Monarch Networth Capital Limited Broker Research reports

Valuation and rating: We value RMT at an average of 26x Sept'23 PE and 16x Sept'23 EV/EBITDA to arrive at TP of Rs2,500 (Rs2,550 previously) and maintain BUY rating. Decrease in TP is due to downward revision of FY22/FY23 estimates. We have lowered both SS pipe and CS pipe sales estimates for FY22/FY23E, assumed higher realisation in 2HFY22 and also accounted the capital expenditure for modification of SS pipe plant....

Kirloskar Ferrous Industries (KFIL) has expressed interest for the seamless tube and alloy steel manufacturing assets of Indian Seamless metal tubes ltd (ISMT) with a non-binding offer of Rs6.7bn (~80% haircut to ISMT's outstanding loans). While this is an attempt at forward integrating the existing pig iron assets through the EAF plant of ISMT and leveraging the common customer profile in the automobile industry, we believe that improving the asset quality of ISMT plants will require substantial capital and time. We await clarity on structure of deal, synergies and...

INDIA l Institutional Research l Chemicals l 01st November 2021 Valiant Organics l BUY l TP: 1,975 Robust revenue growth, margins play spoilt sport We maintain a BUY rating with a revised TP of Rs1,975 (earlier Rs2,100); revision is largely on account of increase in RMAT costs, which has led to downgrade in earnings for FY22E/FY23E. The company posted impressive revenue growth of 64% YoY and 12% QoQ driven by improved realisation rates and increasing utilisation of enhanced capacities; we believe that this strong revenue growth should sustain. However, high RMAT and freight...

We present a high-conviction investment idea on Expleo Solutions, an under-researched premier quality assurance company, with a fair value of Rs1,420. The company is likely to be a One Stop Solution' provider with the merger of engineering, design and testing capabilities. Its investment in the high-growth next-gen testing segment, where it has a leadership position, has started to reap benefits. We believe, a niche company like Expleo Solutions is attractively placed considering its specialized offerings, growth visibility, MNC parentage, superior financials, increased outsourcing trend, traction in smaller deals...

We maintain our TP (Rs360) and BUY rating for Kirloskar Ferrous Industries Ltd. (KFIL). We have marginally increased our earnings for FY22/FY23 to account for higher realisations and higher cost savings from captive mines. Although performance in 2QFY22 was clouded by coking coal and coke cost pressure which will continue for 2-3 quarters, we believe continuous volume rampup in both divisions led by robust demand, capacity expansion and completion of massive cost saving projects in the next 1 year will act as...

We present an investment idea on Safari Industries with a fair value in the range of Rs 980-1,100. The company has undergone a paradigm shift after Mr Jatia acquired a majority stake and revamped the company's strategy and business operations. Over the years this has led to the company's turnover increasing ~10x and market share improving from a dismal 2% to 18%. Currently, Safari Industries is the single largest brand in terms of sales volume. We believe the company is in a sweet spot to capitalize on growth with economies opening up and massive shift from unbranded/unorganized to branded...

Jubilant Ingrevia (Ingrevia') came out with its Q2FY22 results, which showed significant QoQ de-growth in absolute EBITDA and margins on the back Acetyls (LS Chem EBITDA 14% vs 27% QoQ). Large part of sequential decline was on account of Inventory gains in Q1FY22 and reduction in % spreads. As per us, Q2FY22 can be considered as base for absolute EBITDA in acetyls while the margins may continue to decline on the back of higher Acetic acid prices. Spec Chem margins declined on the back of higher input costs, which should be passed on with a lag. Nutrition business showed sustained volume led growth on the back of Vitamin B3, feed and food business. The stock has had a phenomenal run since our IC on March 18th, 2021 (note) at INR 240 per share, since then the stock is up >3.5x in 7 months! Given the run-up in the chemicals space, we believe Ingrevia remains attractively priced, based on relative valuations as it trades at 12x FY23E EV/EBITDA. We revise our FY22/23 estimates based on the...

Plant visit takeaways - Baked to perfection! In our recent visit to Mrs. Bectors Food Specialities' (MBFSL) Khopoli plant (Breads and Buns facility), we got interesting insights into their manufacturing process and reasons that make MBFSL the sole supplier to leading QSR players in India. The company uses state-ofthe-art machinery with the process approved by leading QSR players. The company has indicated that demand for QSR and breads & buns has been better than pre-covid levels...

INDIA l Institutional Research l Metals l 4th October 2021 Kirloskar Ferrous Industries Ltd. l BUY l TP: 360 Plant Visit The Unsung Champion We raise our TP to Rs360 (previously Rs305) and upgrade the rating to BUY for Kirloskar Ferrous Industries Ltd. (KFIL). The upgrade stems from a better understanding of KFIL's leadership position in the casting business (mainly from our plant visit), which is very much comparable to an auto ancillary business and therefore deserves higher valuations than a commodity producer. We also learned...

We hosted Sundaram Finance and the laterals associated with the CV segment to gauge their sense on aspects around asset growth (in the backdrop of promising macro-indicators), CE and asset recovery (post the second-wave of COVID), fleet-operator profitability and other aspects associated with the sector. The...