In today’s briefing:
- Shakeys Pizza: Encouraging Q1 2022, Despite Headwinds
- Alibaba (9988 HK) Pre-Earnings: Still Active Under Lockdown, Buy
- Apollo Tyres – Entering High Growth, Low Capex Phase; Resume with BUY
- Balkrishna Industries – Margin Pressure to Sustain; Valuation Remains Attractive
- Eicher Motors – New Launches and Exports to Drive Volume Growth; BUY
- Emami Ltd – Subdued Operating Performance; Undemanding Valuation
- Tata Motors – Margin Beat on Better Mix; Commodity and Chip Shortage Risks Persist
- Amber Enterprises India Ltd – Robust Topline Growth; Margins to Improve Going Forward
Shakeys Pizza: Encouraging Q1 2022, Despite Headwinds
- Although we were more optimistic about FY22, we still see recovery backed by a very healthy momentum in Q1 2022 with 33% YoY systemwide sales (mid-teens ex-Potato Corner).
- EBITDA margins were weaker in Q1 2022 at 18.2% (with Jan/Feb 2022 restrictions), but management guided a sequential improvement QoQ and a 20-21% EBITDA margin for FY22.
- The stock trades at 16.6x FY12 and 11.1x FY23 on more conservatively guided numbers. (see: Shakey’s Pizza: High Conviction Three Bagger, Management Call Provides Superb Guidance For FY22 )
Alibaba (9988 HK) Pre-Earnings: Still Active Under Lockdown, Buy
- We estimate that the revenue growth will rise to 11.5% YoY in 4Q22 from 9.7% YoY in 3Q22.
- Freshippo is the store chain closest to the operation before the lockdown among all large retailers.
- We believe the stock has an upside of 27% for March 2023.
Apollo Tyres – Entering High Growth, Low Capex Phase; Resume with BUY
- Revenue beat on the back of strong growth in Europe; Europe operations lead margin beat
- Demand outlook remains positive; expect commodity cost pressures to peak by 1QFY23: Domestic volume was flattish QoQ in 4QFY22, led by robust exports even as replacement demand remained muted.
- Focus on sweating assets and deleveraging balance sheet: Capex done in the last 3 years will likely support growth in the medium term (no major capex lined up for FY23/FY24) while the focus on de-bottlenecking and better asset utilization is likely to drive better returns in the medium term.
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Balkrishna Industries – Margin Pressure to Sustain; Valuation Remains Attractive
- Demand holds reasonably well: Demand continued to hold strong across segments and regions.
- Cost pressures to persist in the near term; reiterates sustainable margin guidance
- 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.
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Eicher Motors – New Launches and Exports to Drive Volume Growth; BUY
- Revenue and margins in line – displaying good improvement: Standalone revenue came in at Rs31.9bn, up ~9% YoY, which was in line with our estimate, led by ASP growth and an optimum product mix.
- Valuation turns favorable: We value RE (standalone) at 24x FY24E EPS and VECV at 12x EV/EBITDA on FY24E to arrive at a TP of Rs2,939.
- We expect demand to remain strong and drive volume growth going ahead in both domestic as well as export markets, leading to 21% volume growth.
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Emami Ltd – Subdued Operating Performance; Undemanding Valuation
- 4QFY22 headline performance: Emami’s 4QFY22 consolidated revenue grew by 5.4% YoY to Rs7.7bn (vs our est. Rs7.7bn).
- FY22 performance: Revenue, EBITDA, PBT and APAT (before Amortization) grew by 10.8%, 7.7%, 12.2% and 49.2% YoY, respectively.
- Other highlights: (1) LUP’s contribute 23-24% to the overall portfolio. (2) The company added additional 8,000 rural towns in FY22 through Project Khoj, taking the total to 40,000 towns.
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Tata Motors – Margin Beat on Better Mix; Commodity and Chip Shortage Risks Persist
- Tata Motors reported cons. revenue of Rs784.4bn, down 11.4% YoY but up 8.6% QoQ.
- JLR revenue declined by 27% YoY due to volume decline of 38%/11% YoY/QoQ while retails came in flat QoQ.
- PV revenue was up 62% YoY, led by strong volume growth of ~47%/25% YoY/QoQ.
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.
Amber Enterprises India Ltd – Robust Topline Growth; Margins to Improve Going Forward
- RAC, Components & Mobility Applications segments Update: (1) Industry RAC volume for FY20/FY21/FY22 stood at 7.2mn/5.2mn/6.4mn units.
- Key Concall Highlights: (1) Company had taken a price hike of 8-9% for three quarters. It is likely to pass on another 2-3% price hike in 1QFY23
- Working Capital Position: Working capital days declined by 17 days to 39 days at the end of FY22 vs 56 days at the end of FY21.
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