Institutional Equity Research 27 March 2021

R Weekly Round Up
22 - 26 Mar 2021
What We Did
1. R Friday High Tea - Consumer & Entertainment - Corporate Speaker Access - Conference Call

2. NBFC (Sector Initiation)

3. R Long Short - ACC - Directional Long 

4. Reliance Research - R Long Short - Bharat Forge - Directional Long Update – Stop Loss Hit

5. Reliance Research - R Long Short - Hero MotoCorp - Directional Long Update – Stop Loss Hit

6. Reliance Research -R Long Short - IndusTowers - Directional Long Update – Exit Long 

7. Reliance Research - R Long Short - UPL : Directional Long Update – Booked Profit 

8. Reliance Research - R Alpha - Engineers India - BUY 

We have made changes to our Recommendation and Target Price. Please refer to Page no. 11 at the end of the report. 1
R Friday High Tea - Consumer & Entertainment – Corporate Speaker Access – Conference Call
Wonderla Holidays Limited (WONH IN, NOT RATED, CMP – Rs.194)

We hosted a conference call with the management of Wonderla Holidays Ltd. on March Research Associate:
26, 2021. The management was represented by Mr. Satheeesh Seshadri, CFO. The key Akshay Chaturvedi
Contact: (022) 41681371 / 9769637564
takeaways are enumerated in the following:
Email : akshay.chaturvedi@relianceada.com
1. Operations Witnessing Steady Pick-up:
f The company’s Bangalore park reopened on November 9, 2020 and operated only on
weekends and public holidays till December 23, 2020, while its Kochi park reopened Research Analyst:
on December 20, 2020. Both parks were operational on all days during the year-end Arafat Saiyed
holiday period of 24th-31st December. Its Hyderabad park reopened on January 7, Contact: (022) 41681371 / 9819503007
2021. These parks were open for 3 days a week in Jan’21 and rose to 5 days a week in Email : arafat.saiyed@relianceada.com
Feb’21, while they are open on all 7 days from 1st of March 2021 onwards.
f Whilst all rides are operational, the government directives limit the daily footfall below
5,000/park vs. full capacity of 7,000-8,000.

2. Pricing: With a view to attracting the customers after reopening, the company offered an
attractive ticket price of Rs699 till Jan’21-end, which was increased to Rs999 from Feb’21
onwards. With the peak summer season coming up, the company plans to increase the
prices moderately from Apr’21 onwards.

3. Demand Outlook: There is a lot of pent-up demand as the people are very eager to come
out of their homes. The parks, being an open space entertainment source, will benefit in
the post pandemic world, as the consumer preference could shift to amusement parks
and beaches over closed cinema halls/malls. However, demand from groups like schools,
colleges and corporates, which account for the major chunk of footfalls, is not there due
to closure of schools and colleges. It is not certain when that demand will come back, as
uncertainties and apprehensions over COVID-19 continue to persist with the cases rising in
several regions.

4. Wonder Kitchen: From Aug’20 onwards, the company opened 4 outlets in the 3 cities where
it has parks albeit to keep the brand alive with low investment and leased spaces. As the
business did not reach break-even, the company has decided to temporarily shut it down.
It will focus on its core parks business and once it has resumed normalcy, it will decide on
reopening the F&B business.

5. Update on Upcoming Parks:

f Chennai: The total cost for new park in Chennai would be Rs3.3bn out of which
Rs1.09bn has already been incurred including purchase of land. The company expects
a complete waiver of Local Body Tax (LBT) from the government, but there is uncertainty
because it is an election year in the state. Once the activities are back to normal at
the existing park, the new park would be ready in approximately 18 months and the
remainder of investment could be financed through its operational cashflow and
short-term debt.

f Odisha: The company plans to be asset light for its Odisha park with land being taken
on 90-year lease basis and total cost estimated at ~Rs1.25-1.5bn. The company expects
continued government support for feasibility of the park with land being given, which
is accessible (close to highway and railway station) along with sufficient electricity and
water supply.
6. Fixed Cost: The company had reduced its monthly fixed cost to Rs30-35mn from Rs140-
145mn in pre-COVID era to minimize loss. With the operations getting resumed, the fixed
costs like salary, marketing etc. are also gradually increasing, which currently stand at
~Rs100mn/month. The company expects these costs to move closer to the normal level in
the coming summer season.
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 Institutional Equity Research Sector Initiation | 24 March 2021

NBFC
Poised to Play Key Role in Last-mile Lending

Key Sectoral Tailwinds: Click Image for Video

 Expected strong rebound in credit growth in FY22E led by broad-based economic recovery
Presentation 
 Sustainable improvement in operating cost efficiency will be RoA-accretive
 Likely strong growth in new/used vehicle sales – a big positive for auto financiers
 Extension of sops beyond Mar’21 (Maharashtra) and newer incentives to drive home loan Research Analyst
growth Abhijit Tibrewal
 Gold financiers are longer-term bets despite near-term underperformance Contact : (022) 41681371/+91-9972584400
Email : abhijit.tibrewal@relianceada.com

Research Associate
Key Highlights: D. Vijiya Rao
f The non-banking lenders have exhibited a lot of resilience to navigate the pandemic-induced Contact : (022) 41681371/9321404056
uncertainties helped by several liquidity/fiscal stimulus measures extended by the RBI/ Email : vijiya.rao@relianceada.com

government. However, most non-banking lenders are still standing tall and are now poised
Research Associate
to play an important role in extending the last-mile lending to the under-served customers. Sripriya Konakanchi
Contact : (022) 41681371/ 9930111983
f We expect the vehicle financiers to outperform both housing and gold financiers in FY22E on
Email : sripriya.konakanchi@relianceada.com
the back of strong demand. Tractor demand was robust (post lockdowns) in FY21 and we
expect the positive traction to continue in FY22E as well. We also expect a strong rebound in
Coverage Summary
M&HCV on the back of high government capex in infrastructure projects.
Company Rating CMP 2 Yr Upside
f Extension of stamp duty cuts for an extended period beyond Mar’21 will provide fillip to the real (Rs) TP (%)
(Rs)
estate sector and consequently aid the sustenance of demand for individual housing loans. In
AAVAS BUY 2,405 2,925 21.6
the near-term, we expect affordable (smaller in size/scale) housing financiers to lose market
BAF BUY 5,379 6,650 23.6
share to the banks/large HFCs owing to the aggressive competition in mortgages space.
CANF BUY 603 750 24.4
f Gold finance is expected to remain subdued in FY22E led by: (a) decline in gold prices over CIFC BUY 560 662 18.2
the last 6 months; and (b) improved risk appetite of banks/non-banks towards unsecured HDFC BUY 2,510 3,000 19.5
personal/MSME loans. LICHF* SELL 418 465 11.2

MGFL BUY 157 205 30.1

ESG Overview: The eleven non-banking lenders under our coverage universe score 76%, 75%
MMFS BUY 210 255 21.2
and 77% on Environmental, Social and Governance (ESG) matrix, respectively. The aggregate
MUTH BUY 1,238 1,525 23.2
score across ESG matrices stood at 76%. While the companies like HDFC/MMFS score very high
PNBHF SELL 399 385 (3.4)
on governance matrix, the companies like HDFC/MUTH score high on social matrix. HDFC, Bajaj
REPCO* SELL 319 342 7.2
Finance and Aavas score high on environmental matrix. Please refer to page no. 30-31 for details
Note: *Please refer to our rating rationale in the disclaimer
of individual scores and comments on each criterion under the ESG matrix. on page 251; CMP as on 23 March 2021

Initiate Coverage on NBFC sector Price Performance

We initiate coverage on 11 non-banks across vehicle finance, housing finance and gold finance Mkt. Cap. Absolute Performance
segments. While likely strong growth in new/used-vehicle sales is a big positive for auto financiers, Company (Rs bn) 1M 3M 12 M
extension of sops beyond Mar’21 (Maharashtra) and newer incentive are expected to drive home AAVAS 173 9.1 42.0 129.5
loan growth. Despite near-term under-performance vs. vehicle and housing financiers, we BAF 3,229 (0.1) 5.7 137.4

consider the gold financiers as longer-term bets. Thus, within the broader sub-sectors, our order CANF 77 24.0 25.6 114.0
CIFC 434 5.9 49.2 311.4
of preference is: (1) vehicle finance; (2) housing finance; and (3) gold finance.
HDFC 4,534 (4.5) 4.4 65.0
Our Top Picks: Bajaj Finance, HDFC, Cholamandalam and Can Fin Homes LICHF 211 (2.7) 17.1 117.3
MGFL 135 (7.4) (4.3) 99.4
MMFS 252 1.5 20.9 40.3
MUTH 509 (3.8) 3.9 143.6
PNBHF 63 (7.2) 12.6 130.7
REPCO 20 (6.4) 34.1 133.2

Note: *CMP as on 23 March 2021

PLEASE CLICK HERE FOR DETAILED REPORT 3

R Long Future Price (Rs)* 1910

Short
Recommended Range (Rs) 1890 - 1915
Target Price (Rs) 2250

ACC
Stop Loss (Rs) 1780
Potential Absolute Return 17.8%
Time Horizon 8 Weeks

Directional Long Fundamental Rating BUY

24 March 2021 Fundamental 2-Year Target Price 1718

f At the current level of Rs1,910, ACC has surpassed a multi-year resistance, which has been in place since 2015. Stock is now poised to move
into uncharted territory for an initial leg of up-move until Rs2,250.
f Weekly RSI has surpassed the resistance level and is now oscillating within the bullish zone, which could support the prices.
f Long positions can be initiated in the range of Rs1,890-1,915 for a Target of Rs2,250. This view will be negated at Rs1,780 (stop loss) on closing
basis.

Key Fundamental Triggers for ACC:

f ACC continues to enjoy strong brand equity especially in the trade segment with sound distribution reach in rural India. Pan-India distribution
network comprising of >50,000 dealers/distributors has been the prime growth driver for the company.
f With ongoing capacity expansion of 6mnT in strong demand potential markets, the concern over capacity constraint appears to have subsided.
f Going forward, we believe a sustained healthy demand in the Eastern and Central regions will aid the company to get traction in volume and
profitability.
f Further, recent change in MMDR rule, which facilitates M&As, bodes well for ACC.

Technical Research Analyst:

Abhishek Karande
Contact: (022) 42157022 / 9833055033
Source: Bloomberg & RSec Research; Note: * Near Month- Single Stock Future price as on 9:30am 24th March, 2021
Email: abhishek.karande@relianceada.com

PLEASE CLICK HERE FOR DETAILED REPORT 4

R Long Recommended Date 03-03-2021

Short
Closure Date 25-03-2021
Recommended Price 527

Bharat Forge
Target 640
Stop loss 590
Exit Price 580

Directional Long Return -7.8%

Fundamental Rating BUY

Directional Long Update: Stop loss hit

f Bharat Forge failed to sustain the intermediate supports of Rs610 - Rs600.

f Stock has posted a trend line breakdown on daily charts.
f We recommend to exit long positions at Rs580.

Technical Research Analyst:

Abhishek Karande
Contact: (022) 42157022 / 9833055033
Source: Bloomberg & RSec Research
Email: abhishek.karande@relianceada.com

PLEASE CLICK HERE FOR DETAILED REPORT 5

R Long Recommended Date 21-01-2021

Short
Closure Date 25-03-2021
Recommended Price 3250

Hero MotorCorp
Target 3850
Stop loss 3040
Exit Price 3040

Directional Long Return -6.5%

Fundamental Rating Not Covered

Directional Long Update: Stop loss hit

f Hero MotorCorp rallied until Rs3,600 post recommendation.

f Stock failed to sustain above Rs3,525 and edge below the intermediate support of Rs3,000.
f Failure to sustain below Rs3,000 added negative tone and triggered our stop loss.

Technical Research Analyst:

Abhishek Karande
Contact: (022) 42157022 / 9833055033
Source: Bloomberg & RSec Research
Email: abhishek.karande@relianceada.com

PLEASE CLICK HERE FOR DETAILED REPORT 6

R Long Recommended Date 07-12-2020

Short
Closure Date 25-03-2021
Recommended Price 243

Indus Towers
Target 285
Stop loss 214
Exit Price 241

Directional Long Return -0.6%

Fundamental Rating SELL

Directional Long Update: Exit Longs

f Indus Tower rallied until Rs270 levels post recommendation.

f However stock has failed to sustain above intermediate levels of Rs260 levels.
f We recommend to exit long positions at Rs241.

Technical Research Analyst:

Abhishek Karande
Contact: (022) 42157022 / 9833055033
Source: Bloomberg & RSec Research
Email: abhishek.karande@relianceada.com

PLEASE CLICK HERE FOR DETAILED REPORT 7

R Long Recommended Date 19-02-2021

Short Closure Date

Recommended Price
24-03-2021
562-550

UPL Target
Stop loss
709
500
Exit Price 621
Directional Long Return 11.7%

Fundamental Rating Not Covered

Directional Long Update – Booked Profit

f The stock made multiple tops in range of 630-640 levels and facing resistance indicating exhaustion of up move in short term from here.
f Breakdown of the short term average can indicate further weakness in the stock.
f So, we recommend to book profit at current levels of 621 generating a return of 11.7%.

Technical Research Analyst:

Jatin Gohil
Contact: 7498411546
Email: jatin.gohil@relianceada.com

Source: Bloomberg & RSec Research

PLEASE CLICK HERE FOR DETAILED REPORT 8
 Date: 23 March 2021

R Alpha

Engineers India
Recommendation BUY
CMP 77
Target Price 87
Stop Loss 69
Duration 15 days
Fundamental Rating BUY
2-Year Target Price 100

Key Triggers
f Engineers India (ENGR), a Navratna public sector undertaking (PSU), has emerged as a market leader in Indian hydrocarbon space with strong
expertise in designing, engineering and implementation.
f Its current order book, which stands at Rs95.5bn (3x of TTM revenue), provides promising revenue visibility for next couple of years.
f We believe strong track record in consultancy of complex and high-value projects, debt-free status, negative working capital cycle and beneficiary
of large government projects put ENGR in a sweet spot.
f ENGR has healthy cash to the tune of Rs26bn on book, out of which Rs1bn is cash advances from the clients, and the balance Rs25bn is accrued
cash.
f We recommend BUY for a time horizon of 15 days with a Target Price of Rs87 and Stop Loss of Rs69.

100

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Mar-20

Mar-21
Aug-20
Apr-20

Oct-20

Feb-21
Nov-20
May-20

Jun-20

Jul-20

Dec-20
Sep-20

Jan-21

Technical Research Analyst:

Vikas Jain
Contact: (022) 4215 7022 / 9324611393
Email : vikas.i.jain@relianceada.com
PLEASE CLICK HERE FOR DETAILED REPORT 9
SIGNED BY:

Head of Research: Technical Research Analyst:

Mitul Shah Vikas Jain
Contact : (022) 41681371 / 9869253554 Contact: (022) 42157022 / 9324611393
Email: mitul.shah@relianceada.com Email: vikas.i.jain@relianceada.com

Research Analyst: Research Associate: Technical Research Analyst:

Arafat Saiyed Akshay Chaturvedi Jatin Gohil
Contact: (022) 41681371 / 9819503007 Contact: (022) 41681371 / 9769637564 Contact: (022) 42157022 / 7498411546
Email : arafat.saiyed@relianceada.com Email : akshay.chaturvedi@relianceada.com Email: jatin.gohil@relianceada.com

Research Analyst: Research Associate: Technical Research Analyst:

Abhijit Tibrewal D. Vijiya Rao Abhishek Karande
Contact : (022) 41681371 / 9972584400 Contact : (022) 41681371 / 9321404056 Contact: (022) 42157022 / 9833055033
Email : abhijit.tibrewal@relianceada.com Email : vijiya.rao@relianceada.com Email: abhishek.karande@relianceada.com

Research Associate:
Sripriya Konakanchi
Contact : (022) 41681371 / 9930111983
Email : sripriya.konakanchi@relianceada.com

10
Change in Ratings

f We have shifted to BUY & SELL ratings only and no longer continue with
HOLD rating.
f We have also shifted to 2-year Target Price from 1-year Target Price
earlier.

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