Between FY17-20 Rossari Biotech's revenues have grown at CAGR of 37% while EBIDTA grew at higher pace of 63% CAGR. We expect Rossari to grow at 15-18% CAGR for next 2-3 years which is ahead of industry growth. We expect EBITDA margins to improve from hereon, on the back of (a) improved margins in HPPC segment (b) benefits coming from recently commenced Dahej facility (c) increased economies of scale. We have compared Rossari Biotech with all the leading specialty chemicals companies and found it to be better in almost all financial parameters. The issue price commands P/E of 33.7x (FY20) at the upper price of band of Rs 423-425, which is at upper end of the industry. However, going forward the higher revenue growth, improving profitability would make it a better choice among peers. We recommend Subscribe on the issue for listing as well as long term gains.
Last Month Indian Equity market played catch-up role with US and other markets. This was mainly driven by opening up of lockdown and pent-up demand in various products and market along with depreciating Dollar which supported the buying by FIIs. Various companies announced reaching to 70-80% of their pre COVID capacity utilization. Companies related to Agri, Pharma specialty chemicals segments continue to do well. Mid cap index had outperformed large cap and small cap outperformed Mid Cap. On a lighter note, we are sure that if there has been penny stock index then it would have outperformed small cap index. Positive market encouraged retail and HNI investor to find value in small cap stocks which were under pressure since last 2 years. However, we still don't have any solution for COVID and new cases in various parts continue to increase. We had seen lockdown being re-imposed in various containment areas in cities. States like Florida Texas, California, Arizona in US have seen higher number of additions in Covid positive cases, hence there has been re-emergence of restrictions in various parts of these states. Back in India, part of cities like Chennai, Guwahati, Navi Mumbai have seen stricter lockdowns again. We believe, the bounce back in economic activity which was supposed to happen post opening up have more or less happened or may be some steam is left however it is not likely to reach to pre COVID levels. We expect this on and off situation to continue for some more time till we have a permanent...
We at Nirmal Bang Retail Research Desk are pleased to introduce to you our Stock SIP (SSIP) Recommendations. The objective of the report is to provide you with quality stocks with the objective of providing capital appreciation and returns in the long-term.
Valuations and Recommendation The stock has risen 49% in last one year following the strong results shown by the company. We remain positive on the company for coming period. Going forward, we are projecting 14.5% CAGR in sales between FY20-FY22E however expects EBITDA/PAT to grow higher at 25.6%/22.6% during the same period. We expect EBITDA margins to remain steady at around 13.5% in FY21E/FY22E from 13.2% in FY20. The stock is currently trading at 16.7x on our FY21E earnings. We recommend HOLD on the stock with a target price of Rs 1381 (17x FY22E).
In last few days Indian Market had shown some positive momentum. We feel this is mainly driven by opening up of lock down, addition financial stimulus provided by government and catch-up with world market. As the lockdown upon up the economy will recover from bottom though it may not be able to reach to pre COVID level till the world find solution to the problem. Bumper Rabi Crop and expected good monsoon along with support from government to farm sector will keep the rural economy optimistic. Government Support to MSME, NBFC and reform in mining and farm sector may act as supportive to market. Whereas with the underperformance of Indian market as compared to world market with Year to date negative return of 21.3% vs Dow negative 5.8%, Dax negative 8.3% and Hang Seng negative 13.3%, we are playing catch-up roll. The COVID cases in Europe are not showing reoccurrence even after gradual opening up of economy. Whereas US new cases are declining but very slowly. Brazil, Russia, South Africa and India are still trending upward. At world level the new case addition is still growing. The recent agitation in US may still lead to increase in new case addition in US. We feel the absence of reoccurrence up till now in European nation is been taken positively by market. On Medical side it seems the permanent solution is still far off and the world need to leave with COVID for some time. We feel the recent optimism in India market may be short lived as...
Loan growth slows to single digits; Asset quality remains under pressure DCB reported a lackluster quarter with increased stress on asset quality, tepid loan growth and elevated provisions due to Covid-19. The only solace was the continued control over opex. oAdvances growth stood at 8% YoY (a multi-year low) & remained flat QoQ with advances at Rs. 25,345 Cr. Loan growth trended down owing to a slowdown in all segments viz. Mortgage, SME, CV, Agri and Corporate. Loan book ex-corporate grew by ~10% YoY. We expect advances to grow at 10% CAGR during FY20-22E. oNIMs declined QoQ by 7 bps to 3.64%. (YoY NIM was at 3.78%). NII grew by 8% YoY. LCR has been in excess of 130% which has impacted NIMs by 4-5 bps. NIMs are expected to be negatively impacted in FY21E as the bank will look to maintain excess liquidity and also due to higher slippages. oOther income increased by 11% YoY. Fee income grew by a mere 2% while treasury income and forex transactions led to the overall increase in other income. oOpex grew 3% YoY and cost/income declined 330 bps QoQ and 260 bps YoY to 51.1%. DCB is confident of maintaining its opex levels low in the current year. oTotal Income grew by 8%. oProvisions stood at Rs. 118 Cr vs QoQ Rs. 59 Cr and YoY Rs. 35 Cr. Out of this, Rs. 63 Cr (0.95% of AUM) provisions were towards Covid (including Rs. 9 Cr as 10% provisions on overdue accounts as on 1st March as prescribed...
During the last settlement, we saw a steep fall which was followed by a sharp jump in the market. From its highs, market has corrected by 40% but seen 30% bounce back from bottom. Markets tend to react extreme on either side. Worldwide, we witnessed some positive developments related to Covid-19 where in new additions seem to have peaked out and Europe saw gradual decline in new additions. We may see a similar trend in US as well in coming months. In India, major cities like Mumbai, Delhi are still struggling and continue to see an increasing trend. The government has relaxed lockdown in Green and Orange Zones. Though, area wise 30% of the area comes under Red Zone but over 40% of population and over 50% of GDP is in this Red Zone. Currently, it seems like Economy has shut down and will be opened gradually in safe mode. The biggest threat would be reoccurrence of pandemic. On the medical front, Remdesivir developed by Gilead has shown some positive response in trials and even USFDA has approved it for emergency use. Though the medicine may be available in US but will take lot of time to reach other countries as its take 6-8 months to manufacture. Even the vaccine is also far off. We feel opening up of lockdown (at slower pace) and stimulus provided by government and central banks across world are largely in the price and now market will factor in the delay in bounce back of economy. In India the large part...
Medical Problem Situation seems under control in China & Korea Situation seems to have peaked in Europe and US India at inflection point Exit policy announced indicating start of manufacturing and full support to agriculture Q1 Result will be severally impacted but normalisation will take may be even more than one year Economy is Shut and to be started in Safe Mode Economy will further need stimulus
Last week corona Virus has created mayhem in all the market across world. Though, Corona virus did outbreak around one and half month back, the spread of virus in different continents is creating panic. Over a time China has seen reduction in incremental addition to infected people but the speed of increase in other countries like Korea is threatening and indicating that it will take much longer time than initially thought. It is now certain that the economy growth across the world is likely to get impacted substantially across many regions. It is also certain that government across the world will come up with measures to stimulate their economies. The point is, how much deep decline we may see in economy and how much time it will take to revive. The longer the problem persists, longer it would take to revive. India, up till now seems least impacted on both accounts be Virus spread or be it economy slow down as dependence on external world is limited. On the contrary, decline in prices of imported commodity like Oil may even benefit. We feel because of this event, the green shots of revival which were visible in Q3 results, may get deferred by one more quarter however this decline is offering an opportunity for investment. We feel, though the large pain is already visible and is in the price, market may come off a bit more. Hence it is advised to scatter one's purchases. For March series, the range seems to be 11000- 11600 for Nifty. We...
Valuation and Recommendation: MCL has a diversified product base and strong clientele. The management has taken steps to improve profitability by undertaking cost rationalization measures and improving business mix with focus on high yield products. We expect MCL's top line to grow at over 1.5x the industry led by (i) organic and inorganic expansion, (ii) strong relationships with OEMs, (iii) opportunities in sensors, ABS and wiring harness on the back of BS6 implementation and (iv) focus on exports. At CMP, MCL is trading at a PE of 12.3x FY22E EPS. We maintain Accumulate' on the stock with a target of Rs. 135 (at 15x FY22E).
Valuations and Recommendation The stock has risen 85% in last one year following the strong results shown by the company. We remain positive on the company for coming period. Going forward, we are projecting 13% CAGR in sales between FY19-FY21E however expects EBITDA/PAT to grow higher at 24%/22% during the same period. We expect EBITDA margins to improve to 13.5% in FY21E from 11.2% in FY19. The stock is currently trading at 16.3x on our FY21E earnings. We recommend HOLD on the stock with a target price of Rs 1300 (18x FY21E).
With visible ROE expansion to 16.7% in FY22E on the back of strong AUM growth and lower opex, we believe Equitas SFB's valuations will gravitate towards that of SFBs, banks and NBFCs demonstrating similar growth and profitability. We remain positive on the stock given strong earnings growth of 40% CAGR over FY20-22E. We value Equitas SFB at 2.5x FY21E Adj. BV and thus Equitas Holdings at a 50% discount to SFB, at Rs. 125, post factoring the holdco discount.
Looking at last 3 month's initiatives, we were expecting some major action by government in this budget to revive the economy and specifically to revive the consumption demand, be it through support to rural economy or through personal income tax reduction. Indeed The Finance Minister in this budget has given option to select reduced personal income tax rate up to Rs 15 lakh but with no Investment exemptions. These Investments are in Insurance, Real Estate, Mutual Fund and with the removal of incentive on savings this sector may have some negative impact. Even FM has removed dividend distribution tax for Company and Mutual Fund, and now the Dividend will be taxed in the hand of recipient. Again, this may have some discouraging impact on Investment. These steps to encourage consumption are well accepted but at the cost of changing the habit of regular investment looks negative. We had seen initial negative reaction of budget on Saturday supported by negative sentiment of global market. We feel first reaction is over done, considering the initial signs of some improvement in economy visible from management commentary in Q3 results and pickup in Agri inflation resulting into revival of consumer demand. We feel economic cycle is turning for positive and may see revival in 2020. Any correction driven by international event will be an opportunity for investment. Small and Mid-cap Stocks are offering value at current level.
Valuation and Outlook DCB has surpassed its inflection point in terms of a gradual and continuous reduction in its cost to income ratio as the benefit of over 2x increase in branches post FY15 becomes visible. Although the economic slowdown and run-down of corporate book shall impact the bank during FY20, we remain positive from FY21 perspective, given DCB's strong presence in the SME and Retail space with no baggage of any legacy asset quality issues. As compared to its peer City Union Bank (CUB), DCB trades at a discount of 40% due to its lower historical ROA of 0.9-1.0% as against 1.6% for CUB. We believe this discount should shrink to 25% as DCB's ROA expands to ~1.2% by FY21E majorly backed by a decline in opex/assets. We maintain BUY on the stock with a target price of Rs. 219 (at 1.8x of FY21E Adj. BV).
We feel NIFTY to show positive trend Small Cap and Mid cap index to out perform Large cap Advice to go aggressive on fundamentally good Mid and Small Cap stocks
As expected in the previous month, Nifty remained in a range of 11800 12300. At the start of the last series, market saw some profit booking but recovered towards the end of series - supported by positive sentiment in international markets, especially emerging markets, moderate improvement in commodity prices - especially metals, trade deal between US and China, positive news from Brexit and absence of any further negative news from India. We expect bourses to see further highs and some revival in broader market with Nifty ranging between 12000 12500.
We interacted with the management of R System International Ltd recently. Here are the key highlights:?Going ahead, management expects dollar revenue growth of 11-12% for CY19 and 12-13% for CY20. Management indicates that Ebitda margins for Q4CY19 is likely to come in at 9 -10% vs 7.8% in Q3CY19, thereby ending the year in the range of 8.6-9%. Ebitda margin for CY20 is further likely to see an improvement of 200-300bps, according to management.At CMP, the share is trading at EV/Ebitda of 8.5x and PE of 12.1x TTM Q3CY19 EPS
As expected by us in the last series outlook, the market witnessed new highs. But again the up move was driven by select stocks and the broader markets were not reflecting a similar sentiment. We feel post last 3 months' up move, markets may take a pause in December Series and Nifty may remain in a range of 11700 12300.
Valuations and Recommendation The stock has underperformed the markets and has corrected 35% in the last one year on the uncertainty of new supply facilities coming up and the unclear stance of the government on the use of single use plastic. However, both the issues have turned out to be inconsequential for the industry as a whole and we believe the stock has bottomed out and can a turnaround fr
