04 Jan

Greater demand in real estate – LIC Housing Finance

Update on the Indian Equity Market:
On Monday Nifty closed 0.8% higher at 14,133. Among the sectoral indices, IT (+2.7%), Metal (+5.1%), and Auto (+1.6%) closed higher. Pvt Bank (-0.1%) and Bank (-0.04%) were the only sectoral indices that closed lower. Tata Steel (+8.4%), Hindalco (+6.9%), and Eicher Motors (+4.3%) closed on a positive note. Hero Motors (-1.6%), Kotak Bank (-1.2%), and Bajaj Finance (-1.2%) were among the top losers.

Excerpts from an interview of Mr. Siddhartha Mohanty, MD & CEO, LIC Housing Finance with CNBC-TV18 dated 1st January 2020:
● The real estate sector faced issues because of lower liquidity and demand.
● Mr. Mohanty said these issues are addressed and now the demand is normal.
● The consumption demand has gone up and there is a pickup in new real estate registration.
● Not only the metros but even tier-2, tier-3 cities are showing high growth.
● He said the company will close in a high double-digit year on year growth by the end of FY21.
● Speaking about bad loans, he said the moratorium ended in August and now people who had opted for the moratorium have also started paying.
● He said there is an improvement in big accounts.
● Speaking on spreads and margins, he said the company is raising debt at a very competitive rate.

Consensus Estimate: (Source: market screener and investing.com websites)
● The closing price of LIC Housing Finance was ₹ 382 as of 04-January-2020. It traded at 8x/ 7x/ 5x the consensus Earnings per share estimate of ₹ 49.8/57.8/71.1 for FY21E/ FY22E/ FY23E respectively.
● The consensus average target price for LIC Housing Finance is ₹ 363/- which implies a PE multiple of 5x on FY23E EPS of 71.1/-.
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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04 Jan

Several good products in the pipeline – Lupin

Update on the Indian Equity Market:

On Friday, Nifty closed 0.3% higher at 14,019. Within NIFTY50, ADANIPORTS (+4.4%), TCS (+2.4%), and ITC (+2.3%) were the top gainers, while ICICIBANK (-1.4%), SBILIFE (-1.0%), and HINDALCO (-1.0%) were the top losing stocks. Among the sectoral indices, PSU BANK (+3.3%), AUTO (+0.9%), and IT (+0.8%) were the top gainers while PRIVATE BANK (-0.3%), FINANCIAL SERVICES (-0.2%), and BANK (-0.1%) were the only losing sectors.

Several good products in the pipeline – Lupin

Excerpts of an interview with Mr. Ramesh Swaminathan, ED, and Global CFO, Lupin, aired on CNBC-TV18 on 30th December 2020:
● In the case of new launches- after a drought of the past few years, Lupin had several launches in the recent past. Lupin has launched 12 new products. The most important of the launches has been Albuterol. Albuterol has a large market and the overall inhalations segment is still a growing market in the US.
● Lupin has a pipeline of 150 product launches in the US over the next 3-5 years. Some of that was delayed due to plant issues but now Lupin will launch the bulk of that. Lupin’s story is all about future products in specific areas such as inhalation, complex injectables, and biosimilars.
● In the inhalations segment, Lupin is working on at least 15-20 products.
● Over the last several years, Lupin has invested 9%-9.5% of sales in R&D. This spends will pay returns in the next few years- which was lacking in the past. Lupin had a lack of good products to launch in the last 3-4 years. The company now has a few really good products which will come up in the next few years.
● In 2HFY21E, India will pick up, and going forward growth will sustain. In the US, Lupin has already reached the USD 180 mn per quarter mark and the performance will be better by 4QFY21E.
● Gross margin has been around 63-64% mark which management thinks is a good level. A lot of cost-cutting measures have been implemented which have delivered results in 2QFY21. EBITDA margin was 14.7% in 1QFY21, 16.7% in 2QFY21. Management expects that to stabilize and increase to 20%-21% by 4QFY21E.
● Lupin’s Somerset facility in New Jersey saw 13 observations. Management is disappointed but thinks things are still under control. Somerset plant is not a very big producer as compared to plants in India.
● Management is confident that Indian plants that have been impacted will get resolved. But it’s a waiting game depending on USFDA’s timeline in the covid-19 situation. There are no new filings from the Mandideep unit which has a Warning letter. The same cannot be said about Goa and Pithampur 2 which are very important sites.

Consensus Estimate (Source: market screener website)
● The closing price of LUPIN was ₹ 1,002 as of 1-January-2021. It traded at 43x/ 27x/ 22x the consensus EPS estimate of ₹ 23.4/36.8/44.8 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 968/- implies a PE multiple of 22x on FY23E EPS of ₹44.8/-.

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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01 Jan

Merger &Acquisition in mind as a growth strategy – Gland Pharma

Update on Indian equity market:
On Thursday, the Nifty50 touched an all-time high before closing flat at 13,982 on the penultimate trading day of 2020. Surprisingly, the index has given 15% returns in a year where the world was struggling with the pandemic, the best since 2017! Within the index, HDFC (1.3%), SUN PHARMA (1.1%), and DIVISLABS (1.0%) led the gainers while SHREECEM (-2.4%), TCS (-1.5%), and ULTRACEMCO (-1.4%) were the highest losers. Among the sectoral indices, REALTY (1.2%), MEDIA (0.9%), and METAL (0.7%) led the gainers offset by PSU BANK (-0.5%), FMCG (-0.4%), and IT (-0.3%).
Excerpts of an interview with Mr. Srinivas Sadu, Managing Director and CEO, Gland Pharma Ltd (Gland) published on CNBC-TV18 dated 30th December 2020:
The business model of Gland is focused on B2B (Business to Business) in over 60 countries and the company will focus on growing in the same space.
He said that the order book is strong for the next year. The company has also planned several launches to aid in growth. The year 2020 was different as the product mix was different due to the pandemic.
1QFY21 was affected due to the pandemic. The company managed to sell a lot of ICU related products in the US and other markets.
The company has a strong presence in anti-infectives. 30% of the revenues are contributed by this segment. The company also has 20-30% of the APIs (Active Pharmaceutical Ingredient) backward integrated.
As a part of the growth strategy, the company is not shying away from mergers and acquisitions provided that it has to fit in the growth strategy of the company.
Consensus Estimate: (Source: market screener and investing.com website)
The closing price of Gland was ₹ 2,380/- as of 31-Dec-2020. It traded at 39x/ 32x/ 26x the consensus EPS estimate of ₹ 61/ 74/ 93 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 2,330/- implies a P/E multiple of 25x on FY23E EPS of ₹ 93.
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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31 Dec

Increasing commodity prices a concern – Havells India

Update on the Indian Equity Market:
On Wednesday, NIFTY closed at 13,981 (-0.3%). The top gainers in NIFTY50 were Ultratech Cement (+4.4%), Grasim (+3.0%), and Shree Cement (+3.0%). The top losers were IndusInd Bank (-1.5%), Sun Pharma (-1.1%), and Axis Bank (-1.0%). The top sectoral gainers were AUTO (+1.3%), METAL (+1.3%), and REALTY (+1.3%) and the sectoral losers were PSU BANK (-0.2%), PAHRMA (-0.1%), and PVT BANK (-0.1%).

Excerpts of an interview with Mr. Anil Rai Gupta, CMD – Havells India with CNBC TV18 dated 29th December 2020:
• Havells has recovered from the lows and is up almost 80 per cent from the March lows. The demand is holding up from B and C grade towns. There is also a shift from unorganized to organized players.
• There is an improvement in the residential sector and there is some revival in the industrial and infra portfolio. He expects the rising commodity prices to be a dampener.
• Commodity price increase has to be passed on because the increase has been sharp. But it does dampen two things. One, there will be pressure on margins and secondly, if this sustains, people will have the option to postpone their purchases even in the construction sector.
• So there will be a little bit of stress if this continues.
• He believes that the government move to boost manufacturing is a step in the right direction. The government has realized that the next big source of job creation will be manufacturing and the government is taking the right steps.
• They have chosen many industries for a production-linked incentive (PLI) and they are looking at increasing investments in both lighting and air conditioning with the new PLI.
• They have invested constantly, at least Rs 300-500 crore in CAPEX every year. Going forward they anticipate a similar CAPEX would continue; maybe a bit more so – maintenance CAPEX and the other divisions and high CAPEX in the air conditioning and the lightings space.
• But they definitely see that going forward they will be looking at continued CAPEX even in the coming times.
• They have seen a gain in market share post lockdown.

Consensus Estimate: (Source: market screener and investing.com websites)
The closing price of HAVELLS was ₹ 902/- as of 30-December 2020. It traded at 68x/ 59x/ 50x the consensus earnings estimate of ₹ 13.2/ 15.4/ 18.2 for FY21E/FY22E/23E respectively.
The Consensus price target of HAVELLS was ₹ 743/- as of 30-December-2020. It trades at 41x of FY23E EPS estimate of ₹18.2/-.
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.”

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30 Dec

Expect 2021 tech spend growth to be in mid-single digits – Mphasis

Update on the Indian Equity Market:
On Tuesday, Nifty 50 ended at an all-time high of 13,933 (+0.4%), as gains in the banking, IT, and Technology sectors propelled the index higher. Among the stocks, INDUSINDBK (+5.7%), TECHM (+2.2%), and AXISBANK (+2.1%) led the gainers while HINDALCO (-2.1%), NESTLEIND (-1.8%), and COALINDIA (-1.7%) led the laggards. PRIVATE BANK (+1.6%), BANK (+1.4%), and FINANCIAL SERVICES (+1.0%) led the sector gainers. MEDIA (-1.5%), METAL (-1.1%), and REALTY (-0.3%) led the sectoral losers.

Excerpts of an interview of Mr. Nitin Rakesh, CEO & Executive Director, Mphasis with CNBC TV18 on 29th December 2020:
• Mphasis has witnessed a good expansion of deal pipeline in the last 3-4 quarters but the type of deals is different. The conversation has been about transformation deals, and acceleration of the work done for clients, such as the adoption of application transformation, and moving work to the cloud.
• Their guidance for a pretty strong year in the direct business remains on track. There were 87% (in terms of Total Contract Value (TCV)) more deals done in 1HFY21 compared to 1HFY20. This is expected to translate nicely to the overall revenue momentum.
• The pipeline is pretty strong in terms of the size of deals, the number of deals, and the nature of deals are very encouraging.
• They are expanding their business in Europe, which was resilient to lockdowns in certain areas. Mr. Rakesh feels the impact of these lockdowns needs to be seen on the sales pipeline. In the short to medium term, he believes they are good to sustain through the lockdowns.
• The growth in the business has been broad-based. Hi-tech, banking, logistics – these segments have done well.
• He believes the recovery post the Covid-19 crisis will be different compared to the recoveries from the Y2K crisis and the global financial crisis. This is primarily due to shifting in consumption patterns from a technological standpoint, which will change the importance of technology in every business. Second, the type of competency and capability required is going to be different.
• The market opportunity will exist over the next 3 years. The total tech spend will go up probably higher than it has been in the last 3-5 years. The tech spends are expected to grow in mid-single digits in CY21.
• He believes Mphasis will see above-market growth.
• Mphasis has a pretty robust investment plan. There has been investment in two new tribes in the last six months- Experience and Everything as a platform. They are also investing ahead of the curve in areas such as Quantum Computing.
• The entire value chain that involves all things cloud, AI and machine learning will the areas where Mphasis will keep investing.

Consensus Estimate: (Source: market screener website)
• The closing price of Mphasis was ₹ 1,555/- as of 29-December-2020. It traded at 24x/ 20x/ 18x the consensus earnings estimate of ₹ 66/ 77 /87 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 1,569 implies a PE multiple of 18x on FY23E EPS of ₹ 87/-.

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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29 Dec

Seeing a sharp fall in demand after Nov; will invest Rs 650 cr in a new plant at Chakan, says Bajaj Auto.

Update on the Indian Equity Market:
On Monday, Nifty ended 0.9% higher at 13,873 supported by the metal & financial stocks. The top gainers for Nifty 50 were JSW Steel (+5.8%), Tata Motors (+5.6%), and SBI (+3.3%) while the losing stocks for the day HUL (-0.5%), Sun Pharma (-0.5%), and Cipla (-0.4%). Top gaining sectors were PSU Bank (+2.7%), Realty (+2.6%), and Metal (+2.6%) while Pharma (-0.3%) was the only losing sector for the day.

Edited excerpts of an interview with Mr Rajiv Bajaj, MD, Bajaj Auto dated 24th December 2020 from CNBCTV18:

The demand in the auto sector is back to last year levels which are not a good sign. Mr Bajaj also sees a sharp fall in demand after November although he expects December 2020 sales to be slightly higher on YoY.
Things have panned out as Mr Bajaj thought they would which is that there has been a demand peak as is the case every year around the festive time.

According to him, what the company has recorded in October and November has been good because of the festive season. In December last year, the company did a total of 335,000 units roughly between domestic and exports. He thinks the Company will be a little ahead of that in December 2020.

According to him, on the domestic front, the Company will be on par with last year for motorcycles. The Company has almost doubled the EBITDA of the domestic motorcycle portfolio, which has been positive for them.

Bajaj Auto has a 90% market share in the three-wheeler market primarily in major metros.

In terms of exports, Mr Bajaj mentioned that the reason the overall numbers will be in-line with or a bit better than last year is that exports have been going like gangbusters. Demand seen is good.

On the product front, the Company has a huge task before them for the next 24 months which is
a) to renew their entire motorcycle portfolio especially on the premium brands,
b) There is a humongous amount of work to do on the EV front.

On the market front, Bajaj Auto has to continue to push to improve domestic share and having consistently now been at over 200,000 units exported every month their next goal has to be to move from 2 million exports to 3 million exports on an annual basis. For that, they need to successfully and effectively enter the Brazilian market.

Talking about the new manufacturing facility at Chakan, he said that the Company has signed up for a second plant in Chakan. The new plant was in the works for some time. This is for the expansion in premium motorcycles KTM Husqvarna, and the introduction of Triumph. Bajaj Auto may also expand the electric vehicle portfolio in the new facility.

The Company will be building this plant for a total capacity of a million units to start with. They have estimated an investment of about Rs 650 crore and perhaps the employment of a little over 2,000 people.
On the partnership front, the Company’s goal with KTM Husqvarna is to almost double the business soon.

In terms of production-linked incentive (PLI), Mr Bajaj said that it would be very beneficial to a company like Bajaj Auto. From the Merchandise Exports from India Scheme (MEIS), the Company had a benefit of 2% on exports.

Consensus Estimate: (Source: market screener website)
The closing price of Bajaj Auto Ltd was ₹ 3,420/- as of 28-December-2020. It traded at 22.8x/ 18.8x/16.5x the consensus EPS estimate of ₹ 149/180/206 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 3,316/- implies a PE multiple of 16.1x on FY23E EPS of ₹ 206/.

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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28 Dec

Health and hygiene segments seeing good growth– Emami

Update on the Indian Equity Market:

On Thursday, Nifty closed 1.1% higher at 13,749. Within NIFTY50, TATAMOTORS (+3.9%), SUNPHARMA(+3.2%), and AXISBANK (+2.8%) were the top gainers, while INFY (-1.3%), WIPRO(-1.0%), and NSETLEIND (-0.8%) were the top losing stocks. Among the sectoral indices, FINANCIAL SERVICES (+1.8%),BANK (+1.7%) and PRIVATE BANK (+1.6%) were the top gainerswhileMEDIA (-0.8%), IT (-0.7%), and REALTY (-0.4%) were the only losing sectors.

Health and hygiene segments seeing good growth– Emami

Excerpts of an interview with Mr. Mohan Goenka, Director, Emami, aired on CNBC-TV18 on 23rdDecember 2020:
● The Covid-19 worries are now over for Emami. Emami delivered double digit YoY growth in 2QFY21 and the management expects similar YoY growth in 3QFY21E. The resumption of growth is to do with Emami’s product range which includes health, immunity, and hygiene products.
● Winter is the key season for Emami and it has set in well in most parts of India. Some healthcare products that have done well because of covid-19, continue to do so. These 2 factors are leading to sustainability of last quarter’s growth.
● Emami is a rural play which is also helping with the growth.
● Emami is not seeing any input cost pressure. Margins are in an expanding trajectory and that continues.
● Due to Covid-19, health has been in focus. Zandu is an established brand that plays in that area. Emami also focused on Chyawanprash, honey and some other product portfolios which have grown well- almost 40% in 2QFY21E.
● The promoters are committed to bringing the pledging down to zero in the next few quarters.
● Emami has launched multiple products particularly in the hygiene segment. Emami is spending good amount of money on advertising for these products. Because margins are at all time high would be investing more into the business.
● Advertising as % of sales will remain in range of 17%-18%.
Consensus Estimate (Source: market screener website)
● The closing price of Emamiwas ₹ 426as of 24-December-2020. It traded at 44x/ 36 x/ 31x the consensus EPS estimate of ₹9.8/11.8/13.8 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 435/- implies a PE multiple of 32x on FY23E EPS of ₹13.8/-.

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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24 Dec

Q4FY21 is expected to be normal – Titan

Update on the Indian Equity Market:
On Wednesday Nifty closed 1% higher at 13,601. Among the sectoral indices, Realty (+3.9%), Media (+3.3%), and IT (+2.4%) closed higher. None of the sectors closed lower. Wipro (+5.7%), Cipla (+3.7%), and Tata Steel (+3.40%) closed on a positive note. Hero Motors (-1.0%), Divis labs(-0.7%), and Titan (-0.5%) were among the top losers.

Excerpts from an interview of Mr. S Subramanian, CFO, Titan with CNBC-TV18 dated 22nd December 2020:

● Mr S. Subramanian said there is a strong space for growth in jewellery sector over the next 5-10 years.
● The company has established itself as the market leader and the balance sheet is stronger.
● On other businesses, he said wearables are now a very exciting opportunity. With focus of people on wellness the company is looking for substantial growth in that segment.
● On eyewear, he said the market is significantly underpenetrated and there is a lot of opportunity to grow.
● He expects the company to come out stronger post covid crisis and the focus will be on people.
● On guidance, he said the 4QFY21E is expected to be normal and the good news is vaccine coming.
● The footfalls are improving even in malls and he expects that the worst to be over.
● On weddings, he said that the spends on weddings are lower, it provides an opportunity for people to spend more on jewellery. The company is also witnessing an increase in ticket size spends.
● He said the devices which will track people’s well-being would become important and so (Digital fitness watches) in Watches is a very exciting area.

Consensus Estimate: (Source: market screener and Investing.com websites)
● The closing price of Titan was ₹ 1491 as of 23-December-2020. It traded at 149x/ 69x/ 56x the consensus Earnings per share estimate of ₹ 10/22/27 for FY21E/ FY22E/ FY23E respectively.
● The consensus average target price for Titan is ₹ 1068/- which implies a PE multiple of 40x on FY23E EPS of 27/-.

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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23 Dec

The auto industry will be back in full form in FY22E – Chola Finance

Update on Indian equity market:
Markets bounced back to erase Monday’s steep loss as Nifty closed the day 138 points higher at 13,466. Within the index, ADANIPORTS (5.6%), HCLTECH (5.4%) and TECHM (4.1%) led the index higher while KOTAKBANK (-1.0%), HDFC (-0.7%) and BAJFINANCE (-0.6%) were the highest losers. All the sectoral indices closed the day in green led by IT (3.4%), PHARMA (2.2%), and METAL (1.4%).
Excerpts of an interview with Mr. Arulselvan D., Executive Vice-President & CFO, Cholamandalam Investment & Finance Company (Chola finance) published on CNBC-TV18 dated 21st December 2020:
The impact of COVID-19 impact is behind now. The disbursements, collections, and profitability is expected to reach the pre-pandemic level in one or two quarters.
Demand in the auto segment surged ahead of the festive season. The auto industry will be back in full form in FY22E. The company will look to catch up with lost business during the COVID period in FY22E.
Post moratorium, there are certain segments that are not out of its COVID-19 pressure like the school bus segment, employee transport buses, and to some extent heavy commercial vehicles.
The company is witnessing improvement in the collection on a month-on-month basis and good traction from moratorium customers.
The rural segment especially is doing well because of good monsoon. More than 85% of the company’s branches are in the rural area and the company is confident of growth in the rural parts of the country.
Net interest margin will show a slight improvement from hereon. The cost of funds has reduced further with improvement in yields.
Consensus Estimate: (Source: market screener website)
The closing price of Chola finance was ₹ 360/- as of 21-Dec-2020. It traded at 3.1x/ 2.7x/ 2.3x the consensus Book Value estimate of ₹ 116/ 135/ 160 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 380/- implies a P/B multiple of 2.4x on FY23E BV of ₹ 160.
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 Cholamandalam Investment & Finance, NBFC , 0 Comments Read more...
22 Dec

Expecting highest numbers in 3QFY21 – Escorts

Update on the Indian Equity market:
On Monday, the Indian equity markets witnessed the biggest single-day decline in seven months as investors were worried due to the spread of a new strain of the Covid-19 in parts of the UK. The Nifty50 ended the day at 13,328 (-3.1%). While none of the sectoral indices ended with gains, PSU BANK (-6.9%), MEDIA (-6.2%), and METAL (-5.5%) led the losers. Among the Nifty50, none of the stocks ended in the green, and TATAMOTORS (-9.5%), ONGC (-9.4%), and GAIL (-8.4%) led those that ended in the red.

Excerpts of an interview of Mr. Bharat Madan, Group CFO, Escorts with CNBC TV18 on 18th December 2020:
• In the last 2months, demand was quite good due to the festive season in October and November. In October, the industry growth was close to 7-8 percent and in November the growth was much higher. He expects channel filing to happen in December. Though the retail numbers may not be as strong as in the festive months, he expects this quarter to deliver one of the highest numbers the industry would have ever done.
• Talking about guidance for FY21E, he said the overall industry growth in 8months of FY21E is about 15% and expects mid-teens growth for the company.
• There were some supply issues due to the farm protests but the company has been able to manage the supply.
• The demand for their products comes majorly from the states of UP, Bihar, Rajasthan, Maharashtra, Telangana and Andhra Pradesh. He doesn’t foresee any major demand problems due to the ongoing farm protests.
• In Punjab and Haryana, farmers shift to tractors with higher horsepower (HP) but the volumes are stagnant.
• Talking about input prices, Escorts has taken a price increase after the festive season to pass on the inflation. There could be another price increase in the next quarter. Despite passing on the increased raw material price to consumers, this still impacts margins.
• Supplies from Kubota joint venture (JV) have begun, and he expects export orders to pick up.
• The target for exports for FY21E is 4000-4500 tractors but there are some challenges from container supplies causing delays in orders.
• He expects margins in 3QFY21 to be at the same level as 2QFY21. The impact of cost increases will get neutralized due to the operating leverage from higher volumes.

Consensus Estimate: (Source: market screener and investing.com websites)
• The closing price of ESCORTS was ₹ 1,242/- as of 21-December-2020. It traded at 19x/ 17x/ 15x the consensus earnings estimate of ₹ 66/ 74/ 85 per share for FY21E/FY22E/FY23E respectively.
• The consensus target price of ₹ 1,257 implies a PE multiple of 15x on FY23E EPS of ₹ 85/-.

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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