Volumes Picking Up Gradually, but We Expect Stress to Remain in FY22E: Recovery is clearly visible from the latest two quarterly numbers, with YoY revenues in Q2FY21 and Q3FY21 coming in at 51% and 74% of the numbers seen in the corresponding quarters in the previous year.

TOP PICKS: LT, KNR, PNC Infra, Ashoka, NCC, Capacite Infra, ITD and KPTL. HDFC Securities Institutional Equities (HSIE) hosted the 4th Annual Infrastructure Investors Forum on 18/19th Feb 2021, though virtual this time. We had attendees from 12 large listed Industrials/Infrastructure companies represented by Promoters, CEO/CFO/IR teams. After almost a decade, there is strong/consensus optimism building up for the Indian Infrastructure story. Ordering has moved beyond roads with focus now on health, education, portable water, renewable energy, manufacturing expansion, uptick in real estate cycle and all this is coinciding with relatively lower crude prices, lowest interest rate and improving GDP/Tax collection. Companies remain bullish whilst valuation is still at 40-50% discount to cross cycle mean. We maintain constructive as envisaged in our thematic On Road to Rerating and Triggering a New Cycle.

Background: Page Industries is the exclusive licensee of Jockey International Inc (USA) to manufacture and distribute Jockey brand in India, Sri Lanka, Nepal, Bangladesh and UAE till 2040. They broadly operate in premium men's innerwear; women's innerwear and leisure wear segments. Jockey enjoys high brand recall and they spend ~5% of their annual sales for brand building and promotional activity, which enables them to dominate most of the segments in which they operate. They are also exclusive licensee of Speedo swimwear brand in India. Page has network in ~250 cities and ~760 exclusive brand outlets in India. They...

The expansion at Camana Bay is likely to improve HCCI's reach to patients both international and local, due to close proximity to the airport and several major residential complexes. Significant capital outlay notwithstanding, the new facility would complement the existing set up by focusing more on day care, short stay but niche categories of oncology care while the existing facility would continue to cater to tertiary and quaternary care. We expect the impact of this blended model to materialise from FY23 onwards. NH's experience in running hospital in this region could be handy...

Near term growth momentum depends on the demand for industrial and protective coatings which further depends on macro environment recovery. Also, competitive pressures and raw material price fluctuation could impact the business prospects in long-term. Hence, considering the extended valuation, we downgrade our rating on the...

Delay in order finalization leads to 45% decline in OI, but healthy ordering visibility seen in both domestic and international markets. GE T&D; (GETD) reported strong quarterly performance led by stellar execution, cost rationalization measures and higher other income. Sales grew by 10% YoY as manufacturing and project sites were operating at full capacity. Order inflow decline 45% to Rs6.9bn owing to delay in order finalization. Order book stood decent at Rs49bn (excluding L1 Rs3bn)...

Softness in Consultancy and Turnkey led to subdued Q3FY21 RITES reported revenues of `4.3bn (-28% YoY) with subdued Consultancy-Domestic and Turnkey performance which declined 18% YoY and 19.2% YoY to `2.17bn and `1.58bn respectively. The softness in consultancy was led by QA- related site level inspection delays and construction marred by land acquisition. For 9MFY21, the topline declined 19% YoY to `11.8bn. With planned 34% increase in budgetary capex for rail (lasting upto 2030), Metro and Infra projects the company sees foreseeable double digit growth in FY22 over FY20. The company reported EBITDA of `1.1bn down 25% YoY. The...

While NBCC's order book position has remained strong, its revenue and margin performance was benign with challenges witnessed in big-ticket size redevelopment projects and margins declining in the PMC segment. While there are triggers such as a) expected surge in executable order book position, b) improvement in margins and c) with lean-balance sheet position, we will await execution and margin pick-up before turning constructive. We...

JMC Projects: JMC Projects (JMC) reported in-line revenue at Rs 10.7bn (+15%/+32% YoY/QoQ). However, EBITDA/APAT missed our estimate by 20%/41% as the additional cost related to labour transportation and higher commodity prices impacted margin. YTD order inflow stood at Rs 75bn, taking the order book to Rs 142bn (ex. L1 of Rs 7.5bn). We remain constructive on JMC, given (1) a healthy order book (~4x FY20 revenue) and (2) comfortable balance sheet. We reiterate BUY with an unchanged target price of Rs 110. We have cut our FY21 estimate to incorporate the miss on margin in 3QFY21. Key risks: (1) delay in restructuring/monetisation of BOT assets and (2) increase in leverage. ITD Cementation: While ITD saw robust execution (Rs 7.9bn, +12%/+43% YoY/QoQ, 13% beat), margins have still not normalised to pre-COVID levels (9%, -9/+922 bps YoY/QoQ, vs 10.8% HSIE est.). Labour availability has fully normalised. Order backlog is robust at Rs 130bn (4.5x FY20 revenue), aided by FYTD21 order wins of Rs ~40bn. Although consolidated net debt (Rs 4.4bn vs Rs 3.4bn at 2QFY21) has increased QoQ, the balance sheet remains robust at 0.4x net D/E, as cash utilisation has gone up. We maintain BUY on ITD with an unchanged target price of Rs 106/sh, (1) given large order book (~4.5x FY20 revenue), (2) strong balance sheet and (3) supportive valuation (6.1x FY23E EPS). No change in our financial estimates. ONGC: Our REDUCE recommendation on ONGC with a price target of INR 101 is premised on (1) muted crude oil and gas realisations and (2) lack...

IPM is struggling for growth above 10% even after MoM abating COVID concerns and with MRs, physician activities almost reaching pre-COVID level. We believe key reasons for growth below par are (i) subdued new prescription (Rx) leading to volume de-growth (ii) digital marketing yield going south and (iii) sustained lower demand of acute products. Cardiac and anti-diabetic growth takes a breather in Jan-21 at 8.8% and 5.3% after reporting double digit growth in most months during lockdown. While amongst top therapies Gastro and VMN reported double digit growth of 14%...

Moving to pre-COVID levels despite revenue fall Petronet LNG was formed by the Indian government to import liquefied natural gas (LNG) and set up LNG terminals in India. The company operates...

Demand in Out of Home channels has improved sequentially. We are reducing CY21/22 EPS estimates by 4.6%/3.8% on the back of high employee cost witnessed during the quarter. Double digit growth in key brands like Maggi, Kitkat and Nescafe along with improvement in Out of Home...

Background: Shriram City Union Finance (SCUF), the retail finance arm of the Shriram Group, offers diversified loan products ranging from low risk (loan against gold) to high risk segments (small business loans and two-wheeler financing). Strong group parentage (three decades expertise in the finance services space) is among the key positives. The company benefits from Shriram Chits' branch infrastructure and existing customers, deriving more than 85% of its business from...

LICHF saw largely stable asset quality during Q3FY21 with stage 3 assets declining 11 bps QoQ to 2.68%. On a proforma basis, there was slight deterioration though, as proforma GNPA (calc) increased from ~3% to ~3.7%, as the management had indicated that ~1% of loans would have been recognised as NPA if not for standstill norms. NPA in individual category fell from 1.7% to 1.62% QoQ while in project loans it was down 30 bps QoQ to 16.22%. Collection efficiency improved from 96% to 98% QoQ. Thus, asset quality remains steady but provision buffer at ~1.3% of...

Although Info Edge reported a dip in revenues YoY, its performance improved QoQ. Revenues increased 6.3% QoQ to | 272.3 crore while EBITDA margin improved 491 bps QoQ to 25.0%, indicating a recovery in the economy. However, we believe the performance will improve in coming quarters led by opening up of the economy. In addition, billing has also...

We increase our earnings estimates for FY21E to factor rise in global crude oil prices given production cuts by OPEC countries and similarly for FY22/23 to factor in lower cost. Global crude oil and gas prices will likely remain weak given uncertain demand environment plus new supplies may come in Mar-21 when production cuts get reviewed; accordingly, we factor in USD45/55/bbl...

Adjusted EBITDA (excluding a one-off expense of INR3b on a pre Ind AS 116 basis) was up 15% QoQ (9% beat) due to strong cost rationalization, reducing SG&A; by 32% QoQ as subscriber churn significantly decelerated. VIL's liquidity, ability to invest on its network as well as protect its market share is constrained by the humongous net debt of INR1,171b and meager FY22E EBITDA of INR107b (pre Ind AS 116), thus dependent on a further fund raise. We change our rating from Under Review to Neutral....

SBI Life Insurance Company (SBIL) was established as a JV between State Bank of India and BNPPC, an insurance subsidiary of BNP Paribas. We recommend Buy with target price of Rs 1,011.

Prestige Estates Projects' (PEPL) net profit for 3QFY21 declined by 63.7% YoY to Rs587mn while EBITDA declined by 37.7% YoY. EBITDA margin at 24.2% decreased by 259bps YoY. Revenue declined by 31.1% YoY to Rs18,476mn. Decline in net profit was mainly due to the drop in EBITDA,...