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Results Update 3FYQuart2013

Infotech Enterprises 
For 3QFY2013, Infotech Enterprises (Infotech) reported a muted set of results, with almost negligible volume growth. The quarter witnessed challenges in two of the top 10 client accounts. These two accounts (one in heavy engineering and one in hi-tech) resulted in a revenue impact of -4.2% qoq. The management had cut its FY2013 USD revenue growth guidance to less than 11% from 11-14% earlier in constant currency terms. To achieve it, the company faces an ask rate of 10%+ in 4QFY2012 which looks unachievable. The key reason for it being the extended furloughs seen by the company and ramp down in one of its top 10 accounts. The company has been making investments to strengthen its product portfolio and is taking initiatives to improve its financial metrics. The company is now focusing on strengthening its leadership along with improving its systems and processes and making them scalable. We expect an  USD revenue growth of 7.1% yoy for FY2013. Over FY2012-14E, we expect the company to post a USD and INR revenue CAGR of 6.6% and 13.1%, respectively. We expect EBITDA and PAT CAGR to be at 13.1% and 15.1%, respectively, over FY2012-14E.

South Indian Bank

South Indian Bank (SIB) reported a strong performance for 3QFY2013, with operating profit growth of 31.5% yoy. On  the  earnings  front,  growth  came  in relatively lower at 25.4% yoy, as the bank doubled its provisioning to  `45cr, thereby improving its low PCR by 735bp to 58.6%.After witnessing higher slippages in 2QFY2013, which were mostly one-off in nature, the asset quality for the bank has normalized during the quarter. The stock currently trades at 1.2x FY2014E ABV, which is cheaper than its peers, despite having delivered better return ratios.

Bajaj Auto
Bajaj Auto (BJAUT) posted an in-line operating and bottom-line performance for 3QFY2013; nevertheless, the bottom-line was aided by higher other income. Going ahead, we expect export volumes to recover gradually and also expect domestic volumes to benefit from the new launches (Pulsar 200NS, Discover 125 ST and Discover 100T). We lower our earnings estimate for FY2013 marginally as we lower our volume estimates. We now expect FY2013 volumes to grow by 0.9% as against 2.1% estimated earlier. We believe that the current valuation of 16.2x FY2014E earnings factors in the recovery in earnings growth in FY2014 led by growth in export volumes and benefits of favorable currency. 


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