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Fundamental Analysis of Stocks

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

Extended non-performance period and failure to surpass its IPO issue price of ₹ 36. Investors almost wrote off NHPC. 

But something changed for the stock in the last couple of years. A greater push for renewable energy and favorable government policies led to strong demand for the stock, helping it cross the ₹100 threshold for the first time on February 2, 2024. 

In this article, we will perform a fundamental analysis of the NHPC share price and examine the stock’s long-term growth potential. Let’s begin. 

What does NHPC Do?

NHPC is a state-owned hydropower generation company that develops, operates, and sells bulk power to state utilities. 

Recently, it has also diversified into developing solar and wind energy projects. 

As of 31st October 2024, the company operates 22 hydropower stations, five solar power projects, and one wind energy project, with a combined installed capacity of over 7,200 MW. 

Along with its multiple joint venture partners, NHPC is currently developing 15 renewable energy projects, a mix of hydro and solar, with an installed capacity of over 10,000 MW.

Apart from selling energy from all its renewable energy projects, it earns revenue from power trading, contract execution, project management, and consultancy work. 

NHPC Management Team

Shri Rajendra Prasad Goyal is the Chairman and Managing Director of NHPC and holds the additional charge of Director (Finance). He started his career with NHPC in 1988 as a Senior Accountant and rose through the ranks, serving the company on various key projects. He is an associate member of ICAI and holds a Master’s Degree in Commerce from the University of Rajasthan. 

Shri Uttam Lal is the Director (Personnel) and has over 35 years of rich experience in human resource policies, industrial relations, employee benefits, and learning and development. Before joining NHPC, he headed the HR functions of the R&D wing of NTPC. Shri Lal has a management graduate degree from XISS, Ranchi, with an additional qualification of Bachelor of Law (HRM) and Harvard Manage-mentor certification. 

Shri Raj Kumar Chaudhary is the Director (Technical) at NHPC, overseeing the development and operations of various projects in India and Bhutan. He joined NHPC in 1989 as a Probationary Executive (Civil) and rose through the ranks of his career to the post of Director (Technical). 

Shri Sanjay Kumar Singh is the Director (Projects), and before joining NHPC, he was the Chief General Manager of SJVN Ltd. He has over 32 years of experience in the Power & Infrastructure sector. Shri Sanjay holds a degree in B.Tech (Civil) and has worked at various levels for key project activities like Project Construction, Survey & Investigation, preparation of detailed project reports and cost estimates, project planning and execution, and many other things. 

NHPC Shareholding Pattern

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In the Domestic Institution segment, mutual funds in India hold a 3.63% stake in the company, and the Life Insurance Corporation of India has a 3.96% stake. 

NHPC Financial Performance

Revenue

In FY24, total income declined by 1.24% to ₹10,025 crores from ₹10,150.90 crores in FY23. 

And, in the first half of FY25, total income increased by 5.1% to ₹6,440 crores from ₹6,124 crores reported in the same period last year. 

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EBITDA

In FY24, EBITDA growth was flat and decreased slightly to ₹5,733 crore from ₹5,743 crore in FY23. However, the EBITDA margin improved to 68% in FY24 from 61.65% in FY23. 

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Net Profit

In FY24, NHPC recorded a 2.3% decline in net profit at ₹3,743.94 crores, down from ₹3,833 crores in FY23.

In the first half of FY25, net profit decreased by 21% to ₹2,177.74 crores from ₹2,788.64 crores reported in the same period last year. The company’s net profit margin declined to 37.90% at the end of H1FY25 from 49% at the end of H1FY24. 

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NHPC Financial Ratios

Current Ratio: At the end of Q2FY25, the company’s current ratio declined 1.15 times from 1.24 times recorded in the same period last year. 

Debt-Equity Ratio: At the end of Q2FY25, the debt-to-equity ratio increased to 0.90 times from 0.82 times in Q2FY24. 

Debt Service Coverage Ratio (DSCR): The company’s debt service capability declined significantly. At the end of Q2FY25, its DSCR was 2.05 times, down from 4.39 times at the end of Q2FY24. 

Return on Capital Employed (ROCE): At the end of FY24, the company’s ROCE was 6.85%. 

NHPC Share Price Analysis

NHPC shares were listed on 1 September 2009, and they were oversubscribed nearly 24 times. After their listing, investor response was muted, and the stock traded in a range-bound fashion below its IPO price for more than 10 years. 

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Source: Tradingview

On 15th July 2024, the NHPC share price reached an all-time high level of ₹118.40.  In the last three years, the NHPC share price made a remarkable turnaround and became a multibagger stock, growing by 37% annually. 

NHPC has a consistent dividend payment track record. Over the years, it has distributed more than 50% of its net profit as dividends to shareholders. In FY24, the dividend payout percentage was 53% of its net profit. 

In FY24, it paid ₹1.90 as dividend per share, ₹1.85 in FY23, and ₹1.81 in FY22.  At the current NHPC share price of ₹79, the dividend yield ratio is 2.40%.

NHPC Share Price Valuation Score

Earning Per Share (EPS)

The following is the last five years Earnings Per Share of NHPC:

FY20₹2.99
FY21₹3.22
FY22₹3.52
FY23₹3.82
FY24₹3.73

The company’s EPS growth has been moderate during the last five years and even decreased in the most recent fiscal year. It is important to note that a company’s share price rise is directly proportional to its earnings growth.

Price-to-Book VS Median Price-to-Book

The price-to-book value of NHPC’s share price is 2, while the 5-year median price-to-book value is 2. This indicates that the stock is trading at two times the book value compared to its historical averages. 

Source: Screener (24th Nov 2024)

Price-to-Equity VS Median PE

The current PE ratio of NHPC is 26.7, meaning investors are paying 26.7 times for every ₹1 of earnings. 

However, looking at the PE ratio in isolation doesn’t tell the full story. Therefore, we will compare it with a 5-year median PE.

As per data from the screener, the company’s 5-year median PE is 9.3. This means that at its current PE level, the stock is not trading at a premium compared to its historical valuations. 

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Source: Screener (24th Nov 2024)

Because the stock was trading sideways with no major upside momentum following its IPO, the median long-term PE is low, and after the recent surge, the stock appears overpriced.

Comparing the stock PE to a peer firm will provide a more accurate estimate of stock valuations.

For example, SJVN Ltd., a state-owned hydropower generation business, trades at a PE of 45.7 times and has comparable financial metrics. This indicates that NHPC sells at a lower premium than its peer, SJVN.

NHPC Future Growth Outlook

The nature of its business restricts NHPC’s pursuit of aggressive growth in the hydropower segment. However, its recent diversification to solar and wind energy businesses provides the company with new growth opportunities.

Factors to look out for that could drive the earnings of the company:

Expansion Plans: The company has 10,402 MW of hydro and solar projects under various stages of construction, 4,112 MW of projects awaiting clearance, and 4,110 MW under survey & investigation, providing a long-term growth runway.

Flat revenue growth: In the last five years, the company’s compounded annual revenue growth has been 1%. A longer project execution timeline and flat revenue growth are key risks for NHPC’s share price growth. 

The company’s operating margins are high, but due to the capital-intensive nature of the business and higher non-classified expenses, the net earnings margin is lower. A boost in earnings per share is crucial for the long-term growth of its shares. 

Favorable Government Policies: In a bid to achieve 500 GW of renewable energy capacity by 2030, the government is supporting renewable energy companies through various policy initiatives, helping them grow and strengthen their balance sheets. 

Environmental and Hydrological Risks: Adverse weather conditions, unfavorable hydrology, and variations in water flows can affect power generation and the company’s operational performance. 

Regulatory Risks: Changes in regulatory regulations, particularly tariff adjustments, can impact NHPC’s revenue and profitability. While producing stable returns, the cost-plus tariff regime is subject to regulatory changes.

FAQ

  1. Is NHPC a solar company?

    NHPC is a state-owned hydropower generation company that recently diversified into developing solar and wind energy projects. 

  2. How has NHPC’s share price performed in the last 3 years?

    As of 24 November 2024, the NHPC share price has returned 37% annually in the last three and five years.

  3. Does NHPC pay dividends to shareholders?

    NHPC has a consistent track record of paying dividends to its shareholders, with a dividend payout ratio of 50% compared to net profit. In FY24, it paid ₹1.90 per share as a dividend.

This railway multibagger stock has caught everyone’s attention in the market. IRFC share price has reached an all-time high of ₹229 on 15th July 2024, rising more than 800% since its IPO in January 2021. And, investors continue to bet heavily on this stock. 

IRFC stands for Indian Railway Finance Corporation, and its primary task is to meet Indian Railways’ financial requirements by borrowing funds from financial markets. In short, IRFC is a funding arm of Indian Railways. 

In this article, we will analyze the IRFC share price and delve deeper into its financials. Let’s start. 

What does IRFC do?

IRFC is a public sector enterprise under the administrative control of the Ministry of Railways. It was incorporated on 12th December 1986 as a dedicated financing arm of Indian Railways to mobilize funds from domestic and overseas markets. 

Its primary business is to finance the acquisition of rolling stock assets of Indian Railways including locomotives, passenger coaches, wagons, electric multiple units and leasing these assets to other entities under the Ministry of Railways. 

All of these assets are leased for up to 30 years and lease rentals serve as the primary source of revenue for the company. The lease is divided into blocks of two 15-year periods. In the first 15 years, the lessee pays the principal amount for the leased assets, followed by a rent of ₹1 lakh per annum for the remaining 15 years, or until the asset is sold off before the lease period ends. 

So far, IRFC has funded the acquisition of 13,764 locomotives, 76,735 passenger coaches, and 2,65,815 wagons, accounting for approximately 75% of the total rolling stock fleet of Indian Railways. 

It is also lending to other railway entities like RVNL, Railtel, Konkan Railway Corporation Limited, and Pipavav Railway Corporation Limited, etc. 

IRFC raises funds through issue of both taxable and tax-free bonds and term loans from banks and financial institutions. 

IRFC Management Team

Smt. Usha Venugopal is the Chairman and Managing Director of IRFC from 1st August 2024. She is an Indian Railways Account Service (IRAS) officer of 1987 batch and has over 35 years of experience handling various key roles in the Ministry of Railways. 

Ms. Uma Ranade is the CEO and Railway Board has given her additional charge of CMD. She is a 1986 batch IRAS officer with over 35 years of experience in various Railway divisions and the Ministry of Railways. 

Ms. Shelly Verma is the Director (Finance) of IRFC. She holds B.Com degree from Shri Ram College of Commerce, Delhi and is a fellow member of ICAI. Prior to joining IRFC, she was with Power Finance Corporation as Executive Director (Finance) and has more than 30 years of experience in power sector financing. 

Shareholding Pattern

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The shareholding pattern shows that mutual funds and other institutional investors own a small stake in the company.

The company’s free-float is close to 14%, which means that only 14% of its shares are available for trading. When compared to IRCTC, the free float is nearly 38%.

When demand for shares rises, a lower free float frequently causes a sharp increase in share price.

IRFC Financials

Total Income

In FY24, the company’s total income increased by 12.2% to ₹26,656 crores from ₹23,763 crores. 

And, in the first half of FY25, IRFC’s total income increased marginally by 1.7% to ₹13,666.22 crores from ₹13,437.93 crores. 

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Net Profit

In FY24, net profit of the company increased by 4% to ₹6,412 crores from ₹6,167 crores.

And, in H1FY25, IRFC’s net profit increased by 3% to ₹3,189.47 crores from ₹3,095.86 crores. 

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Asset Under Management

Asset Under Management or AUM reflects the total market value of all assets that the company manages for its clients. In IRFC’s case, Indian Railways is the primary client. 

At the end of FY24, IRFC managed assets worth ₹4.64 lakh crores and at the end of H1FY25, AUM marginally declined to ₹4.62 lakh crores.

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Asset Quality 

IRFC is one of the few NBFCs in India with no NPAs. This is because all loans are guaranteed by the Indian government, allowing it to operate with a low-risk business model and borrow funds at low rates

Also, the Government of India has exempted IRFC from paying any income taxes. 

IRFC Share Price Analysis

IRFC shares were listed on 29th January 2021 and made a quiet start around its IPO issue price. Eventually, IRFC share price exploded to make an all-time high of ₹229 on 15th July 2024, around 9 times its listing price. 

As of 15th November 2024, IRFC market cap stands at ₹1,82,515 crore and is trading at ₹140 per share. 

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Source: Tradingview

IRFC has a good dividend payment history. In 2021, the dividend per share was ₹1.43, ₹1.5 in 2023, and ₹1.5 in 2024.

As of 15th November 2024, the dividend yield of IRFC stands at 1.07.

Earning Per Share (EPS)

EPS is an essential metric to assess whether a company is enhancing its profitability per share over time. Consistent flat EPS growth suggests that the company isn’t generating sufficient profit for its shareholders.

The following is the last five years EPS of IRFC.

FY20₹3.93
FY21₹3.66
FY22₹4.66
FY23₹4.85
FY24₹4.91

Over the last five years, IRFC reported a marginal increase in EPS. Consistent growth in earnings is important for rise in share price. 

Return on Equity (ROE)

Return on Equity is calculated by dividing the net profit by shareholder’s fund or equity. 

The following is the last 5 years ROE of IRFC:

FY2011.92
FY2112.29
FY2214.85
FY2313.93
FY2413.03

The five year average ROE of IRFC is 13.20%. 

A consistent ROE of 15% or higher is generally considered good as it indicates that the company is effectively using shareholder’s equity to generate profits. 

Return on Assets (ROA)

Return on assets is another profitability metric that is especially important for banks and NBFCs, which have an asset-heavy balance sheet. It is calculated by dividing net profit by total assets. 

The following is the last five year ROA of IRFC. 

FY201.33
FY211.16
FY221.35
FY231.29
FY241.32

The five year average ROA of IRFC is 1.29.

A ratio of more than one indicates that a company is generating more profit than the value of its assets. 

Price-to-Book VS Median Price-to-Book

For banking and NBFC stocks, the price-to-book ratio is the more appropriate ratio to measure valuations.

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Source: Screener (15th Nov 2024)

IRFC is trading at a price-to-book value of 3.5 times, while the 5 year Median Price-to-book value is 0.9 times, which means, it is trading at higher valuation compared to historical averages. 

Future Growth Potential of IRFC

The growth of IRFC is dependent on the growth of Indian Railways and its ability to raise low-cost funds.

In FY25, the Government of India has allocated a record ₹2.62 lakh crore in capex, a significant increase from ₹28,174 crores in FY14. The money will be spent on modernization of Indian Railways, new infrastructure development, and improving passenger safety and experience. 

Recent developments, such as the introduction of Vande Bharat train sets and Vande Bharat Sleeper train sets, the conversion of train rakes from ICF to LHB coaches, the transition to a fully electrified network, and the Dedicated Freight Corridor, have all contributed to an increase in demand for rolling stock within the Indian Railways.

The India’s railway and metro rolling stock market is expected to reach ₹4.75 lakh crores in the next five years, growing at a CAGR of 46%, showcasing huge growth potential for IRFC. 

One of the biggest advantages of IRFC is its low risk business model and predictable business growth. Recently, it has diversified its lending activities to financially viable project financing, And, it is the sole player in its business, giving it a long runway of growth.

However, in the event of unfavorable policy changes by the Ministry of Railways, it can adversely impact the growth of the company and IRFC share price. 

FAQ on IRFC Share Price

  1. When was IRFC incorporated?

    IRFC was incorporated on 12th December 1986 to raise money from the debt capital market to meet the extra budgetary requirements of Indian Railways in financing rolling stocks. 

  2. How has IRFC share price performed in the last three years?

    IRFC share price hit an all time high of ₹229 on 15th July 2024. Its shares were listed on 29th January 2021 at around ₹25, recording a CAGR of 79% over the last three years.

  3. Is IRFC a profitable company?

    Yes, IRFC is a profitable company and has recorded a profit growth of 4% to ₹6,412 crores in FY24.

Introduction:

The Public Sector Undertaking (PSU) bank sector is a key part of India’s banking system, comprising banks where the government holds a majority stake. This ownership ensures that these banks operate in the public interest. The growth of PSU banks aligns closely with national economic policies and efforts toward financial inclusion. The ongoing reforms and the government’s push for digital banking in 2024 have positioned PSU banks to adopt new technologies that enhance their services and operational efficiency. This growth is reflected in the NIFTY PSU Bank index, highlighting the sector’s positive trajectory.

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Source: NSE

To make the best out of this growth, you can either invest in the index itself or a PSB like the Canara Bank. But before deciding on the investment, let’s take a look at the Canara Bank stock rate and use fundamental analysis to evaluate the Canara Bank stock price

Canara Bank Overview:

Canara Bank, known for its customer-centric approach, was established in July 1906 in Mangalore, Karnataka. Over its more than a century-long journey, the bank has experienced significant growth, especially after nationalization in 1969, which propelled it into a national player with extensive geographical reach and diverse clientele. The 1980s marked a period of business diversification for the bank. In June 2006, Canara Bank celebrated a century of operations in the Indian banking sector and later merged with Syndicate Bank in April 2020.

Today, Canara Bank is a major financial conglomerate with thirteen subsidiaries and sponsored institutions. It serves over 11.42 crore customers through a vast network of 9,627 branches and 12,256 ATMs across India. As of June 2023, it holds a market share of 6.2% in net advances and 6.5% in total deposits. The bank excels not only in commercial banking but also in corporate social responsibility. It focuses on national priorities, promotes rural development, and enhances self-employment through training institutes while advancing financial inclusion.

Canara Bank has consistently maintained a balanced asset mix, emphasizing sectors like agriculture and Micro, Small, and Medium Enterprises (MSMEs) alongside retail assets such as housing, education, and vehicle loans. As of March 2024, the bank’s capital adequacy ratio stood at 16.28%, well above the regulatory requirement of 11.5%. In FY 2023-24, it raised infrastructure bonds to diversify funding sources, totaling Rs.10,000 crore at competitive rates.

Shareholding Pattern:

The shareholding pattern of Canara Bank as of the quarter ending September 2024 is as follows-

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Source: Company Report

Key Management Personnel:

Canara Bank was started by Shri Ammembal Subba Rao Pai in 1906. As of the financial year ending March 2024, the bank operates under the leadership of the following key management personnel:

  1. Shri Vijay Srirangan (Non-Executive Chairman):

Shri Vijay Srirangan, a Gold Medalist from IIM Ahmedabad (PGDBM) and IIT Delhi (B.Tech), brings extensive experience to his role since November 2022. He was the Director General and Mentor at the Bombay Chamber of Commerce & Industry. Previously, he spent 36 years with Tata Group, serving in leadership roles at Tata Consultancy Services, Tata Infotech, Tata Unisys, and Tata Burroughs. His responsibilities ranged from training and research to international sales and systems integration.

  1. Shri K Satyanarayana Raju (MD and CEO):

Shri K. Satyanarayana Raju, a Physics graduate with a postgraduate degree in Business Administration (Banking and Finance), began his banking career in 1988 at Vijaya Bank. He rose to Chief General Manager at Bank of Baroda, leading branches and serving as Zonal Head of Mumbai. He also held key roles in operations and services at the head office and was on the board of BoB Financial Solutions Limited. Currently, as Executive Director of Canara Bank since March 2021, he oversees various functions, including IT, digital banking, MSME, and corporate credit. 

  1. Dr. Parshant Kumar Goyal (Director representing the Government of India):

Dr. Parshant Kumar Goyal, IAS, serves as Joint Secretary in the Department of Financial Services, Ministry of Finance, focusing on Financial Inclusion and Digital Payments. Earlier, as director of the same department, he handled agriculture credit and regional rural banks. He has also served as Secretary to the Chief Minister of Tripura, managing additional portfolios in the GA (C&C) and Industries & Commerce departments.

Canara Bank Financials:

  1. Operating Profit:

Operating profit reflects the income generated from its core activities like lending, deposits, and other financial services, minus the operating expenses such as salaries, rent, and administrative costs. As of the financial year 2023-24, the operating profit for Canara Bank was Rs.29413 crore. The trend of operating income over the last few years is as under-

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Source: Annual Report

  1. Net Profit:

One of the primary measures of profitability, the net profit, for Canara Bank has been increasing since the bank incurred losses in 2019-20. As of the financial year 2023-24, the net profit of the bank was Rs.14554 crore. The trend of net profit over the last few years is as under-

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Source: Annual Report

  1. Net Interest Income:

Net Interest Income represents the bank’s profitability earned through its core activities. As of the financial year ending March 2024, the bank’s net interest income stands at Rs.36566 crore, which was 16.32% more than the NII of FY2023 (Rs.31435 crore). The trend for the NII of the bank over the last few years is as under-

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Source: Annual Report

  1. Deposits:

Deposits are a major source of funding for a bank, representing the money customers leave in savings, checking, or fixed accounts. For a bank, a growing deposit base means it has a larger base for lending, and its ability to generate income is good. A stable deposit trend indicates consistency and a lower base could signal a doubt in the bank’s ability to lend and earn. As of the financial year 2023-24, Canara Bank received a total deposit of Rs.22,72,968 crore, of which the CASA deposits were Rs.392327 crore, 7.06%. The trend for deposits received by Canara Bank over the last few years is as under-

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Source: Annual Report

  1. Advances:

Advances refer to the loans and credits extended by a bank to its customers. Interpreting a bank’s advances reveals the bank’s risk exposure and profitability. Higher advances indicate active lending and is considered positive when driven by a healthy demand and good credit quality. However, this needs to be examined in combination with risk management and the bank’s NPA. As of FY2024, Canara Bank’s advances stood at Rs.960602 crore. The trend for advances as per the bank’s loan book over the last few years is as under-

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Source: Annual Report

Key Financial Ratios for Canara Bank:

  • Capital Adequacy Ratio: The bank’s capital adequacy ratio is 16.28%. This means that for every Rs.100 of risk-weighted assets, the bank has Rs.16.28 in capital. The ratio highlights the bank’s healthy cushioning for organic growth in the forthcoming quarters and the bank’s ability to absorb potential losses.
  • Net NPA Ratio: The net NPA ratio is 1.27%, meaning that out of every Rs.100 lent, Rs.1.27 is classified as non-performing. A lower NPA ratio shows effective credit management and a lower risk of bad loans.
  • Return on Equity: The return on equity is 22.06%. This indicates that for every Rs.100 of equity invested by shareholders, the bank generated Rs.22.06 in profit, reflecting strong profitability.
  • Return on Average Assets: The bank’s RoAA is 1.01%. This means that for every Rs.100 of assets, the bank earned Rs.1.01 in profit. A higher ROAA shows better asset utilization.
  • Net Interest Margin: The net interest margin is 3.05%, meaning that for every Rs.100 of interest-earning assets, the bank earns Rs.3.05 in net interest income. A higher NIM shows the bank’s efficiency in earning from its lending activities.
  • CASA Ratio: The CASA ratio for Canara Bank is 32.29%. This means that 32.29% of the bank’s total deposits come from low-cost current and savings accounts, reflecting a stable and cost-effective source of funding for the bank.

Source: Annual Report

Canara Bank Share Price Analysis:

A registered investment advisor evaluates a company share using analysis techniques and a stock screener. Canara Bank was listed on the NSE in December 2002. Since then, the stock has generated gains of over 900%. As of 24th October 2024, the market cap of Canara Bank stands at Rs.89,101.01 crore, and its share price stands at Rs.98.22, more than the Bank of Maharashtra share price (Rs.50). 

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Source: MoneyControl

Over the last twelve months, the stock has grown 38.07% as of 24th October 2024. It has surpassed the growth levels of the major indices NIFTY50 (26.42%) and SENSEX (23.92%). 

FY2024 Performance Highlights of Canara Bank:

  • The bank’s global business grew by 11.31% in FY 2023-24, reaching Rs.22,72,968 crores, with global deposits increasing by 11.29%.
  • Its retail portfolio saw an 11.68% growth, reaching Rs.1,56,414 crores. Housing loans rose by 10.81% to Rs.93,482 crores, vehicle loans by 14.03% to Rs.17,251 crores, and education loans grew by 6.65% to Rs.15,726 crores.
  • Advances to agriculture and allied activities increased by 18.69%, reaching Rs.2,53,206 crores, while advances to the MSME segment grew by 6.67% to Rs.1,31,869 crores by March 2024.
  • The bank’s yield on advances rose by 101 basis points, from 7.70% in March 2023 to 8.71% in March 2024.
  • In January 2024, Canara Bank inaugurated its Data and Analytics Center (DnA) in Bengaluru, setting a benchmark in the Indian banking sector.
  • The bank introduced API Banking to provide seamless digital banking services for corporate customers.
  • Canara SHG E-money, a unique digital initiative in partnership with the Reserve Bank Innovation Hub, now offers doorstep digital services to Self-Help Groups (SHGs).
  • The bank has partnered with NEC Corporation and HPE for Data Lake House implementation and with Microsoft for establishing an Advanced Analytics Platform and Data Lake in the cloud.

Source: Annual Report

Bottomline:

In FY2024, Canara Bank introduced API banking for corporate customers and launched Canara SHG E-money with the Reserve Bank Innovation Hub. Embracing digital transformation, it uses advanced analytics and cloud-based solutions to enhance customer service. The bank aims to increase low-cost deposits by offering innovative, customized products, striving to be recognized as the “Best Bank to Bank With.” Investing in Canara Bank could be a way to participate in the growth of India’s banking sector. However, when deciding whether to invest in Canara Bank or another option, remember to consider fundamental analysis vs. technical analysis. Use a stock screener to compare your investment choices with your financial goals. If necessary, consult a registered advisor for guidance.

FAQs

  1. What is the principle of Canara Bank?

    Canara Bank’s founding principles emphasize saving and thrift. It aims to be the community’s social heart, dedicated to assisting those in need. This sense of service mirrors the difference between fundamental and technical analysis in investing—each has its unique value and purpose.

  2. What is Canara Bank famous for?

    The bank is widely known for its customer-centricity.

  3. Is Canara Bank a good stock to buy?

    Canara Bank is a growing public sector bank in India. It can be a good investment opportunity; however, you should decide to invest only after thoroughly analyzing all the market and company parameters.

Introduction:

India’s banking system has remained one of the most stable globally, even during times of global uncertainty. It has a healthy structure with low non-performing loans and strong capital and liquidity buffers. Increased infrastructure spending, quick project implementation, and ongoing reforms are set to further boost the sector’s growth for both PSU banks and private banks. This building opportunity is also reflected in the NIFTY PSU Bank index’s yearly gains of 33.35% as of 23rd October 2024. 

Source: NSE

The growth in the industry can be leveraged by investing in the stocks of PSU banks like the Bank of Baroda. So, what is the Bank of Baroda share value? And how do investment advisory firms evaluate the BOB share price using fundamental analysis? Let’s understand. 

Overview of Bank of Baroda:

Bank of Baroda, often called BoB, is a nationalized bank headquartered in Vadodara, Gujarat. It was founded in 1908 by Maharaja Sayajirao Gaekwad III, initially serving as a private bank for the princely state of Baroda. In 1969, it was nationalized by the Government of India, which now holds a 63.97% stake. In 2019, the Bank of Baroda merged with Vijaya Bank and Dena Bank, making it India’s third-largest public sector bank. It offers a range of services, including personal, corporate, international, SME, rural, and NRI banking, along with treasury services. 

The bank is known for its digital presence through the ‘Bob World’ app, which provides 185+ banking services online. For net banking, the service is called Baroda Connect. BoB has an extensive network with around 8,168 branches in India, 94 branches abroad, and 11,475 ATMs, with 35% of its branches in rural areas. It also operates 150 currency chests across the country. 

Share Holding Pattern:

The shareholding pattern of the bank as of the quarter ending September 2024 is as follows-

AD 4nXePlA6KIE4BMK6Ke860 HFRCwHmTrPd8xXle7stziduw1X14aYhKM5E9tBeINELBDq9qrtDZIIFJo RIqzAKKSTDj5Id9hkoq tkV26FoOnxk9Zntt3S0WG4cUBLtCVo5PJryo TlPA8gK6O1gDCJoHvdHn?key=Mey6a9iBqIAf9HmMpcEFdw
Source: Company Report

Key Management Personnel:

The Bank of Baroda was founded on 20th July 1908 by Maharaja Sayajirao Gaekwad III, the Maharaj of Baroda. As of FY2024, the bank operates under the leadership of the following key management personnel:

  1. Shri Debadatta Chand (MD and CEO):

Shri Debadatta Chand became the Managing Director and CEO of the Bank on 1st July 2023. With over 29 years of experience in banking and finance, he holds a B.Tech, an MBA, CAIIB, a Post Graduate Diploma in Equity Research, and a Ph.D. in Management.

Shri Chand started his career at Allahabad Bank in 1994 and worked at SIDBI before joining PNB in 2005. He became Executive Director at Bank of Baroda, overseeing corporate credit, institutional banking, treasury, and foreign exchange, before becoming MD & CEO in July 2023.

  1. Chayani Manoj Sundar (CFO):

Chayani Manoj Sundar became the Chief Financial Officer (CFO) of Bank of Baroda on June 21, 2024. With over 19 years of experience in banking, he specializes in financial and credit operations. Sundar is a chartered accountant at ICWA with a bachelor’s degree in commerce. He succeeded Ian Gerard Desouza in this role.

  1. Mr. Ravindra Singh Negi (Chief Risk Officer):

Mr. Negi is a seasoned banker with over 25 years of experience at the Bank of Baroda. He has expertise in risk management, treasury, corporate and retail credit, international banking, and general branch operations. Since 1st May 2024, he has served as the Group Chief Risk Officer (GCRO). 

Before this, he oversaw global operations as the Deputy Chief Risk Officer for over two years. He also led the Bank’s GCC operations as CRO in Dubai and headed the Global Mid Office (Treasury) during his 11.5-year journey in risk management.

Bank of Baroda Financials:

  1. Net Interest Income:

Net Interest Income (NII) is the difference between the interest a bank earns from its lending activities (like loans, mortgages, and other credit products) and the interest it pays to depositors on savings accounts, fixed deposits, or other forms of borrowing. It’s the profit a bank makes from its core business of lending money after covering the cost of funds it provides to customers. As of FY2024, the bank’s NII was Rs.44,721.53 crore. 

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Source: Annual Report

  1. Net Profit:

Bank of Baroda’s net profit has been growing consistently after the loss incurred in 2017-18, and it increased significantly in 2021-22. As of FY2024, the bank’s net profit was Rs.17,788.78 crore. 

AD 4nXdPKrO0aZJp7 ZZgNiKZDC3KUDf9S9Fcsxswt8bXMF1YEzdNrQvfdHa7iM5YWnXmnptkLWVjLeVo3AFRGzBWSmiSJA2i4e1xjzJaq1dTqsld0vJkpPdC7YI xV pq DnsJAT 3kwgmLjNg0sxinNYv2 aRm?key=Mey6a9iBqIAf9HmMpcEFdw
Source: Annual Report

  1. Deposits:

Deposits represent the funds that customers place in the bank, such as savings accounts, fixed deposits, and current accounts. These are liabilities for the bank because the bank owes this money to its customers. As of FY2024, the total deposits for the bank reached Rs.13,26,958 crore, and the CASA deposits of Rs.5,14,366 crore. 

Financial YearTotal Deposits (Rs. Cr.)CASA Deposits (Rs. Cr.)
2017-185,91,314.81,92,323.1
2018-196,38,689.72,08,403.8
2019-209,45,985.43,15,952.4
2020-219,66,996.93,68,027.6
2021-2210,45,938.564,10,122.92
2022-2312,03,687.794,75,096.83
2023-2413,26,9585,14,366

Source: Annual Report

  1. Advances:

Advances refer to the loans or credit the bank provides to individuals or businesses, including home loans, personal loans, and business loans. They are assets for the bank since it earns interest income from borrowers. As of FY2024, the bank’s net advances were Rs.1065781.72 crore. 

Financial YearAdvances (Rs. Crore)
2017-184,27,431.8
2018-194,68,818.7
2019-206,90,120.7
2020-217,06,300.51
2021-22777155.18
2022-23940998.27
2023-241065781.72

Source: Annual Report

Key Financial Ratios for Bank of Baroda:

As of the financial year ending March 2024, the key financial ratios are as follows-

  • Net Interest Margin (NIM): The bank’s NIM is 3.18%, meaning that for every Rs.100 of interest-earning assets, the bank earns Rs.3.18 in net interest income. A higher NIM generally indicates better profitability from the bank’s lending activities.
  • Earnings Per Share (EPS): The bank’s EPS is Rs.34.40, which means that the bank earned Rs.34.40 in profit for each share. A higher EPS generally indicates better profitability per share for investors.
  • Return on Average Assets (ROAA): The bank’s ROAA is 1.17%, meaning it earned Rs.1.17 for every Rs.100 of its average assets. The ratio indicates how efficiently the bank uses its assets to generate profit.
  • Return on Equity (ROE): The bank’s ROE is 18.95%, indicating that for every Rs.100 of shareholders’ equity, the bank earned Rs.18.95 in profit. This suggests a strong return on the money invested by shareholders.
  • Capital Adequacy Ratio (CAR): The bank’s CAR is 16.31%, which means it has Rs.16.31 in capital for every Rs.100 of risk-weighted assets. A higher CAR indicates a strong capital base to absorb potential losses.
  • Cost-Income Ratio: The bank’s cost-income ratio is 47.71%, meaning it spends Rs.47.71 for every Rs.100 it earns in income. A lower ratio is generally favorable, as it shows better operational efficiency.
  • Net Non-Performing Assets (Net NPA): The bank’s Net NPA is 0.68%, which means that for every Rs.100 of loans, only Rs.0.68 is classified as non-performing or bad loans. A lower NPA reflects better asset quality and lower credit risk.

Source: Annual Report

Bank of Baroda Share Price Analysis:

The BOB share price can be analyzed using both techniques of analysis. Thus, there is no question of fundamental analysis vs technical analysis to determine the right outcome. Bank of Baroda was listed on the NSE in February 1997. As of 23rd October 2024, the bank’s market cap is Rs.1,23,155.99 crore, and its share price is Rs.238.66, more than the Bank of India share price of Rs.98.78. Since its inception, the stock has given a return of over 1700%. 

As of 23rd October 2024, the stock has returned 21.87% over the past twelve months, lower than the index growth of 33.35% for the same year. Moreover, the stock’s growth is also lower than the one-year returns of NIFTY (26.55%) and SENSEX (23.81%) as of the same date. 

Source: Money Control

Other Performance Highlights of Bank of Baroda:

  • The bank’s domestic CASA grew 5.4% year-on-year, reaching Rs.4,66,401 crore in FY 2024.
  • Global gross advances increased to Rs.10,90,506 crore in FY 2024, compared to Rs.9,69,548 crore in FY 2023. This represents a 12.5% year-on-year growth.
  • The bank’s net worth for FY 2024 rose to Rs.93,850.76 crore. This includes paid-up equity capital of Rs.1,035.53 crore and reserves of Rs.1,11,188.05 crore.
  • The UPI remittance success rate for the bank stands at 92% for FY2024.
  • In March 2024, the bank implemented a Green Finance Framework to raise Green Deposits and support credit flow for green activities.
  • An MOU was signed with KFW, a multilateral finance agency, under the “Solar Partnership—Promotion of Solar/PV in India” program. This program aims to refinance investments in solar energy at competitive interest rates.
  • The bank also entered into an MOU with IREDA. This collaboration focuses on co-lending and co-origination for renewable energy projects, along with loan syndication and underwriting.

Source: Annual Report

Bottomline

Bank of Baroda’s shares currently have a PE ratio of 6.80, a generally accepted PE level in the market. The bank’s financial performance in FY2024 shows promising growth, driven by increased CASA, advances, and successful initiatives in green finance and renewable energy partnerships.

However, deciding whether to invest in the Bank of Baroda or another bank should depend on your analysis using a stock screener, financial profile, and investment objectives. If necessary, seek the help of a registered stock advisor and align your decisions with your long-term goals before investing. 

FAQs

  1. What is the overview of the Bank of Baroda?

    Bank of Baroda (BOB) is a government-owned public sector bank based in Vadodara, Gujarat. It is India’s third largest public sector bank, following the State Bank of India. As of 2023, it is the 586th largest company on the Forbes Global 2000 list.

  2. What are the pillars of the Bank of Baroda?

    The bank stands on the pillars of reliability, transparency, and integrity.

  3. What is the Bank of Baroda famous for?

    Bank of Baroda is famous for its domestic presence and digital initiatives.

Tata Tele (Maharashtra) Limited (TTML), Tata Group’s telecom arm, offers a wide range of enterprise telecommunications services, both wired and wireless. It provides services under the name Tata Tele Business Services (TTBS).

Incorporated on March 13th, 1995, Hughes Ispat Limited secured essential telecom licenses to offer cellular services in the Maharashtra region. In December 2002, the company was acquired by Tata Group and renamed Tata Tele Maharashtra Limited. 

The company has been struggling to achieve growth due to rising competition. However, with Tata Sons infusing nearly ₹60,000 crore for debt payments in the past six years, could this become a turnaround stock? Let’s dive into the analysis of TTML share price.

What does TTML Do?

Operating under the Tata Tele Business Services (TTBS), it offers connectivity and communications solutions for businesses in Maharashtra and Goa. 

TTBS offers India’s businesses the most extensive information and communication technology (ICT) services, including connectivity, collaboration, cloud, security, IoT, and marketing solutions. 

The company also operated a consumer mobile business, partnering with Docomo and Tata Teleservices, but it later suspended operations due to unsustainable competition. On July 1, 2019, it sold its consumer mobile business to Bharti Airtel.

TTML Business Overview

The company has a fiber optic network of over 1.3 lakh KM, offering a comprehensive portfolio of smart digital solutions. It includes

  • Cloud Infrastructure
  • Cybersecurity Solutions
  • Managed Services
  • Business Communications
  • Network & Connectivity
  • Communication Suite for Collaboration & Productivity

TTBS primarily focuses on catering and empowering micro, small, and medium enterprises spanning various industries. 

TTML Management Team

Mr. Amur S. Lakshminarayanan is the TTML’s Chairman and a Tata Group veteran. And has also been MD & CEO of Tata Communications since November 2019. He is an engineering graduate from BITS Pilani. Before joining Tata Communication, he was President and CEO of TCS, Japan. 

Mr. Harjit Singh is the Managing Director and CEO of TTML and is responsible for the company’s growth and expansion as a leading digital service provider in the MSME category. He is also a Tata veteran and has been associated with companies such as Tata Housing, Tata AutoComp Systems, Tata Communication, and Neotel before joining TTML in 2019. 

Mr. Shinu Mathai is the Chief Financial Officer of TTML and joined the company in March 2004 and worked in various leadership roles. 

TTML Shareholding Pattern

The company’s shareholding pattern has not changed significantly over the last year, and no mutual funds have invested in it. 

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TTML Financial Performance Review

Revenue From Operations

In the last four financial years, TTML’s revenue from operations has grown at a lower single digit of 3.37% annually. In FY24, the company posted ₹1,191.65 crore in revenue from operation, up from ₹1,106.7 crore in FY23. 

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In Q1FY25, the company’s revenue from operations increased by 13.31% year-over-year to ₹323.50 crore from ₹285.51 crore in Q1FY24. 

EBITDA

The company’s EBITDA rose marginally in the last four years, from ₹500.3 crores in FY21 to ₹536 crores. The EBITDA margin is maintained at 45%. 

AD 4nXeMe8DKJUCRRDcUOYnu340tUphT JV0yxaD47 qMFFLD5JNtpVRqccLgN0qqqRsYI71zIgS7Su9RwtoNllyM6OBtJcLWrhKQgadKUZV9LeZ4 jNhueyNRDdzEsuyIMT3tG07jM8G 6Jrb2a2prboAH2pfGI?key=Y5 XMi2GLrd 9wgmsECp5Q

In Q1FY25, the company’s EBITDA was reported at ₹138.53 crores, up from ₹127.20 crores in Q1FY24.

Profit After Tax

Because of higher interest expenses, the company is reporting losses which are greater than its revenue.

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The company reported a net loss of ₹323.40 crore in Q1 FY25, compared to a loss of  ₹301.18 crore in Q1 FY24.

TTML Key Financial Ratios

Current Ratio: The company’s ratio deteriorated in FY24 to 0.54 times from 0.64 times in FY23. 

Debt-to-equity Ratio: The debt-to-equity ratio has stayed constant at 1.04 times for the last two financial years. 

Interest Service Coverage Ratio: This metric measures the company’s ability to pay its debt interest costs. It has deteriorated to 0.80 times in FY24 from 0.85 times in FY25, indicating that the company is falling short of meeting interest costs in a financial year. 

Debt Service Coverage Ratio (DSCR): Similar to the interest service coverage ratio, this ratio indicates a company’s ability to repay debt. In FY24, DSCR was 0.08 times, improving marginally from 0.06 times in FY23. It suggests the company lacks enough financial means to repay its debt. 

TTML Share Price Analysis

The company has not created wealth for its investors. Tata Tele was listed on the stock market in October 2000, while its previous owner still owned it. The IPO’s issue price was ₹12. 

Because of the stiff competition in the telecom space following Jio’s arrival in 2016, TTML lost most of its market share due to the closure of its cellular operation, and its share price dropped to the level of a penny stock. However, it bounced back due to the strong performance of its enterprise business. 

TTML share price was trading at ₹2.70 on 14th October 2019 and made a high of ₹290 on 10th Jan 2022. It is currently trading around ₹80 level for quite some time now. 

AD 4nXfmAAL dXQLfaeXBw0D5ou lhuV68cXSWeUHxXGBnNIQPT2pDOthmD CoxfBg7Wk43oVgykidWSG63KLs6ZoogZfn3sUfhzbOKADoksD emRBJecuVsNqODolsdJxIpNrp96hJcRIWFiWvCQRXveUkNPh C?key=Y5 XMi2GLrd 9wgmsECp5Q
Source: TradingView

The company has no history of paying dividends. In August 2013, the company issued bonus shares at a 2:15 ratio, which means that for every 15 shares held, shareholders received two bonus shares.

Tata Tele Maharashtra Limited- TTML Debt Position

TTML’s net debt was ₹19,954 crores at the end of FY24, up slightly from ₹19,825 crore at the end of FY23. 

The interest expenses in FY24 increased to ₹1,621 crores from ₹1,501 crore in FY23. 

FY23FY24
Total Borrowings (in ₹ cr)₹19,825₹19,954 
Interest Expenses (in ₹ cr)₹1,501₹1,621

Despite its low debt-to-equity and interest service coverage ratio, TTML’s debt profile has been assigned a stable outlook by CARE Ratings. 

Tata Sons, its holding company, continues to provide strong financial support, which has resulted in a stable outlook. It has invested ₹46,595 crore in TATA Tele Business Services (TTBS) and continues to support the company.

Valuations Score

The valuation metric doesn’t apply to TTML because it is a loss-making company. Hence, the Price-to-Earnings (PE) Ratio cannot be calculated. With a negative net worth, the P/B Ratio is also negative. 

Market Cap to Sales

The company’s market cap-to-sales ratio is around 13 and is trading close to its 5-year median, which indicates that it is neither overvalued nor undervalued in these valuation metrics. 

AD 4nXcAv EdRujbzTVf0fnpWQRCu8waXhaENcL3e0gy84CWr0ng7NIlXf zUz4NDU7lPS3 VUuGgInIUpFdxzE0BwMnw nNMt7hqMrbQL 8nQVLXCrtvl 5Kz62JwbtW3CJ nupMffWnz9KQoMI3Fdx2DBd8DDz?key=Y5 XMi2GLrd 9wgmsECp5Q
Source: Screener.in

However, it would help if you compared TTML share price with that of peer companies and analyzed the valuation metrics. 

Industry Outlook

India is the second-largest telecom market in the world, with a teledensity of 85.87% at the end of May 2024. According to IBEF, the total number of telephone subscribers stood at 1,203.69 million, and Wired broadband subscribers stood at 41.31 million.

The percentage of digital penetration in the MSME sector is still lower. According to a report by Redseer, India is home to about 64 million MSMEs, contributing 30% to the nation’s GDP. However, the current digital penetration among MSMEs is 12%, which opens up many opportunities for players like TTML. 

To make MSME more digitally empowered, the Government of India has launched the Digital MSME Scheme for the increased adoption of digital tools, applications, and technologies. The government will provide subsidies to MSME units for using cloud-based software,

All these factors can offer a considerable growth potential for TTML stock price

FAQ

  1. What does TTML do?

    Incorporated in 1995, the company specializes in providing wireline voice, data, Cloud, and SaaS solutions to enterprise customers with a strong focus on the MSME sector.

  2. How has the TTML share price performed in the last 5 years?

    Over the last 5 years, TTML’s share price has increased by over 2800%, from a low of ₹2.70 on October 14, 2019, to a high of ₹290 on January 10, 2022.

  3. Is TTML a Tata Group company?


    TTML is a Tata Group company that offers services under the Tata Tele Business Services brand name.

Introduction:

The rising middle class and the increasing youth population are leading to a high demand in India’s automobile sector. The indicative index, NIFTY Auto’s yearly gains of 51.71% as of 18 October 2024, shows the sector’s growth and also reflects a growing investment opportunity in the automobile manufacturing industry. 

AD 4nXfSCFltgkjM9my56 nWKp1u8uam8wQOjmMNQbZwj2tJhv2PbnqySvE OMPcAfw1uQZleyxmKqmmUOAMpYz9QLqSWiCfU0QseZ29H33J9Dvin7bvQrWcww4WaRLgmzGguRAObU5 yYax75a4mrymXYQf4e6F?key=0ICmJp6SYvmIfPkj j5ZQ
Source: NSE

The industry opportunity can be leveraged by investing in automobile manufacturing companies like Ashok Leyland, India’s second-largest commercial vehicle manufacturer. But what is Ashok Leyland share price? How stable is the company, and what does the fundamental analysis of Ashok Leyland say? Let’s find out. 

Overview of Ashok Leyland Limited:

Ashok Leyland is the Hinduja group’s flagship company, with a strong presence in the medium and heavy commercial vehicle (M&HCV) market. It ranks as the fourth largest bus maker in the world and the 19th largest truck manufacturer. Recently, it was recognized as the 34th-best brand in India. Headquartered in Chennai, Ashok Leyland operates nine manufacturing plants—seven in India and one in the UAE and UK.

The company has a broad portfolio in the auto industry with product concepts that set commercial vehicle (CV) benchmarks. In FY24, it held a 31% market share in the M&HCV segment and 20% in the LCV segment. Ashok Leyland also plays a key role in defense, supplying the largest fleet of logistics vehicles to the Indian Army and partnering with armed forces worldwide. Its portfolio includes diesel engines for industrial, genset, and marine uses, along with electric vehicles through Switch Mobility.

The company has one of the largest networks in the commercial vehicle industry, with 52,863 touchpoints, including 1,748 exclusive ones and 11,207 outlets for Leyparts. Additionally, Ashok Leyland runs driver training institutes across India, having trained over 8,00,000 drivers to date. 

Share Holding Pattern:

The shareholding pattern for the company as of September 2024 is as follows-

AD 4nXeEjP4p6jD2IHg9v9YJHEfzcYh WbfyXkMNQNIJj5tDSuYoaCnH83lAk9BGRXaGdxiqoNekwmCxEDq7 HxNq i6ZmR4rFh7BZDIHH f1dKfQnCef8YiJXcy ZAGa HtZIFI6OXH7LTqh EvGgJGdSYZzx3v?key=0ICmJp6SYvmIfPkj j5ZQ
Source: Company Report

Key Management Personnel:

Ashok Leyland was founded by Raghunandan Saran in Chennai, where it began as ‘Ashok Motors’. The leadership baton currently lies in the hands of the following executives-

Mr. Dheeraj G. Hinduja (Executive Chairman):

    Mr. Dheeraj Gopichand Hinduja earned his B.Sc. (Hons) in Economics and History from University College, London, in 1993. He represents the Hinduja Group, and his expertise includes global business strategies, building and transforming organizations, and attracting top Boards and management talent. 

    Mr. Gopal Mahadevan (Director):

      Mr. Gopal Mahadevan is a Chartered Accountant and Company Secretary with 35+ years of experience in finance across various industries. He has worked in manufacturing, internet services, financial services, and project companies. Throughout his career, Mr. Gopal has been part of leading organizations like Thermax, Amara Raja Batteries, Sify, Sanmar Group, and TTK Pharma. He also serves on the board of multiple companies within the Ashok Leyland Group.

      Mr. Shenu Agarwal (MD & CEO):

        Mr. Shenu Agarwal is an NIT Kurukshetra graduate with Honors and holds an MBA from Duke University, USA. He brings over 25 years of hands-on experience in Sales, Marketing, R&D, Product Management, Strategy, Project Management, New Business Start-ups, and Strategic Tie-ups. Previously, he served as the President of Agri Machinery and Construction Equipment at Escorts Kubota Limited.

        Ashok Leyland Financials:

        Revenue (Gross Sales):

          The company’s revenue has been growing steadily since 2020-21. It reached its highest-ever sales revenue of Rs.38,367 crore in FY24, marking a 6% increase from the previous year. This growth came from selling 1,94,555 vehicles, 32,374 engines, and 3,469 spare parts and other items.

          AD 4nXfEyNVQ7c kg84oHoQrbiCAhAbNQFQSy6vvxPOe7Qe Rc6FBuguRknefSR6M xdbhBLurmg3i s6wzWLSflVjYost ewbIMf hNZ8e82l3HpL8E51I0IMztDF JopsQ qTINfIkAf PhOsex8Kyd09lgPap?key=0ICmJp6SYvmIfPkj j5ZQ
          Source: Annual Report

          EBITDA:

            The company’s EBITDA as of FY2024 was Rs.4607 crore, an all-time high level with a 57% growth from FY2023. Additionally, it was Rs.911 crore for the quarter ending June 2024. Over the years, the EBITDA trend for the company has been as follows-

            AD 4nXe3qAXg3fg2 Ia2GMQkIcXpbBXSP7P9rC TVKDxKr4Nzs2wOWAWNre0BJs7DTzh40aoDZ0DyPCGIseG4NWXu9b6by50hrSUf RgQC99g3Md0hADp5R0vSu3Sk zVWKXopn4RBtxkUZ2k9pIbVYMjczGyak8?key=0ICmJp6SYvmIfPkj j5ZQ
            Source: Annual Report

            Profit After Tax:

              The company posted a record profit (PAT) of Rs.2,617 crore, its highest ever. The previous record was Rs.1,983 crore in FY19. This marks a 90% growth compared to the previous year. As of the quarter ending June 2024, this figure had already reached Rs.526 crore. Over the past few years, the trend in the company’s PAT has been as follows-

              AD 4nXfUhGum0iMvSfp1USaWjtNbr06EDZe9AEYu2YAzIo4eQRZevBRQ4I3gUq rXVCRiMbWUCyrso1Q8G18gDhPXUYpoUUkwkSVuIQxW6imhVdr AmAqmlBqKOWBfJ87yCorZBSzMzRKmKZyvSKGNQCqQXo dk6?key=0ICmJp6SYvmIfPkj j5ZQ
              Source: Annual Report

              Key Financial Ratios for Ashok Leyland:

              As of the financial year ending 31st March 2024, the key financial ratios of the company are as follows:

              • Current Ratio: The company’s current ratio is 0.96, which means that for every Rs.1 of liabilities, it has Rs.0.96 in assets. A current ratio lower than 1 is generally considered less favorable. 
              • Debt-to-Equity Ratio: The company’s debt-to-equity ratio is 0.01, which means that for every Rs.100 of equity, the company has only Rs.1 in debt. 
              • Return on Capital Employed: The company’s ROCE is 15%. This means that the company generates a profit of 15 paise for every rupee of capital employed in the business. 
              • Return on net worth: The company gave a 30.8% return on its net worth, meaning that for every Rs.100 of equity invested by the shareholders, it earned Rs.30.8 as profit. This indicates an effective use of shareholder funds to generate profits. 
              • The company achieved a 31.1% market share in the  M&HCV Bus and Truck segment in FY2024. 

              (Source: Annual Report

              Ashok Leyland Share Price Analysis:

              A company’s share price analysis can be done through both techniques; thus, the question of fundamental analysis vs technical analysis doesn’t affect the outcome. Ashok Leyland was listed on the NSE on 25th May 1995. As of 18th October 2024, the company’s share price is Rs.223.40, and its market cap stands at Rs.65,599.79 crore. In the last twelve months, the stock investment advisors have seen the company stock grow 27.15%, lower than the index growth of 52.08% seen in NIFTY Auto. The company stock, however, crossed the NIFTY50 returns of 26.35% and the SENSEX returns of 23.30% as of the same date.  

              AD 4nXd8v85hhB3HUV3cX3jfFVve4CBxeB6WNIPoA2dP0LyNZgFEM781QfnjrQwzK7Na0TL40CKJEQc9Oq5Z15E7YMPH0DyB6Nn8A4L4PjhQT9nye4muO2MwrDE4lldmtMd8KYWdemytu4RshPbV8FS1tYWYpF2r?key=0ICmJp6SYvmIfPkj j5ZQ
              (Source: MoneyControl)

              Key Highlights of Ashok Leyland For FY2024:

              • The company’s aftermarket business grew by 28% over the past year. It also climbed to 2nd place in Sales & Service Satisfaction, showing the impact of its customer-focused initiatives.
              • In International Operations (IO), the company saw a 5% increase, delivering 11,853 units in FY24, up from 11,289 units in FY23.
              • On March 25, 2024, the Board of Directors declared an interim dividend of Rs.4.95 per equity share for the financial year ending March 31, 2024.
              • Over the past three years, the company has achieved strong profit growth of 117.9% and revenue growth of 35.85%. It has also maintained a Return on Capital Employed (ROCE) of 21.57%.
              • In October 2024, Ashok Leyland secured a contract to supply 180 electric trucks to Group BillionE.

              Bottomline:

              Ashok Leyland Limited’s shares have a PE ratio of 23.87, which is lower than that of Force Motors share price. The company’s financial performance in FY2024 is comparatively better than in previous years, considering the record sales and revenue generated this year. However, whether to invest in the automobile sector or not, and if yes, whether to choose Ashok Leyland or go with Tata Motors share price, must be decided based on your financial profile and relevant industry factors like market trends and growth rate. 

              FAQ

              1. Is Ashok Leyland better than Tata?

                Choosing between Ashok Leyland and Tata Motors depends on your needs. For investing in a commercial vehicle producer, Ashok Leyland is often the better choice. It specializes in trucks and buses, offering durable and fuel-efficient options. Its reputation in heavy-duty vehicles and public transport is strong. However, Tata Motors stands out if you’re interested in a wider variety of vehicles, including passenger cars and electric models. They lead in electric vehicle innovation and offer a broader range of vehicles.

              2. Who is the CEO of Ashok Leyland?

                The CEO of Ashok Leyland Limited is Mr. Shenu Agarwal. 

              3. What does Ashok Leyland do?

                Ashok Leyland is engaged in the production and sale of commercial vehicles. 

              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. 

              AD 4nXdtHSKP2l46guERytpfE9KYHRPzpNmgfPy4M2E6iYSEUkqQrsdr7cEDKR f6aSgr X MxX3b5aHIl 0xhbmMqahbEdponW9chnTR4QrgGKCjGDqpyRCKehsP2 5ykV6eyncsV3QB0W0XT hGC1duDe

              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. 

              AD 4nXd Xfolalpx8q0mhPV75eDS2tlriM99chB1yvx6RvghSCXOKRiJSJ L Jsm pC3WCP GBbtoWPUOmNgyHH85lHV9YyqMzQ7ySOgaJoMWY6xiD

              Source: RHP

              EBITDA

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

              AD 4nXeDY1swoaAC7m0eCP9S t5hk tg1E eJ5TmBieC TzGivuIz39O0iZdLcS9ShjCoSWD2Xr2VsZlE370r0Dvv67o3kSUCloLArXekYeJcZNNemS beLDul8Oyyp8vjdf

              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

              1. 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.

              2. 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.

              3. 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.

              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.

              image 7
              Source: BSE

              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.
              Source: BSE
              image 8
              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.
              Source: BSE
              image 9
               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.
              image 10
              Source: BSE
              • 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%.
              image 11
              Source: BSE
              • 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%.
              image 12
              Source: BSE
              • 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.
              image 13
              Source: BSE

              PNB Share Price History

              image 14
              Source: BSE

              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.

              image 15
              Source: BSE

              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.

              FAQs

              1. 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.

              2. When PNB was established?

                Punjab National Bank was established in May 1894 and started its operations in April 1895.

              3. 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%.

              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

              image 37
              Source: BSE India

              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.

              image 38

              Segment-wise Revenue

              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.

              image 39

              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
              Source: TradingView

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

              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

              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.
              GCPL
              • 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

              1. 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.

              2. 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.

              3. 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.

              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

              image 30

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

              image 31
              • 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.      

              image 23

              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.   

              image 24

              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.     

              image 25

              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%.     

              image 26

              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.

              image 27

              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.      

              image 28

              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  

              image 32
              Source: TradingView

              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

              1. 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.

              2. 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.

              3. 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.

              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

              image 141
              Source: Colgate

              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.

              image 142
              Source: Colgate Q1 Results

              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.

              image 143
              Source: Colgate Q1 Results

              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.

              image 144
              Source: Colgate Q1 Results

              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

              Screenshot 1
              Source: TradingView

              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 NameColgate PalmoliveDaburHind. 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)49.7564.0956.78
              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 stores7.7 million retail stores9 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

              1. 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.

              2. 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.

              3. 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.

              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

              image 108
              Source: Annual Reports

              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.

              image 107
              Source: Quarterly Reports

              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.

              image 110
               FY19FY20FY21FY22FY23
              EBITDA Margin (in %)16.4217.7418.1815.9314.56
              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.

              image 111
              Source: Quarterly Reports

              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.

              AnnouncementFace ValueRatioNumber of Shares
              Pre-bonus and split share₹10100
              Bonus Issue- 15 June 1967₹101:2150
              Bonus Issue- 15 June 1973₹107:15220
              Bonus Issue- 7 October 1998₹101:1440
              Bonus Issue- 30 January 2004₹101:2660
              Stock Split- 13 April 2004₹210:23300
              Bonus Issue- 6 June 2006₹23:55280
              Stock Split- 8 January 2015₹12:110560
              Bonus Issue- 30 May 2016₹12:514784
              Bonus Issue- 9 August 2023₹11:5~17740

              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.

              berger
              Source: TradingView

              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 NameBerger PaintsAsian PaintsIndigo 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)68.1565.2150.47
              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 touchpointsMore than 1.5 lakh retail touchpointsMore 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.

              *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

              1. 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.

              2. 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.

              3. Is Berger Paint a good paint company?

                Berger Paint is the second-largest paint company in India after Asian Paints.

              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.

              image 43

              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

              image 44

              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.

              image 53

              Segment-wise Revenue Breakup

               FY22 (in ₹ cr)FY23 (in ₹ cr)Q1FY23 (in ₹ cr)Q1FY24 (in ₹ cr)
              Software Development & Services  2421.313,065.94710.85827.46
              System Integration & Support Services  494.8787.7515.0322.80

              Geographic-wise Revenue Breakup

               FY22 (in ₹ cr)FY23 (in ₹ cr)Growth
              India393.07521.5432.68%
              US1041.631322.7226.99%
              Europe755.771139.5050.77%
              Others280.31160.94-42.58%

              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.

              image 56

              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.

              image 57

              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.

              tata elxsi
              Source: TradingView

              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.

              *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

              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.

              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

              image 31
              Source: DMart Annual Report

              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.

              image 28
              Source: DMart Annual Report
              image 32

              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.

              image 29
              Source: DMart Annual Report
               FY19FY20FY21FY22FY23
              EBITDA Margin (in %)8.28.67.38.28.7

              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.

              image 30
               FY19FY20FY21FY22FY23
              Net Profit Margin (in %)4.75.54.95.36.1
              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.

              DMart
              Source: TradingView

              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.

              *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

              1. 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.

              2. 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.

              3. Are Avenue Supermarts and DMart the same?

                Yes, they both are the same. Avenue Supermarts owns and operates the DMart supermarket chain.

              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.

              Also Read: What is Paid Up Capital?

              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.

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              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

              image 118

              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.

              image 120

              Geographical Distribution of Revenue

               FY21 (in ₹ cr.)FY22 (in ₹ cr.)FY23 (in ₹ cr.)
              India5,783.36,372.96,434.9
              United States of America5,322.25,524.1  5,158.3
              Others3,821.44,295.74,676.7

              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.

              image 121

              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

              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.

              *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

              1. 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.

              2. 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.

              3. 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.

              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.

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              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

              image 106
              Source: BSE India

              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.

              Revenue from Operations 2
              Source: Adani Gas Q1FY24_Results

              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%.

              EBITDA
              Source: Adani Gas Investor-Presentation

              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%.

              Net Profit 1

              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.

              image 104
              Source: TradingView

              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.

              *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

              1. 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.

              2. 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.

              3. 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).

              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

              image 37
              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.

              image 40
              Source: AESL Investor Presentation Sept 2023

              Operating Segment-wise Revenue

               FY22 (in ₹ cr)FY23 (in ₹ cr)Q1FY23 (in ₹ cr)Q1FY24 (in ₹ cr)
              Transmission3,469.333,945.16835.94926.19
              GTD Business6,966.288,591.912,212.742,737.71
              Trading821.91755.6583.200.01

              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.

              image 39
              Source: AESL Equity Presentation September 2023

              EBITDA Margin

               FY20FY21FY22FY23
              EBITDA Margin (in %)40514946
              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.

              image 38
              Source: AESL Equity Presentation September 2023

              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.

              image 34

              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.

              image 35

              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%.

              image 36

              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.

              *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

              1. 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.

              2. 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.

              3. 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.

              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

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              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

              image 16
              Source: BSE India

              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.

              image 17
              Source: HAL Investor Presentation FY23

              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.

              image 18
              Source: HAL Annual Report FY23

              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.

              image 19
              Source: Trading View

              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.

              ParticularsBalance as of 01.04.2022Fresh orders (During 22-23)Order Liquidated (During 22-23)Outstanding Sanction/supplies
              Manufacturing Contracts61,564        25,990        26,36060,470
              Repair & Overhaul8,1418,537
              Spares11,16211,192
              Design & Development Projects 1,1001,345
              Exports187241
              Total82,15425,99026,36081,784
              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

              1. 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.

              2. What is the face value of HAL?

                The face value of HAL is INR 10 per share.

              3. What is the Market cap of HAL?

                The market cap of HAL is INR 1,28,338 crores as of 16th Aug 2023.

              Read more:  How Long-term investing helps create life-changing wealth – TOI.

              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

              image 5
              IEX-Shareholding-Pattern-as-on-June-30-2023.pdf

              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.

              image 9
              Source: Annual-Report-FY-2020-21.pdf

              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.

              image 7
              Source: Annual-Report-FY-2020-21.pdf

              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.

              image 8
              Source: Annual-Report-FY-2020-21.pdf
               FY19FY20FY21FY22FY23
              PAT Margin (in %)56.159.8759.7463.3061.74

              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 ValueRatioNumber of Shares
              Pre-bonus and split share₹10100
              Split- 19th Oct 2018₹1010:11000
              Bonus Issue- 21st Oct 2021₹12:13000
              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.

              image 4
              Source: Trading View

              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.

              *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 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.

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              What is an Investment Advisory Firm?

              An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

              An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

              An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

              An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.