Release of fresh big budget Hindi films key; will F&B; foray create value? PVR reported revenue of Rs330mn in 3QFY21 (down 96% YoY). EBITDA loss (pre IndAS 116) was Rs1.38bn and net loss was Rs1.35bn (pre IndAS 116). The losses were lower than our estimates as cost increase post opening up has not been as high as we had anticipated. During the quarter, the central government permitted cinemas to reopen starting 15th October at a capacity level of 50%. Since then, state governments have allowed opening up based on their own assessment of the pandemic situation. That has meant a phased opening up. Because of this and due to lack of any exciting fresh content and customer caution, footfalls...

EBITDA loss increased 34% QoQ to INR1.1b (v/s our estimate of a loss of INR537m), despite reopening to cinemas as 50% capacity restrictions and lack of fresh content, led to meager (~1%) occupancy. We roll forward our estimates to FY23E and revise down our FY22E EBITDA/PAT estimates by 3%/12% on the back of slower recovery, thriving OTT market, and changing consumer behavior that could pose a risk to long term occupancies and business economics. We downgrade to Neutral. PVR's 3QFY21 revenue fell 93% YoY to INR634m (49% below our estimate)...

PVR reopened its screens everywhere except for Rajasthan and Jharkhand. However, limit to occupancy and lack of new releases meant footfalls did not pick up as envisaged. ATP during the quarter was at |164, down 22% YoY while SPH was at |95, down 5% YoY. The management informed ATP for fresh content has been equal or higher compared to that of pre-Covid level. We believe flow of new releases will be necessary for operating metrics to reach normal levels. We bake in 70 screens addition in FY22E and 90 screens addition in FY23E. Consequently, we build in footfalls growth of...

3QFY21 Outliers: Havells, Crompton and V-Guard Pent-up demand driving recovery: Our coverage universe is expected to post 15/27% revenue/EBITDA growth in 3QFY21 (-2/-1% in 3QFY20 and +8/+30% in 2QFY21). Easing of restrictions across the country and the lower number of COVID cases lifted sentiments, leading to a revival in demand. Companies are seeing the benefits of pent-up demand from 1HFY21 and revival in housing activities that are driving B-C products. GT and e-comm have been sustaining robust growth while MT remained slow due to weak footfalls. Continued work from home is driving demand for large home appliances. Recovery in semi-urban and rural markets was quick while the recovery in metros remains gradual. We expect the urban recovery to gain pace over the next few months. Category leaders have been continuing to gain market share, and top 5 players of most categories are further strengthening leadership

Blockbuster TCV and net new likely to drive mid-teen FY22 growth While there are many aspects of Infosys' 3QFY21 performance that seem superlative, none is greater than the highest ever large deal TCV number of US$7.1bn, of which 73% was net new. This includes the largest ever deal in the history of Indian IT Services industry (Daimler deal worth ~US$3.2bn spread over 8 years, according to media). TTM net new TCV is up 2.8x YoY and should drive mid-teen growth in FY22, which should support the elevated valuation. 3QFY21 QoQ revenue growth in CC terms came at an 8-year high of 5.3% (against our estimate of 2.5%) with the Vanguard deal kicking in. Margin held up (against expectation of a decline)...

Margin surprises yet again; Revenue execution is key Superlative revenue growth surprises delivered in 3QFY21 by both TCS (4.1% QoQ in CC terms on its large base) and Infosys (5.3%) make the 3.4% growth by Wipro look staid. However, this is the best it has delivered in 36 quarters and that too in the second quarter under the new CEO. What's more, it beat ours and consensus expectation (~2.5%). This combined with a very sharp 240bps pick-up in EBIT margin QoQ in IT Services (a big surprise) could induce upgrades in street EPS estimates. The stock price run-up (31% up in 1 month, >100% in 6 months) already prices in a pickup. CEO, Thierry Delaporte, talked about an obsession with growth' while maintaining respectable margins at its recent analyst meet (Meet). Without giving out specific numerical targets Thierry...

Wipro (WPRO) reported better-than-expected revenue growth of 3.4% QoQ CC, on the higher end of the guidance band (1.53% QoQ CC). Growth was broad-based across verticals, with five of seven verticals showing good QoQ growth. WPRO's continued margin improvement (+250bp QoQ / +330bp YoY) and strong cash generation (FCF/PAT at 133%) were the key positives in 3Q. In 9MFY21, IT Services reported revenue (USD)/EBIT/PAT of 3.2%/10.2%/6.9%. Wipro reported 12 deal closures and deal TCV of USD1.2b in 3Q, including USD700m from Metro AG. It further guided for USD CC revenue growth of...

Restructuring of business, large deals to drive growth We believe Wipro possesses all the key ingredients of robust growth in the long run. The company has strong full services capabilities across applications, infra, BPS and engineering, which should help it as integrated deals gain prominence. Further, the induction of a new CEO with focus on profitable growth make us positive on its future growth. This, coupled with the new CEO's focus on simplification of organisation, improving client mining, focus on fewer verticals and geographies to drive growth are...

Energy sold in Q3FY21, in the standalone business, grew 1.8% to 215.7 crore units vs. our estimate of 221.7 crore units while realisation was at | 7.69/kWHR vs. our expectation of 7.8 kWHR. Total generation was down 1.2% YoY at 120.9 crore units. PLF of the Budge Budge and southern plants for Q3FY21 was at 71% (69% in Q3FY20) and 13% (26% in Q3FY20), respectively. Revenues came in at | 1659 crore vs. our estimate of | 1729.3 crore, mainly on account of lesser-than-expected energy sold. On a consolidated basis, revenues came in at | 2539 crore, up 8.3%, which was...

Infosys' (INFO) Q3FY21 dollar revenue growth of 6.2% QoQ beat our estimate of 3.5%, with the company also posting its highest-ever TCV of US$ 7.1bn.

Recently Cadila Healthcare (Cadila) received a USFDA fast track designation for its Phase 2 NCE drug - Saroglitazar for treatment of Primary Biliary cholangiits (PBC). The fast track designation was based on Phase II trial data in PBC patients who are refractory or have inadequate response to 1st line treatment - Ursodeoxycholic acid (UDCA). Apart from Saroglitazar, a couple of other pipeline drugs for PBC have been granted by the USFDA a fast track / breakthrough designation. We try to assess the market opportunity for Saroglitazar considering the expected competition and Saroglitazar relative clinical profile. The key takeaways from our assessment being...

Rapid ageing, greater life expectancy, lack of exercise and altered lifestyles are driving incidences of osteoarthritis among Indians. Knee replacement surgery in India has been growing in double digits over the years. It is expected to emerge as fourth most common cause of physical disability in India in the next decade. Shalby is a market leader in procedure of arthroplasty (source: F&S; Report). It has ~15% market share of all joint replacement surgeries conducted by organised private corporate hospitals in India. It has performed more than one lakh joint replacements till date....

DMart reported healthy revenue growth of 10%YoY post de-growth in the last two quarters on account of Covid-19 led disruption in the industry. The overall sales & sales mix is now trending very close to pre-covid level except for discretionary products like Apparel and footwear, which is taking more time to recover, as per management. The company has added only 1 store Vs 7 stores YoY duie to Covid-19 led disruptions (Added only 9 stores in 9MFY21 Vs 20 stores YoY). However, new store additions are likely to accelerate given recent QIP of Rs.4,098cr. DMart is now considering leased stores also to accelerate growth. DMart, improved its focus on E-Com business and has...

Opening up of businesses, collections closer to pre-Covid levels and adequate provisioning buffers for any untoward stress indicate positive undercurrents for NBFCs. Closer to higher single digit AUM growth, NIM improvement underpinned by reduced B/S liquidity and peaked out credit costs sum up Q3FY21 earnings expectations. Gold and housing financiers should continue to outshine other asset classes both in terms of growth and asset quality. Yet, H2FY21 should provide better clarity on asset quality picture across all NBFCs as 90dpd and credit bureau score freeze lift. While...

tweak the valuation multiple to 43x P/E (earlier 44.5x) arriving at price target of Rs 1,081 (earlier Rs895). Reiterate ACCUMULATE RATING on the stock. than industry averages on cards-in-force and spends traction. (a) SBICARD records 16%YoY/1.4%MoM card-in-force growth, second best to ICICIB and better than HDFCB. (b) On card spends, SBICARD registers 1.5%YoY/32.7%MoM growth, second best to HDFCB. Moreover, the Co. has maintained MoM market share in terms of outstanding cards at 19% for Oct'20. We expect 17% CAGR in outstanding cards traction over FY21-23 with the...

Tata Consultancy Services (TCS) reported revenue growth of 4.1% QoQ CC in 3Q (v/s est. 2.3% QoQ CC). This is the best QoQ growth posted by the company since FY11 in a seasonally weak 3Q it was led by broad-based delivery across sectors and regions. Moreover, TCS improved its EBIT margin to 26.6% (+40bp QoQ; +100bp v/s our estimate) despite absorbing the full impact of a wage hike (160bps impact). Deal wins (ex-Postbank at ~USD0.5b) were USD6.8b, down QoQ on tough comps, but were up 13% from Q3 FY20. TCS reported OCF/PAT of 137% and FCF/PAT of 122%, boasting a strong...

In Q3FY21, we expect construction companies to return to topline growth driven by near optimum labour availability, pick-up in execution. For real estate companies, key highlight will be strong residential sales volumes growth led by factors like pent up demand, benign interest rates, measures like stamp duty cut in Maharashtra. However, financial numbers of real estate companies will look optically weak due to rental waiver in retail...

Pricey but growth surprises possible near term TCS' 3QFY21 delivered a 9-year best, broad-based and better-than-expected 4.1% QoQ constant currency (CC) revenue growth in a seasonally weak quarter, significantly better than our estimate of 1.5% and that of consensus (~3%). Margin expansion of 40bps QoQ was a surprise (against expectation of a decline) after absorbing a 160bps hit from salary hike. YoY CC revenue growth turned positive one quarter ahead of guidance. TCS indicated double-digit growth for FY22, something that was already priced in. The question is whether it can deliver mid-teen or higher growth. A significant shift to cloud, faster conversion to revenue of deals won and market share...

Our target price of Rs 3,435 is based on 28x Dec-22E EPS (27x earlier) with EPS CAGR at 19% over FY21-23E. Tata Consultancy Services: We maintain ADD on TCS, following a back-to-back stellar performance and positive commentary. Key positives included (1) broad-based (verticals & services) growth outperformance (strongest 3Q in nine years) supported by better conversions, (2) robust deal wins with TCV at USD 6.8bn (ex-PBS Deutsche deal), 9MFY21 TCV higher by 23% and strong bookings/ramp-up expected in 4Q, (3) margin outperformance supported by operating leverage & efficiencies. Management provided double-digit outlook for FY22/CY21 (we have factored in 14.8% for FY22E) and sustainability of momentum for 3-5 years secular cycle of cloud adoption. Strong outlook for BFSI vertical (strongest-ever BFSI deal bookings), investments in hyperscalers units, improving supply-side metrics (stronger linkages with revenue growth and an uptick in contextual masters), and lowest-ever attrition were other highlights.

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