IndusInd reported a stable 1QFY19 with 24% YoY growth in earnings driven by 29% growth in loans and 20% growth in core fees. Core-PPOP grew 27% YoY during the quarter even as NII growth was a tad soft at 20% YoY. NIMs tapered by 5bps QoQ to 3.92% led by higher cost of funds and, in our view, also a reflection of bank's own efforts to improve the risk profile of the corporate portfolio before onboarding of BHAFIN's loan book. As BHAFIN acquisition closes towards 2HFY19, we expect IIB's margin trajectory to remain strong and loan portfolio to be well balanced and diversified. Opex growth was contained at 12% YoY due to slightly slower network expansion during the quarter (10 branches added). We...
Rising temperatures and promo offers alleviate the pain This summer, we conducted several channel checks surveying over 25 dealers across 15 of the most populous cities in India to track room AC sales during the season. The key takeaways are as follows: a) volumes improved sequentially during May-June'18 (vs. a 1520% YoY decline in Apr) as average temperatures increased in the second half of May and June (Exhibit 1); b) overall volumes were down 10-15% in 1QFY19, but the increasing share of inverter ACs and price hikes of 3-5% are likely to keep sales growth at -5 to 0%'; c) Voltas, Hitachi and Daikin fared better than competition as Samsung and Panasonic suffered, while Blue Star and Lloyd continued to maintain share in their territories; d) aggressive...
FY18 AR: Government remained the bigger beneficiary The GST Council's (perhaps unintentional?) u-turn on cigarette taxation immediately post GST rollout ensured that government retained a lion's share of ITC's value-addition. Over the past 5 years, 73% of the total value-added by ITC accrued to the government (value-added' defined as the value created by the economic activities of the company and its employees). ITC contributed a cumulative INR 1.5tn (USD 23bn) to the Exchequer over the past 5 years (FY14-18) during which period its own profits were just INR477bn (USD 7.3bn) - share of the government in the value-added by ITC is 3.5x the amount that accrued to the providers of...
In its FY18 Annual Report, Havells has strongly focused on the role IT has played across the company (250-member team working on 200+ projects in sales and R&D;) to boost not only its strategy to penetrate the home segment deeper but also its engagement with dealers and channel partners. In FY18, it forayed into the white goods segment by acquiring the consumer durables business of Lloyd (reported strong margin performance) and expanded its existing consumer durables basket by launching water purifiers and personal grooming products. Havells continues to generate significant free cash flows (INR 10bn in FY18 vs. INR 5.8bn in FY17, adjusted for the Lloyd acquisition). We continue to remain bullish with a...
Info Edge (INFOE) has announced a fresh USD 45mn investment in Etechaces Marketing (EMPL) along with Softbank, a global private equity fund. EMPL is the holding company of policybazaar.com and paisabazaar.com, the online marketplaces for insurance, credit cards and other financial products. Media reports indicate the possibility of an additional investment of USD 16mn that should lead to an increase in INFOE's stake in EMPL to 14.2% (JMFe). The latest round of funding implies USD 1bn+ enterprise valuation for EMPL, making it the second such company in INFOE's investment portfolio after Zomato. The transaction suggests INFOE's willingness to defend its stake in late-stage funding as well as an appetite...
Farm Equipment Segment Day : The Upside of Rise On 26 Jun'18, we attended M&M;'s Farm Equipment Segment (FES) day, highlighting the upside to Mahindra Rise strategy, which would be driven by an increase in a) the domestic tractor market share, b) revenue share from global operations, and c) revenue from the farm machinery category. The company intends to increase its domestic tractor market share from 43% to 50%, supported by the new affordable Trakstar brand, mechanisation of the horticulture segment and growth in the high horsepower (hp) segment. The company views its current global market share of <2%, favourably and as an opportunity to increase its...
Staring at single-digit growth in near term We met the Voltas management for an update on its growth outlook and the key takeaways are as follows: a) While unseasonal rains continued to play havoc, a favourable base and market share gains may help maintain single-digit volume growth. b) The company hiked prices by 2-5% from mid-May'18 to counter rising commodity prices and a depreciating INR (40-45% import content in room ACs). c) Consumer durables products under the Voltbek JV are slated to be launched during the festive season in 2HFY19; these would be imported in CKD form for the first 18 months. d) An increase in the share of rural electrification (RE)...
Investor Meet 2018: Simplicity is the best policy Some pearls of wisdom' from DMart's maiden post-IPO management meet: 1) It would be extremely foolish to not leverage the company's best-in-class cost efficiencies to offer the best prices to consumers and ring-fence them. If competitors cut prices, DMart will cut even more. 2) Inflation is good for consumer businesses as it provides higher value-growth' and lends some sort of leverage and margin support. 3) Retail opportunity in India is so large ($616bn in FY16, set to rise to $960bn by FY20; DMart is yet to set up shops in states that account for c.45% of the country's retail spends) that there is no point worrying about...
Suprajit Engineering (SEL) reported 4QFY18 revenues of INR 4.1bn (+13% YoY, +11% QoQ), driven by increase in aftermarket lamp business and domestic OE cable business, in line with increase in domestic 2W and 4W sales. Consol. EBITDA margin stood at 18.1% (flat YoY, +170bps QoQ), driven by higher sales of H7 lamps during 4QFY18. Capacity utilization at H7 line improved during 2HFY18 to c.40% (vs 25%, 2HFY17). Phoenix Lamps (PLD) EBITDA margin at 14% (FY18) was flat YoY, despite good aftermarket business as export subsidiaries (Luxlite and Trifa) faced headwinds in gaining back key customers and difficulty in passing-on raw material prices to OEs. After two years of no growth, management expects PLD to grow...
4QFY18 profit +51% QoQ as coal shortage related losses shrink NTPC's 4QFY18 adjusted net profit stood at INR 34bn (+5% YoY), a jump of 51% QoQ as losses from coal related shortage have halved to INR 2.5bn from 3Q18. As highlighted in our earlier reports, the issues related to coal shortages in newly-commissioned plants has been arrested as reflected in Mar-April'17 plant availability (PAF). We expect the coal situation to improve by 1H19 given efforts by NTPC and measures taken by Power, Coal and Railway Ministries (detailed report). The current scenario of rising power demand strengthens our long-term thesis of NTPC benefitting from capacity additions and improving PLFs. We expect...
