AGM - Analyst Meet
Latest in AGM - Analyst Meet
IndusInd Bank conducted an analyst meet on 16 April 2014 to discuss the financial performance for the quarter March 2014 and prospects of the bank. Romesh Sobti - Managing Director and CEO along with his colleagues addressed the call:
- Bank reduced the cost of funds during quarter ended March 2014 with sufficient liquidity in the system, which helped bank to improve NIMs despite change in advance book mix in favour of corporate book.
- The strong inflows in the current account deposits also helped bank to reduce cost of funds and support margin improvement.
- The weighted average cost of the saving deposits with the bank stands at 6.6%.
- The provisions bill of the bank was mainly inflated due to provisions for mark-to-market (MTM) losses in the investment portfolio. Bank has made MTM provision of Rs 35 crore in the quarter ended March 2014 and Rs 88 crore in FY2014.
- Bank has maintained the asset quality stable, helping to contain the credit cost at 48 bps in FY2014 against target of 60 bps. Bank has again targeted the credit cost of 60 bps for FY2015, while expects it to be actually lower than the targeted level.
- Bank has sold Rs 35 crore of bad loans to Asset Reconstruction Company (ARC) in Q4FY2014 in addition to Rs 25 crore in Q3FY2014 and Rs 24 crore in Q2FY2014.
- The Securities Receipts (SRs) book of the bank stood at Rs 138 crore at end March 2014, which is expected to decline to Rs 70-75 crore over next six months with more resolutions expected during the period.
- Bank restructured two accounts in the quarter ended March 2014. The restructured advance book has remained nearly steady at 0.33% of advances at end March 2014.
- The retail book share in the overall advances book declined to 45% during FY2014, mainly due to stress in the commercial vehicle (CV) segment. However, bank expects the CV book stress bottoming out and CV business to pick-up over next six months.
- Bank has improved its market share in CV segment, as many players exited the segment during slowdown. As per the bank, currently only eight players hold about 70% market share compared to 40% share two years ago.
- Bank continues to be in favour of 50:50 mix for corporate: retail book in the overall advances book.
- Bank has slowed down deposits growth, as it stepped up borrowings from various refinance windows. However, bank expects the deposits growth to pick up going forward.
- Bank remains well capitalized, which is sufficient for next two years of growth. However, the decline in CRAR ratio during Q4FY2014 was mainly caused by the year ending application of operational risk in the total risk weights.
- On regulatory decisions, bank expects RBI decision to limit the banks borrowing at fixed repo window and hike in borrowing limit at term repo window would cause spike in borrowing cost for banks borrowing at LAF window.
- As per the bank, RBI has announced the decision to provide further banking licenses on tap, but there will be good amount of time interval between the current licenses issued on 02 April 2014 and next ones to be issued.
The company had a Plant Visit and Analyst Interaction on 10th April'14 and was addressed by Mr. Vayu Garware CMD
Based on user industry, broadly Company's business is divided into various segments such as Fishing, Aquaculture, Agriculture, Geosynthetics, Sports, Coates fabrics, Ropes etc. Fishing is more of traditional business which is about 20% of total turnover, Aquaculture constitute about 15-20%, Agriculture about 15-20%, Ropes about 13%, Sports about 10%, Geosynthetics about 7% and rest would be from various other segments like coated fabrics, jute bags, woven sack, reinforcements etc.... (more)
Praj Industries held its Analyst meet on 25th March'14 which was addressed by Mr. Pramod Chaudhari Executive Chairman
- Current order book position of the company is around Rs 900 crore. This is about 1 times sales. Order intake in FY'14 is about Rs 700 crore, of which about 30% are export orders and rest are domestic orders. Emerging business order intake now stands at around 35%, with ethanol and breweries, the mature business constitute the remaining order intake.
- The new emerging business which consists of water and waste water treatment, high purity water (neela system), critical process equipment business now constitute about 30% of turnover as compared to about 0% in FY'08. Management expects the business to contribute about 50% of total turnover
- Emerging business has diversified customer base in sectors like sugar, beverages, pharma, cosmetic, agro chemical, high end industrial product and biotech. The delivery cycle of emerging businesses are short compared to its mature business. High purity water business has delivery cycle of 3-4 months, water business has 6-9 months; process equipment has about 5-7 months as compared to ethanol and breweries business of 12-14 months and 10-12 months respectively.
- Indian market size of pure water is about Rs 600 crore and the company sees huge opportunity in it due to high entry barrier. The Neela system, subsidiary of the company is already qualified with most of pharma and cosmetic companies globally.
- As per the management, margins have bottomed out around 8% level. In the past investments have been made in people and processes for mature business and the pie of emerging business is growing. Margins certainly are looking up from here onwards. Also operating leverage should also support the margin, as the company has sufficient capacity that it can raise turnover by another 30-40% standing at same level.
- Company has made several Investments in the past 4 years and management is confident of reaping the benefits in next 4 years.
- Mature business has market share of about 65% in domestic space and 30% in international ethanol market. The company has laid down various avenues to expand the business.
- Like ethanol, the company intends to take the breweries business also into overseas market, where currently it is only a marginal player. As of now it caters only to domestic brewers. Recently the company has received orders from large beer company SAB.
- The company also has plans to take emerging business internationally in a big way. Currently international contribution within emerging business space is around 12-15%.
- The company will also be launching the 2nd generation ethanol process plant in Q1 of FY'15. Currently testing is happening on demo plant which can reduce the costs of an ethanol plant to around Rs 120 crore. Nearly 50% can be funded through Government subsidy. This plant would demonstrate the 2nd generation ethanol making process, which would produce ethanol from cellulose instead of molasses or starch. This should help clients understand benefits of reduced capex/opex as compared to 1st generation process. This could be a huge opportunity if materialize well as it can run on multiple feedstocks and give multiple outputs. Globally, only 3-4 players are currently exploring this technology.
- Company is also exploring into bio products business such as livestock health and nutrition business in South East Asian market and for human health and wellness businesses in India.
- Management expects order book position and margins to improve going forward.
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