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November 18, 2024

BEAT THE STREET BULLETIN
Date: 17-Nov-2024
t.me/Beatthestreet10
ASSET SALES
ELGI RUBBER: Board approved the sale of land (37 cents) and buildings in Kanyakumari District, Tamil Nadu, to unrelated buyers.
MERGER & AMALGAMATION
NAZARA TECH: Board approved the amalgamation of its wholly-owned subsidiary, Paper Boat Apps Private Limited, with Nazara Technologies.
EQUINOX INDIA: NCLAT has reserved judgment on the merger of Embassy group entities with Equinox India Developments.
KESORAM IND: NCLT Kolkata sanctioned the composite scheme of arrangement with UltraTech Cement.
APPOINTMENTS & RESIGNATIONS
BBTC: Mr. Jehangir Nusli Wadia appointed as Non-Executive, Non-Independent Promoter Director.
HEUBACH COLORANTS: Sambit Roy appointed as Additional and Managing Director for one year starting Nov 25, 2024.
BALAJI TELEFILMS: Mr. Sanjay Dwivedi named Group CEO (in addition to CFO role); Mr. Vimal Doshi promoted to COO of Motion Pictures.
MERCURY EV: CEO Kavit Thakkar resigned, effective Nov 14, 2024.
FUNDRAISING
UPL: Board meeting scheduled on Nov 20 to finalize details for Rights Issue.
EXPANSION
EICHER MOTORS: Royal Enfield to set up a second CKD unit in Brazil.
PHOENIX MILLS: Board approved incorporation of a subsidiary, Sparkle Three Mall Developers Pvt. Ltd., for real estate development.
WONDER ELECTRICAL: Plans to start manufacturing plastic fans at Haridwar Unit with an investment of ₹3 Cr.
ORDERS & PARTNERSHIPS
RPP INFRA: Won ₹38.3 Cr order for road construction and street lights in Ranipet, Tamil Nadu.
CYIENT: Partnering with Allegro MicroSystems for innovation in automotive semiconductors.
IT CONS: Collaborating with Uni B Solutions (USA) to deploy GNSS-based toll solutions in India.
BONUS ISSUE
HARDWYN: Approved a 2:5 bonus issue.
KPI GREEN: Approved a 1:2 bonus issue.
REGULATORY UPDATES
HINDUSTAN ZINC: Declared preferred bidder for a gold mine block.
BEEKAY NIRYAT: Renamed to Agribio Spirits Limited, effective Nov 15, 2024.
CAPACITY UPDATES
TIMKEN INDIA: New ₹700 Cr facility in Bharuch to start production in Q4 FY25.
KIRLOSKAR FERROUS: Operationalized oxygen plant at Koppal, Karnataka, boosting production efficiency.
TECHNOLOGY
HCL TECH: Launched AI Labs in partnership with ServiceNow in Noida and London.
IPO PLANS
BOAT: Plans to raise ₹2500-4200 Cr via IPO by FY26.
HDB FINANCIAL: Filed for ₹12,500 Cr IPO.
REAL ESTATE
PRESTIGE ESTATES: Acquired 22,135 sq. meters of land in Mumbai for ₹291.58 Cr, targeting residential projects.
MISCELLANEOUS UPDATES
DATAMATICS GLOBAL: Incorporated a subsidiary in Dubai Free Zone.
EASYMYTRIP: Entered study tourism with 49% acquisition of Planet Education.
ZOMATO: Launched "District" app to rival BookMyShow.
RELIANCE IND: Established Reliance Group Corporate Centre under its Vision 2030.
Global-Market Insights 1/n
-The Fed chair's statement caused investors to fret about a rate cut, and the Trump rally cooled
-IT was the worst-performing sector of the market, down more than 2%
-Nvidia, Meta, Alphabet, and Microsoft tumbled
-Federal Reserve Chair Jerome Powell said that the central bank wasn’t “in a hurry” to cut interest rates
-Powell noted that the economy’s strong growth will permit policymakers to take their time to decide the extent to which they reduce rates
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Global-Market Insights 2/n
-Dow -306, S&P500 -78, Nasdaq -427
-US 10Y bond yield at 4.444%
-Dollar Index 106.62
-Gold at $2570
-Brent oil $71.04
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Global-Market Insights 3/3
-October retail sales data showed a 0.4% increase, slightly better than the 0.3% forecast
-Brent crude oil dropped 2% to settle at $71 bbl
-Crude under pressure by concerns over China’s waning demand and stronger US dollar
-China’s crude processing dropped 4.6% in October, reflecting slower factory output and persistent demand issues
-IEA and OPEC both revised down their global demand growth forecasts
MORGAN STANLEY ON MUTHOOT FINANCE
Upgrade to Equal-weight from Underweight; Hike target price to Rs 1600 from Rs 1430
Q2: 10% PPOP beat
The environment has been getting better for Muthoot, driving upgrade
Why not OW - Structural concerns at Muthoot remain
If anything, the high bad loan ratios in non- gold segments indicate that diversification is not going to be easy
EQUIRUS ON SWIGGY
Initiate Add with a target price of Rs 450
Swiggy and Zomato, while competing in the same market, may see significant divergence over the next decade, akin to Tencent and Alibaba in China
The food delivery business could achieve an 18% GOV CAGR over FY24-FY29
Swiggy's contribution margin currently lags Zomato's by 100 bps due to higher discounts and delivery costs
Swiggy's adjusted EBITDA margin has a 400 bps expansion opportunity
Swiggy's contribution margin is projected to reach 8.8%, and adjusted EBITDA is expected to touch 4.7% by FY29E as the food delivery market enters a profit expansion phase
GOLDMAN SACHS ON HONASA
Downgrade to Neutral from Buy; Cut target price to Rs 375 from Rs 570
Reset in Mamaearth pushes out earnings trajectory
Q2 revenue declines, driven by a large pipeline inventory correction
Deterioration in growth trajectory driven by the core Mamaearth brand
Honasa's derma skin care brands continue to grow strongly
Long-term potential to ride the consumer shift towards science-based skin care remains intact, but repositioning Mamaearth will take time
Nifty hits four month low; declines for sixth session on Thursday
Get ready for today's trading session with the latest global and Indian markets news wrap!
HINDALCO, NALCO, VEDANTA (+VE)
China said it would cancel export tax rebates on aluminium, copper
effective Dec 1
LME Aluminum prices jumped 8.5% YoY on Friday
-ve for aluminum consuming cos such as auto, construction and packaging
NOMURA ON HERO MOTO
• Maintain Buy; Hike target price to Rs 5805 from Rs 5663
• Rural improvement a key catalyst
• Q2 in line; healthy earnings growth and attractive valuations; margins have room to improve
• Expect the 2W industry to grow by 10% over FY25-26F, given rebalancing of growth and positive monsoons
• There are some early signs of rural pick up which will support sales
CLSA ON CG CONSUMER
• Maintain Outperform with target price of Rs 500
• In-line results
• Medium term growth visibility key for re-rating
• Growth sustains and margin ticks up
• Several levers for sustained growth
CLSA INDIA STRATEGY
• Pouncing Tiger, prevaricating Dragon
• Reverse our earlier tactical allocation shift from India to China
• Misfortune can happens in threes
• So it has played out for Chinese equities over the past week
• Trump 2.0 heralds just a trade war escalation as exports become the largest contributor to China's growth
• NPC stimulus amounts to de-risking with little reflationary benefit
• Higher US yields and inflation expectations sap scope for the Fed and thus PBOC to ease
• Anxious that these concerns lead to a buyers' strike by offshore investors who built China exposure post the initial PBOC stimulus in September
• Therefore reverse our tactical allocation in early October, returning to a benchmark on China and a 20% overweight on India
CITI ON GRASIM
• Maintain Buy; Cut target price to Rs 3100 from Rs 3250
• Q2 Below Est; Paints Business on Track to Exit FY25 With a High Single Digit Market Share
• Chemicals profitability was weaker sequentially while that of VSF improved
JEFFERIES ON HERO MOTO
(CMP: 4,604)
MAINTAIN BUY
TARGET: 5,500
Q2 Results Were In-line
Q2 EBITDA Growth Was In-line With Estimates; EBITDA/Vehicle Rose To A New High
Believe India's 2-wheelers Are Poised For Strong Double-Digit Growth Over Next 3 Years
Co's Market Share Decline In 2-wheelers & Adverse Demand Profile Shifts Are Concerns
Any Success In Premium Bikes And EVs Will Be A Positive
NOMURA ON HERO MOTO
(CMP: 4,604)
MAINTAIN BUY
TARGET: 5,805
Rural Improvement A Key Catalyst
Q2 Was In-line; Healthy Earnings Growth & Attractive Valuations; Margins Have Room To Improve
Expect 2-wheeler Ind To Grow By 10% Over FY25-26, Given Rebalancing Of Growth & Positive Monsoons
There Are Some Early Signs Of Rural Pick Up Which Will Support Sales (54% Rural Mix)
As EV Drag Reduces With New Models & PLI Benefit, Margins Can Improve
JEFFERIES ON BHARAT FORGE
(CMP: 1,329)
MAINTAIN UNDERPERFORM
TARGET: 1,100
Q2 EBITDA 12% Below Est Led By Weaker-than-expected Performance Of Standalone & Subsidiaries
Like Structural Initiatives But Remain Concerned On Cyclical Headwinds In Exports & Rich Valuations
Cut Below-Consensus FY25-27 EPS By 5-16%
JPM on City Gas
Downgrade MGL to Neutral from OW, TP cut to Rs 1300
Downgrade IGL TO UW, TP cut to Rs 343
APM gas allocations for IGL & MGL have been cut 18-20% again (effective 16 Nov).
This comes after an unexpected c.20% reduction in Oct.
Cos will have to scramble for alternate gas at higher costs, which will affect margins further
Cut IGL /MAHGL FY25-26 PAT forecasts 11-25% and reduce valuation multiples
Jefferies on CITY Gas
Downgrade MGL to U-P, TP cut to Rs 1130
Downgrade IGL To U-P, TP cut to Rs 295 from Rs 390
For 2nd month in a row, govt. lowered APM allocation to CNG players by 20%, suggesting cheap domestic gas will soon be taken away fully
CITI ON CITY GAS
IGL/MGL notified of another 20% APM allocation cut w.e.f. Nov 16th
Assuming no excise duty relief, est cuts could necessitate price hike of >Rs7/kg (10%), a challenge to fully pass-through without impacting economics of CNG; introduce further earnings risks
Jefferies on HAL
Buy, TP Rs 5500
Jefferies on hal
2QFY25 EBITDA rose 7% YoY, with margins up 37 bps at 27.5% on 6% YoY rev growth
Higher-margin service income seems to have contributed, especially given later aircraft deliveries on back of delay in engines from tie-up with GE
CLSA on HAL
O-P, TP Rs 4731
2QFY25 Ebitda up 6% but PAT up 20% YoY
Despite delay in Russian aircraft & helicopter orders, its decadal pipeline remains US$45bn
View large helicopter & SU 30 orders in 2HFY25 and visibility on the GE engine deal as key catalysts
Macquarie on Thermax
U-p, TP Rs 3700
2Q underlying margins were weaker than headline as recurring EBITDA/PAT missed estimates
Recurring margins for Industrial Infra (48% of 2Q revenue) remained a drag.
2Q orders were led by relatively low-margin industrial infra
CLSA on Fusion Fin
U-P, TP Cut to Rs 155 from Rs 260
Q2 Net loss of Rs3.05bn higher than expectation as its credit cost was higher than guidance at 28.6% Management has taken accelerated provisions & tightened its underwriting norms, making it stricter than regulatory guardrails
JPM on Honasa
UW, TP cut to Rs 330
Poor Q2 with Rev declining sharply (-7% y/y) resulting in EBITDA/PAT loss of Rs 307/186mn
Besides inventory correction impact, management acknowledged moderating underlying growth for flagship Mamaearth brand
Sharply reduced FY25-26E earnings
Jefferies on Honasa
Buy, TP cut to Rs 425
While higher inventory correction & loss was disappointing, founders' comment on reworking playbook creates further uncertainty
Stk would be under pressure & holders looking to exit may feel stuck given low liquidity
CLSA on DLF
Upgrade to O-P, TP raised to Rs 870
As per channel checks with property brokers in NCR market, DLF has received (EOIs) for 100+ units (out of total 420 units) worth Rs80bn+ (cUS$1bn) in its uber-luxury project, ‘The Dahlias.’
Also, conversion rate for customers so far has been c80%.
Such demand is unprecedented, considering ticket size of such apartments are upwards of Rs800m/unit (US$10m+)
Likely sales so far are higher than assumptions for FY25
RAMKRISHNA FORGINGS; TODAY'S LARGE TRADE NSE
SOCIETE GENERALE SOLD 2LKH SHARES (0.11% STAKE) @ ₹ 922.80
THINK INDIA OPPORTUNITIES MASTER FUND LP BUY 2LKH SHARES (0.11% STAKE) @ ₹ 922.80
CONCOR: India is establishing 23 exclusive container rail terminals to enhance the movement of export-import cargo.- ET
NECTAR LIFESCIENCES: LARGE TRADE NSE
ISENGARD DIRECT PE LLC SOLD 41.55LKH SHARES (2.33% STAKE) @ ₹ 34.02
Dealership relationship management in GT is a very, very complex stuff.
Be it Paints, FMCG products, consumer durables.
Each segment has so may case studies to understand.
No wonder MBA grads get so much groudwork training here.
FADA on festive season-numbers were good+A anticipates passenger vehicle stock levels will reduce further from October
TERA SOFTWARE: LARGE TRADE NSE
YELLOWSTONE VENTURES LLP SOLD 1LKH SHARES (0.8% STAKE) @ ₹ 162.90
Medipus Health Large Trade
6.6% Eq (78.9 Lk Shares) Worth ₹552.5 Cr Change Hands At ₹700/sh In Block Deal Window
L&T TECHNOLOGY SERVICES: announces strategic collaboration with Colorado Smart Cities Alliance
To accelerate adoption of smart city projects in the U.S. with engineering solutions across Mobility, Sustainability and Tech
Nifty slips over 100 points off day's high to turn red;
Smallcap down ~100 points off day's high; turns red
Midcap falls over 200 points off day's high
EnviroInfra sets IPO price band at Rs 140-148/share.
GLENMARK PHARMA SAYS: FROM CONCALL
Met With USFDA w.r.t Monroe Unit, Hope To Start Prodn by FY25 End
Looking For Respiratory Drug Launch In Next 6-8 Months In US
Maintain FY25 Margin Guidance Of 19%
See Margin Rising 100-150 bps Each Year From FY26

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