Motilal Oswal handpicks 7 ‘focus’ stocks post Q4 earnings; do you own any?

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    Motilal Oswal handpicks 7 ‘focus’ stocks post Q4 earnings; do you own any?


    The March quarter corporate earnings-reports were in line with expectations for both Nifty as well as stocks in Motilal Oswal Universe. However, the broader universe continues to witness more downgrades than upgrades

    1) State Bank of India:

    The bank’s loan growth stood at 13% YoY and about 7% on a QoQ basis, driven by the growth of 27.9 % YoY in home loans and 15% YoY in the corporate book.

    Further, it expects loan growth of 12-14%  in FY20. Slippages moderated to Rs 7,960 crore, which, coupled with healthy recoveries and higher write-offs, led to an asset quality improvement.

    2) ICICI Bank:

    Retail loan mix now stands at 60.2% (+120 bps QoQ). Fresh slippages stood at Rs 3550 crore, but healthy recoveries/upgrades of Rs 1520 crore and write-offs of Rs 7,320 crore drove a 105 bps/52 bps QoQ decline in the GNPL/NNPL ratios to 6.7/2.06%

    3) Larsen & Toubro:

    Consolidated revenue grew by 10.5% on a YoY basis to Rs 44,900 crore on a strong base of last year, taking full-year revenue growth to 18% (v/s guidance of 12-15%).

    4) UltraTech Cement:

    The company stabilized operations of Binani’s assets, which operated at 72% utilization in March 2019. Overall, volumes for UltraTech Cements grew 15% YoY to 21.3 MT.

    The company successfully ramped up the profitability of Binani’s assets, which achieved EBITDA/t of Rs 830 (excluding one-offs), an improvement of Rs 740/t.

    5) Maruti Suzuki India:

    We believe that MSIL will see the full impact of headwinds on both volumes and margins over H1 FY20. We estimate FY20 volume growth of 6%, which will be highly influenced by spread out of monsoon and new product launches.

    6) Bharti Airtel:

    India wireless business made a strong comeback with a beat on all fronts – EBITDA grew 32% on a QoQ basis. The minimum recharge strategy drove ARPU by a steep 19% QoQ to Rs 123, while the subscriber base fell by a merger 1%.

    The recent rights issue, impending Africa IPO/Bharti Infratel stake sale and the peak-out of capex intensity should act as a key catalyst in alleviating concerns around burgeoning leverage.

    7) Asian Paints:

    The results were disappointing, with 12 percent sales growth and 2 percent EBITDA and PAT decline (absolute EBITDA/PAT miss of 16 percent/ 17 percent). Ongoing top-line slowdown particularly amid massive capacity expansion (50 percent capacity added in 6 months ending March 2019) and a deteriorating mix indicates a weak earnings outlook.

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