Fundamentals

TUBE INVESTMENTS
Ticker: 540762 BUY: Rs.288.10
Target: Rs.324
 

Tube Investments of India ,a Murugappa Group company, specialises in engineering, bicycles, metal formed products. The consolidated revenue for Q1FY19 came in at Rs 1,408 crore, as against Rs 1,266 crore in Q1FY18, registering an increase of 11.2 per cent YoY. Its EBITDA for the quarter rose by 33 percent YoY to Rs 139.35 crore, with corresponding margin expansion of 148 bps. The EBITDA margin stood at 9.4 per cent. PAT grew by 54.3 per cent YoY and the margin expanded by 117 bps to 4.27 per cent. The Large Diameter Tubes division registered a good volume growth of 63%. For FY19, the company has planned capex of Rs 200 crore for engineering business and fine blanking. The order book is quite strong and the volumes are expected to gear up. Considering these factors, we recommend it as a BUY.

ADITYA BIRLA FASHION & RETAIL (ABFRL)
Ticker: 535755 BUY: Rs.176.40
Target: Rs.195

ABFRL offers one-stop shopping to men, women and kids with wide range of brands across apparels and non-apparels. ABFRL retails 200 licensed and international brands, including 14 exclusive in-house brands. In Q1FY19, the revenue was up by 8.7 per cent YoY as the lifestyle and pantaloons brands grew by 6 per cent and 11 per cent Yo, respectively. Its EBITDA grew by 53.8 per cent YoY. The company had earned net profit of Rs 9.1 crore as against net loss of Rs 20 crore in Q1FY18. In Q1FY19, the company added 7 new stores, which took the total store count to 282. In FY19, it would be adding 350 stores. It plans to add 45-50 new stores annually, of which 20 per cent would be franchisee-based. E-commerce stream has also contributed healthily towards the topline. Considering robust growth and intense expansion plans, we recommend it as a BUY.