JLR’s Nov’18 wholesales in line at 49.3k units (-9% YoY)

Company Background Incorporated in 1998, Indraprastha Gas Ltd. (IGL) is the sole city gas distribution (CGD) company for natural gas in the National Capital Region (NCR). It was formed following a Supreme Court directive to GAIL to set up a CNG infrastructure unit in the NCR. It caters to consumers in the domestic, transport, industrial and commercial sectors. Currently, GAIL, BPCL and the Government of Delhi hold 22.5%, 22.5% and 5% respectively in the company. IGL is sole distributor of compressed natural gas (CNG) and piped natural gas (PNG) in Delhi, Noida, Greater Noilda and Ghaziabad. The CNG business contributed ~74% to the company's sales volumes in FY18. It has acquired 50% equity stake in Central UP Gas Limited (CUGL) for a total consideration of Rs 700mn, which is the authorised CGD operator in Bareilly, Kanpur, Unnao and Jhansi in Uttar Pradesh and also acquired a 50% equity stake in Maharashtra Natural Gas Limited (MNGL) for a total consideration of Rs 1.9bn which is the authorised CGD operator for Pune and the adjoining areas in Maharashtra. Investment Rationale Efforts by regulatory authorities favoring natural gas demand India is the world’s largest consumer of petcoke. The consumption of the dirty fuel has grown at CAGR of 16 per cent over the past 10 years. This has led to the fuel becoming the second-most consumed petroleum product in the country after diesel. While coal attracts a clean-energy levy of Rs 400/tonne, petcoke was exempt. As it was among the cheapest fuels available to the industry, it was widely used for heating and generating electricity. About half of the Indian consumption of petcoke -about 26 mn tonnes in financial year 2017-18 was imported. Regulatory Authority passed complete ban on use of petcoke by industries, except for a few industries, such as cement and electricity gasification, which have been exempted from the ban. Other industrial users would have to now shift to alternate fuels like natural gas over a period of time. The ban on pet coke came in response to the high level of pollution in several cities across the country. The ban would benefit the entire supply chain of natural gas as CGD entities should see an increase in PNG (industrial) volumes over medium term. The shift from furnace oil which is around 30% cheaper and pet coke that is at a fraction of the cost of natural gas will happen over time as those entities currently using pet coke need to incur investment to switch fuels. Enjoys monopoly of being sole supplier of natural gas in Delhi-NCR The statutory authorities like the Environment Pollution Control Authority (EPCA), Centre for Science and Environment (CSE), Delhi Pollution Control Committee (DPCC) and Uttar Pradesh Pollution Control Board (UPPCB) are working in a synchronized manner to curb pollution levels in Delhi and NCR . This has paved the thrust for city gas distribution sector for use of more greener sources of energy like natural gas. Under the PNGRB Act, entities were provided ultimate monopoly through exclusive marketing rights and infrastructure rights for 8 years and 25 years respectively. IGL stood to grab this opportunity and now it services the highest no. CNG vehicles in India with ~33% market share. Measures taken by the various authorities have been instrumental in supporting CNG growth. IGL is now looking at setting up CNG dispensation stations within residential housing complexes to ease queues at CNG pumps. It has set up two CNG dispensation pumps at a residential complex in Noida on a pilot basis. Overall, the company is targeting to add 60 CNG dispensation stations (out of which 2 were added in Q1FY19).In comparison, its peer Mahanagar Gas Ltd recorded a total volume growth of just 19% and CAGR of 4.5% from FY14-18, shows taking same period for comparison IGL’s operations grew almost at double rate compared to MGL. Going forward, we expect the revenue growth to be driven by 1)associate companies-CUGL and MNGL and 2) expansion i

Company's strong balance sheet, significant growth & profitability in future, strong clientele, we estimate P/E of FY19E at around 12x,with a target of Rs 220 in the near term.

Across-the-board traction strengthening growth story

Wedding season demand healthy

PPAP to continue reporting ahead of industry revenues & PAT growth with steady margin performance led by improving product mix, growing wallet share with OEMs, strong product development pipeline (23 products) for Hyundai & MG Motors over next 24 months. However, company remain cautious on overall PV demand in the near to medium term caused by rising crude oil prices, liquidity crunch, currency volatility , high interest rate regime and RM cost headwinds coupled with client concentration risk as MSIL and Hyundai contributing ~80% of revenues.

Company Background Piramal Enterprises Ltd (PEL) is one of the leading diversified companies in India operating through three major verticals comprising-Financial services, Pharmaceuticals and Healthcare Insight & Analytics. The Pharmaceutical business started in 1988 with the acquisition of Nicholas laborites and today it has evolved into a major global player with segments such as Contract Development and Manufacturing(CDM0),in which it ranks among the top 10 globally. Other segments include a strong portfolio of niche differentiated branded generic products, OTC products in the domestic Indian market and the critical care division in which the company sells products across 118 countries with a market share over 50% in emerging markets. In the Financial services vertical PEL has its roots embedded in real estate financing that has now transformed into diversified financial services lender with a presence across whole and retail lending (Loan book-INR 53,000 Crores) along with a strategic interest in the Shriram Group. The Healthcare insights and analytics vertical operates through the Decision Resources Group (DRG) that provides a decision support platform in the healthcare information services space and has leading global Healthcare players as its customers. Housing finance segment compliments real estate financing platform and provides a stronger hold in the retail segment PEL views the HFC as a B to B to C business and an extension of the partnership relationship with the developer. Housing finance for the company is just another product on the wholesale platform for the developers where the company can help the developers with a solution to sell. The HFC business had a loan book of INR ~24 Bn as on Q2FY19.With only 8-10 players in the INR 100 Bn + category there is sufficient room for PFL to grow given it’s inherent competencies. PEL’s focus would be on Tier 2 and Tier 3 cities to drive incremental growth and has planned to open 24 branches by 2020.The HFC segment had an average ticket size of INR 7.4 Mn as of FY18 primarily due to the concentration in MMR. However, going ahead the average ticket size is expected to reduce further on account of deeper penetrations in micro markets. Given PEL’s capabilities, the HFC business can be easily scaled in medium to long term. Within the HFC business segments like Small construction finance is helping to reach out to grade ‘A’ developers in micro markets which was not possible to address through the wholesale platform. Additionally ,LAP is being pursed cautiously by the company by focusing predominantly on cash flow generation. We feel that despite the steep competition in the HFC space, the current liquidity crises, the strong long standing relationships that the group has with developers and the trust on launching customized solutions helping both the developer as well as the individual home buyers provide a firm footing to anchor and grow. Corporate finance group (CFG) & emerging corporate lending (ECL) segments to fuel next leg of growth for financial services vertical and help in diversifying away from RE financing The CFG originally started by providing structured credit solutions to the infrastructure vertical and eventually ,PEL started providing credit solutions to non-RE corporates with a yield expectation of 12-18%. The CFG loan book has witnessed a CAGR of ~60% over (FY14-18) contributing largely to the loan book growth leading up to Q2FY19.Emerging Corporate Lending (ECL) was started by the Company in FY18 with the objective of lending to emerging and mid-market businesses.ECL operates with a sector-agnostic approach and a ticket size ranging from INR 10 Crores to INR 125 Crores. ECL has a loan book of INR 15 Bn as and an average deal size of INR 0.5 Bn as of Q2FY19.The CFG & ECL segments have grown at a CAGR of 126% (FY15-19).Going ahead these segments are expected to contribute to the growth in the wholesale lending book leading to a reduction in c

A healthy deal for HUVR

Canara Bank reported NII of INR 32.8bn (-15% q-o-q & 18% y-o-y) largely due to one-off lumpy interest recovery of INR 5.2bn from resolution of Bhushan steel in Q1 FY19.