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INDIA | Institutional Research | Consumer | 6 August 2021 Mayur Uniquoters l BUY l TP: 610 Navigating uncertainty; better performance ahead Valuation and risks: We expect Mayur's revenue/EBITDA/Adj PAT to grow at a CAGR of 20%/22%/23% over FY21-23E. We have marginally revised our estimates due to high RM pressure and lower PU sales given the current run rate. Owing to the operating leverage visibility, we maintain 18x P/E multiple and roll forward our estimates, thus, slightly revising our TP upwards to Rs610. Our DCF fair value base...
We initiate coverage on Valiant Organics, a chemicals manufacturer having a modest but niche product portfolio, with a BUY and TP of Rs2,100. Valiant's proven expertise in niche chemistries, agile manufacturing and innovative product selection strategy have helped it stand out in a congested chemicals space. Its remarkably large market shares in small but critical products undergirds its indispensability to clients. Our conviction is further bolstered by its sustainably high margins, superior return ratios and low leverage, and at the...
Laboratory to Kitchen - Cooking up a Storm We initiate coverage on Borosil, a thinly researched stock and a household name in the microwaveable glassware industry, with a BUY and TP of Rs300. Fortified by decades of experience, a powerful brand and a distribution network, the company commands ~60% market share in the microwaveable glassware industry. This is likely to be successfully leveraged by diversifying into new consumer categories. The company's highly profitable cash cow - the Scientific and Industrial Products (SIP) division, which commands a ~60% market share in the lab glassware segment,...
Shalby Ltd (Shalby') leader in Arthroplasty in India (market share of 15%), remains an under researched and under owned Investment Idea. Its best in class EBITDA margins even with lower occupancy and lower Capex/bed is a testimony of its cost and capital efficient operations. It remains almost net debt free even with the recent increase in its bed capacity by more than 55% and an implant facility acquisition. The newer hospitals (33% of operating beds) to lead EBITDA expansion on account of increased occupancies and asset maturity. Recent Implant facility acquisition provides massive synergies to Shalby with estimated annual savings of INR >11cr. Strong management bench-strength can help turnaround the International Implant business. We thus Initiate Coverage on Shalby with a BUY rating and a target price of INR 320, 29x P/E FY23 earnings, which is an upside of 65% on CMP....
We raise our TP to Rs305 (previously 290) and maintain ACCUMULATE rating on Kirloskar Ferrous Industries Ltd. (KFIL). We remain positive on KFIL's long term goal of growth and large cost savings (backward integration) but a very steep rally in recent past limits our upside in short term. A large project pipeline which includes commissioning of iron ore mine, phase 2 of coke oven & WHRP and PCI will result in combined savings of Rs3bn over next 3 years, offsetting fall in pig iron (PI) spreads. Further, strong volume growth will keep the balance sheet lean (despite heavy capital expenditure) and return ratios above 20%;...
We present an Investment Idea on VIP Industries (VIP) with a fair value in the range of Rs.550-600. The company is the undisputed market leader in the organized luggage industry with a market share of ~46%. Given the company's presence across different product categories, pricing points and wide distribution platform, we believe the company is in a sweet spot to capitalize on the growth with economies opening up. Further, adding to our enthusiasm are strong cost-cutting initiatives and an increase in sourcing from Bangladesh. These initiatives coupled with strong FCF generation and...
Outlook: With utilisation stable at ~75% since 2QFY21, we feel that HMSI's elongated maintenance shutdown in 3QFY21 was the prime reason for Fiem's revenue decline in FY21. Fiem's 4QFY21 production performance has been resilient and while due to the second lockdown, 1QFY22 is expected to be a dampener for the entire auto industry, we feel 2-wheelers demand remains a long-term positive story. With a...
J.B. Chemicals & Pharmaceuticals Ltd (JBCP) is one of the fastest growing company in the IPM on the back of its brand and therapy focused strategy. Its strong domestic franchisee (>85% sales from 5 mega brands: Cilacar & Nicardia in Cardiac and Metrogyl & Rantac in Gastro-Intestinal) enjoy enormous brand equity which allows them to earn >35% EBITDA margins. While unwinding of erst-while promoter's transactions provide a permanent shift in base, EBITDA margins likely to be supported at the current levels on account to productivity improvements and renewed focus on CMO, US generics and Russia business. We valued JBCP using SOTP based methodology; valuing Domestic franchisee at 7x FY23E EV/Sales and Exports business at 4x FY23E EV/Sales given their inherent quality. We thus initiate coverage on JBCP with BUY rating and target price of INR 2,000 which is ~33% upside on CMP. At our target price, JBCP is available at 26x FY23E PER; on the CMP JBCP trades at 20x FY23E PER....
We initiated on Jubilant Ingrevia ('Ingrevia') on March 18th, 2021 (note) at INR 240 per share, since then the stock is up >2.4x in less than 4 months! It still trades at ~11x FY23E EV/EBITDA, given the visibility on improving profile and robust pricing environment we believe there is room for further re-rating. Ingrevia came out with a robust set for Q4FY21 on the back of pricing in Acetic Anhydride and Ethyl Acetate (LS Chem EBITDA 19% vs 4% YoY). Demand side disruption in Acetyls is likely to continue over short term. On Spec Chem the growth was led by CDMO, Q3FY22 to see commercialisation of Diketene products a big trigger. We believe Ingrevia's transition to Specialty remains underappreciated with >70% of EBITDA contribution from non-commoditised segments. We thus revise our Mar-22 target price from INR 420 in base case to INR 770 valuing at 15x EV/EBITDA, which implies 35% upside on the CMP. Our Bull / Bear case TP is at INR 1015 and INR 450 respectively....
