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MOSL: Morning India (1/August/18): 1. Page Industries; 2. Financials; 3. Tata Motors; 4. Power Grid; 5. Vedanta; 6. Dabur India; 7. UPL; 8. Ashok Leyland-ART; 9. Bharat Electronics; 10. Idea Cellular

MOrning India (1/August/18): 1. Page Industries; 2. Financials; 3. Tata Motors; 4. Power Grid; 5. Vedanta; 6. Dabur India; 7. UPL; 8. Ashok Leyland-ART; 9. Bharat Electronics; 10. Idea Cellular

 

Today’s top research idea

Page Industries: Growth opportunity remains attractive; Balance sheet improvement led by lower inventory days

Key takeaways from recent interactions with PAG's management and highlights from its FY18 annual report:

• PAG's structural story remains attractive, with management targeting 20% revenue growth over the long term.
• Initiatives like outsourcing and EBO expansion are likely to facilitate faster growth and superior asset turns. In fact, as the annual report reveals, inventory days have already declined sharply from 100 days in FY17 to 85 days in FY18.
• Increased focus on technology implementation across the distribution channel should also ensure better efficiencies and higher asset turns.
• Extension of the Jockey franchise agreement to the year 2040 and continuance of royalty at 5% provide comfort.
• We maintain BUY rating with a target price of INR33,460 (53x Sep 2020E EPS; in line with three-year average one-year forward multiple).

Piping hot news

India’s Fiscal Deficit Reaches 68.7% Of FY19 Target

• India’s fiscal deficit rose further in June inching closer to the government's budgetary estimate for financial year 2018-19. But it remained lower than what it was during the same period last year. Fiscal deficit, the gap between the government's revenue and expenditure, rose to Rs 4.29 lakh crore at the end of June, according to data released by the Controller General of Accounts. That’s 68.7 percent of the targeted Rs 6.24 lakh crore in 2018-19. The gap is lower than what it was in June last year, at 80.8 percent of the FY18 target, as the government had front loaded expenditure to kickstart the investment cycle.