Q1 is generally their weakest Qtr. If u look at full year results for them, EBITDA margins should be around 5 pc and PAT margins should be around 2 pc
This is the nature of this business ( Automotive - Dealerships )
Critical thing to look for in such businesses is RoE / RoCE. If they are around the 15 pc mark, then its a investment worthy candidate ( imo )
Adani Ports and Special Economic zones -
Q1 FY 25 results and concall highlights -
Company’s portfolio of ports with annual cargo handling capacities -
Western Coast - 355 MMT -
Mundra - 264MMT
Dahej - 16 MMT
Hazira - 30 MMT
Dighi - 8MMT
Morumgao - 5 MMT
Vizhinjam - 18 MMT
Eastern coast - 272 MMT -
Haldia - 4 MMT
Dhamra - 50 MMT
Gopalpur - 20 MMT
Gangavaram - 64 MMT
Krishnapatnam - 75 MMT
Kattupalli - 25 MMT
Ennore - 12 MMT
Karaikal - 22 MMT
International ports -
Haifa ( Israel )
Dar-es-Salaam ( Tanzania )
Company has got a Operations and Maintenance contract for a port in North Australia at Abbot Point
Company is building a container terminal in Colombo, Sri Lanka
Special Economic Zones -
Mundra ( 12.5k hectares + ) - has air ( 1.9 km long air-strip ), rail, road ( via state highway ) connectivity
Dhamra ( 2k hectares + ) - has rail, road connectivity ( via NH )
Gangavaram ( 1k hectares + ) - has rail, road connectivity ( via expressway )
Krishnapatnam ( 2.7k hectares + ) - has rail, road connectivity ( 4 lane road connecting to NH )
Logistical infra - current capacity - target for 2029-
Marine flotillas - 114 - 140
Rail tracks - 690 km - 2000 km
Trains - 131 - 300
MultiModal Logistics parks - 12 - 20
Grain Silos - 1.2 MMT - 10 MMT
Warehouses - 2.9 M Sq Ft - 20 M Sq Ft
Trucking - 937 - 5000
APSEZ’s current mkt share of All India cargo handling @ a whopping 27 pc. It was 10 pc in 2013
Over the last 10 yrs, EBITDA for the domestic ports business has increased @ 22 pc CAGR from 2060 to 14907 cr !!! Company’s EBITDA margins in this business segment are at a whopping 71 pc
Company’s logistics business has reported an EBITDA CAGR of 43 pc over last 5 yrs with EBITDA growing from 90 cr to 540 cr. EBITDA margins in this business segment are 26 pc ( @ very healthy levels )
Q1 Financial highlights -
Revenues - 7560 vs 6248 cr, up 21 pc
EBITDA - 4848 vs 3754, up 29 pc ( margins @ 64 vs 60 pc )
PAT - 3107 vs 2119 cr, up 47 pc
Cargo handled - 109 vs 101 MMT, up 8 pc
But for a temporary disturbance at Gangavaram port ( now fully resolved ), cargo handling would have been 115 MMT
Coast wise cargo handled -
East coast - 43 pc
West coast - 57 pc
In Q1, company received LOI for Operations and Maintenance of Syama Prasad Mookerjee port in Kolkata and DeenDayal Port in Gujarat
Segment wise cargo handled -
Container - 39 pc
Dry coal - 37 pc
Dry ( except coal ) - 13 pc
Liquids ( except crude ) - 2 pc
Crude - 6 pc
Gas - 2 pc
Segment wise breakdown of revenues -
Indian Ports cargo handling - 5536 cr, EBITDA @ 72 pc
Intl. Ports cargo handling - 825 cr, EBITDA @ 11 pc
Logistics - 571 cr, EBITDA @ 25 pc
Guidance for FY 25 -
Cargo handling - 460-480 MMT
Revenues - 29000 - 31000 cr
EBITDA - 17000 - 18000 cr
Capex @ around 11000 cr
Projected breakup of capex for FY 25 -
Ports business - 7300 cr
Marine business -400 cr
Logistics - 2300 cr
Renewables business - 1500 cr
Current state of leverage in the company in terms of Debt/EBITDA is @ 2.1. They intend to maintain it below 2.5. Which means there is a descent headroom for inorganic opportunities - if they come company’s way
Company intends to have a good presence on international trade routes in India’s near vicinity like - North and East Africa, Middle East and SE Asia. That’s why they r operating in Tanzania, Haifa, SriLanka. Now they intend to expand their presence to SE Asia - to be specific - in Vietnam
Company has been growing far quicker vs the industry and the competition over the last few Yrs. Company believes, the same is because they don’t operate their ports in isolation. They operate as a part of the ecosystem and this ecosystem is connected to the customers using multi-modal ways. Plus - there is razor sharp focus on efficiency
Company is expected to spend aprox 600 cr on the DeenDayal port - for which it has got operations and maint. contract. It’s a long term lease. Should add aprox 1.2 MMT of capacity
Whenever the company ventures into an international project, its aim is to meet its minimum RoCE tgt of 16 pc in rupee terms
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
CIPLA -
Q1 FY 25 concall and results highlights -
Revenues - 6694 vs 6329 cr, up 5 pc
Gross Margins @ 67.2 pc - up 226 bps YoY
EBITDA - 1716 vs 1494 cr, up 4 pc ( margins @ 25.5 vs 24 pc )
PAT - 1175 vs 998 cr, up 17 pc
Geography wise sales breakup -
India - 2898 cr, up 5 pc ( trade generics were adversely impacted in Q1 due change in distribution model. Business to be back on growth path wef Q2. Branded prescriptions grew @ a healthy 10 pc - led by respiratory, cardiac and urology therapies )
North America - 2075 cr, up 13 pc ( highest ever Qtly sales ) - Lanreotide 505(b)(2) mkt share @ 20 pc, Albuterol Mkt share @ 17 pc
South Africa branded - 494 cr, up 11 pc ( ranked no-1 in South Africa prescription mkt and no 3 in the OTC mkt ) - launched 8 new products across multiple therapies in Q1
South Africa tender business - 157 vs 101 cr
EM and EU - 846 cr, up 7 pc
APIs - 100 vs 141 cr
R&D expenses @ 354 cr, @ 5.3 pc of sales
Gross Debt @ 547 cr
Cash on Books @ 8996 cr
India - chronic prescription business now @ 61 pc of India sales ( up 100 bps YoY )
Company 24 brands clock sales > 100 cr / yr
Company’s brand - Foracort ( inhaler ) - is ranked no-1 brand in India ( clocking annual sales of 900 cr )
Other mega brands ( sales > 400 cr / yr ) include - URIMAX ( for relief from symptoms of enlarged prostate ) and DYTOR ( diuretic )
Company is also ranked No 1 in trade generics in IPM
Company popular OTC brands in India include - Omnigel, Nicotex, Prolyte, Cofsils, Cipladine
USFDA inspected their facilities at Patalganga and Kurkumbh - and awarded them VAI status. This is good news after successful US FDA inspections at their overseas facilities at China and InnvaGen facility in US
If there was no change in distribution model in the trade generics, India business would have grown by around 9 pc
Company’s India OTC brands are operating at operating 15-16 pc kind of EBITDA margins. Margins should improve as these brands scale up further
Company’s Goa plant was inspected by USFDA in Q1 and was issued with four 483 observations. Its official classification is awaited
Company is working hard on the ramping up of recently acquired Astaberry product portfolio
Revlimid sales were slightly better on a QoQ basis
Resolution of USFDA issue wrt their Goa facility remains a key concern
Seeing an uptick in R&D expenses in next 3 Qtrs of FY 25. For full yr, R&D expenses should settle at 6 pc of sales
Company has lined up launch of 02 peptide products. Same should materialise by Q3/Q4 this yr. In addition, launch of Advair from InvaGen’s manufacturing facility in US should also happen by end of H1 next yr
For the rest of FY, company expects US business’s run rate to be around $ 235-240 million / Qtr
Company is actively looking at both small and big opportunities in the branded generics space in India - for acquisitions - in order to utilise the cash they have on the books. Outside India, they may look at Sterile Injectables or 505(b)(2) product acquisitions in US
Post the launch of 02 peptide products in H2 this yr, company has lined up 03 more peptide product launches for FY 26
Capex guidance / yr @ 1200-1500 cr for next 2-3 yrs
Disc: holding, biased, not SEBI registered, not a buy / sell recommendation
IKIO Lighting -
Q1 FY 25 concall and results highlights -
Sales - 127 vs 108 cr
EBITDA - 17 vs 23 cr ( margins @ 13 vs 21 pc )
PAT - 12 vs 14 cr
Completed Block -1 of Greenfield expansion of 2 lakh sq ft in Q4 FY 24. Commercialised the same in May 24. Expected to complete Block - 2 of another 2 lakh sq ft by Mar 25. Have started construction for block -3 of another 1 lakh sq ft. Combined capex spend for all three blocks is around 200 cr with a total yearly revenue potential of 1000 cr ( incremental. It may take 3-4 yrs to reach optimum capacity utilisation for all 3 blocks )
ODM Listing segment grew both on YoY and QoQ basis. Performance in domestic mkt was flat. Export sales were aided by exports to Gulf region, inventory reduction in US for company’s RV products
EBITDA margins impacted due to front loading of expenses like higher employee expenses ( up 40 pc YoY ) due completion of new Greenfield Capex. Expect significant contribution from this facility in H2. This facility is also producing 2 new products - earphones of various kinds and smart watches
In addition to RV business in US, have started supplying Industrial and Solar products to energy service companies in US
Gross margins were stable Ex-US operations. As US operations stabilise, expect gross margins to normalise going fwd
Company maintains FY 25 guidance of 20-25 pc revenue growth for FY 25 with EBITDA margins ranging between 20-22 pc !!!
Company has already started backward integrating the wearables and hearables segments. Company is also looking at the design aspects in these segments. Aim is to keep the RoCE high, even if there is some margin dilution
Seeing descent pickup in the LED lighting industry in FY 25 after a difficult FY 24
Company believes that they are an electronics manufacturing and design company at heart. Lighting is the biggest chunk of their business - that’s a different matter. It’s their electronics manufacturing and design DNA that makes them confident of venturing into wearables and hearables. Anything to do with - plastics + metals + electronics - they r good at it and they r capable of doing it in-house
Disc: hold a small tracking position, biased, not SEBI registered, not a buy/sell recommendation
Jyothy labs -
Q1 FY 25 results and concall highlights -
Sales - 742 vs 687 cr, up 8 pc - led by volume growth of 11 pc !!!
Gross margins @ 52 vs 48 pc
EBITDA - 133 vs 117 cr, up 13 pc ( margins @ 18 vs 17 pc )
PAT - 102 vs 96 cr, up 6 pc ( LY, there was an exceptional gain of 9 cr due sale of a one off property )
A&P spends @ 61 cr ( 8.3 pc of sales ) vs 50 cr ( 7.3 pc of sales )
Cash on books @ 650 cr
Company expects demand momentum to continue because of normal monsoons
Category wise growth rates -
Fabric Care - grew 8.8 pc YoY ( form 43 pc of company’s revenues )
Dish Wash - grew 7.1 pc YoY ( form 33 pc of company’s revenues )
Personal Care - grew 11 pc YoY ( form 13 pc of company’s sales )
Household Insecticides - grew 2 pc YoY ( form 7 pc of company’s sales ) - impacted by heat wave in Q1. Should do better in Q2
**Should be able to clock double digit sales growth with EBITDA > 16 pc for full FY **
Company has launched liquid detergents @ disruptive price point of Rs 70/lit in MT outlets- under the Moonlight brand. Have received encouraging response
Company has reduced its dividend payout in FY 24. Aim is to build onto their cash positions for inorganic opportunities
Exo - did very well in East India in Q1. Exo - is already very strong in the South Mkts
A lot of volume growth for the company is being driven by expansion in distribution
Most of the variants of Margo launched over the last couple of years continue to do well
Rural mkts were slow previously, but are picking up now for the last few months. With further pickup in rural demand, company should be a beneficiary
Capex for the year should be around 50-60 cr
Modern Trade + E-Comm now constitute 15 pc of company’s sales. This figure was around 10 pc, about 3 yrs back
In the Household insecticides space, company has gained mkt share by 300 BPS (YoY)- mainly on the back of Liquid Vaporisers - this is a big achievement - IMHO. Because of this, HI category’s EBIT losses have also come down. As the scale and mix of HI business improves, it should show up on company level margins in next 2-3 yrs
Similarly as the personal care business expands, it should favourably impact company level margins as its a high margin segment
Company sales mix continues to remain at 40:60 in terms of South:Rest of India ( this mix has been largely the same over last 3-4 yrs )
Company intends its personal care portfolio to contribute to a minimum of 15 pc of sales vs 13 pc currently. Company is open to inorganic route to achieve that
Company is working on organic new product development as well. Will announce it when they r ready to launch
Disc: hold a small position, not SEBI registered, not a buy/sell recommendation, biased
Marathon NextGen Realty -
Q1 FY 25 concall and results highlights -
Revenues - 162 vs 210 cr
EBITDA - 53 vs 61 cr ( margins @ 33 vs 29 pc )
PAT - 38 vs 43 cr ( interest expenses have fallen sharply from 25 cr to 19 cr )
Area sold @ 72.9k Sq Ft
Debt on books @ 750 vs 783 cr on 31 Mar
Ongoing projects at ( MNRL’s share ) -
Panvel - Nextzone ( 91 pc )
Bhandup - NeoHomes ( 100 pc )
Byculla - Monte South ( 40 pc )
Mulund - Millennium ( 100 pc )
Lower Parel - Futurex ( 100 pc )
Total homes in pipeline - 15k+
Land under development - 40 lakh Sq ft
Premium - Monte South project continues to progress at a rapid pace reflecting company’s commitment to delivering premium and high quality development on time
In commercial segment, Futurex project is garnering significant traction - this project has high value inventory. Likely to result in robust sales in coming Qtrs
Panvel project has got a boost due development of Mumbai - Trans harbour link. Post the commercialisation of the link - seeing increased demand
Millenium project in Mulund with its small ticket commercial offerings is performing exceptionally well
Bhandup - is a nice location for luxury projects. Company being present there for over 6 yrs with their NeoHomes project is a dominant player in Bhandup market
Bhandup area is witnessing a lot of Infra development. Hence the prices are going up. It’s also attracting a lot of other players to Bhandup. Goregaon - Mulund Link Road is also adding a lot of value to the Bhandup area. Company believes, their Bhandup real estate is a gold mine. Company has been hiking prices @ 5 pc for past few years without hampering sales in this area
Company is guiding for a 20 pc + CAGR growth in booking value for next 2-3 yrs
Board has approved an enabling resolution to raise 500 cr via QIP. Aim is to reduce debt and acquire some new assets
Launch pipeline for next 4-5 qtrs should be around 1300 cr. This will comprise of - 1.5 lakh Sq Ft @ Bhandup, 2 Lakh Sq Ft @ Byculla, 2.5 lakh Sq Ft @ Panvel
For any RE company, festive Qtr is when bulk of the sales happen. In other times, sales are generally slower
Company’s Panvel land parcel is located close to the new International airport - that should go live in 9-12 months. So- that’s an added advantage
Company is also looking at merging some of the assets of unlisted entity within the listed entity. The process is on. Should materialise with the materialisation of the QIP
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
Zydus Wellness -
Q1 FY 25 concall and results highlights -
Revenues - 839 vs 699 cr, up 20 pc ( volume growth @ 17 pc )
Gross margins - 55.5 vs 52.4 pc
EBITDA - 155 vs 116 cr, up 33 pc ( margins @ 18 vs 17 pc ). Other expenses were up 27 pc because of hiring of strategy consultant. Without this, other expenses would have only risen by 6 pc
PAT - 147 vs 110 cr, up 34 pc
Have repaid all their Debts. Company is now net cash cash positive
Company’s brands with their Mkt rank -
Sugarfree - No 1 - with 96 pc mkt share in sugar substitutes
Glucon D - No 1 - with 60 pc mkt share
Complan - No 5 - with 5 pc mkt share
ImLite - NA - new product category ( a unique blend of sugar + stevia )
Nycil - No 1 - with 35 pc mkt share in prickly heat powder
Everyouth - No 1 - in peel off masks and scrubs. No 5 in face wash
Nutralite - NA - has no organised peer in Fat spread category
Harsh summers in Q1 helped in the growth of seasonal products like - Glucon D and Nycil
Seeing a pickup in rural demand - lowering the rural - urban consumption gap
The personal care portfolio ( Everyouth + Nycil ) of the company saw a massive growth of 42 pc YoY !!!
Food and nutrition ( Sugarfree + Nutralite + Complan + Glucon D ) also grew strongly @ 15 pc YoY. Nutralite portfolio grew in single digits
Launched the following product extensions in Q1 -
Complan ImmunoGro - in select states
Everyouth Pink Clay, Charcoal infused anti pollution facewash, scrub and facewash
Nutralite - Tandoori Mayo spread
Nutralite - carrot and cucumber sandwich spread
Nycil soap with 4 variants in International Mkts. The 4 variants are - Aqua Mint, Neem and Aloe Vera, Lime and Sandal
Have lined up four more launches in the coming Qtrs
Company increased their A&P spends by 19 pc in Q1 ( to plough back some of the GM expansion gains )
Everyouth face scrub grew by 14 pc in Q1 and maintained its leadership position with 46 pc mkt share vs 43 pc YoY
Everyouth Peel off grew by 21 pc in Q1 and maintained its leadership position with 78 pc mkt share vs 76 pc YoY
Nycil prickly heat powder grew by 20 pc - led by harsh summers and continuous brand advertisements
Company intends to go back to 17-18 pc kind of EBITDA margins on a full year basis over the next 2-3 yrs
E-Comm now constitutes aprox 10 pc of company’s sales
Company has changed the formulation of SugarFree gold from Aspartame to Sucralose + Chromium. Chromium is known to reduce the blood sugar levels. This should help the company overcome the negative perception around Aspartame
Q2 and Q3 are generally slow for the company. 1/3rd of company revenues comes from these Qtrs. 2/3rd comes from Q1 and Q4. This causes loss of operating leverage in Q2+Q3 and hence the margins correct. However over the medium term, company is sticking to their 17-18 pc kind of EBITDA margins guidance for full FY
Company is confident of achieving double digit growth in topline for FY 25
Disc: initiated a tracking position, monitoring, biased, not SEBI registered, not a buy / sell recommendation
RACL Geartech -
Q1 FY 25 concall and results highlights -
Company’s product profile includes transmission gears and shafts, sub assemblies, precision machined parts, chassis parts and Industrial gears
Company has 02 manufacturing facilities in India (Gajraula and Noida) and 03 warehouses in Europe
Company has 22 active customers for its products ( globally )
Company has been awarded Tier - 1 supplier status by a premium German car manufacturer for manufacture and supply of parking lock mechanisms. Mass production for this is expected to start in Feb 26
Company has strong relationship with ZF group. In coming years, revenues from supplies to ZF group should contribute Double digit revenues for the company
Q1 Financial outcomes -
Revenues - 109 vs 88 cr
EBITDA - 20 vs 22 cr ( margins @ 18 vs 25 pc )
PAT - 4 vs 9 cr ( due higher depreciation and interest outgo )
Exports:Domestic sales @ 68:32
Company had budgeted for a Q1 sales of aprox 125 cr. Could not achieve the same due to last minute inventory rationalisation by some clients in Europe resulting in order cancellations. Company had produced the finished products but did not ship them. Hence the tooling costs, costs related to Third party vendors are all booked in Q1 but the sales are not booked. Hence the operating deleverage and resultant compression in margins
Also, the growth in India business in Q1 was strong. India business has lower margins. All this has contributed to EBITDA margin compression
Their customers in Europe ( catering to EV space ) are facing a demand slowdown and hence their projections / demand forecasts are going haywire. This is resulting in order cancellations for RACL from their EV focussed customers
Customers in Europe that were focussing heavily on EV, have again started working on ICE and Hybrids. Overall - the auto industry in Europe is in a state of flux
Company is hopeful of a demand revival in H2 ( more so in the domestic mkt, where the demand is as such holding up ). Their earlier guidance of 550 cr of sales in FY 25 is not going to materialise - because of the disruptions mentioned above
Company has tightened its belt ( earlier they were quite liberal as the company was growing rapidly ) wrt various operational costs to tide over this demand uncertainty
Have operationalised 4MW (off-site) + 1.3 MW (on-site) of solar power plants - should result in energy cost savings
NEW BUSINESS PROSPECTS -
(a) Company is in advanced discussions with a European PV maker for new business related to their new EV/Hybrid/ICE platform - likely to be a big ticket order ( incase the company gets it )
(b) In advanced discussions with a Tier 1 European customer for Pedal - Assist - E Cargo vehicle ( discussion in final stages )
(c) Have received new business from a German customer for additional parts for their E-Bikes ( will be made at Noida plant )
(d) In advanced talks with 2 Indian OEMs for their Sub 400 cc motorcycle gearbox - again, likely to be a fairly large order
(e) Have received orders from Tier-1 clutch suppliers namely - FCC India, Alder Italy for supplies to US/Italian 2W OEMs
(f) In final stage negotiations with on of the domestic OEM for award of substantial business. The business is for a component which is identical / very similar to the component they were supplying to a European customer. The result of negotiation / final ward of business should happen by end of Q3
Company has again started to focus on the agri-segment ( due to the disruptions mentioned above in the export - PV segment )
Company continues to be upbeat on the China + 1 story. The Europeans are increasingly being more stringent wrt imports from China and are increasingly imposing higher import duties. This augurs well for Indian manufacturers
Escorts - Kubota is a big domestic customer for the company. As Escorts - Kubota becomes more aggressive wrt their India business ( which they are becoming ), this again is a good news for RACL
Disc: hold a small position, will add more only if I see a business recovery, not SEBI registered, not a buy/sell recommendation
Emami Ltd -
Q1 FY 25 concall and results highlights -
Revenues - 896 vs 814 cr, up 10 pc
Gross Margins @ 67.7 vs 65.4 pc YoY
EBITDA - 216 vs 190 cr, up 14 pc ( margins @ 24 vs 23 pc - despite company investing heavily in A&P - A&P spends were up 24 pc YoY )
PAT - 150 vs 136 cr, up 10 pc - due higher tax rate vs LY
India business volume growth @ 8.7 pc ( 85 pc of total business )
International business constant currency growth @ 11 pc - led by MENA, SAARC regions ( 15 pc of total business ). There was a sales slowdown in CIS region
Brand wise growth rates in Q1 -
Navratna + Dermi Cool grew by 27 pc ( due harsh summers )
Zandu Healthcare grew 11 pc
Boroplus portfolio grew 4 pc
7 Oils in 1 grew 9 pc
Pain Management de-grew 7 pc
Male grooming de-grew 5 pc
Kesh King portfolio de-grew 15 pc
The Man Company + Brillare - grew 23 pc ( strategic subsidiaries )
Modern Trade + E-Comm now contribute to 11 pc of domestic sales
Expecting a harsh winter this FY due to the La Niña effect this year
Company aspires to keep the double digit growth going in the Zandu Healthcare portfolio. Key drivers behind this growth should be - Zandu’s brand equity, first mover advantage in various Ayurvedic products, aggressive A&P spends, 02 WHO GMP compliant manufacturing facilities
Hopeful of Kesh King coming back to growth territory wef Q2 ( however - the whole premium haircare oils category continues to remain under pressure ). Kesh King has greater rural salience. If the rural growth picks up, this should augur well for Kesh King. Also the competitive intensity is coming down in this space ( Indulekha and Patanjali are the main competitors )
The Man Company - has started making profits. Brillaire is still in investment phase. The combined revenues of Man Company + Brillaire in FY 24 were around 225 cr. The profitability of this portfolio will only improve once it scales up meaningfully ( say 2-3 yrs from now ). This yr, company is aiming for 275 cr sales from this portfolio. Among the two, Brillaire is growing faster than the Man Company due smaller base
Demand trends in July have been encouraging
1/3rd of Kesh King portfolio’s sales come from shampoo ( rest from Hair Oil )
RM prices continue to be soft - aiding gross margins
Seeing descent demand pick up in the rural Mkts
Tax rate for full FY should be around 10-11 pc ( same for next FY ). It was higher in Q1. Should moderate going fwd
Company is doing all it can to revive the Kesh King + Male Grooming portfolio. ( investing very heavily behind these brands )
Overall size of Kesh King portfolio is around 300 cr / yr
Amortisation for FY 25 should be around 90 cr. For next two FYs - should be around 85 cr and 80 cr respectively
Full FY EBITDA margins should be better than LY ie > 26 pc ( despite aggressive A&P spends )
In-organic growth continues to be an integral part of company’s growth strategy ( specially given the strength of balance sheet )
Disc: initiated a tracking position, not SEBI registered, not a buy/sell recommendation
SULA Vineyards -
Q1 FY 25 results and concall highlights -
Sales - 129 vs 118 cr, up 9 pc ( extreme heat wave and general elections were strong headwinds )
Gross margins - 76 vs 74 cr
EBITDA - 35 vs 32 cr, up 9 pc ( margins @ 27 vs 27 pc )
PAT - 15 vs 14 cr, up 6 pc
Revenue split -
Own brands - 115 cr , up 12 pc
Within own brands - Elite and Premium categories contributed to 71 pc of sales ( @ 82 cr ) vs 74 pc in Q1 FY 24. This portfolio grew by 8 pc - led by price growth. Volume growth was (-) 1 pc
Sale of Economy and Popular brands jumped by 24 pc to 33 cr. It has happened after >2 yrs that economy and popular portfolio has grown faster than elite and premium segments
Wine tourism - 11 cr, down 2 pc. New tasting room and restaurant operationalised near Nahsik Airport
Sale of imported brands - 4 cr
Two exiting projects under construction -
Launching new tasting room and wine shop ( 3500 Sq Ft ) at ND Wines ( acquired in Apr 24 ) - near Gujarat Border
Expansion of Wine Tourism facilities at ‘Domaine Sula’ - near Bengaluru
Expecting both these initiatives to go commercial before the festive season
Company’s key brands -
RASA - Elite brand
The SOURCE - Elite brand
SULA - Premium brand
DINDORI - Premium brand
MADERA - Economy brand
DIA - Economy brand
YORK - Popular brand
ARROS - Popular brand
Company has installed 3 MW solar power capacity at its manufacturing sites catering to 50+ of their energy needs
There were very heavy restrictions on the movement of alcoholic beverages during the General Elections - which had an adverse impact on company’s Q1 performance. This also led to distributor level de-stocking
CSD sales grew by 50 pc in Q1
THE SOURCE - brand grew by 20 pc in Q1
Economy and Popular brand sales have been outsourced to third party players ( in Karnataka, Telangana, Maharashtra ). Company wants to focus on Elite and Premium segments. This outsourcing is also yielding good results - evident from the growth in economy and popular segments in Q1
Their Wine Tourism resort occupancy has started to improve nicely in July - Aug vs Q1
A new resort is going to come up in FY 26 - expanding the company’s resort capacity by 30 pc. This facility will also have a conference room ( was absent in their existing resort )
WIPS outstanding balance ( subsidy from Maharashtra govt ) on 31 Mar was 73 cr after receiving 89 cr from Maharashtra govt in Q4. Another 21 cr have accrued in Q1, taking the total balance to 94 cr as on 30 Jun. Now the company has received another 10 cr from the Maharashtra Govt, reducing the WIPS balance to 84 cr
30 pc company’s sales come from HORECA segment ( which company calls on trade sales ). 70 pc come from normal sales from Wine Shops
Pernod Ricard is in talks to sell off their Wines business to Accolade Wines UK by end of FY 25. This is going to be a very positive development for Sula. This is because, Pernod Ricard used to bundle the sales of their Wines - Jacob’s Creek ( no 2 in India ) with their Whisky brands. Sula always used to find it difficult to compete with such a strategy
Will monitor / look out for sales pick up before adding to my positions
Disc: hold a small tracking position, not SEBI registered, biased, not a buy/sell recommendation
Cera Sanitaryware -
Q1 FY 25 concall and results highlights -
Revenues - 398 vs 427 cr, down 7 pc
EBITDA - 56 vs 68 cr ( margins @ 14 vs 16 pc )
PAT - 47 vs 56 cr
A&P spends in Q1 were @ 11 cr. For full FY 24, A&P spends were at 64 cr
Cash and Cash equivalents @ 864 cr
Intense heat wave conditions and the slowdown caused by general elections led to subdued demand conditions in Q1
Product wise breakdown of revenues -
Sanitaryware contributed to 53 pc of revenues
Faucets contributed to 36 pc of revenues
Tiles contributed to 9 pc of sales
Wellness contributed to 2 pc of sales
Segment wise breakdown of revenues -
Luxury/Premium Segment - 44 pc
Mid Segment - 32 pc
entry Segment - 24 pc
City wise distribution of sales -
Tier -1 - 35 pc
Tier -2 - 22 pc
Tier - 3 - 43 pc
Company expects a significant pickup in business wef H2
Company sells its products under 4 prominent brand names - CERA, SENATOR, LUSTRE, LUXE
Senator, Lustre and Luxe are focussed towards the premium and luxury segments
In Q1, company’s imports from China were @ 7 cr - showing increasingly reduced dependence on China
LY, company increased its faucets ware capacity from 3 lakh pieces / month to 4 lakh pieces / month
Company has acquired a land parcel for a new Greenfield sanitaryware facility
Capacity utilisation of Sanitaryware and Faucetware plants in Q1 were @ 76 and 84 pc respectively
B2C sales were @ 64 pc of total revenues. Rest were from B2B/project markets
Gas prices remained favourable in Q1. Gas from GAIL was available @ Rs 28.38/ cubic meter vs Rs 29.31 in Q1 FY 24. Gas from Sabarmati Gas Ltd was available @ Rs 51.40 vs Rs 50.01 in Q1 FY 24. Blended cost of gas was @ Rs 31.64 vs Rs 33.91 ( as the company’s sourcing from GAIL increased from 78 pc to 86 pc YoY )
Guiding for full FY 25 EBITDA margins @ 16-17 pc. Intend to grow sales @ 16 pc CAGR for next 3 yrs ( maintaining the guidance despite a weak Q1 )
Estimated total size of Sanitaryware and Faucetware industry ( organised + unorganised ) @ Rs 9000 cr and Rs 14000 cr respectively
Company has started seeing improvement in B2B business post general elections. Company is expecting the rub off to happen in the B2C segment too - by H2 this yr
Company is investing aggressively behind the - Senator, Luxe, Lustre brands - basically to build a stronger presence in the Luxury space
Disc: initiated a tracking position, intend to add more if the price corrects or if the sales pick up, not SEBI registered, not a buy/sell recommendation, biased
**IIFL Finance - **
Q1 results and concall highlights -
Loan book @ 69.6 k cr, up 2 pc YoY ( due sharp contraction in Gold Loan book post the Ban on further disbursement of Gold loans by RBI )
Breakdown of loan book, Avg Yield, Gross NPAs -
Home loan book @ 28.1 k cr, up 23 pc YoY, Avg Yield @ 11 pc, Gross NPAs @ 1.29 pc
Gold loan book @ 14.7 k cr, down 33 pc YoY, Avg Yield @ 19.6 pc, Gross NPA @ 2.93 pc
Micro fin book @ 12 k cr, up 17 pc YoY, Avg Yield @ 24.5 pc, Gross NPAs @ 2.32 pc
LAP book @ 8.4 k cr, up 23 pc YoY, Avg Yield @ 18.9 pc, Gross NPAs @ 3.59 pc
Digital loans @ 4.6 k cr, up 59 pc YoY, Avg Yield @ 21.4 pc, Gross NPAs @ 3.26 pc
Construction and RE loans @ 1.4 k cr, down 46 pc, Avg Yeild @ 16.5 pc, Gross NPAs @ 1.45 pc
P&L account -
NII - 1012 vs 937 cr, up 8 pc
Other income - 380 vs 487 cr, down 22 pc
Operating expenses - 746 vs 633 cr, up 18 pc
Pre-Provisions operating profits - 647 vs 792 cr, down 18 pc
Provisions - 251 vs 190 cr, up 32 pc
PBT - 436 vs 618 cr, down 29 pc
PAT ( after minority interest ) - 287 vs 425 cr, down 32 pc
Cost of funds @ 9.1 vs 9.1 pc YoY
RBI has lifted the ban of disbursement of Gold Loans wef 19 Sep !!!
As on 05 Aug ( day of concall ), Gold loan portfolio has run down to 12.1 k cr from 26 k cr on 04 Mar ( date of ban on disbursements ). Company has returned jewellery of the customers and returned 13.5 k cr to the Banks. The acid test of quality of a portfolio is when it liquidates - here the company’s Gold loan portfolio has passed with flying colours
Company has not laid off any employees nor has closed any branches
Consol GNPAs @ 2.2 pc vs 1.8 pc YoY
Consol NNPAs @ 1.1 pc vs 1.06 pc YoY
Company’s provision coverage ratio for Net NPAs stands @ 128 pc
Company’s MFI portfolio has behaved far better than the Industry. They started tightening their lending norms in the MFI space, way back in Jan 24 ( which the Industry started doing post Mar - Apr - ie when the stress started to appear ). Also, company’s exposure to Punjab is lower - where the stress is higher
Also, because of their caution on MFI loans, the MFI book is down QoQ - it looks like a great decision - in hindsight
Banks have been a little hesitant in lending to IIFL post the RBI ban. Ex- If the company is asking for say 500 cr, banks are only releasing 100 cr. However, their caution is now seeing signs of abating
While disbursing loans in MFI segment, company doesn’t lend to a customer borrowing from > 4 sources. They also don’t lend if the customer has borrowed > 2 lakh / household
Slippages in MFI portfolio in Q1 were around 100 cr. That’s about 3.3 pc - annualised - this looks okay considering MFI is a very high margin/spread business
Disc: was holding a tracking position, intend to add more - now that the RBI’s ban has been lifted, not SEBI registered, not a buy/sell recommendation, biased
Was anyways looking to add / buy into some NBFC stocks to play the impending rate cut cycle
Star Health and Allied Insurance company -
Q1 concall and results highlights -
Company has a whopping 31 pc mkt share in retail Health Insurance space in India. Its a fast growing, under-penetrated industry
Distribution strength - 7.2 lakh agents, 887 branches
15 pc of company’s premium is collected via specialised policies. These specialised policies include -
Star cancer care
Star senior citizens
Star cardiac care
Young star
Women care
Star Diabetes safe
Q1 FY 25 financial outcomes -
GWP - 3475 vs 2948 cr, up 18 pc
GWP from Retail Health + Personal accident + Travel Insurance @ 3100 cr, from Group health insurance @ 375 cr vs 2700 cr and 248 cr respectively
Combined ratio - 99.2 vs 97.8 pc
Underwriting profit - 140 vs 145 cr
Investment income - 295 vs 145 cr ( investment yield @ 7.5 vs 7.4 pc )
PAT - 318 vs 287 cr, up 11 pc
Investment portfolio @ 15,800 vs 13,300 cr ( investment leverage @ 7.5 pc )
Breakdown of combined ratio -
Claims ratio + Expense ratio = 31.6 pc + 67.6 pc = 99.2 pc in Q1 FY 25 vs 32.4 pc + 65.4 pc = 97.8 pc in Q1 FY 24
Channel wise premium collections -
Individual agents - 80 pc
Bancassurance - 8 pc ( this channel grew 25 pc YoY )
Digital - 7 pc ( digital channel also grew by 25 pc YoY )
Corporate - 5 pc
Company’s last 5 yrs CAGR in GWPs and underwriting profits stand @ 23 and 24 pc respectively
Company added 17k agents in June Qtr
Company has tie-ups with 61 banks and NBFCs for selling their products
Company’s digital channel consists of own direct to consumer and online brokers + web aggregators
Company aims to hit a GWP ( full year ) of 30k cr and PAT of 2500 cr by FY 28 ( FY 24 GWP, PAT were 15.2k cr, 845 cr
Ratio of fresh : renewal business improved to 25:75 vs 23:77 in Q1 LY
Company expects the share of business coming from BACASSURANCE channel to grow in future - as its a high growth channel
Company has 887 branches - touching 19000 PIN CODES in India. Company has a sharp focus towards rural and semi-urban areas
In Q1, 90 pc of claims were cashless vs 84 pc in June LY
Company’s solvency ratio stands @ 2.3 vs a regulatory requirement of 1.5
Star Health App downloads stand at 66 vs 57 lakh YoY
Inflation of bills by hospitals / Over charging is an industry wide problem. However, company is upto the task and they are extremely vigilant about these malpractices. Company also keeps educating its customers about the treatment options available in various areas / cities / towns and try and divert customers away from hospitals that have a tendency to over-charge
Company also invests a lot a wellness awareness and preventive checkups - for its customers to keep them healthier which helps in the long run - obviously
General Insurers council of India ( representing the General Insurance industry ) has started making efforts to bring various Insurers on board and negotiate better deals with Hospitals. The whole thing is in nascent stages. Likely to fructify in medium term
Company’s investment book comprises of roughly 12:88 in terms of Equity:Fixed rate investments
Company’s retail business grew by 15.5 pc - that comprises of 7.5 pc volume growth and 8 pc value growth ( price hikes )
The management believes they have a deep customer connect and trust. This should help them cross-sell other protection plans like Life Insurance, Term Insurance etc. They are open to acquiring a composite Insurance license. Have also appointed BCG to study and identify potential profit pools for the company
Company’s loss ratio is higher by 2.2 pc vs Q1 FY 24. This has been an industry wide phenomenon in Q1. The fever + Infections season did start a little early in Q1. Hence the company expects it to end also a little earlier in Q2 - bringing down the loss ratio in Q2 ( let’s see if that happens !!! )
10 pc of company’s GWP in Q1 has come from porting-in. ( ie porting customers from other companies to their company ). Company is keen to go aggressively towards in-porting - in areas where they feel that loss ratios are expected to be within manageable limits
Company plans to take a price hike ( of about 10-15 pc )on 30 pc of its product portfolio in current FY. On the total portfolio level, this should work out to be a hike of around 4-5 pc
Disc : not holding, analysing, may initiate a tracking position if the stock price falls steeply post the customer data hack news, not SEBI registered, not a buy/sell recommendation, posted only for info purposes
SG MART -
Q1 FY 25 concall and results highlights -
It’s an APL Apollo group company - started operations in June 24. APL Apollo group already runs 2 big companies - APL Apollo steel tubes and Apollo Pipes
In India ( before SG Mart ), there were no trading / distribution giants who could pick up material ( in big / bulk quantities ) from manufacturers and Distribute them across the country ( mostly to MSMEs + smaller Retailers / Distributors ) in the Steel + Other Building materials space. Existence of such nation wide distributors is a norm in US/EU/China. This was one obvious gap in the Industry that the company intends to fill
SG MART is a premier B2B one stop shop ( basically a B2B marketplace ) providing a wide range of construction related solutions from top brands ( like - APL Apollo, Premium Structural Sections, Jindal Steel, JSW Steel, Hindustan Zinc, SAIL, NMDC Steel, Kajaria Tiles, Havells Electricals etc ) under one roof
At present - company has 90+ registered suppliers of building materials and 800+ registered customers
Company’s current product portfolio includes - TMT bars, Wire Mesh, Binding Wire, HR Sheet, Checkered Sheets, Welding Rods, Tapping screws, Bath fittings, Tiles, Cement, Laminates, Paints
Q1 FY 25 financial outcomes -
Revenues - 1137 vs 151 cr
EBITDA - 24 vs 2 cr
PAT - 27 vs 1 cr
Cash on books @ 1125 cr
India’s steel manufacturing ( in various forms ) capacities are slated to go up by 50 pc by Dec 25 vs Dec 23. That’s a huge jump and is also a natural Industry tailwind for the company
Before SG Mart, the biggest distributor in India was selling aprox 25k Tons/month - that’s peanuts if u look at the current size of the Industry - ie 120 million tons / yr and likely to go upto 300 million tons by 2030
Company has already started doing a monthly volume a 60k tons - inside 1 yr of operations. Inventory days in this business are low at 0-10 days. Company makes a margin of 1.5-2 pc when it trades in these products. If it can turnover its inventory 20-25 times / yr, return on capital can be 30 - 40 pc !!!
There is another Industry Gap - there are various Industries like - automobile, consumer durable makers ( making Fridges, Washing Machines etc ) who don’t buy raw steel. They get their raw steel processed by small local players and then buy it from them. Here - the company intends to set up nation wide service centers to process steel to meet the demands of these user Industries and this will also give them much better margins vs pure trading. Company has already operationalised 2 of its service centers - processing 10-12k tons / month each. Aim to start 2 more service centers in Q2 this FY. Company will set up its 5th service center in Dubai. In this business, the margins are better @ 4-5 pc, but Inventory days are also higher @ 25-30 days
Company intends to set up > 100 service centers across India by 2030. Company Intends to cater to towns ( that have small Industrial hubs ) like - Patna, Ludhiana, Jalandhar, Jammu, Kochi, Raipur etc and sell the processed steel to the MSME buys in these cities
Cost of setting up + Working capital + Inventory requirement per service center should be around 40-50 cr. Company has the cash ( > 1000 cr ) and the RM ( since its already buying steel from the big players ) - this is their right to win in this space
By 2030, company intends to clock a topline of 50,000 cr with an EBITDA in the range of 1500 cr
For FY 25, company is looking to clock a revenue of 7-8k cr, doing 1.3 million tons of steel business with a blended margin of 2.5 pc ( EBITDA ). That should mean an EBITDA of around 170-190 cr for FY 25
Company aims to ramp up revenues to 13-14k cr in FY 26 and 18-19k cr by FY 27 ( basically - there should be clean runway of high growth looking into next 2-3 yrs !!! )
As the company is already into 5th month ( as on date of concall ) - they don’t see any risk on the horizon which may hinder them to achieve this yr’s guidance
Aprox Break up of Q1’s revenues -
Metals trading - 600 cr
Service centers business - 400 cr
Distribution of building materials - 140 cr
At present, company’s focus is largely on the steel segment. Once they achieve 500 cr EBITDA ( say by FY 27 ), they ll start diverting some energies towards other products as well. Company intends and is focussed to be the biggest tech enabled B2B platform in the steel segment in India
Some of India’s largest - region wise distributors have already become company’s clients
Company is light on debt and heavy on Equity funding. Also, their capital intensity is light - hence won’t ever have high depreciation rates. Most of the EBITDA is likely to flow to PBT level
Also, since company’s Inventory days are limited to 10-30 days, the Inventory risk that the company carries is also minimal
Even if one looks at EBITDA margisn of Shankara buildcon ( which has higher inventory days ) for last 20 Qtrs, they have been stable despite a lot of fluctuations in the Steel prices
Since Shankara is a big organised retailer, it can eventually end up being company’s customer. Company has already started started doing some amount of business with Shankara Buildcon
There are companies across the globe which have a very successful business and a model similar to SG Mart. These include - Sumitomo Trading company, Mitsubishi trading company, ITOCHU, HANWHA, MARUBENI etc
Disc: initiated a tracking position, business looks promising, growth guidance ( if achieved ) can create a lot of value, not SEBI registered, not a buy sell recommendation, biased
Crompton Greaves Consumer Electricals -
Q1 FY 25 results and concall highlights -
Revenues - 2138 vs 1877 cr, up 14 pc
EBITDA - 232 vs 186 cr, up 24 pc (margins @ 11 vs 10 pc)
PAT - 152 vs 122 cr, up 24 pc
Company ( broadly ) has 3 lines of businesses - their legacy Electrical consumer durables business + Lighting business + acquired kitchen appliances business of Butterfly ltd ( acquired 1.5 yrs back )
Electrical consumer durables ( ECD ) business includes - Fans, Air Coolers, Geysers, Built in Home Alliances ( added recently - less than 2 yrs old ), Lighting products, Irons etc
Lighting business - selling LED downlights, LED tubes, Strips, LED COB lights etc
Butterfly - sells range of Kitchen appliances like - Juicers, Mixers, Grinders, Choppers, Electric Kettles, Gas Cooktops, Electric rice cookers etc
Segment wise performance -
ECD + Lighting business -
Sales @ 1959 cr ( 1727 cr from ECD, 233 cr from lighting ), up 18 pc YoY - highest ever sales, 4th consecutive Qtr of double digit revenue growth. ECD revenues grew by 21 pc. Lighting revenues grew by 2 pc
EBIT @ 280 cr ( 259 cr from ECD, 21 cr from lighting division )
EBIT margins @ 10.4 pc ( ECD EBIT margins @ 15 pc, Lighting EBIT margins @ 8.9 pc )
Company continued to aggressively expand its distribution channel. E-Commerce Chanel also grew at a brisk pace
Company’s spend on A&P increased by 29 pc !!! ( quite a big jump )
Butterfly -
Revenues @ 182 cr
EBIT @ 3 cr
Company is taking several initiatives to strengthen business fundamentals - turning around the Butterfly brand is a key priority
New products contributed to 8 pc of sales
ECD product wise growth -
Fans grew by 16 pc ( aided by extreme summers )
Pumps grew by 30 pc ( both agri and residential pumps grew smartly. Have recently forayed into solar pumps and executed orders worth 21 cr in the solar pumps category )
Large Appliance grew by 24 pc ( aided by 68 pc growth in Air coolers )
Small Appliance grew by 20 pc ( mainly led by Crompton branded Mixer Grinders )
In oder to sell large Kitchen appliances ( like built in Microwaves, Chimneys, Cooktops, Dish Washers etc ) under the Crompton brand, company has opened 100 Exclusive brand outlets ( EBOs). They recorded sales of 14 cr in Q1. Currently making losses at EBITDA level
Witnessing double digit growth in LED - tubes and ceiling lights ( however, prices of these products continue to correct )
Company’s newer channels grew @ brisk pace - E-Comm, Modern retail, rural sales grew by 82 pc, 22 pc and 16 pc respectively
La Niña - effect this year is also likely to result in harsher Winters - which again benefits the company’s sales of Geysers, room heaters
Company did take price hikes to combat higher material costs in Q1. Further hikes / cuts will depend on the trend of raw materials going fwd. Q1 was the fourth consecutive Qtr when company took price hikes ( copper, aluminium and steel prices have corrected somewhat in Q2 vs Q1 - further price hikes may not be required - IMHO )
Premiumisation - ie, selling better and more expensive products is a constant focus for the company in all its business divisions
Company has built a healthy order pipeline in its solar pumps business ( they did not disclose the amount )
Company is actively looking to enter 2-3 more product categories - that are complimentary to company’s line of business / current brand image. Will disclose the same when they r closer to launch
Company expects to start growing the Butterfly part of the business wef H2. At present ( and in Q1 ), taking a lot of steps in improving the business fundamentals, product pricing across channels right
In Q1, Butterfly part of the business spent 4 pc of sales on advertisement vs 2 pc in Q4 - showing increased aggression from the management
Company’s mkt share in the fans category is around 28-29 pc ( which is a big number ). Company sold 2 cr fans in FY 24. Out of these, around 24-25 pc of fans sold were in the premium category ( vs 16-17 pc about 3 yrs ago ). Aim is to take the premium part of the portfolio to 40 pc in next 4-5 yrs
In residential pumps, company is No 1 by mkt share in India. Now their focus is on Agri-pumps where the company is relatively under represented. Even in Solar pumps, there are expectations of higher growth going fwd
Company is among top 3 is Geysers and No 2 in Kitchen appliances ( after the acquisition of Butterfly ). Wef H2, company hopes to really accelerate their growth in the Kitchen segment
Company’s built in Kitchen appliances ( being sold through their EBOs ) is a start up. Company would first scale up the business to 100 cr / yr sales and only then start to focus on profitability
Lighting business ( both B2C and B2B ) is now back on growth path. Key now is to build on the gains made so far
Company had taken a debt of 2000 cr to acquire the Butterfly business. Today that debt stands at 300 cr ( they have knocked off 1700 cr of debt within 2 yrs ) - goes to show their strong cash generating abilities
Company is open to acquiring more brands - as one of the best usages of the cash that they generate. Helps them expand their addressable market
Disc: not holding, studying at present, inclined to add if there is more price correction in the stock price, not SEBI registered, not a buy/sell recommendation
Hero Moto Corp -
Q1 FY 25 concall and results highlights -
Revenues - 10211 vs 8851 cr
EBITDA - 1460 vs 1117 cr, up 21 pc ( margins @ 14 vs 13 pc )
PAT - 1032 vs 701 cr
Company has crossed 500 Hero 2.0 stores ( these are upgraded versions of their existing stores. Company has decided to upgrade a fixed no of its erstwhile stores to 2.0 standards ). These are upgraded stores giving a better customer experience
Have also crossed 40 Premia stores - should take them to 100 stores before end of FY 25. Premia stores have been opened to sell premium vehicles like - Harley X440, Karizma XMR, X Pulse 200 and Vida EVs
The margins in the ICE portfolio were @ 16.4 pc. Because of the impact of investments in the EV portfolio, consolidated margins are @ 14.4 pc
Seeing good uptick in rural demand. Rural is one area where the company has traditionally been very strong and has a robust sales and service network
Company continues to spend aggressively in R&D. R&D spends over last 5 yrs have been around 3500 cr. Working on - EVs, Hybrids, flex fuel powertrains
Company has dramatically improved its Mkt share in the 125 cc category in Q1 vs Q4 LY ( from 13 pc to 20 pc mkt share - that’s a huge jump ). All the brands in this category - Super Splendour, Xtreme 125R, Glamour - have done well
Because of great customer response received by Xtreme 125R, company is increasing its production capacity from 25k bikes / month to 40k bikes / month
After the launch of Harley X 440 and Maverick in last FY, company intends to launch a few more products to boost its presence in the premium segment. Some products like - fully refreshed ( new body ) Dstini scooter, Xoom scooter are steps in that direction. Also intend to launch more EVs after the launch of Vida range of EVs LY
Company’s shareholding in Ather Electric currently stands @ 39 pc
As the EV volumes keep increasing, their negative impact on EBITDA margins ( company level ) will keep reducing ( as they will also turn EBITDA positive if the company is able to sell more EV scooters )
Post covid, the rural markets were hit harder vs urban mkts. Also, the 100-125 cc 2W mkt was hit harder than the > 150 cc mkt. As the lower end / rural part of the mkt is recovering now - this augurs well for HeroMoto Corp
At present, 60 pc of company’s sales are happening via NBFC/Bank financing. Company has launched Hero Digi Finance - an aggregation platform for financing which is all automatic ie based on customers digital footprint. This has the potential to make financing more affordable and accessible
Company shares its smart charging Infra with Ather. At present they have around 2500 charging stations in collaboration with Ather
Vida EV crossed 5000 scooters volume / month in the month of July. As the volume ramp up keeps happening, there is a clear path to profitability in the EV business
Another key focus area for the company continues to be the export markets. Progress is export markets has been steady - but still below Company’s internal targetsCompany is seeing a dramatic improvement in customer satisfaction levels from upgraded / more premium Hero 2.0 stores
Along with these, company has also upgraded 190 of their service centers with upgraded consumer lounges
Capex guidance for this FY @ 1200 cr. R&D guidance @ 800 cr
Disc: not holding, studying, not SEBI registered
Sir one key point you forget to mention is that they get the right to use the brand name of APOLLO, for free, which in itself is a big positive for the company as APOLLO has strong presence in the market as well as in the minds of the customers.
Jash Engineering -
Company overview and Q1 results highlights -
An engineering company making critical products for Fresh water and Sea water intake systems, fresh water and waste water pumping stations, de-salination plants, storm water pumping stations, hydro-power generation and also for manufacturing industries like - Steel, cement, Paper & Pulp, Petrochemicals, Fertilizers and other process plants
Product portfolio includes -
Water Intake systems - Like - Penstock gates, Open channel gates, Downward opening Weir gates, Flap gates, Stop Logs
Heavy fabricated gates - Bulkhead slide gates, Roller gates, butterfly gates, Crest gates, Radial / Tainter gates, Bonneted gates
Coarse screening equipment - Trash rack, MMR screen, MultiRake screen, suspended trash racks
Fine Screening equipment - Screenmat step screen, Rotoclean rotary drum screen, Rotobrush Rotary screen, Mahr Perscalator screen, Travelling band screen
**Gate Valves **
Solid Bulk handling Valves
Special purpose Valves
Process equipments like -
Water clarifiers
Detritors
Slow speed floating aerators
Slow speed fixed aerators
Hydropower Screw generators
Screw Pumps
Filtering equipment
Secondary treatment Equipment like -
Diffuser aeration
Mixing and Aeration equipment
Decanting equipment
Turbo Blower
Products wise revenue contribution in Q1 FY 25 -
Water control gates - 49 pc
Screening equipment - 31 pc
Valves - 13 pc
Hydropower, Pumping, process equipment and others - 7 pc
FY 24 financial outcomes -
Revenues - 521 vs 415 cr
Gross profits - 311 vs 243 cr ( gross margins @ 59 vs 58 pc )
EBITDA - 105 vs 77 cr ( margins @ 20 vs 19 pc )
PAT - 67 vs 52 cr
RoE - 19.7 vs 21.7 pc
Q1 and Q2 are generally soft for the company. Company drives bulk of its business from Q3 and Q4
Q1 FY 25 financial outcomes -
Revenues - 116 vs 65 cr ( up 78 pc )
Gross profits - 60 vs 39 cr, up 52 pc ( margins @ 51 vs 60 pc )
EBITDA - 5.2 vs 1 cr ( margins @ 4.5 vs 1.4 pc )
PAT - 0.1 vs (-) 3.4 cr
Company’s order book as on 01 Aug 24 -
Jash Engineering - 553 cr
Rodney Hunt - 365 cr ( their US subsidiary )
Waterfront fluid controls - 21 cr ( their UK subsidiary )
Total @ 939 cr
Order pipeline (under negotiation and in final stages) @ 103 cr
Revenue guidance for FY 25 @ 675 cr
A new construction facility measuring 60k Sq Ft is under construction at Shivpad, Chennai. Likely to be commissioned by Feb 25. At peak capacity utilisation will contribute to aprox 100 cr of revenues
Capex lined up for FY 25 @ 29 cr
Areas like - Storm water and flood prevention, Desalination, Rising sea levels, Wastewater treatment and re-use are likely to open up exiting new possibilities for the company
Company - at present operates via its 6 manufacturing locations - 04 in India, 01 each in UK and US. Current employee strength @ slightly above 1000. Company is approved by most municipal authorities in India and Abroad. These approvals are extremely critical in the company’s line of business
Overtime - company has made 04 major acquisitions - Rodney Hunt ( US ) , Waterfront ( UK ), Shivpad ( in India and Mahr Maschinenbau ( in Europe )
Shivpad was acquired to help in treatment process equipment
Mahr Meashinenbeu was acquired to get bet screens technology in the world
Rodney Hunt was acquired for their brand value in US
Waterfront was acquired for their penetration in the UK mkts
Company’s current facilities have a revenue potential of 800 cr. Aim to take it up to 1000 cr by next FY
Company does perform a lot of their manufacturing functions - in house - which gives them critical advantage over competition
Company has a technical collaboration with Invent ( Germany ) to make Disc Filters and have already started manufacturing the same
Equipment like - diffusers, Mixing and Aeration equipment, Decanting equipment, Turbo Blowers are recent additions to company’s products portfolio
Company executed some legacy orders from its Rodney Hunt subsidiary in Q1. These had thin margins. Future pipeline of Rodney Hunt has much better profitability
As the company’s turnover keeps rising, even Q1,Q2 will start to report descent profits from FY 26 onwards
Company is likely to overshoot its revenue guidance of 675 cr given in the beginning of the year. Revenues may go upto 700-720 cr range ( contingent on customers taking delivery of materials in Mar 25 )
Over and above the expansion at Shivpad( Chennai ), company is undertaking expansion of its Unit -4 by another 64k sq ft @ cost of 23 cr. This again, has the potential to add 100 cr to the company’s bottomline
At present, company is not doing its screens business in US. US business is currently restricted to various types of gates. Now that the company has been able to turn around Rodney Hunt, it plans to introduce screens in US as well. One advantage that company has is that Mahr - brand is well known in US, hence products approvals should not be a problem for them
Singapore has earmarked resources worth 6000 cr for electrotechnical equipment to be deployed over next 10-15 yrs to combat rising water levels. This business should start flowing wef next FY. Jash engineering should be a beneficiary
In a typical waste water treatment plant, money is spent on civil works and electrotechnical equipment. On an avg, company’s share of value in any such project is around 5-10 pc of the total project cost
Company believes, as of now the GoI’s focus on water related infra is not at levels that it should be. However, as govt’s focus in this area improves - it can be great times for the company
Company has started to increase its focus towards waste water treatment business - hence their latest technical collaboration with Invent ( Germany ) to make disk filters, canisters, diffusers, Turbo blowers etc. At present there are certain differences of opinions between Jash and Invent about the JV’s strategy. Invent wants to do low volume / high margin business whereas Jash is trying to convince them to go for higher volumes. According to Jash’s management, it may take another 6-12 months for the opinions to converge
At present 3-4 additional jobs are under negotiation that the company is actively involved in. Each order is of the magnitude of aprox $ 5-15 million
Company has guided for a 1000 cr topline by FY 28. However, if the business buoyancy is good - they may achieve it sooner
Disc : not holding, tempted to add on dips, looks like a promising company, not SEBI registered, not a buy / sell recommendation
Sir one such risk in this company is they have fixed price contract, so RM volitility can hit their margins, please add other risk that you know, as i also like the business, but have no positions yet.
Laurus Labs -
Q1 FY 25 results and concall updates -
Revenues - 1195 vs 1182 cr
Gross margins @ 55.1 vs 50.6 pc - a key indicator of health of the business
EBITDA - 171 vs 168 cr ( margins @ 14.3 vs 14.2 pc )
PAT - 13 vs 25 pc
Revenues led by strong demand in Oncology APIs, ARVs. Delivery schedule in CDMO business in Q1 was tepid
Gross margins @ 55 pc - is a key indicator of business profitability. As the capacity utilisation of company’s assets improves, profitability can potentially show a major improvement
Spends on new initiatives - Cell and Gene therapy + Animal Health were at 15 cr
Segment wise revenues -
CDMO - 214 vs 250 cr, down 14 pc - CDMO deliveries are scheduled for key late phase NCE projects in Q4. Witnessing significant interest from new customers, momentum in RFPs continued from big Pharma and key Biotechs. Total active CDMO projects ( including intermediates @ 70 !!! ). Out of these, 10 projects are in commercial stages. 20 projects are in Animal health + Crop protection spaces. Have started supplying commercial validation batches of the Animal Health, Crop health projects
APIs - 664 vs 597 cr, up 11 pc - led by strong growth in Onco APIs ( up 120 pc YoY ). Segment wise breakup of API sales -
Onco APIs - 18 vs 9 pc YoY
ARV APIs - 60 vs 68 pc YoY
Other APIs - 22 vs 23 pc YoY ( could have grown stronger but the sales were deferred by shipment delays )
FDFs - 274 vs 285 cr, down 4 pc - fall in ARV FDF volumes ( down 20 pc ) compensated by good growth in developed market exports ( up 25 pc )
Bio - 43 vs 50 cr, down 14 pc - stable Qtr with healthy traction in bio CDMO services. Initiated discussions with several strategic customers for long term CDMO collaboration. Commercial fermentation facility build up on track in Vizag
Company’s manufacturing footprint -
Vishakhapatnam -
Unit - 1 @ Parawada - 1279 KL - APIs + CDMO
Unit -2 @ Atchutapuram - 89KL, 10 billion units - APIs + FDFs
Unit -3 @ Parawada - 2318 KL - APIs + R&D
Unit - 4 @ Atchutapuram - 1959 KL - APIs + CDMO
Unit - 5 @ Parawada - 161 KL - CDMO
Unit - 6 @ Atchutapuram - 1479 KL - APIs
LSPL - 1 @ Parawada - 139 KL - APIs + CDMO
LSPL - 2 @ Atchutapuram - 283 KL - CDMO
Hyderabad -
Sriam - 81 KL - APIs
Kilolab - 4.5 KL - APIs + CDMO + R&D
New R&D center - under development
Bengaluru -
R1 - 15 KL - Bio synthesis + R&D
R2 - 225 KL - Bio synthesis
Kanpur -
Gene Therapy - R&D
Marketing offices -
Winchester - UK
Hamburg - Germany
New Jersey - US
Company has spent very aggressively ( @ 2600 cr ) on Capex in last 3 yrs. Hence, most of its manufacturing facilities are under-utilised. As their capacity utilisation improves, so shall company’s profitability
Company has signed a new long term CMO contract for FDFs with a new customer. Customer is also funding CAPEX for the subject supplies that are expected to begin in FY 27
Company has also spent a lot of money ( @ 470 cr ) on cell and gene therapy + Bio catalaysis. Company is working on 10+ Bio Catalaysis projects with various customers
Animal health products - manufacturing facility is undergoing early ramp-up phase, commercial validation have started
Crop Protection products - manufacturing facility’s inspection and qualification is expected by end of FY 25
Company has formed a 49:51 JV with a Slovenian healthcare company - KRKA ( in Feb 24 ) to manufacture and market formulations in India and non EU mkts
Company has - till date filed 41 ANDAs in US mkts and has obtained 21 final approvals, 14 tentative approvals. Their current formulations R&D has 62 products in the pipeline
R&D spends in Q1 were at 5.4 pc of topline ( healthy levels ) - up 35 pc YoY
Company is in the process of setting up a Bio - Fermentation manufacturing facility in Vishakhapatnam. Likely to be commissioned by June 26. Total capex requirement for this facility should be around 200 cr
Company passed 02 USFDA inspections in Q1 - at their large API manufacturing sites - Parawada -1 & 3 - without major observations - a key positive
Net Debt stands @ 2633 cr
Company also hosted / has undergone 14 customer audits by CDMO customers in Q1 ( that’s a large number ). Company is definitely seeing greater interest from customers from West for their facilities for potential award of late stage CDMO contracts
Company has increased its count of scientists working on CDMO division from 200 in 2019 to 800 scientists currently. That’s a huge jump and this also costs a lot of money ( operational expenses ). This should bear fruit as the CDMO division’s revenues pick up
ARV API + ARV Formulations sales for Q1 stand @ 552 cr ( out of a total topline of 1195 cr )
As their animal health and other important CDMO contracts pick up wef H2 this year and their crop protection product deliveries start next year, the percentage of business coming from ARVs should start to fall meaningfully - that would be a key positive for the company as ARV part of the business is unlikely to grow in future
Company is guiding for a consolidated EBITDA margin of 20 pc for full FY 25
Capex guidance for next 2 yrs @ 1800 - 2000 cr !!! ( majority of that for CDMO business )
The pickup in CDMO business in H2 that company is talking about is supply of materials for product registrations post Phase-3. Hence, logically - a lot of commercial scale manufacturing should come their way in FY 26
Disc : initiated a tracking position, intent is to hold on for next 6-9 months and look out for business improvement, not SEBI registered, not a buy/sell recommendation
