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  • Earnings Report update: HUL, Bajaj Corp, Infosys, DCB Bank

    Publish Date: 18th July, 2018


    1)   Hindustan Unilever (HUVR)

    Earnings snapshot:

    Profit after tax (PAT)
    Growth (yoy)
    Net revenue
    Growth (yoy)
    Rs 15.67 billion 21% Rs 94.87 billion 11%


    *1QFY2019 data

    • -   Volume growth: 12% yoy (domestic)
    • -   Home care revenues grew 20% yoy; personal care revenues grew 11% yoy; food and refreshments revenue grew 14%


    Research view: Reduce

    • -   Our EPS forecast is 4-5% higher than earlier: Rs 29.3 billion in FY2019E, Rs 33.2 billion in FY2020E, Rs 37.4 in FY2021E.
    • -   We believe the EBITDA will increase by 23% in FY2019E
    • -   Strong earnings expected to continue for next few quarters
    • -   Target price: Rs 1,570
    • -   Coverage view: Cautious



         

    2)   Bajaj Corp

    Earnings snapshot:

    Profit after tax
    Decline (yoy)
    Revenue
    Growth (yoy)
    Rs 538 million -2% Rs 2.15 billion 9%


    *1QFY2019 data

    • -   EBITDA: 15% yoy growth
    • -   Volume growth: Hair oil segment grew 2.6% yoy
    • -   Rural demand: LHO category expanded 11.9% yoy in volume
    • -   International business: Down by 94% yoy


    Research view: Add

    • -   The headline data is disappointing, but hopeful about its core product (especially Bajaj Almond Drops Hair Oil) and new product launches
    • -   EPS forecasts down 5-8% for FY2019-20E
    • -   Target price: Revised to Rs 420
    • -   Coverage view: Cautious



         

    3)   Infosys

    Earnings snapshot:

    Net profit
     
    Revenue growth
    (c/c)
    EBIT
    3.7%   6% 23.7% (-100 bps)


    *1QFY2019 data

    • -   Financial services: Declined by 0.2% qoq
    • -   High TCV renewals and fresh deals
    • -   Increased investment general and admin (G&A) expenses increased
    • -   Revenue decline in America and Europe. Europe market likely to improve
    • -   Attrition rose by 23%
    • -   Wage hike to 85% workers this quarter
    • -   FSI vertical contributes more than 56% of India revenues


    Research view: Add

    • -   Current quarter results are mixed
    • -   We expect a turnaround in fortunes
    • -   We estimate a 2.3% increase in EPS between FY2019-21E
    • -   Stock valuation is inexpensive
    • -   Target price: Rs 1,400
    • -   Coverage view: Cautious



         

    4)   DCB Bank

    • -   A 7% yoy increase in earnings
    • -   Net interest income (NII): 17% yoy growth
    • -   Net interest margin fell by 15 basis points qoq to around 3.7%, mainly due to rise in cost of funds
    • -   Loan growth of 31% yoy; loan against property (LAP) growth fell to 19%
    • -   Credit cost fell by 6% yoy, partly due to lower slippages
    • -   Gross non-performing loan (GNPL) ratio up to 19%
    • -   Current account and savings account (CASA) ratio was up to 25% in 1QFY2019
    • -   Cost-to-income ratio has increased due to opening of several branches


    Research view: Add

    • -   We expect NIM to drop by 50 basis points from FY2018-21E
    • -   We believe the company’s loan growth will be above industry average at around 24.4% CAGR between FY2018-21E
    • -   We estimate a 24% CAGR growth in CASA ratio between FY2018-21E
    • -   Cost-income ratio will improve going ahead
    • -   We believe the earnings will improve too at 25% CAGR by FY2021E
    • -   Target price: Rs 205
    • -   Coverage view: Attractive



         

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