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Margin Under Pressure, RiskReward is Unfavorable; SELL TVSL reported a disappointing PAT of ` 1.33bn (-19.2% YoY). This was despite a revenue increase of 9.8% YoY, led by a higher volume growth (+2% YoY) and better realizations (+7.6% YoY). The EBITDA margins was under pressure (at 7%, flat YoY), as it was impacted by the fall in gross margin (+280bps YoY affected by adverse product mix, negative operating leverage, inventory adjustment, and commodity inflation). The management expects the 2W industry growth to be muted in Q1FY20, and...
Persistent Systems (PSYS) closed the Mar'19 quarter with a 15% QoQ decline in IP revenues and 450bps QoQ contraction in reported EBITDA margins. The historically weak growth momentum entering into FY20 will render revenue growth a tall task. Management intends to maintain steady operating margins in FY20 and use the cash kitty for inorganic opportunities. We roll over to a revised Mar'20 TP of Rs 650 (vs. Rs 640) and reiterate REDUCE as we remain...
New management under the leadership of Mr. Ravneet Gill has embarked into a full blown kitchen sinking exercise. Bank has reported its biggest loss of Rs15bn in Q4FY19 attributable to elevated credit cost along with contingency provision. Lower credit growth, compression in NIMs and reversals in fee income could not provide help either. Management has highlighted additional stress of Rs100bn still standard. Management is targeting ROA of 1% by FY22. We have cut our earnings by 43% for FY20. We roll forward our valuations to FY21 and downgrade our rating to SELL with new target price...
Uphill task to regain investor confidence downgrade to SELL Yes Bank (YES) saw a dismal Q4FY19, posting its first-ever quarterly loss of Rs 15bn as the new leadership prudently built in a 20% contingent provision on Rs 100bn of potentially stressed exposure. Guidance disappointed as YES now expects to (a) attain 1% ROA in three years, (b) post lower long-term growth of 20-22%, and (c) incur credit costs of 125bps in FY20. We pare FY20E/FY21E earnings by ~40% on elevated provisions, higher opex and lower growth; cut our...
Market leadership maintained, foremost in BS-VI model launch FY19 was a difficult year for the domestic automobile space with growth challenging, particularly in H2FY19. Demand sentiments were soured by a concurrent increase in fuel, insurance as well as finance costs during the seasonally important Dussehra-Diwali period. For FY19, total domestic sales growth in the automobile space were at 5.2% YoY wherein PV volumes were at 33.8 lakh units, up 2.7% YoY. MSIL in FY19 clocked domestic volumes of 17.3 lakh units, up 5.3% YoY and maintained its market leadership, ending...
MSIL Q4FY19 results were below our and consensus estimates at operating level. EBITDA margin declined to 10.5% vs our and consensus estimates of 11.7% and 12.5% respectively. Margins were majorly impacted on account of higher commodity prices, foreign exchange fluctuations and higher sales promotion. Adj. PAT for the quarter stood at Rs17.9bn above our and consensus estimates of Rs16bn and Rs17.6bn respectively mainly on account of higher other income. We cut our FY20E EBITDA/EPS estimates by 7%/8% respectively and introduce FY21 estimates. We have built in revenue/earnings CAGR of 10%/12% over FY19-21E with ROE of ~17% and average free...
Consolidated revenue stood at Rs36.0bn (-1% qoq, -1.7% yoy). Rental revenues stood at Rs20bn, down 8% yoy (3.4% below estimates). Energy reimbursements increased 1% yoy and was down 3.4% qoq (3% below estimates). Rental revenues for 3Q and 4Q are adjusted for exit penalties of Rs550mn and Rs997mn, respectively. Net tenancies, on a consolidated basis, declined by 1725 vs. 63 in the last quarter. Consolidated EBITDA was Rs14.9bn (-0.9% qoq, -6.4% yoy). EBITDA margin stood at 41.4% (-206bps yoy and +10bps qoq). Other...
Hexaware (HEXW) reported a softish operating performance in Q1CY19 with no respite on talent crunch issues. Attrition rose to 18.2% (+120bps QoQ/ 480bps YoY) and subcontracting expenses continued to weigh on margins. Management kept its CY19 guidance unchanged at 12-14% YoY revenue growth with stable operating margins. In our view, margin management remains an uphill task given supply constraints. We trim CY19-CY21 EPS estimates by 1-3%; on rolling valuations over to Mar'21, our target price holds at Rs 370....
Services & solution share in revenues to expand The company indicated that services and solution segment contribution increased to ~37% of topline in FY19 (vs. ~26% in FY18) given the superior execution in the Navy and other services projects. We also note that of the total order book of | 10,516 crore, services order book is ~| 5,000 crore, which, as per management, is likely to contribute to ~50% of the topline, in the next couple of years. Therefore, we raise our revenue forecast for FY20 and FY21E by ~9% & 16%, respectively, to build in superior execution in the...
Hexaware's 1QCY19 results were broadly inline with our estimates. Hexaware Change in Estimates | Target | Reco has maintained its guidance of 12-14% organic revenue growth in CY19E, with...
