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ICICI Prudential Life Insurance Company reports strong Q2 results with overall APE growth of 34.9% YoY basis.

by 5paisa Research Team 25/10/2021

ICICI Prudential Life Insurance Company (IPLI) reported strong growth of 43.5% YoY basis in 2QFY22 and 45.4% YoY basis in 1HFY22 in linked savings APE, sales of which were affected in last year due to covid-19. While Non-linked savings (excl. annuity) grew by 22.6% YoY basis (Rs. 4.6bn) in Q2FY22 and by 42% YoY basis in 1HFY22. The overall APE grew by 34.9% YoY basis (Rs. 19.8bn) in Q2FY22 and by 39.7% YoY basis in 1HFY22.

In 1HFY22, the company has successfully added 53 new partnerships. Non-ICICI Bank banca partners have delivered strong growth, reporting a 11-12% of the total banca share of 39%.

The overall retail protection grew by 21% YoY basis (Rs. 2.8bn) for 2QFY22 and by 23.3% YoY in 1HFY22. The growth was seen due to monetizing of its client pitching and engagements and ensuring that the covers are examined and correctly priced for the risk in the group term. Along with this, the upselling of critical illness covers now assures an enhanced sum. All these measures have effectively worked for the time being, however, moving forward there may be risks to this performance due to supply-side constraints and underwriting challenges which includes customers being reluctant to undertake physical medical examinations. Even with the challenges and risk, the management seems fairly positive towards medium to long term growth while the near-term outlook may be muted. 

As for the increasing reinsurance rates, the management is in discussions to come out with a final decision which may be a mix of hiked prices and tight underwriting norms. However, the company is confident that the heightened prices would be effectively passed onto the customers without actually causing a drastic impact. The company does not forestall any material changes in near-term due to reinsurance rate hike as retail protection growth is unlikely to pick up.
 

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HUL’s strong performance in Q2, however, underlying volumes lagged

by 5paisa Research Team 25/10/2021

Overall Performance 

Despite the shocking low underlying volume growth, which stood at ~4%, the underlying domestic consumer business grew at 11% YoY basis. In H1FY22, HUL reported 12% growth in sales, 8.5% growth in EBITDA and 6.2% growth in APAT. In Q2FY22, HUL reported 11.2% growth (Rs. 127bn) in sales YoY basis while 6.8% growth on QoQ basis. Adjusted PAT grew by 7.5% YoY basis while it grew by 11.5% QoQ basis.  HUL’s 75% of the business gains decent market share and relative penetration. The management believes that even if half of the entire business performs and gains market share on a global platform, the company situation remains stable and in good position.

Segment Performance

The various segments of the business grew at a healthy pace however the only concern hanging over their performance remains to be the inflationary pressure which affects the cost-pricing. 
~85% of the portfolio is made up of Health, Hygiene & Nutrition (HHN) which has continued to grow at a steady pace. Hand Sanitizers and Hand Washes are growing moderately while Laundry is picking up slowly. Brands like Dove, Tresemme, Pears, Surf Excel etc are doing very well. Discretionary portfolio has recovered well and is almost back to pre-covid level. The portfolio’s recovery in comparison to the performance in. Out-of-Home (OOH), consisting of ice-creams majorly, reached back to the pre-covid level.

Margins and Inflation

The margins, even though healthy, seemed to be under tension due to inflated prices of Palm oil & derivatives (used in skin cleansing & hair care), Crude & derivatives (used in laundry & household care), Packaging (plastic & paper) costs which are inflated to 40-50% in past one-year, multi-fold increase in Ocean freight, and significantly high tea prices. The company is trying its best to sustain the margins. It has spent more on its media expenses and ensured sufficient share of voice to share of market ratio. Even with the inflationary pressure in play, HUL does not seem to be bothered by any disruption in global supply chain challenges since it is doing well in terms of raw material sourcing flexibility & resilience. 

Story moving forward

The online demand through eRTM (Shikhar), E-Com & D2C in Q2FY22 makes up for more than 15% of the business as compared to more than 10% in Q1FY22. Shikha, present only in urban & semi-urban areas, is progressively penetrating rural areas. It is now a part of 650,000 stores with improving adaptability and stickiness. 
In a sector where when prices fall, volumes pick up, HUL needs to focus on the volume delivery while also keeping the market share first priority in order to retain its consumer franchise. Moving forward, HUL plans to focus more on heightened awareness about hygiene and e-commerce, which is in consumer’s favor from convenience and assortment point of view. 
 

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Dreamt of owning an IPL team? - Now you can buy Chennai Super Kings shares

by 5paisa Research Team 25/10/2021

Founded in 2008, Chennai Super Kings is a franchise cricket team based in Chennai, Tamil Nadu which plays in the Indian Premier League (IPL) and is a wholly-owned subsidiary of India Cements. It is one of the most popular team, having won the IPL title four times, and has a strong brand value and highest winning percentage. 

Founded in 2008, Chennai Super Kings is a franchise cricket team based in Chennai, Tamil Nadu which plays in the Indian Premier League (IPL) and is a wholly-owned subsidiary of India Cements. It is one of the most popular teams, having won the IPL title four times, has a strong brand value and highest winning percentage.
 
It is the only sports team in India that is available to the general public for investing in it. Owing to its popularity and love from the masses, the team generates revenues from gate ticket collection, in-stadium advertising, and merchandise sales. The team earns the highest revenue from Media rights which contribute ~60% of the total revenue, followed by Revenue from sponsorship which makes up ~15-20% of the total revenue, and the least contribution ~10% comes from Ticket sales.

With its strong brand value and popularity, CSK has managed to sail through the tough waters during the pandemic by maintaining positive broadcasting and other indirect revenue streams. CSK is estimated to continue generating strong revenues from merchandise sales, sponsorships, portions of prize money and digital viewership revenues for FY21-22.

At present, CSK holds a valuation of Rs. 3,850 crores while the brand value is worth Rs. 47,500 crores and this value is expected to grow even further with recovery in the sports industry. 

The price of the unlisted shares zoomed from Rs. 65/share in Jan ‘21 to Rs. 130/share at present, reporting a 100% growth. With cricket gaining popularity across the globe, IPL is gaining traction as well which may increase the brand value of IPL and its teams by multifold. This along with CSK’s popularity, we can expect more upside to the share price and higher valuations which could make CSK worth billions. 
 

Financial Overview:
 

Particulars FY20-21 (in crores)
Revenue from Operations 247.8
Total Assets 316.2
Total Outside Liabilities 100.1
Equity Shares Outstanding 31
Net-worth 116
Total Income 59
PAT 40.3
   
Ratios  
Current Ratio 4.44x
RoE 18.63%
Debt to Equity 0.3
NP Margin 16.25%

 

CSK’s lower dependency on debt reflects on increasing cash flow which can be shared with the investors through dividends and increased book value. It has also managed to increase its Cash and Cash equivalents component by maintaining its liquidity which has led to improve its Current Ratio. 

Going forward, a strong management on and off field, coupled with recovery in the sports industry and CSK’s popularity, one can expect profit and revenue growth. 

The top shareholders list includes big names such as Indian Cements Shareholders Trust, Sri Saradha Logistics Private Limited, Life Insurance Corporation of India, ELM Park Fund Limited, Hirtle Callaghan Emerging Markets Portfolio, Reliance Capital Trustee Ltd, and Radhakishan S Damani. 
Top principal partners of the team are Myntra, India Cements, Gulf, British Empire, SNJ 10000, Jio, Nippon Paint, Astral Pipes, Equitas. The official partners of the team are Clear, BKT, Dream 11 and Starbucks Coffee.
 

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ICICI Bank reports a robust growth in Q2FY22 however margins still remain under pressure

by 5paisa Research Team 25/10/2021

ICICI bank reported robust growth in the recently announced Q2 results, the overall business grew by 19% YoY as the net profit grew to Rs. 55.1bn, NIM grew by 4.0% (up by 11bp QoQ), loan growth stood at 17% YoY and 4% QoQ, NII grew by 25% YoY, fee income increased by 21% YoY which led to an increase of 23% YoY in core operating profit. Slippages clocked at Rs. 55.8bn (3.5% of loans), and the annualized retail slippage ratio stood at 4.3%. 

The growth and better-than-expected margins were driven by improvement in yields, reduction in cost of funds, and good business in SME and retail loans. This growth is estimated to stay consistently favorable. Other factors driving the growth were superior asset quality performance, improved earnings, wholesale segment improved contribution, newfound growth drivers in the retail segment (personal loans, credit cards), ability to reign in cost ratios gradually and significant reduction in incremental credit costs. The RoE stood at 14.1% and exit RoA stood at 1.8% in Q2FY22. 

Bank’s NIM stands muted and may continue the trend due to difficulty in sustaining the levels due to low interest reversals and high CASA ratio driven improvement in funding costs. The NIM may also get affected if the Bank plans to slash interest rates even lower in order to maintain market share and beat competition. 

The bank’s retail portfolio business strategy based on proprietary data and analytics by utilizing the existing customer database for sourcing retail products through cross-sell and up-sell has served well in growing the business segment. The bank has witnessed a significant growth in SME and business banking, in payment transactions from features like ‘Pay to Contact’ and ‘Scan to Pay’, and number of credit enquiries on its digital offerings and platforms like InstaBIZ. Monitoring these, the bank strategizes to grow its margins by programme-based lending rather than diluting margins. 

The bank registered less than 1% overdue in performing its corporate portfolio. One of the segments that is still under stress is the Commercial Vehicle Loans segment. The net slippage and overdues (without the Commercial vehicle segment) were back at March2021 levels. 

There seems to be no concentration risk in Restructuring under 2.0 and the quantum seems to be under Rs. 10bn while some accounts are still under resolution.
Thus, the risks that the bank may endure would be the deteriorating asset quality, slower economic recovery, higher credit costs, higher slippages and the NIM margins which still remain under tension. 
 

 

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Multibagger stock: An investment of Rs 1 lakh a year back gave 313% price returns

Multibagger stock: An investment of Rs 1 lakh a year back gave 313% price returns
by 5paisa Research Team 25/10/2021

The lesser-known company under the umbrella of Jubilant Group of companies is all set to give multi-bagger returns.

Amid the swinging sentiment in the hitherto bull rally, the markets are finally coming to wake up to the perils of exorbitant valuations (P/E ratio), which seems unjustified and unsustainable.

The likes of IRCTC, Asian Paints bore the brunt in the last few trading session.

The world is suddenly realizing the virtues of Value Investing.

One such value pick is Jubilant Industries which has given multibagger returns in the last one year of 313%.

The multibagger stock of 2021 has risen from Rs 129.35 to Rs 539 in the last one year, logging around a 313% rise in this period. Likewise in year-to-date time, this multibagger stock has risen from Rs 235 levels logging around 129 per cent rise in 2021. 

Just within the time frame of a year, an investment of Rs 1 lakh would have become Rs 3.13 lakhs approx. Amazingly, this is just the beginning of the growth story of this Agricultural and Performance Polymers business of the Jubilant Bhartia group.

The Company’s diversified portfolio of Agri products(46% share of revenue), Performance Polymers (54% share of revenue) and IMFL businesses delivers a broad range of technology-based products and solutions to customers in India as well as globally. Over the years, this business has attained a significant size in India and the company aims at scaling up its business in global markets.

  1. JIL is established as number one in India and globally within the top 3, for manufacturing VP latex used in the dipping of tyre cord and conveyor belt fabric.

  1. It is one of the leading manufacturers of Single Super Phosphate (SSP) in India which is also the largest selling product under the Ramban Umbrella.

  1. The Consumer Products business is focused on providing customers with a complete range of woodworking solutions ie adhesives and wood finishes, footwear adhesives and epoxy sealants. With a nationwide network and brand presence, they represent as brand name of 'JIVANJOR'.

  1. Under the food polymer segment, Vamipol is a major raw material for making gum base for chewing gum and bubble gum. Jubilant is one of the three major global suppliers of Solid Poly Vinyl Acetate (SPVA).Suppliers to market leaders worldwide - The WM Wrigley Jr. Company, Cadbury (The Kraft foods Company) & Perfetti Van Melle Co.

The company has shown considerable traction in its topline performance by way of expanding into new markets and launching new products. The company has logged a YoY growth of 89% in its net sales in the recently reported Q2 FY 2022 numbers. Operational efficiencies have led to Core EBITDA to grow at 112 and Net Profit increased by 106% on a YoY basis. The company is available at a reasonable Price Earning multiple of 25x as compared to other players in the segments.

With the fast recovery in the real estate sector, the company is expected to register good growth. The Brand “Jivanjor” which competes with the market leader “Fevicol” is gaining a strong presence. Also, the demand outburst seen in the Automobile sector is set to boost the demand for the latex segment.

The company continues to be a multibagger for coming quarters on the underscore of a strong revival of demand, its innovative product launches and deeper penetration in new markets.

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Stock in focus: Is RBL Bank ready for a trend reversal?

Stock in focus: Is RBL Bank ready for a trend reversal?
by 5paisa Research Team 25/10/2021

RBL Bank has been on a rough path since May 2019. But is it signalling towards change in trend? Let’s find out.

Quarter ended September 30, 2021, RBL bank’s total deposits jumped 17% to Rs 75,588 crore as compared to Rs 64,506 crore in the same quarter last year. Their Current Account-Savings Account (CASA) ascended by 33% Year-on-Year (YoY) to Rs 26,734 crore in the recent quarter. The Q1 FY22 numbers of RBL Bank were not so enticing. In Q1 FY22 RBL Bank's net loss on a standalone basis stood at Rs 459 crore as against a net profit of Rs 141 crore in Q1 FY21. On the other hand, its total income in Q1 FY22 jumped 4.92% to Rs 2,721 crore from Rs 2,592.73 crore in the same quarter last year.

Having said that, the stock has been on a rough path since May 2019. However, the stock currently is trading near its downward trendline, breaching and thereby sustaining would mean trend reversal. Even if the price breaches this downward trendline, two major resistances are waiting to welcome the price. The immediate resistance is placed at 226.40, one at 246.65 which is also 23.6% Fibonacci level and finally at 274.30. Breaching these resistances would mean more bullishness in this stock.

Looking at the momentum indicator Relative Strength Index (RSI), then it is comfortably trading above 50, whereas its 20-Week Exponential Moving average (EMA) is at 46.82. Rate of Change (ROC) seems to be in full action breaking its three-month-old down trendline. However, if we look at Moving Average Convergence Divergence (MACD), then it is still into negative territory, but quite near the neutral line. Moreover, it has also given positive crossover last month in the negative territory.

RBL Bank today opened at 205, made a high and low of 207.4 and 200, respectively. At the time of writing RBL Bank was trading near its high.

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