Post on 19-Sep-2020
transcript
Page 1
SPARK RESEARCH
03 December 2015
WHAT’S INSIDE
Diesel Generators – Dealer Checks
Exchange & Currency Performance
Spark Focus Stocks
Technical Indicators
Spark Model Portfolio
Today’s News and Announcements
Find Spark Research on Bloomberg (SPAK <go>),
Thomson First Call, Reuters Knowledge and Factset
Dealer feedback on diesel generators’ demand/pricing and competition
Particulars South India West India North India East India
Demand environment in Oct – Nov’15 Picking-uo Moderate Picking-up Moderate
Y-o-Y volume (growth/de-growth/flat) Growth Flat Growth flat
Competition intensity
(increased/decreased/same)Same Increased Same Same
Price cuts/discounting happening (Yes/No) Yes Yes Yes Yes
Comments
Improved demand from
commercial real estate has
resulted in pick-up in
demand for large kVA
rating engines
Market situation is in the
process of bottoming outDemand from
commercial real estate
has seen signs of pick-
up. Dealers hopeful of
recovery in residential
market too
Demand has stayed flat yoy from a low
base . Demand is from Govt. buildings,
hospitals, labs,etc
Industrial demand is
sporadic. Traction for
Pharma, IT has been
healthy
Competitive intensity from
Perkins (distributed by
Sterling and Wilson) has
increased for KKC GOEMs
Financing of genset purchase by
manufacturers (Mahindra Finance for
Mahindra Powerol genset) has impacted
KOEL’s growth
Page 2
SPARK RESEARCH
03 December 2015
Exchange and Currency Performance
Today 1d 5d 1m 3m 6m 12m Today 1d 5d 1m 3m 6m 12m
US (Dow Jones) 17,730 -0.9 -0.5 -1.1 8.3 -1.9 -1.0 -3.4 15.4 Dollar Index# 100.1 0.1 0.3 3.0 3.9 4.9 12.6 -0.4 14.3
UK (FTSE100) 6,421 0.4 1.3 0.6 3.7 -7.6 -4.4 -9.9 11.3 Pound 1.5 -0.1 -1.1 -3.2 -2.1 -2.7 -4.8 -6.3 2.5
Japan (Nikkiei 225) 19,895 -0.2 -0.2 6.5 9.4 -2.8 12.3 -5.0 19.9 Yen 123.3 -0.1 -0.6 -1.8 -2.6 0.8 -2.9 -2.0 6.7
Germany (DAX) 11,190 -0.6 0.2 2.2 8.5 -2.0 12.2 -9.7 21.4 Euro 1.1 -0.2 -0.1 -3.4 -4.7 -6.0 -13.9 -15.7 1.3
Brazil (IBOV) 44,915 -0.3 -4.2 -6.5 -5.2 -16.1 -14.2 -23.3 5.1 Real 3.8 0.4 -2.4 0.5 -2.0 -18.4 -33.0 -9.7 50.5
Russia (Micex) 1,770 -0.2 -3.5 0.4 3.5 8.7 10.2 -5.5 35.1 Ruble 67.5 -0.1 -2.4 -7.2 -1.5 -19.5 -21.2 -14.8 40.1
India (Sensex) 26,118 -0.2 0.6 -1.8 1.4 -2.7 -8.2 -13.0 5.2 Rupee 66.7 -0.2 -0.2 -1.6 -0.7 -4.2 -7.2 -0.3 8.8
China (SHCOMP) 3,550 0.4 -2.4 7.0 12.3 -27.7 27.7 -31.5 29.8 Renminbi 6.4 0.0 -0.2 -1.0 -0.7 -3.2 -3.9 -0.8 4.1
South Africa (Jalsh) 51,159 -0.7 -1.5 -5.4 1.5 -1.3 2.6 -7.6 9.9 Rand 14.4 -0.2 -0.6 -4.5 -5.7 -14.4 -22.0 -0.8 28.9
HK (H S I) 22,407 -0.3 -0.4 -0.7 7.0 -19.0 -4.4 -21.6 10.0 HK Dollar 7.8 0.0 0.0 0.0 0.0 0.0 0.0 -0.3 0.0
Korea (Kospi) 1,989 -1.0 -2.0 -2.9 3.8 -3.6 1.0 -9.2 10.5 Won 1,168.4 -0.3 -1.8 -3.0 1.9 -5.5 -4.8 -3.3 9.7
Singapore (Straits) 2,862 -0.8 -0.8 -4.6 -1.5 -14.6 -13.4 -19.4 4.4 SG Dollar 1.4 0.0 -0.2 -1.1 0.3 -4.9 -7.0 -1.7 8.5
Malaysia (KLCI) 1,674 -0.2 -0.5 -0.2 4.5 -4.3 -4.8 -10.4 11.3 Ringgit 4.2 -0.4 -0.6 0.9 0.0 -13.3 -18.9 -5.2 23.4
Indonesia (Jakarta) 4,536 -0.2 -1.3 0.1 2.3 -11.6 -12.2 -17.9 12.5 Ind Rupiah 13,828.0 -0.3 -0.6 -1.9 2.5 -4.3 -11.0 -6.7 12.5
Commodities Commodities
Brent ($/bbl) 42.7 0.5 -6.1 -15.5 -15.8 -33.1 -38.9 -40.3 1.1 Indonesian Coal ($/MT) 54.4 NA NA -5.2 -8.0 -10.9 -17.2 -19.7 0.0
WTI ($/bbl) 40.1 0.5 -6.8 -17.8 -17.4 -34.5 -42.2 -42.7 0.7 S Africa Coal ($/MT) 61.0 NA -3.7 -7.6 -6.9 -16.7 -26.4 NA NA
Copper ($/MT) 4,568 -1.6 0.1 -11.1 -11.1 -24.2 -29.4 -30.4 1.2 Australia Coal ($/MT) 61.8 NA -1.0 -0.6 -4.4 -11.9 -25.4 NA NA
Zinc ($/MT) 1,530 -1.7 -2.1 -7.8 -15.5 -28.8 -30.7 -36.8 3.0 Gold Spot $/Oz 1,053 -0.1 -1.8 -5.8 -6.5 -11.2 -13.0 -19.5 0.6
Aluminium ($/MT) 1,478 1.1 1.9 1.1 -6.4 -13.1 -25.5 -26.2 3.8 GOLD INDEX (Rs./10g) 25,164.0 -0.3 -0.5 -4.6 -5.3 -6.5 -4.1 -10.7 2.5
Iron Ore ($/MT) 41 -4.0 -7.5 -18.4 -28.3 -33.8 -42.2 -69.2 0.0 Silver Spot $/Oz 14.0 -0.3 -2.2 -8.6 -5.1 -15.5 -14.9 -24.4 0.9
Lead ($/MT) 1,650 0.2 2.5 -1.9 -2.9 -13.6 -18.5 -23.0 6.2 MCX Silver (Rs./KG) 33,698.0 -0.1 -0.3 -6.6 -2.1 -11.4 -6.4 -15.7 1.3
Asian Asian
Chg.
from
52WH
Chg.
from
52WL
Developed Developed
BRICS BRICS
Global Indices
Equity Performance (%) Chg.
from
52WH
Chg.
from
52WL
Currency
Currency Performance (%)
Performance (%) Performance (%)
Page 3
SPARK RESEARCH
03 December 2015
84 74 83
281
59 124
31 26 25
54
32
57 74 92 85
(11)
98
81
(50)
-
50
100
150
200
250
300
350
400
1M avg2-Dec1-Dec30-Nov27-Nov26-Nov
Rs. b
n
FII DII Others
NSE / BSE Category wise turnover
Exchange and Currency Performance
Bulk Deals (INR Mn)
Date Scrip Name Client Name Type Quantity Price
2-Dec-15 Visa Steel Cresta Fund BUY 3,300,000 15.1
2-Dec-15 Visa Steel Visa Infrastructure SELL 3,300,000 15.1
2-Dec-15Ess Dee
AluminiumMacq Emg Mkts Asian Trading BUY 173,652 306
2-Dec-15Ess Dee
AluminiumStandard Chartered Bank (Mauritius) SELL 173,652 306
Last 5 Day FII Buy FII Sell Net DII Buy DII Sell Net
2-Dec-15 37.1 36.5 0.6 12.4 13.2 -0.8
1-Dec-15 41.0 42.0 -1.1 13.4 11.4 1.9
30-Nov-15 135.4 145.8 -10.4 29.8 23.8 6.0
27-Nov-15 26.8 32.0 -5.2 20.7 11.7 9.0
26-Nov-15 59.8 63.8 -4.0 33.4 23.9 9.5
Market Activity FII & DII - Provisional (INR Bn)
Particulars Today 1D 1M 3M 6M 12M
Reverse Repo 33 67 82 54 66 32
Repo 148 86 - 67 100 136
MSF 21 15 25 - 9 7
Net liquidity (135) (34) 57 (13) (43) (111)
Change in BPS
NSE MIBOR 6.78 (7) (55) (42) (99) (136)
1M CP 7.59 7 14 8 (43) (76)
3M CP 7.79 4 7 (3) (41) (74)
6M CP 8.10 10 18 (4) (41) (68)
3M CD 7.26 - 11 (23) (87) (108)
6M CD 7.46 9 24 (19) (81) (101)
12M CD 7.62 3 17 (25) (71) (104)
Change in BPS
India 10 yr 7.74 2 11 (1) 2 (23)
US 10 yr 2.18 (0) (3) 2 (19) (10)
Spread (India 10Y-US10Y) 556
India 10YR AAA corp 8.29 (1) 8 (15) (18) (37)
Spread (India 10Y-AAA10Y) 55
91D T.Bills 7.14 - 4 (29) (71) (113)
1Y T.Bills 7.21 1 4 (32) (51) (100)
Call rate 6.65 (5) (1) (47) (59) (128)
Change in BPS
LIBOR 0.20 (13) (33) (65) (61) (133)
MIFOR 7.27 8 (6) (38) 29 37
OIS 7.25 (3) (4) (12) 20 25
12m OIS fwd 7.11 - 4 (17) (44) (73)
Money Market Rates
Liquidity (Rs. Bn)
LIBOR, MIFOR
Bond Market
Rank Company Delivery % 30D Del. % Price Chg
1 INDUSIND BANK LTD 76.3 58.5 0.0%
2 HERO MOTOCORP LTD 75.4 47.6 -0.1%
3 ITC LTD 73.6 68.3 0.9%
4 ULTRATECH CEMENT LTD 71.2 58.3 -0.5%
5 MAHINDRA & MAHINDRA LTD 70.8 60.7 0.1%
6 GRASIM INDUSTRIES LTD 70.5 49.5 0.6%
7 TATA CONSULTANCY SVCS LTD 69.3 67.0 0.1%
8 MARUTI SUZUKI INDIA LTD 67.7 55.7 1.4%
9 UNITED SPIRITS LTD 66.0 49.7 -0.6%
10 INFOSYS LTD 65.9 61.3 -1.7%
Nifty Top 10 Deliveries
Page 4
SPARK RESEARCH
03 December 2015
Spark Focus Stocks
30 D Volume
1D 1M 3M 1Y FY16E FY17E FY16E FY17E
ASHOK LEYLAND LTD 92.4 (0.6) 2.8 5.9 68.7 10001.4 10174.7 (0.0) 44.6 28.6 19.8 12.2 9.4 Add
AMARA RAJA BATTERIES LTD 878.1 0.8 0.3 (9.9) 16.1 170.2 183.7 (0.1) 56.9 29.3 22.6 18.2 14.5 Add
GATEWAY DISTRIPARKS LTD 335.7 (1.1) (1.2) 0.7 5.0 92.7 91.1 0.0 56.0 16.2 12.6 9.7 7.9 Buy
KAVERI SEED CO LTD 419.4 1.0 (11.4) (5.7) (50.0) 67.6 181.2 (0.6) 26.4 11.3 8.9 9.2 7.1 Buy
SUNDRAM FASTENERS LTD 156.1 (1.2) (2.8) (4.5) (18.8) 25.9 67.1 (0.6) 62.3 15.4 12.5 10.1 8.7 NA
WABCO INDIA LTD 6170.1 (1.5) (9.4) (8.6) 40.3 8.4 5.7 0.5 88.5 54.2 36.2 36.0 24.7 Add
CHOLAMANDALAM INVESTMENT AND 639.8 (1.9) (0.6) 7.3 34.8 67.1 110.0 (0.4) 84.7 3.3 3.1 3.3 3.1 Buy
CITY UNION BANK LTD 85.6 0.2 (3.0) (8.2) (7.7) 861.4 551.7 0.6 78.4 1.8 1.6 1.8 1.6 Buy
DCB BANK LTD 82.8 (0.7) (5.0) (35.0) (23.1) 907.7 963.1 (0.1) 56.8 1.5 1.4 1.5 1.4 Sell
FEDERAL BANK LTD 57.7 (2.6) 4.2 (3.4) (23.5) 851.8 3127.0 (0.7) 44.0 1.3 1.2 1.3 1.2 Buy
KARUR VYSYA BANK LTD 451.7 (0.1) 5.9 (0.5) (17.9) 32.4 58.6 (0.4) 44.7 1.3 1.1 1.3 1.1 Buy
REPCO HOME FINANCE LTD 685.1 (2.6) (2.0) (5.0) 27.9 13.0 28.2 (0.5) 55.3 4.7 4.0 4.7 4.0 Buy
SOUTH INDIAN BANK LTD 20.8 (1.0) 2.2 4.3 (28.8) 4575.9 2062.9 1.2 46.3 0.9 0.8 0.9 0.8 Buy
DALMIA BHARAT LTD 779.0 2.0 8.6 12.6 48.6 12.7 42.0 (0.7) 56.9 57.6 20.0 4.2 3.3 Buy
RAMCO CEMENTS LTD/THE 376.2 0.5 3.1 18.4 15.7 73.7 154.1 (0.5) 83.3 18.3 14.8 6.3 4.9 Buy
BLUE STAR LTD 352.4 (0.8) (4.5) 2.1 2.8 180.4 43.1 3.2 93.0 29.4 21.5 16.3 12.0 Sell
TTK PRESTIGE LTD 4127.6 (0.8) 0.3 3.5 8.5 2.8 3.7 (0.2) 45.0 41.0 34.0 25.6 21.6 Sell
VA TECH WABAG LTD 701.5 (0.7) 11.2 (1.4) (10.9) 32.5 50.4 (0.4) 58.8 30.3 23.9 16.5 13.6 Add
V-GUARD INDUSTRIES LTD 912.1 (0.5) 2.5 1.0 (15.2) 11.4 3.7 2.1 84.7 28.5 23.3 17.2 14.6 Buy
CYIENT LTD 494.0 1.3 (4.7) (16.7) (10.2) 14.2 53.7 (0.7) 66.4 14.9 13.7 11.4 10.1 Add
FIRSTSOURCE SOLUTIONS LTD 43.6 (4.0) 31.4 56.6 15.5 2298.4 2220.3 0.0 32.4 10.8 9.5 7.8 6.4 Buy
HEXAWARE TECHNOLOGIES LTD 257.9 0.2 9.5 3.9 16.7 305.4 365.3 (0.2) 34.5 18.7 16.1 12.5 10.9 Reduce
INTELLECT DESIGN ARENA LTD 290.0 3.2 7.2 70.0 NA 164.1 134.8 0.2 20.0 NA 61.3 NA 44.1 Buy
POLARIS CONSULTING & SERVICE 204.5 0.0 1.0 22.1 3.6 146.7 524.7 (0.7) 54.6 10.1 9.7 7.5 7.4 Add
REDINGTON INDIA LTD 119.5 1.0 5.3 12.5 (9.3) 79.5 153.6 (0.5) 54.1 11.9 10.9 7.7 7.0 Add
BAJAJ CORP LTD 435.0 (0.4) 4.7 (9.7) 24.6 32.0 64.3 (0.5) 45.9 25.6 22.5 21.4 18.8 Buy
BERGER PAINTS INDIA LTD 221.0 1.3 (0.9) 4.3 2.1 213.5 150.8 0.4 53.7 40.0 31.8 23.2 19.0 Add
INDIAN TERRAIN FASHIONS LTD 723.5 4.7 13.7 17.9 27.5 6.1 6.8 (0.1) 84.4 17.0 14.3 11.8 8.8 Buy
JYOTHY LABORATORIES LTD 312.1 0.2 3.9 2.5 23.7 23.4 87.7 (0.7) 52.0 32.7 31.4 23.5 19.9 Add
KEWAL KIRAN CLOTHING LTD 1915.1 (0.3) (6.3) (9.4) 10.5 0.4 2.3 (0.8) 80.9 31.7 18.9 18.2 12.1 Add
LA OPALA RG LTD 591.6 1.2 0.6 4.1 35.4 11.7 22.3 (0.5) 38.0 58.1 45.1 37.0 29.1 Reduce
RELAXO FOOTWEARS LTD 495.0 (0.5) (4.4) (2.1) 96.6 50.3 22.2 1.3 60.4 22.6 18.0 24.3 20.1 Add
Delivery
Volume
('000)
Rating
PE for all sectors &
P/ABV for banksEV/EBITDA (x)
Capital Goods
% inc/dec to
30D avg
Delivery
%
Consumption
Returns (%)
Auto, Agri &
logistics
Financials
Cement
Top Del. % Company Price
IT Services
Page 5
SPARK RESEARCH
03 December 2015
0
150
7500
7550
7600
7650
7700
7750
7800
7850
7900
7950
8000
8050
8100
8150
8200
8250
8300
8350
8400
8450
8500
Rs. b
n
Total Call Value Total Put Value
Nifty Open Interest (‘000 contracts)
Technical Indicators
Nifty PCR
Max Pain Theory (based on Index Options) – Indicative Nifty closing for next Expiry
FII Open Interest 11-24 11-26 11-27 11-30 12-1 Delta 12-2 Delta Delta
Index Futures 220 242 147 149 151 1.7 161 9.8 (0.5)
Stock Futures 520 535 456 464 481 17.1 493 11.2 5.1
Stock Options 40 37 1 11 14 3.6 17 2.6 2.2
Index Options 466 488 519 548 564 16.1 586 21.8 6.5
Total (Rs. Bn) 1247 1302 1122 1172 1210 38.4 1256 45.4 13.3
0.6 0.8 1.0 1.2 1.4
16-O
ct
18-O
ct
20-O
ct
22-O
ct
24-O
ct
26-O
ct
28-O
ct
30-O
ct
1-N
ov
3-N
ov
5-N
ov
7-N
ov
9-N
ov
11-N
ov
13-N
ov
15-N
ov
17-N
ov
19-N
ov
21-N
ov
23-N
ov
25-N
ov
27-N
ov
29-N
ov
1-D
ec
Nif ty PCR Nif ty PCR (30D avg)
0
50
100
7500
7600
7700
7800
7900
8000
8100
8200
8300
8400
8500
OI
('000)c
on
tracts Call Put
Top CompanyPrice
Change
OI
Change
Close Price
(Rs. / sh)
GMR Infrastructure Ltd 7.3% 9.4% 18
Sun Pharmaceutical Industries 0.3% 8.0% 732
Bajaj Auto Ltd 1.5% 7.5% 2,501
JSW Steel Ltd 4.0% 6.5% 981
Crompton Greaves Ltd 1.4% 6.0% 197
Bharti Airtel Ltd 0.0% 5.5% 323
Dabur India Ltd 1.9% 5.0% 284
JSW Energy Ltd 0.1% 4.6% 86
Arvind Ltd 0.6% 4.2% 315
Reliance Communications Ltd 1.8% 4.0% 78
Tata Motors Ltd -1.3% 16.3% 287
Canara Bank -2.3% 7.6% 264
Bank of India -2.5% 7.5% 127
Hindustan Zinc Ltd -1.5% 7.0% 145
Exide Industries Ltd -0.6% 5.0% 145
India Cements Ltd/The -2.5% 4.6% 88
UCO Bank -3.1% 4.0% 48
Ambuja Cements Ltd -0.3% 3.8% 200
Bharat Heavy Electricals Ltd -1.3% 3.8% 173
Bharat Forge Ltd 0.0% 3.6% 848
ICICI Bank Ltd -1% -4% 270
United Breweries Ltd -1% -4% 965
Bharat Petroleum Corp Ltd 0% -3% 932
Indian Oil Corp Ltd 0% -3% 431
Havells India Ltd -2% -2% 289
McLeod Russel India Ltd 2.5% -14.1% 183
Dr Reddy's Laboratories Ltd 1.3% -6.5% 3,252
Cipla Ltd/India 1.5% -4.2% 658
Mahindra & Mahindra Ltd 0.1% -2.9% 1,370
Steel Authority of India Ltd 1.8% -2.7% 48
Lo
ng
Un
win
dS
ho
rt C
overi
ng
Lo
ng
Bu
ild
up
Sh
ort
Bu
ild
up
Page 6
SPARK RESEARCH
03 December 2015
Spark Portfolio returns vs. BSE 200 returns
0
50
100
150
Oct-
13
No
v-1
3
Dec-1
3
Jan-1
4
Feb
-14
Mar-
14
Ap
r-14
May-1
4
Jun-1
4
Jul-14
Aug
-14
Sep
-14
Oct-
14
No
v-1
4
Dec-1
4
Jan-1
5
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun-1
5
Jul-15
Aug
-15
Sep
-15
Oct-
15
No
v-1
5
%
Spark Portfolio BSE 200 INDEX
Spark Model Portfolio
Spark Portfolio returns vs. BSE 200 returns
1.9%6.1% 3.9% 7.4%
90%
-0.8%
2.1%
-0.1% -2.9%
51%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
1M 3M 6M 1 yr Since Oct'13
Spark BSE 200
CompanyBSE 200
Weights
Spark
Weights
Mcap
(Rs. Bn)CMP
6M Avg
(Rs. Mn)
Financials - OW 28.5% 33.0%
HDFC Bank Ltd 7.0% 2706 1,078 1591
ICICI Bank 5.0% 1565 270 3844
IndusInd Bank Ltd 5.0% 558 943 1052
Yes Bank Ltd 6.0% 313 751 2851
Federal Bank Ltd 4.0% 99 57 334
Karur Vysya Bank 3.0% 55 452 56
Cholamandalam Inv. 3.0% 99 630 51
Consumer - OW 13.1% 17.0%
Asian Paints Ltd 4.0% 813 849 1083
Voltas Ltd 3.0% 96 293 633
Arvind Ltd 3.0% 81 315 570
Bata India Ltd 3.0% 61 480 252
Bajaj Corp Ltd 2.0% 64 435 64
Redington India Ltd 2.0% 48 120 55
Auto - OW 10.1% 15.0%
Tata Motors Ltd 3.0% 1324 413 3859
Maruti Suzuki India Ltd 3.0% 1395 4,619 2918
Hero Motocorp Ltd 3.0% 530 2,676 1055
Exide Industries Ltd 3.0% 123 145 238
Baja auto 3.0% 714 2,499 75
Healthcare - UW 8.9% 5.0%
Lupin 3.0% 842 1,871 2287
Aurobindo pharma 2.0% 485 824 1564
Information T echnology - UW 13.3% 4.0%
W ipro Ltd 2.0% 1450 578 844
Cyient Ltd 2.0% 56 499 53
Oil & Gas - UW 7.3% 6.0%
BPCL Ltd 4.0% 672 932 1388
GSPL Ltd 2.0% 75 135 91
Inf rastructure - OW 10.7% 13.0%
Gujartat Pipavav Port Ltd 3.0% 79 163 153
Cummins India Ltd 3.0% 279 1,013 241
Sadbhav Engineering Ltd 3.0% 60 352 61
Ramco cements 2.0% 91 380 69
KNR constructions 2.0% 17 615 15
Others 2.0%
Kaveri Seed Ltd 2.0% 29 421 331
Cash & Others 8.1% 5.0%
T otal 100.0%
Page 7
SPARK RESEARCH
03 December 2015
Today’s News
Today’s News
Sector News
Today’s News
Sector News
Macro FDI increases by 13%, $16.6 billion received in first half of current fiscal
Cabinet gives ex-post-facto nod to FDI reforms in 15 sectors
Mutual funds pump in Rs one-lakh crore in equities in 18-months
Gujarat civic polls: BJP wins urban, Congress rural
24,340 houses to be built in East Godavari district: dy CM
CIDCO announces Rs 34,000-crore smart city project
Pharma Wockhardt‘s Chikalthana unit gets UK MHRA certificate
Aurobindo Pharma gets USFDA nod to manufacture multi disease treatment
injection
IT Symantec Corp to double cyber professionals at Chennai centre
Wipro agrees to buy German IT services company Cellent AG for $78 million
Nucleus Software launches digital cash solution
Page 8
Diesel Generators
Industry Update
Find Spark Research on Bloomberg (SPAK <go>),
Thomson First Call, Reuters Knowledge and Factset
VIJAYARAGHAVAN SWAMINATHAN raghavan@sparkcapital.in +91 44 4344 0022
RAVI SWAMINATHAN ravi@sparkcapital.in +91 44 4344 0058
Stock performance (%)
1m 3m 12m
KKC -6.1 -5.3 17.5
KOEL -0.5 -2.3 -6.5
Sensex -1.7 2.6 -8.9
CG Index -2.1 -6.3 -11.6
We recently interacted with Powerica (Generator OEMs for Cummins (KKC)), Simpsons (lower rating engine supplier toKKC) and diesel generator dealers. The following are the key takeaways-
•Power generation segment sees moderate pick-up (in Oct-Nov’15): Demand environment in the power generation markethas witnessed moderate pick-up (8-10% yoy growth) on a pan-India basis over the past 2-3 months. Traction from key sectors likereal estate, especially commercial realty, has been healthy from cities like Bangalore, Chennai and Pune (larger kVA rating). Weexpect demand to see further recovery in 2HFY16 led by commercial realty and select industries
Railways ordering to improve large engine orders for Cummins: Indian Railways is expected to order locomotives (100-150
nos.) and power-cars engines (600 nos.) which should present ~Rs. 4bn opportunity in FY17E (this is significantly higher than
earlier years). Given these are larger rating engines (>750 kVA), KKC and Caterpillar are the major beneficiary in these orders.
Margins in these orders are likely to be higher due to lesser competition.
Strong mining equipment ordering to boost demand further: Our interactions with Gmmco (GOEM of Caterpillar) and study
of coal India tenders indicate that ~Rs. 20bn worth of mining equipment orders have been placed over the past 6 months and
similar quantum of orders are expected going forward. This is likely to drive engine demand (~10-15% of equipment value)
Simpsons supplies to Cummins moderates as exports slacken: Simpsons supplies lower kVA rating engines (15-30KVA) to
KKC (predominantly for exports). Engine sale to KKC which had been strong in 1HFY16, has moderated over the past 2-3
months, on the back of relatively weaker export demand & high base. While near term weakness could prevail, we expect export
growth to remain strong for KKC given its low global market share & the parents’ focus on making the India entity an export hub.
Competition in the lower kVA rating segment prevails: Competitive intensity in the lower kVA rating has continued to remain
high with KKC’s GOEMs passing on price cuts in lower kVA gensets to customers to gain market share. Our channel checks
suggest, commercial vehicle players (Mahindra Powerol and Leypower) continue to remain aggressive in the lower kVA space
thereby impacting KOEL’s power generation segment’ growth.
Our view on the stocks: We maintain our positive stance on KKC (Buy; TP: Rs. 1249) and KOEL (Rating: Buy, TP: Rs. 309).
We expect KKC to maintain strong growth in FY17E driven by recovery in the industry segment (medium and higher kVA rating),
improving power generation segment and healthy growth in exports (>15% y-o-y). KOEL is expected to benefit from a recovery
in the power generation market. KOEL’s strong cash position of Rs. 9bn (~20% of market capitalization) also provides additional
valuation comfort
Financial summary
Company Year Revenues (Rs. mn) EBITDA (Rs. mn) PAT (Rs. mn) EPS (Rs.) P/E(x) RoE (%)
KKCFY16E 49,614 8,732 8,375 30.2 33.1 27.3
FY17E 59,382 11,223 10,491 37.8 26.4 29.6
KOELFY16E 25,100 2,234 1,636 11.3 23.5 11.9
FY17E 28,723 3,073 2,236 15.5 17.2 15.5
03 Dec, 2015
Bloomberg KKC IN
Shares o/s 277mn
Market Cap Rs. 277.2bn
52-wk High-Low Rs. 1246-754
3m Avg. Daily Vol Rs. 215mn
Index BSE100
Bloomberg KOEL IN
Shares o/s 145mn
Market Cap Rs. 38.5bn
52-wk High-Low Rs. 350-246
3m Avg. Daily Vol Rs. 28mn
Index BSE500
Page 9
Diesel Generators
Dealer feedback on demand/pricing and competition
Particulars South India West India North India East India
Demand environment in Oct – Nov’15 Picking-uo Moderate Picking-up Moderate
Y-o-Y volume (growth/de-growth/flat) Growth Flat Growth flat
Competition intensity
(increased/decreased/same)Same Increased Same Same
Price cuts/discounting happening (Yes/No) Yes Yes Yes Yes
Comments
Improved demand from
commercial real estate has
resulted in pick-up in
demand for large kVA
rating engines
Market situation is in the
process of bottoming outDemand from
commercial real estate
has seen signs of pick-
up. Dealers hopeful of
recovery in residential
market too
Demand has stayed flat yoy from a low
base . Demand is from Govt. buildings,
hospitals, labs,etc
Industrial demand is
sporadic. Traction for
Pharma, IT has been
healthy
Competitive intensity from
Perkins (distributed by
Sterling and Wilson) has
increased for KKC GOEMs
Financing of genset purchase by
manufacturers (Mahindra Finance for
Mahindra Powerol genset) has impacted
KOEL’s growth
KKC – Segmental FY13 FY14 FY15 FY16E FY17E
Power Generation 16,080 11,400 11,000 12,980 15,576
yoy growth (%) 27% -29% -4% 18% 20%
Industrial Business 5,140 5,200 5,070 5,831 6,997
yoy growth (%) -4% 1% -3% 15% 20%
Automobile 1,590 1,195 1,150 920 1,058
yoy growth (%) -36% -25% -4% -20% 15%
Distribution Business 8,890 8,930 9,000 10,080 11,592
yoy growth (%) 17% 0% 1% 12% 15%
Exports 12,690 12,300 17,220 19,803 24,160
yoy growth (%) 8% -3% 40% 15% 22%
Total 44,390 39,767 43,440 49,614 59,382
yoy growth (%) 11% -12% 9% 14% 20%
KOEL – Segmental FY13 FY14 FY15 FY16E FY17E
Power Generation 9,590 8,500 10,970 11,848 13,625
yoy growth (%) 12% -11% 29% 8% 15%
Agriculture 4,470 4,150 4,040 4,588 5,250
yoy growth (%) 30% -7% -3% 14% 14%
Industrial 3,790 3,790 3,830 3,945 4,537
yoy growth (%) -22% 0% 1% 3% 15%
Customer Support 3,630 3,380 3,440 3,509 3,860
yoy growth (%) -6% -7% 2% 2% 10%
Large Engines 1,680 3,010 2,420 1,210 1,452
yoy growth (%) 19% 79% -20% -50% 20%
Total 23,160 22,830 24,700 25,100 28,723
yoy growth (%) 2% -1% 8% 2% 14%
Industry Update
Page 10
Cummins India CMP
Rs. 1000
Target
Rs. 1249
Rating
BuyFinancial Summary
Page 11
Kirloskar Oil Engines CMP
Rs. 266
Target
Rs. 309
Rating
BuyFinancial Summary
Page 12
Diesel Generators
Recommendation History
0
200
400
600
800
1,000
1,200
01-Jan-12 01-Jul-12 01-Jan-13 01-Jul-13 01-Jan-14 01-Jul-14 01-Jan-15
Historical Target
Cummins India
0
50
100
150
200
250
300
350
01-Jan-12 01-Jul-12 01-Jan-13 01-Jul-13 01-Jan-14 01-Jul-14 01-Jan-15
Historical Target
Kirloskar Oil Engines
Report Date CMP (Rs.) TP (Rs.) Recommendation
04/Feb/15 880 941 Buy
20/Nov/14 896 957 Buy
10/Nov/14 770 842 Buy
23/Sep/14 685 791 Buy
Report Date CMP (Rs.) TP (Rs.) Recommendation
22/Jan/15 270 309 Buy
20/Nov/14 262 329 Buy
20/Oct/14 255 329 Buy
23/Sep/14 260 330 Buy
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