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Coforge has seen remarkable consistency in performance under its professional management in the past eight years. Will the next years get better with its recent acquisition and hunger for growth and razor-sharp focus on execution?
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ITC is an Indian conglomerate with diverse business interests, spanning across Cigarettes, Branded Packaged Foods, Personal Care, hotels and Agri. ITC is well diversified players with Cigarette business being a cash cow which enables incubation of new high growth business. The recent quarterly earnings were in line expectations but inflationary pressure weighed on consumption and FMCG business. ITC also offers a decent dividend yield, which can help it outperform in the near term, given the macro headwinds and elevated market volatility. Moreover, post de-merger of the asset-heavy hotel business, the return profile of ITC is expected to improve substantially.
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Bajaj Auto holds a 26% share in the global two-wheeler market and a dominant 76% share in the three-wheeler market. Bajaj operates globally through 66 distributors in 75 countries. Export market continues to holds strong potential for growth. Company is making strong progress in its EV and CNG segments.
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Repco Home Finance is an established housing finance company in South India, with over 23 years of operations, especially in Tier 2 and 3 cities. Focus on niche, small-ticket, non-salaried home loans, generates higher spreads, but has moderate credit quality of assets. Company’s outlook for loan book growth is encouraging for the coming fiscal. Given the rural focus, the recently announce higher allocation under the PMAY scheme will be beneficial for the company.
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Kajaria Ceramics is the largest manufacturer in the country. The company has made consistent investments in manufacturing, branding, marketing, & supply chain to attain high brand recall and maintain the dominant position in the building industry.
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AU small Finance Bank has had a stupendous growth journey building a secured high class asset book, a strong deposit franchisee and multiple avenues to bolster fees. The acquisition of Fincare brought high yielding assets like microfinance but also rising delinquencies as the credit cycle turned adverse. As deposit challenges linger on, asset quality has turned out to be a new headache. Can it conquer all the odds?
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IHCL is well placed to ride the hotel industry upcycle in the medium run. To tap the strong demand momentum, IHCL has lined up healthy inventory addition plans. Also new businesses of re-imagined Ginger, food culinary business Q-Min as well as bungalow stays Ama provide an additional growth trigger. Operating leverage owing to sustained pricing would also aid in earnings growth.
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The travel and tourism sector has shown resilience, unaffected by the consumption slowdown. This strength is partly due to the change in consumer preference. We believe outbound travel demand will continue to remain strong, while travel agents will require access to a platform like TBO Tek to meet their customers' travel needs. Suppliers, on the other hand, need more efficient way to market their inventory. Hence, platforms like TBO Tek are well-positioned for continued success.
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Stock of the day: VIP Industries has faced disappointing performance and market share loss since FY24. The new management is implementing strategies to reverse the decline, though results are yet to be seen. However, there are optimistic signs for a medium-term revival.
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MBL is a premium footwear retailer having a portfolio of brands to serve the entire family needs. MBL is rapidly enhancing network presence and growth prospects are encouraging in the long run. MBL is tying up with reputed global footwear players to bring in premium products to serve the growing affluent consumers in the country.
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Aditya Birla Capital (ABC) is the holding company for the financial services business of Aditya Birla group and holds majority stake in various subsidiaries, which operate mainly in the commercial and retail finance, housing finance, asset management, and life and health insurance segments. The company has been strategically growing its lending and other businesses in a calibrated manner, mining the existing customer base with more up-sale opportunities. Strong group synergies and branch expansion remain long-term drivers.
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CSB Bank is a small sized bank with business concentrated in Kerala (~35% branches) with remaining spread mainly across Tamil Nadu, Andhra, Karnataka, and Maharashtra. CSB Bank has staged a good comeback post capital infusion and change in the ownership with Fairfax becoming single largest shareholder in 2018. Backed by the strong parentage of Farifax group, more than adequate capital, relatively better asset quality and growth in gold loan portfolio, CSB bank delivered return on asset (ROA) around 1.8% and return on equity (ROE) of 17% in FY24. CSB bank has articulated its long-term vision as per which by FY 2030, bank’s loan portfolio will be well diversified with 20% in gold loans, 30% retail, 20% SME and 30% wholesale and other businesses. The bank plans to maintain over 45% of its advances in gold loan product over the near-to-medium term, and hence, most of benefits of gold loans will continue. The valuation looks attractive given the return ratios and huge growth potential on a small balance sheet.
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Founded in 1999 under the leadership of Dr Ramesh Kancharla, Rainbow is one of the large multi-specialty paediatric hospital chains in India in terms of bed capacity. It offers a range of services such as newborn and paediatric intensive care, paediatric multi-specialty services, paediatric quaternary care, obstetrics, and gynaecology
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Nazara Technologies, a diversified gaming and sports media platform with presence in India and other emerging and developed markets, is in a prime position to capitalise on the opportunities in the gaming ecosystem. The company continues to scale up its presence with meaningful forward-looking steps for the different business verticals. Gaming company Nazara Technologies is a growth-oriented company that is successfully executing an expansion strategy in a rapidly growing market. The company is actively scouting acquisitions to add new growth levers to its business.
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Home First is growing its loan book consistently, backed by buoyant demand from tier 2/3 cities and strong policy thrust. The AUM crossed the Rs 10,000-crore-mark, a key milestone, in the June quarter, and the company reiterated the AUM growth guidance of 30 percent. Affordable housing sector will be a key focus area of the government, and Home First will stand to benefit, given robust loan growth and stable asset quality.
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Bosch, a leading diesel injection system manufacturer, continues to do well. Our confidence in the company remains strong because of robust demand in the CV segment, its leadership position, and the emerging opportunities from technologically advanced products.
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Emami is a leading FMCG company engaged in manufacturing and marketing of personal care and health care products. Over 300 diverse products, includes power brands like Navratna, Brooplus, Fair and Handsome, Zandu Balm and Kesh King. Acquired Zandu pharmaceuticals, Crème 21 and Dermicool. It is well known for its aggressive marketing powered by celebrity endorsements. Emami has one of the highest spend on advertisement and publicity as compared to peers at around 18 percent of revenues.
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Navin Fluorine is the leading fluorochemicals company that has transformed itself in the last 15-20 years. It was earlier known for the refrigerant gases opportunity but has now transitioned towards niche fluorochemicals applications in the end markets of pharma, industrials, and agrochemicals. It largely operates from Dewas, Surat, and Dahej plants.
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Container Corporation of India or Concor is the largest container freight services provider in the country with a revenue base of over Rs 8,000 crores. To strengthen its foothold in the domestic and international markets, the company has outlined a capex of over Rs 8,000 crores, spread over the next 3-5 years.
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Syngene, subsidiary of Biocon, is the leading CRAMS (Contract research and manufacturing services) player of India. Its research and manufacturing facilities are located at Bangalore, Hyderabad and Mangalore. Company gets bulk of the revenue from the USA and Europe and runs dedicated R&D centres for Amgen, Baxter and BMS. In recent years, it has forayed into commercial manufacturing apart from the CRO (Contract Research Organization) services.
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Polycab India is a manufacturer of wires & cables as well as Fast Moving Electrical Goods which include products like fans, lights etc. The company is the largest player in the Indian wires & cables industry with an overall market share of 15-16 percent and continues to gain market share in the industry owing to an extensive distribution network and new product launches.
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D-Mart has strong growth prospects given the dominance of unorganised players in the industry. With robust store expansion plans and scaling up of the online business, D-Mart is well positioned to capitalise on the shift towards the organised segment. With improved product mix and enhanced operating efficiency, we expect margins and earnings improvement
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Divi’s Lab is a leading API manufacture of India, primarily known for its market share in molecules like naproxen, gabapentin, and dexamethrophan. While its performance in last few quarters has been impacted due to multiple headwinds, it is well positioned for the new earnings drivers like contrast media and completion of new facility next year
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Mahanagar gas has returned to its strong margin trajectory on the back of soft International gas prices, regulatory visibility on domestic gas price, steady growth in volume and large price differential between CNG & Petrol/Diesel.
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CSB Bank has staged a good comeback post capital infusion and change in the ownership with Fairfax becoming single largest shareholder in 2018. Backed by the strong parentage of Farifax group, more than adequate capital, relatively better asset quality and growth in gold loan portfolio, CSB bank delivered return on asset (ROA) around 2% and return on equity (ROE) of 20% in FY23. CSB bank has articulated its long-term vision as per which by FY 2030, bank’s loan portfolio will be well diversified with 20% in gold loans, 30% retail, 20% SME and 30% wholesale and other businesses. The bank plans to maintain over 45% of its advances in gold loan product over the near-to-medium term, and hence, most of benefits of gold loans will continue. The valuation looks attractive given the return ratios and huge growth potential on a small balance sheet.
