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Adani Group Stocks Rally on SEBI Relief, Investors Watch Pending 22 Orders for Clarity
Business, Equities, Market News, Markets - August 26, 2024

Adani Group's $9B Green Hydrogen Project Boosts Sustainable Growth in Gujarat

Adani Group’s $9B Green Hydrogen Project Boosts Sustainable Growth in Gujarat

Adani Group to Contribute $9 Billion in Green Hydrogen Extend in Gujarat.
The Adani Group has detailed a $9 billion venture in green hydrogen ventures in Gujarat, entering intensely on the export market. The Adani Group’s centre on green hydrogen supports India’s renewable energy targets and positions the nation as an important player in the worldwide hydrogen economy. This move is part of Adani’s larger goal to become a global leader in the production and export of green hydrogen. The project will be based in Mundra, a coastal town that already has well-developed port infrastructure. Adani plans to create greenhydrogen utilizing renewable vitality sources, fundamentally sun oriented andwind control,to guarantee the prepare is economical and ecologically neighbourly.

As part of the strategy, specialised ships will be deployed to Europe and Asia to export hydrogen. Alkaline electrolysers will be used in the project’s initial stages, with anion exchange membrane technology planned for the future. This project is essential to the Adani Group’s strategic expansion goal and is projected to generate 7,500–10,000 new jobs. Adani Green Energy at the same time announced that it would contribute Rs 1.5 lakh crore over the following five a long time to grow the capacity of its Khavda renewable vitality extend in Kutch, Gujarat, to 30 gigawatts (GW). One of the greatest renewable energy projects in the world, the project covers 538 square km. Inside a year of the project’s begin, operations have begun for 2GW of the 30GW capacity that is expected.

Green hydrogen is created through electrolysis using renewable energy and is considered a key element in the global shift towards reducing carbon emissions. It has a variety of uses, including in industries, transportation, and energy storage, making it a versatile and promising energy source. While Adani had to bid for subsidies to cover both the green hydrogen production & electrolyser manufacturing towards membrane technology in future. Adani sought for subsidies to cover both green hydrogen production and electrolyser manufacturing in India’s initial auctions, but the company only got a partial grant for the production of electrolysers. The government only provided money for 198.5MW of the conglomerate’s sought 300MW of annual production capacity subsidies. This investment aligns with India’s national goals to lower carbon emissions and increase the use of renewable energy. Adani plans to build an integrated system that covers everything from generating renewable energy to producing and distributing hydrogen. This approach is expected to make the production process more cost-efficient and competitive on the global market.

Company See there a Global Vision Further where Adani’s decision to invest heavily in green hydrogen signals its intent to become a global leader in this emerging sector. Green hydrogen, produced through renewable energy sources like solar and wind, is increasingly seen as a game-changer in the global push for decarbonization. Adani’s focus on green hydrogen positions the company at the forefront of this transition, potentially giving it a competitive edge in the global energy market. By establishing its green hydrogen production base in Mundra, leveraging the region’s robust port infrastructure, Adani is strategically positioning itself to tap into the export market. This move not only supports India’s ambition to be a key player in the global hydrogen economy but also opens up new revenue streams for the company, enhancing its long-term growth prospects. Economic Impact and Employment The project is expected to have a significant positive impact on the local economy. With plans to create an integrated value chain—from renewable energy generation to hydrogen production and distribution—Adani is set to generate numerous job opportunities in Gujarat. This will boost local employment, foster economic development, and contribute to the region’s prosperity. Chairman Gautam Adani underlined the conglomerate’s dedication to energy transition initiatives, citing ambitions to manufacture vital components for the creation of green energy exceeding USD 100 billion (about Rs 835 crore).

Opinions & Growth :
In my Opinion project is also expected to create many jobs and boost the economy in the region. Adani Group’s focus on green hydrogen helps India meet its renewable energy goals and establishes the nation as a major participant in the global hydrogen market. The project is set to start operations by 2028, with developments happening in phases over the upcoming years, highlighting Adani’s commitment to sustainable growth and energy transition. The $9 billion green hydrogen investment from Adani Group is a statement of purpose rather than just a financial guarantee. Adani is establishing itself as a leader in the global energy transition by putting a focus on innovation and sustainability. This action not only creates the way for Adani’s future expansion and dominance in the global energy market, but it also boosts India’s goals for renewable energy. As the project develops, it is anticipated to become a model for how significant investments in green hydrogen may produce advantages for the environment and the economy.

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Nykaa’s Innovation and Expansion Fuel Impressive Q1FY25 Results

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British Fashion Titan ASOS Makes Exclusive Indian Debut Through Ajio
Markets, Research, Research Reports, Result Updates - August 26, 2024

Nykaa's Innovation and Expansion Fuel Impressive Q1FY25 Results

Nykaa’s Innovation and Expansion Fuel Impressive Q1FY25 Results

About the stock

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

Financial performance Q1FY25

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

Financial statement

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

 

Segments wise performance

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

Strategic Initiatives

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

Brand Focus:

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

Customer & Market Expansion

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

Technology and Efficiency:

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

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

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Flexiloans Bags ₹375 Cr in Series C, Targets ₹5,000 Cr AUM Within 18 Months
Research, Research Reports, Result Updates - August 26, 2024

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

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

About the Company

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

Q1FY25 Highlights

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

Financial Statement (in Cr) Q1 FY 25 Q1 FY 24 YoY % Q4 FY 24 QoQ%
Interest income 1688.99 1818.03 -7.10% 1572.55 7.40%
Total income 2236.27 1915.62 16.74% 2255.13 -0.84%
Finance costs 1309.12 1353.9 -3.31% 1291.48 1.37%
Net interest income 379.87 464.13 -18.15% 281.07 35.15%
OPEX 230.48 226.07 1.95% 241.92 -4.73%
PPOP 696.67 335.65 107.56% 721.73 -3.47%
Profit/(loss) before tax 437.14 396.23 10.32% 431.89 1.22%
Profit/(loss) after tax for the period/year 326.76 294.39 11.00% 319.43 2.29%
EPS (Basic) (₹) 5.43 6.1   5.7  
EPS (Diluted) (₹) 5.41 6.08   5.67  
Financial Highlights (in ₹ Cr) Q1FY25 Q4FY24 QoQ (%) Q1FY24 YoY (%)
Net Worth 20269 19792 2.41% 17576 15.32%
Total Loan Assets 66566 65335 1.88% 65787 1.18%
Own Book 53979 53090 1.67% 53211 1.44%
Return on Assets 1.80% 1.60% 12.50% 1.70% 5.88%
Gross NPA% 2.68% 2.69% -0.37% 2.87% -6.62%
Net NPA% 1.52% 1.52% 0.00% 1.69% -10.06%

 

Future Outlook FY2025 to FY2027:

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

Retail Origination Engine

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

Loan Disbursement

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

Asset Quality

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

Financials Analysis

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

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

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Rites Limited Q1FY25 Profit Falls Amid Revenue Dip, Secures ₹1200 Cr Export Order
Research, Research Reports, Result Updates - August 23, 2024

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

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

Company Overview

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

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

Industry Outlook:

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

Q1FY25 Business & Financial Performance:

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

Q1FY25 Financials Result:                                                                                                             (Rs Cr)

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

Ratio Analysis:

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


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

Healthy Order Book Secured

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

Concall Highlights:

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

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

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

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HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth
Research, Research Reports, Result Updates - August 23, 2024

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

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

About the Stock:

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

Q1FY25 Performance Analysis:

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

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

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

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

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

Profit & Loss Statement Overview:

Particulars Q1FY25

(INR in Cr.)

 Q4FY24

(INR in Cr.)

 QoQ

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

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

Gross NPA Movement:

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

 

Net NPA Movement:

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

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

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

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Torrent Power Q2 FY26: Profit Surges ~50%, Powered by Strong Generation and Lower Finance Costs
Research, Research Reports, Result Updates - August 23, 2024

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

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

ABOUT COMPANY:

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

FINANCIAL PERFORMANCE

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

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

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

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

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

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

Consolidated Financial Highlights: (Figures in Rs. Crs)

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

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

INDUSTRY OVERVIEW:

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

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

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

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

BUISNESS UPDATES:

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

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

Business Outlook for 2032

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

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

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

Company Overview

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

Product Portfolio

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

Industry Outlook :

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

Q1FY25 Business & Financial Performance:

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

Shriram Finance financial statements for Q1FY25:

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

Ratios

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

Concall Highlights:

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

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RIL's Q1FY25 Performance: Retail and Digital Drive Amid O2C Slump

RIL’s Q1FY25 Performance: Retail and Digital Drive Amid O2C Slump

About Stock:

Dhirubhai Ambaini started RIL in in 1966 as a small textile company which has now became a large company with holdings in petrochemicals, energy, natural gas, retail, telecommunications, energy, natural gas, retail, telecommunications, and digital services. RIL has continually pushed innovation and scaled operations to become a major power in a number of sectors under Mukesh Ambani’s direction. The biggest retailer in India, Reliance Retail Ventures Limited (RRVL), provides a wide range of goods online via JioMart, including food, gadgets, clothing, and more. With its reasonably priced 4G network, Jio Platforms has revolutionised the digital services industry in India and grown to become the country’s leading telecom operator.

Q1FY25 Performance Analysis:

Despite challenges in certain areas, Reliance Industries Limited (RIL) demonstrated solid overall performance in Q1FY25. The company’s consolidated sales reached INR 257,823 crore (approximately US $30,919 million), reflecting an 11.5% year-over-year (YoY) growth. This expansion was driven by strong contributions from key sectors, including oil and gas, retail, and digital services. However, the company’s Oil-to-Chemicals (O2C) division faced challenges due to lower refining margins and a decline in global demand.

EBITDA for the quarter increased by 2.0% YoY to INR 42,748 crore (US $5,126 million). While the O2C segment struggled, the robust performance of consumer-facing businesses, such as Retail and Digital Services, provided a counterbalance. A significant increase in production volumes from the KG-D6 block also contributed to the notable EBITDA improvement in the Oil & Gas segment.

On a quarter-over-quarter (QoQ) basis, EBITDA declined by 9.1%, primarily due to a 22% drop in O2C EBITDA, reflecting the challenging conditions in the global petrochemical and refining markets. This downturn in O2C performance also impacted the company’s profitability, with consolidated profit after tax (PAT) decreasing by 17.9% QoQ to INR 17,445 crore (US $2,092 million). Increased financing and depreciation charges further weighed on the bottom line.

Despite these challenges, RIL’s balance sheet remains strong, with a net debt reduction of INR 3,940 crore during the quarter, underscoring the company’s commitment to maintaining financial discipline and generating robust cash flows. RIL’s diversified business strategy has been key to its ability to capitalize on growth opportunities in consumer and digital sectors while navigating sector-specific obstacles.

Key Ratios:

Basic EPS (INR) 102.90
Cash EPS (INR) 191.35
Net Profit Margin (%) 8.72 %
ROE (%) 8.77 %
ROCE (%) 9.38 %
Total Debt/Equity 0.41
Asset Turnover Ratio (%) 0.54 %
Current Ratio 1.18
Quick Ratio 0.80
Dividend Payout Ratio (NP) (%) 8.74 %
EV/EBITDA 13.31

Segment Performance Analysis:

O2C Segment:
Reliance Industries’ O2C division faced significant challenges in Q1FY25. Revenue increased by 18.1% YoY to INR 157,133 crore (US $18,844 million), while EBITDA declined by 14.3% to INR 13,093 crore (US $1,570 million). The EBITDA decline was primarily due to lower refining margins, a sharp drop in prices for petrol (-30%), polypropylene (-17%), and the polyester chain (-15%), as well as weakened global demand. Despite these hurdles, the segment benefited from strong domestic demand, particularly in polyester and polymers, and from favorable feedstock economics, as ethane was used instead of naphtha.

Oil and Gas Segment:
The Oil and Gas division delivered exceptional performance, with revenue increasing by 33.4% YoY to INR 6,179 crore (approximately US $741 million) and EBITDA rising by 29.8% to INR 5,210 crore (around US $625 million). This impressive performance was largely driven by a 43.7% YoY increase in production volumes from the KG-D6 block, resulting in 69.4 BCFe. However, a 14.2% drop in gas price realization somewhat offset the segment’s EBITDA growth. Despite declining prices, higher production volumes continued to bolster the segment.

Retail Segment:
Reliance Retail maintained its strong growth trajectory, with EBITDA increasing by 10.5% to INR 5,664 crore (US $679 million) and revenue rising by 8.1% YoY to INR 75,615 crore (US $9,068 million). The segment saw robust sales in digital products, such as air conditioners, refrigerators, and televisions, alongside strong performance in food sales, driven by summer promotions. Additionally, the company expanded its registered customer base by 18% to 316 million and added 331 new locations, bringing its total retail footprint to 18,918 stores.

Digital Services Segment:
Jio Platforms led the strong growth in the Digital Services segment, with revenue increasing by 12.8% YoY to INR 34,548 crore (US $4,143 million) and EBITDA rising by 11.9% to INR 14,638 crore (US $1,755 million). The segment also benefited from a 32.8% YoY increase in data traffic, driven by growing 5G adoption and fiber-to-the-home (FTTH) penetration. Jio’s ability to maintain its industry-leading position, despite a competitive market, underscores the effectiveness of its customer-centric approach

 

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Dmart Q1FY25 Results Showcase Robust Growth and Strategic Expansion

Dmart Q1FY25 Results Showcase Robust Growth and Strategic Expansion

Q1FY25 Financial Performance

Avenue Supermarts demonstrated robust financial performance in Q1 FY2025, as its operational revenue surged by 18.57%, reaching Rs 14,069.14 crore. The notable revenue growth reflects Avenue Supermarts’ robust market presence and successful implementation of its business approach. This upward trend highlights the company’s ability to capitalize on market opportunities and execute its strategies effectively.

Profitability metrics showed notable improvement, with profit before tax rising by 17.48% to Rs 1,054.13 crore in Q1 FY25, up from Rs 897.26 crore in the same period last year. This growth in profitability reflects the company’s operational efficiency and cost management strategies.

EBITDA performance was particularly strong, increasing by 17.97% to Rs 1,221 crore in Q1 FY25, compared to Rs 1,035 crore in Q1 FY24. The EBITDA margin remained steady at 8.7%, demonstrating the company’s ability to maintain profitability levels despite challenging market conditions.

Operational highlights revealed strategic expansion and growth. Avenue Supermarts added 6 new stores during the quarter, bringing its total store count to 371 as of June 30, 2024. This expansion strategy aligns with the company’s focus on increasing market presence and accessibility for customers.

The company’s standalone performance was equally impressive, with net profit jumping 16.83% to Rs 812.45 crore in Q1 FY25. Standalone revenue from operations also experienced a notable growth of 18.36%, reaching Rs 13,711.87 crore.

Avenue Supermarts’ commitment to its EDLC-EDLP strategy continues to drive its success, enabling the company to offer competitive prices while maintaining profitability. This approach has proven effective in attracting and retaining customers in a competitive retail landscape.

Management’s perspective highlighted key growth drivers. CEO & Managing Director Neville Noronha emphasized the improved contribution from general merchandise and apparel, which positively impacted gross margins. He also noted increased operating costs due to ongoing efforts to enhance service levels and build future capabilities.

Consolidated Financial Highlights: (Figures in Rs. Crs)

Particulars Q1 FY24 Q1 FY25 FY24
Sales 11865 14069 12727
Expenses 10830 12848 11783
Operating Profit 1035 1221 944
OPM % 9% 9% 7%
Other Income 39 42 38
Interest 15 16 13
Depreciation 162 193 205
Profit Before Tax 897 1054 763
Tax 27% 27% 26%
Net Profit 659 774 563
EPS in Rs 10.12 11.89 8.66

The company’s performance in Q1 FY25 positions it well for continued growth, with its expansion strategy and focus on operational efficiency expected to drive further success in the coming quarters. Avenue Supermarts’ ability to maintain strong growth in revenue and profitability demonstrates its resilience and adaptability in the dynamic retail sector.

Industry Overview

Avenue Supermarts Limited’s DMart has become a significant player in India’s affordable retail sector. The company began with humble origins in Mumbai at the start of the millennium and has since experienced impressive growth and expansion across the country. DMart’s rise in the budget retail landscape has positioned it as a formidable competitor in the market. Starting modestly in Mumbai in 2002, the company has undergone remarkable expansion over the years. It currently manages a vast array of 365 stores across a dozen states and territories in India. This impressive growth is reflected in DMart’s extensive retail footprint, which now covers 15.15 million square feet. Such widespread presence underscores the company’s effective growth tactics and its strong position in the marketplace. The company’s growth strategy centers on providing customers with quality products at competitive prices, adhering to the Everyday Low Cost/Everyday Low Price (EDLC/EDLP) model. DMart stores offer a diverse range of products, focusing on Foods, Non-Foods (FMCG), and General Merchandise & Apparel categories. The shopping experience is designed to combine the convenience of everyday value retail with the ambiance of a modern, large-scale mall. DMart’s success can be attributed to its focus on meeting customers’ daily shopping needs in a single location, coupled with competitive pricing. This pricing strategy is supported by the company’s deep understanding of local markets, carefully curated product selections, and efficient supply chain management. The broader economic context for DMart’s operations shows promise, with India’s GDP growth estimated at 7.6% for FY 2023-24, up from 7.0% in the previous year. While challenges such as geopolitical uncertainties and supply chain issues persist, domestic spending and supportive policies have contributed to economic resilience. Looking ahead, GDP growth is projected to moderate to 6.8% in fiscal 2025, influenced by factors such as fiscal consolidation, higher borrowing costs, and stricter regulations. However, potential for rural demand revival exists if normal monsoon conditions prevail and inflation eases. The retail industry in India has shown robust growth, with the overall sector expanding by 11% to reach ₹93 trillion in FY 2023-24. Organized retail grew at 16%, while e-retail surged by 20%. In the organized retail sector, food and grocery items constitute approximately one-fifth of the market value. Projections suggest the retail industry will maintain a compound annual growth rate of 10-11% between 2024 and 2028, driven by economic recovery and moderate inflation. This positive outlook, coupled with anticipated increases in consumer spending, bodes well for the retail sector’s long-term prospects.

Business Updates

Avenue Supermarts, which operates the DMart retail chain, expanded its presence by inaugurating 6 new outlets in the April-June period. The company further increased its footprint with two additional stores in July, bringing the total count to 373 as of July 13, 2024.

The company’s chief executive provided insights into DMart’s expansion and operational adjustments. He noted that the store count had grown to 371 by June 2024’s end. The executive also mentioned rising operational costs, attributing this increase to ongoing efforts to improve customer service and strategically invest in the business’s future potential.

The company reported a consolidated revenue growth of 18.4% for Q1 FY 2025, reaching Rs 14,069 crore. Noronha noted improved contributions from the General Merchandise and Apparel segments, which positively impacted the gross margin compared to the same quarter in the previous fiscal year.

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

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

About the Stock

Neogen Chemicals Ltd, established in 1991, is a leading manufacturer of bromine and lithium-based organic and organo-metallic compounds essential for the pharmaceutical, agricultural chemicals, and engineering sectors. Neogen produces sophisticated intermediates for pharmaceuticals, agrochemicals, flavours, and fragrances. As the largest importer of Lithium Carbonate and Lithium Hydroxide for the past three decades, Neogen has cultivated robust relationships with global leading lithium miners and processors, solidifying its position in the market.

Performance Highlights – Q1 FY25

In Q1FY25, Neogen Chemicals Ltd. demonstrated moderate growth and enhanced profitability in its consolidated financial results. The company’s revenues grew by 9%YoY to INR 180 Cr, while EBITDA rose by 10% to INR 30.8 Cr. Neogen maintained a stable EBITDA margin, which increased slightly to 17.1%, representing a 10-basis points improvement compared to the previous year. Notably, the company’s Profit After Tax (PAT) for the quarter reached INR 11.5 Cr, marking a significant 18% increase year-over-year.

Revenue break-up

Revenue break-up (in Cr) Q1 FY24 Q1 FY25 YoY (%)
Organic Chemicals 121 142 17%
Inorganic Chemicals 44 38 -14%
Organic Chemicals Inorganic Chemicals
Bromine prices declined on Y-o-Y basis. Adjusting for this fall in RM prices, the Organic revenue would have been higher by Rs. 14 crores in Q1 FY25. Income from inorganic chemicals would have been higher by Rs. 27 crores, but for the steep decline in the prices of Lithium raw material during the period under review.

Strong revenue performance despite challenging operating scenario. Volume-led growth driven by higher contribution from non-agchem linked products amid weak pricings. A global recovery in agricultural chemicals is anticipated in the latter half of this fiscal year. Strong BuLi Chem performance driven by recovering demand for key application-specific products. Neogen Ionics enhanced revenue with Lithium Salt sales and limited Electrolyte testing. EBITDA improved despite increased employee costs and other expenses related to capacity expansion in Neogen Ionics. Operational efficiencies helped maintain margins at 17.1%, counteracting ongoing pricing pressures across key products. Net profit performance demonstrates robust operational trends, with an additional boost from reduced tax rates. However, as capital expenditure in Battery Chemicals accelerates, both depreciation and interest expenses are anticipated to increase.

Neogen Ionics (Battery Chemicals)

 Neogen Ionics secured financing for most of its capital expenditure, primarily through long-term project finance debt with a 10-year tenure and a grace period. Construction has begun on the new facility, with commercial production expected to start in FY26, aligning with India’s growing battery manufacturing capabilities.
 The company is negotiating long- term electrolyte force agreements with battery manufacturers.Two major producers are set to start operations this year, with several more expected to launch within the next one to two years.
 A dedicated team of 70-80 employees is focused on implementing the battery chemicals project while also managing ongoing production in the first phase.
 The US Inflation Reduction Act and Foreign Countries of Concern policies are expected to accelerate industry momentum. The company has initiated discussions, signed MOUs, and established pricing agreements with international customers.
 Battery chemicals account for approximately 35% of electric vehicle battery costs; advancements in this area are expected to contribute to reducing the overall price of EVs.

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