Landfall Gains

Expensive Automobiles

Passenger cars are set to get more expensive from the new year. Welp.🙄

Domestic automobile manufacturers like Tata Motors and Maruti have announced product hikes. The two companies will join global manufacturers like Mercedes Benz and Audi, who also made a similar move in India. Steep rise in commodity prices and the chip shortage are key reasons for the hikes. The price hikes are set between 2% and 3%. For most auto companies, the hikes are the fourth in the current fiscal year.🤐

The price hike is on the heels of the manufacturers signalling a recovery from the semiconductor shortage. The semiconductor shortages have so far had a massive impact on the entire industry. Even the festive season failed to bring in any cheers for the sector. Several cars like the Mahindra XUV700 have a waiting period of over seven months.👎

The hikes should boost the bottomline of the automobile companies. 💰Easing supply chain constraints, new product launches, and continued preference for personal mobility are key growth drivers. 🚗

One More Incoming

Shriram Properties IPO will open on Dec 8. The price band is fixed at Rs 113-118 per share. The company plans to raise Rs 600 from the markets. 💸

Founded in 2000, Shriram Properties is one of the largest real estate developers in South India. The company focuses on pocket-friendly and mid-income tier properties.🏠 Chennai and Bengaluru are its top markets. However, it has also worked on properties in other Indian cities like Coimbatore, Visakhapatnam and Kolkata. It has finished 20 projects and has around 35 projects under pipeline. 👍 Shriram Properties will largely use the IPO funds to repay debt. 

Financial Snapshot: 

• FY21 revenue: Rs 432 cr -24% YoY
• FY Net Loss: Rs 68 cr; (vs Net Loss: Rs 86 cr YoY)

Covid notably impacted its financials. 😞 Shriram faced booking cancellations and it delayed the completion of select projects. It all led to the company seeing a dip in its delivery volume and gross revenues. Omicron’s spread and intense competition from large developers are its top risks. ⛔

However, experts are bullish about the real estate sector. India’s real estate market is set to grow to Rs 65,000 cr by 2040 (vs Rs 12,000 cr in 2019). 📈 The company has also switched to an asset light business model. It means an equal focus on real estate development and real estate services, and that is a key positive. ⏫

Jefferies Four Pillars

Jefferies, a leading US-based brokerage firm, shared an interesting perspective on their latest thoughts on Indian markets. In short, they think the easy money in Indian stocks has been made, but still remain bullish on IT, banks, real estate and industrial sectors.👀

Mahesh Nandurkar, a Managing Director at Jefferies, told Economic Times that they’re more bullish on India’s economy than other global markets. But, he also feels that future stock market returns will not be as strong as 2021. 😞

Due to India’s strong economic backdrop, he recommends investors remain overweight Indian cyclical sectors like banks, real estate, and industrials. These sectors tend to do well as the economy recovers and growth accelerates. ⏫

Interestingly, he also feels investors should remain overweight IT. IT is definitely not considered a cyclical sector. Many investors prefer cyclical sectors like banks and industrials as the economy recovers and interest rates increase, partially due to the higher earnings growth rate. But because of powerful underlying IT trends like cloud and AI/ML, Nandurkar feels that the IT demand outlook is so strong that IT stocks can still perform. Here is a helpful data point: 

“In the first six months of this financial year, IT companies have hired more than any year in the last 10 years in terms of the annual hiring. The hiring gives us a very good look ahead into what the company management are looking forward to in terms of their volume growth, deal wins, etc. This gives us a very comfortable feeling.”

Despite his bullish tone, Nandurkar warned investors of future volatility. Based on the US Fed’s latest comments, it seems like global inflation is here to stay, and the Fed may hike interest rates sooner than many expected. Don’t be surprised if you see wild swings! 😧

Charged UP

EV charging startup Charge+Zone raised $10 million in a bridge funding round led by Venture Catalysts.

Charge+Zone also plans to raise another $50 million in a Series A funding in 2022. They plan to use the proceeds to ramp up its existing charging infrastructure for electric buses, electric cars, two-wheelers and three-wheelers. It plans to have 1,500 new charging points over the next 150 days. 🔌

Founded in 2018, Charge+Zone offers a host of EV charging solutions including battery swapping networks. Its charging points serve electric buses, electric cars and electric two and three wheelers. It currently has over 1,000 charging points across 19 cities. 👊

Big picture: EVs are on the rise in India. Tata Motors is the early leader with 80% market share in the EV passenger car market. This past November, Tata Motors more than tripled EV sales. Other manufacturers including MG Motors have also reported an increase in EV sales. Tata Motors’ infra partner, Tata Power, is one of the leaders in the charging space. It has set up over 1,000 EV charging stations.

Now, there is a clear need for additional charging stations. Charge+Zone’s expansion plans will only make it easier for consumers to switch to EVs. 🔌🚗