Q4FY16 Results Update By Amar Ambani Of IIFL

HCL Tech Ltd. (Q4 FY16): Slow growth disappoints again – BUY
CMP: ₹800, 1-yr Target: ₹959, Upside: 19.9%

• Revenue traction remains sluggish; constant currency growth falls to 8% yoy
• Execution on order backlog to uplift growth trajectory
• Operating margin improved by 70bps qoq; recovery likely to be gradual over medium term
• Investment risk-reward favourable; Retain BUY

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Bharti Airtel (Q4 FY16): Strong end to FY16; outlook bright – BUY
CMP: ₹372, 1-yr Target: ₹440, Upside: 18.3%

• Revenue growth at +3.6% qoq beat estimates driven by strong domestic wireless performance
• Wireless margin increased by ~100bps qoq as underlying volumes up robust 6% qoq, voice pricing continues decline qoq; data growth moderates to ~10% qoq
• Africa clocks improved INR revenue growth at +3.2% qoq; margins inch up to ~22%
• Announces buyback worth ~₹1,430cr at price of upto ₹400; we raise target EV/E multiple and retain BUY with fresh 1-year target of ₹440

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Shriram City Union Finance (Q4 FY16): Optical increase in asset quality impacts profitability – Accumulate
CMP: ₹1,650, 1-yr Target: ₹1,797, Upside: 8.9%

• Weak NII growth on optical increase in asset quality; high provisioning led to sharp reduction in PAT
• AUM growth fairly stable at 17% yoy led by small enterprise finance
• Optical increase in asset quality on shift to 150 dpd
• Asset quality performance was stable
• RoA estimates lowered; downgrade from BUY to Accumulate

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Exide Industries (Q4 FY16): All-around growth – Accumulate
CMP: ₹148, 1-yr Target: ₹165, Upside: 11.5%

• Net sales at ₹ 1,761cr was higher than our and street estimates; represented a growth of 6.6% yoy and 15.5% qoq
• Stronger than expected revenues was owing to improvement in industrial and automotive battery sales
• OPM at 15.2% was better than our expectations and was higher by 77bps yoy but lower by 18bps on a qoq basis, gross margins were higher by 98bps yoy but lower by 84bps qoq
• PAT was at ₹ 178crs was above our expectations and higher by 29% yoy and 32.5% qoq
• Automotive demand is expected to strengthen with interest rate cuts, lower fuel prices and strong consumer sentiment, replacement demand is also expected to pick up especially in two wheeler space
• Mr. P. K. Kataky, will retire from services of the company and Mr. Gautam Chatterjee has been appointed as the Managing Director and Chief Executive Officer of the company beginning from May 01, 2016
• We retain our Accumulate rating with a price target of ₹165 as we believe that the recovery will be gradual and the large discount to Amara Raja Batteries should narrow down

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Yes Bank Ltd. (Q4 FY16): Robust performance continues – BUY
CMP: ₹909, 1-yr Target: ₹1,116, Upside: 22.8%

• Loan growth strong at 30% yoy; robust traction in granular lending continues
• Loan growth will remain robust in coming years too
• Deposit franchise continues to improve at impressive pace; CASA ratio up 500bps yoy
• NIM was stable; medium term outlook encouraging
• Core fee growth was strong; opex growth elevated on aggressive investments on building the retail franchise
• Some uptick in NPLs, but outlook remains sanguine
• Reiterate BUY and Top Pick in banking; one-year target of ₹ 1,116 and 2-year target of ₹ 1,373

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Bharti Infratel (Q4 FY16): Strong quarter; healthy outlook – Accumulate
CMP: ₹375, 1-yr Target: ₹405, Upside: 8.0%

• Bharti Infratel reports a strong quarter as energy margins rebound qoq to 10.7%; revenue misses estimates at +2.2% qoq
• EBIDTA margin aided by higher fuel reimbursements translating into a robust 17% qoq PAT growth
• Company to buy back shares worth ₹2,000cr at price of upto ₹450 and as a corollary cuts dividend to ₹3/share for FY16
• Adjusted fund flow up 9.9% qoq and 15.8% yoy; capex at 16% of revenues
• Solid quarter and positive business outlook imply Accumulate stays with support to valuations from share buy back

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