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August 16, 2024

[9:34 am, 16/08/2024] R N Gupta (RNG): Kunvarji News Room:
itive bidding. (Positive)
JTL Industries: Company announces the appointment of Amit Gaur as Chief Strategy Officer to strengthen strategic capabilities. (Positive)
Panacea: Company and ICMR started the Phase III clinical trial of our tetravalent dengue candidate vaccine, DengiALL (Positive)
GIC Housing: ICRA upgraded and withdraw rating for NCDs and Bank facilities (Positive)
Swan Energy: Company to sell FSRU to Turkey's Botas for $399 mn (Positive)
PC Jeweller: IDBI Bank approves one-time settlement proposal of company (Positive)
Dee Development: Company has bagged a Purchase Order from the DOW Chemical Canada ULC, Canada (Positive)
Koicl: Net loss at Rs 50.72 cr vs loss of Rs 58.0 cr, Revenue at Rs. 158 cr vs Rs 515…
[9:34 am, 16/08/2024] R N Gupta (RNG): Macquarie on Bharti Airtel
Upgrade to O-P, TP raised to Rs 1630 from Rs 1280
Reaffirm constructive earnings & deleveraging thesis
See ROIC improving from 10% to 18-20% by FY28E
Lift India mobile target EV-EBITDA multiple to 12.5x (from 11.0x)
Base case
Assume further +15%/10% mobile increase for FY26-27e (Rs205 in FY24 to Rs290-300 FY27e), albeit with only mild subscriber growth (2%)
See Co’s India business generating US $6-7bn of operating FCF in FY26-28E, more than twice avg in FY22-24
Macquarie on Indus Tower
U-P, TP Rs 310
While clarity on tenancies has improved post Vodafone-Idea fund raise, rent erosion & change in competitive dynamics are headwinds
Expect lacklustre revenue/EPS CAGRs of 5% over FY24-27E, below consensus est.
Catalysts
Positives: Divi…
[9:34 am, 16/08/2024] R N Gupta (RNG): Nomura on Hero Moto
Buy Call, Target Rs 5,663
Rural Revival & Xtreme 125 Key Catalysts
Q1 Margin Lower, ICE Improves But EV Drags
EV Cost Reduction Should Address This In H2FY25
Trim Volume Growth Estimate To 6% For FY25/26F (7% Earlier)
Trim Revenue Growth By 2-3% On Lower ASPs
GS on Hero MotoCorp
Sell Call, Target Rs 4,150
Reported A Q1 Miss
Gross Margin Of 32.3% Was -50 bps Below BBG Cons
Management Indicated Spare Parts Decline In Revenue Share As A Reason
However, YoY ASP Trend Of +3% Trailed Peers Like Bajaj Auto & Eicher
BofA Sec on Hero Moto
Buy Call, Target Cut To Rs 6,000
Margin Miss On Mix & EV Drag Mkt Share Recovery Is A Key Catalyst
Analyst Call: Rural + Xtreme 125 Ramp Key To Share Gains
Stock Valn (Adj For Ather & Captive Fin Co) At 17x FY26 PE Is Cheap Vs Peers
MS on Hero MotoCorp
Underweight Call, Target Rs 4,110
Hero's 1QF25 Was Weaker Than Estimates
Stronger ICE Margin Was Offset By EV Losses And Lower Sales Of Spares
Under-Representation In Faster-Growing Premium 2Ws And EVs
Jefferies on Hero Moto
Buy Call, Target Rs 5,800
1Q EBITDA Below Est Led By Lower-Than-Expected ASP & Margin
Believe Indian 2-Ws Are Poised For Strong Double-Digit Growth Over Next 3 Years
Co’s Market Share Decline In 2-Ws & Adverse Demand Profile Shifts Are Concerns
Cut FY25-27E EPS By 5-6% But Still See A 13% EPS CAGR Over FY24-27E
Nomura on M&M
Buy Call, Target Rs 3,417
Thar Roxx Launched At `12.99 Lk Onwards; Potential To Redefine Urban SUVs
Appreciate Consistency With Which MM Has Come Out With Successful Launches
Every Single Launch, Even The Facelifts & Variants Show A Lot Of Effort
Not Merely An Extension Of The 3-Door Thar But Is Substantially Improved In Many Areas
MS on M&M
Overweight Call, Target Rs 3,304
Co Has Shown Good Success In Its Past Launches
Found Thar Five-Door Package Also Impressive
Thar Three-Door Sales Stand At 5,900 Units/Month (Last Six Months' Average)
Expect Three- And Five-Door Variants To Collectively Clock 8,000-9,000 Unit Sales/Month
Maintain That M&M Will Be Fastest Growing PV Company
See A Strong Jump In Sales In Coming Months, Driven By Festive Demand
CLSA on HAL
Outperform Call, Target Rs 4,731
Pipeline Intact & Q1 Weak Large Engine Orders Pushed To Q1 & Rest To H2FY25
1QFY25 EBITDA Down 6% But PAT Up 14% YoY
Orders Slowed On A Delay In Russia-Linked Programs To 2QFY25
Jefferies on HAL
Buy Call, Target Rs 5,725
Q1 Revenue Was 3% Above Expectations
EBITDA Was Lower As Margin Contracted 440 bps To 22.8%
Depreciation Was 27% Lower YoY And Contributed To The Profit Beat
Believe Strong Order Book Gives Confidence Of Double-Digit Growth For 3-5 Yrs
Volatile Margin Should Pick-Up In H2 With Revenue Delivery
UBS on HAL
Buy Call, Target Rs 5,700
Q1 Operationally In Line; On Course For Robust Ordering Momentum
Expect HNAL To Receive Orders Of `1 Lk Cr In FY25
LCH Prachand, 240AL31 Engines & SU30 Upgrades Being Major Ones
Expect Rs 2 Lk Cr To Be Awarded Over The FY25-26 Period
Nomura on HAL
Buy, TP Rs 5400
Earnings miss as EBITDA margin shrinks
Revenue of Rs 43.5bn, up 11% y-y (+5% vs Nomura estimates).
Gross margin at 66.6% was down 719bp y-y.
EBITDA came in at INR9.9bn, down 7% y-y (-11% vs Nomura estimates)
News Headlines from Business News Agencies:
Business Standard
India Inc earnings slow down in Q1FY25 despite operating margin gains
Swan Energy likely to sell FSRU stake to Turkey's Botas for $400 million
Telecom players' Arpu growth falls to 7.5% in FY24, shows govt data
E-commerce logistics firm Ecom Express files for Rs 2,600 cr worth IPO
Global crypto exchange Binance set to start ops in India after 6 months
Manappuram Finance expects non-performing assets falling this FY
Large deals power paradigm shift in India's venture capital terrain
SBI raises MCLR by 10 basis points for all tenors; 3rd hike in 3 months
Tata Steel's Aashiyana expects to cross Rs 3,500 crore GMV in FY25
M&M launches Thar Roxx, targets to rule above Rs 12.5 lakh category
Electric mobility right step in right direction for country: M&M CEO
Economic Times
L&T Realty, Valor in pact for Rs 8,500-cr joint development in Mumbai’s Bandra west
Edible oil imports dip 1.6% in first 9 months of marketing year ending October: SEA
Draw norms to assess background of Mudra loan applicants: Niti Aayog
SBI-led banks key to IBC case against Jaiprakash Associates
India's medicine, antibiotics exports gaining share in US, Italian markets: Govt data
Chinese ecommerce giant JD beats estimates for quarterly profit
SBI, PNB in talks with Karnataka govt for 'amicable resolution' of ban issue
Textiles, apparel exports rise 4.73% in July on improved demand: CITI
UK economy grows 0.6 per cent between April and June as it recovers from recession
Stringent safety norms for construction electric vehicles from October 1
Vacheron Constantin celebrates record sales, eyes growth in Indian luxury watch market
Mint
IndiGrid ties up with three investors to develop transmission projects
Ola to roll out portable dark stores for quick commerce
Hindustan Zinc to pay special dividend of ₹8,000 crore to shareholders: Report
Walmart surges 8% to hit record high on robust Q2 show, revenue guidance boost
CEO Aggarwal announces Ola's first AI chip for India, set for 2026 launch
Coal India to be fined if e-auction supplies not met
Adani Power to sell Bangladesh-bound power in India after Centre eases norms
Ola Electric Roadster Series e-bikes launched in India, starting at ₹74,999
ognizant offers annual salary hike as low as 1% to employees: Report
Former CEO Schmidt blames remote working for Google's lagging AI performance
US Indices surge as latest economic data provide pushback to recession concerns. Recession fears in bond market fade after July’s retail-sales data. 2-year Treasury yield jumps by most in two months after better-than-expected U.S. retail-sales data. Oil prices head higher as traders eye demand outlook, monitor Middle East threat.
Global investment banking firm Morgan Stanley report :
In a short span of 10 years, India has gained positions in the world..
Forex
2014- $285 Billion
2023- $603 Billion
Corporate Debt as % of GDP
2015- 65%
2023- 50%
Foreign Direct Investment:
2013- $22 Billion
2023- $46 Billion
Mutual Fund Investment:
2013- $100 Billion
2023- $500 Billion
Electrified Railways:
2013- 4,100 kms
2023- 28,100 kms
Corporate Tax Rate:
2013- 33.9%
2023- 22%
RBI CPI Inflation:
2013- 10%
2022- 4.7%
Direct Benefit Transfer:
2013- $0.89 Billion
2023- $32 Billion
National Highways:
2014- 25,700 kms
2023- 53,700 kms
Airports
2014- 74
2023- 148
Digital Transaction as % of GDP
2016- 4.4%
2023- 76.1%
No. of IITs
2014- 16
2023- 23
No. of IIMs
2014- 13
2023- 20
No. of IIITs
2014- 09
2023- 25
No. of Institutes of National Importance
2014- 75
2023- 149
No. of AIIMS:
2014 - 7
2023 - 25
No. of Medical Colleges
2014 - 385
2022 - 693
*Consider that household debt/GDP in India is just 19% vs. 48% for China and that only 2% of Indian households have life insurance.
*The path taken by India since 2014 reveals that India is likely to get the tag of the third largest economy in 2027 (or FY28) based on actual GDP data as on March 2023
CLSA on Piramal Ent
Downgrade To Underperform, Target Cut To Rs 860
Co Saw Negative Credit Costs Due To Lower Provisions On Stage 1/3 Assets
Negative Credit Costs Due To One-off Gains Supported Otherwise Weak Operating Profit
AUM Growth Of 10% YoY Was Primarily Driven By 43% YoY Growth In Retail Book
Some Segments Of Its Retail Book Are Continuing To See A Deteriorating 90+ DPD Trend
Believe This Could Put Pressure On Both Growth And Credit Costs
Management Indicated Near-term Pressure On Its Cost Of Funds
Jefferies on Piramal Ent
U-P, TP Rs 805
1Q core PAT Rs778m, below Rs815mn est. due to lower NII.
Co utilized Rs2.6bn of overlay provn in 1Q which aided profit
Retail loans growing well &legacy wholesale AUM should shrink further
Expect slow earnings recovery
Jefferies on Muthoot Fin
Buy Call, Target Rs 2,220
Q1 Profit Grew 11% YoY To Rs 1,080 Cr (7% Miss) As Beat In PpOP Was Offset By Higher Provisions
Loan Growth Surprised Positively, Aided By Higher Gold Prices
Customer & Tonnage Growth Improved QoQ
NIMs Fell QoQ, But Held Up Better Than Est
Gold Gross NPA Rose 70 bps QoQ
Provision Surprised Negatively, But With LTV On Gross NPA At 54%, Loan Losses Should Be Limited
BOFA on Muthoot Fin
Buy, TP Rs 2040
Gold: Strong growth tailwinds AUM +11% QoQ, strong new customer acquisition/activation with loan accounts +5.6% QoQ
PPOP at INR17.1bn (+4% vs BofAe), PAT at INR10.8bn (-5% vs BofAe) on higher provisions; GS-2/GS-3 rose +138bp/70bp QoQ
MS on Muthoot Fin
UW, TP Rs 1330
PAT missed MSe on higher credit costs
Gold price rally drove 11% QoQ gold loan growth (MSe 13%)
NTM P/B of 2.5x & P/E of 14x are expensive
Have seen sharp stock reversals in past once gold prices stagnate or start falling
MS on Manappuram Finance
Overweight Call, Target Rs 245
Q1 Was A Muted Quarter
1% PAT Miss Due To Higher Credit Costs In Standalone & MFI Subsidiary
Standalone NIM Missed Estimates Owing To Higher Borrowings During Quarter
Yields Were In-line With Estimates Even As Gold Loan Yields Fell 30 bps QoQ To 22.2%
Management Raised Its Guidance For Gold Loan Growth From 12-13% To 15% For FY25
Mgmt Also Guided That Credit Costs At Asirvad Microfinance Likely To Remain Elevated
Jefferies on Manappuram Finance
Buy Call, Target Rs 270
Q1 PAT Grew 12% YoY 3% Below Estimates Despite Slight Beat In PpOP Due To Higher Provisions
Gold AUM Grew 10% QoQ Due To Higher Gold Prices & Slight Uptick In Customer Growth
Margins Dipped QoQ
Gross NPA In MFI Segment Fell QoQ
Gross NPA In Other Non-Gold Segments Rose QoQ, But These Form 22% Of Loans
Co Should Gain From Gold Price Tailwind, Growth In Non-Gold Portfolio
Concerns Around Stress In MFI/Non-Gold Book Seem Largely Priced In
BoFA Sec on Manappuram Finance
Buy, TP Rs 247
Strong tailwinds in Gold: AUM +9.7% QoQ on +2.9% QoQ rise in gold customers, +6.1% rise in ATS; OGL share at 70% vs 57% QoQ
Non-gold business disappoints with 3.5% QoQ AUM growth & deterioration in AQ; Non-gold AUM mix down to 47%
Jefferies on Max Fin
Buy Call, Target Rs 1,220
Q1 VNB Of Was Up Just 3% YoY, Missing Est Despite 31% YoY Growth In Premium
Miss In Q1 Was Due To Weaker Mix Of Premiums, Led By Doubling Of Ulips, & Share Rose To 39%
Expect Mix Of Premium To Normalise As Sales Through Banca And ecom Are Managed Better
Persistency Rose By 3 ppt YoY To 87%; ROEV Was 14%; EV Growth Of 30% Including Capital Infusion
Valuations At 1.5x FY26 P/EV Is Attractive
CLSA on Hindalco
Outperform Call, Target Rs 760
Q1 India EBITDA Was Ahead Of Est On Lower Aluminium COP & Better Copper Profitability
Spot LME Was $210/t Lower Than Q1
Profitability Impact Is Likely To Be Cushioned By A Better Mix And Hedging
With Downstream Expansion Near Complete, Focus Now Shifts To Upstream Projects
Upstream Projects Paves Way For Volume Growth & Margin Expansion
Jefferies on Hindalco
Buy Call, Target Rs 800
Q1 EBITDA Rose 32% YoY & In-line With Estimates
India Business Is Delivering Well With Good Cost Control In Aluminum
India Business Is Delivering Better Margins In Copper
The Recent Slide In Aluminium Price Poses Some Headwind
Novelis Is Benefiting From Improved Beverage Can Demand
The Flooding Issue At Swiss Plant Should Normalise In H2
Co’s 1.2x FY25 PB Is Reasonable
JPM on Hindalco
OW, TP Rs 725
EBITDA beat in India business; three upstream projects on the anvil
Hindalco’s net cash balance sheet in India biz keeps co well positioned to pursue growth projects
While 2QFY25 should see a softer EBITDA/t due to decline in LME prices
Jefferies on Hero MotoCorp
Buy Call, Target Rs 5,650
Q1 EBITDA & Recurring PAT Grew 19-21% YoY But Were 6% Below Estimates
Q1 EBITDA & Recurring PAT Below Est Due To Lower-than-expected ASP & Margin
Volumes Grew 13% YoY (+10% QoQ) But ASP Declined 3% QoQ
Gross Margin Contracted 130 bps QoQ
EBITDA Margin Rose 10 bps QoQ To 14.4% On Operating Leverage Benefit
EBITDA/Vehicle Fell 3% QoQ
Press Release Mentions That Co Has Slew Of Launches In Pipeline In Both EV & ICE Categories
MS on Samvardhana
Overweight Call, Target Raised To Rs 198
Q1 EBITDA Was Largely In-line
With All Acquisitions Closed, Expect Balancesheet To Start Improving
Ramp-up Of Non-auto Biz & Addl Details On Consumer Electronics Business Is Key To Watch
JPMorgan on Samvardhana
Overweight Call, Target Raised To Rs 195
Strong Momentum Across Businesses; Investment In Growth Continues
Q1 Broadly In-line
Maintaining A Healthy Balance Between Leverage, RoCE And Growth Capex
Management Reiterated Their Commitment To Remain <2.5x Net Debt/EBITDA
Raise FY25-27 EPS By 9-19%
Nomura on HDFC Bank
Neutral Call, Target Rs 1,720
Increased Priority Sector Lending (PSL) Requirements To Have Marginal NIM Impact
NIM Improvement Led By Better Funding Mix Remains Key RoA Driver
NIM Improvement Will Come At Cost Of Loan Growth
Balancesheet Course Correction Will Be Gradual
Citi on Voda Idea
Buy Call, Target Rs 22
Q1 Revenues Came In Below Estimates
Subscriber Losses Were Stable
Miss On Subscriber Numbers Was Due To Flat ARPU Vs Expectation Of Slight Improvement
Net Loss Narrowed QoQ, Better Than Our Estimate
Narrow Net Loss Led By Higher Other Income (Following The Equity Raise)
Narrow Net Loss Led By Lower Int Expenses (Reversal & Writeback Of Some Prior Charges)
Macquarie on Apollo Hospitals
Underperform Call, Target Rs 5,040
Q1 Revenue & PAT Largely In-line
Q1 EBITDA Missed Estimate By 6%
Overall, EBITDA Margin Of 13.3% Came Below Estimate Of 14%
CITI on Apollo Hospital
Buy. TP Rs 7670
Reported healthy & in-line qtr
Consol EBITDA stood at Rs6.75bn (+33% YoY) vs Citi est of Rs6.8bn
Hospitals revenue/EBITDA grew by 15% YoY, with flat margins, absorbing costs related to new doctor hiring/marketing exp.
Here are some upcoming buyback meetings in the Indian stock market:
1. Tata Consultancy Services (TCS): Buyback meeting on August 17, 2024.
2. HCL Technologies: Buyback meeting on August 22, 2024.
3. Tech Mahindra: Buyback meeting on August 24, 2024.
4. Wipro: Buyback meeting on August 29, 2024.
5. Infosys: Buyback meeting on September 1, 2024.
6. Larsen & Toubro (L&T): Buyback meeting on September 5, 2024.
7. Bharti Airtel: Buyback meeting on September 12, 2024.
8. Dr. Reddy's Laboratories: Buyback meeting on September 19, 2024.
9. Crompton Greaves Consumer Electricals: Buyback meeting on September 26, 2024.
10. Grasim Industries: Buyback meeting on October 3, 2024.
Nifty closed @24,143 (+4.75) and Sensex @79,105 (+149.85) on Wednesday GIFT Nifty was trading at 24,347 (as of 7:30 am)
FIIs net sold equities in cash to the tune of Rs 2,595 cr whereas DIIs bought equities in cash worth Rs 2,236 cr on August 14 2024
SC States can collect tax on mining with retrospective effect from April 2005 Arrears could amount to Rs 1.5 - 2.0 lac crore
Cognizant offers pay hikes of 1-5% this year compared to 7-11% last year
Glenmark Pharmaceuticals sales rose 6.8% y/y to Rs 3,244.2 cr and profit increased by 126.9% y/y to Rs 340.3 cr in Q1FY25
Hindustan Aeronautics Ltd ( consolidated net profit rose 77% y/y to Rs 1,437 cr in Q1F25 Total income was up nearly 18% y/y
Ola Electric Mobility reported a consolidated net loss of Rs. 347 cr for Q1FY25 from Rs 267 cr in Q1FY24
Mazagon Dock reported a rise in revenue by 8.5% y/y to Rs 2,357 cr while profit surged by 121% y/y to Rs 696 cr in Q1FY25
SpiceJet net profit declined by 19.9% y/y to Rs 158.2 cr for Q1FY25 from Rs 197.6 cr in Q1FY24 Revenue fell by 14.7% y/y
Vedanta will offload up to 3.31% stake in Hindustan Zinc at a floor price of Rs 486 per share, for about Rs 6,500 cr
Swan Energy may sell its stake in LNG terminal for $399 mn
HC asks Spice Jet to ground, return 3 engines to lessors
Real estate developer Kalpataru filed it DRHP for a Rs 1,590 cr IPO
India's textiles and apparel exports in July grew 4.7% to $2.93 billion compared to last year mainly driven by an increase in demand for apparels

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