Broker Research reports: Sell reports for all reports

Federal Bank: Federal Bank's (FB) Q4FY22 earnings missed our estimates, largely on account of accelerated absorption of family pension expenses, but these were partly offset by multi-quarter low credit costs (20bps). Margin moderated on the back of income reversal from slippages in the agri portfolio. Overall asset quality continued to impress, with negative net slippages and a 20bps sequential decline in the restructured book (2.4%). The bank's industry-leading FinTech ecosystem partnerships continue to drive new customer acquisitions and these are expected to contribute materially on both sides of the balance sheet, resulting in better business productivity. We tweak our FY23E/FY24E earnings marginally to factor in near-term margin outcomes and higher opex from continued investments; we maintain BUY, with a revised target price of INR126 (1.2x Mar-24 ABVPS). DCB Bank: DCB Bank's (DCBB) Q4FY22 earnings beat estimates due to lower credit costs (1% annualised), better loan growth (+12% YoY) and margin reflation. Gross slippages continued to remain elevated (~5.5%), mainly stemming from the gold portfolio, largely offset by higher recovery/upgrades, resulting in a GNPA of 4.3%. Stress pool continues to remain sticky (NNPA + restructured book at 8.4% of loans) but the management expects improving collection efficiency to reflect in better asset quality on the back of a granular and secured portfolio (~95%). With asset quality still stubborn and loan growth looking soft, we see limited room for any positive surprise from operating efficiency, thus keeping return ratios in check. We trim our FY23/FY24 earnings estimates marginally and maintain ADD with a revised target price of INR132...

The stock has corrected since our previous SELL rating and, thus, we now upgrade our rating to REDUCE from SELL, with a SoTP TP of INR231. During Q4FY22, Tata Power completed the merger of Mundra into its standalone business and also secured the extension of mining lease in KPC for 10 years. Its consolidated revenue increased 18% YoY to INR119.6bn, led by strong execution in the solar EPC segment and incremental revenue across the renewable business (due to addition of 707MW capacity). EBITDA too went up by 29% YoY, led by strong performance across its regulated business and renewable utilities, partially offset by underperformance across the solar EPC business due to increased module prices. Margin, however, improved by ~135 bps YoY to 15.6%. Losses at Mundra widened to INR4.8bn in Q4FY22 vs a loss of INR2.8bn YoY, as it operated at low PAF of 27% vs 79% YoY. CGPL is in advanced discussion stage with GUVNL to enter into supplementary PPA. Profit in the Indonesian coal business was impacted due to export restriction in Jan-22 and heavy rains in Mar-22, both of which affected its operation. However, better regulated business performance and higher earnings across renewable segment caused PAT to rise 28% YoY to INR5.0bn. 4GW capacity expansion across its cell and module manufacturing facilities are expected to take place by FY24 end. The recent renewable deal will provide the equity Capex for renewables; however, its valuation stands below our expectation.

ABB India: ABB's revenue/APAT came in at INR 19.7/1.5bn (-0.1/24% beat), led by increased traction in exports and services and robust execution across segments. Whilst commodity prices impacted negatively, price increase of 18-20% helped neutralise this impact, with gains in margins. ABB maintained its 10% PBT margin guidance and, in the medium term, it aims to move to 10% PAT margin. ABB has set up a smart factory building in Nashik to supply power distribution products globally to over 120 countries and across sectors in India. On similar lines, it will add capacity and automate other manufacturing plants on the back of continued healthy cash position of INR 27.1bn and increasing global sourcing mandate. In line with its strategy to reduce dependence on large orders, it saw an uptick in small ticket orders. The current order book (OB) stands at a robust INR 52.3bn. The turbocharger business was divested in Q1CY22, with a net gain of INR 2.9bn. We believe the punchy valuation would limit further upside on cyclical recovery, and thus maintain REDUCE with revised a TP of INR 2,035/sh (45x Mar-24 EPS). TVS Motors: TVS' Q4 PAT, at INR2.7bn, was in line with our estimate. TVS was able to keep margins stable YoY due to: (1) an improved product mix, with premium products rising across segments; (2) higher exports; (3) cost-cutting initiatives. Over FY17-22, TVS has outperformed the industry in most segments it is present in: (1) it gained 660bps market share in scooters over FY17-22; (2) it gained 700bps share in the 150-250cc...

ABB India: ABB's revenue/APAT came in at INR 19.7/1.5bn (-0.1/24% beat), led by increased traction in exports and services and robust execution across segments. Whilst commodity prices impacted negatively, price increase of 18-20% helped neutralise this impact, with gains in margins. ABB maintained its 10% PBT margin guidance and, in the medium term, it aims to move to 10% PAT margin. ABB has set up a smart factory building in Nashik to supply power distribution products globally to over 120 countries and across sectors in India. On similar lines, it will add capacity and automate other manufacturing plants on the back of continued healthy cash position of INR 27.1bn and increasing global sourcing mandate. In line with its strategy to reduce dependence on large orders, it saw an uptick in small ticket orders. The current order book (OB) stands at a robust INR 52.3bn. The turbocharger business was divested in Q1CY22, with a net gain of INR 2.9bn. We believe the punchy valuation would limit further upside on cyclical recovery, and thus maintain REDUCE with revised a TP of INR 2,035/sh (45x Mar-24 EPS). TVS Motors: TVS' Q4 PAT, at INR2.7bn, was in line with our estimate. TVS was able to keep margins stable YoY due to: (1) an improved product mix, with premium products rising across segments; (2) higher exports; (3) cost-cutting initiatives. Over FY17-22, TVS has outperformed the industry in most segments it is present in: (1) it gained 660bps market share in scooters over FY17-22; (2) it gained 700bps share in the 150-250cc...

Hero Motocorp: HMC's Q4 earnings were broadly in line with our estimate, at INR6.3bn, as higher-than-expected other income offset the slight miss in EBITDA margin. Management expects the 2W industry to post double-digit growth in FY23 on the back of favourable indicators that include marriage season demand, good festive demand in key regions in April, and positive rural sentiment on the back of healthy crop output. We expect HMC to gradually recover its lost market share in motorcycles over the next 2-3 years, led by: (1) gradual economic recovery driving consumption from the mid-to-low income consumers a key segment for HMC and (2) revival in rural economy. In the premium segment, HMC targets to double its market share to 10% in the coming years, planning at least one launch a year for the next 3-4 years. Even in exports, it seems to have got its act right, having grown by 57% YoY in FY22, albeit on a low base; it targets to ramp up export contribution to 15% of total sales in the next four years. Market share revival in domestic motorcycles and ramp-up in exports are likely to be the key upside triggers for the stock. At 12.4x FY24 PER, the valuation is attractive. We maintain BUY, with a TP of INR2,825/sh. KEC International: KEC reported a muted quarter, with revenue at INR 42.8bn, driven by non-T&D segments. EBITDA margin, at 5.9%, was affected, mainly by rising raw material prices, higher logistic cost, geopolitical situations, supply chain issues and losses in SAE. With the highest...

CDSL: CDSL posted a weak quarter, with revenue down 9.9% QoQ (vs. CQGR of ~11% in the last eight quarters), and both revenue and margin coming below our estimates. The transaction (flat QoQ) and annual issuer charges (+1.7% QoQ) revenue were in line, but the miss was mainly due to the sharp drop in IPO/corporate action revenue (-66% QoQ). CDSL's growth rate is expected to moderate to the pre-pandemic level of 16% CAGR, following two years of solid growth (>50% YoY). The company derives ~68% of revenue from market-linked activity, which clocked ~70% YoY growth in the last two years; we expect it to come down to ~15% level. CDSL continued to add BO accounts at a healthy rate (+88.4% YoY) and gain market share (~70%). We expect steady annuity revenue from annual issuer charges, strong growth in BO accounts and IPO revenue led by LIC IPO, and growth in KYC revenue with start of Aadhaar based KYC. We, however, cut our revenue/EPS estimates by ~5/6% for FY24E and reduce the core P/E multiple to 40x (vs 45x earlier) to factor in the revenue miss and moderation in market activity. We value CDSL on SoTP basis and arrive at a target price of INR 1,500 (40x FY24E core PAT + net cash). Symphony: Symphony's domestic business saw revival as early summer helped clear out the high channel inventory, while margin saw a miss. Domestic revenue was at INR 1,700mn, -2/+41% YoY/QoQ, up 12% on a three-year CAGR. We were already expecting that summer benefits will be...

JSW Energy’s (JSWEL) Q4FY22 reported consolidated revenues / EBITDA / PAT were Rs24.4bn / 11.3bn / 8.6bn (+55% / +79% / +711% YoY) respectively. However, there was a one-time gain of Rs5.2bn / Rs4.9bn at EBITDA / PAT levels respectively due to the tariff true-up order for Karcham Wangtoo HEP for the period FY15-FY22

Tanla Platforms: Tanla reported a muted quarter, with both revenue and margin coming slightly below our estimate. Revenue was down 3.6% QoQ due to softness in the enterprise business (-4.2% QoQ), offset by better platform performance (+4.4/48.7% QoQ/YoY). The platform business (currently Trubloq) will continue to deliver strong growth, with the launch of Wisely platform. The two notable deals on the Wisely platform (Vodafone Idea and Truecaller business messaging partnership) provide revenue visibility. The gross margin profile of the company will improve, with increasing contribution from the higher margin product business. The enterprise business, which was hit by seasonality and softness in top accounts, will recover, led by addition of new customers. We expect the enterprise business to clock 15% volume growth and the GM will be in the 20-21% range, led by higher investments and increasing competition. The platform business will clock 35% revenue CAGR with 90% GM. We maintain our EPS estimate and assign a BUY rating with a TP of INR 1,900, based on 35x FY24E EPS, supported by growth (~20%) and RoE of >45%. IndusInd Bank: IndusInd Bank (IIB) reported a 5% miss on earnings estimates due to a higher-than-expected credit cost and soft loan growth. Gross slippages, although sequentially lower, clocked in at ~4%, mainly from the CBG portfolio, while MFI saw healthy collection efficiency at 99% in Mar-22. Credit costs inched up as IIB witnessed slippages from the restructured book and chose to maintain its contingency buffer at 1.4% of loans. During the quarter, IIB reported strong disbursements across most...