Reliance Securities Broker Research reports

Attractive Valuation to Own Strong Company; Upgrade to BUY Hero MotoCorp (HMCL) has delivered better-than-expected performance in 1QFY20 with its operating margin coming in at 14.4% vs. our estimate of 13.6%, declined by 121bps YoY (+86bps QoQ). Its revenue fell by 9% YoY (+2% QoQ) to Rs80.3bn (vs. our estimate Rs81.7bn), while EBIDTA decreased by 16% YoY (+8% QoQ) to Rs11.6bn due to higher other expenses. EBIDTA margin contracted by 121bps YoY on account of limited ability to pass on higher input cost amid intensified competition. Its ASP improved by 4% YoY due to price hike for implementation of safety norms. HMCL's adjusted PAT declined by 14% YoY (+8% QoQ) to Rs7.86bn surpassing...

Revenue Impresses; Profitability Down Steeply On Wage Hikes Central Depository Services (CDSL) reported a robustly improved revenue performance in 1QFY20, for the second successive quarter after a poor show in 3QFY19, when revenues dipped steeply by >10% YoY and >13% QoQ. In 1QFY20, revenue rose strongly by 28.2% YoY and by 14.6% QoQ to Rs584mn, its highest-ever quarterly revenue. Depository Services revenue saw a healthy recovery after two successive quarters of YoY decline, with segment revenue up 11.4% YoY to Rs405mn. On the other hand, the Data Processing segment clocked a substantial 86.6% YoY revenue growth. CDSL's net beneficial owner (BO) accounts touched 17.9mn (17.3mn in 4QFY19),...

Likely Cyclical Down-turn to Drag Bottom-line; Maintain REDUCE Escorts (ESC) missed our estimates albeit marginally in 1QFY20 owing to lower operating margin and higher interest outgo. Its revenue, EBIDTA and adjusted PAT fell by 6% YoY (-13% QoQ), 23% YoY (-25% QoQ) and 27% YoY (-28% QoQ) to Rs14.2bn, Rs1.4bn and Rs875mn vs. our estimate of Rs13.9bn, Rs1.4bn and Rs911mn, respectively. Its EBIDTA margin fell by 227bps YoY and 162bps QoQ to 10% (vs. our estimate of 10.3%), mainly due to lower operating leverage. Its tractor volume fell by 14% YoY, while construction equipment volume plunged by 21% YoY. Notably, its railway segment's revenue rose by a strong 34% YoY. Its RM/sales increased by 137bps YoY (+18bps QoQ)...

DCB Bank has delivered a sub-par performance in 1QFY20 led by decline in loan growth to 13% YoY, sequential rise in fresh slippages and NPAs, and continued pressure on margin. Sequential loan growth (at 2% QoQ) moderated across key segments, including mortgage, SME and AIB, though CV and AIB loan growth was healthy at over 25% YoY. Segmental NPAs were higher across segments, barring corporate, where decline in NPA was mainly driven by higher write-offs. Consequently, provision coverage (excluding technical-write-offs) also declined by 600bps QoQ to 59%. Given the management's focus towards increasing share of retail deposits, cost of deposits continued to rise and consequently, NIM was lower by 11bps QoQ and 23 bps YoY. We expect interim...

Healthy Operating Performance; Consistency Key to Valuations Federal Bank has delivered an in-line set of numbers in 1QFY20 led by NII growth of 18% YoY, a healthy 25% YoY growth in core fee-based income and 30% YoY growth in PPoP. However, slippages were higher than our estimate mainly led by elevated retail slippages, though higher write-offs aided GNPA ratio (+7bps QoQ). Further, NIM declined sequentially despite sharp rise in lending yields owing to continued pressure on cost of funds and one-off in 4QFY19. Notably, advances and deposits grew by 19% YoY each. Loan growth during the quarter was driven by retail loans, which grew by 26% YoY. CASA ratio continued to move southwards. Nonetheless,...