We retain BUY on ICICI Bank with SOTP based TP unchanged at Rs360. Q1'19 results were broadly in-line with our estimates on operational / asset quality front. Core operating profit remains healthy (+13% YoY); new NPA addition moderates (slippages at 3.1% of loans) and loan growth (+11% YoY) gathers pace. Drill-down list (<1% of loans) coupled with BB and below-rated portfolio (5% of loans) remain the new watchlist. We see provisions remain elevated in the near term (FY19E); however draw comfort in pace of resolution and ~69% coverage ratio (combined) against list-1 and list-2 IBC accounts. Capital position remains healthy; subsidiaries remain profitable. Valuations continue to remain undemanding....
Tata Metaliks (TML) delivered steady performance in Q1 despite few unscheduled shutdowns and EBITDA stood at ~Rs660mn, up 33% YoY but lower than our expectations by ~8% with the miss being completely driven by shutdown impact (~Rs70mn). We continue to maintain our positive view on TML as its DI pipe business boasts of an industry leading cost structure, solid demand drivers and strong entry barriers. With expected recovery in spreads in FY19E and commissioning of PCI project by Q4FY19E coupled with several other productivity improvement initiatives, TML is expected to continue delivering steady earnings growth over...
Strong growth in core markets; Maintain BUY Star Cement's Q1FY19 consolidated EBITDA moderated 17% YoY, owing to expiration of freight subsidy and higher fuel costs, despite better pricing. Star's reported unitary EBITDA of Rs1634/MT, is still the best in the industry. Strong demand and pricing in the NE region should help Star Cement to sustain its industry leading profitability despite expiration of its freight subsidy. Robust earnings along with faster clearance of subsidy backlog by central government should accelerate free cashflow generation and should support Star's 20%+ RoE/RoCE. We reiterate BUY with a revised TP of Rs162....
We upgrade Hindustan Zinc (HZL) to Buy (vs Hold earlier) as we like HZL for strong zinc market fundamentals, its plans to expand output to 1.2 mtpa through transition to underground mining through shafts being on track for FY20E and likely cost economies. We believe that recent correction in zinc prices have little to do with fundamental factors and have been driven by global trade friction which in turn is likely to be short lived. The resultant stock price correction has led to...
We maintain our BUY rating on DB Corp with a target price of Rs368. We expect the company to post high single digit ad growth for FY19E as key sectors such as real estate, BFSI continue to disappoint with management focus on FMCG and auto to driver growth. Further general election would help in Q4FY19 to drive ad growth. Newsprint price inflation is expected to be ~18-20% for FY19E which would further dampen margins as the current prices are ~$750/MT. High circulation increase in legacy markets and Bihar would further increase newsprint consumption. Turnaround in new Phase-III radio station, lower losses in digital...
UltraTech's (UTCEM) Q1FY19 standalone EBITDA rose a modest 4% YoY, as weak pricing amid elevated cost inflation moderated the positives of 33% YoY volume growth (core volume up ~7.5% YoY). Continued improvement in energy consumption metrics and lead distance reduction partly moderated the impact of rising energy costs YoY. Amid a good demand outlook, we expect UTCEM to deliver an industry leading 14% volume CAGR during FY18-20E. We also expect UTCEM's margins to benefit from better pricing (H2FY19...
Federal Bank, for Q1FY19, reported decent set of numbers with net interest income growing 22.4% YoY. Pre-provisioning profit grew at a slower pace of 8.1% due to 118bps YoY increase in cost-income ratio (CI%) at 51.8% vs. 50.6% in the corresponding quarter last year. Net profit grew 25.0% to Rs263 crore led by a 15.8% decline in provisions & contingencies. Asset quality, at the end of the quarter, remained stable with gross non-performing assets (NPAs) unchanged at 3.00%. Net NPA increased 3bps QoQ to 1.72%, on lower provisioning. View: Post FY18, the stock of Federal Bank had corrected ~11% (since our last...
We maintain our BUY rating on Zee Entertainment Enterprises Ltd. (ZEEL) with a revised target price of Rs651. We believe there is upside risk to our ad growth expectation of 16% for FY19E on the back of strong market share gains across languages and increasing ad spends by FMCG companies. Further we believe the full impact of the TRAI tariff order would be in FY20 and the management is confident to deliver low teens growth on the back of ARPU increase. New channel launches would help the company complete its bouquet of languages and help in increasing ad inventory. Management strategy to do deals for ZEE5 with telecos only on favourable terms is healthy for long term while we...
We retain BUY on DCB Bank (DCBB) with TP at Rs215. Q1'19 results beat our estimates on both revenue and earnings front. NIM at 3.56% (calc) declined 12bps QoQ and was well on the expected lines. While we foresee some improvement in NIM (especially in H2FY19), the overall trend will remain lower for FY19E (over FY18). Our calculation suggests employee productivity on rise; continued momentum will aid in increased profitability. Loan growth momentum remains intact, asset quality under check, capital position strong; we see RoA /...
We retain Buy on Karnataka Bank (KBL) with TP unchanged at Rs180. Q1'19 results, albeit lower to our estimates on revenue front, were inline on both operational and profitability end. Slippages came in lower (2.3% of loans); provisions included accelerated coverage on NCLT cases (76% vs. 48% QoQ). Segments of MSME and corporate banking have shown signs of improvement; we expect traction therein to continue. Stressed asset pool has reduced to 3.8% of loans; we see loan loss provisions to remain contained at 120bps. We expect earnings growth to accelerate...
