Get started

Demand Zone

Eicher Investment CallNSE:EICHERMOT Eicher Motors Limited, incorporated in 1982, is the listed company of the Eicher Group in India and a leading player in the Indian automobile industry and the global leader in middleweight motorcycles. Eicher has a joint venture with Sweden’s AB Volvo to create Volvo Eicher Commercial Vehicles Limited (VECV). VECV is engaged in truck and bus operations, auto components business, and technical consulting services business. Fundamentals of the company: - Iconic Brand It is the owner of the iconic Royal Enfield brand which is focused on mid-sized motorcycles (250-750 cc). Classic, Bullet, Himalayan are some of the brands that come under its Royal Enfield brand. It is sold in 60+ countries globally. It also provides protective riding apparel, urban casual wear, and Motorcycle accessories. It has launched two BS-VI Compliant Motorcycles, i.e. Classic 350 BS-VI and Himalayan BS-VI in FY20. Commercial Vehicle segment Its VECV segment makes- light & medium-duty trucks, heavy-duty trucks and buses, engineering components, and aggregates. It is also the manufacturer of medium-duty base engines for Euro VI requirements of the Volvo Group. It has launched India’s first BS-VI compliant CV range in FY20. Manufacturing Facility It has 3 Manufacturing Facility around Chennai. Its VECV’s manufacturing plant in Pithampur, Madhya Pradesh produces medium-duty five- and eight-liter engines. Its VE PowerTrain plant is the first engine plant in India to produce a Euro-6 compliant base engine. A new body shop for Pro 2000 and Pro 8000 trucks has been commissioned and installed. Capacity expansion Its Phase 1 capacity expansion for the Bhopal plant is 40k vehicles per annum. Its VE PowerTrain plant current capacity is 50,000 engines, scalable up to 100,000 engines. Distribution It has 1889 dealers (989 stores and 900 studio stores) across 1,550 cities. Its network has grown 3 times in the last 5 years. It has 308 dealers, 27 distributors for its Bus Segment. It has added 35 new stores across international markets in FY19-20, increasing its overall touchpoints to over 660 stores including 77 exclusive stores and 585 multi-brand outlets. Market Share Mid-size Motorcycles segment: >95% in FY20. VE Commercial Vehicles market share in domestic LMD segment: 29.5% in FY20. Above 125cc segment: 26.6% in FY20. Commercial Vehicle: 14.6% in FY20. Overall Motorcycle segment: 6%. Eicher HD Trucks Market Share: 5.1% in FY20. Revenue Mix Domestic: 91% In FY20. International: 9.1% in FY20 which was 2.8% in FY16. Average ROE (Return on Equity) for last 3, 5 and 10 years are 19%, 23% and 24% respectively (all above 15%). Debt to equity at 0.01 (less than 1 is good), Interest Coverage at 107 (greater than 3 is good), Current ratio at 2.73 (greater than 1.5 is good), FCF to CFO at 51%. TTM sales growth of 26% and TTM profit growth of 42%. Dividend yield of 0.71% (consistent dividend payer since 2009). Borrowings came down to 122cr in September 2021 from 249cr in March 2020. Details from credit rating report presented by ICRA in Sep'21 Eicher Motors Limited: Ratings reaffirmed Rationale The reaffirmation of ratings of Eicher Motors Limited (EML) continues to factor in its strong business profile, as evidenced by its market leadership (>90% share) in the premium middle-weight motorcycle segment (>250cc-800cc) in India, its established Royal Enfield (RE) brand, strong product portfolio and well-developed dealership and aftersales network. The ratings also favourably factor in its strong financial profile, reflected in its healthy return indicators, credit metrices and a superior liquidity position. In FY2021, the Covid-19 pandemic exacerbated the already weak two-wheeler (2W) demand environment, and additionally disrupted the supply chain ecosystem. Consequently, EML reported a 13% YoY contraction in its consolidated sales volumes in FY2021 vis-à-vis 9% contraction for the overall motorcycle segment (domestic + exports). Nonetheless, improving pace of the vaccination programme, coupled with an increasing premiumisation trend, is expected to augur well for EML. Its strong brand pull, regular product launches/ refreshes supported by expansion of its overseas presence is likely to support its growth strategy. The ratings continue to factor in the strong financial profile of the company, evidenced by its healthy profitability (average OPBDITA and ROCE of ~27% and over ~35%, respectively, over the past five years) and cash accruals, negative net debt position and robust liquidity profile (cash, cash equivalent and investments of ~Rs. 7, 790 crore as on March 31, 2021). While commodity price headwinds and semiconductor chip shortages may constrain profitability in the near-term, ICRA expects EML’s cost rationalisation initiatives, better product mix and increasing exports to support its profitability. The company is expected to fund its capacity expansion/ new product development plans from internal accruals/ cash balances, thereby keeping its dependence on external borrowings negligible. EML’s commercial vehicle (CV) business under VE Commercial Vehicles Limited (or VECV, a 54.4% subsidiary of EML) has improved its presence in the domestic market over the last few years, despite operating in a highly cyclical industry, prone to stiff competition. This had been aided by continuous product launches/ refreshes, technology advancements, expanding dealer and after-sales networks, and targeted marketing efforts. ICRA expects the Government’s thrust on construction and infrastructure projects, coupled with the potential implementation of a fleet modernisation and scrappage programme, to support demand for VECV over the medium term. The company continues to maintain a strong liquidity position, which is likely to limit any funding support requirements from EML. The Stable outlook on EML’s long-term rating reflects ICRA’s expectation that it will continue to maintain its leadership position in the Indian premium motorcycle sub-segment, aided by its established brand and product portfolio, regular investments in new model launches and extensive dealership network. The same is likely to help the company successfully navigate through the uncertainties caused by the pandemic and maintain a robust credit profile. The company’s volumes grew at a CAGR of ~10% over FY2015- FY2021 vis-à-vis marginal decline for the overall domestic motorcycles segment. Despite the increasing competition from domestic and international OEMs, RE is expected to maintain its stronghold in the target sub-segment over the medium term, backed by its niche brand and value proposition, expansive dealership, and after-sales service network (2,0711 domestic touchpoints in June 2021 against 527 in FY2016). Regular new launches and product variations underpin RE’s technical prowess. With launch of the Himalayan (early 2016), The Twins (FY2019) and Meteor (FY2021), it has demonstrated its capability to develop new models from the ground up, incorporating new engines as well as a platform. This has given the existing RE users a chance to upgrade and helped ramp up its presence in export markets. EML’s liquidity is superior as reflected by its cash, cash equivalents and investments (MF’s) of ~Rs. 7,790 crore as on March 31, 2021. The company does not have any long-term loans on its balance sheet. Healthy cash flows from operations coupled with negligible debt obligations and favourable working capital cycle, have enabled EML to maintain a superior liquidity profile, despite a large capex undertaken in the last few years. In line with its track record, the entire capex for FY2022 (estimated at around Rs. 500-600 crore) is also expected to be funded through internal accruals. Despite near-term demand uncertainties, ICRA expects the company to continue to maintain a strong liquidity profile. Risks RE’s product portfolio, concentrated in the >250cc to 650cc sub-segment, caters to a niche clientele. Despite YoY improvement over the years, the >250-800cc sub-segment constituted only 6% of the total 2W market in India (in FY2021). Further, within the sub-segment also, the company relies heavily on the Classic brand/models, which accounts for over 60% of the motorcycles sold. While the company has launched new brands (within the same sub-segment) over the past few years, there scale-up remain to be seen. Lack of segment diversification and product concentration remains a credit sensitivity for the company. Furthermore, several domestic and international players have entered the premium sub-segment with new products in the past few years. The increasing competition could limit the pricing power of the company to some extent. While RE’s export volumes in FY2021 had increased at a CAGR of 33% in FY2015-2021 on a YoY basis, these accounted for only ~6% of total volumes sold during FY2021. Thus, the company remains exposed to geographical concentration risk, with India remaining its key market. However, over the past few years the company has expanded its distribution network in over 60 international markets. The company established one assembly facility in Argentina in August 2020 and its Columbia facility became operational in August 2021. In addition, it is working towards setting up assembly operations in Thailand, Brazil, and certain other locations to improve its competitiveness. The 650cc Twin motorcycles and newly launched Meteor 350 have been well received in the mature markets. The company’s ability to increase exports could offer a significant scope of market expansion and, thereby, help mitigate the impact of any slowdown in the domestic market. Why is it a good buy right now? on weekly charts NSE:EICHERMOT is trading at a confluence zone of 3 resistances and 3 supports. Also, it is trading near its 10-year average PE of 41 (current PE is 42).
NSE:EICHERMOTLong
by akashbothra
Why BEPL is becoming more attractive day by day? INVESTMENT IDEAThis post is not for traders who want to trade with stop loss. This is for long term investors who wants to buy fundamentally strong beaten down names at a good entry points. NSE:BEPL Bhansali Engineering Polymers Ltd is engaged in manufacturing and sale of ABS Resins, AES Resins, ASA resins, SAN resins and their alloys with other plastics in the Indian market. Its customers include leading companies dealing in Automobiles, Home Appliances, Electronics, Healthcare and Kitchenware. Why is it a good buy right now? The Company had entered into a 50 : 50 Joint Venture Agreement with Nippon A&L Inc., Japan (NAL) and incorporated a Joint Venture Company namely Bhansali Nippon A&L Private Limited which provides sales support and technical support to the Company. This JV has enabled the company in catering the growing demand of ABS resins, ASA resins, AES resins and other specialty polymers. Nippon A&L Inc. was established in 1999 as a JV between Sumitomo Group and Mitsui Chemicals, which focused on polymerisation of Styrenics and enjoys high reputation in the field of manufacturing and marketing of ABS, AES, ASA resins and SBR/PBRLatices. Technical expertise, as and when required, is deployed from NAL Japan, in the purview of the JV between the company and NAL. With the help of the technical support BEPL has developed several new ABS grades and going ahead also the company believes that they will continue adding new SKUs to its product portfolio. Indian ABS market has duopoly situation with only two players BEPL and INEOS, while the rest of the market demand has been catered through imports. Despite the availability of a market in India, global players find it difficult to meet the demand of the Indian market as the scale of operation is not favorable. Further, every segment requires a different colour and performance specification so manufacturing such a wide variety of colours requires a strong balance between investment and sectional capacity utilisation. Need for high grade technology is another strong entry barrier. Both these domestic companies have technical collaboration with foreign partners and have long standing relationships with end user industry. The market is niche which acts as a natural entry barrier for the new players. The Indian automotive industry is undergoing significant transformation, with respect to its sustainable growth and profitability. The industry is witnessing megatrends that are expected to transform the industry in a significant way. Rapidly evolving customer needs, disruptive impact of technology, a dynamic regulatory environment, changing mobility patterns etc. are impacting the way auto companies are doing business in India as well as abroad. The industry now aspires to double its contribution to manufacturing GDP with a four-fold growth in size and a six-fold growth in exports by 2026. These bold aspirations, along with the trends shaping the industry, create new opportunities in the years ahead. India is becoming a global manufacturing hub of two wheelers as well as four wheelers. As a result of which, international giants in the automotive field, viz. Suzuki, Hyundai, Honda, Toyota, Volkswagen, General Motors, Ford, Nissan, Renault, Fiat have established their respective manufacturing facilities in India, with growing degree of indigenization of its components. For components manufactured out of ABS, BEPL’s presence is well registered with all such international giants. Indian appliance and consumer electronics (ACE) market is expected to double by 2025 according to Indian Consumer Durable Report. There is immense scope for growth of these products in India as the penetration level is immensely low as compared to global average. Demand for consumer electronic goods is likely to witness an increase in the coming years, especially in the rural areas as the Government plans to invest significantly in rural electrification, supplemented by rising influence of social mass media and the popularity of online sales. The Government of India’s policies and regulatory frameworks, such as relaxation of license rules and approval of 51% Foreign Direct Investment (FDI) in multi-brand and 100% in single-brand retail, are some of the major growth drivers for the consumer market. The Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) shall boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative. Near-term outlook for Appliances and Consumer Electronics (ACE): Pent-up demand (most seasonal categories missed out massively in the previous two seasons), work-from-home (to support convenience driven categories), improving housing activities, and resumption of Capex will sustain strong revenue traction in the coming quarters too. Average ROE (Return on Equity) for last 3, 5 and 10 years are 40%, 39% and 25% respectively (all above 15%) 5year CAGR (Compound annual growth rate) Sales and Profit at 19% and 82% TTM (Trailing 12 months) Sales and Profit growth at 33% and 147% Promoter Holding increased from 55% in Dec'19 to 56.45% in Mar'20 (greater than 45% is good) Dividend Yield at 1.56% (consistent dividend payer since 2011) Debt to equity at 0.00 (less than 1 is good), Interest Coverage at 1070 (greater than 3 is good), Current ratio at 6.81 (greater than 1.5 is good), FCF to CFO at 78% (company won’t have to raise debt for expansion) Current PE at 4.82 is much lesser than 10-year average PE of 26 BEPL is trading at a very good support point and is heading towards another important support point at Rs.100. If anyone consider it for buying, put only 3% of your capital right now, buy with another 3% if it falls another 40% and invest the rest 4% (don't invest more than 10% of your entire capital in one stock) when the share closes at a 52 week high.
NSE:BEPLLong
by akashbothra
3
TTK Prestige trading at Demand ZoneNSE:TTKPRESTIG TTK Prestige is among the leading brands in the kitchen equipment space, especially in the pressure cooker segment. It is the No. 1 Brand in Pressure cookers, No. 1 Brand in Cookware, No. 1 Brand in Value-added Gas Stoves, No. 1 Brand in Induction Cooktops, India’s only company to offer the complete Induction Cooking solution and it is the No 1 Brand in Rice Cookers. Fundamentals: - 1. The product profile is diversified, with 31% of the revenue coming from pressure cookers, 15% from cookware, 14% from gas stoves, 12% from mixer-grinders, and the remainder from other kitchen and home appliances and cleaning solutions. 98% of the revenue comes from domestic sales. 2. Distribution Network The company has more than 545 Prestige Xclusive stores in over 305 cities. 24 Regional Sales Centre and 350+ Authorized Service Centre. The number of outlets as of FY20 was 588. The network now covers 26 States and 345 Towns. The company during FY20 opened two Prestige Lifestyle Stores in Bengaluru. 3. New launch The company launched an innovative and revolutionary range of Pressure Cookers under the Svachh platform during the second half of FY 20. The company is progressing on a new category of Cleaning Solutions. The operating subsidiary Horwood Homewares Limited introduced new products and a new category SMIDGE range. The Company launched 146 SKUs in FY20 and is geared to launch 100 new SKUs in the market during FY 20-21. TTK Prestige Limited is launching a new category - Stainless Steel Casseroles in two versions viz. Royale and Prime. Totally 7 SKUs of different sizes are being offered at the launch stage. 4. Capex As per Long-Range Plan intend to do ₹ 200 Cr Capex over three years, the Company has spent about ₹70 Cr in FY20. 5. It is trading at a PE multiple of 36, less than 10year average PE of 42. 6. Average ROE for the last 3 and 5 years more than 15. 7. TTM Sales growth at 31% and TTM Profit growth at 88%. 8. Debt to equity at 0.06 (less than 1 is good), Interest Coverage at 61.7 (greater than 3 is good), Current ratio at 2.96 (greater than 1.5 is good). 9. Dividend Yield of 0.64% (consistent dividend payer since 2006) The stock is currently trading at a demand zone where 3 resistances and 1 support meet. If anyone consider it for buying, put only 3% of your capital right now, buy with another 3% if it falls another 40% and invest the rest 4% (don't invest more than 10% of your entire capital in one stock) when the share closes at a 52 week high.
NSE:TTKPRESTIGLong
by akashbothra
INVESTMENT IDEA Kalyani SteelsThis post is not for traders who want to trade with stop loss. This is for long term investors who wants to buy fundamentally strong beaten down names at a good entry points. NSE:KSL Kalyani Steels Ltd, a part of Kalyani Group, is primarily engaged in the business of manufacture and sale of Iron and Steel Products. The product portfolio of the Co consists of camshaft, connecting rods, gears, transmission shafts, axle beams, steering knuckles etc. for Automotive Industry, round cast for Seamless Tube Industry, rolled bars for Engineering Application etc. Why is it a good buy right now? (Excerpts from Rating Update of Kalyani Steels by CARE Ratings) 1. Industry outlook India is the second-largest crude steel producer in the world. India’s crude steel production fell by 5.59% and finished steel production was flat at 95.12 MT in FY21 against 102.62 MT in FY20. Domestic steel demand was impacted by a slowdown in manufacturing activities during H1FY21 due to Covid-19 pandemic. However, post lockdown, the global commodity markets witnessed a sharp rebound with a continuous increase in prices. While the demand recovery, especially in China and other economies, was on the back of substantial government stimulus, the lockdowns and restrictions caused significant supply-side headwinds in terms of difficulty in procurement and movement of key raw materials resulting in reduced production across steel mills. The double whammy effect resulted in one of the sharpest and perhaps the fastest recoveries in the global steel prices, which was considered beyond the market's expectation. CARE Ratings expects the domestic steel demand to grow at a compounded annual growth rate (CAGR) of about 7.5% during the next 2-3 years. CARE Ratings further expects net sales realization to remain healthy. As far as volumes growth is concerned, demand improvement and the low base effect of FY21 is likely to help improve the volumes of the domestic players. The solvency ratios of steel companies are expected to improve on account of accretion to net worth and healthy cash accruals along with continuous reduction in debt levels. 2. Strong promoter group coupled with long track record in iron & steel industry KSL is a part of the Kalyani group and is spearheaded by Mr B.N Kalyani in the strength of Chairman. He is also the Chairman and Managing Director (CMD) of Bharat Forge Limited. The Kalyani group, established in mid 1960s, has wide capabilities across varied industries including Engineering, Automotive, Industrial, Renewable Energy, Urban Infrastructure and Specialty Chemicals. In a span of more than four decades, KSL has grown from being a primary iron and steel manufacturer to a preferred steel supplier for engineering, auto, seamless tubes, etc., companies mainly catering to forging industry serving the auto and allied sectors. The promoters are supported by a team of professionals including, Mr RK Goyal (MD) and Mr Balmukand Maheshwari (CFO) who are associated with KSL since more than eight years. 3. Established selling arrangements KSL was promoted as backward integration unit of the Kalyani group from which majority of the requirements for the group companies is met through KSL. Moreover, long-standing relationship with major OEMs along with approved vendor status continues to garner KSL with repeat orders. The Kalyani group companies accounted for around 53% of the total revenue in FY21 (refers to the period April 1 to March 31). 4. Arrangement with suppliers for procurement of raw material albeit absence of long-term contracts continues KSL has diversified raw material procurement source wherein raw materials are procured both from the domestic and overseas market. The key raw materials used by KSL include coke/coke fines, iron ore/iron ore fines and ferro alloys. However, majority of the raw materials have been sourced from few suppliers representing concentration risk; but the risk is partially mitigated as the company takes quotes from various suppliers before placing orders. Furthermore, KSL has not entered into any long-term contracts with the suppliers. 5. Robust capital structure and comfortable debt coverage metrics Capital structure of KSL remained robust with 0.02 (nil) debt to equity and overall gearing (including LC backed creditors) of 0.22x (0.19x) as on March 31, 2021 (2020). The overall gearing marginally increased on account of ECB taken by the company during FY21 to fund the projected capital expenditure of Rs.211 crore. As on March 31, 2021, the company has long-term debt of Rs.18.37 crore. The debt is projected to increase further, however, the overall gearing is expected to remain comfortable. The fund-based working capital utilization is also minimal. The net worth of the company stood at Rs.1,153.42 crore as on March 31, 2021, as against Rs.962.71 crore as on March 31, 2020. The gearing when adjusted to investments in group companies also stayed strong (adjusted overall gearing of 0.25x) as on March 31, 2021. PBILDT interest coverage and total debt/gross cash accrual remained comfortable at 43.24x and 1.11x in FY21 from 10.08x and 1.12x in FY20, respectively. 6. Improvement of Profitability Margin KSL improved its profitability margin majorly on account of improvement in gross margins. The company’s PBILDT (PAT) margins have remained in between 14.90% and 24.04% (8.2% and 15.59%) over the past five fiscal years through FY21. KSL’s PBILDT margin improved to 24.04% in FY21 from 18.93% in FY20 majorly on account of lower raw material and consumable costs. The company is undertaking a backward integration project amounting to Rs.211 crore, to set up a new 200,000 TPA coke oven plant and 17-MW waste heat power plant. The project is expected to be commissioned by September 2022 which shall lead to reduction in cost of production with further improvement in profitability. 7. Average ROE (Return on Equity) for last 3, 5 and 10 years are 16%, 17% and 16% respectively (all above 15%) 8. TTM (Trailing 12 months) Sales and Profit growth at 51% and 82% 9. Dividend Yield at 2.57% (consistent dividend payer since 2010) 10. Debt to equity at 0.18 (less than 1 is good), Interest Coverage at 27 (greater than 3 is good), Current ratio at 2.11 (greater than 1.5 is good), FCF to CFO at 64% (company won’t have to raise debt for expansion) 11. Current PE at 5.08 is less than 10-year average PE of 7.06 12. It can be seen that the stock price is trading near a good demand zone which is a confluence of strong support and resistances. If anyone consider it for buying, put only 3% of your capital right now, buy with another 3% if it falls another 40% and invest the rest 4% (don't invest more than 10% of your entire capital in one stock) when the share closes at a 52 week high.
NSE:KSLLong
by akashbothra
How to trade like a PRO on the basis of Technical Analysis. In this analysis we'll look how the Professional Trader explore the chart before executing their Trade. Demand Zone - Fib Retracement - Candlesticks - Divergence - Divergence warns that the current trend is getting weakening and it might possible that the trend get changed in up coming session. Volume Profile - POC - Point Of Control It's the Big guys who moves and manipulate the market, The Retail Traders can't. This is Not investment advice. It's just for learning purpose. Invest your capital at your own risk. Please like, share & follow.
Editors' picks
NSE:METROPOLISEducation
by TheGopal
32
Astral buy above 2115Hello guys, last few days have been volatile so I was not giving many trades, seeing the market it is now better to take the trades on support rather than on breakout as most of them are failing. Astral retraced 78.6% from last swing high. Sitting above flip level Near Demand/Supply conversion zone Bounced from 200 MA cluster Immediate resistance at 2095 - 2110 Buy above 2115 Targets mentioned in the chart above Please LIKE, COMMENT and SHARE to motivate and support me. I'll keep on posting new ideas on Indices & Stocks. Be sure to follow so that you don't miss any good trades that might have been rewarding. Any comments and critiques will be appreciated even if it's of opposite view as a trader can also be right so many times.
NSE:ASTRALLong
by this_is_shoaib