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Renault's Bold Move: JSW Alliance Shifts India's EV Landscape
Research, Research Reports, Result Updates - August 22, 2024

Maruti Suzuki India Q1FY25 Sees Double-Digit Profit Growth Amid Shifting Market Trends

Maruti Suzuki India Q1FY25 Sees Double-Digit Profit Growth Amid Shifting Market Trends

Company Overview

Maruti Suzuki India Ltd is engaged in the production and marketing of passenger cars in India. The company, which started with the iconic Maruti 800, now offers a wide range of automobile models with several variants. Maruti Suzuki’s entry-level compact cars include the Alto 800 and Alto K10, while the Ciaz represents the luxury car segment. The company’s operations also encompass fleet management, pre-owned car sales, and auto financing. It operates a state-of-the-art research and development center in Rohtak, Haryana, and production facilities in Gurgaon and Manesar. MSIL holds a 56.2% ownership stake in Suzuki Motor Corporation, a Japanese car and motorcycle manufacturer. With over 50% of the domestic car market, Maruti Suzuki is the largest passenger car company in India. The company’s consistent dedication to innovation and customer satisfaction is evident in its diverse vehicle models, ranging from hatchbacks to UVs, vans, and light commercial vehicles.

Industry Outlook:

By 2030, India is expected to lead the world in shared mobility, creating opportunities for electric and autonomous vehicles. To reduce pollution, there is increasing emphasis on electric vehicles. The Indian government aims to have 30% of all new car sales in India be electric by 2030. The Indian passenger automobile market was valued at US$32.70 billion in 2021 and is projected to grow at a compound annual growth rate (CAGR) of more than 9% from 2022 to 2027, reaching a value of US$54.84 billion. The global EV market is anticipated to grow fivefold, from an estimated US$250 billion in 2021 to US$1,318 billion by 2028. In April 2024, a total of 23,58,041 units of passenger vehicles, two-wheelers, three-wheelers, and quadricycles were produced. In FY24, 2,84,34,742 units of passenger cars, commercial vehicles, two-wheelers, three-wheelers, and quadricycles were produced. The combined output of three-wheelers, two-wheelers, quadricycles, passenger vehicles, and commercial vehicles was 7.13 million units in the third quarter of 2023–2024.

Domestic Sales:

The company had an exceptionally busy year in FY 2023–2024. With the launch of new products, the company’s annual sales volume reached a record high of 1,793,644 units, comprising 33,763 light commercial vehicles and 1,759,881 passenger vehicles. The introduction of new models contributed to the company’s faster growth compared to competitors. While the competition grew by 8% during the same period, the company’s PV sales volume increased by 9.5% in FY 2023–2024. Additionally, the introduction of new SUVs helped the company achieve several milestones in 2018, maintaining brand excitement throughout the year. The company remains the most preferred brand, with 10 of the top 15 models in the nation.

Total Sales

Market Number Growth % % Of Total Sales
Domestic 451,308 3.8% 86.5%
Exports 70,560 11.65 13.5%
Total Sales 521,868 4.8% 100%

Domestic Sales:

Segment Number Growth % % Of Domestic Sales
Mini 30,816 -23.7% 6.8%
Compact 189,208 -10.3% 41.9%
Mini + Compact 220,024 -12.4% 48.8%
Mid-Size 2,169 -42.2% 0.5%
UVs 163,130 29.1% 36.1%
Vans 33,791 3.4% 7.5%
Lcv 7,946 -1.6% 1.8%
Sales to OEM 24,248 91.3% 5.4%
Domestic Sales 451,308 3.8% 100%

Q1FY25 Financials Performance:

MSIL’s Q1FY25 revenue increased by 9.8% YoY to ₹33,875cr. This growth was fueled by a 4.8% YoY increase in sales volume to 5,21,868 vehicles. Additionally, the 4.8% YoY rise in the average selling price (ASP) contributed to revenue growth. The utility vehicle (UV) segment saw the majority of growth in the domestic PV industry, with UV sales increasing by 29.1% YoY, reflecting a shift in consumer preferences. Export sales also grew, reaching 70,560 units, up 11.6% YoY, driven by rising demand from the Middle East, Africa, and Latin America. EBITDA increased to ₹4,502cr (+50.9% YoY), with the EBITDA margin growing by 360bps YoY to 13.3%, thanks to cost-cutting measures, strong operational leverage, and a decrease in commodity prices. Consequently, net profit rose by 46.9% YoY to ₹3,650cr.

Q1FY25 Financials Performance:

Particulars Q1FY25 Q1FY24 YoY % Q4FY24 QoQ %
Revenue 33,875 30,845 9.8 36,698 (7.7)
EBITDA 4,502 2,983 50.9 4,726 (4.7)
EBIT 3,771 2,236 68.7 3,997 (5.6)
PBT 4,689 3,190 47.0 4,998 (6.2)
TAX 1,039 705 47.4 1,120 (7.2)
PAT 3,650 2,485 46.9 3,878 (5.9)
EPS 116.1 82.3 41.1 123.3 (5.9)

Volume Increase and Sales Mix:
Total of 220,024 units were sold in the Mini + Compact car segments, representing a 12.4% YoY decline. The UV (Utility Vehicle) segment, however, showed strong growth, with sales increasing by 29.1% YoY to 163,130 units. This reflects the growing preference for SUVs in the Indian market. Sales of Vans increased by 3.4% YoY to 33,791 units, while LCV (Light Commercial Vehicle) sales slightly declined by 1.6% YoY to 7,946 units.

Key Updates:

• Maruti Suzuki India Limited sold 179,228 units in total in June 2024. The total sales for the month were 31,033 units exported, 8,277 units sold to other OEMs, and 139,918 units sold domestically.
Maruti Suzuki India Limited sold 179,228 units overall in June 2024 as opposed to 159,418 units in June
• Maruti Suzuki India: June output totalled 133,095 units, down from 137,133 units in May. YoY
Maruti Suzuki (MSIL) surpassed 2 million automobile deliveries via railways, speeding past a green milestone.
Maruti Suzuki (MSIL) surpassed 2 million automobile deliveries via railways, speeding past a green milestone.
Maruti Suzuki India Q3 Net Profit: ₹3760 crore compared to ₹2550 crore year-over-year in June 2024. Revenue 35779 crore versus 32535 crore year-over-year.
• Commencing with its maiden SUV launch in Japan, Maruti Suzuki India has started exporting 1,600 units of its ‘Made-in-India’ SUV Fronx.
When computing long-term capital gains on debt mutual funds, Maruti Suzuki India would have to increase the provision for deferred tax liability by about 28.50 billion because the indexation benefit was removed.

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

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Navneet Education Q1FY25: Exceptional Gains Boost Profits Amid Sector Challenges
Research, Research Reports, Result Updates - August 22, 2024

Navneet Education Q1FY25: Exceptional Gains Boost Profits Amid Sector Challenges

Navneet Education Q1FY25: Exceptional Gains Boost Profits Amid Sector Challenges

About stock

Navneet Education Limited (NEL) is a prominent player in the Indian education sector with over 60 years of experience. The company specializes in syllabus-based content for both print and digital mediums and is a major manufacturer of stationery products, both for domestic and international markets. NEL’s portfolio includes non-curriculum books, supplementary curriculum books, and CBSE textbooks, alongside a wide array of stationery products.

Financial Performance Q1FY25

The company reported a modest revenue increase of 0.8% to INR 794 crores in Q1 FY25 compared to the previous year.EBITDA grew by 5% to INR 226 crores, resulting in an improved EBITDA margin of 28.5%. While PBT surged to INR 798 crores due to exceptional gains from the sale of a stake in K12 Techno Services, the normalized PBT margin excluding these gains also improved from 25.5% to 28.5%. Consequently, PAT skyrocketed to INR 742 crores, marking a 310.5% increase year-on-year. The exceptional items significantly inflated the PBT and PAT margins to 100.4% and 93.5%, respectively, compared to the previous quarter 27.4% and 22.9%.

Future Outlook

Navneet Education Limited is expected to continue benefiting from its strategic initiatives, with a focus on expanding product offerings in both domestic and export markets. The company aims for a 12%-15% growth in domestic revenue and 12%-14% EBIT margins in the stationery segment for FY25. The ongoing investments in R&D and infrastructure, coupled with a favorable market position, are anticipated to drive future growth.

Q1FY25 Segment wise performance

Publication stationary:
The publication business experienced a revenue decline in Q1FY25 of approximately 3% to ₹417 crores compared to ₹431 crores in the previous quarter. This contraction was attributed to curriculum reductions in certain grades by state boards, necessitating product redesign. However, absolute sales volume showed a slight increase.

Domestic stationary:
The domestic stationery business recorded a marginal revenue decline to ₹135 crores in Q1FY25 due to product repricing following a drop in raw material prices. While volume growth was observed, margins were impacted by high-cost inventory from previous quarters. Encouragingly, there are early signs of raw material price stabilization.

Export stationary:
The exports of the stationery business demonstrated growth, increasing to ₹241 crores from ₹214 crores quarter on quarter.This expansion was driven by a broader product range and tapping into diverse market segments. The company remains committed to quality, design, and customer engagement in this segment.

Market Opportunities

The textbook market, currently estimated at ₹4,000 crores, is projected to grow to ₹8,000-₹9,000 crores in the next 5-6 years due to increasing school affiliations. With the number of affiliated schools expected to rise from 26,000 to nearly 40,000, the company sees significant opportunities.

Digital Product Development
There is an emphasis on blended offerings combining physical books with digital tools. Recognizing the increasing digital usage in K12 education, especially in CBSE and ICSE schools, the company plans to develop future digital products that enhance physical book sales through integrated digital features.

Challenges and Market Dynamics
The Indiannica acquisition underperformed, and management turnover impacted growth. The company has shifted its strategy to develop Navneet-branded textbooks in Maharashtra and Gujarat, leading to a better understanding of the CBSE market. Future plans include publishing supplementary books for the CBSE curriculum.
Anticipated curriculum changes in Maharashtra and Gujarat, expected to commence next academic year, pose a challenge.However, management remains optimistic about future growth despite these headwinds.

Concall notes

During the Q1 FY25 earnings call, Navneet Education Limited reported a modest increase in overall revenue and a moderate rise in EBITDA compared to the same period last year. The company’s profit witnessed a significant surge, primarily driven by exceptional gains from the sale of its stake in K12 Techno Services. Despite these positive financial indicators, the publication segment faced a decline in revenue, attributed to the reduction of curriculum content by state boards, which impacted product redesigns. The domestic stationery segment also saw a marginal de-growth due to price adjustments following a decrease in raw material costs. However, the export stationery business showed resilience, recording healthy growth due to an expanding product portfolio and increased demand in international markets.

Navneet is strategically focusing on developing new educational content formats and digital learning tools, aiming to align its products with the evolving needs of students in a rapidly changing educational landscape. These efforts are part of the company’s broader strategy to adapt to market demands and maintain its leadership in the education sector.
However, the company is facing some challenges, notably the underperformance of its Indiannica acquisition, which has not met expectations. Additionally, anticipated curriculum changes pose a potential risk to the publication segment’s revenue. Despite these hurdles, the management remains optimistic about the future, citing the high growth potential in the textbook market and the positive impact of ongoing strategic initiatives. The leadership expressed confidence in navigating these challenges and achieving sustainable growth in the upcoming quarters.

 

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

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Sensex Jumps 450 Points Amid Renewed US-China Trade Hopes and Strong Sectoral Buying
Research, Research Reports, Result Updates - August 22, 2024

Coforge's Strategic Acquisition of Cigniti to Fuel $2B Revenue Ambition

Coforge’s Strategic Acquisition of Cigniti to Fuel $2B Revenue Ambition

About the stock

Coforge Ltd. operates as an IT solutions provider with a focus on digital transformation and technology services. Its business model revolves around offering consulting, implementation, and support services in areas such as cloud computing, cybersecurity, analytics, and enterprise applications. The company provides solutions in product engineering, digital solutions, data analytics, artificial intelligence/machine learning (AI/ML), cloud, business process re-engineering, digital process automation, and Low Code/No Code platforms.

Coforge Q1 revenue up 8.1% YoY

In Q1FY25, Coforge Ltd. reported consolidated financial results that showed modest growth and improved profitability. The company’s revenues increased by 1.8% QoQ, reaching INR 24,008 million. Coforge’s EBITDA margin saw a substantial improvement, rising to 17.02%, which represents a 14.02% increase YoY. The company reported a PAT of INR 1,332 million for Q1. However, when adjusted, the consolidated PAT reached INR 2,285 million, marking a substantial 28.2% growth compared to the same period in the previous year.

Robust Order Book

Coforge Ltd. demonstrated strong business momentum in Q1FY25, securing a robust total order intake of $314 million, marking the tenth consecutive quarter of over $300 million in new orders. The company signed two large deals and added 10 new logos to its client portfolio. Coforge’s order book for the upcoming 12 months grew to $1,070 million, representing a substantial 19.3% increase compared to the same period last year. The company maintained one of the lowest IT attrition rates in the industry at 11.4% (LTM). The company’s global workforce expanded to 26,612 employees as of June 30, 2024, reflecting a net addition of 1,886 people and a 7.6% sequential increase.

Acquisition of Cigniti Technologies

In May 2024, Coforge entered into a definitive Share Purchase Agreement to acquire a 54% stake in Cigniti Technologies Ltd. for approximately Rs. 2000 crore. This strategic acquisition is expected to support Coforge’s growth ambitions, potentially helping it reach $2 billion in revenue by FY27 and establish three new major verticals: Retail, Technology, and Healthcare. The Cigniti acquisition is set to significantly boost Coforge’s presence in North America, with the company projecting a nearly 33% increase in revenue.
Coforge formed an alliance with Fiorano in May 24, launching a new offering that provides ISO 20022 Compliance as a Service. In March 2024, it also announced its multi-year strategic partnership with Carnival UK, for precision quality engineering & testing.

Strategic Partnerships

Coforge has recently formed two notable strategic partnerships. In May 2024, it joined forces with Fiorano to offer ISO 20022 Compliance as a Service. Earlier, in March 2024, the company entered into a multi-year agreement with Carnival UK, focusing on delivering precision quality engineering and testing services.

Consolidated Income Statement – Q1FY25 (INR Mn)

Particulars Q1 FY25 Q4 FY24 QoQ% Q1FY24 YoY%
Gross Revenues 24008 23585 1.8% 22210 8.1%
Gross Profit 7911 8034 -1.5% 6808 16.2%
Selling / General and Administration 3625 3561 1.8% 3264 11.1%
Adj. EBITDA 4286 4473 -4.2% 3545 20.9%
Cost of ESOPS 199 22 -10.5% 216 -8.0%
EBITDA 4087 4251 -3.8% 3316 23.3%
Depreciation and Amortization 815 846 -3.7% 757 7.7%
Other Income (net) -272 -452 -39.8% -152 78.9%
PBT (Excl. Transaction related expenses) 3000 2953 1.6% 2407 24.7%
Transaction Related expenses 953 96 889.0% 0  
$1 Bn Milestone celebration cost   0   165 -100.0%
Profit Before Tax 2047 2856 -28.3% 2242 -8.7%
Provision for Tax 654 564 16.0% 485 34.8%
Minority Interest 61 55 10.5% 104 -41.3%
Profit After Tax 1332 2237 -40.5% 1653 -19.4%
Adj. Profit After Tax* 2285 2334 -2.1% 1782 28.2%
Basic EPS 20.9 36.2 -42.2% 27 -22.6%
Adj Basic EPS 35.9 38.1 -5.9% 29.2 23.1%

 

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

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Adani Group Stocks Rally on SEBI Relief, Investors Watch Pending 22 Orders for Clarity
Research, Research Reports, Result Updates - August 21, 2024

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

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

About Stock:

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

Industry Overview:

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

Q1FY25 Performance Analysis:

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

Segment Wise Performance:

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

Segment-wise Profitability:

Particulars Q1FY25

(INR in Cr.)

 Q1FY24

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

Key Ratios:

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

 

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Strategic Partnerships Fuel One97’s Financial Turnaround

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Gautam Adani’s Freight Forwarding Foray: Challenging Global Logistics Giants
Research, Research Reports, Result Updates - August 21, 2024

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

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

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

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

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

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

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

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

Consolidated Financial Highlights: (Figures in Rs. Crs)

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

Operational Highlights:

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

Industry Overview:

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

Business Updates

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

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

 

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Strategic Partnerships Fuel One97’s Financial Turnaround

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Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures
Research, Research Reports, Result Updates - August 21, 2024

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

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

Company Overview

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

Industry Overview:

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

Challenges:

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

Future Outlook Expansion into Tier II and III Cities:

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

Q1FY25 Business Performance:

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

Adjusted Revenue                                                                                                                INR CR

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

Adjusted EBITDA                                                                                                                INR CR

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

Gross Order Value ( B2C Business)

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

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

Q1FY25

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

Highlights of the Business with New Annual Initiatives:

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

Financial Performance

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

Concall Highlights:

Financials Management:

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

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

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

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

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

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

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

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LTFH Q1FY24: Retail Portfolio Grows 31% YoY, Reaches ₹84,444 Cr
Research, Research Reports, Result Updates - August 20, 2024

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

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

Company Overview:

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

Q1FY25 Results Update:

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

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

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

  • Retail Disbursement: Retail disbursements stood at ₹14,839 Cr, showing a 33% YoY increase but a slight 1% quarter-over-quarter (QoQ) decrease.
  • Retail Book: The retail book grew to ₹84,444 Cr, a 31% YoY increase and 6% QoQ growth.
  • NIMs+Fees: Consolidated NIMs+Fees were at 11.08%, improving by 144 basis points YoY but declining by 17 basis points QoQ.
  • PAT: Consolidated PAT reached ₹686 Cr, demonstrating strong growth of 29% YoY and 24% QoQ.
  • Profitability Metrics: Consolidated RoA improved to 2.68%, up 55 basis points YoY and 49 basis points QoQ, while consolidated Return on Equity (RoE) increased to 11.58%, up 186 basis points YoY and 205 basis points QoQ.
Lending Business – Business wise book split
Segment (₹ Cr) Q1FY24 Q4FY24 Q1FY25 Y-o-Y (%)
Farmer Finance
Farm Equipment Finance 13125 13892 14204 8%
Rural Business Finance
Rural Group Loans & Micro Finance Loans 19743 24716 25887 31%
Urban Finance
Two-Wheeler Finance 9190 11205 12025 31%
Personal Loans 5995 6440 6667 11%
Home Loans 11274 14550 15690 39%
LAP 2801 3893 4272 53%
SME Finance 1779 3905 4471
Acquired Portfolio 367 1435 1229
Retail Finance 64274 80037 84444 31%
Real Estate Finance 4096 2337 2310 -44%
Infrastructure Finance 9939 3191 1963 -80%
Wholesale Finance 14035 5528 4273 -70%
Focused Business 78309 85565 88717 13%
De-focused 257 – – -100%
Total Book 78566 85565 88717 13%

Retail Disbursement Growth:

  • Overall: Retail finance disbursements totaled ₹14,839 Cr in Q1FY25, a 33% YoY increase but a 1% decrease QoQ.
  • Rural Business Finance: Grew by 28% YoY to ₹5,773 Cr.
  • Urban Finance: Showed the highest growth, increasing by 44% YoY to ₹6,043 Cr.
  • Farmer Finance: Increased by 8% YoY to ₹1,903 Cr, with a 24% QoQ growth.
  • SME Finance: Grew by 61% YoY to ₹978 Cr but saw a 19% decrease from Q4FY24.
Lending Business – Business wise disbursement split
Particulars (Rs Cr ) Q1FY24 Q4FY24 Q1FY25 Y-o-Y (%)
Farmer Finance
Farm Equipment Finance 1757 1530 1903 8%
Rural Business Finance
Rural Group Loans (JLG) 4240 5639 5659 28%
Micro Finance (JLG) 271 129 114
Urban Finance
Two-wheeler Finance 1726 2502 2621 52%
Personal Loans 1162 968 1178 1%
Home Loans 1072 1823 1656 55%
LAP 227 690 588
SME Finance 607 1213 978 61%
Acquired Portfolio 130 549 141 9%
Retail Finance 11193 15044 14839 33%
Infrastructure Finance 1040 320 175 -83%
Real Estate Finance 132 3 4 -97%
Wholesale Finance 1172 323 179 -85%
Total Disbursement 12365 15366 15019 21%

 

Retail Book Growth:

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

Asset Quality:

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

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PFC Withdrawals May Impact Zero-Coupon Bond Market
Research, Research Reports, Result Updates - August 20, 2024

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

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

Company Overview:

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

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

Industry Overview & Growth Drivers:

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

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

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

Key Drivers for Growth in Solar and Wind Segments:

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

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

Important government initiatives promoting growth include:

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

Q1FY25 Quarterly Results:

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

Sanctions and Disbursements:

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

Loan Book and Disbursement:

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

Key Financial Ratios:

Ratios 30, June 2024 31, Mar 2024 30, June 2024
Rate of Return on Loan Assets% 10.01%

 

 9.97%

 

 9.64

 
Percentage charged for borrowings % 7.78%

 

 7.81%

 

 7.83%

 
Spread of Interest% 2.23% 2.16% 1.81%
Margin of Net Interest (%) 3.29

 

 2.85%

 

 3.23

 
Ratio of Debt to Equity 5.83

 

 5.80

 

 6.35

 
CRAR (%) 20.11% 19.52%

 

 19.95%

 
EPS (Rs) 5.16

 

 1.43

 

 

 1.29

 

Net Non-Performing Assets (NPAs):

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

Future Outlook:

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

Key Policies Announced for FY24:

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

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Prestige Group Plans ₹42,000 Crore Housing Launches in FY26 Amid Real Estate Boom
Research, Research Reports, Result Updates - August 20, 2024

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

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

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

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

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

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

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

RELATIVE PERFORMANCE – Q O Q:

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

 

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

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

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

 

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

Asset Book: (Amt in Rs. Mn)

Type Q1 FY24 Q4 FY24 Q1 FY25
Sanction 7258 9777 7272
Disbursements 6843 8946 6804
Loan Book

1.       Salaried

2.       Non salaried

 126554 135134 137011
51.8 51.4 51.6
48.2 48.6 48.4
Mix of Loan Portfolio

1.       Home Loan

2.       Home Equity
76.9 74.7 74.3
23.1 25.3 25.7

ECL PROVISION (Amt in Rs Mn):

Particulars Jun 23 Mar 24 Jun 24
Gross Stage 3 6947 5516 5826
% portfolio Stage 3 5.5% 4.1% 4.3%
 ECL Provision  Stage 3 3571 33597 3600
 Net Stage 3 3376 1918 2226
Coverage ratio Stage 3 51.4% 65.2% 61.8%
Gross Stage 1 & 2 119607 129618 131185
% portfolio in Stage 1 & 2 94.5% 95.9% 95.7%
Total ECL Provision 5240 5179 5193

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

Profitability Ratios: (Amt in Rs. Mn)

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

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

Quarterly Performance Analysis:

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

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

 

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

Industry Overview:

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

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

Asset Quality:

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

ECL PROVISION (Amt in Rs Mn):

Particulars Jun 23 Mar 24 Jun 24
Gross Stage 3 6947 5516 5826
% portfolio Stage 3 5.5% 4.1% 4.3%
 ECL Provision  Stage 3 3571 33597 3600
 Net Stage 3 3376 1918 2226
Coverage ratio Stage 3 51.4% 65.2% 61.8%
Gross Stage 1 & 2 119607 129618 131185
% portfolio in Stage 1 & 2 94.5% 95.9% 95.7%
Total ECL Provision 5240 5179 5193

SECTOR WISE MOVEMENT (Amt in Rs. Mn):

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

 

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

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India’s Power Capacity Expands Significantly: From 305 GW to 476 GW Over Ten Years
Research, Research Reports, Result Updates - August 19, 2024

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

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

 

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

About the Stock:

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

Price Performance:

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

Industry Overview:

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

Q1FY25 Financial Performance Analysis:

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

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

Disbursements:

  Q1FY25

(INR in Cr.)

 Q1FY24

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

Sanctions:

  Q1FY25

(INR in Cr.)

 Q1FY24

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

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

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

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

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

Borrowings:

Particulars Q1FY25

(INR in Cr.)

 Q4FY24

(INR in Cr.)

 Q1FY24

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

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

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

Key Ratio & Analysis:

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

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

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

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

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

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

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

Future Outlook:

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

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

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

Conclusion

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

 

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