Quick Management Insights – Hindustan Unilever, Prataap Snacks, Tech Mahindra, Muthoot Capital, Shree Cement, Reliance Nippon AMC

Sanjiv Mehta of HUL

On Growth – We have grown our delta (incremental) turnover in the last six years by ₹12,400 crore. If it was a separate company, with ₹12,400 crore, it could perhaps be the largest FMCG company. If you look at our profits or Ebitda, we have more than doubled in the last six years. And these last six years, you have seen two consecutive years of drought, demonetization and introduction of GST (goods and services tax).

On Market Development – Market development is a science. What we call seed, accelerate and explode. Where the penetration is less than 10%, we seed it… once the penetration moves from 10% to 20%, we accelerate the development, and once it crosses 20%, then we press the pedal hard and explode it. So, it is a very clear science that we have built.

On Health Foods Drinks – If you look at our country, four out of 10 children are malnourished. Nine out of 10 children do not get the micro-nutrients that’s required and still the penetration of HFD in the country is about 25%. GSK Consumer Health have built a great category. This is a category of nearly ₹8,000 crore and, in that, they are by far the market leaders with great brands—Horlicks, Boost, Maltova, Viva—and when you look at them from any lens in terms of most trusted brands in the country

Source : https://www.livemint.com/companies/news/combined-business-of-hul-gsk-will-be-rs-45-000-crore-hul-chairman-sanjiv-mehta-1548006247197.html

 

Amit Kumat of Prataap Snacks

On Distribution – Our retail outlet reach has increased considerably from 0.5 million to 1.7 million currently and we hope to expand aggressively in next few years also. We would be present in 60% of the country right now. Big markets where we are very weak are Punjab, UP, Southern India, Himachal Pradesh and J&K. It will take another two years for us to have a pan-India presence.  We have acquired Avadh Snacks to take control of the Gujarat market. We would be needing another Rs 100-150 crore in next two to three years time for that expansion

On New Launches – Planning to take Avadh outside Gujarat to Maharashtra. We plan to start one plant in Mumbai. There is a sweet snack category where we are planning to launch three-four products in near future. Compared to savoury snacks, sweet snacks is a 50% to 60% higher margin product. Currently it counts for 3% to 4% of the revenue and we target this to be 10% of the revenue in next three years’ time.

On Growth Guidance – We hope to grow by 20% to 22% in next three-four years time.

Source : https://economictimes.indiatimes.com/markets/expert-view/we-hope-to-grow-20-22-in-next-three-four-years-amit-kumat-prataap-snacks/articleshow/67656045.cms

CP Gurnani of Tech Mahindra

On Impact of US Govt Shutdown and Brexit – I would not immediately react to this because I have seen that IT is a lag industry. It is not like change in food or oil prices changing your behaviour overnight. The impact, if any, is two to three quarters away. I would wait and watch and do my scenario modelling but many a times, it works out as an opportunity. Ultimately where is IT budget going? It is going to run the operations, to change the operations or to grow new businesses.

On Price Aggression – With discord computing or ARVR or data to AI kind of a solution, you are in a good position and more often than not, you are putting in the tail-end which is premium, which is not so easily available and you are also solving some of the customer challenges that the customer is willing to pay for.

On Digital Investments – After a certain point, digital will become hygiene. But for the next 18 months. we are still talking digital and after 18 months when 5G becomes centrestage, we will talk digital plus 5G.

Source : https://economictimes.indiatimes.com/markets/expert-view/after-18-months-5g-will-take-centrestage-in-tech-world-cp-gurnani-tech-mahindra/articleshow/67651467.cms

Madhu Alexiouse of Muthoot Capital

On Digitisation and Business Model – One of the driving force is spreading across the geography, we are now present in 20 states. Processes are digitally driven which have helped in reducing Opex. Opex to NII has come down by 10%. We have a unique business model where our flagship company Muthoot Fincorp which has 3600 branches cross sells two wheelers and contribute business to us at low cost

On New Products  – Muthoot Capital focus is on small ticket loans, we focus mainly on 2 wheeler loans and intend to expand to used cars and consumer durables. We have no plans to expand into SME and MSME lending

Source : https://www.youtube.com/watch?v=hjKC8zFdRYg

H.M. Bangur of Shree Cement

On Demand and PricingPrices are more or less stable. For last 4 years the profitability of the company is not increasing at all. Impression is cement prices go up only. Even if we see price rise of 3-4% annually, inflation is little more so profitability is impacted continously. Demand is good. Country is growing at 7.5% GDP. All India Cement demand is also growing at 7-8%

Source : https://www.youtube.com/watch?v=oM7Dk_LLIrA

Sundeep Sikka of Reliance Nippon AMC

On Opputunity Size and Consolidation in Industry – We believe that the opportunity is humongous. We have about 45 AMC’s. Even today only 2-3% of population is investing. As India moves from 2tn$ economy to 5tn$ economy the per capita income goes up. India does not have a very high social security system, so people will be using Mututal Funds for their retirement planning and other goal based. We believe the No. of investor in industry to be increased by 5 times in next 10 years. More than 50% of AMC’s are still in losses. The share of Top 10 AMC’s in overall AUM’s went up from 75% to 81%. So there is a lot of scope of consolidation happening in the industry.

Source : https://www.youtube.com/watch?v=SsAs_W2YEw8

Quick Management Comments – Vedanta, Bajaj Auto, Bajaj Finserv, Wipro

Anil Agarwal of Vedanta Plc –

On India’s Mining Resources Minerals are next only to oil on imports bill. India is richly endowed with natural resources, yet is not recognised or leveraged the way Australia, Brazil and China are. I wish India to quadruple share of mining industry, from 2.5% to 10% of GDP

Source : https://economictimes.indiatimes.com/news/economy/policy/view-address-the-mineral-imports-malady-in-resource-rich-india/articleshow/67635050.cms

 

Rajiv Bajaj of Bajaj Auto –

On Domestic business – We would have liked to be a little more successful in the domestic motorcycle market than we did. Every third motorcycle in Africa is a Bajaj. In India, our market share is now 21%…The time has now come after doing a good job overseas to do more here.

On Electric mobility – We believe strongly in electric mobility. It is a new technology and, therefore, there may be some shifts here and there. But our objective is to bring electric vehicles by 2020

On Current slowdown – There is a cycle in every business. But we are fortunate to be in a country which is the largest two wheeler market in the world. Our job now is to adjust the sails and ride out the wind. India is too big a market to fail.

Source : https://economictimes.indiatimes.com/news/economy/policy/no-wishlist-watching-budget-waste-of-time-rajiv-bajaj/articleshow/67627499.cms

https://auto.economictimes.indiatimes.com/news/industry/bajaj-set-for-foray-into-electric-vehicles-next-year-e-quadricycle-3-wheeler-on-anvil/67629312

 

Sanjiv Bajaj of Bajaj Finserv –

On ALMThere were a bunch of HFCs that were mismatched on funds and they got caught at the wrong end. They had short- term liabilities but did not have the assets. Clearly, if you have to grow, you have to match your assets to your liabilities. That is one of the first things you learn whether you are an NBFC or a bank. This is something that requires correction and RBI has taken some steps towards that.

On NBFC Crisis – Why did all NBFCs, HFCs fall in value by between 20 and 40% in a matter of a few days? This is systemic risk. Today. the top 10 NBFCs in the country each have AUMs of over Rs 10,000 crore and they are responsible for 30% of incremental credit going into the system. Consumer and SME growth in this economy has been helped by NBFCs. We u need to find a way to ring-fence them. It does not mean that you are going to create the wrong incentives but why did not banks fall because everybody knows that a bank license is a secure license under RBI. RBI will open up a window for liquidity. Why don’t you do that for big NBFCs?

On Banks vs NBFC’s – What is an NBFC? It is a license to lend with some limitations. A bank is the same but there are some differences. Why should NBFCs be associated with shadow banking? It is real banking. This is where some fundamental thinking and rethinking is required.

On Life Insurance – Life insurance clearly has evolved into pure protection of life but fare more importantly into both an investment product and a protection product. We are very bullish. We have transformed our business about three years ago and from there, we are showing steady growth in the overall top line, in the product mix as well as in the productivity across the different channels. That is growing well.

Source : https://economictimes.indiatimes.com/markets/expert-view/india-needs-to-have-a-decisive-government-that-is-also-inclusive-sanjiv-bajaj/articleshow/67628984.cms

 

Abidali Z Neemuchwala of Wipro –

On Achievements in Last Three Years – Our digital revenues are almost now one-third of our overall company revenues. We restructured some parts of our business which do not belong to the future, like we divested our data centre business. We combined our Middle East business with the global business — all these steps started delivering results and good growth rate. We have the capability through the acquisitions and we are internally building things like Design, Cloud, Cyber Security, some of the new age services like Appirio in sales force and others.

On Improving the Quality of Revenues – The quality of revenue looks at balance sheet items like un-built revenues, collectables, how we address clients who may have credit rating challenges and stuff like that to make sure that on a sustainable basis we do not surprise markets with volatility or unpredictability. We have come quite far.

Just to give you one data point, about seven or eight quarters back, more than 27% of our quarterly revenues were un-built revenues. This quarter that has come down to about 13%. Our operating cash flows are ahead of our revenues and billing.

On Healthcare Vertical – Over the last two years. revenue dropped almost $270 million to about $100-110 million. It is a very significant amount of revenue hit and then there are some of the amortisation acceleration etc that we have taken. In the next couple of quarters, we will at least hit the bottom

On Efforts to Localise Talent in the US – When we started on this, we did take a little bit of a margin hit because this needs investments and we are kind of done with those investments. Now it has become a part of our operating structure, our cost models and we are able to deliver margin expansion because it has become a way of life. Now mid-level talent is still short especially in our large markets whether you look at US and UK and Australia, but by building talent and cadre locally in the markets and having established employer brand ahead of our competition, we do well over there.

Source : https://economictimes.indiatimes.com/markets/expert-view/leading-both-wipro-specific-and-industry-transformation-greatest-achievement-abidali-z-neemuchwala/articleshow/67642101.cms

Interesting Snapshots from Research Reports/Annual Notes of AMCs

Our comments in brackets.

Primary Market Issuances in 2018.    ( Issuances peaked out in 2017 )

Nifty Valuations – Using P-E for Non-Financial and P/B for Financial Companies.  ( Interesting take on valuing Nifty.)

Indian Equities strongly correlated to S&P 500 !!   ( More co-related to US than Asia)

Indias Contribution to World Market Cap – Higher than Average but lower than the highs.

Nifty EPS estimates – Motilal Oswal    ( Estimates have been wrong through 2014-2018 for all brokers. Will it be finally right ? )

Emerging Market ETF Flows    ( Is the tide finally turning for Inflows to India)

Market Cap Wise Performance in CY 18 – ( Huge divergence in large caps to broader market – Can it reverse in CY 19 )

The Power of Retail Investors    ( 2019 will be the real test for Retail Behavior in MFs)

(Midcaps Premium to large caps finally reducing but still higher. )

Hotel Valuations around the World – Kotak 

Categorization of Large Cap, Mid Cap and Small Cap Stocks – The Contrast between AMFI and NSE

SEBI Categorization of Large Cap/Midcap and Smallcap.

SEBI in its circular https://www.amfiindia.com/Themes/Theme1/downloads/1507291273374.pdf has come out with a way of defining large-caps/midcaps/small-caps.

Observations from – Semi-Annual Review – Stock Mcap Classification
(AMFI Release-Jan-19) by Edelweiss

 

Analyse India Observations 

  • There are 1624 companies in the NSE and 4649 companies on BSE as per the data.
  • The cut-off for companies to be a Mid-Cap is 8600 crores. Any company less than that is a Small-cap.
  • There are just 779 companies with an average 6 month market-cap higher than 1000 crores. So roughly around 529 companies in the band of 1000 to 8500 cr market cap.
  • There are approx. 1700 companies with an average market cap of 100 cr.

The Contrast of AMFI/SEBI Categorization with NSE  Indices. 

The categorization is based on 6 months average Full Market Cap.

This is a stark contrast to the fact that all Mutual Funds are benchmarked to indices which have a free float market-cap methodology.

( Free Float Market Cap gives a higher weight to companies with lower promoter shareholding )

Another contrast is SEBI/AMFI wants low churn by Fund Managers and trying to limit the number of schemes etc and want them to be long-term investors but expect them to re-balance every 6 months on basis of price movements.

( Rule – Subsequent to any updation in the list, Mutual Funds would have to rebalance their portfolios (if required) in line with updated list, within a period of one month. )

The categorization of Stocks changes every 6 months and there is no limit to it. So a lot of stocks will keep changing from Large Cap to Midcap or Midcap to Smallcap and vice versa in the categorization.

In contrast, Nifty Index constituents can change every 6 months but have a limitation of only 10% of the constituents to be changed in a year for Nifty. Also replacing stock has to 1.5x free float market cap to the lowest weighted stock. For example, Nifty 500 can make 50 changes in a year and Nifty50 can do 5 changes in a year.

This difference of in categorization will keep leading to a major difference in Midcaps as per AMFI categorization and Midcap/Smallcap as per the NSE Indices.

Funds now have another headache as benchmarks and AMFI classifications do not match.

( An interesting read – http://www.analyseindia.com/midcap-funds-underperformed-in-2017-because-of-vakrangee-limited )

The difference in the categorization of Nifty Indices with AMFI categorization. 

12 Stocks of Nifty Midcap 100 are classified as Small Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

MANAPPURAM Manappuram Finance Ltd.
MGL Mahanagar Gas Ltd.
ENGINERSIN Engineers India Ltd.
VGUARD V-Guard Industries Ltd.
RELCAPITAL Reliance Capital Ltd.
TV18BRDCST TV18 Broadcast Ltd.
PRESTIGE Prestige Estates Projects Ltd.
VAKRANGEE Vakrangee Ltd.
AVANTIFEED Avanti Feeds Ltd.
PCJEWELLER PC Jeweller Ltd.
DBL Dilip Buildcon Ltd.
SPARC Sun Pharma Advanced Research

6 Stocks of Nifty Midcap 100 are classified as Large Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

 

DIVISLAB Divi’s Laboratories Ltd.
UBL United Breweries Ltd.
PAGEIND Page Industries Ltd.
IBVENTURES Indiabulls Ventures Ltd.
BERGEPAINT Berger Paints India Ltd.
LTI Larsen & Toubro Infotech Ltd.

18 Stocks of Nifty Midcap 150 are classified as Small Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

AVANTIFEED Avanti Feeds Ltd.
BLUEDART Blue Dart Express Ltd.
DBL Dilip Buildcon Ltd.
ENGINERSIN Engineers India Ltd.
FINCABLES Finolex Cables Ltd.
GET&D GE T&D India Ltd.
JMFINANCIL JM Financial Ltd.
KRBL KRBL Ltd.
MGL Mahanagar Gas Ltd.
MANAPPURAM Manappuram Finance Ltd.
PCJEWELLER PC Jeweller Ltd.
PRESTIGE Prestige Estates Projects Ltd.
RELCAPITAL Reliance Capital Ltd.
SPARC Sun Pharma Advanced Research
SYMPHONY Symphony Ltd.
TV18BRDCST TV18 Broadcast Ltd.
VGUARD V-Guard Industries Ltd.
VAKRANGEE Vakrangee Ltd.

8 Stocks of Nifty Midcap 150 are classified as Large Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

BAJAJHLDNG Bajaj Holdings & Investment Ltd.
BERGEPAINT Berger Paints India Ltd.
DIVISLAB Divi’s Laboratories Ltd.
GSKCONS GlaxoSmithkline Consumer
IBVENTURES Indiabulls Ventures Ltd.
LTI Larsen & Toubro Infotech Ltd.
PAGEIND Page Industries Ltd.
UBL United Breweries Ltd.

 

10 Stocks of Nifty 100 are classified as Mid Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

ABB ABB India Ltd.
ACC ACC Ltd.
ABCAPITAL Aditya Birla Capital Ltd.
BEL Bharat Electronics Ltd.
BHEL Bharat Heavy Electricals Ltd.
LICHSGFIN LIC Housing Finance Ltd.
NHPC NHPC Ltd.
OIL Oil India Ltd.
SRTRANSFIN Shriram Transport Finance Co. Ltd.
SUNTV Sun TV Network Ltd.

 

Management Comments – Wipro, M&M Financial Services, SKF India

Wipro on where the next leg of growth is coming from?
  • The management sees automation as a key lever to drive margins going forward.
  • It sees good momentum in its business led by steady performance in banking and financial services and consumer businesses Within BFSI, Wipro is seeing good growth in cloud migration and enterprise renovation segments on the Banking side and automation & operations transformation on the capital markets side
  • The management sees revival in the energy and utility business.
  • It has also seen an uptick in communication business driven by core enterprise spend as well as the new edge areas like 5G.
  • Health segment continues to see challenges, driven by the uncertainty around the ACA which continues to persist
Source : Q2FY19 Concall
M&M Financial Services on geographical performance
  • Among the states, the state of Maharashtra is showing slower performance, while other states of North East, UP and Bihar etc are aggressive on growth front and Kerala is bouncing back after floods
  • Large part of NPAs of rural housing finance subsidiary are from Maharashtra state, the company expects the NPAs of rural housing finance subsidiary to decline in Maharashtra in H2FY2019

Source : Q2FY19 Concall

SKF India on Revenue mix, Segmental breakup, Capex and Wind energy
  • Revenue mix : Of the total sales, automotive accounts for around 43%, industrials around 50% and exports which are largely towards auto account for the rest 7%.
  • Within Automotive, aftermarket would be 13% and 87% would be OE. Within industrials, the aftermarket and OE are 50% each. Within industrials,  Strong traction seen from passenger wagon side.
  • Capex :  Company will incur a capex of upwards of Rs 150 crore as compared to around Rs 50 crore
  • Wind : While the prices of bearings for wind energy has stabilized but still no significant demand seen towards wind energy. However investments picking up in turbine side manufacturing and demand will eventually pick up

Source : Q2FY19 Concall

 

 

Management Comments – ICICI Lombard General Insurance, Ultratech Cement, Inox Leisure, JSW Energy

ICICI Lomabard General Insurance

On retail side of business, SME and Retail health indemnity continued to grow faster and remain areas of focus

Company continues to remain cautious in case of government business segment in view of aggressive pricing strategies adopted by some market players

The general insurance industry witnessed significant disruption in the state of Kerala which was triggered by excessive floods. Overall economic losses incurred by state is estimated to be 250 Billion rupees. The gross incurred losses for industry are estimated to be 20 billion rupees.

The regulator has made it mandatory for all new private cars and two wheelers for long term third party cover. This is positive development as it will address the problem of non renewal of motor insurance in case of older vehicles. Insurers have been permitted to price the policies in line with their current approach for pricing.

Source : Q2FY19 Concall

 

Ultratech Cement

Sector update : Demand continues to remain healthy and grew 10 to 11%. Capacity utilisationin Q2 was 65% versus 61%. Capacity addition is expected yo be 15 to 17 mtpa for next 3 years compared with incremental demand of 25 to 27 MTPA.

Cost structure : logistics cost account for 31%, energy cost account for 30%, raw material cost accounts of 14%

Capacity utilization : 80-85% in east; 75-77% in north; 55-60% in central; 65-70% in west; 65-70% in south.

Petcoke prices have declined to 108$ per tonne vs 114$ per tonne. Road freight cost can decline 7% due to revision in the axle load limit and road freight accounts for close to 75% of sales. There will be some cost increase due to higher diesel prices

Source : Q2FY19 Concall

 

Inox Leisure

We are looking for aggressive growth — both organic and inorganic — and are always open for acquisitions. Inox is not in talks with Cinepolis, or any other player, but if owners of any large cinema chains decide to sell, Inox will evaluate.

Our new properties in places like Gwalior, Jaipur, Hyderabad, Delhi NCR, Mumbai and Bengaluru are getting great response from cinema goers. While we have added the highest number of new screens this year, I am seeing new properties coming up faster hereon. This year, we will end up adding 80 screens, while my target for next fiscal is 100

Inox operates 542 screens across 133 multiplexes in 67 cities and the company has 815 more screens in the pipeline.

Source : https://bit.ly/2DJQ2hG

 

JSW Energy

Power sector will be profitable again in two years as no fresh capacity is being added to cater to the rising demand

Power demand grew 6.1% last year and during second quarter this year it was close to 7%. I feel the trend now will be 6.5%- 7.5%. Lots of investments were committed in the sector earlier due to which 123 GW of capacity came up as against 88 GW. That excess capacity of close to 35 GW and lower demand created a problem in the power sector. As no new investments are taking place, a balance will be created in 2-3 years. You will see fresh investments in four years and we feel a lot of consolidation is going to happen

As and when assets go to the NCLT and even outside, we will be interested. We are looking at assets based on domestic coal and the logistics cost is minimum and where we can do projects at low cost so that cost of power is low.

The problems of power purchase agreement (PPA) and coal can be resolved over time and these delays can be factored in with proper capital structure

Source : https://bit.ly/2r6LbQe

Management Interviews – IEX, Sobha Developers, Bata India, Sandhar Technologies, V-Mart

IEX

  • Q2 volume growth driven by increased demand in Gujarat, Maharashtra, Bihar, WB, Telangana, J&K
  • Reason in increase of pricing was due to hydro and wind generation going down in September and shortage of coal
  • Our transaction fees is not dependant on price of power but on volumes transacted
  • Load shedding is the last thing that distributors engage in, hence demand for power will continue
  • Any variation of fees in future shall be first approved by a regulatory approval, earlier exchanges were free to vary.

Link : https://youtu.be/q7RLg1wgg2g

Sobha Developers

  • Revenue can be recognized only on completion basis as per New AS
  • There are few private sector NBFC where we have seen they have not disbursed loans and they have assured that max delay is for 2-3 weeks
  • Aiming topline of 1200 crs in this FY. Order book of 2300 cr on hand for contract manufacturing, will grow this business at double digit
  • 1st time buyers have been buying early in their age
  • 2018 will be better than 2017
  • Kerela is a great market for us, sentiment will revive when NRI returns in december season
  • Gurgaon and NCR is genuinely growth oriented market in North
  • Bangalore we have good land bank

Link : https://youtu.be/wmnWoRioGyg

Bata India

  • SSGR is 9%+ and premium segment is 30%+
  • Turnover growth was 15% where 16% growth in retail and 4% in non retail
  • Portion of premium products will go to 35% from 30% at present
  • Passing entire benefit of GST to customers
  • Margins have improved by 1%
  • All new launches will be mix of premium and retail

Link : https://youtu.be/JqT3gLPC4gM

Sandhar Technologies

  • Margins pressure is due to commodity prices and increase in power and fuel cost
  • Our new units are operating at negative operating leverage and as time passes will see much better margins from new units
  • Industry segment grew at 13%, we grew at 20%
  • PV segment grew at 5.1%, we grew at 7.9%
  • CV segment grew at 37%, we grew at 35%
  • Off highway grew ta 22%, we grew at 75%
  • Diversification program has paid off well for us
  • Just 3% of overall revenue is exports
  • 50% of our foreign currency exposure is always hedged

Link : https://youtu.be/Q57YeC6j64g

V-Mart

  • Festival demand has shifted from Q2 to Q3 which is the reason of SSGR coming down
  • Expenses are growing and SSGR is flattish resulting in Ebitda loss in quarter
  • Witnessing good festival season – will meet our expected nos. by year end
  • Our stores are in Tier2 Tier3 cities and people buy only when they need and when there is festival. So during festival they come out and buy large quantities. Seeing demand rise in winter wear products from North India. Kids wear is growing more than other items
  • 19 new store opening in H1, focussing on north and east states
  • We approach clustered approach by opening new store which is 100-150 kms from our other stores

 

 

 

 

Management Interviews – Welspun India, Welspun Corp, Bajaj Electricals, Castrol India, Escorts, BEL

Welspun India

  • After a long time entered in to double digit growth trajectory
  • SPACES grown 20% in Q2
  • Launched W brand towels in domestic market
  • Christy sales via e commerce platform have gone up by 140%
  • Expecting 1800 crs revenue from Welspun flooring in 2-3 years time (2x of capex)
  • Double digit growth guidance for revenue and ebitda margin next year will improve substantially as current year hedges expire
  • Capex will be 900 crs – 700 crs for flooring. No new spending on spinning and weaving.

Link : https://youtu.be/mSHvcIzKTDk

 

Welspun Corp

  • 7% growth on YoY basis and 9% growth on QoQ basis
  • Ebitda is 239 crs at sales of 269 MT
  • Order book of 1.7 mn tonnes valued at 2 bn $ (highest ever in history of co.)
  • 850k tonnes from Saudi, 500k tonnes from US and 300k tonnes from India
  • Growth mostly coming from US mkt
  • Made a provision of 28 crs rs for ILFS and other bonds.

Link : https://youtu.be/zoF1df0buTE

 

Bajaj Electricals

  • Sales at 1598 crs vs 935 crs YoY , 71% growth
  • PAT gone up to 34 crs from 18 crs, 79.6% growth
  • Consumer product business growing by 25%
  • EPC is growing by 127% because of orders from UP projects
  • Consumer products margins are less as RM prices have gone up and Co. has not taken increase in prices, it will be taken in 3rd qtr
  • EPC margins – UP order margins are on lower side than other EPC projects
  • Total order book for EPC is 7300 crs
  • EPC topline by year end will be 4000 crs, 60% growth
  • Consumer products topline will be around 3000 crs
  • CP margins we expect to improve by 100 bps, EPC margins will be in same range

Link : https://youtu.be/G4yE78X8p_4

 

Castrol India

  • Current quarter volumes increased 4%
  • T/O increased 8% after putting in 3 prices increases in market
  • Profitability was maintained despite 115crs increase in cost of goods
  • ReLaunched some products with differentiated technology
  • We have recovered 80% of cost of goods increase in 9 months
  • No price hikes in this quarter unless huge change
  • Reached 150k retail outlets and signed alliance with M&M
  • Saw uptick in industrial volumes in Q3, 4% growth
  • Synthetic products is a small part of turnover % in India as market is still evolving
  • Lubricant demand depends on how much the vehicle moves and how many vehices are there in system and not so much on vehicles sales. Other thing that impacts is technology change. Replacement of lubricants are getting longer which means vehicles require lesser lubricants but they’ll require other synthetic products in which castrol is well positioned
  • Long term volume growth of 5-6%

Link : https://youtu.be/tuW3Dq-Nabw

 

Escorts

  • Diwali and Navratri are generally strong periods
  • Already taken price increase two times, will be looking again for 1% increase after festive season is over
  • In construction business, H1 is lower and H2 is better, guidance of 13% growth on full year basis
  • Railways – Order book – 400 crs+ which will be executed within next 12-13 months – Guidance of 25-30% growth on full year basis
  • Lowered margins in railways compared to previous quarters as we are entering new product segment. On a full year basis margins will be better by 200-300 bps
  • In tractors we are able to pass the cost increases to customers but in construction we are facing difficulties
  • Price realisations were better due to price hike taken
  • Overall macro for rural is looking positive for next 2-3 quarters

Link : https://youtu.be/eOr_jKPHk3I

 

BEL

  • Revenue growth of 20% for half year
  • PAT depends on mix of services provided during particular period
  • Ebitda guidance for full year around 17-18%
  • Order book of company at all time high touching 50,000 crs
  • Executable order per year will allow us to grow at 12% CAGR
  • Will complete deliveries at 11200 crs in this year
  • Expect order flow of 10000-13000 crs in FY 20

Link : https://youtu.be/xufvb85MJys

Interesting Reads – 05-11-2018

Stocks that investment gurus would buy for Diwali 2018 (ET)

In this article, ET has explained and filtered stocks based on methods used by 4 investment gurus – James O’ Shaughnessy, Warren Buffett, Joel Greenblatt, Joseph Piotroski

https://bit.ly/2DncDS6

 

Can Ethanol Change Business Dynamics For Sugar Industry? (BQ)

A good read on changing dynamics for sugar industry.

https://bit.ly/2OpEoKH

 

The Low Stress Way to Research Stocks (Safal Niveshak)

Jatin Khemani talks about his equity research process and how he tries to balance the stress part of the equation that it involves

https://bit.ly/2zoZNhq

 

A Brief Overview Of Global & Indian Coffee Sector (Alpha Invesco)

https://bit.ly/2Dkccbb

 

Understanding The Indian Tyre Industry, Key Players & The Road Ahead (Alpha Invesco)

https://bit.ly/2RCMgKU

 

Reminiscences Of A Stock Operator: The Volkswagen Chronicles (Albert Bridge Capital)

Mother of all short squeezes, Volkswagen briefly became the world’s biggest company by market value, as short sellers caught betting on a price drop with borrowed stock scrambled to find shares after a buying spree by Porsche

https://bit.ly/2SNlmRJ

Management Interviews – Globus Spirits, Prataap Snacks, Berger Paints, Ceat

Globus Spirits

  • Investing 25-30 crs into premium IMFL business every year. Sales is small now but it’s a high growth business
  • Economy brand business growing at about 8-10% every year
  • Rajasthan is a biggest state, followed by Haryana and then West Bengal
  • Bihar Distillary – Is for ethanol policy – Large part of capacity will go to OMCs – Will start in next 2 months – Will add about 100 crs of revenue to our business on annual basis – Margins will be north of 20%
  • Have taken price increase and that lead to increase in margins
  • Margin increase due to ethanol is not yet played out
  • 12% margins can be safely assumed this year and will increase once ethanol is played out
  • Rajasthan is over 30% of our revenues and most profitable state, don’t see much change in buiness due to elections
  • There will be some capex in Bihar and Haryana for ethanol

 

Link :

https://twitter.com/CNBCTV18News/status/1032528096128262144

 

Prataap Snacks

  • Will not take debt for acquisition of Avadh snacks, already have cash on books of about 140 crs and cash reqd is 145 crs
  • Avadh snacks revenue is 140 crs; Ebitda margins are 7.5-8.5%; No.4 in Gujarat Category
  • They have small debt of 2-3 crs Rs
  • Gujarat is 4-5% of India’s population – they consume around 12-14% of Indian snacks
  • Revenues of Prataap snacks from Gujarat is just 12-25 crs in a year
  • Will take our holding from 80% to 100% in next 4-5 years; until then Avadh promoters will run the business for us
  • We have a growth target of 18-20% and margins of 7.5%
  • Will target revenues of 1250 crs this year

 

Link :

https://twitter.com/CNBCTV18News/status/1032522272576159745

 

Berger Paints

  • RM Prices – Moderation in some and some gone up
  • Re devaluation will impact us as 25-30% of RM is imported
  • We will take a price increase of 1-1.5% in September
  • Ebitda margins will be static or some drop if we are unable to take price increase
  • Saboo coating acquisition – Speciality products – Glass coating, Plastic coating – Earlier it was a Noth Indian company – We are planning it to take to different geographies
  • Volume growth was at 17% in Q1 due to base effect; In Q2 it might not be 17% but can expect a good volume growth
  • Market share – 19% in decorative business
  • Capacity utilization – 70-72% in normal months and 90-92% in seasonal months
  • Going to set up a plant near Lucknow in UP which will come up in 2020

 

Link :

https://twitter.com/CNBCTV18News/status/1032517987985580032

 

Ceat

  • Our physical rubber inventory will be around 3-4 weeks
  • We have a mix of rubber sourcing i.e. imports and local
  • We are facing some supply issues from Kerela in last 2-3 weeks leading to production stoppage
  • Local rubber prices have moved up from 125/kg to 133/kg (Kerela). As far as international prices are concerned – they are rangebound around 1450 $
  • Availability of carbon black have improved in last 2 months.
  • Re depreciation has also impacted delivery costs in terms of imports
  • 2 Wheller demand is good in last 2-3 months; also seen growth in both OEM and Replacement market
  • We are working for additional capacity addition based on our long term capex plan
  • Likely to incur 1000 cr capex in Halol for TBR – Will be commissione din Q3 of this FY
  • Setting up greenfield plant in Southern india for Passenger Vehicles – Est capex is 2000 crs
  • Capex spend will be in phases ; funded through internal accruals (1/3rd) and debt (2/3rd) – Debt to Equity at end of FY19 could be 0.7-0.8

 

Link :

https://youtu.be/E60gjyHdW58