Bata India Ltd. share price forecast

Endurance Technologies: Endurance's Q1 PAT at INR 1.6 bn was ahead of our estimate of INR 1.4bn, led by a better-than-expected performance in Europe even as the standalone performance was in line with estimates. While Endurance standalone outperformed the domestic auto industry, its Europe business underperformed the Europe auto industry for the second consecutive quarter. Going ahead, domestic 2W OEMs continue to see weak demand in both domestic and export markets and are likely to remain a key concern for Endurance. Further, while supply chain challenges seem to have eased out globally, the demand outlook remains weak in Europe, given the record-high inflation and rising interest rates in the region. On the back of a gradual decline in input costs and a reduction in energy costs in Europe, we factor in consolidated margin improvement to 14% by FY25E (from 11.8% in FY23). While we have factored in most of the key positives, the valuation at 28.8x FY25E earnings appears expensive. Reiterate REDUCE with a revised target of INR 1,467 (earlier INR 1,426), as we roll forward to June-25 EPS (unchanged target multiple of 25x). Bata India: Revenue grew 1.6% YoY (four-year CAGR: 2.1% INR9.58bn vs HSIE: INR10.56bn). Revenue growth remains subdued despite (1) the early launch of the end-of-season sale (EOSS), (2) an 11% YoY increase in the number of retail points, and (3) Floatz (Sneaker brand) registering good traction. This implies that core product sales are declining. We expect SSSG to be meaningfully in the negative. GM/EBIDTAM contracted 186/95bps YoY to 54.7/25% (HSIE: 55.5/25%). We...

Recommendation With a 8% upside potential from the CMP, we downgrade the stock to HOLD

BATA’s revenue performance has been decent on SSSG front (-9% our estimate vs -12% for Metro) while retail expansion (at 11%) continues to be modest. Revenue growth at 2% YoY is un-exciting. Improvement in ASP (3%YoY) instills confidence in the execution of casualisation and premiumisation initiatives.

Recommendation With a 12% upside potential from the CMP, we maintain our BUY rating on the stock.

IRB Infra: IRB reported revenue/EBITDA/APAT of INR 16.2/7.6/1.3bn, beating our estimates on all fronts. EBITDA margin came in at 46.8% vs. our estimate of 47.4%. The OB, as of Mar'23, stood at INR 205.7bn (~3.4x FY23 revenue), with EPC contributing 43% (INR 88bn) and O&M contributing 57% (INR 117.7bn). The company bagged two projects in FY23. The consolidated gross/net debt reduced to INR 125.8/100.7bn as of Mar'23 vs. INR 134.9/111.3bn as of Mar'22, with a net D/E of 0.75x. It expects to infuse equity of INR 25bn (including INR 15bn for Hyderabad ORR) in FY24 and another INR 2.5bn in FY25. It guided for order inflow (OI) of INR 100bn for FY24 and a construction revenue of INR 50bn, with margins at 23-25%. We maintain our ADD rating on the stock with an increased SOTP-based target price of INR 32/sh. Clean Science and Technology: We maintain SELL on Clean Science and Technology (CSTL) with a price target of INR 1,290 (WACC 11%, terminal growth 6%). The stock is currently trading at 37x FY25E EPS. We believe EBITDA and PAT will grow by 26/23% over FY22-25, owing to (1) expansion in capacities of existing products and (2) foray into acetone-based products (Hindered Amine Light StabilisersHALSseries). However, the RoE is expected to decline from 34.9% in FY22 to 29.2% in FY25, owing to a reduction in margin. Q4 EBITDA/APAT were 20/21% below our estimates, mainly owing to a 21% fall in revenue. Dilip Buildcon: Dilip Buildcon (DBL) reported Q4FY23 revenue/EBITDA/PAT of INR 28.6/2.7/0.4bn, beating/(missing) our estimates by 4.4/(13)/(39)%....

Revenue growth of 3.5% on 4-year CAGR basis appears weak vs peers. However, this needs to be seen in the context of rationalisation in COCO store footprint (net closure of ~100 COCO stores between March’20 and March’23). Overall retail expansion at ~6-7% 4Y CAGR is modest.

Radico Khaitan: Radico delivered a miss on both revenue and EBITDA despite a beat in P&A revenue. Net sales were up by 5% YoY (HSIE 13%), with flat IMFL volume (three-year CAGR at 3%). P&A value/volume growth was at 19/14% YoY adjusting for royalty brands, volume growth was ~30%. Regular portfolio value/volume was down by 19/22%. GM was flat QoQ but contracted by >400bps YoY to 41.3% (in-line). EBITDA margin was down by 350bps YoY to 12.2% (HSIE 12.8%). EBITDA contracted by 19% YoY (HSIE -8%)a fifth quarter of weak performance. GM has seen ~1,000bps contraction vs. Q3FY21 we model recovery led by price hikes, benefits from backward integration and better product mix. EBITDA margin has come down >500bps from FY21 to 12% in 9MFY23. With investments in backend capabilities, we model recovery in EBITDA margin to 15.5/16.5% in FY24/25 (cautious for downside risk). We remain positive about Radico's constant product innovation and success in the luxury portfolio. However, with the overall slowdown in consumption, the demand for the mid-price segment will remain muted. Capex execution and margin recovery remain key monitorable for the stock. On account of consistent miss in margin and weak show for the regular portfolio, we cut our EPS by ~7% for FY23/FY24/FY25. We value Radico at 28x P/E on Dec-24 EPS to arrive at a TP of INR 900. Maintain REDUCE. PNC Infratech: PNC Infratech (PNC) reported Q3FY23 revenue/EBITDA/APAT at INR 16.3/2.1/1.3bn, missing our estimates on all fronts by 5/7.9/10.1%. PNC expects ~90-95% of JJM water projects to be executed by...

Recommendation With a 12% upside potential from the CMP, we maintain our BUY rating on the stock.

Bata reported a revenue print of Rs9bn (+7% YoY; below our estimates). Revenue growth of 2.8% on 3-year CAGR basis also appears weak. However, this needs to be seen in the context of rationalisation in COCO store footprint (net closure of ~120 COCO stores between March’20 and March’22).

Mahanagar Gas: Our ADD recommendation on Mahanagar Gas (MGL) with a target price of INR 950 is premised on (1) lower volume growth compared to peers and (2) uncertain long-term volume growth visibility since no new geographical areas (GA) won in the 9/10/11th round of CGD bids. Q2FY23 EBITDA, at INR 2.5bn, and APAT, at INR 1.6bn, came in below our estimates, owing to the marginally lower-than-expected volume and higher gas cost. KNR Constructions: KNR posted a strong quarter; revenue/EBITDA/APAT of INR 8.2/1.6/0.8bn beat our estimates by 5/9/0%. FY23 revenue guidance was unchanged at INR 35bn (with a buffer of +-5%), with EBITDA margin pegged at 18-19%. At the standalone level, the gross/net debt stood at INR2/1.3bn as of Sep'22, with net D/E at 0.05x, vs. INR 1.3/0.8bn and net D/E of 0.03x, as of Jun'22. The balance HAM equity requirement is INR 5.6bn as of Sep'22 with INR 3/1.6/1.1bn to be invested in H2FY23/FY24/FY25. KNR incurred a Capex of INR 750mn in H1 vs. FY23 guidance of INR 1-1.2bn. The NWC days stood at 54 as of Sep'22 (vs. 60 as of Jun'22). The irrigation receivables as of Sep'22 stood at INR 9bn vs. INR8.5bn as of Jun'22. We maintain a BUY with an increased TP of INR 367/sh (18x Sep-24E EPS, HAM 1x P/BV). PNC Infratech: PNC Infratech (PNC) reported Q2FY23 revenue/EBITDA/APAT at INR 15.6/2.1/1.3bn, missing our estimates on all fronts by 5.5/6.9/4.4%. PNC was impacted by delays in JJM water projects' DPR approvals on INR 80bn OB. About INR 23/40/17bn of DPR approvals...