Depend on success of relationships with customers: The company has developed strong and long-term relationships with various multinational corporations that has helped it expand its product offerings and geographic reach. Accordingly, it is dependent on its arrangements with such multinational corporations and its business depends on the continuity of its relationship with these customers. It has established relationships with its customers many of whom have been associated with the company for over 10 years. There can be no assurance that its significant customers in the past will continue to place similar orders with it in the future. A significant decrease in business from any such key customer, whether due to circumstances specific to such customer or adverse market conditions affecting the agro-chemical industry or the economic environment generally, such as the COVID-19 pandemic, may materially and adversely affect its business, results of operations and financial condition.
Derive significant portion of revenues from operations from limited number of markets: The company has historically derived a significant portion of its revenues from operations from a limited number of markets, namely, Australia, Europe and Asia. In Fiscals 2019, 2020 and 2021, it derived 10.19%, 30.48% and 35.41% of its revenues from sale of products from business in Australia, 22.88%, 21.24% and 14.65% of its revenues from sale of products from business in Europe, and 60.33%,43.54% and 46.33% of its revenues from sale of products from business in Asia (including India), respectively while it derived 10.51%, 5.85% and 4.01% of its revenues from sale of products from business in Asia (excluding India). Its revenues from these markets may decline as a result of increased competition, regulatory action, pricing pressures, fluctuations in the demand for or supply of its products or services, or the outbreak of an infectious disease, such as the COVID-19 pandemic. Its failure to effectively react to these situations or to successfully introduce new products or services in these markets could adversely affect its business, prospects, results of operations and financial condition.
Outlook
Incorporated in 1984, India Pesticides (IPL) is one of the leading agrochemicals manufacturers in India. The company operates in two business verticals; Technicals and Formulations. It manufactures herbicide, fungicide Technicals, and Active Pharmaceuticals Ingredients (APIs). It is the sole Indian manufacturer of several Technicals i.e. Folpet, Thiocarbamate, and Herbicide. The company also manufactures 30 plus formulations of insecticides, fungicides, and herbicides. It currently has two manufacturing facilities located at UPSIDC Industrial Area at Dewa Road, Lucknow and Sandila, Hardoi in Uttar Pradesh, India that are spread across over 25 acres. It has demonstrated consistent growth in terms of revenues and profitability over the last three Fiscals. It is assisted by experienced team of personnel including an organic chemist, an agronomist, a project advisor, and advisors on environmental and toxicological studies. On the concern side, the company relies and will continue to rely to a significant extent on the relationships it has with its distributors and dealers. It continuously seek to increase the penetration of its products by appointing new distributors and dealers targeted at different customer groups and geographies. Besides, any changes in Government policies relating to the agriculture sector such as the reduction of government expenditure towards agriculture, the withdrawal of or changes in incentives and subsidies provided to farmers, export restrictions on crops, adverse changes in commodity prices or minimum support prices could affect the ability of farmers to spend on crop protection products, which in turn could adversely affect its business and results of operations.
Derive significant portion of revenues from operations from limited number of markets: The company has historically derived a significant portion of its revenues from operations from a limited number of markets, namely, Australia, Europe and Asia. In Fiscals 2019, 2020 and 2021, it derived 10.19%, 30.48% and 35.41% of its revenues from sale of products from business in Australia, 22.88%, 21.24% and 14.65% of its revenues from sale of products from business in Europe, and 60.33%,43.54% and 46.33% of its revenues from sale of products from business in Asia (including India), respectively while it derived 10.51%, 5.85% and 4.01% of its revenues from sale of products from business in Asia (excluding India). Its revenues from these markets may decline as a result of increased competition, regulatory action, pricing pressures, fluctuations in the demand for or supply of its products or services, or the outbreak of an infectious disease, such as the COVID-19 pandemic. Its failure to effectively react to these situations or to successfully introduce new products or services in these markets could adversely affect its business, prospects, results of operations and financial condition.
Outlook
Incorporated in 1984, India Pesticides (IPL) is one of the leading agrochemicals manufacturers in India. The company operates in two business verticals; Technicals and Formulations. It manufactures herbicide, fungicide Technicals, and Active Pharmaceuticals Ingredients (APIs). It is the sole Indian manufacturer of several Technicals i.e. Folpet, Thiocarbamate, and Herbicide. The company also manufactures 30 plus formulations of insecticides, fungicides, and herbicides. It currently has two manufacturing facilities located at UPSIDC Industrial Area at Dewa Road, Lucknow and Sandila, Hardoi in Uttar Pradesh, India that are spread across over 25 acres. It has demonstrated consistent growth in terms of revenues and profitability over the last three Fiscals. It is assisted by experienced team of personnel including an organic chemist, an agronomist, a project advisor, and advisors on environmental and toxicological studies. On the concern side, the company relies and will continue to rely to a significant extent on the relationships it has with its distributors and dealers. It continuously seek to increase the penetration of its products by appointing new distributors and dealers targeted at different customer groups and geographies. Besides, any changes in Government policies relating to the agriculture sector such as the reduction of government expenditure towards agriculture, the withdrawal of or changes in incentives and subsidies provided to farmers, export restrictions on crops, adverse changes in commodity prices or minimum support prices could affect the ability of farmers to spend on crop protection products, which in turn could adversely affect its business and results of operations.
The issue has been offered in a price band of Rs 290-296 per equity share. The aggregate size of the offer is around Rs 799.99 crore to Rs 816.55 crore based on lower and upper price band respectively. On the performance front, total income increased by 33.82% from Rs 4,897.27 million in Fiscal 2020 to Rs 6,553.77 million in Fiscal 2021. It has recorded a profit for the period of Rs 1,345.11 million in Fiscal 2021 compared to Rs 707.99 million in Fiscal 2020. The company intends to continue to expand its product portfolio by manufacturing complex off-patented Technicals. It also intends to continue to leverage its R&D capabilities and manufacturing expertise and focus its investment in process innovation. In particular, it plans to continue to focus on investing in automation, modern technology and equipment to continually improve the processes to manufacture its products and address changing customer preferences.
ABFRL
Highlights from management commentary
* The COVID impact has been lower in smaller stores v/s large formats, high streets v/s malls, and lower tier towns v/s metros; hence, Pantaloons has seen a higher revenue impact.
* Recovery is expected to commence from 2QFY22 if the COVID situation is controlled. Moreover, the spurt in consumer demand, coupled with a better competitive position against smaller peers, should translate to a revenue scale better than pre-COVID levels.
* It should be able to retain a portion of the cost savings permanently, and the EBITDA margin should improve once revenue recovers to normalized levels.
* Balance sheet strength would be maintained, and there is strong flexibility to manage working capital. Hence, even once revenue recovers, it should be contained along with the leverage.
Highlights from management commentary
* The COVID impact has been lower in smaller stores v/s large formats, high streets v/s malls, and lower tier towns v/s metros; hence, Pantaloons has seen a higher revenue impact.
* Recovery is expected to commence from 2QFY22 if the COVID situation is controlled. Moreover, the spurt in consumer demand, coupled with a better competitive position against smaller peers, should translate to a revenue scale better than pre-COVID levels.
* It should be able to retain a portion of the cost savings permanently, and the EBITDA margin should improve once revenue recovers to normalized levels.
* Balance sheet strength would be maintained, and there is strong flexibility to manage working capital. Hence, even once revenue recovers, it should be contained along with the leverage.
Divi
Highlights from the management commentary
* The court judgment in favor of DIVI would enable handing over of the remaining land and kick-starting the Kakinada project. Capex in this project is expected to be INR6b.
* With respect to Molnupiravir, DIVI has already commercialized one stream of production. It has a second stream of production under validation and is in the process of setting up a third production stream.
* DIVI has about 16 products under various phases of development, where the Formulation market size is ~USD10b and is expected to go off-patent over CY23-25.
* The Generics-to-custom synthesis share in sales was ~60:40 in 4QFY21.
* New brownfield DC and DCV SEZ units and debottlenecking/backward integration programs are fully operational now, thereby reducing the dependence for KSM on an external source. This has delivered benefits recently, given the ongoing pandemic situation.
Highlights from the management commentary
* The court judgment in favor of DIVI would enable handing over of the remaining land and kick-starting the Kakinada project. Capex in this project is expected to be INR6b.
* With respect to Molnupiravir, DIVI has already commercialized one stream of production. It has a second stream of production under validation and is in the process of setting up a third production stream.
* DIVI has about 16 products under various phases of development, where the Formulation market size is ~USD10b and is expected to go off-patent over CY23-25.
* The Generics-to-custom synthesis share in sales was ~60:40 in 4QFY21.
* New brownfield DC and DCV SEZ units and debottlenecking/backward integration programs are fully operational now, thereby reducing the dependence for KSM on an external source. This has delivered benefits recently, given the ongoing pandemic situation.
M&M
Highlights from the management commentary
* The Tractor industry is expected to grow in the low single-digits in FY22, with MM focused on gaining share. After a weak Apr-May’21, it is seeing a change in sentiment in the last 4-5 days as land preparation and the sowing period nears. All the agronomic parameters are extremely strong.
* Both the Auto and Farm business commitments for CY25 are: a) 15-20% revenue/EPS CAGR, b) over 18% RoCE, c) leadership in the Core SUV segment, with a strong EV play, d) strengthen its numero uno position in LCVs less than 3.5t, and e) growth in market share in Tractors and quantum growth in the Farm Machinery business. .
* Supply chain disruption is expected to ease from Jul-Aug'21. It doesn’t expect shortages to impact launch of the XUV700 beyond Jul’21.
* Capital deployment over FY22-24: Capex of INR120b (INR90b/INR30b in Autos/Tractors v/s INR110b for the last three years) and investments of INR50b (INR15b in Auto and Tractor subsidiaries and INR35b in group companies; v/s INR65b for the last three years).
* It expects the losses in international Auto and Farm subsidiaries to reduce to INR3b in FY22E and near break-even in FY23E from INR23.6b in FY21.
Highlights from the management commentary
* The Tractor industry is expected to grow in the low single-digits in FY22, with MM focused on gaining share. After a weak Apr-May’21, it is seeing a change in sentiment in the last 4-5 days as land preparation and the sowing period nears. All the agronomic parameters are extremely strong.
* Both the Auto and Farm business commitments for CY25 are: a) 15-20% revenue/EPS CAGR, b) over 18% RoCE, c) leadership in the Core SUV segment, with a strong EV play, d) strengthen its numero uno position in LCVs less than 3.5t, and e) growth in market share in Tractors and quantum growth in the Farm Machinery business. .
* Supply chain disruption is expected to ease from Jul-Aug'21. It doesn’t expect shortages to impact launch of the XUV700 beyond Jul’21.
* Capital deployment over FY22-24: Capex of INR120b (INR90b/INR30b in Autos/Tractors v/s INR110b for the last three years) and investments of INR50b (INR15b in Auto and Tractor subsidiaries and INR35b in group companies; v/s INR65b for the last three years).
* It expects the losses in international Auto and Farm subsidiaries to reduce to INR3b in FY22E and near break-even in FY23E from INR23.6b in FY21.
From ICICI SEC
Store expansion is the key; initiate with BUY
Kalyan Jewellers India (Kalyan) is a pan-India jeweller with focus on the strengths of: 1) store expansion, 2) consistent investment in brand, 3) hyperlocal strategy, and 4) My Kalyan network differentiation (in our view). Accelerated industry formalisation and new store addition of 15-20 per annum are medium-term revenue growth drivers. We forecast 20% and 36% CAGR in revenues and EBIDTA respectively, over FY21E-FY23E. We initiate coverage with a BUY rating and DCFbased target price of Rs95 per share. Key risks are (1) potentially higher competitive intensity in core South India markets, (2) execution risks in expansion, and (3) delayed economic recovery in Middle East.
Focus on expanding showroom network:
Between 1 st Apr’15 and 30th Jun’20, Kalyan Jewellers (Kalyan) opened 60 new showrooms (net) at an average rate of ~12 showrooms per year across multiple regions. We believe the company will continue to drive showroom expansion to capture the opportunity to gain market shares from unorganised players. The scope for nationwide expansion is seen from the fact that Titan has as many as 353 stores (vs Kalyan’s 107) across India as at FY21-end.
Creation of competitive advantages:
Kalyan’s competitive advantages are: 1) strong brand {Kalyan Jewellers}, 2) pan-India retail presence with 107 showrooms across India, 3) hyperlocal strategy to cater to a wide range of geographies and customer segments, and 3) unique My Kalyan centre to drive footfalls.
Growth strategies:
Key revenue growth strategies: 1) expansion of showroom network, and 2) expansion of My Kalyan network to gain market shares from unorganised players. Organised jewellery industry has increased its share from 6% of the market in 2007 to ~30% in 2020 and will continue to garner further gains from unorganised players on the back of tough regulatory and operating (access to credit) environments. We forecast EBITDA margin to expand to 8.7% in FY23E from 7.5% in FY20 driven by: 1) improvement in studded ratio, 2) operating leverage in adspends and other overheads.
Initiate with BUY:
We model revenue and EBITDA CAGRs of 20% and 36% over FY21E-FY23E. We initiate coverage on the stock with a BUY rating and DCF-based target price of Rs95. Key risks: delay in showroom expansion and potentially higher competitive intensity in core South India markets.
Store expansion is the key; initiate with BUY
Kalyan Jewellers India (Kalyan) is a pan-India jeweller with focus on the strengths of: 1) store expansion, 2) consistent investment in brand, 3) hyperlocal strategy, and 4) My Kalyan network differentiation (in our view). Accelerated industry formalisation and new store addition of 15-20 per annum are medium-term revenue growth drivers. We forecast 20% and 36% CAGR in revenues and EBIDTA respectively, over FY21E-FY23E. We initiate coverage with a BUY rating and DCFbased target price of Rs95 per share. Key risks are (1) potentially higher competitive intensity in core South India markets, (2) execution risks in expansion, and (3) delayed economic recovery in Middle East.
Focus on expanding showroom network:
Between 1 st Apr’15 and 30th Jun’20, Kalyan Jewellers (Kalyan) opened 60 new showrooms (net) at an average rate of ~12 showrooms per year across multiple regions. We believe the company will continue to drive showroom expansion to capture the opportunity to gain market shares from unorganised players. The scope for nationwide expansion is seen from the fact that Titan has as many as 353 stores (vs Kalyan’s 107) across India as at FY21-end.
Creation of competitive advantages:
Kalyan’s competitive advantages are: 1) strong brand {Kalyan Jewellers}, 2) pan-India retail presence with 107 showrooms across India, 3) hyperlocal strategy to cater to a wide range of geographies and customer segments, and 3) unique My Kalyan centre to drive footfalls.
Growth strategies:
Key revenue growth strategies: 1) expansion of showroom network, and 2) expansion of My Kalyan network to gain market shares from unorganised players. Organised jewellery industry has increased its share from 6% of the market in 2007 to ~30% in 2020 and will continue to garner further gains from unorganised players on the back of tough regulatory and operating (access to credit) environments. We forecast EBITDA margin to expand to 8.7% in FY23E from 7.5% in FY20 driven by: 1) improvement in studded ratio, 2) operating leverage in adspends and other overheads.
Initiate with BUY:
We model revenue and EBITDA CAGRs of 20% and 36% over FY21E-FY23E. We initiate coverage on the stock with a BUY rating and DCF-based target price of Rs95. Key risks: delay in showroom expansion and potentially higher competitive intensity in core South India markets.
Suven pharma
Key conference call takeaways
* Second Covid wave impact higher than last time o 15-20% personnel affected directly or indirectly
* Logistic challenges and container availability was impacted
* Some RM prices went up 4-5x as oxygen availability was impacted
* Situation is expected to improve, going ahead, with better traction unless a third Covid wave disrupts operations
* Gross margins should not be compared on a quarterly basis but on annual basis
* Manufacturing costs higher in Q4 due to product mix
* Planned capex of | 600 crore delayed, to start from Q2FY22
* Guidance for FY22: topline growth of 10-15%
* CRAMS Pharma: 10-15%, CRAMS specialty chemicals: 5%, formulations – 10-20%
* Margins to be maintained between 35% and 40% minimum
* Products: Six approved, five commercialised as of FY21, one ANDA commercialised in Q1FY22
* six more filed with some to be approved in FY22, to file 5-6 in FY22.
Key conference call takeaways
* Second Covid wave impact higher than last time o 15-20% personnel affected directly or indirectly
* Logistic challenges and container availability was impacted
* Some RM prices went up 4-5x as oxygen availability was impacted
* Situation is expected to improve, going ahead, with better traction unless a third Covid wave disrupts operations
* Gross margins should not be compared on a quarterly basis but on annual basis
* Manufacturing costs higher in Q4 due to product mix
* Planned capex of | 600 crore delayed, to start from Q2FY22
* Guidance for FY22: topline growth of 10-15%
* CRAMS Pharma: 10-15%, CRAMS specialty chemicals: 5%, formulations – 10-20%
* Margins to be maintained between 35% and 40% minimum
* Products: Six approved, five commercialised as of FY21, one ANDA commercialised in Q1FY22
* six more filed with some to be approved in FY22, to file 5-6 in FY22.
Strides
Highlights from the management commentary
* With US sales of USD215m in FY21, STR remains confident of achieving annual sales of USD400m over the next three years. There could be nearterm hiccups on account of the ongoing pandemic.
* Stelis Biopharma (Stelis) has started validation of batches, which should conclude by Jun’21. It expects to launch the Sputnik V vaccine by Oct’21. Typically the validation-to-commercial batch scale is 1:10x.
* The funds raised at the Stelis level (USD125m) would be utilized for last mile capex related to the CDMO business, including setting up a 6KL mammalian block, and ramping up of process development and other technical capabilities. The usage of funds would be completed in FY22.
* STR holds 33% stake in Stelis post completion of the Series C funding.
* It witnessed a considerable QoQ increase in opex (INR1.3b) in 4QFY21 due to rise in freight cost and supply disruption on account of COVID-19.
Highlights from the management commentary
* With US sales of USD215m in FY21, STR remains confident of achieving annual sales of USD400m over the next three years. There could be nearterm hiccups on account of the ongoing pandemic.
* Stelis Biopharma (Stelis) has started validation of batches, which should conclude by Jun’21. It expects to launch the Sputnik V vaccine by Oct’21. Typically the validation-to-commercial batch scale is 1:10x.
* The funds raised at the Stelis level (USD125m) would be utilized for last mile capex related to the CDMO business, including setting up a 6KL mammalian block, and ramping up of process development and other technical capabilities. The usage of funds would be completed in FY22.
* STR holds 33% stake in Stelis post completion of the Series C funding.
* It witnessed a considerable QoQ increase in opex (INR1.3b) in 4QFY21 due to rise in freight cost and supply disruption on account of COVID-19.
Cadila healthcare
Highlights from the management commentary
* CDH expects NDA filing of Saroglitazar Mg for PBC indication in the US by CY23-end.
* It submitted Phase 2b application of Saroglitazar Mg to the USFDA for NASH indication (Non-Alcoholic Steatohepatitis).
* With respect to Desidustat, CDH has completed patient enrollment for Phase III trials in India for treatment of anemia in patients with Chronic Kidney Disease (CKD).
* One of the 505b2 products has a PDUFA goal date of Sep’21.
* The management expects to launch 30-35 products in the US in FY22.
Highlights from the management commentary
* CDH expects NDA filing of Saroglitazar Mg for PBC indication in the US by CY23-end.
* It submitted Phase 2b application of Saroglitazar Mg to the USFDA for NASH indication (Non-Alcoholic Steatohepatitis).
* With respect to Desidustat, CDH has completed patient enrollment for Phase III trials in India for treatment of anemia in patients with Chronic Kidney Disease (CKD).
* One of the 505b2 products has a PDUFA goal date of Sep’21.
* The management expects to launch 30-35 products in the US in FY22.
Page industries
Highlights from the management interaction
* A 4-5% price increase was taken in 4QFY21, which is slightly higher than usual, to combat the steep increase in yarn prices.
* It expects revenue in 1QFY21 to be affected by the ongoing lockdowns as most stores remain closed.
* The management has maintained its 21-22% EBITDA margin guidance.
* The company had 930 EBOs at the end of FY21, with ~180 new additions, including 38 exclusive outlets for Jockey Junior.
* Inventory of finished goods was much lower than usual due to strongerthan-expected demand in 4QFY21. Hence, end of period inventory days of 71 in FY21 may not be sustainable.
Highlights from the management interaction
* A 4-5% price increase was taken in 4QFY21, which is slightly higher than usual, to combat the steep increase in yarn prices.
* It expects revenue in 1QFY21 to be affected by the ongoing lockdowns as most stores remain closed.
* The management has maintained its 21-22% EBITDA margin guidance.
* The company had 930 EBOs at the end of FY21, with ~180 new additions, including 38 exclusive outlets for Jockey Junior.
* Inventory of finished goods was much lower than usual due to strongerthan-expected demand in 4QFY21. Hence, end of period inventory days of 71 in FY21 may not be sustainable.
Eicher motors
Highlights from management commentary
* RE demand remains strong on the back of a strong order book, expected pent-up demand, and a surge in export numbers. It has 2–3 months of order backlog, which would be catered to once the lockdowns are lifted. It expects to achieve 80k units/month in 2HFY22.
* RE has a very exciting pipeline of new products, with FY22 having the highest ever number of model launches.
* RE has reduced rhodium consumption by 66%; however, the benefit of this would be reflected in the coming quarters.
* RE added a total of 535 stores, including main stores (>100 stores) and studio stores (>430 stores), in FY21, taking the total number of outlets to 2,056 across 1,750 cities (from 1200 cities). Network expansion in India is largely complete, except in one state.
Highlights from management commentary
* RE demand remains strong on the back of a strong order book, expected pent-up demand, and a surge in export numbers. It has 2–3 months of order backlog, which would be catered to once the lockdowns are lifted. It expects to achieve 80k units/month in 2HFY22.
* RE has a very exciting pipeline of new products, with FY22 having the highest ever number of model launches.
* RE has reduced rhodium consumption by 66%; however, the benefit of this would be reflected in the coming quarters.
* RE added a total of 535 stores, including main stores (>100 stores) and studio stores (>430 stores), in FY21, taking the total number of outlets to 2,056 across 1,750 cities (from 1200 cities). Network expansion in India is largely complete, except in one state.
Sun Pharma
Highlights from management commentary
* Global Specialty sales stood at USD139m for 4QFY21 v/s USD143m QoQ. The QoQ drop was attributable to increased buying at the end of the calendar year and the adverse impact of the pandemic situation.
* SUNP garnered global sales of USD143m from Illumya, up 51% YoY.
* SUNP remains on track to drive Illumya sales using a) the continuous involvement of opinion leaders, b) an expanding prescriber base, and c) better traction from existing patients.
* SUNP is building a Biosimilar portfolio for launch over CY28–30. We are yet to see clarity on the amount of investment needed for product development as well as building capacity.
Highlights from management commentary
* Global Specialty sales stood at USD139m for 4QFY21 v/s USD143m QoQ. The QoQ drop was attributable to increased buying at the end of the calendar year and the adverse impact of the pandemic situation.
* SUNP garnered global sales of USD143m from Illumya, up 51% YoY.
* SUNP remains on track to drive Illumya sales using a) the continuous involvement of opinion leaders, b) an expanding prescriber base, and c) better traction from existing patients.
* SUNP is building a Biosimilar portfolio for launch over CY28–30. We are yet to see clarity on the amount of investment needed for product development as well as building capacity.
ITC Vivel as part of its brand philosophy of Ab Samjhauta Nahin (No more compromises) introduced ‘Know Your Rights’ at college level across India, with the objective to change the collective consciousness of the youth through an increased perceptiveness on gender-sensitive issues; enabling gender-responsive actions at a personal level and building confidence through the knowledge of rights.
TVS Motor Company has launched its iQube Electric scooter. TVS iQube Electric is a green and connected, fun to ride urban scooter powered by an advanced electric drivetrain and next-gen TVS SmartXonnect platform. TVS iQube Electric is a blend of an advanced electric drivetrain and the next-gen TVS SmartXonnect platform.
TVS iQube Electric ecosystem is built around digital platforms that enable the customers to have the convenience of booking and paying for the vehicle online, along with getting assured contactless deliveries. TVS iQube Electric is equipped with a 4.4 kW electric motor to deliver high power and efficiency with no transmission loss. The scooter has a max speed of 78 kmph and traverses 75 kms with a full charge.
TVS iQube Electric ecosystem is built around digital platforms that enable the customers to have the convenience of booking and paying for the vehicle online, along with getting assured contactless deliveries. TVS iQube Electric is equipped with a 4.4 kW electric motor to deliver high power and efficiency with no transmission loss. The scooter has a max speed of 78 kmph and traverses 75 kms with a full charge.
Result Highlights
NMDC Ltd.: Net Revenue at Rs. 6847.6 crore, Rs. 3187.3 crore YoY, Rs. 4355.1 crore QoQ (+114.8% YoY, +57.2% QoQ). EBITDA at Rs. 4240.3 crore, Rs. 1487.7 crore YoY, Rs. 2766.8 crore QoQ (+185% YoY, +53.3% QoQ). EBITDA Margin at 61.9%, +1525 bps YoY and +-161 bps QoQ. Net Profit at Rs. 2834.7 crore, Rs. 316.2 crore YoY, Rs. 2158.2 crore QoQ (+796.6% YoY, +31.3% QoQ).
Bharat Electronics Ltd.: Net Revenue at Rs. 6917.5 crore, Rs. 5816.8 crore YoY, Rs. 2320.4 crore QoQ (+18.9% YoY, +198.1% QoQ). EBITDA at Rs. 1980.9 crore, Rs. 1494.0 crore YoY, Rs. 456.2 crore QoQ (+32.6% YoY, +334.2% QoQ). EBITDA Margin at 28.6%, +295 bps YoY and +897 bps QoQ. Net Profit at Rs. 1368.2 crore, Rs. 1047.0 crore YoY, Rs. 278.5 crore QoQ (+30.7% YoY, +391.3% QoQ). Ashika
ITI Ltd.: Net Revenue at Rs. 1266.3 crore, Rs. 650.5 crore YoY, Rs. 496.9 crore QoQ (+94.7% YoY, +154.9% QoQ). EBITDA at Rs. 179.2 crore, Rs. 69.5 crore YoY, Rs. 9.4 crore QoQ (+158% YoY, +1804.6% QoQ). EBITDA Margin at 14.2%, +347 bps YoY and +1226 bps QoQ. Net Profit at Rs. 201.3 crore, Rs. 33.1 crore YoY, Rs. -31.8 crore QoQ.
Avanti Feeds Ltd.: Net Revenue at Rs. 1098.1 crore, Rs. 1034.8 crore YoY, Rs. 915.4 crore QoQ (+6.1% YoY, +20% QoQ). EBITDA at Rs. 85.4 crore, Rs. 124.6 crore YoY, Rs. 92.2 crore QoQ (-31.5% YoY, -7.4% QoQ). EBITDA Margin at 7.8%, -426 bps YoY and -229 bps QoQ. Net Profit at Rs. 70.2 crore, Rs. 98.7 crore YoY, Rs. 86.2 crore QoQ (-28.9% YoY, -18.6% QoQ). Ashika
Sobha Ltd.: Net Revenue at Rs. 553.4 crore, Rs. 910.1 crore YoY, Rs. 684.4 crore QoQ (-39.2% YoY, -19.1% QoQ). EBITDA at Rs. 149.7 crore, Rs. 254.5 crore YoY, Rs. 178.6 crore QoQ (-41.2% YoY, -16.2% QoQ). EBITDA Margin at 27.1%, -91 bps YoY and 96 bps QoQ. Net Profit at Rs. 17.9 crore, Rs. 50.7 crore YoY, Rs. 21.6 crore QoQ (-64.7% YoY, -17.1% QoQ).
NMDC Ltd.: Net Revenue at Rs. 6847.6 crore, Rs. 3187.3 crore YoY, Rs. 4355.1 crore QoQ (+114.8% YoY, +57.2% QoQ). EBITDA at Rs. 4240.3 crore, Rs. 1487.7 crore YoY, Rs. 2766.8 crore QoQ (+185% YoY, +53.3% QoQ). EBITDA Margin at 61.9%, +1525 bps YoY and +-161 bps QoQ. Net Profit at Rs. 2834.7 crore, Rs. 316.2 crore YoY, Rs. 2158.2 crore QoQ (+796.6% YoY, +31.3% QoQ).
Bharat Electronics Ltd.: Net Revenue at Rs. 6917.5 crore, Rs. 5816.8 crore YoY, Rs. 2320.4 crore QoQ (+18.9% YoY, +198.1% QoQ). EBITDA at Rs. 1980.9 crore, Rs. 1494.0 crore YoY, Rs. 456.2 crore QoQ (+32.6% YoY, +334.2% QoQ). EBITDA Margin at 28.6%, +295 bps YoY and +897 bps QoQ. Net Profit at Rs. 1368.2 crore, Rs. 1047.0 crore YoY, Rs. 278.5 crore QoQ (+30.7% YoY, +391.3% QoQ). Ashika
ITI Ltd.: Net Revenue at Rs. 1266.3 crore, Rs. 650.5 crore YoY, Rs. 496.9 crore QoQ (+94.7% YoY, +154.9% QoQ). EBITDA at Rs. 179.2 crore, Rs. 69.5 crore YoY, Rs. 9.4 crore QoQ (+158% YoY, +1804.6% QoQ). EBITDA Margin at 14.2%, +347 bps YoY and +1226 bps QoQ. Net Profit at Rs. 201.3 crore, Rs. 33.1 crore YoY, Rs. -31.8 crore QoQ.
Avanti Feeds Ltd.: Net Revenue at Rs. 1098.1 crore, Rs. 1034.8 crore YoY, Rs. 915.4 crore QoQ (+6.1% YoY, +20% QoQ). EBITDA at Rs. 85.4 crore, Rs. 124.6 crore YoY, Rs. 92.2 crore QoQ (-31.5% YoY, -7.4% QoQ). EBITDA Margin at 7.8%, -426 bps YoY and -229 bps QoQ. Net Profit at Rs. 70.2 crore, Rs. 98.7 crore YoY, Rs. 86.2 crore QoQ (-28.9% YoY, -18.6% QoQ). Ashika
Sobha Ltd.: Net Revenue at Rs. 553.4 crore, Rs. 910.1 crore YoY, Rs. 684.4 crore QoQ (-39.2% YoY, -19.1% QoQ). EBITDA at Rs. 149.7 crore, Rs. 254.5 crore YoY, Rs. 178.6 crore QoQ (-41.2% YoY, -16.2% QoQ). EBITDA Margin at 27.1%, -91 bps YoY and 96 bps QoQ. Net Profit at Rs. 17.9 crore, Rs. 50.7 crore YoY, Rs. 21.6 crore QoQ (-64.7% YoY, -17.1% QoQ).
INVESTMENT THESIS
J.B. Chemicals & Pharmaceuticals Ltd (JBCP) is one of the fastest growing company in the IPM on the back of its brand and therapy focused strategy. Its strong domestic franchisee (>85% sales from 5 mega brands: Cilacar & Nicardia in Cardiac and Metrogyl & Rantac in Gastro-Intestinal) enjoy enormous brand equity which allows them to earn >35% EBITDA margins.
While unwinding of erst-while promoter’s transactions provide a permanent shift in base, EBITDA margins likely to be supported at the current levels on account to productivity improvements and renewed focus on CMO, US generics and Russia business.
We valued JBCP using SOTP based methodology; valuing Domestic franchisee at 7x FY23E EV/Sales and Exports business at 4x FY23E EV/Sales given their inherent quality. We thus initiate coverage on JBCP with BUY rating and target price of INR 2,000 which is ~33% upside on CMP. At our target price, JBCP is available at 26x FY23E PER; on the CMP JBCP trades at 20x FY23E PER.
JBCP to solidify base in leadership brands; growth to be driven by new areas
* JBCP has consistently outperformed the IPM on the back of its 5 mega brand groups contributing >85% of its domestic sales. JBCP has posted superior growth in these mega brands where it has >50% market share.
* With the new management in place post acquisition by KKR, as per us the growth will be led by higher MR productivity (10-12%), new therapys (Nephro & Pediateric divisions) and increased pace of launches in key chronic therapies.
EBITDA margins likely to sustain; War-chest ready for an inorganic acquisition
* Renewed focus on higher margins segments such as CMO, US generics and Russia business under the new management to be margin accretive, as per us improvements should be visible post H2FY22.
* Beyond productivity gains, there is a permanent shift in EBITDA margin base with unwinding of related party transactions (>200bps).
* JBCP’s positioning in terms of cash balances and current investments (INR 706crs for FY21), superior free cash flow generations (INR 350crs for FY22E) and lower debt levels give it significant war chest to pursue inorganic acquisitions
Superior execution in the domestic segment; deserving of higher multiples
* Dominant legacy brands in the domestic market ensures strong stream of cashflows enabling the high pedigree management to pursue new growth initiatives in CRAMs, US generics and Russia with renewed focus.
* Domestic franchisee (>85% from mega brands) enjoy enormous brand equity which allows them to earn >35% EBITDA margins. We believe it is deserving of much higher multiples, thus valuing at 7x FY23E EV/Sales while export business at 4x FY23E EV/Sales.
* We thus initiate coverage on JBCP with Buy rating and target price of INR 2,000 which is ~33% upside on CMP. At our target price, JBCP is available at 26x FY23E PER; on the CMP JBCP trades at 20x FY23E PER.
J.B. Chemicals & Pharmaceuticals Ltd (JBCP) is one of the fastest growing company in the IPM on the back of its brand and therapy focused strategy. Its strong domestic franchisee (>85% sales from 5 mega brands: Cilacar & Nicardia in Cardiac and Metrogyl & Rantac in Gastro-Intestinal) enjoy enormous brand equity which allows them to earn >35% EBITDA margins.
While unwinding of erst-while promoter’s transactions provide a permanent shift in base, EBITDA margins likely to be supported at the current levels on account to productivity improvements and renewed focus on CMO, US generics and Russia business.
We valued JBCP using SOTP based methodology; valuing Domestic franchisee at 7x FY23E EV/Sales and Exports business at 4x FY23E EV/Sales given their inherent quality. We thus initiate coverage on JBCP with BUY rating and target price of INR 2,000 which is ~33% upside on CMP. At our target price, JBCP is available at 26x FY23E PER; on the CMP JBCP trades at 20x FY23E PER.
JBCP to solidify base in leadership brands; growth to be driven by new areas
* JBCP has consistently outperformed the IPM on the back of its 5 mega brand groups contributing >85% of its domestic sales. JBCP has posted superior growth in these mega brands where it has >50% market share.
* With the new management in place post acquisition by KKR, as per us the growth will be led by higher MR productivity (10-12%), new therapys (Nephro & Pediateric divisions) and increased pace of launches in key chronic therapies.
EBITDA margins likely to sustain; War-chest ready for an inorganic acquisition
* Renewed focus on higher margins segments such as CMO, US generics and Russia business under the new management to be margin accretive, as per us improvements should be visible post H2FY22.
* Beyond productivity gains, there is a permanent shift in EBITDA margin base with unwinding of related party transactions (>200bps).
* JBCP’s positioning in terms of cash balances and current investments (INR 706crs for FY21), superior free cash flow generations (INR 350crs for FY22E) and lower debt levels give it significant war chest to pursue inorganic acquisitions
Superior execution in the domestic segment; deserving of higher multiples
* Dominant legacy brands in the domestic market ensures strong stream of cashflows enabling the high pedigree management to pursue new growth initiatives in CRAMs, US generics and Russia with renewed focus.
* Domestic franchisee (>85% from mega brands) enjoy enormous brand equity which allows them to earn >35% EBITDA margins. We believe it is deserving of much higher multiples, thus valuing at 7x FY23E EV/Sales while export business at 4x FY23E EV/Sales.
* We thus initiate coverage on JBCP with Buy rating and target price of INR 2,000 which is ~33% upside on CMP. At our target price, JBCP is available at 26x FY23E PER; on the CMP JBCP trades at 20x FY23E PER.
India Pesticides IPO:
APPLY FOR REASONABLE LISTING GAINS AND LONG TERM
Positives:
Experienced Promoters
Growth oriented company
Positive Cash flow despite regular capex
Debt free company
Reasonable valuations with 41% ROE
India Pesticides IPO:
Negatives:
Highly Competitive Business
Small size company
High dependency on China for raw materials
APPLY FOR REASONABLE LISTING GAINS AND LONG TERM
Positives:
Experienced Promoters
Growth oriented company
Positive Cash flow despite regular capex
Debt free company
Reasonable valuations with 41% ROE
India Pesticides IPO:
Negatives:
Highly Competitive Business
Small size company
High dependency on China for raw materials
Auro Lab 141❤️
New 52wk High
Got entry at 78 - 81 - 84 - 88 - 91
Average Buy is 84.4
New 52wk High
Got entry at 78 - 81 - 84 - 88 - 91
Average Buy is 84.4