4QFY18 was a weak operating quarter for Dr Reddy's with Revenues/EBITDA/PAT being 4%/22%/13% below our estimates. Revenues declined 1% YoY to INR 35.3bn mainly driven by the decline in (i) US generics (-6% YoY; -10% QoQ) due to increasing competition in key products, and, (ii) Russia (-25% YoY; -24% QoQ) due to lower off-take by channels. While gross margin improved 230bps YoY to 53.5% (vs. JMFe 54.1%), EBITDA margin declined 83bps YoY to 15.6% (JMFe 19.3%) due to increase in SG&A; expenses (+10% YoY), translating into EBITDA declining 6% YoY to INR 5.5bn (22% miss). PAT declined 3% YoY (10% QoQ) to INR 3.0bn (13% miss), partly benefitting from gains from sale of investments (net finance income of INR 1.0bn in 4QFY18)....
EBIDTA lower than estimate but PAT saved by other income Petronet LNG (PLNG) reported 4Q18 EBITDA of INR INR 8.2bn which was lower than JMFe EBIDTA of INR 8.649 bn by -5%. This was primarily due to lower gross margin of INR 46.6/TBTU against JMFe of INR 47.4/TBTU. Lower gross margin could be possibly due to lower marketing margin and / or internal consumption for shipping. Volume increased (+ 18% YoY) to 213 TBTU but missed JMFe of 217 TBTU. Thus, a combination of lower gross margins and lower volumes led to a 5% miss on EBIDTA. During the conference call, there were queries on the impact of new LNG terminals, domestic gas availability and potential...
L&T; Technology Services (LTTS) surprised again with a 7.5% QoQ USD revenue growth in 4QFY18. It expects revenues to grow at least 16% in FY19 and at 15% CAGR to USD1bn in FY21 (including USD c.120mn from future acquisitions) given strong deal wins/pipeline. It also expects concurrent margin expansion that could be amplified by the INR depreciation. We raise our recurring FY19/FY20 EPS estimates by c.4% each. While the stock's valuation appears optically rich at 19x FY20F EPS, we believe the strong earnings momentum (17% FY18-20 CAGR) and a superior business portfolio should sustain that. Maintain BUY with a...
Cipla disappointed in 4QFY18, in-line with previous years' trend, with Revenues/EBITDA/PAT being 6%/28%/50% below our estimates, mainly due to negative operating leverage on account of lower sales as well as one-time costs related to sales and distribution (INR 450500mn), employee recruitment, disposal of Yemen subsidiary (FX loss of INR 512mn) and provisions (INR 775mn) towards ongoing DPCO overcharging litigation. Net sales remained flat YoY to INR 36,980mn as strong growth in domestic formulations sales (+21% YoY; adj. for GST) and South Africa (+18% in USD terms) was offset by the sharp decline in Global Access markets and Europe. While gross margin was broadly in-line with est. at 64%...
Just Dial (JD) reported 4QFY18 revenues in-line with our estimates. However, EBITDA was below estimates due to a strong sales headcount addition even as a rationalisation of other costs, including advertising and promotion (A&P;), continued. JD has expanded the coldcalling sales team by 23% over the last two quarters to drive penetration in tier 2/3 cities. However, the success has been limited so far; 2.2% YoY net addition in 4Q18 in paid-listings was the lowest ever. We suspect a concurrent attrition in extant client base, especially in the core markets of tier1 cities. We believe it's tightening of the A&P; spend ostensibly to manage margins could hurt in the medium term given the aggressive cash-burn by most of the domain-specific apps. Thus, we maintain our soft revenue growth outlook though the...
In 4QFY18, Bharat Forge (BHFC) reported its fourth successive quarter of 30%+ YoY growth in standalone revenue, driven by robust CV sales in India and the US. Domestic business is likely to witness continued momentum going forward, driven by up-swing in CV cycle, while the domestic industrials segment will remain on a healthy footing. Global industrials is also seeing strong traction from oil & gas segments, mining and construction segment. NA Class 8 truck orders remain robust on improving freight demand and CY18 would see healthy production growth. Rising commodity prices led to a 100bps YoY decline in gross margin this quarter. With increase in sale of machined PC parts, the Company is confident about...
SBIN's 4QFY18 loss of INR 77.2bn marks large cleanup of balance sheet with a) Non-NPL stressed loans declining to just 1.9% of loans, b) 180 bps increase in provision cover on a QoQ basis to 50.4%. Moreover, management has indicated that this new watchlist subsumes all ex-NPL stress on the loan book, and includes all corporate SMA2 loans as well as some SMA1 loans. This should provide comfort on the expected decline in slippages for FY19. We continue to build INR 549bn of credit cost over FY19E, of which 74% is routed through P&L; and the rest through direct haircuts on book value (Exhibit 6). Although management guides for RoA of 0.9%-1% by FY20E, we conservatively build RoA of 0.75% by FY20E. We believe...
Colgate's 4QFY18 volume growth was a tad below our forecast at 4% - on a soft comparator, though (volume had declined 3% in 4Q LY due to the continued impact of demonetisation). Overall revenue, though, was significantly lower (470bps) vs expectations due to a rather sharp deceleration in net realisation growth to merely 1% in 4Q vs 4-6% in past 6M - possibly a function of Colgate's pre-GST price-hike having now anniversarised. On the positive side, toothpaste market share appears to have now stabilised for past 9M at c.53% without any incremental loss therein. On the flip side, management is pointing to a volume growth trajectory of just 4-5% level for the company going forward, which is a tad...
Steady operations; 8msf launch planned in FY19 Sobha 4Q profit was +42% YoY, on higher revenue recognition during the quarter. Revenue recognition increased by 35% YoY while contractual revenues improved by 24%. Sobha reported fresh sales at INR6.6bn, +7/30% QoQ/YoY respectively, as sales witnessed improvement across Sobha reported fresh sales at INR6.6bn, +7/30% QoQ/YoY respectively, as sales witnessed improvement across regions. Bangalore reported improvement in sequential volume primarily contributed by Dream Acres and launches in last 2 quarters. The company launched 2 (0.63msf) projects during the quarter in Bangalore and Chennai. Net...
Inline results; Next phase of growth from East Dalmia Bharat (DBEL) reported revenue growth of 21% YoY in 4QFY18, led by volume growth (14% YoY) on rising demand in key markets - East (+17% YoY), Northeast (+14% YoY), South (+14% YoY) and Maharashtra (+14% YoY). Realisations declined marginally on a sequential basis and was 3% higher YoY. EBITDA/t at INR1,137/t declined 6% YoY as cost escalations more than offset the realisations improvement. Net debt declined by INR4.4bn in 4QFY18 and net debt-to-EBITDA reduced to 1.72x from 2x QoQ with cost of debt declining to 8% (8.9% in 4QFY17). Company has embarked on its next phase of growth through...
