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Early BS-VI adoption to place MSIL in good stead! MSIL has been at the forefront of BS-VI transition in the PV space, with recent additions (Celerio, Eeco, Ciaz) taking the BS-VI model count to 11 (only Brezza, S-Cross, Ignis to go). Sales volumes of new emission norms compliant variants has crossed the 5 lakh unit mark, forming ~75% of total petrol vehicles sold YTD. Given its fast-tracked BS-VI adoption and no signs of any adverse market impact to the new vehicles (MSIL Q3FY20 domestic volumes up 0.3% YoY vs. 0.5% YoY decline for industry), the company is...

Background: CEAT is one among the top four tire manufacturers in India and is a part of the RPG group. The company has a total manufacturing capacity of 0.1mn + tyres/day with plants situated in Nashik, Bhandup (Mumbai),Ambernath, Halol, Nagpur and Sri Lanka. The company manufactures all tires: Truck & Bus (30%), 2W/3W (32%), Passenger vehicles (14%), LCV (11%), Farm (6%), and Specialty (6%). In terms of market, replacement contributed 58% of the sales while OEM and exports make up 27% and 15% of the sales, respectively. CEAT has a robust distribution network consisting of over 4,500 dealers, 33 regional offices and more than...

Zee Entertainment Enterprises Ltd is India's largest vertically integrated media & Entertainment Company. The company started as content supplier for Zee TV now has portfolio that includes India's leading entertainment channels. The company's portfolio consists of brands like Zee TV, Zee Cinema, Zee Music, Zee Caf, Zee Smile, Zee Action, Zee Premiere, ETC, ETC Punjabi, TEN Sports, Zee Studio, Zee...

Continuing high growth momentum with margin expansion: Hold (Target upgrade) GMM Pfaudler Ltd (GMM), for Q3FY20, reported a strong set of numbers. On standalone basis revenue grew by 29.4% YoY to INR 1366mn (est INR 1364mn). EBITDA showed growth of 66.4% YoY to INR287mn (est INR263mn) with 466bps YoY improvement in margin from 16.3% in Q3FY19 to 21% in Q3FY20, due to favorable product mix mainly led by Glasslined business ,where EBIT margin improved by 366bps on YoY basis with 67% contribution in standalone revenue. Moreover, Heavy engineering and proprietary products business has also supported growth momentum with 52% growth in revenue and 18.9% EBIT margin (686bps YoY improvement ) in Q3FY20. As per the management, heavy engineering to add lot of growth on the back of healthy order book till Q2FY21 and expect further improvement in margins going forward. Current order book breakup includes 50% in Glass lined, 30% in heavy engineering and 20% in proprietary products. Net profit surged by 77.4% to INR 194mn (est. INR192mn) due to operationally strong performance and lower tax expense (22.8% vs 32.4%)....

For the AMC business, we are concerned about fund raising, and regulatory clampdown. We remain wary of increased competition in broking. Lastly, despite much of the negatives in MOHL being factored in, the business needs to display scalability. We maintain a SELL with a TP of 711 i.e. 10/20x Broking/AMC business Dec-21E EPS. Key Risks: any sharp turnaround in fund raising and broking market activity, stronger scale up and lower stress in legacy book at MOHL. Treasury income (Rs 545mn, +82.3% beat), boosted MOFS (ex-MOHL) reported 3QFY20 PAT to Rs 1.49bn (+11.0/-3.1% YoY/QoQ). However 9MFY20 core cap markets/AMC performance remains weak as PBT declined 9.9/9.0% YoY. We tweak our estimates but retain SELL (unchanged TP of Rs 711), as core profit growth remains elusive.

Background: RBL bank (RBL) came into operations in 1943 and was incorporated as a small, regional bank in Maharashtra with two branches in Kohlapur and Sangli. Post the change in the management team in 2010, it has been one among the fastest growing private sector banks and now has 346 interconnected branches and 383 interconnected ATMs spread across 24 Indian states and union territories serving ~7.8mn customers. The bank offers a comprehensive range of banking products and services customized to cater to the needs of large corporations, SMEs, agricultural customers, retail customers and development banking & financial inclusion (low income) customers. Loan book of the bank grew at a CAGR of 52% over FY11 to FY19 and stood at INR 596bn as of 3QFY20...

22 January 2020 APNTs ~-8% realization decline (on a base that had an already weak mix in 3QFY19) does not augur well for its sales growth beyond FY20, especially given the uncertain economic revival. While 4QFY20 should continue seeing YoY margin gains, there is uncertainty on further commodity price reduction in FY21/FY22, thereby tempering margin growth expectations. This means that EPS growth is likely to be in line with top line. On account of lower FY20 capex assumption and margin beat in 3QFY20, we have upgraded FY20/FY21 EPS estimates at 2%/3%; our FY22 forecast remains unchanged. net sales grew 3% YoY to INR54.2b (slightly lower than est. INR54.5b), despite volume beat of ~11% (v/s est. Note that 3QFY19 saw 23.5% sales growth. Despite significant mix deterioration, gross margins were up 190bp YoY to 43%. However, higher operational expenses mean that EBITDA margin expanded only 100bp YoY to 21.

While volumes increase deteriorating mix is expected to keep yields under check. Distribution revenues have bottomed out. ISEC is rapidly building loan assets which will drive earnings in the near term. All the above, along with cost control will drive earnings at FY20-22E CAGR of 17.9%. We increase FY20E/21E/22E APAT estimates by 0.6/4.8/5.1%, and continue to rate ISEC a SELL with a TP of Rs 376 (16x Dec-21E EPS). We believe 16x is a fair multiple for the stock given market linked nature of its business lines. A rally in equity markets coupled with increased retail participation remains a key risk. Higher core broking revenues and strong growth in funding book drive profits, while distribution and IB remain soft. Cost decline is lower than our expectation.

We reiterate our REDUCE rating on the stock with a revised target price of Rs. 817 based on 14x FY22E adj. EPS, given the sluggish growth in contracts signed and tough competition in the industry. Strong Hi-Tech segment leads the way Mindtree's revenue were up 10.0% YoY to Rs. 1,965cr primarily driven by the 15.7% YoY growth in the High Technology and Media segment (41.5% of total revenue), Also, Travel and Hospitality segment (16.6% of total revenue) and BFSI segment (21.3% of total revenue) grew 9.9% and 8.2% YoY, respectively. Retail, CPG and Manufacturing...

Expansion plan to be led by mix of organic and acquisition route We met the management team of Metropolis Healthcare (METROHL) at their Global Reference(Mumbai) to understand their business outlook for next few fiscals. We believe METROHL will continue to focus on specialized test (low volume and high complexity), and increase its share in B2C business by partnering with local labs (with sizeable track record) and converting them into Metropolis-branded PSCs (Patient Service Centre). Its wide range of test menu and patient shift towards organized diagnostic player are some...