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JSW Steel reported net income for the first quarter that beat the average analyst estimate.

FIRST QUARTER RESULTS

• Net income Rs 5,900 crore vs. estimate Rs 4,850 crore

• Revenue Rs 28,900 crore vs. estimate Rs 28,492 crore

• Total costs Rs 20,800 crore, +66% YoY

• Other income Rs 198 crore, +50% YoY

• Oper Ebitda Rs 10,274 crore, estimate Rs 9,159 crore

• Ebitda margin 35.5%

COMMENTARY AND CONTEXT

• Net debt to Ebitda 1.89X

• Says spent Rs 2,690 crore on capex in 1Q against total planned capex spend of Rs 18,240 crore for FY22

• To invest Rs 750 crore in JSW Paints in tranches

• To invest Rs 445 crore in renewable SPV

Shares of Federal Bank Ltd. gained 3.20% to Rs 86.95 apiece on the back of April-June quarter numbers.

• Net profit at Rs 367 crore vs Rs 401 crore

• Net NPA at Rs 1.23% vs 1.19% QoQ

• Gross NPA at 3.5% vs 3.4% QoQ

• NII at Rs 1414 crore vs Rs 1296 crore

• Total Income at Rs 4005.86 crore vs Rs 3932.52 crore

• Provisions at Rs 64,183 crore vs Rs 39,462 crore

Out of the 38 analysts tracked the private lender, 35 maintained ‘buy’, 2 maintained ‘hold’ and 1 analyst maintained ‘sell’ recommendation. The overall consensus price of analysts tracked by Bloomberg hinted at an upside of 21.3%.

Shares of Federal Bank gained 27.70% in 2021 so far as compared to 10.86% rise in S&P BSE Bankex Index over the same period.

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Source: Bloomberg

Shares of Schaffler India Ltd. gained over 7% to Rs 6,258.55 after reporting 181% rise in net sales in the April-June quarter on Wednesday. Since the quarterly earnings, the shares have risen nearly 12%.

• Revenue from operations at Rs 1,232.89 crore vs Rs 438.88 crore YoY

• Net profit at Rs 128.13 crore vs Rs 42.47 crore YoY

• Total expenses at Rs 1075.19 crore vs Rs 509.51 crore YoY

• EBITDA at Rs 220.02 crore vs Rs 5.81 crore YoY

• Earnings per share has risen to Rs 41 vs Rs 13.60 YoY

Shares of Schaeffler India gained nearly 35% in 2021 so far and nearly 68% in the past 52 weeks. Out of the 10 analysts tracking the ball and bearing manufacturer, 8 maintained ‘buy’ and 2 maintained ‘hold’ recommendations. The overall consensus price target of analysts tracked by Bloomberg implied an upside of 3.1%.

Brokerage View

Edelweiss

• Recommends ‘buy’ with a 12-month price target of Rs 7,720.

• Strong showing in the June quarter driven by automotive tech sales, improved exports.

• Steady focus on localization, rising content per vehicle and thrust on technological innovation to drive growth going forward.

• Key wins in CV and tractor segment for clutch and transmission solutions augured well for the growth prospects.

• Demand to remain robust driven by offerings in e-mobility.

• Company well-positioned as a play on mobility with rising localization.

JM Financial

• Recommends ‘buy’ with a 12-month price target of Rs 7,200.

• Resilience in non-mobility segments, exports aided earnings growth.

• Better sales mix and cost recovery to continue to support margins.

• Domestic and global order wins likely to sustain sales growth.

• Believe that the growth trajectory is likely to accelerate for CY20-23/

• Growth momentum witnessed in the June quarter is sustainable.

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Brokerage View

Jefferies

• Recommends ‘buy’ with a target price of Rs 1,780.

• Sharp rise in Covid claims impacted profitability and lifted the combined ratio.

• Expect normalcy for the company in second half of the fiscal as daily covid cases continue to decline.

• Growth in auto insurance business faces challenges from higher competition and lack of price hikes.

• Merger with Bharti Axa slightly behind expectations.

Edelweiss

• Recommends ‘buy’ with a 12-month price target of Rs 1,840.

• Views the impact of Covid on profitability as a one-off event.

• Fully expect the loss ratio to normalise going forward

• Enthusiasm in the long-term compounding thesis remains intact.

• Growth in motor insurance business muted as sales were affected due to local lockdowns.

• Believe that ICICI Lombard can grow at 20% for the next 20 years.

• High float levels, scale-led pricing, technology investments are key moats

ICICI Securities

• Recommends ‘hold’ with a target price of Rs 1,530.

• Delay in cyclical recovery is impacting the insurance industry.

• Higher health claims in the quarter adversely affected profitability.

• Lower non-Covid health claims and lower motor claims encouraging.

• Structural under-penetration remains a long-term investment thesis.

Key Risks:

• Weakness in fresh motor demand

• Absence of motor third party price hike for the second consecutive year.

• Continued competitive pricing in the motor own-damage

• Uncertainty over the extent and duration of Covid impact

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Shares of Persistent Systems Ltd gained as much 8.9% to Rs 3,080.85 apiece after it reported 10% rise in net profit and revenue in April-June quarter.

• Revenue up 10% at Rs 1,229.9 crore Vs Rs 1,113.30 crore

• Net profit up 10% at Rs 151.20 crore Vs Rs 137.70 crore

• Ebitda up 7% at Rs 201.50 crore Vs Rs 188.20 crore

• Margin at 16.4% Vs 16.9%

Order booking for the quarter was at $244.8 million in Total Contract Value and at $188.83 million in Annual Contract Value

Out of the 31 analysts tracking the technology services company, 14 maintained ‘buy’, 7 maintained ‘hold’ and 7 maintained ‘sell’ recommendations. The overall consensus price target of the analysts tracked by Bloomberg implied a downside of 18.1%

Shares of South Indian Bank Ltd. shed 5.74% to Rs 11.50 apiece after reporting a 87% decline in net profit in the April-June quarter.

Asset quality worsened in Q1 while provisions increased as the second wave of covid infections adversely impacted the numbers.

• NII down 8% at Rs 542 crore Vs Rs 586.89 crore (YoY)

• Net profit down 87% at Rs 10.31 crore Vs Rs 81.65 crore (YoY)

• GNPA at 8.02% Vs 6.97% (QoQ)

• NNPA at 5.05% Vs 4.71% (QoQ)

• Provisions up 21% at Rs 497.97 crore Vs Rs 412.29 crore (QoQ)

• Covid related provisions at Rs 84.22 crore

Out of the 8 analysts tracking the company, 3 maintained ‘buy’, 3 maintained ‘hold’ and 2 analysts maintained ‘sell’ recommendations. The overall consensus price target of analysts tracked by Bloomberg hinted as a downside of 5.1%.

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Shares of Mphasis Ltd. jumped as much as 12.3% to its record high, as the IT services company posted a healthy rise in revenue and net profit.

Revenue jumped 5.9% sequentially to Rs 2,690.8 crore while net profit jumped by 7% to Rs 339.6 crore. The company’s Ebitda grew by 5% to Rs 427 crore. Its margin, however, declined to 15.9% from 16.1% in the previous quarter.

Brokerage Motilal Oswal maintained its ‘buy’ rating on the stock, while Dolat Capital said it continues to remain cautiously optimistic on the stock, with a current rating of ‘reduce’ and a target price of Rs 1,910.

Shares of Mphasis rose as much as 12.3%, the most in eight months, to a record high of Rs 2,692.35 apiece. Of the 33 analysts tracking the company, 25 have a ‘buy’ rating, five suggest a ‘hold’ and three recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a downside of 19.5%.

Source: Bloomberg

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