. AEL boasts the largest wind turbine generator globally, with a capacity of 5.2 MW, earning recognition for global WTG supply.

EBITDA gained momentum driven by strong incubating business:

EBITDA witnessed a robust 30% year-over-year growth in Q2FY24, primarily attributed to the outstanding performance of the Incubating Business segment, encompassing Energy and Airports. The Energy business demonstrated an extraordinary 11x YoY EBITDA surge, reaching 628 Cr, while the Airport business experienced a notable 15% YoY increase, totaling 568 Cr. Consequently, the consolidated EBITDA exhibited a noteworthy 30% YoY upswing (with a marginal -3.72% QoQ decline), amounting to 2,430 Cr, despite a reduction in overall revenue. In contrast, the Established Business segment, specifically IRM, witnessed a modest 4.4% YoY decline in EBITDA, settling at 1,063 Cr, whereas the Mining business demonstrated a commendable 17% YoY EBITDA growth.

Ensuring Sustained and Resilient Growth in Our Incubating Business

Incubating business exhibited robust growth, with combined revenue from airport and road operations surging 49% YoY to 1,946 Cr, driven by stellar operational performance. Passenger volume soared by 31% YoY to 21.4 Mn in Q2FY24 compared to 16.3 Mn in Q2FY23. Air traffic movement witnessed a 17% increase, while cargo experienced a 5% decline during the quarter. In the solar, wind, and data center segment, combined revenue surged by an impressive 216% YoY, reaching 1,939 Cr. This significant growth was attributed to a remarkable 205% YoY increase in module sales, totaling 630 compared to 206 in Q2FY23.

Margin improvement but PAT declined 23% YoY

In Q2FY24, the PAT saw a 23% YoY decline (-50% QoQ) to 333 Cr, attributed to a rise in the tax rate to 50% from 34% in Q2FY23. EBITDA and PAT margins showed improvements of 590 bps YoY and 35 bps YoY, respectively, driven by lower raw material costs and total Opex. The management maintains a 56% YoY reduction in raw material costs and an 8.17% YoY increase in operating costs.

Latest Developments in Data Center and ANIL Ecosystem Business:

In the Data Center segment, Chennai Phase-I 17 MW project is operational, Noida project- 50 MW was completed 63% of overall project and Hyderabad project -48 MW was completed 65% of overall project. In the ANIL Ecosystem business, solar manufacturing total operational capacity was at 4.0 GW, Wind Turbine manufacturing received final type certificate for prototype 1 and Nacelle & Hub facility – commenced commercial production.

Valuation and key ratio

The stock is currently trading at a high multiple of 103x EPS(TTM) 21.4 Rs at current market price of 2,362, with an industry PE of 38.7x. The company is valued at 2.5x its book value of 322 Rs per share. In EV/EBITDA, AEL ranks 5th among peers at 27x, compared to the industry median of 19.3x. The trailing twelve-month ROE and ROCE are 9.63% and 9.49%, respectively. The interest coverage ratio is 1.94x, indicating strong solvency.

Q2FY24 result update: Consolidated

➡️In Q2FY24, Consolidated revenue declined by 41% YoY (-11.5% QoQ) to 22,517 Cr, attributed to a slowdown in the IRM and mining business.

➡️Gross profit witnessed a 13% YoY growth (-10.5% QoQ) to 9,397 Cr, driven by a significant 56% YoY reduction in raw material costs. The gross margin showed a robust 19% YoY increase, reaching 41.7%.

➡️EBITDA surged by 30% YoY (-3.7% QoQ) to 2,430 Cr, propelled by the strong performance of incubating businesses, including energy and airport & road ventures. EBITDA margin increased by 590 bps YoY and 87 bps QoQ, reaching 10.7%.

➡️Operating business (EBIT) grew by 25% YoY (-7.5% QoQ) to 1,673 Cr, with EBIT margins expanding by 390 bps YoY and 31 bps QoQ, reaching 7.4%.

➡️PAT declined by 22.9% YoY (-50.8% QoQ) to 333 Cr, primarily due to an increased tax rate of 50% in Q2FY24 compared to 34% in Q2FY23.

➡️EPS for the quarter stood at 2.92 Rs, down from 5.94 Rs in the previous quarter.

Conclusion:

Adani Enterprise Ltd Q2FY24 showed strong EBITDA growth from thriving energy and airport businesses, offsetting an overall revenue decline. Despite a dip in PAT due to increased tax rates, the company remains resilient with a focus on sustained growth in incubating sectors. Key ratios indicate a high stock multiple and strong solvency. Ongoing developments in data centers and the ANIL ecosystem underscore AEL’s commitment to innovation and expansion.

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Gold and Silver Aim for Key Resistance Zones

Q2 Success: Cressanda's EBITDA Sees Remarkable Growth

Q2 Success: Cressanda’s EBITDA Sees Remarkable Growth

Company Name: Cressanda Solution Ltd | BSE Code: 512379 | 52 Week high/low: 33.6/19.6 | CMP: INR 25 | Mcap: INR 994 Cr | PE: 176x

Company Overview:

Cressanda Solution Ltd, an India-based company, specializes in IT enabled services and digital media. The company’s offerings are divided into two baskets: TECHNOLOGY nXT and INFRA nXT. TECHNOLOGY nXT focuses on transforming existing business processes through Automation, AI & ML, Data Science, FinTech, HealthTech, and Data Security. On the other hand, INFRA nXT provides services in mobility, transportation, skilling, healthcare, and digital welfare. Cressanda serves key sectors, including healthcare, education, financial services, and transportation.

PAT Skyrockets 300% YoY Amidst Revenue Decline

In Q2FY24, Cressanda reported a revenue of 19.5 Cr, a 6.7% YoY decline but a substantial 57.4% QoQ increase. Despite the top-line slowdown, the company effectively managed raw material costs, resulting in a 28% YoY reduction and a remarkable 300% YoY surge in PAT. This translated to an 836% QoQ increase in PAT.

EBITDA Jumps 315% YoY Fueled by Strategic Cost Management Initiatives

Q2FY24 saw EBITDA growth of 315% YoY, though there was a 191% QoQ decline to 1.68 Cr. This exceptional performance was driven by effective cost management, with revenue declining by 6.74% YoY to 19.5 Cr and COGS down by 28.5% YoY to 14.5 Cr. Consequently, EBITDA margin increased by 6.6% YoY and an impressive 21.6% QoQ to reach 8.63% in Q2FY24.

Q2 Profits Soar on Other & Exceptional Income, Margins Surge

During Q2FY24, the company reported other income of 1.21 Cr, a substantial increase from the previous quarter’s 0.06 lakh. Additionally, a one-time exceptional income of 2.14 Cr, equivalent to 41% of PAT, contributed to a PAT of 5.10 Cr. This boosted PAT margins to 26%, while EBITDA and EBIT margins stood at 8.63% and 8.60%, respectively.

Valuation and Key Ratios:

Currently trading at a multiple of 176x EPS (TTM) at a market price of 25 Rs, Cressanda Solution Ltd surpasses the industry PE multiple of 40.4x. The stock is also trading at 8.37 times its book value of 2.99 Rs per share. In terms of EV/EBITDA multiple, the company ranks 2nd among peers at 137.8x, compared to the industry median of 20.85x. The trailing twelve-month ROE and ROCE stand at 7.23% and 9.65%, respectively.

Q2FY24 Results Updates: Standalone:

➡️In Q2FY24, despite a 6.7% YoY revenue decline, Cressanda showed resilience with a 57.4% QoQ growth to 19.5 Cr. The company’s commitment to maintaining raw material costs led to a remarkable 673.3% YoY increase in gross profit, reaching 5 Cr.

➡️EBITDA witnessed a substantial 315.6% YoY growth, although there was a temporary 191% QoQ decline to 1.7 Cr. EBITDA margin expanded by 6.7% YoY and an impressive 21.6% QoQ, reaching 8.63% in Q2FY24.

➡️Operating profit (EBIT) saw a remarkable 314.6% YoY increase, with a 190.4% QoQ decline to 1.7 Cr. EBIT margin expanded by 6.6% YoY and an impressive 23.6% QoQ, reaching 8.60% compared to 1.93% in Q2FY23.

➡️Other income in Q2FY24 stood at 1.21 Cr, a significant increase from the previous quarter’s 0.06 lakh. The one-time exceptional income of 2.14 Cr significantly contributed to the boosted net profit.

➡️PAT surged by an impressive 301.9% YoY and an astounding 836.5% QoQ to 5.10 Cr. This robust performance was attributed to effective cost management, other income, and one-time exceptional income. PAT margin increased by 20% YoY and 21.8% QoQ, reaching 26.2% in Q2FY24.

➡️EPS for the quarter stood at 0.12 Rs, a significant improvement from the previous quarter’s 0.01 Rs.

Conclusion

Cressanda Solution Ltd demonstrated remarkable resilience in Q2FY24, navigating a YoY revenue decline through astute cost management. Despite the revenue challenges, the company witnessed an impressive surge in PAT by 300% YoY and 836% QoQ. The strategic focus on maintaining raw material costs and capitalizing on other income sources contributed to robust financial performance. The company’s strong EBITDA growth, expanding margins, and prudent financial measures position it as a noteworthy player in the industry.

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Strategic Partnerships Fuel One97’s Financial Turnaround

Gautam Adani’s Freight Forwarding Foray: Challenging Global Logistics Giants

APSEZ Q2FY24 Highlights: Robust Growth in Cargo Volumes Despite Forex Losses

APSEZ Q2FY24 Highlights: Robust Growth in Cargo Volumes Despite Forex Losses

Company Name: Adani port & SEZ Ltd | NSE Code: ADANIPORTS | BSE Code: 532921 | 52 Week high/low: 912/395 | CMP: INR 832 | Mcap: INR 1,79,637 Cr | PE: 22.7x

Company Overview:

APSEZ, part of the Adani Group, is India’s largest private port operator, initially known as Gujarat Adani Port Limited (GAPL). Operating since 2001, it has expanded to manage 14 ports/terminals across India. In FY23, APSEZ held a 24% market share, handling 339mmt of cargo. Noteworthy acquisitions include Gangavaram, with three more ports under construction. The company also offers logistics and SEZ services through its subsidiary, ALL, providing end-to-end solutions and agri-storage through silo capacities nationwide.

Diversified portfolio with market leadership – 24% market share:

Over the past decade, APSEZ has demonstrated an impressive 10-year cargo volumes Compound Annual Growth Rate (CAGR) of 14%, which is three times the industry’s growth rate of 4%. From FY13 to FY23, India’s cargo volumes experienced a modest 4% CAGR increase to reach 1,433 MMT, while APSEZ significantly outpaced this, achieving a remarkable 14% CAGR, resulting in cargo volumes of 337 MMT in FY23. This outstanding performance can be attributed to strategic expansions at Mundra, the successful commissioning of Hazira, and strategic acquisitions, including ports such as Dhamra, Krishnapatnam, and Gangavaram. In FY23, APSEZ handled an impressive 339 MMT of cargo at its ports, solidifying its dominance with a substantial 24% market share.

Robust growth in overall cargo volumes driven by container cargo, dry cargo & liquid-gas:

APSEZ achieved a robust 14% YoY growth in cargo handling, reaching 203 million metric tonnes. Growth was observed across all major categories: dry bulk (10% YoY), liquids (21% YoY), and containers (18% YoY). Eight ports hit their highest half-yearly volumes. Mundra port led with 3.6 million TEUs, surpassing competitors by 15%. In October, Mundra set a record with 16 million metric tonnes, the highest monthly volume in any Indian port. Haifa Port in Israel handled 6.3 million metric tonnes in H1 and 1.1 million metric tonnes in October.

Robust Volume growth in the first half boosted revenue – 27% YoY:

In Q2FY24, the company reported a robust 27.5% YoY (+6.38% QoQ) revenue growth, reaching 6,646 Cr. This growth was fueled by a 17% YoY increase in overall cargo volumes, totaling 101.2 MMT in Q2FY24 and 14% YoY growth to 203 MMT in H1FY24. Notably, all three major cargo categories contributed to this expansion, with dry bulk at 10% YoY, liquids at 21% YoY, and containers at 18% YoY.

EBITDA Surges Amidst Margin Pressure from Forex Losses

In Q2FY24, EBITDA demonstrated a robust YoY growth of 26.7% (slightly down by -2.7% QoQ) to reach 3,664 Cr. However, EBITDA margins experienced a slight decline of 35 bps YoY (500 bps QoQ) to 55.1%, primarily attributable to a forex loss of 216 Cr during the quarter. Adjusting for the forex loss, the EBITDA stands at an impressive 7,429 crores, showcasing a commendable 49% YoY growth.The company’s strategic focus on enhancing operational efficiency is evident in the port EBITDA margins for H1, which expanded by 220 basis points YoY, reaching an impressive 72%. Furthermore, the logistics business boasted EBITDA margins of 29%, positioning it as the best among its domestic peer group.

Key concall highlights

➡️The company successfully completed bond buybacks of $130 million in May and $195 million in October.
Consequently, the net debt as of September 30 decreased to $38,696 million compared to $39,989 million on March 31.

➡️The addition of assets to the logistics business led to a 25% YoY increase in rail volumes to 279,177 TEUs and a 42% YoY Valuation and key ratio S bulk volumes to MMT in Q2FY24.

Valuation and key ratio

The current stock valuation indicates a 22.7x earnings per share (EPS) multiple (TTM) of 29.3 Rs at the market price of 832 Rs, with the industry PE at 34.1x. APSEZ leads peers in EV/EBITDA multiple at 15.2x, while the industry median of 15.2x. Trailing twelve-month ROE and ROCE are 14.4% and 9.53%, respectively. The interest coverage ratio at 5.1x signifies strong solvency.

Q2FY24 result update: Consolidated

➡️In Q2FY24, the company witnessed a robust 27.5% YoY (+6.4% QoQ) increase in revenue, reaching 6,646 Cr, driven by substantial growth in cargo volume.

➡️EBITDA showed a 26.7% YoY growth (-2.7% QoQ) at 3,664 Cr, with EBITDA margins at 55.1%, down by 35 bps YoY (-500 bps QoQ), primarily due to a forex loss stemming from increased foreign currency debt.

➡️Adjusted for forex loss, EBITDA surged by 49% YoY, reaching 7,429 Cr in the first half of the year. Port EBITDA margins in H1 expanded by 220 basis points YoY to 72%, while logistics business EBITDA margins stood at 29%, leading the domestic peer group.

➡️Operating profit (EBIT) increased by 32% YoY (-4.5% QoQ) to 2,689 Cr, with EBIT margin expanding by 140 bps YoY but contracting by 450 bps QoQ to 40.5%.

➡️PAT reported a modest 1.4% YoY growth (-16.9% QoQ) at 1,762 Cr, influenced by one-time expenses related to MAT credit amounting to 455 Cr during the quarter. PAT margin decreased by 680 bps YoY (-740 bps QoQ).

➡️EPS for the quarter stood at 8.16 Rs, compared to 9.81 Rs in the previous quarter.

Conclusion:

APSEZ, a leading private port operator in India, exhibited robust performance in Q2FY24 with a 27.5% YoY revenue growth, driven by a 17% YoY increase in cargo volumes. Despite margin pressure from forex losses, the company’s strategic focus on efficiency is evident in impressive EBITDA margins. The logistics business outperformed peers with a 29% EBITDA margin. The Q2FY24 PAT growth was modest due to one-time expenses. The company’s diversified portfolio, strategic acquisitions, and focus on operational efficiency position it well in the market.

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Celebration Economy: The Economic Impact of Weddings on Hospitality

Celebration Economy: The Economic Impact of Weddings on Hospitality

Introduction

The hospitality industry is a key driver of the economy, contributing significantly to global GDP and employment. The industry is extremely diverse, encompassing everything from hotels and restaurants to event planning and catering. The hospitality industry has faced a number of challenges in recent years, including the global pandemic and the economic downturn. However, the industry is beginning to recover, thanks to an increase in weddings and other celebrations.

Weddings as a Catalyst for Growth

Weddings are a major source of revenue for the hospitality industry. The hospitality industry is experiencing a remarkable resurgence, fuelled by a significant increase in weddings and related events. Celebrations following the pandemic have left an indelible mark on the industry, indicating a significant shift in preferences and customs, painting a dynamic picture of evolving traditions. According to recent CAIT projections, there is a significant expected increase, with approximately 3.8 million weddings expected to take place this season, compared to 3.2 million weddings during the same period last year.

Transformative trends:

A transformative wave is sweeping through the hospitality industry, driven by forward-thinking businesses that combine tourism and hospitality services. The fallout from Covid has forever altered people’s perspectives on life and travel, resulting in game-changing developments and trends in the industry. The travel industry is buzzing with trends such as staycations, leisure travel, solo and backpacking trips, experiential travel, and destination weddings, as millennials and Gen Z continue to shape travel decisions.

Wedding tourism stands out as a particularly promising trend among these. Brands are revamping their offerings to create distinctive and memorable wedding celebrations, with the goal of providing a more enriching experience for guests of all ages. This evolution reflects a dynamic response to today’s diverse and discerning travellers’ shifting preferences and expectations.

Furthermore, according to a KPMG report, the expense of Indian weddings ranges from 5 lakh to 5 crore rupees, with individuals allocating one-fifth of their savings for this significant event. Consequently, each wedding function holds substantial potential for creating employment and business opportunities across various industries. From dedicated wedding photographers to the wedding décor team, as well as F&B vendors, every aspect contributes to making the occasion grand and impactful.

Impact on the hospitality industry:

 Increased Revenue Streams: Hotels, banquet halls, and catering businesses are experiencing an increase in bookings, which translates to increased revenue for these establishments.
 Job Possibilities: The growing demand for wedding-related services has promoted job creation in a variety of sectors of the hospitality industry, contributing to increased employment.
 Industry Diversification: The trend toward unique and personalized weddings is driving a diversification trend in the hospitality industry. This evolution reflects an industry-wide effort to cater to clients’ changing preferences for unique and customized experiences.

Sectors set to soar in wedding and hospitality boom:

1. Hospitality Sector:
– Hotels and Resorts: Increased bookings for wedding events and accommodations.
– Travel and Tourism: Rise in destination weddings contributing to increased travel.

2. Apparel and Clothing:
– Bridal Wear: Growing demand for elaborate and designer wedding outfits.
– Groom Wear: Increased focus on groom fashion and accessories.

3. Jewellery:
– Wedding Jewellery: High demand for traditional and contemporary wedding jewellery.
– Bridal Sets: Rise in purchases of complete bridal jewellery sets.

4. Entertainment and Decor:
– Entertainment Services: Demand for live bands, DJs, and other entertainment.
– Decor Services: Increased need for elaborate and personalized wedding decor.

5. Event Management and Wedding Planning:
– Event Planners: Growing demand for professional wedding planning services.
– Destination Wedding Specialists: Increased interest in unique and exotic locations.

6. Catering and Banquets:
– Catering Services: High demand for catering at weddings and related events.
– Banquet Halls: Increased bookings for wedding receptions and ceremonies.

Conclusion:

In short, the wedding and hospitality industries are reviving, which is good news for many businesses. Hotels, fashion, jewellery, and event planning are all benefiting as weddings become more popular. This boost is about more than just making money; it is about changing the way we celebrate, making things more unique and personal. This upswing is not only assisting businesses in recovering, but it is also bringing new ideas and creativity. As weddings continue to shape the industry, we can expect a bright future full of new opportunities.

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Robust Loan Book Growth and Strategic Lending Drive PFC’s Stellar Q2FY24 Results

Flexiloans Bags ₹375 Cr in Series C, Targets ₹5,000 Cr AUM Within 18 Months

Strategic Partnerships Fuel One97's Financial Turnaround

Strategic Partnerships Fuel One97’s Financial Turnaround

Company Name: One 97 Communication Ltd | NSE Code: PAYTM | BSE Code: 543396 | 52 Week high/low: 998/440 | CMP: INR 889 | Mcap: INR 56,647 Cr | P/Sales: 7.86x

Company Overview:

One97 Communications is engaged in the business of offering a) payment and financial services, encompassing payment facilitator services, facilitating consumer and merchant lending, wealth management, and related financial solutions. b) Additionally, the company provides commerce and cloud services, serving as an aggregator for digital products, managing ticketing operations, supplying voice and messaging platforms to telecom operators and enterprise customers, among other business activities.

Robust Revenue Growth Fueled by GMV and Merchant Payments:

One97 Communications reported a robust 31.6% YoY revenue increase to Rs. 2,519 crore in Q2FY24, driven by a surge in Gross Merchandise Value (GMV) and a 47.6% YoY jump in payments to merchants. The net payment margin rose by 60.0% YoY to Rs. 707 crore, mainly due to a significant increase in non-UPI payments. The company’s adaptability in a dynamic market is evident despite a slightly lower growth rate compared to the previous quarter.

Thriving Financial Services and Loan Disbursement Business:

One97 Communications reported robust Q2FY24 financials with a 63.6% YoY growth, totaling Rs. 571 crore. The surge was driven by a 44% YoY increase in loan disbursements, reaching 13.2 million, fueled by Paytm’s active user base. The total value of disbursed loans rose by 122% YoY to Rs. 16,211 crore, showcasing the company’s success in diversifying revenue streams and leveraging its user base for sustained growth.

Strong growth in contribution profit leads to margin expansion

The loan distribution business and improved net payment margin drove a significant uptick in Q2FY24 EBITDA before ESOP cost to Rs. 153cr, compared to a loss of Rs. -167cr in Q2FY23. A consistent 69.2% YoY growth in contribution profit led to an adjusted EBITDA margin rise from -8.7% to 6.1%. In the same period, profit attributable to shareholders improved from Rs. -571cr to Rs. -291cr, indicating a positive turnaround in financial performance.

Valuation and key ratio

The company’s stock is trading at 7.84x its sales, reflecting a market valuation of 7,203 Crore INR at the current share price of 889 INR. Additionally, the company is valued at 4.53x its book value, amounting to 196 INR per share. However, financial indicators reveal challenges, with a negative ROE and ROCE at -13.9% and -13.5%, respectively. The interest coverage ratio is a concerning -48.2x, indicating potential solvency issues.

Key concall highlight

➡️In Q2, Tata Capital joined as a lending partner, bringing the total number of NBFCs and banks to nine for credit card and loan distribution.

➡️Q2FY24 witnessed a 19% YoY increase in Average Monthly Transacting Users (MTUs), reaching 9.5 crore. Merchant subscriptions showed robust growth, surging 91% YoY to 9.2 million.

➡️The cash balance strengthened to Rs. 8,754 crore in September, up from Rs. 8,367 crore in June, attributed to improved EBITDA and working capital. The company anticipates adding more partners in the upcoming quarters.

Q2FY24 result update: Consolidated

➡️In Q2FY2, the consolidated revenue witnessed robust growth, surging by 31.6% YoY (+7.6% QoQ) to reach 2,519 Cr. This growth was primarily driven by a strong uptick in merchants’ subscription revenue, increased loan disbursements, and a rise in Gross Merchandise Value (GMV).

➡️The Adjusted EBITDA before ESOP cost exhibited remarkable expansion, soaring by 191.6% YoY (+82.5% QoQ) to 153 Cr, compared to a loss of -167 Cr in Q2FY23. This impressive performance was fueled by consistent growth in contribution profit (+69.2% YoY), resulting in an improved adjusted EBITDA margin of 6.1%, a significant positive shift from -8.7% in Q2FY23.

➡️EBITDA demonstrated a notable YoY increase of 57%, but experienced a QoQ decline of 21.1% to -231 Cr, primarily attributed to higher ESOP costs.

➡️The Operating Profit (EBIT) saw a YoY decrease of 36% (-9% QoQ) to -411 Cr, primarily due to a substantial 72.7% YoY increase in depreciation expenses.

➡️Reported Profit After Tax (PAT) declined by 49% YoY (-18.6% QoQ) to -292 Cr, driven by elevated ESOP costs and depreciation.

Conclusion:

One97 Communications demonstrated robust Q2FY24 performance with a 31.6% YoY revenue increase, driven by strong growth in financial services, merchant payments, and loan disbursements. The company’s adaptability and strategic partnerships, such as with Tata Capital, contributed to positive results, leading to a notable turnaround in financial performance, reflected in improved EBITDA margins and a strengthened cash balance. Despite a QoQ decline in some metrics, One97 Communications remains well-positioned for sustained growth, focusing on expanding its partner network and capitalizing on its active user base.

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Robust Loan Book Growth and Strategic Lending Drive PFC’s Stellar Q2FY24 Results