Blip in EPC revenue due to GST transition Techno Electric (TEEC)'s 2QFY18 results missed our expectations. While we were negatively surprised by the magnitude of the decline in EPC segment sales (down 32% YoY), management highlighted that revenue booking had been deliberately slowed down after GST implementation, as it awaited clarity on tax rates, besides facing a few transitionary issues. The sales decline in the wind energy segment was along expected lines due to sale of 33MW capacity in Jan'17. However, operating margins were stable despite a sharp fall in sales, due to a favourable execution mix and tight controls on fixed overheads. Given the...
Profit +34% YoY as margins expand but order inflows decline L&T; delivered 34% growth YoY in 2QFY18 consolidated net profits, driven by a) EBITDA margins expanding to 9.74% (adj for one-offs) vs. 9.2% last year and b) 6% revenue growth that was muted by GST issues. Order inflows (OI) fell 8% YoY to INR 287bn, although its order book (OB) at INR 2.6trn (+2% YoY) remains healthy at c.3x FY17 sales. Management has cut its FY18 OI guidance to flattish/marginal growth vs. 10%-12% earlier, given the spillover of large Indian infra/defence orders into FY19. However management maintained guidance of 12% revenue growth and 25bps YoY margin improvement. L&T;'s order basket for FY18-FY19 remains strong with INR 3trn from Indian infra/T&D;...
Headline beat but no convincing signs of a turnaround yet 2QFY18 was the first quarter of sequential earnings growth for Lupin, after 4 consecutive quarters of sequential decline, driven primarily by strong margin performance (EBITDA margin improving by 173bps QoQ to 21.6%), supported by cost optimisation measures and controlled R&D; spend. While revenues of INR 39,520mn were broadly in-line with our estimates, EBITDA/PAT of INR 8,531mn/4,550mn beat our est. by 11%/25% due to stronger margin performance. US disappointed yet again with revenues declining by USD 34mn QoQ to USD 204mn (JMFe USD 223mn) mainly on account of volume loss in gGlumetza, base...
GST transition pauses sales; outlook remains healthy SKF India's 2QFY18 results beat expectations, as EBITDA grew 45% YoY due to a favourable sales mix (mfg goods at 63% vs. 56%) and lower overheads due to inventory reduction undertaken over the past few quarters. Net sales growth was largely in line with expectations at 4% YoY, but adjusting for GST-related changes, sales were up 6% YoY on a like-to-like basis. Barring wind energy, management remains confident of healthy growth in all other segments and maintains its guidance of doubling annual capex to INR 800mn-1,000mn by FY21 as capacity utilisation has reached 95%. Given expensive valuations of 27x FY19E and...
Consol. 2Q FY18 EBITDA of INR 16.34bn [+12.4% yoy] was 1.2% below our forecast. Core EBITDA [+9.3%] miss of 3.5% was driven entirely by revenues [+9.2%], as net tenancy-adds crashed 78% qoq to 1687 [-30%]gross adds halved qoq to 4398 and tenancy churn or exits surged by 136% to 2711 in 2Q, vs. an average of 723 in the previous four quarters. We maintain FY18 will likely be the last year of double-digit EBITDA growth for BHIN. While tenancy adds from Jio should remain strong, the underlying losses would continue, as smaller telcos are rushing for the exit door. Moreover, Idea/Voda merger will result in significant tenancy losses, likely from FY19....
UPL reported 2Q18 revenue/EBITDA/PAT of Rs38bn/Rs7.2bn/Rs2.4bn growing 6%/12%/44% YoY. It was another quarter of moderate growth for LATAM the key growth driver for UPL - which grew 5%YoY and was impacted by late onset of monsoon and high channel inventories in Brazil. Other geogrphies performed in-line with estimates (i) India witnessed revenue growth of 10% driven by re-stocking following GST but negatively impacted due to untimely rainfall towards the end of the season (September), which destroyed some of the crops. (ii) Europe witnessed revenue growth of 5% driven by strong growth in the company's herbicides portfolio for potato, oilseeds and cereal crops, (iii) North America witnssed revenue...
HDFC Ltd reported PAT of Rs. 21bn (15% YoY, inline with JMFe) as AUM growth improved to 18% YoY with sustained traction in individual loans (up 16% YoY on AUM basis), while the corporate book grew 23% YoY. Adj. NII growth moderated to 13% YoY in 2Q18. While we expect some pressure on spreads due to recent lending rates cuts, however, pickup in non-individual segment would offset the decline. GNPL ratio remained stable sequentially at 1.14%. While individual GNPL remained stable at 0.65%; non-individual GNPL increased 9bps QoQ to due to slippage of one developer account (of INR 1.6bn) to NPL. Credit cost (including provisions for standard assets) remained stable QoQ at 12bps and coverage ratio...
Tata Steel reported consolidated EBITDA of INR47.2bn in-line with JMfe. While Indian operations reported an EBITDA in line with estimates, European operations delivered an EBITDA of USD45/ton vs. JMFe of USD73/ton, driven by higher RM costs and lower spreads. Tata's Indian operations have now fully ramped up, with its 3mt green-field steel plant at Kalinganagar operating at close to full utilisation levels. A barrage of duties put in place by the Government has ensured a floor price for imports, limiting any downside to Indian operations profitability. We expect continued focus on the EU turnaround plans for much of the current fiscal year. We factor in Indian operations EBITDA/ton of INR11.3/11.5k for...
Strong margin tailwinds offset the weak pace of volume recovery We believe the HUL stock could continue to do well on the back of this result, whether or not we agree with the heady valuation of 49-50x NTM EPS that it currently trades at. Sales grew 10% on comparable basis with volume growth of 4% - inline with expectations but not really great, especially considering the favourable base - volumes were down 1% in the base quarter; management cites the continued slackness in rural demand to be the reason for the slower pace of recovery. Margin sprung a big positive surprise again and helped boost earnings a great deal like-to-like expansion was to the tune of 180bps led by strong GPM...
Kotak's consolidated profits for 2QFY18 were up 20% YoY and were in-line with our estimates. Growth in customer assets, which had picked up in the previous quarter, sustained in 2QFY18 with 21% YoY growth (22% YoY in consolidated loan book) and management commentary on growth outlook remains confident. Key positives during the quarter were a) significant decline in cost-to-income ratio (down ~200bps YoY) despite additional expenditure pertaining to 811' and priority sector certificates, b) Strong SA growth of +61% YoY driven by government business, and c) management disclosure that Post-IFRS networth of the bank will be higher than under the current accounting methodology. Subsidiaries, too,...
