Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - November 2, 2023

Dabur Subsidiaries Face Cancer Lawsuits in US and Canada

Overview of Dabur

Dabur India Ltd. is one of India’s leading consumer goods companies with a portfolio of over 250 herbal and Ayurvedic products. The company was established in 1884 and has a long history of developing and manufacturing traditional Indian healthcare products.

Dabur’s products are divided into several categories, including

➢ Healthcare This category includes products similar as Dabur Chyawanprash, Dabur Amla, and Dabur Honitus.
➢ Haircare This category includes products similar as Dabur Vatika, Dabur Amla Hair Oil, and Dabur Red Paste.
➢ Oral care This category includes products similar as Dabur Red Toothpaste, Dabur Lal Dant Manjan, and Dabur Meswak Toothpaste.
➢ Skin care This category includes products similar as Dabur Gulabari, Dabur Odomos, and Dabur Vatika Naturals.
➢ Home care This category includes products similar as Dabur Red Air Freshener, Dabur Odomos Mosquito Repellent Cream, and Dabur Pudin Hara.

About the case

Homegrown FMCG major Dabur on Wednesday said its three foreign subsidiaries are facing cases in civil and state courts in the US and Canada. Two consumers have filed suits against Dabur subsidiaries in the United States and Canada, alleging that the company’s Vatika Naturals Coconut Styling Gel caused them to develop cancer. The suits were filed in California and Ontario in late 2022 and early 2023, independently.

The complainants, both women, allege that the hair gel contains the chemical 1,4 dioxane, which is a known carcinogen. They claim that they used the hair gel for several times before developing cancer, and that the product’s marker didn’t adequately advise consumers about the risks of using it.

Dabur has denied the allegations, saying that its hair gel is safe and that there’s no scientific evidence that it causes cancer. The company has also said that it’s committed to consumer safety and that its products are tested to ensure that they meet all applicable safety norms.

The subsidiaries are Namaste Laboratories LLC, Dermoviva Skin Essentials Inc., and Dabur International Ltd. The suits are still in their early stages, and it’s too early to say how they will be resolved. still, they’ve raised concerns about the safety of Dabur’s hair products and other products that contain 1,4- dioxane.

What’s 1,4- dioxane?

1,4- dioxane is a synthetic chemical that’s used in a variety of artificial and marketable
products, including cosmetics, cleaning products, and paint strippers. It’s also a by- product of some manufacturing processes. 1,4- dioxane is a known carcinogen, and the International Agency for Research on Cancer (IARC) has classified it as a Group 2B carcinogen, which means that it’s “conceivably carcinogenic to humans.”

Implicit health pitfalls of 1,4- dioxane-
Exposure to 1,4- dioxane can do through inhalation, ingestion, or skin immersion. Cancer, skin irritation, eye vexation and 1,4- dioxane can irritate the airways and cause coughing, gasping, and shortness of breath.

https://www.equityright.com/indias-soaring-success-dedicated-india-funds-outperforming-emerging-markets/

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Gabriel India Stock Rockets Nearly 80% in 13 Sessions: What’s Driving This Surge?

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - November 1, 2023

MMFS Q2FY24: PAT Drops to 235 Cr YoY Amid 45 bps NIM Compression

Company Overview:

M&M Finance, a leading Non-Banking Financial Company (NBFC), specializes in financing various types of vehicles, including new and pre-owned autos, utility vehicles, tractors, passenger cars, and commercial vehicles. Additionally, the company offers a range of financial services, encompassing mutual fund distribution, insurance broking, and housing finance. M&M Finance has strategically diversified its lending portfolio, extending its reach to retail and small to medium-sized enterprises in rural and semi-urban areas across India. As of Q2FY24, the company boasts an extensive network, with 1,368 offices spanning 27 states and 7 union territories, serving a substantial customer base of over 9.5 million individuals.

Loan book grew 27% YoY (+8.1% QoQ) to 93,723 Cr, fueled by auto and pre-owned vehicle loans.

M&M Finance experienced a remarkable 27% YoY increase in its loan book, with a further 8.1% QoQ growth, amounting to 93,723 Cr in Q2FY24. This growth was primarily driven by a strong performance in the auto, car, and pre-owned vehicle segments. Notably, the company’s disbursements increased by 12.61% YoY and 9.45% QoQ, reaching 13,315 Cr in the same period. The performance of the tractor portfolio and SME segments, however, remained sluggish. The Cars and Commercial Vehicles segment displayed notable growth of 25% YoY and 28% YoY, standing at 2,455 Cr and 1,511 Cr, respectively, while maintaining market share in various segments. New business segments, including SME, personal loans, and consumer loans, contributed approximately 12% to the overall loan mix.

NIMs compression ~45 bps QoQ and high credit cost ~2.8% (Q2FY23 – 2.5%):

In Q2FY24 yield moderated at ~35% bps QoQ while CoF rose 10 bps led to NIMs contraction by 45 bps QoQ stood at 6.5% in Q2 due to effect of change in portfolio mix (with higher mix of pre-owned vehicles and tractors) and increased interest cost. Annualized credit cost stood at 2.8% (Q2FY23-2.5%) higher than expectation for FY24 targeted between 1.5% -1.7% and included INR 3.5 bn of write-off (PQ-3.1 bn).

Minor improvement in asset quality & CAR strong at 18.7% in Q2

In Q2FY24, minor improvement in asset quality with GS3/NS3 declining to 1bps/9bps QoQ to 4.29%/1.71% with amounting GS3/NS3 stood at 4,024 Cr/1,562 Cr. Stage 2 declined 60 bps QoQ to 5.7% this resulted in 30+ dpd improving 70 bps QoQ to 10% and current level of write-off stood at 351 Cr in Q2FY24. Provision coverage on stage-3 assets stood at 61.2% against 60.1% in previous quarter. CAR strongly stood at 18.70% in Q2FY24 which is above the RBI guidelines 15%.

Valuation and Key ratios: ROA/ROE decline -130 bps/500 bps

Currently, M&M Finance’s stock is trading at 1.63 times its book value, at 151 per share, with the market price at 248 Rs. The company reported a decline in return ratios, with ROE decreasing by approximately 500 bps to 5.5%, and ROA decreasing by 130 bps to 0.9% in Q2FY24. The interest coverage ratio stood at 1.44x, indicating the company’s solvency.

Q2 FY24 Results Highlights: Standalone

➡️ In Q2FY24, interest income grew 25.32% YoY (+3.91% QoQ) to 3,153 Cr while interest expense grew 46.56% YoY (+8% QoQ) to 1,566 Cr resulted in Net interest (NII) income reaching to 1,587 Cr grew 9.64% YoY (+0.17% QoQ).

➡️ Pre-Provision operating profit (PPOP) increased 9.17% YoY (-5.07% QoQ) to 943 Cr due to rise in Opex by 8.32% QoQ because of company’s transformation strategy includes technology investment. Opex-to-average assets remained stable at 2.8% in Q2FY24.

➡️ Provision amount increased 215.72% YoY (+19.02% QoQ) to 626.55 Cr which includes 351 write-off led to decline PAT by 48% YoY (-33.30% QoQ).

➡️ PAT decline 47.54% YoY (-33.30% QoQ) to 235 Cr due to increase in provision 215% YoY results in EPS stood at1.90 Rs (PQ-2.84) decline 33% QoQ.

Conclusion:

M&M Finance continues to expand its loan book and customer base, showcasing its presence and performance in the NBFC sector. While challenges in NIMs and higher credit costs require attention, the company’s strong CAR and provision coverage are notable strengths. The decline in return ratios reflects certain performance pressures, and management should focus on addressing these concerns to ensure sustained growth and profitability.

Q2FY24: Shriram Finance reports robust AUM growth Drives NII soars to 4,594 Cr

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India: Infrastructure Set to Outpace IT as the Growth Engine

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - November 1, 2023

India’s soaring success : dedicated India funds outperforming emerging markets

India’s soaring success: dedicated India funds outperforming emerging markets

Dedicated India funds have outperformed emerging market funds in recent months, as investors shift their focus to economies that are less reliant on China. India is one of the fastest-growing major economies in the world, and it is benefiting from a number of factors, including strong domestic demand, a young and growing population, and a government that is supportive of investment.

The average India fund returned 30.2% in the year to the end of September, compared to 18.7% for emerging market funds. This outperformance has been driven by a number of factors, including strong economic growth in India, a relatively low valuation for Indian stocks, and a favorable investment climate.

India’s economy is expected to grow at 7% in 2023, according to the World Bank, making it one of the fastest-growing major economies in the world. This growth is being driven by a number of factors, including a young and growing population, rising consumer spending, and increasing investment in infrastructure and manufacturing.

Indian stocks are also relatively undervalued, trading at a price-to-earnings ratio of around 17, compared to 20 for emerging market stocks as a whole. This makes Indian stocks attractive to investors who are looking for value. The Indian government has also taken steps to improve the investment climate in recent years. These steps include reducing red tape, simplifying tax rules, and improving corporate governance. These changes have made India a more attractive destination for foreign investors.

The outperformance of dedicated India funds is likely to continue in the coming months. India’s economy is expected to remain strong, its stock market is relatively undervalued, and the government is committed to improving the investment climate.

Benefits of investing in India-dedicated funds:-

1. Access to a growing economy:
India is the world’s fastest-growing major economy, with a projected GDP growth rate of 7% in 2023. This growth is being driven by a young and growing population, rising consumer spending, and increasing investment in infrastructure and manufacturing.

2. Undervalued stocks:
Indian stocks are trading at a relatively low valuation, compared to emerging market stocks as a whole. This makes Indian stocks attractive to investors who are looking for value.

3. Favorable investment climate:
The Indian government has taken steps to improve the investment climate in recent years, including reducing red tape, simplifying tax rules, and improving corporate governance. These changes have made India a more attractive destination for foreign investors.

4. Diversification:
Investing in India-focused funds can provide diversification benefits to your investment portfolio. These funds typically invest in a wide range of Indian stocks and securities, which can help spread risk across different sectors and industries within the Indian economy.

5. Expertise and local knowledge:
Many India-focused funds are managed by professionals with deep knowledge of the Indian market and its unique dynamics. They have the ability to conduct in-depth research, identify promising investment opportunities, and navigate the complexities of the Indian financial system.

US Market:

Demand for US sovereign debt is expected to hold up well in the next few months, but there are risks ahead in the next year from all directions. Fund flows into energy-dedicated funds have started to accelerate, as energy prices in the US are expected to be higher for a longer period.

Overall Flows Subdued:
Overall fund flows have been fairly subdued recently, with bond funds taking in a bit more money than equity funds. However, this is likely to change in the coming months, as investors look to rotate into more cyclical assets in anticipation of a stronger economic recovery.

Implications for Investors:
Investors who are looking for growth should consider overweighting emerging markets equities in their portfolios. They should also consider adding some exposure to energy-related stocks, as well as cyclical stocks that stand to benefit from a stronger economic recovery. However, investors should also be mindful of the risks associated with these investments,
including volatility and currency risk.

Neogen Chemicals’ EBITDA Soars to 29.46 Cr fueled by lower input costs

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RBI Lowers CPI Inflation Forecast to 3.7% for FY26 Amid Stable Price Outlook

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - November 1, 2023

Banks' risky bet on unsecured loans

Banks’ risky bet on unsecured loans

Introduction:

Unsecured loans, also known as personal loans or consumer loans, are financial products that do not require borrowers to provide collateral. They have become increasingly popular among Indian consumers for their accessibility and quick approval processes. However, this rapid growth has led to concerns about the credit risk exposure of banks and the overall financial stability of the banking sector.

Indian banks have seen a sharp growth in unsecured loans in recent months, despite the Reserve Bank of India (RBI) cautioning them against such lending. Unsecured loans are those that are not backed by any collateral, making them riskier for banks.

According to a report by the Credit Information Bureau of India (CIBIL), unsecured loans grew by 22% year-on-year in the first quarter of 2023. This is faster than the growth of secured loans, which was 18%. The report also found that the average unsecured loan size has increased by 15% in the past year. This suggests that banks are becoming more comfortable lending larger amounts without collateral.

➢ HDFC Bank, ICICI Bank, and Kotak Mahindra Bank increased their unsecured loan portfolios by up to 30% in the July-September quarter.
➢ They anticipate that growth in the unsecured segment, which includes microfinance, credit cards, personal loans, and some retail loans, will continue.
➢ This growth comes despite concerns flagged by the Reserve Bank of India over the surge in such loans.
➢ HDFC Bank’s personal loan portfolio grew 15.5%, ICICI Bank’s credit card portfolio grew 29.5%, and Kotak Mahindra Bank’s unsecured portfolio grew 49.76%.
➢ IndusInd Bank’s microfinance portfolio grew 16%, credit card business grew 33%, and other retail loans climbed 64%.
➢ RBL Bank’s retail portfolio grew 35%.

The risk of defaults has prompted the RBI to warn banks against making excessive loans that are not secured. The RBI instructed banks to “exercise due caution” when making unsecured loans in a circular that was published in April 2023. Additionally, the RBI requested that banks “make sure the loans are used for productive purposes and that the borrowers have adequate repayment capacity.”

The RBI’s concerns have been shared by analysts. They caution that by making large loans in the unsecured market, banks are taking on excessive risk. They claim that a downturn in the economy could lead to a severe rise in unsecured loan defaults.

Impact of the growth in unsecured lending on the economy:

The growth in unsecured lending has had a mixed impact on the economy. On the one hand, it has boosted consumer spending and helped to drive economic growth. On the other hand, it has increased the risk of a financial crisis if there is a sharp increase in defaults on unsecured loans. The impact of the growth in unsecured lending on the economy will depend on a number of factors, including the overall health of the economy, the interest rate environment, and the creditworthiness of borrowers.

Concerns related to the growth in unsecured lending:

➢ It could lead to a rise in consumer debt levels. This is because unsecured loans are typically easier to obtain than secured loans.
➢ Another concern is that the growth in unsecured lending could lead to a bubble in the credit market. This is because unsecured loans are often used to finance consumption, rather than investment. If there is a sudden decline in consumer confidence, it could lead to a wave of defaults on unsecured loans.

Conclusion:

Despite the RBI’s cautionary steps, unsecured loans have grown significantly in India’s banking industry. While they provide customers with convenient access to borrowing, they also pose hazards to both banks and borrowers. To guarantee the banking sector’s long-term stability, banks must strike a balance between profitability and responsible lending while complying to the RBI’s standards.

Neogen Chemicals’ EBITDA Soars to 29.46 Cr fueled by lower input costs

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Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 31, 2023

SBI Card Q2FY24: Navigating Headwinds with a Vision for Long-Term Success

Company Overview:

SBI Card & Payment Services Limited (SBI Card) is a leading Indian credit card issuer and payment services provider. It is a joint venture between the State Bank of India (SBI), the country’s largest bank, and The Carlyle Group. SBI Card offers a wide range of credit cards, including super premium cards, premium cards, travel and shopping cards, classic cards, exclusive co-branded cards as well and corporate cards. SBI Card was launched in October 1998 and has since grown to become the second-largest credit card issuer in India, with a customer base of over 16 million cards in force. The company has a wide network of branches and ATMs across India and also offers its products and services through online and mobile channels. SBI Card is known for its innovative products and services, as well as its commitment to customer service. The company has won various industry accolades for its customer service, branding, product innovation and marketing.

Core earnings fall as NIM/retail spending falls; costs rise:

SBI Card’s second-quarter earnings were in line with expectations, but they did not provide a clear picture of the company’s performance. The following reasons contributed to the 2% in QoQ growth in core profitability:- Margin decline: NIM fell 12 basis points year on year to 11.3%, while yields fell 14 basis points year on year. The share of high-yielding receivables remained stable (62% of the mix over the last two quarters), while revolvers stayed stable. Furthermore, the corporation was unable to reprice EMI loans in time for the holiday season. Fee growth slowed to 3.5% as less lucrative corporate spending (increased 14% QoQ) outpaced retail spending (up 5% QoQ). Online retail spending on discretionary items (consumer durables, clothes, and jewelry) fell 44%. Analysts are cautious about discretionary spending since structural demand drivers are weak. Cost income increased to 57% (up 70 basis points QoQ) as a result of significant corporate spending and cash-back incentives (recent offers as high as 27.5% cash-back on select consumer durable goods).

Anticipated Impact of Industry Headwinds on SBI Card’s Q3 Earnings:

SBI Card’s third-quarter earnings are projected to be impacted by industry headwinds such as low revolvers, competition, poor discretionary expenditure, and risks associated with small-ticket card loans. As a result, analysts anticipate that the company’s receivables CAGR will fall from 30% to 27% in FY24-26E, while its spending CAGR will fall from 24% to 21%. Analysts anticipate that SBI Card’s cost-income ratio will stay elevated in FY24-26E, averaging 58%.

SBI Card Faces Trade-off Between Credit Cost and NII:

SBI Card is facing a difficult choice between increasing its net interest income (NII) and reducing its credit costs. On the one hand, the company is increasing its sourcing from open market and banca channels in order to boost revenues. However, this could lead to higher credit costs, which could offset the positives in NII. SBI Card’s self-employed and tier 3 sourcing climbed to 41% and 33%, respectively, in Q2, contributing to an increase in NII. However, credit expenses increased to 6.7%, and write-offs increased 9% year on year. Given that SBI Card is not immune to the unsecured credit market’s headwinds, analysts have revised down their credit cost/GNPA projections for FY24E/25E to 6.3%/2.7%, respectively.

Valuation Outlook: Downgrade to “Reduce,” TP Adjusted to INR 829:

The current valuation of the stock is INR 747 per share. With a book value of INR 117 per share, the market is trading at a Price-to-Book Value (P/BV) ratio of 6.43x, indicating that the stock is priced significantly higher than its book value. Furthermore, the Price-to-Earnings (P/E) ratio stands at 30.7x, suggesting that investors are willing to pay a premium for each unit of earnings generated by the company. This elevated P/E ratio could be a result of strong market sentiment, high growth expectations, or a combination of both. In evaluating this stock, investors should carefully consider whether the premium valuation aligns with their investment goals and risk tolerance. Exhibits 1-6 demonstrate a detailed examination of industry trends that suggest a considerable increase (an increase of 114 basis points) in the 90-day past due (90dpd) rate for credit cards, raising worries regarding SBICARD’s portfolio quality in the coming months. This condition produces a more obvious conflict between credit charges and net interest income (NII), which could have a detrimental influence on the company’s profitability.

Impressive Q2FY24 Financial Performance:

In the second quarter of the fiscal year 2024, the company reported robust financial results. Total revenue amounted to INR 14,286 crore, indicating a substantial 26% year-on-year (YoY) growth. The net profit also demonstrated remarkable performance, surging to INR 603 crore, marking a substantial 15% YoY increase. Earnings per share (EPS) reached INR 6.37, reflecting a solid 14% YoY growth. Additionally, the Return on Equity (RoE) stood at an impressive 25.7%, and the Return on Assets (RoA) was a notable 5.63%, showcasing the company’s strong financial performance and efficiency during this quarter.

Conclusion:

SBI Card is a well-known Indian credit card issuer and provider of payment services with a proven track record of profitability and growth. However, the company is currently suffering industry headwinds such as low revolvers, competition, poor discretionary expenditure, and risks associated with small-ticket card loans. These obstacles are expected to have an immediate impact on the company’s profitability. Despite the challenges, SBI Card is well-positioned for long-term expansion. The company has a strong brand, a diverse product and service offering, and a sizable client base. SBI Card is also investing in digital and technology initiatives to enhance customer experience and operational efficiency.

Q2FY24: Shriram Finance reports robust AUM growth Drives NII soars to 4,594 Cr

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Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 31, 2023

Festive Season to Boost E-Commerce Sales in India

The festive season sales across e-commerce platforms have seen massive growth in 2023 as compared to muted growth in 2022, according to industry expertscommerce firms in India have seen huge growth in sales during the ongoing festive season, with some platforms reporting over 30% growth compared to the same period last year. This growth is being driven by a number of factors, including rising disposable incomes, increasing internet penetration, and attractive discounts and offers from e-commerce platforms.

The festive season is one of the most important periods for e-commerce firms in India, and they typically offer their biggest discounts and promotions during this time. This year, e-commerce firms have been particularly aggressive with their offers, in an effort to attract and retain customers. As the e-commerce industry matures, the report anticipates a rise in contributions from higher-margin categories such as beauty and personal care (BPC), home and general merchandise, and fashion during this year’s festive season.

Over recent quarters, we have observed an increased GMV from categories beyond electronics. While electronics tend to sell well during festive periods, a broader analysis of festive sales over the past few years reveals a clear trend towards category diversification. This is a positive development for the ecosystem, indicating consumers’ willingness to purchase a variety of product categories online and attracting more brands to meet their demands,” noted Mrigank Gutgutia, Partner at Redseer Strategy Consultants.

Flipkart and Amazon, the two largest e-commerce firms in India, have both reported strong sales growth during the festive season. Flipkart’s Big Billion Days sale, which began on October 8, saw a 30% increase in order volumes compared to the same sale period last year. Amazon’s Great Indian Festival sale, which also began on October 8, saw a 25% increase in order volumes.

Other e-commerce firms, such as Myntra, Meesho, and Snapdeal, have also reported strong sales growth during the festive season. Myntra, which is a fashion e-commerce platform, saw a 40% increase in order volumes during its End of Season Sale. Meesho, a social commerce platform, saw a 35% increase in order volumes during its Maha Diwali Sale. Snapdeal, a general merchandise ecommerce platform, saw a 20% increase in order volumes during its Diwali Sale.

E-commerce sales in the previous festive season were 35% higher than in 2021, representing a significant increase. The strong growth in e-commerce sales during the festive season is a sign of the growing maturity of the e-commerce market in India. It is also a sign of the increasing popularity of online shopping among Indian consumers.

The following have contributed to the massive growth in festive season e-commerce sales in 2023:

Recovery from the COVID-19 pandemic:

The e-commerce industry in India faced a challenging year in 2022 due to the COVID-19 pandemic. However, in 2023, the industry has made a remarkable recovery, with a significant surge in festive season e-commerce sales. Consumers have returned to online shopping in large numbers, driven by their increased comfort with digital retail and the industry’s enhanced infrastructure and safety measures. Businesses have employed innovative marketing strategies and attractive deals to entice shoppers. This resurgence in ecommerce sales in 2023 showcases the industry’s resilience and its ability to adapt, even in the face of adversity.

The rise of social commerce:

Social commerce is a new and growing trend in India. Social commerce platforms, such as Meesho and Shop Clues, allow consumers to shop online through social media platforms such as
WhatsApp and Facebook. Social commerce is particularly popular among consumers in rural and semi-urban areas, where internet access is limited.

The popularity of new product categories:

New product categories, such as electronics and fashion, are becoming increasingly popular among Indian consumers. These categories are driving a significant portion of the growth in e-commerce sales. Tier-II and Tier-III cities are driving growth: Tier-II and Tier-III cities are accounting for a growing share of e-commerce sales in India. This is due to the increasing internet penetration and rising disposable incomes in these cities.

Mobile commerce is on the rise:

Mobile commerce is also on the rise in India. More and more consumers are using their smartphones to shop online. This is convenient for consumers, who can shop from anywhere
and at any time. E-commerce firms are increasingly focusing on providing personalized shopping experiences to their customers. This is done by using artificial intelligence and machine learning to recommend products to customers based on their past purchase history and browsing behaviour.

Neogen Chemicals’ EBITDA Soars to 29.46 Cr fueled by lower input costs

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Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 31, 2023

Shaping the Future: Key Trends in the Hospitality Industry

The Indian hotel industry has been a key contributor to the country’s economy, with its substantial growth trajectory. India’s charm, characterized by its lively culture, rich historical sites, and breathtaking natural beauty, has captivated tourists from around the globe, establishing it as a favored travel destination. As a result, the hospitality industry in India has been growing, and it’s making a big contribution to the economy. In recent years, the industry has faced challenges posed by the COVID-19 pandemic. However, it has shown resilience and adaptability, positioning itself for a robust future. According to the Indian Brand Equity Foundation, in 2021, the travel and tourism industry added $178 billion to India’s economy, and it’s expected to increase to $512 billion by 2028.

Nonetheless, professionals in the field assert that what we see is only the beginning, as there exists vast, unexplored potential waiting to be unlocked beneath the surface. In 2022, India witnessed significant investments in the construction of hotels, boasting a total of 256 new establishments. The hotel industry is anticipated to achieve a noteworthy valuation of Rs 1210.87 billion by the conclusion of 2023, displaying a notable Compound Annual Growth Rate (CAGR) of 13% over the period from 2018 to 2023.

Despite the substantial growth in the Indian hospitality industry, a critical impediment remains – the shortage of skilled professionals. To address this hurdle, it is imperative to nurture a workforce that possesses a harmonious mix of technical proficiency, interpersonal skills, and cultural awareness, thereby guaranteeing guests enjoy exceptional experiences devoid of any impediments.

In order to tackle the deficiency of skilled personnel, Indian educational institutions must adopt a proactive strategy. The foremost aim of educators should be to create awareness among the general public regarding the immense potential of the hospitality and tourism sector. It is imperative for Indian society to acknowledge the remarkable opportunities presented by this industry.

To fully harness the extensive potential of India’s hospitality sector, it is essential to employ a multifaceted strategy. Initially, it is vital for both the government and stakeholders in the industry to cooperate in order to cultivate a climate that encourages expansion and investment. This involves the expansion of infrastructure, streamlining regulatory frameworks, and proactively promoting lesser-explored destinations to attract a greater number of visitors and strengthen the sector.

The past year has brought remarkable transformations to the hospitality sector, primarily due to the far-reaching effects of the COVID-19 pandemic on travel and tourism. While the world is gradually on the path to recovery, hotels and resorts are shifting their focus towards the upcoming five years. Anticipations for the hospitality industry are optimistic, as a surge in travel demand and a craving for distinctive experiences are expected to fuel its resurgence. Nevertheless, to maintain a competitive edge, hoteliers must be prepared to accommodate evolving consumer tastes and leverage technological progress. The hospitality industry is currently undergoing substantial changes that are expected to shape its trajectory over the next five years. These evolving trends encompass various dimensions.

1. Technology Integration:

The hospitality sector is standing at the threshold of a technological revolution that promises to enhance the guest experience and streamline operations. Innovations such as mobile check-ins, smart room keys, and remote interactions with hotel services are becoming increasingly prevalent. Guests can now perform tasks like room bookings, ordering room service, requesting housekeeping, and making payments using their mobile devices. A report by Google and Boston Consulting Group predicts that the Indian online travel market will reach USD 13.6 billion by 2023, with a compounded annual growth rate (CAGR) of 13.5% from 2023 to 2028.

2. Sustainability:

In alignment with the Swachh Bharat Abhiyan, the Indian government’s nationwide cleanliness campaign, hotels and resorts are actively implementing zero waste management systems. These initiatives involve the adoption of eco-friendly materials, the introduction of composting systems, and the promotion of recycling. Sustainability is gaining increasing importance as global attention is directed towards environmental responsibility.

3. Personalization:

With the abundance of guest data, hotels and resorts are harnessing the potential of data-driven personalization. This encompasses tailoring room preferences, crafting custom packages, and offering recommendations based on guests’ interests and past behavior. The utilization of mobile applications plays a crucial role in delivering these personalized experiences.

4. Health and Wellness:

The concept of wellness in the hospitality industry has evolved to include not only
physical health but also mental and emotional well-being. Hotels and resorts are now
providing comprehensive wellness programs that incorporate mindfulness practices,
yoga, meditation, and wellness coaching. Immersive wellness experiences extend
beyond spa treatments and fitness classes to encompass outdoor activities, cultural
experiences, and retreats in natural settings.

5. Rise of Bleisure Travel:

More people are combining work and leisure when they travel. The phenomenon of bleisure travel is gaining prominence, prompting hotels to cater to the needs of both business and leisure travelers. This trend includes the provision of high-speed internet workspaces and recreational amenities such as spas, fitness centers, and rooftop bars. Hotels are also adopting flexible booking options to accommodate the unpredictable schedules of business travelers, including flexible cancellation policies and 24-hour check-in/check-out.

In summary, the hospitality industry is in a state of continuous evolution. To thrive in this dynamic environment, hotels and resorts must proactively embrace these emerging trends and implement innovative solutions. By doing so, they can provide memorable and fulfilling experiences for guests while maintaining their competitiveness in this rapidly changing landscape.

Neogen Chemicals’ EBITDA Soars to 29.46 Cr fueled by lower input costs

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Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 30, 2023

Credag outperforms analyst expectations Profit soar to 349 Cr

Company Overview:

CreditAccess Grameen Ltd is a Non-deposit taking NBFC-MFI (Micro Finance Institution) that specializes in providing microfinance loans, including income generation loans, family welfare loans covering medical and education expenses, home improvement loans for water and sanitation, and retail finance loans. The company also offers a wide range of products, such as unsecured business loans, 2-wheeler loans, gold loans, housing loans, and life insurance. They have expanded their reach by adding 51 new branches, bringing their total to 1,877 branches, and adding 3.36 lakh new customers, with 40% coming from states outside the top 3. Recently, the company raised 990 Cr through public NCDs with an average coupon rate of 9.3% and an average tenure of 3 years.

Robust Business momentum:- GLP/disbursement growth-36% YoY/13.5% YoY

In Q2FY24, the company experienced a significant growth in its Gross Loan Portfolio (GLP), which increased by 36% YoY and 3.1% QoQ, reaching 22,488 Cr. Disbursement amounts also grew by 13.5% YoY and 4.1% QoQ, totaling 4,966 Cr. Income generation loans (IGL) constituted 94% of the GLP, indicating a concentration risk on this product. The number of borrowers increased by 21.2% YoY and 4.1% QoQ, reaching 46.03 lakh.

Well Structured Liability Management:

CreditAccess Grameen Ltd has focused on securing long-term funding from foreign sources to mitigate short-term refinance risks. Their liability mix by tenure stands at 70% for long-term instruments, 23.5% for medium-term, and 6.7% for short-term as of Q2FY24. They maintain a diverse lender base, which includes 46 commercial banks, 3 financial institutions, 16 foreign lenders, and 6 NBFCs. Their cost of borrowing stood at 9.8% in Q2FY24

Asset Quality Improved & Strong CAR – 25% in Q2

The company’s asset quality improved significantly in Q2FY24, with Gross Non-Performing Assets (GNPA) reducing by 140 bps YoY and 12 bps QoQ to 0.77% amounting 173 Cr. Net Non-Performing Assets (NNPA) also declined by 53 bps YoY and 3 bps QoQ to 0.24% amounting 53 Cr. The company maintains a robust capital adequacy ratio of 25%, well above the RBI guideline of 15%. Collection efficiency stood at 98.7% in Q2

Valuation and key ratio: – ROA 170+ bps/ ROE 900+ bps/NIMs 110+ bps in Q2

The company’s stock is currently trading at 4.31 times its book value amounting to 364 per share at 1,571 Rs. In Q2FY24, they reported impressive return ratios, with Return on Equity (ROE) improving by 900 bps YoY and decreasing by 170 bps QoQ to 24.7%. Return on Assets (ROA) stood at 5.6%, growing by 170 bps YoY and decreasing by 20 bps QoQ. Net Interest Margins (NIMs) increased by 110 bps YoY and 10 bps QoQ to 13.1%, while the cost of borrowing grew by 60 bps YoY to 9.8%. The interest coverage ratio stood at 2.13x, indicating the company’s solvency.

Q2 FY24 Results Highlights: Standalone

➡️ In Q2FY24, the company saw significant growth in interest income, which increased by 53.95% YoY and 7.44% QoQ to 1,187 Cr. Interest expenses also grew by 55.13% YoY and 10.12% QoQ to 424 Cr, resulting in Net Interest Income (NII) reaching 763 Cr, a growth of 53.29% YoY and 6.01% QoQ, due to an increased yield on loans by 200 bps YoY and 40 bps QoQ to 21.1%.

➡️ Pre-provision operating income (PPOP) increased by 68.91% YoY and 4.28% QoQ to 565 Cr, attributed to a decline in the cost-to-income ratio by 650 bps YoY to 31.7%.

➡️ Provision decline 9.03% YoY (+25.46% QoQ) to 96 Cr while credit cost stood at 1.60% due to healthy asset quality in Q2FY24.

➡️ Net Interest Margins (NIMs) increased by 110 bps QoQ to 13.1%, while the cost of borrowing increased by 60 bps YoY.

➡️ Profit After Tax (PAT) surged by 99.38% YoY and 0.84% QoQ to 349 Cr, driven by strong GLP growth 36% YoY, NIMs improvement 110+ bps YoY, and cost efficiency. EPS for the quarter stood at 21.96 Rs (PQ-21.78) grew 99.38% YoY and 0.84% QoQ

Conclusion:

CreditAccess Grameen Ltd appears to be on a strong growth trajectory with robust business momentum, well-managed liabilities, improved asset quality, and impressive financial performance in Q2FY24. The company’s focus on microfinance and other financial products, along with its diverse funding sources, positions it favorably in the market. The positive financial ratios and strong capital adequacy further enhance its prospects. However, there may be a need for diversification in the product portfolio to reduce concentration risk.

Q2FY24: Shriram Finance reports robust AUM growth Drives NII soars to 4,594 Cr

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

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 27, 2023

Q2FY24: Shriram Finance reports robust AUM growth Drives NII soars to 4,594 Cr

Company Overview:

Shriram Finance, a prominent Non-Banking Financial Company (NBFC) in the retail finance industry, has been a leading provider of financial services in various sectors, including passenger vehicles, construction equipment, MSMEs loans, gold loans, personal loans, and working capital loans. Notably, the company has shown exceptional growth by opening 100 new branch offices in the past year, expanding its reach to 2,975 branches in Q2 FY24, including 1,027 in semi-urban areas, 1,552 in rural areas, and 396 in urban areas. Shriram Finance’s total Assets Under Management (AUM) have impressively crossed the 2,000 billion mark in Q2 FY24, registering a YoY growth of 19.65%. The company serves a vast customer base of 7.71 million individuals across India.

Robust AUM growth crossed 2,000+ bn in Q2FY24:

In Q2 FY24, Shriram Finance achieved a remarkable milestone by crossing the 2,000 billion AUM threshold, demonstrating a substantial YoY increase of 19.65%. The growth was particularly prominent in the passenger vehicles segment, which saw a 32% YoY surge, along with personal loans at 73% YoY, MSME loans at 25.67% YoY, and two-wheeler loans at 22.49% YoY. Notably, passenger and commercial vehicles collectively accounted for approximately 70% of the AUM in Q2 FY24, firmly establishing Shriram Finance’s leadership in commercial vehicle financing.

Segment wise – PL/MSME/PV outperform in Q2

In Q2 FY24, specific segments stood out with remarkable performance. The personal loan (PL) portfolio surged by 73.34% YoY, reaching 88,384 million INR, with a Gross Stage 3 (G3) rate of 5.17%. Similarly, the MSME loan book reached 213,103 million INR, growing by 25.67% YoY, and the Gross Stage 3 (GS) rate stood at 5.42% in Q2. The passenger vehicles loan book registered substantial growth, reaching 396,935 million INR, up by 32.30% YoY, with a GS rate of 6.26%.

Asset Quality improved (GNPA/NNPA), CAR maintained at 22.15% in Q2:

In Q2 FY24, Shriram Finance demonstrated enhanced asset quality, with a reduction in Gross Non-Performing Assets (GNPA) on both YoY and QoQ bases, declining to 5.79%. Moreover, Net Non-Performing Assets (NNPA) also decreased to 2.80% in Q2 FY24, compared to 3.32% in Q2 FY23. The Capital Adequacy Ratio (CAR) stood at a healthy 22.15%, well above the RBI guideline of 15% for NBFCs.

Valuation and Key Ratios:

Shriram Finance’s stock is currently trading at 1.46 times its book value, amounting to 1,234 INR per share at a current price of 1,798 INR. The return ratios improved in Q2, with Return on Equity (ROE) at 15.40% in Q2 FY24, compared to 15.19% in the previous quarter, and Return on Assets (ROA) at 3.14% in Q2 FY24, versus 3.08% in Q1 FY24. The Interest Coverage Ratio stood at 1.64x, indicating the company’s solvency.

Q2 FY24 Results Highlights: Standalone

➡️ In Q2 FY24, the company’s interest income grew by 15.81% YoY (+6.88% QoQ) reaching 8,216 crore INR, while interest expenses increased by 11.98% YoY (+3.85% QoQ) to 3,621 crore INR. Consequently, Net Interest Income (NII) reached 4,594 crore INR, marking a 19.02% YoY (+9.39% QoQ) growth.

➡️ PPOP grew by 16.27%YoY (+11.34% QoQ) to 3,480 Cr mainly due to a decline in the cost-to-income ratio to 25.68%.

➡️ NIMs improved by 60 basis points, standing at 8.93% (PQ-8.33%). This improvement was primarily driven by the outstanding performance of personal loans, MSME loans, and passenger vehicles in Q2.

➡️ PAT surged by 12.59% YoY (+4.50% QoQ) to 1,751 crore INR, attributed to strong AUM growth, NIMs+8%, and operating efficiency, resulting in an Earnings Per Share (EPS) of 46.69 INR for the quarter (PQ-44.68) grew 4.5% QoQ.

Conclusion:

In conclusion, Shriram Finance’s Q2 FY24 performance underscores its continued growth and stability in the retail finance industry. With a substantial increase in AUM, improving asset quality, and solid financial ratios, the company is well-positioned for sustained success in the coming quarters, making it a notable player in the NBFC sector.

Neogen Chemicals’ EBITDA Soars to 29.46 Cr fueled by lower input costs

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India Readies Rs 25,000 cr boost for its electronics components industry

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 26, 2023

India Takes Standardised road to Charge up EVs

Introduction:

India is taking a standardised approach to electric vehicle (EV) charging in order to boost the adoption of EVs in the country. The government is preparing to introduce a standardised charging protocol, which would allow users to charge their EVs at any available charging station nationwide.

The Need for Standardisation:

Currently, there is a lack of uniformity in EV charging infrastructure in India. Different
charging stations use different connectors and charging standards, which can be confusing and inconvenient for EV users. This lack of standardisation has also been a barrier to the adoption of EVs in India.

This action has been prompted by significant concerns raised by influential players within the industry regarding the lack of consistency in electric vehicle (EV) charging infrastructure. This inconsistency has led to complications in achieving interoperability.

The government’s plan:

A senior government official has stated that the primary aim is to establish standardized
protocols that can be universally adopted within the entire EV sector. The proposed solution involves either implementing a singular charging standard that is applicable to all types of EVs or, as an alternative, introducing two distinct standards: one for two-and three-wheelers and another for four-wheelers. It should be noted that the prevailing consensus appears to favour the latter option.

India faces a significant challenge in building an extensive network of public and community EV charging stations, especially in major metropolitan areas, as the adoption of electric vehicles, particularly two-wheelers, continues to grow.

The Ministry of Power has outlined five primary categories for EV charging infrastructure, including Electric Vehicle Supply Equipment (EVSE), which provides the necessary equipment for EV charging, Public Charging Stations for widespread access, Battery Charging Stations for recharging discharged or partially charged EV batteries, Captive Charging Stations under the control of station owners, and Battery Swapping Stations where electric vehicle owners can exchange their depleted batteries for fully charged ones.

As of the end of 2022, India had 2,700 public charging stations with 5,500 connectors available for electric vehicles (EVs). Counterpoint Research predicts that by the close of 2025, India is likely to increase its public charging stations to 10,000, but there’s a considerable challenge ahead to reach the estimated requirement of around 20.5 lakh charging stations by 2030, especially as EV sales need to surge in the meantime. Raghav Arora, the Co-Founder and CTO of EV charging solutions provider Statiq, points out that as the demand for EVs continues to grow significantly, the need for accessible and affordable public and community charging stations will also increase. Personal charging stations with the necessary capacity might not be a feasible solution for many. Statiq has an existing network of over 7,000 chargers across more than 60 cities and has ambitious plans to install 20,000 EV chargers throughout the country in the fiscal year 2023. They are actively collaborating with public sector undertakings (PSUs), corporations, and EV fleets to provide suitable charging solutions and ensure smooth operation within their respective areas. Additionally, they are setting up community charging stations in urban housing complexes at no cost. In recent years, EV sales in India have been consistently reaching record levels, reflecting changing consumer attitudes toward electric mobility. By 2025, the market share of electric
passenger vehicles in India is expected to surpass 6%. The three-wheeler segment currently leads the market with a 4% share, followed by two-wheelers at 3.5% and passenger vehicles at 1.3%, according to Soumen Mandal, a senior research analyst at Counterpoint specializing in IoT (internet of things), automotive, and device ecosystems.

The Indian government has been actively promoting the electric vehicle (EV) industry through initiatives like FAME-I and FAME-II, with a particular emphasis on expanding the charging infrastructure. They have set ambitious targets to electrify different vehicle segments, aiming for 70% of commercial vehicles, 30% of private cars, 40% of buses, and 80% of two-wheelers and three-wheelers to be electric by 2030.

Sohinder Gill, CEO of Hero Electric, shared that their company is committed to enhancing the EV charging network by collaborating with various EV technology firms such as Statiq, BOLT, Charzer, Massive Mobility, and Log9 Materials. They plan to install over 1 lakh charging points across India. Additionally, they aim to leverage this infrastructure to jointly develop electric vehicles, incorporating insights from the Indian market and their own research and development capabilities, in order to advance the electrification of India’s mobility sector.

It’s worth noting that the current state of India’s EV market has limited capacity for fast
charging electric vehicles. However, looking ahead, there will be a growing need for public fast-charging infrastructure, supplemented by AC chargers with capacities ranging from 3-22kW at workplaces, shopping centres, and restaurants to support the evolving charging needs in India. The government is currently consulting with industry stakeholders to get their feedback on the two options. The final decision on the charging standard is expected to be announced soon

Benefits of Standardisation

• EV users will be able to charge their EVs at any available charging station, regardless
of the make or model of their vehicle.
• Standardisation will lead to economies of scale, which will reduce the cost of
manufacturing and installing charging stations.
• Standardisation will make the Indian EV market more attractive to investors, which will
lead to increased investment in EV charging infrastructure.

Conclusion

The standardisation of EV charging in India is a positive step that will boost the adoption of EVs in the country. The government’s plan to introduce a standardised charging protocol is a welcome move that will make it easier and more convenient for people to use EVs.

Neogen Chemicals’ EBITDA Soars to 29.46 Cr fueled by lower input costs

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