We envisage that RIL will be a beneficiary of IMO regulations. But (1) Reduction in heavy crude oil supply post US sanctions, (2) Global refining capacity adds over CY19/20 exceeding expected incremental demand, and (3) Slowdown in petchem demand as a result of the US-China spat will weigh on RIL's refining and petchem business. Our TP is at Rs 1,302/sh (7.5.0x EV/e for standalone refining, 9x EV/e for petchem, Rs 6.0/sh for domestic E&P, 2x EV/invested capital for Shale, 20x EV/e for Retail and 10x EV/e for Telecom). Maintain NEU. We maintain NEUTRAL on RIL after a lower than expected performance in 1QFY20. The EBITDA miss was led by weak GRM and petchem volumes.

New CEO Mohit Malhotra intends to (1) Scale power brands (large addressable opportunity), (2) Increase direct reach in rural (55k villages in FY20 vs 48k now) and (3) Cost optimisation. Most of this is on track, but the rural tilt in sales mix does depend on the progress of the monsoon and government initiatives to revive the rural economy. In FY20, we expect (1) Recovery in gross margins (+70bps vs. -103bps in FY19) led by price hikes and benign input cost inflation, (2) Tight cost controls (A&P) and (3) Favorable operating leverage which will drive EBITDA margin by 181bps (-56bps in FY19). Dabur delivered a strong 1QFY20, despite weak macros and a high base. Cos distribution initiatives and concentrated brand focus have led to ~10% vol. growth, ~2x estimates. This is unprecedented, given Daburs track-record in difficult macros. We model near term softness, maintaining estimates despite the 1Q beat. Our TP of Rs 470 is based on 38x Jun-21E EPS. Maintain BUY.

We have cut earnings estimates for FY20/21E by 25/19% to factor higher slippages and consequent provisions. A fund raise is still possible, and will be crucial for RBL to provide for the upcoming stress and maintain growth rates. We are factoring Rs 35bn (at Rs 500/sh), pushing up est. ABVs by 27/20% over FY20/21E. Guidance on stress, and concentration commentary are red flags that underpin our DOWNGRADE to NEUTRAL. We value RBL at 2x Jun-21E ABV (vs. 3x earlier). Our TP is Rs 512. RBK ticked most boxes in 1QFY20, but guidance on asset quality (potential corporate slippages of Rs 10bn) is seriously disconcerting at the very least. DOWNGRADE to NEUTRAL. Sensitivity to asset quality outcomes is high.

Despite emerging challenges in Telecom & Hi-tech vertical, LTTS is the strongest play in ER&D based on (1) Business resilience supported by vertical diversification and low client concentration (vs. peers), (2) Broad-based deal wins & deal pipeline, (3) Growth outperformance in largest vertical (Transportation) vs. peers and (4) Shift in business-mix to support margins. Expect USD rev/EPS growth of 15/17% CAGR over FY19-22E. Key risks include adverse macros (trade war) and INR appreciation. We maintain BUY on LTTS following an in-line 1Q performance. We lower est. by ~3% to factor near-term weakness in Telecom/Hi-tech vertical, however broad-based wins/pipeline provide growth visibility (continues to be industry leading). Our TP is Rs 1,955, at 20x Jun-21E EPS.

Despite the client-specific hiccups, strong pipeline, large deal wins and investments in digital provide growth visibility. LTI's strong pedigree is reflected in its (1) Marquee account base (66 in F-500), (2) Strong client mining (supported by ADEA and Minecraft programs) reflecting in top 11-20 and focus on large deals, (3) Sub-vertical strategy (e.g. insurance), and (5) Leading margin/return metrics vs. peers. Revenue/EPS CAGR over FY19-22E estimated at 11/10%. Key risks include extended period of spend cuts by large accounts and INR appreciation. We maintain BUY on L&T; Infotech (LTI) post a soft (in-line) 1QFY20. Cut estimates by ~4% to factor near-term client-specific challenges, however deal wins provide growth visibility. Our TP of Rs 2,115 is based on 20x Jun-21E EPS.

Cyient is struggling with issues such as (1) Deteriorating growth in services business, (2) Challenges in top accounts (3) Issues in core vertical (Aerospace and Communication), (4) Focus on lower margin DLM business, (5) Declining services margin due to higher investments, and (6) Higher other income (~30% of PAT). There could be some recovery in performance (both revenue and margins) but concerns related to slowdown in decision making, accelerated trade war risks and higher mix of legacy services remain. We expect USD revenue growth of 1.5/7.8% and EBIT% of 11.3% for FY20/21E. The stock trades at reasonable valuation of 11.9x FY21E which is ~31% discount to LTTS. Risk to our thesis includes improved US/Europe macro and INR depreciation. We maintain NEU on Cyient post weak 1QFY20. Given the huge miss in revenue and margins, we cut EPE estimate by 11.4/10.7% for FY20/21E. Our TP of Rs 510 is based on 11x Jun-21E EPS.

We estimate ACC to deliver 13/17% EBITDA/PAT CAGR during CY18-20E. Given ACC's healthy cash flow and RoE, and its firming up major expansion plans (20% capacity increase by end CY21E/early CY21E), current valuation (of 9.3x/8.8x its CY20/21E EBITDA, EV/T of USD 120) is inexpensive. We reiterate BUY with a TP of Rs1,930 (ascribing 11x to its Jun-21E EBITDA and 0.5x to its CY20E CWIP). Key risks: Sharp roll back in cement prices, rebound in energy costs (crude led). We reiterate BUY on ACC with TP of Rs 1,930 (11x its Jun-21E consolidated EBITDA and 0.5x its CY20E CWIP).

Colgate's market share has largely stabilized but we still don't see signs of gaining meaningful share anytime soon. As a category leader, Colgate needs to drive category growth at a time when natural's fad is moderating. Senior level management churn (Ram Raghavan - MD and Mukul Deoras India chairman) keeps us interested in the story. Ram began his career as a management trainee with Colgate India in 1997. His recent experience as the head of innovation center at Colgate-Palmolive LATAM is exactly what Colgate India needs i.e. product excitement and diversification. With limited upside, we remain NEUTRAL on the company. We will be tracking any revamp in strategy that may trigger our upgrade. Colgates 1Q performance was slightly below our estimates (revenue and APAT). The story remains sombre but senior level management churn instills new hope. We cut EPS by ~2% to factor slower than expected recovery in FY20. We roll forward to Jun-21 EPS and value the co. at 35x, arriving at a TP of Rs 1,281. Maintain NEUTRAL

Wipro is struggling to grow (+2.9% YoY in FY19) whereas larger peers are clocking double digit growth rate. BFSI, which was the key revenue driver for Wipro is witnessing slowdown. Issues such as (1) Completion of large projects (Consumer), (2) Delay in decision making (BFSI, Manufacturing) and (3) Deferral in ramp-up of large projects is impacting growth. The soft guidance for 2QFY20 indicates that the lag is entrenched. Margin expansion is difficult and the buyback trade is over. Wipro has underperformed in last 3M (-8% vs NIFTY IT -3%) and the trend will continue unless growth revives. We expect USD revenue growth of 3.0/5.4% and IT services EBIT% at 18.1/18.3% for FY20/21E. Wipro trades at 14.7x FY21E EPS (in-line with Tier-1 median), which is rich considering its growth profile. Our SELL stance is driven by the weakness in core growth metrics and execution challenges. Risk to our thesis include improved US/Europe macro and INR depreciation. We maintain SELL on WIPRO, post weak 1QFY20 and tepid guidance for 2Q. Wipros revenue growth remains the lowest in tier-1 IT. In view of growth challenges, peaking margins and taxation on buyback we further cut our target multiple. Our TP of Rs 220 is based on 12x (vs. 14x earlier) Jun-21E EPS.

Mindtree's growth trajectory is expected to lower following a stellar FY19 (year of revenue acceleration and margin expansion), as growth dichotomy between top account and residual business normalises. While Mindtree's inherent business strengths of strong digital, marquee accounts and exposure to high growth verticals are in place, leadership transition and sub-optimal costs are near term risks. We expect USD rev/EPS at 10/10% CAGR over FY19-22E and at CMP Mindtree trades at 15.6x FY21E EPS which bake in reasonable margin uptick in FY21E. We maintain NEUTRAL on Mindtree following a weak 1QFY20. Our TP of Rs 705 implies 14x Jun-21E EPS (vs. 16x earlier), with ~13% cut in est.

Regulatory tailwinds like Institutional participation, Indices and tie-up with Retail bank subsidiaries will boost trading volumes by ~10% and increase depth in the long run. Globally Institutional clients account for ~50% of the total derivatives volumes. We continue to remain constructive on the long-term growth opportunities, concerns on increase in competition and pricing pressure is gradually subsiding. The market is expanding with entry of new market participants and products. We estimate revenue/PAT CAGR of 18/15% over FY19-21E. We see value in MCX based on (1) Embedded non-linearity, (2) ADTV growth despite rising competition, (3) Market leadership and (4) Net cash of Rs 13bn (~30% of Mcap). Risks include regulatory delays and increase in competition. We maintain BUY on MCX based on in-line 1QFY20. The company has maintained market share despite increasing competition. Embedded non-linearity and cost control is leading to margin expansion. Regulatory tailwinds will boost volumes further. We assign 30x to core FY21E PAT and add net cash to arrive at SoTP of Rs 962 (13% upside).

While DCBB's asset quality slip in 1Q exceeded seasonal trends, our faith is not fully shaken, given management's conservative stance and stellar record across cycles. Our earnings estimates fall by ~8% over FY20-21E to factor in slower growth and NIM compression, with no change in asset quality trajectory. However, valuations are ample at 2.1x FY21E ABV (RoAA ~1.1%). DOWNGRADE to NEUTRAL, despite DCBB's multi-year growth/compounding promise. Our stance is premised on (1) The substantial jump in stress (GNPAs up 8% QoQ), (2) Growth slowing, (unexpectedly) to 13/2% on a small base, and (3) NIM compression 11bps QoQ, that can linger. We are constrained to downgrade DCB Bank (DCBB) to NEUTRAL with a TP of Rs 234 (2x Jun-21E ABV of Rs 117) post a disappointing show in 1QFY20.

Inconsistent performance across parameters (spanning asset quality and C-I) capped valuations for FB over several quarters. We sense increasing stability over the last two quarters. Despite factoring higher slippages and provisions towards stressed exposures, FB can deliver earnings CAGR of ~28% led by operating leverage and better core performance, especially asset quality. To be sure, FB has stumbled in the past but several corrective initiatives are probably paying off, finally. UPGRADE to BUY with a TP of Rs 117. We upgrade Federal Bank to BUY (TP Rs 117, 1.5x June-21 ABV of Rs 77) after a better than expected show across parameters, in a seasonally weak quarter. Further consistency can lead on to significantly better outcomes.

Maintain BUY with a TP of Rs 515 (18x FY21E EPS). For Laurus Labs, FY19 was a landmark year in which it finally commenced ARV formulations (TLD) supplies to the Global Fund (GF) and has started to reap from the Rs 6-7bn investments made over the years for this segment. The company also turned around its EBITDA margin from 15% in 1QFY19 to 17% in 4QFY19 after facing severe price hikes (~60%) in a key raw material for the ARV API EMT, and partially overcoming it by way of backward integration and alternate sourcing. Overall, it achieved 11% YoY revenue growth, while APAT declined 32% driven by a 450bps contraction in EBITDA margin.

INFY's revenue growth has picked up from 6% YoY CC in 1QFY19 to 12.4% YoY in 1QFY20, supported by large deal momentum, growth in digital and acquisitions. But margins have eroded, both on absolute (-320bps YoY) and relative basis (370bps below TCS vs. 130bps a year ago). We don't expect a cure anytime soon. High cost of delivery (rising localisation and sub-contracting), spiking attrition and large deal aggression pose serious hurdles. Current valuations amply bake in our est. USD rev/EPS CAGR of 10/7% over FY19-22E. Increased payout (85% of FCF vs. 70%) and near-term growth momentum will support valuations. The regulatory arbitrage in buyback is now closed, making it as (in)efficient as dividend. Risks to our thesis include INR appreciation and broader macro deterioration. Hold INFY if you must, but only passively. We maintain NEUTRAL on Infosys post a mostly in-line 1QFY20. INFY upped its growth guidance on strong deal wins, but margin concerns persist. Our TP of Rs 770 is based on (a generous) 18x Jun-21E EPS.

Apprehensions on asset quality (after the slew of defaults and downgrades over FY19) are mostly in the price. IIB has significantly lagged larger PVT peers during FY19. The (1) Reduction in the exposure to potentially stressed cos, and (2) Further contraction in SMA I & II provides mild reinforcement to our positive stance, which is founded on the strength of IIB's core metrics and execution capabilities. We are upbeat on the multi-pronged opportunities that the BHAFIN merger opens up. Management's comfort with low coverage is disappointing. Also, succession is a key monitorable. After a blip in 4Q, IIB is back on track with stable asset quality and a dip in exposure to stressed cos. In-line operating metrics and the sharp dip in provisions (72% QoQ) drove up net earnings (2.1x). Maintain BUY with a TP of Rs 2,011 (3.5x Jun-21 ABV of Rs 575).

We have also reviewed recent mutual fund performance and are encouraged to find thatHDFCAMC has significantly improved its performancewith 64.9% (+1,280bps vs. Oct-18) of rated AUM now outperforming (rated 4 star +). RNAMC has slipped a bit, as only 36.1% (-1,700bps vs. Oct-18) of rated AUM is now outperforming. HDFCAMC has most efficiently passed on the TER cuts to distributors. Commissions now stand at 48bps (-29bps vs. Dec-18). Life insurance and mutual funds: Despite 1Q being a seasonally slow quarter, private life insurers individual NBPs grew a strong 28% YoY to Rs 92bn. On the other hand, equity (ex arbitrage and ETF) flows for 1QFY20 were muted at Rs 83.0bn (72% below FY19 avg). Higher life insurance sales vs. mutual fund sales may owe to changes in distributor commission payouts. While asset managers are not allowed to pay upfront commissions, insurers continue to pay out heavily. Our channel checks indicate this is tempting banks/national distributors to push insurance savings products.

Change in rating: Due to the recent price performance we downgrade Brigade to NEU from BUY. The NIFTY Realty index has gained 14.9/20.1% over 6M/YTD respectively post the NBFC liquidity crisis easing partially and receiving clarity on GST credit rules. But, the index has remained flat over the last 3 months as concerns remain on burgeoning inventory levels in the system (including slow-moving high-end inventory) and overall funding constraints for developers. We have seen developers increase affordable projects in their overall mix.

Top Picks: Larsen, PNC, Ashoka, KNR & HG. Top Picks Buildings: Capacite, Ahluwalia. Union budget retained Infra spends: Union budget was not very different from the Interim budget and largely all FY20E spending estimates on Roads, Railways, MRTS etc were retained. We do remain concerned w.r.t the funding scenario at NHAI as a Rs 1/litre increase in fuel cess (~Rs 120bn annually) is precious too little to assuage the shortfall. States infra spending may supplement the shortfall at NHAI/MORTH.

Our recent interactions with RBK suggest less than commensurate credit risk, achieved via tight (and differentiated) credit policies. RBL Banks (RBK) focus on niche credit segments (credit cards and micro finance) gives it better spreads, system-beating growth and a multi-year addressable opportunity that enables it to outperform peers. Our positive stance is reflected in consistently robust operating metrics. RBKs scorching pace of growth along with its unconventional (but consciously chosen) evolution has invited skepticism. Maintain BUY with a TP of Rs 803 (3x FY21E ABV of Rs 268).