Commodity MOSL
Transcript of Commodity MOSL
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The melting commodities!
India Strategy
Thematic | September 2014
Sector: Commodity
Research Team ([email protected])
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India Strategy
15 September 2014 2
The melting commodities!
Page No.
Summary ................................................................................................................ 3-4
Story in charts ................................................................................................... 5-7
Global slowdown and transatlantic policy shifts weighs on commodities ...... 8-11
Falling commodities: Advantage India............................................................. 12-15
OIL & GAS ........................................................................................................... 16-23
AUTO ................................................................................................................... 24-26
METALS ............................................................................................................... 27-31
FINANCIAL ..................................................................................................... 32-33
Investors are advised to refer through disclosures made at the end of the Research Report.
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15 September 2014 12
India Strategy
Falling commodities: Advantage India
Direct benefit for inflation, fiscal and external account
1. WPI is crashing:The most direct beneficiary of the global commodity softening
are the transportation and manufacturing sector where input costs comes downproportionately. As a result, WPI manufacturing, WPI core and indeed overall
WPI is expected to soften widely. As per our calculations around 66% of the WPI
basket is influenced by international price trend. Thus WPI may soften by 80-
200 bp during FY15 and FY16 respectively, on the back of easing commodities
2. CPI is falling too: While part of the CPI fuel sector would benefit, a large part of
the CPI basket is comprised of food (50%) and services (26%) that are largely
functions of domestic price pressures. We estimate around 17% of the product
basket of CPI being affected by international commodity prices, yielding a
benefit ranging between 20-50bp during FY15 to FY16.
WPI and CPI has very different commodity basket with WPI having more globally linked
commodities
Inflation indicator WeightInflation indicator Weight
WPI 100.0CPI 100.0
Primary articles 20.1 Food, beverages & tobacco 49.7
Food articles 14.3 Cereals and products 14.6
Non-food articles 4.3 Pulses and products 2.7
Minerals 1.5 Oils and fats 3.9
Fuel & power 14.9 Egg, fish and meat 2.9
Coal 2.1 Milk and products 7.7
Mineral oils 9.4 Condiments and spices 1.7
Electricity 3.5 Vegetables 5.4
Manufactured products 65.0 Fruits 1.9
Food products 10.0 Sugar etc. 1.9
Beverages, tobacco & tobacco products 1.8 Non-alcoholic beverages 2.0
Textiles 7.3 Prepared meals etc. 2.8
Wood & wood products 0.6 Pan, tobacco and intoxicants 2.1
Paper & paper products 2.0 Fuel & light 9.5
Leather & leather products 0.8 Clothing, bedding & footwear 4.7
Rubber & plastic products 3.0 Housing 9.8
Chemicals & chemical products 12.0 Miscellaneous 26.3
Non-metallic mineral products 2.6 Medical care 5.7
Basic metals, alloys & metal products 10.8 Education, stationery etc. 3.4
Machinery & machine tools 8.9 Recreation and amusement 1.4
Transport, equipment & parts 5.2Transport and communication 7.6
Personal care and effects 2.9
Household requisites 4.3
Others 1.1
Note: Shaded commodities are likely to benefit more from the global commodities fall.
Source: Rogers, MOSL
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15 S 2014
I , CPI PI
8.6%
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3.
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4. S
S
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FY84
FY86
FY88
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13
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U (INR) O (INR) O ( % GDP)
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15 S 2014 15
I S
I 1.4% GDP
S: G, MOSL
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22.3 %
GDP20.9 %
GDP
0
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S: PPAC, MPNG, IOC, MOSL
3.
LPG / ? PDS I. H,
G LPG . T
,
LPG .
4. U 50%: W
50% INR750 FY16. A
/LPG 70%.
, >50% (INR)
S: PPAC, MPNG, MOSL
20.4
1.5
14.9 13.9
17.1
3.7
14.5
0.1
(5)
0
5
10
15
20
25
1QFY07
1QFY07
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
N11
J12
M12
M12
J12
S12
N12
J13
M13
M13
J13
S13
N13
J14
M14
M14
J14
S14
201400
494
773
1,033
461
780
1,381
1,6101,399
948750 689
0
500
1,000
1,500
2,000
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
P D K LPG T
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15 S 2014 19
I S
P P 2010, (INR/)
S: MPNG, PPAC, MOSL
5. I : S I GDP
% .
G % GDP
S: MPNG, GI, PPAC, MOSL
G %
S: MPNG, GI, PPAC, MOSL
W ,
.
P , D
..
S: PPAC, IOC, MOSL
20
40
60
80
S09 S10 S11 S12 S13 S14
P ( INR/) D ( INR/)
P
D
0.6
1.1 1.2
1.5
1.8
0.7
1.0
1.5 1.6
1.2
0.8
0.6 0.5
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
19.8
26.727.6
34.6 35.5
17.4
24.9
30.630.2
24.4
15.712.4 11.1
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
5%
0%
5%
10%
15%
20%
25%
J05 J07 J08 J10 J11 J13 J14
P 3M YY C (%) D 3M YY C (%)
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15 S 2014 20
I S
G : C 7040 3070?
1. H ONGC : U
.
W ONGC USD107/ FY14,
USD41/ USD66/.
2. C 7040 3070?O
7040 ( ) 3070 ..
USD70/ 40/
USD40/ USD70/.
3. ONGC 20% CAGR:A B USD100/
INR60/USD, INR724 FY16, 48%
FY14 INR1,399. U FY14
48% 50% FY15/FY16/FY17 ONGC
USD61/66/68/ ( @USD100/)
EPS CAGR 20%.
. F USD10/ ONGC
INR6/.
. F USD1/ ONGC
INR3/.
O P (USD/): ONGC .
S: C, MOSL
ONGC C. EPS (INR): ... (INR)
*F 50% FY15/16/FY17 USD5.3/6.3/ FY16/FY17
S: C, MOSL
3842 44
53 48
56
54
5548
41
61 6668
0
25
50
75
100
125
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
G U D N
16.8 18.020.8
23.2 23.1 22.7 24.5
30.4 28.331.0
41.9
48.852.5
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
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15 S 2014 21
I S
E ONGC
INR612 (/ INR485); INR865
*P S: MOSL
L OMC: C ?1. OMC : OMC
(RE 2030% HPCL IOCL )
()
()
. T OMC 22% CAGR 10
CAGR 27%.
HPCL 20
S: C, MOSL
S: C, MOSL
A PAT (INR) RE
S: C, MOSL
42.3 1.8 2.55.2 1.7
22.275.7
485 505534 593 612
865865
BEPS
K
(INR0.5
/
)
LPG
(INR10/
)
S
(@50%)
GP
(@USD7/
)
N
N
EPS
ONGC
9% 14% 20% 33% 38% 94%
15 20
66
104
165
221 211
249
296323 314
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
0.0
0.4
0.8
1.2
1.6
2.0
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
I % (%)
10
20
30
40
50
500
1,000
1,500
2,000
2,500
FY04 FY06 FY08 FY10 FY12 FY14
PAT RHS S
0
7
14
21
28
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
RE(%)
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15 S 2014 22
I S
2. D :OMC
% 0.1% FY04 1.2%
. D 12
OMC
. W OMC 1525%,
816% EPS , HPCL 16%, BPCL 9%
IOCL 8%.
3. OMC : I
(FY0407), 5%
10% . H, ,
, , OMC
, ,
.F,
.
4. M OMC : T
OMC G 2006
810%, OMC 4% .
T . P
, OMC
.
G I
INR1.4/ . HPCL
( / 2),
EPS INR15.5/ INR0.5/
, BPCL IOCL.
G I (INR/)
S: PPAC, IMF, S, I, A , MOSL
1.4
5.4
4.5
2.83.5 3.4
7.3
I US C T S
A
A UK
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15 S 2014 23
I S
F (INR/)
S: C, MOSL
HPCL: EPS BPCL: EPS
IOCL: EPS
S: C, MOSL
HPCL INR1/
INR B F04 F05 F06 F07 F08 F09 F13 F14 F15 F16 F17 F18
M () 19.5 20.1 19.4 21.7 24.5 25.4 30.3 31.0 31.9 32.8 33.7 34.5
GRM (USD/) 4.5 5.2 2.3 3.6 5.6 5.2 2.1 3.4 3.2 3.3 3.5 3.5
N S 515 599 709 890 1,047 1,253 2,065 2,231 2,168 2,179 2,143 2,160
EBITDA 32 21 8 24 16 29 39 52 43 52 57 66
D 6 7 7 7 9 10 19 22 24 26 28 30
I 1 1 2 4 8 21 18 15 7 6 6 5
O I 4 3 3 7 12 9 12 11 10 10 11 12
PBT 29 16 3 20 12 7 15 26 22 29 34 43
T 11 4 (1) 4 (0) 1 6 9 7 10 11 14
PAT 18 13 4 16 12 6 9 17 14 20 23 29
EPS (INR) 54 38 12 46 35 17 27 51 42 58 68 85
S: C, MOSL
496
700
401
646
952
528
801
1,063
588
HPCL BPCL IOCL
C P
D + . INR0.5/
D + . INR1/
34.7
54.9
7.0
15.50.8
A. FY14
EPS
I
MM
@INR0.5/
M
@15%
N
EPS
HPCL EPS (INR)
43.755.8
4.29.3
1.4
A. FY14
EPS
I
MM
@INR0.5/
M
@15%
N
EPS
BPCL EPS (INR)
32.739.8
2.55.4
2.3
A. FY14
EPS
I
MM
@INR0.5/
M
@15%
N
EPS
IOCL EPS (INR)
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15 S 2014 24
I S
F
F FY11, 11%
13.5%. H
PV ,
FY11. T
50% FY12 37% FY14.
W F,
. T I,
PV, .
F,
, 10
INR12/. A ,
FY1114
35% 58% (FY13) (37% / 18% MSIL).
W 4045%
( 1QFY15 50%).
F , 11% CAGR
F11, PV
S: C, MOSL
P & 10
S: C, MOSL
MSIL: A H , MSIL
11% CAGR. R
MSIL, . W 16%
CAGR MSIL FY1417E,
CAGR 20%.
W ,
1QFY15. T ,
MSIL EPS CAGR 40% (FY1417E) / CAGR 31%.
S ,
MSIL 2 .
10
0
10
20
30
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
1QFY15
J'14
A'14
S'14
FY16???
FY17???
P D
0
25
50
75
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
1QFY15
J'14
A'14
S'14
P D
INR24/L
INR12/L
INR12/
L
P D
AUTO
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15 S 2014 25
I S
S
S: C, MOSL
F T B
(% MSIL )
S: C, MOSL
MSIL
S: C, MOSL
R MSIL
S: C, MOSL
D
S: C, MOSL
S: C, MOSL
30
20
10
0
10
20
30
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
1QFY15
J'14
A'14
S'14
FY16???
FY17???
MSIL E L C G (%) P P C (%)
35
4750
4037
43
50
FY08 FY11 FY12 FY13 FY14 1QFY15 FY16???
FY08 FY11 FY12 FY13 FY14 1QFY15 FY16???
48 49
45
38 38
28 28
32
FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 J'14
MSIL E L C (% )
33 34 35 36
48
5853 50
13 15 19 18
24
3732 32
FY08 FY09 FY10 FY11 FY12 FY13 FY14 1QFY15
D ( % ) I
10,539 9,610 9,57512,029 12,049
17,038
21,000
13,000
FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 FY16???
MSIL ' (INR/)
4.1 3.4 3.4 3.9 3.3 4.6 5.7 3.4
45
23
35
56
4249
61
40
FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 FY16???
% % PBT
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15 S 2014 26
I S
P + C + + I = M E
S: C, MOSL
C 90% 1
S: C, MOSL
MSIL' F17 JP/USD
JP/USD
EBITDA
M
(%)
EPS (INR)C EPS
(INR)PE ()
TP (17.5
C.
EPS)
90.000 12.4 174.5 279.9 17.5 3,054
95.000 13.3 190.4 295.8 17.5 3,332
102.000 14.4 210.0 315.4 17.5 3,676
P 107.000 15.1 222.5 327.9 17.5 3,893
110.000 15.5 229.4 334.8 17.5 4,014
115.000 16.1 240.1 345.5 17.5 4,202
120.000 16.6 250.0 355.4 17.5 4,374
S: C, MOSL
91
82
58
82
94
130
166
213
213
274
FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
EPS M EPS
18
10 11
3
136
1627
31
22
3743
V EBITDA EPS
FY0811 FY1114 FY1417E (B) F1417E (M)
3,721
5,500
B @ 17.5 M @ 20
F17 T P (INR/)
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15 S 2014 27
I S
I C
I HRC US$520/
US$535545/ 56 . T
C HRC . A I HRC
,
I .
L I
. S ( ),
,
. H, I
. L
I . T . C
USD60/. I
. T
. T C
.
I HRC
S: MOSL
I (TMT) USD60/
S: MOSL, B
I C
. I . I
.
I
I 0.3% YTD (AA 2014),
. R
2HFY15
11% YTD 2 4.46% 14.79%
. O, I . I ,
I ,
, .
33,000
35,00037,000
39,000
41,000
43,000
S13
O13
N13
D13
J14
F14
M14
A14
M14
J14
J14
A14
S14
HRC M (INR/)
32,000
34,000
36,000
38,000
S13
O13
N13
D13
J14
F14
M14
A14
M14
J14
J14
A14
TMT M (INR/)
METALS
HRC
USD1520/ WW
L
S
-
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15 S 2014 28
I S
D
S: JPC
I TD J
S: JPC
C ;
C J
YY. YTD J FY15 2%
8% . A , C
. C
J 6.3 , 2007 74% . YTD J FY15
57% .
C J
S: MOSL, B
S: MOSL, B
C . W R
( 20%) R ,
E M (.. T S E) US .
C .
S: MOSL, M
C HRC .
S: MOSL, M
15.0
10.0
5.0
0.0
5.0
10.0I (%)
400
200
0200
400
600
J12
A12
J12
O12
J13
A13
J13
O13
J14
A14
J14
I ('000 )
10%5%0%5%10%
15%20%25%
F11
M11
A11
N11
F12
M12
A12
N12
F13
M13
A13
N13
F14
M14
A (%)
(2.0)
2.0
4.0
6.0
8.0
O07
A08
O08
A09
O09
A10
O10
A11
O11
A12
O12
A13
O13
A14
C ()
433
538 565 570575 600 583
100
200
300
400
500
600
700
C
CIS
T
LA
EU
US
I
503542
595549
620567
100
200
300
400
500
600
700
C
CIS
LA
EU
US
I
-
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15 S 2014 29
I S
S RM ,
S C,
. C,
, . A C
.
I , 15% 23
US$82/ C. W , US$111113/ (
A) 3%4% .
I (62% ) ,
US$82/ C
S: B, MOSL
US$110112/
A US$108/
S: B, MOSL
E (USD82/ C), (USD108 A)
2 . HRC
(
C). I ( CY2014),
. T I .
A ; T & SAIL
T , J, ,
. T
,
. T
. F,
40
.
U , O 6
2 . W
, S C ,
T S, SAIL OMC
/.
J
2 , T S
134
117
96
82
70
90
110
130
150
S13
O13
N13
D13
J14
F14
M14
A14
M14
J14
J14
A14
S14
CIF FOB
153
113 112
108100
110
120
130
140
150160
S13
O13
N13
D13
J14
F14
M14
A14
M14
J14
J14
A14
S14
S ( A) US$/
I 12%
23 ,
23%
O
6
2
-
8/10/2019 Commodity MOSL
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15 S 2014 30
I S
SAIL. H, O ,
.
I
. W ,
. H,
( )
.
I
I
. R, O R P
S (RP S) I
B (O). T 3 (.. 4 S 4
D 2014). H, . RP S
, 4.5. A SM, RP
S 1 I , .
A ,
. A , 4050
. T
,
. A ,
, .
M
A ,
. I (T S SAIL)
( 10% 15%
... 1S, 2014) J .
T . T T
SAIL 10% 20% INR1000/
EBITDA . N JSW S
.
J & P ,
INR126/ . I INR295/
, INR30 (INR33/). I
, INR27/
INR1000/ .
NMDC . A
, I 10% 25% IODEX USD82/ C.
I IODEX , NMDC
. JS S .
H C
RP S
O
A ,
4050
-
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15 S 2014 31
I S
S ...
C CMP TP
S (R ) R
EBITDA EV/M INR/
INR/ INR (6.5) (%) TP
T S 517 650 1000 9,541 62,017 64 10% 9.5 TSI FY16
SAIL 79 115 1000 14,705 95,583 23 20% 14.7 FY16
JSW S 1,348 1,647 1000 12,880 83,720 346 21%
JSPL 237 403 1000 3,849 25,019 27 7% 3.8 FY16
NMDC 177 222 300 10,136 65,881 17 7% 33.8 FY16
S ... EV/EBTIDA
1,647
650
115
403
222
1,182
507
93338
199
500
1,000
1,500
2,000
JSW TSL SAIL JSPL NMDC
INR/ A 6.5 A 5.5
S: MOSL
O
EV/EBITDA 6.5
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15 S 2014 32
I S
I : PSB B G
A
( WPI) . A
CPI ( ),
. N,
, ,
() B NBFC, S
PSU () PSU GS
(MTM AFS ) () .
T GS ES, ASB, PNB,
LICHF, SBIN CBK.
1. B .
D 1Y 73% / (
FY14). M 60% / .
F, (19% )
.
2. A B: TAXSB /
ALM
, . T, ,
.
D 47% / ( FY14). E
AXSB .
3. SBI/PNB . F
. PNB AFS
PSU . E 100
28 ROA () PNB.
4. CBK . AFS
27% . E 100
25 ROA () MTM .
5. LICHFW ; 65% LICHF
NCD ( 50 ).LICHF NCD INR 44 2HFY15 ( )
INR60, INR 100
. LICHF NCD
( NCD 100 ). O
56% LICHF
. T
1015.
FINANCIALS
-
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15 S 2014 33
I S
* S 100 J2006 S: C, MOSL
M (% ): ES CBK
S: C, MOSL
PNB CBK ( 100 )
B
G I.
B
(INR )
AFS I.
(INR )
AFS (%)
G I.
AFS
D
()
MTM G
(INR )
F15E PBT
(INR )
% F15E
PBT
% F15E
A A
SBIN 3,983 797 20.0 3.10 25 225 11.0 0.13
PNB 1,383 388 28.1 4.24 16 83 19.9 0.28
BOB 1,217 197 16.2 3.40 7 81 8.3 0.10
BOI 1,207 333 27.6 4.10 14 45 30.4 0.22
UNBK 918 211 23.0 2.63 6 34 16.2 0.15
CBK 1,299 345 26.6 3.80 13 37 35.3 0.25
OBC 596 138 23.1 3.84 5 20 26.3 0.23
INBK 457 101 22.2 3.00 3 16 18.7 0.16
S: C, MOSL
5
0
5
10
15
0
500
1000
J06
J06
N06
A07
S07
F08
J08
D08
M09
O09
M10
A10
J11
J11
N11
A12
S12
F13
J13
D13
M14
AXSB YES CBKSBIN PNB BI (WPI, RHS )
22.6 24.0 28.8 25.2
50.0 49.25.1 12.9
17.8 23.4
10.9 23.4
HDFCB ICICIBC AXSB FB IIB YES
U 6M 6M1Y
24.3 24.5 25.636.2 32.5
39.0
11.6 13.7 13.5
13.4 30.6
26.1
UNBK PNB SBIN BOI CBK BOB
U 6M 6M1Y
-
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34/34
I S
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