MOSL: Morning India (19/July/17)-1. Diesel Genset (Thematic)-2. Oil & Gas-3. ITC-4. Hindustan Unilever-5. UltraTech Cement-6. Jubilant Life
​MOrning India (19/July/17): 1. Diesel Genset (Thematic); 2. Oil & Gas; 3. ITC; 4. Hindustan Unilever; 5. UltraTech Cement; 6. Jubilant Life; 7. GRUH Finance; 8. Aviation Monthly
Today’s top research idea
Capital Goods (Thematic): Diesel Gensets – Firing up; Period of volume decline over; expect 10% CAGR over FY17-20
We expect diesel genset (DG) industry CAGR (FY17-20) of 10%, after a period of subdued growth (industry volumes declined at 5% CAGR (FY13-17), primarily on a sharp fall in sales for telecom towers).
Key end-markets witnessing revival are Infrastructure, Commercial and Manufacturing. Brand, distribution, service network, product portfolio and reliability are key differentiators - fuel consumption and pricing not as much.
Our preferred play on Indian DG industry is Cummins India, the market leader with the largest pan-India distribution/dealer network, wide service network, access to parent's technology, wide product portfolio and reputation of reliability. A recovery in exports would strengthen estimated earnings revival over next few years. We upgrade to Buy with TP of INR1,110 (30x June FY19E EPS of INR37, in line with five-year average).
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Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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