18 February 2020 JSW Energy (JSWE) has signed a share purchase agreement to acquire GMR Kamalanga (1,050MW). We see the transaction as value accretive for JSWE, given the strategic location of the plant, room for merchant volumes, and the companys ability to reduce interest and O&M; costs post acquisition. We raise our FY21/22 EPS estimates by 15/8% to account for the takeover of Kamalanga from FY21. GMR Kamalanga (3x 350MW) is strategically located in Orissa near the coal belt region. Accordingly, variable costs are low at just INR1.5-1.6/kWh. In terms of PPA, 84% of the plants capacity is tied up under long-term agreements (25 years) with Odisha (263MW), Haryana (334MW) and Bihar (283MW). The balance 170MW is available for sale/merchant. Given the strategic location of the plant, fuel supply linkages are tied for the entire PPA. Besides, the company has recently secured another 0.4mtpa for part of its balance merchant capacity.

17 February 2020 The third quarter turned out to be more challenging than expected. While the 1HFY21 outlook is weak given BS6 transition-related challenges, ALs focus on adding new revenue and profit pool bodes well for a stronger recovery from 2HFY21. We cut our EPS estimate by 41%/14% for FY20/21 to factor in the weak demand scenario and RM cost inflation. However, we maintain back of the prospects of a strong recovery 2HFY21 onward. Revenue/EBITDA/PAT declined by ~36.5%/65%/92% YoY to ~INR40.2b/INR2.3b/INR293m for 3QFY20 and by 33%/54%/74% YoY for 9MFY20. Volumes declined ~29% YoY (+8% QoQ) to ~31.2k units, led by M&HCV; (- 39% YoY) and LCV (-6% YoY). INR1,344k), reflecting the adverse mix and higher discounts. 30.8%), primarily due to the impact of inventory reduction and adverse mix. 6.3%) also due to operating deleverage.

17 February 2020 Healthy traction in existing products and addition of in-licensed products facilitated robust growth in India/LATAM. However, the benefit was more than offset by intensified competition in key products in US generics. We maintain our EPS estimate for FY20/21/22. While the US generics business has a strong ANDA pipeline and the DF/Europe/API outlook remains promising, the return ratios are yet to improve meaningfully. Sales were up 5.1% YoY at INR26.4b (in-line), led by India (+18.2% YoY to INR7.9b; 30% of sales) and LATAM (+54.1% YoY to INR1.6b; 6% of sales) as well as API segment (+9.6% YoY to INR2.6b; 10% of sales). RoW (12% of sales) was muted with 0.4% YoY growth to INR3.

17 February 2020 LEMONTRE reported a strong performance at its existing hotels, where RevPAR growth of 7.5% YoY led to a 19% YoY increase in EBITDA. EBITDA performance was mainly driven by new hotels (absent in the base quarter) as they formed 46% of incremental EBITDA. For FY20, we cut our revenue estimate by 6% (to factor in the 16% miss to our estimate in 3QFY20) but maintain our EBITDA estimate. For FY21/22, our estimates remain unchanged. inventory addition (absent in base quarter), contribution from Keys Hotels acquisition, and ARR growth. Reported EBITDA grew 66% YoY to INR812m 48% YoY to INR725m. Adj. PAT declined 2% YoY to INR122m. For 9MFY20, revenue/like-to-like EBITDA/PAT growth stood at 24%/25%/(59%). ARR was up 4% YoY at INR4,644 in 3QFY20; occupancy declined by ~150bp YoY to 71.3%. However, on a same-hotel basis, ARR grew 5.4% YoY with occupancy up ~150bp YoY at 76.

SAILs third quarter result reflects the challenges faced by industry, with EBITDA/ton down 69% YoY at INR2,439 due to a sharp decline in steel prices. We expect sales volume CAGR of 6% over FY20-22 as demand improves and capacity ramps up. Operating leverage benefits from higher volumes and better steel prices are likely to lead to improved margins. Coking coal cost is not expected to decline in 4QFY20 as price has moved up to USD150/t currently; there is a two-month lag in realization of spot prices at Based on FY19 iron ore production of 28 MMT, SAIL can sell up to 7 MMT (25% of 28 MMT) iron ore in the merchant market in FY20. which is one of SAILs largest customers, has had budgetary constraints, resulting in higher receivables and slower-than-expected deleveraging; dues from IR are at INR37b v/s normal level of INR8-10b.

The Mumbai-Pune project can change the fortunes of the company, given the annual toll collection potential of INR10b+. While a few details of the bid and the final awarding are still awaited, we believe the project can generate IRRs of 20%+ for IRB. announcing the second InvIT with GIC and (2) emergence as a winner in Mumbai-Pune project award, in a timely manner and that too as a sole bidder. We await final awarding of the project (recall that the project was scrapped earlier, but management suggested that rules do allow for awarding on second attempt if there is sole bidder) before incorporating it in our earnings. revenue declined 2.6% YoY to INR17b. EBITDA declined 6% YoY to INR7.1b and was 8% ahead of our estimate on account of higher margins. PAT came in at INR1.6b (-27% YoY) and was 12% below our estimate. Construction revenue grew 10% YoY to INR13.

15 February 2020 Slowing ad spends and a high base for movie revenue led to a decline in revenue and EBITDA. OTT segment profitability though was comforting. Economic weakness has slowed down ad spends and the TRAIs latest bouquet norms bring in uncertainty over subscription revenue growth. Revenue declined 10% YoY to INR8.1b (16% miss) in 3QFY20, majorly due to falling ad revenue (-12% YoY). Also, the base effect came into play as the year-ago period had high revenue of INR1b from blockbuster movie distribution, which declined to INR150m in 3QFY20. Production cost was down 10% YoY which led to flat opex and provided some cushion to EBITDA (-13% YoY to INR5.8b; 13% miss). Excluding the base effect, overall revenue was up 1.5% YoY in 3QFY20, PBT would have been higher by INR135m and PAT growth was 12% YoY. Nxt subscribers stood at 15m, and the OTT segment has turned profitable.

14 February 2020 Future Retails revenue declined marginally in 3QFY20 due to closure of small-format stores and exit from select product categories. We cut our revenue estimate by 11% for FY21 to factor in store closures, lesser store adds and slower SSSG. We also cut our EBITDA estimate by a lesser 7% for FY21 due to loss of revenue from store closure. Revenue fell 3% YoY to INR51.3b (7% miss), but the gross margin improved remarkably by 270bp YoY to 28.7%. Thus, pre-Ind AS 116 EBITDA grew 12% YoY to INR3.1b (16% beat) with the margin improving by 80bp YoY to 6%. FRL closed three Big Bazar stores and 157 small-format Easyday and Heritage stores at net level. At gross level, it closed six Big Bazaar, 157 Easyday, and two E-zone stores. PBT came in at INR1.9b (30% beat, -3% YoY), aided by higher other income (3x YoY to INR148m).

13 February 2020 Higher-than-expected volume offset the lower implied transmission tariff and led to in-line EBITDA in 3QFY20. The QoQ decline in volume was primarily led by the refinery/petrochemical segments. We expect low LNG prices to spurt demand, especially from the power segment post monsoon. The company is a direct beneficiary of the upcoming LNG terminals in Gujarat and the renewed focus on reducing industrial pollution. GUJS reported in-line EBITDA of INR3.8b (3% miss; +8% YoY, -13% QoQ) as higher-than-expected transmission volume of 36.9mmscmd offset the lower implied tariff. Implied tariff declined from INR1,420/mscm in 3QFY19 and INR1,461/mscm in 2QFY20 to INR1,331/mscm in the quarter. PAT of INR2.2b was in line with our estimate (+28% YoY, -51% QoQ). The company had written back tax in the previous quarter as it moved to the new lower tax regime. Consumption from the refinery/petrochem segment continued to be the highest at 32% but slid from 12.9mmscmd in 2QFY20 to 11.8mmscmd in the quarter.

13 February 2020 IPCA is one of the companies with high exposure to domestic formulation (DF; 40% of sales), a favorable opportunity in API (23% of sales) and better traction in international generics. We raise our EPS estimate by 10%/10.5%/11.4% for FY20/21/22 and also growth in DF, a revival in int. generics and sustained momentum in API. strong growth in exports (generics) and API. Exports (generics) grew 39% YoY to INR2b (16% of sales), API sales were up 24% YoY at INR3b (23% of sales), while DF sales increased 15% YoY to INR4.9b (40% of sales). Exports (branded + institutional) grew 12% YoY to INR1.6b (13% of sales). Gross margin shrank 120bp YoY to 65.1% due to a change in product mix (higher share of API sales). EBITDA margin contracted 70bp YoY due to a lower gross margin and higher employee cost (+60bp YoY), offsetting the benefit of lower other expenses (- 120bp YoY).

13 February 2020 PAG reported a disappointing set of numbers on both volumes and earnings, with EBITDA declining 16% YoY in 3QFY20. Reported operating margin was the lowest in 30 quarters, and adjusted for the Ind-AS 116 impact, the margin was among the lowest ever. While the long-term growth potential is high and the past track record impressive, valuations of 55.7x/47.6x FY21/22E EPS are expensive. Management commentary also did not assuage concerns about the lack of earnings recovery in the near term. Maintain 490bp YoY to 17.5% due to higher employee costs (+110bp YoY), partly offset by lower other expenses (-20bp YoY). Investments in technology implementation and staff recruitment (mainly on tech and kids businesses) have also impacted the EBITDA margin. Inventory days have come down to ~75 from 85 as of Mar19. Kidswear has shown an encouraging demand trend.

13 February 2020 PI maintained its strong performance, driven by both CSM/domestic agri businesses. Notably, CSM revenue grew by 19% YoY off a very high base (+40% YoY in 3QFY19). EBITDA margin improved led by operating leverage. Revenue/EBITDA was in line, but PAT was a miss mainly due to higher-than- expected tax rate. We broadly maintain our estimates and reiterate operating leverage. PAT grew at a lower rate of 12% YoY to interest cost and tax rate (due to change in SEZ share to overall business), although higher other income provided some support. For 9MFY20, revenue/EBITDA/PAT grew 23%/32%/21% YoY. CSM revenue grew 19% YoY to INR6.4b off a high base (+40% YoY in 3QFY19) on the back of continued ramp-up in exports. CSM order book was flat QoQ at USD1.4b. Domestic business revenue grew 24% YoY to INR2.1b, mainly led by growth in volumes due to higher acreages across key crops during Rabi.

13 February 2020 Double-digit domestic sales growth, while lower than forecast, is very healthy in the current environment. Higher milk & milk derivative costs are likely to weigh on near-term earnings growth, but longer-term prospects remain robust. Valuations of 58.1x/48.6x CY21/22E EPS fully factor in upside from one- year perspective. Domestic sales grew 10% YoY, largely driven by volume/mix. Export sales declined 9.7% YoY due to lower coffee exports to Turkey. Gross margin shrank 220bp YoY to 56.8% due to higher commodity cost, particularly milk and its derivatives. Higher staff costs (+60bp YoY to 10.2%) and lower other expenses (-290bp YoY to 25.2%) led to EBITDA margin expansion of 20bp YoY to 21.

Strategy change in terms of higher focus on managed services/annuity revenue should translate into longer-term engagements and better quality earnings. Among the mid-cap IT companies, MTCL was an early mover in terms of the strategic focus on digital capabilities, which also led to a high share of digital in the revenue mix (50%+). This led to high volatility in growth and margin trajectory, Strategic change in terms of higher emphasis on managed services should lead to longer-term engagements, lower volatility and higher quality earnings. These steps translated into a high share of digital revenue (50%+) The companys strong reference ability in SAP HANA/salesforce ecosystems and niche verticals like Hi-Tech, CPG, Travel & Hospitality provide it an edge over competitors. The volatile nature of spend in this account also led to relatively high volatility in MTCLs revenue growth and margin trajectory (v/s peers like LTI).

12 February 2020 Coal Indias (COAL) results highlight the impact of lower volume offtake amid subdued thermal power demand. FSA realizations though were higher YoY on account of increased share to non-power and better grade. Production at the companys mines has started to ramp up post heavy monsoon, and we expect offtake to improve as power demand recovers. The stock trades attractively at ~3x FY21E EV/adj. EBITDA and offers a dividend yield of ~10%. Maintain Buy with a target price of INR258/sh. EBITDA (ex-OBR) declined 22% YoY to ~INR62b (our driven better-than-expected realizations. Other income rose 21% YoY to decline in sales volumes. Volumes were down 8% YoY at ~142mt (in-line). FSA volumes declined 6% YoY to 127.7mt. However, realization was up 6% YoY at INR1,411/t due to higher non-power segment sales and better grade realized. E-auction volumes declined 33% YoY to 9.8mt.

Moreover, its CAGR performance in the last 5 years/3 years at ~14%/19% has been even more impressive, given the weak earnings growth posted by (much smaller) peers in recent years, amidst a weak operating environment. An unprecedented EBITDA margin improvement of >900bp YoY over the past 10 years ending FY20E has been led by factors such as (a) superior nimbleness in response to raw material cost and competitive stimuli, which has been boosted further by best-of-breed analytics, (b) strong execution of its Winning in Many India (WIMI) strategy, herbal products and more recently on acquisitions as well, and (c) emphasis on premiumization with rigorous focus on cost savings at the same time. performance in the last 3 years at ~8%/~19/~19% and in the last 5 years at ~6%/~14/~14% has been even more impressive, given the weak earnings growth posted by (much smaller) peers in recent years, amidst a weak operating environment.

11 February2020 Despite the lack of new launches, OBER exhibited good pre-sales momentum, led by sustained sales at existing projects across the micro markets in MMR. On the commercial side, strong leasing at Commerz II and construction progress of ongoing projects provide comfort. We cut our pre-sales estimate for FY20/21 to factor in the delay in Thane and Exquisite III project launches. However, we broadly maintain estimates for the leasing and hospitality segments. volumes were up 5% YoY (+11% QoQ) at 0.16msf in 3QFY20, largely driven by strong bookings in Exquisite, Prisma and Maxima. Booking value grew 26% YoY to INR3,033m. Notably, sales traction remained healthy in existing projects across the micro markets in MMR. Launch of Thane project and Exquisite III in 1HFY21 bode well from the volume perspective. Leasing revenue was largely driven by ramp-up in Commerz II, where occupancy increased YoY from 64% to 100%.

11 February 2020 SH Kelkars (SHKL) 3QFY20 operating performance was driven by improved demand in the Fragrances business (~90% of revenue). We expect growth momentum to be driven by demand pick-up in the underlying industry. Albeit the delay in CFF consolidation, we cut our earnings estimates for FY20 and increase estimates for FY21 on account of better demand outlook and easing RM pricing pressure. Reiterate Revenue grew 13% YoY (v/s est. EBIDTA increased 8% YoY to INR431m (v/s est. INR492m) with margin contracting 75bp YoY to 14.9% (v/s est. Adj. PAT was up 20% YoY at INR256m (v/s est. However, SHKL reported net loss of INR109m (v/s INR214m profit in 3QFY19) owing to one-time exceptional expense of INR365m on impairment of PPE and other cost related to the shutdown of a research facility in the Netherlands. Fragrances biz grew 14% YoY to INR2,595m, largely driven by growth in the domestic segment (+22% YoY), while the overseas segment remained muted at 1%.

10 February 2020 Container Corporations (CCRI) results highlight its market share loss v/s peers. CCRIs market share has reduced from 73% last year to 67% currently. However, margins have improved for the company by 3pp YoY. The commissioning of DFCC should be a key volume/margin growth trigger for the company. Total volumes were down 2% YoY to 910,407 TEUs (v/s est. EXIM volumes came in at 766,822 TEUs (-2% YoY) and domestic volumes at 143,585 TEUs (+2% YoY). CCRIs 3QFY20 reported revenues were at INR15.2b (-3% YoY, -12% QoQ) below est. EXIM revenues stood at INR11.7b (-4% YoY, -14% QoQ) while domestic revenues came in at INR3.

10 February 2020 During 9MFY20, GAILs performance was hampered by poor gas trading, petrochemicals and LPG business; however, the transmission business fared well owing to increase in implied transmission tariffs. The management has guided for incremental volumes of ~2mmscmd from Ramagundam, ~2.5mmscd from Matix, and ~4mmscmd from Kochi- Mangalore pipeline from 1QFY21, and 8-9mmscmd in Jagdishpur-Haldia pipeline in FY22; which reiterates our thesis from our This company guides that with start of all fertilizer plants, no US HH contract would be sold outside India. Trading at ~40% discount to long-term 1-year forward P/E of 14.0x, GAIL offers an excellent investment opportunity. GAIL reported EBITDA miss of 18% at INR20.7b (-22% YoY), led by poor LPG and liquid hydrocarbon performance, while petchem saw some marginal improvement after reporting a huge loss in 1QFY20. PBT was at INR18.7b and the company paid tax at rate of 33.2% during the quarter. GAIL is still in the process of evaluating the new tax rate option.