Archives October 2024

Dixon Technologies
Dixon Technologies Drops 15% from Day’s High Amid Profit Booking After Q2 Earnings

Company Overview

Dixon Technologies (India) Ltd. is one of India’s leading electronics manufacturing services (EMS) companies, known for its end-to-end manufacturing capabilities across multiple consumer electronics and appliances segments. Founded in 1993 and headquartered in Noida, Uttar Pradesh, Dixon has grown rapidly to become a significant player in the Indian EMS space, benefiting from strong partnerships with major domestic and global brands like Samsung, Panasonic, Philips, Xiaomi and others. The company’s strategic expansion and competitive manufacturing capabilities make it a key player in the Indian EMS sector.

Industry Outlook

At present, the potential growth of the electronics market is expected to reach USD 3 trillion by 2047; including exports worth approximately USD 100 Billion presents a significant opportunity. The Electronics industry in India is now positioned at an inflexion point with the country planning an Rs 440 billion boost to become an electronics powerhouse. The industry manufacturing capacity will increase to fulfil excess demand.

Segmental Information

  • Consumer Electronics: This is one of Dixon’s largest segments, focused on manufacturing LED TVs for both domestic and international brands. Dixon has established partnerships with prominent brands and provides a wide range of screen sizes and display technologies.
  • Mobile & EMS: Dixon provides mobile phone assembly and electronics manufacturing services for both feature phones and smartphones. It is involved in end-to-end manufacturing, from component assembly to quality testing, serving major domestic and international smartphone brands.
  • Home Appliances: Dixon produces home appliances like washing machines, primarily focused on semi-automatic models. The company has established partnerships with well-known appliance brands and continues to expand its offerings in response to growing demand in the Indian market.
  • Lighting Products: Dixon manufactures LED bulbs, tube lights, down lighters, and other lighting products. It caters to leading brands in the lighting industry, benefiting from increasing demand for energy-efficient lighting solutions in both residential and commercial spaces.

Quarterly Highlights

  • Revenue for Q2 FY25 is Rs 11,528 crores, a growth of 133% YoY from Rs 4944 crores.
  • EBITDA for this quarter is Rs 420 crores, up by 110% YoY from Rs 200 crores in Q2 FY24.
  • Net Profit of Rs 412 crores, a significant rise of 264% YoY, including a fair value gain of Rs 210 crores from a 6.5% stake in Aditya Infotech Ltd.

Business Highlights

  • Revenue from mobile segment is Rs 9444 crores and acquired Ismartu on August 13, 2024, contributing approx. Rs 1100 crores in revenue from selling 8 lakhs smartphones in Q2.
  • Consumer electronics revenue was Rs 1412 crores and refrigerators contributed Rs 188 crores to revenue with 90% capacity utilization.
  • Home Appliances has revenue of Rs 444 crores with monthly run rate of 30,000 units for automatic washing machines. A new R&D center established in Noida for display devices.
  • Management is expecting a seasonal impact on sales post-Diwali, but will recover by start of Q4 FY25. And LED TV segment is facing some pricing pressure, with noted decline in overall industry volumes.

SWOT Analysis

Strengths:

  1. Diverse product range
  2. Strong client relationships
  3. Robust manufacturing capabilities
  4. Advantageous government schemes

Weaknesses:

  1. Heavy reliance on imported products
  2. Lower operating margins

Opportunities:

  1. Expansion into new market segments
  2. Potential for global exports
  3. Increasing domestic demand for electronics

Threats:

  1. Intense competition
  2. Regulatory changes
  3. Supply chain vulnerabilities

Patanjali Foods Q2 Results
Patanjali Foods Q2 Results: Net Profit Surges 21% to Rs 309 Crore Amid Strong Performance

Company Overview

The Patanjali Group, founded by Baba Ramdev and Acharya Balkrishna, is a prominent Indian conglomerate known for its focus on natural, Ayurvedic, and wellness-oriented products. Initially centered on Ayurveda and herbal health, the group rapidly expanded into diverse sectors, including FMCG, healthcare, food products, personal care, and education. Key brands like Patanjali Ayurved and Patanjali Foods offer a wide range of products, from food items and supplements to cosmetics and home care products. With a mission to promote traditional Indian medicine and healthy living, the Patanjali Group has become a household name, emphasizing quality, affordability, and a focus on sustainable practices.
Incorporated in 1986, Patanjali Foods Limited is a leading FMCG company in India, known for its presence across edible oils, food & FMCG, and wind power generation sectors. Originally known as Ruchi Soya Industries Limited, the company has established a strong portfolio of brands, including Patanjali, Ruchi Gold, and Nutrela, offering products at various price points to meet diverse consumer needs. Patanjali Foods is engaged in processing oil seeds, refining crude oil, and producing a variety of food products, such as biscuits and nutraceuticals. It also has a significant focus on renewable energy with wind power generation operations and maintains an extensive network of manufacturing plants across India.

Industry Outlook

For FY25, the industry outlook for Patanjali Foods appears promising, driven by growth in the FMCG and health foods sectors, a rising demand for natural and organic products, and increasing health consciousness among Indian consumers. The edible oil segment, a major contributor to Patanjali Foods’ revenue, is expected to grow due to increased consumption and demand for healthier oil alternatives. The health and wellness segment, particularly nutraceuticals, is also gaining momentum as consumers prioritize immunity and preventive health.

According to recent market reports, the FMCG sector in India is projected to grow at a compound annual growth rate (CAGR) of around 12-14% through 2025. The edible oils market, specifically, may see a CAGR of 9-10%, while the nutraceutical segment, where Patanjali Foods is expanding, is estimated to grow at a CAGR of 15-17%.

These growth rates align with Patanjali Foods’ strategy to diversify its product portfolio and increase its market share across segments. With its focus on affordable, natural, and Ayurvedic products, Patanjali Foods is well-positioned to benefit from these industry trends in FY25.

Business Segments

Patanjali Foods operates in two main business segments: Edible Oils and Food

          & FMCG.

  • Edible Oils: This segment is the largest contributor, accounting for

 approximately three-fourths of Patanjali Foods’ total revenue. In Q2 FY25,

 the Edible Oils segment experienced a 10% increase in revenue, reaching

 ₹5,939 crore, largely supported by stable demand. Branded edible oils played

 a significant role, contributing nearly 74% to this segment’s revenue. This

steady demand helped drive the overall revenue for the company to

₹8,154 crore for the quarter, reflecting an overall growth of about 4%

compared to the previous year.

  • Food & FMCG: The Food and FMCG segment, though smaller, accounted for around 25% of the total revenue in Q2 FY25. However, the segment faced challenges, with a 7% decline in revenue, attributed to sluggish demand in the broader industry. Despite this, staples like rice, pulses, and wheat performed better, with sales reaching ₹1,032 crore. The segment’s EBITDA for Q2 FY25 was ₹234 crore, reflecting some impact from the softer demand for other FMCG products​.
  • Wind power generation: Although smaller in scale, this segment generated revenue of ₹14 crore, showcasing Patanjali Foods’ commitment to sustainable energy by fulfilling 20% of its energy needs through renewable sources.

Key Subsidiaries and Their Information

Patanjali Foods Limited has several key subsidiaries that enhance its operations and product offerings, particularly in the FMCG sector and edible oils. Here are the main subsidiaries as of FY25:

  • Ruchi Soya Industries Limited: This is one of the largest subsidiaries, focusing on edible oils and food products. It significantly contributes to Patanjali Foods’ revenue through its various brands, including Ruchi Gold and Nutrela. Following its acquisition by Patanjali in 2021, Ruchi Soya has been integral to the company’s operations.
  • Patanjali Ayurved Limited: This subsidiary plays a crucial role in providing a range of Ayurvedic and herbal products. Patanjali Foods has expanded its FMCG offerings by acquiring the food business from Patanjali Ayurved, which includes a variety of consumer-focused products.
  • Patanjali Natural Biscuits Private Limited: This subsidiary is involved in the production of biscuits and snacks, further diversifying Patanjali’s product range in the FMCG sector.
  • Patanjali Wind Energy Private Limited: Engaged in wind power generation, this subsidiary contributes to the company’s sustainability efforts by utilizing renewable energy sources. In Q2 FY25, it generated revenue of ₹14 crore from this segment​.

Q2 FY25 Highlights

  • In Q2 FY25, Patanjali Foods Limited reported robust performance despite a challenging environment in both the Food & FMCG and Edible Oils segments. The company’s revenue from operations reached ₹8,154.19 crore, marking a 4.25% year-on-year (YoY) growth.
  • Patanjali Foods achieved its highest-ever EBITDA of ₹493.86 crore, reflecting a 17.81% YoY improvement. The EBITDA margin also expanded by 70 basis points to 6.06%.
  • Gross profit rose significantly from ₹1,021.26 crore to ₹1,292.81 crore, primarily due to favorable pricing scenarios in the market. The PAT increased by 21.38% YoY to ₹308.97 crore, with a corresponding margin improvement of 53 basis points.
  • There has been a noticeable shift in consumer preferences from traditional General Trade channels to modern trade, e-commerce, and quick commerce, leading to higher inventory levels among traditional partners. The company exported products to 21 countries, generating ₹34.55 crore in revenue from exports during the quarter.
  • The wind turbine power generation segment contributed ₹14.35 crore in revenue, with the company sourcing approximately 20% of its energy needs from renewable sources​.
  • During the quarter, Patanjali Foods significantly increased its advertising and sales promotion expenses, surpassing ₹130 crore, which brought the total for H1 FY25 to over ₹185 crore. The company launched various marketing campaigns across print, social media, TV, and radio, promoting specific products. Notably, celebrities such as Shilpa Shetty, Shahid Kapoor, and Khesari Lal Yadav were engaged to endorse Nutrela-branded soya chunks, edible oils, and nutraceuticals, respectively.
  • In addition to celebrity endorsements, Patanjali initiated the Rural Connect Program and Nutrela Operation Thunder to enhance brand visibility and distribution in rural, underserved markets. The brand also collaborated with popular YouTube channels like Rajshri Foods and Get Curried, featuring star chefs who showcased enticing recipes using Nutrela product.

Financial Summary

INR in Cr.Q2 FY25Q1FY25Q2FY24Q-o-Q
Growth		Y-o-Y
Growth
Total Revenue81547173782213.68%4.25%
Selling/ General/ Admin
Expenses Total		1301179110.94%43.59%
Depreciation/
Amortization		565760-0.90%-6.07%
Total Operating
Expense		77626824748713.73%3.67%
Operating Income39334933512.63%17.15%
Profit Before Tax41735933516.13%24.42%
Profit After Tax30926325517.46%21.23%
Diluted Normalized EPS8.537.267.0317.49%21.34%

SWOT Analysis

Strengths:

  1. Wide range of products
  2. Strong brand reputation
  3. Extensive reach in both rural and urban areas
  4. Solid financial performance

Weaknesses:

  1. Heavy reliance on edible oils
  2. Limited international presence
  3. High costs of raw materials

Opportunities:

  1. Rising consumer interest in health and wellness products
  2. Growth in online and modern retail channels
  3. Potential to expand into underserved rural markets

Threats:

  1. Intense market competition
  2. Regulatory hurdles
  3. Economic downturns

Zomato Q2 Earnings Net Profit Jumps 389% YoY
Zomato Q2 Earnings: Net Profit Jumps 389% YoY, ₹8,500 Crore Fundraising via QIP Approved

Company Overview

Zomato ltd. is a leading Indian online food delivery and restaurant discovery platform with a market capitalization of Rs 200,000+ crore. Founded in 2008, Zomato has grown to become one of India’s most prominent food-tech companies, connecting millions of users with restaurants and delivery services across the country. It has over 17 million monthly active users all over world and 300,000+ delivery personnel. In 2022, Zomato acquired Blinkit as a subsidiary for approx. Rs 4440 crore. It specializes in quick commerce for fast delivering groceries, etc.

Industry Outlook

The Indian e-commerce food delivery industry is poised for strong growth in FY25, driven by increasing consumer demand, digital adoption, and expansion into Tier 2 and Tier 3 cities. Indian food delivery market is expected to grow at a CAGR of 18-20% over the next few years, reaching an estimated ₹1 trillion by FY25. This trend is expected to continue, with more people opting for the convenience of ordering in.

Segmental Information

  • Food Delivery: It is a food ordering and delivery platform where customers can search and discover local restaurants, order food, and have it delivered reliably and quickly and it is a core segment of this company.
  • Quick Commerce: It offers a quick delivery services to its customers for various categories of products like stationery, fruits, foods, merchandise, electronics item, etc. in delivery time of 15 minutes. And it has acquired a subsidiary called Blinkit, which handles this segment for Zomato.
  • Going Out: This segment is a combination of Dining out & ticketing platform where it offers customers to discover a restaurant and reserve it for them and customers can book tickets also for movies or any live shows, etc.
  • B2B Supply: The B2B business (Hyper pure) is that, supplying quality food ingredients and other products to restaurants and other B2B buyers.

Q2 FY25 Highlights

  • Bottom line (EBITDA) continued to improve steadily and Quick commerce business is now near a break-even point.
  • Zomato has proposed a fund raising via QIP.
  • Food delivery GOV grew 21% YoY (5% QoQ), Quick commerce GOV grew 122% YoY (25% QoQ) and Going-out GOV grew 171% YoY (46% QoQ); total GOV grew 139% YoY (29% QoQ).
  • The new District app for going-out business will be live soon in Q3.
  • Zomato had average monthly of 20.7 million customers, 292,000 restaurant partners and 500000 delivery partners.

Subsidiary- Blinkit

  • It had revenue of Rs 1156 crore compared to 942 crore in Q2FY24, a growth of 129% YoY.
  • EBITDA was at break-even level of Rs -8 crore in Q2 FY25 which was Rs -125 crore a year back. Shows a good sign.
  • GOV for quick commerce business was Rs 6132 crore and orders for Q2 FY25 were 92.9 million and its average order value is Rs 660, as it offer low price products for daily use and fast delivery.
  • The total stores for Blinkit till Q2 are 791 stores and 152 stores were added during this quarter only.
  • The GOV per day, per store comes around Rs 981,000 for this quarter.

SWOT Analysis of Zomato

Strengths:

  1. Diverse revenue streams that enhance financial stability.
  2. Robust financial backing from investors, enabling expansion.
  3. Extensive user base, driving consistent engagement.

Weaknesses:

  1. High operating expenses impacting profitability.
  2. Intense competitive pressure from other food delivery services.
  3. Limited international market presence hindering global growth.

Opportunities:

  1. Expansion potential in Tier 2 and Tier 3 cities.
  2. Opportunities for partnerships with cloud kitchens to diversify offerings.
  3. Growing potential for subscription model services to boost customer loyalty.

Threats:

  1. Increasing competition in the food delivery industry.
  2. Challenges in consumer retention amidst evolving market dynamics.
  3. Regulatory risks that could affect operational strategies.
Persistent Systems Q2FY25
Persistent Systems Q2FY25 Earnings: Profit Rises by 23.45% YoY

Company Overview

Persistent Systems, incorporated in 1990, is a global software and technology services company specializing in product engineering and digital transformation. The company has demonstrated expertise in emerging technologies, focusing on IoT products, platform development, and strategic partnerships with leading product companies. With a strong presence across sectors like industrial machinery, healthcare, Smart City, and smart agriculture, Persistent delivers solutions that span the entire product lifecycle. In its recent quarter, the company reported $345 million in revenue, marking 18.4% year-on-year growth and 5.3% sequential growth, with key contributions from Healthcare and Life Sciences (up 71.2%) and BFSI (up 15.3%). Persistent continues to drive growth, leveraging advanced technologies like AI and maintaining 18 consecutive quarters of growth.

Industry Outlook

The outlook for the IT sector in FY25 looks promising, with macroeconomic headwinds expected to subside, leading to improved earnings visibility. After outperforming the Nifty in the previous year, the IT sector is likely to maintain its momentum, benefiting from a lower base and easing headwinds. For Persistent Systems (PSL), the company is well-positioned to seize growth opportunities in digital technologies, thanks to its strong product development capabilities and early recognition of digital trends. Management is optimistic about achieving industry-leading revenue growth in FY24, driven by broad-based demand across various sectors, robust deal bookings, new client additions, and incremental revenue from acquisitions. PSL’s leadership in outsourced product development, long-standing client relationships, and end-to-end service offerings position it to capitalize on emerging opportunities effectively. With a strong presence in North America, Europe, and other regions, Persistent is expected to benefit from global digital transformation trends. Its focus on capability-led acquisitions, particularly in Europe, may help it capture new opportunities in consolidating markets.
Persistent aims to maintain industry-leading growth while optimizing margins by 200–300 basis points. Its focus on scaling advanced services, such as AI, and leveraging its robust pipeline suggests a strong performance in FY25.

Business Segments

  • Healthcare and Life Sciences:
    • This segment has experienced significant growth, with a year-on-year increase of 71.2%.
    • The growth is driven by expanding digital transformation initiatives in healthcare, including IoT applications and data analytics.
  • Banking, Financial Services, and Insurance (BFSI):
    • The BFSI sector recorded a 15.3% year-on-year growth. Persistent’s focus on AI adoption and digital services in financial operations is enhancing customer experience and operational efficiency.
  • Technology and High-Tech:
    • Although growth in this segment has been relatively slower, management expects an uptick in the next few quarters as demand increases. Investments in innovative technologies and strategic partnerships are expected to drive future growth.

Key Subsidiaries and Their Information

Persistent Systems has multiple wholly owned subsidiaries, with presence in over 20 countries.

  • Persistent Systems Inc.:
    • This North American subsidiary plays a critical role in driving growth, especially in the healthcare and BFSI sectors. The company is focusing on enhancing its digital offerings and has been successful in securing large deals.
  • Persistent Systems UK:
    • Focused on the European market, this subsidiary has been pivotal in expanding Persistent’s presence in Europe. It emphasizes product engineering and digital transformation services, catering to various industries, including automotive and finance.
  • Acquisitions and Partnerships:
    • Persistent has made several acquisitions to bolster its technology stack. For instance, the acquisition of MetaLogix has strengthened its capabilities in data management and analytics. Partnerships with leading technology companies enhance its service offerings, particularly in AI and cloud services.
  • Focus on Emerging Technologies:
    • Persistent’s subsidiaries are investing in emerging technologies like IoT, AI, and blockchain to enhance their service offerings and provide innovative solutions to clients. The company employs a global delivery model that leverages talent from various regions, ensuring cost efficiency and high-quality service delivery. With macroeconomic challenges easing and increased demand for digital transformation services, subsidiaries of Persistent Systems are well-positioned for sustained growth. The management is optimistic about capturing a larger market share in the digital services landscape, particularly with their strong track record in OPD.

Q2 FY25 Highlights

  • Revenue growth: PSL reported $345.5 million in revenues, up 5.1% q-o-q in constant currency (CC) terms beating our estimates of $342 million. Revenue in USD terms was up 5.6% q-o-q/18.4% y-oy while revenue in rupee terms stood at Rs. 2,897 crores, up 5.8% q-o-q/20.1% y-o-y. Growth was led by Healthcare & Lifesciences and BFSI verticals. Persistent reiterated its aspiration to achieve $ 2 billion revenue target by FY27. Management would endeavor to maintain utilization at 83-85%.
  • EBIT margins: EBIT margins was flat q-o-q at 14% slightly beating our estimates of 13.9%. Margin headwinds comprising of wage hike (-210 bps), absence of policy rationalization present in Q1 (-130 bps), Incremental impact of fresh ESOP issuance in Q2(-60 bps) and lower earnout credit (-60 bps) was neutralized by margin tailwinds comprising of Utilization (+120 bps), Sub contractor cost reduction (+70 bps), lower resale business (+50 bps), Pricing and right shoring (+130 bps), favorable currency (+30 bps) and absence of H-1B visa cost (+60 bps).
  • Order bookings: In the latest performance metrics, Persistent Systems reported a Total Contract Value (TCV) of $529 million, reflecting a 14% increase quarter-over-quarter (q-o-q) and a 10% increase year-over-year (y-o-y). The company achieved a book-to-bill ratio of 1.5x, up from 1.4x in Q1 FY25. New Business TCVs were particularly strong, reaching $389.8 million, which marks a 25% increase q-o-q and a 24% increase y-o-y. The Annual Contract Value (ACV) totaled $348.3 million, showing a modest 3% increase q-o-q and a more robust 10% increase y-o-y. Additionally, New Business ACV reached $218.6 million, reflecting a 10% increase q-o-q and a 19% increase y-o-y. These figures indicate a healthy growth trajectory for Persistent Systems, driven by strong demand and successful business strategies
  • Top clients & Client additions: Revenue from the top-5 clients, top-10 clients, top-20 clients, and top-50 clients grew 7.7%/ 5.3%/5.7%, and 5.4% q-o-q, respectively. Persistent added two clients in the $10mn+ and four clients in the $1mn+ revenue category sequentially.
  • Headcount & attrition: Net headcount additions declined by 282, taking total headcount to 23,130. TTM attrition inched up by 10 bps q-o-q to 12%. However, utilization improved 270 bps q-o-q to 84.8%.
  • Cash generation & DSO:  Cash & investments stood at Rs 1791.6 crore, down 6.2%       q-o-q. DSO stood at 68 from 67 in Q1FY25. Operating cash flows to PAT for Q2FY25 was 108.3% compared to 49.3% Q1FY25.

SWOT Analysis of Persistent Systems: Key Insights for Strategic Growth

Strengths:

  1. Expertise in Digital Transformation – Persistent Systems excels in cutting-edge digital transformation services, providing a strong competitive edge.
  2. Consistent Growth – The company has demonstrated steady revenue growth, reinforcing its position in the global market.
  3. Robust Deal Wins – Regular success in securing high-value contracts underscores its reliability and industry relevance.
  4. Global Presence – A well-established presence across North America, Europe, and other key regions, giving it a broad market reach.

Weaknesses:

  1. Dependence on BFSI and Healthcare – Heavy reliance on these sectors may limit diversification, posing a potential risk in times of industry slowdown.
  2. Smaller Size – Compared to some industry giants, Persistent Systems operates at a smaller scale, which may impact market dominance.
  3. Flat Margins – Margins have remained relatively stagnant, highlighting the need for cost optimization and efficiency improvements.
  4. Integration Challenges from Acquisitions – Ongoing acquisitions pose potential hurdles in seamless integration, impacting short-term operational efficiency.

Opportunities:

  1. Rising Demand for AI and Digital Transformation – The increasing adoption of AI and digital services presents lucrative growth opportunities.
  2. Healthcare and BFSI Expansion – Expanding its footprint in the rapidly growing healthcare and BFSI sectors can drive significant revenue.
  3. Focus on Cloud and IoT Solutions – With businesses globally shifting to cloud and IoT platforms, Persistent is well-positioned to capitalize on this trend.
  4. European Expansion – The company’s increasing focus on Europe offers new market opportunities, especially in digital transformation and engineering services.

Threats:

  1. Global Economic Uncertainty – Economic fluctuations could negatively impact client spending and growth projections.
  2. Competition from Industry Leaders – Larger competitors with greater resources and market share could pose a threat to Persistent’s expansion efforts.
  3. Currency Fluctuations – Persistent’s global operations expose it to currency exchange risks that could affect profitability.
  4. Cybersecurity Threats – As digital services grow, so do cybersecurity risks, requiring constant vigilance and investment to safeguard client data.

L&T Finance Holdings Q2 FY25
L&T Finance Q2 FY25 Results: Net Profit Rises 2% to ₹696 Crore, Revenue Jumps 17%

Company Overview

L&T Finance Holdings, part of the Larsen & Toubro Group, is a key player in India’s financial sector, offering a wide range of services across rural, housing, and infrastructure finance. Through its subsidiaries, it provides products like microfinance, two-wheeler loans, farm equipment finance, and home loans. The company is also involved in financing large-scale infrastructure projects.

L &T Finance emphasizes digital transformation, using data analytics and AI to enhance customer experience and streamline operations. It has adopted a strong Environmental, Social, and Governance (ESG) framework, ensuring sustainable business practices. In recent years, it has improved asset quality by reducing non-performing assets (NPAs) and focusing on cost optimization. With a focus on retail and rural finance, L&T Finance is committed to long-term, responsible growth in India’s financial ecosystem.

Industry Outlook

India’s economy is projected to grow by 7% in FY25, driven by strong private consumption and credit demand. This growth is set to significantly boost the financial sector, particularly non-bank financial companies (NBFCs), which are expected to see increased profitability despite higher funding costs. Credit demand is likely to expand, especially in infrastructure, housing, and microfinance sectors, with NBFC loan growth projected to increase by 15%, fueled by strong performance in key consumption areas. Infrastructure lending is poised for substantial growth due to large investments in energy and urban development. L&T Finance plans to expand its infrastructure portfolio by over 20% to capitalize on these opportunities. Additionally, the company is focused on improving asset quality, aiming to reduce its Gross Non-Performing Assets (NPAs) to below 3.0%, down from 3.1% in FY24.  L&T Finance is also expected to enhance its sustainability efforts by increasing   its allocation towards ESG projects.

Business Segments

  • Rural Finance: This includes microfinance, farm equipment finance, and two-wheeler loans, primarily catering to rural consumers. It plays a key role in driving financial inclusion in India’s rural economy.
  • Retail Finance: L&T Finance offers home loans, loans against property, and other personal loans, targeting individual consumers in urban and semi-urban areas.
  • Infrastructure Finance: The company has a significant presence in financing large-scale infrastructure projects, such as energy, transportation, and urban development, supporting India’s infrastructure growth.
  • Mutual Funds and Wealth Management:  Through L&T Investment Management, the company manages a wide range of mutual funds and wealth management products for retail and institutional investors.

Q2 FY25 Highlights

  • L&T Finance reported a Profit After Tax (PAT) of ₹696 crore, reflecting a 17% increase compared to the previous year. This growth is a strong indicator of the company’s profitability and overall financial health.
  • The company maintained a stable Return on Assets (RoA) at 2.60%, up 18 basis points year-over-year. With 96% of its loan book now in retail financing, it is advancing its “retailization” strategy to reduce corporate loan dependence and improve asset quality.
  • L&T Finance’s retail loan portfolio grew 28% YoY to ₹88,975 crore, driven by strong demand for home loans, vehicle financing, and microfinance. The consolidated book grew 18% YoY, the highest since Q1FY20.
  • L&T Finance improved its Net Interest Margin (NIM) to 8.94%, up by 32 bps YoY, while reducing its Weighted Average Cost of Borrowings (WACB) to 7.80%, down by 5 bps. Credit cost remained stable at 2.59%, and the collection efficiency for the rural segment stood at 99.45%.

Financial Summary

INR in Cr.FY25 Q2FY25 Q1QoQ (%)FY24 Q2YoY (%)
Total Operating Income401937846.20%321425.10%
Total Expenditure (Excl Depreciation)157514826.20%133118.30%
Operating Profit (PBDIT) excl Other Income244423026.20%188229.90%
Other Income502.00%268-98.30%
Operating Profit (PBDIT)244923026.40%215113.90%
Interest147613519.20%132511.40%
Depreciation332817.10%2817.50%
Profit Before Tax9409221.90%79717.80%
Tax2432372.50%20319.60%
Net Profit6976851.70%59417.20%
Share in Profit of Associates000.00%00.00%
Minority Interest1-0.43-523.10%1-223.60%
Consolidated Net Profit6966861.50%59516.90%

SWOT Analysis

Strengths:

  1. Strong Family Background
  2. Wide Range of Products
  3. Effective Retaliation Strategy
  4. Significant Presence in Rural Areas

Opportunities:

  1. Expanding Rural Market
  2. Government Investment in Infrastructure
  3. Growth in Digital Services
  4. Potential for Cross-Selling

Weaknesses:

  1. Heavy Reliance on External Borrowing
  2. Legacy Issues with Corporate Loans
  3. Non-Performing Assets (NPAs)
  4. Delay in Digital Transformation

Threats:

  1. Changes in Regulations
  2. Economic Slowdown
  3. Increasing Competition
  4. Fluctuations in Interest Rates

Hyundai Motor India Limited IPO
Hyundai Motor India Limited IPO 2024: Detailed & Subscribe or Avoid?

Prepared On: October 15, 2024

Hyundai Motor India Limited (HMIL) is set to launch its Initial Public Offering (IPO) with a total issue size of ₹27,870.16 crores. This significant offering comprises an offer for sale of 14.22 crore shares, marking one of the most anticipated IPOs in the Indian primary market.

IPO Subscription Period

  • Open Date: October 15, 2024
  • Close Date: October 17, 2024
  • Allotment Date: October 18, 2024
  • Listing Date: October 22, 2024 (Tentative)
  • Stock Exchanges: BSE and NSE

Pricing and Lot Details

  • Price Band: ₹1,865 – ₹1,960 per share
  • Face Value: ₹10 per share
  • Minimum Lot Size: 7 shares
  • Investment Requirements:
    • Retail Investors: Minimum ₹13,720 (7 shares)
    • Small Non-Institutional Investors (sNII): 15 lots (105 shares) – ₹205,800
    • Big Non-Institutional Investors (bNII): 73 lots (511 shares) – ₹1,001,560

Reservation Structure

The Hyundai Motor IPO reserves shares across various investor categories to ensure broad participation:

  • Qualified Institutional Buyers (QIB): 20% (2,82,83,260 shares)
  • Non-Institutional Investors (NII): 15% (2,12,12,445 shares)
    • Big NII (bNII): 10%
    • Small NII (sNII): 5%
  • Retail Investors: 35% (4,94,95,705 shares)
  • Employees: 0.55% (7,78,400 shares) at a discounted price of ₹186 per share
  • Anchor Investors: 30% (4,24,24,890 shares) raising ₹8,315.28 crores

Key Dates and Timeline

  • IPO Opens: Tuesday, October 15, 2024
  • IPO Closes: Thursday, October 17, 2024
  • Allotment Basis: Friday, October 18, 2024
  • Refund Initiation: Monday, October 21, 2024
  • Shares Credited to Demat: Monday, October 21, 2024
  • Listing Date: Tuesday, October 22, 2024
  • UPI Mandate Cut-off: 5 PM on October 17, 2024

Book Running Lead Managers

Hyundai Motor India Limited has appointed prominent financial institutions as book-running lead managers for the IPO:

  • Kotak Mahindra Capital Company Limited
  • Citigroup Global Markets India Private Limited
  • HSBC Securities & Capital Markets Pvt Ltd
  • J.P. Morgan India Private Limited
  • Morgan Stanley India Company Pvt Ltd

Kfin Technologies Limited has been designated as the registrar for the IPO.

Promoter Information

  • Promoter: Hyundai Motor Company
  • Shareholding:
    • Pre-Issue: 100%
    • Post-Issue: 82.50%

About Hyundai Motor India Limited

Established in May 1996, Hyundai Motor India Limited is a subsidiary of the Hyundai Motor Group, the world’s third-largest automotive OEM by passenger vehicle sales. HMIL manufactures and markets a wide range of vehicles, including sedans, hatchbacks, SUVs, and electric vehicles (EVs), supported by a robust network of 1,366 sales points and 1,550 service centers across India.

Key Models:

  • Grand i10 NIOS
  • i20 & i20 N Line
  • AURA
  • Elantra
  • Venue & Venue N Line
  • Verna
  • Creta & Creta N Line
  • Alcazar
  • Tucson
  • Ioniq 5 (All-Electric SUV)

HMIL’s manufacturing facility near Chennai is pivotal in producing its comprehensive vehicle lineup, catering to both domestic and international markets, including Africa, the Middle East, Bangladesh, Nepal, Bhutan, and Sri Lanka.

Financial Highlights

  • Revenue Growth: Increased by 16% from ₹61,436.64 crores (FY 2023) to ₹71,302.33 crores (FY 2024)
  • Profit After Tax (PAT): Rose by 29%, reaching ₹6,060.04 crores in FY 2024
  • Net Worth: ₹12,148.71 crores
  • Total Borrowing: ₹758.14 crores

Key Performance Indicators (KPIs):

  • ROCE: 13.69%
  • RoNW: 12.26%
  • P/BV: 14.93
  • EPS (Pre-IPO): ₹74.58
  • EPS (Post-IPO): ₹73.33
  • P/E Ratio (Pre-IPO): 26.28x
  • P/E Ratio (Post-IPO): 26.73x

IPO Objectives

Hyundai Motor India Limited will not receive any proceeds from the IPO. Instead, the promoter-selling shareholders will receive the Offer Proceeds after deducting offer-related expenses and applicable taxes.

Subscription Status (As of October 15, 2024, 7:02:07 PM)

  • Overall Subscription: 0.18x
  • Retail: 0.27x
  • QIB: 0.05x
  • NII: 0.13x
  • Employee Category: 0.81x

Total Applications Received: 9,89,91,410 for 1,80,50,557 shares bid.

Recommendation: Apply. The Hyundai Motor India Limited (HMIL) IPO offers strong growth potential due to its market leadership, solid financials, and strategic expansion into electric vehicles (EVs). Backed by the globally renowned Hyundai Motor Group, and with a robust outlook for future growth, this IPO presents an attractive opportunity for long-term investors, especially those looking for exposure to the automotive and EV sectors. Despite the slightly high P/E ratio, the company’s consistent performance and future plans make it a promising investment.

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Just Dial reports
Just Dial Reports Q2 FY25 Earnings: 114% Surge in Net Profit and 9% Revenue Growth

Prepared On: October 12, 2024

Company Overview
Just Dial Ltd., founded on December 20, 1993, in Mumbai, India, is led by CEO Venkatachalam Sthanu Mani. As a key player in the Technology Services sector, particularly in Internet Software/Services, Just Dial is a leading local search engine in India. It offers comprehensive search services via website, mobile app, phone, and SMS, helping users find businesses, products, and services.

The latest JD App integrates features like Map-aided Search, Live TV, and Stock Quotes, making daily tasks easier. Just Dial also provides services such as bill payments and travel bookings, generating revenue through search services, transaction commissions, and certifications.

Key Company Information:

  • Company Name: Just Dial Ltd.
  • Founded: December 20, 1993
  • Headquarters: Mumbai, India
  • CEO: Venkatachalam Sthanu Mani
  • Sector: Technology Services
  • Industry: Internet Software/Services
  • ISIN: INE599M01018
  • Website: justdial.com

Industry Outlook:

The Internet Software and Services industry is growing rapidly due to increased internet use, digital transformation, and the shift to online platforms. Companies like Just Dial are well-positioned as more people rely on digital tools to find local businesses and services. The industry is being reshaped by emerging technologies like AI and automation, enhancing user experiences and operational efficiency. With a focus on mobile apps and personalized solutions, businesses are catering to the rising smartphone user base. As digital adoption spreads, especially in rural areas, localized search services are expected to thrive, driving further growth and innovation in the industry.

Business Segments:

  • Local Search Services: Users can discover businesses, products, and services via website, app, and SMS.
  • Transaction Services: Includes bill payments, travel bookings, and online transactions.
  • Rating Certifications: Business rating and certification services.
  • Website Creation & Digital Marketing: Offers website building and marketing solutions.
  • Revenue Streams: Search-related services, service certifications, and transaction commissions.

Earnings Report:

  • Q1 Results:
    • Net Profit: ₹141 crore
    • Revenue: ₹281 crore
    • Operating Expenses: ₹214 crore
    • Profit Before Tax (PBT): ₹154 crore
  • Q2 Results:
    • Net Profit: ₹154 crore (9% increase from Q1)
    • Revenue: ₹285 crore
    • Operating Expenses: ₹217 crore
    • Profit Before Tax (PBT): ₹182 crore
  • Summary: Strong financial performance with growth in net profit and revenue from Q1 to Q2.

Financial Summary

Just Dial’s financial performance has shown significant growth over the recent quarters. In Q1, the company achieved a net profit of ₹141 crore with revenue of ₹281 crore, accompanied by operating expenses of ₹214 crore and a Profit Before Tax (PBT) of ₹154 crore.

By Q2, Just Dial reported a net profit of ₹154 crore, marking a 9% increase from the previous quarter. Revenue rose to ₹285 crore, with operating expenses slightly higher at ₹217 crore. The PBT for Q2 reached ₹182 crore, reflecting the company’s robust financial health and effective cost management strategies.

Performance Overview:

Just Dial Ltd. delivered a strong performance in Q2 FY25, with significant growth across key financial metrics. The company’s net profit surged by 114% year-over-year, reaching ₹154 crore, driven by efficient cost management and rising revenue. Revenue from operations grew by 9%, totaling ₹285 crore, reflecting sustained demand for its digital solutions. The company also reported a 25% increase in total income and a 98% rise in profit before tax, signaling robust profitability. With strategic investments in technology and a growing user base, Just Dial continues to strengthen its position in the market.

Debt and Coverage:

Just Dial Ltd. maintains a healthy financial position with manageable debt levels.

  • Debt: ₹2.80B (2023), up from ₹700M (2020) 
  • Free Cash Flow: ₹64B 
  • Cash Reserves: ₹48B 
  • Strong debt coverage ensures financial stability and growth.

Stock Performance:
Just Dial’s stock has shown impressive growth, with a 2.96% increase on the BSE to ₹1,307.10 after its Q2 FY25 report and a 7% surge on the NSE to ₹1,359. Over the past year, the stock delivered a 76.10% return, with a 5-year growth of 110.43%. Its market cap stands at ₹100.10 billion, reflecting investor confidence.

SWOT Analysis:
Strengths: Strong brand, profit growth, AI investments.
Weaknesses: Limited global presence, rising debt.
Opportunities: B2B expansion, AI integration.
Threats: Intense competition, market dependency.

Conclusion:

In conclusion, Just Dial Ltd.’s Q2 FY25 performance highlights its strong market position and effective cost management, evidenced by significant profit and revenue growth. With strategic investments in technology and a focus on B2B expansion, Just Dial is well-positioned for continued success and value creation for stakeholders.

GM Breweries Q2 Earnings Report
GM Breweries Q2 Report: Stock Falls 3% Following Year-on-Year Sales Decline and Shrinking Profit Margins

Prepared On: October 10, 2024

Company Overview:
G M Breweries Ltd. is a significant player in the consumer non-durables sector, specializing in the production and sale of alcoholic beverages. Founded on December 9, 1981, by CEO Jimmy William Almeida, the company is based in Mumbai, India. G M Breweries focuses on manufacturing country liquor (CL) and Indian Made Foreign Liquor (IMFL) under brand names like G.M. Santra, G.M. Doctor, G.M. Limbu Punch, and G.M. Dilbahar Sounf. With a strong presence in Maharashtra, the company has established itself as the largest manufacturer of country liquor in the state.

Key Company Information:

  • Market Capitalization: ₹19.64 Billion
  • Dividend Yield (Indicated): 0.65%
  • P/E Ratio (TTM): 12.55
  • Net Income (FY): ₹1.52 Billion
  • Revenue (FY): ₹6.15 Billion
  • Employees: 363
  • ISIN: INE075D01018
  • Website: gmbreweries.com

Industry Outlook:
The alcoholic beverages industry in India is experiencing steady growth driven by factors like rising disposable incomes, changing consumer preferences, and urbanization. Market segments include beer, spirits (CL and IMFL), and wine, with spirits holding a significant market share.

Key Industry Trends:

  1. Regulatory Environment: Stringent regulations on licensing, taxation, and advertising impact industry profitability.
  2. Consumer Preferences: Shift towards premium and branded products, with a focus on quality and brand reputation.
  3. Distribution Channels: Expansion of organized retail and e-commerce enhancing consumer accessibility.
  4. Health and Wellness: Rising health awareness driving demand for healthier beverage options.
  5. Market Growth: Indian alcoholic beverages market is expected to grow at a CAGR of around 10% in the next five years.

Business Segments
G M Breweries operates in key segments focusing on country liquor, IMFL, and exploring opportunities in non-alcoholic beverages to diversify its product portfolio.

  • Country Liquor (CL): Leading presence in Maharashtra with brands like G.M. Santra and G.M. Doctor.
  • Indian Made Foreign Liquor (IMFL): Catering to middle to high-income consumers with a variety of spirits.
  • Other Segments: Focus on non-alcoholic beverages for product diversification.

Earnings Report
Q1 FY25:

  • Revenue from Operations: ₹152.3 crore
  • Net Profit: ₹31.5 crore
  • Profit Before Tax (PBT): ₹29.8 crore

Q2 FY25:

  • Revenue from Operations: ₹149 crore
  • Net Profit: Decreased by 13.11% quarter-on-quarter
  • Profit Before Tax (PBT): ₹28.97 crore

Half-Year Performance:

  • Net Profit: Increased by 10.24% to ₹46.61 crore in H1 FY25.

Financial Summary

  • Revenue (FY 2023): ₹6.15 Billion
  • Net Income (FY 2023): ₹1.52 Billion
  • Market Capitalization: ₹19.64 Billion
  • Dividend Yield (Indicated): 0.65%
  • P/E Ratio (TTM): 12.55

Performance Overview:

  • Revenue Trend: Stable with minor fluctuations, half-year revenue up by 1% year-on-year.
  • Profitability: Net profit improved in H1 FY25 despite a decrease in Q2 FY25.
  • Expense Management: Total expenses slightly increased, and raw material costs declined.
  • Cash Flow: Operating cash flow has declined over the past three years.

Debt and Coverage:

  • Debt managed effectively with a steady increase.
  • Careful monitoring of free cash flow and coverage ratios is needed for financial stability.

Stock Performance Insights:

  • Appreciation of 41.98% YTD, absolute 1-year return of 39.67%.
  • Shareholding pattern indicating ownership distribution among promoters, institutional investors, and public shareholders.

SWOT Analysis:

  • Strengths: Market leadership, diverse product portfolio, robust financials, consistent dividend growth.
  • Weaknesses: Decline in PAT, cash flow issues, market dependence.
  • Opportunities: Market expansion, product diversification, digital growth, partnerships.
  • Threats: Regulatory risks, competition, economic factors, health trends.

Conclusion:
G M Breweries Ltd. showcases strength and market positioning in Maharashtra’s alcoholic beverages industry. Despite challenges in Q2 FY25, the company reported stable revenue and improved profits in H1 FY25—an attractive investment option with strengths and areas of concern for investor consideration.

Garuda Construction and Engineering IPO: Everything You Need to Know

Garuda Construction and Engineering Limited is opening its doors to public investment with an IPO worth ₹264.10 crores. This offering consists of a fresh issue of 1.83 crore shares aggregating ₹173.85 crores and an offer for sale of 0.95 crore shares worth ₹90.25 crores. Mark your calendars—this IPO is open for subscription from October 8, 2024, to October 10, 2024, with the tentative listing date on BSE and NSE set for October 15, 2024.

Key Dates to Remember:

  • IPO Open Date: October 8, 2024
  • IPO Close Date: October 10, 2024
  • Allotment Finalization: October 11, 2024
  • Listing Date: October 15, 2024

Price Band and Lot Size: The IPO price is set at ₹92-₹95 per share, with a minimum lot size of 157 shares. Retail investors can start with an investment of ₹14,915. For high-net-worth investors (HNIs), the minimum investment goes up to ₹208,810 for 14 lots.

Company Overview: Founded in 2010, Garuda Construction and Engineering Limited specializes in residential, commercial, industrial, and infrastructure projects. Their portfolio spans across residential/commercial buildings, infrastructure, and hospitality projects. The company’s focus on mechanical, electrical, and plumbing (MEP) services, as well as its expertise in project management, highlights its strong market positioning.

With a growing order book of ₹1,40,827.44 crore as of September 2024, Garuda is setting the stage for continued growth. Their projects spread across regions like MMR, Karnataka, and Rajasthan, showcasing their nationwide presence.

Financial Overview: Garuda has seen fluctuations in its financial performance, with revenue from operations recorded at ₹1,187.50 crores for the period ending April 30, 2024. Despite a slight decline in profit after tax from ₹40.8 crores in FY23 to ₹36.44 crores in FY24, the company’s robust order book and strong execution capabilities suggest long-term potential.

Key Performance Indicators (FY24):

  • ROE: 36.14%
  • ROCE: 46.69%
  • PAT Margin: 23.63%
  • Market Cap: ₹883.9 crores

IPO Objectives: The funds raised will primarily support:

  1. Working capital requirements
  2. General corporate expenses
  3. Potential inorganic acquisitions

Subscription Status: As of October 8, 2024 (Day 1), the IPO had been subscribed 0.68 times. The retail portion saw strong interest with a subscription of 1.25 times, while the QIB category is yet to attract bids.

Should You Invest? While Garuda boasts a strong portfolio and a promising pipeline of projects, some concerns linger regarding its financial volatility. Their previous IPO attempt by a group company, PKH Ventures, was withdrawn due to a tepid market response. Dilip Davda, a market expert, advises caution with this IPO, categorizing it as a “High Risk/Low Return” opportunity due to aggressive pricing.

Final Thoughts: Garuda Construction and Engineering presents an exciting opportunity for investors seeking exposure to the construction sector. With a well-established presence in the market and a robust order pipeline, the company is set for growth. However, the cautious financial outlook and pricing concerns should be weighed carefully before investing.

Garuda Construction and Engineering IPO Review (Avoid)
Dilip Davda recommends avoiding this IPO due to the company’s inconsistent financial performance and high trade receivables compared to revenue. A related group company, PKH Ventures, withdrew its IPO in 2023 due to poor market response. Despite holding over ₹1,400 crore in orders, the issue is aggressively priced based on FY25 earnings, making it a high-risk, low-return investment.