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“Price is what you pay. Value is what you get.”
- Warren Buffett
TOP PICKS FOR 2020
FROM
SM
C RE
SEAR
CH D
ESK
....FR
OM S
MC
RESE
ARCH
DES
K ....
SR.NO. CO_NAME SECTOR CLOSEPRICE* TARGET(RS.) UPSIDEPOTENTIAL(%)
*CMPason26thDecember,2019
FROMSMCRESEARCHDESK
Backathome,withamammothrecapitalisationandconsolidationdrive,bankingsectorproblemshavebeenaddressedtosomeextent.Recent
resolutionsofsomebigNCLTcaseshaveraisedhopesofsomemoreresolutionhappeningsinthenearfuture.Thereisanexpectationthattheauto
sector,basicallythetwo-wheelerandthree-wheelerwilldowellin2020.Theautomobileindustryhasalwaysbeencyclical.Rabiseasonisexpected
tobegoodthisyearasreservoirpositionsarehealthy,whichinturnisexpectedtorevivetwowheelerssalesastheyrelyonruralareasfornearly
60%oftheirsales.BesidestheentertainmentsectorhasasignificantopportunitygivenIndia`syoungdemographics.Government’sspeedof
spendingoninfrastructureandrailwaysisathemewhichisexpectedtoplayoutwellgoingnextyear.Moreover,domesticfocusedpharmaceutical
companiesareexpectedtodowellgiventheissuesthatarekeeponcomingfromoverseasregulatorybodies.Focusonthegreenenergyespecially
whenoilisonboilisanotherinvestmentthemethatwillremainfavouritesamonginvestors.
arketshavebeenmorevolatileovertheyearsand2019wasnodifferent,withmanymarketspostingsteadyrises.IndianMarkettooMpostedthumping&record-settingruns.BothNiftyandSensexwereupby13and15percentrespectivelyalbeitmidcapandsmall-cap
indexdidnotdowell,witnessedafallof4percentand9percentrespectively.Globaltraderift,liquidityworries,slowereconomic
growth,corporatetaxcut,andseriesofratecutsbytheReserveBankofIndia(RBI)areamongthefewthatguidedthemarketsthroughtheyear
2019.Investorswouldbeeyeingtheannouncementintheunionbudget.Thereisanexpectationthatpolicymeasuresannouncedsofarandother
measureswhichareexpectedtoannounceinupcomingbudgetmayreverseconsumptionandeconomicslowdown.AlsotheRBI’sreductionin
ratesisexpectedtosupporttheeconomy.Talkingabouttheglobaleconomy,thereishopeofaglobalgrowthpickupastradetensionshavelessened
andcontinuityofaccommodativemonetarypoliciesacrosstheglobeisexpectedtopay-offdividendin2020.
Atthisjuncture,itisadvisedtoinvestorstokeeponbookingprofitsandremaininvestedinthemarket.HappyInvesting
TOPPICKS-2020
1
6 InoxLeisure Entertainment 375.60 433 15
1 ICICIBank Banks 539.00 653 21
4 GujaratGas GasDistribution 223.95 262 17
3 BankofBaroda Banks 99.00 120 21
5 KECIntl. CapitalGoods-ElectricalEquipment 294.60 392 33
2 BajajAuto Automobile 3230.10 3710 15
7 JBChem&Pharm Pharmaceuticals 429.55 497 16
ICICIBANKLIMITED
F Domestic advancebook grew16%yoy toRs553324 crore,while the
overseasadvancebookcontinuedtodeclineat13%atRs60035croreat
endSeptember2019.Growthinthedomesticadvancebookwasledby
theretailloanbookcontinuingtoexpandatstrongpaceof22%yoytoRs
380966 crore at end September 2019. SME loan book growth also
acceleratedto30%yoyatRs19064croreatendSeptember2019.The
corporatebookrose3%yoytoRs153294crore.
F Thebankhasacceleratednetworkexpansionadding346branchesand
58ATMsinQ2FY2020.Ithasthenetworkof5228branchesand15159
ATMsatendSeptember2019.
F Thebankhadpostedhealthy26%increaseinNIIatRs8057.43crorefor
thequarterendedSeptember2019.Interestincomeincreased23%toRs
18565.30crore,whileinterestexpensesrose21%toRs10507.87crore.
F Withthehealthygrowth,theshareofretailbookintheoveralladvance
bookwasstableonsequentialbasisat62.1%atendSeptember2019
from6.1%endJune2019and57.30%atendSeptember2018.
F Thebusinessofthebankhadincreasedatacceleratedpaceof19%yoytoRs
1309632croreattheendSeptember2019,supportedbydepositsgrowth
risingto25%atRs696273croreatendSeptember2019.Theloanbookofthe
bankhadincreased13%atRs613359crore.
F The gross NPA additionswere Rs 2482 crore in Q2FY2020. The NPA
additions and gross provisions for the quarter were in line with
expectations.Theprovisioncoverageratioexcludingtechnicalwrite-offs
was76.1%.ThenetNPAratiodeclined from1.77%end June2019 to
1.60%endSeptember2019.
F The bank is focused on achieving a consolidated return on equity of
15.0%bythequarterendedJune2020.
2
CMP:Rs.539.00 Target:Rs.653 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/BCHART
NonPromoterCorporateHolding 1.88
AsonSep’19 %OfHolding
Public&Others 6.48
Institutions 37.06
Foreign 54.58
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:21%
F RegulatoryProvisioningonassetsandCorporateGovernanceissue
F UnidentifiedAssetSlippages(Non-IdentifiedNPA’s)
VALUATION
Thebankcontinuestofocusongrowingthecoreoperatingprofitinarisk
calibratedmanner.Thebankaimstoimproveshareofprofitablemarket
opportunitiesbymakingdeliveryto thecustomermoreseamlessand
frictionless through digitization and process improvements. Business
performanceofthebanksuchasdomesticloangrowth,overallcorporate
advances, retail loan growth, CASA ratio are continuously improving.
Thus,itisexpectedthatthestockwillseeapricetargetofRs.653in8to
10monthstimeframeonanexpectedP/Bvxof3.24xandFY21BVPS
(BookValuePerShare)ofRs.201.66.
StockExchange BSE
P/BRatio(times) 3.24
FaceValue(Rs.) 2.00
P/ERatio(times) 67.88
52WeekHigh/Low 549.50/336.25
EPS(Rs.) 7.94
M.Cap(Rs.inCr.) 348641.03
VALUEPARAMETERS
NetIncome 3363.30 10541.91 18557.01
ACTUAL FORECAST
EPS 5.17 16.33 28.89
Ebit 23437.90 26850.40 32294.56
NII 27015.00 32477.83 37769.04
Pre-taxProfit 3776.76 17680.38 24566.37
FYMar-19 FYMar-20 FYMar-21
BVPS 168.10 177.72 201.66
RoE 3.20% 9.86% 15.06%
Source:Company'sWebsite,Reuters&Capitaline
BAJAJAUTOLIMITED
F ThecompanywillresumesalesinEgyptgoingforward.Themanagement
also indicatedthat ithasarobustpipelineofproducts forthenext18
months.
F Onthedevelopmentfront,thecompanytiesupwithHusquarnabrand
underKTMAustriaandexpectedtocommenceproductionduringcurrent
financialyearandwouldlaunchproductduringQ1FY21.Moreover,itstie
upwithTriumphisunderprocess.
F Onthefinancialfront,themarginsofthecompanyhasimprovedduring
Sep2019quarterto16.9%drivenbypricehike,changeinproductmix
and dollar realization. Moreover, realization of the company has also
improvedby6%QoQasthecompanyupgradedtheproductportfolioin
theentrylevelsegment.
F Regardingtheoutlookfortheindustry,managementfeelsthatwiththe
comingruraldemand;marketshareanddemandofthecompanywould
grow.Themanagementfeelsthat10%to12%growthinexportsisdoable
ona5-yearsCAGRbasis.Fordomesticmotorcycle,14%CAGRgrowthis
possibleover5years.
F Thecompany’sdomesticmotorcycleretailmarketsharestandsat20%
while domestic CV market share stood at 59.4% in 2QFY20. On the
developmentfront,themanagementofthecompanyisexpectedtolaunch
newmodels in its executive and premium segments, which will help
improvemarketsharegraduallyoverthemediumterm.Furthermore,the
company also expects to launch electric two-wheelerBajaj Chetak till
January2020 inPune followedbyBanglorewhilemanagementof the
companyexpectstoseeimprovementin3WsegmentfromAprilonwards.
F Bajaj Auto is a global two-wheeler and three-wheeler manufacturing
CompanywhichisbasedinPune,Maharashtra.Itmanufacturesmotorcycles,
scootersandautorickshaws.ItsplantsincludeWalujplant,Chakanplantand
Pantnagarplant.
F Onexportsfront,themanagementhasmaintainedthatexportsaredoing
wellandtheexportsforPulsarbrandhaveimprovedsignificantlyinnew
markets of Bangladesh, Nepal and Malaysia. The firm registered its
highest ever exports sales. Exports jumped14% to 1.95 lakhunits in
November2019comparedwith1.72lakhunitsinNovember2018.Total
domestic sales slipped 12% to 2.07 lakh units in November 2019 as
against2.34lakhunitsinNovember2018.
3
CMP:Rs.3230.10 Target:Rs.3710 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/ECHART
AsonSep’19 %OfHolding
NonPromoterCorporateHolding 4.56
Public&Others 17.60
Promoters 53.52
Foreign 14.54
Institutions 9.79
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:15%
F Commoditypricing
F Currencyfluctuation
VALUATION
Thecompanyhasadiversifiedbusinessmodelandstrongfocusonthe
profitable growth, widening reach in export markets and strategic
allianceswithglobalmajors.Thedomestic2-wheelermarketwouldstart
growing & would continue to grow for next couple of years. The
managementassuredthatonewillseeaveryhealthytoplinegrowthand
averyhealthyEBITDAincreaseincomingquarters.Thusitisexpected
thatthestockwillseeapricetargetofRs.3710in8to10monthstime
frameona5yearaverageP/Eof20.28xandFY21(E)earningsofRs.
182.94.
DividendYield(%) 1.86
52WeekHigh/Low 3289.50/2400.00
P/BRatio(times) 4.20
StockExchange BSE
EPS(Rs.) 162.34
P/ERatio(times) 19.90
M.Cap(Rs.inCr.) 93468.44
FaceValue(Rs.) 10.00
VALUEPARAMETERS
ACTUAL FORECAST
EPS 149.78 170.09 182.94
Ebit 4716.33 5007.54 5408.70
Pre-taxProfit 6361.16 6416.37 7001.03
Revenue 30249.96 31041.70 34551.44
NetIncome 4333.18 4910.13 5297.38
BVPS 752.67 851.15 955.13
Ebitda 4982.02 4975.00 5479.31
FYMar-19 FYMar-20 FYMar-21
RoE 21.20% 21.01% 20.16%
Source:Company'sWebsite,Reuters&Capitaline
BANKOFBARODA
F T hebankhasexpandeditsoperationsthroughmergersofDenabankand
VijayaBankanditisamongstthefivelargestbanksinIndiawithadomestic
branchnetworkpresencethrough9,449branches&13,153ATMsandCash
Recyclers supported by self-service channels. Well distributed branch
networkwith31%coverageinRural,27%inSemi-urban,23%Metroand
20%Urban.Thecustomerbaseofbanksstoodat13crore,whilethebankhas
workforce of 86170 employees. The Bank has a significant international
presencewithanetworkof100overseasofficesspanning21countries.
F Globalbusinessofthebankgrewby2%yoytoRs1531470croreatend
September2019.Thebusinessgrowthwasdrivenbydomesticbusiness
rising3%toRs1316666crore,whileoverseasbusinessdeclined2%toRs
214804croreatendSeptember2019.
F ThebankaimstoreduceNNPAratiobelow3%andimproveprovisions
coverageratioto80-85%byendMarch2020.
F Net Interest Income (NII) of the merged entity increased 10% to Rs
7027.93 crore in thequarter endedSeptember2019. Interest income
increased8%toRs19274crore,whileinterestexpensesrose6%toRs
12246croreinQ2FY2020.
F DuringQ2FY2020,thebankhasreportednetprofitofRs736.68crore
withtheimprovedmarginsandstronggrowthinnon-interestincomeand
decline inexpenseratio.However, thebankhaswitnessed increase in
creditcostforQ2FY2020.
F Globaldepositsincreased3%toRs894130crore,whileglobaladvances
movedup3%toRs637340croreatendSeptember2019.Credit-deposit
ratio of the merged entity rose on sequential basis to 71.3% at end
September 2019 from 70.7% a quarter ago and 70.7% a year ago.
ContributionofBank'sInternationalBusinessattheendofSeptember
2019was14.2%comparedwith14.6%asofSeptember2018dueto
effectofrationalisationofoverseasoperationssettingin.
4
CMP:Rs.99.00 Target:Rs.120 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/BCHART
Promoters 71.60
NonPromoterCorporateHolding 0.65
Institutions 13.69
Public&Others 8.80
AsonSep’19 %OfHolding
Foreign 5.26
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:21%
F CorporateGovernanceissue
F RegulatoryProvisioningonassets
VALUATION
Apickupintheinvestmentcycle,highergrowthinretail&SMEsegments,
healthyfeeincomegrowth,andgrowthinCASAwouldleadtoarebound
inRoAs.The transformation journey aims at improvedmarket share,
quality business growth, portfolio diversification and enhanced fee
income,withcuttingedgedigitizationofprocesses,whileensuringdue
focusisaccordedtocomplianceandcontrols.Thus,itisexpectedthatthe
stockwillseeapricetargetofRs.120in8to10monthstimeframeonan
expected P/Bvx of 0.75x and FY21 BVPS (Book Value Per Share) of
Rs.160.18.
FaceValue(Rs.) 2.00
P/ERatio(times) 49.25
52WeekHigh/Low 143.60/85.70
M.Cap(Rs.inCr.) 45743.61
EPS(Rs.) 2.01
P/BRatio(times) 0.64
StockExchange BSE
VALUEPARAMETERS
RoE 0.85% 6.20% 11.58%
FYMar-19 FYMar-20 FYMar-21
NII 18683.81 28134.88 31899.50
BVPS 192.72 148.22 160.18
EPS 1.41 5.54 15.85
Ebit 13486.82 18052.03 20841.99
Pre-taxProfit 698.15 4927.05 9418.15
ACTUAL FORECAST
NetIncome 433.52 2872.85 6938.32
Source:Company'sWebsite,Reuters&Capitaline
GUJARATGASLIMITED
F The company has around 23,200 kms of gas pipeline network. It has
around344CNGstationsanddistributesapproximately8.5mmscmdof
naturalgas toabout13,55,000households,approximately2 lakhCNG
vehicles(servingperday)andtoover3540industrialcustomers.
F Themanagementofthecompanyisaimingatsettingupmorethan63
CNGstationsinfinancialyear2020,forthetargettoincreasevolumeof9-
9.5 mmscmd in FY20. The debt stands at Rs 1,800 crore and the
managementofthecompanyislookingatEBITDAmarginofaround13
PercentinFY20.
F G ujaratGasLimited(GGL),isthelargestCityGasDistribution(CGD)player
withitspresencespreadacross23DistrictsintheStateofGujarat,Union
Territory of Dadra & Nagar Haveli and Thane Geographical Area (GA)
(excluding already authorised areas), which includes Palghar District of
Maharashtra.In10thCGDbiddingroundannouncedbyPNGRB,thecompany
haswon6GAscomprisingof17citiesinthestateofPunjab,Haryana,Madhya
PradeshandRajasthan,makingGGLapanIndiaCompany.
F GovernmentofGujarathasalsoinitiatedaCNGSahbhagiSchemeandalso
pushingforthismarketinotherwayandhaveeasedlandrequirement
from1000squaremetertoabout500-550squaremeterandpermission
processhasbeenfastenedinGujaratnow.
F Soecosystemaroundthecompanyhasbeenimprovedduetothateffort
and in lastbudget,Gujarat government allocated1,000 crore forCNG
buses.Therefore,allthesewillhelpittoimproveitsCNGvolumesandthat
needstopushmoreCNGstationsintimetocome.
5
CMP:Rs.223.95 Target:Rs.262 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/BCHART
AsonSep’19 %OfHolding
NonPromoterCorporateHolding 14.93
Foreign 12.23
Institutions 5.73
Promoters 60.89
Public&Others 6.22
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:17%
F Fluctuationincommodityprices
F Regulatorychanges
VALUATION
The company has strong & steady revenue growth momentum and
sustainable margins. It shall continue to focus on growing the
penetration in the current operating areas by increasing the PNG
connections and additional CNG stationswhile tapping the untapped
potential by expeditious rollout of distribution network in the newly
acquiredgeographicareasaswell.Withthisfocusedendeavor,GGLshall
continueitseffortsinprovidingcleanfuelsolutionsacrossalloperational
areatoaugmentanenergetictop-lineandbottom-lineincomingyears.
ThusitisexpectedthatthestockwillseeapricetargetofRs.262in8-10
monthstimeframeonanexpectedPBVmultipleof4.8timesandFY21E
BVPSofRs.54.64.
EPS(Rs.) 14.88
StockExchange BSE
P/BRatio(times) 5.37
FaceValue(Rs.) 2.00
M.Cap(Rs.inCr.) 15416.50
P/ERatio(times) 15.05
52WeekHigh/Low 236.80/116.00
DividendYield(%) 0.45
VALUEPARAMETERS
Revenue 7962.480 10552.082 11747.619
RoE 21.43% 36.02% 25.76%
FYMar-19 FYMar-20 FYMar-21
NetIncome 418.450 920.074 946.100
EPS 6.080 13.032 13.581
Pre-TaxProfit 595.620 1160.797 1309.273
BVPS 32.03 43.13 54.64
Ebit 696.630 1210.330 1328.616
Ebitda 984.640 1529.537 1671.434
ACTUAL FORECAST
Source:Company'sWebsite,Reuters&Capitaline
KECINTERNATIONALLIMITED
F TheRailwaybusinesscontinuestobeonahighgrowthtrajectoryonthe
backofconsistentorderinflows.T&Dgrowthwillbelargelydrivenby
internationalinFY20withexecutionofordersfromSAARC/Bangladesh,
Brazil and Arica start picking up during the fiscal. The management
expects Brazilwould give 35-40%order growth in FY20 and tenders
alreadystartcomingfromSaudiArabia,WestAfricaandEastAisa.
F K ECInternationalisaglobalinfrastructureengineering,procurementand
construction (EPC) major. It has presence in the verticals of power
transmissionanddistribution,railways,civil,solar,smartinfra,andcables.
Globally,thecompanyhasempoweredinfrastructuredevelopmentinmore
than63countries.
F KECInternationalreporteda42%increaseinconsolidatedprofitaftertax
to Rs 139 crore in Q2 September 2019 as against Rs 98 crore in Q2
September2018.Revenues increasedby17% toRs2809 crore inQ2
September 2019 as against Rs 2408 crore in Q2 September 2018.
RailwaysQ2revenuescrossRs500Crsmarkandthecompanycontinues
tofocusonExecutionfocuscontinues.
F Recently, it has secured orders of Rs 885 crore for transmission &
distribution projects from Power Grid Corporation, Tamil Nadu
Transmission Corporation and Karnataka Power Transmission
Corporation.Further,theurbantransportbusinesssegmenthassecured
anorderofRs853crorefortheconstructionofelevatedviaductalong
with10stationsoftheDelhiMetroPhaseIVproject,fromDelhiMetroRail
Corporation(DMRC).TherailwaysbusinesshassecuredanorderofRs
517crorefortheconstructionofroadbeds,majorandminorbridgesand
associatedcivilworks,fromRailVikasNigam(RVNL)inIndia.
F The company has robust and well diversified order book and its
managementisconfidentof15-20%growthinrevenueforFY2020.The
companyexpectsitsRailwaybusinessrevenuetoregisteragrowthof20-
25%forFY20andthatofT&Dasawholeisexpectedtoregisteragrowth
of15%forFY20.
6
CMP:Rs.294.60 Target:Rs.392 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/ECHART
Public&Others 10.97
Promoters 51.59
Foreign 8.09
Institutions 27.14
NonPromoterCorporateHolding 2.21
AsonSep’19 %OfHolding
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:33%
F Increaseinescalationcostduetodelayinprojects
F Politicaluncertaintiesandchangesinregulations
VALUATION
Thecompanyiscontinuouslyperformingwellanddeliveringinallthe
three parameters of revenue, profitability and order intake. T&D
businesshasdeliveredastellarperformance,backedbyrobustexecution
inSAARCandtheAmericas.TheRailwaybusinesscontinuesitsgrowth
momentumasitexpandsportfolioinothersegments.Themanagement
ofthecompanyexpectsinternationalbusinesstopickupwithlargeorder
inflow from Jordan, Saudi, Far East (Indonesia, Thailand), etc and
international T&D, sub-stations and civil infrawill be key drivers for
FY20.Moreover,thecompanyhasmaintaineditsannualguidanceof20%
growthforFY20revenue.Weexpectthestocktoseeapricetargetof
Rs.392in8-10monthtimeframeonaoneyearaverageP/Eof14.06xand
FY21(E)EarningsPerShareofRs.27.90.
P/BRatio(times) 2.93
52WeekHigh/Low 340.50/229.95
EPS(Rs.) 20.96
DividendYield(%) 0.92
M.Cap(Rs.inCr.) 7573.82
StockExchange BSE
FaceValue(Rs.) 2.00
P/ERatio(times) 14.06
VALUEPARAMETERS
Ebitda 1149.91 1317.06 1478.53
Ebit 1032.78 1182.12 1331.56
EPS 19.28 24.06 27.90
NetIncome 495.77 618.57 719.12
ACTUAL FORECAST
Revenue 11000.53 12709.52 14175.16
RoE 22.37% 22.62% 21.78%
BVPS 94.71 114.95 138.70
FYMar-19 FYMar-20 FYMar-21
Pre-TaxProfit 743.51 861.24 988.83
Source:Company'sWebsite,Reuters&Capitaline
INOXLEISURELIMITED
F Content continued to be the decisive force behind the remarkable
performanceoftheQuarter,withnumerousmoviesdoingextremelywell
attheBoxOffice.MissionMangal,Super30,TheLionKing,Chhichhore,
Saaho andDreamGirlwere the top contributors. BatlaHouse, Fast&
FuriousPresentsHobbs&ShawandSpiderMan-FarFromHomealso
madesignificantcontributionstowardstherecordticketsales.
F Thecompanyhasadded27newscreensintheFY20sofar,underlining
Company’sexpansionfocus.INOXcontinueditsfocusontechnologyand
formats with the roll out of India’s first 270-degree multi-projection
ScreenX auditorium at Inorbit Mall Malad, Mumbai and Quest Mall,
Kolkata.
F INOXLeisureLimited(INOX)isamongstIndia’slargestmultiplexchainswith
144multiplexes and598 screens in 68 cities. INOXhas redefinedmovie
experiencesinIndiamakingittrulya7-starexperience.EachINOXpropertyis
uniquewithitsowndistinctarchitectureandaesthetics.
F The management feels that there is enough scope for increasing the
occupancylevelsiftheseatscanbefilledfromMonday-Thursdayandis
exploringdifferentconceptstodoso.In1QFY20,itdidsobyscreeningICC
cricketworldcupmatchesforcorporatesinthetheatersandwantstotake
upsimilarinitiativesgoingforward.Italsobelievesthatgoodcontentand
scriptisthegreatestforcebehindincreasingtheoccupancyrateswhich
mostlyoscillatesinthe25%-30%rangecurrently.
F Recently, it has launched Megaplex – world’s first multiplex with
maximumformatsunderoneroof,atInorbitMallMalad.Besidesbeingan
architecturalmarvelspreadover60,000SqFt,the11-screenspectacleis
also a destination for connoisseurs of good foodwith numerous F&B
conceptsandcuisines.AlsolaunchedBengals’sfirstScreenXtheateratits
multiplexatQuestMall,kolkatta.ScreenXTechnologyoffersapanoramic
270-degreemoviewatchingexperiencetotheaudience.ScreenXisthe
worls’s firstmulti-projection theatre designed to enhance themovie-
goingexperience.
7
CMP:Rs.375.60 Target:Rs.433 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/ECHART
Promoters 51.89
NonPromoterCorporateHolding 1.30
AsonSep’19 %OfHolding
Institutions 21.19
Foreign 12.58
Public&Others 13.04
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:15%
F QualityFilmContentFlow
F ObtainingBusinessLicenses
VALUATION
Withtheconsistencyinperformanceandahealthypipelinesignalstrong
growth,thecompanyisexpectedtoseegoodgrowthgoingforward.It
continuestoimpresswithindustryleadinggrowthacrossallparameters.
In addition, strongmarketposition reflected in ability to consistently
raise ticket prices and strong screen pipeline,will help in increasing
averagefootfallsandconsumerspending. Thus,itisexpectedthatthe
stockwillseeapricetargetofRs.433in8to10monthstimeframeona
currentP/Exof25.72xandFY21EPSofRs.16.84.
P/ERatio(times) 25.72
P/BRatio(times) 5.67
M.Cap(Rs.inCr.) 3863.34
52WeekHigh/Low 390.00/234.00
StockExchange BSE
FaceValue(Rs.) 10.00
DividendYield(%) 0.00
EPS(Rs.) 14.60
VALUEPARAMETERS
Ebit 212.850 346.381 392.220
ACTUAL FORECAST
Pre-TaxProfit 199.100 201.985 237.799
RoE 16.96% 15.75% 17.58%
FYMar-19 FYMar-20 FYMar-21
BVPS 98.135 84.337 99.397
EPS 14.19 14.33 16.84
Revenue 1692.180 2055.428 2361.610
Ebitda 309.160 560.139 637.972
NetIncome 133.490 136.125 165.636
Source:Company'sWebsite,Reuters&Capitaline
JBCHEMICALS&PHARMACEUTICALSLTD
F ThecompanyhasastrongR&Dandregulatoryset-upfordevelopmentof
newdrugdeliverysystemandformulations,filingofDMFsandANDAs.
It’s State-of-the-Art manufacturing facilities are approved by health
authoritiesofregulatedmarkets.
F JB Chemicals & Pharmaceuticals Limited (JBCPL), one of India’s leading
pharmaceutical companies, manufactures & markets a diverse range of
pharmaceuticalformulations,herbalremediesandAPIs.JBCPLexportsto
many countriesworldwidewithpresence inUS,Europe,Australia, South
Africa,otherdevelopingcountries,RussiaandCIS.
F Withwidegeographicalpresenceintheinternationalmarket,increased
focusonANDAfilings,focusonnewproductsintroductioninRussia-CIS
market, focuson lucrativecontractmanufacturingbusinessbackedby
State-of-the-art manufacturing facilities with approval from health
authoritiessuchasUSFDA,UKMHRA,TGAAustralia,MCCSouthAfrica,
MoH-Russia,Ukraine(PICs),ANVISABrazil,MoH-Japan,andwiderange
of products across injectable, solid and semi-solid present a good
opportunityininternationalbusiness.
F The future outlook for the industry and growth expectations remains
positive in view of increased government and private spending on
healthcare.
F The management of the company focuses on harnessing potential of
existingproducts,launchingofnewlineextensions;achievingofnewline
productivity will be pursued with scientific product promotions and
aggressivemarketing strategies. The stringent initiatives takenby the
company have resulted in rationalization of inventory position and
releaseofcashforgrowth.
F DuringQ2FY20,DomesticformulationsbusinessatsalesofRs.189.38
croresregisteredgrowthof15.70%YoY.Theoverallstrategyofexpansion
of field force is playing out well. Domestic sales of contrast media
products at Rs. 14.98 crores were 11.90% higher YoY. Formulations
exportsinGlobalbusiness(otherthanRussia-CIS)atRs.116.42crores
declinedby8%YoYmainlydueto19%lowersalesinUSmarket.Saleof
Company'sSouthAfricansubsidiaryatRs.41.07croreswasflat.
8
CMP:Rs.429.55 Target:Rs.497 Recommendation:Buy
RISK
(Rs.inCr.)FINANCIALPERFORMANCE
P/ECHART
Public&Others 20.28
Promoters 56.02
AsonSep’19 %OfHolding
Foreign 7.17
NonPromoterCorporateHolding 1.17
Institutions 15.36
SHAREHOLDINGPATTERN
INVESTMENTRATIONALE
UpsidePotential:16%
F CurrencyFluctuation
F Regulatoryrisks
VALUATION
Thecompanyaccordshighprioritytodomesticformulationsbusiness,
whichofferssignificantvalueproposition.Ithasconsistent,strongfree
cashflows,withalowdebt-equityof0.02x.Italsoplanstocontinueto
pursue focusonharnessingpotential of theexistingproducts, launch
newproductsselectivelyandachieveincreasedproductivity.Thus,itis
expectedthatthestockwillseeapricetargetofRs.497in8to10months
timeframeonacurrentP/Exof13.68xandFY21EPSofRs.36.35.
DividendYield(%) 1.16
52WeekHigh/Low 434.50/293.00
P/BRatio(times) 2.18
P/ERatio(times) 13.68
EPS(Rs.) 31.41
M.Cap(Rs.inCr.) 3446.56
FaceValue(Rs.) 2.00
StockExchange BSE
VALUEPARAMETERS
ACTUAL FORECAST
EPS 23.54 32.35 36.35
Ebit 249.75 273.70 316.30
Ebitda 305.39 355.19 408.58
Revenue 1643.20 1802.87 2015.20
Pre-TaxProfit 286.99 331.24 383.89
FYMar-19 FYMar-20 FYMar-21
BVPS 184.74 190.72 192.64
RoE 13.24% 16.11% 16.48%
NetIncome 193.47 249.98 286.74
Source:Company'sWebsite,Reuters&Capitaline
E-mail: [email protected] Research also available on Reuters
SMC Research Desk
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