1
Please refer to important disclosures at the end of this report
1
1
Angel Top Picks June 2019
Indian stock market managed to close the month in the green despite heightened
volatility in the run up to the election results on the 23
rd
of May’19. BSE 100 index
was up by 1.5% for the month of May while returns for the calander year 2019 is
7.9%. Our top picks have generated a total return of 64.0% since inception, an
outperformance of 17.0% over BSE100.
Extreme volatility during in the run up to election results - Major indices like the
Sensex and Nifty 50 had touched all-time highs by the first week of May’19 on
the back of strong FII inflows. However all indices came under pressure during
the first half of the month and traders used the rally to book profits before the
last phase of the elections got over on the 19
th
of May’19. Even FII flows
turned negative as FII’s sold equities worth `4,786 cr. till the 17
th
of May’19
before the exits polls were announced on the 19
th
of May’19 evening.
Markets staged strong recovery post exits polls were announced All major
Indices reversed sharply post the results if the exit polls on the 19
th
of May and
were trading at all time highs by the end of the month as the election outcome
were better than markets expectations. FII flows also turned positive as FII’s
bought stocks worth `11,579 crore. post exit polls till the end of the month.
FII’s have been net buyers in Indian equities to the extent of `76,051 crore in
CY2019 till May versus outflow of `33,000 crore in CY2018.
Policy action expected by new Government and RBI to boost growth - There
has been a sharp slowdown in economic activity post the IL&FS crisis induced
slowdown which is reflected in high frequency data like the IIP and Auto sales
numbers. GDP growth for Q4FY19 has also collapsed to 5.8%, much lower
than street estimates. However some of the slowdown in CY19 could be
attributed to postponement of decisions prior to the elections which are now
expected to reverse. We also expect the Government and the RBI to try and
stimulate growth through various policy measures.
Top picks overview
We recommend our top picks as it has outperformed the benchmark BSE 100
significantly since inception. All of our top picks are backed by sound business
model and are likely to do well in coming years. We continue to remain
positive on consumer (both discretionary and non discretionary) space and
private sector banks (both corporate and retail).
Exhibit 1: Top Picks Performance
Return Since Inception (30th Oct, 2015)
Top Picks Return
64.00%
BSE 100
47.00%
Outperformance
17.00%
Source: Company, Angel Research
Company
CMP (`)
TP (`)
Banking/NBFC
Aditya Birla Capital
104
130
ICICI Bank
419
490
HDFC Bank
2,454
2,660
RBL Bank
692
775
Shriram Transport Finance
1,166
1,470
Consumption
Amber Enterprises
838
910
Bata India
1,375
1,643
Blue Star
799
867
Safari Industries
672
1,000
Parag Milk Foods
242
330
TTK Prestige
7,220
7,708
Media/Automobiles
Maruti Suzuki
7,050
8,552
M&M
651
1,050
GMM Pfaudler
1,261
1,400
Jindal Steel
162
250
KEI Industries
500
612
Pharmaceutical
Aurobindo Laboratories
654
890
2
Error!
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ence
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Angel Top Picks | June 2019
June 6, 2019
2
Top Picks
3
Error!
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ence
sourc
Angel Top Picks | June 2019
June 6, 2019
3
Aditya Birla Capital
Aditya Birla Capital (ABCL) is one of the most diversified financial services
entities, with a presence in non-bank financing, asset management, housing
finance, insurance and advisory businesses.
ABFL (NBFC) business contributes highest value in our SOTP valuation. It has
recorded a strong CAGR of 32% over FY14-19. Despite aggressive growth in
lending and migration to 90dpd for NPA recognition, GNPA has remained at
~1%. Banka Tie up with HDFC bank has gaining traction which is visible in
improvement in VNB margin (FY184.5%, FY19-9.5%) and new business
premium.
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 `130.
Key Financials
Y/E
Op. Inc
PAT
EPS
ABV
ROE
P/E
P/ABV
Op. Inc
PAT
March
(` cr)
(` cr)
(`)
(`)
(%)
(x)
(x)
(` cr)
(` cr)
FY2020E
2,368
1,281
5.8
49.1
12
17
2.0
2,368
1,281
FY2021E
3,032
1,699
7.7
56.8
14
13
1.7
3,032
1,699
Source: Company, Angel Research
Amber Enterpries
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.
We expect Amber to report consolidated revenue/PAT CAGR of 23%/41%
respectively 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)
FY2019
2,752
8.1
93.6
29.7
9.8
28.0
2.67
12.67
1.03
FY2020E
3125
7.5
114.4
36.4
10.7
23.0
1.94
8.26
0.62
Source: Company, Angel Research
Stock Info
CMP
104
TP
130
Upside
25.1%
Sector
Financials
Market Cap (` cr)
22,873
Beta
1.6
52 Week High / Low
152/77
2 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
Apr-19
May-19
Stock Info
CMP
838
TP
910
Upside
8.6%
Sector
Electronics
Market Cap (` cr)
2,636
Beta
0.9
52 Week High / Low
1,121/621
1 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
May-18
Jul-18
Aug-18
Sep-18
Nov-18
Dec-18
Feb-19
Mar-19
May-19
4
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ence
sourc
Angel Top Picks | June 2019
June 6, 2019
4
Aurobindo Pharma
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)
FY2019
19,226
20.4
2,365
41.5
17.10
16.2
2.76
11.0
2.2
FY2020E
24,234
21.9
3,438
58.9
22.2
11.1
2.96
7.69
1.7
Source: Company, Angel Research
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).
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019
2,931
18.6
328
25.6
19.6
51.7
10.8
33.8
6.0
FY2020E
3,497
16.4
358
27.9
17.6
49.3
10.3
28.1
4.6
Source: Company, Angel Research
Stock Info
CMP
1,375
TP
1,643
Upside
19.4%
Sector
Footwear
Market Cap (` cr)
17,670
Beta
0.9
52 Week High / Low
1,478 / 740
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
1,600
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
May-19
Stock Info
CMP
654
TP
890
Upside
36.1%
Sector
Pharmaceuticals
Market Cap (` cr)
38,325
Beta
1.2
52 Week High / Low
838/527
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
1,000
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
May-19
5
Error!
Refer
ence
sourc
Angel Top Picks | June 2019
June 6, 2019
5
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.
Going 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)
FY2019
5,235
7.17
190.06
19.5
22.3
41.3
8.81
21.22
1.5
FY2020E
5,891
6.5
205
21.3
20.9
32
5.67
20
1.1
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 FY18-20 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)
FY2019
502
16.99
50.5
34.6
19.0
36.5
6.85
20.6
3.5
FY2020E
591
17.1
69.0
47.3
20.4
26.7
4.84
16.6
2.8
Source: Company, Angel Research
Stock Info
CMP
1,261
TP
1,400
Upside
11.1%
Sector
Machinery
Market Cap (` cr)
1,843
Beta
0.7
52 Week High / Low
1,425/754
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
1,600
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
May-19
Stock Info
CMP
799
TP
867
Upside
8.6%
Sector
Cons.Durable
Market Cap (` cr)
7,692
Beta
0.2
52 Week High / Low
810/507
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
May-
Aug-
Nov-
Feb-17
May-
Aug-
Nov-
Feb-18
May-
Aug-
Nov-
Feb-19
May-
6
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ence
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Angel Top Picks | June 2019
June 6, 2019
6
HDFC Bank
Bank has planned to improve business with digital platform and engaging with
mid market client. Banks next leg of growth road map 1) increasing branch
opening number from 300 current to 600 annually in non urban area. 2)
Increase POS 4x to 4mn by FY21 and double the virtual relationship manager
client in 3 years.
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%.
Key Financials
Y/E
NII
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2020E
58,049
4.4
25,611
94.0
605
1.9
16.5
25.8
4.0
FY2021E
70,343
4.4
31,312
115.0
701
1.9
17.5
21.1
3.5
Source: Company, Angel Research
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 60% (Q4FY19) 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 and
credit costs to further decline owing to incremental lending to higher rated
corporate and faster resolution in Accounts referred to NCLT under IBC.
The gradual improvement in recovery of bad loans would reduce credit costs
that 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 `490.
Key Financials
Y/E
Op. Inc
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2020E
31,749
3.4
12,600
20
169
1.2
11
21
2.5
FY2021E
37,524
3.5
15,448
24
188
1.3
12
18
2.2
Source: Company, Angel Research
Stock Info
CMP
419
TP
490
Upside
17.1%
Sector
Banking
Market Cap (` cr)
270,176
Beta
1.7
52 Week High / Low
438/257
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
450
500
Jun-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-
Stock Info
CMP
2,454
TP
2,660
Upside
8.4%
Sector
Banking
Market Cap (` cr)
668,726
Beta
0.8
52 Week High / Low
2,463/1,884
3 year-Chart
Source: Company, Angel Research
-
500
1,000
1,500
2,000
2,500
3,000
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
May-19
7
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ence
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Angel Top Picks | June 2019
June 6, 2019
7
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 JSPL to perform well going forward, we
expect JSPL’s utilization to improve to 80-85% by FY20 along with reduction in
debt led by improving in profitability.
From April 2019, power segment has seen improvement in PLF and now
producing 1,700 megawatts, up from the average 1,400 megawatts, this will
lead improvement in PLF from 34% to 50%.
Expect 515MW of PPA from NHPC currently, JPL emerged as L1 bidder.
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)
FY2020E
45,561
22.4
2,076
21
7
7
0.52
4.5
1.01
FY2021E
47,450
24.1
3,239
33
9
5
0.45
3.7
0.89
Source: Company, Angel Research
KEI Industries
KEI’s current order book (OB) stands at `3,866cr (segmental break-up: out
which EPC is around `1,508cr 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.
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
FY2018-20 in exports. We expect KEI to report net revenue CAGR of ~18% to
~`4,946cr and net profit CAGR of ~19% to `236cr over FY2018-20E. Hence
we have a Buy rating on the stock.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2019
4,227
10.5
180
23.3
23.3
21.5
9.39
1.0
FY2020E
4,946
10.5
236
30.6
23.9
17.4
8.25
0.87
Source: Company, Angel Research
Stock Info
CMP
162
TP
250
Upside
53.7%
Sector
Steel & Power
Market Cap (` cr)
16,423
Beta
2.6
52 Week High / Low
251/123
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
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
May-19
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
500
TP
612
Upside
22.5%
Sector
cable
Market Cap (` cr)
3,943
Beta
1.3
52 Week High / Low
532/248
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
May-
Aug-
Nov-
Feb-17
May-
Aug-
Nov-
Feb-18
May-
Aug-
Nov-
Feb-19
May-
8
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ence
sourc
Angel Top Picks | June 2019
June 6, 2019
8
Maruti Suzuki
The Automobile sector is expected to benefit from the GST implementation.
The sector has seen a pick up in the volumes in FY17 as there were several
positive factors like normal monsoon and lower interest rates.
Maruti Suzuki continues to hold ~52% market share in the passenger vehicles.
The launch of exciting models has helped the company to ride on the
premiumization wave that is happening in the country. In the last two years,
company has seen improvement in the business mix with the pie of the utility
vehicles growing from ~4% to current 15%. The 2-3 months of waiting period
of new models, launch of Swift Hatchback in January, 2018 and headroom
for more capacity utilization at Gujarat plant is the near term earning triggers.
Due to the favorable business mix, company has also been seeing
improvement in the margins. Company has already moved from ~11-12%
Together with higher operating leverage at Gujarat plant, increasing Nexa
outlets, and improving business mix, we believe that company has further
room to improve its margins. 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)
FY2019
83,039
13.5
7,649
253.21
16.3
27.11
4.52
15.52
2.6
FY2020E
94,790
14.2
8,670
287.1
16.7
23.2
3.78
12.67
1.8
Source: Company, Angel Research
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 and Others (comprising logistics, after-
market, two wheelers and investment).
IMD has predicted a near normal monsoon for 2019 for the third consecutive
year which should be a strong trigger for tractor sales growth. 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 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.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019
53,614
15.48
4,796
38.76
14.3
16.79
2.36
8.6
1.1
FY2020E
60,634
12.7
5,429
45.6
14.2
14.1
1.98
7.9
1
Source: Company, Angel Research
Stock Info
CMP
651
TP
1,050
Upside
61.4%
Sector
Automobile
Market Cap (` cr)
80,895
Beta
0.8
52 Week High / Low
992/598
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
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
May-19
Stock Info
CMP
7,050
TP
8,552
Upside
21.3%
Sector
Automobile
Market Cap (` cr)
212,954
Beta
1.0
52 Week High / Low
9,923/6,324
3 year-Chart
Source: Company, Angel Research
-
2,000
4,000
6,000
8,000
10,000
12,000
May-16
Aug-16
Nov-16
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
May-19
9
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ence
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Angel Top Picks | June 2019
June 6, 2019
9
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 in 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.
Thus 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)
FY2019
2,395
9.7
120.7
14.35
16.2
16.8
2.4
9.5
0.9
FY2020E
2,822
10.6
150.7
17.9
14.9
13.5
2.1
6.6
0.7
Source: Company, Angel Research
RBL Bank
RBL Bank (RBK) has grown its loan book at healthy CAGR of 53% over FY10-
19. We expect it to grow at 35% over FY19-21E. With adequately diversified,
well capitalised B/S, RBK is set to grab market share from corporate lenders
(esp.PSUs).
The retail loan portfolio grew 57% YoY to `16,467cr and now constitutes 30%
of the loan book (18% share in 4QFY17).NIM has expanded to 4.23%, up
25bps 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 2.9x 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)
FY2020E
3,500
3.9
1,291
31
200
1.4
16
22
3.4
FY2021E
4,804
4.0
1,861
44
235
1.5
20
15
2.9
Source: Company, Angel Research
Stock Info
CMP
242
TP
330
Upside
36.1%
Sector
Dairy
Market Cap (` cr)
2,039
Beta
1.1
52 Week High / Low
365/197
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
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
May-19
Stock Info
CMP
692
TP
775
Upside
12.1%
Sector
Banking
Market Cap (` cr)
29,567
Beta
0.9
52 Week High / Low
716/439
2 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
10
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Angel Top Picks | June 2019
June 6, 2019
10
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 its revenue 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
Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(` cr)
FY2019
577
9.3
26.9
12.0
13.9
55.6
7.5
2.8
577.6
FY2020E
785
10.4
47.0
21.1
19.1
34.5
7.35
2
785.1
Source: Company, Angel Research
Shriram Transport Finance
SHTF's primary focus is on financing pre-owned commercial vehicles. We
expect AUM to grow at CAGR of 15% over FY2018-20E led by pick up in
infra/ construction Post 2019 elections, macro revival and Ramping up in rural
distribution.
In last three year SHTF, GNPA and credit cost has been 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.
We expect STFC to report RoA/RoE to2.7%/17.6% in FY2021E respectively. At
CMP, the stock is trading at 1.4x FY2021E ABV and 7x FY2021E EPS, which
we believe is reasonable for differentiated business model with return ratios.
We recommend a BUY on the stock with a Target Price of `1,470.
Key Financials
Y/E
Op. Inc
NIM
PAT
EPS
ABV
ROA
ROE
P/E
P/ABV
March
(` cr)
(%)
(` cr)
(`)
(`)
(%)
(%)
(x)
(x)
FY2020E
8,804
8.2
2,910
128
813
2.6
17
9
1.7
FY2021E
10,305
8.3
3,531
156
953
2.7
18
7
1.4
Source: Company, Angel Research
Stock Info
CMP
672
TP
1,000
Upside
48.7%
Sector
Luggage
Market Cap (` cr)
1,501
Beta
0.3
52 Week High / Low
1,005/580
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
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
May-19
Stock Info
CMP
1,166
TP
1,470
Upside
26.1%
Sector
Financials
Market Cap (` cr)
26,449
Beta
0.9
52 Week High / Low
1,529/904
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
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
May-19
11
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ence
sourc
Angel Top Picks | June 2019
June 6, 2019
11
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 6 cr LPG connections under the Ujjawala Scheme,
inorganic expansion and traction in exports. We expect TTK to report a CAGR
of 16%/22% in revenue/PAT respectively over FY2018-20E.
Key Financials
Y/E
Sales
OPM
PAT
EPS
ROE
P/E
P/BV
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2019
2,106
15.1
192.4
138.7
16.7
51.4
8.6
4.74
FY2020E
2,648
14.3
246.3
213.4
17.7
33.8
5.94
3.15
Source: Company, Angel Research
Stock Info
CMP
7,220
TP
7,708
Upside
6.8%
Sector
Houseware
Market Cap (` cr)
10,008
Beta
1.2
52 Week High / Low
7,738/4,581
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
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
May-19
12
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Angel Top Picks | June 2019
June 6, 2019
12
Exhibit 2: Changes in Recommendation
Effective Date
Stock
CMP
Change in recommantaion
(`)
From
To
06-06-2019
Ashok Leyland
93
Buy
Hold
06-06-2019
GIC Housing
263
Buy
Hold
06-06-2019
Inox Wind
72.2
Buy
Hold
06-06-2019
Music Broadcast
59
Buy
Hold
06-06-2019
Siyaram Silk Mills
338
Buy
Hold
Source: Angel Research
13
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ence
sourc
Angel Top Picks | June 2019
June 6, 2019
13
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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co-managed public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
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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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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)