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Orient Cement reports 63% YoY growth in Net Profits, target price set to Rs. 240 | Orient Cement Q2 results

by 5paisa Research Team 29/10/2021

Orient Cement’s sales volumes grew by 25% YoY to 1.28 million tons despite a heavy monsoon this year along with high raw material costs. In Q2 FY22 the sales in the key markets was as follows- Maharashtra/Gujarat:54%, South:37% and MP/Chhattisgarh:9%. Sales volume is expected to clock a 10% CAGR over FY21-24.

Due to the raw material costs being much more than normal, the extra cost was passed on to the cement prices, increasing it to Rs.15-20 per bag and the sale price of premium cement was up 8% up from Q1 FY22.

The EBITDA/ton decreased to Rs.1048 per ton and the EBITDA increased by 18% to Rs.1.3 billion. EBITDA is estimated to record a 12% CAGR during a period of FY21-24. The Profit After Tax grew by a whopping 63% YoY standing at Rs.569 million due to the interest costs being lower by 43.5% YoY and a higher value of operating profits.

The cost of fuel and power increased by 19.6% YoY. Keeping a fuel stock of 1-4 months will be very helpful for the company to overcome the problems occurring due to the fuel costs being at an all time high along with a relative scarcity of the resource. One of the plants of the company has a 3-4 month fuel stock whereas the other plants have 1 month of stock. The costs of raw material displayed an increase of 12% whereas the freight cost per ton increased by 18%. It is estimated that these high costs may start showing a downtrend from December of this year or January of the next year.

The demand for cement has been relatively stable for Q2. In September FY22 the demand saw a drop due to the unseasonal heavy rainfall. The ratio of sales in West, South and MP/Chhattisgarh is 54:37:9. It is expected by analysts that the sales volumes will go up by 6 million tons in FY22.

In H1 FY22 the company paid back a debt of Rs.2.04 billion and another Rs.400 million in October 2021. The gross debt has been thus reduced to Rs.5.5 billion from the Rs.7.74 billion on 31 March 2021. The company has intentions to reduce the total debt to Rs.2.5-3 billion in FY22.

The company recently acquired a stake of 26% in AMP Solar System Pvt Ltd. The Jalgaon plant is expected to carry out the solar power operation by November 2021.

An expansion in the Devapur plant of a 2m ton clinker installation is scheduled to be over by the end of FY24 whereas the 10MW WHRS expansion has been delayed to the end of FY22 and will get over in FY23 and requires a capex of Rs.1 billion. The total capex for FY22 is expected to be Rs.500 million.

The planned expansions will provide a helping hand in increasing market diversification and a higher sales volume growth. The debt is being kept in check by the continuously improving operational efficiency and also better cash flows.

The revenue growth estimate for FY22 and FY23 has been reported as 5.3% and 4.3% respectively. Similarly, the EBITDA and PAT growth estimate for FY22 and FY23 has been reported as 2.3%,1.9% and 2.3%,3%, respectively.

A BUY call has been given by analysts with a target price of Rs.240, providing an upside of 49.25%.

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Paytm (One97 Communications) net accumulated losses stands at Rs.129 billion | Paytm annual report review

by 5paisa Research Team 29/10/2021

One97 Communications founded in 2002, is the parent company of Paytm. This company provides all sorts of online services like bill payments, top ups, data processing, games, hotel bookings etc.

The losses in FY21 have narrowed to Rs.17 billion compared to the loss of Rs.29.42 billion recorded in FY20, despite revenue from operations decreasing by 15% YoY. Financial services and payment segment revenue saw an 11% YoY growth. Keeping in mind that digital payments increased significantly due to the pandemic, this growth of 11% seems to be much less than what was expected. The commerce and cloud services segment witnessed a drastic loss in revenue of 38% YoY to Rs.6.93 billion in FY21. Other income head in the P&L increased by 48% YoY

Surprisingly, the marketing and promotional expenses decreased by 62% YoY to Rs.5.33 billion. It used to be 69% of the revenue but in FY21 it was just 17% of the revenue. This can either be due to the fact that the return on interest from marketing campaigns and ads is not very significant because of a very competitive market or the management just wanted to cut costs irrespective. This decision can be perceived by people in a negative light.

There was a 16% hike in salaries, incentives and bonus to Rs.10.3 billion which led to a 6% YoY increase in Employment Benefits Expense whereas the share based payments expense decreased by 34% YoY. The expenses increased from 32% of the revenue in FY20 to 37% of the revenue in FY21.

Retained earnings for the financial year 2021 was at a negative Rs.128.72 billion. Payment processing charges forms 91% of the payment and financial services revenue in FY21, showing a decline from the 119% in FY20. There is no information regarding this in the notes to accounts section of the annual report.

Investments have decreased by 95% YoY from Rs.34.2 billion to Rs.1.81 billion and this may be a method of raising capital and increasing liquidity. The total assets of the company decreased from Rs.103 billion in FY20 to Rs.91.51 billion in FY21. Financial assets form 70% of the total assets in FY21.

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SBI Card reports 66% YoY growth in PAT riding on spending growth | Analysts predict upto 24% upside

29/10/2021

In Q2 FY22, SBI Cards saw an increase in loan growth by 10% QoQ and the gross cards added increased to 950k- its highest levels. Spending seems to be growing too and slowly reaching the pre-Covid levels. EMI loans grew by 10% QoQ and 32% YoY. Gross non-performing assets fell by 55bps to 3.4%. With the second wave far behind, the return on assets are expected to improve to 7%. A 20% spending CAGR for the period of FY 20-24 has been estimated.

According to the RBI, the spending by both corporate and retail grew by 50% YoY in October. As employees in the IT and banking sectors get more salary hikes, the propensity to spend is likely to increase more. Online spends account for 55% of the total spends in the first half of FY22. SBI cards grew by 14% YoY and they have continued their trend of gaining market share. Due to restructuring of the books the slippages stand at 2.5%. Restructured loans fell by 150bps QoQ and they have a 28% cover.

PAT increased to Rs.345 crore in Q2 FY22 from Rs.304 crore Q1 FY22, reporting a growth of 13% QoQ and 66% YoY. Even the EPS increased from Rs.3.24 in Q1 FY22 to Rs.3.77 in Q2 FY22. The total income of SBI Cards, backed by the largest lender of the country i.e. SBI, increased from Rs.2,450 crore in Q1 FY22 to Rs.2,695 crore in Q2 FY22.

Bad debt expenses and impairment losses witnessed a drastic decrease of 31.09% in Q2 FY22 from the last quarter. The finance costs decreased by 4% this quarter whereas the operating cost increased by 25%.

Average receivables per card increased by 4.8% QoQ and the cards in force increased by 5% QoQ. The asset quality saw improvement post the second wave and a strong growth in spending as well as loans outstanding.

These positives have played a part in analysts predicting an approximate upside of 24.3% with a BUY call, maintaining the price target in the range of Rs.1350-Rs.1400.

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This PSU Bank stock meets the trend template of Mark Minervini

This PSU Bank stock meets the trend template of Mark Minervini
by 5paisa Research Team 29/10/2021

This stock has gained over 190% meets the trend template of Mark Minervini.

The stock of Canara Bank has formed a long-legged doji candlestick pattern on the last week of March 2020 and thereafter marked the sequence of higher tops and higher bottoms. From the low of Rs 73.65, the stock has gained 191.24% in 83 weeks.

For the last five weeks, the stock is making higher highs and higher lows. Interestingly, for the last three weeks, the volume was above 50-weeks average volume. Further, the current week’s volume is the highest ever. This indicates strong buying interest by market participants.

In the last couple of weeks, the stock has outperformed the frontline indices. Also, it has relatively outshined the Nifty 500 with a decent margin. The relative strength comparison with Nifty 50, Nifty PSU Bank and Nifty 500 is marking the higher high.

Currently, the stock is meeting the criteria of Mark Minervini's Trend Template. The current market price of the stock is above the 150-day (30-week) and the 200-day (40-week) moving averages. The 150-day moving average is above the 200-day moving average. Since the last 227 trading sessions, the stock is trading above its 200-day moving average.

The 50-day (10-week) moving average is also above both 150-day and 200-day moving averages. The current stock price is above the 50-day moving average. Also, the current stock price is nearly 161% above its 52-week low and currently, it is trading at its 52-week high.

As the stock is trading at its 52-week highs, all the trend indicators are showing that the uptrend to continue. The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-weeks, which is bullish. Also, it has managed to close above its prior swing high after almost eight months. The weekly MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting a pickup in upside momentum.

The stock is clearly on uptrend and trend strength is extremely high. The Average Directional Index (ADX), which shows trend strength, is as high as 44.50 on a daily chart and 26.68 on a weekly chart. Generally above 25 levels considered as the strong trend. In both time frames, the stock is meeting the criteria.

Talking purely about the trading levels, the prior swing high of Rs 234 will act as crucial resistance for stocks and the level of Rs 191-Rs 186 will act as crucial support for the stock.

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IndusInd Bank reports 72% growth in PAT in Q2, target price raised to Rs.1340 | IndusInd Q2 results

by 5paisa Research Team 29/10/2021

IndusInd Bank report Net Profit 72% YoY increase in net profits with a jump from Rs.647 crore in Q2 FY21 to Rs.1,113 crore in Q2 FY22. The overall collection efficiency of IndusInd Bank for September 2021 was 98% which is a 200bps improvement over the last quarter. The Gross Non-Performing assets showed a decrease of 11bps to 2.77% compared to the 2.88% in Q1 FY22. The slippages are expected to start decreasing from Q3 FY22. Of the total slippages (Rs.26.6 billion) 90.6% stemmed from the retail book.

The amount of interest earned displayed a 6.59% increase YoY to Rs.7,650 crore in Q2 FY22 from Rs.7177 crore in the same quarter of the previous year.

With a provision buffer of Rs.31.8 billion (1.4% of loans), the bank has managed to weather any more uncertainty arising as a result of the second Covid-19 wave. A 16%-18% CAGR for loan growth for the next 2 years has been estimated.

According to the bank, the interest margin decreased by 9% YoY and 4.7% QoQ due to a high amount of surplus liquidity which has been placed under repo with the Reserve Bank of India.

The bank has decided to keep on investing in new branches until the total reaches 2,500. The current number of branches stands at 2,015 as of Q2 FY22.

The current ROA stood at 1.26% as compared to the 1.12% in Q1 FY22 and 0.83% in Q2 FY22. Return on assets of 1.5% has been estimated for FY22.

The positive points-

1. A strong and positive growth in the retail segment

2. Strong liquidity and capitalization

3. The credit growth is expected to increase from Q3 FY22 and the earnings are also expected to improve further

4. The bank has a strong balance sheet with 72% coverage

5. Efficient collection rate- almost at pre-Covid levels

6. Lower provisions reported in order to drive up the growth in earnings

Analysts recommend a BUY call for this share with a target price of Rs.1340, based on the Dividend discount model method of calculation.

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Adani Ports sees volumes recovery in Q2, gears up for Concor acquisition

by 5paisa Research Team 29/10/2021

ADSEZ's operating performance in 2QFY22 led the EBITDA (ex-forex) to grow 19% YoY to Rs. 22.1bn. Port EBITDA grew +22% YoY with Port margins at 70% vs 70.7% YoY and 70.6% QoQ. Port EBITDA/T stood at Rs. 308 vs. Rs. 306 YoY and INR311 QoQ. In 2QFY22, topline grew ~22% YoY to Rs. 35.3bn, while Logistics revenue grew 21% YoY and margins increased to 26.3% vs. 23.1% QoQ and 22.5% YoY. SEZ revenue stood at Rs. 250mn vs Rs. 7.4bn QoQ and Rs. 210mn YoY, while port revenues grew by 24% YoY. Cargo volumes grew 21% YoY to 68.3mnT along with an increase of 23% YoY growth in Container, and 26% YoY growth in Coal. Volumes slipped 10% led by 28% QoQ drop in Coal volumes on account of higher coal prices. Net Debt stood at Rs. 31.3bn as of 1HFY22 vs. Rs. 28.5bn as of FY21 end.

Volumes at Mundra were flat YoY, Dahej grew at +30% YoY, Hazira at 17%, Dharma at 2% YoY, Kattupalli at -33% YoY. Reported PAT stood at Rs. 9.5bn down by 31% YoY as the company had to book an exceptional loss of Rs.4bn relating to non-receipt of SEIS income from government, post change in regulation. Overall for FY22, the volume guidance was maintained at 350-360mnT.
ADSEZ, overall, has targeted to reach 500 MMTPA in next 4years, and these will continue to grow to 200 from 60-70 currently and build a rail track of 2000km. The company has a targeted expansion to 300-350 MMTPA of capacity over the course of concession of 50 years at Dighi Port. 

The company’s annual capex target of Rs. 31-35bn comes on account of various ports, including capex in Sri Lanka terminal, Vijinjam, and logistics parks but doesn't include the impact acquisition in readymade warehousing segment. Company incurred capex of Rs. 19bn in 1HFY22 vs. Rs. 9bn YoY

Rail modal share at Mundra now stands at 35% vs. 31% and this is targeted to reach 38-39% by FY22 end. For its investment plan in Sri Lanka, the company plans to develop a total berth length of 1400mt i.e. 3.8mn Teus capacity terminal. The construction for the same starts in December 2021, and plans to complete Phase 1 construction in 24 months and the cost of Phase 1 & 2 is estimated at US $650mn. The management announced an appointed date of 1 April 2021 for the merger of Gangavaram Port and is expecting NCLT approval for its acquisition before the end of FY22. 
The company is gearing up for Concor acquisition and has been accumulating cash for the same. There has been a build-up of debt, however, net debt may remain at current levels of Rs. 31bn as management expects to fund the acquisition from next year FCF of Rs. 80bn as the acquisition process to start from April-22.

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