end of the week update - novadhruva pvt. ltd. · 2020/6/27 · 3 sectoral update 3.1 financial...
TRANSCRIPT
End of the Week Update
Weekly Dashboard
June 27, 2020
Contents
2
Section TitlePage
number
1 Our Views 3
2 Market Update 4
3 Sectoral Update
3.1 Financial Services 6
3.2 Technology, Telecom and Media 8
3.3 Pharma 10
3.4 Healthcare 11
3.5 Auto & Auto Components 12
3.6 Metals & Mining 13
3.7 Aviation 14
3.8 Power and Infrastructure 15
3.9 Consumer and Retail 17
3.10 Real Estate 19
NovaDhruva Team 20
Disclaimer: This presentation is for information and illustrative purpose only. This presentation should not be relied upon to take anydecisions, including investment decisions. Neither we nor any of our affiliates shall be liable for any damage, loss, injury, whetherdirect or indirect, that may be caused to you as a result of any investment made based on this presentation. This presentation isneither an offer to buy or sell or deal nor a solicitation of any offer to buy or sell or deal in securities, financial products, investments,etc. This information is neither addressed to nor should it be presented in any jurisdiction where such presentation will entail anyliability or requirement of registration or approval on us. Even though the information is drawn from reliable sources, we neitherguarantee nor assure the accuracy, completeness or authenticity of the information provided by us in this presentation. Informationcontained in this presentation is subject to change without any prior notice. The information provided in this presentation is notinvestment advice.
Our Views
3
Pre-insolvency resolution for a listed stressed company –bridging an important gap
The first comprehensive Indian bankruptcy law introduced in 2016, provided for several measures to facilitatequick resolution of stressed companies. It also provided concessions for listed companies from applicability ofSEBI requirements for pricing of preferential allotment and the provisions of open offer. However, oftenbankruptcy stage is too late for a company to revive as its operations and finances are already significantlyimpacted by this time. An effective pre-insolvency mechanism can prevent value erosion caused by disruption ofbusiness, de-clog the NCLTs, provide access and certainty to potential buyers, and, protect interests of allstakeholders by enabling quick resolution of companies before it is too late.
Businesses facing financial stress often require immediate infusion of capital to save themselves from beingreferred to bankruptcy. So far, one of the main challenges in capital infusion by a strategic investor into astressed listed company had been the SEBI guidelines imposing pricing restrictions on preferential allotment andthe requirement of open offer. Typically, a stressed listed company experiences progressive fall in their shareprice. Attracting capital at higher than the prevailing market price for such a company becomes an issue. Also,the requirement of making an open offer by a strategic buyer diverts funds to existing shareholders than to thecompany which requires immediate financial support.
In the past couple of years, we have had situations where inspite of adequate capital being available forinvestment, a stressed company had to file for bankruptcy as the investors were unable to meet theserequirements. In addition, the revised RBI framework for the resolution of Stressed Assets announced inFebruary 2018 further complicated the matters for stressed businesses. As per this framework, post a default, aperiod of only 180 days was allowed to restructure the stressed assets. Failing this, the company was mandatorilyrequired to be referred to IBC within 15 days. A time-bound activation of bankruptcy proceedings left very littletime for the borrowers to bring in a strategic/ financial investor.
The 2018 circular of RBI was struck down by the Hon. Supreme Court of India in 2019 thereafter RBI came outwith a new Framework for Resolution of Stressed Assets in June, 2019 which provided for a comprehensiveguidelines for resolution of stressed assets outside the IBC. Now there was a real opportunity for businesses torestructure outside the bankruptcy process.
In this backdrop, SEBI this week, has come out with certain relaxations in preferential allotment norms and openoffer obligations for stressed companies to help them raise capital from financial/strategic investors and possiblyclear the path for resolution before it goes under IBC.
SEBI has granted two key relaxations to companies with stressed assets- (a) easing of pricing guidelines forpreferential issue and (b) exemption from open offer obligations. The shares issued to the investors in such anissue need to be locked in for a period of three years. There are other checks and balances prescribed such asdisclosure of end use, barring the promoter and promoter group from participating in such an issue and therequirement of majority of minority shareholders’ approval. To avail such relaxations, the stressed companieswould need to comply with two of the three conditions laid out by SEBI – (i) disclosure of defaults in payment ofinterest or principal and continuing default for a period of at least 90 calendar days after the occurrence of suchdefault, (ii) downgrading of the credit rating of the financial instruments of the company to “D” and (iii) existenceof an inter-creditor agreement in terms of RBI (Prudential Framework for Resolution of Stressed Assets)Directions 2019.
RBI’s June 2019 guidelines and SEBI’s June 2020 announcement together bridge an important gap in thepossibility of a resolution plan outside IBC for a listed company.
18.7x, Nifty19.6x, Sensex
17.3x, Fin. Services
13.4x, Bank
31.6x, FMCG
23.8x, Pharma23.6x, Healthcare
17.6x, IT
28.4x, Auto
16.1x, Media
12.4x, Metals
22.6x, Realty
0.0x
10.0x
20.0x
30.0x
40.0x
26-Jun 07-Sep 19-Nov 31-Jan 13-Apr 26-Jun
0
500
1,000
1,500
2,000
60
80
100
120
140
26-Jun 07-Sep 19-Nov 31-Jan 13-Apr 26-Jun
0
500
1,000
1,500
2,000
60
80
100
120
01-Mar 24-Mar 16-Apr 10-May 02-Jun 26-Jun
Market Update
4
Key Market Trends
Return (%)Current
Level1D 1W 1M
Since 1
stMarch
3M 6M 1Y
Nifty 10,383 0.9% 1.4% 15.0% (7.3%) 19.9% (15.2%) (12.4%)
Sensex 35,171 0.9% 1.3% 14.9% (8.2%) 18.0% (15.4%) (11.2%)
Dow Jones 25,016 (2.8%) (3.3%) 0.1% (1.5%) 15.6% (12.7%) (5.7%)
Nasdaq 9,849 (2.5%) (1.6%) 4.9% 16.4% 29.8% 12.3% 29.1%
FTSE 6,159 0.2% (2.1%) 1.5% (6.4%) 11.8% (19.4%) (17.0%)
Nikkei 22,512 1.1% 0.1% 5.8% 6.5% 16.1% (5.6%) 6.8%
Hang Seng 24,550 (0.9%) (0.4%) 5.0% (6.0%) 4.5% (13.0%) (13.0%)
Source: Bloomberg as of June 26, 2020
Indian Sectoral Performance
Global and Indian Indices Performance
Rebased to 100 Last 1 Year Since 1st March
Return (%)Current
Level1D 1W 1M
Since 1
stMarch
3M 6M 1Y
Nifty Bank 21,592 0.4% 1.2% 23.8% (25.9%) 8.1% (33.4%) (30.7%)
Nifty Financial Services 10,588 0.0% 0.5% 22.1% (22.0%) 8.6% (27.9%) (21.8%)
Nifty FMCG 29,757 (1.2%) 3.6% 5.8% 1.5% 15.6% (1.3%) 0.8%
Nifty Pharma 10,138 (0.5%) 1.4% 6.9% 33.8% 48.8% 25.7% 25.4%
Nifty IT 14,995 4.0% 3.4% 10.5% (1.4%) 19.3% (5.0%) (6.9%)
Nifty Auto 6,731 (0.1%) 1.5% 15.0% (2.5%) 36.3% (18.0%) (14.6%)
Nifty Media 1,402 0.1% 1.0% 23.2% (16.1%) 32.9% (22.8%) (31.7%)
Nifty Metal 2,043 0.6% 2.3% 16.3% (9.0%) 31.4% (26.0%) (32.4%)
Nifty PSU Bank 1,503 0.9% 6.0% 37.9% (22.7%) 12.2% (41.5%) (52.8%)
Nifty Private Bank 11,855 0.6% 1.5% 24.6% (25.7%) 10.4% (33.7%) (31.3%)
Nifty Realty 211 (0.9%) (0.8%) 27.6% (24.7%) 14.1% (28.7%) (24.1%)
BSE Telecom 1,304 0.0% (0.7%) 4.4% 10.3% 32.4% 17.1% 31.5%
BSE Healthcare 16,490 (0.5%) 1.7% 7.0% 22.3% 41.8% 22.9% 28.1%
Rebased to 100
Nifty Sensex Dow Jones NASDAQ FTSE Nikkei Hang SengNIFTY Volume(RHS) -Mn
The Indian indices gained by c. 1.5%
this week led by global expectations
of an economic recovery despite a
sharp rise in the number of COVID
cases in the country
All the sectoral indices except realty
and telecom closed in the positive this
weekFMCG, IT and
metals were the best performers
while pharma, healthcare and
banks witnessed moderate gains as
well
Valuations for all the sectoral indices
except healthcare gained this week
FMCG, banks, IT, media and metals
witnessed significant
expansions in multiples
NTM PE Ratio – Last 1 YearMar 11:
WHO declaredCOVID-19 asa pandemic
Mar 24Lock-down
1.0
Apr 14Lock-down
2.0
May 01Lock-down
3.0
May 18Lock-down
4.0
Market Update
5
Key Market Trends
Yield (%) Current 1D 1W 1MSince
1st
March3M 6M 1Y
1YR AAA Rated Corp. Bond 4.95% 4.97% 4.99% 5.77% 6.08% 5.97% 6.22% 7.62%
1YR G-Sec 3.73% 3.72% 3.74% 3.87% 5.27% 4.95% 5.50% 6.13%
3YR AAA Rated Corp. Bond 5.65% 5.67% 5.67% 6.09% 6.49% 6.54% 6.94% 7.74%
3YR G-Sec 4.44% 4.47% 4.48% 4.62% 5.63% 5.36% 6.21% 6.61%
5YR AAA Rated Corp. Bond 6.24% 6.24% 6.28% 6.36% 6.77% 6.99% 7.12% 8.01%
5YR G-Sec 5.38% 5.36% 5.40% 5.42% 6.16% 6.15% 6.44% 6.82%10YR AAA Rated Corp. Bond
7.08% 7.06% 7.01% 7.24% 7.27% 7.53% 7.59% 8.12%
10YR G-Sec 5.92% 5.89% 5.85% 5.75% 6.35% 6.14% 6.51% 6.93%
Source: Bloomberg of June 26, 2020; 1Financial Benchmarks India Overnight Mumbai Interbank Outright Rate; 2Mumbai Interbank Forward Offer Rate
India Government and Corporate Bond Yields (%)There has not been
any significant movement in Gsec
as well as Corp bond yields this week
Currency Market Snapshot
% Change in FX Current FX Rate 1D 1W 1MSince
1st
March3M 6M 1Y
USD-INR 75.65 0.0% 0.7% 0.0% (3.9%) (1.0%) (5.7%) (8.6%)EUR-INR 84.92 0.1% 0.6% (2.5%) (5.0%) (2.9%) (6.3%) (7.5%)GBP-INR 93.84 0.3% 0.8% (1.1%) (1.1%) (2.5%) (0.6%) (6.5%)JPY-INR 0.71 (0.2%) 1.0% (0.6%) (5.2%) (1.4%) (7.6%) (9.0%)SGD-INR 54.37 (0.0%) 0.5% (2.0%) (3.8%) (4.0%) (3.0%) (6.1%)CNY-INR 10.69 0.0% 0.8% (0.8%) (2.2%) (1.3%) (4.6%) (5.9%)
Commodity Market Snapshot
% Change Current 1D 1W 1MSince
1st
March3M 6M 1Y
WTI Crude (USD/barrel) 38.03 (1.8%) (4.5%) 9.4% (19.4%) 26.6% (35.7%) (32.9%)ICE Brent Crude (USD/barrel)
40.63 (1.0%) (3.7%) 10.6% (21.4%) 22.0% (36.3%) (35.6%)
Spot Gold (USD/ounce) 1,754.01 (0.6%) 0.6% 2.5% 10.4% 7.7% 16.1% 24.5%
Oil
Gold
India InvITs and REIT Performance
% Change Current
Price1D 1W 1M
Since 1
stMarch
3M 6M 1Y
Indigrid 101.02 0.0% 0.5% 0.3% 1.3% 11.9% 4.7% 17.1% IRBInvIt 37.95 0.1% 8.1% 15.0% (17.3%) 40.6% (28.3%) (42.2%)Embassy Office Parks 348.09 (2.2%) (9.4%) 3.3% (24.3%) (6.8%) (18.1%) (5.7%)
InvITs
REIT
Oil prices fell this week on account of
a rise in COVID cases in many
countries leading to speculations of an
extended lockdown
Liquidity Position (USD mn)
Last 1 Week 25-Jun-20 24-Jun-20 23-Jun-20 22-Jun-20 21-Jun-20 20-Jun-20
Net Liquidity 46,842 50,493 50,759 42,210 47,460 47,459
Absorption through RBI Reverse Repo 82,431 86,058 86,472 77,418 82,634 82,633
MIBOR1
(%) 3.84% 3.91% 3.91% 3.91% NA NA
MIFOR2
1M 3.78% 3.68% 3.70% 3.60% NA NA
MIFOR2
3M 3.95% 3.88% 3.90% 3.87% NA NA
MIFOR2
6M 4.15% 4.15% 4.16% 4.07% NA NA
MIFOR2
12M 4.55% 4.52% 4.49% 4.47% NA NA
Trading Activity by FII/DIIs in Capital Market Segment (USD mn)Markets saw muted participation from
institutional investors this week with FIIs/FPIs being net buyers and DIIs
net sellers
FIIs were net buyers in debt segment as
well for the week
Trading Activity by FIIs in Debt Segment (USD mn)
Last 1 Week Weekly Total 26-Jun-20 25-Jun-20 24-Jun-20 23-Jun-20 22-Jun-20
FII/FPI 145.2 (16.4) 14.8 60.1 24.2 62.5
Last 1 Week Weekly Total 26-Jun-20 25-Jun-20 24-Jun-20 23-Jun-20 22-Jun-20
FII/FPI 73.1 (99.6) (138.8) 233.3 22.3 55.8
DII (172.1) 172.4 (33.8) (201.4) 60.1 (169.4)
Total (99.0) 72.8 (172.6) 32.0 82.4 (113.6)
▪ ICICI Bank mulls raising up to a total of USD 3 bn in fresh funds
− At the current price levels, this will translate into a dilution of 10%
− This will help in raising its CET 1 levels by ~300 bps (current level of 13.4%)
▪ SEBI, in its latest Board Meeting on June 25 2020, decided to provide an additional option for pricing under
preferential allotment
− Under this, the issuer may choose to follow an alternate approach of considering the highest of
average weekly high and low for 2 weeks and 12 weeks
− As the prices of NBFCs have corrected sharply, this will help them attract capital from sponsors to
fund their growth requirements
Sectoral Update – Financial Services
6
India – Bank Stocks (1m Return) India – NBFC Stocks (1m Return)
India Financial Services Update
23.9%
19.3%
16.2%
24.5%
41.5%
(2.4%)
HDFC Bank
ICICI Bank
KMB
Axis Bank
Indusind
Yes Bank
17.8%
31.0%
33.2%
34.6%
8.0%
HDFC
Bajaj Finance
Shriram Transport
Mahindra Finance
L&T Finance
Shriram City Union
Trading Comps (USD mn)
Name M.capNet Income ROE P/E P/BV
Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22
Banks Comps
HDFC Bank 76,675 3,562 4,494 15.4% 17.2% 20.9x 16.1x 2.9x 2.5x
Kotak Mahindra Bank 35,055 1,054 1,368 11.0% 12.3% 31.7x 25.7x 3.3x 3.1x
ICICI Bank 29,884 2,353 3,417 9.4% 15.1% 14.1x 9.6x 1.8x 1.6x
Axis Bank 15,849 1,525 1,892 12.3% 14.1% 9.6x 8.4x 1.3x 1.1x
Indusind Bank 4,516 654 844 13.3% 14.9% 7.0x 5.5x 0.9x 0.8x
Median 12.3% 14.9% 14.1x 9.6x 1.8x 1.6x
NBFC Comps
HDFC 40,519 2,403 2,878 13.4% 14.4% 19.0x 14.1x 2.7x 2.5x
Bajaj Finance 23,093 631 977 13.5% 18.0% 36.2x 23.4x 4.8x 4.0x
Shriram Transport 2,114 284 386 12.0% 13.9% 7.6x 6.1x 0.8x 0.7x
L&T Finance 1,819 226 294 11.1% 12.9% 8.0x 6.2x 0.8x 0.8x
Mahindra Finance 1,445 147 214 7.2% 11.2% 10.5x 6.9x 0.9x 0.8x
Shriram City Union 608 120 122 14.0% 13.5% 4.3x 3.9x 0.6x 0.5x
Median 12.7% 13.7% 9.3x 6.5x 0.8x 0.8x
Source: Bloomberg as at 4pm IST, June 26, 2020; Note: All values on consolidated basis
Commentary
Sectoral Update – Financial Services
India – Insurance and Asset Management Update
7
India – Life Insr. (1m Return)
India – General Insr. (1m Return)
India – AMCs (1m Return)
6.8%
4.0%
21.9%
HDFC Life
SBI Life
ICICI Pru
2.4%
(0.5%)
ICICI Lomb.
New India
1.9%
33.4%
HDFC AMC
Nippon
Trading Comps (USD mn)
Life M. Cap. P/BV P / EV1 RoA RoE
Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22
HDFC Life 14,464 14.3x 12.4x 4.3x 3.5x 1.0% 1.0% 17.1% 17.9%
SBI Life 10,369 7.8x 6.7x 2.5x 2.2x 0.7% 0.8% 13.5% 14.3%
ICICI Pru 8,036 7.6x 6.8x 2.1x 1.8x 0.7% 0.8% 17.1% 16.1%
General M. Cap. P/BV P / E RoA RoE
Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22
ICICI Lomb. 7,585 7.9x 6.7x 40.3x 31.3x 3.4% 3.6% 20.9% 22.1%
New India 2,485 0.5x 0.5x NA NA NA NA 6.1% 7.1%
Asset Mgmt. Co.
M. Cap. P / AUM P / E RoA RoE
Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22 Mar-21 Mar-22
HDFC AMC 7,000 11.5% 10.0% 47.4x 41.0x 25.8% 26.5% 28.3% 27.9%
Nippon 2,531 7.7% 6.7% 36.7x 32.4x 18.8% 21.0% 19.7% 21.5%
Source: Bloomberg as at 4pm IST, June 26, 2020; 1 EV refers to Embedded Value
Commentary
▪ ICICI Bank divested 1.5% stake in ICICI Prudential Life Insurance on the exchange for a total consideration
of USD 110 mn
− Following this stake sale, its shareholding in ICICI Lombard stands at approximately 51.4%
− This is in-line with the bank’s strategy of strengthening its core balance sheet (as per the Q4 results)
Sectoral Update –Technology, Telecom and Media
8
India Technology Update
Source: Bloomberg as at 4pm IST on June 26, 2020; News run, VCCircle¹ Financial year ending March
Industry Update
1 Month Share Price Performance
▪ NASSCOM said that the move by the U.S. to bar the entry of certain non-immigrants into America was “misguided and harmful to the U.S. economy
▪ InfoEdge board approved raising of funds via QIP for an aggregate amount not exceeding USD 250 mn
▪ Bond Capital, a venture capital firm co-founded by Mary Meeker, has put in an investment under USD 100 mn in Byju’s, valuing Byju’s at c.USD 10.5 bn
▪ Nextbillion.ai which builds mapping and other AI-based services for emerging markets has raised USD 7 mn in Series A funding, led by Lightspeed India Partners and Falcon Edge Capital
▪ E-commerce platforms like Amazon India and Bigbasket have started asking sellers and brands to put ‘country of origin’ for the products on their platforms
Trading Comparables¹
Market capUSD mn
EVUSD mn
EV/Sales EV/EBITDA P/E Sales 3 yr. Fwd CAGR
EBITDA Margin
FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22
Large Cap IT
TCS 105,102 101,561 4.8x 4.4x 18.4x 16.5x 25.3x 22.5x 6% 26% 27%
Infosys 42,126 39,710 3.2x 3.0x 13.5x 11.9x 19.9x 17.6x 7% 24% 25%
HCL 20,175 19,277 2.0x 1.8x 8.4x 7.7x 13.9x 12.4x 7% 24% 24%
Wipro 17,031 13,924 1.7x 1.7x 9.0x 8.4x 14.6x 13.4x 3% 19% 20%
Tech Mahindra 7,163 6,377 1.3x 1.2x 8.6x 7.4x 14.7x 12.3x 6% 15% 16%
Midcap IT and BPO
Larsen & Toubro Infotech 4,441 4,199 2.7x 2.4x 14.5x 12.7x 21.3x 18.3x 11% 19% 19%
Mphasis 2,202 2,095 1.7x 1.6x 9.6x 8.6x 14.8x 13.1x 7% 18% 18%
Mindtree 2,065 1,970 1.9x 1.7x 12.3x 10.7x 21.3x 17.4x 7% 15% 16%
L&T Tech Services 1,792 1,736 2.3x 2.1x 12.2x 10.8x 17.4x 15.4x 7% 19% 20%
Hexaware 1,292 1,342 1.7x 1.5x 11.3x 9.7x 16.3x 14.1x 9% 15% 16%
NIIT Tech 1,207 1,087 1.8x 1.7x 10.7x 9.5x 19.5x 16.7x 14% 17% 17%
Firstsource Solutions 351 437 0.8x 0.7x 5.4x 4.8x 8.3x 7.1x 5% 15% 15%
Software
Oracle Financial Services 3,110 2,516 3.9x 3.6x 8.5x 7.7x 15.3x 13.7x na 46% 46%
Intellect Design 191 211 1.2x 1.0x 10.7x 7.1x 25.8x 12.7x 8% 11% 15%
Newgen Software 139 117 1.2x 1.0x 5.8x 4.9x 9.9x 8.0x na 21% 21%
Consumer Internet
InfoEdge 4,464 4,370 25.0x 20.8x nm nm nm nm 9% 31% 34%
MakeMyTrip 1,716 1,526 2.5x 2.0x nm nm nm nm 17% nm nm
IndiaMart 917 810 9.0x 8.0x 37.1x 28.6x 42.4x 33.0x 6% 24% 28%
JustDial 337 339 3.1x 2.7x 12.5x 10.0x 12.1x 9.9x 5% 25% 27%
13%
6%
6%
6%
4%
Wipro
TechM
Infosys
TCS
HCL
31%
23%
15%
8%
6%
6%
(1%)
Hexaware
FirstSource
L&T Services
L&T Infotech
Mindtree
Mphasis
NIIT Tech
10%
10%
7%
6%
4%
2%
Intellect
Newgen
Oracle
Infoedge
MakeMyTrip
Just Dial
IndiaMart
Large Cap IT Midcap IT and BPO Software and Consumer Internet
Sectoral Update –Technology, Telecom and Media
India Telecom and Media Update
9
Source: Bloomberg as at 4pm IST on June 26, 2020; News run, VCCircle¹ Financial year ending March
Industry Update
1 Month Share Price Performance
▪ Competition Commission of India (CCI) approved Facebook’s purchase of 9.99% stake in Jio Platforms for USD 5.7 bn
▪ Delhi High Court declined to entertain PIL for direction to TRAI and the Department of Telecommunications (DoT) to ensure that operators do not block incoming services of subscribers during the COVID-19 pandemic
▪ TRAI has announced the launch of a new channel selector app for all television subscribers across DTH and cable services to be able to view, modify and optimize channel packs irrespective of their distribution platform
▪ Bharti Infratel said in a stock-exchange filing that the deadline to complete the merger with Indus Towers has been extended to 31-Aug-20 from 24-Jun-20
▪ RIL said that is working to complete the contours of a strategic partnership with Saudi Aramco and said that it will hold its 43rd
annual general meeting on 15-Jul-20 on an online platform
▪ Vodafone Idea expanded its cellular service for Apple Watch users to the Punjab circle. The service was launched earlier this month to Mumbai, Delhi, and Gujarat circle
Trading Comparables¹
`Market cap
USD mnEV
USD mn
EV/Sales EV/EBITDA P/E Sales 3 yr. Fwd CAGR
EBITDA Margin
FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22
Telecom
Reliance Industries 145,954 183,549 2.6x 2.1x 14.6x 11.5x 24.5x 17.4x 7% 18% 19%
Bharti Airtel 40,415 59,391 4.4x 3.9x 9.9x 8.2x nm 36.8x 14% 45% 48%
Bharti Infratel 5,394 5,492 2.8x 2.7x 5.6x 5.4x 13.1x 12.8x 3% 50% 50%
Vodafone Idea 3,951 17,570 2.7x 2.5x 7.4x 5.8x nm nm 13% 36% 42%
Media and Entertainment
Sun TV 2,238 2,113 1.9x 1.7x 6.5x 5.8x 10.0x 8.7x 6% 29% 29%
Zee Entertainment 2,194 1,841 3.8x 3.4x 6.0x 5.5x 11.4x 10.2x na 63% 61%
PVR 697 1,298 5.8x 2.7x 72.5x 10.0x nm 34.3x 36% 8% 26%
Network18 567 1,333 na na na na na na na na na
Inox 333 695 4.7x 2.6x 24.5x 9.7x nm 29.1x 29% 19% 27%
Dish TV 208 546 1.1x 1.1x 1.9x 1.9x 13.5x 9.8x 2% 60% 58%
79%
18%
(0%)
(1%)
Vodafone Idea
Reliance Industries
Bharti Airtel
Bharti Infratel
Telecom
92%
70%
17%
16%
8%
(2%)
Dish TV
Network18
INOX
PVR
Sun TV
Zee
Media and Entertainment
▪ Based on media reports, the Government is planning to take additional measures to facilitate reduction of import
dependence on China
– Imposition of higher import duties on Chinese products including APIs
– Exploring options in EU markets such as Germany, Sweden and Italy to source APIs and other raw materials
▪ India’s pharma exports grew by 17% in May 2020, over the earlier year period, based on data from Pharmaceuticals
Export Promotion Council of India
– Exports were at USD 1,977 mn as against USD 1,685 mn achieved in May 2019
– Cumulative growth of 9.2% for April-May 2020 with exports of USD 3,508 mn
▪ Piramal’s Board has approved PE firm Carlyle’s proposal to acquire a 20% stake in the pharma business for USD 490 mn
– Piramal Pharma valued at EV of USD 2.7 bn with upside of USD 360 mn contingent on FY21 performance
– Implied LTM EV/Sales of 3.8x and LTM EV/EBITDA of 14.5x based on revenue of USD 723 mn and EBITDA of USD
191 mn in FY20
– Piramal’s pharma division consists of contract development and manufacturing (58% revenues), complex hospital
generics (34% revenues), consumer healthcare (8% revenues) and a JV with Allergan in ophthalmic formulations
Sectoral Update – Pharma
10
India Pharmaceuticals Update
Source: Company news, Bloomberg as on June 26, 2020. FX rate: USD 1 = INR 75
Industry Update
All amounts in USD mn EV/Sales EV/EBITDA PER
Company Name% change in MCapfrom prev. week M. Cap EV LTM 1 Yr Fwd LTM 1 Yr Fwd LTM 1 Yr Fwd
Sun Pharma* (1.7%) 15,354 15,361 3.6x 3.2x 16.5x 14.1x 29.2x 22.8x
Dr. Reddy’s* (0.2%) 8,859 8,810 3.8x 3.5x 26.6x 15.0x 30.0x 25.2x
Divi’s Labs 2.0% 8,321 8,179 11.4x 9.7x 32.9x 26.9x 45.3x 37.9x
Cipla* (0.2%) 6,825 6,971 3.1x 2.8x 16.3x 13.9x 33.1x 25.8x
Biocon* 5.4% 6,429 6,536 7.7x 5.8x 30.6x 20.3x 68.8x 39.8x
Aurobindo Pharma* (0.4%) 6,095 6,474 2.1x 1.9x 10.0x 9.0x 16.1x 14.3x
Lupin* 1.3% 5,598 5,537 2.6x 2.4x 16.3x 13.7x NM 30.2x
Torrent Pharma* (2.8%) 5,576 6,073 5.8x 5.2x 21.2x 18.8x 40.8x 35.9x
Cadila Healthcare* 0.5% 4,967 5,926 3.2x 2.8x 16.2x 14.4x 31.1x 22.2x
Alkem Labs* 1.9% 3,745 3,819 3.4x 3.1x 19.4x 16.7x 24.7x 22.1x
IPCA Labs* 5.2% 2,865 2,866 4.6x 4.0x 23.7x 18.6x 35.6x 25.9x
Alembic Pharma* (4.7%) 2,267 2,498 4.1x 3.6x 15.3x 15.6x 20.5x 22.1x
Syngene Intl.* 7.7% 2,170 2,087 7.8x 6.6x 25.9x 21.6x 39.5x 41.8x
Glenmark Pharma 14.0% 1,756 2,224 1.6x 1.4x 10.4x 8.9x 18.5x 16.0x
Ajanta Pharma* (0.3%) 1,683 1,653 4.8x 4.3x 18.1x 14.9x 27.0x 22.9x
Natco Pharma 0.9% 1,539 1,570 6.2x 5.3x 20.2x 15.6x 25.1x 20.6x
Jubilant LS* 1.3% 1,390 1,813 1.5x 1.4x 7.0x 6.5x 11.6x 10.2x
Eris Lifesciences* (0.4%) 847 829 5.8x 5.2x 16.9x 15.4x 21.4x 19.3x
Laurus Labs* 1.3% 772 900 2.4x 2.0x 12.0x 9.6x 22.7x 17.4x
JB Chemicals (4.7%) 698 654 2.8x 2.4x 12.9x 11.2x 19.3x 16.7x
Abbott India* 1.9% 4,521 4,228 7.7x 6.8x 41.9x 33.5x 57.2x 48.4x
GSK Pharma* 8.3% 3,345 3,201 7.4x 6.5x 34.8x 29.6x NM 41.0x
Sanofi India* 2.3% 2,513 ,363 5.6x 5.6x 25.8x 23.8x 46.3x 34.2x
Pfizer Ltd* 2.6% 2,502 2,206 7.7x 6.8x 28.9x 23.0x 36.9x 32.9x
AstraZeneca 2.4% 1,116 1,084 9.8x NA 67.3x NA 115.9x NA
Novartis India (7.2%) 184 116 2.0x NA 37.8x NA 136.9x NA
Larg
e C
ap P
har
ma
Co
mp
anie
sM
id C
ap P
har
ma
Co
mp
anie
sM
NC
Ph
arm
a P
laye
rs
Trading Comparables
* Announced 4QFY20 results. LTM multiples are for period ending March 2020.
Sectoral Update – Healthcare
11
India Healthcare Update
Industry Update
Trading Comparables
All amounts in USD mn EV/Sales EV/EBITDA PER
Company Name M. Cap EVNet Debt /
EBITDA LTM 1 Yr Fwd LTM 1 Yr Fwd LTM 1 Yr Fwd
Apollo Hospitals* 2,575 2,957 1.7x 2.0x 1.8x 14.0x 14.3x 42.7x 53.2x
Fortis Healthcare* 1,242 1,483 2.1x 2.4x 2.5x 18.2x 19.4x 130.4x 147.7x
Narayana Hrudayalaya* 748 728 (0.4x) 1.7x 1.8x 12.9x 17.2x 47.1x 143.6x
Aster DM Healthcare* 837 1,552 3.9x 1.3x 1.2x 9.3x 9.6x 21.8x 23.9x
Healthcare Global 144 238 4.2x 1.7x 1.4x 10.7x 9.6x NM NM
Shalby1* 103 102 (0.1x) 1.6x 1.3x 9.3x NA 27.9x 12.5x
Dr Lal Pathlabs1* 1,733 1,638 (2.1x) 9.2x 8.6x 35.8x 34.0x 57.4x 55.1x
Metropolis1* 955 935 (0.7x) 8.2x 7.6x 29.7x 29.4x 56.2x 48.4x
Thyrocare1* 356 346 (0.4x) 6.0x 5.7x 15.0x 14.9x 30.2x 24.6x
Poly Medicure* 357 374 0.8x 4.1x NA 17.1x NA 27.9x NA
▪ India likely to re-open the export of Personal Protective Equipment (PPE), five months after the ban on exports was established due to the pandemic. There is demand from various markets and India has a disposable surplus of around 5 million PPEs that can be exported every month.
▪ State governments including Delhi, Tamil Nadu, Karnataka, Telangana and Maharashtra, have moved to cap charges on COVID treatment in a bid to keep treatment costs affordable. Hospitals including Apollo are calling this move ‘unfair’ given hospitals cannot afford to lose more money in the current situation. Apollo also raised the issue of higher import duties and the need for more investments in the healthcare sector
1 Net Debt is negative, EBITDA is positive, 2 Med. Dev. is Medical Devices* Announced 4QFY20 results. LTM multiples are for period ending March 2020.
Source: Company news, Bloomberg as on June 26, 2020. FX rate: USD 1 = INR 75
Share Price Performance
Share Price Return
Company Name 1w 1m 3m 6m 1y
Apollo Hospitals 1.3% 3.8% 19.0% (2.1%) 6.1%
Fortis Healthcare 0.8% 7.7% (4.3%) (6.1%) (4.7%)
Narayana Hrudayalaya 0.7% 3.8% 15.5% (8.7%) 11.9%
Aster DM Healthcare 4.8% 39.7% 35.1% (18.7%) 4.6%
Healthcare Global 0.1% 22.0% 60.5% 18.7% (25.8%)
Shalby 3.4% 8.8% 53.3% (24.4%) (36.1%)
Dr Lal Pathlabs 2.1% 0.3% 3.8% 4.2% 38.0%
Metropolis (4.4%) 7.0% 3.0% (0.5%) 46.1%
Thyrocare (1.2%) (1.5%) (2.7%) (6.8%) 6.2%
Poly Medicure 1.9% 4.7% 28.6% 41.7% 70.2%
Hospitals
Diagnostic
Med. Dev.2
Hospitals
Diagnostic
Med. Dev.2
Sectoral Update – Auto & Auto Components
12
India Auto & Auto Components Update
Share Price (INR) 1W 1M 3M 6M 1Y
Maruti Suzuki 5,754.9 (2.4%) 9.7% 18.0% (20.5%) (11.2%)
Bajaj Auto 2,867.6 7.2% 11.8% 36.1% (11.2%) (0.0%)
M&M 501.4 0.3% 16.8% 75.6% (5.1%) (22.1%)
Hero MotoCorp 2,540.5 7.8% 20.2% 41.0% 4.2% (1.3%)
Tata Motors 101.4 (1.1%) 22.0% 43.2% (41.9%) (37.1%)
Motherson Sumi Systems 96.0 (1.4%) 13.5% 49.6% (34.6%) (19.2%)
Bosch 11,213.5 2.4% 19.4% 13.6% (26.8%) (32.1%)
MRF 66,457.7 5.6% 15.1% 20.1% 5.3% 18.5%
Key Listed Auto Companies in India (1Y Return)
M. Cap. (USD mn)
EV(USD mn)
EV/NTM Revenue EV/NTM EBITDA P/NTM EPS
Maruti Suzuki 22,992 22,854 2.2x 19.5x 25.2x
Bajaj Auto 10,975 10,565 2.6x 15.6x 16.1x
M&M 8,244 15,651 1.2x 8.6x 17.6x
Hero MotoCorp 6,711 6,109 1.3x NA 14.1x
Tata Motors 4,421 12,972 0.4x 3.6x NA
Motherson Sumi Systems 4,009 5,559 0.6x 6.5x 16.2x
Bosch 4,374 4,046 2.3x 14.6x 20.6x
MRF 3,728 3,622 1.6x 10.3x 22.7x
Trading Comparables
▪ According to ACMA (Automotive Component Manufacturers Association), China made up 27% of the USD 17.6bn
automobile components import. The industry has started to take steps towards "deep localization" in order to de-risk
business from Chinese imports
▪ Automakers currently face the issue of importing key spare parts from China which are critical for vehicles to meet
the BS-VI emission norms. Indian makers lack the capability in various segments like electronics, batteries and BS-VI
components. China, along with technical competence and sheer price advantage, has a near monopoly in battery cell
production globally
(11.2%)
(0.0%)
(22.1%)
(1.3%)
(37.1%)
(19.2%)
(32.1%)
18.5%
Maruti Suzuki Bajaj Auto M&M HeroMotoCorp
Tata Motors MothersonSumi Systems
Bosch MRF
Share Price Returns
Industry News
Auto Makers
Auto Components
Tyres
Source: Bloomberg as on June 26, 2020, Company Information, News run; Note: USD 1 = INR 75
Sectoral Update – Metals & Mining
13
India Metals & Mining Update
Key Listed Metals & Mining Companies in India (1Y Return)
(45.4%)(38.2%)
(25.1%)(17.4%)
(30.5%)(36.6%)
1.2%
(27.5%)
Coal India Vedanta NMDC Hindustan Zinc JSW Steel Tata Steel Jindal Steel &Power
HindalcoIndustries
Share Price (INR) 1W 1M 3M 6M 1Y
Coal India 142.1 3.5% 11.7% 15.3% (28.0%) (45.4%)
Vedanta 110.0 4.5% 25.1% 67.1% (27.0%) (38.2%)
NMDC 84.2 2.1% 11.0% 20.5% (33.3%) (25.1%)
Hindustan Zinc 199.0 11.7% 19.4% 42.9% (6.2%) (17.4%)
JSW Steel 192.7 (0.8%) 9.3% 28.6% (28.4%) (30.5%)
Tata Steel 323.9 1.0% 15.5% 13.9% (30.8%) (36.6%)
Jindal Steel & Power 153.2 5.1% 40.4% 72.4% (6.3%) 1.2%
Hindalco Industries 151.1 0.0% 17.0% 59.8% (29.7%) (27.5%)
M. Cap. (USD mn)
EV(USD mn)
EV/NTM Revenue EV/NTM EBITDA P/NTM EPS
Coal India 11,582 7,581 0.6x 3.0x 5.9x
Vedanta 5,405 9,340 0.9x 4.1x 25.3x
NMDC 3,408 3,161 2.3x 4.8x 7.0x
Hindustan Zinc 11,118 8,256 3.6x 7.9x 14.4x
JSW Steel 6,159 11,776 1.0x 5.4x 9.0x
Tata Steel 4,860 17,730 1.0x 8.7x NA
Jindal Steel & Power 2,067 5,896 1.1x 4.9x 15.8x
Hindalco Industries 4,488 9,826 0.6x 6.0x 11.6x
Trading Comparables
Share Price Returns
Industry News
▪ 3 opposition ruled states (Maharashtra, Chhattisgarh and Jharkhand) have expressed reservations against the launch
of coal block auction. The Jharkhand government moved the Supreme Court seeking postponement of the proposed
commercial auction of coal mines citing need for fair assessment of the social and environmental impact
▪ India announced anti-dumping duty on steel products originating or exported from China, Vietnam and South Korea
▪ India was net exporter of steel to China both in April and May, which is a first and a temporary phenomenon as China
once again ramps up production
Integrated Mining &
Metals
Steel
Other Metals
Source: Bloomberg as on June 26, 2020, Company Information, News run; Note: USD 1 = INR 75
Sectoral Update – Aviation
14
India Aviation Update
Source: Bloomberg as on June 26, 2020, Company Information, News run; Note: USD 1 = INR 75; 1Rebased to 100
1W 1M 3M 6M 1Y
Interglobe Aviation 0.1% 9.2% 1.9% (22.2%) (34.7%)
SpiceJet 0.3% 16.1% 44.1% (46.9%) (60.4%)
Delta Airlines (5.1%) 9.2% (11.6%) (53.0%) (50.3%)
Air China (5.8%) (0.8%) (11.0%) (38.1%) (38.7%)
IAG (16.4%) (2.9%) (1.9%) (63.7%) (49.5%)
Southwest Airlines (4.6%) 1.4% (20.0%) (39.9%) (35.0%)
Ryanair (8.3%) (11.0%) 8.8% (27.3%) 5.7%
EasyJet (16.0%) 0.7% 2.7% (52.8%) (22.3%)
Air Asia Group (4.5%) 13.3% 16.4% (50.6%) (69.1%)
M. Cap. (USD mn)
EV(USD mn)
EV/NTM Revenue
EV/NTM EBITDA P/NTM EPS
Interglobe Aviation 5,235 5,500 0.9x 5.0x 14.5x
SpiceJet 406 524 0.3x 2.0x 11.0x
Trading Comparables
Share Price Returns
Industry News
▪ USA, UAE and France have restricted Air India from flying inbound passengers under the Vande Bharat Mission. Post
these restrictions, MOCA (Ministry of Civil Aviation) stated that India is looking at the prospect of establishing
individual bilateral bubbles between select countries
▪ The Vande Bharat Mission had brought back 125K+ to India and carried 43K+ on outbound flights so far
▪ DGCA (Directorate General of Civil Aviation) has decided to suspend all commercial international flight operations in
India till July 15. However, India may allow some international flights on selected routes on a case to case basis
▪ DCGA has allowed airlines permission to operate up to 45% of their total capacity from the current 33%
Share Price Performance
0
20
40
60
80
100
120
Jun-19 Sep-19 Nov-19 Jan-20 Apr-20 Jun-20
Last 1 year Last 1 month
90
100
110
120
130
140
26-May-20 02-Jun-20 10-Jun-20 18-Jun-20 26-Jun-20
Price (SpiceJet)Price (Indigo)
1 1
Indian LCCs
Global FSCs
Global LCCs
Sectoral Update – Power and Infrastructure
India Power Update
15
Key Listed Power Companies in India (1Y Return)
Trading Comparables
Listed Power Companies in India (Operations and Share Price Performance)
Business Share Price Return
Company Generation Transmission Distribution 1w 1m 3m 6m 1y
Adani Trans. - ✓ ✓ 25.1% 52.3% 48.3% (16.1%) 25.2%
Torrent Power ✓ ✓ ✓ 1.4% 6.4% 19.7% 16.0% 13.7%
Tata Power ✓ ✓ ✓ 7.3% 29.7% 36.5% (17.4%) (32.5%)
CESC ✓ ✓ ✓ 1.0% 8.1% 55.9% (18.8%) (22.4%)
NTPC ✓ - - 4.3% 2.4% 16.9% (17.0%) (30.8%)
Adani Green ✓ - - (5.5%) 63.9% 167.3% 163.3% 838.7%
NHPC ✓ - - 4.8% 4.8% 7.5% (13.1%) (16.4%)
Adani Power ✓ - - (3.3%) (0.7%) 33.2% (39.0%) (28.6%)
JSW Energy ✓ - - 1.8% 19.2% 9.8% (29.7%) (29.6%)
Azure Power ✓ - - 0.0% 8.5% 14.6% 28.0% 51.7%
Power Grid - ✓ - 4.6% 14.0% 12.0% (5.2%) (13.7%)
Company Share Price (LC)M. Cap.
(USD mn)EV
(USD mn)EV /
FY21E EBITDAEV /
FY22E EBITDAP / E
(FY21E)P / E
(FY22E)
Adani Trans. 277 4,060 7,523 11.9x 10.4x 31.7x 25.5x
Torrent Power 325 2,085 3,012 6.2x 5.9x 12.7x 11.3x
Tata Power 46 1,672 8,023 7.8x 7.5x 9.9x 8.3x
CESC 607 1,073 2,560 5.9x 6.0x 6.3x 5.7x
NTPC 97 12,797 34,072 7.9x 7.1x 7.1x 6.2x
Adani Green 398 8,290 10,043 NA NA NA NA
NHPC 20 2,793 5,204 6.9x 6.5x 7.5x 7.1x
Adani Power 37 1,890 8,622 8.8x 7.9x NM NM
JSW Energy 49 1,068 2,042 5.1x 4.9x 9.6x 8.3x
Azure Power 16 768 1,892 11.9x 7.8x NM 45.2x
Power Grid 179 12,500 30,231 6.5x 6.2x 7.8x 7.1x
25.2%13.7%
(32.5%)(22.4%)
(30.8%)
838.7%
(16.4%)(28.6%) (29.6%)
51.7%
(13.7%)
AdaniTrans.
Torrent Tata CESC NTPC AdaniGreen
NHPC AdaniPower
JSW Azure PowerGrid
Integrated
Generation
Transmission
Source: Bloomberg as on June 26, 2020 (as on June 25, 2020 for Azure Power), Company Information, News run; Note: USD 1 = INR 75
Sectoral Update – Power and Infrastructure
India Infrastructure Update
16
Trading Comparables
Infra - Share Price Performance
Share Price Return
Company 1w 1m 3m 6m 1y
APSEZ (1.6%) 5.1% 36.6% (5.6%) (15.6%)
GMR Infra (5.6%) 18.3% 28.3% (3.1%) 33.3%
IRB Infra 26.9% 56.4% 66.2% 29.8% (7.1%)
Ashoka Build (2.8%) 25.4% 43.5% (35.9%) (55.2%)
IGL (1.2%) (3.1%) 23.7% 3.9% 41.4%
Gujarat Gas 4.9% 30.5% 34.4% 35.9% 76.6%
Adani Gas 16.5% 44.5% 87.4% 6.5% (1.0%)
MGL 0.1% 17.4% 32.2% 3.0% 25.1%
Perf. of Listed Infra. InvITs
FY20 Dividends (INR)
TrustShare Price
(INR)Q1 Q2 Q3 Q4
India Grid 101.2 3.0 3.0 3.0 3.0
IRB InvIT 38.1 3.0 2.5 2.7 1.8
Recent Developments – Power and Infra
Company Share Price (LC)M. Cap.
(USD mn)EV
(USD mn)EV /
FY21E EBITDAEV /
FY22E EBITDAP / E
(FY21E)P / E
(FY22E)
APSEZ 343 9,297 12,069 12.0x 10.1x 16.9x 14.0x
GMR Infra 20 1,642 5,063 16.7x 13.7x NM NM
IRB Infra 90 422 1,254 3.9x 3.6x 13.8x 9.3x
Ashoka Build 63 236 927 5.2x 4.3x NM 29.8x
IGL 442 4,126 3,838 18.2x 15.0x 26.1x 21.2x
Gujarat Gas 307 2,817 2,969 14.8x 11.7x 25.7x 18.6x
Adani Gas 166 2,432 2,471 26.3x 23.6x 38.4x 34.1x
MGL 1,077 1,419 1,247 9.4x 8.1x 15.5x 13.3x
Key Listed Power Companies in India (1Y Return)
(15.6%)
33.3%
(7.1%)
(55.2%)
41.4%
76.6%
(1.0%)
25.1%
APSEZ GMR IRB AshokaBuildcon
IGL Gujarat Gas Adani Gas MGL
Ports
Airports
Roads
City Gas Dist.
▪ CERC announced New Tariff Regulations for Renewable Energy Projects, to come into force from Jul-20, up to Mar-23
▪ Tata Power Delhi Distribution(which supplies electricity to a population of 7 mn in North Delhi, with 1.7 mn consumers) announced that it installed 200,000 smart meters across its consumer segments
▪ Government is planning to impose a basic customs duty in the range of 20-25% on imported solar modules from which would eventually be raised to 40%; for solar cells, the customs duty is planned to be at 15% levels, and will be raised to 30%
▪ Petrol price ( at INR 80.13 / litre) crossed INR 80-mark in Delhi for first time since 2018; Diesel price (at INR 80.19 / litre) reached a new all-time high rate; Diesel became costlier than Petrol for the first time on Wednesday (Jun 24, 2020)
▪ Regular passenger train services (with a few exceptions) have been further cancelled till Aug 12, 2020
Source: Bloomberg as on June 26, 2020, Company Information, News run; Note: USD 1 = INR 75
▪ COVID-19 led disruption resulted in doubling of online sales for several e-commerce companies including Hindustan Unilever, ITC, Parle Products, LG, Vivo and Godrej.
▪ According to the latest Nielsen report, online contribution to India's FMCG sales rose nearly 50% Y-o-Y in the March quarter as consumers increasingly shopped from e-grocers, while local grocers’ share fell 220 bps.
▪ FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) reported several cases of seizures of smuggled imported cigarettes in the last few months indicating a spike in cigarette smuggling during lockdown.
Sectoral Update – Consumer and Retail
India Consumer Update
17
Share Price Performance
Trading Comparables
Share Price Return
Company Name 1w 1m 3m 6m 1y
HUL 2.9% 7.8% (1.9%) 10.8% 22.3%
Dabur 3.9% 7.3% 8.1% 0.6% 16.8%
Godrej Consumer 5.4% 19.2% 36.9% 0.3% 2.2%
Marico 3.8% 6.5% 29.1% 1.5% (7.1%)
Colgate India 2.5% 8.8% 18.5% (4.6%) 23.1%
Emami 9.5% 12.9% 38.2% (27.4%) (30.5%)
Zydus Wellness 0.8% 4.3% 5.4% (11.7%) (5.1%)
Nestle India 3.6% (0.2%) 11.8% 14.2% 41.3%
Britannia 0.5% 7.3% 33.5% 12.9% 26.5%
Tata Consumer 2.2% 4.6% 38.2% 23.3% 41.4%
ITC 6.1% 1.6% 24.8% (17.6%) (29.6%)
United Spirits (4.3%) 2.3% 20.5% 1.4% 4.4%
United Breweries (0.1%) 9.4% 13.9% (20.0%) (23.7%)
VST Industries 1.6% 4.9% (8.4%) (27.8%) (11.3%)
Godfrey Philips 3.2% 0.6% 11.5% (22.8%) 14.3%
Diversified, Wellness
and Personal
Care
Food
Tobacco and
Alcohol
Source: Bloomberg as on June 26, 2020, Company information, News run, FY – For the year end March – Nestle India calendarized toMarch year end, FX rate: USD 1 = INR 75
Recent Developments – Consumer Sector
All amounts in USD mn EV/Sales EV/EBITDA P/E
Company Name Share Price (INR) M. Cap EV FY21 FY22 FY21 FY22 FY21 FY22
HUL 2,154.2 67,436 66,589 9.9x 8.8x 36.6x 32.1x 51.8x 43.8x
Dabur 460.4 10,846 10,620 8.0x 7.2x 36.8x 31.6x 44.1x 38.8x
Godrej Consumer 685.5 9,343 9,518 6.4x 5.8x 28.0x 24.3x 39.0x 33.3x
Marico 344.4 5,928 5,854 5.3x 4.9x 25.9x 22.9x 36.8x 32.4x
Colgate India 1,391.3 5,045 4,989 8.1x 7.4x 29.4x 26.5x 45.4x 40.2x
Emami 221.0 1,326 1,313 3.4x 3.2x 12.4x 11.6x 18.0x 16.3x
Zydus Wellness 1,275.8 981 1,158 4.2x 3.8x 22.9x 19.4x 29.0x 23.3x
Nestle India 16,677.5 21,440 21,138 11.8x 10.5x 49.7x 42.7x 73.0x 61.6x
Britannia 3,456.4 11,086 11,149 5.9x 5.3x 34.3x 29.2x 44.7x 38.3x
Tata Consumer 385.7 4,711 4,732 3.2x 3.0x 21.9x 20.4x 37.0x 34.2x
ITC 195.2 31,995 29,732 4.4x 4.0x 11.8x 10.3x 17.1x 14.8x
United Spirits 591.5 5,730 5,957 4.7x 4.1x 25.0x 22.0x 40.3x 33.8x
United Breweries 1,018.9 3,592 3,604 3.5x 3.3x 22.2x 20.2x 39.9x 36.1x
VST Industries 3,133.0 645 540 2.9x NA 8.4x NA 13.3x NA
Godfrey Philips 996.6 691 664 1.5x 1.4x 6.8x 5.9x 10.6x 9.0x
Sectoral Update – Consumer and Retail
India Retail Update
18
Share Price Performance
Trading Comparables
Share Price Return
Company Name 1w 1m 3m 6m 1y
Jubilant Foodworks 4.8% 4.8% 25.2% 8.8% 41.7%
Westlife Development 5.3% 13.9% 5.8% (4.6%) 5.5%
Avenue Supermarts (2.9%) (0.6%) 10.3% 19.2% 65.4%
Future Retail 27.6% 76.1% 64.3% (58.2%) (70.5%)
Spencer’s Retail (2.3%) (0.1%) 27.5% 61.4% (14.5%)
Trent 20.6% 48.5% 42.2% 26.0% 59.0%
Aditya Birla Fashion & Retail (2.9%) 9.3% (22.6%) (44.5%) (38.3%)
Future Lifestyle Fashions 1.3% 3.0% 14.7% (62.4%) (67.5%)
Vmart Retail (4.7%) 7.4% 16.5% 4.3% (23.9%)
Shoppers Stop 0.5% 35.7% (13.4%) (49.7%) (62.5%)
Restaurant
Grocery Retailers
Source: Bloomberg as on June 26, 2020, Company information, News run, FY – For the year end March, FX rate: USD 1 = INR 75
Recent Developments – Retail Sector
▪ E-commerce giants Amazon, Flipkart along with a dozen other online retailers including Jio Platforms have agreed to compel merchants to start prominently displaying “country of origin“ for all goods sold online in India, bowing to regulatory demands as tensions with China escalate.
▪ During Unlock 1.0, consumer trends suggest that internal dwell time has reduced for customers as they are now coming in for focused shopping. Also, Tier II cities are seeing higher footfall compared to metros and Tier I cities.
▪ Revenue of the USD 22.6bn organized apparel retail sector is set to plummet 30-35% in FY21 because of temporary store closures, restricted mobility and low-income visibility for consumers.
All amounts in USD mn EV/Sales EV/EBITDA P/E
Company Name Share Price (INR) M. Cap EV FY21 FY22 FY21 FY22 FY21 FY22
Jubilant Foodworks 1,769.9 3,114 3,244 7.1x 5.4x 34.4x 23.4x 98.3x 52.2x
Westlife Development 326.2 677 784 4.7x 3.4x 55.9x 25.4x NM 104.2x
Avenue Supermarts 2,294.4 19,817 19,840 5.3x 4.1x 67.9x 47.2x 103.6x 72.0x
Future Retail 142.5 1,030 1,337 0.4x 0.4x 5.9x 5.2x 10.6x 8.5x
Spencer’s Retail 88.2 94 94 NA NA NA NA NA NA
Trent 687.4 3,258 3,197 8.0x 5.5x 59.8x 36.0x NM 79.9x
Aditya Birla Fashion & Retail 129.3 1,334 1,950 NA NA NA NA NA NA
Future Lifestyle Fashions 149.8 403 488 0.6x 0.5x 3.8x 3.2x 34.4x 16.6x
Vmart Retail 1,710.1 414 413 1.5x 1.3x 18.2x 14.8x 31.1x 25.9x
Shoppers Stop 180.8 212 490 1.0x 0.9x 7.9x 7.5x 71.2x 19.7x
Lifestyle Retailer
Sectoral Update – Real Estate
India Real Estate Update
19
Trading Comparables
Recent Developments – Real Estate
Key Listed Real Estate Companies in India (1Y Return)
(16.4%)(5.7%) (9.6%)
(35.2%)
(6.2%)(15.6%)
(55.3%)
(22.7%)
(56.9%)
(42.7%)
DLF EmbassyOffice Parks
REIT
GodrejProperties
OberoiRealty
PhoenixMills
PrestigeEstatesProjects
ChaletHotels
Nesco SunteckRealty
BrigadeEnterprises
▪ As per the survey conducted by the Retailers Association of India (RAI), malls witnessed 77% degrowth while high
street retail showed a decline of 61% in business in the first half of June, as compared to last year, with consumer
sentiment remaining low even after lockdown relaxations
▪ An industry reports showed that residential property sales in the top 7 Indian cities plunged 81% (13K units compared
to 68K) in the 2nd quarter of 2020 as compared to the previous year. Data was collected from MMR, NCR, Bengaluru,
Chennai, Hyderabad, Pune and Kolkata where only 1.4K new units were launched compared to 69K units in the same
period in 2019
Source: Bloomberg as on June 26, 2020, Company information, News run, 1USD = 75 INR
Share Price Performance
Share Price Return
Company Name 1w 1m 3m 6m 1y
DLF (4.6%) 12.9% 11.8% (31.9%) (16.4%)
Embassy Office Parks REIT (9.4%) 3.3% (6.5%) (17.5%) (5.7%)
Godrej Properties (2.9%) 44.1% 24.7% (8.6%) (9.6%)
Oberoi Realty 0.1% 24.3% (2.7%) (27.8%) (35.2%)
Phoenix Mills (0.8%) 20.9% 5.5% (25.6%) (6.2%)
Prestige Estates Projects 6.5% 63.6% 18.1% (33.0%) (15.6%)
Chalet Hotels (3.2%) 34.7% (35.1%) (59.8%) (55.3%)
Nesco (2.9%) 12.4% (10.5%) (33.5%) (22.7%)
Sunteck Realty 6.7% 23.9% (10.4%) (57.0%) (56.9%)
Brigade Enterprises 1.2% 48.4% 15.7% (33.0%) (42.7%)
All amounts in USD mn EV/Sales EV/EBITDA P/E
Company Name Share Price (INR) M. Cap EV FY21 FY22 FY21 FY22 FY21 FY22
DLF 154.4 5,096 5,562 5.9x 5.6x 16.0x 14.3x 18.3x 16.5x
Embassy Office Parks REIT 348.1 3,581 4,467 14.3x 12.3x 17.3x 15.3x 27.8x 24.7x
Godrej Properties 868.3 2,918 3,004 13.0x 12.8x 75.6x 74.0x 40.3x 50.0x
Oberoi Realty 375.4 1,820 1,929 4.7x 4.0x 10.5x 8.5x 12.8x 11.7x
Phoenix Mills 600.2 1,228 1,895 6.6x 5.9x 12.7x 10.8x 23.6x 18.5x
Prestige Estates Projects 224.0 1,197 2,251 2.4x 2.4x 7.5x 7.6x 16.2x 15.6x
Chalet Hotels 136.8 374 584 3.7x 3.1x 9.6x 7.5x 17.6x 12.6x
Nesco 441.3 415 409 6.3x 5.2x 9.3x 7.5x 13.8x 10.9x
Sunteck Realty 183.1 357 412 2.2x 2.1x 5.2x 5.1x 6.9x 6.7x
Brigade Enterprises 144.1 393 893 2.2x 1.9x 7.6x 6.1x 15.2x 10.4x
Sunil SanghaiFounder & [email protected]
Rikin SanghviExecutive [email protected]
Dhruv BhatiaVice [email protected]
Anirban BharVice [email protected]
Mohit BhutdaSenior [email protected]
Stuti [email protected]
Piyush [email protected]
Neel [email protected]
Swahum MukherjeeSenior [email protected]
Ponmathi [email protected]
Mandvi DixitExecutive [email protected]
Vishal [email protected]
NovaDhruva Capital Private Limited902 One Indiabulls Centre, Tower 2A; Elphinstone Road (West), Mumbai 400 013; : +91 22 6246 6000www.novadhruva.com
NovaDhruva Team