In today’s briefing:
- MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day
- Britannia Industries (BRIT IN) | Time for a Good Snack
- Aditya Birla Fashion and Retail – A Strong Recovery in Business, Particularly the Lifestyle
- Kaveri Seeds – Revenue Fell 6% YoY in FY22 Due to Lower Cotton/Maize (Down 24%/16%) Volumes.
- Sapphire Foods – Available Always in All Ways
- Jyothy Laboratories – Sales in 4QFY22 Were in Line.
- Fast Fitness Japan (7092): Confusion over Election of Directors
MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day
- There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there was large short buildup prior to announcement of the changes.
- Shorts have continued to increase to increase over the last week and there could be a reversal over the next few days as shorts start to cover.
- Buying the deletions in the next few days and hedging with Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) futures could provide superior risk adjusted returns.
Britannia Industries (BRIT IN) | Time for a Good Snack
- Aggression in adjacencies, market share gains and under indexed rural exposure presents an opportunity.
- COGS Inflation, Risk of downgrading in case of a further hike loom and is a potential risk.
- YTD Britannia Industries (BRIT IN) is an outperformer and could remain so.
Aditya Birla Fashion and Retail – A Strong Recovery in Business, Particularly the Lifestyle
- A strong recovery in business, particularly the Lifestyle segment, saw 59% YoY jump in ABFRL’s 4QFY22 EBITDA backed by 25% YoY revenue growth and 210bp gross margin improvement.
- Net debt at INR5b too was comfortable even after building inventory for the upcoming season and new stores.
- With healthy recovery and growth momentum across verticals, we raise our FY23E/24E EBITDA by 7-8%, modeling strong 40% EBITDA CAGR over FY22-24E.
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Kaveri Seeds – Revenue Fell 6% YoY in FY22 Due to Lower Cotton/Maize (Down 24%/16%) Volumes.
- Revenue fell 6% YoY in FY22 due to lower cotton/maize (down 24%/16%) volumes.
- Cotton seed volumes were impacted by lower cotton acreage and the use of illegal herbicide-tolerant Bt (HTBt) seeds, which impacted sales of branded seeds.
- Maize volumes fell due to no sales to the government.
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.
Sapphire Foods – Available Always in All Ways
- The Indian Food Service Industry (FSI) is expected to clock 9% CAGR in the coming years, with QSRs likely to grow faster at 23% CAGR over FY20-25.
- SAPPHIRE’s new scalable Restaurant economic model is a game-changer. Its omnichannel strategy and reduction in store sizes, along with other elements of the model, have led to a big shift in SAPPHIRE’s unit economics.
- KFC India’s business is on a strong footing, with a healthy ADS and profitability.
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.
Jyothy Laboratories – Sales in 4QFY22 Were in Line.
- Sales in 4QFY22 were in line. Gross margin was affected due to elevated raw material prices.
- Revenue growth is key for a company with sales of only ~INR22b. The likelihood of a consistent 15% sales growth (essential for any re-rating) continues to appear difficult, despite JYL’s efforts to ramp up its total and direct reach.
- With margin likely to remain under pressure over the next few quarters due to high input costs, its earnings growth prospects remain weak.
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.
Fast Fitness Japan (7092): Confusion over Election of Directors
- Fast Fitness Japan announced that 1) on April 25, it had received a letter from three of its major shareholders jointly proposing the election of directors and 2) on May 23, the company’s board of directors decided to oppose the shareholder proposal
- The shareholder proposal was submitted in response to the board’s April 14 decision regarding director candidates
- Despite the company’s solid fundamentals, such disruption in the governing structure could be an additional risk factor for the stock price in the near term
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