Tag: Elara Capital

Pizza is losing ground to other fast food, says Elara Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While pizza has long been a favourite choice for many, its position at the top of the food hierarchy has been challenged by the emergence of various competitors and changing consumer tastes.

According to Karan Taurani, Senior Vice President-Research Analyst at Elara Capital, the pizza segment faces tough competition, and its growth prospects may not be readily evident. In fact, when examining market share data from the past 3-4 years, it becomes apparent that the pizza category has ceded market share within the broader quick service restaurant (QSR) chain industry. Thus, aggregators like Zomato appear to be in a favourable position for the foreseeable future, benefiting particularly from the burger and fried chicken segments.

“If you look at the market share numbers over the last 3-4 years, pizza has lost market share as a category within the overall QSR chain. So, it’s a win-win for burger, fried chicken for aggregators like Zomato, over the near to medium-term,” said Taurani in an interview with CNBC-TV18.

One notable shift in strategy that Taurani discussed is Jubilant Foodworks‘ move toward prioritising dine-in experiences. Traditionally known for its pizza delivery services, Jubilant Food, which operates Domino’s Pizza in India, has recognised the need to adapt to the evolving market conditions. Taurani’s insights suggest that the delivery segment may not be experiencing the same growth it once did due to the intense competition. Therefore, Jubilant Food’s strategic pivot toward dine-in services reflects a response to changing consumer preferences and the need to explore new avenues for growth.

This transformation within Jubilant Food aligns with broader industry trends where pizza chains are diversifying their offerings and exploring innovative ways to engage with customers. The ability to adapt and provide a variety of dining experiences is becoming increasingly important for pizza chains to remain relevant in this fiercely competitive landscape.

“Our strategy of customer first and technology forward has started to yield positive results. ADS for mature stores grew by 2.7 percent sequentially, a decline in ticket size was arrested, app installs and loyalty enrolments reached a new peak, and we executed efficiently to expand EBITDA margin by 97 bps versus the previous quarter. I remain confident in our strategies and the organization’s ability to overcome the slower growth phase and emerge stronger out of it,” said Sameer Khetarpal, CEO and MD of Jubilant FoodWorks, post the results for quarter one of FY24.

The company opened 30 new stores in India, resulting in a network of 1,891 stores across all brands. With the addition of 23 new stores and entry in one new city, Domino’s India expanded its network strength to 1,838 stores across 394 cities.

The company opened four new restaurants for Popeyes and entered two new cities – Manipal and Coimbatore – taking the network tally to 17 restaurants across four cities.

The decline in pizza’s market share, coupled with the intensified competition in the category, underscores the need for pizza chains to continually innovate and adapt to changing consumer preferences. Jubilant Food’s shift toward dine-in services serves as an example of how industry players are re-evaluating their strategies to thrive in this evolving market.

For more details, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Elara Capital bullish on railway and renewable stocks – here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Siemens” isinid=”INE003A01024″ bseid=”500550″ nseid=”SIEMENS” sector=”Infrastructure – General” exchange=”nse”]

The government’s increased thrust on infrastructure development is likely to come as a shot in the arm for capital goods and engineering companies. According to Harshit Kapadia, VP-Industrials, Consumer Durables and Electricals, and Renewables at Elara Capital, the government’s focus on renewable energy and the railway sector has led to a significant increase in capex (capital expenditure) in these industries.

Kapadia believes that this trend will continue in the near future as the government continues to support these sectors.

“We are seeing a lot of new sectors rising and the capex comes out in large quantity is being started to flow from railways as a sector going into renewables and defence. So those are the key sectors that we are looking in terms of where more order inflows are expected given the government is very aggressive in these three sectors,” he said.

Kapadia also noted that the capex cycle has improved significantly post-COVID-19. This is due to the government’s efforts to revive the economy and the private sector’s willingness to invest in growth opportunities.

Siemens, a multinational conglomerate based in Germany, is also looking at increasing its exposure towards the railway sector in India. Kapadia believes this is a positive development for the country as it will lead to more job opportunities and infrastructure development.

Also Read | Siemens signs single-largest Indian contract with Railways worth Rs 26000 crore

Another promising area for the Indian economy is the defence sector, according to Kapadia. He expects more export orders for players like Hindustan Aeronautics Limited (HAL) in the next 2-3 years. This will be a boost for the Indian economy and will also help in building the country’s defence capabilities.

In terms of stocks, he is pencilling in a 10 percent kind of growth for Havells. Also, has a ‘hold’ rating on Voltas.

“We have a hold rating on Voltas. But quarter-four onwards, when the summer season starts picking up, one can look at Voltas and that’s where the demand is expected to revive and the price hike may also happen where most of the players are struggling in the market,” he explained.

Also Read | RailTel to monetise Wi-Fi footfalls in rail stations, eyes Rs 250-crore revenue in 5 years

On the other hand, Kapadia advised reduced exposure to BEML, a public sector company engaged in the manufacturing of rail coaches and spare parts. He believes that the company may face headwinds in the short term and it’s better to be cautious.

“The reason we have a reduced rating is that we saw the order inflow momentum for BEML being slowed largely on the metro side,” he said.

Also Read | PM Modi to launch projects worth over Rs 7,800 cr in Bengal, flag off Vande Bharat Express

For more, watch the accompanying video

Catch the latest stock market updates with CNBCTV18.com’s blog

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Festivals didn’t help auto sales much in September, says Elara Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Bajaj Auto” isinid=”INE917I01010″ bseid=”532977″ nseid=”BAJAJ-AUTO” sector=”Auto – 2 & 3 Wheelers” exchange=”nse”]

For automobile sector, it has been a lukewarm start to the festive season, according to Jay Kale, Senior Vice President-Research at Elara Capital. The Ganesh Chaturthi and Onam festivals in Maharashtra and Karnataka, compared to the FY19 volume, are around 20 percent lower.

“There hasn’t been much improvement in September demand versus what was going on from April to August,” he said.

Key rural states have been underperforming for a while. According to him, rural states like Uttar Pradesh (UP), Bihar, Jharkhand, Rajasthan etc, have to bounce back because they constitute a large portion of the festive weightage.

He believes the trends in July and August have further weakened in rural states versus what the marriage season trend was from April to June. “That is a cause of concern, and we would want to monitor that in the festive season,” he said.

The ask rate for the festive season, around 7 percent on a year-on-year (YoY) basis, is not too demanding. He believes this is achievable, but it also factors in some bit of recovery in the rural markets. “So, we are gunning on a pent-up demand and non-agri rural demand bouncing back, which needs to be monitored,” he mentioned.

Eicher Motors has a lower contribution from the rural states, and the urban, doing relatively better, has its positive rub-off on the overall market shares.

Apart from that, the newly launched Hunter has garnered a decent enough response. “But we have to see how that sustenance comes in, post the cannibalisation of the existing models,” he said.

Also Read: Tata Tiago EV launching soon: Check expected price, features, specifications

Elara has a sell rating on Eicher. “We believe that next two-three months could be good but post that, sustenance needs to be monitored,” he explained.

He is positive about TVS Motors. This is one of the only companies in the two-wheeler space to have a very strong success rate of new launches, as per Elara.

“From an engineering standpoint, they are one of the best plays to capitalise on this emission norm change and the technology change to EVs. It will continue to remain a very strong earnings growth company, one of the highest in two-wheelers, and that will lead to expensive valuations, so we are positive on the stock,” he explained.

Also Read: Nitin Gadkari calls for switch to electric fuel, scrapping old trucks and road safety measures

Exports of two-wheelers which are mainly in the African, Latin America, Middle East and South East Asian countries, are expected to see some downside risk.

Bajaj Auto has the highest revenue exposure from exports in the two-wheeler pack, close to around 45-50 percent of revenues coming in from exports and maybe even higher profits from exports.

“While domestic recovery will aid them in the near-term, exports will keep that stock under rangebound at current levels,” he said.

For the full interview, watch the accompanying video

Catch the latest stock market updates with CNBCTV18.com’s blog

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IT Q3 earnings: Infosys, Wipro likely to post 4% revenue growth, says Elara Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With the ongoing pandemic, there was a growing need among one and all to shift to digital, which in turn brought the IT companies to the forefront. Nifty IT saw one of its best runs in the last two quarters. As the holy trifecta of IT companies, namely Wipro, Infosys and Tata Consultancy Services (TCS) prepare to kick-off earnings season with their Q3 results tomorrow, CNBC-TV18 spoke to Apurva Prasad, VP-Institutional Research-IT Sector, Elara Capital, to get his views on the upcoming IT earnings.

Prasad mentioned that from a growth perspective, he expects Wipro, Infosys to post close to 4 percent revenue on a quarter-on-quarter (QoQ) basis. According to him, Tech Mahindra will be posting the strongest growth in Q3 but it will be aided primarily by acquisitions. He specified that his expectation from TCS isn’t running too high this time around.

“From a growth perspective, we do expect Infosys and Wipro to be posting close to 4 percent as compared to TCS. Purely in terms of the numbers, within the entire tier-I pack, Tech Mahindra should be posting the strongest growth but then that’s also going to be aided to some extent by inorganic components,” he said.

Also Read: Wipro shares rise 3% as tech major to buy Texas-based Edgile

Among midcap IT companies, Prasad likes Mphasis and Persistent Systems. He believes the growth runway will be strong for the midcap IT names. He expects these companies to post a growth premium of 600-700 basis points (bps) over their largecap counterparts.

“The fundamental momentum in the earnings momentum is certainly strong and certainly a lot more within the mid-tier. I think at current price points, Mphasis would certainly score there; from a slightly more medium-term perspective, we like Persistent Systems,” he said.

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Prasad added, “The runway is very strong for a lot of these mid-tiers. I think there is going to be a growth premium of 600-700 basis points (bps) that mid-tier IT is going to post as compared to the tier-I companies.”

Prasad, however cautioned that total contract value (TCV) of deal wins have been declining owing to fewer large deals. “The interesting thing is, while you would see the total contract value (TCV) numbers have been trending down, that’s primarily because there are not enough mega deals as compared to the year before. And that’s primarily because the mix of smaller duration deals have gone up,” he further mentioned.

According to Prasad, an important indicator of growth is hiring. He explained that for largecap IT companies, hiring is around 50,000 per quarter.

“The other big indicator of growth is what’s happening on the hiring side. And I think it’s fairly visible, the rates have gone up by 3-4x. That’s the quantum of hiring, so between the top five companies, they were taking in 15,000-17,000 a quarter and number has gone up to almost 50,000 a quarter,” he said.

Watch the accompanying video for the full interview.

Also Read: Midcap IT cos to see sustainable growth; prefer L&T Tech, Persistent Systems, Mphasis: Elara Capital

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

UBL looking at volume CAGR of 8-9%, slightly outperforming industry: Elara Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Heineken has bought 14.8 percent stake in United Breweries from debt recovery tribunal (DRT), on Wednesday, increasing its stake to 62 percent. The deal was done at a 1 percent premium to Tuesday’s closing price, that is the range that is allowed in a special window, what they are spending is close to Rs 5,700 crore.

Beer will outperform spirits, going ahead, and that is the trigger for the company, said Karan Taurani, VP Research Analyst, Media and Consumer Discretionary at Elara Capital, in an interview with CNBC-TV18 while adding that, “We are looking at a volume CAGR of somewhere close to 8-9 percent, wherein UBL will be slightly outperforming the industry.”

“On realisation front, we are expecting mid-single-digit growth there, because of premiumisation picking in,” he further mentioned.

“If they can drive some efficiencies, do some cost savings that they have done during COVID, all these things put together, you could see about 18-19 percent earnings CAGR. With that, our target price of Rs 1,475 could be revised upwards,” Taurani said.

“The premiumisation story for UBL will take a big increase from here on, you will see multiple new premium brands getting launched,” he concluded.

For the full interview, watch the accompanying video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

New digital media norms: It’s a welcome move for the industry, says Elara Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has introduced new rules to regulate social media platforms — online news companies and over-the-top players like Netflix, Amazon Prime, among others. In an interview to CNBC-TV18, Karan Taurani of Elara Capital, spoke at length about the impact on the industry and listed players.

“It’s a welcome move for the industry because the industry wanted this kind of a thing. This is a balanced approach; there is no blanket censorship for the OTT players. There is more of a regulation and some more restriction in terms of content delivered,” said Taurani.

However, according to Taurani, it’s a twofold impact for the broadcasters. “One, the content cost which was seeing a sharp rise over the last 3-4 years since 4G was launched and data consumption has gone off the roof. There will be some kind of arrest there in terms of content cost. Second, we will some opportunity of consolidation here wherein the smaller OTTs which would reply on obscene, nude and violence content may have to shut shops because of strict regulation norms which are there,” he said.

For more details, watch the video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow