Sheela Foam's (SFL) 4QFY19 profit came in 10% below our expectations with revenues remaining unchanged yoy and EBITDA showing moderate growth of 6% yoy. We maintain Hold as demand recovery hopes in 2HFY20 have been priced in. We see SFL's sales volume growth to remain moderate in 1HFY20 as customers shift to lower-priced mattresses. Mass-market products contribute just 20% to SFL's revenue. In...
NIIT Tech delivered an in-line top quartile industry growth of 17.6% yoy in CC terms and OPM improved by 80bps yoy to 17.6% in FY19. For Q4FY19, growth was slower than expectations due to deferment of a license deal and lower collections in the GIS business. Deal wins continued to remain strong with fresh bookings of USD646mn in FY19 (up 27% yoy), while orders executable over the next 12 months have also posted strong growth,...
Refer to important disclosures at the end of this report Strong results; renewed focus on retail to drive profitable growth Federal Bank reported strong set of results in Q4FY19. The bank's profitability stood strong at Rs3.8bn and exit RoA at 1%. Federal Bank saw a reasonable improvement in its asset quality (GNPA down 22bps qoq to 2.9%) during the quarter. Loan growth moderated to 20% yoy from a 25% trajectory due to its conscious run-down in short-term corporate credit. It guides for 22-23% growth in FY20 with incremental focus...
Tata Chemicals' consolidated revenue grew 8.0% yoy to Rs27.6bn (Emkay est: Rs28.1bn) and EBITDA grew 3.6% yoy to Rs5.3bn (Emkay est: Rs5.4bn). EBITDA margin declined by 82bps yoy to 19.2% (Emkay est: 19.3%). Consolidated soda-ash revenue increased 13.5% yoy to Rs22.1bn on better realizations across geographies. Total soda-ash volume declined 4% yoy due to lower volume at TCNA and the discontinuation of the trading business in Europe (from Q1FY19). second phase of 130K MTPA will come in 3-4 years. The 400K MTPA salt capacity will come in 3 steps in 3-4 years. Mgmt expects soda-ash prices to remain firm globally....
In Q4FY19, Raymond reported an 11% growth in sales, broadly in line with our estimates, mainly driven by growth in Apparel (21% yoy). Growth in Textiles was slower at 4%, while the Shirting and Garmenting segments grew moderately at 7% and 5%, respectively. EBITDA stood at Rs1,669mn, up 11% yoy but lower than our estimates by 7%. Margins, however, were flat. There was a 360bps negative impact on Textiles due to higher input...
LTI posted broad-based and strong 20.9% yoy CC growth in FY19 - most likely industry leading too. Despite the structural slowdown in IT spending by the Top client, LTI expects to post top-quartile growth and stable NPM (in the narrow band of 15%) in FY20. Ex-Top client, the outlook for the BFSI vertical continued to remain strong, with two large deal wins (>USD50mn+) in FY19. This comes as a key positive after indications of weak demand in the BFSI vertical by Cognizant post its Q1CY19 results on May 02, 2019. USD100mn+), fruitful client mining efforts (5 USD50mn+ clients vs. 4 in FY18), and healthy addition of marquee Fortune-500 clients (66 now vs. 59 in FY18)....
HUL's performance missed our expectations marginally, with volume growth slowing down to 7% after five quarters of double-digit volume growth. Sales grew 9% to Rs99bn, while EBITDA and PAT (bei) grew 13% to Rs23bn and Rs15.9bn, respectively. Home care registered steady growth of 13%, while Personal care growth was lower at 7%,...
Godrej Consumer (GCPL) reported another quarter of disappointing performance with sales/EBITDA/PAT 5-7% below our estimates. The domestic business was impacted by the poor performance in HI, while comparable international business grew 10% in CC. Domestic margin expanded by 70bps on a reduction in employee cost and ad spends, but consolidated margins declined 30bps due to a 230bps contraction in the international...
Tata Steel's standalone EBITDA/t was down 13%/10% qoq/yoy to Rs13,845/t in Q4FY19, but ahead of our estimate of Rs2637/t. Its European ops reported Rs1696cr EBITDA which included Rs500cr toward the CERs and land sale. Adj. EBITDA/t rose 4.2%/15% yoy/qoq. The company continued to focus on debt reduction and has deleveraged the balance sheet by Rs6169cr during the quarter. During H2FY19, the net debt reduction has been to the...
SBI Life Insurance Company (SBIL) reported gross written premium (GWP) of Rs113.7bn (+22.5% yoy, +24.1% qoq), almost in line with our estimate, supported by annualized premium equivalent (APE) growth of 16.8% yoy to Rs30.4bn. Value of new business (VNB) margin was 17.7% (at gross-tax), 10bps below Emkay est. (+150bps yoy and +20bps ytd). Product mix boosted margins 300bps yoy, while...
Axis Bank reported strong Q4FY19 results, with higher-than-expected profits of Rs15bn (our est. - Rs8.8bn), led by strong fees and lower provisions coupled with continued deceleration in GNPA to 5.3% for the fourth consecutive quarter. Deposit growth (~21%) continued to outpace credit (~13%) which coupled with higher CoF weighed on NIMs in Q4FY19. The bank guided for better credit growth in FY20, led by...
EBITDA margin expanded 70bps qoq to 10.5%, below our estimate of 13%, as the benefits of price increases, discounts, and scale were mostly offset by higher costs in the Gujarat plant, inventory adjustments, and adverse forex movement. Despite the increase in competitive intensity, management expects to outpace industry...
Consolidated revenue stood at Rs36.0bn (-1% qoq, -1.7% yoy). Rental revenues stood at Rs20bn, down 8% yoy (3.4% below estimates). Energy reimbursements increased 1% yoy and was down 3.4% qoq (3% below estimates). Rental revenues for 3Q and 4Q are adjusted for exit penalties of Rs550mn and Rs997mn, respectively. Net tenancies, on a consolidated basis, declined by 1725 vs. 63 in the last quarter. Consolidated EBITDA was Rs14.9bn (-0.9% qoq, -6.4% yoy). EBITDA margin stood at 41.4% (-206bps yoy and +10bps qoq). Other...
Dixon has acquired an additional 50% stake in Padget Electronics Pvt. Ltd., the JV for mobile manufacturing in which Dixon already owns 50%. After the transaction, Padget has become a wholly owned subsidiary of the company. Dixon valued Rs270mn as the consideration for the stake, valuing Padget at 2.6x FY19 EBITDA. The net cash payout stood at Rs110mn. The deal should lead to incremental revenues of Rs3.4bn/3.7bn for Dixon's in FY20/FY21E, with EBITDA of Rs84mn/92mn. marquee customer additions will drive revenue sustainability for Dixon. Note that we have now incorporated 100% of Padget Electronics into our estimates....
Refer to important disclosures at the end of this report A rejuvenated 2019; reiterate Buy APAT has announced the acquisition of a 200k ton plant in Hyderabad from Shankara Building Products for Rs700mn after a solid 4Q sales volume growth (+39% yoy). APAT's total capacity is now 2.3mn tons, which is 28% of the Indian steel pipe industry. Key benefits from this plant are: high-margin products of 155k tons, reduction in logistics costs for Andhra Pradesh market and 29acres of land area (viable for future expansion). To add, Shankara will buy 250k tons of pipes from APAT annually....
expectations of 2.2%. EBIT margins, however, was 25.1%, down 50bps qoq vs. our expectation of 25.6%, but in line if adjusted for one-time charges toward electoral trust. Robust commentary driven by client optimism, evident from strong TCV signings of US$6.2bn up 5% qoq indicates continued business traction for TCS in FY20E. The...
Infosys' 2.1% qoq CC growth for Q4FY19 was in line with our expectations of 2.0%. EBIT margins of 21.4% was down ~110bps qoq. For the full-year FY19, Infosys posted 9.0% CC growth vs. guidance of 8.5-9.0%, while EBIT margins declined 150bps yoy to 22.8%. Infosys provided modest CC growth guidance of 7.5-9.5% and lowered its margin guidance band by 100bps to 21-23% for FY20E. Ex-contribution from its Stater/other...
GSFC has announced the annual shutdown of its Ammonia - IV (1,350MTD) plant at Vadodara unit for 50 days. Due to this, other connected plants Urea-II (800MTD), Caprolactam-I (20,000TPA), AS-II, and SA-II (469TPD) will also be affected. GSFC has made alternate arrangements to minimize the production losses of various fertilizers and industrial products. The company is also ensuring continuous supply of...
We hosted investor meetings with management in Europe and the UK for five days. Catalysts are expected from new project acquisitions and accelerated presales. Investors are positive on Mumbai's property market due to ongoing infrastructure upgrade. Investors believe SRIN is undervalued at a 35% discount to NAV and is a good entry point. They are impressed with the company's high ROE, strong balance sheet and solid growth...
Our channel checks indicate near-term demand concerns due to tight liquidity conditions for business community and increasing vehicle prices. The volume performance is expected to gradually improve after elections, and single-digit growth likely in FY20. Dealer inventory days have increased to 45-50 days, in comparison with normal levels of 20-30 days, and is expected to reduce in the coming months due to lower offtake from OEMs and sequential demand improvement due to the marriage/festive season. However, MSIL is expected to sustain market share over next 1-2 years due to new products, network expansion, and shifting customer preferences toward petrol vehicles....
