Bharat Financial Inclusion Q3FY17 Concall Summary

Bharat Financial Inclusion.png

Financial Highlights

BFIL Q3FY17 Financial Highlights.png
  • P&L is not affected and is Rs. 34 Lacs due to dispensation in Q3.
  • Mid-term loan MTL ticker size has increased from Rs. 10755 to Rs. 25421 with an average offtake of Rs. 20704.
  • Approx. disbursements of 3000 crores, AUM has also fallen from Rs. 9000 crores to Rs. 8500 crores Q-o-Q.
  • Took hit of Rs. 20 crores on the securitization front in the P&L.
  • BFIL has a 70 crores unamortized loan processing fee in balance sheet
  • NIM has decreased from 10.6% to 10.1% because Rs. 14 crores loss on short collection.
BFIL Q3FY17 Profitability Analysis.png

Strategies and Challenges:

BFIL Q3FY17 Competitve advantage.png
  • Banks have reduced the MCLR which has reduced the cost of borrowing for BFIL by 35 to 50 basis points.
  • BFIL will be retaining the benefits by reduction is cost of borrowing in the upcoming FY.
  • BFIL provided android tabs to all loan officers to do cashless disbursement of loan thus reducing the turnaround time by 10%.
  • Shifting to Tabs, E-sign, E-KYC and involvement of Aadhar based biometric identification helped in achieving instant disbursement of cash.
  • The biggest execution challenge with BFIL is about scaling 9422 sangam managers, about 226000 centers every week.
  • Focusing on BHIM 5.0 version which involves transaction based on Biometric Aadhar.
  • BFIL is following a 3C’s strategy going forward, targeting on customer delight, competitive advantage and cashless transactions.
  • Their securitized portfolio is Rs. 917 crores and managed portfolio is Rs. 723 crores.
  • The lag is not seen in whole of Maharashtra or U.P., but in certain parts of it, for example the lag is in Nagpur and Amravati region in MH and Western U.P. has been a problem.
  • In rural India, there is not much options for microfinancing so, borrowers must go back to money lenders and borrow at higher rate of 48%. This makes BFIL a preferred lender for rural India.
  • BFIL involves JLG model and they meet their customers 4 times a month which is far greater than the competition.
  • 80% of the centers are Rural as compared to the industry level of 42%.
  • Loans are turned into NPA only when they are overdue more than 60 days.
  • BFIL send 30 lakh messages to its membersand used leaflets to target its customers, focus on different pockets to communicate that they are willing to meet in person to the customers.

 Market Share and Growth:

  • Demonetization led to negative growth of 6% Q-o-Q in the portfolio.
  • In Q3FY17, 38% YoY growth in GLP which is 33% from increase in number of borrowers.
  • Factoring an increase in ticket size of 10% in 2018.
  • BFIL is expecting a growth of 50% as the demand is high even after considering demonetization.

Forecasts and Expectations:

  • BFIL is Expecting to disburse 3300 crores in Q4FY17 and to maintain the portfolio at Rs.8500 crores by March ’17.
  • The portfolio will remain flat as BFIL will be disbursing its collections, but in the next year 50% portfolio growth is expected.
  • Overall collection efficiency is first 20 days have improved in the affected geographies.
  • Renewal ratio of loans is about 75% to 80%.
  • BFIL is expecting a 30% increase in customer base from March 2017.

Operational Highlights

BFIL Q3FY17 Operational Highlights.png
  • BFIL offers 19.75% interest rate, the lowest among the private sector MFIs and they are operating at a spread of 8.7%.
  • Cost to income has jumped to 49.5%
  • BFIL has the account details of about 50% of its clients and 23.5 lakhs of which were sourced through UID and 7.8 lacs were NEFT enabled.
  • The tenure for the Mid-term Loan MTL has also been increased from 50 weeks to 75 weeks.
  • The contribution mix of MTL as a % of GLP has changed from 28% to 23% in Q3.
  • Overall customers added in this quarter is 4.7 lakh compared to 7.9 lacs in Q2.
  • 75% of the term disbursement is to existing customers.
  • Weighted average maturity of their loans is 5.8 months with 55 lakh active borrowers.
  • Around 1.6 lakh centers still working at 100% collection efficiency in Maharashtra and U.P.
  • Bureau rejections are in the region of 25%.
  • 23 lakh accounts are sourced on ABPS front.

Demonetization Impact

  • In Bihar, Chhattisgarh, Jharkhand and Orissa 99% of the normalcy has been achieved and the 1% of the payments were not been made because of lack of currency generated during the phase.
  • 90 days limit is given to the women living in border areas of Maharashtra, Madhya Pradesh and Karnataka, but still 80% is the repayment rate of the women living in the north region.
  • Disbursement was effected due to lack of cash in the system.
  • Repayment rate will take few months to come back to normal.
  • Going cashless, they have started disbursement directly into the bank accounts.
  • Collection efficiency has improved to 97.5% and excluding U.P. and Maharashtra it has become 98.9%. Previously it used to be 99.9% pre-demonetization

 Downloads

Prabhat Dairy Q3FY17 Concall Summary

Prabhat Diary.png

 Financial Highlights

Prabhat Dairy Q2FY18 Financial Performance.png
  • Total revenues increased by 34.5% year-on-year to Rs.4081 million in Q3 FY17.
  • Gross profits increased by 26.6% year-on-year to Rs.790 million in Q3. However, gross margins have decreased by 122 bps from 20.6% to around 19.4% year-on-year.
  • The share of our value-added products increased from 76% to 86% on year-on-year basis.
  • Q3FY2017 EBITDA increased by 37% year-on-year to Rs.376 million.
  • EBITDA margin increased by 16 bps year-on-year to 9.2% in Q3.
  • PAT increased by 280% year-on-year, PAT margin increased by 534 bps year-on-year to 8.3% in Q3 FY2017.
  • Receiving of Rs.256 million this quarter as a part of megaproject income, which pertains to FY2015, FY2016 and H1 of FY2017, boosted profitability significantly.
  • Inventory for the quarter end stood at around Rs.110 Crores and debtor number stood around Rs.300 Crores for this quarter.
Prabhat Dairy Key Financial HIghlights.png

Business Performance

  • Milk procurement cost has particularly gone up to around Rs.27.20 in Q3 FY 17 from Rs.22 in FY2015-16 and Rs.25.6 in Q2 FY 17.
  • Purchase price rise is around 6% to 10% of the overall milk because it is the percentage procured by print channels and 65-70% of milk is procured from the company’s channel.
  • Value-added product category, which includes the specialty dairy powders, cow ghee, condensed milk, and cheese,comprises more than 80% and out of total revenue, around 30% comes from the consumer segment. Of the 20% liquid milk, 86% is for pouch milk business. This mix will continue to be there as it is takenat anoptimum level.
  • Price of Skimmed milk powder (SMP) significantly increased because there was also alot of inventory in the country. Now the inventory has gone down,and prices are expected to remain stronger in the years to come.
  • Current cheese capacity is around 30 tonnes per day, which includes raw and processed cheese.
  • On a per day basis, only8.5Lacs liter milk is procured in Q3, as compared to 7.5Lacs Liter in Q2 FY16, because of the draught situation.
  • Out of Rs.256 million, total benefit accounted for till this quarter is around Rs.29 Crores out of which around Rs.3.17 Crores are for current quarter Q3 and Rs.25.60 Crores is for FY2014-2015, FY2015-2016,and H1 of FY2017. The company has received Rs.4.50 lakh till the date, as a first refund and in the process of getting another refund of around Rs.12 Crores, which pertains to FY2015-2016.
  • The company has around 18% to 20% utilization of the capacity for cheese manufacturing. And it targets 40-50% for the next year.
  • Around 65-70% of the procurement is sourced directly from the farmers and the rest is sourced from the third party agent.
  • In B2B, contact duration depends on the product, ranges from 3-6 months to 2-3 years.

Future Prospects

  • The company aims to scale its B2C business and grow its share from around below 30% to around 50% in terms ofrevenues by 2020.
  • It has recently started modern trade in Gujarat and by this quarter and plans to expand the modern trade presence across India.
  • The company anticipated that in the couple of years it would be able to get around Rs.100 Crores plus of tax as a refund depending on what sales and how much amount of sales happens in the states, outside state and all.
  • As of now, the company is new to cheese industry. In the next two years, the company tends to go in high value-products of whey when it will be handling enough quantity of cheese.
  • Since the company has a lot of un-utilized capacities, its major focus is fully utilize the capacities and to grow in the regions where it has already started selling products.

Downloads

Atul Auto Q3FY17 Concall Summary

Atul Auto.png

Financials Highlights

  • Atul Auto has seen negative growth of 12.42% as compared to 19.54% de-growth of overall industry.
  • Net profit margin for Q3FY17 is 9.19% as compared to 9.68% in previous quarter and 10.56% in Q3FY16.
  • EBIDTA margin has remained 15% for Q3FY17.
  • EPS for Q3FY17 is Rs. 5.6 which is down by 0.69 paisa compared to Q2FY17.
  • Raw material consumption has increased by 41 basis point on account of increase in commodity prices.Because of increase in raw material cost, EBIDTA for Q3 has dropped by 1% compared with Q2FY17.
  • Account receivables has reduced as compared to previous quarter and debt-free status is maintained.

 Business Highlights

  • Volume for the company in domestic market has dropped by 18.9% which is in line with industry’s drop of 18.3%in Q3FY17.
  • In overseas market, the company has achieved 7x the volume of Q3FY16, while the industry saw decline of 22%.
  • In Q3FY17, the company has sold 11,043 vehicles with turnover of Rs. 133.76 crores as compared to 11,761 vehicles and turnover of Rs. 142.7 crores in Q2FY17.
  • Domestic sales for Q3FY17 has remained 10,116 vehicles as against 11,253 vehicles for Q2FY17. Export sales have increased to 927 vehicles against 508 vehicles in Q2FY17.
  • Out of 11,043 vehicles sold in Q3FY17, passenger auto is 6069 vehicles and remaining are load carriers.
  • The market share of the company in cargo segment has remained 18% whereas in passenger segment it is 6%.

Industry Update

  •  Till December 2016, the overall Auto industry of India has registered a positive growth of 6.67%, domestic market grew by 9.42% whereas export has de-growth of 7.37%.
  • Because of the impact of Demonetization, volume growth for auto industry has remained negative 3.33%.
  • 3-wheeler industry has seen overall decline of 14.8% till December 2016. Domestic market have flat growth rate of 1.88% while in international front, export have declined by almost 35%.

    Bharat stage 4:

    • BS4 complying products are ready. The company will get certificates of the products by end of February 2017.
    • When BS4 becomes effective from April’17, raw material cost may go up between 5% and 7%.

    E-rickshaws:

    • The company is likely to launch E-rickshaws from Q1FY18.The market size for electric vehicle in India is around 150,000 a year at 10,500 per month.
    • The product will approved by authorized certifying agency and it will be meeting government norms.
    • The product will be distributed through authorized dealers so after-market services will also be available. Warranty will also be available on critical components.
    • The company will tie-up with retail finance company for easy availability of finance.
    • Margin on these products will be in line with regular products.

    Distributors:

    •  The company have 200 primary and 120 secondary distributors in the domestic market and 10 distributors in overseas market.
    • As of now, the company is selling majority of diesel and petrol fuelled vehicles in Gujarat, Haryana, Rajasthan and Punjab.

    Inventory Stock levels:

    • Dealers’ stock levels have come down in Q3FY17 as compared to H1 of current fiscal year. Retail stock levels have gone up.

    Export market:

    • The company has already crossed FY16’s figure of export of 1500 vehicles in first nine months of FY17.
    • The company is targeting African markets and Latin American markets which are major destinations for 3-wheelers other than India.
    • Demand for products in Africa is around 1,75,000 units per annum while for Latin American countries market demand is somewhere between 50,000 and 60,000 units per annum.
    • In Africa the company is facing the challenge of having USC from the buyers. The African buyers are unable to get the FOREX which is a major concern in developing market.

    Downloads

    PPAP Automotive Q3FY17 Concall Summary

    PPAP Automotive.png

     Company Background:

    • PPAP was incorporated in 1978 for the manufacture of custom made extrusion products
    • PPAP is led by Mr. Ajay Kumar Jain who is the Chairman and Managing Director. He is also the President of Toyota Kirloskar Suppliers Association.
    • Abhishek Jain is the Executive Committee of Honda Suppliers Association.
    • PPAP commenced the automotive business in 1985 with a start of Maruti cars in the Indian market
    • The company was converted into a public limited company in 1995 and was listed on the Indian Stock Exchange in 2008
    • PPAP is the leading manufacturer of Automotive Sealing Systems, interior and exterior injection molded products
    • PPAP working with three Japanese companies for the technology requirements and relationships Today PPAP manufacture over 500 different products for their customers and their target is to achieve Zero defect and Zero PPM in quality and delivery performance
    • All the policies and decisions of PPAP are in line with what the customer desires.It is this strategy that has resulted in PPAP leadership position in the respective product segments
    • The company’s core competence is in Automotive Sealing system and Injection molded products
    • The company primarily services the Passenger Car segment and they have recently started supplying to the LCV segment as well
    • PPAP is capable of doing in-house product designing and manufacturing of tools and validation of their products also. This integrated capability gives PPAP a very strong competitive edge over their competitors as they are able to give customers an integrated cost effective solution for theirproduct requirements

    State of the Art manufacturing facilities

    • Located in Noida, Greater Noida, Chennai and Pathredi in Rajasthan
    • PPAP have established a Joint Venture with their technology partner Tokai-Kogyo. After the establishment of this company, as a group, PPAP can cater to theentire Automotive Sealing System requirements of the customers
    • All PPAP plants are environment quality, safety and health related certified

    Customers Updates

    • All Japanese OEMs operating in India are PPAP customers, a few European, local car makers like TATA and Mahindra are customers of PPAP
    • PPAP have recently added Suzuki Motorcycles which is a leading two wheeler manufacturer as a newcustomer. They would be manufacturing injection molded parts for them.

    Exports:

    • About 10% of PPAP products are CKD Exports to their customers to various countries all overthe world like Japan, Europe, Mexico, Venezuela, Argentina and othercountries

    Awards:

    • PPAP has been awardedthe ‘Economic Times Polymers Award’ for 2017 for excellence in plastics under the automotive category

     Industry overview:

    • PVs seem to be the least impacted with single digit decline Y-o-Y while two wheelers and CVs seem to be the most affected with a strong Y-o-Y double digit decline
    • Passenger vehicles and Commercial Vehicles in India on a consolidated basis fell by 18.66% in December; the steepest in 16 years; hit by weak consumer sentiment and cash crunch post demonetization
    • Two wheelers sales crunched by almost 20% Y-o-Y while Passenger domestic sales declined by 8%
    • Players like Maruti Suzuki and Renault India have managed to report good volume numbers on the back of the strong orderbooks and new launches like Baleno, VitaraBrezza and Kwid
    • Tata Motors and Toyota India have also outperformed, supported by the launch of their new products InnovaCrysta, Fortuner and Tiago and a low base of reference last year.
    • Hyundai India performed in line with the industry; however Honda Cars India registered a 19% Y-o-Y decline in its monthly domestic sales during December.
    • Mahindra & Mahindra also underperformed reporting an 8% fall in volumes owing to higher exposures in the rural economy.
    • The management of Maruti has indicated that it is expected to grow at least 10% in the current financial year despite the impact of demonetization.
    • The launch of the Ignis which was announced on 13thJanuary is expected to keep the tempo high for Maruti
    • App-based cab aggregators such as Uber and Ola are also pushing overall car sales accounting for over 1 lakh cars or almost 1/3rd of total sales to fleet operators last year
    • Overall in the Automobile sector, Passenger Vehicles will be the least hurt as bulk of the sales happens through financing and with the interest rates getting cut, thick and fast, this can make Passenger Vehicles sales to outperform the industry
    • Amid a volatile demand scenario nearly 24% of the passenger car volume over the past year has come from the sale of new models
    • The bulk of PPAP sales would primarily be to OEMs, PPAP do not cater toaftermarket
    • PPAP is focusing on increasing the customer base, so in the last quarter PPAP added the SML Isuzu as into their customer base, in this quarter PPAP has already added Suzuki Motorcycle as its customer
    • For Plastic Sealing System the company is catering to almost 70% of the Indian market and90% market share with each of their customers’ components.

     Increasing use of thermoplastics:

    • The plastic product is more premium because it gives a better appearance than rubber product since it gives higher compression set ratio it provides better insulation from air, water,noise and dust from getting in the vehicle
    • The primary sealing is going to continue in the rubber space for PPAP, basically due to an important property called compression set, which is much higher in rubber compared to a plastic or a thermoplastic compound, so due to this property the primary sealing system is going to continue in the rubber space only, secondary sealing system like outer, inner can be shifted from rubber to thermoplastics, so for the Indian market all the Japanese OEMs already using plastic or thermoplastic as the secondary sealing system has been supplied by PPAP
    • TATA has already converted from rubber to thermoplastics and PPAP is supplying these parts. The plastic for secondary sealing system is used by Mahindra & Mahindra left and European OEMs

     Financial Highlights:

    PPAP Automotive Q3FY17 Financial Performance.png
    • PPAP recorded a total income of INR 84.23 crores as compared to INR 71.78 crores in the corresponding quarter of last year
    • The parts business contributed INR 74.14 crores and tools contributed INR 9.89 crores
    • Around INR 21 lakhs coming from the subsidy from Rajasthan government
    • Part sales have grown by 7% Y-o-Y. EBITDA grew by 32.7% in the current quarter under review and stood at INR 15.99 crores as compared toINR 12.05 croresin the previous quarter last year
    • The EBITDA was up by 6.03% as compared to INR 15.08 crores in Q2 FY17
    • The company’s EBITDA margin stood at a robust 18.98% in Q3 FY17 as compared to 16.79% last year and 18.4% in the previous quarter
    • Profit after tax stood at INR 6.33 crores in this quarter compared to INR 3.51 crores last year and INR 5.27 crores in the previous quarter
    • The company recorded a PAT margin of 7.52% in the quarter under review as compared to 4.89% last year same quarter and6.43% in the previous quarter of this financial year
    • Total income stood at INR 247.19 crores as compared to INR 225.69 crores in the same period last year
    • EBITDA for nine months was at INR 43.98 crores as compared to INR 39.01 crores last year
    • The company recorded an EBITDA margin of 17.79%; the net profit was at INR 15.17 crores which is up by 37.41% compared to INR 11.04 crores in ninemonths last year
    • PPAP is supplying almost INR 1200-1300/- per car for Marutiand from Suzuki Motors Gujarat it is in the range of about INR 1500-2000/-
    • December 2016 was expected to be a litmus test for the Auto Industry with the impact of demonetization getting starker in the presence of inventory pile up at the dealers’ ends post the festival season of Diwali
    • The debt equity ratio of the company as on 31st Dec’16 stands at 0.28
    • Total revenue from the tools for the nine months is close to INR 22 crores
    • ROCE for the quarter, it is over 15% and the current gross block is around INR 300+ crore in Q3 FY17
    • The other income is around INR 80 lakhs income which is expected by consistent subsidy and rents, interests and gain on foreign currency fluctuations etc.
    PPAP Automotive 9MFY17 Financial Performance.png

     CAPEX:

    • CAPEX commitments are being met by their internal accruals
    • Money spent for CAPEX or OPEX or maintenance CAPEX. The company is very closely reviewing the timing, the efficiency and the best possible way either a make scenario or a buy scenario
    • ROCE is positively going to be a good result with improved operation efficiency
    • SMG (Suzuki Motors Gujarat) business, is going to make two models; one is the Baleno which is going to getshifted to Gujarat and the new Swift is going to come. So, for the Baleno model, PPAP is going to support Maruti from PPAP existing locations namely Manesar and in Gujarat
    • Around Rs.50 crores of CAPEX towards Chennaiinvestment and Gujarat investment and maintenance expenditure is expected. Hence PPAP is expected to spend between INR 10 – 15 crores on an annual basis

     Strategy

    • PPAP is also exploring new opportunities especially in the region of injection molded parts with SMG.
    • The strategy of PPAP is going tobe concentrating SMG regarding injection molding parts due to the demand and PPAP have already bought land last year and building plan isready, PPAP is just waiting for the confirmation from Marutito start building up small facility at Gujarat
    • PPAP is focusing on improving their operational efficiency by an internal benchmarking and by valuing each and every paisa that is being spent on the company operations
    • PPAP is focusing on Korean customers like Hyundai and working on two fronts on developing the Hyundai business, one islocalization of the existing parts under mass production.Hyundai is presently importing secondary sealing from Korea and planning to localize their requirements, PPAP is approaching Hyundai directly through tier-1 for this product
    • PPAP has already supplied parts to Hyundai for evaluations and the parts have been on trial on the vehicle as early as last week and the results are positive.
    • For Maruti, PPAP the next three years business strategy is 90% is on total volume and next 3 models like Ignis and other new launches, it is going to be 100%
    • The company is focusing fundamentally on making the operations of the company strong.
    • Injection side, the market share is still and small because only Honda is their major customer and some insignificant share from Maruti

     Future Guidance:

    • PPAP is basically focusing on rubber sealing systems, and for plastic sealing systems PPAP is discussing on future prospectus, they are not that focused on injection products
    • The PPAP is striving for 17-18% sustainable operating margins for the coming years
    • The company have 2 basic processes and one is the extrusion process and the second is injection process,where numerous products can be made onthese processes, hence the company wants to explore white good industry options in future
    • From the new business from Suzuki Motorcycles, the revenue is not as expected as they get from Maruti or Honda but this will improve customer-base and de-risking for PPAP in future
    • The capacity utilization may increase in future from the current 65-70% capacity utilization with the new plants at Gujarat and Patherdi, Rajasthan becomes operational

    Downloads