We initiate Buy on State Bank of India (SBIN) with a target price of Rs 240 (SOTP basis, valuing core book at 0.6x FY22E ABV and Subsidiary value at Rs 110). SBIN with business size of ~Rs 57trn is the largest commercial bank with ~22.8/19.7% market share in deposits/ advances in India.

Poised for a quantum leap; Valuations fully priced Dixon Technologies (Dixon) reported 1QFY21 sales of Rs5.2bn, down 55% YoY due to COVID-19 disruptions. The topline was 4%/9% below our/consensus estimates. Consolidated gross margin was up 60bps YoY at 12%. EBITDA fell 68% YoY to Rs169mn with an operating margin of 3.3%, down 130bps YoY due to lower production and under-absorption of costs. The margin was above our/consensus estimates of 1.3%/2.9%. PAT fell 93% YoY to Rs16mn (partially aided by lower tax rate at 26% versus 34% YoY). The bottom-line was above our/consensus of loss of Rs84mn/Rs34mn, respectively. Achieving scale, migration to ODM, new customer acquisition...

Pressure on earnings from hit on soda ash volumes to persist We maintain Sell on Tata Chemicals Ltd (TTCH) based on our revised earnings and Target Price of Rs232 post the 1Q results concall. We have cut earnings 33.1%/11.6% over FY21/FY22E, but raised the TP 7.5%, based on a 10% increase in our Target EV/E (our new estimates represent trough volumes/margins for chemicals), and the increase in the value of its stake in Rallis India. Management expects volumes in the troubled soda ash business (around 75% of revenue) to recover gradually over the next 6-9 months, while adding that this hinges on a recovery in the auto/realty segments, which accounted for 32% of global soda ash demand. There are signs of...

Valuation and Risks: Since its listing in Nov 2016, VBL has historically traded consistently within its avg1 year forward PE of 47x. Given the pandemic and economic downturn, we factor in the risk regarding longevity of the economic troubles and value the stock at a discount of ~ 10% (40x) from its 1 year forward PE since listing on CY21E EPS of Rs. 20.8 and recommend BUY'.

4 August 2020 Godrej Consumers (GCPL) 1QFY21 earnings were in line. Household Insecticides (HI) sales were better than expectations. However, Soaps disappointed with 2% YoY sales decline, despite a favorable environment. Gross margins were below expectations due to an adverse mix. A sharp 46% YoY cut in ad-spends meant that EBITDA was slightly ahead of expectations. We do not see any visibility for the single-digit EPS trajectory of the past 5 years to change materially any time soon. RoCE at less than 20% is also much lower than peers and is unlikely to improve materially over the next few years. Thus, valuation of 40.5x FY22E seems fair. EBITDA grew 3% YoY to INR4.7b (v/s est.

Torrent Pharmaceuticals Limited (Torrent) reported strong performance for Q1FY2021. Revenues at Rs. 2,056 crore increased by 1.7% y-o-y on account of 2% growth in India business, while other geographies reported a decline. The chronic heavy portfolio in the Indian markets led to revenue growth. Operating profit at Rs. 661 crore increased by 22% y-o-y and was better than estimates. Operating profit margin (OPM) at 32% expanded by 540 bps y-o-y, backed by expansion in gross margins and lower other expenses. Strong operating performance percolated to the bottom line as well. Consequently, PAT for the quarter stood at Rs. 321 crore, up impressively by 49% y-o-y and was ahead...

EIL has a healthy balance sheet that is debt free in nature and surplus cash of ~| 170 crore as of FY20P. It has a capital efficient business model with nearly ~15% RoCE, ~>20% RoIC's and controlled working capital cycle (<90 days). It has also been a consistent CFO and FCF positive company with present CFO & FCF yield presently placed at ~7% & ~4% respectively. These attributed place EIL in good stead making it aptly capable to tide over...

Saregama India's revenues for Q1FY21 fell 39.2% YoY to | 76.5 crore due to Carvaan sales declining to 15,000 units vs. 219,000 in Q1FY20 as retail stores were shut during lockdown. EBITDA came in at | 18.9 crore, up ~16x YoY, due to lower promotion costs (high marketing expense in base quarter) and reduced production costs and contract manufacturing charges with EBITDA...

VST Industries reported resilient sales despite manufacturing, supply chain as well as retails selling points remaining closed for~40 days. Gross sales declined merely 4.4% but net of excise, sales were down 19.4%. Cigarette sales de-grew 4% to | 274.7 crore while tobacco sales fell 7% to | 40 crore. Cigarette volumes were down 39% (similar to ITC's decline of ~40%). The company took a blended price hike of 11% after the excise increase in Budget in February 2020. The new price points for Edition', Total' are | 11, | 7, respectively. More, importantly it curtailed trade promotions & schemes...

We have mildly tweaked our estimates and retain ADD with an unchanged TP of Rs 715. A strong spurt in cash volumes (88.2% YoY) bolstered capital markets APAT 63.5% YoY (-5.9% vs. estimates), while a steep decline of 16.2% YoY in QAAUMs meant that AMC's APAT declined 33.3% YoY (-8.8% vs. estimates). Management enhanced provisions to 27.8% (+556bps QoQ) of GNPLs due to the potential COVID-19 impact, which resulted in MOHL reporting a 35.1% YoY lower APAT. Significant MTM gain (Rs 1.3bn, +272.3% YoY) on treasury resulted in MOFS (ex. MOHFL) APAT growth of 98.1%.

Tata Motors: In 1QFY21, Tata Motors reported a loss of Rs 84bn due to the impact of the lockdown on the India business and at JLR. The silver lining was that CJLR (China JV) has broken even this quarter as retails in China recovered sharply. Tata Motors is continuing with its cost-cutting initiatives (Charge+ savings target is raised to GBP 2.5bn for FY21 from GBP 1.5bn earlier). The company is moving ahead with the subsidiarisation plans for the India passenger car business. Geopolitical uncertainties will partially offset the improving outlook, in our view. Reiterate ADD. Sun Pharma: Suns Q1 EBIDTA/PAT beat expectations on account of improved gross margin (product mix, productivity) and lower expenses (SG&A; and R&D;). India business grew by 3% YoY (chronic led). The US business declined 25% QoQ, impacted by muted trends in specialty (in line with expectations) and generics (Taro, price erosion). However, market share for specialty products were maintained at pre-Covid levels. The scale up in specialty is key to drive operating leverage and margins. While the costs pertaining to this business are largely expensed, the revenue traction is yet to be seen. Suns balance sheet continues to remain strong (repaid ~USD200mn debt in Q1). We increase our EPS estimates by 4%/7% to factor the beat and improvement in gross margin. We maintain Add rating with revised TP of Rs535. Indian Oil Corporation: We maintain ADD on IOC with a target price of INR 96, owing to an expected recovery in demand for petroleum products and, subsequently, refining margins in 2HFY21E....

Sun's balance sheet continues to remain strong (repaid ~USD200mn debt in Q1). We increase our EPS estimates by 4%/7% to factor the beat and improvement in gross margin. We maintain Add rating with revised TP of Rs535 Suns Q1 EBIDTA/PAT beat expectations on account of improved gross margin (product mix, productivity) and lower expenses (SG&A; and R&D;). India business grew by 3% YoY (chronic led). The US business declined 25% QoQ, impacted by muted trends in specialty (in line with expectations) and generics (Taro, price erosion). However, market share for specialty products were maintained at pre-Covid levels. The scale up in specialty is key to drive operating leverage and margins. While the costs pertaining to this business are largely expensed, the revenue traction is yet to be seen.

Production disruption caused by the extended lockdown resulted in lower-than-expected sales volume of higher-margin specialty 45%/302% due to strong volumes and higher realizations in the enterprise declined 26% YoY and stood at INR2.4b with EBIT margin contracting 70bp to 1.4%. GOAGRO's CP business is expected to be on strong footing due to (a) product launches in the standalone CP segment, (b) strong performance in Astec owing to its expertise in triazole chemistry, and (c) commencement of a new herbicide In the AF segment, increase in chicken/milk prices should improve farm profitability, thereby driving demand for broiler/cattle feed. Crop protection segments performance was impacted as the company took a conscious call to reduce the receivable for The company launched new herbicides during the quarter Delete Aqua and Production disruption caused by the extended lockdown resulted in lower-than- expected sales volumes of higher margin specialty products.

Cholamandalam Invst. & Finance Company Ltd (CIFC) Q1FY21 earnings performance was better than expectations as provisioning was much lower than estimates accompanied by improvement in cost to income. However, since the morat book tag still remains elevated at ~76%

Mold-Tek Packaging (MTEP) reported numbers beat all our estimates owing to better than expected traction in demand in June 2020 from across sectros like Paints, Lubes and F&F.; Net Sales at Rs.65cr down 44% YoY (Rs. 32cr our estim) as operations across segments were hit for month of April

Well provided for; visibility on recoveries; downside risks limited State Bank Of India (SBI) reported strong earnings for 1QFY21, led by margin expansion (up 4bps to 3.01% on reported basis). We were expecting the margin to contract due to high liquidity of the balance sheet amid lack of credit opportunities. As a result, NII grew by 16.1% YoY and 17% QoQ. Domestic NIM improved by 23bps YoY and 5bps QoQ to 3.24%. Besides an improving asset quality and reduction in the quantum of reversals, what also supported the NIM was the reduction in cost of deposits (down by 46bps QoQ to 4.48%). Non-interest income was nearly flat YoY and down 40% QoQ. Fee income was down 13.7% YoY and 43.2% QoQ. Total opex grew by 2.1% YoY but was down 11.3%...

Sun Pharmaceutical Industries' (SPIL) 1QFY21 revenue at Rs75,853mn is down 7.3% QoQ and 9.4% YoY as there was a slowdown across geographies with India and API business being an exception. US sales (US$282mn) declined by 33.5% YoY and 21% QoQ. Emerging Markets sales were down 10% YoY as the company lost tender sales in South Africa. Rest of the world sales declined by 18% YoY due to slowdown in Japan and lower sales of Taro Pharma (ex US). In line with the broader trend seen so far, API sales grew by 20% YoY and India sales were up in low single digits. Revenue is 5% above our estimate and 6% below consensus estimate. Despite weak revenue, EBITDA declined by just 7.6% YoY, growing by...

Ujjivan SFB reported an operationally strong quarter with operating profit growing by 33.1% YoY and 12.6% QoQ. NII growth stood at 29.9% YoY (down 1.8% QoQ) on account of lower disbursements as well as margin contraction. Disbursements during the quarter were Rs4.74bn, down 84% YoY and 85% QoQ as lockdown disrupted the MFI sector. Given the lockdown, the business could only start in June'2020 but it is expected to pick up 2QFY21 onwards. The general sense currently is that the rural-oriented and MFI segments should be able to bounce back faster than expected. During the quarter, USFB focused on its existing customers with 95% of the microfinance loans (by volume) accounted for by repeat loans (fresh loans were only 5%). In this...

Background: Persistent Systems Limited offers complete product life cycle services. The Company's segments include Infrastructure and Systems, Telecom and Wireless, Life science and Healthcare, and Financial Services. The Company's products include Connected Healthcare, which is an integrated healthcare ecosystem; ShareInsights Platform, which allows organizations to analyze an overlay of enterprise data with public or cloud sources to derive insights; Digital Banking, and Accelerite, which provides cloud solutions, endpoint management and mobility. The Company provides product engineering services, platform-based solutions and...

Outlook & Valuation: We downgrade our revenues by 4%/2% to Rs 348 Bn/Rs 385Bn for FY21E/FY22E on account of downgrade in Domestic formulations, US/Taro and other businesses.