Reviews

In this edition, we have reviewed Indiabulls Housing Finance Ltd and Gillette India Ltd. We suggest our reader-investors to HOLD Indiabulls Housing Finance Ltd and Gillette India Ltd.



We had recommended Indiabulls Housing Finance in Volume 37, Issue No. 02, dated November 22 to December 5, 2021 under the ‘Analysis’ segment. The recommended price for the stock was ₹259.65. We had recommended the stock on the basis of strong fundamentals, expanding product portfolio and robust research and cost-effective solutions. Indiabulls Housing Finance is the third-largest provider of mortgages in the country. The company with its focus on technology has given India its first end-to-end digital home loan technology platform. It is a proud service provider to more than 1.2 million home owners across the country and has collectively disbursed loans of over ₹2.94 lakh crores.

Analysing the performance of the company during the recent quarter, the interest income for Q1FY23 was recorded at ₹21.83 crore as compared to ₹21.96 crore reported in the last quarter. The total income gained was ₹22.33 crore in Q1FY22 compared to ₹22.78 crore in the previous quarter. The PAT for Q1FY23 is ₹303 crore, up 1.7 per cent on a QoQ basis, from Q1FY22 PAT of ₹253 crore. Gross NPAs increased to 3.18 per cent in Q1FY23 from 2.59 per cent in Q1FY22. On the annual front, the interest income has declined from ₹9,721.96 crore in FY21 to ₹8,582.53 crore in FY22.

The total income reported for FY22 stood at ₹8,993.90 crore as compared to total income of ₹10,030.12 crore reported in FY21. The net profit for the period fell to ₹1,298.12 crore in FY22 from ₹499.84 crore in FY21. Gross NPA for FY22 was 3.2 per cent whereas for FY21 it was 2.7 per cent. The company’s quarterly earnings showed steady QoQ growth for the last four quarters. The balance-sheet also showcased strong capital adequacy, low gearing, high liquidity and robust provisioning providing strong foundation for growth from FY23. The company has low debt to equity ratio of 3.68 per cent. 

It has a low PE of 5.09 per cent and a ROCE of 11.39 per cent. The company has chosen to join NSE Prime. It has a set of norms that prescribes stricter corporate governance standards than extant requirements for NSE-listed companies. The housing sales have recorded an increase of 18 per cent in the top eight cities in FY22. The ticket size of the houses has also been increasing. In the past two quarters, the company has had significant recovery. Furthermore, on the back of the pickup in the real estate sector, the company expects this trend to continue through FY23. Its liquidity coverage ratio stood at 393 per cent against a regulatory requirement of only 50 per cent. Hence, we recommend HOLD.



We had recommended Gillette India in Volume 36, Issue No. 26, dated December 20, 2021 to January 2, 2022 under the ‘Choice Scrip’ segment. The recommended price for the stock was ₹5,689.20. We had recommended the stock on account of multiple new orders, diversified market risks and positive growth prospects. Under its various brands, Gillette India Ltd. produces and markets packaged fast-moving goods for the grooming and oral care markets. It distributes razors, blades, shaving cream, gel and aftershave through a variety of channels, including mass merchandisers, drugstores, department stores and grocery stores. 

The company’s financial performance showed a remarkable growth of 26.82 per cent from ₹435.98 crore recorded in Q1FY22, generating total sales of ₹552.89 crore in Q1FY23. The net profit for the first quarter of FY23 soared 145.51 per cent from ₹27.53 crore to ₹67.59 crore when compared to the same quarter in FY22. According to the company’s annual performance, its net profit dropped from ₹310.38 crore to ₹289.33 crore. Net sales, on the other hand, surged by 12.28 per cent to ₹2,256.16 crore from ₹2,009.42 crore in the prior year.

As of March 31, 2022, promoters held a sizeable 75 per cent of the company, with foreign promoters controlling 40.12 per cent owing to the company’s significant backing from multinational corporation Procter and Gamble. The stock recently saw a significant block deal from the iShares Core MSCI Emerging Markets ETF. With a return on equity (ROE) of 33-35 per cent, the company is able to create excellent profitability per unit of equity capital. Not only does it provide good returns, but it also dominates the domestic and worldwide razor markets by developing innovative and high-quality products in response to buyer demand. 

Before a few months, the company started promoting and selling Braun grooming products in India. The Procter and Gamble subsidiary Braun provides men with critical grooming and styling tools like electric shavers, styling kits and shavers. On a year-to-date basis, major global indices have fallen due to concerns about inflation and the economic slowdown. One of the sectors least impacted by the current market’s weakness is fast-moving consumer goods, which actually witnessed strong growth. Due to the sector’s promising future outlook and the company’s significant position, the stock has a greater possibility of rising in the near term. Hence, we recommend HOLD.