Deccan Cements: We maintain our ADD rating on Deccan Cements (DCL), with a lower target price of INR 515/sh (6x its Mar-24E EBITDA). The company reported weak performance in Q4FY22 as both volumes and margin contracted YoY on lower sales and rising cost inflation. It reported 13/35/15% YoY revenue/ EBITDA/APAT decline. DCL's 2mn MT capacity expansion is slightly delayed (we expect it to be operational in FY25) due to delay in environmental clearances. Phoenix Mills: Phoenix Mills (PHNX) reported strong revenue/EBITDA/APAT at INR 4.9/2.4/1.05bn, beat at all levels. Retail consumption for the year was INR 46.8bn (excl. Palassio) and was 1.7x FY21 and 70% of FY20/FY19 level. Consumption has bounced back and, in Apr-22, it was 129% of pre-COVID level. The effect of inflation on consumption was not significant; however, price escalation is on the cards from many retailers, which will translate into higher revenue for PHNX. The convergence of leased and trading occupancy shall further push growth by ~8% as multiple tenants under fit-outs move to trading. PHNX acquired the remaining stake in PMC Chennai for INR 9.4bn at a cap rate of ~9%. Within office space, Fountainhead Tower 2 started contributing. Office income was up 22% YoY in FY22. Until now (in FY23), 0.1msf has been leased in this segment. Gross debt inched up INR 740mn sequentially, on account of debt drawn for Indore and Ahmedabad mall construction, which are expected to commence operations by Diwali 2022. We maintain BUY, with an unchanged SOTP of INR 1,364 on account of: (1) slightly better rental...
Deccan Cements: We maintain our ADD rating on Deccan Cements (DCL), with a lower target price of INR 515/sh (6x its Mar-24E EBITDA). The company reported weak performance in Q4FY22 as both volumes and margin contracted YoY on lower sales and rising cost inflation. It reported 13/35/15% YoY revenue/ EBITDA/APAT decline. DCL's 2mn MT capacity expansion is slightly delayed (we expect it to be operational in FY25) due to delay in environmental clearances. Phoenix Mills: Phoenix Mills (PHNX) reported strong revenue/EBITDA/APAT at INR 4.9/2.4/1.05bn, beat at all levels. Retail consumption for the year was INR 46.8bn (excl. Palassio) and was 1.7x FY21 and 70% of FY20/FY19 level. Consumption has bounced back and, in Apr-22, it was 129% of pre-COVID level. The effect of inflation on consumption was not significant; however, price escalation is on the cards from many retailers, which will translate into higher revenue for PHNX. The convergence of leased and trading occupancy shall further push growth by ~8% as multiple tenants under fit-outs move to trading. PHNX acquired the remaining stake in PMC Chennai for INR 9.4bn at a cap rate of ~9%. Within office space, Fountainhead Tower 2 started contributing. Office income was up 22% YoY in FY22. Until now (in FY23), 0.1msf has been leased in this segment. Gross debt inched up INR 740mn sequentially, on account of debt drawn for Indore and Ahmedabad mall construction, which are expected to commence operations by Diwali 2022. We maintain BUY, with an unchanged SOTP of INR 1,364 on account of: (1) slightly better rental...
Deccan Cements: We maintain our ADD rating on Deccan Cements (DCL), with a lower target price of INR 515/sh (6x its Mar-24E EBITDA). The company reported weak performance in Q4FY22 as both volumes and margin contracted YoY on lower sales and rising cost inflation. It reported 13/35/15% YoY revenue/ EBITDA/APAT decline. DCL's 2mn MT capacity expansion is slightly delayed (we expect it to be operational in FY25) due to delay in environmental clearances. Phoenix Mills: Phoenix Mills (PHNX) reported strong revenue/EBITDA/APAT at INR 4.9/2.4/1.05bn, beat at all levels. Retail consumption for the year was INR 46.8bn (excl. Palassio) and was 1.7x FY21 and 70% of FY20/FY19 level. Consumption has bounced back and, in Apr-22, it was 129% of pre-COVID level. The effect of inflation on consumption was not significant; however, price escalation is on the cards from many retailers, which will translate into higher revenue for PHNX. The convergence of leased and trading occupancy shall further push growth by ~8% as multiple tenants under fit-outs move to trading. PHNX acquired the remaining stake in PMC Chennai for INR 9.4bn at a cap rate of ~9%. Within office space, Fountainhead Tower 2 started contributing. Office income was up 22% YoY in FY22. Until now (in FY23), 0.1msf has been leased in this segment. Gross debt inched up INR 740mn sequentially, on account of debt drawn for Indore and Ahmedabad mall construction, which are expected to commence operations by Diwali 2022. We maintain BUY, with an unchanged SOTP of INR 1,364 on account of: (1) slightly better rental...
Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with a revised target price of INR 190/share (8.5x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share, as other players expand in HEIM's core markets. In Q4FY22, the company's QoQ volume recovery in the peak quarter remained muted at 9% (-1% YoY). Adjusted for prior-period incentives, unitary EBITDA recovered 24% QoQ to INR 751/MT. Since there was no major Capex outgo, the balance sheet continues to be firm: net cash on the books almost doubled YoY in Mar-22 to INR 1.5bn. Karur Vysya Bank: Karur Vysya Bank (KVB) reported a significant beat on our estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is well-placed to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63. JK Cement: We maintain our REDUCE rating...
Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with a revised target price of INR 190/share (8.5x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share, as other players expand in HEIM's core markets. In Q4FY22, the company's QoQ volume recovery in the peak quarter remained muted at 9% (-1% YoY). Adjusted for prior-period incentives, unitary EBITDA recovered 24% QoQ to INR 751/MT. Since there was no major Capex outgo, the balance sheet continues to be firm: net cash on the books almost doubled YoY in Mar-22 to INR 1.5bn. Karur Vysya Bank: Karur Vysya Bank (KVB) reported a significant beat on our estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is well-placed to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63. JK Cement: We maintain our REDUCE rating...
Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with a revised target price of INR 190/share (8.5x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share, as other players expand in HEIM's core markets. In Q4FY22, the company's QoQ volume recovery in the peak quarter remained muted at 9% (-1% YoY). Adjusted for prior-period incentives, unitary EBITDA recovered 24% QoQ to INR 751/MT. Since there was no major Capex outgo, the balance sheet continues to be firm: net cash on the books almost doubled YoY in Mar-22 to INR 1.5bn. Karur Vysya Bank: Karur Vysya Bank (KVB) reported a significant beat on our estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is well-placed to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63. JK Cement: We maintain our REDUCE rating...
Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with a revised target price of INR 190/share (8.5x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share, as other players expand in HEIM's core markets. In Q4FY22, the company's QoQ volume recovery in the peak quarter remained muted at 9% (-1% YoY). Adjusted for prior-period incentives, unitary EBITDA recovered 24% QoQ to INR 751/MT. Since there was no major Capex outgo, the balance sheet continues to be firm: net cash on the books almost doubled YoY in Mar-22 to INR 1.5bn. Karur Vysya Bank: Karur Vysya Bank (KVB) reported a significant beat on our estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is well-placed to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63. JK Cement: We maintain our REDUCE rating...
Heidelberg Cement: We maintain our REDUCE rating on Heidelberg Cement (HEIM), with a revised target price of INR 190/share (8.5x Mar-24E EBITDA). In the absence of any major planned expansion for the next three years, we expect subdued volume growth and loss in market share, as other players expand in HEIM's core markets. In Q4FY22, the company's QoQ volume recovery in the peak quarter remained muted at 9% (-1% YoY). Adjusted for prior-period incentives, unitary EBITDA recovered 24% QoQ to INR 751/MT. Since there was no major Capex outgo, the balance sheet continues to be firm: net cash on the books almost doubled YoY in Mar-22 to INR 1.5bn. Karur Vysya Bank: Karur Vysya Bank (KVB) reported a significant beat on our estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is well-placed to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63. JK Cement: We maintain our REDUCE rating...
Hindustan Petroleum Corporation: Our ADD rating on Hindustan Petroleum Corporation (HPCL) with a price target of INR 270 is premised on (1) recovery in domestic demand for petroleum products; (2) improvement in refining margins over the coming 18 months; and (3) gradual improvement in marketing margins for FY23-24 vis--vis FY22 levels. Q4FY22 EBITDA, at INR 21bn, was 14% below our estimates, mainly due to higher other expenses; however, APAT of INR 18bn was 38% above estimates due to higher-than-expected other income and lower tax expenses. GRM was reported at USD 12.44/bbl (HSIE: USD 13.5/bbl). PGCIL: PGCIL's asset capitalisation/Capex in Q4FY22 declined 75.5%YoY/44.0% YoY to ~INR21.8bn/INR18.1bn, on a high YoY base. Capitalisation/Capex for FY22 stood at INR207bn/90.6bn, vs. INR214.7bn/INR112.8bn in FY21. Q4 revenue increased 2.8% YoY, led by moderate growth in transmission, marginally offset by 12% decline in telecom segment sales. While EBITDA grew 1.5% YoY, reported PAT was up 22.9% YoY to INR43.2bn (mainly due to a deferred tax adjustment in the quarter). PGCIL declared a final dividend of INR2.25/share, taking the overall FY22 payout to INR14.75/sh (~6.6% yield). It has INR533bn worth of projects in hand and a bidding opportunity for INR318.5bn worth over the next year. We expect capitalisation of INR120bn for FY23 and FY24 each. While the company has floated a bid to procure the one-crore smart meter project and is in talks with states for its installation, there is no concrete progress on it. We tweak our estimates, factoring in the FY22 numbers; we retain ADD with a TP of INR252.
Hindustan Petroleum Corporation: Our ADD rating on Hindustan Petroleum Corporation (HPCL) with a price target of INR 270 is premised on (1) recovery in domestic demand for petroleum products; (2) improvement in refining margins over the coming 18 months; and (3) gradual improvement in marketing margins for FY23-24 vis--vis FY22 levels. Q4FY22 EBITDA, at INR 21bn, was 14% below our estimates, mainly due to higher other expenses; however, APAT of INR 18bn was 38% above estimates due to higher-than-expected other income and lower tax expenses. GRM was reported at USD 12.44/bbl (HSIE: USD 13.5/bbl). PGCIL: PGCIL's asset capitalisation/Capex in Q4FY22 declined 75.5%YoY/44.0% YoY to ~INR21.8bn/INR18.1bn, on a high YoY base. Capitalisation/Capex for FY22 stood at INR207bn/90.6bn, vs. INR214.7bn/INR112.8bn in FY21. Q4 revenue increased 2.8% YoY, led by moderate growth in transmission, marginally offset by 12% decline in telecom segment sales. While EBITDA grew 1.5% YoY, reported PAT was up 22.9% YoY to INR43.2bn (mainly due to a deferred tax adjustment in the quarter). PGCIL declared a final dividend of INR2.25/share, taking the overall FY22 payout to INR14.75/sh (~6.6% yield). It has INR533bn worth of projects in hand and a bidding opportunity for INR318.5bn worth over the next year. We expect capitalisation of INR120bn for FY23 and FY24 each. While the company has floated a bid to procure the one-crore smart meter project and is in talks with states for its installation, there is no concrete progress on it. We tweak our estimates, factoring in the FY22 numbers; we retain ADD with a TP of INR252.
Sobha: Sobha (SDL) reported the highest-ever annual presales of 4.9msf (+22% YoY), valued at INR 38.7bn. Bengaluru accounted for 68% of total presales volume (vs 67% in FY23). SDL expects contribution from Bengaluru to come down to 55% over the next few years. The residential launch pipeline stands at 13.2msf, with 61% of launches planned for the Bengaluru market. SDL recorded the best-ever cash inflow of INR 12.9bn (+32%/+22% YoY/QoQ) on the back of best-ever residential cash collection of INR 10.6bn. This resulted in overall net debt reduction by 13% QoQ to INR 23.4bn. In FY22, SDL took an average price hike of 6% YoY and it expects a similar hike in FY23. On the back of this and increasing interest rate, it expects volume to remain flat in FY23, with presales value growth in low double digits. Currently, ~80% of its customers opt for housing loans. We maintain BUY, with a reduced TP of INR 902/sh to factor in rising cost of capital resulting in higher WACC. NTPC: Generation/sales increased 3.0%/2.4% YoY to 79.9/73.9bn units in Q4FY22 on higher YoY base, led by improved demand. Coal PAF improved marginally in Q4 to 89.6%, vs 89.1% YoY, but coal PLF was down at 76.1%, vs 77.1% YoY. Under-recovery came in at INR4.5bn, vs INR6.0bn YoY, while surcharge income declined to INR1.6bn, vs INR6.2bn YoY. Consequently, after adjusting for one-offs, adj PAT increased 19% YoY to INR45.6bn, above our estimate. Overdue reduced to INR42.7bn vs INR56.6bn YoY and INR45bn QoQ. NTPC has 3.4GW of RES capacity under...
Sobha: Sobha (SDL) reported the highest-ever annual presales of 4.9msf (+22% YoY), valued at INR 38.7bn. Bengaluru accounted for 68% of total presales volume (vs 67% in FY23). SDL expects contribution from Bengaluru to come down to 55% over the next few years. The residential launch pipeline stands at 13.2msf, with 61% of launches planned for the Bengaluru market. SDL recorded the best-ever cash inflow of INR 12.9bn (+32%/+22% YoY/QoQ) on the back of best-ever residential cash collection of INR 10.6bn. This resulted in overall net debt reduction by 13% QoQ to INR 23.4bn. In FY22, SDL took an average price hike of 6% YoY and it expects a similar hike in FY23. On the back of this and increasing interest rate, it expects volume to remain flat in FY23, with presales value growth in low double digits. Currently, ~80% of its customers opt for housing loans. We maintain BUY, with a reduced TP of INR 902/sh to factor in rising cost of capital resulting in higher WACC. NTPC: Generation/sales increased 3.0%/2.4% YoY to 79.9/73.9bn units in Q4FY22 on higher YoY base, led by improved demand. Coal PAF improved marginally in Q4 to 89.6%, vs 89.1% YoY, but coal PLF was down at 76.1%, vs 77.1% YoY. Under-recovery came in at INR4.5bn, vs INR6.0bn YoY, while surcharge income declined to INR1.6bn, vs INR6.2bn YoY. Consequently, after adjusting for one-offs, adj PAT increased 19% YoY to INR45.6bn, above our estimate. Overdue reduced to INR42.7bn vs INR56.6bn YoY and INR45bn QoQ. NTPC has 3.4GW of RES capacity under...
Sobha: Sobha (SDL) reported the highest-ever annual presales of 4.9msf (+22% YoY), valued at INR 38.7bn. Bengaluru accounted for 68% of total presales volume (vs 67% in FY23). SDL expects contribution from Bengaluru to come down to 55% over the next few years. The residential launch pipeline stands at 13.2msf, with 61% of launches planned for the Bengaluru market. SDL recorded the best-ever cash inflow of INR 12.9bn (+32%/+22% YoY/QoQ) on the back of best-ever residential cash collection of INR 10.6bn. This resulted in overall net debt reduction by 13% QoQ to INR 23.4bn. In FY22, SDL took an average price hike of 6% YoY and it expects a similar hike in FY23. On the back of this and increasing interest rate, it expects volume to remain flat in FY23, with presales value growth in low double digits. Currently, ~80% of its customers opt for housing loans. We maintain BUY, with a reduced TP of INR 902/sh to factor in rising cost of capital resulting in higher WACC. NTPC: Generation/sales increased 3.0%/2.4% YoY to 79.9/73.9bn units in Q4FY22 on higher YoY base, led by improved demand. Coal PAF improved marginally in Q4 to 89.6%, vs 89.1% YoY, but coal PLF was down at 76.1%, vs 77.1% YoY. Under-recovery came in at INR4.5bn, vs INR6.0bn YoY, while surcharge income declined to INR1.6bn, vs INR6.2bn YoY. Consequently, after adjusting for one-offs, adj PAT increased 19% YoY to INR45.6bn, above our estimate. Overdue reduced to INR42.7bn vs INR56.6bn YoY and INR45bn QoQ. NTPC has 3.4GW of RES capacity under...
Sobha: Sobha (SDL) reported the highest-ever annual presales of 4.9msf (+22% YoY), valued at INR 38.7bn. Bengaluru accounted for 68% of total presales volume (vs 67% in FY23). SDL expects contribution from Bengaluru to come down to 55% over the next few years. The residential launch pipeline stands at 13.2msf, with 61% of launches planned for the Bengaluru market. SDL recorded the best-ever cash inflow of INR 12.9bn (+32%/+22% YoY/QoQ) on the back of best-ever residential cash collection of INR 10.6bn. This resulted in overall net debt reduction by 13% QoQ to INR 23.4bn. In FY22, SDL took an average price hike of 6% YoY and it expects a similar hike in FY23. On the back of this and increasing interest rate, it expects volume to remain flat in FY23, with presales value growth in low double digits. Currently, ~80% of its customers opt for housing loans. We maintain BUY, with a reduced TP of INR 902/sh to factor in rising cost of capital resulting in higher WACC. NTPC: Generation/sales increased 3.0%/2.4% YoY to 79.9/73.9bn units in Q4FY22 on higher YoY base, led by improved demand. Coal PAF improved marginally in Q4 to 89.6%, vs 89.1% YoY, but coal PLF was down at 76.1%, vs 77.1% YoY. Under-recovery came in at INR4.5bn, vs INR6.0bn YoY, while surcharge income declined to INR1.6bn, vs INR6.2bn YoY. Consequently, after adjusting for one-offs, adj PAT increased 19% YoY to INR45.6bn, above our estimate. Overdue reduced to INR42.7bn vs INR56.6bn YoY and INR45bn QoQ. NTPC has 3.4GW of RES capacity under...
Prince Pipes: We maintain BUY on Prince Pipes with a revised target price of INR 875/sh (18.5x its Mar-24E EBITDA). In Q4FY22, volume rebounded 9% YoY and moderated the EBITDA/APAT fall (amid gross margin compression) to 4/9% YoY. We continue to like Prince for its large product portfolio and robust pan-India distribution (unit EBITDA at an all-time high of INR 30/kg in FY22). Despite the temporary surge in resin inventory, leverage remains comfortable. Ashok Leyland: In Q4, Ashok Leyland's (AL) margin improved 130bps YoY to 8.9%, led by (1) 11% YoY volume growth and (2) 13% YoY realisation growth. On account of improved margin, PAT (adjusted for one-off gains) came in ahead of estimate at INR4.3bn. CV demand continues to be upbeat and we expect the MHCV goods industry to post 25% growth in FY23. However, AL may find it difficult to recoup lost market share in CVs since the industry mix is shifting to ILCV segment and CNG (within ILCVs), and the company has been traditionally weak in this segment and late in launching CNG variants. Also, we do not expect margin to revert to the previous peak, as the top-3 players fight for gaining market share in each of the key segments (both TTMT and AL target to outperform industry growth in FY23). Intense competition in the industry is also visible in the fact that despite demand recovering extremely well in H2FY22, discounts remain at record high levels. On account of expensive valuation, we reiterate SELL on AL. Alkyl Amines: We maintain SELL on...
Prince Pipes: We maintain BUY on Prince Pipes with a revised target price of INR 875/sh (18.5x its Mar-24E EBITDA). In Q4FY22, volume rebounded 9% YoY and moderated the EBITDA/APAT fall (amid gross margin compression) to 4/9% YoY. We continue to like Prince for its large product portfolio and robust pan-India distribution (unit EBITDA at an all-time high of INR 30/kg in FY22). Despite the temporary surge in resin inventory, leverage remains comfortable. Ashok Leyland: In Q4, Ashok Leyland's (AL) margin improved 130bps YoY to 8.9%, led by (1) 11% YoY volume growth and (2) 13% YoY realisation growth. On account of improved margin, PAT (adjusted for one-off gains) came in ahead of estimate at INR4.3bn. CV demand continues to be upbeat and we expect the MHCV goods industry to post 25% growth in FY23. However, AL may find it difficult to recoup lost market share in CVs since the industry mix is shifting to ILCV segment and CNG (within ILCVs), and the company has been traditionally weak in this segment and late in launching CNG variants. Also, we do not expect margin to revert to the previous peak, as the top-3 players fight for gaining market share in each of the key segments (both TTMT and AL target to outperform industry growth in FY23). Intense competition in the industry is also visible in the fact that despite demand recovering extremely well in H2FY22, discounts remain at record high levels. On account of expensive valuation, we reiterate SELL on AL. Alkyl Amines: We maintain SELL on...
Prince Pipes: We maintain BUY on Prince Pipes with a revised target price of INR 875/sh (18.5x its Mar-24E EBITDA). In Q4FY22, volume rebounded 9% YoY and moderated the EBITDA/APAT fall (amid gross margin compression) to 4/9% YoY. We continue to like Prince for its large product portfolio and robust pan-India distribution (unit EBITDA at an all-time high of INR 30/kg in FY22). Despite the temporary surge in resin inventory, leverage remains comfortable. Ashok Leyland: In Q4, Ashok Leyland's (AL) margin improved 130bps YoY to 8.9%, led by (1) 11% YoY volume growth and (2) 13% YoY realisation growth. On account of improved margin, PAT (adjusted for one-off gains) came in ahead of estimate at INR4.3bn. CV demand continues to be upbeat and we expect the MHCV goods industry to post 25% growth in FY23. However, AL may find it difficult to recoup lost market share in CVs since the industry mix is shifting to ILCV segment and CNG (within ILCVs), and the company has been traditionally weak in this segment and late in launching CNG variants. Also, we do not expect margin to revert to the previous peak, as the top-3 players fight for gaining market share in each of the key segments (both TTMT and AL target to outperform industry growth in FY23). Intense competition in the industry is also visible in the fact that despite demand recovering extremely well in H2FY22, discounts remain at record high levels. On account of expensive valuation, we reiterate SELL on AL. Alkyl Amines: We maintain SELL on...
Issue Snapshot: Issue Open: May 20 May 24, 2022 Price Band: Rs. 243 256 *Issue Size: Rs 412.79 cr (Fresh issue 161.0 cr + offer for sale of 9,835,394 eq sh) Reservation for: QIB upto 50% eq sh Non Institutional atleast 15% eq sh ((including 1/3rd for applications between Rs.2 lakhs to Rs.10 lakhs)) Retail atleast 35% eq sh Face Value: Rs 5 Book value: Rs 20.02 (Dec 31, 2021) Bid size: - 58 equity shares and in multiples thereof 100% Book built Issue eMudhra Limited - IPO Note
Somany Ceramics: We maintain BUY on Somany Ceramics with a revised target price of INR 950/share (13x Mar-24E consolidated EBITDA). We continue to like SOMC for its strong retail distribution, improving product mix, and tightened working capital (WC). With the recent capacity expansion of ~20% in Q1FY23, we expect SOMC to continue industry leading volume growth. While Q4FY22 consolidated revenue rose 9% YoY, EBIDTA/APAT declined by 43%/ 65% YoY on op-lev loss and elevated gas prices. Balance sheet continues to firm up, as Somany's cash conversion cycle fell to 50 days, the lowest in past seven years Godrej Consumers: GCPL's Q4 performance was a mixed bag, with in-line revenue but a miss on EBITDA margin. Consolidated revenue grew 7% YoY - domestic revenue was up by 9% (7% three-year revenue CAGR) and international was up 4%. Domestic volume declined 3% YoY, three-year CAGR at 2% vs. Marico's 7%, Dabur's 3%, HUL's 3% and Emami's 3%. However, the key highlight of the result is the weak international performance. International EBIT declined ~70% YoY due to the sharp fall in Indonesia and Africa EBIT margins. Indonesia remained under pressure and revenue contracted by 15%, leading to a sharp 1,400bps fall in EBITDA margin. Africa clocked healthy 15% growth, while EBITDA margin contracted by ~1,000bps YoY due to delayed price hike and inventory pilferage in South Africa. The new CEO is implementing several initiatives to recover margin and increase penetration for domestic categories. However, considering uncertainty around macro and RM inflation, we do not expect quick recovery in the...
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