Weekly Earnings Wrap

WEEK – IV
(27th Oct’23 – 02nd Nov’23)

Result Highlights of Q2FY24

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KEY UPGRADES & DOWNGRADES

UPGRADES NO CHANGE

Previous Current
Company Name Sector
Reco Reco
Previous Current
Company Name Sector Steel Strips Wheels Ltd Auto Ancillaries BUY BUY
Reco Reco
Maruti Suzuki India Ltd Automobile BUY BUY
TVS Motor Company Ltd Automobile BUY BUY
IDFC First Bank Ltd Banks HOLD BUY AU Small Finance Bank Ltd Banks HOLD HOLD
City Union Bank Ltd Banks BUY BUY
DCB Bank Ltd Banks BUY BUY
Ambuja Cements Ltd Cement HOLD BUY Ujjivan Small Finance Bank Ltd Banks BUY BUY
ACC Ltd Cement BUY BUY
Navin Fluorine International Ltd Chemicals BUY BUY
Nippon Life India Asset Management Ltd Finance BUY BUY
SBI Cards & Payment Services Ltd Finance HOLD HOLD
Britannia Industries Ltd FMCG BUY BUY
Colgate-Palmolive (India) Ltd FMCG HOLD HOLD
Indian Hotels Company Ltd Hotels BUY BUY
PNC Infratech Ltd Infra/Cons BUY BUY
Infrastructure Developers &
Rites Ltd HOLD HOLD
Operators
DOWNGRADES SBI Life Insurance Company Ltd Insurance BUY BUY
IndiaMART InterMESH Ltd IT BUY BUY
KPIT Technologies Ltd IT - Software BUY BUY
Asian Paints Ltd Paints/Varnish HOLD HOLD
Cipla Ltd Pharmaceuticals BUY BUY
Previous Current Dr Reddys Laboratories Ltd Pharmaceuticals HOLD HOLD
Company Name Sector
Reco Reco V I P Industries Ltd Plastic products HOLD HOLD
Embassy Office Parks REIT Real Estate Investment Trusts BUY BUY
Westlife Development Ltd Retail BUY BUY
Praj Industries Ltd Construction & Engineering BUY HOLD Apcotex Industries Ltd Specialty Chemicals SELL SELL
SIS Ltd Staffing BUY BUY
APL Apollo Tubes Ltd Steel BUY BUY
Bharti Airtel Ltd Telecomm-Service BUY BUY

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UPGRADES

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IDFC First Bank Ltd
Balance Sheet Growing Sustainably; Margins to remain Stable
Recommendation: BUY | Reco Price: 82 | TP: 91 | Upside: 11%
Est. Vs. Actual for Q2FY24:NII – BEAT; PPOP – MISS; PAT – MISS
Changes in Estimates post Q2FY24
FY24E/FY25:NII0%/0.8%;PPOP2.9%/4.2%; PAT4%/-0.1%
Recommendation Rationale
 Advances growth momentum likely to continue – IDFCFB reported broad-based growth in advances (26/7%
YoY/QoQ). With the festive season to come in H2FY24 and with H2 seasonally being better than H1, we believe
advances growth would be better in H2FY24. Thus with healthy performance in H1FY24 and improved performance in
H2FY24expected, we revise our credit growth estimates to 25% for FY24-25E.
 Margin to remain stable in H2FY24–Strong deposit mobilization is aiding loan book growth of 25% and repayment of
high-cost borrowing. The cost of funds is expected to go up in the coming quarter due to re-pricing, however, a large part
of the increase has already been recorded. Repayment of high-cost legacy borrowing would provide some support to
NIM. Thus, margins are expected to remain stable in H2FY24.
 Asset Quality expected to remain stable –GNPA and NNPA have improved in the current quarter to 2.1% and 0.68%
respectively. Furthermore, Collection efficiency remains strong at 99.5% and SMA 1 and 2 at 0.77%, indicating lower
incremental stress. Also, the restructured book continues to improve, which is currently at 0.38% of the funded asset and
85% of restructured book is secured. Thus, no major stress is expected from the asset quality.
Sector Outlook: Positive
Company Outlook & Guidance: We like IDFCFB as it has shown complete turnaround post Covid-19 disruptions with
consistent performance across parameters. We believe the key levers are intact for further expansion of ROA/ROE.
Valuation: 1.9x FY25E ABV
Current TP: Rs91(Earlier TP:Rs 90)
Recommendation: We revise our rating from HOLD to BUY on the stock.
Ambuja Cements Ltd
In-line Operating Performance; New Capacity to Drive Growth
Recommendation: BUY | Reco Price: 407 | TP: 455 | Upside: 12%
Est. Vs. Actual for Q2FY24: Revenue – BEAT; EBITDA Margin – BEAT; PAT – BEAT
Change in Estimates post Q2FY24 (Abs.)
FY24E/FY25E – Revenue: 2%/1%; EBITDA: 4%/-1%; PAT: 7%/-1%
Recommendation Rationale
 EBITDA margins to improve to 22%-23% in FY25E: The synergies with the group resulted in a cost reduction of
7% on a per-tonne basis on a YoY basis. More cost optimization is expected which will aid the company in further
margin enhancement. Business initiatives are expected to bring down the company’s operating costs even more
along with reducing the clinker factor and logistics costs, improving the sale of blended cement and, expanding the
EBITDA margin of the business. We foresee the company’s EBITDA margins to improve to 22%-23% in FY25E from
16% in FY23.
 Aims to create a capacity of 140 mtpa (Ambuja & ACC combined) by FY28: The company is expanding its
capacity from the current 32 mtpa to 46 mtpa and the existing expansion is expected to be completed in phases
over FY25-FY26. Furthermore, the company is pursuing growth opportunities and it aims to create a capacity of 140
mtpa (Ambuja and ACC combined) by FY28. This will help the company in continuing its growth momentum moving
ahead.
 Overall industry to grow in the healthy range of 8%-9% in FY24/FY25: Cement demand in the country is likely to
remain robust on account of higher government thrust on creating infrastructure and developing low-cost and
affordable housing. Private Capex is also expected to drive the cement demand moving forward along with robust
real estate demand. We expect the overall industry to grow in the range of 8%-9% in FY24/FY25.
Sector Outlook: Positive
Company Outlook & Guidance: Demand growth is expected to remain positive, facilitating higher capacity utilization.
Moreover, cost reduction initiatives are to further enhance margins. The company guided for volume growth of 10%-
12% in FY24.
Current Valuation: 16x FY25 EV/EBITDA (Earlier Valuation: 16x FY25 EV/EBITDA)
Current TP: Rs 455/share (Earlier TP: Rs 455/share)
Recommendation: We change our rating from HOLD to BUY on the recent decline in the stock price.
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Steel Strips Wheels Ltd
Product Diversification and Robust Exports to Drive Growth
Recommendation: BUY | Reco Price: 261 | TP: 325 | Upside: 25%
Est. Vs. Actual for Q2FY24:Revenue –INLINE; EBITDA –INLINE; PAT –MISS
Change in Estimates post Q2FY24
FY24E/FY25E: Revenue:0%/0%; EBITDA:0%/-3%; PAT:-8%/-8%.
Recommendation Rationale
 Robust Export Opportunities: The company currently supplies wheels to the USA and EU among others via wholesalers such as
Road Ready, Alcar Wheels, Tredit, and OE Wheels in the aftermarket. Exports revenue guidance currently stands at ~Rs 500-600
Cr in FY24, significantly up from the impacted base of ~Rs 292 Cr in FY23 (vs. the erstwhile base of ~Rs 829 Cr in FY22).
Exports volume in H1FY24 at 21 Lc units (including1.12 Lc alloy wheel units) has already surpassed full-year volumes of FY23
significantly by 40%, indicating the desired pick-up in the export market. Total export sales in H1FY24 stood at ~Rs 331 Cr,
including ~Rs 39 Cr from the alloy wheels segment. SSWL expects additional demand from International OEMs in FY25E, to
further aid company's export growth by up to ~15% YoY.
 Incremental Capex for Steel and Alloy Wheel Capacity: The AMW plant will aid in steel wheels capacity expansion to 27.5 Mn
wheels by FY24 (from 20.5 Mn in FY23) and debottlenecking will raise the alloy wheel capacity to 4.8 Mn wheels in FY24 (from 3
Mn in FY23). The total Capex for FY24 is ~Rs 320 Cr. (plus ~Rs 138 Cr required for the AMW plant).
 EV Business: The company shared that supplies to 2W EV OEMs has started from Chennai and Dappar plants; having gained
~50% market share in the Rear Wheel (Hub Motor attached) segment. The motor controller talks with Israel’s Reddler
Technologies have been delayed due to ongoing geopolitical conflicts.
Company Outlook & Guidance: The company maintained its earlier guidance for volume sales growth at 12-15%YoY in FY24 and
revenue at ~Rs 4,800-5,000 Cr (vs. ~Rs 3,560/4,040 Cr in FY22/23) on similar commodity price levels. This will be mainly led by
increased alloy wheels sales, a pick-up in exports, and a longish CV upcycle. Furthermore, the introduction of a new product, namely
Aluminium Knuckles in Mehsana plant at a total Capex of ~Rs 200 Cr (1 Mn capacity), shall result in incremental revenue of ~Rs 200-
250 Cr once fully ramped up in the next few years.
Current Valuation: 17x PE multiple onDec’25EPS(roll forward from Sep’25 EPS).
Current TP: Rs 325/share (unchanged).
Recommendation: We maintain our BUY rating on the stock based on a richer product mix (alloy wheels, exports, CV) and
improvement in EBITDA/wheel in FY25.
Maruti Suzuki India Ltd
Q2 Posts Impressive Margins; Concerns Emerge Over Small Car Revival
Recommendation: BUY | Reco Price: 10550 | TP: 11800 | Upside: 12%
Est. Vs. Actual for Q2FY24:Revenue – INLINE; EBITDA Margin – BEAT; PAT – BEAT
Change in Estimates post Q2FY24
FY24E/FY25E:Revenue3%/0.8%;EBITDA 18%/15%; PAT19%/15%.
Recommendation Rationale
 Margins beat estimates: The company’s EBITDA margins stood impressive at 12.9%, a 165bps beat vs. our estimates, led by a
confluence of positive factors. Higher volumes, sales mix, FX benefit and drop in RM costs drove the beat. We also note the impact of the
inventory build-up of ~Rs 815 Cr, which led to lower RM to sales. The management said it does not include any one-offs. Normalizing that
inventory impact, our margin estimate would have been inline. We foresee margins to remain elevated YoY in coming quarters on account
of soft RM prices (precious metals are soft, while steel prices are slightly increasing), probable FX benefit and sales mix (higher share of
SUVs).
 Entry-level segment continues to remain weak: The management foresees 5% industry growth and MSIL outpacing it by growing at
10% YoY in FY24.However,for the next year, overall PV industry growth is expected to remain flat due to de-growth of the entry-level cars.
The management said it will still post positive growth over the ‘flat’ industry growth YoY in FY25. De-growth in entry-level cars is a concern
as the future growth in Sedan/SUV will come from small cars. The management said that a small car market growth revival is necessary for
the sustainable long-term PV market growth of 6-7%.
 Supply-side issues easing: With the easing of the semiconductor shortages, the pending orders at the end of Q2FY24 have come down
to about 2.88 Lc units (3.55 Lc units as of the end of Q1FY24) and further corrected to about 2.5 Lc units. Out of the current total order
book of 2.5 lc units – CNG accounts for 123k units, Ertiga at 73.7k units of pending orders, followed by the recently-launched SUVs such as
Grand Vitara, Jimny, and Invicto forming the large part of the order book.
Sector Outlook: Cautiously positive
Company Outlook & Guidance: We revised our sales volume estimates down for FY25/26 by 1%/2% vs. our earlier estimates due to theflat
YoY PV industry growth guidance for FY25, led by de-growth in the entry-level car segment. However, we offset the impact from the volume
de-growth on EBITDA by raising our EBITDA margin estimates for FY25/26 post this quarter's solid margin performance by lowering our RM to
sales ratio.
Current Valuation: 27x P/E on Sep’25E EPS(From28xP/E on Sep’25E EPS)
Current TP: Rs 11,800/share(Unchanged)
Recommendation: The company achieved a market share of 23% in the SUV segment with the support of the newly launched products.
Reasonable valuations and weak entry-level segments limit re-rating potential despite this quarter’s robust margin performance. We keep our
TP of Rs 11,800/share unchanged and maintain our BUY rating on the stock.
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TVS Motor Company Ltd
Inline Q2; Exports Boost to Drive Growth!
Recommendation: BUY | Reco Price: 1609 | TP: 2100 | Upside: 31%
Est. Vs. Actual for Q2FY24:Revenue – INLINE; EBITDA –INLINE; Adj.PAT – BEAT
Change in Estimates post Q2FY24:
FY24E/FY25E: Revenue: -2.5%/-0.6%; EBITDA: -3.1%/7.9%; PAT: -2.7%/10.7%
Recommendation Rationale
 Market Outlook: The retail demand in the urban market is strong and rural demand is expected to do well in the coming
months on account of the festive season. In the medium to long term, rural demand, specifically for the entry-level
segment, is slowly expected to pick up on account of increased infrastructure spending by the government and higher
retail finance penetration along with expected stability in vehicle prices. Exports have bottomed out and are expected
to recover MoM; stocks are at the right level as dispatches were earlier reduced to match retail levels. TVSL expects
high demand from the LATAM region followed by African and Asian markets.
 EBITDA margins: Moderate price hikes with RM tailwinds expected to continue for H2FY24.Furthermore, as the
company builds scale in EV volumes, margins from EVs will aid improvement going ahead.
 2W-EV outlook:The EV market share of TVSL in H1FY24 stands at ~20%, higher than ICE market share level(~16%).
Multiple new products are expected to be launched over the next 2-3 years targeted at 2W segments such as premium,
sporty, commuter, delivery, and also e3Ws. The iQube network is available at 337 stores as ofSep’23, (309 stores in
Q1). TVSL plans to export iQube in the next 2-3 quarters both to developing and developed markets.
Sector Outlook:Positive.
Company Outlook& Guidance: The company expects to grow faster than the industry led by premium 2W models
(Raider, Apache, Ronin and Jupiter125) along with new product launches in the EV portfolio over the next two years. We
factor total sales volume to grow at 10.5% CAGR over FY24E-26E.
Current Valuation: 30x P/E on core Dec’25 EPS (rollover from 25x P/E on core Jun’25 EPS) and other investments at 1x
P/BV and TVS Credit Services at 2X P/BV.
Current TP: Rs 2,100/share(earlier Rs 1,450)
Recommendation: We maintain our BUY rating on the stock.
AU Small Finance Bank Ltd
Near-Term Headwinds on NIMs and Credit Costs to Persist!
Recommendation: HOLD | Reco Price: 666 | TP: 685 | Upside: 3%
Est. Vs. Actual for Q2FY24: NII – MISS; PPOP – BEAT; PAT – Marginal BEAT
Changes in Estimates post Q2FY24
FY24E/FY25E: NII+2.1%/+2.8%; PPOP +5.0%/+6.2%; PAT -2.4%/-1.6%
Recommendation Rationale
 Merger synergies with Fincare SFB to be visible over the medium term – AUSFB’s merger with Fincare SFB would
pave the way for AUSFB to foray into the Southern states where Fincare SFB has a prominent presence. It would provide
the bank the opportunity to cross-sell AUSFB’s products to Fincare’s urban deposit customers. The merger would also
enable AUSFB to venture into the microfinance (MFI) segment, a segment the bank has been averse to so far. Gradually
the bank will ramp up the MFI book in its core geographies, given the wider reach and deeper presence of the merged
entity (2300+ touch points). The management also highlighted that over time, AUSFB would convert the smaller MFI
branches of Fincare into asset branches and expand its product offerings. Post the merger, MFI would form ~8% of the
portfolio and AUSFB will look to cap its mix at ~10%. We expect operating leverage to kick in gradually on account of the
benefits accruing from the scale, the bank’s improved productivity/efficiency and better reach and higher employee count
(thereby limiting the need for fresh hiring).
 Demand remains healthy; Not restricting growth – Festival demand has been healthy and the consumption in both
the rural and urban markets has not been a constraining factor for growth. The business banking and affordable housing
business has been growing at a healthy pace. AUSFB will continue to find its footing for a favourable risk-reward,
adjusting for the higher CoF in the Wheels and SBL/MBL segment before accelerating growth. The management is
confident of delivering credit growth of 25-26%, despite the challenging environment for deposit mobilization.
Sector Outlook: Positive
Company Guidance: AUSFB expects margins to remain range-bound between 5.5-5.7% in FY24E. While the impact on
margins hereon will be gradual as the bulk of the repricing is over, there is some pressure from the recent increase in peak
deposit rates on both SA and TDs. With continuous investments towards business, franchise and tech, the bank’s C-I ratio
is expected to be in the FY23 range and will decline to ~60% over the next 2 years. Credit costs will gravitate to normalised
levels and are expected to settle at 50-60bps.
Current Valuation: 3.3x FY25E ABV Earlier Valuation: 3.3x FY25E ABV
Current TP: Rs 685/share Earlier TP: Rs 700/share
Recommendation: We maintain our HOLD rating on the stock.
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City Union Bank Ltd
FY24 Guidance Maintained Despite a Sluggish H1FY24!
Recommendation: BUY | Reco Price: 134 | TP: 150 | Upside: 12%
Est. Vs. Actual for Q2FY24: NII – INLINE; PPOP – MISS ; PAT – BEAT
Changes in Estimates post Q2FY24
FY24E/FY25E: NII: -0.6%/0.2%; PPOP: -6.9%/-6.5%; PAT: +3.1%/+4.6%
Recommendation Rationale
 Growth revival likely as bank exits FY24 – Despite the slow start and an unimpressive credit growth delivery which
stands far behind industry/peers growth, CUB’s management remains confident of delivering credit growth in the range
of 12-15% in FY24E. This growth will be back-ended and led by the roll-out of the digital lending initiatives. CUB has
initiated the soft launch of its MSME digital lending process (ATS of < Rs3 Cr) in select branches on a pilot basis. Post a
test run and improvement (if required), the bank will roll out the same to all branches by Nov’23. The management
remains confident in the ability of the bank to (1) Reduce TAT and also to (2) Control slippages in the long run post the
implementation of the digital lending initiatives for the MSME/Retail segment.
 Asset Quality improvement underway – Slippages during the quarter are near pre-COVID levels and the management
expects them to remain at similar levels going forward. Asset quality improvement hereon will be led by moderating
slippages and better recoveries. This is expected to keep credit costs under control. Supported by better recoveries
(~65-70% of slippages) and backed by adequate collateral and opportunities to liquidate the same, CUB remains
comfortable with a PCR of ~51%. CUB’s focus is on reducing NNPA to 1.75-2% in the near term and expects it to
gravitate to 1-1.5% over the medium-long term.
 Ensuring smooth management transition– The Board has appointed a sub-committee to identify potential candidates
for the position of MD & CEO and expects the short listing and onboarding of new MD & CEO in the next 4-5 months to
ensure a smooth management transition. The current MD CEO’s tenure is slated to end in May’26.
Sector Outlook: Positive
Company Guidance: Despite a slow start to FY24, the management remains confident of delivering on its earlier
guidance. Growth is expected to pick up in H2FY24, enabling the bank to exit FY24 with 12-15% credit growth. Margins are
expected to remain stable at 3.7% (+/-10bps ) in FY24E. In the absence of treasury profits, the bank’s C-I Ratio is expected
to range between 42%-45%. Despite this, the management remains confident of closing FY24E with a RoA of 1.5%, which
will be largely aided by benign credit costs.
Current Valuation: 1.3x FY25E ABV Earlier Valuation: 1.3x FY25E ABV
Current TP: Rs 150/share Earlier TP: Rs 150/share
Recommendation: We maintain our BUY recommendation on the stock
DCB Bank Ltd
Growth Momentum Sustains; Margin Pressures persist!
Recommendation: BUY | Reco Price: 115 | TP: 140 | Upside: 22%
Est. Vs. Actual for Q2FY24:NII – INLINE; PPOP – MISS; PAT – MISS
Changes in Estimates post Q2FY24
FY24E/FY25E: NII: 1.6%/4.2%; PPOP: -2.0%/0.5%; PAT: -0.5%/0.9%
Recommendation Rationale
 Business momentum to remain buoyant – With its focus now shifting to Mortgages, AIB, and Business loans
(LAP)along with the support from strong growth from co-lending, DCB is eyeing to register a robust 20%+ credit growth
over the medium term. DCB has also shifted to co-lending gold loans, given its lower burden on Opex and slightly better
margins. Thus, with a focus on building a retail-led deposit franchise, the bank has redeployed its branch resources to
mobilize deposits (focus on CASA) amidst heightened competition. The bank remains focused on doubling the balance
sheet in the next 3-4 years.
 Slippages normalization likely by FY25 – The elevated slippages have been primarily from the restructured pool (as
customers coming out of moratorium take 2-3 months to start repaying regularly) and Gold portfolio. On the other hand,
the non-restructured book slippages have largely normalized. The management expects the slippage ratio to normalize
to ~2% over the next couple of quarters. DCB remains confident of better recoveries and upgrades (inch back to ~100%
of slippages vs. 73% in Q2FY24) to drive asset quality improvement in H2FY24. Credit costs are expected to range
between 35-40bps in FY24 vs. the management’s earlier guidance of 40-50bps.
 Improving fee income and Opex ratio to offset the impact of NIM compression – NIM contraction has been mainly
driven by a sharp increase in CoF while yields have remained largely stable. The management has indicated that the
CoF will continue to increase over the next 2 quarters before stabilizing. This will weigh on the margins. However,
margins could see some cushion from the repricing of small-ticket mortgage loans which are eligible to be repriced.
Considering this, we expect margins to remain at the bottom end of the guided range of 3.65-3.75%. However, RoAs will
find support from the improving trajectory of core fee income which is expected to grow in line with the balance sheet
growth. Even as the bank continues to add capacity, strong growth and improving productivity should aid in the C-A
Ratio improvement over the medium term.
Sector Outlook: Positive
Company Outlook: The management remains confident of delivering RoA/RoE of 1/14% on a steady state basis backed
by (1) Strong growth and favourable product mix supporting margins, (2) Improving core fee income, and (3) Gradually
improving Opex ratios. Keeping margin pressures in sight, we expect DCB to deliver RoA of 0.9% in FY24 and expect
improvement to 1% by FY25E.
Current Valuation: 0.85x FY25E ABV; Earlier Valuation: 0.9x FY25E
Current TP: Rs 140/share; Earlier TP: Rs 150/share
Recommendation: We maintain our BUY recommendation on the stock.
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Ujjivan Small Finance Bank Ltd
Margin Contraction Sharper than Expected; H2FY24 Outlook Strong!
Recommendation: BUY | Reco Price: 53 | TP: 64 | Upside: 21%
Est. Vs. Actual for Q2FY24: NII – INLINE; PPOP – BEAT; PAT – Marginal BEAT
Changes in Estimates post Q2FY24
FY24E/FY25E: NII: -0.3%/-1.1%; PPOP: 7.0%/2.7%; PAT: 8.1%/2.1%
Recommendation Rationale
 Portfolio Diversification efforts continue – While the Affordable Housing and FIG segment continues to drive growth
in the secured businesses portfolio, the management expects the MSE segment to pick up momentum as the business
process revamp is completed. It expects the segment to gradually contribute to growth. UJSFB has also forayed into
Gold Loans and 2-Wheeler Financing which continues to witness healthy demand and will help the bank meet the
growing needs of the customers. Thus, as the secured businesses scale up, we expect the growth in the non-MFI
business to outpace growth in the MFI business and the share of non-MFI books to improve to 30-32% by FY25E from
the current 28%.
 Margin pressures to ease in H2FY24 – The sharp ~40bps margin compression in Q2FY24 was owing to an equally
sharp increase in CoF/CoD (+30bps), while yields remained largely stable QoQ. With repricing opportunities in the MFI
book available, NIMs are likely to find support and recoup in H2FY24. ~53% of the MFI is yet to be repriced. Of this,
~28% of the book will see a 50bps repricing and the balance will see a 100bps upward revision. Additionally, the
management expects the CoF/CoD to flatten with TD repricing almost complete. Thus, UJSFB remains confident of
exiting FY24E with NIMs of ~9%.
 Focus on building a granular deposit franchise – UJSFB continues to focus on building a granular retail-dominated
liability franchise. Its recently-launched nationwide brand campaign to improve visibility has been received well, so far.
The bank recently launched digital FDs, and premium CA and SA accounts, which have been yielding positive results
and are likely to help UJSFB accelerate deposit mobilisation. Additionally, the bank is also focusing on newer products in
its effort to rake up its CA deposits, primarily from the MSE customers. Thus, UJSFB expects to exit FY24E with deposit
growth of 30%+ and maintain this momentum over the medium term.
Sector Outlook: Positive
Company Guidance: The management remains confident of clocking advances growth of over 25% in FY24E. This will be
backed by healthy growth in the MFI, Affordable Housing, and FIG segments, with a gradual pick-up in the MSE segment in
H2FY24. Deposit growth is expected to remain robust at over 30% YoY in FY24E. Margins are likely to be maintained at
~9% during the year. The bank is eyeing to exit FY24E with a RoE of 22%+ and maintain it at 20%+ over FY25-26E.
Current Valuation: 2.0x FY25E ABV Earlier Valuation: 2.0x FY25E ABV
Current TP: Rs 64/share Earlier TP: Rs 64/share
Recommendation: We maintain our BUY recommendation on the stock.
ACC Ltd
Robust Volume Growth; EBITDA Miss On lower realization. Retain BUY
Recommendation: BUY | Reco Price: 1908 | TP: 2460 | Upside: 29%
Est. Vs. Actual for Q2FY24: Revenue – BEAT; EBITDA Margin – MISS; PAT– BEAT
Change in Estimates post Q2FY24 (Abs.)
FY24E/FY25E – Revenue: 2%/1%; EBITDA: 0%/0%; PAT: 3%/0%
Recommendation Rationale
 Strong Volume Growth: The company’s volume increased by 18% YoY to 8.1 mtpa, supported by an increase in
blended cement and an improvement in efficiency parameters. It maintained market leadership across key markets. The
recent commercialization of the Ametha integrated unit (3.30 mtpa Clinker Unit and 1 mtpa Grinding Unit) in the demand-
accretive Central region will support volume growth moving forward. We expect the company to report volume growth of
13% CAGR over FY23-FY25E.
 Cost Optimization Drives EBITDA Margins: Various cost optimization drives undertaken by the company reduced its
overall cost by 17% YoY on a tonne basis to Rs 4,797. Consequently, its EBITDA margins improved to 12.4% vs 0.4%
YoY. The company’s ongoing business initiatives are expected to bring down the operating cost further. Moreover
reducing clinker factor and logistics costs, increasing sales of premium products, higher share of green energy, and a
recent hike in cement prices will expand the company’s EBITDA margin further. We foresee the EBITDA/tonne of the
company improving to Rs 920 in FY25 and margins to 16%.
 Attractive Stock Valuation and Comparative Position: The stock is currently trading at 10.5xFY24E and 8xFY25E
EV/EBITDA and EV/Tonne of $100 and $90 respectively. This is attractive compared to other larger peers in the sector
and trading much below its 10-year average EV/EBITDA multiple of 13x.
Sector Outlook: Positive
Company Outlook & Guidance: Cement industry to witness volumetric growth as demand environment remains robust
on the back of increased housing and infrastructure spend. Healthy growth and demand prospects augers well with
company’s growth ambition with leading margins.
Current Valuation: 11x FY25 EV/EBITDA (Earlier Valuation: 11.5x FY25 EV/EBITDA)
Current TP: Rs 2,460/Share(Earlier TP: Rs 2,540/share)
Recommendation: We maintain our BUY recommendation on the stock.
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Navin Fluorine International Ltd Nippon Life India Asset Management Ltd
Poor Quarter Led by Operational Issues; Awaiting New MD Strong traction in AUM Growth; Trend likely to continue

Recommendation: BUY | Reco Price: 3500 | TP: 3880 | Upside: 11% Recommendation: BUY | Reco Price: 371 | TP: 430 | Upside: 16%

Est. Vs. Actual for Q2FY24:Revenue – MISS; EBITDA– MISS; PAT – MISS Est. Vs. Actual for Q2FY24:Revenue –BEAT;Operating Profit – BEAT;PAT – BEAT

Change in Estimates post Q2FY24 Changes in Estimates post Q2FY24

FY24E/FY25E:Revenue: -8.5%/-9%;EBITDA: -9%/-10.5%; PAT: -10%/-9.7% FY24E/FY25E:Revenue7%/8.9%;Operating profit11.6%/14.1%; PAT11.1%/13.6%

Recommendation Rationale Recommendation Rationale

 Specialty Chemicals segment plans to launch 5 new molecules from Q3FY24:Thecompany plans to launch 2 new  AUM Growth to persist– NAM will receive about Rs 15,000 Cr per year for management of EPFO corpus and would

molecules from Dahej and 3 from the Surat facility. NFIL’s dedicated plant for Agrochemical Intermediate is running at full charge about 4bps, which would add 5-6 Cr per annum to company’s bottom line. Also, the management highlighted that

capacity and the company expects the MPP plant to achieve full capacity in the next year. Dedicated Agri-chem plant to a notable traction is seen in the hybrid category, wherein hybrid having a 65% share in equity having higher yields

contribute from FY25 onwards, with 50% of its capacity already booked. Newer molecules are seeing good demand. equivalent to equity asset class. SIP inflows continue to remain strong as well as sticky, wherein 64% of SIP AUM have

 HPP stabilisation issues: NFIL witnessed a halt due to a stabilisation issue at the HPP plant and the company has continued for 5 years. Thus, with healthy H1FY24 and momentum expected to continue, we revise our AUM growth

resolved the issue with the help of a partner and expects higher turnover in the coming quarters. estimates upwards to 28% for FY24E.

 Refrigerant Gas:R32 Plant has been commissioned but plant stabilisation took more time than expected. Currently, the  Increased share in high-yielding asset class–The share of high yielding equity in AUM increased from 44.5% in

plant is operating at optimal capacity. R22 on the other hand, saw weak volume and price demand. Q1FY24 to 46.8% in Q2FY24 driving a 70bps increase in yields supporting robust revenue growth. Furthermore, NAM

Sector Outlook:Cautiously Optimistic improved its equity market share by 26bps sequentially, and with the current growth momentum, we believe, NAM would

Company Outlook & Guidance: We remain cautiously positive on the NFIL as top management uncertainty with the exit continue to improve its market share.

of the MD may affect the company’s long-term strategy focus. However, the company has a proven track record of strong Sector Outlook: Positive

execution and its ability to attract business in the export segment outside its core chemistries. NFIL focus on specialty Company Outlook & Guidance: With the lower penetration of mutual funds in India, we still believe NAM is in a good

chemicals while its strategic Capex in traditional business will support future revenue growth in coming years. position to improve its AUM growth going forward as it is one of the fastest growing AMC in B-30 cities and has a strong

Current Valuation: 30xFY25E (Earlier Valuation: 35xFY25E). distributor base, thereby delivering sustainable operating profit and return ratios.

Current TP: Rs 3,880/share (Earlier TP:5,000/share). Current Valuation: 23x FY25E EPS Earlier Valuation: 22x FY25E EPS

Recommendation With an 11% upside from the CMP, we maintain our BUY rating on the stock. Current TP:Rs430/share(Earlier TP: Rs 360/share)
Recommendation: We maintain our BUY recommendation on the stock.

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SBI Cards & Payment Services Ltd
Near-Term Challenges on Margins and Credit Costs to Persist!
Recommendation: HOLD | Reco Price: 791 | TP: 850 | Upside: 7%
Est. Vs. Actual for Q2FY24: NII –INLINE; PPOP – INLINE; PAT – INLINE
Changes in Estimates post Q2FY24
FY24E/FY25E: NII-5.2%/-8.9%;PPOP -1.4%/-4.1%; PAT -2.6%/-5.4%
Recommendation Rationale
 Operational metrics growth to remain strong – With the commencement of the festive season, the management
remains confident of maintaining growth momentum with spends growth visible across categories. SBIC has seen strong
growth in spends on both the retail and corporate spends with healthy traction in discretionary and travel spends. New
customer additions continue to remain healthy and the company’s focus on the self-employed segment for incremental
sourcing remains unwavering. Backed by a strong consumption pattern, we expect SBIC to deliver healthy CIF/Spends
growth of 20/27% CAGR over FY23-25E.
 NIM challenges to persist in the near term – While SBIC has kept lending rates unchanged and the share of interest-
yielding assets has also remained stable, an increase in CoF resulted in margin compression of 12bps during the
quarter. Going forward, the management expects a marginal inch-up in the CoF, while movement in yields would remain
a function of the product mix. Thus, challenges on NIMs are likely to persist in H2FY24.
 Treading cautiously to maintain asset quality – The company has taken appropriate actions both at the portfolio level
and in terms of collection strategy for the stress in the 2019 portfolio (highlighted in Q1FY24). It has been able to control
the stress and has seen its efforts yield positive results. However, the stress in the unsecured lending space which has
been lately visible at a systemic level has also rubbed off on a certain set of SBIC’s individuals/customers,. Thus, the
management expects credit costs to remain elevated even in Q3FY24. Exercising caution, SBIC has stopped sourcing
from certain pockets of Tier III and Tier IV cities owing to higher delinquencies. However, on a positive note, the
delinquency trend in the new vintage book (~50% mix) remains benign, so far.
Sector Outlook: Cautiously Positive
Company Outlook:Business growth momentum is likely to continue supported by strong volume and spends growth during
the upcoming festive season. However, near-term headwinds on asset quality/credit costs and margins persist and we
remain watchful of the same.
Current Valuation: 23x FY25E EPS Earlier Valuation: 23x FY25E EPS
Current TP: Rs 850/share Earlier TP: Rs 900/share
Recommendation: We maintain our HOLD recommendation on the stock.
Britannia Industries Ltd
Strong Operating Performance; Maintain BUY
Recommendation: BUY | Reco Price: 4400 | TP: 5150 | Upside: 17%
Est. Vs. Actual for Q2FY24:Revenue – MISS;EBITDA – BEAT; PAT – BEAT
Changes in Estimates post Q2FY24
FY25E/FY26E:Revenue:-4%/-5%; EBITDA:-1%/-4%; PAT:-1%/-4%
Recommendation Rationale
 BRIT Q2FY24 Results were above our estimates on the operational front, led by better-than-expected Gross and
EBITDA margin expansion. However, revenue growth stood at 1% (flat volume growth) owing to high base, increased
competition, and price cuts. The management highlighted that it witnessed heightened competitive intensity in HFy241
and Q2Fy24 amidst lower raw material prices. However, it undertook price cuts which led to a recovery in the company’s
market share. EBITDA margins are likely to remain at the current levels despite an increase in ad spending.
 Q2FY24 results were strong on the operating front and we believe the worst is behind for the company as 1) Raw
material prices of palm and packaging costs are in a downward trajectory (though they are still firm for wheat and sugar
prices), 2) Rural-led distribution expansion and focused-approached in the Hindi belt region is expected to help the
company gain market share, and 3) Rural revival is expected in the coming quarters, supporting recovery. Moreover,
BRIT’s long-term prospects remain strong as the management has a proven execution track record, robust portfolio
planning through NPD in core and adjacencies, and a focus on continued distribution expansion in direct as well as rural
markets.
Sector Outlook: Positive
Company Outlook & Guidance: We maintain our BUY rating on the stock as the company’s long-term story remains intact
Current Valuation: 47xSep-25 EPS (Earlier Valuation: 48x June-25 EPS).
Current TP: Rs 5,150/share (Earlier TP: Rs 5,110/share).
Recommendation: With an upside potential of 17% from the CMP, we maintain our BUY rating on the stock.
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Colgate-Palmolive (India) Ltd Indian Hotels Company Ltd

Pricing Drove the Growth; Maintain HOLD Improvement in QoQ Realizations

Recommendation: HOLD | Reco Price: 2034 | TP: 2100 | Upside: 3% Recommendation: BUY | Reco Price: 375 | TP: 415 | Upside: 11%

Est. Vs. Actual for Q2FY24: Revenue – MISS; EBITDA – BEAT; PAT – BEAT Est. Vs. Actual for Q2FY24:Revenue – INLINE; EBITDA Margins – Miss; PAT – MISS
Changes in Estimates post Q2FY24` Changes in Estimates post Q2FY24
FY25E/FY26E – Revenue 1%/1%; EBITDA 2%/3%; PAT 3%/3% FY24E/FY25E:Revenue-3.2%/-5.1%;EBITDA Abs.-10.2%/-8.3%; PAT-8.9%/-7.3%
Recommendation Rationale Recommendation Rationale:
 Pricing Led the Growth: The toothpaste segment grew in high single digit, while toothbrush and exports dragged  Indian Hotels (IHCL) reported consolidated revenue growth of 16.3% YoY which stood in line with our
volumes down. The company doubled down on Colgate Strong Teeth re-launch by expanding its reach/availability.
Colgate Max Fresh, too, was re-launched which saw strong growth in Q2. In the Toothbrush segment, the company
expectations.
restaged Colgate Zig Zag with a superior mix. Its EBITDA margins improved by 337bps YoY to 33% on account of better-
than-expected gross margin expansion and cut down on other expenses.
 This growth was mainly due to the increase in RevPAR to Rs 9,840, up 17.9% YoY in domestic hotels, while
international assets in the US and UK reported growth of -4.0% YoY and 22% YoY, respectively.
 Ad-spends remains elevated: In the previous quarter, the management had highlighted that ad spends is likely to
remain elevated in FY24 on account of new launches/re-launches and in an effort to increase the company’s market
share. In line with this guidance, the company’s ad spends in Q2FY24 accounted for 14% of sales and was up 30% on a
 The company reported an EBITDA margin of 24.8%, up 90bps YoY despite an increase in losses (Rs 27 Cr)
YoY basis. in the US assets.
 Strategic growth pillars: In the last analyst meet, the new CEO highlighted the company’s strategic growth pillars,
Sector Outlook:Positive
which included – 1) Category development through increased marketing spends, 2) Science-led premiumisation, 3)
Increasing usage frequency along with driving rural penetration, and 4) Expanding Personal Care portfolio under Company Outlook & Guidance: In H1FY24, standalone occupancies and realizations reached to 75.3% and
Palmolive. We believe that while these initiatives are positive from a long-term perspective, they will take time to bear
Rs 13,000 respectively. Improvement from here on seems to be limited now. The company’s US assets are
fruits as slowing category growth is adding woes to the short-term performance. Furthermore, in light of increasing
competitive intensity and the long gestation period for the said strategy to work out, we await initial signs of revival in expected to incur losses over the next 4-6 quarters. Supply, too, could match in non-luxury segment in the
volume growth and market share gains.
upcoming years.
Sector Outlook: Neutral Current Valuation: PE 38x for FY26 earnings (Earlier Valuation: PE 38x)
Company Outlook & Guidance: We increase our FY25/26 PAT estimates by 3% each to account for near-term margin
Current TP:Rs 415/share (Earlier TP:Rs 450/share)
improvement. However, due to limited upside potential from the CMP, we maintain our HOLD rating on the stock.
Recommendation: BUY
Current Valuation: 37x Sep-25 EPS (Earlier Valuation: 37x Jun-25 EPS).
Current TP: Rs 2,100/share (Earlier TP: Rs 1,830/share).
Recommendation With a limited upside potential from the CMP, we ascribe a HOLD rating on the stock.

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PNC Infratech Ltd
Broadly In-Line Results; New Order Inflow Crucial
Recommendation: BUY | Reco Price: 424 | TP: 415 | Upside: -2%
Est. Vs. Actual for Q2FY24: Revenue – MISS; EBITDA Margin – INLINE; PAT – MISS
Revision in Estimates post Q2FY24
FY24E/FY25E: Revenue: 0%0/%; EBITDA: -2%/0%; PAT: -2%/-2%
Recommendation Rationale
 Robust & Diversified order book: PNCIL has an order book of Rs 13,404 Cr (as of 30th Sep'23), indicating revenue
visibility for the next 2-2.5 years. In addition, it has another four HAM projects, totalling Rs 4,421 Cr for which the
appointed date is expected by the end of FY24. The order book is well diversified between Roads and Water projects.
This coupled with improved execution quality, we expect PNCIL to grow its revenue by 12% CAGR over FY23-25E.
 Expects order inflow of Rs 10,000 Cr in FY24: In the Union Budget 2023-24, Capex has been increased by 33% for
the Road sector and by 27% for the JJM, thereby providing greater opportunities for companies like PNCIL. With a
strong bid pipeline of over Rs 1 Lc Cr, the management expects an order inflow of Rs 10,000 Cr in FY24.
 High priority to asset monetization: The company gives top priority to asset monetization and has selected 12
projects, including 11 HAM assets and 1 BOT projects. The due diligence in this regard has been completed with the
interested party and monetization of the assets is expected by the end of FY24. This will free up capital for future growth.
Sector Outlook: Positive
Company Outlook & Guidance: For FY24, the company expects revenue growth of 10-15%. EBITDA margins are
expected to be between 13%-13.5%. The management outlined that there has been a delay in project awarding but expects
the same to gain pace in Q3/Q4FY24.
Current Valuation: 11x FY25 EPS (Earlier Valuation: 11x FY25 EPS) and HAM assets 1x book value
Current TP: Rs 415/share (Earlier TP: Rs 435/share)
Rites Ltd
Weak Result with Margins Under Pressure; Retain HOLD
Recommendation: HOLD | Reco Price: 442 | TP: 420 | Upside: -5%
Est. Vs. Actual for Q2FY24:Revenue–MISS; EBITDA Margin – MISS; PAT – MISS
Change in Estimates post Q2FY24 (Abs.)
FY24E/FY25E:Revenue:-11%/-4%;EBITDA: -16%/-11%; PAT:-18%/-12%
Recommendation Rationale
 Healthy order book: With an order inflow of Rs 329 Cr in Q2FY24, the company's overall order book stands healthy
at Rs 5,529 Cr, giving revenue visibility for the next 2 years. The consultancy segment comprises 48% of the
orderbook, which is a high-margin business. Moreover, we foresee sustainable growth in both the domestic and
overseas consultancy business of the company and its current margins are likely to sustain moving forward.
 Margins under pressure: For FY24, the management has guided that the margins will be under pressure across all
businesses due to a change in revenue mix as well as due to the company bidding for projects under competitive
mode rather than nomination mode. However, it aims to achieve previous EBITDA levels through tapping
opportunities across all business segments. Against this backdrop, we revise our margin estimates from earlier 27-
28% to 25-26%.
 Export vertical to support revenue growth: Recently, the company emerged as an L1 bidder for the export of
rolling stock to Mozambique and Bangladesh. This will notably support the revenue growth of the company in FY25.
Keeping this in view, we expect the company to grow its revenue at a CAGR of 9% over FY23-FY25E.
 Healthy Dividend Payout: In FY23, the company declared a dividend of Rs 20.5/share (86% payout),implying a
healthy dividend yield of 4.6% on the CMP. The board has declared an interim dividend of Rs 4.5/share in Q2FY24
and the total interim dividend including Q1FY24 now stands at Rs8.25/share. We believe that consistency in
dividend payout will be maintained. This will also support protecting any major downside risk in the stock.
Sector Outlook: POSITIVE
Company Outlook & Guidance: The management refrained from giving any revenue guidance and maintained that
margins would remain under pressure for some time. On the brighter side, it expects good export orders in FY24.
Current Valuation: 17xFY25E(Earlier Valuation: 17x FY25E EPS).
Current TP: Rs420/share(Earlier TP:Rs 500/share).
Recommendation: We maintain our HOLD recommendation on the stock and revise our estimates downward
for FY24 and FY25 respectively.
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SBI Life Insurance Company Ltd IndiaMART InterMESH Ltd

APE Growth Revives After Soft Q1; VNB Margins Holding Up Robust Result; Market Share Gain Continues

Recommendation: BUY | Reco Price: 1303 | TP: 1535 | Upside: 18% Recommendation: BUY | Reco Price: 2766 | TP: 3625 | Upside: 31%

APE Growth Revives After Soft Q1; VNB Margins Holding Up Est. Vs. Actual for Q2FY24:Revenue – INLINE; EBITDA Margin – Inline; PAT – MISS

Est. Vs. Actual for Q2FY24: NPE – BEAT; APE – INLINE; VNB – INLINE Changes in Estimates post Q2FY24
Changes in Estimates post Q2FY24 FY24E/FY25E:Revenue0.5%/0.5%;EBITDA Margins0.5%/0.5%; PAT1%/1%
FY24E/FY25E: NPE -0.4%/-0.4% ; PAT 4.9%/6.2%; EV 0%/0% Recommendation Rationale
Recommendation Rationale
 IndiaMart has sustained market share gain with 203Ksuppliers.
 H2FY24 expected to be better than H1FY24 – The management expects the ULIP mix to decline going forward with a
focus more on NPAR and protection products. The company aims to have a balanced mix with ULIP products constituting  The product profile stood strong with 102Mn products across 56 industries.
55% and non-ULIP products constituting 45% of the total. In H1FY24, growth in ULIP is attributed to positive movement
 The management is confident of gaining medium-term demand momentum and expects improvement on
in the equity market. The company is also working on launching new products, especially in the NPAR and Protection
segments. Despite a soft Q1FY24, the management remains confident of delivering APE growth of ~20% in FY24, as it the margin front as well.
expects robust performance in H2FY24. Sector Outlook: Positive
 Margin expected to remain range bound – Margin declined marginally to 28.6% from 28.8% QoQ on account of
Company Outlook & Guidance: Employee costs to moderate going ahead which will help the company in
change in the product mix, wherein the mix of ULIP has increased. However, the management indicated that the margin
improving its operating margins profile. The outlook on revenue growth momentum still remains strong.
in the respective product level is at its best and intact. Furthermore, the focus remains on policy issues in NPAR and
protection segments through all channels for a healthy product mix, which would support margins. The management Current Valuation: 40x FY25E P/E; Earlier Valuation: 40x FY25E
stuck to its earlier guidance of margins to be in the range of 28-30% for FY24.
Current TP: 3,625/share(Earlier TP:Rs 3,625/share)
Sector Outlook: Positive
Recommendation: Given the company’s strong growth potential backed by a robust product profile with
Company Outlook & Guidance: We continue to like SBI Life Insurance for its strong VNB margins, robust APE growth, leading market share and superior execution capabilities, we maintain our BUY recommendation on the stock
healthy cost ratios and robust performance delivery potential.
Current Valuation: 2.3x FY25E EV (Earlier Valuation: 2.3x FY25E EV)
Current TP: Rs 1,535/share (Earlier TP: Rs 1,535/share)
Recommendation: We maintain our BUY recommendation on the stock.

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KPIT Technologies Ltd Asian Paints Ltd

Robust Execution; Resilient Outlook to Support Growth Missed Estimates; Maintain HOLD

Recommendation: BUY | Reco Price: 1218 | TP: 1500 | Upside: 23% Recommendation: HOLD | Reco Price: 2958 | TP: 3200 | Upside: 8%
Est. Vs. Actual for Q2FY24: Revenue – MISS; EBITDA – MISS ; PAT – MISS
Est. Vs. Actual for Q2FY24: Revenue – BEAT; EBITDA Margin – BEAT; PAT – BEAT; Deal Wins–BEAT
Changes in Estimates post Q2FY24
Changes in Estimates post Q2FY24
FY25E/FY26E – Revenue: -3%/-4%; EBITDA: -5%/-7%; PAT:-7%/-9%
FY24E/FY25E:Revenue0%/0%;EBITDA Margins0%/0%; PAT0%/0% Recommendation Rationale
 Missed Estimates: Asian Paints results missed all estimates, primarily owing to weak consumer sentiments and rural
Recommendation Rationale witnessing sustained weakness. However, the company saw a healthy exit in Sep’23 and expects Oct’23 and Nov’23 to
be strong months on account of strong festive season and wedding days. The company's gross margins increased due
 The management has indicated strong broad-based growth across verticals backed by a strong deal pipeline and better
to favourable raw material prices (4% raw material deflation in Q2FY24). For FY24, the management has guided
engagement with clients. continued double-digit volume growth in the Decorative Business, despite the high base in FY23 and subdued Q2
performance, and maintains its EBITDA margin guidance of 18-20%. However, it could see some volatility in crude oil
 TCV stood strong in Q2FY24 with deal wins at $156Mn prices.

 The management is confident of gaining medium-term demand momentum on the backdrop of the deals it has won in the
previous quarters. It also expects improvement on the margin front.
Sector Outlook: Cautiously positive
Company Outlook & Guidance: Strong revenue growth momentum will continue backed by robust deal wins and
strong addition of capabilities.FY24 guidance is upgraded to 37%+ YoY in CC terms as against 27%-30% YoY in CC
 We maintain a cautious stance on Asian Paint in the near term. However, we are positive about the company’s
longer-term prospects: The company has all the ingredients to outperform its peers in the long run. Some of these
factors are: – 1) Improving demand, especially in rural areas, 2) Falling raw material prices and efficient sourcing, and 3)
The recent announcement to expand production presence and backward integration of key raw materials. These are
steps in the right direction to achieve the next level of growth and secure its market share in the long term. However, we
believe the stock is likely to see sideways movement owing to the uncertain demand environment and increased
competition from the new entrants which will keep the profitability under check in the near term.

terms. EBITDA Outlook increased to 20%+ from 19%-20% earlier.
Current Valuation: 43x FY26E P/E; Earlier Valuation: 43x FY26E
Current TP: 1,500/share (Earlier TP: Rs 1,500/share)
Recommendation: Given the company’s strong growth potential backed by robust deal wins and superior execution
capabilities, we recommend a BUY rating on the stock.
Sector Outlook: Neutral
Company Outlook & Guidance: We maintain a HOLD rating on the stock owing to near-term growth concerns.
Current Valuation: 51x Sep-25 EPS (Earlier Valuation: 53x June-26 EPS).
Current TP: Rs 3,200/share (Earlier TP: Rs 3,500/share).
Recommendation With an 8% upside from the CMP, we maintain our HOLD rating on the stock

15
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Cipla Ltd Dr Reddys Laboratories Ltd

Niche Product Mix in Favor of Margins Weak Base Business in the US and India

Recommendation: BUY | Reco Price: 1176 | TP: 1350 | Upside: 15% Recommendation: HOLD | Reco Price: 5397 | TP: 5850 | Upside: 8%

Est. Vs. Actual for Q2FY24:Revenue – BEAT; EBITDA Margin – BEAT; PAT – BEAT Est. vs. Actual for Q2FY24:Revenue –BEAT; EBITDA Margin– INLINE; PAT –BEAT

Changes in Estimates post Q2FY24 Changes in Estimates post Q2FY24:

FY24E/FY25E:Revenue: 6.0/4.9%;EBITDA Abs: 8.8%/6.6%; PAT 9.1%/8.7%
FY24E/FY25E:Revenue: 0.2%/ 0.6%;EBITDA Abs.:5.6%/1.0%; PAT: 6.6%/0.8%
Recommendation Rationale:
Recommendation Rationale
 The US business reported sales of $382 Mn (-2.0% QoQ), led by low growth in the base business (~$249 Mn, +1.1%
 Cipla reported the highest-ever US business of $229 Mn (+3.7% QoQ),which was majorly driven by better execution in
QoQ), gRevlimid sales of ~$100 Mn and new acquisition of $33 Mn.
the base business and higher-than-expected revenue contribution from gRevlimid.

 Gross margins improved by 243bps YoY to 65.4% due to a high proportion of gRevlimid along with low other expenses,  India's business continues to struggle with sub-par growth to the IPM. During the quarter, DRRD reported revenue
while stable R&D expenses led to EBITDA margins of 26%. growth of 3% YoY due to the weak Acute season and the impact of NLEM.

 The company’s India business (ex-Covid) grew by 11%, driven by chronic therapies that posted better than expected
performance.
Sector Outlook:Positive
Company Outlook & Guidance: The base business in the US reported better-than-expected results ($190-$200 Mn). This
was driven by the following factors: 1) Only a few distributors buying locally manufactured drugs,2) Channel readjusting, 3)
Shortage of drugs in a few segments, and 4) The company launching new products in the market. gSynbicort and one
Peptide ($300-400 Mn) products are expected to be launched in H2FY24 and the company has planned to launch two more
peptides in FY25E.
Current Valuation: PE 25x for FY26 earnings (Earlier Valuation: PE 25x)
Current TP:Rs 1,350/share (Earlier TP:Rs 1,250/share)
Recommendation: BUY
 The quarter had a PLI of Rs 159 Cr and adjusting for the same, the EBITDA margin came in at ~26.6%, reflecting weak
margins in the Base business.
Sector Outlook:Positive
Company Outlook & Guidance: We believe the company’s strategy of investing in various businesses may provide growth
in the long term. The company is proactively building a global pipeline of Biosimilars, developing NCE for immunooncology,
and building up a Neutraceuticals portfolio, vaccines, CDMO, and digital healthcare platforms.
Current Valuation: PE of 20x for FY26 earnings (Earlier Valuation: PE 22x)
Current TP:Rs 5,840/share (Earlier TP:Rs 6,000/share)
Recommendation: HOLD

16
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V I P Industries Ltd Embassy Office Parks REIT

Weak Quarter; Revamping Organizational Strategy Post CEO Exit Lower Occupancies Led by Early Lease Exits

Recommendation: HOLD | Reco Price: 596 | TP: 625 | Upside: 5% Recommendation: BUY | Reco Price: 310 | TP: 350 | Upside: 13%

Est. Vs. Actual for Q2FY24:Revenue – MISS ;EBITDA – MISS; PAT – MISS
Change Estimates post Q2FY24
FY24E/FY25E:Revenue: -6%/-6%;EBITDA: -9%/-10%; PAT: -10%/-14%
Recommendation Rationale
 Change in Trajectory – Post the hard exit of CEO Anindya Dutta, Neetu Kashiramka, who was the company’s then
CFO, was raised to the position of new MD. VIP under her leadership has started with acceptance of not performing to
their own expectation or targets & plans to revamp organizational strategy with focus from Hard Luggage to Soft
Luggage. New MD plans to leverage VIP, Skybag brand value to extract benefits from premium category. VIP has also
put a hold on its 200 Cr capex on soft luggage and plans to spend 50 Cr on Hard Luggage. Hard luggage demand is
higher than what the company can service at this point in time.
 Tepid Revenues& Margins: The demand slowdown in the Middle East and rising Chinese supply have affected
international business which led to lower exports. Sales growth and absolute profit were not inline with the company's
own expectations. EBITDA margin declined on account of the increase in Advt.& DCA Expenses and higher other
expenses on account of eCom spends.
Sector Outlook: Positive
Company Outlook &Guidance: India is moving towards premiumization. With that, the management's focus is to capitalize
on brand equity like VIP, Skyback, and Carlton, targeting a much better premium mix in H2. The company has revised its
target gross margins at 53-55% for FY24 as it expects demand to pick up from Q3FY24.
Current Valuation: 35x FY25E (Unchanged)
Current TP: 625(Unchanged)
Recommendation: We believe that fundamental demand indicators like passenger traffic and hotel occupancy are all
trending upward. There is a significant wedding cohort in Q3FY24, and industry experts are raving about an excellent Q3.
However, the company has to prove itself with ongoing management transition and the change in top strategy. We,
therefore, maintain our HOLD rating on the stock& maintain our target price of 625/share implying a 5% upside from CMP.
Est. Vs. Actual for Q2FY24:Revenue –INLINE;EBITDA Margin – INLINE; PAT – BEAT
Changes in Estimates post Q2FY24
FY24E/FY25E:Revenue-0.5%/-0.4%;EBITDA Absol. -0.5%/-0.4%;PAT: -5.1%/-4.1%
Recommendation Rationale
 Embassy increased the yearly expiries to 4.2 mn sq. ft for FY24 (from 2.8 Mn Sq. ft at the end of Q1FY24). This is on
account of a large IT/ ITes exit.A total of 1.6 mn sq. ft was vacated during the quarter.
 The company has offered a total distribution of Rs 520 Cr (payout ratio 100%) which resulted in a distribution per unit of
Rs 5.53.
 The company’s Hotel business revenue also increased due to an improvement in average occupancy to 52% YoY (vs.
49%) and average daily rates to Rs 10,383 YoY (vs. Rs 8,403).
Sector Outlook:Positive
Company Outlook & Guidance: The distribution growth did not flow through due to higher interest costs and the
refinancing of zero-coupon bonds. Citing a lack of regulatory and macroeconomic clarity, the management has refrained
from giving any guidance.
Current Valuation: PE 25x for FY25 earnings (Earlier Valuation: PE 25x)
Current TP: Rs 350/share (Earlier TP:Rs 352/share)
Recommendation: BUY

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 NO CHANGE
Westlife Development Ltd
Temporary Blip in Performance; Maintain BUY
Recommendation: BUY | Reco Price: 879 | TP: 1000 | Upside: 14%
Est. Vs. Actual for Q2FY24: Revenue – MISS ; EBITDA – MISS ; PAT – MISS
Changes in Estimates post Q2FY24
FY25E/FY26E – Revenue: -7%/-9%; EBITDA: -6%/-9%; PAT: -12%/-16%
Recommendation Rationale
 Numbers marginally miss our estimates: Westlife Foodworld’s print was lower than our estimates. Revenue grew 7% YoY, while
SSSG stood at 1%, which grew on a high base of 40% SSSG growth. The management shared that despite weak SSSG, the
company managed to increase its market share in the West and South regions. It also expects demand recovery in Q3FY24, led by
the festive season. Average Revenue per store on a TTM basis stood at Rs 6.65 Cr (up 7.4% YoY), while on-premise and off-
premise sales grew 7% YoY. Gross margins improved on account of stable input cost, cost savings, and earlier pricing actions.
EBITDA margins declined to 16% on account of higher SG&A. It expects similar EBITDA margins are likely to be tracked at current
levels for H2FY24.
 Maintained FY24/Vision 2027 store opening guidance: Despite weak performance, the company has maintained FY24/Vision
2027 store opening guidance of 40-45/ 580-630 stores
 Vision 2027 strategy remains intact: In Dec’22, WDL conducted a Vision 2027 analyst meeting in which the management
outlined various strategic initiatives to drive the next leg of growth for the company. These are – 1) Scaling up fast-growing
categories, 2) Leveraging omnichannel strategy, 3) Increasing store opening guidance to 40-45 stores from 25-30 stores earlier,
and 4) Improving operating margins to 18-20% from the current 16%. We believe the management is likely to deliver on the above
initiatives based on its past track record of delivering Revenue/EBITDA growth of 17%/51% over FY16-20. Moreover, bright future
prospects of the overall QSR industry – formalization, rising disposable income, eating out, etc. will further aid in the company’s
growth.
Sector Outlook: Positive
Company Outlook & Guidance: We maintain our BUY recommendation on the stock as the company’s strong growth levers
remain intact.
Current Valuation: 31x Sep-25 EV/EBITDA (Earlier: 31x June-25 EV/EBITDA)
Current TP: Rs 1,000/share (Earlier: TP Rs 1,040share).
Apcotex Industries Ltd
Respite in Margins Not Visible; New Capex Takes a Toll on PAT
Recommendation: SELL | Reco Price: 490 | TP: 400 | Upside: -18%
Est. Vs. Actual for Q2FY24: Revenue - INLINE; EBITDA - BEAT; PAT - BEAT
Change in Estimates post Q2FY24
FY24E/FY25E: Revenue-5%/-3%; EBITDA -8%/-11.5%; PAT-11%/-13.4%
Recommendation Rationale
 Margins to stay under pressure–Although margins beat our estimates in the current quarter as we factored in the
impact of inventory write downs, prices rebounded marginally in Aug-Sep, albeit margins remain lower than historical
levels for Latex below 10% compared to 15% pre-Covid. This decrease in margins is offsetting the increase in volumes.
 Company incurred Capex of 200 Cr for two plants – Sharp fall in price of finished goods has reduced absolute
EBITDA which along with higher depreciation and interest expense (attributable to recent Capex) and increase in working
capital requirement has led to halving of PAT margins.
 No new growth trigger– The company has no potential growth trigger in the near term to sail through dependence on
Latex. We believe investing in other products would be a challenge on the balance sheet given the current macros.
 Company Outlook & Guidance: We maintain our Negative outlook on the rubber/latex industry due to demand-supply
mismatch and challenging market in terms of margins. We expect a slower ramp-up in the new plant's capacity utilisation
levels and lower realisation from weakened NBR, XNB, and Paper demand.
Current Valuation: 15xFY25E
Current TP: 400(Earlier TP:Rs 425)
Recommendation: We continue to have a negative outlook on the business in the short term and maintain our SELL rating
on the stock.
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 NO CHANGE
SIS Ltd
Superior Execution; Improving Outlook to Support Growth
Recommendation: BUY | Reco Price: 412 | TP: 475 | Upside: 15%
Est. Vs. Actual for Q2FY24: Revenue – INLINE; EBITDA Margin –INLINE;PAT – MISS
Changes in Estimates post Q2FY24
FY24E/FY25E: Revenue 0.5%/0.5%; EBITDA 1%/1%; PAT 0.5%/ 1%
Recommendation Rationale
 The outlook for vertical businesses such as Security Solutions and Facility Management remains good.
 International business has improved and is likely to regain momentum.
 The management is confident that demand will pick up in the medium term based on orders won in recent
quarters. It also expects further improvement on the margin front.
Sector Outlook: Cautiously positive
Company Outlook & Guidance: The management has given an improved outlook for FY24,backed by
the robust pick-up in Security business and Facility Management in India. The company’s margins are
likely to expand in the near term.
Current Valuation: 16x FY25E P/E; Earlier Valuation: 16x FY25E
Current TP: 475/share(Earlier TP:Rs 475/share)
Recommendation: Given the company’s strong recovery potential backed by strong deal wins and improved
client engagement, we maintain our BUY recommendation on the stock.
APL Apollo Tubes Ltd
Largely Inline Results; Growth Drivers Remain Intact
Recommendation: BUY | Reco Price: 1603 | TP: 1950 | Upside: 22%
Est. Vs. Actual for Q2FY24:Revenue –INLINE; EBITDA/t– Slight BEAT; PAT–Slight BEAT
Change in Estimates post Q2FY24:
FY24E/FY25E:Revenue:-2%/2%;EBITDA:-2%/6%; PAT: -4%/7%
Recommendation Rationale
 Raipur Plant Ramp-up: The Raipur capacity of 1.2MT is now on stream (from 1MT in Q1FY24). In Q2FY24, the plant
achieved volumes of ~100kt at 28% utilization level (vs. 75kt in Q1FY24). This will ramp up to 40% utilization in Q3FY24.
Volumes will eventually ramp up to ~1.2MT at a 100% capacity utilization level by FY26 as the company’s market-
creation efforts have bought order visibility. EBITDA/t at Raipur improved to Rs 5k/t (from Rs 4k/t in Q1FY24) which will
increase to a steady state of Rs 6k-7k/t once the ramp-up gets completed over the next 2.5 years.
 Blended EBITDA/t to improve from hereon: With the ramp-up of the Raipur plant, the blended EBITDA/t is expected to
improve gradually. InFY23, the EBITDA/t stood at ~Rs 4,481/t. The target is to achieve Rs 5,000/t in FY24and Rs 5,500/t
in FY25 and Rs 6,000/t in FY26, assuming the Raipur plant manages to deliver products at Rs 6k-7k/t.
Sector Outlook: Positive
Company Outlook & Guidance: The company has Vision 2025 where it targets Revenue/EBITDA to grow 2x/2.5x over
FY23 levels by FY26. FY24 sales volume guidance is now at the lower end of the previous guidance range of 2.8-3MT.
Moreover, capacity and sales volume are expected to reach 5.0MT by FY25 and FY26 respectively. The company has
planned a Capex of ~Rs 6 Bn for a 5Mtpa expansion, out of which Rs 3.56 Bn was spent in H1FY24, and the remaining Rs
2.0 Bn will be spent in H2FY24.The company’s vision is to grow to capacity of 10MT by FY30. Capex for this will start only
after the 1st5mtpa expansion phase stabilizes.
Current Valuation: 33xP/E Sep’25 EPS (Roll over from32x P/E Jun’25 EPS)
Current TP: Rs 1,950/share(Earlier TP: Rs 1,630/share)
Recommendation: Incremental production from the Raipur plant will drive higher EBITDA/t. We maintain our BUY rating.
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 NO CHANGE

Bharti Airtel Ltd

Broad-based Growth; Gain in Market Share Continues

Recommendation: BUY | Reco Price: 914 | TP: 1155 | Upside: 26%

Est. Vs. Actual for Q2FY24:Revenue – MISS;EBITDA Margin–BEAT; PAT – MISS

Changes In Estimates post Q2FY24
FY24E/FY25E: Revenue: 1%/1%; EBITDA: 1%/1%; PAT: 2%/2%
Recommendation Rationale

 The company's digital portfolio is gaining momentum along with market share gains

 The company continued a strong share of 4G/5G net ads in the market with the 4G customer base growing by 7.7 Mn
QoQ and 27.2 Mn YoY. This forms 69% of the overall customer base now.

 ARPU continues to be the best in the industry and average data usage per customer stands healthy at 21.7GB/month.

 The management is confident of gaining longer-term demand momentum on the backdrop of the strong digital services
portfolio, better rural conversion to 4G, and better cash flow management.

Sector Outlook: Positive

Company Outlook & Guidance: The company has a strong focus on quality customers with increasing ARPU and
revenue. The management is confident of gaining industry-leading growth backed by strong rural penetration and
a better service portfolio.
Current Valuation: SOTP based
Current TP: 1,155/share(Earlier TP:Rs 1025/share)
Recommendation: Given the company’s strong recovery potential backed by strong conversion, rising digital portfolio, and
moderated Capex. We maintain our BUY recommendation on the stock.

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DOWNGRADES

21
 DOWNGRADES

Praj Industries Ltd

Increasing Share of Export & Services Orderbook to Improve Margins

Recommendation: HOLD | Reco Price: 534 | TP: 580 | Upside: 9%

Est. Vs. Actual for Q2FY24:Revenue-MISS; EBITDA - MISS; PAT- MISS

Changes in Estimates post Q2FY24
FY24E/FY25E:Revenue: -4%/-1%; EBITDA:-2.4%/-1%; PAT: -5.5%/1%
Recommendation Rationale

 Strong Exports, Good Quality Orderbook Momentum likely to continue- The company received its first big order
from the USA and the management remains confident in demand for low-carbon intensity Ethanol in the USA as SAF
demand increases. The company also expects the revenue share of Engineering Services to increase in future and both
have higher margins than the traditional business.

 CBG& Other Business –1/5 large CBG project has started with execution, enquiry pipeline remains strong. The PHS
segment was surprised with a 100 Cr+ order in Q2FY24. Engineering continues strong order inflow as CPES caters to
ETCA needs.

 Hiccup in Domestic Ethanol Business – A change in domestic grain policy stopped the supply of rice for ethanol
production which halted several prospective and existing grain-based projects, although revised prices for grain-based
ethanol by OMCs and reduction on GST for molasses have given certain comfort. On the other hand, lower sugar
production guidance by the ISMA may have a possible impact on sugar-based plants. We remain cautious about the
impact of these developments.

 Company Outlook & Guidance: We maintain our Positive outlook on Praj Industries. However, the company's stock
has seen a massive run-up which has led to the stock being fairly valued. We marginally revise our FY24/25E estimates
to factor in the hiccup in order execution in H1FY24 and higher margins in the coming quarters.

Valuation: 25x FY26E (Earlier: 30x FY25E)

Current TP: Rs 580 (Earlier: Rs 510)

Recommendation: We believe that the transition towards cleaner forms of energy is the only sustainable way to grow and
this will attract major global investments in the coming years as global environmental issues create existential challenges.
As we roll forward our estimates to FY26E,we revise our rating from BUY to HOLD as the recent move limits the
upside potential to 9% from the CMP.

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 Earnings Wrap Archive – Q2FY24
Refer to our past Weekly Earnings Wraps for Q2FY24 here:

Q2FY24 Earnings Wrap – WEEK I

Q2FY24 Earnings Wrap – WEEK II

Q2FY24 Earnings Wrap – WEEK III

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Digitally signed by NEERAJ

NEERAJ CHADAWAR CHADAWAR
Date: 2023.11.03 15:33:43 +05'30'

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