External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

External broker reports(aggregated public sources)

A Relationship Beyond Broking

Nirmal Bang, one of the leading stock broking companies in India, caters to retail and institutional clients by offering them a range of financial products and services, including equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS.

Nirmal Bang is drawn from a diversity of professional backgrounds, and blend of experience, skill and dedication is shared with its clients. Nirmal Bang emphasizes adequate, thorough research local and world-wide developments, balancing these with the astute discovery of intrinsic values, synergies and growth. The aim is simply to help the investors to maximize their returns.

Equity Bottom-Up

<ul><li><span style="font-size: var(--content-font-size);">Demand holds reasonably well: Demand continued to hold strong across segments and regions.</span></li></ul><div><div><div><div><div><ul><li>Cost pressures to persist in the near term; reiterates sustainable margin guidance</li></ul><div><div><div><div><ul><li>Rs22.5bn capex to cater to medium term demand: BKT has decided to keep on hold investment of Rs3.5bn to continue operating the old Walunj plant and operations in the plant will continue, taking its total capacity to 360k MT by the end of FY23. Project capex for FY23 will likely be at ~Rs9bn each.</li></ul></div></div></div></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Demand holds reasonably well: Demand continued to hold strong across segments and regions.Cost pressures to persist in the near term; reiterates sustainable margin guidanceRs22.5bn capex to cater to medium term demand: BKT has decided to keep on hold investment of Rs3.5bn to continue operating the old Walunj plant and operations in the plant will continue, taking its total capacity to 360k MT by the end of FY23. Project capex for FY23 will likely be at ~Rs9bn each.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Balkrishna Industries - Margin Pressure to Sustain; Valuation Remains Attractive

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.</p><p>The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.</p><p>We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOMATO IN)</a> will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.</p><p>Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.</p>

The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. Zomato (ZOMATO IN) will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.

India: Stock Reclassification & Active Portfolio Management (Dec 2021)

Independent Research Analyst

Mamta Verma

DC India Research

DC India Research LLP (DCIR) is based out of Mumbai, India.

We specialize in providing customized, independent research across listed and unlisted companies in India across equities and credit including sectoral research. Our customers include India focussed PE funds, special situation funds, domestic AMCs, Wealth Advisory& PMS firms, Rating Agencies & Investment Advisors. 

The DCIR board consists of prominent names from the industry as well as CIO’s of Hedge funds.

<p>In this note, we have reviewed the 9m-FY18 performance of the listed players in the Indian Tyre Sector.</p><p>Note - This review will be followed on with the q4-FY18 results of the companies.</p><p>Companies covered - <a href="https://www.smartkarma.com/entities/8423" target="_blank" data-smartkarma-citation="entities:8423:1">Apollo Tyres Ltd (APTY IN)</a>, <a href="https://www.smartkarma.com/entities/2930" target="_blank" data-smartkarma-citation="entities:2930:1">Mrf Ltd (MRF IN)</a>, <a href="https://www.smartkarma.com/entities/18722" target="_blank" data-smartkarma-citation="entities:18722:1">Ceat Ltd (CEAT IN)</a>, <a href="https://www.smartkarma.com/entities/8501" target="_blank" data-smartkarma-citation="entities:8501:1">Jk Tyre &amp; Industries Ltd (JKI IN)</a>, <a href="https://www.smartkarma.com/entities/16789" target="_blank" data-smartkarma-citation="entities:16789:1">Goodyear India Ltd (GDYR IN)</a>, <a href="https://www.smartkarma.com/entities/9603" target="_blank" data-smartkarma-citation="entities:9603:1">Tvs Srichakra Ltd (SRTY IN)</a>, <a href="https://www.smartkarma.com/entities/15331" target="_blank" data-smartkarma-citation="entities:15331:1">Balkrishna Industries Ltd (BIL IN)</a></p><p><strong>1. Summary -</strong></p><table class="table table-striped"><tbody>
<tr>
<td>Net Sales</td>
<td>Q3-FY18 YoY</td>
<td>Q3-FY18 QoQ</td>
<td>9M-FY18 YoY</td>
<td>9M-FY18 (Rs. Mn.)</td>
</tr>
<tr>
<td>Apollo Tyres Ltd.</td>
<td>17.13%</td>
<td>16.49%</td>
<td>9.</td>
</tr>
</tbody></table>…

In this note, we have reviewed the 9m-FY18 performance of the listed players in the Indian Tyre Sector.Note - This review will be followed on with the q4-FY18 results of the companies.Companies covered - Apollo Tyres Ltd (APTY IN), Mrf Ltd (MRF IN), Ceat Ltd (CEAT IN), Jk Tyre &amp; Industries Ltd (JKI IN), Goodyear India Ltd (GDYR IN), Tvs Srichakra Ltd (SRTY IN), Balkrishna Industries Ltd (BIL IN)1. Summary -

Net Sales
Q3-FY18 YoY
Q3-FY18 QoQ
9M-FY18 YoY
9M-FY18 (Rs. Mn.)


Apollo Tyres Ltd.
17.13%
16.49%
9.

…

Equity Analyst, LightStream Research

Chacko Jacob

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/15331" target="_blank" data-smartkarma-citation="entities:15331:1">Balkrishna Industries Ltd (BIL IN)</a> is India's leading off-highway-tyre (OHT) player in the global market. The company has developed a wide-reaching network that spans the Americas, Europe and Asia. The company's four plants (all in India) have a total capacity to produce 300,000MT per annum. With only 65-70% of this capacity being utilised, BIL finds itself at a sweet spot - the company can avoid heavy CapEx while utilising the remaining capacity to consolidate its global market share. </p><p>While we remain positive about the company’s growth in FY2018, we think the next fiscal period might throw some surprises despite the decent economic growth forecasted in its key markets. In the time between our last report and this, the company has undertaken a stock split (1:2) and seen its shares hit a 52-week high before paring most of its gains. The stock currently trades at 27x and 21x 1-Year forward and 2-year forward PE respectively, which are also still near historical highs. Given the considerable downside risk in the next fiscal period, we think the stock might decline further, leading us to consider it overvalued. </p><p>Some of the underlying risks for the next fiscal period include:</p><ul class=""><li class="">Higher raw material costs as rains caused by the La Nina phenomenon could hamper supply of natural rubber.</li><li class="">Domestic shortage of carbon black due to the shutdown of a key manufacturer and because of steep duty on imports. </li></ul>

Balkrishna Industries Ltd (BIL IN) is India's leading off-highway-tyre (OHT) player in the global market. The company has developed a wide-reaching network that spans the Americas, Europe and Asia. The company's four plants (all in India) have a total capacity to produce 300,000MT per annum. With only 65-70% of this capacity being utilised, BIL finds itself at a sweet spot - the company can avoid heavy CapEx while utilising the remaining capacity to consolidate its global market share. While we remain positive about the company’s growth in FY2018, we think the next fiscal period might throw some surprises despite the decent economic growth forecasted in its key markets. In the time between our last report and this, the company has undertaken a stock split (1:2) and seen its shares hit a 52-week high before paring most of its gains. The stock currently trades at 27x and 21x 1-Year forward and 2-year forward PE respectively, which are also still near historical highs. Given the considerable downside risk in the next fiscal period, we think the stock might decline further, leading us to consider it overvalued. Some of the underlying risks for the next fiscal period include:Higher raw material costs as rains caused by the La Nina phenomenon could hamper supply of natural rubber.Domestic shortage of carbon black due to the shutdown of a key manufacturer and because of steep duty on imports. 

Balkrishna Ind: Higher RM Costs Could Cast a Shadow on Earnings Growth in FY2019

<p>In 2Q, <a href="https://www.smartkarma.com/entities/18722" target="_blank" data-smartkarma-citation="entities:18722:1">Ceat Ltd (CEAT IN)</a> managed to overcome the GST blues and make a quick turnaround from the preceding quarter that saw its PAT plummet nearly 98.6%. Based on management's ambiguous comments on restocking by dealers, we estimated that growth will normalise only after two or three quarters. However, the stronger than expected showing in 2Q along with new developments in the market have made us take a bullish stance on the company.</p><ul><li>Anti-dumping duty on Chinese tyre imports will support Ceat's CV (commercial vehicle) business from which it draws 33% of its revenue.</li><li>Ceat's new plant in Nagpur, producing 2-wheeler tyres, has gone live and the company has also commissioned the second phase at the Halol plant to meet the demand in the PV (passenger vehicle) segment. </li><li>The company plans to foray into the high-margin OHT (off-highway tyres) space soon and has begun testing its products globally.</li></ul><p>While natural rubber prices have declined from their highs in the middle of the year, uncertain weather patterns can play spoilsport to the company's margins. However, on the whole, we have raised our outlook for the company based mainly on the above points. </p>

In 2Q, Ceat Ltd (CEAT IN) managed to overcome the GST blues and make a quick turnaround from the preceding quarter that saw its PAT plummet nearly 98.6%. Based on management's ambiguous comments on restocking by dealers, we estimated that growth will normalise only after two or three quarters. However, the stronger than expected showing in 2Q along with new developments in the market have made us take a bullish stance on the company.Anti-dumping duty on Chinese tyre imports will support Ceat's CV (commercial vehicle) business from which it draws 33% of its revenue.Ceat's new plant in Nagpur, producing 2-wheeler tyres, has gone live and the company has also commissioned the second phase at the Halol plant to meet the demand in the PV (passenger vehicle) segment. The company plans to foray into the high-margin OHT (off-highway tyres) space soon and has begun testing its products globally.While natural rubber prices have declined from their highs in the middle of the year, uncertain weather patterns can play spoilsport to the company's margins. However, on the whole, we have raised our outlook for the company based mainly on the above points. 

Ceat: La Nina May Play Spoilsport in 2H; Restocking Post GST Served Well By ADD Imposed on Imports

India

Balkrishna Industries Limited (BKT) is a leading global manufacturer of off-highway tires, specializing in products for agricultural, industrial, construction, earthmoving, mining, and port sectors. The company offers a comprehensive portfolio of tires for various niche applications. Balkrishna Industries is headquartered in Mumbai, India, and was founded in 1961.

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Balkrishna Industries (BIL IN)

Balkrishna Industries - Margin Pressure to Sustain; Valuation Remains Attractive

Balkrishna Industries’ (BKT) revenue in 4QFY22 came in ahead of our estimate, led by strong volume growth of 13% YoY vs our expectation of 6.5% YoY.

Nirmal Bang

India: Stock Reclassification & Active Portfolio Management (Dec 2021)

Halfway through the review period, we take a look at stocks that could migrate across the large, mid and small cap segments. With over US$100bn of...

Brian Freitas

Sector Capcule: India Tyre Sector

In this note, we have reviewed the 9m-FY18 performance of the listed players in the Indian Tyre Sector.Note - This review will be followed on with...

DC India Research

Balkrishna Ind: Higher RM Costs Could Cast a Shadow on Earnings Growth in FY2019

Balkrishna Industries Ltd (BIL IN) is India's leading off-highway-tyre (OHT) player in the global market. The company has developed a...

Chacko Jacob

Ceat: La Nina May Play Spoilsport in 2H; Restocking Post GST Served Well By ADD Imposed on Imports

In 2Q, Ceat Ltd (CEAT IN) managed to overcome the GST blues and make a quick turnaround from the preceding quarter that saw its PAT plummet nearly...

Chacko Jacob

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