LUPIN - Result Analysis Q1 FY21

LUPIN - Result Analysis  Q1 FY21

CMP: 958.85 (As on 11-08-2020)

Total income from operations 3,527 Cr 

3,877 Cr (-9.01%) YoY | 3,845 Cr (-8.22%) QoQ 

Year ending revenue: 15,347 Cr Vs. 14,665 Cr (4.67%)

Net Profit of 108.7 Cr 

264.3 Cr (-59.01%) YoY 391.2 Cr (-72.33%) QoQ 

Year ending Net profit: (399.8) Cr Vs. 607 Cr (-165.84%)

EPS (in Rs.) 2.35

6.67 YoY | 8.57 QoQ 

Year ending EPS: (5.95) Vs. 13.40

View: Result is declined and below expectation. YoY and QoQ revenue declined and profit also corrected significantly in YoY and QoQ. 

Business Updates & Highlights

Q1FY21 EBITDA is around INR 488.1 Cr Vs. 746.4 Cr in Q1FY20 Vs. 523.7 Cr in Q4FY20 therefore declined by 52.4% in YoY and 2.9% in QoQ. EBITDA margin in Q1FY21 was 14.7% Vs. 20.0% in Q1FY20 Vs. 13.8% in QoQ therefore EBITDA margin significantly declined in 530 bps in YoY and up by 90 bps in QoQ.

Manufacturing and other expenses - INR 9,58.3 Cr, at 27.6% of sales, compared to INR 1,151.9 Cr in Q4 FY2020 Vs. 1086 Cr in Q1FY20. 

Investment in R&D - INR 357.5 Cr, at 10.3% of sales, compared to INR 344.2 Cr in Q4 FY2020.

Personnel cost - INR 793.6 Cr, at 22.9% of sales, compared to INR 763.5 Cr in Q4 FY2020

Company is primarily operating into four main geographical segments which are as under:

North America

Lupin’s North America sales for Q1 FY2021 were INR 1,216 Cr, compared to sales of INR 1,579.1 Cr during Q4 FY2020, down 21% compared to sales of INR 1,541.2 Cr during Q1 FY2020; accounting for 35% of Lupin’s global sales

India

Lupin’s India formulation sales for Q1 FY2021 were INR 1,285.4 Cr, compared to sales of INR 1,192 Cr during Q4 FY2020 and sales of INR 1,307.7 Cr during Q1 FY2020; accounting for 37% of Lupin’s global sales.

Growth Markets (LATAM and APAC) 

Lupin’s LATAM & APAC regions together form our Growth Markets. Together, Growth Markets had sales of INR 269.9 Cr for Q1 FY2021, compared to sales of INR 280 Cr during Q4 FY2020, down 6% compared to sales of INR 286.4 Cr during Q1 FY2020; accounting for 8% of Lupin’s global sales.

Europe, Middle-East and Africa (EMEA)

Lupin’s EMEA sales for Q1 FY2021 were INR 250 Cr, compared to sales of INR 364.9 Cr during Q4 FY2020, down 4% compared to sales of INR 260.4 Cr during Q1 FY2020; accounting for 7% of Lupin’s global sales.

Global API 

Lupin’s Global API sales for Q1 FY2021 were INR 409 Cr, compared to sales of INR 328.6 Cr during Q4 FY2020 and up 17% compared to sales of INR 348.9 Cr during Q1 FY2020; accounting for 12% of Lupin’s global sales.

The Company filed 4 ANDAs during the quarter and received 4 ANDA approvals from the U.S. FDA. The Company launched 2 products during the quarter in the US market. The Company now has 175 products in the US generics market. Cumulative ANDA filings with the US FDA stood at 434 as of June 30, 2020, with the Company having received 276 approvals to date.

Capital Expenditure for the quarter - INR 179.3 Cr as of June, 2020. 

Financial

ROE and ROCE is around (4%) and 9% respectively and book value per share is around INR 277 and share is currently trading at 3.2x of its book value. Company is currently trading at annualized PE) of around 110 which is very high and expensive as per Industry benchmark. Promoter holding in the company is around 47 which is good and stable. FIIs and mutual fund hold around 21.3% and 11.9% respectively. 

Position: Share strong support price is INR 810/750. Long term investor based on their risk appetite may continue with the company.

Share View: Share price high 955 (52 week) and now 879. Lupin is an innovation-led transnational pharmaceutical company headquartered in Mumbai, India. The Company develops and commercializes a wide range of branded and generic formulations, biotechnology products and APIs in over 100 markets in the U.S., India, South Africa and across Asia Pacific (APAC), Latin America (LATAM), Europe and MiddleEast regions.

Opportunities

The Company enjoys leadership position in the cardiovascular, anti-diabetic, and respiratory segments and has significant presence in the anti-infective, gastro-intestinal (GI), central nervous system (CNS) and women’s health areas. Lupin is the third largest pharmaceutical company in the U.S. by prescriptions. The Company invests 10.3% of its revenues on research and development. Lupin is now the market leader in 62 products in the US generics market and amongst the Top 3 in 126 of its marketed products (market share by prescriptions, IQVIA June 2020). API business growth in this quarter was good and increased by 24.5% in QoQ and 17.2% in YoY.

Risk

Significantly declined EBITDA in QoQ and lower sales also in this quarter. Despite mostly pharmaceuticals player outperform in EBITDA and topline in this quarter Lupin topline and profit was down on YoY and QoQ. India Region Formulation sales declined by 6% compared to Q1 FY2020 which is 37% of Lupin’s sales. Lupin North America business declined by 23% and 21% in YoY and QoQ which is accounted 35% of Lupin’s sales. Total Formulations business declined by 11.6% in YoY and QoQ.

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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CIPLA - Result Analysis Q1 FY21

CIPLA - Result Analysis Q1 FY21

CMP: 779 (As on 11-08-2020) 

Total income from operations 4,346 Cr 

3,989 Cr (8.91%) YoY | 4,376 Cr (-0.68%) QoQ 

Year ending revenue: 17,476 Cr Vs. 16,362 Cr (6.80%)

Net Profit of 566 Cr 

447 Cr (26.61%) YoY 239 Cr (136.83%) QoQ 

Year ending Net profit: 1,547 Cr Vs. 1,528 Cr (1.24%)

EPS (in Rs.) 7.16

5.93 YoY | 3.05 QoQ 

Year ending EPS: 19.16 Vs. 18.96

View: Result is overall good and improved. YoY revenue up and profit also up. Profit also increased in QoQ. EBITDA and margin also improved in this quarter. 

Business Updates & Highlights

Q1FY21 EBITDA is around INR 1,049 Cr Vs. 905 Cr in Q1FY20 Vs. 652 Cr in Q4FY20 therefore up by 24% in YoY and 61% in QoQ. EBITDA margin in Q1FY21 was 24.1% Vs. 22.7% in Q1FY20 Vs. 14.9% in QoQ. EBITDA margin is improved in 145 bps in YoY and 923 bps in QoQ.

Company is primarily operating into five main geographical segments which are as under:

North America

Cipla North America sales for Q1 FY2021 were INR 1,021 Cr Vs. 1,119 Cr in Q1FY20 VS. 856 Cr in Q4FY20 therefore declined by 9% in YoY and up by 19% in QoQ. North America contributed 23% of total sales. 

India

India sales (Rx+Gx+CHL) for Q1 FY2021 was INR 1,608 Cr Vs. 1,388 Cr in Q1FY20 Vs. 1,730 Cr in Q4FY20 therefore up by 16% in YoY and declined by 7% in QoQ. India contributed 37% of total sales. 

SAGA (including South Africa Animal health) in Q1FY21 was INR 763 Cr Vs. 691 Cr in Q1FY20 Vs. 825 Cr in Q4FY20 therefore up by 10% in YoY and declined by 8% in QoQ. SAGA contributed 18% of total sales.

Global API

Cipla API sales for Q1 FY2021 was INR 184 Cr Vs. 182 Cr in Q1FY20 Vs. 247 Cr in Q4FY20 therefore up by 1% in YoY and declined by 25% in QoQ. API contributed nearly 4% of total sales. 

Emerging Markets

Cipla emerging market sales for Q1FY21 was around INR 457 Cr Vs. 279 Cr in Q1FY20 Vs. 415 Cr in Q4FY20 therefore up by 64% in YoY and 10% in QoQ.

Europe

Europe contributed sales in Q1FY21 was around INR 240 Cr Vs. 201 Cr in Q1FY20 Vs. 232 Cr in Q4FY20 therefore up by 19% in YoY and 3% in QoQ.

Other expenditure declined by 17% in YoY and 27% in QoQ.

The Rx business grew 9% YoY led by strong traction in chronic therapies despite lock down challenges; continued servicing of patients with Covid portfolio

Pipeline Update

Launched dihydroergotamine mesylate nasal spray with 180 day of CGT exclusivity. 

Launch of Icatibant injectable pre-filled syringe

US Specialty CNS Out-licensing: Actively exploring partnerships for the other CNS asset. 

R&D investments stand at INR 200 crores or 4.6 % of revenue

Financial

ROE and ROCE is around 10% and 12% respectively and book value per share is around INR 196 and share is currently trading at 3.7x of its book value. Company is currently trading at annualized PE of around 33 which is good as per Industry benchmark. Promoter holding in the company is around 36.7% which is low but stable. FIIs, mutual fund and insurance cos hold around 18.6%, 16,3% and 4.6% respectively. Total debt as of June 2020 was around INR 3,206 Cr Vs. 2,816 Cr in March 2020. Cash & cash equivalent as of June 2020 was around 3,256 Cr VS. 2,009 Cr in March 2020. 

Position: Share strong support price is INR 690. Long term investor should continue with the company and any correction will give good opportunity to enter in SIP basis in long term.

Share View: Share price high 740 (52 week) and now 728. Cipla is a global pharmaceutical company focused on agile and sustainable growth, complex generics, and deepening portfolio in home markets of India, South Africa, North America, and key regulated and emerging markets.

Opportunities

Cipla enjoy 2nd rank overall in Chronic segment with 7.4% market share and growth 7% in YoY. Respiratory therapy 1st rank overall with 25.7% market share with 5% growth. Inhalation therapy 1st rank overall with 68.9% market share with 6% growth. Urology therapy 1st rank overall with 16.3% market share with 5% growth. Cardiology 1st rank overall with 5.5% market with 10% growth. Outperformed the market in Respiratory, Inhalation and Urology while Cardiology reported strong double digit growth. Significant net cash addition through focus on cash conservation and liquidity management. Accelerated launch of the largest Covid-19 portfolio in the country ▪ Cipremi® (Remdesivir) ▪ Actemra® (Toclizumab) ▪ Ciplenza® (Favipiravir) ▪ Ciphands® (Hand Sanitizer) received good response also. India Rx 4th consecutive quarter of market beating growth. Strong product portfolio and enjoy the brand image and reputation.

Risk

Observations received in one of major plant in Goa location. Very low Return on equity (ROE) and in past 10 year average it was around 11% and further sales and profit growth was also single digit. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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Titan - Result Anallysis Q1 FY21

Titan - Result Anallysis Q1 FY21

CMP: 1,068 (As On 11-08-2020)

Total income from operations 2,020 Crs 

5,205 Cr (-61.11%) YoY | 4,753 Cr (57.58%) QoQ 

Year ending revenue: 21,205 Cr Vs. 19,779 Cr (7.21%)

Net Profit of (297) Cr 

364 Cr (181.59%) YoY 343 Cr (186.53%) QoQ 

Year ending Net profit: 1,493 Cr Vs. 1,404 Cr (6.34%)

EPS (in Rs.) (3.28)

4.12 YoY | 3.93 QoQ 

Year ending EPS: 16.91 Vs. 15.82

View: Result is below expectation and declined. YoY and QoQ revenue declined and company also posted losses in this quarter due to complete lockdown of their stores in April and partially resumed the operations in May and June 2020. 

Business Updates & Highlights:

Company is primarily operating into three main segment which are as under:

Jewellery

Revenue for the division declined by 71% (excluding bullion sales). Revenue growth in May & June month was at about 20% and 72% compared to the same months of previous year. INR 1,182 Cr VS. 1,147 in corresponding previous quarter

EBIT in Q1FY21 was around INR (54) Cr Vs. 442 Cr in Q1FY20.

Lockdown led to zero sales in the month of April, a month which should have seen very high sales normally due to ‘Akshaya Tritiya’ festival. The recovery has been better than originally envisaged on the back of higher share of wedding jewellery sales (despite the deferment of many weddings), good sales coming from GHS scheme, and investment led demand leading to higher gold coin sales.

Gross margins in the business have suffered as studded ratio was lower at 18% compared to 25% in the previous year.

Watches & Wearables

Revenue was consequently down by 90%. Revenue growth of May & June month was at about 5% and 23% respectively. 75 Cr vs. 715 Cr in corresponding previous quarter.

EBIT in Q1FY21 was around INR (164) Cr Vs. 128 Cr in Q1FY20.

Eye Wear

The Eyewear category, that requires extended store level interaction with customer also was impacted severely. Revenue was down by 80%. Revenue growth of May & June month was at about 15% and 35% respectively. 30 Cr Vs. 149 Cr in corresponding previous quarter.

EBIT in Q1FY21 was around INR (31) Cr Vs. 11 Cr in Q1FY20.

The division closed 15 stores during the quarter, on net basis, ending up with a reduction of about 8K sq. feet of retail space.

Other business - Fragrances, Indian dress wear and Accessories

Other business declined by 88%.It has been a slow recovery particularly for the ‘Indian dress wear’ business with the recovery rate being around 40% in June.

Subsidiary / JV businesses

Caratlane Total income in Q1FY21 was around INR 44 Cr Vs. 133 Cr in Q1FY20 therefore declined by 67% in YoY. Profit in Q1FY21 was around INR (14) Cr Vs. (5) Cr in Q1FY20.

Teal Total income in Q1FY21 was around INR 77 Cr Vs. 95 Cr in Q1FY20 therefore declined by 19% in YoY. Profit in Q1FY21 was around INR 7 Cr Vs. 15 Cr in Q1FY20.

Financial

ROE and ROCE is around 24% and 24% respectively and book value per share is around INR 75 and share is currently trading at 14.8x of its book value. Company is currently trading at annualized PE of around 93 which is very high as per Industry benchmark. Promoter holding in the company is around 52.9% which is good and stable. FIIs, mutual fund and insurance cos hold around 17.5%, 5.6% and 4.8% respectively. 

Position: Share strong support price is INR 1040/980. Long term investor should continue with the company and any good correction will give good opportunity to add for long term basis.

Share View: Share price high 1,390 (52 week) and now 1,107. Titan Company Limited is an Indian consumer goods company that mainly manufactures fashion accessories such as watches, jewellery and eyewear. Part of the Tata Group

Opportunities

Company was good business visibility till Feb 2020 after Global pandemic on Covid -19 company businesses were drastically down washed in the month of March, April and part of May and June 2020. Weddings season and Akshya Tritiya sale were also down due to restrictions. The Jewellery division is targeting for full recovery in the fourth quarter. Gold prices have been on sharp uptrend for more than a year and gold is now being considered as an attractive asset class too. Jewellery division covered around 80% of their topline through their flagship store “Tanishq” largest Jewellery retailer in country. The Company has managed the cash situation very well and the bullion sale of INR 601 cr helped the Company turn net cash positive in the quarter despite the low level of revenues.

Risk

Losses in this quarter on every segment of their business due to shut down of stores Covid-19 pandemic That shut businesses and left millions jobless, pushing the economy on course for its first full-year contraction in more than four decades. And as uncertainties rose, a flight to safe havens led to an eye-popping rally in gold prices. Q2 will also be challengeable as currently economic stress and Covid-19 outbreak can’t be discounted. Titan said 83% of the company’s stores had opened by the end of June. But even then many of them were not operating for all days and further very limited footfall in all the stores.

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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Shree Cement - Result Analysis Q1 FY21

Shree Cement - Result Analysis Q1 FY21

Total income from operations 2,480 Crs 

3,303 Cr (-24.91%) YoY | 3,415 Cr (-27.38%) QoQ 

Year ending revenue: 12,868 Cr Vs. 12,555 Cr (2.49%)

Net Profit of 330.3 Cr 

382.2 Cr (-13.39%) YoY 536.6 Cr (-38.43%) QoQ 

Year ending Net profit: 1,540 Cr Vs. 1,006 Cr (53.04%)

EPS (in Rs.) 91.3

108.9 YoY | 148.5 QoQ 

Year ending EPS: 435.3 Vs. 288.83

View: Result is overall good. YoY and QoQ revenue declined but profit slightly declined in YoY due to better cost control mechanism and operational efficiency. 

Business Updates & Highlights:

EBITDA in Q1FY21 was around INR 687.9 Cr Vs. 947.2 Cr in Q1FY20 Vs. 1056.1 Cr in Q4FY20 therefore declined by 27.4% in YoY and 34.9% in QoQ. EBITDA margin in Q1FY21 was around 27.8% Vs. 28.7% Vs. 30.9% in QoQ. 

Power & fuel cost in Q1FY21 was around INR 458.1 Cr Vs. 748 Cr in Q1FY20 therefore decreased by 38.8% in YoY. 

Employee expenditure in Q1FY21 was around INR 205 Cr Vs. 220 Cr in Q1FY20 therefore declined by 6.8%.

Freight & Forwarding expenditure in Q1FY21 was around INR 581 Cr Vs. 683 Cr in Q1FY20 therefore declined by 14.9% in YoY.

Financial

ROE and ROCE is around 13% and 15% respectively and book value per share is around INR 3,650 and share is currently trading at 6.1x of its book value. Company is currently trading at annualized PE of around 58 which is very high as per Industry benchmark. Promoter holding in the company is around 62.5% which is very good and stable. FIIs and mutual fund hold around 11.5% and 8.7% respectively. 

Position: Share strong support price is INR 21,100. Long term investor can continue with the company. 

Share View: Share price high 25,341 (52 week) and now 22,388. Shree Cement is an Indian cement manufacturer. it is one of the biggest cement makers in Northern India. It also produces and sells power under the name Shree Power and Shree Mega Power. 

Opportunities

Top 3 cement group in India (in terms of cement capacity). Total cement capacity is 41.9 MTPA (Including subsidiaries) and Power Capacity is 659 MW (including subsidiaries). Despite Covid-19 outbreak the company was able to maintain their bottom line and overall positive scenario. Strong rural market position with strong brand and dealership network. Maintained good sales growth in last 5 year and it was above 17% and profit growth above 14%. Strong reserve and surplus which was above 13.1K Cr as of March 2020 and strong operating cash flow which was around INR 3.9K Cr as of March 2020. Liquidity position is also sound in the company and average debtor receivables was around one month. 

Risk

Commercial space sector may perform very slow due to demand will overall contract in upcoming months due to global pandemic. Further slow spending by Govt in Infrastructure segment. Expensive valuation as compare to other peers like Ambuja, Ultratech, JK Cement, Birla Corp etc. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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IPCA LAB - Result Analysis Q1 FY21

IPCA LAB - Result Analysis Q1 FY21

Total income from operations 1,534 Cr 

1,078 Cr (42.31%) YoY | 1,073 Cr (436.18%) QoQ 

Year ending revenue: 4,548 Cr Vs. 3,746 Cr (21.31%)

Net Profit of 445.8 Cr 

129.3 Cr (244.91%) YoY 83.05 Cr (136.83%) QoQ 

Year ending Net profit: 603 Cr Vs. 445 Cr (35.54%)

EPS (in Rs.) 35.24

10.24 YoY | 6.57 QoQ 

Year ending EPS: 47.73 Vs. 35.21

View: Strong result and above expectation. YoY revenue up and profit more than double in YoY and four times in QoQ. 

Business Updates & Highlights:

Q1FY21 EBITDA is around INR 594.4 Cr Vs. 210 Cr in Q1FY20 therefore up by 183% in YoY EBITDA margin in Q1FY21 was 38.4% Vs. 19.1% in Q1FY20. EBITDA margin is improved and its double in YoY.

India formulations income in Q1FY21 up 8% at INR 489.8 Cr Vs. 452.8 in Q1FY20.

Exports formulations income in Q1FY21 up by 89.3% at INR 462 Cr Vs. 244 Cr in Q1FY20.

Domestic APIs income in Q1FY21 up by 209% at INR 203 Cr Vs. 65.7 Cr in Q1FY20.

Exports APIs Income in Q1FY21 up by 33% at INR 310 Cr Vs. 233 Cr in Q1FY19.

Financial

ROE and ROCE is around 15% and 16% respectively and book value per share is around INR 287 and share is currently trading at 7.3x of its book value. Company is currently tradinStrg at annualized PE of around 22 which is very fair as per Industry benchmark. Promoter holding in the company is around 46.1% which is good and stable. FIIs and mutual fund hold around 12.4% and 22.8% respectively. Company is virtually debt free. 

Position: Share strong support price is INR 1990. Long term investor should continue with the company and any correction will give good opportunity to enter in SIP basis in long term.

Share View: Share price high 2,150 (52 week) and now 2,095. IPCA is fully integrated pharmaceuticals company with a strong thrust on exports. IPCA is vertically integrated and produces finished dosage forms (FDFs) and Active Pharmaceuticals ingredients (APIs).

Opportunities

Strong APIs business growth in YoY in domestic as well as exports income. pca produces over 80 APIs at 12 production facilities. Manufacturing leadership extends across Atenolol (anti-hypertensive), Chloroquine Phosphate (anti-malarial), Chlorthalidone (diuretic), Furosemide (diuretic), Hydroxychloroquine Sulphate (DMARD), Losartan (anti-hypertensive), Metoprolol Succinate (anti-hypertensive), Metoprolol Tartrate (anti-hypertensive), Pyrantel Salts (anthelmintic), and Propranolol (anti-hypertensive) – besides being one of the largest suppliers of these APIs worldwide. Exports formulation Income which contributes nearly 30% of topline grew by 89% in YoY. Ipca manufactures over 350 formulations in almost every dosage form with 4 of branded formulations being ranked amongst the top 300 brands of Indian Pharma Market as per IQVIA May 2020. Leaders in Pain, Rheumatology, Antimalarials and Haircare therapies with a steadily growing portfolio. Strong operating cash flow in every quarter. 

Risk

Last 5 years topline growth was less than 5% and profit growth was also negative. Return on equity was also too less as compare to other pharma companies. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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Reliance Ind – Result Analysis Q1FY21

Reliance Ind – Result Analysis Q1FY21

Total revenue from operations at 91,238 Cr

162,353 Cr (-43.85%) YoY | 139,535 Cr (-34.62%) QoQ

Year ending revenue 612,437 Cr Vs. 568,337 Cr (7.78%)

Net Profit of 13,248 Cr

10,141 Cr (30.63%) YoY 6,546 Cr (102.74%) QoQ

Year ending profit 39,880 Cr Vs. 39,588 Cr (0.71%)

*EPS – After exceptional item

EPS (in Rs) 20.63 

16.93 YoY | 9.95 QoQ

*EPS – Before exceptional item

EPS (in Rs) 12.92 

16.94 YoY | 16.63 QoQ

Year ending EPS 70.18 Vs. 62.62

View: Result is overall good despite Covid -19 outbreak company has outperformed their Reliance JIO business and continuously growing in YoY and QoQ . Profit significantly Jump in this quarter due to RIL recorded a one-time gain of INR 4,966 crore from the transfer of its petrol marketing business to the joint venture between RIL and BP Plc.

Business Updates & Highlights

EBITDA (Cons.) for the quarter was INR 21,585 crore Vs. 24,486 Cr in YoY declined by 11.8% in YoY.

Finance cost was around INR 6,735 Cr Vs. 5,109 Cr in YoY therefore up by 31.8% in YoY.

Exports (including deemed exports) from RIL’s India operations declined by 34.8% to INR 32,681 crore as against INR 50,158 crore in the corresponding period of the previous year due to lower price realizations. 

Reliance Jio

Revenue including access revenues for the quarter was INR 19,513 crore VS. 14,593 Cr in YoY up by 33.7%. 

EBITDA for the quarter was INR 7,281 crore Vs. 4,686 Cr and increase of 55.4% YoY. EBITDA Margin is around 44% Vs. 37.8% therefore up by 613 bps. 

Net profit in Q1FY21 was INR 2,520 Cr Vs. 891 Cr in Q1FY20 therefore up by 182.8%.

Total Customer base as on 30th June 2020 of 398.3 million. 

RELIANCE JIO Q1 ARPU RS 140.3 Vs. 122 in YoY. Its improved in YoY. 

Total wireless data traffic during the quarter of 1,420 crore GB (30.2% YoY growth)

Jio Platform Limited has raised INR 152,056 crore across thirteen investors which includes Facebook, Google, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton, Public Investment Fund of Saudi Arabia, Intel Capital and Qualcomm.

Reliance Retail

Revenue for the quarter was INR 31,633 crore Vs. 38,216 in YoY therefore down by 17.2% in YoY. 

EBITDA for the quarter was INR 1,083 crore Vs. 2,060 Cr therefore declined by 47.4% in YoY. EBITDA margin was around 3.8% Vs. 6.0% in YoY

Net profit for the quarter was INR 431 crore.

The current footprint of the business spans across 11,806 retail stores in over 7,000 towns with 28.7 million sq. ft. of retail space.

Petrochemicals business

Revenue of Q1FY21 was INR 25,192 Cr Vs. 37,611 (YoY) therefore declined by 33% in YoY. 

EBITDA of Q1FY21 was around INR 4,430 Cr Vs. 8,810 Cr in Q1FY20 therefore declined by 49.7% in YoY.

EBITDA margin was around 17.6% Vs. 23.4% in YoY

Polyester chain margins were weaker due to decline in PX and PTA margins with significant new supplies. Polyester chain margins were at $540/MT v/s $668/MT in 1QFY20.

Weak domestic demand and higher share of exports impacted margins as compared to regional benchmarks

RIL increased its focus on health & hygiene segment, food and beverage packaging and agriculture demand led products such as: Special melt blown PP to support domestic N95 mask and PPE production, PSF sliver forms raw material along with swab stem rod etc. 

Refining & Marketing business

Revenue of Q1FY20 was INR 46,642 Cr Vs. 101,721 in YoY therefore significantly declined by 54.7% in YoY.

EBITDA was around INR 3,818 Cr Vs. 5,143 Cr in YoY therefore declined by 25.7% in YoY.

EBITDA margin was 8.2% Vs. 5.1% in YoY. Production (MMT) 16.6 Vs. 17.5 in YoY.

GRM ($/bbl) was around 6.3 Vs. 8.1 in YoY.

Regional Benchmark Singapore Complex Margins turned negative for the first time in 2 decades and averaged at $-0.9/bbl. Reliance Gross Refining Margins at $6.3 was impacted by lower product cracks and narrower light-heavy crude differential.

Financial

ROE and ROCE is around 10.2% and 10.7% respectively and book value per share is around INR 715 per share and share is currently trading at 3.1x of its book value. Company is currently trading at annualized PE of 42 around which is high as per Industry benchmark. Promoter holding in the company is around 50.4% which is increased by YoY and QoQ. Insurance cos, FIIs and mutual fund hold around 6.1%, 24.2% and 5.2% respectively.

View: Share price high 2,198 and now 2,108. Long term investor should continue with the company with target price of INR 3000 any correction will give good opportunity to enter Reliance on SIP basis. Reliance Industries Limited (RIL) is an Indian multinational conglomerate company. Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications.

Opportunities: Reliance Industries is currently no.1 company In India in terms of market capitalization and outperform for past 3 years. Reliance is diversified group now and its more focused now on Retail and digital services (JIO) and partially setoff the pressure and margin of Refining and Petrochemical business. The current growth of Retail and Digital services business is excellent and Reliance has overtaken to Airtel and Vodafone Idea as now No.1 Telecom Company in India on subscription base as well as revenue base also. As 5G is under process and more looking into digital media space the growth is evitable. 

Reliance JIO During the lockdown period April 2020 also RJIO has added around 1.5 Mn customer and Vodafone and Bharti Airtel lost their customers. Jio Platforms has rolled out India's first and only cloud-based video-conferencing app, JioMeet during the quarter. Within few days of launch JioMeet has been downloaded by more than 5 million users. Reliance JIO is too aggressive for expanding their customer base after started for service for merely 4 years company has become No.1 Telecom Company. ARPU has also increased in YoY and QoQ. Company has also received record significant investment in JIO from big player like Google, Facebook, Intel etc with valuation over 4.91 lacs Cr for JIO itself.

Reliance Retail is also fairly well in terms of revenue and profitability, EBITDA was positive and resilient despite the limitations in the quarter, with cost management initiatives leading to fixed cost savings, which helped cushion the impact of lower profits from lower sales. While store expansion remains a thrust for the business, with activity being largely suspended in the lockdown period, the business was able to open 69 new stores during the quarter. 

More Value will be unlocked for shareholders once Reliance comes with IPO of Reliance Jio and Reliance Retail

Risk: Reliance two main businesses Petrochemicals and Refining continuously declined in YoY and QoQ despite they were covered still covered 53% dependent on topline in this quarter. GRM ($/bbl) corrected in QoQ and YoY. In bottom line this segment cover around 44% and declined by more than 43% in YoY. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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Dixon Tech - Result Analysis Q1 FY21

Dixon Tech - Result Analysis Q1 FY21

Total income from operations 517 Cr 

1,147 Cr (-54.91%) YoY | 857 Cr (-39.72%) QoQ 

Year ending revenue: 4,400 Cr Vs. 2,984 Cr (47.47%)

Net Profit of 1.60 Cr 

23.5 Cr (-93.41%) YoY 27.6 Cr (-94.23%) QoQ 

Year ending Net profit: 120.5 Cr Vs. 196 Cr (38.74%)

EPS (in Rs.) 1.35

19.94 YoY | 23.51 QoQ 

Year ending EPS: 102.70 Vs. 55.95

View: Result is below expectation. YoY and QoQ revenue declined significantly and profit also significantly down. EBITDA margins declined Y-O-Y owing to decline in production and related under absorption of overheads.

Business Updates & Highlights:

Q1FY21 EBITDA is around INR 17.1 Cr Vs. 53.1 Cr in Q1FY20 Vs. 55.8 Cr therefore declined by 67.8% in YoY and 69.9% in QoQ. EBITDA margin in Q1FY21 was 3.3% Vs. 4.6% in Q1FY20 Vs. 6.5% in QoQ. 

Operating profit margin in Q1FY21 was 3.3% Vs. 4.6% in Q1FY20 declined by 130 bps. 

Company is primarily into five business segment viz. consumer electronics – 67%, Lighting Products – 15%, Home Appliances – 5%, Mobile Phones – 10% and Security system – 3%. YoY topline growth for consumer electronic was (32%), Lighting was (76%), Home appliances – (76%), Mobile phones – (63%) and security systems was (80%). 

YoY bottom line growth (operating profit) for consumer electronics – (24%), Light products – (77%), Home appliances – (96%), Mobile Phones – (37%) and Security systems – (99%). 

Financial

ROE and ROCE is around 20.8% and 26.1% respectively and book value per share is around INR 470 and share is currently trading at 17.1x of its book value. Company is currently trading at annualized PE of around 115 which is very high as per Industry benchmark. Promoter holding in the company is around 36.1% which is low but stable. FIIs and mutual fund hold around 12.3% and 21% respectively. 

Position: Share strong support price is INR 7500/7000. Long term investor may continue with the company.

Share View: Share price high 8,300 (52 week) and now 8,000. Dixon Technologies (India) Limited has been leading the electronic manufacturing services (EMS) space in India. Founded in 1993 and commenced manufacturing of colour television in 1994, Dixon has now expanded its operations to various sub-segments of electronics. Dixon Technologies provides design focused solutions in consumer durables, home appliances, lighting, mobile phones and security devices to customers across the globe, along with repairing and refurbishment services of a wide range of products including set top boxes, mobile phones and LED TV panels.

Opportunities

Company business also comprises of Original equipment manufacturer (OEM) as well as original design manufacturer (ODM) further will also take the benefit of Make in India in future for all segment. Samsung, Lava and Dixon have proposed to produce mobile devices and components of over ₹11 lakh crore in the next five years under the government's new Production Link Incentives (PLI) scheme to boost electronics manufacturing. After ban China products and boost local mfg. Business confidence & condition picked up in May & significantly improved in June.

Risk

Expensive valuation and high PE. Business was fairly well till March 2020. Significant business disruption due to Covid – 19 outbreak in Q1 and it may impact Q2 as well. Cash conversion cycle is distorted due to weak revenues in Quarter 1 & hence is an aberration & will be corrected in Quarter 2. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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