With 16% YoY India growth and 12% QoQ decline in exports, INDR's net sales declinedby3%YoYinQ4FY18.ThestoppageofUSandrestrictiononEUexports fromGoaplantreducedexportsinregulatedmarketsby17%QoQand37%YoY. Highercontributionofdomesticbusiness(63%inQ4FY18vs51%inQ4FY17)led...

However, PAT grew 358% to | 17 crore (I-direct estimate: | 3 crore), mainly due to higher other income (| 15 crore in Q4FY18 vs | 6 crore in Q4FY17) and lower tax rate (15% in Q4FY18 vs 36% in Q4FY17) EBITDA growth revival visible in FY18 For FY18, revenues were flattish with growth of 1% to | 592 crore vs. | 586 crore in FY17. However, the EBITDA margin has improved 280 bps YoY to 22.8% in FY18. The improvement in EBITDA margin has been owing to fuel expense as a percentage of sales declining 200 bps from...

Bharat Heavy Electricals (BHEL) posted 4QFY18 revenues of Rs101.5bn, up 4% YoY, 6%/4% below our/consensus estimates, respectively. Gross margin increased 380bps YoY to 49.5% in 4QFY18. Other expenses fell 32% YoY to Rs19bn owing to netting-off of forex gain of Rs1.9bn (versus the earlier practice of including it in other income). Consequently, EBITDA stood at Rs12.3bn, translating to an operating margin of 12.1%, above our/consensus estimate of 8.1%/8.6%, respectively. Impacted by a high tax rate (60% versus 19.7% YoY), the bottom-line stood at Rs4.6bn, below our estimate of Rs5.4bn. Order inflow in 4QFY18 stood at Rs253bn aided by receipt of Patratu (Rs117bn) and Panki (Rs44bn) EPC projects. Order...

Heidelberg Cement (HEIM) reported a strong set of numbers for 4QFY18 driven by higher realization which was up ~10% YoY/~4% QoQ at Rs4,137/tn (above our estimate of 3,916/tn). The realization gains were also partially due to change in commercial terms post GST introduction. Volume gained 5% YoY at 1.27mnmt (below our estimate of 1.35mnmt), on account of healthy demand in Uttar Pradesh (UP) and Madhya Pradesh (MP), key markets of HEIM. Effectively, revenues grew ~16% YoY to ~Rs 5.3bn (in line with our estimate). However, operating costs/tn rose only ~2% YoY/declined ~5% QoQ to Rs3,237/tn, despite a challenging environment, following controlled energy and raw material cost inflation. Consequently, EBITDA grew ~52% YoY to...

Reiterate SELL, with a TP of Rs 2,848 (40x FY20E EPS). UNSPs 4QFY18 revenue and gross profit were better than expected. Healthy volume growth of 16% in P&A; segment led to outperformance. However, this was offset by increased employee costs (+53%) and A&P; spends (34%).

Refer to important disclosures at the end of this report Revenue guidance and Halol restart a positive; events factored in earnings Q4FY18 results had a number of one-offs, including higher operating income (milestone from Almirall), significantly higher non-operating income and tax write-backs. Adjusting for these, operating revenue and EBITDA largely stood in line with expectations. FY19 revenue guidance at low teens growth, significant incremental investments in R&D; & building of front-end marketing for the Branded business. The US Branded business...

The India Cements (ICEM) reported a weak operating performance for 4QFY18 because of the decline in realisation. Cement volume was up 6.4% YoY at 3.09mnmt (below our estimate of 3.34mnmt). However, realisation declined 2% YoY/rose 2%QoQ to Rs4,528/tn (above our estimate of Rs4,324/tn). Effectively, revenues grew only ~4% YoY to ~Rs13.9bn (below our estimate of ~Rs14.5bn). Operating costs increased ~1.1% YoY/5.5% QoQ to Rs4,024/tn because of raw material costs and other expenditure. Limited pass-through because of weakness in key ICEM markets led to EBITDA margin compression of 291bps YoY to 11.3% YoY. Effectively, EBITDA/tn stood at Rs510/tn, down ~23.7% YoY (below our estimate of...

28 May 2018 Deloitte Haskins & Sells was the statutory auditor of MANB since FY11. The auditor resigned four days prior to the scheduled 4QFY18 result announcement and stated the following reason, We This event has come as a surprise, just ahead of the earnings release. We will wait for the 4QFY18 results and further disclosures.

core sales of Rs67.1bn with an adj. EBITDA of Rs14.1bn (adj. EBITDA margin 21.1%)andadj.PATofRs9.2bninQ4FY18,againstourestimatedsales,EBITDA and PAT of Rs65.6bn, Rs13.7bn and Rs8.3bn respectively. Adj. EBITDA margin wasmarginallydown10bpsQoQ.Whiletherewasnoexplanationforvariation ingrossmarginvariabilityofQoQ,webelievethatoneoffinventorywriteoffin Q3FY18 due to withdrawal of ANDAs along with lower COGS in Taro were the reasonforhighergrossmarginQoQ.ManagementalludedforHalolresolution withouttherequirementofreinspectionoftheplantbyH1FY19E.Therewere...

Higher Expenses and Lower GRM Lead To Subdued Earnings Hindustan Petroleum Corporation or HPCL's 4QFY18 profit declined 10.5% YoY and 3.9% QoQ to Rs17.5bn because of: 1) Weak gross refining margin or GRM of US7.1$/bbl in 4QFY18 versus US9$/bbl in 3QFY18 and US7.9$/bbl in 4QFY17. 2) Other expenses at Rs33.5bn increased 37.5% YoY and 20.7% QoQ. 3) Increase in employee benefit expenses by 16.7% QoQ to Rs7.8bn. However, a further decline in earnings was mitigated by: 1) Rise in product sales from 8.76mmt in 4QFY17 to 9.39mmt in 4QFY18, up 7% YoY. 2) Rise in refinery throughput from 4.52mmt in 3QFY18 to 4.63mmt in 4QFY18....

Subdued Earnings Because Of Lower GRM and Higher Expenses Indian Oil Corporation (IOCL) reported earnings of Rs52bn for 4QFY18, down 34% QoQ, primarily because of: 1) Lower gross refining margin or GRM of US$9.2/bbl in 4QFY18 versus US$12.32/bbl in 3QFY18, mainly on account of lower inventory gains of Rs24bn in 4QFY18 versus Rs53bn in 3QFY18. 2) Decline in refinery throughput from 18.2mmt in 3QFY18 to 17.2mmt in 4QFY18. However, earnings grew 40% YoY on account of: 1) Higher expenses in 4QFY17 relating to pay and allowances as per the Third Pay Committee's recommendations and revision of existing liabilities relating to entry tax totaling Rs 66bn. 2) Higher GRM of...

Modest consumer performance; EPC springs a surprise Bajaj Electricals (BEL)'s adjusted net profit grew 126% YoY in 4QFY18 on the back of EPC (revenue/EBIT grew 44%/110%). On the other hand, Consumer Products revenue grew 15% YoY (like to like basis), in line with JMFe. Aggressive bidding in recent past (after a lull in FY15-17) led to massive new orders in EPC in 4QFY18 (Orderbook of INR 90bn vs INR 31bn in Jan'18), executable over next 18-20 months. The management guides for INR 35-40bn revenue with c.8% EBIT margins in EPC segment while maintained 15% revenue growth and 6-7% EBIT margin guidance in Consumer Products. We continue to remain cautious on the...

4QFY18 was a weak operating quarter for Dr Reddy's with Revenues/EBITDA/PAT being 4%/22%/13% below our estimates. Revenues declined 1% YoY to INR 35.3bn mainly driven by the decline in (i) US generics (-6% YoY; -10% QoQ) due to increasing competition in key products, and, (ii) Russia (-25% YoY; -24% QoQ) due to lower off-take by channels. While gross margin improved 230bps YoY to 53.5% (vs. JMFe 54.1%), EBITDA margin declined 83bps YoY to 15.6% (JMFe 19.3%) due to increase in SG&A; expenses (+10% YoY), translating into EBITDA declining 6% YoY to INR 5.5bn (22% miss). PAT declined 3% YoY (10% QoQ) to INR 3.0bn (13% miss), partly benefitting from gains from sale of investments (net finance income of INR 1.0bn in 4QFY18)....

EBITDA and adj. PAT of Rs34.9bn, Rs3.5bn and Rs2.3bn and way below our estimates by 6%, 51% and 25% respectively. The company also missed the consensusestimatesby4%,21%and27%respectively.Theoptimisticguidanceof themanagementonthelaunchofonecomplexdrug/quarterandQ4FY18wasto be first strong quarter (to begin a series of good quarters) has been a strong disappointment.Itssalesdeclinedby9%QoQandwasflatYoY,whilegrossmargin declinedby210bpsQoQand32bpsYoY.Adj.EBITDA marginwas11.6%vslofty guidanceof1618%.Overall,Q4FY18hasbeenKitchensink'quarterasitalways...

Sales, EBITDA, PAT below estimates: Dr Reddy's (DRL) sales, EBITDA and adj. PAT decreased by 7%, 29% and 10% QoQ respectively. Adj. EBITDA margin droppedto15.9%asthecompanycontinuestomaintain1213%R&D;expenses without seeing monetisation of IPR assets. DRL's sales, adj. EBITDA and PAT werebelowourestimatesby7%,34%and37%respectively.Themanagement reiteratedthechallengesfacedinUSalongwithadversedevelopmentinRussia (25% YoY decline in local currency) and GST related issues leading to tepid performanceofDRLinQ4FY18.PSAIgrew15%QoQand16%inYoYduetoprice...

Dalmia Bharat Enterprises (DBEL) reported a healthy performance for 4QFY18 on double-digit volume growth YoY driven by higher volume. Volume grew ~14% YoY to 5.18mnmt (above our estimate of 4.96mnmt), mainly contributed by the eastern region. Realisation was up ~4% YoY/down 1% QoQ to Rs4,892/tn (marginally below our estimate of Rs4,915/tn) on account of better pricing in the eastern region. Overall revenues grew ~21% YoY to ~Rs 26.4bn. Operating costs increased ~10% YoY to Rs3,956/tn (marginally below our estimate of Rs4,000/tn) because of high raw material, energy, logistics and employee costs. Effectively, EBITDA grew ~7% YoY to Rs5.9bn...

Strong Earnings Growth, But Margin Compression Raises Concerns Sobha reported a net profit of Rs654mn for 4QFY18, up 42.2% YoY and 22.5% QoQ. Sales volume stood at 1.01mn sqft in 4QFY18, an increase of 9% QoQ and 40% YoY. Revenues stood at Rs7,696mn, up 30.7% YoY and 11.2% QoQ. Despite the rise in revenues, we still have concerns such as: 1) Margin compression - Sobha reported EBITDA margins of 17.7% for 4QFY18, down 270bps YoY and 210bps QoQ. 2) Although the sales volume increased, average realisation at Rs 6,457/sqft declined 1% QoQ and 8% YoY. Despite ordinary EBITDA-level performance, the earnings boost came on account of: 1) Higher other income...

Thermax posted 4QFY18 consolidated revenues of Rs14.4bn, down 3% YoY and 8%/12% below our/consensus estimate, respectively. The top line was lower by ~Rs2bn because of e-way bill related despatch issues. Gross margin was up 150bps YoY at 45.3%. But other expenses rose 10.5% YoY to Rs3.3bn, leading to 200bps YoY decline in EBITDA margin to 9.6%. EBITDA fell 20% YoY to Rs1.4bn, lower than our/consensus estimate of Rs1.8bn each. While core profit stood at Rs929mn, losses from subsidiaries and associates worth Rs172mn (Thermax's share) pulled down adjusted net profit to Rs757mn, below our/consensus estimate of Rs1.2bn each. The consolidated order inflow in 4QFY18 was healthy at Rs16bn (versus Rs11.7bn YoY). Consequently, the consolidated order backlog stood...

JK Lakshmi Cement (JKLC) reported a steady set of numbers for 4QFY18 driven by higher realisation. Cement realisation (adjusted with readymix concrete or RMC revenues of Rs 410mn) were up by ~13.6% YoY to Rs3,835/tn (above our estimate of 3,735/tn). However, volume declined 2.5% YoY to 2.23mnmt (below our estimate of 2.75mnmt) in a seasonally strong quarter, indicating supply pressure in its key markets. Revenues grew 11.2% YoY to ~Rs 9.0bn (below our estimate of Rs ~10.6bn). However, following higher energy, logistics and employee costs, the overall operating costs/tn rose ~11% YoY to Rs3,565/tn EBITDA grew ~41.5% YoY driven by realisation gains to ~Rs1,013mn (below our estimate of Rs 1,123mn). EBITDA margin improved by 242bps YoY to 11.3%...

GMM's GL sales volume in FY17 was ~1400 vessels with capacity utilization of 75%. GMM is undertaken a debottlenecking exercise and aims to achieve 2,100 GL capacity volume in FY19. During Q4FY18 capacity utilization level was at 80% level given the strong order book (8 months), for full year FY18 GL volume stood at 1500 vessels (80% utilization), Management targeting to achieve 1800 vessels in by the end of FY19 (20% volume growth from FY18). The Company's GL business grew at 10% CAGR during FY14-17. We estimate the same growth to continue going forward on the back of >10% growth in end-user industries ( Pharma 10-12 %, Chemicals 12-14%; Most of the chemical players are in capacity expansion mode). Revenue contribution from pharmaceutical industry restricted to 30% during Q4FY18 compared to more than half of GL revenue due to the challenging environment in the sector and increased order from chemicals sector. Management expects in FY19, recovery in the pharmaceutical sector as capex cycle to get the better pace. Currently, The Company had 5 furnaces...