Result Update: Marico Ltd
Marico's 4QFY16 results beat estimates, as gross margins expanded 6.3 ppt (y/y). Volume growth in Indian markets remains strong (8.4% y/y), and the company continues to make market share gains in most of its India portfolio. International market growth is likely to remain on (relative to recent past) strong footing (weak base, reorganization in certain markets). Earnings visibility is high on the above, as also on flexibility in advertising and promotion expenses. Even so, we believe that significant earnings surprises, going forward, shall be dependent on gross margin outperformance. As such, we are unconvinced on assigning a valuation beyond 35X FY18E PER (two turns premium to our target multiple for Dabur), or Rs 267 (price target revised upward from Rs 240, on roll-forward to F18E). On limited upside, we downgrade the stock to REDUCE (ACCUMULATE earlier).
Result Update: ICICI Bank
PAT (down 76% YoY) was pulled down by creation of Rs.36 bn worth of contingent reserve to take into account future stress arising from five key sectors namely Power, Iron & Steel, Mining, Cement and Rigs. NII (6.4% YoY) was also marginally lower than our expectations due to non-accrual of interest income as slippage remained elevated during the quarter. Non-interest income was strong mainly on back of treasury gains arising from stake sale in both life & non-life businesses (Rs.21.3 bn). Strong retail asset disbursement continued primarily by the strong growth in secured assets along with stable liability franchise. Gross slippage remained elevated (Rs.70 bn) partly arising from last tranche of RBI's AQR exercise and partly due to higher slippage arising from restructured portfolio. We do take cognizance of management's muted near-term outlook on its asset quality. We have tweaked the earnings for FY17E and rolled over ICICI bank's TP to FY18E estimates. We retain BUY rating on the stock with revised TP of Rs.314 (Rs.312 earlier) based on SOTP methodology, where the standalone business is valued at Rs.237 (1.5x FY18E ABV) and the subsidiaries are valued at Rs.77 (Holdco discount @20% to the fair value of its subsidiaries at Rs.97).
Result Update: Shriram Transport Finance Co Ltd (STF)
Operating performance was largely in line with our estimates - net operating income (including securitization) grew 31.5% on back of NIM expansion (18bps QoQ) and strong AUM growth (23.1% YoY). PAT (Rs.1.44 bn; down 54.6% YoY) was pulled down by higher provisions (2.5x YoY) due to move to stringent NPL recognition system (150 dpd) and amalgamation of equipment finance business. NIM saw improvement on back of lower funding costs as banks cut their base rate (~40% borrowing) while improvement in asset yield was aided by better cash management (down 50% YoY) as well as better recovery. Disbursement (39.2% YoY) was robust driven by both new CV (2.4x YoY) as well as old CV (29.6% YoY) segments. Sharp rise in headline NPL (up 52.6% QoQ) is partly due to migration to 150dpd from 180dpd (60bps impact) and partly due to merger of equipment finance business (130bps impact). At CMP, stock trades at 1.9x FY18E ABV and hence we retain BUY rating on the stock with upward revised TP of Rs.1080 (Rs.1060 earlier; rolling over to FY18 estimates) based on 2.2x FY18E ABV. We believe STFC is likely to benefit from likely improvement in the CV cycle.
You received this message because you are subscribed to the Google Groups "LONGTERMINVESTORSRESEARCH" group.
To unsubscribe from this group and stop receiving emails from it, send an email to longterminvestorsresearch+unsubscribe@googlegroups.com.
Visit this group at https://groups.google.com/group/longterminvestorsresearch.
For more options, visit https://groups.google.com/d/optout.
No comments:
Post a Comment