1 December 2017
Equities - India
10 Yrs G-Sec
10 Yrs AAA Corp
Flows (USD b)
Note: YTD is calendar year, *Avg
Today’s top research idea
Sagar Cement: Well placed to capture growth in AP/Telangana
Sagar Cements (SGC) is well placed to capitalize on strong opportunities in the
markets of AP/Telangana, where demand is likely to grow at 12-15% over the
next two years after increasing by ~20% YoY over the past 12-15 months. This will
be mainly led by the government's push toward infrastructure development and
the creation of a new state capital of Amravati (Andhra Pradesh).
SGC will increase capacity by ~35% over FY17-19 at a capex of INR2b (USD20/t)
by way of debottlenecking and brownfield expansion, and will also diversify
into east by ramp-up capacity in Bayyavaram.
SGC is likely to improve its cost curve over the medium term, led by i)
stabilization of WHRS, ii) commissioning of the 18MW thermal power unit and
iii) lead distance reduction for the eastern markets due to capacity expansion in
SGC is attractively priced at EV/t of ~USD60-65 - a significant discount to
replacement cost of USD110/t.
Cost efficiencies and scaling of capacity to drive profits
Indo Count Inds.
SPOTLIGHT: Well placed to capture growth in AP/Telangana
2QFY18 real GDP growth in line with estimate
Well placed for upcoming opportunity
Multiple headwinds hurting margins
Nov-17 Sales Estimates: Strong wholesales on low base of previous year
Piping hot news
India’s GDP growth rebounds to 6.3% in September quarter
India’s GDP growth quickened to 6.3% in the September quarter, up from a
three-year low of 5.7% in the June quarter, an indication that the Indian
economy has shaken off the lingering effects of demonetisation last year and
GST rollout on 1 July…
Chart of the Day: EcoScope—2QFY18 real GDP growth in line with estimate
Real GDP grew 6.3% YoY in 2QFY18 the highest in three
Manufacturing led higher growth in 2QFY18*
Research Team (Gautam.Duggad@MotilalOswal.com)
* Over 1QFY18
Source: CSO, MOSL
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