Author - Richa Varu Rathod

  • Richa Varu Rathod
20 Jul

We will be very sensible in our lending – Federal Bank

Update on the Indian Equity Market:

On Friday, NIFTY ended up 162 pts (+1.51%) at 10,902. Among the sectoral indices, FIN SERVICE (+1.94%), PSU BANK (+1.84%) and AUTO (+0.73%) were top gainers while IT(-0.62%) was the only loser. Among the stocks, BPCL (+12.43%), ONGC (+5.84%) and INFRATEL (+4.32%) were the top gainers. HINDALCO (-1.90%), BRITANNIA(-1.86%) and NESTLEIND (-1.47%) were the top losers.

 

Edited excerpts of an interview with Mr. Shyam Srinivasan, Managing Director & Chief Executive Officer, Federal Bank with Economic Times dated 16th July, 2020:

We have grown ahead of the market for the last 14-16 quarters: Shyam Srinivasan

  • Comments on 1QFY21 result: 1QFY21 numbers are quite encouraging. It is quite a balanced outcome. There is no one area that has outdone or given unique benefits but it is spread out between both credit and deposits. Credit grew by 8% YoY. Federal Bank did have businesses like gold loan parts of retail and parts of commercial banking did very well, in particular, gold loan had a remarkably good quarter it grew by 10% QoQ and 36 % YoY. Good credit growth in the higher-margin products and low-cost deposits resulted in 12% income growth YoY. CASA deposit ratio has moved from 30.5% to 32%, So, the 150 bps increase in CASA is driven by sequential growth of 7% in savings. It is an improvement consistent with what the bank has been working on for many quarters and that is why the interest income was at an all-time high of Rs 12,970 mn.
  • Outlook on PCL (provision for credit losses) ratio he said that he would like the coverage ratio including technical written off to be well above 70% and currently it at 75%. Everything depends on how the next 2-3 quarters shape up, given all that is going on in the environment and the challenges that we are all facing. The bank wants to keep coverage portfolio well covered much higher than the likely loss given default. He added that when the bank’s loss given default was in the early 40s, they had a coverage ratio closer to 47-48. When they visualized that the environment is getting stickier and the loss given default might go up, they took the coverage up to almost 59. Depending on how things shape up, Federal Bank will be well provisioned.
  • On the NPA (Non-performing Assets) he stated that we are all part of the same economy so we cannot be totally insulated from all the challenges that globally everybody is facing, given the COVID situation. Federal Bank’s portfolio generally is more secured and a relatively higher credit standard book. For very long, net NPA is at 1.22. In fact, it had a 20 quarter low. This gives confidence that the bank is better placed now to face the likely challenges that may arise over the next six months-nine months. The provisions have been made and will keep increasing the coverage at every available opportunity and post the moratorium liftoff when you can really make sense of how the credit books of everybody is performing, the visible impact will be in September-20 and in the December-20 quarter. He further added that he won’t be able to guess the exact level of deterioration but the bank is ensuring and is in continuous dialogue with customers and expects the deterioration to be manageable.
  • Comments on declining operating profits: The sequential number on operating profit may not reflect the reality because last quarter there was a significant one-off gain on the treasury and the sale of investments was not there in 1QFY21. Rs 9,320 mn of operating profit in 1QFY21 and Rs 9,590 mn in 4QFY20, both are by way of record, the highest the bank has ever done. But Rs 9,590 mn had some larger one-off gains because of the sale of investments which do not repeat itself. In that context, Rs 9,320 mn 1QFY21 is a more sustainable credible consistent number. Operating cost efficiency increase is the productivity drive of the bank. There are many elements of activity going on and that will continue to improve. The Bank is centralizing, standardizing, renegotiating, and deferring a bunch of stuff to maintain the costs.
  • Guidance on NIMs (Net Interest Margin) going forward: In the last three quarters, margins have been moving up sequentially between 4 bps one quarter 3 bps in the next quarter. In the normal course of events, a similar kind of rate of increase could be seen, but we are in a relatively low-interest environment. To that extent, margin expansion does not happen significantly. Second, as credit slippages increase which is likely to happen after the moratorium is lifted off, there certainly will be impairment which will have revenue impact as well. He said that he cannot comment on NIMs but expects to keep the current level of margins which is their top priority and number one effort. For improvement on this, we will have to see how things shape up.

Consensus Estimate: (Source: market screener, investing.com websites)

  • The closing price of The Federal Bank was ₹ 52/- as of 17-July-20. It traded at 0.68x/0.62x the consensus BV estimate of ₹ 77/83.4 for FY21E/ FY22E respectively.
  • The consensus target price of ₹ 67.8/- implies a PB multiple of 0.81x on FY22E BV of ₹ 83.4/-.

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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09 Jul

Technology will drive the economic recovery – Tech Mahindra

Update on the Indian Equity Market:

On Wednesday, NIFTY ended down 94 pts (-0.87%) at 10,705.
Among the sectoral indices, METAL(+1.57%), FMCG (+0.84%) and PHARMA (+0.71%) were top gainers while AUTO (-1.95%),REALTY (-1.95%)and IT(-1.72%) were among the top losers.
Among the stocks, INDUSINDBK (+4.5%), VEDL (+2.7%) and JSWSTEEL(+2.31%) were the top gainers. BAJFINANCE(-4.62%), ZEEL(-4.6%) and ASIANPAINT (-3.25%) were the top losers.

Technology will drive the economic recovery: Tech Mahindra CEO
Edited excerpts of an interview with Mr. C P Gurnani, Chief Executive Officer, Tech Mahindra with Economic Times dated 7th July, 2020:

Need for digitalisation is on a high and so it is still advantage Indian IT industry.
Manufacturing, travel, logistics, hospitality are some of the sectors re-inventing themselves to be future ready and we are helping our clients to cope with the post Covid world., says CP Gurnani, CEO, Tech Mahindra

• When asked about his views on future of IT companies, he said that most of the Tech M family have remained safe and healthy, the pandemic have impacted few lives and locations. The command and control centre of the company is constantly monitoring the wellbeing of the employees.
• His comments on IT sector’s performance as compared to the month of Mar-20, now that the Pharma, financial and telecom sectors have normalized: He believes that here will be two quarters of stress and if the second wave is not that strong and till the time a vaccine is not discovered, overall global IT spend will come up. Technology will drive the economic recovery and the way consumption is done. So he remains optimistic but at the same time conscious that manufacturing sector, travel, logistics, hospitality are some of the sectors which are re-inventing themselves to be future ready ad Tech M is helping their clients to cope up with the post Covid world.
• When asked about IT budgets and client engagement he informed that they are all seeing increased demand from sectors like telecom, healthcare, pharmaceuticals, media and entertainment and e-education. So that is the positive side. The second positive side is the growth of the digital economy. The need for digitalisation has become equally important for the corner shops or the grocery shops. People now want to participate in the digital economy, even the retail sector. The stress is only for offline, the online retail sector is doing well. So technology and online services are playing a critical role during the lockdown and in a lot of ways, the feeling of optimism is relative and the relative part is where we will continue to see demand.
• When asked about his views on telecom sector and whether it is now going to be the driving vertical because globally spend in telecom and data is only going to intensify, is Tech M in a position to capitalise on it, Where does he see the telecom business moving for Tech Mahindra, he answered that a lot will depend on the next quarter results because all of us understand that the new age technologies like 5G, AI, machine learning, data analytics, Cloud, automation will be the drivers for change in growth for the telecom businesses. How we translate it into revenue will depend upon how these organisations respond to economic development or in certain cases, a little bit of a slowdown in the economy. He also requested to remember that at this stage the stimulus money has kicked in. The US is about 17-18% deficit, India would be about 7-8% deficit. If we follow the money and look at the digital requirements, there is business to be had but a lot depends on how the world responds over the next two quarters.
• When asked about the reason why market is not rewarding Tech M with best PE multiple and lower margins, he stated that the Board has asked for a plan which addresses three parts to what Tech Mahindra will do. Number one is the industry mix. Number two is geography mix. One of the biggest challenges, which is an advantage as well as a disadvantage is that US business is only 45-48%, the rest of the world is 55%. That has effectively meant the energies which have gone into operating in Latin America or operating in Africa could have been better used. Tech M is now working on a plan focusing on: a) geographic reach, b)service offerings and c)some of their big bets like 5G have been relatively slow but he committed to the board that we do understand the challenges. We are going to follow the path of differentiated connected solutions strategy at the same time, we need to do a better job of choosing a few of the geographies particularly where because of the local labour policies, it becomes very difficult to operate profitably. So we are conscious of the need for turnaround or transformation. We are very clear and know the direction, now we need to bring in the speed.
• When asked whether the Covid crisis have pushed the plans forward by 6 or 12 months, he replied that he will attend the financial analysts meet himself in November-20 and would give definitive answers. Till that time, because of the uncertainty called Covid he would want to reserve his comments but the strategy, direction and speed — all three are high on his radar.
• His views on work from home: Today, 93% people are working from home. About 6% to 7% go to work which is also because there are clients in Australia, Philippines, some in the US, who have restrictive and more stringent policies. So till December, the ratios are not going to dramatically change. Most of the clients have accepted that work from home is the reality. The positive outcome to all of this is that most of us are now becoming a lot more conscious about data security, cyber security and making sure that we use and equipment which are part of the Tech Mahindra ecosystem. The last thing you want is risks off too much of distributed processing. So 25% to 30% work from home is a given in the future. People like him would still go to office because some people like to interact with people, to have some cooler talk, go to the canteen and ask people for feedbacks and listen to them. Similarly, he would like to visit his customers. So, he thinks about 25% to 30% at any given point of time will be work from home. About two days in a week, people would like to come back to work. The structured interactions, the whole human machine technology refresh will happen in those two days a week. It is interesting times, but the new normal is here to stay.
• When asked about the cost structure and any chances of cost reduction due to work from home he said that in a lot of ways most of Indian IT companies despite being a $181 bn business had stopped investing a lot on campuses. The reason was that most of the growth was coming which was non-linear growth. Number two, it is also evident that if 25% of the workforce is common for everybody, then we do not need commercial space for a long time.The third part is it is not that the employee cost or the infrastructure cost will come down dramatically. Wewill have to start providing some level of allowances which compensate because people are not spending their time and energy from coming to the workplace. In balance, it is a good thing for the industry. It is a great thing for the gig economy, it is almost a wonderful thing for a flexible workforce and it is a wonderful thing for adoption of AI and machine learning.
• His outlook on India specific business for IT companies as no Indian IT company gets even 10% of the business from India : Most of us are hesitant about India business. Nasscom has been trying to persuade various government departments on the payment terms. Unfortunately, what has happened is that IT buying is almost like they used to buy hardware where the manpower cost was probably 6% or 7%. Today the manpower cost in any IT project is 60% to 70%. So, in payment terms and the way acceptance of the solution is addressed, the Indian government has not adopted itself to the new normal. We have seen it in the last two-three years that the Indian IT spending may have gone up, but the players which are participating, have only got very limited. India Inc has to spend more on IT needs. It has to realize the need for cloud, need for cyber security is very high and at the same time it has to take into account that whether we like it or not, employee payroll has to be delivered every month and you cannot have a situation where an employee works for a project and get paid after a year.

Consensus Estimate: (Source: market screener, investing.com websites)

• The closing price of Tech M was ₹ 582/- as of 08-Jul-20. It traded at 14x/12x the consensus EPS estimate of ₹ 40.8/50.3 for FY21E/ FY22E respectively.
• The consensus target price of ₹ 647/- implies a PE multiple of 12.9x on FY22E EPS of ₹ 50.8

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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30 Jun

We import as there is little choice, should be self-reliant – Maruti Suzuki

Update on the Indian Equity Market:

On Monday, NIFTY ended down 71 pts (-0.7%) at 10,312 amid weak global cues.
Among the sectoral indices, FMCG (+0.7%) was the only gainer while REALTY (-3.6%), PSU BANK (-3.3%) and METAL (-2.6%) were among the top losers.
Among the stocks, BRITANNIA (+2.1%), HDFCBANK (+1.8%) and CIPLA (+1.4%) were the top gainers. COALINDIA (-5.0%), AXISBANK (-4.7%) and TECHM (-3.2%) were the top losers.

We import as there is little choice, should be self-reliant – Maruti Suzuki

Edited excerpts of an interview with Mr. R C Bhargava, Chairman, Maruti Suzuki with Business Standard dated 28th June, 2020:

• The answer to calls for boycotting Chinese imports lies in making Indian manufacturing much more competitive, deeper and widespread, but people should remember that shunning products from the neighboring country may lead to them paying more for goods.
• While stating that importing continuously for long period is not really in anybody’s commercial interest, he also asserted that certain products continue to be imported as there is little choice in the matter due to their non-availability in India, or because of quality and pricing issues.
• Everybody knows that importing products over time actually becomes more and more expensive as the rupee gets weaker. If you were importing something 10 years ago, the same product today will cost 60-70 % higher. So it is not really in anybody’s commercial interest to continue to import, you import because you really have little choice in the matter.
• The answer to the sentiments which are being expressed is to make Indian manufacturing much more competitive, much deeper, and much more widespread. What the Prime Minister has said about ‘Atmanirbhar’ means exactly that. If you start making more products in India at competitive prices, people will not import those products.
• Asked if companies, including those in the automotive sector, need to worry in the wake of rising voices against Chinese imports following Indo-China border clashes in Ladakh, Mr. Bhargava commented that this is a natural reaction to what has happened on the border. We had this happen with Pakistan also. It doesn’t become policy. He thinks the policymakers think carefully before they make or unmake a policy. They don’t react to popular sentiments.
• Explaining why industries in India import, he said that the reason why anybody imports is that either the product is not made in India, not available or what is made in India is not at the right quality or the product made in India is too expensive.
• He also underlined the need to understand whether stopping import will hurt or benefit India. If it is non-essential products it will not hurt us, but if it is essential then stopping imports is going to hurt us much more than it will hurt China. We need to see what the import is, what does it do to our whole industry, whether stopping imports is going to hurt us or benefit us.
• When asked if importing from China is inevitable under the current circumstances, Mr. Bhargava stated that it is inevitable unless we can find alternative sources of imports and which do not raise the prices to a level that consumers will get hurt.
• We should remember that consumers ultimately pays the price of imports, the same people who are asking for a boycott have to remember that in some cases it may lead to them being asked to pay more for the same product and asked are they ready for that.
• He also called for a comprehensive understanding of the circumstances and taking informed decisions on the pros and cons of importing from China before being swayed by sentiments.
• In case of stopping imports from China consumers will not get a car if a car has 2 per cent Chinese imports. He asked that if we stop that 2 per cent and stop making the car, who will it hurt, India or otherwise, how many jobs will Indians lose, how many people will lose a living, how much taxes will be lost.
• Commenting on instances of consumers cancelling bookings of vehicles from a Chinese auto firm, he said that it is the expression of a sentiment and he understands popular sentiment.

Consensus Estimate: (Source: market screener, investing.com websites)

• The closing price of Maruti was ₹ 5,701/- as of 29-Jun-20. It traded at 39x/25x the consensus EPS estimate of ₹ 147/231 for FY21E/ FY22E respectively.
• The consensus target price of ₹ 5,519/- implies a PE multiple of 24x on FY22E EPS of ₹ 231/-.

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 Jun

A slew of health and wellness products to be rolled out soon: ITC

Update on the Indian Equity Market:

On Wednesday, NIFTY ended down 33 pts (-0.3%) at 9,881 as investors remained cautious amid geo-political tensions between India and China at the Ladakh border. Further, a steady rise in Covid-19 cases, both in India and globally, also dented investor sentiment.
Among the sectoral indices, MEDIA (+1.7%), AUTO (+0.8%) and REALTY (+0.8%) were among the gainers while FIN SERVICE (-0.8%), METAL (-0.8%) and FMCG (-0.5%) were among the top losers.
Among the stocks, MARUTI (+4.1%), BHARTIARTL (+3.4%) and WIPRO (+2.5%) were the top gainers. INFRATEL (-4.5%), KOTAKBANK (-2.3%) and ITC (-2.2%) were the top losers.

Mr B Sumant, Executive director of ITC, in an interview said the company has always been ‘vocal for local’, and has introduced products designed in India, sourced in India and made in India. Here are the excerpts of the interview with Business Standard dated 17th June,2020:

• On capacity utilization rate, he said ITC is meeting market demand for its products. The way they design their factories – the ‘Make in India’ Integrated Consumer Goods Manufacturing and Logistics (ICML) facilities that are spread across the country, it is for the long term. So, they always keep enough extra reserve capacity in all plants.
• There were many challenges when they started the operations, but now they have adapted with agility to the new ways of working which includes adhering to all social distancing and hygiene norms. ITC had to realign all its operations adjusting to the new normal.
• Food sales have seen a gradual evolution during the pandemic. The first phase of the lockdown was all about consumers stocking essential products, including staples and spices. Then, people realized that this was going to continue for a while and products like biscuits and noodles started selling. Then over time, consumers also went on to buy discretionary food products like snacks and chocolates. Now, people realise that the current situation is here to stay for a while so normal consumption is progressively being resumed. A lot of do it-yourself products are getting preference as people are trying to recreate the experience of a restaurant at home.
• ITC has launched a range of innovative products in the health and hygiene space during lockdown:
o They witnessed demand for surface cleaning and came up with the Savlon disinfectant spray, which was created in a record time.
o Nimwash, a fruit and vegetable cleaning product.
o Savlon Wipes, another product suiting the times and designed for convenience.
o 50 paise Savlon sachet, taking the sanitizer to the masses.
o B Natural + in association with Amway, where a natural immunity building ingredient was included.
• ITC is also working on a range of products where clinical trials are going on. There is a pipeline of health and wellness products that will be rolled out going forward.
• When asked about any thought regarding change in rural strategy with the changing landmark, he replied that ITC’S multi-pronged presence and engagement with rural areas is quite extensive and an area that receives significant strategic consideration. Given that the recent reforms can give new wings to the critical food processing sector, ITC’S continuing farmer engagements, agri-linkages, distribution reach and initiatives are well poised to respond to the emerging demand impulses. ITC has been focusing on expanding our presence in the rural markets even before the pandemic.
• When asked how sunrise would add value to Ashirvad, he said that Spices is a local business — every locality, every state and every province have their own taste and flavor preferences. Sunrise is very popular in the east — it has got a wide range of products.
• ITC has always been vocal for local. Over the years, they have invested extensively in developing a vibrant portfolio of world class Indian brands which support millions of farmers and creates largescale livelihoods in the country. A bouquet of 25 Indian vibrant brands have been created from scratch. As a relatively late entrant into FMCG, they were up against all the global giants. But ITC went extra lengths to bring in differentiated products and are proudly Indian because all their world-class products are designed in India, sourced in India and made in India with Indian R&D capabilities.
• As a part of their “Nation First” philosophy, ITC focus on domestic procurements, unless circumstances compel to do otherwise. For Fabelle, for example, the chocolate comes from Madagascar because India is not a chocolate growing country. The ingredient is grown only in certain parts of the world. A majority of ITC’S brands anchor domestic agri value chains and create largescale livelihoods. B Natural, ITC’S fruit juices and beverage brand sources fruits directly from Indian farmers instead of importing concentrates. Also, its notebook brand Classmate sources pulp through largescale forestry programmes. Similarly, ITC’S Mangaldeep brand of agarbattis supports indigenous bamboo value chains, instead of importing raw agarbattis.

Consensus Estimate: (Source: market screener, investing.com websites)

• The closing price of ITC was ₹ 181/- as of 17-Jun-20. It traded at 15.8x/13.9x the consensus EPS estimate of ₹ 11.9/13.5 for FY21E/ FY22E respectively.
• The consensus target price of ₹ 235/- implies a PE multiple of 17.4x on FY22E EPS of ₹ 13.5/-.

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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10 Jun

May have to give incentives to bring labor back: L&T

Update on the Indian Equity Market:

On Tuesday, NIFTY ended down 120 pts (-1.2%) at 10,047 level amid see-saw trade as traders booked profit in recent gainers like banking shares. Lower opening of European shares also weighed on sentiments.
Among the sectoral indices, PHARMA (+1.8%) and FMCG (+0.8%) were among the gainers while MEDIA (-3.3%), BANK (-2.2%) and PVT BANK (-2.0%) were among the top losers.
Among the stocks, DRREDDY (+3.8%), INDUSINDBK (+2.7%) and SUNPHARMA (+1.9%) were the top gainers. ICICIBANK (-3.7%), WIPRO (-3.69%) and GAIL (-3.68%) were the top losers.

Edited excerpts of an interview with Mr. SN Subrahmanyan, Managing Director, Chief Executive Officer, Larsen & Toubro’s L&T with CNBC TV-18 dated 9th June,2020:

• Construction engineering major Larsen & Toubro’s (L&T) Managing Director and CEO, SN Subrahmanyan, on June 8, said that he did not expect any major private investments in India over the next 1-1.5 years. It is maybe a tough statement to make, but that is the way he looks at it. Existing capital expenditure on projects that are already in play will move on, but he doesn’t see any fresh capital induction.
• The company announced a final dividend of Rs 8 per share of the face value of Rs 2 each.
• Mr Subrahmanyan said that the company had seen normalcy come back to some extent in the last three weeks i.e. from Mid-May-2020.
• He also informed that all the factories are back in operation. On the project size, L&T have currently about 950 odd sites and about 90 percent of the sites have started working.
• He, however, said during COVID they had kept around 1,60,000 laborers in labor camps which went down to 70,000 around the month of May-20 and currently the company has only 1,20,000 laborers compared to the 2,20,000 in the pre-COVID period.
• He stated that to get back to normal working L&T needs about 220 thousand laborers. L&T is working on bringing the laborers back to work and expects in another 15-30 days labor availability should be there and it should get back to some kind of normality.
• Normally the laborers go and come back to work 3-4 times during a year for Holi season, Kharif season, marriage season, and Diwali festival season. But this time the situation is different and might be difficult for L&T to bring back the laborers.
• L&T has an app where it has mapped down the names, addresses, phone number and other details of more than 2 mn laborers and are constantly messaging and trying to get in touch with the laborers to get them back.
• Normally Q2 is monsoon season which is relatively low for L&T but this time L&T has put in systems where it can double up the work to compensate the work lost at least partially.
• Mr Subrahmanyan said that fear psychosis and herd mentality had led to labor exodus and further the psychological pressure may hold the workers back. He further added that L&T might have to give some incentives to bring labor back.
• Talking about the impact of COVID-19 on the business, he further added that some billing has taken place in April-20 and May-20 but not to that extent. He expects some recovery in the month of Jun-20.
• He said that overall L&T have backlog of ₹ 15,000 crs of sales, so in the balance 9-10 months of the year L&T needs to catch that up and see how to make it up.

Consensus Estimate: (Source: market screener, investing.com websites)

• The closing price of L&T was ₹ 951/- as of 09-Jun-20. It traded at 18.3x/13.5x the consensus EPS estimate of ₹ 52.5/71.3 for FY21E/ FY22E respectively.
• The consensus target price of ₹ 1160/- implies a PE multiple of 16.3x on FY22E EPS of ₹ 71.3/-.

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.”

By L&T 0 Comments Read more...
01 Jun

Tough for industry to crank up quickly: TVS Motor Company

Update on the Indian Equity Market:

On Friday, NIFTY ended up 90 pts (+0.9%) at 9580 levels ahead of the release of GDP data for the January-March quarter of 2019-20 (Q4FY20). Among the sectoral indices, REALTY (4.3%), PHARMA (3.2%) and FMCG (3.0%) were among the top gainers while IT (-0.1%) and MEDIA (-0.04%) were the losers.
IOC (+7.5%), WIPRO (+6.3%) and ONGC (+5.1%) were the top gainers. AXISBANK (-2.3%), BHARTIARTL (-2.3%) and ADANIPORTS (-1.5%) were the top losers.

Edited excerpts of an interview with Mr. Venu Srinivasan, Chairman, TVS Motor Company:

TVS Motor Company Chairman speaks of the challenges ahead while easing the lockdown. Mr. Srinivasan believes the devastation caused by the pandemic is not going to disappear in a hurry

• His comments on COVID-19: It is going to be a very painful period in our economic history. He thinks we have to hunker down and go through it because there is definitely no stop to this infection. The truth is that Covid-19 is likely to stay around for a long, long time to come. Being a fast mutating virus, a vaccine may not be found very quickly either. Yet, the good part at least for now is that it is not so fatal, which means we will learn to get on with our lives and live with it. As he explains, this is information based on over five months of the virus being studied internationally which, in turn, could have played a key role in prompting many countries to ease up their lockdowns.
• During this time, there have been more updates coming in about Covid-19 and many Indian States have decided to open up factories in recent weeks. However, the recovery process will take time, especially when you have clogged all the wheels of the industry with grease which has caked and stuck. Add some rust to this and it is obvious that you cannot just switch it on and expect it to run.
• Srinivasan said that the top priority is to protect factories from accidents and make sure that all safety norms are in place. Right from furnaces to chemical reactors and heat exchangers, everything needs to be reset. Across the country, you have to evaluate the status of the plant and make sure that it is done in a systematic process.
• There are other challenges to contend with as the industry slowly limps back to a state of normalcy. Companies need to cope with the reality that lots of people, including the younger lot, are not turning up for work.
• For those living in containment zones, he advised them to stay there and not come to work since others will be put to risk in the process. However, there are people who are not in the containment zone but are still refusing to come to work because there is pressure from parents, spouses, children, and peers. There is a lot of fear but people are slowly coming in and we will have enough at work in TVS added Mr. Srinivasan.
• The situation is a lot more complex for ancillary suppliers, especially the small ones, categorized as Tier 2/3 vendors. These entities employ a lot of migrant labor who are clearly in no mood to return to the cities in a hurry.
• He also stated that migrants who have gone back with great difficulty to their villages while paying large sums of money. Some have even entirely lost their savings and they are not going to come back just because you say jobs are open from tomorrow.
• In this backdrop, he believes that it will take four to twelve weeks for “this wheel to start up and get running”. It is not as if everybody is going to come to work because factories are open, especially when it involves units which are further down the automotive supply chain. These encompass smaller ancillary suppliers with low value-added manual jobs and the impact will be even more significant for them. In and around Chennai, continues Srinivasan, there is a large migrant population in these small and medium auto ancillary units. Likewise, the construction industry is also “largely migrant-driven” and a major provider of employment.
• Given the situation, whatever we do, the industry cannot crank up that quickly. And once we crank up, he is not sure if demand is going to come back that quickly either said Mr Srinivasan.
• In other words, it is not just a question of production but also of demand which will take a few quarters coming through the system.
• He said that it is anybody’s guess if it will be two or three quarters even while pessimists are talking of six quarters. We have to see it day by day.
• No wonder he describes this as “an unprecedented situation” where the whole world has been compelled to opt for a lockdown. India was no exception to the rule either.
• He also added that when Covid first struck, there was nothing known about it and we had to take drastic action to protect our society. A few months have gone by and serious studies have shown that there is going to be no quick breakthrough in a vaccine.
• The good news for India is that the fatality rate is very, very low, unlike North America or Europe which have seen huge losses of lives. The next step, according to Srinivasan, is to evaluate the cost of livelihoods lost versus lives lost and the right thing to do now is to gradually and selectively open up the economy.
• However, this has to be done with care, especially if there is a big spread and hence the need for a phased/gradual manner he said. It is also clear now that it is better to quarantine the vulnerable part of the population rather than the whole country.
• WFH positives: From TVS Motor’s point of view, the entire exercise of working from home (WFH) has had some interesting positives. He observed a lot of staff functions that are not needed any more. Similarly, area and regional offices are not needed either since many of the people can work from home elaborated Srinivasan.
• Likewise, travel can reduce by up to 50 per cent on an average, especially air travel, which will come down dramatically. As he puts it, there is so much time lost going to the airport, being screened amid tight security before flying out and then spending time on the road all over again before reaching the final destination. We now realise that any time we went to meet someone for an hour, we ended up travelling seven hours from Chennai to either Mumbai or Delhi. Now, with digital taking over in the Covid-19 world, many meetings can be done comfortably online. Yet, it is not as if the physical part will be taken over completely since we also need to see people in board meetings and their body language, especially if someone is objecting to a certain proposal.
• He further added that there is the limitation of video conferences, where one only sees the person who is speaking. All meetings cannot happen online.
• According to Srinivasan, it is also difficult to predict all the changes that will happen in a post-Covid world. One school of thought subscribes to the belief that everyone will be hesitant to travel by public transport and private ownership of cars and two-wheelers will grow.
• From Srinivasan’s point of view, the positives will be better hygiene standards at least till the fear lingers and some paranoia persists. Likewise, he adds, personal space/distancing will grow with hugging and physical displays of affection taking the backseat.
• On the business side, digital buying of vehicles will increase and customers will be happier to check out road tests, spec comparisons and reviews online before zeroing in on a certain car or two-wheeler. This will save needless trips to dealerships.
• There has been a lot of debate on the excessive dependence on China as a single supply point for sourcing components especially during the pandemic. More recently, geopolitical tensions have peaked with the US, Australia and some European nations clearly livid with China for, what they feel, its alleged role in unleashing Covid-19 on the world.
• According to Srinivasan, long supply chains are going to be suspect going forward and manufacturers will have to produce some significant quantity in the free trade region where they will be selling products. For instance, this does not have to be the US, but Canada or Mexico.
• He cites the example of TVS Motor which, two years ago, decided to go in for a de-risk strategy in sourcing from China. There was no Covid-19 in sight then but many of its Chinese suppliers relocated to India following a carefully thought out plan.
• He said that they felt that there were a dozen parts which came largely from China. Even if the value was merely 10-12 per cent, it just meant that a bike could not be produced without them. They took a decision that they had to be made here and it really helped them.
• While the lockdown pretty much ensured that the wheels of industry came to a grinding halt, the fact remained that the China shutdown was no threat to our production at all. This was not true for other automakers, who felt the pinch when supplies from China were cut off.
• With Covid-19, the need to produce closer to home has also become more pronounced. From the industry’s point of view, the pandemic has posed a huge risk in terms of wreaking havoc across the supply chain. Shutting down borders, logistics, transport and so on have only made the situation more complex in India.
• The good part is that the lockdown has seen cleaner air and rivers, which only reinforces the need to keep this going even after economic activity resumes optimally in the coming weeks. Srinivasan thinks this is also a good opportunity for the Centre to spend more on the Swachh Bharat Mission where 20 cities, for instance, can be earmarked for a zero pollution drive.
• He stated that we need rigid enforcement of laws in sewage treatment. Small industries were releasing untested sewage and this is a wakeup call for the country to take Swachh Bharat seriously in terms of recycling, cleaning and reuse.
• For the auto sector which has made big investments in Bharat Stage-VI emission standards, the key is to continue the effort towards cleaner mobility. He informed that there was some degree of over-enthusiasm to go all electric in two years, which is just not feasible.
• It is his view that the world will take a couple of years to get back to normal in an L-shaped, and not V-shaped, recovery curve. He sees this situation as an opportunity to reset use of people, buildings, energy, travel and everything in life. How much less can we live with in terms of eating out, having simpler food, not buying as many clothes or having as many haircuts!!

Consensus Estimate: (Source: market screener, investing.com websites)

• The closing price of TVS Motors was ₹ 337/- as of 28-May-20. It traded at 33.1x/21.6x the consensus EPS estimate of ₹ 10.1/15.4 for FY21E/ FY22E respectively.
• The consensus target price of ₹ 355/- implies a PE multiple of 23x on FY22E EPS of ₹ 15.4/-.

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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20 May

A big opportunity is beginning to unlock for us in the US: Cipla

Update on the Indian Equity Market:

On Tuesday, NIFTY ended up 56 pts (+0.63%) at 8879 level. Among the sectoral indices, MEDIA (2.0%), AUTO (1.03%) and IT (0.99%) were among the top gainers while PSU BANK (-2.59%), REALTY (-0.7%) and PVT BANK (-0.49%) were the losers.
BHARTIARTL (10.81%), ADANIPORTS (+9.0%) and ONGC (+5.69%) were the top gainers. UPL (-9.78%), VEDL (-2.65%) and RELAINCE (-2.2%) were the top losers.

A big opportunity is beginning to unlock for us in the US: Cipla

Edited excerpts of an interview with Mr. Umang Vohra, Managing Director (MD) & Global Chief Executive Officer (CEO), Cipla:

Our ambition is to dominate the inhaler space across all markets and offer solutions to patients, says Umang Vohra, MD & Global CEO, Cipla.

• His comments on Profit Margins: Company has guided at the beginning of the year and that is standing up at close to 19% range. The fourth quarter is usually off-season for the company and therefore historically, have always been subdued. There are some of the specific one-offs:
o Company was not able to invoice about Rs 2000 odd mn of sales on account of the last week of Covid closure and that is pretty high margin sales. The impact would have been directly on profitability.
o In comparison to the base in the previous year where there was a huge amount of cinacalcet sales, that is not the right comparison for 4QFY20 and for 1QFY21E too.
o Cinacalcet itself had some charges in 4QFY20 as exclusivity has ended.
o In the last six to nine months, a fair amount of cost and effort on the remediation was required for Goa which is now completely in numbers. The remediation effort and work for Goa that is required will finish approximately by June/July, 2020. The charges have largely been taken in 3QFY20.

• His views on sale pick up in the year to come – A pretty solid year is expected on account of Sensipar, Albuterol approval and also esomeprazole granules approval received in the last week of 4QFY20.
• When asked about the US market he informed that US is a 55 mn unit market and with the recent shortage of Albuterol in the US, it moved to a 50-65 mn unit market. On the branded side, it is close to 4 bn in sales across the three brands of Albuterol. It is a very significant and sizable market for Cipla to play in.
• When asked about the main growth drivers going ahead he commented that respiratory franchise might be boosted by another complex inhaler filing. The inhaler opportunity can add to position Cipla as the lung leader. Already, Cipla is number two in terms of both Metered-dose inhaler (MDI) and Dry-powder inhaler (DPI) sold worldwide, just with the number of devices that Cipla sells worldwide in both these categories. Company’s ambition is to dominate this space across all markets and offer solutions to patients which they are not getting today.
• Cipla had albuterol approved that is a great validation for MDI. The trial just finished and a filing is imminent in the next one or two days for the Advair product which is a product that many companies have struggled to get a first part clinical trial approval and Cipla have just passed that.
• Cipla also filed another product which cannot be disclose right now due to IP. It has also filed another product which is again another inhaler in 4QFY20 and have a partnered asset which is another very large category where nobody else is working. That product is at the clinical trials stage with their partner.
• If we combine the above four and the rest of the products that Cipla is likely to do, a big opportunity is beginning to unlock for Cipla in the US and carries a fairly significant value for the company in the long term.
• His views on COVID-19, India and other emerging market business and the process for other prescription drugs: In the first two, three weeks of the lockdown, there was a serious dip because everyone was dealing with the lockdown initially. In week three and four, activity was resumed by doctors, who started interacting virtually with their patients. In the last week, the green and orange zones are opening up and activity is resuming in these areas. Of course, there are sections where the doctors are not meeting as much. For example, dentists and dermatologists because of the risk of this infection being real, are perhaps not meeting as much as interventionists, chest physicians etc. So, it is gradually opening up. As the red zones begin to open up, resumption in activity can be seen depending on the zone.

Consensus Estimate: (Source: market screener website)

• The closing price of Cipla Ltd. was ₹ 594/- as of 19-May-20. It traded at 25.4x/ 21.2x the consensus EPS estimate of ₹ 23.7/28.4 for FY21E/ FY22E respectively.
• The consensus target price of ₹ 623/- implies a PE multiple of 22x on FY22E EPS of ₹ 28.4/-.

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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11 May

Covid-19 will push a lot more customers to look at outsourcing: C Vijayakumar, HCL Technologies Chief Executive Officer (CEO)

Update on the Indian Equity Market:

On Friday, NIFTY ended up 53 pts (+0.57%) at 9251 level.

Among the sectoral indices, PHARMA (2.13%), FMCG (1.9%) and IT (0.83%) were among the top gainers while PSU BANK (-1.9%), AUTO (-1.29%) and PVT BANK (-0.7%) were the losers. HINDUNILVR (4.3%), SUNPHARMA (+3.9%) and DRREDDY (+3.7%) were the top gainers. NTPC (-3.7%), M&M (-3.7%) and AXISBANK (-3.6%) were the top losers.

 

Covid-19 will push a lot more customers to look at outsourcing: C Vijayakumar, HCL Technologies Chief Executive Officer (CEO)

 

Edited excerpts of an interview with Mr C Vijayakumar, Chief Executive Officer (CEO) of HCL Technologies:

 

  • Digital transformations at global companies, expected over the next two to three years, will now hasten in crisis-mode due to the Covid-19 pandemic. Mr Vijayakumar said sectors or companies that were not looking at outsourcing will do so now to save costs.

 

  • When asked between the United States and Europe, where does he expect growth to pick up, he said that the US and Europe are not going to be very different, because in Europe, some geographies are already opening up. Around 23 states in the US have also already relaxed some guidelines and there is some hope that things will stabilize quickly, but customer behavior may not change immediately.
  • His views on traditional and digital services in coming fiscal years: Traditional services also have some very strong propositions, like digital workplace, engineering services. Some of the demand is intact and it is only getting accelerated. So, barring the short-term challenge, HCL Technologies will have good growth momentum. Mr. Vijaykumar thinks there could be a hit in the first quarter for sure. Industrial, auto, and aero have been impacted significantly, and non-grocery retail is also quite seriously impacted. But, almost 12% of revenue comes from Life Sciences and close to 20% of revenue comes from tech services. Both are strong verticals.
  • When asked about the kind of projects and wins expected after the recovery, he replied that Digital spends will (only) accelerate. Whatever transformation was expected to happen over the next two to three years, it’s almost going to get done in crisis mode, because for all the businesses, digital is the most viable channel to engage. He sees acceleration in cloud adoption, digital transformation, spend on digital workplace and cybersecurity. He believes the hospitals of the future will only have operation theatres and ICUs, everything else will be done through telemedicine.
  • He further informed that since work from home has been implemented, the productivity is much higher. They have tools to track productivity of every individual. Currently, there is a lockdown so obviously everybody is glued on to work, but how a large-scale work from home stacks up in a non-lockdown scenario needs to be seen in future.
  • He stated that HCL Technologies is very open to look into the opportunities to acquire companies, products, platforms or capabilities if there are attractive assets available. They have not only been acquisitive, but have made the acquisitions work.

 

Consensus Estimate: (Source: market screener)

  • The closing price of HCL Technologies was ₹ 519/- as of 8–May-20. It traded at 13x/ 11.5x the consensus EPS estimate of ₹ 40.2/45.1 for FY20E/ FY21E respectively.
  • Consensus target price of ₹ 580/- implies a PE multiple of 13x on FY21E EPS of ₹ 45.1/-

 

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.”

 

 

 

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20 Apr

Not working on Remdesivir generic; eyeing HCQ opportunity: Mr G V Prasad, Chief Executive Officer (CEO) and Co-Chairman of Dr Reddy’s Labs (DRL)

Update on the Indian Equity Market:

On Friday, NIFTY ended up 273 pts (+3.05%) above 9200 level as Reserve Bank announced a slew of liquidity-boosting measures to support the economy during the coronavirus crisis. The RBI further eased bad-loan rules, froze dividend payments by lenders and pushed banks to lend more by cutting the reverse repo rate by 25 basis points.

Among the sectoral indices, PVTBANK (7.4%), BANK (6.6%) and FIN SERVICE (5.5%) were among the top gainers while FMCG (-1.1%) and PHARMA (-0.5%) were the losers. AXISBANK (13.9%), EICHERMOT (+9.9%) and ICICIBANK (+9.7%) were the top gainers. NESTLEIND (-2.9%), HUL (-2%) and INFRATEL (-1.9%) were the top losers.

Not working on Remdesivir generic; eyeing HCQ opportunity: Mr G V Prasad, Chief Executive Officer (CEO) and Co-Chairman of Dr Reddy’s Labs (DRL) edited excerpts of an interview dated 16th April 2020:

DRL shares have risen over the past few days on speculation about the company being in the early stages of developing a generic version of anti-viral Remdesivir, owned by Gilead. The stock has risen around 32% over the last month and is at a 52-week high. Remdesivir is an experimental anti-viral drug being studied for Ebola, and in some cases, used on a compassionate ground against COVID-19.

DRL had no rights to work on a generic version of Remdesivir as Gilead still owned the patent. Prasad also said his company was not in talks with Gilead for contract manufacturing of Remdesivir, or for any licensing agreement.

DRL was looking at opportunities in other drugs which are being explored for treating COVID-19. Anti-malarial drug hydroxychloroquine or HCQS is one such. DRL is currently selling it in the US through a local partner. So far, DRL had not been selling it in India, but could look at it if there is strong demand. Besides the HCQS the company sells in the US, there is no COVID-19 drug that DRL is associated with.

DRL was facing a shortage of the active pharmaceutical ingredients (APIs) for HCQS, since its supplier is in Europe. But for the industry in general, supply was not an issue.

The other drug which is being explored as a cure for COVID-19 is ivermectin which is currently used for treating head lice. Exploring this drug as a cure for COVID-19 is at early stages with human trials not having commenced.

DRL continued to explore all non-patented drugs. Mr Prasad is of the view that for finding a cure to COVID-19, one needs to reposition existing drugs first, followed by vaccines and try novel drugs only as the last resort.

Drug repositioning is a drug development strategy predicated on the reuse of existing licensed drugs for new medical indications. According to Mr Prasad, repositioning existing drugs already might have a higher chance of success and novel drugs won’t be an immediate solution. The novel drugs being tested for COVID-19 include Gilead’s Remdesivir and Fujifilm’s influenza antiviral drug Avigan.

On manufacturing, DRL US sites and factories were functioning normally, and the staff at the offices were working from home. In India, there were some logistics issues in the initial days of the lockdown, but those have been overcome and the factories are now operating at “good” capacity.

He said the pace of approvals for its US drugs were progressing at a ‘normal’ rate. Similarly, Mr Prasad said too much should not be read into the recent spate of Establishment Inspection Reports received by multiple Indian facilities over the past few days. The EIRs received according to Mr Prasad were for the facilities which had ‘reasonably good’ inspections. For the industry as a whole, the quality of systems and level of compliance have matured resulting in these successful inspections.

On the fundamentals of the business, Mr Prasad said due to the recent disruptions, his company was slightly late in responding to the queries issued by the USFDA on their two key drugs in the US pipeline — contraceptive drug Nuvaring generic and multiple sclerosis drug Copaxone generic. They are in the process of finishing some work in order to reply to the queries on these two drugs within a few weeks. There is a renewed focus on India, Prasad said. This would not be acquisitions alone but through pipeline development and marketing as well.

Consensus Estimate: (Source: market screener, investing.com websites)

The closing price of Dr Reddy’s was ₹ 3,940/- as of 17-April-20. It traded at 34.4x/ 27x/ 23.2x the consensus EPS estimate of ₹ 112/ 143/ 167 for FY20E/ FY21E/ FY22E respectively.
Consensus target price of ₹ 3442/- implies a PE multiple of 20.6x on FY22E EPS of ₹ 167/-

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 Apr

IT industry adopting new methods to tackle the crisis: C P Gurnani Chief Executive Officer (CEO) and Managing Director (MD) of Tech Mahindra

Update on the Indian Equity Market:

On Friday, NIFTY ended up 170 pts down (-2.06%) at below 8,100 level as ratings downgrade for the banking sector, due to the impact of the crisis and ensuing stressed asset concerns, impacted the financial stocks.

Among the sectoral indices, PHARMA (4.8%), and FMCG (0.7%) were the only gainers while PVT BANK (-5.5%), BANK (-5.3%) and FIN SERVICE (-4.3%) were the top losers. SUNPHARMA (+9.6%), CIPLA (+8.3%) and ITC (+6.7%) were the top gainers. AXISBANK (-8.9%), INDUSINDBANK (-8.3%) and ICICIBANK (-7.4%) were the top losers.

IT industry adopting new methods to tackle the crisis: C P Gurnani

Chief Executive Officer (CEO) and Managing Director (MD) of Tech Mahindra

India has spent only 0.3 per cent (of the GDP) and the World Bank has suggested the countries to spend up to 6-7 per cent said Mr Gurnani.

The world is heading towards a ‘new normal’ due to the current crisis, by almost forcing businesses to work from home, the IT industry has learnt a lot from this event.

Edited excerpts of an interview C P Gurnani, Chief Executive Officer (CEO) and Managing Director (MD) of Tech Mahindra; dated 31st March 2020:

His views on the current crisis and its impact on IT industry – He is of the opinion that India has been very lucky. Even today, only ~ 1,100 cases though it’s true that India’s testing infrastructure is not as strong as the US. Everyone is also praying that with rising temperature, the propagation of the virus will be reduced. So, he is not expecting further lockdown but probably a new normal will be kicked in. The new normal is, people will keep safe distance and they will be a lot more hygienic than ever before.

When asked what the industry as a whole has learnt, he divided this into three chapters. The first one is the period ‘before the crisis’, second is ‘during the crisis’ and third is ‘after the crisis’. He said that everyone knew that they have to become healthy, but had been ignoring it. Everyone knew that they have to reduce pollution. During the pandemic, many things have become reality. It was an opportunity for Tech Mahindra and others to take those decisions, which were never taken before. Tech M have now introduced many collaborative tools and launched workstation as a service, remote diagnostics networks, content delivery platforms and omni-channel retail experiences and so on. Many of these platforms were ready but were not launched yet, but now it is becoming a reality.

When asked about the challenges in the ‘post crisis’ environment he stated that the reality is the government agencies have now officially declared recession. India has spent only 0.3 per cent (of the GDP) and the World Bank has suggested the countries to spend up to 6-7 per cent. He thinks there is headroom to kick-start the economy. Consumers’ confidence comes back very fast. Infrastructure spending will increase the cash flow. Though the B2B businesses will take little longer (to come back to shape), he thinks the doomsayers are being very negative. It is less than a year cycle of recovery.

His comments on hospitality, travel and aviation sector: Hospitality sector is not a big one for Tech M as it contributes less than 3 per cent of the total revenue. Travel and hospitality have also seen these challenges in the past. Besides, this sector has always been the first one to get impacted. But the sector also bounces back.

When asked about the benefit to Tech M from the Telecom Vertical as the company has a good exposure to this sector, he said that he is not denying it but everyone is in crisis. Keeping the human capital intact and lights on are important themes.

He was asked about the sales team performance, whether they are still chasing for deals on ground or stopped. He replied that everyone is talking to everybody. No conversation has stopped. In fact, the number has increased. However, we need to remember that the sales team are not talking to organizations, but only to individuals. Clients are not having their board meetings or committee meeting now. Everyone is on a fire-fighting mode. Overall, he is proud of the associates for the way they have rallied. Offices in the Philippines and India are not working, but none of Tech M’s customers has been impacted.

He also added that almost 90 per cent or their employees are working from home. The remaining go to office because of the data security norms. So, the density is less than 6 per cent in the offices. Work from home has actually helped in enhancing the overall productivity. They are using various tools to measure the productivity.

His views on laying off staff to withstand the business losses in IT industry: Each company has its own strategy. What Tech M have conveyed to their people is that the company would rather offer advances to their employees who earn less than ₹ 35,000 per month. They will offer this to temporary or even sub-contract workers, as Tech M understands they require their support a lot more.

With regards to buy back, he said that looking at the current scenario he feels it will be unfair at this point to take advantage and he won’t recommend it to the board.

Consensus Estimate: (Source: market screener, investing.com websites)

The closing price of Tech M was ₹ 524/- as of 3-April-20. It traded at 10.4x/ 9.6x/ 8.6x the consensus EPS estimate of ₹ 49/ 53/ 59 for FY20E/ FY21E/ FY22E respectively.

Consensus target price of ₹ 793/- implies a PE multiple of 13.4x on FY22E EPS of ₹ 59/-

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