Equity Research

4 MidCap Stocks Not Yet Rallied – Hold

April 26, 2014April 18, 20202 min read

The 4 Mid Caps which are beaten down but still have good operating ROEs and hold potential of an earnings recovery 12 months out. The stocks have been beaten down over the last 4 years but incrementally are reducing debt and sales growth has been positive. EPS revisions over the last 2 quarters too seem to have stabilized albeit at a lower level. Free cash flow is also positive implying scope to de-lever from underlying operations.

Indian Hotels Peak supply in the domestic market in our view is over and a large part of the company’s capex is coming to an end. Any improvement (more…)

Equity Research

Sadbhav Engineering – On a Strong Footing

April 25, 20141 min read

Sadbhav’s overall operational projects portfolio could potentially have an equity IRR of about 16% and P/B valuation of about 2X. This is despite the near-term traffic / toll collection disappointments witnessed in the projects, attributed to the broad economic slowdown, and some one-off issues (in Aurangabad-Jalna project).

Sadbhav’s under-construction projects require an incremental equity commitment of Rs 3.8-4 bn, to be infused over the next (more…)

Equity Research

IndusInd Bank Performance above Expectations

April 17, 2014April 18, 20202 min read

Indusind bank reported a strong growth of 29% YoY in PAT, driven by NII growth of 18% YoY and slower growth of 20% YoY in operating cost. Non-interest income growth was strong at 42% YoY, driven by core fee income, forex income and Investment banking fees.

Loan book grows healthy at 24% driven by working capital loans with the corporate loan book, reporting a growth of 38% YoY. CASA improves (more…)

Equity Research

Implications of Sun Pharma’s Acquisition of Ranbaxy Labs

April 7, 2014April 18, 20201 min read

India’s Leading Generic Drug maker, Sun Pharma announced the $4.0 Bn acquisition of Troubled Ranbaxy Labs from Daiichi Sankyo of Japan. The all share swap merger will give 0.8 Shares of Sun Pharma for 1 Share of Ranbaxy after all the approvals.

Sun’s management has a successful track record of turning around distressed (more…)

Equity Research

Motherson Sumi – Review – Long Term BUY on Correction

April 2, 2014April 3, 20142 min read

Motherson Sumi Systems Ltd is a a joint venture of Sumitomo Wiring Systems of Japan and Motherson group of India, is a leading manufacturer of electrical and plastic parts for automobiles globally. It is a market leader for wiring harness in India with over65% share. In Europe it is one of the top three manufacturers for external rear view mirrors, car bumpers and dashboard etc. Currently India contributes 17% of revenue and bulk of its profit.

Motherson is expected to register a 20% CAGR in sales through FY20. Key drivers we see are: an increase in the value of plastic and electrical parts per car (more…)

Equity Research

Which Industrial / Cement/ Auto / Financial Stocks to Own to Play Economic Recovery ?

April 1, 2014April 2, 20142 min read

With cyclical stocks in India having rallied in anticipation of an election induced acceleration in economic momentum and sentiment in the wake of Opinion Polls projecting most progressive Global Politician Narendra Modi Ji as the Prime Minister of India, we look at blue sky valuations for domestic cylicals. We use EV/Sales as our benchmark for manufacturing companies and P/BV for financials, inherently assuming that the profitability cycle mirrors the revenue cycle.

Industrial / Auto / Cement Stocks – Only 4 companies are trading (more…)

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