HUL, Tech Mahindra, Axis Bank, Wipro, LTIMindtree, Trent And More Q4 Results Reviews: HDFC Securities

HDFC Securities Institutional Equities

Hindustan Unilever - Uninspiring show

Hindustan Unilever Ltd.’s revenue growth of 11% YoY was below our expectations (our estimate: 15%), with volumes growing by 4% (3% four-year compound annual growth rate, our estimate: 7%). Home care continued to outperform with revenue/Ebit growth of 19/13%. Beauty and personal care clocked revenue/Ebit growth of 10/10% YoY and food and refreshments grew by 3/-5% YoY.

In addition to the sustained increasing premium mix in its portfolio, 75% plus of its business continues to gain market share. Home care has been consistently delivering above par, thereby aiding HUL to register better-than-industry volume (singledigit volume decline in FY23).

Tech Mahindra - Uninspiring outlook

Tech Mahindra Ltd. delivered soft yet in-line revenue and deal intake, but a lower-than-expected margin in Q4 FY23. Growth in Q4 was led by the communications, media and entertainment vertical, which was offset by a sequential decline in the enterprise segment (retail and transport). FY23 revenue growth of 10.1% is expected to moderate to 4.3% in FY24E before recovering to 9.8% in FY25E.

Axis Bank - Searching for a new normal

Axis Bank Ltd. reported a one-time loss from accounting for its merger with Citi Bank’s India consumer business, ex of which it delivered a beat, led by strong loan growth (+16% YoY standalone), healthy fee income and lower credit costs (22 bps annualised).

Net interest margins moderated marginally (-4bps QoQ) on account of excess liquidity on the balance sheet and catch-up in funding costs following accelerated deposit mobilisation. That said, the loan-to-deposit ratio (~89%) continues to remain high and we believe Axis Bank will have to further accelerate efforts to match its targeted loan growth (management has guided for loan growth of 400-600 bps above industry), which is likely to impede mediumterm NIMs.

Wipro - Buyback cushions the valuation

Wipro Ltd. reported in-line revenue and operating performance but provided a weak outlook for Q1 FY24E. Wipro's Q4 revenue growth of -0.6% QoQ and guidance of -3% to -1% QoQ for Q1 FY24E is based on cuts in discretionary spend (banking, financial services and insurance and tech verticals) and postponement of programs. Wipro’s higher mix of consulting services (post its recent acquisitions) is impacting the portfolio disproportionately.

LTIMindtree - Growth premium to continue

LTIMindtree Ltd. posted soft revenue performance, yet better sequential (and FY) growth than tier-I IT peers.

We believe LTIMindtree will continue its growth premium versus tier-1 IT peers and the company will grab market share from tier-I IT (5% of India tier-I IT but ~9% share of incremental growth).

Trent - Stellar growth; front-loading of costs weighs on margins

Trent Ltd. continued its stellar topline growth. Standalone revenue grew 75% YoY (four-year CAGR: 33%) to Rs 20.8 billion. Both flagship formats (Westside/Zudio) fired. Westside’s strong growth was same-store sales growth-heavy (23%). Zudio’s blitz scaling continues to be the big needle-mover.

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