This is the 14th & last post in our quarterly result update series for Q3FY21.
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
CRISIL saw a good response to the rating business while the research business grew steadily with the addition of Greenwich Associates to the company’s umbrella. Although the profits for the company are subdued due to the addition of Greenwich without which PAT growth would have been 16% YoY in CY20, 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 Life Insurance
The results show a sustained rise in Individual WRP, its market share and renewal premium remains strong despite the industry decline. HDFC Life has also done well to maintain its focus on operational segments and on introducing the new digital product Click2Protect. It also sees a big opportunity in annuity space which is even bigger than the protection opportunity. It remains to be seen whether the situation ahead unfolds within the company’s expectations or how long will it take for the industry to normalize. Nonetheless, given the company’s market positioning, its dynamic product portfolio, and its emphasis on the development of non-traditional channels and innovative products, HDFC Life remains a pivotal insurance stock in the country.
Kotak Mahindra Bank
The bank has performed well in Q3FY21 with more than 29% growth in savings deposits and has gotten 17% YoY growth in NII despite flat YoY growth in advances. It has done well to keep its books resilient and focus on expanding on the secured lending side while remaining cautious on the unsecured side. It has also seen a very good rise in the digital channels with more than 73% YoY rise in digital transactions and plans to use this consumer shift to keep its branch density low to be able to better compete with peers who have a much larger physical presence. It remains to be seen how the proforma NPAs will affect the bank going forward and whether the company will be able to better compete with other players with its low branch density plan. Nonetheless, given the bank’s track record and the capability and vision of the management over the years, Kotak Mahindra Bank remains a pivotal banking stock for every Indian investor.
SBI Life Insurance
SBI Life has seen good growth in New business premium and ULIPs have seen a good recovery with ticket sizes higher than last year. the company sees good potential for growth from the association with SBI and its 450 million customer base serves as a big opportunity for SBI Life. The company is yet to receive approval for repricing for its new protection product but this product is expected to be launched shortly in Q4. The focus of the management remains to focus on products based on customer requirements & stay competitive and drive volumes in these segments. It remains to be seen whether the situation ahead unfolds within the company’s expectations or how will SBI Life remain competitive with other industry players in this rising industry. Nonetheless, given the company’s market positioning, its emphasis on cautious capital allocation, and the immense cross-sell opportunity with SBI, SBI Life remains one of the most preferred life-insurance companies in the country.
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