Mindtree (MTCL) yet again surprised positively with a 6.8% QoQ USD revenue growth driven by a 16.4% QoQ growth in the Top client; part of the beat on expectations was also due to changes in revenue recognition policies. Despite this, EBITDA was weak (-2% QoQ) and below estimates likely due to unexpectedly higher CSR expenses. Further, lengthening of the working-capital cycle affected the operating cash-flows in the quarter. Management is confident of both revenue growth and margins improving in FY19 though sequential growth in 2QFY19 is likely to be only modest. As such, revisions in our FY19/FY20 EPS are relatively minor (5%/3%) despite the sharp revenue beat in 1QFY19. We recognise MTCL's attractive...
Another good set of results; strong ad-growth outlook Zee reported yet another set of good results; 1Q consolidated revenues [+15.0% yoy] were marginally below our forecast, but EBITDA [+16.8%] came in c.2% higher, thanks to lower content and employee expenses. Normalised 1Q PAT was 10% lower, driven by higher depreciation, lower interest & other income and higher tax rate (37% vs. JMe 35.0%). Domestic ad revenue growth was strong at 22.3% yoy, and management shared a bullish outlook based on higher TV ad-spend growth than initial forecasts (made by Agencies) and continuing gains in viewership share for Zee led by Regional GECs. We believe a 20% ad...
After 3 consecutive years of contraction, Thermax (TMX) reported a sharp jump in order inflows (up 45% YoY) in FY18, but management guides for a cautiously optimistic outlook amid rising interest rates and the run up to the 2019 elections. Key takeaways from TMX's FY18 annual report are: a) a cautious outlook on order inflows, to be driven largely by 2 sectors: consumer-led industries (food, beverage, textiles, tyres and automobiles) and emission norm-related capex (power and oil & gas); b) expanding its manufacturing footprint through new facilities in Indonesia, Dahej and the acquisition of assets in Poland to counter cyclicality in sales; c) margin decline being restricted to 70bps in FY18 as projects' improved...
Federal Bank reported a strong quarter in 1QFY19, with PAT at INR 2.63bn (+8% above JMFe). The beat in net profit was primarily driven by strong NII growth (+22% YoY), as margins held up for FB. Credit cost was contained at 80bps for FB in 1QFY19, as slippages almost halved sequentially to 2.3% (annualised). Net stress on FB's loan book (net NPA + other stress) is now at 2% of loans (from 2.3% as of 4QFY18). Management remains confident of containing slippages at INR 11-12bn in FY19E, with credit costs in the range of 65-70bps. Furthermore, FB is positive on its margin outlook, and expects this, along with the containment of credit cost will help it deliver 1% exit RoA by 4QFY19. We remain cautious...
No massive positive surprise this time round HUL delivered another strong quarter but that is somewhat par for the course now, considering its recent results delivery plus the stock's heady valuation (59x NTM EPS). There was no massive surprise element this time round, though, to drive another leg of decisive upmove from an already elevated level, in our view. The stock had rallied 8-10% each after 2Q-3QFY18 results and up a massive 16% between 4QFY18 report and now - we expect reaction to be more lukewarm this time round, given that there was nothing in 1QFY19 report to prompt another round of earnings-upgrade. Key numbers: 12% volume growth...
DCB Bank reported PAT of INR 695mn in 1QFY19, a tad below our estimates (4% below JMFe). The miss in PAT was largely driven by continued increase in opex (+17.5% YoY) as the moderation in topline growth (+17% YoY) was in-line with our estimates. DCBB witnessed compression in margin (26 bps QoQ) to 3.9% in 1QFY19, while balance sheet growth was strong (both loans and deposits were up 31% YoY). While competitive forces have resulted in headwinds for DCBB's yields, we remain constructive on DCBB's potential to improve its RoA, primarily driven by an improvement in its cost profile. We believe current levels provide an attractive entry point for the stock. We factor in the compression in NIM and cut our...
Infosys (INFO) reported a modest 2.3% QoQ constant currency revenue growth in 1QFY19; the operational construct 2.6% QoQ volume growth in services (highest in the last 10 quarters) and USD 1.1bn large deal wins (highest in the last 7 quarters) lends comfort on the outlook. Management commentary was optimistic on pick-up of project activity in troubled verticals such as Retail and US Financial Services, and a healthy deal pipeline. The retention of EBIT margin guidance despite the INR depreciation could disappoint some, but we see that as prudent given the concurrent cross-currency headwind. INFO emphasised it is not linking its planned investments in capability build with the currency movement indicating...
Good quarter; volume trajectory now looking up Bajaj Corp reported a better than expected 1QFY19 earnings buoyed by a much stronger than expected acceleration in volume growth of its flagship Bajaj Almond Drops (BAD) to 11.2% - this is the highest seen in the last 13 quarters, albeit on an easy base (volumes fell 6.6% in 1Q last year due to GST-transition related downstocking by the trade). Domestic volume growth was even stronger at 13.9% and more importantly, retail-level offtakes, which are free of base and destocking-related issues, also grew 10.2% during the quarter. Management is, after quite a long time, sounding reasonably bullish about the business'...
TCS' 1QFY19 result was marked by a strong margin management; reported USD revenue growth was broadly in-line. Management exuded confidence on recovery in the troubled US BFS vertical and indicated improved visibility on the medium-term outlook with a USD 4.9bn of pending order book in 1QFY19. This sets TCS well for a double-digit growth in FY19 though the high share of mega deals limits extrapolation over the longer term. We raise our FY19/FY20 EPS forecasts by 4% each on 1QFY19 margin beat + currency reset. The stock trades at 21X FY20F EPS, at 33% premium to INFO and 19% premium to its own 5-year median. Thus, while we recognize the recovery in growth trajectory and TCS' aptitude in...
IndusInd reported a stable 1QFY19 with 24% YoY growth in earnings driven by 29% growth in loans and 20% growth in core fees. Core-PPOP grew 27% YoY during the quarter even as NII growth was a tad soft at 20% YoY. NIMs tapered by 5bps QoQ to 3.92% led by higher cost of funds and, in our view, also a reflection of bank's own efforts to improve the risk profile of the corporate portfolio before onboarding of BHAFIN's loan book. As BHAFIN acquisition closes towards 2HFY19, we expect IIB's margin trajectory to remain strong and loan portfolio to be well balanced and diversified. Opex growth was contained at 12% YoY due to slightly slower network expansion during the quarter (10 branches added). We...
