Stocks in the news:
1. Bajaj Auto: Bajaj Auto is expected to post relatively muted performance in Q2FY21E, largely led by product mix deterioration and an element of rupee appreciation. Total volumes were at 10.5 lakh units, down 10.2% YoY (2-W down 2%, 3-W down 53%; share of 3-W in total volumes at 8.4% vs. 16.1% YoY; exports at 46% of total volumes, unchanged YoY). Net sales are expected at | 7,192 crore, down 6.7% YoY. EBITDA & EBITDA margins for the quarter are seen at | 1,231 crore and 17.1%, respectively (up 380 bps QoQ, 50 bps YoY). Consequent PAT is expected at | 1,178 crore, down 16% YoY
2. Asian paints: For Asian paints, we believe, a slow recovery in the metro regions is expected to be partially offset by strong volume recovery in semi-urban and rural regions, helping drive volume in Q2FY21. We believe company to report sales growth of 6% YoY to | 5355 crore led by volume growth of 7% in Q2FY21. On the margin front, benign raw material prices and improved operating leverage to drive EBITDA margin up by 170 bps YoY at 20.6%, which would take PBT higher by 18% YoY to | 985 crore. PAT may decline by 12% YoY at | 743 crore mainly due to reversal of tax benefits in the base period.
3.HDFC AMC: For HDFC AMC, AUM is expected to witness sequential uptick, though on YoY basis is seen to remain flattish at | 3.75 lakh crore. Gradual recovery in equity market and inflow from SIP is seen to partially offset pressure of lumpsum outflow. Operational performance is expected to revive sequentially and remain flat on YoY basis. Revenue from operation expected at | 498 crore (Yield at ~53 bps of closing AUM). Steady expense trajectory is seen to lead to support profitability with PBT at | 426 crore, i.e. 45 bps of AUM. PAT is seen at | 324 crore,~34 bps of AAUM.
4.Syngene: Q2FY21 revenues grew 11.9% YoY to ~| 520 crore led by growth in Discovery Services and Dedicated R&D Centres. EBITDA margins remained flat YoY at 30% with better gross margins due to change in product mix being offset by higher employee expenses owing to recruitment for new facilities. EBITDA grew 11.9% YoY to | 156 crore. Adjusted net profit (ex-exceptional insurance gain in Q2FY20) grew 2.6% YoY to | 84 crore. Delta vis-a-vis EBITDA was due to higher depreciation and lower other income partially offset by lower tax outgo.
5. Ultratech Cement reported good set of numbers for Q2FY21 with EBITDA margin expansion of 592bps YoY to 25.5%. Volumes for the quarter improved 8.2% YoY to 19.2MT. While realizations broadly remained flat YoY, stricter cost controls helped company to improve margins sharply. While revenues grew 8.1% YoY to |10,019 crore, EBITDA improved by 40.8% YoY to |2,552 crore due to better margins. Further, reduction in interest costs (down 31% YoY) helped to achieve robust PAT growth of 89% YoY to |1209 crore for the quarter.
6.Colgate: Colgate reported strong set of numbers with 5.3% revenue growth led by 7.1% domestic business growth. With sharp decline in crude based commodity cost, gross margins improved by 340 bps. Further, the company got the benefit of lower advertisement rates which resulted in 160 bps lower ad-spend to sales. Moreover, cost cutting measures resulted in overhead spends down by 120 bps to sales. All these factors resulted in operating margin expansion of 540 bps to 31.8%. Net profit increased by 12.3% to | 274.2 crore despite the lower tax in base quarter.
7. DLF: DLF's rental arm has given on lease 7.7 lakh sq ft office space to Standard Chartered GBS in an upcoming commercial tower in Chennai to be constructed at a cost of around | 450 crore, The construction of the prime office tower is expected to start in January 2021 and will be completed in 36 months
8.L&T: L&T construction awarded large contracts ( ranging between | 2500 to | 5000 crore) across its various businesses including buildings & factories order from reputed developer in Mumbai to construct residential & office space, an order from Punjab water supply board in water & effluent treatment business and an order from NCRTC for manufacturing & supply
1. Bajaj Auto: Bajaj Auto is expected to post relatively muted performance in Q2FY21E, largely led by product mix deterioration and an element of rupee appreciation. Total volumes were at 10.5 lakh units, down 10.2% YoY (2-W down 2%, 3-W down 53%; share of 3-W in total volumes at 8.4% vs. 16.1% YoY; exports at 46% of total volumes, unchanged YoY). Net sales are expected at | 7,192 crore, down 6.7% YoY. EBITDA & EBITDA margins for the quarter are seen at | 1,231 crore and 17.1%, respectively (up 380 bps QoQ, 50 bps YoY). Consequent PAT is expected at | 1,178 crore, down 16% YoY
2. Asian paints: For Asian paints, we believe, a slow recovery in the metro regions is expected to be partially offset by strong volume recovery in semi-urban and rural regions, helping drive volume in Q2FY21. We believe company to report sales growth of 6% YoY to | 5355 crore led by volume growth of 7% in Q2FY21. On the margin front, benign raw material prices and improved operating leverage to drive EBITDA margin up by 170 bps YoY at 20.6%, which would take PBT higher by 18% YoY to | 985 crore. PAT may decline by 12% YoY at | 743 crore mainly due to reversal of tax benefits in the base period.
3.HDFC AMC: For HDFC AMC, AUM is expected to witness sequential uptick, though on YoY basis is seen to remain flattish at | 3.75 lakh crore. Gradual recovery in equity market and inflow from SIP is seen to partially offset pressure of lumpsum outflow. Operational performance is expected to revive sequentially and remain flat on YoY basis. Revenue from operation expected at | 498 crore (Yield at ~53 bps of closing AUM). Steady expense trajectory is seen to lead to support profitability with PBT at | 426 crore, i.e. 45 bps of AUM. PAT is seen at | 324 crore,~34 bps of AAUM.
4.Syngene: Q2FY21 revenues grew 11.9% YoY to ~| 520 crore led by growth in Discovery Services and Dedicated R&D Centres. EBITDA margins remained flat YoY at 30% with better gross margins due to change in product mix being offset by higher employee expenses owing to recruitment for new facilities. EBITDA grew 11.9% YoY to | 156 crore. Adjusted net profit (ex-exceptional insurance gain in Q2FY20) grew 2.6% YoY to | 84 crore. Delta vis-a-vis EBITDA was due to higher depreciation and lower other income partially offset by lower tax outgo.
5. Ultratech Cement reported good set of numbers for Q2FY21 with EBITDA margin expansion of 592bps YoY to 25.5%. Volumes for the quarter improved 8.2% YoY to 19.2MT. While realizations broadly remained flat YoY, stricter cost controls helped company to improve margins sharply. While revenues grew 8.1% YoY to |10,019 crore, EBITDA improved by 40.8% YoY to |2,552 crore due to better margins. Further, reduction in interest costs (down 31% YoY) helped to achieve robust PAT growth of 89% YoY to |1209 crore for the quarter.
6.Colgate: Colgate reported strong set of numbers with 5.3% revenue growth led by 7.1% domestic business growth. With sharp decline in crude based commodity cost, gross margins improved by 340 bps. Further, the company got the benefit of lower advertisement rates which resulted in 160 bps lower ad-spend to sales. Moreover, cost cutting measures resulted in overhead spends down by 120 bps to sales. All these factors resulted in operating margin expansion of 540 bps to 31.8%. Net profit increased by 12.3% to | 274.2 crore despite the lower tax in base quarter.
7. DLF: DLF's rental arm has given on lease 7.7 lakh sq ft office space to Standard Chartered GBS in an upcoming commercial tower in Chennai to be constructed at a cost of around | 450 crore, The construction of the prime office tower is expected to start in January 2021 and will be completed in 36 months
8.L&T: L&T construction awarded large contracts ( ranging between | 2500 to | 5000 crore) across its various businesses including buildings & factories order from reputed developer in Mumbai to construct residential & office space, an order from Punjab water supply board in water & effluent treatment business and an order from NCRTC for manufacturing & supply