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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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Nykaa Q2FY24 results: A Beauty brand on the rise with 5x growth

Nykaa Q2FY24 results: A Beauty brand on the rise with 5x growth

Company Overview:

Nykaa, established in 2012 by Falguni Nayar, stands as a prominent Indian e-commerce company specializing in beauty, wellness, and fashion products. Over the years, the company has experienced substantial growth, becoming a household name in India. Nykaa’s product range encompasses offerings from both local and international brands. Nykaa has a cumulative customer base of over 21 million, with over 3,600 domestic and international brands available across its 165 physical stores. The company also has over 80 participating brands and over 800 influencers, MUAs, and KOLs. Additionally, Nykaa has generated over 5,000 pieces of content.

Nykaa Q2 Business Segment Highlights:

Nykaa’s primary revenue driver is the Beauty and Personal Care (BPC) segment, contributing 77.9% of its revenue, 15.5% for Fashion, and 6.6% for other categories. The Compound Annual Growth Rate (CAGR) of the Gross Merchandise Value (GMV) has been 31%. The customer base has grown significantly, with 21% new consumers and 79% old customers totalling 20,016 in total. Nykaa’s product selections include over 3,600 foreign and domestic brands, as well as over 10,000 new Stock Keeping Units (SKUs) among the top 400 brands.

Strong key metrics:

In the fiscal year 2023, Nykaa demonstrated strong performance across both the Beauty and Personal Care (BPC) and Fashion segments. The BPC segment experienced a noteworthy 6% QoQ increase in monthly average visitors, reaching 26.8 million. This surge translated into a total of 10 million orders, marking a substantial 4% QoQ growth. The average order value (AOV) remained consistently strong at INR 1,916.

The Gross Merchandise Value (GMV) for the BPC segment exhibited robust growth, escalating by 8% QoQ to INR 20,016 million. Moving to the Fashion segment, there was a 6% QoQ rise in monthly average visitors, reaching 17.6 million. This uptick contributed to 1.7 million orders, reflecting a significant 18% QoQ increase, with the AOV steadily growing to INR 4061. Notably, the Fashion GMV demonstrated remarkable growth, surging by an impressive 17% QoQ to INR 7628 million.

Nykaa’s Offline Expansion:

Nykaa has significantly broadened its footprint, establishing 165 physical stores in over 60 cities across India. These stores feature three distinct formats: Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks. In Q2FY24 alone, the company successfully launched 13 new stores, contributing to an impressive 34% year-on-year (YoY) growth. This offline expansion has proven impactful, with an 8% contribution to the overall Gross Merchandise Value (GMV) in the Beauty and Personal Care (BPC) segment.

Nykaaland 2023: India’s Premier Beauty Festival

Nykaa, in its grandest celebration, hosted Nykaaland 2023, marking India’s biggest beauty festival. The event witnessed enthusiastic participation with over 80 brands, collaboration with 800 influencers, MUAs, and KOLs, resulting in the creation of over 5,000 diverse content pieces. This extravaganza drew a massive crowd, with more than 15,000 attendees immersing themselves in the beauty experience. Nykaa’s strategic social media and influencer outreach achieved a staggering reach of 525 million, amplifying the festival’s impact. A unique highlight was the first-time early access for Prive Gold & Platinum members.

Valuation and Key Ratios:

Nykaa’s stock valuation is notably high, standing at a multiple of 2,490 PE, with a market price of INR 171. This is in sharp contrast to the industry PE of 46.5. The company reports return ratios, with ROE at 1.42% and ROCE at 5.52%. Additionally, the stock is trading at 35.04 times its book value, and the EV/EBITDA stands at 149x.

Nykaa’s Q2FY24 Financial Performance:

Nykaa has experienced a notable 50% year-on-year (YoY) surge in net profit, reaching INR 7.8 crore. In Q2FY24, Nykaa maintained its upward trajectory, achieving a 22% YoY increase in revenue, reaching INR 15,070 crore. The key driver of this growth was the Beauty and Personal Care (BPC) segment, witnessing an 18% YoY surge to INR 12,782 crore, complemented by a robust 28% YoY increase in the Fashion business. The GMV soared to INR 29,435, reflecting a substantial 25% YoY growth, with significant contributions from both the BPC and Other business segments. EBITDA exhibited a noteworthy 10% QoQ increase, reaching INR 806 crore, and margins expanded by 18 bps QoQ. The PAT also demonstrated growth, reaching INR 7.8 crore.

Conclusion:

Nykaa, founded in 2012, has become a major force in Indian beauty and fashion e-commerce. With a customer base of over 21 million, 3,600 brands, and 165 physical stores, the company has witnessed substantial growth. Key Q2FY24 highlights include a 22% YoY revenue increase, with the BPC segment leading at 18% YoY growth. Nykaa’s offline expansion, showcased by 165 stores, and successful events like Nykaaland 2023 contribute to its strong market presence. Despite a high stock valuation, Nykaa’s financial indicators and a 50% YoY surge in net profit indicate a robust and strategic position in the industry.

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Resilient Kokuyo Camlin: Impressive Profit Growth Amid Q2

Resilient Kokuyo Camlin: Impressive Profit Growth Amid Q2

Company Overview:

Kokuyo Camlin, a renowned company specializing in the production and marketing of stationery and art products, has a robust background. The company, now majority-owned by the Japanese stationery giant Kokuyo with a 74.4% stake, boasts an extensive product portfolio, including writing instruments, notebooks, marker pens, inks, fine-art colors, and various other stationery products.

Robust Manufacturing Facilities

Operating three manufacturing sites in Patalganga, Tarapur, and Jammu, the company’s Patalganga facility leads in production volume with over 324 SKUs annually. Tarapur follows with 800 SKUs, and the Jammu plant contributes 393 SKUs. Kokuyo Camlin caters not only to the local market but also exports its products to other countries.

Camlin Leads Stationery Market with 54% Paper, 34% Non-Paper Share

The stationery market is composed of two main categories: paper and non-paper stationery products. Camlin dominates the stationery market with a 54% market share in paper and 34% in non-paper. The paper industry, valued at ₹21,000 Crores, witnesses an 8% growth, with Camlin contributing ₹11,500 Crores. In the ₹17,500 Crores non-paper industry, Camlin holds a share of ₹6,100 Crores, in a market growing at 7.6%. Overall, the industry has shown significant growth.

Top-Line Momentum Sustained YoY while Dip QoQ in Q2FY24

In Q2FY24, the company reported a revenue of 194.8 Cr, marking a 2.6% YoY growth but a 17.3% QoQ decline. Despite moderate growth in top line, the management maintained raw material expenses, resulting in a 6.4% YoY boost in gross profit to 77.4 Cr, but down 12.2% QoQ.

Despite top line challenge, PAT up147% YoY on Lower Finance Cost & Tax Rate

Despite moderate top-line growth, Profit After Tax (PAT) soared by an impressive 147% YoY to 9.5 Cr, though it experienced a 48.3% QoQ downturn. This remarkable bottom-line growth was driven by decreased interest expenses, which fell 43.3% YoY and 58.8% QoQ to 0.47 Cr, and a lowered tax rate, dropping to 24% compared to 60% in Q2FY23.

Valuation and Key Ratios:

Presently, Kokuyo Camlin trades at a multiple of 40.3x EPS (TTM) 4 Rs at a market price of 161 Rs, with the industry PE standing at 26.2x. The company is trading at 5.64x its book value of 28.6 Rs per share. In the EV/EBITDA multiple, it ranks third among its top peers with a multiple of 21.7x, while the industry median is at 15.3x. The trailing twelve-month Return on Equity (ROE) and Return on Capital Employed (ROCE) stand at 9.26% and 12%, respectively. The interest coverage ratio in Q2FY24 stands at 27.4x, indicating the company’s solvency.

Q2FY24 Results Updates: Standalone

➡️In Q2FY24, revenue grew by 2.6% YoY but experienced a 17.4% QoQ decline to 194.8 Cr. Despite the moderate revenue growth, gross profit increased by 6.4% (down 12.2% QoQ) to 77.4 Cr, driven by prudent management of raw material costs.

➡️Gross margin showed improvement, rising 233 basis points (bps) QoQ and 140 bps YoY to 39.7% in Q2FY24 compared to 37.4% in the previous quarter.

➡️EBITDA increased by 18% YoY (down 28.6% QoQ) to 17.3 Cr, attributed to low raw material costs and operating leverage. The EBITDA margin, up 115 bps YoY but down 140 bps QoQ, stood at 8.9% in Q2FY24.

➡️Operating profit (EBIT) witnessed a YoY growth of 23.4% (down 35.6% QoQ) to 12.9 Cr, with the EBIT margin up 111 bps YoY but down 188 bps, standing at 6.6% in Q2FY24.

➡️PAT surged impressively by 147% YoY (down 48.3% QoQ) to 9.5 Cr, driven by lower interest costs (down 43.3% YoY), increased other income, and a reduced tax rate.

➡️Earnings Per Share (EPS) for the quarter stood at 0.95 Rs compared to 1.84 Rs in the previous quarter.

Conclusion:

Kokuyo Camlin, a leading stationery and art products company, faces QoQ revenue decline but sustains YoY growth. Despite top-line challenges, prudent cost management boosts gross profit and results in an impressive 147% YoY increase in PAT. The company trades at a PE of 40.3x, showing a premium compared to the industry. Key highlights include improved gross margin

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Navigating Innovation: Tata Technologies in Engineering Excellence and Risk Mitigation

Navigating Innovation: Tata Technologies in Engineering Excellence and Risk Mitigation

Tata Technologies Limited is an Indian multinational company that provides engineering and design services, product lifecycle management, manufacturing, and IT service management to the automotive and aerospace industries. It has a global presence, with offices in 19 countries.

Company Overview:

Tata Technologies, founded in 1989, has established itself as a prominent player in the field of engineering solutions. With a history spanning several decades, the company has built a reputation for delivering innovative and reliable services to its clients. Specializing in engineering solutions, Tata Technologies has become a trusted partner for some of the global leaders in the automotive and aerospace industries.

The company’s client portfolio includes renowned names such as Jaguar Land Rover, Ford, Fiat Chrysler Automobiles, Airbus, and Boeing, showcasing its ability to collaborate with major Original Equipment Manufacturers (OEMs). Over the years, Tata Technologies has likely contributed significantly to the development and advancement of technology in the automotive and aerospace domains. The company’s focus on innovation and engineering excellence has likely played a pivotal role in shaping its success and maintaining long-term relationships with industry leaders.

Tata technologies core services:

1. Engineering, Research and Development (ER&D):
Tata Technologies’ ER&D services are focused on assisting global manufacturing customers throughout the product development lifecycle. This involves conceptualization, design, and development to create improved and sustainable products. The emphasis on sustainability suggests a commitment to environmentally conscious engineering solutions.

2. Digital Enterprise Services (DES):
The Digital Enterprise Services are tailored to help manufacturing customers leverage technology for various aspects of their operations. This includes identifying and deploying technologies, tools, and solutions to enhance manufacturing processes, service delivery, and overall product realization. This aligns with the modern trend of digital transformation in manufacturing.

3. Education Offerings:
Tata Technologies collaborates with universities and governments to contribute to the education sector. The company plays a role in equipping the next generation of engineers with the skills needed in the manufacturing industry. Additionally, offering a digital learning system to businesses and individuals reflects a commitment to addressing training needs in a dynamic digital environment.

4. Products and Value Added Reselling (VAR):
Tata Technologies assists its customers in identifying and deploying product development software from partners. Acting as a Value Added Reseller (VAR), the company adds value to these products, helping customers manufacture, service, and bring superior products to market successfully

Tata Technologies Industries: Driving Excellence Across Sectors-

 Automotive Innovation:
Navigating the automotive industry’s radical transformation, Tata Technologies delivers end-to-end solutions. From electric vehicle engineering to digital transformation, their expertise spans the entire automotive value chain. They accelerate product launches, optimize operations, and enhance customer experiences, shaping a connected, autonomous, shared, and electric future.

 Global Industrial Heavy Machinery (IHM):
In a shifting Industrial Heavy Machinery landscape, Tata Technologies provides comprehensive solutions. Their offerings, covering engineering, manufacturing, and customer experience, empower manufacturers to meet global infrastructure demands efficiently. Leveraging digital enterprise solutions, they minimize production costs, accelerate time to market, and guide their clients towards Industry 4.0.

 Aerospace Advancements:
As the aerospace industry undergoes a transformative phase, Tata Technologies contributes cutting-edge solutions. Their aerospace portfolio spans engineering, manufacturing, and customer services, addressing the industry’s need for innovative, high-precision products. With advanced technologies and a focus on customer experiences, they redefine excellence in aerospace engineering and services.

Risk factors associated with tata technologies:

 Dependence on key clients: Tata Technologies’ business is strongly reliant on a few important customers, notably Jaguar Land Rover, Ford, Fiat Chrysler Automobiles, Airbus, and Boeing. If any of these clients reduces their spending or switches to a new provider, Tata Technologies’ revenue and profitability could suffer significantly.

 Exposure to global economic conditions: As Tata Technologies works in a global market, it is subject to swings in global economic conditions. A faltering global economy could result in lower demand for Tata Technologies’ services, significantly impacting its financial performance.

 Technological advances: The engineering services business is continually evolving, with new technologies arriving on a regular basis. To be competitive, Tata Technologies must be able to keep up with these changes. If it does not, it risks losing clients to more innovative competition.

 Currency fluctuations: Tata Technologies operates in a number of countries worldwide, and its revenue is denominated in a number of currencies. Exchange rate fluctuations might have an impact on the company’s performance.

 Regulatory risks: In the countries where it works, Tata Technologies is subject to a range of rules. Changes in this legislation may have an impact on the company’s ability to operate in certain markets.

 Project risks: Projects at Tata Technologies are frequently difficult and require a high level of technical competence. If a project fails to reach its goals, it may result in financial losses and damage to the company’s reputation.

 Talent acquisition and retention: Tata Technologies’ services are delivered by a competent staff. If the organization is unable to attract and retain great personnel, its ability to compete in the market may suffer.

 Financial investment: The corporation invests in unsecured debt instruments on occasion, including those with interest rates lower than the market rate, which has an impact on profitability. These investments include a variety of financial products. Inter-corporate deposits are held solely by the Promoter and are repayable on demand.

 Cash flows and projections: Recognizing previous negative cash flows and projecting future negatives, the business recorded negative net cash flow from operational activities for Fiscal 2022 and the six-month period ending September 30, 2023. The negative operating cash flow in Fiscal 2022 was related to the use of client advances to pay vendors. Similarly, the latter period’s negative cash flow was caused by greater advances to suppliers.

Tata technologies partnerships:

1. Mobility in Harmony (MIH) Consortium: Tata Technologies is a member of the Mobility in Harmony (MIH) consortium, indicating its commitment to engineering sustainable mobility solutions and contributing to the acceleration of innovation in future mobility.

2. PTC: Tata Technologies collaborates with PTC, a company focused on making digital transformation a reality for businesses. In this partnership, Tata Technologies serves as a system integrator (SI) and a reseller for PTC, likely working on customized innovations that deliver maximum business advantage.

3. Kovair: Tata Technologies has a partnership with Kovair, a company specializing in enabling digital transformation through DevOps solutions and enterprise tools integrations for embedded software development. As a system integrator (SI) and reseller for Kovair, Tata Technologies likely plays a role in integrating Kovair’s solutions into their services.

4. Codincity: Codincity is Tata Technologies’ cloud and digital partner. This partnership suggests that Tata Technologies is harnessing the power of the cloud to support its customers’ digital transformation journeys. The collaboration with Codincity may involve utilizing cloud technologies to enhance Tata Technologies’ offerings.

5. Logility: Tata Technologies serves as a system integrator (SI) for Logility, focusing on delivering a digital and sustainable supply chain. This partnership aims to empower customers to grow and compete through advanced supply chain solutions.

6. Dassault Systèmes: Tata Technologies acts as a reseller for Dassault Systèmes, a company known for developing product development applications. This collaboration enables Tata Technologies to offer a range of tools and solutions that help customers thrive throughout the entire product lifecycle.

7. SAP: Tata Technologies has a partnership with SAP, where it functions as a sell partner. SAP is renowned for transforming enterprise processes, enhancing customer satisfaction, and enriching employee experiences. Through this collaboration, Tata Technologies likely provides SAP solutions to its clients.

8. Siemens: Tata Technologies plays a dual role as a system integrator (SI) and a reseller for Siemens. Siemens is recognized for empowering companies to embrace complexity, leveraging it to enhance productivity and gain a competitive advantage. This partnership positions Tata Technologies to integrate Siemens’ solutions and serve as a reseller. 

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

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Neogen Q2FY24: Resilient Top-Line Amid Export Market Slowdown

Neogen Q2FY24: Resilient Top-Line Amid Export Market Slowdown

Company Overview:

Neogen Chemicals specializes in the production of specialty chemicals for the pharmaceutical, engineering, and agro-chemical industries. Offering 248 products to domestic and international markets, the company operates four manufacturing sites and two R&D facilities. With a total production capacity of 463 liters cubic meters in organic chemicals and 39 liters cubic meters in inorganic chemicals, Neogen Chemicals exports to 29 countries, with the USA, Europe, and Japan contributing 31% to revenue in Q2FY24.

Capacity expansion in existing and battery business & Current project updates

In its existing business, Neogen Chemicals increased organic chemical capacity by 60,000 liters and inorganic chemical capacity from 1,200 MT (15 m^3) to 2,400 MT (30 m^3). In the battery chemical business, a new capacity of 400 MTPA was added for manufacturing Lithium Electrolyte Salts & Additives. The company aims to commission 29 m^3 of chemicals by March 2024, with an additional 31 m^3 commissioned by Q4FY24. This expansion is complemented by a recent fund raise of 253 Cr, which is expected to reduce finance costs.

Debt repayment from recent funds is expected to cut finance costs

In Q2FY24, the company successfully raised 253 Crores through preferential allotment, a strategic move aimed at retiring some existing debt. This capital infusion contributed to a reduction in interest costs in the near term. However, in the most recent quarter, PAT experienced a decline of 7.6% Year-over-Year (YoY) and a significant 20% Quarter-over-Quarter (QoQ) decrease, amounting to 9.14 Crores. This decrease in PAT can be attributed to escalated interest costs and increased depreciation during the period.

Despite a slowdown in the export market, top-line momentum continues to sustain.

Despite challenges such as global inventory destocking, a slowdown in the export market, and geopolitical uncertainties, Neogen Chemicals sustained a standalone revenue growth of 13.1% YoY (-1.1% QoQ) to 168 Cr in Q2FY24. This resilient top-line performance is attributed to recent capacity expansions and contributions from Buli chemicals.

Enhanced EBITDA (8.21% YoY) through Product Mix Optimization:

The company reported a standalone EBITDA of 26.2 Cr, marking an 8.21% YoY increase (-10.9% QoQ). This growth is attributed to an improved product mix and rationalization of raw material costs. While EBITDA margins experienced a slight decline, the overall operational efficiency improved.

Valuation and Key Ratios:

Neogen Chemicals is currently trading at a multiple of 77.5x EPS (TTM) at a market price of 1,542, with an industry PE standing at 32.7x. The company’s trading at 7.74x its book value of 199 Rs per share. The trailing twelve-month ROE and ROCE stand at 10.9% and 13.2%, respectively. In terms of EV/EBITDA multiple, the company ranks 4th among its top 8 peers, with a multiple of 34.4x, compared to the industry median of 16.1x. The interest coverage ratio of 1.98x in Q2FY24 signifies the company’s solvency.

Q2FY24 Results Updates: Standalone

➡️In Q2FY24, standalone revenue grew 13.5% YoY (-1.1% QoQ) to 168 Cr despite a slowdown in the export market, driven by an increase in capacity expansion.

➡️Gross profit grew 3.8% YoY to 71.9 Cr, with a 22.1% YoY increase in COGS. However, gross margin declined by 400 bps YoY to 42.7%.

➡️EBITDA boosted 8.2% YoY (-10.9% QoQ) to 26 Cr led by improved product mix. EBITDA margin down 78 bps YoY (172 bps QoQ) to 15.6%.

➡️Operating profit (EBIT) grew 4.61% YoY and down 13.1% QoQ to 21 Cr due to an increase in depreciation (27% YoY) with several CAPEX initiatives.

➡️PAT is down by 7.58% YoY (-20% QoQ) to 9 Cr on account of higher finance costs and depreciation.

➡️EPS for the quarter stood at 3.67 Rs while the previous quarter was 4.59 Rs.

Conclusion:

Neogen Chemicals, specializing in specialty chemicals, demonstrated resilience in Q2FY24 with sustained revenue growth despite global challenges. Capacity expansions in existing and battery businesses, coupled with successful debt repayment and enhanced EBITDA, contribute to the company’s positive outlook. While facing a decline in PAT due to increased finance costs, Neogen remains strategically positioned for future growth.

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

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PTC India's Q2FY24: Resilient Growth in Power Trading and Financing Operations

PTC India’s Q2FY24: Resilient Growth in Power Trading and Financing Operations

Company Overview:

PTC India is primarily engaged in power trading, generation, and providing financing services across the energy value chain, including projects in generation, transmission, and distribution. Its financing business operates through the subsidiary company PTC India Financial Service Ltd (PFSL), registered as an NBFC with RBI. Additionally, its subsidiary PTC Energy Ltd (PEL) is involved in the import and export of coal, fuels into electricity, fuels linkages, and provides advisory services in the energy sector.

Moderate growth in volumes (1.45% YoY), while core margins rises by 16.1% YoY

Power trading volumes experienced a slight YoY increase of 1.45% to 21,316 million units, with core margins seeing a significant rise of 16.1% YoY to 3.96 paisa per unit. The increase in volumes from long-term and medium-term contracts offset the decline in short-term contract volumes. Long-term and medium-term contracts now constitute 53% of total volumes in Q2FY24.

EBITDA Rises by 29.8% YoY led by higher surcharge income

PTC India reported a standalone EBITDA of Rs 118 Cr, reflecting a substantial YoY increase of 29.8% and a QoQ growth of 5.7%. This growth was primarily led by higher surcharge income, amounting to Rs 34.5 Cr compared to Rs 11.8 Cr in Q2FY23. Operating expenses also showed a notable decline of 40% YoY. Standalone PAT surged by an impressive 113.3% YoY (48.4% QoQ) to Rs 133 Cr, attributed to higher surcharge income and a lower effective tax rate.

Power Trading Volume Mix in Q2FY24

As of Q2FY24, long-term and short-term contracts collectively account for 98% of total trading volumes, with long-term contracts constituting 53% and short-term contracts 45%. Medium-term contracts contribute a minor 2% to the total trading volume.

Valuation and Key Ratios:

Currently trading at a multiple of 8.91x EPS (TTM) of Rs 17.6, PTC India’s market price of 156 implies a significant undervaluation and industry PE stands at 35.6x. With a book value of Rs 172 per share, the company is trading at 0.9x its book value. In terms of EV/EBITDA multiple, PTC India is notably undervalued among its peers at 6.2x, while the median EV/EBITDA for the industry is 19.2x. Trailing twelve months ROE and ROCE stand at 9.03% and 9.21%, respectively, indicating the company’s solvency. The interest coverage ratio is at a comfortable 2.36x.

Q2FY24 Results Updates: Standalone

➡️Power trading volumes saw a slight YoY increase of 1.45% to 21,326 million units, attributed to a decline in short-term contract volumes and a rise in long-medium term contracts.

➡️Revenue for Q2FY24 grew by 6.04% YoY (6.80% QoQ) to Rs 4,880 Cr, driven by higher volumes and surcharge income.

➡️EBITDA increased significantly by 29.8% YoY (5.75% QoQ) to Rs 118 Cr, primarily due to higher surcharge income and reduced operating expenses.

➡️Other income experienced a remarkable YoY growth of 18x and a QoQ increase of 379% to Rs 50 Cr, including a dividend of Rs 41.7 Cr received from a subsidiary company during the quarter.

➡️PAT surged by an impressive 113.2% YoY (48.4% QoQ) to Rs 133 Cr, led by higher surcharge income and a lower tax rate.

➡️EPS for the quarter stood at Rs 4.51, compared to Rs 3.03 in Q2FY23.

Conclusion:

PTC India has demonstrated resilience and growth in its power trading and financing operations in Q2FY24. The company’s strategic focus on long and medium-term contracts has mitigated the impact of declining short-term volumes. With a notable rise in EBITDA, substantial surcharge income, and prudent cost management, PTC India positions itself as a strong player in the energy sector. The undervaluation indicated by key ratios, coupled with a robust financial performance, suggests positive prospects for investors.

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

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

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

Company Overview:

PFC Ltd is a government Non-deposit-taking NBFC company primarily focused on providing finance to the power, logistics, and infrastructure sectors. Additionally, it offers consultancy services to the power sector, facilitating the development of ultra mega power projects and independent transmission projects.

Strong Loan book growth – 19% QoQ & disbursement grew 2.5x

In Q2FY24, PFC achieved an impressive 19% QoQ growth in its loan book, reaching 4,50,000 Cr as of September 30, 2023. The YoY growth is noteworthy, driven by a consistent increase in disbursements, particularly in H1FY24, where disbursements grew 2.5x compared to the previous year, standing at around 55,500 Cr. This growth is primarily attributed to lending in the distribution sector and towards renewable energy projects.

Yield expansion moderate, while rise in funding cost pull down margins

The yield in H1FY24 stood at 9.92%, showing a moderate 7bps increase from Q1FY24. However, a simultaneous 11 bps rise in the cost of funds to 7.41% led to a 3.11% YoY decline in Net Interest Income (NII) (+6.44% QoQ). Despite this, the Net Interest Margin (NIM) for the quarter stood at 3.37%, and the interest spread at 2.51%, both within the company’s target range.

Asset quality improved & CRAR sustained above 24% reflect strong capital position

Maintaining the highest level of asset quality, PFC added no new NPA in the last six years, with an NNPA ratio standing at 1%, the lowest in six years. GNPA levels have also decreased from 4.75% in H1FY23 to 3.67% in H1FY24. As of September 2023, the Capital to Risk (Weighted) Assets Ratio (CRAR) stands at a robust 24.86%, marking a 57 bps increase from Q2FY23 levels.

Hedging portion has improved to minimise exchange risk – INR depreciation

PFC has enhanced its hedging strategies, minimizing exchange risks associated with INR depreciation. The company booked a foreign translation loss of Rs 119 Cr in Q2FY24, with 83% of the foreign currency portfolio hedged for exchange risk, compared to 68% in Q2FY23. Additionally, 100% of U.S. dollar exposure maturing in the next five years has been hedged.

On going projects worth INR 16,497 Cr in stage 3

Presently, the company has 22 stressed projects in stage 3, totaling INR 16,497 Cr. Notably, 13 projects worth INR 13,899 Cr have been successfully resolved under NCLT. Two projects in advanced stages include the Lanco Amarkantak project and the Dans Energy project, with resolution plans finalized and documentation processes underway.

Late Payment Surcharge (LPS) Scheme: Bolstering Financial Discipline in Discoms

In the realm of government initiatives, the Late Payment Surcharge (LPS) scheme spearheaded by the company has made significant strides. With a sanctioned corpus of 70,500 Cr, an impressive 31,500 Cr has already been disbursed. Notably, this scheme has achieved remarkable success, evidenced by a substantial 50% reduction in legacy dues owed by discoms to generation companies. Moreover, it has facilitated the clearance of current dues, thereby enhancing the financial discipline of discoms. The LPS scheme emerges as a pivotal instrument in fostering fiscal responsibility among discoms.

Revamped Distribution Sector (RDSS): Catalyzing Modernization and Financial Health

On another front, the Revamped Distribution Sector (RDSS) stands as a testament to the company’s commitment to modernizing discoms and fortifying their operational efficiencies and financial health. Aligned with the national electricity plan, which envisions approximately 33 lakh Cr of investments in the power sector by 2032, the RDSS is strategically positioned. As a key player, the company is actively contributing to this vision, ensuring that discoms evolve into robust entities capable of meeting the challenges of the evolving energy landscape. The RDSS is a holistic approach toward the sustainable development of the power sector.

Medium to Long-Term Growth Outlook: Tapping into a Multifaceted Opportunity

Zooming out to assess the broader landscape, the medium to long-term growth outlook reveals a vast opportunity for the company. As per the national electricity plan, a staggering 33 lakh Cr of investments are slated for the power sector by 2032. PFC currently holds the mantle as the largest lender for the renewable sector, having bolstered 25% of the current installed renewable capacity. With an eye on the future, the company anticipates maintaining this significant share in energy transition financing within the power sector. This foresight positions the company as a pivotal player in driving sustainable growth and development.

Striving for 500 Gigawatts by 2030: PFC’s Ambitious Renewable Energy Vision

Looking ahead, PFC is steadfast in its commitment to achieving a monumental milestone – 500 gigawatts by 2030. Currently boasting a formidable 187 gigawatts, the company has already disbursed a substantial 1 lakh Cr in funding to the renewable sector, commanding a noteworthy 25% market share in the current installed renewable capacity. The ambitious pursuit of 500 gigawatts underscores PFC’s pivotal role in steering the renewable energy trajectory. As a stalwart in the sector, the company is poised to play a pivotal role in shaping the future of renewable energy in the country.

Valuation and Key Ratios

Currently company Trading at 1.14x of its book value at Rs 283 per share at current market price 320. PFC’s trailing twelve months ROE and ROCE stand at 20.4% and 9.08%, respectively. The Interest Coverage Ratio at 1.58x reflects the company’s solvency.

Q2FY24 Result Highlights: Standalone

➡️ In Q2Y24, Interest income grew 12.1% YoY (+5.6% QoQ) to 10,692 Cr while interest expenses grew 22.5% YoY (+5.1% QoQ) to 6,963 Cr

➡️ As a result, NII grew 6.4% QoQ but declined 3.1% YoY to 3,729 Cr due to higher cost of funds.

➡️ Other income grew 101.1% YoY and 60x QoQ to 1,096 Cr includes dividend income of 1,074 Cr and fees & commission income of 20.3 Cr.

➡️ PPOP increased by 22.6% YoY (+27.6% QoQ) to 4,686 Cr supported by operating leverage benefit and healthy growth in other income.

➡️ PAT surged 28.3% YoY (+27.9% QoQ) to 3,847 Cr, supported by lower provisions, operating leverage benefit, and robust growth in other income.

➡️ EPS for the quarter stood at 11.6 Rs, a significant improvement from the previous quarter 9.1 Rs and Q2FY23.

conclusion

PFC Ltd demonstrates robust financial performance with significant loan book growth, prudent asset quality management, and strengthened hedging strategies. Despite a margin challenge, the company maintains a healthy capital position. The successful resolution of stressed projects and impressive Q2FY24 results further underscore PFC’s resilience and strategic positioning in the non-deposit-taking NBFC sector.

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