Personal Finance & Investment share price target

Consumer Appliances: Weak season offers entry point.Our top picks in Appliances: Havells and V-Guard We have been strong believers of HUL and Britannia to outperform, as category leaders will drive category growth during turbulent market conditions (demon and GST). We remain structurally positive for HUL and Britannia, however on account of limited upside we downgrade HUL and Britannia to NEUTRAL. We prefer mid-cap staples as consumption dynamics and trade conditions are now beginning to normalize which will support pick-up in performance. We have rolled forward our target price for our coverage universe to Jun-20 EPS (earlier Mar-20). Our top picks in FMCG: Emami and Marico

We expect TAKE's USD revenue/EPS CAGR at 20/22% over FY18-20E, factoring 24/30% CAGR in Life Sciences revenues/order book (37/53% CAGR in the trailing three years). TAKE trades at 15.7/13x FY19/20E EPS. Based on 16x FY20E EPS, TAKE's fair value is Rs 280, supported by (1) ~15% RoIC and 22% EPS CAGR, (2) Likely value unlocking (SCM business divestment), (3) Midcap-IT valuations at 16.5x FY20E and global Life science tech/CRO valuations at 16x. Working capital intensity (an industry phenomenon) is a concern. Take Solutions (TAKE) is a niche technology-led service provider for the Life Sciences industry (91% of revenue). The company provides IP-based solutions in clinical, regulatory, safety and consulting processes to global Life science companies across multiple therapeutic areas. TAKE will benefit from (1) Large addressable market (favourable global trends), (2) Broad and high-growth portfolio (therapeutic segments) within Life science, (3) Strong growth visibility (order book, pipeline), and (4) Marquee clients (9 of top 10 global pharma giants) with low client concentration risk.

The mix improvement is possibly being ignored by Voltas' sellers. This throws open an opportunity to buy Voltas on dips. At 25x Mar-20E EPS, our TP of Rs 710 offers an entry point. The air-conditioner industry has witnessed several headwinds during FY18, led by GST transition and the change in energy efficiency ratings. Additionally, the summer of 2018 started on a weak note, despite IMD predicting a harsh summer. Consumer offtake has thus been weak, as evident in Lloyd (Havells) and Blue Stars Room Air Conditioner (RAC) volume growth in 4QFY18.

Upgrade LTT to BUY with TP of Rs 1,130, 18x Dec-19E EPS (17x earlier). L&T; Technology Services (LTT) posted strong revenue growth, supported by ramp-up of large deals (Hi-Tech vertical). Revenue came at USD 151mn, 8.3% QoQ CC led by robust growth in top accounts (Top-10/20/30 accounts grew 12.2/11.3/10.5% QoQ). EBITDA% stood at 15.3%, +7bps QoQ as wage increase (-120bps impact) and other expense increase (sub-con and software expense impact of -183bps) was offset by sharp increase in utilisation (+270bps QoQ). APAT came at Rs 1.16bn, 5.9/7.2% QoQ/YoY (adjusted for non-recurring licence sale).

PCJL remains confident of 25-30% CAGR in the domestic jewelry retail business over the next five years. The franchisee model is working well so far; going forward, franchisee stores will be~80% of incremental annual store openings. PCJL has massive opportunity to grow at the cost of unorganized players. Though competition from organized players will increase as the salience of the organized segment goes up 3-4 years down the line, the company believes its strengths on design (craft) and low cost manufacturing will serve it well in the long term. We have a BUY rating on the stock, with a target price of INR645, valuing the company at 29x December 2018E EPS, 40% discount to Titan. We believe that the valuation gap vis-a-vis Titan will shrink further, once PCJL demonstrates its ability to maintain its revenue and earnings trajectory.

We maintain NEUTRAL with a TP of Rs 780/sh (22x FY19E EPS). Dhanuka Agritech (DAL) reported muted revenue of Rs 2.1bn (+4% YoY) in 1QFY18, owing to lower inventory build-up by dealers/retailers ahead of GST implementation. Higher RM cost resulted in lower gross margins 37.6% (-126bps). EBITDA (at Rs 245mn) was impacted owing to higher other expenditure (+14%). APAT was down at Rs 161mn (-19%).

At the CMP, we maintain Neutral with a TP of Rs 880 (26x FY19 EPS). Gulf Oil Lubricants 1Q numbers came in above expectations. The core business delivered 7% volume growth, driven by distribution expansion and OEM tie-ups, despite GST-related headwinds. Revenue growth was 2.7% YoY at Rs 2.8bn, supported by core volume growth rate of 7% (excluding the institutional order). Gross margins improved ~190bps (took price hike in May-17). Margin was largely flat at 17.6%, owing to higher overheads and employee expenses.

We maintain our positive view, owing to Zenzar's Digital/SMAC capabilities (~75% of the existing clients are engaged Digitally) and robust deal TCV. We build in 7/18% revenue/EPS CAGR over FY17-19E. Maintain a BUY with a TP of Rs 950 based on 13x FY19 EPS. Zensar delivered decent numbers in 1QFY18. Revenue stood at USD 114.3mn (+3.1%, +2.5% CC), growth was led by IMS recovery (+2.5% QoQ) and the full quarter impact of Keystones acquisition (USD 4.8mn). Organic growth ex-Keystone stood at -1.3% QoQ, led by pain in manufacturing (-4.9% QoQ) and softness in Professional Access (Oracle ATG). Digital (36.3% of revenue, +8.8% QoQ) remains Zensars key strength. Deals TCV remains robust at USD 800mn, with more than 50% of the new deal wins in Digital.

Reco / TP changes: We change our valuation methodology to SOTP for Skipper, and assign 15/15/25x to Mar-19E EPS for Engineering/ Infrastructure/ Polymer division. Consequently, our TP increased from Rs 223/sh to Rs 253/sh. With a steep run up in valuations, we downgrade Triveni to NEUTRAL. Post correction in stock price, we upgrade CGPower to BUY. Our coverage universe is likely to witness ~10% YoY growth in revenues. Growth is likely to be skewed in Suzlon (+18.1%) and AIA Engineering (17.6%), while most other companies are likely to witness high single-digit growth

We expect Nifty to report an EPS of Rs. 455 for the fiscal year 2017 implying a growth of 6% over the previous fiscal year.