Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: HDFC Bank, XL Axiata, Crowdstrike Holdings Inc and more

In today’s briefing:

  • HDFC Bank Q2FY21 Results – Robust Q2 Performance Seems to Defy All the Prevailing Economic Woes!
  • XL Axiata (EXCL IJ) – Enabling and Converging in Indonesia
  • TMT Weekly:  3 Things that Stood Out The Week of 10/16/​​​​2020

HDFC Bank Q2FY21 Results – Robust Q2 Performance Seems to Defy All the Prevailing Economic Woes!

By Saumya Agarwal

The Q2FY21 results season has just commenced and HDFC Bank is among the first ones to come out with its Q2FY21 earnings. Even as analyst and investors were expecting some signs of stress / slowdown to become visible in the Banks Q2 numbers, especially now that the moratorium is over, HDFC Bank surprised one an all by a stellar set of numbers for the September quarter. The numbers seem to proudly defy ALL the prevailing economic and banking sector woes and would largely be an outlier among Banks!


XL Axiata (EXCL IJ) – Enabling and Converging in Indonesia

By Angus Mackintosh

Smartkarma hosted a Webinar with XL Axiata (EXCL IJ) this week, which revealed a positive long-term picture, despite some near term competitive headwinds. The company remains confident in its position as one of the key enablers of the Indonesian digital economy, with around 90% of revenues coming from data and 75% of its subscriber base on 4G. Given the share price impact of a recent pick up in competitive pricing driven by Telekomunikasi Indonesia (TLKM IJ), valuations are looking appealing. 

Competition has heated up with Telkomsel offering selective unlimited data plans in 65 cities although these are not truly unlimited but more add-ons. 

There has been no reaction from the smaller players to Telkom’s move and it is still priced about the smaller players. 

XL Axiata (EXCL IJ) continues to focus on growing its presence outside Java, which is more favourable pricing wise and still only has a 13% market share leaving plenty of upside. 

The company is also focused on increasing fiberisation of its network, which helps maintain a better service and will pave the way longer term for 5G. It is also offering its own fixed line high speed broadband service. 

XL Axiata (EXCL IJ) looks attractive trading on 3.6x FY21E EV/EBITDA versus Telekomunikasi Indonesia (TLKM IJ) on 5.0x FY21E EV/EBITDA and is a much purer play on data.


TMT Weekly:  3 Things that Stood Out The Week of 10/16/​​​​2020

By Aaron Gabin

As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike’s user conference.

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.


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