Thu, 31 Mar 2016 11:54 AM
The Front Page: Infrastructure; HDFC Bank (BUY); Events
Infrastructure (Mumbai Metro III - awaits awards): We met Mr. Indranil Sarkar, CFO of Mumbai Metro Rail Corporation (MMRCL). He highlighted that work on scope changes and renegotiation with bidders for seven civil packages is nearing completion and letter of awards should be handed out soon. Strong political will should ensure resolution of issues on depot location and handing over of 17 land parcels, which are the key for starting work and meeting the commissioning schedule in 2020.
Wed, 30 Mar 2016 1:08 PM
The Front Page: Cement; Oil & Gas; Britannia Industries (ADD); Events
Cement (Annual report analysis: ACC and Ambuja): Profitability for ACC and Ambuja (ACL) took a beating in CY15 with both reporting decadal low return ratios owing to severe infighting in most regions during the year due to weak demand and low utilisation. ROE declined 178bps/466bps for ACC/ACL in CY15. While ACL’s free cash flow was high due to low capex, ACC’s capex of Rs11bn (80% of OCF generation) for its 3.5mtpa capacity expansion in Jamul and 0.9mtpa expansion in Sindri resulted in low free cash flow.
Tue, 29 Mar 2016 10:57 AM
The Front Page: Maruti Suzuki; Titan; Crompton Greaves; Events
Maruti Suzuki (Stock attractive post correction, BUY, TP Rs4500): We cut FY16-18 EPS estimates by 6-9% to factor in adverse impact of currency movement (JPY appreciation vs. INR) and slightly lower volume growth. Maruti’s market share may have peaked, given higher competitive intensity; however, we expect its volumes to grow largely in line with the industry, led by good response to its new models. JPY appreciation and lower initial margins of new models may hurt margins in the near term.
Mon, 28 Mar 2016 10:41 AM
The Front Page: Fertilizers; Accenture; Cadila Healthcare; Welspun India
Fertilizers (India cuts NBS rates for FY17): India’s Ministry of Chemicals and Fertilizers on Wednesday announced Nutrient Based Subsidy (NBS) rates for non-urea fertilizers for FY17. The revised rates imply 24% and 29% cuts respectively in subsidy on the Nitrogen (N) and Phosphorus (P) components within non-urea fertilizers (figure 1). Therefore, if consumption volumes remain stable in FY17, the government may be able to lower subsidies by nearly Rs50b. Fertilizer companies should benefit from lower workin
Thu, 4 Feb 2016 2:39 PM
The Front Page: Cement; Bajaj Finance (BUY); Pidilite Industries (BUY); Cummins India (ADD); Dish TV (BUY); Redington India (REDUCE); CCL Products (BUY); Events Calendar
Cement (Prices continue to be lacklustre): - Cement prices continued to decline in January in the northern, central regions (by Rs5-30 per 50kg bag) due to weak housing demand and fight for volumes. Prices increased in eastern and western region by ~Rs15-20 per bag (6-7%), which is seasonal. - According to dealers, demand is weak in the housing segment and there is no material pickup even in the infrastructure segment.
Wed, 3 Feb 2016 10:42 AM
The Front Page: Highways (Awards on track; execution picking up pace); Blue Star (BUY); Manpasand Beverages (BUY); Events Calendar
Highways (Awards on track; execution picking up pace): Following the recent investor meetings we conducted along with an ex-NHAI official, we remain positive on the award pipeline for national highways that can sustain at ~8,000km for FY16-17. A higher share of EPC project awards will translate into faster execution and drive improvement in contractor balance sheets.
Tue, 2 Feb 2016 5:45 PM
The Front Page: Banking & Fin (Still a subdued outlook for credit quality); Tech Mahindra (BUY); Grasim Industries (BUY); Thermax (SELL); Shoppers Stop (BUY); Sobha (Earnings Conf call); Events Calendar
Banking & Fin (Still a subdued outlook for credit quality): We hosted meetings for Mr.Anjan Ghosh, Chief Ratings Officer of ICRA, with investors in Singapore and Hong Kong. ICRA’s commentary points to subdued outlook for corporate sector credit quality trends in FY17ii. Sharp decline in commodity prices, slow progress in resolving distress in the infrastructure sector, and high financial leverage for a large part of the non-financial sector are a significant overhang on the rating outlook for companies.
Fri, 29 Jan 2016 5:34 PM
The Front Page: ICICI Bank (BUY); Maruti Suzuki (BUY); Bharti Airtel (BUY); Power Grid Corp (BUY); Dabur India (ADD); United Spirits (ADD); Titan (REDUCE); Vedanta (ADD); Events Calendar
ICICI Bank (3QFY16 results - more pain ahead, BUY, TP Rs280): - ICICI Bank’s (ICICIB) reported performance for 3QFY16 was below our expectation. A sharp increase in NPL and elevated loan loss provision (LLP) were the key reasons for the subdued performance. - Revenue growth, excluding gains from stake sale in the life insurance, was subdued. De-recognition of income on NPLs added and sluggish fee-income growth were responsible for the subdued revenue growth.
Thu, 28 Jan 2016 5:24 PM
The Front Page: Strategy (When to buy?); HDFC (ADD); Godrej Consumer (BUY); Container Corp (BUY); Havells India (BUY); Events Calendar
Strategy (When to buy?): Despite the sharp fall in the market in recent weeks, we do not believe valuations have turned attractive enough to warrant a change in our view on the market. Investors can ignore the near-term challenging macro environment when valuations are significantly below average. However, currently, valuations are at or above the long-term average. We believe a further 15-20% correction is warranted before investors can ignore the macros and take comfort in low valuations.