ICICI Securities Limited Broker Research reports

We attended the analyst concall organised by Garden Reach Shipbuilders & Engineers’ (GRSE) to discuss the company’s Q4FY23 performance and outlook on the future.

Coal India’s (CIL) board of directors has approved a price hike of 8% on higher- grade coal (G2-G10) w.e.f. 31st May’23, translating into a benefit of Rs27.03bn for the remaining part of FY24. Despite the high-grade coal production being limited to subsidiaries such as BCCL and CCL, we believe the price hike is likely to partially allay investor concerns about the adverse impact of the recent wage hike on profitability.

3M India reported 5th consecutive quarter of EBITDA growth higher than 23% YoY. Strong revival in manufacturing, infrastructure and automotive sectors has resulted in healthy growth for 3M India. Correction in crude oil prices, other commodities and stable forex rates also offer margin tailwinds.

Commodity profit pool contraction seen in FY23 is set to reverse in FY24. Commodity profit pool within the listed space dipped YoY by a staggering Rs1.3trn during FY23 to reach Rs2.5trn, thereby, resulting in the aggregate PAT/GDP ratio dipping to 4.3%.

Gokaldas Exports’ (GEXP) Q4FY23 consolidated EBITDA at Rs701mn, although down 8.5% YoY, was above our / consensus expectations. Revenue at Rs5.2bn was flat QoQ (down 11% YoY) due to soft demand scenario in the company’s end-market (US).

LIC is treading well towards increasing VNB by pushing product mix towards non- participating segment (8.9% in FY23 individual APE mix vs 7.1% in FY22) and sharp focus on improving persistency (improvement in all cohorts except 25M in FY23).

Power Finance Corporation’s (PFC) Q4FY23 PAT was healthy at Rs34.9bn, up 16% QoQ and 34% YoY, largely driven by credit cost reversal of Rs4.9bn. CRAR sustained above 24% and PFC announced final dividend of Rs4.5/share, taking the total dividend for FY23 to Rs13.25, which translates into ~30% dividend payout ratio.

Beat in earnings amid gradual overall recovery: Balkrishna Industries’ (BIL) Q4FY23 EBITDA margin at 20.3% was in line with our estimate and up 420bps QoQ, driven by gradual decline in the cost of consumed raw material basket (RMB) and relatively lower-priced freight contracts.

Engineers India (EIL) reported a strong set of numbers with Q4FY23 EBITDA up 51% YoY to Rs1.6bn (I-Sec: Rs1.4bn) led mainly by 540bps YoY margin expansion to 18.8%. PAT grew 26% YoY to Rs1.6bn (I-Sec: Rs1.4bn).

Repco Home Finance’s (Repco) Q4FY23 financial performance sustained its improving trajectory as reflected in 9% QoQ growth in PPoP driven by robust 6% QoQ NII growth and tight control on expenses (down 5% QoQ).