Completely defying the realisation challenges witnessed in 2QFY20, Shree Cement (SRCM) has reported a super performance in 2QFY20. While EBITDA zoomed by a stellar 62% YoY (-6% QoQ) to Rs8.4bn (vs. our estimate of Rs6.7bn), cement EBITDA/tonne stood at strong Rs1,451 (Rs314 higher than our estimate) as against Rs946 in 2QFY19 and Rs1,443 in 1QFY20. Higher than expected EBITDA/tonne is attributable to: (a) Rs100 lower opex/tonne than estimated; and (b) Rs213/tonne higher realisation than estimated. Sales volume remained soft as per expectations at 5.72mnT (+1.5% QoQ and -5.5% QoQ), while average cement realisation improved by 9% YoY (-1.1% QoQ) to Rs4,356/tonne despite having significant presence in Eastern region. Cement...

We recommend BUY with a SOTP based TP of Rs240. We value ACEM's standalone cement biz 11x its Jun-21E EBITDA and its 50% stake in ACC at a 20% holding disc. While ACEM's upcoming expansions would not arrest market share, robust profitability has made its valuations attractive. The stock currently trades at 10.5/9.2x its CY20/21E EBITDA and at an EV of USD 120/MT. We recommend a BUY on Ambuja Cements with a TP of Rs 240 (SOTP based). In 3QCY19, strong pricing more than offsets weak demand. Thus, standalone net sales/EBITDA/PAT rose 1/23/31% YoY to Rs 26.26/4.40/2.35bn respectively.

Supreme is one of the largest plastic processor in India with manufacturing capacity of ~ 6 lakhs tonnes. It has four business division namely Plastic piping division, Industrial products, Packaging products and consumer furniture segments. Supreme Industries is one of the largest PVC pipe and consumer furniture companies with organized market share of ~14% and 26% respectively. Further, Supreme's plastic piping division (contributes ~58% in topline) grew at CAGR of ~15% during FY11-19 (against Industry growth of ~12%) led by sustained demand of pipes from housing and...

The recent tax cut by the government from 33% to 25.2% is likely to boost earnings of Kansai Nerolac (Kansai) by 3% and 6% for FY20E and FY21E respectively. We change our earnings estimates and target price accordingly. We believe a tax cut would help demand revival in both decorative and industrial paint demand (with revival in automotive industry). This would also help organised players to gain market share from the...

High concentration to rural to drive future growth Dabur derives 40-45% of revenue from rural sales vs 35% for the industry, which has led the company to grow at 20% sales CAGR over FY09-14 period. However, rural slowdown due to GST and demonetisation over last 4 years has resulted in a tepid topline growth of ~4% in the last 5 years. Though high base in FY19 and recent rural slackness may impact company's performance in FY20, we remain positive on long term growth prospects for Dabur. We believe that government would increase its measures to improve...

PVR reported yet another strong quarter with robust box office performance boosting the topline and bottomline show. Footfalls came in at 29.3 mn, up 25% YoY and much better than our estimate of 20% growth with box office revenues at | 492 crore, up 31.6% (our estimate was 25% growth), The SPH at | 99, grew by 11% YoY, resulting in 38% growth in F&B; revenues. Advertisement revenues grew by 15.6% YoY (ex- SPI, growth at ~8.9%), better than our expectation of overall growth of 12% YoY. EBITDA (without impact of Ind AS116) came in at | 194.4 crore, up 56.8% YoY, and much...

TVS Motors (TVS) is the third largest two- wheeler manufacturer in India with a market share of 14.8% in FY19. Q2FY20 revenue de-grew by 13%YoY due to sluggish Industry...

We maintain HOLD rating on the stock with a revised target price of Rs.2,210 based on FY21 PE of 55x. Revenue growth in-line with expectations The company reported topline growth of 6.7% for Q2FY20, aided by strong growth in Home Care segment (Rs. 3,371cr./+9.5% YoY), followed by Food & Refreshment (Rs. 1,847cr./+8.4% YoY) and Beauty and Personal Care (Rs. 4,543cr./+5.3% YoY). Despite unfavorable macroeconomic conditions and slow urban and rural demand, companys innovation driven strategy facilitated strong performance and maintained its position...

Federal Bank Ltd is a major Indian commercial bank in the private sector headquartered in Kerala having 1,251 branches and 1,942 ATM/ Recyclers and a loan book size of ~Rs116,000cr. A muted sequential growth in interest income due to the decline in the yield on advances from 9.55% in Q1FY20 to 9.33% in Q2FY20. Business growth was moderate at 17%, with advances and deposits growing at 15% & 18% YoY respectively. The provisions slightly increased on a YoY basis and the bank has...

The stock has surged ~35% in a month and almost fully reflects our bull case, leaving little upside. Government's demonstrably weak stance on auto fuel pricing (across different political regimes), expected credit rating downgrades (likely on losing implicit GoI support on balance sheet) and rich valuations compel us to downgrade BPCL to SELL A group of Secretaries on disinvestment has approved the strategic sale of Government of Indias (GoI) entire 53.2% stake in BPCL. The Department of Investment & Public Asset Management (DIPAM) has floated a request for proposal inviting transactions, legal advisors and asset valuers for this purpose. Yet, there is uncertainty on whether this will lead on to genuine privatisation or yet another stake sale to a Public Sector Unit (PSU).

After a relatively steady show over the trailing three quarters, a small but broad stumble (growth, margins and opex) is evident. Even as corporate slippages were significantly higher (largely from identified stress), the steady watchlist and a <2% SMA book provide consolation on asset quality. At 1.1x FY21E ABV, valuations are cheap and reflect FB's inconsistent journey through challenging macros. It is noteworthy that the incumbent MD&CEO was granted a only year's extension by the regulator (with conditions for further extension). Maintain BUY with a TP of Rs 119. FB saw higher slippages, margin contraction, slower growth and an opex bump up in 2QFY20. A static watchlist was the silver lining. With a TP of Rs 119 (1.5x Sept-21 ABV of Rs 79), we maintain BUY.

Mindtree's growth trajectory has lowered following the management/promoter transition and significant deceleration in top account (a key growth driver). While Mindtree's inherent business strengths of strong digital practice (front-end), marquee accounts and exposure to high growth verticals are in place, leadership transition, modest growth in digital and large account volatility are near term risks. We expect USD rev/EPS at 10/11% CAGR over FY19-22E and at CMP Mindtree trades at 15.5x FY21E EPS. We maintain NEUTRAL on Mindtree following an in-line 2QFY20. Recovery in BFSI and operating trajectory is offset by volatility in large accounts/attrition spike. Our TP of Rs 760 implies 14x Sep-21E EPS.

Avenue Supermarts Ltd (DMart) owns & operates India's most profitable supermarket, DMart. It provides products like Food, Non-Food (FMCG), General Merchandise & Apparel through 189 stores (total 6.5mn sq. ft). We downgrade to HOLD due to limited upside and premium valuation....

Although growth in south India has been relatively slow, management expects a turnaround in the second half this year, which will likely provide additional support to earnings. We increase our EBITDA estimate by 9%/4% for FY20/21, given the strong second-quarter performance and managements focus on screen addition A multitude of factors including its healthy growth prospects, strong competitive positioning, continuous increase in ATP and bright opportunity to grow ad revenue justify premium valuations. These bode well from the top- and A multitude of factors, including healthy growth prospects, competitive positioning, continuous increase in ATP and a bright opportunity to grow advertisement revenue, justify premium valuations. Also, this could provide additional source of revenue to producers which can lead to investment in better and big Management highlighted a major trend in the industry South Indian movies dubbed in Hindi are performing exceptionally well.

After a weak quarter performance in Q1FY20, Mindtree reported a good Q2FY20 with beat on revenues and in-line margins. Revenues in constant currency grew by 3.2% QoQ and 11.1% YoY while adjusted EBITDA margins expanded 40 bps QoQ to 13%. Growth in revenues was broad based among verticals across geographies. In terms of digital revenues, it increased 2.6% QoQ & 18.7% YoY and comprised 38% of revenues while digital TCV was up 2.2% QoQ. Pointers which were key draggers in this quarter were 1) Dip in total TCV by 5.2% QoQ 2) Increase in attrition to 16.5% (vs. 13% in...

Recently, Tech Mahindra has secured a multiyear contract from AT&T; communications. The expansion of the strategic collaboration focus on accelerating AT&T;'s IT network application, shared systems modernization and movement to the cloud. As per media sources, it is the largest deal with a consideration of ~$1 billion. Previous to this deal, company has bagged an outsourcing contract of $100 million from Vodafone in New Zealand (media sources). Company's management commentary also indicates a revival in large deals, as companies move towards bigger transformation...

Despite challenging scenario, HUVR delivered a strong Q2FY20 with a beat on all counts versus our estimates. UVG was healthy at 5% (ahead of our 4% estimates) and growth as broad based across segments.

Regulatory tailwinds like Institutional participation, Indices and tie-up with Retail bank subsidiaries can boost trading volumes further and increase depth in the long run. Globally Institutional clients account for ~50% of the total derivatives volumes. We continue to remain constructive on the long-term growth opportunities and the concern related to increase in competition is behind us. There has been no impact of the whistle-blower letter and the physical delivery mechanism remains robust. We estimate revenue/PAT CAGR of 19/22% over FY19-22E. We see value in MCX based on (1) Embedded non-linearity, (2) ADTV growth, (3) Market leadership and (4) Net cash of Rs 14bn (~28% of Mcap). Risks include regulatory delays, increase in competition and drop in Bullion volumes and commodity volatility. We maintain BUY on MCX based on in-line revenue and margin beat in 2QFY20. Market share (94%) is increasing despite rise in competition. Embedded non-linearity and cost control is leading to margin expansion. We assign 30x to core Sep 21 PAT and add net cash (20% discount) to arrive at SoTP of Rs 1,175 (16% upside).

While Wipro continues to lag growth within Tier-1 IT, its relative growth underperformance has reduced with growth moderation of larger peers. We reckon that growth will continue to lag peers ahead based on soft outlook on ~52% of rev comprising BFSI (earlier a growth driver), Mfg (re-structuring ME) and Technology (semicon sub-segment). This is expected to be offset by relatively stronger outlook in Consumer, Healthcare (ex-HPS) and E&U (large deals). While slowdown concerns remain (BFSI/large accounts-led) with limited scope of margin expansion (SG&A normalisation). The stock has corrected ~6% in 3M (following the buyback trade) and valuations are at ~13.7x FY21E (vs. 14.1x Tier-1 IT median). We expect USD revenue growth of 2.4/5.7/6.4% and IT services EBIT% at 17.9/18.0/18.2% for FY20/21/22E. We maintain NEU on Wipro post in-line revenue and operating performance. Increased headwinds in BFSI/large accounts offset the improving outlook in Consumer/Healthcare. Our TP of Rs 230 is based on 12x Sep-21E EPS.