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But This Construction Stock For +21% Upside Suggested By IDBI Capital

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Q2FY22 results of IRCON

In its research report, the brokerage has stated that “IRCON international (IRCON) Q2FY22 PAT came 10% higher than our estimate. This is led by higher other income. H1FY22 revenue increased by 71% YoY and IRCON targets FY22E Revenue at ~Rs60-70bn but expects softness in margin. Based on guidance, H2FY22 implies revenue to increase by 1% to 29% YoY. But due to the expectation of weak margin we have cut EPS for FY22E/23E by 9%/10% (exhibit 8). H1FY22 Order book at Rs349bn provides revenue visibility at 6x TTM Revenue. YTDFY22 order inflow (won on competitive bidding) is at Rs27bn and additionally, the company emerged as L-1 bidder in a project worth Rs86bn. We have rolled forward TP to FY24E at Rs58, valued at PER of 10x (earlier Rs56). Company has announced a second interim dividend of Rs0.7/sh (first was Rs0.45/sh). We have modeled a total dividend of Rs2.9 for FY22E (implying div. yield of 6%). Maintain BUY rating on the stock.”

Key highlights and investment rationale for IRCON international (IRCON) according to IDBI Capital

Key highlights and investment rationale for IRCON international (IRCON) according to IDBI Capital

Q2FY22 Snapshot: IRCON Revenue was up 47% YoY at Rs14bn. EBITDA stood at Rs1bn (+49% YoY/ +39% QoQ) with EBITDA margin at 6.9%. Q2FY22 PAT at Rs1.3bn (+74% YoY, +57% QoQ). This is led by higher other income at Rs0.8bn vs Rs0.5bn YoY. Segment-wise, Domestic EBIT margin was higher QoQ/ YoY. But International EBIT was at loss due to a one-off.

L1 in Rs86bn project: H1FY22 IRCON’s Order book stood at Rs349bn equals 6x TTM Revenue with 88%/ 5%/ 7% of order book from Railway/ Highway/ Other. In other, it has a solar power segment worth Rs26bn via e-Reverse auction with a Viability Gap Funding (VGF). Equity investment in solar project is expected at Rs4bn and IRCON has the option to unlock the value at IRR of 14%. Geography wise international order book at 4% and domestic at 96%.

FY22E PAT guidance at Rs4.8bn: IRCON targets FY22E Revenue/ PAT at ~Rs60-70bn/ Rs4.8bn. And PAT margin is expected at 8-9% for H2FY22. Company re-iterated it’s FY23E revenue target of Rs100bn.

Disclaimer

Disclaimer

The above is picked from the brokerage report of IDBI Capital. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.



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Reserve Bank of India – Press Releases

Press Releases

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Tenor 15-day
Notified Amount (in ₹ crore) 5,50,000
Total amount of offers received (in ₹ crore) 4,45,742
Amount accepted (in ₹ crore) 4,45,742
Cut off Rate (%) 3.99
Weighted Average Rate (%) 3.97
Partial Acceptance Percentage of offers received at cut off rate NA

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1220

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Ensure cryptocurrency does not end in wrong hands: PM to democratic nations

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Prime Minister Narendra Modi on Thursday urged all democratic nations to work together to ensure that cryptocurrency does not end up in the wrong hands, cautioning that it can spoil the youth.

 

In a virtual address at the Sydney Dialogue, he said the digital age is changing everything as it has redefined politics, economies and societies and has raised new questions on sovereignty, governance, ethics, rights and security.

Giving an overview of India’s approach to new technologies, Modi said the country is investing in developing indigenous capabilities in diverse areas including in 5G and 6G for the telecom sector.

Also read: Crypto investments gaining currency

The Prime Minister said India uses data as a source of empowerment of people and that the country has unmatched experience in doing this in a democratic framework with strong guarantees of individual rights.

“It is important that all democratic nations work together on this and ensure it does not end up in wrong hands, which can spoil our youth,” he said referring to cryptocurrency.

 

Modi said India is building the world’s most extensive public information infrastructure and that over 1.3 billion Indians have a unique digital identity.

“The greatest product of technology today is data. In India, we have created a robust framework of data protection, privacy and security. And, at the same time, we use data as a source of empowerment of people,” he said.

Also read: RBI may pilot digital currency in Q1 of FY23

He said India is on its way to connecting 6,00,000 villages with broadband. Referring to the strategic cooperation between India and Australia, he said it is a force of good for the region and the world.

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Reserve Bank of India – Press Releases

Press Releases

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In the underwriting auctions conducted on November 18, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:

(₹ crore)
Nomenclature of the Security Notified Amount Minimum Underwriting Commitment (MUC) Amount Additional Competitive Underwriting Amount Accepted Total Amount underwritten ACU Commission Cut-off rate
(paise per ₹100)
6.10% GS 2031 13,000 6,510 6,490 13,000 0.42
GOI FRB 2034 4,000 2,016 1,984 4,000 0.65
New GS 2061 7,000 3,507 3,493 7,000 0.68
Auction for the sale of securities will be held on November 18, 2021.

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1219

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Retail advances will drive growth this fiscal: Axis Bank

Banking & Finance

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Retail lending, which has seen strong demand in recent months, is likely to continue driving growth this year for Axis Bank. The private-sector lender also expects unsecured lending to pick up pace in the second half of the fiscal.

“The contribution of retail has been inching up in the overall share of our book. My sense is that, given the kind of strong demand, we will see corporate demand return from the fourth quarter of the fiscal year; but retail will be pretty much the driver of growth this year,” said Sumit Bali, Group Executive and Head–Retail Lending, Axis Bank.

The bank reported a 10 per cent growth in advances on a year-on-year basis, as on September 30, 2021.

Banks see robust festival season credit growth

Bali noted that much of this was led by retail and agri lending.

Corporate advances increased by one per cent on an annual basis, as on September 30, 2021, compared to an 18 per cent growth in advances to small and medium-sized enterprises (SME) and 16 per cent increase in retail lending. Retail advances accounted for 56 per cent of its net advances, as on September 30, 2021, with the share of secured retail loans at about 80 per cent.

“As part of our retail lending strategy, we were biased towards the secured side of the business for the first six months. From now on, the unsecured side would be growing faster. My sense is that, while secured will keep growing, the pace of growth for unsecured will be faster from here on,” Bali told BusinessLine.

October was a good month for the bank with record spends — almost 40-45 per cent higher than the level in March 2021.

Bank boards must diligently discharge oversight functions: RBI Governor

Segments like business instalment loans and personal loans are back to pre-Covid levels while credit card spending has also been increasing on a month-on-month basis.

“In small business banking — which is the secured side of business and [where] our exposure is upto ₹1 crore — utilisation, which had fallen to sub-50, got closer to 60 per cent. That is a good sign,” he said.

He also said stress in the retail book was moderating.

“Delinquencies are moderating. The spike was sharp in May and June, and the reduction is equally sharp. Month-on-month, we are seeing 25-40 basis points being shaved off from the delinquency level and the net GNPA [gross non-performing assets] flow is down to virtually nil,” he said.

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Australia’s central bank weighs digital currency, remains unconvinced, BFSI News, ET BFSI

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SYDNEY, – The Reserve Bank of Australia, like some other major central banks, has stepped up research into running its own digital currency, but remains unconvinced of the merits, its payments chief said on Thursday.

The comments, made at a financial services conference, follow an Australian Senate report last month that called for laws to be changed in ways that were more amenable to digital currencies.

Most major economies are now considering whether to issue a central bank digital currency (CBDC) – an internet-only cash equivalent that is different to cryptocurrency since it is not de-centralised – although none have done so yet, said Reserve Bank of Australia head of payments policy Tony Richards.

However, “given the possibility that the balance could shift towards a case for issuance of retail CBDCs, the Bank has been stepping up its CBDC research”, Richards said in a speech at the Australian Corporate Treasury Association.

Noting that the European Central Bank and Sweden appeared to be the most advanced of the major economies to consider a role for CBDCs, Richards said the U.S. Federal Reserve was more cautious.

“Reserve Bank (of Australia) staff have also not been convinced to date that a strong policy case has emerged in Australia for a CBDC,” he said.

“Australia’s existing electronic payments system already provides households and businesses with a wide range of safe, convenient and low-cost payment services.”

Amid the rush to internet-only money, which has been spurred along partly by the shift toward online living during the pandemic, Australia’s biggest bank also said this month that it was offering some cryptocurrency trading services via its smartphone app. (Reporting by Byron Kaye; Editing by Simon Cameron-Moore)



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Small finance banks, microlenders stay away from IPO party, BFSI News, ET BFSI

Personal Finance

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Kolkata: While Nykaa, Paytm and Policybazaar are the toast of the primary equity market now, lenders to the bottom of the pyramid which had earlier lured investors for their capacity to earn high margins remain laggards.

Half-a-dozen entities in the small finance bank and microfinance space that have received approval for raising funds through initial public offerings appear to be going slow because of valuation issues, people familiar with the matter said.

Among small finance banks, ESAF, Jana, Fincare and Utkarsh are said to be weighing investor interest for their proposed IPOs. Utkarsh Small Finance Bank received Securities & Exchange Board of India’s approval for IPO in June, Jana SFB got it in July and Fincare in August. ESAF Small Finance Bank received the regulator’s approval in October for the second time, after the one-year validity on the first lapsed in March.

Microfinance firm Arohan Financial Services received Sebi approval in April but has yet to hit the market. Northern Arc Capital, a non-bank lender with exposure to the financial inclusion space, got the approval in September.

“Many Lenders including those in the microfinance industry are not getting the kind of investor interest or valuation seen for primary issues of fintech firms,” said Donald D’Souza, managing director & co-head (investment banking) at Equirus.

“Some of these firms have done a few roadshows but have failed to attract investors at higher valuation. That’s the reason why some of these lenders are not seen in the IPO market despite the bull run. Even some small finance banks, which need to be listed within a specified time frame to meet regulations, are yet to be seen in this space,” D’Souza said.

Investors are apparently exercising caution as micro lenders are saddled with concerns over asset quality, high credit cost and squeezed margin following the pandemic-led stress on their borrowers.

The portfolio at risk for 30 days (PAR30+) for the microfinance sector remained high at 10.18% at the end of September, even after showing a sharp improvement from 16.56% three months earlier.

“The new-age companies are mostly making merry in the season of IPOs since investors are ready to pay huge premiums for new business models and fresh ideas. The party is on at least till Christmas. The valuations however are relatively muted for lending companies as investors are comparing them with the existing secondary market prices in the same segment,” said Dinesh Arora, partner and leader (deals) at PwC India.

As many as 52 companies have mobilised Rs 1.08 lakh crore from primary issuances in 2021 so far compared with Rs 26,600 crore raised by 15 companies last year. Foreign portfolio investors are said to have invested more than Rs 46,000 crore in IPOs this year.

Microfinance association Sa-Dhan said the average collection efficiency has increased to more than 95% in the quarter through September from 85% in the preceding quarter, even as 13 states and union territories including Chhattisgarh, Kerala, Tamil Nadu and West Bengal have their PAR30+ value higher than the industry average.



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Report, BFSI News, ET BFSI

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MUMBAI: The Reserve Bank of India‘s digital currency may see its pilot launch in the first quarter of the next fiscal year, a senior central bank officer said at the State Bank of India’s Banking and Economic Conclave as reported by a local newspaper.

“I think somewhere it was said that at least by the first quarter of next year a pilot could be launched. So we are bullish on that,” the Business Standard newspaper quoted P. Vasudevan, chief general manager at the Department of Payment & Settlement of the RBI as having said.

Central bank digital currencies, or (CBDCs) are digital or virtual currencies are basically the digital version of fiat currencies, for India that would be its domestic currency rupee.

Previously, the central bank governor had said a soft launch of the CBDC could be expected by December but there has been no official timeline committed to by the RBI.

“We are on the job and we are looking into the various issues and nuances related to CBDC. It’s not a simple thing to just say that CBDC can be a habit from tomorrow on,” Vasudevan said, adding that a CBDC could have a useful role depending on how it is implemented and there should be no hurry to launch it.

Vasudevan said the RBI was examining various issues related to which segment the CBDC should target – wholesale or retail, the validation mechanism and also other issues including distribution channels.

“The central bank is also checking if intermediaries can be bypassed altogether, and most importantly, checking if the technology should be decentralized or should be semi-centralised,” the RBI CGM said.

The RBI has repeatedly raised concerns over cryptocurrencies posing macro-economic and financial stability risks.



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World Bank, BFSI News, ET BFSI

Banking & Finance

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India, the world’s largest recipient of remittances, received USD 87 billion in 2021 with the United States being the biggest source, accounting for over 20 per cent of these funds, according to the World Bank.

India is followed by China, Mexico, the Philippines, and Egypt, the Washington-based global lender said in its report released on Wednesday.

In India, remittances are projected to grow three per cent in 2022 to USD 89.6 billion, reflecting a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return, it said.

“Flows to India (the world’s largest recipient of remittances) are expected to reach USD 87 billion, a gain of 4.6 per cent – with the severity of COVID-19 caseloads and deaths during the second quarter (well above the global average) playing a prominent role in drawing altruistic flows (including for the purchase of oxygen tanks) to the country,” the World Bank report stated.

Remittances to low- and middle-income countries are projected to have grown a strong 7.3 per cent to reach USD 589 billion in 2021, the bank said.

This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief.

“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis.

“Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.

India had received over USD 83 billion in remittances in 2020.



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