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Lupin: We upgrade Lupin to Buy premised on: a) recovery in US business led by gProAir approval (imminent) and ramp up in Levothyroxine; b) bounce back in India growth (solid franchise, chronic skewed portfolio); c) operating leverage to aid margin expansion of ~500bps over FY20-22e. Management commentary was positive, indicating normalization of US business, continued cost reduction efforts as well as good progress on complex/specialty pipeline. With monetization of key assets, resolution of key facilities and margin levers in place, the business is set to post strong earnings growth of ~50% CAGR over FY20-22e. We reduce our FY21 EPS by 7% to factor Q1 miss but keep FY22 estimates largely intact. We increase our TP to Rs980 based on 22x FY22 EPS (from 21x earlier). Upgrade to Buy. DCB Bank: DCBB's 1QFY21 print was in line. The QoQ de-growth in deposits was underwhelming, but DCBB's focus on improving deposit granularity was evident and is positive. Asset quality was optically stable (benefited by the standstill classification), and the moratorium book dipped significantly. Our estimates remain mostly unchanged, and we expect earnings to remain under pressure in the near term as provisions are set to rise. However, we remain optimistic about the bank's long-term prospects, and this underpins our ADD recommendation (target price of Rs 103, 0.9xFY22E ABV). Mahindra & Mahindra: M&M; reported a weak 1Q (PAT of Rs 389mn, -96% YoY), impacted by the automotive segment. While tractor outlook remains upbeat due to encouraging monsoon trends, the demand for SUVs continues to be impacted by intense competition...
We reduce our FY21 EPS by 7% to factor Q1 miss but keep FY22 estimates largely intact. We increase our TP to Rs980 based on 22x FY22 EPS (from 21x earlier). Upgrade to Buy. We upgrade Lupin to Buy premised on: a) recovery in US business led by gProAir approval (imminent) and ramp up in Levothyroxine; b) bounce back in India growth (solid franchise, chronic skewed portfolio); c) operating leverage to aid margin expansion of ~500bps over FY20-22e. Management commentary was positive, indicating normalization of US business, continued cost reduction efforts as well as good progress on complex/specialty pipeline. With monetization of key assets, resolution of key facilities and margin levers in place, the business is set to post strong earnings growth of ~50% CAGR over FY20-22e.
We forecast ~400bps of margin expansion over FY20-22e and increase our FY21/22e EPS estimates by 22%/13% to factor lower costs and strong revenue momentum. We increase our TP to Rs805 based on 23x FY22 EPS and Rs30/share for gAdvair opportunity. Maintain Buy. Ciplas Q1 results were strong (EBITDA/PAT beat of ~85%) driven by good growth across regions and higher than expected cost savings. With strong traction in US (ramp up in Albuterol, niche launches), good growth in India (Rx business outperformed IPM growth for past four quarters, benefits of One-India strategy, Covid portfolio) and reduction in costs (good part of cost savings are likely to sustain owing to digital initiatives) margins are set to structurally improve.
Disruption due to nationwide lockdown and significant disturbances in key markets and manufacturing centres led to contraction of Revenue/Ebitda/APAT of the company. Company reported de-growth in Revenue/Ebitda/APAT by 35%/39% and 53% on YoY basis.
NBIE Values your patronage- Vote for The Team in the Asia Money poll 2020. Click Here We maintain Buy on HPCL with a target price (TP) of Rs343, which we have arrived at based on 7x PE on our unchanged consolidated FY22E EPS. The standalone 1QFY21 results were a massive beat vs. our estimates. The adjusted PAT came in at Rs28.2bn vs our estimate of Rs14.8bn and 3.5x the PAT reported in 1QFY20. The beat was due to Gross/EBITDA margins coming in 181bps/352bps above our forecast, driven by robust unit EBITDA margin on marketing volume ~ Rs6351/te, as per our proforma analysis....
Lupin's 1QFY21 revenue at Rs35,279mn is down 8.3% QoQ and 20.2% YoY and lower than our/consensus estimates by 6.9%/6%. US sales, which declined by 23% QoQ, led to the underperformance. EBITDA stood at Rs4,881mn, down 43% YoY. EBITDA margin (excl. other income) stood at 14% - higher by 18bps QoQ and lower by 563bps YoY. QoQ improvement in EBITDA margin was led by lower other expenses. This was partially offset by higher COVID related expenses (higher freight costs) and higher employee expenses due to restructuring of the specialty organization in the US. Net profit for the quarter stood at Rs1,069mn and was adversely impacted by higher effective tax rate (60%). US sales to normalize in 3QFY21 We build US$120mn addition to base US sales (US$760mn) by FY22...
Gradual recovery likely; Value-added products a key focus Apar Industries (Apar) reported 35% YoY decline in consolidated revenue at Rs12.9bn due to COVID-19 led lockdown, lower commodity prices and high base effect (sales in 1QFY20 had grown by 33% YoY). The topline was 9% below our estimate. With lockdown in April and lower scale of operations in May & June, domestic revenue declined by 52% YoY while exports grew by 11% YoY. Segment-wise decline in sales was as follows: Conductors (24% volume & 31% value), Oil (42% volume & 43% value) and Cables (37% value). EBITDA/MT of Conductors fell by 49% YoY to Rs6,185, EBITDA/KL of Oil fell by 81% YoY to Rs732 while EBITDA margin of Cables contracted by...
Weak pricing results in lower than expected margins Birla Corporation (BCORP) has reported relatively weak set of numbers for 1QFY21. Revenue at Rs12.22bn declined by 35.1% YoY due to 33.3% YoY decline in volume. Realization/mt declined by 1.1% YoY (+1.4% QoQ) to Rs4,956, resulting in subdued EBITDA/mt performance. Despite the strong presence in Central and Eastern markets, which saw significantly better growth compared to the industry, BCORP's volume and pricing growth was lower, which was disappointing. Delayed start to the Rae Bareli grinding unit resulted in weak volume whereas lower sales in Bihar (where pricing was better) and weak pricing in MP resulted in lower...
Momentum picking up, HDFC Life performance strong Given the July 2020 numbers, we believe that the traction has been improving and the momentum is likely to sustain in the ensuing months/quarters as the economy reverts back towards normalcy. For July 2020, total industry-wide individual APE was down 0.3% YoY compared to the ~44% YoY decline in April 2020 and ~20% YoY decline in May 2020. June 2020 saw strong recovery in new business with sales being down only 1.4% YoY. LIC has continued to outperform the industry, growing by 9.6% YoY (individual APE). At the same time, the private industry's individual APE was down 7.1% YoY, but much better than the first two months of...
AGL reported sales volume decline of 53.6% YoY for Q1FY21. The extended lockdown resulted in a sharp decline of 66.2% YoY in CNG sales at 0.3 mmscmd. Similarly, PNG sales registered a decline of 40% YoY to 0.4 mmscmd mainly due to fall in volumes in the industrial and commercial segment. Only domestic PNG segment registered growth at ~17% YoY. During the quarter, sales increased MoM from April lows and were at 1.1 mmscmd by June end. The management said sales volume further improved in July and were at ~1.4 mmscmd. Going forward, we estimate...
With the 2.8 lakh tonnes (lt) of exports this season & higher domestic sales quota, BCML has been able to liquidate excess inventory in last six months. It is holding 5.5 lt of sugar, which is not more than six months of sales. By the time next crushing season starts, it would be holding at best 1.5 months of sugar inventory compared to five month's industry average. This would enable BCML to generate strong cash flow in FY21 as well and further reduce working capital requirement. It would not require to take any working capital debt by December 2020 for new crushing season (starts from October)....
Organic revenues fell 4.4% YoY in Q1FY21 mainly led by ~10% YoY dip in organic cost per converted user (CPCU) revenues. CPCU revenues fell due to severe impact in April, May. However, Affle is seeing significant improvement in CPCU revenue in June quarter that has gone to average of | 1 crore/day. If we extrapolate this, it will lead to | 90 crore of organic CPCU revenues in Q2FY21E leading to organic growth of ~47% QoQ. Considering this organic revenue trajectory, acquisition of Appnext & Mediasmart will...
From April 1, the Railway Ministry revised the annual land licensing fee (LLF) norms for Concor (Indian Railway land on which ~25 Concor of total 64 terminals operate). The change should be seen in the backdrop of Concor's privatisation, as earlier mode of LLF payment provided certain advantage to the company vs. other private CTOs. Earlier method of payment was based on Concor's volumes and was, thus, variable in nature (| 1175/TeU). However, the revised mode of payment is fixed in nature (6% of value of land). This has caused LLF payment to jump from earlier | 120 crore paid in...
Focus on cost efficiencies to drive margin expansion Being predominantly a north (8.2MT capacity) and central (3.5 MT capacity) player, the company has got structural advantage of balanced supply and demand environment in these two high growing regions. Further, selfsufficiency in power, through captive power plant (CPP) of 54 MW, waste heat recovery (WHR) plant of 14 MW and solar power plant of 6 MW has helped the company to reduce reliance on costly grid power. In the eastern region, the company has already commissioned its 7 MW WHR plant and has recently commissioned CPP of 20MW, to become self-sufficient. To...
TV Today reported a weaker than estimated set of numbers in all segments for Q1FY21 led by sharp de-growth in the broadcasting segment. Operating revenue fell 31.9% YoY to | 167.7 crore with TV broadcasting revenue at | 137.8 crore (33.7% YoY de-growth) due to low ad volumes and high base effect (general elections in Q1FY20). Radio segment reported a sixth consecutive quarterly de-growth with revenues declining 70% YoY at | 20 lakh. Growth momentum of digital revenue came to a halt. It fell 4.6% YoY at | 27.6 crore. EBITDA was at | 30 crore, down 59.7% YoY as the topline...
Under the terms of the agreement, all Majesco US (US entity) shareholders of record will receive $16 cash for each share of Majesco US common stock held by them upon closing of the transaction. Majesco US board of directors have unanimously approved the merger and recommended that shareholders approve the merger. Majesco India board also approved the revised transaction on August 8, 2020. In order to enhance successful completion of the proposed transaction, under the Revised Support Agreement, the specified promoters have agreed, in their individual capacity...
Domestic tractor industry is continuing to be at the forefront of post-Covid automotive recovery in India. Against overall auto industry's ~36% YoY fall in July retail volumes, tractor segment volumes rose 35%. M&M;, as market leader with dominant 41.2% domestic market share as of FY20, is also benefitting from present sector tailwinds. Rural income levels stay on a relatively firmer footing with cash flows healthy on the back of strong Rabi harvest, rise in crop MSPs, healthy water table levels. Moreover, amid ongoing normal monsoon progress (1% above LPA as of July 31), strong...
Emami: Emami posted a weak 1QFY21 as revenue/EBITDA declined by 26/8% YoY (HSIE -19/-9%). The domestic revenue decline of 26% YoY (volume decline of 28%) was due to the Navratna range, Male Grooming and Kesh King declining by 41/70/33% YoY. However, Boroplus, Healthcare, and Pain management clocked a strong growth of 28/23/15% YoY. The company saw sequential improvement in revenue growth (+8% YoY in June and double-digit growth in July), led by healthcare and pain management. The pick-up is driven by (1) healthy growth in rural markets, (2) new launches (5% contribution), and (3) channel filling. At the same time, sharp cost control (A&P down by 54% YoY) led to 487bps YoY expansion in EBITDA margin. Despite strong growth in June/July, we expect core categories to improve gradually. However, we increase our EPS estimate by 5/3/3% for FY21/FY22/FY23 on account of the strong traction in healthcare and pain management along with benign raw material prices. We value Emami at 18x P/E on Jun-22E EPS and derive a target price of Rs 232. Maintain REDUCE. JK Lakshmi Cement: JK Lakshmi Cement's (JKLC) standalone revenue/EBITDA/APAT fell 21/16/26% YoY to Rs 8.25/1.43/0.44bn respectively, due to lower sales. A healthy realisation and cost controls led to stable unitary EBITDA (+3% YoY to Rs 752/MT). We estimate demand recovery and benign input costs in subsequent quarters to drive 6% EBITDA CAGR during FY20-23E. JKLC expects to kick-start growth capex FY22E onwards in the northern market. We maintain estimates and BUY rating on the stock with a TP of Rs 385/share. Dalmia...
