We maintain Buy rating on Lupin with TP to Rs920 (earlier Rs930) based on 23x March'20 EPS of Rs40.0. Lupin's Q1FY19 results were lower than our and consensus estimates due to pricing pressure in the US generic market. Lupin's revenue was flat YoY, margin declined 620bps to 13.7%, and net profit declined by 43% YoY. The pricing pressure in the US has eased out due to discontinuation of several generic products by Teva and Sandoz. We believe the company's robust growth across key markets coupled with its strong pipeline of 162 pending ANDAs with US FDA will drive future growth. The key positive risk to our assumptions would be strong...
We maintain buy on Hindalco (HNDL) with a revised TP of Rs340. HNDL's domestic aluminium business continued to deliver a solid operational performance (Blended EBITDA/t at US$762 on Utkal inclusive basis) led by industry leading cost positioning and optimum utilisations. Novelis' performance remained solid (EBITDA/t at US$417) and Aleris (acquisition underway) also performed strongly with EBITDA/t of US$361. We like HNDL on account of i) strong earnings visibility from low cost domestic aluminium asset base with domestic coal supply in place, ii) increasing proportion of non-commodity linked EBITDA share in consolidated entity...
Bharat Financial Inclusion Ltd (BFIL), for Q1FY19, continued to report good set of numbers with the non-AP loan book growing 43.7% YoY to 13,832 crore as on 30 Jun'18, the fastest growth post-demonetisation. Net interest income and preprovisioning profit grew by 70% and 56%, respectively. With a 207bps YoY decline in cost-income ratio (CI%) and lower credit cost, the net profit grew at a robust pace of 196% (2.9x) to 142 crore. Asset quality remained healthy with the gross NPAs at 0.3% and net NPAs at 0.1%, as on 30 Jun'18. Recommendation: Since our last update (Hold: Q4FY18 @ 1,145 on 27 Apr'18), the stock of BFIL achieved our then target price of 1,240 and corrected to 1,204...
Deccan Cements (DCL) registered 23% YoY volume growth in Q1FY19, buoyed by strong demand across all south markets. Still, aggressive competition is preventing price recovery while fuel and freight costs are on rise, leading to 7% EBITDA decline YoY. We continue to like DCL owing to (1) its strong balance sheet and (2) as we expect pricing to recover in south which should help the industry pass on the energy cost inflation. DCL is trading at extremely cheap valuations (14% AOCF/EV yield, 4.6x...
We remain structurally positive on Ratnamani Metals & Tubes (RMTL) but retain our Hold rating with a revised TP of Rs940 (vs Rs970 earlier) on the back of limited upside potential with strong growth outlook fully factored in at current valuations. Q1 performance was on expected lines with strong EBITDA growth but margin remaining under check led by higher share of CS segment. We continue to believe in...
Can Fin Homes Ltd (CFHL)'s fundamental growth remained muted in Q1FY19 with net interest income (NII), pre-provisioning profit (PPP) and net profit up mere 3.7%, 3.9% and 11.0%, respectively. The loan growth came-in at 17.5% YoY to 16,199 crore as on 30 Jun'18, the slowest pace in several years. Asset quality...
We maintain buy rating for Cipla and revise our TP to Rs750 (earlier Rs730) based on 24x March'20E EPS of Rs31.1. Cipla's Q1FY19 revenues and EBIDTA margin were in line with our and consensus estimates. However, net profit exceeded our expectations. Cipla's revenues grew 12% YoY, margin improved 10bps to 18.4% and net profit grew by 5%YoY to Rs4.46bn from Rs4.25bn. The domestic business (39% of revenues) grew 22% YoY on a lower base in Q1FY18 due to GST uncertainties. Steady growth in the domestic market, with leadership position in respiratory,...
We maintain our BUY rating on Mirza International with revised TP of Rs162. We believe the growth momentum in the domestic business would get better on the back of increasing focus on the newly launched Bond Street & sports/canvas shoes. Further online EBO channel is garnering strong traction wherein the management has plans to aggressively open new stores. Entry in the women's footwear through Mode' brand would help the company in garnering incremental sales while the garmenting business continues to grow at healthy...
Riding the golden wave of GE, retain Hold We continue to remain positive on prospects of Graphite India (GIL) led by our view of electrode industry remaining in an upcycle for next few years as postulated in our recent sector report. We continue to expect extremely strong earnings trajectory for GIL in next few years with peak earnings in FY19E and moderation kicking in from FY20E/21E. GIL remains the best bet to play the electrode upcycle with healthy balance sheet, strong adj. FCF generation, high dividend payout and strong management pedigree. GIL reported another record earnings performance...
Kirloskar Ferrous (KFIL) delivered another subdued performance in Q1 due to continued pressure in gross margins and increased other expenses (due to nonrecurring items) negating strong volume growth. We remain positive on KFIL's prospects as it features i) increasing share of high-margin casting business which has spare capacity, ii) cost efficiencies from upcoming low-payback projects albeit slightly delayed, iii) an enviable track record of converting cash profits to cash flows (5Y/10Y AOCF/CP ratio of 1x/0.9x) and iv) strong balance sheet with low D/E of 0.1x. We expect strong earnings growth during FY18-20E driven by castings volume CAGR of 20%. Valuations remain undemanding with attractive cash flow yield of 14.5% &...
