Bajaj Auto – Sustainable Ride – Closing Gap with Hero Honda

bajaj auto india trafficBaja Auto is estimated to record 25% growth in FY10/FY11 (industry 20%/15%), as a market transition to user-related economy and premium segments is expected to favor Bajaj’s Discover and Pulsar brands, respectively. We expect the company to sustain recent share gains in bikes, increasing to ~25%, up from the January trough of 15%, and 21% in H1.

Going forward, there will be moderation in margins to ~20% by FY12, below peak levels of 22% achieved in Q2. This is due to (1) operating leverage, (2) better sales mix in favour of pricier economy, (more…)

Insight on July-September GDP 7.9%

Exclusive ResearchIndia’s July-September 2009 real GDP growth came in at 7.9% yoy, much higher than the 6.1% yoy growth in the previous quarter and overshooting consensus expectations of 6.3% yoy and our estimate of 6.4% yoy by a big margin. The sequential momentum leaped 13.1% qoq s.a. annualized, from 8.3% qoq in the previous quarter.

While trends in industry (8.3%) and services (9.3%) were broadly in line, (more…)

FMCG – Significant Slowdown in Retail Sales

FMCG sales grew 5.9% YoY in October 2009 (the slowest growth since Feb-07) compared to 14.8% growth in F1H10. The TOP10 players witnessed deceleration in sales growth, with sales in October growing 1.7% vs. 9.9% growth in F1H10.

Hindustan Unilever witnessed a deceleration in sales across its major categories (viz. laundry bars, toothpastes, soaps, shampoos, tea, laundry powder, and skincare), leading to de-growth of 0.4% (vs. 8.1% in F1H10) for the first time since February 2007.

Dabur witnessed a deceleration in revenue growth, from 9.6% in F1H10 to 3.9% in October 2009.

Colgate’s sales growth in toothpaste and toothpowder slowed down, leading to overall growth of 5.9% vs. 10.5% growth in F1H10.

Nestle saw sales growth slowing from 15.8% in F1H10 to 6.7% in October 209, with noodles, milk powder, chocolates, and coffee sales growth decelerating in October 2009.

P&G’s laundry powder, shampoos, and feminine hygiene sales led to a slowdown in sales growth from 16.4% in F1H10 to 7.6% growth in October.

Britannia has witnessed de-growth since Jul-09, with the pace accelerating in October 2009 to 4.5%

Sundaram Paribus – PSU Opportunities Fund

The objective of the scheme is to seek capital appreciation by investing primarily in equity and equity-related instruments of PSU companies across the cap curve and sectors. PSU companies are good wealth creators and industry leaders in their area of operations. The expected re-rating of these companies in the future in the event of the government divesting stakes in PSU companies can lead to above average gains over a period of time.

Investment Strategy:
At least 65% of the assets will be invested in PSU companies. Fund shall take (more…)

MBL Infrastructures Ltd – AVOID

MBL Infrastructure Ltd (MBL) is engaged primarily in construction and maintenance of roads and highways.

MBL has a strong order book of Rs 815 crore (including order inflow of Rs 203 crore post June), which is at 1.6x FY09 revenues. This provides revenue visibility over the next 1.5-2 years. However, the current order book to FY09 revenues ratio is relatively lower than its peers.

MBL has successfully completed the execution of the BOT project of the 114 km Seoni-Balaghat-Rajegaon state highway under (more…)

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