Maintain BUY with a TP of Rs 957, implying a P/E of 30x to Dec-20E core earnings and adding back net cash. MCX delivered good set of numbers in 3QFY19. Revenue was up 8.2% QoQ to Rs 0.77bn (in-line with our est. of Rs 0.77bn), led by 7.9% QoQ increase in volume (Rs 17.03tn). MCX maintained its market share at 91% and ADTV grew 7.9% QoQ, despite increased competition from NSE & BSE. EBITDA margin was down 496bps QoQ to 27.2% largely due to higher other expenses. Excluding one-off margin was up 89bps QoQ to 33.1% but still below our estimate of 34.9%. Hedging activity in bullions is witnessing increased traction with open interest built up while metals volume is impacted due to shift from cash to physical settlement.

At 27/24x FY19/20E EPS, Zee's valuations look reasonable given its superior growth and execution. Reiterate BUY with TP of Rs 512 @ 25x Dec-20E EPS. Zee delivered yet another strong quarter on all the operating parameters viz. ad, subscription and margins. This is despite ongoing investments in digital (ZEE5). In 3QFY19, revenue/EBITDA/APAT grew by 18/27/44% YoY. Even in 9MFY19, revenue/EBITDA/APAT grew by healthy 19/27/31%.

We prefer MMFS (TP Rs 500, 2.75x Dec-20E ABV of Rs 175 + Rs 18 for MBIL) and CIFC (TP Rs 1,616, 3.25x Dec-20E ABV of Rs 497) among asset financiers. In the HFC pack, LICHF (TP Rs 534, 1.5xDec-20E ABV of Rs 356) offers value, despite its low pricing NBFCs have grown significantly ahead of Indian aggregate credit over the last decade (19% CAGR vs. overall credit growth of 14%). This growth can be attributed to both intrinsic and extrinsic factors. Intrinsic factors include their ability to (1) Deliver credit to customers that banks cannot reach, (2) Develop niche credit segments and sticky customer relationships, and (3) Price risk appropriately and manage the lending cycle efficiently.

We believe this is an interesting time to track net inflows to these savings options, as SEBI has banned upfront commission payouts for MF sales by AMCs, while life insurers continue to pay out heavily. We believe this tilts the scale in favour of the insurers, as we expect distributors will push insurance (ULIPs) given the higher commissions and upfronting of payouts. In this context, Dec-18 seems to be a month where growth rates at life insurers (+17% YoY, +54% MoM) have overtaken asset managers (-74% YoY, -23% MoM). Private life insurers individual NBPs grew 17% YoY to Rs 51bn in Dec-18 (FY19TD growth 15%), recovering after a bleak Nov-18 where growth was just 2%. Mutual fund equity (ex. arbitrage and ETF) net inflows on the other hand declined to a 30-month low of Rs 67bn in Dec-18 i.e. 40.6% below FY19TD monthly average of Rs 112bn.

As all major segments of the business are under pressure we downgrade stock to NEUTRAL with a TP of Rs 298 (+8.6%) based on 16x Dec-20E EPS. Our multiple is premised on growth opportunities, market leadership and ISEC's strong financial products distribution franchise. ISEC reported a disappointing 3QFY19 with revenues/PAT at Rs 3.9bn/1.0bn (-18/-34% YoY). Broking/distribution revenues declined 17/12% YoY to Rs 2.3/1.1bn, while investment banking revenues declined 37% YoY to Rs 256mn. EBITDA declined 33% YoY as management was able to reduce costs only by 3% YoY.

Maintain BUY with TP of Rs 800, 18x Dec-20E-EPS. Infosys (INFY) posted strong revenue performance, robust large deal bookings and increased its FY19E rev guidance. However, operating performance was soft impacted by accelerated hiring, lower utilisation (seasonality impact) and higher onsite-mix (large deal transition). Revenue came at USD 2,987mn, 2.7/10.1% QoQ/YoY in CC terms.

Maintain BUY with TP of Rs 2,430, at 24x Dec-20E EPS, supported by leading organic growth within tier-1 IT and >60% RoIC, >4% FCF yield & >3.5% dividend yield. TCS posted acceleration in revenue (in-line) supported by strong digital traction (53% YoY) and continued revival in BFSI. However, margins were lower on increased hiring and higher sub-contracting expense (both indicative of buoyant demand). Rev came at USD 5,250mn, 1.8/12.1% QoQ/YoY CC with digital at 30.1% of rev (USD 6.3bn rev annualised).

Change in rating, Top Picks: No Change in Rating. Minor TP changes to factor in Dec-20E valuation roll over. Top Picks: Oberoi realty & Prestige estates. Over last 1-Yr, Nifty Realty index has corrected 36%. Large part of this fall has been on back of tepid real estate demand, weak pricing power and higher interest rate. The fall was further accentuated by NBFC liquidity issues and its impact on overall lending to real estate sector.

Initiate coverage with a BUY rating and TP of Rs 480 (18x Dec-20E EPS). Laurus Labs is a young, R&D-driven; company with strengths in complex chemistry and cost-efficient capabilities in API manufacturing. Laurus has grown at a scorching pace with 30% revenue, 32% EBITDA and 40% earnings CAGR over FY12-18. However, price hikes in a key raw material (FCME) and Rs 1bn operating spend on the nascent formulations business led to a nosedive in 1HFY19 (40% earnings drop).

Top Picks: PNC, Ashoka, NCC & Sadbhav. Top Picks Buildings: JMC Projects, Capacite. Tendering has continued to remain weak: Tendering in roads (by NHAI)has been virtually non existent in 9MFY19 as compared to the ~7,400km/Rs 1.2tn of awards in FY18. There is a likelihood of tendering picking up as we close in on the elections (with the model code of conduct to kick in). We could see at best ~Rs 500bn of actual awards over the next 2 months even though projects worth ~Rs 900bn are listed for tendering (EPC share is >70%).

Top picks: Dr Reddy's, Jubilant, Dishman Depreciated rupee, normalized generic price erosion, seasonally strong quarter in the US and focus on cost optimization will enable Indian pharma companies to post better numbers in 3QFY19. We expect our coverage companies to deliver ~8% YoY top line growth, 21% EBITDA margin (flat YoY) and 12% YoY earnings growth. This will be the second consecutive quarter with positive sequential growth in the US business, aided by softening of pricing pressure, exit of many US based companies from commodity products and the presence of a flu season. India branded revenues are also likely to grow 10% YoY and 4% QoQ. The sequential growth is solely driven by a jump in SUNPs revenues post inventory adjustment in 2QFY19. As articulated in our Jun-18 sector note, the pharma sector is recovering from US market woes and has started growing sequentially. With a few companies still in investment phase for their specialty businesses, earnings growth is still slower than anticipated. The cost rationalization efforts taken by SUNP, DRRD, CIPLA and LPC can help counter this incremental spend.

Near term outlook: We expect the stock to remain range bound given the uncertainty surrounding the recognition of and provision for the IL&FS exposure. IIBs 3Q was characterized by robust business growth and healthy operating performance ( PPOP up 27/6% YoY/QoQ). NIMs were sequentially stable at ~3.8% (down ~16bps). Driven by treasury gains (2x QoQ), other income grew ~12%. CASA remained sequentially stable at ~44%, w/w SA dipped ~2% QoQ. Fees (% of loans) dipped by 10bps QoQ to 3%. While overall asset quality deteriorated sequentially, (GNPAs at 1.13%, ~Rs 19.7bn, +11% QoQ) the exposure to IL&FS; remained std (Rs 30bn). Even as IIB additionally provided ~Rs 2.55bn (total provisions ~Rs 6bn incl. floating provisions), it will have to incur further provisions of at least ~Rs 4bn toward the holdco exposure. Our constructive thesis on IIB remains unaltered as it continues to display strong growth and operating performance, which we expect will continue. While asset quality will be adversely impacted by its exposure to IL&FS;, in the near term; we expect IIB to be back on track to achieve RoAAs of 1.62% by FY21E post its acquisition of BAFIN. Maintain BUY with a TP of Rs 1,935 (3.5x Dec-20 ABV of Rs 553).

Chemicals: Momentum to continue We believe, Vinati Organics and Alkyl Amines are likely to be the best performers under our chemicals coverage. Lubrizol's exit from the ATBS market is a key positive for Vinati Organics (Vinati is expected to increase market share from 45% to 65% in ATBS). Alkyl Amines is expected to benefit from the commencement of commercial sales from its recently commissioned Methyl Amine plant in Dahej(30,000 TPA capacity). Alkyl Amines has planned a capex of Rs 3.0bn over the next 3 years providing an implicit opportunity of Rs 4.5bn on the topline.Balaji Amines has aggressive capex plans of ~Rs 3.0 bn for its Mega project in Solapur whose benefits could be visible from FY21E. Navin Fluorine's cGMP CRAMS facility in Dewas is likely to start contributing to its topline by the end of FY19.The situation in China continues to benefit Indian chemical manufacturers. We like Alkyl Amines and Vinati Organics given their presence in niche chemistries, focus on strong SHE practices and mid-term growth visibility. Oil & Gas: Subdued Quarter RIL: We expect GRM of USD 9/bbl vs USD 9.5/bbl in 2Q. The company is to report stable standalone PAT of Rs 88.15bn. Sequential fall in GRM will be mitigated by higher petchem production and forex gains. IGL/MGL: We expect a 12/9% YoY volume growth for IGL/MGL. We have estimated an EBITDA/scm of Rs 5.7/scm (+27bps YoY, +2bps QoQ) for IGL and Rs 7.9/scm (-4.6bps YoY, -21bps QoQ) for MGL. PLNG/GAIL: We expect 5% YoY and 2% QoQ decrease in volumes to 212tbtu...

Telecom: Stability, finally! Reiterate BUY on Bharti and Voda-Idea with revised TPs of Rs 396 and Rs 43 respectively (10x Dec-20E EV/EBITDA for India Wireless). We have increased our target multiple for Bharti from 9x to 10x (in-line with Voda-Idea and Jio) factoring in the likely improvement in industry outlook. Even if the tariff war prolongs, Bharti (with manageable debt, potentially monetisable assets) remains best-positioned. Idea remains vulnerable owing to high leverage and low profitability.Reiterate BUY on BHIN with TP of Rs 345. This is primarily on account of (1) Savings on DDT (~Rs 5bn) and earnings accretion from Indus acquisition (2) Recent price correction (3) Tenancy losses from the Voda-Idea merger are lower than expected, and (4) No re-pricing of tower rentals downwards by telcos despite the bad busines environment. This remains a key risk. Media: Broadcaster, Healthy performance Zee Entertainment (Broadcaster) - Maintain BUY with a revised TP of Rs 511 @ 25x Dec-20E EPS Dish TV (DTH operator) - Our revised TP is Rs 50 @ 7x Dec-20E EV/EBITDA (Rs 58 earlier). Reduction in our TP is to factor likely weak 3QFY19 Entertainment Network and Music Broadcast (Radio companies) - Reiterate BUY with revised TP of Rs 714 on ENIL and Rs 404 on MBL, both based on @ 25x Dec-20E P/FCFE

Our top picks in OEMs space are MSIL (extensive distribution network and strong rural franchise), Ashok Leyland (leadership in high tonnage trucks) and Baja Auto (diversified product and geographical mix). Automobiles sector will report weak number in 3Q led by increase in cost of ownership (higher fuel prices, insurance and financing costs) and higher inventory at dealers level. Channel inventory for 2Ws and PVs remained elevated at 6-8 weeks, forced OEMs to offer aggressive incentives to clear inventories. 2Ws/CVs segment posted 9/5% volume growth YoY while PVs volume declined 1% YoY. In CV segment M&HCV; volume fell by 12% YoY, offset by 17% growth in LCV segment. Auto OEM universe is expected to post 2% YoY revenue growth however, EBITDA could contract 11% YoY.

Top picks in FMCG: ITC, Dabur and Jubilant FoodWorks Consumer sentiments continue to be positive: Our FMCG coverage universe is expected to deliver 11/13% YoY revenue/EBITDA growth in 3QFY19. We believe earnings growth is healthy, given that favorable base now evades (13/17% YoY in 3QFY18) and the last leg (Sep-18) of monsoons were weak. Although, cos will enjoy festive benefits in 3Q instead of 2Q, festive sales were tepid and hence we dont expect robust incremental growth. Rural demand continues to outpace urban in the last 6qtrs. CSD channel (5-6% of FMCG revenues) is recovering from the impact of biometrics implementation, while MT (10% mix) and E-commerce (2% mix) continue to be the growth engines in urban markets. Pricing actions have returned in the sector (1-2%) owing to sharp commodity inflation during 2Q. However, with a reversal in crude prices coupled with INR appreciation, we dont expect another round of price hikes in 4QFY19 instead cos should benefit from GM expansion in 4Q assuming ceteris paribas

Key monitorables: (1) Outlook and commentary of CY19 client IT budgets and evolving US/UK macros, (2) Performance of digital business, (3) Deal trends and outlook of key verticals (BFSI, Retail, CPG), (4) Large account metrics, large deal wins and supply indicators (attrition, sub-contracting), (5) Legacy erosion and rebid pricing pressure and (6) Possible acceleration of non-linear trends like AI, automation. Tier-1 IT is expected to post the strongest 3Q sequential growth (USD terms) since FY14 on (1) Improved deal trajectory and (2) Revival of core verticals and geographies. Revenue growth for IT sector (coverage universe) is expected at 1.7/8.3% QoQ/YoY (3.9/20.4% QoQ/YoY in INR terms). Tier-1 is expected to grow 1.7/7.6% QoQ/YoY led by HCL Tech and Tier-2 is estimated to grow at 2.1/13.1% QoQ/YoY. Among Tier-2, L&T; Infotech and L&T; Tech are expected to lead the growth.

We expect a lacklustre festive season for Auto OEMs to translate into slower disbursal growth for vehicle financiers. Given the steep rise in CoF (post IL&FS) and a large fixed rate book, NIM compression for asset financiers is imminent. Stable asset quality in certain segments may well be the only silver lining. We expect the HFCs in our coverage (LICHF and Repco) to report a mixed qtr. While business momentum will sustain, NIMs/spreads will come under pressure. Asset quality is a key monitorable, given LAP/CRE exposures for some players. 3QFY19 is expected to be predominantly good for banks. With system credit growth at 15% YoY (Dec-18), we expect large banks to register higher loan growth. Meanwhile, NIM tailwinds are expected to play out, driven by an increase in pricing power and lower slippages. As bond yields have fallen, treasury gains will accrue. On the asset quality front, stress accretion will reduce (except IL&FS;). Credit costs may remain high for corporate heavy banks and PCR will continue to improve. The change in guard at the RBI will impact liquidity and PSB reforms (e.g. PCA) and must be watched closely.

Maintain BUY. Our TP is Rs 1,255 at 14x Dec-20E EPS (in-line with 5-yr avg multiple). We recently hosted HCL Techs (HCLT) CFO for investor meetings. The discussions covered organic business and Mode-3 strategy (esp. the recent product acquisition). HCLT has under-performed peers ~30% over the last two years on (1) Organic growth slowdown, with IMS slowing from 9% to 4% YoY, and (2) Balance sheet-heavy capital allocation strategy. HCLTs rev/PAT/OCF share in tier-1 IT has been steady at ~15%.

Lastly, despite 44.7% YTD decline in equity inflows from the cyclical highs of FY18 (net equity inflows of Rs 2.6tn, +154% YoY), SIP inflows have continued at an average monthly pace of Rs 76bn. Recent market uncertainties (global and local) have hit stock prices. We believe CMPs provide attractive entry points for investors. With a total penetration level of just 11% (equity 4%, debt 7%), we believe that Indias mutual fund industry remains under-penetrated. We expect financialisation of savings to grow at 9.7% CAGR over FY18-30E. This provides Asset Management Cos (AMCs) and investors a structural growth opportunity.