Sell

In view of the termination of Punjab e-governance contract, uncertainty regarding receivables and no near-term growth visibility, we maintain our SELL rating with a TP of Rs 170, based on 20x Dec-19E EPS. BLS International posted a mixed set of numbers in 3QFY18, with beat on revenue, but miss on margins (-450bps QoQ to 18.7% vs our est. of 22.7%). Revenue stood at Rs 2.03bn, up 8.8% QoQ, led by 9.5% QoQ rise in the Visa segment (~75% of rev). Growth in visa business was led by pick-up in Spain visa applications and contribution from newer contracts (Afghanistan). The Punjab e-governance revenue stood at Rs 0.50bn (~25% of rev).

Dispose its Strategic Engineering Division (SED), part of its standalone operations. It generated EBITDA of ~INR600m in FY17. Sell its investment in Tata Ceramics, ~57% subsidiary. It had a carrying value of INR91m, revenue of ~INR464m and PAT loss of INR5.9m in FY17. Sell investment in Tata Projects, ~48% associate. It has a carrying value of ~INR4.9b, revenue of ~INR60b and PAT of ~INR1.3b in FY17. Sell stake in Panatone Finvest, ~39% associate that owns ~88m shares in Tata Communication (TCOM). At TCOM's CMP, the attributable value is ~INR23b

In addition to a weak operational performance, higher interest expense (up 8% YoY) coupled with increase in depreciation (up 19% YoY) led DCI to report a loss of | 22.5 crore (I-direct estimate: | 2.1 crore) Sluggish YTD performance; revival to take some time DCI posted five-year low revenues of | 119.9 crore (vs. a normal run rate of | 140-160 crore. For 9MFY18, revenues de-grew 6% YTD to | 428.4 crore vs. | 455.7 crore in 9MFY17. However, benefiting from lower crude prices in FY18, EBITDA for the same period grew marginally by 6% YoY...

We maintain Sell rating on GlaxoSmithKline Pharma (GSK) and revise our TP to Rs1,850 (earlier Rs1,525) based on 24x March'20E EPS of Rs77.1. GSK's Q3FY18 results were below our and consensus estimates. GSK revenue was flat, EBIDTA margin improved 1,270bps to 20.1% and net profit grew 156% YoY. GSK's major brands grew by high single digit to double digit during the quarter. That said, the company has a strong presence in the vaccines segment and is likely to derive growth from the same. Key risks to our assumptions include faster-thanexpected growth in the domestic market and higher growth of its flagship brands. We recommend a switch to other pharma companies, Abbott India or...

Thermax (TMX) operational performance was below our expectations. While revenues increased by 18% yoy aided by strong order backlog, the EBITDAM declined by 72bps to 8.5% impacted by higher than expected rise in steel prices. APAT was up by 9%. While the order inflows increased by 19% yoy to Rs14bn (up by 45% for 9MFY18), the order backlog grew by 27% to Rs56 bn providing decent revenue visibility for FY19E and FY20E. However, the increasing steel prices could limit profit growth as most of the fixed price international orders were booked ~2-3 quarters ago. Thermax Babcock & Wilcox (TBW) JV has ceased operations and is in the process of...

Subdued performance: BHEL reported revenues at Rs66bn (+5% yoy) below our expectations. While the gross margins increased by 386 bps yoy to 41.2%, the EBITDAM increased by 92 bps yoy to 4.5%. Although EBIDTA increased by 32% yoy to Rs2.95bn, the APAT surged by 64% yoy to Rs1.53bn aided by lower depreciation charge. Revenues in the power segment increased by 5% yoy to Rs54bn while it declined in the industry segment by 17% yoy to Rs11bn. EBITM in the power segment improved by 289bps to 14.5%.The industry segment reported EBITM of 3.6% (loss in 3QFY17). Other income remained flattish at Rs1.38bn, though declined by 72% qoq on account of losses related...

Gas transmission volume stood at 109mmscmd (+6% YoY, +3% QoQ), led by increased off take from power plants due to the lack of coal supply. Implied tariff stood at INR1,325/mscm (+9% YoY, -2% QoQ) due to increased share of higher tariff zone during the quarter. EBIT stood at INR6.3b (+8% YoY, -21% QoQ). While petchem sales stood at 176kmt (+21% YoY, +1% QoQ), realization declined to USD1,265/MT (-11% YoY, -1% QoQ). EBIT stood at INR940m (-30% YoY, +6% QoQ). Due to higher availability of rich gas, LPG/liq. HC sales stood at 326tmt(+10% YoY, -2% QoQ). Realization was USD557/mt (+40% YoY, +34% QoQ). EBIT stood at INR6.6b (+76% YoY, +44% QoQ).

Sector: Apparels /Mid-Cap | Earnings Update 3QFY18 Background: Page Industries is the exclusive licensee of Jockey International Inc (USA) to manufacture and distribute Jockey brand in India, Sri Lanka, Nepal, Bangladesh and UAE till 2030. They broadly operate in premium men's innerwear; women's innerwear and leisure wear segments. Jockey enjoys high brand recall and they spend ~5% of their annual sales for brand building and promotional activity, which enables them to dominate most of the segments in which they operate. In the men's and women's segment, they have a market share of ~21% and ~12% respectively. They are also exclusive licensee of Speedo swimwear brand in India. Page has...

Maintain REDUCE on High Exposure to Merchant Biz, Rising Coal Prices JSW Energy (JSWEL) has reported 4.7% YoY growth in revenue to Rs19.9bn in 3QFY18 owing to higher generation (+6.5% YoY) and other income (+74% YoY to Rs0.87bn). Led by higher realisation and other income, JSWEL's PAT zoomed by 181% YoY to Rs506mn compared to Rs180mn in 3QFY17. Proposed foray into electric vehicle business announced during 1QFY18 Conference Call having the least cash inflow visibility may warrant a de-rating of the stock, in our view. Rolling over our estimates to FY20E, we maintain our REDUCE recommendation on the stock with a revised Target Price of Rs74 (from Rs72 earlier)....

Below Par Performance Retain SELL;During Q3FY19, Bajaj Auto Ltd (BAL) sales grew 25.7% YoY to Rs63.7bn, driven by 17.6% volume growth and a 0.9% increase in average realizations. EBITDA margins declined by 127bps yoy to 19.3% on account of higher CSR and one time registration charges the Company incurred during the quarter.