Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

India Strategy & Q4FY22 Review - Long term growth prospects to overshadow near term uncertainties

Posted On: 2022-06-11 13:55:47 (Time Zone: IST)


By Mr. Amnish Aggarwal - Director - Research at Prabhudas Lilladher.

Global Headwinds Just a Blip in India growth story: Global headwinds emanating from geo political uncertainty, disruption of supply chain, rising crude and commodity prices and global food shortage has led to aggressive increase in interest rates by central banks. We note that the rate tightening cycle is far from being over with further increase of 50-100bps in India in next 3-6 months. We believe further increase in crude prices and shortage of key components is slowly pushing major economies towards recession. We believe that India is in a unique position given 1) Huge domestic demand 2) self sufficiency in major food items 3) Govt support to develop Infra 4) strong corporate balance sheets and 5) emerging domestic investor class which has enabled absorb FII selling from past 3 quarters. We believe India will continue to remain as a major growth engine and current geopolitical impasse will only increase opportunities in both domestic market and also in global markets. We believe this uncertainty is only a passing phase and add fundamentally strong companies with business moats in uncertain times.

- 4Q22 has seen sales, EBIDTA and PBT lower than estimates by 0.8%, 1.9% and 6.9% respectively. 4Q was impacted due to 3rd wave of covid, although the impact was much less than 2nd wave of covid. Recovery post 3rd wave was quick although it got impacted by Russia Ukraine war from end of February, which disrupted supply chains and led to jump in commodity and crude prices. Demand remained impacted for Consumer staples, 2W, cement, Durables etc. LCV, Capital Goods, Multiplexes, Apparels and travel showed smart increase on a low base. Rural slowdown sustained amidst poor sentiment and high inflation.

- Maximum beat from estimates was recorded in Agri Chemicals, Chemicals, Auto and HFC

- Major Rating Upgrade: Avenue Supermart, Jubilant Foods, Hindalco, JK Lakshmi, Aarti Inds, LIC Housing and Chola.

- Rating Downgrade: Ambuja Cement, Bayer, Avaas Housing, LTTS, HCL, Tata Steel, JSPL, JSW Steel, IOC and Lupin

- Major Estimates Upgrade - M&M, SBI, Chola, Ambuja cement, Fine Org, and IOC

- Estimate Downgrade - HDFC, HDFC Bank, Muthoot, Ramco Cement, Kansai, Apollo Hospital, NH, Infy, Wipro, Zeel, Tata Steel, JSPL, JSW, SAIL, GAIL, IOC, Aurobindo and Lupin. Downgrades outweigh upgrades by 2.25:1

- NIFTY EEPS is estimated at 14.7% EPS CAGR over FY22-24 with FY23/24 EPS of Rs773.6 and 891. Our estimates are lower than consensus by 2.2/1.2% for FY23/24. NIFTY is currently trading at 20.7x 1-year forward EPS which is at 1% discount to 10 year average of 20.9x.

- Base Case: we value NIFTY at 10 year av. PE (20.7x) with March 24 EPS of 891 and arrive at June 23 target of 18622 (18470 based on 20.8xMarch 24 EPS earlier), a 13% upside.

- Bull Case, we value NIFTY at 10% premium to 10 year average (23x) and arrive at bull case target of 20484 (20317 earlier).

- Bear Case like March20 can see Nifty trading at 20% discount to LPA with a target of 14898. However we remain positive on India growth given strong tailwinds and expect positive returns by end of FY23.

- Model Portfolio - We remain overweight on Auto, Banks, IT services and Healthcare. We remain Underweight on Metals, Cement, Consumer, Oil and Gas and NBFC and increase cash to 3%. Our Model portfolio has outperformed NIFTY by 717bps since inception and 44bps in last 2 months.

- High Conviction Picks - We remove HDFC Bank, JSPL and Fortis Hospitals while we and add ICICI Bank and Apollo Hospitals.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

CRISIL Ratings: Steady demand to power up revenue of battery makers by 10-11%

Elevated gold prices to restrain jewellery consumption growth to 6-8% in FY2025: ICRA

Elara Securities India - Diet Report - Ambuja Cements - Cash deployment starts

Kotak Institutional Equities - Consumer Staples: Month in review: May 2024

Elara Securities India - Banking & Financials - Retail loans to MFI borrower a risky affair - Sector Update

Kotak institutional Equities - Real Estate: Hitting the Billion Mark

CRISIL Ratings: Tide turns for ship recyclers, revenue seen rising ~15% this fiscal

Elara Securities India - Diet Report - Media & Entertainment - Wait turns longer for occupancy revival

Elara Securities India - Economics - India: CPI inflation continues to ease

Kotak Institutional Equities - ESG, Global carbon pricing trends 2023: Needs more ambition

Kotak Institutional Equities - Economy: Inflation remains steady in May

Kotak Institutional Equities - Strategy: NTPC and PWGR are neither growth nor value stocks

Elara Securities India: Automobiles - Tata Motors - Aggressive PV market share target - Company Update - Accumulate - TP: INR 1,100 - Upside: 11%

Finance Companies - Gold lending in the spotlight - Report by InCred Equities

CRISIL Ratings: Revenues of shrimp exporters to grow 8-10% as demand improves

Elara Securities India: Utilities & Renewables - Peak demand ascends to record highs - Monthly Update

Tata Motors - Analyst meet highlights - REDUCE - Maintained - Report by InCred Equities

Kotak Institutional Equities - Pharmaceuticals: IPM pulse - gaining momentum

Elara Securities India - Metals & Mining - Input cost inches up - Monthly Update

CRISIL Ratings: Paints sector to double production capacity by fiscal 2027

Elara Securities India-Economics - India: Smooth sailing into H2CY24

Kotak Institutional Equities - Insurance, NoP drives APE growth for private players

Financial Services - AMCs - Election month propels equity fund inflow - Report by InCred Equities

Kotak Institutional Equities - Strategy: Fight, flee or join a stampede?

Elara Securities India - Utilities - PTC India - Trading volumes up by 10% in Q4 - Q4FY24 Update - Reduce - TP INR 207 - Upside: 1%

Kotak Institutional Equities - Economy: Coalition journey: Long travails ahead

Kotak Institutional Equities - IT Services: CTSH-big bet in core engineering services

Elara Securities India - Initiating Coverage - Infrastructure - Hindustan Construction - Phoenix Rises - Buy - TP INR 63 - Upside: 65%

Elara Securities India - Real Estate - Oberoi Realty - Low-risk compounder - Company Update - Buy - TP: INR 2,350 - Upside: 24%

Elara Securities India - Diet Report - Aviation - INDIGO: lagging fleet growth vs rivals

Elara Securities India - The IT Inflexion Point - Market Internals with Biju Samuel - Quantitative & Alternate Strategy

Elara Securities India - Economics - RBI Policy: Nascent rate cut discussions

Elara Securities India-Diet Report - Internet - JioMart to enter qCommerce - execution is key

Elara Securities India-India Strategy - Exit Polls: Doubt over long term sustainable rally

FY2025 domestic steel consumption growth revised upwards to 9-10%: ICRA

Elara Securities India-Strategy - Q4FY24 Review - Ending FY24 on good note

Elara Securities India-Banking & Financials - Services lifts growth; unsecured growth softens - Sector Update

Elara Securities India-Healthcare - Apollo Hospitals Enterprise - New beds impacting margin - Q4FY24 Update/Rating Change - Accumulate - TP INR 6,183 - Upside: 6%

Elara Securities India-Economics - India GDP: Upside surprise continues

Elara Securities India-Banking & Financials - Rules-based credit model shows vulnerability - Sector Update

Elara Securities India-Oil & Gas - Gujarat Gas - Play on LNG surplus, rise in propane prices - Company Update - Buy - TP INR 745 - Upside: 35%

Elara Securities India-FMCG - Mrs Bectors Food Specialities - New capacity and innovation, key drivers - Q4FY24 Update/Rating change - Accumulate - TP INR 1,414 - Upside: 12%

Kotak Institutional Equities - Diversified Financials: Regulating retail F&O: Global learnings and potential options

Kotak Institutional Equities - Automobiles & Components: 4QFY24 review - Sustaining momentum

Strategy: Exit polls 2024: No Drama by Kotak Institutional Equities

Elara Securities India - Global Liquidity Tracker: Inflows into India Dedicated Largecap funds continued ahead of Election results. China flows again turn weak

Elara Securities India-Banking & Financials - Attention - Still a lot on RBI's radar - Sector Update

Indo Count Industries- Bumpy Quarter; Smooth Road Ahead - Share India Securities

Elara Securities India-Auto Ancillaries - Amara Raja Energy & Mobility - All eyes on tech partner for Li-ion cells - Q4FY24 Update/Target price change - Accumulate - TP INR 1,341 - Upside: 13%

Flair Writing Industries Ltd - Steady margins in competitive industry - Share India Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020