Strong EBITDA visibility in power generation operations
Adani Power Limited, a company that generates electricity, has a total capacity of generating 15.2 gigawatts (GW) of power. Out of this, 81% is already promised to be sold through long-term agreements. They’ve also arranged about 75% of their coal needs from within India.
The company is looking forward to making more money (EBITDA) from increasing the output of its Mahan I and Godda plants. Additionally, there’s a chance to earn even more money from 3GW of power capacity that’s not yet promised to anyone, with expected earnings between Rs. 8-10 million for each megawatt.
Even though they need to buy some coal from other countries, their Tiroda and Kawai plants still get to sell electricity because of their competitive pricing. The money these plants will make depends on how much electricity they produce, due to the pricing agreements they have.
Overall, Adani Power has a strong outlook for future earnings thanks to its secured sales, plans for more agreements, and the extra capacity that could bring in additional income.
Strong improvement in liquidity and leverage
In FY24, Adani Power made a lot of money from its operations and collected overdue payments. They smartly used this money to pay back Rs. 8,435 crores in loans that didn’t have specific assets backing them and also reduced their other group loans.
Besides, they paid off Rs. 1,150 crores of their external debt too. This helped improve their financial health, with their debt compared to their earnings before interest, taxes, depreciation, and amortisation (EBITDA) dropping to 2.6 times by September 2023, from 3.3 times in March 2023, and even better from about 4 times back in March 2022.
Looking ahead, they expect their financial situation to get even better thanks to the steady flow of cash they’re bringing in. Their cash situation is now stronger, making them well-equipped to handle their debt payments for the foreseeable future.
Bharti Airtel Ltd.
Subscriber trends encouraging, with focus to shift towards 5G monetization
The company has been doing really well in adding more customers to its wireless and home internet services.
They’ve managed to make more money per user, up to Rs. 203, by offering better plans that mix quality and value, including deals that bundle services together and by attracting more users to their international roaming services.
This strategy has not only made them stand out from their competitors but also helped them capture a bigger share of the market in the third quarter of the financial year 2024. With the plan to introduce 5G across India by the end of FY24, the company is now focusing on how to make money off 5G technology.
The introduction of Fixed Wireless Access (FWA) is their first step towards this goal. As more people start using 5G and spending more time on it, the company is also thinking about raising their prices soon.
Moderating capex in India's business and net debt reduction a key positive
The company did really well in the third quarter, with its revenue and profits (EBITDA) going up by 6% and 11% compared to last year.
They expect to make a good amount of money, Rs. 720 billion, in free cash flow in India for the financial year 2024, even though they plan to spend a lot on improving and expanding their business (capex).
The money they plan to spend is estimated to be between Rs. 280-310 billion. This spending is expected to reach its highest point in 2024, especially on radio technology, but it will likely decrease the next year.
However, investment in things like transport, data centres, home broadband, and business services will still be high. Also, the company was able to reduce its total debt by Rs. 83 billion, bringing it down to Rs. 1.4 trillion as of the end of December 2023.
With a growing number of customers and smart planning, the company is set to do well in future quarters. They are also keeping an eye on costs through their WoW program, which should help them save money.
Cochin Shipyard Ltd.
Healthy order book driving the growth prospects of the company
Cochin Shipyard Ltd. is currently working on shipbuilding projects worth Rs. 21,500 crores, with most of these orders coming from the defence sector. Additionally, they have repair projects worth Rs. 800 crores, where they’re expected to finish significant work for the Defence Ministry by the financial year 2025.
One exciting project includes building a hydrogen-powered boat that can carry 100 passengers, set to be ready by the fourth quarter of the financial year 2024. With all these projects lined up, Cochin Shipyard is in a good position to keep making money and maintain its profit margins in the coming years, ensuring the company continues to grow steadily over time.
Capacity expansion nearing the completion stage
The company is spending Rs. 1,790 crores to make its Dry Dock bigger and Rs. 970 crores on creating a place to fix ships for international clients.
By the middle of 2024, these projects should be finished. This upgrade will allow the company to work on bigger projects, including making and fixing large ships like LNG carriers and modern aircraft carriers.
Looking ahead, we’re expecting the company’s earnings to grow significantly and keep making a good profit. This growth will be supported by the company’s ability to do a variety of jobs, including both fixing ships and building new ones.
Engineers India Ltd.
Healthy order book and project pipeline with a key focus on export
Engineers India Limited has a strong lineup of projects worth Rs. 79.9 billion, including both consultancy and construction work. This means the company has a lot of work lined up, which is good for its future earnings.
They’re planning to grow their business abroad, especially in places with active oil and gas industries like Algeria, Nigeria, Abu Dhabi, Kuwait, Oman, Saudi Arabia, Egypt, and also venturing into Guyana in South America. They’re also gearing up for big petrochemical projects, with three huge ones in the pipeline (one in Nigeria and two in India) that could add more projects to their schedule.
Besides, they’re looking at different kinds of projects like data centres and airports to expand their infrastructure business. On top of that, there’s a lot of potential in new energy areas such as green hydrogen, mixing ethanol with fuel, sustainable aviation fuel (SAF), solar power, etc.
Hydrocarbon capex pick up to bear fruit in future
There’s a buzz that spending on oil and gas projects in India is going to pick up again. Engineers India is in a prime spot to benefit from this because it’s a top choice for providing advice and complete project services to India’s major oil companies.
These companies are using their facilities more and making more money thanks to the freedom to set diesel prices. This situation is expected to lead to an impressive Rs. 2 trillion being spent on new projects over the next five years. Engineers India, known for its close work with government-owned oil companies for managing projects and providing full construction services, is likely to get a big share of this investment, making it a company to watch in this revival.
Kalyan Jewellers Ltd.
Expansion into non-south markets and strong new customer addition augur well for growth
KJL has made a big move by growing its business by 77% in areas outside its usual southern market, proving it can appeal to a wide range of customers. This strategy helps the company reduce the risk of just focusing on one region and lets it reach new groups of people.
An impressive 38% of the company’s income now comes from new customers, showing that Kalyan is good at drawing in and keeping a larger crowd of shoppers. This success highlights how well the brand connects with modern styles and uses smart marketing to grow bigger.
Also, a notable increase of 43% in sales of fancy jewellery, which now represents 27.2% of their total sales, shows Kalyan’s knack for meeting the demand for expensive items. This shows the brand’s quick response to market changes and its skill in focusing on profitable types of jewellery.
Margin expansion and profitability enhancement in focus
Kalyan Jewelers is taking smart steps to lower its debt by selling off assets that aren’t central to its main business, showing it’s serious about being financially smart and aiming for long-lasting success.
They’ve also started using a franchise model where stores are owned by franchisees but operated by the company, and with 67 stores already running this way, they’re seeing better efficiency and profits. This approach helps Kalyan grow and save money at the same time, leading to bigger profits and steady growth.
Additionally, they’re focusing on selling more fancy jewellery and offering a wider range of designs, proving their dedication to bringing in more money by meeting customer demands for unique and high-value products.
Tata Power Company Ltd.
Rooftop solar segment to witness robust growth
The Government of India recently launched a program called PM Surya Ghar Muft Bijli Yojana, aiming to install solar panels on the rooftops of about 1 crore homes. Thanks to this initiative, we’re expecting to see an addition of 30 to 40 gigawatts (GW) of solar power capacity in the next two to three years.
This is a big deal for our company because it means we’ll have a lot of new opportunities to work on these rooftop solar projects, which will help us make more money. Given how fast the renewable energy sector is growing and our own goals to earn more from green energy sources, we’re really optimistic that this focus on rooftop solar power will be great for our business in the near future.
Strong financials and robust order book key drivers for growth
In the third quarter of the financial year 2024, our company did really well, showing strong growth in profit after tax (PAT). This time, most of our profit came from our main business activities, a change from previous years when a lot of our earnings were from side businesses, like coal.
We’re excited about several upcoming projects focused on renewable energy that we expect will help us increase our earnings and profit margins even further. Looking ahead, we’re on track to achieve over 10,000 megawatts (MW) of renewable energy capacity soon, which will make up half of our total power generation capacity. With our steady performance and the promising outlook for our new projects, we’re optimistic about our company’s future success.
Union Bank of India
Driving growth with extensive reach and stability
Union Bank, a major player among India’s government-owned banks, holds a strong position with a 7% share of the banking sector’s total deposits and loans as of the end of December 2023.
The bank’s loans to customers have grown by 11.4% over the year, reaching Rs 8,95,974 crores, showing that it’s on a fast growth path. Union Bank lends to a mix of clients: about 45.6% of its loans go to big companies, while 19.4% go to everyday people buying things like homes, 19.8% to farmers, and 15.3% to small businesses.
The bank also has a wide reach with 8,479 branches, especially in areas not fully covered by banks, like rural and semi-urban places. This extensive network helps Union Bank get resources efficiently and serve a broad customer base.
Maintaining margin stability and enhancing RoA through credit cost moderation
Union Bank has been doing well in the banking industry, despite tough competition. It has kept its profit margins stable at around 3% for the first nine months of 2024.
The bank has a good balance of current and savings accounts, making up 34.4% of its total accounts. It also recently got some extra money, which helped it set its deposit rates. The bank expects its profit margins to stay between 2.9% and 3% from 2024 to 2026. It’s also doing a good job of managing its loan risks, with a strong coverage ratio of 92.5%.
This means it’s well-prepared for any potential loan losses. As a result, Union Bank is likely to see a gradual increase in its return on assets to between 1% and 1.1%. Overall, the bank is in a strong position and is expected to continue growing in the future.
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