Stocks To Buy & Sell After Q1FY16 Results: Amar Ambani Of IIFL

Granules India (Q1 FY16) – BUY
CMP Rs115, Target Rs135, Upside 15.8%

• Strong start to FY16 with margin beat on back of better operational efficiencies; PAT beats forecast at +18.6% yoy
• Revenues below estimate at +11.2% yoy, down 2.4% qoq
• Company expects sharp jump in FY17 capex as US business gains prominence
• Raise estimates on robust Q1 and retain BUY with revised 9-12mth target of Rs135 (earlier Rs112)

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TVS Motors (Q1 FY16) – Reduce
CMP Rs251, Target Rs230, Downside 5.3%

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Lupin (Q1 FY16) – Accumulate
CMP Rs1,672, Target Rs1,750, Upside 4.6%

• Lupin revenues, margins largely in line; PAT beat on higher other income due to hedging gains
• Acquires New Jersey based GAVIS Pharma for US$880mn, ~9x CY14 sales of US$96mn; deal establishes scale in derma and controlled substances
• Earnings momentum to return in H2 FY16 with large launches but believe growth is already priced in at ~23x FY17E EPS; retain Accumulate

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Dewan Housing Finance (Q1 FY16) – BUY
CMP Rs498, Target Rs580, Upside 16.5%

• AUMs registered strong growth of 27.4% yoy to Rs. 60,000cr
• Spread intact at 2.6% as cost of borrowing benefits passed on to customers
• Cost/income ratio decline with sweating of existing network
• Asset quality performance strong with little downside risk
• Retain BUY recommendation with 12-month target price of Rs580

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Reliance Industries (Q1 FY16) – BUY
CMP Rs1,025, Target Rs1,300, Upside 26.8%

• Revenues at Rs. 65,817cr, lower by 31.7% yoy driven by sharp fall in crude oil prices causing weak refining and petchem segment sales
• OPM improves by 633bps yoy but falls 126bps qoq; yoy increase was led by 462bps and 423bps rise in petchem and refining segment EBIT margins respectively, sequential fall was led by 134bps fall in refining EBIT margins
• GRMs at US$10.4/bbl was higher than expectations, GRMs saw 19.5% yoy and 3% qoq increase and was substantially higher than the benchmarks
• Shale gas revenues and EBIDTA declined qoq owing to fall in gas prices
• PAT at Rs. 6,318cr was higher than our estimates owing to better than expected refining and petchem segment performance
• Cut FY16 estimates but we maintain BUY rating with 2-year price target of Rs1,300

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Bajaj Auto (Q1 FY16) – Accumulate
CMP Rs2,497, Target Rs2,500, Upside 0.9%

• Revenues at Rs. 5,613cr higher by 6.9% yoy; was lower than our estimates owing to lower than estimated export realizations
• Blended realizations improved 4.3% yoy driven by 2.4% higher export realization (US$), rupee depreciation and 1.5% higher domestic realizations
• Total volumes were higher by 2.5% yoy as 1.8% yoy decline in domestic volumes was more than offset by 7.8% yoy increase in export volumes. In terms of products, 2-W volumes were flat yoy while 3-W volumes surged 21.3% yoy
• OPM at 20.3% was higher by 141bps yoy and 274bps qoq, OPM was in line with expectations but absolute operating profit was lower than expectations
• APAT at Rs. 1,015cr was higher than our estimates due to lumpy other income
• Maintain Accumulate rating with a 9-month price target of Rs2,500

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Axis Bank (Q1 FY16) – BUY
CMP Rs581, Target Rs670, Upside 15.5%

• Loan growth was ahead of expectation at 23.5% yoy; retail and corporate loans grow strongly
• Deposits mix stable; CASA + Retail TDs constitute 78.5%
• NIM steady at 3.8%; could gradually decline from here
• Fee growth retracted to 13% yoy; substantial treasury income and suppressed opex growth drive C/I ratio lower
• Impaired assets addition was higher than expectation; however, it is likely to be lower yoy for the year
• Risk-reward getting balanced, Retain BUY

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