Whalesbook
Ambit Capital Realigns Investment Strategy
Ambit Capital has updated its investment approach, favoring companies with visible growth and operational leverage. This led to maintaining a 'Buy' rating for Blackbuck, with an attractive target price, and also issuing a 'Buy' for MakeMyTrip, recognizing its strength in the travel market. Conversely, GE Vernova T&D has been downgraded to 'Sell' due to valuation and order concerns. This move reflects a market preference for solid fundamentals over speculative growth.
Blackbuck's Logistics Momentum
Blackbuck's 'Buy' rating is boosted by its strong Q4 FY26 results, showing a 52% year-on-year revenue increase to Rs 185 crore and a Rs 66 crore profit, a significant improvement. The company's core trucking services remain its main revenue source, supported by its growing lending arm. Blackbuck's ongoing expansion, particularly in its Superloads segment, is a key growth driver, alongside better operational efficiency and wider geographic reach. The Indian logistics sector, valued at $354 billion, offers substantial growth potential.
MakeMyTrip's Resilience in Travel
Despite recent travel sector challenges, Ambit maintains its 'Buy' rating on MakeMyTrip, emphasizing its market leadership and increasing profitability. Strong domestic hotel demand and bus services helped offset impacts from geopolitical events on international travel. Ambit believes these issues are temporary and sees MakeMyTrip's strong market position and growing online penetration as drivers for future growth in the $15.35 billion Indian online travel market.
GE Vernova T&D Faces Challenges
Ambit's 'Sell' rating for GE Vernova T&D stems from worries about weak domestic orders and potential margin declines. While exports have grown, the brokerage notes that high valuations may already account for expected gains. Risks include export allocation issues and parent company capacity changes. Ambit observed, "Margins appear to have peaked." Although Q3 FY26 order inflow grew, the first nine months of FY26 saw lower cumulative orders compared to the previous year. Competitors like Siemens Energy and Hitachi Energy also face market dynamics, including supply chain and pricing pressures. The global T&D equipment market is growing, but GE Vernova T&D's domestic order booking and margin outlook are key concerns.
Valuation and Sector Trends
Blackbuck's P/E ratio of approximately 23.38 is competitive within the Indian software sector. MakeMyTrip's P/E ratio recently hovered around 89.92-91.69, indicating high growth expectations. GE Vernova T&D India's P/E ratio is high at 97.41x, with a forward P/E of 66.58, suggesting a rich valuation. The Indian logistics sector is projected to reach $450 billion by 2026-2027, and the online travel market is expected to grow from $19.05 billion in 2025 to $31.38 billion by 2031. The global Power T&D market is also expanding. However, Ambit believes GE Vernova T&D's valuation may not fully reflect its domestic order pipeline challenges and margin pressures.
Focus on GE Vernova T&D's Domestic Orders
Ambit's 'Sell' rating for GE Vernova T&D is primarily due to its struggles with domestic orders. While it has a strong export order book, its domestic pipeline is soft. "Margins appear to have peaked," according to the brokerage, indicating limited room for improvement. Unlike Siemens Energy, which has a strong European base, GE Vernova T&D's domestic market shows signs of a slowdown. This reliance on a few large projects and potential difficulties in securing consistent domestic orders pose a risk to its premium valuation.
Future Outlook
Ambit Capital's strategy favors companies with proven growth and efficiency. Blackbuck's performance in logistics and MakeMyTrip's online travel dominance support their 'Buy' ratings. GE Vernova T&D's downgrade highlights concerns over sustained domestic growth, potential margin pressures, and high valuations. The market will be watching GE Vernova T&D's ability to secure new domestic orders and maintain margins amid global competition.