Loan growth to improve going ahead: Post-demonetization, the loan sanctions and disbursements have consistently de-grown resulting in slower loan growth. In Q2FY18, while sanctions and disbursements continued to de-grow, the same increased at a robust pace, on QoQ basis, by 23.4% and 37.2%, respectively. Over the next few years, the management expects loan growth of +25% ex-Tamil Nadu (may take time to pick up pace considering slower business recovery postdemonetisation). The company plans to maintain its LAP book close to 19% of total book. Over FY17-19E, on the back of expected business recovery and government's focus on affordable housing segment, we expect loan book to...
We maintain our Hold rating on Sun Pharma (SPIL) and maintain our TP of Rs490 based on 26x March'19E EPS of Rs18.7. SPIL's Q2FY18 results were in-line with our expectations. The performance was impacted by the pricing pressure in the US and impact of GST in the domestic market. The drug maker's revenue declined 20% YoY, margins narrowed 1,760bps to 20.7%, and net profit fell 60%. SPIL is facing supply constraints at its Halol facility. The management has guided for a single digit decline in revenue and EBIDTA margin of 20-22% for H2FY18. Key upside risks to our assumption include higher revenues from the US market and...
We retain Hold on Credit Analysis And Research (CARE) with TP at Rs1,560 (vs. earlier TP at Rs1,600). Q2'18 reported revenue was a tad higher to our estimates and follows the change in accounting policy towards surveillance related income recognition. Margins, though saw some moderation and we expect trend therein to continue. H2'18 promises to be better than H1'18 and is given the favourable regulatory framework its likely impact on the rating revenues for the credit rating agencies (CRA's). CARE with its strong business model and respectable market share remains one of the key beneficiaries. While we remain positive on CARE,...
Pharma segment revenue grew 13%YoY: Merck's pharma segment's revenue grew 13%YoY to Rs2.45bn from Rs2.18bn 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 (22% of revenues) grew by 12%YoY. We expect the high-margin pharma business to drive future growth. Margin grew by 140bps YoY: Merck's EBIDTA margin grew by 140bps YoY to...
Margin grew by 1,290bps YoY: Pfizer's EBIDTA margin for the quarter grew 1,290bps YoY to 29.3% from 16.4% due to overall decline in costs. Its material cost declined by 30bps YoY to 41.9% from 42.2% due to a profitable product mix. Personnel expenses declined by 60bps to 13.9% from 14.5%. Other expenses declined by 1,210bps to 14.9% from 27.0% as Q2FY17 had one-off expenses. The...
Vardhman Textiles Ltd (VTL), for Q2FY18, on a consolidated basis, continued to witness EBITDA margin pressure, in-line with expectation. Higher raw material cost (up 840bps to 55.8%) and employee expense (up 101bps to 8.9%) led to EBITDA margin contraction of 785bps to 13%. Revenue grew by ~2% to 1,523 crore while adjusted net profit decline by 42% to 133 crore. Management View: The management has maintained its view that margins could see some improvement from Q4FY18, with the expectation of higher acreage under cotton leading to softening of prices in the new cotton season 2017-18 (Oct-Sept)....
We retain our Buy rating on Deccan Cements (DCL) with a revised TP of Rs670. DCL reported weak earnings growth in Q2Y18 (EBITDA/PAT down 23%/30% YoY) led by high cost inflation and flattish volume offtake. We continue to like DCL owing to 1) the improving demand outlook in the south, 2) DCL's higher than peers profitability metrics, due to its...
We maintain Buy on Orient Refractories (ORL), with a revised TP of Rs185 as ORL has remained ahead of competition in maintaining strong growth with superlative margins (well above the industry average). Q2 performance was solid with revenue growth above expectations and margins surprising positively. ORL's growth story remains on track with increasing penetration in both domestic & export markets and margins kicker through operating leverage benefits. We remain structurally positive on ORL and believe that the tremendous scope for brownfield expansion, as well as low capital and operational costs, MNC parentage and strong return ratios...
Concall highlights & outlook: Management has indicated execution of current order book within 12 months and remains confident on receiving new orders for future execution. RMTL has also initiated debottlenecking at its existing HSAW lines which would increase the capacity from 180ktpa to 250 ktpa by Mar'18 and help in higher order execution from FY19E. We retain our earnings estimates for FY18E/19E. Recovery in demand for the SS segment and expansion of seamless SS tube capacity by 20ktpa in the next few years (first phase commissioning in H2FY19E) would remain key growth triggers....
Strong growth in key markets; maintain Buy We maintain our Buy rating on Aurobindo Pharma (APL) and revise TP to Rs1,030 (earlier Rs970) based on 18x March'19E EPS of Rs57.1. The company's Q2FY18 results exceeded our and consensus expectations. APL's sales grew 18% YoY, margin improved 60bps to 25.2%, and net profit grew 29% YoY. Its specialised segments such as injectables, penam, microspheres, hormones, oncology, neutraceutical, depot injections and peptides would improve margins due to complexity in the manufacturing. APL has developed a robust pipeline of 463...
