There is other side to this argument.
I know quite a few HNIs but I don’t know anyone who keep their cash in savings accounts. They are usually savvy investors or have their wealth managers who deploy their money in higher yield asset classes (real estate, equity, gold etc) and avoid keeping them in low yielding savings account.
Lower income or salaried middle class on the other hand can be more attractive for banks because either they keep their money in savings accounts or do term deposits in the same banks thus providing a sticky source of capital.

Provisioning is a standard practice by lenders to strengthen their balance sheets. Expecting lenders to announce provisioning before the result will be a bad practice as without full context and commentary it can have unjustified impact on stock prices. It’s like expecting a lender to announce their operating margin or PAT before the actual results.

Even Indusin or Kotak have high corporate governance but did you see them disclosing higher provisioning before the actual results? IDFC first bank, also disclosed higher provisioning in their results.

Most of the well run lenders disclose who they are lending to and a prudent investor should do their homework to identify the risks. That’s why investing in lending sector is inherently tricky.

Supriya Lifesciences –

Q2 FY 25 results and concall highlights –

Revenues – 166 vs 140 cr, up 19 pc
EBITDA – 65 vs 32 cr, up 104 pc ( margins @ 39 vs 23 pc !!! )
PAT – 46 vs 24 cr, up 93 pc ( margins @ 28 vs 17 pc !!! )

Region wise sales breakup –

Asia – 32 pc
Europe – 38 pc
LATAM – 19 pc
North America – 5 pc
Others – 6 pc

Therapy wise sales breakup –

Analgesic + Anesthetics – 55 pc
Anti-Histamines – 9 pc
Vitamins – 12 pc
Anti-Asthmatics – 9 pc
Anti-Allergic – 5 pc
Anti-Hypertensive – 2 pc

Company is currently exporting to 128 countries worldwide

Company has a Niche Portfolio of 32 APIs

Company is the largest exporter of – Chlorpeniramine Maleate ( anti-allergic), Ketamine Hydrochloride ( anaesthetic ) and Salbutamol Sulphate ( anti- asthmatic ) from India

Total reactor capacity @ 600 KL/Day. Company has 04 manufacturing blocks ( Blocks – A,B,C,D ) – segregated therapy wise. Block E is under construction

15 of company’s products have a high degree of backward integration ( ie backward integrated right upto the KSM stage ) and derive 75 pc of company’s revenues. Company is in the process of integrating 3 more products

Company expects its new Ambernath facility to commence commercial production – sometime in Q3. This will greatly enhance company’s manufacturing capacity to aprox 1020 KL ( including the 340 KL expansion underway at Lote Parshuram ie new Block E ). This facility ( @ Ambernath ) will cater 80 KL of APIs manufacturing and to CMO of formulations. They r setting up large lines for bottling, tablets, capsules and Injectables at Ambernath

Company has been awarded a 10 yr CMO by a European player – DSM Fermenich. Supplies should start in H2. Have another 2-3 opportunities which are in final stages of discussion. Expecting positive outcomes on these before end of Q2

Aim to cross 1000 cr revenues mark in FY 27 ( company believes this is a conservative estimate )

Expecting H2 to be better than H1 in terms to topline. Absolute EBITDA and PAT should also be higher in H2

Expect to reach full capacity utilisation on the expanded capacity of 1020 KL by end of FY 27

Disc: holding, biased, not SEBI registered

Any updates/takeaways from today’s concall

Key Pointers from CMS Infosystems Q2 FY25 Earnings Call

Financial Performance:

• Strong Overall Growth: Despite a slower-than-expected H1 FY25, the company achieved 16% revenue growth, reaching ₹1225 crore by the half-year mark. This signifies consistent momentum even with external challenges. Q2 FY25 consolidated revenue grew by 15% to ₹624 crore.
• Segmental Performance:
  • Cash Logistics: Grew 8% YoY in Q2, reaching ₹390 crore, with an EBIT margin of 25%. This segment consistently contributes a significant portion of overall revenue and is expected to grow at 10-13% in the mid-term.
  • Managed Services and Technology Solutions: Showcased strong growth of 28% YoY in Q2, reaching ₹264 crore. This was driven by new order wins, though margins were affected by product mix and delayed project executions.
• Profitability: While revenue growth was robust, profit growth was comparatively slower. Factors impacting profitability include:
  • Delayed Order Execution: This led to incurring costs without corresponding revenue recognition, especially in the Managed Services segment.
  • Investment in Growth Initiatives: The company invested in capacity expansion, new business incubations, and talent acquisition, impacting short-term profitability.
  • Product Mix: In Managed Services, the higher contribution of product revenue, which typically has lower margins, impacted the segment’s profitability.
• Working Capital: An increase in trade receivables, particularly ₹175 crore related to delayed payments for a key project, impacted working capital in H1 FY25.

Challenges and Opportunities:

• External Headwinds: H1 FY25 was impacted by external challenges like extended monsoons, an election cycle, and muted consumption, impacting both revenue and realizations.
• Order Execution Delays: Primarily due to technical integration issues with PSU banks, impacted revenue recognition and capital expenditure plans.
• Competitive Intensity: Though moderating, competitive pressures persist, particularly in the BLA sector, impacting pricing and margins.

Growth Drivers and Outlook:

• Order Book Execution: The company is intensely focused on executing its robust order book, expecting a strong Q4 FY25, laying a solid foundation for FY26.
• New Business Initiatives: Investments in new areas like IoT RMS and the bullion logistics business are showing promising results, offering potential for future growth and diversification.
• M&A Strategy: The company has a strong pipeline of potential M&A deals, focusing on expanding its offerings, scaling existing businesses, and consolidating core sectors.
• Favorable Regulatory Developments: Potential ATM interchange rate increases, PSU bank outsourcing trends, and RBI’s plans for currency chest infrastructure revamp are viewed as potential mid-term growth drivers.
• H2 FY25 Outlook: The management expressed optimism about the second half of the year, citing encouraging early festive season data, government focus on capital expenditure, and easing bank liquidity. They aim for an H2 performance better than H1 and a strong base for FY26.

Key Management Commentary:

• The company remains committed to its strategic priorities of driving revenue growth, market share gain, and margin growth.
• They are focused on investments for capacity addition, growth incubations, and M&A.
• Emphasis on improving customer satisfaction and strengthening the customer value proposition.
• The cash logistics business is expected to maintain a steady growth trajectory, with potential for 10% growth over the next five years.
• Despite challenges, the management remains confident in achieving the midpoint of their FY25 revenue guidance range (₹2500-2700 crore).