TCS's Q1FY21 revenue decline of 6.9%/7.8% QoQ/YoY in CC was a miss to our forecast. EBIT margin of 23.6%, -150bps QoQ was also a miss. Further, higher than expect effective tax rate (ETR) resulted in higher miss at EPS level. In Q1, TCS has secured deals with TCV of US$6.9 bn (ex-Phoenix Standard Life deal) vs. US$5.7 bn YoY. TCS believes that the impact of Covid-19 pandemic has bottomed out in Q1FY21 and has maintained its revenue growth outlook for rest of FY21. We factor Q1FY21 miss and cut FY21E/22E revenue (US$) by 3%/2.5% and EPS by 2.6%/2.9%. We now forecast FY21 revenue to decline by 5.1% YoY and revive to a...

TCS reported sluggish results in Q1FY21; revenue stood at Rs. 38,322 crs a decline of 4% QoQ and 7.1% QoQ in CC terms. Operating profit showed a de-growth of 10% QoQ at Rs. 9,048crs, while operating margin declined by 150 bps QoQ at 23.6% due to lower utilization and pricinng pressure.

More importantly, continued traction in large deals, a healthy pipeline, and better resilience in BFSI are encouraging Management believes the worst impact of COVID-19 is behind (both in terms of revenue and profitability) even as some variables such as pricing and working capital cycles warrant a close watch. TCS reported revenue (CC) / EBIT / PBT/ PAT declined 6.3%/2%/11%/14% As in the case of Accenture, the Healthcare vertical reported robust growth (~14% YoY, CC), led by work related to contact tracing applications, etc. Over the medium term, we expect TCS to be a key beneficiary of the COVID-19-driven increase in technology intensity across Rich multiples (22x FY22E EPS) leave limited upside in the stock, in our view. In this vertical, while the UK and Canadian markets remained soft, Barring continental Europe (+2.7% YoY), key geographies such as North America (-6.1% YoY) and the UK (-8.5% YoY) reported declines.

TCS's Q1FY21 performance was a mixed bag with a miss on operating performance but healthy deal wins.

These factors imply that 1QFY21 sales would decline ~20% YoY in the north and ~40% in the south. Cement prices mostly held up in June, bolstering 1Q realization YoY across the south (+11%), north (+6%), and central (+2%) India. West and east prices are down ~1% and 2% YoY respectively. We believe that falling energy costs could further cushion the impact of dwindling demand on profitability. Despite the ongoing COVID situation, cement demand recovered MoM in June, driven by strong traction in retail sales (semi-urban/rural areas) while non-trade sales continued to decline. Our channel checks suggest sales in north/central/east regions printed flattish to marginal growth. Even in the south and west India, the volume decline rate moderated to ~20-30% YoY in June vs ~40% in May.

City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered at Tamil Nadu, having a network of 700 branches and 1,793 ATMs spread across the country and a loan book size of Rs.34,576 Cr. CUB reported net loss of Rs.95 Cr on account of higher provision (Rs.450 Cr) due to elevated NPA and Covid-19 related concerns....

Key takeaways from our recent interaction with the management of Finolex Industries (FNXP): (1) FNXP witnessed healthy demand for agricultural pipes in May and June following easing of the nationwide lockdown.

Given the improving capacity utilization across plants, and strong performance of Specialty products, we expect PAT to grow at CAGR of 13.7% over FY20-22E, led by a steady growth in revenue and improved margins. We upgrade our rating to ACCUMULATE on the stock with a...

Tata Steel is a leader in the global steel industry with operations spanning over 26 countries with key operations in India, Netherlands and United Kingdom. Tata steel primarily caters to customers in automotive,...

In the last three months, BSE IT index (+31.4%) has performed largely in-line with BSE SENSEX (30.6%). There have been near-term headwinds on growth due to the impact of the Covid-19 pandemic. However, the sector's track record of dealing with headwinds, strong FCF profile, payouts (dividend/buyback) and corporate governance has augured well with robust FII flows and performance of broader markets. Q1FY21 has been another quarter of currency volatility cross-currency movement (negative for reported US$ revenue growth) and INR depreciation (positive on EBIT margin). However, this has been overshadowed by QoQ decline in revenue (in CC) and...

1Q impacted but operations back to near normal Marico Ltd. (MRCO) released an update to provide a summary of the operating performance and demand trends witnessed in 1QFY21. The domestic business is expected to see a low teen YoY decline in volume during the quarter but business is improving on a month on month basis, led by the Saffola (Edible oils & Foods) and Parachute portfolio. The impact of total or partial lockdowns on the overall international business is low to moderate. Raw material prices are benign for the quarter. This along with aggressive cost control and rationalization of A&P; spends...

5 July 2020 ALPM delivered a 14% CAGR in US sales to USD280m (43% of sales) on account of 58 launches over FY1620. Particularly, in FY20, ALPM garnered 49% YoY growth, led by new launches (22) and partly by regulatory concerns witnessed by peers. On a high FY20 base, we expect a 10% CAGR in US sales to USD340m over FY20 22. ALPM would ramp up filings across new dosages (Ophthalmology, General Injectables, Oncology Injectables, and Oral Solids). The considerable share of revenue from new capex / product development would reflect in overall growth in US sales 2HFY22 onward; thus, it forms a marginal portion of the business trajectory over FY2022. ALPM delivered 13% YoY growth in 4QFY20, reflecting the benefit of the pre-buying of medicines (in anticipation of shortage due to COVID-19) and partly of renewed strategy. While efforts to improve sales growth have been on track, performance could be dented on account of the COVID-19-led slowdown.

Fine Organic Industries (FOIL) posted revenues of INR 2,473mn with 13% YoY decline which was below our estimate of INR2,734mn mainly due to loss of sales during last two week of March led by COVID 19 outbreak and logistic challenges in domestic as well as in many other countries. In the near term revenue outlook remains cloudy as management expects regaining pre Covid operational level can be possible post AugSep due to slow recovery in existing business and challenging environment in new business development. On the back of favourable product mix, Gross margin expanded by 505bps, which resulted in 226bps (YoY) improvement in EBITDA margin to 23.2%(est. 22.1%) in Q4FY20. Commissioning of new capacity (Ambernath 3) resulted in a sharp increase (178% YoY) in...

MSSL would acquire & merge promoter group (SAMIL) into itself against earlier proposal to buy out SAMIL's 49% stake in SMRP BV. Effectively, this would consolidate all the group's automotive businesses (ex-DWS) as well as other supporting businesses under the umbrella of the listed entity i.e. MSSL. MSSL would issue ~136 crore new shares, diluting equity share base by ~43% to 452 crore shares from present 316 crore shares. This would be an effective equity acquisition value of ~| 8,300 crore and an EV valuation of ~| 9,400 crore (net debt at SAMIL at ~| 1,100 crore) for an incremental...

Weak order inflows may impact near term execution... Thermax Ltd (TMX) is a leading energy and environment solutions provider. They offer integrated innovative solutions in the areas of...

Emami Limited's (Emami's) Q4FY2020 performance was below our as well as street expectation with revenue and PAT declining by ~17% and ~25%, respectively, during the quarter. Lockdown at the end of the quarter affected pre-season sales of the summer portfolio, resulting in a sharp decline of 19% in domestic revenue (international business decreased by just 4%). Post acquiring required approvals, the company started manufacturing essential products from April 10, 2020, and gradually scaled up its operations to 100% in some of its plants. Trade and supply chain have normalised in few...

Valuation and Outlook: We have valued the stock based on 2.7x forward P/EV on discount of 0.8x and44.4x forward P/VNB with at a discount of 0.9x and has arrived at a price targetof Rs.418 with potential upside of 5%.

Valuation and Outlook: We have valued the stock based on 5x forward P/EV and 57.5x forward P/VNBwith a premium of 1.05x and has arrived at a price target of Rs. 574 with potentialupside of 11%.

Our TP is INR 86 (8x EV/e Sep-21E standalone earnings and INR 25 from investments).The stock is currently trading at 2.4x FY22 EV/e. Our ADD recommendation on ONGC with a TP of INR 86 is premised on rich OCF yield of 6/35% and divided yield of 14% for FY21/22E. We believe the current valuations are contextually low after adjusting for investments (OVL+ other) at 4.0x FY22 PER

rationalization by 10-20% to result in cost savings in FY21. COVID-19 led to a revenue loss/spillover of Rs1.6-1.8bn. While cost generation at Rs486mn was below expectations of Rs1.2bn as lockdown impacted collection efforts and led to inventory pile up. Given the uncertain timeline regarding start of the upcoming academic year, full recovery of...