Q4FY21 was marked by a sharp increase in prices of key raw materials. Q4FY21 witnessed a steep rise in domestic iron ore prices by ~20-30% mainly due to supply constraint in Odisha from merchant mines. Furthermore, domestic coke prices in Eastern India increased ~22% QoQ, caused by limited availability, as merchant coke plants contracted for exports to avail better realisation. Despite a notable increase in prices of key raw materials, TML was able to report relatively steady EBITDA margin for the quarter. For Q4FY21, EBITDA margins were at 21.7% (23.1% in Q4FY20,...
Wipro has seen strong deal wins (US$7.1 billion of which US$2.6 billion are large deals in H2FY21) and healthy traction in digital technologies like cloud, customer experience and cyber securities in Q4FY21. This, coupled with the restructuring of organisation, client mining (as seen in this quarter, which witnessed healthy client addition in US$100 million (mn), US$75 mn & US$50 mn buckets) and aspiration to win one large deal every quarter will lead to sustained revenue growth in the longer run. We believe Wipro's strong full services capabilities across applications, infra, BPS and...
Improving IT spend, large deal momentum key positive We expect IT spends to improve led by cloud migration, increased spend by companies in customer & employee experience (P&L; led investment) and ancillary technologies like AI, IOT, data analytics. Infosys is in a sweet spot to capture this growth considering the investment it has made in digital technologies. This, coupled with an increase in outsourcing in the US and Europe, vendor consolidation opportunities, captive carve outs and cost take out deals will further boost its revenues. In addition, Infosys has...
The rise in inflation was primarily driven by food items like meat and fish, oils and fats pulses and non-alcoholic beverages. In non-food items, almost all items witnessed a marginal rise in data print except...
SLK is a business process transformation enterprise, offering BPM and digital solutions for the financial services industry. It has deep domain expertise in the banking and insurance segments in North America, enjoying multiple long-standing and scalable relationships with marquee clients, including with Fifth Third Bank, which in addition to being the largest customer is also a significant minority shareholder. The acquired entity derives its revenues from North America with delivery centres and offices in India (Pune, Kolhapur, Bangalore), the US and the Philippines. The...
TCS believes that tech refresh cycle driven by cloud migration and business transformation will play a critical role in driving multi-year technology growth. In addition, ancillary technologies developed around cloud will lead to new business models & differentiated customer experiences. The company's investment in upskilling of its employees, investment in research & development and industry-specific solution and contextual knowledge to drive business transformation will make TCS key beneficiary of this secular demand growth in coming years. This, coupled with increased outsourcing...
Cement demand to continue to remain robust After witnessing modest demand decline of ~2.0% in FY21 cement demand is expected to witness a strong upcycle in FY22E led by urban housing recovery and infra push by the government. While demand in H1FY21 was largely driven by strong rural housing demand, urban housing and infra segment aided recovery in H2FY21. Going forward, higher budgetary allocation by the government on infrastructure (up 26% YoY | 5.54 lakh crore), lower interest rates and recovery in private capex would continue to...
In Q4FY21, base metal prices improved both QoQ as well as YoY. During the quarter, average zinc prices on the LME were at US$2749/tonne, up 29% YoY & 5% YoY while average lead prices were at US$2011/tonne, up 9% YoY, 6% QoQ. Similarly, during the quarter, average aluminium prices on LME were at US$2096/tonne, up 24% YoY, 9% QoQ while average copper prices on the LME were at US$8501/tonne, up 51% YoY, 18% QoQ....
On the companies front, three out of 12 companies are likely to report 15%+ YoY growth. Key monitorables are 1) Divi's Lab, likely to register above 25% growth in revenues amid steady growth in Generics and Custom Synthesis and 2) Ipca Labs, likely to register 18%+ revenue growth on the...
In Q4FY21, we expect strong revenue growth for construction companies driven by a benign base and pick-up in execution. For real estate companies, key highlight will be continued robust residential sales volumes growth led by factors such as pent up demand, benign interest rates and measures such as a cut in stamp duty in Maharashtra. Residential sales volumes traction to remain healthy We anticipate residential sales will maintain their strong momentum in Q4FY21 led by pent up demand, benign interest rates, launches and...
EBITDA to grow 33.9% YoY with bottomline up 41.9% YoY Increase in the value added segment revenue from the basket of specialty chemical companies along with a rise in realisation for select companies can aid the operational performance. We expect the OPM of our coverage universe companies to expand 280 bps YoY to 19.3%, leading to EBITDA growth of 33.9% YoY. Bottomline growth is expected to be up 41.9% YoY, largely on the back of lower tax outgo and higher other income....
In our coverage universe, EIH Ltd is the best placed on the b/s front. The fund raising of | 350 crore thorough rights issue would improve debt/equity mix to 0.1x from 0.2x. While Indian Hotels has a strong promoter backing, its debt/equity is 0.7x, which combined with capex requirement could lead D/E to rise further to 0.9x if current Covid issue persists for a longer period. Lemon Tree Hotels, being on a capex mode is highly levered vs. peers....
Our coverage universe is likely to see a 50 bps margin contraction due to a sharp rise in raw material prices. Palm oil, copra prices have risen 47%, 25%, respectively, in the last one year. Also, crude prices have risen above US$60 per barrel. Further, tea prices are still up ~50% YoY. This has pushed FMCG companies to take price hikes to the tune of 5-12%. We expect gross margin contraction for HUL, Marico and Tata Consumer. However, favourable prices of sorbitol & calcium carbonate would enhance gross margins for Colgate. Though milk prices have risen sharply in the last...
Revenue, EBITDA expected to grow 9.6%, 14.5%, respectively Overall, the coverage universe revenue is expected to grow 9.6% YoY owing to further rebound in execution sequentially at engineering and T&D; companies like L&T;, KEC, KPTL, BEL and Cochin Shipyard. The international business is likely to aid performance of companies like L&T;, KEC, AIA, Elgi, etc. We expect EBITDA to grow 14.5% YoY mainly due to positive operating leverage in product companies and better execution by EPC companies as economy gradually normalises. Consequently, overall PAT is...
In line with global steel prices, domestic steel prices have witnessed strong traction over the last eight to nine months, registering a healthy increase in the aforementioned period. Currently, domestic hot rolled coil (HRC) prices (ex-Mumbai) are at | 57500/tonne, up 58% from July 2020 low of | 36500/tonne. Healthy demand both on the global as well as domestic front has aided steel prices to remain firm at higher levels. The strength in steel...
With a complete washout in Q1FY21 (70% decline), Titan's jewellery division ended the year on a strong note with marginal sales growth of ~3% in FY21 (excluding gold bullion sale). This signifies the inherent strength of the business model and its strong brand patronage. With a healthy recovery in Q3FY21 itself (15% revenue growth), momentum accelerated even further with Titan reporting 32% sales growth YoY in January-February 2021 (excluding B2B order). On a benign base, Tanishq reported 70% YoY growth in Q4FY21 with 10% growth being contributed by a large B2B order for gold...
The quarter started on promising note with success of southern releases like Master. However, desired flow of successive releases (especially in Hindi languages) was absent. Subsequently, PVR and Inox Leisure recorded occupancy short of their historic figures. Employee and other expenses, increased further during the quarter as more screens opened. We estimate EBITDA (ex-Ind-AS) loss of | 132.9 crore for PVR and EBITDA (ex-Ind-AS) loss of | 93.2 crore for Inox. This will translate to net losses at bottomline for both companies. With newly announced restrictions in the key market of...
Average diesel prices are up ~22% YoY, 9% QoQ leading to a rise in average freight costs per tonne by ~| 45-50/t QoQ. Also, petcoke prices inched up further by 7% QoQ. However, players switching to coal would help restrict its impact, to some extent. This is expected to lead to another cost impact of | 35-40/tonne during the quarter. On the other hand, fixed cost rationalisation is expected to restrict cost impact to ~| 70-75/t. Overall, we expect I-direct universe EBITDA/t to decline 2.4% QoQ to | 1176/t....
