Out of gross leasing of 15msf in CY18, net leasing is estimated at 8-9msf, which implies that many existing tenants are moving to new and better properties/locations. Around 32-33msf of new supply is likely to come on board in the city by 2021, and the current low vacancy rate of 5-6% (7-8% in East Bangalore where tech gardens are located has) indicates that this supply is likely to be absorbed well. Rental growth was estimated at 5-6% YoY for CY18, with large part of demand coming from MNC IT companies. management cited that two LOIs have been signed recently at Brigade Tech Gardens (BTG) for 2 lakh sq.ft. of space, with a hard option of 1.5+ lakh sq.ft. The pipeline in BTG too appears strong at more than 1m sq.ft. which will primarily cater to A&B; grade tenants. WTC Chennai also has a strong pipeline. As discussed in the last concall, management is confident to lease 5-7 lakh sq.

However, management is confident on containing the higher cost if growth exceeds 20%. IIM Jobs and LinkedIn are the major competitors in the space. While growth has been on an uptrend over the past few quarters led by a low base, the recent liquidity crunch and the caution ahead of the general elections will have a near-term impact on the real estate sector. Revenue contribution from builders stands at 45%, while the broker market is showing good traction due to high growth trajectory in the resale and rental market. Apart from that, there has been broad-based traction in this space. While the top 9 cities contribute majority of revenue, the sales teams are now focusing more on tier II cities. Overall growth should exceed 25% YoY. Facebook and Google are the major competitors (apart from MagicBricks). Currently, Facebook and Google are doing more business than 99acres and MagicBricks combined.

VIL requires INR600b over the next eight quarters to fund (a) estimated capex of INR326b, (b) spectrum payment liabilities of INR213b and (c) external debt servicing and interest cost. The rights issue of INR250b, along with Ideas INR50b stake sale in Indus, current cash position, and cumulative EBITDA of INR220b until FY21, will be the sources of funds. Despite the huge fund raise and the estimated EBITDA increase to INR126b by FY21, net debt is likely to remain at INR1,060b, with the net debt-to-EBITDA ratio at a steep 8.4x. Unlike Bhartis fund raise, which will help it to deleverage the balance sheet significantly, VILs estimated annual capex requirement and interest burden of over INR200b in FY21 may not be fulfilled even with an optimistic EBITDA of INR126b. Thus, without an ARPU increase, it may need another round of fund-raise to survive. Given the cash flow and capex requirements for telcos and the current price plans offered, there exists a huge opportunity to increase ARPU.

Corporate loan growth will be a function of Risk Adjusted Return and if the return criteria are met, then AXSB does not plan to impose any upper limit on growth. Incrementally, the bank is looking to grow both its retail and wholesale side of the balance sheet, and has guided for calibrated increase in retail asset mix. AXSB plans to make Product, Underwriting and Operations a separate function in both Wholesale and Retail business from 1 Apr19. Axis Bank wishes to enter into manufacturing of the life insurance business; however, it is awaiting clarity from the RBI on the structuring of a life insurance company. However, AXSB will exercise caution in growing the international/guarantee business, which will cap the recovery in fee intensity to historical levels. The mix of fees has changed in favor of retail, where in the card business contributes 24% to the total fees v/s 9% in FY14, while corporate fees have declined from 32% to 17%.

It has earmarked an amount of INR107b for this acquisition, valuing MTCL at INR162b (+5% v/s current market cap of INR155b) or INR980/share. However, the promoters of MTCL (13.3% stake) may look to resist the hostile takeover by engaging with other shareholders, and hence, it could be a long-drawn process, in our view. Moreover, this is better utilization of its strong cash balance, especially in light of the rejection of the INR90b share buyback by the SEBI. Even though LT is still engaged with the SEBI for its planned share buyback, the MTCL acquisition lowers the chances of a buyback now, in our view. MTCLs acquisition raises a few questions on the capital allocation policy, especially given that LT has been on track to meet its RoE guidance of 18% by FY21 and divesting its non-core assets.

19 March 2019 L&T; has entered into a share purchase agreement with V.G. Siddhartha, Coffee Day Enterprise and related parties for the acquisition of 3.3m equity shares aggregating to 20.32% of the paid-up equity capital at a price of INR980 per share. In addition to this, L&T; has also placed a purchase order for 2.4m shares (15%) at a maximum price of INR980/share in the open market. Lastly, it will make an open offer for another 31% at INR980/share. If all transactions go through, L&T; will hold a 66% stake in MTCL with a total outflow of INR107.3b (Link). MTCL has a lower net margin (10-11%) than LTI (15-16%). L&T; expects to drive some opportunities to improve the net margin at MTCL, as it saw in the past with LTI. MTCL promoters (current) expressed their disapproval of L&Ts; intent to buy a controlling stake, and cited that the deal is value destructive for all stakeholders.

For running the DRI plant at full capacity, production at 5-6 units of CGP will have to be ramped up. In contrast, if coal were made available from its erstwhile captive mine (de- allocated in 2014), the receiving time (post production) would be ~12 hours and cost of gas production would have been USD3-4/mmbtu. DRI plant has restarted in Mar19 and is operating at a run-rate of ~1mtpa (3,000tpd at 50% utilization). JSP plans to increase the DRI utilization run-rate to ~80-85% by Sep19. JSP has started using surplus coke oven gases (two coke oven batteries commissioned last year) in DRI production. The third coke oven battery is likely to be commissioned in FY20. Usage of coke oven gases in DRI production is likely to increase. Coke oven acts as a cost-effective substitute to syngas (gas obtained from CGP).

19 March 2019 Alembic Pharmaceuticals ALPMs capex investment has seen a significant increase from INR8.8b gross block in FY15 to INR11b over FY15-19E, which the company used to aggressively tap business opportunities in its key focus market, the US. But, due to its (a) track record of healthy launches, (b) ability to grab product-specific opportunities supported by a nimble supply chain, and (c) strong pipeline of products under development filings, ALPM remains confident of scaling the US business over the next 3-4 years. ALPM has about 190 projects under development Oral solids (~40-45%), Derma (~28%), and the remaining Onco-Injectables/general injectables. ALPM would be filing through the CB30 route to transfer a few products from its existing formulation unit at Panelav to a new unit at Jarod. ALPM has about 20 injectables (onco products) under development at its with exhibit batches planned in 2QFY20. It has about 20 Oral solids under development; exhibit batches have already commenced for a few products.

Torrent Power 19 March 2019 TPL has a diversified portfolio spanning (i) regulated electricity distribution, (ii) franchisee-based distribution (DF), (iii) a mix of gas- and coal-based conventional generation and (iv) renewable energy (RE) generation. The companys regulated distribution business is among the most efficient in India, delivering steady growth and generating assured returns. TPLs RE capacity is likely to more than double in two years to 1.4GW; it has an attractive mix of (a) feed-in tariff-based capacities generating a high RoE and (b) under-construction competitively bid projects at >12% equity IRR. It has a mix of gas- and coal-based conventional generation capacity of ~3.1GW. The sourcing of imported LNG has improved the PLF of its gas plant which is under PPA, the DF business performance has improved now with the risk of contract expiry behind, and the likely doubling of RE capacity has bolstered the growth prospects.

A small short-term blip was seen in 4QFY19 demand. But, we had already built in 8% volume growth for 4QFY19 v/s double-digit growth of the preceding five quarters. Measures announced in the budget are expected to benefit demand from 1QFY20 onwards. We see no immediate threat to our FY20 forecast of 7.5% volume growth.

In such a scenario, we believe (a) overall supply of money from debt capital markets to the sector will remain tight, leading to lower growth but rational competition for the sector as a whole; and (b) lower-rated peers would now have lesser access to capital, leading to lower balance transfers for the industry as a whole. As a result, we believe good-quality NBFCs like LICHF will be more competitive, both in fund raising, as well as in business as compared to peers. By 3QFY19, almost all such loans got converted, resulting in hardly any such loans on the balance sheet. Its home loan rates are competitive v/s banks and peers like HDFC. On the other hand, given the liability structure, overall cost of funds for LICHF is expected to increase only ~40bp cumulatively over FY18-20E, despite a sharp increase in incremental cost of funds. Over the past two years, the valuation of LICHF has corrected from 2.5x PB (1-year forward) to 1.

13 March 2019 Capital Goods AC industry to register double-digit growth in FY20 on back of a pick-up in demand in certain pockets of the country. VOLT expects volumes to increase in March- April (post the festive season of Holi). Inventory levels have started to recede and primary channel filling has increased. The new facility will come up in phases with the INR5b capex spread over the next five years; annual capex will be in the range of INR1b. VOLT expects the factory to start in 2H 2020. margins to settle around 11-12% on sustainable basis, despite its inability to take price hikes given the subdued demand, INR depreciation and increase in competition, raw material cost, and import duty on compressors and completely built units (CBUs). EBIT margins for 9MFY19 for the UCP segment stood at 9.1%. 4Q margins for VOLT over the last five years stood at an average of 16.9%.

While growth momentum remains intact for now, one needs to be cautious on the likelihood of the same sustaining through the course of CY19. Barring Automotives and Hi-tech, traction is sanguine in other segments of the business

JLR's wholesale volumes declined 13% YoY (+19% MoM) to 49.7k units (v/s est. of 48.3k units), which includes 2.5k units (-51% YoY) from its China JV. Jaguar volumes declined 8% YoY to 14.9k units (v/s est. of 13.8k units),while Land Rover volumes declined 14.5% YoY to 34.8k units (v/s est. 34.5k units).

We met the management of Sadbhav Engineering and discussed the company's asset monetization plans and improvement in its order book. Also, the company's working capital cycle has normalized.

7 March 2019 Oil & Gas The Delhi bench of the National Green Tribunal (NGT) has ordered the closure/dismantling of all coal gasifiers at Morbi in Gujarat, which is a major sales area for Gujarat Gas (GUJGA). But, according to our estimates, currently there are ~400-450 units running on coal gasifiers. Nonetheless, a blanket ban on all coal gasifiers would result in ~80-100 units going out of business completely as they would not be profitable. Peak potential is estimated at 5-6mmscmd out of which current sales stands at ~2.5mmscmd. In Jul12, the Central Pollution Control Board (CPCB) had announced a similar blanket ban on coal gasifiers, ordering the Gujarat Pollution Control Board (GPCB) to stop and dismantle all units. Back then, ceramic manufacturers had shifted to natural gas by Apr14. We have not changed our estimates as of now, but we note that an effective blanket ban could result in an immediate increase of 2.5mmscmd in volume (~38% of FY19E).

Key point to note Cummins India has not hiked prices for the last four years. While it is the market leader in HHP (~60% share) and MHP segment (~50% share), Cummins is focusing on gaining greater market share in few selective nodes in the 750kv and above segment a key focus area for the company. It has also developed new growth areas in the domestic market; a segment like Railways now contributes INR2.5b to sales. Cummins also expects manufacturing to start contributing to revenue. guidance for FY20, Cummins India expects 10-12% growth in the Domestic market backed by strong growth across infrastructure segments like Data Centers, Hospitality and Metro. Demand for Powergen segment products (major part of its exports business) has witnessed a decline. Even key markets like the Middle East (slowdown in investment) and Africa (payment concerns), which contributes 50% to LHP exports have not picked up.

1 March 2019 Revenue increased 15% YoY to INR19.7b in 4QCY18. EBITDA grew 48% YoY to INR2.2b, while PAT increased 58% YoY to INR1.3b. For CY18, sales/EBIDTA/PAT from the continued business grew 6%/10%/13%. We note that ABB has shown power grid as a discontinued business as it has entered into an agreement with Hitachi at global level to sell this business. During the quarter, discontinued business revenue grew 6% YoY to INR11.6b, while EBIT/PAT declined 2.4%/22% YoY to INR1.1b/INR0.7b. Continued business gross margin expanded by 210bp YoY to 32.6% and operating margin by 250bp YoY to 11.0%, driven by (a) operating leverage on better execution, (b) improved revenue mix and (c) strong control over RM cost.

28 February 2019 BHARTIs board has approved INR320b fund raise via an INR250b rights issue and INR70b (foreign denominated) perpetual bonds with equity credit. every 67 shares held) at a price of INR220/share (which is a steep ~30% discount to CMP). This implies 1,134m rights shares, resulting in post equity dilution of 22%. Since the rights issue is at a discount, the dilution in earnings should result in a correction of the stock price from INR318 now to INR296 over the record date. FY19 net debt stands at INR1,148b, with net debt/EBITDA of ~4.5x. However, post the INR250b fund raise, FY19 net debt/EBITDA would come down sharply to 3.5x with net debt of INR898b. Bharti Africa IPO (~USD1.5b or INR105b) and the 53.5% Bharti Infratel stake sale (INR290b) could help raise overall INR400b. This could further reduce net debt to ~INR475b (FY21E) with net debt/EBITDA of 1.6x.

26 February 2019 4QCY18 revenue growth was muted (~8% YoY) due to a high base, with some support from Lantus (the largest brand) and the smaller brands (ranked 26-50). Gross margin shrank by ~200bp YoY (-140bp QoQ) to 57% due to increased RM cost. EBITDA margin contracted by ~110bp YoY to 18.9% (our est. 19.8%) due to higher employee cost (+60bp YoY to 14.2% of sales), partly offset by a decline in other expenses (-180bp YoY, 23.8%). Consequently, EBITDA improved ~2% 11%/16%/17% YoY to INR27.7b/INR6.2b/INR3.8b. Growth was largely driven by volumes. Growth in Chronic segment (contributed around half of sales) exceeded that in Acute segment. SANLs secondary sales grew 12% YoY ~28% of sales).