This is the first post in our quarterly result update series for Q4FY21.
In this post, we’re sharing the latest updates of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking. We make our notes on the quarterly results and conference calls. Putting it up here makes it easier for us to refer them at a future date.
You can see the earlier updates here.
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Please click on the read more button for more details on each stock.
CRISIL Limited
The company saw a good response to the rating business while the research business grew steadily with the addition and integration of Greenwich Associates to the company’s umbrella. Although the profits for the company are subdued due to the addition of Greenwich this drop in profits is expected to be temporary only. The advisory business is expected to rise going forward due to the revival in demand and govt push for infra development. It remains to be seen how long the Greenwich integration takes and when will it start delivering according to the company’s expectations. Nonetheless, given the company’s industry position and its financial resilience, CRISIL remains a pivotal stock in the rating sphere.
HDFC Bank
The bank has performed well in Q4FY21 and continued its consistent growth momentum with 27% growth in CASA. The bank has seen a good 7 million new deposit customers which highlights the market reputation of the bank. The bank’s Video KYC seems to have had a good impact with customer onboarding time reduced to less than 5 mins. It remains to be seen what economic impact will the 2nd wave of COVID-19 have to the bank and industry in general. Nonetheless, given the bank’s resilient customer set, strong liquidity profile, and enduring brand image, HDFC Bank remains an indispensable banking stock for every investor, more so because of the recent correction in valuation.
ICICI Prudential Life
The company has done well to deliver good performance of VNB growth of >20% in Q4 and growth in EV of 26% YoY. The performance of the company’s protection business is particularly encouraging with group protection being a special focus. The company has also seen a good increase in persistency across the board which highlights the resilience of its base. It was also able to deliver its highest ever monthly APE in March. It remains to be seen how the company will be able to fulfill its guidance for doubling FY19 VNB and whether it will be able to maintain its growth momentum from March given the dire state of the country from the 2nd wave of COVID-19. Nonetheless, given the company’s market position, track record, and reach in the market, ICICI Prudential is a pivotal insurance stock to watch out for.
Tata Elxsi
Tata Elxsi had a good quarter with its highest ever quarterly revenues and capped off a remarkable performance in FY21. The company continues to see good growth in in all segments and recovery in transport segment. It has also managed to maintain its offshore ratio and high levels of utilization which has helped boost PBT growth. The company is also identifying both organic and inorganic opportunities for its expansion to achieve its goal of $1 billion revenues. The auto segment continues to be subdued due to the COVID-19 situation. The company has done well to achieve multiple deal wins in Q4 including a multiyear deal for its connected mobility IoT platform. It remains to be seen how the company’s major clients adapt to the new world after COVID-19 and what opportunities will the company explore in its quest to achieve $1 billion sales. Nonetheless, given the company’s strong technological capabilities and its resilient performance in the last year, Tata Elxsi remains a good technology stock to watch out for, particularly given the rising demand for its services in the broadband and media & communications spaces.
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