Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Posted On: 2021-02-23 23:06:45 (Time Zone: Arizona, USA)

Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

HDFC Securities Institutional Equities (HSIE) hosted the 4th Annual Infrastructure - Investors Forum on 18/19th Feb 2021, though virtual this time. We had attendees from 12 large listed Industrials/Infrastructure companies represented by Promoters, CEO/CFO/IR teams. After almost a decade, there is 'strong/consensus optimism' building up for the Indian Infrastructure story. Ordering has moved beyond roads with focus now on health, education, portable water, renewable energy, manufacturing expansion, uptick in real estate cycle and all this is coinciding with relatively lower crude prices, lowest interest rate and improving GDP/Tax collection. Companies remain bullish whilst valuation is still at 40-50% discount to cross cycle mean. We maintain constructive as envisaged in our thematic 'On Road to Rerating' and 'Triggering a New Cycle'.

All-round bullish commentary, cyclical uptick present unique opportunity: Bid pipeline is the key barometer of cyclical sector growth longevity and, unexpectedly, Union Budget 2021 has given the sector a longer rope and set the tone for higher awarding over the next few years. With over two years left for the next general elections, emphasis will be on awards. Whilst roads have been the key order book driver for most EPC companies, new segments, viz., buildings, water infra, mega projects like HSR, railways, metro, solar, manufacturing etc. are now set to take a big leap. This presents a unique opportunity for diversified plays to gain market share.

Structural changes in supply chain to aid formalisation, BS health: Most of the attendees highlighted that COVID-19 pandemic has adversely impacted 1HFY21, 3QFY21 marked a gradual return to normalcy. Further, 4QFY21 will set the base to pre-COVID levels of operation and growth recovery will pan out from FY22E. The first order impact of COVID-19 has led to shrinkage of creditors days and further consolidation of supply chain. The key takeaways from the conference are: (1) the clients will have to adjust to new equilibrium as EPC players will not take further load on BS; (2) working capital is expected to improve as even the government understand that it's difficult to get work done, given the supply chain issues and many projects have interest-free advance to aid site mobilisation.

Asset monetization, equity recycling to aid deleveraging: Within our coverage universe, we are seeing increased interest from road investment platforms to tie up with reputed developers at under-construction stage for the HAM assets. Relaxation in complete exit by developer at COD+6months will further accelerate cash inflows. We see FY22/23E as an asset monetisation year for most developers with HAM/BOT exposure. This shall lead to rerating of the asset heavy corporates.

Valuation has rerated, full potential still some time away: At HSIE, we have been highlighting a case for valuation rerating building up (please refer our thematic 'On Road to Rerating' and 'Triggering a New Cycle'). Whilst there has been serious rerating for most of our coverage universe, the valuation is still at meaningful discount to long-term median averages (core P/E ~7x FY23E vs 12-15x 1-yr forward). We believe this cycle is backed by (1) government infra program, (2) states captive projects awards, (3) low interest and crude prices, (4) asset equity recycling and (5) strong balance sheet. We remain constructive over the next few quarters. TOP PICKS: LT, KNR, PNC Infra, Ashoka, NCC, Capacite Infra, ITD and KPTL.

Source: Equity Bulls

Click here to send ur comments or to

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., 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. 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:

Nestle India 1QCY21 results - Views by Himanshu Nayyar, Lead Analyst - Institutional Equities, YES SECURITIES

ICICI Prudential Life Insurance - Q4FY21 Result Update - YES Securities

Power: Sector Thematic - Reforms essential for renaissance - HDFC Securities

ACC 1QCY21 Results Review Report - Strong margins! - HDFC Securities

ICICI Prudential Life 4QFY21 Results Review Report - Strong micro; challenging macro - HDFC Securities

ACC Ltd - Q1CY21 Result Update - YES Securities

ICICI Prudential Life Insurance - Business momentum upwards; valuations remain attractive - ICICI Securities

Multiplex - Business disruption again - learnings and better cash position to help - ICICI Securities

ACC - Strong show led by lower costs - ICICI Securities

Brookfield India REIT - Building a strong edifice - ICICI Securities

Q4FY21 Result Preview - Oil & Gas - ICICI Direct

Q1CY21 Result Update - ACC Ltd - ICICI Direct

ACC Q1CY21 Results - Views by YES SECURITIES

Comments on Rupee from industry experts - April 19, 2021

Autos & Logistics 4QFY21 Results Preview - HDFC Securities

ADD on Mindtree - Gaining momentum - HDFC Securities

ICICI Lombard 4QFY21 Result Review - HDFC Securities

Mindtree - Q4FY21 Result Update - YES Securities

ICICI Lombard - Q4FY21 Result Update - YES Securities

HDFC Bank - Q4FY21 Result Update - YES Securities

Mindtree - Subtle downgrade in outlook! - ICICI Securities

SBI Cards and Payment Services - Play on monetisable payments growth - ICICI Securities

ICICI Lombard General Insurance Company - Cyclical recovery can protract; fundamentals remain intact - ICICI Securities

HDFC Bank - Resilience and consistency displayed to its core - ICICI Securities

Home First Finance Company - Tech-led affordable housing play at affordable valuations - ICICI Securities

Q4FY21 Result Update - Wipro Ltd - ICICI Direct

ICICI Direct - Covid Recovery Pulse - E-Way bill generation ends March 2021 on strong note...

Derivatives Strategy - Positional Future - ICICI Direct

Gladiator Stocks - Escorts - ICICI Direct

Q4FY21 Company Update - Tata Metaliks - ICICI Direct

Q4FY21 Result Update - MindTree Ltd - ICICI Direct

Q4FY21 Result Update - HDFC Bank - ICICI Direct

ICICI Direct Derivatives Weekly View (April 16): Sustainability above 14700 may trigger fresh uptrend...

Market Outlook - Technical - By Dharmesh Shah, Head - Technical, ICICIdirect

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, on Monsoon outlook

ADD on Wipro - Improving growth visibility - HDFC Securities

Building Materials 4QFY21 Results Preview - Strong demand to support robust margin - HDFC Securities

Consumer Discretionary 4QFY21 Results Preview - Bargains few and far between - HDFC Securities

Consumer Durables 4QFY21 Results Preview - HDFC Securities

Wipro - Q4FY21 Result Update - YES Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, on March 2021 Monthly Trade Balance

Wipro - Q4FY21 Result Update - Lofty multiples leave limited margin of safety - ICICI Securities

FMCG & Alco Bev 4QFY21 Results Preview - HDFC Securities

Maintain BUY on Infosys - Q4FY21 Results Review - Buy the dip - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, on March 2021 WPI Data released today

Non-leveraged financials 4QFY21 Results Preview - HDFC Securities

Infosys - A reality check! - ICICI Securities

Infosys - Q4FY21 Result Update - YES Securities

Polymer price tracker - PVC prices continue to rise - April 15, 2021 - ICICI Securities

Bharti Airtel - Restructuring aimed at digital biz, AGR-tax efficiency - ICICI Securities

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

disclaimer copyright © 2005 - 2020