EUR 120.00 For Business Accounts Only

MOSL: Morning India (11/May/20): 1. Consumer - Alcoholic Beverages (‘Lost year(s)’ for alcoholic beverages); 2. Reliance Inds.; 3. ICICI Bank; 4. Bajaj Finance; 5. Shree Cement; 6. ICICI Pru Life; 7. P&G Hygien

Morning India (11/May/20):

Today’s top research Idea
Consumer- Alcoholic Beverages: ‘Lost year(s)’ for alcoholic beverages
** The COVID-19 pandemic is likely to sharply impact the earnings of alcoholic beverages companies for FY21 on account of (a) lost sales due to lockdown, (b) revoking of permissions by local authorities due to overcrowding at shops, (c) nil sales from on-trade channel, (d) sharp hikes in excise duties being imposed by states, and (e) expected delay in payments by states.

** We believe home delivery of alcohol is unlikely to create any large positive impact. The current challenges would lead to undoing the past improvement of ROEs of United Breweries (UBBL) and United Spirits (UNSP). Earnings growth and ROE improvement, which were key drivers of rerating these stocks, will now be under pressure.

** The current valuations seem lofty for UBBL and fair for UNSP leading to downgrades to Sell and Neutral, respectively.

Piping hot news
Mega FDI plan to focus on faster pharma approvals
The government has begun examining ways to shore up foreign investments, including a fast-track mechanism to clear applications of companies especially in the pharmaceutical sector that are looking at India with the US pushing its companies to relocate from China. As part of the exercise, the Department for Promotion of Industry and Internal Trade (DPIIT) plans to put in place a database of all foreign direct investment (FDI) applications, queries from investors and the problems they have faced, so as to generate confidence in global investors that India’s response is quick.