In light of liquidity challenges and concern in wholesale NBFCs, we remain cautious on the sector even as stable asset quality in most retail segments, detailed in RBI’s FSR, reinforces comfort on retail players.
However, the Jaypore brand is fairly nascent, and will require time and investment to scale up. We await detailed plans of the scale up, but would be wary of hefty investments, similar to the innerwear business.
While the company’s growth prospects remain strong due to pickup in industry demand and increase in localisation, we believe that profitability is not sustainable at 4QFY19 levels. Valuations are expensive at 25X FY2021E EP
PIDI’s 4Q earnings were 10-12% below our and the Street’s estimates due to sharp deceleration in volume growth (India CBP volume/mix growth down to 4% in 4Q from 15% in 9MFY19), partly offset by better-than-estimated reco
A steady quarter defying some slowdown in consumer staples, healthy trends (market share gains and offtake growth tracking ahead of primary) and new product launches keep us optimistic of earnings growth acceleration.