PORTFOLIO UPDATE!!!
1] KPIT TECH
It was expected all the IT companies to give a muted results this quarter but KPIT on the other hand has given really good results. Revenue has grown from 591cr to 745cr Y-o-Y and from 686cr Q-o-Q. The PAT has dropped this quarter due to higher tax and also a marginal fall in OPM due to salary hikes this quarter. The attrition for KPIT is quite low and the turnover ratio is also low. Being in a RnD sector the impact of Recession might not be as severe as it is expected on the large cap IT companies given the type of business they are in. Increased investments in Electric Vehicles will drive the topline for the company and operational efficiency will drive the bottom line. All in all good results.
Would add to my existing positions if there is a small correction or a consolidation. At 56PE this feels like a bit risky zone. Considering estimated Annual Revenue at 3000cr and EBITDA at 540cr, the 5yr avg EV/EBITDA multiple is at 19, which gives us a market cap of approx 10000cr. The price per share comes at 374rs. Also my DCF analysis shows estimated price per share at 348rs. Hence any correction towards 500-600 can be buying opportunity but it will be a momentum buy rather than a value buy.
2]KEI INDUSTRY
Personally my expectations were a bit high because of the amazing results by Polycab but KEI didn’t show the growth I expected. Revenue this quarter came at 1600cr and PAT was 107cr not much growth Q-o-Q but Y-o-Y growth is really good. Revenue has grown 18% Y-o-Y and PAT has grown 16% Y-o-Y. There was slight fall in margins but its very negligible. The Domestic Cable business showed good demand while the EHV segment which is mainly related to Infrastructure business which takes a hit during the monsoon has been quite low. Historically, Dec and Mar quarter is a strong quarter for KEI while the monsoon months are a bit muted.
Holding KEI till next quarter. Any major fall due to these muted results will be a buying opportunity.
3] INDIAN ENERGY EXCHANGE
Again a muted quarter due to monsoons muted demand but there is no degrowth. Revenue has fallen Y-o-Y but has been constant Q-o-Q. The stock price has also corrected significantly from 120 PE to 40 PE. It is still not clear what the future looks like but once Diwali starts we will see energy demand going up and trading volumes increasing on the exchange.
Will hold till the December quarter.
4] TATA CONSUMER
It has been a decent quarter for Tata Consumer. The volume growth has been really muted. There is actually some degrowth in UK business, while the foods and Coffee business have grew more than 20% but it is mainly price driven rather than volume driven. It is very crucial for the volumes to grow since price driven growth is not sustainable in the long term. Yet the Revenue has increased 10% Y-o-Y and PAT has increased to 389cr from 286cr last year and 276cr last quarter.
I have no intention of selling this stock for atleast a year since now the growth is price driven but eventually when things get better which I hope they do, the volume growth will bring more sustainable growth in the long term.