In today’s briefing:
- Alibaba: A Long Way Down Already and a Lot More to Go
- Channel Insight #26 | M&M (Tractors), Bajaj Electricals (Murphy Richards), Havells
- Barbeque Nation Update: Discomforts Still Prevalent
- Crown Resorts 13.50 Top Barrier
- Crompton Consumer (Update): Acquiring additional wings. Maintain BUY
- Margins impacted by RM Cost and operating deleverage
- Butterfly Gandhimathi Appliances: Stake Sale to Provide Larger Canvas for Butterfly Brand
Alibaba: A Long Way Down Already and a Lot More to Go
- Alibaba Group (9988 HK)’s 3QFY22 results was disappointing with the company’s revenue growing by 9.7% YoY, the slowest YoY growth since inception and missing the consensus revenue target by 1.3%.
- The situation appears far worse on the profitability side considering that OP (excluding impairment of goodwill) fell more than 34% YoY to RMB 32.2bn in 3QFY22.
- We feel there’s a lot more downside to Alibaba shares over the medium term as the company’s cash cows are starting to falter in these tough conditions.
Channel Insight #26 | M&M (Tractors), Bajaj Electricals (Murphy Richards), Havells
- We interact with channels of Mahindra & Mahindra (MM IN) , Bajaj Electricals (BJE IN) & Havells India (HAVL IN) with an objective to understand sources of stress in rural India.
- Price increases, lack of savings and irregular rural cash flows are taking a toll on Tractor Sales.
- In durables, there are no signs of recovery, with lower prices being the only catalyst that would bring back volumes.
Barbeque Nation Update: Discomforts Still Prevalent
- Barbeque Nation Hospitality (0823884D IN) is among the largest casual dining chains in the country, and its been a year since it got listed on the bourses.
- In our earlier insight Barbeque Nation IPO: Not Grilling Fine , we had highlighted the business, financial and governance discomforts seen in the IPO document.
- A year later, these setbacks still continue to be visible in the balance sheet. In this insight, we try to update our insights regarding the company.
Crown Resorts 13.50 Top Barrier
- Crown resorts displays a clear sell top zone near 13.00-50 that will induce a tactical rejection to short. On pullback we see a buying opportunity.
- Rising price wedge is ultimately bearish. RSI bear divergence warns of a weakening rise (not confirming new price highs on weaker bull momentum).
- Initial pullback support at 11. Higher conviction buy level at the 10 support where price and trend meet.
Crompton Consumer (Update): Acquiring additional wings. Maintain BUY
- The deal is fairly valued (already at acquisition premium, the stock has run up 2x in the last 6 months).
- Any valuation upside from this deal will be based on Crompton’s success on execution (growth with margin improvement).
- Crompton has announced the acquisition of Butterfly Gandhimathi Appliances (Butterfly) in order to extend its kitchen product line.
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Margins impacted by RM Cost and operating deleverage
- New order wins in EVs/hybrids; Focus on energy cost pass on to customers MACA’s weak performance in 4QCY21 was reflection of high RM/energy cost and operating deleverage in both geographies.
- It is negotiating with customers to pass on hyper inflation in energy prices.
- We cut our CY22E EPS estimates by 3.5% to account for margin pressures across both geographies and maintain CY23E EPS estimates.
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Butterfly Gandhimathi Appliances: Stake Sale to Provide Larger Canvas for Butterfly Brand
- Butterfly Gandhimathi (BGAL) is one of the leading manufacturers of kitchen & electrical appliances in India and sells its products branded as ‘Butterfly’.
- The company is a market leader in India for SS LPG stoves & table top wet grinders and major supplier of mixer grinders & pressure cookers
- Over the last three years, BGAL has enhanced its focus on modern trade/online distribution channels to capture higher revenue growth
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
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