The 4 Mid Caps which are beaten down but still have good operating ROEs and hold potential of an earnings recovery 12 months out. The stocks have been beaten down over the last 4 years but incrementally are reducing debt and sales growth has been positive. EPS revisions over the last 2 quarters too seem to have stabilized albeit at a lower level. Free cash flow is also positive implying scope to de-lever from underlying operations.
Indian Hotels Peak supply in the domestic market in our view is over and a large part of the company’s capex is coming to an end. Any improvement in beaten down ADRs in the domestic market could improve EBITDA significantly given operating leverage.
Cox and Kings The company has become free cash positive and the UK business is now throwing up cash flows which should result in net debt levels declining by 10% every year. Domestic market has held up despite rupee depreciation. Just net debt reduction could give approx 20% annualized returns
HT Media: Growth in the core Hindi portfolio has been strong and underlying subsidiaries (Radio & Digital) have fared better than expectations. Read through from latest readership survey for the business is
positive as well. Mumbai too has achieved breakeven levels. Key overhang has been weak growth in English which has been weak for over 2 years.
Dish TV: The company’s debt levels have started to reduce and strategically the focus has shifted towards content cost management and churn rate management. EBITDA margins for the business are at a 4 year low given limited ARPU increase and content cost inflation.
You can Continue to HOLD the above if they are existing in your portfolio.