Kotak Securities Broker Research reports

Business in top gear. SBI Cards reported ~105% earnings growth on the back of 22% yoy operating profit growth and ~30% yoy decline in provisions. The business is showing solid growth signals with spend growth at 80% yoy, card growth at ~20% yoy and receivables growth at 40% yoy.

Forgettable quarter. DALBHARA’s 3QFY22 EBITDA, in line with our estimates, declined sharply (-41% yoy, 26% qoq) due to a triple whammy of weak demand, higher costs and weak prices. However, we see the worst operating performance behind and expect stronger demand, higher prices and abating cost pressures in the coming quarters.

We expect earnings to grow by 54.2% in FY23E & grow by 22.2% in FY24E.

2QFY22 EBITDA was 6% ahead of our estimates with lower costs more than offsetting pricing pressure in East with 7% qoq lower realization. Divestment of non-core investments (IEX, Hippo) and focus on organic growth will help address investor concerns on capital allocation. The company would reach 36 mtpa capacity in FY2022E and is embarking on the next phase of expansion.

of our estimates, driven by 6.2% yoy growth in IMFL volume which was at 5.1 mn cases. Volume in Prestige and above category grew at 22.1% yoy while Regular category grew at a slower pace of 1.3% yoy. Volume growth in...

Revenue growth in US$ term remains lower than our expectation. Persistent's Q4FY19 consolidated revenue decreased by 2% qoq in US$ terms to US$ 118 mn (vs expectation of US$ 121 mn) led by 15% qoq decrease in IP revenue (partly due to seasonality factor and partly due to lower revenue from top clients). Going forward, the company indicated that...

GHCL's Q4FY19 numbers were above our estimates on all parameters. Soda Ash segment continued with its strong performance, supported by tight demand supply in the domestic market resulting in outperformance. Strong operating performance, led to 44.3% YoY and 15.7% QoQ jump in PAT to...

Cyient Q4FY19 revenue de-grew by 0.3% QoQ in CC terms to USD 165.2 mn below our estimate. However, in FY19 revenue grew 10.1% YoY to US$660 mn in CC terms. In Q4FY19, Services revenue stood at $ 146.9 mn; growth of 1.7% QoQ (1.4% in CC), 2.9% YoY. On a consolidated basis, operating...

Welspun Corp (WCL) is a leading global manufacturer of large diameter pipes with an installed capacity of 2.4 Mn tonnes. With the execution and addition of the latest order of 180KT, the company order book at the start of FY20 now stands at 1.66 MT (in terms of revenue Rs141 bn), to be executed over next 15-18 months. At the end of FY19, WCL has entered into an agreement to sell PCMD division and 43MW power plant, at a consideration of Rs9.4 bn, this will make balance sheet further leaner, post the completion of the transaction i.e. by the end of Dec'19. With the leaner balance sheet...

Himatsingka Seide Ltd (HSL) is a vertically integrated home textile player with manufacturing facilities in India and has retail and distribution businesses in North America, Europe and Asia. The company has adopted integrated business model with presence from farm to store. This results into cost efficiency and delivering quality products to its customers. HSL is focused on building a strong brand portfolio through owned and licensed brands contributing 75-80% of its revenue. It has license to manufacture, source and distribute home textiles brands such as Calvin Klein Home,...

As per the press release, MOIL has achieved highest ever turnover in FY19 of Rs14.4 bn (unaudited and provisional), up 9% YoY, which is higher than our estimates of Rs12.5 bn. The outperformance was driven by record sales of non-fines (high grade ore) to ~1.1 MT, up 13% YoY. Average realisation during the quarter was also higher during the year (in 9MFY19, non-fines realisation was up 7.8% YoY). During the year, the company has opened a new mine Parsoda, in Nagpur district, with an annual production of 40,000...

As per the press release, MOIL has achieved highest ever turnover in FY19 of Rs14.4 bn (unaudited and provisional), up 9% YoY, which is higher than our estimates of Rs12.5 bn. The outperformance was driven by record sales of non-fines (high grade ore) to ~1.1 MT, up 13% YoY. Average realisation during the quarter was also higher during the year (in 9MFY19, non-fines realisation was up 7.8% YoY). During the year, the company has opened a new mine Parsoda, in Nagpur district, with an annual production of 40,000...

Welspun Corp (WCL) is a leading global manufacturer of large diameter pipes with an installed capacity of 2.4 Mn tonnes. Given its presence in USA, Saudi Arabia and India, we believe that, the company is better placed compared to its peers in terms of tapping the global market opportunity of over US$400 bn. At the end of Feb'19, WCL's order book stood at Rs145 bn, to be executed over the next 15-18 months, thereby providing strong revenue visibility. We expect Welspun Corp to register growth of ~11% CAGR in revenue during the FY18FY21E period, while PAT is expected to grow at 31% CAGR during the same period, on back of improvement in operating performance and decline in interest...

Due to weak demand and high inventory, the two wheeler manufacturers are expected to cut production in the near term and that will likely keep FIEM's growth subdued in the near term. However, we expect demand would likely pickup in 2HFY20 supported by weak base and pre-buying ahead of BSVI implementation. In our view, continued LED transition will drive revenue growth for FIEM in FY20. Our recent interaction with auto ancillary players supplying automotive lighting to the auto industry pointed towards higher penetration of LED content in automotive lighting going forward. With stability in input cost...

The management expects revenue growth of 15% and modestly higher EBITDA margins in FY20 aided by increasing share of value-added products. At CMP, TTL is trading at P/E of 12.4x and 9.4x FY19E and FY20E earnings respectively, which is attractive as it is at a discount to midcap index valuation. In recent months, the TTL stock has been derated in line with 1) general sell-off in the midcaps and smallcaps universe 2) Weak Q2FY19 results and 3) concerns on promoter stake sales. At the current price, valuations are attractive. Hence, we continue to maintain our positive...

EIIL balance sheet likely to get de-leveraged post monetization of Chennai land for Rs 1 Bn. Management sounded confident about 1/ monetizing other non-strategic assets in the near term as and 2/ strengthening balance sheet...

We attended Zensar's analyst meet where it highlighted the progress on its strategy and initiatives taken for future growth. Zensar emphasized its focus on Digital through its RoD Next platform. It outlined the digital spend across the verticals and why Zensar is well positioned to capture the opportunity. The company took a bold and aggressive decision about 2.5 years ago to become a 100% digital company before taking the platform to its customers. Company's digital enterprise is built on 34 digital platform having 650+ releases with over 1.5mn downloads. The company is building...

Strong volume trend in both the key segments of Multimodal Transport Operations (MTO) and Container Freight station (CFS) with stable realisations and loss in the project engineering has been the highlights of financial performance for ALL in H1FY19. Healthy performance in H1FY19 has given us confidence of a decent performance in FY19. Also, we believe that most of negatives have got factored in the current price. Maintain estimates with an unchanged target prices of Rs 145 at 15x FY20 earnings....

Arvind has demerged its branded apparel & retail business and engineering business into separate companies Arvind Fashions Ltd (AFL) and Anup Engineering Ltd (AEL), respectively. This would create three separately listed companies focusing on different businesses which will increase focus on individual businesses. The company management is positive on the long term fundamental of all the entities. As per company PPT, AFL and AEL are expected to be listed on exchanges tentatively in early February 2019. Post demerger, Arvind will be present in two main businesses; textiles ~87%...

NEGATIVE SURPRISE: Change in company's business strategy Shankara building products in its conference call has updated on the business strategy of achieving higher revenue growth in retail segment but at much lower margins which came as a negative surprise. It is transitioning into a low price retailer with focus on plumbing and sanitaryware as key growth drivers in the retail segment. Company expects healthy growth in the retail segment and...