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...
NCC Ltd. (NJCC) has reported better-than-expected operating performance in 2QFY20 despite missing our estimate on revenue front. While revenue declined by 44% YoY to Rs17.3bn vs. our estimate of Rs19.3bn, EBITDA came in ahead of estimates at Rs2.33bn (-36% YoY and -13% QoQ) vs. our estimate of Rs2.22bn. EBITDA margin improved by 170bps YoY and 127bps QoQ to 13.5% vs. our estimate of 11.5%. Notably, claims worth Rs310mn booked pertaining to three Maharashtra projects led to higher margin, adjusted for which its margin stood at 11.7%. APAT declined by 62% YoY to Rs601mn marginally ahead of estimate of Rs587mn mainly led by better operational performance. NJCC secured order worth Rs15.2bn during the quarter...
SRF has delivered a steady operating performance in 2QFY20 largely on the back of healthy chemicals business. EBITDA grew by 5.6% YoY to Rs3.35bn (vs. our estimate of Rs3.62bn), while EBITDA margin rose by 120bps YoY to 19.3% (vs. our estimate of 17.8%). Adjusting for a one-off expense of Rs288mn (pertaining to stamp duty paid related to tyre cord division in MP), its EBITDA grew by 14.7% YoY to Rs3.64bn, while margin expanded by 280bps to 20.9%. However, its revenue fell by 1% YoY to Rs17.38bn vs. Our estimate of Rs20.35bn. PAT grew by 40.5% YoY to Rs2.05bn (vs. our estimate ofRs1.82bn) primarily on account of lower tax rate of 2% (vs. 22.6%...
Early Cyclical Reversal on the Card; Upgrade to BUY Escorts (ESC) has delivered largely an in-line performance in 2QFY20. While its margin improved in construction equipment segment, the Company witnessed contraction in tractor margin. Its revenue and EBIDTA fell by 5% YoY (-7% QoQ) and 20% YoY (-11% QoQ) to Rs13.2bn and Rs1.3bn vs. our estimate of Rs13.3bn and Rs1.2bn respectively. However, due to tax credit, its adjusted PAT grew by 11% YoY (+30% QoQ) to Rs1.1bn vs our estimates of Rs865mn. Its EBIDTA margin fell by 169bps YoY and 44bps QoQ to 9.6% (vs. our estimate of 9%) mainly due to lower operating leverage and inferior product-mix in tractor segment. Better margins at construction segment...
Aided by higher-than-expected realisation, JK Lakshmi Cement (JKLC) has reported a strong set of numbers for 2QFY20, despite dismal sales volume. EBITDA grew by a stellar 62% YoY to Rs1.48bn vs. our estimate of Rs1.1bn, while EBITDA/tonne stood strong at Rs722 (vs. our estimate of Rs526) vs. Rs431 and Rs729 in 2QFY19 and 1QFY20, respectively owing to Rs370/tonne higher realisation than our estimate. Average realisation/tonne increased by 13.4% YoY to Rs4,541, which is even sequentially higher by 1.6%. Notably, low sales volume in Chhattisgarh markets and higher volume in Northern region led to higher realisations. Sales volume declined by 3% YoY and 11.6% QoQ to 2.06mnT in 2QFY20, while it declined marginally by 0.5% in 1HFY20....
IITS Revenue Slightly Soft, IP-Led Biz Continues Upward Journey Sonata Software's USD revenue from IITS business rose by 2.3% QoQ (+3% QoQ in CC terms) to US$45.3mn, slightly below our estimate by 0.8%. In INR terms, IITS revenue rose by 2.7% QoQ to Rs3.13bn. Organic revenue excluding Sopris contribution in 1QFY20 came in at a strong 4.1% QoQ, similar to 1QFY20. Growth would have been higher had it not been for some delayed licence revenue in Sopris. Vertical-wise, revenue was led by healthy growth in the Travel vertical (+6.2% QoQ in USD terms especially after 5.4% QoQ decline in 1QFY20). On the other hand, revenue from OPD vertical grew by 2.3% QoQ, in-line with company average. A...
HeidelbergCement India (HEIM) continued to deliver steady performance in 2QFY20 despite moderate deterioration in opex. EBITDA grew by 9% YoY to Rs1.2bn vs. our estimate of Rs1.15bn, while EBITA/tonne stood at Rs1,060 vs. Rs980 and Rs1,199 in 2QFY19 and 1QFY20, respectively. While sales volume remained muted at 1.13mnT (+1% YoY), average realisation remained upbeat at Rs4,581 (+7.5% YoY and -1.1% QoQ). Notably, opex/tonne surged to Rs3,522 (+7.3% YoY and +2.7% QoQ) owing to 8% YoY and 13% QoQ rise in other expenditures/tonne, while input cost/ tonne stood at Rs1,900 (+11.5% YoY and +2% QoQ) mainly impacted by increase in grid charge in MP and UP and higher flyash prices. As company continued to follow old taxation regime...
Strong LNG Volume; Lower Spot LNG Prices to Drive Growth PLNG (Petronet LNG) reported EBITDA of Rs11.6bn, grew by 31% YoY and 13% QoQ (17% above our estimates and 11% consensus) in 2QFY20. EBITDA growth is aided by stellar operating volume, 5% rise in regasification tariffs and adoption of Ind AS 116 with Lease Liability'. PBT grew by just 2% YoY and 6% QoQ mainly due to fall in other income and higher in interest cost. Notably, reported net profit is higher than pre-tax profit due to adoption of lower tax rate for 1HFY20 and reversal of deferred tax liability of Rs3.8bn. PAT grew by 96% YoY and 97% QoQ to Rs11bn, exceeding ours and consensus estimates by 75% and 69%, respectively. Despite...
Exceeding our estimates, Ramco Cements (TRCL) has reported a strong performance mainly led by better-than-expected volume and pricing despite a challenging environment. EBITDA surged by 27% YoY to Rs2.6bn (-20% QoQ) exceeding our estimate of Rs2bn, while EBITDA/tonne stood at strong Rs958 as against Rs830 and Rs1199 in 2QFY19 and 1QFY20, respectively. Sales volume grew by a strong 10% YoY (1% QoQ) to 2.72mnT (a significant beat) despite slowdown in construction activities across pockets. Average realisation stood at Rs4,708/tonne (+2% YoY and -5.6% QoQ), which is ~Rs60/tonne higher than our estimate. PAT increased significantly by 47% YoY led by improved operating performance and lower ETR (under MAT). Its gross debt...
ICICI Bank has reported a healthy operating performance in 2QFY20 with NII and PPoP growing by 26% and 31%, respectively. Whilst higher-than-expected provisioning and one-time impact of DTA write-down impacted its bottom-line performance, improved fee-based income and higher treasury gain aided its other income. Asset quality parameters continued to improve with 12bps QoQ reduction in GNPA ratio to 6.4%, moderate annualised slippages at 1.6% and 160bps QoQ rise in PCR to 76%. However, the Bank's BB and below book remained sequentially stable at 2.6% of loans, mainly due to higher downgrades. CET 1 benefitted by ~25bps owing to the...
Strong Quarter; Corporate Portfolio Concerns Priced in Valuations State Bank of India (SBI) has delivered an impressive performance in 2QFY20 with improving operating metrics, all-round improvement in asset quality, and increased prudential provisioning towards select standard stressed exposures. Healthy treasury gain and proceed from 4.5% stake sale in SBI Life (Rs35bn) aided its bottom-line and higher provisioning. CET 1 ratio rose by 47bps despite exclusion of 1HFY20 profit owing to lower RWA for consumer loans (ex CC receivables) and DTA reversal of Rs30bn over the period. The Bank continues to recognise taxes as per the old tax regime, as it is yet to decide whether to adopt new tax structure for FY20....
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....
