Rossari Biotech IPO – Growth and Good Chemistry

  • Date 11th July; IPO Opens 13-15th July at ₹423-425/share
  • Small Cap: 2,200 Mkt cap
  • Sector – Specialty Chemicals
  • Valuations: P/E 30.7 times TTM, P/B 6.9 times (Post IPO)
  • Advice: SUBSCRIBE

jainmatrix investments, rossari

Summary

  • Overview: Rossari Biotech is a leading Indian textile and specialty chemical firm. Revenues, EBITDA and profit for FY20 were ₹ 603.8 cr., ₹ 105 cr. and ₹ 65 cr. resp., and grew at 32.3%, 67.6% and 66 % resp. over the last 3 years. Rossari has seen a rapid growth in recent times, and has a balanced product portfolio and a large number of domestic customers. Growth plans look promising with the planned Dahej plant. The debt is low, and balance sheet looks healthy with good return ratios. Expansion plans have been funded mostly from internal cash generation. The firm is small but looks nimble in terms of product formulations, R&D, new export markets, etc. At a P/E of 30.7 times FY20 earnings, the valuation is expensive. However the current growth rates justify this valuation.
  • Risks: 1) Valuations look expensive 2) delay in new Dahej plant could affect growth 3) Covid19 infection can affect Revenues. It can also affect manufacturing operations.
  • Opinion: Investors can SUBSCRIBE to this IPO with a 2 year perspective.

Here is a note on Indian Rossari Biotech (Rossari) IPO.

IPO highlights

  • The IPO opens: 13-15th July 2020 with the Price band ₹423-425 per share.
  • There is a Fresh issue of ₹ 50 crore, and an Offer for Sale of 10,500,000 shares by promoters. The FV is ₹ 2. The IPO in total will collect ₹ 500 cr.
  • The IPO share quotas for QIB, NII and retail are in ratio of 50:15:35.
  • The unofficial, grey market premium is ₹125-130 /share, indicating a 30% upside. This is a positive.

Introduction

  • Rossari Biotech is a leading Indian textile and specialty chemical firm with over a decade history of innovative, agile, and rapid growth. They provide customized solutions to industrial and production requirements of customers through a diversified chemical products portfolio. Building upon expertise in textiles sector, they have successfully diversified into the home, personal care, animal health and nutrition and performance chemicals markets.
  • Revenues, EBITDA and profit for FY20 were ₹ 603.8 cr., ₹ 105 cr. and ₹ 65 cr. resp.
  • It has 3,783 employees. The Silvassa (in Union Territory of Dadra & Nagar Haveli) mfg. facility has a capacity of 120,000 MTPA. They have a dedicated team of 22 employees in R&D facilities situated at Silvassa mfg. facility and another one in Mumbai.
  • Rossari relevant market includes following Segments – Home Care, Personal Care, Textile Chemicals, Construction Chemicals, Paints & Coatings, and Water Treatment Chemicals.
  • Promoters of the company are Edward Menezes, 59, and Sunil Chari, 54. They started together in 2003, and are career technocrats having 45 years of experience cumulatively in specialty chemicals industry.
  • The two Promoters hold about 82% pre IPO and 62% shares post IPO and are the primary sellers.
  • On 10th July, Rossari Biotech raises Rs 149 cr. from anchor investors, with top 3 MFs key investors.

Financials of Rossari

jainmatrix investments, rossari biotech IPOFig 1 – Financials

  • The 4 years financials shows rapid revenue growth, and improving EBITDA and profit margins.
  • Over 3 years, Revenues, EBITDA and Profits grew at 32.3%, 67.6% and 66 % resp. See Fig 1.
  • The firm has grown Operating Profits sharply, but the working capital has grown in FY20, reducing the final Cash from Operations, see Fig 2.

jainmatrix investments, rossari biotech IPOFig 2 – Free Cash Flows

  • The firm is also making significant investments into a new manufacturing facility at Dahej, so the Free Cash Flow has turned negative in FY20.
  • The firm has in recent years grown its offering in the Home, personal care and performance chemicals (HPPC) segment and this is 47% of its revenues, see Fig 3.
  • Per news reports, Rossari seized the opportunity after Covid19 to make Hand Sanitizers and Disinfectant liquids, which saw a massive demand spurt in recent months.

jainmatrix investments, rossari biotech IPOFig 3 – Key Product Segments

  • The firm has also grown its exports pie and now exports to 18 countries including Vietnam, Bangladesh and Mauritius. It plans to grow the international business in future. See Fig 4.

jainmatrix investments, rossari biotech IPOFig 4 – Exports

  • The firm has grown its manufacturing capacity steadily at the Silvassa plant, see Fig 5.
  • The Capacity utilization has been over 80% for the last 2 years.
  • Rossari is setting up a new plant at Dahej of 1,32,000 MTPA. This is expected to go on stream in FY21. There is no expansion planned at Silvassa, perhaps the plant area is saturated.
  • Funding for this plant has been from internal cash generation as well as loans.
  • The rapid revenue growth has come at the cost of slightly lower average realizations from products.

jainmatrix investments, rossari biotech IPOFig 5 – Manufacturing

Chemicals Industry Outlook in India

  • We recently published a report, see Indian Specialty Chemicals Sector – A Spotlight. Do read this.
  • In brief, we are quite positive on Chemicals and particularly Specialty Chemicals sector. Particularly the opportunities are around replacement of Chinese supply for both domestic and global demand.

Benchmarking

We compare Rossari to Chemical industry peers in India. See Fig 6.

jainmatrix investments, rossari biotech IPOFig 6 – Benchmarking

  • It’s the smallest firm by revenues in this group. In terms of valuations, ie P/E and P/B, it is on the higher side. The margins are also on the lower side, both Operating and Profit.
  • Growth numbers are leading, both Sales and Profits, indicating a good burst of recent success.
  • In terms of ROE it’s a leader, and on RoCE above average. Post IPO there is some 5% dilution to equity, so the number may be reduced to that extent.
  • The D/E looks healthy, even though the company is in expansion mode. This is good.
  • In a growth phase, one does not expect dividends from small cap firms, so its not an issue.
  • Plans are afoot around growing exports, and this should help Rossari improve revenues and realization.

Risks and Negatives for Rossari and the IPO

  • Valuations at PE 30.7 times of FY20 earnings looks expensive.
  • Any delay in the Dahej plant in terms of commissioning and a start of production in FY21 will slow the revenue momentum at Rossari as the current plant is close to capacity utilization.
  • The IPO is primarily an offer to sell by promoters, so the firm gains only by Rs 50 crores of capital raised by fresh issue of shares. Conversely the equity capital will not be much diluted.
  • In FY20 domestic sales were 86% of revenues, a low ratio. There is opportunity is in growing exports.
  • When we see a sharp burst of growth in financials in 2-3 years before an IPO, we worry that such growth may not be sustained in the next 5-10 years after a successful listing.
  • The primarily promoter owned firm has not benefited from the oversight, partnership and approval of Private Equity or other investors, so future success of Rossari is highly dependent on Promoters.
  • This is the first IPO after a pause of several months. It’s possible that hurt investors may not flock to this IPO like in Jan-Feb this year. But this may actually be to the benefit of investors in this IPO.
  • Covid19 epidemic is still gathering momentum in India, and till we see a fall in infection numbers, both investors and overall demand in the economy may be subdued. However the firm has grabbed the opportunity by making Covid safety products such as d Sanitizers and Disinfectant liquids.
  • This is a B2B space, so verification and confirmation of customers, brands and quality is difficult.

Overall Opinion and Recommendation

  • Specialty Chemicals sector is a high potential growth sector.
  • Rossari Biotech has seen a rapid growth in recent times, and has a balanced product portfolio and a large number of domestic customers. Growth plans look promising with the planned Dahej plant.
  • The debt is low, and balance sheet looks healthy with good return ratios. Expansion plans have been funded mostly from internal cash generation.
  • The firm is small but looks nimble in terms of product formulations, R&D, new export markets, etc.
  • At a P/E of 30.7 times FY20 earnings, the valuation is expensive. However the current growth rates justify this valuation.
  • Risks: 1) Valuations look expensive 2) delay in new Dahej plant could affect growth 3) Covid19 infection can affect Revenues. It can also affect manufacturing operations.
  • Opinion: Investors can SUBSCRIBE to this IPO with a 2 year perspective.

Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain discloses that he has no stake ownership or known financial interests in Rossari Biotech or any group company. Punit Jain intends to apply for this IPO. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Record surge in sales of vacuum cleaners, dishwashers, DIY products

07th July 2020

At JainMatrix Investments, we want to encourage India to get back on Track, so we are going to publish a series of articles and track stories in this space. Here we go, click LINKS:

  1. Record surge in sales of vacuum cleaners, dishwashers, DIY products – (ET) – 07th July 
  2. Labour shortage, factories go the extra mile to woo migrant workers – (ET) – 07th July 
  3. PMI, GST mop-up point to a pickup in economic activity – (LiveMint) – 02nd July 
  4. India Inc’s big bet on Bharat saving the day – (LiveMint) – 02nd July
  5. Green shoots in Bharat lead country’s economic revival – (LiveMint) – 30th June 
  6. Opinion | The onus is on us to conquer fear – (LiveMint) – 30th June 
  7. Not two years, 200 projects finished during lockdown: Railways – (ToI) – 29th June 
  8. Bankers in India are more productive working from home – (LiveMint) – 29th June 
  9. Global equity markets are likely to continue their up move – (BizStd) – 27th June
  10. Migration is reversing: Trains from UP, Bihar run full – (ToI) – 27th June 
  11. Indicators of economic recovery in India – (EcoTimes) – 24th June
  12. Get India fully back to business, says India Inc – (EcoTimes) – 24th June
  13. Post-crisis, increase integration with global economy – (EcoTimes) – 20th June
  14. Kharif planting rises 40% on strong monsoon start – (EcoTimes) – 20th June 
  15. Maruti Suzuki’s model can make India a global mobile mfg hub – (EcoTimes) – 18th June 
  16. Indian economy to recover very fast: HDFC Bank CEO – (EcoTimes) – 18th June 
  17. A COVID-19 workplace readiness tool for organisations – (IISC) – 17th June 
  18. It is time to be a little positive on financial space – (EcoTimes) – 17th June 
  19. Exports bounce back to last year’s levels in June – (EcoTimes) – 16th June 
  20. Unemployment rate declines sharply as India exits lockdown – (Livemint) – 16th June 
  21. Local trains, Mumbai’s lifeline, resumes services – (Livemint) – 15th June 
  22. Construction work restarts at over 100 projects in NCR – (EcoTimes) – 15th June 
  23. Govt urges use of bicycles, EVs to mitigate risks – (EcoTimes) – 13th June 
  24. Digital is the Key to Unlock this Disruption’ – (EcoTimes) – 13th June 
  25. ‘Put the money in Indian stocks, forget till 2025’ – (EcoTimes) – 12th June 
  26. Loans are getting cheaper, HDFC cuts lending rate – (EcoTimes) – 12th June
  27. View: Replacing China imports possible, even in EVs – (EcoTimes) – 11th June 
  28. ‘Time for Bold Investments, not conservative decisions’ – (Livemint) – 11th June 
  29. After steep falls, June exports show signs of improvement (EcoTimes) – 10th June 
  30. Partial lockdown lift gives work to 21 million; not salaried class (EcoTimes) – 10th June 
  31. Covid-19 is no plague or cancer; fear psychosis unnecessary (EcoTimes) – 09th June
  32. Import-intensive spending likely to feel the pinch – (EcoTimes) – 09th June 
  33. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  34. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  35. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  36. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  37. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  38. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  39. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  40. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  41. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  42. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  43. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  44. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  45. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  46. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  47. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  48. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  49. How is India doing against COVID19 in 3 graphs – 28th May
  50. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  51. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  52. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  53. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  54. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  55. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  56. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  57. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  58. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  59. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown.

Today, 2 months on, we are at a different phase in the economy. The first phase of lockdown and defense against this virus has been by and large successful in India. We did not have a massive early spike in cases. We did far better than Spain and Italy and USA  in the early phase. We have been able to set up Covid hospitals, track infection cases, close our borders and airports and more or less, slow initial infections. The statistics today is that we have 125,000 infections and 3,720 deaths from the infection. This is a very very small number for India’s population.

After the very strict lockdown 1.0, we have had lockdown 2.0, 3.0, 4.0 and now Unlock 1.0. The fact of the matter is that the economy has suffered immensely. Crores of people lost their jobs due to the lockdown. Many had to migrate back to their native places due to loss of wages. The economic losses are much more severe from the economic slowdown. Now that the infection is in control, we need to reverse our losses and regain the momentum. Even as we take sufficient precautions.

Both demand and supply were frozen, and it will take a massive effort from each of us for the economy to regain momentum. Its now time to open up our economy and as far as possible, get back to normal. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Get Back on Track from Covid – India can be a global mobile mfg hub

18th June 2020

See latest link of campaign – https://jainmatrix.com/2020/06/13/india-gets-back-on-track-3/

At JainMatrix Investments, we want to encourage India to get back on Track, so we are going to publish a series of articles and track stories in this space. Here we go, click LINKS:

  1. Maruti Suzuki’s model can make India a global mobile mfg hub – (EcoTimes) – 18th June 
  2. Indian economy to recover very fast: HDFC Bank CEO – (EcoTimes) – 18th June 
  3. A COVID-19 workplace readiness tool for organisations – (IISC) – 17th June 
  4. It is time to be a little positive on financial space – (EcoTimes) – 17th June 
  5. Exports bounce back to last year’s levels in June – (EcoTimes) – 16th June 
  6. Unemployment rate declines sharply as India exits lockdown – (Livemint) – 16th June 
  7. Local trains, Mumbai’s lifeline, resumes services – (Livemint) – 15th June 
  8. Construction work restarts at over 100 projects in NCR – (EcoTimes) – 15th June 
  9. Govt urges use of bicycles, EVs to mitigate risks – (EcoTimes) – 13th June 
  10. Digital is the Key to Unlock this Disruption’ – (EcoTimes) – 13th June 
  11. ‘Put the money in Indian stocks, forget till 2025’ – (EcoTimes) – 12th June 
  12. Loans are getting cheaper, HDFC cuts lending rate – (EcoTimes) – 12th June
  13. View: Replacing China imports possible, even in EVs – (EcoTimes) – 11th June 
  14. ‘Time for Bold Investments, not conservative decisions’ – (Livemint) – 11th June 
  15. After steep falls, June exports show signs of improvement (EcoTimes) – 10th June 
  16. Partial lockdown lift gives work to 21 million; not salaried class (EcoTimes) – 10th June 
  17. Covid-19 is no plague or cancer; fear psychosis unnecessary (EcoTimes) – 09th June
  18. Import-intensive spending likely to feel the pinch – (EcoTimes) – 09th June 
  19. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  20. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  21. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  22. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  23. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  24. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  25. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  26. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  27. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  28. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  29. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  30. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  31. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  32. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  33. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  34. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  35. How is India doing against COVID19 in 3 graphs – 28th May
  36. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  37. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  38. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  39. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  40. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  41. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  42. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  43. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  44. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  45. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown.

Today, 2 months on, we are at a different phase in the economy. The first phase of lockdown and defense against this virus has been by and large successful in India. We did not have a massive early spike in cases. We did far better than Spain and Italy and USA  in the early phase. We have been able to set up Covid hospitals, track infection cases, close our borders and airports and more or less, slow initial infections. The statistics today is that we have 125,000 infections and 3,720 deaths from the infection. This is a very very small number for India’s population.

After the very strict lockdown 1.0, we have had lockdown 2.0, 3.0, 4.0 and now Unlock 1.0. The fact of the matter is that the economy has suffered immensely. Crores of people lost their jobs due to the lockdown. Many had to migrate back to their native places due to loss of wages. The economic losses are much more severe from the economic slowdown. Now that the infection is in control, we need to reverse our losses and regain the momentum. Even as we take sufficient precautions.

Both demand and supply were frozen, and it will take a massive effort from each of us for the economy to regain momentum. Its now time to open up our economy and as far as possible, get back to normal. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Get Back on Track from Covid – Invest, or Take a Loan to Rebuild

12th June 2020

See latest link of campaign – https://jainmatrix.com/2020/06/13/india-gets-back-on-track-3/

At JainMatrix Investments, we want to encourage India to get back on Track, so we are going to publish a series of articles and track stories in this space. Here we go, click LINKS:

  1. ‘Put the money in Indian stocks, forget till 2025’ – (EcoTimes) – 12th June 
  2. Loans are getting cheaper, HDFC cuts lending rate – (EcoTimes) – 12th June
  3. View: Replacing China imports possible, even in EVs – (EcoTimes) – 11th June 
  4. ‘Time for Bold Investments, not conservative decisions’ – (Livemint) – 11th June 
  5. After steep falls, June exports show signs of improvement (EcoTimes) – 10th June 
  6. Partial lockdown lift gives work to 21 million; not salaried class (EcoTimes) – 10th June 
  7. Covid-19 is no plague or cancer; fear psychosis unnecessary (EcoTimes) – 09th June
  8. Import-intensive spending likely to feel the pinch – (EcoTimes) – 09th June 
  9. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  10. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  11. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  12. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  13. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  14. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  15. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  16. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  17. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  18. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  19. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  20. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  21. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  22. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  23. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  24. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  25. How is India doing against COVID19 in 3 graphs – 28th May
  26. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  27. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  28. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  29. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  30. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  31. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  32. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  33. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  34. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  35. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown.

Today, 2 months on, we are at a different phase in the economy. The first phase of lockdown and defense against this virus has been by and large successful in India. We did not have a massive early spike in cases. We did far better than Spain and Italy and USA  in the early phase. We have been able to set up Covid hospitals, track infection cases, close our borders and airports and more or less, slow initial infections. The statistics today is that we have 125,000 infections and 3,720 deaths from the infection. This is a very very small number for India’s population.

After the very strict lockdown 1.0, we have had lockdown 2.0, 3.0, 4.0 and now Unlock 1.0. The fact of the matter is that the economy has suffered immensely. Crores of people lost their jobs due to the lockdown. Many had to migrate back to their native places due to loss of wages. The economic losses are much more severe from the economic slowdown. Now that the infection is in control, we need to reverse our losses and regain the momentum. Even as we take sufficient precautions.

Both demand and supply were frozen, and it will take a massive effort from each of us for the economy to regain momentum. Its now time to open up our economy and as far as possible, get back to normal. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

India Gets Back on Track – Getting growth back is non-negotiable

08th June 2020

At JainMatrix Investments, we want to encourage India to get back on Track, so we are going to publish a series of articles and track stories in this space. Here we go, click LINKS:

  1. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  2. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  3. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  4. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  5. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  6. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  7. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  8. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  9. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  10. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  11. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  12. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  13. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  14. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  15. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  16. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  17. How is India doing against COVID19 in 3 graphs – 28th May
  18. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  19. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  20. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  21. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  22. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  23. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  24. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  25. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  26. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  27. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown.

Today, 2 months on, we are at a different phase in the economy. The first phase of lockdown and defense against this virus has been by and large successful in India. We did not have a massive early spike in cases. We did far better than Spain and Italy and USA  in the early phase. We have been able to set up Covid hospitals, track infection cases, close our borders and airports and more or less, slow initial infections. The statistics today is that we have 125,000 infections and 3,720 deaths from the infection. This is a very very small number for India’s population.

After the very strict lockdown 1.0, we have had lockdown 2.0, 3.0, 4.0 and now Unlock 1.0. The fact of the matter is that the economy has suffered immensely. Crores of people lost their jobs due to the lockdown. Many had to migrate back to their native places due to loss of wages. The economic losses are much more severe from the economic slowdown. Now that the infection is in control, we need to reverse our losses and regain the momentum. Even as we take sufficient precautions.

Both demand and supply were frozen, and it will take a massive effort from each of us for the economy to regain momentum. Its now time to open up our economy and as far as possible, get back to normal. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Jubilant Foodworks – Ship to Steady this Year

  • Date: 05th June 2020
  • CMP: Rs 1,688
  • Mid Cap with Mkt Cap Rs 22,000 crores
  • Industry: Quick Service Restaurant (QSR)
  • Advice: HOLD. Buy if it falls below Rs 1,400

jainmatrix investments, jubilant foodworks

summary

  • Overview: Jubilant Foodworks is India’s leading Quick Service Restaurant chain which operates Domino’s Pizza and Dunkin’ Donuts chains in India. FY20 revenues and profits were ₹3,927 crores and ₹279 crores The Revenues, EBITDA & PAT have grown by 15.7%, 20.9% and 11.4% CAGR resp. over 7 years.
  • What’s Good: 1) A new management team since 2017 has revived and improved the firm, growing the pizza chain, making the donuts chain profitable, launching a Chinese food segment and put focus on Same Store Sales Growth 2) The balance sheet looks strong with low debt and good free cash flow. 3) The pizza options have become innovative and more reasonably priced. 4) Valuations are at historical averages 5) Even during lockdown, home delivery business did not suffer much. 5) An upside risk is a V shaped recovery for QSR in FY21
  • Key risks: 1) FY21 will be weak due to Covid lockdown and restrictions on restaurants. Also the consumers will take time to recover their eating out habits. 2) JFL can be affected by consumption and economic cycles 3) Higher Competition 4) Promoter stake reduction plan.
  • Advice: HOLD the share for a target price of ₹1,997 by May 2022, a gain of 18% over 2 years. BUY if it falls below Rs 1,400.

The entire report in PDF form is available hereJainMatrix Investments_Jubilant FoodWorks_May2020 

Disclaimer and Explanation

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same Punit Jain has a small (<0.01%) holding in Jubilant Foodworks Ltd. since March 2020. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JM at punit.jain@jainmatrix.com.

How is India doing against COVID19 in 3 graphs

Its been 3 months since Covid infection hit India. I believe India has done well so far. But lets check out the facts using just 3 graphs in Logarithmic Scale. (click to expand image)

  1. India’s COVID-19 Curve, compared to other countries. (Source visualcapitalist.com)
  2. Total Coronavirus Cases in India (Source: worldometers.info)
  3. Total Coronavirus Deaths in India (Source: worldometers.info)

jainmatrix investments, India on Covid

Thoughts? Comments? Please share below.

Regards, Punit Jain