In today’s briefing:
- Vedant Fashions IPO: Regal Ware Deserves a Premium. India’s Leading Men’s Ethnic Apparel Brand Play.
- Coforge Ltd: Outlook Remains Strong
- IndusInd Bank – Stabilizing Somewhat
- Macrotech Subsidiaries Merger: It’s All Baffling
- Colgate-Palmolive: RM Inflation Persists; Valuations Comfortable
- Pick of the Week – Infosys
- Result Update:Coforge: Results Below Expectations; Outlook Remains Healthy
- Bharti Airtel: Google’s Investment – a Strategic Move
- Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India
- Can Fin Homes: Loan Growth Picks Up; Maintain BUY
Vedant Fashions IPO: Regal Ware Deserves a Premium. India’s Leading Men’s Ethnic Apparel Brand Play.
- Vedant Fashions, owner of India’s leading homegrown brand for premium ethnic wear for men – Manyavar, will launch its IPO on Feb 4th at a price range of Rs824-866/share.
- The USD420 mn IPO suggests an equity valuation of USD2.8 bn implying forward P/E of around 70X at a premium to apparel peers but in line with consumer good companies.
- The rapid growth in demand for premium ethnic-branded-wear for men have helped Vedant Fashions emerge as a segment leader with a pan India presence and attractive growth outlook.
Coforge Ltd: Outlook Remains Strong
- Coforge offers system integration, apps & BPO services to BFSI, travel & healthcare verticals.
- Revenues and PAT grew at a CAGR of ~12% each over the past five years
- Target Price and Valuation: We value Coforge at Rs 5870 i.e. 30x P/E on FY24E EPS
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IndusInd Bank – Stabilizing Somewhat
- IndusInd reported FY 3Q22 bottom-line results improved 4.8% linked quarter, driven by stronger core revenues and a lower provision;
- NCOs remain elevated and show no sign of abating, and net new NPLs increased 31.6% annualized; and
- IndusInd’s reserve needs to increase closer to 75% with a shortfall of INR 30 bn – representing two quarters of pre-tax results.
Macrotech Subsidiaries Merger: It’s All Baffling
- Lodha Developers (LODHA IN), also known as Macrotech, announced last week the merger of its three listed subsidiaries into the parent entity.
- These three entities are namely National Standard India Ltd (NSIL), Roselabs Finance Ltd (RFL) and Sanathnagar Enterpriseses Ltd (SEL). All of them are listed on the BSE.
- However, when we look at the business and financials of these companies, the decision and the entire story-line along with swap ratio/valuation raises questions.
Colgate-Palmolive: RM Inflation Persists; Valuations Comfortable
- Colgate Palmolive (India) (CLGT) reported an in-line quarter vs our estimates across key performance metrics
- Reported Revenue growth was 3.8% yoy at Rs. 1,271 Cr (our estimate Rs. 1,285 Cr) led by volume growth of 3% in our view (3% our estimate) and ~1% price/mix growth.
- Maintain BUY with revised TP of Rs. 1,650 (earlier Rs. 1,765) at 39x FY24E EPS.
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.
Pick of the Week – Infosys
- Infosys is India’s second-largest provider of consulting and IT services to clients across the globe
- It is also among the fastest-growing IT services organization in the world and leader in the offshore services space
- The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clients
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.
Result Update:Coforge: Results Below Expectations; Outlook Remains Healthy
- Coforge Ltd (Coforge) Q3FY22 results stood below our expectations. The company’s revenue grew by 4.2% QoQ in CC terms to Rs 1,658 C
- Operating profits were reported at Rs 323 Cr, exhibiting a growth of 8.8% QoQ and operating margins witnessed a marginal growth of 90bps QoQ and stood at 19.5%
- We recommend a BUY rating on the stock and assign a 28x P/E multiple to its FY24E earnings of Rs 177.8/share which gives a TP of Rs 5,060 /share. TP implies an upside of 15% from CMP.
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.
Bharti Airtel: Google’s Investment – a Strategic Move
- Bharti Airtel (Airtel) is India’s second largest telecom operator with a revenue market share of ~36% as on Q2FY22
- The company has ~35.5 crore wireless customers in India (November, 2021) and ~12.9 crore subscribers across operations in 14 African countries.
- We remain constructive on Airtel and maintain BUY rating with a revised SOTP target price of Rs 860
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.
Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India
- In a recent Insight, Regulating ESG Ratings in India: Outline of SEBI’s Proposed Regulatory Framework, I summarised SEBI’s proposed regulatory framework for ESG ratings in India.
- This Insight goes a bit further, looking at implications of regulation on stocks of ESG ratings providers (ERPs), especially Credit Rating Agencies (CRAs) and Research Analysts (RAs).
- Downside risk are minimal for ERPs, but a few scenarios and stipulations related to conflicts of interest and compensation (how ERPs are paid, and by whom) could have an impact.
Can Fin Homes: Loan Growth Picks Up; Maintain BUY
- Can Fin Homes (CANF) reported encouraging numbers in Q3FY22 with the pick-up in loan growth led by higher disbursements, improved NIMs due to higher yields, and strong asset quality
- AUM grew 20% YoY/6% QoQ, led by higher disbursements (up 123% YoY/12% QoQ).
- We believe CANF has notable scope for expansion in valuations and we maintain a BUY with a revised target price of Rs 750.
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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