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

Axis Bank (Q4 FY15) – BUY
CMP Rs553, Target Rs670, Upside 21.2%

• Loan growth was ahead of expectation at 22% yoy; retail portfolio growth continues to be strong
• Deposits mix improves further; CASA + Retail TDs constitute 78% of deposits
• Marginal NIM decline came as a surprise; outlook remains strong
• Fee growth accelerated on robust momentum in retail fees; C/I ratio declined
• Impaired assets addition was within the annual guidance, bank expects it to be lower in FY16
• Further room for valuation re-rating exists, Retain BUY

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TVS Motors (Q4 FY15) – Accumulate
CMP Rs239, Target Rs250, Upside 4.6%

• Net sales rise 14% yoy owing to 6.7% yoy growth in volumes and 6.8% jump in realizations, Sales were in line with our expectations
• OPM at 6.1% was in line with our estimates, adjusted for one-offs OPM was at 6.6%, which was higher than estimates
• APAT was at Rs. 90cr was higher than estimates owing to lower than estimated tax rate
• Growth in volumes was on account of sharp jump of 24.1% yoy in scooters and 22.2% yoy jump in three-wheeler volumes
• We maintain our Accumulate rating with a revised price target of Rs250 as valuations seem expensive at current levels

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Idea Cellular (Q4 FY15) – BUY
CMP Rs182, Target Rs230, Upside 26.4%

• All round beat in Q4 with adjusted (for TRAI’s IUC changes) revenues up 6.3% qoq
• Margins surprise with ~200bps gain on lower network cost and operating leverage tailwinds
• Company guides for a higher FY16 capex to upgrade 2G sites to 3G and reconfigure GSM network post Mar’ 15 auctions
• Execution forte, robust data growth and prospects of voice pricing uptick support our BUY reco with 9-12mth target of Rs230

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Sesa Sterlite Ltd (Q4 FY15) – Accumulate
CMP Rs207, Target Rs218, Upside 5.3%

• Vedanta’s operational performance was marred by one-offs related to power and oil & Gas division
• The outperformance of copper and aluminium division was offset by lower contribution from zinc international and iron ore division
• Aluminium division outperformance was led by lower coal costs and ramp up of new capacities
• The strong performance in copper division extended further in Q4 FY14 as Tc/Rc margins continue to rise and acid realisations have improved
• SEL’s power production was lower on a qoq basis due to lower demand and evacuation constraints
• Production from the first unit of 660MW in Talwandi Saboo (TSPL) increased from 259mn units in Q3 FY15 to 690mn units
• Domestic zinc business operating performance was strong on the back of jump in mined metal output
• International zinc business performance was quite weak due to lower sales volume and higher production costs
• Contribution of Oil & Gas business reduced on account of the sharp reduction in crude oil prices and lower production
• Consolidated bottomline impacted by impairment of goodwill created on acquisition of Cairn India, Sri Lankan exploratory assets and Copper mines of Tasmania. Normalized EBIDTA stood at Rs. 4,500cr against Rs. 4,014cr reported by the company
• Maintain accumulate rating on attractive valuations with a price target of Rs218

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Bharti Airtel (Q4 FY15) – BUY
CMP Rs388, Target Rs465, Upside 19.8%

• Bharti Q4 margin beat estimate with steady performance from India mobile business
• India wireless traffic growth healthy at 3.9% qoq though voice pricing decline is a point of concern
• Africa posted constant currency decline of 1.2% qoq though reported revenues heavily impacted by currency headwinds especially in Nigeria
• Bharti remains the best bet to play the data growth supported by solid spectrum portfolio; retain BUY for 9-12mth target of Rs465

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Granules India (Q4 FY15) – BUY
CMP Rs82, Target Rs100, Upside 22.0%

• Negligible revenue growth ex-Auctus contribution in Q4; Paracetamol share rises to 47% in FY15 revenues, Metformin steady at 28%
• Inventory write offs, surge in R&D expenses lead to ~300bps sequential margin decline in Q4
• Auctus breaks even on cash basis in Q4; FY15 pretax loss at Rs. 13cr
• Cut margin and EPS estimates on tepid Q4 but still foresee ~21% EPS cagr over FY15-17E; retain BUY for revised 9-12mth target of Rs100

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Maruti Suzuki (Q4 FY15) – BUY
CMP Rs3,647, Target Rs4,280, Upside 17.4%

• Net sales rise 12.6% yoy owing to 6.7% yoy rise in volumes and 5.2% higher realizations. Domestic volumes were higher by 6.2% yoy while export volumes jumped 12.4% yoy
• OPM at 15.9% was way ahead of our and street expectations which represented an increase of 558bps yoy and 322bps qoq, driven by lower raw material prices, fall in discounts, favorable currency movements and better product mix
• PAT at Rs. 1,284cr was 28% higher than our estimates owing to higher than estimated operating profit and other income
• Company aims to grow at a faster rate when compared with the industry in FY16 with several new launches lined up
• We maintain our BUY rating with a 24-month target of Rs4,280

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ICICI Bank (Q4 FY15) – BUY
CMP Rs302, Target Rs425, Upside 40.7%

• Domestic loan growth accelerated to healthy 18% yoy; retail credit continued to grow by robust 25% yoy
• Targets a slightly higher growth in FY16; well capitalized for a period of credit growth recovery
• Average CASA ratio improves; NIM touches historic high of 3.57%
• Weak fee growth; cost/income ratio stable on higher treasury income
• A sharp uptick in delinquencies drive a substantial increase in credit cost
• Retain BUY and 24-month target of Rs425

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Indiabulls Housing Finance (Q4 FY15) – BUY
CMP Rs558, Target Rs771, Upside 38.2%

• Loan assets growth accelerated to 27% yoy; to witness 24-25% CAGR over the next two years
• Spreads stable on the back of easing in cost of funds
• Asset quality intact; balance sheet remains robust
• Retain BUY with 24-month target of Rs771

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Alembic Pharma (Q4 FY15) – Accumulate
CMP Rs471, Target Rs500, Upside 5.2%

• Alembic Pharma Q4 revenues, PAT largely in line though margins below estimates
• India branded business growth healthy at +16% yoy while international generics sales improved 11% qoq on higher market share and increased supplies to US partners; ROW sales impacted by delayed approvals and exposure to Ukraine and Yemen
• Cut FY16/17 EPS by 3-6% on second successive quarter of tepid growth; downgrade to Accumulate with revised 9-12mth target of Rs500

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Maruti Suzuki – Call Success & Update
Reco price Rs2,772, Previous target price Rs3,800, New target price Rs4,280

We had included Maruti Suzuki in our theme report India Strategy: Size Matters! – 12 Bluechips to ride on released on August 27, 2014 where we had assigned a 2-year target of Rs3,800. The stock surpassed our target in today’s trading session. In our Q3 FY15 and Q4 FY15 result updates we have assigned a target of Rs4,280. MSIL is one of the best proxy-play on the expected economic recovery in the country. Macro headwinds in the past couple of years had weakened demand for passenger cars. However, during this phase MSIL has emerged stronger with 1) market share gains, 2) line up of new launches, 3) increased localization and 4) deeper presence in domestic markets. While economic recovery and existing latent demand will result in robust volume growth for MSIL, its profitability will improve further with 1) increase in localization, 2) reduction in discounts and 3) weakening of Yen. We expect MSIL to see revenue and PAT CAGR of 15.3% and 30.9% respectively during FY14-17E.

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Infosys Ltd (Q4 FY15) – Accumulate
CMP Rs1,996, Target Rs2,125, Upside 6.5%

• Muted volume growth at 0.9% qoq; pricing pressure continues
• FY16 annual revenue growth guidance implies much better run-rate than FY15
• EBIT margin contracted more than expected but remained within the long term band
• Cut FY16/17 earnings estimates by 6-7%; lower rating to Accumulate

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Ultratech Cement Ltd (Q4 FY15) – Accumulate
CMP Rs2,707, Target Rs2,886, Upside 6.6%

• Top-line at Rs. 6,135cr disappoints on lower than expected dispatches.
• Operational efficiency was higher than our estimate on account of saving arising from lower RM and other overhead.
• Higher interest outgo (up 103% yoy) drags PBIT; marginally higher than our estimate.
• Effective tax rate stood at 33.5% (as against 14.2% in Q4 FY14) translating into PAT de-growth of 26.6% yoy.
• Upgrade Ultratech to Accumulate as we now factor in FY17 earnings

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Petronet LNG (Q4 FY15) – Accumulate
CMP Rs167, Target Rs182, Upside 9.0%

• Net sales at Rs. 716cr was sharply lower than our and street estimates; represented a fall of 31.3% yoy and 2% qoq
• Total volumes were at 102.5 TBTUs as compared to 117.3 TBTUs in Q4 FY14 and 139.6 TBTUs in Q3 FY15; fall was mainly on account of fall in offtake of long term volumes
• OPM at 3.1% was below our expectations
• PAT at Rs. 301cr was higher than our estimates as one time tax reversal pertaining to 80IA of Income Tax Act, 1961 more than offsets poor operational performance
• While Kochi ramp up continues to be a concern recent developments such as stakeholders meeting by state government, leasing out of storage tanks and trucking of gas have been positive
• We maintain our Accumulate rating but lower our 12 month target price to Rs. 182 as clarity should emerge on Kochi terminal in medium term and current soft LNG prices should ensure robust demand for LNG

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