Background: South Indian Bank (SIB), among the mid-sized banks in the private sector space, operates a network of about 839 branches and about 1,306 ATMs. The bank's business is largely skewed towards the Southern state with half of its branches located in Kerala. SIB has established a strong brand recall among the Keralite-NRI Diaspora. With no identifiable promoters SIB is run by a team of professionals. As of 2QFY17 the bank had deposits of ~INR 602bn and...
seed production, with farms in Karnataka, Andhra Pradesh and across the country. In the last five years (FY10-15), company's revenue and PAT have grown at a CAGR of 48% and 59.6% respectively. The company has a pan-India presence with a strong distribution network of ~25,000 distributors (direct & in-direct) and retailers across15 key states in India (up from 11,000 - 4 years ago). Kaveri has 26 warehouses at strategic location with a combined storage space of ~500,000 sqft. The...
Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. A low ~5% share of the global market makes us believe reasonable room exists for several years of growth. While OTR forms ~65% of the global market, for BIL, it only contributes ~34% to its revenue. With the completion of the new 140,000 MT facility at Bhuj, BIL is looking to expand in the OEM, OTR segments. The company has been undertaking various actions like setting up warehouses in markets in North America and Europe to be closer to the customer and have a just in time (JIT) system. BIL is focusing on the OEM segment while its share in revenue has...
Net sales grew 10.6% YoY to INR 4.2bn in 1QFY17 vs INR 3.8bn in 1QFY16 led by robust volume growth of 36.7% YoY in cartridge from 22,426MT to 30,665MT and 10.7% growth in bulk explosive segment from 43,224MT to 47,843MT; exports revenue grew 16.5%YoY. The company’s has consistently reduced its reliance on CIL (Coal India Ltd) for revenues diversifying its customer portfolio. Consequently, customer share (in terms of revenue) stood at – CIL (24%), Non CIL & Inst (20%), Export & Overseas (25%), Trade & Others (31%), Defense (0.35%). Moreover management highlighted that the company has INR 720mn of defense orders in the order pipeline which would be completed within the year.
Valuation: Strong order book, expected rapid revenue growth from defense and growing export revenues are the key growth drivers. At current levels, the stock trades at P/E of 23.0X its FY18E. Consequently, we rate the stock an OUTPERFORMER, assigning P/E of 26X to FY18E EPS to arrive at a target price of INR 696.
In 4QFY16, NIIT Tech revenue stood at INR 6,847mn (up 12.0% YoY and +0.9% QoQ). Revenue declined in dollar terms by 1.6% QoQ to USD 101.7mn. In CC terms, revenue growth was flat QoQ. Growth was soft due to closure of large projects in travel and transportation vertical. EBITDA margins expanded by 20bps QoQ at 18.4% in 4QFY16, driven by healthy increase in GIS business, lower SG& A expenses and currency tailwinds. PAT margin rose by 60bps QoQ on the back of lower effective tax rate in 4QFY16. DSO declined by 10 days QoQ to 80 days.The company’s order book, executable over the next 12 months was flat at USD 301mn. During the quarter NIIT added 4 clients, 2 each in USA and RoW and received fresh order intake of USD 120mn (US: USD 30mn, EMEA: USD 61mn and RoW USD 28mn).
Valuation: Management expects the growth momentum to pick up in the remaining quarters and has guided for double digit growth in FY17 aided by healthy order bookings and traction in digital business. However, management indicated that 1QFY17E is likely to be soft quarter due to seasonality in its GIS business. The stock is currently trading at 10.5/9.1/8.2x of FY16/17E/FY18E EPS. We have arrived at a target price of INR 588 (earlier 564), valuing the stock at 10X FY18E EPS and maintain a BUY rating on the stock.
Background: Tata Motors is India's leading automobile maker, and is among the top 10 auto manufacturers in the world. The company has more than 130 models spanning a wide range of Heavy, Medium & Light Commercial Vehicles, Passenger Cars and Multi-Utility Vehicles. Tata Motors is the market leader in M&HCV; and 2nd in LCV with established brand and service network including the hinterland offering the competitive advantage. Engine and transmission for some models of cars are manufactured in a JV with Fiat. The company operates out of plants at Jamshedpur, Pune, Lucknow, Sanand and Pantnagar. Jaguar-Land Rover (JLR) are key wholly owned subsidiaries of the company. JLR has...
Background: Amara Raja Batteries Ltd (ARBL), a Joint Venture between Amara Raja Group & Johnson Controls, each holding 26% stake, is the second largest battery manufacturer in India. It is the largest manufacturer of standby valve regulated lead acid (VRLA) batteries in the Indian Ocean Rim region and manufactures automotive batteries for all vehicle segments. With a production capacity of 18mn units (Automotive: 14.5 mn & Industrial (MVRLA) - 3.6 mn), ARBL has built a strong pan-India distribution network of 30,000 retailers and 274 franchisees (Amaron network) & 900 retailers (Powerzone network). ARBL's market share in different segments: 4-wheeler...
Lumax Industries Ltd (LIL), incorporated in 1945 was set up in Delhi by S.C. Jain as a trading company under the name Globe Auto Industries. In 1956, Lumax setup manufacturing units for automotive lighting equipment and other components. In 1984, Lumax embarked on collaboration with Stanley Electric Co. Ltd., Japan and converted itself from private limited to public limited company. Company derives ~65-70% of sales from PV segment, and 30%-35% from 2W + UV. Company caters...
Background: RBL bank Ltd came into operations in 1943 and was incorporated as a small, regional bank in Maharashtra with two branches in Kohlapur and Sangli. It is one among the fastest growing private sector banks in the last six years and now has 197 interconnected branches and 362 interconnected ATMs spread across 16 Indian states and union territories serving ~1.9mn customers. The bank offers a comprehensive range of banking products and services customized to cater to the needs of large corporations, SMEs, agricultural customers, retail customers and development banking & financial inclusion (low income) customers. Loan book of the bank grew at a CAGR of 50.5% for the past 4 years and now...
