Monarch Networth Capital Limited Broker Research reports

Outlook: With most regional reservoirs consistently clocking healthy water level (> 10year average) and the healthy monsoon that we have witnessed; we stick to our view of low rural water woes for at least two years. The MSP hike for FY2021 has continued with key crops' price being raised by an average of ~4%. Thus, favourable tractor drivers bolster our existing conviction in SEL's cash-rich and debt-free business. Valuation & Risks: We continue to value SEL using the DCF methodology to arrive at a fair value of Rs 1,305 and maintain REDUCE. We have slightly revised our earnings estimates accounting for the current high capacity utilisation. While SEL's business and industry fundamentals are intact, we feel that COVID-19 related uncertainty still...

Achieves the milestone of lowest cost pig iron producer The record high injection of pulverised coal has led to a structural reduction in Tata Metalik's (TML) upstream cost thereby making it the lowest cost producer of pig iron in India. Multiple price hikes for foundry grade pig iron and low coking coal cost further led to record high pig iron spreads and highest quarterly profit in 2QFY21. The partial repayment of debt has strengthened TML's balance sheet making it net cash. With robust outlook on long term demand for DI pipes, lowest production cost, impeccable capital allocation and superior corporate governance, we maintain our...

Channel checks with Pipeline engineers from a leading oil & gas company regarding demand recovery. Industry-wise list of on-going expansion projects which will drive demand for SS and CS steel pipes....

INDIA l Institutional Research l Automobile l September 30, 2020 We hosted a call with Saifee Tyre Service, a multi-tyre brand dealer which operates in Dadar East, Mumbai. On average, Saifee sells ~700 units/month of passenger car tyres, ~300 units/month of 2-wheeler tyres and ~150-200 units/month of CV tyres. Our dealer interaction revealed that while passenger car and two-wheeler tyre demand is slowly picking up, the CV tyre demand remains subdued in the current lockdown climate. Lower production and the shortage of labour persists leading to unavailability...

It is the sheer grit of the management to diligently repay its long-term debt in this environment while bagging new global orders. Fiem's 1QFY21 results were a one-off arising from zero production in April and slow pick-up amidst lockdown. We still feel that the management is being extremely prudent with its low capital expenditure and cash conservation. In our view, the company is on the right track to diversify its OEM client base and greater personal mobility should provide an early advantage to two-wheelers. We give an ACCUMULATE rating with a revised TP of Rs650. Gross Margin slips: The top line declined by 81% YoY to Rs67mn in Q1FY21. The...

We initiate coverage on Central Depository Services Ltd (CDSL) with BUY and Target price (TP) of Rs525. This thinly covered stock sports a well-diversified revenue mix, impressive margins, and correspondingly healthy returns. The asset-light model, duopoly play on the secular increase in stockholder accounts coupled with potential market share gains is an added positive. While this itself is a successful recipe for growth, the icing on the cake could be the massive unexploited revenue opportunities in CDSL's core activities, and leveraging its customer base and data for new businesses, a feat adroitly accomplished by similar sectors such as credit rating agencies (not to...

In our Water project Tracker, an occasional review of the progress of water projects (including the Jal Jeevan Mission) along with an analysis of its impact on demand for pipes, we outline our discussion with a senior official at Kerala Water Authority (KWA), which highlights that although currently there is a countrywide slowdown in execution of water projects, we will likely see pent up demand for pipes in FY22. Decoding the tender document of a water project, we learned that ~30% of the budget outlay is spent on DI pipes. The ongoing Andhra Pradesh State...

We remain convinced of Lumax Industries (LMXI) strong entry segment market leading client portfolio and a gradual increase in annual LED revenue share. What provides us additional confidence is that in the current uncertain climate, LMXI has a low D/E of 0.15x and is being prudent with its CAPEX planning. 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. We maintain a BUY with a TP of Rs1,650. LED revenue share slips due to HMSI: LMXI's top line declined by 80.6% to...

Valuation and risks: Mayur is currently trading at a 9% discount to its 5-yr average 1-yr forward P/E. We continue to value Mayur at 15x FY22E EPS to arrive at our TP of Rs270 and change our rating from BUY to HOLD. We have slightly revised our earnings estimate. Risks to our call include slower-than-expected...

Valuation and risks: We value OCCL using DCF methodology to arrive at a TP of Rs1,029 and maintain a BUY rating. Our estimates have marginally been revised with a minor TP change to Rs1,027 from Rs1,091. Key risks to our thesis are...