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...
HDFCB reported a net profit of INR 46.0bn in 1QFY19 (+18.2% YoY), 2.2% below our estimates. Core PPoP growth was strong at +24% YoY. Profit miss was largely led by softer than expected NII growth (+15.4% YoY). The topline moderated as margins contracted 10bps QoQ led by faster growth in term deposits (+25% YoY), lower yields on investments and higher growth in low yielding corporate and home loan segments. HDFCB's bottomline was also impacted by MTM provisions on the AFS investment book (INR 3.9bn, 4.4% of core PPoP), which was fully recognised in the quarter. Slippage was slightly elevated for the quarter at INR 35.5 bn (2.1% annualised), primarily due to pressure on the agri loan book...
Wipro (WPRO) reported 1QFY19 that was a tad above the modest expectations; the 0.32.3% QoQ USD revenue growth guidance indicates the drag from client-specific issues visible over the last two quarters has subsided. The top client continues to grow (+31% YoY) + deal traction appears to be improving. However, continued uncertainties in HPS + near-term weakness in Utilities and Manufacturing verticals gives little confidence in USD revenue growth converging with peers over FY19-20 even after factoring in the Alight Solutions partnership announced with the 1QFY19 results. On the positive side, WPRO's differentiated digital portfolio, limited exposure to the US BFS, healthy cash-flows and a prudent capital allocation policy lends downside support. The stock's valuation too has moderated vs. peers,...
Strong overall performance; broadly in line with estimates Havells reported robust 1QFY19 results with strong growth across product categories coupled with margin expansion. While Havells (ex-Lloyd) revenue/EBITDA grew 22% YoY (like-to-like)/37% YoY, Lloyd reported 14% like-to-like sales growth (vs. 10% FY19 guidance). We continue to believe in Havells' endeavours to expand its distribution (including B2B/Enterprise scale up) and product portfolio; also, brand building (spent INR 1.2bn in 1QFY19; +57% YoY) would go a long way in improving its growth trajectory as macros...
Inline quarter; JP assets achieve cash breakeven UltraTech reported revenue growth of 31% YoY for 1QFY19, primarily on volume growth aided by JP assets' ramp-up (70% capacity utilisation). Blended realisations remained flat on a sequential and YoY basis. EBITDA/t declined by 20% primarily on cost escalations which was partially offset by better operating leverage. JP assets cash breakeven was achieved in 1Q and company is targeting PBT breakeven by 1QFY20. Management guidance for double digit growth going forward stems from demand improvement on infrastructure and affordable/rural housing segments. The company commissioned 1.75 grinding capacity...
Bajaj Finance (BAF) reported 1QFY19 net profit of INR 8.35bn as per IndAS, up 81% YoY. As per IGAAP, net profit was up 69% YoY at INR 10.18bn. AUM growth remained strong at 35% YoY (39% YoY excluding short term IPO financing), driven by consumer, rural and commercial segments. Customer acquisition remained healthy, with the company acquiring 2.1 million new customers (up 33% YoY) in 1QFY19. Margins increased 70bps YoY to 11.6% on a 40bps YoY decline in funding costs. Asset quality trends improved, with the gross NPL ratio improving to 1.39% YoY with coverage ratio at 69%.Credit costs were down at 153bps YoY. BAF remains well-positioned to deliver sustainable profitable growth going...
Financing and general insurance businesses continue to outperform Bajaj Finance (BAF), the financing business and BAGIC, the general insurance arm, both reported strong 1QFY19 numbers while BALIC, the life insurance business could continue to witness muted APE growth owing to the high-base set last year. BAF reported 1QFY19 net profit of INR 8.35bn as per IndAS, up 81% YoY. As per IGAAP, net profit was up 69% YoY at INR 10.18bn. This strong performance was supported by robust customer acquisition and stellar asset quality. BAGIC continued to report best-in-class CORs of 90.2% in 1QFY19 vs. 95.8% last year on the back of retail-focussed product mix and strong distribution. BALIC...
FY18 Annual Report Analysis: Capital allocation hurts RoIC Cummins India (KKC)'s balance sheet has seen a stark change in the past 5 years, with increased allocation to investment properties and current investments, leading to a 150% rise in interest and rental income vs. a 12% decline in EBITDA over the same period. Other key takeaways from the annual report are: a) management increased focus on the industrial division through bundled offerings and new product introductions to capture a larger share of railways, mining, defence and construction (new emission norms from CY20) as power gen/export sales growth remain muted, b) it maintained tight control on expenses and...
Bandhan's 1QFY19 results indicate strong momentum across all fronts (loan growth 52% YoY, deposits 37% YoY, earnings 47.5% YoY) as well as stability across key qualitative parameters (GNPLs flat QoQ, cost-income ratio 34.2%, down 140bps YoY). Microbanking loan book grew 45% YoY, while other retail loans were up 123% YoY on a low base. CASA deposits were up 84% YoY, with CASA ratio of 35.5%. NIMs benefitted from the recent capital raise to expand to 10.3% and Tier1 ratio now stands at 31.4%. Nonmicrobanking assets are now 14.2% of the loan mix. The bank added 0.39mn microbanking customers (+4.7% growth) and 0.25mn retail banking customers (11% growth). We upgrade our earnings estimates by 2%/5% for FY19/20 resulting into a revised TP of INR650...
