DM Stocks

2022-11-30 06:47:50 Zomato blocks on nse Open / Comment

2022-11-29 12:06:02 Large blocks done in Delhivery Open / Comment

2022-11-29 11:53:09 UBS on Apollo Tyres Open / Comment

2022-11-29 11:45:05 Bandhan Bank has lagged most MFIs in this cyclical recovery due to concentrated exposure in MFI-leveraged states and high restructuring during Covid, which eventually turned bad. While we believe MFI is not underpenetrated, especially in east India, we expect Bandhan to finally benefit from the cyclical recovery in MFI collections/growth. Its non-MFI portfolio is now growing consistently and provides some diversification. We cut our estimates by 26% for FY23 and 3-5% FY24/25CL and expect provisioning to ease from 4QFY23. We expect FY24/25CL ROEs at ~20%. Multiples at 1.6x FY24 book look cheap and hence we upgrade Bandhan Bank to BUY from O-PF on normalising MFI cycle. Open / Comment

2022-11-29 11:44:30 CLSA upgrades Bandhan to BUY from O-PF. Target 300 Open / Comment

2022-11-29 11:05:09 Asian paints above 3200 will be good traction....benefits from recent crude correction Open / Comment

2022-11-29 10:24:27 Price correction makes risk-reward favourable; US$1bn+ cash on BS (CLSA upgrades paytm...analyst meet on 1st)

Over the past two weeks, Paytm’s share price has corrected 25-30% on the back of selling by a large shareholder. While our interactions with several investors over the past four months suggests some discomfort or uncertainty on scaling up the lending business, we think that the stock warrants a look now. The company has more than US$1bn cash on the balance sheet and cash burn should end in another 4-6 quarters, in our view. Paytm trades at 16x EV/core Ebitda on an FY26 basis, discounted back to FY24. As a result, it trades at a 25-40% discount to Adyen and Block’s EV/Ebitda multiples. We keep all our estimates and TP unchanged. Upgrade to BUY from SELL with a TP of Rs650. The key near-term risk is continued selling by pre-IPO investors (which we cannot predict). Open / Comment

2022-11-29 09:27:44 MFSL Open / Comment

2022-11-29 09:20:48 ICICI Pru Life Open / Comment

2022-11-29 07:18:51 Tyres – Don’t miss out - RM prices falling, Heavy capex phase behind – Top two ingredients of tyre stock rally

Many a times I hear argument about tyre supply demand and stock prices. Let’s look at some historical facts – over FY13-15 period when tyre stocks witnessed massive rally, volume growth for industry was 3%/3%/6% in FY13/14/15.
FY17-19 was highest volume growth phase for industry but stocks remained sideways as two most important drivers of tyre stocks – RM and capex were high.

We are again going to see capex and RM becoming favourable

Raw Material prices falling now
Natural rubber prices on Singapore exchange in 3QFY23 so far 24% lower than average over 4QFY21-1QFY23
Kerala Natural rubber prices in 3QFY23 so far are 11% lower than 4QFY21-1QFY23
Styrene and Butadiene (components of synthetic rubber) are 17-18% lower

So 3QFY23 onwards, every quarter we will see margin improvement

Heavy capex phase behind
Over last 6 years, industry capex ballooned due to shift towards radial in truck segment and greenfield plants by Apollo, Ceat and MRF.
TBR capex is going to moderate going ahead and it will be all brownfield expansion over next 3-4 years, so capex for industry will be significantly lower.

Apollo Tyres spent ~Rs 23bn capex per year over FY16-22, which is going down to Rs 12bn in FY23-24 and even in FY25, unlikely to be more than Rs 18bn at much larger EBITDA base.
Ceat capex will also moderate from next year

We are seeing one big change as well that companies are talking about deferring capex due to low ROIC whether its Apollo or Ceat or JK Tyre.

Don’t miss out
We remain extremely bullish on tyres and have 3-year Sep’25 PT of Rs 597 on Apollo Tyres and Rs 3,654 on Ceat.
We like these two most as they have spent maximum on R&D over last 5-7 years and is reflecting in market share gains in PCR and TBR.

On lighter note, in 2016 at peak of tyre stocks, people were saying why should not tyre companies trade at higher multiples as these are B2C business. I am sure in 2026, I will hear same comments Open / Comment