Sell

Larsen & Toubro Infotech (LTI) disappointed with a weak set of Q4FY22 earnings on various fronts. Revenues were way below our estimate at US$570mn (+3.6% QoQ CC vs Isec. est. of +5.3% QoQ CC).

However, EBITDA margin declined by 332bps YoY to 21.1% on account of higher raw material prices and other expenses. The company has taken a price hike of 8% in December January period to offset the impact of rising input price and expect the margins to stabilize in the range of 20% to 21%. The current capacity utilisation is at 80% and the company is...

Cummins India (KKC) reported strong revenue at INR17.4b in 3QFY22 (twoyear CAGR: +9%), 15% ahead of our expectation, led by a strong beat across the domestic segment. The gross margin contracted 240bp YoY. The EBITDA margin also expanded 60bp QoQ, while it declined 140bp YoY to 15.6% (v/s the estimate of 15.2%). Other income came in at INR866m v/s our...

to capacity constraints and focus on nearby markets. Strong prices in the region has attracted meaningful surge in volumes from other regions. Increased supplies due to inflow from other regions and upcoming new capacities would keep margins under check. We cut our EBITDA estimates for FY23e/FY24e by 10.6%/10.4% on account of lower margins. Given the tepid outlook on earnings growth due to capacity constraints and contraction in...

EBITDA margin declined by 346bps YoY to 7% due to higher commodity prices and an increase in other expenses. The company expects margin pressure is likely to sustain as recent FGD orders were booked after 9 months delay and difficulty in price hike due to high competition in chemical business. The current premium valuation and headwinds on margins, implying limited room for further upside in the near term. Therefore, we revise our rating to SELL from Accumulate and value TMX at a P/E of 35x on FY24E EPS with a TP of Rs1,700....

Company's standalone revenue for Q3FY22 grew 34.5% YoY to Rs. 197,172cr (+16.1% QoQ). Revenue from sale of Petroleum Products rose 34.3% YoY to Rs. 188,339cr (+16.4% QoQ), Revenue from sale of Petrochemicals also increased 26.6% YoY to Rs. 6,983cr (-4.5% QoQ). Domestic sales volume declined 1.9% YoY to 21.021mmt (+11.0% QoQ), while export sales decreased by 2.4% YoY to 1.57mmt (+26.3% QoQ). Average Gross Refining Margin (GRM) for 9MFY22 was US$ 8.52/bbl compared to US$ 2.96/bbl in 9MFY21. However, normalized Average GRMs stood at US$ 5.4/bbl after adjusting for inventory loss/gain impact....

PAT declined by 3% QoQ, but rose 4% YoY to INR891m (12% miss) in 3QFY22. NII fell 3% QoQ, but rose 12% YoY to INR1.58b (8% miss). Other income grew 28% QoQ and 15% YoY due to healthy sequential growth in assignment income (up 37% QoQ and 12% YoY). Opex (in line) rose 5% QoQ and 37% YoY, led by investments in distribution and normalization of other expenses like advertising and travel. AAVAS added only one branch in Odisha in 3QFY22. Sharp reduction in 1+dpd to 6.45% (down ~240bp QoQ, but broadly flat on...

Q3 revenue growth modest at 4% YoY (+2% QoQ) despite strong US and India formulation business, as API revenue declined 25%