 "Indian companies to keep an eye on European weakness: JM Financial")
A recent India Strategy report from JM Financial highlighted a few companies in the industrials space, which would have to be watched for signs of a slowdown on account of the problems of the European economy. Industrials include companies such as metals and automobile components.
The companies include Tata Motors, Apollo Tyres, Bharat Forge, Motherson Sumi, Cummins India, Thermax, Crompton Greaves, Carborundum and Tata Steel. The exposure is wide-ranging. For example, Europe contributed 12-15% of Cummins India's revenues. A major chunk of the 84% in foreign revenues for Motherson Sumi, comes from Europe.
"Europe being India's second largest trading partner, weakness in the growth momentum in the region will likely have repercussions back home in India. We highlight the companies amongst Indian industrials that have a relatively higher exposure to Europe and would watch them closely for any slowdown signals," said the 17th October report authored by Prasad Shahane, Ambrish Mishra, Ashutosh Somani and Sandeep Tulsiyan.
The report added that there could be other factors that could help mitigate any European impact.
"Some of the companies also have other risk mitigating factors (such as domestic import displacement and a possible pick up in domestic CV biz or order book visibility in the overseas business)," it said.
| Companies To Watch |
| Company Exposure |
| Tata Motors: 18% overall for Tata Motors |
| Apollo Tyres: Around 35% exposure through its subsidiary Verdestein Bannd B V (VBBV) |
| Bharat Forge: Europe auto exposure around 16-18% of consolidated revenue |
| Motherson Sumi: 84% outside India with major share of EU |
| Cummins India: 12-15% of revenue from Europe |
| Thermax: 20-25% of consolidated revenue from Europe |
| Crompton Greaves: 20% of consolidated revenue from Europe |
| Carborundum: No data available |
| Tata Steel Corus: 57% of topline 20% of EBITDA |
| Source: JM Financial |