*Agri Inputs and Speciality Chemical*
*Revenues robust; margins a mixed bag*
*Q4FY2021 Results Review*
*Sector: Agri Inputs and Speciality Chemicals*
*Sector View: Positive*
Agri input companies saw strong demand trends (beating estimates) in both domestic markets (UPL/PI Industries’s domestic revenue up 23%/11% y-o-y), as well as overseas business (UPL’s revenues from Latin America/Europe was up 40.5%/16.9% y-o-y and PI Industries’ CSM business saw a 47% y-o-y growth in revenue). Overall, the margins were good led by higher realisation and better product mix. However, export-oriented companies such as PI Industries saw contraction in margins due to reduced benefits from the Merchandise Exports from India Scheme (MEIS) and an unfavourable sales mix due to seasonal nature of the domestic business.
*Outlook* After a good rabi season and higher procurement by government, the early monsoon and expectation of above-normal rainfall will be beneficial for kharif sowing. In addition, higher MSPs leading to better crop prices would bode well for the upcoming kharif season. This would help domestic agrochemical companies to report strong growth along with favourable sourcing policies of global companies (China Plus One factor) would drive market share gains in the exports segment.
*Valuation* Conducive government policies, product innovation, massive export opportunity (CRAMS) would help the sector witness a high double-digit growth trajectory on a sustained basis over the next 2-3 years. Structural revenue growth drivers (higher domestic demand, rising exports and import substitution) and potential for margin expansion (rise in share of high-margin value-added products) would help sustain high valuation of quality companies (like PI Industries and Sumitomo Chemical India) in the sector.
*Key Risks* Higher raw material cost for speciality chemical business might impact margins if they are not able to pass it on to customers. Lower demand offtake for products as a result of slowdown in economic activity for specialty chemicals may also affect earnings.
*Leaders:* UPL, Sumitomo Chemical India, Insecticides (India), SRF, Atul Limited and Sudarshan Chemical
*Laggards:* Coromandel International, Aarti Industries and Vinati Organics
*Preferred Picks:* Coromandel International, PI Industries, SRF, Atul Limited, Sumitomo Chemical India and Sudarshan Chemical
*Revenues robust; margins a mixed bag*
*Q4FY2021 Results Review*
*Sector: Agri Inputs and Speciality Chemicals*
*Sector View: Positive*
Agri input companies saw strong demand trends (beating estimates) in both domestic markets (UPL/PI Industries’s domestic revenue up 23%/11% y-o-y), as well as overseas business (UPL’s revenues from Latin America/Europe was up 40.5%/16.9% y-o-y and PI Industries’ CSM business saw a 47% y-o-y growth in revenue). Overall, the margins were good led by higher realisation and better product mix. However, export-oriented companies such as PI Industries saw contraction in margins due to reduced benefits from the Merchandise Exports from India Scheme (MEIS) and an unfavourable sales mix due to seasonal nature of the domestic business.
*Outlook* After a good rabi season and higher procurement by government, the early monsoon and expectation of above-normal rainfall will be beneficial for kharif sowing. In addition, higher MSPs leading to better crop prices would bode well for the upcoming kharif season. This would help domestic agrochemical companies to report strong growth along with favourable sourcing policies of global companies (China Plus One factor) would drive market share gains in the exports segment.
*Valuation* Conducive government policies, product innovation, massive export opportunity (CRAMS) would help the sector witness a high double-digit growth trajectory on a sustained basis over the next 2-3 years. Structural revenue growth drivers (higher domestic demand, rising exports and import substitution) and potential for margin expansion (rise in share of high-margin value-added products) would help sustain high valuation of quality companies (like PI Industries and Sumitomo Chemical India) in the sector.
*Key Risks* Higher raw material cost for speciality chemical business might impact margins if they are not able to pass it on to customers. Lower demand offtake for products as a result of slowdown in economic activity for specialty chemicals may also affect earnings.
*Leaders:* UPL, Sumitomo Chemical India, Insecticides (India), SRF, Atul Limited and Sudarshan Chemical
*Laggards:* Coromandel International, Aarti Industries and Vinati Organics
*Preferred Picks:* Coromandel International, PI Industries, SRF, Atul Limited, Sumitomo Chemical India and Sudarshan Chemical
*Sharekhan Stock Idea- 3R Recommendation*
*UPL Limited*
*Sowing seeds of sustainable growth*
*Rating: Buy*
(CMP: 792, Price Target: 930)
*Company Description*
UPL is a global leader in agricultural solutions and has a healthy mix of high-value crops and high-growth geographies. The company is well positioned to achieve sustainable growth as it is present across the agricultural input segment, ranging from seeds to crop-protection products and post-harvest activities. Arysta’s acquisition strengthens UPL’s global positioning and helps it to emerge as an end-to-end solutions provider in the global agri input space. The company has manufacturing facilities across 48 locations (earlier 34) and is present across more than 138 countries.
*Key Investment Arguments*
• UPL has carved out a strategic business unit – the Natural Plant Protect (NPP), aiming to double revenue from biosolutions to $700 million by FY24-25. The step is in line with its strategy to increase share of high growth/margin differentiated products & sustainable solutions in overall revenues to 50% by FY2026.
• Strong R&D pipeline (peak revenue potential of $4-4.5bn) and tie-ups with FMC and Meiji for launch of a new formulations makes us confident that UPL can achieve the higher end of long-term revenue growth guidance of 7-10%.
• Q1FY22 outlook - Strong mid double-digit growth for India, Latin America and Rest of World while the US and Europe may witness flat-to-moderate growth, with price hikes on cards across regions. Focus on deleveraging balance sheet to continue with a plan to further reduce debt by $500 million in FY2022.
• Robust earnings growth outlook (expect a CAGR of 22% in PAT over FY21- FY24E) would help UPL to generate robust cumulative FCF of Rs. 11,642 crore over FY22-FY24 and help further balance sheet deleveraging and drive rerating Hence, we retain Buy on UPL with a revised price target (PT) of Rs. 930.
*UPL Limited*
*Sowing seeds of sustainable growth*
*Rating: Buy*
(CMP: 792, Price Target: 930)
*Company Description*
UPL is a global leader in agricultural solutions and has a healthy mix of high-value crops and high-growth geographies. The company is well positioned to achieve sustainable growth as it is present across the agricultural input segment, ranging from seeds to crop-protection products and post-harvest activities. Arysta’s acquisition strengthens UPL’s global positioning and helps it to emerge as an end-to-end solutions provider in the global agri input space. The company has manufacturing facilities across 48 locations (earlier 34) and is present across more than 138 countries.
*Key Investment Arguments*
• UPL has carved out a strategic business unit – the Natural Plant Protect (NPP), aiming to double revenue from biosolutions to $700 million by FY24-25. The step is in line with its strategy to increase share of high growth/margin differentiated products & sustainable solutions in overall revenues to 50% by FY2026.
• Strong R&D pipeline (peak revenue potential of $4-4.5bn) and tie-ups with FMC and Meiji for launch of a new formulations makes us confident that UPL can achieve the higher end of long-term revenue growth guidance of 7-10%.
• Q1FY22 outlook - Strong mid double-digit growth for India, Latin America and Rest of World while the US and Europe may witness flat-to-moderate growth, with price hikes on cards across regions. Focus on deleveraging balance sheet to continue with a plan to further reduce debt by $500 million in FY2022.
• Robust earnings growth outlook (expect a CAGR of 22% in PAT over FY21- FY24E) would help UPL to generate robust cumulative FCF of Rs. 11,642 crore over FY22-FY24 and help further balance sheet deleveraging and drive rerating Hence, we retain Buy on UPL with a revised price target (PT) of Rs. 930.
*Sharekhan Stock Idea- 3R Recommendation*
*Sumitomo Chemical India Limited*
*Massive CRAMS opportunity improves growth prospects*
*Rating: Buy*
(CMP: 378, Price Target: 448)
*Company Description*
Sumitomo Chemical India Limited (SCIL) manufactures, imports and markets products for Crop Protection, Grain Fumigation, Rodent Control, Bio Pesticides, Environmental Health, Professional Pest control and Feed Additives for use in India. SCIL has also marked its presence in Africa and several other geographies of the world. The company’s product range comprises of conventional chemistry sourced from our parent company, Sumitomo Chemical Company and biological products sourced from USA based subsidiary, Valent Biosciences LLC, a leader in producing a range of naturally occurring, environmentally compatible pesticides and plant growth regulators, for over 40 years. The company also produce many technical grade pesticides at its state-of-the-art manufacturing units with indigenous R&D facility.
*Key Investment Arguments*
• Robust export growth prospects led by 1) CRAMS opportunity from parent SCC (to supply five products worth Rs. 200-250 crore), 2) higher sales to LatAm (SCC acquired Nufram’s distribution business in LatAm) and 3) doubled capacity of tebuconazole. We expect a 13% revenue CAGR over FY21-24E.
• Focus on high margin PGRs/herbicides, rising share of specialty chemicals, further synergies from Excel Crop Care to drive 346 bps expansion in margins and take EBITDA margins to ~22% in FY24.
• Promising H1FY22 outlook in volume terms, price hikes and margin given good agronomics in India (above normal monsoon and higher crop prices in India) and adequate inventories to supply products in the upcoming Kharif season.
• We maintain our Buy rating on SCIL with a revised PT of Rs. 448 as massive contract manufacturing opportunity from parent provides superior growth prospects and expect SCIL to enjoy premium valuation over domestic peers.
*Sumitomo Chemical India Limited*
*Massive CRAMS opportunity improves growth prospects*
*Rating: Buy*
(CMP: 378, Price Target: 448)
*Company Description*
Sumitomo Chemical India Limited (SCIL) manufactures, imports and markets products for Crop Protection, Grain Fumigation, Rodent Control, Bio Pesticides, Environmental Health, Professional Pest control and Feed Additives for use in India. SCIL has also marked its presence in Africa and several other geographies of the world. The company’s product range comprises of conventional chemistry sourced from our parent company, Sumitomo Chemical Company and biological products sourced from USA based subsidiary, Valent Biosciences LLC, a leader in producing a range of naturally occurring, environmentally compatible pesticides and plant growth regulators, for over 40 years. The company also produce many technical grade pesticides at its state-of-the-art manufacturing units with indigenous R&D facility.
*Key Investment Arguments*
• Robust export growth prospects led by 1) CRAMS opportunity from parent SCC (to supply five products worth Rs. 200-250 crore), 2) higher sales to LatAm (SCC acquired Nufram’s distribution business in LatAm) and 3) doubled capacity of tebuconazole. We expect a 13% revenue CAGR over FY21-24E.
• Focus on high margin PGRs/herbicides, rising share of specialty chemicals, further synergies from Excel Crop Care to drive 346 bps expansion in margins and take EBITDA margins to ~22% in FY24.
• Promising H1FY22 outlook in volume terms, price hikes and margin given good agronomics in India (above normal monsoon and higher crop prices in India) and adequate inventories to supply products in the upcoming Kharif season.
• We maintain our Buy rating on SCIL with a revised PT of Rs. 448 as massive contract manufacturing opportunity from parent provides superior growth prospects and expect SCIL to enjoy premium valuation over domestic peers.
*Good Morning & Welcome to Friday’s trading action at Dalal Street dated 2nd of July 2021.*
Early action at SGX Nifty is indicating that Dalal Street could start on the right foot on backdrop of positive overnight Wall Street cues where the S&P 500 set another record—after weekly jobless claims came in better than expected.
*7 AM GLOBAL UPDATE*
• SGX Nifty (+30, 15757)
• DOW JONES (+131, 34633)
• NASDAQ (+18, 14522)
• BOVESPA (-1135, 125666)
• NIKKEI (+105, 28812)
• HANG SENG (+31, 28859)
*OUTLOOK & INSIGHTS:*
• Global: Positive.
• FII: Negative (-1245.29 Cr)
• DII: Positive (+880.60 Cr)
• F&O: 15300-16000 zone
• Trend: Range bound
• Sentiment: Precarious
• Technicals: Overbought
• Theme: Profit booking?
*All ABOUT NIFTY & BANK NIFTY*
*NIFTY (CMP 15680):*
• SUPPORT: 15613/15449
• RESISTANCE: 15853/15917
• RANGE: 15607-15857
• BIAS: Neutral.
*BANK NIFTY (CMP 34684):*
• SUPPORT: 33732/32469
• RESISTANCE: 35811/37709
• RANGE: 34001-35001
• BIAS: Neutral.
*THEME OF THE DAY:*
• Caution should be the buzzword.
• Technically speaking, Nifty could charge out to higher range only on any close above 15917 mark. Nifty’s make-or-break long-term supports are placed at 15449 mark.
• *Bullish looking stocks are Siemens and Balkrishna Industries.*
• *SHOW ME THE MONEY:* Momentum Call: Buy BALKRISHNA INDUSTRIES JULY Futures for 0-3 days at CMP 2282 for an objective of 2421. Stop 2217. Alert: BREAKOUT PLAY.
• *All eyes on Friday’s U.S non-farm payroll report that should yield clues on inflation and also for signs of economic progress.*
• Crude oil prices are seen trading above the $75 a barrel on reports that Saudi Arabia and Russia have a tentative deal to gradually increase OPEC+ output in the coming months.
• *RBI Financial Stability Report: Banking Sector NPAs May Rise To 9.8% By March 2022.* Capital and liquidity buffers are reasonably resilient to withstand future shocks for Indian banks
*Disclaimer:* Our subscribers/clients may have positions in the stocks recommended in this note. Please note that the actual subscribers may receive additional information in real time not available to the viewers of this note. This does not construe to be an investment advice. Stock market investments are subject to market risks. No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments. While we may talk about strategies or positions in the market, our intent is solely to showcase effective risk-management in dealing with financial instruments. This is purely an information service and any trading done on the basis of this information is at your own, sole risk.
Early action at SGX Nifty is indicating that Dalal Street could start on the right foot on backdrop of positive overnight Wall Street cues where the S&P 500 set another record—after weekly jobless claims came in better than expected.
*7 AM GLOBAL UPDATE*
• SGX Nifty (+30, 15757)
• DOW JONES (+131, 34633)
• NASDAQ (+18, 14522)
• BOVESPA (-1135, 125666)
• NIKKEI (+105, 28812)
• HANG SENG (+31, 28859)
*OUTLOOK & INSIGHTS:*
• Global: Positive.
• FII: Negative (-1245.29 Cr)
• DII: Positive (+880.60 Cr)
• F&O: 15300-16000 zone
• Trend: Range bound
• Sentiment: Precarious
• Technicals: Overbought
• Theme: Profit booking?
*All ABOUT NIFTY & BANK NIFTY*
*NIFTY (CMP 15680):*
• SUPPORT: 15613/15449
• RESISTANCE: 15853/15917
• RANGE: 15607-15857
• BIAS: Neutral.
*BANK NIFTY (CMP 34684):*
• SUPPORT: 33732/32469
• RESISTANCE: 35811/37709
• RANGE: 34001-35001
• BIAS: Neutral.
*THEME OF THE DAY:*
• Caution should be the buzzword.
• Technically speaking, Nifty could charge out to higher range only on any close above 15917 mark. Nifty’s make-or-break long-term supports are placed at 15449 mark.
• *Bullish looking stocks are Siemens and Balkrishna Industries.*
• *SHOW ME THE MONEY:* Momentum Call: Buy BALKRISHNA INDUSTRIES JULY Futures for 0-3 days at CMP 2282 for an objective of 2421. Stop 2217. Alert: BREAKOUT PLAY.
• *All eyes on Friday’s U.S non-farm payroll report that should yield clues on inflation and also for signs of economic progress.*
• Crude oil prices are seen trading above the $75 a barrel on reports that Saudi Arabia and Russia have a tentative deal to gradually increase OPEC+ output in the coming months.
• *RBI Financial Stability Report: Banking Sector NPAs May Rise To 9.8% By March 2022.* Capital and liquidity buffers are reasonably resilient to withstand future shocks for Indian banks
*Disclaimer:* Our subscribers/clients may have positions in the stocks recommended in this note. Please note that the actual subscribers may receive additional information in real time not available to the viewers of this note. This does not construe to be an investment advice. Stock market investments are subject to market risks. No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments. While we may talk about strategies or positions in the market, our intent is solely to showcase effective risk-management in dealing with financial instruments. This is purely an information service and any trading done on the basis of this information is at your own, sole risk.
Market Wizard
Short Term Bumper Call Buy Indo Tech at CMP of 104 - 105 and dips of 99 Sl 96 Targets:- 107 - 108 - 109 - 110 - 111 - 112 - 113 - 114+ Above 114 we can see 118 - 124 - 131 - 137+ Disclaimer:- I am not SEBI Registered. Please consult your financial advisor…
INDOTECH 255.55❤️❤️
UC LOCKED🔐🔐
8 DAYS 8 UC✅✅
UC LOCKED🔐🔐
8 DAYS 8 UC✅✅
Market Wizard
BUMPER MID TERM CALL BUY RAMA STEEL AT CMP OF 77 - 78 AND DIPS TILL 72 SL 69 TARGETS:- 80 - 81 - 82 - 83 - 84 - 85 - 86 - 87+ ABOVE 87 WE CAN SEE 91 - 97 - 104 - 111+ DISCLAIMER:- I am not SEBI Registered. Please consult your financial advisor before investing.…
RAMASTEEL 144.45❤️❤️❤️
UC LOCKED
10 DAYS 10 UC
UC LOCKED
10 DAYS 10 UC