We recently interacted with the management of Kansai Nerolac Paints (KNPL) to understand the developments in the company and in the sector. KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector; 2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots);4) Heavy promotion through...
MSSL, through its step down subsidiary Samvardhana Motherson Automotive Systems Group B.V. (SMRP BV), announced the proposed acquisition of Reydel Automotive Group (Reydel), a privately held portfolio company of Cerberus Capital Management, L.P. (Cerberus) for a purchase price of $201mn. In our view, this deal helps MSSL move a step forward towards achieving its vision 2020 revenue target of $18bn, further scale its interiors business and opens up new markets. Prima facie, the transaction valuation of 2x EV/EBITDA looks attractive for a company with 25% RoCE, net cash and positive free cash generation. Since our previous update, the...
We believe that the weakness in EIL stock price over the last two months is predominantly driven by weak order inflows in the current quarter. We expect key large orders (including HPCL Barmer refinery order) to defer to Q1/Q2FY19. We retain long term positive view on EIL, however tweak FY19/20 estimates to factor in continued sluggish momentum in awarding of new large ticket size orders. We expect EIL valuations to remain under pressure driven by sluggish ordering momentum. Further delays in the awarding of key orders can pose threat to our earnings estimate. We reduce our target PER and value EIL at 23x FY20 (25x earlier)...
We recently met with the management of TBA. Company continues to stay on a strong growth trajectory. We expect TBA to benefit from expected healthy automobile demand over FY18-FY20E. Addition of new customers and new orders gives visibility to robust revenue growth in FY19/FY20. Company is also working on new products which is expected to gain acceptance with BSVI implementation. On the EBITDA margin, the company expects to witness improvement through cost reduction, import substitution of raw material, operating leverage and turnaround in one of...
NBCC (India) Ltd, a Navratna PSU with major presence in project management consultancy space in building segment is focusing on execution of its order book. In the last 4 years (FY15-18E), the company has grown its order book by ~4x to ~Rs 800 bn which gives strong revenue growth visibility for the next 5 years. On the other hand, the revenue has grown less than 1.5x in the same period. The company is focusing on execution and expects strong revenue growth in FY19E as most of the redevelopment projects would contribute meaningfully in the year. It has begun work on Rs 100 bn of new projects in the past 6 months which will be...
We believe Petronet's earnings will continue to rise over the next 2-3 years, driven by higher volumes from Dahej LNG regasification terminal and a higher operating rate of the currently stranded Kochi terminal. Construction of the pipeline to evacuate gas from Kochi is progressing well. PLNG is eyeing to invest in the...
KNR Constructions, a strong player in road construction in south is focusing on growing its order book by adding new projects in road sector. The company has been awarded first Hybrid Annuity project (HAM) from NHAI of value Rs 10.2 bn in the state of Tamil Nadu. This is the first major road project bagged by the company in FY18E and would strengthen its order book to ~Rs 43 bn from Rs 33.3 bn at the end of Q3FY18. The company is also lowest bidder (L1) in another HAM project of Rs 11.7 bn in Karnataka where awarding is expected in near future. The company has strong bid pipeline of road projects in south India particularly in...
Akzo Nobel NV, the world's largest paint company, operates in India through its subsidiary Akzo Nobel India (Akzo) operating primarily in the decorative paint segment through its well-known brand Dulux and in the area of performance coating and specialty chemicals. Akzo in India enjoys ~ 9% market share in decorative paints in India serviced through its network of 9,000 plus dealers and 90 depots and six manufacturing facilities. We expect the company to report ~ 14.5% earnings CAGR over FY18-20E driven by ~ 9% revenue CAGR and improving margins. Strong growth in volumes should...
KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector;2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots);4) Heavy promotion through multiple media platforms and 5) Sales aggression exhibited by the company. Management (and we agree) expect the growth momentum to continue in medium term as well with increasing disposable income,...
CUMI Q3FY18 result was in line with our estimate. Volumes across divisions have started to pick up with exception to channel abrasives, severed by GST rollout. Industrial ceramics and EMD division have been witnessing rising demand across...
