BIG BOSS
we recommend BUY on the stock for Medium Term
CompanyOverview:
Dabur India Ltd is one of the leading FMCG Companies in India. The company is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic products. They operate in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods.
InvestmentRationale:
Thrust on improvement in rural distribution network
Dabur is focusing on increasing its rural distribution reach, as rural penetration for FMCG product is still lower as compared to urban penetration. Low penetration level in Indian rural FMCG market offers room for FMCG's companies to grow across consumption categories.
Well diversified product portfolio
Dabur has well diversified product portfolio with a strong presence in FMCG products and has key brands in hair care, oral care, ayurvedic tonics, digestives, fruit juices, honey, glucose, skin care, air freshener in all of these categories. This diversification across product categories helps the company to minimize the risk arising due to competition.
Strong result driven by growth across all product lines
Dabur has shown strong result in Q1 of FY13, Net sales was up by 20.12% i.e. Rs.1012.66 cr as compared to Rs. 843.01 cr in same period year ago. This strong growth in revenue was driven by robust performance across all product categories Health Supplements grew by 18%, Digestives grew by 10%, OTC & Ethicals portfolio increased by 13%, Hair Oils increased by 8%, Canteen store department (CSD) contribute 6%, Shampoos was up by 23%, Home Care was up by 14%, Skin Care grew by 13%, Oral Care reported growth of 8%, Foods grew by 35%. Profit after tax was Rs. 118.92 cr in Q1 FY13 as compared to Rs. 91.1 cr in Q1 FY12 whichwas up by 30.54%. Profit marginswere also stable.
Thus, we recommend BUY on the stock for Medium Term with the Target of Rs. 151
* Our interaction with EEL's management and other industry players highlights that the situation in Europe has been improving at a moderate
pace. Demand from SME's has been adequate in 1HFY13 for the industry.
* We remain positive on company's strong brand franchise in domestic markets and increasing geographical diversification. We value the company using DCF valuation methodology and maintain 'BUY' recommendation on company's stock with one year unchanged price target of Rs 98.
Valuation & Recommendation
At current price of Rs.87, stock is trading at 13.9x P/E and 7.7x EV/EBITDA multiples on FY14E earnings. We value the company using DCF valuation methodology and maintain 'BUY' recommendation on company's stock with one year unchanged price target of Rs 98.
Buy Shriram Transpor Finance Co.Ltd For Target Rs.702.00
* Shriram Transport Finance co. Ltd is a part of Shriram Group, a prominent player in commercial vehicle financing business, chit funds, consumer finance, life insurance, general insurance, stock broking, property development, project engineering and IT.
* The company has raised the funds by the way of public issue of 60,00,000 secured Nonconvertible Debentures during the quarter.
* The company has demonstrated the results during the quarter; its boisterous growth of Net Profit is steers by 12.74% to Rs. 3375.60 million.
* The company has declared an Interim Dividend of 30% i.e. Rs. 3/- per equity share of the face value of Rs. 10/- each fully paid up.
* As per the Court Order, the company has sanctioning the Merger is yet to be filed by Shriram Holdings (Madras) Private Limited (SHMPL) & the Company with Registrar of Companies, TamiI Nadu, the Financial affects of the merger have not been given effect to in the financial results.
* Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 6% over 2011 to 2014E respectively.
Outlook and Conclusion
* At the current market price of Rs.615.40, the stock P/E ratio is at 9.99 x FY13E and 9.39 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.61.63 and Rs.65.55 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 6% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 3.21 x for FY13E and 2.96 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.89 x and 1.57 x respectively for FY13E and FY14E.
The second quarter witnesses a healthy increase in overall sales as well as profitability on account of powerful combination of exciting products, an enhanced store network and robust infrastructural Support system. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.702.00 for Medium to Long term investment.
Buy Cholamandalam Investment & Finance For Target Rs.298
Scaling new heights
Cholamandalam Investment & Finance Company (CIFC), a part of the southbased Murugappa Group, operates as a pure asset finance player (AFC) offering vehicle finance, home equity loans and business finance. It has a network of 484 branches across India with an AUM of Rs 15,631 cr as on September 2012. The company has built a scalable and sustainable business model with attractive NIMs, strong loan growth, control over asset quality and widespread reach.
Management aims to maintain growth but does not wish to compromise on the asset quality front for the sake of growth. Adopting a pro active approach management has avoided the gold loan portfolio considering lots of regulatory hurdles with RBI. Moreover, the company has been focusing more on the high yielding Used CVs and LCVs segment which will ensure that the company continues to witness the growth momentum going forward. With most of the branch network expansion in place, CIFC now intends to focus on improving the productivity of these branches which will lower the cost to income ratio.
We believe that the above initiatives with a revamped business model will lead 1to a sustainable and profitable growth in CIFC’s business. We expect earnings to grow at a CAGR of 46.7% over FY12-FY14E. We expect the company to report an improvement in its RoE from 14.0% in FY12 to 19.9% in FY14E and RoA (post tax) to improve from 1.5% in FY12 to 1.9% in FY14E. At CMP the stock is trading at 1.9x FY13E and 1.54x FY14E ABV and 11.08x FY13E and 8.22x FY14E EPS. Based on our estimated BV of Rs.149 per share for FY14E and P/ABV target multiple of 2.0x we arrive at a target price of Rs.298. We recommend BUY on the stock indicating a potential upside of 25.3%.
* CIFC is well positioned to deliver 30% CAGR growth in AUM over FY12-FY14E driven by the growth in vehicle finance segment. In the Vehicle Finance segment particularly the company’s strategy to target high growth business segments like Used CVs, less cyclical LCV segment and entering into new tractor financing will lead to sustainable growth going forward.
* We believe that CIFC will continue to maintain its growth momentum aided by the new products launched, increasing market share in high yielding segments and benefit of network expansion. We expect disbursements to witness a CAGR growth of 30.3% over FY12-FY14E.
* The significant branch expansion made by the company in the last 2-3 years will start yielding results and CIFC will witness improvement in overall productivity of the branches leading to lower cost to income ratio leading to improvement in the company’s bottom line. We expect C/I ratio to improve from 56.1% in FY12 to 51.5% in FY14E.
* CIFC has managed to reduce its gross NPA from historic high of 5.5% in FY10 resulting from its personal loan portfolio to nearly 0.8% in FY12 which suggest strong command of the management to keep a check on the rising concern over NPAs. Going forward although we expect NPA to slightly increase from current levels to 1.1% in FY13E it will still be well under control.
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VIKAS PARSHURAM SAMWATSARE
DATED 6/12/12
we recommend BUY on the stock for Medium Term
Buy Dabur India Ltd. For Target Rs.151.00.
CompanyOverview:Dabur India Ltd is one of the leading FMCG Companies in India. The company is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic products. They operate in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods.
InvestmentRationale:
Thrust on improvement in rural distribution network
Dabur is focusing on increasing its rural distribution reach, as rural penetration for FMCG product is still lower as compared to urban penetration. Low penetration level in Indian rural FMCG market offers room for FMCG's companies to grow across consumption categories.
Well diversified product portfolio
Dabur has well diversified product portfolio with a strong presence in FMCG products and has key brands in hair care, oral care, ayurvedic tonics, digestives, fruit juices, honey, glucose, skin care, air freshener in all of these categories. This diversification across product categories helps the company to minimize the risk arising due to competition.
Strong result driven by growth across all product lines
Dabur has shown strong result in Q1 of FY13, Net sales was up by 20.12% i.e. Rs.1012.66 cr as compared to Rs. 843.01 cr in same period year ago. This strong growth in revenue was driven by robust performance across all product categories Health Supplements grew by 18%, Digestives grew by 10%, OTC & Ethicals portfolio increased by 13%, Hair Oils increased by 8%, Canteen store department (CSD) contribute 6%, Shampoos was up by 23%, Home Care was up by 14%, Skin Care grew by 13%, Oral Care reported growth of 8%, Foods grew by 35%. Profit after tax was Rs. 118.92 cr in Q1 FY13 as compared to Rs. 91.1 cr in Q1 FY12 whichwas up by 30.54%. Profit marginswere also stable.
Thus, we recommend BUY on the stock for Medium Term with the Target of Rs. 151
Buy Elgi Equipment Ltd. For Target Rs.98
EEL reported Q2FY13 PAT lower than our estimates due to forex loss and acquisition fees incurred in Rotair S.p.A; company reported moderation in standalone and consolidated operating margins on account of increased personnel cost.
* Our interaction with EEL's management and other industry players highlights that the situation in Europe has been improving at a moderate
pace. Demand from SME's has been adequate in 1HFY13 for the industry.
* We remain positive on company's strong brand franchise in domestic markets and increasing geographical diversification. We value the company using DCF valuation methodology and maintain 'BUY' recommendation on company's stock with one year unchanged price target of Rs 98.
Valuation & Recommendation
At current price of Rs.87, stock is trading at 13.9x P/E and 7.7x EV/EBITDA multiples on FY14E earnings. We value the company using DCF valuation methodology and maintain 'BUY' recommendation on company's stock with one year unchanged price target of Rs 98.
Buy Shriram Transpor Finance Co.Ltd For Target Rs.702.00
* Shriram Transport Finance co. Ltd is a part of Shriram Group, a prominent player in commercial vehicle financing business, chit funds, consumer finance, life insurance, general insurance, stock broking, property development, project engineering and IT.
* The company has raised the funds by the way of public issue of 60,00,000 secured Nonconvertible Debentures during the quarter.
* The company has demonstrated the results during the quarter; its boisterous growth of Net Profit is steers by 12.74% to Rs. 3375.60 million.
* The company has declared an Interim Dividend of 30% i.e. Rs. 3/- per equity share of the face value of Rs. 10/- each fully paid up.
* As per the Court Order, the company has sanctioning the Merger is yet to be filed by Shriram Holdings (Madras) Private Limited (SHMPL) & the Company with Registrar of Companies, TamiI Nadu, the Financial affects of the merger have not been given effect to in the financial results.
* Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 6% over 2011 to 2014E respectively.
Outlook and Conclusion
* At the current market price of Rs.615.40, the stock P/E ratio is at 9.99 x FY13E and 9.39 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.61.63 and Rs.65.55 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 6% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 3.21 x for FY13E and 2.96 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.89 x and 1.57 x respectively for FY13E and FY14E.
The second quarter witnesses a healthy increase in overall sales as well as profitability on account of powerful combination of exciting products, an enhanced store network and robust infrastructural Support system. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.702.00 for Medium to Long term investment.
Buy Cholamandalam Investment & Finance For Target Rs.298
Scaling new heights
Cholamandalam Investment & Finance Company (CIFC), a part of the southbased Murugappa Group, operates as a pure asset finance player (AFC) offering vehicle finance, home equity loans and business finance. It has a network of 484 branches across India with an AUM of Rs 15,631 cr as on September 2012. The company has built a scalable and sustainable business model with attractive NIMs, strong loan growth, control over asset quality and widespread reach.
Management aims to maintain growth but does not wish to compromise on the asset quality front for the sake of growth. Adopting a pro active approach management has avoided the gold loan portfolio considering lots of regulatory hurdles with RBI. Moreover, the company has been focusing more on the high yielding Used CVs and LCVs segment which will ensure that the company continues to witness the growth momentum going forward. With most of the branch network expansion in place, CIFC now intends to focus on improving the productivity of these branches which will lower the cost to income ratio.
We believe that the above initiatives with a revamped business model will lead 1to a sustainable and profitable growth in CIFC’s business. We expect earnings to grow at a CAGR of 46.7% over FY12-FY14E. We expect the company to report an improvement in its RoE from 14.0% in FY12 to 19.9% in FY14E and RoA (post tax) to improve from 1.5% in FY12 to 1.9% in FY14E. At CMP the stock is trading at 1.9x FY13E and 1.54x FY14E ABV and 11.08x FY13E and 8.22x FY14E EPS. Based on our estimated BV of Rs.149 per share for FY14E and P/ABV target multiple of 2.0x we arrive at a target price of Rs.298. We recommend BUY on the stock indicating a potential upside of 25.3%.
* CIFC is well positioned to deliver 30% CAGR growth in AUM over FY12-FY14E driven by the growth in vehicle finance segment. In the Vehicle Finance segment particularly the company’s strategy to target high growth business segments like Used CVs, less cyclical LCV segment and entering into new tractor financing will lead to sustainable growth going forward.
* We believe that CIFC will continue to maintain its growth momentum aided by the new products launched, increasing market share in high yielding segments and benefit of network expansion. We expect disbursements to witness a CAGR growth of 30.3% over FY12-FY14E.
* The significant branch expansion made by the company in the last 2-3 years will start yielding results and CIFC will witness improvement in overall productivity of the branches leading to lower cost to income ratio leading to improvement in the company’s bottom line. We expect C/I ratio to improve from 56.1% in FY12 to 51.5% in FY14E.
* CIFC has managed to reduce its gross NPA from historic high of 5.5% in FY10 resulting from its personal loan portfolio to nearly 0.8% in FY12 which suggest strong command of the management to keep a check on the rising concern over NPAs. Going forward although we expect NPA to slightly increase from current levels to 1.1% in FY13E it will still be well under control.
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