MOSL: Morning India (28/June/19): 1. Automobiles (No signs of recovery yet); 2. Technology; 3. ICICI Pru Life Insurance; 4. Financials – Bank and NBFC
MOrning India (1/July/19): 1. Asian Paints –ART (Rising capital intensity keeps return ratios subdued); 2. GAIL India; 3. Oil & Gas; 4. Lemon Tree Hotel; 5. EcoScope
Today’s top research idea
Asian Paints (ART): Rising capital intensity keeps return ratios subdued
- Asian Paints’ FY19 annual report highlighted continued pressure on its consol. RoCE (down 640bp from 22.4% in FY19 (FY15: 28.8%), primarily due to rising capital intensity and the subdued operating performance.
- Also, over last five years, Standalone RoCE declined 880bp to 28.6% and subsidiaries’ RoCE was down to 4.1% from 7.1% in FY15. Earnings-to-cash flow conversion declined to 89% (FY18: 99%) and OCF stood modest at INR22.1b (FY18: INR21.1b). Consol. revenue grew 15% to INR193.4b, but (a) higher RM costs, (b) deteriorating product mix and (c) rising discounts led EBITDA margins decline by 80bp to 18.2%. Over FY16- 19, discounts increased by 170bp to 12.8% of gross revenue. Purchases from related parties stood at INR5.4b, 5.2% of raw materials consumed.
Piping hot news
Liquidity crunch weighs on Anil Ambani firm, Reliance Home Fin extends NCDs maturity date by 4 months
- Anil Ambani-led Reliance Home Finance Saturday said it has extended by four months the maturity date on its bonds worth Rs 400 crore due to continuing liquidity pressure. In view of the continuing severe liquidity crisis in the sector, the maturity of certain NCDs of Rs 400 crore has been extended till October 31, 2019, with the formal written consent of the concerned debenture trustees and non-convertible debenture (NCD) holders, Reliance Home Finance (RHFL) said in a release
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