In today’s briefing:
- BEL: Earnings Firepower in Place, Rerating Looks Done
- Asia File : Risk Reward Asymmetrical
- The Beat Ideas: KDDL- Precision Engineering with Luxury Retail
- Tata Steel: Strategic Pivot in Capital Allocation
- Recruit: Weakening Labour Markets and More Downside Ahead
- Sula Vineyards Q4FY25: What Is Hidden?
- Green Dot’s $2 Billion Opportunity: Why PE Giants and Strategics Are Circling This Embedded Finance Pioneer?
- Shareholder Returns of Japanese Trading Companies Invested By Buffett Vs Top Korean Trading/Holdcos
- Apple Faces Crosswinds: $900M Tariff Hit, Legal Storms, and AI Lag – What’s Next?
- Giant Manufacturing (9921 TT)
BEL: Earnings Firepower in Place, Rerating Looks Done
- Strong Execution: 3-yr PAT CAGR of ~22% with ₹80,354 Cr order book offers 2–4 years of revenue visibility from high-margin defence programs.
- Growth Levers: Expanding in seekers, EW, AI, and smart infra; 5 new units and key contracts like Akash, LRSAM, and Shakti drive forward pipeline.
- Valuation Stretch: Trading at ~45x FY25E P/E vs 3-yr average of 32x; pricing reflects peak sentiment and leaves little room for error.
Asia File : Risk Reward Asymmetrical
- Trades below Cash and liquidation value and has a profitable operating business
- Operations have been consistently profitable and free cash flow generating
- Industry is not growing but getting consolidated. Market is pricing in a business to become zero
The Beat Ideas: KDDL- Precision Engineering with Luxury Retail
- KDDL’s precision engineering division, Eigen, is expanding its manufacturing capacity with a new facility and further upgrades planned, aiming to capture high-growth sectors like aerospace, automotive, and medical devices.
- This expansion enhances KDDL’s competitive edge in precision engineering, a high-margin segment, and aligns with the company’s goal of making Eigen a significant revenue contributor, targeting 40-50% of manufacturing revenue.
- The focus on precision engineering and premium retail through Ethos positions KDDL for sustained growth, balancing stable manufacturing revenue with high-margin luxury retail.
Tata Steel: Strategic Pivot in Capital Allocation
- Tata Steel reported resilient India performance in Q4 FY25 with strong volumes, though consolidated margins remained under pressure due to ongoing European losses.
- The Kalinganagar CRM line and Ludhiana EAF are progressing toward completion. The company’s $2.5 billion infusion into its overseas arm marks a strategic pivot, potentially weighing on returns.
- We apply a lower EV/EBITDA multiple of 6x (vs. 7.5x earlier) to reflect the weaker capital allocation stance, flattish steel price outlook, and relatively subdued growth versus peers.
Recruit: Weakening Labour Markets and More Downside Ahead
- Recruit Holdings (6098 JP) reported 4Q and Full-year FY03/2025 results on Friday which fell below consensus estimates. However, earnings were in line with the company’s guidance.
- Labour markets have begun to cool off with concerns over potential impact of trade wars and economic uncertainty, and the company expects top line to decline in FY03/2026E.
- Though the company’s monetisation efforts have paid off, we expect Recruit’s earnings to remain under pressure and think there’s opportunity to gain on the Short side.
Sula Vineyards Q4FY25: What Is Hidden?
- In a surprising turn of events, the management of Sula Vineyards (SULA IN) has cancelled earnings call for Q4FY25 citing Indo-Pak conflict after posting bad quarterly numbers.
- Receivable cycle has further elongated to all time high since the company became public.
- Revenue growth yet remains muted post company became public in 2022.
Green Dot’s $2 Billion Opportunity: Why PE Giants and Strategics Are Circling This Embedded Finance Pioneer?
- Green Dot Corporation’s latest financial results for the first quarter of 2025 illustrate both positive momentum and areas requiring focus.
- The company reported an impressive 24% increase in adjusted revenue and a 53% rise in adjusted EBITDA, outperforming internal expectations.
- Growth was observed across all three operating segments, indicating a cohesive and forward-moving strategy.
Shareholder Returns of Japanese Trading Companies Invested By Buffett Vs Top Korean Trading/Holdcos
- “In the next 50 years… we won’t give a thought to selling those [Japanese trading companies]…. Japan’s record has been extraordinary.” (Warren Buffett)
- In this insight, we provide detailed comparisons of the five major Japanese trading companies and five major Korean holdcos/trading companies.
- Japanese trading companies have higher points for market cap, ROE, DPS increase, and shares cancellation. Korean holdcos have higher points for dividend yield, deb/equity ratio, ROIC, and valuations.
Apple Faces Crosswinds: $900M Tariff Hit, Legal Storms, and AI Lag – What’s Next?
- Apple reported strong financial results for Q2 of the fiscal year 2025, achieving revenue of $95.4 billion, which represents a 5% increase compared to the previous year.
- This growth was at the high end of the company’s guidance range, and the diluted earnings per share stood at $1.65, marking an 8% year-over-year increase and setting a record for the March quarter.
- The company’s Services segment achieved an all-time revenue high, with a 12% growth year-on-year, indicating robust performance across Apple’s diverse service offerings.
Giant Manufacturing (9921 TT)
Taiwan’s Giant Manufacturing (9921 TT — US$1.7 billion) is the world’s largest bicycle manufacturer.
It’s based in the Taiwanese city of Taichung, which has become somewhat of the center of the global bicycle industry.
From there, it controls nine factories around the world, selling about 6 million bicycles a year via many thousands of distributors in 50 countries.
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