16 Feb

Non-COVID business recovered, saw 40% pick-up – Apollo Hospital

Update on the Indian Equity Market:

On Tuesday, NIFTY closed at 15,313 (-0.01%). Top gainers in NIFTY50 were Power Grid (+6.3%), ONGC (+4.9%), and Tata Steel (+3.8%). The top losers were ICICI Bank (-2.3%), Axis Bank (-2.2%), and Eicher Motors (-1.6%). The top sectoral gainers were METAL (+2.9%), PSU BANK (+1.6%), and PHARMA (+0.5%) and sectoral losers were MEDIA (-0.8%), FMCG (-0.7%) and BANK (-0.5%)

Excerpts of an interview with Ms. Sunita Reddy, MD, Apollo Hospital (APOLLOHOSP)  with CNBC -TV18 dated 15th February 2021

  • Total hospital occupancy is at 63 percent. Out of these, 17 percent of the revenue is coming from COVID.
  • The non-COVID business has recovered, they have seen 40 percent pick-up in non-COVID work. There has been a 36 percent improvement in elective surgical work.
  • This has reflected in the average revenue per occupied bed (ARPOB) which was at Rs 38,000 in 2QFY21 moving up to Rs 40,100 in 3QFY21.
  • In terms of international patient inflow, it was barely 2 percent. Most of the international patients were from countries like Bangladesh and Myanmar. Definite improvement is expected from March when travel opens up.
  • The digital business peaked during COVID. They had done about 250,000 teleconsults during the first two quarters and in Q3 they are doing about 2,000 a day.
  • Many of the doctors are now coming back to the offices, they are seeing growth again in the OP.
  • They have seen 21 percent growth in the pharmacy business, with both the front end and the back end. Margins have been good at ~6.5 percent and this is after they added 150 stores in 3QFY21 and about 400 stores for the full year.  They are currently at 4,000 stores in the pharmacy.
  • Pharmacy business revenues have picked up by 16.4 percent and continue to grow. Margins continue to improve.
  • Going forward they are expected to see healthy margins because in the mature stores they are seeing margins of 9 percent.
  • They are still seeing strong growth in the diagnostic business in spite of tapering off of COVID.

Asset Multiplier comments:

  • Rapid expansion and maturity of older hospitals have kept overall growth higher. Health care technology investment and deals continue to provide opportunities.
  • The health care industry’s response to COVID 19 has been one of persistence and commitment, especially by front-line caregivers. The pandemic has significantly shifted industry trends and accelerated the pace of change.
  • Digitalization has become a major component in a sustainable healthcare model. Virtual care and telemedicine enabled the continuity of care during the recent health crisis, and these solutions are expected to continue growing in importance as patients value efficiency and convenience.

Consensus Estimate: (Source: market screener and investing.com websites)

  • The closing price of APOLLOHOSP was ₹ 3,205/- as of 16-February-2021.  It traded at 348x/ 65x/ 44x the consensus earnings estimate of ₹ 9.2/ 49.1/ 72.8 for FY21E/22E/23E respectively.
  • The consensus price target is ₹ 2,898/- which trades at 40x the earnings estimate for FY23E of ₹ 72.8/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

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15 Feb

Actively looking for acquisitions – Happiest Minds

Update on the Indian Equity Market:

On Monday, Nifty closed in the green at 15,315. Among the sectoral indices, Bank (+3.3%), Private Bank (+3.3%), and Financial Services (+2.9%) closed higher. Metal (-0.5%), IT (-0.4%) and Pharma (-0.3%) closed in the red. Axis Bank (+6.2%), ICICI Bank (+4.2%), and SBI (+4.0%) closed on a positive note. SBI Life (-2.3%), HDFC Life (-2.1%), and DR Reddy (-1.8%) were among the top losers.

Excerpts from an interview of Mr. Joseph Anantharaju, Executive Vice Chairman & CEO of Product Engineering Services, and Venkatraman Narayanan, MD and CFO, Happiest Minds with CNBC-TV18 dated 12th February 2021:

  • The company guided for a 20% revenue growth rate. The demand has panned out well.
  • The company won 6 new deal wins in 3QFY21.
  • Speaking about verticals, Mr. Joseph said edutech was doing well. The company received new requests and projects.
  • The industrial, B2B, and logistical space seem to be having new initiatives, which are leading to higher demand.
  • On operating margins, he said for the last 3 quarters the company is delivering margins in the range of 21-23%.
  • The company has guided for a profit margin of 22%-24% in FY22E.
  • On revenue growth, the company will maintain long term growth at 20%.
  • The company witnessed some efficiencies in the past 3 quarters, the plan is to retain some of those going forward.
  • The company recently completed an acquisition of PGS for 8.25 mn$. The company is actively looking for acquisitions.
  • On dividend, the company has not yet declared but the board will look after it.

 

Asset Multiplier comments:

  • The improvement in new deals signed and increased focus on IT budgets by clients has been mentioned by most of the IT Companies during the December quarter earnings call.
  • In 3QFY21, most of the IT companies have significantly expanded their operating margins, which was a result of continuing control on costs and improved sales.
  • It would be interesting to watch the performance of IT companies in the next couple of quarters, as companies have guided for lower margins but if cost control continues (led by on-off shore mix, WFH) then the margins might sustain these high levels.

 

Consensus Estimate: (Source: TIKR website)

  • The closing price of Happiest Minds was ₹ 401 as of 15-February-2021.  It traded at 36x/35.8x the consensus Earnings per share estimate of ₹ 11/11.2 for FY21E/FY22E/ respectively.
  • The consensus average target price is ₹ 385/- which implies a PE multiple of 34x on FY22E EPS of 11.2/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Happiest minds, IT , 0 Comments Read more...
15 Feb

This week in a nutshell (Feb 8th to Feb 12th)

Technical Talks

  • NIFTY opened the week on 8th Feb at 15,064 and closed on 12th Feb at 15,163, a weekly gain of 0.7%. The index was range-bound during the week. With RSI (69) nearing the overbought zone and MACD on a declining trend, the technical indicators show a possible decline. On the downside, 10DMA of 14,921 could act as a support. On the upside, 15,257 is the key level to watch out for as the index tried to test this level during the week but could not sustain.

Weekly highlights

  • Foreign Institutional Investors (FIIs) continued to be net buyers in Indian equity of Rs 5,870 mn, but the quantum of inflows declined from the previous week of Rs 12,1340 mn. Conversely, Domestic Institutional Investors (DIIs) continued to be net sellers with an increased net outflow of Rs 9,560 mn vs the previous week Rs 5,643 mn.
  • Sectoral updates:
    • IRDAI released monthly business data for January 2021 for both Life and non-life insurance companies.
    • For the General insurance industry as a whole, the growth in Gross Direct Premium Underwritten was +6.7% YoY for the month and +2.8% YoY for FY21 YTD.
    • For the Life Insurance industry, the New Business Premium growth was +3.7% YoY for the month and a decline of -1.2% YoY for FY21 YTD.

 Things to watch out

  • The 3QFY21 results season will be nearly concluded in the coming week. With that, the result-led stock-specific movements will come to an end and the focus may again shift to macro developments.
By Uncategorized, Weekly update 0 Comments Read more...
11 Feb

Have very low inventory at dealerships Maruti Suzuki

Update on Indian Equity Market:

The markets closed the weekly expiry day on a positive note as Nifty ended the day 0.5% higher at 15,179. Within the index, HINDALCO (5.4%), RELIANCE (4.2%), and ADANIPORTS (2.6%) were the highest gainers while EICHERMOT (-3.0%), TITAN (-2.5%), and LT (-1.4%) were the laggards. Among the sectoral indices, FMCG (0.8%), METAL (0.8%), and IT (0.6%) led the gainers while PSU BANK (-1.3%), AUTO (-0.5%), and REALITY (-0.3%) were the losing sectors.

Excerpts of an interview with Mr. Shashank Srivastava, Executive Director, Marketing & Sales- Maruti Suzuki India Ltd (Maruti) with CNBC TV18 dated 11th February 2021:

  • Mr. Srivastava mentioned that the Vaahan data comes with a lag. In October-November, it was said that the dealers are carrying very high inventories based on the Vaahan data which on the ground was incorrect.
  • The states like Telangana and Andhra Pradesh, which contribute about 12% to the sales are not part of Vaahan numbers. About 14% of the RTOs (Regional Transport Office) are not part of the data issued by Vaahan.
  • The company is currently not facing any difficulty caused by a global shortage of semiconductor chips. Production was normal in January and continues to be so in February.
  • The auto sales recovery has continued. The company is now only 15% below last year’s volume levels. The same number was -78% and -34% during 1QFY21 and 1HFY21 respectively.
  • The company has kept very low inventory levels at dealerships. He said that the company needs to undertake extra production to fill the inventory levels.
  • Price rise in precious metals leading to input cost inflation for the auto sector. He mentioned that one has to take a hit on the bottom-line to protect the top-line.

Consensus Estimate: (Source: market screener)
•The closing price of Maruti was ₹ 7,665/- as of 11-February-2021. It traded at 49x/ 31x/ 24x the consensus earnings estimate of ₹ 156/ 245/ 313 for FY21E/FY22E/23E respectively.
• The consensus price target of ₹ 7,620/- implied a PE multiple 24x of FY23E EPS estimate of ₹313/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Auto, Maruti Suzuki , 0 Comments Read more...
10 Feb

Optimistic on Sun NXT – Sun TV

Update on the Indian Equity Market:

On Wednesday, Nifty closed in the red at 15,107. Among the sectoral indices, Realty (+1.6%), Pharma (+0.7%), and IT (+0.4%) closed higher. PVT Bank (-0.7%), Fin Services (-0.2%) and FMCG (-0.1%) closed in the red. Cipla (+2.8%), Bajaj Finserv (+2.8%), and SBI Life (+2.7%) closed on a positive note. Eicher Motors (-2.2%), Bharti Airtel (-1.6%), and HDFC Bank (-1.2%) were among the top losers.

Excerpts from an interview of Mr. SL Narayan, CFO, Sun Group with CNBC-TV18 dated 09th February 2021:

  • The company expects double-digit growth across financials.
  • Narayan said things are looking good since January-21.
  • The advertising revenues are still lagging but the company is in a better position as compared to Q1FY21.
  • The company was impacted more as compared to large peers because of its dependence on local revenues.
  • He said the entire ecosystem is affected and hence there is some impact on the company as well.
  • On Sun NXT, he said the company had a large contract that came up for renewal. However, the negotiations couldn’t be concluded on time and its revenues were not recognized in Q3FY21.
  • Speaking about subscribers for Sun NXT, he said the company is not spending on customer acquisition because they don’t want to build an OTT at a significant upfront investment.
  • Movie releases will bring back the growth in subscription revenues.
  • A lot of new movies will be hitting the screen in coming times.

 

Consensus Estimate: (Source: market screener website)

  • The closing price of Sun TV was ₹ 528 as of 10-February-2021.  It traded at 15x/13x/12x the consensus Earnings per share estimate of ₹ 35.8/39.3/42.3 for FY21E/FY22E/ FY23E respectively.
  • The consensus average target price is ₹ 566/- which implies a PE multiple of 13x on FY23E EPS of 42.3/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By Miscellaneous, Sun TV , 0 Comments Read more...
09 Feb

Double-digit volume growth to continue – Galaxy Surfactants

Update on the Indian Equity Market:

On Tuesday, the Indian equities snapped the six-day winning streak and Nifty 50 ended at 15,109 (-0.5%). Among the sectoral indices, FINANCIAL SERVICES 25/50 (+0.3%), FINANCIAL SERVICES (+0.3%), and BANK (+0.2%) ended the day with gains. MEDIA (-1.9%), AUTO (-1.4%), and PHARMA (-1.2%) led the losers. Among the stocks, SBILIFE (+4.0%), ASIANPAINT (+3.8%), and HDFCLIFE (+3.6%) led the gainers while M&M (-3.0%), TATAMOTORS (-3.0%), and JSWSTEEL (-2.2%) dragged the index lower.

Excerpts of an interview with Mr. U Shekhar, Founder Promoter and Managing Director, Galaxy Surfactants (GALAXY) with CNBC TV18 on 9th February 2021:

  • GALAXY saw good 3QFY21 earnings. The reported double-digit volume growth on a YoY basis is expected to continue, especially in the specialty chemicals segment.
  • Money received from Egypt which was accounted in 3Q was export benefits accumulated over the last 2-3 years. GALAXY accounts for the export benefits availed only when received.
  • Consumer focus on personal hygiene has increased significantly this year. This is expected to sustain going forward and the new products which have been introduced are seeing slow evolution which is certainly giving Galaxy better numbers.
  • The company has implemented expansion projects at Jhagadia, which was expected to be completed by April-21. This project has been delayed a little due to difficulties faced due to the outbreak of Covid-19.
  • The disruption due to shipping and containers is continuing which is certainly putting pressure on the supply chain.
  • The price hikes have been passed on to customers or absorbed the freight hikes in case of long-term contracts.
  • As far as the margin is concerned, there will be a gradual progression when new products keep on getting better.

Consensus Estimate: (Source: market screener website)

  • The closing price of GALAXY was ₹ 2,222/- as of 09-February-2021. It traded at 31x/ 27x/ 23x the consensus earnings estimate of ₹ 71.6/ 83.8/ 95.7 per share for FY21E/FY22E/FY23E respectively.
  • The consensus target price of ₹ 2,160 implies a PE multiple of 23x on FY23E EPS of ₹ 95.7/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Chemicals, Galaxy Surfactants , , 1 Comment Read more...
08 Feb

Recovery in consumption has been faster than expectations – HPCL

Update on the Indian Equity Market:

On Monday, NIFTY closed in the green at 15,115 (+1.3%). Top gainers in NIFTY50 were M&M (+7.3%), Tata Motors (+6.4%), and Hindalco (+6.1%). The top losers were Britannia (-1.8%), HUL (-1.6%), and Kotak bank (-1.4%). Top sectoral gainers were METAL (+3.2%), AUTO (+3.1%), and IT (+2.3%) and sectoral losers were PSU BANKS (-1.0%) and FMCG (-0.5%).

Excerpts of an interview with Mr MK Surana, CMD – HPCL with CNBC -TV18 dated 5th February 2021:

  • The overall recovery in consumption has been faster than expectations. The subsidy receivables from the government are reducing.
  • HPCL’s 3QFY21 came in weaker than consensus estimates due to a miss on refining margins but marketing margins came in line with expectations.
  • The Singapore margins which were in the negative territory have started coming in the positive one. The diesel and motor spirit (MS) cracks which were at $2-3 per barrel have started looking up. The recovery is better and quicker than many people were expecting.
  • The cracks have been on the lower side for some time now. The petrol and diesel cracks have been in the range of $ 2-3 per barrel which is normally not the situation. These are improving now, with diesel cracks ranging up to ~ $ 4-5 per barrel and for petrol as well. Despite this, the refining cracks remain low which hits the refinery margin to some extent.
  • He believes that it is too early to talk about the monetization of pipelines.
  • HPCL does not have a gas pipeline, HPCL has a petroleum product pipeline. They will see how they can create better value than what they had already been able to create and they will review the options.

Consensus Estimate: (Source: market screener and investing.com websites)

  • The closing price of HPCL was ₹ 230/- as of 8-February-2021.  It traded at 4x/ 6x/ 5x the consensus earnings estimate of ₹ 55.1/ 41.3/46.8 for FY21E/22E/23E respectively.
  • The consensus price target is ₹ 289/- which trades at 6x the earnings estimate for FY23E of ₹ 46.8/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By HPCL 0 Comments Read more...
05 Feb

Expect double-digit volume growth in FY22E – BIRLACORPN

Update on the Indian Equity Market:

On Friday, Nifty closed 0.2% higher at 14,924. Within NIFTY50, SBIN (+11.3%), TATASTEEL (+4.9%), and DIVISLAB (+4.5%) were the top gainers, while AXISBANK (-3.1%), BHARTIARTL (-2.7%), and TATAMOTORS (-2.4%) were the top losing stocks. Among the sectoral indices, PSU BANK (+3.6%), PHARMA (+1.7%), and METAL (+1.0%) were the top gainers while MEDIA (-4.5%), AUTO (-1.3%), and IT (-0.9%) were the top losing sectors.

Expect double-digit volume growth in FY22E – BIRLACORPN

Excerpts of an interview with Mr. Aditya Saraogi, CFO, Birla Corporation, aired on CNBC-TV18 on 4th February 2021:

  • BIRLACORPN management expects volumes of 13 mn ton in FY21 as compared to 13.6 mn ton in FY20. Lower volumes in 1QFY21 due to the pandemic have impacted FY21 full year volumes to be marginally lower YoY.
  • In FY22, management expects demand for cement to be strong on back of Government’s focus on growth and investments. Management expects double digit volume growth for BIRLACORPN in FY22.
  • Growth in demand is primarily coming from rural and infrastructure segments. Tier 2 & 3 cities are also going well.
  • In 4QFY21, management expects double digit YoY growth in volumes. Realizations have come off a bit and there is increase in cost due to fuel price inflation. As a result, margins may be under pressure in 4QFY21E and EBITDA per ton may come down by ~Rs 100 or so.
  • Going ahead, given the robust demand environment, management expects no difficulty in passing on increased costs and expects to maintain EBITDA margins in coming quarters.
  • BIRLACORPN is in the process of adding 4 mn ton capacity by Sep-2021. They also have an ambitious target of achieving 25 mn ton capacity by FY25 from current capacity of 15 mn ton.
  • BIRLACORPN’s current net debt position is Rs 35 bn and peak net debt is expected to be below Rs 40 bn. Cost of capital for BIRLACORPN has come down by 150-170 bps.

Consensus Estimate (Source: market screener website)

  • The closing price of BIRLACORPN was ₹ 831 as of 05-February-2021. It traded at 12x/ 12x/ 10x the consensus EPS estimate of ₹ 67.0/69.3/84.2 for FY21E/ FY22E/ FY23E respectively.
  • The consensus target price of ₹ 973/- implies a PE multiple of 12x on FY23E EPS of ₹ 84.2/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By Birla Corporation, Cement 0 Comments Read more...
04 Feb

Entry into new categories with Soulfull acquisition – Tata consumer

Update on the Indian Equity Market:

On Thursday Nifty closed 0.7% higher at 14,896. Among the sectoral indices, PSU Banks (+5.9%), FMCG (+2.5%), and Metal (+2.0%) closed higher. IT (-0.4%) was the only sector which closed in the red. SBI (+6.6%), ITC (+6.1%), and Bajaj Finance (+5.0%) closed on a positive note. Asian Paints (-1.9%), UPL (-1.7%), and Cipla (-1.6%) were among the top losers.

Excerpts from an interview of Mr. Sunil D’souza, MD & CEO, Tata Consumer with CNBC-TV18 dated 03rd February 2021:

  • Tea prices have not started to taper off and the company is confident that proper execution will deliver good results in the future.
  • Starbucks and NourishCo Beverages are showing sequential improvement.
  • On ‘Soulfull’ acquisition, he said the Company looked at strategic and financial filters. It will help to get into new categories including snacking, breakfast.
  • This will lead to entry into new consumer occasions. The company was not previously present in these segments.
  • These new products are margin accretive products. EBITDA margins for Soulful are higher as compare to the current basket.
  • Speaking about the tea business, he said the margins are a transient issue. The company has increased its share by 90 bps (Y-0-Y).
  • The company has also integrated its distributor and digitize its system.
  • The account receivables days are down 50% from where the company started.
  • On future acquisitions, he said the company is juggling around different pieces and the announcement will be made when the company gets closer to it.
  • The gross cash of the company is around Rs 2,500 crores, the company makes judicious of the cash. The company around Rs 156 crore cash for the ‘Soulfull’ acquisition.
  • The company expects double-digit growth across financials.

 

Consensus Estimate: (Source: market screener website)

  • The closing price of Tata Consumer was ₹ 589 as of 04-February-2021.  It traded at 58x/47x/40x the consensus Earnings per share estimate of ₹ 10.2/12.5/14.7 for FY21E/FY22E/ FY23E respectively.
  • The consensus average target price is ₹ 605/- which implies a PE multiple of 41x on FY23E EPS of 14.7/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By Consumer, Tata Consumer , 0 Comments Read more...
03 Feb

Bigger demand in financing younger vehicles – Shriram Transport Finance

Update on Indian Equity Market:

The Budget 2021 induced rally which started on Monday continued as Nifty50 closed the day 142 points higher at 14,790. The rally was led by PHARMA (2.8%) along with PSU BANK (2.6%) and PVT BANK (1.7%) continued its upward journey while REALTY (-0.4%) and FMCG (-0.1%) were the only sectors that closed in the red. Within the index, INDUSINDBK (7.3%), POWERGRID (6.0%) and DIVISLAB (4.7%) were the biggest gainers whereas SHREECEM (-1.6%), UPL (-1.5%), and ULTRACEMCO (-1.0%) were the biggest losers.

Excerpts of an interview with Mr. Umesh Revankar, Managing Director- Shriram Transport Finance Company Ltd (SRTRANSFIN) with CNBC TV18 dated 2nd February 2021:

  • Mr. Revankar believes that the announcement of a voluntary vehicle scrappage policy is a positive development for the auto and allied industry. The development will increase the demand especially for financing of 3 to 10-year-old vehicles.
  • The existing loan book of the company is not impacted by the introduction of the policy. The company normally lends for a maximum of 12-13 years. However, he expects people to buy younger vehicles between 3-10 years and there will be a big demand in that space.
  • He mentioned that the company is able to raise money at low costs for a longer tenure. This is expected to reduce the overall cost of funds and eventually improve NIMs (Net Interest Margins). He is confident of breaching 7 percent in NIMs.
  • The company may do much lower than what had been planned for restructuring. As a result, the restructuring portfolio will be much smaller.
  • The credit cost as of December-2020 was at 2.59 percent which is expected to be sustainable in the next few quarters. The company is aiming to go back to 2 percent by the end of FY22E.

Consensus Estimate: (Source: market screener website)
•The closing price of SRTRANSFIN was ₹ 1,464/- as of 3-February-2021. It traded at 1.7x/ 1.5x/ 1.3x the consensus book value estimate of ₹ 854/ 970/ 1,093 for FY21E/FY22E/23E respectively.
• The Consensus price target of SRTRANSFIN  of  ₹ 1,393/- implies a 1.3x PB multiple on FY23E book value estimate of ₹1,093/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By NBFC, Shriram Transport Finance , 0 Comments Read more...