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Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

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The season of Q3 results has almost come to an end and results are slowly trickling out. Here is a quick compilation of results of stocks that form part of our Long term Multicap portfolio. (click here to see the long term Portfolio).

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

DCB Bank

  • Quarterly net income grew by 27% and profit by 51% YoY.
  • Advance Growth at 23% YoY. Currently the net advances stand at 22,888 Crs.
  • Deposit Growth at 29% YoY. Currently stands at 27,509 Crs.
  • Gross NPA % has declined by 8 basis points QoQ, however the absolute growth in NPAs stands at 8.57% QoQ. Advance growth has offset the NPA growth.
  • Net NPA on the other hand has increased by 5.26% on absolute basis and increased by 1 basis points on Net NPA % basis.
  • Provision Coverage Ratio improved from 76.82% in Sep 2018 to 76.99% in Dec 2018.
  • Cost of Funds has increased from 6.42% in Dec 2017 to 6.74% in Dec 2018.
  • Capital adequacy ratio has declined by 12 basis points QoQ and currently stands at 15.45%.

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

Notes:

  • Bank has reported a fraud of 12.5 Crs in the quarter. The bank has provisioned for Rs 10 Cr in the quarter and needs to provision another 2.5 Crs in next quarter.

     Management Comments

  • Branch expansion undertaken in October 2015 have started giving the desired results
  • Cost to Income, Return on Equity and Return on Asset ratios have been improving consistently.
  • Will be working towards steady growth along with improved profitability.

City Union Bank

  • Revenue growth was moderate at 10% and profit growth at 15% YoY.
  • Higher PAT growth is on account of lower provisioning in the quarter.
  • Deposits growth at 13% YoY and currently stands at 35,504 Crs.
  • Advance growth at 17% YoY and currently stands at 30,636 Crs.
  • Gross NPA % increased by 6 bps QoQ and in absolute terms increased by 5.19%
  • Net NPA % also remained flatline QoQ but grew 6% in absolute terms.
  • Provision coverage ratio remained flat QoQ at 65%.
  • Cost of funds stood at 5.18% for the quarter compared to 5.31% last year same quarter.
  • Capital adequacy ratio declined by 32 basis point QoQ. Currently is at 14.79%.

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

     Management Comments

  • Credit Growth expected for the whole year at 18-20%
  • Restricting Slippages to 2.2% for FY19.
  • Profit after tax must grow only by better NPA management.
  • Cauvery issues and Cyclone Gaja has affected credit growth to certain extent
  • NPA increase due to slippage in one paper industry account.
  • Education Loans are problem area at this juncture.
  • Insurance Firm has denied claim for Rs 32 Cr cyber-attack, which happened last year.

Manappuram

  • Revenue growth at 25% and net profit growth at 44% YoY.
  • AUM growth at 3.44% QoQ and 21.38% YoY. Non-Gold business forms 29.6% of the AUM.
  • Cost of funds have gone up by 81 bps YoY and 41 bps QoQ and currently stands at 9.37%.
  • Gross NPA % has come down by 9 bps. Net NPA% has gone up by 13 bps on account of lower provisioning.
  • Capital Adequacy ratio increased by 39 basis points during the quarter. Currently stands at 26.36%.
  • Its subsidiary Asirwad micro finance is slowly turning around and has started making some consistent profits. For the quarter the subsidiary made a profit of 33.24 Crs
  • 131 more branches have been added in last one year. The total number of branches currently stand at 4,314.

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

     Management Comments

  • Non-Gold business has been driving the profitability. All the new business has started generating profits. Targeting a consolidated growth of 20% for next year.
  • Security costs have come down, which has led to cost reduction.
  • Commercial papers borrowing cost will not come down immediately. Will take couple of quarters more.
  • Housing Finance portfolio will double by next one year.

Jamna Auto

  • Revenue growth has been on a lower end with 3.81% growth YoY. Profit Declined by 10% YoY.
  • Profit growth was lower on account of higher finance cost and depreciation.
  • EBITDA margins have improved by 34 bps YoY. Margins improved due to increased inventory of 63.45 Crs in Q3FY19 from 0.29 crs in Q3FY18.
  • Raw Materials cost has gone up. Accounting for 72.1% of the revenues for Q3FY19. Which otherwise was at 63.73% in Q3FY18.
  • Employee Benefit expense has shot up by 180 bps YoY.

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

    Notes:

  • Build-up of inventory is a thing to worry about.
  • In last quarter trade receivables days have also shot up significantly.
  • One of the reason might be they are giving more credit to dealers for after market sales and inventory build up is on account of lower sales in CV segment. We are not sure though on above justifications, will wait and watch until we get clarity.

Garware Technical Fibres.

  • Revenue grew by modest 12% profit by 14.19% YoY.
  • QoQ number looks bit let down as business is cyclical and peaks in September Quarter.
  • Margins have improved by 26 bps YoY and declined by almost 200 bps QoQ.

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

     Management Comments:

  • International and geo-synthetics businesses continued their growth momentum with some strong wins aided by our differentiated solution approach.
  • Have been granted two patents which have tremendous potential to propel growth in the foreseeable future.

The results of all the above stocks are in line with our expectation.  We continue the to have buy rating on all the above stocks.

Q3FY19 Earnings Report: Results in Long Term Multicap Portfolio

NOTE: As a disclosure some Capitalmind authors may own the above company in their stock portfolios. There is no other relationship between Capitalmind and the above company. Please do not consider this article as a recommendation, It is purely for informative purpose only.

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