In today’s briefing:
- NIFTY Indices: Quiddity Leaderboard for September 2022
- J B Chemicals and Pharmaceuticals – Strong Growth in Contract Manufacturing Bus
- City Union Bank – Credit Growth +ve; Lower Treasury Gains to Cap ROE
- Colgate-Palmolive (India) – Margin Surprises but Growth Disappoints
- Container Corporation of India – No Clarity yet on Land Licence Fees; Higher Ca
- Hindalco Industries Ltd – Prudent Capex Amidst Macro Risks; Retain BUY with Lower TP
- Johnson Controls-Hitachi Air Conditioning India – Margin Pressure Offsets Topline Growth
- Muthoot Finance – Competition Impact Visible
- Page Industries – Strong Set of Numbers; Long-Term Growth Visible
- Praj Industries Ltd – Growth Engines Fired, Aided by Strong Execution
NIFTY Indices: Quiddity Leaderboard for September 2022
- The NIFTY Index Family has a series of broad equity indices that represents large, mid and small market capitalisation segments of the Indian public equity market.
- The review of broad market indices will be done on a semi-annual basis and the changes will be implemented at the end of March and September every year.
- Below is a look at the names leading the race to become Adds and Deletes for NIFTY 50, NIFTY 100, and NIFTY 500 in September 2022.
J B Chemicals and Pharmaceuticals – Strong Growth in Contract Manufacturing Bus
- JB Chem reported revenue at Rs6,246mn, up 18.2% YoY and 4% QoQ. EBITDA stood at Rs1,249mn, up .8% YoY but down 2.5% QoQ.
- EBITDA margin stood at 20%, down 344bps YoY and 133bps QoQ. PAT stood at Rs849mn, down 15.7% YoY but up 1.2% QoQ.
- Domestic Formulations sales at Rs2,870mn grew by 29.9% YoY and 3.2% QoQ.
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City Union Bank – Credit Growth +ve; Lower Treasury Gains to Cap ROE
- Guiding for low-to-mid double digit credit growth: Overall loan book increased by 11.6% YoY and 7.1% QoQ.
- Recoveries remain strong; repayment trends improving: Absolute GNPA declined by Rs0.65bn (down 3.3% QoQ) to Rs19.3bn.
- NIM stable QoQ; weak treasury outlook to impact profit: NII growth for 4QFY22 was 16.8% YoY and 2.2% QoQ.
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Colgate-Palmolive (India) – Margin Surprises but Growth Disappoints
- 4QFY22 headline performance: CLGT’s 4QFY22 revenue (including other operating income) grew by 1.4% YoY to Rs13bn (vs est. Rs13.6bn).
- FY22 performance: Sales, EBITDA and APAT grew by 5.3%, 3.7% and 4.1% YoY, respectively.
- Other highlights: (1) India is identified as the key emerging market to contribute to the overall growth of the parent, so the focus on growth will remain.
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Container Corporation of India – No Clarity yet on Land Licence Fees; Higher Ca
- (1) The company has paid LLF of Rs4.65bn in FY22 against expectation of Rs4.50bn (as stated by management).
- (2) Export volume grew marginally by 0.5% QoQ in 4QFY22 due to container shortage amid the Russia- Ukraine crisis and higher freight costs.
- (3) The land policy is still under discussion with the government.
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Hindalco Industries Ltd – Prudent Capex Amidst Macro Risks; Retain BUY with Lower TP
Novelis (Results reported on 11th May): EBITDA/tonne declined to $437/tonne (Q3FY22 at $544 and Q4FY21 at $514/tonne).
Aluminium India: EBITDA stood at a record high at Rs 4,050 Cr, up 123% YoY and 20% QoQ and stood ahead of our estimate by 5% led by higher realised prices, higher sales volume (Q4FY22: 336kt, Q3FY22 at 325kt and Q4FY21 at 329kt and higher VAP sales (Q4FY22: 93kt, Q3FY22 at 86kt and Q4FY21 at 92kt).
Copper India: EBITDA stood at Rs 387 Cr up 20% YoY and flat QoQ due to operational efficiencies and improved by-product realizations.
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Johnson Controls-Hitachi Air Conditioning India – Margin Pressure Offsets Topline Growth
- Strong performance expected in 1QFY23: JCH-IN has grown by 60.4% over the 4QFY20 base.
- Expect margins to improve going forward: EBITDA margin contracted by 770bps YoY to 5.7% in 4QFY22 mainly due to commodity cost pressures (raw material costs were up 40.7% YoY).
- Capital employed increased: Capital employed for Cooling Products rose to Rs5.53bn in 4QFY22 from Rs4.39bn in 4QFY21.
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Muthoot Finance – Competition Impact Visible
- Volume growth slows; guiding for 12-15% growth in FY23: Overall gold loan AUM increased by 10.8% YoY and 6.1% QoQ.
- While we note the growth in absolute value, underlying trends indicate this was driven by a higher ticket size and increasing customer leverage while customer growth indicators weakened, possibly due to heightened competition from smaller NBFCs and banks.
- Total stock of gold holding (in tonnes) increased to 187, up 9.4% YoY and 5.1% QoQ.
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Page Industries – Strong Set of Numbers; Long-Term Growth Visible
- Healthy demand outlook: Demand for consumer discretionary remains intact for PAGE even though it is tepid for others – due to value for money products with reasonable prices to hold on to consumers.
- Margins: The management undertook price hikes by ~8% during Dec ’21 in response to input cost increases, the effect of which can be attributed to this quarter.
- Distribution reach expansion: PAGE will continue to maintain the pace of outlet expansion both across EBOs and MBOs and is looking to reach ~1,50,000 MBO outlets in the next couple of years and double the EBO count from 1,000 EBOs in the next 4 years.
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Praj Industries Ltd – Growth Engines Fired, Aided by Strong Execution
- Strong Demand for Domestic Grain: During Q4FY22,66% of the new orderbook was for Grain-based capacity(starchy feedstock), indicating momentum in Grain-based distilleries.
- Key Business Updates: India has achieved the highest-ever Ethanol blend of ~10% in 2022.
- Strong Execution: The company is witnessing more growth in Grain-based distilleries which has reduced the seasonality of the business which was predominantly based on the sugar cycle.
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