EUR 120.00 For Business Accounts Only

MOSL: Morning India (24/June/22): 1. Tube Investments - Initiating Coverage (Reinvesting cash flows for sustained growth); 2. ICICI Prudential Life; 3. Chemplast Sanmar; 4. Technology (Accenture); 5. EcoScope

Morning India (24/June/22):

Today’s top research idea
Tube Investments: Reinvesting cash flows for sustained growth
-    TIINDIA has articulated the TI way of growth, with objectives of: a) delivering 25% profit CAGR over long term and b) moving away from being an auto component supplier only, by leveraging on cashflows of existing businesses. The TI way of growth has three components - TI-1 (existing businesses), TI-2 (a venture capital style model) and TI-3 (a private equity style model based on acquisitions).
-    TI-1 businesses, core businesses of Engineering, Metal Formed Products, Cycles, and Others, are estimated to drive revenue/PAT CAGR of 14%/25% over FY22-25.
-    Under its TI-2 strategy (VC model), TIINDIA is seeding new platforms for future growth. It plans to invest at least INR2b p.a. from its standalone free cashflows to seed new businesses that will lay down the foundation of future growth. So far, it has seeded five businesses, of which we see good potential in optical lens, e-3Ws and e-Tractors, though ramp-up will take longer time for any material contribution to consolidated earnings.
-    TI-3 is based on acquiring stressed assets in either existing line of businesses or new areas. It has so far acquired only one asset - CG Power, which has already seen very good turnaround and is contributing ~33% to the SOTP for TIINDIA.
-    TII offers diversified revenue streams, with strong growth in the core business (~25% CAGR), ramp-up in CG Power and optionality of new businesses incubated under TI-2 strategy. At consolidated level, we estimate revenue/EBITDA/PAT CAGR of ~15%/20%/ 20% over FY22-25, respectively. We initiate coverage on the stock with a BUY rating and a TP of ~INR1,900 (Mar-24 based SOTP).

Piping hot news
Accenture’s Q3 revenues comes in at $16.2 bn, beats estimates
Accenture tempered its revenue forecast for Q4 and toned down its profit forecast for 2022 fiscal.