Titan's standalone business recovered to 89% (consolidated recovered to 98%) with the jewellery business growing by 9% in Q2FY2021; watches and eyewear business recoveredto 56% and 61%, respectively. Consolidated OPM declined 433 bps to 6.9%, affected by hedging loss and lower operating leverge. Operating profit was down 40% to Rs. 313 crore. Higher demand during the festive season and improving wedding demand will help Titan post sustained recovery in the jewellery business going ahead. We have fine-tuned our estimates for FY2021 to factor in lower-than-expected...
The Supreme Court of India (SC) allowed telecom players to pay Adjusted Gross Revenue (AGR)-related dues to the Department of Telecommunications (DoT) on a staggered basis over next 10 years subject to certain conditions. The apex court has directed telecom companies to make a 10% upfront payment of outstanding AGR dues by March 31, 2021, and the balance over a 10-year timeline starting February 7, 2022. As per the SC verdict, Bharti Airtel will have to pay ~Rs. 2,600 crore upfront in FY2021 and ~Rs. 3,500 crore annually from FY2022. As the SC has not mentioned anything...
The Supreme Court of India (SC) allowed telecom players to pay Adjusted Gross Revenue (AGR)-related dues to the Department of Telecommunications (DoT) on a staggered basis over next 10 years subject to certain conditions. The apex court has directed telecom companies to make a 10% upfront payment of outstanding AGR dues by March 31, 2021, and the balance over a 10-year timeline starting February 7, 2022. As per the SC verdict, Bharti Airtel will have to pay ~Rs. 2,600 crore upfront in FY2021 and ~Rs. 3,500 crore annually from FY2022. As the SC has not mentioned anything...
Arvind Limited's (Arvind) Q1FY2021 performance was impacted by the lockdown in April. The company's revenue declined by 68.4% y-o-y to Rs. 599.3 crore, lower than our expectation of Rs. 728 crore, largely impacted by almost negligible sales in April. Gross margin expanded by 244 bps to 52.1% owing to improving mix. The company reported an operating loss of Rs. 28.9 crore (better than our expectation of loss of Rs. 72.6 crore) as against profit of Rs. 154.4 crore affected by significant reduction in fixed costs. Advanced material monthly revenue has fully recovered to preCOVID levels. The denim segment has good recovery in performance with...
Larsen and Toubro (L&T;) remains at the forefront to reap benefits from the recentlyannounced Atma Nirbhar Bharat scheme from the government of India with its diversified businesses across sectors like defence, infrastructure (roads, railways, metros, DRC), heavy engineering, IT (digitalisation). In the recent move from the Ministry of Defence, wherein the import embargo was placed for 101 defence items will prove to be beneficial for L&T; as it is already manufacturing more than 50% of the items stated in the first negative list of 101 items. The company have been focusing on the defence manufacturing and have also been ramping up operations (invested ~Rs. 8,000 crore) in the space over the last few year. Further, the government's announcement to create...
Valuation: Major beneficiary, limited competition: We expect BEL to deliver strong performance in the coming years given its robust order book, major beneficiary from increasing emphasis on indigenisation, and limited competition. BEL remains our preferred pick in the defence sector on account of its strong manufacturing and R&D; base, good cost control, growing indigenisation, and strong balance sheet with improving return ratios. We have introduced FY2023E numbers in this note. At the CMP, the stock is trading at a reasonable valuation of 16.1x/15.0x/13.4x its FY2021E/FY2022E/...
LIC Housing Finance Limited (LICHFL) reported steady results with operating performance coming largely in line with expectations (lower provisions resulted in better-than-expected profits) but asset-quality performance was not bright. Moratorium book holding fast at 25% of total book (was 25% at Q4FY2021) was a dampener since most peers have reported a reduction in the same. Of the 25% loan book under moratorium, individual home loans accounted for 16% and rest were developer segment, which is a concern. Nearly 77% of developer loan book was under moratorium. However, developer loans were at ~7% of the total book; hence,...
Punjab National Bank (PNB) posted largely in line with expectations results for Q1FY2021. Net interest income (NII) and PPoP came in line with expectations, but asset-quality performance was mixed. During the quarter, the bank had reported on amalgamated basis (erstwhile OBC and UBI merged in PNB) and, hence, priorperiod reported performance is not strictly comparable. As of Q1FY2021, the bank had an elevated 29.2% (in value terms) of accounts under moratorium (which comprise borrowers who have missed two or more EMIs). The moratorium book has not declined on a sequential basis (most other peers have reported a decline) and, hence, is a dampener. On a restated comparable basis, amalgamated NII was flat...
Max Financial Services' (MFS') deal with Axis Bank appears to be progressing positively, even though the lender will now buy a lower stake in Max Life Insurance Co. Ltd. (MLIC). Mutually altering the deal, Axis Bank now will acquire 17% in MLIC to increase its holding to 18% (lower than a 29% stake buy announced earlier). The companies have executed a definitive agreement to the effect but are yet to approach regulatory authorities with the revised applications. Axis Bank is one of the key bancassurance partners for Max Life, contributing ~57% (as...
Oil India Limited (Oil India) reported weak Q1FY2021 numbers, clocking a net loss of Rs. 249 crore (as against a net profit of Rs. 625 crore in Q1FY2020) due to: 1) weak oil and gas realisations, declining by 54.1% y-o-y and 29% y-o-y respectively, 2) higher-than-expected operating expenses on account of exploration cost write-off of Rs. 115 crore (versus negative Rs. 1 crore in Q1FY2020) and 3) exceptional expenses of Rs. 93 crore related to control blowout at Baghjan Oilfields and 4) lower-than-expected other income (down 87% q-o-q). Even after adjusting for exceptional expenses, net loss...
