Volume growth revival; Faster growing parts return accretive We had a meeting with Bata India (BIL) management recently to understand its 1HFY20 performance in greater detail as well as status of its various initiatives to drive revenue growth and margins. The key takeaways from the meeting were: (1) After many years of stagnant volume due to defocus on lower priced SKUs, volume has grown at 8% in 1HFY20 (5% in 2Q). This has been driven by increased momentum in the wholesale business growing ~18% in 1HFY20. Unlike revenue in last many years, which was driven by average selling price (ASP) growth, we believe from here on, there is going be a better mix of volume and ASP growth. This move has been in line with the strategy of...

Alembic Pharma (ALPM) has underperformed the midcap and Sensex indices since 2015 due to subdued earnings. This cycle should reverse in the next 3-4 years.

Launched the loyalty program (see details on page 2). renovated property in Mumbai), Siddharth Jain, Director, emphasized on how the strategy of penetrating in metro/tier-1 markets with constrained aggression has helped in improving ATP/SPH/Ad revenue per screen. In order to penetrate deeper into the North, lot of screens have been signed in Gurgaon & Noida. However, Delhi continues to remain a challenge given scarcity of new malls. In all, the target of adding 70 screens for FY20E remains intact. A new loyalty program was also unveiled with a clear focus on...

The number of dengue cases has increased considerably in 2019 due to rising temperature, which promotes mosquito breeding. More than 67,000 people have been diagnosed with dengue this year across India. Excessive rain, flooding and poor sanitation have also led to multiple dengue cases, especially in Bihar, Maharashtra, West Bengal and Gujarat. This will result in higher demand for Household Insecticides (HI) products in the domestic market (especially out of home creams/gels). Further, the threat of illegal incense sticks has been gradually receding as the government is taking stringent regulatory measures...

This was driven by an increase in generation from pit head (lower variable cost) plants in the northern and eastern regions of India; on the other hand, higher variable cost generation from the southern region CERC, in its order, has taken note of this and (1) extended its implementation up to end-FY20, and (2) set out a methodology for sharing of benefits accumulated in the pool. The CERC has directed that benefits within the SCED pool should be shared equally between the participating generators and DISCOMs (after compensation for part load operations of generators). The benefit for each generator would be in proportion to their share of SCED schedule for the time Our analysis suggests that NTPC is entitled to a net benefit of ~INR1b for the first three months of the pilot scheme (see As observed, PLF for NTPCs non- pit head plants (such as Simhadri, Kudgi, Solapur and Dadri) have declined.

Assuming Rs25-30 hike in ARPU, it translates to incremental EBIDTA of Rs85100bn. Reliance JIO has launched All-in-One Plans' with higher tariffs following hikes by Vodafone and Airtel. After three years of severe tariff war, price hikes are welcome and we expect further hikes going forward. We increase RJIO's ARPU assumptions for FY21-22E to Rs 170 /180 vis--vis FY20 rate of Rs130....

the business model and growth outlook till FY23E. NLL is in a slow growth phase with CAGR of 10% in revenues, while EBITDA and PAT declined at 9% and 16% over FY16-19. NLL underwent sharp decline of 700bps led by surge in raw material prices in China. Although worst seems over in terms of margins, significant expansion is unlikely to meet management guidance of 200bps/year beyond FY20E. We believe that Salmeterol API scale up for supplying to partners in US remains uncertain as it lacks clarity over the approvals of gAdvair from USFDA. Given the uncertain volatility over the...

Larsen and Toubro (L&T;) has underperformed the broader market over the trailing two months, correcting by ~9%, led by sustained delay in revival of project tendering in the infrastructure sector against earlier expectations of revival post normal monsoon. L&T;'s FY2020 order inflow growth guidance of 10-12% seems unlikely to be achieved, with order inflows announced for Q3FY2020 till date remaining weak (three significant orders in Rs. 1,000 crore to Rs. 2,500 crore range, one mega order above Rs. 7,000 crore). To achieve the targeted FY2020 order inflow, L&T; would require Rs. 1 lakh...

Kotak Mahindra Bank (KMB) has forged a powerful banking franchise backed by a formidable liability profile.

However, the expected revival in tractor demand (on the back of healthy monsoons) will partially offset the impact from the above. We would advise investors to turn constructive on the stock after further clarity emerges on BSVI/favorable market responses to new launches. We reinstate coverage on Mahindra & Mahindra (M&M;) with a NEUTRAL and a SOTP based Sep-21 TP of Rs 570. After outperforming the PV industry over the past decade, we expect growth rates for SUVs to converge. Further, as competition remains intense, M&M;s automotive segment margins are expected to remain under pressure.

We think that Kotak Mahindra Bank's (KMB) valuation (3.6x 1HFY22E BV) reflects, amongst other qualities, its superior risk-adjusted margin. Our analysis across key peers reveals that KMB's risk-adjusted margin, at 3.65-3.70%, is at par with HDFC Bank (HDFCBK). Even during the most testing times, the bank's asset quality has held up very well, which has also helped the bank to maintain low credit costs through the cycle (10-year avg: 61bps). Liability franchise management has been excellent. Despite reducing overall cost of deposits by ~220bps over the last 6 years, CASA ratio has expanded substantially, to 52.5% (FY19). A strong balance sheet (low NPAs + strong CAR), supported by an enviable...

High ARPU prepaid plans have seen ~27% price hike, which would result in ARPU increasing by INR38 from INR142 to INR180. While no rates have been disclosed for low ARPU Jio feature phone subscribers, we assume ~30% price hikes for these subscribers too. Low ARPU Jio phone subscribers would probably see a hike of INR25 in ARPUs from INR84 to INR109. The price differential between RJio and Bharti/VILs price plans is constant at ~INR40-50 for most of the popular quarterly bundled plans; however, we see the discount of RJios plan over Bharti/VIL reducing to ~8% from ~11-13% witnessed in the previous months. The hike in ARPUs should result in ~INR134b/INR119b incremental revenue/EBITDA, which is ~25%/58% rise over the previous revenue/EBITDA (2QFY20 annualized) with 89% incremental EBITDA. This is on the back of INR100b interest cost, which should be contained due to the recent capital reorganization announcements and reducing capex intensity in the market as indicated by RJio and other telcos.

5 December 2019 GATI is engaged in express distribution (surface, air and rail parcel), which contributes ~80% of its revenue. It has a pan-India network in the surface express industry. We, however, note that GATIs consol. Post-acquisition, AGLL will gain management control in GATI and thus an entry in express distribution, which is lacking in its portfolio. The SPA involves the acquisition of up to promoters of GATI, viz. Mr Mahendra Kumar Agarwal, Mahendra Investment Advisors, and TCI Finance. The SSA is for subscribing to the AGLL will thus acquire 19.4% of equity share capital (post preferential issue) of GATI. AGLL has also approved an open offer for the acquisition of 31.7m shares representing 26% of the paid-up equity share capital (post preferential issue and vesting of stock option) of GATI at a price of INR75/share. AGLL will acquire ~45% stake in GATI for INR4.2b.

In addition to large capacity addition in lieu of higher IMO-led diesel demand, Chinese teapot refineries have ramped up their utilization rates (~67% vis--vis 61% in Oct-Nov18) as the country increased crude oil import More importantly, with IMO less than a month away, the forward curve for diesel depicts an incapacitated scenario of a mere USD14-16/bbl, as against consensus estimate of USD25-30/bbl. MRPL suffered refinery shutdowns in 1HFY20, leading to lower utilization (6.2mmt in 1HFY20 v/s 7.8mmt in 1HFY19) and poor GRM (USD0.13/bbl in In 1QFY20, water scarcity in Mangalore led to a major forced shutdown of 75 days. Nevertheless, in 2QFY20, MRPL faced another (precautionary) shutdown of the phase-III units after intensified monsoon caused landslide in Dakshina Given subdued global oil demand and incremental capacity addition, GRMs will likely remain suppressed for a few more months. Originally, it was expected that the INR150b phase-III expansion would generate ~USD8/bbl of GRM when SG GRM is at USD6/bbl.

HCL Tech made an announcement on bonus shares along with its Q2FY20 results on October 23, 2019. The ratio was one bonus share for every existing equity share held i.e. 1:1. The record date for the same is December 7, 2019 while the ex-date for the same is today i.e. December 5, 2019. Consequently, HCLT's share price, as per yesterday's closing price, has dropped to | 563/share from | 1126/share. Currently, the stock is trading at | 563/share. Our target price also stands revised to | 600/share from...

In Q2FY20, Sheela foam Ltd. reported sales revenues of Rs 497 cr (down 7%YoY& down 3%QoQ), EBIDTA of Rs 70 cr grew strongly by 66% YoY& 13% QoQ. EBIDTA margin improved to 14.2% up 625 bps YoY& 210 bps QoQ. Profit of Rs 59 cr was up 2.4x on yearly basis and 1.5x quarterly basis.

Our constructive stance on ICICIBC (for a while now) has been mostly premised on the reduction in stress pools, consequently lower provisions and (therefore) earnings expansion. The visible risk-consciousness in corporate lending (and limited exposure to recent defaulters) reconfirms our stance on asset quality. The action on the digital and retail fronts sets the bank up for strong, granular and efficient growth. We think ICICIBC now merits a hike in valuation multiple from 2.0 to 2.2x. Maintain BUY. Our revised SOTP is Rs 565 (2.2x Dec-21E core ABV of Rs 200 and sub-value of Rs 125). At the recently concluded ICICIBC Analyst Day, we noted a common desire (and plan) across verticals to drive up risk-adjusted RoAE. The primary drivers of this expansion are (1) Improving oplev due to digitalisation of processes, (2) Expanding margins via faster growth of higher yielding retail loans, and (3) Reducing credit costs by following a calibrated growth path. The emphasis on digital capacity building seems to be a cross-company imperative.

ICICIBC held an analyst day to showcase its digital capabilities being placed at the core and leveraging the same across business segments & operations of the bank. Bank emphasized its journey of making One Bank One ROE as a principle for every business enabled through high focus on core operating profit. This will be led by high use of digital, technology & data analytics helping lower costs, maximize risk adjusted NIMs and enable customized offerings to increase stickiness. We have been witnessing some of the initiatives play out in past couple of quarters with improved market share in...

Siemens India, a flagship company of Siemens AG (Germany), is an integrated technology provider and a leading powerhouse in electronics and electrical engineering. Siemens is strongly placed in Energy and Infrastructure...