Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
790

IndusInd Bank q4 concall highlights -

Loan book on 31 Mar 23 at 2.89 vs 2.39 lakh cr

Retail : Corporate + commercial at 54:46, unchanged yoy

Loan book break down -

Vehicle Finance at 26 pc of book
Micro Finance at 11 pc of book
Other Retail at 17 pc of book
Large corporates @ 26 pc of book
Mid Corporates @ 16 pc of book
Small Corporates @ 5 pc of book

CV book at 75k cr
Microfin book at 32k cr ( second largest in India )

Deposits - 3.36 lakh cr

CASA at 1.34 vs 1.25 lakh cr ( at 40 pc vs 43 pc )
Borrowings at 11 pc vs 12 pc

Profitability-

NIMs-4.28 vs 4.20
Cost/Income- 44.9 vs 42.6
Fee Inc/Total assets- 1.9 vs 1.9 pc
RoA- 1.9 vs 1.51 pc
RoE- 15.2 vs 11.9 pc

Asset Quality-

GNPAs at 5826 cr@ 1.98 vs 2.06 pc
NNPAs at 1715 cr@ 0.59 vs 0.62 pc
Restructured book-0.85 vs 1.25 pc
Q4 Slippages-1600 cr

PCR+other provisions at 126 pc of GNPAs

Interesting Data point -
Top 20 deposits- 16 pc vs 23 pc three yrs back (must reduce further)

Distribution network -

Branches - 2606 vs 2265
BFIL branches - 3303 vs 2795
Vehicle Finance Outlets - 582 vs 816
ATMs - 2878 vs 2767

Q4 highlights -

Deposit growth at 15 pc yoy
NII at 4669 cr, up 17 pc yoy
Fees Income at 2154 cr, up 13 pc yoy
Op Profits at 3758 cr, up 11 pc yoy
NP - 2043 cr, up 46 pc yoy (due reduced provisions)

Avg Micro Finance loan value at 32k/customer

Low growth in Operating profits as the bank is trying to push more towards retail loans where initial cost of acquisition is high

Overall loan book growth driven by retail, small and mid corporates

Mid and small corporates, CV , Microfinance to be growth drivers going fwd

SMA 1 +2 book at 0.32pc of total book

Intend to make counter cyclical provisions ahead of stress formation

Over last 3 yrs, 73 pc of incremental deposits are retail !!!

Bank is Mkt leader in Gems and Jewellery loans too

Affluent banking growing at 25 pc CAGR

NRI deposit mkt share at 3.16 vs 1.6 pc in 2020

Aim to ramp up LAPs, affluent and affordable housing loans in a big way in next 3-4 yrs

Aim to double profits in next 3 yrs with RoA of 1.9-2.2 pc

Credit cost guidance for next 3 yrs - 1.1 to 1.3 pc / year

Believe that industry credit growth shall moderate in next 2-3 qtrs from elevated current levels

Bank aims to clock an avg of 18-23 pc credit growth for next 3 yrs

Expect NIMs in the range of 4.25-4.35 pc for next 3 yrs

Barring any accidents, macro economic slowdowns … looks like a 3X in 3 yrs kind of opportunity - due expected profitability jump by 2X, rest of the gains from re-rating

Disc - Holding, Biased

Not an investment advice

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791

RPG Lifeciences Q4 concall highlights -

Business breakdown -

Domestic formulations - 67 pc
International formulations - 18 pc
APIs - 15 pc

Manufacturing facilities - 03 ( 02 Formulations + 01 APIs plant )

Leader in Immunosuppressants in India

Among companies with < 1000 cr sales, RPG Life is no 1 in terms of EBITDA margins, PBT and PAT margins

FY 19- FY 23 highlights -

Sales - 330 to 513 cr
EBITDA- up 3X
Profits- up 6X

Current cash balance of 100cr. Company scouting to acquire brands. No debt on balance sheet

Q4 outcome-

Sales at 118 vs 103 cr, up 14 pc
EBITDA at 18 vs 15 cr, up 20 pc
PAT at 10.5 vs 7.5 cr, up 38 pc

FY23 outcome-

Sales at 512 vs 440 cr, up 17 pc
EBITDA at 107 vs 90 cr, up 19 pc
PAT at 68 vs 51 cr, up 32 pc

Sales breakdown-

Domestic formulation- 337 cr, up 20%

International Formulations-92cr, up 18 pc ( present in UK,Germany, France, Canada, Australia, Africa )

APIs-80 vs 78 cr

Monthly MR productivity now at 5.5 vs 3.5 lakhs in FY 19

Important management comments-

IPM volume growth continues to be flattish, RPG volumes grew 13 pc

Total IPM growth ( Price + Volume + new products ) at 8 pc vs RPG’s total growth of 20 pc ( v v healthy )

New products launched post FY 19 at 28 pc of company sales ( a big achievement )

Rheumatology sales picking up nicely ( launched 2 yrs back )

Intend to spend 100cr towards plant modernisation and capacity enhancement
Also looking to acquire brands in local Mkts

Product mix and scale of operations may help sustain upwards trajectory of EBITDA margins

Q4 is always a seasonally weak qtr due nature of ordering patterns by clients. Qtrly Sales run rate should rebound from Q1 onwards

Company is strong in Immunosuppressant APIs which gives the company the right to win here

Company wants to develop niche, small mkt size APIs

Don’t intend to go head on against large players like DIVIS on any of the APIs

Intend to increase field force by 8-10 pc / year

Next two focus therapies - derma, GI - because immunosuppressants are used in these therapies as well. So the expansion should be easier

Post the fall in stock price in last 2-3 days, looks good to me. Added today. Tracking position

792

Disc:

Sold all my holdings in IDFC First bank. Heard not so nice things about Mr Vaidyanathan at the latest VP Conference at Goa.

In financials, never take a chance … is the thumb rule.

Converted to -

Axis Bank
IndusInd Bank
ICICI Securities
RPG Lifesciences

Not a buy/sell recommendation

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793

Can you help share those comments on V Vaidyanathan, for the larger benefit of the community

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794

He was amongst the core member of Mr KV Kamath’s team that almost blew up ICICI Bank in 2008 due poor lending practices.

Then, he almost blew up Capital First …again due to reckless lending. To save it, he announced the merger with IDFC bank. Was ready to clean up IDFC’s NPAs in exchange for a banking license. But in reality, it was Capital First’s NPAs that were also cleaned up in the process.

Basically … a poor history of reckless lending but excellent media management.

Sharing - my views and views of some senior VP members. Views are only views, not verdicts !!!

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795

Banking is one of those sector where you can not hide NPA(s) beyond a certain time frame and they will crop up one fine day.
It is very difficult sector to be in and Management quality is the most important parameter for investing in Banks and NBFC(c).

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796

Some take aways from Sajal Kapoor + Aditya Khemka’s Twitter spaces about 10 days back -

Neuland is the only company to share full pipeline of molecules ( phase wise ) in their investor ppt. No other company does it - not even Divis, Syngene, Laurus

Laurus has 1200 scientists on its rolls vs 400 for Divis. That’s a definitive tick for Laurus. Nothing against Divis

Domestic Pharma margins likely to shoot up in Q1 FY 24. Should have happened for Q4 FY 23 as well but didn’t because its a seasonally weak Qtr for domestic mkt

Margin improvement due falling power, RM costs plus the annual price hikes

Diagnostic companies results to start looking better from Q1 as the base Qtrs won’t have COVID related sales. So… double digit topline growth with improved margins are possible

API overstocking took place in FY 21, 22. Hence FY23 was weak. FY24 should be much better on the base of a weak year and the overstocking has also now been liquidated

NLEM prices set by the Govt are generous. Domestic companies don’t have any problems meeting NLEM price criteria

Long term risk in domestic Pharma mkt- buyer consolidation due emergence and growth of big E-Pharmacies

Possible Black swan event- If private sector doctors are forced to prescribe generic drugs

One concern with Indoco Remedies - No improvement in MR productivity in last 4 yrs

Had very kind words to say about Manish Gupta, CEO of Jagsonpal Pharma (joined last year). He may well turn it around like Mr Sikri turned around RPG Life

New injectable long acting ARVs are overhyped as patient compliance and affordability is low there vs oral ARVs

As such NCE CDMO is the real long term story iro Laurus. May start to play out from 3rd or 4th Qtr of FY 24. Agro and Animal pharma CDMO contracts likely to go commercial by then

Large hospitals are too expensive. Better to buy smaller chains and wait for them to become big

Be careful in Hospitals adding > 20 pc of Gross Block via Greenfield route … it causes significant suppression of return ratios. The same gets reflected in stock price performance (Eg-Apollo from 2010-14)

Current management of Sequent,Pharmova and Piramal Pharma-not promising

Seeing significant positive operating leverage to play out in Syngene in next 2 yrs

Spoke highly of Dr Reddy’s current CEO ( joined in 2018 ) because he out licensed their cash burning NCE projects and increased capital allocation to India Branded vs US generics business

One good thing that Sun Pharma did was to de-merge their NCE business. Should also be done by Glenmark, Pharmova and not burn shareholder money

Mankind’s IPO may have some rub-off on valuations of Eris, JB,RPG and other India focussed branded businesses

Aarti Pharma looks good… just on the basis of their long term track record

Disc: invested in - Laurus, Divis, Neuland, Syngene, JB, RPG, Sun and Indoco in Pharma space. Holding - KIMS, Rainbow and Narayen among hospitals

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797

Hi Ranvir, You mentioned about exiting IDFC First Bank, so dont you feel its better to go with the best (i.e HDFC Bank) instead… Or the top 3 as PPFAS has done? Sorry but my concern is could you be diversifying too much? Or maybe it makes sense to diversify much more in Financials… Will like to hear your experiences pls… Thanks!

798

I think there is no right/wrong formula.

I already have 31-32 pc of my portfolio in Financials with HDFC, Axis, ICICI, Bajaj Finserv being roughly 4.5 pc each. I personally become uncomfortable if a financial company’s allocation in portfolio goes above 5 pc.

Rest of the Financials that I hold include - Kotak, KVB, Federal Bank, IndusInd Bank, ICICI Sec, AB Capital, Angel One.

IndusInd, Axis and Federal can help me generate some alpha given cheaper valuations and favourable credit cycle. But… that’s only an assumption.

Basically, that’s the whole thought process.

1 Like
799

Federal Bank Q4 FY 23 concall highlights -

Credit growth at 20 pc yoy (led by retail, agri, corporate, commercial and CV book. Business bank grew slower at 13 pc)

Deposit growth at 17 pc yoy

Core fee income up 20 pc yoy (encouraging)

Cost/Income at 49.5 pc vs 59.8 pc yoy !!

GNPAs at 2.36 vs 2.80

NNPAs at 0.69 vs 0.96

PCR at 70 vs 65.5 pc

RoA at 1.45 vs 1.03

RoE at 17.5 vs 11.9

NIMs at 3.31 vs 3.16 yoy (but down qoq)

NII-1909 vs 1525 cr

NP-903 vs 541 cr

Restructured assets at 2830 vs 3536 cr

Q4 slippages at 436 cr (@ 1.04 pc annualised)

CASA ratio at 32 pc ( needs improvement )

Remittance Mkt share at 17 pc vs 21 pc yoy ( still very good )

Loan book - retail:wholesale - 54:46

Retail loans ( w/o Agri,CV, Business bank)-

Housing- 26k cr
LAP- 9.9k cr
Gold- 4.3k cr
Auto- 5.4k cr
Personal- 2.3k cr
Others- 8k cr

Wholesale banking book-

Commercial bank - 17.2k cr
Corporate bank - 64.3k cr
Credit substitutes - 4k cr

Two segments that saw massive growth on a very low base - Micro Finance (up 223 pc), Credit cards( up 493 pc)

Total branches - 1355 vs 1282

NIMs may have bottomed (at 3.31 vs 3.5 qoq). Have already passed on higher deposit rates

Aim to open 100 branches this FY

Cost/Income - intend to bring it down to 48 pc by exit of FY 24

May go in for capital raise for growth in FY 24

Retail deposits at 85 pc vs 92 pc last FY

A large part of NRI deposits are>2cr which are beyond the definition of retail deposits

Seeing trend of ppl moving money into term deposits from saving deposits. That’s an industry wide trend

Bank’s annual slippages were around 1600 cr ie about 1 pc of the book - among the best

Aim to increase gold loan portfolio by 25 pc in FY 24. Current gold loans ( retail + Agri + Business ) @ 10 pc of bank’s book. Aim to cap it below 15 pc of total book

Large part of fixed deposits book has a tenure of 12 months

Guiding for 3.30-3.35 NIMs for FY 24

High yielding business like micro fin,credit cards,CVs growing much faster but the base is small

Restructured book at 1.6 pc (although falling). This is < 1 pc for most good pvt sector banks. Bank believes that this book is behaving well now (post covid), not a cause of worry

Bank believes most of increases in cost of deposits is already in the price

Lower yields on Advances and hence lower NIMs are also a function of Bank’s conservative lending practises

Since the bank is likely to raise capital this yr, dividend announced at Rs 1 vs 1.8 / share LY

Plus the stock price performed well this year. So the shareholders should be happy … was the management’s call

CRAR at 14.81 pc. Tier-1 at 13.02 pc, Tier-II at 1.79 pc

95 pc of MFI clients are women !!!.. very smart, IMHO

Disc: holding, added more yesterday

1 Like
800

Kotak bank Q3 concall highlights -

Segment wise loan growth -

Home Loans, LAP - 92 vs 76k cr, up 22 pc
Consumer bank (WC) - 30 vs 26k cr, up 15 pc
PL,BL,CDs - 15.7 vs 10k cr, up 56 !!!
Credit Cards- 10 vs 5.5k cr, up 81 pc !!!
Agri- 27.5 vs 26k cr, up 9 pc

Tractor Fin - 14 vs 10.7 k cr, up 29 pc
Micro Fin - 6.2 vs 3k cr, up 103 pc
Corporate bank - 70 vs 69k cr, up 1 pc
SME - 24 vs 20.4k cr, up 18 pc
Others - 6.5 vs 4.5 k cr, up 48 pc

Overall - 3.25 vs 2.75 lakh cr, up 19 pc

Deposits -

CASA at 52.8 vs 60.7 pc

A lot of SA deposits moved to Term Depositss

Consol PAT contributions-

Bank-3496 vs 2767 cr
Prime (car fin)-224 vs 313 cr
Investments-100 vs 101 cr
Microfinance-89 vs 43 cr
Securities-182 vs 252 cr
Kot Mah Capital-48 vs 42 cr
Life Ins-205 vs 267 cr
Gen Ins-(55) vs (46) cr
AMC - 192 vs 102 cr

Consol PAT at 4566 vs 3892 cr

Consol RoA at 3.06 vs 2.94 pc
Consol RoE - 16.9 vs 16.6 pc
Despite Capital Adequacy > 23 pc

Total branches at 1780

Management commentary -

Sustainable growth tgt for next few yrs at 17-22 pc
Q4 NIMs at 5.75 pc !!!

Bank’s standalone Q4 operating profits at 4647 cr, up 39 pc

GNPAs at 1.78 vs 2.34

NNPAs at 0.37 pc, PCR of 80 pc

Slippages - 823 cr ( @ 0.92 pc of advances on an annualised basis - well within control )

Restructured assets at - 0.22 pc ( very healthy )

Tractor Fin Mkt share at 11 pc

Term deposits grew by 40 pc yoy due increasing rates

Seeing slowdown in Kotak Prime’s business in FY 24

Kotak Life’s VNB margins are now best in the industry

Kotak Securities cash Mkt share at 10.5 vs 10.6 pc, Options mkt share at 5.6 vs 3 pc

Fall in Kotak Sec profits due to sharp fall in daily cash mkt turnover by aprox 30 pc

Kotak AMC AUM up 5 pc, reached 2.87 lakh cr. Equity AUM at 1.53 lakh cr, up 17.6 pc. Equity AUM mkt share at 6.5 pc. SIP book at 870 cr/month. Retail AUMs at 55 pc

NIMs should sustain above 5 pc for FY 24 as well

Witnessed repayments in the corporate book. Seeing high competition in this segment

Added aprox 100 branches last FY. Aim to add 150 branches this year

Clearly, Bank’s focus is more on digital 811 accounts vs physical branches

However, a healthy mix of physical branches shall also be maintained

Going to invest heavily in technology in next 12 months to improve per branch productivity vs peers. Likely to see significant gains going fwd

Disc: holding, biased

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801

Axis Bank Q4 concall highlights -

Excluding exceptional items ( Acquisition of Citi Banks India business ) -

PAT at 6625 cr, up 61 pc yoy
RoA - 2.18 pc, consol
RoE - 21.5 pc, consol !!!

Operating performance (yoy)-

NII up 33 pc
Fee inc up 24 pc
Op profits up 42 pc

Advances up 19 pc ( including Citibank’s loans )-
Domestic -

Retail advances up 22 pc - of which Rural up 26 pc, Cards up 97 pc
Corporate advances up 24 pc, Mid corporates up 38 pc, SME up 23 pc
Small Business Banking advances up 50 pc

Overseas advances lagging domestic growth

Deposits up 15 pc ( including Citibank’s deposits )-

CA up 17 pc
SA up 23 pc
Term deposits up 11 pc

GNPAs at 2.02 vs 2.82 pc yoy
NNPAs at 0.39 vs 0.73 pc yoy
Annualised gross slippages at 1.76 pc ( within guided range )

PAT from subsidiaries for FY 23 at 1304 cr, up 9 pc

Excluding acquisition impact, Annual EPS at Rs 86/share

Including acquisition impact, Book Value at 406

CASA deposits at 47 pc of total, up 21 pc yoy

Advances Domestic breakup -

Retail 58 pc, up 22 pc
SME 11 pc, up 23 pc
Corporate 31 pc, up 24 pc

NIMs at 4.02 pc, up 55 bps

PCR at 80 pc. Including specific + std+ addnl + COVID provisions - at 145 pc of GNPAs (very healthy)

Management commentary -

Among the largest issuer of credit cards in FY 23 at 4.2 million

New accounts opened in FY 23 at 1.08 cr, up 26 pc yoy

Cost/Inc at 46.1 pc, improving by 274 bps ( for FY 23 )

Added 6000 ppl to growth businesses and Technology teams in Q4

Lower credit costs allowing bank to invest in ppl and tech

Guidance for FY 24 -
Advances growth between 16-18 pc
Deposit growth between 14-15 pc

Expect to add upto 500 branches in FY 24

Next yr, Opex is likely to be higher due Citibank’s acquisition which is largely a retail business. By FY 25, want to come back to 2 pc of assets as Opex cost

Corporates/wholesale and Mortgage loans - remain very competitive wrt yeilds

Some easing in competition witnessed on corporate/wholesale side

Recoveries and upgrades trend has been good because the quality of Bank’s book has structurally improved. Bank has made a lot of efforts to reach here

Expect uplift in growth due Citi’s acquisition from Q2 onwards

All one time costs wrt Citi’s merger have been absorbed. 1500 cr of operating costs will be absorbed over next 18 months

Also seeing pickup in Corporate demand across various sectors like - steel, infra, RE etc

Disc : holding, biased

4 Likes
802

Nippon AMC q4 highlights -

Industry overview -

MF Industry AUMs at 39 lakh cr vs 8 lakh cr in 2014, CAGR of 16 pc

MF AUM / GDP in India at 16 pc vs 73 pc as world avg

Unique MF investors at 3.7 cr vs 2.1 cr in 2020 ( still huge under penetration )

No of demat accounts at aprox 10 cr, up 3X in last 5 yrs. Momentum is building

Industry AUM ( 39-40 lakh cr ) category wise breakup -

Equity - 52 pc
Debt - 22 pc
Liquid - 14 pc
ETFs - 13 pc

Geography wise breakup of AUMs -

Top 30 cities - 83 pc
Next 30 cities - 17 pc

Segment wise break up -

Corporates - 42 pc
HNIs - 33 pc
Retail - 25 pc ( hugely under penetrated )

Monthly SIP flows at 14300 cr vs 12300 cr in Mar 22

SIP folios at 6.4 cr vs 5.3 cr in Mar 22

SIP AUM at 6.8 lakh cr vs 5.7 lakh cr in Mar 22

Nippon AMC -

AUM - 3.6 lakh cr ( 4th largest in India, No 1 in non bank sponsored AMCs )
Folios - 1.9 cr
Unique investors - 1.3 cr
Monthly SIPs - 3200 cr
Beyond top 30 cities AUM - 55k cr
Offices - 270
Distributors - 91000
Employees - 1000+
Mkt share - 7.24 pc ( down 14 bps )

Total yearly SIP flow at 11k cr vs 7.8k cr yoy ( very encouraging )

ETF mkt share - 13.7 pc

Q4 PAT at 198 cr, up 13 pc yoy

Equity AUMs- 44 pc
ETF AUMs- 24 pc
Debt- 18 pc
Liquid- 13 pc

Investor break up -

Retail-29 pc (better than industry avg)
NHIs- 24 pc
Corporates- 44 pc
Company’s own financial assets-3416 cr invested in debt, equity ,FDs

Avg AUM/branch- 1530 cr vs 1040 cr in Mar 20
Avg profit/branch- 4.1 cr vs 2.1 cr in Mar 20
Profit/employee- 79 lakh vs 40 lakh in Mar 20

Total dividend for FY 23 @ Rs 11.5/share !!!

Disc: holding, biased

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803

Aarti Industries Q4 results highlights -

Company infra -

16 manufacturing plants
11 ZLD plants
05 Co-Gen power plants
02 R&D centers
6000 employees

Sales breakup(FY 23) -

India- 52 pc
ROW- 15 pc
N America- 13 pc
Europe- 11 pc
China- 6 pc
Japan- 3 pc

Total Sales @ 6620 cr

5 yr sales CAGR @ 22 pc
5 yr EBITDA CAGR @ 15 pc

Key strengths -

Global leader in Benzene derivatives. Among top 3 in chlorination and nitration. Among top 2 in hydrogenation

Fully backward integrated, low cost, sustainable mfg ops

100+ products
1100+ customers

End user industries -

Agrochems-30 pc
Pharma-20 pc
Pigments-12 pc
Additives-26 pc
Polymers-10 pc
HPC- 3 pc

Products in pipeline - 40 plus, half of these to be made in India for the first time

Q4 highlights-

Sales- 1854 vs 1642 cr
EBITDA- 252 vs 262 cr

PAT- 149 vs 146 cr ( due one time tax write back )

Contribution from value added products- 85 pc

Debt/Equity - 0.58

Comments on Q4 performance -

Increased volume from higher volumes and higher sales of value added products

EBITDA impacted due-

Maint shut down of one Acid plant and Kutch Unit

Slowdown in off take of dyes, pigments (textile related).Green shoots visible wef Q1

Except energy, other RMs were higher QoQ

Updates-

Commercialised 02 spec chemical blocks(for agro and pigment intermediates-for captive use)

02 more blocks to be commissioned in next 02 yrs

3rd long term contract commissioned last yr to be ramped up this yr

Macro concerns wrt demand continuing. Likely to improve in FY24

Targeting 20 pc EBITDA growth for FY 24 ie around 1320 cr vs 1090 cr for FY 23

FY 25 guidance - EBITDA of 1700 cr @ 25 pc margins due ramp up of new facilities and increased op-leverage

FY 26 and beyond - EBITDA to grow at 25 pc CAGR due zone 4 ramp up and better utilisation of zone 1,2 and 3

Other important comments-

Capex spends for FY 23 at 1300 cr

Entered into a 20 yr supply arrangement of Nitric Acid with Deepak Fertilisers to secure the key RM

Capex guidance for next 2 yrs at 1500 cr each for expansion into chloro-toulenes, which is a difficult to make product. Will target both exports and import substitution

Expect 25 pc volume growth in FY 24. EBITDA growth to be slower ( @ 15 pc or so ) as exports to non regulated Mkts increase

Global slowdown impacting demand of discretionary products

Expect employee costs to moderate going fwd in percentage terms as topline grows in FY24

Margin difference between regulated vs non regulated Mkts are as high as 10-15 pc at GM level

Supplying to both patented and non patented agrochemical makers

Long term, Europe likely to lose mkt share wrt energy intensive products as overhang of high energy prices continues

Not losing mkt share to China post China opening up

Nitro Chloro Benzene volumes to pick up in Q2

Tax rates to be around 15-17 pc next FY

Expect some debt increase in next 2 yrs as operating cash flow may not be able to absorb all capex spends

Volume growth for FY 23 has been 15 pc plus

Capacity expansions in FY 24,25 will be in NCB, Acid plant (up 22 pc), Ethylation (up 3X), Nitro Toulene

Post ramp up of capacities in FY 25, expect an asset turn of about 1.5 times

Working capital reduced post demerger of Pharmalabs

Disc: intend to add slowly on dips. Holding a small tracking position

2 Likes
804

Neuland labs has hit the ball out of the Park!!!

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805

AB Capital Q4 and FY 23 concall highlights -

Full yr highlights-

NBFC loan book @ 80k cr, up 46 pc yoy
NIMs @ 6.84, up 60 bps yoy
PBT- 2090 cr, up 41 pc (despite doubling NBFC branches)

HFC loan book @ 13.8k cr, up 14 pc yoy
NIMs @ 5.08, up 76 bps yoy
PBT - 309 cr, up 22 pc

AMC’s AUM @ 2.86 lakh cr, down 4 pc yoy
PBT - 794 cr, down 11 pc yoy

Life Insurance Individual first yr premium up 37 pc yoy
Net VNB margins at 23%, up 800 bps yoy
PBT- 196 cr, up 12 pc yoy

Other businesses ( broking - insurance and stocks, ARC )- PBT at 236 vs 176 cr, up 34 pc

Health Insurance - Gross premium up 57 pc yoy
Combined ratio at 110 pc vs 127 pc LY
PBT- (-) 218 vs (-) 310 cr

Asset quality -

NBFC -

87 pc loans to customers with CIBIL score> 700

Stage 2+3 book at 5.86 pc vs 8.98 pc yoy

PCR of 46 vs 39 pc for stage 2+3 book

HFC -

94 pc loans to customers with CIBIL score > 700

Stage 2+3 loans at 4.99 pc vs 8.75 pc yoy

Stage 2+3 PCR at 33 pc vs 31 pc yoy

AMC -

SIP book at 1003 cr vs 895 cr yoy
Total SIPs at 33 vs 32 lakh yoy
Count of SIPs -
Over 10 yrs old - 82 pc
Over 5 yrs old - 91 pc

Life insurance -

Total premium collected at 15.07 k cr, up 24 pc yoy

Growth at 2X of Industry

Third fastest growing life insurer in FY 23

Persistency ratios -

61M @ 54 vs 52 pc
37M @ 67 vs 67 pc
25M @ 72 vs 73 pc
13M @ 87 vs 82 pc

AUM@ 70k vs 60k cr (24:76 pc Debt:Equity)

Health Insurance -

GWP @ 2717 cr, up 57 pc yoy. Industry growth @ 26 pc
Mkt share @ 10.4 pc, up 208 bps ( SAHI )
Fastest growing health insurance player

Other Fin services ( insurance and stock broking ) -

Revenue @ 1100 cr, up 2 pc
PBT @ 238 cr, up 26 pc

Management commentary -

Added 75 AB Capital branches in Q4. Total branches now at 1295

Company announced board of directors approval to raise 3000 cr for business expansion

Loans to Retail, SME, MSME, HNI constitutes 69 pc of loan book

Company focusing on granualisation of loan book

Avg ticket size in HFC business @ 25-30 lakh. HFC branches at 128

Health insurance claim settlement ratio at 96 pc (one of the highest in the Industry )

Capital raise in expectation of pick up of growth in Indian Economy

To be used for growth of both lending and protection businesses

A heavy chunk of company’s lending business comes from Fintech partners like Paytm. However, company has a direct connect with the customers while disbursing and collecting EMIs, also has access to their data etc

This was a concern that I also had. I think the management’s clarification on the same was satisfactory

Has launched a lending app - Udyog plus to capture micro SMEs. Company believe that this may be a big growth engine in the future

70 pc of NBFC book is secured

Management continues to be cautious wrt credit quality despite very high growth rates. Most lending happening to customers with credit score > 700

Company will target various Aditya Birla group employees, SME and MSME vendors for additional growth

Avg tenure of unsecured loans at 15-18 months for consumer loans, 18-24 months for SME loans

40+ pc customers are repeat customers in unsecured business

Keep proactively monitoring customer data on a monthly and weekly basis for any stress in the system

Despite rapid branch expansion, company continues to maintain healthy return ratios. Intend to continue on this path going ahead

Breakup of individual life insurance wrt Traditional vs ULIPs at 81 vs 19 pc

Disc: hold a small tracking position

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810

Indoco Remedies Q4 concall highlights -

Revenues - 428 vs 409 cr
EBITDA - 65 vs 81 cr
EBITDA margins at 15 vs 20 pc
PAT at 30 vs 36 cr

For full FY 23 -

Revenues - 1669 vs 1541 cr
EBITDA - 286 vs 328 cr
EBITDA Margins at 17 vs 21 pc
PAT at 142 vs 150 cr

Base was very high due COVID related sales in FY 22

Domestic brand Cyclopam (used to relieve cramps) grew at a rapid pace

New product launches generated aprox 30cr sales

Top 20 brands of Indoco India generated double digit prescription growth

Two of company’s brands are in top 300 brands in IPM. Cyclopam jumped 27 ranks in FY 23

Company has three brands that generate > 100 cr and 04 brands that generate > 50 cr sales

Launched a D2C division this year for a few OTC dental brands

Plant-1’s import alert lifted by FDA

Plant-1 (solid dosage facility), now can export to US

In Europe, garnered 30 pc and 20 pc Mkt share for Lacosamide (to control seizures) tablets and Injections respectively

In Germany, company’s Allopurinol (to manage gout that causes intense joint pain) has 70 pc Mkt share

Business promo & marketing spends back to pre Covid levels

IPM rank at 27

Formulations-

Q4 India formulations sales at 185 cr, down 4 pc

FY 23 India formulations sales at 797 cr, down 1 pc
(India business had a big Covid base)

Q4 Intl formulation sales at 216 cr, up 14 pc

FY 23 Intl formulation sales at 754 cr, up 21 pc

Within Intl Mkts -

Q4 Revenues from regulated Mkts grew 5 pc to 163 cr

FY 23 revenues from regulated Mkts grew 21 pc at 610 cr

APIs -

Q4 API business grew by 75 pc to 23 cr

FY 23 API business grew by 12 pc to 71 cr

ndoco CRO operations-

Q4 revenues at 4.5 cr,down 5 pc
FY 23 revenues at 17 cr,up 12 pc

Base yr’s Covid sales in India were around 40 cr because of which company could not grow this year in the domestic market

Post clearance of Plant -1, US sales should also pick up next yr

Growth in advertising and sales promotion likely to moderate next year

Legal cost incurred this yr (aprox 5-6 cr) is unlikely to recur next yr

Company confident of doing 18-19 pc EBITDA for FY 24 and 25 ( that’s a descent jump from Q4 levels )

FY 24,25 growth expectations at 15 pc plus CAGR ( plus margin expansion )

US business has healthy order book. Likely to grow US business by 25-30 pc this yr

2.5 pc of domestic sales from new products (launched within last 2 yrs)

Expect the toothpaste business ( medicated ones ) to do better due to the D2C push initiatives that company shall take in FY 24

Attrition in MRs is an issue that company intends to resolve this year

Expect 3-4 approvals in US this yr - mostly in ophthalmic space

Expect a price hike of 5-6 pc in domestic mkt for FY 24

Company has overpromised and underachieved in the past 2-3 yrs. Mrs Parandikar was mindful of that. Intends to correct this in FY 24. The proof of the pudding will be in the numbers though

Ophthalmic and Injectables supplies to US involve very complex manufacturing practices. Company has been learning this over the last few years

Capex plan for FY 24,25 - aprox 125 cr

Disc: holding a tracking position. Hope to see an improvement in business momentum next year

4 Likes
811

Was listening to Piramal Pharma’s Q4 concall

Broad brush takeaways -

Piramal Pharma can potentially clock 1200 cr plus EBITDA for FY 24

Profitability at PAT levels also likely to improve significantly next year

Most improvements to accelerate in H2 FY 24

Beauty is the the eye of beholder

Everyone can judge for themselves wrt current Mkt Cap

Disc: biased, holding a tracking position

5 Likes
812

EIH Q4 highlights - YoY

Consol sales - 663 vs 316 cr, up 110 pc
EBITDA - 231 vs 34 cr, up 562 pc
Avg occupancy - 80 pc vs 56 pc vs 62 pc ( in FY 20’s Q4 )

F&B revenues - 221 vs 143 cr ( in Q4 FY 20 )
Flight catering - 82 vs 41 cr ( in Q4 FY 20 )

For FY 23 vs 22 vs 21 vs 20 vs 19 -

Sales - 2096 vs 1044 vs 547 vs 1675 vs 1880 cr

EBITDA - 675 vs 57 vs (-) 230 vs 368 vs 475 cr

Net Cash position - 129 vs (-)61 vs (-)217 vs (-)192 vs (-)271 cr

RoE for FY 23 -
Oberoi Hotels - 45 pc
Trident Hotels - 22 pc

Future expansions -

FY 23,24 -
Bay Club,Mumbai - opened Nov 22
Restaurant in Mumbai - wef Jun 23

FY 25 -
Oberoi Raigarh palace, 48 keys
Oberoi Bandhavgarh, 24 keys
Oberoi Bardia, 18 keys

FY 26 -

Oberoi Kathmandu (managed)- 84 keys
Trident Tirupati - 100 keys

Oberoi Wadi Safar, Saudi Arabia - 60 keys

FY 27 -

Oberoi Goa - 90 keys
Trident Goa - 150 keys
Oberoi Al Zorah (managed) - 174 keys

Current properties -

Owned - Oberoi Hotels - 15
Managed - Oberoi Hotels - 07, Trident - 08
Other brands - 03 hotels

Number of Keys-

2020 keys under Oberoi brand (India + International)
2172 keys under Trident brand

Valuations at 40X profits

Can assume 300 cr+ profits plus some descent growth going fwd for atleast next 2-3 yrs (before any new meaningful capacity comes up)

Management Comments -

ARRs and Occupancies softened in Mar vs Jan,Feb. Have been improving post March

Corporate travel is back to pre covid levels

Over and above the pipeline of hotels put up above, there are 11 more proposed hotels in the pipeline

Exploring Andaman, Nicobar Islands for setting up a new hotel. Nothing concrete yet

Company has 13 acres land near Sohana in Gurugram. No plans finalised wrt sale or development of that land parcel in Gurugram

Mumbai Club ( Cuckoo ), launched last yr - doing well

If it does well in future as well, company looking to scale up this concept

Company believes, there is considerable upside in ARRs and occupancy going fwd. Their Gurugram hotel used to do Rs 20,000 ARR in 2009-10. Its at similar levels today.The upside in ARRs can be substantial

As foreign travel into India picks up, it should further push up the ARRs

One an avg, a new hotel takes 3-5 yrs to start making profits … depending on location to location

Company has razor sharp focus on customer experience and quality of stay

That’s why they don’t go aggressively for managed hotels. However, they r not averse to it if a right opportunity arises

EIH is largely positioned above Indian Hotels, Marriot wrt Luxury, customer experience and hence command a premium over them

Company being a net cash company, has the room avlb for speedy expansion in number of properties

Airport + Flight catering business operates at 20-25 pc EBITDA. Margins likely to trend up due demand of air traffic outpacing the supply of caterers

Foreign hotels ( total 07 ) are making money at EBITDA levels. Should turn profitable at PAT levels soon. EIH foreign hotels are debt free

Indians increasing affluence & propensity to take short breaks across the year is bringing the seasonality down in a significant way

New govt regulations wrt upfront tax deduction should help the domestic industry

Indian 5 star hotels are really really underpriced vs the trends across the globe

Reliance Industries and ITC are major shareholders in the company

Disc: holding, biased

1 Like
813

Eris Lifesciences Q4 highlights -

Revenues at 403 vs 306 cr

EBITDA at 119 vs 97 cr

EBITDA margins at 30 vs 32 pc

PAT at 61 vs 80 cr (due higher interest outgo, higher amortisation, lower other income - all due aggressive inorganic acquisitions made by the company in FY 23)

Consolidated revenue growth for Q4 and FY 23 at 32 and 25 pc

Standalone ( organic business ) revenue growth for Q4 and FY 23 at 11.5 and 9.5 pc

Consol Debt at 774 cr. Expect accelerated pre-payments in FY 24 due generous cash flow generation

Oakent business ( Derma focussed company, acquired early LY) -

Revenues at 250 vs 195 cr, up 23 pc ( for full FY )

Generated EBITDA of 61 vs 20 cr YoY

Added complementary brands to this business by acquiring medical and cosmetological brands of Glenmark, DRL in FY 23

Oaknet’s MR productivity increased from 2.3 to 3.2 lakh / month. EBITDA expanded from 10 to 24 pc

Basically - a very sucessful turnaround of Oakent under Eris

Eris Life - therapy wise revenue share -

Diabetic- 29 pc
Cardiovascular- 21 pc
Vit & Minerals- 16 pc
Derma- 14 pc

CNS- 7 pc
Women Health- 5 pc
Others- 9 pc

Revenue wise Brand strength -

4 brands > 100 cr revenues
6 brands > 70 cr revenues
5 brands > 50 cr revenues

Added 200+ MRs in FY 23

Total cost of acquisition of Oaknet +Derma brands of DRL and Glennmark at 1265 cr incurred in FY 23

Consolidated gross margins sustaining at 80 pc !!

With Oaknet scale up and higher sales of Injectable Insulins, expect improvement in Gross, EBITDA margins in FY 24!!

Eris MJ (JV) for oral insulin hit 17 cr revenues for FY 23. Could have been higher but for supply issues in Q4

Going to launch a number of new formulations in FY 24. Even after accounting for these launches, expect significant jump in EBITDA margins in FY 24

Currently all Derma formulations being made by third parties. Intend to bring them in-house in their new Gujarat facility

Top 20 brands account for 70 pc of revenues

Effective tax rate should be around 14-15 pc this yr

Intend to pay back 400-500 cr of Debt this yr

Business Matrix improvements should be visible from Q1 FY 24 onwards

Going to add aprox 100 MRs in H2 FY 24 in Oaknet division

Disc: holding a tracking position, biased

Once the topline growth starts translating into bottomline growth, I personally expect a significant re-rating in the stock price … something similar to JB Chemicals

That a hunch

Do ur own homework before investing

1 Like