Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

HDFC Asset Management Co Ltd / Equity Bottom-Up

<ul>
<li>Due to the ongoing earnings season, for the next two weeks, we will temporarily deviate from our regular format and instead focus on reported earnings.</li>
<li>We focus on reported earnings, performance against expectations, and the top three highlights that we believe are important from earnings calls for each company that is usually under coverage.</li>
<li>Besides the Bullish/Bearish names, we draw attention to the ones that are highlighted as interesting and would be pleased to engage in discussions about any of them.</li>
</ul>


Due to the ongoing earnings season, for the next two weeks, we will temporarily deviate from our regular format and instead focus on reported earnings.
We focus on reported earnings, performance against expectations, and the top three highlights that we believe are important from earnings calls for each company that is usually under coverage.
Besides the Bullish/Bearish names, we draw attention to the ones that are highlighted as interesting and would be pleased to engage in discussions about any of them.


[Week 8] Namaste India 🙏 | Earnings Edition - Part I

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.</li>
<li>The BSE AllCap index Rebalance was completed in September 2023. There were 77 ADDs and 73 DELs. </li>
<li>Since the BSE AllCap index is the main universe for the BSE 200, 100, and SENSEX indices, there have been some changes to our December 2023 index change expectations.</li>
</ul>


In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
The BSE AllCap index Rebalance was completed in September 2023. There were 77 ADDs and 73 DELs. 
Since the BSE AllCap index is the main universe for the BSE 200, 100, and SENSEX indices, there have been some changes to our December 2023 index change expectations.


Quiddity Leaderboard BSE/​​​​SENSEX Dec 23: AllCap Sep 23 Rebal Done; Some Changes to Expectations

<ul>
<li>
<a href="https://www.smartkarma.com/entities/voltas-ltd" target="_blank" data-smartkarma-citation="entities:19924:1" rel="noopener">Voltas Ltd (VOLT IN)</a> has experienced a decline in revenue due to a slowdown in demand, increased competition, and higher commodity prices. </li>
<li>The Voltas Beko brand has been a ray of hope for the company, with strong growth in demand and market share.</li>
<li>While there may be an upside in volumes as capex kicks in,  but better to be on the sidelines until there is a change in the structure of the industry.</li>
</ul>



Voltas Ltd (VOLT IN) has experienced a decline in revenue due to a slowdown in demand, increased competition, and higher commodity prices. 
The Voltas Beko brand has been a ray of hope for the company, with strong growth in demand and market share.
While there may be an upside in volumes as capex kicks in,  but better to be on the sidelines until there is a change in the structure of the industry.


Voltas Ltd (VOLT IN) | Competition Casualty

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>In Q2FY23, <a href="https://www.smartkarma.com/entities/thermax-ltd" target="_blank" data-smartkarma-citation="entities:4578:1" rel="noopener">Thermax (TMX IN)</a> recorded strong revenue growth of 41% y/y to Rs20.8bn, driven by strong growth across all the three segments.</li>
<li>The company bore the brunt of high raw material prices as EBIT margins saw a 900 bps decline y/y to 6.9%. However, EBIT margin improved 200 bps over Q1FY23.</li>
<li>The order book of the company grew 46% y/y to Rs94.8bn. Order book is well diversified across sectors. Domestic orders comprised ~84% of the order book.  </li>
</ul>


In Q2FY23, Thermax (TMX IN) recorded strong revenue growth of 41% y/y to Rs20.8bn, driven by strong growth across all the three segments.
The company bore the brunt of high raw material prices as EBIT margins saw a 900 bps decline y/y to 6.9%. However, EBIT margin improved 200 bps over Q1FY23.
The order book of the company grew 46% y/y to Rs94.8bn. Order book is well diversified across sectors. Domestic orders comprised ~84% of the order book.  


Thermax (TMX IN): Strong Order Book Entails Visibility Amid Margin Pressure

Johnson Controls-Hitachi Air Conditioning India / Equity Bottom-Up

Johnson Controls-Hitachi Air Conditioning India

<ul>
<li>Our channel interactions continue to suggest, <a href="https://www.smartkarma.com/entities/johnson-controls-hitachi-air-conditioning-india-ltd" target="_blank" data-smartkarma-citation="entities:6172:1" rel="noopener">Johnson Controls-Hitachi Air Conditioning India (JCHAC IN)</a> will not be able to recover market share over the next two years. </li>
<li>More disappointment in line with what we have seen in Q2 remains a strong probability. </li>
<li>Other annual report concerns also warrant attention, best to AVOID in spite of a sharp correction in stock price. </li>
</ul>


Our channel interactions continue to suggest, Johnson Controls-Hitachi Air Conditioning India (JCHAC IN) will not be able to recover market share over the next two years. 
More disappointment in line with what we have seen in Q2 remains a strong probability. 
Other annual report concerns also warrant attention, best to AVOID in spite of a sharp correction in stock price. 


Johnson Hitachi (JCHAC IN) | Losing Its "Cool"

India

GMR Infrastructure is an infrastructure company with interests in airports, power and roads. The Company is developing a greenfield international airport at Hyderabad, and is also operating, managing and developing the Delhi airport. Additionally, it is involved in development and operation of power plants and road projects in India.

IRB Infrastructure Developers Limited is an infrastructure development and construction company in India with significant experience in the roads and highways sector.  The Company is also involved in the real estate development sector.

NBCC (India) Limited provides construction and engineering services. The Company constructs residential, commercial, and institutional buildings, as well as offers services, including project conceptualization, feasibility studies, construction drawings, detailed project reports, and project consulting services.

Kalpataru Power Transmission Limited manufactures transmission line towers for power distribution which are sold to The Power Grid Corporation of India and State Electricity Boards. The Company also exports its products to various countries and it also develops real estate.

NCC Ltd. is a construction company. The Group undertakes civil and structural infrastructure projects, real estate development and light engineering projects.

KEC International Limited is a power transmission company which is involved in the design, manufacture, supply and construction of turnkey projects of power transmission lines. The company also installs fiber optical cable and provides services for Satellite/GPRS surveys.

Techno Electric & Engineering Company Limited operates as a renewable energy company. The Company generates, transmits, and distributes wind power and electricity, as well as provides engineering and project management services. Techno Electric & Engineering serves customers in India.

Techno Electric & Engineering (TECHNOE IN)

Engineers India Limited is a design and engineering company in the field of petroleum refineries, petrochemicals, oil and gas processing, offshore structures and platforms, fertilizers, metallurgy and power. EIL provides services such as design, engineering, procurement, construction management, commissioning assistance and project management.

Praj Industries Limited is an engineering firm that provides solutions for distillery and brewery wastewater treatment and utilization. The Company's fermentation systems include technology packages for multiple feedstock including cane molasses, cane juice and filtrate, starch based raw material like corn, sorghum, wheat, tapioca and tropical sugarbeet.

H.G. Infra Engineering Limited (HGIEL) provides infrastructure construction services. The Company offers highways, roads, bridges, runways, and civil construction, as well as land development, water pipelines, and rehabilitation and upgradation services. HGIEL serves customers in India.

Shimizu Corporation is a general contractor operating nationwide and overseas. The Company builds residential, commercial, and institutional buildings. Shimizu also performs civil engineering works for roads and operates real estate businesses. The Company, through its subsidiaries, sells and leases construction materials and machinery.

Metallurgical Corporation of China Ltd., through its subsidiaries, operates in EPC projects (engineering, procurement and construction) mainly for metallurgical facilities, natural resources exploration, equipment fabrication, and property development.

Metallurgical Corporation Of China Ltd (601618 CH)

China State Construction International Holdings Limited, through its subsidiaries, provides building construction and civil engineering works services in Hong Kong.

Valmont Industries, Inc. designs and manufactures poles, towers, and structures for lighting, communication, and utility markets and provides protective coating services for infrastructure.  The Company also manufactures and distributes industrial and agricultural irrigation products in addition to a wide variety of fabricated products for commercial and industrial applications.

Gamuda Berhad is an investment holding and civil engineering construction company. Through its subsidiaries, the Company provides earthwork construction, manufactures and supplies road surfacing materials, and operates quarry and road laying projects. Gamuda also has operation in hiring and rental of plant and machinery, develops properties, and manufactures and sells paper.

Dycom Industries, Inc. provides engineering, construction, and maintenance services to telecomm providers in the United States.  In addition to its primary services, the Company performs underground utility locating and electric utility contracting services.  Dycom also provides services related to the installation of integrated voice, data, and video networks in office buildings.

China National Chemical Engineering Company Ltd. offers construction services. The Company builds chemical, petrochemical, pharmaceutical and power plants, and coal industry facilities.

China National Chemical Engineering Company A (601117 CH)

China National Chemical Engineering Company A

China Energy Engineering Group Co. Ltd. (CEEC) provides infrastructure construction and investment for hydroelectrical works. The Company also offers power engineering, electric power equipment, technology, and human resources. CEEC provides its services in China and internationally.

Arcadis N.V. offers consulting and engineering services worldwide.  The Company performs feasibility studies, develops projects, offers financial and legal consulting services, assists in the permitting process, and offers design and maintenance services.

Fomento de Construcciones y Contratas S.A. (FCC) offers construction services and manufactures building materials.  The Company offers civil engineering services, constructs housing and commercial buildings, roads, and other infrastructure projects, develops real estate, collects, treats, and disposes of solid waste, markets street cleaning machines, and produces cement.

Fomento De Construcciones Y Contratas (FCC SM)

Voltas Limited offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools, mining and construction equipment, materials handling, water management, building management systems, indoor air quality and chemicals.

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Voltas Ltd (VOLT IN)

[Week 8] Namaste India 🙏 | Earnings Edition - Part I

Deviating from our usual format due to earnings season, this is a long but must-read for anyone who is keen to track the earnings of Indian...

Pranav Bhavsar

Quiddity Leaderboard BSE/SENSEX Dec 23: AllCap Sep 23 Rebal Done; Some Changes to Expectations

Currently, I do not see any changes for the SENSEX Index in December 2023. There could be seven changes for the BSE 100 index and six changes for...

Janaghan Jeyakumar, CFA