Strong Performance at JLR; Upgrade to BUY Tata Motors (TTMT) has delivered a stellar operating performance in 2QFY20 with sizable improvement in JLR's EBITDA margin despite challenging business environment for the global automobile industry. JLR's EBIDTA margin expanded by strong 485bps YoY and 960bps QoQ to 13.8%, supported by healthy product-mix and cost control measures. Consolidated revenue fell by 9% YoY (+7% QoQ) to Rs654bn (vs. our estimate of Rs689bn) on lower JLR volume and sharp deterioration in India business. Consolidated EBITDA rose by 8% YoY and 139% QoQ to Rs71.6bn (vs. our estimate of Rs51.2bn), while EBIDTA margin expanded by 174bps YoY and 607bps QoQ...
Crompton Greaves Consumer Electricals (Crompton) has reported muted revenue growth of 4% to Rs10.8bn in 2QFY20. Revenue from ECD segment grew by 11% YoY to Rs7.9bn led by strong performance in fans, pumps and Geyser, while revenue from Lighting segment declined by 12% YoY to Rs2.9bn led by price erosion and lower EESL sales (down 60%). EBITDA margin was up 10bps YoY to 12.0% as higher margin in ECD segment was partially offset by lower margin in lighting segment. PAT grew by 44% YoY to Rs1.1bn aided by higher other income and lower tax rate. Further, the Company is in the process of revamping its ECD business, which is expected to be implemented by FY21E. We cut our revenue estimates by 2%/6% for FY20/21 factoring the...
Maruti Suzuki India (MSIL) has delivered in line performance in 2QFY20. Its subdued performance was primarily impacted by low volume and pricing pressure amid competitive intensity. Company's volume fell by 30% YoY and 16% QoQ to 338,317 units. Its revenue fell by 24% YoY and 14% QoQ to Rs169.8bn, 3% higher than our estimates, EBIDTA margins of 9.5% (our estimate of 9.5%) contracted by 584bps YoY and 93bps QoQ. Such sharp contraction in margin happened for the third consecutive time. EBIDTA fell by 53% YoY and 22% QoQ to Rs16bn owing to higher discount, adverse exchange rate and lower volume. Its PAT declined by 39% YoY and 5% QoQ to Rs13.6bn, mainly benefited from lower tax rate. Its Other Exp/Sales rose by 133bps YoY and...
Havells India has reported a dismal performance in 2QFY20, with revenue growing by mere 2% YoY to Rs22.3bn led by muted growth across segments except ECD segment (+20% YoY) and Cable & wires segment (+7% YoY). Lloyd revenue declined by 30% YoY due to lower sales in LED panels. The industry experienced aggressive competitive landscape in LED Panels leading to substantial decline in prices, while AC sales were flat during the quarter. Switchgear sales declined by 6% YoY and impacted by slowdown in construction and new projects. Demand has further deteriorated from real estate to industrial and infrastructure segments. Cable & wire revenue has increased by 7%. ECD delivered a strong performance despite tepid market...
estimates by 16%, while reported PAT stood at Rs8.7bn. We believe that current margin of 14.5% is commendable, despite negative operating leverage of 21% YoY, inventory correction, cost inflation for safety norms and overall competitive business environment. In view of expected rural revival in FY21E, company's strong market share position to capitalise demand...
Kajaria Ceramics (KJC) reported below par performance and was mainly impacted by dismal sales volume. Sales volume (tiles) grew merely by 1% YoY to 19.75msm (our expectation / street expectation was 7.5% / 10%). Revenue declined marginally by 1.5% YoY to Rs7.14bn as against expectations of Rs7.4bn. EBITDA stood at Rs1.05bn (-3.4% YoY and -0.7% QoQ) marginally below our estimates of Rs1.1bn and EBITDA margin stood at 14.7% vs. 15% in last year and 15.1% in 1QFY20. Average realisation for tiles improved sequentially by 1.7% to Rs337/SM mainly led by favourable product mix, while operating cost/tonne deteriorated by 2% QoQ at Rs309/SM due to surge in input costs. PBT stood at Rs807mn (-2.8% YoY and flat QoQ) below our expectations...
Torrent Pharmaceuticals (TRP) has delivered an in-line 2QFY20 performance in sales and EBITDA terms. Sales grew by 6% YoY to Rs 20.0bn. Domestic business grew by 10% YoY. Adjusted for base impact of discontinuation of certain products (2% negative impact) and change in sales cut-off recognition (1% negative impact), domestic revenue grew 13% YoY vs our estimate of 12%. US sales declined by 3% YoY to US$54mn (in-line) due to lack of new launches. Brazil revenue rose 6% YoY to Rs1.6bn, Germany was flat YoY at Rs2.5bn and RoW grew by 18% YoY to Rs2.0bn. Gross margins rose 210bps YoY to 73.2%, which led to EBITDA margin improvement of 200bps YoY to 27% against our estimates of 26.5% aided further by better product mix. EBITDA...
Higher Capex and Debt to Impact Profitability CEAT has delivered a strong operating performance in 2QFY20. Its EBIDTA margin was 110bps higher than our estimates, supported by lower commodity cost, while EBIDTA was 14% higher than our estimate. Its volume declined 3% YoY due to subdued sales in OEM segment, flat volumes in replacement and single digit growth in exports. Its consolidated revenue fell by 5% YoY and 4% QoQ to Rs17.5bn. Consolidated EBIDTA declined by 5% YoY (+3% QoQ) to Rs1.7bn, while adjusted PAT fell by 46% YoY as well as 46% QoQ to Rs445mn due to higher depreciation and interest outgo. EBIDTA margin improved 10bps YoY (+53bps QoQ) to 10.1% vs....
Asian Paints reported Q2FY20 numbers were significantly below our estimates because of slower revenue growth and significant increase in cost structure. While the company continued to deliver double digit volume growth, but adverse product mix, higher discounting and promotional expenses resulted in slower operating profit growth. Earnings were higher because of lower taxes. We incorporate slower revenue growth and lower tax structure resulting in earnings upgrade of 7%/8% for FY20/21E. We value the company at 50x FY21E earnings to arrive at our target price of Rs 1,725. We maintain our hold recommendation on the stock. The key takeaways of the results and conference call are as follows:...
Improving Operating Metrics; Execution Remains Key for Rerating Axis Bank's 2QFY20 operating metrics were largely in line with our estimates, with NII and PPoP growth of 16% and 45% respectively. The miss in PAT estimates was mainly driven by higher provisions and the one-off impact of DTA markdown of Rs21.4bn during the quarter, excluding which PAT grew by 157% YoY to Rs20.2bn (low base). Despite elevated slippages at 4% of advances, GNPA ratio declined by 22 bps QoQ aided by higher write-offs. Domestic loan book grew by a healthy 19% YoY, while de-growth in overseas book dragged the overall loan growth to 14% YoY. Growth in fee income stood at a modest 12% YoY owing to a weaker growth...
