Review of Picks given in Outlook 2021 - Outlook 2021 Update - StockAxis
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Outlook 2021 Update
Review of Picks given in
Outlook 2021
e-mail: research@stockaxis.com | Website: www.stockaxis.com
StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 01Outlook 2021 Update
Return (%) from
Reco Price as on Highest Price CMP (Rs) as on
Sr. No. Stock Name Reco price to
Dec 24, 2020 after reco Feb 16, 2021
CMP
Alkem Laboratories
1 2,916 3,151.5 2,876.2 -1.37%
Ltd.
Cholamandalam
2 Investment & Finance 376.35 538 528.05 40.31%
Company Ltd.
3 Gland Pharma Ltd. 2,408.35 2,508.55 2,205.85 -8.41%
HCL Technologies
4 919.35 1,067 952.3 3.58%
Ltd.
5 ICICI Bank Ltd. 513.55 679.4 658.35 28.20%
ICICI Lombard GIC
6 1,484.05 1,626.45 1,504.9 1.41%
Ltd.
7 Mastek Ltd. 1,097.25 1,464.45 1,239.9 13%
8 Minda Industries Ltd. 401.8 612 570.25 41.92%
9 Route Mobile Ltd. 1,121 1,890 1,827.6 63.03%
10 Voltas Ltd. 810.95 1132 1037.65 27.95%
StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 02Alkem Laboratories Ltd. • Alkem reported steady performance in Q3FY21, led by growth in international business which grew 6.7% YoY, while for 9MFY21 international sales grew by 17.8% YoY. International sales were led by US business which grew 5.5% YoY for Q3FY21, while other international market sales grew 11.7% YoY for the quarter. Indian business grew by 6.3% YoY during the quarter; while for 9MFY21 domestic business was stable at Rs. 4226 cr., growth of 0.7% YoY. • Gross margins for the quarter has improved from 60.47% in Q2FY21 to 61.71%, while YoY margins remained stable. EBITDA margins for the quarter improved 205 bps YoY to 22.83%, while sequentially EBITDA margins contracted 259 bps, mainly because of come back of operating expenses. PAT during the quarter grew by 19% YoY, led by 246% growth in other income. • During the quarter, the Company received 10 approvals (including 2 tentative approvals) from the US FDA. For 9MFY21, the Company filed 5 ANDAs and received 16 approvals (including 4 tentative approvals). As on December 31, 2020, the Company has filed a total of 147 ANDAs and 2 new drug application out of which it has received approvals for 100 ANDAs (including 14 tentative approvals) and 2 NDA. • The management said Enzene Biosciences Ltd. (Biotech subsidiary) has received the marketing authorization from DCGI for the 1st product ‘Teriparatide’ and it will be launched soon in India. • The overall opportunity which the company is chasing for the domestic market in the pipeline of Enzene Biosciences is ~Rs. 2,000 crores, which the management expects to be played out over next 3 – 5 years. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 03
Alkem Laboratories Contd... • On the trade generics front, the management said that the demand for the branded products should pick up going forward Outlook & Valuation – Alkem witnessed strong outperformance in key therapies of Anti-infectives, Vitamins / Minerals, Cardiac and Anti-diabetes. Approval for 1st Biosimilar product is positive; we expect robust growth from biosimilars through its biotech subsidiary Enzene, with many more launches in near future. US business continued its strong growth trajectory led by new launches and market share gains. We remain positive on the long-term outlook based on continuous scale-up & new launches in the US generic business, growth opportunities from biosimilars and stable growth & market share gains in the domestic market. The stock is currently trading at 18.34x FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 7,357 1,115 774 64 FY2020 8,344 1,473 1,149 94 FY2021E 9,095 2,173 1,757 147 FY2022E 10,460 2,194 1,662 139 FY2023E 11,725 2,517 1,882 157 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 04
Cholamandalam Investment & Finance Company Ltd. • The company reported a 5% YoY growth in PAT at Rs. 409 crore and 26% YoY / 9% QoQ growth in Net Interest Income at Rs. 1,364 crore. PPOP grew 51% YoY and 11% QoQ. Industry wide higher slippages were witnessed which led to higher provisions (up 40% QoQ). • Asset quality to improve with strong provisioning buffer. Provision coverage stood at 44.94%, as against 32.95% at the end of December 2019. Loan losses include additional COVID provisions of Rs. 216 crores for 9MFY21, and total COVID provisions as of Dec 20 are at Rs. 750 crs. • Disbursements grew by 6% YoY and 23% QoQ, led by 25% YoY growth in LAP & SME segment, while sequentially vehicle finance disbursements grew by 25% and home loans & LAP grew 14% & 9% respectively. Used vehicles disbursements grew at fastest pace and contributed 40% to overall disbursements. • ROA for Q3FY21 was at 3.1% as against 3.4% in previous year quarter, while for YTD Dec 2020 it was at 3.4%, which is at the same level of 3.4% for 9MFY20. ROE for YTD Dec 2020 was at 19.2% as against 20.3% in previous year. The CAR of the company as on December 2020, was at 19.25% as against the regulatory requirement of 15%. • Collection efficiency against billing improved month on month for vehicle finance at 87%, 103%, 105% and 108% for September, October, November and December respectively. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 05
Cholamandalam Investment & Finance Contd… Outlook & Valuation – Chola is one of the best vehicle finance company with strong return ratios, improving NIMs, well capitalized balance sheet, and strong underwriting record & parentage. We expect demand for tractors and used commercial vehicles to be robust and Chola being one of the largest players in these segments will benefit the most. Vehicle finance disbursements have crossed pre-covid levels, we expect disbursements to further gain pace in Q4FY21 onwards, while FY22 to provide strong growth on back of resilient rural segment, pick up in economic activities and upturn in CV cycle. Voluntary scrappage policy is a step in right direction; we expect vehicle finance companies like Chola to benefit significantly. The stock is currently trading at 3.31x FY23E P/BV. Rs in cr. NII PPOP PAT BV FY2019 3403 2,134 1,186 79 FY2020 4060 2,483 1,052 100 FY2021E 4609 3,085 1,431 113 FY2022E 5573 3,763 2,046 136 FY2023E 6879 4,743 2,807 161 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 06
Gland Pharma Ltd. • Growth momentum continued in Q3FY21 with revenue growth of 33% YoY and 3.4% QoQ to Rs.859 cr. & PAT growth of 32.5% YoY to Rs. 204 cr. • Revenue growth was led by new product launches, geographic expansion and volume growth in existing portfolio. For Q3FY21, Core markets (USA, Europe, Canada and Australia) grew by 24% YoY, India grew by 25% YoY and Rest of the world market grew by whopping 161% YoY. Strong growth in Rest of the world market is driven by new partnerships and increased penetration geographically. • Gross margins for the quarter stood at 50.4% which is lower by 240 bps QoQ and 360 bps YoY, mainly because of product mix. • EBITDA stood at Rs. 264 cr., growth of 25% YoY, but QoQ it witnessed de-growth of 11% because of increase in other expenses. • The company expects atleast 1 product approval in Q4FY21 from China market where it has filed 6 applications. The same will be commercialized in next fiscal. Management is planning to file more products in China market as it has advantage of its parent Shanghai Fosun’s wise spread network. • The company has launched 6 product SKUs (4 molecules) in core markets (USA, Europe, Canada and Australia) in Q3 FY21. Management expects 25-30 approvals every year going forward. • The company is planning to build API capabilities to backward integrate products, have better control over costs and avoid price fluctuations and shortages. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 07
Gland Pharma Contd... Outlook & Valuation – Gland Pharma reported robust Q3 FY21 numbers, with YoY growth of 33.1% in Revenue and 32.5% in PAT. We believe strong growth to continue led by new launches, penetration into newer geographies, and entry into China market. We like Gland’s business model where 96% of sales come from B2B, which means the company has long term supply contracts, with no conflict of interest with customers as company does not have its own marketing setup or any brands. The company is currently trading at the PE of 21.5x of FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 2,044 706 452 292 FY2020 2,633 955 773 50 FY2021E 3,423 1,321 1,000 61 FY2022E 4,382 1,753 1,324 81 FY2023E 5,477 2,191 1,644 101 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 08
HCL Technologies Ltd. • HCL Tech reported Q3FY21 revenues at Rs. 19,302 cr., growth of 3.8% QoQ and 6.4% YoY, For CY20 HCL has crosses $10 billion revenue milestone, Q3 growth was led by 25% YoY and 11% QoQ constant currency (CC) growth in Mode 2 business and 9.3% YoY CC growth in Products and Platform business. Revenue Guidance for Q4 at 2-3% is intact on organic basis. • In Q3FY21, Geography wise America delivered CC growth of 3.2% QoQ and 2.2% YoY, while Europe delivered 6.3% QoQ CC growth. Vertical wise Telecommunication, Media, Publishing & Entertainment made a strong comeback with 12.1% sequential growth. Other verticals like Manufacturing, Technology and Retail delivered QoQ CC revenue growth of 5.6%, 6.8% and 3.7% respectively. • Consolidated profit for the quarter jumped 26.7% QoQ and 35% YoY to Rs. 3,977 cr., led by robust EBIT margin expansion of 130 bps QoQ and 260 bps YoY. The company has also revised its margins guidance upwards from 20-21% in FY21E to 21-21.5%. • In Q3 FY21, HCL won 13 transformational deals across industry verticals, including Life Sciences and Healthcare, Technology and Financial Services. Client addition was strong during the quarter. • HCL saw a gross addition of 12,422 people, while net addition during the December 2020 quarter was of 6,597 people. Attrition as on 31st December 2020 stood at 10.2%, down from 16.8% &12.2% in 31st December 2019 & 30th September 2020 respectively. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 09
HCL Technologies Contd... Outlook & Valuation – We believe HCL is a key beneficiary of increasing IT spends globally. HCL has a good track record on client acquisition front; the deal pipeline is robust with healthy large deal wins. Further, the on-going pandemic has enforced businesses across the globe to adopt digital technology to stay competitive in this new business environment, which, in turn, has resulted in increased adoption of cloud technology. Apart from cloud, cyber security, automation, app modernisation, etc. are some of the opportunities which could see traction going forward. Also, strategic partnerships and acquisitions could give the company an edge for niche technologies and aid in client acquisitions by cross-selling, thereby increasing its top-line. The stock is currently trading at the PE of 15.9x of FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 60,427 13,918 10,120 37 FY2020 70,676 17,286 11,057 41 FY2021E 75,695 20,854 13,232 49 FY2022E 87,313 23,138 14,529 53 FY2023E 98,969 26,078 16,324 60 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 10
ICICI Bank Ltd. • In Q3FY21, net interest income rose by 16.0% YoY to Rs. 9,912cr, however Net interest margin shrank 10bps YoY to 3.67% due to reduction of yield on advances by 109bps YoY to 8.44%, which was slightly offset by lower cost of deposits (-95 bps YoY to 3.97%) • Pre-provisioning profit grew strongly to Rs. 8,820cr (+16.8% YoY), supported by lower employee costs, advertisement and sales promotion expenses. Provisioning remained high at Rs. 2,742cr (+31.6% YoY) • • PAT increased by 19.1% YoY to Rs. 4,940cr, as a result of lower tax expenses mainly due to higher gains from stake sale which is not subjected to tax. • Total advances for the quarter grew 10.0% YoY to Rs. 6,99,017cr (+7.1% QoQ) driven by domestic loan at Rs. 6,55,956cr (+13.3% YoY). Within domestic loans, Retail contribution rose 15.4% YoY to Rs. 4,58,778cr while SME went up 24.6% YoY to Rs. 27,093cr. • CASA deposits grew by 17.5% YoY to Rs. 395,416cr with average CASA ratio at 41.8% (vs. 42.8% in Q3FY20). • GNPA/NNPA stood at 4.38%/0.63% whereas the pro-forma GNPA/NNPA stood at 5.42%/1.26% (vs. 5.36%/1.12% in Q2FY21). Bank maintained healthy PCR at 86.0% (vs. 81.5% in Q2FY21) and remained well capitalized with CRAR at 17.61% and Tier-1 capital at 16.24% at the end of this quarter. • Bank has reduced 21 branches and 503 ATMs in Q3FY21. Bank has the network of 5,267 branches and 14,655 ATMs at end December 2020 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 11
ICICI Bank Contd... Outlook & Valuation – On the back of expansion in digital offerings, strong demand recovery on consumption loans, increase in disbursement of secured loans, growth in business and rural banking, ICICI bank is poised to reap benefits. Further, bank expects credit costs to normalize in FY22. The stock is currently trading at 2.5x FY23E Book Value. Rs in cr. NII PPOP PAT BV FY2019 27,015 23,438 3,363 166 FY2020 33,270 28,101 7,931 178 FY2021E 38,408 36,601 16,826 212 FY2022E 41,166 38,087 21,367 241 FY2023E 44,464 42,054 23,592 273 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 12
ICICI Lombard General Insurance Company Ltd. • ICICI Lombard General Insurance (ILGI) reported steady performance for Q3FY21. Gross Direct Premium Income (GDPI) grew 3.9% YoY for 9MFY21, while it grew 9.2% for Q3FY21. Growth in GDPI was led by Motor, Fire and Health segments. ILGI outpaced industry growth for Q3FY21, which stood at 4.9%. Operating profit in Q3FY21 de-grew 2.7% YoY because of upfronting of acquisition costs and higher claims payout. PAT grew by 23.6% in 9MFY20, whereas for Q3FY21 PAT grew by 6.6% YoY. • The solvency ratio has improved further to 2.76x from 2.74x in Q2FY21. Combined ratio improved to 99.1% in 9MFY21 compared to 100.5% in 9M FY2020 while the ratio improved to 97.9% in Q3 FY21 compared to 98.7% in Q3 FY20. ILGI’s combined ratio is much better than industry combined ratio at 103%. Return on Average Equity (ROAE) was 22.4% in 9MFY21 compared to 21.8% in 9MFY20, whereas ROAE was 17.6% in Q3FY21 compared to 20.3% in Q3FY20. • Sharp recovery across sectors has led to growth in economy, even hospitality and travel has started showing positive signs. Motor showed encouraging performance due to pent up demand, personal mobility and festive sales, while rate hike has aided fire segment growth. • Overall costs has increased, mainly because of upfronting of acquisition cost, while benefit of GDPI growth will come through the policy period. Bharti Axa merger related cost of Rs. 35 cr. has been expensed which has further impacted operating costs. • Bharti Axa merger has been approved by IRDAI, CCI and BSE & NSE. ILGI has filed application with NCLT, which has directed to take shareholders approval for scheme of arrangement. We believe merger is in its last leg, and will be effective soon. • Management is very optimistic and expects Q4 FY21 to be positive on growth perspective. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 13
ICICI Lombard General Insurance Contd... Outlook & Valuation – ICICI Lombard reported stable third quarter results where GDPI growth and combined ratio was much better than industry. Management is rightly focused on sustained profitability, prudent risk management and multi-channel distribution mix. We believe pandemic will lead to increased penetration of health insurance segment and covid-19 claims to have moderated. We remain bullish on ICICI Lombard & believe it to be a long term compounding story. ICICI Lombard is currently trading at 31.27x FY23E earnings. Rs in cr. Total Revenue Operating Profit PAT EPS FY2019 10,227 1,706 1,049 23 FY2020 11,533 2,024 1,194 26 FY2021E 11,805 2,175 1,417 31 FY2022E 13,122 2,710 1,869 41 FY2023E 15,115 3,141 2,176 48 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 14
Mastek Ltd. • Mastek delivered strong performance for the quarter, despite being seasonally weak quarter because of Christmas and New Year. Revenue grew 8% QoQ in INR terms and 7.3 % QoQ in constant currency (CC) terms to Rs. 443 cr and $60 mn respectively. EBIT margin stood at 20.8%, QoQ improvement of 253 bps, margin expansion was led by higher offshoring and lower SG&A expenses. • 12 month order backlog was at Rs. 946.7 crore as on December, 2020 as compared to Rs. 940.5 crore in Q2FY21, reflecting a growth of 0.7% in rupee terms and marginal reduction of 2.3% in constant currency terms on Q-o-Q basis and Rs 471.0 crore in Q3FY20 reflecting a growth of 101.0% in rupee terms and 93.9% in constant currency terms on Y-o-Y basis. • The company added 57 new clients during the quarter as compared to 37 during Q2FY21. Joint go-to- market strategy with Evosys is helping to win clients, as clients are getting complete bouquet of services like cloud migration and digital transformation. • The company is looking at M&A opportunities with strong cash in hand of ~ Rs. 521 crore. The USA is the key focus area for the company for the future course of the business. • The UK business has seen strong traction from the government department; UK Public sector performance grew ~40% YoY. The UK government is $12 bn market opportunity growing at 3%+ CAGR. The top four spenders which management indicated are central government, local government, health care and defense and Mastek is present in three of the top-four spenders. • Mastek and Evosys entered into a LOI with a leading professional services organization in North America under Joint Go-To Market strategy for an order value of USD 1.8 million. This is the third significant go-to-market deal this year. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 15
Mastek Contd... Outlook & Valuation – Q3FY21 has witnessed strong order backlog, robust margin expansion, strong client addition and high cash flow conversion. Strong traction is seen in UK government departments and the US retail business. After the acquisition of Evosys, the company has larger market access and is able to win large multi million dollar end-to-end transformation deals. We believe in long term growth of the company driven by access to larger market, multi-million dollar deals and inorganic expansion coupled with margin expansion and healthy balance sheet. Mastek is currently trading at 13.35x FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 1,033 132 102 41 FY2020 1,071 155 114 46 FY2021E 1,623 286 186 75 FY2022E 1,823 314 207 83 FY2023E 2,019 343 228 92 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 16
Minda Industries Ltd.
• Minda Industries (MIL) 3QFY21 consolidated revenues came in at Rs. 1850 crores, up 35.8% YoY;
driven by strong aftermarket (+55% YoY) and export sales (+25% YoY).
• EBITDA grew 61.8% YoY with margin at 14.7% (up 236bps YoY); benefit of operating leverage was
offset by high raw material cost (60% of revenue). Healthy demand coupled with higher product
value per vehicle enabled MIL to outperform industry.
• MIL introduced new products for EV (which included sensors, LED lighting, smart plugs, body
control module etc.) that would help it continue its growth prospects as and when the EV
becomes prevalent in the country; currently the share of EVs in the market is negligible but with
the product development, MIL is ready to grab the market ahead of competition.
• MIL has inked multiple JVs/acquisitions and forged several technology tie-ups to tap existing
customers for new products such as airbags, rear parking sensors, car infotainment, connected
mobility, ADAS etc.
• The company has leveraged these new products and increased its overall content per vehicle. Its
content per vehicle has increased by ~15% over past couple of years.
StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 17Minda Industries Contd... Outlook and Valuation – The company is one of the leading auto ancillary companies with a diversified mix of 2Ws (~48%) and PVs (~52%). We remain positive on the company as it is best positioned to benefit from higher increase in content per vehicle across segments led by regulatory tailwinds. The BS6 transition has led to sharp rise in switching content whereas the safety norms have made it mandatory to install premium products like parking sensors and airbags. It has further pro-actively forged several JVs/tie- ups with globally established players after sensing enormous growth opportunities in ADAS, sensors, IoT, seating systems which has the potential to strengthen the overall kit value for the company over next 3-5 years. We expect MIL to post decent set of numbers led by market share gains in legacy business with foray into new verticals like seating, ADAS and ramp up of its green-field 2W alloy wheel capacity. The stock is currently trading at 38.5x FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 5,908 725 320 11 FY2020 5,465 619 185 6 FY2021E 5,200 605 162 6 FY2022E 6,350 832 292 10 FY2023E 7,534 972 430 16 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 18
Route Mobile Ltd. • Q3FY21 Revenue from operations for Q3FY21 grew by 46% YoY and 11% QoQ, while for 9MFY21 revenue growth stood at 52% YoY. • PAT for Q3FY21 grew by 30% YoY and 14% QoQ. For 9MFY21, PAT grew by 72% YoY. • The company witnessed growing number of multi-million dollar accounts with improving client diversification. Top client now accounts for 16% of total revenue for 9MFY21 as compared to 23% in FY19 and 19% in FY20. • Deep customer engagement led to 59% growth in recurring revenue in 9MFY21 (Recurring customers are customers that have been billed in each of the months over the respective period). • New products sales in Q3FY21 witnessed sequential growth of 21%. Next generation products in the pipeline and to be launched soon include MIDaaS (Mobile Identity as a Service) and GBM (Google Business Messaging). • Route Mobile won the Gold CPaaS Provider of the Year Award in the Enterprise Telco Innovation Category and another Gold Best SMS Firewall Award in the Security & Fraud Innovation Category at the 2021 Juniper Awards for Telco Innovation. StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 19
Route Mobile Contd... Outlook & Valuation – Route Mobile reported strong Q3FY21 led by robust growth in revenues and profitability. We like Route Mobile on back of strong performance led by accelerated digitization of global economy. We estimate 32.9% revenue and 49.5% PAT CAGR over FY20-23 led by accelerated CpaaS adoption, operating leverage benefits, and value addition through inorganic growth. Route Mobile is a debt-free company with strong FCF generation. The stock is currently trading at 46x of FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 845 87 56 11 FY2020 956 101 58 12 FY2021E 1497 178 128 26 FY2022E 1872 230 163 33 FY2023E 2246 281 196 39 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 20
Voltas Ltd.
• Consolidated revenue grew by 34% YoY (flat in 3QFY20 and +13% in 2QFY21). UCP revenue was up by a
robust 40% YoY (14% in 3QFY20 and +9% in 2QFY21). UCP volume growth stood at 40% YoY (14% YoY in
2QFY21), driven by RAC volume growth of 43% YoY (11% YoY in 2QFY21).
• Commercial Refrigeration grew by 100% YoY (20% YoY in 2QFY21) and Air cooler by 11% YoY (28% YoY in
2QFY21). EMPS grew by 26% YoY growth (-8% in 3QFY20 and +15% in 2QFY21) and EPS was up 46% YoY (-
1% in 3QFY20 and +16% in 2QFY21).
• Voltas, as part of internal business restructuring, has decided to move its B2B businesses - domestic
projects (MEP/HVAC, Water), mining & construction equipment and textile machinery business to its wholly
owned subsidiary Universal MEP Projects and Engineering services Ltd (Formerly Rohini Industrial
Electricals Ltd) for a cash consideration of INR10-12b and transaction is expected to be executed on or.
before 31st March 2021 and concluded by September 2021.
• The company has announced to restructure all domestic B2B business into a 100% owned subsidiary
(Rohini Industrials). The newly incorporated subsidiary project business and the EPS business. we believe
segregation of both the business can help Voltas realize fair valuation of both its business and potentially
rerate the consumer business.
• VoltBek is a 50:50 Joint Venture between Voltas and Arçelik. With this, Voltas entered the home appliances
market. It introduced refrigerators and washing machines in 2019 and plans to focus on widening its
portfolio, ramp up distribution network and expand manufacturing capacity.
• In FY20, it has achieved ~2% market share in refrigerators and Washing Machines. Further, it targets to
achieve 10% market share in categories such as refrigerators, washing machine, microwave and
dishwashers by 2025.
StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 21Voltas Contd... Outlook and Valuation – Voltas’s room air conditioning market share has expanded to 26.8%; Voltas’s market share gain is reflection of its strong execution & scale benefits. Moreover, a stronger balance sheet and weaker economic growth are benefiting Voltas in gaining market share from peers. Given high dependence of nearly ~40% on imports in the AC industry, companies are increasingly looking to outsource to domestic players to control costs. Voltas is expected to continue its lead in the industry on the back of its market leadership, strong brand recall ,high operational efficiency and strong distribution reach. The stock is currently trading at PE of 44x of FY23E earnings. Rs in cr. Net Sales EBITDA PAT EPS FY2019 7,124 559 508 15 FY2020 7,658 614 517 16 FY2021E 6,740 510 450 14 FY2022E 8,750 780 680 20 FY2023E 9929 968 816 24 StockAxisResearch | Feb 17, 2021 Outlook 2021 Review 22
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StockAxis Research | Feb 17, 2021 Outlook 2021 Review 23Disclaimers & Disclosures contd… Opulent or its associates in the last twelve month has not: •received any compensation from the subject company; •managed or co-managed public offering of the securities for the subject company; and •received compensation for investment banking or merchant banking or stock broking services or for any product or other services from the subject company Opulent or its associates have not received compensation or other benefits from the subject company or any other third- party in connection with this report. Our salespeople and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. Opulent holding in the subject company: Nil TERMS AND CONDITIONS This report is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. The report and information contained herein are strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of Opulent. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. Opulent will not treat recipients as customers by virtue of their receiving this report. StockAxis Research | Feb 17, 2021 Outlook 2021 Review 24
Disclaimers & Disclosures contd… DISCLAIMER Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the recipient’s specific circumstances. The securities and strategies discussed and opinions expressed, if any, in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This report may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this report should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this report (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. Certain transactions, including those involving futures, options and other derivatives as well as non-investment grade securities involve substantial risk and are not suitable for all investors. Opulent, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. Opulent and its affiliated companies, their directors and employees may; (a) from time to time, have long or short position(s) in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities or earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or investment banker, lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting this document. StockAxis Research | Feb 17, 2021 Outlook 2021 Review 25
Disclaimers & Disclosures contd… This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Opulent to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. General Risk Factors An indicative list of the risks associated with investing through the services is set out below: 1. Equity and Equity related Risks: Equity instruments carry both companies specific and market risks and hence no assurance of returns can be made for these investments. 2. Price/Volatility Risk: Equity Markets can show large fluctuations in price, even in short periods of time. Investors should be aware of this and only invest in equity or equity-related products if their investment horizon is long enough to support these important price movements. 3. Clients are not being offered any guaranteed/assured returns. 4. The value of the asset may increase or decrease depending upon various market forces affecting the capital markets such as de-listing of Securities, market closure, etc. Consequently, we make no assurance of any guaranteed returns. 5. Our past performance does not guarantee the future performance of the same. 6. Investment decisions made by the Investment Adviser may not always be profitable 7. Not following the recommendation or allocation may impact the profitability of the Portfolio. 8. System / Network Congestion: Recommendation communicated via electronic modes i.e. Email exists a possibility of delivery failure, which may be beyond our control. StockAxis Research | Feb 17, 2021 Outlook 2021 Review 26
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