Recent Posts

81

India Stocks and Shares / Post-Paid Customer Unwilling to Switch to Jio

« Last post by resh on September 27, 2020, 03:44:46 PM »

Reliance Jio focus to raise consumer market share continues after the company launched more aggressive postpaid wireless plans that were cheaper than incumbent offerings. This comes after the reduction in FTTH broadband tariffs late last month. While RIL’s prepaid offering has been one of the most value-for-money offerings, postpaid and broadband have been areas where customer acquisition has been slower than anticipated.

Jio's postpaid plan offers more value as its offering, with bundled OTT content even (at the lowest starting tariffs of Rs399/month), unlimited calling, along with higher data usage and additional benefits vs competition.

Jio's new tariff are at a 37% discount to Airtel's Rs499 plan. However, with the existing postpaid plan getting limited traction, we believe stickiness of postpaid and offers by competition to Jio's announcement still need to watched. India's postpaid ARPU as of Mar-20 was Rs244/month (~3x of pre-paid) with ~5% of the customer base on postpaid.

82

IPOs and Rights Issues / UTI AMC - Review + Recommendation

« Last post by resh on September 27, 2020, 03:36:07 PM »

UTI Asset Management Company -  AMC / Mutual Fund IPO Review and Recommendation

Nirmal Bang Analysts Raghav Garg and Arjun Bagga said

At the upper price band of Rs 554 / share, the company is being valued at Rs70.2bn. The issue size is Rs21.6bn, which is entirely an offer for sale (OFS). SBI, LIC, PNB, BoB and T. Rowe Price would be selling 39mn shares collectively. At 25.4x FY20 EPS (trailing), we think the IPO pricing is undemanding given the valuation HDFC AMC and Nippon AMC are currently commanding. From a more near-to-medium term perspective, we currently have a cautious view on the overall AMC sector. Even though we are positive on the industry prospects from a long-term perspective, we take cognizance of some of the near-to-medium term headwinds.

ICICI Direct Research Analyst, Kajal Gandhi Wrote

Post issue market capitalisation at the upper band will be Rs 7000 crore. At Rs 554, the stock is available at P/AAUM of ~5.3% Q1FY21 AAUM and at ~17.4x P/E at Q1FY21 PAT (annualised basis).

Emkay Securities analyst Jignesh Shial and Anand Dama said,

At a price band of Rs552-554, UTI AMC has priced its IPO at ~4.6% of total FY20 AUM (~26x P/FY20 earnings) with ~10% FY20 RoE. Peer comons are NAM India which is trading at ~7.4% of FY20 AUM (~37.3x P/FY20 earnings) and HDFC AMC which is trading at ~8.2% of FY20 AUM (~37.5x P/FY20 earnings). Considering relatively weaker return ratios and unfavorable AUM mix, UTI AMC is expected to be at a discount to its peers. Hence, the valuation discount by UTI AMC IPO is justified and remains attractive considering gradual improvement in cost parameters

Canara Bank Securities Research Team said,

UTI AMC IPO at higher price band is attractive as Market cap to AUM percentage stands at 5.26%, which is lowest among listed peers.
HDFC AMC’s and Nippon Life AMC’s Market Cap/AUM percentage stands at 12.57% and 8.54% respectively. In addition, UTI AMC’s PE stands at 25.73x FY20 as com-pared to HDFC AMC’s and Nippon Life AMC’s PE of 35.43x and 37.06x FY20 respectively. Hence, we rec-ommend to Subscribe UTI AMC IPO for listing as well as long term gains.

83

IPOs and Rights Issues / Re: CAMS IPO Reviews + Recommendations

« Last post by resh on September 21, 2020, 12:09:48 PM »

Sharad Avasthi of SPA Securities said,

At the IPO price of 1230 the price discounts FY20 EPS at ~35x while the p/b multiple stands at ~11x. While valuations seem to price all
that CAMS has achieved over the last decade in sync with the mutual fund industry, the advent of technology and increased speed of
technology absorption due to COVID may not be very beneficial for the company. Future outlook will largely depend on the increase in
AIF and insurance repository business improvement, which look very promising for the long term hence we advice investors to apply with a long term horizon.

Anand Rathi Analyst Anindita Chaudhury said

At upper price band of ₹1,230, the IPO is priced at 34.6 times FY20 EPS and 36.7 times FY21 EPS (annualized). While currently there is no listed player to compare, we believe the IPO is reasonably priced considering the latest numbers. We remain optimistic on growth prospects of CAMS, given its leadership position in the market, scalable technology with robust infrastructure, strategic growth initiatives, high entry barriers in the industry and gradual growth in AAUM in the coming periods. We recommend Subscribe to this IPO.

Geojit Analyst said,

At the upper price band of Rs.1,230, CAMS is available at a P/E of 34.6x and when we annualize Q1FY21 numbers we arrive at a P/E of 36.7x for FY21E on a post issue basis. Given that there is no listed peer to compare, and based on stable financial, we assign a subscribe rating on this IPO

84

IPOs and Rights Issues / CAMS IPO Reviews + Recommendations

« Last post by resh on September 19, 2020, 11:12:54 AM »

Computer Age Management Services - CAMS IPO is opening on Monday Sep-21st and closes on Sept-23rd.
Price Band ₹1,229 – ₹1,230 per share
Retail Portion: Not less than 6,322,435 Equity Shares - 35%
NOTE The issue is OFS by existing Shareholders and hence NO MONEY will flow into the COMPANY.

Here are the Research Reviews & Recommendations

Devesh Agarwal of IIFL Securities said,

CAMS is the dominant player in a two-player MF RTA industry, with 70% market share. It services 4 of the top-5 MFs in the country. Its revenue growth is directly linked to the AUM growth of its partner MFs and it is, hence, a proxy play on the MF industry. The opportunity landscape for the MF business in India is huge, given low penetration and financialisation of household (HH) savings, thus providing long-term visibility. The IPO valuation is at discount to the nearest comparables (AMCs, Depositories and Exchanges) and has scope to re-rate.

SMC has the following views,

Considering the valuation at upper price band of Rs.1230, EPS and P/E of FY2020 are Rs. 35.55 and 34.60 multiple respectively and at a lower price band of Rs. 1229, P/E multiple is 34.57; at upper price band of Rs.1230 , book value and P/B of FY2020 are Rs.110.65 and 11.12 multiple respectively and at a lower price band of Rs. 1229, P/B multiple is 11.11. No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital.

DealMoney Securities Ltd has the following recommendation,

CAMS is India's largest registrar and transfer agent of mutual funds with an aggregate market share of approximately 70% based on mutual fund AAUM managed by its clients and serviced by the company during July 2020. CAMS has  Leadership position, integrated business model and PAN India presence.  Based on FY20 consolidated numbers, the issue is priced at a P/E of 34.6x. at diluted EPS of FY20 Which is priced fairly therefore we recommend SUBSCRIBE over the issue for a long term perspective

JM Financial, HDFC Securities, Axis Securities, ICICI Direct have no recommendation for retail investors.

85

Experian-Equifax / Experian's View on COVID Impact

« Last post by resh on September 19, 2020, 11:02:47 AM »

Experian India is a leading credit-bureau in India and highlighted that retail unsecured lending is more concentrated in top-cities and nearly 60% of the loans were classified as Red-zone (i.e. higher Covid cases & longer lockdowns). While lockdowns are being relaxed, a reasonable part of lending and collections is still done physically, rather than digitally, hence it would reflect in growth and asset quality for lenders.

Mr. Sathya Kalyanasundaram echoed the high level of moratoriums across products and divergence across the lenders. He believes that this underlines the client-selection as well as capabilities to enhance analytics and build collection-machinery beyond credit-bureau scores. Interestingly, he pointed that borrower behavior indicates that borrowers who can repay, will actually pay-back all loans.

He highlighted that over the past month there has been a reasonable uptick in demand for consumer goods/ personal loans. Experian India's base case is that by October 2020, demand should revert to normalised levels. However, lenders are being very cautious on fresh lending so approval rates on applications are likely to be much lower. In the personal loan segment, he believes that ticket size of loans will fall as borrowers will also be more cautious and unlikely to borrow purely for lifestyle related loans

86

MidCap Stock Picks / Edelweiss - MidCap + Small Cap Top Picks

« Last post by chetan on September 19, 2020, 10:47:58 AM »

Here is the List of Top MidCap & Small Cap Picks from Edelweiss Research after the 25% compulsory holding rule from SEBI in Midcap & Smallcap Stocks for MultiCap Mutual Funds.

NOTE: Please Consult your Registered Investment Advisor Before doing any Investments

Godrej Properties
Coromandel International
AU Small Finance Bank
Jindal Steel & Power
Aarti Industries
Tata Power Co
AIA Engineering
Mahindra & Mahindra Financial Services
Crompton Greaves Consumer Electrical
IndiaMART
Exide Industries
Crisil
JK Cement
Mahanagar Gas
Persistent Systems
Galaxy Surfactants Ltd
Indian Energy Exchange
Quess Corp
Cyient
Dhanuka Agritech
TCI Express
eClerx Services
Just Dial
TCNS
Mahindra Logistics
Prince Pipes
Polyplex Corporation
Vesuvius India
Greaves Cotton
Heritage Foods Limited

87

SmallCap Stocks India / Aavas Financiers + Music Broadcast

« Last post by komal on September 15, 2020, 12:22:51 PM »

Ambit Capital's Note on Aavas Financiers

During FY16-20, both real estate & housing finance companies have been under severe stress due to events like RERA, Demon, IL&FS and an economic slowdown. During the same period Aavas financiers, a formidable housing finance player has seen its market share more than double from ~1.4% to ~2.9% in the affordable segment. This has been on the back of 47% CAGR in AUM versus a 23% growth in affordable housing finance industry, while overall housing finance industry growth has been even lower at just 14%.

and on Music Broadcast Ltd  (RadioCity)
Music Broadcast has adopted a disciplined approach of profitable growth with focus on bottom-line. This has kept them away from poor capital allocation decisions like some of the peers. The company is profit leader in the industry and in tough times this allows it to gain over peers

88

MidCap Stock Picks / Britannia Industries - Good Days

« Last post by komal on September 15, 2020, 12:20:54 PM »

Here is an excerpt from Ambit Capital on Britannia Industries Ltd

Many would characterise the last few years as economically challenging years with a series of disruptive events such as demonetisation, GST reforms and now Covid to name a few. However the biscuit manufacturer of choice, Britannia Industries has been marching to a different tune. Biscuit market share has increased to 36%, a gain of 400bps in the last 3 years itself. During this period the gap between Britannia and its peer set has considerably widened and that too with good reason.

89

SmallCap Stocks India / Top 5 Buy Ideas

« Last post by komal on September 15, 2020, 12:12:04 PM »

Here are the Top 5 high conviction smallcap ideas which Motilal Oswal Securities expect to do well in the short to medium term

The stocks are fundamentally sound with good growth potential

One can buy this basket of 5 stocks with a potential upside of 10-15% over a time frame of 1-3 months and keep a stop loss of 7-8% on the overall basket

Birla Corp
IEX
Teame Lease
Essel Propack
KEI Industries

90

MidCap Stock Picks / Top 5 Picks - Motilal

« Last post by komal on September 15, 2020, 12:10:39 PM »

Motilal Oswal's Top 5 MidCap stock Picks.

The stocks are fundamentally sound with good growth potential.

One can buy this basket of 5 stocks with a potential upside of 10-15% over a time frame of 1-3 months and keep a stop loss of 7-8% on the overall basket.

Aditya Birla FAshion & Retail
JK Cements
Tata Power
Ashok Leyland
Dr Lal Path Labs

Disclaimer: Please consult your RIA before making any decision