Larsen & Toubro Infotech (LTI) at its investor and analyst day reiterated that revenue growth in FY19 would be better than the 16.7% YoY growth in FY18. Further, it expects the industry-leading growth to sustain in FY20 as well. Importantly, it remains confident...

Digital adoption is still at a very early stage, and majority of the clients are less than half-way through their Digital journey. While Digital capabilities are imperative, LTI also shared its differentiated proposition with which it approaches the legacy spending of clients. It is transforming the 'lights-on' services by driving end business outcomes. An example here is rethinking the role of a support engineer as a productivity engineer.

Key takeaways from Persistent Systems' (PSL) analyst meet held on 11 December 2018 are as follows: (1) In case IBM pushes PSL to buy CE/CLM IP - we believe this is a high probability as IBM seeks to raise cash to pay for its Red Hat acquisition - PSL would likely be a buyer. Unlike the deal HCL Technologies did the other day (Call Option), we believe this purchase would be outsized and may require special payment terms and also possibly leverage. (2) PSL is likely to bring in a CEO from outside - with a sales background - who would focus on the pivot to business IT services which has been a work in progress for the past several years. Mr. Anand Deshpande, current CMD, would...

ICICI Securities Ltd | Retail Equity Research We attended the analyst meet of Greenply Industries (GIL). The key takeaways are: -i) MDF industry currently operates at 50% capacity utilisation, ii) the management has guided for ~60% blended utilisation for its MDF business while Andhra MDF plant is expected to reach breakeven at PBT level in FY20E, iii) on the plywood business, GIL will increase the proportion of outsourcing to 30% in the next three years and iv) the management has guided for | 1500-1600 crore revenues and 11.5% EBITDA margin for plywood business post de-merger. We maintain our...

HCL Technologies (HCLT) has announced that it has signed definitive agreement to acquire 7 software products from IBM for US$1,775 mn (including earn-out). HCLT would fund this acquisition largely through internal accruals and debt of US$300 mn. The acquisition is expected to be closed in mid-2019. The acquisition would add an incremental revenue of $625mn-$650mn to HCLT's Mode-3 solutions which currently has run-rate of ~US$1bn. HCLT has not clarified the ammortisation policy for this acquisition. we expect the payback to be in 6+ years. We expect the acquisition to add ~3.4%/6.2% to FY20/21 revenue and ~2%/4% to the...

of USD625mn in the first year of acquisition and USD650mn revenues in the second year for acquisition. This implies HCL Tech is valuing the acquired business at P/S of 2.8x. The acquired products have an EBIDTA margin of ~50% and the deal is likely to be cash EPS accretive by ~15%. HCL Tech expects to close the acquisition by mid CY2019 (2QFY20E) and 48% of the purchase consideration is expected to paid on closing date of the acquisition (~2QFY20E). A majority of the remaining payout is expected to be done post...

disbursements; yet management expects 15% AUM growth for FY19. Margins shrank ~300bp YoY to 14.1%, driven by a similar decline in yields. However, the decline was due to a high base (one-off income in 2QFY18). MUTH has recently increased yields to offset the rise in borrowing cost. Opex increased 18% YoY, largely driven by a 35% YoY increase in nonemployee expenses, largely due to advertising expenses. Asset quality improved on a sequential basis stage 3 loans declined ~100bp QoQ to 1.9%. This was against a sequential increase of 230bp in 2QFY18. As a result, credit costs declined sharply to INR25m from INR1.2b in...

HCLT has moved beyond partnering with IBM to acquiring some of the latter's product IPs, which it believes are a reflection of its focus on the strategic segments and efforts to expand services to a gamut of clients across industries and markets. In this note, we highlight the key specifics of HCLT's announced deal with IBM.

We project revenue/PAT to grow at 20%/19% CAGR over FY18-20E owing to continued traction in commercialisation of molecules, scale-up of exports, healthy R&D; pipeline, additional capacity with the commissioning of new plants and robust order book position Hence, we continue to maintain our positive stance on the stock and recommend...

According to management, the domestic market for the 0-30MW Turbine Generators (TG) segment has bottomed out in FY18 and is likely to grow at 10-12% for the next few years. The bulk of the incremental domestic demand in the 0-30MW TG segment was derived from process cogeneration and is attributable to Sugar, Food, Agro and Allied Industries, Chemicals, and Textiles. Going forward, the company expects steady demand for TG from the upcoming ethanol manufacturing facilities. While order intake in the international segment declined 7% yoy in 1HFY19, the company is expecting to close FY19 with marginal growth in the international inflows....

The deal will add 12/14% revenue/APAT and is EPS accretive (~6%) in FY21. Despite richer multiples vs. Zydus-Heinz deal (Complan), we believe this deal is worth the buck considering market leadership position of Horlicks. Our earnings revises by 5%, we don't change multiples and value HUL at 45x P/E on Dec-20 EPS (earlier Sep-20) with TP of Rs 1,855 (earlier Rs 1691). HUL announced merger with GSK Consumer India (GSK CH) with an all equity deal, valuing GSK CH at Rs 317bn. Every share of GSK CH will be exchanged with 4.39 shares of HUL. GSK CH is the category leader (value/volume share of 54/63%) in the Health Food Drinks (HFD) market in India (at Rs 77bn; largest globally), with brands like Horlicks, Boost, Viva and Maltova.

Refer to important disclosures at the end of this report Challenges to turn into opportunities profitability in FY16-18. The key factors affected the performance were: 1) being on the wrong-side of the actions at the client's end; and 2) a mix change toward onsite, with low gross margins (onsite now accounts for 22% of revenues versus 1% in FY15). Despite the modest performance in the recent past, we are certain about a gradual recovery in growth on account of: 1) stable deal momentum (adding about USD40-50mn in new TCV); 2) no client roll-offs (witnessed no adverse case in the last six quarters); 3)...

Due to spill over impact of bad summer, Symphony posted sharp ~20% YoY decline in standalone revenue in Q2FY19 as a result of lower volume offtake. Although EBITDA margin showed a smart recovery sequentially in Q2FY19, it...

business of Sun Pharma is routed via Aditya Medisales Limited (AML), which became a related party in FY2018 due to shareholding consolidation; it was not a related party prior to that. The company disclosed financials of Aditya Medisales for FY2018 and said that the current structure was implemented as it resulted in tax saving before GST implementation. The...

In March 2018, GlaxoSmithKline Plc had announced a strategic review of GSK Consumer Healthcare's (GSKCH) consumer nutrition business, including brands like Horlicks & Boost as the company was exploring a partial or full sale of its stake in GSKCH by end of 2018. This was triggered by GSK looking to help fund its $13 billion buyout of the Novartis stake in...

In March 2018, GlaxoSmithKline Plc had announced a strategic review of GSK Consumer Healthcare's (GSKCH) consumer nutrition business, including brands like Horlicks & Boost as the company was exploring a partial or full sale of its stake in GSKCH by end of 2018. This was triggered by GSK looking to help fund its $13 billion buyout of the Novartis stake in...

The management of Sun Pharma conducted a conference call to address apprehension among investors after a recent publication by a brokerage regarding so called corporate governance issues and a complaint filed by a whistleblower with Sebi highlighting so called wrongdoings in the company. While the first issue was addressed with a case by case analysis, question marks remain over the whistleblower's complaint for want of management action plan as the management awaits Sebi...

Hindustan Unilever's big bet on health drinks with GSK acquisition appears positive and we estimate EPS accretion of ~6% from the deal. Management's positive commentary on category growth and synergy benefit targets can drive more upsides we believe. HUL believes category offers strong long term growth given low penetration and huge opportunity for market development and premiumisation. It believes higher distribution...

We remain positive on HUVR's acquisition of Glaxo Consumer Healthcare given that it will be 1) EPS accretive by 5% in FY20 and ~7.75% in FY21 2) market leading brands like Horlicks and boost with more than 63.4% volume share in Rs77bn MFD industry 3) strong R&D; and pipeline of nutritional products and 3) scalability to foods and refreshment business as combined sales exceed Rs100bn. HUVR expects significant scalability and synergy benefits from 1) 3x distribution and direct reach than GSK 2) distribution gains in pharma channel which is HUVR's weak point 3) cost reduction in...

The management of Shankara Building Products Ltd (SBPL) now believes that the company's strong future prospects lies in consolidating its position in the industry rather than aggressive store expansions. It has hence cut its store expansion target to 8-10 stores in FY19 (v/s 15-20 stores guided earlier) and aims for a payback period of 3 years. Also, SBPL shall be putting its core focus on select product categories like plumbing & sanitaryware products to achieve growth ahead. It is also bringing strict financial discipline measures like reducing debtor days,...