Cox & Kings (India) Ltd
Cox & Kings (India) Ltd is one of the recognized holiday brands that cater to the overall travel needs of an Indian and International traveler. Cox & Kings (India) Ltd‘s business can be broadly categorized as Leisure Travel, Corporate Travel, Forex and Visa Processing. Cox & Kings (India) Ltd also provides value added services such as customizing travel plans for the NRI customers, travel arrangements for Trade Fairs, providing private air charter services, etc. Besides, Cox & Kings (India) Ltd offers travel related foreign exchange & payment solutions.
Cox & Kings (India) Ltd has 255 points of presence covering 164 locations through a mix of branch sales offices, franchised sales shops, General Sales
Key Rationale for Cox & Kings (India) Ltd:
Cox & Kings (India) Ltd has vast diversified geographical presence in more than 19 countries covering each and every continent. Such diversification provides cushion against geographical slowdown in business
Cox & Kings (India) Ltd has strong brand values across different segments like Anand Yatra, Gaurav Yatara, Dunia Dekho, etc with robust segmental business performance across different verticals viz Leisure Travel, Foreign Exchange, Corporate Travel & Visa Processing etc. Though leisure travel contributes over 90% of revenue in last three financial years we expect other supplementary business are equally important to meet the holiday travel needs
Cox & Kings (India) Ltd is expanding its network through penetration into smaller cities thereby reducing the reach thorough net enable services. Cox & Kings (India) Ltd is also looking to grow inorganically within the industry through acquisitions as it has acquired 7 companies across different countries.
India is the 4th largest economy based on purchasing power parity (PPP) and total travel and tourism (T&T) market size is pegged at $42 billion which is 5th largest in the world. The Indian T&T market is expected to growth at 10%over next one decade till 2020 and the direct contribution of T&T to GDP is expected to reach 8% ($76 bn) from current 1.9% ($42 bn).
India is expected to attract nearly 6 million international tourist arrivals in 2011 which is expected to rise to 111million by 2021 growing at 6 annually.
The net sales and profit for the company since last 2 years clocked 32 and 37 percent CAGR to Rs496 and Rs118 crore respectively with healthy EBITAD and net margin of ~45 and ~25 percent respectively and thus provides robust business opportunity.
Financials & Valuations of Cox & Kings (India) Ltd:
At current price of Rs208, the stock of Cox & Kings (India) Ltd is trading at 18.1x and 14.3x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of Cox & Kings (India) Ltd to grow at 19 and 28 percent CAGR over next two years to Rs705 and Rs199 crore respectively. We recommend a BUY on the stock with price target of Rs243 which provides an upside potential of 17%.
Nitin Fire Protection Industries Ltd
Nitin Fire Protection Industries Ltd (NFPIL) is leading manufacturer of complete range of portable fire fighting equipments with diverse product & services offering ranging from supply, installation, engineering and maintenance of Fire Protection Systems in India and overseas market. The products are approved by BIS approval and bear ISI mark, Nitin Fire Protection Industries Ltd also has a system design & service center in Mumbai. Apart from portable fire fighting equipment, Nitin Fire Protection Industries Ltd undertakes turnkey projects for design, manufacture, install commission and supply of complete Fire detection and suppression systems, using the latest techniques.
Nitin Fire Protection Industries Ltd has over 25 years of successful track record in fire protection industry with over 5000 installations with PAN India presence and over 1 lakh installations indirectly through contractors.
Nitin Fire Protection Industries Ltd has prominent clients for their institutional set up with repeat businesses from exiting clients. Nitin Fire Protection Industries Ltd is the only Indian Company to have 86 approvals from Underwriters Laboratories Inc., USA; Loss Prevention Certification Board, U.K. and VDS, Germany.
The revenue for Nitin Fire Protection Industries Ltd has grown over 53 percent CAGR since last 5 years with robust order inflows every month.
Nitin Fire Protection Industries Ltd has recently entered into a production sharing contract for exploration and prospecting of a crude oil block in Rajasthan (NELP VI). GAIL and GSPC are the main operators for the block and HPCL, BPCL and Hal worthy are other consortium members.
As per recent estimates this block has a potential of 32.3 million barrel of prospective four wells of oil reserve. Nitin Fire Protection Industries Ltd has 11.11% share in a JV with GSPC, HPCL, BPCL, GAIL and other consortium partners, for oil exploration in Rajasthan State RJ 19.
In 2010, the fire protection equipment industry was estimated to be INR 25 bn and is expected to reach INR 45 bn by 2013, a CAGR of 25%. The key driver for industrial growth is increasing investments in Data Centers, BPOs, Malls, R&D, Power/Petrochemical, Telecom, IT Terrorist Threats and Government Regulations etc
Key demand driver for industrial cylinders is industrial gases, whose demand is set to grow at 5-6% y-o-y during 2006-12. The demand for cylinders is expected to show the same trend.
Total number of CNG vehicles, including new vehicles and replacements, expected to reach 50 mn in 2020 as compared to 8.5 mn in 2007-08, a CAGR of 16% as per IANGV (International Association for Natural Gas Vehicles).
Financials & Valuations:
At current price of Rs39, the stock of Nitin Fire Protection Industries Ltd is trading at 11.1x and 10.1x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of Nitin Fire Protection Industries Ltd to grow at 16 and 25 percent CAGR over next two years to Rs585 and Rs84 crore respectively. We recommend a BUY on the Nitin Fire Protection Industries Ltd stock with price target of Rs45 which provides an upside potential of 15%.
Shoppers Stop Ltd
Shoppers Stop Ltd (SS) part of K Raheja group, is a leading retail chain with diverse brands like Shoppers Stop (The apparel and non-apparel segment), Homestop, Crossword, Morthcare, Estee Lauder, MAC and Clinique etc.
Shoppers Stop Ltd presently has nearly 146 stores comprises of various retail formats which includes 43 each shoppers stop and crossword and rests other retail formats. Shoppers Stop Ltd has PAN India presence in more than 20 cities predominantly in high growth markets like Mumbai etc.
Shoppers Stop Ltd‘s total area under store has increase from 1.2 mn sq fit to 2.6 mn sqft since last 4 years growing at 18 percent CAGR. Though Shoppers Stop Ltd‘s total area under retail stores has increased its sales per sqft has remain same at Rs~2100 indicating robust revenue growth despite rising inflation.
India is witnessing boom in retail industry due to changing lifestyle. With growth of nuclear family and constrain in availability of time, the families prefer branded products.
The Indian retail industry is currently account for nearly 15% of India’s GDP. The Indian retail market is the fifth largest retail destination all across the globe. It has been ranked as the most attractive emerging market for investment in the retail sector in 2009.
Consumerism is on the rise with the rising trend of middle class segment in the country. The Indian consumer (retail) market, in all probability, will grow four times by 2025 which will automatically benefit the organized retailers like Shoppers Stop.
India’s retail sector is estimated to touch US$ 833 billion by 2013 and US$ 1.3 trillion by 2018, with a compound annual growth rate (CAGR) of 10% – which is quite lucrative.
Financials & Valuations:
At current p[rice of Rs348 , the Shoppers Stop Ltd stock is trading at 56.3x and 47.7x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of Shoppers Stop Ltd to grow at 35 and 18 percent CAGR over next two years to Rs4358 and Rs60 crore respectively. We recommend a BUY on the Shoppers Stop Ltd stock with price target of Rs401 which provides an upside potential of 15%.
Mirza International Limited
Mirza International Limited is a frontrunner in the manufacturing and marketing of leather and leather footwear. Headquartered in the Indian capital of New Delhi, Mirza International Limited markets its products across the globe to countries like the UK, Europe, South Africa and the Middle East, to name a few. Mirza International Limited has a fully integrated in-house shoe production facility backed by a state-of-the-art double density direct injection polyurethane plant, a tannery with its own pollution treatment plant, and a dedicated design studio in London.
Mirza International Limited has robust brand under premium segment viz REDTAPE, OAKTRAK and REDTAP GEL is highly preferred brands amongst youth.
Mirza International Limited presently derives over 65 percent of revenue from export segment, however we expect revenue shift towards domestic segment with introduction of middle segment for Indian consumers which growing rapidly.
Mirza International Limited looks to diversify into Hi-fashion sports and casual shoes at the same enter into automotive leather business. It also looking to increase presence in new markets like Germany, France and USA.
Mirza International Limited is also looking to expand its existing shoe manufacturing capacity from 48 Lakh pairs to 60 lakh pairs including new Greenfield manufacturing units at NOIDA with 7.5 lakh pairs.
Mirza International presently has 62 REDTAPE store including 28 owned through franchisee. Mirza International Limited looking to add 50 new stores in next 1 years to take total number of store to over 100 stores.
We expect the consumption demand in India set grow rapidly due to change in life style and higher disposable income in the hands of people, this would further fuel the FMCG growth including shoes market.
Financials & Valuations:
At current price of Rs20, the Mirza International Limited stock is trading at 4.0x and 3.2x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of Mirza International Limited to grow at 25 percent CAGR over next two years to Rs736 and Rs59 crore respectively. We recommend a BUY on the Mirza International Limited stock with price target of Rs24 which provides an upside potential of 20%.
HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL Technologies focuses on ‘transformational outsourcing’, underlined by innovation and value creation, and offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO.
HCL Technologies leverages its extensive global offshore infrastructure and network of offices in 26 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Consumer Services, Public Services and Healthcare.
HCL Technologies takes pride in its philosophy of ‘Employee First, Customer Second’ which empowers our 80,520 transformers to create a real value for the customers. HCL Technologies, along with its subsidiaries, has reported consolidated revenues of US$ 3.7 billion (Rs.16,977 crores), as on (on LTM basis).
HCL Technologies is doing exceptionally well under RIM (Remote Infrastructure Management) and we expect HCL Technologies to gain larger market share going forward.
The management expects its BPO business to turnaround by Q3 this year which would give larger strength in overall IT sector play.
HCL Technologies has delivered good set of Q2FY12 numbers which are in line with estimates and management has given EBIT margin guidance of ~14 for FY12.
We also expect the rupee depreciations to benefit HCL Technologies from here.
Financials & Valuations:
At current price of Rs424, the HCL Technologies stock is trading at 13.1x and 11.3x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of HCL Technologies to grow at 21 and 26 percent CAGR over next two years to Rs23,083 and Rs2,598 crore respectively. We recommend a BUY on the HCL Technologies stock with price target of Rs455 which provides an upside potential of 7%.
ITC is the largest cigarette manufacturer and among the largest paperboard manufacturing companies in India. ITC also has the second largest hotel chain in the country and is aggressively acquiring a strong position in the FMCG space. Being the market leader in cigarettes (83% value share in FY11), ITC has strong pricing power and brand value with a well established distribution network, thereby helping it to derive strength in other businesses also.
ITC has been the largest cigarette manufacturer and the market leader in the Indian cigarettes market. Occupying a dominant market position,~75% by volume and ~83% by value in FY11, ITC has no close competitor in the cigarettes space.
ITC‘s pricing power remains very strong. ITC has passed on every excise duty/value added tax (VAT) increase through judicious price hikes. ITC‘s topline growth in the last 10 years has mainly been through price led growth.
In the paperboard segment, ITC is the second largest manufacturer in India with a capacity of 0.6 million tonnes (MT) and a value market share of ~26% in FY11.
ITC has built powerful brands in the foods (Aashirvaad, Sunfeast, and Bingo) and personal care (Vivel, Superia) segment within a short span of its presence in the segment. ITC‘s FMCG revenues grew at a CAGR of 27.3% from FY07-11 compared to the revenue growth of Nestle and Britannia at 21% and 19.4%, respectively, and HUL’s (personal care revenues) revenue growth remaining lower at 12.5%
ITC is the second largest hotel chain in India, after Indian Hotels, catering to different categories through diverse brands. ITC‘s total room inventory currently stands at ~7,000 (~3,000 under owned properties and ~4,000 under management contracts) along with a strong chain of well known restaurants nationwide, having powerful cuisine brands.
Financials & Valuations:
At current market price of Rs204, the ITC stock is trading at 27.8x and 23.4x of its FY12E and FY13E earnings respectively. We expect ITC‘s Sales and net profit to grow at 17 and 16 percent CAGR over next two years to Rs.30,573 and Rs.6,791 respectively. We recommend a buy on the ITC stock with a price target of Rs.235 which provides an upside potential of 13%.
Titagarh Wagons Ltd
Titagarh Wagons Ltd. is one of the leading manufacturer of wagons within India with an annual capacity of 5000 wagons. Titagarh Wagons Ltd apart from wagon manufacturing is also a certified vendor for supply of bailey bridges to defence and heavy earthmoving and mining equipments to the construction and mining industry. Titagarh Wagons Ltd presently derives over 90 percent of its revenues from the wagon manufacturing division where it has an overall market share of 30% including 65-70% market share in wagon supply to private clients.
Wagons Division of Titagarh Wagons Ltd is the dominant contributor to Revenues and EBIDTA of the Company, accounting for 91.75 % and 86.90% of the total revenues and operating profit respectively.
As per the Railway Budget announced in February, 2011, the government has planned an outlay of Rs.57,630 crores during 2011-12 which is the highest ever outlay consequent of which acquisition of 18000 Wagons is also on cards while freight loading capacity upped by 6.4% to 993 MT. This is a positive news for Titagarh Wagons Ltd as such developments will boost the demand for companies products.
Last year Titagarh Wagons Ltd entered passenger train in a small manner and started manufacturing EMUs. Titagarh Wagons Ltd‘s Heavy Engineering Division (HED) located at Uttarpara is now equipped to turn out fairly large number of AC/EMUs per month and is expecting to bag a prestigious order in current financial year.
Titagarh Wagons Ltd plans to set up new infrastructural facilities for expansion combined with the setting up of various projects for metro railways in a few major cities of India, construction of bridges, highways, airports, ports as well as housing construction, the demand for heavy engineering and mining equipments is also believed to take a long leap in the coming years.
Titagarh Wagons Ltd has a healthy order book which stands at Rs.750 Cr.
Financials & Valuations:
At current price of Rs.435, the Titagarh Wagons Ltd stock is trading at 9.7x and 9.1 x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of Titagarh Wagons Ltd to grow at 8 and 11 percent CAGR over next two years to Rs.850.2 and Rs.89.7 crore respectively. We recommend a BUY on the Titagarh Wagons Ltd stock with price target of Rs.476 which provides an upside potential of 10%.
TVS Motor Company is the third largest two-wheeler manufacturer in India and is among the world’s top ten. TVS Motor is the flagship company of the parent TVS Group with an estimated 15 million customers. It manufactures motorcycles, scooters, mopeds and auto rickshaws.
TVS Motor’s overall volumes rose 25.1% Y-o-Y and 12.6% sequentially to 219,369 units in September 2011, thus surpassing the 0.2 mn mark for the first time and marking the highest ever monthly volumes recorded by TVS Motor.
TVS Motor’s total Motorcycle sales increased 11.6% Y-o-Y and 16.9% sequentially to 90,848 units. TVS Motor’s Motorcycle exports increased 14.5% Y-o-Y to 20,248 units and the domestic Motorcycle volumes also soared up by 10.8% Y-o- Y and 25.7% sequentially to 70,600 units in September 2011. TVS Motor’s domestic volumes in the entry-level segment rose 6.5% Y-o-Y to 54,103 units and grew 27.7% Y-o-Y to segment,
TVS Motor sold 3,679 units in 16,497 units in the high-end segment.
TVS Motor sold 53,319 units of Scooters in the domestic market in September 2011, up 85.9% Y-o-Y. TVS Motor’s domestic Moped sales increased 12.9% Y-o-Y to 68,108 units, with TVS Motor maintaining a market share of 100% in the segment.
Following an increase in exports recorded for nineteen consecutive months, the growth momentum in TVS Motor’s exports continued in September 2011 as well, with exports up 26.8% Y-o-Y to 25,973 units. In the Three-wheeler segment, TVS Motor sold 3,679 units in September 2011, up 14.2% Y-o-Y.
Financials & Valuations:
At current price of Rs.66, the TVS Motor stock is trading at 14.9x and 11.4x of its FY12E and FY13E earnings respectively. We expect the Net sales and PAT of TVS Motor to grow at 17 and 47 percent CAGR over next two years to Rs.8792.7 and Rs.275.7 crore respectively. We recommend a BUY on the TVS Motor stock with price target of Rs.75 which provides an upside potential of 13%.
Oberoi Realty Limited
Oberoi constructions, the group was established in the early 1980’s and since its inception, has evolved into a real estate developer focused on premium developments in Mumbai. Oberoi constructions later re-branded as Oberoi Realty, has completed 34 projects covering approximately 5 million square feet of saleable area spread across Mumbai.
With nearly 3 decades of experience Oberoi Realty has become synonymous with aspirational developments. Oberoi Realty Limited currently manages a portfolio spanning across Residential, Office Space, Retail, Hospitality and Social Infrastructure properties in Mumbai. Going forward, the group intends to expand its geographic base through acquisitions of land and development rights.
Oberoi Realty acquired ICICI Ventures’ 50 percent stake in the Worli project – Oberoi Skyz for Rs 2.80 billion. This suggests Oberoi Realty Limited has started deploying its excess cash. The project currently has FSI of 1.70 which could increase to 2.70 if Oberoi Realty Limited avails car parking policy. The total saleable area on 2.70 FSI will be 0.73 million square feet with 50 percent loading on carpet area. The completion timeline would be Fy2018e.
Oberoi Realty Limited has witnessed consistent momentum in sales in the past six months despite the tough market conditions. Going forward, Oberoi Realty expects that the momentum to continue and grow. It is confident that with cash in hand, it will continue to be well placed to acquire more land parcels.
Strong cash surplus of Rs 1,340 crore offers a huge opportunity to acquire value-augmenting projects at competitive prices in the backdrop of low competition from cash-strapped competitors and rationalizing land prices.
Financials & Valuations:
At current market price of Rs. 228, the Oberoi Realty stock is trading at 13.41x and 8.48x of its Fy2012E and Fy2013E earnings respectively. We expect the Net sales and PAT of Oberoi Realty to grow at 21.86 and 30.62 percent CAGR over next two years to Rs. 1,461.69 and Rs. 883.09 crore respectively. We recommend a “BUY” on the Oberoi Realty stock with price target of Rs. 276 which provides an upside potential of 21 percent.
Hindustan Zinc is the world’s largest integrated producer of Zinc-Lead. Hindustan Zinc has a metal production capacity of 1,064,000 tonnes per annum with its smelter operations situated in Chanderiya, Debari, Dariba and Visakhapatnam. Hindustan Zinc has Lead-Zinc mines in Rampura Agucha, Sindesar Khurd, Rajpura Dariba and Zawar.
Hindustan Zinc is a subsidiary of Sterlite Industries and Vedanta Resources. Its activities range from exploration, mining and ore processing to smelting and refining of lead, zinc, cadmium, cobalt, copper and other precious metals. Hindustan Zinc also produces sulphuric acid and rock phosphate. Hindustan Zinc is looking forward to opportunities in gold, other minerals and new business areas.
Hindustan Zinc will continue to maintain its focus on mine exploration, which will be the key driver of its future growth. In the last 7 years, exploration activities have added 167 million tons, net of depletions, to its reserve & resource base. It is currently exploring over 6,200 sq km area in 10 ‘Reconnaissance Permits’. Hindustan Zinc‘s total reserves & resources base as of 31st March 2011 is 313.20 million tons containing
34.70 million tons of Zinc- Lead metal and 885 million ounces of Silver, ensuring long mine life of more then 25 years.
The 1,00,000 ton lead smelter has started commercial production in Q2Fy12 and expected to contribute in H2Fy2012e. Hindustan Zinc is targeting 40,000 tons of production from the new smelter in H2Fy2012e. With the commissioning of this smelter, Hindustan Zinc‘s silver production is set to increase rapidly. Expansion in wind power capacity to 237 mega watt is on schedule and will complete in Q3Fy2012e.
Hindustan Zinc follows conservative investment policy and invests in high quality debt instruments in mutual fund and fixed deposit with bank. As on 30 September 2011, Hindustan Zinc had cash and cash equivalents of Rs. 16,229 crore, out of which Rs. 10,324 crore was invested in debt mutual funds and Rs. 5,905 crore, were in fixed deposits with banks.
Financials & Valuations:
At current market price of Rs. 121, the Hindustan Zinc stock is trading at 9.78x and 8.10x of its Fy2012E and Fy2013E earnings respectively. We expect the Net sales and PAT of Hindustan Zinc to grow at 11.50 and 15.94 percent CAGR over next two years to Rs. 12,324.05 and Rs. 6,313.57 crore respectively. We recommend a “BUY” on the Hindustan Zinc stock with price target of Rs. 146 which provides an upside potential of 20 percent.
Talwalkars Better Value Fitness Ltd. is one of the largest fitness chains in India offering diverse services including gyms, spas, aerobics and health counseling under the brand “Talwalkars“. It operates 58 health clubs in 28 cities of 12 states across the country serving over 55,000 members.
Talwalkars have entered into a few arrangements with established local fitness operators in certain markets in order to accelerate the ramp-up in those locations. Talwalkars also believes in partnering with strong local players with good management record in entering newer areas. Talwalkars has entered into franchisee agreements in the past to enter certain markets.
Talwalkars is one of the largest fitness chains in India as per the statistics of the IHRSA Asia Pacific Report, 2008. Talwalkars has grown rapidly since inception and operate 58 health clubs in 28 cities across the country serving over 55,000 members. Being a pioneer in the health and fitness industry, Talwalkars enjoys a significant lead over their competitors.
In a fragmented health and fitness industry, Talwalkars benefit immensely due to its pan India presence. Talwalkars has been able to achieve a country wide foot print, which it believes may be very difficult to replicate. Talwalkars is currently present in 28 cities belonging to 12 states of the country. And Talwalkars believes its continuous expansion plans will further enhance its brand visibility on pan India basis.
Talwalkars follow one of the three strategies to enhance its presence i.e. either directly or through JV or through franchisee route. Its preferred strategy is to enter a new market on its own, however, it is also constantly in lookout for partnering with strong local players in cities where it does not have a presence. Talwalkars currently own 44 out of the total of 58 health clubs. It believe in having a nimble attitude in its health club rollout strategy to ensure profitability of both owned as well as joint venture / franchised route.
Financials & Valuations:
At current market price of Rs. 166, the Talwalkars stock is trading at 15.52x and 10.21x of its Fy2012E and Fy2013E earnings respectively. We expect the Net sales and PAT of Talwalkars to grow at 46.02 and 52.56 percent CAGR over next two years to Rs. 218.06 and Rs. 39.20 crore respectively. We recommend a “BUY” on the Talwalkars stock with price target of Rs. 199 which provides an upside potential of 20 percent.