Since the Coronavirus issue outbreak in China, technical/key input prices like H Acid, Vinyl sulphone surged at least 30-50% in a month. This is largely owing to the fact that Wuhan is considered one of the largest manufacturer of dye intermediates. However, we believe the recent price increase is largely sentimental in nature. Once China comes back into production, we expect to see a softening in key input prices. India had witnessed Vinyl sulphone imports of mere | 47 crore from China in FY19 while exports remained at | 740 crore of which exports to China were at | 299 crore...
Weak demand drags topline but profitability improves NCL operates in South India (80% cement business comes from AP & Telangana). It has clinker and grinding capacity of 2.6 MT and 2.7 MT, respectively, cement bonded particles boards (capacity of 90000 TPA), hydro power plants with total capacity of 15.75 MW and recently set up a plant to manufacture premium doors with a capacity of 1000 doors/day. While the subdued environment in its major markets is expected to keep growth for FY20E in the negative territory, demand is expected to revive...
Revenues of the proposed acquired business were | 594 crore in FY19 and at | 377 crore for 9MFY20 (~| 500 crore on annualised basis). The implied valuation comes to ~3.8x annualised revenue. Going by the current trail, the valuation seems in line with industry standard but considering the growth trends of key brands, it is on the higher side. Nevertheless, this acquisition is in sync with the company's overall scheme of the things of being aggressive in branded formulations, especially in India and calibration in the US. Post this acquisition, the domestic business contribution in revenues is...
The domestic auto space continues to face demand-side challenges across segments at present (for 10MFY20 - PV down 15.4%, CV down 20.3%, 2-W down 15.9%). Increase in product prices on account of introduction of safety features/other regulations, higher taxes and reduced propensity to spend is affecting PV segment while the CV segment is suffering from several issues of cyclical (high installed base, slowing economic activity) and structural (system idle capacity) nature. The upcoming changeover to BS-VI regime is set to further complicate the demand and pricing scenario. We expect the...
Volume growth returns; Siliguri plant to boost sales further While offtake in H1FY20 remained weak owing to weak demand and heavy monsoons, the trend seems to have reversed in the company's major market from Q3FY20. A pick-up in construction activity post floods in the north east region and commissioning of the Siliguri plant by Q1FY21E, should drive sales volumes. While the management expects the North East region to end the year at ~8-9% growth and the eastern markets at 5-6% growth, FY21E volume growth for the company is expected to be strong....
Higher brand investments towards new launches aiding growth Nestl India (NIL) has been able to deliver 8-12% volume growth (as per our estimates) in the domestic business over last seven quarters backed by aggressive new launches. NIL has increased marketing spend by ~20% over last one year to support new launches. Contribution to sales from new launches has grown from 1.5% to 3.7% over last three years. During the quarter, NIL continued its innovations in market across categories with the launch of KitKat Dessert Delight Rich Chocolate Fudge, MAGGI Fusian Range...
Continuing business investment while awaiting demand revival Tepid consumer demand and high competitive intensity impacted the performance of Page Industries. It resulted in lower offtake from distributors and a decline in footfalls in its own exclusive stores (720+). For 9MFY20, revenues grew 7% YoY to | 2404 crore, with volume growth of mere 1% YoY to 138 million pieces. In a bid to beat the blues, the management has undertaken several initiatives such as new product launches, sustained enhancement in distribution reach and higher investments in marketing and...
Healthcare expansion moderates; focus on asset sweating Rapid expansion and maturity of older hospitals has kept the overall growth tempo at 12-14% per annum. After an intense capex cycle, especially during FY14-18, the company is focusing on the profitability and return ratios with calculated capex moderation. This has reflected in a marked improvement in both EBITDA margins and RoCE. The new hospitals and ventures are turning profitable ahead of schedule on the back of a judicious case mix besides better occupancy and other matrix. We expect healthcare sales to...
Average crude oil prices in Q3FY20 remained flattish compared to Q2FY20. Core marketing margins were steady during the quarter. In terms of marketing sales, BPCL reported growth of 3.3% YoY (led by LPG, motor spirit sales growth) to 11 MMT, marginally above our estimates. Going forward, we expect marketing sales volume to improve to 3.5-4.5% CAGR over the next two years. The crude throughput in Q3FY20 was up 13.3% YoY at 8.4 MMT, above our estimates. We estimate 44.2 MMT throughput for FY20E. Going forward, we estimate throughput of 45.8 MMT and 47.6...
ABL's orderbook (OB) was at | 8,092.4 crore, implying OB-to-bill ratio of 2.0x TTM revenues, giving us comfort on execution ahead. Of this, road projects comprise | 5,981 crore, (HAM projects: | 3,411 crore, EPC projects: | 2,570 crore), power T&D; ~| 1,046 crore, Railways | 993 crore, and CGD | 73 crore. This OB does not include Tumkur-Shivamogga P-IV (TSP-IV) HAM project worth | 869.6 crore and recently won Kandi Ramsanpalle HAM project worth | 586.0 crore. The company has identified projects worth | 30,000 crore for bidding in the next two months and expects | 3,000-4,000 crore order inflow...
Revenues from recruitment business (Naukri) grew at a slower pace at 13.1% YoY (average 18% in last six quarters) while billings growth slowed down to single digits (8.5% YoY). Billings were impacted by ongoing weakness in non-IT segments (spreading to sectors like FMCG, travel, retail) and markets like Mumbai & Delhi getting impacted more than Q2. Further, slowdown in hiring in IT segments has played in lower growth in billings. The pressure is anticipated to be there in the near term and lead us to slightly tweak our revenue estimates for the segment for FY20E. Hence, we expect...
During the YTD current fiscal, CIL's production and offtake volumes witnessed a muted trend. One of the reasons for the same is extended monsoons. Production volume for the first 10 months (April-January 2020) of FY20 were at 451.5 million tonnes (MT) (down 3.9% YoY). Similarly, offtake volumes for April-January 2020 were at 473.3 MT (down 4.8% YoY). Going forward, we maintain our offtake volume assumption of 600 MT for FY20E and 625 MT for FY21E. CIL's offtake volume for FY19 was at 608 MT. EBITDA margins to hover around ~21-22%......
Inflation in food & beverages decline marginally to 11.8% in January from 12.2% in December, primarily led by a fall in onion prices. The fall in food inflation was restricted by a rise in potato prices (63% rise vs. 37% in December), which has higher weightage of 1% and a few other vegetables prices. Going forward, food inflation is likely to fall sharply as retail prices of higher weightage items like potatoes, onions and...
The weak performance in Q3FY20 was largely the result of extended monsoons, which led to the disruption in mining and infrastructure activities. This impacted the sale of packaged explosives in the eastern, central and northern regions. Demand for packaged explosives is expected to remain weak in the near term. On the other hand, Coal India's production was hindered by flooded mines. However, December and January saw an uptick in mining activities giving some respite for Q4FY20. Decline in prices of ammonium nitrate by ~8% coupled with a change in product mix (17% YoY...
Novelis, a wholly-owned subsidiary of Hindalco, reported a steady set of operational numbers for Q3FY20 with adjusted EBITDA/tonne at US$430/tonne. Net sales revenue was at US$2.7 billion while adjusted EBITDA came in at US$343 million, up 7% YoY. For Q3FY20, the reported net income attributable to its common shareholder was at US$107 million, up 37% YoY. Excluding special items, net income was at $132 million, up 31% YoY. Over the last few quarters, Novelis has reported a good set of numbers wherein EBITDA/tonne has consistently stayed above...
Growth in exports formulations (28% of FY19 revenue) was on the back of growth in both international generics and international branded formulations. The international anti-malarial institutional business has also contributed substantially to overall exports growth. US traction will take more time than earlier estimated due to USFDA import alerts for the Ratlam facility that is the only API source for Silvassa and Pithampur formulations plants along with Silvassa and Pithampur (Indore) plants that are specifically earmarked for US business, besides third party sales. However, sustained...
Newly installed 100 KLPD distillery plant to perk up earnings With the commissioning of 100 KLD new distillery, the company has the capacity to sell 4.0-4.3 crore litre of ethanol to OMCs. Moreover, it would be able to divert ~33% of its sugarcane to B heavy ethanol. We expect distillery volumes to increase from 0.9 crore litre in FY19 to 4.0 crore litre in FY21E. Average distillery realisation would also improve to | 47/litre given higher proportion of B heavy ethanol. We estimate | 53.3 crore & | 191.2 crore revenues from distillery operations in FY20E & FY21E, respectively....
The bank witnessed asset quality deterioration as absolute GNPA surged 33% YoY to | 1185.4 crore. Fresh slippages continue to remain elevated at | 230 crore led by one paper account worth | 71 crore slipping into NPA (as guided). Accordingly, GNPA ratio surged 59 bps YoY to 3.5% and provision escalated to | 116 crore during the quarter. The management has guided at a slippage ratio of 1.75-2% for FY21E. With a cautious approach in MSME and agri segment, advances growth remained slower at 10.4% YoY to | 33828 crore. Commercial real estate...
Instability in J&K; impacted business activities thereby keeping credit offtake muted and operational performance subdued. Operating profit was at | 336 crore, down 21% YoY largely due to flattish NII and lower other income. NII came in at | 875 crore, flat YoY, due to muted credit growth & decline in margins. Reorganisation in state related slippages and thereby higher provision led to loss of | 917 crore in Q2FY20 and de-growth of 52% YoY to ~| 49.6 crore in Q3FY20. Impact on business activities and repayment ability of borrowers led to asset quality deterioration on exposure in Jammu &...
Astral reported strong volume growth of 15% in the piping segment during Q3FY20 despite extended monsoons. The company witnessed a strong recovery in volume growth during November-December 2019. Astral has further guided at strong demand for pipes in Q4FY20 (with ~24% volume growth in January 2020) supported by market share gain (from regional, unorganised players) after the government imposed anti-dumping duty on CPVC resin import from China and Korea. We model piping segment volume CAGR of ~15% (FY19-22E) in line with management estimates supported...
