Gandhi Special Tubes (GST) reported a healthy performance in Q2FY19 with net sales for the quarter coming in at | 33.6 crore, up 12.9% YoY. Corresponding EBITDA in Q2FY19 was at | 12.9 crore with subsequent EBITDA margins at 38.3%, flat YoY PAT in Q2FY19 was at | 10.0 crore, up 15.1% YoY Topline growth of 12.9% can be considered a temporary blip vs. ~30% in last three quarters (Q3FY18, Q4FY18 & Q1FY19). The management attributed it to fewer working days in the quarter with...
Emmbi Industries (Emmbi) reported a healthy Q2FY19 performance Net sales in Q2FY19 were at | 73.3 crore, (up 21.8% YoY) EBITDA in Q2FY19 came in at | 10.3 crore with corresponding EBITDA margins at 14.0%, up 20 bps YoY PAT in Q2FY19 was at | 4.4 crore, up 18.9% YoY The company is putting its new capacity (food grade FIBC+ pond liner) to optimum use and is stated to attain peak capacity utilisation, going forward, in FY20E. Capacity utilisation in FY19E is expected at...
We anticipate Somany's sales volumes will improve in H2FY19 as operational disruption such as trucker's strike, Kerala flood, software related issues & credit control measures are behind us. Additionally, 3.5 million square metre (msm) GVT capacity addition in Andhra Pradesh will further aid volume growth for the company from FY20E. We expect Somany's sales volume to grow 11.3% in FY20E. Furthermore, with the company taking price hikes across the product portfolio, an increase in share of value-added products, expected fall in gas prices & higher...
ICICI Securities Ltd | Retail Equity Research We recently met the management of Aditya Birla Fashion & Retail (ABFRL). The key takeaways are: -i) festive period sales have been strong across all formats, ii) anticipates Pantaloons to report healthier revenue growth in H2FY19 owing to a shift in the festive season, iii) lifestyle brands are expected to maintain healthy growth momentum with early double digit SSSG in FY19E, iv) innerwear business growing at a rapid pace and currently has ~10,000 point of sales and v) would go slow in...
The financial sector has come off from the turbulence in previous months led by the NBFC crisis, particularly housing finance companies. The market has clearly differentiated to favour NBFCs with strong parentage and robust business model. Banks with high CASA like HDFC Bank, Axis Bank and SBI have clearly outperformed. Being corporate banks and...
ICICI Securities Ltd | Retail Equity Research Astral Poly came out with a strong set of numbers in H1FY19 wherein revenue, PAT increased 20%, 30% YoY, respectively, led by impressive growth in the adhesive segment (revenue up 25% YoY). The piping segment revenue growth at ~12% YoY was lower-than-expected mainly due to trucker's strike, floods in Kerala and fall in PVC prices, which led to sales deferral by dealers. Despite this, EBITDA margins increased ~200 bps YoY to 15.6% due to price hike (mainly in the adhesive segment),...
ICICI Securities Ltd | Retail Equity Research JLL launched 100% natural and chemicals free incense stick - Maxo Agarbatti in Q2FY19. The mosquito repellent incense stick category has posted 101% revenue CAGR in last three years with a size of | 385 crores (YTD CY18). The market currently consists of hundreds of local brands of which many are illegal/unorganised and use harmful pesticides. With high growth and huge popularity being witnessed in this segment, we believe JLL has made the right move to capture the opportunity by foraying into...
The domestic auto industry reported muted wholesale numbers (factory dispatch) for November 2018, indicating 4.2% YoY growth, with consequent YTD industry growth maintained at a healthy 12.2% YoY. With the 2018 festive season being muted vis--vis robust growth seen in the past, OEMs found themselves on the backfoot having miscalculated the retail demand, resulting in large inventory pileup at the dealer's end. According to Federation of Automotive Dealers Association (FADA), dealer inventory, at the end of the festive season, amounted to ~50 days...
ICICI Securities Ltd | Retail Equity Research The Bombay High Court (HC) denied an interim stay to Kotak Mahindra Bank (KMB) with respect to its December 31 deadline to dilute its promoter holding. The ongoing debate is on using non-convertible perpetual noncumulative preference shares (PNCPS) as a means for dilution. According to RBI commentary now, PNCPS has no voting rights. The next hearing by the HC is scheduled on January 17, 2019 while the December 31, 2018 deadline to reduce the promoter's stake below 20% still stands. KMB had issued 100 crore non-convertible PNCPS of face value | 5 each...
Central Electricity Regulatory Commission's (CERC) draft power tariff regulations aim to promote efficiencies like reduction in regulated equity of conventional power sector in India, with the proposed return on equity higher-than-expected at 15.5%. However, some suggested changes may face implementation challenges like formation of operating & maintenance expense escalation being below long term inflation and tightening of working capital by way of reduction in receivable days despite payment delays from discoms....
Central Electricity Regulatory Commission's (CERC) draft power tariff regulations aim to promote efficiencies like reduction in regulated equity of conventional power sector in India, with the proposed return on equity higher-than-expected at 15.5%. However, some suggested changes may face implementation challenges like formation of operating & maintenance expense escalation being below long term inflation and tightening of working capital by way of reduction in receivable days despite payment delays from discoms....
Larsen & Turbo Infotech (LTI) recently hosted its analyst day in Mumbai. LTI is a technology and digital solutions company with a presence in BFSI (47.8% of revenue), manufacturing (15.4%), hi-tech, media & entertainment (11.2%), energy & utilities (10.7%) and CPG, retail & pharma (10.2%). In coming years, the company is planning to increase its focus on life science, consumer package goods and hi-tech. The company reiterated its growth engines as winning large deals, new logos and client mining and its continuous efforts in driving the same. Visible signs of it...
After a recent publication by a brokerage regarding corporate governance issues in Sun Pharma and a complaint filed by a whistleblower with SEBI, the management of Sun pharma conducted a call to address apprehensions among investors. While the first issue was addressed with case by case analysis, the question mark remains over the whistleblower's complaint for want of management action plan as the management awaits SEBI correspondence. Similarly, concerns regarding issues related to transactions with AML (related party distributor) and Loans and Advances to...
We recently met Tarak Patel, Managing Director of GMM Pfaudler, to get an insight into the company's business model and growth prospects. GMM Pfaudler is a leading supplier of glass lined based equipment (reactors, storage tanks) in India, commanding > 50% domestic market share, finding critical application in the chemical & pharmaceutical industries. It has its manufacturing base in Karamsad, Gujarat. Pfaudler Inc, a world leader in glass lined equipment, purchased 40% of the company in 1987. They further increased their stake to 50.44%. The...
ICICI Securities Ltd | Retail Equity Research We attended the analyst meet of Greenply Industries (GIL). The key takeaways are: -i) MDF industry currently operates at 50% capacity utilisation, ii) the management has guided for ~60% blended utilisation for its MDF business while Andhra MDF plant is expected to reach breakeven at PBT level in FY20E, iii) on the plywood business, GIL will increase the proportion of outsourcing to 30% in the next three years and iv) the management has guided for | 1500-1600 crore revenues and 11.5% EBITDA margin for plywood business post de-merger. We maintain our...
After seeing a moderation in growth in the last three years, Bhartiya International's (BIL) fashion business growth inched up to 16% YoY in H1FY19 along with a 220 bps improvement in EBITDA margin to 10.4%. Going ahead, BIL is looking to achieve a turnover of | 1000 crore in FY20E and improvement in EBITDA margin (12%) as textile business (~35% of topline) reached break-even level. With better revenue growth, it expects better contribution from the textile business. Secondly, we are finding it difficult to monitor the progress of its real estate business given the lack...
RBI maintained status quo on the policy repo rate, maintaining it at 6.5%, which was not as estimated by markets. The stance on calibrated tightening was maintained. Reverse repo rate was maintained at 6.25%. SLR was reduced 25 bps to 19.25% with aim to bring it down to 18% in line with LCR. CRR stable at 4%. Monetary policy decision to maintain stance of calibrated tightening was favoured by four committee members while a member Mr Dholakia had a view to change stance to neutral. The governor spelled out in his speech the chances of policy action (i.e. rate...
