Revenue target of Rs 250bn: CCRI has set itself an ambitious revenue target of Rs 250bn by FY25/FY26 (Rs 7bn in FY19), factoring in the paradigm shift expected post DFC commissioning and material revenue...

The zero cost EMI financing segment is witnessing strong competition with private banks entering the space aggressively. Though growth momentum remained strong for Bajaj Finance (41% in FY19), we believe growth and margin in this high yield segment can face headwinds, as current liquidity environment favours banks with rich CASA. Share of consumer business (low risk - high NIM) has been moderating from ~45% of AUM in FY17 to 39% of AUM in FY19, as the company tries to build portfolios of mortgage, SME, etc. Hence, margins seems difficult to sustain over 10% in the medium...

markets but lacks digital banking. Mobiquity will help HEXW to build digital banking solutions & Omni channel banking capability. Services offered by both companies are complementary to each other rather than competitive. We are estimating 18.7% USD revenue growth for HEXW which includes 24% growth in Mobiquity (USD47mn for 6.5 months) & organic growth of ~13% in CY19E & 18.5% USD revenue growth in CY20E. We cut our EBIT margins by 30bps/50bps for CY19/20E due to higher depreciation and slight lower margin business of Mobiquity. We expect lower other Income Led by USD130m...

Our interaction with AL's MHCV dealer in Gujarat indicates a fragile demand environment with over 20% drop in volumes in Apr-May'19. The volume decline should persist in Q2 due to a high base, surplus capacity with transporters, and lower transporter profitability. Volume growth is expected to gradually recover in H2FY20, driven by pre-buying before the BS6 transition. BS6 cost increases are expected to be in the range of Rs80,000150,000. After the transition, volumes are likely to decline steeply in H1FY21. to the implementation of the new axle-load norms and lower freight availability. In addition, blended discounts remain elevated at Rs450,000/unit. We expect earnings to slump at a 23% CAGR over FY19-21E. Maintain high-conviction...

Q4FY19 top-line grew by 9% YoY supported by significant rise in real estate revenue to Rs224cr while PMC growth was subdued (3.6% YoY). EBITDA margin declined by 79bpsYoY to 7.5% due to rise in material cost and absence of high margin re-development revenue....

We attended CEAT's annual Investor day and are downgrading the stock Change in Estimates | Target | Reco from Hold' to Reduce' on account of further downside that we see to margins and rise in debt levels. Given the various capacity expansions (capex of...

We attended CEAT's annual Investor day and are downgrading the stock Change in Estimates | Target | Reco from Hold' to Reduce' on account of further downside that we see to margins and rise in debt levels. Given the various capacity expansions (capex of...

Management indicated that it is looking at accelerating store addition (v/s 21 inFY19) and that it is open to further explore the lease model to reduce the capex intensity (capex/sq.ft. up 2.5x over FY16-19). We expect 24 store adds and 26%revenue CAGR over FY19-21.

Sector: Auto Ancillaries /Mid-Cap | Earnings Update 4QFY19 Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. The company has a ~7% share of the global market. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. The company has been undertaking various actions like setting up warehouses in markets in North America and Europe to be closer to the customer and have a just in time (JIT) system. The company sales to over 130 countries through...

We recently met the management of Tech Mahindra's (TML's) to see if there has been any impact of the US-China trade tensions as well as slowing global growth on its prospects in FY20. TML had recalibrated its revenue growth guidance for FY20 post 4QFY19 against the one given at its analyst meet (link) and post 3QFY19. Enterprise segment (~59% of FY19 revenue) is expected to grow at 6%8% versus 8%-10% indicated earlier. Communication vertical (~41%) growth has been upped by 100bps from the mid-single digit indicated then. TML indicated that it is too early to get any client reaction due to incremental stress from the US-China trade tensions. Considering that a broad swathe of companies had already indicated cost pressures (see our sector report We Downgrade of December 2018, page 11-12) from the 10% tariff that was imposed in 2018 we think that pressure...

COAL needs to spend c40+% (FY15-21E) of OCF on capex, yet EBIT growth is mainly driven by price hikes. COAL is a cash (dividend) cow as it pays all FCF after capex as dividends. In our view, this is the only benefit that minority shareholders get. We thus believe a realistic way to value COAL is to focus on its dividend paying potential, hence we use DDM to value COAL. We maintain our SELL rating on COAL with a TP of Rs199. COAL reported strong Q4FY19 that beat market expectations comprehensively driven by better FSA realization & bonus related to FSA vol, which were offset partly by higher than expected employee cost. Overall, the result was a beat at the Revenue / EBITDA/PAT level. More importantly, this result doesn't setup COAL in a position to even meet our FY19 div est. of Rs 17/sh. Dividend announced thus far in FY19E is Rs 13.1/sh and there is little scope for a further round of div for the year.

Poor operational performance impacts b/s in FY19 Rupa reported yet another tepid performance with revenue growth of mere 3.1% YoY to | 1154.7 crore in FY19. In a bid to enhance the share in growing premium menswear segment, the company undertook various licencing of international brands. However due to intense competitive scenario (Van Heusen from ABFRL and CK in Arvind), the management has been unable to scale up its business as per expectations. Higher incentives offered by competitors have negatively impacted the offtake from dealers. Oban...

After the formation of new state government in Andhra Pradesh, the government has announced cancellation of some infra projects sanctioned by previous government prior to April 1, 2019. As per government, It is noted that a number of engineering works were...

EBITDA was down by 56% while the margin down by 1400bps on account of lower realisation in the US and inventory write-offs. Weak filing momentum as categorized by ~5 filings in FY19 with the major one being Imbruvica ($2.97 billion sale in FY19) Key drivers of revenue in FY20 will be India, Brazil and Canada which together is expected to see high growth in FY20-21E. We revise downward our revenue estimates by 14%/11% for FY20/21E while the PAT estimate by 13% in FY20 and 6% in FY21...

We lower our earning estimates by 11% & 8% for FY20E & FY21E to factor in near impact on earnings. Despite this, we expect earnings to grow by 23% CAGR over FY19-21E. We roll forward to FY21E and value HAVL at 36x (historical average) given its high brand recall, strong retail presence and strong balance...

Mahindra & Mahindra (MM) clocked a 6% YoY rise in Q4FY19 standalone revenue to Rs 140bn, with realisations up 6% despite stagnant volume growth. EBITDA declined 6% YoY to Rs 16.5bn but came in above our estimate, as did margins at 11.7%. Adj. PAT was broadly in line, dipping 9% YoY to Rs 9.3bn. We trim FY20/FY21 earnings estimates by ~2% each to build in softer volumes and also pare our target core P/E multiple from 14x to 12x. Upon rollover to Mar'20, our TP remains at Rs 760....

We attended Hero MotoCorp's (HMCL) analyst meet where management reiterated its dual focus of making inroads into the premium segment and retaining its hold on the deluxe segment. While acknowledging immediate concerns from higher insurance costs, new ABS/CBS norms and cramped liquidity, HMCL believes India's macro climate is favourable. Management also remains optimistic on exports and expansion into newer markets. Macro climate favouring long-term industry growth: HMCL is optimistic on growth prospects of the 2W industry in the mid-to-long term, underpinned by...

Some Respite From Disappointment, But Sustainability Is Key The India Cements (ICEM) reported a steady operating performance on a weak base in 4QFY19 backed by realisation gain. Cement volume, including clinker, picked up ~8.0% YoY at 3.33mmt (above our estimate of 3.24mmt) helped by the busy season (4Q). Realisation gained ~5.3% YoYat Rs4,672/tn. Effectively, revenues grew by a steady ~12% YoY to ~Rs15.6bn (in line with our estimate of ~Rs15.2bn). Cement revenues grew ~13.6% YoY. Operating costs increased ~2.5% YoY (3% QoQ) to Rs4,119/tn, primarily on account of higher energy costs and raw material expenditure. Realisation gain driven by better cement prices in key ICEM markets led...

US beat drives in-line Q4; guidance less impressive Q4FY19 EBITDA of Rs 8.9bn has multiple moving parts: (1) US$ 60mn-65mn bump up in US business, (2) one-time sales impact of Rs 11bn from AML transition in India business, and (3) Rs 500mn forex loss. Adjusted for these, EBITDA is in line. FY20 sales growth guidance in low double-digits to midteens, near-term margin pressure with rising specialty spends, and continued price pressure in US generics can trigger consensus EPS downgrades. We further...

While our thesis of margin contraction is playing out, we remain generous with a ~13% rev CAGR and margins largely flat at 38% in our estimates. These result in 16% earnings CAGR. ROEs are at ~20%. DIVI is trading at 31/27x FY20/21E EPS, a ~50% premium to peer-avg and ~40% above historical avg, much of which corresponds to periods of 40% plus return ratios. Even so, valuations have rarely crossed 25x one-year forward P/E. With return ratios in a significantly lower range, current valuations look unsustainable. Maintain SELL with a TP of Rs 1,445 (22x FY21E EPS). DIVI may be a good business, but the price is clearly wrong. We maintain SELL on DIVI, following a significant drop in profitability. Our thesis is playing out, even as our estimates remain unchanged. At 22x FY21E EPS, our TP stays at Rs 1,445/sh (more than 15% downside).