Re: {LONGTERMINVESTORS} Research Reports extracts & summaries - Thread
Rajesh Desai
Disruptive changes will impact 1HCY17, but believe structural reforms are coming into place
Solid foundation for long-term improvement in economic growth & profitability has been laid
Trump impact far weaker than 2013 taper tantrum as India's balance of payment position is strong
Believe note ban pain unlikely to last beyond 2 qtrs, except in property, housing-fin & cement
GST, bankruptcy law, DBT expansion will significantly improve long-term growth
Govt could become incrementally populist; expect social housing to scale-up as funding rises
Expect corporate earnings improvement after three weak years
Dec17 Nifty target of 9,100 implies return of 13%; based on 16.5x 1-yr forward earnings
CS INDIA STRATEGY: ET NOW
Expect slowdown in real-estate, continued stress in the banking system
GST (expect Jul17 start) will also be disruptive for a few quarters
Recent rate cuts may not revive credit growth for several quarters
Believe there are limited avenues available to govt to provide fast acting stimulus
Continue to prefer non-India low P/E stocks, or beneficiaries of low interest rates
Stay Underweight on Cement, Discretionary and NBFCs
Top picks: HCL Tech, LIC HF, Tech M, Cipla, Tata Motors
Top relative underperformers: Ultratech, Ambuja, Bajaj Finance , Asian Paints
CITI ON IT: ET NOW
Epect 4 key themes Growth, Rupee, Immigration, M&A will drive sector
Cution on Indian IT space is more around industry changes
Pressure in core biz outweigh any currency tailwinds, difficult for co to retain Rupee benefits
Immigration risks are higher than ever with Trump's victory in the recent elections
Among Indian vendors, believe HCL Tech should be relatively better placed
Higher M&A may lead to risk that FCF growth could come under pressure in next few years
Absolute valuations don't look cheap given growth slowdown and profitability pressures
Think business outlook will determine medium term trajectory - remain cautious
Preference ladder - (1) HCL Tech (2) Infosys (3) Tech M (4) TCS (5) Wipro
In midcap space, L&T Infotech (Neutral) remains preferred pick
CS ON VA TECH WABAG: ET NOW
Maintain outperform, target at `750
Solid recent momentum: VA Tech's end-FY16 order book rose 34% YoY
Most of Co's markets are stable to looking up
Co holds strong position in a sector where opportunities are significant
Scope for margin expansion from improving profile and order sizes
End of 2 low-margin projects in FY18, end of Oman settlement can help margins from FY18
Final settlement of Oman project higher than prov made; could impact FY17 margins by 100 bp
Stock trades at a 12M forward P/E of 16x vs three-year average of close to 21x
MS ON HDFC BANK: ET NOW
Maintain overweight, cut target to `1450 from `1425
Likely to see revenue slowdown - weaker loan growth; slower fees; lower NIMs
At 1 SD below long-term average, valuations look very attractive
Demonetization will likely hurt revenue progression for next two quarters
Building in core revenue growth of 13% in F3Q17 and 14% in F4Q17
Bank will lag usual 20% PAT growth rate for next two quarters
UBS ON JUST DIAL: ET NOW
Maintain sell, cut target to `360 from `415
Cash bal at 40% of current MCap & FY18E EV/EBITDA of 12.1x is at a trough vs historical levels
Still don't find risk-reward attractive, with no signs of changes in mgmt's strategy
Thesis of core Search biz getting eroded in absence of strategic change remains intact
Current revenue growth, digital traffic growth is on back of higher marketing/discounting spending