mix from ROW markets and API sales. The new ANDA launches, favourable forex and steady growth in India formulations kept EBITDA flat despite price erosion of its US portfolio by 8%. The forex loss of Rs1.3bn have impacted PAT to 72% QoQ decline in Q3FY19. Overall GNP's revenues were marginally better than expected considering the benefits of key launches (gWelchol, gVagifem, Tacrolimus, gNitrostat, gMupirocin) in US and better traction in India. The management guided for...

We maintain our SELL rating on COAL. COALs Revenue/EBITDA/PAT of Rs 250.5/67.9/ 45.7bn were well ahead of street estimates of Rs 238.2/50.1/38.1bn, driven by 1) good FSA realization at Rs 1,334/t (+2% q/q, +13% y/y) 2) strong e-auction realization at Rs 2,892/t (+10% q/q, +43% y/y & 113% premium to FSA price vs 98/69% in 2QFY19/3QFY18) 3) in-line costs 4) operating leverage due to higher sales volume at 154 mt (+12% q/q).

Thermax continued its strong execution traction with 29% YoY growth in consolidated revenues to Rs14.4bn in 3QFY19, 7%/6% above our/consensus estimate, respectively. However, commodity cost inflation, INR depreciation and a large share of fixed-price contracts led to lower profitability. EBITDA grew only 12% YoY to Rs1.1bn with a 100bps YoY decline in operating margin to 7.5%, below our/consensus estimate of 7.9%/8.5%, respectively. PAT stood at Rs750mn, up 28% YoY, after goodwill impairment of Rs875mn for its subsidiary Thermax Netherlands BV and creation of deferred tax asset worth Rs974mn for its subsidiary TBWES. Consolidated order inflow in 3QFY19 was up 5% YoY at Rs14.8bn, largely driven by standard product orders in the absence of large projects. Order...

Sanghi Industries' (SNGI) dismal show continued in 3QFY19, with flat cement volume growth and sharp cost escalation that offset realisation growth. Cement volume (including marginal clinker sales) were flat YoY at 0.66mnmt on steady demand in key markets. However, realisation gained 3.4% (adjusted for ready-mix concrete or RMC revenues of Rs69mn)at Rs3,897/tn. Conversely, operating costs rose ~18% YoY to Rs3,516/tn driven by higher energy, logistics and raw material expenses and the impact of lower clinker exports that reduced blended volume in 3QFY19. Effectively, EBITDA margin declined sharply to 12.1% from 22.1% in 3QFY18 as EBITDA fell steeply by 48% YoY to Rs322mn. EBITDA/tn fell 43% YoY to Rs485/tn (in line with our estimate of Rs489/tn). Interest expenses declined - following debt refinancing at...

New CEO Focus On Strengths. Enterprise Pivot May Suffer Persistent Systems (PSL) yesterday appointed Christopher (Chris) O'Connor as CEO. Chris will be based in the US and join on February 25, 2019. According to the press statement Chris led the Internet of Things (IoT) business unit at IBM including roles as its General Manager, Head of Sales and Head of all software R&D.; He has been the founding strategist, leader and industry wide innovator of IBM IoT. His prior roles in IBM have centered around building new businesses for IBM such as Systems Management, IBM Commerce and Financial Software, and founding the IBM Smart Cities software and...

The India Cements (ICEM) reported a weak operating performance in 3QFY19 as the slide in realisation continued. Cement volume continued to pick up with ~8.5% YoY growth at 2.95mnmt (below our estimate of 3.11mnmt). Realisation fell ~2.6% YoY to Rs4,320/tn. Effectively, revenues grew only ~8.5% YoY to ~Rs13.2bn (below our estimate of ~Rs13.9bn). Cement revenues grew only ~6% YoY. Operating costs increased ~5% YoY (flat QoQ) at Rs3,994/tn, primarily on account of higher energy costs. Continued weakness in realisation owing to the demand-supply imbalance in key ICEM markets led to EBITDA margin compression of 360bps YoY to 10.2% YoY. Effectively, EBITDA/tn fell sharply to Rs430/tn,...

JK Lakshmi Cement (JKLC) reported a listless operating performance in 3QFY19 driven by double-digit volume gain. Cement realisation (adjusted with ready-mix concrete or RMC revenues of Rs410mn) was flat YoY at Rs3,979/tn (above our estimate of Rs3,943/tn). The volume push in western and eastern regions led to a hit on realisation. Effectively, revenues grew ~12% YoY to ~Rs9.35bn (above our estimate of ~Rs8.95bn). Logistics costs declined because of better lead distance management (reduction by ~14km), but this was offset by higher raw material costs and other expenses. Effectively, overall operating costs were flat YoY at Rs3,561/tn (Rs3,523/tn in 3QFY18). Consequently, EBITDA grew by a meagre ~4% YoY to ~Rs983mn. EBITDA margin declined to 10.5% from a very weak base of...

Weak GRM Induced-EBIT Loss Turns Into Profit With Higher Other Income SELL Bharat Petroleum Corporation or BPCL's reported earnings of Rs4.9bn in 3QFY19 were down 76.9% YoY and 59.4% QoQ. The key reasons are: 1) Decline in gross refining margin or GRM from US$7.89/bbl in 3QFY18 and US$5.57/bbl in 2QFY19 to US$2.78/bbl in 3QFY19. 2) Interest expenses at Rs3.4bn, rose 2.8% QoQ and 68.3% YoY. However, EBIT-level loss was converted into profit by: 1) Growth in other income to Rs9.6bn a rise of 79.8% QoQ and 33% YoY. 2) Decline in other expenses to Rs33.6bn a fall of 30.5% QoQ and 7.2% YoY. 3) Sharp decline in the tax rate to 16% in 3QFY19 from 35% in 2QFY19 and 29% in 3QFY18. We...

Concern Over Rising Debt And Decline In Operational Cash Flow Despite the strong growth in earnings of Sobha in 3QFY19, we are concerned over the sharp decline in cash flow after income tax and interest expenses by 20% QoQ and 65% YoY to Rs191mn. Consequently, net debt increased to Rs23,999mn, an increase of 7% QoQ. The weak cash flow is partially because of rising advertising, marketing and interest expenses following pricing pressure in a weak market. We also note that sales in 3QFY19 were muted compared to earlier quarters, despite being a festival season. We have retained our Sell rating on Sobha with a target price of Rs376....

Margin Gains Peaking, More Focus On Growth Likely Tech Mahindra's (TML's) 3QFY19 performance was robust - both in terms of revenue growth and margin expansion. Revenues grew 4.3% in CC terms (our estimate 3%) and EBITDA margin was 50bps above our estimate (although a sharp dip of 150bps in SG&A; expenses was not adequately explained). Ever since the collapse of its EBITDA margin to a low of 12% in 4QFY17, the focus of TML has been to largely bring that back to a respectable level. This has been an seven-quarter journey which we believe is largely done. The margin expansion has come about through tightening of operations (employee utilisation, higher use of automation, better portfolio profitability, modest salary hikes) and also through improving yields on its...

Bayer CropScience reported 29% yoy revenue growth to Rs6.2bn in Q3FY19, which was above our and consensus estimates. Despite overall domestic remaining under stress the performance was driven by rice, fruits and vegetable segments. Gross margins improved by 130bps yoy to 42% owing to better product mix and inventory gains. EBITDA margin expanded 280bps yoy to 7.5% vs. our estimates of 5.7%....

Maintain SELL with a TP of Rs 1,395 (22x Dec-20E EPS). This is Divis Labs (DIVI) second consecutive quarter with Rs 12bn plus revenues, up from a quarterly run-rate of Rs 9-10bn earlier. Although the management maintains that this is driven by normalization of orders post import alert clearance, there is an uncanny coincidence that the business has gained traction in a quarter where Valsartan API prices soared, and the Rupee fell ~10%.

HCL Tech on sales front posted 4.9% sequential growth in USD revenues to US$2,202mn v/s. US$2,099mn in 2QFY2019. In Constant currency terms (CC), the company posted a 5.6% qoq growth. EBIT margin came in at 19.7% v/s 20.0% in 2QFY2019. Consequently, PAT came in at `2,611cr v/s. `2,540cr in 2QFY2019, a rise of 2.8% qoq.

The deceleration in India wireless revenues was on expected lines, while EBITDA margin erosion was higher than estimated. Africa continues to deliver growth on the revenue front with stable margins after expanding 475bps over the last five quarters. Consolidated net debt decreased by Rs68bn to Rs1.06tn due to fund-raise in Africa and the conversion of shareholders loan into equity in the Africa entity. Consolidated capex is...

Reported PAT of | 39 crore was below our expectation of | 64.6 crore on account of a sharp margin decline and lower other income Pressure in emerging clients to continue in near term The company posted a marginal increase of 0.4% QoQ led by 4.3% growth in managed services and 5% in onsite revenue. This was offset by 0.9% decline in offshore revenue and 2.6% drop in revenue from emerging clients (non top 10 clients). Decline in emerging clients was mainly on account of two clients in $1-5 million revenue category...

Vedanta's Q3FY19 performance was a mixed bag wherein the topline came in above our estimates while EBITDA came in lower than our estimates. On account of higher-than-expected other income, PAT came in higher than our estimate The consolidated topline came in at | 23669 crore (up 4.2% QoQ, down 2.8% YoY, our estimate: | 20917.7 crore) EBITDA for the quarter was at | 5645 crore (down 16.5% YoY, up 8.4% QoQ) lower than our estimate of | 5789.1 crore. The EBITDA margin...

ICICI Securities Ltd | Retail Equity Research Castrol India reported its Q4CY18 numbers, which were above our estimates on the profit front. Revenues increased 6.5% YoY to | 1033.4 crore in line with our estimates. Volumes fell marginally by 0.7% YoY to 54 million litre below our estimates of 56.3 million litre However, the quarter witnessed an increase of 0.7% YoY in gross margins at | 98.4/litre, above our estimate of | 89.9/litre mainly due to a better product mix. Due to the same and lower other expenses,...

Indian Oil Corporation (IOCL) reported earnings of Rs7.6bn for 3QFY19, down 76.9% QoQ and 90.3% YoY, primarily because of: 1) Lower gross refining margin or GRM of US$1.15/bbl in 3QFY19 versus US$6.7/bbl in 2QFY19 and US$12.7/bbl in 3QFY18, mainly on account of poor Singapore GRM and inventory loss of Rs80.8bn in 3QFY19 as compared to inventory gain of Rs30bn in 2QFY19 and Rs53.4bn in 3QFY18. 2) Other income at Rs7.8bn in 3QFY19 declining 28.1% QoQ and 41.9% YoY. However, further decline in earnings was mitigated by: 1) Rise in refining throughput to 18.98mmt in 3QFY19 as compared to 17.82mmt in 2QFY19 and 17.5mmt in 3QFY18. 2) Strong market...

Net interest income grew by 15% and PAT grew by 15% YoY in Q3FY19 mainly led by consistent 17% YoY growth in loan book. Net Interest Margin (NIM) remained stable at 4.41% on a YoY basis and improved sequentially by 9 bps against 4.32% in Q2FY19 due to sequential increase in yield of funds and cost of funds. Deposit grew by 13% YoY in Q3FY19 in which CASA grew by 21% YoY. Asset quality improved with GNPA at 2.91% against 3.30% in Q3FY18, with NNPA and PCR stable at 1.74% and 65% respectively....