Persistent Systems 2QFY18 results were a mixed bag. Revenues were in‐line with our estimates while the quantum of EBIDTA margin expansion was below our estimates. Revenues at USD118.1mn were up 4.5% QoQ (Organic growth for the quarter stood at 2.9% and rest was on account of PARX acquisition). EBIDTA margin at 15.2% was up 90bps QoQ and marginally below our estimates (15.5%). Headcount
Cyients USD revenue grew by 6.6% QoQ to USD150mn in 2QFY18 vs our estimate of USD 146.2mn.Core service business grew by 4% QoQ after 3.1%. The growth was further supported by DLM business which grew by 33.5% to USD15.8mn vs our estimate of USD14.55mn.
However, some near term headwinds being faced by Cyient largest Client UTC owing to work load rebalancing can be a matter of concern. E
* Bajaj Finance’s (BAF) Q2FY18 earnings missed our estimates marginally; however, the operating performance was broadly in line with expectations with AUM, PPOP as well as PAT growing at a 35%+ run rate
* Notably, continued expansion in its distribution reach helped BAF acquire 1.32mn new to Bajaj customers, up 60% yoy (notwithstanding the pre-GST destocking exercise by dealers
IIB announces merger with BHAFIN
Gains strong edge in rural distribution; synergies to further boost earnings
IndusInd Bank (IIB) finally announced the long awaited merger with Bharat Financial Inclusion (BHAFIN). As per terms of the agreement IIB will issue 639 shares for every 1000 shares of BHAFIN to the
Forecast EPS CAGR of 40% for FY17-20E
* Reiterate BUY with 21% upside to our revised TP (+18%). In addition to its strong profit momentum, we believe SOTL’s earnings visibility is one of the highest within the sector.
* This is supported by its track record of new capacity expansion, robust optic fiber demand and strong efficiency impr
Standalone EBITDA in line; RJio delivers +ve EBIT from 1st quarter itself
Reliance Industries’ (RIL) 2QFY18 standalone EBITDA rose 23% YoY (+12% QoQ) to INR129.8b, largely in line with our estimate of INR126b. PAT rose 7% YoY (+1% QoQ) to INR82.6b, below our estimate of INR88.2b, due to higher interest expense of INR13b (est. of INR9.4b) and a hi
Strong growth continues; RoE of 20%+ despite large capital raise n Bajaj Finance’s (BAF) 2QFY18 PAT increased 37% YoY to INR5.57b (2% miss). Performance across parameters was largely in line with the trend.
* AUM continued its robust growth trajectory (+38% YoY, +5% QoQ) to reach INR721b, led by impressive growth in consumer finance (+42% YoY) and commercial business
Volumes miss, but high rural salience to drive performance
* Colgate’s (CLGT) volumes declined 0.9% YoY (est. of +7%) in 2QFY18. Realization was slightly lower than expected, and thus, sales grew only 2.7% YoY to INR10.8b. EBITDA was up 9.4% YoY (est. of +17.1%) to INR3b. Adj. PAT declined 2.1% YoY to INR1.8b (est. of +10.7%). Market share in too
Set to run the show Forte in global media services to drive profitable growth
* Prime Focus Ltd (PFL) is a full-service media player offering creative solutions, including visual effects (VFX), animation, 3D conversion and media-focused ERP solutions, in India and abroad.
* The company turned profitable in FY17 post completion of the M&A
* Persistent reported largely inline revenues at US$118mn up 4.5% QoQ with organic revenue growth of 2.9% QoQ. Revenue growth was aided by strong growth in Digital business and continued traction in Services business. US$ revenues from Accelerite increased by 2% QoQ while Alliance (i.e IBM) revenues declined by 2.3% QoQ
* EBITDA margins at 15.2% were tad better than our estimate and i
Further traction in growth ahead; maintain BUY
* 2QFY18 net profit of Rs433m (+35% YoY, +112% QoQ) trounced expectations at 117% of our estimates.
* Coming quarters, we expect even stronger earnings growth momentum, driven by rising footfalls in Goa/Sikkim casinos and ramp up of online gaming business.
* On that, we lift our FY18/F
FB reported strong net earnings of Rs2.64bn (first quarter post Q4FY15) mainly led by strong NII growth of ~24% and loan growth of ~25% YoY (despite higher base of bought loan book). Credit cost which had remained a elevated for the last few quarters is stabilizing and bank expect it to remain at steady range for next few quarters. Bank continues to focus on upgrading technology, improving proc
PPoP growth offset by elevated provisions; asset quality stable
* South Indian Bank (SIB) reported robust PPoP growth of 21%/55% QoQ/YoY on the back of strong other income (fee income growth of 1.2x, led by lumpy PSLC fees of INR590m). As % of total income, other income was the second highest in 13 quarters (36%), except 3QFY17. However, elevated provi
* Strong performance: RIL reported highest quarterly profits in Q2FY18. Results were in line with our estimates; Standalone EBITDA of Rs129.8bn (PLe: Rs126.4bn), PAT of Rs82.7bn (PLe: Rs84.6bn). Healthy performance was supported by better than expected petrochemicals profitability partly nullified by higher interest and tax charges.
Both engines firing… …
on track to achieving double-digit growth in FY18
* Strength in Services and DLM: 4.2% QoQ growth in Services and 34% QoQ growth in Rangsons drove in-line revenue growth of 6.5% QoQ. Double-digit growth expectations for FY18 get validated by the performance so far, placing
* Total volumes at MCX traded during the quarter stood at INR14.1t, up 17.0% QoQ and down 14.0% YoY.
* Volumes at MCX have been severely impacted post demonetization. Barring bullion, other commodities have been seeing stability in the past few months. Gold volumes in 2QFY18 are down 38.7% YoY. However, volumes have seen a sharp rebound on a sequential basis, growing by 12.0% YoY, whi
• United Spirits (USL), is the largest spirits company in India and a flagship entity of UB group. It manufactures wide range of whisky, vodka, rum and other spirits. United Spirits is among the top three spirits companies in the world. USL has a global footprint with exports to over 37 countries. It has a sizeable presence in India with distilleries and sales offices all across the countr
* Bharti Airtel has been driving the ongoing industry consolidation with 5 big deals in the last 15 months. In the latest deal, it has agreed to merge the consumer business of Tata Teleservices (TTSL), which includes both Mobility Services as well as Data (dongles).
* TTSL has 40mn subscribers (35mn VLR subscribers) with a revenue market share (RMS) of 5.9% as of Q1FY18. Bharti will t
* Standalone PAT came lower than expected at Rs82bn (vs our estimate of Rs93bn), mainly on account of: 1) capitalization of interest & depreciation and higher tax outgo due to commissioning of new projects. However, positive EBIT in JIO (Rs2.6bn) surprised us positively.
* JIO has reported net revenue of Rs61.5bn (net of GST) and EBITDA of Rs14.4bn with EBITDA margin of 23.5%. Tot
Global Fund allocation to drive anti-malaria business
* With the Global Fund expected to award a tender for institutional anti-malaria (instiAM) medicines in the near term, we tried to analyze the probable impact on Ajanta Pharma’s (AJP) business in the event of intensification in competition.
* The companies preq
Steady quarter; earnings visibility remains strong
* IndusInd Bank’s (IIB) 2QFY18 PAT grew 25% YoY (in-line) to INR8.8b. Strong loan growth of 24% YoY (+26% YoY in corporate loans) and a steady NIM of 4% helped keep NII growth steady at 25% YoY.
* Robust NII, coupled with steady fee income growth of 22% YoY, enabl
Tata Consultancy Services (TCS) has delivered an encouraging performance in 2QFY18 with its USD revenue growing by 3.2% QoQ. While volume growth came in at 3.2% QoQ, CC pricing remained flat. Aided by operational efficiency and decent growth in revenue, its EBIT margin rose by 171bps QoQ (exceeding our estimate by 38bps), which
Sluggish revenue growth (marginal miss)… …
but strong execution on margins
* No pick-up in revenue momentum...: TCS' 1.7% QoQ CC revenue growth was marginally below our estimate of +2.2%, led by a 150bp QoQ realization drop (fell for the second consecutive quarter). YoY CC gr
Impressive 2Q All-Round
Cyient’s revenue grew by 6.8% QoQ and crossed US$150mn in 2QFY18, exceeding our estimate of 6.2% QoQ growth led by healthy 4.3% QoQ and 33.7% QoQ growth in core and DLM business, respectively. Consistency in core business growth metrics is heartening, in our view especially with 4.3% QoQ growth following 3% QoQ/3.3% QoQ g
Holistic growth on the cards
Attractive play of balanced growth in Cotton and Non-cotton businesses
Non-cotton business to flourish driven by Vegetables
* Kaveri Seed (KSCL) is highly dependent on the Cotton business, which contributes ~60% of its overall revenues.