Q2 FY24 Earnings Insights- Dmart/Jio Financial/Paytm/Astral/ Havells/ Bandhan Bank/ ITC

[anandmtech10]

Own views - not from other analyst/ brokerages

Dmart H2 FY24 Results Insights

consolidated Revenue 19.7% up, PAT down 9%

Same store sales growth 8.6% YOYStore additions H1 12 nos only ( vs 40-50 / yr last 2yrs)

Revenue breakup H1 FY24 / H1 FY23

Food 56.2% / 54.75%

Non food 20.6%/ 20.5%

Apparel /GM 23.2% / 24.75%

1. Dmart mainly earns from non-food/ apparel sales ( higher margin business) - so this segment sales going down affects PAT as they operate on thin margins ( EBITDA 8.5%, PAT 5.6% )
2. Maybe they have slowed down store addition seeing tepid consumer discretionary buying ( non food/ apparel) among mass-premium category which they address .

3. Revenue/ sqft yet to touch FY20 nos of Rs 32880 indicating consumer demand recovery not recovered fully.

1. Once consumer demand resumes, things may look good. Q3 festive demand will be important to watch for.
2. Plus scaling up of Dmart Ready and cashburn required for scaling up needs to be watched. Here they are not competing with Blinkit, but objective is to address their own customers shifting to Blinkit , so cashburn should be low, considering they have established Dmart Ready model in Mumbai.

Jio Financial Services Q2 FY24

Total income 608crDividend income 216crInterest income 186cr

Since Jio Financial is a financial institution, it can show DIVIDEND income in Income statement.

Otherwise, it had to record dividends in Cashflow statement, could not record Dividend income as Profits.

It may need to show lot of Interest Income to justify the current valuation.



Paytm Q2 FY24 results Insights

Contribution margin 57% ( vs 49% FY23)

Revenues 2520cr (8% up QoQ)

Merchant base 92 lkh ( vs 68 lkh FY23)

Contribution profit 1420cr (3900cr FY23)

Net Loss 290cr ( 360cr Q1 FY24)

For high growth cos like Paytm, we need to track QoQ growth, for path to profitability

Revenues 2520cr (8% up QoQ)

Breakup

Payment services 1520cr ( vs 4930cr FY23 full yr)

Financial services 570cr ( vs 1540cr FY23)

Commerce/cloud 420cr (12% up YoY)

1. Payment services is UPI - mainly subscription fees received from merchants for Soundbox and UPI merchant transactions

Merchants base impressive growth 92 lakh ( FY23 - 68 lakh)

2. Financial services- (consumer/ merchant loans) - this is main growth engine.

Postpaid loans (ATS Rs5600) - good growth

Personal loans (ATS 1.65 lakh) / 16mth tenure- degrowth as they reduced shorter tenure loans for controlling ECL

Merchant loans -(ATS 1.8lkh/ 13 mth tenure)- good growth

Contribution margin 57% ( 49% FY23) - impressive

Contribution profit 1420cr (3900cr FY23)

Net Loss 290cr ( 360cr Q1 FY24)

Highlights-

1. results without UPI incentives ( will come in H2)
2. Contribution margin up owing to less cashback spends, will increase in Q3, payment processing charge going down -leverage

Ant Fin stake down from 23.8% to 9.9%

Vijay Shekhar sharma stake up from 10.3% to 19.4%

All encouraging developments around Paytm.

Credit loss due to loans how it goes need to be monitored

Bajaj Finance Q2 FY24 Results Insights

Bajaj Finance continues to grow its loanbook > 25% CAGR as promised, with top notch asset quality.

BUSINESS REACH-

Rural lending location- 2465 vs 1360 (F20) - 80% up in 3yrs.

Consumer durables reach 82200

Digital products reach 37100

And people are concerned that 550 Reliance Digital stores would slowdown Bajaj business.

Q2 METRICS

Loanbook growth 33% yoy. AUM 2,90,230 cr

Net interest income 8845cr (26% up YOY)

PAT 3550cr (28% up)

ROA 5.2%

ROE 24.1%

Since leverage > 5 , co have decided to raise funds

Cost of funds gone up at 7.67% ( from 6.8% FY22) , may stabilize hereafter

All loan products apart from rural personal loans (18%yoy) shown very strong growth.

LOANBOOK

Total loanbook 2,90,230cr

MORTGAGE loanbook- 170150cr

Home loans 92300crLAP 16200cr

Lease rental 33700cr

So, Bajaj Finance is no more an only consumer durable lender, loanbook is highly diversified.



Bandhan Bank Q2 F24 Insights

Loan book 1.08 lakh crore ( 12.3% up YoY)

Retail Loan book other than housing 80% up

Commercial Banking 65% up

Housing Finance 4% up

EEB remains flat YoY

1. Housing loanbook is 20% of total AUM- with housing sector doing well, despite that 4% growth not good.

1. EEB flat- is as per strategy- they are reducing unsecured book

3. Profits 245% up due to provisions becoming half.

1. Fresh slippages 1320cr inline with Q1
2. Operating Expenses grew 6.6% QoQ ( 79 branches opened )
3. NPA provisioning at 5 Qtr high , maybe due to fresh provisions for Assam floods,- probable reason for NPA nos didnt reduce QoQ
4. Assam group loan NPA is dragging entire NPA nos.
5. YoY spread improved from 6.5% to 6.8%, still interest expenses 29% up- not clear

9. needs to reduce WB/Assam exposure (45%) faster

ROA 1.9% ( improved from 1.6% FY23)ROE 14%

ROE 14%

CRAR 20.6%Post covid book GNPA 2.6%

Post covid book GNPA 2.6%

So faster they grow secured loanbook, maintaining this quality, and reducing WB/ Assam contri- better the nos.





Astral H2 FY24 Result Insights

market leader of CPVC pipes

Last 4 yrs huge growth, half of that has come from raw material prices rising. Nevertheless, Astral has outperformed industry growth since its inception.

Pipes business 73%

Adhesives/ paints 27%

H1 FY24

Revenues 12% up YOYSales volumes 29% up

PAT 51% upEBITDA 16.9%

Yes 29% volume growth is very impressive in PVC.

Revenue growth muted owing to raw material prices correcting sharply.

51% PAT growth is partially due to raw materials price cooling off, so EBITDA margins expanded , still below FY20 EBITDA of 17.6%

Adhesives and Paints business also doing equally well.

Even if they maintain this growth of 30% and margins of 17% in H2 , still might remain costly.

Let's see how market rates it



Havells Q2/ H2 FY2 Results Insights

leader in wires, switchgear, fans, AC , electrical consumer durables

Q2

1. Wires/ cables- 8% up YOY weak compared to KEI /Polycab
2. Switchgear - 7% up- also weak considering housing demand
3. Fans & ECD - no growth4. AC (Llyoyd) 20% up- strange considering consumer durables growth is still muted .Possibly bcoz of low base of Q2 last year for most AC cos.

Though AC segment does not contribute to profits yet for Havells.

H1 total PAT 25% up mainly owing to wires/cables prices cooling off YoY, combined with wires/ cables growth in Q1

Thoughts

1. Fans, ECD , Switchgear critical for Havells business, esp ECD, Switchgear will drive growth in bottomline for them how upcoming festive season demands pan out needs to be seen.
2. Wires - understanding why they are underperforming peers despite strong demand is important

Overall, results not encouraging for Q2



ITC Q2 FY24 Results Insights

conglomerate of Cigarretes, FMCG, Paper, Agri, Hotels+ ITC infotech

Q2 Revenues- 16360cr

FMCG 5290cr/ Cigarretes 7660cr

1. Though FMCG constitutes significant portion of revenues, it only contributes to 7% of EBIT

2. Cigarettes- the high margin cashcow contri to EBIT 80%

1. Rest businesses contribute 13% to EBIT .

That is how skewed it is- despite ITC doing well in FMCG ( revenues 25% up YoY), impact is marginal on bottomline.

In coming yrs, even if FMCG grows much faster, cigarettes contribution will still remain dominant for significant time - as cigarettes is 63% margin business, FMCG 11% margin business.

Yes, scope of margin expansion is there in FMCG as they achieve scale in long term- that will increase the contribution of FMCG more.

Q2 FY24 Results summary

1. FMCG Rev 25% up- despite fairly elevated wheat, sugar prices & margins 11% ( FY23 10.2%)

1. Cigarettes Rev 8% up despite sharp cost increase in tobacco & tax incr.
2. Paper Rev 50% drop ( paper pulp prices)
3. Agri Rev 1.7% drop ( non-basmati rice export ban)