18 May 2018
Market snapshot
Equities - India
Close
Chg .%
Sensex
35,149
-0.7
Nifty-50
10,683
-0.5
Nifty-M 100
19,153
0.4
Equities-Global
Close
Chg .%
S&P 500
2,720
-0.1
Nasdaq
7,382
-0.2
FTSE 100
7,788
0.7
DAX
13,115
0.9
Hang Seng
12,278
-1.3
Nikkei 225
22,838
0.5
Commodities
Close
Chg .%
Brent (US$/Bbl)
79
0.5
Gold ($/OZ)
1,291
0.0
Cu (US$/MT)
6,857
0.9
Almn (US$/MT)
2,303
-1.4
Currency
Close
Chg .%
USD/INR
67.7
-0.1
USD/EUR
1.2
-0.1
USD/JPY
110.8
0.3
YIELD (%)
Close
1MChg
10 Yrs G-Sec
7.9
-0.02
10 Yrs AAA Corp
8.6
-0.02
Flows (USD b)
17-May
MTD
FIIs
-0.1
-0.6
DIIs
0.1
1.1
Volumes (INRb)
17-May
MTD*
Cash
343
341
F&O
14,328
7,840
Note: YTD is calendar year, *Avg
YTD.%
3.2
1.4
-9.4
YTD.%
1.7
6.9
1.3
1.5
4.9
0.3
YTD.%
18.0
-0.9
-4.9
2.1
YTD.%
6.0
-1.7
-1.7
YTDchg
0.6
0.7
YTD
0.7
6.2
YTD*
371
8,013
Today’s top research idea
Eicher Motors: All set for next leg of growth
Driven by high-potential, under represented BIMARU states
We see high growth potential in key motorcycling markets like BIMARU (Bihar,
MP, Rajasthan and UP). These under-penetrated 2W markets offer higher
scope for aspirational products like RE. RE's market share in these states is
currently 3-4% (v/s 6% for pan-India).
Our state-wise demand model indicates 20% CAGR in domestic volumes over
FY18-20. However, considering capacity constraints we model ~16% volume
CAGR.
RE is focused on creating a mark in developing markets like LatAm and South
East Asia. We believe that export markets can be a meaningful contributor to
volumes in five years, but ramp-up would be back-ended.
We expect EPS to grow 30% CAGR over FY18-20E.
Buy
with TP of INR35,572
(FY20E).
Research covered
Cos/Sector
India Strategy
Eicher Motors
Bajaj Finance
Britannia Inds
Voltas
Muthoot Finance
Quess Corp
SRF
Escorts
TeamLease Services
Results Expectation
Key Highlights
Contrarian Investing: Consensus Upgrade Analysis
All set for next leg of growth…
Growth outlook positive, improving asset quality
Robust volume and margin outlook; Maintain Buy
Results impacted by below-expected UCP performance
PAT misses estimate as growth remains tepid
Robust growth in Staffing leads to revenue beat; In-line margins
Strong beat on all fronts
Healthy progress across segments, upgrade to Neutral
Margin story playing out better than expectations
AMRJ | AL | BJAUT | DBEL | STR | TMX
Chart of the Day: Eicher Motors – All set for next leg of growth; driven by high-potential,
under represented BIMARU states
Share of Premium (>150cc) motorcycles to expand to ~31% of motorcycles by FY22E
Note: % in circle represents share of premium segment in motorcycle
Source: MOSL
Research Team (Gautam.Duggad@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.