TCS reported 3QFY18 revenue growth broadly in-line with the moderated expectations; outlook was sanguine with a strong deal closure during the quarter + a healthy pipeline. Still, we expect FY19 USD revenue growth could remain in the 7-8% band, same as FY18, given the continued softness in BFS vertical (c25% of revenues, JMFe). Further, the profile of the incremental revenues + a strong INR should keep the margins around current levels. Thus, our operative assumptions and forecasts are largely unchanged; changes in the US taxation...
Stable show; soft topline a temporary blip IIB's 3QFY18 profits grew 25% YoY and asset quality remained in fine fettle. However, core operating income growth was 20.6% YoY and slower than recent trends. While margins were maintained at 4%, overall asset growth was at 20% YoY (vs loan growth of 25% YoY) dragging NII growth lower. Slower opex growth meant that core PPoP growth was still robust at 26% YoY. Management also indicated that the Bhafin merger remains on-track as per earlier communicated timelines. We expect IIB to resume its topline momentum in the next couple of quarters and continue to like the name for its diversified portfolio mix, clean...
Bajaj Corp's 3QFY18 report was disappointing as volume growth recovery turned out to be well-below our expectations. While the headline numbers were impacted by lower international turnover, domestic business volume growth of 8% was also quite subdued given a highly favourable base (BAD volumes declined 4%, overall volumes down 6.5% in 3Q LY). Reported operating performance for the quarter was partially aided by prior period income (CGST refund pertaining to earlier excise-exempt zones). Excluding this, EBITDA growth was just 2-3% due to the impact of sharp increase in SG&A; (+23.7%). The company attributed the disappointment in performance to weakness in the wholesale and CSD...
We initiate coverage on Reliance Nippon Life Asset Management (RNLAM) with a BUY rating and a target price of INR 350, valuing the company at 28x FY20E earnings (at CMP stock trades at 36x/ 29x FY18E/ FY19E). We believe RNLAM remains in a favourable position to capitalise on twin trends: a) mutual fund (MF) industry tailwinds as inflows remain strong and...
Our in-depth analysis of the profitability curves of the IP partnerships that HCL has invested in over the last 6 quarters indicates that while their revenue impact could be low (c.3% over FY18-20), their superior profitability provides HCL with an incremental margin lever (up to c.50bps EBIT margin leverage in FY19-20). We believe the market has ignored this given a limited understanding of the economics of these partnerships. We see value in the stock after the c.6% correction since 2QFY18 results, ostensibly on a weak near-term outlook for the infrastructure services (IMS) business. We believe the slowdown in IMS is transient and at 12.6x FY19F EPS (9% discount to its 3-year median PER), we find the risk-reward attractive....
Over the past month, LTFH's stock price has corrected by 23% and we believe the CMP provides an attractive entry point due to: i) Improving RoE trends - profitability over the last 6 quarters has improved with reported ROE improving from 9.7% in to 15.2% despite the company providing for voluntary provisioning of INR 8.9bn and accelerated provisioning of INR 5.3bn; ii) While PSU banks' recap would increase competitive intensity in infrastructure/LAP, LTFH would benefit from the increase in down-selling opportunities; and iii) The company has hired senior staff from Bajaj Finance and Piramal Finance for its credit analytics and housing team. We believe LTFH is on track to achieve top quartile (18%+) ROE...
TeamLease Services Ltd. (TEAM), India's largest organised flexi-staffer, is at the cusp of redefining its long-term growth trajectory with several favourable factors likely to play out over the next decade. Market leadership (5-7% share) with an established track record of operational excellence (associate-to-core employee ratio - 203x) gives it pole position to reap the benefits of the flexi-staffing industry's imminent formalisation. Entry in the high-margin IT staffing business will further aid profitability. We estimate operating profit to triple in the next three years, with margin expanding 85bps. A strong balance sheet (net cash-to-equity of 0.4x, strong cash conversion) and stable management strengthen TEAM's ability to expand...
2Q18 Core RoE at 22% on adj. profits; 2.6GW commercialised NTPC's 2Q18 adjusted net profit stood at INR 29bn (+15% YoY) due to a) reversal of FY17 sales in Barh II (INR 4bn) due to regulatory disputes and b) wage provsioning of INR 2bn whih is yet to be approved by CERC. NTPC added 2.62GW of commecial capacity, however this is yet to reflect in earnings growth as they came in at the fag end of the quarter. Core RoEs (on regulated equity) came in at 22% on adjusted profits. We expect NTPC to add 4-5GW annually in FY18 and FY19 based on CEA timelines of plant execution. Thus NTPC is set to add c40% of its existing base and almost double its regulated equity base in next 2-3years....
Stable quarter; cost saving initiatives to benefit in FY19 For 2QFY18, JK Lakshmi reported volumes in line with our estimates at 1.89MnT, +10% YoY, primarily on higher capacity vs. the base quarter. Realisations rose 8% YoY (sequential growth of 3.5%) primarily on a change in the sales pattern from Ex works to FOR. EBITDA/t at INR 505/t declined 7.4% YoY as the rise in power/fuel and freight costs more than offset realisations growth. It commissioned 7.5MW of WHR at its Durg unit, benefits of which would be seen going forward (c.INR 50/t in east). In addition, management expects c.INR 200/t cost saving from 20MW captive thermal power plant (4QFY19 commissioning). In the...
