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June 2022

Vishnu Prakash R Punglia Promoters’ Stake Sale: A Strategic Step to Enhance Liquidity
Markets, Result Updates - July 29, 2022

Robust growth in the June quarter, witnessed by Kokuyo Camlin :

Robust growth in the June quarter, witnessed by Kokuyo Camlin :

Kokuyo Camlin reported a net profit of Rs.8.35 Cr. compared to Rs.2.94 Cr. in March 2022. The firm clocked in Rs. 196.15 Cr., up by 20.24 % from Rs. 163.95 Cr. in the previous quarter. The EBITDA margin stood at Rs. 13.54 Cr. in the June 2022 quarter compared to Rs. 7.69 Cr. in March 2022.

The demand for paper is strong in all the regions after the COVID-19 pandemic. India’s stationery market is estimated to be around USD 2.5 billion. The latter are dominating the market as this industry has a mix of both organised and unorganised players. With a literacy rate of 74% accompanied by a high population. There are numerous government programs inclined towards pushing higher studies that have resulted in new opportunities for the company. resulting in higher demand and enhanced stationery industry growth.

Camlin’s non-school product portfolio accounts for almost 50% of the total revenues and is improving in the Fine Art and Hobby domain. The company has contacted nearly 2500 hobby tutors across the country and is working with them to improve the quality of their product. The main risks for the firm are the cyclic nature of the stationary industry, economic risk, supply chain disruptions and shortage of raw materials due to the Russia-Ukraine war, etc. The company is taking steps to reduce risk while also creating value for its customers and shareholders.

We believe the share price of Kokuyo Camlin is around the same range as well. due to ongoing geopolitical issues, a slowdown in the economy and currency deprecation. Despite the fact that synergies across various distribution hubs will benefit in terms of low cost, expansion to new locations, quick roll outs, and R&D. The firm targets around 30% or more of its revenue from overseas in a ten-year time period. With the devaluation of the domestic currency, the company has opportunities to capture new markets since it has a competitive price.

The script was trading at Rs. 67.80 on Friday and was up by 0.59%, or 0.40 points. The stock touched an intraday high of Rs.69.25 and an intraday low of Rs.67.10. The 52-week high for the stock was at Rs. 79.6 and the 52-week low was at Rs. 50.5. The market cap for Kokuyo Camlin is Rs. 681Cr.

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Liquidity is a major concern in the Indian Banking Sector
Business, Markets, Result Updates - July 27, 2022

Axis Bank’s net profit was up by 91% in Q1 FY23.

Axis Bank’s net profit was up by 91% in Q1 FY23.

Axis Bank reported a net profit of Rs. 4,125 Cr. in the June 2022 quarter, a jump of 91% from the June 2021 quarter at Rs. 2160 Cr. The advances stood at Rs. 7.01 lakh crore, up by 17% from June 2021. However, the advances were down by about 7.07 lakh crores from March 2022.

In Q1 FY23, NII increased by 20.9% year on year to Rs. 938 Cr. NIM stood at 3.6%, improved by 11 bps QoQ and by 14 bps YOY. The PPOP was at Rs. 588 Cr., with a decline of 8.2% YOY. The fee income was at Rs. 357 Cr. in June 2022, up by 34% YOY. The provisions for the quarter stood at Rs. 359 Cr. The street is disappointed with the loan growth for the June 2022 quarter, down by 7.5% QOQ and 43.5% YOY at Rs. 368 Cr. The gross slippage ratio was at 2.05%, declining by 20 bps YOY and 33 bps QOQ. 45% of the gross slippages were contributed by borrowers’ linked accounts, which were standard. The GNPA and NNPA ratios improved and stood at 2.7% and 0.64%, respectively.

The PCR ratio was at 77% for the quarter. We believe that the asset quality will be constant and improve in the near future. The cost to income ratio stood at 52.5% for the June 2022 quarter at Rs. 357 Cr. and we expect the ratio to increase due to investments in technology. While income growth is expected to improve, The bank is focused on the three core areas: deepening performance culture, strengthening the core and building for the future. It continues to invest in the SME space, extending its distribution and service across India. On Citibank customer business integration, Axis Bank is waiting for CCI approvals and expects to close transactions. 69% of the bank’s loan book is floating rates, which will rise in the policy tightening environment.

The stock price closed at Rs.719.05 and touched an intraday high of Rs.707 and a low of Rs.703. The market capitalization for the bank is Rs. 2.21 lakh cr. The 52-week high was at Rs. 866 and the 52-week low was at Rs. 618.25.

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Happiest Minds Technologies' net profit jumps by 57% in Q1 FY23.
Markets, Result Updates - July 26, 2022

Happiest Minds Technologies' net profit jumps by 57% in Q1 FY23.

Happiest Minds Technologies’ net profit jumps by 57% in Q1 FY23.

Happiest Minds recorded net sales of Rs. 328.92 crores in June 2022 compared to Rs. 244.61 crores in June 2021. The net profit stood at Rs. 56.34 crores in Q1 FY23, up by 57.68% sequentially at Rs. 35.73 crore because of lower other income. The free cash flows were recorded at Rs. 86.39 cr. The service business was driven primarily by Edu-tech, contributing 23.7%, BFSI, contributing 13.7%, and industrials, at 8.2%. Digital infrastructure/Cloud, AI/Analytics and SaaS had a contribution of 45%, 11.6%, and 21.5%, respectively.

EPS stood at Rs. 3.96 in June 2022, up from Rs. 2.51 in June 2021. EBITDA stands at Rs. 87.75 crore, up 32.65% from Rs. 66.15 crore YOY. The reported operating margin stood at 22.7% QoQ, down by 30bps due to lower utilization. 97% of the total revenue comes from digital business, and 93% is contributed by Agile. Europe and the USA witnessed positive growth on a QOQ basis, with healthy pipelines in digital services. 90% of the total revenue was repeat business. The IT tech added 5 new clients and now has 211 active clients in total. The smaller accounts of non-top 10 clients did well and contributed approximately 57.1% of the total revenue. The firm was able to increase business from existing clients while also adding two new clients to the Fortune 2000/Forbes 200 billion dollar corporation.

In the concall, the IT firm mentioned that 15% of the total revenue was from the new business and the remaining came from the existing operations. One of the large clients was cautious in the last quarter but has shown interest in investing more in its new features in the product platform. The firm intends to hire more than 500+ freshers and around 300+ will be joining by August 2022. Happiest Minds will continue to invest in new technology and maintain an EBITDA of 22% to 24% in the coming period. The management believes that they will maintain a CAGR of 25% over the next five years. They are optimistic about their future opportunities and focus on the annuity business. The management expects a multi-year tail wind in digital technologies, multi-hybrid cloud and automation.

We believe that the recent intake of freshers, constant investments in skill addition, currency depreciation, along with supply side challenges, wage hikes, increasing subcontracting costs, and higher intake will keep margins under check in the near term. The stock is currently trading at Rs.974.55, down by 24.05 points, or 2.41%. The stock touched a 52-week high of Rs.1568.00 and a 52-week low of Rs.785.60. The Bangalore-based firm’s market cap is at Rs.14258 crores.

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Grainspan Boosts Ethanol Output with ₹520 Crore Investment in Gujarat Plants
Result Updates - July 26, 2022

JSW Steel's net profit declined to Rs. 839 crores in Q1 FY23.

JSW Steel’s net profit declined to Rs. 839 crores in Q1 FY23.

Net profit declined to Rs. 839 crores compared to Rs. 5900 crores in June 2021. The total revenue reported was down by 32% YOY and 19% QOQ to Rs. 38126 crore in June 2022. EBITA stood at Rs. 4,309 crore and the EBITDA margin declined by 29% to 11.3%. The fall in EBITDA was contributed to by the lower volume of sales, loan translation losses, NRV provisions, etc.

The domestic steel industry was impacted by global events and the imposition of a 15% duty on steel exports in May 2022. Exports fell by 26% from March 2022 to June 2022.crude steel production was at 5.77 million tonnes and saleable steel sales were at 4.449 million tonnes. It was up 12% YOY but down by 21% QOQ, mainly due to a sharp drop in export volume. The company’s average capacity utilisation for the quarter was 93% in June 2022 compared to 98% in March 2022. They have also planned the maintenance shutdowns that were scheduled for during the year. This lowered the average capacity utilisation.

Among the subsidiaries, JSW Steel Coated Products recorded an EBITDA loss for provisioning for inventory, while BPSL’s EBITDA was down by 55% QoQ. Acero Junction’s EBITDA plunged down 87% QoQ; however, Plate and Pipe Mill reported better numbers on strong shield demand for EBITDA, up 14% QoQ. Europe managed to get rail orders, thus securing the operating margin.

As the inventory is rising and demand is weak, coupled with few opportunities to export in the near term, the company has moderated its fabrication. We have slightly reduced our volume forecast for FY23, but management remains confident that lost volumes will be recovered in the coming quarters.JSW is finalising its deal with a few auto makers for a hike of Rs.900/t and is still negotiating with the major auto players. The company has also started to buy coal from Russia at a discount. However, Australia is the major source of coal for JSW.

We expect the excess finished steel inventory in the industry to prohibit any future price hikes. To evacuate the inventory, the companies will have to slow down production or export some quantities. This will be over by Q2 – Q3 FY23 and price hikes can be seen. We believe one more round of correction will happen in the steel industry. As it is a cyclical industry, weak quarters are expected due to monsoons, which supports our dip in the stock price.

The stock price closed at Rs. 596.65 on Tuesday and touched an intraday high of Rs. 599 and an intraday low of Rs. 581.60. The 52-week high for the company was Rs. 790 and the 52-week low was Rs. 520. The market cap was at Rs. 143 lakh crore.

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