Adani Group Stocks Rally on SEBI Relief, Investors Watch Pending 22 Orders for Clarity

Research, Research Reports, Result Updates - August 21, 2024

Robust Q1FY25: Adani Wilmar's Revenue Climbs to INR 14,169 Crores

Robust Q1FY25: Adani Wilmar’s Revenue Climbs to INR 14,169 Crores

About Stock:

Adani Wilmar is recognized as one of the largest, newest, and fastest-growing companies in India’s FMCG industry. The company holds a 19% market share in branded consumer packaging and over 12% in edible oil consumption in India. With a presence in 2.1 million retail locations, the corporation has successfully expanded its reach to 121 million households nationwide.
In recent years, Adani Wilmar has been positioning itself as a comprehensive food and personal care company by expanding its product line and entering new markets. The company’s strategy focuses on expanding into new markets, enhancing its current product lines, and exploring international opportunities. Adani Wilmar’s extensive distribution network, strong brand identity, and commitment to innovation place it in a favorable position to capitalize on the growing demand for high-quality FMCG products in India and beyond.

Industry Overview:

Prominent consumer products companies are increasingly focusing on meeting the growing demand for edible oils, juices, snacks, and ready-to-eat meals. This shift is driven by changing consumer preferences, particularly in the wake of COVID-19, which has significantly boosted the growth of the packaged food sector in India.
Between 2019 and 2023, India’s retail industry grew by 34%, rising from $890 billion to $1.2 trillion. This growth has made India the fifth-largest retail market in the world. Several factors have contributed to the rise of the packaged food sector, including the increasing popularity of quick-service casual dining, changing consumer preferences, rising urbanization, evolving lifestyles, and the expansion of e-commerce in rural areas. Additionally, the growth has been supported by modern retail spaces.

Q1FY25 Performance Analysis:

As of Q1FY25, the company reported a solid year-on-year (YoY) volume growth of 12%, driven by consistent expansion in its staple packaged foods segment. Edible oils registered a 12% YoY growth, while the Foods & FMCG sector exhibited an impressive 42% YoY increase. The Essentials Industry segment also saw double-digit growth in the Oleo and Castor businesses. However, the oil meal business had a dampening effect on overall volumes.
The company’s revenue for Q1FY25 stood at INR 14,169 crores, reflecting a 10% YoY increase. This growth aligns with the volume expansion and marks the end of the disinflationary impact that declining edible oil prices had on revenue in previous quarters. The company’s ability to achieve this growth demonstrates resilience and successful navigation through market challenges.
Q1FY25 also saw the company achieving its highest-ever EBITDA, amounting to INR 619 crores. This achievement was primarily due to the stabilization of edible oil prices, which significantly bolstered the profitability of the edible oil business. The strong EBITDA performance underscores the company’s effective cost management and strategic pricing initiatives.
The demand for branded oil and foods remained stable, supported by a consistent shift in consumer preference towards packaged staple foods. This steady demand has been crucial in sustaining the company’s growth trajectory.
The company has maintained a strategic focus on capturing market share, especially in under-indexed markets and categories. By leveraging local nuances to enhance regional engagement, the company has successfully implemented customized campaigns, specialized packaging, localized pricing strategies, and targeted schemes. This focus has allowed the company to gain a competitive edge in various segments and regions.
The company’s continuous efforts to raise transparency, strengthen ESG performance, and actively engage in significant ESG evaluations are evident in its inclusion in these assessments. The company’s proactive approach to ESG matters reflects its commitment to ethical business practices and long-term sustainability.

Segment Wise Performance:

Edible Oil:
In Q1FY25, the company’s sales in the Edible Oil category increased by 8% to INR 10,649 crores, representing a 12% year-over-year volume rise. Strong demand, particularly in South India, for mustard and sunflower oils was the primary driver of this expansion. Additionally, the company introduced a specialty mustard oil package for pickle enthusiasts and launched a premium mustard oil called “Fortune Pehli Dhaar.” Notably, the edible oil category achieved its highest-ever profits in Q1FY25, with sector earnings of INR 398 crores. The corporation maintained stable prices throughout the quarter, with minimal disruptions to the supply chain.
Food & FMCG Segment:
In Q1FY25, Adani Wilmar’s Food & FMCG segment recorded sales of INR 1,533 crores, a 40% increase from the previous year. This achievement was largely attributed to higher market share in South India, increased presence in retail outlets, and an increase in repeat business. For the past 11 quarters, the branded foods category has experienced steady growth, with sales rising at an annual rate of nearly 30%. The market for wheat flour continued to outpace the overall sector, and the rice industry also made significant progress, supported by effective marketing campaigns. Furthermore, Adani Wilmar used trade schemes and strategic bundling to increase penetration, driving additional expansion in the edible oil industry.

Segment-wise Profitability:

Particulars	Q1FY25 (INR in Cr.)	Q1FY24 (INR in Cr.)
Segment EBITDA:
Edible Oil	604	118
Food & FMCG	31	42
Industry Essentials	48	26
Unallocable	(14)	(0)
Total Standalone EBITDA (Incl. other income)	669	187
(-) Finance Cost	148	153
(-) Depreciation	86	83
PBT before Exceptional Items	434	(49)
(-) Exceptional Items	0	0
PBT after Exceptional Items	434	(49)
(-) Tax	111	(11)
Standalone PAT	324	(38)
(+) Share of Subsidiary Profit	(12)	(21)
(+) Share of JV Profit	2	(19)
(-) Consolidation Adjustments	0	1
Consolidated PAT	313	(78)

Key Ratios:

Net Profit Margin (%)	0.33 %
ROE (%)	1.77 %
ROCE (%)	11.33 %
Return on Assets (%)	0.74 %
Asset Turnover Ratio (%)	2.51 %
Current Ratio	1.22
Quick Ratio	0.53
Inventory Turnover Ratio	5.82
EV/EBITDA	28.93

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

Research, Research Reports, Result Updates - August 21, 2024

Adani Group's Q1 FY25 Results Highlight Resilience and Strategic Growth Across Sectors

Adani Group’s Q1 FY25 Results Highlight Resilience and Strategic Growth Across Sectors

The firm experienced an uptick in its earnings by 13% year-over-year to Rs. 26,067 crores, the significant revenue increase was largely attributed to exceptional operational results in both the ANIL Ecosystem and the company’s airport operations. EBITDA showed significant improvement, increasing by 48% to Rs. 4,300 crores.

Profitability metrics advanced significantly, with profit before tax more than doubling, rising by 107% to Rs. 2,236 crores. Profit after tax attributable to owners exhibited even stronger growth, surging by 116% to Rs. 1,458 crores. Cash accruals demonstrated robust expansion, growing by 81% to Rs. 2,704 crores.

Operational highlights showcased impressive developments across various business segments. Solar module exports skyrocketed by 109% to 808 MW, while ANIL WTG achieved a milestone by crossing its 200th blade production during the quarter. Furthermore, ANIL WTG received the final type certificate for its 3 MW wind turbine, marking a significant technological advancement.

The Airports segment demonstrated strong performance, with passenger movement crossing 90 million for the first time on a trailing twelve-month basis, indicating a robust recovery in air travel demand. The company’s incubating businesses, particularly the ANIL Ecosystem and Airports, also recorded impressive performance. The Airports segment experienced a 27% rise in total income, growing from ₹1,711 crore to ₹2,177 crore.

Adani Group maintained a strong growth trajectory across its diverse portfolio, showcasing resilience and adaptability in various sectors. The substantial improvements in revenue, EBITDA, and profitability metrics position the company well for sustained performance in FY25, despite potential market challenges.

The ANIL Ecosystem saw its total income surge by 1.4 times to ₹4,519 crore in Q1 FY25, with EBITDA multiplying by 3.6 times to ₹1,642 crore and PBT rising by 4.1 times to ₹1,425 crore. Despite the PBT remaining negative, it improved to a loss of ₹89 crore. The Airports segment saw a 7% increase in passenger movement to 22.8 million and a 7% rise in ATMs to 152.1 thousand. The Roads segment reported an 8.1-fold increase in construction volume, while Mining Services saw a 47% increase in dispatch volume. However, IRM segment volumes fell by 13%. Additionally, 41 WTG sets were produced in Q1 FY25. These developments across various segments underscore Adani Group’s strong growth trajectory, with a focus on renewable energy and strategic expansion in key sectors.

Consolidated Financial Highlights: (Figures in Rs. Crs)

Particulars	Q1 FY24	Q1 FY25	% change Y-o-Y	FY24
Total Income	23,016	26,067	13%	98,282
EBIDTA	2,897	4,300	48%	13,237
Profit Before Tax	1,080	2,236	107%	5,640
Profit After Tax	675	1,458	116%	3,240
Cash Accruals	1,493	2,704	81%	7,376

Operational Highlights:

Volume	Q1 FY24	Q1 FY25	% change Y-o-Y	FY24
Ecosystem
Module Sales (MW)	614	1379	125%	2679
WTG (Sets)	–	41	–	54
Airports
Pax movement (Mn)	21.3	22.8	7%	88.6
ATMs (‘000)	141.6	152.1	7%	593.8
Cargo (Lacs MT)	2.3	2.7	17%	8.1
Roads
Construction (L-KM)	79.8	730.0	8.1x	514.8
Mining Services
Dispatch (MMT)	6.4	9.3	47%	30.9
Volume (MMT)	17.8	15.4	(13%)	82.1

Industry Overview:

India is endowed with a diverse range of minerals, including fuels, metallic, non-metallic, atomic, minor, and rare minerals, positioning it as a strong player on the global stage. The capacity to produce, process, utilize, and recycle these resources will be critical in the future. Despite the global shift toward renewable energy, coal still represents 50% of India’s energy mix. The country is steadily progressing toward an annual coal production of 1 billion tonnes, with an ambitious target of 1.5 billion tonnes by FY30 to meet rising energy demands. Although coal demand is expected to grow, initiatives like coal gasification are being pursued to meet energy requirements while also addressing sustainability objectives. Beyond coal, India’s mineral sector, including metals and rare earth elements, is on the brink of significant growth. As the world’s fifth-largest economy, with a GDP of approximately USD 3.6 trillion and a growth rate of 7.3%, India has a strong demand for copper, aluminum, steel, and rare earth minerals, which are vital for industries such as construction, electronics, and renewable energy. Over the last 20 years, the consumption of refined copper in India has tripled, driven by these expanding sectors. ANZ Research forecasts a strong decade for Southeast Asia and India, predicting substantial growth in global copper demand. CRU, a global market intelligence provider for mines and metals, projects India’s demand for refined copper to rise to 1,200 KT by 2028, up from 819 KT in 2023. The global iron ore market is expected to grow from 2.5 billion metric tonnes in 2023 to 2.7 billion metric tonnes by 2026, with a CAGR of 3%. India’s strong steel industry drives its iron ore consumption, creating significant opportunities for Mine Developers and Operators (MDOs) within the country. Additionally, India’s aluminum industry, supported by substantial bauxite reserves, particularly in Odisha, Chhattisgarh, and Jharkhand, is showing remarkable growth. The industry’s shift toward value-added products like extrusions and rolled products has increased its competitiveness and integration into global supply chains. By embracing modernization and technology, these industries have improved productivity and efficiency while reducing energy consumption and emissions. Government initiatives like “Make in India” and “Atmanirbhar Bharat” are further boosting the growth of the aluminum, copper, rare mineral, and other metal industries by promoting domestic manufacturing and innovation. As India advances towards sustainable practices and digitalization, these sectors are poised for a bright future, driven by increasing urbanization and industrialization, which offer significant opportunities for growth and investment.

Business Updates

Scheme of Arrangement for Food FMCG business:
Adani Enterprises, serving as an incubator, remains committed to fostering new businesses and generating sustainable, long-term value for its stakeholders. Over the years, we have established a strong track record of successfully nurturing ventures across various sectors, many of which have become leading players in their respective industries, delivering significant returns to shareholders. The food FMCG segment has now become self-sustaining, showing strong performance, and is well-positioned for further growth under AWL. This arrangement not only aims to unlock value for AEL’s shareholders but also allows the company to concentrate on a focused strategy for sustainable growth within its incubating businesses.

Adani New Industries Ecosystem has made significant strides in solar and wind turbine manufacturing. In solar manufacturing, module sales rose by 125% year-on-year, reaching 1,379 MW, with exports up by 109% and domestic sales growing by 151%. The company saw an improvement in EBITDA margins, fueled by cost reductions from the TopCon cell line, which became fully operational on March 31, 2024, along with decreased raw material expenses. In wind turbine manufacturing, Adani submitted an RLMM listing application for its 5.2 MW prototype 2, which utilizes ANIL blades. A key milestone was reached with the production of the 200th blade during this quarter. AdaniConnex Pvt Ltd (ACX), focused on data centers, also reported progress. The Noida Data Center is 89% complete in terms of construction for its 50 MW core and shell plus 10 MW MEP. Construction progress on the data centers varies by location. In Hyderabad, the initial stage is nearing completion, with 94% of work done on facilities that will offer 9.6 MW of capacity. Meanwhile, the Pune project’s first phase, also designed for 9.6 MW, shows different levels of advancement across its components, with completion rates at 20% and 38% respectively.

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Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures

Research, Research Reports, Result Updates - August 21, 2024

Zomato's Q1FY25: 253 Crore Profit Surge, 4,206 Crore Revenue, Driven by Strong Vertical Performance

Zomato’s Q1FY25: 253 Crore Profit Surge, 4,206 Crore Revenue, Driven by Strong Vertical Performance

Company Overview

Zomato’s technological platform, introduced in 2010, serves the needs of customers, restaurant partners, and delivery partners by connecting them. When dining out, customers use the Zomato platform to find restaurants, order meal deliveries, reserve tables, write and read reviews, and upload and view images. Additionally, Zomato offers its restaurant partners industry-specific marketing tools that help them attract and retain customers to expand their businesses, while providing a reliable and efficient last-mile delivery service. Zomato also runs Hyper pure, a one-stop shop that provides restaurant partners with premium food and kitchenware.

Industry Overview:

The food delivery industry in India has grown rapidly over the last ten years due to a mix of factors, including rising internet usage, an expanding middle class, and shifting consumer habits.
Market Value: The Indian meal delivery market was estimated to be worth $5 billion in 2023 and is projected to expand at a compound annual growth rate (CAGR) of 12–15% in the coming years.
Drivers of Growth: Urbanization, rising disposable income, the spread of cell phones, and the convenience provided by meal delivery services are some of the main drivers propelling this expansion.

Challenges:

Profitability: Food delivery companies continue to struggle with profitability due to high customer acquisition costs, discounts, and delivery expenditures, despite their rapid expansion.
Competition: Food delivery businesses must exercise caution with respect to labor laws, food safety standards, and data privacy issues.

Future Outlook Expansion into Tier II and III Cities:

As urban markets reach saturation, businesses are branching out into smaller cities and towns, presenting new growth opportunities
. Service Diversification: Some platforms are extending their services beyond just meal delivery.
Technological Advancements: The application of AI, machine learning, and data analytics is anticipated to boost operational efficiency, optimize delivery routes, and improve customer experience. Considering all factors, the Indian meal delivery market is expected to grow significantly due to changing consumer tastes, technological breakthroughs, and the strategic expansion of major players. However, profitability and competition remain significant challenges to long-term success.

Q1FY25 Business Performance:

According to Zomato’s Q1 FY25 results, all major business segments performed exceptionally well. The company’s reported total net profit of ₹253 crore marks a considerable increase compared to ₹2 crore in the same quarter last year. This represents a 44.5% increase over the previous quarter. Operating income was ₹4,206 crore, up 74% year over year. Outstanding progress across Zomato’s various business verticals drove this growth: Businesses are growing and becoming more profitable, which is driving their scaling well
Gross Order Value (GOV): GOV growth accelerated to 53% YoY (14% QoQ) to INR 15,455 crore. Food Delivery: The segment’s gross order value (GOV) increased by 27% year over year, with revenue increasing by over 10% on a quarterly basis to ₹2,256 crore.
Quick Commerce (Blinkit): This category grew impressively, with sales reaching ₹942 crore in Q4 and GOV increasing by 130% year over year.
Going-Out: This relatively new area brought in ₹95 crore in revenue for the quarter, with a 106% year-over-year growth in GOV.
Hyperpure (B2B Supplies): Revenue increased to ₹1,216 crore, reflecting a 27% quarter-over-quarter growth.

Adjusted Revenue INR CR

Particulars	Q1FY24	Q2FY24	Q3F24	Q4FY24	Q1FY25	Q-o-Q Change
Food Delivery	1,742	1,938	2,064	2,050	2,256	10%
Quick Commerce	384	505	644	769	942	22%
Going Out	42	49	73	93	95	2%
B2B supplies Hyper pure	617	745	859	951	1,212	27%
Others	1	3	8	10	15	50%
ADJ .Revenue	2,786	3,240	3,646	3,873	4,520	17%
YOY %	54%	54%	54%	61%	62%	–

Adjusted EBITDA INR CR

Particulars	Q1FY24	Q2FY24	Q3FY24	Q4FY24	Q1FY25	Q-o-Q %
Food Delivery	181	204	252	275	313	38%
Quick Commerce	-133	-125	-89	-37	-3	34%
Going Out	3	1	1	-11	10	21%
B2B supplies Hyper pure	-35	-34	-34	-23	-22	1%
Others	-4	-5	-5	-10	1	11%
Adj.EBITDA	12	41	125	194	299	105%

Gross Order Value ( B2C Business)

Particulars	Q1FY24	Q2FY24	Q3FY24	Q4FY24	Q1FY25	Q-o-Q %
Food Delivery	7,318	7,980	8,486	8,439	9,264	10%
Quick Commerce	2,140	2,760	3,542	4,027	4,923	22%
Going Out	616	682	858	1,069	1,268	19%
GOV B2C	10,070	11,422	12,886	13,536	15,455	14%
YoY % Food Delivery	14%	20%	27%	28%	27%	–
YoY % Quick Commerce	–	–	103%	97%	130%	–
YoY % Going Out	61%	129%	154%	207%	106%	–
YoY % B2C Business	48%	47%	47%	51%	53%	–

Additionally, the company’s adjusted EBITDA increased to ₹287 crore from ₹299 crore in the prior quarter, primarily due to margin expansion in every business unit. Zomato’s robust market position has been strengthened by these outcomes, as evidenced by its market cap surpassing $25 billion during the quarter. The contribution margin from food delivery witnessed some contraction in Q1FY25, although the adjusted EBITDA margin saw improvement. The contribution margin decreased marginally on a QoQ basis (from 7.5% to 7.3%), and small fluctuations are expected to persist due to seasonality and other variables. Nonetheless, the company remains on course to reach its objective of a 4-5% adjusted EBITDA margin (as of Q1FY25, it stands at 3.4%).

Q1FY25

Particulars	Q1FY25	Q4FY24	Q1FY24	YoY%	QoQ%
Total Revenue	4,206	4,206	2,416	74%	18.08
Operating Income	177	177	-48	-469%	-3%
Operating Income	236	235	181	–	–
PBT	239	161	-15	-1693%	48.57%
Tax	-6%	-9%	113%	283	-1191
PAT	253	175	2	12550%	44.57%
EPS	0.29	0.2	0	–	45%

Highlights of the Business with New Annual Initiatives:

Zomato Everyday: Offers reasonably priced home-cooked meals on a cycle. The service is still in its early stages and is currently being tested in a few select locations in Mumbai, Bengaluru, and Delhi NCR. Zomato Legends: Allows users to order famous dishes from legendary restaurants. Currently available in eight Indian cities, with eighty renowned restaurants already on board. Meals Served on Trains: Customers can get restaurant-quality food delivered to their trains through a partnership with IRCTC. Live streaming is available across more than 80 train stations in India. Blink it: Expanded the range of products on its platform in FY24 to meet customers’ needs in both new and existing product categories, such as games and toys, flowers and plants, printing, sports, home renovation, luggage, and fashion jewellery. In FY24, the going-out GOV increased by 136% YoY to INR 3,225 crore. Topline development was solid: Balanced income expanded by 56% YoY, and B2C GOV by 48% YoY. Bengaluru had Zomato’s biggest nourishment conveyance arrange in FY24, with a single arrange totalling INR 32,828. Order frequency and transacting client growth were the main drivers of order volume growth. Both the delivery partner network and restaurant partner base saw significant growth. The shop network experienced significant growth in FY24, leading to a 28% YoY increase in warehousing capacity, reaching 4.8 million sqft.

Financial Performance

Zomato Ltd. (Zomato) revealed sales of Rs 4,206 Cr in Q1FY25, surpassing projections and rising 18% on a quarter-over-quarter (in rupee terms). 1. Revenue: Zomato recorded ₹4,206 crore in total revenue from operations, a 74% increase from the previous year. Comparing this to ₹2,416 crore in Q1 FY24, there was a noticeable increase.2. Net Profit: From ₹2 crore in Q1 FY24 to ₹253 crore, the company’s consolidated net profit experienced a sharp increase. This was a consecutive rise of 44.5% from ₹175 crore in Q4 of FY24. 3. Expenses: In Q1 FY25, total expenses came to ₹4,203 crore, compared to ₹2,612 crore in Q1 FY24 and ₹3,636 crore in the previous quarter. The expenditures related to delivery, procurement, and employee benefits were the main causes of the increase in expenses. Net Arrange Esteem (GOV): Zomato’s GOV expanded by 53% year over year to ₹15,455 crore over all of its B2C operations. The GOV for the food delivery sector went up from ₹8,439 crore to ₹9,264 crore in the previous quarter. Positively, the B2B vertical experienced strong QoQ growth of 19%, and the management is still quite optimistic about this sector.

Concall Highlights:

Financials Management:

Growth in Q1FY25: Zomato recorded a year-over-year (YoY) increase in Gross Order Value (GOV) of 27%–28%, and growth above 20% is anticipated in the near future.

Margin: The management stated that they want to continuously invest in growth while focussing on expanding the margins over time. Contribution margins are targeted to be between 4% and 5%, although no deadlines have been established for meeting this goal.
Food Delivery Industry Perspectives:
Market Dynamics: The management saw that restaurant partners did not express any particular concerns about demand, which suggests a stable picture for the meal delivery industry.

Promotional Discounts: The absence of significant promotional discounts that had an adverse effect on margins during the quarter indicates a robust demand environment.

Order Volume Growth: With a major contribution from Zomato Gold subscribers, order volume—rather than average order value (AOV)—drives GOV growth.
Rapid Growth in Trade:
Store Ramp-Up: Zomato has already opened 113 of its planned 2,000 locations by March 2026. The management has faith in its ability to keep up service standards in order to draw clients in new areas.

Competition: Zomato’s growth is likely to bring about competition, but management is confident that they can continue to turn a profit in spite of possible market challenges.
Blink its operation:
Take Rate Dynamics: A number of variables, including product mix and food inflation, affect Blinkit’s take rate. The management emphasised that higher-take-rate products outside of the core category are now responsible for a greater share of sales.
Store Operations: Local partners oversee the majority of new locations, with an emphasis on upholding consistent and high-quality customer service. SKU Expansion: Blink it has been steadily increasing the number of SKUs, which has aided in overall growth.
Working capital and capital expenditures:
Capex Increase: The expansion of Blink it stores and improvements to Hyperpure’s warehouse capacity are the reasons for the increase in capital expenditure.
Working Capital Release: Growth in the Hyperpure business, which runs on positive working capital, was responsible for a working capital release of almost ₹175 crores.
Perspective on Strategy:

Market Share in Southern India: Over the last few years, Zomato’s market share in southern India has increased dramatically and is now on par with national norms.

Emphasis on Quality: In order to stand out from rivals, particularly in emerging areas, management stressed the significance of upholding high service standards.

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LTFH Q1FY24: Retail Portfolio Grows 31% YoY, Reaches ₹84,444 Cr

Research, Research Reports, Result Updates - August 20, 2024

LTFH Q1FY25: Retail Portfolio Grows 31% YoY, Reaches ₹84,444 Cr

LTFH Q1FY24: Retail Portfolio Grows 31% YoY, Reaches ₹84,444 Cr

Company Overview:

L&T Finance Ltd., formerly known as L&T Finance Holding Ltd., is a Non-Banking Financial Company (NBFC) offering a diverse range of financial products and services. In March 2024, the company underwent a name change and applied for registration as a Systemically Important Non-Deposit Accepting Core Investment Company. As a subsidiary of Larsen & Toubro, which holds a 65.86% stake, L&T Finance benefits significantly from its parent company’s technical expertise and capital support.

Q1FY25 Results Update:

L&T Finance reported a robust financial performance for Q1FY25, with a 29% year-over-year (YoY) increase in Profit After Tax (PAT) to ₹686 Cr, and a 55 basis points YoY improvement in Return on Assets (RoA) to 2.68%. The company’s retail-focused strategy continued to deliver strong results, with the retail book comprising 95% of the overall portfolio and growing 31% YoY to ₹84,444 Cr. Consolidated book growth reached 13% YoY, the highest since Q1FY20. Net Interest Margins (NIMs) and fees remained steady at 11.08%, with NIMs increasing by 125 basis points YoY to 9.31%. Credit cost stability was maintained at 2.37% YoY.

Key Ratios	Q1FY24	Q4FY24	Q1FY25
Yield	14.74%	15.53%	15.54%
Net Interest Margin	8.06%	9.14%	9.31%
Fee & Other Income	1.58%	2.11%	1.77%
NIM + Fee & Other Income	9.64%	11.25%	11.08%
Operating Expenses	3.81%	4.69%	4.45%
Pre-provision Operating Profit	5.83%	6.56%	6.63%
Credit Cost	2.33%	2.39%	2.37%
Return on Assets	2.13%	2.19%	2.68%
Debt / Equity (Closing)	3.42%	3.27%	3.41%
Debt / Equity (Average)	3.50%	3.22%	3.21%
Return on Equity	9.72%	9.53%	11.58%

L&T Finance introduced several strategic initiatives, including the beta launch of ‘Cyclops,’ an advanced credit underwriting engine, and a revamped home loan product. Additionally, the company partnered with PhonePe to expand its reach and broaden its sourcing channels. L&T Finance also achieved the ‘Great Place to Work-Certified®’ designation, underscoring its focus on employee satisfaction.

Retail Disbursement: Retail disbursements stood at ₹14,839 Cr, showing a 33% YoY increase but a slight 1% quarter-over-quarter (QoQ) decrease.
Retail Book: The retail book grew to ₹84,444 Cr, a 31% YoY increase and 6% QoQ growth.
NIMs+Fees: Consolidated NIMs+Fees were at 11.08%, improving by 144 basis points YoY but declining by 17 basis points QoQ.
PAT: Consolidated PAT reached ₹686 Cr, demonstrating strong growth of 29% YoY and 24% QoQ.
Profitability Metrics: Consolidated RoA improved to 2.68%, up 55 basis points YoY and 49 basis points QoQ, while consolidated Return on Equity (RoE) increased to 11.58%, up 186 basis points YoY and 205 basis points QoQ.

Lending Business – Business wise book split
Segment (₹ Cr)	Q1FY24	Q4FY24	Q1FY25	Y-o-Y (%)
Farmer Finance
Farm Equipment Finance	13125	13892	14204	8%
Rural Business Finance
Rural Group Loans & Micro Finance Loans	19743	24716	25887	31%
Urban Finance
Two-Wheeler Finance	9190	11205	12025	31%
Personal Loans	5995	6440	6667	11%
Home Loans	11274	14550	15690	39%
LAP	2801	3893	4272	53%
SME Finance	1779	3905	4471
Acquired Portfolio	367	1435	1229
Retail Finance	64274	80037	84444	31%
Real Estate Finance	4096	2337	2310	-44%
Infrastructure Finance	9939	3191	1963	-80%
Wholesale Finance	14035	5528	4273	-70%
Focused Business	78309	85565	88717	13%
De-focused	257	–	–	-100%
Total Book	78566	85565	88717	13%

Retail Disbursement Growth:

Overall: Retail finance disbursements totaled ₹14,839 Cr in Q1FY25, a 33% YoY increase but a 1% decrease QoQ.
Rural Business Finance: Grew by 28% YoY to ₹5,773 Cr.
Urban Finance: Showed the highest growth, increasing by 44% YoY to ₹6,043 Cr.
Farmer Finance: Increased by 8% YoY to ₹1,903 Cr, with a 24% QoQ growth.
SME Finance: Grew by 61% YoY to ₹978 Cr but saw a 19% decrease from Q4FY24.

Lending Business – Business wise disbursement split
Particulars (Rs Cr )	Q1FY24	Q4FY24	Q1FY25	Y-o-Y (%)
Farmer Finance
Farm Equipment Finance	1757	1530	1903	8%
Rural Business Finance
Rural Group Loans (JLG)	4240	5639	5659	28%
Micro Finance (JLG)	271	129	114	28%
Urban Finance
Two-wheeler Finance	1726	2502	2621	52%
Personal Loans	1162	968	1178	1%
Home Loans	1072	1823	1656	55%
LAP	227	690	588
SME Finance	607	1213	978	61%
Acquired Portfolio	130	549	141	9%
Retail Finance	11193	15044	14839	33%
Infrastructure Finance	1040	320	175	-83%
Real Estate Finance	132	3	4	-97%
Wholesale Finance	1172	323	179	-85%
Total Disbursement	12365	15366	15019	21%

Retail Book Growth:

Overall: The retail finance book grew to ₹84,444 Cr in Q1FY25, a 31% YoY increase and 6% QoQ growth.
Rural Business Finance: Grew by 31% YoY to ₹25,887 Cr, with a 5% QoQ increase.
Urban Finance: Increased by 32% YoY to ₹38,653 Cr, with a 7% QoQ growth.
Farmer Finance: Grew by 8% YoY to ₹14,204 Cr, with a 2% QoQ growth.
SME Finance: Demonstrated remarkable growth of 151% YoY to ₹4,471 Cr, with a 14% QoQ increase.

Asset Quality:

Retail Portfolio:
- Gross Stage 3 (GS3) Assets: Increased from ₹2,063 Cr in Q1FY24 to ₹2,355 Cr in Q1FY25.
- Net Stage 3 (NS3) Assets: Rose from ₹437 Cr to ₹511 Cr over the same period.
- GS3 Ratio: Improved from 3.21% to 2.79%.
- NS3 Ratio: Decreased from 0.70% to 0.62%.
- Provision Coverage Ratio (PCR): Remained stable at around 78-79%.
Consolidated Portfolio:
- GS3 Assets: Decreased from ₹3,172 Cr in Q1FY24 to ₹2,789 Cr in Q1FY25.
- NS3 Assets: Decreased from ₹907 Cr to ₹688 Cr over the same period.
- GS3 Ratio: Improved from 4.04% to 3.14%.
- NS3 Ratio: Decreased from 1.19% to 0.79%.
- PCR: Increased from 71% to 75%.

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PFC Withdrawals May Impact Zero-Coupon Bond Market

Research, Research Reports, Result Updates - August 20, 2024

IREDA Q1FY25 Sees Record Loan Disbursement of ₹25,089 Crore

Company Overview:

Indian Renewable Energy Development Agency Ltd (IREDA) is an Indian public sector company that provides financial backing and additional assistance for projects related to renewable energy sources, energy efficiency, and conservation. Established in 1987, IREDA is a Navratna institution under the administrative jurisdiction of the Ministry of New and Renewable Energy, owned by the Indian government. IREDA was listed on the NSE and BSE following its initial public offering (IPO) in November 2023.

IREDA, a public limited company under government ownership and a non-banking financial institution, is committed to the development, encouragement, and funding of projects related to energy efficiency, conservation, and new and renewable energy sources. The company holds the status of a Mini Ratna (Category I).

Industry Overview & Growth Drivers:

India’s Green Financing Scenario: According to the International Renewable Energy Agency’s (IRENA) 2023 global ranking, India ranks fourth in the world for installed capacity of renewable energy, fourth for installed capacity of wind power, and fifth for installed capacity of solar power.

Bidding activity in other renewable energy sectors also increased in FY24:

The Government of India secured contracts for approximately 412,000 MTPA of green hydrogen production, with a 30-month timeline for commissioning.
Production of electrolysers: Under the Strategic Interventions for Green Hydrogen Transition Scheme (Tranche-I), a production capacity of approximately 1,500 MW was granted.
Solar PV production: Under the Solar PLI Scheme (Tranche II), letters of award were issued for 39,600 MW of fully and partially integrated solar PV module manufacturing plants.
Battery production: Under the Advanced Cell Chemistry PLI Scheme, a request for proposals was issued for a 10 GWh production capacity, which was later approved in April 2024.

Key Drivers for Growth in Solar and Wind Segments:

The budget for grid-based solar power projects in 2024–2025 is ₹10,000 crore, compared to ~₹4,757 crore in 2023–24, according to updated estimates.
In 2024–25, wind power was allocated ~₹930 crore, compared to ~₹916 crore in 2023–24.
Utility-scale solar and onshore wind: 50 GW of yearly bids for utility-scale solar and onshore wind have been planned, with allocations distributed among SECI, NTPC, NHPC, and SJVN, and a minimum of 10 GW of wind capacity announced for the period of 2023–2028.
Additionally, 50 solar parks with a combined capacity of more than 37,490 MW have been approved by the MNRE across 12 states, with about 10,401 MW of that power already put into service.

Hydropower: Depending on their scale, hydropower projects are categorized as large or small. In India, hydropower facilities with a capacity of 25 MW or less are classified as small hydro projects and fall under the purview of renewable energy. Following a government notification in 2019, large hydropower projects (>25 MW) have also been classified under renewables.

Important government initiatives promoting growth include:

Budgetary Focus: Aggregation machinery will help meet the mandate to combine CBG with piped gas and CNG, reducing the cost of LNG imports and enabling greenfield capacity development.
PLI for Manufacturing of High-Efficiency Solar Modules & Electric-Mobility Promotion Scheme 2024 (EMPS 2024)
Waiver of Interstate Transmission System (ISTS) charges for solar PV manufacturing capacity
₹564.75 crore allocated under the scheme from FY 2023–2024 to FY 2026–2027.

Q1FY25 Quarterly Results:

The company’s highest-ever disbursement of ~₹25,089 crore in FY24 led to an incremental rise in its loan book to ~₹59,698 crore at the end of FY24.
Interest on loans increased by 44.84% in FY24 compared to FY23, contributing to the 42.56% increase in total income in FY24 over FY23.
Finance costs rose by 51.51% over FY23, primarily due to higher borrowing to meet the increasing demand for lending operations.
Interest expenses on borrowings increased by 70.59% due to additional funding raised through term loans from banks and other financial institutions at attractive domestic market rates.
Loans increased by 27.14% in FY24, mainly due to an increase in net disbursement.
The company achieved an all-time high PAT of ~₹1,252.23 crore and increased its net worth to ~₹8,559.43 crore in FY23.
The company’s capital adequacy is well within RBI guidelines, with a CRAR of 20.11% compared to the minimum allowable floor of 15%.
The debt-to-equity ratio decreased to 5.80 times in FY24 from 6.77 times in FY23 due to a new stock issue and retained earnings that were greater than the debt increase at the end of the fiscal year.
Operating profit margin grew by 3.76% in FY24 to 32.92% from 32.69% in FY23, driven by an improvement in net margin due to higher interest income.
The net profit margin increased from 24.82% in FY23 to 25.22% in FY24, primarily due to a 1.61% increase in the interest income margin.

Sanctions and Disbursements:

A 14.63% rise was observed over the ~₹32,586.60 crore sanctioned in the previous year. During FY24, loans totaling ~₹25,089.04 crore were disbursed, marking a 15.94% increase over the ~₹21,639.21 crore disbursed in the previous year.

Loan Book and Disbursement:

During FY24, loans disbursed reached ~₹25,089.04 crore, a 15.94% increase from ~₹21,639.21 crore the previous year. This marks the largest yearly payout in the company’s history.
The company’s loan book increased by 26.81% from ~₹47,075.52 crore as of March 31, 2023, to ~₹59,698.11 crore as of March 31, 2024.

Key Financial Ratios:

Ratios

30, June 2024

31, Mar 2024

30, June 2024

Rate of Return on Loan Assets%

10.01%

9.97%

9.64

Percentage charged for borrowings %

7.78%

7.81%

7.83%

Spread of Interest%

2.23%

2.16%

1.81%

Margin of Net Interest (%)

3.29

2.85%

3.23

Ratio of Debt to Equity

5.83

5.80

6.35

CRAR (%)

20.11%

19.52%

19.95%

EPS (Rs)

5.16

1.43

1.29

Net Non-Performing Assets (NPAs):

The company’s NPAs decreased to 0.99% in FY24 from 1.66% in FY23, a significant 40.36% decrease from the previous year.
Additionally, the company saw a 32 basis point increase in interest spread, with the net interest margin rising to 2.85% in FY24 from 2.82% in FY23.
The company achieved a ten-year low of 0.99% for the Net NPA ratio at the end of FY24, compared to 1.66% at the end of FY23.
The company’s systematic recovery procedures resulted in a drop in GNPA and NNPA to 0.99% and 2.36%, respectively.
A strong emphasis on recovery and resolution measures led to the net removal of three loan accounts from the NPA list and the recovery of ₹212.70 crore from NPA loans, of which ₹90.68 crore is owed towards the principal and ₹122.02 crore towards interest income, including ~₹58.39 crore in recovered written-off assets.

Future Outlook:

Prospects for India’s Green Finance Industry and Government Initiatives: India’s green finance industry is expanding rapidly, driven by significant government initiatives and a global commitment to enhancing renewable energy capacity. By 2030, up to ~₹46 lakh crore is expected to be invested in India’s renewable energy sector. The FY25 Union Budget allocation for renewable energy has increased by 46% over the previous year to reach ₹14,980 crore, reflecting the country’s commitment to this sector.

Key Policies Announced for FY24:

Utility-Scale Solar and Onshore Wind: SECI, NTPC, NHPC, and SJVN have been allocated shares of the 50 GW yearly bidding cycle, including at least 10 GW of wind capacity for the 2023–2028 period. The MNRE has also approved 50 solar parks with a combined capacity of around 37,490 MW across 12 states, with 10,401 MW of that power already operational.
Rooftop Solar: The PM Surya Ghar Mufti Bijli Yojana was introduced, with an initial investment of ~₹75,021 crore, covering 10 million households. Under the program, each household will receive 300 free units of power per month, resulting in annual savings of approximately ₹15,000 to ₹18,000 per household.
Hydropower: Developers are provided with the option to determine tariffs by backloading, provided they extend the project life to 40 years, shorten the debt repayment period to 18 years, and implement a 2% escalating tariff. For hydroelectric projects where the construction work is awarded and a PPA is signed until June 30, 2028, ISTS charges have been partially waived, with the waiver available in increments of 25% from July 1, 2025, to July 1, 2028.
Offshore Wind: The MNRE has announced a bidding trajectory for 37 GW of offshore wind capacity, while CTU has completed the planning for transmission infrastructure for the first 10 GW of offshore capacity (5 GW each off the shores of Gujarat and Tamil Nadu). Additionally, regulations for offshore wind leases have been published, offering the possibility of extending the lease duration to 35 years.

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Prestige Group Plans ₹42,000 Crore Housing Launches in FY26 Amid Real Estate Boom

Research, Research Reports, Result Updates - August 20, 2024

Robust Profitability and Asset Quality Improvements Highlight Repco Home Finance's Q1 FY25

Robust Profitability and Asset Quality Improvements Highlight Repco Home Finance’s Q1 FY25

Repco Home Finance’s Q1 FY25 performance shows robust growth and improved financial metrics across various segments.

The company’s credit book grew by 8.3% year-over-year to Rs. 13,701 crores, with AUM reaching Rs. 13,513 crores as of March 31, 2024. Credit sanctions increased slightly by 0.2% to Rs. 727 crores, while disbursements slightly decreased to Rs. 680 crores.

Total income surged by 13.6% to Rs. 416 crores, with NII growing by 8% to Rs. 175 crores. Net profits showed significant advancement, rising by 18% to Rs. 105 crores. The company maintained a solid loan spread of 3.4%.

KEY INDICATORS FOR Q1 FY25: (Figures in Rs. million)

METRICS	Q1 FY25	Q1 FY24	GROWTH %
Sanctions	7,272	7,258	0.2%
Disbursements	6,804	6,843	-0.6%
Net Interest Income	1,749	1,619	8.0%
Operating Revenue	4,078	3,645	11.9%
PBT	1,366	1,198	14.0%
PAT	1,054	891	18.3%

RELATIVE PERFORMANCE – Q O Q:

Particulars	Units	Q4 FY24	Q1 FY25
Sanctions	Rs. Mn	9,777	7,272
Disbursements	Rs. Mn	8,946	6,804
Net Interest Income	Rs. Mn	1,723	1,749
PAT	Rs. Mn	1,081	1,054
NIM	%	5.1	5.1
Yield on Assets	%	11.7	12.0
Cost of Funds	%	8.3	8.6
Spread	%	3.4	3.4
Return on Assets	%	3.2	3.1
Return on Equity	%	16.5	16.3

Profitability metrics improved, with return on assets increasing to 3.1% from 2.8% and return on equity rising to 16.3% from 15.8%. The credit portfolio remained diversified, with non-salaried segments accounting for 51.6% and salaried segments for 48.4%. Housing loans comprised 74.3% of the outstanding loan book, while home equity products made up 25.7%.

Income & Earning Growth QoQ: (Amt in Rs. Mn)

Metrics	Q1 FY24	Q4 FY24	Q1 FY25
Income from Operations	3,645	3,926	4,078
NII	1,619	1,723	1,749
Net Profit	891	1,081	1,054
Net Worth	24,050	26,771	27,709

Asset quality showed improvement, with GNPA decreasing to Rs. 583 crores from Rs. 695 crores year-over-year, although slightly up from Rs. 552 crores in the previous quarter. The GNPA ratio improved to 4.25% from 5.5% year-over-year, while the NNPA ratio decreased to 1.7% from 2.8%. The company maintained strong provision coverage, with expected credit loss provisions at Rs. 519 crores or 3.8% of total loan assets.

Asset Book: (Amt in Rs. Mn)

Type	Q1 FY24	Q4 FY24	Q1 FY25
Sanction	7258	9777	7272
Disbursements	6843	8946	6804
Loan Book 1. Salaried 2. Non salaried	126554	135134	137011
	51.8	51.4	51.6
	48.2	48.6	48.4
Mix of Loan Portfolio 1. Home Loan 2. Home Equity
	76.9	74.7	74.3
	23.1	25.3	25.7

ECL PROVISION (Amt in Rs Mn):

Particulars	Jun 23	Mar 24	Jun 24
Gross Stage 3	6947	5516	5826
% portfolio Stage 3	5.5%	4.1%	4.3%
ECL Provision Stage 3	3571	33597	3600
Net Stage 3	3376	1918	2226
Coverage ratio Stage 3	51.4%	65.2%	61.8%

Gross Stage 1 & 2	119607	129618	131185
% portfolio in Stage 1 & 2	94.5%	95.9%	95.7%
Total ECL Provision	5240	5179	5193

Repco Finance maintained a robust capital position with a capital adequacy ratio of 34%, well above the regulatory requirement of 15%. The company’s distribution network expanded to 181 branches and 42 satellite centers across 13 states and union territories.

Profitability Ratios: (Amt in Rs. Mn)

Metric	Q1 FY24	Q4 FY24	Q1 FY25
Net Interest Margin	5.1%	5.1%	5.1%
Spread	3.3%	3.3%	3.4%
Return on Equity	15.1%	16.5%	16.3%
Return on Assets	2.8%	3.2%	3.1%

This comprehensive improvement in growth, asset quality, and profitability metrics positions Repco Home Finance well for sustained performance in FY25, despite potential market challenges such as elections and heatwaves. The company’s focus on retail lending in both housing and home equity segments, coupled with a strong capital base, provides a solid foundation for navigating the evolving financial landscape.

Quarterly Performance Analysis:

Repco demonstrated strong execution in Q1 FY25. The company’s credit book grew by 8.3% year over year to Rs. 13,701 crores, while total income surged by 13.6% to Rs. 416 crores. Net interest income increased by 8% to Rs. 175 crores, and net profit showed significant improvement, rising by 18% to Rs. 105 crores. The company maintained a solid loan spread of 3.4%. Asset quality improved, with the GNPA ratio decreasing to 4.25% from 5.5% year over year, despite a slight increase in the GNPA amount due to factors like elections and heatwaves. Profitability metrics also improved, with return on assets increasing to 3.1% and return on equity rising to 16.3%. The loan portfolio remained diversified between non-salaried (51.6%) and salaried (48.4%) segments, with housing loans comprising 74.3% of the outstanding loan book. Repco Home Finance maintained a strong capital position with a capital adequacy ratio of 34%, well above the regulatory requirement. These results indicate robust growth and improved financial metrics across various segments, positioning the company well for the financial year despite potential market challenges.

In the transition from Q4 FY24 to Q1 FY25, Repco Home Finance experienced some changes in its financial metrics. Loan sanctions decreased from Rs. 9,777 million to Rs. 7,272 million, while disbursements also declined from Rs. 8,946 million to Rs. 6,804 million. However, the company’s Net Interest Income slightly increased from Rs. 1,723 million to Rs. 1,749 million. Profit After Tax (PAT) saw a notable decline from Rs. 1,081 million to Rs. 1,054 million. The Net Interest Margin (NIM) remained stable at 5.1%. The Yield on Assets improved from 11.7% to 12.0%, while the Cost of Funds increased from 8.3% to 8.6%. Despite these changes, the company maintained its spread at 3.4%. Profitability measures showed a slight decrease, with Return on Assets dipping from 3.2% to 3.1% and Return on Equity declining from 16.5% to 16.3%. These figures suggest that while Repco Home Finance faced some challenges in loan growth, it managed to maintain relatively stable performance in terms of interest income and overall profitability.

Net Sales increased by 11.89% from Rs. 364.48 crore in June 2023 to Rs. 407.83 crore in June 2024. Quarterly Net Profit increased by 17.91% from Rs. 95.44 crore in June 2023 to Rs. 112.53 crore in June 2024. EBITDA increased by 14.38% from Rs. 326.38 crore in June 2023 to Rs. 373.32 crore in June 2024. Repco Home’s EPS grew from Rs. 15.26 in June 2023 to Rs. 17.99 in June 2024.

Industry Overview:

The global economy remains strong, with steady growth and inflation gradually returning to targeted levels. Although risks persist, such as potential price surges due to geopolitical tensions in regions like Ukraine and Gaza, and ongoing core inflation driven by tight labor markets, the overall global outlook remains relatively balanced. Global GDP is projected to grow by 3.1% in FY24 and 3.2% in FY25, while global headline inflation is expected to decrease from 6.9% in FY23 to 5% in FY24, and further to 3.4% in FY25. However, differences in disinflation rates across major economies may lead to currency fluctuations, affecting financial sectors. Additionally, high interest rates may have a more pronounced cooling effect than anticipated, potentially leading to financial stress as fixed-rate mortgages reset and households struggle with high debt levels.

India continues to be one of the fastest-growing economies globally, with an estimated GDP growth of 8.2% for FY24, up from 7% in the previous year. The IMF projects a growth rate of 6.8% for FY25, driven by public investment and strong domestic demand. Contributing factors include high capacity utilization in manufacturing, government capital expenditure, FDI inflows, and strong financial and corporate sector balance sheets, which are expected to support a positive economic cycle. Digitalization initiatives are expected to enhance formalization, financial inclusion, and economic opportunities, contributing to India’s sustained rapid growth. India’s large and young population offers opportunities for growth, employment, and consumption-driven expansion, with investments in education and skill development being crucial for inclusive progress. However, challenges persist, such as geopolitical tensions, volatility in global financial markets, geo-economic fragmentation, and extreme weather events, all of which pose risks to the economic outlook. To mitigate these risks, ensuring resilience through the diversification of trade partners and strengthening domestic capabilities will be critical. Contributing factors include a decline in rural consumption due to an uneven monsoon and crop yield in FY24, as well as a potential slowdown in government capital expenditure early in FY25 ahead of the general elections. Geopolitical tensions and financial market volatility continue to pose risks to the inflation outlook, with the Reserve Bank of India projecting CPI inflation at 4.5% for FY25.

Asset Quality:

The asset quality of Repco Home Finance has shown a mixed trend over the past year, as reflected in both the graph and the provided data. The Gross Non-Performing Assets (GNPA) ratio has generally improved, decreasing from 5.5% in June 2023 to 4.3% in June 2024, despite a slight uptick from the March 2024 low of 4.1%. In absolute terms, GNPA amounted to Rs. 583 crores as of June 30, 2024, down from Rs. 695 crores a year earlier, but up from Rs. 552 crores at the end of March 2024. This marginal increase was attributed to the impact of national elections and prevailing heatwaves during the quarter.

ECL PROVISION (Amt in Rs Mn):

Particulars	Jun 23	Mar 24	Jun 24
Gross Stage 3	6947	5516	5826
% portfolio Stage 3	5.5%	4.1%	4.3%
ECL Provision Stage 3	3571	33597	3600
Net Stage 3	3376	1918	2226
Coverage ratio Stage 3	51.4%	65.2%	61.8%

Gross Stage 1 & 2	119607	129618	131185
% portfolio in Stage 1 & 2	94.5%	95.9%	95.7%
Total ECL Provision	5240	5179	5193

SECTOR WISE MOVEMENT (Amt in Rs. Mn):

Particulars	Jun 24		Jun 23
	AUM	%	AUM	%
Stage 1	1,15,222	84.0%	1,01,622	80.3%
Stage 2	15,963	11.7%	17,985	14.2%
Stage 3	5,826	4.3%	6,947	5.5%
Grand Total	1,37,011	100.0%	1,26,554	100.0%

Similarly, the Net Non-Performing Assets (NNPA) ratio has shown improvement, declining from 2.8% in June 2023 to 1.7% in June 2024, with a slight increase from the 1.5% recorded in March 2024. In monetary terms, NNPA stood at Rs. 223 crores as of June 30, 2024, a significant reduction from Rs. 338 crores a year ago, though up from Rs. 192 crores at the end of the previous quarter.

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India’s Power Capacity Expands Significantly: From 305 GW to 476 GW Over Ten Years

Research, Research Reports, Result Updates - August 19, 2024

REC Ltd. Achieves 30% YoY Growth in Net Interest Income for Q1FY25

REC Ltd Achieves 30% YoY Growth in Net Interest Income for Q1FY25

Current Market Price	INR 579.65
Current Market Cap	INR 1,53,938 Cr.
High/Low	INR 654/ INR 231
BSE Code	532955
NSE Code	RECLTD
Bloomberg Code	RECL:IN
P/BV	2.1

About the Stock:

REC Ltd., formerly known as Rural Electrification Corporation Limited, is an Indian government-owned public sector company under the Ministry of Power. Established in 1969, REC Ltd. was initially tasked with funding and promoting rural electrification initiatives throughout India. Over time, the company’s scope has expanded to include funding projects related to power generation, transmission, and distribution in both urban and rural areas. REC Ltd. has consistently demonstrated strong financial performance, characterized by solid profitability, liquidity, and solvency. The majority of its revenue comes from interest income on loans to companies within the power sector, supported by a robust capital structure.

Price Performance:

1 Month	-6.16 %
3 Month	7.12 %
1 Year	159.76%
3 Year	408.96%

Industry Overview:

The power sector has thrived during the post-pandemic recovery phase, driven by increased demand and a focus on energy transformation. In the fiscal year 2023–2024, total power generation reached 1,738 BU, representing a 7% increase compared to the previous year. However, renewable energy sources, including hydropower, accounted for 364 BU, marking a 2.2% year-over-year decrease. Notably, large hydro generation experienced a significant 17.8% slowdown despite a 10.9% increase in renewable energy generation. Total power generation from non-fossil fuels stood at 412 BU, a 1.4% decrease from the prior year, resulting in non-fossil energy comprising 24% of the total. Additionally, the fiscal year saw a 26 GW increase in installed electricity capacity, bringing the total to 442 GW by the year’s end. Remarkably, renewable energy accounted for 73% of the new capacity. The non-fossil capacity share increased from 43% to 45% year-over-year, with peak power consumption reaching a record-breaking 240 GW, up from 215.9 GW the previous year.

Q1FY25 Financial Performance Analysis:

In Q1FY25, REC Ltd. reported a 19% year-over-year growth in total income, rising from INR 10,981 crores in Q1FY24 to INR 13,037 crores. This impressive growth is likely due to an expanded loan book and higher interest revenue, reflecting the company’s strong operational performance. Net interest income (NII) increased by 30% YoY, from INR 3,612 crores in Q1FY24 to INR 4,713 crores in Q1FY25, underscoring REC Ltd.’s ability to effectively manage interest rates and boost lending income.

REC Ltd.’s net profit grew by 16% YoY to INR 3,442 crores in Q1FY25, up from INR 2,961 crores in Q1FY24, highlighting its strong profitability driven by increased revenue and lower expenses. Total comprehensive income, which includes net profit and other comprehensive income, rose by 12% YoY to INR 3,525 crores in Q1FY25, further demonstrating the company’s enhanced equity value and overall financial health.

Disbursements:

	Q1FY25 (INR in Cr.)	Q1FY24 (INR in Cr.)
Generation	4,667	4,446
Renewables Incl Large Hydro	5,351	1,534
Transmission	1,443	837
Distribution	20,714	22,411
a) Distribution Capex	1,980	1,863
b) LPS & LIS	3,007	9,551
c) RBPF	15,727	10,997
I&L – Core	5,753	3,605
I&L – E&M	2,229	890
STL/MTL	3,495	410
Total Disbursements	43,652	34,133
% Increase in Q1FY25 over Q1FY24	28%

Sanctions:

	Q1FY25 (INR in Cr.)	Q1FY24 (INR in Cr.)
Generation	35,552	15,519
Renewables Incl Large Hydro	39,655	24,985
Transmission	7,169	6,808
Distribution	7,600	33,861
a) Distribution Capex	4,200	11,341
b) LPS & LIS	–	13,620
c) RBPF	3,400	3,500
d) Special Loan	–	5,400
I&L – Core	19,815	5,810
I&L – E&M	–	3114
STL/MTL	3,000	700
Total Sanctions	1,12,791	90,797
% Increase in Q1FY25 over Q1FY24	24%

The company’s loan book exhibited robust growth, increasing by 17% YoY from INR 4.54 lakh crores in Q1FY24 to INR 5.30 lakh crores in Q1FY25. This expansion indicates REC Ltd.’s successful operations and its ability to finance major projects. Moreover, asset quality improved as net credit-impaired assets declined from 0.97% YoY to 0.82% of total assets in Q1FY25, reflecting better credit risk management and effective recovery procedures.

REC Ltd.’s net worth significantly increased from INR 60,886 crores in Q1FY24 to INR 72,351 crores in Q1FY25, representing a 19% YoY rise. This growth indicates a strong equity foundation, enhancing the company’s financial stability. The capital adequacy ratio (CAR) for Q1FY25 was a robust 26.77%, well above the regulatory requirement. With Tier I at 24.27% and Tier II at 2.50%, this solid CAR highlights REC Ltd.’s strong capital structure and its capacity to absorb losses while expanding its business.

In summary, REC Ltd.’s Q1FY25 results demonstrate solid and well-managed financial performance, marked by significant growth in revenue, profitability, and asset quality. The company’s strategic focus on expanding its loan book and efficient cost management has led to improved interest rates and net interest margins.

Over the past seven quarters, from December 2022 to June 2024, the financial institution’s asset quality has steadily improved. Gross credit-impaired assets have consistently decreased, from 3.63% in December 2022 to 2.61% by June 2024, indicating a substantial reduction in the risk associated with the loan portfolio. Similarly, net credit-impaired assets, which consider impairments after provisions, have significantly declined from 1.12% in December 2022 to 0.82% by June 2024, showcasing effective provisioning and recovery efforts.

Borrowings:

Particulars	Q1FY25 (INR in Cr.)	Q4FY24 (INR in Cr.)	Q1FY24 (INR in Cr.)
Domestic Borrowings:
Institutional including Subordinated Bonds	1,93,011	1,81,471	1,60,325
Loans from Banks, FIs, NSSF, etc	75,043	79,806	85,492
54EC Capital Gains Tax Exemption Bonds	43,246	42,356	38,908
Tax Free Bonds	8,999	8,999	10,307
Infra Bonds	4	4	4
Total Domestic Borrowing	3,20,303	3,12,636	2,95,036
Foreign Currency Borrowings:
External Commercial Borrowings (Bonds & Term Loans)	1,08,644	1,00,169	83,464
FCNR (B) Loans	29,847	25,139	19,082
Total Foreign Currency Borrowings	1,38,491	1,25,308	1,02,546
Grand Total	4,58,794	4,37,944	3,97,582

During the same period, the provision coverage ratio, which measures the extent to which provisions cover impaired assets, fluctuated. It started at 69.11% in December 2022, peaked at 70.64% in March 2023, and then slightly dipped before stabilizing in the subsequent quarters at around 68-70%. While the ratio remains relatively high, the slight decline towards the end suggests that even as the bank’s asset quality improves, it may be slightly reducing its provision buffer, possibly due to increased confidence in asset quality.

The yield on loan assets for Q1FY25 was 9.99%, slightly higher than the 9.82% recorded for Q1FY24. This yield stability indicates that REC Ltd. has maintained profitability in its lending operations, whether through favorable changes in loan terms or a stable interest rate environment.

Key Ratio & Analysis:

Yield on Loan Assets (%)	9.99
Cost of Funds (%)	7.05
Interest Spread (%)	2.94
Net Interest Margin (%)	3.64
Return on Net Worth (%)	19.51
Interest Coverage Ratio (Times)	1.54
Debt Equity Ratio (Times)	6.27

In Q1FY25, the cost of funds decreased to 7.05%, down from 7.23% in Q1FY24. This reduction in financing costs may be attributed to better debt management or favorable borrowing terms, thereby enhancing the company’s profitability.

The interest spread, which is the difference between the cost of funding and the yield on loan assets, improved from 2.59% in Q1FY24 to 2.94% in Q1FY25. This suggests that REC Ltd. has increased the margin between what it pays for funds and what it earns on loans, indicating more profitable lending operations.

The net interest margin (NIM) grew to 3.64% in Q1FY25, up from 3.28% in Q1FY24. The growth in NIM, a critical indicator of a company’s profitability, demonstrates REC Ltd.’s effective allocation of interest income against its interest expenses.

Return on net worth (RoNW) decreased slightly from 19.98% in Q1FY24 to 19.51% in Q1FY25. Although the decline is minor, it suggests a slight drop in the company’s return on equity, possibly due to slower net income growth or an expanded equity base.

During Q1FY25, the interest coverage ratio remained steady at 1.54 times, compared to 1.53 times in Q1FY24. This stability indicates consistent performance in managing the company’s debt obligations, demonstrating its ability to meet interest commitments from earnings.

The debt-to-equity ratio in Q1FY25 was 6.27 times, slightly lower than the 6.42 times noted in Q1FY24. A lower ratio indicates that REC Ltd. has marginally reduced its reliance on debt financing, leading to a more balanced capital structure.

Future Outlook:

REC Ltd. is strategically positioned as a key financier of power infrastructure projects across India. Given the Indian government’s ambitious infrastructure development plans, including rural electrification and renewable energy expansion, REC Ltd. is expected to continue playing a crucial role in funding large-scale power projects. The government’s commitment to achieving universal electricity access and enhancing the reliability of power supply, particularly in rural and underserved areas, ensures a steady flow of projects and opportunities for REC Ltd.

As India strives to meet its renewable energy targets, REC Ltd. is likely to focus more on financing projects related to solar, wind, and other renewable energy sources. This shift aligns with global trends and India’s commitments under international agreements like the Paris Accord. By supporting the transition to a greener energy mix, REC Ltd. can diversify its portfolio and position itself as a leader in financing sustainable energy projects, potentially enhancing its reputation and attracting new business.

REC Ltd. has consistently demonstrated strong financial performance, driven by the size of its loan portfolio, steady revenue growth, and profitability. The company’s sound financial management practices and substantial capital base provide a solid foundation for future growth. As India’s economic development, urbanization, and industrialization progress, REC Ltd.’s loan disbursements are expected to increase, further boosting profitability and shareholder value.

Conclusion

REC Ltd. is well-positioned to benefit from India’s ongoing infrastructure and energy development initiatives. Its strong financial base and focus on funding critical power projects contribute to a positive long-term outlook. However, the company must navigate sector-specific challenges and adapt to evolving market conditions to sustain its growth trajectory.

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 16, 2024

Power Grid Strengthens Southern Grid with Successful Project Completion

The nation’s top power transmission provider, Power Grid Corporation of India Limited (POWERGRID), has successfully commissioned a project for “Augmentation of Transformation Capacity in the Southern Region,” marking a critical milestone. The objective of this effort is to improve grid stability and strengthen the electricity transmission infrastructure in the southern states of India.

Project Specifics and Advantages:
Power Grid has not made the project’s details available to the general public. On the other hand, we may deduce the following from the project title:

Emphasis on Transformers: It is probable that this project entailed the installation of either new or upgraded transformers. Transformers are essential for efficiently transmitting power over long distances by stepping up or down voltage levels.
Enhanced Capacity: The project intends to “augment” transformation capacity, implying an expansion of the southern grid’s total capacity to handle power. This means that more power can be sent, meeting the rising demand and making it easier to integrate renewable energy sources.

Enhanced Grid Stability: The upkeep of grid stability depends on a strong transmission infrastructure with sufficient transformation capacity. For businesses and homes in the southern area, this means fewer power outages and higher-quality power supplies.

Importance to the Southern Area: The southern part of India has grown significantly in the last several years, which has increased demand for power. In order to meet this rising need, this initiative will:

Enabling electricity Transmission: By facilitating the transmission of extra electricity from generation sources to distribution networks, the increased capacity will guarantee that customers will always have access to power.

Integration of Renewable Energy: The South has a lot of potential for renewable energy sources, such as wind and solar power. By strengthening the grid’s infrastructure, this initiative makes it possible to seamlessly include these renewable energy sources into the overall power mix.

Enhanced Power Quality and Reliability: The project will minimise power outages and disruptions by improving power quality and reliability through increased grid stability.

The Commitment of Power Grid to Sturdying the Country’s Grid

Power Grid is essential to the development and upkeep of the national transmission network in India. The accomplishment of this project successfully highlights the company’s dedication to:

Infrastructure Expansion: To fulfil the nation’s rising demand for power, Power Grid is constantly modernising and expanding the nation’s grid.
Grid Resilience: By funding initiatives that increase transmission capacity and stability and reduce the likelihood of power outages, the corporation prioritises grid resilience.
Integration of Renewable Energy: Power Grid is actively engaged in building infrastructure to enable the integration of renewable energy, acknowledging the significance of this energy source in India’s energy mix.

Financial performance of the company:
The P/E ratio of 7.66 and the P/B ratio of 1.90 indicate a moderate value for this firm. Positive valuation indicators are further shown by its P/S ratio of 3.45 and EV/EBITDA ratio of 6.83. The firm has grown steadily over the last three years, with a three-year compound annual growth rate (CAGR) of 9.89% for sales and 19.22% for net profit. The firm has strong interest coverage ratios of 4.20, while having a debt to equity ratio of 1.52. However, with a current ratio of 0.91 and a quick ratio of 0.88, liquidity ratios show some pressure. The ROCE of the firm is a commendable 12.81%. With a gross profit margin of 88.85%, an operating margin of 59.60%, and a net profit margin of 34.00%, the company is clearly exceptionally profitable. With respect to book value per share (excluding Reval Reserve), it is Rs. 119.01. Basic EPS and Diluted EPS are both Rs. 22.10. With a face value of Rs. 10, a substantial dividend of Rs. 18.75 per share is given out. With a market valuation of Rs. 251,255 crore, the business has a strong position in the market and investor trust.

The “Augmentation of Transformation Capacity in the Southern Region” project has been successfully put into service, signifying Power Grid’s dedication to fortifying the national grid and streamlining the integration of renewable energy sources. This initiative should help Power Grid’s long-term growth prospects and investor value, even if an exact valuation impact cannot be calculated without particular financial information.

India’s economic growth and energy security depend heavily on Power Grid’s efforts on modernising and expanding its grid and infrastructure. The project’s successful completion establishes a favourable precedent for next initiatives and establishes Power Grid as a major participant in India’s changing energy environment.

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Waaree Energies Surges Over 11% on FTSE Index Inclusion Buzz

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 16, 2024

Mahindra Lifespaces Acquires New Land to Expand Its Presence in Bengaluru

Leading Indian real estate developer Mahindra Lifespaces Developers Ltd. (MLDL) has furthered its presence in Bengaluru by purchasing a plot of property in the desirable Whitefield neighbourhood, totalling about 2 acres. The statement demonstrates MLDL’s dedication to the booming residential sector in the city.

Specifics of the Land Acquisition and Project Prospects:
It is anticipated that the recently purchased property tract has 0.2 million square feet of developable potential, or saleable area. Mid-premium residential flats are anticipated to be featured in the project, which has an estimated Gross Development Value (GDV) of ₹225 crore. This acquisition is emphasised by MLDL as a critical step in realising their goal of building sustainable urban communities.

Specifics of the Land Acquisition
• Land size: around two acres
• 0.2 million square feet of saleable area is the developable potential.
• Gross Development Value (GDV): Approximately $27 million, or ₹225 crore.
• Focus of the project: mid-range residential properties

Latest Information & Updates:
MLDL is benefiting from this land acquisition in Bengaluru, which increases their potential for land bank expansion to ₹2800 crore in FY24 (according to ICICI direct analysis). This graphic illustrates the company’s diversification strategy by including a Mumbai rehabilitation project. Analysts see this land bank expansion positively, suggesting that MLDL is concentrating on growing the total scope of its business

Recent Developments and Market Position:
This land acquisition in Whitefield marks MLDL’s second such move in the area for FY24. Earlier this year, they secured a larger land parcel of 9.4 acres. This strategic focus on Whitefield highlights their confidence in the locality’s potential for residential development
Mahindra Lifespaces’ third-quarter net income increased 33% to Rs 33.21 cr, or Rs 198 cr. Mahindra Lifespace Developers Ltd, a real estate company, recorded a 33% rise in its consolidated net profit for the quarter that ended in December, coming in at Rs 33.21 crore.
Its net profit for the previous year was Rs 25.02 crore.According to a regulatory filing, total income increased significantly to Rs 198.14 crore in the third quarter of the current financial year from Rs 33.32 crore in the same period last year.

From April to December of current fiscal year, net profit increased to Rs 100.88 crore from Rs 17.67 crore during the same time the previous year. Additionally, total revenue increased from Rs 253.22 crore to Rs 389.30 crore in the first nine months of FY23. The company’s market capitalization stands at Rs. 9,095 crores. Despite its sizeable market cap, the financial metrics paint a mixed picture of its performance. The stock opened at Rs. 579.00, slightly higher than the previous close of Rs. 564.90. Over the past year, it has seen highs of Rs. 632.80 and lows of Rs. 316.00, indicating significant volatility. In terms of profitability, the company faces challenges with negative gross profit margin (-9.42%) and net profit margin (-2.52%). However, it manages to achieve a modest return on equity of 5.61% and return on assets of 2.80%. The return on capital employed (ROCE) is negative at -3.81%, suggesting inefficiencies in capital utilization. The company maintains a healthy current ratio of 1.52, indicating its ability to cover short-term liabilities. However, the quick ratio is relatively low at 0.35, reflecting potential liquidity concerns. On the positive side, the debt-to-equity ratio is low at 0.15, indicating a conservative capital structure. Interest coverage ratios stand at -5.24, indicating a potential inability to cover interest expenses with earnings. The asset turnover ratio is low at 0.15, suggesting inefficiencies in asset utilization. Over the past three years, the company has experienced a significant decline in net profit at a CAGR of -70.01%. Despite this, the stock trades at a relatively high P/E ratio of 53.67 and P/B ratio of 3.02, indicating possibly overvaluation. The EV/EBITDA ratio is negative at -98.69, which may suggest distress or undervaluation. The company’s total asset value is Rs. 3,610 crores, reflecting the scale of its operations.

There is a lot of demand in the Whitefield real estate market in Bengaluru. With their well-timed land acquisitions, MLDL is well-positioned to benefit from this expansion. Potential purchasers may be certain that a well-designed and well-executed living environment will be provided by their experience in creating high-quality residential projects. With the recent purchase of property in Bengaluru, Mahindra Life spaces has increased their footprint in a significant market. The project’s capacity to build mid-premium residential flats will help meet the expanding need for high-quality housing in the city. MLDL has a solid financial position and a track record, which will help them build this project effectively.

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Genus Power Aims for 1.5M Smart Meters Monthly!

Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - August 16, 2024

Reliance Industries enters into PPA with Adani Power subsidiary

Reliance Industries Limited (RIL) has entered into a significant power purchase agreement (PPA) with Mahan Energen (MEL), a subsidiary of the Adani Power. This 20-year deal, valued at Rs 50 crore, marks a strategic collaboration between two of India’s industrial giants. The crux of the agreement lies in APML supplying electricity to RIL for a period of 20 years. The deal likely involves bulk power supply to cater to RIL’s vast energy requirements across its refineries, petrochemical plants, and other operations. The agreement signifies a Rs 50 crore investment from RIL, likely towards securing a stable and reliable power source for the next two decades. This strategic move can potentially lead to cost savings for RIL in the long run, especially considering the rising costs of conventional power generation.

Company Overview

Reliance Industries Limited (RIL), has a diversified presence across sectors like petrochemicals, refining, retail, telecom, and now increasingly, renewable energy.

Market Capitalization of RIL is ₹ 2,010,621 Cr. TTM EPS is 103.41. TTM PE is 28.74. P/B is 2.45. ROE is 8.94 % and ROCE is 9.14 %. Share Price of the company opened at ₹2,985.75 and closed at ₹2971.70. For Q3 of FY24: Revenue of the company is ₹2,48,160 cr. Net profit is ₹19,641 cr. EBITDA is ₹44,678 cr. Capital Expenditure is ₹ 30,102 Cr. Cash & Cash Equivalents is ₹ 192,371 Cr.

Adani Power is an Indian multinational power and energy company situated in Khodiyar, Ahmedabad, India. It is a subsidiary of the Adani Group. It is a privately owned thermal power producer with a 12,450 MW capacity. It also runs a 40 MW mega solar facility in Naliya, Bitta, Kutch, Gujarat.

Market Capitalization of Adani Power is ₹205,883 Cr. TTM EPS is 60.50. TTM PE is 8.82. P/B is 12.55. ROE is 44.8 %. ROCE is 15.8 %. Share price of Adani Power opened at ₹520.00 and closed at ₹533.80 For Q3 of FY24: Revenue is ₹12,991.44 Cr. EBITDA is ₹5,059 cr. Profit After Tax is ₹2,737.96 Cr. EPS is 6.61. Total assets are ₹88,289.84 Cr.

The RIL-APML deal holds immense significance for India’s power sector. It highlights a growing trend of collaboration between private players to ensure efficient and reliable power supply. The deal could potentially pave the way for further consolidation within the power sector, with other companies exploring similar arrangements. The agreement might indirectly propel both companies to prioritize renewable energy sources in their future endeavors, considering India’s ambitious clean energy targets.

RIL might secure a competitive electricity tariff compared to prevailing market rates through this long-term agreement. This could lead to significant cost savings over the 20-year period, particularly if energy prices rise in the future. RIL, with its vast energy requirements across its various ventures, might be seeking to diversify its power procurement sources. This agreement could be a strategic move to hedge against potential price fluctuations or secure a reliable backup option. APML, a prominent player in the Indian power sector, assures a reliable source of electricity for RIL’s operations. This can minimize disruptions and ensure smooth functioning of RIL’s facilities.

The Reliance-Adani Power PPA presents a captivating development in the Indian energy sector. The long-term benefits in terms of cost optimization and reliability are remarkable. deal signifies a strategic alliance with long-term implications for both companies. This collaboration, coupled with the focus on renewable energy, paves the way for a more sustainable and secure energy future for India.

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