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Maruti Suzuki sets the target of regaining 50 percent auto market share in India
Autos, Equities, Markets, Research, Result Updates - January 30, 2025

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Company Name: Maruti Suzuki India Ltd | NSE Code: MARUTI | BSE Code: 532500 | 52 Week high/low: 13,680 / 10,204 | CMP: INR 12,000 | Mcap: INR 3,77,433 Cr | P/E- 25

About the stock
➡️Maruti Suzuki India Ltd. is the largest passenger vehicle manufacturer in India, holding a dominant market share of over 40%. The company, a subsidiary of Suzuki Motor Corporation (Japan), offers a diverse portfolio ranging from entry-level hatchbacks to premium SUVs.

➡️It has a strong distribution network with over 4,000 touchpoints across the country. Maruti is also expanding into green mobility, with a growing focus on EVs, hybrids, and CNG models. The company has a significant export presence, catering to markets in Africa, Latin America, and the Middle East.

Strong Revenue Growth Led by Record Exports
➡️Maruti Suzuki delivered an in-line performance for Q3FY25, reporting net sales of ₹35,535 crore, up 15.7% YoY, driven by higher volumes (+13% YoY) and better realisation (+2.4% YoY). The company achieved its highest-ever exports in a quarter, with volumes rising 38% YoY, primarily supported by strong demand in Africa, Latin America, and the Middle East.

➡️Domestic sales increased by 9% YoY, aided by festive demand and growing preference for premium models. Despite these positives, realisation declined sequentially, reflecting a higher mix of entry-level models and discounting measures.

EBITDA Margin Under Pressure Due to Higher Costs
➡️Despite strong revenue growth, EBITDA declined to ₹3,890 crore, with the EBITDA margin contracting by 15 bps YoY to 11.3%, impacted by higher raw material and staff costs. However, raw material costs eased sequentially by 33 bps, offering some margin support.

➡️The average discount per car increased to ₹30,999, compared to ₹29,300 in the previous quarter, highlighting the need for promotional efforts to sustain sales momentum in the entry-level segment.

Demand Outlook: Strength in Premium Segment, Weakness in Entry-Level Cars
➡️The demand outlook remains favorable, particularly in rural markets where demand growth is outpacing urban regions. However, the entry-level segment continues to face softness, which may limit domestic volume expansion and necessitate higher sales promotions and discounts. The premium segment, particularly utility vehicles (UVs) and mid-size models, saw strong traction, contributing 20% and 17.6% to total domestic sales, respectively. This aligns with broader industry trends, where SUVs and high-end vehicles are gaining share.

Expanding EV & Green Vehicle Portfolio
➡️Maruti Suzuki has officially entered the EV market with the launch of E-Vitara, which will be manufactured exclusively by the company and exported to over 100 countries. Alongside its EV push, the company remains bullish on CNG vehicles, which now contribute one out of every three vehicles sold, reflecting a clear shift towards green mobility solutions.

Valuation and key metrics
➡️Maruti Suzuki is currently trading at 25x FY26 earnings, which is at a premium to Hyundai (22.2x) but justified by its market leadership, strong export growth, and expanding premium portfolio. The company’s return profile remains healthy, with a Return on Equity (ROE) of 13.8% and a Return on Capital Employed (ROCE) of 17.2% for the trailing twelve months (TTM). Additionally, its interest coverage ratio stands at 87.5x, indicating a strong balance sheet with minimal leverage concerns.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract
Equities, Markets, Research, Result Updates - January 27, 2025

Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract

Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract

Company Name: Shriram Finance Ltd | NSE Code: SHRIRAMFIN | BSE Code: 511218 | 52 Week high/low: 730 / 439 | CMP: INR 512 | Mcap: INR 96,205 Cr | P/BV – 1.88

About the stock
➡️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.

Robust loan book growth backed by healthy growth in CV, PV and MSME
➡️Shriram’s loan book has grew by double digit at 19% YoY (+5% QoQ) to 2,54,470 Cr supported by growth in CV, PV and MSME segment.

➡️Commercial vehicle constitute 45% of the overall loan book, growing by 13% YoY (+3% QoQ) to 1,15,767 Cr. Passenger vehicle segment constitute 20% of overall segment, growing by 25% YoY (+6% QoQ) to 51,884 Cr. While MSME segment constitute 14% of overall segment, growing by healthy growth of 50% YoY (+7% QoQ) to 34,632 Cr. This three segment led the solid growth in overall loan book in Q3FY25.

➡️Rest other segment report good growth but command a low weight in overall loan book. Construction equipment grew at 10% YoY followed by Farm equipment at 42% YoY, 2W at 27% YoY, gold at -7% while personal loan degrow by 9% YoY.

➡️Borrowing overtake the loan growth, increased by 26% YoY (+8% QoQ) to 2,235 bn driven by deposit growth of 24% YoY (+6% QoQ).

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Loan 2,54,470 2,14,233 19% 2,43,043 5%
Borrowings (bn) 2,235 1,775 26% 2,078 8%
Deposit (bn) 534 431 24% 502 6%

Double digit growth in NII backed by loan book expansion; while NIMS down 50 bps
➡️NII report a double digit healthy growth of 14% YoY (+2% QoQ) to 5,590 Cr driven by loan book expansion only while NIMs contract for the quarter. NIMs down by 50 bps YoY (-26 bps QoQ) to 8.48% due to the expansion in CoF.

➡️PPOP jump 11% YoY (+2% QoQ) to 4,085 Cr, Operating efficiency benefit lagged as total OpEx increased 22% due to rise in employee cost and other expense.

➡️PAT boost by 96% YoY (+72% QoQ) to 3,570 Cr on one time exceptional gain of 1,657 Cr. PAT excluding exceptional item report 5% YoY and on QoQ degrow 8%.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  10,341 8,618 20% 9,815 5%
Interest expenses 4,751 3,707 28% 4,350 9%
NII 5,590 4,911 14% 5,464 2%
Other income  365 309 18% 282 29%
Total Net income 5,954 5,220 14% 5,746 4%
Employee expenses 970 810 20% 907 7%
Other OpEx 899 721 25% 853 5%
Total Opex  1,869 1,531 22% 1,760 6%
PPOP 4,085 3,689 11% 3,987 2%
Provision 1,326 1,250 6% 1,235 7%
Exceptional items 0 0
PBT 2,759 2,440 13% 2,752 0%
Tax expenses  846 621 36% 680 24%
Tax rate  31% 25% 20% 25% 24%
PAT  1,913 1,818 5% 2,071 -8%
PAT% 18% 20% -12% 21% -13%
EPS 10.17 9.68 5% 11.02 -8%
No. of equity shares  188 188 0% 188 0%

Asset quality improved YoY; QoQ remain stable
➡️Shriram’s asset quality has been improved during the quarter as GNPA and NNPA are in downward trajactory. GNPA/NNPA decline 28 bps/ 4 bps YoY while QoQ basis remain stable to stood at 5.38%/2.68% as of Q3FY25.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 5.38 5.66 -28 5.32 6
NNPA 2.68 2.72 -4 2.64 4

Valuation and Key metrics
➡️Currently the stock is trading at 1.88x price to book value. NIMs contract by 50 bps YoY and 26 bps QoQ to 8.48% led by the expansion in CoF. ROA dissapoint down by 23 bps YoY and QoQ both to 2.88% while ROE down 13 bps YoY and 59 bps QoQ 16%. Company capital position CAR remain stable YoY to stood at 21% but still above the RBI guidelines.

Key metrics  Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
NIMs 8.48 8.99 -51 8.74 -26
ROA 2.88 3.11 -23 3.06 -18
ROE 15.41 15.54 -13 16 -59
PCR 0 51.7 -5170
CAR 21 21.01 -1 20.16 84

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Budget needs to focus on local infrastructure

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Godfrey Phillips India Outshines Peers Amid Sector-Wide FMCG Upswing
Equities, Markets, Research, Result Updates - January 23, 2025

HUL Q3FY25: Muted Growth, Strategic Acquisitions

HUL Q3FY25: Muted Growth, Strategic Acquisitions

Overview
The FMCG (fast-moving consumer products) giant Hindustan Unilever experienced modest volume increase during the October–December 2024 quarter. Despite cost challenges and seasonality, earnings growth was unchanged, and urban demand remained unimpressive.

Q3FY25 Results see a muted growth
For the third quarter that ended on December 31, Hindustan Unilever reported a 19% increase in consolidated net profit. Due primarily to the extraordinary gain realized from the sale of its Pureit business, the company declared a consolidated net profit of Rs 2,989 crore, up from Rs 2,508 crore. Consolidated revenue increased from Rs 15,259 crore to Rs 15,559 crore during the quarter that ended on December 31 of last year. Due to a weak product mix and volume growth that fell short of forecasts, brokers cut their target price on HUL shares.

In Q3FY25, underlying volume growth (UVG) decreased. In some categories, premium segments increased faster than mass segments. Despite a mild winter, the high-margin skin care items underperformed, while the home care (HC) division—the largest segment with lower realization—grew faster than the firm as a whole.

An aggressive development throughout the liquid format and a robust portfolio propelled growth in the resilient category of HC. The product formulation adjustment (soap) is also paying off. Smaller packets sold well through general trade channels in both rural and urban areas, while organized trade expanded by double digits. Pricing and the better performance of major brands drove the rise of oral care.

HUL implemented proactive price increases that limited the erosion of its gross margins even while the prices of tea and palm oil continued to fluctuate. Despite inflationary and mix pressure, the EBITDA margin held up well during the quarter, despite the subdued sequential growth in ad spends.

Disinvestment to boost margins
The recently established B&W (beauty & well-being) category has seen fierce competition from cutting-edge direct-to-consumer firms. Against this backdrop, HUL has announced that it has acquired Minimalist, a high-end brand that operates in the rapidly expanding beauty industry.

For Rs 2,955 crore, HUL plans to purchase a 90.5% share in Uprising Science. The Minimalist brand is owned by the company. In two years, the remaining portion will be purchased. Regulatory clearances are required before the acquisition is anticipated to be finalized in Q1FY26.

Skin and hair care are the specialty of minimalist, and the digital-first company has successfully tapped into the growing wealthy beauty sector, which is one of HUL’s main areas of focus. With an annual revenue run rate of Rs 500 crore, it is among the brands with the quickest pace of growth.

HUL will use complementary skills, such as R&D and innovation, technology, offline expansion, global presence, and cost effectiveness, to expand the brand to greater heights, given the beauty market’s substantial headroom for development (low per-capita spend). The investment is anticipated to unlock growth and margin synergies in the upcoming year and will be a solid strategic match for HUL’s beauty portfolio.

Additionally, HUL announced that it has acquired Vishwatej Oil Industries’ palm business venture. In the long run, the backward integration will lessen the volatility of palm oil prices and enhance the supply of palm oil derivatives, a vital raw resource.

Future Outlook
According to management, the moderate urban trend in the near future is only temporary, while the growth in rural consumption will continue to be higher. The urban market’s growth rate will be influenced by employment levels, food inflation, and real wage growth. If commodity inflation persists, the low-single-digit price increase will continue in the foreseeable future.

HUL’s business foundation will be strengthened by strategic measures that will also influence the company’s future growth trajectory. While cost-cutting measures will support long-term, sustainable growth, divestitures will increase operational efficiency and streamline concentration on core competencies.

HUL will increase its footprint in high-growth beauty markets and take advantage of the secular trend of premium product growth by making a strategic investment in the B&W category. With more releases in the March quarter and increased innovation intensity, the business intends to increase its position in the premium segment by 900 basis points.

Market Sentiment
The stock is currently trading at 51 times its expected earnings for FY26, which is a decent valuation. We believe that a significant re-rating still depends on steady increases in domestic volume growth.

Brokers’ opinions on the massive FMCG company are divided. However, most broking houses have cut their target price for Hindustan Unilever shares after the earnings announcement since they think the company’s short-term prospects will be restrained because of urban weakness.
Reiterating its ‘buy’ recommendation with a price target of Rs 2,675 per share, Emkay Global stated that while the dismal near-term outlook is weighing down on valuations, comparatively stronger execution is projected to help HUL in its medium-to-long term performance.

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Impact of Trump 2.0 on Indian Equity Market

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Festo Launches ₹500 Crore Facility to Boost Automation
Equities, Markets, Research, Result Updates - January 23, 2025

LTFH Q3FY25: Retail Growth Shines Despite Profit Hit from Higher Provisions

LTFH Q3FY25: Retail Growth Shines Despite Profit Hit from Higher Provisions

Company Name: L&T Finance Ltd | NSE Code: LTF| BSE Code: 533519 | 52 Week high/low: 194 / 129 | CMP: INR 139 | Mcap: INR 34,758 Cr | P/BV – 1.44

About the stock
➡️LTFH is leading NBFC cater diversified financial lending prodcut in both rural and urban areas. Its offer consumer loan, 2W loan, home loan, MFI, farm and SME loans. Distribution network remain strong with 13,200+ distribution touch point, pan India presence in 2 lakh villages/100+ citiesand cover 18 states in India.

Reatil book shine up (23% YoY) led by 2W, HLand MFI segment
➡️LTF retail loan book has been contributing 97%> of overall loan book, company achieveing its FY2026 lakshya goal. Retail book grew 23% YoY (+4% QoQ) to 92,224 Cr driven by 2W, HL and MFI segment. 2W book contribute 14% of retail book, growing 21% YoY and MFL contribute 28% of retail book, growing 14% YoY and Home loan contribute 20% of retail book, growing 37% YoY in Q3FY25.

➡️The total book increased by 16% YoY (+2% QoQ) to 95,120 Cr led bt strong growth in retail book.

➡️Whole sale book report degrowth by 59% YoY growth but its weight has been reduce to only 3% in overall loan book in Q3FY25.

➡️Retail disbursement grew 5% YoY (+1% QoQ) to 15,210 Cr led by 2W and home loan segment. While MFL shake the disburesement growth down by 16% YoY and its contribute 29% of retail disbursement.

➡️Company’s borrowing growth in line with credit growth. Borrowing grew at 13% YoY to 86,161 Cr during the quarter.

NII grew on book growth, PAT down on higher provision
➡️Interest income grew 15% YoY (+4% QoQ) to 3,806 Cr driven by robust retail book growth and while yield decline by 56 bps YoY. NII increased 15% YoY (+3% QoQ) to 2,237 Cr attributed to book expansion while NIMS contract by 47 bps YoY.

➡️PPOP grew robust at 16% YoY (+4% QoQ) to 1,553 Cr thanks to higher other income and stable other OpEx. Profitability suffered decline 23% YoY (-10% QoQ) to 626 Cr due to higher provision expense (up 117% YoY).

Asset quality dissapoint on QoQ basis
➡️LTFH asset quality has maintain on YoY basis and sequentailly. GNPA up 2 bps YoY and 4 bps QoQ to 3.23% while NNPA dissapoint YoY as well as sequentially by 16 bps/1 bps to 0.97%. Its normal effect due to the lower base on last quarter while NNPA below the management target of 1% till FY26.

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.44 Price to book value. Yield on loan down 56 bps to 15.04% while CoF remain stable at 7.83% YoY. This result in contraction in NIMs by 47 bps to 8.5% as of Q3FY25. credit cost remain stable at 2.49% YoY while decline by 10 bps QoQ.

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Impact of Trump 2.0 on Indian Equity Market

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HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth
Equities, Markets, Research, Result Updates - January 22, 2025

HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

Company Name: Housing & Urban Development Corporation Ltd | NSE Code: HUDCO | BSE Code: 540530 | 52 Week high/low: 354 / 145 | CMP: INR 227 | Mcap: INR 45,551 Cr | P/BV – 2.66

HUDCO delivered an exceptional performance in Q3FY25, with its Profit After Tax (PAT) surging to INR 7.35bn, surpassing estimates of INR 6.32bn. The PAT grew by 6.7% QoQ and an impressive 41.6% YoY, driven by robust business momentum, strong Net Interest Income (NII), and significant provision writebacks due to marked improvement in asset quality.

Strong Net Interest Income and Stable Margins
NII for the quarter came in at INR 9.83bn, well above expectations of INR 8.32bn, reflecting growth of 23.3% QoQ and 47.3% YoY. This stellar growth was fueled by healthy interest income, supported by stable Net Interest Margins (NIM) at 3.19% for 9M FY25, compared to 3.2% in the same period last year.

Record AUM Growth Driven by Urban Infrastructure
The company’s Asset Under Management (AUM) reached a historical high of INR 1,189.3bn, growing 7.1% QoQ and 40.9% YoY, exceeding expectations. Urban Infrastructure emerged as the key driver, growing 6% QoQ and 72% YoY, and now accounts for 60% of AUM. Meanwhile, the Housing segment showed subdued growth of 8% QoQ and 11% YoY, though it is expected to gain momentum in Q4FY25 with disbursements under the Pradhan Mantri Awas Yojana (PMAY).

Resilient Disbursements Despite Prior Glitch
Disbursements for the quarter stood at INR 100.6bn, registering an 11% QoQ growth following a temporary setback in Q2FY25. Urban Infrastructure disbursements were particularly robust, rising to INR 98.5bn, an increase of 22% QoQ and an astonishing 189% YoY. However, Housing disbursements remained subdued at INR 2.1bn, witnessing a decline of 78% QoQ and 66% YoY.

Moderate Sanctions and Declining Other Income
Sanctions for the quarter were recorded at INR 156.8bn, a significant 53% YoY growth, although they declined by 75% QoQ from the record levels seen in Q2FY25. Other income witnessed a decline of 63.8% QoQ and 43.5% YoY, amounting to INR 242mn.

Efficient Cost Management and Operating Performance
Operating expenses for Q3FY25 came in at INR 925mn, down 4.9% QoQ but up 26.5% YoY. The cost-to-income ratio improved to 9.2% from 11.3% in Q2FY25, reflecting better efficiency. Pre-Provision Operating Profit (PPoP) stood at INR 9.1bn, significantly above estimates of INR 8bn, with a growth of 19.3% QoQ and 43.5% YoY.

Improvement in Asset Quality and Recoveries
Asset quality saw a notable improvement, with Gross Non-Performing Assets (GNPAs) declining to 1.88%, down 16bps QoQ and 126bps YoY. Absolute GNPA stock reduced by 2% QoQ and 16% YoY, to INR 22.3bn. During FY25, the company resolved four long-pending NPA accounts, recovering INR 2.6bn, bringing total recoveries to INR 4.6bn, including INR 1.7bn from six government agencies.

Status of Stressed Accounts
HUDCO continues to address stressed accounts, with INR 12.2bn worth of consortium projects under NCLT resolution and INR 0.35bn of projects outside NCLT, both fully provided for. For non-consortium projects, INR 0.3bn is under NCLT, while suit-filed or DRT cases involve projects worth INR 4.3bn, all with 100% provisions.

Valuation and Outlook
At the current market price, HUDCO is trading at an FY27E PABV of 1.9x. With a strong growth trajectory, improvement in asset quality, and robust performance in key segments, the company is well-positioned for sustained growth. We maintain our conviction BUY rating and will revisit our estimates in light of these outstanding results.

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Solid reason for GST reduction on two-wheelers

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Easing of risk weights on loans given to MFIs and NBFCs
Business, Equities, Markets, Research, Result Updates - January 22, 2025

South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality

South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality

Company Name: South Indian Bank Ltd | NSE Code: SOUTHBANK | BSE Code: 532218 | 52 Week high/low: 36.9 / 22.3 | CMP: INR 26.8 | Mcap: INR 7,014 Cr | P/BV – 0.79

NII Moderate; strong Profitability; NIMs flat; Asset quality improved

About the Stock
➡️South indian bank is private sector bank operate in south region of India headquartered in kerala. The bank has 950 branch network and majority situated in south India. The customer bas has increased from 7.3 Mn to 7.8 Mn within one year period. The bank loan book is well diversified 40% with corporate and remaining 60% retail book includes perosnal, agri and business.

Strong growth in Advances and Disbursement in Q3FY25
➡️The bank has reported strong growth annually in key business parameter. Gross Advances grew 12% YoY to 86,966 Cr, with corporate segment contributing 40% of the loan book, growing at 17% and personal segment contribute 26%, growing at same pace 26% while business loan and Agriculture contribute 15% and 19% respectively.

➡️Disburement grew 86% YoY to 1,22,572 Cr led by corpoarte book. While the bank deposit lagging behind, increased by 6% YoY and borrowings decline 30% YoY. The CASA stand at 31.15% in Q2FY25 lower by 65 bps YoY.

➡️Personal segment loan book driven by growth in mortgage loan at 79% folowed by home loan loan at 64%, gold loan 10%, auto loan 25% and credit card 4%.

➡️Retail disbursement momentum help by home loan, auto loan while agriculture and personal loan remian flat annually.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advances  86,966 77,686 12% 84,714 3%
Disbursement  1,22,572 65,805 86% 76,872 59%
Borrowings  2,956 4,213 -30% 2,609 13%
Deposit 1,05,387 99,155 6% 1,05,452 0%


NII growth moderate while PAT jump 12% led by lower opex and tax expense
➡️Interest income increased by 9% YoY (+1% QoQ) to 2,371 Cr driven by yield expansion and advance growth. The yield on loan expand 11 bps YoY to 7.64% while Cost of fund jump 13 bps to 4.84% result contraction in NIMs.

➡️NII grew moderate at 6% YoY (-1% QoQ) to 869 Cr due to high expansion in CoF makes NIMs flat.

➡️The bank’s PAT surged 12% YoY (+5% QoQ) to 342 Cr led by lower operating cost and tax expense despite the jump in credit cost. The stable the employee cost and total operating cost kick in operating leverage and boost the profitability.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  2371 2184 9% 2,355 1%
Interest expenses 1501 1365 10% 1,472 2%
NII 869 819 6% 882 -1%
Other income  447 452 -1% 449 -1%
Total Net income 1316 1271 4% 1,332 -1%
Employee expenses 415 460 -10% 421 -2%
Other OpEx 373 328 13% 360 3%
Total Opex  788 788 0% 782 1%
PPOP 529 483 9% 550 -4%
Provision 66 49 36% 110 -40%
PBT 463 435 6% 440 5%
Tax expenses  121 130 -7% 116 5%
Tax rate  0 0 -12% 26% 0%
PAT  342 305 12% 325 5%
PAT% 12% 12% 5% 12% 5%
EPS 1.31 1.46 -10% 1.24 5%
No. of equity shares  262 209 25% 261 0%

Asset quality enhanced; stress book reduce
➡️Company has reduced the stress assets from 894 Cr in Q3FY24 to 404 Cr in Q3FY25. Bank has churned 78% of overall loan book since covid level and 91% current GNPA from old book. GNPA/NNPA stood at 4.43%/1.25% decline by 44bps/36 bps YoY (10bps/6 bps QoQ). Slippages ratio decline to 0.33% in Q3FY25 vs 0.34% in Q3FY24. The provision coverage ratio expand 310 bps YoY to 81.07% vs 77.97% in Q3FY24.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 4.3 4.74 -44 4.40 -10
NNPA 1.25 1.61 -36 1.31 -6

Valuation and Key metrics
➡️Currently the stock is trading at 0.79 price to book value. The yield on advances jump 11 bps to 7.64% while CoF up by 13 bps YoY to 4.84%. This result in flat in NIMs at 3.19%. The increased in deposit rate to maintain and increased the deposit growt led to higher CoF and contract NIMs as Yield is stable.

Key metrics  Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 7.64 7.53 11 7.68 -4
CoF 4.84 4.71 13 4.80 4
NIMs 3.19 3.19 0 3.24 -5
ROA 1.12 1.07 5 1.07 5
ROE 13.93 16.38 -245 13.71 22
CASA  31.15 31.8 -65 31.8 -65
PCR 81.07 77.97 310 80.72 35
CAR 18 15.6 240 18.04 -4

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Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

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UGRO Capital Acquires Profectus Capital in Ambitious ₹1,400 Crore Deal
Equities, Markets, Research, Result Updates - January 22, 2025

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Company Name: Jana Small Finance Bank Ltd | NSE Code: JSFB| BSE Code: 544118 | 52 Week high/low: 761 / 364 | CMP: INR 430 | Mcap: INR 4,509 Cr | P/BV – 1.25

Abouth the stock
➡️Jana SFB is leading small finance bank engaged in providing MSME loan, affordable housing loan, 2W loan, gold loan, Micro LAP etc. Jana SFB has rapidly expanded network with 778 banking outlet including 252 outlet in unbanked rural centres, in 22 states/ 2UTs while serving 4.6 Mn active customers.

Robust Advance growth thanks to secured book
➡️Jana’s total advance book grew 18.5% YoY (+6% QoQ) to 27,984 Cr thanks to the secured book. Secured book at 68% of the Jana total book report a growth of 35.8% YoY (+11.9% QoQ) to 19,085 Cr while Unssecured book down at 6.90% YoY and de-growth 4.80% QoQ to 8,899 Cr. Secured book contribution jump from 60% in Q3FY24 to 68% in Q3FY25 and management further planning to increased its weight in overall book.

➡️Healthy growth of secured book attributed to affordable housing (up 39.1% YoY) and Micro LAP (up 22.5% YoY) segment. This both combines cross the milestone of 11,000 Cr. 2W and gold loan also report a sound growth of 108.8% and 127.9% YoY but have low weightage in overall book. MSME and term loans to NBFCs grew 15.5% YoY and 33.4% YoY respectively.

➡️Deposit growth higher than advance growth at 24.4% YoY to 25,865 Cr while CASA as % of total deposit decline to 18.4% in Q3FY25 vs 18.8% in same quarter previous year.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advance  27,984 22806.96 18.50% 26304.96 6%
Secured  19,085 12252.57 35.80% 16813.89 11.90%
Unsecured 8,899 9513.031 -6.90% 9326.152 -4.80%
Deposit 25,865 19553.94 24.40% 24752.81 4.30%

NII grew single digit on solid advance growth while NIMs contact
➡️Interest income grew 13% YoY and remain flat on QoQ to 1,177Cr led by solid secured book growth while yield down 10 bps YoY (+20 bps QoQ) to 17.4%.
➡️NII grew 8% YoY to 593 Cr with support of advance growth while CoF expand and NIMs decline. On QoQ NII remain flat led to modest growth of book on QoQ and NIMs contraction.
➡️PPOP report -5% YoY and -7% to 279 Cr due to higher operating expenses. PAT down 18% YoY and sequentially 14% to 111 Cr led by higher provision growth.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  1,177 1,038 13% 1,166 1%
Interest expenses 585 490 19% 572 2%
NII 593 548 8% 594 0%
Other income  177 140 27% 176 1%
Total Net income 770 688 12% 770 0%
Employee expenses 309 245 27% 296 5%
Other OpEx 181 148 22% 175 4%
Total Opex  491 393 25% 471 4%
PPOP 279 295 -5% 299 -7%
Provision 174 161 8% 210 -17%
PBT 105 135 -22% 89 18%
Tax expenses  5 0 -8 -167%
Tax rate  5% 0% -9% -156%
PAT  111 135 -18% 97 14%
PAT% 8% 11% -29% 7% 13%
EPS 10.49 18.3 -43% 9.28 13%
No. of equity shares  10.47 7.36 42% 10.45 0%

Asset quality tempered on YoY basis
➡️Jana asset qaulity has been decline due to the stress in the MFI segment. GNPA/NNPA jump 65 bps/24 bps YoY while on QoQ down 15/4 bps 2.71%/0.91%. Net NPA has 82% secured loan which signifies higher chances of recovery.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 2.71 2.06 65 2.86 -15
NNPA 0.91 0.67 24 0.95 -4

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.25 price to book value and book value per share stood at 342 Rs. Yield decline 10 bps YoY (+20 bps QoQ) to 17.4% while CoF jump 40 bps YoY and down 5 bps on QoQ to 8.03%. Yield contraction is led by competitive environment and challenges in MFI segment while CoF expansion driven by increase in deposit rate for attracting retail deposit. This result in decline in NIMs by 30 bps YoY and 10 bps QoQ to 7.6%. Return ratio dissapoint as ROE and ROA down by 670 bps and 20 bps YoY. Company’s capital position remain solid with 18.4% Capital adequacy ratio.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 17.4 17.5 -10 17.2 20
CoF 8.03 7.64 39 8.08 -5
NIMs 7.6 7.9 -30 7.7 -10
ROA 1.5 1.7 -20 1.2 30
ROE 13.5 20.2 -670 10.2 330
PCR 66.9 6690 67.2 -30
CAR 18.4 16.3 210 18.8 -40
CASA 18.4 18.8 -40 20.1 -170

Management Guidance for FY25
➡️Management expect overall 20% growth in AUM and deposit in FY25.
➡️PAT growth of 30%-40% in FY25 will led by advance and disbursal growth.
➡️ROA and ROE maintained at 1.8% -2% and 19%-21% respectively. Company will continue to increase the secured business led to decline in NIMs.

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BEML Surges by 7.86% on Likely Upgrade to Navratna Status
Business, Equities, Markets, Research, Result Updates - January 21, 2025

Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures

Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures

Company Name: Zomato Ltd | NSE Code: ZOMATO| BSE Code: 543320 | 52 Week high/low: 305 / 127 | CMP: INR 212 | Mcap: INR 2,04,829 Cr | P/E – 309

About the Stock
➡️Zomato is engaged in multiple business vertical segment such food delivery, quick commerce (Blinkit), going out and B2B supplies. Company has done rapid expansion in quick commerce segment by adding 368 net new stores in Q3FY25.

GOV shoot up led by all segment (up 57% YoY /14% QoQ)
➡️Zomato’s gross order value grew healthy across all the segment. GOV (B2C business) increased 57% YoY (+14% QoQ) to 17,671 Cr thanks to all segment. This growth is attributed to strong growth in food delivery business (up 17% YoY/ 2% QoQ) followed by Quick commerce (blinkit) (up 120% YoY/ 27% QoQ) and Going out (up 191% YoY/ 35% QoQ ). Quick commerce business operating under the name Blinkit 
➡️Key operating metrics of all business segment helps in robust growth. In blinkit business 368 net new stores and also added 1.3 million sqft of warehousing space, account for 30% of overall warehousing space. This rapid expansion will take time to ramp up the business across all new store.
➡️Average monthly customer surged 9% YoY (+0% QoQ) to 20.5 Mn in Q3FY25 vs 20.7 Mn in Q2FY25 for food delivery business. While Quick commerce (blinkit business) customer base nearly double from 5.4 Mn in Q3FY24 to 10.6 Mn in Q3FY25 reflecting the change in buying pattern of consumer and habit for convenience buying.
➡️Quick commerce (blinkit business) order value double to 110.3 Mn in Q3FY25 from 5.8 Mn in same quarter previous year led by increase in Average order value and new customer base.

Profitability disappoint on higher depreciation; Quick commerce turn negative from break even
➡️Zomato’s food delivery business has maintained the overall profitability despite the loss in quick commerce business (blinkit). Overall EBITDA surged 218% YoY (-28% QoQ) to 162 Cr driven by strong growth in food delivey business and margin expansion (100 bps YoY). While quick commerce adjusted EBITDA at loss of 103 Cr from -89 Cr in Q3FY24. EBITDA margin has expand 100 bps YoY to 4.71%. led by all segment.
➡️Despite the robust growth in quick commerce GOV, margins are not improving due to the rapid infrastructure expansion.
➡️EBIT decline 10% YoY (-285% QoQ) to -85 Cr due to increment in depreciation by 93% YoY to 247 Cr.
➡️PAT down 57% YoY to 59 Cr due to the higher depreciation. PAT margin decline 300 bps YoY to 1%. While on QoQ basis PAT down 66% due to higher tax expenses and interest cost.

Years Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Revenue  5,405 3,288 64% 4,799 13%
COGS 1500 782 92% 1334 12%
Employee cost 689 423 63% 590 17%
Advertisement & sales promotion 521 374 39% 421 24%
Delivery & related charges 1450 1068 36% 1,398 4%
Other expenses 1083 590 84% 830 30%
Total OpEx 3743 2455 52% 3239 16%
EBITDA 162 51 218% 226 -28%
EBITDA Margin% 3% 2% 93% 5% -36%
Depreciation 247 128 93% 180 37%
EBIT -85 -77 10% 46 -285%
EBIT Margin% -2% -2% -33% 1% -264%
Interest expenses 43 18 139% 30 43%
Other income 252 219 15% 221 14%
PBT  124 124 0% 237 -48%
Tax expenses 65 -14 -564% 61 7%
Tax rate % 52% -11% -564% 26% 104%
PAT 59 138 -57% 176 -66%
PAT Margin % 1% 4% -74% 4% -70%
EPS 0.07 0.16 -60% 0.20 -68%
No. of shares 906 857 6% 872 4%

Valuation and Key metrics
➡️Currently the stock is trading at a multiple of 309x 0.75 EPS at the CMP of 212 Rs. Company trading at 9.65x its book value of 22.1 per share. Trailing twelve months ROE and ROCE stood at 1.12% and 1.14% respectively. Interest coverage ratio stood at 7.45x signify strong solvency.

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Jio Financial Acquires Remaining SBI Stake to Fully Own Jio Payments Bank in ₹104.54 Crore Deal
Business, Equities, Markets, Research, Result Updates - January 20, 2025

Jio Financial Services Q3FY25 Result Update: Mixed Performance Amid Key Developments

Jio Financial Services Q3FY25 Result Update: Mixed Performance Amid Key Developments

Jio Financial Services Ltd (NSE Code: JIOFIN | BSE Code: 543940) reported a mixed performance in its Q3FY25 results. The company’s total income stood at ₹449 crore, reflecting an 8% year-on-year (YoY) increase but a 35% sequential decline. The growth was moderated by a 22% YoY decline in interest income from loans and investments, which was offset by an impressive 85% YoY surge in net gains from fair value changes.

Financial Highlights:
Pre-Provision Operating Profit (PPOP): PPOP grew 5% YoY to ₹330 crore, driven by higher employee costs (up 58% YoY) and increased operating expenses (up 20% YoY). However, on a quarter-on-quarter (QoQ) basis, PPOP declined by 40% due to the significant drop in total income.

Profit After Tax (PAT): PAT remained stable at ₹295 crore, with margins declining by 500 basis points YoY to 66%. The flat PAT was attributed to reduced contributions from associates and joint ventures.

Business Updates and Key Metrics:
Assets Under Management (AUM): The company’s AUM achieved a significant milestone, surging 248% QoQ to ₹4,199 crore from ₹1,206 crore in Q2FY25.

Payments Business: Jio Payments Bank (JPB) has grown its customer base to 1.89 million CASA accounts and expanded its business correspondent network to 7,300 BCs.

Asset Management Collaboration: The joint venture with BlackRock (50:50) filed for final approval to commence operations. Additionally, the company incorporated Jio BlackRock Investment Advisers Pvt. Ltd. in September 2024 to launch wealth management services.

Strategic Growth Outlook:
JFSL is well-positioned for robust growth, supported by its diversified product portfolio, digital-first approach, and strategic partnerships with industry leaders like BlackRock and Reliance. Key growth drivers include:

* Expansion in retail lending and corporate financing.
* Integration of tailored insurance products to cater to India’s growing demand for financial solutions.

Valuation Perspective:
Currently trading at a price-to-book value (P/Bv) of 1.28x, JFSL lags behind the sectoral average P/Bv of 1.81x. While the company reported lackluster growth in total income and flat PAT this quarter, its impressive AUM growth and upcoming asset management initiatives signal long-term growth potential.

Conclusion:
Although Q3FY25 results were underwhelming, JFSL’s strategic developments, particularly its venture with BlackRock, position it to capitalize on India’s evolving investment landscape. Investors should closely monitor the company’s progress in the asset management and wealth advisory segments for future growth opportunities.

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BEML Surges by 7.86% on Likely Upgrade to Navratna Status
Business, Equities, Markets, Result Updates - January 17, 2025

Sugar Industry Outlook: Prices, Production, and Market Trends

Sugar Industry Outlook: Prices, Production, and Market Trends

Domestic and Global Overview of sugar prices
The current sugar season is difficult for sugar mills. International raw sugar prices have decreased by 21% since the end of September. One factor adding to some pricing pressure is the Brazilian Real’s dramatic fall against the dollar, while another is healthier than anticipated output in important producing countries like Brazil and Thailand. Brazil is a major exporter of sugar, thus exporters will profit from a depreciating real.

Since exports have not yet been permitted, weak worldwide prices may put pressure on domestic producers’ realizations. However, depending on trade limitations, domestic prices are somewhat impacted by global price movements. Whether or not Indian sugar mills will be permitted to export during the current sugar season is still a major concern. The production of sugar for domestic use and ethanol diversion have been the government’s top priorities.

Impact of Ethanol Diversion on production
Cane crushing statistics as of December 31 were recently issued by the sugar industry group ISMA, and it showed a dramatic 16 percent decline as a result of rains impacting crushing in Uttar Pradesh. The season, which begins in October and concludes in September, is still in its early stages. A more precise estimate will be ready in March or April. The post-diversion amount for ethanol is currently 9.5 million tons. In a later statement, ISMA noted that ex-mill prices are less than the cost of production and that the government plans to evaluate the minimum selling price for sugar. Additionally, it stated that arrears for cane purchased during the current sugar season had accumulated to a total of Rs 6500 crore.

This situation is not new as noted by India Ratings about the state of the industry. Due to decreased recovery rates brought on by weather-related events and the red rod infestation in Uttar Pradesh, it is anticipated that this season’s sugar output will drop to 30-31 million tonnes from 34 million tonnes the year before. It will be the lowest sugar production since the 2020 sugar season if that occurs.

Sugar production predicted to fall
After the diversion of sugar for ethanol, production may fall slightly short of demand but there are ample opening stocks of sugar to take care of demand. The one thing that remains to be monitored on the cost front is the UP State Advised Price that is not out yet, which UP-based mills will need to pay to farmers. Lower output should ordinarily translate to higher domestic sugar prices and support profitability. If we look at government data on wholesale sugar prices, then they are up by only 0.2 percent over a year ago and up by 0.4 percent over three months ago. That looks hardly conducive for mills to raise prices. The government, of course, will be happy with that market situation as it wants to keep inflation under check. Since the government wants to control inflation, it will naturally be pleased with that market condition.

Sugar Mills’ Earnings from Ethanol
The next question is how much money sugar mills make from ethanol. The government halted ethanol diversion during the previous sugar season because it was concerned that it would limit the supply of sugar and cause prices to rise. The political sensitivity of such an event was increased by general elections. Although the regulations governing sugar diversion have been loosened, the India Ratings report indicates that during the current ethanol season, oil marketing corporations will mostly purchase maize as a feedstock for ethanol.

Indian Sugar stocks shoot up
In Thursday’s (January 16, 2025) trading, the majority of sugar stocks surged up to 8.1% as reports indicated the Indian government would likely decide soon to raise the minimum support price (MSP) of sugar. The price at which the government promises to purchase specific crops from farmers in order to guarantee that they receive a minimum price for their produce is known as the MSP. Its goal is to shield farmers from market price swings.

In terms of the BSE, Dhampur Sugar Mills, Dwarikesh Sugar, Dalmia Bharat Sugar and Industries, Shree Renuka Sugars, Bajaj Hindusthan Sugar, and Mawana Sugars all had increases of 5.9, 4.68, 4.14, and 3.46 percent, respectively.

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