Balance sheet discipline to determine stock performance Tata Steel reported consolidated EBITDA of INR 64.7bn, in-line with JMfe. Indian operations delivered a multi quarter high EBITDA per ton of INR 17k driven by higher realisations. Corus performance improved significantly, driven by higher realisation and better operational efficiency. Strong performance in standalone and European operations were significantly offset by an adverse forex movement of c.INR 11bn at financing entities. Bhushan Steel reported an EBITDA of 46bn in 1QFY19 implying an EBITDA/t of INR 9.7k/ton. We continue to remain positive on the steel cycle and factor in normalized spreads for Indian and...
ICICI Bank reported a net loss of INR 1.1bn in 1QFY19, against our estimates of INR 16.8bn of profit as management opted to increase provision coverage on NPLs by c.640bps to 54.8% (provisions of INR20.4bn above estimates). ICICI Bank also disclosed Rs246bn of BB&below; exposures in the loan book, which comprise of ~INR125bn of loans that were part of the earlier disclosed drilldown list, restructured loans as well as loans under various dispensations. The new disclosures, worth Rs121bn, are exposures to non-stressed sectors and more granular in nature. As a result, we do no expect significant changes to our provisioning estimates for FY19-20. Given the upfronting of provisions, the haircuts to...
Robust pre-sales; debt rises on stake buyback Prestige Estates (PEPL) reported robust operations as company benefitted from projects launched in 4QFY18. Pre-sales volume was at 1.11msf and sales value at INR 7.6bn (+69% YoY) during the quarter. Completed inventory declined by 0.67msf during the quarter (60% of sales). Collection from residential segment was reported at INR 7.5bn (vs. INR 8.0bn quarterly average). PEPL has shifted to completion method of accounting under Ind AS 115. Net debt increased by INR 8.2bn to INR 72.8bn primarily on CapitaLand stake acquisition (INR 3.4bn) and consolidation of INR 2.8bn debt related to the acquisition. While the increase in...
BOB reported a steady quarter with earnings of INR 5.3bn driven by healthy recoveries and lower slippages. Specific credit cost declined substantially to 1.8% (annualised), which was the lowest since 3QFY17. Fresh slippages declined to INR 28.6bn (2.8% annualised) and 85% came from the watchlist, which now stands at INR 86bn ( down -INR 14bn QoQ). Non-NPL stress (Watchlist + NFB exposures to NPLs) on BoB's loan book is now at 2.8%. Management remains upbeat on NPL recoveries, with recoveries on two large steel accounts expected to flow through in upcoming quarters. We remain constructive on BoB, given its strong stress recognition (PCR of ~60%), reduction in unprovided residual stress and strong incremental...
Adj. Profit growth begins to reflect capacity addition benefits NTPC's 1QFY19 adjusted net profit stood at INR 25bn, +11% YoY vs. 5-6% growth trend of past quarters. This compares with 16%YoY growth in regulated equity as the benefit of capex is now beginning to reflect in earnings growth. During the quarter NTPC witnessed a) reduction in coal under-recovery from c. INR 3.5bn in 3QFY18 to INR 1.3bn as Mauda was the only impacted project, b) fixed cost under recoveries of INR 1.6bn in Unchahar and Badarpur which will discontinue by 2H FY19 and c) INR 2bn fixed cost under recovery from annual maintenance shutdowns which got advanced to 1Q in FY19 vs. 2Q in FY18. Without...
India mobile revenuessigns of stability in a tough environment Bharti's 1QFY19 consolidated Revenue/EBITDA came in 0.4%/1.3% ahead of our forecasts, thanks to 1.0%/3.5% beat in the India mobile segment. Excluding impact of Telenor consolidation, international termination rate [ITR] cut and some reduction in Tata ICR revenues, underlying mobile revenues were up on a sequential basis. Performance of Africa mobile was slightly ahead, while that of other segments was broadly in line. Reported PAT was INR 1.0bn against our forecast of 5.7bn net loss, thanks to 5.2bn of net exceptional income (mainly creation of deferred tax asset in Nigeria). Bharti's consolidated capex at INR...
Near-perfect; positive surprise on both revenue and margin Westlife's 1QFY19 earnings report is a testimony that the business is well-placed to deliver the targets that management had set for itself, viz. 7-9% comps every year and doubling of margin by 2022 (see our earlier report for details). The near double-digit margin delivery during the quarter (9.9% - up 431bps YoY) was a positive surprise to us, led by a more favourable demand environment, the successful revamp of its value platform and further scale-up of brand extensions that helped drive a 30% growth in revenue and more-thandoubling of EBITDA. We expect this strength to sustain in the coming quarters - earnings growth trajectory would accordingly remain strong and could help drive further stock...
Strong growth and asset quality improvement in a seasonally weak quarter MMFS recorded a strong performance in a seasonally weak quarter with PAT of INR 2.7bn (up 34% YoY) on IndAS basis. Comparable IGAAP PAT for 1QFY19 is INR 1.9bn vs. INR0.5bn in 1QFY18, a 4x YoY growth. Moreover, migration to IndAS had a positive 2% impact on BV. Other key highlights are: i) acceleration in disbursement growth (35% YoY) driven by CV/CE, pre-owned vehicles and SME segments; this led to AUM growth improving to 21% YoY from 16% last year. ii) GNPA ratio was stable at 9.4% in 1QFY19 with the lowest sequential increase in absolute GNPAs during the first quarter. Given the improved outlook for rural...
HCL reported organic revenue growth in 1QFY19 a tad below our estimates, likely on higher than expected pricing resets in some of the extant large contracts/renewals + delays in the start of new deals. However, a strong order booking (highest-ever') should help the growth recover through 2Q-4QFY19. Management's stance was incrementally positive and improved disclosures, especially on the IP partnerships, should help increase investors' confidence, more so, given the stock's inexpensive valuations at c.13x FY20F EPS, HCL trades at 27%/5% discount to INFO/TECHM. A 4% dividend + buyback yield also limits the downside risk....
Strong sales performance led by volume growth: The company's revenue rose 36.3% YoY to Rs74,193mn in Q1FY19, driven by strong overall volume growth of 38.1%. Domestic sales stood at 688,665 units, a growth of 43.8% yoy whereas exports sales reported a growth of 31.4% to 537,976 units. The average realization contracted by 1.2% yoy due to adverse product mix as strong sales came from entry level bikes. Margin disappoints with no signal of recovery in near term: Bajaj's standalone EBITDA margin stood at 17.3% in Q1FY19 vs 17.2% in Q1FY18 (19.4% in Q4FY18), below our estimates. The marginal yoy expansion in margin was mainly due to lower employee...
