Menu

Result Updates

Z47 Launches $400M Fund for India's Tech Boom
Equities, Markets, Research, Research Reports, Result Updates - October 28, 2024

Shriram Q2FY25 Loan Book Growth 20% YoY led by CV, PV and MSME segment

Shriram Q2FY25 Loan Book Growth 20% YoY led by CV, PV and MSME segment

Company Name: Shriram Finance Ltd | NSE Code: SHRIRAMFIN | BSE Code: 511218 | 52 Week high/low: 3,652 / 1,851 | CMP: INR 3,093 | Mcap: INR 1,16,286 Cr | P/BV – 2.37

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 20% YoY (+4% QoQ) to 2,43,043 Cr supported by growth in CV, PV and MSME segment.

➡️Commercial vehicle constitute 46% of the overall loan book, growing by 14% YoY (+2% QoQ) to 1,12,194 Cr. Passenger vehicle segment constitute 20% of overall segment, growing by 23% YoY (+7% QoQ) to 49,000 Cr. While MSME segment constitute 13% of overall segment, growing by healthy growth of 52% YoY (+12% QoQ) to 31,300 Cr. This three segment led the solid growth in overall loan book in Q2FY25.

➡️Rest other segment report good growth but command a low weight in overall loan book. Construction equipment grew at 17% YoY followed by Farm equipment at 28% YoY, 2W at 26% YoY, gold at 12% while personal loan degrow by 6% YoY.

➡️Borrowing overtake the loan growth, increased by 26% YoY (+8% QoQ) to 2,078 bn driven by deposit growth of 23% YoY (+6% QoQ).

Book Growth (As on)  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Loan 2,43,043 2,02,641 20% 2,33,444 4%
Borrowings (bn) 2,078.20 1,653.40 26% 1,917.50 8%
Deposit (bn) 502 408 23% 474.9 6%

Double digit growth in NII backed by loan book expansion; while NIMS down
➡️NII report a double digit healthy growth of 19% YoY (+4% QoQ) to 5,464 Cr driven by loan book expansion only while NIMs contract for the quarter. NIMs down by 19 bps YoY (-5 bps QoQ) to 8.74% due to the expansion in CoF.

➡️PPOP jump 15% YoY (+3% QoQ) to 3,986 Cr, Operating efficiency benefit lagged as total OpEx increased 20% due to rise in employee cost and other expense.

➡️PAT boost by 18% YoY (+5% QoQ) same in line with topline growth to 2,071 Cr. This growth is only attributed to book expansion.

Years  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry
Interest income  9,814.50 8,216.56 19% 9,362.79 5% Driven by healthy loan book growth 
Interest expenses 4,350.42 3,621.86 20% 4,128.91 5%
NII 5,464.08 4,594.70 19% 5,233.88 4% Loan book support growth; NIMs down 
Other income  282.18 347.89 -19% 234.28 20%
Total Net income 5,746.26 4,942.59 16% 5,468.16 5%
Employee expenses 906.67 790.38 15% 868.35 4%
Other OpEx 853.07 671.38 27% 745.67 14%
Total Opex  1759.74 1461.76 20% 1614.02 9%
PPOP 3,986.52 3,480.83 15% 3,854.14 3% In line with topline growth; OpEx efficiency lagged
Provision 1,234.99 1,128.55 9% 1,187.55 4%
PBT 2,751.53 2,352.28 17% 2,666.59 3%
Tax expenses  680.27 601.44 13% 686 -1%
Tax rate  25% 26% -3% 26% -4%
PAT  2,071.26 1,750.84 18% 1,980.59 5% PAT boost with topline; no OpEx benefit 
PAT% 21% 20% 0% 21% -1%
EPS 55.10 46.65 18% 52.69 5%
No. of equity shares  37.59 37.53 0% 37.59 0%

Asset quality improved – GNPA/NNPA down (47 bps/16 bps YoY)
➡️Shriram’s asset quality has been improved during the quarter as GNPA and NNPA are in downward trajectory. GNPA/NNPA decline 47 bps/ 16 bps YoY while 7 bps/ 7 bps QoQ to stood at 5.32%/2.64% as of Q2FY25. Provision coverage ratio decline by 140 bps YoY while on QoQ up 55 bps to 51.7% vs 53.1% in Q2FY24.

Asset Quality Q2FY25 Q2FY24 YoY bps) Q1FY25 QoQ (bps)
GNPA 5.32 5.79 -47 5.39 -7
NNPA 2.64 2.8 -16 2.71 -7

Valuation and Key metrics
➡️Currently the stock is trading at 2.37x price to book value. NIMs contract by 1 bps YoY and 5 bps QoQ to 8.74% led by the expansion in CoF. ROA disappoint down by 6 bps YoY and QoQ both to 3.06% while ROE rise 69 bps YoY and remain flattish QoQ to 16%. Company capital position CAR down 200 bps YoY to stood at 20.16% but still above the RBI guidelines.

Key metrics  Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
NIMs 8.74 8.93 -19 8.79 -5
ROA 3.06 3.12 -6 3.12 -6
ROE 16 15.31 69 16.03 -3
PCR 51.7 53.1 -140 51.15 55
CAR 20.16 22.15 -199 20.29 -13

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , 0 Comment
Read More
Can’s Q2FY25: Profitability Boosted by Enhanced Operating Efficiency
Equities, Markets, Research, Research Reports, Result Updates - October 23, 2024

Can’s Q2FY25: Profitability Boosted by Enhanced Operating Efficiency

Can’s Q2FY25: Profitability Boosted by Enhanced Operating Efficiency

Company Name: Can Fin Homes Ltd | NSE Code: CANFINHOME | BSE Code: 511196 | 52 Week high/low: 952 / 680 | CMP: INR 885 | Mcap: INR 11,789 Cr | P/BV – 2.54

About the stock
➡️Can fin home is a housing finance company focused in South India, sponsored by Canara Bank. It offered lending product as Housing loan, top-up personal loan, Mortgage caters to both salaried professionals and self-employed individuals. The company’s focus is on medium ticket-size loans, with housing loans constituting a significant portion.

Loan book propelled on healthy disbursement growth
➡️Can Fin homes report a double digit growth in its loan book, growing 10% YoY (+3% QoQ) to 36,591 Cr backed by healthy disbursal during the quarter. This growth is attributed to sound growth in non-salaried segment contribute 29% of overall book, growing at 16% YoY (+6% QoQ) to 10,638 Cr. While salaried segment contribute 71% of overall book, growing at 7% YoY (+2% QoQ) to 25,930 Cr.

➡️Product wise in both segment (salaried & non-salaried) growth supported by home loan growing by 7% and 15% respectively. Home loan influence 79% of total book in Q2FY25 vs 77% of total book in Q2FY24. Remaining 20% allocate to top up loan, Mortgage and loan for site.

➡️Disbursement support the loan growth grew by 18% YoY while on QoQ basis report solid growth of 28% to stood at 2,381 Cr as of Q2FY25.

➡️Borrowing grew in line with the growth of loan book, grew 10% YoY to 33,790 Cr. Funding source followed as bank loan 60%, NHB 14%, NCD 18%, Commercial paper 7% and deposit 1%. Can’s borrowing cost can be lower in coming quarters due to the higher chances of rate cuts from RBI side as banks borrowing has major portion.

Book Growth (As on)  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Borrowing  33,790 30,628 10%
Loan Book 36591 33359 10% 35557 3%
Disbursement  2381 2019 18% 1853 28%
Salaried 
HL 23607 22067 7% 23245 2%
Top up PL 1121 1020 10% 1092 3%
Mortgage 950 843 13% 899 6%
Loan for site 213 184 16% 204 4%
Other  39 41 -5% 37 5%
Sub total 25930 24155 7% 25477 2%
As % of total  71% 72% -2% 72% -1%
Non – Salaried 
HL 8786 7656 15% 8357 5%
Top up PL 548 437 25% 507 8%
Mortgage 1144 950 20% 1047 9%
Loan for site 109 87 25% 99 10%
Other  51 52 -2% 47 9%
Sub total 10638 9182 16% 10057 6%
As % of total  29% 28% 6% 28% 3%
Total  36,591 33,359 10% 35,557 3%

Profitability boom on operating leverage and lower provision
➡️NII grew moderate at7% YoY (+6% QoQ) to 340 Cr led by loan book growth yield remain flat. This moderate growth backed by flattish in yield while CoB jump 10 bps YoY result in contraction in NIMs. PPOP grew 25% YoY (+3% QoQ) to 288 Cr fueled by better operating efficiency (down 36% YoY). PAT up 34% YoY (+6% QoQ) to 211 Cr driven by lower provision.

Years (in Cr) Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry
Interest income  955 865 10% 924 3% led by strong disbursement; yield flat
Interest expenses 615 548 12% 603 2%
NII 340 317 7% 321 6% backed by book growth; NIMS stable
Other income  7 6 28% 7 7%
Total Net income 347 323 8% 328 6%
Employee expenses 29 25 16% 23 24%
Other OpEx 31 67 -55% 26 20%
Total Opex  59 92 -36% 49 22%
PPOP 288 231 25% 280 3% driven by operating efficiency
Provision 14 33 -58% 24 -44%
PBT 274 198 38% 255 7%
Tax expenses  63 40 57% 55 13%
Tax rate  23% 20% 13% 22% 5%
PAT  211 158 34% 200 6% Healthy PAT fueled by lower provision. 
PAT% 22% 18% 21% 21% 2%
EPS 15.88 11.87 34% 14.99 6%
No. of equity shares  13 13 0% 13 0%

Asset quality show slight increment YoY while flattish QoQ
➡️Can’s asset quality slight degraded as GNPA/NNPA show increment by 12 bps/ 4 bps YoY to 0.88%/0.47%. While on QoQ basis remain flat. Can’s asset quality is lowered as 70% book given to salaried segment where chances of default is low. Provision coverage ratio stood at 46.41% as of Q2FY25.

Asset Quality Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
GNPA 0.88 0.76 12 0.91 -3
NNPA 0.47 0.43 4 0.49 -2

Valuation and key Metrics
➡️Currently the stock is trading at multiple of 2.55x BV 353 per share at CMP of 886 Rs. Yield on loan slight up 5 bps YoY and flat QoQ to 10.12% while CoB jump 10 bps YoY (- 2bps QoQ) to 7.56%. This result in decline in NIMs by 5 bps while expand 18 bps QoQ. 

Key metrics  Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
Yield 10.12 10.07 5 10.12 0
CoF 7.56 7.46 10 7.58 -2
NIMs 3.75 3.8 -5 3.57 18
ROAA 2.29 1.86 43 2.17 12
ROAE 17.99 15.96 203 17.57 42

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , 0 Comment
Read More
Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures
Equities, Markets, Research, Research Reports, Result Updates - October 23, 2024

Zomato Q2FY25: Food Delivery Leads Profitability; Quick Commerce Expands Rapidly

Zomato Q2FY25: Food Delivery Leads Profitability; Quick Commerce Expands Rapidly

Company Name: Zomato Ltd | NSE Code: ZOMATO| BSE Code: 543320 | 52 Week high/low: 298 / 101 | CMP: INR 510 | Mcap: INR 2,26,469 Cr | P/E – 305

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 152 net new stores in Q2FY25.

GOV shoot up led by all segment (up 55% YoY /14% QoQ)
➡️Zomato’s gross order value grew healthy across all the segment. GOV (B2C business) increased 55% YoY (+14% QoQ) to 17,671 Cr thanks to all segment. This growth is attributed to strong growth in food delivery business (up 21% YoY/ 5% QoQ) followed by Quick commerce (up 122% YoY/ 25% QoQ) and Going out (up 171% YoY/ 46% QoQ including the acquisition of Paytm’s entertainment business).
➡️Key operating metrics of all business segment helps in robust growth. In blinkit business 152 net new stores and 7 warehouse added. This rapid expansion will take time to ramp up the business across all new store.
➡️Average monthly customer surged 13% YoY (+2% QoQ) to 20.7 Mn in Q2FY25 vs 18.4 Mn in Q2FY24 for food delivery business. While Quick commerce customer base nearly double from 4.7 Mn in Q2FY24 to 8.9 Mn in Q2FY25 reflecting the change in buying pattern of consumer and habit for convenience buying.
➡️Quick commerce order value double to 92.9 Mn in Q2FY25 from 45.5 Mn in same quarter previous year led by increase in Average order value and new customer base.

GOV Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Food Delivery 9,690 7,980 21% 9,264 5%
Quick Commerce 6,132 2,760 122% 4,923 25%
Going-Out 1,849 682 171% 1,268 46%
Total  17,671 11,422 55% 15,455 14%
Operating Metrics Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Food Delivery
Avg Monthly Customer (Mn) 20.7 18.4 13% 20.3 2%
Restaurant Partner (000′) 292 238 23% 276 6%
Delivery Partner (000′) 498 410 21% 469 6%
Quick Commerce
Order (Mn) 92.9 45.5 104% 78.8 18%
AOV (INR) 660 607 9% 625 6%
Customer (Mn) 8.9 4.7 89% 7.6 17%

Profitability soar on growth in food delivery business & Margin expansion; Quick commerce near by break even
➡️Zomato’s food delivery business has maintained the overall profitability despite the loss in quick commerce business. Overall EBITDA surged 581% YoY (+28% QoQ) to 226 Cr driven by strong growth in food delivey business and margin expansion (636 bps YoY). While quick commerce adjusted EBITDA come to near by break even at -8 Cr from -125 Cr in Q2FY24. EBITDA margin has expand 636 bps YoY (+50 bps QoQ) 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. In Q2FY2, 152 net new store and 7 warehouses added lead to margin dilution for short term as new store and warehouse take few months to ramp-up.
➡️EBIT grew 126% YoY (+64% QoQ) to 46 Cr due to increment in depreciation by 41% YoY to 180 Cr. EBIT margin lead the growth up 710 bps YoY (+29 bps QoQ) to 0.96%.
➡️PAT surged 389% YoY to 176 Cr thanks to higher other income of 221 Cr. PAT margin jump 241 bps YoY to 3.67%. While on QoQ basis PAT down 30% due to higher tax expenses and interest cost.

Years (in Cr) Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry 
Revenue  4,799 2,848 69% 4,206 14% Driven by healthy GOV across all segment
COGS 1,334 674 98% 1099 21%
Employee cost 590 417 41% 529 12%
Advertisement & sales promotion 421 355 19% 396 6%
Delivery & related charges 1,398 919 52% 1,328 5%
Other expenses 830 530 57% 677 23%
Total OpEx 4,573 2,895 58% 4,029 14%
EBITDA  226 -47 581% 177 28% Led by food business & Margin expansion;
Quick commerce near by break-even
EBITDA Margin% 4.71% -1.65% 6.36% 4.21% 0.50%
Depreciation 180 128 41% 149 21%
EBIT 46 -175 126% 28 64%
EBIT Margin% 0.96% -6.14% 7.10% 0.67% 0.29%
Interest expenses 30 16 88% 25 20%
Other income 221 212 4% 236 -6%
PBT 237 21 1029% 239 -1%
Tax expenses 61 -15 507% -14 536%
Tax Rate% 26% -71% 136% -6% 539%
PAT 176 36 389% 253 -30% Pushed higher other income
PAT Margin% 3.67% 1.26% 190.13% 6.02% -39.03%
EPS 0.20 0.04 374% 0.29 -31%
No. of Shares 872 845 3% 870 0%

Fund raise planned via QIP for strong cash postion
➡️Comapny has propsed the plan to board forraising 8,500 Cr by issue of equity shares via QIP. Management aim to enhance cash balance given the competitive landscape and and much larger scale of business currently.

Valuation and Key metrics
➡️Currently the stock is trading at a multiple of 305x 0.84 EPS at the CMP of 256 Rs. Company trading at 10.6x its book value of 24.1 per share. Trailing twelve months ROE and ROCE stood at 1.12% and 1.14% respectively. Interest coverage ratio stood at 9.18x signify strong solvency.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More
Microfinance sector recorded surge in NPAs to Rs. 50000 crore
Equities, Markets, Research, Research Reports, Result Updates - October 22, 2024

Jana SFB Q2FY25: Secured Growth Drives Advances, Profit Declines Amid MFI Stress

Jana SFB Q2FY25: Secured Growth Drives Advances, Profit Declines Amid MFI Stress

Company Name: Jana Small Finance Bank Ltd | NSE Code: JSFB| BSE Code: 544118 | 52 Week high/low: 761 / 365 | CMP: INR 510 | Mcap: INR 5,352 Cr | P/BV – 1.49

About 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 776 banking outlet including 261 outlet in unbanked rural centres, in 22 states/ 2UTs while serving 4.5 Mn active customers.

Robust Advance growth thanks to secured book; Disbursement slowdown
➡️Jana’s total advance book grew 17.3% YoY (+2.5% QoQ) to 26,411 Cr thanks to the secured book. Secured book at 65% of the Jana total book report a growth of 28.6% YoY (+7.4% QoQ) to 17,063 Cr while Unsecured book moderate at 1% YoY and de-growth 5.4% QoQ to 9,348 Cr. Secured book contribution jump from 56% in Q2FY24 to 65% in Q2FY25 and management further planning to increased its weight in overall book.
➡️Healthy growth of secured book attributed to affordable housing (up 43.3% YoY) and Micro LAP (up 24.2% YoY) segment. This both combines cross the milestone of 10,000 Cr. 2W and gold loan also report a sound growth of 95% and 80% YoY but have low weightage in overall book. MSME and term loans to NBFCs grew 16.5% YoY and 3% YoY respectively.
➡️Disbursement growth modest at 0.3% YoY and 3.3% QoQ to 8,457 Cr due to MFI challenges.
➡️Deposit growth higher than advance growth at 31% YoY to 24,808 Cr while CASA as % of total deposit remains flat.

Book Growth (As on)  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Advance  26,411 21,842 17.30% 25,751 2.50%
Secured  17,063 12,183 28.60% 15,800 7.40%
Unsecured 9,348 9,255 1.00% 9,853 -5.40%
Disbursement  8,457 8,432 0.30% 8,178 3.30%
Deposit 24,808 17,118 31% 23,667 4.60%

NII Soar on solid advance growth while NIMs contract
➡️Interest income grew 19% YoY and remain flat on QoQ to 1,166 Cr led by solid secured book growth while yield down 30 bps YoY (-90 bps QoQ) to 17.2%. NII grew 13% YoY to 594 Cr with support of advance growth while CoF expand and NIMs decline. On QoQ NII down 3% led to modest growth of book on QoQ and NIMs contraction. PPOP report 6% YoY while decline 16 QoQ to 299 Cr due to lower other income. PAT down 21% YoY and sequentially 43% to 97 Cr led by higher provision growth.

All figures are in Cr 

Years  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry
Interest income  1,166 979 19% 1,167 0%
Interest expenses 572 453 26% 557 3%
NII 594 526 13% 610 -3% Healthy advance lead growth, NIMs contract
Other income  176 164 7% 189 -7%
Total Net income 770 690 12% 799 -4%
Employee expenses 296 239 24% 278 6%
Other OpEx 175 168 4% 165 6%
Total Opex  471 407 16% 443 6%
PPOP 299 283 6% 356 -16% QoQ decline due to 30 bps decline in NIMs
Provision 210 160 31% 196 7%
PBT 89 123 -28% 160 -44%
Tax expenses  -8 0 -10 -20%
Tax rate  -9% 0% -6% 44%
PAT  97 123 -21% 170 -43% Higher provision degrowth PAT 
PAT% 7% 11% -33% 13% -42%
EPS 9.28 16.73 -45% 16.27 -43%
No. of equity shares  10.45 7.35 42% 10.45 0%

Asset quality tempered on stress in MFI segment
➡️Jana asset quality has been decline due to the stress in the MFI segment. GNPA/NNPA jump 55 bps/13 bps YoY and 35 bps/remain flat QoQ to 2.86%/0.95%. Net NPA has 82% secured loan which signifies higher chances of recovery. Company has already done strong PCR for all business, PCR up 230 bps YoY (+450 bps QoQ) to 67.2%.

Asset Quality Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
GNPA 2.86 2.31 55 2.51 35
NNPA 0.95 0.82 13 0.95 0

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.49 price to book value and book value per share stood at 342 Rs. Yield decline 30 bps YoY (-90 bps QoQ) to 17.2% while CoF jump 60 bps YoY and remain flat on QoQ to 8%. 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 20 bps YoY and 30 bps QoQ to 7.7%. Return ratio disappoint as ROE and ROA down by 500 bps and 40 bps YoY. Company’s capital position remain solid with 20.1% Capital adequacy ratio.

Key metrics  Q2FY25 Q2FY24 bps Q1FY25 bps
Yield 17.2 17.5 -30 18.1 -90
CoF 8 7.4 60 8 0
NIMs 7.7 7.9 -20 8 -30
Credit Cost 1.86 2.33 -47 186
ROA 1.2 1.6 -40 2.1 -90
ROE 14.5 19.5 -500 18.8 -430
PCR 67.2 64.9 230 62.7 450
CAR 18.8 17.5 130 19.3 -50
CASA 20.1 20.5 -40 20.4 -30

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.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More
Giva Raises Fresh Capital to Strengthen Jewelry Business, Valued at ₹3,950 Crore
Equities, Markets, Research, Research Reports, Result Updates - October 21, 2024

LTFH Q2FY25: Strong Retail Loan Growth, NIM Expands, CoF Remains Stable

LTFH Q2FY25: Strong Retail Loan Growth, NIM Expands, CoF Remains Stable

Company Name: L&T Finance Ltd | NSE Code: LTF| BSE Code: 533519 | 52 Week high/low: 194 / 127 | CMP: INR 167 | Mcap: INR 41,591 Cr | P/BV – 1.71

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 (28% YoY) led by 2W, HLand MFI segment
➡️LTF retail loan book has been contributing 95%> of overall loan book, company achieveing its FY2026 lakshya goal. Retail book grew 28% YoY (+5% QoQ) to 88,975 Cr driven by 2W, HL and MFI segment. 2W book contribute 14% of retail book, growing 33% YoY and MFL contribute 30% of retail book, growing 22% YoY and Home loan contribute 20% of retail book, growing 39% YoY in Q2FY25.
The total book increased by 22% YoY (+5% QoQ) to 93,015 Cr led bt strong growth in retail book.
➡️Whole sale book report 56% YoY growth but its weight has been reduce to only 4% in overall loan book in Q2FY25.
➡️Retail disbursement grew 12% YoY (+2% QoQ) to 15,092 Cr led by 2W and home loan segment. While MFL shake the disburesement growth down by 5% YoY and its contribute 35% of retail disbursement.
➡️Company’s borrowing lagging in line with credit growth. Borrowing grew half of loan book growth at 11% YoY to 84,912 Cr during the quarter.

Key metrics  Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
Yield 15.38 15.23 15 15.54 -16
CoF 7.8 7.79 1 7.85 -5
NIMs 8.94 8.62 32 9.31 -37
Credit Cost 2.59 2.58 1 2.37 22
ROA 2.6 2.42 18 2.68 -8
ROE 11.65 10.81 84 11.58 7
PCR 71 76 -500 75 -400
CAR 22.16 25 -284 22 16

NII grew on book growth, yield expansion and stable CoF
➡️Interest income grew 15% YoY (+6% QoQ) to 3,654 Cr driven by robust retail book growth and expansion in yield by 15 bps YoY. NII increased 18% YoY (+4% QoQ) to 2,178 Cr attributed to NIMs expansion by 32 bps YoY and stable CoF at 7.8%. PPOP grew robust at 25% YoY (+14% QoQ) to 1,490 Cr thanks to higher other income and stable other OpEx. Profitability comes in line with topline, grew 17% YoY (+2% QoQ) to 697 Cr due to higher provision expense (up 40% YoY).

All figures are in Cr.

Years  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry
Interest income  3,654.41 3,168.54 15% 3,452.62 6% Driven by book growth and yield expansion
Interest expenses 1,476.28 1,324.91 11% 1,351.41 9%
NII 2,178.13 1,843.63 18% 2,101.21 4% led by stable CoF and Nims jump by 32 bps YoY
Other income  369.61 313.53 18% 331.99 11%
Total Net income 2,547.74 2,157.16 18% 2,433.20 5%
Employee expenses 548.78 448.62 22% 519.34 6%
Other OpEx 508.88 515 -1% 601.41 -15%
Total Opex  1057.66 963.62 10% 1120.75 -6%
PPOP 1,490.08 1,193.54 25% 1,312.45 14% Grew by other income and stable other Opex
Provision 550.51 396.15 39% 390.18 41%
PBT 939.57 797.39 18% 922.27 2%
Tax expenses  242.89 203.17 20% 237.02 2%
Tax rate  26% 25% 1% 26% 1%
PAT  696.68 594.22 17% 685.25 2% Kick in opEx efficiency offset by higher provision,
PAT grew in line with NII
PAT% 17% 17% 1% 18% -4%
EPS 2.79 2.39 17% 2.75 2%
No. of equity shares  249.26 248.3 0% 248.98 0%

Asset quality dissapoint on QoQ basis
➡️LTF asset quality has maintain on YoY basis but decline sequentailly. GNPA down 8 bps YoY but jump 5 bps QoQ to 3.19% while NNPA dissapoint YoY as well as sequentially by 14 bps/17 bps to 0.96%. Its normal effect due to the lower base on last quarter while NNPA below the management target of 1% till FY26.

Asset Quality Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
GNPA 3.19 3.27 -8.00 3.14 5
NNPA 0.96 0.82 14.00 0.79 17

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.71 Price to book value. Yield on loan jump 15 bps to 15.38% while CoF remain stable at 7.8% YoY. This result in expansion in NIMs by 32 bps to 8.94% as of Q2FY25. credit cost remain stable at 2.59% YoY while increased by 22 bps QoQ.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More
Visteon Invests $10M in India's Camera Manufacturing!
Equities, Markets, Research, Research Reports, Result Updates - October 17, 2024

South Indian Bank Q2FY25: Strong Profit, NIMs Contract, Asset Quality Improves

South Indian Bank Q2FY25: Strong Profit, NIMs Contract, Asset Quality Improves

NII Moderate; Strong Profitability; NIMs contract; 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 955 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 personals, agri and business.

Strong growth in Advances and Disbursement in Q2FY25
➡️The bank has reported strong growth annually in key business parameter. Gross Advances grew 13% YoY to 84,714 Cr, with corporate segment contributing 40% of the loan book, growing at 24% and personal segment contribute 25%, growing at same pace 24% while business loan and Agriculture contribute 15% and 20% respectively. Disbursement grew 77% YoY to 76,872 Cr led by corporates book. While the bank deposit lagging behind, increased by 9% YoY and borrowings decline 56% YoY. The CASA stand at 31.8% in Q2FY25 lower by 8 bps YoY.
➡️Personal segment loan book driven by growth in mortgage loan at 75% followed by home loan loan at 42%, gold loan 11%, auto loan 18% and credit card 37%.
➡️Retail disbursement momentum help by home loan, auto loan while agriculture and personal loan remains flat annually.

NII growth moderate while PAT jump 18% led by other income and lower tax
➡️Interest income increased by 11% YoY (+2% QoQ) to 2,355 Cr driven by yield expansion and advance growth. The yield on loan expand 19 bps YoY to 7.68% while Cost of fund jump 23 bps to 4.80% result contraction in NIMs. NII grew moderate at 6% YoY (+2% QoQ) to 882 Cr due to high expansion in CoF makes contract NIMs by 7 bps. The bank’s PAT surged 18% YoY (+10% QoQ) to 325 Cr led by higher other income and lower 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.

Asset quality enhanced; stress book reduce
➡️Company has reduced the stress assets from 1,159 Cr in Q2FY24 to 476 Cr in Q2FY25. Bank has churned 75% of overall loan book since covid level and 93% current GNPA from old book. GNPA/NNPA stood at 4.40%/1.31% decline by 56bps/39 bps YoY (10bps/13 bps QoQ). Slippages ratio decline to 0.36% in Q2FY25 vs 0.42% in Q2FY24. The provision coverage ratio expand 290 bps YoY to 80.7% vs 77.8% in Q2FY24.

Valuation and Key metrics
➡️Currently the stock is trading at 0.76 price to book value. The yield on advances jump 19 bps to 7.68% while CoF decline by 23 bps YoY to 4.80%. This result in contraction in NIMs by 7 bps to 3.24%. The increased in deposit rate to maintain and increased the deposit growth led to higher CoF and contract NIMs as Yield is stable.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More
Diversification Strategy: IOC’s Foray into Petrochemicals and Renewable Energy
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 11, 2024

IREDA Q2FY25: Hydro and Solar Loans Lead Growth as India Targets 500 GW RE

IREDA Q2FY25: Hydro and Solar Loans Lead Growth as India Targets 500 GW RE

About the stock
➡️IREDA is PSU NBFC engaged in the business of financing green energy projects. Its finances project such as solar, wind power, hydro power etc. GoI has conferred the Navratna status upon IREDA in April 2024. Loan portfolio well diversified across the 23 states and 4 UT in FY24. It contributing major role in fueling the India’s RE taget of 500 GW by 20230.

Loan book up double digit 36% YoY /8% half yearly
➡️As on 30 sep 2024, loan book stood at 64,564 Cr represent growth of 36% YoY while half-yearly growth was moderate at 8%. This growth led by loan given to state utilities (43% YoY) followed by hydro power at 37%, solar 19% and wind at 7%.
➡️Along with loan book disbursement and sanction grew 44% and 240% to stood at 4,461 Cr and 8,650 Cr respectively.

Asset quality improved – GNPA down 17 bps/ NNPA jump 5 bps
➡️During the half year FY25, gross asset quality has improved by 17 bps declined in GNPA stood at 21.9% (1,415 Cr) in Q2FY25. While NNPA jump 5 bps to 1.04% (666 Cr) despite the surge in provision coverage ratio.

Borrowing jump 10% H2FY25 – domestic rise while foreign declined
➡️During H2FY25 company’s borrowing increased by 10% to stood at 54,639 Cr. Dometic borrowing raised 13% to 45,691 Cr while foreign borrowings declined 4%.
➡️In domestic borrowing, bank loan weightage has declined to 49% in Q2FY25 vs 59% in Q2FY24. while money raised through bonds weightage rise to 51% in Q2FY25 vs 41% in Q2FY24. The rising chance of rate cuts will declined the borrowing cost for company as bank loan and bond both equal weight in borrowing.
➡️Within the foreign borrowing, un-hedged portion rise to 27% in Q2FY25 vs 22% in Q4FY24. While hedged portion has declined equally to increased in un-hedged. The surge in un-hedged portion increased the currency risk.

Valuation and key metrics
➡️During the quarter, Yield on loan jump 15 bps to 9.92% while Cost of borrowing decline by 5 bps to 7.8%. This result in surge in spread and NIMs by 20 bps and 17 bps to stood at 2.12% and 3.34% respectively. The cost of borrowinf can further decline in coming quarter as RBI ready to ease monetary policy. Capital Adequacy ratio stood at 20.24% which is above the guidance of RBI but decline by 68 bps YoY.

Q2FY25 Results updates
➡️Interest income increased by 37% YoY (6% QoQ) to 1,577 Cr while interest expense jumped 30% YoY (6% QoQ) to 1,030 Cr. This result in NII grew by 52% YoY (8% QoQ) to 547 Cr. The surge in NII led by Nims expansion and increased in new loan book.
➡️PPOP grew 36% YoY (11% QoQ) to 494 Cr due to rising Opex (411% YoY). While PAT surged by 36% YoY and moderate on QoQ basis at 1% to stood at 388 Cr. The Jump in provision off set with the reduction in tax expense makes PAT growth unchanged with Operating profit.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More
RBI's Surprise Rate Cut Sends Realty Stocks Tumbling: Is It Time to Reassess?
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 7, 2024

RBI’s October MPC: Rate Status Quo Likely Amid Persistent Inflation Concerns, Global Risks

RBI’s October MPC: Rate Status Quo Likely Amid Persistent Inflation Concerns, Global Risks

India’s Monetary Policy Committee (MPC) is set to reconvene this week, marking the first meeting for its three new external members: Ram Singh (Director, Delhi School of Economics), Saugata Bhattacharya (veteran economist), and Nagesh Kumar (Director, Institute for Studies in Industrial Development). Given their fresh appointments, all three are expected to follow the Reserve Bank of India’s (RBI) house view on rates, at least initially, as noted in a recent Bank of America report. While the new members lack any known rate biases, newcomers traditionally adopt the majority stance in their early days.

This is significant because it suggests that the RBI is likely to maintain the status quo on rates for the tenth consecutive policy meeting. This pattern aligns with Governor Shaktikanta Das’ cautious stance, particularly on inflation, which remains a key concern for the central bank’s policymakers.

Despite headline inflation falling below the RBI’s medium-term target of 4%—with CPI inflation at 3.65% in August, slightly up from July’s 3.6%—the central bank continues to exercise caution. The RBI’s reluctance to declare victory over inflation stems largely from persistent food price pressures. Governor Das, in the minutes of the August MPC meeting, underscored that while the base effect has helped lower headline inflation, food prices continue to pose challenges, and inflation expectations among households are rising. Therefore, monetary policy needs to remain vigilant to the risk of food price pressures spilling over into core inflation.

Adding to these inflationary concerns are risks posed by the geopolitical tensions in the Middle East. India is one of the world’s largest importers of crude oil, and escalating conflict in the region, particularly between Israel and Iran, could disrupt oil supplies and send prices skyrocketing. This could increase India’s oil import bill, which would, in turn, fuel inflation. Although crude oil is currently trading below the RBI’s assumed $85 per barrel average for FY25, any significant upward movement could complicate the inflation outlook. The central bank will undoubtedly factor this geopolitical risk into its deliberations.

Inflation is not the only concern for the MPC, however. Economic growth, while improving, remains below potential. Although India’s economy has shown some signs of recovery, unemployment continues to rise, and small businesses are grappling with high borrowing costs. Small and medium-sized enterprises (SMEs), in particular, are struggling with rising interest payments, and there are growing concerns about asset quality in the SME sector. In light of these challenges, there is a strong case for the RBI to begin cutting interest rates to stimulate growth.

The RBI, however, faces a dilemma. On the one hand, inflation pressures, especially in food and core inflation, suggest the need for a cautious approach to rate cuts. On the other hand, the economic reality on the ground—rising unemployment, underwhelming growth, and financial strain among small businesses—argues for the central bank to shift its focus toward supporting growth.

The recent 50 basis point (bps) rate cut by the US Federal Reserve will also be a topic of discussion at the upcoming meeting. While the RBI Governor has consistently maintained that the Fed’s actions do not dictate India’s rate policy, the reality is that central banks around the world, including India’s, cannot fully ignore rate moves in major economies like the US. The Fed’s rate cut may influence the MPC’s thinking, particularly if global economic conditions continue to weaken.

In summary, while the October meeting is likely to result in a rate status quo, the groundwork is being laid for a potential rate cut in the next few months. With inflation pressures still present but stabilizing, and economic growth faltering, the RBI will likely need to pivot toward growth support soon. However, much will depend on how inflation, particularly food prices, evolves in the coming months, and how global risks, such as the Middle East conflict and US monetary policy, unfold. If inflationary pressures subside, a rate cut could be on the horizon by the end of the year.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , , 0 Comment
Read More
Sensex Jumps 450 Points Amid Renewed US-China Trade Hopes and Strong Sectoral Buying
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 7, 2024

Kaynes Technology Acquires Iskraemeco India to Strengthen Presence in Smart Meters

Kaynes Technology Acquires Iskraemeco India to Strengthen Presence in Smart Meters

Kaynes Technology, a leading player in India’s Electronics Manufacturing Services (EMS) market, is positioning itself for rapid growth across several high-potential segments, including smart meters, semiconductors, and printed circuit board (PCB) manufacturing. The company has recently acquired a 100 percent stake in Iskraemeco India, a subsidiary of a Slovenian company, which is a strategic move aimed at strengthening its foothold in the smart meter market.

The acquisition deal, valued at Rs 43 crore, gives Kaynes full control of Iskraemeco India, a company that generated Rs 65 crore in turnover in FY24. While Iskraemeco India is still operating below break-even levels, the enterprise value (EV)/sales ratio of 0.7 times makes the deal attractive, especially given the long-term potential of the smart meter market in India. This acquisition aligns with Kaynes’ broader strategy of leveraging new growth opportunities in the evolving smart meter ecosystem, driven by the Indian government’s ambitious Smart Meter National Program (SMNP).

Tapping into the Smart Meter Opportunity
The Smart Meter National Program, part of the government’s larger power sector reform, seeks to replace 25 crore traditional electricity meters with prepaid smart meters over the next five years. The initiative includes modernizing infrastructure such as feeders and transformers, with an estimated total capital expenditure of Rs 1.5 lakh crore. With smart meter penetration currently standing at just 2-3 percent, there is substantial room for growth. The goal is to bring more transparency and efficiency to India’s power sector, and Kaynes sees this as a major area of opportunity.

To capitalize on this demand, Kaynes has set up a dedicated manufacturing plant for smart meters in Hyderabad. The facility has a current production capacity of 1 million units, but the company plans to scale this up to 4 million units in the near future by adding additional assembly lines. This move will allow Kaynes to ramp up its production capabilities to meet the growing demand from government projects and utilities across India.

The acquisition of Iskraemeco India further solidifies Kaynes’ position in this market. Iskraemeco India has secured a significant order from Power Grid Corporation of Gujarat to install 3.5 million smart meters over the next 12-18 months. This deal provides a strong revenue stream in the near term and reflects the high demand for smart meters, driven by government mandates and infrastructure upgrades. Kaynes is also expecting additional orders from the central government as well as from various state governments, which could provide further tailwinds for its smart meter segment.

The smart meter business currently contributes 2-3 percent of Kaynes’ total turnover, but management expects this to increase to 10 percent by FY25, bolstered by its strong order book and recent acquisitions. Over the medium term, the company also plans to expand its portfolio to include gas and water meters, thereby broadening its market presence in utilities.

Deploying Capital for Expansion
Kaynes Technology has been actively deploying capital to fuel its expansion plans. In 2023, the company raised Rs 1,400 crore through a qualified institutional placement (QIP). These funds have been allocated toward expanding its presence in both domestic and international markets. In January 2024, Kaynes acquired Digicom Electronics, a California-based EMS company, for $2.5 million. This acquisition marks Kaynes’ entry into the U.S. market, a key growth area for the company as it seeks to diversify its revenue streams.

Additionally, Kaynes acquired a minority stake in Mixx Technologies, an electronics manufacturing and PCB assembling services company, for $3 million. This acquisition is in line with its strategy to enhance its capabilities in PCB manufacturing, a key area of growth for the company.

In September 2024, Kaynes received cabinet approval to set up a semiconductor manufacturing plant in Gujarat, another significant step toward building a diversified electronics manufacturing portfolio. This new facility will allow Kaynes to tap into the growing demand for semiconductors, both in India and globally.

Strong Order Book and Growth Outlook
Kaynes Technology currently boasts an order book of over Rs 5,000 crore, with a book-to-bill ratio of 2.5x, offering strong growth visibility over the medium term. The management has reiterated its revenue guidance of Rs 3,400 crore for FY25, with an operating margin target of 15 percent. Over the longer term, Kaynes has set a revenue target of Rs 8,000 crore by FY28, of which 75 percent is expected to come from its core EMS business. The remaining 25 percent will be driven by growth in semiconductors, PCBs, smart meters, and the Kavach project (an indigenous safety system for railways).

The acquisition of Iskraemeco India is expected to be margin accretive over the medium term as Kaynes ramps up smart meter production and secures new orders. The company’s strategy of acquiring complementary businesses, deploying capital for capacity expansion, and entering new markets is poised to fuel its growth trajectory in the coming years.

Valuation and Investor Outlook
At its current market price, Kaynes Technology trades at an FY26 price-to-earnings (PE) multiple of 71 times, with a price/earnings-to-growth (PEG) ratio of 1.4x. While the company’s robust growth outlook is priced into the stock, investors may want to wait for better entry points given the elevated valuations. However, for long-term investors, Kaynes’ strong order book, aggressive expansion strategy, and growing presence in high-potential markets like smart meters and semiconductors make it a compelling play on India’s rapidly growing electronics manufacturing sector.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More
Giva Raises Fresh Capital to Strengthen Jewelry Business, Valued at ₹3,950 Crore
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - October 4, 2024

NBFC Loan Sanctions Q1 FY2024: Gold Loans Dominate Amid Slowdown in Unsecured Personal Loans

NBFC Loan Sanctions Q1 FY2024: Gold Loans Dominate Amid Slowdown in Unsecured Personal Loans

The latest data from the Finance Industry Development Council (FIDC) reveals a significant shift in the lending practices of Non-Banking Financial Companies (NBFCs) for the first quarter of FY2024. Gold loans have emerged as the dominant loan category, growing by 26% year-on-year to ₹79,218 crore. This rise in gold loan sanctions comes as NBFCs slowed their lending towards unsecured personal loans, which declined by 4% year-on-year due to the Reserve Bank of India’s (RBI) tightening regulations on unsecured credit.

Key Highlights:
Surge in Gold Loans: Gold loans accounted for the largest share of loan sanctions by NBFCs, reflecting their increasing preference for secured lending amid a changing regulatory landscape. The 26% growth from ₹63,495 crore last year to ₹79,218 crore in Q1 FY2024 underscores the sector’s focus on gold-backed financing.

Decline in Personal Loans: Unsecured personal loans, previously a dominant segment, witnessed a decline of 4% during the same period. This drop can be attributed to the RBI’s November 2023 decision to increase the risk weight on unsecured consumer credit from 100% to 125%, effectively raising the cost of capital for NBFCs extending such loans. The higher risk weight led to a shift in strategy as NBFCs redirected their focus toward secured lending products like gold loans, which offer better risk-adjusted returns.

RBI’s Regulatory Scrutiny: The RBI has increased its vigilance on NBFCs, particularly regarding gold lending practices. During its onsite examinations, the central bank observed several irregularities, including the use of third-party agents for loan sourcing, valuation practices without customer presence, insufficient monitoring of loan end-use, and lack of transparency in gold auctions during defaults. In response, the RBI issued a stern warning, mandating corrective measures within three months to avoid potential regulatory action.

Rising Property and Housing Loans: Property loans experienced a healthy growth of 21% YoY, now ranking as the fourth-largest loan category sanctioned by NBFCs. Housing loans also continue to hold a significant share of the total NBFC loan portfolio. However, unsecured business loans, like personal loans, have seen a deceleration, influenced by the same risk weight increases implemented by the RBI.

Shift Towards Secured Lending: The regulatory changes have made unsecured lending more expensive for NBFCs, prompting them to reallocate capital towards safer, secured lending options such as gold loans. The RBI’s sectoral deployment data supports this trend, showing that the gold loan portfolio of banks surged by 41% in August 2023, becoming the second-fastest-growing loan segment after renewable energy projects.

Implications for NBFCs:
Focus on High-Yield Secured Loans: The sharp rise in gold loans highlights a strategic pivot by NBFCs toward high-yielding but secured assets. Gold loans, backed by collateral, provide a safer lending avenue with attractive yields, making them a preferred choice in the current regulatory environment.

Cost of Capital and Credit Risk: With increased risk weights on unsecured loans, NBFCs face a higher cost of capital in those segments, reducing their appetite for such products. Consequently, gold loans have emerged as a favorable alternative, offering a secured product with relatively lower credit risk.

Potential Regulatory Risks: While gold loans present a lucrative opportunity, NBFCs must address the regulatory concerns raised by the RBI. Non-compliance with corrective measures could lead to stricter regulatory oversight, higher penalties, or restrictions on lending, impacting overall business operations.

Sectoral Diversification: NBFCs are likely to continue diversifying their loan portfolios, focusing on secured lending products such as gold and property loans, while cautiously navigating the unsecured credit landscape.

Conclusion:
The gold loan segment is expected to remain a growth driver for NBFCs in the near term, as the regulatory environment continues to favor secured lending. However, NBFCs will need to remain vigilant in complying with RBI’s guidelines to avoid regulatory backlash, while also exploring opportunities in other secured lending sectors such as housing and property loans to balance their portfolios effectively.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More