Sell

Indraprastha Gas' (IGL) Q1FY21 EBITDA was a tad below estimates at Rs 0.8bn (77% YoY).

Battered by no meager stress in the retail fashion industry owing to large scale lockdowns nationally, V-Mart Mart posted 82.1% decline in revenues in the first quarter of FY21 the sharpest decline thus far. Business remained largely impacted in April and mostt parts of May with operational days at a dismal 2% and 22% respectively. Stress in discretionary consumer spend...

No exclusive COVID provisions; Mngt believes ECL provs. stand sufficient interest expenses, steep decline in operating costs and unexpected overall loans, business-wise morat numbers have not shown improvements as recoveries remain elusive. While it's COVID assessment on asset quality is uncertain, Mngt hopes of higher transition of moratorium customers to...

Background: Berger Paints is the second largest decorative paint company in India. The Company operates seven manufacturing facilities spread across India, and four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts for 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating accounts for 2%...

Oil India (OINL) reported a loss of Rs 2.5bn for Q1FY21, impacted by one-off expenses to contain a blowout at one of its oilfields in Assam.

Berger Paints (BRGR) result was above expectations. BRGR continued to positively surprise on revenue growth similar to other paint companies. However, gross margin expansion has been inferior compared to competition due to adverse product mix and currency appreciation. Positively, management guides for gross margin expansion in ensuing quarters as the benefit of lower inventory cost start accruing to P&L.; Subsidiary performance optically looks better as decline in revenue has been less steeper compared to standalone numbers. This was due to inclusion of revenue from STP Ltd (which was acquired in Nov'19) in 1QFY21. Based on strong recovery in decorative...

Royal Enfield's (RE) Q1FY21 consolidated revenue/EBITDA was above our estimates while company reported loss vs our estimate of profit. Revenue/EBITDA was higher than our estimates on account of BSVI related price hikes and lower operating expenses while PAT was lower than our estimates due to lower other income and higher effective tax rate. We believe 2W industry is likely to decline in mid-double digit in FY21 however decline in premium segment could be lower on account of strong order book/enquiry levels from rural/semi urban areas. We believe RE being a discretionary product; we expect muted demand post lockdown, given likely erosion of purchasing...

1QFY21 earnings were mixed bag with revenue lower than our estimate however EBITDA, EBITDAM and PAT were higher due to lower SG&A; (operating leverage). We continue to maintain SELL and retain TP of Rs365(12x PE of FY22E) as its core business continues to witness headwinds that may impact growth and margin. GNP is our top sell idea as 1) US derma portfolio (35% of US revenue) continues to witnesses 15-20% price erosion, 2) has thin product pipeline for US market with guidance of 8-10 new launches...

Hero MotoCorp (HMCL) Q1FY21 result was above our estimates on all parameters. Revenue was higher than our estimates on account of higher realisation while EBITDA stood at Rs1.08bn vs our estimated loss of Rs1.5bn due to substantially lower operating expenses. We believe lower COVID cases in rural areas, strong rural/semi urban economy, timely monsoon and preponement of affordable personal mobility has been in favour for HMCL in these tough times. However we are also seeing urban pocket to remain under pressure due to pandemic outbreak, negative sentiment and higher unemployment which would impact HMCL urban sales. We expect consumer spending...

Tata Steel (TATA) reported Q1FY21 EBITDA below our/consensus estimates by 76%/61% at Rs5.1bn (down 89% QoQ/down 91% YoY), due to lower than expected earnings across operations. Impacted by weak spreads and lower volumes, TATA Steel Europe (TSE) reported EBITDA loss of US$82mn (v/s PLe: Loss of US$45mn and positive EBITDA of US$9mn in Q4FY20). Indian operations earnings missed our/consensus estimates by 32%/18% owing to lower volumes and higher than expected costs. Domestic EBITDA margins fell 53% QoQ/55% YoY to Rs5,900/t (PLe:Rs8,420)....