Asian Paint Q1FY23.

Asian Paint Q1FY23. 

STRONG SHOW

NET PROFIT up 80 % AT 1036 CR (YOY), up 18.5 %(QOQ)

REVENUE UP 55 % AT 8,578 CR (YOY), Up 8.9 % (QOQ)

EBITDA UP 70% At 1,555 CR (YOY) up 8 % (QOQ)

EBITDA MARGINS AT 18.1 % V 16.4 % (YOY), 18.3 % (QOQ)

EPS: 10.60 Vs. 5.93 (YoY) Vs. 8.87 (QoQ

Highlights: 

Sales for Bath Fittings business increases by 120.1% to ₹ 117.99 crores from ₹ 53.61 crores in the corresponding period of previous year. PBDIT for Bath Fittings business increases to ₹ 4.21 crores as against a loss of ₹ 1.04 crores in the last year.

Sales for Kitchens business increases by 68.3% to ₹ 109.04 crores from ₹ 64.79 crores in the corresponding period of previous year. PBDIT loss for Kitchen business reduced to ₹ 4.00 crores as against a loss of ₹ 5.38 crores in the last year.

Economic crisis in Sri Lanka led to currency devaluation resulting in recognition of an exceptional item of ₹ 24.21 crores towards exchange loss arising on foreign currency obligations of Causeway Paints Lanka (Pvt.) Limited (Causeway Paints) for the quarter June 2022.

View: Result is overall good and strong despite crude negative impact and highly volatile in this quarter topline and bottom line increased in QoQ since YoY is not much comparable due to strong second wave of Covid in April to June 2021 previous financial year.

Asian paint is now diversified their business as well for Paint segment to Home accessories segment viz. highly margin business bath fittings as well as Kitchen business etc. “The domestic decorative business experienced good consumer demand and recorded stellar revenue growth.

For the quarter. The volume growth registered in the quarter is one of the highest in the last six quarters. The business also registered robust 4-year compounded growth in volume and value terms.

The Auto OE and the General Industrial Coatings business delivered a sturdy growth trajectory.

Management comments:

We continued to make further inroads in our Home Décor business, proliferating its product & service offerings.

The International business also delivered a good double digit revenue growth for the quarter despite multiple headwinds across key geographies. While the persistent inflationary environment continued to impact the gross margins,

We delivered healthy operating margins with strong push on the premium & luxury offerings and driving further operational efficiencies across businesses.”, said Amit Syngle, Managing Director & CEO of Asian Paints Limited.

Reliance Industries Q1 FY23 Results

Reliance Retail

Q1 FY2022-23 Reliance Retail Gross Revenue for the quarter was ₹58,554 crore ($7.4 billion), higher by 51.9% YOY.

Q1 FY2022-23 Reliance Retail EBITDA for the quarter was ₹3,837 crore ($486 million), higher by 97.7% YOY

Q1 FY22-23 Reliance Retail witnessed its first quarter without any operating disruptions since the onset of COVID; Footfalls surpassed pre-COVID levels as consumers return

Q1 FY2022-23 Reliance Retail crossed a milestone of 200 million registered customers. The registered customer base stood at 208 million at the end of the quarter, up 29% YoY

Q1 FY2022-23 Reliance Retail opened 720 stores in the quarter, taking the total count to 15,916 stores with an area of 43.2 million sq ft covering all corners of the country

Q1 FY2022-23 Reliance Retail bolstered its supply chain capabilities with addition of 79 warehousing and fulfillment locations measuring 3.3 million sq ft of space during the quarter

Q1 FY2022-23 Reliance Retail Digital Commerce daily orders stood 66% up YoY; New Commerce merchant base stood 3x over last year.

Q1 FY2022-23 Reliance Retail added over 17,000 jobs during the quarter; The total employee count stands at ~3,79,000.

Jio - 

ARPU - 

Q4FY22 - Rs 167.6 | 

Q1FY23 - Rs 175

Customer base - 

Q4FY22 - 41 Cr 

Q1FY23 - 42 Cr

Reliance Jio Total customer base as on 30th June 2022 of 419.9 million

• Total data traffic was 25.9 billion GB during the quarter; 27.2% growth Y-o-Y

• Total voice traffic was 1.25 trillion minutes during the quarter; 17.2% growth Y-o-Y

How Reliance Earns Money 📊

• Oil to chemicals 60.2%

• Retail 21.8%

• Digital Services 10.6%

• Others 5.7%

• Oil to Gas 1.3%

• Financial Services 0.1%

HDFC Q1 FY23 Earning Summary

 Loan Growth:-

Overall loan growth at 20.3%

1. Retail Loan growth made a sharp comeback to grow at 21.7%

2. Rural Banking grew at 28.9%

3. Corporate loans grew by 15.7%

Retail loan growth is steadily picking up again for HDFC Bank

Net Interest Margin(NIM) Compression:-

The NIMs had fallen to an all-time low of 4% but have now recovered to 4.2%.

The retail book constitutes just 39% of the total loans

The rapid growth in the wholesale loan book came at a lower margin

Deposit growth:-

Deposits grew at 19.2% with CASA ratio at 45.8%.

The bank continues to gain market share in deposits.

Bank is slowly hiking the deposit rates

Asset Quality:-

Gross NPAs at 1.28% vs 1.17%

The rise in the NPA is due NPAs due to agricultural loans 

Slippages ex of this remains at 38bps

The bank remains is adequately provisioned and remains in a strong position to push loan growth.

Capital Adequacy:-

The Bank is sitting on a Capital Adequacy of 18.

TIER-1 Capital Adequacy at 16.5

The bank is adequately capitalized for no

To fund the merger and meet the regulatory framework the Bank will need to raise capital in the future.

Aggressive Branch expansion:-

The Bank opened 36 branches in the last quarter.

250 branches are already in the works

The bank envisions to be 1-2 km of clients rather than the current 5-6 Km

This could inflate costs in the near term and needs to be monitored.

HDB Financial:-

COVID-19 had a severe impact on HDB financial

The pain is now beginning to ease out.

The revenues grew by 13%

PAT showed at 441cr against 88cr

Slippages are continuing to ease.

Merger Hangover:-

As HDFC gets merged with HDFC Bank RBI has approved the scheme of arrangement.

However the RBI has not commented on the dispensation on SLR,CRR sought by the bank.

Without the dispensation, the ROE of the Bank will take a hit in the near term.

So How is the result then?

The result is very stable.

Nothing to complain about.

1. Asset quality is stabilizing

2. Retail Loan growth is coming back

3. Bank is strongly capitalized to take advantage of future growth opportunities.

As the credit cycle continues to move up banks like HDFC Bank will be a major beneficiaries.

In view of the merger, the hangover on the stock may mean the stock may continue to underperform.

However, the business is on an upward trajectory.

Disclaimer:-

This is my study. Not an Investment Advise. Please consult your own investment advisor before investing.

RELAXO Q4 Earning call/Transcript update

1. Revenue during the quarter was affected due to disruption caused by Omicron variant of COVID, GST rate hike from 5% to 12% w.e.f. January ‘22 on footwear priced below Rs. 1,000 and subdued demand due to high inflation.
2. Our EBITDA margin for the quarter is 15.9%.
3. Our profit after tax is Rs. 63 crores for the quarter as compared to Rs. 102 crores in the corresponding period of previous year.
4. For FY2022 our revenues stood at Rs. 2,653 crores as compared to the Rs. 2,359 crores which is a growth of 12% year-on-year.
5. Our EBITDA margin for the year is 15.7%. The decline in EBITDA margin is mainly on account of increase in raw material prices and normalization of selling, marketing and administrative expenses in FY22 as compared to FY21.
6. At the end of March 31st, 2022, we have 394 exclusive brand outlets which contributed around 7% of our FY22 revenue. Export crossed Rs. 100 crores mark and is picking up with opening of market and its contribution is more than 4% of revenue of FY2022.
7. Price increase, because this full year was lot of inflation, raw material prices went up. Price increase was in the range of 25% across all the categories, in few categories more and few categories less. it's a mix of raw material and GST.
8. Yes, Sparx brand has done very well in e-commerce platform and we can see the growth rate was more than 40% in e-commerce platform. There is a traction of a sports shoe selling more on e-com.
9. Total exposure of online as a channel for us were last year around 10%, now it is 11.5%.
10. Inventory is the major reason for working capital disturbance in this year and there are two reasons, one there was pressure upon the sale and second because the cost of goods has also increased, even raw material also. We were carrying little more inventory just to be more cautious about the future price increase, so inventory has increased in the balance sheet.
11. This year being a little tough year comparatively and FY21 was a best year but if we compare FY20 the margins are definitely achievable, and we intend to. We can say, FY20 was 17% margin and this year we achieved lower than that, so definitely we intend and it's possible also.
12. We are doing Hawai and Bahamas come under Hawai division. That is around 25% and Flite is 37.5% and similarly Sparx is 37.5%.
13. Within Sparx 50% were sandals and the rest 40% were the closed toes, has that portfolio changed in terms of the mix? Gaurav Dua: Yes, it has changed now. It is 60% shoes and 40% sandal as athleisure growing tremendously.
14. There is a good demand in athleisure and sportswear. That e-commerce is growing much faster because of India becoming more fit and demand of these products going high.
15. We have around 650 to 680 distributors and online contribute around 11.5% of our sales, 7% is contributed by retail and 4% by exports.
16. We don't have any intent to spend in south but definitely we are expanding our capacity in north where we have our own set up. So, we are integrating our backend operations and for that we are working. This year also we have intent to spend around INR 100 crores, so it will add to the backend operations mainly.
17. Already we have reached the capacity of 10 lakhs pairs per day and utilization is around 65% and within this category we are focusing to free some capacity of whatever is required in shoe division.
18. So overall maximum inventory related to FG (Finished Goods) because most of the materials we keep around 50 to 60 days inventory in the system but this time it was little higher. Average we keep around 40 days but this time it is higher. So, in percentage term you can say around one-third, around 30% will be raw material and rest is WIP and FG.
19. MRP it’s a 25% increase on a YOY basis and this includes the GST increase also from 5% to 12%,
20. The price increase has happened more in Hawai Slippers, Bahamas, and Flite EVA because they are having high content of polymers which became very expensive.
21. Sustainable working capital, if it’s 3 months things are workable smoothly, 3-3.5 months maximum. If I look 7-8 years where it was 2 months. Now we have shifted to 3 months kind of working capital. Sushil Batra: Because this shoe category is growing much faster. It's a high value item, so it's lead time is much more, and we have to give little more credit to trade also because it is high value item. So that’s why it is increasing and moreover the raw material prices have also gone up like anything. So overall in value term it is definitely putting pressure upon the working capital side.
22. We are always expensive than unorganized. You cannot compare brand with unorganized. It's very difficult because they do pricing on daily basis, so we do not do. If you're talking about Aqualite, so 5% to 10% cheaper is relaxo.
23. As everybody knows that digital is growing and e-commerce is the fastest growing category in footwear. 11% to 15% in one year will be difficult but we are definitely having high aspirations and we will grow to a good number. But it’s difficult to say right now if it will become 11% to 15% in just 1 year.
24. Volume generally we don't share but overall, Yes, maximum, Contribution comes from Hawai, Hawai is including Bahamas also and second is the Flite and last is Sparx.
25. If you talk about online, in Sparx 60% is shoes and 40% is sandals even in online. So, majority of sales are coming more than Rs. 500 MRP in online. In our Sparx brand, online contribution is more than 25%.
26. Our major sales come from North India that is around 50% and then 18% comes from East, same West 18% and around 13% from South.
27. Around 2 years ago our distributor count was around 800 and today it has come down to around 650. Why has the distributor count reduced over the last few years? Gaurav Dua: We want quality distributors so less than Rs. 10 lakh sales per month was cut. So, they were many in numbers. So, we have cut down the tail. We are focusing on the cost of reaching them it was not viable. We are focusing on good number of distributors who are doing more than Rs. 10 lakhs per month. That is how we decided. It was a tail. We have to cut the tail.
28. The distributors and retailers are very cautious because of so many changes in MRPs. So, they're keeping less stocks.
29. Over all category of Hawai and EVA, it is actually gone down because this year the market has opened up and outdoor people have started to be in the market. So, closed footwear is doing good and chappals and these things have gone down and at the same time because of high inflation, buying power of these masses has gone down. So, they're trying to hold on to their old slipper also and so delaying their purchase.
30. Whether we've lost market share to any competitor, unlisted competitor, maybe somebody who's come from the South for instance? Ramesh Kumar Dua: No, that's not there.
31. 20% in closed footwear, 80% in open footwear and last time it was 15-85.
32. Rural we are feeling more pinch, there's more pressure in the rural side of India. Urban still there is a movement but in rural India they are not able to absorb the inflation or price hikes.
33. We started with Udaan and Ajio, but our contribution is quite less. It is less than 1% you can say that. So, it's a new channel for us. The problem with them is that they are playing a discounting game which we do not want to disrupt the market. We are cautiously watching them and going forward then we'll see how we have to do business.
34. One of your competitors’ books double-digit revenues through these channels in the sports category. So, do we sell directly to them or we'll sell them through a distributor channel? Gaurav Dua: Through our distributor.
35. Sometimes we have to first protect our market share and top line and we have to keep our pricing very competitive so that we are there. Once the things settle down then you can always have your better pricing and margins also.
36. It's very important we have the market share; we cannot lose our shelf space. We have to be there in the minds of the consumer always, that is of prime importance. Once we are always there and everything else will only then follow. If we lose our market share, then what are we left with.
37. Competition is from unorganized also and organized also but we have to always remain competitive on all fronts. We can't just look down upon anybody lightly. Gaurav Dua: They were selling before, now also. So listing and non-listing does not make any difference Ramesh Kumar Dua: They were always in the system. They will remain always in the system.
38. Ramesh ji, my biggest concern is succession plan for Relaxo? Is this something that is actively discussed in the company or is this something that the board is discussing? What are your personal thoughts on this? 
39. Ramesh Kumar Dua: That thing is in process. We are serious on it, but we can't divulge beyond anything now.