Bull-run enters 6th day; Sensex soars 617 pts, Nifty ends above 15,100
Weightage-wise, Infosys (up 3 per cent), Reliance Industries, ICICI Bank, M&M, and TCS contributed around 408-points towards overall gains on the index
 "Bull Markets")
9:19 AM
Opening Bell :: Nifty hits new lifetime high at open
9:18 AM
Opening Bell :: Sensex hits fresh record high of 51,226
9:11 AM
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9:10 AM
Top gainers and losers on S&P BSE Sensex at Pre-open
9:08 AM
Markets at Pre-open
9:07 AM
Markets at Pre-open
9:04 AM
BROKERAGE VIEW :: Prabhudas Lilladher on Hero MotoCorp
Rating: ACCUMULATE | CMP: Rs 3,429 | TP: Rs 3,753
>> HMCL’s Q3FY21 was operationally better with beat at EBITDA/PAT by ~10/13% respectively led by higher gross margins at 29.5% (PLe 28.7%) and lower other expenses at Rs9.5bn (PLe Rs9.9bn). Market share expansion continues with ~190bp gains in domestic markets and ~90bp gains in exports. While soft retails and RM pressures are near term headwinds, increased focus on cost control measures such as LEAP 2 (savings of 100bp v/s LEAP 1 savings of 50bp) will help sustain margins.
>> We increase FY22/23 EPS by 5-7% to factor in for LEAP 2 and higher spare sales. We build in revenue/EBITDA/PAT CAGR of 8.4%/10.7%/11% and maintain ‘Accumulate’ with a TP of Rs3,753 (earlier Rs3,344) roll forwarded to Mar-23 EPS (v/s Sep-22 earlier) based on 17x (unchanged) and Rs174 value for Hero FinCorp at 20% Holdco.
>> HMCL’s Q3FY21 was operationally better with beat at EBITDA/PAT by ~10/13% respectively led by higher gross margins at 29.5% (PLe 28.7%) and lower other expenses at Rs9.5bn (PLe Rs9.9bn). Market share expansion continues with ~190bp gains in domestic markets and ~90bp gains in exports. While soft retails and RM pressures are near term headwinds, increased focus on cost control measures such as LEAP 2 (savings of 100bp v/s LEAP 1 savings of 50bp) will help sustain margins.
>> We increase FY22/23 EPS by 5-7% to factor in for LEAP 2 and higher spare sales. We build in revenue/EBITDA/PAT CAGR of 8.4%/10.7%/11% and maintain ‘Accumulate’ with a TP of Rs3,753 (earlier Rs3,344) roll forwarded to Mar-23 EPS (v/s Sep-22 earlier) based on 17x (unchanged) and Rs174 value for Hero FinCorp at 20% Holdco.
9:02 AM
BROKERAGE VIEW :: Prabhudas Lilladher on M&M
Rating: BUY | CMP: Rs 866 | TP: Rs 1,011
>> M&M’s 3QFY21 results were operationally better with a record EBITDA of Rs23.9bn (PLe Rs22.7bn). EBIT margins for FES were at 23.4% (+400bp YoY) led by operating leverage and cost controls. Challenges related to semi conductors shortage to impact LCV and UV volumes till 1QFY22. Strict focus on capital allocation and international subs is now visible as 1) international subs (FES and Auto) loss declined significantly to Rs0.9bn (from Rs4.65bn), 2) MANA PBT loss expected to declined to Rs1.3bn in FY21 (v/s Rs4.8bn in FY20) and 3) Peugeot PBT declined to Rs0.2bn (v/s loss of Rs2.2bn in CY19).
>> We reiterate buy on MM as 1) sharp focus and execution on capital allocation to help prioritise investments and returns, 2) focus beyond tractors resulted in farm machinery revenues growth of 48% YoY in YTDFY21 to Rs3.8bn and 3) strong product pipeline in UVs and tractors to help industry outperformance. We increase FY22/23 EPS by 13%/ 6% and built in EBITDA/PAT CAGR of 10.1%/15% over FY20-23E. We maintain BUY with revised SoTP based price target of Rs1,011 (v/s Rs851), as we raise target multiple of core business to 18x (from 16x) to factor in faster than expected turnaround in subs.
>> M&M’s 3QFY21 results were operationally better with a record EBITDA of Rs23.9bn (PLe Rs22.7bn). EBIT margins for FES were at 23.4% (+400bp YoY) led by operating leverage and cost controls. Challenges related to semi conductors shortage to impact LCV and UV volumes till 1QFY22. Strict focus on capital allocation and international subs is now visible as 1) international subs (FES and Auto) loss declined significantly to Rs0.9bn (from Rs4.65bn), 2) MANA PBT loss expected to declined to Rs1.3bn in FY21 (v/s Rs4.8bn in FY20) and 3) Peugeot PBT declined to Rs0.2bn (v/s loss of Rs2.2bn in CY19).
>> We reiterate buy on MM as 1) sharp focus and execution on capital allocation to help prioritise investments and returns, 2) focus beyond tractors resulted in farm machinery revenues growth of 48% YoY in YTDFY21 to Rs3.8bn and 3) strong product pipeline in UVs and tractors to help industry outperformance. We increase FY22/23 EPS by 13%/ 6% and built in EBITDA/PAT CAGR of 10.1%/15% over FY20-23E. We maintain BUY with revised SoTP based price target of Rs1,011 (v/s Rs851), as we raise target multiple of core business to 18x (from 16x) to factor in faster than expected turnaround in subs.
8:59 AM
BROKERAGE VIEW :: Elara Capital on Chambal Fertilisers
CMP: Rs 247 | TP: Rs 404 | Reco: Buy
>> Chambal Fertilisers (CHMB IN) reported a 17% YoY increase in EBITDA at INR 8bn, above our estimates by 10%, on account of lower other expenses (power & fuel cost) improved margin in traded fertilisers and operating leverage. EBITDA margin expanded 280bp YoY to 20.6%. Blended EBITDA per tonne increased to INR 5,436 vs INR 4,940 in Q3FY20. Total revenue remains flat YoY at INR 38.7bn.
>> Traded fertiliser revenue was up 15.9% YoY to INR 18.3bn while urea revenue dropped 9% YoY to INR 20.4bn. Interest expenses reduced 52% YoY and 35% QoQ to INR 525mn. PBT increased 31% YoY to INR 6.5bn while APAT dropped 6% YoY to INR 4.5bn, due to a higher tax rate.
>> Chambal Fertilisers (CHMB IN) reported a 17% YoY increase in EBITDA at INR 8bn, above our estimates by 10%, on account of lower other expenses (power & fuel cost) improved margin in traded fertilisers and operating leverage. EBITDA margin expanded 280bp YoY to 20.6%. Blended EBITDA per tonne increased to INR 5,436 vs INR 4,940 in Q3FY20. Total revenue remains flat YoY at INR 38.7bn.
>> Traded fertiliser revenue was up 15.9% YoY to INR 18.3bn while urea revenue dropped 9% YoY to INR 20.4bn. Interest expenses reduced 52% YoY and 35% QoQ to INR 525mn. PBT increased 31% YoY to INR 6.5bn while APAT dropped 6% YoY to INR 4.5bn, due to a higher tax rate.
8:56 AM
BROKERAGE VIEW :: IDBI Capital on Hero MotoCorp
CMP: Rs 3,428 | TP: Rs 3,140 | Reco: Reduce
>> Hero MotoCorp (HMCL) Q3FY21 result was above our and consensus estimates on all parameters. Revenue was higher than our and consensus estimates mainly on account of higher realization, favorable product mix and higher spare part revenue. We believe positive macro factors, vaccination program in place, more cities opening up are improving sentiments for good retail demand. We expect domestic 2W industry to see a double growth for FY22 on a low base.
>> We do not expect any significant improvement in export sales for HMCL and wait for turnaround. We build our volume growth estimates for FY21/FY22/FY23 by -10%/+15%/+12% factoring the strong recovery in 2W domestic market. We expect revenue/earnings to grow at 5% each respectively CAGR over FY20-FY23E with EBITDA margin of ~13%.
>> Due to recent increase in share price we maintain REDUCE rating and arrive at a TP of Rs3,140 (earlier Rs2,540) based on PER of 16x FY23E EPS.
>> Hero MotoCorp (HMCL) Q3FY21 result was above our and consensus estimates on all parameters. Revenue was higher than our and consensus estimates mainly on account of higher realization, favorable product mix and higher spare part revenue. We believe positive macro factors, vaccination program in place, more cities opening up are improving sentiments for good retail demand. We expect domestic 2W industry to see a double growth for FY22 on a low base.
>> We do not expect any significant improvement in export sales for HMCL and wait for turnaround. We build our volume growth estimates for FY21/FY22/FY23 by -10%/+15%/+12% factoring the strong recovery in 2W domestic market. We expect revenue/earnings to grow at 5% each respectively CAGR over FY20-FY23E with EBITDA margin of ~13%.
>> Due to recent increase in share price we maintain REDUCE rating and arrive at a TP of Rs3,140 (earlier Rs2,540) based on PER of 16x FY23E EPS.
8:54 AM
BROKERAGE VIEW :: IDBI Capital on PNC Infratech
CMP: Rs 245 | TP: Rs 331| Reco: Buy
>> PNC Infratech (PNCL) Q3FY21 PAT came in-line with our & consensus estimate. Labor availability at the site has reached 100%. Toll volume has gained traction and is up 22% YoY. After gaining experience in executing road assets, PNC is venturing in the execution of irrigation and water supply projects. Order from non-road portfolio is 25%.
>> On execution front, PNCL has re-iterated to match FY21E revenue with FY20 and target FY22E revenue growth at 20%. We have increased execution run rate for FY22E, 23E and thus EPS for FY22E/23E is revised up by 4%/6% (exhibit 8). In SOTP based TP, we now value EPC/construction business at 12x FY23E EPS (10x earlier) and investment in various road assets at FY20 BV.
>> At our revised TP Rs331 (earlier Rs266), implied valuation is 13x FY23E EPS and last 5 years average PER is 12x. Maintain BUY.
>> PNC Infratech (PNCL) Q3FY21 PAT came in-line with our & consensus estimate. Labor availability at the site has reached 100%. Toll volume has gained traction and is up 22% YoY. After gaining experience in executing road assets, PNC is venturing in the execution of irrigation and water supply projects. Order from non-road portfolio is 25%.
>> On execution front, PNCL has re-iterated to match FY21E revenue with FY20 and target FY22E revenue growth at 20%. We have increased execution run rate for FY22E, 23E and thus EPS for FY22E/23E is revised up by 4%/6% (exhibit 8). In SOTP based TP, we now value EPC/construction business at 12x FY23E EPS (10x earlier) and investment in various road assets at FY20 BV.
>> At our revised TP Rs331 (earlier Rs266), implied valuation is 13x FY23E EPS and last 5 years average PER is 12x. Maintain BUY.
8:50 AM
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8:48 AM
BROKERAGE VIEW :: MOFSL on Hero MotoCorp
CMP: Rs 3,428 | TP: Rs 4,000 (+17%) | Reco: Buy
>> Hero MotoCorp (HMCL)’s strong performance was driven by cost management and price increases to offset cost inflation. Domestic demand recovery and continued traction in weak areas (Scooter, Premium Motorcycle, and exports) are key monitorables.
>> We have raised our EPS estimate for FY21/FY22E by 5%/7%, factoring in price increases and cost savings. We maintain our Buy rating, with TP of INR4,000 (~18x Mar’23 S/A EPS + INR154/share for Hero FinCorp).
>> The stock trades at ~18.2x/16.1x FY22/FY23E EPS. We value HMCL at 18x Mar’23E EPS, factoring in improved volume visibility and lower risk of value outflow from HMCL’s areas of strength.
>> Hero MotoCorp (HMCL)’s strong performance was driven by cost management and price increases to offset cost inflation. Domestic demand recovery and continued traction in weak areas (Scooter, Premium Motorcycle, and exports) are key monitorables.
>> We have raised our EPS estimate for FY21/FY22E by 5%/7%, factoring in price increases and cost savings. We maintain our Buy rating, with TP of INR4,000 (~18x Mar’23 S/A EPS + INR154/share for Hero FinCorp).
>> The stock trades at ~18.2x/16.1x FY22/FY23E EPS. We value HMCL at 18x Mar’23E EPS, factoring in improved volume visibility and lower risk of value outflow from HMCL’s areas of strength.
8:46 AM
BROKERAGE VIEW :: MOFSL on Britannia
CMP: Rs 3,541 | Reco: Neutral
>> Consolidated sales increased 6.1% YoY to INR31.7b (v/s our estimate of INR32.8b) in 3QFY21. Standalone sales grew 5.7% YoY to INR29.8b. We peg base business volume growth to be 3-4% (there is no mention of volume growth in the press release, v/s our estimate of +7%). Consolidated EBITDA/ PBT/adjusted PAT
>> Consolidated gross margin expanded 220bp YoY to 43.1%. The management said BRIT witnessed moderate inflation in material prices, except Palm Oil where they witnessed a significant increase.
>> The company has gained market share over the last several quarters.
>> Essentials were at elevated demand levels at the beginning of the year due to pantry up-stocking, which has started to normalize with the diversification of the purchase basket of consumers
>> Consolidated sales increased 6.1% YoY to INR31.7b (v/s our estimate of INR32.8b) in 3QFY21. Standalone sales grew 5.7% YoY to INR29.8b. We peg base business volume growth to be 3-4% (there is no mention of volume growth in the press release, v/s our estimate of +7%). Consolidated EBITDA/ PBT/adjusted PAT
grew 21.8%/23.5%/22.5% YoY to INR6.1b/INR6.1b/INR4.5b (in line).
>> Consolidated gross margin expanded 220bp YoY to 43.1%. The management said BRIT witnessed moderate inflation in material prices, except Palm Oil where they witnessed a significant increase.
>> The company has gained market share over the last several quarters.
>> Modern Trade, Institutional business, etc. continue to face challenges with lower footfalls.
>> Essentials were at elevated demand levels at the beginning of the year due to pantry up-stocking, which has started to normalize with the diversification of the purchase basket of consumers
8:44 AM
BROKERAGE VIEW :: MOFSL on Divi's Labs
CMP: Rs 3,820 | TP: Rs 4,530 (+19%) | Reco: Buy
>> Divi’s Labs (DIVI) reported in-line 3QFY21 earnings. This was led by healthy traction in Generics / Custom Synthesis (CS), coupled with lower raw material cost, driven by process improvements. Meaningful benefit is yet to accrue from the major capex phase. 10 new molecules under development in generic APIs and contrast media APIs would provide a fillip going forward.
>> We maintain our EPS estimates for FY21/FY22/FY23.
>> We expect a 38% earnings CAGR over FY20–23E, led by increased business prospects from CS and Generics, new product additions in the near term, and ~930bp margin expansion on better operating leverage.
>> We continue to value DIVI at 36x 12M forward earnings to arrive at TP of INR4,530. We reiterate Buy, supported by promising demand prospects and multiple growth levers – a) new product additions, b) strong chemistry skill sets, c) efficient manufacturing capabilities, d) scale-led advantage in legacy molecules, e) minimal financial leverage, and f) sufficient cash available for new projects.
>> Divi’s Labs (DIVI) reported in-line 3QFY21 earnings. This was led by healthy traction in Generics / Custom Synthesis (CS), coupled with lower raw material cost, driven by process improvements. Meaningful benefit is yet to accrue from the major capex phase. 10 new molecules under development in generic APIs and contrast media APIs would provide a fillip going forward.
>> We maintain our EPS estimates for FY21/FY22/FY23.
>> We expect a 38% earnings CAGR over FY20–23E, led by increased business prospects from CS and Generics, new product additions in the near term, and ~930bp margin expansion on better operating leverage.
>> We continue to value DIVI at 36x 12M forward earnings to arrive at TP of INR4,530. We reiterate Buy, supported by promising demand prospects and multiple growth levers – a) new product additions, b) strong chemistry skill sets, c) efficient manufacturing capabilities, d) scale-led advantage in legacy molecules, e) minimal financial leverage, and f) sufficient cash available for new projects.
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First Published: Feb 08 2021 | 7:49 AM IST
