Another best-in-class delivery but largely in the price now HUL's 2QFY19 key operating metrics comprising volume growth of 10%, revenue growth of 12% and 160bps expansion in operating margin were undoubtedly strong and commendable but were all bang on expected lines and no more a massive positive surprise as such. We expect the stock to be more range-bound hereonwards. Focus would be more on what the volume delivery for 3QFY19 and thereafter would be, since double-digit volume growth' would be in the base from 3Q onwards. Management remains quite confident and upbeat; key commentaries: 1) Demand outlook is stable. 2) Rural growing ahead of urban....
Bandhan Bank reported a strong quarter in 2QFY19, with net profit at INR 4.88bn (+47% YoY, 10% above JMFe). Gross AUM growth was robust (+51% YoY), while disbursement growth was at 71% YoY. Gross NPLs were largely stable at 1.3%, while total provisions were slightly elevated at 1.1%, despite marginal reduction in PCR (330bps decline QoQ to 47%). Bandhan disclosed that it has an exposure of INR 3.9bn to the IL&FS; group (1.2% of AUM), which is currently classified as standard. Bank believes that the withdrawal of general permission to open branches by the RBI, does not materially impact balance sheet growth in the near term : a) Bandhan averages c. INR 350mn deposit per branch (vs 1.7bn , 1.4bn for...
Strong 2Q core performance and OTT metrics; 2H growth to be softer Zee reported yet another strong set of results; 2QFY19 consolidated revenues (+25% yoy) were c.6% [INR 1.1bn] ahead of our forecast, led by c.10% [+540mn] beat on subscription (+21.3%), 2.4% [280mn] beat on ad (+22.7%) and c.19% [250mn] beat on Other revenues. 2Q EBITDA (+37.6%) was 13.5% [800mn] higher; EBITDA margin of 34.2% [235bps ahead] was the best-ever for Zee despite OTT losses. Normalised 2Q PAT was 6% higher; effective tax rate was 38.8% vs. our 35.0% forecast. Zee reported strong user and engagement metrics for Zee5; Sep-18 MAUs [monthly active users] of 41.3mn were up 190% from Apr18, while average time spent per user was 31 minutes per day. Zee5 climbed to the #2...
ABC amalgamation to be EPS accretive from Year 1 We resume coverage on Timken India (Timken) and publish our revised numbers to factor in the consolidation of ABC Bearings (ABC). In our view, the amalgamation of ABC Bearings would be EPS accretive from FY19 as net profit of the consolidated entity should increase 17% (factoring in 11-month consolidation in FY19) vs. 11% stake dilution through a share swap. Over FY18-21, we forecast sales and earnings CAGR of 16% and 25%, respectively, for the consolidated entity, led by a) strong growth in the domestic CV market (entry in wheel bearings segment), b) bounce-back in exports on easing of capacity constraints and...
The Twins' are here: Ride it like you stole it (at a bargain) Today, Royal Enfield (RE) launched its much awaited 650cc Twins - Interceptor and Continental GT in the US market, starting at a competitive price of USD 5,799 and USD 5,999, respectively. The Twins' form the core of the RE's expansion plans in the overseas market, as much as they are relevant for offering a suitable upgrade to a large base of existing RE customers in India. At the launch event in California, RE reiterated its focus to establish itself in the middle-weight segment (250-750cc) and expand the market for middleweight motorcycles globally. The Twins' offer power-packed performance and specifications similar to some of the popular international models (in the mid-size segment) but at a much...
The GST Council is scheduled to meet coming Friday, Sep 28 to, inter alia, decide on a way to raise funds to help re-build Kerala after the state faced massive losses from severe flooding last month (Aug'18). The natural consequence of this is, expectedly, renewed pressure on ITC's share price. Interestingly, the GST Council may not need any parliamentary approval for this additional levy since Article 279A of the Constitution has already been amended to allow the GST Council to recommend any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster'. We expect the stock to recover once the event is out of the way this week, as we do not expect the fresh levy to be all that...
RBI's stance to cut short tenure of Mr. Rana Kapoor as MD&CEO; to Jan 31 , 2019 as against the board's request to grant a 3-year term has made us reevaluate our investment thesis on Yes Bank. We believe Mr. Kapoor's presence at the helm of Yes Bank is an all-encompassing...
SEBI notifies significant changes to TER structure In its board meeting held today, SEBI has notified reductions in the maximum TER that can be charged to mutual fund schemes. The regulator has also notified that all commissions and expenses are to be expensed from the MF schemes alone and not through any other route (AMC/Trustee P&Ls; a common industry practice). Moreover, AMCs will no longer be allowed to pay out upfront commissions (except for certain relaxations in the case of SIPs). While the move is a positive step towards increasing reach and reducing costs for retail MF investors and also improves transparency, it has a negative impact on profitability for AMCs....
We expect the Titan stock to remain volatile and mostly weak in the backdrop of the recent announcement by the government that it is looking at ways to curb import of non-essential' items. We do not expect RBI or the government to create disruptions of the kinds they did in 2013 (see Exhibits 1-3 for chronology of events, their impact on Titan's stock price), which in hindsight did no material damage to Titan's business-model but did severely impact stock performance in the interim. Ceteris parabus, any sharp fall in stock price on account of nervousness around government or RBI's current account deficit control measures should be used as a buying opportunity - Titan's intrinsic value would be impacted if and only if RBI's...
We do not want to let go the opportunity of having a very large business in the future was the key message delivered by ABFRL's management in recent investor meetings. A lot of the strategic initiatives in recent times were towards this end, e.g. the reduction in product prices at Pantaloons' stores in recent years was not to do with competition in the space but aimed more at bringing affordability to a level that would allow the format to travel to 250+ towns vs just the top-20 cities that it would otherwise have been confined to. We find the narrative extremely compelling for the longer term, and management's steadfast focus on cashgeneration and return-ratio (targeting 18-20% ROCE for Pantaloons in the next 3 years)...
