Monarch Networth Capital Limited Broker Research reports

Cost savings intact in a weak quarter| Result Update 1QFY21 Tata Metalik's (TML) long-term prospects remain intact despite a weak 1QFY21 performance on account of muted sales and realisations due to the pandemic. No relief in the fixed costs further dragged down the EBITDA margins to ~5%. We believe that although realisation will remain muted in FY21, the spreads will continue to stay buoyant due to the enormous cost savings from increased coal injection, low coking coal prices, commissioning of coke oven and captive power plant. With robust outlook on long term demand for DI pipes, massive cost savings, impeccable capital allocation...

INDIA l Institutional Research l Automobile l 22 July 2020 Swaraj Engines l REDUCE l TP: 1,302 Revving dark horse has galloped, awaiting a fresh race Swaraj Engine's (SEL) 1QFY21 result seems dull mainly on the account of no production in April 2020 owing to the lockdown. Post the opening of plant on 5 th May, SEL has been nearing ~100% capacity utilisation. Factors like India's reservoirs' level breaching the 10-year average, on-going healthy monsoon and recent kharif MSP hikes are buoying the domestic tractor demand. While a lower...

INDIA l Institutional Research l Automobile l July 6, 2020 Fiem Industries l BUY l TP: 524 Improving working capital cycle; expect better capital allocation | Result Update 4QFY20 Fiem's Q4FY20 results were encouraging in terms of margin stability and good cost control displayed by the company in a prolonged slowdown. We feel that the management is being prudent in lowering CAPEX and conserving cash and in turn focussing on debt repayment in these unprecedented times. The plan to diversify revenue stream and product portfolio are intact, though with a perceptible lag due...

We initiate on Tata Metaliks (TML), a premier pipe manufacturing company, with a TP of Rs680 (~38% upside) and BUY. In what appears as many stars being aligned, the doubling of its high margin Ductile iron (DI) pipe capacity which comes just on the cusp of expanding demand from government schemes like Jal Jeevan Mission, is a force multiplier that facilitates potential of massive ~500bps market share gains, structurally enriches its EBITDA/t profile, and partially offsets commodity price risk of the pig iron (PI) business. Additional impetus to productivity will come from cost-saving...

Valuation and risks: Mayur is currently trading at an 18%/78% discount to its 1yr forward P/E and EV/EBITDA multiple. We value Mayur at 15x FY22E EPS to arrive at our TP of Rs269 and maintain a BUY. Post COVID-19, we have revised our earnings estimate and trimmed our TP from an earlier value of Rs317. Risks to our call include slower-than-expected recovery in automobile production due to...

We remain convinced of Lumax Industries (LMXI) strong client portfolio and cost rationalisation efforts and hence maintain a BUY with a TP of Rs1,397. In the current uncertain climate, LMXI is focussed on conserving cash and being prudent with CAPEX. Currently, LMXI has Rs1.5bn worth of unutilised credit lines and thus faces no immediate liquidity challenge. We stand by our existing conviction that greater LED penetration and higher local content will aid LMXI's margin profile and new products with Stanley will help diversify revenue streams. LED revenue share intact while margin expansion continued: LMXI's top line...

Why should you invest your time in this report? Hodrick-Prescott analysis of Indian tractor cycle How is SEL better placed than key tractor OEM Should M&M; merge SEL within itself A scenario...

Strong regulatory tailwinds make it a multi-year story PNGRB's latest two bidding rounds gave a massive push to the overall CGD infrastructure with ~4x increase in CNG outlets and ~7x increase in PNG connection. With no caps on tariffs, the revised PNGRB bidding regulation puts emphasis on network coverage, further encouraging execution, which has been AGL's forte. The environment tribunal's restriction on traditional fuels in many...

We initiate coverage on Lumax Industries (LMXI), the largest auto lighting player in India, with a BUY and a TP of Rs1,794. A long history of catering to the biggest domestic auto players like Maruti, Hyundai, HMSI, and Hero MotoCorp (HML), demonstrate LMXI's product R&D; and impeccable quality. We believe that the key driver for increased LED penetration will be the impending fusion of BS-VI and CAFE norms, which will compel OEMs to incorporate LEDs and other lightweight materials. LMXI has been a substantive beneficiary of a three-decade old equity and technical partnership with Stanley, which has, inter alia, laid the foundation for its debt-free...

We initiate coverage on Oriental Carbon & Chemicals (OCCL) with a BUY and TP of Rs1,287. OCCL, India's leading Insoluble Sulphur (IS) manufacturer, has consistently registered higher EBITDA margins and cash flow generation capacity along with a rising market share over the last 10 years in an oligopolistic industry for a critical tyre component. In the light of growing IS demand, OCCL is increasing its capacity, which it has efficaciously done before, and is poised to benefit from higher IS demand due to growth in high-performance tyres and rising radialisation of...