Research

Fundamental View:

Expect IP business to be back to normaly.

Management of Persistent Systems Limited (PSL) indicated that the revenue loss in IP
business (higher-than-normal drop of 21% q-o-q in Q4FY2018 versus 2-4% q-o-q drop in Q4 since
FY2010) is expected to recoup during the first three quarters of FY2019E.Management highlighted
that overall revenue from IP products with IBM is expected to grow by 5% y-o-y in FY2019E.Though PSL has already made investments on sales resources (especially in Europe) to drive revenue growth
in IP business.
Digital revenue momentum to continue in FY2019E: PSL’s digital business revenue grew
by 43% y-o-y in FY2018.
There is scope for margin improvement in FY2019 on account of better operational efficiencies such as favourable onsite mix, higher revenue from derivative products, increasing digital business.Further, rupee depreciation (depreciated around 3.7% against USD that also positive for IT sector.FII increased the stake 2.78%.

Board meeting on 27th July for AGM and first quarter result

Short Term view: Positive
Long Term view: Positive

Fundamental View:

ITC is one of India’s foremost private sector companies with a market capitalisation of nearly US $ 14 billion and a turnover of over US $ 5 billion. ITC is rated among the world’s Best Big Companies has a diversified portfolio in Cigrattes, Hotels, Paper Boards & Speciality Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal care, Stationery, Safety Matches and other FMCG products.

Revenue Data as on March 2018

Cigrattes :- 47.14%
FMCG – 21.55%
Agri Business – 15

Cigratte is the highest revenue generating portfolio of the company, there is a fear of tax increases every year which is affecting the revenue of the company. Even then a 3% growth in the Cigratte business with a double digit EBIT is expected in FY19.

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Regarding FMCG business, the company is diverting its concentration to this area and investing more on the FMCG sector. From packaged foods and life style and confectionery, the company is investing in Diary Sector following the footsteps of Amul. They are planning to spread the business to all over India. This will increase there profits.Paper board business is expected to improve margins given benign input costs, benefits from refurbishment of Décor machine and expected capacity expansion.
Expecting a higher Accounting Rate of Return and occupany rates to improve profitability in the Hotel Sector.
Lower production and high prices of leaf tobacco in India will drag Agri business, despite some relief from INR depreciation.
Taking into consideration of above facts it is recommended to retain “BUY” with sell on target price or Rs.346/-.

News Updates:
(Sector / Scrip related news)

Fundamental View:

1.Assets Quality outlook: Wholesale business was remained the major drag on the profitability front due to the high GNPA. Increasing share of high yielding low risky retail credit and increasing PCR against bad loans provides comforts on assets quality front. LTFH is reducing the exposure to stressed sector like power and road and continued to grow in relatively less risky renewables energy segment and structured finance.
2.Provision:To mitigate the future assets quality risk, LTFH is making aggressive provisioning. Provision required for the wholesale business is Rs27-30 bn v/s earlier expectation of Rs22 bn. Company will complete the entire provisioning in FY19.
3.NIM:The company is witnessing healthy financial growth across all the business segments. It has exhibited improvement in NIM (NET INTEREST MARGIN)and fee income and management expects to maintain same growth, going forward.

4.New focus area for company: Refinancing of tractors, scaling up retail and increasing share of direct souring, infra – few new opportunities, increasing B2C fees, and cross-selling in fees

5.Expectation of Rural Business: The company has also maintained a control on asset quality and provisions and expects its rural business to exhibit robust improvement in asset quality in coming years. The company has been showing consistent improvement in cost-to-income ratio.

Short Term view: Positive
Long Term view: Positive

News Updates:
1. During the year, the company recorded one-off income of Rs 1bn from the sale of some PE assets. LTFH still has two PE assets, which are expected to be divested in FY19.

Fundamental View:

1. BSE Ltd is an oldest stock exchange in Asia and currently holds global No.1 ranking in terms of highest number of companies listed, and rank No.10 in world by market capitalisation. BSE is a professionally managed with capable management team with diverse revenue source, management team is trying hard to improve its market share in equity. The company has 13% market share in equity cash while in currency and interest rate derivatives it has 46% and 41% respectively. In emerging segment like Mutual fund business it has 76% market share through its STAR MF platform. With equities as an asset class is getting more acceptances among Indian savers the scope for higher transaction in stock exchanges and mutual fund platform are high. It has strong balance sheet with huge cash and bank balance which implies higher other income will continue in future. Due to surplus cash in balance sheet, the company is doing market buyback of its own shares. Till date company has bought back 16.79 lakh shares at an average price of 815 and has used 82.5% of its earmarked buy back amount. Dividend payout is expected to be good in coming years as capital requirement in future is less. Also BSE has applied for commodity commodity exchange business and likely to start in latter part of current financial year once it gets approval. Currently BSE is trading around 20 times trailing twelve month earnings which appears cheap considering its growth potential and cash in balance sheet. We expect profitability from core business to improve consistently in coming years and advise investors to buy at current market price.

Short Term view: Positive
Long Term view: Positive