UltraTech Announces Its Foray In C&W With Capex Of Rs18 bn Over Next 2 Years
Assuming 4-5x Asset Turnover, Ultratech’s Revenue Potential Can Be Est At 5-7% Of C&W Ind In FY29
Power Transmission, Industrial Cables Generally Require 2-4 Yr For Prequalification
Foresee Lower Competitive Impact On Polycab Vs Housing / B2C players FNXC / HAVL
Key Pick Polycab
MS On Cable & Wire
Cable & Wire: New Competition
Surprised, but not concerned for C&W coverage
There Are Differences In C&W Vs Paints Sector
Jefferies On UltraTech
Buy Call, Target Price Rs13,265/sh
Announces A Surprise Entry Into Cables/Wire Segment With Target Capex Of Rs18 bn
No Specific Inputs Are Available On Product Profile/Target Segments
Co Expects To Leverage Its Mfg Expertise & End-
Customers Connects To Scale Up New Segment
Capex Is Relatively Small & Appears More Like Deployment Of Burgeoning EBITDA/CF Profile Of Co
Any Knee-Jerk -Ve Reaction Should Be Used As Buying Opportunity
CLSA on Ultratech
Revenue Potential: Could generate 4x-5x revenue growth with an 11%-13% margin.
Industry is already seeing Rs 100 billion capex over 2-4 years. UltraTech’s entry adds further expansion pressure, requiring an 11%-13% CAGR demand growth to absorb the new capacity.
More competition could affect overall profitability in the sector
Expect Ultratech will focus more on wires than cables
Nuvama on Ultratech
UltraTech’s entry into the W&C segment is expected to have only a modest impact, contributing less than 5% to the total industry by FY28 or later
Challenges for UltraTech-Fragmented market, Distribution complexities and Regulatory approvals
CITI on Ultratech
Small in overall context-foray in wires and cables could hurt positioning as cement pure play
Net debt stood at Rs 16200cr posy India Cements offer
Expected spends of Rs 1800cr would account for 13% of cumulative free cash flows in next 2 years
Business could generate revenue of >Rs 1200cr (14% of estimated FY27 revenue)
MS On UltraTech
Overweight Call, Target Price Rs13,650/sh
Co Announces Entry Into The Cables & Wires Segment With Initial Capex Of Rs18 bn
it’s A Positive Strategic Dvpt, Given Segment’s Strong Growth & High Margin
Existing Strong In-House Distribution Network And End-Customer Connect
Equirus on SRF
Add Call, Target Price Rs2,800/sh
Specialty Chemical Segment Is Expected To Remain Flat To Positive In FY25
Capacity In Place To Double The Business
Strong Traction In New Products Has Partly Offset Pricing Pressure On Older Ones
Active Ingredients Are Set To Ramp Up Over The Next 2-3 Years
Pharma Business Is Poised For Significant Growth
Ref Gas Prices Remain Firm In Both Domestic And Export Market
Newly Announced R32 Capacities Are Unlikely To Cater To Domestic Markets
Jefferies On SRF
Underperform Call, Target Price Rs2,060/sh
Mgmt Expects Specialty Chem To Grow YoY In FY26
As New Agrochem AIs & Pharma Products Move To Commercialisation
Domestic Ref Gas Prices Should Remain Firm On Strong Demand
Export Prices Come Down As Contracts Are Renegotiated
Expect A Gradual Recovery & Are 16-17% Below Consensus On FY26/27 EPS
Valn At 47x Fwd PE Is > +2 SD On Historical, Making Risk-Reward Unfavorable
Nuvama On HDFC AMC
Realignment Of Distribution Commission Led To An Improvement In Yield
Expect To Moderate The Pace Of Decline In Yields
Key Indicator Of Investor Sentiment, SIP Inflows Remains Strong
SIP Market Share Slipped As HDFC AMC Discontinued New SIPs In Its Defence Fund
New Asset Class To Be An Additional Growth Driver
Jefferies on HDFC AMC
Maintain Buy, TP 4750 (FROM 5000)
Management highlighted that gross SIP flows might see some moderation in the near-term
But the structural story remains intact.
Fintechs continue to dominate the channel for SIPs, with ~65% share in incremental volumes.
AMC’s relative performance vs peers across key categories has been better.
Commission rationalization to help slow down yield decay.
Trim ests for FY25-27 by 6-9% to factor impact of mkt fall.
Nuvama On Spicejet
Hold Call, Target Price Cut To Rs52/sh
Q3: EBITDAR Flattish YoY On Low Base; Yields Jump 18% YoY
SJ’s Lack Of Transparency In Sharing Key Operational Data Stays A Major Concern
Q3 Yields Jumped 18% YoY On Better Route Mix While Q2 Yields Fell 4% YoY
ASKM Crashed 41% YoY In Q3 & 30% In Q2 On AoG Rise
Revival Likely To Be Gradual Post-QIP With Turnaround A Key Monitorable
Cutting FY25E/26 EPS By 14%/13% On Operational Softness
Nomura On Alkem Labs
Upgrade To Buy Call, Target Price Cut To Rs5,430/sh
Recent Underperformance Can Be Attributed To Slower Revenue Growth
Slower Revenue Growth Both In Its Domestic & International Segments
Investments In New Segments Of Biologic CDMO & Medtech
Negative Impact To EBITDA Margin And Limited Visibility On Upside
Market Concerns Around Potential Tariff Imposition By US On Generic Pharmaceuticals
Stake Sale By One Of Promoters
Stock Currently Trading At 21.2x 1-yr-fwd EPS & Concerns Are In The Price
MS On Bharti Airtel
Equal Weight Call, Target Price Rs1,650/sh
Co Confirms That It Is In Bilateral Discussions To Combine Tata Group’s DTH Biz & Its Own DTH Biz
Such Events Have Binary Outcomes & Could Swing In Either Direction
It Would Imply Consolidation & Will Strengthen Bharti’s Industry Positioning
UBS on Bharti Airtel
Maintain Neutral, TP 1705
Airtel is likely to hold 52-55% in merged entity
Total of 35mn subscribers (Tata Plat 19mn/Airtel 16mn)
Airtel likely to hold 58% of overall 60mn subscribers
Tata Play’s FY24 revenue was Rs 4300cr and net loss of Rs 350cr
Airtel’s TV revenue was Rs 3000cr and EBIT of Rs 270cr
MS on Titagarh Rail
Maintain Overweight, TP at 1090 (from 1300)
Freight-Inadequate wheels sets from Indian Railways constrain Q3 offtake
Passenger-Execution in Vande Bharat delayed by 9 months by a change in car design plan
Near term execution challenges affect revenue trajectory
Passenger segment has won no orders since October 2023
Execution in Ahmedabad metro will be begin in Q1FY26 (vs Q4FY25 previously)
Lower FY25/FY26 Earnings by 14%/7%
Jefferies on Jubilant Foodworks (Wish List for management meeting)
Maintain Buy, TP 1000
Set to host its maiden analyst meet on Feb 27
Industry trends and outlook in QSR industry
Issues ailing dining business and steps to revive it
Risk and opportunities on food platform aggregators like Zomtato, Swiggy
Pizza competitions especially on offerings and prices
Further clarity on M&A and Insights on journey of Popeyes
Jefferies on Hotels
January RevPar up 16% YoY in January-STR Data
Strong growth in RevPar reflects strong underlying travel trends and growth in MICE segment
Growth on back of marriage season and corporate travel
Base is relatively favourable for strong growth to continue in Q1FY26
Managements are expecting are strong Q4
Top picks are ITC Hotels and IHCL
Alert-MICE is Meetings, Incentives, Conferences, and Exhibitions
MS on FPI
FPI flows matter because of what they can do to macro conditions
Thinks share prices are likely troughing as is growth-that could spur a reversal in FPI sentiment
Share prices depend on growth and not on flows
Financials will lead the way out of the corrections
India is on the cusp of a recovery in lending, capex and consumption
FPIs have made strong equity return in lon run, although underperformed MSCI India Index over past 3 years
Kotak Institutional Equities on Hindalco
Upgrade to Buy, TP Raised to Rs 725
Misplaced concerns make risk-reward attractive
Believe concerns around scrap spread, tariffs in US & aluminum prices on Hindalco/Novelis are overblown. Scrap spreads bottomed in 3Q & unlikely to worsen further
Pass-through sales agreement at Novelis would protect against potential tariffs, & scrap benefits should expand as seen historically
Upcoming expansion projects should put India biz back on growth path
