We retain Buy on State Bank of India (SBIN) with SOTP-based TP unchanged at Rs350. Q2FY19 results were an extension of positive trends witnessed in recent past across key ratios domestic margins, loan growth, slippages and asset recovery and return ratios. Commentaries across each of the above aspects remain positive (unchanged since last quarter). Watchlist portfolio stands reduced to 1.04% (vs 1.3% as at FY18); management has reiterated its stance on moderation in slippages / credit cost for FY19E. Capital position remains strong, subsidiaries profitable. Valuations at 1.4x...
We retain BUY on CARE with revised TP at Rs1,550 (vs. Rs1,600 earlier). Q2'19 revenue / PAT were below estimates. This is even as volume of debt rated grew 32.6% YoY and points to pricing pressure. The growth in high-yielding non-BLR segment remains muted (down 3% YoY for H1'19); we foresee trends to continue in H2'19 and have thus trimmed our overall volume growth assumptions for FY19E. In the backdrop of concerns around rating downgrade / delay in rating changes, CARE has strengthened its rating standards further. We will watch for outcome therein. We like CARE for its business model, return ratios and free cash...
Q2FY19 result highlights: Revenue for Sun TV Network was up 10.9% to Rs7.5bn (1.6% above expectation) on the back of 3.3% YoY growth in advertisement revenue, 19.6% YoY growth in DTH revenues and 27.7% YoY growth in digital revenues. Operating profit was up 11.7% YoY to Rs5.5bn on the back of 51bps margin expansion as employee cost and other expenses were down 5.1%/16.5% respectively. Depreciation and movie amortisation cost was down 20.3% due to lower movies broadcasted in the quarter. PAT rose 23.4% YoY to Rs3.5bn (17.8% above expectations) due to higher other income....
We maintain our positive stance on Oriental Carbon & Chemicals (OCCL) and retain Buy with a revised TP of Rs1575. Q2 performance was strong with EBITDA/PAT growth of 32%/42% YoY. We continue to remain positive on company's prospects led by solid demand outlook for IS in domestic market led by fast paced growth of domestic tyre manufacturers and opportunity for gaining market share globally led by higher penetration in new geographies of US & China. Consolidated margins are expected to improve over FY18-20E led by i) higher share of IS business with increasing volumes coupled with benefits of operating leverage and...
Strong execution leads to massive growth, retain Hold We remain structurally positive on Ratnamani Metals & Tubes (RMTL) but retain our Hold rating with a revised TP of Rs985 (vs Rs940 earlier) on the back of limited upside potential with strong growth outlook largely factored in at current valuations. Q2 performance was well above expectations with solid EBITDA growth of 127% YoY & 28% QoQ led by strong execution of previous orders. We continue to believe in RMTL's long-term growth story, with expected strong domestic capex over FY19-22E and...
We retain Hold on CUBK with TP at Rs160 (valued at 2.2x FY20E ABV). Q2'19 revenue beat estimates on strong margin performance; PAT though was as per expectations. Loan growth remains healthy (consecutive fourth quarter of 17%+ YoY growth); asset quality intact with coverage (incl. tech w/off) healthy at 65%; capital position remains strong (CAR / Tier-I at 15.1% / 14.7% respectively). We like CUBK for its...
We retain HOLD on Axis Bank with TP revised upwards to Rs560 (valued at 2x FY20E ABV) . Q2'19 results were in-line with our estimates on revenue / operating front. Slippages came in lower (2.4% of loans); provision coverage therein has improved further. The share of vulnerable pool is now at a meagre 1.7% of customer assets and provides greater comfort. Capital position remains strong and will cushion asset growth in the credit up-cycle. While we see levers in place, we would await for better clarity on long-term growth strategy for the bank under the leadership of the new management (change of guard will be effective from...
We maintain buy on Hindalco (HNDL) with a TP of Rs340. HNDL's domestic aluminium business beat expectations again despite cost pressures (blended EBITDA/t at US$597 on Utkal inclusive basis) led by industry leading cost positioning and optimum utilisations. Novelis' performance was best ever (EBITDA/t at US$440) and guidance was strong. We like HNDL on account of i) strong earnings visibility from low cost domestic aluminium asset base, ii) increasing proportion of value added downstream conversion business EBITDA share in consolidated entity with acquisition of Aleris and increasing automotive share at Novelis, iii) high FCF...
Can Fin Homes Ltd (CFHL) reported muted growth in Q2FY19 with net interest income (NII), pre-provisioning profit (PPP) and net profit increasing in single digits each. The loan growth remained close to 17% YoY (up ~5% QoQ) to 16,935 crore as on 30 Sept'18, the slowest pace in several years. However, on the bright side, the asset quality improved marginally with gross and net NPAs down 3bps QoQ to 0.63% and 2bps to 0.42%, respectively. View: During H1FY19, the stock of CHFL has witnessed ~46% correction partly due to mounting concerns of asset-liability mismatch, slowing loan growth, higher...
We maintain Sell rating on GlaxoSmithKline Pharma (GSK) and revise our TP to Rs950 (earlier Rs1,900 cum bonus) based on 24x March'20E EPS of Rs39.6. GSK's Q2FY18 results were better than our estimates. GSK's revenue declined by 2%YoY, EBIDTA margin dropped 280bps to 20.2% and net profit before EO item declined by 10% YoY on a higher base in Q2FY18 after GST implementation. 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 derives ~20% revenues from the same. Key risks to our assumptions include...
We upgrade ACEM to BUY with unchanged TP of Rs230, as the recent stock price corrections has turned valuations attractive the stock is trading at 10.6x/9.4x its CY19/20E EBITDA. During Q3CY18, ACEM's standalone EBITDA rose a modest 5% YoY, as the strong 9% YoY volume growth benefits were moderated by high cost pressure. PAT declined 32% YoY on absence of dividend income from its subsidiary ACC, during the quarter. We model in 5% volume CAGR for CY17-20E amid no near term capacity expansion. The material supply agreement (MSA) with ACC should partly moderate the cost inflation going forward, thus aiding 9% EBITDA CAGR during CY17-20E....
Beat estimates on all counts; Maintain Hold We maintain our Hold rating on TVS Motor (TVS) with a TP of Rs567 as the company reported a strong operational performance during 2QFY19, above our estimates. The management highlighted that company will not go for any price discounting for its products and despite several headwinds, the company has posted moderate growth during on-going festival season. We believe TVS is on the right track with exposure to high-growth segments - scooters and premium bikes and lucrative export markets. With the export markets recovering, the company is set to maintain its growth momentum....
In keeping with its strategic focus on higher-engine capacity products, Hero MotoCorp today launched its first 125 cc scooter, Destini 125. The powerful Destini 125 aims to fortify Hero's presence in the fast-growing 125cc scooter segment. The new Destini 125 will be available from tomorrow across Hero dealerships in the Delhi-NCR region, at a price of Rs. 54,650 (Ex-Showroom) for the Lx variant and Rs. 57,500 (Ex-Showroom) for the Vx variant. The retail sales of the Destini 125 in other markets across the country will commence over the next 3-4 weeks. Destini 125 is also the first and only scooter in India to feature the highly efficient idle start-stop-system, based on Hero's revolutionary i3S...
We downgrade Hindustan Zinc (HZL) to Hold with a revised TP of Rs275 as weakening price outlook for LME Zn/Pb led by sharp increase in mining output globally is likely to result in a balanced zinc market in CY19 thereby reversing the deficit position seen since CY16. We like HZL for its attractive asset base, growing volumes but see earnings growth remaining muted with lower LME realisations. Valuations appear rich on the revised lower earnings and don't leave much room for any disappointments on volume/cost front. Metal volumes subdued due to mismatch in MIC availability: MIC production...
Cost inflations hurt margin despite strong volume growth During Q2FY19, UltraTech's (UTCEM) total volume rose 19% YoY thus boosting standalone net sales by 21% YoY. However, EBITDA and PAT fell 4% and 9% YoY respectively, driven by elevated cost inflation amid muted price increase. Management expects inflationary pressure to sustain during H2FY19. However, expected cement price improvement during H2FY19 (amid sustained good demand and rising utilisation), should aid UTCEM's margin recovery. We reiterate BUY on UTCEM with a revised TP of Rs4,450. Revenue driven by strong demand from infrastructure segment: Q2FY19 grey sales...
Business growth improves: Overall business grew 23.2% YoY to 2,19,123 crore as on 30 Sept'18 with advances and deposits growing 25.2% and 21.6%, respectively. On the deposits side, the current account and savings account (CASA) deposits grew 23.2% to 39,457 crore with the CASA ratio remaining stable at 33.4%. Advances grew the highest in last 5 quarters largely driven by 28.8% growth in wholesale loans and 20.0% growth in retail loans. Over FY18-20E, we expect advances and deposits to witness CAGR of 26.5% and 21.0% respectively, resulting in overall business growth of 23.5% to 3.11 lakh crore....
Strong volume growth and stable operating costs During Q3CY18, ACC delivered 10% YoY volume growth aided by strong demand mainly in east and south markets. However, realisation fell 1.7% QoQ amid aggressive competition and seasonal weakness. ACC's productivity improvement muted inflationary impact of slag, energy and diesel price inflation. Consolidated EBITDA/PAT growth of 8%/17% YoY came is lower than estimated, owing to higher than estimated other expenses. We believe ACC's focus on cost controls to keep cost inflation in check, going forward. While ACC's volume growth would moderate during CY19-20E due to lack of new...
Strong volume growth and stable operating costs During Q3CY18, ACC delivered 10% YoY volume growth aided by strong demand mainly in east and south markets. However, realisation fell 1.7% QoQ amid aggressive competition and seasonal weakness. ACC's productivity improvement muted inflationary impact of slag, energy and diesel price inflation. Consolidated EBITDA/PAT growth of 8%/17% YoY came is lower than estimated, owing to higher than estimated other expenses. We believe ACC's focus on cost controls to keep cost inflation in check, going forward. While ACC's volume growth would moderate during CY19-20E due to lack of new...
We retain BUY on DCB Bank (DCBB) with TP at Rs205. Q2'19 results were strong on many counts robust loan growth, healthy core operating profit, limited slippages and higher than expected NII / PAT. NIM (reported) declined 7bps QoQ; we expect trend in NIM to reverse in H2FY19. Cost / asset ratio declined further to 2.6% (vs. 2.9% for FY18) and re-affirms our thesis of improved branch productivity. Continued traction will aid in increased profitability. Capital position remains strong;...
We maintain our Buy rating on Hero MotoCorp with TP of Rs3,810 as the company reported a decent performance despite headwinds such as intense price war, increasing cost of ownership for 2Ws, expiry of Haridwar plant benefits and RM cost pressure. The management re-iterated their confidence of double digit growth in the industry considering favourable macros. To sharpen its edge over competition and plug the gaps in its product portfolio, the company has already launched its new premium segment bike Xtreme 200R and is all set to launch scooters with 125 cc. Q2FY19 performance was in-line with our estimates at operational levels, however PAT...
