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City Union Bank Quarterly Result Weekly -2

4 mins read
10 August 2023

Originally known as The Kumbakonam Bank Limited, City Union Bank was incorporated as a limited company on 31 October 1904. The bank was initially a regional bank in the Thanjavur District, Tamil Nadu.

Currently, City Union Bank has a strong network of 496 computerized branches and 1292+ ATMs which are spread across India.

In December 2006, Larsen & Toubro bought 10% of the bank. The bank celebrated its 110 years of service on 31st October 2014.

The entire introduction is a little broken. There needs to be a better flow going forward.

Results Highlight:

CUBK’s Net Interest Income (NII) for Q4FY23 was Rs. 514.3 crores, a slight increase over Q4FY22. For FY23, the NII increased by 13% to reach Rs. 2,163.0 crores. However, the Net Interest Margin (NIM) declined to 3.65% in Q4 FY23, mainly due to rising interest rates.

The bank’s Pre-Provision Operating Profit (PPOP) also declined in Q4FY23, primarily due to higher operating expenses. PPOP stood at Rs. 417.0 crores, down 16.2% QoQ and 5.2% YoY. On the positive side, the bank managed to control provisions, indicating asset quality improvement. Provisions decreased to Rs. 159.0 crores, down 29.2% QoQ and 7.0% YoY.

Net profit improved slightly to Rs. 218.0 crores, up 0.1% QoQ and 4.4% YoY. CUBK maintained its asset quality, with Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) declining in Q4FY23 compared to the previous quarters.

However, the bank faced challenges in deposits and advanced growth. Total Deposits increased by 4.8% QoQ and 9.9% YoY, while Total Advances grew by 2.2% QoQ and 6.8% YoY. The Current Account and Savings Account (CASA) ratio also showed weakness, falling below the bank’s 30% target.

Return on Assets (RoA) improved to 1.46% in FY23 compared to 1.35% in FY22, and Return on Equity (RoE) increased to 13.42% in FY23 from 12.31% in FY22.

Valuation and Outlook

City Union Bank (CUBK), the oldest private-sector bank in the country, reported weak results in Q4FY23. Despite the interest rate hike by the central bank, CUBK couldn’t capitalize on the opportunity like its peers. The bank’s profitability relied on recoveries from NCLT proceedings and Treasury gains in the first half of FY23.

The management expects growth in Advances and business in the second half of FY24, but they are currently more focused on recoveries than business expansion. Unlike peers targeting the retail segment for improved NIMs, CUBK plans no change in Advances composition in FY24.

There are indications of an elevated Cost-to-Income ratio in FY24 due to increased deposit costs and higher operating expenses. Non-Interest Income growth is not expected to be significant in FY24. The bank has appointed BCG consultancy for digital lending process enhancement.

Cautious view for CUBK in FY24 due to focus on MSME and gold loans, absence of new products, and other factors.

Key Concall Highlights

  1. The bank has made its underwriting process stricter in recent years.
  2. The approval rate for new customers decreased from 45-50% to 25% in FY23 but is expected to increase in the coming quarters.
  3. The bank’s loan composition remains unchanged, with the majority in the MSME segment (43%) and gold loans (25%).
  4. Management expects credit growth of 12-15% in FY24, skewed towards year-end.
  5. Slippages in FY23 were around 2.5-3% of total advances, resulting in a slippage ratio of 3.02%. The bank anticipates a reduction in the
  6. slippage ratio and a return to pre-COVID levels of non-performing assets (NPAs) in the next 4-5 quarters.
  7. Net interest margins (NIMs) may face pressure due to deposit repricing, potentially resulting in a cost-to-income ratio of 40%-42% in FY24.
  8. The bank aims to maintain a return on assets (RoA) of 1.5% in FY24.
  9. Profit growth challenges are expected in FY24 but will be compensated for by business growth and improved NPA recovery in the second half.
  10. The bank is not focusing on retail loan growth like its peers and will maintain its existing loan composition.
  11. NIMs are expected to decline by 10-15bps in FY24 due to deposit repricing.
  12. The bank had significant profits in FY23 from Treasury gains and NCLT recoveries. These profits may not be replicated in FY24. However, the bank expects compensation in the second half.

Click here to view the detailed report.

Read more about the other results declared in Q4
 
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City Union Bank Quarterly Result Weekly

4 mins read
10 August 2023

Originally known as The Kumbakonam Bank Limited, City Union Bank was incorporated as a limited company on 31 October 1904. The bank was initially a regional bank in the Thanjavur District, Tamil Nadu.

Currently, City Union Bank has a strong network of 496 computerized branches and 1292+ ATMs which are spread across India.

In December 2006, Larsen & Toubro bought 10% of the bank. The bank celebrated its 110 years of service on 31st October 2014.

The entire introduction is a little broken. There needs to be a better flow going forward.

Results Highlight:

CUBK’s Net Interest Income (NII) for Q4FY23 was Rs. 514.3 crores, a slight increase over Q4FY22. For FY23, the NII increased by 13% to reach Rs. 2,163.0 crores. However, the Net Interest Margin (NIM) declined to 3.65% in Q4 FY23, mainly due to rising interest rates.

The bank’s Pre-Provision Operating Profit (PPOP) also declined in Q4FY23, primarily due to higher operating expenses. PPOP stood at Rs. 417.0 crores, down 16.2% QoQ and 5.2% YoY. On the positive side, the bank managed to control provisions, indicating asset quality improvement. Provisions decreased to Rs. 159.0 crores, down 29.2% QoQ and 7.0% YoY.

Net profit improved slightly to Rs. 218.0 crores, up 0.1% QoQ and 4.4% YoY. CUBK maintained its asset quality, with Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) declining in Q4FY23 compared to the previous quarters.

However, the bank faced challenges in deposits and advanced growth. Total Deposits increased by 4.8% QoQ and 9.9% YoY, while Total Advances grew by 2.2% QoQ and 6.8% YoY. The Current Account and Savings Account (CASA) ratio also showed weakness, falling below the bank’s 30% target.

Return on Assets (RoA) improved to 1.46% in FY23 compared to 1.35% in FY22, and Return on Equity (RoE) increased to 13.42% in FY23 from 12.31% in FY22.

Valuation and Outlook

City Union Bank (CUBK), the oldest private-sector bank in the country, reported weak results in Q4FY23. Despite the interest rate hike by the central bank, CUBK couldn’t capitalize on the opportunity like its peers. The bank’s profitability relied on recoveries from NCLT proceedings and Treasury gains in the first half of FY23.

The management expects growth in Advances and business in the second half of FY24, but they are currently more focused on recoveries than business expansion. Unlike peers targeting the retail segment for improved NIMs, CUBK plans no change in Advances composition in FY24.

There are indications of an elevated Cost-to-Income ratio in FY24 due to increased deposit costs and higher operating expenses. Non-Interest Income growth is not expected to be significant in FY24. The bank has appointed BCG consultancy for digital lending process enhancement.

Cautious view for CUBK in FY24 due to focus on MSME and gold loans, absence of new products, and other factors.

Key Concall Highlights

  1. The bank has made its underwriting process stricter in recent years.
  2. The approval rate for new customers decreased from 45-50% to 25% in FY23 but is expected to increase in the coming quarters.
  3. The bank’s loan composition remains unchanged, with the majority in the MSME segment (43%) and gold loans (25%).
  4. Management expects credit growth of 12-15% in FY24, skewed towards year-end.
  5. Slippages in FY23 were around 2.5-3% of total advances, resulting in a slippage ratio of 3.02%. The bank anticipates a reduction in the
  6. slippage ratio and a return to pre-COVID levels of non-performing assets (NPAs) in the next 4-5 quarters.
  7. Net interest margins (NIMs) may face pressure due to deposit repricing, potentially resulting in a cost-to-income ratio of 40%-42% in FY24.
  8. The bank aims to maintain a return on assets (RoA) of 1.5% in FY24.
  9. Profit growth challenges are expected in FY24 but will be compensated for by business growth and improved NPA recovery in the second half.
  10. The bank is not focusing on retail loan growth like its peers and will maintain its existing loan composition.
  11. NIMs are expected to decline by 10-15bps in FY24 due to deposit repricing.
  12. The bank had significant profits in FY23 from Treasury gains and NCLT recoveries. These profits may not be replicated in FY24. However, the bank expects compensation in the second half.

Click here to view the detailed report.

Read more about the other results declared in Q4
 
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City Union Bank Quarterly Result Update

4 mins read
2 June 2023

Originally known as The Kumbakonam Bank Limited, City Union Bank was incorporated as a limited company on 31 October 1904. The bank was initially a regional bank in the Thanjavur District, Tamil Nadu.

Currently, City Union Bank has a strong network of 496 computerized branches and 1292+ ATMs which are spread across India.

In December 2006, Larsen & Toubro bought 10% of the bank. The bank celebrated its 110 years of service on 31st October 2014.

The entire introduction is a little broken. There needs to be a better flow going forward.

Results Highlight:

CUBK’s Net Interest Income (NII) for Q4FY23 was Rs. 514.3 crores, a slight increase over Q4FY22. For FY23, the NII increased by 13% to reach Rs. 2,163.0 crores. However, the Net Interest Margin (NIM) declined to 3.65% in Q4 FY23, mainly due to rising interest rates.

The bank’s Pre-Provision Operating Profit (PPOP) also declined in Q4FY23, primarily due to higher operating expenses. PPOP stood at Rs. 417.0 crores, down 16.2% QoQ and 5.2% YoY. On the positive side, the bank managed to control provisions, indicating asset quality improvement. Provisions decreased to Rs. 159.0 crores, down 29.2% QoQ and 7.0% YoY.

Net profit improved slightly to Rs. 218.0 crores, up 0.1% QoQ and 4.4% YoY. CUBK maintained its asset quality, with Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) declining in Q4FY23 compared to the previous quarters.

However, the bank faced challenges in deposits and advanced growth. Total Deposits increased by 4.8% QoQ and 9.9% YoY, while Total Advances grew by 2.2% QoQ and 6.8% YoY. The Current Account and Savings Account (CASA) ratio also showed weakness, falling below the bank’s 30% target.

Return on Assets (RoA) improved to 1.46% in FY23 compared to 1.35% in FY22, and Return on Equity (RoE) increased to 13.42% in FY23 from 12.31% in FY22.

Valuation and Outlook

City Union Bank (CUBK), the oldest private-sector bank in the country, reported weak results in Q4FY23. Despite the interest rate hike by the central bank, CUBK couldn’t capitalize on the opportunity like its peers. The bank’s profitability relied on recoveries from NCLT proceedings and Treasury gains in the first half of FY23.

The management expects growth in Advances and business in the second half of FY24, but they are currently more focused on recoveries than business expansion. Unlike peers targeting the retail segment for improved NIMs, CUBK plans no change in Advances composition in FY24.

There are indications of an elevated Cost-to-Income ratio in FY24 due to increased deposit costs and higher operating expenses. Non-Interest Income growth is not expected to be significant in FY24. The bank has appointed BCG consultancy for digital lending process enhancement.

Cautious view for CUBK in FY24 due to focus on MSME and gold loans, absence of new products, and other factors.

Key Concall Highlights

  1. The bank has made its underwriting process stricter in recent years.
  2. The approval rate for new customers decreased from 45-50% to 25% in FY23 but is expected to increase in the coming quarters.
  3. The bank’s loan composition remains unchanged, with the majority in the MSME segment (43%) and gold loans (25%).
  4. Management expects credit growth of 12-15% in FY24, skewed towards year-end.
  5. Slippages in FY23 were around 2.5-3% of total advances, resulting in a slippage ratio of 3.02%. The bank anticipates a reduction in the
  6. slippage ratio and a return to pre-COVID levels of non-performing assets (NPAs) in the next 4-5 quarters.
  7. Net interest margins (NIMs) may face pressure due to deposit repricing, potentially resulting in a cost-to-income ratio of 40%-42% in FY24.
  8. The bank aims to maintain a return on assets (RoA) of 1.5% in FY24.
  9. Profit growth challenges are expected in FY24 but will be compensated for by business growth and improved NPA recovery in the second half.
  10. The bank is not focusing on retail loan growth like its peers and will maintain its existing loan composition.
  11. NIMs are expected to decline by 10-15bps in FY24 due to deposit repricing.
  12. The bank had significant profits in FY23 from Treasury gains and NCLT recoveries. These profits may not be replicated in FY24. However, the bank expects compensation in the second half.

Click here to view the detailed report.

Read more about the other results declared in Q4
 
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Carysil Ltd Quarterly Result Update

4 mins read
2 June 2023

The Acrysil Group was founded in India in 1989, by Ashwin M. Parekh. We produced our first kitchen sink with a technical collaboration with Schock & Co., Germany – an established world leader. 30 years later his son, CMD Chirag A. Parekh, has led Acrysil into becoming one of the largest producers of quartz kitchen sinks in the world, under its brand Carysil.

The ‘CARYSIL’ brand represents a remarkable combination of innovative design, distinctive style, and aesthetic appeal. It aims to capture customers with its unique and eye-catching appearance, while also instilling pride and prestige in those who own its products. The brand’s ultimate goal is to establish Acrysil as an unrivaled leader and the ultimate destination for all your kitchen product needs.
CARYSIL Quartz Sinks have loyal customers in more than 30 countries worldwide. This includes prominent markets such as the USA, UK, Germany, France, Canada, China, the Far East, and Gulf Countries. To further solidify its presence in European markets, Acrysil has established a wholly owned subsidiary called Acrysil GmbH in Germany.
Building upon the success of CARYSIL Quartz Sinks, Acrysil has ventured into other product categories. These include Stainless Steel Sinks, Faucets, Food Waste Disposers, and a range of Kitchen Appliances including Hobs & CookTops, Ovens, Wine Chillers, and Dishwashers. This expansion demonstrates Acrysil’s commitment to diversification and meeting diverse customer needs.
Result Highlights

Carysil Ltd. reported a revenue growth of 5.6% quarter-on-quarter (QoQ) and 4.8% year-on-year (YoY) to Rs. 145.6 crores in Q4FY23, slightly beating market expectations of Rs. 141.8 crores. However, the quartz sink business revenue declined by 29.0% in FY23 due to a 20.9% decrease in volume caused by inventory destocking. The EBITDA stood at Rs. 26.2 crores in Q4FY23, up 4.9% QoQ but down 7.0% YoY, surpassing street estimates of Rs. 25.6 crores. The EBITDA margin contracted to 18.0% in Q4FY23, down 13 basis points (bps) QoQ and 228 bps YoY, but was in line with market expectations. The company’s net profit after tax (PAT) declined to Rs. 12.1 crores in Q4FY23 compared to Rs. 16.5 crores in Q4FY22, with a PAT margin of 8.3% compared to 11.9% in Q4FY22. The company recommended a final dividend of Rs. 2.0 per share.

Valuation and Outlook

Carysil Ltd. reported a solid revenue growth of 22.7% YoY to Rs. 593.9 crores in FY23, surpassing its target of Rs. 500 crores. However, the longer destocking period for quartz sinks affected the company’s EBITDA margins. The company remains positive about restoring its margins to around 20% through revenue growth, product mix improvement, lower freight costs, and stable foreign exchange rates. The ongoing destocking process and increased marketing expenses for the domestic business will be monitored closely. Carysil expects strong demand for quartz sinks and healthy order inflow for its export business in FY24. Expansion of steel sink capacity, doubling orders for quartz sinks from IKEA, and acquiring new customers will drive revenue growth and help achieve the target of Rs. 1,000 crores in FY25.

Key Concall Highlights

  1. Carysil Ltd. aims to surpass Rs. 1,000 crores in revenue in FY25, with domestic business contributing 25-30%.
  2. The company renewed a $68 million order with Karran Inc for quartz kitchen sinks in the USA.
  3. Demand is recovering in the US and UK markets, but slower in Europe.
  4. Carysil expanded its domestic dealership network from 1,500+ to 3,100+.
  5. Steel sink manufacturing capacity doubled to 180,000 units per year, generating Rs. 80-90 crores.
  6. The greenfield project for the Appliances division experienced delays, with commercial production expected in September 2023.
  7. A subsidiary, Carysil FZ-LLC, was incorporated in the UAE to cater to the GCC market.
  8. The company acquired a 70% equity share of Tap Factory Ltd. in the UK to strengthen its position in the Kitchen and Bathroom Brassware market.
  9. April revenue was impacted by SAP implementation, but the company expects 15-20% revenue growth in FY24.
  10. Capex for FY23 was Rs. 60 crores, and gross debt stood at Rs. 222 crores.
  11. Sales volume: 5.14 lakh units (Quartz Sink), 1.08 lakh units (Stainless Steel sink), and 28,895 units (Kitchen Appliances).
  12. Destocking of quartz sinks affected sales volume this quarter.
  13. The company expects to reach a 20% EBITDA margin with reduced freight costs, stable foreign exchange rates, and a change in product mix.

Click here to view the detailed report.

Read more about the other results declared in Q4
 
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Greenlam Industries Ltd

4 mins read
2 June 2023

A major and dominant brand in the home building material space, with a strong presence in product segments like laminates and veneer, Greenlam Industries Ltd. (GIL) products have many uses in our daily lives . GIL, now gearing up to enter the plywood and particle board space, has the potential to do a profit of Rs. 250 crores and the company’s cash flow can grow at a CAGR (Compounded Annual Growth Rate) of 27% till FY27.

Confident Management

The management is confident of growing quickly and securely. The management expects to speed up the growth achieved in the last few decades in just the next few years. GIL achieved very good results in the last seven years from its existing business. Management believes that the time has come to extrapolate this capability across additional revenue engines. Today’s GIL is engaged in the manufacturing of laminates and veneers, which addresses a cumulative market of Rs. 11,000 crores, but with the entry in the plywood and particle board, GIL is expected to address a market size of nearly Rs. 46,000 crores.

All set for Greenlam 2.0!

Post the capital expenditure planned into production, we believe that the Greenlam brand will become larger, more profitable, and will have more sustainability across market cycles. Closer access to ports along with integrated manufacturing plants (laminate + compact laminates) will help them manage the supply chain more efficiently. Moreover, the entry of multinational companies like IKEA in the Indian furniture market will increase the thrust of particle board made furniture. This is because 90% of IKEAs home furniture products are made of particle board.

Triggers Ahead…

Dani family, promoters of Asian Paints, buys a 4.9% stake in Greenlam at Rs. 309 per share through preferential allotment which increases their stake to just shy of 10%. This is a very important point as they know all the things needed for creating a very successful and a big brand. GIL is one of the best proxies to play the real-estate cycle. New capex (capital expenditure) plan will lead to good growth in revenues.

Opportunities Galore

India’s plywood sector is at an inflection point. Thanks to the high demand of particle board products, this industry is on a positive trajectory. There is a trend towards formalisation. The market share of unorganised players is declining and that of organised branded players is rising. Price sensitivity is declining and consumers are willing to pay more for superior quality. In line with global benchmarks there is an attractive headroom in enhancing product quality standards. More consumers seek to buy all their surface and substrate products from a single brand and retail outlet.

Taking all of the above to consideration, we recommend a “Buy” on GIL with a price target of Rs.435.

The creator of WatchGPT, Hidde van der Ploeg, announced on Twitter that the software is now accessible on the App Store, including in India. From their watch screen, users may utilize the app to communicate with ChatGPT and share their responses via SMS, email, and social media. Nevertheless, it requires iOS 13.0 or later-running smartphones, and the download size is 2.6MB.

Users of Apple Watch can now receive longer produced messages in addition to fast responses without having to type anything. The Apple App Store offers the WatchGPT app for download in English, Dutch, French, and Spanish.

Also, the developer of WatchGPT has disclosed planned enhancements to the application, such as the choice to utilize a personal API key, access history, and the standard capability to adhere to vocal input. To improve the user experience, the app will also enable responses to be read aloud by the app itself.

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Invest in HFCs bet on PNB Housing Finance Ltd

2 mins read
30 May 2023

With improved profitability and entry in the affordable housing segment makes PNB Housing Finance Ltd. (PNB HFL) a good investment option. Among the housing finance companies (HFCs), PNB HFL has access to diversified source of funds and better asset quality. PNB HFL is promoted by Punjab National Bank and is a registered Housing Finance Company with National Housing Bank (NHB). We have arrived at a target price of Rs. 543 with a “Buy” rating.

What’s in the making?

PNB HFL recently successfully completed rights issue in May 2023 and raised funds to the tune of Rs. 2,493.76 crores, which in turn helped the to support future growth while maintaining prudent capitalisation. There has been an improvement in the asset quality, which is evident by the decline in Gross and Net NPA (Non-performing Assets). With a sharp drop in both GNPA (down 4.30% Year on Year basis) and NNPA (down 2.30% Year on Year) was supported by write-offs, resolutions, rundown and accelerated prepayments in the corporate book.

At the same time, PNB HFL increased its focus towards the affordable housing segment since Q4FY23 and disbursed around Rs. 137 crores via dedicated affordable housing branches. The Company expect to see good traction from the affordable segment in the coming quarters. The company has increased its lending rates by 0.30% in the March quarter whose impact will be seen in Q1FY24. The company has shifted its focus on the retail business over the corporate business and can maintain GNPA under control.

The Way Forward…
The company’s gradual shift to focus on profitability along with maintaining stable asset quality has been seen in the performance of the company. Also, the company has been able to achieve the highest retail disbursement and loan assets as an outcome of the ongoing efforts to build the retail business. The management has guided that there shall be disbursement growth of about 22%, primarily in the prime and affordable segment in the next 2-3 years. These factors will play out positively for the company in the foreseeable future.

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Aditya Birla Fashion and Retail Ltd Quarterly Result Update

3 mins read
26 May 2023

Aditya Birla Fashion and Retail Ltd. (ABFRL) emerged after the consolidation of the branded apparel businesses of Aditya Birla Group comprising ABNL’s Madura Fashion division and ABNL’s subsidiaries Pantaloons Fashion and Retail (PFRL) and Madura Fashion & Lifestyle (MFL) in May 2015. Post the consolidation, PFRL was renamed Aditya Birla Fashion and Retail Ltd. Aditya Birla Fashion and Retail Limited is part of a leading Indian conglomerate, The Aditya Birla Group.

Result Highlights

Aditya Birla Fashion & Retail Ltd. (ABFRL) achieved a strong 26.2% year-on-year growth in Q4FY23, reaching Rs. 2,879.7 crores in revenue. This growth was primarily driven by the Madura segment, which grew by 23.6% YoY, and Pantaloons, which grew by 18.2% YoY. The company’s expansion efforts, including adding over 500 stores in FY23, along with robust retail sales and an enhanced omnichannel presence, contributed to the positive results. However, the company faced challenges due to lower sales after Diwali and negative operating leverage, leading to a decline in EBITDA of 50.4% QoQ and 42.2% YoY. The company also reported a higher-than-expected loss of Rs. 194.5 crores. ABFRL’s growth was driven by its offline expansion strategy, with the addition of 104 net stores in Q4FY23. Additionally, the company made a significant acquisition of TCNS Clothing Company Limited to strengthen its ethnic wear portfolio.

Valuation and Outlook

ABFRL’s revenue growth in Q4FY23 exceeded market expectations, mainly due to aggressive store expansion and a favorable base from the previous year. However, the company’s profit margin declined significantly, primarily due to weaker consumer spending and higher marketing costs. Concerns remain regarding the Pantaloons segment and the company’s debt and inventory levels for the next fiscal year. The performance of the recently acquired TCNS portfolio is also being closely watched. Despite short-term challenges, the apparel industry is expected to grow in the long term, driven by premiumization and a shift towards branded products.

Key Concall Highlights

  1. On May 5, 2023, Aditya Birla Fashion and Retail Limited (ABFRL) approved the acquisition of a 51% stake in TCNS Clothing Company Limited, marking one of the largest deals in the Indian fashion industry. The acquisition will be financed through a combination of debt and internal funds, with a borrowing of approximately Rs. 700 crores – Rs. 800 crores.
  2. ABFRL’s management aims to focus on expanding their existing and new ethnic wear portfolio businesses in the coming years. They have committed Rs. 500 crores in equities, which will be raised over the next 12 to 18 months to support the growth of acquired or smaller businesses.
  3. The company’s revenue targets have surpassed their previous five-year plan, with four brands generating revenue between Rs. 1,500 crores and Rs. 2,500 crores. With the addition of Reebok and parts of the TCNS portfolio, the management anticipates having four to five brands earning between Rs. 1,000 crores and Rs. 2,000 crores.

The debt funding for this acquisition will be obtained from the capital market rather than bank loans, and it will be of a long-term nature

Click here to view the detailed report.

Read more about the other results declared in Q4
 
 
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Alkem Laboratories Ltd Quarterly Result Update

3 mins read
24 May 2023

Headquartered in Mumbai, India, Alkem Laboratories Limited is a leading Indian pharmaceutical company with global operations. The company is engaged in the development, manufacture and sale of pharmaceutical and nutraceutical products. The company produces branded generics, generic drugs, active pharmaceutical ingredients (APIs) and nutraceuticals, which it markets in India and international markets. With a portfolio of more than 800 brands in India, Alkem is ranked the fifth largest pharmaceutical company in India in terms of domestic sales. The company also has presence in more than 40 international markets, with the United States being its key focus market.

Results Highlights

Alkem reported revenue growth of 16.9% compared to the previous year and a decrease of 4.5% compared to the previous quarter. The revenue was in line with market expectations. In India, the business saw strong double-digit growth in major acute therapy segments. The US business grew by 9.2% due to currency depreciation. Alkem outperformed the market growth in both acute and chronic therapies.

The EBITDA increased by 4.8% compared to the previous year but decreased by 41.0% compared to the previous quarter. Gross margins contracted due to increased raw material costs. Profit after tax decreased by 37.5% compared to the previous year and 85.3% compared to the previous quarter, falling below market expectations. R&D investments decreased compared to the previous year.

Valuation and Outlook

In Q4FY23, Alkem experienced strong revenue growth, driven by its India business, which performed exceptionally well and surpassed industry benchmarks. The company also outperformed the market in both acute and chronic therapies. However, the US business faced pricing pressure, impacting its performance. Alkem has filed numerous applications with the USFDA and received approvals for several of them. The domestic sales are showing positive trends due to increased demand and market share gains from new launches. However, the US business remains uncertain due to ongoing price erosion in its portfolio.
Key Concall Highlights

  1. Alkem’s domestic business achieved strong growth, driven by the success of anti-infectives, gastrointestinal, and pain management therapies.
  2. The chronic segment also performed well, with double-digit growth in CNS, Anti-Diabetes, and Derma therapies.
  3. In the US market, revenues declined sequentially but the company plans to reduce price erosion and launch 15 new products in the coming year to support recovery.
  4. Trade generics accounted for a significant portion of sales, growing 5% in FY23.
  5. Enzene Biosciences, the biosimilars venture, had sales of Rs. 1,600 mn but incurred losses. The company expects it to break even in FY24. Alkem has a strong marketing representative force and plans to expand it further.
  6. The company has a Capex plan focused on biosimilars for FY24.
  7. Management aims for double-digit volume growth in the next fiscal year and plans to grow the US business despite price erosion.
  8. The tax rate for FY24 is expected to be between 14-15%.
  9. The shutdown of the St. Louis plant will lead to cost savings of approximately Rs. 2000 mn.

Click here to view the detailed report.

Read more about the other results declared in Q4
 
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Jubilant Foodworks Ltd Quarterly Result Update

4 mins read
24 May 2023

Jubilant FoodWorks believes in a world powered by simplicity, flavour and cutting edge technology. That’s why they are the first in the industry to incorporate AI, IoT and breakthroughs that push the envelope, to author food-tech innovations.

Trusted by global brands – Domino’s Pizza, Dunkin’(Coffee & Donuts) and Popeyes®(Fried Chicken), they curate the best blend of food & tech for our consumers. Taking this responsibility a step further, they have successfully launched 3 other homegrown brands – Hong’s Kitchen (Chinese Cuisine), ChefBoss(Ready -to-Cook) & Ekdum!(Biryani).

With current presence across India, Bangladesh & Sri Lanka; exclusive rights to expand operations in Nepal & Bhutan and recent investments in Domino’s Eurasia (Turkey, Russia, Azerbaijan and Geogia), they are a truly Global Indian MNC and one of the top 100 companies in India by market cap with 1500+ restaurants across 300+ cities.

Results Highlights

In Q4FY23, the company’s revenue grew by 8.0% YoY to Rs. 1,269.8 crores due to increased store additions and double-digit growth in orders. However, weak consumer sentiment resulted in a decrease in average ticket size and negative like-for-like (LFL) growth of 0.6%, impacting the company’s trend of double-digit revenue growth. Domino’s LFL average daily sales declined to Rs. 81,430 compared to Rs. 85,756 in Q3FY23.

The gross profit (GP) margin decreased by 166 basis points (bps) YoY to 75.6% in Q4FY23, mainly due to higher cheese prices. However, the company managed to limit the sequential decline to 14 bps through timely cost management, data-related efficiencies, and declining prices in other commodities.

The EBITDA fell by 13.0% QoQ and 14.0% YoY to Rs. 249.1 crores in Q4FY23, with the EBITDA margin declining to 19.6% from 24.6% in Q4FY22. This was primarily due to adverse operating leverage. Additionally, an impairment charge of Rs. 20 crores in its Sri Lankan subsidiary further impacted the profitability.

As a result, the net profit after tax (PAT) declined to Rs. 28.5 crores in Q4FY23, down 64.5% QoQ and 70.3% YoY. The PAT margin stood at 2.3% in the quarter compared to 8.2% in Q4FY22.
The board of directors has recommended a dividend of Rs. 1.2 per equity share.

Valuation and Outlook

Jubilant Foodworks Ltd. reported weak performance in Q4FY23 with subdued average daily sales (ADS) and negative like-for-like (LFL) growth of 0.6%. This was due to weaker consumer demand and a lack of price hikes. Margins were under pressure due to high inflation in wheat and dairy prices. The EBITDA margin declined to 19.6% in Q4FY23 compared to 24.6% in Q3FY23. The company’s revenue fell short of market expectations.

In the short term, caution is advised in the quick-service restaurant (QSR) space due to inflationary pressures and weak volume-driven growth. The company’s increased local marketing activities and store renovations are worth monitoring. However, in the long term, there is optimism about the business due to expansion plans for Popeyes, focus on LFL growth, increasing dine-in presence, and improving delivery time for higher volume-driven growth.

Key Concall Highlights

  1. Q4FY23 saw sustained margin pressure due to high cheese and dairy prices, along with weak consumer sentiment.
  2. Cheese prices are expected to remain elevated in the next two quarters.
  3. The company plans to strengthen its value offerings and improve its like-for-like (LFL) growth.
  4. Cost control and productivity enhancement initiatives are being implemented to protect margins.
  5. Domino’s added 54 new stores, but LFL growth declined to -0.6% in Q4FY23. Annual LFL and same-store sales growth were 8.9% and 6%, respectively, in FY23.
  6. Popeyes expanded to 13 stores, with one new opening in Chennai in Q4FY23.
  7. A 20-minute delivery service guarantee was launched in Bengaluru, a first in India and globally for Domino’s.
  8. The Bengaluru commissary is on schedule for commissioning, serving over 750 stores in the region.
  9. Plans to open 200-225 new Domino’s stores and 30-35 new Popeyes stores in FY24.
  10. No further price hikes indicated for Q1FY24 to protect gross profit (GP) margins.
  11. Capex is expected to be high due to investment in the Mumbai commissary.
  12. Other expenses increased due to higher marketing costs and changes in variable manpower mix.

Click here to view the detailed report.

Read more about the other results declared in Q4
 
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Titan generates 1200x shareholder wealth in the last 20 years!

3 mins read
23 May 2023

Who hasn’t heard of Titan? It just takes us down the memory lane. It’s a legacy that has been passed down over generations. Our grandfathers, as well as our children, everyone has their own story when it comes to their first Titan watch.

Titan has seen remarkable success over the last 20 years, generating 1200 times shareholder wealth. This is a staggering achievement, especially in a country where companies often struggle to deliver consistent growth and profits. The company’s success is a testament to its management’s vision and the dedication of its employees.

Titan has been a significant player in the Indian market since the 1980s, but it was only in the last two decades that the company really took off. Its focus on the jewellery segment and the launch of its brand, Tanishq, helped it gain a strong foothold in the market. The company’s foray into watches, eyewear, and accessories also contributed to its growth.

The growth story of Titan is impressive, but what’s even more fascinating is the potential of the company in the luxury segment. Recently, there has been a lot of talk about Titan’s partnership with the luxury brand, Hermès, and how this could be a game-changer for the company.

Hermès is one of the world’s most iconic luxury brands, known for its high-end fashion and accessories. The company has a strong brand identity and a loyal customer base, making it an attractive partner for any company looking to expand into the luxury segment.

For Titan, the partnership with Hermès could be a significant opportunity to take its business to the next level. By associating with such a prestigious brand, Titan can elevate its image and attract a new segment of high-end customers. This, in turn, could lead to higher sales and profits for the company.

Moreover, the association with Hermès could help Titan expand its presence in international markets, where it currently has a limited presence. This would open up new growth opportunities for the company and enable it to tap into the global luxury market.

In a nutshell, Titan’s success over the last 20 years is a remarkable achievement, and the company’s future looks bright. Its partnership with Hermès could be a significant opportunity to expand its business into the luxury segment and attract a new segment of high-end customers. With its strong brand image and loyal customer base, Titan is well-positioned to take advantage of this opportunity and continue its growth trajectory.

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