Kotak Institutional Equities
Life insurance: Protection story continues to play out
With focus shifting to protection and other high margin policies, the value of new business growth of large players will remain strong.
Torrent Pharmaceuticals rating ‘NR’: Q2 margins continued to impress
Results reflected further synergy gains from Unichem acquisition; EPS estimates for FY19-21 trimmed 1-4%.
Jyothy Laboratories rated ‘Add’; Quality of earnings in Q2 was weak
EPS forecasts cut marginally; ‘Add’ retained on reasonable valuations with TP at Rs 210
RBI likely to keep rates on hold in rest of FY2019
Expect average IIP growth to moderate to around 4.1% in H2FY19 as against 5.1% in H1FYF19
HDFC Life, SBI Life and other large private life insurance players grow stronger
HDFC Life saw 20% y-o-y growth in individual APE and similar growth in overall APE in Sept 2018
Sadbhav Engineering Rating ‘Buy’: Uncertain ordering remains a overhang
Traffic and BOT portfolio stake sale bode well; TP cut to Rs 370 from Rs 435 given uncertainty in NHAI awards.
HCG rated ‘buy’; Correction offers another entry point
Strong execution; FY19-21 estimates down 2-4%; upgraded to ‘Buy’ with TP revised to Rs 270 from Rs 290; valuations are reasonable.
Timken rated ‘sell’; commodity prices, demands are headwinds
FY19-21e EPS cut 12-14%; valuation high; ‘Sell’ retained with revised TP of Rs 570.
Energy: ‘Add’ on ONGC; negative stance on OMCs
The government’s ad-hoc interventions in fuel prices and subsidy sharing historically suppressed earnings and return ratios for these companies, while limiting visibility on profits until the end of every year during that t
Apollo Tyres rating ‘buy’: Correction greater than is needed
FY19-21e EPS cut 4-6% to factor in higher crude prices and rupee depreciation
Demand environment is robust for Indian IT firms
Accenture reported an exceptional August 2018 quarter (Q4FY18) with 11% revenue growth in constant currency (c/c).
Your money: Gap between outstanding & fresh loan rates remains
Difference in loan growth between public and private banks may result in the latter looking to revisit their deposit rates.
Bajaj Auto rated ‘sell’; Rupee depreciation likely to help margins
Medium-term concerns persist; earnings rise 5-8% for FY19-21e; TP raised to Rs 2,700; ‘Sell’ retained owing to outlook in bike segment
Utilities: Merchant tariff rates log September spike
The recent spike in merchant tariff rates on the exchange to above Rs 5/kwh brought with it a sense of déjà vu, as a similar seasonal trend was seen in September, 2017 with spot prices having gone above Rs 5/kwh for a brief
NBFCs: IND-AS had limited impact on earnings
Net worth too saw low impact; next downcycle is not expected to be more severe than the last one .
Management sees 13-15% topline growth; ‘add’ Marico
We hosted the Marico management for an NDR in Europe. The company intends to reinvest the likely GM gains to accelerate growth in its new growth engines (health foods and male grooming).
Company betting on new growth engines
Momentum in market growth is picking up; Saffola only major area of concern; reason to remain constructive; ‘Add’
L&T Rating ‘Buy’: Cash flows or monetisation gains will be key
Expected recovery in infra sector margin behind 2-3% rise in core E&C estimates; deleveraging pace likely to increase; ‘Buy’ retained.
Pidilite Industries Rating: Company well placed on all fronts
PIDI management has reiterated its confidence in the core adhesives/ sealants business, highlighted opportunity size and progress in the growth categories (waterproofing, WD-40, etc) and emphasised an innovation pipeline that
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.
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