Earnings seem to have bottomed out; maintain HOLD
* Q1 results impacted by number of transitory factors including GST led impact on India business. Underlying margin trends are extremely weak even on factoring some of the fleeting factors. In our opinion this reflects the continuing intensity of pricing pressure in the US base business.
Many segments were weak; cost pressure in AL
Zinc outlook remains bullish; Maintain Buy
* Cons. EBITDA increased 42% YoY to INR48.7b (est. of INR50.7b), driven by strong growth in zinc, O&G and aluminum (AL). The iron ore, copper (Cu) and power segments, however, reported weak operating performance.
Strong operating performance:
HCL Technologies (HCL Tech) reported yet another good quarter, with constant currency (CC) revenue growth of 2.6% QoQ. This was driven by a CC growth of 7.9% QoQ in Engineering and R&D Services (ERD) services (includes inorganic revenue from Geometric consolidation
Operating performance impacted by one-offs; Outlook remains intact
* Maruti Suzuki’s EBITDA margin contracted by 150bp YoY/70bp QoQ to 13.3% (Emkay: 15.1%; Consensus: 14.3%), led by GST transition losses, increased discounts, higher procurement from Gujarat plant and rise in commodity prices.
* Net revenue grew strongly by 1
Impacted by GST-related challenges; RM costs pull down margins
Asian Paints (APNT) reported consol. sales growth of 6.4% YoY (est. of +2%) to INR38.2b,
with volume growth of ~4% (est. of flat growth) in the domestic decorative paints business. The quarter failed to build on a good start due to destocking ahead of GST implemen
Asset quality concerns persist; retain ADD
Karur Vysya Bank (KVB) reported below-expected 1QFY18 PAT of Rs 1.5bn (+1.1% yoy/6.5% below EE) on higher provisions (+79% yoy). NIMs slid 28bps qoq while core fee income growth was healthy at 29% yoy. Loan growth (+7.7% yoy) remained weak at 7.7% yoy. Asset quality deteriorated further with GNPL/NNPL ratios i
Loan growth moderates; but deceleration likely to be transient
Can Fin’s loan assets growth decelerated to 23.4% yoy from 25.1 % yoy in the preceding quarter and now stands quite lower than 27-29% yoy growth trajectory witnessed pre-demonetization. While effects of demonetization waned to large extend, the company faced a couple of other headwin
Decent quarter; light at the end of the tunnel
* Consolidated EBITDA drops meager 1% QoQ: Consol.
EBITDA fell 1% QoQ (-19% YoY) to INR77.6b (4% above estimate) on the back of flat revenue. Bucking the last two quarter’s declining trend, India wireless revenues stabilized in 1QFY18 (+0.4%
Revival in advertisement revenue
* After disappointment of 6 quarters, the company reported robust 57% increase in advertisement revenues. Advertisement revenues of Rs334mn was highest ever in a quarter. Footfalls increase of mere 1% yoy was disappointment, akin to PVR.
* Double digit increase in rent and other expenses restr
L&T reported mixed set of numbers. While the domestic execution gained momentum resulting in higher than expected revenue growth, there was pressure on margins. PAT beat our estimates aided by higher other income and lower tax provisions. However, order intake came in lower than estimates due to subdued overseas markets. On the positive side, there were improvements on the balance sheet fro
Return ratios to take time to normalize; retain REDUCE
Equitas Holding Ltd (EQUITAS) saw a 31% yoy decline in 1QFY18 PAT to Rs 156mn (EE Rs 226mn) on higher opex (+102% yoy) and provisions (+151% yoy), even as it booked Rs 601mn as PSLC fees. MFI disbursements (-57% yoy/-22% qoq) remained weak and in line with management strategy to reduce the MFI loan
Operating Performance In-line; Maintain BUY
Shriram Transport Finance Company (STFC) has reported a strong performance in 1QFY18 with its net profit rising by 20% YoY (200% QoQ) to Rs4.5bn. Strong growth in bottom-line was led by 23.4% YoY and 11.6% QoQ growth in operating profit to Rs12.5bn and 36.1 QoQ decline in provisioning expenses to Rs5.8bn. NII
Higher raw-material cost and one-off GST compensation impact margins:
For Q1FY2018, Maruti Suzuki’s (Maruti) performance was in line with our estimates, as increased costs restricted profit growth. The company’s topline grew by 17% YoY, driven by sharp 13% YoY volume growth on account o
Core PPoP helped by healthy fees; Pool of stress loans remains unchanged
* Axis Bank’s (AXSB) PAT came in at INR13.06b (5% beat). Key positives were: a) continued healthy retail loan growth of 22% YoY; reported loan growth was lower at ~12% due to FCNR-B linked loans redemption in 2HFY17, b) average daily CASA growth stood at 24% YoY, with
Lack re-rating triggers
* Footfall growth of mere 1% and 7% decline in footfalls for comparable properties was a disappointment. ATP increase of 10% yoy and 31% advertisement revenue growth surprised positively.
* Increase in employee cost and other operating expenses restricted EBITDA growth, as employee expense had impact of min
Steady growth in gaming drives revenue beat
Expanding share of online gaming to bolster growth
Revenue exceeds but PAT below estimates:
DELTA reported overall revenue of INR1,286m (est. of INR1,180m) v/s INR1,087m in 1QFY17, marking an increase of 18
Industry revenues to remain under pressure
* Revenue was in-line with estimate while EBITDA beat of 2% was driven by better than expected performance in Africa operations.
* India- Wireless revenue was flat qoq (vs estimate of 2% decline), driven by qoq growth in data revenues and lower than expected decline in voice revenues. Rob
Carborundum’s (CUMI) Q1 FY18 results were weaker than expected on account of lower contribution from domestic abrasives and electro minerals (EMD). Domestic abrasives business was impacted due to GST transition that led to lower off-take from channel partners. Domestic EMD was impacted by higher power costs, increase in input costs and ramp up costs at new capacities. However, global divi
Balance sheet clean-up phase; PAT turns positive after three quarters
* JKBK reported PAT of INR302m in 1QFY18 (+32% YoY on a low base), after three consecutive quarters of losses. Adjusted for excess provisions made by the bank (which it created from DTAs recognized), PAT came in at INR2.7b.
* Slippages of INR5.1b (22% decline f
1Q beat on margin gains
* We were positively surprised by RDCK’s 1QFY18 results. Profit of Rs257m was unchanged YoY and increased 55% QoQ. EBITDA margin improved 100bps YoY to 15%. The lower-than-expected volume decline also aided profitability.
* Net revenue declined just 4% YoY despite de-stocking owing to highway ban and
Steady operating performance:
Federal bank reported a steady Net interest income (NII) growth of 15.6% YoY in Q1FY18 slightly lower than our expectations and its own performance compared to previous quarters. The net interest margin (NIM) during the quarter contracted by 29BPS QoQ and 15BPS YoY owi
Ahead of estimates, but uncertainty clouds near term
1Q beat on 99acres surprise and cost containment:
INFOE’s 1QFY18 standalone revenue grew 12.6% YoY to INR2,225m (2% beat). While revenue growth in the Recruitment business showed 10.4% YoY growth (est. of + 13.5%), real estate portal 99acres.com grew
Corporate loans boost growth
* HDFC Ltd.’s (HDFC) Q1FY18 performance was in line with expectations on all fronts; Reported profits were below estimates due to higher tax outgo, core PPOP (ex-dividend and investment gains) grew 16% yoy, largely in line with the overall loan growth
* Net loans (ex-loan sell downs) grew 18% yoy
DHFL came out with yet another quarter of good results. AUM growth of 23% and PAT growth of 29.5% was in line with expectations. Stable credit cost and ability to hold on to strong NIM were the key highlights of the quarter.
Loan growth accelerated further and momentum is likely to remain