Stocks To Buy & Sell After Q4FY15 Results: Amar Ambani Of IIFL

Symphony Ltd (Q3 FY15) – BUY
CMP Rs3,151, Target Rs3,630, Upside 15.2%

• Steady volume growth at 13.3% yoy; avg realization up 5.7% yoy
• Gross margins expansion was better-than-expected led by higher per unit realizations, low RM cost and better product mix
• PAT stood at Rs37cr registering robust ~35% yoy growth
• Domestic as well as international businesses continue to post strong performance with yoy revenue growth of ~22% and 19% respectively.
• Retain BUY with revised 12 month target price of Rs3,630

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Hindustan Zinc Ltd (Q4 FY15) – BUY
CMP Rs168, Target Rs210, Upside 25%

• HZL’s operational performance was better than our expectations on the back of strong mined metal production
• Positive impact of higher production was marginally offset by provision for DMF and jump in wage costs (conclusion of wage agreement)
• Mined metal output during the quarter stood at 0.27mn tons, its highest ever quarterly production
• Cost of production increased marginally on a qoq basis due to higher wage costs
• Management has guided for strong refined metal growth in FY16
• HZL remains one of our preferred picks in metal sector due to inexpensive valuations and firm zinc prices

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HCL Tech (Q3 F6/15) – BUY
CMP Rs891, Target Rs1,100, Upside 23.5%

• Dollar revenue growth was below expectation; moderation in IMS and decline in Enterprise SI being the key culprits
• Sustained robust deal win momentum to improve revenue growth trajectory
• Growth trends were disparate within verticals and geographies; non-Top 20 clients drive growth again
• Substantial margin correction came as a negative surprise; however, it is likely to be recouped over the medium term
• Reduce earnings estimates marginally for FY16/17; Retain HCL Tech as our Top Pick in the sector

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Wipro Ltd (Q4 FY15) – Reduce
CMP Rs580, Target Rs565, Downside 4.0%

• IT services dollar revenue growth disappointed
• Guidance for Q1 FY16 also muted; Wipro to materially underperform peers in FY16
• OPM expansion was a positive; lower growth could weigh on margin going ahead
• Relatively weaker growth trajectory to drive incremental valuation de-rating; Downgrade from BUY to Reduce

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Reliance Industries (Q4 FY15) – BUY
CMP Rs927, Target (2-year) Rs1,300, Upside 40.3%

• Revenues at Rs. 56,043cr, lower by 41.1% yoy driven by sharp fall in crude oil prices causing weak refining and petchem segment sales
• OPM improves by 665bps yoy and 641bps qoq; yoy improvement was led by 521bps increase in petchem segment EBIT margins, sequential improvement was led by 535bps rise in petchem EBIT margins
• GRMs at US$10.1/bbl was higher than expectations, GRMs saw 8.6% yoy and 38.4% qoq surge and was substantially higher than the benchmarks
• Shale gas revenues and EBIDTA declined qoq owing to fall in gas prices
• PAT at Rs. 6,243cr was higher than our estimates owing to better than expected refining segment performance
• Cut estimates to factor in lower crude oil prices, we maintain BUY rating with 2-year price target of Rs1,300

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Mindtree Ltd (Q4 FY15) – Reduce
CMP Rs1,296, Target Rs1,236, Downside 4.3%

• Organic dollar revenue growth below expectations
• Q1 FY16 to be much better but beating the top end of Nasscom’s guidance would be challenging in FY16
• Revenue weakness impacted operating margin; to move in a narrow band in the longer run
• Valuation still rich despite recent fall; maintain Reduce with 12-month price target of Rs1,236

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