Fwd: FW: Kotak Institutional Equities Report, UNSP

[Dhaval Gandhi]

---------- Forwarded message ----------
From: Dhaval Gandhi <dhaval...@mirainform.com>
Date: Fri, Feb 5, 2016 at 12:36 PM
Subject: FW: Kotak Institutional Equities Report, UNSP
To: Dhaval Gandhi <dhavalg...@gmail.com>

Many Thanks

Dhaval Gandhi Director:  Business  Development

Mira Inform Private Limited 605, Palmspring, Above Croma, Link Road, Malad (West), Mumbai – 400064. India

Tel.: 91-22-40448000  Dir.: 91-22-40448029 Mob.: 91-9819355353 Fax : 91-22-40448045/46 E-Mail : dhaval...@mirainform.com

Globally…

DISCLAIMER

Freshly investigated Credit Reports / Business Information Reports – India & International www.mirainform.com -SINCE 1983

Winner of the "EUROPEAN QUALITY AWARD" ”OUTSTANDING PERFORMER-IIMM” 

Mira Inform Private Limited is a Registered Company in India having Com. Reg. No. 11-029458 of 02-03-1983 and capital of INR 50000000.

Save paper, print if you have to. Save energy.  Mira Inform supports energy conservation & environment protection.

DISCLAIMER
The information in this email is confidential and intended solely for the addressee. Access to this email by anyone else is unauthorized. Any use, distribution, copying or disclosure by any other person is strictly prohibited and may be illegal. If you received this in error, please notify the sender by reply email and then destroy the message. Opinions expressed in this email are those of the individual, unless specifically indicated

 

From: Dhaval Gandhi <dhaval...@mirainform.com>
Date: Friday, 5 February 2016 at 12:07 PM
To: <hka...@gmail.com>
Cc: <stockta...@googlegroups.com>
Subject: Kotak Institutional Equities Report, UNSP

Please go through the trailing mail as discussed.

Many Thanks

Dhaval Gandhi Director:  Business  Development

Mira Inform Private Limited 605, Palmspring, Above Croma, Link Road, Malad (West), Mumbai – 400064. India

Tel.: 91-22-40448000  Dir.: 91-22-40448029 Mob.: 91-9819355353 Fax : 91-22-40448045/46 E-Mail : dhaval...@mirainform.com

Globally…

DISCLAIMER

Freshly investigated Credit Reports / Business Information Reports – India & International www.mirainform.com -SINCE 1983

Winner of the "EUROPEAN QUALITY AWARD" ”OUTSTANDING PERFORMER-IIMM” 

Mira Inform Private Limited is a Registered Company in India having Com. Reg. No. 11-029458 of 02-03-1983 and capital of INR 50000000.

Save paper, print if you have to. Save energy.  Mira Inform supports energy conservation & environment protection.

DISCLAIMER
The information in this email is confidential and intended solely for the addressee. Access to this email by anyone else is unauthorized. Any use, distribution, copying or disclosure by any other person is strictly prohibited and may be illegal. If you received this in error, please notify the sender by reply email and then destroy the message. Opinions expressed in this email are those of the individual, unless specifically indicated

 

From: Dhaval Gandhi <dhaval...@mirainform.com>
Date: Friday, 5 February 2016 at 11:34 AM

Subject: Re: Kotak Institutional Equities Report, Awaiting Response

Dear Mr Prasad;

Greetings!!!!!

Thanks for your mail explaining  the unjustified downgrade of UNSP. Its great to receive a mail from market veteran like you, whom we have always seen on TV. To be honest sir the downgrade and the explanation given is not at all satisfactory. I would want to give you reasons why I feel so and maybe then you could give the explanation for the same. One more thing sir you have apologised for the downgrade I would request you not to do that, as an investor we understand that the reports are a guide to stock investing and the decisions totally wrest upon the investors themselves. Here are the points which need to be clarified or answered

Regarding your point that “earlier guidance by the management on 17-18 percent margins” 

• Referring to Kotak report dated 6th Jan 2016, you had estimated revenue growth of 13 percent for UNSP which came in at 22 percent which is a huge beat according to your expectations.
• Again referring to the same report the Prestige segment growth was estimated at 8.5 percent which came in at 11 percent again a beat which indicates that the long term premiumization strategy is working.
• Sale from Diageo was expected to be 1.5 bn INR which came in at 2.5 bn INR again a big positive.
• Now with respect to the margins, you feel that it is the main aspect behind the downgrade by whooping 30 percent or so. So I would like to ask you and your team, does the analysts take management commentary on face value without trying to read between the lines? Isn’t it obvious that being Diageo for what it is known they would have given a conservative commentary and later maybe would beat it. You are a veteran you should know more about the good management practices followed by MNC’.s Uday sir always gives conservative guidance.
•  Secondly even if we consider that they wouldn’t beat the guidance but a significant beat in Topline as per Kotak expectations wouldn’t set off the low margin commentary for the coming years? 
• Thirdly there was a high expenditure in Advertising and Promotion in this quarter due to the relaunch of Royal Challenge and Mcdowells No 1 brand hence the margins were a bit low, the analyst knows that thus  again raising the question,  how can a 30 percent cut in the TP be justified based on one quarter data on margins and conservative management commentary?
• You yourself have accepted the fact that Pernod Richard has the higher profitability in India. So taking this point forward a brilliant management team of Mr Kripalu and Churiwala at UNSP, Dingoes global experience,focus on bringing down debt, almost 40 percent market share in India, successful relaunch of brands, access to Diageo brand portfolio, high barrier to entry, what makes you believe that UNSP won’t be able to achieve the profitability that Pernod Richard has?
• Last but not the least I would like to question, does one quarter change and commentary warrants such steep reduction on inherent value of business value because in DCF perpetual value forms 70-80 percent value and is function of sustainable margins over longer period of time not guidance for horizon period.

Hope to get a detailed reply with respect to each point raised as it might be subjective but sir you have wronged your investors by downgrading in this particular case without applying proper thought. Post this it would become really difficult to trust any Kotak reports. Am awaiting a structured reply to the rebuttal points raised.

Many Thanks

Dhaval Gandhi Director:  Business  Development

Mira Inform Private Limited 605, Palmspring, Above Croma, Link Road, Malad (West), Mumbai – 400064. India

Tel.: 91-22-40448000  Dir.: 91-22-40448029 Mob.: 91-9819355353 Fax : 91-22-40448045/46 E-Mail : dhaval...@mirainform.com

Globally…

DISCLAIMER

Freshly investigated Credit Reports / Business Information Reports – India & International www.mirainform.com -SINCE 1983

Winner of the "EUROPEAN QUALITY AWARD" ”OUTSTANDING PERFORMER-IIMM” 

Mira Inform Private Limited is a Registered Company in India having Com. Reg. No. 11-029458 of 02-03-1983 and capital of INR 50000000.

Save paper, print if you have to. Save energy.  Mira Inform supports energy conservation & environment protection.

DISCLAIMER
The information in this email is confidential and intended solely for the addressee. Access to this email by anyone else is unauthorized. Any use, distribution, copying or disclosure by any other person is strictly prohibited and may be illegal. If you received this in error, please notify the sender by reply email and then destroy the message. Opinions expressed in this email are those of the individual, unless specifically indicated

 

From: <Sanjeev...@kotak.com>
Date: Thursday, 4 February 2016 at 9:04 PM
To: Dhaval Gandhi <dhaval...@mirainform.com>
Subject: FW: Kotak Institutional Equities Report, Awaiting Response

Dear Mr Gandhi,

 

I write to you in response to the mail you had sent to Mr Uday Kotak. At the outset, I would like to apologize for the ‘sudden’ cut in the target price. However, the change was necessitated  by an abrupt change in the management’s guidance on medium-term margins for the business. As UNSP is a turnaround story, you would appreciate that it is hard for analysts to understand the true profitability of the business. Our analyst had drawn guidance from (1) the earlier guidance of the management on margins of about 17-18% and (2) profitability of peer companies such as Pernod Ricard who have much higher profitability in India. Thus, the sudden change in guidance of the management on EBITDA margins to much lower levels (10-12% for the next 2-3 years) and the sharply lower margin of 10.2% for the quarter versus the analyst’s expectation of 14.3% has come as a complete surprise to the analyst.

 

I apologize once again.

 

Best regards,

 

Sanjeev Prasad

Institutional Equities

Kotak Securities Limited

27BKC | 8th Floor | Plot No.C-27 | "G" Block | Bandra Kurla Complex Bandra (East) | Mumbai - 400051

Direct: +91-22-43360830 | Board: +91-22-43360000 Extn: 60830

Fax: +91-22-67132430 | Email: Sanjeev...@kotak.com

 

 

DISCLAIMER:

This email is intended for the recipient/s to whom it is marked only and is subject to restrictions detailed in our Disclaimer on http://kie.kotak.com.

 

From: Dhaval Gandhi <dhaval...@mirainform.com>
Date: 2 February 2016 at 10:44:23 AM IST
To: <uday....@kotak.com>
Subject: Kotak Institutional Equities Report, Awaiting Response

 

 

From: Dhaval Gandhi <dhaval...@mirainform.com>
Date: Friday, 29 January 2016 at 8:49 PM
To: <uday....@kotak.com>
Subject: Kotak Institutional Equities Report

 

Dear Sir;

 

I am a Kotak Securities user and Kotak Bank Client as well. I couldn’t find any senior research /head contact details on the webpages and hence had to write to you I would request you to make changes to the reports and share the contact mail ids of each Analyst so that grievances can be directly addressed to him. PFA the KIE report for 29th Jan. I am referring to USL report where the target has been reduced from Rs 4000 which was there since almost one and a half year to Rs 2900 based on one quarter results. Surprisingly the Revenue was the best ever, debt has come down, growth in prestige brands, new management in place, agreed the the profit was not upto expectations. But does that warrant a Reduction in target by almost 30 percent?  What is the difference between say Kotak Securities or some local broker if such reports are dished out.

 

Now referring to the language in the report. Some words used “Difficult to say” “What we do” used on page no 96 makes you believe that the analyst was on gunpoint to downgrade the stock. Its highly disappointing that the language used resembles some school kid dishing out such important reports.

 

 

 

Awaiting your reply

 

 

Many Thanks

 

Dhaval Gandhi Director:  Business  Development

Mira Inform Private Limited 605, Palmspring, Above Croma, Link Road, Malad (West), Mumbai – 400064. India

Tel.: 91-22-40448000  Dir.: 91-22-40448029 Mob.: 91-9819355353 Fax : 91-22-40448045/46 E-Mail : dhaval...@mirainform.com

 

DISCLAIMER:

This email is intended for the recipient/s to whom it is marked only and is subject to restrictions detailed in our Disclaimer on http://kie.kotak.com