Beruflich Dokumente
Kultur Dokumente
"Neutral"
As per the management, exports have not been impacted due to demonetization, Indian business saw lower sales in the month of November. The
dependence of the company on domestic business is ~ 31% in total revenue. Recently Biocon has Submitted Trastuzumab dossier to the United
States Food & Drug Association (USFDA) which is an important milestone for Biocon and its review process is expected to take 18-24 months. The
market size of Trastuzumab injection is valued at about $6.5 billion, according to IMS data. Crestor Generic has been approved by USFDA and
Biocon is on track to launch the product in near future. This will be a huge opportunity for Biocon to take first mover advantage with its bio-similar
products. On the contrary ongoing price control pressure in India and US and discontinuance of key products may put some uncertainties in near
term. Hence we maintain Neutral rating in this stock. . ( Page : 2-4)
BEL
"BUY"
The company is having robust order intake during H1FY17 which gives decent revenue growth visibility going forward and this is expected to remain
in the range of Rs 10000cr-15000cr over the next two-three years. Currently, the defence sector is in the limelight due to the governments strong
focus on making defence procurements central to the Make in India campaign. The company has ~35% market share in Indias defence
electronics segment and is likely to be one of the biggest beneficiaries of the offset clause. Based on above mentioned reasons we see strong
medium-term earnings visibility for the company, hence we recommend BUY at a target price of Rs 1670 (Potential upside 22%).
..................................................... ( Page : 5-8)
VOLTAS
"NEUTRAL"
The company is cautious in taking new orders in the EMPS segment and its focus is primarily on Govt. projects i.e. smart cities, rural electrification
and water treatment wherein execution cycle is steady and payments are secured. Management expects profitability to improve after closing most
of its low-margin and loss-making legacy projects by end-FY17. Going forward we expect near-term earnings to be under pressure due to lower
sales and margin in the UCP segment and continued subdued performance in EMPS segment. Right now we are not seeing any major uptick in
demand so we revised our estimates with flat revenue growth from 5% to 0.7% in FY17E and presently we are NEUTRAL on this stock at a revised
target of Rs 330 (from Rs 345). ..................................... ( Page : 9-12)
ASHOKLEY
"BUY"
Going forward, We assume that the upcoming emission norms BS-IV to BS-VI, focus towards the export markets, improvement in demand from
infrastructure segment, diminution of investments in subsidiaries will help the company to focus on its commercial vehicle business and
government's initiative to develop defence products in the country can be volume boosters for the company in FY17. The current demonetization
issue has impacted the transport sector most because a lot of transactions happen through cash. The sales may be down by 10-12% for next couple
of months but we are hopeful that the situation might improve in 4QFY17 due to pre-buying during the quarter. We expect that the company will
maintain a healthy ROE of over 20% going ahead. We maintain 'BUY' looking at the huge growth potential going ahead but considering the
uncertain demand scenario we reduce our target to Rs.110. .................... ( Page : 13-15)
DABUR
"NEUTRAL"
DABURs 2QFY17 result was below than our expectations. Sales for second quarter grew by 1% YoY to Rs 1981 cr on the back of sluggish growth
from international business. International business has contributed approx. 34% of companys sales in 2QFY17. International business declined by
2.3% YoY in this quarter due to geo political disturbances in the MENA region and adverse currency impact. According to Management, headwind in
international business will continue for at least 2-3 quarters going forward. Secondly, recent demonetization may negatively affect companys
domestic sales in 3QFY17E which is a cause of concern for the company in the short term. Rural demand is still stressed witnessing slight
improvement. Lastly, the company is getting tough competition from Patanjali. Patanjali is strong in north and west India from where Dabur gets
Substantial part (approx. 60% of its footprint) of its domestic business which is another concern for DABUR. Hence considering tepid international
business growth outlook, tough competition from Patanjali and stress in rural demand we maintain `Neutral rating on Dabur with no target price.
............................... ( Page : 16 -18)
SUNPHARMA
"NEUTRAL"
Synergies from the Ranbaxy acquisition are gaining momentum and the Company is on track to achieve the targeted benefits. Post 2QFY17,
Sunpharma has further strengthened the branded ophthalmic pipeline through the acquisition of Ocular Technologies. But recent developments
are not very conducive for the company. US business is under pricing pressure due to customer consolidation. Ongoing issue in Halol plant and
inflated pricing issue on dermatology products in US will pose near term uncertainty. Though the company has maintained its guidance of 8-10%
sales growth for FY17E, we are little skeptical about it considering on-going issues. Thus, we recommend "NEUTRAL" view on this
stock......................................... ( Page : 19-21)
Narnolia Securities Ltd
917
Neutral
BIOCON LTD
30-Dec-16
Company Update
CMP
930
Target Price
Previous Target Price
880
Upside
Change from Previous
Market Data
BSE Code
532523
NSE Symbol
BIOCON
1020/431
18,604
73
8,693
3M
12M
Absolute
0.5
82.8
67.4
Rel.to Nifty
2.5
80.6
63.1
1QFY17 4QFY16
60.7
37.5
1.8
100.0
Public
Others
Total
60.7
60.7
37.4
1.9
100.0
37.4
-100.0
Company Vs NIFTY
200
Q2FY17_Result Update
EBITDA rose 45% to Rs 277 Cr; Net Profit stood at Rs 147 Cr a growth of
52% over last year.
Stock Performance
1M
2QFY17
BIOCON
NIFTY
180
160
140
120
Financials
2012
2013
2014
2015
Rs,Cr
2016
100
Sales
EBITDA
Net Profit
EPS
P/E
2148
517
338
17
14.1
2538
475
509
25
10.8
2933
518
414
21
20.5
3143
617
497
25
18.9
3570
784
896
30
19.0
Dec-16
Oct-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Aditya Gupta
aditya.gupta@narnolia.com
Segment Revenue
286
638
263
270
526
602
250
576
316
225
581
632
238
587
220
172
527
531
188
535
192
183
513
548
188
166
457
CRAMS(Rs in Cr)
542
140
486
155
129
463
533
122
440
BIOPHARMA(Rs in Cr)
2,485
53
2,538
1,045
42%
576
475
19%
179
296
8
408
98
24%
509
116
20
FY13
Share Capital
Reserves and surplus
Shareholders' funds
Long term Debt
Total Borrowings
Non Current liabilities
Long term provisions
Short term Provisions
Current liabilities
Total liabilities
Net Fixed Assets
Non Current Investments
Other non Current assets
Current assets
Total Assets
100
2,595
2,695
164
249
502
4
247
905
4,416
1,823
65
41
2,240
4,416
2,877
56
2,933
1,186
41%
707
518
18%
204
315
2
538
107
20%
414
175
20
3,090
53
3,143
1,256
41%
737
564
18%
221
343
9
519
96
18%
497
119
20
3,485
85
3,570
1,330
38%
831
688
20%
242
446
10
652
257
39%
896
119
20
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
BALANCE SHEET
FY14 FY15 FY16
100
2,927
3,027
606
850
656
8
177
1,136
5,751
2,731
65
47
2,639
5,751
100
3,171
3,271
770
1,031
608
15
158
1,294
6,375
3,307
137
2,563
6,375
100
3,956
4,056
2,072
2,467
415
30
88
1,233
8,482
3,910
166
3,993
8,482
FY13
25
135
6
0.23
RATIOS
FY14 FY15
21
151
9
0.42
25
164
6
0.24
FY16
45
203
6
0.13
11
2
2%
21
3
2%
19
3
1%
11
2
1%
19%
10%
14%
9%
15%
8%
22%
7%
0.56
75
59
51
0
0.50
76
48
44
0
0.48
91
53
51
0
0.41
86
54
57
1
610
179
(94)
758
471
1,904
(359)
(376)
(21)
(8)
(100)
(9)
87
387
474
538
204
(149)
672
561
1,642
(789)
(938)
(19)
(1)
(150)
426
49
508
557
624
221
(133)
698
211
2,943
(838)
(509)
(15)
(1)
(100)
186
(112)
574
463
1,227
242
(247)
818
526
2,784
(811)
(954)
(54)
(11)
(200)
1,087
659
468
1,127
BUY
BHARAT ELECTRONICS LTD.
29-Dec-16
Result Update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1374
1670
22%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500049
BEL
1540/1009
30,880
41373
8044
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
13.2
10.6
22.0
17.1
15.0
17.2
1QFY17
Promoter
74.41
75.02
75.02
Public
25.59
24.98
24.98
--
--
--
100
100
100
Others
Total
Company Vs NIFTY
130
125
120
115
110
105
100
95
90
85
80
BEL
Order inflow grew 108% YoY to Rs 41300cr, led by finalization of orders like
electronic warfare suite, advanced composite communication system, ship
data network, and annual maintenance contract for Rohini radar. For FY17
Key orders like Akash missile system, mobile cellular communication system,
Commander TI Sights, Samyukta upgrade, Long range surface to air missile
and L-band tropo upgrade are supposed to be finalized.
Key Highlights:
Company has entered into strategic alliance with defence laboratories,
ordinance factory board and other global OEMs to develop products like
Surface to air sytems, air defence radars, Battlefield management system,
sonar systems, next generation night vision devices, gun upgrades/ new gun
programmes, inertial navigation systems, medium altitude long endurance
unmanned aerial vehicles (UAVs) and maintenance of aerostat surveillance
and communication systems.
Company plans to set up Rs 500cr Greenfield weapon systems facility in
Andhra Pradesh which will focus on the design, development and production
of weapon systems like fire control, missile systems and other weapon
upgrade systems. Company expects the facility to be ready over the next two
years.
NIFTY
Bibha Kashyap
Financials
Sales
EBITDA
Net Profit
EBIDTA%
P/E
FY12
5847
636
847
10.9%
0.1
FY13
6173
663
912
10.7%
0.1
FY14
6388
922
952
14.4%
0.1
FY15
6915
1175
1197
17.0%
0.2
FY16
7759
1538
1387
19.8%
0.2
bibha.kashyap@narnolia.com
Narnolia Securities Ltd
Please refer to the Disclaimers at the end of this Report
35000
34675
30000
22884 22077 21617
21053 21648
25000
20000
12776
15000
10000
5000
827
2780
763
4127
2824
1980
541
1003
1,400
1,195
1,287 1,244
1,197
1,200
1,094 1,065
1,000
794
800
701
691
600
400
200
-
3,056
663
2,000
1,500
1,582
1,009
1,000
1,172
997
192
500
-
3,135
795
2,831
723
3,000
2,500
PAT (Rs/Cr)
59
1,266
1,071
272
147
26
1,5251,500
296
206
77
900
800
700
600
1,756 500
400
346
300
847
200
100
36
-
Gross Margin %
EBIDTA Margin %
60%
50%
48%
42%
41%
53%
52%
46%
31%
19%
17%
19%
12%
9%
0.2%
50%
27%
15%
20%
45%
37%
25%
30%
0%
49%
36%
40%
10%
43% 45%
1%
-4%
-5%
-10%
Investment arguments:
Company has a strong balance sheet with zero debt and cash balance of Rs. 7553 cr (~25% of market capitalization). It is also
paying dividends consistently since 1990. Accelerated order inflow and steady performance makes it a preferred defense play.
The government notified increase in Foreign Direct Investment (FDI) limit to 49% through approval route in the defense sector,
aimed to cut imports by indigenizing defence production.
Segments like Radar and Missile systems, Communication and Network Centric Systems, Tank Electronics, Gun upgrades & EO
systems and Electronic Warfare & Avionics systems will continue to drive the Companys growth in the coming 4 to 5 years.
The Defence Sector is increasingly being opened up for private sector participation with evolutions of Defence Procurement
Procedure.
Company is working on new strategic areas like Electronic Ammunition Fuzes, Homeland Security Solutions, Navigational
Complex Systems and Inertial Navigation Systems in line with the emerging needs of the Customers.
BEL is also taking collaborative R&D initiatives for joint developments with reputed foreign companies and Indian MSMEs to
quickly harness specialized technologies into the new products.
Order status at the end of Q2FY17
Acquired
Supply
Expected order
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY13
6273
625
6898
3917
1
569
663
11%
136
526
1
1151
236
21%
912
178
8
FY14
6518
437
6955
3788
1
762
922
14%
150
772
4
1205
254
21%
952
186
8
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY13
80
6407
6487
0
0
0
6488
928
237
3364
5331
1174
720
5594
14851
FY14
80
7140
7220
0
0
0
7221
1153
269
4156
4605
1234
605
6192
14976
FY15
7093
507
7599
3935
1
702
1175
17%
166
1008
3
1513
316
21%
1197
239
8
RATIOS
FY16
7549
533
8082
3916
1
772
1538
20%
200
1338
6
1865
471
25%
1387
277
8
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
FY13
114
811
22
20%
FY14
119
903
23
20%
FY15
150
1015
30
20%
FY16
173
1123
35
20%
10
1
1.9%
10
1
2.0%
7
1
2.8%
8
1
2.6%
14%
8%
13%
11%
15%
12%
15%
15%
0.4
196
303
68
0.0
0.4
233
322
69
0.0
0.5
196
318
61
0.0
0.4
181
393
58
0.0
BALANCE SHEET
FY15
80
8037
8117
0
25
0
8117
1213
140
3805
6038
1184
786
7064
15726
FY16
240
8746
8986
0
28
0
8986
1664
224
3741
7553
1194
666
7242
18525
FY13
1147
136
245
753
(1540)
FY14
1206
150
206
777
(570)
FY15
1513
166
356
1343
1434
FY16
1869
200
438
1714
2268
CAPEX
CF from Inv. Activity
Repayment of LTB
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
388
1753
0
1
157
(157)
56
1752
1809
375
759
(0)
4
209
(213)
(23)
1809
1786
227
(839)
0
3
220
(209)
386
1786
2171
657
(1424)
(0)
6
296
(320)
525
2171
2696
NEUTRAL
Voltas Ltd.
28-Dec-16
Result Update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Impact of Demonetisation
313
330
345
6%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500575
VOLTAS
406/211
10,372
1694
7947
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
7.9
5.2
14.5
9.5
1.4
3.6
4QFY16
Promoter
30.3
30.3
30.3
Public
69.7
69.7
69.7
Others
Total
--
--
--
100
100
100
Company Vs NIFTY
150
VOLTAS
NIFTY
140
130
120
110
100
90
80
70
Bibha Kashyap
Key Highlights:
Voltas reoprted its 2QFY17 results which is in line with our estimates.The
Consolidated Sales/Income from Operations for the quarter ended
September 30, 2016 was Rs. 972 cr as compared to Rs. 1044 cr in the
corresponding quarter last year owing to lower revenues in International
Projects. However, Profit before tax was higher by 22%, at Rs. 125 cr as
compared to Rs.103 cr last year. Profit after tax was also higher by 15%, at
Rs. 74 cr as compared to Rs. 65 cr last year. EBITDA margin improved
84bps YoY to 7.0% on higher profitability in UC; this, coupled with higher
other incomeEMPS booked an Rs 120cr order for a water treatment plant in
Agra, taking its total order book to Rs 4250cr (+13.8% YoY). Unitary cooling
segment grew a robust 13.5% YoY, driven by inventory restocking on higher
demand during the festive season.
bibha.kashyap@narnolia.com
Narnolia Securities Ltd
Please refer to the Disclaimers at the end of this Report
Order Intake
Gross Margin %
2187
2065
2032
2385
2035
1879
35%
35%
30%
25%
29%
24%
31%
26% 27%
31%
32%
29% 28% 29%
28%
20%
10%
731
959
EBIDTA %
37%
33%
15%
382
2141
1369
500
1871
1728
201
2021
2018
594
1,908
1,985
544
1,856
2,093
40%
680
2,207
1,472
395
1,629
2,160
694
2,023
1,589
275
2,131
240
500
785
1,000
1,524
1,500
1,815
2,088
2,000
2,261
2,500
1209
3,000
2,286
5%
4% 4%
8% 8% 6%
6% 7%
10% 8%
6%
10% 11% 8%
4%
0%
10
Investment arguments:
Company sustained its leadership in the UCP segment(i.e. 22%) which will help to register better sales growth in the
current quarter.
Company sold 50000 units coolers last quarter and mabagement expects their marketing efforts to benefit volumes
going ahead and as per the management Air cooler will grow ahead of market.
The company has been selective in taking new orders with minimum margins of 4-5% in the international market. Its
aspirational EBIT margin target remains at 4-5% for the international market in FY17.
The company has cut prices selectively on few products with selective sale promotions due to the higher competitive
pressures.
Despite the aggressive competition, the company retained its market leadership position with 22% market share.
New efficiency norms for ACs from January
Seeking to reduce carbon emissions, the government said that a new efficiency rating system for air-conditioners, based
on Indian climatic conditions, will be made compulsory for all models starting January 2018.All air-conditioners will need
energy-saving and intelligent regulation of compressors in place of the conventional thermostat-triggered cut-offs, said
the Bureau of Energy Efficiency (BEE), the standard setter for appliances. Today, ACs with this technology is costlier by
about Rs.7000-8000 a unit. But as more units adopt it, cost will come down. As per the management, Company is ready
to comply with the new guidelines set by BEE for 2018. They will continue to provide energy-efficient products to their
customers.
The Governments initiatives on creating new Smart Cities and upgradation of the infrastructure of existing cities
represents an area of significant potential. The Companys expertise at installation, testing, commissioning and
operation of sensor networks across some of the worlds largest building complexes and its existing infrastructure of
support technicians and service partners, positions it effectively to handle the complex task of managing the
maintenance of Smart City information networks.
In International front, Despite the declining oil prices, spend on infrastructure will get a boost especially in Dubai and
Qatar owing to the EXPO 2020 and FIFA world cup 2022. Voltas remains one of the few large MEP contractors with
required project qualifications and domain expertise. Voltas continues to be a preferred contractor in the Middle East,
holds the Company in good stead against competition for these mega events.
11
FY14
7.4
55.0
1.9
25%
RATIOS
FY15
FY16
11.6
11.7
63.5
72.4
2.2
2.6
19%
23%
FY17E
10.2
79.5
3.0
30%
21.7
2.9
1.16%
24.1
4.4
0.77%
23.6
3.8
0.96%
32.6
4.2
0.92%
13%
13%
18%
18%
16%
17%
13%
15%
1.1
92.5
85.3
112.8
0.00
1.1
94.3
88.0
108.6
0.00
1.0
81.4
79.0
108.7
0.00
1.0
89.4
84.1
108.7
0.00
INCOME STATEMENT
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
5266
100
5366
3854
1
551
266
5%
25
241
23
318
94
30%
245
62
33
FY15
5183
109
5292
3597
1
586
410
8%
28
382
23
467
128
27%
384
72
33
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
33
1786
1819
5
258
2
1825
210
2
1335
282
1627
279
1487
4746
FY15
33
2069
2102
5
117
2
2107
193
4
1339
252
1541
354
1218
4888
FY16
5857
118
5975
4126
1
625
437
7%
28
409
15
511
160
31%
386
87
33
FY17E
5896
130
6025
4180
1
619
419
7%
32
387
26
490
153
31%
337
101
33
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
BALANCE SHEET
FY16
33
2362
2395
0
260
2
2395
222
0
1307
197
1745
408
1356
5599
FY17E
33
2598
2631
0
262
2
2631
227
0
1444
193
1757
424
1532
5874
FY14
340
25
89
351
230
0
25
(285)
0
23
57
(79)
(134)
407
273
12
"BUY"
ASHOK LEYLAND LTD.
27-Dec-16
Result Update
CMP
77
Target Price
110
120
Upside
44%
Market Data
BSE Code
500477
NSE Symbol
ASHOKLEY
113/74
21,799
Av. Volume
567130
Nifty
7,908
Stock Performance
1Month
1Year
YTD
Absolute
-0.6
-12.9
-13.0
Rel.to Nifty
2.0
-13.5
-12.5
EBITDA margin contracted by 40 bps due to higher other expenses during the
quarter.
PAT margin grew by 260 bps to 6.4% due to lower interset cost and tax
expenses.
Promoter
Public
Others
Total
4QFY16
50.4
50.4
50.4
49.6
-100.0
49.6
-100.0
49.6
-100.0
Company Vs NIFTY
130
ASHOKLEY
NIFTY
125
120
115
110
105
Outlook
Going forward, We assume that the upcoming emission norms BS-IV to BSVI, focus towards the export markets, improvement in demand from
infrastructure segment, diminution of investments in subsidiaries will help the
company to focus on its commercial vehicle business and government's
initiative to develop defence products in the country can be volume boosters
for the company in FY17. The current demonetization issue has impacted the
transport sector most because a lot of transactions happen through cash. The
sales may be down by 10-12% for next couple of months but we are hopeful
that the situation might improve in 4QFY17 due to pre-buying during the
quarter. We expect that the company will maintain a healthy ROE of over
20% going ahead. We maintain 'BUY' looking at the huge growth potential
going ahead but considering the uncertain demand scenario we reduce our
target to Rs.110.
Rs. In crore
100
95
90
85
Dec-16
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
4622
536
294
11.6%
6.4%
4259
476
282
11.2%
6.6%
4940
594
287
12.0%
5.8%
9%
13%
5%
-6%
-10%
3%
13
ASHOKLEY
Investment Arguments
The country would be moving to BS-IV norms in April, 2017 and a significant amount of pre-buying expected, especially in the
fourth quarter of FY17. Ashok Leyland's subsidiary, Albonair, holds a significant potential moving forward because Albonair does
exhaust emission systems, selective catalytic reduction emission systems which are necessary for being BS-IV compliant.
Export is only 12% of total volumes, therefore the company is targeting the African and Middle East countries to expand its export
contribution by setting up own assembly plants in these countries under the company's global expansion project. The exports is an
important part of Ashok Leyland's strategic intent to globalise its product portfolio and derisk itself from supplying only into India.
The management expects its defence business to log four-fold jump in revenues at over Rs 2,000 crore in next five years as it
gears up to provide an entire range of mobility solutions, including missile carrying vehicles to the armed forces. Ashok Leyland is
the largest supplier of logistics vehicles to the Indian Army.
The management has focused approach towards its core commercial vehicle business. We expect that the company will be
benefitting from recovery in the M&HCV demand and its EBITDA margin will expand on account of operating leverage. The
company is also working on to reduce its debt and generate more cash to fulfill its future expansion requirements.
Management Highlights
Management expects Q4 to be promising due to the implementation of BS-IV norms.
If there is economic growth in the country CV industry will move ahead. Going ahead we see CV industry to grow about 12-15%
annually.
30% market share in M&HCV space and in south region overall market share is 51%.
Domestic truck business contributes 50-55 percent of total revenue.
Marginal impact of commodity prices but it will be passed on to the customers.
Net debt stood at Rs.1870 crore.
Price increase on November 1, 2016 of 1%.
Ashok Leyland have acquired 100% ownership of the JVs, we will continue to be associated with Nissan for the technology of the
existing Dost, Partner, and Mitr models.
The management is focusing on to improve profitability and ROCE of the company going ahead.
Defence Revenue to be close to around Rs 1,500 crore by FY18.
40000
71%
60%
26262
25000
10000
70%
29840
30000
15000
80%
35246
35000
20000
Growth YoY
44%
21489
14908
18207
14%
18279
64%
40%
23232
27%
34%
24025
25346
50%
40%
30%
12%
20%
10%
0%
0%
-15%
5000
0
-10%
-20%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
14
ASHOKLEY
Financials Snap Shot
Net Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
11,487
92
11,579
8,138
71%
1,581
422
4%
530
(108)
805
(821)
(68)
8%
(164)
266
INCOME STATEMENT
FY15
FY16
15,341
20,659
189
152
15,530
20,811
10,443
13,558
68%
66%
1,845
2,396
1,517
2,932
10%
14%
580
524
937
2,408
872
968
254
1,592
172
528
68%
33%
134
1,071
150
316
285
285
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
266
3,723
3,989
5,491
1,264
411
9,480
7,087
270
1,381
113
2,592
256
400
17,534
BALANCE SHEET
FY15
FY16
285
285
4,227
4,708
4,511
4,992
6,219
7,597
827
1,093
510
536
10,731
12,589
6,060
5,894
166
162
1,354
1,515
905
1,758
3,082
2,966
599
1,081
522
1,016
19,525
22,963
FY17E
23,458
171
23,630
15,365
66%
2,698
3,383
14%
519
2,865
1,194
1,842
611
33%
1,232
364
285
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
FY14
FY17E
285
5,575
5,860
7,217
938
536
13,077
5,871
162
1,721
2,094
3,213
1,147
1,222
23,951
FY14
OP/(Loss) before Tax
(300)
Depreciation
530
Direct Taxes Paid
(97)
OP before WC changes
195
CF from Op. Activity
(104)
Capex
(408)
CF from Inv. Activity
(377)
Repayment of Long Term Borrowings
(1,586)
Interest Paid
(499)
Divd Paid (incl Tax)
(187)
CF from Fin. Activity
461
Inc/(Dec) in Cash
(20)
Add: Opening Balance
127
Closing Balance
106
(1)
15
0%
RATIOS
FY15
FY16
0
4
16
18
0.5
1.1
112%
30%
FY17E
4
21
1.3
30%
-38.4
1.6
0.00%
73.2
2.2
1.53%
9.2
2.0
3.23%
8.0
1.7
3.71%
-4%
-1%
3%
9%
21%
19%
21%
22%
0.7
43.9
69.2
82.4
1.4
0.8
32.2
54.8
73.3
1.4
0.9
26.8
55.5
52.4
1.5
1.0
26.8
55.5
50.0
1.2
15
Neutral
26-Dec-16
Company Update
CMP
263
Target Price
NA
NA
Upside
NA
NA
Market Data
BSE Code
500096
NSE Symbol
DABUR
320/231
46,240
1040
7,986
DABURs 2QFY17 result was below than our expectations. Sales for second quarter
grew by 1% YoY to Rs 1981 cr on the back of sluggish growth from international
business. International business has contributed approx. 34% of companys sales in
2QFY17. International business declined by 2.3% YoY in this quarter due to geo
political disturbances in the MENA region and adverse currency impact. According to
Management, headwind in international business will continue for at least 2-3
quarters going forward. Secondly, recent demonetization may negatively affect
companys domestic sales in 3QFY17E which is a cause of concern for the company
in the short term. Rural demand is still stressed witnessing slight improvement.
Lastly, the company is getting tough competition from Patanjali. Patanjali is strong in
north and west India from where Dabur gets Substantial part (approx. 60% of its
footprint) of its domestic business which is another concern for DABUR. Hence
considering tepid international business growth outlook, tough competition
from Patanjali and stress in rural demand we maintain `Neutral rating on Dabur
with no target price.
Q2FY17_Result Update
Stock Performance
1M
3M
12M
Absolute
-4.8
-8.2
-5.5
Rel.to Nifty
-4.6
1.7
-7.4
1QFY17 4QFY16
Promoters
68.0
68.0
68.1
Public
32.0
32.0
31.9
Others
0.0
0.0
0.0
100.0
100.0
100.0
Total
Company Vs NIFTY
120
DABUR
NIFTY
115
110
105
100
Sales for this quarter grew by 1% YoY to Rs 1981 cr led by sluggish growth from
international business. EBITDA margin declined by 4 bps YoY to 20.6% due to higher
employee and COGS.Ad expenses for Q2FY17 declined by 92Bps. International
business operating margin declined by 250Bps YoY. PAT margin improved by 64Bps
YoY led by higher other income (Rs 89Cr in Q2FY17 Vs Rs 56Cr in Q2FY16). PAT
grew by 5% YoY to Rs 357Cr in Q2FY17. Oral Care, Hair Care, Home Care and Skin
Care reported volume growth of 6% while growth in value terms was 1.6%. Oral care
category including toothpowder was flattish in value terms. Home care category
reported good growth of 20% in value terms led by strong double digit growth in
Odomos and Odonil. Honey was flattish in volume terms on a high base of 32.5%
growth during Q2FY16.
Concall Highlights:
Rural demand is severely stressed. Good monsoon and seventh pay commission
pay out would not be sufficient.
The company will continue with promotion for next 2 quarters. After that company
will try to reduce promotion and think of increase in price.
It gained market share in Almond hair oil segment. Presently it is below than 10%.
Indian business witnessed some deflation in this quarter.
95
90
85
80
Financials
2013
2014
2015
2016
Rs,Cr
2017E
Sales
6169
988
763
4
36.4%
7075
1160
914
5
34.4%
7827
1316
1066
6
31.8%
8454
1520
1253
7
30.1%
7903
1598
1349
8
27.3%
EBITDA
Net Profit
Rajeev Anand
rajeev.anand@narnolia.com
EPS
ROE
16
DABUR
55%
51%
54%
51%
52%
51%
53%
52%
57%
55%
54%
54%
55%
51%
51%
45%
35%
25%
15%
19%
16%
17%
14%
18%
17%
18%
19%
16%
19%
18%
18%
21%
15%
Gross Margin %
5%
EBITDA margin %
-5%
400
Net Sales(in cr)
PAT(in cr)
341
2000
287 283 285
250 243
235
1500
300
250
200
150
1975
1924
2157
2122
2092
2064
1945
2074
1924
1864
1769
1904
1749
100
1651
500
293
261
211
186
1000
358
350
332
319
50
Employee Expence
18%
16%
15%
14%
12%
13%
10%
8%
6%
8%
9%
12%
8%
13%
14%
9%
14%
13%
13%
8%
12%
9%
13%
13%
13%
13%
13%
13%
13%
9%
9%
10%
10%
9%
12%
9%
Ad Expenses
16%
16%
15%
15%
15%
13%
13%
Other expenses
12%10% 12%
11%
11%
8%
4%
2%
0%
1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
17
DABUR
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
174
2482
2656
260
448
45
2916
1789
22
675
519
1097
311
1142
5312
BALANCE SHEET
FY15
FY16
176
176
3178
3984
3354
4160
211
341
523
450
59
77
3565
4502
1927
1995
50
0
711
810
276
220
1096
1330
302
384
835
1271
6106
7120
FY17E
176
4766
4942
341
450
77
5284
2098
50
736
263
1148
426
1604
7734
FY14
5.2
15.2
1.9
36%
RATIOS
FY15
FY16
6.1
7.1
19.1
23.6
2.6
2.4
43%
34%
FY17E
7.7
28.1
3.2
42%
34
11.8
1.0%
32
10.2
1.4%
39
11.7
0.9%
34
9.4
1.2%
34%
36%
32%
34%
30%
31%
27%
28%
1.3
35
104
57
0.1
1.3
33
95
51
0.1
1.2
35
105
57
0.1
1.0
34
103
53
0.1
FY14
1136
97
-186
1202
1098
-215
-107
-280
-34
-326
-804
187
123
313
18
Neutral
611
Target Price
NA
870
Upside
NA
NA
Market Data
BSE Code
524715
NSE Symbol
SUNPHARMA
898/571
146723
421.82
8607.5
Stock Performance
1M
3M
12M
Absolute
-10.1
-23.4
-23.3
Rel.to Nifty
-11.3
-26.2
-29.3
Q2FY17_Result Update
1QFY17 4QFY16
Promoters
55.0
55.0
55.0
Public
45.0
45.0
45.0
Others
0.01
Company Vs NIFTY
120
23rd December2016
SUNPHARMA
NIFTY
115
110
105
100
Outlook
Synergies from the Ranbaxy acquisition are gaining momentum and the
Company is on track to achieve the targeted benefits. Post 2QFY17,
Sunpharma has further strengthened the branded ophthalmic pipeline
through the acquisition of Ocular Technologies. But recent developments
are not very conducive for the company. US business is under pricing
pressure due to customer consolidation. Ongoing issue in Halol plant and
inflated pricing issue on dermatology products in US will pose near term
uncertainty. Though the company has maintained its guidance of 8-10%
sales growth for FY17E, we are little skeptical about it considering on-going
issues. Thus, we recommend "NEUTRAL" view on this stock.
90
Financials
2012
2013
2014
2015
Rs,Cr
2016
85
Sales
EBITDA
Net Profit
EPS
ROE
8019
3204
2657
26
22%
11300
4896
2983
29
20%
16080
7002
3141
15
17%
27433
8064
4541
22
17%
27219
7431
3665
18
12%
95
Dec-16
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Aditya Gupta
aditya.gupta@narnolia.com
19
Segmental Revenue
Latest Events
16 Dec 2016- The necessary formalities for closure of acquisition transaction have been concluded and we have successfully
completed the acquisition of Ocular Technologies.
12 dec 2016- Sun Pharma, Moebius Medical ink pact to develop pain management product.Moebius Medical will conduct requisite
pre-clinical studies and will assume responsibility for product development and manufacturing through the end of Phase-II studies,
as per the pact
7 Dec 2016- Company has undergone an inspection by USFDA recently and post that the health regulator issued a Form-483
observation letter For Halol Plant. The company is in the process of responding to the letter.
Financial Performance
EBITDA
50%
46%
44%
44%
45%
41%
44%
44%
46%
EBITDA Margins
44%
44%
46%
3000
2500
40%
31%
35%
27%
30%
28%
31%
33%
26%
27%
25%
1500
20%
14%
1000
1873
1768
2520
2169
1934
1850
892
2165
2180
1733
1801
2001
1843
1551
1275
1275
1175
5%
1242
15%
10%
2000
0%
500
0
1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
20
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
Share Capital
Reserves and surplus
Shareholders' funds
Long term Debt
Total Borrowings
Non Current liabilities
Long term provisions
Short term Provisions
Current liabilities
Total liabilities
Net Fixed Assets
Non Current Investments
Other non Current assets
Current assets
Total Assets
FY13
104
14,886
14,990
115
198
1,001
787
1,482
2,758
20,583
5,077
1,106
8
11,503
20,583
BALANCE SHEET
FY14
FY15
207
207
18,318 26,252
18,525 26,459
49
1,368
2,489
7,596
2,886
2,817
2,602
2,532
1,961
3,336
3,549
9,256
29,371 49,028
5,824 11,020
788
599
0
55
18,686 29,122
29,371 49,028
FY16
241
31,164
31,404
3,117
8,338
2,365
2,080
3,417
8,026
54,220
13,361
593
96
30,865
54,220
FY13
29
145
5
17%
RATIOS
FY14
FY15
15
22
89
128
3
2
19%
8%
FY16
18
152
2
10%
14
3
1%
38
6
1%
47
8
0%
58
7
0%
20%
30%
17%
35%
17%
24%
12%
19%
1
78
83
34
0.0
1
50
71
30
0.0
1
71
75
42
0.1
1
91
86
47
0.1
21
Neutral
22-Dec-16
View & Valuations :
Company Update
CMP
866
Target Price
1015
1100
Upside
NA
NA
Market Data
BSE Code
500820
NSE Symbol
ASIANPAINT
1230/825
83,095
Av. Volume(,000)
128.0
Nifty
8061
Stock Performance
1Month
1Year
YTD
Absolute
-7.6
-1.0
1.2
Rel.to Nifty
-8.8
-3.8
-4.8
Promoter
52.8
52.8
52.8
Public
Others
Total
47.2
47.2
47.2
100.0
100.0
100.0
Company Vs NIFTY
140
ASIANPAINT
NIFTY
130
120
110
100
90
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
bhabani.dehury@narnolia.com
Narnolia Securities Ltd
Please refer to the Disclaimers at the end of this Report
22
Q2FY16
Q3FY16
Q4FY16
3779
58
3837
2032
247
4160
36
4196
2200
247
3971
34
4005
2027
277
880
3159
621
71
550
9
598
184
415
912
3359
801
73
728
8
756
229
527
964
3268
704
75
628
15
648
225
422
Q2FY16
16.4%
14.6%
11.0%
Q2FY16
53.8%
6.5%
0.0%
23.3%
1QFY15
Q3FY16
19.2%
17.5%
12.7%
Q3FY16
52.9%
5.9%
0.0%
21.9%
2QFY15
Q4FY16
17.7%
15.8%
10.6%
Q4FY16
51.0%
7.0%
0.0%
24.3%
3QFY15
Q1FY17
4082
72
4154
1919
277
445
621
3262
820
85
735
6
800
260
540
Q1FY17
20.1%
18.0%
13.2%
Q1FY17
47.0%
6.8%
10.9%
15.2%
4QFY15
Q2FY17
4232
79
4312
2088
279
469
683
3519
713
84
629
6
702
221
481
Q2FY17
QoQ
YoY
3.7%
10.0%
3.8%
8.8%
0.7%
5.5%
10.1%
7.9%
-13.1%
-1.3%
-14.4%
-5.0%
-12.3%
-15.2%
-10.9%
12.0%
37.6%
12.4%
2.7%
13.3%
14183
170
14353
7971
907
-22.3%
11.4%
14.8%
19.0%
14.3%
-34.5%
17.3%
20.2%
16.0%
3069
11947
2235
266
1969
35
2104
650
1395
QoQ
YoY
49.3%
6.6%
11.1%
16.1%
1QFY16
QoQ
42 Bps
30 Bps
39 Bps
YoY
Q3FY16
FY15
FY15
15.8%
13.9%
9.8%
FY15
56.2%
6.4%
0.0%
21.6%
Q4FY16
FY16
15843
213
16056
8049
990
1571
2463
13074
2769
276
2494
41
2666
844
1779
FY16
17.5%
15.7%
11.2%
FY16
YoY
11.7%
25.7%
11.9%
1.0%
9.1%
-19.7%
9.4%
23.9%
3.6%
26.6%
17.0%
26.7%
30.0%
27.5%
YoY
172 Bps
185 Bps
139 Bps
YoY
Q2FY17
Volume Growth ( % )
11%
10%
3%
4%
12%
5%
15%
13%
11%
12%
Realization Growth (%)
7%
6%
3%
3%
-4%
-1%
-1%
-1%
1%
0%
Sales Growth (%)
18%
17%
6%
7%
8%
4%
14%
12%
13%
12%
Crude Price in USD
109.8
102.1
76.0
54.0
62.1
50.0
43.4
34.4
45.5
45.8
Key Conference call Highlights :
Double digit volume growth in decorative business in Q2FY17, but, a prolonged monsoon did affect demand in West and Central
India.
Rural India still continues to grow faster than urban India. South India, post floods, has picked up. Hence, North and South have been
growing at similar pace. Overall retail demand has improved after monsoon eased out.
No price revision this quarter. Asian Paints will closely monitor movement of input prices and GST rate before deciding on price
revision, if any.
271bps QoQ dip in gross margin was purely owing to increase in raw material cost.
Good demand in auto OEM and general industrial business segment led to improved performance of automotive coatings JV. In the
industrial coatings JV, the industrial liquid paints segment continued to grow well.
Home improvement delivered good top line due to network expansion and new product launches. Good improvement in Ess Ess and
Sleek business. New products launches under Ess Ess have resulted in better traction.
International business performed well aided by good growth in markets like Nepal, UAE and Fiji. Moderate improvement in Ethiopia
too, but it was affected by adverse forex fluctuations.
In the standalone business, the company will incur capex of INR6bn in FY17 for its Mysore and Vizag facilities. Of this, capitalisation
will be INR2bn in FY17. Full Vizag and Mysore plants will be capitalised in FY18.
Narnolia Securities Ltd
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23
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