Despite macro challenges (Demon and GST), DCBB fulfilled its almost prophetic guidance of 1% RoAA. While loan growth disappointed in 4QFY19 (16%), stable margins, improving op-lev and asset quality impressed. With its core growth engine intact, we believe DCBB has the potential to grow at faster rates. Upgrade earnings by ~12/16% for FY20/21E. A significant improvement in resulting efficiencies (anticipated) drives up our RoAA estimate to ~1.2% by FY21E. 4QFY19 marked the fulfillment of dual commitments by DCBB, viz. (1) Achievement of 1% RoAA in FY19A, (2) A meaningful improvement in operating efficiency (C-I ratio lowest in 20 qtrs). We maintain BUY with a TP of Rs 228 (2x FY21E ABV of Rs 114).

With an unblemished record, abundant opportunity and focus on high yielding granular credit segments, RBK will sustainably outperform peers on growth and margins. Op-lev and credit costs (esp. on the cards portfolio) are key monitorables, as they drive RoAA expansion hereon. With a book value-accretive fund raise in FY20, RBK can get capital to fuel its ambitious growth aspirations. Our opex (29% CAGR) and flattish NIM assumptions (3.9%) over FY19-21E provide upside risk to estimates. An all round 4Q show and an impending (book accretive) fund raise justify our positive stance on RBK. Maintain BUY with a TP of Rs 803 (3x Mar-21E ABV of Rs 268).

Cost and Capital Efficiencies to Aid RoE; Maintain BUY DCB Bank continued to deliver a consistent performance in 4QFY19 with 21% YoY growth in noncorporate advances, sustained decline in C/I ratio and further improvement capital consumption. CI ratio improved by 300bps YoY to 57% in FY19 (55% in 4QFY19), contributing ~30bps to RoA in FY19. Mortgages and AIB continue to be the key drivers for loan growth in 4Q and FY19. Focus on small-ticket granular loans, efforts towards cost rationalisation, and improved capital consumption should aid expansion in RoE going forward. Margin decline in FY19; to Improve Hereon Margins declined by 33bps YoY to 3.8% in FY19 led by higher cost of funds (+25bps YoY) and...

Mindtree's growth trajectory expected to lower following stellar show in FY19 (year of rev acceleration and margin expansion) as growth dichotomy between top account (36% CAGR over FY16-19) and residual biz (8% CAGR) normalises. The risk of high velocity (attrition) and low velocity (client metrics) cannot be ignored in the current scenario. FCF conversion also moderated on higher capex. We expect USD rev/EPS at 12/14% CAGR over FY19-21E, however at ~17x FY21E (vs. 13.5x for midcap IT) upside seems capped. We maintain NEUTRAL on Mindtree following inline 4QFY19. Our TP is Rs 1,040 implying 18x FY21E, with ~2% change in est.

Mindtree came out with good set of numbers in Q4FY19, PAT was ahead of our estimate though revenue & EBITDA were below our estimate. Revenue grew 25.6% YoY to Rs 18,394mn against our estimate of Rs 18,870mn. EBITDA stood at Rs 2803mn against our estimate of Rs 3270mn. PAT for the quarter stood at Rs 1984mn ahead of our estimate of Rs 1820mn. We are positive on the stock from longer term perspective, however due to ongoing news flow regarding stake sale/open offer activities, not much clarity is there for continuity of current management. To factor in this uncertainty...

Himatsingka Seide Ltd (HSL) is a vertically integrated home textile player with manufacturing facilities in India and has retail and distribution businesses in North America, Europe and Asia. The company has adopted integrated business model with presence from farm to store. This results into cost efficiency and delivering quality products to its customers. HSL is focused on building a strong brand portfolio through owned and licensed brands contributing 75-80% of its revenue. It has license to manufacture, source and distribute home textiles brands such as Calvin Klein Home,...

FY20 Seen Better Than FY19, But Not Good Enough To Drive A Re-rating Wipro IT services delivered (adjusted for divestitures and carve outs) YoY growth of 5.4% in FY19, which has been the best in four years. Wipro has not been able to deliver smoother and at-parwith-industry growth because of sector, client and restructuring-related problems during a large part of this decade. FY19 probably marks the first year when it has been able to get its act together somewhat on growth and on margins. Its margin improvement has been the positive surprise of FY19. Wipro is hinting at improving growth and margins a bit more in FY20. We believe its performance could still fall short of that of peers like TCS, Infosys and HCLT. Unlike its other three peers, Wipro has somehow not been able to balance profitable growth with the continual...

Sharp Growth Deceleration In FY20 Not Factored In The Price Mindtree's (MTCL) has given guidance of a sharp deceleration in revenue growth from 18% in US dollar in FY19 to a low-teen level in FY20. This may lead to a downward revision by part of the street which was expecting a mid-teen kind of number (we had been in the high single-digit camp). MTCL also indicated a 100bps-120bps improvement in EBITDA margin driven by tightening of operations (delivery mix, employee utilisation, employee pyramid, better pricing in digital, etc). The margin uptick, we believe, is broadly expected by the street but would be under the scanner as sharp INR depreciation-related benefits seen in FY19 are likely to be absent in FY20. Despite having the largest...

Mindtree posted healthy revenue in 4QFY19, which stood at US$262mn (+4.2% QoQ in USD terms, +3.9% QoQ in CC terms). From a vertical perspective, BFSI grew at a robust 4.8% QoQ, with YoY growth crossing double digits (11.5%) for the first time since 3QFY18; among other...

Inline operating performance; FY20 outlook no surprise Mindtree (MTCL) posted above-estimated revenue growth but below-par EBITDA margins in Q4FY19, making for an in-line operating performance. Q4 deal wins were soft. Management is targeting growth in the low teens and 100-120bps margin expansion in FY20 (vs. 13.3% CC growth and +80bps estimated). We trim FY20E/FY21E EPS by ~2% on lower other income and cut our rating from ADD to REDUCE on risks of operational performance slippage amid L&T;'s unsolicited...

Mindtree (MTCL) posted above-estimated revenue growth but below-par EBITDA margins in Q4FY19, making for an in-line operating performance. Q4 deal wins were soft. Management is targeting growth in the low teens and 100120bps margin expansion in FY20 (vs. 13.3% CC growth and +80bps estimated). We trim FY20E/FY21E EPS by ~2% on lower other income and cut our rating from ADD to REDUCE on risks of operational performance slippage amid L&T;'s unsolicited bid. Rolling valuations over, we have a Mar'20 target of Rs 990 (vs. Rs 1000)....

Wipro's revenues grew 1.4% QoQ mainly led by 6.3% QoQ growth in digital revenues. However, pressure in traditional revenues arrested the growth. Besides digital, growth was supported by consumer business unit (grew 5.3% QoQ in CC terms) followed by healthcare and BFSI. We expect growth...

Presence in niche segments limits competition: VSSL has a presence in northern India where competition in alloy steel and special steel is comparatively less compared to other parts of India. Additionally, it is also closer to Maruti and Hero's plant, providing it an edge. Within the broader spectrum, VSSL chooses to be in niche spaces where it enjoys the status of...

18 April 2019 FY19, MTCL grew its constant currency (CC) revenue by 19.2% YoY, accelerating by over 2x from 9.3% YoY growth in FY18. EBITDA margin expanded 160bp YoY to 15.2% in FY19, driving EBITDA growth of 44% YoY. Adj. net income, thus, grew 55% YoY. MTCL announced a total dividend of INR33/share, taking its payout to 72% of FY19 earnings. For 4QFY19, MTCLs revenue growth of 3.9% QoQ CC (+17.9% YoY CC) was marginally ahead of our estimate of +3.1%. EBITDA margin shrank 70bp QoQ to 15.2% (in line) in the quarter. PAT increased 15% QoQ (+17% YoY) to INR1.

Q1FY20 guidance of IT services revenue growth of -1.4% to +0.6% is a miss. However, share buyback of Rs105 bn for 323.1mn shares (5.4% of equity capital) is positive and especially the buyback extremely attractive. We factor weak EBIT margin in Q4FY19 and muted guidance for Q1FY20. However, it would be more than offset by benefit of share buyback, resulting in a 2.9% increase in our FY20E EPS. We introduce FY21E financials. We forecast IT services revenue (in US$) and EPS CAGR of 6.1% and 4.9% respectively over FY19-21E. We roll-over to FY21E and...

Wipro has grown the slowest (2.9% YoY in FY19) in the Tier-1 IT pack. The key revenue driver for FY19 (BFSI) is easing. Challenges in Communications (client specific) and Healthcare (HPS) seem sticky. The soft guidance for 1QFY20 tells us that the lag is entrenched. Margin recovery and buyback drove recent outperformance (+16% vs NIFTY IT +8% in 6m). We downgrade WIPRO to SELL (from Neutral), post the insipid 4QFY19 show and weak guidance. Revenue growth remains challenged and margins are peaking. The recent security breach raises questions about clients data security and is a setback to Wipros reputation. The much awaited buyback (5.4% of equity at Rs 325/sh, 16% premium to CMP) kicks up FY21E EPS by ~2%. At 14x FY21E EPS, our TP is Rs 250 (~11% downside from CMP).

With low exposure to legacy (~16% of rev), Mastek generates low teen margins, given higher on-site revenues and effort mix. We like its success in ramping up UK Govt digital business. Mastek is the only only Indian co in their top-10 vendor list. Co can generate 14.0/13.4% GBP rev/EPS CAGR over FY19-21E (despite US softness and Brexit worries). Its stake in Majesco US (Rs 83/sh) and net cash (Rs 63/sh provide additional comfort. Risks to our thesis include deferment of spend due to Brexit and GBP depreciation. We maintain BUY on Mastek following an inline 4QFY19. Our SoTP is Rs 657 implying 11x FY21E EPS which includes Rs 83/share for 12% stake in Majesco US.

We attended Dilip Buildcon's analyst meet in Goa and visited the under construction site at Zuari bridge & Goa airport on 5th/6th April 2019. Execution of both projects are in high gear and expected to complete Zuari bridge by October 2020. Whereas,...

Revenue Below-par, Soft 1Q Guidance; Buy-back to Support Stock Wipro has delivered a below par revenue performance in 4QFY19. While its CC revenue rose 1% QoQ (vs. our estimate 1.9% QoQ), USD revenue rose 1.4% QoQ to US$2.076bn vs. our estimate US$2.087bn. From vertical perspective, BFSI grew by 1.3% QoQ, HLS grew by 2.1% QoQ and CBS rose by 5.3% QoQ, while COMM (-1.2% QoQ), ENU and MFG (-1.2% each) performed poorly (all in CC terms). IT EBIT margin declined by 59bps QoQ despite substantial increase in utilisation,...

17 April 2019 FY19 revenue by 5.4% YoY CC, improving gradually through the year and exiting 4Q with 6.9% YoY growth. IT Services EBIT margin expanded 180bp YoY to 17.9%, exiting the year at 19.0% (in line). Net income grew 12.4% to INR90b in FY19 from INR80.1b in the last fiscal. The announcement of INR105b worth of share buyback, combined with INR1/share of interim dividend, pegs its total payout at ~124% of net income. 4QFY19 QoQ CC revenue growth of 1% was at the midpoint of WPROs guided band of 0-2%, and marginally below our estimate of 1.5%. Net income declined 2.4% QoQ to INR24.9b (in line) in the quarter.