Tractors market share declined 39.1% in 1QFY21 (v/s 41.2% in FY20) due to supply side Current demand is 50-60% of normal; however, a clearer picture would emerge over the next 3-4 months. However, MM's SUVs business is severely challenged, and we do not see any respite for the company in this category in The Tractors segment has been seeing volume recovery since Dec19, driven by improvement in farm-level indicators such as output prices, lower input prices, higher government spend in rural areas, and unusually strong water reservoir levels. We upgrade FY21/FY22E EPS by 9%/3% to reflect the volume upgrade in tractors and UVs, as well as the improving mix MM's recent outperformance, valuations are still at a substantial discount to its five-year average (which captures both pain points of deterioration in the UV market share and the subsidiaries' performance).
We roll our price target to INR650 on a 12M forward SOTP basis (8x EV/EBITDA for the US / Other Regulated markets, 6x for Emerging Markets, and 5x for Institutional). Considering this and its increased market share in commercialized products, we expect US sales to revive and exhibit a 6% CAGR to USD270m over STR recorded the highest ever quarterly revenue of INR2.6b in the Other Regulated market, implying growth of 53% on a YoY basis in 1QFY21. We expect the business to exhibit a 23% CAGR in sales to INR12.6b over STR exhibited 17% YoY / 47% QoQ growth in the Emerging Markets business, led by an increase in primary sales in Africa. in Other Regulated and 52% sales CAGR in Emerging Markets, supported by our price target to INR650 on a 12M forward SOTP basis (8x EV/EBITDA for US / Other Regulated, 6x for Emerging Markets, and 5x for Institutional).
6 August 2020 CDH delivered in-line performance for 1QFY21. The decline in domestic formulation (DF) and consumer healthcare was more than offset by lower operating cost. CDH is progressing well to build Injectable/vaccine/biosimilars as additional levers of growth for the next 2-3 years. We have raised our earnings estimates for FY21/FY22E by 10%/9% to reflect better operating leverage/growth outlook for DF. We continue to value CDH at 21x 12M forward earnings to arrive at TP of INR460. We remain positive on CDH due to robust ANDA pipeline (including injectables/transdermals), renewed strategy in DF and completion of remediation measures at Moraiya. Maintain 1QFY21 sales at INRINR36.4b (v/s est. Sales growth was largely led by (a) US sales (45% of sales), up 19% YoY to INR16.2b, (b) LATAM/EM revenues (7% of sales), up 8% YoY to INR2.4b, and (c) API revenues (4% of sales), up 89% YoY. India revenue (41% of sales) comprising of DF, consumer and animal health was down 11% YoY to INR14.
5 August 2020 Tata Consumer Products (TCP) 1QFY21 results were robust (ahead of expectations), mainly led by improvement in standalone (S/A) performance. S/A EBITDA grew 40% YoY due to better realizations, favorable commodity costs and lower discretionary expenditure. Strong operating performance was witnessed across businesses (barring Tata Coffee S/A). Factoring in the better-than-expected performance and margin expansion in India Food and Beverage (F&B;) segment, we have increased our earnings estimates for FY21/FY22E by 30%/22% to arrive at an SOTP-based TP of INR560/share. Maintain Revenues were up 13% YoY to INR27.1b (v/s est. EBITDA grew 38% YoY to INR4.8b (v/s est. Note that base quarter performance includes India Food business numbers (erstwhile Tata Chemicals consumer business). EBITDA margin expanded 310bp YoY to 17.8% due to 180bp expansion in gross margin, lower ad spends and operating leverage.
5 August 2020 Jyothy Laboratories (JYL) 1QFY21 results were above our low expectations. Sales growth was up only 4%. Ad-spend reduction of 40% (much higher than peers) drove EBITDA margin beat, despite gross margin being much below expectations. Despite being much smaller than its peers under our coverage, the company has reported mere 2.5% sales CAGR over the past 5 years and neither the management commentary for Jul20, rest of the year or subsequent years indicates a substantial revival to steady-state double-digit sales growth. Double-digit sales growth in FY21E is only because of low base due to 24% sales decline seen in 4QFY20. 1QFY21 standalone net sales grew 4.1% YoY to INR4.3b (v/s est. EBITDA grew 19.4% YoY to INR782m (v/s est.
5 August 2020 DMart has reopened most stores, and sales have reached ~80% across assortments as customer traffic is gradually returning to stores given the brands value offering. Same-store sales growth (SSSG) has fallen but is not concerning, excluding the high base of last year and select low-performing stores. Management indicated that in terms of store adds, it aims to make up for the lost period of lockdown with ~59 store additions over FY2122 (the next six quarters). B) It would focus on larger sized stores, predominantly in semi-urban and lower tier cities, that may have slightly sluggish metrics in the near term, but bring longer term growth, operating leverage, premiumization, and thus ROIC. However, it believes online is still restricted to the urban markets, where DMart Ready offers both delivery and pick-up options at more attractive pricing v/s online and would wait for the model to turn profitable.
5 August 2020 successful in reducing its working capital (WC) cycle in FY20. As % of sales, WC stood at 6.2% in F20 (v/s 10.6% in FY19) due to debtor days declining to 57 days in FY20 (v/s 78 days in FY19). Free cash flow (FCF) generated stood at INR3.7b in FY20, implying FCF/EBITDA of 131% and FCF/Adj. PAT of 252%. Over FY14-20, FCF generation stood strong at INR8.9b, implying 100% FCF/Adj. PAT. BLSTRs products are exported to 18 countries across the Middle East, Africa, SAARC and ASEAN regions. Revenues from abroad doubled to INR5.2b in FY20 (v/s INR2.6b in FY15). Also, share of revenue from abroad now constitutes ~10% of the companys total revenue (v/s 8.
4 August 2020 volumes increased 7% YoY to 2.57mt on improving demand from steel plants as domestic demand improves. This, coupled with higher international iron ore prices, has enabled NMDC to raise prices this month by INR200/t (~9%) to INR2,360/2,650 per ton for fines/lumps. We believe NMDCs iron ore prices should sustain in 2HFY21 due to rising steel prices (up ~INR2,000/t MoM), higher pellet prices (up 20% MoM to INR7,200/t), and reduced iron ore supply from Odisha mines. Volume growth of 7% YoY reported by NMDC (to 2.57mt) in July20 has surprised and is three months ahead of our expectation of positive volume print in 2HFY21. While iron ore production from several auctioned mines in Odisha has commenced in the current quarter, we believe production from these mines would be lower by >30% YoY in FY21, supporting NMDCs volumes in the near term.
4 August 2020 The RBI has approved the appointment of Mr Sashidhar Jagdishan as MD & CEO of the bank for a period of three years, effective from 27 Oct20. He was appointed as Business Head Finance in 1999 and later as Chief Financial Officer in 2008. He has diversified experience across various functions and is currently the Group Head of Finance, Human Resources, Legal & Secretarial, Administration, Infrastructure, Corporate Communications, Corporate Social Responsibility & the Strategic Change Agent of the Bank. Over the past 26 years, under the leadership of Mr Aditya Puri, HDFCB has grown to become the largest private bank in India, with systemic market share of ~9.8% in advances and 8.3% in deposits, and market capitalization at INR5.7t. HDFC Bank HDFCB has maintained a stable asset quality track record over the past two decades through rigorous risk management practices and following high-quality governance standards.
4 August 2020 EBITDA/scm was better than est. INR4.1) and higher QoQ as well (INR4.7 in 4QFY20). Reported EBITDA was at INR1.85b (-60% YoY; -56% QoQ), with PBT at INR0.8b. PAT came in at INR0.6b (-75% YoY and QoQ). CNG volumes stood at 0.7mmscmd (-54% YoY and QoQ). PNG I/C stood at 2.9mmscmd (-60% YoY; -63% QoQ).
