Sell

Visible signs of pick-up in demand for mortgage loan led by improving affordability, attractive incentive from PMAY scheme and introduction of RERA augurs well for sustained growth in loan book for HDFC over the next 3-5 years. Further, the performance of its various financial business subsidiaries/associates has improved substantially over the last few quarters. HDFC has raised fresh equity via QIP and preferential placement in FY18 and incremental capital will help the company to participate in upcoming fund raising of HDFC Bank to retain its stake at 21% and create buffer for leveraging other organic and inorganic growth opportunities in domestic real estate and housing sector. Rolling over our valuation to FY20E, we reiterate...

The company's performance was below our expectations lagging by 8% in revenues.There is a margin contraction in pumps segment which is down by 145 bps. The revenue for Q1CY18 Rs. 2128 mn was marginally down as against Rs. 2174 mn showing a decline of 2.3%. The increase in depreciation expense due to capacity expansion and lower other income impacted EBIT which was down by 10.3%.

We retain Sell on MMFS with TP revised upwards to Rs380 (valued at 2.5x FY20E ABV). Our channel checks had pointed for strong disbursement growth and incidences of lower repossessions / higher recoveries for the quarter. Q4'18 results corroborated our survey that saw a) solid 17.8% YoY growth in AuM and b) sharp 22% QoQ decline in GNPA. Commentaries on growth, asset quality remain encouraging. Even as we factor in higher growth rates (we have our reservations here) and improved asset quality, FY20E RoE will still be lower to its 10-year average RoE, also when compared to its peers. Valuations at 3.4x FY20E ABV are on the higher end of the band. Retain SELL....

Muted growth and tepid margins impact performance; Maintain SELL WPRO reported USD revenue growth of 2.4% QoQ (CC growth of 1.1% QoQ). EBIT margin for IT services declined 40bps QoQ at 14.4% due to one-time impact of insolvency of a customer & impairment loss booked for one of its acquisitions. Adjusting the same, IT Services Margin improved 120bps QoQ at 16%. Consolidated EBIT margin declined 70bps QoQ to 13.7% due to higher cost of revenue and depreciation. Concerns persist in Communication vertical; which will lead to limited scope for the revenue...

Wipro's (WPRO) Q4FY18 IT services revenue growth of 1.1% QoQ in CC was slightly lower than our forecast of 2%. EBIT margin of 13.7%, -70bps QoQ missed our forecast, impacted by provision for insolvency of one more client and impairment...

Wipro's IT Services revenue in CC terms grew by 1.1% qoq against our expectation of 2.0%. Q4FY18 growth only met the lower end of its revenue guidance of 1%-3% in CC terms. However, 130bps of cross-currency tailwinds helped it to deliver a USD growth of 2.4%. Consolidated revenue grew by 4.6%/2.9% in USD/CC terms in FY18. IT Services EBIT margin at 14.4% was down 40bps, much below our estimate of 16.8%, as it recognized one-time costs related to insolvency of two clients (Aircel in Telecom and Carillion in Utilities) and impairment of one of its subsidiaries (HPS) in Q4FY18. Excluding the insolvency impact, the EBIT margin stood at 16.0%....

USD revenue grew 5.6% QoQ (4.5 % QoQ CC terms) to USD 226mn (DCMe: USD 221mn) led by 7.8% growth in volume despite decline in pricing by 2.2%. ` revenue grew 6.3% QoQ at ` 14,640mn (DCMe: ` 14,257mn) helped by cross currency tailwind. EBIT margin improved by 150bps QoQ at 13.5% (DCMe: 12.2%) led by operational efficiencies (+70bps) and currency benefit (+80bps). PAT improved by 28.8% QoQ to...

Management expects improved revenue growth and brighter profitability outlook for FY19 vis--vis FY18 (revenue grew by 8.6%, OPM stood at 13.6% in FY18). Management's confidence about FY19 outlook is driven by improved wallet share, increase in Digital project size and marginal improvement in client budgets. We have raised our revenue growth estimates by 2.3%/1% for FY19/20E. However, most of these gains would be negated by higher tax rate of 27% guided by management, resulting in unchanged earnings estimate for FY20E. We believe that the pick-up in growth rate would not be significant given its modest client...

New CEO's focus: to scale digital, automation, reskilling and localisation New CEO plans to scale digital/agile, energise core through automation, reskill employees in clients' digital needs and boost investment in localization in US, Europe and Australia as part of its strategic roadmap for FY19. The company has lowered the operating margin guidance for FY19 to 22-24% compared to 24.3% in FY18, as it sees the need to revitalise its sales team (more feet on ground in Europe, digital specialist salespersons and account expansion program from both service lines and geographic perspective) and enhance Digital capabilities from offering/delivery perspective. Management expects growth to be back-ended and has...

Low margin guidance dents profitability; maintain SELL USD revenue grew 1.8% QoQ tad below our estimates; 0.6% QoQ in CC terms. EBIT margin remained flat QoQ at 24.2% despite negative impact of wage hike offset by operational efficiencies. INFO slashes its revenue guidance to 6%-8% (CC terms) which translates into a CAGR of 1.6%-2.3% over four quarters. The management has lowered its EBIT margin guidance in the range of 22%-24% for FY19 as compared to 23%-25% for FY18 due to investment in digital services. We upgrade our earnings estimates by 4%...