1
Please refer to important disclosures at the end of this report
1
1
Angel Top Picks – May 2019
Indian stock market maintained it’s upwards trajectory in the month of April as the
markets continued to factor in a good showing by the ruling party in the ongoing
general elections post the surgical air strike at Pakistan. BSE 100 index was up by
0.5% for the month of April while returns for the calander year 2019 is 6.3%. Our
top picks have generated a total return of 61.4% since inception (i.e. October
2015), an outperformance of 16.5% over BSE100.
Major indices at all time high on back of strong FII inflows – Major indices like the
Sensex and Nifty 50 have recently touched all-time high majorly led by banking
stocks on the back of strong FII inflows. FII flows continued to remain strong for the
third month in a row as they were net buyers in Indian equities to the extent of `
21,193 core in the month of April 2019. FII’s have been net buyers in Indian
equities to the extent of ` 67,000 crore in CY2019 till April versus outflow of r`
33,000 crore in CY2018.
Macro conditions improving post IL&FS crisis induced slowdown – Growth rate had
slowed down sharply in the aftermath of the IL&FS crisis with the Q3 GDP growth
numbers coming in at 6.6% yoy while Q4 GDP growth is estimated at 6.5% yoy as
per the second advance estimate by the CSO. However monthly GST collections
have been on an increasing trend over the past few months and have touched all
time high at `1.14 trillion in Apr’19 post collections of `1.06 trillion in Mar’19.
Rupee too has been largely stable as trade deficit have come down to manageable
levels over the past few months despite crude prices moving above the USD 70/bbl
mark. As per the IMD monsoon are expected to be near normal at 96% of long
period average despite an El Nino this year over the Pacific Ocean. Structurally
lower inflation rates would allow the RBI to cut rates by another 50-75 bps after a
50bps reduction till date in 2019.
High probability of a reasonably stable Government along with improving global
liquidity to help markets - After the sharp rally we expect markets to consolidate till
the election results on the 23
rd
of May. We do not see any reason for a sharp
correction post the election results, except in the very unlikely event of an extremely
fragile coalition Government. The markets should be pleased as long as it is
relatively stable government and assures the continuation of the reforms process.
Global cues have also been positive with clear indications of an end to the global
tightening cycle.
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 continue to remain positive on consumer
discretionary space and private sector banks (both corporate and retail).
Exhibit 1: Top-Picks Performance
Return Since Inception (30th Oct, 2015)
Top Picks Return
61.4%
BSE 100
44.8%
Outperformance
16.5%
Source: Company, Angel Research
Company
CMP (`)
TP (`)
Banking/NBFC
Aditya Birla Capital
100
151
GIC Housing Finance
258
424
ICICI Bank
395
460
HDFC Bank
2,354
2,500
RBL Bank
664
775
Shriram Transport Finance
1,095
1,764
Consumption
Amber Enterprises
807
910
Bata India
1,467
1,643
Blue Star
682
867
Safari Industries
727
1,000
Siyaram Silk Mills
369
549
Parag Milk Foods
238
330
TTK Prestige
8,144
9,250
Media/Automobiles/Online
Maruti Suzuki
6,668
8,552
M&M
645
1,050
Music Broadcast
59
95
Ashok Leyland
90
156
Jindal Steel
181
249
GMM Pfaudler
1,198
1,400
KEI Industries
411
486
Inox Wind
64
120
Pharmaceuticals
Aurobindo Pharmaceuticals
798
890
2
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ence
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Angel Top Picks | May 2019
May 6, 2019
2
Top Picks
3
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Angel Top Picks | May 2019
May 6, 2019
3
Ashok Leyland
During FY19, Ashok Leyland has gained market share in domestic market
from other players. 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 ~30% 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
14.6
3.1
0.8
FY2020E
31,122
10.0
1,884
6.4
19.1
14.0
2.7
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 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
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
FY2019E
581.5
10.2
32.3
14.5
16.0
50.1
8.2
3.0
FY2020E
785.1
10.4
47.0
21.1
19.1
34.5
6.8
2.2
Source: Company, Angel Research
Stock Info
CMP
90
TP
156
Upside
73.0%
Sector
Automobile
Market Cap (` cr)
26,317
Beta
1.6
52 Week High / Low
168/78
3 year-Chart
Source: Company, Angel Research
-
20
40
60
80
100
120
140
160
180
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
Feb-19
Apr-19
Stock Info
CMP
727
TP
1,000
Upside
37.6%
Sector
Luggage
Market Cap (` cr)
1,623
Beta
0.3
52 Week High / Low
1005/580
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
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
Feb-19
Apr-19
4
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ence
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Angel Top Picks | May 2019
May 6, 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).
IMD has predicted a near normal monsoon for FY19 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 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 with target price of `1050.
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
16.2
2.3
8.6
1.1
FY2020E
60,634
12.7
5,429
45.6
14.2
14.1
2.0
7.5
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 favourable.
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
5,235
6.4
188
19.6
21.0
34.8
7.3
20.1
1.3
FY2020E
5,891
6.5
205
21.3
20.9
32.0
6.7
17.5
1.1
Source: Company, Angel Research
Stock Info
CMP
682
TP
867
Upside
27.1%
Sector
Cons.Durable
Market Cap (` cr)
6,568
Beta
0.2
52 Week High / Low
829/507
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Stock Info
CMP
645
TP
1,050
Upside
62.9%
Sector
Automobile
Market Cap (` cr)
80,124
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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ence
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Angel Top Picks | May 2019
May 6, 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 with a target price of `549.
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
15.0
2.2
8.0
1.1
FY2020E
2,207
14.0
146
31.2
16.1
11.8
1.9
6.7
0.9
Source: Company, Angel Research
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)
FY2019E
85,396
13.5
7,504
248.5
16.0
26.8
4.3
15.1
2.0
FY2020E
94,790
14.2
8,670
287.1
16.7
23.2
3.9
12.5
1.8
Source: Company, Angel Research
Stock Info
CMP
6,668
TP
8,552
Upside
28.3%
Sector
Automobile
Market Cap (` cr)
2,01,438
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
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Stock Info
CMP
369
TP
549
Upside
48.8%
Sector
Textile
Market Cap (` cr)
1,729
Beta
0.7
52 Week High / Low
680/303
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
900
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
6
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ence
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Angel Top Picks | May 2019
May 6, 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
48,243
4.4
21,078
77.4
528
1.8
16.8
30.4
4.5
FY2020E
58,049
4.4
25,611
94.0
605
1.9
16.5
25.0
3.9
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 with a
target price of `95.
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
13.0
4.4
FY2020E
370
34.8
72
2.6
10.2
22.7
2.3
10.8
3.8
Source: Company, Angel Research
Stock Info
CMP
59
TP
95
Upside
61.4%
Sector
Media
Market Cap (` cr)
1,627
Beta
0.5
52 Week High / Low
77/50
1 year-Chart
Source: Company, Angel Research
-
10
20
30
40
50
60
70
80
90
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
Stock Info
CMP
2,354
TP
2,500
Upside
6.2%
Sector
Banking
Market Cap (` cr)
6,41,462
Beta
0.8
52 Week High / Low
2376/1884
3 year-Chart
Source: Company, Angel Research
-
500
1,000
1,500
2,000
2,500
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
Feb-19
Apr-19
7
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ence
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Angel Top Picks | May 2019
May 6, 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
FY2018-20 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
17.8
4.1
8.4
0.9
FY2020E
4,878
10.5
233
30.2
23.7
13.6
3.2
6.9
0.7
Source: Company, Angel Research
GIC Housing Finance Ltd
GICHF has healthy capital adequacy, and is seeing an increase in demand for
home loans. GICHF’s loan book is expected to report 16% loan growth over
next two years.
GICHF is consistently decreased bank borrowing and increased high yield
loan book which has improved Net Interest Margin over last 3 years. The
share of bank borrowing was 75% in FY15, which fell to 54% in FY18. In our
opinion, Present liquidity issue would not impact GIC Housing for raising new
fund considering strong parentage.
GICHF’s asset quality is on the higher side compared to other HFCs (As on
Q3FY19 GNPA-3.10%). This is primarily due to GICHF has not written off any
bad asset and has not sold any bad assets to ARC.
We expect the GICHF’s loan growth to grow at a CAGR of 16% over next two
years. 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
8
1.2
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
411
TP
486
Upside
18.2%
Sector
Cables
Market Cap (` cr)
3,245
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
Apr-19
Stock Info
CMP
258
TP
424
Upside
64.7%
Sector
Financials
Market Cap (` cr)
1,387
Beta
1.3
52 Week High / Low
427/213
3 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
8
Error!
Refer
ence
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Angel Top Picks | May 2019
May 6, 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 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/EBITDA
EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2019E
2,254.1
14.3
204.2
176.9
17.2
46.0
6.0
12.4
4.2
FY2020E
2,648.8
14.3
246.3
213.4
17.7
38.2
5.2
9.6
3.6
Source: Company, Angel Research
Inox Wind
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 `64, Inox Wind is trading at 4.3x FY20E EPS of `15.
Considering the above positives, we assign a multiple of 8X on FY20EPS to
arrive at a target price of `120 (potential upside of 87% 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
0.2
115
5
5.4
12.4
0.7
7.0
3
FY2020E
3,416
0.2
330
15
13.5
4.3
0.6
1.3
1
Source: Company, Angel Research
Stock Info
CMP
8,144
TP
9,250
Upside
13.6%
Sector
Houseware
Market Cap (` cr)
9,408
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
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
Feb-19
Apr-19
Stock Info
CMP
64
TP
120
Upside
87%
Sector
Equipment-Wind
Market Cap (` cr)
1,416
Beta
0.3
52 Week High / Low
113/57
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
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
Feb-19
Apr-19
9
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Angel Top Picks | May 2019
May 6, 2019
9
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 FY18-20E. 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)
FY2019E
2,539
3.7
867
21
176
1.2
12
33
3.9
FY2020E
3,500
3.9
1,291
31
200
1.4
16
22
3.4
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 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.
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
17.2
2.4
11.7
0.9
FY2020E
2,822.9
10.6
150.7
17.9
14.9
13.3
2.1
9.1
0.8
Source: Company, Angel Research
Stock Info
CMP
664
TP
775
Upside
16.7%
Sector
Banking
Market Cap (` cr)
28,353
Beta
0.9
52 Week High / Low
692/439
2 year-Chart
Source: Company, Angel Research
-
100
200
300
400
500
600
700
800
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
Stock Info
CMP
238
TP
330
Upside
38.6%
Sector
Dairy
Market Cap (` cr)
2,003
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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Angel Top Picks | May 2019
May 6, 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 58% (3QFY19) from 38% in FY12.
Asset quality likely to stabilize going ahead: 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 `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, 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 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
2.2
FY2020E
3,043
1,654
7.5
52.4
14
13
1.9
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
100
TP
151
Upside
51.3%
Sector
Financials
Market Cap (` cr)
21,970
Beta
1.6
52 Week High / Low
166/77
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
Stock Info
CMP
395
TP
460
Upside
16.6%
Sector
Banking
Market Cap (` cr)
2,54,413
Beta
1.7
52 Week High / Low
410/257
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
400
450
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
Feb-19
Apr-19
11
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Angel Top Picks | May 2019
May 6, 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
18.1
3.0
12.5
2.6
FY2020E
24,234
21.9
3,438
58.9
22.2
13.5
2.5
8.6
2.0
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)
FY2019E
502.8
17.1
58.7
40.2
21.0
29.8
6.2
18.9
3.3
FY2020E
591.6
17.1
69.0
47.3
20.4
25.3
5.1
15.6
2.7
Source: Company, Angel Research
Stock Info
CMP
798
TP
890
Upside
11.6%
Sector
Pharmaceuticals
Market Cap (` cr)
46,744
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
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
Feb-19
Apr-19
Stock Info
CMP
1,198
TP
1,400
Upside
16.9%
Sector
Machinery
Market Cap (` cr)
1,750
Beta
0.7
52 Week High / Low
1325/754
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
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
Feb-19
Apr-19
12
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Angel Top Picks | May 2019
May 6, 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 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 realization.
In power segments, During the year Jindal Power limited (JPL) has signed a
30% PPA of installed capacity and it is in discussions with various utilities for
another short to long term PPA, we expects JPL to generate ~ 1,700 MW units
by FY19 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/Tonne 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
20.8
0.56
6.3
1.43
FY2020E
42,076
24.2
1839
19
6
10
0.53
4.9
1.21
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 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).
FY19 Onward we expect asset quality to improve and credit cost to normalise,
this would help to improve return ratio.
We expect loan book/PAT CAGR of 20%/45% respectively over FY2018-20E.
At 1.6x 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
10
1.9
FY2020E
9,390
9.2
3,181
140
799
2.9
19
8
1.6
Source: Company, Angel Research
Stock Info
CMP (`)
181
TP (`)
249
Upside
37%
Sector
Steel & Power
Market Cap (` cr)
17,561
Beta
2.6
52 Week High / Low
264/123
3 year-Chart
Source: Company, Angel Research
-
50
100
150
200
250
300
350
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
Feb-19
Apr-19
Stock Info
CMP
1,095
TP
1,764
Upside
61.1%
Sector
Financials
Market Cap (` cr)
24,846
Beta
0.9
52 Week High / Low
1606/904
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
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
Feb-19
Apr-19
13
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Angel Top Picks | May 2019
May 6, 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). Thus, we initiate coverage on Bata India
with Buy recommendation and Target Price of `1,643.
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
61.7
10.8
33.8
6.0
FY2020E
3,497
16.4
358
27.9
17.6
52.7
9.3
28.7
5.1
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.
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)
FY2019E
2,805.5
7.0
93.2
35.9
9.6
22.5
2.2
9.7
0.6
FY2020E
3,226.3
7.5
123.8
45.4
11.5
17.8
2.0
8.2
0.6
Source: Company, Angel Research
Stock Info
CMP
1,467
TP
1,643
Upside
12.0%
Sector
Footwear
Market Cap (` cr)
18,859
Beta
0.9
52 Week High / Low
1478/735
3 year-Chart
Source: Company, Angel Research
-
200
400
600
800
1,000
1,200
1,400
1,600
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
Feb-19
Apr-19
Stock Info
CMP
807
TP
910
Upside
12.7%
Sector
Electronics
Market Cap (` cr)
2,537
Beta
0.9
52 Week High / Low
1200/621
1 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
Apr-19
14
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Angel Top Picks | May 2019
May 6, 2019
14
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
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.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
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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)