CRISIL Ratings revises TVS Holdings' outlook to 'positive'; reaffirms 'AA' rating

by Hansraj Agrawal | Oct 11, 2024 | Share Market

Last Updated : Oct 11 2024 | 4:31 PM IST

TVS Holdings (TVSHL) said that CRISIL Ratings has revised its outlook on the long-term bank facility and non-convertible debentures (NCDs) of the company to ‘positive’ from ‘stable’ while reaffirming the rating at ‘CRISIL AA’.

CRISIL Ratings stated that the outlook revision factors the healthy improvement in credit profile of its main operating company, TVS Motor Company (TVSM).

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The improvement is driven by healthy gain in market share for TVSM over the past 3-4 fiscals in motorcycle and scooter segments backed by expansion of product portfolio including launch of electric scooters and market reach through dealership expansion.

The growth momentum of TVSM will continue over the medium term as well supported by healthy market position in motorcycle and scooter segment.

Operating profitability at consolidated level is constrained on account of losses in the overseas subsidiaries due to product development costs and muted demand scenario in Europe. The losses are expected to gradually decline over the medium term with launch of new products and ramp up of utilization levels. which will aid TVSMs overall operating profitability.

Besides, TVSMs financial risk profile also continues to improve over time, driven by healthy cash generation and prudent capital spend.

In addition, TVSHL holds 50.26% stake in TVSM which is valued at Rs 68,718 crore as on 27 September 2024 which translates to healthy debt cover of over 100x (debt of Rs 650 crore as on date). The healthy debt cover provides adequate financial flexibility for TVSHL.

“Owing to healthy relationships with lending community and comfortable debt cover because of the holding in TVSM, refinancing will not be a challenge. However, material decline in debt cover, including debt raised for sizeable additional acquisition or investments in subsidiaries, or fall in share price of TVSM will remain monitorables,” the rating agency said.

TVS Holdings (TVSHL) [formerly Sundaram Clayton (SCL)] was a leading manufacturer of aluminium die-casting components. Until fiscal 2007, SCLs financials included the CV brakes business. With effect from March 28, 2008, the Madras High Court approved the de-merger of the brakes business into a separate company, Wabco India Ltd. The non-brakes business (aluminium die-casting) and investments in the TVS group entities remained with SCL. During fiscal 2012, SCL restructured its businesses, hiving off the non-automotive businesses into its erstwhile subsidiary, Sundaram Investments Ltd (SIL).

In August 2023, the aluminium diecasting business of SCL was demerged into a separate entity, SCL DCD and SCL was renamed as TVSHL which retained the investments in TVS Motor Company (TVSM) and real estate entity TVS Emerald (TEL).

The scrip lost 0.41% to end at Rs 13290.30 on the BSE today.

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First Published: Oct 11 2024 | 4:15 PM IST

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Anand Rathi Q2 PAT climbs 32% YoY to Rs 76 cr in FY25

by Hansraj Agrawal | Oct 11, 2024 | Share Market

Last Updated : Oct 11 2024 | 5:04 PM IST

The financial products distributor’s consolidated net profit jumped 32.38% to Rs 76.11 crore in Q2 FY25 as compared to Rs 57.49 crore posted in Q2 FY24.

Revenue from operations surged 32.80% YoY to Rs 242.48 crore in the quarter ended 30 September 2024.

For the quarter ended 30 September 2024, profit before tax was Rs 102.18 crore, reflecting a growth of 31.47% compared to Rs 77.72 crore posted in the same quarter previous year.

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During the quarter, assets under management (AUM) stood at Rs 75,084 crore, up 57% as compared with Rs 47,957 crore recorded in Q2 FY24. Share of Equity Mutual Funds in AUM increased to 55% as of September 2024 and 50% as of September 2023.

In Q2 FY25, the companys net inflows surged by 128% year-on-year to Rs 5,700 crore, while net inflows in Equity Mutual Funds increased by 64% YoY to Rs 3,116 crore for the quarter ended 30 September 2024.

Mutual Fund distribution revenue rose by 70% YoY to Rs 195 crore, while the annualized Return on Equity (ROE) stood at 44%.

On half-year basis, the company’s consolidated net profit jumped 35.09% to Rs 149.35 crore in H1 FY25 as against 110.55 crore posted in H1 FY24. The compays Revenue surged 34.25% YoY to Rs 480.09 crore in H1 FY25.

Meanwhile, the companys board declared interim dividend of Rs 7 per share of face value of Rs 5 each for FY25. The company has fixed 18 October 2024 as record date for the said dividend.

Rakesh Rawal, chief executive officer (CEO), said, We are thrilled to announce another exceptional financial result. In H1 FY25 our total revenue grew by 35% year-on-year to Rs 495 crore and Profit after Tax was Rs 150 crore, representing growth of 35% year-on-year. Our Assets Under Management (AUM) has seen a significant increase of 57% to Rs 75,084 crore. In the first half of FY25, we welcomed 1,066 new client families, bringing our total count of client families to 10,977.

Indias growth story is being celebrated as the global economy faces geopolitical challenges and slow growth. As the fastest-growing large economy, India is projected to achieve a 7% GDP growth for FY25, driven by strong domestic demand, government reforms and increased capital expenditure, which has also boosted its market capitalization.

In light of such strong economic growth, the companys prospects are positive, supported by the rising HNI population who are seeking a strategic approach to wealth creation.

Feroze Azeez, deputy chief executive Officer said, Indias strong economic fundamentals have driven increased interest from both domestic and foreign investors. This trend is reflected in consistent inflows into the equity markets, with new investments hitting record highs month-on-month. Such a positive momentum is expected to strengthen the Indian equity markets further, fostering an environment conducive to long-term capital appreciation and broadening of the investor base.

Our client centric approach has resulted in 0.28% client attrition rate in terms of AUM lost during the first half of FY25. We take immense pride in achieving zero regret RM attrition for the fifth consecutive quartera true testament to our robust entrepreneurial work culture and unwavering commitment to our teams growth and satisfaction.

Anand Rathi Wealth is among Indias leading non-bank wealth solutions firms, catering to high and ultra-high net worth individuals.

The scrip shed 0.37% to settled at Rs 4,040.50 on the BSE.

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First Published: Oct 11 2024 | 4:08 PM IST

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Mukul Agrawal portfolio stock zooms 122% in 4 months; up 1100% in 25 months

by Hansraj Agrawal | Oct 11, 2024 | Share Market

4 min read Last Updated : Oct 11 2024 | 3:53 PM IST

Neuland Laboratories share price hit a new high of Rs 14,500 on the BSE on Friday, surging 16 per cent in the intraday. The shares, however, closed 12.8 per cent higher at Rs 14,100 on the BSE on expectation of a strong September quarter earnings (Q2FY25). In comparison, the BSE Sensex ended 0.28 per cent lower at 81,381.

In the last four months, Neuland Labs share price has more-than-doubled, zooming 122 per cent, as the company posted robust earnings for the June 2024 quarter (Q1FY25). Since September 9, 2022, in the last 25 months, it has skyrocketed 1,100 per cent or 12 times from a level of Rs 1,201 on the BSE.

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Investor Mukul Mahavir Agrawal held 400,000 shares, representing 3.12 per cent stake, in Neuland Lab at the end of June quarter, shareholding pattern data shows.

The company has not yet disclosed the shareholding pattern for the quarter ended September 2024.

Neuland Labs is a pharmaceutical manufacturer providing active pharmaceutical ingredients (APIs), complex intermediates and custom manufacturing solutions (CMS) services to customers.

The company recorded its highest-ever quarterly revenue in Q1FY25 at Rs 444.4 crore led by growth in the CMS business. The company recorded healthy earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins at 28.9 per cent, up 174 bps over Q1FY24. Profit after tax jumped 58 per cent year-on-year at Rs 98.3 crore from Rs 62.2 crore in the year-ago quarter.

The management said the company continues to maintain that FY25 will be a year of normalisation of revenue growth and subsequently margins as the company continue to invest for growth. The management expect the company’s business to regain momentum from FY26 onwards, basis its visibility from the company’s portfolio of projects and products.

“As we evaluate our pipeline of projects and the flow of new projects, we remain enthusiastic on the strong potential of the CMS business over the long term. The Generic Drug Substances (GDS) business continues to build on the strong base we have with quality focussed customers, even as our R&D team is working on an exciting set of molecules to add to our portfolio,” the management had said while announcing its Q1FY25 results on August 1.

Meanwhile, the market for API within the CDMO sector is likely valued at $118.09 billion in 2024 and is expected to grow to $178.47 billion by 2029. This growth represents a compound annual growth rate (CAGR) of 8.61 per cent from 2024 to 2029.

“There has been a noticeable trend towards increased outsourcing to CDMOs in the pharmaceutical industry. This shift allows companies to leverage the expertise, flexibility, and specialised skills offered by CDMOs. Organisations of all sizes, from small drug developers to large pharmaceutical and bio pharmaceutical companies spanning both early and late-stage development projects, are adopting this outsourcing strategy,” Neuland Lab said in its FY24 annual report.

The revenue contribution from niche API and CMS will continue to increase over the next three years while that of prime API segment is expected to remain around 25 per cent. Healthy relationships with top pharma players and strong R&D capabilities ensure healthy operating margin, according to CRISIL Ratings.

The group caters to clients in India and overseas. It derives over 80 per cent of its revenue from export. In the CMS business, the entire revenue comes from regulated markets, such as the US, Europe and Japan. Diversity in geographic reach and clientele will continue to support the business risk profile, the ratings agency had said in its rationale dated March 27, 2024.

First Published: Oct 11 2024 | 3:53 PM IST

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IPO-bound Oyo rejigs its top leadership team with five elevations

by Hansraj Agrawal | Oct 11, 2024 | Share Market

3 min read Last Updated : Oct 11 2024 | 3:52 PM IST

Hospitality major Oyo has made five additions to its leadership team, with Sonal Sinha appointed as chief operating officer – international, and Rachit Srivastava taking over as chief operating officer of Oyo Vacation Homes (OVH) in Europe.

Furthermore, Shashank Jain has been elevated to head of technology and online revenue, while Pankhuri Sakhuja will head Traum-Ferienwohnungen – Oyo’s listings business in Germany, and its flex-space business Innov8. Ashish Bajpai has been elevated to head of revenue and global online travel agency (OTA).

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“As we pursue our growth objectives, agility and decisive action remain at the core of our strategy. Our leaders are continuously adapting and expanding their roles to stay ahead of evolving market dynamics and drive our business forward,” said Oyo founder and group chief executive officer Ritesh Agarwal.

In his new role, Sonal Sinha, who joined Oyo in 2015, will be responsible for overseeing Oyo’s international business operations, revenue, and spearheading strategic initiatives across the US.

Rachit Srivastava, who was earlier serving as the head of the Vacation Rentals Management Company (VRMC) business for OVH, will “continue to leverage his expertise to deliver growth and customer satisfaction across Oyo’s European vacation homes portfolio,” the company said.

Shashank Jain, who led product development for customer acquisition and retention on Oyo’s own channels, will also oversee direct revenue and marketing for all hotels and homes. With a continued focus on GenAI, Shashank will leverage technology to improve customer service and growth across markets.

Pankhuri Sakhuja, who has been managing the Oyo workspaces vertical and hotel acquisitions from the central office for some of Oyo’s overseas markets, will now also take on the role of business head for Oyo’s Germany-based vacation home listings business Traum-Ferienwohnungen, besides being formally appointed as the head of the workspaces business.

Meanwhile, former global chief operating officer and chief product officer Abhinav Sinha will be moving into an advisory role starting January 2025. Parallelly, he will explore new opportunities for his own startup venture.

Ayush Mathur, president – Oyo Europe, will also be moving on to build his own startup. His responsibilities will be taken up by Srivastava.

Oyo recently agreed to acquire G6 Hospitality, the leading economy lodging franchisor and parent company of Motel 6 and Studio 6 brands, from Blackstone Real Estate for $525 million, in an all-cash transaction.

The company reported a profit after tax (PAT) of Rs 132 crore for the first quarter (Q1) of the financial year 2024-25 (FY25), up from a loss of Rs 108 crore in the year-ago period. The company expects its PAT to increase three-fold to Rs 700 crore for the full year FY25.

First Published: Oct 11 2024 | 3:45 PM IST

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Indian EV market may grow 'strongly, steadily' till 2030: Hyundai India MD

by Hansraj Agrawal | Oct 11, 2024 | Share Market

3 min read Last Updated : Oct 11 2024 | 11:46 PM IST

The Indian electric vehicle (EV) market is expected to grow “strongly and steadily” through 2030, as many companies turn their focus to this segment, supported by strong government leadership, Unsoo Kim, managing director (MD) of Hyundai Motor India (HMIL), stated on Friday.

Kim’s optimism comes at a time when electric car sales in India have been declining for several months now.

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In September, 5,874 EVs were sold, marking an 8 per cent year-on-year (Y-o-Y) drop, according to data from the Federation of Automobile Dealers Associations (Fada).

HMIL’s chief operating officer (COO) Tarun Garg stated that the company’s first high-volume EV, the Creta EV, will be launched in the last quarter of the current financial year.

He noted that it will be a “very big game changer” with the potential to completely transform this segment. “We believe that such a high-volume EV from Hyundai’s stable will really give the customer the confidence that EV is the way to go,” Garg added.

HMIL has announced India’s largest-ever initial public offering (IPO) of Rs 27,780 crore. Bids for the IPO will open between October 15 and 17. The company’s management was addressing a pre-IPO press meet in Delhi.

In its pre-IPO red herring prospectus (RHP), HMIL has mentioned that its royalty outgo to parent company Hyundai Motor Corporation (HMC) stands at 3.5 per cent of its sales revenue.

HMIL’s chief financial officer (CFO) Wangdo Hur assured that Hyundai will maintain a royalty outgo rate at 3.5 per cent for a “long period” unless there are changes to the Organisation for Economic Co-operation and Development (OECD) guidelines on transfer pricing.

The OECD guidelines on transfer pricing require that transactions, including royalty payments, between related entities be priced at arm’s length.

This will ensure that the royalty rate reflects what independent parties would agree upon under similar circumstances.

About the Indian EV market, Kim said that it is at an “early stage of electrification.”

“We believe that the Indian EV market is expected to grow strongly and steadily by 2030, mostly led by the government’s strong leadership and many OEMs’ focus on this segment. HMIL has access to global battery technologies. So, we are developing an EV ecosystem. We will be launching four new models. Our first high volume EV — which is Creta EV — is coming in the last quarter of the current financial year,” he said.

Garg added that Creta EV will be a game changer. “Creta is a very strong brand. In 2015, when Creta was launched, India used to be a market dominated by hatchbacks. At that time, the share of SUVs was about 13 per cent to the overall car sales in India (Today, it is about 60 per cent). Creta changed it all. Nine years down the line, you can see, we have surprised the market every year. We launched Creta facelift recently and it is already seeing double-digit growth, on the back of a similar growth seen in 2023,” he said.

Garg also said that the Indian EV market’s slowdown should not be compared with the slowdown in the global EV market as EV penetration in the latter is at a much higher level.

“We are still at a very low level of electrification. There is only one way — up,” he added.

First Published: Oct 11 2024 | 3:39 PM IST

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