With the focus back on driving same-store sales growth and margins, and more importantly on its core strength – pizzas, Jubilant has undone some of its past mistakes and has charted a new territory of profitable growth. This should support its financials in the medium to long-term. Macquarie expects Jubilant to witness 29 per cent annual growth in operating profit during FY18-20.
As the ghost of Maggi is now well behind it, Nestlé is back to bettering Street expectations yet again. It plans to foray into ready-to-drink beverages and breakfast cereals which hold good potential. Till then, its key offerings—infant and culinary foods, chocolates and beverages will remain prominent revenue drivers. Analysts at Credit Suisse, who have increased their earnings expectations by 4-5 per cent, say Nestlé is best placed to play the long-term packaged foods growth story in India.
India’s second-most valuable company, Reliance Industries (RIL) has seen many changes over the years, the most prominent being the success of its telecom venture, Jio. Even its core oil refining and petrochemicals businesses are set to garner better margins owing to capacity expansions and better product mix. Morgan Stanley believes RIL is set for earnings inflexion with upside triggers every quarter until end-FY19, driving 12 per cent upside surprise to consensus earnings. “All businesses are experiencing once-in-a-decade step-ups in margins”, they note. Now, with consumer businesses to generate higher profits, RIL’s earnings should grow faster.
Tata Consultancy Services
Post a tough period due to the Brexit vote, TCS stock is now seeing strong gains. Three large deals signed in 2018 that ramp up TCS’s dominance in the insurance and retail segments should help offset any pressures in its banking vertical and accelerate FY19’s revenue growth. UBS views TCS as the best-positioned Indian IT services provider. “We expect stronger revenue momentum in FY19-21, led by growing digital exposure,” they foreign brokerage adds.
Successfully meandering through multiple hiccups, be it the tighter regulatory compliance for purchasing gold jewellery, the note ban or the GST rollout, Titan has emerged as a major beneficiary, gaining market share from unorganised players. The management’s aspiration to compound jewellery business revenues by 20 per cent till FY23 reiterates the evolution Titan has seen over the years. Analysts at ICICI Securities believe that Titan’s growth story will remain multi-pronged and drawn over a longer time frame. The recent update on the June quarter numbers, indicating slower growth (after a strong 50 per cent rise in March quarter), is more of a short-term blip. This, along with the partial stake sale by Rakesh Jhunjhunwala recently has weighed on sentiment, but it has also brought the rich valuations lower.
Having waded through a prolonged period of challenges (mostly regulatory changes), United Spirits is set to accelerate. While GST-related uncertainty may stay in the near-term (alcohol not part of the new tax regime) and so may tax uncertainties (given the hike in duties by Karnataka), renewed management focus on product premiumisation and cost-effectiveness should deliver strong growth going ahead. Analysts estimate the company’s earnings to grow by 25-30 per cent over the next two years.