Equity Research

April 12, 2023

ICICI Securities Limited
is the author and India Update
distributor of this report
Contents
Page 2 Oil & Gas: Government notifies new gas pricing regime – mostly positive,
Market data as on Apr 11, 2023 but lack of clarity on free pricing a surprise
INDICES
% chg
Page 3 Metals & mining Preview: Margins revive
(DoD) Page 5 Capital Goods Preview: Execution to remain upbeat on robust order backlog
BSE Sensex 60158 0.5
S&P CNX Nifty 17722 0.6 Page 7 Specialty Chemicals Preview: Excl Chemplast, EBITDA growth is 15% for
BSE 100 17949 0.5 chemical cos
BSE 200 7539 0.5
Page 10 Logistics Preview: Expect only limited respite
OVERSEAS MARKETS# Page 12 Building material Preview: Pipe & ceramic companies’ margins to improve QoQ
% chg
(DoD) Page 15 Diversified Financials: FY23 a record year for equity and commodity
Dow Jones 33684 0.3
Nasdaq Comp. 12031 (0.4)
options; STT hike impact remains to be seen
S&P 500 4109 0.0 Page 16 Recent reports/updates
Hang Seng 20328 (0.8)
Nikkei 28049 0.5
Highlights
ADVANCES/DECLINES (BSE)
Group A B S Sector/event Impact
Advances 436 721 1029
Declines 265 442 654 OIL & GAS: The government has, post a short delay, notified the new gas pricing norms
Unchanged 3 14 95 Sector on the 7th of April (link here) which is broadly in line with the Kirit Parikh
update committee (KPC) recommendations issued a few months ago. One key
FII TURNOVER (BSE+NSE)*
(Rs mn) change that has been made is the decision to keep the same ceiling price of
Bought Sold Net US$6.5/mmbtu for both FY24 & FY25 vs the KPC recommendations to raise
69,310 65,890 3,420
the price by US$0.5/mmbtu annually (the norms allow for a small change of
CURRENCY US$0.25/mmbtu annually, but only FY26 onwards). Additionally, unlike the
US$1 = Rs82.09
recommendations of the KPC to move to free market pricing of all domestic
*FII turnover (BSE + NSE) as on production by FY27, the declared norms do not have any mention of the same
Apr 10, 2023 which is a negative surprise. Subsequent to the notification, the City Gas
Distribution (CGD) companies have been quick to react, reducing prices of
CNG/domestic PNG prices to pass on the benefit (exhibit 5). As for the rest of
coverage, we see a benefit of Rs4-5bn for LPG segment costs for GAIL, while
for ONGC/OIL FY25E EPS estimates see a marginal downgrade (see exhibit
1). Overall, the measures are structurally positive for the gas sector and
should spur demand while keeping gas prices in check.

Snippets
ECONOMY
 The IMF has lowered its growth forecasts for India for the current fiscal year and the next by
20bps and 50bps, to 5.9% and 6.3%, respectively. This was broadly in line with the cuts in its
global growth forecasts for 2023 and 2024 by 10bps each to 2.8% and 3%, but indicated that
India may not be weathering the global turmoil as exceptionally as it was expected to. Of
course, India will still be the fastest growing major economy during the forecast period.
(Financial Express)

Market movement (BSE+NSE) Volumes in Rs mn (BSE and NSE) Advances & Declines ratio (BSE)
BSE NSE (RHS) NSE BSE (RHS) 4.0
60500 17800 600000 45000
60000 3.5
17600 550000
59500 40000
3.0
17400
59000 500000 2.5
17200 35000
58500
450000 2.0
58000 17000 30000 1.5
57500 400000
16800 1.0
57000 25000
56500 16600 350000 0.5
56000 16400 300000 20000 0.0
22-3 24-3 26-3 28-3 30-3 1-4 3-4 5-4 7-4 9-4 11-4 22-3 24-3 26-3 28-3 30-3 1-4 3-4 5-4 7-4 9-4 11-4 22-3 24-3 26-3 28-3 30-3 1-4 3-4 5-4 7-4 9-4 11-4

ICICI Securities Limited, ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400 025, India.
Phone: +91 22 2288 2460/70 Fax: +91 22 2298 2448
ICICI Securities Inc, 275 Madison Avenue - Suite 1417, 7th Floor, New York, NY 10017
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Equity Research INDIA
April 11, 2023
BSE Sensex: 59847 Oil & Gas
ICICI Securities Limited
is the author and Government notifies new gas pricing regime – mostly
distributor of this report
positive, but lack of clarity on free pricing a surprise
Sector update The government has, post a short delay, notified the new gas pricing norms on the
7th of April (link here) which is broadly in line with the Kirit Parikh committee (KPC)
Oil & Gas and recommendations issued a few months ago. One key change that has been made is
the decision to keep the same ceiling price of US$6.5/mmbtu for both FY24 & FY25
Petrochemicals vs the KPC recommendations to raise the price by US$0.5/mmbtu annually (the
norms allow for a small change of US$0.25/mmbtu annually, but only FY26
IGL (BUY) TP revised to onwards). Additionally, unlike the recommendations of the KPC to move to free
Rs545 from Rs535 market pricing of all domestic production by FY27, the declared norms do not have
any mention of the same which is a negative surprise. Subsequent to the
MGL (BUY) TP revised to notification, the City Gas Distribution (CGD) companies have been quick to react,
Rs1,160 from Rs1,125 reducing prices of CNG/domestic PNG prices to pass on the benefit (exhibit 5). As
for the rest of coverage, we see a benefit of Rs4-5bn for LPG segment costs for
Gujarat Gas (ADD)
GAIL, while for ONGC/OIL FY25E EPS estimates see a marginal downgrade (see
TP revised to Rs525 from
exhibit 1). Overall, the measures are structurally positive for the gas sector and
Rs535
should spur demand while keeping gas prices in check.
PLNG (HOLD)  Multiple positive implications of the move: The proposals aim to achieve multiple
TP of Rs230 things: i) offset the impact of stronger crude and LNG price environment in the
current geopolitical scenario, ii) create a stable, visible gas cost environment, over
GAIL (BUY) TP of Rs132 the next 2-3 years, iii) additional incentive of 20% for new wells or wells intervention
is a positive for exploration/development capex of ONGC and OIL and iv) the lower
GSPL (BUY) TP revised to costs which have been passed on expeditiously by the CGDs help widen the price
Rs383 from Rs390 differential with petrol and diesel prices, which should spur demand over FY24-26E.
OIL India (BUY)  Improving gas supply environment provide further succor to prices: While the
TP revised to Rs315 from prospects for meaningful growth in LNG supplies in the next 12 months remain
Rs265 weak, stronger pricing and structural changes in trade flows are driving a new wave
of proposed capacity additions, specifically in the USA by CY26-27E. New estimates
ONGC (BUY) TP of Rs187 from Bloomberg indicate a massive ~200mt of new export capacity globally (50%
increase vs CY22) by CY27, which is a material positive for supply scenario.
However, we note the price at which these volumes will be available is a key
monitorable. Additionally, the ~20mmscmd of new domestic gas supplies from
RIL/ONGC is a positive from a near-term perspective. All of these factors make us
optimistic on the gas price environment over the next 3-5 years.
 Minor changes to estimates, no changes in ratings: While the pass through of
the cost benefits for FY24E was largely expected, the softer than expected spot LNG
prices provide additional relief on margins. The lower prices prevailing for FY25E
also drives a minor upgrade in volume growth estimates for FY25E, driving EPS
changes for all 3 CGDs. ONGC and OIL however see an 2.0/1.2% reduction in
FY25E EPS owing to US$0.5/mmbtu reduction in nomination field gas realisations.
BUY recommendation stays on IGL/GAIL/MGL/ONGC/OIL while GGL stays at ADD.
Research Analysts:  Key upside risks: i) Higher-than-expected decline in LNG prices, ii) resumption of
Probal Sen price increase in petrol and diesel, iii) stronger regulatory push for gas conversion.
probal.sen@icicisecurities.com
+91 22 6807 7274  Key downside risks: i) Further disruption in Russian gas supplies to Europe, ii)
Hardik Solanki faster recovery of Chinese demand for oil and gas, iii) sudden reversal of weather
solanki.hardik@icicisecurities.com
+91 22 6807 7386
patterns in Europe and/or a more aggressive inventory buildup for CY24E.

Please refer to important disclosures at the end of this report

 Equity Research INDIA
April 11, 2023
Metals & mining
ICICI Securities Limited
is the author and Margins revive
distributor of this report
Q4FY23 is likely to see margin improvement led by higher prices and lower/flat coal
costs: 1) Ferrous EBITDA (especially for flats) is likely to benefit from higher
Q4FY23 result preview realisation and stable coking coal cost; 2) Volume growth likely to remain subdued
as demand picked up only post Feb-23; 3) Non-ferrous players to benefit from
higher LME prices and lower thermal coal cost; and 4) Debt reduction in store for
ferrous players mainly due to working capital unlocking.
Metals & mining Going ahead, we expect profitability to improve for ferrous players- especially flats-
owing to higher domestic/export prices and lower coking coal cost. That said, we
Jindal Steel (BUY) see the stock performance constrained until macro risks persist. Our top picks in
the space are: JSPL (TP: Rs750; BUY), Jindal Stainless (TP: Rs300; BUY) and
Jindal Stainless (BUY) Shyam Metallics (TP: Rs570; BUY).
SMEL (BUY)  Margin likely to improve further: After recovering in Q2FY23 (from the recent lows
in Q1FY23), we expect EBITDA margin of all the players to improve further QoQ on
APL Apollo (BUY)
higher realisation and lower to flat coal cost. Key points: 1) India EBITDA of ferrous
Hindalco (ADD) players likely to improve QoQ by Rs1,500-2,000/te with higher realisation Rs1,00-
2,000/te and lower coking coal cost up to USD10/te; 2) Steel players with relatively
NMDC (ADD)
higher reliance on exports are likely to benefit from the better realisation in Europe; 3)
Tata Steel (ADD) Ongoing truckers strike in Odisha has impacted supply chain of companies such as
JSPL resulting in an impact on volumes; 4) Sales volume also likely to get impacted
NALCO (HOLD)
by tepid demand particularly in Jan/Feb; 5) EBTIDA/te of Al players likely to improve
SAIL (REDUCE) on higher realisation and up to 5% lower coal cost; and 6) Debt reduction for almost
all the players likely owing to working capital unlocking especially Hindalco.
JSW Steel (SELL)
 3 stocks in focus: We see three stocks relatively better placed compared to their
larger players within their operating segments: 1) Shyam Metalics is likely to report 2x
EBITDA growth QoQ largely on the back of record rolled products sales, revival in
pellet prices and 1.2mtpa pellet capacity commissioned in Jan-23; 2) Jindal Stainless
is likely to report EBITDA/te in excess of Rs20,500 with sales volume (together with
JSHL) reaching 481kt on higher custom rolling at JUSL; and 3) NALCO is expected to
report better performance largely due to higher LME Al and Alumina prices and lower
thermal coal cost. On flip side, TSE is expected to incur loss of USD100/te as coking
coal cost reduction QoQ is likely to remain insufficient to overcome the drop in
realisation. Also, Q4FY23 sales volume of 2.13mnte (down 9.7% YoY; up 7% QoQ) is
relatively muted.
 Outlook- Ferrous better placed: Ferrous players look better placed considering the
improving spot spreads and better traction in domestic market. While the demand
recovery in China has underwhelmed thus far, we still remain optimistic considering
the favourable credit metrics. That said, we see the macro uncertainties and an
adverse environment as the key stock overhang. We would keep a close watch on
domestic demand and management commentary. We maintain JSPL (TP: Rs750;
BUY), Jindal Stainless (TP: Rs300; BUY) and Shyam Metallics (TP: Rs570; BUY) as
our key picks in the space.
Company Sales EBITDA PAT
% chg % chg % chg
(Rs mn) Q4FY23E (YoY) (QoQ) Q4FY23E (YoY) (QoQ) Q4FY23E (YoY) (QoQ)
JSW Steel 4,51,479 28.5 9.7 60,814 (83.2) (59.3) 18,154 (111.8) (201.2)
Research Analyst: Tata Steel 6,00,240 (0.8) (5.6) 52,643 (63.2) (59.5) 7,389 (87.3) (80.5)
Amit Dixit JSPL 1,27,766 (0.7) 3.6 24,914 (58.0) (43.8) 9,668 (56.7) (42.1)
amit.dixit@icicisecurities.com SAIL 2,94,243 (2.2) 9.2 32,680 (89.6) (68.2) 11,289 (109.0) (149.7)
+91 22 6807 7289 SMEL 33,438 23.7 (4.3) 4,304 (61.0) (59.8) 1,924 (72.4) (72.5)
Hindalco 5,79,118 17.9 (3.2) 46,358 (30.0) (36.4) 16,843 (35.5) (46.5)
Mohit Lohia NALCO 35,560 (2.9) (7.8) 5,406 (70.3) (61.5) 3,297 (77.2) (70.6)
mohit.lohia@icicisecurities.com Jindal Stainless 92,899 13.0 2.0 9,813 (42.1) (21.4) 6,793 (47.8) (34.0)
+91 22 6807 7510 APL Apollo 43,090 29.2 15.3 2,868 4.4 19.6 1,786 2.8 24.5
Pritish Urumkar NMDC 57,079 (51.0) (30.2) 21,103 (72.6) (55.0) 16,352 (62.0) (39.5)
pritish.urumkar@icicisecurities.com Source: I-Sec research
+91 22 6807 7314
Please refer to important disclosures at the end of this report
Metals & Mining, April 11, 2023 ICICI Securities
Table 1: Q4FY23 estimates – a snapshot
% growth % growth
(Rs.mn) Comments
Q4FY23E Q4FY22 Q3FY23 (YoY) (QoQ)
JSW Steel Revenues 4,51,479 4,68,950 3,91,340 (3.7) 15.4 Expect volume uptick on the back of higher
(consolidated) exports though domestic demand remained
EBITDA 60,814 91,840 45,470 (33.8) 33.7 tepid. Expect coking coal cost to stay flat
PAT 18,154 32,340 4,900 (43.9) 270.5 and realisation uptick of Rs2,500/te on an
EPS 7.5 13.4 2.0 (43.9) 270.5 average. Overseas subsidiaries'
performance expected to stay stable. BPSL
and Coated products performance is likely
to improve
Tata Steel Revenues 6,00,240 6,93,235 5,70,836 (13.4) 5.2 Expect TSE to incur loss of USD98/te due
(consolidated) to negative price-cost effect. Domestic
EBITDA 52,643 1,50,296 40,478 (65.0) 30.1 EBITDA/te likely to improve by Rs1,500
PAT 7,389 97,562 (22,238) (92.4) NM mainly due to higher realisation. Expect
EPS 0.6 8.5 (1.9) (92.4) NM loss at TSLP to sustain, though at a lower
level.
Jindal Steel & Revenues 1,27,766 1,43,395 1,24,524 (10.9) 2.6 Sales volume growth likely to be
Power constrained by truckers strike in Odisha
(Consolidated) leading to supply chain bottlenecks in case
EBITDA 24,914 30,702 23,775 (18.9) 4.8 of iron ore. Expect overseas mining division
PAT 9,668 19,335 8,967 (50.0) 7.8 performance to be constrained by lower
EPS 8.7 17.5 8.1 (50.0) 7.8 coking coal prices.

SAIL Revenues 2,94,243 3,07,581 2,50,419 (4.3) 17.5 Performance likely to be driven by higher
EBITDA 32,680 43,313 20,768 (24.5) 57.4 sales volume. Expect realisation uptick of
PAT 11,289 38,500 4,635 (70.7) 143.6 Rs2,500/te and coking coal price up by
EPS 2.7 9.3 1.1 (70.7) 143.6 Rs500/te. Expect debt reduction of up to
Rs30bn mainly due to working capital
unlocking.
SMEL Revenues 33,438 28,568 29,217 17.0 14.4 Performance driven by higher pellet
EBITDA 4,304 6,631 2,223 (35.1) 93.6 volume/prices and the highest rolled
PAT 1,924 4,308 673 (55.3) 186.1 product sales volume. Low cost inventory of
EPS 7.5 16.9 2.6 (55.3) 186.1 iron ore and lower thermal coal cost are
likely to improve EBITDA margin. Expect
EBITA margin at 13%.
Hindalco Revenues 5,79,118 5,57,640 5,31,510 3.9 9.0 Expect Novelis EBITDA at US$425/te-
(Consolidated) EBITDA 46,358 73,050 35,480 (36.5) 30.7 USD100/te lower than the long term
PAT 16,843 38,510 13,620 (56.3) 23.7 guidance of US$525/te. Expect sales
EPS 7.6 17.3 6.1 (56.3) 23.7 volume to remain constrained at Novelis. At
India operations, expect Al EBITDA to grow
owing to lower thermal coal cost.
NMDC Revenues 57,079 67,022 37,200 (14.8) 53.4 Expect higher prices/volume to lead to
(Standalone) EBITDA margin back to 40%. In our view,
EBITDA 21,103 26,844 11,434 (21.4) 84.6 the lagged impact of IBM pricing is likely to
PAT 16,352 18,151 8,901 (9.9) 83.7 impact the cost.
EPS 5.2 5.7 2.8 (9.9) 83.7

Jindal Revenues 92,899 62,872 62,206 47.8 49.3 Expect EBITDA margin back at Rs20,500/te
Stainless* as the company continues its focus on
EBITDA 9,813 7,611 6,223 28.9 57.7 ramping up the sales volume. Combined
PAT 6,793 6,686 3,512 1.6 93.4 shipments (with JSHL) at 481kt led by
EPS 14.2 14.0 7.3 1.6 93.4 contribution from custom rolled volumes.

APL Apollo Revenues 43,090 40,804 42,011 5.6 2.6 Expect EBITDA to gain from record sales
EBITDA 2,868 2,661 2,729 7.8 5.1 volume and improving product mix.
PAT 1,786 1,766 1,692 1.1 5.6 However, raw material cost is likely to be
EPS 7.1 7.1 6.8 1.1 5.6 higher due to firm HRC prices.

NALCO Revenues 35,560 43,408 32,900 (18.1) 8.1 Expect benefit from higher
EBITDA 5,406 16,186 4,598 (66.6) 17.6 Aluminium/Alumina prices and lower
PAT 3,297 10,257 2,739 (67.9) 20.4 thermal coal cost. Expect EBITDA margins
EPS 1.8 5.5 1.5 (67.9) 20.4 at both Chemicals and Aluminium
segments to improve sequentially.
Source: Company data, I-Sec research (* prior period figures are not comparable)

2
Equity Research INDIA
April 12, 2023

ICICI Securities Limited

is the author and
Engineering and Capital Goods
distributor of this report
Execution to remain upbeat on robust order backlog
For our capital goods coverage universe, we expect revenue growth momentum to
continue in 4QFY23 for both EPC and product companies, led by robust order
Q4FY23 result preview backlog, improving supply chain and hence overall pick-up in execution. We expect
margin improvement would be restricted due to hardening of select commodity
Top picks prices especially steel. NWC is likely to be stable or may see some improvement
 L&T QoQ on the back of pickup in execution and lower inventory levels. Order intake for
our coverage universe is expected to be flat on account of large base in Q4FY22.
 Siemens Ex-L&T, order inflow is expected to grow 21% YoY. During the quarter, we saw
 Thermax pickup in the domestic transmission orders with PGCIL receiving 8 projects on
TBCB basis, Vande Bharat (200 train sets), hydrocarbon and thermal power plant
 BHEL awarding. We expect the momentum to continue going ahead, on the back of
 Techno Electric government thrust on infrastructure development, increase in private capex, and
continued demand in new-edge sectors – such as data centre, metro, hydrogen, EV,
digitalisation, energy efficiency, etc. We factor in revenue growth of 12% YoY (ex-
L&T: 15% YoY) in Q4FY23E for our coverage universe, given the steady execution
pace. We forecast EBITDA/PAT growth at 15%/12% YoY, respectively. Our top picks:
L&T, SIEM, BHEL, TMX, Techno Electric.
 Order inflow momentum continues: As per our channel checks, tender/enquiry
pipeline remains strong from majority of the end-markets. T&D tendering which has
been muted in the recent past, has picked up with PGCIL receiving 8 projects on TBCB
basis. We expect the momentum to sustain with government’s strong push for
increasing transmission capacity for 500GW by 2030. We expect L&T to over achieve
its 15% order inflow guidance for FY23, led by hydrocarbon, minerals & metals, power
T&D, water & effluent treatment etc. For Q4FY23, we expect L&T’s core OI to be
Rs500-550bn. KECI is expected to report order inflow of ~Rs56bn, led by power T&D,
civil and railways. BHEL, along with Titagarh Wagons, has been declared as L2 in
Vande Bharat tender, value at ~Rs600bn.
 Strong revenue growth on robust order backlog: With robust order backlog and
strong demand environment, we expect revenue growth of 12% YoY (ex-L&T: 15%
YoY). L&T to see consolidated revenue growth of ~11% YoY.
Table 1: Q4FY23 estimate summary
Revenue YoY EBITDA YoY PBT YoY PAT YoY
(Rs mn) (%) (Rs mn) (%) (Rs mn) (%) (Rs mn) (%)
L&T 5,85,974 10.9 72,049 10.5 61,209 10.1 42,551 17.5
BHEL 89,222 10.7 12,812 11.2 11,425 4.0 6,965 -23.4
ABB 22,420 13.9 2,307 22.8 2,428 22.6 1,816 21.0
Siemens 41,505 19.4 4,719 9.7 5,111 18.5 3,823 20.0
Engineers India 8,616 6.9 1,446 33.9 1,978 31.6 1,404 11.2
Cummins India 19,056 27.6 2,815 36.2 3,091 26.8 2,165 14.5

Thermax Ltd 23,327 17.1 1,747 29.2 1,731 31.8 1,324 29.3
Research Analysts: ISGEC 14,977 9.9 968 42.6 761 61.0 551 56.5
GE T&D 7,713 16.5 406 -125.5 248 -170.9 244 -123.2
Ashwani Sharma KEC International 50,844 18.9 2,837 12.7 955 -18.9 472 -57.9
sharma.ashwani@icicisecurities.com
Techno Electric & Engg 823 -73.2 236 -39.5 130 -57.6 28 -92.4
+91 22 6807 7340
AIA Engineering 12,244 12.0 2,459 8.8 2,478 1.7 1,968 1.4
Bharat Kumar Jain Va Tech Wabag 10,809 983 737 604
jain.bharat@icicisecurities.com
21.2 37.5 33.7 31.1
+91 22 6807 7397 Honeywell Automation 8,142 21.9 1,006 15.2 1,168 18.4 868 19.4
CUMI 12,174 40.0 1,872 68.8 1,383 59.6 933 59.7
GWN 6,681 19.5 1,370 10.8 1,321 10.2 980 8.6
Voltamp Transformer 3,220 -16.8 459 -31.2 573 -20.5 390 -24.7
Total 9,17,748 12.3 1,10,489 14.8 96,727 11.8 67,087 11.7
Total (excl L&T) 3,31,774 14.9 38,440 23.8 35,519 15.0 24,536 2.7
Source: I-Sec research

Please refer to important disclosures at the end of this report

 Engineering and Capital Goods, April 12, 2023 ICICI Securities
 Coverage universe margin to be flat on YoY basis: While supply chain related
issues have been broadly resolved, select commodity prices, specialty steel, has
reversed its downward trend after witnessing sharp fall in the recent past. We
expect flat EBITDA margin for our coverage universe during the quarter at 12%.
We expect L&T to report EBITDA margin of 12.3%, flat on YoY basis. Engineers
India is likely to report 340bps margin expansion on account of a potential pickup
in the consultancy business.

Chart 1: Margin pressure likely to continue due to elevated commodity prices (copper, steel, aluminium)
12,100 China HRC
LME Copper 1,100
1,000
10,100
900

8,100 800
700
6,100 600
(US$/te)

(US$/te)
500
4,100
400
2,100 300
200
100 100
Jan-20

Jan-21

Jan-22

Jan-23
Apr-20

Oct-20

Apr-21

Oct-21

Apr-22

Oct-22

Apr-23
Jul-20

Jul-21

Jul-22

Jan-20

Jan-21

Jan-22

Jan-23
Jul-20

Jul-21

Jul-22
Apr-20

Oct-20

Apr-21

Oct-21

Apr-22

Oct-22

Apr-23
4,100
LME AL
3,600

3,100

2,600

2,100
(US$/te)

1,600

1,100

600

100
Jan-21

Jan-23
Jan-20

Jan-22
Jul-21
Jul-20

Oct-20

Apr-21

Oct-21

Jul-22
Apr-20

Apr-22

Oct-22

Apr-23

Source: Bloomberg

2
Equity Research INDIA
April 11, 2023

ICICI Securities Limited

Specialty Chemicals
is the author and
distributor of this report Excl Chemplast, EBITDA growth is 15% for chemical cos
We estimate our specialty chemical coverage universe’s revenue to grow 3.3%
Q4FY23 result preview YoY in Q4FY23. EBITDA is expected to grow 5.3% YoY; however, excluding
Chemplast, we estimate growth to be 15% YoY: 1) SRF’s EBITDA to dip (-1.4%)
YoY on lower margin in non-chemicals, while chemicals business to continue its
good show; 2) Navin Fluorine (+98%) to benefit from rise in utilisation of HPP plant
and higher specialty / CRAMS revenue; 3) Gujarat Fluorochemicals’ (52% YoY)
 SRF (HOLD)
growth to be led by a strong show in new fluoropolymers and ref-gas, and 4)
 Navin Fluorine Clean Science (40% YoY) and EPL (+16% YoY) to benefit from lower input prices.
(REDUCE)
5) Tatva Chintan’s performance continues to be hurt by higher input cost, while
 Gujarat Fluorochem SDA sales to recover. 6) Galaxy Surfactants’ volumes to grow but on low base, but
(BUY) EBITDA/kg may dip. 7) Chemplast’s volumes to be stable; however, PVC spread is
 Archean Chemical likely to recover, but still below mid cycle levels. 8) PCBL’s volumes to grow on
(BUY) re-inventorisation and gross profit/kg to be stable. 9) Sudarshan to continue
 Tatva Chintan (BUY) facing volume pressure in pigment business on lower demand from plastics, but
 Clean Science (HOLD) margins to recover partly. 10) Rossari EBITDA to grow moderately even on a low
base. 11) Archean to see subdued demand in bromine volume; realisation to hold.
 Galaxy Surfactants
(ADD)  SRF’s chemical business EBIT to grow 27% YoY / 13.6% QoQ to Rs6.4bn. SRF’s
 Rossari Biotech (ADD) chemical business EBIT may gain from steady growth (YoY) in fluoro-specialty, and
 EPL (BUY) sustained high price in ref-gas (HFC). Technical textiles and packaging films’ EBIT is
likely to be lower YoY on dip in spreads; however, we anticipate some recovery QoQ.
 Chemplast Sanmar
(BUY) SRF’s revenue to grow 4.8% YoY / 7.2% QoQ to Rs37bn, EBITDA to decline 1.4%
YoY / up 12.1% QoQ to Rs9.3bn. Net profit to decline 9.7% YoY / up 7.1% QoQ to
 Sudarshan Chemical
Rs5.5bn.
(ADD)
 PCBL (BUY)  Navin Fluorine’s EBITDA to rise 98% YoY to Rs1.9bn. Revenue to grow 56% YoY
to Rs6.4bn. This would be aided by 84% YoY growth in HPP (which also includes ref-
gas and inorganic fluoride) to Rs2.8bn on commissioning of intermediate product for
Honeywell. Specialty chemicals revenue to grow 50% to Rs2.4bn on full quarter
benefit of MPP-2 and dedicated agro-chemical intermediate plant; and CRAMS
revenue to grow 40%. EBITDA margin may rise 160bps QoQ on operating leverage.
EBITDA / PAT may grow 98% / 52% YoY to Rs1.9bn / Rs1.1bn, respectively.
Quarterly summary
Revenue EBITDA PAT
% chg % chg % chg
JFM’23E JFM’23E JFM’23E
(Rs mn) (QoQ) (YoY) (QoQ) (YoY) (QoQ) (YoY)
SRF 37,202 6.6 0.4 9,346 12.1 (1.4) 5,471 7.1 (9.7)
Navin Fluorine 6,393 13.4 56.3 1,869 20.1 98.3 1,144 7.4 52.3
Gujarat Fluorochemicals 14,374 1.4 33.9 5,028 (3.9) 51.7 3,331 1.1 50.3
Clean Science 2,601 9.6 27.1 1,173 8.4 40.1 832 (0.7) 33.4
Tatva Chintan 1,322 9.6 34.2 202 12.9 (7.8) 119 2.8 (31.8)
Research Analysts: Galaxy Surfactants 9,901 (8.3) (6.0) 1,292 (16.1) (10.9) 804 (24.3) (18.2)
Rossari Biotech 3,980 2.2 (9.3) 558 3.1 6.8 272 5.8 12.8
Sanjesh Jain EPL 9,500 0.5 7.9 1,544 3.6 16.0 529 (15.8) 8.6
sanjesh.jain@icicisecurities.com
+91 22 6637 7153 Sudarshan Chemical 6,111 15.7 (2.6) 695 66.8 (19.3) 214 3,557.4 (52.2)
Chemplast Sanmar 12,178 2.5 (32.6) 1,516 94.0 (56.2) 703 159.1 (69.6)
Akash Kumar
akash.kumar@icicisecurities.com PCBL 13,797 1.2 13.2 1,818 11.3 35.3 1,006 3.6 14.0
+91 22 6807 7637 Archean Chemical 3,810 4.4 2.3 1,743 9.0 5.1 1,189 21.3 45.9
JFM’23E*: Jan-Mar23; Source: Company data, I-Sec research

Please refer to important disclosures at the end of this report

Specialty Chemicals April 11, 2023 ICICI Securities
 Gujarat Fluorochemicals’ EBITDA may rise 52% YoY to Rs5bn. Bulk
commodity revenues are likely to dip 18% YoY due to fall in caustic soda and
chloromethane prices. Fluorochemicals revenue to benefit from ramp-up in R-125.
Fluoropolymers revenue to benefit from higher realisation in PTFE; and volume
ramp-up in new fluoropolymers. Revenue to grow 34% YoY to Rs14bn. Gross
profit margin may dip 230bps QoQ to 70.2% on lower bulk commodity revenue.
EBITDA margin to be at 35% (down 190bps QoQ). Net profit may rise 50% YoY /
up 1.1% QoQ to Rs3.3bn.
 Clean Science’s net profit to grow 33% YoY / flattish QoQ to Rs832mn. We
expect Clean Science’s revenue to grow across segments YoY on new capacity
addition. Gross profit margin is expected to rise 20bps QoQ to 67.4% aided by
drop in key raw material prices. Company’s EBITDA is likely to jump 40% YoY /
8.4% QoQ to Rs1.2bn, and EBITDA margin to be 45.1% (down 50bps QoQ).
 Tatva Chintan’s EBITDA to dip 7.8% YoY / +13% QoQ to Rs202mn. Revenue
from SDA to recover as customer inventory level normalise; up 60% YoY to
Rs617mn. PTC, electronic chemicals and PASC to grow at a healthy pace. Gross
profit to grow 3% (up 14.6% YoY) to Rs605mn, which continues to hurt by high
priced solvent. EBITDA margin is likely to remain subdued at 15.3% (up 40bps
QoQ). Net profit to dip 31.8% to Rs119mn.
 Galaxy Surfactants’ volumes to grow 6.2% YoY to 61kte on low base. India
should see a steady volume performance; AMET and RoW to see improvement in
demand, though on low base. Performance surfactants volumes to rise 10% YoY;
specialty care volumes to be flattish. Realisation may dip on a drop in raw-material
prices. Thus, revenue to dip 8.3% QoQ and 6% YoY to Rs10bn. Gross profit
margin to improve 50bps QoQ (optically on lower raw material cost), while
EBITDA margin may rise 120bps QoQ. EBITDA /kg to remain healthy at Rs21.2
(down 20% QoQ); and EBITDA to decline 10.9% YoY / 16.1% QoQ to Rs1.3bn.
Net profit to decline 18% YoY / 24% QoQ to Rs804mn. GSL benefited from export
incentive of Rs200mn in Egypt in Q3FY23 which we assume nil in Q4FY23.
 Rossari’s net profit to grow 12.8% YoY / 5.8% QoQ to Rs272mn. Rossari’s
consolidated revenue is expected to dip 9.3% YoY / up 2.2% QoQ to Rs4bn.
HPPC segment revenue to dip 7.1% YoY (up 4% QoQ) to Rs2.8bn. Textile
business is likely to have muted revenue due to headwinds for the industry.
EBITDA to grow 6.8% YoY to Rs558mn which should benefit from decline in raw
material prices and EBITDA margin may improve by 10bps QoQ to 14%.
 EPL’s EBITDA to rise 16% YoY to Rs1.5bn. Revenue is likely to grow 8% YoY
to Rs9.5bn. Revenue growth to come across geographies, except Europe (flattish)
- AMESA (+10% YoY), Americas (+12%) and EAP (+15%). Gross profit may be
up 9.7% YoY to Rs5.2bn and EBITDA to grow 16% YoY to Rs1.5bn. Net profit to
grow 8.6% YoY to Rs529mn. We expect EBIT margin improvement sequentially
across segments from lower raw-material prices and cost inflation.
 Sudarshan Chemical’s EBITDA to dip 19% YoY. Revenue is expected to dip
2.6% YoY / +15.7% QoQ to Rs6.1bn. Gross profit margin may improve 60bps
QoQ to 41.4% on easing raw material inflation and EBITDA margin may improve
by 350bps to 11.4%. We expect net profit to dip 52% YoY to Rs214mn.
 Chemplast Sanmar’s EBITDA to dip 56% YoY to Rs1.5mn. Volumes are likely
to be flattish YoY at 151kte. Revenue is estimated to dip 33% YoY to Rs12bn on

2
Specialty Chemicals April 11, 2023 ICICI Securities
lower realisation. PVC spread is expected to improve from lows of previous two
quarters, but we believe it is still below mid cycle spreads which should take a few
more quarters. Drop in caustic soda and chloromethane prices will likely hurt
standalone profits which may off-set benefit of price increase in paste-PVC. Gross
profit may be lower by 23% YoY to Rs4.6bn. Net profit to contract 70% YoY to
Rs703mn.
 PCBL’s EBITDA to rise 35% YoY / 11.3% QoQ to Rs1.8bn. Volumes to rise 6%
YoY to 119kte on re-inventorisation. Realisation to be lower QoQ on a drop in
input cost while spreads are stable. Gross profit/kg to improve 12.5% YoY (flattish
QoQ) to Rs31.5. Net profit to increase 14% YoY to Rs1bn.
 Archean Chemical EBITDA to rise 5.1% YoY to Rs1.7bn. Archean Chemical
revenue to grow 2.3% YoY to Rs3.8bn driven by better realisation in salt and
bromine; while volumes remain subdued, particularly in bromine, as demand from
China is below expectation. Salt realisation is expected to remain strong which is
helping company to sustain EBITDA growth. Net profit to grow 46% YoY to
Rs1.2bn on interest cost saving from repayment of high cost NDCs from IPO
proceeds.

Table 1: Our chemical coverage universe revenue is likely to grow 3.3% YoY /
3.8% QoQ on drop in raw-material dragging down realisation
Rs mn Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23E QoQ (%) YoY (%)
SRF 35,494 38,947 37,278 34,697 37,202 7.2 4.8
Navin Fluorine 4,089 3,975 4,192 5,636 6,393 13.4 56.3
Gujarat Fluorochemicals 10,738 13,340 14,613 14,179 14,374 1.4 33.9
Clean Science 2,046 2,341 2,475 2,374 2,601 9.6 27.1
Tatva Chintan 985 884 901 1,206 1,322 9.6 34.2
Galaxy Surfactants 10,529 11,589 12,316 10,803 9,901 (8.3) (6.0)
Rossari Biotech 4,389 4,347 4,254 3,893 3,980 2.2 (9.3)
EPL 8,802 8,318 9,481 9,449 9,500 0.5 7.9
Sudarshan Chemical 6,272 5,542 5,284 5,280 6,111 15.7 (2.6)
Chemplast Sanmar 18,069 14,113 11,944 11,886 12,178 2.5 (32.6)
PCBL 12,188 14,091 16,279 13,633 13,797 1.2 13.2
Archean Chemical 3,726 4,003 2,935 3,649 3,810 4.4 2.3
Total 1,17,329 1,21,489 1,21,952 1,16,684 1,21,171 3.8 3.3
Source: Company data, I-Sec research

Table 2: Underlying gross profit trend shows moderating growth at 7.2% YoY
(up 5.2% QoQ)
Rs mn Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23E QoQ (%) YoY (%)
SRF 18,857 20,370 17,749 17,753 18,925 6.6 0.4
Navin Fluorine 2,122 2,152 2,356 3,172 3,565 12.4 68.0
Gujarat Fluorochemicals 7,624 9,624 10,632 10,280 10,093 (1.8) 32.4
Clean Science 1,334 1,427 1,548 1,596 1,754 9.9 31.4
Tatva Chintan 588 486 466 528 605 14.6 3.0
Galaxy Surfactants 3,472 3,571 3,312 3,412 3,177 (6.9) (8.5)
Rossari Biotech 1,145 1,241 1,237 1,169 1,223 4.6 6.8
EPL 4,751 4,663 5,123 5,182 5,210 0.5 9.7
Sudarshan Chemical 2,561 2,237 2,045 2,152 2,531 17.6 (1.2)
Chemplast Sanmar 6,015 5,072 4,124 4,115 4,620 12.3 (23.2)
PCBL 3,146 3,834 3,692 3,196 3,753 17.4 19.3
Archean Chemical 3,597 3,954 2,642 3,714 3,734 0.5 3.8
Total 55,212 58,631 54,924 56,267 59,190 5.2 7.2
Source: Company data, I-Sec research

3
 Equity Research INDIA
April 12, 2023
Logistics
ICICI Securities Limited
is the author and Expect only limited respite
distributor of this report
We expect Q4FY23 to be another muted quarter with volume growth across sectors
such as FMCG and e-commerce continuing to show limited traction. However,
Q4FY23 result preview automotive growth continues to stay relatively better. Key points: 1) expect higher
volume uptick across surface express companies; 2) profitability likely to languish
QoQ owing to continued cost pressure and insufficient absorption of recently
taken price hikes; and 3) lower oil prices may not provide material tailwinds, being
Logistics a pass-through.
We would keep tab on management commentaries on: 1) price hikes taken and
TCI Express (BUY) their absorption in the market; 2) extent of cost efficiencies realised from
GATI (BUY) digitisation/automation initiatives; and 3) business outlook. We prefer VRL (TP:
Rs775; BUY), GATI (TP: Rs175; BUY) and TCI Express (TP: Rs2,000; BUY).
VRL Logistics (BUY)
 Volume growth though better QoQ, likely to remain subdued: Indian Railways
Gateway (ADD) (IR) monthly freight data suggests volume improvement of 8% QoQ (6.1% YoY) in
Q4FY23 (refer table-4). We expect CONCOR to report similar growth in volumes. We
Mahindra Logistics
also expect volume improvement for Gateway Distriparks (GDL) based on monthly
(HOLD) railway data and commissioning of Kashipur ICD. For surface express players, we
BlueDart Express envisage volume growth of 3-4% QoQ. For Blue Dart Express (BDE), we estimate
(REDUCE) parcel volumes to increase to ~90mn. That said, we forecast good growth on YoY
basis for all the companies, especially GATI whose focus on market share expansion
CONCOR (SELL) is likely to be visible.
 Margin likely to be largely stable across players: For both CONCOR and GDL, we
expect EBITDA/teu to stay stable vis-à-vis the previous quarter, while in Bluedart
(BDE) we expect slight contraction in the EBITDA margins. For surface express
companies as well, we expect margins to remain broadly stable for all the players
under coverage- GATI, TCI Express (TCIE) and VRL. That said, we would watch out
for the acceptance of announced price hikes by BDE (Jan-23 onwards), GATI (Apr-23
onwards) and VRL (for non-contractual customers, accounting for 60-65% of
volume). In the case of Mahindra Logistics (MLL), while Rivigo (B2B express
business) acquisition is likely to be revenue-accretive, we envisage profitability to
take a hit due to integration costs and Rivigo still incurring loss at EBITDA level.
 Outlook – Management commentaries would be critical: We believe management
commentaries pertaining to ongoing cost efficiency initiatives – notably automation of
sorting centres and digitisation – are key in tracking the margin trajectory. Besides,
we would keep tab on the price hike plans articulated by a few companies in the
Q3FY23 earnings call. Furthermore, we would also watch out for volume guidance,
including opening of new branches/ICDs. We remain positive on VRL (TP: Rs775),
GATI (TP: Rs175) and TCI Express (TP: Rs2,000; BUY) in the space.
Quarterly summary
Company Sales EBITDA PAT
% chg % chg % chg
Research Analyst: (Rs mn) Q4FY23E (YoY) (QoQ) Q4FY23E (YoY) (QoQ) Q4FY23E (YoY) (QoQ)
Amit Dixit BlueDart Exp. 13,358 14.6 (0.1) 2,101 (28.0) (7.9) 828 (39.6) (6.7)
amit.dixit@icicisecurities.com CONCOR 21,016 2.9 5.7 4,512 9.3 5.8 3,034 21.6 2.3
+91 22 6807 7289 Gateway 3,752 4.5 10.0 956 0.7 5.1 382 (55.1) (28.9)
Mohit Lohia GATI 4,467 18.6 1.2 215 524.5 10.5 17 NM NM
mohit.lohia@icicisecurities.com Mahindra Log. 13,396 24.9 0.8 637 15.8 1.5 64 (42.7) 280.9
+91 22 6807 7510 3,152 5.7 0.2 480 (4.3) 4.2 322 (10.4) 0.5
TCI Express
Pritish Urumkar VRL Logistics 6,893 4.3 (9.6) 1,148 (8.7) 11.2 508 (9.7) 3.2
pritish.urumkar@icicisecurities.com Source: I-Sec research
+91 22 6807 7314
Please refer to important disclosures at the end of this report
Logistics, April 12, 2023 ICICI Securities
Table 1: Q4FY23 estimates – a snapshot
% growth % growth
(Rs.mn) Comments
Q4FY23E Q4FY22 Q3FY23 (YoY) (QoQ)
BlueDart Revenues 13,358 11,659 13,371 14.6 (0.1) In BDE, we expect overall shipments to
Express EBITDA 2,101 2,918 2,281 (28.0) (7.9) improve to ~90mn. Further, we expect,
PAT 828 1,370 887 (39.6) (6.7) EBITDA margins to decline on both YoY
EPS 34.9 57.7 37.4 (39.6) (6.7) and QoQ.

CONCOR Revenues 21,016 20,430 19,884 2.9 5.7 In CONCOR, we expect overall volumes to
EBITDA 4,512 4,128 4,264 9.3 5.8 improve by 6.6% QoQ and 8.3% YoY.
PAT 3,034 2,496 2,965 21.6 2.3 Further, we expect EBITDA/teu to remain
EPS 5.0 4.1 4.9 21.6 2.3 flat on QoQ.

Gateway Revenues 3,752 3,591 3,411 4.5 10.0 We expect ~11% volume growth QoQ
Distriparks EBITDA 956 949 909 0.7 5.1 (factoring the Kashipur volumes) in Q4 with
PAT 382 852 538 (55.1) (28.9) slight decline in EBITDA/teu.
EPS 0.8 1.7 1.1 (55.1) (28.9)

GATI Revenues 4,467 3,767 4,414 18.6 1.2 In Gati, we expect 12.5% volumes growth
EBITDA 215 35 195 524.5 10.5 YoY; also, we expect EBITDA margins to
PAT 17 (297) (47) NM NM expand in Q4 owing to improvement in
EPS 0.1 (2.4) (0.4) NM NM operational efficiency.

Mahindra Revenues 13,396 10,727 13,296 24.9 0.8 In case of MLL, while we expect revenue to
Logistics EBITDA 637 550 627 15.8 1.5 improve QoQ due to additional revenue
PAT 64 111 17 (42.7) 280.9 from Rivigo business, we expect EBITDA
EPS 0.9 1.6 0.2 (42.7) 280.9 margins to see slight moderation due to the
impact of Rivigo business which was
incurring losses at EBITDA level earlier.

TCI Express Revenues 3,152 2,982 3,144 5.7 0.2 In TCI, we expect slight improvement in the
EBITDA 480 502 461 (4.3) 4.2 volumes and EBITDA margins on both QoQ
PAT 322 359 320 (10.4) 0.5 and YoY basis.
EPS 8 9 8 (10.4) 0.5

VRL Logistics Revenues 6,893 6,611 7,624 4.3 (9.6) We expect volumes growth of 3-4% in GT
EBITDA 1,148 1,258 1,033 (8.7) 11.2 segment YoY and EBITDA margins in GT
PAT 508 562 492 (9.7) 3.2 segment to remain flat.
EPS 5.7 6.4 5.6 (9.7) 3.2

Source: Company data, I-Sec research

Table 2: Operating details

Volumes Q4FY23E Q4FY22 Q3FY23 %YoY %QoQ
Blue Dart (mn-shipment) 90.0 73.1 87.9 23.1 2.4
CONCOR (mn-TEU) 1.2 1.1 1.1 8.3 6.6
Gateway (mn-TEU) 0.2 0.2 0.2 5.4 11.3
GATI - SE (Kte) 286.9 255.0 284.2 12.5 0.9
VRL - GT (Kte) 1,045.6 887.0 1,009.0 17.9 3.6
TCI E (Kte) 262.4 239.0 253.0 9.8 3.7
Source: Company data, I-Sec research

Table 3: Profitability estimates

(Rs.) Q4FY23E Q4FY22 Q3FY23 %YoY %QoQ
Blue Dart (EBITDA/shipment) 23 40 26 (41.5) (10.0)
CONCOR (EBITDA/TEU) 3,900 3,862 3,929 1.0 (0.8)
Gateway (EBITDA/TEU) 5,298 5,335 5,398 (0.7) (1.9)
GATI - SE (EBITDA/te) 750 135 686 454.4 9.4
TCI E (EBITDA/te) 1,831 2,100 1,821 (12.8) 0.5
Source: Company data, I-Sec research

2
Equity Research
April 12, 2023
ICICI Securities Limited
is the author and
distributor of this report
Q4FY23 result preview
Recommendations
Kajaria Ceramics (BUY)
Somany Ceramics (BUY)
Cera Sanitaryware (ADD)
Greenply Industries (BUY)
Century Plyboard (BUY)
Greenpanel Industries
(BUY)
Pidilite Industries (ADD)
Astral Ltd (BUY)
Supreme Industries
(HOLD)
Finolex Industries (BUY)
Prince Pipes and Fittings
(BUY)
Research Analysts:
Arun Baid
arun.baid@icicisecurities.com
+91 22 6807 7235
Sohil Kaura
sohil.kaura@icicisecurities.com
+91 22 6807 7416
INDIA
Building material
Pipe & ceramic companies’ margins to improve QoQ
Building material companies under our coverage are expected to report a mixed
quarter (Q4FY23) YoY: Pipe and ceramic companies to report QoQ improvement
in operating margins due to lower raw material cost, whereas woodpanel
companies to continue seeing pressure due to higher timber prices. Volume
growth in ceramic companies under our coverage – Kajaria Ceramics (KJC) and
Somany Ceramics (SOMC) – is expected to be healthy (KJC/SOMC to grow
+9.5%/+9.1% YoY, 4-year CAGR of 6.0%/3.4%) , with operating margins improving
QoQ (+304bps/+280bps) led by easing of gas cost. In plywood segment, we
expect Greenply (MTLM) and Century Plyboards (CPBI) volumes to grow in the
range of flat to 7.4% YoY (4-year CAGR: 2.3% to 10.8%) with operating margins
declining YoY on continued raw material cost pressures. In MDF, we expect
domestic volumes to be flattish QoQ on account of increased imports (due to
weak global demand, lower ocean freight rate and higher container availability)
and margins to be under pressure due to higher raw material (timber) cost. For
pipe companies, we estimate volume to grow by flat to 16.1% YoY (4-year CAGR:
flat to 9.0%) driven by plumbing demand with agri demand yet to pick up. Margins
for pipe companies are also expected to improve sequentially due to stable raw
material prices, and thus, absence of inventory losses. We prefer Kajaria & Cera
in ceramic space, Century Plyboard and Greenpanel in woodpanel, and Astral in
pipe segment.
 Tiles and sanitaryware: Tile volumes to be healthy, margins to improve
sequentially. We expect KJC / SOMC to report tiles revenue growth of 10.0% /
10.3% YoY due to largely flat realisation YoY with volumes growing 9.5% / 9.1%
YoY (4-year CAGR of 6.0%/3.4%), respectively. Operating margin for KJC is likely to
improve 304bps QoQ (flat YoY) and for SOMC 280bps QoQ (+110bps YoY) on
lower gas prices and operating leverage. Cera Sanitaryware (CRS) is expected to
witness revenue growth of 11.4% YoY (4-year revenue CAGR: 4.3%) while
operating margin is expected to expand 128bps QoQ (-152bps YoY).
 Pipe and adhesive segments: Margins to improve QoQ. In pipe segment,
demand (based on our interaction with dealers) was healthy in plumbing segment,
but agri demand had a delayed pick-up from end-Mar’23. We thus expect healthy
volume growth for pipe companies which have higher exposure to plumbing
segment (Astral) and tepid growth for companies with greater exposure to agri
segment {Finolex Industries (FNXP), Prince Pipes (PRINCPIP)}. We expect pipes
volumes to grow a) +16.1% YoY (4-year CAGR: 9.0%) for Astral, b) +11.4% YoY (4-
year CAGR: 6.5%) for Supreme Industries (SI), c) largely flattish YoY (4-year CAGR:
3.8%) for PRINCPIP, and d) flat YoY (flat 4-year CAGR) for FNXP. Operating
margins are expected to improve sequentially during the quarter for all segmental
companies led by stable raw material prices and thus absence of inventory losses
(vs heavy losses incurred during 9MFY23). We model EBIT/kg of Rs31.7/kg
(+26.2% QoQ) for ASTRA, Rs21.6/kg (+31.3% QoQ) for SI, Rs16.8/kg (+51.4%
QoQ) for PRINCPIP and Rs10.0/kg (+30.8% QoQ) for FNXP pipe segment. For
adhesive segment, we forecast ASTRA to report revenue growth of 7.6% YoY with
operating margin of 14.7% (+371bps YoY / +257bps QoQ) on lower raw material
costs. For PIDI, we forecast consolidated revenue growth of 13.6% YoY with
operating margin +224bps QoQ (+279bps YoY) due to declining raw material cost.
Please refer to important disclosures at the end of this report
Building Material sector, April 12, 2023 ICICI Securities
 Plywood and MDF: Margins to be lower due to higher timber prices.
Plywood companies – MTLM / CPBI – are expected to post plywood revenue
growth of 4.3%/9.5% YoY (4-year revenue CAGR: 5.9%/12.7%) on high base
and volume growth of flat / 7.4% YoY (4-year CAGR of 2.3% / 10.8%) with
realisation higher YoY and flat QoQ. Plywood operating margin is expected to
decline 183bps YoY (+17bps QoQ) for MTLM and decline 162bps YoY
(+110bps QoQ) for CPBI primarily due to higher raw material cost pressure as
timber prices remain elevated which were partly offset by a decline in chemical
prices. In MDF segment, pick-up in imports has partially hampered demand for
domestic companies. We expect CPBI volumes to be flat QoQ/YoY, whereas for
GREENP volumes are expected to increase 12.4% YoY/18.4% QoQ (4-year
CAGR: 21%) with domestic volumes declining 6.7% YoY (+2.4% QoQ). We
estimate operating margins for MDF segment to decline 13.1ppt YoY (-410bps
QoQ) for GREENP and decline 925bps YoY for CPBI on higher raw material
cost.
 Key to watch out: 1) Management outlook/guidance on volume growth for
FY24, and 2) future margin trajectory.

2
Building Material sector, April 12, 2023 ICICI Securities
Table 1: Estimates for Q4FY23
(Rs mn) Q4FY23E Q4FY22A Q3FY23A YoY (%) QoQ (%) Comments
Kajaria Ceramics
Sales 12,266 11,018 10,911 11.3% 12.4%  Revenue growth driven by volume uptick of 9.5% YoY
EBIDTA 1,869 1,659 1,331 12.6% 40.5%  EBITDA margin to improve QoQ due to easing gas cost pressures
PAT 1,192 958 743 24.5% 60.4%  PAT growth in-line with operating profitability
Somany Ceramics
Sales 6,631 6,168 6,224 7.5% 6.5%  Volume +9.1% YoY to drive revenue growth
EBIDTA 618 507 406 22.0% 52.3%  Softening gas cost to improve operating profitability QoQ
PAT 319 174 120 83.6% 165.4%  PAT growth in-line with operating profit growth
Cera Sanitaryware
Sales 4,886 4,387 4,558 11.4% 7.2%  Revenue growth driven by +8.2%/+24.5% YoY growth in
EBIDTA 843 824 729 2.3% 15.8% Sanitaryware/Faucet segments
 Operating margins to improve QoQ
PAT 597 563 564 6.1% 5.9%
 PAT growth to be lower due to decline in other income
Greenply Industries
Sales 4,742 4,486 4,282 5.7% 10.7%  India revenue to grow 4.3% YoY, driven by higher realisation
EBIDTA 418 445 326 -6.0% 28.5% and flat volume YoY
 Operating margins to decline YoY due to continued raw
material pressure
PAT 214 290 127 -26.2% 68.9%
 PAT decline YoY higher than operating profit due to
increased finance cost
Greenpanel Industries
Sales 4,591 4,701 4,202 -2.3% 9.3%  India volumes to decline 6.7% YoY but export volumes to
EBIDTA 885 1,372 981 -35.5% -9.8% grow 98.2% YoY (due to low base)
 Operating margins to decline YoY due to adverse
PAT 523 802 482 -34.7% 8.6% geographical mix and higher cost of timber
 PAT decline YoY in-line with operating profitability
Century Plyboard
Sales 9,365 8,953 8,772 4.6% 6.8%  Revenue growth (on high base YoY) driven primarily by
EBIDTA 1,484 1,609 1,274 -7.8% 16.5% +7.4% YoY plywood volume
 Operating margins to decline YoY due to higher RM pressure
PAT 918 920 831 -0.3% 10.4%
 PAT decline lower than EBITDA decline due to lower tax expense
Pidilite Industries
Sales 28,478 25,071 29,976 13.6% -5.0%  Revenue growth YoY driven by higher realisation and CBP
EBIDTA 5,349 4,011 4,959 33.4% 7.9% volume +6%-6.5% YoY.
 Operating margins to be improve QoQ/YoY due to lower RM
PAT 3,493 2,544 3,042 37.3% 14.8% cost.
 PAT growth in line with operating profitability
Astral Ltd
Sales 15,561 13,906 12,678 11.9% 22.7%  Pipes volume growth of 16.1% YoY to drive revenue uptick
EBIDTA 2,695 2,168 1,864 24.3% 44.6%  Operating profitability to improve QoQ due to absence of
PAT 1,901 1,441 960 31.9% 97.9% inventory losses in pipe segment and declining RM prices in
adhesives
Pipes EBIT/kg (Rs/kg) 31.7 34.4 25.1 -7.7% 26.2%  PAT growth QoQ higher than EBITDA growth due to higher
other income
Supreme Industries
Sales 25,669 25,571 23,107 0.4% 11.1%  Tepid revenue growth YoY due to lower realisation, despite
EBIDTA 3,725 3,914 3,034 -4.8% 22.8% pipes volume growing 11.4% YoY
PAT 2,921 3,239 2,100 -9.8% 39.1%  Margins to improve QoQ due to stability of RM prices in the
quarter
Pipes EBIT/kg (Rs/kg) 21.6 26.8 16.4 -19.6% 31.3%
 PAT growth QoQ in-line with operating profitability
Finolex Industries
Sales 12,940 15,946 11,248 -18.9% 15.0%  Lower realisations YoY and flattish volume in pipe segment,
EBIDTA 2,350 2,647 919 -11.2% 155.8% resulting in revenue decline
PAT 1,946 2,080 772 -6.5% 152.2%  Subsiding inventory losses to improve operating profitability
QoQ
Pipes EBIT/kg (Rs/kg) 10.0 12.0 7.6 -16.5% 31.2%
 PAT to improve QoQ in-line with operating profitability
Prince Pipes and Fittings Ltd
Sales 7,667 9,012 7,059 -14.9% 8.6%  Revenue decline YoY driven by lower realisations and flattish
EBIDTA 984 1,405 695 -30.0% 41.6% volume growth YoY
PAT 577 878 354 -34.3% 63.0%  Operating profitability to improve QoQ due to absence of
inventory losses
Pipes EBIT/kg (Rs/kg) 16.8 26.6 11.1 -37.0% 51.4%
 PAT to grow in-line with operating profitability
Source: Company data, I-Sec research

3
Equity Research INDIA
April 11, 2023
BSE Sensex: 59847
Diversified Financials
ICICI Securities Limited
is the author and
distributor of this report
FY23 a record year for equity and commodity options;
STT hike impact remains to be seen
Monthly update Cash ADTV dipped 2% MoM, while NSE derivatives volumes continued to grow at a
rapid pace of 13% MoM in Mar’23. Interestingly, despite an increase in trading costs in
the form of increased STT (partially offset by rollback of increase in transaction cost
MCX (HOLD) by NSE), total NSE futures/options ADTV has remained range bound between Rs225-
Rs235trn between Mar-Apr’23. MCX commodity futures volumes improved MoM by 2%,
2,250
while options volumes rose sharply by 21% YoY in Mar’23. Total demat accounts
2,000
added in Mar’23 stood at 1.92mn as against ~2.1mn monthly average addition between
1,750
Dec’22-Feb’23. We expect MCX to report modest EBITDA of Rs97mn in Q4FY23 given
1,500
inflated software cost, while AngelOne is expected to report Rs2.3bn PAT in Q4FY23.
1,250
(Rs)

1,000  Monthly performance: NSE cash ADTV dipped 2.5% MoM to Rs490bn, while options
750 ADTV increased 13.4% MoM to Rs235trn in Mar’23. Overall NSE currency derivatives’
500 ADTV rose 24% MoM in Mar’23 while its market share increased to 92% as against 91%
in Feb’23.
Apr-20
Oct-20
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23

 FY23 performance: Basis FY23, NSE cash ADTV is down 20% YoY, options ADTV is up
120% YoY, MCX futures ADTV is down 11% YoY while MCX options surged 324% YoY.
AngelOne (BUY)
2,500
 MCX futures’ ADTV grew 2% MoM to Rs210bn, while options’ ADTV rose sharply by
21% MoM to Rs546bn in Mar’23. Growth in MCX futures ADTV was driven by strong
2,000 sequential growth in Gold ADTV (+16% MoM) and Crude ADTV (+23% MoM), partially
1,500
offset by decline in Silver (-8% MoM), Natural Gas ADTV (-6% MoM) and other base
metals. Options ADTV jumped sharply by ~21% MoM to an all-time high of Rs546bn,
(Rs)

1,000 driven by 251% MoM growth in gold and 16% MoM increase in Crude, partly offset by
500 17% dip in Silver. Natural Gas options ADTV remained flat at Rs46bn.
 Q4FY23 MCX earnings to be modest on account inflated software cost: In Q4FY23
0
futures turnover has declined 15% QoQ while options turnover increased 16% QoQ. This
Jan-21

Jan-22

Jan-23
Oct-20
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23
Jul-21

Jul-22

will likely result in futures / options revenues of Rs548/667mn and flattish other operating
income of Rs222mn. This will likely result in total revenue of Rs1.4bn, largely flat QoQ.
Total expenses are likely to increase 20% QoQ driven by software cost, which will
increase from Rs676mn in Q3FY23 to Rs910mn in Q4FY23. This will likely result in
EBITDA of Rs97mn in Q4FY23E vs Rs493/656/333mn in Q1/Q2/Q3FY23.
 AngelOne continues to report strong operating numbers along with overall
improvement in retail market share
 Number of daily traded orders at all-time high: Angel One reported monthly total
orders of 93.2mn in Mar’23, up 12% MoM partly driven by one extra trading day.
Basis average daily orders traded, AngelOne reported 6% MoM growth. Average
daily number of orders traded increased from 4.09mn in Jan’23 to 4.17mn in Feb’23
to all time high 4.4mn in Mar’23. Q4FY23 number of orders traded were up 16%
QoQ.
 Robust growth in monthly client additions: Number of clients added in Q4FY23
stood at 1.29mn as against 0.99mn added in Q3FY23. Overall client base has
increased 10% QoQ to 13.8mn.
Research Analysts:  MTF book dips in Mar’23: MTF book declined 7% QoQ to ~Rs13bn in Q4FY23 and
4% MoM in Mar’23.
Ansuman Deb
ansuman.deb@icicisecurities.com  Expect AngelOne to report Q4FY23/FY23 PAT of Rs2.3/8.5bn. Lower cost in
+91 22 6807 7312 Q4FY23 could lead to positive surprise: Overall number of orders increased 16%
Ravin Kurwa QoQ and we expect similar growth in net brokerage income. Average MTF book has
ravin.kurwa@icicisecurities.com declined 6% QoQ and we expect similar trend for net interest income. Other
+91 22 6807 7653 operating income is expected to increase 11% which will likely result in overall
revenue growth of 11% YoY. We expect cost to increase in Q4FY23 largely on
account sharp increase in client acquisitions. We expect EBITDA margin of 50% in
Q4FY23 vs 54% in Q3FY23. Overall PAT is expected to be up 2% QoQ to Rs2.3bn.

Please refer to important disclosures at the end of this report

India Update, April 12, 2023 ICICI Securities
ravin

Recent reports/updates
Analyst Company/Sector Date
Ashwani / Bharat Capital Goods Preview: Execution to remain upbeat on robust order Apr 11
backlog
Sanjesh / Akash Specialty Chemicals Preview: Excl Chemplast, EBITDA growth is 15% for Apr 11
chemical cos
Amit / Mohit / Pritish Logistics Preview: Expect only limited respite Apr 11
Arun / Sohil Building material Preview: Pipe & ceramic companies’ margins to improve Apr 11
QoQ
Ansuman / Ravin Diversified Financials: FY23 a record year for equity and commodity Apr 11
options; STT hike impact remains to be seen
Amit / Mohit / Pritish Metals & mining Preview: Margins revive Apr 11
Probal / Hardik Oil & Gas: Government notifies new gas pricing regime – mostly positive, Apr 10
but lack of clarity on free pricing a surprise
Ansuman / Ravin InterGlobe Aviation: Expect steady Q4; business momentum remains strong Apr 10
Adhidev Chattopadhyay Phoenix Mills: Strong end to FY23, all eyes on LTL growth for FY24E Apr 10
Basudeb / Vishakha Auto & auto ancillaries: Robust earnings growth across segments Apr 10
Basudeb / Vishakha Auto: Commercial vehicles: Demand drivers intact; freight rate hikes this Apr 10
month awaited
Manoj / Varun / Karan / Consumer: Continuing decent demand print for Jewellery in 4QFY23 Apr 9
Akshay
Amit / Mohit / Pritish Metals & Mining: Steel: HRC back at Rs60,000/te, spot spreads rise Apr 5
Amit / Mohit / Pritish Hindalco Industries: Basic tenets reiterated; Novelis in focus Apr 5
Vinod / Niraj Strategy: ‘Fear of the unknown’ emanating from global markets could force Apr 5
a ‘type-1 error’ in gauging domestic economic activity
Probal / Hardik Oil & Gas Q4FY23 preview: Steady improvement likely, YoY & QoQ Apr 5
Ansuman / Ravin / Vishal Motilal Oswal Financial Services: Attractive valuations Apr 5
Ansuman / Ravin Insurance: Highlights and implications of IRDAI’s expense of management Apr 5
notification, and guidance note on commission
Ansuman / Ravin Star Health and Allied Insurance Co.: Growth levers and operational moats Apr 5
put business at a vantage point
Sanjesh / Akash Telecom Q4FY23 preview: Expect steady quarter, adjusted for two days Apr 5
less in Q4FY23E
Renish / Chintan Banking: SCBs' median MCLR up 130bps in FY23 vs RBI repo rate hike of Apr 4
250bps; SCBs' WALR (on fresh loans) up 142bps
Renish / Chintan BFSI: Gujarat Yatra: Ahmedabad – key takeaways Apr 4
Prasenjit Basu Economy: Twin Deficit Watch: CAD on track to stay below 2% of GDP in Apr 3
FY23, fiscal deficit below 6% of GDP
Adhidev Chattopadhyay Hotels: Stellar check-out (FY23), sanguine check-in (FY24E - potential Apr 3
demand sustenance, price hikes)
Manoj / Varun / Karan / Westlife: Acceleration at play Apr 3
Akshay
Basudeb / Vishakha Automobiles: Auto retails: PV steady, 2W rising, CV at record highs Apr 3
Basudeb / Vishakha Automobiles (wholesale): Strong show across segments; crucial weeks Apr 3
ahead
Sanjesh / Akash Telecom: Re-evaluating our tariff hike thesis – we are not worried! Apr 3
Renish / Chintan Banking: February sectoral credit deployment: Bank credit up 15.9% YoY, Apr 3
0.9% MoM, 13.3% FY23-TD
Sumeet / Aditi Technology: Q4FY23 preview: Weak sequential growth already factored in Apr 1
recent valuation cuts; Buy TCS, INFY, LTIM, MPHL
Sanjesh / Akash Telecom: Subscriber watch: Bharti’s churn still under control Apr 1
Arun / Sohil Prince Pipes and Fittings: Medium-term volume outlook remains healthy Mar 31
Abhisek / Manoj / Heenal Internet: Q4FY23 preview: Strong B2B; B2C may be underwhelming Mar 31
Amit / Mohit / Pritish Defence: Orders galore Mar 31
Amit / Mohit / Pritish Metals & Mining: Steel: Tepid demand in flats offsets coal cost gains Mar 31
Ansuman / Ravin Diversified financials: SEBI Board approves series of proposals: Key Mar 30
highlights
Probal / Hardik Gujarat Gas : Industrial retail prices slashed by Rs3/scm Mar 30
Harsh Mittal Star Cement : Aiming to consolidate its core market Mar 30
Vinod / Niraj Strategy: i-Lens Screener: GARP stocks largely emanating from cyclical Mar 29
sectors
Ansuman / Ravin ICICI Lombard General Insurance Company: Digital journey is all- Mar 29
encompassing across customer sourcing, retention and cross-selling
Arun / Sohil Cera Sanitaryware: Demand and margin outlook remains healthy Mar 29
Basudeb / Vishakha Mahindra & Mahindra: Near-term challenges priced in Mar 28
Adhidev Chattopadhyay Embassy Office Parks REIT: Valuation-neutral Bengaluru asset acquisition Mar 28

16
India Update, April 12, 2023 ICICI Securities

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New I-Sec investment ratings (all ratings based on absolute return; All ratings and target price refers to 12-month performance horizon, unless mentioned otherwise)
BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return

ANALYST CERTIFICATION
I/We Amit Dixit, PGDM, B.Tech, Mohit Lohia, CA; Pritish Urumkar: MBATech (Finance);Ansuman Deb, MBA, BE; Ravin Kurwa, CA; Vishal Singh, MBA; Probal Sen,
CA, MBA; Hardik Solanki, CA; Ashwani Sharma, MBA; Bharat Jain, MBA; Sanjesh Jain, PGDM; Akash Kumar, MBA; Arun Baid, MBA; Sohil Kaura, M.Com (Finance);
issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in
this report. Analysts are not registered as research analysts by FINRA and are not associated persons of the ICICI Securities Inc. It is also confirmed that above
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as an officer, director or employee of the companies mentioned in the report.
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17