Sell

Maintain SELL on eClerx with TP of Rs 1,145, at 13x Dec-19E EPS eClerx posted in-line revenue, while operating performance was sub-par. Revenue came at USD 48.9mn, 1.1% CC QoQ. Growth was led by Top-6 to 10 and Non-top-10 accounts which grew 3.9% QoQ each, while Top-5 (60.5% of rev) accounts declined 0.6% QoQ. EBITDA% stood at 22.9%, -233bps QoQ with lower gross margin (-50bps impact with investments onsite) and higher SG&A; (-175bps impact with increase in business development staff). APAT came lower at Rs 0.57bn, -21.3% QoQ impacted by lower profitability and lower other income.

Dec'17 quarter revenue performance was in line with expectation. Alliance revenue increased by 12.5% qoq on the back of seasonal uptick in IBM IoT business while incremental contribution from PARX aided Digital business growth (up 9.2% qoq). Performance of Services and Accelerite business was soft. At 17.4%, EBITDA margin improved by 220bps qoq, aided by operational efficiencies and...

The management believes that Tech Mahindra's strong capabilities and improved demand traction in four key focus areas - Network of Future, IoT, Dev-ops and Customer Experience - would aid in sustaining growth across verticals in the coming quarters. Tech Mahindra's investment in the Acumos platform (with AT&T; on AI) and with Toshiba on Smart Factory along with the recent minority investment in Alitostar in the area of virtualized radio network space is a testimony to the same. In the Telecom business, it is winning consistent orders for the new-age offerings and would witness traction as CY18 evolves (done with the portfolio restructuring) owing to its focused service approach and client relationships. The company is...

Orient Cement's Q3FY18 operating performance disappointed, with EBITDA at Rs391mn against estimated Rs772mn and OPM at 7.6% against estimated 14.5%, led by lower realization and higher Repair & Maintenance costs (impact of Rs100-120mn). Sales volume was up 9.3% yoy at 1.37mt with capacity utilization of 68.5% (62.6% in Q3FY17). Realization grew by 2.5% yoy (down 6.5% qoq), supported by change in billing...

Revenues buoyed by gSevelamar, margins by milestone payment: Dr. Reddys Labs (DRL) revenue increased by 2.7% YoY to Rs 38.1 bn in line with our estimates of Rs 38.2 bn) due to improved contribution from US business in the Global generics business.

Divis Labs Net revenues increased by 6.2% YoY to Rs 10.4 bn, higher thanour estimates of Rs 9.8 bn for the quarter. The Operating margins were at31.4% in Q3 FY18 (lower than our estimate of 32.9%) as against 38.7% inQ3FY17 on account of lower gross margin and higher other expenses.

Reiterate SELL, with a TP of Rs 2,540 (40x Dec-19E EPS). United Spirits (UNSP) post stellar 2QFY18 results (stock price up 66%) reported weak 3QFY18. This was led by feeble revenues (-2% YoY) due to distribution model change and notably high ad & promotions spend (+27% YoY, +79% QoQ).

Wipro's (WPRO) Q3FY18 IT services revenue growth of 0.9% QoQ in CC missed our forecast. Flat revenue QoQ in US$ was a bigger miss. EBIT margin of 14.4%, -246bps QoQ missed our forecast, impacted by provision for insolvency of a client. As a...

Refer to important disclosures at the end of this report Inline operating performance; Mar'18 quarter revenue guidance uninspiring Q3FY18 adjusted operating performance was largely inline with estimates with 0.9% QoQ revenue growth in CC terms and 17.2% IT Services EBIT margins; reported operating...

Reiterate Sell with TP of Rs 305 (earlier Rs 310). Bharti Infratels (BHIN) 2QFY18 revenue and EBITDA were in-line. Highest ever loss of 6,612 tenancies was the key negative. BHIN has treated 5,601 tenancies as churn though the actual exits hasnt yet happened. Instant loss of tenancies on merger of Voda-Idea is the key negative trigger that would lead to further multiple de-rating of BHIN. These could impact BHINs EBITDA by ~15% and EPS 25%.