In today’s briefing:
- Life Insurance Corporation of India IPO – Anchor Book Results Weren’t Great
- Smartkarma Webinar | High-Conviction Ideas from the Indian Market
- Bajaj Finance (BAF): Back to Pre-COVID Like Stellar Performance!
- KPIT Tech: Robust Earnings and Strong Guidance
- Coromandel International – Maintain Buy Despite Interim Worries on Input Costs
- Coromandel International – Backward Integration and Operating Leverage Drive EBIDTA
- Can Fin Homes – Record Disbursements and Margin Expansion Aid Earnings
- IndiaMART – Strong Customer Additions; Growth to Bump up in FY23E
- Indiamart Intermesh Ltd – Robust Revenue Growth; Margins Decline
- Gillette India – Mixed Bag; Limited Upside Leads to Rating Downgrade
Life Insurance Corporation of India IPO – Anchor Book Results Weren’t Great
- Government of India (GoI) is looking to raise around US$2.7bn via selling a 3.5% stake in Life Insurance Corporation of India (LIC) in its upcoming India IPO.
- This is less than half of its initial plans in terms of fundraising target and comes at less than half of its initial valuation target.
- We have looked at various aspects of the deal in our earlier notes. In this note, we compare it’s anchor book results with recent listings.
Smartkarma Webinar | High-Conviction Ideas from the Indian Market
In our next Webinar, we welcome back Analyst Ankit Agrawal, CFA, who will share and elaborate on three high-conviction ideas from the Indian market, across sectors and market caps.
The webinar will be hosted on Wednesday, 11 May 2022, 17:00 SGT/HKT.
Ankit Agrawal, CFA is the founder and CIO of Yellowstone Equity, a firm providing unbiased and independent research on Indian equities. He was previously on the buy-side with Howe & Rusling and Investcorp.
Bajaj Finance (BAF): Back to Pre-COVID Like Stellar Performance!
- BAF reported strong Q4FY22 earnings led by 1) healthy AUM growth and 2) decline in provisioning. YoY, the NIM growth was similar to the AUM growth suggesting no margin compression.
- However, QoQ, BAF witnessed NIM compression, partly driven by interest reversal from a corporate account that became NPA. Overall, the management is confident of maintaining NIMs at current level.
- The pace of core AUM growth also declined QoQ. However, this could be due to seasonality and despite declining pace, Q4FY22 core AUM growth was still healthy at 5%+.
KPIT Tech: Robust Earnings and Strong Guidance
- KPIT Tech reported strong Q4FY22 revenue growth (5%+ QoQ in constant currency [CC] terms). It also reported margin improvement, despite supply-side headwinds; with EBITDA margin at 18.6% vs 18.5% QoQ.
- FY23 guidance came in optimistic with revenue growth expected to be in 18-21% range in CC terms and EBITDA margin projected to remain stable in the 18-19% range.
- Demand environment continues to be robust with high visibility for growth. Q4FY22 total deal win was healthy at USD 200mm; including a large deal of Euro 70mm value.
Coromandel International – Maintain Buy Despite Interim Worries on Input Costs
- Revenue at Rs42.27bn was 14% below NBIE estimate: EBITDA margin at 9% was a beat on our estimate of 4.8% due to higher-than-expected gross margin of 25.7% – a beat of 668bps.
- 4QFY22 revenue was up 48% YoY: Nutrient segment’s revenue was up 55.8% YoY at Rs36.82bn, a miss of 13.3% compared toth NBIE estimate of Rs42.47bn.
- EBITDA margin beats NBIE est. by 418bps, but down 15bps YoY at 9%
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Coromandel International – Backward Integration and Operating Leverage Drive EBIDTA
- 4QFY22 earnings beat our estimates – CRIN reported a better than expected operating performance despite rising input costs, due to backward integration, control on fixed costs, selective price increases, better outsourcing of raw material, mix management of raw material (while maintaining quality), and better capacity utilization.
- Higher fertilizer margin drives operating performance – CRIN reported an overall revenue of INR42.3b (est. INR40.3b) in 4QFY22, up 44% YoY.
- Highlights from the management commentary – Subsidy outstanding as of Mar’22 stood at INR2.94b (v/s INR5.9b in Mar’21).
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Can Fin Homes – Record Disbursements and Margin Expansion Aid Earnings
- Record disbursements: The company recorded disbursements worth Rs27bn in 4QFY22, increasing by 35.2% YoY and 9.4% QoQ.
- Loan growth strong on the back of record disbursements: Overall loan book increased by 19.7% YoY and 5.1% QoQ to Rs263.8bn.
- NIM expansion aided by yield improvement and stable CoF.
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IndiaMART – Strong Customer Additions; Growth to Bump up in FY23E
- Margin to drop on elevated investments; business fundamentals intact
- Good topline growth but large miss on margins – Revenue stood at INR2.0b (1.8% above our estimates), +12.1% YoY and +7.1% QoQ.
- Highlights from the management commentary – The company added the highest ever paid customers at 13k and plans to add customers in the range of 8-9k per quarter going forward.
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Indiamart Intermesh Ltd – Robust Revenue Growth; Margins Decline
- Indiamart have reported consistent growth in registered buyers, registerd buyers grew to 149 Mn showed a growth of 4.2% QoQ.
- Indiamart has also expanded its foothold on the number of the products live on the platform, total products live on the platform stood at 83mn grew 3.75% QoQ.
- Total business enquiries delivered stood at 120 Mn demostrated a growth of 2.6% QoQ. Annualised ARPU for Q4 FY22 declind to Rs. 47,400 but likely to improve with better offering mix.
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Gillette India – Mixed Bag; Limited Upside Leads to Rating Downgrade
- 3QFY22 performance: GILL’s 3QFY22 revenue grew by 5.6% YoY to Rs5.7bn (vs our est. of Rs5.9bn).
- 3QFY22 segmental performance: In terms of revenue, while the Grooming segment (76.1% of sales in 9MFY22) grew by 8.9% YoY (largely in line with our estimate; 3-year CAGR of 5.5%), Oral Care disappointed with a decline of 5.1% YoY (a drop of 12% even on QoQ basis; 3-year CAGR of 12.2%).
- 9MFY22 performance: Revenue was up by 8.3% YoY while EBITDA & PAT were down by 9.2% YoY & 16.8% YoY, respectively.
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