Kotak Institutional Equities

With deposit rates broadly stable, further rise in MCLR at a swift pace is less likely

Reserve Bank of India’s data for system-wide average lending and deposit rates for June continued to indicate a flattish trend for the sector (slack period), the outcomes similar for private and public banks.
Steady show in Q1FY19 was telling

Estimates cut 4-8% over deferral of deleveraging and lower order inflow; TP down to Rs 410; ‘Buy’ maintained
Q1 saw moderation in sales momentum

Strong launch pipeline and cash generation factored into rich valuations; ‘Sell’ retained with TP of Rs 400
Cholamandalam Fin. rating ‘Reduce’: Yet another strong showing by company

Estimates raised by 1-5%; softer business momentum to open up better entry points into quality stock.
Buy rating on L&T: Execution and order inflows offer comfort

Q1 raised concern on margins; upholding of guidance is reassuring; TP increased marginally to Rs 1,600
An excellent performance by company

Mindtree’s strong digital competencies, deal flow from the advisory channel and favourable portfolio mix will ensure strong growth with improving margins.
F&B development poses a risk

The Maharashtra government intends to allow outside food in multiplexes; theoretically, it can significantly impact PVR’s earnings.
Metals and Mining, Q1FY19 Preview: A good quarter likely for most companies

Domestic steel companies and integrated aluminum names will report sequential earnings improvement led by higher metal prices.
Dish TV rating ‘add’: Impressive show in first quarter, says Kotak Institutional Equities

FY19-21 Ebitda estimates up 3-4% and TP revised to `90; consistency will be key.
‘Sell’ on Bharat Forge as TP cut to Rs 600 from Rs 650

FY2018 was a successful year for Bharat Forge as both automotive and non-auto segments fired on all cylinders.
Zee likely to revisit its treasury management strategy in FY19

Zee achieved an important milestone in FY2018—#1 non-sports entertainment network and it set the tone for enhanced focus on digital.
Progress made by company is slow

Even as patanjali is not gaining incremental market share anymore, CLGT is not wresting back any of the lost share either, unlike what a Dabur is reporting in Honey and Chyawanprash.
Road sector stocks are undervalued

The decline in stock prices of road companies is in contrast to the scale-up in the order backlog of their construction business
Accenture’s results suggest robust spending scenario

Accenture impressed with constant-currency revenue growth of 11% in May 2018 quarter. The company also raised FY2018E revenue growth guidance to 9.5-10% from 7-9% earlier.
Maintain ‘sell’ on ACC on expensive valuations

A new cement project earns an investment return of 8-10% (assuming Industry utilisation of close to 75%).
Maintain ‘buy’ on Tata Motors with TP of Rs 445

Our estimates build in more conservative assumptions than the management guidance. Reiterate BUY with unchanged target price of Rs 445.
CG Power and Industrial rating ‘buy’: Kotak Institutional Equities says strength of core business key positive

FY19-20e EPS cut 18-21% and TP down to Rs 65 owing to deal deferral; upgraded to ‘Buy’ on cheap valuations.
Outlook is positive

With higher capacity, Apollo will target Central Eastern European countries along with Russia where it does not have enough presence currently and will also target market share gains in Western Europe. Exports to North America will also start in 2HFY19.
Cement stocks: Subdued prices augur another weak quarter, says Kotak Institutional Investors

Cement prices for June, 2018 declined by Rs 3/bag (all-India average), per our channel checks. The Q1FY19 prices are flat q-o-q (but down 5% y-o-y) even as cost pressures rise due to higher energy prices and depreciating INR/US$.
Magma Fincorp: Primed for high growth in earnings, Kotak Institutional Equities rates ‘buy’

Magma Fincorp is well-placed to deliver high (30% CAGR) earnings growth during FY2019-21e from current subdued levels on the back of improving loan growth to (moderate) mid-teen levels, improving yields and tight control over credit costs.
Life insurance: Expect inflows into Ulips to be moderate in FY19

Private life insurance companies reported 4% growth in individual annual premium equivalent (APE) (16% excluding ICICI Prudential Life and SBI Life Insurance) during May 2018 on a high base – 46% year-on-year (y-o-y) growth in March 2017.
Thermax Rating: Steps to push growth have promise

While the order backlog is progressing well, lack of visibility on large orders a negative; ‘Reduce’ retained.
NHPC rating ‘add’: Kotak Institutional Equities says earnings in final quarter distorted

Company is likely to revert to growth path; earnings down 1/7% for FY19/20e even as TP of Rs 30 is retained.
Kotak Institutional Equities gives ONGC ‘add’ rating; Final quarter results below estimates

ONGC’s revenues increased 4% q-o-q to Rs 240 bn, 1.4% below our estimate led by modestly lower VAP sales and realisations.
Aurobindo Pharma: Kotak Institutional Equities rates ‘add’, sawys weak Q4 showing due to US injectibles, ARVs

ARBP’s Q4FY18 revenues increased by 11% y-o-y, ~4% below our estimates, driven by a sharp 43% y-o-y fall in the ARV segment.
Maintain ‘reduce’ on SAIL with target price of Rs 72

UBBL’s Q4FY18 earnings print was solid on all counts – volumes, market share gains, gross margins, EBITDA and PAT growth.
Maintain ‘sell’ on United Breweries with TP of Rs 1,000

UBBL’s Q4FY18 earnings print was solid on all counts – volumes, market share gains, gross margins, EBITDA and PAT growth.

Horoscope: By Peter Vidal

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