ICICI Securities Limited Broker Research reports

Commissioning of new capacities to fuel growth Out of total capex plan to set up new 4.2 MT capacity, JK Cement has commissioned 3.5 MT cement capacity while commercial dispatches also resumed in the quarter. Newly added capacities include 1 MT grinding unit (GU) each in Nimbahara, Mangrol along with 2.6 MT clinker plant and 1.5 MT GU in Aligarh. The company is also adding 0.7 MT GU in Gujarat (Balasinor), which will take its total capacity to 14.7 MT, a rise of 40% in capacity. Thus, despite a challenging FY21E, we expect it to clock volume CAGR of 12.6%...

Crude oil prices stayed volatile in Q1FY21. Brent crude oil prices fell up to ~US$17/bbl while WTI oil prices traded in the negative for the first time in April. With demand increasing following a resumption of economic activities & Opec output cuts, Brent oil prices recovered in May, June. Average Brent crude oil prices remained lower at US$31.4/bbl, a decline of US$19.2/bbl QoQ. In Q2FY21E, oil prices are in range of US$45/bbl. Going ahead, we model net realisation of US$39.4/bbl for FY21E, US$48.5/bbl for FY22E at Brent oil prices of US$41/bbl, US$ 50/bbl, respectively, taking into account...

On PV side, MSIL's total volume rose a healthy 17.1% YoY to 1.24 lakh units. Its strong volume rebound was backed by 26.8% YoY rise in mini & compact portfolio, 13.5% growth in UVs. M&M;'s UV portfolio posted modest 2.8% YoY growth by comparison, with overall PV rise at 1.1% YoY to 13,651 units. CV segment's improvement from a low base continued, led by LCVs. LCV decline for Ashok Leyland was at 3.8% YoY while M&M;, MSIL posted healthy growth of 9%, 47.4% YoY, respectively. M&HCV; sub-segment continued to lag, albeit directional uptick carried over from the previous month. Ashok...

On the positive side, the legal tangles seem be over. We expect the industry, as a whole, to utilise their management bandwidth to expand profitability and cash generation. Airtel, with comfortable leverage, superior customer quality and consistent KPI is our top pick. We maintain BUY on Airtel with an unchanged target price of | 700/share. We also maintain SELL on VIL with an unchanged target price of | 6/share, given the difficult path ahead to assure survival and lack of clarity on the same. We also downgrade Bharti Infratel to REDUCE (from HOLD earlier) with a target price of | 180/share....

Better overseas plant utilisation limits overall revenue fall Better plant utilisation in overseas subsidiary (~56% vs. 38% in India) helped limit consolidated revenue fall at 45% in Q1FY21. Post ease in lockdown restrictions in India, while demand of other products saw a recovery, piping segment demand stayed sluggish due to lower government spending amid lockdown. We expect a continued demand recovery in domestic and...

PNC remains our preferred pick in the EPC space given its robust order book, comfortable working capital cycle, healthy return ratios and lean balance sheet. Notwithstanding near term hiccups on account of Covid-19, PNC is likely to tide over with resilient fundamentals. While monetisation of HAM assets could be delayed in near term, we do not see it as a major issue with sufficient internal accruals from current order book enough for equity infusion. Hence, we maintain our BUY rating on the stock with a revised SoTP target price of | 200/share. We value its construction business at...

Phillips Carbon Black (PCBL) reported a steady performance in a Covid impacted Q1FY21. Net sales for the quarter were at | 360 crore, down 61% YoY. Carbon black sales volume for the quarter came in at ~51,300 tonne, down 52% YoY with blended realisation at | 68/kg vs. | 83/kg in base quarter. PCBL reported positive EBITDA and PAT prints despite a steep decline in sales volume and value. EBITDA in Q1FY21 was at | 39 crore with EBITDA margins at 10.7% (EBITDA/tonne at ~| 7,500/tonne). PAT in Q1FY21 came in at | 2.3 crore. The company guided for near normalcy in operations...

IGL's volume declined sharply 56.6% YoY to 2.7 mmscmd during the quarter on account of lockdown. CNG sales volume fell 65.6% YoY to 1.6 mmscmd (our estimate: 2.2 mmscmd) due to travel restrictions. PNG volumes also degrew 30.3% YoY to 1.1 mmscmd (our estimate: 1.2 mmscmd). Within PNG segment, domestic PNG segment reported strong growth of 39% YoY while industrial/commercial PNG segment de-grew 40% YoY. CNG & industrial/commercial PNG volumes are expected to remain subdued due to extended lockdown in the near term. We expect volume growth to be witnessed from Q4FY21E onwards. We estimate sales volumes at 5.1...

Maharashtra Seamless took 100% control over United Seamless Tubular Pvt Ltd (USTPL) on February 14, 2020 after the Supreme Court decision on January 22, 2020. USTPL has a capacity of 300000 tonnes per annum (TPA) in the size range of 4 to 14 diameter in various grades and wall thicknesses. The plant has Fine Quality Mill (FQM) manufacturing technology, which is supplied by Danielle, Italy. The company has indicated that USTPL will run on partial capacity after completion of trial run by September 2020. With this acquisition, MSL will have an additional...