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MOSL: Morning India (17/December/18): 1. Marico-2. Utilities-3. Endurance Technologies (ART)-4. India Industrials (Delving into the government’s electrification drive); 5. Logistics

MOrning India (17/December/18): 1. Marico (New products traction picking up); 2. Utilities (Draft regulations ensure continuity) 3. Endurance Technologies (All-round improvement, subsidiary traction intact); 4. India Industrials (Delving into the government’s electrification drive); 5. Logistics

 

Today’s top research idea

Marico: New products traction picking up; promising to boost medium-term earnings growth prospects

• Three factors reinforce our confidence in Marico’s earnings prospects— (a) likely benign raw material environment over the next 18-24 months (Copra accounts for 40-50% of material costs and is in a deflationary period), (b) strong performance of Parachute volumes in recent quarters and healthy growth prospects in the VAHO segment, and (c) good traction being witnessed in new product development.
• Crucially, at a time when both sector multiples, as well as ability of peers to pass on emerging material cost pressures are under question, Marico provides far higher earnings visibility compared to peers. Moreover, with over 30% sales coming from rural (management is targeting 40%), Marico is an interesting play on rural growth as well. Targeting 46x December 2020 EPS, we get a target price of INR465.

Piping hot news

National Green Tribunal Orders Reopening Of Vedanta’s Sterlite Copper Plant In Tuticorin

• Vedanta Ltd. can restart its copper smelter in Tuticorin, which accounts for nearly half of India’s output, the National Green Tribunal said. The tribunal set aside the Tamil Nadu state government’s order to shut Sterlite Copper's 2,50,000-tonne plant, saying it was “unsustainable”. It also directed the Vedanta subsidiary to spend Rs 100 crore on the welfare of the inhabitants in the area, according to the verdict put up on its website on Saturday.