Presents
TOP PICKS REPORT
Diwali Special - October 2019
Research Team
Top Picks Report
October 2019
Diwali Special
Top Picks
Corporate tax cut - A game changer policy for India
Company
CMP (`)
TP (`)
Banking/NBFC
The Government has announced a major fiscal stimulus by reducing
ICICI Bank
427
510
corporate tax rates across the board through an ordinance. The changes
HDFC Bank
1,223
1,390
made to the income tax are listed below.
RBL Bank
312
410
Corporate tax rates have reduced from 30% to 22% for companies that are
not availing any exemption/incentive. The effective tax rate for these
Shriram Transport Finance
1,032
1,385
companies shall be 25.17% inclusive of surcharge & cess.
Consumption
Amber Enterprises
875
964
Tax rates for any new domestic company incorporated on or after 1st
October 2019 making fresh investment in manufacturing, to 15% from 25%.
Blue Star
795
867
This is conditional upon the companies not availing any exemption/
Safari Industries
588
646
incentive and commences their production on or before 31stMar'23.
TTK Prestige
6,087
7,708
Effective tax rate works out to be 17.01% inclusive of surcharge & cess.
Media/Automobiles
MAT rates for companies who are paying tax at concessional rates or zero
Maruti Suzuki
6,752
8,552
rate have been reduced to 15% from 18.5%.
Real Estate/Infra/Logistics/Power
GMM Pfaudler
1,495
1,740
Fiscal slippage a necessity to boost growth given low
Larsen & Tourbo
1,458
1,850
inflation
KEI Industries
527
612
Tight fiscal and monetary policy over the past few years coupled with major
Ultratech Cement
4,147
4,982
structural changes have taken a toll on growth. Given current growth inflation
Source: Angel Research;
dynamics, some amount of fiscal slippage is unlikely to stoke inflation. On the
Note: CMP as of 03 Oct , 2019
contrary we believe that fiscal slippage is necessary and will go a long way in
boosting growth given that India doesn't have a twin balance sheet problem
like 2013. As per Government estimates the tax break will cost the exchequer
`1.45 lakh Cr. of which ~60-65% will be borne by the states. Therefore the tax cut
will cost the central Government ~55-60 thousand Cr. which has already been
financed by the RBI which transferred `148,000Cr. to the Govt as compared to
budgeted estimates of `90,000Cr.
The tax cuts would increase profitability for companies at the highest tax
bracket by ~14% which would be used by the companies to stimulate growth
through price cuts and by increased investments in new capacities. Increased
investments would boost growth over a period of time which would in turn
lead to higher tax collections and thus lower fiscal deficit in the long run.
Exhibit 1: India Current account deficit (%)
Exhibit 2: India Fiscal deficit (%)
7.0
6.5
5
4.8
6.5
6
4.2
6.0
5.8
4
5.5
5.0
4.9
4.8
3
2.8
2.8
4.6
2.3
4.5
4.1
2.1
3.9
2
1.7
1.8
4.0
3.5
3.5
3.4
1.3
3.5
1.1
1
0.7
3.0
2.5
0
2.0
Source: Company, Angel Research
Source: Company, Angel Research
October 2019
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October 2019
Diwali Special
RBI has room to cut rates further as inflation is expected to
remain low
Monsoon situation has improved significantly and is at a 9% surplus as
of 28th Sep'19. Improving monsoon situation would keep food inflation
in check while falling commodity prices would lead to lower
manufacturing inflation. As a result we expect inflation to remain
below the RBI's target of 4% which would allow the RBI to cut rates
further despite fiscal slippage.
G Sec yields have moved up lately from ~6.3% to ~6.7% despite a 35bps
rate cut by the RBI in it's August MPC meeting as markets are
concerned about significant additional Government borrowings due
to revenue shortfall on account of economic slowdown and tax cuts.
However we believe that the RBI would step in at some point of time in
the near future and push down yields through Open market
operations (OMO).
We believe that accommodative monetary and fiscal policy is the
need of the hour to bolster growth as inflation rates are unlikely to pick
up given significant spare capacity in the economy. Low crude prices
and relatively stable food prices would also go a long way in helping
contain inflation. We expect the RBI to cut rates by 40-65bps from
here on over and above the 110bps of cuts so far.
Q1FY20 GDP number of 5.0% probably the bottom in terms of
growth rate
Rate cuts and large transfer by the RBI, Improving monsoon situation,
relief for FPI's from additional surcharge and tax cuts announced by
the Government should help in reversing sentiments going forward.
The Q1FY20 GDP growth number at 5.0% probably marks the bottom
in terms of growth rate. Hence we believe that the worst is over and
growth rates should start improving from Q2 onwards driven by
Government spending while private spending is expected to pick up
from the second half of FY20.
Exhibit 3: GDP growth at multi quarter low
Exhibit 4: Consumption growth lowest since Dec 2014
10
12
9.8
10
8.1
8
8
6
6
4
5.0
3.1
4
2
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
October 2019
3
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October 2019
Diwali Special
US-China trade war throws up opportunity for India
The trade war between US and China has already caused global growth rates
to slow. The OECD has recently cut its GDP growth estimate for FY19 from 3.2%
to 2.9% while growth rate for 2020 have been cut to 3.0% from it's earlier
forecast of 3.4%.
While the US China trade war is having an adverse impact on global growth
India is relatively immune given low share of exports to GDP as compared to
some of the other Asian countries. The US China trade war however is an
opportunity for India as some manufacturing capacities would be moving out
of China in order to de-risk their supply chain. With tax rates in India now
comparable to some of the other emerging economies we would be in a
better position to capture the opportunities thrown up by the disruption
caused by the trade war.
IBC has forced out the Stress in Corporate India…
Indian banking sector had been under severe stress as NPA levels had spiked
from 3.8% in FY2014 to 11.9% by the end of FY2018. This was largelydriven by
stress from few key sectors like Iron & steel, Infrastructure and Power and
Textiles. NPA recognition was accelerated on account of the Insolvency and
Bankruptcy Code which was introduced by the Government in 2016. It
replaced earlier laws like the SICA which were antiquated and were ineffective
in dealing with stressed assets.
Under the IBC inefficient promoters and management were forced out of
their companies which were sold out to more efficient players. One of the key
highlights of the IBC was resolution of some very large Iron & steel accounts,
wherein the banks were able to recover a significant portion of their loans
which would have been unthinkable under the previous acts. We believe that
the worst of the NPA cycle is behind us now and credit costs for the banking
sector is expected to normalize over the next few quarters.
Exhibit 5: NPA's down sharply since peak in FY18
Exhibit 6: Provisioning coverage improved significantly
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
October 2019
4
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October 2019
Diwali Special
Central banks easing to reverse liquidity outflow from India
Major central banks are cognizant of slowing global growth and have taken
preemptive action. The US fed has now cut rates by 50bps and has also
stopped unwinding it's balance sheet while the ECB has cut it's deposit rate by
10bps to -50bps and has restarted it's QE program at EUR 20bn per month.
With major central banks printing money global liquidity should improve
from here on and India should be able to get a disproportionate share of the
liquidity going to emerging markets given the latest move by the Government
which indicates that growth is of paramount importance to them and that
they are willing to foster and reward a compliant culture.
Earnings upgrades post corporate tax cuts keeps valuations
attractive
The tax cuts would increase profitability for companies at the highest tax
bracket by ~14%. Post the tax cuts Nifty earnings are expected to be revised
upwards by 8-10% led banks and consumer companies which are paying taxes
at the highest rate.
Most analysts on street are incorporating only the direct impact of tax cuts in
their Nifty earnings estimates. We believe that there would be a second round
of impact on growth as the increased profits would be used by the companies
to stimulate demand through price cuts and by investments in new
capacities. This will help boost growth over a period of time which would in
turn lead to higher tax collections and thus lower fiscal deficit in the long run.
Over the past 18 months midcaps have borne the brunt of the correction and
are currently trading at levels last seen in 2013, when India was staring at a twin
balance sheet problem which subsequently led to a major currency crisis. We
believe that valuations have become attractive especially with the recent
round of historical reforms. We believe that one should use any corrections in
the markets to build a well diversified portfolio consisting of high quality
stocks.
While we are very constructive on the markets from a 12-18 months
perspective we believe that one should focus only on quality businesses with
strong moats and avoid companies which either don't have very strong moats
or are highly leveraged or where management integrity is questionable.
Exhibit 7: Historical Nifty one year forward chart
Exhibit 8: Historical difference Nifty & Nifty Midcap PE
PE
5 yr avg PE
40
Diff Nity & Nifty MID cap PE
19
18
29
18
30
17
17
20
11
16
15.3
10
15
0
14
-10
13
-20
12
-30
-24
-28
11
-40
11
10
Source: Bloomberg, Angel Research
Source: Bloomberg, Angel Research
October 2019
5
Top Picks Report
October 2019
Diwali Special
Diwali Picks
October 2019
6
Top Picks Report
October 2019
Diwali Special
Stock Info
Amber Enterprise
CMP
875
Amber Enterprises India Ltd. (Amber) is the market leader in the room air
TP
964
conditioners (RAC) outsourced manufacturing space in India. It is a one-
Upside
10.2%
stop solutions provider for the major brands in the RAC industry and
Sector
Electronics
currently serves eight out of the ten top RAC brands in India.
Market Cap (` cr)
2,750
In line with its strategy to capture more wallet share, it has made few
Beta
0.88
acquisitions in the printed circuit board (PCB) manufacturing space which
52 Week High / Low
1012/622
would boost its manufacturing capabilities.
We expect Amber to report consolidated revenue/PAT CAGR of 20%/32%
respectively over FY2019-21E. Its growing manufacturing capabilities and
2 year-Chart
scale put it in a sweet spot to capture the underpenetrated RAC market in
India.
1,400
1,200
Key Financials
1,000
800
Y/E
Sales
OPM
PAT
EPS
ROA P/E P/BV EV/Sales
600
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
400
FY2020E
3,434
8.5
133
42.2
12.1
20.7
2.5
0.8
200
FY2021E
3,988
8.5
163
52.0
13.2
16.8
2.2
0.7
-
Source: Company, Angel Research
Source: Company, Angel Research
Stock Info
Blue Star
CMP
795
BSL is one of the largest air-conditioning companies in India. With a mere
TP
867
3% penetration level of ACs vs 25% in China, the overall outlook for the room
Upside
9.0%
air-conditioner (RAC) market in India is favorable.
Sector
Cons.Durable
BSL's RAC business has been outgrowing the industry by ~10% points over
Market Cap (` cr)
7,659
the last few quarters, resulting in the company consistently increasing its
Beta
0.85
market share. This has resulted in the Cooling Products Division (CPD)'s
52 Week High / Low
834/508
share in overall revenues increasing from~23% in FY2010 to ~43% in FY2019
(expected to improve further). With strong brand equity and higher share
in split ACs, we expect the CPD to continue to drive growth.
3 year-Chart
Aided by increasing contribution from the Unitary Products, we expect the
900
overall top-line to post revenue CAGR of ~11% over FY2019-21E and margins
800
to improve from 5.7% in FY2018 to 6.8% in FY2021E.
700
600
500
400
Key Financials
300
Y/E
Sales
OPM
PAT
EPS
ROE P/E P/BV EV/Sales
200
100
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2020E
5,711
6.5
215
22.4
23.1
35.6
8.2
1.5
FY2021E
6,397
6.8
255
26.5
24.6
30.0
7.4
1.4
Source: Company, Angel Research
Source: Company, Angel Research
October 2019
7
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October 2019
Diwali Special
Stock Info
GMM Pfaudler
CMP
1,495
GMM Pfaudler Limited (GMM) is the Indian market leader in glass-lined
TP
1,740
(GL) steel equipment used in corrosive chemical processes of
Upside
16.4%
agrochemicals, specialty chemical and pharma sector. The company is
Sector
Machinery
seeing strong order inflow from the user industries which is likely to
Market Cap (` cr)
2,185
provide 20%+ growth outlook for next couple of years.
Beta
0.57
GMM has also increased focus on the non-GL business, which includes
52 Week High / Low
1558/900
mixing equipment, filtration and drying equipment for the chemical
processing industry. It is expecting to increase its share of non-GL business
gradually over the medium term.
3 year-Chart
GMM is likely to maintain the 20%+ growth trajectory over FY19-21 backed
1,800
by capacity expansion and cross selling of non-GL products to its clients.
1,600
1,400
1,200
Key Financials
1,000
Y/E
Sales OPM PAT
EPS
ROE
P/E
P/BV
EV/Sales
800
600
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
400
FY2020E
665
18
77
52.9
22.2
28.7
6.4
3.1
200
FY2021E
767
18
99
67.8
22.9
22.4
5.1
2.6
Source: Company, Angel Research
Source: Company, Angel Research
Stock Info
HDFC Bank
CMP
1,223
HDFC Bank has planned to improve business with digital platforms and is
TP
1,390
engaging with mid market clients. Its next leg of growth road map includes
Upside
13.7%
(1) increasing branch opening number from 300 current to 600 annually in
Sector
Banking
non urban area, (2) increase point of sale (POS) 4x to 4mn by FY2021 and
Market Cap (` cr)
6,69,101
double the virtual relationship manager clients in 3 years.
Beta
0.93
The bank registered NIM of 4.4% on the back of lower cost of funds, while
52 Week High / Low
1285/945
healthy asset quality kept the provision cost lower. Consistency in both the
parameters helped the bank to report healthy return ratio. Despite strong
advance growth, the bank has maintained stable asset quality (GNPA/NPA
3 year-Chart
- 1.3%/0.4%).
1,400
HDFC Bank's subsidiary, HDB Financial Services (HDBFS) continue to
1,200
contribute well to the banks overall growth. Strong loan book, well-planned
1,000
product line and clear customer segmentation aided this growth.
800
We expect the bank's loan growth to remain 20% over next two years and
600
earnings growth is likely to be more than 20%.
400
200
-
Key Financials
Y/E
NII
NIM
PAT
EPS
ABV ROA ROE P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
Source: Company, Angel Research
FY2020E
57,795
4.4
27,176
49.7
312
2.0
17.2
24.6
3.9
FY2021E
68,500
4.4
33,673
61.6
362
2.1
18.2
19.8
3.4
Source: Company, Angel Research
October 2019
8
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October 2019
Diwali Special
Stock Info
ICICI Bank
CMP
427
ICICI Bank has taken a slew of steps to strengthen its balance sheet viz.
TP
510
measures like incremental lending to higher rated corporate, reducing
Upside
19.4%
concentration in few stressed sectors and building up the retail loan book.
Sector
Banking
The share of retail loans in overall loans increased to 61.4% (Q1FY2020) from
Market Cap (` cr)
276,108
38% in FY2012.
Beta
1.37
ICICI Bank's slippages remained high during FY2018, and hence, GNPA
52 Week High / Low
458/295
went up to 8.8% vs. 5.8% in FY2016. We expect addition to stress assets to
reduce and credit costs to further decline owing to incremental lending to
higher rated corporate and faster resolution in accounts referred to NCLT
3 year-Chart
under IBC.
500
The gradual improvement in recovery of bad loans would reduce credit
450
400
costs which would help to improve return ratio. At the current market price,
350
the bank's core banking business (after adjusting the value of subsidiaries)
300
250
is trading at 1.7x FY2021E ABV, which is inexpensive considering retail Mix
200
and strong capitalization (tier I of 14.6%).
150
100
50
Key Financials
-
Y/E
NII
NIM
PAT EPS ABV ROA ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2020E
31,732
3.4
12,250
19
169
1.2
11
22
2.5
Source: Company, Angel Research
FY2021E
37,135
3.5
16,518
26
189
1.4
13
17
2.3
Source: Company, Angel Research
Stock Info
KEI Industries
CMP
527
KEI's current order book (OB) stands at `4,414cr (segmental break-up: EPC
TP
612
is around `2,210cr and balance from cables, substation & EHV). Its OB grew
Upside
16.2%
strongly in the last 3 years due to strong order inflows from State Electricity
Sector
Cable
Boards, Power grid, etc.
Market Cap (` cr)
4,156
KEI's focus is to increase its retail business from 30-32% of revenue in FY19 to
Beta
1.31
40-45% of revenue in the next 2-3 years on the back of strengthening
52 Week High / Low
559/249
distribution network (currently 926 which is expect to increase ~1,500 by
FY20) and higher ad spend.
KEI's export (FY19 - 16% of revenue) is expected to reach a level 20% in next
3 year-Chart
two years with higher order execution from current OB and participation in
various international tenders. We expect KEI to report net revenue CAGR of
600
~15% to ~`5,632cr and net profit CAGR of ~29% to `300cr over FY2019-21E
500
400
Key Financials
300
Y/E
Sales
OPM
PAT
EPS
ROE P/E P/BV EV/Sales
200
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
100
FY2020E
4,897
10.5
249
32.2
24.8
16.3
4.0
0.9
FY2021E
5,632
10.5
301
38.9
23.5
13.5
3.2
0.7
Source: Company, Angel Research
Source: Company, Angel Research
October 2019
9
Top Picks Report
October 2019
Diwali Special
Stock Info
Larsen & Tourbo
CMP
1,458
L&T is India's largest EPC company with strong presence across various
TP
1,850
verticals including Infra, Hydrocarbon and services segment. The company
Upside
26.9%
also has a very strong presence in the IT services and NBFC space through
Sector
Infrastructure
it's various subsidiary companies which are also growth drivers for the
Market Cap (` cr)
204,645
company.
Beta
1.21
L&T continued to report strong order flows during Q1FY20 despite the
52 Week High / Low
1607/1183
quarter being hampered by the general elections. Company reported
order flow of `387bn and retained it's guidance of a 10-12% order inflow for
the year and 12-15% revenue growth guidance.
3 year-Chart
Management had indicated a very strong pipeline for FY20 of `9lakh Cr.
2,000
which includes both domestic as well international orders. The company
1,800
has a strong order backlog of ~ ` 3lakh Cr. and the pipeline provides strong
1,600
visibility for new order flows for the rest of the year.
1,400
1,200
We are positive on the prospects of the Company given the Government's
1,000
thrust on Infrastructure with over 100lakh cr. of investments lined up over
800
600
the next 5 years. Reduction in tax rate for domestic companies to 22% from
400
30% will improve profitability by ~15% for the company.
200
-
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROA P/E P/BV EV/Sales
Source: Company, Angel Research
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2020E
1,58,646
12
9,876
70.5
14.8
20.7
2.9
2.0
FY2021E
1,80,137
12
11,622
82.6
15.6
17.7
2.5
1.8
Source: Company, Angel Research
Stock Info
Maruti Suzuki
CMP
6,752
Maruti Suzuki continues to maintain ~52% market share in the passenger
TP
8,552
vehicles space. The launch of exciting new models has helped the
Upside
26.7%
company to ride on the premiumization wave that is happening in the
Sector
Automobile
country. In the last two years, company has seen improvement in the
Market Cap (` cr)
203,971
business mix with increasing share from utility vehicles.
Beta
1.38
Company is well placed to capture any revival in industry due to overall
52 Week High / Low
7929/5447
refreshment of portfolio (Already more than 50% of portfolio launched
based on BS6 compliance like Alto, Wagon, Baleno, Dzire, Swift. Recent
new launches in August 2019 also has the potential to contribute
3 year-Chart
significantly to the Top-line (MPV - XL6 and S-Presso).
12,000
Key Financials
10,000
Y/E
Sales OPM PAT
EPS ROE P/E
P/BV
EV/Sales
8,000
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
6,000
4,000
FY2020E
84,277
11.9
6,806
225.4
13.5
30.0
4.0
1.9
2,000
FY2021E
90,201
12.6
7,527
249.2
14.0
27.1
3.8
1.8
-
Source: Company, Angel Research
Source: Company, Angel Research
October 2019
10
Top Picks Report
October 2019
Diwali Special
Stock Info
RBL Bank
CMP
312
RBL Bank (RBK) has grown its loan book at healthy CAGR of 53% over
TP
410
FY2010-19. We expect it to grow at 27% over FY2019-21E. With an adequately
Upside
31.4%
diversified, well capitalised balance sheet, RBK is set to grab market share
Sector
Banking
from corporate lenders (mainly PSUs).
Market Cap (` cr)
13,428
During Q1FY20 the retail loan portfolio grew 62% yoy to `18,391cr and now
Beta
1.7
constitutes 32% of the loan book (from 18% share in 4QFY2017). NIM has
52 Week High / Low
717/256
expanded to 4.23%, up 19bps yoy despite a challenging interest rate
scenario on the back of a changing portfolio mix. However, the
Source: Company, Angel Research
management disclosed stressed asset worth `1,000cr, which will increase
GNPA to 2.25%. Management is confident that it would normalize by
Q1FY2021.
3 year-Chart
RBL Bank currently trading at 1.4x its FY2021E book value per share, which
we believe is reasonable for a bank in a high growth phase with stable asset
800
quality.
700
600
Key Financials
500
Y/E
NII
NIM PAT EPS ABV ROA ROE
P/E
P/ABV
400
300
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
200
FY2020E
3,270
3.7
1,154
27
193
1.3
14
12
1.6
100
FY2021E
4,226
3.8
1,704
40
223
1.4
18
8
1.4
-
Source: Company, Angel Research
Source: Company, Angel Research
Stock Info
Safari Industries
CMP
588
Safari Industries Ltd (Safari) is the third largest branded player in the Indian
TP
646
luggage industry. Post the management change in 2012, Safari has grown
Upside
9.8%
its revenue by 6x in the last 7 years. This has been achieved by foraying in
Sector
Luggage
many new categories like back pack, school bags (via acquisition of Genius
Market Cap (` cr)
1,314
and Genie) and improvement in distribution networks.
Beta
0.58
Its margins have more than doubled from 4.1% in FY2014 to 9.1% in FY2019,
52 Week High / Low
839/481
driven by launch of new product categories and business. We expect it to
maintain 9%+ margins from FY2018 onwards led by regular price hikes,
shift towards organized player and favorable industry dynamics.
3 year-Chart
We expect its revenue to grow by a CAGR of ~23%/23.5% in revenue/
1,200
earnings over FY2019-21E on the back of growth in its recently introduced
1,000
new products.
800
600
Key Financials
400
YY/E
Sales OPM PAT
EPS ROE P/E
P/BV
EV/Sales
200
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
-
FY2020E
730
9.1
28
12.6
12.5
46.7
7.5
1.9
FY2021E
882
10.0
42
18.7
15.9
31.5
6.4
1.6
Source: Company, Angel Research
Source: Company, Angel Research
October 2019
11
Top Picks Report
October 2019
Diwali Special
Stock Info
Shriram Transport
CMP
1,032
SHTF's primary focus is on financing pre-owned commercial vehicles. We
TP
1,385
expect AUM growth to improve going ahead led by (1) good monsoon
Upside
34.1%
which will improve rural economic activity, (2) pick-up in infra/construction,
Sector
Financials
which was subdued since 2019 elections, (3) ramping up in rural
Market Cap (` cr)
23,417
distribution.
Beta
1.45
SHTF gradually expanded its offering to existing borrower with good track
52 Week High / Low
1297/904
record. New offering includes business loan and working capital which
cover overall truck business owner requirement (payment at petrol pump/
tyre dealers, insurance premium).We expect asset quality to remain stable
3 year-Chart
owing to lower LTVs since 3QFY2019 and stable collateral value as used CV
prices to improve or remain stable in a BS6 regime.
1,800
We expect SHTF to report RoA/RoE of 3.1%/18.8% in FY2021E respectively. At
1,600
1,400
CMP, the stock is trading at 1.3x FY2021E ABV and 6x FY2021E EPS, which we
1,200
believe is reasonable for differentiated business model with return ratios.
1,000
800
600
Key Financials
400
Y/E
NII
NIM
PAT
EPS
ABV ROA ROE P/E
P/ABV
200
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
-
FY2020E
8,681
8.1
3,251
143
827
2.9
18.8
7
1.4
FY2021E
9,946
8.3
3,861
170
980
3.1
18.8
6
1.2
Source: Company, Angel Research
Source: Company, Angel Research
Stock Info
TTK Prestige
CMP
6,087
TTK Prestige (TTK) is the leading brands in kitchen appliances with 40%+
TP
7,708
market share in organized market. It has successfully transformed from a
Upside
26.6%
single product company to a multi product company offering an entire
Sector
Houseware
gamut of kitchen and home appliances (600+ products).
Market Cap (` cr)
8,437
It has also launched a economy range - 'Judge Cookware' to capture the
Beta
0.66
untapped demand especially at the bottom end of the pyramid. It is
52 Week High / Low
7739/4581
expecting good growth in cleaning solutions.
Management expects to double its revenue in the next five years backed by
revival in consumption demand, inorganic expansion and traction in
3 year-Chart
exports.
10,000
Key Financials
9,000
8,000
Y/E
Sales
OPM
PAT
EPS
ROE P/E P/BV EV/Sales
7,000
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
6,000
5,000
FY2020E
2,307
13.9
235
170.6
17.4
39.6
6.0
3.5
4,000
3,000
FY2021E
2,557
13.9
262
190.1
16.8
35.5
5.2
3.2
2,000
Source: Company, Angel Research
1,000
Source: Company, Angel Research
October 2019
12
Top Picks Report
October 2019
Diwali Special
Stock Info
Ultratech Cement
CMP
4,147
Ultratech Cement is India's largest cement manufacturer with ~100mn TPA
TP
4,982
of capacity spread across the country with a strong presence in Central,
Upside
20.1%
North, and West India.
Sector
Cement
The company has added capacity by taking over stressed assets of over
Market Cap (` cr)
1,13,909
~30mn TPA since 2017. Company would also be taking over Century textile's
Beta
1.26
cement capacity of 13.4mn TPA from H2FY20 which will give it 40% plus
52 Week High / Low
4,903/3263
market share in West and Central India which are amongst the best
regions.
Increased costs due to high energy prices had adversely impacted margins
3 year-Chart
in 1HFY19. However strong pricing discipline due to consolidation allowed
cement companies to hike prices in Q4FY19. Energy prices (coal and pet
coke) have come off significantly since the beginning of 2019 which along
5,000
with benign freight costs would allow cement companies to protect
4,000
margins despite any marginal dip in realizations.
3,000
We are positive on the long term prospects of the Company given ramp up
2,000
from acquired capacities, pricing discipline in the industry and benign
1,000
energy & freight costs. Reduction in tax rate for domestic companies to 22%
from 30% will improve profitability by ~15% for the company.
-
Key Financials
Source: Company, Angel Research
Y/E
Sales
OPM
PAT
EPS
ROA P/E P/BV EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2020E
42,967
19
3,280
113.7
10.5
36.5
3.8
3.3
FY2021E
50,305
21
4,783
165.7
13.4
25.0
3.4
2.7
Source: Company, Angel Research
October 2019
13
Top Picks Report
October 2019
Diwali Special
Research Team Tel: 022 - 39357800
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Disclosure of Interest Statement
Top Picks
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
October 2019
14
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Research Team
Fundamental:
Vaibhav Agarwal
Head of Research & ARQ
Jyoti Roy
Lead Equity Strategist
Amarjeet Maurya
Lead Analyst (Mid - Cap)
Jaikishan Parmar
Lead Analyst (BFSI)
Keshav Lahoti
Associate Analyst
Bhavin Dedhia
Associate Analyst
Technical and Derivatives:
Sameet Chavan
Chief Technical & Derivatives Analyst
Ruchit Jain
Technical Analyst
Rajesh Bhosle
Technical Analyst
Sneha Seth
Derivatives Analyst
Disclaimer: ‘Investments in securities market are subject to market risk, read all the related documents carefully before investing. Angel Broking
Limited (formerly known as Angel Broking Private Limited), Registered Office: G-1, Ackruti Trade Center, Road No. 7, MIDC, Andheri (E), Mumbai - 400
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Investment Adviser SEBI Regn. No.: INA000008172, AMFI Regn. No.: ARN-77404, PFRDA Registration No.19092018.Compliance officer: Mr. Rajiv
