1
Please refer to important disclosures at the end of this report
1
1
Angel Top Picks – April 2019
Indian stock market saw a relief rally in the month of March as the market
appeared more confident about the ruling party’s second term post the surgical air
strike at Pakistan amid strong FII inflows. BSE 100 index rose by 7.2% for the
month of March while it saw a yearly rise of 12.9% for FY2019. Our top picks
have generated a total return of 68% since inception (i.e. October 2015), an
outperformance of 23% over BSE100.
Market indices at all time high, will macro support? – The broad markets indices
like Sensex and Nifty 50 have recently touched all-time high majorly led by
banking stocks and liquidity gush from foreign investors. FII have continued to
pour in Indian markets in CY2019 with ~ `34,000 crore is coming in March itself
(equity FII inflows in CY 2019 till March is `56,491 crore versus outflow of `
33,000 crore in CY2018). Rupee has also strengthened in the last 1 month backed
by FIIs inflow and there is another 25 bps rate cut announced in the 4
th
April
monetary policy meeting. Monthly GST collections have touched all time high at
`1.06 trillion in March which would reduce pressure on the centre government
coffers to support states for the revenue loss. On the negative side, monsoon rains
have been forecasted to be below normal as there is possibility of El Nino this year
over Pacific ocean.
Next few months could offer some good investment opportunities- We continue to
believe that the market would still be in watchful mode till May’s centre election
results. Post that since the markets are already touching high, markets would start
focusing on the sectors that the new government are laying stress on and their
relevant beneficiaries. Overall, in the long term, the fundamentals underlying the
business drive the stock returns and they are of at most importance to the
investors. We prefer select private banks and niche consumption stocks. Investors
could also pick at the some of the overly corrected value stocks which offer high
margin of safety. We also advise our investors to avoid bottom fishing stocks which
are facing severe corporate governance/ regulatory issues.
Top picks’ overview
We recommend our top picks as the good bets which are offering healthy returns
in the next 1 year. All of our top picks are backed by sound business model and
are likely to do well in coming years. We also remain positive on discretionary
consumption theme with stocks like Safari Industries, TTK Prestige, Bata, and Blue
Star.
Exhibit 1: Top-Picks Performance
Return Since Inception (30th Oct, 2015)
Top Picks Return
68.1%
BSE 100
44.7%
Outperformance
23.4%
Source: Company, Angel Research
Company
CMP (`)
TP (`)
Banking/NBFC
Aditya Birla Capital
103
151
GIC Housing Finance
273
424
ICICI Bank
397
460
HDFC Bank
2,297
2,500
RBL Bank
681
763
Shriram Transport Finance
1,200
1,764
Consumption
Amber Enterprises
858
984
Bata India
1,383
1,479
Blue Star
706
867
Safari Industries
733
1,000
Siyaram Silk Mills
412
606
Parag Milk Foods
261
330
TTK Prestige
8,541
9,250
Media/Automobiles/Online
Maruti Suzuki
6,883
10,820
M&M
667
1,050
Music Broadcast
60
95
Ashok Leyland
89
156
Jindal Steel
185
327
GMM Pfaudler
1,215
1,400
KEI Industries
420
486
Inox Wind
69
120
Pharmaceuticals
Aurobindo Pharmaceuticals
786
890
Company
CMP (`)
TP (`)
Banking/NBFC
Aditya Birla Capital
103
151
GIC Housing Finance
273
424
ICICI Bank
397
460
HDFC Bank
2,297
2,500
RBL Bank
681
753
Shriram Transport Finance
1,200
1,764
Consumption
Amber Enterprises
858
910
Bata India
1,383
1,479
Blue Star
706
867
Safari Industries
733
1,000
Siyaram Silk Mills
412
549
Parag Milk Foods
261
330
TTK Prestige
8,541
9,250
Media/Automobiles/Online
Maruti Suzuki
6,883
8,552
M&M
667
850
Music Broadcast
60
95
Ashok Leyland
89
122
Real Estate/Infra/Logistics/Power
Jindal Steel
185
249
GMM Pfaudler
1,215
1,400
KEI Industries
420
486
Inox Wind
69
120
Pharmaceuticals
Aurobindo Pharmaceuticals
786
890
2
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Angel Top Picks | April 2019
April 5, 2019
2
Top Picks
3
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Angel Top Picks | April 2019
April 5, 2019
3
Ashok Leyland
During April-July 2018, Ashok Leyland has gained market share by 11bps in
domestic market. Further, the company has reported ~46.4% yoy growth
(against ~45% industry growth) during the same period due to strong pick up
in construction and industrial activities.
BS-VI emission norms and the vehicle scrappage policy are among the major
triggers that can provide a fillip to the commercial vehicle industry over the
next couple of years. Further, in our view, the change in axle load norms will
not impact the CV demand scenario; hence the company will not witness any
disruption in performance.
In the recent past, the stock has corrected after the announcement of axle load
norms (which will not have a significant impact on the industry). We see
buying opportunity in stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2019E
28,293
10.1
1,808
6.2
21.5
14.2
3.1
0.8
FY2020E
31,122
10.0
1,884
6.4
19.1
13.7
2.6
0.7
Source: Company, Angel Research
Safari Industries
Safari Industries Ltd (Safari) is the third largest branded player in the Indian
luggage industry. Post the management change in 2012, Safari has grown
its revenue by 6x in the last 7 years. This has been achieved by foraying in
many new categories like back pack, school bags (via acquisition of
Genius and Genie) and improvement in distribution networks.
Its margins have more than doubled from 4.1% in FY2014 to 9.8% in FY2018,
driven by launch of new product categories and business. We expect it to
maintain 9%+ margins from FY2018 onwards led by regular price hikes, shift
towards organized player and favorable industry dynamics.
We expect it to grow by a CAGR of ~37%/49% in revenue/ earnings over
FY2018-20E on the back of growth in its recently introduced new products.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2019E
581.5
10.2
32.3
14.5
16.0
53.5
8.2
2.9
FY2020E
785.1
10.4
47.0
21.1
19.1
36.7
6.8
2.2
Source: Company, Angel Research
Stock Info
CMP
89
TP
122
Upside
37.1%
Sector
Automobile
Market Cap (` cr)
26,214
Beta
1.6
52 Week High / Low
168/78
3 year-Chart
Source:, Angel Research
-
20
40
60
80
100
120
140
160
180
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Mar-19
Stock Info
CMP
733
TP
1,000
Upside
36.5%
Sector
Luggage
Market Cap (` cr)
1,636
Beta
0.3
52 Week High / Low
1005/533
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Mar-19
4
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Angel Top Picks | April 2019
April 5, 2019
4
Mahindra & Mahindra Ltd.
Mahindra & Mahindra Ltd (M&M) is an India-based company, operating in
nine segments: automotive, farm equipment, IT services, financial services,
steel trading & processing, infrastructure, hospitality, Systech (comprising
automotive components and other related products & services), and Others
(comprising logistics, after-market, two wheelers and investment).
In our view, strong growth in tractor industry would benefit M&M the most due
to strong brand recall and leadership position in farm tractor.
We expect Mahindra & Mahindra (M&M) to report net revenue CAGR of
~12% to ~`60,634cr over FY2018-20E mainly due to healthy growth in
automobile segment like Utility Vehicles (on the back of new launches and
facelift of some models) and strong growth in Tractors segment driven by
strong brand recall and improvement in rural sentiment. Further on the
bottom-line front, we expect CAGR of ~16% to `5,429cr over the same period
on the back of margin improvement. Thus, we recommend a Buy rating on the
stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
54,041
12.6
4,751
39.9
14.0
16.5
2.3
8.9
1.1
FY2020E
60,634
12.7
5,429
45.6
14.2
14.4
2.0
7.7
1.0
Source: Company, Angel Research
Blue Star
BSL is one of the largest air-conditioning companies in India. With a mere 3%
penetration level of ACs vs 25% in China, the overall outlook for the room air-
conditioner (RAC) market in India is favorable.
BSL's RAC business has been outgrowing the industry by ~10% points over the
last few quarters, resulting in the company consistently increasing its market
share. This has resulted in the Cooling Products Division (CPD)'s share in
overall revenues increasing from~23% in FY2010 to ~50% in FY2018
(expected to improve to ~50-55% in FY20E). With strong brand equity and
higher share in split ACs, we expect the CPD to continue to drive growth.
Aided by increasing contribution from the Unitary Products, we expect the
overall top-line to post revenue CAGR of ~13% over FY2018-20E and
margins to improve from 5.8% in FY2018 to 6.2% in FY2020E. We
recommend a Buy rating on the stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
5,178
6.1
135
14.1
15.6
49.2
7.7
21.6
1.3
FY2020E
5,871
6.3
198
20.6
20.8
33.7
7.0
18.4
1.2
Source: Company, Angel Research
Stock Info
CMP
706
TP
867
Upside
22.8%
Sector
Cons.Durable
Market Cap (` cr)
6,800
Beta
0.2
52 Week High / Low
843/507
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
Feb-16
May-…
Aug-…
Nov-…
Feb-17
May-…
Aug-…
Nov-…
Feb-18
May-…
Aug-…
Nov-…
Feb-19
Stock Info
CMP
667
TP
850
Upside
27.4%
Sector
Automobile
Market Cap (` cr)
82,940
Beta
0.8
52 Week High / Low
992/616
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Apr-19
5
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Angel Top Picks | April 2019
April 5, 2019
5
Siyaram Silk Mills
SSML has strong brands which cater to premium as well as popular mass
segments of the market. Further, SSML entered the ladies' salwar kameez and
ethnic wear segment. Going forward, we believe that the company would be able to
leverage its brand equity and continue to post strong performance.
The company has a nationwide network of about 1,600 dealers and business
partners. It has a retail network of 160 stores and plans to add another
300-350 stores going forward. Further, the company's brands are sold across
3,00,000 multi brand outlets in the country.
Going forward, we expect SSML to report a net sales CAGR of ~13% to
~`2,207cr and adj.net profit CAGR of ~13% to `146cr over FY2018-20E on
back of market leadership in blended fabrics, strong brand building, wide
distribution channel, strong presence in tier II and tier III cities and emphasis
on latest designs and affordable pricing points. At the current market price,
SSML trades at an inexpensive valuation. We have a buy recommendation on
the stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
1,919
13.5
115
24.6
14.8
17.4
2.6
8.0
1.3
FY2020E
2,207
14.0
146
31.2
16.1
13.7
2.2
6.7
1.1
Source: Company, Angel Research
Maruti Suzuki
Maruti Suzuki India Ltd (MSIL) has been able to improve its PV market share
over the last six years from 39% to 51% given its strong market understanding
and unparalleled distribution (~2.6k dealer outlets i.e. 3x of Hyundai). The
company captured the market share despite competition across PV/UVs from
global players like VW, Renault, Nissan, Hyundai, Honda Toyota and Ford,
and domestic peers like M&M & Tata.
Maurti is coming with facelift for higher selling models like New WagonR
(launched recently), Baleno, Vitara Brezza and Grand Vitara. Further, the
company is coming up with two newer launches viz. future S and Jimmy. We
expect high selling models (contribute significant amount in revenue) and new
launches would drive the growth for Maruti in coming financial year.
Considering the above positive factors and attractive current valuations, we
recommend BUY on MSIL.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
85,396
13.5
7,504
248.5
16.0
28.5
4.5
15.1
2.0
FY2020E
94,790
14.2
8,670
287.1
16.7
24.6
4.1
12.5
1.8
Source: Company, Angel Research
Stock Info
CMP
6,833
TP
8,552
Upside
25.2%
Sector
Automobile
Market Cap (` cr)
2,07,917
Beta
1
52 Week High / Low
9923/6324
3 year-Chart
Source: Company, Angel Research
-
2,000
4,000
6,000
8,000
10,000
12,000
Feb-16
May-16
Aug-16
Nov-16
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
Stock Info
CMP
412
TP
549
Upside
33.2%
Sector
Textile
Market Cap (` cr)
1,931
Beta
0.7
52 Week High / Low
763/303
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
Mar-…
May-…
Aug-…
Nov-…
Feb-17
May-…
Aug-…
Nov-…
Feb-18
May-…
Aug-…
Nov-…
Feb-19
6
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ence
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Angel Top Picks | April 2019
April 5, 2019
6
HDFC Bank
Capital infusion to propel growth: Bank has to raised `24,000cr capital
through a combination of QIP and preferential allotment. Of these, `8,500cr
has been infused by the bank’s parent company HDFC. Capital Infusion
would help bank to grow advance at healthy CAGR of 22% over FY18-FY20E.
Asset quality has been strong: Strong and steady NIM of 4.4% on the back of
lower cost of funds and lower credit cost will ensure healthy return ratios for
the company. Despite strong growth, the company has maintained stable
asset quality (GNPA/NPA – 1.3%/0.4%).
Subsidiaries: HDFC bank’s subsidiaries, HDB Financial Services (HDBFS) and
HDFC Securities continue to contribute well to the banks overall growth.
Strong loan book, well-planned product line and clear customer segmentation
aided this growth.
Outlook: We expect the company’s loan growth to remain 22% over next two
years and earnings growth is likely to be more than 21%. We maintain
Accumulate on the stock with a target price of `2,500.
Key Financials
Y/E
NII
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2019E
47,942
4.4
20,990
78.5
537
1.8
16.7
29.3
4.3
FY2020E
58,609
4.5
25,798
96.5
616
1.8
16.6
23.8
3.7
Source: Company, Angel Research
Music Broadcast
Radio Industry is protected by licenses for 15 years, thereby restricting the entry
of new players. This would support the existing companies to strengthen their
position and maintain a healthy growth rate.
It has grabbed the Number 1 position in Mumbai, Bengaluru and Delhi in
terms of number of listener. This is helping MBL to charge premium rate,
which resulting into higher EBITDA margin (33.6%) compare to 22% of ENIL.
MBL outperformed its closest peer with 18.4% CAGR in revenue over FY2013-
17 (ENIL reported 13.2% CAGR in revenue). On the profitability front too,
MBL, with 32.3% CAGR in PAT over FY2013-17, has performed much better
than ENIL (-5.2% CAGR in PAT). Moreover, Radio City posted a six year CAGR
of 12.1% v/s. 9.1% of industry owing to higher advertising volumes.
Capex for 39 licenses have been done for the next 15 years, hence no heavy
incremental Capex requirement would emerge. Moreover, the maintenance
Capex would be as low as `5-10cr. This would leave sufficient cash flow to
distribute as dividend. We have a Buy recommendation on the stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
331
34.1
62
2.2
9.6
26.3
2.5
12.2
4.2
FY2020E
370
34.8
72
2.6
10.2
22.7
2.3
10.2
3.5
Source: Company, Angel Research
Stock Info
CMP
60
TP
95
Upside
59.4%
Sector
Media
Market Cap (` cr)
1,511
Beta
0.5
52 Week High / Low
82/50
3 year-Chart
Source: Company, Angel Research
-
10
20
30
40
50
60
70
80
90
Oct-18
Nov-
18
Dec-18
Jan-19
Feb-19
Mar-19
Stock Info
CMP
2,297
TP
2,500
Upside
8.8%
Sector
Banking
Market Cap (` cr)
6,25,666
Beta
0.8
52 Week High / Low
2332/1880
3 year-Chart
Source: Company, Angel Research
-
500
1,000
1,500
2,000
2,500
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
7
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Angel Top Picks | April 2019
April 5, 2019
7
KEI Industries
KEI’s current order book (OB) stands at `2,570cr (segmental break-up: out
which EPC is around `1,425cr and balance from cables, substation & EHV). Its
OB grew by ~28% in the last 3 years due to strong order inflows from State
Electricity Boards, Power grid, etc.
KEI’s consistent effort to increase its retail business from 30-32% of revenue in
FY18 to 40-45% of revenue in the next 2-3 years on the back of strengthening
distribution network (currently 926 which is expect to increase `1,500 by FY19)
and higher ad spend (increased from `2cr in FY13 to `7.5cr in FY17 and
expected to spend).
KEI’s export (FY18 – 16% of revenue) is expected to reach a level 20% in next
two years with higher order execution from current OB and participation in
various international tenders. We expect a strong ~25% growth CAGR over
FY2018-20E in exports. We expect KEI to report net revenue CAGR of ~18%
to ~`4,878cr and net profit CAGR of ~19% to `233cr over FY2018-20E.
Hence we have a Buy rating on the stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
4,106
10.3
178
23.1
23.1
18.1
4.2
9.2
0.9
FY2020E
4,878
10.5
233
30.2
23.7
13.8
3.3
7.5
0.8
Source: Company, Angel Research
GIC Housing Finance Ltd
GICHFL’s loan book has registered CAGR of 19.9% over five years ending
FY18. The company average ticket size is of ~`15 lakhs. The company's loan
book composition stands at home loan - 87%, LAP – 12% as of Q3FY19.
In our opinion, present liquidity issues will not impact GICHFL for raising new
funds considering the strong parentage. Moreover, during Q3FY19, GICHFL
has reported healthy loan book growth despite liquidity issues faced by NBFCs
/HFCs.
GICHFL’s asset quality is on the higher side compared to other HFCs (as on
Q3FY19, GNPA was at 3.28%). The company did not write-off any bad assets
and nor did it sell any bad assets to ARC, which has aided the asset quality.
We expect GICHFL’s loan growth to register CAGR of 16% over the next two
years. Present valuations are inexpensive considering strong parentage and
healthy return rations. We have a Buy rating on the stock.
Key Financials
Y/E
Op. Inc
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2019E
398
3.3
165
31
210
1.5
17
9
1.3
FY2020E
470
3.3
197
37
242
1.5
18
7
1.1
Source: Company, Angel Research
Stock Info
CMP
338
TP
419
Upside
24%
Sector
cable
Market Cap (` cr)
2,629
Beta
1.7
52 Week High / Low
371 / 106
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
Nov-14
Feb-15
May-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Stock Info
CMP
430
TP
Upside
%
Sector
Real Estate
Market Cap (` cr)
2,156
Beta
1.1
52 Week High / Low
530 / 318
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
Nov-14
Feb-15
May-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Stock Info
CMP
420
TP
486
Upside
15.7%
Sector
Cables
Market Cap (` cr)
3,315
Beta
1.3
52 Week High / Low
495/248
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Stock Info
CMP
273
TP
424
Upside
55.7%
Sector
Financials
Market Cap (` cr)
1,470
Beta
1.3
52 Week High / Low
436/213
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
Feb-16
May-…
Aug-…
Nov-…
Feb-17
May-…
Aug-…
Nov-…
Feb-18
May-…
Aug-…
Nov-…
Feb-19
8
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Angel Top Picks | April 2019
April 5, 2019
8
TTK Prestige
TTK Prestige (TTK) is the leading brands in kitchen appliances with 40%+
market share in organized market. It has successfully transformed from a
single product company to a multi product company offering an entire gamut
of kitchen and home appliances (600+ products).
It has also launched a economy range – ‘Judge Cookware’ to capture the
untapped demand especially at the bottom end of the pyramid. It is expecting
good growth in cleaning solution.
It expects to double its revenue in the next five years backed by revival in
consumption demand, new 8 cr LPG connections under the Ujjawala Scheme,
inorganic expansion and traction in exports. We expect TTK to report a CAGR
of 20% + in earnings over FY2018-20E.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
2,254
14.3
204.2
176.9
17.2
43.6
5.7
11.7
4.2
FY2020E
2,649
14.3
246.3
213.4
17.7
36.1
4.9
9.1
3.6
Source: Company, Angel Research
Inox Wind Ltd.
Inox Wind is India’s leading wind energy solutions provider servicing IPPs,
Utilities, PSUs, Corporates and Retail Investors.
We expect Inox Wind to report exponential growth in top-line and bottom-line
over FY19-20E. The growth would be led by changing renewable energy
industry dynamics in favor of wind energy segment viz. changes in auction
regime from Feed-In-Tariff (FIT) to Reverse auction regime and Government’s
guidance for increasing wind energy capacity from 34GW current to 140GW
by 2030.
Further, being the lowest wind turbine producer globally coupled with healthy
order book of 780 MW order along with low debt equity. During the quarter,
IWL has received LOI of 501.6MW for current SEC IV, V, VI and upcoming
auction under SECI from Adani Green Energy. We believe INOX Wind is in a
sweet spot to tap the upcoming opportunity in renewable energy segments.
At the CMP of `69, Inox Wind is trading at 4.4x FY20E EPS of `14.9.
Considering the above positives, we assign a multiple of 7.5X on FY20EPS to
arrive at a target price of `112 (potential upside of 62% over a period of the
next 12-18 months).
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
1,505
15%
115
5.2
5.4
13.4
0.7
7.5
3.0
FY2020E
3,416
15%
330
14.9
13.5
4.6
0.6
1.5
1.3
Source: Company, Angel Research
Stock Info
CMP
8,541
TP
9,250
Upside
8.3%
Sector
Houseware
Market Cap (` cr)
9,951
Beta
1.2
52 Week High / Low
9290/5500
3 year-Chart
Source: Company, Angel Research
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Mar-19
Stock Info
CMP
69
TP
112
Upside
62%
Sector
Equipment-Wind
Market Cap (` cr)
1,523
Beta
0.3
52 Week High / Low
119/57
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
450
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
9
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ence
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Angel Top Picks | April 2019
April 5, 2019
9
RBL Bank
RBL Bank (RBK) has grown its loan book at a healthy CAGR of 56% over FY10-
18. We expect it to grow at 30% over FY18-20E. With adequately
diversified, well capitalised B/S, RBL is set to grab market share from
corporate lenders (esp.PSUs)
The retail loan portfolio grew 56% YOY to `14,644cr and now constitutes
29.4% of the loan book (18% share in 4QFY17). NIM has expanded to 4.12%
(Q3FY19), up 4bps YOY, despite a challenging interest rate scenario on the
back of a changing portfolio mix and lower cost of deposits. The management
stated that the bank is slated to breach 4% NIM early in FY19.
RBL Bank currently trades at 3x its FY2021E price to book value, which we
believe is reasonable for a bank in a high growth phase with stable asset
quality.
Key Financials
Y/E
Op. Inc.
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2019E
2,463
3.6
882
21
173
1.2
12
32
3.9
FY2020E
3,347
3.7
1,279
30
197
1.4
16
22
3.5
Source: Company, Angel Research
Parag Milk Foods
Parag Milk Foods (PARAG) is one of the leading dairy products companies in
India. The company has been successful in creating strong brands like GO,
Gowardhan and introducing new products like Whey Protein. It has become
the 2nd player in processed cheese (after Amul) in a short span of 10 years
and commands 33% market share.
Value Added Products like cheese, whey protein enjoy higher gross margins
of 25-45% versus 6-8% entailed in liquid milk. VAP forms ~66% to its revenue
(the highest among the listed players versus 25-30% for others). Driven by
recently launched products and higher share of VAP, its operating margins
would improve in next few years.
We expect PARAG to report net revenue/PAT CAGR of 17%/35% respectively
over FY2018-20E.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
2,331.0
10.4
115.9
13.8
13.5
17.5
2.4
11.7
0.9
FY2020E
2,822.9
10.6
150.7
17.9
14.9
13.5
2.1
9.1
0.8
Source: Company, Angel Research
Stock Info
CMP
681
TP
753
Upside
10.6%
Sector
Banking
Market Cap (` cr)
29,032
Beta
0.9
52 Week High / Low
692/439
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
Stock Info
CMP
261
TP
330
Upside
26.5%
Sector
Dairy
Market Cap (` cr)
2,194
Beta
1.1
52 Week High / Low
415/197
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Apr-19
10
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ence
sourc
Angel Top Picks | April 2019
April 5, 2019
10
ICICI Bank
ICICI bank has taken a slew of steps to strengthen its balance sheet.
Measures such as Incremental lending to higher rated corporate, reducing
concentration in few stressed sectors and building up the retail loan book. The
share of retail loans in overall loans increased to 57.5% (Q3FY19) from 38%
in FY12.
ICICI bank’s slippages remained high during FY18 and hence GNPA went up
to 8.8% vs. 5.8% in FY16. We expect addition to stress assets to reduce further
and credit costs to decline owing to incremental lending to higher rated
corporate and faster resolution in Accounts referred to NCLT under IBC. For
Q3FY19 fresh formation of bad loans were lowest in last 13 quarters.
The gradual improvement in recovery of bad loans would reduce credit costs,
which would help to improve return ratio. The strength of the liability
franchise, shift in loan mix towards retail assets and better rated companies,
and improvement in bad loans would be a key trigger for multiple expansion.
We recommend a Buy rating on the stock, with a price target of `460.
Key Financials
Y/E
NII
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2019E
26,952
3.3
5,077
8
147
0.6
5
50
2.7
FY2020E
33,084
3.6
14,230
22
165
1.4
12
18
2.4
Source: Company, Angel Research
Aditya Birla Capital
Aditya Birla Capital (ABCL) is one of the most diversified financial services
entities in India, operating under a single brand, with a presence in non-bank
financing, housing finance, asset management, insurance.
(NBFC) business contributes highest value in our SOTP valuation. It has
recorded a strong CAGR of 42% over FY13-18. Despite aggressive growth in
lending and migration to 90dpd for NPA recognition, GNPA has remained at
~1%. We believe ABFL would be able to continue to grow at 25% CAGR over
FY18-FY20E.
We expect financialization of savings, increasing penetration in Insurance &
Mutual funds would ensure steady growth. Further, Banca tie-up with HDFC
Bank, DBS and LVB should restore insurance business. We recommend a Buy
rating on the stock, with a price target of `151.
Key Financials
Y/E
Op. Inc
PAT
EPS
ABV
ROE
P/E
P/BV
March
(` cr)
(` cr)
(`)
(`)
(%)
(x)
(x)
FY2019E
2,173
1,228
5.6
44.9
12
18
2.3
FY2020E
3,043
1,654
7.5
52.4
14
14
2.0
Source: Company, Angel Research
Stock Info
CMP
863
TP
1091
Upside
26.4%
Sector
Pharmaceutical
Market Cap (` cr)
39025
Beta
0.7
52 Week High / Low
1572/807
3 year-Chart
Source: Company, Angel Research
Stock Info
CMP
103
TP
151
Upside
46.5%
Sector
Financials
Market Cap (` cr)
22,685
Beta
1.6
52 Week High / Low
166/78
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Stock Info
CMP
397
TP
460
Upside
15.7%
Sector
Banking
Market Cap (` cr)
2,56,204
Beta
1.7
52 Week High / Low
409/257
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
450
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Mar-19
11
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Angel Top Picks | April 2019
April 5, 2019
11
Aurobindo Pharmaceuticals
Aurobindo Pharmaceuticals is an India-based leading global generic
company. It’s predominately formulations Export Company, with USA &
Europe contributing ~80% of sales (FY2018).
Recently it acquired dermatology and oral solids businesses from Sandoz Inc.,
USA. With this acquisition, Aurobindo adds sales of US$0.9bn and would
become the 2nd largest generic player in the US by number of prescriptions
Aurobindo has a robust pipeline (has filed 519 ANDA’s; second highest
amongst Indian companies) & is investing to enhance its foray into complex
generic (mainly injectables, ophthalmic etc.) & biosimilar, which will drive its
next leg of growth.
We expect Aurobindo to report net revenue CAGR of ~22% & net profit to
grow at ~19% CAGR during FY2018-20E, aided by acquisitions. Valuations of
the company are cheap v/s its peers and own fair multiples of 17-18X. We
recommend BUY rating.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
18,799
19.6
2,575
44.1
20.1
17.8
3.3
13.2
2.5
FY2020E
24,234
21.9
3,438
58.9
22.2
13.3
2.7
9.1
1.9
Source: Company, Angel Research
GMM Pfaudler Ltd.
GMM Pfaudler Limited (GMM) is the Indian market leader in glass-lined (GL)
steel equipment used in corrosive chemical processes of agrochemicals,
specialty chemical and pharma sector. The company is seeing strong order
inflow from the user industries which is likely to provide 20%+ growth outlook
for next couple of years.
GMM has also increased focus on the non-GL business, which includes mixing
equipment, filtration and drying equipment for the chemical processing
industry. It is expecting to increase its share of non-GL business to 50% by
2020.
GMM is likely to maintain the 20%+ growth trajectory over FY18-20E backed
by capacity expansion and cross selling of non-GL products to its clients.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
503
17.1
58.7
40.2
21.0
30.2
6.3
19.2
3.3
FY2020E
592
16.9
66.1
45.3
19.7
26.8
5.3
16.2
2.7
Source: Company, Angel Research
Stock Info
CMP
786
TP
890
Upside
13.3%
Sector
Pharmaceuticals
Market Cap (` cr)
46,023
Beta
1.2
52 Week High / Low
830/527
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
1,000
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
Stock Info
CMP
1,215
TP
1,400
Upside
15.2%
Sector
Machinery
Market Cap (` cr)
1,776
Beta
0.7
52 Week High / Low
1325/700
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Mar-19
12
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ence
sourc
Angel Top Picks | April 2019
April 5, 2019
12
Jindal Steel & Power Ltd.
The company has increased its crude steel capacity more than double in last
five years from 3.6 MTPA to 8.6 MTPA and currently running at ~65%
utilization.
Owing to continuous demand of steel from infrastructure, housing and auto
sectors along with limited addition of steel capacity in near term and favorable
government policies augur well for companies like JSPL to perform well going
forward, we expect JSPL’s utilization to improve to 80-85% by FY20.
Recently JSPL has started its 1.8MTPA Angul DRI plant and expect utilization for
this plant to improve going forward which will help to improve steel business
revenue.
In power segments, During the year Jindal Power limited (JPL) has signed a
250MW PPA and it is in discussions with various utilities for another 300MW
PPA, we expects JPL to generate ~ 1,700 MW units by FY19E due to
increasing demand of power.
JSPL is trading at attractive valuation to its peer, we value the stock based on
asset based approach of Steel segment on EV/Tone basis and Power segment
on EV/MW basis.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
38,967
22.5
844
8.7
2.7
19.3
0.52
6.2
1.40
FY2020E
42,076
24.2
1839
19
6
9
0.49
4.8
1.18
Source: Company, Angel Research
Shriram Transport Finance
SHTF's primary focus is on financing pre-owned commercial vehicles. CV/LCV
sales grew by 20%/25% in FY18, respectively. We expect AUM to grow at
healthy CAGR of 20% over FY2018-20E led by pick up in infrastructure/
construction post 2019 elections, macro revival and Ramping up in rural
distribution.
Over the last three years, SHTF's GNPA and credit costs have increased
primarily due to the transition of NPA recognition from 180DPD to 90DPD
(Q4FY18). Q1FY19 onwards asset quality started witnessing steady
improvement, and we expect this trend to continue. Once the credit costs
normalize, an improvement in return ratios will be visible.
We expect loan book/PAT CAGR of 20%/45% respectively over FY2018-20E.
At 1.8x FY20E ABV, Valuation appears reasonable.
Key Financials
Y/E
NII
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2019E
7,914
9.1
2,494
110
681
2.6
18
11
2.1
FY2020E
9,390
9.2
3,181
140
799
2.9
19
9
1.8
Source: Company, Angel Research
Stock Info
CMP (`)
185
TP (`)
249
Upside
37%
Sector
Steel & Power
Market Cap (` cr)
17,902
Beta
2.6
52 Week High / Low
265/123
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
Stock Info
CMP
1,200
TP
1,764
Upside
47.0%
Sector
Financials
Market Cap (` cr)
27,229
Beta
0.9
52 Week High / Low
1671/904
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
13
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ence
sourc
Angel Top Picks | April 2019
April 5, 2019
13
Bata India
Bata India Ltd (BIL) is the largest footwear retailer in India, offering footwear,
accessories and bags across brands like Bata, Hush Puppies, Naturalizer,
Power, etc. BIL’s ~70% revenue is derived from Men & Kids segment and
balance from women’s segment. BIL has over 1,400 Bata retail stores across
India.
Further, over the last 3 years, the company has added 135 stores (net
addition). Going forward, the company has plans to open 500 stores (already
identified 435 cities) mainly in tier-II and tier-III cities over the next 4-5 years.
We expect BIL to report net revenue CAGR of ~16% to ~`3,497cr over
FY2018-20E mainly due increasing brand consciousness amongst Indian
consumers, new product launches and focus on women’s segment (high
growth segment). Further, on the bottom-line front, we expect CAGR of ~19%
to `358cr over the same period on the back of margin improvement
(increasing premium product sales). s
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
3,008
16.2
306
23.8
17.5
58.6
10.3
32.9
5.7
FY2020E
3,497
16.4
358
27.9
17.6
50.0
8.8
27.7
4.9
Source: Company, Angel Research
Amber Enterprises
Amber Enterprises India Ltd. (Amber) is the market leader in the room air
conditioners (RAC) outsourced manufacturing space in India. It is a one-stop
solutions provider for the major brands in the RAC industry and currently
serves eight out of the ten top RAC brands in India.
In line with its strategy to capture more wallet share, it has made 2 acquisitions
in the printed circuit board (PCB) manufacturing space over the last 1 year
which will boost its manufacturing capabilities. Recently, it has also entered the
growing HVAC space via a acquisition in Mobile application.
We expect Amber to report a CAGR of 35%+ in consolidated PAT over
FY2018-20E. Its growing manufacturing capabilities and scale put it in a sweet
spot to capture the underpenetrated RAC market in India.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
2,778
7.0
90.0
35.9
9.3
30.0
2.8
12.9
0.9
FY2020E
3,125
7.5
114.4
45.4
10.7
23.6
2.5
10.7
0.8
Source: Company, Angel Research
Stock Info
CMP
1,383
TP
1,479
Upside
6.9%
Sector
Footwear
Market Cap (` cr)
17,781
Beta
0.9
52 Week High / Low
1425/733
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Dec-18
Jan-19
Mar-19
Stock Info
CMP
858
TP
910
Upside
14.7%
Sector
Electronics
Market Cap (` cr)
2,698
Beta
0.9
52 Week High / Low
1200/621
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
Jan-18
Mar-18
Apr-18
Jun-18
Jul-18
Sep-18
Oct-18
Dec-18
Jan-19
Mar-19
14
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Refer
ence
sourc
Angel Top Picks | April 2019
April 5, 2019
14
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
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associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
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the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
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Disclosure of Interest Statement
Top Picks
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or
relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)