Research – 15th May 2018

Fundamental View:

HCL Technologies (HCLT) reported revenue growth of 2.5% QoQ in USD terms in 4QFY18
in FY2018: HCL Tech reported largely in-line revenue performance with 1.2% q-o-q growth.

FY19 revenue growth guidance of 10.5% to 12.5% in US$ this figure only negative exceptation was 12% to 14%.
HCLT already has 26 clients with revenue run-rate of US$10 mn+ contributing to ~49% of revenue from Mode-2 solutions. In FY18, it had 40+ notable wins in existing and new clients for Mode-2 solutions.
Good quality company basis long term financial performance.
At the current stock price and financial performance the stock has Attractive valuation.
Recent developments
HCL Tech signed 15 transformational deals in Q4FY2018 against 20 deals in Q3FY2018 across verticals.

Fundamental View:

Heritage Foods is a Fast Moving Consumers Good company engaged in dairy, Retail, Agriculture, Bakery and Renewable Energy. Its principal products/services are milk, value added products and FMCG (food and non-food). The dairy segment mainly deals with procuring milk, processing and selling of milk, value added products, fat products, skimmed milk powder, tradable goods and job work. The retail segment mainly deals with buying and selling of FMCG – Food, FMCG – Non Food and fruits and vegetables. The agriculture segment mainly deals with procuring, processing and selling of fruits and vegetables, tradable goods and job works. The bakery segment mainly deals with procurement, production and selling of bakery products. The Renewable Energy segment mainly deals with generating and supply of solar power and wind power to the diary segment for its captive consumption. It has operations across approximately 10 states in India.

Increasing demand for dairy products is giving and expectation to report net profit of Rs.24.7 crore up 68.2% year -on-year (up 47.8% quarter-on-quarter).

Net sales are expected to increase by 11.5% Y-O-Y (up 34.9% Q-O-Q) to Rs.780.8 Crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 41.8% Y-OY (up 38% Q-O-Q) to Rs.48 Crores.

The expectation of good monsoon prediction by the Metrological Dept. and increasing demand for FMCG products the company is expecting good revenue growth for the company in the next quarter.

Looking at the above conditions , it is a good buy of Heritage Foods at the CMP with a target of Rs.795/- in six months time.

News Updates:
(Sector / Scrip related news)

Fundamental View:
Strong performance in a challenging quarter
1. Yes Bank reported robust growth for the Q4 with better than expected margin.
2. Net stressed loans as of 4QFY18 at 1.73% of total advances (Dec 17 : 2.41% of the advances).
3. Yes bank added 50 branches during the quarter to 1100.
4. Recommended Payment of dividend of Rs. 2.70 per share.
5. Loan & Deposits doubled Y2Y is positive for the bank.
6. Well managed asset Quality is another positve.
Short Term view: Positive
Long Term view: Positive
News Updates:
1. Asset quality performance so far has been significantly better than industry;
bank expect this trend to continue.
2. YESBK has been growing at a much faster clip than the industry’s growth rate.

Fundamental View:

1. L& T has entered in to a definitive agreement with Schneider Electric (India) Pvt Ltd. And Schneider Electric JV Holdings Limited for a divestment of its electrical and automation (E&A) segment for a cash consideration of INR140b. The deal does not include the marine switch gear and Servo watch Systems in the E&A segment. The deal is expected to close in 18 months from the date of signing of the agreement and is subjected to the required regulatory approvals. The E&A segment accounted for 4 – 5 % of consolidated sales in FY18. The E&A segment is a debt free business with strong cash flow generation.