Ranvir's Portfolio

Q&A: Questions & Answers Portfolio Q&A
1720

Senco Gold -

Q2 FY 26 results and concall updates -

Revenues - 1554 vs 1458 cr, up 7 pc
Gross margins @ 17 vs 12 pc
EBITDA - 108 vs 55 cr, up 95 pc ( if not for the custom duty impact in Q2 LY, EBITDA growth would have been @ 27 pc )
PAT - 53 vs 17 cr, up 215 pc ( if not for customs duty impact in Q2 LY, PAT growth would have been 36 pc )

Diwali and Dhanteras updates -
Clocked sales of 1700 cr in Oct 25, up 56 pc YoY. Volume growth in Gold, Silver and Diamond in Oct stood @ 4 pc, 8 pc and 5 pc respectively

In last seven months ( ie Apr-Oct ), Sales growth stands @ 25 pc with SSSG @ 19 pc ( vs 17 pc sales growth in H1 )

Total no of stores now @ 192

Stud ratio in H1 stood @ 12 pc

Full yr topline growth guidance @ 18-20 pc

In Q2, avg gold prices were up 43 pc YoY

Added 6 new showrooms in Q2 - 03 Company owned and 03 Franchise stores ( including 1 store in Dubai )

Coin sales in H1 stood @ 4 pc - in line with historical averages

Eastern India + WB contributed to 81 pc of company sales. Percentage of sales coming from franchisees stood @ 36 pc

Geographical breakdown of company’s stores -

WB - 106
North India - 25
East India ( Ex- WB ) - 26
NE - 7
West - 9
South - 6
Central - 6
Dubai - 2
Sennes stores - 8

Total stores @ 192 vs 175 as on 31 Mar 25

Marketing expenses in H1 ( as a percentage of revenues ) stood @ 2.5 pc vs 1.7 pc in FY 25

Avg selling price in Q2 @ 86k, up 16 pc YoY

Old gold exchange as a percentage of total sales @ 42 pc ( on the higher side due record high gold prices )

Elevated stud ratio ( @ 12 pc ) is helping company’s profitability

Excessive rains in Q2 in Eastern and North India had an adverse impact on Q2 sales

Company’s topline growth in Q2 has lagged its peers ( by 15-20 pc ). However their business did pick up strongly in Oct and the trends seen in Nov are also good

Company’s long term sustainable EBITDA margin band is 7-7.5 pc. Should be able to clock similar margins in FY 26 as well ( on a topline of 7400 cr, absolute EBITDA should be around 550 cr )

As on 30 Sep, company’s hedging cover was around 70 pc

EBITDA margins in Q1 were @ 10 pc as the hedging cover in Q1 was lower leading to inventory gains

Have a pipeline of another 8-10 franchisee stores to be opened in near future ( its capital light for the company to go for franchisee led expansion as the Inventory investments are made by the franchisee )

SSSG for Q2 was @ (-) 4 pc, H1 @ + 8 pc and for YTD till Oct @ + 18 pc

Inventory gains in Q2 stand @ aprox 7-8 pc ( due higher hedging ratio maintained by the company )

Sales for light weight jewellery are holding up well - a trend seen due high gold prices ( also plays to company’s strengths as they r good at making light wt jewellery with a wide array of designs )

In East India, a store takes about 12 months to break even. For non - East India stores, this timeline extends to 2-3 yrs

Company’s main focus wrt expansion shall continue to remain in North and Eastern mkts. 80 pc of new store openings shall happen in North and Eastern mkts

Disc: hold a small position, biased, may add if the performance in Q3 improves vs Q2, not SEBI registered, not a buy/sell recommendation

3 Likes
1721

NALCO -

Q2 FY 26 results and concall highlights -

NALCO is an integrated Bauxite - Alumina - Aluminium -Coal - Power company. It is the global leader in producing bauxite and alumina at the lowest cost

Q2 outcomes -

Revenues - 4262 vs 3973 cr, up 7 pc
EBITDA - 2077 vs 1621 cr, up 28 pc ( operational expenses fell 3.5 pc YoY )
PAT - 1433 vs 1062 cr, up 34 pc

H1 outcomes -

Revenues - 8048 vs 6819 cr, up 18 pc
EBITDA - 3693 vs 2616 cr, up 41 pc
PAT - 2497 vs 1663 cr, up 50 pc

Aluminium prices have been on a constant uptrend wef Apr when they bottomed @ around $ 2350 / Ton. Presently ( mid Dec ) they r trading @ around 2860 levels

Top 6 user Industries of aluminium -

Electrical
Transportation and Automobiles
Building and construction
Consumer durables
Machinery and Equipment
Packaging

Company expects the demand for aluminium in India to keep growing @ 6-7 pc CAGR for next 5 yrs

Company’s current capacities and expansion plans -

Bauxite - 7.5 million MTPA ( located @ Panchpatmali, Odhisa ) - total reported resources @ 310 million MT

Expansion underway @ Pottangi Bauxite mines ( located @ a distance of 25 km from Panchpatmali ). It ll have a capacity of 3.5 MTPA with reserves of 110 million Tons. Expected to be commissioned in May 26

Alumina Refinery - 2.1 million MTPA ( producing alumina hydrate, special hydrates, Calcinated alumina ) - located @ Damajodi ( Odisha ) - aprox 14 km away from Panchpatmali. The mined-out bauxite is transported from captive mine to refinery by a 14.6 KM long single-light multi-curve 1800 tonnes per hour (TPH) capacity cable belt conveyor

Expansion is currently underway at the Alumina refinery. Capacity is expected to go up by 1 MTPA. Expected to be commissioned in Jun 26

Smelter - 0.46 million MTPA ( producing Aluminium metal - Ingots, Billets, Wire Rods, Rolled products ) - located @ Angul ( Odisha ). The alumina produced is transported to aluminium smelter at Angul (Odisha) and to Vizag ( for exports ) port by rail

Angul to Damajodi distance is aprox 450 km
Vizag to Damajodi distance is aprox 200 km

Smelter expansion shall double the company’s refined aluminium’s capacities. Likely to be commissioned in Dec 30

Captive coal mines - 4 million MTPA ( @ At Utkal coal mines in Angul district )

Captive thermal power capacities @ 1200 MW ( 10 X 120 MW ) - located @ Angul

Additional captive power plant with capacity of 1080 MW - expected to go live in FY 31

The location of captive thermal power plant at Angul is also strategic to the availability and supply of coal from nearby Utkal Coal mines ( in Angul district )

Wind power capacities @ 198 MW

Total capex requirement for all the A/m capex over next 5 yrs shall be aprox 30k cr

Company’s cost of production for aluminium for FY 25 was around $ 1900 / Ton

Company’s captive coal costs them Rs 1600 - 1700 / Ton while they buy Coal from Coal India @ Rs 2000 / Ton

The cost of production figures given ( above ) by the company includes depreciation costs - both for Aluminium and Alumina

Company can increase its Coal block’s production by 20 pc above 4 million MTA without environmental clearances

Q2 physical performance -

Production -

Bauxite - 17.8 vs 15.74 lakh MT, up 13 pc
Alumina Hydrate - 5.76 vs 5.11 lakh MT, up 13 pc
Metal - 1.19 vs 1.15 lakh MT, up 3 pc
Thermal power - 1744 vs 1686 MU ( million units ), up 9 pc

Sales -

Alumina export - 3.65 vs 2.74 lakh MT, up 33 pc
Alumina domestic - .31 vs .10 lakh MT, up 191 pc
Aluminium domestic - 1.12 vs 1.17 lakh MT, down 5 pc

New Alumina refining capacity should go live by June 26. Should be able to produce additional 5 lakh MT of Alumina in FY 27 and 10 lakh tons ( full ramp up ) by FY 28

Capex for company’s Aluminium Smelter shall begin in FY 28. For Smelter, the capex should be around 17000 cr. For 1080 MW power plant, capex requirement should be around 13000 cr

Cash on books @ 7900 cr ( as on 30 Sep )

H1 alumina sales stood at 7 lakh tons. Should be able to clock 6-6.5 lakh tons of Alumina sales in H2

Avg realisations for Alumina in Q2 were @ $ 380/MT vs $ 320 - 330 / MT seen in Oct 25

Avg realisations for Aluminium in Q2 was @ $ 2600/MT vs $ 2850 in Nov - Dec 25 ( a key positive for the company )

KABIL JV ( between Nalco : Hind Copper : Mineral exploration and consultancy limited in the ratio - 40 : 30 : 30 ) has 5 mines in Argentina ( Lithium mines ). Non invasive complete. Results were encouraging. Commercial mining may take > 2 yrs to begin ( once they ascertain commercial viability for which they ll take another 6 months )

Capex for Alumina refinery expansion has been around 4000 cr. Should spend another 1300 cr before the refinery goes live. Should be able to make Rs 10000 / MT kind of margins ( post depreciation ) from this new refinery ( even at depressed alumina price levels )

2-3 new Alumina refineries have come up in Indonesia + 1-2 smelters have been shut in China and elsewhere. That’s why Alumina prices r weak but aluminium prices continue to rise

Power and fuel costs in H1 are lower by 53 cr vs H1 in LY ( have consumed more captive coal this yr vs LY )

Aluminium metal sales in Q2 were on the lower side as Q2 saw excessive rains. Demand for Aluminium metal should increase wef Q3

Company does’t hedge Aluminium sales against price fluctuations

In India, Aluminium prices traded at aprox 10 pc above LME prices. This premium continues to remain as of Oct - Nov

Company consumes aprox 96 kg of caustic soda for 1 MT of Alumina production

Should be able to sell 6 lakh tons of Alumina in H2 ( vs 7 lakh tons sold in H1 ). Aluminium sales should be similar to H1 sales ( in volume terms )

Employee costs is at around 18 pc of total costs ( @ a projected cost of 1900 cr for full FY 26 ). Next yr, it should fall to 16 pc as the no of retirements > no of recruitments in next FY. Plus the new hirings happen at far lower rates

Disc : holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

1 Like
1722

Hi Ranvir,
Do you have a view on Rain Industries. Do you think Rain Inds can benefit from improving Aluminium production and also pricing. Looks very cheap valuation wise. Last 2 quarters, operating margins have improved and stayed steady.
Thanks,
Ketan

1723

Sorry …

I have not studied rain industries, hence can’t comment on it :lying_face:

1724

Kamat Hotels -

Q2 FY 26 results and Concall highlights -

Q2 outcomes -

Revenues - 75 vs 85 cr, down 12 pc
EBITDA - 8.5 vs 22.5 cr, down 62.5 pc
PAT - (-) 2.2 vs 8.3 cr, down 74 pc

H1 outcomes -

Revenues - 157 vs 159 cr, down 1 pc
EBITDA - 25 vs 36 cr, down 26 pc
PAT - 2 vs 9.5 cr, down 78 pc

Brand wise ARRs in Q2 -

Orchid - 5979 vs 5698, up 7 pc
IRA - 4749 vs 4971, down 4 pc
Lotus - 5331 vs 5150, up 4 pc
Jadavgarh Fort - 8286 vs 8323, flat YoY

Brand wise occupancy in Q2 -

Orchid - 47 vs 66 pc, down 29 pc
IRA - 65 vs 77 pc, down 16 pc
Lotus - 38 vs 44 pc, down 14 pc
Jadavgarh Fort - 20 vs 28 pc, down 29 pc

Currently operational hotels -

Orchid Hotels - Mumbai, Lonavala, Pune, Shimla, Manali, Jamnagar, Chandigarh, Toyam, Goa, Rishikesh, Panchgani ( out of these - 2 hotels are owned, 6 are leased, 1 is on a revenue share model and 2 are managed ). Orchid Pune and Orchid Mumbai are the owned hotels. Orchid Lonavala is a managed property

IRA by Orchid - Mumbai, Bhuvneshwar, Nashik, Shambaji Nagar, Ayodhya, Noida, Hyderabad, Dwarka, Goa ( 6 are leased, 3 are on a revenue share model )

Lotus resorts - Konark, Murund ( both are leased )

Heritage hotels - Fort Jadhavgarh, Madhodadhi Palace ( both are leased )

Total - 24 hotels ( 2100 keys )

Orchid Chandigarh started operations in last week of April 25

IRA by Orchid @ Hyderabad, Dwarka, Porvorim ( Goa ) and Orchid Panchgani and Rishikesh went live in Q2

Upcoming Properties -

Orchid Dehradun - Apr 26
IRA by Orchid Bhavnagar - Apr 26 ( delayed - was scheduled to open in Q2/Q3 FY 26 )
Orchid Gwalior - Mar 26
Orchid Nahsik - Apr 26
Orchid Rishikesh 2 - Mar 27
Orchid Puri - Dec 27
Orchid Mandvi - Dec 27

All the a/m properties shall be on lease / revenue share mode except Orchid Mandvi which is on a management contract

Debt on books @ 115 cr ( as on 30 Sep )

IRA by Orchid @ Hyderabad, Dwarka and Orchid Panchgani went live in Q2 + starting of Q3

Orchid Mumbai ( 370 rooms ) and Orchid Pune ( 410 rooms ) are their 2 large hotels - both doing exceedingly well ( managing hotels > 250 rooms requires good management skills - its a kind of testimony to their operational excellence )

H1 EBITDA margins in Q1 stood @ 16 pc. H2 is generally far stronger

Q2 was bad due - washing away of roads near Manali + Shimla had a really bad impact on company’s 2 properties at these places in Q2. Even Chandigarh hotel was adversely impacted due excessive rains in HP + Punjab. Also, company opened 5 new properties in Q2 which led to additional expenses without kicking in of commensurate revenues. Excessive rains in Pune and Mumbai regions ( from where company derives bulk of its revenues ) also impacted their Q2 performance

In Q3, business @ Chandigarh hotel has picked up

Orchid Pune’s renovation now stands paused ( wef 15 Nov ). Most parts of the hotel shall go live wef mid Nov. Rest of renovation shall take place in Apr 26

Q3 in current FY is expected to be far better vs Q3 in FY 25

Should be able to clock 400 cr + kind of revenues for current FY ( management is still confident despite a weak H1 )

Wedding season demand for company’s older hotels continues to be strong. For newer Hotels, demand shall build up as they establish their reputation over a period of time

Company has land banks @ Kottayam, Pune. In talks for developing the land bank near their hotel @ Pune

In Q2, Orchid Shimla had Zero occupancy for 40 odd days and Orchid Manali had zero occupancy for entire 90 days ( Shimla + Manali have 100 + 50 = 150 rooms )

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

1 Like
1725

Bajaj Auto -

Q2 FY 26 results and concall highlights -

Consolidated Financial outcomes -

Revenues - 15735 vs 13247 cr, up 18 pc
EBITDA - 2829 vs 2073 cr, up 36 pc ( margins @ 18 vs 16 pc )
Other income - 576 vs 400 cr
PAT - 2122 vs 1385 cr, up 53 pc

Export volumes were up 20 pc in Q2 crossing 5.5 lakh units

Their Oct sales were up by 8 pc, led by exports that were up 16 pc and domestic sales grew by 3 pc. CV sales were up 16 pc ( exports + domestic )

Their Nov sales were up by 8 pc, led by exports that were up 14 pc and domestic sales de- grew by 1 pc. CV sales were up 37 pc ( exports + domestic )

LatAm sales grew strongly led by Columbia, Mexico and Brazil

Asia and Africa sales also grew in double digits led by Sri Lanka, Phillipines and East African mkts. Nigerian sales witnessed stability. Full recovery in sales is yet to happen

CV exports in Q2 grew by 67 pc

KTM Austria sales witnessed a 10 pc QoQ growth

Monthly export sales ( 2Ws ) being clocked by the company are in the range of 2 lakh units. Company’s Nigeria sales are around 25k/month vs 50k/month previously

Mkt share erosion in domestic mkt is now being arrested by gains made by the company in > 125 cc segment

Pulsar N and NS are doing exceedingly well in domestic mkts in Q2

Company hopes, the recent GST cuts should improve the baseline growth of domestic 2W industry by 4-5 pc

Company’s 3W manufacturing is operating @ 100 pc capacity. Planing to undertake capacity expansions

Sold 500 units of Bajaj Riki in 8 cities in Q2. Currently observing mkt response to their newly introduced product ( priced @ Rs 1.9 lakh )

Chetak was No 1 and No 2 selling E 2W in Oct and Nov 25 respectively in domestic mkt

Company’s domestic EV portfolio ( 2W + 3W ) contributed to 20 pc of company’s sales in Q2 with double digit EBITDA margins

KTM + Triumph sold > 30k units in Q2 - growing by 30 pc on a YoY basis ( led by Duke 160 and Triumph 400 )

BACL reported AUM @ 14k cr ( aprox ), PAT @ 132 cr

Spare sales @ 1800 cr, up 21 pc YoY ( its a high margin business )

Weakening rupee in Nov, Dec 25 has been having a positive impact on company’s EBITDA ( due to their heavy export bias ). Every Rs 1 depreciation adds to aprox 200 cr in EBITDA

Company’s models with engine capacity > 350 cc had an adverse impact of GST rate changes moving from 28 pc + 3 pc cess to 40 pc bracket. Company has not taken any price hikes despite the rise in GST rates in this segment

Total export revenues in Q2 were @ $ 600 million

Cash on books @ 14000 cr { despite paying 6000 cr in dividends, investing 2000 cr in Dutch subsidiary ( holding company ) to fund the KTM acquisition and 500 cr in BACL }

At present KTM Austria’s results are consolidated @ Bajaj’s equity holding in the company. Now that they have taken full control, from Q3 onwards - expect full consolidation of results

BACL’s business is seeing very good traction in the festive season in Oct/Nov - inching towards AUM of 15k cr. BACL’s RoE for H1 stands @ 17 pc

Seeing commodity inflation in metals ( + in rare earth metals ) in Q3. Yet to take any price hikes as the commodity pressures are being offset by weakening currency

Post GST cuts, company is seeing up-trading by the customers. This is getting reflected in greater sales of premium models and premium variants that the company has to offer

Strong CV exports are being led by broad based demand from multiple mkts ( a great thing ). Mkts like Philippines, Ghana, Myanmar, Afghanistan, Mexico, Bolivia are seeing strong demand surges

Received a regulatory breakthrough for their Quadricycle in Egypt after they banned the 3Ws ( some time back ). Egypt was a major mkt for company’s 3Ws. This approval paves way for sales of Bajaj Qute into Egyptian mkt

New ABS norms should result in price hikes of Rs 2-3k / bike

Will be adding new variants of Pulsar in Dec, Mar and May. Will be launching an all new 2W in domestic mkt in the ICE space in FY 27 ( should be sooner vs later )

Will be launching < 350 cc Triumph and KTMs in India to take advantage of new GST rates ( did not specify a timeline for the same )

Bajaj Auto has made mandatory investments in Mexico and is hence exempt from higher tariff rates - a key positive wrt their export business

GST rate cuts for ICE 3Ws is a great outcome for Bajaj’s 3W business as their ICE 3Ws command fat margins vs comparatively lower margins in Electric 3Ws

BACL’s future capital requirements should taper off going forward as it starts generating healthier profits

Disc: holding, biased, not SEBI registered, posted only for educational purposes

1 Like
1726

Sanghvi Movers -

Q2 FY 26 results and Concall highlights -

World’s 5th largest and India’s largest crane rental company. Currently running operations in India and Saudi Arabia

Have 175 acres of freehold land in India dedicated to crane parking

Company’s depots are located @ -

3 in Gujarat
1 in Rajasthan
1 in MP
4 in Maharashtra
1 in Telangana
1 in AP
1 in TN
1 in Karnataka
1 in UP
1 in Chattishgarh
1 in Odisha
1 in Riyadh ( Saudi Arabia )

Sanghvi Movers Standalone - 400 + cranes are dedicated to their India crane rental operations, with a Gross Block of 2700 cr

SANGREEN Renewables - their subsidiary company runs a turnkey projects business ( operates in Wind energy space )

SANGREEN Logistics - another subsidiary - provides logistics services for heavy machines, industrial equipment

Sanghvi Movers Middle East - another subsidiary - provides rental heavy lift solutions in KSA

Q2 outcomes -

Revenues - 218 vs 164 cr
EBITDA - 88 vs 81 cr, up 9 pc ( due sharp uptick in manpower costs )
PAT - 36 vs 29 cr

H1 outcomes -

Revenues - 498 vs 335 cr
EBITDA - 195 vs 175 cr ( due sharp uptick in manpower costs )
PAT - 87 vs 70cr

Breakdown of H1 revenues -

Crane rentals - 63 pc
Wind EPC - 33 pc
Project EPC - 4 pc

Capex planned for India business @ 405 cr for current FY. Plan to add 97 cranes in current FY. Have spent 123 cr and have added 22 cranes in H1

Debt on books @ 440 cr
Cash on books ( including MF investments ) @ 225 cr

Order book to be executed in current FY @ 1200 cr

Capex planned for KSA business @ 224 cr for current FY. Plan to add 56 cranes in current FY. Have spent 17 cr and have added 9 cranes in H1

Q1, Q2 capacity utilisations stand @ 80 pc and 70 pc respectively

Company’s avg borrowing costs were stable @ 8.48 pc

Out of an order book of 1240 cr for FY 26, 10-15 pc may spill over to next FY due extended monsoons related delays in H1

Company’s enquiry pipeline stands @ 2000 cr - indicating healthy future order pipeline and robust customer confidence

Crane rental mkt in KSA should be around $ 800 million to $ 1 billion / yr ( by 2030 ). Company’s enquiry pipeline in KSA stands @ 450 cr

By 2030, company aspires to clock revenues of 4000 cr / yr !!!

No of receivable days stand at 120 at the end of Q2 ( this amounts to 356 cr ). Should see a definitive improvement wef Q3 ( a key monitorable -IMHO )

Full FY 26 depreciation costs should be around 130-140 cr

Capacity utilisations in H2 should inch towards 80 pc

Their EPC business should clock 10-12 pc kind of EBITDA margins ( over medium to long term )

KSA yeilds are higher vs India. However the costs r also higher. Overall - EBITDA margins in KSA should be similar to Indian margins

At present, KSA is the construction capital of the world. The infra build up happening @ KSA is massive. Company aspires to be among top 3 crane rental players in next 5 yrs

Company’s current capacity utilisation in KSA stands @ 100 pc

Company shall start reporting their KSA’s order book wef Q3 FY 26

Disc: initiated a tracking position, not a buy/sell recommendation, posted for educational purposes, not SEBI registered

1 Like
1727

Jyothy Labs -

Q2 FY 26 results and concall highlights -

Revenues - 736 vs 733 cr
Gross margins @ 48.1 vs 50.2 pc
EBITDA - 118 vs 138 cr, down 14 pc ( margins @ 16.1 vs 18.9 pc - largely due gross margin compression )
PAT - 88 vs 105 cr, down 16 pc

Cash on books @ 801 cr

Launched new product in Q2 - Mr Wool - Liquid detergent for Woolen and Delicate clothes. Have positioned it in the premium category

Strengthening their portfolio of Maxo Aerosols + Maxo Racquets - to complement their Maxo LV portfolio

A&P spends stood @ 61 cr @ 8.4 pc of sales

GST cuts triggered short term channel de-stocking in Q2. This impacted company’s Q2 sales. Demand trends wef Oct 25 have been healthy

Have seen positive impact of new GST rates in Soaps and Toothpastes ( Margo, Jovia, Neem brands )

Segmental Value / Volume growth -

Fabric care ( main + post wash ) - 6 pc / 8 pc - led by liquid versions of More Light, Henko, Mr White

Dishwashing - 3.5 pc / (-) 4 pc - led by price corrections

Personal care - adversely impacted due GST rate revisions

Household Insecticides - muted performance. Immediate aim is to turn around this category ( basically to make it profitable )

Rural demand trends continue to be encouraging

Guiding for 16-17 pc kind of EBITDA margins for H2

Jovia + Margo combined have started doing well wef Oct 25 - this should bump up company’s personal care portfolio results in Q3 and Q4

Earlier in Mar 25, Ujala Young and Fresh - a new age fabric conditioner was launched by the company

Aiming to exit FY 26 @ double digit volume growth rates. Value growth would be lower due price cuts ( GST led + competition led ). Value growth should be lower by aprox 3 pc

Should be launching new products in H2 CY and H1 next year as well

Actively looking for acquisition opportunities to utilise cash on books

As per company’s assessment, it should take 4-6 Qtrs for their HI business to turn profitable

In Q2, company made sizeable investments being their Margo brand. This has also impacted their EBITDA margins. Company’s personal care business operates @ high single digit / low double digit margins

Company’s contribution from rural sales is @ 40 of total sales. Company’s sales that come from general trade is @ 66 pc. Modern trade + E Comm + Quick Comm constitute 33 pc of company’s sales

The slowdown in general trade is presently limited to urban / semi urban areas

Company is de-focussing their HI coils business and focussing only on LVs, Aerosols, Rackets

Disc : holding, biased, not SEBI registered, not a buy/sell recommendation

1728

Endurance Technologies -

Q2 FY 26 results and concall highlights -

Q2 outcomes -

Revenues - 3604 vs 2939 cr, up 22 pc
EBITDA - 498 vs 409 cr, up 22 pc
PAT - 227 vs 203 cr, up 12 pc

Segmental results -

India business - 2692 vs 2317 cr, up 16 pc. EBITDA @ 336 vs 316 cr, up 6 pc. PAT @ 188 vs 185 cr, up 2 pc

Europe - 908 vs 617 cr, up 47 pc, EBITDA @ 161 vs 100 pc, up 61 pc. PAT @ 41 vs 27 cr, up 42 pc

Maxwell - 44 vs 19 cr, up 130 pc, EBITDA @ 1.9 vs (-) 1.7 pc. PAT @ (-) 1 vs (-) 4 cr

In H1, Indian Scooters, Motorcycles, 3Ws, 4Ws Industry grew by 6 pc, 4 pc, 16 pc and 2 pc respectively. As the new GST rates cuts take effect - These growth rates should see a meaningful uptick in Q3 ( already seeing strong growth in Oct - Nov 25 )

New car registrations in EU grew by 2.5 pc in H1 ( still down 13 pc vs the base of FY 19 )

H1 outcomes -

Revenues - 6958 vs 5799 cr, up 20 pc
EBITDA - 977 vs 616 cr, up 20 pc
PAT - 454 vs 407 cr, up 12 pc

Region wise breakup of H1 sales -

India - 77 pc
EU - 22 pc
Maxwell - 1 pc

Product wise breakup of H1 sales -

Suspension systems - 25 pc
Die Casting products - 45 pc
Disc Brakes - 12 pc
Alloy Wheels - 6 pc
Transmission systems - 3 pc
After mkt sales - 4 pc

Category wise breakup of H1 sales -

Motorcycles - 52 pc
Scooters - 9 pc
3Ws - 8 pc
4Ws - 30 pc
Others - 1 pc

H1 Capex @ 460 cr for India business + 223 cr for EU business

India capex includes - New Die Casting, brake assembly, alloy wheels, Aluminium castings and machining, Battery packs, Dual channel ABS

EU capex includes - capacities to cater to new orders from Stellantis, Daimler, Porsche and Audi

Company’s dual channel ABS facility is under customer validation. Setting up additional facilities in view of new draft regulations making ABS mandatory for 2 Ws over a period of time

Planning to expand ABS capacity to 5 X of current capacities

Plan to increase the 4W mix to 45 pc of consolidated revenues ( over medium term ) - contribution should come from both EU + India - making mkt share gains in braking systems, drive shafts, suspension systems

In H2 LY, company acquired 60 pc stake in Stroferle Ltd Germany with a plan to acquire the rest of 40 pc over next 5 yrs. It specialises in machined Aluminum die-casting for auto parts. Stroferle’s LY revenues were aprox 750 cr

Ex of contribution from Stroferle in Q2 ( as it wasn’t a part of the company in Q2 LY ), company’s topline growth would have been 7 pc vs the reported 22 pc growth

Capacity to make 1.2 million units of ABS are to be installed by Q1 FY 27. Another round of capacity expansion by 1.2 million units / yr shall happen when actual guidelines come out. ABS were already mandatory for 2W with engine capacity > 125 cc

Company has started civil work for setting up a new Chennai plant for disc brake systems, which includes the master cylinder, caliper, brake disc and brake hoses. Here they produce 3 million disc brake assembly systems + 4 million disc brakes / yr. Plan to take this capacity up to 7.6 million disc brake assemblies + 8.6 million disc brakes

Company’s new alloy wheel plant shall have a capacity of 3.6 million wheels / yr - should generate a revenue of 600 cr / yr. The new facility is already fully booked. Their existing alloy wheels plant produces 5.5 million alloy wheels

Company continues to position their new AURIC Shendra facility as a key point for critical machined castings for 4W and non-auto applications. They are therefore equipping this plant with highly sophisticated machining and finishing equipments. In the past, they mentioned about orders from marquee U.S. and UK-based OEMs and also orders from Valeo for electric platforms of Mahindra. And now they have added Yazaki as a customer taking the total sales close to Rs388 crores per annum at peak. SOP for both the U.S. and UK OEMs will start in Quarter 1 of FY 27 and they will reach peak sales in FY 28. The SOP for the AURIC Shendra plant is going to be in January 2026

Company’s subsidiary - Maxwell Ltd achieved a turnover of 74 cr in H1. They supply battery management systems for 2Ws, 3Ws, tractors and construction equipment

Company’s new battery pack manufacturing facility has already won business worth 300 cr / yr from a 2W OEM

The new alloy wheel facility of 3.6 million wheels / yr should reach full ramp up by Q2 next FY

Company is a leading manufacturer of inverted front forks for 2W OEMs. Company supplies these to 4 Indian OEMs and one International OEM ( KTM ). One Chinese OEM will start sourcing these from the company wef next FY. Should be able to sell 6.5 lakh inverted front forks in FY 26

Company has also started selling Solar Dampers. Have won business worth 200 cr from a Spanish OEM for their Solar Dampers. This business ca potentially grow multi fold going forward

Margin compression in Q2 in India business is on account of higher RM prices ( mainly Aluminium ) + higher investments made in their after mkt business

Share of power sourcing from renewable sources stands @ 28 pc

Current capacity that the company has to make ABS stands @ 0.65 million pieces / yr

Four wheeler suspensions is a very tough business to get into. Undergoing trials with one of the OEM. Company has a tech tie up with a South Korean technology partner. The system being developed by them is suited for small cars. Company is expecting a major breakthrough in near future. Company is already a leader in suspension systems of 2Ws

Company’s mkt share in front forks ( 2Ws ) is @ 43 pc. In the inverted front forks, their mkt share is even higher. In shock absorbers ( 2Ws ) , their mkt share is @ 45 pc

Company solar dampers business has a huge mkt potential and can also grow @ rapid rates. In talks with 2 more OEMs ( beyond the Spanish OEM mentioned above ). This can be a huge growth opportunity going forward

Similarly, battery packs is another high growth area which also has a long growth runway

Capex for H2 planned @ 400 cr for India + 200 cr for EU business

Disc: initiated a tracking position, not a buy/sell recommendation, biased, posted only for educational purposes

1 Like
1729

Cipla Ltd -

Q2 FY 26 results and concall highlights -

Revenues - 7589 vs 7051 cr, up 7.6 pc
EBITDA - 1895 vs 1886 cr, flat YoY ( margins @ 25 vs 27 pc )
Other income - 269 vs 191 cr
PAT - 1353 vs 1305 cr, up 4 pc

Cash on books @ 10368 cr
Debt on books @ 467 cr

Segmental performance -

One India - 3146 cr, up 7 pc. Continue to be the largest player in India by volumes. In respiratory category, company’s brands occupy all of top 5 spots

29 of company’s brands clock sales > 100 cr

Company is ranked in top 5 among five therapeutic categories - Respiratory, Anti Infectives, Urology, Anti Diabetes, Cardiac

Have collaborated with Elli Lilly for marketing and distribution on Mounjaro in India

Other new launches -

Huena - first non anti biotic drug for treatment of urinary track infections ( UTI )
Zemdri - Injectable to treat complicated UTI
Cipenment - In-licenced Enmetazobatum antibiotic from Orchid Pharma

Revenues from OTC products in India in Q2 stood @ 404 cr ( like - Cipladyne, Nicotex, Omnigel, Prolyte, Cofsils )

North America - 2050 cr, up 3 pc ( due currency depreciation, otherwise the revenue would have regrown by 3 pc )

Albuterol is ranked no 1 in US with 22 pc mkt share

Lanreotide mkt share increased to 23 pc in Q2

Launched first Bio Similar - Filgrastim in US

Planning to launch 4 new respiratory ( major ) products in US in CY 26 ( including gAdvair ). Out of these, 3 products will be launched from US facilities

Have got an approval for launch of Glucagon Injection in US ( another key approval )

One Africa - 1180 cr, up 5 pc

Company is ranked No 2 in RSA in Prescriptions + OTC mkt. Have 8 brands in top 30 brands in RSA

Revenues from OTC products stood @ 235 cr

Emerging mkts - 968 cr, up 15 pc

Notes from Concall -

Company’s India branded business grew by 8 pc, the their growth in focus therapies grew in double digits ( like - Anti_diabetes, Urology, Cardiac, Derma ). Company’s share of Chronic business now stands @ a very healthy 62 pc. Their respiratory brand - Forecourt continues to be No 1 selling product in IPM ( by value )

Q3 is generally their stodgiest Qtr for their respiratory portfolio. Their combination products in respiratory portfolio - Foracort G, Ciphaler, Voltido Trio - are gaining strong traction

Company’s trade generics business grew in double digits in Q2 on the back of rigorous distribution execution and new product launches

Revlimid contribution to US sales shall now be coming off sharply ( wef Q3 ). By Q3 or Q4 next year, company shall be back to their current US business’s run rate

Over and above the 04 respiratory launches, 03 peptide launches are also lined up for US in next FY

R&D costs in Q2 stood @ 539 cr, @ 7.2 pc of revenues

Guiding for full yr EBITDA margins of 24 - 25 pc ( vs 26 pc clocked in last FY )

Company believes that launch of Tirzepetide ( in collaboration with Eli Lilly ) should be a sizeable mkt opportunity in Tier 1,2,3 cities. It ll be launched by the company under the brand name - Yurpeak. Cipla shall be their only nationwide partner. Tirzepetide’s patent expiry is post 2030

Given company’s diversification into Urology, Cardio, Anti Diabetic and Derma therapies - growth in India branded business should pick up and company should be able to beat the mkt growth rates over medium to long term

Company expects their Lanreotide mkt share in US to keep inching up over the next 1 yr ( as their capacity comes online ). They aim to take their share to 30 pc levels or thereabouts

Company aspires to clock $ 1 billion sales from US mkts in FY 27 ( despite the loss of sales from Revlimid )

Disc: not holding, posted only for educational purposes, not a buy/sell recommendation, not SEBI registered

1 Like
1730

MOIL -

Notes from Annual Report 2024-25 -

Company’s Infra -

India’s largest producer of Manganese. Their operations span over 10 mines in Maharashtra and MP. Company supplies aprox half of country’s Manganese requirements

Company’s Ferro Manganese plant is located at Balaghat in MP (12000 MTPA capacity)

Their Electrolytic Manganese Dioxide Plant is located at Dongri Buzurg Mine in Maharashtra (1500 MTPA capacity) - only EMD plant in India

Their renewable energy infra stands at - Wind mills - 20 MW, Solar plants - 10.5 MW. More than 56% of their energy consumption is through renewable energy

Company is debt free

6 of their mines are located in North East Maharastra ( bordering MP ). Another 4 mines are located @ South East MP ( bordering Maharastra )

FY 25 Financial outcomes -

Revenues - 1584 cr, up 9.35 pc
EBITDA - 638 cr, up 20 pc ( margins @ 37 vs 34 pc )
PAT - 381 cr, up 30 pc

Q1 in FY 25 was exceptionally good because of very high Manganese prices due to unscheduled mine closures in South America

Company aspires to achieve an annual production of 3.5 MMT by 2030. Company was granted an additional Environmental clearance capacity of 1.9 lakh MTPA taking their total EC backed capacity to 2.67 MMTPA

India aims to be producing 300 million MT of steel by 2030. 11 million MT of Manganese will be required to achieve this target. MOIL intends to be supplying 3.5 million Mts out of this total requirement of 11 million MT

Capex spends in FY 25 stood @ 321 cr. Capex projection for FY 26 stands @ 325 cr

Company continues to expand their resource base through strategic partnerships and new drilling initiatives. In Gujarat, a joint venture is in process with GMDC in the Pani area, where resource estimation indicates strong mining potential. In Madhya Pradesh, extensive exploration in Balaghat and Chhindwara has identified two viable blocks. Detailed feasibility studies are underway to further enhance their value-accretive strength

Estimated Manganese ore @ Pain Block in Gujarat stands @ 9.51 MMT

Area resered in MP for company’s exploration stands @ 1337 Sq Km

In FY 25, company added 16 MMTs of Manganese to its reserves via normal exploratory activities that the company undertakes. In FY 25, company undertook exploratory drilling of 1.07 lakh meters

Out of company’s 10 mines, 3 are open cast and 7 are underground mines

In FY 25, company produced aprox 1.8 million MT of Manganese

Company is open to exploring any mineral in any geography, provided it makes economic sense. Manganese mining has given the company an expertise in both open cast and UG mining. So, they can literally indulge in mining any other mineral as well

As the company keeps ramping up its production output by 12-14 pc CAGR for next 4-5 yrs, the cost of production at the corporate level should fall by 5-7 pc / yr ( as a lot of fixed costs won’t go up in the same proportion ) - an important factor likely to drive future margins / over and above the global Manganese prices

Company achieved best ever production of Ferro manganese and Electrolytic Manganese dioxide @ 12000 MT and 1350 MT in FY 25

Company aspires to produce 2.05 MMT of Manganese in FY 26 ( basically a 15 pc growth over FY 25 ). In Q1 FY 26, company produced 5.02 lakh MMTs ( highest Qtly output ). Company also hiked the prices of Manganese alloys by 2 pc in Q1

Company aspires to keep producing incrementally higher quantities of Electrolytic Manganese Dioxide and higher grades of Manganese metal - in order to improve their realisations

Company’s H1 FY 26 outcomes -

Revenues - 696 vs 785 cr ( Q1 in last FY was exceptionally good due to some mine closures in South America )
EBITDA - 179 vs 293 cr
PAT - 122 vs 202 cr

Company’s production till Nov 25 has reached 12.69 lakh MTs ( up 8 pc YoY vs Mar - Nov 24 period )

Disc: not holding, studying, not SEBI registered, not a buy/sell recommendation

4 Likes
1731

Mrs Bectors -

Q2 FY 26 results and concall highlights -

Q2 outcomes -

Revenues - 551 cr, up 11 pc
Gross margins @ 44 vs 47 pc
EBITDA - 69 cr, down 2 pc ( margins @ 12.6 vs 14.2 pc )
PAT - 36 cr, down 6 pc

Biscuit segment reported revenues of 350 vs 320 cr ( including domestic and export sales ) - up 10 pc

Bakery segment reported revenues of 194 vs 167 cr, up 16 pc

H1 outcomes -

Revenues - 1024 cr, up 9.5 pc
Gross margins @ 44.8 vs 47.6 pc
EBITDA - 127 cr, down 5 pc ( margins @ 12.4 vs 14.4 pc )
PAT - 67 cr, down 9 pc

Current manufacturing footprint -

Biscuit plants -

Rajpura ( Punjab )
Phillaur ( Punjab )
Tahliwal ( HP )
Dhar ( MP ) - commissioned in FY 26

Breads and Bun plants -

Greater Noida
Bhiwadi ( Rajasthan )
Khopoli ( Maharashtra ) - to be commissioned in FY 26
Bengaluru
Another Bakery plant @ Kolkata should go live in FY 26

Biscuits plants avg capacity utilisation stand @ 71 pc. For Bakery plants, the figure is 75 pc

GST cuts implemented by GoI + Taxation reliefs + Easing interest rates are leading to demand revival in company’s product offerings. Company’s entire biscuits portfolio’s taxation slab has fallen from 18 to 5 pc - a huge positive for the company. Company has implemented price reductions due new tax rates. This also caused trade uncertainity due to which there was trade de-stocking that was witnessed in late Sep and early Oct

Distribution expansion is a key pillar of revenue growth for the company

Margin pressures in H1 is due to govt withholding the DGFT benefits vs LY. DGFT benefits should start to flow through for the company in not so distant future. US tariffs have also hit their topline and margins in H1

RM inflation is not material at the moment - a key positive

Aim to get back to 14-15 pc EBITDA margin trajectory as soon as possible. Confident of achieving the same for next FY

Growth from QSR segment ( for bakery products ) was in single digits

A lot of large international retailers are showing interest in company’s range of Biscuits - augurs well for company’s growth in international mkts

Going by current trends, the margins in Q3 and Q4 should be better than company’s H1 margins with further scope of improvement in next FY

Company’s new plants @ Dhar ( MP ), Khapoli ( Maharashtra ) and Kolkata should help them expand their distribution in a big way in both Maharashtra and Eastern parts of India - should keep the domestic business’s growth trajectory in high gear

Have launched a few products in the frozen foods segment on a trial basis in Delhi NCR

Room for distribution expansion for Mrs Bectors is huge ( unlike larger peers like - Britannia/ Parle / ITC etc )

Most of heavy capex should be over by the end of FY 26 ( ie after commissioning of Khapoli, Kolkata and Dhar plants ). Capex for current FY was heavy @ 400 cr. Next yr’s capex should be lighter @ around 100 cr to modernise and upgrade their Bengaluru plant

Company’s direct reach wrt biscuits @ 5 lakh/ total reach including indirect reach @ 7 lakh ( up by 5 pc in H1 )

Company’s direct reach wrt Bakery @ 40k ( up by 10 pc in H1 )

New product contribution to H1 sales stood @ 2 pc

Kolkata facility should go live in Q3. Khapoli facility should go live towards the end of Q4

Disc: not holding, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

1 Like
1732

Elecon Engineering -

Q3 FY 26 results and concall highlights -

Q3 outcomes -

Revenues - 552, up 4 pc
EBITDA - 109 cr, down 23 pc ( margins @ 19.8 vs 27 pc - steep margin contraction )
PAT - 72 cr, down 33 pc

Order Intake @ 701 cr, 7 pc YoY

9M FY 26 outcomes -

Consol revenue and EBITDA in 9M results include a one time income from arbitration settlement in the material handling division, worth Rs 25 cr

Revenues - 1620 cr, up 13 pc
EBITDA - 365 cr, up 5 pc ( margins @ 22.5 vs 24.3 pc )
PAT - 335 cr, up 19 pc ( also includes MTM gains on investments previously made by the company )

Order intake in 9Ms @ 2003 cr, up 15 pc YoY

Total open order book as on 31 Dec stands @ 1372 cr vs 1105 cr as on 31 Dec 24

Segmental performance -

Gears -

Revenues - 429 cr, up 1.3 pc
EBIT- 78 vs 118 cr, down 34 pc ( margins @ 18.2 vs 27.8 pc )
Q3 Order intake @ 464 cr, down 1.1 pc
Open order book @ 811 vs 684 cr, up 19 pc

Sharp contraction in margins due - hikes in employee costs + change in product mix

Continue to witness healthy demand from Steel, Cement, Power, Steel and MHE industries. Healthy open orders and encouraging inquiries levels provide good visibility and confidence for revenue improvement and recovery in margin going forward

MHE -

Revenues - 123 cr, up 16 pc
EBIT - 25 vs 33 cr ( margins @ 20 vs 31 pc )

Q3 order intake @ 237 cr, up 28 pc
Open order book @ 562 cr, up 28 pc

Margins were affected adversely due unfavourable product mix and steep salty hikes

A healthy open order book and strong inquiry pipeline provide confidence for improved performance ahead

Geography wise sales mix -

Q3 - Domestic : International @ 431 cr : 131 cr
9M - Domestic : International @ 1620 : 1429 cr

Product wise sales mix -

Q3 - Gears : MHE @ 429 cr : 123 cr
9M - Gears : MHE @ 1227 cr : 393 cr

Open order book - Gears : MHE @ 811 cr : 561 cr
9M order intake - Gears : MHE @ 1441 cr : 562 cr

Gear boxes for marine applications can be a high growth area in future due Govt’s focus on Naval modernisation and ship building in general

Fresh order intakes in H1 were relatively slow. Have picked up in H2

MHE division’s growth led by Power, Cement, Mining, Fertilisers and Ports sector

Gear division’s revenues in Q3 were hurt by timing related order delays from customers + customer led execution deferments

Expecting faster conversion of orders to execution in Q4 - leading to better consolidated performance going forward

Cash on books @ aprox 600 cr

Capex from FY 26 to 28 budgeted @ 400 cr

**Revenue guidance @ ( - ) 5 pc vs earlier guidance **
EBITDA guidance @ ( - ) 2 pc vs earlier guidance

Going forward, expecting orders to pick up from power, steel and sugar sectors. Enquiry levels are already healthy

Not looking at any inorganic acquisition opportunities for the time being

Earlier revenue guidance for FY 26 was @ 2650 cr. New guidance @ 2540 cr. Earlier EBITDA margin guidance @ 24 pc. New guidance @ 22 pc ( assumption - that would mean an absolute EBITDA of 560 vs 543 cr YoY )

Company commands 40 pc mkt share for their products in India ( among the organised players )

Do not intend to enter the EPC business. Shall continue to execute the material supply and maintenance business

Have lost 30 - 40 cr in revenues in the gears division in Q3 due customers deferring the delivery schedule

Revenue mix between engineered ( custom made ) : standard ( catalogue ) products @ 52 : 48. Custom made products command higher margins

Company supplies its products to 18 OEMs in the overseas mkts in addition to direct supplies

GMs @ 43 pc in Q3 were the lowest in last 5 yrs ( vs an avg of 47-49 pc that the company normally clocks ). Bulk of this is because of adverse product mix. Should see decent recovery going forward. Company did supply to Indian Navy in Q3 @ lower margins. Once they become an established supplier, the margins on supplies to Indian Navy shall expand

Expecting bigger orders from IN in FY 27 ( for equipment supplies to new generation A/C carriers and Corvetts )

Adjusted for the IN supplies, the margins in the gears divisions would have been higher by 2-3 pc

Company’s order booking run rate in FY 26 is better than Qtly revenue run rates for current FY. This is because, most of the order intake happened for FY 27

Confident of achieving the revised guidance for current FY given out in the current concall

Bullish on their exports business to ME + EU. Don’t foresee acute competition from China as company’s reputation wrt after sales service is better than Chinese players

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

3 Likes
1733

Fed Bank Fin Services -

Q3 FY 26 results and Concall highlights -

Q3 outcomes -

Interest income - 526 vs 475 cr
Interest expenses - 208 vs 221 cr
NII - 318 vs 253 cr, up 25 pc
Gain on direct assignment - 0.1 vs 19 cr
Other income - 29 vs 38 cr
Total income - 347 vs 311 cr, up 12 pc
Operating expenses - 149 vs 133 cr, up 12 pc
Credit costs - 31 vs 108 cr ( sharp improvement on a YoY basis. Credit cost in Q2 was also @ 31 cr )
PAT - 88 vs 19 cr, up 368 pc ( up 10 pc vs Q2 )

Total branches @ 730 vs 693 ( have opened >100 new GL branches in last 9 months. At the same time, have merged 63 LAP branches with GL branches in preceding 9 months )

Asset Quality -

Stage 1 assets @ 95 vs 94.4 pc ( ie @ 12.29k vs 10.80k cr )
Stage 2 assets @ 3 vs 3.8 pc ( ie @ 382 vs 431 cr )
Stage 3 assets @ 2 vs 1.8 pc ( ie @ 266 vs 205 cr )
Total provisions held @ 2 vs 2.1 pc ( ie @ 255 vs 244 cr )

Yields, CoF, Spreads -

Avg yeilds in Q3 FY 26 @ 16.8 vs 17.1 pc

Avg cost of borrowing in Q3 FY 26 @ 7.8 vs 9 pc ( sharp fall on a YoY basis )

Spreads @ 9 vs 8.1 pc

AUM -

Gold loans @ 7.9k vs 5.2k cr
Non Gold loans @ 9.5k vs 9.7k cr

Gold loan AUM / branch @ 13.3 vs 10.7 cr ( across 594 branches )

Total Gold tonnage as collateral @ 11.2 vs 10.7 tons

Active customer base for Gold Loans @ 2.7 vs 2.5 lakh

LTV @ 59 vs 69 pc YoY

Fresh disbursements -

Gold loans @ 7.8k vs 3.4k cr
Non Gold loans @ 753 vs 954 cr
Total disbursements @ 8.6k vs 4.3k cr

Small ticket LAP and HL disbursements @ 208 vs 171 cr

Medium ticket LAP disbursements @ 545 vs 562 cr

Business loans disbursements @ NIL vs 220 cr ( discontinued disbursements here wef Q1 FY 26 )

Geographical mix of Mortgage loans -

South - 48 pc
West - 23 pc
North - 29 pc

Geographical mix of Gold loans -

South - 37 pc
West - 44 pc
North - 19 pc

Notes from Q3 concall -

Within LAP, company intends to keep focusing on high risk ST LAP and low risk MT LAP and shall strive to strike a balance between the two to manage overall risk at company level

Company was facing challenges in their ST LAP business. They intend to re-build and restructure this part of their business for better profitability and growth

In Q3, Gold loans AUM grew by 52 pc YoY

Company has merged 63 ST LAP branches with their gold loan branches in 9M FY 26

MT LAP business’s performance was satisfactory

Have institutionalised better checks and balances wrt their ST LAP business

Unsecured loan book continues to run down. It now constitutes only 0.6 pc of total loan book

AUM growth ( Ex - Business loans, now discontinued ) is at 32 pc YoY and 9 pc QoQ

Company is deliberately reducing their Direct assignment business

Since the Gold loans are a shorter term product, it enables the company to borrow for shorter terms and and lower rates + the rates in the economy are as such heading south

Q3 annualised RoA stands @ 2.5 pc
Q3 annualised RoE stands @ 12.7 pc

Operating leverage on account of rapid growth in GL business shall become visible wef Q4 ( as the growth curve steepened in Q3, it also leads to distribution of a lot of incentives at the time of loan origination )

Company has grown their gold loan tonnage @ aprox 10 pc / yr for last 5 yrs. Aim to achieve the same in by end of FY 26 as well

Company continues to maintain a very conservative LTV on Gold loans

Fresh ST LAP origination is happening in a much more conservative and healthier fashion. Stress in this part of portfolio should keep inching downwards from hereon

Company’s medium and long term aspiration is to hit 15 cr and 20 cr of Gold Loan / branch respectively

Company’s employees are specially incentivised for tonnage growth ( over and above the AUM growth )

Implementation of new labour code has hit the P&L by 4 cr ( a large part of this is a one time impact )

Cost / Income in FY 27 shall start to improve meaningfully vs FY 26 as the operating leverage keeps kicks in

Previously, the company had not invested adequately in their collection teams. ST LAP is a collections heavy business. Company has corrected this over last 12 months by rapidly expanding their internal collections team. Should see much better collections and asset quality going forward in their LAP vertical

MT LAP : LT LAP AUM stands @ 60 : 40

Disc: holding, inclined to add more, biased, not SEBI registered, not a buy / sell recommendation, posted only for educational purposes

2 Likes
1734

Hindalco -

Q2 FY 26 results and concall highlights -

Q2 outcomes -

Revenues - 66058 vs 58203 cr

EBITDA - 9684 vs 9100 cr, up 6 pc

Depreciation - 2160 vs 2074 cr, up 4 pc

Finance costs - 803 vs 869 cr, down 8 pc

Exceptional charges - 182 vs 514 cr

PAT - 4741 vs 3909 cr, up 21 pc

Segmental breakdown of EBITDA -

Novellis business - 3685 vs 3872 cr, down 5 pc

Aluminium upstream India - 4524 vs 3709 cr, up 22 pc

Aluminium downstream India - 261 vs 154 cr, up 69 pc

Copper India business - 634 vs 829 cr, down 24 pc

Unallocated income - 738 vs 533 cr

Breakdown of volumes of India Aluminium business -

Upstream sales to third parties - 227 vs 230 KT

Downstream third party sales - 113 vs 103 KT

Total sales - 333 vs 340 KT

Breakdown of Novelis business volumes -

941 vs 945 KT ,down 1 pc

Debt status -

Gross Debt @ 72670 cr

Cash on books @ 31255 cr

Net Debt @ 41415 cr

Last 12Ms consol EBITDA @ 33787 cr

Consol Net Debt / EBITDA @ 1.23

Novellis Debt / EBITDA @ 3.5

India business’s Debt / EBITDA @ ( - ) 0.41

Breakdown of Copper business’s volumes -

Copper cathodes - 107 vs 104 KT

Copper rods - 122 vs 114 KT

H1 Cash generation @ a healthy 8762 cr, up 45 pc YoY

H1 Capex deployment @ 11330 cr, up 23 pc YoY

Segmental EBITDA / MT in USD -

Novelis’ EBITDA / MT @ $ 448 vs 489 ( excluding the impact of tariffs, EBITDA / MT would have been $ 506 )

India Aluminium upstream business EBITDA / MT @ $ 1521 vs 1349

India Aluminium downstream business EBITDA / MT @ $ 265 vs 179

India Copper business EBITDA / MT @ $ 641 vs 848

Ongoing Upstream capex with likely dates of commissioning -

Captive coal mines @ Chakla - FY 26, @ Meenakshi - FY 29, @ Bandha - FY 27

Aditya Alumina refinery - FY 28

Aditya Aluminium Smelter Ph 1 - FY 28

Aditya Aluminium Smelter Ph 2 - FY 29

Copper Smelter - FY 29

Ongoing Downstream capex with likely dates of commissioning -

Aditya FRP - ramping up

Copper IGT and AI AC fins - FY 26

Copper E waste recycling - FY 27

Speciality Alumina VAP projects - FY 27

Company aims to expand their Downstream business’s EBITDA by 4X by 2030

Company’s - Bay Minette capex ( under Novelis ) is on track. Total capex outlay for this project shall be a massive $ 5 billion. This will be a Greenfield first integrated aluminium project in US in over 40 yrs aiming for a capacity of 600 KT / yr ( expandable to 1200 KT / yr ) for beverage cans, automotive mkts. Construction work is progressing well. Plant is expected to go live in FY 28

Company is confident of expanding Novelis’s EBITDA / Ton to $ 600 even before the Bay Minette Project is commissioned

Avg Aluminium prices on LME in Q1 and Q2 stood @ $ 2447 and $ 2617 / Ton. In Oct, Nov, Dec the avg LME prices were @ ( aprox ) - $ 2700, $ 2800 and $ 2900 / Ton respectively. Prices have been holding above $ 3000 / Ton in Jan 26

Company’s renewable energy capacity @ the end of Q2 stands @ 292 MW ( Hydro + Solar + Wind ). Will add another 232 MW in H2 ( taking the total renewable capacity to beyond 520 MW ) !!!

Electrification, EVs and thrust on new infra continue to keep Aluminium prices firm on the LME

Global Aluminium production grew by 1 pc over last 1 yr. Global demand grew by 1.5-2 pc in last 12 months resulting in overall Aluminium mkt remaining in deficit ( Chinese mkt remained in deficit while global mkts were in slight surplus situation )

Indian demand for Aluminium continues to grow very strongly ( @ 8 pc + rates in Q2 ), further boosted by recent GST rate cuts. Demand for copper in India grew by a robust 11 pc in Q2. Copper continues to remain a supply constrained metal indicating potential for higher prices going forward

Company’s India operations clocked 45 pc EBITDA margins ( best in the world ) vs consol EBITDA margins of 15 pc

Hedging on metal remains @ 31 pc ( @ around $ 2700 / Ton ) and 26 pc on currency @ Rs 87.5 / USD

Company believes, phase 1 of their Bay Minette capex shall yeild IRR above the cost of capital. When phase 2 goes live, the IRR can potentially be as high as early teens

For Q3, company has hedged the metal output by 31 pc @ $ 2700 / Ton. For Q4, they have hedged 49 pc of their output @ $ 2760 / Ton. For Q1, company has locked in 10 pc of their output @ $ 2800. Rest, they r yet to decide

Have already spent 50 pc of capex amount for their Bay Minette Project. Remain committed to not allow Consol Net Debt / EBIDA to cross 2

Company intends to save costs to the tune of $ 300 million / yr. Should be able to achieve this target through renewable energy, additional captive coal mines, cost control measures etc. Aim to achieve these yearly savings wef FY 29 ( that would boost the EBITDA margins in a significant manner )

Since the company has backward integration into Bauxite, coal, captive renewable energy + their cost cutting measures - they believe an LME price of even $ 2200 / Ton should be enough for them to generate adequate returns ( hence they are expanding their smelting capacities )

Company estimates that the demand for Aluminium beverage cans and Automotive demand is likely to remain buoyant for foreseeable future. This should help them effectively utilise their Bay Minette capacities ( once they come online ) - this projected demand is a key monitor able ( IMHO )

Capex for FY 26, 27 should be around 8.5k cr and 11k cr respectively. Should be able to share projected capex for FY 28 only by end of Q3/Q4

Will be borrowing $ 750 million under the Hindalco’s Indian entity and infuse the same into Novelis as Equity. This is being done to manage the Debt levels at Novelis and to protect its overall credit rating and keep that entity’s leverage within manageable limits. Hindalco India is as such in a very comfortable position

Company’s cost of debt in US is @ around 5 pc

Aluminium and Copper scrap recycling are a meaningful opportunity for the company’s future India operations. Similarly, scrap Aluminium recycling in EU is also a good business opportunity

COP in Q2 was higher by 4-5 pc higher than than Q1 ( due monsoons and higher coal prices ). Also Alumina sales happened at lower prices in Q2 vs Q1. This led to a lower EBITDA / Ton for India operations in Q2 vs Q1. This should however reverse in Q3

Alumina sales volumes in Q2 stood @ 199 KT. In Q3, Alumina sales volumes should be lower @ around 175 KT due to a planned shutdown at one of their sites. Company usually sells 700 - 800 KT of Alumina / yr. Over and above this, company sells aprox 500 KT of speciality Alumina / yr

Cash flows between Hinalco India and Novelis US are highly fungible

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

1 Like
1735

Recently ( over last 2-3 months ), I ve started adding non-ferrous metal companies to my portfolio

Earlier I used to hold Gold + Silver ( Physical + ETFs ) as a part of my PF with a combined PF weight of 10 pc. On Dhanteras, I thought I had made descent money and and liquidated all of the ETFs + Physical holdings

Soon ( in next 2-3 weeks ), I realised that the firmness in Gold, Silver and base metals may be here to stay because of the American fiscal situation ( and its only getting worse )

Hence I started loading up on Hindustan Zinc ( largest producer of Zinc + Silver in India ), Hindalco + Nalco ( first and Second largest producer of Aluminium in India ) and MOIL ( largest producer of Mangenese in India )

Hence I keep posting detailed posts on these companies from time to time

Not adding Ferrous metal companies as the supply demand situation in ferrous metal space is not as favourable

10 Likes
1736

Thank you sir for all your crisp and clear concall analysis along with disclosure, sir if possible please include how much % you invested in a particular stock as Disc., so as to get the idea about your conviction in a particular stock. Thank you sir for all your teachings, have learnt about so many businesses.:folded_hands:

1 Like
1737

Hindustan Zinc -

Q3 FY 26 results and Concall highlights -

Revenues - 10922 vs 8556 cr, up 27 pc

EBITDA - 6005 vs 4458 cr, up 36 pc ( margins @ 55 vs 52 pc )

PAT - 3879 vs 2647 cr, up 44 pc

Company’s mkt share in India’s domestic Zinc mkt @ 77 pc

Silver’s contribution to net profits stands @ 44 pc

In Q3, CoP fell to $ 940 / MT ( excluding royalty ) - down 10 pc YoY and 5 pc QoQ - quite an achievement. Continue to remain among the lowest cost Zinc producers

Mined metal output @ 276 KT in Q3, up 7 pc QoQ and 4 pc YoY

Refined metal output @ 270 KT in Q3, up 9 pc QoQ and 4 pc YoY

Silver production in Q3 @ 158 MT, up 10 pc QoQ ( vs 144 MTs in Q2 )

Company is India’s only integrated producer of Lead, Zinc and Silver. Also the only producer of Zinc alloys

Company was the successful bidder for a Tungsten mine in AP. Have also received LoI for Potash and REE ( rare earth elements ) mines in Rajasthan and UP respectively

Avg Zinc and Lead prices / Ton in Q3 stood @ $ 3165 and $ 1970. Current ( 24 Jan ) Zinc and Lead prices / Ton are @ $ 3280 and $ 2035

In Q3, company’s avg selling price for Silver stood @ $ 54/ounce. Current Silver prices are @ $ 103 / ounce !!!

Company’s annual silver production in FY 04 was @ 35 MT / yr, in FY 12 was @ 205 MT / yr, in FY 25 was @ 687 MT /yr - up 20 times ( aprox ) in 2 decades. Company is now the world’s 4th largest Silver miner

Company has commissioned expanded smelter facilities ( post expansion ) @ Darbaria and Chanderiaya in Q2 and Q3

Hot acid leaching plant @ Darbaria for additional recovery of 27 MTPA of Silver and 6 KTPA of Lead is expected to be commissioned by Mar 26

510 KTPA - DAP fertiliser plant ( DAP is mainly imported into India ) is expected to be commissioned by June 26. It ll be producing DAP fertiliser and NPK nutrients. The fertiliser plant that the company is expected to commission next FY has the potential to do peak EBITDA of 450 - 500 cr / yr

Notes from previous concalls -

In medium to long term, company aspires to increase its metal production to 1.5 MMT / yr ( initially ) and then to 2 MMT ( eventually ). Also intend to increase their reserves to 2X of current levels by indulging in domestic and international exploration activities. This would entail a lot of CAPEX - should be doable with internal accruals as the company produces a lot of cash / yr. Also intend to expand Silver production to 1500 MT / yr over medium to long term

Company has set up a dedicated subsidiary - Hindmetal Exploration Services Pvt Ltd - to continuously focus on exploring, discovering, developing and tapping mineral resources. The subsidiary has interest in exploration of all minerals across the globe by implementing best in class technologies and practices

Company’s smelting capacities -

Zinc smelting capacity @ .913 MMT + .16 MMT ( recently commissioned @ Derbari ) + .21 MMT ( recently commissioned @ Chanderia )

Lead smelting capacity @ .210 MMT

Silver refining capacity @ 800 MT

Have announced a capex of 12000 cr for setting up of 250 KTPA zinc smelter @ Debari. Have already started work on ground ( yet to finalise the technology to be used in the Smelter ). This should take 2.5 - 3 yrs before it goes commercial

Percentage of power used by the company that came from renewable sources in Q2 stood @ 19 pc. Aim to exit FY 26 with renewable share of power consumption @ 25 pc

Captive power generation capacity @ 625 MW. Among India’s largest producer of Wind Power with a generation capacity of 274 MW - spread across 5 states Company has entered into a 25 yr long renewable power purchase agreement with Serentica ltd - this would @ a fixed flat rate of energy buying without any inflation and would help the company move towards its stated goal of reducing costs to $ 1000 / Ton

Notes from Q3 concall -

Have announced Capex for India’s first Zinc Tailings reprocessing plant. It will be transforming waste into valuable resources while contributing significantly to circular economy. Key highlights -

Feed capacity: 10 Mtpa

Total approved investment: ₹ 3,823 crore

Target completion: 4QFY28

Current cash on books @ 9340 cr

Q3 volume performance ( production of refined metal )-

Zinc - 221 vs 259 KT

Lead - 49 vs 55 KT

Silver - 158 vs 160 MT

Q3 Segmental revenues -

Zinc - 6485 vs 5628 cr, up 15 pc

Lead - 1036 vs 1008 cr, up 3 pc

Silver - 2676 vs 1465 cr, up 93 pc

Others - 873 vs 513 cr, up 53 pc

Ballpark estimate - If avg selling price for silver in Q4 stays @ $ 84 / ounce ( vs $ 54 in Q3 ) - additional EBITDA for the company over Q3 shall be around 1400 cr. That would amount to EBITDA within striking distance of 7500 cr ( not even accounting for higher Zinc and Lead prices currently prevailing in Q4 )

Electrification and Renewable energy themes are a tailwind for Zinc ( used in Galvanised steel for Solar panels + Wind energy Infra ) + Silver ( widely used in Electronics, Batteries, Solar panel coatings )

State taxes / Royalties paid to the state of Rajasthan in 9Ms FY 26 stood @ 4000 cr

In domestic Lead mkt, company’s mkt share is > 90 pc !!!

Both silver and lead continue to trade a premium to LME prices ( in the domestic mkt ) - another tailwind for the company

Continue to hedge 15-20 pc of their total metals output ( holds for all three metals ). Will continue with the same for FY 27

FY 26 Silver’s hedging price is $ 39 / ounce, for Zinc is around $ 2900 / Ton. Thee prices for FY 27 are $ 68 / ounce for silver and aprox $ 3100 / Ton for Zinc respectively

Have spent $ 180 million as growth Capex in FY 26. Will be spending around $ 300 million / yr wef next FY ( talking about growth capex ). In addition, will be spending $ 400 million maintenance capex / yr

Full FY 26 Silver production should be around 680 MT, Have sold 450 MTs in first 9Ms. That means a Q4 sales figure of around 230 MTs of Silver !!! This is expected to incline their Q4 PAT even further

The share of renewable energy as a percentage of company’s total energy consumption for FY 27 should be around 40 pc and around 70 pc for FY 28. This would eventually lead to 300 cr / yr kind of cost savings vs FY 26 ( where the company shall exit with renewable power share of 25 pc or so )

Zinc tailings are fine-grained, solid waste materials left after extracting zinc from ore, composed mainly of silica, alumina, iron oxides, and other minerals, posing environmental risks but also holding potential for reuse in construction (roads, concrete) or reprocessing to recover residual metals, turning waste into resources

Company also sold 20 Tons of Lead - Silver concentrate in Q3 - which helped profitability ( as they got good prices for the same )

Disc: core holding, inclined to add on dips, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes

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1738

General thoughts on the Mkts -

  1. As per latest media reports ( from WION ), US has taken over control of military bases in Greenland

  2. Putin said in Public - Let US have Greenland. We have nothing to do with it

  3. US - Russia - Ukraine - Presidents are scheduled to meet shortly in UAE ( Ukraine’s division / partition is the only likely outcome - IMHO )

  4. Military build up against Iran is only increasing. Regime change in Iran may not be too far away. American puppet PM shall then be imposed

  5. Once US has control of Greenland + Venezuela + Iran ( Oil + Minerals ) - trade deals shall follow - is my best estimate

  6. It’s more than clear that dumping of US Treasuries is only gonna accelerate. Hence the control of Iran, Venezuela, Greenland was necessary to cushion the blows on USD. Expanding QE programs by US should be the way forward

  7. We r entering a new Global order

  8. At present, can’t think of any other loser except EU

  9. Views r personal. Have studied these things in some detail ( but can be completely wrong )

  10. Rally in precious metals doesn’t look like fizzling out. Rally in EMs - shall follow on dollar weakness + trade deals

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1739

IIFL Finance Q3 FY 26 results and Concall highlights -

Interest income - 2535 vs 1942 cr, up 31 pc

Interest expenses - 1437 vs 995 cr, up 44 pc

NII - 1098 vs 947 cr, up 16 pc, QoQ NII growth stood @ 3 pc

Income from off book assets - 771 vs 190 cr, up 305 cr. QoQ growth in off book assets is @ 3 pc

Other income - 125 vs 144 cr, down 13 pc

Total income - 1995 vs 1282 cr, up 56 pc

Operating expenses - 920 vs 748 cr, up 23 pc

Operating profits - 1075 vs 534 cr, up 101 pc. QoQ growth in operating profits is @ 4 pc

Provisions - 399 vs 491 cr, down 19 pc. QoQ provisions are down by 21 pc

PAT - 464 vs 40 cr ( up 11.6 X ). QoQ PAT is up 23 pc

AUM @ 98.4k vs 71.4k cr, up 38 pc. QoQ growth @ 9 pc

RoA @ 2.5 vs 0.6 pc. In Q2, RoA was 2.2 pc

RoE @ 14.3 vs 1.4 pc. In Q2, RoE was 11.9 pc

GNPAs @ 1.6 vs 2.4 pc. In Q2, GNPAs were @ 2.1 pc

NNPAs @ 0.8 vs 1.0 pc. In Q2 NNPAs were @ 1.0 pc

Basically - company has reported a broad based recovery on most business parameters

Segmental performance -

Gold loans - grew 26 QoQ @ 43.4k cr ( strong growth led by both price and tonnage growth )

Home loans - were flat QoQ @ 31.9k cr

MSME loans - grew 4 pc QoQ @ 10.1k cr ( only focusing on secured lending, pulling back from unsecured lending )

MFI loans - were flat QoQ @ 8.4k cr

Segmental Yields -

Gold loans - 18.3 vs 18 pc

Home loans - 10.6 vs 10.3 pc

MSME loans - 16.1 vs 16.2 pc

MFI - 24.4 vs 22.3 pc

Avg ( consolidated ) cost of borrowings stood @ 9.28 vs 9.13 pc ( in Q2 it was @ 9.38 pc )

Segmental Gross NPAs -

Home loans - 0.51 vs 1.29 pc

Gold loans - 0.36 vs 0.66 pc

MSME loans - 4.92 vs 3.99 pc ( in Q2, it was 5.93 pc )

MFI - 4.93 vs 5.07 pc ( in Q2, it was 5.03 pc )

Notes from Q3 concall -

IT dept’s enquiry for a 6 yr block for the company is completely routine. There r no allegations / no Tax demands at present

Assigned and Co Lending book stand @ 21.4k cr and 13.1k cr respectively ( combined they stand @ 35 pc of company’s total loan book ) - That’s why such high income from off book assets

Company Gold loan tonnage now stands @ 59.4 Tons ( ATH ). Gold loan mkt continues to be very strong due strong gold prices + the clampdown on unsecured lending is is pushing ppl towards gold loans

Gold loan mkt is large. There is ample scope of growth for everyone. Company’s avg Gold loans / branch is @ around 12 cr vs around 24 cr for Mkt leader

Loan loss provisions are trending downwards. Similar trend should continue into Q4 and next FY

Company has provisioned an extra 23 cr towards implementation of new labour laws ( happening to all companies )

With most of the clean up being behind ( wrt small ticket LAP ), home loan portfolio’s AUM should see acceleration wef Q4

A 25 pc QoQ growth in Gold loans AUM should happen in Q4 as well !!!

Company resorted to 875 cr of sale of loan portfolio to ARC ( mostly micro LAPs + unsecured MSME loans ). Basically company is exiting this segment. This is also getting reflected in sharp fall in GNPAs in their Home Loans portfolio

Expect the credit cost to fall below 2 pc levels in next FY ( vs 2.5 pc kind of levels at present )

Since company’s lines of business are diversified across different lending spaces, company isn’t facing borrowing challenges wrt their MFI business. Some Standalone MFI organisations are facing these challenges - as Banks are cautious that they may not be able to survive the LY’s turmoil in the micro finance space

Company’s MFI business in TN, Karnataka is now showing significant improvements ( these two states had shown considerable deterioration in asset quality in last 1.5 yrs ) - a key positive

If the company’s co-lending and direct assignment business picks up further pace, they may not even raise further equity capital in near future

Oct, Nov Dec disbursements in Micro Fin business stood @ 500 cr, 600 cr and 700 cr respectively

Aim to grow their Housing loans business by 15-17 pc for next FY

Company has reported a 7 pc QoQ tonnage growth wrt their Gold Loans - commendable effort

In medium term ( 2-3 yrs ) aim to start hitting annual RoEs of 17-18 pc

Disc: holding, core holding, biased, not SEBI registered, not a buy / sell recommendation, inclined to add more, posted only for educational purposes

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