Bonanza Broker Research reports

TCS delivered muted revenue growth in Q1 due to weak discretionary spending and deferment of non-critical projects. Revenue grew by 0.4% QoQ to US$7.2bn (flattish in cc terms), amidst a difficult macro environment as clients remained cautious.

HCLT disappointed with overall miss. The disappointment was on account of a sharp ramp-down in the technology and telecom segments, where revenues declined significantly. Despite a weak Q1, HCLT has retained its FY24 revenue and EBITM guidance of 6-8% and 18-19%. This implies CQGR of 3.1-4.4% over Q2-Q4 — a steep ask, given the current environment.

Bank of India (BOI) is a fundamentally strong bank with a robust balance sheet led by best-in-class CET-I and higher PCR (legacy stress largely provided). BOI’s earnings trajectory started improving on the back of lower credit cost, margin expansion and growth coming back.

Indian IT - Precariously Placed in the near term: During Q4FY23, aggregate revenues of Top-5 IT firms declined by c.0.8% QoQ in cc terms. While revenues in Q4 were impacted mainly by QoQ decline in Communication and Technology verticals, growth across verticals moderated on a QoQ basis. America and Europe both witnessed declining revenue, indicating weakness across both the sub continents.

Midcap and Smallcap investment ideas have in recent time’s outperformed large-cap ideas. This is especially true about Midcaps. Even at the index level, the NIFTY 50 has only delivered a CAGR of 8.35% against the NIFTYSMALLCAP which stood at 10.07% and NIFTYMIDCAP150 coming in at 11.78% from FY19 – FY23.

eClerx reported a steady performance in Q4. Revenue grew 0.6% QoQ (flat in cc terms) impacted by weak discretionary spends. Margin performance was healthy, with reported OPM expanding by 211bps QoQ. Slower decision-making, slow conversion of deal pipeline and delayed deal renewals on account of uncertain macro-environment would weigh on near-term growth.

Prince Pipes reported robust numbers despite volatility in PVC prices, but still falls short to surpass yearly performance. Reporting a QoQ increase in revenue to ? 764 Cr from ? 706 Cr in Q3FY23, although registering de-growth of 15% YoY. Meanwhile, PAT jumped by a massive 168% QoQ to ? 94 Cr as compared to ? 35 Cr in the previous period, and a slight increase by 7% YoY.

Jubilant Foodworks reported a sales growth of 8.2% YoY at ? 12,523mn during Q4FY23 over ? 11,579mn, failing to impress with flat LFL of (0.6%). The weak LFL impacted the margins leading to a decline of 210bps and 520bps in the EBITDA and PAT margins respectively (EBITDAM – 21.2% and PATM – 2.2%).

Strong non-interest income (34% above estimates) aided by recoveries in written-off accounts and miscellaneous income and a sequential drop in provisions aided SBI surpass its previous peak quarterly profit of ? 150bn (in Q2FY22) to touch ? 167bn in Q4FY23.

KVB reported a stellar earnings performance in Q4FY23 aided by NIM expansion, a strong non-interest income, and a sequential softness in non-tax provisions despite taking in some higher specific provisions. The management commentary on business growth ahead was convincing with a modest 14% YoY growth target while the earnings trajectory based on the NIM guidance, non-interest income, expansion plan and opex range, and asset quality performance appeared realistic.