Stock Market Live Updates 18 June 2024| Stock to buy today: JK Paper (₹490.70)

Allcargo Logistics

There are indications that the global supply chain industry will expand in the second half of 2024.

Despite the addition of 1 mn TEUs to the capacity of container shipping this year, freight rates are still rising

Warehousing capacities in key countries are going down and inventory re-stocking is happening on the back of actual consumer demand going up and in anticipation of demand recovery

Express business has seen significant improvement on the back of cost reduction, which has on a monthly basis until March, providing healthy exit rates on operating costs.

Apcotex Industries

Apcotex Industries foresees revenues of Rs 18.0-20.0 bn and margins of 12-14% in the next three-five years.

The management believes that EBITDA margins between 12-14% are sustainable

The next leg of growth will be driven by exports as the share of exports is expected to go up from 30% to 50% over three-five years.

The management expects to incur a capex of Rs 200-350 mn in FY25, which also includes maintenance capex.

Management remains optimistic about recovery in the coming 9 -12 months.

Apcotex along with other companies are in talks to file for antidumping duties on NBR.

Longer export receivables have impacted the working capital cycle lately.

APL Apollo Tubes

In FY24, APL Apollo Tubes (APAT) fell short of guidance by 13%, primarily because of slowdown in consumption activity impacting ~100k MT of volumes, late ramp-up of Raipur and Dubai plants impacting ~100k MT of volumes, and subdued 3Q.

Despite being short on guidance, overall performance was still strong with 15% volume growth, 17% EBITDA growth and 14% PAT growth.

Operating cash flow to EBITDA has been upwards of 90% throughout, indicating good cash flow generation.

The company targets return on capital to increase to 35-38%.

APAT is confident in achieving EBITDA/tonne of Rs 5,500/tonne when the company’s volumes cross 5 million tonnes. The company also targets EBITDA margin of Rs 10,000/tonne and 10 million tonne capacity.

Current value add mix is 60% for FY24. APAT plans to take it to 70-75% when the company reaches the 5 million tonne mark.

APAT commands a premium of at least 4-5% over competition for its products.

Solar torque tubes have become an important element in solar industry. The world is moving towards tracking solar systems. Tracking solar system needs to be built only on a tubular structure. APAT is working with all the large solar power producers to develop their tracking structures with the help of its tubes.

Apollo Pipes

During FY19-24, the company delivered volume growth at a CAGR of 15%, whereas revenue grew at a CAGR of 22% during that period. The company has guided sales growth at a CAGR of 25% over the next three to four years, driven by increased organic and inorganic capacity, entry into newer markets and positive demand outlook.

Apollo Pipes is actively working to strengthen its presence in domestic markets and playing a crucial role in enhancing its PanIndia footprint, with its recent greenfield expansion plan in Varanasi, brownfield expansion plan of Dadri facility and acquisition of Kisan Mouldings. 

In the medium-term, it is planning to adjust its product mix towards plumbing pipe with expansion of product portfolio as well as expanded capacity.

The company has recently acquired old legacy brand of Kisan Moldings with a capacity of 60k tonnes and a wide dealer network alongwith a diverse product portfolio. Post modernisation and efficiency improvement, the company is targeting sales of ~Rs 9 bn with an EBITDA margin of 10%.

3M India

India expected to grow the PV segment production by 5-8% in FY25, automotive electrification and premiumisation in SUVs, which will help 3M India increase their revenue streams.

* Local value addition across all the segments is ~60% of the overall sales and increased by 100-125 bps over the past four-five years.

* The outlook for the automotive industry is expected to be around 3-5% in FY25; however, they expect to perform well due to their penetration in different segments. Growth opportunity in revenue is expected to be driven from the Safety & Industrial business.

* Most of the production in China is done for the Chinese local market and minimal for the export internally to 3M, establishing production capabilities in India would be possible if the customers move their buyer base from the Chinese market to the Indian market.

* 3M is working closely with the emerging and established OEM players on product development of their products bespoke to the OEM models which is expected to get solidified in the next 18 months.

360 One

The new HNI business segment is being launched in existing locations in the initial phase.

The economics of the HNI business are better due to a primarily distribution-led model, which leads to better retention

By the end of three-four years, C/I is likely to improve to 44-45% and then settle down at 42-43% in the longer term.

On AMC, the company’s focus will always remain on Alternate products and institutional business, rather than retail.

Action Construction Equipment

Guided 15-20% year-over year growth in the cranes, material handling, and agriproduct segments in FY25, and 30-40% YoY growth in its construction equipment segment. 

It has projected FY25 revenue to grow by 15-20% YoY, with the potential for further margin expansion. Additionally, it is targeting 2x revenue growth over the next two-three years.

The new emission norms are expected to impact at least 50% of the company’s portfolio. There could be some drop in the volumes as well

The company hinted that they are planning to acquire a small company with a good product outside the country. They are looking to move some of the specific export products through that company apart from their own product which they manufacture in their assembly.

Ashok Leyland

Management indicated on strong demand for traditional ICE segments, especially in trucks and buses. Tractor trailer volume is gaining market share from the multi-axle segment, and there is significant growth in the school bus segment.

Ashok Leyland (AL) expects to maintain EBITDA margins in the mid-term through cost reduction strategies, volume increases, and stable steel commodity prices. AL undertook prices increase of 1.5% in the MHCV segment and 3% in the LCV segment

In the next two-three years, management plans to expand distribution network from 250 to 750 outlets, eventually reaching 1,500 outlets in the long run.

Slow progress in scrappage policies with a longer time to recover. 50% of trucks are below BS IV emission norms, presenting opportunities for replacement. 

BS IV vehicles cost 20% less than BS VI, making freight rate increases challenging for BS VI operators.

Astral

Astral has set a medium-term goal to double its revenue over the next five years.

This target is based on anticipated volume growth in the pipes segment and sustainable growth in the adhesives, sanitaryware, and paints segments.

This growth is expected to be driven by the establishment of two new facilities in Hyderabad and Kanpur. These facilities will significantly enhance Astral’s brand presence in these regions, enabling the company to tap into new markets and customer bases.

The company is present in eight high growth categories of pipes, water tanks, adhesives and sealants, construction chemicals, bathware, paints, specialised walls and infrastructure products

Astral plans to launch OPVC pipes in the third quarter of FY25. The OPVC segment is projected to experience rapid growth compared to the building materials segment due to its high acceptance in large infrastructure projects and its cost advantages over ductile iron pipes.

Beyond its core segments of pipes and adhesives, Astral is placing increased focus on its water tanks segment. This segment is expected to see meaningful growth over the next two to three years, further diversifying the company’s revenue streams and enhancing its market position.

Aurobindo Pharma

High single-digit revenue growth anticipated on a consolidated level with EBITDA margin of 21-22%.

Low single digit growth expected in API business.

The price erosion has eased in the US generics because smaller players, causing the price erosion (5-10% range), are unable to supply the products due to unaffordability. Hence, customers are demanding reliable supplier.

Certain products are facing shortages, it is supplying as much as possible.

Being a late entrant, Revlimid is not a significant contributor for the company. It is in double digits revenue for the company, slight upside is expected in FY25.

Strategy of the company is to grow on the basis of overall portfolio (658 ANDA’s approved, 172 pending) and not be dependent on one product.

All business in EU are doing good and will continue to grow.

Revenue run-rate to be stable at this level and due to expensive valuations and long payback period, company unwilling to acquire brands in India.