Management was not able to properly answer 10 crore surprise bonus to employees. This could have been better handled. My personal opinion.

Agree, that’s where every bank would want to be over time. Which is why cross selling payments, cards, wealth management and other services come handy, these lock in customers into regular usage and build in switching costs that prevent customers from moving to another bank.

All this takes time, normally takes 2-3 years for a branch to turn in operating profits and around 5+ years for the book to start contributing meaningfully to profits. But once a threshold is reached, profitability is non linear due to a confluence of factors since cost escalation does not keep pace.

Which is why comparing per branch revenue, CASA and profitability with a leading bank is not fair. Even within these large banks, their seasoned branches subsidize the lower throughput from semi urban and upcoming branches. A bank with 50% of the branches opened in the past 3 years will have high operating cost until it hits a threshold size on assets and fee income. But once it hits, operating leverage kicks and spikes the return efficiency rather quickly so long as provisions don’t spike too.

The key is to survive for a long period without credit events that can damage the asset quality significantly.

Q1FY23 Result - Highlights

1. To integrate all logistics entities as One ProConnect, the Automated Distribution
   Centres in Chennai and Kolkata will be transferred to ProConnect Supply Chain
   Solutions Limited for 90 Crs. This business unit generated 4.25 Crs in income during FY22.
2. Even though on a standalone basis, the finance costs went up substantially, on a consolidated basis it has only increased slightly. Similar to the standalone entity, the group’s employee benefit expenses have gone up but other expenses have come down.
3. SISA segment is more efficient (better ROA, ROCE -50% and ROE - 24%) than ROW (ROCE - 36% and ROE -19%).
4. During the quarter, Redserv Global Solutions Limited (“RGS”) acquired Redserv Business Solutions Private Limited (“RBS”). Prior to this transaction, RBS was a wholly owned subsidiary of Redington Gulf FZE (“RGF”).
5. Due to high WC utilisation, FCF for Q1FY23 stood at -2316.7 Crs (-13.79 % FCF margin)
6. Mobility segment’s share in the revenue pie grew YoY.
7. WC days (YoY), SISA - from 19 to 20, ROW - from 18 to 36 and Global - from 18 to 28.
8. Apple’s share in revenues grew from 28% in Q1FY22 to 31% in Q2FY23

Disclosure - Invested

Satisfactory results by Inox.

• Revenus at 589 this quarter vs 496 in Q1FY20.

• OPM is 36% vs 30% Q1FY20. Largely due to lower employee cost. Employee cost is 20% lower than pre covid levels.

• F&B revenue share is back to pre covid level.

• Advertisement revenue did not. Advertisement share in revenue was 5% this quarter vs 9% in Q1FY20.
  This should IMO increase as advertisers realise that the footfall is back to pre covid levels. This should further increase the OPM.

Anyone who has done valuations for Inox?

investor presentation: https://www.bseindia.com/xml-data/corpfiling/AttachLive/038a72b1-0dfa-44c3-9cf7-4a385bcf61a7.pdf

disc: invested