TVSL's EBITDA came ~5% better at Rs4.3bn (PLe Rs4.1bn) led by tight control and low advertisement spends in low volume environment. Consequently, TVSL reported better than expected margins at 9.3% (+50bp YoY, PLe 8.6%) However, adj. PAT came in-line at Rs1.9bn (+9.7% YoY) as depreciation cost came in higher at Rs1.3b (PLe Rs1.2b). We believe with eventual volume...

Decent order inflows led by infrastructure & services segment For Q2FY21, L&T; registered reasonable order inflows at the group level worth | 28039 crore, which de-grew 42% YoY, on account of deferral of award decisions largely caused by pandemic. International orders for Q2FY21 came in at | 10200 crore, contributing 36% to order inflows. Overall infrastructure segment secured orders worth | 14522 crore (~52% of total inflows), which included international orders in water effluent and power T&D; segment, domestic orders for rural water supply, etc. L&T;'s order...

To focus on profitable execution of its large Order Book, below estimates Larsen & Toubro the engineering construction to software major has registered 12% fall in consolidated revenue to Rs 31034.74 crore for the quarter ended Sep 2020 hit by lingering impact of COVID pandemic even though the execution pick up momentum with labour at various project sites reaching near pre covid levels. Lower sales together with 70 bps contraction in operating profit margin to 10.7%, the operating profit was down by 17% to Rs 3334.75 crore. But with other income stand lower by 6% to RS 559.03 crore, the fall at PBIDT was 16% to Rs 3893.78 crore. But with interest and depreciation stand higher, the PBT was...

We tweak our FY21/FY22 estimate by 0.1/-0.6% and keep the target price unchanged at Rs 1,260/sh While LT 2QFY21 revenue/EBITDA/APAT was (7)/0.4/(19)% (miss)/beat on our estimate, robust FCF generation, contained NWC, and directionally strong commentary on ordering were key positives. LT has taken impairment on key non-core assets to make them monetisation ready. Talks on Hyderabad Metro project restructuring/refinancing have been initiated, and focus is on re-investing the surplus E&A; proceeds towards high RoE growth businesses. Despite near-term challenges, we reiterate BUY on LT, given its (1) strong order book (Rs 2.99tn, ~3x FY20 core EPC revenue), (2) healthy balance sheet and (3) robust services business.

Recommendations and stock picks: From a near to mid-term perspective, the government would drive ordering, and private Capex/opex will be late-cycle recovery. Hence, recovery plays with high government exposure will remain in focus. In capital goods, LT is our top pick. In the mid-cap space, KPTL, KNR, PNC, HG Infra and Ahluwalia are our top picks Converging towards normalisation: Within our coverage universe, we expect operations to have normalised from Sep-20. Labour is back/exceeded pre-COVID-19 levels, which augurs well for execution. Some of the cost rationalisation measures would continue even post lifting of lockdown restrictions and shall help improve EBITDA margins. FYTD21 ordering has been robust, and momentum is expected to continue for 2HFY21E. Working capital is expected to improve over the next two quarters as GST impasse gets resolved between the Central and State Governments. High-frequency data is pointing towards economic recovery, which shall alleviate concern on the government fiscal situation. States are also gearing up to take new infrastructure projects

Adjusting for taxes and debt, the company is likely to garner net cash inflow of USD1.4b as proceeds. originally announced, and even until the days preceding the COVID-19 outbreak, we expected the proceeds to be utilized for buybacks or put toward a one-time special dividend of INR7080/sh. However, COVID-19 has posed various challenges, including the risk of funding requirements in non-core businesses such as L&T; Finance and Hyderabad Metro. the nature of use of the proceeds may be against the original expectation; however, this has more to do with COVID-19-led risks than any change in the managements intention to return excess cash to shareholders. Owing to the proceeds, L&T; is likely to maintain a strong liquidity position and does not have to depend on debt on a net basis to support core business execution. had already communicated that it may utilize part of the funds to restructure the capital structure of the Hyderabad Metro by replacing external debt.

Larsen and Toubro (L&T;) remains at the forefront to reap benefits from the recentlyannounced Atma Nirbhar Bharat scheme from the government of India with its diversified businesses across sectors like defence, infrastructure (roads, railways, metros, DRC), heavy engineering, IT (digitalisation). In the recent move from the Ministry of Defence, wherein the import embargo was placed for 101 defence items will prove to be beneficial for L&T; as it is already manufacturing more than 50% of the items stated in the first negative list of 101 items. The company have been focusing on the defence manufacturing and have also been ramping up operations (invested ~Rs. 8,000 crore) in the space over the last few year. Further, the government's announcement to create...

Refer to important disclosures at the end of this report Counter-cyclical infrastructure spending to boost the economy not a realistic hope We appreciate your support in the Asiamoney Brokers Poll 2020 Several experts suggest a counter-cyclical infrastructure driven stimulus worth the size of 5-15% of GDP (as compared to estimated direct government-funded spend of below 3% in FY20) to bail out the economy. We took a deep dive into India's fiscal math just as we look at corporate finances to find that India does not...

margins in North and Gujarat regions. East region would witness flooding of capacity addition over next couple of years. However, we do not expect further deterioration in region's margins given the wafer thin margins (with near nil RoCE) and likely consolidation. Commissioning of CPP, WHR and split grinding unit at Odisha further boosted the cost competitiveness of its East operations. Led by bottomed-out earnings in East operations (25% of volumes) and strong outlook on North and Gujarat region (combined 75%), JKLC's earnings quality improved significantly over last couple of years....

Given current upside potential, we reiterate our BUY rating on the stock with a revised target price of Rs. 1,154 based on SOTP valuation. Economic disruption impacts performance Q1FY21 consolidated revenue came in at Rs. 21,260cr (-28.3% YoY), as the company saw declines in revenue from its verticals across the board, with exception of IT&TS; which registered a 57.2% YoY growth to Rs. 6,043cr. Among its key segments, Infrastructure revenues stood at Rs. 6,456cr (-53.1% YoY), Hydrocarbon at Rs. 3,070cr (-18.5%) and Financial Services at 3,284cr (-5.1). EBITDA fell 47.2% YoY to Rs....

Bayer reported better than expected results with robust growth in both crop protection and seeds segment. Topline/EBITDA/APAT grew by 29%/61%/57% YoY. Gross margin contraction of 240 bps would have been largely due to higher sales growth of Roundup (Glyphosate) which is a low margin product for the company. Liquidation growth continues to be better than placement growth implying limited build-up of stocks at the dealer level. With robust paddy plantings and decent growth in Corn acreages, seeds segment is...

COVID related products to share more focus in FY21E. 1QFY21 revenue was in-line with our estimate but EBITDA and EBITDAM were beat due to decline of SG&A; 17% YoY. We believe its foray into COVID related products has diverted its focus from core business when its top revenue contributors (India, US Gx) have been lacking consistency. With HCQ already...

mid-cap space due to 1) pure domestic play with insignificant regulatory and currency risk, 2) contribution of chronic/sub-chronic products with steady demand structure, 3) strong balance sheet and 4) less dependenace on Chinese API and KSM. We maintain BUY recommendation and retain TP of Rs576 based on PE 21x of FY22E. Gross margin and employee cost brings EBITDAM lower: Revenue grew 6% YoY to Rs 2.8bn (PLe: Rs2.8bn), while EBITDA declined 3% YoY to Rs989m (PLe: Rs1.0bn). Gross margin was 300bps lower YoY at 80% due to launch of OTC...

Management's strong commentary despite weak performance was driven by 1) Strong deal pipeline, 2) Decent performance in all verticals except Travel, 3) No further erosion in Airline Services....

TVSL's reported mixed set of results where revenues came in marginally lower at Rs14.3bn (-68% YoY, PLe Rs15b). Gross margins too came in lower at 24% (-90bp YoY/QoQ), PLe 27%). However, led by tight cost control, EBITDA loss restricted at Rs488m (PLe loss of Rs649m) while net loss at...

Larsen and Toubro Ltd.'s quarterly Profit misses Estimates, Ordering activity in infra and water to pick up in the later part of current fiscal Larsen & Toubro the engineering construction to software majorhas registered 28% fall in consolidated revenue to Rs 21259.97crore for the quarter ended Jun 2020.Lower sales together with 280 bps contraction in operating profit margin to 7.6%, the operating profit was dragged...

We cut our FY21/FY22 estimate by 7.6/2.5% to account for increase in finance cost. We raise TP to Rs 1,260 (1,235 earlier), increase primarily driven by services valuation. L&T; reported 5%/37% beat on our revenue/APAT estimates, supported by resilient performance in services business. Labor availability has recovered to near-normal level for monsoon season. Despite 39% YoY decline in order wins in 1QFY21, order book (OB) of Rs 3.05tn provides visibility for more than two years of revenue at FY20 level. We maintain BUY on Larsen & Toubro Ltd (LT) as it is well-placed to ride out the pandemic, given its (1) strong order book, (2) healthy balance sheet and (3) robust services business. Key risks: (1) delays in government infrastructure spending, (2) delayed pick-up in private sector spend and (3) stressed payment cycles for government projects

Larsen and Toubro (L&T;) reported decent performance in Q1FY2021 despite challenges. The company's operational performance was broadly in line with our estimates. L&T;'s revenue declined by 28% y-o-y to Rs. 21,260 crore, affected by 53% y-o-y decline in E&C; revenue (33% of revenue). L&T;'s core E&C; was affected by COVID-19 led stringent lockdown hampering project execution. The company lost Rs. 12,500 crore revenue in Q1FY2021 due to the lockdown. Operating profit margin (OPM) at 7.6% was lower by -273 bps y-o-y (marginally lower than estimates) as margins shrank across all segments. E&C; margins dipped by 340 bps to 3.9%, while service margins declined by 875 bps to 10.4% on losses on developmental...

Decent order inflows led by infrastructure & services segment For Q1FY21, L&T; registered reasonable order inflows at the group level worth | 23574 crore, which de-grew 39% YoY, characterised by low interest in fresh investment and order deferrals. International orders for Q1FY21 were at | 8872 crore contributing 38% to order inflows. Overall infrastructure segment contributed 48% to total inflows, which included orders in rural water supply scheme, expressway project and some international orders in power T&D;, mainly from Middle East while services contributed 42% to...