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India Equity Research Reports, IPO and Stock News
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Strategy: FY11 foodgrain production estimates raised - yet again [Abhishek Saraf]
The Govt. of India has again raised its FY11 food grain production estimates to 241mn tonnes (from 236mt est. in April and 232mt est. in Feb) implying a 10%yoy growth (highest in past 7 years) over FY10 production of 218mt. This is yet another data point in a series of positive developments for India's hinterland, which suggest that rural economy will remain one of the key drivers of domestic demand. Earlier in June, the government had raised Minimum Support Prices (MSPs) of several Kharif (autumn harvest) crops by 7%-19%, propping up rural purchasing power.
Bajaj Auto Limited: Annual report analysis [Srinivas Rao]
Bajaj’s FY11 annual report throws light on the impact of its three year-old strategy, which focused on building a differentiated brand position, based on performance (vs mileage), with an export thrust (30% of sales). As a result, revenue-share of entry-level bikes has fallen from 32% (FY08) to 12% (FY11) and EBITDA margin has risen c700bps. While the strategy has been successful, we also see a possible risk of brand dilution and a crowded product palette due to recent product launches. Our estimates factor in a 50% cut in export incentives from 2HFY12.
Tata Motors Ltd: Jun-11 volumes: Land Rover strong, Jaguar soft; maintain Buy [Srinivas Rao]
Jaguar and Land Rover (JLR) volumes for June 2011 at 20,358 units (+1% YoY) are soft due to the continued weakness in Jaguar volumes. YTD volumes stand at 62,085 (+9% YoY) compared to our full year FY12E estimate of 285K units (+18% YoY). We expect the monthly run-rate to increase in 2HFY12 once the deliveries of the new Range Rover "Evoque" commences. We note that the Evoque has already received confirmed advance bookings of around 15K units.
TVS Motor: New three-wheeler permits in Karnataka a positive [Amyn Pirani]
The recent decision of the Karnataka High Court paves the way for the issue of 40,000 new permits for auto rickshaws (three-wheelers) is a significant positive for TVS Motor. Recent management commentary had indicated that the weakness in domestic three-wheelers (3W) volumes was on account of no new permits being issued in the south India market which has been the company's traditional stronghold. TVS's YTD 3W volumes at 11,422 units (46.5% YoY) have been driven by strong exports (8839 units, 370% YoY) whereas domestic volumes have been weak (2585 units, -56% YoY). We estimate TVS's 3W volumes for FY12E/13E at 55K/72K units implying growth of 38%/30%.
The Asia Investor Letter: Tail-Hedging China's (In)Stability Paradox [Brad Jones]
China's extraordinary economic transformation following the Deng-inspired reforms of 1978 might be considered equivalent to the Gilded Age in the US, a boom industrialization period of similar length that followed the ravages of the US Civil War. History subsequently showed this to be a springboard for US economic and military hegemony. With per capita GDP in China now approaching that of the US at the onset of World War One, yet still 6-10 times below that of the US today, some observers have suggested favorable base effects for China should ensure many more years, if not decades, of smooth prosperity gains ahead.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strategy: FY11 foodgrain production estimates raised - yet again [Abhishek Saraf]
The Govt. of India has again raised its FY11 food grain production estimates to 241mn tonnes (from 236mt est. in April and 232mt est. in Feb) implying a 10%yoy growth (highest in past 7 years) over FY10 production of 218mt. This is yet another data point in a series of positive developments for India's hinterland, which suggest that rural economy will remain one of the key drivers of domestic demand. Earlier in June, the government had raised Minimum Support Prices (MSPs) of several Kharif (autumn harvest) crops by 7%-19%, propping up rural purchasing power.
Bajaj Auto Limited: Annual report analysis [Srinivas Rao]
Bajaj’s FY11 annual report throws light on the impact of its three year-old strategy, which focused on building a differentiated brand position, based on performance (vs mileage), with an export thrust (30% of sales). As a result, revenue-share of entry-level bikes has fallen from 32% (FY08) to 12% (FY11) and EBITDA margin has risen c700bps. While the strategy has been successful, we also see a possible risk of brand dilution and a crowded product palette due to recent product launches. Our estimates factor in a 50% cut in export incentives from 2HFY12.
Tata Motors Ltd: Jun-11 volumes: Land Rover strong, Jaguar soft; maintain Buy [Srinivas Rao]
Jaguar and Land Rover (JLR) volumes for June 2011 at 20,358 units (+1% YoY) are soft due to the continued weakness in Jaguar volumes. YTD volumes stand at 62,085 (+9% YoY) compared to our full year FY12E estimate of 285K units (+18% YoY). We expect the monthly run-rate to increase in 2HFY12 once the deliveries of the new Range Rover "Evoque" commences. We note that the Evoque has already received confirmed advance bookings of around 15K units.
TVS Motor: New three-wheeler permits in Karnataka a positive [Amyn Pirani]
The recent decision of the Karnataka High Court paves the way for the issue of 40,000 new permits for auto rickshaws (three-wheelers) is a significant positive for TVS Motor. Recent management commentary had indicated that the weakness in domestic three-wheelers (3W) volumes was on account of no new permits being issued in the south India market which has been the company's traditional stronghold. TVS's YTD 3W volumes at 11,422 units (46.5% YoY) have been driven by strong exports (8839 units, 370% YoY) whereas domestic volumes have been weak (2585 units, -56% YoY). We estimate TVS's 3W volumes for FY12E/13E at 55K/72K units implying growth of 38%/30%.
The Asia Investor Letter: Tail-Hedging China's (In)Stability Paradox [Brad Jones]
China's extraordinary economic transformation following the Deng-inspired reforms of 1978 might be considered equivalent to the Gilded Age in the US, a boom industrialization period of similar length that followed the ravages of the US Civil War. History subsequently showed this to be a springboard for US economic and military hegemony. With per capita GDP in China now approaching that of the US at the onset of World War One, yet still 6-10 times below that of the US today, some observers have suggested favorable base effects for China should ensure many more years, if not decades, of smooth prosperity gains ahead.
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