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Within the FMCG universe, Dabur, Britannia, GCPL, Radico, Emami, and Nestle outperformed, clocking revenue growth of 14/12/11/11/11/10% YoY respectively. Growth in packaged food and hygiene moderated, although it continued to remain strong, following reduced fear among consumers and easing of restrictions. Discretionary demand witnessed substantial sequential improvement as increased economic activity and more instances of going out lifted sentiments. Rural growth has been ahead of urban due to lower restrictions, migration of labour & capital and healthy agri economy. We expect rural will remain strong in 2HFY21. However, we remain cautious and selective within the sector due to the unfavourable medium-term risk-reward, given modest absolute growth relative to expectations and valuations. Despite defensive characteristics, we are underweight on the sector in our model portfolio. We recommend BUY on ITC and ADD on UNSP, Colgate and Radico. The HSIE Consumer-Index sales indicated recovery with a growth of 1% YoY in 2QFY21 (+6% in 2QFY20 and -23% in 1QFY21) as easing of lockdown and resumption of economic activity supported demand. The three-year CAGR (which normalises all base adjustments over the past three years) in 2QFY21 was +7% YoY, supported by the healthy growth in the past two years. Categories that outperformed our index in 2QFY21 are OTC FMCG, F&B;, Oral Care, Paints, and Haircare, clocking 50/13/8/6/5% YoY growth. The divergence between the underperforming and outperforming categories narrowed sequentially as growth in essentials moderated and discretionary demand saw improvement. QSR, Footwear, Liquor and Dairy categories were impacted the most, contracting by 30/27/16/3% YoY.
Asian markets are trading mixed while investors focus on developments with regard to a potential coronavirus vaccine. Nikkei is trading higher by 2.61%; Hang Seng is trading lower by 0.07% and Shanghai is trading lower by 0.33%. Indian indices are expected to open higher. Sgx Nifty is trading higher
We have initiating coverage on SOLARA with BUY rating and a target price of Rs 1,350 (P/E of 18x for FY23E earnings) which implies an upside of 25% from the current levels.
Long expected IAC basin trials are on November 27 whereas delivery for the same is expected by December 2021. If things fall in place, as they should, we expect FY22E to be amplified on account of IAC execution. This should aid management to reach their topline target of | 4000 crore. In the quarter, IAC execution was | 491 crore (cost plus | 283 crore, fixed price | 207 crore)....
Decent inflows for H1FY21 but cautious guidance for FY21E For Q2FY21, EIL's order inflows were decent at | 594 crore (| 166.7 crore in Q2FY20), all in the consultancy segment, primarily from customers like Gail, Odisha Mining, Bangladesh Petroleum, AAI, etc. Order book as on Q2FY21 was at | 8978 crore (vs. | 9116.8 crore in Q2FY20) comprising 49% from consultancy and 51% from turnkey segment. For Q2FY21, 86% came from domestic while 14% was from the overseas market. Decent order pipeline for next two years amid challenges...
Perhaps the most significant set of recommendations, in line with the intent to increase the number and diversity of private banks, is the RBI laying out two potential routes for the entry of new private banks by allowing large corporate houses to set up banks and large NBFCs to become banks. We believe that potential new banks are more likely to choose the NBFC-Bank route' as the entry of industrial houses will require a slew of changes to the extant legislative, regulatory and supervisory frameworks.The recommendations proposed by the IWG are especially significant given that no non-financial institution was able to float a bank under the 2013 licensing guidelines and no NBFC has successfully converted into a bank under the extant 2016 On-tap' licensing guidelines.While large NBFCs aspiring for banking licenses will face near-term challenges, conversion into a bank should be viewed as a desirable long-term strategy, in our opinion. Amongst banks within our coverage, DCBB and IIB stand to benefit from the recommended increase in the limit on promoter shareholding. In its recently released report, the RBI's Internal Working Group (IWG) has proposed several recommendations to harmonise the ownership guidelines, regulatory landscape, and corporate microstructure of Indian private banks. We explore the key implications of the findings and recommendations and the likely winners.
Our positive view on MM is based on a strong recovery in Tractors, LCVs recovering in 2HFY21 and positive development on capital allocation. We were not banking on any positive development in its SUV business, but have taken stock of MM's SUV and LCV business in this note. Both businesses have so far positively surprised us. The company is reorienting its SUV business to maintain its DNA and brand position and garner market share. Thar's success shows that it is on the right track. The MM and Ford JV got delayed due to the COVID-19 pandemic. However, the product pipeline reflects some promising upgrades in its UV portfolio....
Engineers India's (ENGR) 2QFY21 revenues were in-line with our estimates. Operating profit came in 13% lower than our estimate, owing to lower profitability from the Turnkey segment and a couple of one-off incomes, which was part of the operating profit of the base quarter. The buyback proposal for acquisition of 69.9m shares (~11% of total shares) at INR84/share is expected to be completed in the next three months. The same would happen via a tender offer, and the Government of India (GoI) would participate, with a stipulation of maintaining its shareholding at 51%...
RBI's Internal Working Group (IWG) has recommended guidelines on ownership and preferred corporate structure of Indian private banks. While key guidelines on increasing promoter stake, NOHFC structure are positives, conversion of large NBFCs into banks could throw up some uncertainties as guidelin..
Asian markets are trading mixed tracking weak cues from Wall Street over the weekend. Nikkei is shut for trading due to holiday; Hang Seng is trading lower by 0.11% and Shanghai is trading higher by 0.57%. Indian indices are expected to open on in the green. Sgx Nifty is trading higher by 0.56%.
Bajaj Auto remains the 2nd largest player (~18% market share) in the domestic motorcycle segment and continues to be the largest exporter of two-wheelers in India.
GDP in 2QFY21 (due on November 27) is likely to decline by 8.2% YoY, unchanged from our earlier estimate. Agriculture & Allied sector is likely to do well with a growth of 4% YoY in 2QFY21, supported by a good Kharif season. teresa.john@nirmalbang.com Industry (excluding Construction sector) is likely to witness a decline of 4.6% YoY. The Services sector (including +91 22 6273 8114 Construction sector) will likely decline by 11.2% YoY in 2QFY21 with the sharpest contraction of 25% YoY in Trade, hotels, transport and communication sector due to the slow opening up of passenger transport, restaurants, hotels and recreation services. We expect a sharp improvement in the Construction sector, which will decline by 6.5% YoY in 2QFY21 after declining by 50.3% YoY in 1QFY21. However, with government revenue expenditure (net of interest payments) declining by 9.9% YoY in 2QFY21 (compared to a growth of 13.5% YoY in 1QFY21), Public administration...
As per disclosures made by the company, Embassy Office Parks REIT (EOPR) has approved acquisition of Embassy Tech Village (ETV) for a total enterprise value of Rs97,824mn (subject to adjustments in relation to net debt, working capital and other adjustments as agreed among the parties). EOPR has exercised its right under the ROFO agreement to acquire the asset. ETV spans over 84 acres and derives 88% of its rents from multinational occupiers. ETV is 97.3% occupied and has a 9.7 year Weighted Average Lease Expiry (WALE) with a 33.7% mark-to-market (MTM) potential. The acquisition is proposed to be financed through a mix of equity and...
Optimistic about the Auto industry with caution We hosted an investor call with Mr. Hormazd Sorabjee (Senior Editor and Auto Journalist at Autocar India) to get his views about the current state of affairs in the Auto industry in India. Given below are the key takeaways from the interaction with Mr. Sorabjee....
Background Greaves Cotton (GCL) is one of the largest manufacturers (primarily) single cylinder (diesel, gasoline engines) and dual cylinder engines, which find application in running 3-W vehicles and 4-W small commercial vehicles (SCVs). The company offers products and solutions across business units- Engines, power, farm equipment, mobility and aftermarket. In FY19 Greaves Cotton augmented its Clean Technology...
At the end of Q2FY21, IRB's order book (OB) was at ~| 12,150 crore (2.2x TTM revenues), largely contributed by the construction segment (| 5,129 crore) and O&M; job of BOT, ToT projects (| 7,035 crore). However, in contrast with industry focused asset-light EPC business, IRB's emphasis remains on BOT, ToT and HAM projects wherein it is targeting ~| 5,000 crore of order inflows in the rest of FY21. The company has also participated in the bidding process of the ToT-5 bundle. We note that order inflow will...
Sadbhav Engineering (SEL) continued to report disappointing numbers in H1FY21 with revenue falling 54.2% YoY to | 641.9 crore, largely marred by disruptions caused by Covid-19 pandemic. Operating margin fell 162 bps YoY to 10.8% for H1. At net level, the company reported loss of | 21.3 crore during H1FY21 on account of lower operational revenue and higher costs. SEL's standalone net debt (including loans) at the end of September 2020 was at | 1,095 crore. However, the company expects the potential realisation of arbitration awards, SPV debtors, GST refunds, and proceeds from transfer...
The RBI had constituted an internal working group on June 12 to review extant ownership guidelines and corporate structure of Indian private sector banks. Terms of reference included review of the eligibility criteria for individuals/entities to apply for banking license; examination of preferred corporate structure for banks and, review of norms for long-term shareholding in banks by promoters and other shareholders. These steps are in right direction and beneficial for the sector in the long-term but we...
