TVS Motors (CMP - Rs 650 Target Price - Rs 690).
TVS Motor Company Ltd is the third largest two-wheeler manufacturer in India and one among the top ten in the world.
TVS Motors is well poised to outpace industry growth (TVS is likely to report a 15% volume CAGR over FY2017-FY2019 as against estimated industry growth of about 10%), given the success of recent launches and strong product pipeline. Further, realisation/vehicle would improve as share of the highvalue non-moped segment rises. Moreover, TVS Motors' margins are likely to reach the doubledigit mark by FY2019, leading to a strong 37% earnings CAGR over the next two years.
TVS Motors volume outlook has improved, given the acceleration in the 2W industry's growth and a strong product pipeline, which is likely to be unveiled in the ongoing festival season. We give HOLD rating on the stock with a Price Target (PT) of Rs.690 (based on 33x FY2019 earnings).
Tata Consultancy Services (CMP- Rs 2519 Target Price - Rs 2416)
Tata Consultancy Services is an IT solution provider.TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development..The company also engagged in the business of Telecom, Retail and Distribution, Banking, Financial Services and Insurance.
TCS has restructured its business in Emerging Markets (India, ME, APAC ex-Australia) that were more volatile owing to project-based nature of delivery, product-platform sales and inconsistency in business opportunities. This collective base accounts for ~17.6% of total revenues as of Q1FY18 and is termed as 'Regional Markets & Others'. The company reported 2.3% qoq growth in BFSI, driven by a platform win in Insurance and a Core Banking win in USA. The traction in BFSI is improving and is also reflected in healthy pipeline for Diligenta business. Retail revenues grew 2% qoq and saw some very encouraging deal engagements. The remaining segments grew in the range of 4-7% qoq and are showing sustained promise. The only dampener would be the performance of low focus 'Regional Markets & Others' segment.
The outlook on the business growth has been largely kept intact with strong growth in Digital business and improved business metrics on the segment - size, scale, and competitiveness. Taking into account the risk to growth estimates and likely impact on profitability, we have a NETURAL rating on the stock with TP of Rs 2416 based on P/E of 16x FY19E EPS of Rs 151.
DCB Bank (CMP - Rs. 193 ; Target Price- Rs.218)
Development Credit Bank Ltd (DCB) is one of the emerging private sector banks in India. The services offered by the bank include Personal Banking, Corporates banking & NRI Banking.
DCB Bank Ltd. reported strong growth for Q1FY18 quarter. Operating Profit came in at Rs.136 Cr. for Q1 FY18 as against Rs. 93 Cr. in Q1 FY17 registering robust growth of 47%. Net profit increased to Rs 65 Cr up by 39% YoY and growth of 23% sequentially. Deposits for the bank grew at 22% YoY. NIM for the quarter came in at 4.23. We believe bank is in growth trajectory with continued focus on retail and SME segment customers. On back of strong CASA growth and better asset quality ahead we believe bank will be able to maintain its current NIM levels. Company has set target to bring down Cost to Income ratio to 55% by end of next FY. Company's top Business priorities are improving staff quality & focus on internal training, keeping NPA's intact and focusing more on fee based income. Company has set target to achieve fee based income with a growth of around 14%-16% YoY.
Our Estimates for FY19, Net interest Income at Rs.1218 Cr & PAT at Rs. 313 Cr. We have pegged a multiple of 2.4(x) to FY 19E ABV & arrived at a fair value of Rs 218 per share.