Loan growth set to improve: After 4 consecutive quarters of decline in sanctions and disbursements post-demonetisation, the same grew at a robust pace of 70.3% YoY and 30.9%, respectively (although on a lower base). Loan book grew 9.6% to 9,490 crore as on 31 Dec'17 with 81.1% contribution from Individual Home Loans. This is expected to improve further in Q4 with disbursements aimed at ~ 1,000 crore. Also, the management has guided a growth of ~20% in FY19E. Overall growth in Tamil Nadu and Kerala is low currently, however the same is expected to improve going ahead. Further, RHFL plans to expand more in other...
Vardhman Textiles Ltd (VTL), for Q3FY18, on a consolidated basis continued to witness weak operational performance, in-line with expectation. Higher raw material expenses, up 1,095bps YoY to 56.7% of sales, led to EBITDA margin contraction of 736 bps to 13.7%. Revenue grew by 12% to 1,648 crore, on the back of ~11% and 21% growth in the textiles and acrylic fibre segments, respectively. Lower operational performance and other income (down 34% to 38 crore) led to net profit declining by 29% to 136 crore. Sales volume of yarn grew 14% to 55,096 tonne and grey & processed fabric grew 4% to 759 lakh meters....
Karur Vysya Bank reported weak numbers in Q3 after showing some signs of recovery in the preceding quarter. While advances growth improved to 16.6% YoY (11.0% in Q2 & 7.7% in Q1); gross NPAs increased substantially by 111bps on QoQ basis to 5.94%. The net interest income (NII) growth was muted at 8.5% led by interest reversals. However, pre-provisioning profit (PPP) grew at a healthy pace of 25.7% mainly due to 32.2% increase in non-interest income. Net profit continued to decline further down 38.2% YoY (5.5% QoQ). Recommendation: We have been maintaining Neutral rating on KVB due to...
AIA Engineering (AIAE), for Q3FY18 on a consolidated basis, continued to witness EBITDA margin pressure on account of higher raw material prices (Scrap prices were higher although ferro chrome prices were stable QoQ), currency volatility and pricing strategy to acquire new clients. EBITDA margins contracted by 712bps YoY to 22.2%. Sales volume for the quarter declined by 9% to 51,392 tonne. Revenue and net profit were down 3% to 572 crore and 4% to 116 crore....
Jain Irrigation Systems Ltd (JISL), for Q3FY18 on a consolidated basis, reported good numbers. Revenue increased by ~31% YoY to 1,890 crore, on the back of ~49% growth in the Hi-tech Agri Input Products Division (52% of Q3FY18 revenue), 22% growth in the Plastics Division (25%) and 6% growth in the Agro Processing Division (20%). Higher other income and stable finance cost led to net profit increasing by 11x to 67 crore. EBITDA margins contracted by 129bps to 11.8%, on account of lower margins in the food business (impact of fire incidence and market spends for launch of consumer brand food). Better collection in the Micro...
Loan growth picking up pace: After several quarters of slower growth in disbursements and loans, the same grew at a robust pace of 58.1% to 4,712 crore and 34.4% to 11,466 crore, respectively as on 31 Dec'17. Additionally, of the total gross loan book, only 10% is pre-demonetisation era, rest all has been disbursed post 1 Jan'17 and has 99.8% collection efficiency. This builds further comfort in the growth going ahead management guidance of ~30% sustainable in the long term. BFIL has maintained their guidance of disbursements at 19,500 crore and gross loan book at 13,500 crore for FY18. Over FY17-20E, the loan book is...
Chemical segment revenue grew 27%YoY: Merck's pharma segment's revenue grew 14%YoY to Rs2.24bn from Rs1.96bn due to re-stocking by trade post successful GST implementation. Merck is a pioneer in the vitamin segment, with three major brands Neurobion, Polybion and Evion. Evion does not fall under the National List of Essential Medicines (NLEM) and hence its price hasn't been capped. The company's chemical business (26% of revenues) grew by 27%YoY. We expect the high-margin pharma business to drive future growth. Margin grew by 340bps YoY: Merck's EBIDTA margin grew by 340bps YoY to 15.8%...
Revenues grew by 11%YoY: SIL's revenue grew 11%YoY to Rs6.70bn from Rs6.05bn due normalcy in the domestic market after GST implementation. The company's top 19 brands contributed ~73% to revenues. Nine of the 19 top brands surpassed the market growth rate of 7.8% in December'17. We expect these brands to drive the company's growth. SIL derives ~27% of its revenues from exports of APIs, formulations and insulin pens. Launch of new products and line extensions, volume growth of existing brands would drive future growth. EBIDTA margin improved by 200bps: SIL's EBIDTA margin improved by 200bps to...
Recommendation and key risks: We have revised our FY18E and FY19E EPS downwards by 3% and 19% respectively. We upgrade MPL to Buy from Hold rating, with a TP of Rs55 based on 18x March'20E EPS of Rs3.0, and a 45.3% upside from CMP. Key positive upsides would be additional ANDA approvals from US FDA and...
We maintain Sell rating on GlaxoSmithKline Pharma (GSK) and revise our TP to Rs1,850 (earlier Rs1,525) based on 24x March'20E EPS of Rs77.1. GSK's Q3FY18 results were below our and consensus estimates. GSK revenue was flat, EBIDTA margin improved 1,270bps to 20.1% and net profit grew 156% YoY. GSK's major brands grew by high single digit to double digit during the quarter. That said, the company has a strong presence in the vaccines segment and is likely to derive growth from the same. Key risks to our assumptions include faster-thanexpected growth in the domestic market and higher growth of its flagship brands. We recommend a switch to other pharma companies, Abbott India or...
