Operationally strong ; IL & FS exposure leads to PAT miss IndusInd Bank reported an operationally strong quarter in 2QFY19, with operating profit up 22% YoY (in-line with JMFe). However, IIB's PAT missed our estimates by 15%, largely driven by elevated provisions on account of exposures to the IL &FS; group (currently classified as standard). IIB made contingency provisions of INR 2.75 bn against the account (14% of PPoP), resulting in flattish PAT in 2QFY19 (+4.6% YoY). The exposure to the group, although not quantified by management, is on 2 counts a) At the SPV level to a completed and currently tolling tunnel project (AAA rated recently) and b) At the holdco level, where IIB has...
Trident reported 2QFY19 PAT at INR 1.1bn, significantly higher than JMfe/street estimates, primarily driven by robust performance in terry towel segment. EBITDA margin expanded 330bps YoY to 18.8% driven by a) operating leverage due to higher towel volumes, b) sheet segment turning EBITDA positive in 1QFY19, and c) YoY increase in yarn EBITDA on a low base in 2QFY18 (inventory loss). Bed sheet and terry towel volume increased 32.5% and 29.6% YoY, respectively. a) INR depreciation (15%+ YTD-CY18), b) settling of market place disruption in the US and c) extension of MEIS (4% export benefit) have provided a welcome relief to the company. Change in export subsidies (MEIS/ROSL) and cotton price movement...
DMart's 2QFY19 earnings-report reflects a massive margin disappointment (8% vs 9.1% in 2Q LY and 8.9% for FY18) which is likely to mask the excitement that a 38.9% growth in revenue would otherwise have created. The business has brought down prices across categories to further drive store-throughput; the consequent EBITDA miss of 3.7% vs our forecast, however, means that the incremental revenue garnered through the price-cuts (2QFY19 revenue was 8.7% ahead of our expectation) have not been able to entirely protect the business' profit pool at least not just yet. We reckon it could take a few quarters before operating leverage starts to entirely offset the margin erosion impact, but we are confident...
Another best-in-class delivery but largely in the price now HUL's 2QFY19 key operating metrics comprising volume growth of 10%, revenue growth of 12% and 160bps expansion in operating margin were undoubtedly strong and commendable but were all bang on expected lines and no more a massive positive surprise as such. We expect the stock to be more range-bound hereonwards. Focus would be more on what the volume delivery for 3QFY19 and thereafter would be, since double-digit volume growth' would be in the base from 3Q onwards. Management remains quite confident and upbeat; key commentaries: 1) Demand outlook is stable. 2) Rural growing ahead of urban....
Bandhan Bank reported a strong quarter in 2QFY19, with net profit at INR 4.88bn (+47% YoY, 10% above JMFe). Gross AUM growth was robust (+51% YoY), while disbursement growth was at 71% YoY. Gross NPLs were largely stable at 1.3%, while total provisions were slightly elevated at 1.1%, despite marginal reduction in PCR (330bps decline QoQ to 47%). Bandhan disclosed that it has an exposure of INR 3.9bn to the IL&FS; group (1.2% of AUM), which is currently classified as standard. Bank believes that the withdrawal of general permission to open branches by the RBI, does not materially impact balance sheet growth in the near term : a) Bandhan averages c. INR 350mn deposit per branch (vs 1.7bn , 1.4bn for...
Strong 2Q core performance and OTT metrics; 2H growth to be softer Zee reported yet another strong set of results; 2QFY19 consolidated revenues (+25% yoy) were c.6% [INR 1.1bn] ahead of our forecast, led by c.10% [+540mn] beat on subscription (+21.3%), 2.4% [280mn] beat on ad (+22.7%) and c.19% [250mn] beat on Other revenues. 2Q EBITDA (+37.6%) was 13.5% [800mn] higher; EBITDA margin of 34.2% [235bps ahead] was the best-ever for Zee despite OTT losses. Normalised 2Q PAT was 6% higher; effective tax rate was 38.8% vs. our 35.0% forecast. Zee reported strong user and engagement metrics for Zee5; Sep-18 MAUs [monthly active users] of 41.3mn were up 190% from Apr18, while average time spent per user was 31 minutes per day. Zee5 climbed to the #2...
ABC amalgamation to be EPS accretive from Year 1 We resume coverage on Timken India (Timken) and publish our revised numbers to factor in the consolidation of ABC Bearings (ABC). In our view, the amalgamation of ABC Bearings would be EPS accretive from FY19 as net profit of the consolidated entity should increase 17% (factoring in 11-month consolidation in FY19) vs. 11% stake dilution through a share swap. Over FY18-21, we forecast sales and earnings CAGR of 16% and 25%, respectively, for the consolidated entity, led by a) strong growth in the domestic CV market (entry in wheel bearings segment), b) bounce-back in exports on easing of capacity constraints and...
The Twins' are here: Ride it like you stole it (at a bargain) Today, Royal Enfield (RE) launched its much awaited 650cc Twins - Interceptor and Continental GT in the US market, starting at a competitive price of USD 5,799 and USD 5,999, respectively. The Twins' form the core of the RE's expansion plans in the overseas market, as much as they are relevant for offering a suitable upgrade to a large base of existing RE customers in India. At the launch event in California, RE reiterated its focus to establish itself in the middle-weight segment (250-750cc) and expand the market for middleweight motorcycles globally. The Twins' offer power-packed performance and specifications similar to some of the popular international models (in the mid-size segment) but at a much...
The GST Council is scheduled to meet coming Friday, Sep 28 to, inter alia, decide on a way to raise funds to help re-build Kerala after the state faced massive losses from severe flooding last month (Aug'18). The natural consequence of this is, expectedly, renewed pressure on ITC's share price. Interestingly, the GST Council may not need any parliamentary approval for this additional levy since Article 279A of the Constitution has already been amended to allow the GST Council to recommend any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster'. We expect the stock to recover once the event is out of the way this week, as we do not expect the fresh levy to be all that...
RBI's stance to cut short tenure of Mr. Rana Kapoor as MD&CEO; to Jan 31 , 2019 as against the board's request to grant a 3-year term has made us reevaluate our investment thesis on Yes Bank. We believe Mr. Kapoor's presence at the helm of Yes Bank is an all-encompassing...
