Asian Paints (NS: ASPN ): APNT’s topline delivery (91% YoY) exceeded expectations (HSIE: 64%). Growth was all-round. The decorative business clocked 106/96% volume/value growth, underpinned by (1) strong pent-up demand in paints and adjacencies (waterproofing/adhesives) and (2) stronger pick-up in metros/tier 1/2 cities and projects & large institutional sales (vis-à-vis the previous year). Despite a meaningful revenue beat, EBITDA (INR 9.1bn) missed expectations (HSIE: INR 9.3bn) as RM inflation dragged it down. Note: price hikes (3% in Q1/1% in Jul-21) remain incommensurate vis-à-vis the steep RM inflation (21-25% in the past six months). Our FY23/24 EPS estimates largely remain unchanged. Maintain SELL with a DCF-based TP of INR 2,460/sh, implying 54x Jun-23 P/E.
Jubilant FoodWorks: Jubilant’s Q1FY22 was in line and it posted revenue growth of 131% YoY (HSIE 131%, -3% two-year CAGR). SSG was at +114% (-61% in Q1FY21) vs. HSIE +129%. System recovery was at 94% vs. 41% in Q1FY21 and 115% in Q4FY21, reflecting less impact of the second wave of COVID on the business. While Jubilant continued to capitalize on its delivery expertise, delivery recovery was at 149% vs. 67% in Q1FY21 and 129% in Q4FY21. EBITDA margin was robust at 24% (HSIE 23%), driven by tight cost control. We expect the margin to remain strong in FY22/FY23. The company is committed to aggressive store expansion across brands for the remaining FY22. Investments in technology and digital marketing will further empower the brands and operations. Jubilant is a strong franchise among QSR peers, and its success on new initiatives and capital allocation will remain the key monitorables for the stock. We maintain our EPS estimates. We value Jubilant at 55x P/E on Jun-23E EPS and derive a target price of INR 2,650. We believe a large part of the recovery is priced in (trading at 68x/57x P/E on FY23/24). Maintain REDUCE.
Supreme Industries (NS: SUPI ): We maintain our ADD rating on Supreme Industries (SIL), keeping the target price unchanged at INR 2,320/share (SOTP based). In Q1FY22, the countrywide lockdown hit sales across all of the company’s four segments, with the agri-pipes and plastic furniture segments witnessing a sharper impact than the others. Lower utilization and inventory loss pulled profits down. Thus, consolidated volume/net sales/EBITDA/ APAT fell 36/36/56/62% QoQ respectively. Despite the Q1 loss, SIL expects to deliver growth in FY22E, as demand has been picking up from late June onwards.
ICICI Securities: Pure broking revenue was in line (+4% QoQ), as a higher share of delivery in the volume mix protected blended yields. ISEC has been able to stabilize its retail market share both in the cash and derivatives segments, despite the implementation of the third phase of peak margin norms. We are comforted by (1) the company’s focus on gaining client share through diversified channels and (2) increasing focus on building digital prowess. However, we remain wary of the impact of successive phases of peak margin regulations on trading volumes and discount brokers’ acquiring a higher client share. Given the positive macro lead indicators (rising retail participation and list of potential IPOs in the pipeline), we maintain our positive bias on the broking industry and ISEC. We raise our target multiple on ISEC to 25x Mar’23 EPS (from 23x earlier) and maintain ADD with a target price of INR 800.
Read full article here:
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.