Persistent Systems (PSYS) at its investor and analyst day said that it would be absolutely responsive to the change required for reviving revenue growth. It has confirmed that it is separating the Chairman and MD position and would appoint new MD with a clear focus on driving revenue growth. Accordingly, it would also continue to refresh the sales team and go-to-market. PSYS reiterated its strong presence in software product engineering. It said that it would continue to focus on platforms and partnerships for technologies including Data/AI/ML, Cloud, Security and IoT across Healthcare & Life sciences, BFSI and...

Key takeaways from Persistent Systems' (PSL) analyst meet held on 11 December 2018 are as follows: (1) In case IBM pushes PSL to buy CE/CLM IP - we believe this is a high probability as IBM seeks to raise cash to pay for its Red Hat acquisition - PSL would likely be a buyer. Unlike the deal HCL Technologies did the other day (Call Option), we believe this purchase would be outsized and may require special payment terms and also possibly leverage. (2) PSL is likely to bring in a CEO from outside - with a sales background - who would focus on the pivot to business IT services which has been a work in progress for the past several years. Mr. Anand Deshpande, current CMD, would...

Our TP is Rs. 329/sh, based on 17x Dec-20 EPS. We met Petronet LNG (PLNG) recently. Capital allocation and competition from new LNG terminals are the legitimate concerns. However, we believe that 100% take or pay contracts (running till 2028), contractual 5% escalation in regas tariff and sensible capital allocation is likely to protect shareholder value. Valuations are reasonable at 12.7x FY20E and 10.7x FY21E EPS, in view of PLNGs de-risked business profile and earnings visibility.

A Low-cost Call Option On Longevity And Higher Margins Contrary to our lukewarm stance earlier, we are turning structurally more positive on HCL Technologies (HCLT) post announcement of its purchase of seven select IBM IPs for US$1.8 bn on 7 December 2018. We believe this stance may be non-consensus. We also believe the cumulative investment of ~US$3.1bn in acquiring the IPs over the past two-and-a- half years to be the price of a low-cost call option on longevity and higher margins. At ~6x EBITDA (for the cumulative IP), we believe these acquisitions do not have much downside. But it opens up the potential for a large upside in terms of the enterprise software opportunity which has hitherto not been addressed...

We attended Persistent Systems' (PSYS) Analyst Day, where the company showcased - through panel discussions - its capabilities and references in the areas of Data/Machine Learning/IoT/Cloud for catering to industries such as BFS and Healthcare & Life Sciences.

and fuel costs the long term demand is intact as BS VI implementation and scrappage policy will trigger a strong and continuous demand for the sector. The company being market leader in axles business is well placed in gaining incremental business from its...

We recently met Tarak Patel, Managing Director of GMM Pfaudler, to get an insight into the company's business model and growth prospects. GMM Pfaudler is a leading supplier of glass lined based equipment (reactors, storage tanks) in India, commanding > 50% domestic market share, finding critical application in the chemical & pharmaceutical industries. It has its manufacturing base in Karamsad, Gujarat. Pfaudler Inc, a world leader in glass lined equipment, purchased 40% of the company in 1987. They further increased their stake to 50.44%. The...

visibility; Strong growth in the aftermarket space to further bolster growth: Rico Auto Industries (RAI) has a robust order book (valued at Rs. 4,800 crore) currently, which is executable over the next five to seven years. The size of the order book is substantial (FY2018 turnover was about Rs. 1,200 crore). As per management, RAI has also received new business (new orders in the order book...

We recently met the management of TCS to discuss its outlook on the demand environment, revenue growth trajectory going forward, its digital strategy and potential challenges relating to H1-B visa issues...

JLR's wholesale volumes declined 9% YoY (+5% MoM) to 49.3k units (est. 50k units) including the China JV volume at 4.1k units (-49% YoY) in Nov'18. Jaguar volumes increased 23% YoY to 15.1k units (est. 14k units) while Land Rover volumes declined 18.5% YoY to 34.2k units (est. 36k units).

ICICI Securities Ltd | Retail Equity Research We attended the analyst meet of Greenply Industries (GIL). The key takeaways are: -i) MDF industry currently operates at 50% capacity utilisation, ii) the management has guided for ~60% blended utilisation for its MDF business while Andhra MDF plant is expected to reach breakeven at PBT level in FY20E, iii) on the plywood business, GIL will increase the proportion of outsourcing to 30% in the next three years and iv) the management has guided for | 1500-1600 crore revenues and 11.5% EBITDA margin for plywood business post de-merger. We maintain our...

We attended Zensar's analyst meet where it highlighted the progress on its strategy and initiatives taken for future growth. Zensar emphasized its focus on Digital through its RoD Next platform. It outlined the digital spend across the verticals and why Zensar is well positioned to capture the opportunity. The company took a bold and aggressive decision about 2.5 years ago to become a 100% digital company before taking the platform to its customers. Company's digital enterprise is built on 34 digital platform having 650+ releases with over 1.5mn downloads. The company is building...

DFC continues to be the most important long-term trigger as apart from boosting volumes, it will aid margins. Distribution logistics will help reduce rail dependence and counter falling lead distances. Management is...

Funding of Heinz India acquisition will be done through a mix of equity and debt in the ratio 1.7:1: Zydus Wellness (Zydus) is planning to raise Rs. 4,075 crore through a mix of preferential allotment of equity shares and issue of non-convertible debentures for funding the acquisition of the entire shareholding of Heinz India Pvt. Ltd. valued at ~Rs. 4,600 crore. The...

Muthoot Finance's Q2FY19 has seen revival in momentum of its core business with AUM growth of 17% YoY as against 11% during last quarter. NII at Rs4.8bn (growth of 9% YoY) and PAT at Rs11bn (de-growth of 5% YoY) has narrowly missed our estimate of Rs4.9bn and Rs11.3bn respectively. Stage III loan assets have eased by 94bps sequentially to 1.9%. All the subsidiaries are witnessing healthy traction, accounting for 10% of the overall loan book. On the back of higher loan growth, we raise our TP to...

HCL Technologies (HCLT) has announced that it has signed definitive agreement to acquire 7 software products from IBM for US$1,775 mn (including earn-out). HCLT would fund this acquisition largely through internal accruals and debt of US$300 mn. The acquisition is expected to be closed in mid-2019. The acquisition would add an incremental revenue of $625mn-$650mn to HCLT's Mode-3 solutions which currently has run-rate of ~US$1bn. HCLT has not clarified the ammortisation policy for this acquisition. we expect the payback to be in 6+ years. We expect the acquisition to add ~3.4%/6.2% to FY20/21 revenue and ~2%/4% to the...

Muthoot Finance (MFL) reported its 2QFY19 results with the key takeaways being: (1) Margin contracted 75 bps QoQ but MFL has taken a 100 bps gold lending rate hike post 2QFY19 (2) Gold loan AUM grew 5% QoQ indicating return to growth of gold business has sustained (3) Traction for non-gold loans continues to be strong with share of non-gold AUM standing at 10% of total AUM. (See comprehensive conference call takeaways below; see initiating coverage report here). Per se, on the results front, MFL posted NII de-growth of 4.7% YoY at Rs10,962mn, PPOP de-growth of 13% YoY at Rs7,473mn and PAT growth of 8.6% YoY at Rs4,838mn. We have revised our estimates for FY18/FY19 and retained Buy...

of USD625mn in the first year of acquisition and USD650mn revenues in the second year for acquisition. This implies HCL Tech is valuing the acquired business at P/S of 2.8x. The acquired products have an EBIDTA margin of ~50% and the deal is likely to be cash EPS accretive by ~15%. HCL Tech expects to close the acquisition by mid CY2019 (2QFY20E) and 48% of the purchase consideration is expected to paid on closing date of the acquisition (~2QFY20E). A majority of the remaining payout is expected to be done post...

We expect this to not only drive further growth and profitability, but also reduce dependence on single blockbusters (like Niraparib), leading to lower earnings risk. We re-iterate our positive stance on the company and maintain BUY with a TP of Rs 355 (15x Sep'20E EPS). One of DCALs US based clients is preparing to commercialize an antibiotic product in Feb-19. The product was approved by the US FDA in Oct-18 for the indication of community-acquired bacterial pneumonia (CABP) and acute bacterial skin infection (ABSSSI). This will be the third commercial launch from DCALs pipeline over FY18-19. We believe DCAL could generate annual revenue of US$ 4-5mn in the initial years.