Latest broker research reports from IDBI Capital buy, sell, hold, neutral recommendations along with target prices forecast and upside.
|Summary||Date||Stock||Broker||LTP||Target||Price at reco|
Change since reco(%)
|2020-07-13||Mutual Funds News +||IDBI Capital||Sector Update|
|2020-07-12||Avenue Supermarts Ltd. +||IDBI Capital||2994.20||2079.00||2322.70 (28.91%)||Target met||Sell|
Avenue Supermarts (DMART) 1QFY21 result was operationally in-line while PAT was better than expected due to higher other income. Store shutdowns, restrictions on selling high-margin non-essential products and strict social distancing norms inside the stores contributed towards dismal performance in Q1FY21. Online sale remain strong as customers preferred safety and convenience. Adding 2 stores of size 1 lakh sqft each is departure from DMART's usual strategy of opening 40-50k sqft size stores. Large-size stores should ideally be more profitable if the company maintains its usual inventoryturnout of 14x.Given the strength of DMART's balance sheet with Rs 29bn unutilized money from QIP, it would be opportune time to bargain real-estate and further...
|2020-07-11||Brokerage Research R.. +||IDBI Capital||Sector Update|
Our channel check suggests, average cement prices at an all India level is down 3% MoM in July-2020. Cement prices has taken a breather after sharp increase in the last two months. Recall, in May-20/June-20 cement price has increased by 6%/1% MoM. But despite the July-20 month weakness, average all India cement prices is up 4% MoM as on July-20 vs exit price of March-20. Cement industry production decreased by 22% YoY for May 2020 (latest data available). Led by pent up demand, cement companies has seen sharp increase in the utilization in May-20 vs April-20. But, given the monsoon, we expect the demand to decline YoY basis...
|2020-07-10||Tata Consultancy Ser.. +||IDBI Capital||2894.30||1982.00||2222.35 (30.24%)||-31.52||Hold|
TCS's Q1FY21 revenue decline of 6.9%/7.8% QoQ/YoY in CC was a miss to our forecast. EBIT margin of 23.6%, -150bps QoQ was also a miss. Further, higher than expect effective tax rate (ETR) resulted in higher miss at EPS level. In Q1, TCS has secured deals with TCV of US$6.9 bn (ex-Phoenix Standard Life deal) vs. US$5.7 bn YoY. TCS believes that the impact of Covid-19 pandemic has bottomed out in Q1FY21 and has maintained its revenue growth outlook for rest of FY21. We factor Q1FY21 miss and cut FY21E/22E revenue (US$) by 3%/2.5% and EPS by 2.6%/2.9%. We now forecast FY21 revenue to decline by 5.1% YoY and revive to a...
|2020-07-08||FMCG +||IDBI Capital||Sector Update|
As most of the economies are opening up and gaining momentum, demand for crude oil has also picked up amid tight supply as OPEC and Non-OPEC both cut its production level. Consequently, crude oil price (Brent) increased 29% MoM to average US$39.9/bbl. We expect oil price to remain in the broader range of US$35-45/bbl over the next quarter as demand would continue to be on a rising trend but higher price would bring back lost supply from US shale assets, which would keep price under check. However, on a medium to long-run we expect crude oil price to stabilise near US$50-55/bbl. OPEC cut its production level further to reach to the lowest level since May 1991 to 22.6mbpd vs 24.6mbpd in May'20 (30.4mbpd in Apr'20). Saudi Arabia was in a lead role with a production cut of 1.13mbpd MoM to 7.5mbpd in Jun'20 (11.6mbpd in Apr'20) while other countries saw a minor cut in production. This is in line with their commitment to bring down supply by 9.5mbpd which has further extended to Jul'20. We expect, if demand scenario doesn't improve much, production cut would be extended till year-end....
|2020-07-06||Infosys Ltd. +||IDBI Capital||1253.30||678.00||764.00 (64.04%)||-45.90||Hold|
In the last three months, BSE IT index (+31.4%) has performed largely in-line with BSE SENSEX (30.6%). There have been near-term headwinds on growth due to the impact of the Covid-19 pandemic. However, the sector's track record of dealing with headwinds, strong FCF profile, payouts (dividend/buyback) and corporate governance has augured well with robust FII flows and performance of broader markets. Q1FY21 has been another quarter of currency volatility cross-currency movement (negative for reported US$ revenue growth) and INR depreciation (positive on EBIT margin). However, this has been overshadowed by QoQ decline in revenue (in CC) and...
|2020-07-06||Brokerage Research R.. +||IDBI Capital||Economy Update|
|2020-07-03||Brokerage Research R.. +||IDBI Capital||Top Picks|
|2020-07-02||APL Apollo Tubes Ltd. +||IDBI Capital||1072.70||1978.00||1767.40 (-39.31%)||Target met||Buy|
APL Apollo Tubes (APL) Q4FY20 operating results were broadly in line with our estimates. Net sales decreased 10.6% YoY to Rs.18,087 mn led by lower volumes (-4.4% YoY to 401 kt) and lower steel prices. EBITDA fell 13.6% YoY to Rs. 1,199 mn. EBITDA/tonne fell 9.9% YoY to Rs2,989 due to lower volumes. Net profit fell 7.9% YoY...
|2020-07-02||Oil And Natural Gas .. +||IDBI Capital||111.00||95.00||81.85 (35.61%)||Target met||Buy|
ONGC's Q4FY20 result was impacted negatively by higher impairment losses (Rs 49bn), higher forex loss (Rs11.1 bn) and higher dry-well write off (Rs26.4 bn). Revenue was down 20% YoY to Rs 214.6bn on the back of 20% YoY lower crude oil realization at US$50.5/bbl. Oil sales volume declined by 7.3% YoY to 5.4mmt whereas gas sales volume declined 10.6% YoY to 4.7bcm. Further, standalone EBITDA declined by 37% YoY to Rs5 bn due to higher forex losses of Rs11.1bn. The company reported net loss of Rs31 bn while adjusted PAT declined 83% YoY to Rs7.1 bn. We forecast oil price of US$40/50/bbl for FY21/FY22 while oil and gas production decline of 2% for FY21 and 1% growth in FY22. We resume our coverage...
|2020-07-01||Petronet LNG Ltd. +||IDBI Capital||255.15||273.00||257.35 (-0.85%)||Target met||Buy|
Petronet LNG (PLNG) Q4FY20 result was a miss at EBTDA level due to higher other expenses. The company's revenue increased 2% YoY to Rs85.7 bn on the back of higher volume. Total volume increased 7% YoY (-6% QoQ) to 219tbtu led by 4% increase in Dahej volume and 87% increase in Kochi volume. Kochi-Mangalore pipeline is expected to complete by Jul'2020 which is likely to increase Kochi's utilisation to 30%-35%. The company's utilisation level at Dahej reached to 100% in June'2020 after seeing some disruption in Apr (upto 60% utilisation) and May'2020. We forecast Dahej/Kochi volume to reach to 17.8/1.8mmt in FY22 from 17.2/0.8mmt in FY20. We expect PLNG to get stiff...
|2020-06-30||Nilkamal Ltd. +||IDBI Capital||1815.55||1321.00||1142.60 (58.90%)||Target met||Accumulate|
Nilkamal Ltd.'s (NILK) Q4FY20 result was beat to our estimates. Despite muted sales in second half of March, 2020, the company's net sales declined just by 1.5% YoY to Rs5,615mn. EBITDA came in at Rs706mn, up by 26.5% YoY, while PAT stood at Rs318mn, increased by 4.9% YoY. Nationwide lockdown completely halted NILK's production facilities in April and few facilities resumed production in May. However since June all the plants are operational. The management has guided subdued Q1FY21E and business to normalize in Q3FY21E. On positive side, NILK's extensive distribution network, direct connect with the industrial customers and strong brand recall amongst retail customers will enable it to...
|2020-06-29||Oil India Ltd. +||IDBI Capital||126.30||113.00||95.65 (32.04%)||Target met||Buy|
Oil India (OIL) Q4FY20 reported first-time ever negative EBITDA on the back of lower volume and realization. However, due to higher other income and deferred tax writeback OIL reported 51.5% YoY growth in net profit. Revenue was down 16% YoY to Rs26 bn owing to 3.4%/8.3% YoY decline in oil/gas production volume and 15.5%/3.2% drop in oil/gas realization in Q4FY20. We expect oil production to fall by 2% in FY21 and stable in FY22 due to natural decline. Also, gas volume to dip by 5% for FY21 before reaching to FY20 levels in FY22 on the back of Baghjan fire, flood and Covid-19. We forecast crude oil price (Brent) to average to US40/bbl and US$50/bbl in FY21 and FY22 vs US$60.9/bbl in FY20. We value it's core business at Rs55 (4.5x EV/EBITDA) and Rs58 for...
|2020-06-29||Berger Paints (India.. +||IDBI Capital||679.85||374.00||502.20 (35.37%)||44.99||Sell|
Berger Paints (BRGR) result was below expectations. Revenue on standalone basis declined at a higher rate compared to Asian Paints (APNT) largely due to higher stress in industrial coatings. However, on consolidated basis, Berger outperformed APNT led by (i) strong performance of a subsidiary in Poland (41% international revenue share, 4% PAT margin) led by higher exposure to external insulation and construction projects business which were not subject to lock-down (ii) inclusion of STP LTD revenue (acquired in Nov'19). Gross margin expansion is likely to sustain led by deflationary raw material cost trend. Only 10% of raw material is imported from China, hence no...
|2020-06-26||GAIL (India) Ltd. +||IDBI Capital||141.80||135.00||105.15 (34.85%)||Target met||Buy|
GAIL has come out with robust set of numbers in Q4FY20 led by strong profit growth from petrochemicals and gas trading division. Though, volume growth remain muted for most of the segments owing to lockdown for 9 days in Mar'20 but lower gas cost, better marketing margin and cost efficiency across segment boosted profits. Further, out of total 120 cargoes in FY20, 46 were sold overseas and 74 in India and expect similar ratio for FY21 as well. Out of total 90 LNG cargoes from US, the company has already sold 37 cargoes overseas and nearly 70% of total volume is hedged. The company mentioned that except CNG volume, volume at all the segment has come...
|2020-06-26||Indian Oil Corporati.. +||IDBI Capital||98.05||86.00||89.15 (9.98%)||Target met||Hold|
IOC's Q4FY20 result was impacted negatively by higher inventory losses (Rs184.8 bn) and higher forex loss (Rs27.2 bn). Further, marketing and petchem EBITDA was a drag to profits owing to lower marketing margins, lower volume and lower polymer delta. Reported GRM came at a negative US$9.6/bbl whereas normalised GRM reported by IOC was US$2.2/bbl (inventory loss of US$17.9/bbl). Refinery utilisation has already reached to nearly 90% in first three weeks of June (40% in Apr and ~62% in May) and management expect it to normalise within a month. We expect GRM of US$3/bbl and US$4/bbl in FY21 and FY22 respectively while marketing margin to remain stable on a...
|2020-06-25||Finolex Industries L.. +||IDBI Capital||613.10||603.00||483.25 (26.87%)||Target met||Buy|
Finolex Industries Ltd.'s (FIL) Q4FY20 result was marred by lower volume off-take amid COVID-19 pandemic. The company's plants and business was completely shut down from March 23, 2020, which led to muted performance in otherwise a seasonally strong quarter. Net sales declined by 20.5%YoY to Rs7,661mn, while EBITDA came in at Rs1,041mn, down by 29%YoY. The company reported net profit of Rs587mn, declined by 37.2%YoY. On a positive note, plant operations have gradually started from April end and demand outlook remains healthy, particularly on agri-pipes segment. We like FIL's extensive distribution network, healthy market share in pipes segment and...
|2020-06-24||Asian Paints Ltd. +||IDBI Capital||2277.20||1747.25 (30.33%)||Buy|
Asian Paints (APNT) result was below expectations. Volume growth was in double digit during Jan-Feb'20 followed by decline in Mar'20. The gap between value and volume growth rises as APNT strongly pushes bottom-of-the-pyramid products (margins are similar in both premium and value products). Gross margin expands for the 4th consecutive quarter led by deflationary raw material cost. Business lost during Apr'May'20 (before rainy season) is tough to win-back in 2HFY21 as re-painting demands are largely event driven (wedding, protection from leakage etc). However, since home will become important place to socialize, people would want their home to look beautiful. Hence, expect industry tailwinds to remain favorable. APNT has also...
|2020-06-18||Muthoot Finance Ltd. +||IDBI Capital||1299.70||1200.00||1175.80 (10.54%)||Target met||Buy|
Muthoot Finance (MUTH), one of our top picks, reported robust growth in profitability (60% YoY) as well AUM (22% YoY Cons.) in 4QFY20. NII grew by 30% YoY led by improvement in margins; while PBT grew by 38% YoY led by lower provisions (down 76% YoY). Lower provision as asset quality improved as well as management expects no further requirement of provisions for Covid -19 due to gold loan business model. Stage III loan assets declined by 38bps QoQ to 2.16%, however NPA is never a cause of concern in gold loan. We revise estimate upwards to 10% AUM growth for FY21 vs 5% YoY earlier as management remains confident of 15% gold loan growth in FY21. This...
|2020-06-17||Castrol India Ltd. +||IDBI Capital||129.70||138.00||117.95 (9.96%)||6.40||Buy|
We lower our CY20 volume forecast due to likely weak volumes during Q2CY20 on the back of extended lockdown. Our CY20 sales/EBITDA/EPS estimates are lowered by 6.1%/7.9%/8.2%. We make minor changes to our CY21 forecasts. We value the stock at a PER of 18x CY21E EPS (earlier Rs17x) and derive a target price of Rs138 (previous Rs139). We maintain our BUY rating on the stock. Key Highlights and Investment Rationale Volumes fall sharply: Castrol's sales volumes fell 24.6% YoY to 38 mn ltrs due to weak demand from auto as well as due to lockdown in late March. Even realization at...