MOSL: Morning India (23/October/17)-1. Electrical Consumer Durables(Expert Speak)2. UltraTech Cement3. Bajaj Auto4. Dewan Hsg. Fin.5. GRUH Finance6. NIIT Tech.

​MOrning India (23/October/17): 1. Electrical Consumer Durables(Expert Speak); 2. UltraTech Cement; 3. Bajaj Auto; 4. Dewan Hsg. Fin.; 5. GRUH Finance; 6. NIIT Tech.

Today’s top research idea

Ultratech Cement: Beat led by higher-than-estimated realizations

• 2QFY18 revenue rose 22% YoY to INR65.7b (est. of INR64.2b), as volumes grew 18% YoY due to the ramp-up of JPA assets.
  
• Blended realization increased 4% YoY to INR5,001/t due to healthy pricing in its focus markets.
  
• Power & fuel cost/t rose 14% YoY due to the impact of higher petcoke and coal prices. Freight cost increased 4% YoY due to a 7% YoY rise in diesel prices, partially offset by lead distance reduction. EBITDA thus increased 24% YoY to INR13.5b.
  
• While in the short-term, the acquisition of JPA would be earnings-dilutive, we believe addition of ~31% of present capacity at virtually zero lead time is critical for a large-scale player like UTCEM to retain market share. Expanded capacity would give it an edge, when there is an upturn. We value the stock at FY20E EV/EBITDA of 14x. Our TP of INR4,906, implies 20% upside.
  

Piping hot news

Banking sector stares at additional Rs40,000 crore NPAs

• The banking sector fears accretion of more than Rs40,000 crore of bad loans to its books following recent classification of eight consortium accounts of Axis Bank as non-performing assets (NPAs) by the Reserve Bank of India (RBI). The RBI has directed certain reclassifications in the private sector lender’s asset classification and provisioning as on March 2017, subsequent to the annual risk based supervision (RBS) exercise conducted for 2016-17.