In today’s briefing:
- Delhivery IPO Trading – Anchor Book Was Good but Overall Demand Was Still Tepid
- S&P BSE Indices: No Changes for SENSEX; 7 ADDs/DELs for BSE 100 in June 2022
- Jamna Auto Industries – Ideal Play on CV Upcycle; Resume with Buy
- Camlin Fine Sciences: RM Pressure Weighs on Performance; Structural Change Underway
- Result Update – Endurance Tech
- Endurance Technologies – Multiple Growth Levers to Drive Industry Outperformance
- Result Update – Krishna Institute of Medical Sciences LTD
- Pfizer India – Beat on Margins
- PI Industries: Executional & Operational Improvement. Positive Outlook!
- Shree Cements Ltd – Lower Pricing Impacts EBITDA; Costs Remain in Control
Delhivery IPO Trading – Anchor Book Was Good but Overall Demand Was Still Tepid
- Delhivery raised around US$680m in its India IPO, the company is backed by a host of financial investors, the largest being Softbank.
- Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
- We have covered various aspects of the deal in our earlier notes. In this note, we talk about the demand and trading dynamics.
S&P BSE Indices: No Changes for SENSEX; 7 ADDs/DELs for BSE 100 in June 2022
- After market close on Friday 20th May 2022, the constituency changes for S&P BSE 100, SENSEX 50, and SENSEX Next 50 Indices were announced.
- There will be no changes for S&P BSE SENSEX and S&P BSE BANKEX Indices in the June 2022 Rebalance.
- These changes will become effective at the open of Monday 20th June 2022. Below is a closer look at each of the names involved in the June 2022 Rebalance.
Jamna Auto Industries – Ideal Play on CV Upcycle; Resume with Buy
- Revenue ahead of estimate driven by improving product mix and higher realisation
- Key beneficiary of a multi-year CV upcycle: We see strong multi-year CV upcycle over the next 2-3 years
- Rising share of high-margin products & cost-control initiatives to drive margins: Increasing share of more rofitable Parabolic Springs (share of Parabolic Springs has risen to ~37-40% in the last two quarters vs. ~22% FY19) due to vehicle premiumisation should lead to improvement in product mix and profitability.
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Camlin Fine Sciences: RM Pressure Weighs on Performance; Structural Change Underway
- Camlin Fine Sciences (CFS) Q4 FY22 performance was lower than our expectations as the company witnessed severe raw material inflation as increased gas prices affected the CFS Euro subsidiary due to the ongoing Russia-Ukraine conflict.
- Consolidated Revenues stood at Rs 389 Cr, up 19% YoY (our estimate: Rs 377 Cr).
- With regards to the Lockheed Martin deal, the pilot project with a 1,500-ton capacity has the potential to generate Rs 120-140 Cr revenue with contribution kicking in from FY24 onwards.
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Result Update – Endurance Tech
- Domestic business: The standalone revenue declined 3% YoY, impacted by weak 2W industry demand especially in the entry-level segment while production of premium motorcycles was impacted by the shortage of ABS ECUs
- EU business: Europe’s business reported a strong beat on both topline and margin despite multiple headwinds (weak PV production, RM pressures, and elevated energy costs, among others.).
- Healthy Order Wins: During FY22, the company won new orders worth Rs 742 Cr from the top domestic OEMs such as HMSI, HMCL, RE, Ather and others (this is excluding order wins from Bajaj Auto) while receiving RFQ of Rs 2,034 Cr. It includes EV orders worth Rs 160 Cr (including Rs 53 Cr for 2W brakes from Ather and Rs 70 Cr for suspension and brakes from Polarity).
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Endurance Technologies – Multiple Growth Levers to Drive Industry Outperformance
- Endurance Technologies’ (ENDU) consolidated revenue came in above our estimate by ~15%, mainly on the back of higher realizations following price hikes.
- Increase in content per vehicle due to premiumisation in the suspension business, new growth opportunities due to import substitution & regulatory tailwinds (alloy wheels and disc brakes), new products like ABS, growing orders in fully machined casting from automotive & non-auto companies and a sharper focus on aftermarket (recently entered tyre distribution business) are the growth levers going forward. ENDU’s wallet share across OEMs has been gradually rising via cross-selling of new products.
- EV order wins remain key: ENDU is in an advanced stage of discussion with start-ups, in addition to the existing OEMs, to supply them EV products
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Result Update – Krishna Institute of Medical Sciences LTD
- The company’s occupancy rate reduced to 590bps YOY due to COVID 3.0 in Jan’22 but it has since picked up momentum.
- ARPOB improved to Rs 25,144., led by speciality surgeries into the lungs and heart segment.
- The business has almost reached the pre-Covid levels with In-Patient (IP) volumes increasing by 25% on a YoY basis.
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Pfizer India – Beat on Margins
- Resurgence of Covid and potential launch of anti-covid pill Paxlovid in India
- Potential generic competition in Eliquis in 2HFY23 – we estimate Eliquis sales to be ~Rs1,500mn for Pfizer in India.
- Impact of Universal Immunization Program on Prevnar sales in Private Markets – Prevnar penetration in the target markets is currently in low single digit and hence we currently are not building in a material decline in the Prevnar opportunity.
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PI Industries: Executional & Operational Improvement. Positive Outlook!
- PI Industries (PIIND) posted a steady quarter in line with our estimates as the company proved its execution & operational capabilities in this volatile environment. The company reported revenue of Rs. 1395 cr higher by 17.7% / 3% YoY/QoQ.
- EBITDA Margin came in at 22% which was 101 bps higher YoY, led by favourable product mix in export & domestic market and ISAGRO performance, coupled with improved operating leverage
- The stock currently trades at 47x at FY22 EPS, given strong performance on the export and domestic front we value PIIND at 35x (its FY24E EPS) coming at a Target Price of Rs 3161.
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Shree Cements Ltd – Lower Pricing Impacts EBITDA; Costs Remain in Control
- 4QFY22 performance: SRCM reported revenue of Rs41bn, up 3.6% YoY and 7% below our estimate.
- Capex plans: The company has commissioned 3rd clinker line at Chhattisgarh recently, which has total capacity of 4mn mt.
- This plant will supply clinker for the recently commissioned grinding units in East. SRCM had earlier announced a capex plan, which includes: (1) Setting up of an integrated cement plant in Nawalgarh tehsil of Rajasthan with clinker capacity of 3.8mn mt and cement grinding capacity of 3.5mn mt (2) Setting up of grinding unit in the Purulia district in West Bengal with 3mn mt capacity and (3) Setting up of 106MW solar power plant at various locations.
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