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We attended HCL Tech’s (HCLT) Analyst Meet ‘The Big Leap Forward’ and maintain our positive outlook on the company based on (1) leadership/growth premium in infra & engineering services, (2) improved growth/margin visibility, (3) strength in renewals, (4) robust deal momentum and (5) effective platform-leverage (DryIce). While technological shifts will disrupt on-premise ops (effort reduction leading to revenue shrinkage) towards greater cloud adoption, HCLT’s leverage in analytics & automations and strong win-rate is expected to contribute to its growth progression.
Valuation: They believe that HCLT’s revenue ask-rate of 1.7-2.9% CQGR in order to meet its annual guidance of 12-14% CC is not steep with Geometric consolidation expected post 3Q. They have factored US$ revenue/EPS CAGR at 12% FY16-18E; maintain BUY with TP of Rs910.
Management expects repo rate cut of 25-50 bps from the RBI in Source: Company, Ashika Research rest of FY2017. This will also be followed by excess credit supply in the market in FY18 and thus result in ~50 bps cut in...
Gabriel India Ltd’s operating revenue has registered a steady growth in its operating revenue (YoY) of 8.3% to Rs 3,704 mn, whereas it has seen an increase of 1.1% (QoQ). The company has witnessed an increase in volumes in passenger vehicle segment compared to the same quarter of its last year (32.0% Vs 27.0%) led by the likes of its some customer products, whereas the share of its 2/3 wheeler segment (56.0% Vs 60.0%) has decreased because of the lower off-take from 2 of its customers and share of commercial vehicles segment stood at 12.0% Vs 13.0% of its revenue. We introduce FY18E earnings and expect the company to register stable operating revenue at CAGR of over 10.4% during FY16-FY18E on the back of expected improvement in the economy and expected reforms at the macro-economic level leading to the increased customer demand.
Valuation: They introduce FY18E earnings and reiterate our “BUY” on Gabriel India valuing it at 20.0x of its FY18E EPS of Rs 7.1, which is ~1 Standard deviation from its mean forward P/E multiple over its 5 years and also was the average forward P/E multiple in the last 2 years to arrive at a target price of Rs. 144.
Q1FY17 saw a muted addition of 3000-4000 members and 1 new gym only. The heat wave in India during the month of April the growth of the business- revenues grew by a mere 11.9%. • Over the last four-six quarters, franchisee has become an integral part of the company’s operations. Out of the 177 gyms owned/ operated by it, almost 50-55 gyms are in the franchisee model. Going ahead, the company plans to add another 12-15 gyms under the same model which will be operational within the next three quarters.
Valuation:. The intention to forg venture with David Lloyd Leisure (Europe’s leading premium sports, health and leisure group) for the development of 7-10 clubs in India along with demerger - one focusing on gyms and the other focusing on properties and value added services- is symptomatic of renewed business focus. Transformation into a wellness company (better services and infrastructure) will further make its offerings more eclectic. Growing disposable income and awareness regarding fitness augurs well for the business expansion. Average earnings growth of 21.5% over the next two years is doubtless worthy of notice. We retain ‘buy’ rating on the stock with a revised target of Rs. 338 (previous target Rs 319) implying a 12x FY18e EPS over a period of 9-12 months. (PEG ratio: 0.6)
Top takeaways from Q1FY17 : Recurring PAT (Rs 803mn, +50% yoy) was 42% above our estimate, led by margin expansion.Gross margin (86.2% vs. 56.9% yoy) surprised due to change in sales mix to the high? margin consultancy segment (79% of sales vs. 57% yoy). EIL achieved its FY17 order inflow guidance in 1Q itself (Rs 20.6bn, +318% yoy).
Valuation: Phillip Capital maintain their Buy rating as they believe that though the order inflows thesis may be priced in, there is further scope for re?rating on a turnaround in margins, which should benefit from operating leverage. We expect EIL’s core earnings (ex?other income) to see a 53% CAGR in FY16?18, aided by a 46% CAGR in EBITDA. We base our revised price target of Rs 280 (Rs 210 earlier) on 33x (30x earlier) FY18 core EPS of Rs 6.1 and add Rs 79/share of cash value.
Top takeaways from Q1FY17 : ARBP’s Q1 earning performance missed our estimates by 3% (but was just in line with street expectations), primarily due to lower than expected US sales caused by delayed launch of approved drugs.Guides for strong double digit growth in its US business in FY17 led by the planned launch of 19 approved oral dosages (with branded size of US$ 6.8bn, including gNexium) and ~8 injectables in next few months.ARBP indicated that its Europe business turned PAT positive in FY16; expects it to improve further with cost optimisation initiatives like site transfer to a low?cost manufacturing base in India.
Valuation: Phillip Capital estimate ARBP to report sales/earnings CAGRs of 13%/20% over FY16?18. In fact,they are positive on ARBP’s firm footing in the US with limited impact of price correction and robust approval flow. They retain their BUY rating with an unchanged TP of Rs 1,000, i.e., 20x FY18 EPS.
HPCL reported a strong result in Q1FY17 on the back of higher adventitious and inventory gain supported by higher crude throughput & product sales volume. The company's revenue declined 12.9% YoY to Rs448 bn (below IDBIest) while EBITDA increased 17% YoY to Rs36.3 bn (+36% QoQ) and net profit grew 30% YoY to Rs21 bn, beats expectation. Crude throughput increased 20% YoY to 4.5mmt (-4.7% QoQ) while sales volume increased 4% to 8.9mmt (-1.4% QoQ). GRM came at US$6.8/bbl in Q1FY17, down from US$8.6/bbl in Q1FY16 (IDBIest US$7.1/bbl) which includes US$2/bbl of inventory gain. Also, the company's adventitious gain from marketing business came at nearly Rs10 bn which boosted profits. Total under-recoveries came at Rs3.3 bn which was fully...
Astral Poly Technik Ltd. (Astral) came out with mixed results where revenue was marginally above expectation while EBITDA and PAT was a tag lower than estimates. In Q1FY17, Consolidated revenue/EBITDA grew by 16.7%/8.5% YoY to Rs5,205mn and Rs546 mn, respectively (below our estimates) while adjusted PAT (adjusting forex loss of Rs36 mn) came at Rs303 mn, up by 3.7% YoY due to higher depreciation and interest expenses. EBITDA/Adjusted PAT margin declined 98/90bps YoY to 13%/7.2% respectively due to lower gross margin and higher employee cost. The company reports strong 16% YoY growth in pipes revenue led by 21% rise in volume partially offset by 4.3% drop in realization due to lower CPVC prices. Adhesive business witnessed a growth of...
Aurobindo Pharma's (ARBP) Sales, EBITDA & PAT stood at Rs37.3bn, Rs8.9bn & Rs5.8bn, respectively in 1QFY17. Revenue grew 13% yoy mainly due to US business (~45% of sales) rising by 14% yoy to US$255mn (vs. US$252mn in 4QFY16 & US$225mn in 1QFY16) led by new product launches (final approvals: FY16: 49; 1QFY17: 13). We expect acceleration in earnings and margins backed by new launches from residual approvals. Its injectable sales stood at US$34mn in 1QFY17 vs. US$36mn in 4QFY16. Its EU revenue (22% of sales) rose 12% yoy to Rs8.3bn. ARBP reported positive EBITDA margin for four quarters in a row...
