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Indian markets outperform even in recovery, New high view intact

4 Mins 02 Sep 2022 0 COMMENT
  • Indian equities outperformed global peers as sharp correction in Brent crude and industrial metal prices supported sentiments 

  • The banking space remained outperformer last week and helped Nifty to close flat despite weakness seen in Technology and Energy stocks. 

  • Indian markets are outperforming global peers in this recovery 

  • Broader markets continue to outperform 

  • Expect current consolidation to continue and US inflation numbers may trigger some up move due to short covering 


  • Indian GDP, fastest in last 4 quarters primarily led by services sector. However, the growth is lower than estimates 

Auto Volumes Snapshot - August 2022 and Outlook

  • Auto Volumes for the month of August 2022 came in mixed. Out-performance for the month was led by Eicher Motors in the 2-W space, M&M in the PV category and Ashok Leyland in the CV domain. 

  • Domestic PV segment is well poised to report ~20% YoY growth in FY23E with volumes surpassing the pre-Covid highs at ~37 lakh units in FY23E 

  • Expect CV space to report better volume prints going forward with M&HCV space seen growing in excess of 20% in FY23E. 

  • In the 3-W space, volumes grew double digit, with TVS outperforming with ~22% MoM growth largely led by export segment. The segment seems to be out of woods, the pace of recovery however has been quiet steady in nature with electrification trend most promising in this space. 

  • Tractor space, M&M's tractor sales were flat YoY at 21,520 units, while Escorts growth was placed at 7.3% to 6,111 units. On a high base, Industry expectations are ripe for low single digit YoY growth in FY24E 

  • Remain positive on the auto space given the expectation of double digit volume growth 


  • Market could be anticipating more weakness in revenues for IT companies. 

  • Attrition for IT companies to remain at elevated levels due to deferment of variable pay 

Real Estate

  • The inventory level has declined from 33 months in CY18 to 22 months in 2QCY22. 

  • Strong IT hiring and salary hikes have aided growth in cities such as Bengaluru, Chennai, Hyderabad, Pune etc. 

  • The momentum is strong as Mumbai city saw property sale registrations of 8,149 units in August 2022. Property sales registration recorded a 20% rise YoY in August 2022 

  • Preferred players – Brigade Ent., Mahindra Life Space, DLF, Oberoi 


Hospitals are reporting revival of medical tourism with the % of international patients is almost 90% of the Pre-Covid level. 

EBITDA margins for most of the hospitals are trending higher than the pre-Covid level 

Recent Max deal- KKR is positive for the entire sector   

Reliance AGM highlights:

Reliance Industries (RIL), in its latest AGM has announced a slew of new initiatives across businesses: 

Reliance JIO:

We highlight that overall intention of Jio is to capitalise on the fixed wireless broadband opportunity (through Jio AirFiber) and accelerate home broadband wherein its long term target is to reach 100 million homes vs. ~7 million currently. 

Reliance Retail:

  • Company has announced plans to enter the FMCG segment, focussing on high quality affordable products for daily needs. 

Reliance New Energy business

  • Reliance is in the process of setting up a manufacturing ecosystem for its four planned Giga factories in Solar, Energy Storage, Fuel cells and Green Hydrogen. 

  • strong technological partnerships and acquisitions. 

Reliance OTC/textile:

  • On oil to chemicals (O2C) front, the company announced investment of | 75000 crore in petrochemical segment in next five years. 


  1. TTK Prestige (CMP |955, Mcap: | 13260 crore, Target Price : | 1130, Potential upside : 18%) 

TTK Prestige is It has an aspiration of achieving revenue of | 5000 crore by FY26 through organic and inorganic route (| 1000 crore). We build in revenue and earnings CAGR of 12% and 13% respectively in FY22-24E. 

  1. Lemon Tree Hotels (CMP |72, Market Capitalization |5756 crore,  TP |95, Potential upside 32%)  

Lemon Tree Hotels remains a best proxy play on Tourism sector revival. We have BUY rating on the stock with TP of |95 per share (valuing the company at 25x FY24E EV/EBITDA).  

  1. Techno Electric   CMP Rs 290   Mcap :  Rs 3190 crore  Target Price:  385  Upside: 33% 

With strong order wins of Rs. 2000 crore in Q1FY23 in the FGD and power transmission space. we expect Techno’s revenue and operating profit CAGR of 26% and 29% respectively over FY22-FY24E. 

  1. Timken CMP Rs 3130  Mcap :  Rs 23500 crore  Target Price:  3560  Upside: 14% 

Strong uptick in CV cycle with volumes expected at life high augurs well for Timken. Also, strong tendering in the railways for wagons will be highly beneficial as Timken 

  1. PSP Projects Ltd (CMP: | 606, Mcap: | 2,178 crore, Target Price; | 710, Potential Upside: 17.4%) 

PSP Projects Ltd is set to enter the big leagues backed by a) its rich construction experience, b) eligibility to bid for higher-ticket size project with improvement in pre-qualification criteria (| 2,000+ crore). We have a BUY rating with a target price of | 710 (14x FY24E P/E). 

  1. Jamna Auto (CMP: ₹ 120, Market Cap: ₹ 4,775 crore, Target Price: ₹ 155, potential upside: 29%) 

Jamna Auto is the dominant supplier of suspension system and outsized beneficiary of cyclical upswing in the domestic M&HCV space. With capital efficient to the core and healthy B/S, it trades at inexpensive valuations of  

  1. Apollo Tyres (CMP: ₹ 250, Market Cap: ₹ 15,875 crore, Target Price: ₹ 290, potential upside: 16%) 

Apollo tyres stands to gain from its focus on capital efficiency, sweating of assets and controlled capex spends. With reduction in debt, RoCE at the company is seen crossing double digit mark by FY24E 

  1. Ramkrishna Forging (CMP: ₹ 205, Market Cap: ₹ 3,300 crore, Target Price: ₹ 235, potential upside: 15%) 

Ramkrishna Forgings is a leading forging player which stands to gain from recovery in CV volumes both domestically as well as in key export markets of US (Class 8 truck) & Europe 

  1. Laurus Labs (CMP: ₹ 574, Market Capitalisation: ₹ 30,898 crore, Target Price: ₹ 675, Potential Upside: 18%) 

Laurus is a key players in formulations and high-growth CRAMS segments. We have a BUY rating on the stock amid incremental contribution from CRAMS with visible order-book. 

  1. Brigade Enterprises (CMP: ₹ 522, Market Cap: ₹ 11600 crore, Target Price: ₹ 595, Potential Upside: 13%) 

Strong IT hiring in major markets like Bangaluru, stable cash flows in office leasing portfolio to drive growth. We value BEL at Rs 595/share 

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