Miscellaneous

29 May

Cash flow will be a challenge for the hospitality industry – Prestige Group

Update on the Indian Equity Market:

On Friday Nifty closed 1.9%higher at 9,490. Among the sectoral indices Auto (+3.7%), Media (+3.6%), and PVT Bank (+2.79%) closed higher. PSU Bank (-0.4%) was the only sector that closed lower.ZEEL (+9.6%), Eicher Motor (+7.3%) and L&T (+5.8%) closed on a positive note. Wipro (-0.9%), ITC (-0.6%) and CIPLA (-0.5%) were among the top losers.

Excerpts from an interview of MrZaid Sadiq,Executive Director, Prestigegroupwith ET Now:

  • Before the crisis hit, the Indian hospitality industry along with tourism was one of the key segments driving the growth of the services sector in the Indian economy.
  • The pandemic and lockdown has brought things to a standstill and the hospitality industry is taking stock and reinventing them to successfully revive the sector in the post Covid world.
  • Speaking about the long term effect of Covid-19 on the industry he saidgiven the dynamic and the unprecedented nature of this global crisis, it is expected to witness the ripple effects of Covid-19 across socio-economic sectors for at least another year.
  • There is a hope to begin the journey towards recovery by June 2020 – provided India manages to flatten the corona virus curve.
  • Speaking about the post covid-19 strategy to garner business, he added thatthe pandemic is changing the world, and businesses that are able to come up with innovative solutions to offer the right customer experience will be in a position to seize the opportunity and accelerate the recovery journey.
  • The company is working closely with domestic partners and collaboration will be the key strategy. It will focus on the home-grown business; the ideal revenue stream will be Food & Beverage, including catering.
  • The focus on room business will be back after the economy stabilizes.
  • Speaking about the government, he saidthe Indian government has done a remarkable job of combating the global outbreak, the exact trajectory of which is still unknown.
  • The government should consider extending the option of delaying of loan repayment / EMIs to business entities and slashing GST rates as cash flow will be a challenge for hospitality industry.
  • The Covid-19 pandemic has taught us the importance of business agility, disaster preparedness, collaboration and compassion. The company is finding innovative ways to cut costs, manage unknown risks and work with fewer resources.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Prestige Estate Projects was ₹ 145/- as of 28-May-2020.  It traded at 12.3x/ 10.75x the consensus Earnings per share estimate of ₹ 11.7/13.5 forFY21E/ FY22E respectively.
  • The consensus average target price for Prestige Estate Projects is ₹ 318/- which implies a PE multiple of 23.5x 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.”

 

 

By Miscellaneous , 0 Comments Read more...
18 Mar

SBI Cards will see rebound once the market settles: Hardayal Prasad, MD & CEO, SBI Cards

Update on the Indian Equity Market:

On Tuesday, NIFTY50 closed 2.5% lower at 8,967. All sectoral indices closed in the red except FMCG (+0.9%) and Pharma (+0.3%). Media (-5.9%), Financial Services (-4.6%) and Bank (-4.1%) were the top losing sectors. The Nifty 50 top gaining stocks for the day were Yes Bank (+59.3%), Hindustan Unilever (+3.1%) and Eicher Motors (+2.8%) while the losers were Zee Entertainment (-20.0%), IndusInd Bank (-9.2%) and ICICI Bank (-8.9%).

Excerpts from an interview with Mr Hardayal Prasad, MD & CEO, SBI Cards Ltd. (SBICARD) with CNBC -TV18 dated 16th March 2020:

  • About the share price bounce back: Mr. Hardayal said that in terms of return on equity (ROE), revenue and growth, when these minor blips of the market are overcome going forward, the company’s strength will come to the fore and they should see a strong rebound.
  • One of the biggest things is that the penetration of the credit card in India is very low, this gives SBI Cards a huge opportunity to grow.
  • According to him, the aspirations of tier II and III cities have still not been met. People want to spend, they have money. They want good things in life and they did not have the opportunities till a few years back. Now with the PoS infrastructure, with the e-commerce and so many other things happening, there is a big potential sitting over there. Thus, SBICARD feels the growth story in India will continue and the Company will continue to show robust growth.
  • He thinks other countries have seen massive penetration of credit cards into smaller towns. Thus, in India, if we leverage ourselves properly if we continue to have our policies right and have a good model, the Indian credit cards market will continue to see similar growth stories.
  • About the NPA concerns with credit card businesses, he said: In the last 10 years, since the last cycle has seen high NPAs and delinquencies, there has been a major shift in the way the business:
  1. India now has an absolutely robust and strong credit bureau which is very important for any country to manage delinquencies.
  2. IT infrastructure, which has been created all across.
  3. The overall modeling that is been done.
  4. The business is spread out. Earlier it was only in the metros; now it is spread out to Tier II and III cities. As many as 58% of the business is now coming from Tier-II cities. Now the leveraging that is there in tier II & III cities is pretty low.
  • So, he doesn’t think the kind of phenomenon one saw in post-Lehman times is there anymore. One can calibrate risks, control NPAs and can ensure good profitability.
By SBI Card , , , 0 Comments Read more...
17 Mar

Margins to improve due to crash in crude prices – Mr Surana, BPCL

Update on the Indian Equity Market:

On Monday, NIFTY50 closed 7.6% lower at 9,199, erasing the gains of Friday. All sectoral indices closed in the red with METAL (-8.9%), PVT BANK (-8.8%) and BANK (-8.3%) being impacted the most. Of the NIFTY50 components, INDUSINDBK (-18.4%), JSWSTEEL (-14.8%) and VEDL (-10.9%) were the worst performers. YESBANK was the only index component to close in the green with a 45% gain.

Margins to improve due to crash in crude prices – Mr Surana, BPCL

Excerpts from an interview with Mr M K Surana, Chairman and MD, Hindustan Petroleum Corporation Ltd. (HPCL) with CNBC -TV18 dated 9th March 2020:

  • The crash in crude prices is governed by factors different than those which are normally seen. The crash is abnormal, sharp and not guided by purely demand-side factors.
  • Mr Surana expects that in the near term, there will be softness in most Middle East crudes. This may lead to better margins on refining side in the near term. Brent Dubai differential may increase slightly, making Middle East crude slightly more favourable from refining point of view.
  • The lower crude price is good for refiners and means better margins in the near future. But the choppiness will not be correcting.
  • The gross refining margins (GRMs) and the cracks were low in the recent past. But in this particular event, the Saudi crude has reduced OSP by almost USD 6 per barrel in all markets and not just Asian markets. That should improve the cracks in the near future. In fact, the 6th March vs 9th March futures/forwards are already seeing a little jump of cracks.
  • The BPCL divestment impact on industry dynamics depends on how the divestment proceeds. Assuming private players are involved, there may be certain changes in the way businesses are picked up.
  • Sudden fall in crude causes inventory losses. However, there are still 20 days in March (at the time of the interview). After such a sudden fall, a pick up if it happens is also sharp. So, we may see days of gains also in March so the inventory will depend on the net price. However, on the margins, they are expected to be better in nearer months.
  • On the demand in India, February was better than earlier months for both diesel and petrol. Mr Surana was of the view that it is difficult to identify where the demand is coming from as many factors are working in contradictory directions.
  • As far as the Coronavirus impact is concerned, there was no impact in India in February. It is only now that concerns are being raised.

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

  • The closing price of BPCL was ₹ 365/- as of 16-March-2020.  It traded at 10.9x/8.6x/8.2x the consensus earnings estimate of ₹ 33.4/ 42.4 /44.5 for FY20E/21E/22E respectively.
  • The consensus target price for BPCL is ₹ 506/- which implies a PE multiple of 11.4x on FY22E EPS of ₹ 44.5/-.
By HPCL, Miscellaneous , 0 Comments Read more...
28 Feb

Volumes impacted due to Coronavirus: V. Kalyana Rama, CONCOR

Update on the Indian Equity Market:

On Thursday, investors continued rushing to safer assets on fears that the coronavirus outbreak is fast developing into a pandemic.

The broad market index, NIFTY50 ended the day marginally lower at 11,633. The two sectoral gainers were Pharma (+0.6%), and FMCG (+0.1%). Realty (-2.4%), Media (-2.4%), and PSU Bank (-2.3%) were the top losing sectors. The top gaining stocks were Sun Pharma (+3.6%), Britannia (+1.9%), and Titan (+1.9%) while Wipro (-3.5%), ONCG (-3.0%), and JSW Steel (-3.0%) led the losers.

Volumes impacted due to Corona Virus: V. Kalyana Rama, CONCOR

Excerpts from an interview with Mr V. Kalyana Rama, Chairman and MD, CONCOR published in Mint on 26th February 2020:

  • The last quarter witnessed a drop in the volumes of the company as the demand did not pick up. Even now the business is subdued; the volumes are impacted because of the coronavirus.
  • They have guided for a flat FY20 in the last quarter looking at the volumes. If the impact of coronavirus is worse than already considered, there might be a negative side.
  • There has been a provision for the Services Export from India Scheme (SEIS) income close to ₹ 861 crores, which was disallowed by the Directorate General of Foreign Trade (DGFT). CONCOR is contesting the disallowance of those claims. Disallowance leads to the formation of committee of secretaries and approvals from the government. The process is a work-in-progress and they are waiting for the outcome.
  • The government had announced it is willing to divest CONCOR with management control, transferring 30.8% share.
  • Despite the government announcement, business is going on as usual on 41 terminals on lease from the railways. There is absolutely no disruption on the business.
  • CONCOR is continuing with rail freight price policy announced in April 2019, for the current financial year. Any price change will be only in effect from FY21 and the market will be duly notified of it. As per the previous three-quarter numbers, there was a positive effect on the top line and the bottom line.
  • The coastal shipping business made some losses in the first nine months but they are not too worried about it. They are keeping a timeframe of three years to stabilize and turnover this business.

Consensus Estimate: (Source: market screener website)

  • The closing price of CONCOR was ₹ 510/- as of 27-February-2020.  The consensus earnings estimates are not available.
  • The company declared earnings of ₹ 2.9 per share for the quarter ending December 31 2019, versus ₹ 4.5 declared for the quarter ending December 31, 2018. It declared earnings of ₹ 19.95 per share for the year ended March 31, 2019.
By CONCOR , 0 Comments Read more...
26 Dec

IndiaMART: Collection growth expected to decelerate

Update on the Indian Equity Market:

On Tuesday, NIFTY ended 0.4% lower at 12,212 level. BPCL (-2.7%), HCLTECH (-1.7%) and RELIANCE (-1.7%) dragged NIFTY down. YESBANK (+3.0%), CIPLA (+2.0%) and INDUSINDBK (+1.3%) were the top NIFTY gainers. NIFTY IT (-0.5%), NIFTY MEDIA (-0.5%) and NIFTY AUTO (-0.4%) were the worst performing sectors while NIFTY METAL (+0.5%), NIFTY REALTY (+0.5%) and NIFTY PHARMA (+0.1%) were the best performing sectors.

IndiaMART: Collection growth expected to decelerate

Excerpts of an interview with Mr Dinesh Agarwal- Founder and CEO, IndiaMART InterMESH Ltd. The interview was broadcasted on CNBC-TV18 dated 24th December 2019.

  • IndiaMART is India’s largest online B2B market place. The stock price has rallied 120% since listing in July 2019.
  • IndiaMART’s revenue growth for the last couple of years has been robust. Revenue growth in 1HFY20 was strong at 29% but the growth is expected to decelerate going forward due to overall economic slowdown.
  • IndiaMART collects money in advance and has Rs 6,290 mn deferred revenue pool. The deferred revenue flows into the revenue eventually.
  • The incremental growth in the deferred revenue has slowed down considerably over the last 2 quarters. The impact on revenue will show up over the next couple of quarters if the economic conditions do not improve substantially quickly. Growth will be lower than the 25% growth guidance given earlier.
  • IndiaMART has 137,000 paying subscribers. The subscribers have been growing 15% YoY. The net customer addition is about 5,000 per quarter. The slowing economy has impacted the net additions. In 2QFY20 IndiaMART added only 4,000 customers because of pressure on sales and revenue.
  • Management believes they will grow at 15% on the customer side and about 5% on the average revenue per customer.
  • Mr Agarwal said that collection growth has come down to 15%-16% in the last two quarters from 30% earlier. IndiaMART has successfully reduced business in MSME space. IndiaMART is well diversified in terms of industries and geography coverage.  They already have more than 140,000 product categories and about 60 mn products. They deal into 1,000 plus small towns, cities and tier-III villages. Management believes their core business will continue to remain robust.
  • Management has taken additional bets in SaaS [software as a service] and fintech opportunities for SMEs. They have invested in mobile accounting software for micro SMEs called Vyapar.
  • IndiaMART’s cost base has been growing at 16%-18%. As long as revenue base continues to grow faster, margins will expand. Being a technology company, the product has already been built so the margins should continue to improve.
  • In 2QFY20, EBITDA margin jumped YoY from 18%-19% to 23%. This level of margin is sustainable and can further improve QoQ if the economic condition is not very bad.

Consensus Estimate (Source: market screener website)

  • The closing price of IndiaMART was ₹ 2,074/- as of 24-December-19. It traded at 54x/32x/27x the consensus EPS estimate for FY20E/ FY21E/ FY22E of ₹ 38.2/63.8 /76.3 respectively.
  • Consensus target price of ₹ 2,202/- implies a PE multiple of 29x on FY22E EPS of ₹ 76.3/-.
By IndiaMART, Miscellaneous 0 Comments Read more...
29 Nov

TeamLease Services Ltd- Telecom should be back in 4-6% profit range from Q1FY20

On Thursday, NIFTY50 closed 0.44% higher. NIFTY50 gainers includes Infratel (+14.2%), UPL (+5.5%) and JSW Steel (+4.2%). NIFTY50 losers includes Zeel (-2.5%), Hero Motocorp (-2.1%) and HDFC (-1.2%). NIFTY Auto (-0.3%) was the only losing sector while NIFTY PSU BANK (+3.4%), NIFTY Metal (+1.9%) and NIFTY Realty (+1.1%) were the top gaining sectors.

Excerpts from an interview with Mr. Ravi Vishwanath, the Chief Financial Officer of TeamLease Services. The interview was published in Livemint dated 27th November 2019.

  • According to Mr Vishwanath, things are looking better. While they expected the previous quarter to come in at the same 20% range as the usual growth is, they came in a tad short at 16%.
  • He believes that between Q3 and Q4 they should be able to get to their targets. They will also try and see if they can claw back some of the deficit that they had in H1.
  • The current pipeline is looking pretty strong and they have no reason to believe that Q3 should be a soft quarter. In fact, Q3 should be a reasonably strong quarter and so should Q4.
  • In the IT sector, they deal with service companies, product companies, and captives.
  • As they provide staff to all these three different kinds of IT companies, their growth in product and captives, though small in percentage terms, is reasonably good for the first half of the year.
  • They got slightly impacted in the service sector on account of higher absorption by these companies of their staff onto their payroll, something that has never happened before.
  • He believes that the growth in Q3 and Q4 should come back, and more than Q3 it will come back for them in IT in Q4.
  • Telecom has been a little soft for the whole of last year and for the first two quarters of the current year as well. It is primarily on account of certain projects that they undertook in Q1 of FY19, which continue to linger. They hope to come out of it by Q4 and telecom should be back in the 4-6% profit range from Q1 of next year.
  • They believe that their associate growth in telecom for next year would certainly be 10-15% which would translate to 15-20% growth year-on-year.
  • Outside IT and telecom, the sectors that they have been seeing hiring pickup is BFSI, fin-tech, e-commerce, logistics, and warehousing.
  • The other sectors are warming up to it because from the existing clients, their growth is coming back, which is all the other sectors put together.

Consensus Estimate (Source: market screener website)

  • The closing price of TeamLease Services Ltd was ₹ 2,515/- as of 28-November-19. It traded at 45x/ 30x/ 22x the consensus EPS estimate for FY20E/ FY21E/ FY22E of ₹ 56.3/ 85.2/ 116.0 respectively.
  • Consensus target price of ₹ 2,983/- implies a PE multiple of 26x on FY22E EPS of ₹ 116/-

By Miscellaneous 0 Comments Read more...