14 Nov

Bank of Baroda: No Further Slippages

Update on the Indian Equity Market:

On Wednesday, NIFTY closed -0.6% lower. Among sectoral indices, NIFTY media (-4.5%), NIFTY PSU Banks (-3.1%), NIFTY Metal (-2.0%), NIFTY Bank (-1.8%), NIFTY PVT Bank (-1.8%) closed lower. None of the NIFTY sectoral Index ended on a positive note. The biggest losers were Yes bank (-5.7%), GAIL (-4.8%), ZEEL (-4.7%), whereas Britannia (+4.9%), TCS (+3.7%) and Reliance (+2.9%) ended with gains.

Bank of Baroda: No Further Slippages

Excerpts from an interview of Mr Murali Ramaswami, executive director, Bank of Baroda with CNBC-TV18:

  • Speaking about slippages, Mr Ramaswami mentioned that slippages during the last quarter were Rs 6,001 cr and 4 accounts constituted 60%-65% of it.
  • He said there is nothing to worry about as the worst is behind. Bank’s provision coverage ratio is adequate and the operating performance is growing continuously.
  • In total watch list of Rs 14,500 cr, DHFL is having exposure of Rs 1,900 cr.
  • Mr Ramaswami doesn’t expect any further slippages in the corporate book. About BBB accounts he says, that those are from quite some time with the bank and there are no new accounts.
  • Total exposure to NBFC’s is Rs 1.05 trillion and Rs 97,000 Cr is outstanding. One of the groups NBFC have slipped last quarter but as of now none of them are showing any sense of overdue.
  • Out of Rs 97,000cr outstanding, around Rs 10,000 cr is non reputed private sector.
  • Speaking about NPA’s he says, Gross NPA has come down from 10.28% to 10.25% on a quarterly basis. It will be sub-10% by the end of December quarter.
  • Net Interest Margin stood at 2.81%. Retail growth is primarily driven by auto and home loans. The current growth rate for auto and home loan is 16% and the expectation is that it will increase to 20%.
  • Retail loan, which is around ₹1.05 trillion is expected to rise to ₹1.3-1.35 trillion in this quarter. But overall advances are flat.
  • Some NBFCS have paid back and the bank didn’t take any additional exposure because of stress in that sector.
  • He added that HR integrations are complete, and the bank has saved ₹150 crores in amalgamation profits.
  • Speaking about MD, he says, that the bank does miss Mr Jayakumar. The government has given power to the ED’s to manage the business so there is no impact.

Consensus Estimate (Source: market screener website & Investing.com)

  • The closing price of Bank of Baroda was ₹ 93 /- as of 13-November-2019. It traded at a price to Book Multiple (P/B) multiple of 0.59x/0.54x/0.48x of the consensus book value estimates for FY20/21/22E of ₹ 157/172/192 respectively. 
  • Consensus target price of ₹ 128 /- implies a P/B multiple of 0.6x on B/V of ₹ 192 for the year ending Mar-22E.
By Bank, Bank of Baroda , 0 Comments Read more...
13 Nov

VIP Industries: Revenue growth target of 5-10% for next quarter as well as for the whole year

Update on the Indian Equity Market:

Markets started the week marginally higher as Nifty closed the day 5 points higher to 11,912. 6 out of 11 sectoral indices closed the day on a positive note with MEDIA (2.8%), PVT BANKS (1.4%) and BANK (1.3%) led the gains while IT (-0.5%), FMCG (-0.5%) and AUTO (-0.2) were the laggards. Among the stocks, ZEEL (6.2%), YESBANK (5.7%) and BPCL (2.8%) led the index higher whereas NESTLEIND (-2.4%), HEROMOTO (-2.1%) and HINDALCO (-2.1%) were the worst-performing stocks.

VIP Industries:  Revenue growth target of 5-10% for next quarter as well as for the whole year

Key takeaways from the interview of Mr Dilip Piramal, Chairman, VIP Industries dated 11th November 2019 published in LiveMint:

  • Mr Piramal started the interview with his remarks on the 2QFY20 performance of VIP Industries. He mentioned that though revenues were lower, EBITDA was higher due to two reasons. First, due to the implementation of IND-AS 116, the EBITDA went up by 6 basis points. Second, the company also witnessed improvement in gross margins which contributed to the EBITDA growth.
  • The company reported YoY growth of 3% in revenues. He said that he was not surprised by the lower growth in revenues as it aligns with the general trend in the economy.
  • About the revenue growth in the future, he said that things are slightly better than before. The company is looking to achieve between 5-10% growth in this quarter and for the whole year. This is lower as compared to the historical growth rate of around 25%.
  • On being asked about whether the customers are up-trading, he said that there is not much of a change. In fact, the lower end is increasing faster for about nearly one year.
  • He mentioned that there is no increase in competition for the company. The industry is very small with two bigger players and one quite small player who is very competitive in the lower end. It is more like a segment-wise competition. The competitive pressure is the same.
  • After the implementation of Goods and Service Tax (GST), the market share has moved from unorganised players to the organized players. The company achieved a growth of 25% in FY18 largely on the back of implementation of GST.

Consensus Estimate (Source: market screener website)

  • The closing price of VIP Industries was ₹ 437/- as of 11-November-19. It traded at 37x/ 30x the consensus EPS for FY 20E/ FY 21E of ₹ 11.8/ 14.6 respectively.
  • Consensus target price of ₹ 509/- implies a PE multiple of 35x on FY22E EPS of ₹ 14.6/-.
By FMCG, VIP , , , 0 Comments Read more...
11 Nov

Indiabulls Housing Finance: Maintains healthy cash balance on the balance sheet

Update on the Indian Equity Market:

On Friday, NIFTY closed ~104 points lower at 11,908 points. International rating agency Moody’s Investors Service downgraded India’s outlook to negative from stable on concerns that the country’s economic growth will remain materially lower than in the past. The negative sentiment led to a selloff in the stock market. Amongst the NIFTY 50 Stocks, YESBANK (+4.8%), INDUSINDBK (+2.9%), ICICIBANK (+2.4%) were the largest gainers; while INFRATEL (-4.9%), SUNPHARMA (-4.3%) and GAIL (-3.9%) were the top losers. The government’s announcement to set up an Alternative Investment Fund (AIF) in aid of the stalled housing projects kept the sentiment positive for the NIFTY REALTY index which closed higher by 1.7%. PRIVATE BANK was the only other sector in the NIFTY sector indices, to close in the green. NIFTY Pharma (-2.2%), PSU BANK (-1.9%), FMCG (-1.8%) were amongst the top losers for the day.

Indiabulls Housing Finance: Maintains healthy cash balance on the balance sheet

Key takeaways from the interview of Mr Gagan Banga, MD Indiabulls Housing Finance; dated 8th November 2019 on CNBC TV-18:

  • Indiabulls Housing Finance (IBHFL) maintains 20% of the balance sheet in cash; covering around the next 12 months liabilities. The cash balance is monitored on a daily basis. IBHFL continues to carry cash at similar levels as Sept-2019 less the amount of buyback done in October and early November 2019.
  • Mr Banga mentioned that in the last 13-14 months, the Housing Finance Companies (HFC) suffered because of the liquidity crisis. The market lost confidence in HFC. IBHFL’s suffering got exaggerated because of the various allegations and the attempt to merge with Lakshmi Vilas Bank.
  • IBHFL’s stakeholders are confident about the solvency with 20% of the balance sheet as cash and a capital adequacy ratio of 29%. Risky perception of the book is due to wholesale lending. However, for the last 10 years; IBHFL’s business has been in line with what the HFC charter permits.
  • In the event of various allegations, IBHFL has subjected itself to diligence. Multiple regulators and agencies have looked at the transactions in question and the overall book of IBHFL.
  • Talking about the governments’ announcement to set up an Alternative Investment Fund (AIF) to help complete the stalled housing projects, Mr Banga mentioned that it is a positive development in the right direction. It may take a couple of months for implementation with the setting up of the fund and the money to start flowing. The lenders and developers are content to see the government thinking of de-clogging the real estate sector.

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

  • The closing price of IBHFL was ₹ 242/- as of 8-November-19. It traded at 0.6x / 0.5x / 0.5x the consensus Book Value for FY20E / 21E / 22E of ₹ 437 / 487 / 475 respectively.
  • Consensus target price of ₹ 467/- implies a Price to Book multiple of 1x on FY22E Book Value of ₹ 475/-.
By Housing Finance, Indiabulls Housing Finance , , , , , , , 0 Comments Read more...
08 Nov

“Titan’s market share gain story intact”- S. Subramaniam, chief financial officer, Titan Co. Ltd.

Update on the Indian Equity Market:

On Thursday, NIFTY closed 0.42% higher at 12,016. Infratel (+3.5%), Sun pharma (+3.4%) and IndusInd Bank (+2.8%) were the top NIFTY50 gainers. UPL (-7.8%), Yes Bank (-3.6%) and GAIL (-3.5%) were the top NIFTY50 losers. Among the sectors, NIFTY METAL (+1.1%), NIFTY REALTY (0.9%) were the sectoral indices that closed positive. NIFTY PSU banks (-1.5%) and NIFTY AUTO (-0.2%) were the worst performing sectors.

Excerpts from an interview with S. Subramaniam, chief financial officer, Titan Co. Ltd broadcasted on CNBC on 7th November 2019.

  • June onwards it has been really tight and the entire industry has been in turmoil. As far as are we are concerned, our market share gains story is intact but it is unfortunately in a very declining jewellery market.
  • Even from Dussehra to Diwali, which is the festive season, for 33 days they have grown 10%.
  • They are in tough times. Gold prices have been high but, importantly, consumer sentiment has not been encouraging. consumers are trying to save money. They don’t want to invest too much.
  • Gold coins sales being little higher, which means that people who are investing in the category also are looking at it more from the savings perspective rather than actually spending money on jewellery as adornment.
  • They are now looking at 11-13% growth in second half. They also have a higher base but 10% in the festive season was not bad at all under the circumstances.
  • Typically when gold prices do go up there is pent up demand when it comes to the wedding part of the segment, people do have to finally end up investing. So, to some extent we could see a shift on a month-on-month or quarter-on-quarter basis.
  • Even the millennials when they get married, they have exactly the set of jewellery that otherwise would have been bought and if anything the design quotient is much higher these days.
  • They have seen east do quite well, they have seen south do relatively quite well, but the region that gets impacted the most has been west.
  • FY20 is expected to be a fairly bad year. They are not going to meet their 20% target and they have given that guidance also now. Their goal for the next six months is 11-13%.
  • One of the biggest drivers in the last three years has been the gold exchange programme. Today it accounts for almost 40% of the revenues. They need more growth drivers like that.
  • They do not want to have any quarter where they have less than 10% margin. They are well within their own internal plans as far as the margin for the watch business is concerned.
  • They are trying to even it out better than having 18% in the first half and then going down to 7-8% in the second half. So, in FY20, we should look at second half to be more than 10%. So, it is a conscious decision and, therefore, it is not really a fall.

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

  • The closing price of Titan was ₹ 1,166/- as of 7th November 2019. It traded at 63x/ 48x/ 39x the consensus EPS for FY 20E/ FY 21E/ FY 22E of ₹ 18.6/ 24.4/ 29.7 respectively.
  • Consensus target price of ₹ 1,246/- implies a PE multiple of 42x on FY22E EPS of ₹ 29.7/-.
By Consumer, Titan 0 Comments Read more...
07 Nov

“HDFC Life always at the forefront of product innovation,” says HDFC Life Insurance MD & CEO.

Update on the Indian Equity Market:

On Tuesday, NIFTY closed 0.4% higher than the previous close. Cipla (+3.0%), ICICI Bank (+2.5%) and Infosys (+2.4%) were the top NIFTY50 gainers. Titan (-10.1%), Bharti Airtel (-3.4%) and ONGC (-1.3%) were the top NIFTY50 losers. NIFTY Realty (+2.3%), Nifty Pvt Bank (+1.4%) and Nifty Bank (+1.2%) were the top sectors that closed positive. NIFTY PSU Bank (-0.9%), NIFTY Media (-0.5%) and NIFTY Auto (-0.2%) were the worst-performing sectors.

“HDFC Life always at the forefront of product innovation,” says HDFC Life Insurance MD & CEO.

Excerpts from an interview with Mrs. Vibha Padalkar, Managing Director & CEO, HDFC Life Insurance broadcasted on CNBC- TV18 on 6th November 2019:

  • HDFC Life insurance continues to gain market share & remain number one in the private sector space. The Company has gained market share by 220 bps in 1HFY20.
  • The Company has reported a growth of 38% on Effective Premium Income in the first half of FY20. Thus, there was a 65% YoY growth in the 1QFY20 on the back of their product called ‘Sanchay Plus’. In 2Q the Company reported a growth of 19% which according to her is not moderate by any means.
  • HDFC Life has a balance in its product mix as well as in the distribution. In a particular quarter, one might have something that is topical like a product launch or some focus because of the overall sentiment in the markets. However, on a full-year basis, the Company will come back to the balance and that is exactly what HDFC life has started demonstrating.
  • The non-par savings product contributed about 68% in 1QFY20 which came down sharply in 2Q at an exit rate of 41%. The Company expects to end the year between 30% to 35% contribution from non-par saving products.
  • HDFC Life is confident of delivering growth of 25-27% in the value of new business for the next two years on the back of:

a) Tying up with new partners and expanding a new ecosystem partner,

b) Product innovation. HDFC Life has always been at the forefront of product innovation, according to the MD.

c) Operational savings by reducing the fixed costs as a percentage of new business.

  • Regarding exposures of insurance companies to the non-banking financial companies (NBFCs) sector, the Company had one which is the IL&FS which has been written down fully. There is no other NBFC exposure.
By HDFC Life Insurance, Life Insurance 0 Comments Read more...
06 Nov

“The worst is behind us” says Ashok Leyland Chairman.

Update on the Indian Equity Market:

On Tuesday, NIFTY closed 0.2% lower. Bajaj Finance (+3.3%), Bharti Infratel (+3.3%) and Yes Bank (+3.2%) were the top NIFTY50 gainers. Zee (-3.7%), Indusind Bank (-2.3%) and Ultratech Cement (-2.2%) were the top NIFTY50 losers. Among the sectors, NIFTY FMCG (+0.3%) was the only sectoral index that closed positive. NIFTY MEDIA (-1.4%), NIFTY PHARMA (-1.1%), NIFTY METAL (-0.9%) were the worst-performing sectors.

 “The worst is behind us” says Ashok Leyland Chairman.

Excerpts from an interview with Mr. Dheeraj Hinduja, Chairman, Ashok Leyland broadcasted on CNBC on 5th November 2019.

  • Demand slowdown has been caused by multiple issues including issues faced by financing companies and the availability of liquidity in the market.
  • Last financial quarter is traditionally a strong quarter for Commercial Vehicle (CV) OEMs. 4QFY20 will be a strong quarter followed by a slow 1QFY21 due to the technology transition from BS-IV to BS-VI.
  • Management is looking forward to FY21. Historically, the year of transition is a strong year.
  • The transition from BS-IV directly to BS-VI in a 3 year period is one of the shortest transition times globally. Other countries have taken 7-10 years in which period the cost absorption has been done in a phased manner. There will be a significant cost-push on account of the transition.
  • Even post the cost-push due to BS-VI, management says Ashok Leyland will be cost-competitive as ever. The customers will see real value in products launched.
  • Looking forward, there are some good signs such as many initiatives that the government is taking and the revival of financing. Most of the OEMs have now corrected the state of their inventories that had built up. The next few months look to be quite positive.
  • The market is not going to recover overnight, but the worst is behind for Ashok Leyland.
  •  It’s been a year since the previous CEO, Mr. Vinod Dasari quit.  Search for the CEO is on. FY20 is a year of important changes with respect to BS-VI, their new modular platform and the introduction of a whole line up of LCV products. The Board had taken a decision that they did not want a major disruption in the Management at this important juncture.  But a new CEO is required and the Board will be announcing a successor in the next few months.
By Ashok Leyland, Auto , , , 0 Comments Read more...
05 Nov

Growth at Bajaj Auto has outperformed industry

Update on the Indian Equity Market:

On Monday, Sensex ended at record closing high of 40,302, up 137 pts; Nifty ended at 11,943; IT index was the biggest sectoral gainer, while auto stocks bled the most. Infosys share price closed 3% higher at Rs 709 after the firm said it has not received any prima facie evidence so far to corroborate any of the allegations made by the anonymous whistle-blower. Infosys, VEDL, Tata Steel, HDFC, ONGC were among the biggest gainers, jumping up to 3%. On the other hand, Maruti Suzuki, Hero MotoCorp, IndusInd Bank, Tata Motors were among the biggest losers, shedding up to 2.5%. Among sectoral indices, NIFTY IT (+0.8%) NIFTY Metal (+2.8%) closed higher while NIFTY Auto (-1.4%), NIFTY media (-3.3%) ended on a negative note.

Growth at Bajaj Auto has outperformed industry

Key takeaways from the interview of Mr Rakesh Sharma, Executive Director, Bajaj Auto; dated 4th November 2019:

  • Mr Sharma stated that the company reported the highest ever retails of all business in its history by a wide margin. The motorcycle business turned in a retail sales performance of 400,000 units plus, which is ~50% growth YoY. It grew by 28% over the festive period of last year. Small commercial vehicle (CV) business reported retail sales of 43,000 plus and KTM business doubled reporting the highest ever retail performance. So, it was a wonderful month for Bajaj Auto and the company is happy that almost half of the growth in domestic motorcycle by newly launched products (in the last six months) which have done exceedingly well and brought down the inventory levels.
  • Mr Sharma said that they had proactive engagements with the channel where it was informed that come October Bajaj Auto will be easing the burden.
  • Mr Sharma added that he has not seen such low channel inventory in the last 18 months and suspects that the company should have moved the market share needle as well.
  • When asked about the future performance he said that the economy is entering a naturally lower part of the quarter now. Post the festive seasons, the sales do drop so there is obviously a combination of postponement that has occurred from July-August and a bit of advancement that would have occurred from November. All of these combine to give the surge during the festive season. So, there is a natural down cycle that we will now hit and added on this will be the uncertainty in the minds of a lot of people about the BSIV-BSVI transition.
  • He refrained from commenting that Bajaj Auto would see similar kind of numbers, but he confirmed that this festival season has served as a very good trigger to bottom out what the Indian industry was experiencing.
  • Mr Sharma said that the company still needs to navigate the turbulent change that is impending, which is BS-IV to BS-VI, and will have to see how the consumer behaviour will occur during this change.
  • Mr Sharma informed that Bajaj Auto has always been outpacing the market by 5-8% points and thinks that Bajaj Auto outpaced the industry growth by at least 15% points on the back of new products. Therefore, he is confident of market share expansion.
  • When asked about the price cuts and margins he commented that the company’s strategy of uplifting the consumer step by step has helped the realisation per vehicle to move upwards. The stocks are now in a very manageable zone.
  • Mr Sharma said that softer raw material costs, steady foreign exchange rate (45% of revenues come from overseas sources), improved portfolio and favourable business mix is contributing to margin expansion but would not like to further comment on margin as they are in an ambiguous situation in November-December-January.

Consensus Estimate (Source: market screener website)

  • The closing price of Bajaj Auto was ₹ 3,212/- as of 04-November-19 and traded at 18.4x /17.2x /16.7x the consensus EPS for FY20E / 21E / 22E of Rs 176/188/194 respectively.
  • Consensus target price of ₹ 3,049/- implies a PE multiple of 15.7x on FY22E EPS ₹ 194/-.
By Auto, Bajaj Auto 0 Comments Read more...
04 Nov

Shriram Transport Finance Co: Rural market to see demand in December

Update on the Indian Equity Market:

On Friday, NIFTY closed 0.2% higher. Among sectoral indices, NIFTY media (+7.6%), NIFTY Metal (+2.3%), NIFTY PSU Banks (+1.4%) closed higher while NIFTY Auto (-0.7%), NIFTY IT (-0.5%) ended on a negative note. The biggest gainers were ZEEL (+18.5%), Bharti Infratel (+6.8%) and IndusInd Bank (+5.0%) whereas Yes Bank (-6.1%), Indian Oil Corporation (-2.8%) and TCS (-2.8%) ended with high losses.

Shriram Transport Finance Co: Rural market to see demand in December  

Excerpts from an interview of Mr Umesh Revankar, MD Shriram Transport Finance Co with CNBC-tv18:  

  • Speaking about ongoing talks on the merger of Shriram Transport Finance Co. (STFC) and Shriram City Union Finance, Mr Revankar said, it is still in the idea stage and yet to be discussed at the board level.
  • The merger will bring synergy in businesses. It will also give an opportunity for cross-selling and upselling some of the product across customer bases.
  • The customer base of Shriram Transport Union and STFC put together is about one crore.
  • Once the company will be in a position to offer multi-products, the cost of funds will also come down.
  • Speaking about employees, he mentioned that they won’t resist as the business is quite decentralized and operational freedom is given at ground level.
  • Speaking about the shift from BS-IV to BS-VI he mentioned, that as the cost of the vehicle will increase, the price of resale will also go up. He adds that the transactions will keep happening and the used vehicle market will also grow.
  • The company has penetrated 30% market so enough space is still left to penetrate.
  • Mr Revankar said, the demand is yet to be very positive but on the rural side the demand would come back as crop sowing got delayed by the extended monsoon. November and December may see a big demand in the rural market.
  • The urban market will take some time to grow. Growth of heavy vehicles depend on infrastructure and real estate so unless real estate and infrastructure activity pick up, it will take time.
  • Government is taking steps to restart infrastructure contracts, engineering, construction contracts it will help to get things to normal by December.

Consensus Estimate (Source: market screener website)

  • The closing price of SRTRANSFIN was ₹ 1,144/- as of 1-November-19. It traded at 1.4x /1.2x /1.0x the consensus Book Value for FY20E / 21E / 22E of ₹ 805/932/1078 respectively.
  • Consensus target price of ₹ 1289/- implies a Price to Book multiple of 1.1x on FY22E Book Value of ₹ 1089/-.
By NBFC, Shriram Transport Finance 0 Comments Read more...
01 Nov

PVR: QIP proceeds to be used for deleveraging and expansion

Update on the Indian Equity Market:

The BSE Sensex touched the all-time high of 40,344 Thursday before closing at 40,129. The volatility was fuelled by the monthly Futures and Options (F&O) expiry. The rally was seen in the global equity markets as the US Federal Reserve cut interest rate 25 bps as expected. The Sensex is up 12 out of the last 15 sessions with the total rally of more than 2,500 points. Foreign Institutional Investors (FII) bought equities of Rs100bn in this period. Among the sectoral indices, PSU BANK (3.8%), MEDIA (3.4%) and REALTY (1.2%) topped the chart while METAL (-0.5%), PVT BANK (-0.3%) and FIN SERVICES (-0.2%) were the losers. YESBANK (23.8%), ZEEL (10.8%) and SBIN (7.8%) led the index higher whereas JSWSTEEL (-2.9%), IOC (-2.1%) and TATASTEEL (-2.1%) were the laggards.

PVR: QIP proceeds to be used for deleveraging and expansion

Key takeaways from the interview of Mr Nitin Sood, CFO of PVR Limited (PVR): dated 31st October 2019 published with CNBC TV18:

·       Mr Sood mentioned that the company successfully completed the Qualified Institutional Placement (QIP) which was followed by the big slate of releases during the Diwali weekend.

·       He said that the primary intention of raising the money was to deleverage and a part of the proceeds to scale up the expansion plans all over the country. PVR has continuously opened 80-100 screens every year and the company intends to continue the expansion of the screens and better multiplex experience all over the country. The QIP fetched ₹ 5,000 mn for the company.

·       About the use of fresh capital, he said that the net debt of PVR is around ₹ 13,000 mn and the idea is that the company plans to reduce the leverage by around ₹ 3,000 mn and use the remaining proceeds for continuing investments in the expansion story. As per the guidance, the target is to open 80-100 new screens in the current year.

·       About the occupancy levels during the recent quarter, he said that 2QFY20 was one of the strongest quarters that the company witnessed. The movie flow has been excellent this year on the back of very strong 2018. All the three big Diwali releases have done decent business with the slate of films lined up for release in November- December. The outlook is strong for the company.

·       He talked about sales in terms of other merchandise. He mentioned that Food & Beverages (F&B) spend showed strong growth in the 2QFY20. The average per-person spending on F&B actually moved up by 10% during the quarter which shows that people are considering this as the most important form of entertainment. They are not cutting back on their spending on eating popcorn and food at the cinemas.

·       Total footfall growth during 2QFY20 was 25% higher from last year. This includes the new screens that the company built but even same-store growth during the quarter was strong at 6-7%. He considers it as a good indicator that people are coming back to cinemas to watch movies.

·       According to him, cinemas are investing heavily in reinventing the choice of offering one get at the theatres and the company is having a lot of focus on that front which is helping them to drive consumption up in the cinemas.

Consensus Estimate (Source: market screener website)

  • The closing price of PVR was ₹ 1,780/- as of 31-October-19. It traded at 41x/ 31x/ 25x the consensus EPS for FY 20E/ FY 21E/ FY 22E of ₹ 43.2/ 57.3/ 71.2 respectively.
  • Consensus target price of ₹ 1,983/- implies a PE multiple of 28x on FY22E EPS of ₹ 71.2/-.
By Entertainment 0 Comments Read more...
31 Oct

Fashion segment grew in double-digits on a base of 18-20%: Mr Kishore Biyani, CEO, Future Group

Update on the Indian Equity Market:

On Wednesday, NIFTY closed up with 0.5% gain at 11,844. GAIL (+6.3%), Grasim (+3.6%) and SBI (+3.5%) were the top NIFTY50 gainers. Infratel (-5.2%), Yes Bank (-3.6%) and Cipla (-2.1%) were the top NIFTY50 losers. Among the sectors, NIFTY PSU BANK (+3.7%), NIFTY IT (+1.4%) and NIFTY FMCG (+1.0%) were the top performers while NIFTY MEDIA (-0.6%), NIFTY REALTY (-0.5%) and NIFTY AUTO (-0.3%) were the top losers.

Excerpts from an interview with Mr Kishore Biyani from Livemint on 30th October 2019:

  • Festive demand starts in August sometime with Onam for Kerala and that did quite well. Followed by Puja in the Eastern part of India which again did very well. Dussehra in some parts of India also did well.
  • Diwali started a little late and the business picked up from September and till now they have been seeing some very good traction on Diwali also, but it picked up late.
  • They deal in food, fashion as such. For food, the consumption continues. It is all about some category shifts here and there. Fashion surprisingly has done well for them.
  • Men’s fashion has changed significantly in terms of what a man is wearing and after a while, the change has come in. So, change is making fashion drive that business. Value fashion has done well.
  • Central has done phenomenally well which is a departmental store format which has achieved its numbers.
  • Women’s fashion has been a little slower than what it used to be last year and they are seeing some shifts in footwear also.
  • With the wedding season starting November onwards, they expect to see a lot of shifts which are going to happen. This summer, weddings were much slower, so any category which was related to wedding had seen some kind of sluggishness, whether it was personal care, beauty, footwear —anything related to the wedding saw some moments which were much slower than expected.
  • The larger ticket size items definitely, which we are hearing in terms of auto sales, real estate sales, consumer durables have held on onto some categories, again some categories have seen some slowdown there, but in smaller ticket items also we are seeing some variation.
  • Fashion has done very well in 2018. So they are looking at a huge base of growth of 18-20%, but fashion would have grown in double-digits in 2019 for them.
  • Non-fashion, food in the first quarter grew quite well. Second-quarter has been little lower than Q1, but nevertheless, the growth continues.
  • Foodhall is breaking even and Foodhall, in fact, has probably done better. Now they have three Foodhalls in Mumbai and four in Delhi. This festive season Foodhall has done brilliant numbers because of the gifting backlog they had. A lot of gifting orders they had picked up this year.
  • ₹650 crore of extra EBITDA in Future Retail definitely helps in the long term to build a very strong balance sheet.

Consensus Estimate (Source: market screener & Investing.com website) 

Future Retail:

  • The stock price was ₹ 383/- as of close price of 30th October and traded at 22x /23x /20x the consensus EPS for FY20E / 21E / 22E of  17.4/ 16.9/ 19.5 respectively.
  • Consensus target price of ₹ 560/- implies a Price to earnings multiple of 29x on FY22E EPS of ₹ 19.5/-.

Future Lifestyle Fashion:

  • The stock price was ₹ 410/- as of close price  of 30th October and traded at 38x /31x /28x the consensus EPS for FY20E / 21E / 22E of Rs 10.8/ 13.5/ 15.0 respectively.
  • Consensus target price of ₹ 555/- implies a Price to earnings multiple of 37x on FY22E EPS of ₹ 15.0/-.
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