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Indian OHT exports improved sequentially by 12% in Jul’23 (in line with average monthly exports in CY23), though were down ~20% YoY. Agri segment exports increased 4% MoM to ~USD 85mn as against OTR segment exports at their highest in CY23 at USD 52mn, up 27% MoM.
We believe our estimates are already in line; however if Dabur can achieve the margin and growth targets it would justify our rerating argument. We do not expect price cuts to impact Dabur's revenue growth in FY24 unlike its peers. We maintain our EPS estimates and value the stock at 45x P/E on Sep-25EPS to derive a target price of INR 650. Maintain ADD. We attended the analyst meet of Dabur India previously hosted in 2019 when the newly-appointed CEO Mr. Mohit Malhotra laid down the new strategic roadmap. This analyst meet was a recap of strategies along with their outcomes during 2019-2023 (FY15-19 revenue CAGR was 2% vs. 8% during FY19-23). We could also meet Mr. Philipe Haydon who was recently appointed as the head of Dabur's healthcare business and who was earlier the CEO of Himalaya Wellness (1980-2020). Using his rich experience Dabur can capitalise on its backend strength for the healthcare business (revenue mix at c.30% currently). The company is aiming for double-digit growth in the medium term (unlike the ~7% 10-year CAGR) through (1) focus on power brands (now eight vs. seven earlier) to achieve greater scale (focus marketing penetration brand extension etc.); (2) healthcare achieving c.15% CAGR led by additional focus to add allopathic doctor network to drive health-disorder medicines; and (3) premiumisation across categories. We model a 10% revenue CAGR for FY23-26E in our estimates. Dabur is also looking to recoup its +20% EBITDA margin during FY24-26 (18.8% in FY23 21% in FY21); we model a similar improvement.
The theme for Dabur's analyst meet was ‘portfolio enhancement’. It provided a strategy to redefine core for younger India (stronger scientific claims, new-age formats, aspirational packaging) while boosting the total addressable market (TAM) by expanding into adjacencies through power platforms.
Tata Steel (TSL) has announced deep restructuring of its UK operations (TSUK) with twin objectives of business continuity and sustainability. Key points: 1) Existing blast furnaces to be replaced by 3mtpa Electric Arc Furnace (EAF); 2) 40% of GBP 1.25bn investment to be funded through the grant by the UK government; 3) cost differential of GBP 150-170/te compared to current operations.
We visited the largest plant of Prince Pipes and Fittings (PRINCPIP) situated in Haridwar (Uttarkhand) on Sep 13-14, ‘23, and interacted with its management and its biggest pipe dealer of Haridwar. The Haridwar plant caters to markets primarily in North and East India.
We expect AOL's PAT to grow at a 25% CAGR over FY23-26E, led by a 27% CAGR in EBITDA. We retain our ADD rating on Ami Organics Ltd (AOL), with a target price of INR 1,360 (WACC 11%, terminal growth 6%), on the back of (1) expansion of its speciality chemicals portfolio, (2) Fermion contract revenue accruing from Q4FY24, and (3) strong advanced pharma intermediates product pipeline. The stock is currently trading at 37x FY25E EPS. We expect the EBITDA margin to improve by 222bps, from 20% in FY23 to 22% in FY26E, owing to a ramp-up in capacity utilisation in the speciality chemicals business and an increase in the value-added items in the product portfolio.
Outlook and valuation: In the long term, JUBI remains focused on mid-teen revenue growth (5-6% LFL) on the back of (1) stepping up store expansion and store format innovation (e.g. container stores), (2) plugging product gaps and strengthening value offering, (3) improving cost efficiency and productivity, (4) elevating customer experience (reimaging stores, 20min delivery), and (5) long-term strategic initiatives (commissary). We maintain our EPS estimates and value Jubilant at 55x P/E on Sep'25 EPS to arrive at a TP of INR 500. Maintain ADD. We interacted with Mr. Sameer Khetarpal, the CEO of Jubilant FoodWorks, to understand industry demand and company strategy. According to him, the QSR industry demand continues to decelerate and recent trends are tougher than witnessed during the last six months. The pressure is across markets, brands, and formats. Signs of stress on demand are witnessed even in tier 2/3 cities with mall food courts wearing a deserted look. Moreover, one additional month of Sawan is expected to further dampen SSSG in Q2FY24. However, the industry remains hopeful of a bounce-back in demand in H2FY24 on the back of (1) softening inflation, (2) expected pick-up in the festive season, and (3) the cricket World Cup. In the ongoing challenges, Jubilant remained focused on further strengthening its core (customer acquisition, menu, 20-minute delivery, etc.).
CAMS has showcased its business capabilities in all its segments in its recently held Analyst Day (on Sep 8). Strategically, the company underlined that significant thrust in ex-MF RTA segment is backed by a suite of capabilities, unique offerings and talented leadership, while the company’s pole position in MF RTA space has also manifested in quality new account wins.
Prestige Estates Projects’ (Prestige) residential sales bookings remain strong and we model for gross sales bookings of INR150bn in FY24E and INR165bn in FY25E vs. INR129bn in FY23 led by high-value Mumbai launches. At the same time, the company’s consolidated net debt levels have risen by INR25.6bn over the last 12 months as it continues to incur annual land/stake buyout spend of INR40-50bn and annual annuity capex of INR30-40bn.
Tarsons Products (Tarsons) offers a range of plastic labware products. Over the years, it has gained ~25% market share (Source: Company) in a segment which was historically dominated by MNCs. Its network consists of over 150 distributors and more than 500 sub-distributors which provide pan-India visibility to its products.