PAT grew 9% YoY to INR2,834m. CSM business delivered robust growth of 40% YoY, backed by higher demand due to an improvement in global sentiment. Domestic business performance was notable in that it grew by 10% YoY, despite facing headwinds in the form of erratic rainfall in key states and poor price realization for key crops, which impacted demand and led to higher inventory levels. We expect it to meet its FY19 guidance of ~20% revenue growth on the back of the improved global scenario and strong support from its newly launched products. Factoring in the strong beat on our 3QFY19 estimates, we raise our FY19 earnings estimate by 8% while keeping FY20/21 estimates unchanged. We expect revenue/PAT CAGR of 19%/17% over FY18-21. We value the stock at 24x FY21E EPS (in-line with its five-year average trading multiple), which is justified as the company has shown strong signs of returning to its robust growth cycle post three muted years.

12 February 2019 Sun Pharmas (SUNP) revenue grew ~16% YoY to INR76.6b (our estimate: INR77.3b) in 3QFY19, led by higher Taro and API sales. Gross margin (GM) expanded ~350bp YoY (-260bp QoQ) to 71.7%, led by better revenue growth and an improved product mix. EBITDA margin, too, expanded by 210bp YoY to 23.1% owing to GM expansion and lower employee cost (-206bp YoY as % of sales), partly offset by higher other expenses (+190bp YoY). Revenue growth, coupled with a better operating margin, led to adj. PAT of INR9.4b (our estimate: INR10.2b). PAT increased 12%/26%/26% YoY to INR216b/INR47.3b/INR29b.

For Q3FY19, LT Foods Ltd (LTFLs) revenue grew 21% YoY largely driven by pick up in branded consumer business and better realization both in India (+2%) and international (+8%) market. In Q3FY19, branded business (both domestic and international combined) saw a growth of 2% YoY driven by better realization in international branded segment (up 8% YoY). Organic segment de-grew by 12% YoY in value terms largely on account of consolidation. For Q3FY19, growth was triggered by India unbranded segment and other value added products which together grew by 63% YoY. Other Income Adj. PAT Adj. PAT Margin % Market share in India Basmati rice industry for the company stands at 29% while in USA it is 45% (Royal Brand). Branded business as % of overall sales up 100bps YoY for 9MFY19 to 69% from 68%. In Q3FY19, other income was down significantly on account of lower forex gains of INR50mn vs INR220mn gains for the corresponding quarter last year.

Despite PV industry growth of Adj. PAT Interest cost reduced in 3QFY19 due to repayment of long term debt (9MFY19 Other income was negative due to loss incurred on fair value accounting of derivatives after netting off realized currency gain on hedging. Tax rate remained high Management expects PV industry to grow at ~6-7% in FY20. However, it expects Subros to grow faster than industry at 10-11% given its rising market share, presence in better selling models and shift to petrol variant. Further it is already tied up with new business for next one year. It aims to achieve EBITDA margins of 12-13% over next two years by reducing its import content of raw material (from current 30% to 25% by FY21) and improving revenue mix. Subros is pursuing a new thermal product for electric cars and is negotiating with various customers.

Thermax continued its strong execution traction with 29% YoY growth in consolidated revenues to Rs14.4bn in 3QFY19, 7%/6% above our/consensus estimate, respectively. However, commodity cost inflation, INR depreciation and a large share of fixed-price contracts led to lower profitability. EBITDA grew only 12% YoY to Rs1.1bn with a 100bps YoY decline in operating margin to 7.5%, below our/consensus estimate of 7.9%/8.5%, respectively. PAT stood at Rs750mn, up 28% YoY, after goodwill impairment of Rs875mn for its subsidiary Thermax Netherlands BV and creation of deferred tax asset worth Rs974mn for its subsidiary TBWES. Consolidated order inflow in 3QFY19 was up 5% YoY at Rs14.8bn, largely driven by standard product orders in the absence of large projects. Order...

Sanghi Industries' (SNGI) dismal show continued in 3QFY19, with flat cement volume growth and sharp cost escalation that offset realisation growth. Cement volume (including marginal clinker sales) were flat YoY at 0.66mnmt on steady demand in key markets. However, realisation gained 3.4% (adjusted for ready-mix concrete or RMC revenues of Rs69mn)at Rs3,897/tn. Conversely, operating costs rose ~18% YoY to Rs3,516/tn driven by higher energy, logistics and raw material expenses and the impact of lower clinker exports that reduced blended volume in 3QFY19. Effectively, EBITDA margin declined sharply to 12.1% from 22.1% in 3QFY18 as EBITDA fell steeply by 48% YoY to Rs322mn. EBITDA/tn fell 43% YoY to Rs485/tn (in line with our estimate of Rs489/tn). Interest expenses declined - following debt refinancing at...

New CEO Focus On Strengths. Enterprise Pivot May Suffer Persistent Systems (PSL) yesterday appointed Christopher (Chris) O'Connor as CEO. Chris will be based in the US and join on February 25, 2019. According to the press statement Chris led the Internet of Things (IoT) business unit at IBM including roles as its General Manager, Head of Sales and Head of all software R&D.; He has been the founding strategist, leader and industry wide innovator of IBM IoT. His prior roles in IBM have centered around building new businesses for IBM such as Systems Management, IBM Commerce and Financial Software, and founding the IBM Smart Cities software and...

Britannia Industries (BRIT) earnings performance in 3QFY19 was marginally below expectations but innovation intensity and non-core business momentum was healthy. Alongwith improved category Sector: FMCG growth rate we expect the company to regain high growth momentum in FY20-21. Revenue growth at 11% was about 2% below expectations on account of somewhat sluggish category momentum. Price CMP: Rs3,108 and Mix trends however remained favourable and displayed similar intensity as compared to previous quarter. Gross margin trends were also fairly favourable even after adjusting for reclassification as Target Price: Rs3,600...

The India Cements (ICEM) reported a weak operating performance in 3QFY19 as the slide in realisation continued. Cement volume continued to pick up with ~8.5% YoY growth at 2.95mnmt (below our estimate of 3.11mnmt). Realisation fell ~2.6% YoY to Rs4,320/tn. Effectively, revenues grew only ~8.5% YoY to ~Rs13.2bn (below our estimate of ~Rs13.9bn). Cement revenues grew only ~6% YoY. Operating costs increased ~5% YoY (flat QoQ) at Rs3,994/tn, primarily on account of higher energy costs. Continued weakness in realisation owing to the demand-supply imbalance in key ICEM markets led to EBITDA margin compression of 360bps YoY to 10.2% YoY. Effectively, EBITDA/tn fell sharply to Rs430/tn,...

JK Lakshmi Cement (JKLC) reported a listless operating performance in 3QFY19 driven by double-digit volume gain. Cement realisation (adjusted with ready-mix concrete or RMC revenues of Rs410mn) was flat YoY at Rs3,979/tn (above our estimate of Rs3,943/tn). The volume push in western and eastern regions led to a hit on realisation. Effectively, revenues grew ~12% YoY to ~Rs9.35bn (above our estimate of ~Rs8.95bn). Logistics costs declined because of better lead distance management (reduction by ~14km), but this was offset by higher raw material costs and other expenses. Effectively, overall operating costs were flat YoY at Rs3,561/tn (Rs3,523/tn in 3QFY18). Consequently, EBITDA grew by a meagre ~4% YoY to ~Rs983mn. EBITDA margin declined to 10.5% from a very weak base of...