Sell

Valuation and Risks: We have valued the stock based at 7.55x 1-yr forward P/BV mean at 0.8 x discount and has arrived at a price target of Rs. 1155 with potential downside of 13% and we rate it SELL'.

EBITDA loss stood at INR5.6b (v/s profit of INR14b last year) due to lower absorption of fixed cost. EBIT loss stood at INR3.7b (v/s revenue was down 7% YoY to INR55b. Total receivables remain elevated at INR365b, of which 12% is from the private sector, 47% is from state entities, 34% is from the Center and 7% is BHEL continues to struggle on account of cost at ~25% of sales. In FY20, working capital deteriorated to 99% of sales from 65% in FY19 on account of higher inventories, slow movement in receivables We have cut our FY21E/FY22E earnings estimates by 46%/17% to account for the poor execution and weak ordering environment. EBIT loss stood at revenue was down 36% YoY to INR150b. EBIT loss stood at INR3.7b (v/s profit of INR349m YoY). BHEL continues to struggle on account of (a) the weak ordering environment in the power sector, (b) high receivables of INR365b, and (c) high employee cost at ~25% of sales in FY20.

Background Greaves Cotton (GCL) is one of the largest manufacturers (primarily) single cylinder (diesel, gasoline engines) and dual cylinder engines, which find application in running 3-W vehicles and 4-W small commercial vehicles (SCVs). The company offers products and solutions across business units- Engines, power, farm equipment, mobility and aftermarket. In FY19 Greaves Cotton augmented its Clean Technology...

Indian Hotels (IHCL) reported 14.6% drop in revenue to | 1,063 crore (I-direct estimate: | 995 crore) led by 48% drop in income for March 2020. Revenues were flattish at | 4,463 crore in FY20, in contrast to 4% growth on 9MFY20 basis. Consolidated EBITDA margins for Q4FY20 fell 330 bps YoY to 19.6% (I-direct estimate: 20.5%); standalone (pure domestic) business saw a sharper decline of 522 bps. EBITDA for the quarter dropped 27% YoY to | 207.9 crore (I-direct estimate: | 203.7 crore). For FY20, EBITDA increased 16.6% YoY, with higher share of growth coming from international business....

Mahanagar Gas's (MAHGL) Q4FY20 PAT underperformed at Rs 1.7bn (+25% YoY).

DCB Bank's (DCBB) board today passed a resolution to raise equity capital of up to Rs 5bn.

Expensive Valuation:Despite the correction post the pandemic, the stock has retraced to nearly 10% from the peak seen around March 2020.

The nationwide lockdown due to spread of Covid-19 has reduced capacity utilisation of the company and will impact its near term performance. On the business front, MRPL plans to augment its capacity from 15 MMTPA to 18 MMTPA over the next few years. However, the last expansion project to increase complexity as well as capacity did not achieve desired results. Also, weak global product spreads will affect refining margins thereby affecting profitability. MRPL's investment in OMPL has also not paid off. It continues to be a drag at the consolidated level. We downgrade the stock from...

We recommended SELL on Ashok Leyland with a Target Price of Rs 46, a downside of 10% from CMP and Stop Loss Rs 54.

Hero MotoCorp (HMCL) posted an operationally weak Q4FY20 performance led by poor gross margins and one-off dealer support via discounts.