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A sharp reduction in oil demand owing to Covid-19 outbreak resulted in a significant drop in crude oil prices. As a result, average Brent crude oil prices declined by US$12/bbl QoQ to US$50.6/bbl with closing Brent price at US$21.5/bbl. On account of the same, the company reported marketing inventory loss of | 1937 crore. However, core marketing margins were steady during the quarter. In terms of marketing sales, BPCL reported degrowth of 5.5% YoY (mainly due to diesel sales decline) to 10.7 MMT, above our estimates. Going forward, we expect marketing sales volume to improve at 5.1% CAGR in the next two years. Crude throughput in Q4FY20 was up...
We are lowering our EBITDAR estimates by 75/43% for FY21/22E to factor in the changed demand environment. We roll forward our TP to Mar-22 and set a revised TP of Rs 1,110 (we continue to value the stock on 6x EV/EBITDAR). Key risks: Any resolution of promoter differences on the upside, an increase in oil prices on the downside. We downgrade IndiGo to ADD (from BUY earlier). The management is shifting focus from growth to conserving cash and is revising its full year capacity guidance to factor in the weaker demand environment. While we believe that IndiGo is better placed to withstand the downturn due to its dominant market share/scale, a healthier balance sheet (as compared to competition) and cost cutting initiatives (phasing out of older CEO planes), the overall demand outlook is challenging.
With consumers refraining from eating outside, we expect Britannia to deliver healthy growth in 1HFY21, before aggregate demand pressure kicks-in in 2HFY21. Cost control and moderation in RM inflation will sustain EBITDA margin in FY21. We increase EPS estimate by 6/5% for FY21/FY22. However, we remain cautious due to rich valuations (47x FY22 P/E) coupled with group company investments (via ICD), rising gross debt and non-current investments. We value BRIT at 38x P/E on Mar-22E EPS, and derive a TP of Rs 2,852. Maintain REDUCE. Britannia (BRIT) clocked 2% yoy revenue growth (HSIE -2%) with flat volume. Co saw growth acceleration (8-10%) in Jan/Feb which was better than what it clocked in 9MFY20 (5% yoy growth). Lockdown led supply chain disruption impacted primary performance in March. Pantry loading supported other foods businesses in Q4 as Nestle and Maricos Saffola posted 11% and 25% yoy growth which BRIT missed. However, BRITs recovery in April/May was strong (24% yoy) owing to (1) Benefits of high home consumption (April/May consumer offtake at ~20% for BRIT), (2) Market share gain (particularly in Hindi belt), (3) Channel filling (~3% support), (4) Quicker resumption of plants and supply chain than peers, and (5) Support from deeper distribution reach.
We cut our EPS for FY21/FY22 by 14/9% (18% cut in FY21/FY22 in our 4QFY20 Preview) in order to factor in channel liquidity concerns and weak demand. We value V-Guard at 28x on Mar-22E EPS, deriving a TP of Rs 145. Maintain REDUCE. V-Guard posted a weak show in 4QFY20 with revenue/EBITDA decline of 28/42% yoy. The revenue decline was broad based as Electrical/Electronic/CD segments dipped by 32/27/20% yoy. In Jan/Feb, V-Guard saw a healthy growth of 7% yoy, which was close to 6.5% yoy growth clocked in 9MFY20. Lockdown impacted channel filling of seasonal products during the last 2 weeks of March. Channel inventory is at 40 days (20-30 days normally) and liquidation of inventory will be a challenge for the co. V-Guard is also holding high inventory (105 days vs. 75 days), resulting into higher NWC days. South performance remained challenging in FY20 and posted 6% yoy decline. Non-south revenue mix has increased to 41% in FY20 (34% in FY17).
(%) Margins (%) BRIT declared an in-line set of results, but we are pleasantly surprised with the commentary on ~24% avg. The management attributed this growth to high in-home consumption in the lockdown period and BRIT being quicker off the block than peers after the initial COVID-19-led disruption. Two factors highlighted in the post-results call could keep multiple re-rating in check. (a) The management going back on its stated commitment of Inter Corporate Deposits (ICDs) not exceeding INR5b. (b) The company following the policy of not repaying debt while letting the investment book to build up despite a sharp inventory reduction in the past six months. This would lead to consequent concerns over ROCE. While we have revised our FY21 and FY22 EPS by 19.8% and 15.4%, respectively, but valuations fully capture upside at 45.5x FY22 EPS. Standalone sales were flat YoY at INR26.9b.
Recruitment revenue grew 11.2% YoY (v/s 18.4% YoY in 4QFY19), 99acres.com grew 3.7% YoY (v/s 45.8% in 4QFY19) and Jeevansathi grew 25.4% YoY (v/s 6.5% in The companys B2B businesses (Naukri.com and 99acres.com) saw a major part of the COVID-19 impact. According to the companys estimate, COVID-19 related impact led to a Unlike the above, Jeevansathi saw only a nominal impact with collections Given that Naukri.com and 99acres.com together contribute 90% of INFOEs standalone business, we expect 1QFY21 to be a complete washout. According to our estimate, the company has clocked an XIRR of >40% since the time it We foresee a halt in near-term momentum, led by expectation of billing decline in the recruitment and real estate segments for 1HFY21. However, given the market positioning of its entities, multi-dimensional growth could be expected from the company in the medium-to-long term, backed by recruitment, real estate, Zomato (its biggest investee company) and Policybazaar.
Asian markets are trading higher tracking cues from Wall Street overnight. Nikkei is trading higher by 1.09%, Shanghai is trading higher by 0.99%, and Hang Seng is trading higher by 1.06%. Indian indices are expected to open higher. Sgx Nifty is trading higher by 0.81%.Nifty futures closed at 9962.
COVID-19 dents sales growth and operating margin V-Guard Industries (VIL) posted revenue of Rs5.4bn in 4QFY20, down 28% YoY, 21%/26% below our/consensus estimates as lockdown in March led to Rs2.5bn loss of sales. Revenue from South region fell 31% YoY to Rs3.2bn (60% of total sales), while Non-south region fell 21% YoY to Rs2.2bn (40% of total sales). Revenue of Electronics/Electricals/Consumer Durables segments fell 27%/32%/20% YoY to Rs1.5bn/Rs2.4bn/Rs1.4bn. Gross margin jumped 370bps YoY to 33.3% (but flat QoQ), led by premiumisation of product portfolio and pricing actions. EBITDA fell 42% YoY to Rs452mn, leading to an operating margin of 8.4%, down 220bps YoY, below our/consensus estimate...
MSSL reported decent Q4FY20 performance. Standalone revenues (largely includes Indian operations) came in at | 1,735 crore (down 6% YoY), while EBITDA margins stood at 17%, up 200 QoQ on the back of savings realized in raw material costs. Consequent standalone PAT stood at | 386 crore, supported by higher other income (dividend from subsidiaries). On consolidated basis, top line in Q4FY20 came in at | 15,159 crore (down 12% YoY), while EBITDA margins stood at 9.2%, up 130 bps QoQ. Expansion in margins can be largely attributed to 130 bps gross margin expansion....
Valuations (81x FY20P EPS of 84) at WIL, in our opinion are disconnected from prevailing challenges on the demand front, with relative resilience in price performance centred around market expectations around the open offer price. On the back of elongated CV recovery cycle, we assign SELL rating on WIL and advice existing investors to either tender their shares in the forthcoming open offer ( 7067.5/share, 2.5 months away) or for simplicity of operations sell shares in open market. We ascribe a fair value...
Tourism was the first sector that took a hit due to outbreak of the pandemic and is expect to be among the last to recover. Business in April was down 76% YoY and 70% YoY in May. Business and Leisure travel are not expected to normalize for few quarters. Occupancies in the lockdown came from rooms occupied by quarantine or corporate guests, doctors and healthcare workers. We model occupancy of 52%/63% and ARR of |4080/|4410 in FY21E/FY22E. LTH has taken measures to curtail costs, by taking salary cuts, re-negotiating contracts, reducing repairs costs, reduction in power costs,...
Strong acquired brands; enhanced distribution to aid sales After the acquisition of Heinz, ZWL now has five brands (Sugarfree, Everyuth, Glucon D, Complan, Nycil) in different categories with strong recall value. It would look to double the direct distribution reach in general trade & further enhance its chemist channel. It has a presence in 75% of 5 lakh chemists in India. Further, ZWL has enhanced its e-commerce capabilities by investing in channel early. It is driving 3-3.5% of its sales from ecommerce channel from 1% earlier. We also believe it would be able to leverage its strong relations with medical practitioner to grow Complan...
The second half of March happens to be a strong revenue booking period for V-Guard due to significant offtake of summer based products and annual closing of incentive schemes of various products. According to the company, the lockdown situation impacted revenue, EBITDA to the tune of | 250 crore, | 70 crore, respectively, in FY20. Adjusted with Covid-19 impact, FY20 revenue, EBITDA would have been up 6%, 47%, respectively. Further, the company's improved product mix, benign raw material prices helped drive gross margin up ~330 bps YoY in FY20. It has further guided that while...
Revenue est. for FY21/22E is lowered by 10.0/3.8% to factor in Covid-19 impact. We assign 30x to FY22E core PAT and add net cash (ex SGF) to arrive at a TP of Rs 1,330. Maintain ADD. MCX delivered healthy volume growth in 4Q (+35.7% YoY) and expanded market share by 240bps to 94% in FY20. After strong 4Q, volume dropped significantly in April-20, due to reduction in exchange timings and a sharp drop in crude prices (Covid-19). Volume recovery was witnessed in May-20, but its still 35% below the 4Q level. Crude (45.4% of vol. in FY20) is impacted due to the high margin requirement (100%), extreme volatility, and negative settlement price. We dont see crude volume reaching the previous level in FY21E. Tailwinds like launch of Index futures and Institutional participation will aid volume recovery.
View: Upgraded to Buy with a revised PT of Rs. 1,520: We have reduced our earnings estimates for FY2021 and FY2022 by 10% and 6%, respectively, to factor in the impact of supply disruption due to the lockdown. With the acquisition of Heinz product portfolio, ZWL has a strong portfolio of brands, which it can leverage upon to improve its market share through new launches supported by enhancing distribution reach. Further, strong cash flows along with relatively stable balance sheet provide support to overall growth prospects. The stock has corrected by 17% in the past five months and is currently trading at 38.5x its FY2022E earnings,...
