Author - Maitreyee Vaishampayan

  • Maitreyee Vaishampayan
22 Dec

Expecting highest numbers in 3QFY21 – Escorts

Update on the Indian Equity market:
On Monday, the Indian equity markets witnessed the biggest single-day decline in seven months as investors were worried due to the spread of a new strain of the Covid-19 in parts of the UK. The Nifty50 ended the day at 13,328 (-3.1%). While none of the sectoral indices ended with gains, PSU BANK (-6.9%), MEDIA (-6.2%), and METAL (-5.5%) led the losers. Among the Nifty50, none of the stocks ended in the green, and TATAMOTORS (-9.5%), ONGC (-9.4%), and GAIL (-8.4%) led those that ended in the red.

Excerpts of an interview of Mr. Bharat Madan, Group CFO, Escorts with CNBC TV18 on 18th December 2020:
• In the last 2months, demand was quite good due to the festive season in October and November. In October, the industry growth was close to 7-8 percent and in November the growth was much higher. He expects channel filing to happen in December. Though the retail numbers may not be as strong as in the festive months, he expects this quarter to deliver one of the highest numbers the industry would have ever done.
• Talking about guidance for FY21E, he said the overall industry growth in 8months of FY21E is about 15% and expects mid-teens growth for the company.
• There were some supply issues due to the farm protests but the company has been able to manage the supply.
• The demand for their products comes majorly from the states of UP, Bihar, Rajasthan, Maharashtra, Telangana and Andhra Pradesh. He doesn’t foresee any major demand problems due to the ongoing farm protests.
• In Punjab and Haryana, farmers shift to tractors with higher horsepower (HP) but the volumes are stagnant.
• Talking about input prices, Escorts has taken a price increase after the festive season to pass on the inflation. There could be another price increase in the next quarter. Despite passing on the increased raw material price to consumers, this still impacts margins.
• Supplies from Kubota joint venture (JV) have begun, and he expects export orders to pick up.
• The target for exports for FY21E is 4000-4500 tractors but there are some challenges from container supplies causing delays in orders.
• He expects margins in 3QFY21 to be at the same level as 2QFY21. The impact of cost increases will get neutralized due to the operating leverage from higher volumes.

Consensus Estimate: (Source: market screener and investing.com websites)
• The closing price of ESCORTS was ₹ 1,242/- as of 21-December-2020. It traded at 19x/ 17x/ 15x the consensus earnings estimate of ₹ 66/ 74/ 85 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 1,257 implies a PE multiple of 15x on FY23E EPS of ₹ 85/-.

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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14 Dec

Price hikes will vary from model to model – Maruti Suzuki

Update on the Indian Equity market:
On Friday, Nifty50 ended the week with gains at 13,514 (+0.3%). Among the sectoral indices, METAL (+1.1%), PSU BANK (+1.0%), and FMCG (+0.9%) ended with gains, while PHARMA (0.6%), IT (-0.4%), and AUTO (-0.1%) were the only losers. ONGC (+5.5%), NTPC (+5.2%), and GAIL (+5.0%) were the top gaining stocks while AXISBANK (-2.3%), DIVISLAB (-2.2%), and ADANIPORTS (-1.3%) were the top losing stocks.

Excerpts of an interview of Mr. Shashank Srivastava, ED- Marketing & Sales, Maruti Suzuki India Ltd (MARUTI) with CNBC TV18 on 10th December 2020:
• MARUTI has announced a hike in the prices of its vehicles from January 21 to offset the impact of rising input costs. The quantum of price hikes is still being discussed and will vary from model to model.
• Largely the input cost increases have been because of steel and precious metals (Palladium) increasing.
• Due to the shift from BS-IV to BS-VI, the consumption of precious metals used has increased, worldwide. As a result, the demand for these metals has gone up worldwide.
• Due to the mismatch in higher input costs and lower production in CY20, there has been a sharp increase in input costs and it has become imperative to hike prices.
• He believes the pent-up demand still exists. The long-term demand would depend on the fundamentals of the economy and Covid sentiment.
• This year has been a little unusual and the auto industry was recovering from supply chain disruptions. When the demand finally came in, inventory levels are lower and due to this demand-supply gap, he expects lesser discounts compared to last year.
• According to FADA registration numbers, MARUTI sold 143,554 vehicles in November which was lower than the numbers company expected. This is due to the difference in the number of RTOs from which data is collected by VAHAN (which FADA uses) vs the number MARUTI uses. VAHAN takes data from 1252 RTOs whereas there are 1465 RTOs in India. About 15% RTOs are not a part of VAHAN data and these are in the states of Telangana, Madhya Pradesh, and Andhra Pradesh. These 3 states comprise about 13-15% of MARUTI’s sales.
• Another problem with using the VAHAN numbers is that it used permanent registration. There are about 18 states which give temporary registration and the permanent registration comes in as late as 30 days.
• For loans to customers, MARUTI is planning to add 4 more banks and 5 more in 4QFY21E. There will be 17 banks integrated on the website, which disburse about 95% of auto loans.

Consensus Estimate: (Source: market screener website)
• The closing price of MARUTI was ₹ 7,715/- as of 11-December-2020. It traded at 51x/ 31x/ 25x the consensus earnings estimate of ₹ 150/ 247/ 308 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 6,367 implies a PE multiple of 21x on FY23E EPS of ₹ 308/-.

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, Maruti Suzuki 0 Comments Read more...
04 Dec

Demand for loans coming back – SBI

Update on the Indian Equity Market:
On Thursday, Nifty 50 ended at 13,134 (+0.2%). Among the stocks, MARUTI (+7.3%), NTPC (+4.2%), and ONGC (+4.2%) ended with gains while SBILIFE (-2.0%), HDFCBANK (-1.8%), and TCS (-1.4%) ended the day with losses. Among the sectoral gainers, PSU BANK (+4.8%), MEDIA (+2.8%), and METAL (+2.5%) led the gainers and IT (-0.5%), PRIVATE BANK (-0.5%), and FINANCIAL SERVICES (-0.3%) led the laggards.

Excerpts of an interview with Mr. Dinesh Khara, Chairman, State Bank of India (SBIN) published in Business Standard on 3rd December 2020:
• The bank is cautious about loan demand from vaccine manufacturers given the huge investments which may turn sour if central approvals are not forthcoming. Proposals worth Rs 1,000 crore have been received from the pharmaceutical segments.
• When there is unlocking, there is demand revival, which is going to be the main growth engine in the current scenario. He expects the demand to be back with a vengeance after covid.
• There has been a significant improvement in sanctions and disbursements to unsecured personal loans and express credit loans. In September, in the personal loans space, there was 55% growth year-on-year. Disbursements went up as high as 61 percent. In the home loans segment, there was a 49% growth.
• SBIN has taken stock of the special mention accounts (SMA) 1 and 2 and there is time till March 31 for carrying on the restructuring exercise. There is an internal target of completing 50% of restructuring by December, and the rest by February.
• They have given unsecured loans to customers who have been maintaining their salary accounts, employed with either the government or well-rated private sector corporates.
• Recovery is ensured through the Insolvency and Bankruptcy Code, restructuring, and the non-discretionary one-time settlement schemes. One major resolution went through in the early part of this quarter.
• There has been a delay in big accounts in financial sectors looking for resolution due to litigation. In such cases, an elaborate process is laid out, and timelines given for such accounts are stringent.
• In the recent past, they have raised tier I and tier II capital with prices set at the benchmark.
• SBIN had the work-from-home policy in 2017 and the pandemic has helped SBIN leverage this policy. They have reframed this policy to ‘work from anywhere’ and digitised some of the non-customer facing activities as well. They can’t have a work-from-home policy for everyone as they are a customer-facing organisation and need to engage with customers.
• When YONO, SBIN’s digital banking app was put in place, it was to be a distribution platform for the bank’s products. The definite and concrete plans in terms of listing it will be shared in some time.
• In the post-Covid world, some in-person meetings will probably come back. There will be a paradigm shift when it comes to the way SBIN has been conducting themselves in the past to the way they will conduct themselves in the future.

Consensus Estimate: (Source: market screener and investing.com websites)
• The closing price of SBIN was ₹ 256/- as of 03-December-2020. It traded at 1x/ 0.9x/ 0.8x the consensus book value estimate of ₹ 262/ 286/ 318 for FY21E/ FY22E/FY23E respectively.
• The consensus target price of ₹ 276/- implies a PB multiple of 0.9x on FY23E BV of ₹ 318/-.

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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25 Nov

Low penetration translates to enormous growth opportunities – HDFC LIFE

Update on the Indian Equity market:
On Tuesday, the Nifty50 index closed at a record high of 13,055 (+1.0%) as hopes for faster economic recovery were renewed due to Covid-19 vaccine progress. BANK (+2.5%), PRIVATE BANK (+2.3%), and REALTY (+1.8%) led the sectoral gainers and there were no sectoral losers. Among the stocks, ADANIPORTS (+4.5%), AXISBANK (+3.9%), and HDFCBANK (+3.5%) led the gainers. TITAN (-1.5%), HDFC (-1.4%), and BPCL (-1.2%) led the laggards.

Excerpts of an interview of Ms. Vibha Padalkar, MD & CEO, HDFC Life aired on CNBC TV18 on 20th November 2020:

• The green shoots are being seen and each month has been better than the previous month. On YTD basis, the industry has declined 8% YoY while HDFC Life has grown 8%. The month of October 2020 has been one of the best with 50% growth in new business premium.
• The growth is not linked to the festive season because insurance is a long-term protection and savings outlay. The growth is due to inherent need felt by the customers. Due to the high conviction about the need of insurance, the growth has been across distribution touch points-bancassurance, and the new age ecosystem channels.
• HDFC recently sold some stake in HDFC Life due to regulatory requirements. RBI had asked HDFC to get the shareholding in both of its insurance subsidiaries to 50% levels which led to stake sale to comply before December 2020. Despite the stake sale, HDFC will continue to remain the promoter in the foreseeable future.
• Penetration levels remaining so low, the growth opportunities for HDFC Life are enormous.
• Sanchay policies- the company keeps repricing it and over the past 18-24 months since the product was launched, pricing for new policies has moved in tune with the interest rates.
• The company’s focus has been on prompt protection-mortality, morbidity, longevity and interest rate risk.
• Unit linked products are continuing to see an uptick as there is a recovery in the equity market.
• Covid-19 products are awaiting approval and it is in combination with having an indemnity on covid and is expected to do well. There is an uptick on the Covid-19 claims, which is within the company’s actuarial assumptions.
• The protection products witnessed 38% growth and is one of their best performing products, followed by Sanchay product. Sanchay par advantage has catapulted to 30-35 % of their business and is under the participating umbrella of products.
• They expect a high single digit growth for Annual Premium Equivalent (APE) for FY21E. On Value of New Business (VNB), this year is going to be flat, and margins are expected to be at the same level as FY20.

Consensus Estimate: (Source: market screener website)
• The closing price of HDFC Life was ₹ 666/- as of 24-November-2020. It traded at 97x/ 83x/ 66x the consensus earnings estimate of ₹ 6.9/ 8.0/ 10.1 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 642 implies a PE multiple of 64x on FY23E EPS of ₹ 10.1/-.
• In the case of life insurance companies, the embedded value per share is the correct multiple for valuing the company. The consensus estimate of this metric is not available on any of the websites.

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 HDFC Life Insurance, Life Insurance , , 0 Comments Read more...
17 Nov

Not keen on diversifying at this point – M&M

Update on the Indian Equity market:
On Friday, Nifty50 ended 0.2% higher at 12,720. EICHERMOT (+7.4%), BAJAJFINSV (+3.7%), and COALINDIA (+3.1%) led the index gainers while TATAMOTORS (-3.3%), LT (-2.0%), and HDFC (-1.1%) led the laggards. Among the sectoral gainers, METAL (+1.7%), REALTY (+1.3%), and PHARMA (+1.1%) were the leaders while MEDIA (-0.9%), and FMCG (-0.1%) were the only index losers.

Excerpts of an interview of Mr. Anish Shah, MD & CEO-designate, M&M published in Business Standard on 12th November 2020:
• The stock price has more than doubled since March. The board’s decision to not invest in SsangYong was important and signaled to investors that the management is serious about capital allocation.
• The next re-rating will happen once the international subsidiaries turn around and start contributing to earnings. The second set of actions is toward driving the growth of the domestic business. Third, they have identified significant growth drivers for the future, which are termed ’10 gems’.
• They are conducting a detailed analysis of growth drivers of international subsidiaries’ performance; does it have the potential for an 18 percent return on equity? They are working to see if they can revisit their go-to-market, product, and channel strategies. The subsidiaries will have to show a profitable path.
• M&M was the best performing stock in the Nifty for 17 years. Though acquisitions were made even then, that was driven by a very high level of fiscal discipline. Now, the acquisitions will be made, just that the bar in terms of fiscal discipline will be as high as it was in the past.
• They don’t expect to diversify even when they make an acquisition. There are 10 businesses right now and they believe there is a lot of potential to grow. They are keen on scaling up the diversified footprint.
• The joint venture with Ford has been delayed because of the pandemic and government approvals.
• There is a lot of synergy from material costs in the auto and farm equipment segments. They announced the best-operating margins and that is why those segments will be together.

Consensus Estimate: (Source: market screener website)
• The closing price of M&M was ₹ 629/- as of 13-November-2020. It traded at 23x/ 17x/ 15x the consensus earnings estimate of ₹ 26.9/ 36.7/ 41.1 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 667 implies a PE multiple of 16x on FY23E EPS of ₹ 41.1/-.
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, Mahindra & Mahindra , 0 Comments Read more...
05 Nov

Covid tailwinds led to a 50% growth in Healthcare – Dabur India

Update on the Indian Equity market:
Amid the uncertainty surrounding the US Presidential election outcome, Indian markets remained volatile on Wednesday. The Nifty50 ended marginally higher at 11,909 (+0.8%). Among the stocks, INDUSINDBK (+4.9%), SUNPHARMA (+3.7%), and DIVISLAB (+3.6%) ended the day higher. UPL (-3.9%), AXISBANK (-2.6%), and HDFC (-2.2%) led the losers. Among the sectoral indices, PHARMA (+2.2%), IT (+1.8%), and AUTO (+0.7%) led the gainers. REALTY (-1.9%), METAL (-0.3%), and FINANCIAL SERVICES 25/50 (-0.1%) led the losers.

Excerpts of an interview of Mr. Mohit Malhotra, CEO, Dabur India published in Mint on 4th November 2020:
• Dabur India recently reported 2QFY21 numbers with ~17% domestic volume growth compared to a year ago. There has been an all-around recovery- economy, rural, urban opening up, modern trade opening up, and e-commerce.
• Healthcare got a tailwind and continues to do well; home and the personal care portfolio have seen a sequential recovery in all the sub-categories.
• Healthcare has grown by 50%, out of which health supplements grew by 70%. That is the one that has driven growth.
• Consumption is very muted and the whole mindset is about saving and not splurging. That is why most discretionary products have not yet picked up. In-home consumption continues and this will sustain over a period of time.
• This quarter, the contribution of new products was ~5-6%. The new product launches are not just in categories but also specific to channels, such as e-commerce first products. Dabur is also trying to get into adjunct categories around its power brands, so it is both line and brand extensions. These new launches have also helped drive growth in revenue.
• Covid-19 has been an inflection point for Dabur. There are some fundamental changes being made, in both go-to-market and the way they look at categories, and capitalizing on the opportunities. Capitalizing on e-commerce will help connect with the millennials and urban consumers while strengthening the rural distribution will help resonate with the rural consumer.
• The casual labor force suffered the most due to the outbreak of the virus and they were the ones who went back. Since that labor didn’t come back, there was some hiring from the remote parts of Jharkhand and some other states. Initially, there was some productivity fall and now, post-training, they are at 100% of pre-covid levels.
• The rural growing significantly ahead of urban is expected to continue for a while.

Consensus Estimate: (Source: market screener website)
• The closing price of Dabur India was ₹ 519/- as of 04-November-2020. It traded at 55x/ 48x/ 42x the consensus earnings estimate of ₹ 9.5/ 10.9/ 12.4 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 544 implies a PE multiple of 44x on FY23E EPS of ₹ 12.4/-.

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.”

By Dabur, FMCG , , 0 Comments Read more...
29 Oct

Operations back to pre-Covid levels – JSW Steel

Update on the Indian Equity market:
Amid weak global cues from spiking Covid-19 cases worldwide and uncertainty over the US presidential election, Nifty 50 ended 1.3% lower at 11,730 on Wednesday. Among the stocks, BHARTIARTL (3.4%), UPL (+2.8%), and M&M (+1.2%) led the gainers while HDFC (-3.5%), INDUSINDBK (-3.2%), ICICIBANK (-3.2%) led the losers. None of the sectoral indices ended the day in the green. FINANCIAL SERVICES (-2.3%), PRIVATE BANK (-2.2%), FINANCIAL SERVICES 25/50 (-2.1%) led the losers.

Excerpts of an interview of Mr. Seshagiri Rao, Joint MD, and CFO, JSW Steel with Financial Express on 27th October 2020:
• JSW Steel reported strong numbers for the September quarter with improvement in revenues and margins. Volumes were significantly better, both on a YoY and MoM basis. There has been a strong recovery in business activity as compared to 1QFY21. Although there are certain seasonal factors that impact demand in 2Q the overall environment is upbeat and expects the second half to see strong growth momentum.
• There is a very good improvement with regards to offtake by the auto sector. The revival in the auto sector was unexpected and sales to the auto industry went up 33% YoY.
• Although the commercial sector is still lagging, tractors, two-wheelers, and passenger vehicles are doing reasonably well. The demand is not expected to weaken in 2HFY21, on account of the festive season and the government’s attention to give fiscal stimulus. Demand will definitely see an MoM improvement, though YoY improvement will still take some time.
• There is good traction in the coated steel products, appliances, packaging, solar and government-aided projects. Rural demand is resilient and good monsoon and government initiatives will improve demand further.
• Long product demand was impacted by the monsoon and remained low. Construction activity has gained pace now and both 3Q and 4Q are expected to see good demand. Packaging and color-coated areas saw good offtake, which is expected to continue the rest of the year.
• Operations are back to pre-Covid levels and achieved average capacity utilization of around 86% in the quarter, versus 85% in 2QFY20. There were some disruptions due to the unavailability of iron ore and due to the increase in exports, evacuation of iron ore from other mines remained a challenge. The company is hopeful of the situation normalizing in the next quarter.
• In the second quarter, the steel prices have gone up by 11% and international prices have gone up by 16%. There has been an improvement in sales realizations, though realizations in India are increasing at a slower pace compared to that globally.
• The costs during the quarter were lower on account of the natural gas price which has come down. The power cost is lower because thermal coal prices have come down. Iron ore prices have gone up due to supply constraints. They will be able to reduce the cost of transporting iron ore from the mine to the railway siding, to an extent. They are also working on reducing the mining costs and want to set up a slurry pipeline to bring iron ore from the mine to the port. Though that will take time, once construction is completed, logistics costs will reduce drastically.
• The share of value-added and special products has now increased substantially to 51% of sales volume. There is substantial demand for color-coated products is on the rise from steel-using industries. There are plans to expand capacities at the Vasind, Tarapur, and Kalmeshwar plants by the end of this financial year.
• Once the high margin business like Asian color coated started coming in, margins will also get a lift.
• The NCLT has given approval for the plan to acquire the Asian Colour Coated Company. They are awaiting the final order to see if there are any modifications.
• They expect the Bhushan Power and Steel resolution to be settled by December 2021.

Consensus Estimate: (Source: market screener website)
• The closing price of JSW Steel was ₹ 306/- as of 28-October-2020. It traded at 18x/ 12x/ 10x the consensus earnings estimate of ₹ 17.3/ 26.3/ 30.4 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 303 implies a PE multiple of 10x on FY23E EPS of ₹ 30.4/-.

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.”

By JSW Steel , , 0 Comments Read more...
21 Oct

4QFY21 Revenue run rate to be same as 4QFY20 – LT Technology Services

Update on the Indian Equity market:
On Tuesday, Nifty 50 ended 0.2% higher at 11,897. The gainers were led by HCLTECH (+4.3%), TECHM (+3.2%), and ASIANPAINT (+2.9%), while BRITANNIA (-5.8%), ONGC (-2.6%), and GAIL (-2.3%) led the losers. Among the sectoral indices, REALTY (+3.9%), MEDIA (+2.0%), and IT (+1.4%) led the gainers. PSU BANK (-1.4%), FMCG (-0.4%), and METAL (-0.2%) were the only losers.

LTTS recently released its earnings for 2QFY21. Mr. Keshab Panda, MD, and CEO of L&T Technology Services (LTTS) discussed the result and outlook for FY21 with CNBC TV-18 on 20th October 2020:

• At the beginning of the outbreak of Covid-19, the company took some measures: investment required in new technology, the business model required for each segment, and different geography. These have helped achieve sequential growth in each segment.
• All 5 segments will grow sequentially going forward. The company will offer the new technology demanded by customers quickly in the post-Covid era.
• There are two reasons for ~160 bps improvement in margins sequentially. First, revenue increased 4.1% QoQ and there has been a 4.5% increase in utilization in Q2. There is some room for improvement in the coming quarters as well.
• LTTS has learned that solution selling. To give an example, their medical devices segment which is doing well, they are thinking of taking it to the pharmaceutical and provider space.
• There are multiple levels- operational lever, solution offering lever, and business mix for margin growth going ahead.
• Margin growth depends on the business mix. Some of the segments they have are highly profitable and some segments are not as profitable. Telecom, industrial, and plant engineering have higher segmental margins compared to hi-tech, and part of the transportation subsegment.
• Another parameter is the offsite-onshore ratio. LTTS did well in Q2 and moving forward if customers believe the work can be done from home, the work will be done from India. Higher engineering offshoring will also add to margin improvement going ahead.
• Revenue and margins are expected to be better in Q3 and Q4. The management has guided for a revenue decline of ~7-8% for FY21.
• They intend is to come back to growth as soon as possible. Q1 suffered a drop in revenue and cash flow issue and realigning will take some time.
• Goal is that the 4QFY21 revenue run rate should be the same as 4QFY20.
• The impact of furlough coming in 3Q for LTTS is not clear yet. The positive side is the pipeline and orders in hand and how soon the proposals are accepted by customers.
• Sizeable deals got pushed to Q3 as the decision-making circle is a little longer today than in pre-Covid. Some analysis which was not done by customers in pre-covid is been done today. Cost-saving, analysis of cash flow, business model, credentials -all these are analyzed extensively post Covid.
Consensus Estimate: (Source: market screener website)
• The closing price of LTTS was ₹ 1748/- as of 20-October-2020. It traded at 27.7x/ 21.9x/ 18.8x the consensus earnings estimate of ₹ 63.2/ 79.7/ 93.0 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 1537 implies a PE multiple of 16x on FY23E EPS of ₹ 93.0/-.
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 IT, LTTS , , 0 Comments Read more...
13 Oct

Demand to bounce back as festive season approaches – Dalmia Bharat

Update on the Indian Equity market:
On Monday, Nifty50 ended marginally higher at 11,931 as the Finance Minister announced fiscal stimulus measures. Among the sectoral indices, IT (+1.7%), PHARMA (+0.9%), and FMCG (+0.3%) were the only gainers while MEDIA (-2.4%), PSU BANK (-1.7%) and REALTY (-1.1%) led the losers. Among the stocks, INFY (+2.9%), ITC (+2.7%), and UPL (+2.0) led the gainers while BHARTIARTL (-2.8%), JSWSTEEL (-2.7%), and GAIL (-2.6%) led the losers.

Excerpts of an interview with Mr. Mahendra Singhi, MD and CEO of Dalmia Bharat with CNBC TV-18 which aired on 12th October 2020:
• The cement sector is on the path of revival. September demand vs the previous months of July and August is much better.
• The rural areas are showing good progress due to better economy or better policies from the government. The demand is increasing on a month-on-month basis.
• Both the urban and rural areas have shown good demand in the month of September as labor issues are being sorted. Sufficient steps to ensure the safety of the people have been taken. Now, the fear is reducing and people are assuming this to the new normal and working.
• Festival season is around the corner and demand is expected to bounce back.
• There was a 10% decline YoY in the months of July and August. September was 3-5% lower than a year ago.
• The cement sector is a localized business. Demand has been good in certain regions such as the North and Eastern parts of India due to a higher percentage of rural markets in those areas. Part of Southern states are still facing challenges.
• He expects the month of October 20 to be better than October 19.
• The company has completed the acquisition of Murali Industries. The revival activities for Murali industries has started and is expected to take nine months as the company was closed for a long time.
• The acquisition of Murali Industries and capacity addition at two plants is expected to increase the total capacity to 33,000 mn tonne by March 21.

Consensus Estimate: (Source: market screener website)
• The closing price of Dalmia Bharat was ₹ 790/- as of 12-October-2020. It traded at 36x/ 25x/ 13x the consensus earnings estimate of ₹ 22/ 31.4/ 60.2 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 959 implies a PE multiple of 16x on FY23E EPS of ₹ 60.2/-.

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 Cement, Dalmia Bharat , , 0 Comments Read more...
01 Oct

The pandemic has led to a behavioral change toward Health and Wellbeing – Tata Chemicals

Update on the Indian Equity Market:
On Wednesday, the consolidation in the equity markets continued with the Nifty ending marginally higher at 11,227 (0.2%). Among the stocks, GRASIM (+3.0%), TECHM (+2.8%), and TITAN (+2.6%) led the gainers while BPCL (-9.0%), BHARTIARTL (-3.7%), and TATASTEEL (-3.1%) led the laggards. FMCG (+1.3%), PHARMA (+0.5%), and IT (+0.4%), the three sectors considered defensive led the index gainers. METAL (-2.1%), PSU BANK (-1.1%), and REALTY (-0.8%) led the sectoral losers.

Edited excerpts of an interview with Mr. Rahul Gupta, Business Head, Nutritional Sciences, Tata Chemicals with ETHealthworld on 29th September 2020:
• One of the consequences of the pandemic has been a paradigm shift in the health consciousness and food preferences of consumers.
• Following a healthy lifestyle has increased the significance to increase gut health and immunity by following a healthier diet which includes consuming more fortified products. This increased inclination towards nutritional products and supplements coupled with the increasing disposable income is now changing the consumer’s purchasing pattern which has provided an impetus to the wellness sector.
• The F&B, pharma, and nutrition companies are forced to present well-researched and innovative products to suit the changing needs of the customers. The desire to build a stronger immunity and lead a healthier lifestyle will only evolve consumer behavior patterns towards the nutraceuticals industry.
• Tata Chemicals is witnessing 100% growth driven by a focus on health and immunity. The virus outbreak will reset the baseline for health and nutrition companies which will help reshape the market by offering products backed by strong science.
• Tata NQ, the nutritional solutions arm of Tata Chemicals has invested in researching new age products with the help of machine learning and big data at the R&D centers over the past years.
• The work on building one of the biggest global knowledge bases on the gut microbiome, mapping subjects across geographies, age groups, genders, sedentary habits, and other parameters is underway.
• The new trend in consumers’ food patterns is the inclusion of more immunity building nutrients in the daily diet to strengthen health and protect from the virus. There is a huge demand for preventive nutraceutical products and natural products in the market, across all age groups.

Consensus Estimate: (Source: market screener website)
• The closing price of Tata Chemicals was ₹ 300/- as of 30-September-2020. It traded at 13x/ 8x/ 7x the consensus earnings estimate of ₹ 23.5/ 35.9/ 41.3 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 327 implies a PE multiple of 8x on FY23E EPS of ₹ 41.3/-.
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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