Driven by healthy 4.9% growth in volumes and strong growth in top-5 accounts, Hexaware posted 4.7% QoQ growth in consolidated revenue in CC terms in Q2CY18. Notwithstanding revenue and currency tailwinds, EBIT margin came in at disappointing 14% down by 10bps QoQ mainly impacted by lower utilisation and higher visa cost. Management raised its CY18 revenue and EPS growth guidance to 12-13% and 13-14%,...

Mindtree reiterated its expectations of 1) stronger-than-industry growth rate along with improving profitability in the near term (3-5 years). Modest outlook despite exceptional Q1 performance, indicates likely growth moderation in the upcoming quarters. Within the next 10 years, Mindtree intends to become an IP-led organization. To achieve this, it has entered into partnerships with educational institutions, such as Stanford.to create monetizable IPs. We believe that these IPs will require upfront investments which would impact its profitability and cash-flows in near term. The company elaborated on various use cases and strategy in Digital, suggesting its...

We attended the analyst meet of Mindtree (MTCL) held on 3 September 2018. The meet showcased its digital and automation capabilities areas of concern for us. While MTCL seems to be on the path of improvement in these, we believe it is still not at par with some of its larger peers with which it will have to compete for large deals. The medium-term (3-5 year) plan is one of driving faster-than-industry growth and of margin expansion. EBITDA margin is sought to be raised to 16%-18% from 13.6% in FY18. MTCL reiterated at the meet that in digital, customers are more capability- focused than on scale and hence it is not at a disadvantage vis--vis larger peers, be they Indian or global. We are not entirely convinced about this view...

Berger is the second biggest decorative paint company in the country. In Q1FY19, in the decorative segment, Berger reported 15% YoY volume growth. The decorative business constitutes around 80% of Berger's overall business and typically grows at 1.5x the GDP of the country. The current volume growth of...

Net interest income grew by 9.5% and PAT grew by 15% YoY in Q1FY19 mainly led by 17% YoY growth in loan book. NIM contracted by 23bps to 4.24% in Q1FY19 against 4.47% in Q1FY18 due to 93 bps decline in yield on advances. Deposit grew by 10% YoY in Q1FY19 in which CASA grew by 13%....

Although EBITDA grew impressively by ~23% YoY underpinned by benefits of price hike and operating leverage, expansion in margin was restricted to only 47 bps YoY owing to higher input cost. We factor consolidated revenue CAGR of 16% over FY18-20E driven by its capacity expansion, continued new product launches and aggressive network expansion. Despite improvement in capacity utilization, price hikes and benefit of operating...

Set for a retreat: We reiterate our SELL rating on the stock with reduced target price at Rs 1150 2.5x FY20 P/B(earlier Rs 1430 3.1x FY20 P/B). The stock trades at 57% premium to the long term average (~ 7 yrs P/B 1yr Fwd.) of ~ 2.3x and we believe is yet to factor in a relatively weaker return profile as we factor in deeper pressure on spreads, moderation in AUM growth and guarded optimism on the anticipated operating leverage.

Revenue Mix Worsens, Realization Improvement to Take Time: Denim contributed 60% of the total revenues, at Rs. 2168 Mn as of Q1FY19, vs 69%, in Q1FY18 and the sales of yarn and fabric continues to be higher, by 6% on YoY basis.

Mr M D Ranganathan resigns from the role of CFO after a stint of 18 years (3 years as CFO; term ends on Nov 16, 2018) to pursue opportunities in new areas. The hunt for the new CFO has begun and Mr Jayesh Sanghrajka (Deputy CFO) can be a possible candidate for the replacement. But, given Infosys' recent preferences, we cannot rule out the possibility of an external candidate. While no specific reason has been mentioned for Mr Ranganathan's untimely exit, we see following 3 possible factors that could have triggered this event: (1) Mr Ranganathan's wanted to pursue CEO's role, which was ruled out at Infosys post the appointment of Mr...

Low base effect, margins under pressure: Q1FY19 results came below our estimates. YoY revenue grew by 17.8% on the back of low base effect. However, Margin performance has disappointed, EBITDA margin is recorded at 7.3% vs our estimate of 10.4% owing to pressure from higher material costs (73.7%).

SUNP's sales, adj. EBITDA and adj. PAT grew by 6%, 7% and 1% QoQ Change in Estimates | Target | Reco respectively due to strong growth in India formulations and US generics as those contributes 66% of consolidated sales. SUNP's Q2 performance has...

The India Cements (ICEM) reported weak operating performance for 1QFY19 because of the sustained fall in realisation. Cement volume continued to pick up with 15.8% YoY growth at 3.08mnmt (above our estimate of 3.0mnmt). However, realisation continued to decline 10.3% YoY/2.5%QoQ to Rs4,323/tn (below our estimate of Rs4,323/tn). Effectively, revenues grew only ~5% YoY to ~Rs13.6bn (in line with our estimate of ~Rs13.8bn). Operating costs decreased ~5.4% YoY/2.6% QoQ to Rs3,917/tn because of savings in logistics cost and other expenditure. Limited pass-through because of weakness in key ICEM markets led to EBITDA margin compression of 326bps YoY to 11.5% YoY. Effectively, EBITDA/tn stood at Rs510/tn, down...

Dalmia Bharat Enterprises (DBEL) reported a steady performance in 1QFY19 backed by YoY double-digit volume growth. Volume grew ~13% YoY to 4.51mnmt (below our estimate 4.67mnmt), contributed by its key markets. Realisation, however, fell ~4.8% YoY/flat QoQ to Rs4,881/tn on account of weak pricing in the southern/eastern region. Overall revenues grew ~16% YoY to ~Rs23.7bn. Additionally, operating costs increased ~10% YoY to Rs4,088/tn (5% above our estimate) contributed by higher raw material and energy costs, and also other expenses. Effectively, EBITDA declined ~6% YoY to Rs5.24bn versus ~Rs5.6bn in 1QFY18 (above our estimate of ~Rs4.9bn). EBITDA/tn stood flat at Rs1,135 versus Rs1,333 as cost inflation and weak...

Improved growth & Healthy Margins: ESAB reported Q1 results above ourestimates. Q1FY19 earnings have witnessed a 61.5% YoY growth on the back of YoY revenue growth of 36.5% supported by an EBITDA growth of 65.4%.

Strong Earnings Driven By Inventory Gains, But Interest Expenses Up Indian Oil Corporation (IOCL) reported earnings of Rs68bn for 1QFY19, up 30.9% QoQ and 50.2% YoY, primarily because of: 1) Higher gross refining margin or GRM of US$10.21/bbl in 1QFY19 versus US$9.2/bbl in 4QFY18 and US$4.3/bbl in 1QFY18, mainly on account of higher inventory gains of Rs 59bn in 1QFY19 as compared to Rs24bn in 4QFY18 and an inventory loss of Rs28bn in 1QFY18. 2) Rise in refinery throughput from 17.2mmt in 4QFY18 and 17.5mmt in 1QFY18 to 17.7mmt in 1QFY19. 3) Employee benefit expenses at Rs23.6bn in 1QFY19 declined 19.5% QoQ and 1.9% YoY. 4) Domestic product sales at...

formulations, INDR's net sales increased by 4% YoY in Q1FY19. The stoppage of US and restriction on EU exports from Goa plant reduced exports in regulated markets by 55% QoQ and 60% YoY. Higher contribution of domestic...

API prices and while EBITDA margin increased by 160bps QoQ. The increase in EBITDA margin was benefitted from lower overheads which management guided to increase in later part in FY19E. Further adjusted with normalised other expenses and R&D; expenses, normalized EBITDA margin was 9.5%, declined by 360bps QoQ. Tax provisioned 29%, guided effective tax rate of 27%, while cash tax outflow was 31%. GNP's Q1FY19 was disappointing given that it launched two limited...

Key products in US and price cuts in Japan impact revenues and profits: Lupin's revenues decreased by 0.4% YoY to Rs 38.5 bn in Q1FY19 lower than ourestimates of Rs 41.5 bn on the back of dismal performance in US market.Business from EMEA and India clocked decent growth, while US and LATAMshowed de-growth of 26% and 1% YoY respectively.

Merck's Q2CY18 results were a mix bag. Topline was 27.2% below our estimates given the divestment in the business, however PAT was 7.6% above our estimates given better than expected EBITDA. Sales grew by 33.3% YoY to Rs2.2bn. EBITDA margins were at 23.1% up QoQ from 12% given higher gross margins and reduced OE. APAT was...

Thermax posted 1QFY19 consolidated revenues of Rs10.4bn, up 19% YoY and broadly in line with our/consensus estimate, respectively. Gross margin was down 110bps YoY at 50.1%. Other expenses rose 30% YoY to Rs2.6bn (up 210bps YoY as a percentage of sales to 25.4%), leading to 160bps YoY decline in EBITDA margin to 6.7%, much below our/consensus estimate of 9% each. EBITDA fell 4% YoY to Rs693mn. Higher other income (up 29% YoY at Rs310mn) led to 21% YoY increase in PAT to Rs490mn, below our/consensus estimate of Rs641mn/Rs589mn, respectively. The consolidated order inflow in 1QFY19 was healthy at Rs16.5bn, leading to a strong order backlog of Rs64.2bn, up 13% QoQ. Thermax is focusing on executing its robust order book (which will lead to healthy revenue...