Religare : Diwali muhurat top stock picks 2018

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Religare 2018 Picks & top Ideas

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Religare: 2017 Master Picks

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Religare - Top Pick 2016

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Top stocks for 2015: Religare

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Prestige Estates Projects :Operations strong; pick-up in deliveries/rentals key: Religare Research

Operations strong; pick-up in deliveries/rentals key
PEPL posted steady sales in Q3FY14 (1.5msf/Rs 9.4bn) aided by the big
launch (Lakeside Habitat) in Bengaluru. This along with collections/leases of
Rs 5.9bn/~0.7msf mean that the company remains comfortably placed
vis-à-vis its full-year guidance. We however expect launches to moderate as
the focus shifts to inventory liquidation and execution. Thus, a pick-up in
deliveries and an improvement in the rental portfolio should be the key
performance indicators for PEPL from here on. Maintain BUY.
 New sales remain buoyant: PEPL reported pre-sales of 1.55msf/Rs 9.4bn helped by
the launch of Lakeside Habitatin Bengaluru. As of Dec’13, PEPL has achieved 82% of
its annual sales target. Management suggests a moderation in new launches for a few
quarters, which should mean a corresponding moderation in volumes.
 Collections remain steady: Customer advances came in at Rs 5.9bn, thus meeting
79% of its annual collection target of Rs 23bn. Management indicated that the QoQ
decline in customer advances was normal, and the number should pick up again in
Q4FY14. We also expect customer advances to improve through FY15 as new sales
start contributing.
 P/L numbers to remain flat: While construction activity across projectsremains on
track, the P/L numbers may not improve significantly in the absence of big projects
hitting the revenue-recognition threshold. We estimate Q3FY14 revenue/PAT at
Rs 4.7bn/Rs 0.8bn (-2%/+1% QoQ), and as per management, these numbers should
improve in Q4 led by the first-time revenue recognition fromsome projects.
 Maintain BUY: PEPL has improved itsscale of business, which is reflected in its
sales/launches. We however expect launches to moderate for the next few quarters
and hence see limited near-term volume growth potential. Thus, a pick-up in
deliveries/an improvement in the rental portfolio remain key growth triggers. BUY.

IPCA Labs- Outlook robust, valuation upsides strong – initiate with BUY :: Religare Research

Outlook robust, valuation upsides strong – initiate with BUY
We initiate coverage on IPCA with a BUY and a TP of Rs 880. We like IPCA
due to (a) sharp ramp-up in US sales (post Indore SEZ contributing from
1QFY15), (b) superior earnings growth (25% EPS CAGR vs. 20% for peers)
led by margin expansion & (c) attractive valuations (trades at 20% discount
to mid-sized peers). We expect re-rating led by earnings upgrades on faster
domestic growth (from H2) & improved biz. mix driving margin surprise. Our
TP (16x Dec’15E EPS, a 20% discount to sector) implies a 19% upside.
 Formulations-led revenue growth: We forecast 18% sales CAGR over FY13-FY16E
led by both domestic (16% CAGR, 32% of sales) and export (23% CAGR, 44% of
sales) formulations. A ramp-up in US generics (aided by Indore SEZ contribution),
sustained anti-malarial tender wins and new launches in branded markets brighten
export growth prospects. Higher captive utilisation would limit growth in the lowermargin API biz (27% of sales) to 15%, thereby improving the overall revenue mix.
 Domestic growth to rebound on improving productivity: Post one-time impact of
the new pricing policy, IPCA’s domestic growth to bounce-back (to 16% from11% in
1H) over FY13-FY16 on (a) higher thrust on chronic segmentslike cardiac, pain,
diabetes &(b) improving productivity of recently added field-force (25% of total).
 Margin outlook firm: IPCA’s EBITDA margins should to improve to ~24% (22.2% in
FY13) on (a) rising contribution of high-margin US sales, (b) higher-than-expected
margin-accretive anti-malarial tender supplies (14% of sales), and (c) belowexpected impact of NLEM-listed products in the domestic market. We thus expect a
21% EBITDA CAGR over FY13-FY16E (faster than 18% sales growth in this period).
 Earnings momentum to drive upsides: IPCA’s valuation discount of 20% to mid-cap
peers would narrow due to (a)rising growth visibility (25% EPS CAGR), (b)improving
RoEs (26% in FY16E vs. 23% now) and (c) lower gearing (0.2x in FY16E vs. 0.4x now).��

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Oracle Financial Services: religare research,

Pipeline improving but little clarity on cash usage
We met Oracle Financial Services (OFSS) CFO Makrand Padalkar recently.
Key takeaways of our meeting: 1) demand is looking up in terms of pipeline,
which should help drive some pickup in license sales; 2) the new Banking
Platform should drive traction in large complex transformational deals; and 3)
margins are a key management focus. Additionally, we don’t see any concrete
steps for cash utilization toward the business or in terms of shareholder
returns in the near-term. Valuations are expensive at 20x FY15E PE; SELL.
 Focus on driving new license growth, pipeline improving:While OFSS has seen
sluggish new license sales in 1HFY14, management did indicate that new license sales
remains their top focus. The company’s pipeline is improving, although Europe
remains sluggish. Further they remain confident of the new Oracle Banking Platform,
a comprehensive suite that integrates Oracle’s other enterprise software offerings
including CRM, ERP, HRM etc. As such this platform significantly enhances the
capability of Flexcube and should enable OFSS to addressthe large global banks which
have highly complex legacy systems.
 Margins a key focus for management: Blended EBIT margins have been in a healthy
range of 35-36% for 1HFY14, aided by the INR depreciation. Management continues
to keep a sharp focus on maintaining the margin profile, including keepingmargins
in the services business at current levels (c.20%). On cash usage(Rs59bn in 2QFY14),
management indicated acquisitions to strengthen their platform, but we see
nothing executable near-term. As such, appropriate cash usage is a concern for us.
 Expensive – SELL:OFSS is trading at 20x FY15E (Mar ended) PE, a premium to its
large-cap peers in India. While initial feedback suggests some improvement in the
deal pipeline, we do not see any significant upgrades to our current 12% license
growth for FY15 yet. We value OFSS at 16x fwd PE to arrive at our Dec’14 TP of
Rs2,600. Maintain SELL given expensive valuations and a weak growth outlook

Bank of Baroda - Q1FY14 Results Review :: Religare research

Bank of Baroda BOB IN

Asset quality risks persist BOB’s Q1FY14 earnings were in line, but asset quality risks remained elevated and future profitability outlook subdued. Business growth was muted and NIMs declined by 9bps QoQ. Impaired asset formation remained high at Rs 40bn (~5% on annualised basis). PAT was higher than estimates at Rs 11.7bn (+15% QoQ), but driven by trading profits. We cut FY14/FY15 EPS estimates by 17%/16% to factor in lower growth and higher provisions, but maintain BUY on attractive valuations (0.6x/4.8x FY14 ABV/EPS).Æ  Slippages/restructuring remain high: Slippages/restructuring were high at Rs 19.6bn/Rs 20bn. Slippages from domestic advances stood at Rs 18.4bn (3.7% on annualised basis). Recoveries/upgrades improved from Rs 2.3bn in Q4FY13 to Rs 3.5bn in Q1FY14 but remained lower compared to peers. GNPLs/NNPLs increased by 59bps/41bps QoQ to 3%/1.7% and the PCR declined to 44.3%. Outstanding standard restructured assets stood at Rs 175bn (5.4% of advances). The restructuring pipeline was at ~Rs 25bn in Q2FY14 with slippages likely to be at elevated levels; however, management has guided for an improvement in H2FY14.  Æ  NIMs under pressure; advances growth muted:Advances/deposits declined by 1.4%/1.5% QoQ (up 13%/22% YoY). Domestic advances grew by 10% YoY whereas growth in international advances (+18% YoY) was driven by INR depreciation. Domestic/international NIMs declined by 9bps/17bps QoQ to 2.84%/1.3% as pricing power remains weak. However, the domestic C/D ratio was low at 66.5% which could provide support to NIMs. Other income grew by 60% YoY, but driven by trading profits (Rs 4.1bn as against Rs 815mn in Q1FY13). Opex increased by 27% as the bank provided Rs 1bn/Rs 0.75bn towards pension liabilities/wage revisions.     Æ  Subdued near-term outlook but valuations attractive: We cut our FY14/FY15 earnings estimates by 17%/16% to factor in lower growth and higher provisions, and trim our TP to Rs 775 (from Rs 875). While the near-term outlook is challenging given a weak macro, valuations (0.6x/4.8x FY14 ABV/EPS) are attractive.

Religare Research | HCL Technologies: Mixed rev. growth but margins surprise again; HOLD

Mixed rev. growth but margins surprise again; HOLD
HCLT reported in-line US$ revenues (+3% QoQ) but a positive margin surprise
(+140bps QoQ). Infrastructure services continued to drive growth (+8.6% QoQ)
while Software services was sluggish (+0.6% QoQ). Software volume growth of
1.4% QoQ was below peers (Infy/TCS). We raise FY14 earnings estimates by
11% to factor in better margins and INR depreciation. While HCLT’s earnings
performance remains ahead of expectations, further re-rating hinges on more
broad-based growth and recovery in Software Services. Maintain HOLD.

ICICI Bank - Religare

Results in line but slowdown to hurt earnings growth
ICICIBC’s Q1FY14 NII came in marginally below estimates but PAT in line
(+25% YoY to Rs 23bn) buoyed by strong trading profits (of Rs 4bn vs. Rs 1bn
in Q4FY13). Advances grew at 3.8% QoQ (12.3% YoY) while NIMs contracted
~6bps QoQ to 3.27%. Asset quality was under pressure with incremental
slippages/restructuring at Rs 11.2bn/Rs 8bn. We believe a poor macro could
hurt credit offtake/asset quality, and therefore trim our FY14/FY15 earnings
estimates and our Mar’14 TP to Rs 1,075 (from Rs 1,225). Maintain HOLD.
 Advances growth lower than expected:Overall advances growth moderated to
12.3% YoY (from 14.4% YoY in Mar’13) driven by slower domestic credit growth (at
14% YoY). The overseas book grew by ~8% YoY largely due to INR depreciation. The
retail book grew only by 12.6% YoY, but growth was healthy at 26.6% adjusted for
buyouts. Corporate growth picked up with advances growing by 3.9% QoQ while
the SME segment remained weak. Deposits were up 3.7% QoQ and the domestic
LDR was higher by 80bps QoQ. SA deposits mobilisation wasstrong at 3.7% QoQ
(14% YoY) and the average CASA proportion improved by 90bps QoQ to 39%.
 Asset quality slips; credit costs higher: Slippages were higher at Rs 11.2bn (slippage
ratio: 1.6%), while incremental restructuring at Rs 8bn was in line. Gross retail NPLs
shot up to Rs 54.1bn from Rs 41.8bn in Q4FY13. Outstanding netrestructured loans
rose from Rs 53.1bn to Rs 59.1bn. Credit costs were higher than expectations at
82bps; however,the bankmaintained its FY14 credit cost guidance at 75bps.
 NIMs decline marginally; fee income sluggish:Domestic NIMs declined by 7bps
QoQ to 3.63%, leading to a 6bps QoQdrop in Q1FY14NIMs even as international
NIMs improved to 1.6%. The uptick in NIMs was due to a dip in the yield on
advances. The management has maintained its guidance for a 10bps NIM expansion
in FY14. Fee income remained muted (+9% YoY). A sharp slowdown in corporate fee
income coupled with negligible growth in other fee avenues hurt fee growth. The
C/I ratio was flat QoQ at 40%.

Strong Q1 but regulatory uncertainty persists: HOLD TITAN :Religare research

Strong Q1 but regulatory uncertainty persists: HOLD
TTAN’s Q1 net sales/EBITDA/PAT grew by a strong 42%/15.6%/16.9% with
topline growth led by the jewellery business (+47% YoY; grammage up 67%
YoY) even as watches clocked a mere 11.4% growth. Jewellery margins
were hit by a lower studded share and inventory losses (~Rs 340mn). We
raise our FY14/FY15 earnings by 7%/9% and our Mar’14 TP to Rs 265 (from
Rs 225) due to reversal to the gold-on-lease scheme. However, gold
availability and further regulatory risks remain key stock overhangs. HOLD.

Religare Institutional Research | India Economics: India July Mfg. PMI at 50.1 - Downtrend continues; worse times ahead

India July Mfg. PMI at 50.1
Downtrend continues; worse times ahead
India’s mfg. PMI at 50.1 in July is now barely above the 50-mark,
down from 50.3 in June. Output and new order growth continue to
fall on slowing export orders, with the weak INR raising
inflationary pressures. The RBI’s recent rate-based measures to
curb FX volatility will take time to show results, if any, and a
calibrated rollback, as intended by the central bank, looks unlikely
at least over the next two quarters. We now expect a rate cut only
by Q4 (25bps at best) depending on global macro dynamics.
Growth implications are obvious; we see downside risk to our
FY14 industrial estimate of 3.0%.
A quick look at global mfg. PMI data signals a mixed bag with
Eurozone, Germany and the US showing improvement, while all
other regions recorded declines.

Religare Research | Bharti Airtel : Solid India performance; Africa remains a drag – Hold

Solid India performance; Africa remains a drag – Hold
Bharti reported a strong Q1 as India ARPM increased by a sharp 4% QoQ,
shoring up wireless margins by 185bps QoQ. Africa remained sluggish (-5%
QoQ), impacted by lower interconnect even as margins rose 130bps QoQ.
While we already build in a margin recovery in FY14, Bharti’s ability to take
more price hikes without hurting volumes remains the key to further
upgrades. Growth in Africa remains below-par, with the underperformance
weighing on EBITDA upgrades. We adjust our estimates to factor in a better
India wireless performance and raise our TP to Rs 370 (from Rs 320). HOLD

Weak quarter LTFH :: Religare Research

Weak quarter
LTFH reported weak results for both infrastructure and retail & corporate
finance businesses. While NIMs remained stable in the retail & corporate
business, advances growth was subdued and asset quality remained under
pressure (GNPLs/NNPLs up 89bps/72bps QoQ). PAT for the infrastructure
finance business grew 3% YoY as NIMs declined QoQ and provisions were
high. A sharp increase in wholesale rates and a change in the loan mix
could put further pressure on NIMs. Maintain HOLD.

Idea Cellular IDEA IN Big aspirations need capital; downgrade to SELL -Religare

While Idea has shown solid execution in voice, we take a closer look at its
positioning within the data market. With slowing voice market growth, we
think players need to incrementally strategize for data. In our view, Idea needs
to match the investments of larger players given its market share aspiration.
Idea’s levered balance sheet is a constraint and it needs more capital to
compete effectively in data. Valuations at 8x fwd EV/EBITDA and the premium
to Bharti could prompt management to consider raising equity capital.

Religare Institutional Research| Infosys (INFO IN, BUY): Healthy Q1 raises probability of guidance beat; BUY

Healthy Q1 raises probability of guidance beat; BUY
INFO reported a strong Q1FY14 with US$ revenue growth of 2.7% QoQ
(RCMLe 1.7%) led by 4% volume growth. While margins were flat despite the
absence of wage hikes this quarter, the company performed well on most
operational metrics. Further, management maintained its guidance, and we
believe a healthy Q1 performance increases the probability of achieving/
beating the top end of the guidance. Overall, while we do not see any
significant upgrades to our EPS estimates, the pick-up in US$ growth could
help drive up valuations. INFO remains our top pick in the Indian IT space.

L & T Finance - Religare

Strong growth prospects to support premium valuations
We initiate coverage on LTFH with a HOLD rating and a Sep’14 TP of Rs 85/sh.
We like LTFH for its diversified product profile, strong parentage (subsidiary
of L&T) and skilled management. This coupled with a low base will ensure
industry-leading growth in the medium term. LTFH is also a leading contender
for a new banking licence which will further accelerate growth. Valuations
(lending businesses trading at 2.2x FY14E BV) are expensive given subdued
ROEs, but we are long-term positive and advise buying on declines.

Ashoka Buildcon - Religare

On a steady wicket despite sluggish order awards
As per our recent interaction with ASBL’s management, order progress in
the roads sectorremains sluggish and is likely to be back-ended this year.
In our view, the recent decision by government to allow exit mechanisms for
road developers (by introduction of substitute developers) from projects will
alleviate the bleak scenario in road sector. We remain positive on ASBL
given healthy revenue visibility across key projects in the next 12-24
months and a well-capitalised balance sheet. Reiterate BUY