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Rail capex increased from ~US$6bn/annum to ~US$24bn/annum from 2014 to 2020 and is expected to further increase to ~US$33bn/annum over the next 10 years. The near term key focus would be on electrification, signalling and gauge conversion while station re-development, DFC and HSR remain medium to long term focus areas. NIP, a major catalyst for infra investments in Airports, Ports, Roads, Renewables, etc. remains a pivotal area for RITES....
Valuation & Risks. We assign a PE multiple of 30x (premium to other chemical companies as discussed above) on FY23E earnings of Rs 97.9 post which we arrive at a target of Rs.2,936, an upside of 26% from current levels. We believe Galaxy deserves a higher valuation multiple compared to other chemical companies due to its high return ratios and eye-popping cash flows. The company is also less exposed to the general risks faced by chemical companies, such as commodity price fluctuations and cyclicity. The stock can very well move towards FMCG valuations, if not reach them....
In our occasional review of the progress of water projects (including the Jal Jeevan Mission) and its impact on demand for pipes, we highlight how funding has resumed in the Covid-hit states along with a 3x surge (vs. August 2020) in countrywide release of funds. Our discussion with a senior official at Uttar Pradesh State Water and Sanitation Mission (SWSM) indicates massive spending worth Rs65bn aimed to increase the tap water coverage to 40% in 2years (14% currently). With 4x surge in budgetary allocation by Centre for the Jal Jeevan Mission Rural in FY22 and announcement of another Rs2.87tn for Jal Jeevan Mission Urban, we...
Outlook: With utilisation stable at ~70-75% since 2QFY21, we feel that HMSI's elongated maintenance shutdown was the prime reason for this stagnation and it should climb higher from 4QFY21 onwards. FIEM's orders from Piaggio are fully LED and this trend should further boost the shift from halogen to LED. The AFI JV staying in positive territory is a good sign for the future. While we maintain our view that FIEM is aggressively trying to grab market share by supplying to new models of existing clients, new sizeable 2W clients and entry into 4Ws will be the key triggers for Fiem's next leg of the growth story....
We retain our BUY rating with a revised TP of Rs1,790 as we remain confident of Lumax Industries' (LMXI) well-diversified client mix and strong backing of Stanley. While 3QFY21 revenue lagged the industry production growth by a whisker, we think that that accounts like Tata Motors and Hero MotoCorp (HML), which are displaying strong growth, should offset any decline arising from an unfavourable model mix. LMXI is not facing any semiconductor issues due to Stanley's global support and this auger well for the company. We stick to our view that LMXI being...
INDIA | Institutional Research | Consumer | 16 February 2021 Mayur Uniquoters l ACCUMULATE l TP: 470 Marching from Maruti to Mercedes Valuation and risks: We have revised our earnings estimates by incorporating minor price hikes, 7th PVC line capacity coming online in FY22 and better utilisation on the back of demand pick up. We roll forward our estimate but continue to assign 15x to FY23E EPS to arrive at our TP of Rs470. We have introduced a DCF valuation methodology in this update as we feel Mayur has a better hold on its cash and...
Valuation and risks: Our estimates have marginally been revised due to more than expected demand and a revival in commercial vehicles. We value OCCL using DCF methodology to arrive at a fair value TP of Rs1,150 (implied FY23 P/E of 11.6x and implied FY23 EV/EBITDA of 7.4x) and maintain a BUY rating. Key risks to our thesis...
Valuation and rating: Valuation and rating: We value La Opala at 38x on Dec 22 EPS of Rs 10 leading to a TP of Rs 380 an upside of 81%. The company has delivered EBITDA that has consistently outpaced revenues, with margins more than doubling in the last 10 years (ending in FY20, a pandemic-driven aberration). Free cash flow generation and conversion of EBITDA to FCF have been regular. While current and attributed valuations may appear demanding, we strongly believe they are justified in view of above mentioned prospects, option-value of new businesses not backed in, and clear examples of valuation expansion...
We interacted with Indian Railway Finance Corporation (IRFC) management to get their perspective on asset growth, income recognition, margins, and other business aspects. IRFC management reiterated their stance on strong AUM growth (Q3FY21 AUM grew 26.8% YoY) and follows increased capital outlay by the Ministry of railways. Superior credit ratings and diversified borrowing mix saw the cost of borrowings reduce further (9MFY21 marginal cost of borrowings at 6.4%), and thus retain margins at 1.4% (annualized for FY21). Exposure to sovereign has attributed to NIL NPA and excessively high capital-adequacy. Revenue/earnings growth thus have remained healthy (Q3FY21...
Spot prices remain volatile; any RM hikes to be passed on to the customers: Spot prices remained extremely volatile over last 3 months, however ATGL was still able to increase its industrial PNG volumes on account of its superior gas sourcing. For CNG segment, ATGL has taken multiple hikes in a period of extremely favourable gas economies with (APM gas at USD 1.79mmbtu) given the hikes in alternative fuels. We strongly believe that any hikes on the domestic...
