Research Reports published by HDFC SECURITIES

SECTOR | 09 Dec 2019
HDFC Securities
The cogs of this flywheel include (a) Real estate choices (we mapped networks across income profiles and population density of 460+ districts), (b) Assortment/mix and pricing (across 1,50,000 SKUs), (c) Financial position of 40+ retailers. Despite the huge opportunity, food & grocery (F&G;) and Apparel exhibit divergent trends. While F&G; is consolidating, Apparel is gradually fragmenting. Both trends make it imperative to identify whos got the proverbial flywheel (momentum) moving.
HDFC Securities released a Sector Update report for Realty on 09 Dec, 2019.
Mahindra & Mahindra Ltd.    
05 Dec 2019
HDFC Securities
However, the expected revival in tractor demand (on the back of healthy monsoons) will partially offset the impact from the above. We would advise investors to turn constructive on the stock after further clarity emerges on BSVI/favorable market responses to new launches. We reinstate coverage on Mahindra & Mahindra (M&M;) with a NEUTRAL and a SOTP based Sep-21 TP of Rs 570. After outperforming the PV industry over the past decade, we expect growth rates for SUVs to converge. Further, as competition remains intense, M&M;s automotive segment margins are expected to remain under pressure.
HDFC Securities released a Neutral report for Mahindra & Mahindra Ltd. with a price target of 570.0 on 05 Dec, 2019.
ICICI Bank Ltd.    
04 Dec 2019
HDFC Securities
Our constructive stance on ICICIBC (for a while now) has been mostly premised on the reduction in stress pools, consequently lower provisions and (therefore) earnings expansion. The visible risk-consciousness in corporate lending (and limited exposure to recent defaulters) reconfirms our stance on asset quality. The action on the digital and retail fronts sets the bank up for strong, granular and efficient growth. We think ICICIBC now merits a hike in valuation multiple from 2.0 to 2.2x. Maintain BUY. Our revised SOTP is Rs 565 (2.2x Dec-21E core ABV of Rs 200 and sub-value of Rs 125). At the recently concluded ICICIBC Analyst Day, we noted a common desire (and plan) across verticals to drive up risk-adjusted RoAE. The primary drivers of this expansion are (1) Improving oplev due to digitalisation of processes, (2) Expanding margins via faster growth of higher yielding retail loans, and (3) Reducing credit costs by following a calibrated growth path. The emphasis on digital capacity building seems to be a cross-company imperative.
Number of FIIs/FPIs holding stock rose by 47 to 1605 in Sep 2019 qtr.
HDFC Securities
Ujjivan Small Finance Bank Limited IPO Note Issue Open: December 02 December 04, 2019, Price Band: Rs. 36 37 (Discount of Rs 2 per share for eligible UFSL shareholders bidding in shareholders reservation portion), Issue Size: 202,702,703 eq shares * (Inculding UFSL shareholder reservation)
IDBI Capital released a IPO Note report for Ujjivan Small Finance Bank Ltd. on 04 Dec, 2019.
Siemens Ltd.    
22 Nov 2019
HDFC Securities
SIL growth headwinds remain with limited visibility on Pvt./Public capex. Tight liquidity environment makes it further challenging to maintain NWC. Whilst ex GP (highly cyclical), less cyclical segments like Digital Infrastructure & Mobility continue to see traction, large ordering is still awaited. While Mobility business sale was earlier put on hold we await clarity on highest revenue contributing segment-Power & Gas. Exports segment is also stagnant owing to weak global demand. We maintain NEU. Key risks (1) Delays in Government capex recovery, (2) Slowdown in private investments, (3) INR depreciation, and (4) Any adverse corporate action. Slow Private/Public capex and high competitive intensity has resulted in muted 4QFY19 YoY growth. SIL delivered Rev/EBIDTA/APAT (beat)/miss of (0.4)/10/15%. Our FY20/21E EPS is unchanged. Maintain NEU on Siemens India Ltd. (SIL) with a TP of Rs 1,463/sh.
Siemens Ltd. has an average target of 1639.50 from 4 brokers.
CSB Bank Ltd.    
20 Nov 2019
HDFC Securities
CSB Bank Ltd - IPO Note Issue Open: November 22 November 26, 2019, Price Band: Rs. 193 195, Issue Size: 21,021,821 eq shares (Fresh Issue of 1243523 eq sh + Offer for sale of 19778298 eq sh)
CSB Bank Ltd. has lost -26.44% in the last 1 Week
ITD Cementation India Ltd.    
18 Nov 2019
HDFC Securities
ITD has sharply de-rated over last 1-yr with Metro projects seeing series of adverse news flows. We believe that Kolkata metro risk is overpriced with project execution expected to resume from mid Dec-19. BS improvements, robust inflows and large unutilized FB/NFB limits augurs well. We maintain BUY. Key risks (1) High competitive intensity in marine segment with competition from L&T, (2) Sustained cost overruns in projects, and (3) BS and NWC deterioration. ITD delivered 2QFY20 Rev/EBIDTA/APAT beat of 11/7/16%. 1HFY20 order inflows have been robust at Rs 29bn ex Rs 20bn L1. Risk surrounding Kolkata metro seems to be overpriced with work expected to restart mid Dec-19. We maintain BUY on ITD with an increased TP of Rs 83/sh (12x Mar-21E EPS) vs. Rs 78/sh earlier.
ITD Cementation India Ltd. is trading below it's 30 day SMA of 58.6
Sadbhav Engineering Ltd.    
18 Nov 2019
HDFC Securities
With the sale of majority of the assets in the SIPL platform to IndInfravit the SEL-SIPL Merger provides an opportunity to the company to recalibrate its business model to an asset light structure where it can further monetize its under construction portfolio through the ROFO agreement with IndInfravit, ensuring capital churning for securing new orders. Going forward, SEL is expected to prioritize securing new orders through EPC mode while selectively bidding for new HAM projects, once the NHAI activity gathers pace during 2HFY20. We maintain BUY. Key risks (1) Delay in new order inflows; and (2) Further delay in appointed dates for balance projects. We maintain BUY on SEL with a reduced TP of Rs 241/sh (vs. Rs 269/sh earlier). We value SELs EPC business at 15x FY21E EPS and assign a 20% hold co discount to SIPL stakes market value. Price cut is on account of revision in FY20/21E EPS by 4.9/(6.6)%.
Promoters pledge increased to 41.01% of holdings in Sep 2019 qtr.
Infosys Ltd.    
18 Nov 2019
HDFC Securities
The stock correction and partial recovery (midway) following the whistleblower allegations (and clarifications) provide an opportunity with INFY available at its median valuations (at peak discount to TCS). Expect USD rev/EPS at 10/9% CAGR over FY19-22E and upgrade to BUY (NEU earlier) with TP of Rs 840, at 18x (unchanged) Sep-21E EPS. We upgrade Infosys (INFY) to BUY based on better visibility on growth, stable margin trajectory and the recent stock underperformance. Sustainable growth momentum and steady margin are premised on (1) Greater focus on large deals (77% YoY in 1H & broad-based on S&M; velocity, partnerships), (2) Recovery in T25 and Large account mining, (3) Pricing lever in Digital, and (4) Completion of accelerated investment phase (localisation, innovation hubs, S&M;). These are getting manifested in INFYs growth (400bps premium over sector avg. growth) and operational trajectory (EBIT% at lowest gap vs. TCS in 5-qtrs). The recent Analyst meet highlighted some key initiatives by INFY.
Infosys Ltd. has an average target of 781.86 from 17 brokers.
J Kumar Infraprojects Ltd.    
18 Nov 2019
HDFC Securities
JKIL achieved strong performance during 2QFY20. FY20/21E Rev guidance is maintained at Rs 32/36bn. Old legacy issues are all settled now. Order book is robust at 4.1x FY20E Revenue. With strong execution visibility on current order book, JKIL is well placed for re-rating. At CMP JKIL trades at 4.6x FY21E EPS. We maintain BUY. Key risks (1) Political instability in Maharashtra; (2) Order conversion within estimated timelines. JKIL delivered 8/14/21% 2QFY20 Rev/EBIDTA/APAT beat. We maintain our FY20/21E Rev/EBIDTA estimates. Owing to lower tax rate adoption, we have increased FY20/21E APAT estimates by 1.3/6.7%. We maintain BUY on JKIL with a TP of Rs 276/sh (vs. Rs 258/sh earlier, 8x Mar-21E EPS), increase is largely driven by FY21E EPS upgrade.
J Kumar Infraprojects Ltd. is trading above it's 100 day SMA of 139.8