LIC Housing Finance (LICHF) net profit was up 2% YoY (4% higher than JMFe) due to higher than expected margins and lower credit costs. Key Highlights i) Disbursement grew by 15% YoY while Loan book grew 15% YoY supported by non-core segments - LAP (31% YoY) and developer segment (47% YoY) while individual segment remained muted 11% YoY. Proportion of non-core segments has now increased to 19.2% vs. 16.4% YoY ii) Calc. spreads declined 45bps YoY to 1.50% driven by 78bps YoY decline in yields and higher slippages during the year. To tackle the decline in yields, company has now increased its lending rates by 20bps in April 2018 iii) Company has increased its processing fees across...
In FY18, CDSL reported a strong growth in consolidated net sales of 31% YoY, driven by high growth in IPO/corporate action charges, transaction charges and KYC segment. Consolidated PAT came in at INR 1bn (+20% YoY), in-line with our estimates. Fixed cost model driven primarily by staff and IT costs enables the company to register strong margins in tandem with revenue growth. High FCF generation (FCF yield c.4%+), stable dividend policy (35% payout) and a strong balance sheet (net cash INR 5.5bn+) provide further support. SEBI panel's likely recommendation to allow new entrants in depository space may increase the competition intensity. We forecast a c.20% EPS CAGR over FY18-FY20E and...
HDFC Bank's 20.3% YoY growth in PAT was in-line with estimates driven by a strong fee income and controlled opex ratios. Loan growth at 18.7% YoY, however, lagged our expectations albeit on a high base of 4QFY17. We expect the same to bounce back to recent trends as corporate lending picks up (single digit YoY growth in 4QFY18 vs avg. of 18% seen in first nine months of the year). Slippage ratio was at 1.86% for 4QFY18 vs Average of 2.2% in the past four quarters. Core fees grew a robust 30% YoY and should sustain at healthy rates as against mid-teens growth last few years. With controlled opex (core CI ratio improved by 180bps YoY), core PPOP registered a healthy 24.8% growth. In our view, HDFC...
Infosys (INFO) kept the hopes of a demand recovery live with an in-line 4QFY18 results/FY19 guidance. However, the unexpected lowering of the EBIT margin band to 22-24% (from the current 23-25%) was a disappointment, especially given the currency tailwinds. The reasons for reset appear to be micro increased investments in digital capability + capacity expansion to quickly develop a services-driven digital business (vs. the product/platform approach under Vishal Sikka); macro variables are stable INFO indicated minimal pricing pressures and FY19 wage inflation is similar to FY18. We expect the margin impact to be concentrated in the near-term and stabilise over FY20; INR depreciation could be an incremental support. Thus,...
Container Corporation released provisional volume/revenue estimates for FY18 (subject to audit and finalisation). It indicated total volume grew 13% YoY to 3.5mn TEUs while total revenue grew 9% to INR 64.4bn in FY18. We estimate a) volumes grew 15% YoY 4QFY18 (2% below JMFe), and b) continued recognition of SEIS income in 4QFY18 (as it recognised in 3QFY18 for 9MFY18). Given the lumpy nature of SEIS income recognition (4QFY17 for FY17; 3QFY18 for 9MFY18), we believe revenue/realisation figures may not be exactly comparable. Based on our analysis of port/rail volume, we believe the growth momentum for...
Coal India (CIL) reported 9.4% production growth and 5.5% offtake growth YoY in Mar'18. Production jumped significantly in Mar'18 vs. the scanty 1-2% growth seen in the previous months of the year. This may have been led by a) offloading of built up stocks completed by Jan-Feb18 and b) low power plant coal stock (still at 10 days) building up on coal demand. Offtake growth remains strong at 5.5%, due to higher coal...
Minimal impact from US tariffs; earnings outlook intact We believe Novelis' earnings will see minimal impact from the 10% tariff imposition on aluminium by the United States of America. a) Exemption to key exporter Canada (51%) and b) significant recycling dependence (at over 50%) blunt any possible meaningful impact on Novelis. Duty imposition on Novelis' end products, namely auto and can sheets, further insulates the US market from dumping by other countries (ruling out competition to Novelis). Hindalco a) has worked its way to an advantageous point in coal security (80%+) at its India operations, b) is augmenting operations at Novelis further to look beyond the achieved...
Q: What is the impact the recent RBI guidelines on stressed assets impacting Yes Bank and the credit costs outlook thereof? For Yes Bank, the impact of the recent RBI guidelines on our Restructured Book as well as on exposures to entities with systemic exposures above INR1Bn is minimal and it doesn't alter the Bank's outlook on its credit / asset quality parameters. The Bank has been...
We upgrade Oracle Financial Services Software (OFSS) to BUY on a 19% upside. The stock's participation in the broader IT sector rally over the last two months has been restricted by muted 3QFY18 results; it has also under-performed global peers over this period. However, given management's commentary of a robust deal pipeline + a seasonally stronger period ahead, we find current levels attractive to play to its structural strengths. We also raise our FY19/FY20E EPS by 6.6%/6.8% on superior margin management. Our revised INR 4,480 TP...
Beat on cost controls; growth constrained by clinker capacity Ambuja's 4QCY17 EBITDA exceeded expectations primarily on lower costs. Revenues grew by 20% YoY primarily on volume growth of 17%. Realisations grew by 2% YoY; remained flat sequentially. EBITDA/t, reported at INR865/t vs INR658/t grew realisation growth, lower raw material cost and other expenses more than offset the freight and power/fuel cost escalations. We believe Ambuja's long term growth is constrained by the clinker capacity and limited expansion plans (phase 1 expansion of 1.7MTPA clinker at Marwar Mundwa expected by 2HCY20). As a result we expect Ambuja's market share to decline in the interim and see...
