DRRD is well-placed to erosion in the base business, b) robust ANDA launches for the US segment, c) improving benefit from cost rationalization, d) a favorable demand-supply scenario in the PSAI segment, and e) synergy benefit through the addition of the Wockhardt portfolio. After three years of YoY decline in US sales, DRRD exhibited 5% growth in FY20, led by new launches, improved market share, and the reduced impact of price erosion in the base portfolio. The PSAI business has remained sluggish over the past three years, with a CAGR With a strong order book, a favorable demand-supply scenario, and the low base of the past year, DRRD delivered 88% YoY growth in the PSAI segment in to de-risk API supplies and b) stocking up on APIs in preparation of unexpected We expect the PSAI business to post a CAGR of 23% over FY2022 as clients focus on alternate sources of RMs to de-risk their businesses.
It expects cost-cutting efforts to boost margins, with volume recovery and the Premium portfolio outperforming. 25.6%), weighed by a weaker product mix (lower export mix and Apache) and the impact of the BS6 cost inflation (as contribution margins are yet to be Furthermore, op. Interest cost increased due to additional borrowings in 1QFY21 to ensure The company expects demand recovery in 2HFY21, with TVSL performing better than the industry on account of its portfolio. Apache faced severe production-related challenges, which impacted the mix in Expect margins to improve in 2H, driven by cost cutting and focused market strategy. would be INR3b for FY21 and investment in TVS Credit would be We upgrade our FY20/FY21 EPS by 2%/5% to INR10.3/17.5 to reflect volume recovery. We expect TVSLs market share gains to slow as there are now only limited product gaps in its portfolio. We upgrade our FY20/FY21 EPS by 2%/5% to INR10.3/17.5 to reflect demand recovery.
30 July 2020 MSILs 1QFY21 revenues declined 79% to ~INR41b; EBITDA/PAT loss was reported at ~INR8.6b/INR2.5b. MSILs domestic PV market share declined sharply by 430bp YoY (700bp While MSILs 1QFY21 performance was insignificant as normal operations were there only for two weeks in 1Q, commentary on demand recovery is positive. However, commentary on demand recovery is positive. Management has not given any demand outlook as the situation in dynamic and operating environment is changing frequently. We upgrad our FY21/FY22E EPS by ~13%/5% to factor in for cost cutting initiatives, higher other income and lower depreciation. Maintain QoQ) to 47.3% in 1QFY21 due to supply side challenges. Net realization saw steep increase of 9.3% QoQ (+13.2% YoY) to ~INR536k (v/s est. ~INR471k) as non-vehicular revenue contribution was very high, though vehicle ASP were stable. Gross margin contracted ~120bp QoQ (140bp YoY) due to sharp decline in inventory levels (impact of INR1.1b or 3.
While the company did not give out market share for 1QFY21, we believe the flattish volumes indicate good performance under in 1QFY21 to INR10.4b (v/s est. We arrive at a TP of INR1,660/share (target multiple of 43x Jun22E EPS, based A combination of the sharp market share decline in recent years and increased penetration of the category itself has meant single-digit top line growth over the last 10 years. Due to the market share decline in recent years, sales/EBITDA/PAT was even lower over the past 5 years at ~3%/~8%/~8% CAGR. Importantly, the company does not need any material on CLGT from a one-year perspective given that (a) the nature of the category (98% of sales from oral care) offers less uncertainty currently, (b) it has amongst the best-of-breed balance sheets, (c) valuations are moderate at 39.5x FY22E EPS, close to its 10-year average, and (d) there is a spark of an incipient market share recovery under the new Managing Director.
LME Aluminum price recovered ~16% from recent lows of USD1,422/t to USD1,655/t (currently), led by higher demand in China. In 2QCY20, primary aluminum consumption in China grew by 5% YoY, whereas demand ex-China declined 28% YoY, resulting in a 9% YoY drop. In 2QCY20, global primary aluminum demand declined 9% YoY to 15.5mt. According to Norsk Hydro, the Aluminum market was in surplus of ~2.5mt (supply v/s consumption) in 2QCY20 as primary aluminum production increased 1.2% YoY in 1HCY20 amid declining demand. In 2QCY20, global aluminum stocks rose by 0.7mt QoQ to 14.2mt, led by a 1.6mt rise in ex-China inventory to 9.3mt. Rolled Aluminum market demand is guided to improve substantially in 3QCY20; it is likely to decline by just 7% YoY in North America and 11% YoY in Europe v/s decline of 29% and 26%, respectively, in 2QCY20. Extrusion Aluminum demand would decline 14%/22% in North America/Europe in 3QCY20 (v/s decline of 30%/32% in 2QCY20).
Further, better product mix has aided the company in avoiding a steep decline in its gross margin/liter, which stood at INR86.8/liter (-14% YoY). Owing to the lower tax rate of 26.1% (v/s 35.6% in 1HCY19), PAT stood at INR1.9b (-48% YoY). Factoring in the same along with further imposition of the extended lockdowns in various states, we have revised down our volume estimate for CY20/CY21 to 143m/186m liter (from 153m/191m liter), resulting in EPS CSTRL has entered into a strategic alliance with Jio-BP fuel retail JV to exclusively sell its products at its 1,400 outlets (which should expand to 5,500 outlets over the next five years). However, 2W segment accounts for 30% of CSTRL total volumes, which may be hugely impacted by EVs. We expect high dividend payouts to continue. Oil drain intervals are expected to rise in the commercial segment for BSVI engines.
Despite higher cash burn of ~INR300m per day, the company was successful in its initiatives to create additional liquidity and thus realized ~35% of its earlier target of INR3040b, leading to free cash reduction of ~INR14b (v/s reported loss of INR28.4b). INDIGO plans to replace CEO aircrafts gradually, as earlier scheduled, by the end of Dec22; hence we build ASK of 85.8b for FY22 (-11% to FY20 For FY22E, we assume sentiment would improve from 3QFY22, resulting in the normalization of PLF at ~75% (although, expected PLF remains low at 75% for the full-year FY22 v/s average PLF of ~86% over FY1620). To note, the fare bands were recently further extended till the end of Nov20, and the permanent enforcement of fare bands could be a huge dampener on the Aviation industry as a whole, weakening sentiment for the regulated We have built-in a crude price forecast of USD40/bbl / USD50/bbl for INDIGOs fuel cost constitutes ~35% of the total cost (in FY20), and according to our EPS sensitivity, aircraft fuel savings of even 10% would translate into an EPS change of ~14% for INDIGO in FY22.
29 July 2020 GSK Pharma (GLXO)s performance for the quarter was deeply impacted by the COVID-19-led disruption. As a result, the company posted the lowest revenue recorded in the past 16 quarters. The severity amplified with reduced operating leverage. The outlook is expected to gradually improve with the easing of the lockdown. We reduce our EPS estimate by 26.3%/11.7% for FY21/FY22 to factor COVID- 19-led weakness in the Prescription and Vaccination segments. We continue to value GLXO at 37x 12M forward earnings (25% discount to its three-year average) to arrive at TP of INR1,355. GSK Pharma revenues were down 17.7% to INR6.5b (v/s est. GM expanded 230bp YoY to 60.
29 July 2020 Quess Corp (QUESS)s 1QFY21 results were largely in line with estimates. Adjusted for businesses that remained completely closed (e.g. Excellus) and one-off COVID-19-related costs, underlying revenue, EBITDA, and recovery trends were reasonably resilient. Good cost rationalization, net debt reduction (by INR1b), healthy cash conversion (OCF/Ind-AS adjusted EBITDA = 152%), and the simplification of Terriers holding structure are key micro- level positives. Recent unemployment data (e.g. CMIE) and hiring outlook surveys hint at quick and strong recovery in the job market. However, the back and forth on lockdowns across cities would mean some amount of uncertainty in the job market. Operationally, our earnings estimate over FY2122E remains largely unchanged. Over the medium term, we expect QUESS to be the biggest beneficiary of the recently announced labor law reforms Quess Corp reported revenue/EBIT/PAT growth of 1%/-23%/-62% YoY (v/s est. Sequentially, overall headcount declined ~13% and general staffing headcount ~15%, in line with our expectations.
Maintain Revenues stood at INR16.7b, down 21% YoY and expect the revenue shortfall to be recouped in the next quarter as the company accomplished balanced ventilator order delivery as well as start ramping up the LRSAM and IACCS orders. Adj. PAT was down 74% YoY to BHEs order book stood at INR538b at end-1QFY21. BHE has secured orders worth INR34.2b in 1QFY21 (up 72% YoY), on the back of large orders acquired for Ventilators (INR12bn), Advanced Torpedo Defense systems and Smart City projects. We have increased our TP from INR108 to INR116 (14x FY22E EPS, below its long-term trading multiple BHE is well positioned to benefit from rising defense expenditure, supported by (a) strong manufacturing base and execution track record, (b) its relationship with defense and government agencies, (c) strategic collaboration with foreign technology partners for new product development, (d) in-house R&D; capabilities (R&D; spend at > 9.0% of revenues), and (e) an increased focus on exports to friendly countries.
