HINDUSTAN AERONAUTICS LTD.
Revenue growth visibility on strong order book
Hindustan Aeronautics Ltd. (HAL) has a robust order book worth Rs. 82,000 crores for Q1FY24. In FY24, they expect to conclude orders valued at around Rs. 48,000 crores. Additionally, HAL secured Repair and Overhaul (ROH) contracts worth Rs. 18,000 crores. HAL aims for a 10% growth from FY24 onwards, driven by the delivery of LCA Mk1A and HTT-40 aircraft. The company also has a promising long-term order pipeline, including projects like Tejas MK II, AMCA, TEDBF, IMRH, LCH, and ALH, which could generate business opportunities of Rs. 4,500 billion over the next decade.
Government’s significant push toward the Aerospace and defence industry
The government has increased the defence budget to Rs. 5.94 lakh crores for FY24, benefiting established players like HAL. This budget includes funds for acquiring new military equipment. HAL is also diversifying into civil manufacturing and maintenance, aligning with the government’s focus on civil MRO opportunities. The company is working on expanding its global presence
HINDALCO INDUSTRIES LTD.
Dominant market position along with diversified geographical reach
Hindalco Industries holds a prominent position in both domestic and global markets, operating in 10 countries and maintaining strong relationships with renowned global customers. The company is investing in organic growth projects, with approximately $3.5 billion allocated to Novelis and $1.13 billion for projects in India. Hindalco’s product range includes high-value items like beverage can sheets, auto body sheets, and construction materials
Strong operational performance despite adverse market conditions
In Q1FY24, the company achieved an EBITDA of Rs. 6,109 crores, a 5% increase from Q4FY23, thanks to a recovery in Novelis and India Downstream Business. The Aluminum India Downstream Business showed significant improvement, with a 31% increase in Q1FY24 EBITDA. Despite market challenges, Novelis saw improved EBITDA and EBITDA per ton due to high automotive aluminium sheet sales. Hindalco’s copper business also performed well, maintaining market share despite a planned shutdown.
Mahindra & Mahindra Ltd
Domestic automobile business growth is driven by the PV segment
M&M’s domestic automobile business, particularly in the passenger vehicle (PV) and commercial vehicle (CV) segments, has performed well. Robust sales are attributed to dealer inventory buildup in anticipation of high demand during the upcoming festive season. The company expects continued growth driven by increased capacity and new models.
Farm equipment segment driven strong performance despite industry headwinds
Despite an industry decline, M&M reported robust farm equipment segment performance during the quarter led by strengthened leadership through new launches and network expansion. However, farm equipment segment exports faced challenges in markets like the US and South Asia due to industry dynamics and regional issues. The company’s market share in the tractor segment stands at 42.9% and further plans to gain share from the OJA global tractor platform and Swaraj Target to grow in the food production market. With the outlook for tractor segment remaining positive, we expect market share gain to continue through new launches.
OBEROI REALTY LTD.
Strong project launch pipeline provides revenue visibility
Oberoi Realty has a strong project pipeline, including launches in Pokhran Thane and Kolshet Thane. These projects involve residential, educational, hospitality, and retail components. The company is also working on a significant land acquisition in Gurugram, NCR, and a MHADA redevelopment project in Andheri, Mumbai.
Experienced promoter and professional management reduces execution risks
The company’s promoter has over three decades of experience in real estate projects in the Mumbai Metropolitan Region (MMR). The promoter group holds a 67.71% stake with no pledge against it. Oberoi Realty is managed by a qualified and experienced team, known for executing projects in various segments
SBI LIFE INSURANCE COMPANY LTD.
Healthy capital adequacy and solvency ratio in the life insurance space
SBI Life Insurance consistently maintains a healthy capital position, with a solvency ratio of 2.15 times, exceeding the regulatory requirement of 1.5 times as of June 30, 2023. The net worth has increased to Rs. 13,530 crores from Rs. 11,760 crores a year earlier. Steady internal cash accrual supports the company’s capital position and business growth.
Improvement in operational metrics reflection of superior performance
SBI Life Insurance has shown improvement in longer duration persistency, with the 61st-month persistency increasing from 50.3% in Q1FY23 to 56.7% in Q1FY24. The value of new business margin remains healthy at 28.8% in Q1FY24.
UNITED SPIRITS LTD.
Strong leadership position and well-established brands augur well for the company
United Spirits is a top player in the Indian spirits industry, with well-known brands like McDowell’s No.1, Royal Challenge, Signature, and Antiquity. It also benefits from Diageo’s iconic brands. The company’s wide-ranging product portfolio in categories like Scotch whisky, IMFL whisky, brandy, rum, vodka, gin, and wine positions it well in the competitive alcohol beverages industry.
Easing raw material prices, price hikes and upcoming festive season key triggers ahead
The company benefits from lower raw material prices, recent price hikes in Indian-Made Indian Liquor (IMIL), and strong demand anticipated during the upcoming festive season. Increased on-trade socialisation and the revival of global travel also bode well for the company.
VARUN BEVERAGES LTD.
Capacity expansion and commissioning of new facilities bodes well for growth
Varun Beverages has expanded its production facilities and capacity in various locations. They are also undertaking a green-field expansion in Maharashtra, Uttar Pradesh, and Odisha to enhance their juice and dairy-based beverage business. The company’s new subsidiary in South Africa holds promise, as the market size is substantial.
Resilient quarterly performance despite soft demand environment in India
Despite challenging market conditions due to unseasonal rains, Varun Beverages achieved a 13.6% YoY revenue growth in Q2CY23, surpassing market expectations. EBITDA and PAT also showed annual growth of 20.8% and 25.4%, respectively. The company’s focus on expanding production capacity and diversifying geographically has contributed to its resilience.
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