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MOSL: Morning India (6/July/18): 1. Automobiles 1QFY19 Preview; 2. Rural India; 3. Expert Speak (Healthcare) 4. Telecom (Renewed aggression); 5. Quess Corp

MOrning India (6/July/18): 1. Automobiles 1QFY19 Preview (Demand intact; rural sales healthy); 2. Rural India (Rural consumption recovery playing out well); 3. Expert Speak (Healthcare) 4. Telecom (Renewed aggression); 5. Quess Corp

 

Today’s top research idea

Automobiles 1QFY19 Preview: Demand intact; rural sales healthy; EBITDA margin to expand for fourth consecutive quarter

• Auto sector continued healthy growth momentum in 1QFY19 – 2Ws grew 15% YoY, 3Ws grew 67% YoY, UVs grew 21% YoY, and CVs grew 50% YoY.
• EBITDA margin for our auto OEM (ex-JLR) universe is likely to expand (200bp YoY and 60bp QoQ to 13.8%) for the fourth consecutive quarter, as high commodity costs are offset by price increases and operating leverage. In 1QFY18, margins of OEMs were impacted by one-time GST-related compensation and discounts on BS-3 stocks.
• We have lowered our FY19/20 EPS estimates for by 10.5%/10.9% for TVSL, by 9.5%/13.3% for BHFC, and by 6.1%/4.3% for EIM.
• Our top picks are MSIL and MSS among large caps, and AL, ENDU and EXID among midcaps. We also believe that MM is the best play on rural market recovery.

Piping hot news

Rupee slumps to an all-time closing low versus US dollar

• The Indian rupee on Thursday closed at a record low against the US dollar, tracking losses across Asia ahead of the tit-for-tat tariffs by Washington and Beijing are implemented, besides key US data. The rupee ended at 68.94 against the dollar, down 0.29% from its previous close of 68.74. It opened at 68.75 and touched an intraday low of 69.01. The rupee had hit an all-time closing low of 68.825 on 28 August 2013. It hit a record intraday low of 69.09 on 28 June 2018.