Indus Towers Q4FY22/FY22 results & share analysis (long term)

Avg monthly data consumption is 17GB! - expected to rise to 60GB in few years.. how can u benefit with a lower risk/reward?

A Thread 🧵👇

If you like the analysis, please retweet for support🙏
[Disclosure: Invested]

1/ 
Indus Towers Q4FY22/FY22 results analysis [refer pic for numbers]

(a) Company had healthy growth in Q4FY22 - revenue and net profit increased 10% and 34% respectively on a YoY basis✔️

(b) EBITDA margin has expanded in Q4FY22✔️

2/ 
(c) Cash flow conversion (CFO/EBITDA) has been poor at 61% due to an increase in receivables from Vodafone Idea of ~ INR 3,000 cr. This has been settled by Vodafone Idea after March 31, 2022❌

3/ 
(d) D/E ratio is at 0.8x which is quite low for a tower company (quite stable revenue due to long term agreements) ✔️

(e) ROE/ROCE is quite healthy at 25/33%✔️

4/
Share analysis
In this digital age, we’re always glued to our mobiles. And as such there is a 40% chance that our data is being carried by a telecom tower owned by Indus Towers. You might be wondering, what is Indus Towers?

5/
Indus Towers is a provider of telecom towers and related infrastructure to wireless telecom service providers like Jio, Airtel, and Vodafone Idea. Indus Towers started off in 2006 when Bharti Airtel, Idea Cellular and Vodafone merged their tower companies in select circles. 

6/
Today, it has approximately 185,500 towers and 335,800 tenancies, with a sharing factor of 1.8x. Sharing Factor or “Tenancy Ratio” refers to the average number of tenants on each tower. Higher tenancy ratio means higher profits for the tower company. 

7/
Tenants are also sticky in nature. Indus Towers has a strong balance sheet and reported an RoE of 33% in fiscal year 2022.

8/
During the quarter that ended March 31, 2022, the shareholding of promoter groups changed. Vodafone sold a 7.1% stake in Indus Towers out of which 2.4% were sold in the open market and 4.7% have been sold to Bharti Airtel.

9/
Current promoter holding is:
- Bharti Airtel: 46%
- Vodafone: 21%

In the next few years, I expect Bharti Airtel to keep acquiring shares from Vodafone which Vodafone will use to fund its operations.

10/
One of the key tenants, Vodafone Idea, is facing insolvency due to high debt burden. If it were to go insolvent, India would be left with 2 and a half players, which will have long-term effects on competition in Indian telecom industry. 

11/
This has forced the Government to relook at the telecom policy to make it more conducive.

12/
In January 2022, Vodafone Idea opted to convert its interest on spectrum installments and AGR dues to Government equity by exercising the option offered by the Government in the relief package. 

13/
Following conversion, it is expected that the Government will hold around 35.8% of the total outstanding shares of Vodafone Idea and that the promoter shareholders Vodafone Plc and Aditya Birla Group would hold around 28.5% and 17.8% respectively.

14/
Bharti Airtel plans to spend INR 1.2 lakh crore in capex and related expenses through subsidiaries — Indus Towers, Nxtra, and Bharti Hexacom — over the next four years. 

15/
Out of the total proposed capex, Bharti Airtel will spend INR 88,000 cr in business with mobile tower company Indus Towers according to its stock exchange filing. Big positive for Indus Towers

16/
5G auctions are set to be spread over the next 2 years with 5G sites leading to additional tenancy for the tower company. Internet of Things is expected to further drive growth in the telecom tower industry. Do you know – most of the cars come with a SIM these days?? 

17/
Everything under the sun is likely to have a wireless 4G/5G connection.

18/
So, with a higher tenancy ratio than the national average, marquee shareholders, an experienced management team and a strong balance sheet with dividend yield expected to be around 5%, things are looking good for Indus Towers. 

19/
However, dependence on 2 or 3 tenants increases concentration risks.

20/
So, what is our view on company valuation?

Indus Towers trades at an EV to EBITDA multiple of approximately 4.6x and a PE (TTM) ratio of 8.1x. The current valuation seems to be reasonable.

21/
Listed comparable in the US – American Tower Company and Crown Castle trade at PE (TTM) multiple of 25-30x.

22/
Reliance Jio has sold its tower business (c. 175,000 towers with nearly 1.0x tenancy) to Brookfield at an enterprise value of USD 8 billion. 

23/
Using this benchmark and adjusting for the higher tenancy factor at Indus (1.8 times due to higher tenancy), the enterprise value of Indus Tower comes to around USD 14.4 billion or INR 110,000 cr (vs current market level of INR 85,000 cr).

24/
Company is also expected to have a dividend yield of 5% which is quite attractive.

Overall, the company looks interesting for investment from a long term perspective and should be explored further by investors.

25/
As for the risks to our analysis, 5G deployment could see delays beyond the current expectation of 2 to 3 years. Moreover, the industry is set to continue to be dominated by 2 or 3 players only, for the foreseeable future.

26/
So, would you invest in Indus Towers?
Share your views in the comments and join SocInvest Community if you liked our analysis.

Join SocInvest Community on Telegram for more such analysis: https://t.me/+su0SABLEoedjMjI8

Indus Towers (detailed share analysis): 

https://www.socinvest.app/post/indus-towers-attractive-play-with-t-cs-attached

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/C4q5jdK

Deepak Nitrite Q4FY22/FY22 results & share analysis (long term)

Company has given 5x return since Mar 2020 !! Will the good run continue? Is it a multi-bagger from current level??

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

#deepakntr #deepaknitrite

1/ Deepak Nitrite Q4FY22/FY22 results analysis [refer pic for numbers]

(a) Company has grown tremendously since FY2019 with revenue (TTM) and net profit becoming 2.5x and 6x primarily due to the Phenol business which also led to significant margin expansion.✔️

2/ 

(b) EBITDA margins have come down in Q3/Q4FY22 due to higher input prices. EBITDA and PAT in Q4FY22 are down on YoY basis❌

(c) Deepak Nitrite operates at a high ROE/ROCE level of around 40%✔️

3/ 

(d) Cash flow conversion (CFO/EBITDA) was poor in FY22 due to expansion in working capital (receivables and inventory levels) ❌

4/ Share analysis

Chemicals are all around you. And contrary to popular belief, they’re not all bad for you! Animals, plants and nearly all natural things are made of chemicals, but it’s the artificial chemicals that have the biggest impact on the world. 

5/ And while artificial chemicals have earned a bad reputation, it cannot be denied that they have helped save billions of lives, increased human productivity, and completely changed the way we live. This is where Deepak Nitrite comes into play.

6/ Deepak Nitrite is a 51 years old intermediate chemicals company, with a diversified business of Basic Chemicals, Fine and Specialty Chemicals, and Performance Products. 

7/ It is one of the top 3 global players in xylidines, cumidines and oximes, and a leader in India for inorganic intermediates and phenols.

8/ It retails in more than 30 countries in North America, South America, Europe and Asia. It has earned a reputation and is now a preferred supplier to multinational companies like BASF, CIBA, Monsanto and Bayer Crop Sciences.

9/ Phenolics accounted for more than 60% of the revenues and profitability in FY22. Phenolics business is cyclical in nature. 

10/ Company had the advantage of high phenol prices in FY21 and some part of FY22, primarily driven by supply chain uncertainty thereby expanding the ROE/ROCE significantly, but that is unlikely to be sustainable in the medium term as can be seen in the last two quarters.

11/ With an experienced management team, and many other accolades to its name, is Deepak Nitrite really worth putting your money into?

12/ Deepak Nitrite’s product portfolio is very diverse, with historic market leadership in quite a few of them. Deepak Nitrite is trying to de-bottleneck capacity in its subsidiaries which may ensure high growth rate for the next few years.

13/ So, what is our view on the company valuation?
The Company is a high-growth import substitution story that is undertaking significant investments over the next few years to increase capacity. We can expect the revenue growth to be strong. 

14/ However, investment in R&D, capex and development of new platforms is going to impact the margins of the company in the medium term. 

15/ With the current PE ratio standing at 26 times and the 5-Years Price-to-earnings standing at 21 times, company seems to be overvalued at current levels.

16/ Further, Company’s majority of revenues and profitability comes from commodity business and thus it will be very difficult to sustain current levels of ROE/ROCE.

17/ As for the risks to this analysis, the volatility of prices in the industry is high and can affect margins. Moreover, any hindrance in the supply chain can affect sales. 

18/ Their biggest problem, as a firm in the chemicals industry, Deepak Nitrite can be constantly under fire from environmental activism.

19/ So, would you invest in Deepak Nitrite?

Share your views in the comments and join SocInvest Community if you liked our analysis.

Join SocInvest on Telegram: https://t.me/+su0SABLEoedjMjI8

Share analysis article (detailed): https://www.socinvest.app/post/deepak-nitrite-currently-operating-in-a-sweet-spot

Share analysis video (English): https://youtu.be/AX2zm53qQVA

Share analysis video (Hindi): https://www.youtube.com/watch?v=SoB5RAcs0ZA

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/EPfiu5Q

Easy Trip Planners or EaseMyTrip share analysis (long term)

One of the recent IPOs which have done well. Why?

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

#investing #StockMarketIndia #EaseMyTrip

1/ In modern-day India, to cater to the rising demand for travel and tourism, there are a handful of companies. One such listed company is India’s second-largest online travel agency (OTA), Easy Trip Planners Limited or EaseMyTrip.com. 

2/ Established in 2008, the company offers a comprehensive range of travel-related products and services for end-to-end travel solutions.

3/ The company’s products and services are organized primarily in the following 3 segments: Airline Tickets, Hotels & Holiday packages, and Other Services. Most online travel agencies today make the most of their revenue from airline ticket sales. 

4/ For Easy Trip Planners, this segment constitutes 94% of the revenue generated. However, airline ticket sales are a very low-margin business, whereas hotels/holiday packages and other travel products have higher margins.

5/ It also has the largest network of travel agents with around 60,000 registered travel agents across almost all major Indian cities. The company offers a “No Convenience Fee” strategy which helps it to attract many customers. 

6/ This has resulted in industry-leading growth for the company. The company also benefits from a healthy repeat transaction rate of approximately 85%, which has been key in making the company the only profitable player amongst all online travel agencies in India. 

7/ Easy Trip Planners ranks second in terms of air ticket volume and third in terms of gross booking revenue and the number of registered customers.

8/ The company makes money via performance-linked bonuses, and commissions from Global Distribution System service providers. Select airlines and credit card companies prefer working with EaseMyTrip due to their high sales volume and offer the Company incentives in the process. 

9/ The Company also earns revenue from convenience fees, cancellation services, rescheduling charges, and advertisement revenues.

10/ The Online Travel Agency market is set to grow alongside the growth of digital transactions worldwide. Online airline ticketing has grown by approximately 68% and hotel bookings are 20 to 25% higher after COVID-19. 

11/ Additionally for EaseMyTrip, efficient operations leveraged through technological advancement have reduced employee expenses to 1/3rd of competitors. As for the financial situation of the company, it has a net cash balance of approximately 120 crore rupees as of Sep 2021.

12/ So, what is our view on company valuation?

The company did its IPO at a price of INR 206 in Mar21 and saw a massive subscription of 159x. It is listed at a 13% premium to its issue price. Company issued a 1:1 bonus in Feb22 and is now trading at nearly 4x its issue price.

13/ Market leader MakeMyTrip trades at Price to Sales Ratio of about 9 times. EaseMyTrip in comparison trades at approximately 40 times. The company is significantly overvalued vis-à-vis its competitors.

14/ As for the risks to this analysis, the Company’s fortunes can be severely impacted by any disruptions to the travel industry as seen during the Covid-19 lockdowns. Moreover, should any competitor offer better technological services, customers are likely to move towards them.

15/ So, would you invest in EaseMyTrip?

Share your views in the comments and join SocInvest Community if you liked our analysis.

Share analysis article: https://www.socinvest.app/post/easy-trip-planners-travel-play-on-rising-indian-aspirations

Share analysis video: https://youtu.be/j02i-5oeQRg

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/iiTTO0I

CDSL Q4FY22/FY22 results & share analysis

"I like to invest in companies that are so simple to run, that even an idiot can run it because sooner or later one will". Buffetji could have been talking abt CDSL.

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

1/ CDSL Q4FY22/FY22 results analysis [refer pic for numbers]

(a) CDSL became the first depository to register 6 cr Demat accounts in March 2022 (Q4FY22) ✔️

(b) Number of Demat accounts almost doubled in FY22 ✔️

2/ (c) Company has solid growth (Revenue, EBITDA, and net profit level) in FY22 and Q4FY22 (YoY) on the back of increased retail activity ✔️

3/ (d) However, the revenue has fallen in Q4FY22 vs Q3FY22 primarily due to a fall in IPO/Corporate Action charges (23->8). Another thing to note is that the Transaction Charges didn't grow in Q3FY22 (on a QoQ basis) and slightly fell in Q4FY22 (on a QoQ basis) 49->47.5❌

4/ Share analysis
Being promoted by BSE, and regulated by SEBI, CDSL operates as a depository to keep securities or shares. 

5/ CDSL operates in a favorable regulatory framework that acts as a massive barrier to entry, and as such, it enjoys a duopolistic market structure alongside NSDL.

6/ Starting operations in 1999, CDSL has gained significant ground over NDSL in terms of Demat accounts, even though NDSL started operating 3 years prior. CDSL enjoys 70% of all Demat accounts and 580 depository participants catered through 21,000+ service centers. 

7/ The low operating cost, lower net worth criteria for depository participants, and technology investments are some of the reasons that have possibly attributed to CDSL gaining market share.

8/ Key revenue sources for CDSL include annual issuer charges and transaction charges. Annual Issuer charges contributed to around 20% of the revenue in the second quarter of the current fiscal year, with CDSL charging 11 rupees per folio. 

9/ 32% of the revenue was collected from transaction charges which are directly related to the delivery-based transactions in the cash market.

10/ Key Moats are:
· Asset light business with significant operating leverage
· Duopoly – regulatory framework provides entry barrier
· Network effect – Higher number of Demat accounts or DPs make the business more competitive as the fixed cost is distributed on a higher number

11/ The company is in a perfect place with retail activity expected to further go up with the LIC IPO, and the market shifting to discount brokerages. As a cynic, we must ask ourselves, if this will this last forever?

12/ The business is vulnerable to the market cycles which will make growth happen in a step function. Slow growth in the bear phase is followed by the sudden jump in a bull run.

13/ So, what is our view on company valuation?
Company share price has appreciated 6 times in the last three years primarily on the back of multiple expansion. CDSL trades at a P/E ratio of around 43x. The long-term annual growth of the company is expected to be around 15 -20%. 

14/ As the Company could have high volatility in earnings with the majority of revenue being transaction charges, a high PEG ratio will not be sustainable. So, the company seems overvalued at the current levels. 

15/ However, overall the business seems good and investors should evaluate investing at lower levels.

16/ As for risks to this analysis, a  Market sentiment with LIC IPO is expected to remain buoyant in short term which can take share price higher.

So, would you invest in CDSL?

Share your views in the comments and join SocInvest Community on Telegram if you liked our analysis.

Share analysis article: https://www.socinvest.app/post/cdsl-riding-the-covid-19-wave

Share analysis video: https://youtu.be/KUPA8wFaS-0

CDSL Q4FY22/FY22 results & share analysis

"I like to invest in companies that are so simple to run, that even an idiot can run it, because sooner or later one will". Buffetji could have been talking abt CDSL.

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

1/ CDSL Q4FY22/FY22 results analysis [refer pic for numbers]

(a) CDSL became the first depository to register 6 cr demat accounts in March 2022 (Q4FY22) ✔️

(b) Number of demat account almost doubled in FY22 ✔️

2/ (c) Company has solid growth (Revenue, EBITDA and net profit level) in FY22 and Q4FY22 (YoY) on the back of increased retail activity ✔️

3/ (d) However, the revenue has fallen in Q4FY22 vs Q3FY22 primarily due to fall in IPO/Corporate Action charges (23->8). Another thing to note is that the Transaction Charges didn't grow in Q3FY22 (on QoQ basis) and slightly fell in Q4FY22 (on QoQ basis) from 49->47.5❌

4/ Share analysis

Being promoted by BSE, and regulated by SEBI, CDSL operates as a depository to keep securities or shares. 

5/ Being promoted by a stock exchange in a favorable regulatory framework acts as a massive barrier to entry, and as such, it enjoys a duopolistic market structure alongside NSDL.

6/ Starting operations in 1999, CDSL has gained significant ground over NDSL in terms of demat accounts, even though NDSL started operating 3 years prior. CDSL enjoys 70% of all demat accounts and 580 depository participants catered through 21,000+ service centers. 

7/ The low operating cost, lower net worth criteria for depository participant, and technology investments are some of the reasons that have possibly attributed to CDSL gaining market share.

10/ Key Moats are:
· Asset light business with significant operating leverage
· Duopoly – regulatory framework provides entry barrier
· Network effect – Higher number of demat accounts or DPs make the business more competitive as the fixed cost is distributed on a higher number

12/ The business is vulnerable to the market cycles which will make growth happen in a step function. Slow growth in the bear phase followed by sudden jump in a bull run.

13/ So, what is our view on company valuation?
Company share price has appreciated 6 times in last three years primarily on the back of multiple expansion. CDSL trades at a P/E ratio of around 43x. The long term annual growth of the company is expected to be around 15 -20%. 

14/ As the Company could have high volatility in earnings with majority of revenue being transaction charges, high PEG ratio will not be sustainable. So, the company seems overvalued at the current levels. 

15/ However, overall the business seems good and investor should evaluate investing at lower levels.

16/ As for the risks to this analysis, Market sentiment with LIC IPO is expected to remain buoyant in short term which can take share price higher.

So, would you invest in CDSL?

Share your views in the comments and join SocInvest Community if you liked our analysis.

Share analysis (detailed article): https://www.socinvest.app/post/cdsl-riding-the-covid-19-wave

Laurus Labs Q4FY22/FY22 results & share analysis (long term)

Results were a glass half full or half empty – in the eyes of the beholder! Why?

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

1/ Laurus Q4FY22/FY22 results analysis [refer pic for numbers]
(a) Company had 3% revenue growth in FY22 and 1% in Q4FY22 on YoY basis ❌

(b) Business recovered vs Q3FY22 with 38% revenue increase but Q3FY22 was a sharp fall in the trajectory. So, does it make sense to compare❓

2/ (c) EBITDA margin has contracted to 29% in FY22 and 28% in Q4FY22 ❌

(d) Cash flow from operations to EBITDA ratio has improved to 64% but cash conversion rate is still very poor ❌

(e) ROCE and ROE have come down to 26-28% in FY22 vs 40-45% in FY21 ❌

3/ 
Share analysis

The earliest known compilation of medicinal substances in Indian traditional medicine dates to the 3rd or 4th century AD and has been attributed to Susruta and Charaka. Our history with pharma is quite old. 

4/ The Indian Government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s. With focus on Science and Maths, we created entrepreneurs with superior chemistry skills.

5/ Today, Indian pharmaceuticals market has characteristics that make it unique. While India ranks tenth globally in terms of value, it is ranked third in volumes.

6/ Laurus Labs is an India-based Pharma manufacturer. The Company was traditionally strong in Anti-retroviral API or ARV manufacturing but has since diversified into finished dosage. 

7/ More recently, Laurus Labs has turned its focus on a contract development and manufacturing company where it allows big pharma companies to focus on drug discovery and marketing via outsourcing.

8/ ARV API accounted for 50% of company revenue in Fiscal Year 2017 but only 38% of revenue in Fiscal Year 2021. Other key players in ARV API are Cipla and Aurobindo Pharma. Company is undertaking capex of INR 900 crore to expand its API capacity.

9/ Finished Dosage business accounts for 35% of Laurus revenues in Fiscal Year 2021, having grown from a very small base in Fiscal Year 2018. The business is built on backward integration and consists of sales of ARV dosage forms to Low and Middle-Income countries.

10/ Contract Development and Manufacturing accounted for 10% of company revenue in FY21. There are over 100 R&D scientists working, and the company has 4 Big Pharma clients.

11/ As for the strengths of the company, Strong R&D skills have led the Company to become a low cost supplier of APIs. This skill has also enabled it to gain considerable share in the formulations business. 

12/ Company delivered a tepid performance in the FY22 with a Year-on-Year revenue growth of 3%. On the other hand, the company has no real pricing power in products in which it has significant market share.

13/ So, what is our view on company valuation?

Company has had a big jump in revenue in FY21. EBITDA margin increase led to ~4x jump in profits but sustainability of such margins is still to be tested as they have come down from 32-33% to 28% in FY22. 

14/ Company has a lot of competition in key segments – ARV API and Formulations (Government tenders for drugs in Low and Middle Income countries) so having ROE/ROCE at 26/28% is unsustainable. I would expect the EBITDA margin to come down to a more sustainable level of ~24-25%.

15/ Company trades at EV/EBITDA (TTM) ratio of 23x and P/E (TTM) ratio of 37x which looks challenging due to (1) reversion in EBITDA margins to a more sustainable level and (2) high working capital in the business.

16/ As for the risks to the analysis, promoter shareholding had come down from 32% in September 2020 to 27% in December 2020. Promoter selling stake is not a good sign. 

17/ Warburg Pincus (PE fund) sold their stake in June 2020 when the share price was INR 100-110. PE investors have better access to information so their exit at a lower price should be treated as a warning.

Join SocInvest on Telegram: https://t.me/+su0SABLEoedjMjI8


Share analysis article: https://www.socinvest.app/post/laurus-labs-is-hype-justified

Share analysis video: https://youtu.be/ZpF1axtvIq4

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/gMaqpER

IEX Q4FY22/FY22 results & share analysis (long term)

Share price has dropped 25% and FIIs have reduced stake from 37% to 27% since Sep21

#IEX gave bumper results for FY22. But there is a twist in the story!

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

1/ IEX Q4FY22/FY22 results analysis [refer pic for numbers]

(a) Revenue growth has been solid of 36% on in FY22 vs FY21 with increase in EBITDA margin

(b) CFO/EBITDA, ROCE and ROE too has expanded in FY22

2/ (c) However, the growth is coming down in last few quarters with revenue growth of 19% (YoY) in Q4FY22 and volume growth of 16% (YoY) in the month of March

(d) Revenue and EBITDA have come down in Q4FY22 vs Q3FY22 which also point in the same direction

3/ IEX Share analysis

You’re reading this thread on a device that, at some point in time, needed to be charged, or plugged into a switch. We all rely heavily on electricity in our daily lives. 

4/ There’s a high chance that your electricity supplier has bought electricity from the electricity platform of IEX. IEX is the single largest entity in the electricity trade market with a market share of 90%.

5/ The industry has seen growth, with a significant rise in renewable energy industry. Given the dependence of Renewable energy on nature, producers of such energy sell in the open markets on shorter duration contracts, like the ones on IEX. 

6/ The markets which IEX sets to target is also set to increase by some 50bn units to around 170bn units in 2022.

Since IEX is a monopoly, the growth of the spot power market is especially beneficial to them. Their financial metrics are proof of just that, with a ROE of ~50%.

7/ The Indian Gas Exchange, a subsidiary of IEX, the first of its kind in India, is also likely to grow very fast. The gas companies have been given pricing and marketing freedom from the government, to trade on the gas exchange up to 10% of their annual production.

8/ So, is investing in IEX a good option?

To put it simply, Company owns controlling share of a very fast growing market, thus investing in it makes a lot of sense. The short term power trading market is ~11% of the electricity market, and could grow into 13% in the near future.

9/ And with an excellent management team, and overly positive metrics, there’s no reason not to invest in IEX.

10/ What are our views on the company valuation?

A Price to Earnings ratio of around 65 times is not cheap by any means. And while business is good, and fundamentals are likely to catch up, this stock may be accumulated at significant dips in the long run.

11/ Risks to this analysis?
The risk exists in the form of competitors, most notably Power Exchange of India, which has opted for a much aggressive approach, and are taking away market share from IEX. 

12/ IEX greatly benefits from its monopoly status and network effects, and the emergence of competitors puts it at risk. Moreover, changes in regulations can reduce the commissions that the exchange can make thereby impacting its financial metrics.

Join SocInvest on Telegram for more such analysis: https://t.me/+su0SABLEoedjMjI8

Share analysis article: https://www.socinvest.app/post/indian-energy-exchange-a-platform-play-in-the-fast-growing-indian-energy-market

Share analysis video (Hindi): https://youtu.be/j0sCMTywWjw

Share analysis video (English): https://youtu.be/0a1oNcvJjYo

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/wY97EvP

ICICI Bank Q4FY22/FY22 results & share analysis (long term)

HDFC Bank has been reigning king of the Indian banking industry for last 20 years. Darling of investors.

We have a challenger in ICICI Bank! How?

A Thread 🧵👇
If you like the analysis, please retweet for support🙏

1/ ICICI Bank Q4FY22/FY22 results analysis [refer pic for numbers]

(a) Revenue growth has been slow – 7% on YoY basis or 12% on QoQ basis

2/ (b) Net Interest has accelerated by 17% in FY22 vs FY21 driven by higher Net Interest Margin (3.96% vs 3.69%) or lower cost of deposits (3.53% vs 4.125)

3/ (c) Net profit growth of ~37% in FY22 on YoY basis which was also aided by lower NPA (implies improving asset quality)

(d) ROE increased from 13% to 15% - a big positive

4/ ICICI Bank share analysis

If you have watched the cult movie Jo Jeeta Wahi Sikandar and have been following the Banking industry in the past few years, you can’t help but notice a few parallels here btw the showdown of the top 2 in the banking and the movie’s final race.

5/ Although we can say that there isn’t any end to the race in the banking industry or any other industry in general, it is safe to say that the top 2 contenders have pulled way ahead of the rest of the industry. 

6/ Shekhar (HDFC Bank) is still firmly in the lead, but Sanjay (ICICI Bank) is slowly inching closer in a bid to overtake the leader. Will Sanjay come to level with Shekhar is uncertain, but, surely, the race is now becoming closer than ever before.

7/ The Banking industry in India, especially the private sector has grown mainly on the back of the trust, service quality, and operational efficiency demonstrated by these private players over the dominant public sector banks.

8/ But now the same factors as operational efficiency, good underwriting, and trust have become the norm (hygiene factor) in the banking sector and are no longer the differentiating factor. 

9/ The new edge that will dictate the race now is technology, ease of usage, and superior app & platform experience.

10/ And technology is what ICICI Bank is counting on to be able to match and overtake the market leader HDFC Bank.

11/ ICICI Bank has been a pioneer in the Indian Banking Industry for a long time. It has not only been involved in the creation of many historic institutions like NSE, CRISIL, & CIBIL, it has also been the trailblazer in the technology services introduced in the banking industry.

12/ ICICI Bank was the first in India to introduce a mobile banking app way back in 2008 and has even adapted its mobile app iMobile Pay to become India’s 1st universal banking app which provides payment and banking solutions to customers of any bank present in India.

13/ The biggest edge for ICICI Bank is its focus and expertise in banking technology. Their iMobile Pay app has seen over 5.3 million activations from non-ICICI customers which stands as a testament to their innovative capabilities in the retail banking and technology space.

14/ View on Valuation

ICICI bank currently trades at a P/E of 21x vs 20x of HDFC Bank, 12x of SBI, 32x of Kotak Mahindra Bank and 19x of Axis Bank.

15/ In terms of Price to Book value, ICICI Bank is trading at close to 3.3x times vs. 3.6x of HDFC Bank, 1.6x of SBI, 4x of Kotak Mahindra Bank, and 2.3x of Axis Bank.

16/ The Bank has gone through numerous changes since the appointment of the current CEO Sandeep Bakshi after the high-profile sacking of Chanda Kocchar. 

17/ Sandeep Bakshi has cleaned up the bank’s balance sheet and has seen profit growth outpace revenue growth with CAGRs of 81% and 10% respectively over last 3 years. 

18/ This has also seen the RoE rise to 15% currently which is higher than Kotak Mahindra Bank’s current RoE (13%) and has significantly reduced the gap with HDFC Bank to 3% from the 8-9% seen earlier.

Detailed share analysis article - https://www.socinvest.app/post/icici-bank-jo-jeeta-wahi-sikandar

Join SocInvest on Telegram - https://t.me/+su0SABLEoedjMjI8

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/Xy3owuL

LTTS Q4FY22/FY22 results and share analysis

Air mobility is closer to reality and could solve urban congestion. What's the connection of air mobility with LTTS? 

A Thread 🧵👇

If you like the analysis, please retweet for support🙏

#investing #LTTS

1/ 
LTTS Q4FY22/FY22 results analysis
[refer pic for numbers]

(a) Company’s revenue growth (CAGR) for last 5 years is 15% and PAT (CAGR) is 18%
(b) Business was impacted in 2021 – COVID 19; recovered in FY22 - revenue growth of ~16% in FY22 over FY20.  Decent growth - not high!

2/ 
(c) EBITDA margins improved to 22% in FY22 vs 20% in FY19 and 18% in FY21
(d) WC days worsened: 126 days in FY22 vs 45-70 during FY19-21 leading to poor cash flow convertibility (CFO/EBITDA)
(e) ROE at 25%
(f) Revenue growth guidance of 13.5-15.5% (constant currency) in FY23

3/
(g) LTTS has garnered a multi-year USD100 million+ electric air mobility deal from Jaunt Air Mobility (Jaunt). As part of the contract, LTTS will open an Eng. and R&D Centre in Québec Province for the next-gen electric aircraft manufacturer to provide engineering services

4/ 
LTTS share analysis
LTTS is an Engineering Research & Development services and digitalization solutions providing company, incorporated in 2012. It focuses its business on five areas: Transportation, Telecom & Hi-tech, Industrial products, Plant Engineering, & Medical Devices

5/
It offers consultancy, design, development, and testing services across the product and process development life cycle.

6/ 
It serves 318 clients spread across the globe in these areas, including 57 of the world’s top 100 R&D companies. LTTS’s excellence in customer satisfaction is directly reflected in the fact that 90% of its clientele are repeat customers.

7/
Global spending in the industry stood at $1.5 trillion in 2020, which is expected to increase to $2.6 trillion by the year 2026. The addressable market looks set on increasing from $86 billion to $128 billion in the same time frame.

8/
Within India, the Engineering R&D market has also doubled in this period from $35 billion to $71 billion due to an increase in digital engineering spending which is expected to increase further at a CAGR of 19%

9/
To build new-age digital products and services, enterprises across verticals will spend on digital engineering which will boost R&D spending. 5G, and sustainable engineering.

10/
LTTS benefits from its strong partnerships. Amazon selected LTTS as consulting and professional service partner to support Alexa integration in various connected devices spanning multiple domains and industries. 

11/
Airbus selected LTTS to provide technology and digital engineering solutions for its Skywise platform and the company has set up a dedicated engineering hub for Airbus.

12/
Its Experienced management team is a key advantage over competitors. Current CEO joined in 2009 and has grown through the ranks over the last 12 years. The company has been recognized by industry experts such as Zinnov as one of the industry leaders across various categories.

13/
So, what is our view on company valuation?
Even though the stock has moved up 4 times since March 2020, but lower compared to other players like Tata Elxsi and Persistent. Company trades at PE (TTM) multiple of ~50x, higher than its 5-year average PE multiple of 21x.

14/
Capgemini acquired Altran Technologies, a major ER&D player, in April 2021 at an implied P/E multiple of ~15x. LTTS could be an interesting target for an IT player looking to expand in the ER&D space.

15/
As for the risks to this analysis, any acquisition interest can keep the price high for the short or medium term. Moreover, the ER&D space is getting increasingly competitive which can lead to high attrition levels similar to IT companies.

16/
So, would you invest in L&T Technology Services? Share your views in the comments section.

Share analysis article (detailed): https://www.socinvest.app/post/l-t-technology-services-preferred-engineering-services-partner

You can read the unrolled version of this thread here: https://typefully.com/_saurabhk_/evGPDcb