The domestic and international stock markets have been very volatile for the last six months. In such a time traders need to have the proper information to take correct decisions for earning profit. However, small traders are always short of first-hand information. Check here are reports from brokerages on Wipro, Federal Bank, and Ramco Cements shares:
Wipro reported weak Q1FY20 numbers—IT services’ revenue, at $2,039 million, slipped 1.3 percent QoQ (0.7 percent in constant currency or cc) and failed to meet Street’s sombre 0.9 percent growth estimate. Adjusted operating margin fell 80 bps QoQ to 16.2 percent versus Street’s estimate of 30 bps decline. Management guided for another uneventful quarter with revenue growth of 0.0-2.0 percent for Q2FY20. The silver lining was digital business’ sustained growth—up 34.6 percent YoY; 37.4 percent of revenue. Wipro’s revenue growth of 5.9 percent (YoY, cc) continued to undershoot peers Infosys and TCS; we do not see this trend reversing in the near term, an Edelweiss report said.
"As a result, we continue to value Wipro at a discount to peers at 16x Q3FY21E EPS. The poor growth metrics justify current valuation of 16.4x FY20E EPS. Maintain ‘HOLD’ with a target price of Rs 261 as we roll over to Q3FY21E EPS."
Federal Bank (BUY)
Federal Bank reported a stable quarter in 1QFY20, with a net profit up 46 percent YoY at Rs 3.8billion. While topline growth was steady (18 percent YoY vs loan growth of 19 percent), core pre-provision operating profit (PPoP) growth was strong (21 percentYoY), led by a healthy uptick in core fees (+25 perecnt YoY). Slippages in the quarter, continued to remain within comfort levels (1.7 percent annualised), with corporate slippages contributing only 21 percent to this, a JM Financial report said. While there was a healthy uptick on loan yields (+18bps QoQ), net interest margins (NIMs) remained stable at 3.15 percent, as a result of a moderation in CASA (-70bps QoQ). Management indicated that the bank has no exposure to the stressed media group and airline, while it does have exposure to 2 stressed HFCs (Rs 2.8 billion, 0.25 percent of loans) on which it holds 15 percent provisions (currently standard on books).
"Federal Bank continues to guide for credit costs of c.60bps in FY20E, with NIMs (reported) of c.3.2%.We expect FB to deliver RoA of 96bps / 106bps in FY20E /FY21E. Maintain BUY," the brokerage said.
Ramco Cements (HOLD)
Brokerage JM Financial said in Ramco Cement annual report analysis, it observed a 29 percent decline in operating cash flow on a 6 percent decline in EBITDA and working capital expansion of Rs 975 million. Volumes grew 19 percent on market share gains in east. Muted realisations and higher power/fuel and freight costs led to 22 percent decline in EBITDA/per tonne. The company's gross debt stands higher at Rs 16.37 billion (vs. Rs 11.21 billion in FY18) as of FY19 end, with a net debt to EBITDA at 1.5x. The company is in the process of expanding capacity from 16.7 MTPA to 20.8 MTPA through a mix of greenfield and brownfield projects across south and east at a cost of RS 35.3 billion.
"Sustainability of price hikes and timely execution of the expansion projects (clinker utilisation >90%) are key for growth going forward. We maintain a HOLD with a target price of Rs 680 (March 2020)."