Karvy Stock Broking Limited [KSBL] is a SEBI (Registration No INH200003265).registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform.
The Company expects demand for its products in domestic market to increase further as its key customers are planning to launch new products in the near term.
The loan growth was hearty at 13%/28% QoQ/YoY. The same was led by both the retail (8%/26% QoQ/YoY) and corporate (16%/29.8% QoQ/YoY).
The bank reported a healthy and stable performance across the parameters: Loan growth was healthy at 4.3%/18.7% QoQ/YoY led by retail, NIMs were sequentially stable at 4.3%, asset quality was stable, and cost/Income ratio inched down further.
In Q4FY18, Indian automobile industry reported robust volume growth on account of favorable base (demonetization impact in Q4FY17) and current buoyancy in the demand supported by urban and rural markets.
Domestic formulations have clocked 8.7% growth (ex- bonus) (AIOCD Awacs) for the quarter. We believe that Q4FY18 to be better for the industry and primary sales would show recovery in the domestic space.
Sandhar Technologies (Sandhar) is a multi-product auto component supplier based out of Gurgaon. It is a dominant Auto lock assemblies and Rear View Mirror manufacturer in India. It has strong relationship with OEMs like Hero Motocorp, TVS Motor, Royal Enfield and Honda Cars.
CPI for Mar 2018 declined to 4.28% in line with the consensus data of 4.3% as compared to 4.4% in Feb 2018.
Indian auto companies released Monthly sales volumes for the month of Mar’18. Overall the industry volumes were strong compared to corresponding month last year.
We value the stock 9.0x, (a premium to the 3 year average valuation of 8.3x) on FY20E EPS of Rs.18.4 and arrive at a target price of Rs.166, and recommend ‘BUY’.
We interacted with Lupin management recently. The US market will become more competitive as pricing pressure would continue, but newlaunches will successfully offset the pricing pressure. However, we believe the stock is fairly priced and reiterate our HOLD rating on the stock.