Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 19, 2024

OfBusiness $1 Billion IPO A Milestone in India's Startup Evolution

OfBusiness $1 Billion IPO A Milestone in India’s Startup Evolution

With plans to conduct an initial public offering (IPO) that may generate up to $1 billion, SoftBank-backed OfBusiness, an Indian startup that specialises in B2B finance and commerce, is making headlines. This IPO is not only a big step forward for the business, but it also shows how the Indian startup scene is changing. The decision was made at a time when there are a tonne of chances in the market for companies who have effectively used technology to upend established sectors.

Asish Mohapatra, Ruchi Kalra, and Bhuvan Gupta founded OfBusiness (formerly known as OFB Tech Pvt. Ltd.) in 2015, and it has quickly expanded to become a significant player in the SME financing and industrial supply chain industries in India. The business offers working capital funding, technological solutions, and raw materials to small and medium-sized businesses (SMEs). It operates at the nexus of commerce, finance, and technology.

OfBusiness has established a name for itself by serving sectors with steady and significant demand for raw materials, such as manufacturing, construction, and infrastructure. The firm has positioned itself as a one-stop shop for SMEs, who frequently suffer with credit and liquidity concerns, by providing both finance and procurement options.

With a target of raising up to $1 billion, the proposed IPO is anticipated to be among the biggest in India’s tech-driven corporate sector. Executives at the firm have stated that OfBusiness would utilise the profits from the IPO to support its goals for growth.

Given the favourable market circumstances and growing investor interest for tech-driven enterprises with great growth prospects, the timing of the IPO seems strategically sound. OfBusiness is well-positioned to benefit from the present market momentum thanks to the success of recent initial public offerings (IPOs) in India, notably those of IT and fintech businesses.

OfBusiness’s IPO gains further trust from SoftBank’s engagement, one of the biggest tech investors globally. SoftBank’s Vision Fund has a history of supporting prosperous startups, and the fund’s investment in OfBusiness demonstrates its strong belief in the company’s development potential and business plan. Furthermore, early investors like SoftBank will have the chance to partially exit and get returns on their investments thanks to the IPO. Given that SoftBank recycles funds from profitable exits into new investments, this may be very tempting to them.

Investors find OfBusiness’s IPO to be appealing for a number of reasons. First off, the business is in a fast-growing industry. Following the epidemic, the Indian economy has been steadily recovering, with the government placing a major emphasis on manufacturing and the expansion of infrastructure. As a result, there is a strong need for the financing options and raw materials that OfBusiness offers.

Second, small and medium-sized businesses (SMEs), the backbone of the Indian economy, can meet their demands using the organization’s business strategy. In India, SMEs frequently struggle with access to loans, operating cash, and procurement. By providing a smooth platform that combines financing and procurement, OfBusiness solves these problems and allows SMEs to grow their business without the typical limitations.

Although there is a lot of room for expansion with the IPO, OfBusiness will face a number of obstacles. There are many companies fighting for market share in India’s B2B financing and commerce sectors, which is getting more and more competitive. Infra.Market and Udaan are two other companies making progress in this area, and OfBusiness will need to keep coming up with new ideas to stay ahead of the competition. The macroeconomic situation also presents a unique set of hazards. Inflation and rising interest rates may have an effect on the need for finance solutions, and supply chain interruptions may have an influence on raw material availability. Businesses must use good risk management and diversification techniques to reduce these hazards.

To conclude the SoftBank backed OfBusiness $ 1 Billion IPO displays the company’s goals of maintaining its growth trajectory and solidifying its market position. OfBusiness is well-positioned for success despite the obstacles that still lie ahead because to its solid business strategy and the support of well-known investors like SoftBank. The IPO is a strong indication for the larger Indian startup ecosystem in addition to being a critical milestone for OfBusiness.

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TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

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Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 19, 2024

Tiny Titans: Grand Re-Entry of Small Cars

Industry experts predict a strong resurgence for small cars in India’s auto market, despite recent SUV dominance. Several factors point to a resurgence in demand for small cars, including a recent surge in two-wheeler sales indicating improving sentiment at the entry level of the personal mobility market, an expanding pool of two-wheeler owners looking to upgrade to four-wheelers, and the need for affordable and efficient mobility solutions in metro cities and urban areas. Small car segment to gain development by 2026, expert says.

Maruti Suzuki, India’s car market leader which previously relied heavily on small cars, is expected to expand its portfolio of such models beyond the Alto. The company plans to offer a mix of petrol, CNG, and electric options, with reports suggesting they are already testing small electric vehicles. Maruti Suzuki’s chairman, RC Bhargava, emphasized the company’s commitment to small cars at a recent annual general meeting, Bhargava emphasized the importance of affordable small cars in India’s economic landscape. Despite a temporary dip in demand, he projected a revival of the small car segment by the end of fiscal year 2025-26.

The small car segment’s market share in India has declined significantly over the years, dropping from around 50% two decades ago to just 3.24% currently. This decline coincided with a sharp increase in average vehicle prices, rising from Rs 3.48 lakh in 2019 to Rs 6.98 lakh. Increased prices, driven by BS-VI emission compliance and required safety upgrades, are believed to be key factors in the market’s downturn. Among auto manufacturer Tata Motors and Datsun abandoning small car segment. However, the increasing congestion in city roads and limited parking spaces are causing small cars to regain Favor among buyers.

Today’s small car buyers have diverse drivetrain choices beyond just petrol, including CNG and electric options, contrasting with the limited fuel selections of the past. MG Motors’ compact EV, Comet, has already attained success in the price-sensitive market segment. Satinder Bajwa, chief commercial officer at JSW MG Motor, emphasized the crucial role this segment plays in making car ownership more accessible across cities, especially as urban populations expand, and traffic congestion intensifies.

Experts suggest that increased model diversity and government incentives, especially for EVs, could revitalize the entry-level vehicle market. The shift in consumer behaviour towards using financing options to upgrade lifestyles is expected to be a key factor in the segment’s revival. Ravi Bhatia, president of Jato Dynamics, suggests that automakers need to leverage electric powertrains, modular platforms, and lightweight materials to offer well-packaged vehicles with lower total cost of ownership.

Dealers emphasize that government support to make vehicles affordable is crucial for driving growth in this segment. Dealer Nikunj Sanghi proposes GST cuts and scrappage-based upgrades to boost small car sales. Maruti Suzuki’s Bhargava also notes that rising rural incomes will help narrow the affordability gap, and government recognition and action to support the sector could accelerate this process.

The revival of the small car segment is not just a matter of market dynamics but also a reflection of changing urban needs and environmental concerns. As cities grapple with pollution and congestion, small cars, especially electric ones, offer a more sustainable and practical solution for personal mobility. The success of models like the MG Comet demonstrates that there is a market for well-designed, affordable small cars that cater to urban needs.

In conclusion, while the small car segment has faced challenges in recent years, a combination of factors including changing urban landscapes, technological advancements, and potential policy support point towards its resurgence. As automakers adapt to these new realities and consumer preferences, the small car segment in India appears set for a renaissance, potentially reshaping the country’s automotive landscape once again.

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TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

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REC Board Greenlights ₹1.55 Lakh Crore Bond Fund!

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 18, 2024

Green Ambitions, Trade Concerns: India's COP29 Roadmap

Green Ambitions, Trade Concerns: India’s COP29 Roadmap

The Indian government is intensifying its efforts to finalize a strategy for the upcoming 29th UN Conference of the Parties (COP29) of the UNFCCC, scheduled to take place in Baku, Azerbaijan, in November 2024. This comes amid mounting concerns over the European Union’s (EU) plans to impose a carbon tax on key shipments from India and other nations, a move that could significantly impact India’s economy.

As one of the world’s largest emitters of carbon, India will play a crucial role at COP29, representing the interests of the global south and advocating for the needs of developing nations in the ongoing climate negotiations. Union Environment, Forest, and Climate Change Minister Bhupendra Yadav emphasized that India’s focus will be on addressing the challenges faced by these nations, particularly concerning climate adaptation and mitigation.

COP29 is particularly significant this year, as the world faces unprecedented extreme weather events like heatwaves, droughts, and floods, all driven by global warming nearing the critical threshold of 1.5°C above pre-industrial levels. The conference will be a vital platform for discussions on climate finance, including the long-delayed loss and damage fund, and the EU’s proposed Carbon Border Adjustment Mechanism (CBAM), commonly known as a carbon tax.

The EU’s CBAM, set to be implemented by January 2026, would impose a 25% tariff on energy-intensive goods such as iron, steel, cement, fertilizers, and aluminium exported to Europe. This move is expected to impact approximately 0.05% of India’s GDP. Minister Yadav indicated that India would thoughtfully evaluate its response to the CBAM and may consider imposing retaliatory tariffs on EU exports if the tax is implemented. The CBAM has already sparked significant concern, as it could disrupt over $8 billion worth of Indian metal exports to the EU.

Preliminary consultations with experts and stakeholders are already underway in India to shape the country’s agenda for COP29. According to Yadav, these discussions are crucial in setting the stage for India’s participation in the global climate summit. Climate finance will be a central theme, as developing countries, including India, continue to push for adequate financial support and technology transfer to facilitate their transition to low-carbon economies. A major expected outcome of COP29 is the development of a New Collective Quantified Goal (NCQG) on climate finance, aimed at setting a new financial target to support developing countries in their climate efforts, building on the benchmark set by the Paris Agreement of $100 billion per year.

India has consistently been a strong advocate for climate finance, emphasizing the need for developed nations to fulfil their financial commitments to the global south. Minister Yadav highlighted India’s constructive role in previous COPs, particularly in discussions on the loss and damage fund and the Global Stocktake (GST). He indicated that India would maintain a similar stance at COP29, focusing on practical solutions rather than creating obstacles in the negotiations.

Conservation of biodiversity is also expected to feature prominently in India’s agenda for COP29. Yadav hinted at a broader approach to environmental protection, linking development activities with the preservation of biodiversity and enhancement of land productivity. India’s recent initiatives, such as issuing soil health cards to farmers and promoting natural farming practices, reflect this integrated approach to sustainable development. The minister also underscored the importance of collaborative efforts in conservation, citing the International Big Cat Alliance as an example of how protecting biodiversity requires joint action.

On the EU’s CBAM, European officials maintain that the mechanism is not intended as a trade tool or protectionist measure but rather as a means to combat climate change by addressing the risk of carbon leakage. The CBAM will apply to imports from all non-EU nations that do not have an emissions trading system (ETS) linked to the EU’s ETS. India and other major developing nations like Brazil, Russia, China, and South Africa have condemned the CBAM as discriminatory, arguing it could severely damage their economies and make EU trade prohibitively costly.

In 2022-23, goods covered by the CBAM constituted about one-fourth of India’s total exports to the EU, with iron, steel, and aluminium exports particularly vulnerable. As the EU gradually increases the tax rate to cover 100% of grey emissions by 2034, Indian industries could face billions in lost exports and increased costs. The EU argues that CBAM creates a level playing field for domestically manufactured goods, which must meet strict environmental standards, but developing countries fear that it will further disadvantage their economies in global trade.

The debate over the CBAM is likely to be a contentious issue at COP29, with developing nations, including India, pushing back against what they see as an unfair imposition by developed countries. As the world grapples with the dual challenges of climate change and economic inequality, the outcomes of COP29 will be closely watched by nations around the globe.

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Shriram Finance Targets $1.5 Billion in Overseas Funding

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HAL Set to Benefit from $1 Billion GE Fighter Jet Engine Deal

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - September 18, 2024

HAL Stock Rises as Government Clears Huge Aero-Engine Purchase

On Tuesday, shares of Hindustan Aeronautics Ltd (HAL) opened more than 5% higher, reflecting a notable increase in the company’s stock price. This increase came after the Union Cabinet Committee made a significant decision to allow the purchase of 240 engines for the Su-30 MKI fighter jets used by the Indian Air Force (IAF). The agreement, which is valued at Rs 26,000 crore, is a significant victory for HAL and should improve the company’s prospects for long-term growth.

Highlights of the Agreement: Deliveries of the aero-engines, which will power the IAF’s Su-30 MKI fleet, are scheduled to begin in a year and be finished in eight. The fact that more than 54% of the engine components will be produced domestically is one of the deal’s most important features; it shows HAL’s dedication to lowering India’s reliance on foreign suppliers. HAL plans to produce the engines at its Koraput plant in Odisha, with the assistance of foreign suppliers for a few essential parts. Utilising a technology transfer agreement with Russia, the business makes sure the engines satisfy international standards.

The agreement is regarded as essential for strengthening India’s defence capabilities as well as for HAL. The IAF’s Su-30 fleet is a vital component, and this purchase guarantees the aircraft’s efficient and continuous operation. As of right now, HAL has given the IAF 113 of these engines, and it’s predicted that the Su-30 would need about 900 engines in all over its lifetime.

HAL’s Robust Order Pipeline: HAL ended FY24 with a sizable order book worth Rs 94,000 crore. That will be greatly increased by this new engine purchase, bringing the company’s entire order book to almost Rs 1.2 lakh crore. Long-term revenue visibility is provided by this amount, which is equivalent to 3.2 times HAL’s trailing twelve months (TTM) revenue. With orders worth Rs 48,000 crore pending, HAL’s future appears bright. Contracts for Su-30 aircraft, RD-33 engines, Advanced Light Helicopters (ALH), and Light Utility Helicopters (LUH) are among these orders. HAL’s robust pipeline, according to analysts, will guarantee consistent growth over the ensuing years.

Sukhoi-30 Fleet Modernisation and New Purchases: Apart from acquiring the engines, HAL plans to undertake a substantial modernisation of the IAF’s complete Su-30 fleet. With a projected Rs 65,000 crore refurbishment, the fighter jets would be outfitted with state-of-the-art technology. The Uttam active electronically scanned array (AESA) radar, cutting-edge electronic warfare technologies, better avionics, and stronger weapon control systems will all be included in the updated aircraft. These enhancements will boost India’s defence readiness and increase the Su-30 fleet’s combat capability. HAL’s order book will soon grow as a result of efforts to replace the twelve Su-30s that were lost in accidents.

Development of Domestic Defence Manufacturing: The agreement is a significant step towards India’s goal of being self-sufficient in the defence industry. For HAL and the Indian defence industry, the fact that more than 54% of the engine components would be made domestically marks a significant accomplishment. It demonstrates the business’s capacity to localise vital technology and lessen its dependency on outside vendors.

Even while essential parts like castings, forgings, and spares will still be purchased from foreign vendors, the indigenisation of basic components is a noteworthy accomplishment. This project helps to strengthen India’s defence manufacturing capabilities and backs the government’s ‘Make in India’ campaign.

HAL’s challenges and Prospects for the Future: Although this encouraging development, HAL has recently encountered certain difficulties, particularly with relation to the Tejas Light Combat Aircraft (LCA Mk-1A) delivery delays. GE Aerospace, the company that supplies essential parts for the aircraft, experienced supply chain problems that resulted in the delays. Although HAL management is aware of these delays, they nevertheless project a 13% growth in revenue in FY25, with higher manufacturing sales providing a major boost. HAL is optimistic that the Tejas Mk-1A would start to be delivered in the September quarter of FY25, although analysts are still wary of any additional delays.

With the purchase of 240 Su-30 MKI engines, HAL has achieved a major milestone for both the Indian military industry and the corporation. HAL is well-positioned for long-term growth, with multiple collaborations in the works and a robust order pipeline. Despite short-term difficulties brought on by disruptions in the supply chain, the company’s robust order book and dedication to indigenisation provide good revenue visibility. HAL’s endeavours to modernise India’s Su-30 aircraft and manufacture next-generation engines highlight the vital role it plays in fortifying the nation’s defence capabilities.

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TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

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British Fashion Titan ASOS Makes Exclusive Indian Debut Through Ajio

Markets, Research, Research Reports, Result Updates - August 26, 2024

Nykaa's Innovation and Expansion Fuel Impressive Q1FY25 Results

Nykaa’s Innovation and Expansion Fuel Impressive Q1FY25 Results

About the stock

Nykaa, a leading Indian e-commerce platform focused on beauty and fashion, has demonstrated strong growth and financial performance in its latest quarterly report. The company’s strategic initiatives, including expansion into physical retail, focus on innovation, and investments in technology, have driven significant revenue growth and improved profitability.

Financial performance Q1FY25

Nykaa reported strong financial performance in Q1FY25. The company’s revenue from operations grew by 23% year-on-year, reaching INR 17,461 crore. This growth was accompanied by a 22% increase in gross profit, resulting in a gross margin of 43.3%. While expenses related to fulfillment, marketing, employee salaries, and other operations also increased, Nykaa’s ability to manage costs effectively led to a significant improvement in EBITDA, which grew by 31% year-on-year. This positive trend translated to a remarkable 127% year-on-year growth in PBT and a 150% increase in PAT.

Financial statement

Particulars	Q1FY25 (Rs mn)	Q1FY24 (Rs mn)	YoY (%)
Revenue from Operations	17,461	14,218	23%
Gross Profit	7,560	6,186	22%
Gross Margin	43.30%	43.50%	-21 bps
Fulfillment expenses	1,667	1,357	23%
As % of revenue from operations	9.50%	9.50%	0 bps
Marketing and S&D expenses	2,484	1,918	29%
As % of revenue from operations	14.20%	13.50%	-73 bps
Employee Expenses	1,559	1,386	12%
As % of revenue from operations	8.90%	9.70%	82 bps
Other Expenses	890	790	13%
As % of revenue from operations	5.10%	5.60%	46 bps
EBITDA	961	735	31%
EBITDA Margin	5.50%	5.20%	34 bps
PBT	221	97	127%
PBT Margin	1.30%	0.70%	58 bps
PAT	136	54	150%
PAT Margin	0.80%	0.40%	39 bps
Adj. EBITDA	1,090	759	44%
Adj. EBITDA Margin	6.20%	5.30%	90 bps

Segments wise performance

● Beauty Segment: The beauty business remains a strong driver, with a 28% YoY growth in GMV and a 23% increase in net revenue. Nykaa’s strategic focus on expanding its brand portfolio and enhancing customer engagement through initiatives like Nykaa Play and personalized skincare solutions has been pivotal in this growth.
● Fashion Segment: Although the fashion segment experienced a slight decline due to shifts in product mix and promotional strategies, it still achieved a 21% YoY growth in net revenue. The company is addressing these challenges by focusing on category-specific growth and enhancing its luxury offerings.

Strategic Initiatives

● Supply Chain & Fulfillment: Investments in supply chain optimization have led to significant improvements in delivery times, with 50% of orders in major cities now being delivered the same or next day. This emphasis on expedited and dependable delivery positions Nykaa favorably within the competitive e-commerce landscape.
● Category Innovation: Nykaa’s focus on category-specific innovations, particularly in the fragrance and skincare segments, has driven substantial growth. The introduction of initiatives like CSMS and the expansion of luxury fragrance brands showcase Nykaa’s ability to cater to evolving consumer preferences.

Brand Focus:

● House of Brands Strategy: The Beauty segment within Nykaa’s House of Brands grew by 47% YoY. Investments in marketing and offline expansion are helping high-potential brands like Kay Beauty and Dot & Key to thrive.
● Sustainable and Inclusive Growth: The acquisition of Earth Rhythm and its focus on clean beauty and sustainability align well with Nykaa’s broader strategy of diversification and customer retention.
● eB2B Business: The eB2B business has grown rapidly, with a 72% YoY increase, driven by a focus on improving order quality and expanding the retailer base.

Customer & Market Expansion

● Customer Base Growth: Nykaa’s customer base expanded by 33% YoY, reaching 35 million, underscoring the brand’s increasing popularity and market penetration.
● Brand Partnerships and Offering: In the past year, Nykaa has added over 1,500 new brands to its portfolio, bringing the total to more than 6,700 brands. This expansion in brand partnerships enhances Nykaa’s product offerings, making it a go-to platform for a wide variety of beauty and fashion products. Nykaa has added luxury fragrance brands like Burberry, Dior, Estee Lauder, Jo Malone, Tom Ford, etc.
● Physical Store Network Expansion: Nykaa has significantly expanded its physical store network, which now includes 200 stores across India. This makes Nykaa one of the largest beauty retail networks in the country. The expansion of physical stores complements Nykaa’s online presence, providing customers with a seamless omnichannel shopping experience.
● Fulfillment Network and Reach:Nykaa’s fulfillment network has also seen significant growth, now covering 98% of pincodes in India through 44 warehouses. This extensive reach ensures that Nykaa can efficiently service a vast geographical area, enhancing customer satisfaction by reducing delivery times and improving service reliability.
● Content Creation and Engagement:Investing heavily in content creation, Nykaa has managed to reach 1 billion people through various Intellectual Properties (IPs). This focus on content not only strengthens brand awareness but also drives customer engagement, fostering a deeper connection with the brand.

Technology and Efficiency:

● Personalization Technology: Investments in personalization technology have enhanced customer experience and engagement through hyper-personalized recommendations.
● Operational Efficiency: The company has optimized fulfillment processes, reduced packaging costs, and increased warehouse capacities to support future growth.

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Shriram Finance Q1FY25 Reflects Strong growth across AUM, NIIMs & Asset Quality Improved.

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

Research, Research Reports, Result Updates - August 26, 2024

Sammaan Capital Targets ₹1 Lakh Cr AUM by FY27 Amid Strategic Rebranding

About the Company

Sammaan Capital Ltd is a NHB regulated lending business which offers home loans and loans against property. The company’s services also extend to corporate mortgage loans, including lease rental discounting and residential construction finance. Recently, the company underwent a significant transformation, rebranding itself as ‘Sammaan Capital Limited’. This change was accompanied by the receipt of a Certificate of Registration as an NBFC-ICC from the Reserve Bank of India (RBI), following a comprehensive six-month review process. This development marks a new chapter in the company’s operations within the financial sector.

Q1FY25 Highlights

The company reports a net worth of ₹20,269 Cr and a high capital adequacy ratio of 34.21%. The company maintains low leverage with a gearing ratio of 1.9x, indicating moderate borrowings of ₹37,628 Cr. Asset quality appears solid, with gross and net NPAs at their lowest levels in four years, standing at 2.68% and 1.52% respectively. The company’s total loan assets are ₹66,566 Cr, with an own book of ₹53,979 Cr. Profitability remains steady, with a profit after tax of ₹327 Cr in Q1FY25. The 1.8% return on assets indicates steady profitability.

Financial Statement (in Cr)	Q1 FY 25	Q1 FY 24	YoY %	Q4 FY 24	QoQ%
Interest income	1688.99	1818.03	-7.10%	1572.55	7.40%
Total income	2236.27	1915.62	16.74%	2255.13	-0.84%
Finance costs	1309.12	1353.9	-3.31%	1291.48	1.37%
Net interest income	379.87	464.13	-18.15%	281.07	35.15%
OPEX	230.48	226.07	1.95%	241.92	-4.73%
PPOP	696.67	335.65	107.56%	721.73	-3.47%
Profit/(loss) before tax	437.14	396.23	10.32%	431.89	1.22%
Profit/(loss) after tax for the period/year	326.76	294.39	11.00%	319.43	2.29%
EPS (Basic) (₹)	5.43	6.1		5.7
EPS (Diluted) (₹)	5.41	6.08		5.67

Financial Highlights (in ₹ Cr)	Q1FY25	Q4FY24	QoQ (%)	Q1FY24	YoY (%)
Net Worth	20269	19792	2.41%	17576	15.32%
Total Loan Assets	66566	65335	1.88%	65787	1.18%
Own Book	53979	53090	1.67%	53211	1.44%
Return on Assets	1.80%	1.60%	12.50%	1.70%	5.88%
Gross NPA%	2.68%	2.69%	-0.37%	2.87%	-6.62%
Net NPA%	1.52%	1.52%	0.00%	1.69%	-10.06%

Future Outlook FY2025 to FY2027:

As of Q1FY25, the company reports a legacy AUM of ₹37,386 Cr, with a target to reduce this to single-digit percentage of AUM by FY27. The new AUM stands at ₹29,180 Cr, with a goal to reach ₹1,00,000 Cr+ by FY27. Annual incremental disbursals are ₹12,450 Cr (annualized), aiming for ₹35,000 Cr by FY27. The company shows an incremental retail RoA of 2.9% and incremental RoE of 15.3%, targeting 3.20% and 18% respectively by FY27. The company has called for final monies of ₹100 per right share, potentially garnering ₹2,462 Cr by August 22nd to strengthen capital. They have capital buffers to manage the legacy book and support recoveries. Notably, 66% of the new AUM (loans sourced since FY22) has already been sold down. The average monthly retail disbursal during the quarter was approximately ₹1,050 Cr.

Retail Origination Engine

The company has expanded its CLM/Sell-down subsidizing from 29% to 37% of AUM since FY22, disbursing ₹2,058 Cr through co-lending and offer down in Q1FY25. The loan profile reveals a focus on home loans (₹1,190 Cr) and LAP (₹867 Cr), with high median CIBIL scores indicating quality borrowers. The company is expanding its co-lending partnerships, with IDBI Bank recently added and Bank of India set to join, bringing the total to 10 partner banks by H1FY25. Strategic appointments, such as Mr. Mrutunjay Mahapatra to the IT Strategy Committee, underscore the company’s commitment to technological advancement.

Loan Disbursement

The Loan Disbursement Profile shows a total of ₹2,058 Cr distributed across 6,360 cases, with a significant focus on home loans. Home loans account for ₹1,190 Cr spread over 4,646 cases, while LAP (Loan Against Property) contributes ₹867 Cr across 1,714 cases. The average ticket size varies considerably between loan types, with home loans averaging ₹25.62 lacs and LAP at a higher ₹50.58 lacs. Notably, the median CIBIL scores are consistently high across all loan categories, ranging from 760 for LAP to 762 for both the overall portfolio and home loans specifically.

Asset Quality

The latest quarter (Q1FY25) shows gross NPA at 2.68% and net NPA at 1.52%, both at their lowest levels in four years. The company maintains a robust provision buffer, with total imputed provisions of ₹6,287 Cr, representing 11.6% of the loan book and 3.5x the gross NPAs. This includes ₹4,000 Cr of expected recoveries from a pool of ₹10,000 Cr. The enhanced capital buffers, bolstered by a recent rights issue, are strategically positioned to support the tactical run-down of the legacy book and facilitate recoveries. The company aims to reduce its legacy Assets Under Management (AUM) to a single-digit percentage of total AUM by FY27, indicating a focused approach on improving overall asset quality and operational efficiency.

Financials Analysis

Interest income decreased by 7.10% year-over-year from 1818.03 Cr in Q1 FY24 to 1688.99 Cr in Q1 FY25. Finance costs also saw a decrease of 3.31% year-over-year, dropping from 1353.9 Cr to 1309.12 Cr. Net interest income experienced a significant decline of 18.15% year-over-year, falling from 464.13 Cr to 379.87 Cr. In contrast, OPEX & PPOP showed a substantial increase of 1.95% & 107.56% year-over-year, PPOP rising from 335.65 Cr in Q1 FY24 to 696.67 Cr in Q1 FY25 and OPEX rising from 226.07 to 230.48 in Q1FY25.

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Shriram Finance Q1FY25 Reflects Strong growth across AUM, NIIMs & Asset Quality Improved.

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Research, Research Reports, Result Updates - August 23, 2024

Rites Limited Q1FY25 Profit Falls Amid Revenue Dip, Secures ₹1200 Cr Export Order

Company Overview

RITES is a multidisciplinary engineering and consulting firm, renowned as a Navratna and Schedule ‘A’ Central Public Sector Enterprise. It offers customized, diverse, and comprehensive solutions for all transport and infrastructure needs. The business operates in areas such as project design engineering, rolling stock export, turnkey construction, and management consulting, providing services to various industries including roads, metros, bridges, tunnels, green mobility and sustainability, airports, land ports, ropeways, infrastructure and urban planning, ports, harbours, and educational structures. Trusted by customers both domestically and abroad, RITES is essential to the growth and modernization of transportation infrastructure by offering innovative and sustainable solutions.

Products & Services: Locomotives, coaches, wagons, and train sets in narrow, meter, standard, cape, and broad gauges (including semi-high-speed train sets).Management consulting covering many sectors including railways, metros, airports and land ports, highways, ropeways, and urban planning. Services in consultancy, exports, leasing, turnkey, and EPC segments.

Industry Outlook:

The transport infrastructure environment is set to change due to growing economic demands, sustainability requirements, and technical advancements. Smart infrastructure will optimize traffic flow, enhance safety, and improve user experiences through intelligent transportation systems that leverage data analytics and artificial intelligence (AI). Increased semi-high-speed train services and related infrastructure will shorten travel times and improve connections between key urban centres. Infrastructure supporting extensive networks of charging and refuelling stations will accelerate the shift to electric and hydrogen-powered transportation, crucial for reducing the sector’s carbon footprint. Governments are prioritizing infrastructure capital expenditure due to its economic multiplier effect. The Asia-Pacific region plans significant investment in transportation infrastructure to accommodate urbanization and economic growth. Future transportation infrastructure will focus on inclusivity, sustainability, and innovation, with continued investment in next-generation transport technologies to build environmentally friendly, robust, and interconnected systems that enhance connectivity and quality of life. These developments will significantly impact global economic and social evolution.

Q1FY25 Business & Financial Performance:

RITES Ltd. reported sales of Rs 486 Cr in Q1FY25, an 11% decline YoY. This decline was primarily due to poor performance in the exports business and reduced revenue in the quality assurance segment, despite growth in other areas. EBITDA decreased by 34% to Rs 106 Cr YoY, and PAT was Rs 90 Cr, a 24% YoY decrease. EBITDA margins for the company were estimated at 21.8% in Q1FY25, up from 29.6% in Q1FY24 to 27.5%. The decrease in income was linked to lower QA, overseas consulting, and exports for the quarter. Profit decreased due to lower income without a corresponding reduction in expenses. Falling margins were a result of a changed revenue mix in exports and lower consulting profits.

Q1FY25 Financials Result: (Rs Cr)

Particulars	Q1FY25	Q4FY24	Q1FY24	% Change (QoQ)	% Change (YoY)
Sales	486	643	544	(24)	(11)
Total Revenue	486	643	544	(24)	(11)
Other Expense	22	31	50	(29)	(56)
Total Expenditure	380	467	383	(19)	(1)
EBIDTA	106	176	161	(40)	(34)
PBT	113	185	163	(39)	(31)
Tax	25%	50%	43%	(51)	(43)
PAT	90	137	119	(34)	(24)

Ratio Analysis:

Ratios	(%)
OPM%	26.3
Debt / equity	0.0
Current Ratio	1.65
ROE	19
ROCE	25.90
ROA	8.56
EBITDA MARGINS%	25.64
P/E	35.05
P/B	6.12
EV/EBITDA	17.43

Segment Performance :
RITES recorded sales of Rs 271 Cr (down 11% YoY) in consultancy, Rs 5 Cr (down 87% YoY) in exports, Rs 34 Cr (up 9% YoY) in leasing, and Rs 171 Cr (up 4% YoY) in turnkey during the quarter. Turnkey, leasing, and consulting all had EBITDA margins of 1.2%, 38%, and 40%, respectively. A pickup in the exports segment is anticipated in H2FY25, with the commencement of supply of locos/coaches to Bangladesh and Mozambique.

Healthy Order Book Secured

In Q1FY25, the company received orders worth Rs 1300 Cr—more than one order per day for the quarter. With a robust order book totalling Rs 6,355 Cr, the company can project its revenue for the next two years. Thirty-nine percent of the order book consists of high-margin consulting services. Steady expansion in the domestic and international consulting sectors is anticipated, and additional capital expenditure in the Railways budget for 2024–2025 will further spur the company’s growth. The company also holds export orders worth Rs 1200 Cr, with an expected increase in export revenue in H2FY25.

Concall Highlights:

• As of Q1FY25, the orderbook is valued at Rs 6,355Cr: The division of the order book is as follows:39 percent came from consulting (Rs 2,492 Cr), 37 percent came from turnkey (Rs 2,351 Cr), 19 percent came from exports (Rs 1202 Cr), 3 percent came from leasing (Rs 190 Cr), and 2 percent came from the REMCL segment (Rs 120 Cr). 61% of the projects in the order book are awarded through competitive bidding, with 39% awarded by nomination. The company secured projects totalling Rs 1301 cr in Q1FY25.
• Segment of consulting: In Q1FY25, projects totalling Rs 293 Cr were secured. The sector with the largest revenue and profit margins continued to be consulting, notwithstanding the segment’s depressed margins. Revenue from consulting decreased by 10% in the quarter .At least 40% of the orderbook from the consulting division is expected to remain with the company. Section is dealing with rigid competitiveness than in the past because most new orders are being placed through competitive bidding as opposed to nominations. While Due to a competitive bidding process for newly secured orders, the quarter’s QA business was negatively impacted, and margins decreased.

* Turnkey and Leasing: In Q1FY25, new Turnkey and Leasing projects totalling Rs 54 Cr and Rs 48 Cr were obtained. The business Expect the Turnkey segment’s margin to be between two and three percent.
• Export: The company currently has two export orders: one for the delivery of 200 locomotives to Bangladesh Railways and another for the delivery of 10 locomotives with CFM Mozambique. The two projects have an order value of Rs 1200 Cr. It is anticipated that export revenue will increase in H2FY25. The corporation has put in bids in new regions in an effort to get more export orders. For Zimbabwean orders While Zimbabwean officials are trying to secure finance from Asian sources, the company hopes to receive limited orders.
• REMC business: Due to one-time increased expenses, the company’s revenue in Q1FY25 was Rs 35 Cr, down 18% YoY. revenue from consulting for the RTC procurement in Q1 of FY24. Energy management operations kept growing.
• Capex: For FY25, the company plans to spend between Rs100 and Rs140 Cr. It is a low-investment company.

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South Indian Bank's Q1FY25: Steady Growth Amid Slight NIM Decline

South Indian Bank’s Q1FY25: Steady Growth Amid Slight NIM Decline

About the Stock:

South Indian Bank which began in 1929 has headquartered in Thrissur, Kerala, is a private sector bank in India. The bank has a significant presence in South India, especially in Kerala, but it also operates branches across the country. Known for its customer-centric approach, South Indian Bank emphasizes digital banking solutions, aiming to cater to both urban and rural populations. Despite challenges in the competitive banking sector, the bank continues to focus on growth through innovation and customer service excellence.

Q1FY25 Performance Analysis:

The total business of the company witnessed a significant growth of 10%, increasing from INR 1,69,601 crore in Q1FY24 to INR 1,86,112 crore in Q1FY25. This growth reflects the company’s successful expansion strategies and increased market penetration over the year.

Gross advances in Q1FY25 increased by 11%, reaching INR 82,580 crore, compared to Q1FY24 which is INR 74,102 crore. This rise indicates enhanced lending activity and a positive response from the credit market, showcasing the institution’s ability to deploy funds effectively.

Retail deposits saw an 8% increase, rising from INR 92,043 crore in Q1FY24 to INR 99,745 crore in Q1FY25. This indicates growing consumer trust and an expanding depositor base, which is critical for maintaining liquidity and funding future growth.

The CASA ratio slightly increased by 7%, from INR 31,166 crore (32.64%) in Q1FY24 to INR 33,195 crore (32.06%) in Q1FY25. Although the CASA ratio grew, the percentage of total deposits in CASA marginally decreased, suggesting a shift towards term deposits.

There was a remarkable 51% increase in disbursements, from INR 22,108 crore in Q1FY24 to INR 33,482 crore in Q1FY25. This substantial growth highlights the institution’s aggressive lending practices and strong demand for credit in the market. Net Interest Income (NII) has seen steady growth, reaching INR 866 crore in Q1FY25, while the Profit after Tax (PAT) was INR 294 crore, indicating consistent profitability.

Profit & Loss Statement Overview:

Particulars	Q1FY25 (INR in Cr.)	Q4FY24 (INR in Cr.)	QoQ (%)
Net Interest Income	866	875	-1%
Non-Interest Income	422	346	22%
Total Income	1,288	1,221	5%
Operating Expenses	780	787	-1%
Operating Profit	508	434	17%
Provisions & Contingencies	113	41	176%
Profit Before Tax	395	393	1%
Provision for Tax	101	105	-4%
Profit After Tax	294	288	2%

The Net Interest Margin slightly decreased by 8 basis points, from 3.34% in Q1FY24 to 3.26% in Q1FY25. This decline could be due to rising interest costs or competitive pressures in the lending market. CRAR showed a solid improvement, increasing by 162 basis points to reach 18.11% in Q1FY25, compared to 16.49% in Q1FY24. This showcases the company’s ability to absorb losses and ensure a Financial Stability.

Gross NPA Movement:

	Q1FY24	Q2FY24	Q3FY24	Q4FY24	Q1FY25
Opening	3,708	3,804	3,714	3,682	3,620
Additions	487	315	306	289	346
Deductions	391	405	337	351	246
Closing	3,804	3,714	3,682	3,620	3,720

Net NPA Movement:

	Q1FY24	Q2FY24	Q3FY24	Q4FY24	Q1FY25
Opening	1,294	1,326	1,234	1,212	1,135
Additions	336	207	185	211	250
Deductions	304	298	207	289	232
Closing	1,326	1,234	1,212	1,135	1,153

The GNPA in Q1FY25 is 4.50% which is reduction from 5.13% in Q1FY24. Similarly, the Net Non-Performing Assets (NNPA) decreased from 1.85% to 1.44%. The good asset quality and effective recovery processes is the reason behind it. Overall, the company has demonstrated strong financial performance, marked by growth in business volume, improved asset quality, and consistent profitability. The slight dip in NIM is a point of attention, but overall, the institution appears well-positioned for continued growth.

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Power Grid Corporation's Q1 FY25 Performance Reflects Resilience Amid Challenges

Power Grid Corporation’s Q1 FY25 Performance Reflects Resilience Amid Challenges

ABOUT COMPANY:

India’s interstate electricity transmission is primarily managed by Power Grid Corporation of India Limited (PGCIL), a major state-owned enterprise in the power sector.
The company’s main tasks include planning and maintaining the national grid, as well as providing telecom and advisory services. PGCIL also handles special projects assigned by the government. With its extensive network, the corporation plays a vital role in India’s energy distribution, helping to balance power supply across different parts of the nation.

FINANCIAL PERFORMANCE

Power Grid Q1FY25 Performance
Power Grid Corporation demonstrated steady financial performance in Q1 FY2025, with consolidated total income reaching ₹11,280 crore, marking a slight year-on-year growth of 0.20%. This modest increase underscores the company’s ability to maintain revenue streams in a dynamic market environment.

Profitability showed resilience, with consolidated Profit After Tax (PAT) at ₹3,724 crore, representing a 3.52% year-on-year increase. This growth in profitability, albeit modest, highlights Power Grid’s operational efficiency and cost management strategies in the face of market pressures.

Capital expenditure and asset expansion remained a key focus, with the company investing ₹4,615 crore in Q1 FY25. Assets worth ₹2,320 crore were capitalized, excluding Foreign Exchange Rate Variation (FERV). This strategic investment underlines Power Grid’s commitment to strengthening its infrastructure and expanding its operational capabilities.

The company’s asset base saw significant growth, with gross fixed assets on a consolidated basis reaching ₹2,77,213 crore as of June 30, 2024. Power Grid’s transmission network expanded to 1,77,790 Circuit Kilometers (CKM) of lines, supported by 278 substations and a transformation capacity of 5,28,761 MVA.

Operational excellence remained a hallmark, with the company maintaining an impressive average transmission system availability of 99.80% during the quarter. This high reliability underscores Power Grid’s commitment to efficient service delivery and network management.

Future growth prospects appear promising, with a substantial work portfolio exceeding ₹1,14,000 crore (excluding Capital Work in Progress). The company’s success in securing 6 Inter-State Transmission System (ISTS) projects through competitive bidding, with an estimated cost of approximately ₹24,855 crore, further bolsters its future pipeline.

Consolidated Financial Highlights: (Figures in Rs. Crs)

(Rs crores)	Q1FY24	Q4FY24	Q1FY25	QoQ (%)	YoY (%)
Total income	11,258	12,305	11,280	-8.3%	0.2%
Total expenses	6,689	7,066	6,643	-6.0%	-0.7%
Profit before tax	4,564	5,301	4,666	-12.0%	2.2%
Tax	621	958	879	-8.3%	41.6%
Profit after tax	3,597	4,166	3,724	-10.6%	3.5%
Earnings per share	4.2	4.7	4.1

Power Grid continues to play a crucial role in India’s energy transition, focusing on large-scale integration of renewable energy sources into the National Grid. This strategic positioning aligns with national energy goals and sustainable development objectives. Quarter-on-quarter performance showed some fluctuations, with consolidated revenues decreasing by 8.3% compared to the previous quarter. Expenses saw a reduction of 6% quarter-on-quarter and 0.7% year-on-year, reflecting ongoing efforts in cost optimization. The company’s earnings per share (EPS) stood at 4.1 for Q1 FY25, providing a measure of its profitability on a per-share basis. This comprehensive performance overview highlights Power Grid’s resilience in navigating market challenges while maintaining its focus on strategic growth and operational excellence.

INDUSTRY OVERVIEW:

The Indian economy maintains its position as a standout performer among major global economies, demonstrating impressive fortitude and growth momentum. Despite various challenges, India’s economic engine continues to power forward, highlighting the country’s adaptability and robust fundamentals. This sustained economic vigor underscores India’s increasing significance on the world stage and its ability to navigate complex global conditions while maintaining a strong growth trajectory. Despite global headwinds, the nation’s economic trajectory remains strong, with the IMF projecting growth rates of 3.2% for FY24 and 3.1% for FY25. The outlook for FY 2023-24 is even more promising, with growth forecasts ranging between 6.5% and 7%, underlining India’s robust economic foundation. The country’s performance in FY 2024 was particularly noteworthy, with real GDP growth hitting 8% and surpassing pre-pandemic levels by 20%.

Sustainable Development and Energy Transition: India is making significant strides in environmental sustainability and climate resilience. The country’s G-20 presidency in 2023 emphasized clean energy transitions, energy security, and the development of international energy markets. These initiatives are expected to bolster India’s position in the global sustainable energy landscape.

Power Sector: A Pillar of Growth: The power sector, encompassing generation, transmission, and distribution, remains crucial to India’s economic development. Over the past decade, the country’s energy mix has evolved significantly, with renewables now comprising over 50% of the total grid capacity. As of 2024, renewable sources account for 55.03% of the grid capacity, while non-fossil-based energy makes up 44.97%. India’s National Grid plays a pivotal role in the global electricity market, emphasizing the importance of non-fossil fuels. The renewable energy sector is poised for substantial growth between 2024 and 2030, with clean energy investments projected to reach ₹8.5 lakh crore.

Investment Landscape and Future Outlook: The power sector is increasingly attractive for foreign direct investment, particularly in green energy. The government has allocated significant funds towards green hydrogen, solar power, and renewable energy development. The National Electricity Plan 2022-32 estimates that India’s power generation industry will require a total investment of ₹33 lakh crore by 2032. Recent policy measures, including support for rooftop solar and the Pradhan Mantri Surya Shakti Yojana, further highlight the government’s commitment to renewable energy. These developments paint a picture of a dynamic and forward-looking power sector, poised to play a crucial role in India’s sustainable economic growth and energy transition.

BUISNESS UPDATES:

Telecom Business: Power Grid’s telecom sector showed strong performance in Q1FY25, marked by several key achievements. The company successfully onboarded 35 new customers during this period, reflecting its expanding market reach and customer base. Additionally, Power Grid achieved 100% backbone availability, ensuring uninterrupted service and demonstrating its commitment to reliability. The network capacity was significantly enhanced to 1.8 Tbps, positioning the company to meet growing demand and deliver high-speed telecom services. Financially, the telecom division saw an increase in income, rising from ₹191 crores in Q1FY24 to ₹219 crores in Q1FY25, indicating a growth trajectory. Power Grid’s efforts in the telecom sector have been well recognized, with letters of appreciation received from institutions such as NIT Bhopal, IIITDM Jabalpur, and the Narmada Control Authority, acknowledging the satisfactory telecom services provided.

Commercial Performance Overview: In Q1 of the 2025 fiscal year, PowerGrid’s financial performance showed notable figures. The company logged billings amounting to ₹9,262 crore, while its actual collections reached ₹8,509 crore. This translated to a collection efficiency rate of 91.87%, indicating the company’s strong ability to convert billed amounts into realized revenue during the period. The outstanding dues stood at ₹5,548 crore, a decrease from ₹7,140 crore in the same quarter of the previous year (Q1FY24). Notably, dues outstanding for more than 45 days reduced significantly from ₹4,912 crore to ₹3,295 crore, while the dues pending for less than 45 days were relatively stable. This improvement is partly attributed to the LPS (Late Payment Surcharge) Rules 2022 by the Ministry of Power, which led to the collection of ₹1,849 crore from an outstanding amount of ₹2,438 crore. Major states with outstanding dues include Tamil Nadu, Jammu & Kashmir, Telangana, and Uttar Pradesh.

Business Outlook for 2032

PowerGrid has outlined an ambitious investment plan up to 2032, with an estimated outlay of ₹2,07,500 crore. The bulk of this investment, ₹1,90,500 crore, is earmarked for the transmission business. This includes inter-state transmission projects, intra-state ventures, cross-border initiatives, and international projects, with a significant 71% allocated to inter-state projects. Additionally, ₹17,000 crore is designated for other business areas, such as solar generation, smart metering infrastructure, and data center operations. Solar generation and smart metering, in particular, account for most of this segment’s investment.

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Neogen Chemicals Boosts Q1 FY25 Profit to INR 11.5 Cr, Lithium Sales Shine

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Shriram Finance Q1FY25 Reflects Strong growth across AUM, NIIMs & Asset Quality Improved.

Company Overview

Shriram Finance Ltd., a significant entity within the Shriram Group, operates extensively in consumer finance, stock broking, distribution, life insurance, and general insurance. Founded in 1979, the company stands as India’s largest non-bank financial company (NBFC) in retail asset finance. It is a leader in structured financing of used commercial vehicles and two-wheelers, specializing in serving small business owners and road transport operators.

Product Portfolio

Products: A. Commercial Vehicle Loans: Financing for tractors, farm equipment, passenger commercial vehicles, and commercial products.
B. Business Loans: Offers financing to dealers, private financiers, customers, and the broader commercial vehicle industry.
C . Deposits: Recurring Deposits (RD), Fixed Deposits, and related services.
D. Working Capital Advances: Includes fuel financing, challan marking down, asset financing, toll financing, tire financing, repair/top-up advances, and vehicle protection advances.
E. Life Insurance: Smart Protection Plan by Shriram Life and Cashback Term Plan by Shriram Life.
F. Emergency Credit Line Guarantee Program: Addresses the operating capital needs of micro, small, and medium-sized business borrowers. As of March 31, 2024, the AUM for personal loans stood at ₹8,974.7 crores, accounting for 3.99% of the total AUM. The AUM for gold loans was ₹6,299.8 crores, representing 2.80% of the total AUM.
Small and Medium Business (SME) Loans: These include both secured and unsecured business loans tailored to meet a variety of financial needs. As of March 31, 2024, SME loans comprised 11.66% of the total AUM, amounting to ₹26,234.6 crores.

Industry Outlook :

Non-Banking Financial Companies (NBFCs) have become crucial financial support systems for a significant portion of the Indian population, especially Small and Medium Enterprises (SMEs) and underserved groups that traditional banking institutions often overlook. In recent years, the financial services industry in India has undergone significant transformation. This transformation is characterized by the rise of neo-banking, digital authentication, the widespread adoption of mobile banking and the Unified Payments Interface (UPI), and the increasing penetration of mobile internet. Additionally, the 64 million MSMEs in the Indian MSME sector contribute 30% of the country’s GDP. Less than 15% of the total credit demand of ₹69.3 trillion, which is growing at a CAGR of 11.5%, is met by formal sources.

Q1FY25 Business & Financial Performance:

Shriram Finance exhibited strong AUM growth, with AUM increasing by 21% year over year in FY24, compared to a similar 21% growth in the previous year. For FY25, management has projected an AUM increase of more than 15%. Total disbursements amounted to ₹377 billion, reflecting a 24% year-over-year growth. Asset Quality: Asset quality improved due to better collections, although it slightly declined from 5.5% to 5.4%. Credit costs decreased quarter over quarter as a result of better recoveries; management maintained the 2% credit cost projection. The improvement in asset quality is attributed to recovery from the election period and fewer disruptions. The gross non-performing assets (NPA) showed a year-over-year decrease to 5.39% from 6.01%, indicating improved asset quality management. Additionally, the company’s cost-to-income ratio slightly increased to 27.45%.Net Interest Income (NII): The NII increased by 21% year over year to ₹5,555 crore, primarily due to a stable yield on advances and slightly better liability expenses. This rise in NII was crucial for enhancing the company’s overall profitability. Disbursements: Disbursements rose by 24% year over year to ₹37,709 crores. As of March 31, 2024, Stage 3 Assets improved to 5.45% from 6.21% on the same date in 2023. Net Stage 3 Assets, after accounting for Stage 3 provisions, were at 2.70%, down from 3.19% on March 31, 2023.Due to increased AUM growth, a higher net interest margin, and improved asset quality, which led to greater profitability for the year ending March 31, 2024, the return on net worth rose to 15.64% as of March 31, 2024, compared to 14.84% as of March 31, 2023.OEM Sales in Q1 FY25: Sales were reasonably good, with commercial vehicle sales growing by 3.5% to 224,000 units, including a 9.7% growth in the MHCV segment to 85,421 units. The company’s net profit increased to ₹2,030 crore for the quarter, up from ₹1,712 crore during the same period last year, representing an 18.6% year-over-year increase. The business also benefited from consistent back costs and effective cost-control measures

Shriram Finance financial statements for Q1FY25:

Particulars	Q1FY25	Q4FY24	Q1FY24	QoQ %
Interest income	95,210.1	93,714.1	79,566.7	1.60%
Net interest income	53,544.7	53,360.6	44,386.8	0.35%
Operating expenditure	15,744.2	15,540.9	13,617.1	1.31%
Core operating profit	37,800.5	37,819.7	30,769.7	-0.05%
Other income	740.9	1,236.3	492.6	-40.07%
Operating profit	38,541.4	39,056.0	31,262.3	1.32%
Profit before tax	26,665.9	26,441.2	22,476.2	0.85%
Tax Expense	6,860.0	6,982.5	5,721.8	-1.75%
Profit after tax	19,805.9	19,458.7	16,754.4	1.78%
EPS	52.70	51.79	44.73	1.76%

Ratios

Ratios	%
Capital Adequacy Ratio	20.30%
Return on Total Assets	3.13%
Debt Equity Ratio	3.83
Net Interest Margin	8.84%
Interest Coverage Ratio	2.34
Net Profit Margin	20.55%
Return on Equity	15.64%
ROCE	11.31
Price To Book Ratio	12.04

Concall Highlights:

Financial Performance : In Q1 FY25, disbursement growth was 23.82% year over year, and AUM increased by 20.82% year over year. Net interest income grew by 20.63% year over year, while PAT increased by 18.21% year over year. Net Stage 3 was at 2.71% in Q1 FY25, while gross Stage 3 was at 5.39%. The credit cost for the quarter was 1.87%. The cost-to-income ratio stood at 27.45%.
Subsidiary Performance (Shriram Housing Finance): In Q1 FY25, AUM grew by 50.93% year over year. Net interest income increased by 40.62% year over year, while PAT rose by 5.85% year over year.
Asset Quality and Recovery: Recovery efforts and fewer disturbances during the election season contributed to the improvement in asset quality. There has been a decrease in repo operations across the business as borrowers aim to retain their assets. Recovery efforts have been continuous over the past thirty months.
Plans for Branch Expansion: The company plans to add 500 gold loan branches and 175 MSME branches over the next two years. The total number of branches is expected to reach approximately 900 for MSME loans and 2,000 for gold loans
MSME Business: The company specializes in providing loans to small businesses in the trading and service industries. The average MSME loan ticket size is approximately ₹10 lakhs, with 40% of MSME loans originating from outside the South.
Asset Quality and Provisioning: ECL provisions are based on model performance and take into account various factors. There is no fixed rule for maintaining ECL provisions at 6%; it depends on the product mix and other variables.

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