Daily BriefsIndia

India: BYJU’S, Edelweiss Financial Services, Paytm, Bandhan Bank Ltd, Maruti Suzuki India, Tata Motors Ltd, Crompton Greaves Consumer Electricals, Symphony Ltd, SBI Life Insurance Co Ltd, Mangalam Cement and more

In today’s briefing:

  • Can After Tremors of the China Tutoring Sector Shakeup Impact India EdTech?
  • Edelweiss: The Worst Is Behind Us
  • Paytm IPO: Multiple Revenue Channels but Profitability Is a Tall Order
  • Bandhan Bank | Postcard from West Bengal
  • India Channel Insight | Maruti, Hyundai, Tata Motors, Eicher, Ola Electric
  • Tata Motors – Earnings Flash – Q1 FY 2021-22 Results – Lucror Analytics
  • Crompton Greaves
    Consumer Electrials
  • Symphony Ltd: Slow Recovery on Favourable Base
  • VNB growth robust; margins expand on steady product mix
  • Mangalam Cement: Value Play in Cement Space

Can After Tremors of the China Tutoring Sector Shakeup Impact India EdTech?

By Devi Subhakesan

China-based after-school tutoring stocks saw the bulk of their equity value evaporate as authorities decided to turn the regulatory heat on this sector and also requiring the players to operate as non-profits. As the after-tremors of this move reverberate across the investment space, are the multibillion-dollar valuations of India’s rapidly growing edtech players at risk? Well-known private equity players ranging from Sequoia Capital to Tiger Global have invested in India’s fast-growing online education players – notably, BYJU’S (1391510D IN)  (valued at USD16.5 Bn) and Unacademy (valued at USD 2Bn) amongst others.

In this insight, we discuss if India’s rapidly growing online education sector is vulnerable to regulatory risks similar to that faced by after-school tutoring companies in China and how this could potentially affect large online tutoring players like Byju’s and Unacademy. We also look at leading investors in this space – and how they could be impacted.


Edelweiss: The Worst Is Behind Us

By Ankit Agrawal, CFA

While Edelweiss has faced significant provisioning led losses over the past one and half years, we believe the worst is behind us now. Edelweiss had significantly cleaned up its book in Q4FY20 and in the most recent reported quarter i.e. Q4FY21, it further took significant provisioning to account for adverse impact of COVID second wave and any additional stress. Going forward, we expect Edelweiss’ asset quality to improve largely assisted by significant clean-up in the past few quarters. Additionally, the residential real estate market seems to have bottomed out with liquidity coming back to the market and demand turning favorable post COVID. In line with our original thesis, Edelweiss has also significantly accelerated its shift towards fee based business model over the past couple of years. All in all, we expect significant re-rating in the stock over the next 1 to 2 years.


Paytm IPO: Multiple Revenue Channels but Profitability Is a Tall Order

By Shifara Samsudeen, ACMA, CGMA

India’s largest payment and financial services platform Paytm (PAYTM IN)  has filed for an IPO to raise about INR166bn (US$2.2bn) through the issuance of new shares as well as through the sale of existing shares. Paytm plans to raise about INR83bn through the sale of new shares while the existing shareholders including the company’s founder Mr. Vijay Shekhar Sharma and other investors plan to offer part of their shareholding in the company.

According to news media outlets, Paytm aims for a valuation of about US$25-30bn and the company’s FY03/2021 revenues of INR28bn (US$364m) implies a trailing EV/Sales of 69-82x.

Paytm’s revenues grew 1.5% YoY in FY03/2020 while it declined 14.6% YoY in FY03/2021 due to the pandemic. We expect the company’s commerce and cloud services business’s top line to further decline in FY03/2022E due to the resurgence of Covid-19 in India in April 2021. Though Paytm has multiple monetisation channels and established itself as a category leader in overall payments sector in India, we believe it will take a few more years for the company to reach profits.

In this insight, we examine Paytm’s business model, segments, revenues and margins. In a follow-up insight, we plan to take a look at the corporate governance related issues of the company and run through our governance framework.


Bandhan Bank | Postcard from West Bengal

By Pranav Bhavsar

Bandhan Bank Ltd (BANDHAN IN) is a fine example, reiterating our ability to deliver “qualitative” alpha that is backed with rigorous primary research and channel checks (YTD BANDHAN -26% vs NIFTY at +12%). Our work done on Bandhan stands as a testimony proving our ability to cover channels not just for consumer names but also financials where in spite of wide coverage, primary checks are able to provide the required edge. 

Our earlier coverage on Bandhan includes 

We again test the waters by speaking to five DSC managers in top districts in West Bengal with an objective to assess collection, lending practices and expected delinquency. 


India Channel Insight | Maruti, Hyundai, Tata Motors, Eicher, Ola Electric

By Pranav Bhavsar

In this Insight, we present commentary from our interactions with one of the largest dealers of Maruti Suzuki India (MSIL IN) , Store Manager of Royal Enfield from Eicher Motors (EIM IN) , Dealership owners of Hyundai Motor Co (005380 KS) and an Electric Vehicle (EV) of Greaves Cotton (GRV IN). We also share anecdotal commentary that we have gathered about Tata Motors Ltd (TTMT IN) .

About India Channel Insight 

Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets emerging out of these interactions and have been aiding us to generate interesting trade ideas and have often proven to be reliable sources of qualitative alpha.


Tata Motors – Earnings Flash – Q1 FY 2021-22 Results – Lucror Analytics

By Trung Nguyen

Tata Motors’ Q1/21-22 results were weak, as expected. The quarter was affected by the second wave of COVID-19 outbreaks and the chip shortage. Our key concern is the surge in net automotive debt. We believe it is unlikely that net debt at FYE would return to the level at the beginning of the fiscal year. However, the net debt increase may be offset by potentially higher earnings. Liquidity is adequate, especially after the recent bond issuance.


Crompton Greaves
Consumer Electrials

By ICICI Securities Limited

Market leader in the domestic fan industry with value market share of 24%. The company has increased focus on increasing market share in home appliances categories like (air coolers, water heater and kitchen appliances) Robust balance sheet with RoE & RoCE of 34% & 39% (three-year average), respectively, with stringent working capital policy…

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Symphony Ltd: Slow Recovery on Favourable Base

By ICICI Securities Limited

Better gross margins (up 452 bps YoY) helped turned EBITDA positive at 4.3% vs. -3.2% in Q1FY21. However, lower-than-expected EBITDA margin is mainly due to higher advertisement expense (3x jump YoY)…

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

VNB growth robust; margins expand on steady product mix

By Motilal Oswal

VNB growth robust; margins expand on steady product mix Motilal Oswal values your support in the Asiamoney Brokers Poll 2021 for India Research, Sales, Corporate Access and…

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Mangalam Cement: Value Play in Cement Space

By ICICI Securities Limited

About the stock: The company is a north based player with cement capacity of 4.0 MT having plants in Morak (Rajasthan) and Aligarh (UP). Mangalam markets and sells cement under the brand name Birla Uttam Cement.

  • The key markets include Uttar Pradesh, Rajasthan and Madhya Pradesh having revenue share of ~45:30:25, respectively
  • The company is in the process of increasing its clinker capacity at its existing facility at Morak, from 2.3 MT to 2.6 MT at a projected cost of | 135 crore
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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