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Fundamental Analysis of Stocks

Fundamental Analysis of Stocks

Fundamental analysis of stocks based on the quarterly and annual reports of the companies.

September 30, 2024

Fundamental Analysis of Stocks

Ola Electric Fundamental Analysis: All You Need to Know

Ola Electric is currently the only pure EV manufacturer listed on the Indian stock market.

While its IPO was a success on the street, both in terms of oversubscription and listing gains, investors remain divided on its long-term prospects.

In this article, we will be doing a fundamental analysis of Ola Electric and assess the long-term growth potential of its share price with the help of a stock market advisory.

About Ola Electric

Ola Electric Mobility Private Limited was incorporated in February 2017 in Bengaluru, Karnataka and is primarily into the business of manufacturing electric two-wheelers and core EV components like battery cells, motors, etc.

All of its manufacturing activities for electric two-wheeler (E2W) assembly and core component manufacturing take place at the Ola Gigafactory in Tamil Nadu.

In the E2W category, the company has increased its market share from 5.70% in FY22 to 34.80% at the end of FY24, according to the company’s IPO documents.

According to Tracxn, Ola Electric has raised nearly $1 billion in multiple funding rounds from different investors including Softbank, Ratan Tata, Tiger Global in combination of fresh equity infusion and debt. Before the IPO, the company raised funds at an enterprise valuation of $5.49 billion.

Ola Electric Business Overview

As mentioned earlier, Ola Electric is a pure EV player in India with manufacturing capabilities for E2W, EV components including cells, motor, vehicle frames, etc.

Currently, it sells six variants of Ola scooters. In FY24, the company sold close to 3.3 lakh electric two-wheelers, up from nearly 1,56,251 units in FY23.

It manages its business operations primarily through two subsidiaries- Ola Electric Technologies Private Limited and Ola Cell Technologies Private Limited.

Ola Electric Technologies Private Limited is engaged in the business of providing services across the electric value chain and manufacture and supply of electric vehicles.

While, Ola Cell Technologies Private Limited is engaged in the business of manufacturing, processing, assembling, export, selling, repairing, and distribution of cells and battery packs.

The company is constructing the Ola Future Factory for EV manufacturing and the Ola Gigafactory for cell manufacturing, thereby creating an EV hub in Tamil Nadu.

Ola Electric Management Profile

Bhavish Aggarwal has been the founder, Chairman, and Managing Director at Ola Electric since its inception.

Ramkripa Ananthan is the Head of Vehicle Design and has been with the company since July 2022. She holds a B.Tech in Engineering (Mechanical) from BITS, Pilani, and an M.Tech in Industrial Design from IIT Bombay. Earlier, she worked with Mahindra & Mahindra and Thermax.

Samraj Jabez Dhinagar is the Head- Vehicle Engineering and joined the company in February 2022. He is responsible for overseeing the complete vehicle development lifecycle. Samraj holds a master’s degree in automobile engineering from Anna University and a Phd from IIT Madras. Prior, he was associated with TVS Motors.

Shaun William Calvert is the Chief Operations Officer and joined the company on March 1st, 2023. He is responsible for business operational activities and oversees Ola Future Factory.

Hyun Shik Park is the Chief Operations Officer of Ola Cell Technologies and joined the company in August 2023. He is in-charge of the Ola Gigafactory operations to ensure mass-production of cells and battery packages, His term in the office ends on August 16, 2027.

Harish Abichandani is the company’s Chief Financial Officer. He joined the company on December 6, 2023. He oversees our company’s financial strategy and ensures it aligns with overall business objectives. Harish is a chartered accountant by profession and earlier was associated with Tata Communications.

Ola Electric Shareholding Pattern

After the IPO and as per the shareholding pattern filed by the company on 8 August 2024, Bhavish Aggarwal holds a 30.02% stake in the company, while another promoter group company holds a 6.76% stake.

The public shareholding of the company is 56.81%, and employees make up 6.41% of the company.

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Ola Electric Financials

Revenue

In the last three years, the revenue of the company has grown at a mind-boggling rate of 136% per annum.

For Q1FY24, the company reported revenue from operations at ₹1,644 crores, up from ₹1,243 crores in Q1FY23. The company earns the majority of its revenue from its automotive business.

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Source: RHP

EBITDA

The company continues to make losses from its operations, which means it is spending more than what it is earning.

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Source: RHP

In FY24, the losses of the company swelled to ₹1,584.4 crores from ₹784.1 crores in FY22.

Valuations

Since the company is loss making since its inception, the normal valuation metrics like price to book, price to equity, and price earnings growth could not be applied.

The only valuation metric that can be applied is price to sales ratio.

FY24 sales: ₹5,010 crores

Market cap ( as of 13th September 2024): ₹49,224 crores

Price-to-sales ratio = (Market cap / Sales)

The price-to-sales ratio approaches ten times. It was nearly six times the initial public offering price. The lower the ratio, the better it is.

The absence of any listed pure EV player makes it challenging to compare the valuation with its peers.

Should You Invest in Ola Electric

Ola Electric is building vertically integrated technology and manufacturing capabilities for EV and core EV components.

Its automotive business is not generating profit at operational levels. And, its cell manufacturing business is at the very initial stages of operations. The company is at a very early growth phase and yet to scale to its full potential, both in automotive and cell business.

Speaking about threats, the company is a beneficiary of the government FAME subsidy program for faster adoption of electric vehicles. The company has identified that reduction or elimination of such incentives can adversely affect customer demand and ability to achieve profitability or become less competitive.

Because the electric vehicle market is rapidly evolving and heavily reliant on R&D for new product development, the company is at risk of being eclipsed by deep-pocketed automotive companies if it reduces or stops innovating.

In conclusion, it’s a sunrise sector and if strategies and plans are executed well, Ola Electric can become one leading EV player in India, benefitting Ola Electric share price.

FAQs

Should I invest in Ola Electric Shares?
Ola Electric is a loss-making electric vehicle company that is benefitting massively from the increased adoption rate of electric vehicles in India. Compared to other listed automotive companies, Ola Electric is trading with expensive valuations.
Who are the competitors of Ola Electric?
Ather is the direct competitor of Ola Electric, along with other regular two wheeler automotive companies like Hero MotoCorp, TVS, Bajaj Auto.
Who owns Ola Electric?
Bhavish Aggarwal is the founder of Ola Electric and currently owns nearly 30% stake in the company. The remaining 57% stake is held by the public and close to about 6% shares are held by employees.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

January 16, 2024

Fundamental Analysis of Stocks

PNB Share Price – All You Need To Know

Introduction

Punjab National Bank, popularly known as PNB Bank, became the third bank in the public domain to reach a market valuation of Rs. 1 lakh crore on 15 December 2023. While the PNB share price was not at an all-time high on Friday, the government’s equity aid to revive the public sector banks from the claws of NPAs helped the bank achieve this milestone.

However, is it just the government’s support, or is the bank also putting effort into becoming one of the largest public sector banks in the country? Let’s find out.

Overview of Punjab National Bank

In 1894, members from different parts of the country established the Punjab National Bank with a vision of offering the citizens a true national bank that would benefit the people and the economy. The first board members included some eminent personnel such as Sardar Dayal Singh Majithia, Kali Prosanna Roy, Lala Harikrishna Lal, and others. On 12 April 1895, the bank started operating, and Lala Lajpat Rai was the first PNB customer to open an account with the bank.

Business Overview: PNB is a full-service bank offering various financial products for different uses. From loans to insurance to deposits, government financial schemes under its banking wing. It offers loans for retail, business, and agricultural needs. It has multiple schemes for MSMEs and SMEs. Apart from personal banking, corporate banking services are available, including cash management services, forex services for exporters and importers, and more. It also offers international banking facilities from foreign exchange and NRI accounts to world travel cards and others. That’s not all; Punjab National Bank has a capital services segment, which offers Mutual Funds, Merchant banking facilities, Depository services, and more.

Key Management Personnel

Shri Atul Kumar Goel became the CEO and MD of Punjab National Bank on 1 February 2022. Before joining PNB, he held the same position at UCO Bank. He is a qualified CA and has a rich professional banking experience of more than 30 years. His expertise revolves around more or less all the banking segments, including handling large corporates, risk management, treasury management, financial planning, and investor relations.
Atul Kumar Goel played a pivotal role in bringing UCO Bank to life when it was on the verge of sinking with five years of consecutive losses. In FY 2020-21, when he was the MD and CEO of UCO bank, he brought the profitability back to the bank. Apart from being in the banking industry, he also held the position of Director of New India Assurance Co. Ltd. There are several similar positions he either held in the past or still holds. Shri K G Ananthakrishnan acts as the Non-official Director and Non-Executive.
Chairman of PNB. With over 40 years of experience in progressive leadership, he joined PNB as the Non-executive Chairman on 7 November 2022. He is known for his strategic thinking, thought leadership, and ability to build high-performing organizations. His expertise lies in general management, partnership building, strategic planning, optimization of profits and revenue, policy development, marketing tactics, and more. He started his career in 1976 as an executive in the sales and marketing team at Novartis India Ltd, and after that, his journey with the pharmaceutical industry began in 1999.
Shri Kalyan Kumar, an Executive Director of Punjab National Bank, started this journey in October 2021. He has over 25 years of experience in the banking sector, and he started as a Rural Development Officer at Union Bank in 1995. He is known for his strategies for different training programs for public sector banks, unique leadership development, and employ-centric operations.

PNB Shareholding Pattern

As of 30 September 2023, the shareholding pattern of PNB was segregated into promoters and the public only. The total number of fully paid equity shares outstanding as of the said date was over 1101 crores.

Financials of PNB

Total Income: The total income of PNB grew over the years. Between FY19 and FY23, the total income has grown at a CAGR of 10.73%, from Rs. 59514.53 crore to Rs. 99084.88 crore. In the FY24’s second quarter, the total income stood at Rs. 29847.05 crores.

Total Income(Rs. Crore)
FY19	FY20	FY21	FY22	FY23	Q1FY24	Q2FY24	CAGR (%)
59514.53	64306.13	94990.85	88339.49	99084.88	29033.11	29857.05	10.73295

Source: BSE

Net Profit: Coming to The net Profit of this public sector bank, was negative during FY19 and FY20, from which it grew Rs. 5886.99 crores in FY23. During the Q1 and Q2 of FY24, the net profits stood at Rs. 1210.82 crores and Rs. 1764.54 crores, respectively.

Net Profit (Rs. Crore)
FY19	FY20	FY21	FY22	FY23	Q1FY24	Q2FY24
-9364.11	-8050.46	4052.82	5639.24	5886.99	1210.82	1764.54

Source: BSE

Key Financial Ratios of PNB

Return on Equity: Investors who purchased PNB shares before FY21 had earned an ROE of around 3.88% in FY21, which increased to 5.96% in FY22; however, in FY23, the ROE fell as per the PNB bank share price movement.

Global Net Interest Margin Ratio: For any bank, the Net Interest Margin is a crucial metric to analyze its growth over the years. In FY21, the ratio stood at 2.88%, which declined to 2.71% in FY22, but in FY23, it rose to 3.06%.

Return on Asset: Investors who had PNB shares in FY22 gained higher than those who sold the PNB share before the said year or invested later as in FY22, the ROA of the bank rose to 0.26%, while in FY21, it was 0.15% and in FY23, it stood at 0.18%.

Net NPA: Punjab National Bank has reduced its NPA over the years. If you look at the Net NPA Ratio in FY21, it stood at 5.73% while it decreased to 2.72% in FY23.

PNB Share Price History

The Punjab National Bank share price has surged close to 65% in the past year, between 20 December 2022 and 19 December 2023. In the past year, the share price almost went up gradually, with minor corrections in between.

If you look back to 2002, the PNB Share price was around Rs. 72.9, which rose to almost Rs. 1221 in 2010, but then in 2020, it dropped to 33.05, which has been the lowest in these 21 years that is from FY2022 to FY2023.

PNB SWOT Analysis

From the financial information and ratios and PNB share price analysis, it can be understood that this public sector bank is again returning to business. After its share price touched the floor in 2020, in just three years, that is, on 15 December 2023, the bank ranked third as per market valuation amongst all public sector banks, a major achievement.

On the other hand, while the profits turned negative during 2019-2020, they turned positive and grew for the past three years between FY21 and FY23. Similarly, the return on equity has increased over the years as well.

Competitive Advantage

The third largest bank in the public sector as per market valuation.
The government of India is the largest shareholder of PNB. As of 30 June 2023, GOI had 73.15% stakes in this bank.
Offering basic banking products as well as high-end fintech services
Net NPAs have reduced to 2.72% in FY23, which suggests improvement in the financial health of the bank
Strong and experienced management team
PNB has a well-developed deposit base which increased by 14.18% on a YoY basis in Q1FY24.
As of 31 March 2023, PNB’s network had 10080 branches nationwide.

Risks

While PNB’s share price is reviving, the profits are going up, but still, certain challenges remain which can be a hindrance to the growth of this PSU bank.

The macro-economic situation, such as recession fear in the West, can lead to borrower’s credit servicing ability.
The bank’s ability to generate return on its assets has dipped drastically in FY23, which can be a concern regarding its management’s efficiency.

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

What does PNB do?
PNB is a full-service public sector bank which offers different financial and banking products and services such as loans, deposits, insurance products, and capital market products and services.
When PNB was established?
Punjab National Bank was established in May 1894 and started its operations in April 1895.
How has PNB’s share price performed?
In the past year, from 20 December 2022 to 19 December 2023, the PNB Share Price has increased by 64.61%.

December 27, 2023

Fundamental Analysis of Stocks

RVNL Share Price: All You Need To Know

Indian Railways is not one organization but a combination of multiple organizations dedicated to the daily operations and functioning of the railway system. For example, IRCTC is responsible for the ticketing and catering services, IRFC is accountable for meeting the financing needs of rolling stocks (wagons and coaches), RailTel is the information and communication technology provider for the railway, IRCON is involved in the construction of railway projects in India and abroad.

In this blog article, we will discuss one more railway subsidiary, Rail Vikas Nigam Limited (RVNL), which plays a crucial role in developing railway infrastructure in India. And, let us understand Rail Vikas Nigam share price performance. Let’s dig in.

Rail Vikas Nigam Limited

Rail Vikas Nigam Limited (RVNL) was incorporated as PSU in 2003 under the Ministry of Railway to bridge the infrastructure deficit in Indian Railways. RVNL was set up after Late PM Atal Bihari Vajpayee announced the National Rail Vikas Yojna in his 2002 Independence Day speech.

It was created with twin objectives- raising extra-budgetary resources and implementation projects relating to the creation and augmentation of the capacity of rail infrastructure on a fast-track basis.

RVNL lays new lines, doubling, rail bridge electrification, and other critical infrastructure projects. It raises extra-budgetary resources through a mix of equity and debt from banks, financial institutions, multilateral agencies like the Asian Development Bank, etc.

Business Overview of RVNL

RVNL functions as an extended arm of the Ministry of Railways and is empowered to act as an umbrella Special Project Vehicle to undertake project development, resource mobilization, etc. It operates both through SPVs and subsidiaries.

The company generates revenue through management fees on the total expenses incurred for the projects at the following margin:

10% for national projects
9.25% for the metro projects
8.5% for other plan heads

It executes all types of railway infrastructure works such as new lines, gauge conversion, electrification, workshops, hill railway projects, institutional buildings, mega bridges, and metro railways. It consistently contributes 30% of the total Indian Railway infrastructure each year.

To date, RVNL has commissioned over 15,500 km of railway infrastructure with a project expenditure of ₹1.25 lakh crores. The company has an excellent MoU performance rating among Railway PSUs and was awarded “Navratna” in May 2023.

Shareholding Pattern

Key Management Personnels

Shri Pradeep Gaur is the Chairman and Managing Director of RVNL, appointed in September 2018, and has been with RVNL since its inception. He is a 1987 batch IRSE officer working with Indian Railways from 1989 to 2005. Mr. Gaur completed a B.Tech from REC, Kurukshetra, 1986 and an M.Tech in Structural Engineering from Punjab Engineering College.

Shri Vinay Singh is the Director (Projects) and assumed responsibility in August 2019. He is a 1986 batch IRSE officer with extensive experience in planning, development, design, construction, and maintenance of Railway Transport Infrastructure. Mr. Singh has a B.Tech in Civil Engineering from IIT Roorkee in 1986 and M.Tech from IIT Delhi.

Shri Rajesh Prasad was appointed Director (Operations) in March 2020. He completed a B.Tech in civil engineering from IIT Kanpur in 1987 and an M.Tech from the same college in Environmental Engineering. Mr. Prasad joined the Indian Railway after clearing the IRSE 1988 exam batch.

Shri Sanjeeb Kumar is the Director (Finance) & CFO, and IRAS officer of the 1989 batch. He holds an M.A., MBA, and LLB from the University of Delhi. Mr. Kumar has served in various capacities in the Railway Board and Zonal Railways and has officiated as Director (Finance) in RailTel and IRCTC.

RVNL Financials

Revenue

In FY23, the company’s revenue increased by 5.42% to ₹21,285.51 crores from ₹20,190.97 crores in FY22. And, for the six months ending September 30th for FY24, the company recorded a total income of ₹11,063.52 crores, up by 10.53% from ₹10,009.16 crores in H1FY23.

https://rvnl.org/RVNL_cms/uploads/latestresult/Financialresults300920231.pdf

EBITDA

7 https://rvnl.org/RVNL_cms/uploads/Annualreport/20th_AGM_Notice_
and_Annual_Report.pdf

Profit After Tax

The company’s net profit increased by 16.57% over the previous year to ₹1,268 crores in FY23 from ₹1,087 crores in FY22. And, for the six months ending September 30th for FY24, the company recorded a net profit of ₹737.51 crores, up 8.6% from ₹678.89 crores in H1FY23.

Key Financial Ratios

Current Ratio: At the end of 31 March 2023, RVNL reported a 2.11% decline in the current ratio to 2.02 times from 2.07 times in FY22.

Debt-to-equity Ratio: The company’s debt-to-equity ratio deteriorated to 0.99 times in FY23 from 1.17 times in FY22.

Net Profit Margin: The company’s net profit margin in FY23 was 6.25%, compared to 5.61% in FY22.

Return on Capital Employed (ROCE): The ROCE of the company at the end of 31st March 2023 was 17.27%, compared to 16.11% in FY22.

Return on Equity (ROE): At the end of FY23, the ROE of the company was 20.94%, compared to 21.47% at the end of FY22.

RVNL Share Price Performance Analysis

The IPO of RVNL was launched in March 2019 at a price band of ₹17-19 per equity share. The IPO was oversubscribed 1.78 times and made a flat market debut. However, the stock has provided good returns to investors since its listing, with a CAGR of 91% over the last three years (3rd December 2020 to 3rd December 2023).

RVNL has a track record of consistently paying dividends to its shareholders, paying ₹1.58 in 2021, ₹1.83 in 2022, and ₹2.13 in 2023 as dividends.

The RVNL share price hit an all-time high level of ₹199.25 on 19th September 2023, and the company has a market capitalization of ₹34,403 crores as of 3rd December 2023.

Key Highlights

RVNL consistently contributes 30% of the infrastructure requirements of Indian Railways each year.

For the past 12 years, RVNL has received the highest MOU Rating of “Excellent” among all central public sector companies. The rating is given by the Ministry of Finance.

The company’s current order book stands at over ₹56,000 crores (₹36,000 crores assigned by the Ministry of Railways and ₹20,000 crores through bidding projects).

RVNL has a very low interest rate and default risk as borrowings on the book are a pass-through entry where the Ministry of Railways bears interest and principal repayments.
RVNL signed a shareholder agreement with Russia’s Transmasholding (TMH) to supply 120 Vande Bharat train sets and a maintenance contract for these train sets for 35 years.
RVNL may sign projects worth over ₹300 crores with the Government of Kyrgyzstan, expanding its international operations.
RVNL enjoys a near monopoly-like status in Indian Railways and by leveraging its position as an execution agency for the Ministry of Railways, it is now focusing on high-value projects in a sustained manner and also bidding on projects outside Indian Railways.

Increased Capex By Indian Railways

The government and the Ministry of Railways are spending heavily on improving the infrastructure of railways. In FY24, it may make a highest-ever capital outlay of ₹2.6 lakh crores, of which major spending will happen on the construction of new lines, doubling, rolling stock, track renewals, and improvement of customer amenities.

RVNL is expected to be chosen for the mega development contracts of important infrastructure projects since it is the Ministry of Railways’ preferred execution agency.

Capex by railways has increased from around ₹46,000 crores in FY14 to over ₹2.6 lakh crores in the last 10 years, and the government is likely to continue the spending momentum for the development railways as a part of efforts to reduce logistics costs and reliable transporter.

FAQs

What does RVNL do?
Rail Vikas Nigam Limited (RVNL) is an extended arm of the Ministry of Railways. It is tasked with raising extra-budgetary resources through a mix of equity and debt from the market and executing key railway infrastructure projects.
How has Rail Vikas Nigam share price performed in the last 3 years?
RVNL share was listed on the market on 10th April 2019 and had a flat market debut at ₹19. RVNL share price is currently trading at ₹165 as of 3rd December 2023. In the last three years, from 3rd December 2020 to 3rd December 2023, the RVNL share price has given a CAGR return of 91%.
When RVNL was started?
RVNL was incorporated in 2003 under the National Rail Vikas Yojna, announced by Late PM Atal Bihari Vajpayee in his 2002 Independence Day speech to bridge the infrastructure deficit in Indian Railways.

November 18, 2023

Fundamental Analysis of Stocks

Godrej Consumer Share Price: All You Need To Know

Several brands have ingrained themselves so deeply in our lives that they have become nearly irreplaceable or synonymous with their product category. One such brand is Good Knight, a mosquito repellent from the house of Godrej Consumer Products. Several other products from the same company, such as Cinthol, Hit, Aer, Godrej expert hair color creme, etc., have high brand recall among customers.

In this article, we will understand more about Godrej Consumer Products and Godrej Consumer share price.

Brief Overview of Godrej Consumer Products

The Godrej brand needs no introduction in India and has over 125 years of rich history. The roots of the company date back to 1897, when Ardeshir Godrej, the company’s founder, became successful in the locks business after a few failed ventures. In the following years, Godrej ventured into multiple product categories, and in 1918, it launched the world’s first vegetable oil soap, Chavi.

Over the years, Godrej emerged as a diversified conglomerate interested in food, chemicals, agriculture, FMCG, real estate, etc.

Godrej Consumer Products Limited (GCPL) was created in 2001 through the demerger of Godrej Soaps Limited. The company was demerged into a chemical business- Godrej Chemicals, and a focused FMCG business, Godrej Consumer Products. Today, GCPL is a global company with over 85 countries and a revenue of $1.6 billion in FY23. The company has a strong presence in Indonesia, Sub-Saharan Africa, the USA, and Latin America.

Business Overview of Godrej Consumer Products

GCPL has divided its business into two categories:

Home Care
Personal Care

The home care category includes household insecticides, air care, fabric care, and home hygiene. The personal care category includes personal washing and hygiene, hair care, and premium beauty and professional products. As reported in the AS 108 by the company, it has identified geographical segments as reportable segments, which are as follows:

India
Indonesia
Africa
Others

The company’s top brands include Good Knight, Cinthol, Godrej No. 1, Darling, Hit, Godrej Expert, Stella, Ezee, Mitu baby wipes, and Godrej Aer. These 11 brands have contributed around 75% of revenue in FY23.

Key Management Personnel

Ms. Nisaba Godrej is the Executive Chairperson of GCPL and has been a key architect of the company’s strategy and transformation in the last decade. She has a BSc degree from The Wharton School at the University of Pennsylvania and an MBA from Harvard Business School.
Mr. Sudhir Sitapati is the Managing Director and CEO of GCPL and joined the company in October 2021. He was with HUL as Executive Director- Foods and Refreshments and has been with the company for 22 years. Mr. Sudhir has an MBA from IIM-Ahmedabad and a B.Sc in Maths with Economics from St. Xavier’s College, Mumbai.
Mr. Aasif Malbari is the Chief Financial Officer at GCPL and joined recently in August 2023. Earlier, he was CFO at Tata Passenger Electric Mobility Limited and Director at Tata Motors Passenger Vehicle Limited. He is a qualified Chartered Accountant and Company Secretary.
Mr. Sumit Mitra is the Head of Human Resources at GCPL and group companies. He joined the company as a management trainee and has spent over 25 years working across different business verticals of the group.

Godrej Consumer Product Shareholding Pattern

Godrej Consumer Product Financials

Revenue

In FY23, GCPL reported a 9% year-on-year increase in total revenue to ₹13,484.38 crores from ₹12,366.21 crores. In Q2FY24, the company reported a 6.9% increase in revenue to ₹3.667.88 crores from ₹3,431.79 crores in Q2FY23.

Segment-wise Revenue

	FY22	FY23	H2FY23	H2FY24
India	₹6,951.56	₹7,667.16	₹3,834.44	₹4,173.69
Indonesia	₹1,705.19	₹1,653.03	₹785.17	₹923.65
Africa	₹3,049.74	₹3,414.67	₹1,637.53	₹1,664.37
Others	₹750.77	₹717.83	₹328.45	₹363.39

Net Profit

In FY23, the company reported a 4.5% fall in net profit to ₹1,702.86 crores from ₹1,783.39 crores in FY22. In Q2FY24, the company’s net profit increased 20.6% to ₹432.77 crores from ₹358.66 crores during the same period the previous year.

Key Financial Ratios

Current Ratio: On 31st March 2023, the company’s current ratio increased by 16% to 1.76 times from 1.43 at the end of 31st March 2022.

Inventory Turnover Ratio: The inventory turnover ratio during FY23 increased by 19% to 7.20 times from 6.33 in FY22.

Trade Receivable Turnover Ratio: The company’s trade receivable turnover ratio declined marginally by 2% to 22.90 times in FY23 from 23.34 at the end of FY22.

Trade Payables Turnover Ratio: At the end of FY23, the company’s trade payables turnover ratio increased by 8% to 5.28 times, from 4.87 at the end of FY22.

Net Profit Margin: The company’s net profit ratio during FY23 was 12.9%, down from 14.65% during FY22.

Return On Capital Employed (ROCE): The ROCE of the company declined by 18% during FY23 to 14.9% from 18.1% in FY22.

Debt To Equity Ratio: The company has no significant debt. Therefore, the debt-to-equity ratio is zero, and the debt-service coverage ratio is almost 100%.

Godrej Consumer Share Price History

Godrej Consumer Products Limited was listed in the stock market through way of a demerger in 2001 and has been a consistent performer. As of 6th November 2023, the stock of GCPL has given a CAGR return of 15% and 8% over the last three and five years, respectively.

Godrej Consumer Products has done two bonus issues and split its shares once. 100 shares of GCPL issued in 2001 are now 1200 shares.

Announcement	Face Value	Ratio	Number of Shares
Pre-bonus and split share	₹4	–	100
Split- 24 August 2006	₹1	4:1	400
Bonus Issue- 22 June 2017	₹1	1:1	800
Bonus Issue- 12 September 2018	₹1	1:2	1200

The company paid ₹6 in 2019, ₹2 in 2020, and ₹5 in 2023 as dividends to its shareholders. Godrej Consumer Products share price has hit an all-time high level of ₹1119 on 3rd September 2021. As of 6th November 2023, the market cap of Godrej Consumer Products Limited is ₹1,04,823 crores.

Peer Comparison

Company Name	GCPL	Dabur	Marico
Face Value	₹1	₹1	₹1
Share Price (as of 6th November 2023)	₹1025	₹537.4	₹533.20
P/E Ratio (as of 6th November 2023)	57.1	55	48.82
Market Capitalization	₹1,04,823 crores	₹95,229 crores	₹68,968.64 crores
Revenue	₹13,484.38 crores	₹11,529.9 crores	₹9,908 crores
Operating Profit Margin (FY23)	19.07%	18.8%	18.5%
Net Profit Margin (FY23)	12.9%	14.8%	12.9%
ROCE (FY23)	14.9%	26.95%	44%
Distribution Network (FY23)	Global operations with a presence in over 85 countries	7.7 million retail stores	5.6 million retail stores

Acquisition of Raymond Consumer Care Limited

In April 2023, the management of Godrej Consumer Products announced the acquisition of Raymond’s FMCG business, which houses brands like Park Avenue, KS, Kamasutra, and Premium. With this acquisition, the company aims to strengthen its product portfolio beyond soaps and insecticides. It will help GCPL to operate in the highly competitive deodorant market, where HUL, ITC, and other small players are active.

In FY23, Raymond’s FMCG business reported a revenue of ₹622 crores, and the deal was closed at 4.5 times the revenue, i.e., ₹2,825 crores. With this acquisition, Godrej wants to repeat the success of the acquisition of Transelektra in 1994, which made the GoodKnight and Hit brands. Godrej acquired the brand for ₹100 crores, now with an implied value of ₹30,000 crores.

Key Highlights

The company’s three big markets are India, Indonesia, and Africa, and it has employed distinct product strategies for each region that helped it to become a leader in their respective product category.

India & SAARC countries: The company is the leader in household insecticides, air care, and hair color. It stands second in the market share for fabric care, personal wash, and hygiene products.

Indonesia: Godrej is the market leader in household insecticides, air care, and baby wipes in the country and is in third position in the hair color segment.

Sub-Saharan Africa & USA: In these regions, GCPL is the market leader in the hair color segment, with the second spot in premium beauty and professional products.

Latin America: The company is the leader in hair color premium beauty and professional products in Latin American countries.

In Q2FY24, the company’s consolidated EBITDA margin was 19.7%, with the company’s India business leading the growth. During the quarter, the company reported a 980 bps year-on-year expansion in gross profit margin. GCPL has taken multiple strategic cost reduction initiatives expected to enhance the EBITDA level in the coming quarters.
The company’s revenue from the e-commerce segment witnessed 33% CAGR growth in the last two years and is currently renewing its focus on the quick commerce segment. Also, with a strong e-commerce focus in the US, accounting for 6% of the e-commerce business.
The sharp improvement in newly acquired Raymond’s FMCG business performance, with sales clocking at ₹142 crores in Q2FY24. Integration of the brands is completed with GCPL, and cost synergies may flow from H2FY24.

Brief Industry Overview

The creme segment dominates the global hair color market and may grow from $23.6 billion in 2022 to $35.2 billion by 2028, with an estimated CAGR growth of 6.2%. Regarding demand, Asia-Pacific accounted for the most significant global market share in 2021.

Increased demand from the aging population will likely boost hair color market growth. The overall increase in population in China and India and the aging population in Japan and South Asian countries are generating a high demand for hair color.
As per estimates, the global household insecticide market has witnessed sales of $15.12 billion and is expected to double to $31.67 billion by 2033, with an estimated CAGR growth of 7%.
Urbanization and changing lifestyles, increased demand for natural & eco-friendly household insecticides, convenience and ease of use, raising awareness about health and hygiene, and rising consumer disposable income are currently driving the market growth.
The deodorant market is one of the high-growth markets in India and is valued at $1.35 billion in 2023. It is estimated that through 2029, the market size may grow at a CAGR of 11.3%.

FAQs

When was Godrej Consumer Products Limited established?
Godrej Consumer Products Limited was established as a legal entity in April 2001 and was demerged from Godrej Soaps Limited, with headquarters in Mumbai. The company entirely focuses on the FMCG vertical.
How has Godrej Consumer Products share price performed in the last five years?
As of 6th November 2023, Godrej Consumer share price has given a CAGR return of 8% in the last five years. Godrej Consumer share price has hit an all-time high of ₹1119 on 3rd September 2021.
What are the consumer products of Godrej Consumer Products Limited?
Godrej Consumer Products Limited houses brands like Good Knight, Hit, Aer, Ezee, etc. The company has a strong presence in Indonesia, the Saharan sub-Africa, the USA, and Latin America.

November 9, 2023

Fundamental Analysis of Stocks

Bank of Baroda Share Price: All You Need To Know

Bank of Baroda’s history is steeped in excellence as one of India’s foremost public sector banks. With a robust legacy, it holds a formidable position in the banking industry, delivering diverse banking products and services to individuals, corporations, and governments globally.

Bank of Baroda History

Bank of Baroda has evolved significantly from its inception to become India’s third-largest public sector bank (PSU).

1908

Maharaja Sayajirao Gaekwad III, the Maharaja of Baroda, founded the Bank of Baroda on 20 July 1908.
The first branch was set up at Mandvi, Baroda (now known as Vadodara).

1918 – 1949

Over the years, branches were set up at key locations like Bombay (now Mumbai), Calcutta (now Kolkata), Delhi, and more.

1953: The bank established its first overseas branches in Mobasa (Kenya) and Kampala (Uganda).

1957: It set up operations in the United Kingdom (UK).
1964: It became the first bank to start mobile operations.
1969: The bank was nationalized. “The Bank of Baroda Ltd” became “Bank of Baroda”.
1985: The bank began to computerize and mechanize its operations. It also introduced BOBCARD.
1996: It became one of the first nationalized banks to tap into the capital market via the public issue of equity shares.

2007 – 2008

The bank has completed 100 years since its inception.
It set up India’s first Gen-Next branch dedicated to the youth.
The bank established a joint venture for mutual funds, “Baroda Pioneer Asset Management Company Ltd.” with Pioneer Investments of Italy.
Bank of Baroda introduced state-of-the-art banking technology solutions with “BarodaNext”.
There was 100% implementation of core banking solutions.

2019: The country witnessed the first-ever tripartite amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank.

2020: The bank introduced a transformation project, “BOB NOWW,” to build a futuristic bank.

2021: The bank launched BoB World, an end-to-end video KYC-based online account opening process, and a website centralization project

2022: It won the ‘Best Technology Bank’ by the Indian Banks’ Association (IBA) two times in a row. The Great Place To Work Institute certified it as a Great Place To Work.

2023

Bank of Baroda emerged as the Overall Top Performing Bank in the EASE 4.0 Reforms Index FY2021-22.
Fabulous Employers Pvt Ltd certified it as a Great Place to Work.
It received the Best AI and ML Bank among large banks at the IBA.
It was felicitated at The Economic Times “Best BFSI Brands 2023”.

The bank is revamping its business model by including Environmental, Social, and Governance (ESG) elements. This will help reduce the bank’s carbon footprint and improve its ESG ratings.

Bank of Baroda Business Overview

Bank of Baroda is amongst the leading public sector banks in India. Post the merger of Bank of Baroda with Vijaya Bank and Dena Bank in 2019, it became India’s third-largest public sector bank.

The bank offers a wide range of solutions and services. These include personal banking, corporate banking, international banking, small and medium enterprise (SME) banking, rural banking, non-resident Indian (NRI) banking, and treasury services.

Bank of Baroda Management Profile

Dr. Hasmukh Adhia

He is the Non-Executive Chairman of the Bank of Baroda. Dr. Adhia holds a Post-Graduate degree in Accountancy. Additionally, he is a Gold medalist from the Indian Institute of Management (IIM), Bangalore. He has held important positions in the Government of India. He has also served on the Board of Directors of various institutions/companies.

Shri Debadatta Chand

He is the Managing Director and CEO of Bank of Baroda. He has over 29 years of experience in the banking and financial services industry. Shri Debadatta Chand holds a B. Tech. Degree, an MBA degree, a CAIIB qualification, and a PG Diploma in Equity Research. He is also a certified Portfolio Manager.

Shri Ajay K Khurana

Shri Khurana is an Executive Director at Bank of Baroda. He holds a Post-Graduate degree in Business Management and a CAIIB qualification. He has over 17 years experience in various capacities.

Shri Joydeep Dutta Roy

He is an Executive Director at the Bank of Baroda. Joydeep Dutta Roy has over 25 years of banking experience. He holds an Honours degree in Economics from Delhi University. He is also a law graduate with an MBA from the Narsee Monjee Institute of Management Studies, Mumbai.

Shri Lalit Tyagi

Shru Tyagi is an Executive Director at the Bank of Baroda. He has over 26 years of experience in various spectrums of banking. He is also a law graduate with an MBA from the Narsee Monjee Institute of Management Studies, Mumbai.

Bank of Baroda Shareholding Pattern

Let us have a detailed look into the shareholding pattern of the Bank of Baroda.

For the quarter ended June 2023, the bank’s total promoters’ stake remained unchanged at 63.97%.
The FII holdings increased from 4.57% in March 2020 to 12.29% in June 2023.
Furthermore, DIIs have increased their share in this stock from 13.95% in March 2020 to 17% in June 2023.
Though the public holding stood at 9.88% in March 2020 and 13.24% in March 2021, it decreased to 7.71% in June 2023.

Bank of Baroda Financials

1. Core Operating Profit and Net Profit

The bank has reported an operating income of ₹51,381.58 crore during FY2022-23, compared to ₹44,105.29 crore during FY2021-2022. The bank has posted a net profit of ₹14,109.62 crore (nearly double) for FY2022-23, as against a net profit of ₹7,272.28 crore for FY2021-22.

2. Net Interest Income and Net Interest Margin

Net Interest Income (NII) is the difference between the interest earned on a bank’s assets (like loans and investments) and the interest paid on its liabilities (like deposits and borrowings).

Net Interest Margin (NIM) is calculated by dividing the NII by the average interest-earning assets.

The bank’s Net Interest Income increased to ₹41,356 crore in FY2022-23 from ₹32,621 crore in FY2021-22, registering a growth of 26.8% YoY. The NII for the quarter of 30 June 2023, at ₹10,997 crore, grew by 24.4% YoY. NIM global and NIM domestic improved to 3.31% and 3.42% in FY2022-23 as against 3.03% and 3.09%, respectively, in FY2021-22.

3. Asset Quality (GNPA & NNPA)

NPA refers to Non-Performing Assets. It is a loan or an advance where the borrower has not paid the interest or principal amount for a specified period, generally 90 days or more.

Gross NPA is the total value of a bank’s NPAs. Net NPA is the value of NPA after reducing the provisions made by the bank to cover the potential losses arising from the NPAs.

FY2022-23 saw a significant improvement in the bank’s asset quality. Higher recoveries and upgradations drove the improvement. In FY2022-23, the Gross NPA (GNPA) ratio declined by 282 bps to 3.79% in FY2022-23 and Net NPAs dropped to an 11-year low of 0.89%.

Fresh slippages were lower during the year, which led to a fall in the slippage ratio to 1.07%, with credit costs coming in at a record low of 0.53%.

The Provision Coverage Ratio (PCR), including Technical Written Off (TWO) accounts, could help the bank prepare to cover future losses. It has risen to 92.43%, indicating a significant protection level. The bank has constructed efficient collection machinery using advanced analytical tools to detect potential weaknesses and early warning signs.

The BOB balance sheet indicates the provisions for NPA have declined to ₹4,351 crore in FY2022-23 from ₹14,640 crore in FY2021-22. The bank launched the One-Time Settlement (OTS) schemes “Rin Mukti Yojana” and “Vasooli Sankalp” to address a large number of small NPA accounts.

4. Advances and Deposits

An advance is a loan or credit offered by banks to their customers. Banks offer various advances such as business, personal, home, education, vehicle, and credit card loans. Advances as of 30 June 2023 were ₹9,90,988 crore as against ₹8,39,785 crore on 30 June 2022, an increase of 18% YoY.

Deposits are a critical source of funding for banks, and they use these funds to provide loans and advances to customers. As of 30 June 2023, deposits were ₹11,99,908 crore as against ₹10,32,714 crore on 30 June 2022, an increase of 16.2% YoY. The total deposits rose to ₹12,03,688 crore during FY2022-23 from ₹10,45,939 crore during FY2021-22, registering a 15.1% YoY growth.

The bank’s net advance increased to ₹9,40,998 crore during FY2022-23 from ₹7,77,155 crore during FY2021-22, registering a growth of 21.1%.

The bank’s CASA (Current Account & Savings Account) deposits ratio is 40.33% as of Q1 FY2023-24 and has reduced slightly from 44.18% in Q1 FY2022-23.

The bank has continued to focus on CASA deposits, with current deposits growing at 9.2% and saving deposits at 7.6%. The CASA ratio stood at 42.25% on 31 March 2023. It will help minimize the overall cost of deposits and manage liquidity.

5. Return Ratios (ROA and ROE)

The bank’s Return on Assets (ROA) for FY2022-23 improved by 43 bps to 1.03% in FY2022-23 from 0.6% in FY2021-22. It further increased to 1.11% in Q1 FY2023-24.

The bank’s Return on Equity (ROE) increased by 648 bps to 18.34% in FY2022-23. Q1 FY2023-24 saw an increase in ROE to 20.03%.

The book value per share increased to ₹148.80 in FY2022-23 from ₹118.97 in FY2021-22. The earnings per share (EPS) increased to ₹27.28 in FY2022-23 from ₹14.06 in FY2021-22.

6. Dividend payouts

Bank of Baroda paid a dividend of 275% for the year ended March 2023. The dividend payout per share of the bank was ₹5.5. In July 2022, the bank paid a dividend of ₹2.85 per share. In 2015, after the stock split, the bank distributed a dividend of ₹3.20 per share.

Bank of Baroda Share Price History

The bank’s stock price has been volatile since being listed on the National Stock Exchange in 1991. The stock began trading at a low price and rose to a high of ₹202 in October 2010. However, the stock price took a hit because of the global financial crisis in 2009. As time passed, most public sector banks’ stock prices fell further as their NPAs increased.

Furthermore, the bank opted for a stock split in 2014 — the face value of the share was split from ₹10 to ₹2, which helped increase the overall liquidity for the bank. However, the bank’s stocks have rallied after the successful merger in 2019 with Vijaya Bank and Dena Bank.

The bank’s share price is trading from ₹200 to ₹213. This is due to an increase in Bank of Baroda’s profit (net) this quarter, a significant reduction in NPAs, and an increase in revenue. As of 14 September 2023, the bank’s 52-week high is ₹213.20.

Bank of Baroda SWOT

Strengths for Bank of Baroda

Wide network: Bank of Baroda has 8,205 domestic branches (2,867 in rural India), 93 overseas branches across 17 countries, and 9,764 ATMs.
Humongous product portfolio: The bank has a wide range of banking products and services to cater to its diverse customer base. The bank has leveraged technology to cross-sell and create opportunities to generate revenue.
Large customer base: Bank of Baroda has a vast customer base of 15.3 crore. The bank’s Bob World app has around 3 crore activated users.
Bank size and government ownership: The Government of India owns most of the equity stake in BoB (63.97% as of 30 June 2023). As of 31 March 2023, BoB became the second-largest PSB in India in terms of advances, with a 7% market share and a 6.7% share in the total deposits.
Strong capital position: As of 31 March 2023, the bank has a robust capital adequacy ratio (CAR) of 16.24%.
Strong solvency profile: With the enhanced capital position and the diminishing net non-performing advances (NNPA) level, the bank’s solvency level stands at 10.5% as of 31 March 2023, in contrast to 19.1% as of 31 March 2022. There is an expectation that the bank’s solvency profile will improve in the coming years.
Strong earnings: The bank’s earnings have improved greatly due to the astute management and control of its assets, liabilities, and expenses. There has been an improvement in the core operating profitability (before divestments and trading income) to 2.05% of average total assets (ATA) in Q1 FY2023-24 (1.97% in FY2022-23, 1.70% in FY2021-22).

Key Risks

International market presence: The bank is in 17 countries; however, the primary focus is on the Indian market. To increase profitability, the bank needs to increase its international presence.
Brand image: Government banks spend less on their brand image, which can hamper their brand value. The bank must focus on its brand image and be at par with its competitors.
Competition: The banking industry comprises domestic (private banks, NBFCs) and foreign competitors. This can also affect the bank’s lending business and other revenue streams.

FAQs

What is the face value of Bank of Baroda’s share?
The face value of Bank of Baroda’s share price is ₹2 per share.
What is the 52-week high and low of Bank of Baroda?
As of 8 September 2023, the 52-week high of Bank of Baroda is ₹210.80, and the 52-week low of Bank of Baroda is ₹124.
Who is the promoter of the Bank of Baroda?
Bank of Baroda is a state-owned bank, and the Government of India holds 63.97% of the total paid-up equity of the bank.

October 30, 2023

Fundamental Analysis of Stocks

Colgate Share Price: All You Need To Know

Did you know Colgate originally sold soap and perfume before adding toothpaste to their product portfolio? The company’s roots date well before India’s first war of Independence in 1857.

Colgate is more than a company in India; it’s an emotion. The brand has extremely high recall across all age groups and has become synonymous with toothpaste. It’s one of those few companies that have stood the test of time and have grown by leaps and bounds.

In this article, we will understand more about Colgate and Colgate share price. Let’s dive in.

Brief Overview of Colgate

Colgate-Palmolive, as the company is known, was set up by William Colgate in 1806 in New York City. The company was initially called William Colgate & Company and was a soap and candle company.

The company developed and marketed more products over the years, but it is best known for its toothpaste, which it introduced in 1873. Initially, the company sold toothpaste in a jar, and in 1896, it introduced the collapsible tube to sell toothpaste called Colgate Ribbon Dental Cream.

Since then, Colgate has continued introducing a new range of toothpaste, establishing itself as a leading global oral care company serving hundreds of millions of consumers worldwide. In 1928, Palmolive-Peet bought Colgate to create the Colgate-Palmolive-Peet Company, and later, in 1953, Peet was dropped from the title and continued to be known as Colgate-Palmolive Company.

India Entry

Colgate started its operation in India in 1937 with the launch of dental cream. Over the years, it launched its other product range, including shampoo and cold cream, but continued to be known as an oral care company.

Currently, all oral care products are marketed under the Colgate brand, and all other non-oral personal care products, such as hand wash and shaving cream, are marketed under the Palmolive brand.

Business Overview of Colgate-Palmolive

Colgate Palmolive India is a subsidiary of Colgate-Palmolive, a global FMCG company that produces and distributes household, personal care, healthcare, and veterinary products.

In India, Colgate-Palmolive operates only in one segment- Oral, Personal, and Home Care. The oral segment includes toothpaste, toothbrush, mouthwash, toothpowder, and oil-pulling products. In the personal and home care segment, it includes soaps, shampoos, handwash, shower gels, conditioners, shaving products, dishwashing products, house cleaning, etc.

The company has a strong distribution network with a presence in more than 5 lakh villages across India and has three manufacturing units in Goa, Himachal Pradesh, and Gujarat.

Leadership Team

Ms. Prabha Narasimhan is the Managing Director and CEO of Colgate-Palmolive India and joined the company in 2022 from Hindustan Unilever Limited, where she led the home care category. She has over 25 years of experience in customer development, consumer marketing, and innovation across geographies and multiple categories in the FMCG segment. Ms. Prabha has graduated from IIM-B and Melbourne Business School.
Mr. M.S. Jacob has been the Whole-time Director and Chief Financial Officer since 2016. He joined Colgate in 1995 and served through multiple leadership roles in Finance across the Southeast Divisions of the company as well as the Asia Pacific Divisions. Mr. Jacob holds a B.Com degree from Mumbai University and is a qualified chartered accountant.
Mr. Gunjit Jain is the Executive Vice President of Marketing and has been with the company since 2008. He has held roles and responsibilities across customer development, marketing, innovation, strategy, and leadership functions. Mr. Jain holds an MBA from IIFT, Delhi, and a B.Tech from Vellore Institute of Technology.
Mr. Balaji Sreenivasan has been the Executive Vice President of Human Resources since November 2020 and joined the company in 2005. He has served through multiple leadership roles in the Human Resources function at Colgate’s subsidiaries in India, Turkey, Central Asia, North Africa, Middle Eastern countries, and the Asia Pacific region.

Shareholding Pattern

Financials

Revenue

In FY23, Colgate-Palmolive reported a 2.4% increase in revenue to ₹5,188 crore compared to ₹5,066 crore in FY22. And, in Q1FY24, the net sales of the company increased by 10.8% over the same quarter last year to ₹1,314.7 crore from ₹1,186.6 crores in Q1FY23.

EBITDA

In FY23, the company reported a marginal dip of 1.2% annually in EBITDA to ₹1,547 crores from ₹1,566 crores in FY22.

Profit After Tax

In FY23, the net profit declined by 2.8% to ₹1,047.15 crores, compared to ₹1,078.32 crores in FY22. And, in Q1FY24, the company reported a net profit of ₹273.3 crore, a growth of 30.5% as against the net profit of ₹209.7 crores in the same quarter the previous year.

Key Financial Ratios

Current Ratio: At the end of FY23, the current ratio of the company improved by 4% to 1.43 times from 1.37 times at the end of FY22.

Debt-to-equity Ratio: The company has no long-term debt on its book. The debt-to-equity ratio as of 31st March 2023 stands at 0.04 times compared to 0.05 at the end of 31st March 2022.

Interest Coverage Ratio: The interest service coverage ratio of the company at the end of FY23 was 281.82 times compared to 236.30 times at the end of FY22.

Inventory Turnover Ratio: The company’s inventory turnover ratio improved by 8% to 5.18 times on 31st March 2023, compared to 4.81 times on 31st March 2022.

Operating Profit Margin: The operating profit margin of the company in FY23 was 26%, compared to 27% in FY22.

Net Profit Margin: The net profit margin of the company in FY23 was 20%, compared to 21% in FY22.

Return on Capital Employed (ROCE): The ROCE of the company at the end of 31st March 2023 increased to 84% from 82% at the end of 31st March 2022.

Colgate Share Price Analysis

Colgate has consistently generated compounded wealth for its shareholders over time and has shown the least volatility compared to other stocks in the category. The company has issued bonus shares in the past years and has a consistent track record of paying dividends to its shareholders. It paid dividends of ₹39 in 2021, ₹39 in 2022, and ₹21 in 2023 to its shareholders.

As of 28 October 2023, Colgate share price has grown at a CAGR of 14% and 11% in the last five and three years, respectively. It reached an all-time high level of ₹2,096 on 27th September 2023. The market cap of Colgate Palmolive (India) Ltd. is ₹56,587 crores.

Peer Comparison

Company Name	Colgate Palmolive	Dabur	Hind. Unilever
Face Value	₹1	₹1	₹1
Share Price (as of 26 Oct 23)	₹2032.5	₹506.65	₹2476.15
P/E Ratio (as of 26 Oct 23)	49.75	64.09	56.78
Market Capitalization	₹55,784 crores	₹92,748 crores	₹5,81,970 crores
Revenue	₹5,188 crores	₹11,529.9 crores	₹58,154 crores
Operating Profit Margin (FY23)	26%	18.8%	21.7%
Net Profit Margin (FY23)	20%	14.8%	17.1%
ROCE (FY23)	84%	26.95%	101.9%
Distribution Network (FY23)	1.7 million retail stores	7.7 million retail stores	9 million retail stores

Key Highlights

Colgate is the most prominent oral care company in India, with more than 50% market share in the toothpaste category.

The company has been ranked India’s most trusted oral care brand for the ninth consecutive year from 2011 to 2019 by the Economic Times- Brand Equity, conducted by Neilsen.

For the quarter that ended on 30th June 2023, the company reported the highest-ever quarterly revenue growth in recent times, driven by early signs of recovery in the rural market. The toothpaste category witnessed double-digit sales growth during the period.

The company is focusing on the premiumization of toothpaste products, which has been the cornerstone of its growth strategy. Total Sensitive Toothpaste, CLGT water flosser, Visible white O2 TP & Whitening Pen, and Colgate Periogard Toothpaste are all expected to contribute to long-term revenue growth.

There is enough headroom for growth in the toothpaste category as the company, through its multiple awareness programs, focuses on increasing the frequency of brushing in India. 55% of rural households don’t brush daily, while only 20% of urban households brush twice daily.

The per capita toothpaste consumption in India is low compared to other developing nations like Brazil, the Philippines, etc. Brazil’s per capita consumption of toothpaste is 3X more than what Indians consume annually.
The company has also increased its focus to grow hand and body wash products under Palmolive brands faster than the average growth rate, given its low market penetration of 2%.

Brief Industry Overview

The size of the Indian oral care market in 2022 was around $641 million in 2022 and is expected to expand at a CAGR of 9.2% between 2022 and 2030 to reach around $1.3 billion, according to insights10 report.

With oral issues becoming more prevalent in India with changing lifestyles, increased consumption of sugar in daily diet, and living standards, demand for oral hygiene products will increase.
The National Oral Health Programme (NOHP), the flagship program of the Government of India, will also contribute to expanding oral hygiene in India. This program aims to improve oral hygiene standards in India, provide accessible, affordable, and high-quality health care, and reduce morbidity associated with oral disease.
With the entry of new players, the oral care industry is experiencing increased competition among players, which reduces pricing flexibility. Colgate benefits from its parent company, which has a strong R&D capability and can launch new and innovative products at greater speed.

FAQs

When was Colgate-Palmolive established in India?
Colgate was established in 1806 by William Colgate in New York City as a soap and candle company. Later, in 1873, Colgate added toothpaste to its product portfolio. The company started its operation in India in 1937 with the launch of dental cream.
How has Colgate share price performed in the last five years?
As of 13 October 2023, Colgate share price has given a CAGR return of 13% in the last five years. It reached an all-time high level of ₹2,096 on 27th September 2023.
Are Colgate and Colgate-Palmolive same?
Yes, Colgate and Colgate-Palmolive are the same. Palmolive-Peet acquired Colgate in 1928 to create Colgate-Palmolive-Peet Company. Later, in 1953, the company renamed itself to Colgate Palmolive.

October 19, 2023

Fundamental Analysis of Stocks

Berger Paints Share Price: All You Need To Know

In India, the paint industry has been long characterized by the dominance of two significant players, Asian Paints and Berger Paints. Despite aggressive marketing strategies and product launches, no other player in the industry has successfully become a market leader.

However, the paint industry is witnessing a fresh wave of disruption with the entry of two new players, Grasim and JSW Paints. This article will explain India’s oldest paint company, Berger Paints, the company and Berger share price.

Brief Overview of Berger Paints

Berger Paints has a very long history in manufacturing colors, and its origin and name date back to over two & a half centuries in England in 1760. The company was started by a young color chemist, Lewis Berger, and his innovation and creation in the world of colors impressed every designer and householder.

Now, the India division of the company was not established by Berger Paints but is a result of an acquisition.

Timeline of Berger Paints India Ltd

1923: Incorporated as Hadfield’s (India) Limited in Kolkata
1947: British Paints (Holdings) Limited took over the company. The name changed to Britsh Paints (India) Limited
1965: Celanese Corporation, USA, acquired the controlling interest of British Paints (Holdings) Limited, including its India division
1969: Celanese Corporation sold its Indian interest to Berger, Jenson & Nicholson, U.K. British Paints (India) Limited became part of Berger Group.
1973: British Paints (India) Limited changed its name to Berger Paints India Limited
1976: Foreign holding of the company diluted to below 40% by the sale of shares to the UB Group
1991: UB Group sold its stake to Delhi-based Dhingra brothers (Mr. K.S. Dhingra and Mr. G.S. Dhingra) and their associates of the UK Paints Group. Presently, the Dhingra brothers own a majority stake in the company, almost 73%.

Today, Berger Paints India Limited is the second-largest paint company in India after Asian Paints, with a consistent track record of being one of the fastest-growing paint companies in India.

Business Overview of Berger Paints

Berger Paints is one of the leading paint companies in India and offers its products in the following categories:

Exterior Painting: In this category, the company offers paint products for painting exterior walls of houses strategically designed to cater to specific needs in different regions. Products like WeatherCoat Longlife 10 and WeatherCoat Longlife Flexo are available under this category.

Construction Chemicals: Under this division, the company offers waterproofing solutions. The division crossed ₹1,000 crores in sales in FY23.

Protection: Under this category, the company offers a wide range of coating solutions for various industrial applications, including oil refineries, power plants, railway bridges and coaches, and others. Berger Protection is the industry leader in the segment.

Automotive- General Industrial Coatings: This segment offers coating solutions for CED Coating, Commercial vehicles, heavy construction equipment, and 2-wheelers.

Powder Coatings: The company offers advanced powder coating technologies catering to various industries and applications.

Key Management Personnel

Mr. Abhijit Roy is the Managing Director & CEO of Berger Paints and has held the position since 1 July 2012. He graduated in Mechanical Engineering from Jadavpur University and did his post-graduation in business administration from IIM-Bangalore.
Mr. Kaushik Ghosh is Vice President and Chief Financial Officer and joined the company in June 2000. He is a qualified Chartered Accountant and Cost Accountant. Mr. Ghosh started his career in McNally Bharat Engineering Company.
Mr. K.K Sai is Senior Vice President of Marketing and Sales and started his career as a Management Trainee in Berger Paints around 2000. He has graduated in Chemical Engineering from IIT Chennai and did his MBA from FMS Delhi.

Shareholding Pattern

Berger Paints Financial Overview

Revenue

In FY23, Berger Paints reported a year-on-year topline growth of 20.6% at ₹10,568 crores, compared to ₹8,762 crores in FY22. The revenue has grown in the last five years at a CAGR of 15.39%. And, in Q1FY24, total revenue increased by 9.8% to ₹3,029.51 crores, from ₹2759.70 crores in Q1FY23.

EBITDA

In FY23, the company reported a 10.2% annual growth in EBITDA to ₹1,538.77 crores, compared to ₹1,395.66 crores. And, in Q1FY23, the EBITDA was ₹556.75 crores, which increased by 37.5% every year from ₹404.84 crores over the corresponding quarter of the last year.

	FY19	FY20	FY21	FY22	FY23
EBITDA Margin (in %)	16.42	17.74	18.18	15.93	14.56

Source: Quarterly Reports

Net Profit

In FY23, the company’s net profit witnessed a year-on-year growth of 3.2% to ₹860 crores, compared to ₹833 crores in FY22. And, in Q1FY24, the company’s net profit was ₹354.91 crores, a 39.9% increase over Q1FY23’s net profit of ₹253.71 crores. The increase is because of favorable raw material costs and operational efficiencies.

Key Financial Ratios

Current Ratio: The company’s current ratio increased to 1.52 times on 30th June 2023 from 1.34 times at the end of 31st March 2023.

Debt-to-equity Ratio: The company’s debt-to-equity ratio improved to 0.16 times at the end of 30th June 2023 from 0.25 times at the end of FY23.

Debt Service Coverage Ratio: The company’s debt service coverage ratio at the end of 30th June 2023 is 10.61 times, compared to 6.76 times at the end of FY23.

Interest Service Coverage Ratio: The company’s ability to service interest expense increased to 24.71 times for the quarter ending on 30th June 2023, compared to 13.31 times at the end of FY23.

Inventory Turnover Ratio: For the quarter ending on 30th June 2023, the inventory turnover ratio increased to 0.84 times, compared to 0.67 times in the previous quarter that ended on 31st March 2023.

Return on Capital Employed (ROCE): The ROCE of the company declined marginally to 22.15% at the end of FY23, compared to 22.74% at the end of FY22.

Berger Paints Share Price Analysis

Berger Paints has generated massive wealth for investors since its listing in the 1960s. The company’s shares have been split twice, and seven bonus issues have been announced. After splits and bonus issues, 100 shares issued at public listing have now become ~17740 shares.

Announcement	Face Value	Ratio	Number of Shares
Pre-bonus and split share	₹10	–	100
Bonus Issue- 15 June 1967	₹10	1:2	150
Bonus Issue- 15 June 1973	₹10	7:15	220
Bonus Issue- 7 October 1998	₹10	1:1	440
Bonus Issue- 30 January 2004	₹10	1:2	660
Stock Split- 13 April 2004	₹2	10:2	3300
Bonus Issue- 6 June 2006	₹2	3:5	5280
Stock Split- 8 January 2015	₹1	2:1	10560
Bonus Issue- 30 May 2016	₹1	2:5	14784
Bonus Issue- 9 August 2023	₹1	1:5	~17740

The company also has a consistent track record of paying dividends to its shareholders. It paid ₹2.8 in 2021, ₹3.1 in 2022, and ₹3.2 in 2023 as dividends.

As of 3rd October 2023, Berger Paints’ share price has given a CAGR return of 19% and 5% in the last five and three years, respectively. It has reached an all-time high of ₹727 in July 2021. The market cap of Berger Paints on 3rd October 2023 is ₹65,448 crores.

Peer Comparison

Company Name	Berger Paints	Asian Paints	Indigo Paints
Face Value	₹1	₹1	₹10
Share Price (as of 3rd October)	₹561.50	₹3166.85	₹1518.85
P/E Ratio (as of 3rd October)	68.15	65.21	50.47
Market Capitalization	₹65,448 crores	₹303734.73 crores	₹7233.14 crores
Revenue	₹10,568 crores	₹29,953.1 crores	₹1,073.3 crores
EBITDA Margin (FY23)	14.56%	21.1%	16.91%
Net Profit Margin (FY23)	8.14%	12.2%	12.18%
ROCE (FY23)	22.15%	38%	20.9%
Distribution Network (FY23)	More than 60,000 retail touchpoints	More than 1.5 lakh retail touchpoints	More than 16,000 dealers

Key Highlights

The company expanded its market share from 19.3% in Q4FY23 to 20.2% in Q1FY24.

During Q1FY24, the company increased its retail touchpoints by incorporating over 1,500 stores and 1,300 color bank machines. The company closed FY23 with over 60,000 retail touchpoints.

In Q1FY24, the waterproofing and construction chemical segment witnessed robust growth.
In the Q1FY24 earnings con call, the management said it intends to maintain EBITDA margin within the range of 16-18% in FY24.

Brief Industry Overview

The market size of the Indian paints and coating industry is about $8.64 billion in 2023. As per estimates by the Indian Paint Association, it is expected to be worth $12.64 billion in the next five years.

The decorative paints segment is the mainstay of the Indian paints and coating industry and witnessed strong growth in 2022 on the back of the vibrant construction sector.

Urbanization is the critical driver of the growth of the decorative paint segment. Currently, 34% of India’s population resides in urban areas. And by 2035, it is expected to grow to 43.2%, according to the 2022 United Nations Report.

30% of the revenue of India’s paint and coating industry is generated from industrial applications, which have rapidly grown over the years.

Capex by industry stands at ₹20,000 crores, out of which ₹10,000 crores will be spent by the Grasim and about ₹8,000 crores by Asian Paints. JSW Paints has planned a capex outlay of ₹750-1000 crores in the next two to three years.

FAQs

How has Berger share price performed in the last five years?
As of 29th September 2023, Berger share price has given a CAGR return of 19% in the last five years. It has reached an all-time high of ₹727 in July 2021.
When was Berger Paints India Limited incorporated?
Berger Paints India Limited was initially incorporated in1923 as Hadfield’s (India) Limited in Kolkata. The company changed multiple hands, was acquired by Berger Group in 1969, and changed its name to Berger Paints (India) Limited in 1973. Presently, the majority stake of the company is owned by the Delhi-based Dhingra brothers, who have retained the company’s name.
Is Berger Paint a good paint company?
Berger Paint is the second-largest paint company in India after Asian Paints.

October 10, 2023

Fundamental Analysis of Stocks

Tata Elxsi Share Price: All You Need to Know

Have you ever noticed how everyday items have become more comfortable in recent years, with ergonomic designs that feel right in your hand? Or the increasing reliability of our communication networks and healthcare systems?

The combination of design and technology has helped companies create innovative products that are easy to use and positively impact people’s lives. And companies like Tata Elxsi play a considerable role. The world’s leading provider of design and technology services across industries.

In this article, we will do a company analysis of Tata Elxsi Ltd. and check out its share price history.

Overview of Tata Elxsi Ltd.

Tata Elxsi commenced its business on 5 May 1989 in Bangalore and is mainly involved in developing and promoting electronics, embedded systems, and software applications. Over the years, it has evolved its business structure and offering and is recognized as a premium engineering service provider globally.

The company operates across various industries and offers a diverse set of services, such as:

Product Design and Engineering: The company helps its clients develop innovative and aesthetically designed products across industries such as automotive, healthcare, consumer electronics, railways, and more. It offers mechanical design, 3D modeling, simulation, and prototyping to develop physical products and components.

Embedded Systems and Software: Tata Elxsi specializes in developing embedded software and firmware for different applications. Embedded software and firmware is a type of software that controls hardware devices but not computers. For example, remote controls, in-vehicle computers, digital cameras, IoT devices, etc. It offers software for testing and quality assurance services for checking the performance and reliability of software and embedded systems.

Automotive and Transportation Solutions: It assists companies in product design and development, including interior, connected systems, infotainment systems, etc., and advanced systems related to autonomous vehicles, electric mobility, etc.

Broadcast and Communication: In the broadcasting and media industry, it offers services, including content creation, digital transformation, and streaming solutions.

Similarly, in the communications segment, it provides services like infrastructure design, network management, signal processing, and wireless protocol solutions for telecom operators.

Healthcare and Life Sciences: It offers design and development of medical devices, healthcare software, telemedicine solutions, healthcare IT services like electronic health record (EHR) implementation, data analytics, etc.

Tata Elxsi also leverages Artificial Intelligence (AI) and Machine Learning (ML) to develop solutions for various industries, such as predictive maintenance, data analytics, voice and speech recognition, etc. It also offers services to the Aerospace and Defense industry, semiconductors, etc.

Also Read: Top Semiconductor Stocks in India

Tata Elxsi Business Overview

As defined in the Accounting Standard 108- operating segments, the company has identified two business segments:

Software Development & Services
System Integration & Support Services

In FY23, Tata Elxsi reported a total revenue of ₹3,218.5 crores and has earned a significant share of the revenue from the transportation vertical, followed by media & communication and healthcare.

Tata Elxsi Management Team

Tata Elxsi has a workforce of over 12,000 people spread across 16 countries. The company is led by:

Mr. Manoj Raghavan, who is the Managing Director & CEO. He has been with the company since 1997 and began his career with the Tata Group in 1993 as a Graduate Trainee Engineer at Tata Motors.
Mr. Nitin Pai is the CMO and Chief Strategy Officer. He joined Tata Elxsi in 1996 as a product manager and has held various leadership roles in the marketing and design division. Mr. Pai is a Mechanical Engineer from BITS Pilani.
Mr. Gaurav Bajaj is the Chief Financial Officer at Tata Elxsi. He joined Tata Elxsi in January 2021, previously working for Wipro Ltd. Mr. Gaurav is an ICAI-certified chartered accountant.
Mr. Philip Mammen is the Vice President- Human Resources and has been with the company since January 2007.

Shareholding Pattern

Tata Elxsi Financial Review

Revenue

In FY23, Tata Elxsi reported a 27.9% year-on-year rise in revenue to ₹3,218.5 crores from 2,515.3 crores in FY22. And, in Q1FY24, total income rose by 18.5% to ₹872.5 crores, from ₹736.2 crores in Q1FY23.

Segment-wise Revenue Breakup

	FY22 (in ₹ cr)	FY23 (in ₹ cr)	Q1FY23 (in ₹ cr)	Q1FY24 (in ₹ cr)
Software Development & Services	2421.31	3,065.94	710.85	827.46
System Integration & Support Services	494.8	787.75	15.03	22.80

Geographic-wise Revenue Breakup

	FY22 (in ₹ cr)	FY23 (in ₹ cr)	Growth
India	393.07	521.54	32.68%
US	1041.63	1322.72	26.99%
Europe	755.77	1139.50	50.77%
Others	280.31	160.94	-42.58%

EBITDA

In FY23, the company reported an EBITDA of ₹961.1 crores, an increase of 25.5% year-over-year, compared to ₹765.7 crores in FY22. The EBITDA margin in FY23 was 30.6%, compared to 31% in FY22. In Q1FY24, EBITDA witnessed a year-on-year growth of 5.6% to ₹251.5 crores from ₹238.2 crores.

Profit After Tax

In FY23, Tata Elxsi Ltd. reported a 37.4% year-on-year rise in net profit to ₹755.2 crores from ₹549.7 crores. In Q1FY24, the company reported a 2.2% increase in net profit to ₹188.9 crores from ₹184.7 crores.

Tata Elxsi Key Financial Ratios

Current Ratio: At the end of FY23, the current ratio stood at 4.83 times, compared to 4.13 times at the end of FY22.

Debt-to-equity Ratio: The company has no long-term debt, and the debt-to-equity ratio is stable at 0.09 times at the end of FY23.

Net Profit Margin: In FY23, the net profit margin increased to 24.01% from 22.25% in FY22.

Return on Equity (ROE): The ROE of the company at the end of FY23 was 40.97%, compared to 37.23% at the end of FY22.

Return on Capital Employed (ROCE): The ROCE of the company declined slightly to 42.05% at the end of FY23, compared to 43.4% at the end of FY22.

Tata Elxsi Share Price History

Tata Elxsi has given a stellar return to investors, becoming a tremendous success. It launched its IPO in 1995, and from September 1995, the stock has surged from ₹13.5 to reach an all-time high of ₹10,760 in August 2021.

If an investor had invested ₹1 lakh in this stock in September 1995 and remained invested during this period, the value of the stock would have turned more than ₹13 crores today.

The company issued bonus shares in the ratio of 1:1 on 18th September 2017 and has a consistent track record of paying dividends to shareholders. It paid ₹24 in 2021, ₹42.50 in 2022, and ₹60.60 in 2023 as dividends.

As of 27 September, Tata Elxsi share price has given a CAGR return of 45% and 79% in the last five and three years, respectively. The market cap of the company at this date is ₹45,466 crores.

Tata Elxsi Ltd. Company Analysis

Tata Elxsi has experienced remarkable growth since its establishment, continuously evolving to adapt to changing times and shifting customer preferences. Its growth journey over the years is divided into four stages:

Gen 1 was between FY94 and FY03, wherein the company focused on developing system integration services (SI) and Engineering, Research & Development (ER&D).

Gen 2 growth stage lasted from FY04 to FY13; the company launched the Industrial Design business and Visual Computing Labs for visualization and animation.

In the Gen 3 growth stage, which lasted from FY14 to FY19, the company merged the VLC division with Industrial Design, entered the medical electronics business, and achieved leadership in Auto, Media, and Communication.

Gen 4: In its ongoing growth stage from FY20, the company is now focusing on Design-led Engineering for scaling growth. During this period, the CAGR growth in revenue has been 24.5%.

Financial Performance Review

Tata Elxsi is majorly earning from three verticals- Transportation, Healthcare, and Media & Communications.

Transportation

During FY23, The company’s transportation business grew by 32.7% and contributed ₹1,177 crores to the revenue, aided by large deals and growth across segments like EV, software-defined vehicles, and connected cars. The company is a leading provider of transformative technologies for connected, autonomous, and electric cars, with solutions like the AUTONOMIA platform for driverless cars and Tata Elxsi’s e-Cockpit. Besides, it has a vast suite of EV solutions, electric motor solutions, and battery management systems.

Media & Communications

The media & communications division posted 18.5% year-on-year growth, generating ₹1,132.2 crores in revenue. In media, the company has benefitted from the shift towards digital streaming and services. Its award-winning solutions help streaming platforms and media companies stay on top of the game, including content curation. The growing availability of 5G networks has also created an enormous opportunity and has won strategic deals from leading operators from EMEA and a leading multi-system operator in North America.

Healthcare

In FY23, the healthcare division posted strong year-on-year growth of 37.6%, contributing ₹423.5 crore to the top line. The company is offering services in the areas of digital and connected healthcare. And solutions like TEngage and TEDREG help pharmaceutical companies to monitor and capture real-time updates to global healthcare standards.

Key Highlights from Earning Calls

Deal closure in Q1FY24 has been slow in the transportation segment and affects revenue growth. The management is hopeful of an accelerated deal pipeline closing in the next two quarters.

The media and communication segment is witnessing a slowdown, affecting revenue growth.

The healthcare division recorded a sequential growth of 3.4%, a significant improvement over the last two quarters. The company is hopeful to continue the growth momentum in subsequent quarters on the back of good new deals and product wins.
Operating margins fell 341 basis points sequentially in Q1FY24 to 27.05%, owing primarily to higher employee costs and subcontracting expenses. However, management expects that margins will improve in the coming quarters. This will be driven by increasing employee utilization from 72.5% to 80% and decreasing subcontracting expenses.
In FY24, the company plans to hire 1800-2000 employees, and despite the uncertain demand outlook, the management is hopeful of strong deal wins and client transformation in the industry.

FAQs

Is Tata Elxsi the same as TCS?

No, TCS and Tata Elxsi are different companies with different domain expertise. Tata Elxsi is a product development company n the automotive, healthcare, and media & communications industries. TCS is an IT services company.

How has Tata Elxsi share price performed in the last five years?

As of 27th April 2023, Tata Elxsi share price has given a CAGR return of 45% and 79% in the last five and three years respectively. It made an all-time high level of ₹10,760 in August 2021.

When was Tata Elxsi established?

Tata Elxsi was incorporated on 5th May 1989 in Bangalore and is primarily involved in the development and promotion of electronics, embedded systems, and software applications.

October 7, 2023

Fundamental Analysis of Stocks

DMart Share Price: All You Need To Know

Introduction

In a fiercely competitive market, where large and multinational retail chains are struggling to dominate and be profitable, Avenue Supermarts, the operator of the D-Mart retail stores, is not only thriving but has set a benchmark in efficiency and profitability.

From its humble beginning in the early 2000s, D-Mart has become one of India’s most successful and rapidly expanding retail chains. This article will help us understand the fundamentals of Avenue Supermart.

History of Avenue Supermart

DMart, short for Damani Mart, was founded by investor and entrepreneur Radhakishan Damani and his family in 2000. The first DMart store was opened in Powai in 2002 with a straightforward vision, to provide customers with a wide range of products at affordable prices. DMart is in 10 states, one union territory, and NCR with 324 stores.

DMart initially chose to expand its store network within Maharashtra. It took eight years for the company to open its first ten stores before scaling up its operations and expanding to other states.

It followed a cluster-based expansion strategy, focusing on deepening its penetration, where it was already present before moving to newer regions. The success of DMart’s growth is attributed to multiple factors, including its everyday low pricing strategy for products, store format, supply chain management, and customer-centric approach.

Business Overview of Avenue Supermart

DMart offers its customers a mix of everyday-use items with a prudent product mix across all stores in three categories- Food, Non-Food, and General Merchandise and Apparel.

The company sells all its products through offline and online modes. Avenue Supermarts allows its customers to shop online through its mobile app and website, www.dmart.in. In accordance with the Indian Accounting Standard 108, all business activities of the company primarily fall under a single segment of “retail,” and all its revenues originate from within India.

Key Management Personnel

Mr. Ignatius Navil Noronha is the Managing Director and CEO and has been with the company since 2004. He is a graduate of the Narsee Monjee Institute of Management Studies.
Mr. Ramakant Baheti is the Whole-time Director and Group CFO at Avenue Supermarts and has been with the company since its inception. He is a qualified Chartered Accountant from ICAI.
Mr. Narayan Bhaskaran is the Chief Operating Officer (COO) and oversees the company’s supply chain management. He joined Avenue Supermarts as Vice President HR in May 2008 and was promoted to COO in September 2016. Mr. Bhaskaran has done post-graduation in human resource management from XLRI, Jamshedpur, and is also a qualified Company Secretary.
Mr. Niladri Deb is the Chief Financial Officer and joined the company in 2018. He is a qualified Chartered Accountant and also did management-related courses from IIM-Ahmedabad. Earlier, he was with The Kraft Heinz Company, ITC, and Usha International.
Mr. Trivikrama Rao Dasu is the CEO- of Avenue E-Commerce Limited. He looks after the entire e-commerce operations of the company.

Shareholding Pattern

Financials

Revenue

In FY23, the company reported a 38% year-on-year increase in consolidated revenue from operations to ₹41,833 crores, from ₹30,353 crores in FY22. In Q1FY24, revenue from operations came in at ₹11,865.44 crores, up 18.2% from ₹10,038.07 crores in Q1FY23.

EBITDA

In FY23, the company reported a 46% year-on-year increase in EBITDA to ₹3,659 crores from ₹2,502 crores in FY22. And, in Q1FY24, DMart’s EBITDA was ₹1,035.3 crores, up 2.8% year-on-year, compared to ₹1,008 crores in the same period last year.

	FY19	FY20	FY21	FY22	FY23
EBITDA Margin (in %)	8.2	8.6	7.3	8.2	8.7

Net Profit

In FY23, the company’s net profit increased by 58% year-on-year to ₹2,556 crores from ₹1,616 crores. And, in Q1FY24, net profit increased by 2.3% to ₹658.71 crores from ₹642.89 crores in Q1FY23.

	FY19	FY20	FY21	FY22	FY23
Net Profit Margin (in %)	4.7	5.5	4.9	5.3	6.1

Source: DMart Annual Report

Key Financial Ratios

Current Ratio: The current ratio increased 4 times at the end of FY23 from 3.06 times in FY22. The ratio increased because fixed deposits held with the bank last year were reclassified as a current asset in FY23.

Debt-to-equity Ratio: The company has no long-term debt on its book, and the debt-to-equity ratio is stable at 0.03 times as of 31st March 2023.

Interest Coverage Ratio: The interest coverage ratio was 68.22 times at the end of FY23, up from 56.09 times at the end of FY22.

Inventory Turnover Ratio: The inventory turnover ratio in FY23 was 14.83 times, up from 12.77 times in FY22.

Operating Profit Margin: The operating profit margin in FY23 was 7.84%, up from 7.32% in FY22.

Net Profit Margin: The net profit margin was 6.11% in FY23, up from 5.32% in FY22.

Return on Capital Employed (ROCE): The ROCE of the company improved to 21.50% at the end of FY23, up from 17.37% at the end of FY22.

Return on Equity (ROE): The ROE stands at 16.8% in FY23, up from 12.32% at the end of FY22 due to increased earnings.

DMart Share Price Analysis

DMart launched its IPO on March 8th, 2017, and was the most successful issue in the market. The IPO was issued at a price band of ₹295 to ₹299 per share and oversubscribed by 104.5 times, receiving bids for 463.61 crore shares against the total issue size of 4.43 crore. The shares were listed on March 21, 2017, at ₹604.7 per share, up 102% over the issue price.

In the last five years, DMart share price has given a CAGR return of 20%, rising from around ₹1,200 level, and as of 21st September 2023, it is trading at around ₹3,680 level. It made an all-time high level of ₹5,900 on 18th October 2021.

In its listing history, the company has not issued any dividends or bonus shares to its investors. As of 21st September 2023, the market capitalization of Avenue Supermarts is close to ₹2.4 lakh crore.

Avenue Supermarts Company Analysis

Avenue Supermarts has recovered after being severely impacted by COVID-19 in terms of sales, and both growth and demand have now surpassed pre-COVID levels in FY23. Total bill cuts in FY23 were 25.8 crores, which dropped from 20.1 crores in FY20 to 15.2 crores in FY21.

The revenue from sales per retail business area sq ft was ₹31,096 in FY23, which is still below the FY19 level of ₹35,647. During this period, the company expanded to new geographies, and the store count went up from 176 to 324, taking up the retail business area from 5.9 million to 13.4 million sq. ft.

Financial Performance

In FY23, the company showcased a turnaround in financial performance with a 38% annual increase in the top line to ₹42,839.56 crore, and the bottom line increased by 58% to ₹2,556 crores. The net profit margin improved by 210 bps from 4.9% in FY21 to 6.1% in FY23, as the company recovered from the Covid-19 pandemic slowdown and drop in demand.

However, the company’s General Merchandise and Apparel Category continues to witness sales weakness. Generally, the merchandise and apparel category is where the margin is highest compared to the foods and non-foods category.

In FY19 and FY20, the revenue contribution share from General Merchandise and Apparel was 28.29% and 27.31%, respectively, which fell to 23.04% in FY23. Also, the company struggles to increase the revenue share contribution in the non-foods category, around 20%.

Operational Performance

The company in FY23 added 1.9 million sq ft, and sales revenue inched higher from ₹27,454 per sq. ft. to ₹31,096 per sq. ft. Still, it is below the pre-Covid levels, which used to be ₹35,647 per sq. ft. in FY19.

As per the management commentary, recent expansion to other states and larger store sizes resulted in a drop in revenue per sq. ft.

Inventory Days, which shows how long products are in storage before they are sold, are coming down. From 36.5 days in FY21, it has dropped to 28.8 days in FY23. The drop is due to changes in product mix in recent years. It has reduced its inventory levels in the General Merchandise and Apparel category and increased inventory levels in the Food and Non-food categories.

The company is reorganizing its merchandise and apparel businesses, focusing on less aspirational products such as daily wear and less on the fashion apparel category in the ₹500-600 price range.

E-commerce Business

DMart Ready, the company’s e-commerce division, reported a total revenue of ₹2,202.03 crores in FY23, compared to ₹1,667.21 crores in FY22. It reported a loss of ₹193.07 crores and ₹142.07 crores in FY23 and FY22, respectively. The company operates its e-commerce services in 22 cities and focuses on increasing efficiency in the Mumbai Metropolitan Region.

As per management commentary, there is little room for losing money in the e-commerce segment and the growth in the e-commerce division is not impacting the revenue growth in physical stores.

Expansion

The company follows a cluster-based expansion approach, strengthening its presence in existing areas before moving to new regions. It increases the operating leverage. The entry of other big players like Reliance results in stiff competition in existing and new regions.

DMart is currently experiencing high real estate costs and a lack of availability of large store sizes that impact store sizes. The company has also ventured into the pharmacy business, opening its first outlet in Mumbai. And looks to scale it up as it requires less shelf space and high productivity.

FAQs

How has DMart share price performed in the last five years?
As of 21st September 2023, DMart share price has given a CAGR return of 20% in the last five years. It made an all-time high of ₹5,900 on 18th October 2021.
When was DMart founded?
DMart was founded in the year 2000 by Radhakishan Damani. It opened its first store in 2002 in Mumbai. As of 21st September 2023, the company has 327 stores across 10 states, one union territory, and NCR.
Are Avenue Supermarts and DMart the same?
Yes, they both are the same. Avenue Supermarts owns and operates the DMart supermarket chain.

October 3, 2023

Fundamental Analysis of Stocks

Lupin Share Price Analysis: All You Need To Know

October 3, 2023

Introduction

India is known as the “Pharmacy of the World” because of its ability to produce high-quality, low-cost generic and specialty drugs. The country’s pharmaceutical industry ranks the third largest globally in production volume and 13th by value. India exports pharmaceutical products to more than 200 countries, underlining its global footprint in the industry.

Many companies have helped India to earn this coveted title. Sun Pharma, Dr. Reddy’s, Cipla, Lupin, Mankind Pharma, Biocon, Torrent Pharma, and many others started from modest beginnings. However, their founders’ grit and determination helped them become industry leaders.

This article will explain more about Lupin Limited, the Mumbai-based pharmaceutical company known for its anti-TB and diabetics drugs.

History of Lupin Limited

Every significant achievement we see today has its origins in humble beginnings. Lupin was founded by Dr. Desh Bandhu Gupta (DBG) in 1968 with ₹5,000 borrowed from his wife. Before starting Lupin, DBG had no experience in the pharma field and was a professor of science at BITS, Pilani.

DBG named the company after the Lupin flower, which grows and sustains in harsh conditions and nourishes the soil. This nature’s selfless act inspired DBG to start in the pharmaceutical sector and address unmet medical needs.

The company commenced operations as a manufacturer of vitamins. It supplied iron and folic acid tablets for the Government of India’s flagship programs aimed at improving the health of mothers and children. Later, DBG’s strong desire to reduce the impact of TB in India led to Lupin’s foray into manufacturing anti-TB drugs, the decision that accelerated the company’s growth path.

Over the years, through a series of organic and inorganic initiatives, Lupin has grown from a two-employee company to an employee footprint of more than 21,000 heads that spans 11 countries across six continents.

Today, Lupin is the 13th largest generic company in the world, with annual sales of $2 billion in FY23. Region-wise, Lupin is the third-largest in the US by prescriptions, sixth-largest in the Indian pharma market, fourth-largest in Australia, and eighth-largest in South Africa.

Lupin Business Overview

Lupin has 15 manufacturing sites and seven R&D sites across India, the US, the Netherlands, Brazil, and Mexico. The products and offerings of the company include:

Key Therapeutic Areas: This includes multi-drug resistant TB, diabetes, cardiology, respiratory, central nervous system disorders, ophthalmology, and others.
Generics: Lupin is a strong player in the generics market, with a product footprint in more than 100 countries. In the US, 70% of its generic portfolio ranks amongst the top three in their respective categories, and in India, several Lupin generic brands are ranked in the top 300 brands.
Specialty Drugs: The company’s specialty business divisions are located in the US and Europe, where it has carved a niche in the women’s health and neurology segments.
Over-the-counter (OTC): Lupin’s OTC portfolio includes products from bowel regulators, feminine hygiene, health supplements, and personal sanitization products.
Active Pharmaceutical Ingredients (APIs): Lupin is the leading API manufacturer supplying to more than 70 countries. The company is among the top API manufacturers of antiretrovirals, antimalarials, and first-line TB treatment drugs.
Biosimilars: Similar generic drugs made from chemicals; biosimilar products are made from biological (natural) sources. Lupin introduced this segment in its product line in 2008 and produces high-quality biologics that are accessible and affordable globally. Its oncology biosimilars enjoy a high market share in India.

As reported under IND AS 115, the group’s operations are limited primarily to one segment: “pharmaceuticals and related products.”

Key Management Personnel

Mrs. Manju D Gupta is the Chairman (Non-Executive) of the company and has been a member of the Board since its incorporation.
Ms. Vinita Gupta, the company’s Chief Executive Officer, joined the company in 1997. She has played an instrumental role in shaping the company’s growth strategy. Ms. Gupta is a pharmacy graduate from the University of Mumbai and holds an MBA from the Kellogg School of Management at Northwestern University, Illinois.
Mr. Nilesh D Gupta is the company’s Managing Director and joined Lupin in 2002. He is responsible for the company’s research, supply chain, manufacturing, quality, and regulatory operations. Mr. Nilesh is a Chemical Engineer from the University Department of Chemical Technology (UDCT), Mumbai, and holds an MBA from The Wharton School, University of Pennsylvania.
Mr. Ramesh Swaminathan is the company’s Executive Director, Global CFO, and Head of Corporate Affairs. On March 26, 2000, he began working for the company. Mr. Swaminathan is a CA, CS, ICWAI, and Chartered Management Accountant, UK. He has also completed the Senior Management Program at INSEAD in France and is a Lord Chevening Scholar in the UK.

Lupin Shareholding Pattern

Lupin Financials

Revenue

In FY23, Lupin reported a slight 1% rise in total revenue to ₹16,715 crores from ₹16,547 crores. And, in Q1FY24, the total revenue was ₹4,814 crores, up by 28.6% compared to ₹3,743.8 crores in Q1FY23.

Geographical Distribution of Revenue

	FY21 (in ₹ cr.)	FY22 (in ₹ cr.)	FY23 (in ₹ cr.)
India	5,783.3	6,372.9	6,434.9
United States of America	5,322.2	5,524.1	5,158.3
Others	3,821.4	4,295.7	4,676.7

In FY23, the company’s EBITDA decreased by 18.9% to ₹1,871.5 crores from ₹2,307.3 crores in FY22. The EBITDA margin in FY23 is 11.5%, down from 14.2% in FY22. And, in Q1FY24, EBITDA was reported at ₹879.1 crores, up by 269% compared to ₹237.9 crores in Q1FY23.

Net Profit

In FY23, Lupin reported a net profit of ₹430 crores, compared to a loss of ₹1,528 crores in FY22. And, in Q1FY24, the company reported a net profit of ₹452.3 crores, over a loss of ₹89.1 crores in Q1 of last financial year.

Key Financial Metrics

Current Ratio: At the end of FY23, the company’s current ratio was 1.34 times, which declined from 1.51 times at the end of FY22.

Debt-to-equity Ratio: The company’s debt-to-equity ratio as of 31st March 2023 is 0.34 times.

Debt Service Coverage Ratio: The debt service coverage ratio at the end of FY23 improved significantly to 3.82 times from 0.20 at the end of FY22.

Return on Equity (ROE): The ROE at the end of FY23 grew to 0.03% from -0.12% at the end of FY22.

Return on Capital Employed (ROCE): At the end of FY23, the ROCE of the company was 0.08%, which increased marginally from 0.09% at the end of FY22.

Lupin Share Price History

Lupin has been listed on the stock market since June 20, 1993, when it came out with its public issue.

As one of the country’s leading pharma stocks, its stock has always been the focus of investors and traders. However, over the long term, the stock has underperformed the market. As of 11th September 2023, Lupin share price has given a CAGR return of 3% and 5% in the last five and three years, respectively.

Lupin share price has increased from ₹635 on 19th September 2022 to a 52-week high level of ₹1,148 on 6th September 2023.

The company has a consistent track record of paying dividends to its shareholders. In the last three years, the company paid ₹4 in 2023, ₹4 in 2022, and ₹6.5 in 2021 as dividends.

Lupin did a bonus issue once on 11th August 2006 at a 1:1 ratio and a stock split on 27th August 2010 at a 10:2 ratio. This means that 100 shares allotted in the IPO have now turned into 1000 stocks with a face value of ₹2.

The company has a market capitalization of ₹51,279 crores as of 11th September 2023.

Fundamental Analysis of Lupin

Revenue and Profitability: The company’s revenue has increased by 2.19% over the last five years. However, in terms of profitability, the company made a net profit in only three of the previous five years. The company has been EBITDA positive during these years.

The loss of ₹1,528 crores in FY22 was due to deferred tax payout, a spike in input cost due to supply-chain constraints, forex losses, and a one-time impairment charge.

Growth Drivers

Lupin has a diverse portfolio of products and services in the generics, specialty, biosimilars, APIs, and OTC drugs. In FY23, the company’s India sales were 37%, US sales were 32%, and Emerging Market sales were 10% of total sales, and it continues to grow rapidly with new product launches.

The company has six R&D units and spent ₹1,280 crores in R&D expenditure in FY23, which was 7.69%. It has a total of 911 active patents.

Lupin has further planned to expand its complex generics and biosimilar portfolio and aims to strengthen its position with new launches in the regulated market by FY28. 70% of the U.S. FDA filing in FY24 is focused on complex dosage forms.

Risk & Challenges

Over the years, Lupin has strengthened its position in the market and brand equity. The company is world-leader in anti-TB drugs, the third-largest in the US in prescription drugs, and the sixth-largest in the Indian pharmacy market.

Lupin faces various risks and challenges in its business environment, such as regulatory uncertainties, patent expiries, and competition from other players in the market. The company’s is highly dependent on the US market, from where it earns one-third of its revenue. Increased cost pressure in the US market resulted in losses in FY22.

Since the company operates mainly in the generics segment, pricing pressure is constant from other players in the market, government, and other stakeholders. For example, the sales of the company’s flagship product, Glumetza, declined by 28% in 2021 due to increased competition and price erosion.

Similarly, delay in launch or securing approvals for new products could be a considerable risk as the company loses the price premium advantage.

Key Con-call Takeaways Q1FY24

Added over 1,300 new sales forces in Q3 and Q4 of FY23 in India, the benefit of which is likely to start yielding results from Q2FY24. It is also likely to increase expenses.
Increased R&D spending on new platforms. Over 50% of the R&D spend goes towards biosimilars, injectables, and complex generics.
India’s growth may be slightly impacted in the short term due to the patent expiry of a key drug, Ondero, in August 2023.
US business continues to see margin expansion for the fourth straight quarter.
Net debt of the company reduced to ₹1,300 crores from ₹2,500 crore in Q1FY24.
The company has maintained a guidance of 18% or higher exit EBITDA margin. And full-year margin guidance of +15% in FY24 with double-digit revenue growth.

FAQs

When was Lupin established?
Lupin was established in 1968 on the day of Gudi Padwa by Dr. Desh Bandhu Gupta, popularly known as DBG in the pharma circle. Before founding Lupin, he was a professor of science at BITS, Pilani.
How has Lupin share price performed in the last five years?
As of 11th August 2023, Lupin share price has given a CAGR return of 3% in the last five years, underperforming the broader market and index like Nifty50.
What does Lupin company do?
Lupin is a global pharmaceutical company offering various products in the generics, specialty drugs, APIs, biosimilars, over-the-counter drugs, etc. It is the sixth-largest pharma company by sales in India and third-largest by prescription sales in the US.

September 29, 2023

Fundamental Analysis of Stocks

Adani Gas Share Price: All You Need To Know

September 29, 2023

Introduction

Adani Group is India’s largest private Energy & Utility company, with a strong presence in Renewables, Power Generation, Transmission & Distribution, and Gas Distribution.

This article explains more about Adani Gas, now known as Adani Total Gas Limited, which supplies natural gas to residential, commercial, industrial, and vehicle users through PNG and CNG. Let’s dive in.

Overview of Adani Gas

Adani Gas was incorporated on August 5th, 2005, as a subsidiary of Adani Enterprises Limited to venture into India’s natural gas distribution business.

The company was initially focused on setting up a city gas distribution pipeline network for supplying natural gas to residential, commercial, and industrial users in various cities across India.

It started operations by setting up domestic gas connections in Ahmedabad and started the development of the city gas network in Faridabad.

At the end of Q1 FY24, the company expanded its gas distribution network to 124 districts in India, with 7.28 lakh PNG home connections, 7,615 industrial and commercial connections, and 467 CNG stations. The company has completed 11,124 kilometers of gas pipeline across the country.

Adani Gas’s other business interests include E-mobility, which is building a network of EV charging points. Currently, it has 141 charging points across 40 sites. And the company’s new initiative includes setting up biomass units. It is constructing one of India’s largest Biomass projects in Barsana, Uttar Pradesh, and is expected to be functional by the end of FY24.

Induction of Strategic Investors

On February 29, 2020, Adani Gas inducted French energy giant Total Energies as a strategic investor in the company. Total Energies bought a 37.4% stake in the company for ₹5,512 crores.

Following the induction, the company changed its name to Adani Total Gas Limited.

Business Overview of Adani Gas

City Gas Distribution

Adani Gas is in 52 geographical areas across 17 states and two union territories. It

has four consumer types- industrial, commercial, domestic, and CNG.

Industrial users utilize boilers, thermic fluid heaters, heat treatment, casting, and forging. Commercial consumers include restaurants, hotels, shopping malls, hospitals, temples, etc.

Biogas

Adani Gas formed a wholly new subsidiary called Adani Total Energies Biomass Limited (ATBML) to focus on building CBG plants and enhancing the production of CBG. The development came after the government launched the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme to increase CBG production and brought compressed biogas projects under priority sector lending.

The upcoming biogas plant in Barsana, Uttar Pradesh, will process 225 tonnes per day of feed processing with an output capacity of 12,000 KG of compressed biogas.

e-Mobility

The e-mobility business, which houses the company’s charging infrastructure, is being developed through its newly created subsidiary, Adani Total Energies E-Mobility Limited. It is using the existing space available at CNG stations. The company offers customers diverse fuel feed options through this arrangement- CNG, Biogas, and Electric. The company has also launched charging infrastructure at all six Adani Group-managed airports, GIFT City, and other premium hotspots.

Under Indian Accounting Standard 108, the company reports all its revenue under one segment, i.e., Selling and Distribution of Natural Gas.

Key Management Personnel

Mr. Suresh P. Manglani is the Executive Director and CEO of the company. He has diversified leadership experience of over 31 years at the CXO level. Before joining Adani Total Gas Limited in September 2018, he worked as CFO- Petroleum Retail Business- Reliance Industries Limited and worked with GAIL and Mahanagar Gas Limited.

Mr. Parag Parikh is the company’s Chief Financial Officer (CFO) and joined the company in August 2019. Earlier, he was working with GMR Group as Group Head – Finance. He has a Masters in Commerce from the University of Mumbai and an MBA-Finance from Mumbai Educational Trust, MET League of Colleges.

Shareholding Pattern

Adani Group and TotalEnergies are both promoter groups of the company.

Financials

Revenue

In FY23, the company reported a 46.07% annual growth in revenue from operations at ₹4,683 crores, compared to ₹3,206 crores in FY22. And, in Q1FY24, the consolidated revenue from operations grew by 2.2% to ₹1,135 crores from ₹1,110.21 crores in Q1FY23.

EBITDA

In FY23, consolidated EBITDA increased by 11.29% to ₹907 crores from ₹815 crores in FY22. And, in Q1FY24, the consolidated EBITDA increased by 12% to ₹255 crore from ₹228 crore in Q1FY23. In the last 4 years, EBITDA has grown by a CAGR of 14%.

Net Profit

In FY23, Adani Gas reported a 5% year-on-year increase in net profit to ₹530 crores from ₹505 crores in FY22. The net profit margin was 11.32% in FY23 and 15.75% in FY22. And, in Q1FY24, net profits increased by 8.2% to ₹150.22 crores from ₹138.77 crores in Q1FY23. In the last four years, Net Profit of the company has grown by a CAGR of 23%.

Key Financial Ratios

Current Ratio: The current ratio improved by 59% to 0.39 times at the end of March 2023 from 0.25 times at the end of March 2022. The increase is primarily due to the rise in trade receivables and a change in the investment maturity period.

Debt-to-equity Ratio: The debt-to-equity ratio increased by 14% at the end of FY23 to 0.47 times from 0.41 times at the end of FY22.

Interest Service Coverage Ratio: At the end of FY23, the interest service coverage ratio decreased by 27% to 10.11 times, from 13.88 times at the end of FY22. Higher interest costs lead to a decrease in the interest coverage ratio.

Return on Capital Employed (ROCE): As of 31st March 2023, ROCE declined to 21.6% from 24.5% in FY22. It was 27.9% in FY21.

Return on Equity (ROE): The ROE of the company was 19.7% at the end of FY23. It was 23% at the end of FY22.

Adani Gas Share Price Analysis

Adani Gas shares were listed on the stock market through the demerger process from Adani Enterprise Limited (AEL). The shares were listed on November 5th, 2018, at ₹72 apiece.

Before listing Adani Gas, the combined entity (AEL and Adani Gas) traded around ₹210 a share in September 2018.

The company has yet to complete 5 years in the stock market, but in the initial years, it has given superior returns to investors. The last three-year CAGR return of the stock is 46%.

In recent months, after the release of Hidenberg’s report on corporate misgovernance in the Adani Group, the stock has experienced extreme volatility. The Adani Gas share price fell from its all-time high level of ₹4,000; as of 15 September 2023, it traded at around ₹640.

In the last three financial years, the company has paid ₹0.25 a share as a dividend to its shareholders. As of 15 September 2023, the market cap of Adani Total Gas Limited is ₹69,986 crores.

SWOT Analysis

Strength

Adani Gas is India’s largest private compressed natural gas distribution company, with a presence across 17 states and two UTs.

The company is backed by Adani Group, which has a strong reputation for executing and managing the largest and most challenging infrastructure projects. In addition, the strategic partnership with Total provides it with global expertise, technology, and resources.

Adani Gas is a profitable company with solid growth potential. In FY23, the company’s revenue increased by 46% year-on-year to ₹4,683 crores. And net profit increased by 5% to ₹530 crores.

Weakness

Adani Gas faces stiff competition from established CGD players such as Indraprastha Gas Limited (IGL), GAIL, Mahanagar Gas Limited, Gujarat Gas Limited (GGL), and others, all of which have established and continue to expand their networks.

The company’s operation is limited to specific geographic locations and has lower margins than its peers.
Adani Total Gas has high capital expenditure and debt levels. In FY23, the company has invested ₹1,150 to create additional infrastructure and plans to invest ₹18,000 to ₹20,000 crores in the next 10 years to build infrastructure for the gas distribution business.

Opportunities

Adani Gas can leverage the increasing demand for natural gas in India. The government is looking to increase the share of natural gas in the Indian economy from 6% to 15% by 2030.
The government has launched various schemes like Pradhanmantri Ujjwala Yojana, Pradhan Mantri Urja Ganga Project, and City Gas Distribution (CGD) bidding rounds to improve and expand the availability of natural gas in India.
The company is also exploring new business opportunities in biogas, biofuel, biomass, hydrogen, EV charging stations, and manufacturing equipment related to CGD business.

Threats

Adani Gas faces regulatory risks and uncertainties related to the pricing and allocation of natural gas. PNGRB determines the pricing based on factors like international prices, domestic production costs, demand & supply dynamics, etc.

The company faces a considerable challenge in maintaining the vast pipeline network and infrastructure. Building a pipeline network for city gas distribution will require clearance and approvals at various central, state, and municipal levels. Any delay and disruption could lead to a deterioration of service quality.

Opening geographical areas where the company operates could lead to Adani Gas losing marketing exclusivity, impacting earnings.

FAQs

Why did Adani Gas change its name to Adani Total Gas Limited?
After the induction of Total Energies as a strategic investor into the company in February 2020, Adani Gas changed its name to Adani Total Gas Limited. Adani Gas and Total Energies hold a 37.4% stake in the company.
How has Adani Gas share price performed in the last three years?
As of 15 September 2023, Adani Gas share price has given a CAGR return of 46% in the last three years. The stock’s all-time high level is ₹4,000.
What does Adani Gas do?
Adani Gas distributes natural gas to domestic, industrial, and commercial customers through CNG for vehicles and piped natural gas (PNG).

September 6, 2023

Fundamental Analysis of Stocks

Adani Transmission Share Price: All You Need To Know

September 6, 2023

Introduction

In the last 10 years, Adani Group has emerged as a leading infrastructure and utility company in India, and its foundation for excellence was laid around 1995 when it forayed into the ports business. Through various organic and inorganic strategies, Adani Group has become a force to reckon with in the Indian power sector.

The group has some leading companies in the power sector, such as Adani Power, India’s most significant private thermal power producer, and Adani Green, India’s largest renewable energy company.

This article will analyze another company of the Adani Group in the power sector, Adani Transmission, now known as Adani Energy Solutions Limited, India’s largest private power transmission company.

Let’s get started.

History of Adani Transmission

2006: Adani Group’s journey in the power transmission sector began in 2006, but not as a business unit to earn profits. It had to put transmission lines in place to evacuate power from its Mundra thermal power plant to the substation. The dedicated transmission lines spanning more than 3800 cKMs were commissioned between Mundra – Dehgam, Mundra – Mohindergarh, and Tiroda -Warora. It laid the groundwork for Adani’s future foray into the power transmission business.

2014: The group had to put another transmission line spanning over 1200 CKMs in place to generate power from the Tiroda power plant.

2015: After studying the enormous business potential in the transmission sector, Adani Transmission Limited was carved out of Adani Enterprise Limited (AEL) in 2015.

2016: Adani Transmission pursued inorganic and organic ways to grow its transmission network. It acquired GMR’s transmission assets in Rajasthan.

2017: Adani Transmission bought Reliance Infrastructure’s transmission assets in Gujarat, Madhya Pradesh, and Maharashtra.

2018: It acquired Reliance Infrastructure’s power generation, transmission, and distribution businesses, ushering the group into the power distribution business. Through its subsidiary, Adani Electricity Mumbai Limited (AEML), the company currently serves 3 million customers in Mumbai suburbs.

2019: Adani Transmission bought KEC’s transmission assets in Rajasthan in 2019.

2023: In July 2023, Adani Transmission Limited changed its name to Adani Energy Solution Limited (AESL). Presently, AESL is the largest private power transmission company with a network of more than 19,820 CKMs of transmission lines with a network availability of 99.7%.

Adani Transmission (AESL) Business Overview

AESL has divided its business into four divisions:

Transmission
Distribution
Smart Metering
District Cooling

Transmission: AESL owns and operates various high voltage AC and DC transmission lines, substations of 132KV to 756 KV voltage level. At the end of Q1FY24, it had a transmission network length of 19,778 circuit KM with a power transformation capacity of 46,000 MVA. It has targeted increasing the transmission lines network to 30,000 cKM by 2030.

Distribution: It distributes electricity to over 3 million customers in Mumbai sub-urban regions and the Mundra-SEZ region. It meets nearly 2000 MW of power demand with more than 99.9% supply reliability.

Smart Metering: The company is undertaking projects in select regions in Mumbai, Andhra Pradesh, and Assam and has yet to generate revenue and profits.

District Cooling: Under the India Cooling Plan (2019) developed under the Ministry of Environment, Forest & Climate to encourage efficient cooling methods, such as District Cooling and Thermal Energy Storage, AESL has ventured into the district cooling domain.

Under the Indian AS-108, AESL has three reportable operating segments:

Transmission
Trading
Generation, Transmission, and Distribution (GTD) Business- This segment covers the revenue from AEML.

Key Management Personnel

Mr. Anil Sardana has been the Managing Director of Adani Energy Solutions Limited since May 2018 and was recently appointed as Managing Director of Adani Power, effective July 2020. He has over 40 years of experience in the power and telecommunications industries. Mr. Sardana was the MD of Tata Power for over seven years before joining AESL, and he has also worked for NTPC for over 15 years.
Mr. Bimal Dayal is the CEO of AESL Transmission Business. He brings 35 years of rich experience in the Telecom Network Industry, handling multiple business functions. Mr. Dayal worked as MD & CEO of Indus Towers Limited before joining AESL. He has also worked with Ericsson India and Qualcomm in leadership roles.
Mr. Kandarp Patel is the CEO of AESL Distribution Business and has more than two decades of experience in Power Trading, Fuel Management, Legal and Regulatory, and Commercial aspects of Power business. He started his career with Gujarat Electricity Board (GEB) and joined Adani Enterprise Limited (AEL) in 2004 to spearhead the company’s power trading business.
Mr. Rohit Soni is the CFO at AESL. He is a qualified Chartered Accountant and Harvard Business School, Boston, USA alumnus. Before joining AESL, he was in various leadership roles with Vedanta Group.

Shareholding Pattern

Source: AESL Investor Presentation Sept 2023

Financials

Revenue

In FY23, AESL reported an 18% year-on-year increase in revenue to ₹13,293 crores from ₹11,258 crores in FY22. And, in Q1FY24, the company reported a 16% increase in total income to ₹3,772 crores from ₹3,249.74 crores in Q1FY23.

Operating Segment-wise Revenue

	FY22 (in ₹ cr)	FY23 (in ₹ cr)	Q1FY23 (in ₹ cr)	Q1FY24 (in ₹ cr)
Transmission	3,469.33	3,945.16	835.94	926.19
GTD Business	6,966.28	8,591.91	2,212.74	2,737.71
Trading	821.91	755.65	83.20	0.01

EBITDA

During FY23, consolidated EBITDA increased by 11% to ₹6,101 crores from ₹5,493 crores in FY22. In Q1FY24, the consolidated EBITDA increased by 4% to ₹1,378 crore from ₹1,326 crore in Q1FY23. In the last five years, EBITDA has grown at 14.08% CAGR.

Source: AESL Equity Presentation September 2023

EBITDA Margin

	FY20	FY21	FY22	FY23
EBITDA Margin (in %)	40	51	49	46

Source: AESL Equity Presentation September 2023

Profit After Tax

In FY23, AESL reported a 4% year-on-year increase in net profit to ₹1,281 crores from ₹1,236 crores in FY22. And, in Q1FY24, net profits increased by 8% to ₹182 crores from ₹168 crores in Q1FY23.

Key Financial Ratios

Current Ratio: The current ratio at the end of June 2023 improved to 1.08 times from 0.88 at the end of June 2022.

Debt-to-equity Ratio: The debt-to-equity ratio stood at 2.74 times at the end of June 2023, compared to 2.72 times at the end of June 2022.

Debt Service Coverage Ratio: At the end of June 2023, the debt service coverage ratio increased to 1.19 times, 1 time at the end of Q1FY23.

Interest Service Coverage Ratio: In Q1FY24, the interest service coverage ratio improved to 1.56 times from 1.27 at the end of Q1FY23.

Return on Capital Employed (ROCE): In FY23, ROCE declined marginally to 9.57% from 9.72% in FY22.

Net Profit Margin: At the end of Q1FY24, the net profit margin declined to 4.82% from 5.18% at the end of Q1FY23.

Adani Transmission(Adani Energy Solution Limited) Share Price History

Adani Energy Solution Limited (erstwhile Adani Transmission) was listed on the stock exchanges by demerging the transmission business from Adani Enterprise Limited on 31st July 2015.

As of 1st September 2023, Adani Transmission share price has given a CAGR of 31% and 44% in the last five and three years, respectively. However, the stock has underperformed heavily in the previous year due to extreme volatility in Adani Group stocks after the release of the Hindenburg report. Adani Transmission share price has dropped from its all-time high of ₹4,326 level, and as of 1st September 2023, it is trading at ₹825 level.

Since listing on stock exchanges, the company has not announced dividend payments to shareholders or bonus issues. The market cap of Adani Energy Solutions Limited is ₹92,017 crores as of 1st September 2023.

Adani Energy Solutions Limited Fundamental Analysis

Transmission

AESL is the largest private player in the power transmission business, with its assets in 14 states. The company has the lowest O&M cost per CKM among Indian power utilities companies, with solid efficiency and system availability in line with global standards.

It has the highest EBITDA margin in transmission business across global utilities. Compared to American utility companies, which recorded an average EBITDA margin of 63% in 2022, AESL’s transmission business averaged 92%.

AESL has divided its transmission assets into two categories:

Section 63 (Fixed Tariff): Under it, AESL has 20 operating assets and 9 under-construction assets. From 20 operational assets, it gets a level tariff of ₹1,800 crore per annum. And, from under-construction assets, it expects to get ₹1,500 crores in level tariff.

Section 62 (RAB Assets): Under it, AESL has five transmission assets, four operating and one under construction. The combined worth regulatory asset base (RAB) is ₹17,900 crores.

The group has secured long-term annuity incomes with assets commissioned to last decades (35 years of concession life + 30 years). Also, the company has efficiency-linked incentives, which help to generate higher returns for its highest network availability.

Furthermore, the company has more than 50% sovereign-rate counterparties and no-throughput risks. This has given multi-year revenue visibility and predictability.

It helped the company to efficiently plan its capital management program. AESL has synced its debt to asset life, which has helped reduce the debt cost. The average debt maturity in the company’s books is 8.1 years in FY23. In the power transmission business, there is a business opportunity of more than ₹2,28,000 crores for the private sector in the next 10-15 years.

Distribution

AESL distributed electricity in the Mumbai region through its subsidiary AEML and to the Mundra SEZ zone through MPSEZ Utilities Limited (MUL).

The key characteristics of AESL’s distribution business are it has a pool of over 12 million consumers with a perpetual license period, no throughput risk due to RAB-based returns, and O&M costs are passed to customers.

It services 85% of Mumbai, touching two-thirds of households in the city with the lowest distribution losses in the country at 5.9%. And, in Mundra, it was 3.12%. The company also focuses on parallel distribution, where consumers can choose multiple power distributors. It has planned a capital outlay of ₹20,000 crores over 8 years and is targeting more than 20% of the total market size or 4.5 million customers.

Smart Metering

AESL’s smart metering initiative is currently in the implementation phase and encompasses seven contracts spanning three states. These contracts involve the installation of an impressive 16.2 million smart meters, with a total contract value of ₹19,700 crores.

The smart metering market presents enormous growth potential, with the government aiming to deploy a staggering 250 million meters by 2026, necessitating a significant capital investment of ₹2.2 lakh crores. Notably, AESL has secured a 31% market share from the 109 million smart meters that have been tendered thus far, positioning itself as a critical player in this emerging sector.

District Cooling

AESL has recently expanded its operations into the district cooling sector. This innovative approach involves the centralized production of chilled water, which is then distributed to various buildings through an underground network of pipes to facilitate the cooling process. The system is expected to save 80% electricity and 60% water compared to conventional cooling systems.

Given the massive demand for cooling services in the residential, industrial, data center, and airports, the growth prospects for district cooling is up-and-coming. AESL strategically targets the commercial real estate and industrial cooling segments, with the highest demand for cooling services.

Adani Transmission, or AESL, has a robust operational business performance. However, with a PE ratio of 74.6 (as of 1st Sept 2023), its stock may be relatively expensive compared to its peers. Deleveraging its balance sheet could help Adani Transmission improve its profitability metrics and ROE.

FAQs

When were Adani Transmission shares listed on stock exchanges?
Adani Transmission share was listed through demerging from its parent company, Adani Enterprise Limited (AEL), on 31st July 2015.
How has Adani Transmission share price performed in the last five years?
As of 1st September 2023, Adani Transmission share price has given a CAGR return of 31% in the last five years.
Is Adani Transmission a profitable company?
Yes, Adani Transmission is a profitable company with India’s highest operating efficiency. Its transmission business has generated an EBITDA of 92%, and profit after tax is ₹1,281 in FY23.

September 4, 2023

Fundamental Analysis of Stocks

HAL (Hindustan Aeronautics Ltd) Share Price: All You Need To Know

September 4, 2023

Introduction to HAL

Hindustan Aeronautics Ltd. (HAL) is one of the oldest Indian companies specializing in aircraft and helicopter manufacturing and related services, and it plays a strategic role in India’s defense program. It is also one of the world’s oldest and largest aerospace and defense manufacturers.

Let us understand what the company does and analyze the share price of HAL.

HAL Overview

Hindustan Aeronautics Ltd. (HAL) is a government-owned aerospace and defense company. They design, develop, manufacture, and supply aircraft, helicopters, avionics, and communications equipment for military and civil markets. The company was founded in Bangalore in 1940 by Walchand Hirachand and the Government of Mysore to manufacture aircraft in India.
HAL has 20 Production and 10 R&D Centres co-located with the Production Divisions. These divisions /R&D Centres are in ten locations in seven states nationwide.

These divisions are organized into five complexes with current & future operations given below:

Bangalore Complex (BC): Production and ROH (Repair and Overhaul) of Fixed-wing Aircraft and Engines (Indian and Western origin), Spacecraft Structures, Castings, Forgings, and Rolled Rings.
MiG Complex (MC): Production and ROH of Fixed-wing Aircraft and Engines (mainly of Russian origin), Civil MRO, and UAV Projects.
Helicopter Complex (HC): Production and ROH of Helicopters (Indian and Western origin).
Accessories Complex (AC): Production and ROH of Transport Aircraft. Production and ROH of Accessories and Avionics for Fixed-wing and Rotary wing Platforms (Indian, Russian, and Western origin). Depot Level Maintenance of UAVs.
Design Complex (DC): R&D of Fixed-wing and Rotary wing Aircraft, Unmanned Aerial Vehicles (UAV), Aeroengines, Avionics, and Accessories.

Hindustan Aeronautics Ltd (HAL) Company Journey

The history and growth of HAL are synonymous with the development of the Aeronautical industry in India for more than 79 years. Here are some of the critical milestones in the company:

●: 1940:The company was incorporated on 23 Dec 1940 in Bangalore by Walchand Hirachand in association with the then Government of Mysore.

● 1941: In March 1941, the Government of India became a shareholder in the company and took over its management in 1942.

● 1951: In January 1951, Hindustan Aircraft Ltd was placed under the administrative control of the Ministry of Defense, Government of India.

● 1963: In August, Aeronautics India Ltd was incorporated as a Company wholly owned by the Government of India to manufacture MiG-21 aircraft under license. Factories were set up at Nashik (Maharashtra) & Koraput (Odisha).

● 1964: Hindustan Aircraft Ltd and Aeronautics India Ltd merged on October 1, 1964, creating Hindustan Aeronautics Ltd (HAL) as per the amalgamation Oder by the Government of India.

● 1971: The Avionics Design Bureau was established in Hyderabad to develop and manufacture components such as IFF, UHF, HF radios altimeters, and ground radars.

● 1973: A design wing was set up in Lucknow to design and develop accessories such as under-carriage and hydraulic systems, static inverters, fuel control systems, etc.

● 1979: The company began manufacturing ‘Jaguar’ aircraft after obtaining a license agreement with British Aerospace and partnering with Rolls Royce-Turbomeca for Adour engines.

● 1982: The company entered into an agreement with the USSR and started production of swing-wing Mig-27 aircraft at the Nasik Division of the company

● 1983: The Korwa Division of HAL in District Sultanpur (U.P.) was established to manufacture the Inertial Navigation System.

● 2000: An independent profit center was established to offer airport-related services in May.

● 2006: A new MRO Division was created in Bangalore to carry out ALH overhaul activities

● 2018: On 28 March, HAL was listed on BSE and NSE

Hindustan Aeronautics Ltd Management Profile

Mr. C.B. Ananthakrishnan is the Chairman, Director (Finance) & CFO, and Managing Director of the company. He is a commerce Graduate with a postgraduate degree in Business Administration from Madras University. He received management and leadership training from the Indian Institute of Management in Ahmedabad and the Institut of Aeronautique et. Spatiale (IAS) in Toulouse, France. He is also a member of the Institute of Cost Accountants of India. He has over 35 years of experience in both public and private sectors. He has worked in various industries, including merchant banking, pharmaceuticals, fertilizers, and aerospace. He joined HAL in 2004.
Mr. Jayadeva E. P. is the Director (Operations) of the company. He holds a bachelor’s degree in Electrical Engineering from the University of Visvesvaraya College of Engineering, Bangalore, and did a Master’s from IIT Madras in Aircraft Production Engineering. He joined the company in 1987 as a management trainee and has about 33 years of experience in Manufacturing, Assembly, Overhaul, Upgrades, Customer support, Indigenisation, and other Management functions.
Mr. Shailesh Bansal is the Company Secretary and Compliance Officer of the company. He is a fellow member of the Institute of Company Secretaries of India and an Associate Member of the Institute of Cost& Management Accounts of India. He’s also a qualified Chartered Secretary from the Institute of Chartered Secretary and Administrators in the U.K. He has vast experience in both the public and private sectors in managing the overall Corporate Affairs of the companies. He was appointed Company Secretary and Compliance Officer on March 28, 2023. Before this, he worked as a Joint Company Secretary at HAL.
Mr. Atasi Baran Pradhan is the company’s Director (Human Resources). He holds a Bachelor’s degree in chemistry (Hons.) and a PG in Personnel Management and labor Welfare from Utkal University, Bhubaneswar. He also holds a Bachelor of Law (LLB) from University Law College, Bhubaneswar. He has 35 years of experience in Human Resources, serving in both Public and private sectors with exposure to various industries such as Engineering, Metallurgy, Paper, Aerospace & Defence across India. He joined HAL in 2005.

Hindustan Aeronautics Shareholding Pattern

Financial Analysis of HAL

HAL posted revenue from operations of INR 26,928 Cr during FY23 compared to INR 24,620 Cr during FY22, an increase of 9.37%. On the profitability front, the company has posted a PAT of INR 5,811 Cr for FY23 as against the PAT of INR 5,087 Cr for FY22, an increase of 14.23%.

If we look at the financial performance over the Financial Year 2019 – 2023, the company has posted a Revenue CAGR of 7.71% and a PAT CAGR of 25.45%, which is relatively good. HAL has consistently delivered operating margins (EBITDA %) in the range of 24.67% to 30.95% since 2019.

ROCE

The ROCE of HAL is 31% in FY23, which is relatively good. HAL has consistently delivered ROCE of 24% over the last five years.

HAL Fundamental Analysis

Hindustan Aeronautics Limited (HAL), a prominent company in India’s defense and aerospace industry, has a robust long-term growth plan supported by a strong order book and promising prospects in the near and long term.
During this year, the company secured contracts for producing and supplying 70 Nos. HTT-40 Basic Trainer aircraft and 6 Nos. of Dornier 228 Aircraft, respectively. As of March 31st, 2023, the Company’s Order Book position is INR 81,784 Cr.

The HAL-L&T consortium was awarded an INR 860 Cr contract to develop five Polar Satellite Launch Vehicles (PSLV) for New Space India Limited (NSIL) on September 5, 2022.
The company continues to develop new platforms, products, and technologies to enhance its capabilities and stay ahead of future technological challenges. These efforts have resulted in major achievements such as successful flights of various aircraft and the development of advanced projects like the LCA Mk II and Indian Multirole Helicopter. This will improve visibility for future platform orders.
The company spent INR 2,494 Cr on R&D, 9.46% of the turnover. Additionally, INR 539 Cr (15% of Operating PAT) was transferred to the R&D corpus in FY 2023. HAL supplied four Gas Turbines to power INS Vikrant, India’s first indigenous aircraft carrier, commissioned by the Prime Minister in Kochi.
In FY 2022-23, HAL spent INR 2,081.73 Cr on Capital Expenditure (CAPEX) to maintain infrastructure, develop systems/platforms for Defence Forces, and become Atmanirbhar Bharat. Investments were made towards the Green Field Helicopter project, augmentation of LCA facilities, ROH of SU-30, ROH of AL-31 FP Engine, etc.
Honorable President of India, Smt. Droupadi Murmu inaugurated HAL’s Integrated Cryogenic Engine Manufacturing Facility (ICMF) in Bengaluru on September 27, 2022. The facility will manufacture rocket engines for ISRO.
Honorable Prime Minister Narendra Modi dedicated HAL’s new helicopter factory in Tumakuru to the nation on February 6th, 2023, and unveiled HAL’s indigenously designed and developed LUH.
The Company produced 22 new aircraft and helicopters annually, including LCA Tejas, Dornier Do228, ALH Dhruv, Light Combat Helicopter (LCH), and Light Utility Helicopter (LUH). In addition, it produced 51 new engines and accessories across its various divisions. The Company also overhauled 216 aircraft/helicopters and 535 engines during the year.

HAL Share Price History

HAL was listed on the Indian Stock Exchange on 28 March 2018 at a price per share of INR 1,130 and currently trades at 3,869.25 per share (as of 17 August 2023). HAL has delivered a stupendous three-year stock price CAGR of 46%. Over the last year, HAL’s share price grew 69 %. HAL’s share price is expected to grow over the long term due to its monopoly in the Aircraft and Helicopter manufacturing and service industry.

HAL -What’s Next?

After the COVID-19 pandemic, the Aerospace and Defense (A&D) industry is recovering in both the civil and defense sectors. The defense sector is expected to grow in 2023-24 due to global geopolitical conflicts, as many countries have significantly increased defense budgets to strengthen their military capabilities.

In the civil sector, global passenger traffic has improved significantly in 2022, and it is expected to reach 2019 levels by the end of 2023 or early 2024. This has become a driving factor for large-scale manufacturing orders and aftersales activities in the industry.

As part of the Atmanirbhar Bharat initiative, the Indian government is supporting the growth of domestic industries to decrease defense imports and reliance on foreign OEMs. This will benefit HAL as India’s sole player in this segment.

The company plans to expand its manufacturing unit, production capability, and geographical reach. It also invests in R&D for innovation, doing partnerships with other companies for future growth, thus creating shareholder value.

The company announced it had a strong order book of `81,78,400 lakh and anticipated significant revenue growth from the existing and upcoming contracts.

Particulars	Balance as of 01.04.2022	Fresh orders (During 22-23)	Order Liquidated (During 22-23)	Outstanding Sanction/supplies
Manufacturing Contracts	61,564	25,990	26,360	60,470
Repair & Overhaul	8,141			8,537
Spares	11,162			11,192
Design & Development Projects	1,100			1,345
Exports	187			241
Total	82,154	25,990	26,360	81,784

Source: HAL Annual Investor Presentation FY23

HAL signed an MoU with Safran to establish a joint venture for developing, producing, selling, and supporting helicopter engines. In March 2022, they signed an MoU with IAI (Israel Aerospace Industries) to convert civil passenger aircraft to multi-mission tanker aircraft.

Key risks:

● Fluctuations in the prices of raw materials and delays in the availability of critical components may affect the execution.
● Allowing private companies into the defense sector could increase competition.
● Change in preference of Defence customers by moving from nomination to competitive procurement.
● Little presence outside India in the export market.
● Dependency on foreign OEMs for supply of critical Components and Spares required for the manufacture and overhaul of Aircraft/ Helicopters

FAQs

Is Hindustan Aeronautics Ltd. (HAL) good to buy long-term?
HAL dominates the Indian market in its business segment. It continuously increases production capabilities, invests in innovation, and launches new platforms, products, and technologies to meet future demands and drive growth. To know if it is a good buy, you must thoroughly analyze the company fundamentals before you decide.
What is the face value of HAL?
The face value of HAL is INR 10 per share.
What is the Market cap of HAL?
The market cap of HAL is INR 1,28,338 crores as of 16^th Aug 2023.

September 1, 2023

Fundamental Analysis of Stocks

IEX Share Price: All You Need To Know

September 1, 2023

Introduction

Over the past two decades, there has been a notable transformation in India’s power market structure. Initially, state electricity boards (SEBs) and DISCOMs used to sign long-term power purchase agreements (PPAs) for 25 years with power generation plants.

These PPAs constituted the sole source for fulfilling a region’s energy demand. However, there was a significant limitation in this structure. Accurately predicting hourly power consumption over an extended period was challenging, resulting in power shortages in some areas and an excess power supply in others.

Furthermore, power generation plants entered into power purchase agreements (PPAs) structured with a cost-plus nature, which did not lead to competition in the sector.

Setting up of Power Exchanges

The enactment of the Electricity Act 2003 in May 2004 changed the dynamics of the power sector in the country. This legislation ushered in a new era for the power industry, introducing competitive elements across all segments and implementing inter-state power transmission that paved the way for a bilateral market.

In simpler terms, the act allowed power generators to sell surplus power to DISCOMs in different states and enabled DISCOMs to procure power from generators in other states.

In December 2006, the Central Electricity Regulatory Commission (CERC) released directives for establishing power exchanges in India. These exchanges created a unified platform for power buyers and sellers to engage in transactions and effectively determine prices.

The Establishment of the Indian Energy Exchange (IEX)

n March 2007, IEX applied to set up a power exchange. Following approval, IEX commenced operations on June 2, 2008, becoming India’s first power exchange.

The exchange was promoted by Financial Technologies India Ltd. and PFS. But, due to regulatory breaches, the promoter’s stake was divested and is now a professionally managed company. FTIL exited from the company in October 2015, and PFS in March 2017.

IEX’s Power Marketplace

IEX power exchange only represents the short-term electricity markets in India and covers contracts of less than one year of electricity supply. Unlike other commodity exchanges such as MCX, where you can profit from trading commodities without taking delivery, delivering power is mandatory on IEX. The company’s electronic trading platform comprises the following contracts:

Day-Ahead-Market (DAM): Electricity contracts in blocks of 15 minutes are offered the next day starting from midnight.

Green Day-Ahead-Market (G-DAM): It offers a collective auction in renewable energy on the day before the market. Bids for conventional and renewable sources are done in an integrated way through separate bidding windows.

Term-Ahead-Market (TAM): This includes electricity contracts for fixed terms in the future, including intra-day contracts, day-ahead contingency contracts, and contracts up to 11 days ahead.

Green Term-Ahead-Market (G-TAM): It is a market segment of TAM for trading in renewable energy.

Real-Time Market (RTM): Electricity contracts in blocks of 15 minutes are offered for same-day delivery.

Renewable Energy Certificates: This mechanism allows the state utilities and authorized entities to purchase renewable energy.

Energy Savings Certificates: In DAM and RTM, IEX has a market share of more than 99%, and in FY23, the overall electricity market share in DAM, TAM, RTM, and Green Market was 88.3%.

Key Management Personnel

Mr. Satyanarayan Goel is the Chairman and Managing Director of the company, having joined it as MD & CEO on January 21, 2014. He has over 40 years of experience in the power sector and was actively involved in various power sector reform initiatives of the Government of India, including the draft preparation of the Electricity Act 2003, Tariff-based Bidding Guidelines, Tariff Policy, National Electric Policy, and so on. Mr. Goel previously worked for PTC India Limited and NTPC. He graduated from NIT Rourkela with a bachelor’s degree in electrical engineering and an MBA from FMS Delhi.
Mr. Vineet Harlalka is the company’s Chief Financial Officer and Company Secretary. On January 16, 2010, he was named Company Secretary; on May 9, 2014, he was named CFO. Mr. Harlalka is a Chartered Accountant who is also a member of the Institute of Company Secretaries of India. He has over 20 years of experience in finance and taxation and previously worked for New Holland Fiat (India) Limited before joining IEX.
Mr. Amit Kumar is the Head of Market Operations and new Product Initiatives. He holds a B.Tech in Chemical Engineering from the Indian Institute of Technology (BHU), Varanasi. Mr. Kumar has an MBA from the Indian School of Business, Hyderabad.

IEX Shareholding Pattern

Financials of IEX

Revenue

IEX’s consolidated revenue declined by 2.1% on a Y-o-Y basis, from ₹484.4 crores in FY22 to 474.1 crores in FY23. In Q1FY24, consolidated revenue increased by 12.3% to ₹127.4 crores from ₹113.4 crores in Q1FY23.

EBITDA

In FY23, the company reported a marginal decline of 1.92% in EBITDA year-on-year to ₹409.5 crores from ₹417 crores. And, in Q1FY24, EBITDA increased by 8.33% y-o-y to ₹104.9 crores from ₹96 crores.

Net Profit

In FY23, the company reported a marginal decline of 0.87% in net profit year-on-year to ₹305.9 crores from ₹308.6 crores. And, in Q1FY24, net profit increased by 9.7% y-o-y to ₹75.8 crores from ₹69.1 crores.

	FY19	FY20	FY21	FY22	FY23
PAT Margin (in %)	56.1	59.87	59.74	63.30	61.74

Key Financial Ratios of IEX

Current Ratio: At the end of FY23, the current ratio declined by 18.7% to 1.26 times from 1.54 times in FY22.

Return on Capital Employed (ROCE): The ROCE of the company improved to 53.45% in FY23 from 57.21% in FY22. The company has no long-term borrowing on its books. Therefore, the debt-to-equity and interest service coverage ratio is not reported.

IEX Share Price History

IEX launched its IPO in October 2017 with a total issue size of ₹1,000.73 crores at a price band of ₹1645 to ₹1650 per share and a face value of ₹10. The issue was an offer for sale (OFS) with existing promoters exiting the company.

IPO was oversubscribed by over 2.28 times, and shares were listed at ₹1,500, which was at a discount of 9.1%. On October 19, 2018, the stocks underwent a split in the ratio of 10:1. On October 21, 2021, the company issued bonus shares in the ratio of 2:1. Meaning that 100 shares allotted at IPO have now turned into 3000 shares.

	Face Value	Ratio	Number of Shares
Pre-bonus and split share	₹10	–	100
Split- 19th Oct 2018	₹10	10:1	1000
Bonus Issue- 21st Oct 2021	₹1	2:1	3000

Illustration

The company has a consistent track record of paying dividends to its shareholders. In the last three years, IEX paid ₹2.5 in 2020, ₹4 in 2021, and ₹3 as dividends.

IEX share price has given a CAGR return of 18% and 25% in the last five and three years, respectively, as of August 28, 2023. However, it has been underperforming the market for more than one year. It reached an all-time high of ₹318.65 after the split and bonus issue on October 19, 2021, and the price has declined. As of August 21, 2023, IEX had a market cap of ₹11,137 crores.

IEX Fundamental Analysis

IEX has a near monopoly in India’s short-term power trading markets with a debt-free balance sheet and strong cash flow from operations. The company is India’s most prominent and only listed power exchange, with an overall market share of 88%.

Electricity trading volume on the exchange has grown at a CAGR of 30% since 2008; in FY23, 96.8 billion units of electricity were traded on the exchange. As of June 2023, the company has a diverse user base of over 7,500 participants across utilities, industries, renewable generators, DISCOMs, and open-access consumers.

Competitive Advantage

IEX has a significant competitive advantage over its peers due to its first-mover advantage, significant network effect, innovative product portfolio, better pricing, and superior technology.

Power Exchange India Limited (PXIL), promoted by the NSE and NCDEX, and Hindustan Power Exchange (HPX) are other power exchanges competing with IEX. HPX is supported by the BSE, PTC India, and ICICI Bank.

Risks

Market Coupling: The Ministry of Power and CERC has decided to go ahead with market coupling, where an independent third party will collect buy and sell bids for short-term electricity contracts and, choose a uniform market price, and will be intimated to exchanges. This could end the monopoly of IEX, as other exchanges will feature the same price for all short-term electricity contracts. And could potentially reduce the profitability and market share of IEX.

Regulatory Changes: As electricity falls under the essential services category, the power sector in India is subject to various regulations and policies of central and state governments, which could impact the demand and supply, tariffs, and taxes. This could pose a considerable risk to IEX’s business model and profitability margins. For instance, short-term electricity prices in India are highly volatile, and in October 2021, they reached a record high of ₹20.79/kWh. The high price prompted the regulator to put a price cap of ₹12/kWh to protect customers and grid stability.

IEX Future Growth Outlook

In the short to medium term, IEX may experience headwinds and margin contraction due to the implementation of market coupling. However, launching innovative products like long-duration base contracts in power exchanges, future derivatives contracts, and the National Open Access Registry (NOAR) will likely positively impact IEX share price.

Despite the near-term headwind, the future outlook of the short-term electricity market in India is expected to grow and evolve in the coming years. According to the report India Energy Outlook 2021 by IEA, the share of the short-term electricity market is expected to grow from 10% in 2018 to 18% in 2040 and 21% in the sustainable development scenario.

Indian Gas Exchange (IGX)

IGX is a newly launched product from the house of IEX and is India’s first natural gas trading exchange. 50.9 million mmBTU natural gas was traded on IGX in FY23 across 2355 trades, representing a 319% year-on-year increase. The exchange has 40 members and over 200 active clients.

The government’s focus on increasing the share of natural gas in the total energy basket from ~6% to ~15% by 2030 and net zero carbon emissions by 2070 will lead to opportunities for gas exchanges & other players in the market.

International Carbon Exchange (ICX)

On the road towards further diversifying its product portfolio, IEX launched ICX in December 2022 to promote a voluntary carbon market where participants can trade their carbon credits. Almost 500 million units of carbon credits are traded globally, which is expected to grow to 1500-2000 million units by 2030. And, at present, only 25-30% of trades are happening over exchanges. This presents a massive opportunity for exchanges as demand for carbon credits skyrockets.

IEX is also exploring setting up a domestic coal exchange and has appointed consultants to finalize frameworks. With the rise of green energy systems, IEX may explore diversifying its product portfolio in the green markets, like trading green hydrogen and battery energy storage systems.

Besides the short-term electricity market, IEX has a largely untapped market that can propel its growth in the future. IEX has taken steps in that direction by establishing IGX, ICX, and an exploratory phase in establishing a coal exchange in India. IEX is well-positioned to meet the changing needs of the energy market as a fundamentally strong company with solid cash flows.

FAQs

What does IEX company do?

IEX, or Indian Energy Exchange, is a power exchange that facilitates trade in the short-term electricity market in India, where power generators and consumers (state electricity board, DISCOMs) can trade electricity as per the prevailing supply and demand.

When IEX was established?

IEX commenced operations on June 2, 2008, becoming India’s first power exchange.

How has IEX share price performed?

As of August 28, 2023, the IEX share price has given a CAGR return of 18% and 25% in the last five and three years, respectively.

August 30, 2023

Fundamental Analysis of Stocks

Adani Ports SEZ: All You Need To Know

Summary

Gautam Adani’s rise to become one of India’s most successful industrialists in recent years can be traced back to the success of his ports and logistics company, Adani Ports & Special Economic Zone Ltd. Since its inception, the company has become a benchmark in India for efficiency in port operations and logistics management.

Adani Ports SEZ (APSEZ) is the central component of his business empire. Compared to his other businesses, this company is a cash cow playing a pivotal role in improving the country’s unorganized supply chain and logistics channels.

This article will look at the businesses of APSEZ and analyze its growth potential, including Adani Ports SEZ share price.

Overview of Adani Ports SEZ

The foundation of the Adani Ports was laid in 1995 when the Gujarat state government started inviting applications from private companies to set up and develop port projects as a joint venture.

Receiving the contract to develop Mundra Port on the northern shores of the Gulf of Kutch, Adani established Gujarat Adani Port Limited in 1998 as a joint-sector company. Initially promoted by Adani Port Limited and Gujarat Port Infrastructure Development Company, an undertaking company of the Gujarat government, the company began phase-wise operations in October 1998, with commercial operations starting in October 2001. Later, the Gujarat Government diluted its stake in Mundra Port and ultimately exited the JV.

Today, Adani Ports is India’s largest private port operator with a network of 14 ports and terminals, handling 24% of India’s cargo volumes together. Its Mundra port and Krishnapatnam port in Andhra Pradesh are ranked in the top 10 ports in India. Mundra Port has the highest annual cargo handling capacity of 250 MMT.

Special Economic Zone Business

The SEZ (special economic zone) unit was set up in 2003. It was incorporated as Mundra Special Economic Zone Limited -India’s first multi-product port-based SEZ and currently covers an area of over 15,000 hectares.

The SEZ allows different companies to set up manufacturing units of various products such as textiles, garments, plastics, chemicals, metal, engineering goods, and so on, and it benefits from different tax breaks such as exemption from excise duty, GST, and income tax.

It also offers warehousing and logistics services for the domestic and international markets through the Free Trade Warehousing Zone units, which allows duty-free storage and handling of goods. Mundra SEZ was merged with Adani Chemicals Limited in 2006, and its name was changed to Mundra Port and Special Economic Zone Limited (MPSEZ) before being renamed Adani Ports SEZ Limited in 2012.

Business Overview of Adani Ports SEZ

APSEZ consists of three business verticals- Ports, SEZ, and Logistics.

The company’s Ports business consists of 14 ports across the national coastline and two ports outside India in Colombo, Sri Lanka, and Haifa, Israel. It specializes in handling different types of cargo, such as crude oil, coal, food grains, and containers.

The SEZ vertical has an industrial land bank of 12,000 hectares at Mundra, Dharma, and Krishnapatnam, allowing companies to set up manufacturing and business facilities.

APSEZ is India’s largest integrated logistic player, with a private rail network, multi-modal logistics park (MMLP), and warehousing connecting ports to customer gates. It has the largest private rail network of 620 KM in India with 93 trains, 9 MMLP, 1.6 mn Sq. Ft. of warehousing and 1.1 MMT of grain silos.

Despite having a wide array of business activities, the company reports all its revenue under one segment, i.e., Port and SEZ activities. The operating activities are developing, operating, and maintaining the Ports services, Ports-related Infrastructure development activities, and development of infrastructure at contiguous Special Economic Zone.

Key Management Personnel

Mr. Karan Adani is the CEO of APSEZ and is responsible for developing the Adani Group and overseeing its day-to-day operations. He holds a degree in economics from Purdue University, USA, and started his career at Mundra port in 2009, learning the intricacies of port business.
Mr. D. Muthukumaran is the Chief Financial Officer and joined the company in July 2022 from ReNew Power. He is a qualified chartered accountant and started his career at Deloitte in August 1992.

Shareholding Pattern

Financials

Revenue

In FY23, consolidated revenue grew by 22% to ₹20,852 crores from ₹17,119 crores in FY22. The revenue grew by a CAGR of 19% in the last 10 financial years. Business-wise, revenue from logistics was ₹1,744 crores, and port business was ₹17,304 crores in FY23. And, in Q1FY24, revenue increased by 24% to ₹6,248 crores from ₹5,058 crores in Q1FY23.

Source: Investors-Presentation/AGM-Presentation-08-Aug-2023.pdf

EBITDA

During FY23, consolidated EBITDA increased by 21% to ₹12,833 crores from ₹10,607 crores. In FY23, the port business’s EBITDA was ₹12,039 crores, and the logistics business’s EBITDA was ₹487 crores. With around 70% EBITDA margin for the port business, APSEZ is the most profitable port operator globally.

In Q1FY24, the consolidated EBITDA increased by 80% to ₹3,765 crore from ₹2,089 crore in Q1FY23. During Q1FY23, the company recorded a forex loss of ₹1,201 crores, which pulled down its EBITDA.

EBITDA Margin

	FY19	FY20	FY21	FY22	FY23
EBITDA Margin (in %)	65	64	64	62	62

Net Profit

In FY23, APSEZ reported an approximately 9% annual increase in net profit to ₹5,393 crores from ₹4,953 crores in FY22. And, in Q1FY24, net profits increased by 80% y-o-y to ₹2,119 crores from ₹1,177 crores in Q1FY23.

Key Financial Ratios

Current Ratio: At the end of FY23, the current ratio declined by 7% to 1.36 times from 1.46 times in FY22.

Debt-to-equity Ratio: The debt-to-equity ratio improved marginally by 1% to 1.09 times at the end of FY23, from 1.08 times the previous year.

Net Debt to EBITDA: The net debt to EBITDA ratio at the end of FY23 stands at 3.1 times, increased marginally, and was 3 times at the end of FY22.

Interest Service Coverage Ratio: During FY23, it improved by 15% to 5.20 times, from 4.54 times at the end of FY22.

Return on Capital Employed (ROCE): The company improved its ROCE in FY23 to 12% from 11% in FY22.

Net Profit Margin: At the end of FY23, net profit margin declined marginally by 3% to 26% from 29% at the end of FY22.

Adani Ports SEZ Share Price History

Mundra Port and SEZ launched its IPO on 1st November 2007, raising ₹1,771 crores from the market. The IPO price band was ₹400 to ₹440 per share. The IPO was a success, and it was oversubscribed 115 times. The stock was listed at a premium of 75%.

Adani Ports share price has given a CAGR return of 17% and 33% over the last 5 and 3 years, respectively, as of 24th August 2023. It underwent a split on 23rd September 2010 at a 10:2 ratio. The stock’s all-time high was ₹987.85 as of 19th September 2022.

Adani Ports consistently pays dividends to shareholders, having paid ₹5 in the last three years. As of 24 August 2023, Adani Ports SEZ has a market cap of ₹1,77,639 crores.

APSEZ Fundamental Analysis

Adani Port SEZ is India’s largest transport utility company with strings of ports and an integrated logistics network. The company operates 14 ports along the country’s coastline, with a total installed capacity of 602 MMT. Compared to the national average of all India port cargo volume, which has grown at a 6% CAGR since 2002, APSEZ cargo volume has grown at a 25% CAGR over the same period.

In addition, over the last decade, the company has distributed its cargo volumes across ports and is no longer dominated by Mundra Port. From 91% of cargo volumes originating from Mundra port in FY13, the share has decreased to 46% in FY23.

Furthermore, the share of sticky cargo of the overall cargo handled by different Adani Ports is around 50%. It was 54% in FY23. Sticky cargo is unlikely to be diverted to another port due to infrastructure constraints or a lack of facilities to handle specialized cargo such as crude oil, chemicals, and shipments from joint venture partners.

Since the Mundra Port commenced commercial operations, Adani Ports has established an operational benchmark in the industry and driven the transformation of India’s port sector. The company has an average turnaround time (TAT) for cargo ships of ~0.7 days, compared to the national average of 2 days. It was 5 days in 2011.

Adan Port’s strong organic growth of its ports business, combined with strategic inorganic acquisitions and the integration of logistics operations, has helped the company build a strong moat around the business over the years.

Adani Ports SEZ Future Growth Outlook

Adani Ports SEZ has embarked on a journey to become India’s largest transport utility company by 2030, strengthening its logistics segment from ports, warehousing, in-land transportation, last-mile delivery, etc.

The company has strategically targeted increasing its warehousing capacity by 38 times to 60 MN Sq. Ft. (15% of market capacity), have 15 MMLP covering all key markets, more than 2.5 MMT of grain silos, increase the rail network by 3 times to over 2,000 KM, and deploy 200+ trains (rakes) by FY26.

Furthermore, establishing the Dedicated Freight Corridor (DFC) connectivity to Mundra Port will provide faster port evacuation and quicker transit time. Due to the higher rail coefficient, customers preferred to export or import through Adani Ports. APSEZ’s cargo volume through rail grew by 22% in FY23 to 120.5 MMT from 98.6 MMT in FY22. And the overall rail coefficient improved to 39%.

Regarding efficiency, APSEZ ports had a capacity utilization rate of 60% in FY23, which increased from 45% in FY10. While the national average of other ports dropped from 91% in FY10 to 48% in FY23.

In FY24, Adani Ports plans to undertake a capex of ₹4000-4500 crores and reduce the Net Debt to EBITDA level from 3.1 to 2.5 times. The company also aims to deleverage its balance sheet and keep Net Debt to EBITDA level below 2.5 times over the long term.

Industry Outlook

In the fiscal year 2023, India achieved its highest-ever annual merchandise exports, reaching $447 billion, while merchandise imports climbed to $714 billion.

And, with the government’s unwavering commitment to establishing India as a global manufacturing hub, propelled by a series of policy initiatives such as the PLI Scheme, PM-GatiShakti, National Logistics Policy, and Sagarmala Pariyojana, there’s a strong expectation that India’s exports will skyrocket soon. In addition, Prime Minister Narendra Modi has set an ambitious export target of $2 trillion by 2030.

Concerning the logistics domain, India’s logistics costs as a percentage of its GDP stood at 13-14%, in stark contrast to the 8% seen in developed nations. This differential diminishes the competitiveness of Indian products on the global stage.

Ranked 38th in the Logistics Performance Index 2023, India aims to climb above 25 by 2030, underscoring its resolute commitment to enhancing logistical efficiency and promoting a more globally competitive business environment.

Adani Ports SEZ’s present business model and future plans are well-aligned to benefit from the rise of India’s global stature and trade. The company has strong fundamentals, and the long-term business outlook seems optimistic.

FAQs

When was Adani Ports SEZ incorporated?

Adani Ports SEZ was incorporated in 1998 as Gujarat Adani Port Limited. It started phased-wise operations at Mundra Port in October 1998, with commercial operations beginning in October 2001.

When were Adani Port SEZ shares listed on the stock exchange?

Mundra Port and SEZ launched their IPO on 1st November 2007 and listed the shares on the stock exchanges on 27th November 2007. As of 24 August 2023, the stock has given a CAGR return of 17% and 33% over the last 5 and 3 years, respectively.

Which ports are owned by Adani Ports SEZ?

Adani Ports SEZ owns Mundra Port, India’s largest port. The company also owns 13 other ports along the country’s coastline and two ports outside India in Colombo, Sri Lanka, and Haifa, Israel.

August 28, 2023

Fundamental Analysis of Stocks

Polycab Share Price: All You Need To Know

Summary

The rise of Polycab India is inspiring by all means and shows the aspirational spirit of the Indians and their eagerness to achieve greater heights. In less than 40 years, the company has grown from a small-scale enterprise to a large-cap company, becoming India’s largest fast-moving consumer electrical company, manufacturing electrical cables, wires, and other electrical products. Not only that, but it exports its products to over 72 countries.

Let us understand the fundamentals of Polycab India.

History of Polycab India

Polycab India had a humble beginning in 1964 when Late Thakurdas Jaisinghani established Sind Electric Stores, which sold various electrical products such as fans, lighting, switches, and wires. Following his death in 1968, his four sons- Girdhari T. Jaisinghani, Inder T. Jaisinghani, Ajay T. Jaisinghani, and Ramesh T. Jaisinghani- took over the business.

The family founded a partnership firm “Thakur Industries”, which entered into a lease agreement with MICD in 1975 to lease a parcel of land in Andheri, Mumbai, to establish a factory to manufacture wires and cables, which remained operational until 1984.

Before closing the Mumbai unit, the four brothers formed a new partnership firm called “Polycab Industries” in 1983. They registered it as a small-scale industrial unit with the Directorate of Industries, Government of Gujarat, for a factory in Halol, Gujarat. They started manufacturing PVC insulated wires and cables, copper, aluminum, and bare copper wires.

In 1998, the company became a private limited company, and in 2018, it became a public limited company; Polycab Industries was renamed Polycab India Limited.

In FY23, it had a revenue of ₹14,108 crores, which has grown at a CAGR of 15% in the last four years.

Business Overview of Polycab India

Polycab India is an undisputed market leader in the Indian wire & cables industry, commanding a 22-24% market share in the organized market. The company’s wires & cables business contributes 89% of its total product mix, and the remaining consists of FMEG products and others.

Source: Q1FY24-Earnings-Presentation.pdf

Polycab India has a retail presence in over 125,000 stores across India. It has divided its business into two operating segments:

Wires & Cables: It manufactures and sells various wires and cables for retail and industrial use.

FMEG: The FMEG business commenced operation in FY14, including a mix of consumer electrical products.

Key Management Personnel

Mr. Inder T. Jaisinghani is the company’s Chairman, Managing Director, and founding member. He was appointed to the position in 1997, and under his direction, the company has grown to be a leader in the wires and cables segment, with over 25 glorious years of success.

Mr. Bharat A. Jaisinghani is the Executive Director and joined the company in 2012. He holds a Master’s Degree in Operations Management from the University of Manchester and has worked in different verticals in the company. Mr. Bharat currently leads the growth initiatives of the company.

Mr. Nikhil R. Jaisinghani is the Executive Director and joined the company in 2012. He holds an MBA from Kellogg School of Management, USA. And currently leads the wires & special cable business.

Mr. Rakesh Talati is the Executive Director and has been with the company since 2014. He heads the wires & cables segment and is responsible for Greenfield and Brownfield in the country.

Mr. Gandharv Tongia is the Executive Director and Chief Financial Officer and has been associated with the company since 2018. He is a qualified chartered accountant related to Big 4 Audit firms, namely EY and Deloitte.

Polycab India Shareholding Pattern

Financials

Revenue

In FY23, the company reported a 16% year-on-year increase in total income to ₹14,107.8 crores from ₹12,203.8 crores in FY22. And, as per financial results in Q1FY24, total income increased 42% year-on-year to ₹3,953.3 crores from ₹2,780.9 crores in Q1FY23.

Segment-wise Revenue Breakup

Segment	FY22 (in ₹ cr)	FY23 (in ₹ cr)	Q1FY23 (in ₹ cr)	Q1FY24 (in ₹ cr)
Wires & Cables	10,695.3	12,536.8	2,405.6	3,533.7
FMEG	1,254.3	1,251.1	308.1	314.5
Other	294.2	358.4	99.8	152.8

Source: Financial-Results-FY-2024-Q1.pdf

By Geography	FY22 (in ₹ cr)	FY23 (in ₹ cr)
Within India	11,321	12,762.9
Outside India	922.9	1,383.5

Source: Financial-Results-FY-2024-Q1.pdf

EBITDA

In FY23, the company reported a 45% year-on-year increase in EBITDA to ₹1,842.9 crores from ₹1,262.6 crores. And, in Q1FY24, EBITDA increased by 77% y-o-y to ₹548.6 crores from ₹309.8 crores.

	FY19	FY20	FY21	FY22	FY23	Q1FY24
EBITDA/Net Sales Margin (in %)	11.9	12.8	12.6	10.3	13.1	14.1

Souce: Polycab_IAR%202023.pdf

Net Profit

In FY23, Polycab India reported a 40% annual increase in net profit to ₹1,282.3 crores from ₹917.3 crores in FY22. And, in Q1FY24, net profits increased by 88% y-o-y to ₹402.8 crores from ₹222.5 crores in Q1FY23.

	FY19	FY20	FY21	FY22	FY23	Q1FY24
Net Profit Margin (in %)	6.3	8.7	10.1	7.5	9.1	10.4

Source: Polycab_IAR%202023.pdf

Key Financial Ratios

Current Ratio: At the end of FY23, the current ratio declined by 30 bps to 2.6 times from 2.9 in FY22.

Debt-to-equity Ratio: The company has no significant borrowings on its books, and its debt-to-equity ratio remains unchanged at 0.01 times as of the end of FY23.

Return on Capital Employed (ROCE): The company improved its ROCE in FY23 to 26.1%, from 20.4% in FY22.

Inventory Days: At the end of FY23, the inventory days, meaning the average number of days the company takes to sell its inventory, stand at 102 days.

Receivable Days: At the end of FY23, the receivable days, meaning the average number of days a customer takes to pay back a business for products purchased, stand at 32 days. It was 61 days in FY19.

Earning Per Share (EPS): In the last five years, EPS more than doubled to ₹84.9 in FY23 from ₹35.4 in FY19.

Polycab India Share Price History

Polycab India launched its initial public offering (IPO) in April 2019, raising ₹1,345 crores at a price range of ₹533 to ₹538. The IPO was a success, with 51.77 times oversubscription, and listed at a 20% premium above its issue price.

Polycab share price has given a CAGR return of 76% in the last three years as of August 21, 2023, and the stock price has doubled in the previous year. The share was listed at ₹633 on April 16, 2019, and is currently trading at ₹4,850. It made an all-time high of ₹4,924 on July 20, 2023.

The company has a consistent track record of paying dividends to its shareholders. It paid ₹10 in 2021, ₹14 in 2022, and ₹20 in 2023 as dividends.

As of August 21, 2023, Polycab India has a market cap of ₹72,797 crores.

Polycab Fundamental Analysis

Polycab is the undisputed market leader in the electrical wires and cable segment, with a 22-24% market share in the organized market. And its FMEG business has been growing at a CAGR of 30% since its inception. Over the years, Polycab has evolved as a company, improving its efficiency, expanding its product line, and global presence.

In the last three financial years, the company’s EBITDA margin stayed within a range of 10-13%, with signs of improvement in the current fiscal. In the last five years, the company has halved its receivable days to 32 days and its payable days to 52 days, which has helped the company to optimize its working capital requirement and reduce its financing costs.

Wires & Cables

The wires and cables segment accounts for nearly 90% of total revenue, which increased 17% yearly to 12,536 crores in FY23. EBIT increased by 58 percent during the period, and the EBIT margin was 13.1%.

The merger of Heavy Duty Cables (HDC) and Light Duty Cables (LDC) under Project LEAP played a vital key role in the outperformance of the segment in FY23. It helped in incremental cross-selling revenue and enhanced efficiencies across sales, supply chain, and operations.

In the last fiscal, the company’s institutional business showcased accelerated growth. Polycab is also supplying cables to Indian Navy warships like INS Vikrant.

FMEG

Since its inception in FY14, the FMEG business has grown rapidly, with sales reaching ₹1,251.2 crores in FY23, with the western region, the company’s stronghold, demonstrating positive growth. The company’s FMEG growth story is led by factors like demand for premium products on the back of rising disposable income and the recent revival of the real estate sector.

However, despite rapid growth, the FMEG business does not significantly contribute to the bottom line. In FY23 and Q1FY24, the EBIT margin was negative at -0.5% and -2.3%, respectively.

International Business

The company’s international business reached a new milestone in FY23, contributing nearly 10% of revenue, up from 7.6% in FY22, with solid demand from the United States, Europe, and key industries such as oil and gas, renewables, and infrastructure.

Project Leap

Amidst all the visible megatrends in the Indian economy, Polycab has introduced Project Leap. It is a multi-year transformational journey divided into multiple phases. Polycab 1.0 was about the successful launch of the IPO. Polycab 2.0 was about improving the efficiency metrics of the business and transforming it into a distribution-led business.

The 3.0 stage is a five-year plan (FY2126) in which the company aims to:

Increase its revenue to ₹20,000 crores by FY26
1.5X market growth in core segments
2X market growth in emerging segments
2X market growth in the FMEG segment
Achieve 10-12% EBITDA margin in the FMEG segment
A target of ~10% of the contribution from exports

In FY24, the company is also undertaking a capex of ₹600-700 crores, of which three-fourths will go towards the wires & cables business, and the remaining to go towards the FMEG segment. The future may be positive, yet factors like raw material price volatility, weak FMEG business growth, intense competition, and high inventory are vital concerns.

FAQs

When was Polycab India incorporated?

Polycab India was incorporated as a partnership firm in 1984 as Polycab Industries. It was initially engaged in the manufacturing and selling of PVC insulated wires and cables, copper, aluminum, and bare copper wires.

When was Polycab shares listed on the stock exchange?

Polycab India share was listed on April 16, 2019, and as of August 21, 2023, Polycab share price has given a CAGR return of 76% in the last three years.

Is Polycab a large or mid-cap company?

Polycab India is a large-cap company. As of August 21, 2023, its market share is ₹72,797 crores.

August 23, 2023

Fundamental Analysis of Stocks

IndusInd Bank Share Price: All You Need To Know

Summary

IndusInd Bank started under the leadership of Mr. S.P. Hinduja to serve the NRI community. Today, IndusInd is the fifth largest private bank, creating substantial wealth for its shareholders over the long term. Let’s dig deeper into the company and see the potential of IndusInd Bank share price growth.

IndusInd Bank Overview

Induslnd Bank was incorporated 1994 as a commercial bank under the banking regulation Act of 1949. The then Finance Minister, Dr. Manmohan Singh, inaugurated the Bank in Mumbai, and the bank came out with its Initial Public Offering in November 1997. It is one of India’s leading financial services brands, serving approximately 35 million customers nationwide.

IndusInd provides banking solutions to individuals, large corporations, government entities, and PSUs. Its network includes 2606 branches/banking outlets and 2,875 ATMs across India, covering 1,38,000 villages. Additionally, the bank has representative offices in London, Dubai, and Abu Dhabi.

The Bank offers various products and services for individuals and corporates, including microfinance, personal loans, commercial vehicle loans, credit cards, and SME loans.

IndusInd Bank Journey

The following timeline illustrates the significant events and growth of the Bank since its establishment:

1994-1995: IndusInd Bank was founded by Mr. Srichand P. Hinduja. The first branch opened in Mumbai with an initial investment of USD 35 million and was inaugurated by Dr. Manmohan Singh.
1996-1997: The bank raised USD 30 million by issuing an Initial Public Offering in November 1997. It also successfully launched the concept of anywhere banking by expanding its network to 18 branches and 11 ATMs.
1997-2000: The bank expanded its range of services to include FAST Forex, Indus Home, Indus Estate, and Indus Auto, among others.
2001-2003: The bank introduced mobile banking and a suite of loan products, including housing, personal, and auto loans, to customers nationwide.
2003-2004: The bank merged with Ashok Leyland Finance Limited.
2004-2005: Bank partnered with Ashok Leyland for channel financing with a focus on expanding client relationships, and the bank opened its 100th branch in Dadar, Mumbai
2005-2006: Bank raised INR 170 crores through the issuance of Tier-II bonds and entered into an agreement with NCDEX as their clearing banker.
2008-2009: Bank launched new savings and current accounts to expand its consumer banking portfolio. It also created separate corporate, institutional, and commercial banking units to serve all corporate needs.
2009-2010: The bank established a microfinance unit and introduced new products for corporate clients, expanding its offerings to include loan syndication, microfinance, and warehouse finance.
2011-2012: Bank entered into a Memorandum of Understanding (MoU) with HDFC Bank for home loans.
2013-2014: The Bank got added to the NIFTY 50 benchmark index.
2015-2016: The bank acquired RBS’s Diamond & Jewelry Financing business in India and reached a milestone of 1,000 branches. Additionally, it achieved leadership in the Carbon Disclosure Project in the Indian corporate sector.
2016-2017: The bank ranked 12^th among the most valuable Indian brands in 2016 by Millward Brown and WPP. Bank introduced a specialized approach to cater to industries and created business units in Healthcare, Education, Logistics, Pharma, MNC, and Financial Services.
2017-2018: The bank has announced a merger with Bharat Financial Inclusion Limited, one of the largest microfinance institutions in India.
2018-2019: The IndusInd bank launched a new product line that includes the Duo card, a debit-cum-credit card.
2022-2023: IndusInd Bank has partnered with MoEngage to offer its customers a unique digital experience. Additionally, the bank has announced a strategic partnership with the Asian Development Bank (ADB) to support and promote Supply Chain Finance solutions in India.

IndusInd Bank Management Profile

Mr. Sunil Mehta is the Chairman of the bank. He has 40 years of leadership experience in banking, finance, insurance, and investments with top global and domestic financial institutions, including Citibank, AIG, SBI, PNB, and YES Bank. He graduated from Shri Ram College of Commerce, Delhi University, and is a Fellow Member of the Institute of Chartered Accountants of India. He is also an alumnus of the Wharton School of Management at the University of Pennsylvania.

Mr. Sumant Kathpalia is the Managing Director and CEO of the bank. Before joining IndusInd Bank, Mr. Sumant gained years of valuable experience as a career banker at Citibank, Bank of America, and ABN AMRO. He joined IndusInd Bank as part of the management team 15 years ago and has been instrumental in turning the bank around. He holds a bachelor’s degree in B Com (Hons.) from Hindu College, Delhi University, and is also a qualified Chartered Accountant.

Mr. Gobind Jain is the Chief Financial Officer of the Bank. Mr. Jain worked as Joint President of Group Accounts and MIS at Kotak Mahindra Bank (KMB) for over 15 years. Mr. Jain has an impressive accounting and financial management background, having worked with esteemed institutions such as ICICI Bank, Bank of America, Reserve Bank of India, and Bank Internasional Indonesia. He is a qualified Chartered Accountant, Financial Analyst, Financial Risk Manager, and CPA Australia.

Mr. Zubin Mody is the Chief Human Resources Officer of the Bank. Currently, he leads the HR Function at IndusInd Bank; he joined the bank in December 2005. Before this, he was heading the HR function at ICICI Lombard. He graduated with honors in Physics from Mumbai University and holds a Management Degree in Personnel Management & Human Resources from XLRI, Jamshedpur (1993).

IndusInd Bank Shareholding Pattern

IndusInd Bank Business Segments

The IndusInd bank has a diversified loan book across Consumer and Corporate Products. The consumer loan book is ~54% of the total as of Jun 2023 and comprises Vehicle Finance, Non-Vehicle Finance, and Microfinance segments.

The corporate loan book is 46% of the total and comprises large and mid-size corporates. Within the corporate book, the focus is on granular, high-rated customers.

Consumer Banking	June-23	% of the Loan Book
Vehicle Finance	78,332 Cr	26%
Non-Vehicle Finance	51,567 Cr	17%
Microfinance	31,981 Cr	11%
Total Advances	1,61,880 Cr	54%

Source: IndusInd Investor Presentation Q1FY24

Corporate Banking	June-23	% of the Loan Bank
Large Corporates	77,065 Cr	25%
Mid Corporates	47,624 Cr	16%
Small Corporates	14,748 Cr	5%
Total Advances	1,39,437 Cr	46%

Source: IndusInd Investor Presentation Q1FY24

IndusInd Bank Financials

Core Operating Profit and Net Profit

The company has reported an Operating Income of INR 25,758.49 Cr during the Financial Year ended March 31, 2023, compared to INR 22,335.04 Cr during the Financial Year ended March 31, 2022.

The company has posted a net profit of INR 7389.72 Cr for the Financial Year ended March 31, 2023, as against a net profit of INR 4611.12 Cr for the Financial Year ended March 31, 2022.

In INR Cr.	FY19	FY20	FY21	FY22	FY23
Interest Income	22,261.15	28,782.83	28,999.80	30,822.44	36,367.92
Interest Expense	13,414.97	16,724.09	15,471.91	15,821.60	18,775.80
Net Interest Income	8,846.18	12,058.74	13,527.89	15,000.84	17,592.12
Non-Interest Income	5,646.72	6,951.31	6,558.61	7,334.20	8,166.37
Revenue	14,492.90	19,010.05	20,086.50	22,335.04	25,758.49
Profit After Tax	3,301.10	4,417.91	2,836.39	4,611.12	7,389.72

Source: IndusInd Annual Reports (FY20 to FY23)

Net Interest Income & Net Interest Margin

Net Interest Income (NII) is the difference between the interest earned on a bank’s assets (such as loans and investments) and the interest paid on its liabilities (such as deposits and borrowings).

Net Interest Margin (NIM) is calculated by dividing the NII by the average interest-earning assets.

Net Interest Income for the quarter of June 30, 2023, at INR 4,867 Cr, grew by 18% YoY and 4% QoQ. Net Interest Margin for Q1 of FY24 stood at 4.29% against 4.21% for Q1 of FY23 and 4.28% for Q4 of FY23. The bank has been increasing its NIM% consistently by focusing on high-yielding segments like MFI and vehicle finance.

Source: IndusInd Annual Reports (FY20 to FY23) and Q1FY24 Investor Presentation

Asset Quality (GNPA & NNPA)

NPA stands for Non-Performing Asset. It refers to a loan or an advance where the borrower has not paid the interest or the principal amount for a specified period, usually for 90 days or more.

Gross NPA refers to the total value of a bank’s non-performing assets. Net NPA, on the other hand, is the value of NPA after reducing the provisions made by the bank to cover the losses that may arise from such non-performing assets.

IndusInd’s reported asset quality metrics for corporate and retail segments have been range bound, with overall GNPA between 1.0% – 1.2% from March 31, 2014, to December 31, 2018. Since fiscal 2019, due to slippage of some corporate accounts and COVID-19-related stress in the past fiscal, the gross NPA has increased steadily to 2.9% as of June 30, 2021, which has improved to 1.94% as of June 30, 2023. The GNPA of the Bank is one of the lowest in the industry, with adequate provision coverage of 71% and a provision buffer of INR 1700 Cr, with total loan-related provision standing at 2.4% as of June 2023.

Source: IndusInd Investor Presentations (Q3FY22 to Q1FY24)

Advances & Deposits

An advance refers to a loan or credit extended by a bank to its customers. Banks offer various advances such as personal, business, home, education, vehicle, and credit card loans. Advances as of June 30, 2023, were INR 3,01,317 Cr as against INR 2,47,960 Cr, an increase of 22% compared to June 30, 2022.

Deposits are a critical source of funding for banks, and they use these funds to provide loans and advances to customers.

Deposits as on June 30, 2023, were INR 3,47,047 Cr as against INR 3,02,719 Cr, an increase of 15% over June 30, 2022. Deposits growth is driven by granular retail deposits. The bank has a stable, low-cost deposit base, another reason contributing to the high profitability of the bank.

The bank’s share of CASA (Current Account & Savings Account) deposits ratio is ~40% as of Q1FY24 and has reduced slightly from 43% in Q1FY23. Bank continues to focus on this journey of growing better CASA deposits which will help reduce the overall cost of deposits and manage liquidity.

Source: IndusInd Q1FY24 Investor Presentation

Improving Return ratios (ROA & ROE)

IndusInd Bank has been improving its RoA (A higher RoA suggests that a bank is more efficient in generating profits from its assets) & ROE (the higher the ROE, the more efficient a company’s management is at generating income and growth from its equity financing) over the last few quarters as can be seen in the chart below.

IndusInd Bank’s ROA currently stands around 1.9%, supported by healthy net Interest margins with some exposure to high-yield segments such as vehicle finance and MFI.

IndusInd Bank Share price history

IndusInd Bank launched its IPO in Jan 1998 at ~INR 45 per share, and today, the stock trades at INR 1372 per share (as of 18^th August).

Like all private banks in India, IndusInd, too, has created significant wealth for its shareholders. The stock has delivered a 10-year CAGR of ~14% (from 18th August 2003 to 18th August 2023). More recently, the stock has given a 3-year CAGR of ~39% (from 18^th August 2010 to 18^th August 2023).

IndusInd Bank Share Price Target Growth Potential

The management has introduced planning cycle – 6 (FY23–26), wherein they have guided for 18-23% YoY credit growth, mainly driven by retail (55-60% proportion) and PPOP margins (pre-provision operating margins) to be 5.25-5.75% range.

The focus will be on new business verticals (home loans) to aid business growth and gain market share. An uptick in NIMs is expected, led by a higher share of retail loans, including the micro-finance segment.

The company is investing in ramping up phygital distribution channels, which will keep the Cost to Income ratio elevated for a couple of quarters. However, improvement in credit cost will boost earnings growth and return ratio.

Key Risks:

An unanticipated rise in defaults to erode margins and increase credit cost

Any unexpected rise in delinquencies, particularly in the vehicle and MFI segments, could increase the stress on assets and strain its profitability. Higher-than-anticipated failure could result in elevated interest income reversals, lower credit yield, and margin compression.

Lower credit growth in FY24 and FY25

Any further weakness in credit quality and lower credit demand could impact interest income and fee revenue recognition, thereby impacting profitability.

FAQs

Who is the promoter of IndusInd Bank?

IndusInd International Holdings Ltd, an entity belonging to promoters Hinduja Group, has a 12.57% stake in the lender. IndusInd Ltd has a 3.93% stake per the company’s latest shareholding pattern available with the Indian stock exchange BSE.

What is the 52 Week High and Low of IndusInd Bank?

52 Week high of IndusInd Bank is INR 1446 per share, and 52 Week low of IndusInd Bank is INR 990 per share.

What is the face value of IndusInd bank share?

The face value of IndusInd Bank share price is INR 10 per share.

August 21, 2023

Fundamental Analysis of Stocks

Sona BLW Share Price: All You Need To Know

Introduction

Sona BLW is a prominent Indian company with a global presence that manufactures differential gears, motors, and other components. It holds a 60-90% market share in various segments of the Indian differential gears (DG) market.

The company plans to expand manufacturing capacity and launch new products. Let’s understand more about the company.

Sona BLW Overview

Sona BLW is a global manufacturer of automotive systems and components with origins in India. The company has nine manufacturing and assembly plants across India, China, Mexico, and the USA, of which six are in India.

The company is India’s leading auto ancillary company, specializing in designing, manufacturing, and supplying highly engineered, mission-critical automotive systems and components. These include differential assemblies, differential gears, conventional and micro-hybrid starter motors, BSG systems, EV traction motors, and motor control units.

It supplies these products to automotive OEMs across the US, Europe, India, and China for use in all categories of vehicles, including conventional passenger vehicles, commercial vehicles, off-highway vehicles, electric cars, electric light commercial vehicles, and electric two-and-three-wheelers.

The company develops mechanical and electrical systems, software solutions, and components to meet customer demands. The company has nine manufacturing plants, 3 R&D Centers, and 4064+ employees.

Sona BLW Journey

Here are some of the critical milestones in the company:

1995: The company was incorporated as Sona Okegawa Precision Forgings Ltd. in a joint venture with Mitsubishi Metal Corporation Limited.
1998: The Company started manufacturing differential bevel gears at its first plant in Gurugram, Haryana, India.
1999: The company established a manufacturing facility in Chennai, Tamil Nadu, India.
2005: A new manufacturing plant was launched in Pune, Maharashtra, India, by the company. Additionally, Sona Autocomp Holding Private Limited became the company’s majority shareholder.
2008: Acquired Thyssen Krupp’s precision forging business (which had previously acquired the company BLW, the inventor of Warm Forging Technology).
2013: The company was renamed “Sona BLW Precision Forgings Limited.” It was also awarded the “North American OEM of PV’s and CV’s World Excellence Award (Silver).”
2016: The Company was recognized with a Gold World Excellence Award for being a leading North American OEM of PV’s and CV’s. It also established a new manufacturing plant in China and received an investment from JM Financial Trustee. Contract with Mitsubishi and Metal One has been terminated
2017: Two new plants commenced operations in Gurugram, India, and the Company also launched the final assembly and finishing plant in Mexico, North America.
2018: Acquired new land for a second plant in Chakan, Pune. It was awarded the contract for Differential Assembly supply by a renowned Global Electric Vehicle Manufacture
2019: The brand name “Sona Comstar” was adopted by the Company, and the differential assembly plant commenced operations in Manesar, Haryana, India.
2020: Achieved a production milestone of 250 million Gears and awarded contracts for BLDC (Brush Less Direct Current) motor supply by two Indian Electric 2 Wheeler Manufacturers
2021: The Company got listed on the Indian Stock Exchanges

Sona BLW Management Profile

Mr. Vivek Vikram Singh is the company’s Managing Director and group CEO. He holds a bachelor’s degree in technology in computer science and engineering from HBTI Kanpur and a postgraduate diploma in management from IIM Ahmedabad. He has over 18 years of experience, including eight years of experience in the automotive industry. He is responsible for capital allocation, strategic decisions for growth, business development, managing financial stakeholders, and performance monitoring of individual business units of the company.
Mr. Rohit Nanda is the Group Chief Financial officer of the company. He is a qualified chartered accountant with over 20 years of experience in diverse industries, including automotive, steel, engineering, pharma, chemical, and industrial goods. He is responsible for capital allocation, financial reporting, investment decisions, risk management, and information technology.
Mr. Kiran Manohar Deshmukh is the Chief Technology officer of the company. He holds a bachelor’s degree in technology in metallurgical engineering from IIT Bombay. He has significant experience in automotive components manufacturing and has worked in the areas of, among others, manufacturing, process control, and design. He is responsible for steering the development of new technologies, establishing technology partnerships, and building competencies in manufacturing excellence in the company. He joined the company on July 1, 2019.

Sona BLW Shareholding Pattern

Sona BLW Business Segments

The product line of the company can be classified under two segments:

Driveline parts – differential assembly and gears
Motors

Driveline parts segment: The Company produces differential assemblies and precision-forged bevel gears for electric and non-electric vehicles, including passenger cars, commercial vehicles, off-highway vehicles, and three-wheelers.

Motors segment: The company produces starter motors for conventional, micro-hybrid, and EVs. It also manufactures motor control units and EV traction motors for hybrid and electric vehicles, including two and three-wheelers.

Sona BLW Fundamental Analysis

Sona BLW caters to all major automotive segments, including Passenger Vehicles, Commercial Vehicles, Tractors, and Off-Highways. Sona BLW is the largest manufacturer of differential gears for PVs, CVs, and tractors in India. They are also ranked among the top 10 global suppliers of differential bevel gears and starter motors for PVs.

In CY22, Sona BLW has a 7.2% market share in global differential gears and 4.1% in starter motors globally. In the domestic market, the company holds 80-90% market share in commercial vehicles, 75-85% in tractors, and 55-60% in passenger vehicles.

The company operates in various vehicle segments, including PVs, CVs, OHVs, and E2W/E3W, with a revenue mix of 69%, 15%, 12%, and 4%, respectively. However, it has a high dependency on the passenger vehicle segment.

The company has a solid clientele base. Almost all well-known automotive manufacturers are customers of SONA BLW, like Maruti Suzuki, Renault, Nissan, Volvo, etc. In FY 2022-23, the top 5 customers contributed 55% of the revenue, while the top 10 contributed 77% to the total revenue for the company.

The Company generated 29% of its revenues from India. The remaining revenue came from overseas operations in North America (43%), Europe (20%), and Asia/Others (8%).

The company continues to focus on R&D to develop new innovative systems and components. In FY 2023, the company invested INR 73.1 Cr rupees in R&D with 273 on-roll employees across three centers in India located in Gurugram and Chennai.

The company has increased its focus on the electric vehicle segment, and its revenue contribution is 26%. The company operates 46 EV programs across 27 customers, and BEV (Battery Electric Vehicles) revenue contributes 26% share in FY 2022-23.

The company plans to focus on light passenger, commercial vehicles, and electric buses over the next three years. It aims to expand in Europe for differential assemblies and gears and in China for micro-hybrid starter motors and 48V BSG systems.

In FY 2023, the Company announced its entry into the sensors and software market by acquiring a 54% stake in Novelic.

Revenue & Profitability

Sona BLW posted revenue of INR 2,676 Cr during FY23 compared to INR 2,131 Cr during FY22, an increase of 25.57%.

On the profitability front, the company has posted a PAT of INR 395.3 Cr for FY23 as against the PAT of INR 361.5 Cr for FY22, an increase of 8.5%.

If we look at the financial performance over the Financial Year 2019 – 2023, the company has posted a Revenue CAGR of 39.86% and a PAT CAGR of 23.16%, which is relatively good.

Sona BLW has consistently delivered operating margins (EBITDA %) in the range of 26% to 28% since 2018, which is relatively high for an auto ancillary manufacturer. The company has done reasonably well on execution and delivered well on Revenue growth, profitability growth, and margins.

Return on Equity & Return on Capital Employed

Sona BLW has consistently delivered ROCE and ROE of over 25% over the last five years. This can be credited to the existing manufacturing facilities’ high operating margins and asset turnover.

The company can generate high ROCE on the back of innovative products being launched to cater to the requirements of auto manufacturers globally.

Source: Sona BLW Q1FY24 Investor presentation

Sona BLW Share Price History

Sona BLW was listed on NSE & BSE in June 2021 at a price per share of INR 302.4 and currently trades at INR 555.6 per share (as of 13 August 2023). During this period, the company achieved an all-time high price of INR 835 per share on 14^th Dec 2021.

Key risks:

Undertrial products may not get acceptance – It is also possible that the hybrid technology that uses a 48V BSG motor may not find acceptance globally, or BV penetration increases much faster. In that case, SONA will have to develop alternative products.

Volatility in critical raw materials – The Company’s business could be affected by commodity price volatility, which could affect the firm’s overall cost of manufacturing operations. Though it has adequate mechanisms to monitor and manage various market risks, the effects of changes in commodity prices cannot always be predicted, hedged, or offset with price increases to eliminate the impact on the Company’s overall profitability.

Change in regulations and industry trends -The automotive industry is subject to environmental and other laws. Therefore, any adverse impact on the industry and the Company’s customers due to any change in such rules can affect its business. Further, there has been a gradual shift in the industry from pure ICE-dependent vehicles. An acceleration in this trend will adversely affect the ICE-dependent business of the Company.

Overdependency on top five customers- The top 10 customers contributed 77% of the revenue. If top existing clients cancel the order, it may affect the finances.

FAQs

What is the face value of Sona BLW?

The face value of Sona BLW is INR 10 per share.

What is the Market cap of Sona BLW?

The market cap of Sona BLW is INR 32,742 crores as of 8^th Aug 2023.

August 16, 2023

Fundamental Analysis of Stocks

SAIL Share Price: All You Need To Know

Introduction

Since independence, Tata Steel and SAIL (The Steel Authority of India Limited) have played a key role in the country’s industrial growth. Being the oldest and foremost steel manufacturers in India, both companies have been instrumental in supplying essential raw materials for infrastructure development, manufacturing, and various sectors of the economy.

However, this article focuses on understanding the fundamentals, analyzing SAIL share price, and exploring its future growth potential. Let’s dig deeper into the company and understand if SAIL can achieve a market capitalization of ₹1 lakh crore in the next five years.

SAIL Company History

SAIL is one of the Maharatna category Central Public Sector Enterprises (CPSE) and one of the leading steel manufacturers in the country. The Maharatna status is awarded to a company that has achieved a net profit exceeding ₹5,000 crore consistently for three consecutive years, maintains an average annual turnover of ₹25,000 crore over three years, or maintains an average annual net worth of ₹15,000 crore over three years.

But, you might be too surprised to learn that SAIL, initially, wasn’t formed as an operating company but as a holding company with the primary purpose of overseeing the input and output of government-owned steel plants in the country.

1950: The origins of SAIL can be traced back to the establishment of Hindustan Steel Limited (HSL) in the early 1950s. HSL’s original focus was to manage the forthcoming Rourkela Steel Plant operations.
1954: Hindustan Steel Limited (HSL) is formed. It comprised of four plants: Bhilai Steel Plant, Rourkela Steel Plant
Durgapur Steel Plant, and Alloy Steel Plant
1957:Subsequently, in 1957, the Iron and Steel Ministry transferred the supervision and control of the Bhilai and Durgapur Steel Plants to HSL.
1960: Rail & Structural mill commissioned at Bhilai Steel Plant
1962: January 1962 saw HSL manage a total steel production capacity of 2 MT. The Wheel & Axle plant was inaugurated at Durgapur
1968: Construction of Bokaro Steel Limited starts and other facilities commissioned at various HSL plants.
1972: On December 2, 1972, the Ministry of Steel and Mines presented a policy document to the parliament to create a new industry management model.
1972: First blast furnace at Bokaro Steel Plant inaugurated, Salem Steel Limited formed in Tamil Nadu and RDCIS established in Ranchi.
1973: SAIL was officially incorporated on January 24, 1973, with an authorized capital of Rs 2000 crore. SAIL’s role was to manage the operations of five integrated plants in Rourkela, Bhilai, Durgapur, Bokaro, and Burnpur. The Bokaro steel plant helped increase the overall crude steel production capacity to 4 MT by 1973.
1978: SAIL underwent significant restructuring, transforming into an operating company. The Indian Iron & Steel Company (IISCO) taken over as subsidiary.
1985: Inauguration of integrated trial run of Meghahataburu iron ore project
1986: First modernization phase initiated at Durgapur and SAIL takes over Maharashtra Electrosmelt Limited (MEL), subsequently renamed Chandrapur Ferro Alloy Plant (CFP).
1989: The Raw Material Division was formed and the subsidiary Visvesvaraya Iron & Steel Plant (VISL) merged into SAIL.
1992: SAIL gets listed in Bombay Stock Exchange
1995: Rourkela Steel Plant’s first modernisation commissioned
1997: SAIL becomes a Navratna company
2001: SAIL enterst into JV with NTPC to form NSPCL for captive power generation
2004: SAIL environment policy was released and the Bhilai plant produces first 80 meter long rail
2006: IISCO merged with SAIL
2007: Modernisation and expansion plan initiated to increase crude steel production to 21.40 MTPA
2010: SAIL becomes a Maharatna company
2013: Durga, India’s second largest blast furnace (Capacity: 4060 m3) comes up at RSP. Special grade steel from Bhilai and Rourkela used for building India’s first indigenouse aircraft carrier, INS Vikrant.
2015: Steel plants at Rourkela and IISCO modernised and dedicated to the Nation
2017: Rail Mill at BSP produced world’s longest single piece rail measuring 130 mtr
2018: LHB wheels developed and supplied by DSP. Steel Authority of India launched its new ‘NEX’ brand Parallel Flange Section.
2019: Steel Authority of India launched its new branded TMT bars SAIL SeQR.

Business Overview of SAIL

Steel Authority of India’s operating crude steel capacity is around 19.5 Metric Tons (MT), and it has a product mix of flats, longs, and semis.

Flats steel products include plates, hot-rolled & cold-rolled sheets, and coated sheets. Long products consist of rails, bars, and rods. And semis are semi-finished steel products that are further rolled or forged to produce finished steel products.

Steel produced by SAIL is primarily consumed in the country and contributes only a tiny portion of export revenue. In FY23, only 3% of the total produce was exported.

Operating Segments

The company has considered its five integrated and three alloy steel plants’ reportable operating segments.

Bhilai Steel Plant (BSP)
Bokaro Steel Plant (BSL)
Durgapur Steel Plant (DSP)
Rourkela Steel Plant (RSP)
IISCO Steel Plant (ISP)
Tamil Nadu and Alloy Steel Plant (ASP)
Salem Steel Plant (SSP)
Visvesvaraya Iron & Steel Plant (VISL

SAIL Management Personnel

Shri Amarendu Prakash is the Chairman and Managing Director at SAIL and leads the company’s operations and initiatives. He took charge as Chairman on 31st May 2023, and previously he held the post of Director in charge at Bokaro Steel Plant. He joined SAIL in 1991 as a Management Trainee (Technical). He graduated from BIT Sindri as a metallurgical engineer.
Shri Anirban Dasgupta is the Director of the Bhilai Steel Plant and started his career in SAIL in 1986. He is a distinguished alumnus of IIT-BHU in Metallurgy.
Shri Atanu Bhowmick is the Director of the Rourkela Steel Plant and is a Metallurgist from NIT, Rourkela. He joined SAIL/ Rourkela Steel Plant in1988 in the blast furnace department and has worked in various capacities.
Shri Brjendra Pratap Singh is the Director of Burnpur and Durgapur Steel Plant. He is an ISM-Dhanbad alumnus and joined SAIL in 1989.
Shri Vijendla Srinivasa Chakravarthy is the Director (Commercial) of SAIL and joined the company’s Central Marketing Organization in 1987. He is a chemical engineer from the Laxminarayan Institute of Technology, Nagpur University.
Shri Anil Kumar Tulsiani is the Director (Finance) and is a seasoned finance professional. During his tenure, he joined SAIL in 1988 as Junior Manager (Finance) and worked in different plants and units at SAIL. Shri Tulsiani is a qualified CMA and MBA (Finance).

SAIL Shareholding Pattern

Source: Shareholding as of 30th June 2023

SAIL Financials

Revenue
SAIL’s revenue from operations in FY23 was ₹1,04,447 crores, which increased marginally by 0.94 % from ₹1,03,4 73 crores in FY22. In Q1FY24, total income rose marginally by 1% to ₹24,800 crores from ₹24,334 crores in Q1FY23.

Source: SAIL Performance Q1 Highlights p.24

Segment-wise Revenue From Operations

	FY22 (in ₹ cr.)	FY23 (in ₹ cr.)
Bhilai Steel Plant	27,993.23	30,516.07
Durgapur Steel Plant	11,853.29	13,250.48
Rourkela Steel Plant	26,830.57	25,600.33
Bokaro Steel Plant	28,531.63	26,343.77
IISCO Steel Plant	12,200.78	13,520.93
Alloy Steels Plant	896.84	1,000.55
Salem Steel Plant	2,685.35	1,881.81
Visvesvaraya Iron & Steel Plant	377.11	310.86
Others	3,324.18	1,445.29

Source: Financial Results Q4 FY23

EBIDTA

In FY23, SAIL’s EBITDA came in at ₹ 9,379 crores, which declined by 58% from ₹ 22,364 in FY22. And, in Q1FY24, EBITDA declined by approximately 20% to ₹ 2090 crores from ₹ 2606 crores in Q1FY23.

Source: SAIL Performance Highlights FY23

Net Profit

In FY23, SAIL’s profit after tax declined by 84% to ₹ 1,903 crores from ₹ 12,015 crores in FY22. For Q1FY24, profit after tax declined by 80% to ₹ 150 crores from ₹ 776 crores in Q1FY23.

SAIL Key Financial Ratios

Current Ratio: At the end of FY23, the current ratio improved marginally to 0.77 times from 0.73 at the end of FY22.
Debt-to-equity Ratio: The debt-to-equity ratio increased to 0.59 times on 31st March 2023, from 0.33 times compared to the previous fiscal.
Interest Service Coverage Ratio: SAIL’s interest service coverage ratio declined to 2.0 5 times at the end of FY23 from 9.56 times in FY22. The decline was due to a significant reduction in profitability metrics over the last two fiscal years.
Inventory Turnover Days: In FY23, the inventory turnover increased significantly to 99 days from 77 days in FY22.
Operating Margin: The operating profit margin for the year ended 31st March 2023 dropped to 8.98% from 21.61% in FY22.
Net Profit Margin: The net profit margin declined to 1.82% in FY23 from 11.61% in FY22.

SAIL Share Price History

SAIL was listed through the Government of India’s disinvestment process rather than an IPO. The company sold 1.18% of its stake to financial institutions in the first tranche of disinvestment in 1991-92. The second tranche happened in 1994 when the government offered the public up to 14.95 of the equity shares. In 2004, 10% of the equity was divested, followed by 5% in 2014. The latest disinvestment occurred in 2021 when the government successfully offloaded a 10% stake through an Offer for Sale (OFS) mechanism.

As on 12th August 2023, SAIL share price has given a CAGR return of 33% in the last three years and 12% returns in the last year.

The stock has struggled to sustain upward momentum in the past five years. SAIL’s shares reached an all-time high of ₹151.30 on May 10, 2021. However, the stock has since experienced a decline, attributed to the impact of weak macroeconomic conditions and the cyclicality nature of the metal stocks.

The company has a good track record of paying rich dividends to its shareholders. It paid ₹6.8 in 2021, ₹4.75 in 2022, and ₹1 as interim dividend in 2023. As of 12th August 2023, SAIL has a market capitalization of ₹37,629 crores.

SAIL Fundamental Analysis

One factor that drives the stock price of most metal companies, including steel, is cyclicality. Meaning the price of metal stock swings as per the business cycle of an economy. These stocks tend to perform best when the economy is recovering or in a high-growth phase.

SAIL’s financial performance over the last two fiscal years is witnessing a downward pressure, mainly on account of a sharp fall in the global steel prices and reduced global demand. Post-pandemic, rise in global steel price, fall in fuel costs, and better-than-expected economic recovery helped steel companies to improve profitability. During the period, SAIL share price rose from around ₹20 level to ₹151.30 in less than 18 months

Global Price of Metal Index

Metal price — Source: International Monetary Fund

Factors that Impacted Profitability

The company’s sales have remained subdued in the last two fiscal years, with only 16.15 MT sold in FY22 and 16.20 MT sold in FY23.

Increase in the cost of material consumed. During FY23, the cost of material consumed increased to ₹62,179.91 crores from ₹42,890.12 crores in FY22, an increase of approximately 45%.

Higher inventory cost. In FY23, inventory turnover days increased by 22 days, which had an impact on working capital.

Slowdowns in key markets, including China, the US, the UK, and Europe, adversely impacted steel prices. The steel prices remained volatile, with downward pressure during FY23.
The company had to depend on the import of coking coal to power its steel plant. In FY22, out of the total requirement of 17.2 MT, the company had to import 15.92 MT. Supply-chain woes due to the Russia-Ukraine war, the prices of imports jumped significantly.

SAIL Share Price Growth Potential

SAIL expects a 15% year-on-year increase in sales volume to 18.7 MT in FY24. It is also expected to benefit from the lower price of coking coal.

The company is undertaking a huge capex plan of ₹1 lakh crore in the next 9 to 10 years and increasing its manufacturing capacity to 30 MT by 2030.

India’s steel sector may benefit from the country’s strong growth momentum. According to the Indian Steel Association (ISA), steel demand in India will increase by 8-9 MT per year over the next two fiscal years, owing to strong momentum in infrastructure spending and sustained growth in urban consumption.

Global Outlook

FY24 will likely be a better year for steel companies on the back of global economic recovery. The IMF has projected global real GDP growth at 3% in 2023, up 0.2% from its April forecast.

However, one of the concerns is sluggish domestic demand in China, which is likely to keep global steel prices under pressure. China’s massive steel industry has been hard hit by the country’s massive slowdown in the property sector, pushing steel prices to three-year lows in May. The country is also exporting its surplus steel. In the first five months, China’s steel exports were up by 41% compared to the previous year.

China is the world leader in steel manufacturing capacity accounting for 54% of the world’s steel production in 2022. As Indian steel prices follow international steel prices, the sector may remain under pressure until there is a strong global recovery, particularly in China’s domestic demand.

FAQs

When was SAIL established?

SAIL was incorporated in the year 24th January 1973 with an authorized capital of ₹2000 crores as a holding company to manage the government-owned five integrated steel plants in the country. In 1978, through significant restructuring of the company, SAIL transformed into an operating company.

What are the five steel plants of SAIL?

SAIL operates through five integrated steel plants at Bokaro, Rourkela, Durgapur, Burnpur, and Bhilai. The combined capacity of all steel plants is around 19.5 MT by the end of 2022.

How has SAIL share price performed in the last 5 years?

As of August 12, 2023, the SAIL share price has delivered a CAGR return of 3% over the past five years and an impressive 33% over the last three years. all-time high of ₹151.30 on May 10, 2021. The stock has subsequently experienced a notable decline and has been unable to surpass that peak.

August 11, 2023

Fundamental Analysis of Stocks

Sun Pharma Share Price Analysis: All You Need To Know

Introduction

The Indian Pharmaceutical Industry is one of the world’s largest in terms of production by volume and value. It produces over 60,000 generic drugs in 60 different therapeutic categories. It meets 60% of the global vaccine demand, 40% of generic medicine demand in the US, 25% of all medicines in the UK, and exports drugs valued at over $24 billion globally.

This article will analyze India’s leading and most valuable pharmaceutical company Sun Pharma. The company had a humble beginning in 1983 and is now a world leader in generic and specialty medicines, with global sales of over $5 billion.

Let’s dig deeper into the company and see the Sun Pharma share price growth potential.

Sun Pharma Company Journey

Sun Pharma was established by Dilip Shanghvi in 1983 in Vapi, Gujarat, and initially focused on five products catering to psychiatric ailments. Before venturing into entrepreneurship, Dilip Shanghvi had gained experience as a helper in his father’s wholesale drug business based in Kolkata.

After completing his bachelor’s degree in commerce from the University of Calcutta in 1982, Shanghvi started his own company. With a small loan from his father, he aimed to produce high-quality medicines at affordable prices.

In 1988 Sun Pharma introduced its first cardiology products and expanded its offerings to include API manufacturing by 1995. Today, it stands as the fourth-largest specialty generic pharmaceutical company globally, with over $5.1 billion in revenue and over 40 state-of-the-art manufacturing facilities. Its reach extends to over 100 countries worldwide, providing essential medicines to a diverse population across the globe.

In the last 40 years, the company has acquired numerous companies worldwide, including Taro Pharma, URL Pharma, Pola Pharma in Japan, Biosintez in Russia, and Ranbaxy.

Sun Pharma Company Analysis

Sun Pharma’s marketed portfolio comprises innovative specialty medicines, branded generics, pure generics, and APIs. The company’s business is divided into seven different clusters:

US Business
India Business
Emerging Market Business
Global Specialty Business
Rest of the World Business
Global Consumer Healthcare Business
API Business

Sun Pharma’s US Business comprises sales of specialty and generic medicines. It is the 10th largest generics pharmaceutical company in the US and ranked 2nd by prescriptions in the US dermatology market. In FY23, the US business contributed 31% to the company’s consolidated revenues.

The company’s India Business contributes 32% to the consolidated revenue with an 8.3% market share. It offers a comprehensive product portfolio across various therapeutic and other segments.

Sun Pharma is one of the leading pharmaceutical companies in the Emerging Markets Business, with a presence in 80 countries. It accounted for 18% of the consolidated revenue for FY23.

The Rest of the World Business includes Western Europe, Canada, Israel, Japan, Australia, New Zealand, and other markets. It contributed 14% to the consolidated revenue in FY23.

Sun Pharma’s Global Consumer Healthcare Business is among India’s top five consumer healthcare companies, with a science-based portfolio and footprints in 25 emerging countries. Some iconic brands in the portfolio include Revital, Volini, and Abzorb.

Sun Pharma’s next emerging business is API Business, which caters to captive needs while supplying large generics manufacturers and innovator companies. It accounted for 5% of the consolidated revenue for FY23.

Operating Segments

Sun Pharma derives all its revenue from the sale of pharmaceutical products. Hence no different business segments are reported. Therefore, the group reportable segments are geography.

India
United States of America
Emerging Markets
Rest of the World

Key Management Personnel

Dilip Shangvi is the Managing Director and leads the company’s operations.
Abhay Gandhi is the CEO of North America and looks after the business operations in US and Canada. He joined Sun Pharma in 1995 as DGM- Marketing.
Kirti Ganorkar is the CEO of India Business and joined the company in 1996.
S. Damodharan is the CEO of API Business.
Dr. Sapna Purohit is Senior Vice-President and Head of Human Resources and joined Sun Pharma in May 2018.
And C.S. Muralidharan is the group’s chief financial officer and has been associated with the company since June 2017.

Sun Pharma Shareholding Pattern

Sun Pharma Financials

Revenue

In FY23, Sun Pharma reported an 11.98% rise in total income to ₹44,520 crores, up from ₹39,756 crores in FY22. And, in Q1FY24, the total income was ₹12,145 crores, up by 12.8% compared to 10,763.9 crores in Q1FY23.

Segment-wise Revenue

	FY21 (in ₹ cr.)	FY22 (in ₹ cr.)	FY23 (in ₹ cr.)
India	10,958.3	13,443.8	14,162.4
United States of America	10,364.7	11,734.3	13,970.4
Emerging Markets	6,405.8	7,275.6	8,563.3
Rest of the World	5,504.1	5,972.5	6,582.7

EBITDA

In FY23, the company’s EBITDA increased by 12% to ₹11,646 crores, from ₹10,169 crores in FY22. And, in Q1FY24, EBITDA was reported at ₹3,313.8 crores, up by 15.5% compared to Q1FY23.

Net Profit

In FY23, Sun Pharma reported 159% year-on-year growth in net profit to ₹8,473.6 crores, from ₹3,272 crores in FY22. And, in Q1FY24, the company reported a 13.8% increase in net profit of ₹2,025 crores, over Q1 last year.

Financial Ratios

Current Ratio: At the end of FY23, the company’s current ratio was stable at 2x.
Debt-to-equity Ratio: Due to an increase in borrowing during FY23, the company’s debt-to-equity ratio increased by 300% to 0.12 times from 0.03 times in FY22.
Interest Coverage Ratio: At the end of FY23, the interest coverage ratio deteriorated by 21.3% to 56.7 times from 72 in FY22.
Return on Equity (ROE): The ROE for FY23 increased to 15.9% from 15% in FY22.
Return on Capital Employed (ROCE): In FY23, the ROCE of the company increased marginally to 16.5% from 16.4% in FY22. In FY20, the ROCE was 11%.
Reserves & Surplus: The company has a huge war chest of ₹55,755 crores at the end of FY23.

Sun Pharma Share Price Analysis

Sun Pharma’s initial public offering (IPO) took place in December 1994 and was a massive success in the market. The issue price was ₹150 per share, and it was 55 times oversubscribed. It went public at around ₹220 per share.

As on 7th August 2023, Sun Pharma share price has given a CAGR return of 30% and 15% over the last 3 and 5 years, respectively.

Sun Pharma share price has increased dramatically over the last five years, rising from ₹312 on March 30th, 2020, to ₹1166 on August 7th, 2023. It is trading near its all-time high level of ₹1200.80.

The company has a track record of consistently paying dividends to its shareholders. In the last three years, it has paid ₹7.5 in 2021, ₹10 in 2022, and ₹11.50 in 2023. Since it went public, the company had three bonus issues and split its shares twice. 100 shares held at IPO have turned 12,000 shares.

	Face Value	Ratio	Number of Shares
Pre-bonus and split share	₹10	–	100
Bonus Issue- 9th Feb 2000	₹10	2:1	300
Stock Split- 13th January 2003	₹5	10:5	600
Bonus Issue- 21st April 2004	₹5	1:1	1200
Stock Split- 24 January 2000	₹1	5:1	6000
Bonus Issue- 28th May 2013	₹1	1:1	12000

As of 7th August 2023, the market capitalization of Sun Pharma is ₹2.78 lakh crores.

Sun Pharma Fundamental Analysis

Sun Pharma is a leading global specialty generic drug maker with a market share of 8.3% in India and a well-diversified product portfolio of both Indian-branded and US formulations.

The company’s strategy is to produce therapy drugs, used to treat and prevent diseases. This strategy has paid off handsomely. For the global market, it focuses on three areas of therapy: Dermatology, Ophthalmology, and Onco Dermatology. Over the last five years, the international specialty business has been one of the key growth drivers.

US Formulations

US formulation refers to pharmaceutical products developed, manufactured, and approved for sale in the United States. These formulations are specifically tailored to meet the regulatory requirements and standards set by the U.S. FDA.

In FY23, US Formulations accounted for 31% of the consolidated revenue and ranked 2nd by prescriptions in the US dermatology market. The company has a market presence in specialty, generics, and OTC segments with a comprehensive product portfolio. Over the last five years, US Formulations’s revenue has grown at a CAGR of 4.76%, from ₹10,700 crores in FY19 to ₹13,500 crores in FY23.

Indian Formulations

The company’s Indian Formulations business accounted for 32% of the consolidated revenue in FY23 and is ranked no.1 by prescriptions with 12 classes of prescribers. And is a market leader in the chronic segment.

sp 1 — *Source: Q1FY24 Investor Presentation*

Over the last five years, the revenue from Indian Formulations is growing at a steady rate. It has grown at a CAGR of 13.25% during the period, from ₹7,300 crores in FY19 to ₹13,600 crores in FY23.

Emerging Markets and the Rest of the World

In the emerging markets category, the company has a presence in over 80 countries and offers a strong basket of branded generics. It contributed 18% to the consolidated revenues in FY23.

While the rest of the world contributed 14% to the consolidated revenue, where the company offered a wide range of specialty, hospital, and retail products.

API Business

The company’s API business contributed 5% to the consolidated revenue in FY23 and has a product portfolio of approximately 370 APIs. It provides strong backward integration, helping reduce its dependency on third-party suppliers and supplying large generic drug manufacturers.

Sun Pharma Share Price Growth Potential

The company continues to grow ,rapidly, aided by strong sales in the specialty segment and improved product mix. The US and Indian market accounts for more than 60% of revenue and is on the path to further improvement with new product launches and expansion to new geographies.

However, heightened regulatory scrutiny, NLEM (National List of Essential Medicines) related price reductions in India, pricing environment, supply chain issues, and competition are a constant drag for the company.

Indian Pharmaceutical Industry

According to government data, the market size of the Indian Pharmaceutical Industry is around $50 billion as of 2020-2021 and is expected to reach $130 billion by 2030. And the Indian generics market is one of the fastest-growing and most lucrative segments of the global pharmaceutical industry, driven by factors like cost competitiveness, high-quality standards, increasing demand, and favorable government policies.

It presents substantial growth opportunities for companies like Sun Pharma, which has a strong balance sheet and reserves on its book to help expand its business lines. And it is likely to have a positive impact on the price of Sun Pharma share price over the long term.

FAQs

Who founded Sun Pharma?

Sun Pharma was founded by Dilip Shangvi in 1983 in Vapi, Gujarat, and initially started with five products catering to psychiatric ailments. Before founding Sun Pharma, Dilip Shangvi was assisting his father in this wholesale drug business in Kolkata as a helper.

How has Sun Pharma share price performed in the last five years?

As of 7th August 2023, Sun Pharma share price has given a CAGR return of 30% in the last five years, rising from ₹312 on March 30th, 2020, to ₹1166 on August 7th, 2023.

How has Sun Pharma share price performed since its IPO?

Sun Pharmaceutical went public in 1994. Its IPO was priced at ₹150 per share and listed on the ₹220. The stock was split twice, and the company issued bonus shares three times. 100 shares purchased at the IPO has grown to 1200 shares.

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