In today’s briefing:
- NIFTY Indices: Quiddity Leaderboard for September 2022
- Japan Airport (9706): Not the Best Proxy for Japan Reopening.
- Conch Environment (587 HK): Don’t Overly Bet on the Blue Sky Scenario
- Ashoka Buildcon Ltd – EPC Business Outlook Robust; Awaiting Further Asset Sale
- Container Corporation of India – No Clarity yet on Land Licence Fees; Higher Ca
- Praj Industries Ltd – Growth Engines Fired, Aided by Strong Execution
NIFTY Indices: Quiddity Leaderboard for September 2022
- The NIFTY Index Family has a series of broad equity indices that represents large, mid and small market capitalisation segments of the Indian public equity market.
- The review of broad market indices will be done on a semi-annual basis and the changes will be implemented at the end of March and September every year.
- Below is a look at the names leading the race to become Adds and Deletes for NIFTY 50, NIFTY 100, and NIFTY 500 in September 2022.
Japan Airport (9706): Not the Best Proxy for Japan Reopening.
- Japan’s reopening has started and pre-departure and on arrival tests for vaccinated tourists have also been abolished.
- The beneficiary of this theme is less obvious for Japan Airport Terminal Co (9706 JP) while it is very obvious for Keisei Electric Railway Co (9009 JP) .
- Japan Airport is trading at a PBR premium to Keisei while the former has a higher debt than the latter.
Conch Environment (587 HK): Don’t Overly Bet on the Blue Sky Scenario
- The sharp plunge in share price of China Conch Environment Protection Holdings (587 HK) has not yet brought its valuations back to more reasonable levels and we see more downside.
- Its 10.1x PER for FY22F is at a significant premium over peer average. Even taking into account the impressive ROE, we still cannot find justifications for its high P/B multiple.
- Negative catalysts include overly aggressive expansion target, slower profit growth than rise in capacity and surge in gearing and finance costs – they will potentially lead to earnings disappointment.
Ashoka Buildcon Ltd – EPC Business Outlook Robust; Awaiting Further Asset Sale
- 4QFY22 performance: ASBL’s revenue grew by 12.4% YoY to Rs15.6bn (4% ahead of our estimate), led by strong order execution while absolute EBITDA at Rs1.56bn declined by 22% YoY (in-line with our estimate). EBITDA margin came in at 10%, which was down 448bps YoY and 50bps lower than our expectation.
- Highest-ever orderbook at Rs137bn: The total OB as on 31st March’22 stood at Rs137.3bn, which included Rs79bn of road projects.
- Update on asset business: The company has already signed SPA for the sale of 5 BOT projects to KKR and 1 BOT project to NIIF, which will be concluded this year.
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Container Corporation of India – No Clarity yet on Land Licence Fees; Higher Ca
- (1) The company has paid LLF of Rs4.65bn in FY22 against expectation of Rs4.50bn (as stated by management).
- (2) Export volume grew marginally by 0.5% QoQ in 4QFY22 due to container shortage amid the Russia- Ukraine crisis and higher freight costs.
- (3) The land policy is still under discussion with the government.
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Praj Industries Ltd – Growth Engines Fired, Aided by Strong Execution
- Strong Demand for Domestic Grain: During Q4FY22,66% of the new orderbook was for Grain-based capacity(starchy feedstock), indicating momentum in Grain-based distilleries.
- Key Business Updates: India has achieved the highest-ever Ethanol blend of ~10% in 2022.
- Strong Execution: The company is witnessing more growth in Grain-based distilleries which has reduced the seasonality of the business which was predominantly based on the sugar cycle.
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