In today’s briefing:
- Jubilant Foodworks (JUBI IN) | Anyone Can Hold the Helm when the Sea Is CALM
- Hindalco Industries: Geopolitical Conflict Provides Traction to Metal Prices
- Improving visibility towards >5% PPoP/loans, >1.8% RoAs and 15% RoEs
- Energy cost inflation to drive margin reversion
- Consistency at play; enough levers and buffers to absorb global uncertainties and grow
- RBI directs PPBL to temporarily stop onboarding new customers
- Stars are aligned to growth in Indian health insurance
Jubilant Foodworks (JUBI IN) | Anyone Can Hold the Helm when the Sea Is CALM
- Jubilant Foodworks (JUBI IN) announced the departure of its CEO Mr Pratik Pota.
- The timing of departure coupled with recent disappointment around disclosures is making the market nervous.
- As the “sea” gets stormy thanks to high food inflation and pressured “Dine-Ins”, who would be JUBI’s new captain is the key.
Hindalco Industries: Geopolitical Conflict Provides Traction to Metal Prices
- The Russia Ukraine conflict has provided traction to global metal prices.
- During YTD CY22, a healthy rally has been witnessed in both ferrous and non-ferrous metals.
- During YTD CY22 (January 1-March 10, 2022), aluminium prices on the LME increased by ~21% to US$3409/tonne.
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Improving visibility towards >5% PPoP/loans, >1.8% RoAs and 15% RoEs
- Our interaction with the management of IndusInd Bank (IIB) suggests that the macro uncertainties / volatility amidst current geopolitical situation and prolonged supply disruption may pose some risk to financing demand in gems/jewellery (Russia accounts for ~30% of global diamond output) and vehicle financing (due to rise in fuel prices).
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Energy cost inflation to drive margin reversion
- We believe, it would be tough for Asahi India Glass (AIG) to sustain its present elevated profitability levels amidst steep rise in energy costs.
- We expect it to surge a further ~400bps by Q1FY23E, assuming present natural gas and crude oil prices.
- Also, logistics cost to sales is ~5-6%, and ~20% increase in fuel costs would add a further 100bps pressure on margins.
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Consistency at play; enough levers and buffers to absorb global uncertainties and grow
- Interaction with senior management of HDFC Bank suggests the bank is well geared to sustain high-teen growth in loans and advances.
- Visibility continues to be high on its consistent earnings delivery and >2% RoA / >18% RoE for FY23E/FY24E.
- Nonetheless, the stock has corrected >10% in past one year and underperformed Nifty by ~20% and Bank Nifty by ~7%.
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RBI directs PPBL to temporarily stop onboarding new customers
- RBI has directed Paytm Payments Bank (PPBL), an associate of One 97 Communications (OCL or Paytm), to temporarily halt onboarding of new customers, via a letter dated 11th Mar’22. The embargo will have an adverse impact on signing up users for new PPBL wallets or savings / current accounts, until further notice.
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Stars are aligned to growth in Indian health insurance
- Star Health Insurance (STAR) is the leading health insurance player in India with 14%/32% market share in total/retail health insurance segment as of 10MFY22. A strong network of 0.53mn agents, >12,000 hospitals and 737 branches as of 9MFY22 makes STAR a dominant franchise in Indian health insurance with significant entry barriers.
- This is further complemented by healthy financials.
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