MOSL: Morning India (10/January/18)-1. Emami- 2 Infosys- 3 Metal - 4 Motherson Sumi - 5 Results Flash-South India Bank

​MOrning India (10/January/18): 1. Emami; 2. Infosys; 3. Metal; 4. Motherson Sumi; 5. Results Flash: South India Bank

Today’s top research idea

EMAMI: Rural recovery just the beginning of growth revival; Valuations attractive; maintain Buy

We maintain our BUY rating on Emami, as:

• It is a great play on rural demand growth and wholesale recovery.
  
• Before the slowdown caused by extraordinary factors like demonetization, Emami had the best track record among peers on consistency of earnings growth, which we expect to resume.
  
• Emami has a formidable portfolio of dominant brands, with best-in-class R&D and advertisement to support existing brands and new launches.
  
• Despite likely resumption of better-than-peers' earnings growth of 20% CAGR over FY18-21, valuations are in line with peers.
  
• Our target price of INR1655 implies a one-year upside of 23% and a two-year upside of 39%. Our bull case upside is 33% for one year and 53% for two years.
  

Piping hot news

Direct tax collections rise 18.2% in April-December in breather for government

• Direct tax collections grew by more than 18% in the first nine months of the fiscal year to two-thirds of the full-year target, providing a breather to the government as it struggles to contain the fiscal deficit. Government revenues have been under pressure due to a shortfall in revenue from the goods and services tax (GST), prompting it to announce additional borrowing of Rs50,000 crore last month to fund spending in key sectors of the economy.