We maintain Buy on BPCL with a target price (TP) of Rs417 (+16.8% to CMP), which we have arrived at based on 7x PE on FY22E EPS (based on past average). This follows our earnings revision - cutting FY21E/FY22E earnings by -48.3%/-12.42% post the 4QFY20 results call with BPCL management. The standalone 4QFY20 results were a miss vs. our estimates - adjusted loss of Rs2.8bn vs our PAT estimate at Rs2.49bn. This was due to a steeper inventory loss of Rs49.02bn vs our estimate of Rs34.5bn. The reported inventory loss includes exceptional loss of Rs10.8bn attributed to the impact of lockdown on crude and products inventory. BPCL reported a 4QFY20 loss of Rs13.61bn, including this exceptional item. Reported GRM came in at...

FY21 guidance missed Commercial manufacturing revenue slows down Dishman Carbogen Amcis' or DCAL's 4QFY20 revenue at Rs5,121mn is 26.7% below our and 21% below consensus estimate, largely due to a sharp decline in CRAMS revenue. CRAMS revenue for the quarter was down 18%, but up 3% on a full year basis. Over the last 12 months, 4 new NMEs have been approved by the USFDA where DCAL is the development partner. The number is encouraging considering the fact that about 50 NMEs have been approved by the USFDA in FY20 and DCAL has a reasonably large share of this pie. According to the company, two of these NMEs are expected to be quite...

Closer to being debt free, preparing for the next leap Aurobindo Pharma's (APL) 4QFY20 revenue at Rs61,584mn is up 4.5% QoQ and 3.1%/3.7% above our/consensus estimates, respectively. The Formulations business grew by 23.5% YoY and 5.8% QoQ, led by strong performance in Europe (up 12% QoQ). Revenue growth came along with gross margin expansion of 300bps (QoQ), which was driven by low cost inventory and higher realizations (aided by USD/Euro appreciation). Net profit stood at Rs8,498mn, which was 31%/19% above our/consensus estimates. Going forward, executing growth on this base in the near...

Heidelberg Cement (HEIM) reported good set of numbers for 4QFY20 with revenue of Rs5.1bn down 6.2% YoY and EBITDA of Rs. 1.3bn up 1.9% YoY. Realization was better with 4.2% YoY uptick at Rs. 4,677/mt. Operating cost/mt increased by 1.5% YoY as drop in freight and power & fuel cost was offset by higher raw material and other expenses. EBITDA/mt, as a result, came in at Rs1,168 which was up by 13.3% YoY. Current EBITDA/mt is the second best in the history of the company. The company is currently selling 100% blended cement and more than 85% of its total sales are in trade segment which will keep efficiency parameters higher. Only blemish on the cost structure is the high-power costs which the company has tried to...

Britannia Industries' (BRIT) 4QFY20 consolidated revenue (including OOI) grew by 2.5% YoY to Rs28.7bn (vs our est. 4.5% growth to Rs29.3bn). Standalone revenue (including OOI) grew by 0.9% YoY to Rs26.9bn. We believe that the base business volume would have been flattish during the quarter (vs. our est. 3% growth). After seeing moderate growth in the first nine months of FY20, the company saw some pick-up in growth in the first two months of 4QFY20. Covid-19 related lockdown affected March and the overall quarter was impacted by an estimated 7-10% at revenue and bottom-line. EBITDA grew by 4.1% YoY to Rs4.5bn (vs our est. 13.5% growth to Rs4.95bn). Adj. PAT grew by 26.5% YoY to Rs3.7bn (vs our est. 16.8% growth to...

COVID-19 dents sales growth and operating margin V-Guard Industries (VIL) posted revenue of Rs5.4bn in 4QFY20, down 28% YoY, 21%/26% below our/consensus estimates as lockdown in March led to Rs2.5bn loss of sales. Revenue from South region fell 31% YoY to Rs3.2bn (60% of total sales), while Non-south region fell 21% YoY to Rs2.2bn (40% of total sales). Revenue of Electronics/Electricals/Consumer Durables segments fell 27%/32%/20% YoY to Rs1.5bn/Rs2.4bn/Rs1.4bn. Gross margin jumped 370bps YoY to 33.3% (but flat QoQ), led by premiumisation of product portfolio and pricing actions. EBITDA fell 42% YoY to Rs452mn, leading to an operating margin of 8.4%, down 220bps YoY, below our/consensus estimate...

Orient Electric posted revenue of Rs5.6bn in 4QFY20, down 12% YoY but in line with our estimate. Electrical Consumer Durables (ECD) segment's revenue fell 5% YoY to Rs4.5bn (81% of total sales) while Lighting & Switchgears (L&S;) segment's revenue fell 33% YoY to Rs1.1bn, on a high base. Both the segments had witnessed mid-to-high teens growth prior to the lockdown in 4QFY20 led by Fans and Air Coolers (for ECD) and Consumer Luminaires (for L&S;). Gross margin fell 240bps YoY to 30.5% due to adverse product mix and lower sales volume. Lower other expenses (down 39% YoY to Rs572mn) restricted the fall in EBITDA to 8% YoY at Rs652mn. Thus, operating margin rose 50bps YoY to 11.6%, above our estimate of...

Sagar Cements Ltd (SGC) has reported good set of numbers for 4QFY20. Revenue at Rs3.04bn declined by 17% YoY due to 11% YoY decline in volume. Realization was better with 5.4% QoQ uptick, but it was down by 6.6% YoY. Operating cost/mt declined by 4% YoY as raw material cost and power & fuel cost were lower. As a result, EBITDA/mt came in at Rs534, which was almost double compared to 3QFY20 but down 18% YoY. SGC will continue to add capacity in Madhya Pradesh and Odisha which will take its total capacity from current 5.75mn mt to 8.25mn mt by June 2021. The current gross debt of the company stands at Rs4.9bn, which is expected to reach Rs8bn post completion of capex. Given the expected slowdown in...

Tractors shine, slower recovery for other segments Automobile sales witnessed a paltry increase in volume in May'20 after collapsing to almost zero in April'20 due to the Covid-19 outbreak and unprecedented lockdown across India. Tractor segment positively surprised us by posting a YoY marginal decline/growth on the back of positive rural sentiments primarily due to robust Rabi crop production, higher procurement, good price realizations and the forecast of a normal monsoon that bodes well for a good Kharif crop. All the other OEMs reported a sharp YoY decline in sales volume as they faced challenges to ramp up production after resuming the plants. Most OEMs received permission and opened their plants during the month. However, the entire production...

Margin delivery continues; Sharper focus on cost & cash in near term United Spirits' (UNSP) standalone net sales declined by 11.4% YoY to Rs19.9bn (v/s our est. of 1.5% growth to Rs22.8bn) primarily due to COVID-19 led disruption in March, which aggravated the impact of the ongoing consumption slowdown. Underlying net sales, excluding the one-off sale of bulk Scotch, declined by 14.8% YoY. Reported overall volume declined by 13.5% YoY (v/s our est. of 4.5% YoY decline). Popular volume was down 7.5% YoY while Prestige & Above (P&A;) volume declined by 19.6% YoY due to closure of onpremise channel and lower social occasions. Reported gross margin contracted sharply by 430bps YoY to 42.2%, primarily due to the adverse impact of COGS inflation. Underlying...

UCP outperforms despite COVID-19; EMPS stays weak Voltas posted 4QFY20 consolidated sales of Rs20.9bn, flat YoY, 9%/5% above our/consensus estimate. UCP sales grew 20% YoY to Rs11.9bn (57% of total sales) despite loss of primary sales in March 2020 due to COVID-19 lockdown. Voltas maintained room AC leadership with 24.2% YTD (till Feb 2020) market share and also lead in inverter ACs in Jan-Feb 2020. EMPS revenue fell 18% YoY to Rs8bn (38% of total sales) due to slower pace of project execution amid COVID challenges. Order book is at life-time high of Rs78bn (up 56% YoY & 11% QoQ) with order inflow of Rs15.2bn in 4QFY20. Engineering Products revenue grew 21% YoY to...

Revenue growth of 17% YoY in 4QFY20 was primarily driven by 48% YoY increase in number of rooms to 8,006 rooms. RevPar at Rs2,764 declined by 19% YoY. However, the RevPar for Lemon Tree (excluding the RevPar of Keys Hotels) declined by 11% YoY. While reported EBITDA and EBITDA margin rose by 31% and 381bps, respectively YoY, the comparable EBITDA (adjusted for changes due to Ind As 116) rose by 12% YoY and the comparable EBITDA margin declined by 127bps YoY to 31.2%. We however remain concerned about the rising debt level. In 4QFY20, the net debt to equity stood at 1.79x as compared to 1.33x in 4QFY19....

4Q was shaping up well; could benefit from steady farmer income Seasonally, 4Q is typically the second worst quarter of the year for V-Mart (VRL) with 3Q being the best followed by 1Q and 2Q being the worst. VRL's 4QFY20 numbers were better than expected. While revenue was in-line, better than expected gross margin (though flat YoY) helped company deliver a positive EBITDA (pre IndAS 116) while we were expecting a loss (due to the Covid-19 impact). VRL had EBITDA margin of +2% while we were expecting -1.9%. 4QFY20 saw revenue growth of 29%, LTL growth of 8% and EBITDA (including IndAS 116, in our view) growth of 60% till 15th March when Covid-19 related lockdowns hit sales. The unusual strength in the first 75 days...

Hospitality assets-trading at near distressed valuation below replacement cost It is well known that the hospitality and tourism industry is the worst affected by the outbreak of COVID19 (corona virus). This has been reflected in the stock prices of hospitality stocks, which have declined by 62% to 82% from their 52 week highs. The recent announcement of the Government of India, allowing the hotels to open from 8th June 2020 has given strong visibility of the revival of the sector. Since most...

Dilip Buildcon Ltd (DBL) has reported marginally better than expected results for 4QFY20 with 2.8% YoY decline in revenue and 8.2% YoY decline in EBITDA. Revenue and EBITDA are in-line with consensus estimates, whereas PAT at Rs1.15bn (down 48% YoY) is 8% ahead of expectations. The management has withdrawn its guidance for FY21 and will review it after couple of quarters once more clarity emerges on working conditions and availability of resources. For FY20, DBL reported revenue of Rs89.8bn, down 1.7% and EBITDA of Rs15.7bn, down 3.3%. EBITDA margin at 17.5% was down marginally by 30bps. PAT at Rs4.25bn declined by 44% owing to higher interest, depreciation and tax....

KEC International (KEC) reported consolidated revenue of Rs36.7bn, down 4% YoY and 8% above our estimate. Railways/SAE towers sales grew 36%/39% YoY to Rs8.6bn/Rs4.4bn. T&D;/Cables sales fell 17%/38% YoY to Rs20.2bn/Rs2.2bn. EBITDA fell 7% YoY to Rs3.7bn, leading to EBITDA margin of 10.1% (down 30bps YoY), exactly in line with our/consensus estimate. Aided by lower tax rate at 28.3% (versus 34.2% YoY), decline in PAT was restricted to 3% YoY to Rs1.9bn, 12%/3% above our/consensus estimate. FY20 order inflow was at Rs113bn, down 20% YoY while order book was flat YoY at Rs205bn. FY20 revenue grew 9% YoY to Rs120bn, while the COVID-19 lockdown led to sales disruption of Rs5bn-Rs6bn in March 2020. Lockdown challenges have...

Heading from quasi recession' to real recession'; FY20 GDP at 4.2%; 4Q at 3.1% GDP growth for 4QFY20 stood at 3.1%, which was significantly better than Bloomberg consensus estimate of 1.6% and also better than our estimate of 2.6%. GVA growth stood at 3.0%, which was better than our estimate of 2.2%, driven by better than expected performance of the agriculture sector and supported by government spending. Although we have been highlighting likely agricultural sector outperformance, it surpassed our expectation at 5.9% YoY. Higher government spending supported growth in public administration and defence at 10.1% YoY, only marginally lower than 10.9% in the previous quarter. Nominal GDP growth in 4QFY20 stood at 7.5% YoY, up from 7.2% in the previous quarter. Nevertheless,...

Lupin's 4QFY20 revenue at Rs38,457mn is up 2% QoQ and down 12.7% YoY. The top line is higher than our/consensus estimates by 2.2%/1.6%. Net profit for the quarter stood at Rs3,896mn. The net profit was driven by higher other income (net forex benefit of Rs1260mn), exceptional income of Rs830mn (net gains from business divestment) and lower amortization charge (lower by Rs390mn QoQ). The effective tax rate was lower at 25% vs guidance of 40%. EBITDA stood at Rs5,253mn, down almost 40% YoY. EBITDA margin (excl. other income) stood at 14% - higher by 300bps QoQ and lower by 614bps YoY. The QoQ improvement was partially...

Jubilant Life Sciences or JLS reported 4QFY20 revenue of Rs23,914mn, which was above our estimate by 4.2% and above consensus estimate by 1.4%. Net profit for the quarter stood at Rs2,605mn (Rs16.4 per share) and was 27.6%/8.9% above our/consensus estimates, respectively. Revenue growth was 3.3% QoQ but was flat YoY. Drug Discovery Solution business clocked Rs851mn in sales during the quarter and was up 25.5% YoY. The business is showing good momentum and with capacity set to double in 2-3 years. Net profit margin at 10.9% was up 211bps QoQ. EBITDA margin expanded by 52bps QoQ as the LSI business showed some improvement in EBITDA margin QoQ. Pharma sales...