Titan (TTAN) has reported a better-than-expected performance in 3QFY20. Its revenue was broadly in-line with the management revised guidance band at 11-13% YoY growth in 2HFY20 and it retained the same guidance for 4QFY20E as well. Revenue grew by 9.4% YoY (9MFY20 at +8% YoY) on the back of 10.6% YoY growth in jewellery segment and 2.4% YoY decline in watches segment. While wedding and festive season aided 15% YoY growth in retail jewellery sales, poor consumer sentiment affected Watches and Eyewear division. We are enthused by TTAN's market share gain during though times, not ruling out for its ability to grow >20% with improvement in consumer sentiment, going ahead. Consistent RoE of ~25% in the coming years and strong cash...
Steady Operating Performance on Healthy Chemical Biz SRF has delivered a steady operating performance in 3QFY20 largely on the back of healthy chemicals business. EBITDA grew by 25% YoY to Rs3.90bn (vs. our estimate of Rs3.85bn), while EBITDA margin rose by 384bps YoY to 21.1% (vs. our estimate of 19.2%). However, its revenue grew by only 2% YoY to Rs18.5bn vs. our estimate of Rs20.1bn. PBT grew by 40% YoY to Rs2.6bn (vs. our estimate ofRs2.4bn). Net profit increased by 125% YoY to Rs3.5bn primarily on account of lower...
We believe CRIN is one of the best bets in fertilisers space with robust FCF generation and best in-class return profile. We expect it to benefit from a better Rabi season and softening of RM prices in the near-term, while higher level of Backward integration would aid in sustainable margin expansion. The stock has been trading at ~16x of 1-Year forward EPS over the last 3 years and we value it at 15x FY22E EPS. Maintaining our Target Price of Rs606, we revise our...
State Bank of India (SBI) has delivered largely an in-line performance in 3QFY20. Strong recoveries aided NII growth of 22% YoY and improvement in asset quality (GNPA ratio declined by 25bps QoQ). Lower growth in opex at 3% YoY and 1.3% QoQ aided 44% YoY growth in PPoP. The Bank moved to the lower tax regime during the quarter, which resulted in higher-than-expected tax rate due to the impact of DTA write-down and MAT reversal. Risk optimisation continued with decline in RWA/total assets by 400bps QoQ to 51% against 60% two years ago. Loan book grew by a muted 7% YoY, with 5% YoY growth in domestic advances. However, decline in corporate/ SME advances by 0.5% YoY and 5% YoY respectively impacted overall growth trends even as the...
Hindustan Unilever (HUVR) has reported broadly an in-line performance in 3QFY20 with betterthan-expected operating performance. However, its underlying volume growth at 5% YoY continued to remain sluggish (broadly in-line with our 4% estimate), as demand environment continued to remain weak, marked with sharp slowdown in rural and discretionary spend. Pricing declined by 1% YoY led by: (1) impact of price cuts undertaken in personal wash category; (2) negative leverage due to slowdown in Skin-care portfolio; and (3) pricing actions relating to general competition. Healthy improvement in margin was the key quarterly takeaway, led by continued cost saving measures. Historically, HUVR has demonstrated its ability to tide over consumption slowdown with focus on driving premiumisation, innovation and efficient supply...
Havells India (HAVL) has reported a dismal performance in 3QFY20, with revenue declining by 10% YoY to Rs22.7bn owing to lower revenue across segments led by slowdown especially in B2B segment. Switchgear revenue fell by 6% YoY due to slowdown in industrials switchgear owing to sluggish infra and govt-driven projects. Revenue from Cable & Wire segment declined by 13% YoY due to lower realisation in power cables and low single-digit growth in domestic wires business. Lloyd revenue fell by 16% YoY due to disruption in LED TV business. ECD segment also disappointed with flat sales, which has been supporting the growth since several quarters. EBITDA margin remained flat on YoY basis at 11.8% due to lower share of...
Improving Prospects; Challenges on NIM and PCR Remain Despite weak growth trends and higher corporate slippages, Federal Bank reported 32% YoY growth in PAT 3QFY20, partly benefitting from lower tax rates even as PBT was in-line with expectations. Annualised slippages at 2.2% was mainly led by higher corporate slippages. However, GNPA ratios declined by 8bps QoQ to 3.0% owing to higher write-offs. Loan growth moderated to 13% YoY against 15% in 2QFY20. Growth would have been ~15%, after adjusting for corporate slippages/loan settlements. Growth in fee income moderated to 11% YoY led by decline in TP distribution fee and forex gains over previous year. Margins at 3% continued to...
Kotak Mahindra Bank's (KMB) 3QFY20 earnings were below expectations with weaker than expected growth, higher one-time opex charges, and elevated provisions resulting in 1.4% YoY decline in PBT (8% QoQ). Reported PAT however was higher by 24% YoY on lower than expected tax rate at 18%. Slippages at 2% (annualized) remained elevated with higher slippages from unsecured and corporate portfolios. Growth in fee-based income moderated to 10% YoY mainly led by weaker growth in advances and lower TP distribution fee. Margin improved further to 4.7% driven by ~20 bps sequential decline in cost of funds as the full impact of lower SA rates (for accounts with balances below 1 lakh) played out. KMB's consolidated profits grew by 27%...
KNR Constructions (KNRC) Continued to report a strong operating performance in 2QFY20 with margin exceeding our estimate with the wide range yet again. Revenue grew by 31% YoY and 17% QoQ to Rs5.5bn (including Rs180mn claims received/booked in revenue) vs. our estimate of Rs5.1bn mainly led by pick-up in execution in HAM projects. Adjusted for claim booked, EBITDA margin stood at strong 19.7% way ahead of ours and even the Company's own guidance. APAT declined by 7% YoY to Rs420mn (but higher than our estimate of Rs395mn) mainly led by higher tax, as new projects do not enjoy any tax benefit. Order book as on 30th Sept'19 stood at Rs51.5bn (excluding Rs15.4bn EPC order components from 2 AD pending HAM...
Likely to Witness Steady Improvement; Maintain BUY Apollo tyres (ATL) has delivered a weak performance in 2QFY20 with its consolidated revenue, EBITDA and adjusted PAT declining both on YoY and QoQ basis due to 45% YoY decline in OEM business. Its replacement segment reported a decent 6% YoY growth, while exports witnessed strong growth. Its revenue and EBIDTA declined by 6% YoY/8% QoQ and 8% YoY/9% QoQ to Rs39.8bn and Rs4.3bn vs. our estimate Rs42bn and Rs4.3bn. Its EBITDA margin fell by 14bps YoY/13bps QoQ to 10.8% vs. our estimate of 10.1%, aided by better product-mix and higher contribution of replacement segment. Overall volume declined by 13% YoY, while improved...
