Reliance Securities Broker Research reports

Growth Moderation & Asset Quality Risks to Limit Upside in Valuations IndusInd Bank (IIB) has reported a better-than-expected PAT growth in 1QFY20 driven by higher treasury gains and lower-than-expected provisioning. Ex-BHAFIN loan book grew by 26% YoY, with the lowest sequential credit growth of 1.9% in the last 6 years. Consequently, while overall margins improved to 4.1% owing to the BHAFIN merger, IIB's margins at 3.7% (ex-BHAFIN) were lower than average margins of 3.9% over the last three fiscals. Asset quality was well contained, with GNPA at 2.15%, marginally higher on QoQ comparison. Deposits growth at 26% YoY was primarily driven by retail deposits, with a sequentially stable CASA. Core fee income growth...

initiatives. The capex for FY19 was Rs 10bn. Downgrade to Hold: Considering the slower revenue growth and impact of rising cost structure our earnings estimates see material downward revision of 10% each for FY20 and FY21 respectively. Considering the pressure on margins, we cut our target multiple to 42x...

Good Quarter; FY20 Guidance Implies Healthy Revenue, but at a Cost HCL Technologies (HCLT) reported revenue growth of 3.3% in CC terms in 4QFY19, while USD revenue rose 3.5% QoQ to US$2.28bn led by a robust 7.3% QoQ CC growth in IMS revenue. Impressive growth in IMS is the biggest positive, with YoY growth hitting double-digit for the second successive quarter (21.9%). On the flip side, ER&D; services and Business Services declined by 3% QoQ and 5.8% QoQ, respectively. Management had alluded to growth momentum continuing in 2HFY19E two quarters ago, and the company has delivered in 3QFY19 and 4QFY19, aided by robust traction in Infrastructure-as-a-Service (IaaS) with enterprises investing substantially in...

KEC International (KEC) has reported a muted performance in 4QFY19 with its revenue growing by 5% YoY to Rs38.4bn (vs. our estimate of Rs41bn) owing to 1% YoY decline in core T&D; segment despite 23% YoY growth in non-T&D; segment. Delay in approvals in SAE and execution challenges in a domestic private project also impacted its top-line. EBITDA margin rose by 30bps YoY to 10.4% mainly led by lower other expenses cost at 6.5% of sales (vs. 7.7% in 4QFY18). Its net profit declined by 1% YoY to Rs1.94bn led by higher interest cost (+29% YoY). While its order book stood at Rs203bn (1.8x of FY18 revenue) as of 4QFY19-end, it is favourably placed (L1) in orders worth ~Rs30bn. NWC days increased to 103 days in FY19 from 93 days in 4QFY18, which the Company...

Cost and Capital Efficiencies to Aid RoE; Maintain BUY DCB Bank continued to deliver a consistent performance in 4QFY19 with 21% YoY growth in noncorporate advances, sustained decline in C/I ratio and further improvement capital consumption. CI ratio improved by 300bps YoY to 57% in FY19 (55% in 4QFY19), contributing ~30bps to RoA in FY19. Mortgages and AIB continue to be the key drivers for loan growth in 4Q and FY19. Focus on small-ticket granular loans, efforts towards cost rationalisation, and improved capital consumption should aid expansion in RoE going forward. Margin decline in FY19; to Improve Hereon Margins declined by 33bps YoY to 3.8% in FY19 led by higher cost of funds (+25bps YoY) and...

Mindtree posted healthy revenue in 4QFY19, which stood at US$262mn (+4.2% QoQ in USD terms, +3.9% QoQ in CC terms). From a vertical perspective, BFSI grew at a robust 4.8% QoQ, with YoY growth crossing double digits (11.5%) for the first time since 3QFY18; among other...

Revenue Below-par, Soft 1Q Guidance; Buy-back to Support Stock Wipro has delivered a below par revenue performance in 4QFY19. While its CC revenue rose 1% QoQ (vs. our estimate 1.9% QoQ), USD revenue rose 1.4% QoQ to US$2.076bn vs. our estimate US$2.087bn. From vertical perspective, BFSI grew by 1.3% QoQ, HLS grew by 2.1% QoQ and CBS rose by 5.3% QoQ, while COMM (-1.2% QoQ), ENU and MFG (-1.2% each) performed poorly (all in CC terms). IT EBIT margin declined by 59bps QoQ despite substantial increase in utilisation,...

Robust TCV Growth Signals Strong Biz Momentum; Margin Disappoints Tata Consultancy Services (TCS) has reported a decent CC revenue growth of 1.8% QoQ in 3QFY19, while USD revenue came in softer-than-expected at US$5,250mn (+0.7% QoQ, below our estimate by 0.8%) owing to a higher-than-expected adverse cross-currency impact. Its TCV order bookings grew by a robust >20% QoQ to US$5.9bn (vs. US$4.9bn in 2QFY19), with bookto-bill rising strongly to 1.12x (vs. 0.94x in 2QFY19), which signals a strong traction in underlying business growth. On the flip side, its EBIT margin declined by 90bps QoQ to 25.6% (missing our estimate by 73bps) owing to higher wage cost and SG&A; expenses. Net profit rose by 2.6%...

ff It made additional contingency provisioning to the tune of Rs2.6bn towards exposure to IL&FS; Holdco (exposure at Rs20bn), taking the total provisioning on this account to 30%. Further, haircuts could be ~40-50% on this exposure and the Bank will make additional...