Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Posted On: 2020-11-22 08:50:53 (Time Zone: Arizona, USA)


Balkrishna Industries' (BIL) key export markets continue to witness strong demand (Oct'20 industry exports grew: 17% YoY). The industry growth momentum remains higher than our H2FY21 constant currency growth expectations for BIL of ~7% YoY. The latest industry export data (Oct'20) continues to be driven by agri (Ag) demand (up ~33%), while OTR witnessed a cool off with ~5% decline. Interesting to note, the USA region witnessed demand slack across segments (OTR+Ag: down 16%) which may be due to political uncertainty. The latest export data continues to support the V-shaped demand rebound, YTD exports are up 5% led by Ag (up 15%). On a regional basis, in Oct'20, growth was led by EU region (up 30%). As BIL reaches peak utilisation in FY23 we expect it to clock best in class RoICs of >30%, justifying its superior valuation. Maintain BUY.

- Overall export rebound continues as agri propels higher growth: Agri tyre and OTR tyre segments combine grew at a healthy 17% YoY in Oct'20 on solid prior year base. On an end-product basis, growth acceleration continued in Ag tyres (up 33%) and contributed ~66% of total exports (up 800 bps). On OTR side, growth momentum softened a trickle as it declined ~5% in Oct'20.

- EU growth surge continues: On a regional basis, EU continues to deliver strong growth (Ag+OTR) at ~30% YoY, while the rest of the world (RoW) also grew ~28% YoY. The two regions together represent ~81% of Oct'20 exports. On the flip side, the USA region declined ~16% YoY (Ag dropped ~7% while OTR declined ~25%). Growth in EU exports was driven by France, Italy and Poland (together up ~90% YoY). These three countries contributed ~15% and ~29% to the overall exports and exports to EU, respectively. In rest of the world (RoW), Australia and Argentina reported strong growth (up 192%/390% YoY, respectively). On a sub-segment basis, OTR growth was driven by EU region (up ~8% YoY / ~34% contribution) while US declined ~25% (~26% contribution). However, on agri side, EU and RoW regions grew rapidly (up ~38% and 62%, respectively).

- Agri exports recovery covers up the Covid-19 pandemic shock: After the initial Covid-induced demand shock (~23% decline) in Q1FY21, exports have since grown ~28% YoY. This has led to the overall industry clocking ~5% growth YTD. The pace of recovery has been quite sharp, surprising most investors. We believe outlook for global Ag exports continues to remain strong under the rising commodity price environment. OTR demand is also likely to be aided by infrastructure investments in key developed markets in FY22 and beyond.

- Maintain BUY: We expect strong FCF generation of ~Rs28bn over FY22E/23E. We raise our multiple to 24x (earlier: 22x) Sep'22E EPS of Rs75.9 on the back of growth surprise to arrive at our target price of Rs1,892 (earlier: Rs1,735). Maintain BUY.

Shares of BALKRISHNA INDUSTRIES LTD. was last trading in BSE at Rs.1616.9 as compared to the previous close of Rs. 1596.8. The total number of shares traded during the day was 60583 in over 5131 trades.

The stock hit an intraday high of Rs. 1659.5 and intraday low of 1596.35. The net turnover during the day was Rs. 98604202.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

HDFC Bank Q3 FY21 - 'Stellar Show' - Retain BUY and raise 12m PT to Rs1870 - YES Securities

IPO Review - Indian Railway Finance Corporation (IRFC) - ICICI Direct

HCL Technologies - Q3FY21 First Cut - ICICI Direct

Logistics Sector Update - Indian Railways - getting aggressive - HDFC Securities

Indigo Paints - IPO view - YES SECURITIES

Infosys - Near-term margins will likely come under pressure - ICICI Securities

CESC - 7% dividend yield + higher ESG rating - ICICI Securities

South Indian Bank - Unveils vision 2024; targets RoA / RoE of 1% / 13% by 2024 - ICICI Securities

Maintain BUY on Infosys - Growth certainty on explosive deal wins - HDFC Securities

Maintain ADD on Wipro - Growth acceleration - HDFC Securities

Consumer Durables - Q3FY21 Results Preview - HDFC Securities

Q3FY21 Company Update - Filatex India - ICICI Direct

Q3FY21 Result Update - Wipro Ltd - ICICI Direct

Q3FY21 Result Update - CESC - ICICI Direct

Monthly Inflation - December 2020 - ICICI Direct

Q3FY21 Result Update - Infosys - ICICI Direct

Banks Q3FY21 Results Preview - Scope for optimism beyond a tepid 3Q - HDFC Securities

Consumer Discretionary Companies - Q3FY21 Results Preview Report - HDFC Securities

Pharma Sector Update - Ample catalysts to sustain luster - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on IIP data

Infosys - Q3FY21 First Cut - ICICI Direct

Wipro - Q3FY21 First Cut - ICICI Direct

HDFC Securities - Real Estate Q3FY21 Results Preview - Has COVID triggered a new cycle?

Industrials Q3FY21 Results Preview - Normalisation done, growth awaited - HDFC Securities

FMCG & Alco Bev - Q3FY21 Results Preview - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on December 2020 CPI Data

Cement & Building Materials (Tiles) - Results Preview - Robust Performance on Improved Volume - Reliance Securities

Automobile & Auto Ancillary - Results Preview - Strong Results on Healthy Volume Performance in 3QFY21 - Reliance Securities

Q3FY21 Result Update - Tata Consultancy Services - ICICI Direct

Q3FY21 Result Preview - Real Estate & Infrastructure - ICICI Direct

Q3FY21 Result Update - Avenue Supermarts - ICICI Direct

Q3FY21 Result Preview - Metals & Mining - ICICI Direct

Insurance and Capital Markets Companies Q3FY21 Results Preview - Stronger earnings expected across sectors - HDFC Securities

Capri Global Capital - Getting back to normalcy - ICICI Securities

Avenue Supermarts - Fast recovery; there are speed breakers though - ICICI Securities

Tata Consultancy Services - Steady state growth / margins are yet to be seen! - ICICI Securities

Q3FY21 Result Preview - FMCG - ICICI Direct

Cement Sector - Q3FY21 Results Preview - HDFC Securities

Avenue Supermart Q3FY21 Results - Views of YES SECURITIES

The Phoenix Mills - Festive season ushers in consumption revival - ICICI Securities

Quant Pick - Zee Entertainment - ICICI Direct

Q3FY21 Result Preview - Auto and auto ancillary - ICICI Direct

Q3FY21 Result Preview - Capital Goods & Power - ICICI Direct

Q3FY21 Result Preview - Consumer Discretionary - ICICI Direct

Q3FY21 Result Preview - Banking & Financial Services - ICICI Direct

Q3FY21 Result Preview - Cement - ICICI Direct

Stock Tales - Esab India - ICICI Direct

TCS - Q3FY21 First Cut - ICICI Direct

NHPC - Receivables decline; pending issues cleared - ICICI Securities

ICICI Securities - Telecom - Bharti Airtel to outperform yet again...



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020