Maintain BUY with TP of Rs 970, 20x FY20E. Mindtree posted robust revenue growth and in-line profitability. Revenue came at USD 226mn, 5.5% QoQ led by digital (45% of rev) growth at 8.3% QoQ. EBITDA% stood at 16.1%, +103bps QoQ supported by operational efficiencies (+30bps impact). APAT stood at Rs1.70bn, adjusted for write-back of earn-out from prior acquisitions (Rs0.13bn).
In FY18, MTCL's revenue grew by 8.6% YoY to USD847m, EBITDA by 3.1% YoY to INR7.4b and PAT by 29% YoY to INR5,701m. Excluding the one-offs from the reversal of acquisition liabilities, PAT grew 19.6% YoY to INR5,007m. However, the exit to the year was far healthier on the operational front, with USD revenue up 15.6% YoY to USD226m, EBITDA up 26% YoY and PAT up 87% YoY to INR1,822m. QoQ revenue grew 5.5% v/s our estimate of 4.3%. EBITDA margin expanded 100bp QoQ to 16.1%, largely in line with our estimate of 15.9%.
Our revised TP is Rs 231 (3x FY20E ABV of Rs 77). Our recent interaction with the City Union Bank (CUBK) reaffirms our consistently bullish view. CUBK has repeatedly quashed apprehensions around growth (23% loan CAGR over FY06-17) and delivered stable asset quality across cycles. Its relatively weaker liability franchise is more than compensated by a flourishing asset profile. We believe CUBKs balance of deep customer relationships, employee motivation and rock steady astute top management will propel the bank to greater heights.
Deposits for the bank grew at 24% YoY and 13% sequentially. The CASA portion for the bank stood at Rs 5,840 cr rising by 25% YoY & 7% sequentially. CASA ratio stood at 24.33% vs. 24.31% YoY. Retail term deposits stood at 50.18%. Cost of funds...
GRUH Finance (GRHF) reported strong 4QFY18 results, with continued high-teens loan growth, an improvement in margins and lower-than-expected operating expenses. However, higher tax expenses drove in-line PAT. Disbursements were up 20% YoY to INR15.1b for the quarter and up 28% YoY for the full year. Disbursement growth in the quarter was driven by home loans (+24% YoY) and developer loans (+33% YoY). Loan growth came in at 18% YoY/5% QoQ. The loan book stands at INR156b.Growth in the LAP book continues to decline (+13% YoY), while the NRP loan book continues to de-grow (-9% YoY).
DCB Bank continued to deliver healthy performance on all major metrics in 4QFY18 as well led by (a) strong growth in loan book (+28.6% YoY & 9.4% QoQ); (b) all-time high NIMs of 4.16% in FY18 vs. 4.04% in FY17; (c) strong growth in other income (+33.4% YoY & 13.2% QoQ); (d) continued sequential improvement in C/I ratio to 59.4% vs. 62.3% in 3QFY18; and (e) lower fresh slippages of Rs805mn vs. Rs1,031mn in 3QFY18. Led by 70% YoY and 16% QoQ improvement in upgrades and recovery from gross NPA to Rs667mn, its headline gross and net NPA ratio came in at 1.79% and 0.72%, respectively compared to 1.89% and 0.87% in 3QFY18. The Bank's overall stressed loan portfolio, which improved sequentially, remains within the Management's comfort zone....
Past Underinvestment Comes Back To Bite; Renewal TCV Skew Poses Growth Risk; Capital Return To Support Stock The 4QFY18 performance of Infosys was broadly in line, with revenues being slightly weaker and margins being a tad better than expected. Importantly, Infosys gave FY19 revenue guidance of 6%-8% in constant currency or CC terms (7%-9% in USD terms) broadly in line with street expectation but a tad above our CC estimate of 5%-7%. It had delivered 5.8%/7.2% growth in CC/USD terms, respectively, in FY18. Infosys indicated that the revenue growth guidance is purely organic and does not include any acquisitions or any material revenues...
HCL Technologies (HCLT) in keeping with its stated M&A; strategy of focus on all three modes in 2018, announced two acquisitions in the first-half of April, 2018. One of them was Actian Corporation (Palo Alto-based software product company) in partnership with Sumeru Equity Partners (SEP), a technology and growth-focused private equity firm. HCLT will own ~80% stake and SEP will own ~20% stake in the joint venture which, in turn, will own 100% shareholding of Actian Corporation. The all-cash deal valued at US$330mn has come at a valuation of ~3xCY17 sales (in line with its earlier IP acquisitions at 3.0x-4.0x sales). Our preliminary study suggests the rationale behind the stated acquisition is: (1) Strengthening of HCLT's Mode-3 offerings in...
In Line Quarter & Guidance; Growth Investments & Cash Return Key Positives Infosys delivered an in-line performance in 4QFY18, with revenue rising 1.8% QoQ (0.6% QoQ in CC terms) to US$2,805mn, almost exactly in-line with our estimate. Aided by currency, lower SG&A; and offshore mix, EBIT margin rose by 46bps QoQ, while volume growth came in at 1.2% QoQ. The Management has guided for FY19E USD revenue growth at 7-9% (6-8% in CC terms), in-line with our and street expectations. However, the management guided for lower margin at 22-24%, owing to investments in business on digital, increasing localisation of US staff and reskilling employees. The wide margin band is negative, which gives room for margins to come in at the lower end of the band. FY18 EBIT margin was at 24.3%, which implies margins could fall...
DCB Bank (DCBB) reported PPoP growth of 23% YoY (12% beat), as the 7%beat on total income was offset by the 4% miss on opex. NII growth of 20%YoY was led by 29% loan growth, while other income rose 33% YoY (39% YoY core fee income growth led to a 16% other income beat). 4QFY18 NII included INR26.2m from interest on tax refund. Cost-to-core income ratio stood at 60.1%, the lowest since 4QFY16.Provisions at INR388m (+14% YoY) were in line, while higher-than-expected taxes partly offset the PPoP beat, resulting in PAT (INR642m, +21% YoY)exceeding our estimate by 12%
INFO's FY19 guidance of 6-8% revenue growth in CC is in-line with our forecast. However, EBIT margin guidance of 22%-24% is a miss. However, we believe that INFO is making the right investments needed to drive higher growth. We believe that Mr Salil Parekh's Four-pillar strategy would enable INFO to drive...
L&T Finance (LTFH) recently raised equity capital amounting to INR30b, of whichINR20b came from the parent (L&T). As a result, leverage has declined from previous elevated levels of ~8.5x to ~6.1x now. We believe LTFH is now well capitalized for growth, and will not need to raise equity capital at least in the next 3-4 years. Over the past two years, there has been a modest increase in the share of retail loans from 26% to 30%. On the wholesale lending front, there has been a mix shift toward real estate finance (its share has increased from 6% to 12% over the same period), while the contribution of other wholesale finance segments (infra, structured finance, etc.) has declined. However, the increased share of real estate finance is likely to translate into strong growth in the retail home loan segment in the coming years, in our view.
DCB Bank reported a healthy set of Q4FY18 numbers with business traction and earnings coming in above our estimates Advances grew at a strong rate of 28.6% YoY (highest in the last six quarters) to | 20337 crore mainly led by the corporate, SME and...
INFO's CC revenue growth guidance of 6-8% YoY was nearly in line with expectation. The marginal beat can be ascribed to a weaker exit in 4Q (0.6% CC) than our expectation (1.5% CC). This implies that the CQGR will be better if the guidance is met. We have cut our earnings by ~2% for FY19/20E, factoring in the weaker exit and the marginal profitability decline. INFO's performance in recent years has been in line with peers. The guidance on revenues was on expected lines. However, we believe that the lower end of the EBIT margin band of 22% is conservative, with pricing pressures seemingly tailing off and the share of higher-margin Digital inching up. Our price target of INR1,330 discounts forward earnings by 16x. Maintain Buy.
JLR's wholesale volumes grew 6.4% YoY (+ 33.9% MoM) to 76.2k units(including China JV's 7,126 units) in March 2018. Jaguar volumes increased 2.7% YoY to 21.04k units (est. of 21.2k units), while Land Rover (LR) volumes rose 7.9% YoY to 55.2k units (est. of 55.9k units). For FY18, JLR wholesales grew 5.4 % YoY to 633.5k units, as LR sales rose 8.3%to 457.3k units, while Jaguar sales declined 1.4% to 176.2k units. JLR's retail volumes declined 7.8% YoY (- 109.8% MoM) to 83.7k units in March2018. LR sales fell 5.7% YoY to 59.4k units, while Jaguar sales were down by 12.7% YoY to 24.3k units.
Bajaj Electricals' (BEL) engineering, procurement & construction (EPC) division has seen a revival in performance post FY15 supported by new high margin orders. Also, BEL has bagged orders worth | 2389 crore from Purvanchal Vidyut Vitaran Nigam, UP under the Saubhagya Yojana (government's flagship rural electrification programme). This is in addition to BEL's outstanding order book of | 3000 crore (as on Q3FY18) that will be executed in 15 months. Considering the government's thrust on infrastructure development with aggressive allocation to the infrastructure...
M& HCV industry volumes grew by 12% in FY18, driven largely by strict implementation of rated load capacity in markets of UP, Rajasthan and Haryana. While truck volumes grew 20%, bus volumes declined 25% in FY18. Truck segment tonnage grew over 30% due to mix improvement towards higher tonnage vehicle. MAV/Tractor trailer grew over 35% whereas haulage segment was down 21%. Tippers grew 6%, whereas ICVs grew 28%. This is reflected in strong growth in the North, East and Central markets, but muted growth in the South and West.
We met the management of Shriram Transport Finance (SHTF) and returned with renewed optimism on its business prospects. Over the past few years, while CV volumes have been stagnant, there has been a marked shift in mix towards higher-tonnage vehicles. In addition, price hikes in the past two years have been healthy (18-20% on new vehicles). While the addressable market size for SHTF in terms of volumes will remain largely stable, we believe better pricing and mix will drive disbursement and AUM growth. AUM is likely to grow 18-19% in FY18 as compared to the management's earlier guidance of 15% growth. We keep our FY18 AUM growth estimate of 18% unchanged,but modestly increase FY18-20E AUM CAGR to 17%
4QFY18 turned out to be a good quarter for the Jewellery division, with retail growth coming in at mid-teens, despite no new collection launch. Growth was driven by successful diamond jewellery activation and the revised gold exchange policy. Watches performed strongly in the quarter, aided by the multi-brand and e-com platforms. Prescription Eyewear, too, sustained its growth momentum, while Sunglasses business continued to suffer.
