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Tata Power Q2 profit up 36% on lower finance costs, growing green energy biz

by 5paisa Research Team 29/10/2021

Tata Power Ltd has reported a 36% increase in year-on-year net profit for the second quarter ended September, helped in lower finance costs and an uptick in its renewable energy business.

Consolidated profit after tax rose to Rs 506 crore for the July-September period from Rs 371 crore a year earlier, the private-sector electricity producer said. Consolidated revenue went up by 13% to Rs 9,502 crore from 8,428 crore.

The Tata Group company said its consolidated earnings before interest, tax, depreciation and amortisation fell to Rs 1,732 crore from Rs 2,276 crore in the corresponding quarter last year.

EBITDA fell mainly due to higher losses at its Mundra power project on account of higher coal prices, but this was offset at the net profit level by earnings at coal mines.

The bottom line was boosted also by an 11% drop in finance costs to Rs 946 crore from Rs 1,065 crore.

Tata Power also said that while the cost of fuel, mainly coal, was up 17.2%, on a year-on-year basis, the cost of power purchased was up 61%, more than offsetting the former. 

Tata Power’s numbers come as the country is facing an acute shortage of coal, and rising price of spot power. Both the government and industry say that the shortage is likely to persist at least for the next six months.

Shares of Tata Power closed 2.7% lower at Rs 218.05 apiece on the BSE on Thursday. The shares have lost almost a fifth of their value since touching a one-year high on October 19. However, the shares are still up fourfold over the past year.

Tata Power Q2: Other highlights

1) Revenue from the transmission and distribution segment jumped 48% year-on-year to Rs 6,787.4 crore.

2) Revenue from the power generation segment fell 36% YoY to Rs 2,216.9 crore.

3) Revenue from the renewable energy segment rose 35% to Rs 1,494.9 crore from Rs 1,105.6 crore a year ago.

Tata Power management commentary

The company said that its strong performance was thanks partly to its transmission and distribution segment, which benefitted from the surge in domestic power demand.

Its power generation business suffered due to reduced run time as thermal power stations across the country faced a coal shortage during the quarter.

Tata Power chief executive officer and managing director Praveer Sinha said the company aims to scale up its renewable energy business towards its 2030 target. “Clean energy currently makes up 32% of Tata Power's portfolio. This is expected to touch 80% by 2030,” Sinha said. 

Sinha said all business divisions and subsidiaries reported strong results and that consolidated financial performance was “exceptionally strong” on the back of robust underlying business performance. 

“Our focus continues to remain towards the expansion of our renewable and distribution businesses and go green strategy in our existing generation business,” he added.

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Schaeffler India rallies 4% on strong Q2FY22 results and significant corporate actions

Schaeffler India rallies 4% on strong Q2FY22 results and significant corporate actions
by 5paisa Research Team 29/10/2021

Leading industrial and automotive supplier, Schaeffler India announced that its board has approved results for the quarter ending on September 30, 2021. The board also approved a stock split and target dividend payout ratio.

Total revenue from operations for Q2FY22 was Rs 1,487.6 crore, higher by 32.7% than the corresponding quarter of the previous year and 20.7% higher than the preceding quarter. Profit before tax (before exceptional items) for the quarter was Rs 229.6 crore, which happened to be 50.3% higher than the corresponding quarter of 2020 and 34.6% higher than the preceding quarter. PBT margin for the quarter stood at 15.4%, against 13.6% during the corresponding quarter of 2020. Net Profit for the quarter was Rs 170.8 crore while the margin for the quarter stood at 11.5%.

To quote, Harsha Kadam, Managing Director of Schaeffler India from a filing with the exchange, “This is our fourth consecutive quarter showing a strong performance. The performance demonstrated during the first half of the year further improved in the third quarter, despite significant input cost pressures. Our business divisions – automotive technologies, automotive aftermarket and industrial have delivered resounding performance and further consolidated our position of being the preferred technology partner. However, we do see some headwinds due to the global chip shortage and the resultant supply chain disruptions, which we are monitoring closely. Our continued focus on countermeasures and deeper customer engagements have yielded impressive results.”

The Board of Directors approved a subdivision of each equity share of the face value of Rs 10 per share into five equity shares of the face value of Rs 2 per share, subject to the approval of the shareholders. The 5 for 1 stock split will see existing shareholders issued with five new shares, in lieu of every one share they currently own. The rationale behind the stock split is to encourage wider participation of investors and to improve the liquidity of the equity shares in the stock market.

The Board of Directors also approved the target dividend payout ratio of 30%-50% of the annual standalone profits after tax (PAT) to be announced by the company from time to time, subject to the applicable rules and regulations. The company has adopted a progressive dividend policy, intending to sustain or raise the dividend each year, in conjunction with the financial performance and free cash flow generation each year. The company shall endeavour to consider a total dividend payout ratio as indicated above subject to the circumstances and scenarios mentioned in the dividend distribution policy.

Schaeffler India’s share price rallied 4% during early market hours on Friday, 29 October 2021.

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CarTrade tumbles 5%, here’s why!

CarTrade tumbles 5%, here’s why!
by 5paisa Research Team 29/10/2021

Shares of CarTrade Tech plummeted by more than 5% to touch an intra-day low of Rs 1,155 per share on the bourses on Friday, 29 October 2021.

One of India’s largest online auto platforms, CarTrade Tech Limited recently declared its standalone and consolidated financial results for the quarter and half year ended September 30, 2021. Total revenue for Q2FY22 stood at Rs 88 crore, as compared to Rs 63 crore in the same period last year. Adjusted EBITDA in Q2FY22 stood at Rs 24 crore, as compared to Rs 18 crore during H1FY21. The adjusted EBITDA margin for Q2FY22 was 28%.

Total revenue for the half-year ended September 30, 2021, stood at Rs 150.75 crore, showing a growth of 46%, as compared to Rs 103.26 crore in the same period last year. Adjusted EBITDA in H1FY22 stood at Rs 33 crore, showing a growth of 104% as compared to Rs 16.18 crore in the corresponding period. Adjusted EBITDA margin stood at 22% in H1FY22 as compared to 16% in H1FY21.

An exceptional and non-recurring, non-cash adjustment of Rs 93 crore for employee stock options granted in FY21 has been accounted for, resulting in a net loss after tax for H1 FY22 of Rs 81 crore (net loss before tax of Rs 75 crore) for H1FY22 as compared to a net profit after tax of Rs 64 crore (net profit before tax of Rs 0.75 crore) for H1FY21.

CarTrade Tech received over 34 million average monthly unique visitors for Q2FY22, of which 86.68% was organic. This was a growth of over 34% over Q2FY21. The number of vehicles listed for auction were 3,00,671 for Q2FY22. This was a growth of over 73% over Q2FY21. The number of vehicles sold via auction were 63,533 for Q2FY22. This was a growth of over 104% over Q2FY21. In Q2FY22, the company successfully launched CarWale abSure in nine cities. CarWale abSure will deliver a world-class online-offline shopping experience for used car buyers and sellers.

CarTrade Tech Ltd is a multi-channel auto platform with a presence across vehicle types and value-added services. The brand’s platforms operate under several brands: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz. These platforms enable new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell their vehicles in a simple and efficient manner.

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Interview with Rajratan Global Wire Ltd

Interview with Rajratan Global Wire Ltd
by 5paisa Research Team 29/10/2021

Expanding horizons to gratify customer needs and business development.

Continuing to be the lowest cost manufacturer of bead wire and generating significant operating leverage in the business are some of our growth levers says, Yashovardhan Chordia, Director, Rajratan Thai Wire Co Ltd. The company is based in India as well as Thailand. In Thailand, the company is operating as Rajratan Thai Wire Co. Ltd.

Rajratan Global Wire net sales for Q2FY22 stood at Rs 241.17 crore up 73.5% on a YoY basis. Net profit jumped by 140.7% on an annual basis to Rs 32.6 crore. What factors contributed the most to help you outperform?

Main factors that contributed to the latest results were strong demand from our customers. The operating leverage that we have in India today by having the largest production capacity in one location and our continued efforts to keep control on (and reduce) our conversion costs as well as operating costs. Going forward, once we expand in Thailand, we will have similar volume leverage and it will make us even more competitive in the coming few years. We expect all factors to continue to support our growth in the near future. 

Can you shed some light on Rajratan Global Wire's ongoing capital expansion and capacity addition plans?

Currently we are in the process of expanding our capacity in Thailand from 40,000 TPA to 60,000 TPA, which is slated to come on stream by Q4FY22. This will take our total consolidated bead wire capacity to 120,000 TPA, of which 60,000 TPA is in India and 60,000 TPA will be in Thailand by end of FY22. With this expansion coming on stream, we will have significant capacity on offer for meeting the increasing demand of our customers. 

We have also further announced our plans for a greenfield facility in Chennai, Tamil Nadu for which we have signed an MoU with the state government. This facility will have a capacity of 60,000 TPA at an estimated cost of Rs 300 crore, to be set up over the next 24-36 months, from the groundbreaking activity.

What are your growth levers?

Our key growth levers are the following: 

1)Capacity expansion at our Thailand plant to 60,000 TPA

2)New port-based greenfield facility in India to meet growing domestic and export demand.

3)Continuing to be the lowest cost manufacturer of bead wire.

4)Generating significant operating leverage in our business led by strong control on costs as well as sizeable capacities at all our manufacturing locations.

5)All our future growth plans in bead wire will be funded from internal accruals or low-cost debt.

What are your top 3 strategic priorities?

Our top three strategic priorities today are:

1)Completion of expansion in Thailand and setting up of our greenfield facility at Chennai.

2) Enhancing our efforts on the sustainability front - reducing water consumption to 1/3rd, working on sustainable procurement and reducing all kinds of emissions from our production facilities.

3) Developing our R&D team to work closely with our customers and curating higher quality and new styles of bead wire which will help our customers to meet new government norms. Additionally, we also plan on the digitalization of our shop floor and related activities.

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Suprajit Engineering to acquire Light Duty Cable business unit of Kongsberg Automotive ASA

Suprajit Engineering to acquire Light Duty Cable business unit of Kongsberg Automotive ASA
by 5paisa Research Team 29/10/2021

With this, Suprajit Engineering will emerge as a global leader in control cables in all these segments with a strong global presence.

Suprajit Engineering has announced that it has signed a definitive share and asset purchase agreement to acquire Light Duty Cable (LDC) business unit on October 28, 2021, with Kongsberg Automotive ASA, listed on the Oslo Stock Exchange, Norway.

The LDC business unit of Kongsberg Automotive Group consists of the cable business, supplying to automotive, non-automotive and 2-wheeler segments along with Electro-Mechanical Actuators (EMA). Through this transaction, Suprajit will also add key actuation technologies that can be brought to other customers of the company. EMA will emerge as a new product segment in the future, for the group.

This transaction also involves the transfer of global sales and engineering expertise related to this business to Suprajit Engineering. The transaction is expected to close by end of January 2022. LDC consists of three manufacturing plants located in Matamoros - Mexico, Siofok - Hungary, and Shanghai - China, and a warehouse in Brownsville - USA. LDC’s global business development and engineering teams are at plants and other key geographies including the US, Germany, France, Norway, Sweden and the UK, and will come under the fold of Suprajit Engineering. The total employee strength of LDC is approximately 1300 employees at the end of Q2.

Kongsberg Automotive is a global automotive supplier, headquartered in Zurich. Through this divestment, Kongsberg Automotive will realign its product portfolio and this transaction will provide a strong focus to the cables business as part of Suprajit Engineering.

To quote an excerpt from the company’s filing with the exchange, “The current year sale is expected to be in the range of USD 90 million. Enterprise value of the transaction is pegged at USD 42 million. LDC has marquee global customers in automotive, non-automotive and two-wheeler businesses and is a segment leader in its own right. With this, Suprajit will emerge as a global leader in control cables in all these segments with a strong global presence. LDC will be a very complementary fit in its manufacturing footprint, customer base, product and technology.”

Suprajit Engineering is India’s largest automotive cable and halogen bulb maker with an annual global capacity of 300 million cables and 110 million halogen bulbs. The company’s customer list includes most Indian automotive majors and also exports to many marquee global customers.

Share price of Surajit Engineering soared by roughly 3%, to touch an intra-day high of Rs 366 per share on Friday, 29 October 2021.

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Trade Talk: Is Vaibhav Global, a good opportunity to short?

Trade Talk: Is Vaibhav Global, a good opportunity to short?
by 5paisa Research Team 29/10/2021

Vaibhav Global was in a rally since March 2020 and took a breather in May 2021. So, is this stock a good opportunity to go short? Let’s find out.

Post making a low of 88.15 in March 2020, Vaibhav Global made a high of 1046.85 in May 2021. This is almost 11-fold growth in just a matter of one year. However, in the month of May 2021, the stock plunged almost 21%. Moreover, since then it is moving downwards. This week started October 25, 2021, the stock breached its crucial support level and continued its southward journey.

Vaibhav Global Limited has a distinctive business model as it engages in the global retail space, specifically in the jewellery, accessories and lifestyle product segments in the US and UK.

Since March 2021, it was respecting 714-694 levels which also is the stock’s strong support zone. On October 25, 2021, the stock breached the above-mentioned support zone. Interestingly, it also tried to breach this support turned resistance zone on October 27, 2021, but failed to do so moved back downward.

Therefore, this can create a good opportunity to go short. However, there are some critical things to keep in mind. The stock has immediate resistance placed at 649-681 and short-term resistance being 694-714. If this is breached, then the bearish view fails. More importantly, the stock presently is trading near its crucial Fibonacci level of 50% (567.5). So, there are some chances of stock retracing from this level. If this level is breached then the stock is likely to further move downward.

Having said that, on daily charts, the stock is trading below its 50-Day Moving Average (DMA) as well as its 200-DMA. However, we haven’t seen any negative crossover of these two moving averages. Even the Relative Strength Index (RSI) is trading near the oversold zone. Therefore, it makes complete sense to adhere to strict stop losses while going short on Vaibhav Global.

At the time of writing, the stock of Vaibhav Global was trading at 580.

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