Amara Raja Batteries: Amara Raja reported a healthy quarter as revenue grew 14% YoY, driven by pent-up demand. The growth was across automotive segment (2W/4W replacement sales and higher home inverter sales) as well as industrial (higher telecom, UPS segment). While margins expanded to 17.6% on improved operating leverage, we believe that profitability will be lower in 2H as lead prices are firming up. Further, revenue growth is expected to moderate as the home inverter demand is seasonal. Amara Raja will continue to gain market share from the unorganised segment in the near term. However, the co's future technology partnerships (after the exit of Johnson Controls) and its ability to foray into alternate battery chemistries will determine growth opportunities in the longer term. Reiterate ADD with a TP of Rs 840 at 19x Sep-22 EPS. We raise our FY22/23E estimates by ~3% to factor in the better-than-expected results. RBL Bank: A strong rebound in fee income and lower-than-expected operating costs resulted in a significant earnings beat. The bank saw improving deposit (particularly retail) traction, which is creditable. The imminent capital raise is an additional positive. We continue to expect a sharp rise in GNPAs in FY21E. Credit costs will remain elevated in the near term, denting return ratios. This drives our REDUCE rating. We have a target price of Rs 179. Axis Bank: We maintain BUY on AXSB with a target price of Rs 616. AXSB saw strong operating profit growth, led by robust NII growth, a sequential rebound in core fees, and controlled operating costs....

Marico's (MRCO) 2QFY21 earnings were largely in line, barring the 11% volume growth (v/s est. 7.3%). Over the past year, MRCO has witnessed remarkable recovery in its key segments Parachute, Saffola and more recently in case of VAHO. Importantly, the outlook remains strong with guidance of 8-10% volume growth in 2HFY21 as well. While the stock is up 40% since our upgrade in Mar'20, robust sales outlook and inexpensive valuations (37x FY22E, 20% discount to peer average),...

Saturated hair oil category; growth prospects in foods Hair oil category is saturated with limited growth opportunity. In Parachute, ~30% category is unorganised creating limited opportunity to grow through market share gains only. Similarly, VAHO segment has become crowded with too many brands chasing a limited opportunity. We believe growth opportunity for Marico is limited to select brands in VAHO. We believe continued demand for healthier edible oil & food products would result in stronger growth for entire Saffola franchise that is contributing ~25% of...

India core franchise and Bangladesh lead growth; Input cost to hurt 3Q Marico Ltd's (MRCO) 2QFY21 consolidated topline grew by 8.7% YoY to Rs19.89bn (vs our est. growth of 8.2% to Rs19.8bn). Domestic revenue grew by 7.9% YoY, led by volume growth of 11% YoY with the core franchise leading growth during the quarter. The three core categories of Parachute Rigids, Value Added Hair Oils (VAHO) and Saffola (Refined Edible Oils) posted volume growth of 10%, 4% and 20% YoY, respectively. Domestic realizations in 2QFY21 were down largely on account of increase in promotional intensity (including below-the-line spends), price discounts in the Parachute portfolio and adverse mix in VAHO. The Foods portfolio grew by 55% YoY in value terms with the base Oats franchise posting 45% YoY...

We cut FY21/22/23 EPS estimates of MRCO by 2.3%, 0.8%, 1.8% even as Change in Estimates | Target | Reco MRCO remains optimistic on growth led by Edible oil, Foods portfolio, Bangladesh and Vietnam. Parachute and VAHO seem well poised for growth...

Parachute rigid packs to maintain 5-7% volume growth, while Saffola edible oil would achieve low-teens volume growth in the near to medium term. Though higher copra prices would impact gross margins in the near term, operating efficiencies would help mitigate impact on OPM. We have broadly maintained our earnings estimates for FY2021/22/23E. We retain a Buy on the stock with an unchanged price target of Rs. 420. Marico's consolidated revenues grew by ~9% in Q2FY2021 driven by an 11% volume growth in the domestic business and 7% constant currency growth in the international business....

Barring VAHO (+4%), Parachute (+10%) and Saffola (+20%) reported double digit volume growths, was encouraging. Saffola continues to outperform with 16/20% value/volume growth....

Saffola franchise and cost savings to support earnings growth We recently interacted with Mr. Pawan Agarwal, CFO, Marico Ltd. (MRCO) in order to get an update on the overall operating environment and demand trends being witnessed on ground. After witnessing YoY volume growth in May-June'20, company's domestic business has seen growth in July'20 and August'20 as well. It has been primarily led by the Saffola franchise (Edible Oils and Foods), partially by coconut oil and new launches made in the health & hygiene space. On the international front, Bangladesh has managed to remain on a firm footing. Copra...

Revenue is expected to recover to mid-to-high single digits in Q2FY2021 from 3% in May-June (and an 11% decline in Q1FY2021). Core brands Parachute coconut oil have recovered and registered sales that is better than pre-COVID levels (in July-August); Saffola edible oil continues to get good demand and is expected to register an 8-12% volume growth. Conservative ad-spends and stringent cost-saving measures would help company save Rs. 150 crore in FY2021; consolidated OPM to remain at over 20%. Stock is trading at 36x its FY2022E earnings, which is at discount to large-cap...

Gross margins expanded 360bps in FY20 amidst benign raw material environment. Average domestic copra prices declined 9% YoY in FY20. Rice bran oil/ LLP/HDPE were down 4%/8%/24% YoY respectively. The company expects mildly bearish trends in copra prices for FY21E given the sudden fall in demand for coconuts. It has taken a 5-6% price cut in Parachute through promotional pricing which will help it gain share from unbranded players. In the near term, the company will reallocate spends from nonmedia to media channels. A&SP; spends were 10% of sales in FY20. Rationalization in ad spends and cost saving initiatives are likely to help...

New product launches in the premium segments as well as increased focus on direct channel distributions and improving cost synergies should help maintain growth. We reiterate our BUY rating on the stock with a revised target price of Rs. 413 based on 43x FY22E adj. EPS. Pandemic hits volumes impacting topline Q1FY21 revenue declined 11.1% YoY to Rs. 1,925cr due to severe impact in domestic business in April, even as volume recovery can be seen from May onwards (upwards of 3.0% YoY). Revenue from India operations stood at Rs. 1,480cr (-14.5% YoY)....

Nippon Life India Asset Management: While we remain concerned about the loss of market share in both debt and equity assetsdown 332/275bps since Mar-19 to 7.5/6.8%we believe that post ownership change, NAM stands to benefit from increased credibility to raise HNI/institutional capital. We expect the company to focus on improving investment return performance and gradually recoup part of its lost market share, although this journey would neither be easy nor inexpensive. We expect NAM to post an FY21-23E revenue/PAT CAGR of 13.7/15.8% and retain a REDUCE rating with TP of Rs 280 i.e. at 36x (20% discount to HDFCAMC's multiple) FY22E NOPLAT + cash and investments. Any signs of improving performance and market share will be key re-rating drivers for the stock. Crompton Consumer: Crompton's 1QFY21 revenue was slightly lower than estimates, declining by 47% YoY vs our estimated figure of 41% YoY. At the same time, there was a beat in EBITDA by 10% despite our estimate being higher than consensus'. Efficient cost control by the company has supported its margin in the current crisis. ECD revenue/EBIT decline was 44% YoY (better than Havells and Orient Electic). ECD saw a sequential recovery as May was down by 30% while June was down only 10% YoY. Some categories like agri pumps, geysers, appliances and mixer-grinders recorded strong growth in June. Lighting saw revenue/EBIT dip by 57/61% YoY. The B-C pick-up was healthy (9% YoY growth in June) while B-B is gradually improving. Stability in pricing in B-C lighting is supporting the segment's margin, which deteriorated in...

Hair oils contribute 62% of domestic sales. The category is saturated and major brands are only growing by gaining market share from unorganised sector. Though Marico aims to further gain market share in coconut oil by passing on benefit of lower copra prices, growth prospects remain limited as the organised market has already reached above 65%. VAHO performance has remain muted in the last four quarter (Q4 & Q1 have been impacted by lockdown). With expected down trading, Marico is expected to gain market share in the economy category with Nihar Shanti Amla brand....

Marico Ltd. (MRCOs) 1QFY21 consolidated topline was down 11.1% YoY at Rs19.3bn (vs our est. decline of 13.3% to Rs18.8bn). Domestic revenue declined by 14.5% YoY with underlying volume declining by 14% YoY (vs est. 13% decline). India business was severely impacted in April but has scaled-up in May and June. Trade spends were rationalized during the quarter which supported value growth. Within the domestic business, Parachute Rigids and Value Added Hair Oils (VAHO) portfolio declined by 12% and 32% YoY, respectively, while Saffola Edible Oils posted a robust growth of 16% YoY. The business was also supported by healthy growth in the Foods portfolio (value growth of 30% YoY in 1QFY21) and the newly introduced hygiene portfolio. In the International business, Vietnam,...

is likely to continue the momentum as medium-term macro The company remains cautious on the business outlook, but would be aggressive on cost management to enable it to tide over challenging MRCO is cautious on the near-term outlook for the business, but expects to protect the core franchise of Ethnic Hair Care and Healthcare future business prospects as it incubates new geographies to expand the The company would be comfortable maintaining the operating margin at 19% plus over the medium term. Growth in Saffola (edible oil brand) has tapered off in recent years, partly as a result of strategic mistakes in terms of pricing and partly due to the company being unable to cater to the recently emerged Super Premium market segment. both topline growth and margin is optimistic v/s prior fears of EPS decline in While the jury is still out on success achieved in terms of new product trajectory as well as valuation multiples, the stock at 36.8x FY22 EPS appears to still provide healthy upside over the next year, with superior outlook than most peers and a far less volatile international business.

MRCO seems cautiously optimistic on medium term prospects led by market share gain across portfolio and strong growth in Foods and Bangladesh. Although some of the trends like double digit volume growth in edible oils and Oats and significant pressure on VAHO looks temporary, some near term gains from unorganized players looks likely as MRCO looks to cut Parachute prices given moderately benign Copra price outlook. MRCO is betting big on Foods and Hygiene, however aspiration of Rs5bn sales looks stretched target. We expect margin expansion to moderate in coming quarters as ad...

1Q impacted but operations back to near normal Marico Ltd. (MRCO) released an update to provide a summary of the operating performance and demand trends witnessed in 1QFY21. The domestic business is expected to see a low teen YoY decline in volume during the quarter but business is improving on a month on month basis, led by the Saffola (Edible oils & Foods) and Parachute portfolio. The impact of total or partial lockdowns on the overall international business is low to moderate. Raw material prices are benign for the quarter. This along with aggressive cost control and rationalization of A&P; spends...

Marico's Q1FY21 earnings were above our estimates on all fronts. Consolidated revenue stood at Rs 19,250 mn, above our estimate of Rs 18,470 mn, registering a growth of +28.68% QoQ/-11.13% YoY. Reported EBITDA grew by +65.60% QoQ/+0.86% YoY to Rs 4,670 mn, above our estimate of Rs 3,694 mn, while EBITDA margin expanded by 541bps QoQ/288bps YoY, aggressive cost control and rationalization of A&P; spends in few discretionary portfolios on a lower topline, will lead to expansion of operating margins compared to the corresponding quarter last year. PAT for...

impacted by COVID-19 among the sectors, b) a significant share of migrant labor has returned to villages, potentially resulting in the lower end of consumption shifting to rural, c) the forecast for monsoon is better than the long-term average, and d) MGNREGA wages have been raised. relatively discretionary categories (35% of the portfolio) such as male styling, premium hair nourishment, and premium hair oil in the Value-Added Hair Oil (VAHO) to witness impact on sales in the near term. falling wage rates, b) low food inflation / high non-food inflation, and c) low However company believes that, going ahead, rural should perform better than the sectors, b) a significant share of migrant labor has returned to villages, potentially resulting in the lower end of consumption shifting to rural, c) the forecast for monsoon is better than the long-term average, and d) MGNREGA In the Coconut Oil category, 35% of the market is unorganized (loose form).