Zee Learn Q1FY19 Concall Summary

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 Company Update

  • Zee Learn in the last 10 to 12 quarters has consistently performed well, and the growths have been to the extent of about 35 to 30% both on the top line and bottom line.

  • Zee Learn has approximately 200 business partners as franchises.

  • Zee Learn through its Kidzee, and Mount Litera Schools operates in 700 to 750 cities pan India

  • Mahesh Tutorial is now a part of ZEE Learn

  • Mahesh Tutorial in this first quarter have done a breakeven and posted a small PAT of about approximately a Crore.

  • The company has acquired 60% and immediately as on date there are no plans to merge MT Educare.

Quarter performance including MT:

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  • The company attributes it’s increased the margin during the quarter to disciplined executions, accelerating growth and strong leadership bandwidth.

  • While we have made strategic investments to leverage the opportunities in the education sector,

  • The company is confident that its persistent focus on the operational efficacy of the newly acquired business of MT Educare will continue.

  • Company’s top line at the console level including MT stands at Rs. 113 crores which are up by 67&.

  • Company’s EBITDA is at Rs.42 crores vis-à-vis Rs.26 crores for the same period last year which is up by 62%.

  • Company’s EBITDA margin is at 37% vis-à-vis 38%. We have managed to maintain the margin in spite of MT consolidations.

  • Company’s PBT is at Rs.34 crores vis-à-vis Rs.19 crores for the same period of last year up by 77%.

  • Company’s PAT is at Rs.24 crores versus Rs.12.8 crores of the same period of last year up by 87%.

  • Company’s PAT margin is up by 21% vis-à-vis 19% for the same period.

  • Company’s minority interest is Rs.2.4 cross, and PAT stands at Rs.21.6 crores vis-à-vis Rs.12.8 crores which are up by 68%.

Quarter performance excluding MT:

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  • Company’s top line is at Rs.82.9 crores vis-à-vis Rs.66.9 crores which are up by 24%.

  • Company’s EBITDA is at Rs.31.9 crores vis-à-vis Rs.25.1 crores which are up by 27%.

  • Company’s EBITDA margin is at 38% vis-à-vis 37% for the same period of last year

  • Company’s PBT is at Rs.25.8 Cr vis-à-vis Rs.19.3 crores which are up by 34%.

  • Company’s PAT is at Rs.18 crores versus Rs.12.8 crores which are up by 41%.

  • Company’s PAT margin is at 22% against 19% for the same period of last year.

Zee Learn Standalone Quarter performance:

  • Zee Learn’s top line standalone stands at Rs.54.2 crores versus 51.7 crores which are up by 5%.

  • Company during the same quarter last year had a one-time revenue of around Rs.3.12 crores on account of sale of additional kits.

  • Company’s growth at a standalone level after excluding the past year’s quarter one-time revenue comes to around 12% which is in line with its normal growth.

  • Company’s standalone EBITDA stands at Rs.22.9 crores versus Rs.18.9 crores which are up by 21%.

  • Company’s EBITDA margin is 42% vis-à-vis 37% and on a standalone basis.

  • Company’s PBT is Rs.23.6 crores vis-à-vis Rs.17.9 crores which are up by 32%.

  • Company’s PAT at Rs.16.2 crores vis-à-vis Rs.11.6 crores which are up by 40%.

  • Company’s PAT margins stood at 30% versus 22% in the period during last year.

Receivables:

  • The company has Rs.16 Crores at Zee standalone level versus the same period last year we had Rs.14 crores debtors.

  • As far as DVPL is concerned the debtors has reduced to Rs.14 crores versus Rs.51 crores the same period last year.

  • The net debtors at MT are at about Rs.21 crores versus Rs.137 crores last year same quarter, so the company is very well placed regarding the receivables.

Borrowing:

  • The company has about Rs.118 crores borrowings at ZEE Learn standalone versus Rs.108 crores same quarter last year.

  • The company has Rs.122 crores at DVPL versus Rs. 121 crores same quarter last year and MT borrowings as on June stand at Rs.154 crores versus Rs.161 crores.

  • MTS started repaying their borrowings post-June, and there is a substantial reduction as of now.

KIDZEE:

  • Kidzee revenue has grown by 5% however when that one-time sale of kit during last year same quarter the Kidzee has grown up by about 12%.

  • Kidzee’s EBITDA margin was about 50% vis-à-vis around 47% same quarter last year.

  • Kidzee’s EBITDA is about Rs.21 crores versus Rs.18 crores last year.

  • Kidzee has about 1,10,000 students versus 102,000 students same period last year. So, there is a growth of about 8%.

  • The company expects to reach about 145,000 and a little above 145,000 students by the end of the financial year.

Mahesh Tutorial:

  • MT operates on self-operated models. Their centers which are there are mostly self-operated.

  • Mahesh Tutorial’s geographical spread is limited to 7 or 8 states.

  • The company sees an opportunity for MT to launch from the Zee Learn franchising model and help that in an asset-light manner to expand their business

  • The company sees an opportunity for MT to expand Pan India via ZEE Learn’s Kidzee and Mount Litera schools that operate in 700 to 750 cities pan India.

  • Mahesh Tutorial can become a partner of about 200 franchises of Zee Learn and utilize their real estate.

  • Zee Learn students would have access to very good content curriculum, of the higher classes specifically 9th 10th and 11th and 12th from the Mahesh Tutorial portfolio.

  • The company has to put a lot of efforts to acquire the consumers who come to Kidzee at the age of 2 years.

  • The company acquires and nurture them for the next 15 odd years.

  • The company only gets a limited part of their share of wallet because when the students are outside the four walls of the school, there are many other people catering to them for auxiliary services like test prep and tutorials etc

  • The company hopes to give more holistic and integrated services to the student community making their life simpler and also spreading its consumer acquisition costs over multiple offerings and broader revenue base

  • MT Educare has enrolled about 46,500 students through its various verticals in this quarter, versus about 35,400 students they served during the same quarter last year.

  • The company had cleared about Rs.51 crores of debt for MT Educare which were standing around 176 crores when we acquired MT Educare.

  • Company’s target is to reduce the debts in the MT Educare substantially and thereby save the interest cost.

  • The company revealed that the reduction in debt is also connected with the one-time payments that will be required to do as per the term sheet entered by MT Educare.

  • The company had infused 200 crores in MT Educare and by that time they had about 176 crores debts.

  • The Company aims to utilize that 200 crores substantially or largely to reduce the debt, to use about 15 crores to 20 crores in working capital.

Mount Litera Zee School

  • Mount Litera Zee School has about Rs.10 crores top line versus Rs.10 crores top line last year.

  • Mount Litera last year had two signups higher than the current year signup.

  • Mount Litera normally does around 15 signups during the year.

  • The EBITDA margin for Mount Litera franchisee business stands at 30% versus 26% last year.

Liberium

  • Liberium has delivered a turnover of Rs.19.6 crores versus Rs.9.4 crores, growth of about 108%.

  • Liberium currently is served by 3900 employees versus 2000 during the last year same period.

  • Liberium's EBITDA margin is about 5%, and PAT margin is about 3.6%.

KIDZEE Day Care:

  • The company plans to roll this out in 100 centers in the current year.

  • Kidzee Day Care’s theme is home away from home which provides the safe, secure and nursing environment for every child.

  • Kidzee Day Care is a comprehensive program hearing cognitive, social and emotional, combination of speech, language, sight and gross motor skill development for the child.

  • The company plans to start this pilot in the month of October.

  • The company expects a significant impact regarding revenue from these 100 centers.

Ankuram

  • The company plans to do a pilot across 50 such locations across the country.

  • Ankuram is aimed at providing structured quality education at an affordable cost in a safe and secure environment.

  • The company wants to give students the best chance of academic success by providing well-researched age appropriate and child-centered holistic curriculum.

  • The company has already done three signups so far, one in Udaipura which is in MP, Jamner in Maharashtra and Shahapur in Karnataka.

  • The company plans to do a launch in September with around 10 to 15 schools.

Smart classes ICD space:

  • The company has also taken small steps into the smart classes space ICD space and the objective being to identify stable government projects with a sustainable margin.

  • Company’s academic strength, Pedagogy, school management experiences give it the competitive edge.

  • The company so far has not ventured into this field, and this is the first time they plan to enter.

  • The company has already formed a partnership with –another entity Edu Solutions.

  • The company has got its first project which is the Agra smart city; it is a very small project with 30 digital classrooms for an order value of about 52 lakhs.

  • The company has few projects in the in the pipelines they are already in talks at Dharamshala, Telangana, Jammu and Kashmir and Jharkhand for similar projects.

Kidzee Learning Tab

  • The company has planned to make the Kidzee Learning Tab a mandatory part of the student kit as it would be linked to their curriculum, therefore providing better learning outcomes for the child.

  • The company mentions it as a cheaper option compared to what they had provided previously.

  • The company finds the tab to be convenient also, as it can be installed on any Android or IOS platform.

  • The company plans to start from the next academic year, and they are targeting 50,000 plus children in the pilot itself.

Wellness Health

  • The company believes that obesity is a real problem amongst children in India and therefore they plan to roll out a wellness program across our children both in Kidzee as well MLZS.

  • The company has been a pioneer in early child education, and this initiative is spreading the awareness about health and nutrition.

  • The company expects it to be a significant revenue driver for it because given the scale and the scope.

  • The company will be covering four broad parameters-general, dental, eye and dietary.

  • The company has received a very positive response and these have to be assessed by qualified doctors we are starting off with the pilot with 50 centers covering 5000 children’s in September and so far we have received a very encouraging response.

  • The company is also launching a parenting magazine for the network for the first time.

  • The company believes that it is very important to also communicate effectively with the parent community.

  • The company wants to deliver uniform; it is starting with uniforms with online delivery of uniforms across the network.

  • The company conventionally use to bring all material into its warehouse and then dispatch it to the respective schools, but here they want to go directly to the parents.

  • The company expects significant operational efficiencies benefits both regarding top line and bottom line as they go forward on this.

Robomate:

  • Robomate is online App; it is delivered to its customers in two formats, Whoever buys a test prep or tutorial package gets access to Robomate and secondly one can also buy it in a standalone mode directly.

  • Robomate is a SaaS-based platform which is very versatile.

  • Robomate is not only a tool for delivering content curriculum, etc., to the students, but it is also testing, self-assessment revision tool, and also the same tool can be used to manage the various activities within an educational institution.

  • The company expects the performance metrics for the direct part to be, that how many people have registered on the web portal for this particular app. Secondly, how many have done a download of the free trial which is offered for 3 or 4 days. And then how many have bought it?

  • The company will provide Robomate app to the students who buys a test paper or tutorial course from Mahesh Tutorial.

  • The company would have B2B tie-ups for the Robomate with many institutions.

  • The company generates two types of revenues from Robomate; one through the tutorials and the test prep that MT conducts through its class rooms.

  • There is an apportionment of Robomate which is offered to those students which will be about 25% to 30% of this fees that they pay for each of those tutorials and the test preps.

  • The company also sell robot mate as an independent package to students outside its classrooms.

  • Company’s sales value for outside students is roughly around 10,000 to 12,000 per user.

  • The company is confident about the larger acceptance of Robomate.

  • The company has sold about 9750 Robomate outside the classrooms to the independent students, which were not MT Educare students versus 2473 students done in the same quarter last year.

  • The company has so far generated five crores from Robomate.

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Mahindra CIE Q2CY18 Concall Summary

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Financial Highlights

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  • Sales have grown by 26% vis-a-vis Q1 FY-17, 10% of this growth is on account of positive exchange rate translation impact

  • The EBITDA for the India business has crossed the 15% EBITDA mark, which is good news.

  • The EBITDA has thus grown by 49% versus first quarter CY ‘17, EBIT has grown by 71%, and the EBT has grown by 88%.

  • Company has managed to maintain EBITDA margins as compared to Q1 FY17.

  • In absolute terms, EBITDA has grown 27% versus Q1 C ‘17, EBIT by 35%, and EBT by 46%.

  • In the consolidated results which are a combination of the positive evolution in both India and Europe, there has been a 26% growth in revenue, 36% growth in EBITDA, 50% growth in EBIT, and 62% growth in EBT when compared with the same quarter of last year.

  • The consolidated EBITDA margin is at 13.8% from Q1 CY ‘18 compared to 12.8% in Q1 FY ‘17s.

  • In Europe total impact of the steel price increase that is about 1% on EBITDA margin.

  • Company had around 10 odd Crores of currency impact that came on account of the unit of Bill Forge, Mexico. There is a loan in Mexico which is dollar denomination and the local currency strengthening is what has resulted in this exchange gain.

  • The full-year run rate is 30 million

  • The total revenue size of roughly 1900 Crore per quarter consolidated and for Europe it is 1100 plus and it is 700 plus for India.

  • Impact on margins of commodity price is about 100 basis point.

  • The European operations have hit €140 million mark this quarter.

  • India business now along with Bill Forge crossed the 15% EBITDA margin this quarter.

  • In the Europe, out of the 26% growth, 10% would be currency related and 2% would be the commodity price related, so volume growth is 14%.

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India Business 

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  • The India business has grown by 24%. All divisions in India have seen healthy growth.

  • The main drivers of growth in India has been the positive market evolution in UV, tractors, and two wheelers as well as the growth at some key customers.

  • The revenue growth has also been augmented by favourable raw material and scrap prices. The European growth, if you adjust for the currency impact, it is about 16% growth.

  • There has been a 24% growth in the India business and somewhere around 3% to 4% would be because of the Steel price increase, the rest would be all organic and volumes.

  • For the India part, their growth is almost 12%, 4% is explained by the steel cost inflation and the rest is because other key customers have grown faster than the industry.

  • The weighted average growth of key customers would be about 18.5%.

Metalcastello

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  • Metalcastello is growing at a tremendous pace mainly because company got a new program coming from the customer Caterpillar all the transition were made during last year

  • They have already started the production, so the jump in Metalcastello is 45% growth in last quarter 2018.

 Forging business

  • German Forgings had seen a growth of around 10 odd percent. This growth is coming especially because all the customers, most of them are European truck makers, Scania, DAF, MAN,

  • Daimler and those companies they are exporting a lot to the States, the truck business in the States is booming right now.

  • This is one of the explanation why company is receiving so many orders from the customers. Second impact is that this technology is quite mature technology and some of our competitors are failing in the market, so there is a concentration in the biggest client, in the most reliable company, so company is getting benefit.

  • The castings, forgings, and Bill Forge are the best performing, fastest growing divisions, but the others are also growing above double digits, so overall it is balanced

  • The Lithuanian crankshaft business growth is approximately €15 million, it is the growth that are coming from there annualized, and regarding the growth increase in Metalcastello excluding the exchange rate the impact has been 35%.

  • MFE (German Forgings) is growing at 10% and is growing in production. In Euros it is 10%, it is 35 in Metalcastello, and something like 16% in the car passenger roughly.

  • Growth of the Bill Forge in constant is 25% plus.

New investments

  • The CAPEX guidance is 5% to 6% of sales that includes both maintenance and growth.

  • The amount of capex for this year is Rs. 4 million.

  • Mexico plant is a new factory with new machinery, new people and it is done to cope with the demand

  • One new press has been set up in Mexico and in approximately nine months or eight months, it will start the production with another customer

  • In India, management is investing heavily to solvebottleneck in terms of production to continue growing

  • The company made an investment approximately 300 crores last year and for this year, management expects to go up to 400 Crores of investments

  • There has been advancements of the gear business, it is fully booked right now and management is advancing 2019 investment to 2018 i.e. moving ahead the investment.

  • The forgings, Bill Forge, management is adding a couple of presses in order to continue with the supply to the customers that they are increasing every month and the company will be adding new capacity in all the profitable businesses where there is customer demand

Production/capacity utilisation

  • The production in the casting wing per month where it was about 3500 ,over passed the 4000 tons and the same situation in the forging

  • The utilization level right now at an average would be at 90% more or less. Certain divisions have 25% free capacity and some, for e.g. Bill Forge are fully booked i.e. they are 100% utilised, so overall average capacity utilisation is 90%

Management expectations

  • For Bill Forge, Mexico, the peak expected revenue is $30-$35 million.

  • The company will start the ramp up of the new customer project in Mexico by beginning next year.

  • The ramp up of current 15 customers will be at the peak volumes by the end of this year, so in 18 months more or less, expectations will reach approximately that level.

  • Germany business is not really profitable business, it is below the standard. Management does not plan to continue invest in that and are only making maintenance CAPEX in Germany operation and the idea is to fulfill the capacity, maximize the resource, and do not invest in development in those company

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Aegis Logistics Q1FY19 Concall Summary

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Financial Performance:

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  • Q1 FY19 was very promising quarter for Aegis Logistics Limited

  • Aegis Logistics recorded excellent Operating Performance in Q1FY19 but slightly higher tax rate compared to FY18 cut the Profit After Tax margin

 Segment wise results

Liquid Terminal Division:

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  • Revenue for Q1FY19 were INR 45.45 crores as compared to INR 42.69 crores Q1 FY18. This is about 6% Y-o-Y increase in revenues

  • EBITDA for Q1FY19 was INR 28.88 crores versus INR 27.85 crores in Q1 FY18. This corresponds to a rise of 4% Y-o-Y.

New Terminal Projects:

  • Kandla liquid terminal, a 100,000 kiloliter project, is operational from Q1, and Aegis Logistics expect revenues to kick in from Q3 onwards.

  • Management expects to complete the Mangalore project, a 25,000 kiloliters, in Q2FY19. This will add to the revenues in Q3.

  • The Haldia 4 liquid terminal project, 35,000 kiloliters, is also expected to be complete in Q2.

  • Aegis Logistics expects a significant boost to the revenues and earnings in Liquid Terminals division in the second half of the FY19

Gas Terminal Division

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  • Revenues for Q1FY19 were INR 971.4 crores as compared to INR 813.3 crores in Q1FY18.

  • The EBITDA for the Q1 for Gas Terminal Division was INR 62.2 crores versus INR 38.9 crores in Q1FY18. This is very strong rise of 60% year-on-year.

Volume analysis
 

LPG Volumes

  • The LPG volumes, throughput volumes, logistics volumes in Aegis Logistics’ three terminals of Bombay, Pipa and Haldia, was 576,468 metric tons in Q1FY19 as compared to that of 301,571 metric tons in Q1FY18.

  • That's a stunning rise of 91% year-on-year in the LPG logistics volumes in those 3 terminals.

  • Reason for this massive rise lies in operational efficiency of Haldia Plant.

  • Haldia Plant was budgeted to run at 125000 Metric tons per Quarter, but plant has already reached run rate of 200000 metric tons per quarter. This is about 60% higher than budget.

 Packed Cylinder Volumes

  • Packed Cylinder volumes for the commercial cylinder market were also good 3,900 metric tons for Q1FY19 as compared to that of 2,946 metric tons in Q1FY18. That's a rise of 32% YoY.

 Industrial bulk LPG volumes:

  • Industrial bulk LPG sales for Q1FY19 was 11,031 metric tons versus that of 8,836 metric tons in Q1FY18, a rise of 25% Y-o-Y.

 Auto-gas Volume

  • Autogas constitutes 6,895 metric tons of volume for Q1FY19 as compared to that of 6,204 metric tons in Q1FY18, a pleasing rise of 11% year-on-year.

  • Sourcing volumes for LPG for AGI in Singapore was 215,849 metric tons versus 285,094 in Q1 FY18. There was a drop of 24% YoY.

  • This is due to BPCL, power petroleum, did not come out with a tender for 2018, although Aegis Logistics did the same in August.

Dividend Announcement:

  • Aegis Logistics declared a final dividend of INR 0.75 per share.

  • Along with the interim dividend earlier in the year, the total dividend for the year, interim plus final dividend, for financial year 2018 was INR 1.25 a share versus INR 1.05 a share in the previous year.

Further expansion in LPG division Road map

  • Aegis is working on 2 deals in the West Coast of India, to different ports in the West Coast

  • First step is to take environmental permissions and explosives permissions, which means that AGI have layouts approved for expansion in West Coast

  • Aegis Logistics is negotiating the commercial deals with the oil companies. And might end up with 3 oil companies being major users of buoy.

  • Management expects to complete all necessary approvals by end of Q1 and Q2 of FY20 and after that 18 months of construction period

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ICICI Prudential Insurance Q1FY19 Concall Summary

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Organizational Structure

  • NS Kannan has been appointed as MD of the company effective June 19, 2018 subject to IRDAI approval.
  • Punnet Nanda has been promoted as Deputy Managing Director of the company.
  • 94 of the top 113 managers have been with the organization for more than 10 years.
  • Company boasts a strength of 17,000+ employees.

Strategy & Performance

  • Focus continues to be on growth of absolute Value of New Business (VNB)
  • The path to growth is reflected in 4 Ps of “Premium growth”, “Protection focus”, “Persistency improvement” and “Productivity enhancement”

Premium Growth

  • Range of product have been increased to ensure customers’ on-boarding and service through distribution architecture.
  • A diverse distribution architecture helped translate product and service into business.
  • Even with growth in new business, Annualized Premium Equivalent (APE) has declined by 18.1% and market share being 11.3%

Protection Focus

  • Nuclear families are growing and need to protect loved ones from losing family income is on the rise.
  • Retail customers are borrowing to make assets and need to secure them through insurance.
  • The company is devising solutions and products to cater to this need.
  • The protection APE growth was 48.1%, with protection accounting for 8.2% of APE.

Persistency Improvement

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  • Customer retention has improved by changing the organization and partner culture.
  • Customer retention actually creates profitability to the company and is best parameter to gauge customer experience.
  • The efforts to increase customer retention led to 13% growth in total premium and 29% growth in yearly retain renewal. Also, 13th month persistency was 85.8%.
  • 49th persistency has also improved to 63.7% from 59.2%

Productivity enhancement

  • Focus was on technology and re-engineering to improve on expense ratios. But, increasing focus on protection will lead to increment in cost ratios.
  • Expense ratio for the saving business was at 13.7% mainly due to decline in the business

VNB Growth

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  •  The Value of New Business for Q1-2019 was Rs. 2.44 billion with a margin of 17.5%.
  • The growth in VNB was 34.1% even with the decline of 18.1% in APE
  • The growth would be led by rising working population and increasing per capita income for both savings and protection businesses.

Retail Focus

  • Retail business accounts for 96% of new business APE. It has marginally reduced because of increase in group protection business.
  • Total AUM growth in the quarter was 12.7% to Rs. 1.43 trillion. Retail AUM constituted of Rs. 1.28 trillion, i.e. 89% of the total AUM
  • Private market share continues to be around 21.0%. Whereas total market share of 11.3% was a decline from 11.8% in FY 2018.
  • The first 2 months of FY 2019 saw 30% decline in RWRP numbers because of strong first-quarter in last year due to demonetization.
  • RWRP numbers for June were 36% higher than that of May.
  • Year-on-year decline was low at -5%.

Multi-Channel Distribution

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  • Non-bank channels contributed to almost 45% of APE.
  • Different channels like agency, bancassurance partnerships, proprietary sales force, corporate agents and brokers including web aggregators have been developed.

Customer centric Products

  • ULIP were focal point in delivering lower cost and lower persistency risk to customer while offering transparency.
  • Individual life/health, credit cover, and group life are three key segments of protection all of which saw growth in Q1-FT2019

Productivity Cost

  • Cost to TWRP ratio was Q1-FY2019 as compared to 14.2% for Q1-FY2018.
  • Cost to TWRP for saving business was 13.7% compared to 12.5% for Q1-FY2018.
  • Commission Ratio is stable at 5.5% is stable and is higher than Q1-FY2018.
  • Non-commission component of cost has gone up by 40%.
  • For Q1-FY2019, 73% if new business policies are issued within 2 days, 61% of renewal premium is receipted through electronic mediums and 99% of customer-initiated pay-outs are processes electronically.

Financial Update

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  • Total premium increased be 13% to Rs. 55.18 billion in Q1-FY2019.
  • Profit after tax for Q1-FY2019 was Rs. 2.82 billion down from Rs. 4.06 billion in Q1-FY2018
  • The decline in profit is because of increase in expenses with focus on protection business.
  • Expenses grew by 43.4% in Q1-FY2019 because of increased ads and publicity.
  • Solvency ratio continues to be a very strong number at 235%.
  • AUM grew by 12.7% to Rs. 1.43 trillion and 86% of linked portfolio has performed better than the benchmark indices
     

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Biocon Q1FY19 Concall Summary

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Key highlights

  • Biocon’s partnered biosimilar, pegfilgrastim, Fulphila, received approval from the U.S. FDA last month.
  • Biocon’s partner, Mylan, has launched the product in the U.S. as the most -- as a more affordable therapy option for cancer patients undergoing chemotherapy.
  • Biocon's sterile drug product manufacturing facility for biologics in Bengaluru received EIR from U.S. FDA and the EU GMP certification during the quarter.
  • Biocon presented PK-PD data on our Novel Insulin Tregopil at the American Diabetes Association scientific sessions in the U.S. And Syngene extended and expanded their agreement with the Baxter global R&D center until 2024.

Financial Highlights

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  • Total consolidated revenue for the quarter were INR 1,193 crores, up 21% compared to last year.
  • Revenue from operations were INR 1,124 crores, which were up 20% as compared to last year. This includes licensing income of INR 5 crores this quarter as compared to INR 8 crores in Q1 of last year.
  • Segment perspective
    • Small Molecules, the segment revenue was up 10% to INR 400 crores.
    • Biologics grew 36% to INR 250 crores and Branded Formulations grew 13% to INR 147 crores.
    • Syngene revenues were up 39% at INR 406 crores in Q1.
  • Biocon incurred gross spend of INR 88 crores on R&D this quarter, corresponding to 12% of revenues, excluding Syngene.Of this amount, INR 44 crores is reported in the P&L.
  • Biocon capitalized an amount of approximately INR 44 crores related to our biosimilars and insulin analog development expenses.
  • The gross spends are lower than last year due to timing of some of the activities on a quarterly basis. The amount in the P&L has reduced on account of capitalization of bevacizumab-related expenses, which were reflected in the P&L in Q1 of last year.
  • Biocon booked a Forex gain of INR 39 crores this quarter as compared to INR 17 crores in Q1 of last year. This gain is reflected in the other income line of the P&L. Of the total amount, INR 28 crores is coming from Biocon while the rest is attributable to Syngene.
  • Group EBITDA grew 25% to INR 307 crores, with EBITDA margins at 26%. Core margins, that is EBITDA margins net of licensing impact of ForEx and R&D, stood at 27%. Reported net profits were up 47% this quarter at INR 120 crores, which represents a net profit margin of 10%.
  • The effective tax rate at 27% for the quarter is slightly lower than last year of 28% due to lower losses in overseas subsidiaries during the period under review. 
Biocon Q1YF19 YoY performance.png

Segment-wise Analysis

Small Molecules Segment

  •  The revenue growth of this segment was led by key APIs and increased generic formulation sales.
  • Higher sales of immuno-suppressants and increased market share of Rosuvastatin formulation in the U.S. were key contributors.
  • Biocon also launched simvastatin tablets in the U.S. market during the quarter.
  • Several drug multipliers were filed in developed and key emerging markets during the quarter, centering on Small Molecule's API pipeline

Biologics

  • This segment was led by higher sales of biosimilar monoclonal antibodies in emerging markets, supported by the Insulin business
  • The primary driver for growth this quarter was trastuzumab with strong retail market uptake witnessed in Brazil and robust market shares in certain markets in the [LATMEX] region
  • Biocon’s Insulins portfolio continue to improve its market share in several emerging markets
  • The recent launch of pegfilgrastim by Biocon’s  partner, Mylan, in the U.S. and Insulin Glargine sales in EU and Australia, which are planned for later this fiscal, are expected to provide a further tailwind to this segment performance.
  • Biocon is confident of achieving the $200 million target revenue for this segment in FY '19.

Branded Formulations Segment

  • In Q1, the growth in Branded Formulations segment, which comprises product sales in India and U.A.E, was led by growth in the India Branded Formulations business.
  • India Business
    • The India business growth this quarter benefited from the lower base last year in the same quarter due to GST implementation. Metabolics, Nephrology, Immunotherapy and Comprehensive Care divisions aided the business performance with strong growth reported for some of our key brands.
  • UAE Business
    • In the U.A.E., the business continue to garner market share in the Metabolics segment to increase sale of in-licensed products of Insulin Glargine, which was introduced recently.

Syngene

  • In terms of research services, Syngene recorded a strong growth this quarter.
  • The growth was driven by good performances within biologics manufacturing, discovery services and chem dev services.
  • Syngene also announced the extension and expansion of their agreement with the Baxter global R&D center until 2024. They also announced the recommissioning of Phase I of the upgraded [S2] facility, which was damaged due to a fire incident in December 2016. The progress made provides good visibility on underlying growth expectations for Syngene for this year and the long term.

Product development updates

  • In Europe, the regulatory review of Biocon’s Marketing Authorization Applications or MAA for biosimilar trastuzumab and pegfilgrastim are progressing well, and the decision by CHMP is expected by the end of calendar year 2018.
  • For the U.S. market, Biocon and Mylan are generating additional clinical data for Insulin Glargine in support of the manufacturing site change from Bengaluru to Malaysia.
  • As part of Biocon’s novel molecule portfolio development program for Insulin Tregopil, our oral insulin candidate. Insulin Tregopil advanced in pivotal Phase II, Phase III study in Type II diabetes with more patients in India being randomized during the quarter.

Business updates for Q1FY19

  • Biocon able to increase sales in the Small Molecules segment despite challenges persisting in the generics industry.
  • Branded Formulations also grew in double digits, and a better performance expected  from this segment this year.
  • The growth segments, namely Biologics and Syngene, have made a strong start building upon the traction from last quarter.
  • Recent and upcoming launches of biosimilars, coupled with traction in the research services, provide us a good launch pad to accelerate growth in the subsequent quarters during this financial year.

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Indusind Q1FY19 Concall Summary

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Banking Industry Developments:

  • Major event was increase of 50 basis points in G-secs rate. As a result, bond portfolios of banks were severely hit especially trading portfolios in money market and G-secs.
  • Monetary policy change led to hike of 25 basis points.
  • Rupee depreciated about 5% in the quarter itself leading to more volatility that presented an opportunity to offset the MTM hits that bank got.
  • For large borrowers, RBI introduced fixed loan component out of the working capital limits and the undrawn portion will have a 20% credit conversion factor.
  • Minimum Support prices were raised which lead to increase in inflation by 25 basis points.

Financial Results:

Indusind Q1FY19 Profit and Loss.png
  • Growth in Net Interest Income is 6% and loans is 4% q-o-q basis.
  • Growth in Net Interest Income is 20% and loans is 29% y-o-y basis.
  • Revenue Growth and net profit growth is 6% and 9% respectively.
  • Loan book growth was 29% year-on-year and 4% q-o-q where 30% growth in corporate loans and 28% growth in vehicle finance and non-vehicle retail businesses.
  • Above mentioned 29% growth is in spite of Rs. 8000 crores that were sold from corporate book.
  • CASA growth rate was 37% y-o-y basis, of which SA growth was 51%.
  • ROA growth was from 1.86% to 1.91%.
  • ROE has grown to 17.25%.
  • Cost-to-income ratio has gone down close to 44%.
  • Earnings per share has also gone up to annualized Rs. 69.
  • Net Interest Margin went down by 5 basis points.
  • Credit cost shrank from 19 basis points to 14 basis points.
  • The ARC book, SR book is at 33 basis points
  • The Weighted average Risk score (WARS) for vehicle portfolio of this quarter is 1.77 (1 being the best), indicating that credit cost will slightly improve in next few quarters.
  • The trading gains is Rs. 137 crores (fee line)
  • Net gains are Rs. 51 crores
  • Fee income has grown by 20%, but total free has grown by lower than that because of the fall in trading gains. Total fee is down from Rs. 181 crores to Rs. 111 crores because of that.
  • Core fee has grown y-o-y and q-o-q basis
  • Foreign exchange incomer has grown by 16%.
Indusind Q1FY19 Key Financial Indicators.png

Asset Quality

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  • Gross NPA is 1.15% which is lowest in industry.
  • Restructured book is lowest among industry at 5 basis points
  • Provisions absorbed the Rs. 86 crores mark to market quarter end loss
  • Slippages reduced from 2.68% to 1.31%
  • Provision coverage ratio is maintained at 56%.

Customer Base and Branch Growth:

  • Customer base is 12 million
  • 1 million new customers were added during the last quarter
  • 10 new branches are work in progress
  • Around 200 branches are on track to be opened in the full year

Mergers and Acquisition:

  • The acquisition of ISSL, ILFS Securities and Services Limited is signed and should be closed in this quarter
  • Bharat Financial merger is in its final leg and next step in to take approval from NCLT

Cost of Funds and Yield :

Indusind Q1FY19 Yield Cost Movement.png
  • Cost of deposit went up 22 basis points and cost of funds went up 35 basis points
  • Yield on asset went up by 30 basis points leading to NIM going down by 5%
  • Corporate yield has improved by 9 basis points and consumer yield has gone up by 4 basis points

Capital Consumption:

  • Risk-weighted asset to total asset ratio in last two years this quarter was 76% and 78% respectively, while it is 80% now.
  • Growth in credit risk RWAA is 6.12% q-o-y vs. 3.3% loan book growth
  • 33 base points comprise of 8 base points because of dividend payment and 25 base points on account of loan book growth which is BAU

Distribution Fees:

  • Distribution fees has gone up by 30% y-o-y basis
  • This is because of momentum for insurance and investment business
  • The fees also incorporate housing loans disbursal for HDFC

Vehicle Finance Market:

Indusind Q1FY19 Vehincle Finance Portfolio.png
  • Vehicle improvement is there in terms of freight rates and freight availability
  • Finance market is only 20% for two wheelers, rest 80% are in cash or credit cards
  • IndusInd Bank closes around 70,000 to 75,000 vehicles per month

Current Account Growth:

  • CA business growth is 2-3% only in over five quarters
  • Acquisitions need to be made to increase throughput to 20,000 from current 8,000-9,000 because of low average ticket size (Rs. 50,000 to Rs. 60,000)
  • The reason for slow growth is advancement in payments space and cash management space

OPEX Growth:

  • OPEX growth has been arrested to a low number even after opening 200 branches
  • Main reason is digitization related productivity gains leading to Rs. 200 crores being saved annually
  • Business has grown by 25-30% even after reducing headcount by 300
  • Cost to income ratio is targeted to be around 44%

Saving and Government Deposits:

  • Government deposits are 15% to 20% of overall balance sheet
  • SA will continue to grow at a stable rate.
  • Currently, 1,25,000 accounts are there and target is of 1,50,000

Home Markets:

  • Moving from 16 markets today to 18 this year

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Symphony Q1FY19 Concall Summary

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Key Performance Figures:

  • •Revenues declined from ₹ 190 Cr to ₹ 146 Cr. (drop of over 23%) for the Quarter ended on June’18 [Consolidated]
  • EBITDA dropped over 50% from ₹ 47 Cr. to ₹ 23 Cr. {June’18 Quarter}
  • PAT dropped from ₹ 39 Cr. to ₹ 21 Cr. a drop of about 48% in Q1FY19
  • Efficacy of Capital employed has improved from ₹ 152 Cr. to ₹ 189 Cr qoq 
  • International Business is unaffected at ₹ 80 Cr, same as the last year, for the same quarter
  • Domestic Business dropped from ₹ 110 Cr. to ₹ 65 Cr. on a Standalone alone basis 
  • Treasury, Cash & Cash Equivalents are up from ₹ 351 Cr. to ₹ 449 Cr. 
  • Treasury, Cash & Cash Equivalents are the only parameters that have shown growth in Q1FY19
  • Company would be reporting the Consolidated performance on a quarterly basis starting June’18 Quarte
  • Gross margin remained more or less same through the quarter, however the drop-in profits was due to the reduced top-line.  
  • In the Dec Quarter, the profitability was in excess of 20%

Mexico Updates

  • In Mexico, the topline in Mexican peso has increased from MXN 109 million to MXN 123 million
  • IMPCO ha made profits of INR 12 Cr. & that of the China subsidiary has made profits of INR 3 Cr.

Acquisition of Climate Technologies

  • Symphony had recently completed the acquisition of Climate Technologies w.e.f July 1st 2018.
  • Climate Technologies was acquired at valuation of 40 million AUD which is expected to grow to 44 million AUD i.e INR 210 Cr
  • For FY18, Climate Technologies topline was $ 55 million with EBITDA of $ 5.5 million, which amounts to topline of INR 275 Cr & EBITDA of INR 30 Cr. & PAT of INR 23 Cr. on translation
  • Overall the acquisition translates to EBITDA multiple of 7.33x, while the sales multiple is 1x
  • The acquisition was funded by 60% long term debt of AUD & remaining 40% which is 15 million AUD is via equity. 
  • Climate Technologies is expected to generate ROCE of approx. 20% 
  • Climate Technologies is expected to register gains of $ 65 million in 2018 
  • By 2021, Climate Technologies topline is expected to grow to $ 80 million
  • Climate Technologies market share in Australia is close to 35%

Business Updates

  • The results were not so good primarily because of the bad summer with unexpected rains
  • The Topline in India has dropped from INR 120 Cr to INR 79 Cr. 
  • However, the ad expense has remained more or less constant at 21 Cr. approx.
  • Symphony was able to maintain it’s market share despite the overall market size drop
  •  As per the estimates, the branded cooler market would have definitely grown by about 15%. Markets in India and China are fragmented
  • In the last quarter, GST has registered the profit of almost INR 3 Cr.
  •  The company has created its subsidiary in Australia
  • Under Version 3.0, there is good opportunity of savings in Symphony’s range of residential coolers through Climate Technologies

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Info Edge (India) Q1FY19 Concall Summary

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Q1 FY19 Results - Stand-alone financials

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  • Billings in Q1 were INR 283.3 crores, up 17% year-on-year.
  • Revenue in Q1 was INR 259.5 crores, up 17% year-on-year.
  • Operating expenses excluding depreciation for the quarter were INR 175.3 crores, up 15% year-on-year primarily due to an increase in marketing, hiring in certain products and annual increments
  • Operating EBITDA stood at INR 84.3 crores versus INR 70.3 crores last year, having increased 20% year-on-year.
  • Operating EBITDA margin for the quarter stood at 32.5% versus 31.6% in Q1 of last year.
  • EBITDA adjusted for ESOP noncash charges stood at INR 88.1 crores versus INR 79 crores last year
  • Adjusted EBITDA margin for the quarter stood at 34%.
  • Cash EBITDA for the quarter stood at INR 112 crores, up 14.2% year-on-year.
  • Deferred sales revenue has increased to INR 420 crores as of June 30, 2018, versus INR 354 crores as of June 30, 2017, an increase of 19% year-on-year.
  • The cash balance for the company as a whole stands at INR 1,980 crores as of June 30, 2018
  • The recruitment business and the real estate business continued to drive the growth for the quarter.
  • Expenses
  • Spent more on marketing as compared to Q1 of last year,
  • Hired additional resources to invest in changing technologies.

Results by segment

Recruitment segment.

  • Recruitment segment billings in Q1 were INR 210 crores, up 15.4% year-on-year.
  • Revenues were INR 184.1 crores, an increase of 15.2% year-on-year.
  • Operating EBITDA margins in recruitment segment were at 56.8% versus 55% in Q1 FY '18.
  • Employee costs were higher because of increments and some net hiring in the division.
  • EBITDA margins adjusted for ESOP noncash charges stood at 57.8%.
  • Cash EBITDA for recruitment during the quarter stood at INR 132 crores, up 15.6% year-on-year.

Naukri

  • Added an average of 18,000 fresh CVs every day in Q1.
  • Naukri database grew to about 59 million CVs.
  • Average CV modifications were [350,000] per day.
  • Traffic share in the job portal space continues to be in the mid-70s excluding Indeed and around 60% including Indeed.
  • Investment in recruitment tools and systems business continues aggressively.

Industry-wise trend

  • There was an uptick in new customer acquisition last quarter, and there was also some pickup in IT sector hiring, leading to higher billing from IT companies this quarter.
  • Non-IT companies -- sectors like auto, industrial products, construction, banking, finance, insurance, manufacturing, BPO and some other smaller sectors also did well for the company in terms of growth as also indicated by the Naukri JobSpeak index.
  • Revenue from consultants did not grow as expected.
    • 27%-28% of our revenue comes from IT companies
    • Another 25%-26% of our revenue comes from recruitment firms
    • And then all the rest comes from another 40-50 industries.

Key Investment areas in Naukri

  • Whole mobile piece and for the personalized user experience on app.
  • Enterprise applicant tracking and regular management space.
  • Data science group and a machine learning group to leverage these technologies to improve our machine capabilities.
  • Incremental improvements on product.

Real estate business - 99acres

  • In the real estate business, 99acres, billings in Q1 grew 39% year-on-year to INR 41 crores. Revenue grew 34% to INR 42 crores.
  • Continued investment in marketing during the quarter, resulting in an EBITDA loss of around INR 11.5 crores versus a loss of INR 9.6 crores in Q1 of last yeare
  • Adjusted EBITDA after adjusting for ESOP expenses stood at a loss of INR 10.7 crores versus a loss of INR 7.1 crores in Q1 of last year.
  • Cash EBITDA loss in 99acres during the quarter stood at INR 11.7 crores versus a loss of INR 8.7 crores in Q1 of last year
  • Our traffic share amongst real estate portals remained around 60% during the quarter based on time spent as per SimilarWeb.
  • Broker billings form 50% of the overall billings, while builder billings stood at about 45% of the billings for the trailing 12 months ending June 30, 2018.
  • Homebuyers continue to prefer retail and rental properties over new launches which was evident from higher Q1 billing growth on account of agents.
  • Owner billings stood at about 5% of total billings for the last 12 months.
  • Key investment areas
    • Continued investment in marketing for 99acres to consolidate position in real estate classified business
    • More investment in products and technology.

Matrimony business - Jeevansathi

  • Jeevansathi billings grew 1% year-on-year in Q1 to INR 18.2 crores, owing to aggressive pricing and activity by competition during the quarter.
  • Revenue grew 4% year-on-year to INR 18.6 crores.
  • Higher marketing expenses in the quarter aided higher traction as number of paid transactions improved year-on-year.
  • Operating EBITDA loss in Jeevansathi increased to INR 5.6 crores in Q1 FY '19 from INR 4.1 crores in Q1 FY '18.
  • Adjusted EBITDA loss stood at INR 5.5 crores in Q1 versus a loss of INR 3.5 crores in Q1 FY '18.
  • Cash EBITDA for Jeevansathi during the quarter stood at negative INR 5.4 crores.
  • More than 90% of our users access Jeevansathi from their mobile, and the Jeevansathi mobile app continues to be the best in the category.

Shiksha business

  • In Q1, Shiksha billings grew by 22% year-on-year to INR 14.1 crores.
  • Revenue grew 11% year-on-year and reached INR 15.3 crores.
  • EBITDA profit of INR 3.1 crores in Q1 versus a profit of INR 2 crores in Q1 of last year.
  • Adjusted EBITDA profit for the quarter stood at INR 3.3 crores versus INR 2.9 crores last year.
  • Cash EBITDA was INR 2.1 crores versus INR 0.6 crores in Q1 of last year. 

Strategic investments- Policy Bazaar

  • The Policy Bazaar deal was announced in the quarter and will be concluded after statutory approval.
  • 28-30% stake in Policy Bazaar after the investments.

Information on Zomato

  • Zomato is increasingly delivering more and more of its orders through its own delivery system, which is Runnr and others, right, and less and less increasingly through third parties.
  • Zomato has 12 million orders a month run rate. Zomato expects to catch up and overtake the narrowing difference from Swiggy in a few months.
  • Expect no seasonality to ordering.
  • Zomato Gold has done very well and continues to do well.
  • Recently launched Piggybank - a loyalty program, which has within 48 hours of launch locked up a large number of subscriptions and sign-ups.

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HCL Technologies Q1FY19 Concall Summary

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Overview

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  • Over the last 12 months HCL performed consistently and cross the revenue milestone of $8 billion.
  • HCL’s revenue per employee is the highest among its peers in industry and global competitors.
  • HCL is among top 3 revenue per employee firm in the world.
  • HCL’s EBIT per  employee is also highest and better than some of the largest consulting firms in the world. 

Transformational Deals

  • HCL recorded Highest ever bookings in Q1FY19, led by next-gen infrastructure services and a variety of its Mode-2 services primarily Cloud-Native and digital offerings.
  • HCL had 27 transformational deals in Q1, Nokia networks was the largest programs greater than $0.5 billion in TCV that it won. 

Industrial Verticals

Its bookings were broad based covering various industrial verticals:

  • Telecom sector: Nokia
  • Financial services: 4 large deals
  • Retails, Co nsumer Packaging Goods (CPG) and Utilities

Performance Overview

HCL Tech Q1FY19 Financial Performance.png
  • HCL was very Effective in cross selling and up selling in its existing clients to deliver the better metrics.
  • Reduction of $12 million in its India SI business and it has come down to 0.5% of HCL’s revenues.

Acquisitions

  • HCL successfully integrated the C3i acquisition which it started early in the last quarter.
  • It announced new acquisition with H&D international in Germany. Geographic expansion is one of HCL’s inorganic strategies in addition to IP and digital or Mode-2.
  • This will be helpful to HCL in automotive sector where there were some disruptive infrastructure transformation programs to enable autonomous vehicles.

Mode wise revenue Analysis

HCL Tech Mode wise Performance Q1FY19.png
  • Mode 1 revenues continues to be stable and Mode 2 & 3 combined revenue stand for 26.6% of total revenue.
  • Mode 2 business has grown 8% QoQ. HCL has built several innovation labs across the world for Digital, Analytics, IoT Works and Cloud-Native. It has invested significantly in the pivotal Cloud-Native partnership.
  • Cloud a doption and digital transformation is need of the business, primarily because of innovation, some agility and quick delivery of services

Focus on Mode 3

  • Mode 3 business is 11% of its revenues. The margins are 25.2% at an EBIT level, significantly higher than company level margins.
  • Mode 3 consist of two sets of products, one set of products are enabling Mode 1 products and these are mature products in mid or late stage of their lifecycle, these are 60% of total products.
  • Other set of products are automation, AI, lot of things that they built in DryICE as well as some of the IP partnerships, these constitute 40% of Mode 3 products

HCL Performance Improvement

  • Revenue: +5.3% QoQ , +14.2% YoY
  • EBITDA Margin: +0.2% QoQ, +1.1% over the year
  • Operating margin:+0.1% QoQ
  • Net Income Margin:+0.4% QoQ
  • EPS: +8% over the last Quarter

Trends in Infrastructure Market

  • Customers spend a lot on shifting from one platform to another, with target of making foundation as “Digital Enterprise”, shift towards more consolidation and hybrid model
  • Cloud is a means to drive innovation, new capability, drive modernization of applications, help, build more digital applications. They leverage all the new capabilities on AI, Cognitive, Cloud-Native.
  • Infrastructure shifting from core infrastructure to application infrastructure platform and data infrastructure.
  • Hyper integration between infrastructure and make it more agile to serve the digital needs of an enterprise.
  • Chang  e in Operating Model - driving autonomics at the center, significant AI machine learning and those capabilities.

Capabilities Improvement by HCL

  • Product and platform market is growing CAGR 10% - 15 % in the industry. HCL is improving its capabilities in this field by leveraging IP partnership, expanding engineering functional team.
  • Integration of Mode 1 and Mode 2 products to enhance capabilities to supplement HCL’s managed service and outsourcing offerings to customers.
  • Transformation of the products in mature life cycle or having single digit growth into next generation products.
  • Cross  market digital footprint of HCL with upsurge in retail, CPG and healthcare.

Organic Growth of HCL

  • HCL helps industry replacing their old IoT systems or traditional application service because of rising demand of next generation technology.
  • Growth in Life sciences enabled by CPI and Public services is very organic. HCL has very promising Organic growth rates.
  • He alth and financial services had grown 9% LTM YoY, Retails and CPG has grown 7% YoY, Life Sciences has grown by 10% YoY.

HCL’s Segmental Margins

  • Mode 1 margin is very consistent with company level margin.
  • Mode 2 margin is little lower than company level margin due to heavy investment in that area.
  • Mode 3 margin is very much higher than company margin.

Segments based on Product’s Lifecycle

  • More decent business split of HCL would be 60% of businesses in mature products and 40% in high growth. Its IP partnership is also decent mix of mature and high growth products.
  • HCL has imbedded  IP partnership and products into its outsourcing businesses.  
  • Its regular Mode 1 businesses consisting of infrastructure business and engineering business have a lot of opportunities to re-innovate and differentiate and thereby create higher growth opportunities.
  • HCL’s EBIT margin YoY has been declined due to renewal and structure reduction happened at the beginning of the year.
  • Most part of the segmental earning has been invested in cloud and security.

Advanced Technology

  • Within Mode-3, 40% revenues are new technology and 15.5% are Mode-2.
  • Cloud services Private cloud and utility services are classified as Mode 2 service has a lot of scope for investment and improvement.
  • 130 bps of guidance is built through acquisitions. Ci3 acquisition which had single digit EBIT margin has impact on gross margin decline.
  • Tax assumption for FY 2019 is 22-23%. Net investment is 177 million , however the number look small (125 million) on financial statement due to currency effects.

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Shriram Transport Finance Q1FY19 Concall Summary

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Information about company

  • No of branches = 1,230 (with 854 rural centres)
  • No of employee = 24,533
STFC Branch and AUM Distribution Q1FY19.png

India’s economic scenario:

  • 7.7% EBITDA growth rate, making India as world’s fastest growing and major economy
  • Increase in GST collections to INR 97,000 crore per month in April-June 2018
  • Increase in MSP and goof rainfall in the past 2 years to boost consumption in rural areas

Industry overview:

  • 51.55% growth in committed vehicle segment for Q1FY19

Company’s Q1 financial information

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  • 21.975 growth in AUM to INR 1,00,000 crore in Q1FY19 against INR 82,597 crore in Q1FY18
  • Net interest income (NII) increased by 19.58% to INR 1,840.3 crore compared to INR 1,538.95 crore in Q1FY18
  • Profit increased by 24.37% yoy to INR 571.72 crore against INR 459.69 crore in Q1FY18, higher than AUM growth
  • Changes linked with adoption of Ind AS from IGAAP
  • Consideration of securitized portfolio as well for gross NPA calculations in Ind AS compared to considerations of only on books portfolio in IGAAP
  • Gross NPA is INR 9,127 crore as per Ind AS
  • Profitability increased from INR 540 crore (as per IGAAP) to INR 572 crore (as per Ind AS)
  • Increase in the book value by INR 40 crore due to adoption of Ind AS
  • Overall capital liquidity has gone up
  • ECL provisions to come down gradually from 2.5% over the period of time depending upon the operating environment
STFC AUM Breakup Q1FY19.png
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Other financial information

STFC P&L Q1FY19.png
  • Revenue and interest cost are separately mentioned in the P&L statement in Ind AS compared to only net revenue in IGAAP
  • Operating expenses growth is 30.47% in this quarter is primarily due to increase in branch network and employee strength
  • Earnings per share (EPS) increased to INT 25.20 from INR 20.26 in this quarter
  • Net worth of company increased by INR 900 crore
STFC Balance Sheet Q1FY19.png

Coverage ratio

  • Coverage ratio has come down to 57% from 71% and is expected to stay within 55-60% in the future
  • Decrease in the coverage ratio has been one of the reasons for increase in the net worth of company
  • Cost guidance is 2% for FY19

Government decisions

  • Axle load capacity of vehicle was increased by 40%. This will reduce the demand of new vehicle in coming 2-3 months but won’t affect in long run due to strong economic activities
  • Increase in the life of vehicle from 15 years to 20 years by government of India. This should increase the demand of used vehicle
  • Reduction in the barriers due to GST has increased the coverage km per day by 20-25% thereby increasing their earnings, but increase in fuel prices reduced their margins. Thus, overall there is little advantage due to net effect

Disbursements of loans

  • Total disbursement is INR 13,425 crore = INR 1,936 crore from new vehicle + INR 10,955 crore from used vehicles + INR 534 crore from business loan
  • Duration of the loans are 6-9 months for working capital and 3-5 years for business loans
  • Interest rates are 20% for working capital and 15-18% for business loans
  • Provisions of loans are 78% in stage I, 13% in stage II and remaining 9% in stage 3
  • LGT is about 34%
  • Number of PV is 5.82 for stage I, 13.39 for stage II and 100% for stage III with LTV of 33.8

Inorganic growth strategy

  • Focus is more on the used vehicle loans in the rural areas
  • Fulfilling strong demand in the North and East region of country

Recent tie ups

  • Tie up with HPCL to provide fuel for 15 to 30 days credit with daily interest charged
  • Intended to enroll 1 lakh customers by June-19

Future projections

  • ROI of the company is expected to be around 2.2% at bottom cycle to 2.8% at top of the cycle
  • Expected assets growth rate to be 10% minimum incase economy is not going well
  • The credit cost as per Ind AS is expected to come down to about 2% by year-end
  • AUM target for this year is 18-20%
  • Cost to income ratio is about 22% and expected to maintain it around 20-24% in future
     

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Tata Elxsi Q1FY19 Concall Summary

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Financial Highlights

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  • Q1 has been a weak quarter for the company historically
  • Still the operating revenue grew by 18% compared to Q1FY18 and so did the bottom-line
  • Pursuing annual average growth of 20% 
  • Top account revenue was 24% odd for this quarter
  • Constant currency growth is 14% compared to Q1FY18

Verticals

  • Four verticals include automotive, media and broadcast, communications and medical.
  • Automotive
    • Primarily focus on connecting cars, autonomous cars and electrification
    • Generated significant opportunities with few closures
    • Expected to grow the fastest among all verticals
    • Media and broadcast
    • Operations with MSO’s, telecom operators and CPE vendors (set top box and gateway makers) 
    • Decent quarter ii this vertical
    • Lot of opportunities and some good deals in Android space and OTT space
  • Communications
    • Primarily focus on Cloud and SDN initiative
    • Focus on SDN technology for the past 18 months and have good traction in this space
  • Medical
    • Investment in this segment for the last 4 years
    • Won significant deals in the last quarter and is expected to bring good revenue in the future

Wage hike

  • Wage hike for about 90% of employee will be effective from 1st July

Revenue Breakup and contributions

Tata Elxsi Q1FY19 Financials.png
  • T&M vs Fixed is 55:45
  • Offshore vs Onsite is 60:40
  • Geography wise breakup is 50% Europe, 30% USA and 20% from rest of the world
  • Vertical breakup is 60% automotive, 25% media & broadcast and the rest 15% from communication and medical
  • Utilization is 81% this quarter with top 5 contributing 40% and top 10 contributing 55% roughly
  • JLR contributes about 24% of the total revenue
  • IPR and patients accounted for 3-3.5% of the total revenue compared to less than 1% in the same quarter last year

Patents

  • Filed 68 patents to date out of which 2 was granted in the last quarter
  • Created drug delivery pen through in-house R&D
  • In talks with companies to patent its design

Tie ups

  • Setup an ODC with Panasonic for home appliances like AC and refrigerators
  • Partnership with Unity to build AR and VR for gaming, automotive and other fields

Growth strategy

  • Company focusing on IOT, AI and Robotics across these market verticals and investments have been done in these areas for the last 12 months
  • Expanding the market beyond India and Japan. Participated in a computex in Taiwan and presentations at the Broadcast Asia Conference in Singapore at the beginning of the quarter
  • Design segment has grown in line with EPD business and has started showing synergies with technology like multi modal interface and machine interface in automotive space
  • Focus on smart home technologies and electric vehicle related products

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HT Media Q1FY19 Concall Summary

HT Media.png

Company Overview

  • HT is the second-largest read daily in the country overall, and they continue to be dominant in overall Bihar and Jharkand put together and U.P. Also, U.P. and Uttarakhand put together have become #2 in HT readership.
  • Company’s Highlight of Print Media has been the launch of Hindustan Purnea edition.
  • Company has seen a muted revenue performance in the quarter.
  • Newsprint prices expected to go up, and have had a sharp impact on the cost structure of both Hindi and English publications.
  • The Print business, on both the revenue side and the commodity side, has been facing some turbulence.
  • Radio business continues to be on a path of healthy growth.
  • Margin has also seen a positive click because of the operating leverage flown through the Radio business.
  • Management’s strategy on yield to remain intact. But given the market scenario and competitive pressures, they are facing some problems on the national side of business.
  • Metro stations have been contributing largely to the EBITDA numbers.
  • The company took mark-to-market losses on some of the investments they are holding, which contributed to unallocated cost, thereby showing a spike.
  • Another one-off in this quarter has been in the salary, caused by a one-time truing up of certain bonus provisions.
  • The replacement price which would come into the P&L in the next quarter might see a sharper escalation because of inventory consumption, which had been purchased at a price which is less than INR 42,000 a metric ton (current print price).
  • All players in the newsprint industry are currently undertaking some cover price reduction. 
  • The management stated that HT Media didn’t give shares of the radio business to existing shareholders of HT Media because of regulatory and tax considerations.
  • The company still remains very focused on its core strategy around information, education and entertainment.
  • Going forward, the company aims to focus on print, digital, and radio business, with special attention on growth of Digital business to reap future benefits.

Financial Highlights

HT Media Q1FY19 financials.png
  • Operating revenue reduced by 7%, to INR 542 crores as against INR 584 crores last year.
  • Operating EBITDA reduced to INR 36 crores from INR 70 crores, and the margin as a consequence came down to 7%.
  • PAT reduced to INR 6 crores, and margins came down to 1%. 
  • Net cash has still been above INR 100-plus-odd crores.
  • The cash drawdown of around INR 100 crores has largely been working capital investment.

Ad Revenue

  • There has been a pickup in local advertising, though national advertising growth has remained elusive.
  • Ad revenues went down from INR 431 crores to INR 390 crores.
  • Key categories which had shown pickup in ad revenue from Hindi publication include auto, FMCG, e-commerce and real estate. 
  • National advertising, which is a substantial part of ad revenue for the company, has seen a massive pressure on yields, thereby bringing down the entire ad revenue table lower. 
  • Despite the poor base, hardly any growth trajectory was seen in the education category, which has been a substantial category for the company in the past. Further, there have been muted ad spends in government, classifieds, retail, medical health and fitness, durables and BFSI categories.
  • The set-back has largely been due to government advertising, which was quite high the previous year due to GST implementation. Some recovery has been seen in few categories, such as FMCG, where advertising has grown very well. Local retail advertising also seems to be picking up.

Newsprint vertical

HT Media Print Q1FY19.png
  • Print unit performance- operating revenue went down by 7% at INR 478 crores. Operating EBITDA margin stood at 14%.
  • Circulation revenue went down from INR 71 crores to INR 69 crores. 
  • News print prices have gone up by about 15%, both year-on-year and quarter-on-quarter basis. In rupee terms, it comes to about INR 6000 per metric to
  • English Segment
    • The degrowth in English has been sharper than Hindi, which is at 9% coming at INR 221 crores.
    • Circulation revenue went down by about 4%.
    • Key revenue drivers, key sectors like real estate, e-commerce showed ad revenue growth. Education category posted muted growth.
    • Local to local market had shown better result growth. However, muted ad spends in government, auto, retail, entertainment and BFSI categories had a heavy bearing in this quarter financials
HT Media Q1FY19 Print English.png
  • Hindi segment- 
    • 4% degrew from the top line coming at INR 227 crores. 
    • Operating EBITDA went down to INR 19 crores from INR 51 crores same period last year. Margins went down to 9%. 
    • PAT came in at INR 13 crores as against INR 48 crores, and PAT margins declined to 6% as against 18% last year. 
    • Net cash was maintained at a healthy level of INR 977 crores.
    • 5% and 3% margins on ad revenues and circulation revenues on Hindi. 
    • Cover price actions started yielding returns, leading to sequential revenue growth of 9%. Full impact to be seen in the second quarter results.
    • Local volumes and yields have been on a growth trajectory, and the trend is expected to continue into the next quarter also.
HT Media Q1FY19 Print Hindi.png

 Radio Vertical

HT Media Radio Performance Q1FY19.png
  • The radio vertical showed a growth of 12%.
  • Revenue went up from INR 42 crores to INR 47 crores. 
  • Operating EBITDA has grown sharply from INR 11 crores to INR 14 crores, which comes to around 27%. The effect of operating leverage also kicked in, hence the margins improved from 26% to 30%. EBIT came out at INR 5 crores, with the EBIT margin nearly doubling. 
  • Real estate and auto categories led to go revenue growth in Radio segment.

New Initiatives

  • The company entered into a proposed transaction on the Radio side- a merger of Metro Radio business of HT Media with Radio business of Next MediaWorks. 
  • Rationale- both businesses will create a metro focused radio business, which would be on parallels in competition. 60% to 65% of revenues still localized in the metro market, hence the reason for the choice of market.
  • The company is looking to become the biggest network with the metro-facing radio business across the country with this merger. 
  • The merged entity expected to have the widest reach in the top 7 metro markets, with a lot of depth in the biggest markets of Delhi and Bombay. The merger is also expected to bring benefits to synergies, which will help in further strengthening the operating margins of the resulting entity.
  • The consideration for the transaction is a pure Equity deal, and no cash transaction. 
  • The deal has been structured as a single scheme of arrangement, whereby relevant businesses are to be combined into 1 entity, which is the parent listed company, Next Mediaworks, called NMW. 
  • HT Media would be demerging all its Radio business except Hyderabad and Uttar Pradesh (because of regulatory reasons, and also Uttar Pradesh having more synergies with their newspaper business).
  • Amalgamation of HT Music & Entertainment Company with NMW, housed at the company’s Chennai station. And demerger of the FM radio business of Next Radio Limited into NMW. NMW to issue shares as consideration for the above business transfers to the respective entities.
  • Post-transaction holding consequent to the implementation of the proposed transaction. HT Media and its shareholders to hold 74% of the equity share capital of NMW, and the current shareholders of NRL and NMW to hold the balance 26%.
  • Complete transaction expected to take time of 12 to 18 months to justify.
  • Fair Valuation of merged entity is expected to come out somewhere around 20x, 25x or 30x EBITDA using comparables of other listed radio companies.
  • The merged entity would have 100% of the operating radio businesses of Next Mediaworks, except Ahmedabad, as Next Mediaworks had already demerged into a separate legal entity prior to the inception of this scheme, which needs applying to MIB for separate approval.
  • INR 47 crores of debt to be passed on from Next Mediaworks to HT Media.

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Welspun Corp Q1FY19 Concall Summary

Welspun Corp.png

Company Overview

  •  In Q1FY19, excluding the Saudi business, company’s production and sales were respectively at 254,000 tonnes and 229,000 tonnes, up 12% and 9%, respectively, YOY
  • Including Saudi, the Q1 pipe production and sales were at 288,000 tonnes and 266,000 tonnes, higher by 26% and 22% Y-o-Y, respectively.
  • The plate and coil mill production stood at about 123,000 tonnes.
  • Sales was at around 128,000 tonnes in the current year. And of the sales mix, more than 70% was scattered to outside customers, keeping in line with the company’s efforts to reduce dependence on captive usage.
  • A currency depreciation of 5% between 1st April and 30th June has benefitted the company in terms of the derivatives getting repriced, and that has gone into their other income.
  • The average bid book to sales win ratio for the company stands at around 20-30%. 
  • The Forex derivatives impact amounted to INR 34 crores, included in other income.
  • The other operating revenue comprises of sale of scrap, the VAT income, the export benefits.
  • The company would try to maintain an EBITDA of around INR 8000 per tonne, for the India and U.S. business, taking a 4-quarter view.
  • The company expects to execute its 1.6 million tonne of order book over the course of the current financial year and the next.
  • Out of the total bid book of 3.1 million tonnes, the U.S. is almost 40%. Europe and MENA are about 30% and the balance, 30% is in India between oil and gas and water and the other segments.

Financial Highlights

Welspun Q1FY19 performance.png
  • In Q1, the revenue was up 25% Y-o-Y at INR 2,023 crore
  • EBITDA reduced by about 19% Y-o-Y at INR 220 crores and the profit after tax, after minorities and share in associates and joint ventures, was at around INR 47 crores versus a net profit of around INR 55 crores in Q1FY18.
  • EBITDA was distributed as under INR 50 crores in plate and coil mill business, and the balance from the pipe business.
  • EBITDA for the pipe business in Q1 was around INR 7,700 a metric tonne, slightly less, higher Q-on-Q, but down. 
  • The company has maintained an improved cash conversion cycle at around 30 days versus 34 days quarter-on-quarter.
  • Gross debt as of 30th of June 2018 went up by about INR 47 crores quarter-on-quarter and was at the level of about INR 1,433 crores. On a Y-o-Y basis, gross debt has been reduced by INR 598 crores. This was made possible due to the continuous efforts towards realigning the debt book to match the requirement of the business and also repayment and prepayment of debt wherever feasible. The company looks to continue pursuing that agenda.
  •  Net debt was higher by about INR 54 crores quarter-on-quarter and was at the level of INR 476 crores as at 30th of June this year. On a Y-o-Y basis, net debt has been reduced by about INR 388 crores. 
  • Including the Saudi operations, the net debt was INR 1,025 crores, which was lower by about INR 271 crores compared to last year's same figure.
  • The company remains committed towards conserving cash and continues to aim for a leaner balance sheet. Cash flow generated is to be used largely for debt repayment, except for required essential CapEx for the business.
Welspun Corp Q1FY19 Sales Volume.png

Order Book

Welspun Order book Q1FY19.png
  • The company has booked more than 212,000 tonnes of pipe orders since their previous call, and this is reflected in the strong order book, which is at a level of about 1,602,000 metric tonnes (after executing 267,000 tonnes in the current quarter) and valued at over INR 11,000 crores. The figure was at around 1,657,000 metric tonnes in the previous quarter.
  • The bid book stands at over 3 million tonnes and the potential upcoming projects, which are expected to come up in the next couple of years and are spread across major Welspun markets, stand at a strong figure at over 15 million tonnes.

Domestic Market

  • In the domestic India market, demand is gaining pace across most segments.
  • The demand outlook for the plate and coil mills division continues to be promising, but the company needs to address profitability concerns.
  • The company expects a ramped-up production across markets in Q2 and Q3.
  • The company has made an EBITDA of INR 50 crores from the plate and coil mill, and it aims to achieve its previous year level of INR 170 crores.
  • A major increase in expenses has been caused by an increased freight and material handling and transportation-related expenses, which have gone up compared to previous period because of the sales mix in current quarter being based on destination, which means duty paid and delivery at destination.
  • The company believes if they are able to manage the steel in the supply chain well within time to the respective units, they can achieve a plant utilization factor of in excess of 85%.

Foreign Markets

  • With increasing emphasis on local sourcing requirements across all the key geographies including the U.S., India and the Middle East, players with local capacity are expected to gain. And Welspun Corp with sizable capacities in India, U.S. and Saudi Arabia is believed to be ideally poised to benefit from this policy change. 
  • The company has seen a demand uptick in the US market, with a growing order pipeline.
  • In the MENA region, oil and gas segment demand is expected to become more relevant in the second half of current financial year.
  • Q1 was a challenging quarter for their Saudi business, with a volume of about 35 KT and a reported loss of INR 27 crore, but the benefits of a strong order book would be evident from Q2 onwards.
  • The company has seen low capacity utilization of its Saudi mills, which have a production capacity of 300,000-350,000 tonnes. But a strengthened order book shows promise of a total production of around 275,000-300,000 tonnes, and a higher throughput would result in improved bottom lines.
  • The old order books have been liquidated for the most part, except for a few large orders left to execute, which are mostly in the water segment in Saudi.
  • Total volume form Saudi operations in the previous financial year was 96,000 tonnes.
  • The U.S. volumes in Q1 were of the magnitude of about 60,000-65,000 tonnes.
  • Some regulatory changes (such as duties on large dia pipes) have turned US into a market more relevant for local players. But for a few long seam capacities and long seam projects where US companies will have no option other than buying from outside the country, Welspun would be one of the preferred vendors for them. And they also have an annual capacity of 0.5 million tonnes between 2 mills in U.S.
  •  The company has seen quite a few projects that have come up for bidding, and out of the 3 million tonnes that in their bid book, a large portion is in the U.S. which they expect it to be awarded over the next couple of months.
  • In the U.S., the business booked by the company is all based on local sourcing of coil and with back-to-back cover, hence there is no exposure to coil prices.
  • Historically, U.S. business has been more profitable than India business, but that depends largely on the quality of orders.

Competitive Scenario

  • The competition has remained the same, with a slightly better order books, which might help in improving margins.
  • In India, taking water and oil and gas as 2 major segments, there are 3-4 players who are there in that market in water segment, which include Jindals and Ratnamani. 
  • In the oil and gas space also, several players exist. But not many of them will have the track record or the capacity to cater to the market. In oil and gas where there is concrete-based coating required, only 2 companies have that capability at this point in time, including Welspun.
  • In U.S. markets, there are 2 or 3 big players- major competitors being Staub, Vog. But Welspun is the largest player in that market, and enjoy a market share of around 25%.

New Initiatives

  • The company is setting up a spiral plant in Madhya Pradesh, capacity around 175,000 tonnes, basically to align their production capacity closer to the market with an expected CapEx of around INR 175 crores.
  • The spiral plant being set-up in Madhya Pradesh expected to be installed and commissioned in around 6-months, and would start to give benefits in the following financial year.
  • The company has announced a capex of INR 175 crores in MP, and they see a sizeable opportunity in MP, Rajasthan and Western UP in the coming years, hence maintaining presence in these states.
  • The spiral plant in MP would focus on the water segment at this point of time, but it also has the ability to handle the non-water space. They will also be enabling themselves to do API business as and when it is available.
  •  The company expects a payback period of roughly 5 years from the plant.
     

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