DMart's 2QFY19 earnings-report reflects a massive margin disappointment (8% vs 9.1% in 2Q LY and 8.9% for FY18) which is likely to mask the excitement that a 38.9% growth in revenue would otherwise have created. The business has brought down prices across categories to further drive store-throughput; the consequent EBITDA miss of 3.7% vs our forecast, however, means that the incremental revenue garnered through the price-cuts (2QFY19 revenue was 8.7% ahead of our expectation) have not been able to entirely protect the business' profit pool at least not just yet. We reckon it could take a few quarters before operating leverage starts to entirely offset the margin erosion impact, but we are confident...

Maintain BUY with TP of Rs 2,400, at 24x Sep-20E EPS supported by >60% RoIC and >4% FCF yield TCS strong performance (in-line) was digital-led and driven by momentum in core verticals, robust client metrics and deal signings. Revenue came at USD 5,215mn, 3.7/11.5% QoQ/YoY in CC terms (3.5% QoQ est) which was its fastest growth in three years (in YoY CC terms). EBIT margin was in-line at 26.5%, +148bps QoQ (26.3% est) impacted by INR depreciation. APAT stood at Rs 79.27bn, 7.7% QoQ supported by lower ETR

HUL's volume performance was in line with our estimate (+10%) while the operational performance was a beat. Volume growth was led by (1) improvement in rural growth (1.2-1.25x urban) (2) and increase in sales reach. We believe that the performance was encouraging as in the fourth consecutive quarter the company has delivered double digit volume growth and margin expansion. We expect that the volume growth would reduce to single digit due to unfavorable base; 6%+ volume growth over a medium-term can be taken sanguinely considering the size of the...

Another best-in-class delivery but largely in the price now HUL's 2QFY19 key operating metrics comprising volume growth of 10%, revenue growth of 12% and 160bps expansion in operating margin were undoubtedly strong and commendable but were all bang on expected lines and no more a massive positive surprise as such. We expect the stock to be more range-bound hereonwards. Focus would be more on what the volume delivery for 3QFY19 and thereafter would be, since double-digit volume growth' would be in the base from 3Q onwards. Management remains quite confident and upbeat; key commentaries: 1) Demand outlook is stable. 2) Rural growing ahead of urban....

TCS's Q2FY19 result was in-line with our forecast as regards reported US$ growth, EBIT and EPS. However, there was a slight miss as regards CC revenue growth which came at 3.7% QoQ (vs. our forecast of +4.5%) and EBIT margin improvement of +150bps to...

12 October 2018 LIC Housing Finance An analysis of the liability structure shows that LICHF still has a meaningful chunk of relatively high-cost liabilities that are set to mature over FY19-20. Assuming refinancing of these NCDs at 9.0%, the impact of overall cost of funds is only 15-20bp each year. Our base case assumption is that the NCDs maturing in FY19/20 as well as the new NCDs issued are at 9.0%. We have done a sensitivity analysis to see impact on PBT due to refinance of maturing NCDs at various interest rates.

Double-digit Growth Finally, But Sustenance In FY20 Will Be The Hard Part After a gap of two years, TCS has got back to growing its revenues at a double-digit rate (YoY) in CC terms in 2QFY19 11.5%. Besides a better macro, TCS indicated an improvement in its market share that drove this performance. TCS indicated that double-digit growth will continue in 2HFY19, despite seasonality. We believe sustenance of this beyond FY19 will be a tough task in the weak global macro backdrop that seems to be developing in 2019, after a rather supportive one in 2018 (see our recent report Peaking Global Capex Cycle). In FY19, TCS has been the only Tier-1 Indian player, despite its large size, to deliver double-digit organic growth - expectations at the beginning...

TCS won US$4.9bn TCV in 2QFY19 (similar to 1QFY19), implying book-to-bill ratio of 0.94x. BFSI accounted for the maximum value of US$1.5bn (US$1.6bn in 1QFY19). Like the previous quarter, TCS witnessed broad-based revenue growth in 2QFY19 with most verticals clocking healthy growth in CC terms, barring MFG, COMM and ENU. Improving growth momentum in BFSI and Retail verticals is the biggest positive, in our view. Looking ahead, we expect the IT major to clock double-digit growth in FY19E both in CC and USD terms. Digital hit 28.1% of total revenue (25%), clocking a robust 16.5% QoQ CC revenue growth. On margin front, TCS has hit a level within its...

11 October 2018 In line with its recent commentary, TCS managed to return to double-digit YoY CC revenue growth (+11.5% YoY; thanks to currency benefit of 120bp. PAT grew 22.6% YoY to INR79b (our TCS won deals with total contract value (TCV) of USD4.9b the same as last quarter. It expects to grow in double- digits for the remainder of the year, the ask-rate for which is not demanding. To grow 10% YoY CC in FY19, the CQGR required in 2H is 0.3%. To grow 10%+ YoY CC in each quarter, flat revenue in 3Q and 1.9% QoQ CC growth in 4Q should suffice. trade war and Brexit are potentially unnerving, TCS continues witnessing strong demand in the US, led mainly by BFSI and Retail. UK remains a complex geography, but is currently seeing demand in BFSI, Retail and even Manufacturing.

Britannia Industries Ltd (BRIT) is India's leading packaged foods company. Britannia's product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy products including cheese, beverages, milk and yoghurt.

finalized by the Ministry of Defense (MoD) in May 2018, a 7.5% PBT margin would be allowed v/s the earlier 10-12% margin. Order book continues to be strong. With the LRSAM order of Rs 92 bn, the...

While Mr Bakhshi presented last quarterly results at ICICIBC, the upcoming results announcement now becomes much more important as it will provide much-needed clarity on the banks performance and the revised business strategy under the new leadership. We believe that the development has raised hopes of a quicker turnaround in the banks earnings/business performance. Mr Bakhshi has been associated with ICICI Group for 32 years and also served as CEO at two well-performing subsidiaries ICICI Prudential Life and ICICI Lombard early in his career. Under the leadership of Ms Kochhar, ICICIBC had shared its strategy to achieve 15% consolidated RoE by Jun-20 and a net NPL ratio of <1.5% by Mar-20. Mr. Bakhshi started his career with ICICI Ltd. in 1986 and has worked across different functions/businesses of ICICI Group. Prior to this role, Mr Bakhshi was Deputy MD of ICICI Bank.

Strategy in-place to become a Total foods company' Britannia Industries Ltd (BIL), a flagship company of the Wadia Group, is one of the largest packaged food companies in India with presence in bakery & dairy products....

We analyzed NTPC's FY18 annual report. Key highlights: Under-recoveries in fixed charge and employee cost led to ~9% decline in NTPC standalone's (NTPCsa) core PAT, as against an increase of ~16% in regulated equity in FY18. However, reported PAT was up ~10% YoY to INR103b, supported by prior-year items, provision reversal and one-off gains. Core RoE declined ~300bp YoY to ~17% in FY18. Excluding under-recovery in fixed charge and employee cost, core RoE stood at ~20% (unchanged YoY)....

Petroleum and Natural Gas Regulatory Board (PNGRB) have announced the final tariff for four gas pipelines of Gail. The upward revision in tariffs was above our estimates. The tariffs for the important Dahej-Uran-PanvelDabhol pipeline (DUPL-DPPL) increased 54% from | 24.49/mmbtu (~| 1.14/scm) to | 37.78/mmbtu (~| 1.76/scm). This pipeline has gas transmission volumes of ~14 mmscmd i.e. ~13% of Gail's current volumes. Also, tariffs of other three small pipelines have increased 161691%. Subsequently, we increase our tariff estimates by ~5.6% from H2FY19E onwards and increase tariffs from | 1.42/scm to | 1.51/scm for FY20E. The tariff revision has led to an increase in FY19E EPS by 1% and...

The GST Council is scheduled to meet coming Friday, Sep 28 to, inter alia, decide on a way to raise funds to help re-build Kerala after the state faced massive losses from severe flooding last month (Aug'18). The natural consequence of this is, expectedly, renewed pressure on ITC's share price. Interestingly, the GST Council may not need any parliamentary approval for this additional levy since Article 279A of the Constitution has already been amended to allow the GST Council to recommend any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster'. We expect the stock to recover once the event is out of the way this week, as we do not expect the fresh levy to be all that...

Elephant set to dance despite getting enormous We see Usha Martin (UML) steel business acquisition as a smart move given the attractive discount of 30% to greenfield cost for a well-integrated asset providing product diversification and synergy benefits. We see that Net Debt/EBITDA for consolidated operations including both Bhushan (BSL) and UML (excl. European business which is getting shifted to JV) is likely to remain in a comfortable zone of 3.1x in FY20E (vs 2.9x at FY18 end) led by strong cash flows of domestic business given the favorable steel cycle and low cost metrics. We expect TSL to abandon...

24 September 2018 received a positive opinion from CHMP for its Neulasta biosimilar for the EU market. BIOS/Mylan also have in place the EU good manufacturing practices (GMP) certification for their drug product and drug substance facilities. Biocon/Mylan would be the fourth team to receive a positive opinion for Neulasta for the EU market. Accord (subsidiary of Intas Pharma) and Coherus received a positive opinion in July 2018, followed by Sandoz (Novartis division) and Cinfa Biotech in September 2018. The global market size of Neulasta is ~USD4.5b (as of CY17; ex-US sales USD600m). Separately, the drug product facility was inspected in April-May 2018 and received the Establishment Inspection Report (EIR) in June 2018. Successful inspections at both its facilities imply minimal regulatory hurdles for sales of pegfilgrastim biosimilar in the US market. BIOS/MYL, leading companies vying for approval in the regulated markets are Apotex, Sandoz, Coherus, Pfizer and Dr.