EUR 120.00 For Business Accounts Only

MOSL: Morning India (21/May/20): 1. UltraTech Cement (Deleveraging to continue even in FY21); 2. Bajaj Auto; 3. Dr Reddy’s Labs; 4. L&T Infotech; 5. Jubilant FoodWorks; 6. Ajanta Pharma; 7. JSW Energy; 8. NBFC;

MOrning India (21/May/20): 1. UltraTech Cement (Deleveraging to continue even in FY21); 2. Bajaj Auto; 3. Dr Reddy’s Labs; 4. L&T Infotech; 5. Jubilant FoodWorks; 6. Ajanta Pharma; 7. JSW Energy; 8. NBFC; 9. Expert Speak (Agro Chemicals)

 

Today’s top research Idea

Ultratech Cement: Deleveraging to continue even in FY21

• UTCEM's result instills confidence in its planned cost-rationalization and deleveraging roadmap. Despite lower operating leverage (volumes down 16% YoY), operating cost per ton increased only 1% YoY (-2% QoQ) which coupled with better realization drove a 14% YoY (and 13% QoQ) increase in EBITDA/t to INR1,138. Strong FCF helped the company reduce net debt sharply to INR169b (implying 1.55x net debt/EBITDA).
• We expect net debt to decline further even in FY21 as the company has curtailed capex and seeks to reduce operating cost as well.
• The valuation is also attractive at 10.9x FY22E EV/EBITDA and USD134/t of capacity, a ~35% discount to the past five-year average and ~20% discount to the past 10-year average. The stock is also trading 30% cheaper than peer Shree Cement v/s the historical average of 10%. We value UTCEM at a 13x FY22E EV/EBITDA to arrive at a target price of INR4,305. Reiterate Buy.

Piping hot news

Domestic airlines to resume operations in calibrated manner from all major airports from 25 May

Domestic airline operations will resume from airports across all major cities in the country from 25 May, even though the existing lockdown to contain covid-19 remains in place till 31 May. "Flight operations will resume from all major Indian airports, including ones located at tier one cities," said a government official, under the condition of anonymity. Civil aviation minister Hardeep Singh Puri had earlier on Wednesday tweeted that flight operation will resume in a calibrated manner from 25 May..