During 4QFY18, Bajaj Auto (BJAUT) reported EBITDA margin of 19.4% (+90bps YoY, +10bps QoQ) due to positive operating leverage accruing from 33% volume growth (despite a 160bps YoY drop in gross margin). With the upswing witnessed in oil price and ramp-up in newly added markets, export volume witnessed second successive quarter of 25%+ YoY growth. However, domestic 2W segment growth of 20.3% YoY in 4QFY18 was lower than the industry's 24.8%. The company is confident of regaining market share in FY19 with CT100 and the new Pulsar (with twin discs) acting as the primary growth drivers. BJAUT has taken a price hike of 1-1.5% during Mar'18 and May'18, to offset the impact of commodity...
Improving financials, but outgo to group rises 4x in 10 years We read ABB India's CY17 annual report and the key takeaways are as follows: a) healthy free cash flow generation continued as FCF yield stood at 1.5%, led by improvement in the NWC cycle, b) gross margins scaled up to 10-year highs, but a 4x jump in outgo to parent/group entities from 1.9% to 7.7% of sales has led to moderate growth in EBITDA/PAT (6%/12% in CY17 and -0.6%/-2.3% CAGR over the last 10 years), c) management indicates an improved outlook due to increased opportunities in transportation (railway modernisation and EV charging infra), energy efficiency, service income, renewables (although margins may...
Lower than expected profitability on higher pace of store additions DMart's 4QFY18 profitability is a tad below the kind of trajectory that one has come to expect from the company, and that was in part due to the accelerated store-additions that happened during the quarter - 14 new stores were added vs past 6M's run-rate of 4-5 per quarter. This likely caused a higher than expected rise in 4Q's SG&A; and some adverse impact on mix. Revenue growth is on expected lines 22.5% on reported basis which, as per our workings, translates to an intrinsic growth of 27-28%. Reported LTL growth for FY18 is a modest 14.2% which again, in our view, has the impact of GST-related changes ex which LTL...
Stable Operations; capital raise to improve growth profile GPL reported robust 4Q operational performance with pre-sales at INR10bn which was driven by Sohna Road project and sustenance sales. However reported margin was impacted by INR 1.5bn write-off taken in legacy commercial assets (Kolkata /Chandigarh). With improvement in 4QFY18 operations, GPL has achieved a pre-sales of 6.3msf/INR 50.8bn for FY18. Net debt declined by INR2bn during the quarter as company collections improved to INR 12.8bn (from INR 9bn in 3QFY18). Company is planning to raise INR 10bn through preferential issue resulting in 5.5% dilution. We believe the raised capital will enable company to increase...
Ambuja Cement (Ambuja)'s 1QCY18 EBITDA beat our expectations primarily on lower costs. Revenues rose 12% YoY primarily on realisation improvement of 8%. On a sequential basis, realisations remained flat. Volume growth for the quarter remained muted (+3% YoY) but EBITDA grew 29% YoY and exceeded expectations primarily on lower expenses. EBITDA/t was reported at INR 806/t (vs. INR 647/t in 1QCY17), as realisation growth and lower raw material costs more than offset freight and power/fuel cost escalations. We believe Ambuja's long-term growth is constrained by its clinker capacity and limited expansion plans (phase 1 expansion of 1.7MTPA of clinker at Marwar Mundwa expected by 2HCY20). As a result, we...
A consistent outperformer in a challenging industry UPL reported 4Q18 Revenue/EBITDA/PAT of INR 57bn / INR 12.2bn / INR 7.7bn (+7%/+8%/+6% YoY respectively), in-line with JMFe of INR 59.1bn/11.3bn / 7.87bn. Geographically, (i) India business grew 6% YoY with growth in new fungicides and successful farmer reception of 3 new launches, (ii) LATAM business grew 7% YoY driven by product launches throughout the value chain , (iii) Europe grew at 7%YoY(against the industry negative growth rate of 2%) driven by sugar beet herbicide portfolio (iv) ROW grew at 5% YoY driven by double digit growth in Africa and key South East Asian countries, and (v) North...
Shree Cement (Shree) reported 18% YoY growth in cement revenues primarily on volume growth (+8.7% YoY) and realisation growth (+10.3% YoY). EBITDA grew at 17% and EBITDA/t grew at 18% aided by realisation growth and lower other expenses partially offset by power/fuel and freight cost escalations. Power revenues declined YoY on lower power unit sales. Shree during the quarter commissioned 3.6MTPA and 2MTPA grinding capacities in Sriganganagar, Rajasthan and Aurangabad, Bihar respectively. Additionally company acquired Union Cement Company (4MTPA) in UAE for a consideration of USD304mn (USD75/t). Sustainability of cement demand and realisation trend would be key monitorables...
RNAM reported a strong quarter with PAT for 4QFY18 up 35% YoY at INR 162bn. Quarterly average AUM in equity MF schemes witnessed strong growth (+53% YoY). However, overall quarterly average MF AUM grew 16%, as debt MF schemes faced pressure from rising interest rates. Equity MF schemes now contribute 37% of RNAM's overall MF AUM (on a closing basis), up from 30% as of FY17.RNAM's profitability witnessed a sharp uptick in 4QFY18, with PAT / QAAUM at 26bps for the quarter and 24bps for the full year FY18. However, there were some one-offs for the quarter relating to a) other income (+113% YoY) at INR850mn due to recognition of investment income in MF schemes and accrued interest...
MSIL reported 4QFY18 with EBITDA margin at 14.2% (+30bps YoY, -150bps QoQ). Topline at INR 206bn (+14% YoY, +9% QoQ), in-line JMFe, was driven by 11% YoY volume growth and 3% expansion in realisation on healthy sales mix and lower discounts. Although EBITDA margin remained almost flat YoY, a steep sequential increase in other expenses due to bunching-up of multiple headwinds led to 150bps decline in margin in 4QFY18. With no material price hike taken during CY18, we expect some announcement going forward to offset commodity and exchange rate pressure. SMG production has reached an annualised rate of 230K units (93% utilisation). Rural segment is witnessing healthy 15% volume...
Axis Bank accelerated the recognition of stressed assets in 4QFY18 driven by RBI's revised stressed asset guidelines. Consequently, slippages jumped to ~Rs163bn (slippage ratio of 4.2%, NOT annualized). Net Non-NPL stress pool of the bank thus reduced sharply to 2.7% of loans, as against 4.5% in 3QFY18. We see this as a positive move despite the near-term negative impact on P&L; (loss of INR 21.9bn in 4QFY18). Management has sounded confident that NPL recognition is nearly complete and should reach its logical end by 1HFY19. We were earlier building in provisions of INR 270bn over 4QFY18-FY20E for the bank and we continue to expect similar overall provisioning requirement, with INR 200 bn pending over...
