Author - Abhishek Salunke

  • Abhishek Salunke
15 Dec

Expecting double-digit growth YoY in 3QFY21 – Berger Paints

Update on Indian equity market:
Markets started the week on a higher note as Nifty closed the day 44 points higher at 13,571. Within the index, ONGC (5.9%), LT (4.3%), and CIPLA (4.1%) led the index higher while EICHERMOT (-2.5%), HEROMOTOCO (-2.2%), and M&M (-2.0%) were the highest losers. Nine out of 11 sectoral indices were in the green with MEDIA (2.0%), PSU BANK (1.8%), and METAL (1.4%) leading the pack while AUTO (-1.0%) and REALTY (-0.9%) were the only losers.
Excerpts of an interview with Mr. Abhijeet Roy, Chief Operating Officer, Berger Paints (Berger) published on CNBC-TV18 dated 11th December 2020:
The demand scenario in the month of October and November was robust. The company is witnessing a similar trend in December. He expects the volumes to report double-digit YoY growth in 3QFY21E.
Demand from the auto segment surged ahead of the festive season. The demand has softened in the month of December.
The decorative segment has seen robust demand right from 2QFY21 and continues to do well in the month of December.
To meet the ever-increasing demand for its products, the company is putting up a new plant at Lucknow. The initial plan was to have Rs 2,600-2,700 mn of investment in capacity expansion. The same has been ramped up to beyond Rs 4,500mn looking at the demand scenario.
He said that the costs are going up for some raw materials, specifically for monomers. The margins are expected to be under pressure in 4QFY21E.
He said that the company reported the fastest growth in the industry and as a result, gained market share. With the ever-increasing demand scenario, he is confident of continuing the momentum.
Consensus Estimate: (Source: market screener website)
The closing price of Berger was ₹ 681/- as of 14-Dec-2020. It traded at 102x/ 75x/ 63x the consensus EPS estimate of ₹ 6.7/ 9.1/ 10.8 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 551/- implies a P/E multiple of 51x on FY23E EPS of ₹ 10.8.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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07 Dec

Truck demand coming back; not enough buyers for buses – Ashok Leyland

Update on Indian equity market:
Markets continued the upward journey to end the truncated week as Nifty closed the day 140 points higher at 13,274. Within the index, ADANIPORTS (4.6%), HINDALCO (4.4%), and ICICIBANK (4.4%) led the index higher while RELIANCE (-0.8%), BAJAJFINSV (-0.6%), and HDFCLIFE (-0.6%) were three out of 11 losers. All the sectoral indices ended in the green with BANK (2.4%), PVT BANK (2.3%), and PSU BANK (1.5%) leading the pack.
Excerpts of an interview with Mr Anuj Kathuria, Chief Operating Officer, Ashok Leyland (AshokLey) published on CNBC-TV18 dated 3rd December 2020:
The monthly sales data for the month of November reported the seventh straight monthly improvement in sales, though the demand for buses was tepid.
He said that initial signs of demand coming back in the long-haul segment. The truck demand is coming back due to the movement of cement and steel whereas travel restrictions in the country have led to muted demand for buses.
The industry is witnessing growth in intermediate commercial vehicles. The tippers segment is holding strong and the company is expecting further improvement in MHCV (Medium & Heavy Commercial Vehicles) segment in December as well.
He said that the industry may see some replacement demand as the ownership cost of BS-VI (Bharat Stage-VI) is comparably lower. He also highlighted that state transport undertaking activity has intensified and the company is seeing more orders coming through.
The company is expected to show QoQ improvement in margins, but higher commodity prices could limit the gains.
Consensus Estimate: (Source: market screener website)
The closing price of AshokLey was ₹ 95/- as of 04-Dec-2020. It traded at 36x/ 20x the consensus EPS estimate of ₹ 2.6/ 4.8 for FY22E/ FY23E respectively.
The consensus target price of ₹ 90/- implies a P/E multiple of 19x on FY23E EPS of ₹ 4.8.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Ashok Leyland, Auto , , 0 Comments Read more...
26 Nov

Expect to touch Rs 170-180 bn revenue in a couple of years – Tata Chemicals

Update on Indian equity market:
After crossing 13,000 for the first time ever, the Nifty-50 could not hold onto the gains as the monthly expiry led volatility kicked in the markets. Nifty closed the day 185 points lower at 12,870. Within the index, only 8 stocks closed the day in green led by ONGC (5.9%), GAIL (2.1%) and ADANIPORTS (1.9%) whereas EICHERMOT (-3.5%), AXISBANK (-3.2%) and KOTAKBANK (-3.2%) led the laggards. Among the sectoral indices, all but one index, PSUBANK (1.9%) traded the day in the red led by REALTY (-2.3%), PHARMA (-2.1%), and BANK (-1.8%).
Excerpts of an interview with Mr. R Mukundan, CEO & Managing Director, Tata Chemicals (TataChem) published on CNBC-TV18 dated 24th November 2020:
Tata Chemicals 2QFY21 result was operationally weaker due to pressure on margins in the basic chemistry segment. All the units are working at full capacity though and the company sees no demand problem from 2HFY21.
The nutrition and agri segment performed well during the quarter. These two segments were unaffected due to the pandemic. Q1 was good and Q2 continued to be even better. Sequentially, material science has done better than 1QFY21.
He said that there are some pricing issues in the export market, but India is doing well. The UK has performed well through the pandemic. The overall momentum is positive. All the sectors are beginning to open up and the company expects to be back to normal somewhere around 2QFY22E.
Regarding the pricing power, he mentioned that as the volumes pick up, the pricing power comes back especially in the material segment.
The company is focusing on the nutraceutical segment and increased allocation of assets. Revenue from this business can scale up to Rs 50bn with this capacity addition.
The company is expecting good growth in the silica business from 3QFY21. Renewables are a big market opportunity for the company currently.
With the capacity additions and business racing towards pre-covid levels, the company is confident of achieving an annual revenue target of Rs 170-180bn in the next couple of years.
Consensus Estimate: (Source: market screener website)
The closing price of Tata Chem was ₹ 368/- as of 25-Nov-2020. It traded at 21x/ 11x/ 9x the consensus EPS estimate of ₹ 17.2/ 34.4/ 40.4 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 332/- implies a P/E multiple of 8x on FY23E EPS of ₹ 40.4/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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18 Nov

Looking to enter the refrigerator segment: Dixon Technologies

Update on the Indian Equity market:
Markets started the four-day week on a positive note, led by global peers on the back of positive vaccine news from Moderna. Nifty closed the day 94 points higher at a new record high of 12,933. Within the index, the gainers were led by TATAMOTORS (6.2%), TATASTEEL (5.9%) and HDFCLIFE (5.7%) whereas BPCL (-4.2%), HEROMOTO (-2.6%) and NTPC (-2.5%) were the laggards. Among the sectoral indices, METAL (2.4%), PSU BANK (2.2%), and BANK (2.1%) led the index higher while MEDIA (-1.3%), PHARMA (-0.7%), and IT (-0.3%) were the laggards.
Excerpts of an interview with Mr. Atul Lall, Managing Director, Dixon Technologies Ltd (Dixon) published on CNBC-TV18 dated 13th November 2020:
The government on Wednesday levied a 5% duty on the import of TV parts like chips, printed circuit board assemblies, and glass boards. Reacting to the development, Mr. Lall said that the industry has been requesting the government to correct the disparity for a very long time.
After the recent decision by the government, the duty on both pure and open cell is at 5%. The localization on LED and LCD TV parts too is positive for coming quarters.
He said that the government has stated that LED will be covered under the production-linked incentive (PLI) scheme. The final details about it are still to be announced. If this development takes place then it gives an additional impetus for exports of LED lighting products to the company.
The company has expanded the capacity of LED TVs from 3.6mn to 4.4mn in phase-I. The company further plans to expand the capacity to 5.5mn sets (>30% of India’s requirement). The expansion will be completed by March 2021.
The company entered into digital setup boxes in a big way. In the next phase, the company is looking to enter the refrigerator segment organically or inorganically.
The company achieved the highest monthly production of 3.6 lakh units and the order book for 4Q looks healthy as well.
Consensus Estimate: (Source: market screener website)
The closing price of Dixon was ₹ 10,302/- as of 17-Nov-2020. It traded at 81x/ 47x/ 33x the consensus EPS estimate of ₹ 127/ 219/ 316 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 9,940/- implies a P/E multiple of 31x on FY23E EPS of ₹ 316.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Dixon technologies, IT 0 Comments Read more...
09 Nov

Albuterol contribution to be higher from 4Q onwards – Lupin

Update on Indian equity market:
Following its global peers, Indian markets continued to rally for the 5th straight session as Nifty closed the day 143 points higher at 12,157. Within the index, the gainers were led by RELIANCE (3.6%), BAJAJFINSV (3.5%), and INDUSINDBK (3.3%) whereas Maruti (-2.9%), GAIL (-1.9%) and BHARTIARTL (-1.5%) were the laggards. Among the sectoral indices, PVT BANK (2.1%), BANK (1.9%), and FIN SERVICE (1.9%) led the index higher while PHARMA (-0.7%) and FMCG (-0.1%) were the only laggards.
Excerpts of an interview with Mr. Nilesh Gupta, Managing Director, Lupin with CNBC-TV18 dated 05th November 2020:
The company is witnessing growth in the US markets on the back of the launch of Albuterol. The drug is a great growth opportunity for Lupin.
The Albuterol story will really come out in 4QFY21E. The company is still in ramp-up mode. Lupin is expected to get more business in 3Q as compared to 2Q and will see a steady-state of demand from 4Q onwards.
The reason for optimism on Albuterol is a major competitor, Perrigo going out of business with no timeline of coming back.
Commenting on the re-launch of Glumetza, there were some teething problems regarding the product but management is confident about the re-launch of the drug.
The company is able to return to a $180- 200mn quarterly run rate in the US markets. The remediation costs and research and development spend in the past have started fructifying for the company.
In the Indian business, the company is expected to grow 6-8% YoY. The business has suffered in the 1st half of FY21 due to the COVID-related slowdown in demand from the acute segment. The market is expected to grow in the range of 4-5% and the company is confident of beating the industry growth rate.
Consensus Estimate: (Source: market screener website)
The closing price of Lupin was ₹ 931/- as of 05-Nov-2020. It traded at 40x/ 25x/ 21x the consensus EPS estimate of ₹ 23/ 38/ 45 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 945/- implies a P/E multiple of 21x on FY23E EPS of ₹ 45/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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30 Oct

Expect impact of high rubber prices in 4QFY21 – Ceat

Update on the Indian Equity Market:
The Indian markets witnessed a volatile monthly expiry day as Nifty opened the day higher but managed to close 57 points lower at 11,673. Within the index, the gainers were led by ASIANPAINT (3.1%), TECHM (2.2%), and ULTRACEMCO (2.0%) whereas LT (-4.9%), TITAN (-3.4%), and ONGC (-2.9%) were the laggards. Among the sectoral indices, only IT (0.5%) closed the day in green while MEDIA (-1.7%), AUTO (-1.1%), and PHARMA (-0.9%) led the laggards.
Excerpts of an interview with Mr. Anant Goenka, Managing Director, Ceat Ltd (Ceat) published on CNBC-TV18 dated 28th October 2020:
The company is witnessing a very large demand in the months of October and November from the Original Equipment Manufacturers (OEM). The demand seems challenging from 4QFY21E onwards.
Raw material prices are inching up for the past few days. The increased rubber prices will start coming into effect around 4Q onwards. This will have a negative impact on margins.
He said that the rural economy has done well for the company. The farm sector has shown 50-60 percent growth in the replacement segment. The revenues are also back to 90 percent of pre-COVID levels. The higher demand is a mix of pent-up demand and a lot of other aspects.
The higher profitability margins during 1HFY21 were led by favorable mix and t is expected to come down in 2nd half of FY21E.
The company has completed a capex of Rs 2,500-3000mn YTD (Year-to-Date) and the figure will be around Rs 5,000mn by the end of FY21E and Rs 6,000 mn for FY22E.
Ban on Chinese tyres has impacted the PCR replacement demand. However, he said that OEMs are allowed to import Chinese tyres.
Consensus Estimate: (Source: market screener website)
The closing price of Ceat was ₹ 1,123/- as of 29-Oct-2020. It traded at 22x/ 16x/ 14x the consensus EPS estimate of ₹ 51/ 72/ 78 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 1,014/- implies a P/E multiple of 13x on FY23E EPS of ₹ 78/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Auto Ancillary, CEAT , 0 Comments Read more...
22 Oct

Business at 85-90% of pre-COVID levels – Amber Enterprise

Update on Indian equity market:
Indian markets were slightly higher today with Nifty closing the day 57 points higher at 11,954. Within the index, the gainers were led by POWERGRID (4.2%), BHARTIARTL (3.5%) and TATASTEEL (3.1%) whereas BRITANNIA (-4.3%), TCS (-2.3%) and SBILIFE (-1.9%) were the laggards. Among the sectoral indices, REALTY (4.7%) METAL (2.4%) and BANK (1.6%) led the index higher whereas FMCG (-0.9%), MEDIA (-0.5%) and IT (-0.4%) led the laggards.
Excerpts of an interview with Mr. Jasbir Singh, Chairman & CEO, Amber Enterprise Ltd (Amber) published on CNBC-TV18 dated 19th October 2020:
The recent notification by the central government to ban the import of ACs with refrigerants would increase local manufacturing. 30% of ACs worth Rs 40,000 mn were imported in India in FY20. 75% of this had refrigerants. The company is eyeing the majority share from this opportunity.
The decision of the government will shift the complete manufacturing of all the imported goods to India and the company will benefit as they have the capacities in place.
India currently produces 7mn RACs (Refrigeration & Air Conditioning) whereas China produces 110 mn RACs.
The business is back on track and the industry is back to 85-90% of pre-COVID levels on a month on month basis.
The company has won some orders from Metro and Railways which are moving normally. The company expects some more orders in the recent future.
He said that pent demand during the months of lockdown resulted in increased manufacturing orders by OEMs (Original Equipment Manufacturers)
The company recently bought the remaining 20% stake in Sidwal Refrigeration Industries. Accordingly, Sidwal is now a wholly-owned subsidiary of Amber. The company expects a 15% growth from Sidwal acquisition in FY21E.
Consensus Estimate: (Source: market screener website)
The closing price of Amber was ₹ 2,307/- as of 21-Oct-2020. It traded at 96x/ 35x/ 26x the consensus EPS estimate of ₹ 24/ 66/ 90 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 2,050/- implies a P/E multiple of 23x on FY23E EPS of ₹ 90.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Amber Enterprise, Consumer durable , 0 Comments Read more...
14 Oct

Enough liquidity in the system, but credit flow weak – Edelweiss

Update on Indian equity market:
Indian markets were muted today with Nifty closing the day 4 points higher at 11,935. Within the index, the gainers were led by IT biggies like HCLTECH (+4.1%), INFY (+2.5%) and KOTAKBANK (+2.2%) whereas CIPLA (-3.6%), TITAN (-2.6%) and ADANIPORTS (-2.5%) were the laggards. Among the sectoral indices, only IT (+1.3%) and METAL (+0.4%) closed in green whereas PHARMA (-1.8%), PSU BANK (-1.5%), and PVT BANK (-0.9%) led the laggards.
Excerpts of an interview with Mr. Rashesh Shah, CEO, Edelweiss Financial Services Ltd. (Edelweiss) published on CNBC-TV18 dated 12th October 2020:
50% of the loan book was under moratorium when it was announced by the Government. The same number has been under 20% by the end of September. 80% of customers are paying regularly. He said that the company has exposure to only semi-formal and formal sectors. The current Non-Performing Assets (NPA) is at 2-3%.
Commenting on the impact of the pandemic on the company’s books, he said that 2% should be the impact of credit cost purely because of COVID-19. He said that growth and profitability are the two challenges for the Non-Banking Financial Companies (NBFC) sector.
Liquidity in the system has improved in the last four-five months through various measures like TLTRO, partial credit guarantee schemes taken by the RBI. He said that liquidity is ample but the market is currently lacking the credit flow.
The bond market needs to get stabilized, long term credit flow needs to get started again for risk-taking, and the investment cycle to start again. The bond markets are currently dislocated and not yet back to 60-70% of the pre-ILFS levels.
The company has recently raised Rs 20,000 mn through the stake sale in the wealth management business, which is more than 5% of the company’s book size.
He said that the capital adequacy ratio for the housing finance business is at 25%, retail NBFC at 28%, and ECL finance at 21%.
Consensus Estimate: (Source: market screener & investing.com websites)
The closing price of Edelweiss was ₹ 60/- as of 13-Oct-2020. It traded at 0.9x/ 0.8x/ 0.8x the consensus Book Value estimate of ₹ 66/ 70/ 77 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 87/- implies a P/BV multiple of 1.1x on FY23E BV of ₹ 77.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Edelweiss, NBFC 0 Comments Read more...
05 Oct

95% of stores have resumed operations – Bata India

Update on Indian equity market:
The optimism in markets continued as Nifty closed the holiday-shortened week at 11,415 (+1.5%). Among the index, INDUSINDBK (12.3%), BAJFINANCE (5.0%), and BAJAJAUTO (4.1%) were the top-performing stocks while DRREDDY (-1.4%), ITC (-0.5%) and ONGC (-0.5%) were the laggards. The optimism was such that all the sectors traded in the green zone on a weekly expiry day with PVT BANK (4.1%), BANK (3.6%), and MEDIA (3.1%) leading the rally.
Excerpts of an interview with Mr. Sandeep Kataria, CEO, Bata India (Bata) published on ETNOW dated 25th September 2020:
Mr. Kataria said the sales trends are changing after COVID-19. The Work-From-Home norm has affected the demand trends as the demand is moving towards comfort wear.
Footfalls are gradually increasing in the stores as the unlock is happening. 95% of the Bata stores have resumed operations.
Small towns with 1-3 lakh population are the fastest to return to pre-COVID levels. The company has seen demand from smaller towns as they choose to shop from local stores instead of traveling to cities. Stores near residencies are doing better.
The company has identified new avenues of growth in the post-pandemic era as the country gradually learns to cope with the virus. Sales via distribution channels are witnessing growth.
He said that sales via digital retail have seen dramatic growth in India during the lockdown. The company has even sold products via video calls and WhatsApp.
The company was growing between 7% and 11% for the last five years before the pandemic struck. Its revenue fell 9% in the quarter ended in March 2020. He expects FY21 to be subdued due to disruptions caused by the virus and confident of attaining growth in the following years.
Consensus Estimate: (Source: marketscreener & investing India website)
The closing price of Bata was ₹ 1,345/- as of 01-Oct-2020. It traded at 179x/ 45x/ 37x the consensus EPS estimate of ₹ 7.5/ 29.8/ 35.9 for FY21E/ FY22E/ FY23E respectively.
Consensus target price of ₹ 1,290/- implies a P/E multiple of 36x on FY23E EPS of ₹ 35.9/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Bata, Consumer 0 Comments Read more...
23 Sep

Expect 90% collection efficiency in September – Shriram Transport Finance

Update on Indian equity market:
Markets continued to fall further on Tuesday after a sharp selloff on Monday as Nifty closed 99 points lower at 11,152. Among the stocks, HCLTECH (+2.3%), TCS (+2.2%) and GRASIM (+1.8%) were the top-performing stocks while ZEEL (-6.6%), ADANIPORTS (-4.8%), and GAIL (-4.5%) were the laggards. Within the sectoral indices, only IT (+1.2%) and PHARMA (+1.0%) were able to close the day in green whereas MEDIA (-2.4%), AUTO (-1.8%), and REALTY (-1.5%) were the sectors that bled the most.
Excerpts of an interview with Mr. Umesh Revankar, Managing Director & CEO, Shriram Transport Finance (Shriram) aired on CNBC TV18 dated 21st September 2020:
September is the first month without a loan moratorium. Since there is no moratorium, the collection has to be really good. In addition, most of the locations under lockdown have been opened up. The containment zones are the problem areas.
In May, 51% of the company’s borrowers made partial or full payment, up from 24% in the month of April. It increased to 71% in June while it remained flat in the months of July and August. About 73% of clients made payments in August. The company is expecting a 90% collection efficiency in the month of September. He said that the company is able to meet customers physically and they are willing to pay. They have observed delays in payments by very few customers.
He said that the disbursements are also picking up. The disbursements in the month of August were 50% of last year’s levels which has increased to 75% in September. The company expects to reach 90-100% of the monthly run rate in October- November period.
The business has been picked up in the second half of August in semi-urban and rural areas. He said that urban areas are mostly seeing e-commerce activity leading to some demand.
The company expects the business to be normal and to pre-lockdown levels by December as their customer segment is mostly owner-operator of the vehicle and less dependent on outside driver/ helper.
The festival period in October- November is likely to be good for the business. Some sectors like travel & tourism will take a little more time to recover. He said that the demand in the rural market has been really good and the NBFC should be able to improve business there with better penetration.
Consensus Estimate: (Source: market screener & investing India website)
The closing price of Shriram was ₹ 642/- as of 22-Sept-2020. It traded at 0.8x/ 0.7x/ 0.6x the consensus BV estimate of ₹ 837/ 932/ 1,036 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 884/- implies a P/BV multiple of 0.9x on FY23E BV of ₹ 1,036/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By NBFC, Shriram Transport Finance 0 Comments Read more...