In today’s briefing:
- Radico Khaitan: Forensic Analysis
- Voltas Ltd (VOLT IN) | Competition Casualty
- Bajaj Auto Ltd (BJAUT IN) | EV & Exports Optionality
- Sheng Siong (SSG SP): Upbeat on Potential Ramp up in Store Growth
- Torrent Pharmaceuticals (TRP IN): Strong Domestic Foothold; US Business Reviving
- GoTo (GOTO IJ) – Foundations Laid for Profitable Growth
- Mediatek: TV Demand Peculiarly Strong Within Consumer Electronics Malaise
- Carly Holdings Limited – The Right Operational Model
- Shekel Brainweigh Ltd – Aiming for EBITDA Breakeven in Q4 CY23
Radico Khaitan: Forensic Analysis
- Radico Khaitan (RDCK IN) had succeeded in getting de-leveraged to a strong extent, as mentioned in our previous insight, Radico Khaitan Limited: On the Path of Getting Debt Free
- The company has entered into the new capex phase and has accumulated some debt, the annual report F22 also highlights few irregularities on the forensic side.
- These include complex structure for land purchase, receivables provisioning, deviation between RoU and lease assets, etc.
Voltas Ltd (VOLT IN) | Competition Casualty
- 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.
Bajaj Auto Ltd (BJAUT IN) | EV & Exports Optionality
- Bajaj Auto Ltd (BJAUT IN) is optimistic about the future of their exports and expects a recovery in exports as a critical catalyst for the stock over the near term.
- The company’s EV endeavors in both 2-wheelers and 3-wheelers are expected to surprise on the upside, which can deliver upside than what is currently factored in.
- The stock also trades at undemanding valuations (16x FY25 consensus estimates), offering adequate comfort with an optionality of EV and Exports.
Sheng Siong (SSG SP): Upbeat on Potential Ramp up in Store Growth
- Sheng Siong (SSG SP) management hinted at possible accelerated store growth referring to news reports about Singapore ramping up public housing to meet strong demand.
- Singapore minister’s comment on public housing BTO projects under construction to increase to 150 in 2025 (from 100 currently) suggests a strong project pipeline in the next few years too.
- Muted 1Q2023 performance reported- decline in revenues and profits, yoy – in line with expectations as shopping ‘normalize’ post-COVID.
Torrent Pharmaceuticals (TRP IN): Strong Domestic Foothold; US Business Reviving
- Torrent Pharmaceuticals (TRP IN) continues to report double-digit revenue growth from India business. Leadership positioning in chronic therapeutic areas underpinned by Curatio acquisition is driving the domestic business.
- The company expects the India business to continue its growth momentum, backed by new launch, top brand performance, increase in field force productivity, and continued performance of Curatio portfolio.
- The U.S. business also witnessed revival in FY23 after a downturn in FY22, which should provide impetus to the company’s bottom line to a great extent.
GoTo (GOTO IJ) – Foundations Laid for Profitable Growth
- GoTo (GOTO IJ) 1Q2023 were impressive given the group is now contribution margin positive for all its divisions plus making good headway towards positive Adjusted EBITDA by 4Q2023.
- This came at a cost with substantial QoQ declines in GTV for both ODS and e-commerce but better take rates offset this decline. Further significant declines may raise concerns.
- GoTo Logistics and GoPay’s lending business are key foundational focus areas to underpin a lower cost to serve and higher future growth. Valuations remain reasonable relative to peers.
Mediatek: TV Demand Peculiarly Strong Within Consumer Electronics Malaise
- Mediatek results showed it may be in one of the stronger positions through this cycle, part of the stronger group of company’s in what appears a ‘two-track’ semi industry recovery.
- The company reported notable strength in TV end-demand relative to the rest of the consumer electronics space.
- The company implied 2Q23E could be the company’s cycle bottom.
Carly Holdings Limited – The Right Operational Model
- Carly Holdings Limited (ASX:CL8) operates a vehicle subscription business, which it launched in March 2019, leveraging the existing DriveMyCar operations and technology.
- Car subscription allows business and retail customers to pay a single monthly fee to access a car for 30 days or more and is an alternative to purchasing or financing a vehicle.
- Carly has attracted larger automotive industry businesses as shareholders, with a model that facilitates sales volumes of new vehicles and delivers a new recurring revenue stream for automotive manufacturers and dealers.
Shekel Brainweigh Ltd – Aiming for EBITDA Breakeven in Q4 CY23
- Shekel Brainweigh Limited (ASX:SBW) reported FY22 sales growth of 14% to US$26.3m, which included 117% growth in Retail Innovation sales to $US2.0m.
- Revenue growth has continued into Q1 FY23 with 13% underlying growth, driven by 32% growth in the Self-Checkout division.
- We estimate an adjusted FY22 EBITDA loss (before amortisation, one-off costs and share-based payments) of US$3.3m, in-line with CY21 and impacted by a ~530bps decline in gross margin, predominantly in H2 FY22.
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