In today’s briefing:
- India Household Appliances | Q3 Earnings Review and Channel Check Map
- Sintex Loan Fiasco: Is RBL’s Acting CEO Fit to Be a Banker, Let Alone Run a Bank?
- Delhivery IPO: A Bumpy Delivery
- Butterfly acquisition likely to be earnings accretive in FY24 assuming 5% synergy benefits
- Earnings growth likely to remain lower than peers
India Household Appliances | Q3 Earnings Review and Channel Check Map
- We analyze Q3 FY22 Earnings for Bajaj Electricals (BJE IN) , Crompton Greaves Consumer Electricals (CROMPTON IN) , Havells India (HAVL IN) and Stove Kraft (0490943D IN)
- Stress in rural is hurting BJE, CROMPTON is riding high on new products, Upcoming AC season is the key for HAVL. For Stove Kraft growth is falling off a cliff.
- BJE and HAVL would be best placed to explore a potentially long and short respectively.
Sintex Loan Fiasco: Is RBL’s Acting CEO Fit to Be a Banker, Let Alone Run a Bank?
- Newspaper article pertaining to loan by RBL Bank to Sintex-BAPL highlights either `evergreening’ or extreme incompetence by the bank
- Rajeev Ahuja, present Acting CEO served on the Credit and Risk Committees which approved the Sintex-BAPL loan
- Not desirable that the RBL Bank board selects Rajeev Ahuja as the permanent CEO of the bank
Delhivery IPO: A Bumpy Delivery
- Delhivery (1058656D IN) is a fully integrated logistics player in India. The company’s application for a listing has been approved by the regulators.
- The company plans to raise US$650m through issuing new shares while existing shareholders will offer US$3120m worth of shares at the IPO.
- The company plans to use proceeds from the IPO for funding growth (both organic as well as inorganic growth through acquisitions and strategic initiatives) and for other general corporate purposes.
Butterfly acquisition likely to be earnings accretive in FY24 assuming 5% synergy benefits
- The acquisition values Butterfly at MCap/sales of 2.3x on annualized FY22E sales (TTK FY22E Mcap/Sales: 4.2x).
- The acquisition will help Crompton to have stronger connect in south India, expand distribution network, will offer better right-to-win in kitchen appliances and reduce over dependence on Crompton brand.
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Earnings growth likely to remain lower than peers
- V-Guard reported earnings CAGR of 8.6% over FY17-21 vs Havells (15.4%), Crompton (21.5%) and Polycab (39.2%).
- We model V-Guard’s earnings growth to be lower than peers ahead too due to negligible growth in stabilizer business with improving quality and quantity of power supply pan India, While V-Guard has forayed into high-growth consumer durables business, it generates lowest margin among all three segments, Non-South region also offers higher growth but lower margins and V-Guard’s right-to-win in kitchen appliances also appears low.
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.
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