Kotak Daily 08-May-24

India Daily
May 08, 2024 NIFTY50 [May 07]: 22,303
Contents
Daily Alerts
Results
Godrej Consumer Products: Investor meet 2024 takeaways
Dr Reddy's Laboratories: Muted end to the fiscal
JSW Energy: Aggressive growth path; expensive valuations
Lupin: Operationally on track
IRB Infrastructure: Well-placed with growth capital
Max Financial Services: Fares well
Kansai Nerolac: Subdued print
Navin Fluorine: Significant recovery is some distance away
Private Circulation Only.

This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
RESULT
Godrej Consumer Products (GCPL) BUY

Consumer Staples
CMP(₹): 1,322 Fair Value(₹): 1,450 Sector View: Attractive NIFTY-50: 22,303 May 08, 2024
Investor meet 2024 takeaways Company data and valuation summary

We like GCPL management’s clarity$ in thinking, consistency in strategy and Stock data
simplified action plans. Management expressed confidence on multiple
CMP(Rs)/FV(Rs)/Rating 1,322/1,450/BUY
fronts—(1) potential success of the new HI LV (RNF), (2) sustained structural
52-week range (Rs) (high-low) 1,350-932
growth in Indonesia, (3) navigating volatility in Africa with improvement in INR
Mcap (bn) (Rs/US$) 1,353/16.2
profit/CF, (4) extracting efficiencies and reinvesting the same to turbocharge
ADTV-3M (mn) (Rs/US$) 1,124/13.5
UVG while maintaining/improving margins, and (5) differentiated innovations
that can achieve meaningful scale if successful (liquid detergent and Shareholding pattern (%)
bodywash). We tweak estimates, roll over and revise FV to Rs1,450 (from
Rs1,375).
4.02.5
2.2
5.6
FY2024 scorecard: Ticks most of the boxes
GCPL achieved most of the FY2024 targets it had shared in its last investor 22.6
meet (May-23)—(1) high-single digit organic UVG (achieved ~7%), (2) high-teens 63.2
organic EBITDA growth (achieved ~20%+ growth; mid-20s excluding media

spends) and (3) partially achieved guidance for RCCL (margin expansion on
track, sexual wellness performed better, Deodorants’ performance was slightly Promoters FPI s MFs BFIs Retail Others
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
short of expectations). GCPL gained market share across soaps, hair color, air
Price performance (%) 1M 3M 12M
fresheners and HIT (Indonesia). HI lost share overall due to illegal incense Absolute 9 7 41
sticks, but it hopes to gain back with GK Agarbatti. On category development Rel. to Nifty 10 5 18
front, GCPL has made great strides across vectors of relevance (Aer, GK, Rel. to MSCI India 9 3 7
Darling), access (Crème hair color gained 500 bps penetration), availability and
Forecasts/Valuations 2024 2025E 2026E
trials (10 mn/1 mn HH trials in India/Indonesia).
EPS (Rs) 18.7 23.4 28.0
FY2025E guidance: HSD UVG and mid-teen EBITDA growth EPS growth (%) 9.1 24.8 19.6
On a consolidated basis, GCPL is aiming for HSD UVG and mid-teen EBITDA P/E (X) 70.6 56.5 47.3
growth in FY2025E, driven by (1) HSD UVG (more likely at the higher end of the P/B (X) 10.7 9.7 8.7
band) in India and Indonesia, (2) stable EBITDA margin in India, (3) high DD UVG EV/EBITDA (X) 46.3 38.7 33.8
and EPS neutrality in RCCL (end-FY2025E) and (4) a step-up in ROW RoE (%) 14.5 18.0 19.4
(GAUM+LATAM) profitability. We believe that management’s mid-teen EBITDA Div. yield (%) 0.8 0.8 1.0
Sales (Rs bn) 141 151 167
growth guidance is a tad conservative, and it also doesn’t factor in any
meaningful upside from the impending RNF LV launch in India HI (June 2024). EBITDA (Rs bn) 29 35 40
Net profits (Rs bn) 19 24 29
Over medium term, GCPL has guided—(1) HSD UVG (>7%) and mid-to-high 20s
EBITDA margin in India, (2) HSD UVG and mid-20s EBITDA margin in Indonesia, Source: Bloomberg, Company data, Kotak Institutional Equities estimates
and (3) MSD UVG and >15% EBITDA margin (from 8-10%) in two years in ROW. Prices in this report are based on the market close of
May 07, 2024
Other highlights: HI LV (RNF) launch, distribution expansion, innovations
GCPL has received all approvals and is set to launch the new HI LV (RNF
molecule) in June 2024; its efficacy is 2X that of the existing LV. Management
expects a pickup in HI UVG starting in 4QFY25E; the potential success of this
molecule could drive HSD UVG and DD USG in HI for a few years. GCPL’s rural
Related Research
salience at 1/3rd is lower than its peers, and its rural market share is lower than
urban. The company has embarked on the next leg of its rural expansion journey → GCPL: CEO meeting takeaways
through Vistaar 2.0. GCPL expects Indonesia business to do well structurally. → GCPL: A potential game changer
GCPL’s liquid detergent FAB has the potential to disrupt the premium detergent → GCPL: RCCL acquisition progressing well
powder market and accelerate the shift to liquids. Likewise, its bodywash
innovation aims to drive the soap-to-bodywash shift. Full sector coverage on KINSITE
Jaykumar Doshi Umang Mehta Praneeth Reddy

3
4QFY24—A well-rounded quarter

GCPL posted a well-rounded 4Q, with 7%/5% organic volume/value growth in India business (KIE
5%/3.5%), driven by personal care/home care growing at 4%/6% (value terms). On segmental front, (a)
HI growth was impacted by extended winter in North/East (Holi was on 25th March), (b) personal wash
segment reported high-single digit volume growth (partly aided by share gains from HUVR), (c) Hair color,
air fresheners and fabric care reported double-digit volume growth, and (d) RCCL business grew by 22%
to Rs1.4 bn, partly impacted by extended winter.
Comments on 4QFY24 performance
Margins. Standalone GM improvement of +80 bps yoy to 57.8% (KIE: 59.1%) and standalone EBITDA
margin expansion of 20 bps yoy to 26.6% (KIE: 27.1%) despite 175 bps yoy increase in A&P spends
to 11.4% of sales. Consolidated EBITDA margin was up 230 bps yoy to 22.3% (KIE 21%) after a 205
bps yoy increase in A&P spends.
Exceptional items of Rs23.7 bn included (a) Rs13.9 bn toward brand and goodwill impairment for
Africa (including Strength of Nature), (b) Rs9.3 bn pertaining to loss on sale of subsidiaries and
business in East Africa pursuant to change on business model, (c) Rs0.7 bn for other group related
restructuring costs. The impact of this charge is cash positive (NPV of Rs2 bn).
Indonesia registered 17% c/c sales growth (+14.7% reported), led by 12% volume growth (HI and
hair color volumes grew in strong DD). The management attributed it to continuing good
performance on HI and benefit of the Lebaran season shifting to Q4. EBITDA margin was up 360 bps
yoy at 25.2%. GCPL launched Stella electric diffuser to expand air freshener penetration.
GAUM grew 16% c/c ((-)23% reported; 10% volume growth), impacted by devaluation of Naira. FMCG
continued with its DD growth trajectory. EBITDA margin expanded 720 bps yoy to 14.3%. GCPL
completed the re-organization of its business in East Africa, which will have a positive impact of
Rs500 mn per annum on PAT but negative impact of Rs4.7 bn on top line.
LATAM and SAARC grew 262% c/c and 42.5% in INR terms.
FY2024 round-up. (1) Consolidated revenue(reported)/UVG (organic)/EBITDA/recurring PAT grew by
6%/7%/21%/9%. Growth was impacted by challenges in multiple geographies (adverse HI seasonality in
India, currency devaluation in GAUM and hyperinflation in LATAM). Margin expansion was enabled by
higher growth in the high margin geographies (India and Indonesia), (2) GCPL improved its gross margin
by 550 bps yoy to 55.2%, as RM environment turned favorable and has almost reached to pre-Covid levels
(55%+), (3) GCPL grew consolidated A&P spends by 35.6% yoy to Rs13.4 bn, 9.5% of sales (up 205 bps
yoy) to drive its category development agenda. Robust GM improvement enabled GCPL to significantly
invest behind brands (4) absolute employee cost grew 12.4% yoy ((+)50 bps as % of sales) while other
expenses were up 7.7% yoy ((+)25 bps yoy as % of sales), (4) OCF generation was healthy at Rs20.7 bn,
about ~70% of EBITDA, (5) capex stood at Rs3.1 bn (versus Rs2.3 bn in FY2023).
Godrej Consumer Products

Consumer Staples India Research
4
Investor Meet 2024 takeaways

Vision 2040. Without sharing any specifics on its vision 2040 for GCPL, management said that its
actions today are driven by where it wants to be two decades out. For instance—it has organically
taken a bet on liquid detergents through “Fab” and inorganically on deodorants/fragrances through
“Park Avenue” acquisition.
FY2025E guidance. GCPL aims to deliver high-single digit UVG (‘more likely to be at the higher end
of the range’) in India/Indonesia and step-up in profitability in RoW in FY2025E. At a consolidated
level, GCPL expects HSD UVG and mid-teens EBITDA growth in FY2025E. For RCCL, management
has guided high-double digit volume growth and EPS neutrality by end-FY2025E. Management
maintained that it is on track to reach double-digit UVG in the medium term.
Guidance for FY2025E and beyond, across businesses

Business FY2025E Medium-to-long term
India HSD UVG HSD UVG (DD UVG in LT) and mid-to-high 20s EBITDA margin
Park Avenue and KamaSutra High DD UVG and EPS Neutral by end-FY2025E High DD UVG
Indonesia HSD UVG HSD UVG and mid-20s EBITDA margin
Step up in profitability (focus on volume growth, INR
Rest of the World (ROW)
profit growth and INR cash growth on annual basis) MSD UVG and 15%+ EBITDA margin in two years
Consolidated HSD UVG and mid-teen EBITDA growth
Source: Company
FY2024 scorecard. GCPL met its guidance given in May-2023 investor meet on most parameters—
(1) high-single digit organic UVG (achieved ~7%), (2) high-teens organic EBITDA growth (achieved
~20%+ growth; mid-20s excluding media spends), and (3) partially achieved guidance
(revenue/EBITDA in FY2024 to be similar to FY2023) for RCCL. GCPL gained market share across
soaps, hair color, air fresheners, HI (lost share on overall basis due to illegal incense sticks; hope to
gain back with GK Agarbatti) and HIT (Indonesia). What went right?
 New innovations. FY2024 was a far more successful year on innovations than FY2023, with GCPL
launching Fab liquid detergent, AerO with membrane format, GK Agarbatti, and Stella electric
diffusers in Indonesia.
 Increasing TAM. Acquisition of RCCL business was based on the view that India in 2040 will look
like what China/Indonesia are today. Both fragrances and sexual wellness are categories of the
future.
 Global reach. GCPL products are serving consumers in more than 80 countries. The company
identified several export geographies that found good demand for India innovations such as Aer
pocket, shampoo hair color, etc.
 Simplification. GCPL’s organic SKU count is down by 30% and manager count is down by 10%
over FY2022-24. In GAUM, GCPL has exited loss-making East Africa business, simplified
distribution in West Africa, and taken impairment. It is also reassessing its manufacturing
footprint in GAUM, by evaluating exports from India.
▪ Captive creative studio. GCPL achieved non-consumer facing media saving of ~40 bps (Rs500
mn+) by creating an in-house creative/design team of 10 members (Light Box), that made 25
films for seven countries in past one year. They reduced redundancy by leveraging global
category insights, moved from multiple to single brief, and from multiple to single advertisement
with multiple executions (same location with different models for different countries). GCPL has
become 5th largest advertiser in India (after HUL, Reckitt, Amazon and RIL), as it spent more on
brands and less on costs to serve (140 bps savings in supply chain costs).

5
GCPL was the fifth largest advertiser in India in 2023 versus 17th largest in 2021
Source: Company
 Capital employed. GCPL’s standalone capex stood at Rs1.9 bn in FY2024 versus Rs1.6 bn in
FY2022 but core working capital days reduced from 50 days to 38 days over the period. Capex in
FY2025 will be higher as GCPL plans to setup two new capacities with cumulative spends of Rs9
bn over next 18-24 months. Capex will normalize post this expansion.
Category development playbook has four pillars—relevance (why do we need this category), access
(how can consumers afford this category), availability (distribution) and trials (sampling).
 Relevance. GCPL drove relevance in Aer (achieved ~240 bps penetration delta) through impactful
campaigns, based on the insight that consumers use this category when guests visit their homes.
Similarly, Darling in RSA (~220 bps penetration delta) capitalized on the insight that consumers
want salon-like braids at home. GCPL has also moved HI’s positioning in India/Indonesia from
efficacy to relevance (‘GK/HIT keep children safe and away from hospitals’).
 Access. HIT aerosol (Indonesia) grew by 48% in FY2024 versus just 5% CAGR over FY2018-23, as
it introduced a new 150 ml SKU at IDR 12,000. Crème hair color gained 500 bps penetration delta
and became the most widely distributed hair color in India displacing ‘Nisha’, after it launched a
new Rs15 SKU. Management conceded that HI LUPs in India were perhaps not as successful as
expected, partly because their efficacy was not up to the mark (RNF should address that gap).

6
Success stories in Indonesia and India on driving access
Source: Company
 Availability. Selling a new category or brand in hinterlands require direct or door-to-door selling
and cannot be done through the wholesale channel.
 Trials. GCPL achieved significant expansion in door-to-door sampling, with 10 mn households

reached (each category is witnessing substantial penetration gains) in India and 1 mn households
in Indonesia in FY2024. GCPL spent about Rs100/household (Rs30/call with 30% productivity),
implying total spends of Rs1 bn on HH sampling in India.
Leveraging global structure. GCPL’s ‘think local, act global’ philosophy helped to move India’s LV to
Bangladesh/Indonesia and AerO/Aer Matic from Indonesia to India. Similarly, shampoo hair color
moved from India to LATAM, where it found good traction.
India’s K-shaped recovery poses a peculiar problem for the Indian FMCG sector—(1) consumption
and agriculture growth at 3%/0.5% are lagging GDP growth of 7.5%, and (2) consumption slowdown
is driven by bottom 40% HHs (negative savings), even as consumption by top 20% (contribute >90%
of savings) is growing and middle 20% is stable. Management targets HSD UVG (>7%) in MT, which
will gradually inch toward double-digits in LT. EBITDA margins are expected to remain in mid-high
20s.

7
India’s K-shaped recovery poses peculiar challenges for India FMCG
Source: Company
 Near-term outlook for India FMCG is still subdued but the company hopes for a turnaround in the
next 6-8 months. GCPL’s base case and all business plans are based on the assumption that
India’s K-shaped recovery will continue.
 FY2025E strategy—GCPL’s 3-pronged strategy entails
▪ Premiumization to cover the top-20% HHs through premium innovations, premium categories
and premium channels.
(a) Premium innovations. GCPL launched Cinthol Bodywash at Rs120 (for 200 ml) to target
Rs7 bn category, growing at 20% CAGR. Cinthol Bodywash addresses one of the key
impediments to upgrade from soaps—it doesn’t leave a ‘slimy feel’ that bodywashes
typically leave post wash and offers a ‘squeaky clean feel’ that soaps typically offer. Cinthol
Bodywash is currently launched in Tamil Nadu and on e-commerce. AerO fresheners have
a unique membrane-based technology, which changes color as the fragrance reduces. The
most anticipated innovation is the LV with RNF molecule, which is slated to be launched
in June 2024.

8
GCPL is launching premium innovations in India
Source: Company
(b) Premium categories. KamaSutra entered the premium condoms segment (was a one-
player market) through ‘longlast’, post integration. Detergents was a US$4 bn category
(100% powders mix) in China in 2008 and in 2022, it was a US$8 bn market (split 50:50
between powders and liquids). GCPL believes India will follow the same path and thus, it
launched ‘Fab’ liquid detergent, with quality comparable (leveraged GIL’s knowledge on
surfactants) to premium liquid detergent of peers but at half the price. Park Avenue’s fine
fragrances portfolio (small at the time of acquisition) is booming, largely through e-
commerce.
GCPL is entering premium categories in India
Source: Company

9
(c) Premium channels. Both modern trade and e-commerce are growing at high double-digit
for GCPL. In D-mart, GCPL now has 40% share in deodorants. With RCCL acquisition, GCPL
has gained some presence in OTC channels, but it aspires to have a much bigger presence
there. GCPL was covering the cosmetics channel through its distribution system, whereas
RCCL was servicing some of these outlets through a sales system (selling/marketing at
POS). Management claimed that their effort to reduce this redundancy was erroneous and
they have now setup an independent cosmetics channel. GCPL plans to increase OTC and
cosmetics outlets by more than 50% in FY2025E.
▪ Expand reach in rural GT and improve accessibility for the bottom-40%. Vistaar 2.0 is one of the
largest outreach programs in India, under which GCPL plans to nearly double/3X its rural
outlet/village reach to 700k/100k in FY2025E, through van operations (250 vans in pilot stage,
will increase to 700 vans in two quarters). Out of the 300k new rural outlets that GCPL plans to
service, about 2/3rd are not being serviced by any other brand. GCPL’s rural salience is about
1/3rd and its rural market shares lag urban. This outreach entails significant upfront
investments, which GCPL believes will pay off in 2-3 years. On access, GCPL launched Rs15
Crème hair color in 2022, HI LUPs in 2023, GK Agarbatti in 2024 and has couple of more
launches planned for FY2025E.
▪ Extract efficiencies on the manufacturing and media front. GCPL has signed off Rs9 bn capex
on two new plants at Chennai and MP, which will result in 100-200 bps cost (distance travelled,
energy consumption and labor) saving in two years, which can help offset some loss of tax
benefits going forward.
In media, GCPL’s planning is happening through its internal proprietary tools; GCPL hired the ex-
CEO of Mindshare Fulcrum, one of the largest media agencies in India, as head of its media
function (to manage Rs10 bn media spends in India + Rs2 bn in international, growing at 15-
20%). GCPL’s CPRP (cost per rating point) reduced by 6% yoy in FY2024 even as it increased by
low-single (3-4%) digit for the industry; this was achieved on the back of better planning and
higher scale driving better negotiations.
 Household insecticides is GCPL’s most profitable category globally. Management highlighted

that the last time GCPL had a molecule change in 2008, its market share was just 36% whereas
All Out (first mover in LVs in India) had a 58% share. Over the years, its share gradually moved up
to 57% (2023) whereas All Out’s share has declined to 30%. The company hopes that RNF (new
molecule) is able to achieve something similar, in terms of market development.
▪ RNF LV margins should be largely similar to TFT LV. The cost of active is higher in terms of RM
basket mix for cheaper formats. Thus, GK Agarbatti has lower margins. But the company
expects RNF LV’s growth to offset the negative impact from GK Agarbatti.
▪ GCPL will continue to emphasize that GK Agarbatti and upcoming RNF LVs are safe for humans
by showcasing that the mothers should use these products to protect their babies.
▪ GK Agarbatti’s MRP/trade prices are Rs10/8 versus illegal incense sticks at Rs10/6.5-7. GCPL
is playing the retail game and not going through wholesale as they believe that brand pull and
advertising will play a larger role in driving category adoption/share gains.

10
Molecule change had a meaningful impact on GCPL’s market share in HI in 2008
Source: Company
▪ GCPL has received all approvals to launch the new LV with RNF molecule (expected to be
launched in June 2024). The management demonstrated efficacy of the new LV (RNF) versus
existing LV (GK Gold Flash). The existing LV product and the new LV product (RNF molecule)
were activated simultaneously in two identical glass chambers with mosquitoes. The
performance of the new LV (RNF molecule) was significantly better than existing LV product
(new product killed about 100 mosquitoes out of 150 released in the chamber, whereas the
existing product killed about 19 mosquitoes out of 150). Management claimed that the efficacy
of the new product would be 2X that of the existing product and it expects a pick-up HI UVG
starting 4QFY25E (with lag of six months) based on it experience of Indonesia and Bangladesh.
Further, management noted that its competitors are not working on introducing any new
molecule and it would take at least 5-7 years for them to get regulatory approvals if they start
the process now.
GCPL is planning to launch its RNF-molecule based LV in June 2024
Source: Company

11
Efficacy of the new LV (RNF molecule; yet to be launched) was significantly better than existing
LV product
Source: Company
 Personal care. GCPL has consistently gained market share in soaps, but it doesn’t see 4Q
performance as a break-out quarter. It benefited partly due to a soft base (high prices and lower
volumes). Soaps typically grow volumes at 2-5% for GCPL.
 RCCL brands (Park Avenue/KamaSutra). Management shared that RCCL business performed a
tad below expectations in FY2024, even as a surprisingly good performance by KS were offset by
a subpar show by PA deodorants. The acquisition was successful in terms of integration, cost
take-outs, SW performance and perfumes, even as deodorants is still a work in progress.
▪ RCCL integration was completed in a record time frame (within three months). RCCL business
had 18 warehouses, 450 SKUs, 700 channel partners, and 1k vendors. GCPL reduced its SKUs
to 150 (‘less is more’), reduced complexity by seamlessly integrating its manufacturing and
suppliers with its own system.
▪ Deodorants category needs to be restructured (too high on BTL) in India. The gap between MRP
and ECP (end-consumer price) is too high—MRP is Rs220, trade buys at Rs100-110 and sells in
between Rs110-220.

12
International business
 Indonesia macro environment is fairly stable now, with GDP growth reverting to pre-Covid level
of 5%. GCPL’s Indonesia business has inherent strengths—(1) the portfolio has a large headroom
for growth; penetration ranges in 6% to 23-25% for GCPL’s categories and (2) enjoys market
leadership in several categories. Management targets HSD volume growth and mid-20s EBITDA
margins in the medium term.
▪ FY2025E strategy. Sustain HI’s strong momentum, rejuvenate air care, and scale up hair color
(~20% penetration; plan to expand outlet count by 4X in FY2025E). Air care lagged in FY2024
due to (1) slowdown in discretionary consumption (high food/fuel inflation), and (2) ~200 bps
impact due to rationalization of tail SKUs. GCPL’s air care business has an hourglass-like shape
(35% mix at bottom-of-pyramid/BOP and 35% mix at top end with 1:7 pricing differential).
GCPL aims to rejuvenate Stella through innovations (Stella LVs can drive upgradations; per night
cost of LV refill is same as BOP), driving relevance (market is under-developed for instant
solutions; GCPL has launched an instant solution at affordable end with 1.5-2X BOP pricing),
and access (revamping Stella pockets, where the price-value equation was reset last year and
seeing huge traction this year). In shampoo hair color, GCPL will have a new local factory coming
on stream from July, which will unlock capacity and improve its agility.
GCPL plans to rejuvenate Stella (Indonesia air care) through innovations, relevance and access
Source: Company
▪ Pre-transformation. The erstwhile model had several weaknesses—(1) high reliance on modern
trade (75% mix versus 40% for industry) led to erratic pricing across channels, (2) under-
investments in media spends (just 4% of sales) and (3) weak GTM due to reliance on a high-cost
branch operation, wherein GCPL’s 12 branches used to serve a large set of retail outlets. The
channel mix stood at 1/3rd from Indomart/Alfamart, 1/3rd from GT and balance from branch
operations.
▪ Post-transformation. GCPL Indonesia delivered 11% UVG, 14% revenue growth and 28% EBITDA
growth in FY2024, as against 1%/4%/(-)1% CAGR over FY2018-23. Revenue growth was aided
by a strong performance in HI (+38%, partly aided by low base versus a 4% CAGR over FY2018-
23) and hair color (+24% versus 16% CAGR over FY2018-23), even as air care lagged (-3% versus
+3% CAGR over FY2018-23).
(a) GCPL shifted from a deep discounting to Every Day Low Promotion (EDLP) model, wherein
they achieved price parity across channels for some 4-5 affected parts of the portfolio. For
instance—HIT Aerosol’s (large pack) price difference between GT and Minimarts came
down from 25-35% (Apr-21) to parity (Mar-24).

13
GCPL’s shift to EDLP helped achieve pricing parity across channels
Source: Company
(b) GCPL has also discontinued its branch operations, which has improved its distributor-led
GT reach by 10% over FY2022-24. The transition has improved profitability of GCPL’s
distributors, which has improved its assortment availability with the retailers.
(c) The business has improved its media spends from 3% in FY2021 to 6% each in FY2023/24.
Unilever is 10X in size and spends about 7.5-8% on media.
(d) Fixed overheads are down by ~120 bps and SKUs are down by ~25% in the past two years.
▪ HI success. HI market in Indonesia is skewed toward aerosols and LVs are relatively small (~7%
penetration). GCPL’s earlier offering was technically weaker than competition (‘Vape’ from
Fumakilla). In late 2022, GCPL took a call to create a ~4X more efficacious product, by taking
some hit on GM. The company also set price-value equation of LV right and has seen the benefit
for two years in a row. GCPL improved media spends by 1.5X yoy, launched access packs of
HIT, and drove 1 mn household trials in FY2024. It plans to scale up trials to 3-4 mn in coming
year. New 150 ml HIT improved outlet reach by 40% to 100k+ outlets and volumes are now 3X
since beginning. Consequently, HIT brand grew 28% with 90 bps penetration increase, led by
81%/23% growth in HIT LV/aerosols in FY2024.
 Rest of the World (GAUM + LATAM). Historical complexity was high in this business with high
fixed overheads (>15%), high SKU count (>5k), and high # of factories (26). GCPL aspires MSD
volume growth and >15% EBITDA margin (from current 8-10%) in two years. This plan builds in
continuity in some volatility in operating environment but nothing drastic. With expected
improvement in working capital intensity and minimal capex, business expects CFO/FCF growth
to outpace EBITDA growth.

14
ROW business: aspirational EBITDA shape
Source: Company
▪ Codebooks to manage volatility. Given the volatility in reported numbers, the business is
focused on volume growth, INR profit growth and INR cash growth. In order to manage volatility,
GCPL took agile pricing actions, reduced manufacturing footprint (factories down to 19 by Mar-
24) and reduced fixed overheads (down 300 bps over FY2020-24). Consequently, its EBITDA
margin improved by ~300 bps in the past four years.
External volatility cannot be wished away in ROW business
Source: Company

15
▪ Focus on LT fundamentals. Business is also strengthening its LT fundamentals by improving

the FMCG portfolio mix (from 40% in FY2022 to 50%+ in FY2024) and increasing distribution
across countries (40% increase in direct reach in Southern Africa over FY2022-24).
▪ Jewel crowns. Southern Africa and Godrej International (exports) are the jewel crowns of this
business, with DD growth trajectory, 20% EBITDA margin and mild volatility. They contribute
about 1/4th to ROW revenues. 1/3rd of Southern Africa business comes from hair colors, where
GCPL is the market leader.
▪ Middle tier (USA, Chile, West Africa and Argentina) saw 40% reduction in SKUs over FY2022-
24, even as GCPL strengthened some core brands such as Mega Growth (HSD salience in ROW,
grew almost 3X in the past four years) and VN (Latin America). VN has forayed into US$150 mn
sunscreen category in Argentina, and has witnessed 90% volume growth, US$5 mn revenues,
with 69.5% gross margins.
▪ Bottom tier. Divestment of East Africa business is likely to impact cash flows positively, even
as it could have a 200 bps annualized impact on UVG in FY2025E. The divestment gave 150 bps
bump in margin immediately.
Southern Africa and Godrej International are the crown jewels of ROW business
Source: Company

16
GAUM reorganization is expected to drive improvement in ROCE over next 2-3 years
Source: Company
Tax rate. GCPL will remain in the old regime in FY2025 (as cash tax outgo is lower) and move to the
new regime (ETR will go down) in FY2026E. ETR (standalone) will be around 30% in FY2025E and
25% in FY2026E. RCCL acquisition is driving a lower cash tax outgo and creation of DTL.
Impairment. GCPL currently holds about Rs40 bn Goodwill/intangibles/assets pertaining GAUM/US

business; management does not expect any further impairment going forward.

17
Others. (1) Dengue cases have skyrocketed from 0.5 mn to 6 mn in LATAM, (2) GCPL has
significantly addressed the gap on the regulatory front, by working more closely with the
government through its corporate affairs team (formed two years ago), (3) GCPL’s R&D spends are
much higher today than the past, (4) The Green Discount—move from plastic to organic wick saved
Rs600 mn/year for GCPL, (5) Tamil Nadu is the biggest premium soap market in India and Cinthol
has a strong brand equity in the state, (6) employee retrenchments pertaining to RCCL were done in
a fair and transparent manner, (7) past two years witnessed elevated media spends; the next two
years will see elevated spends on distribution expansion, funded by simplification, (8) HIT is present
in 25% of Indonesia’s households, (9) GCPL plans to reach double-digit ROCE in GAUM in next 2-3
years (versus 2% each in FY2021/22/23 and 6% in FY2024 post reorganization), (10) GCPL has
announced a dividend policy, with expected payout ratio of ~50% (+/(-) 20%) of PAT, (11) van
operations will not be self-funded—each van costs Rs3-4k/day and the incremental sales they can
achieve could be about Rs7-8k so they might just break-even or may incur losses, (12) margins on
Fab liquid detergent are lower than competitor products but not at an unacceptable level, (13)
Bangladesh HI also accelerated post launch of a new molecule; typically there is a time lag of 6-8
months between launch and visible pick-up in sales (new molecule was launched in Indonesia in
Dec-22 and results were visible in May/Jun-23), (14) anti-roach gel in India (Rs300/piece) grew 2X,
one of the fastest growing SKU, and (15) new product contribution (launched in past three years)
stands at 1.5-2%; GCPL aims to take it up to 3-3.5%.
Interim consolidated results of Godrej Consumer Products, March fiscal year-ends (Rs mn)
(% chg.)
4QFY24 4QFY24E 4QFY23 3QFY24 KIE Est yoy qoq FY2024 FY2023 (% chg.)
Net sales 33,651 32,778 31,722 36,228 2.7 6.1 (7.1) 139,741 131,987 5.9
Other operating income 205 289 280 368 8.7 17.9 (10.1) 1,220 1,173 21.1
Net operating revenues 33,856 33,067 32,002 36,596 2.4 5.8 (7.5) 140,961 133,160 5.9
Material cost (14,857) (14,594) (15,074) (16,143) 1.8 (1.4) (8.0) (63,203) (67,028) (5.7)
Gross Profit 18,999 18,472 16,928 20,454 2.9 12.2 (7.1) 77,758 66,132 17.6
Gross Margin (%) 56.1 55.9 52.9 55.9 25 bps 322 bps 22 bps 55.2 49.7 549 bps
Employee cost (3,237) (2,756) (3,008) (2,761) 17.5 7.6 17.2 (12,493) (11,115) 12.4
Advertising and promotion (3,063) (2,891) (2,245) (3,433) 5.9 36.4 (10.8) (13,359) (9,855) 35.6
Other expenditure (5,142) (5,876) (5,267) (5,853) (12.5) (2.4) (12.1) (22,471) (20,858) 7.7
Total expenditure (26,299) (26,117) (25,593) (28,189) 0.7 2.8 (6.7) (111,527) (108,856) 2.5
EBITDA 7,557 6,950 6,409 8,407 8.7 17.9 (10.1) 29,435 24,304 21.1
EBITDA margin (%) 22.3 21.0 20.0 23.0 130 bps 229 bps -66 bps 20.9 18.3 262 bps
Other income 638 723 579 701 (11.7) 10.2 (8.9) 2,690 1,685 59.7
Interest (785) (553) (525) (666) 42.0 49.4 17.8 (2,964) (1,757) 68.6
Depreciation (499) (596) (686) (539) (16.3) (27.2) (7.4) (2,410) (2,363) 2.0
Pretax profits 6,912 6,524 5,777 7,903 5.9 19.6 (12.5) 26,751 21,868 22.3
Tax (2,087) (1,589) (1,034) (2,024) 31.3 101.9 3.1 (7,588) (4,303) 76.3
PAT 4,824 4,935 4,743 5,880 (2.2) 1.7 (17.9) 19,163 17,566 9.1
Minority interest 0 0 0 0 0 0
PAT after MI 4,824 4,935 4,743 5,880 (2.2) 1.7 (17.9) 19,163 17,566 9.1
Extraordinary items (23,757) - (222) (69) (24,769) (541)
Net profit (reported) (18,932) 4,935 4,521 5,811 (483.7) (518.7) (425.8) (5,606) 17,025 (132.9)
Recurring EPS (Rs) 4.7 4.8 4.6 5.8 (2.2) 1.7 (17.9) 18.8 17.2 9.1
Income tax rate (%) 30.2 24.4 17.9 25.6 584 bps 1230 bps 459 bps 28.4 19.7 868 bps
Costs as a % of sales
Material cost 43.9 44.1 47.1 44.1 -26 bps -323 bps -23 bps 44.8 50.3 -550 bps
Employee cost 9.6 8.3 9.4 7.5 122 bps 16 bps 201 bps 8.9 8.3 51 bps
Advertising and promotion 9.0 8.7 7.0 9.4 30 bps 203 bps -34 bps 9.5 7.4 207 bps
Other expenditure 15.2 17.8 16.5 16.0 -259 bps -127 bps -81 bps 15.9 15.7 27 bps
Source: Company, Kotak Institutional Equities

18
Interim standalone results of Godrej Consumer Products, March fiscal year-ends (Rs mn)
(% chg.)
Net sales 20,075 20,101 17,892 21,602 (0.1) 12.2 (7.1) 82,679 75,308 9.8
Other operating income 261 395 338 439 (34.0) (22.7) (40.6) 1,435 1,364 5.3
Net operating income 20,336 20,496 18,229 22,041 (0.8) 11.6 (7.7) 84,114 76,672 9.7
Material cost (8,576) (8,380) (7,834) (9,000) 2.3 9.5 (4.7) (35,290) (37,275) (5.3)
Gross Profit 11,760 12,116 10,395 13,041 (2.9) 13.1 (9.8) 48,824 39,397 23.9
Gross Margin (%) 57.8 59.1 57.0 59.2 -129 bps 80 bps -134 bps 58.0 51.4 666 bps
Employee cost (1,200) (1,239) (1,139) (1,171) (3.1) 5.4 2.5 (4,986) (3,722) 34.0
Advertising and promotion (2,316) (2,318) (1,753) (2,534) (0.1) 32.1 (8.6) (10,110) (6,873) 47.1
Other expenditure (2,832) (2,998) (2,689) (2,858) (5.5) 5.3 (0.9) (11,305) (10,114) 11.8
Total expenditure (14,924) (14,935) (13,415) (15,563) (0.1) 11.2 (4.1) (61,691) (57,984) 6.4
EBITDA 5,412 5,561 4,814 6,478 (2.7) 12.4 (16.5) 22,424 18,688 20.0
EBITDA margin (%) 26.6 27.1 26.4 29.4 -52 bps 20 bps -278 bps 26.7 24.4 228 bps
Other income 606 574 499 553 5.5 21.5 9.5 4,562 1,395 227.1
Interest (371) (342) (11) (362) 8.3 3,430.5 2.5 (1,341) (31) 4,268.1
Depreciation (221) (316) (355) (270) (30.1) (37.8) (18.3) (1,269) (1,080) 17.5
Pretax profits 5,426 5,477 4,948 6,400 (0.9) 9.7 (15.2) 24,376 18,972 28.5
Tax (1,756) (1,304) (871) (1,615) 34.6 101.7 8.7 (6,378) (3,559) 79.2
PAT 3,671 4,173 4,077 4,784 (12.0) (10.0) (23.3) 17,998 15,413 16.8
Extraordinary items (10,680) 0 (2) (59) (11,528) (276)
Net profit (reported) (7,009) 4,173 4,075 4,726 (268.0) (272.0) (248.3) 6,470 15,137 (57.3)
EPS (Rs) 3.6 4.1 4.0 4.7 (12.0) (10.0) (23.3) 17.6 15.1 16.8
Income tax rate (%) 32.4 23.8 17.6 25.2 854 bps 1475 bps 711 bps 26.2 18.8 740 bps
Costs as a % of sales
Material cost 42.2 40.9 43.0 40.8 128 bps -81 bps 133 bps 42.0 48.6 -667 bps
Employee cost 5.9 6.0 6.2 5.3 -15 bps -35 bps 59 bps 5.9 4.9 107 bps
Advertising and promotion 11.4 11.3 9.6 11.5 7 bps 176 bps -11 bps 12.0 9.0 305 bps
Other expenditure 13.9 14.6 14.8 13.0 -71 bps -83 bps 95 bps 13.4 13.2 24 bps
Key changes to consolidated earnings (Ind-AS), GCPL, March fiscal year-ends, 2025-26E
Revised Earlier Change (%)

2025E 2026E 2025E 2026E 2025E 2026E
Consolidated
Revenues (Rs mn) 150,961 166,948 158,148 175,099 (4.5) (4.7)
Revenue growth (%) 7.1 10.6 11.3 10.7
Gross margin (%) 56.5 56.9 55.4 55.6 111 bps 135 bps
EBITDA (Rs mn) 34,893 39,600 34,679 39,233 0.6 0.9
EBITDA (%) 23.1 23.7 21.9 22.4 118 bps 131 bps
PAT (Rs mn) 23,916 28,595 24,243 27,985 (1.4) 2.2
EPS (Rs/share) 23.4 28.0 23.7 27.4 (1.4) 2.2
Source: Company, Kotak Institutional Equities estimates
Segment-wise revenue growth for India business, March fiscal year-ends (Rs mn, %)
Rs mn 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24
Home care 5,040 7,800 8,310 5,520 5,700 8,020 8,770 7,360 6,870 8,550 9,080 7,240 6,630 8,690 10,000 8,260 7,520 9,130 10,470 8,756
Personal care 7,300 6,530 5,790 4,580 7,440 7,750 6,880 6,190 8,680 8,640 7,680 7,440 10,880 10,170 8,750 8,720 11,090 10,030 8,960 9,069
Branded sales 12,340 14,330 14,100 10,100 13,140 15,770 15,650 13,550 15,550 17,190 16,760 14,680 17,510 18,860 18,750 16,980 18,610 19,160 19,430 17,824
Unbranded and Exports 570 570 820 790 440 740 930 1,120 660 900 1,090 1,360 630 670 1,000 910 630 710 780 NA
Total net sales 12,910 14,900 14,920 10,890 13,580 16,510 16,580 14,670 16,210 18,090 17,850 16,040 18,140 19,530 19,750 17,890 19,240 19,870 20,210 NA
% growth
Home care 13.1 2.8 5.5 33.3 20.5 6.6 3.5 (1.6) (3.5) 1.6 10.1 14.1 13.4 5.1 4.7 6.0
Personal care 1.9 18.7 18.8 35.2 16.7 11.5 11.6 20.2 25.3 17.7 13.9 17.2 1.9 (1.4) 2.4 4.0

19
GCPL’s geography-wise IBD revenue breakdown (Rs mn)
4QFY24 4QFY23 3QFY24

15,000
13,000
11,000
9,233
9,000
7,701
7,000 5,937
5,000 4,983
4,345 4,665
3,000 2,036
2,900
1,000 993
(1,000) Indonesia (Megasari) GAUM (Africa, USA and ME) Others (LATAM, EU and SAARC)
GCPL's geography-wise IBD margins including forex impact (%)
30 4QFY24 4QFY23
25.2
25
21.6
20
14.3
15
10 8.1
7.1
4.0
5
-
Indonesia (Megasari) GAUM (Africa, USA and ME) Others (LATAM, EU and SAARC)
GAUM growth was impacted by further depreciation in Naira and re-organization of East Africa business (Rs mn, %)
1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24
Revenues (Rs mn)
Indonesia 3,530 3,639 3,955 4,125 3,721 4,262 4,482 4,494 4,056 4,460 4,473 4,711 4,115 4,450 4,470 4,016 3,765 4,087 4,333 4,345 4,507 4,730 4,665 4,983
GAUM (Africa, US & ME) 5,646 6,296 6,823 5,871 5,623 5,912 6,787 4,840 4,373 6,520 7,788 6,304 6,942 7,490 8,840 7,228 7,789 8,587 10,071 7,701 8,486 8,158 9,233 5,937
Others 2,782 1,906 1,665 1,367 1,308 1,277 1,611 1,359 1,273 1,813 1,800 1,787 1,597 1,750 1,980 2,116 1,541 1,744 1,828 2,036 1,808 1,826 993 2,900
Reported growth
Indonesia 9.0 13.0 9.0 19.0 5.0 17.0 13.0 9.0 9.0 5.0 - 5.0 1.0 - - (15.0) (8.5) (8.2) (3.1) 8.2 19.7 15.7 7.7 14.7
GAUM (Africa, US & ME) 10.0 13.0 14.0 11.0 (1.0) (6.0) (1.0) (16.0) (22.0) 10.0 15.0 30.0 59.0 15.0 13.0 15.0 12.2 14.6 13.9 6.5 8.9 (5.0) (8.3) (22.9)
Others 6.0 (26.0) (3.0) (35.0) 10.0 24.0 (3.0) 1.0 (4.0) 41.0 12.0 30.0 26.0 (3.0) 10.0 19.0 (3.5) (0.3) (7.7) (3.8) 17.4 4.7 (45.7) 42.5
Constant currency growth
Indonesia 10.0 14.0 7.0 14.0 4.0 13.0 9.0 6.0 5.0 3.0 (2.0) 4.0 - (2.0) (2.0) (16.0) (12.0) (11.0) (3.0) 5.0 15.0 14.0 7.0 17.0
GAUM (Africa, US & ME) 5.0 4.0 4.0 5.0 2.0 (2.0) 6.0 (13.0) (23.0) 10.0 17.0 36.0 60.0 16.0 12.0 14.0 12.0 13.0 23.0 8.0 16.0 17.0 14.0 16.0
Others 8.0 2.0 41.0 16.0 56.0 38.0 38.0 23.0 23.0 46.0 35.0 54.0 48.0 11.0 19.0 26.0 15.0 34.0 47.0 64.0 79.0 99.0 181.0 262.0
Exchange rate impact
Indonesia (1.0) (1.0) 2.0 5.0 1.0 4.0 4.0 3.0 4.0 2.0 2.0 1.0 1.0 2.0 2.0 1.0 3.5 2.8 (0.1) 3.2 4.7 1.7 0.7 (2.3)
GAUM (Africa, US & ME) 5.0 9.0 10.0 6.0 (3.0) (4.0) (7.0) (3.0) 1.0 - (2.0) (6.0) (1.0) (1.0) 1.0 1.0 0.2 1.6 (9.1) (1.5) (7.1) (22.0) (22.3) (38.9)
Others (2.0) (28.0) (44.0) (51.0) (46.0) (14.0) (41.0) (22.0) (27.0) (5.0) (23.0) (24.0) (22.0) (14.0) (9.0) (7.0) (18.5) (34.3) (54.7) (67.8) (61.6) (94.3) (226.7) (219.5)
Adj. EBITDA margin (%)
Indonesia 22.0 24.0 23.0 31.0 23.7 24.5 24.6 33.1 23.6 25.8 25.3 35.4 23.4 26.4 21.2 21.6 15.3 17.1 20.1 21.5 19.5 NA NA NA
GAUM (Africa, US & ME) 13.0 9.0 14.0 11.0 11.9 12.5 12.2 3.8 (1.8) 11.4 14.1 10.9 9.9 11.9 14.7 4.6 8.3 9.2 13.0 10.4 11.8 NA NA NA
Others 6.0 8.0 (2.0) 1.0 2.3 5.2 3.5 7.9 11.2 19.6 12.5 3.6 13.6 16.0 12.6 11.1 1.4 1.5 5.0 8.4 0.6 NA NA NA
Adj. EBITDA margin including forex impact (%)
Indonesia 15.4 17.2 20.2 21.6 19.4 17.9 20.9 25.2
GAUM (Africa, US & ME) 6.4 5.4 8.9 7.1 7.8 8.5 11.4 14.3
Others 0.9 1.7 4.6 8.1 (0.4) (0.8) (3.2) 4.0

20
Key consolidated revenue and profit assumptions for GCPL March fiscal year-ends (Rs mn)
2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Revenue breakup (Rs mn)
Domestic
- Soaps 18,920 17,760 20,470 24,155 28,019 28,440 30,999 33,789 36,800
- Hair colour 6,729 6,270 6,420 7,190 8,197 9,017 10,144 11,361 12,670
- Household insecticides 22,540 21,900 25,340 26,981 28,134 29,401 31,753 34,928 38,071
- Others 7,400 7,890 8,610 9,815 10,573 11,842 13,973 16,438 19,280
- RCCL (Park Avenue/Kamasutra) 4,660 7,000 7,700 8,470
IBD
- Indonesia 15,249 16,959 17,700 17,052 16,530 18,885 21,151 23,267 25,535
- Africa (including SON) 24,560 23,162 24,985 30,497 34,147 31,813 28,632 31,495 34,566
- Others 7,702 5,556 6,673 7,452 7,148 7,527 7,904 8,536 8,963
yoy growth (%)
Domestic
- Soaps 5.0 (6.1) 15.3 18.0 16.0 1.5 9.0 9.0 8.9
- Hair colour 8.2 (6.8) 2.4 12.0 14.0 10.0 12.5 12.0 11.5
- Household insecticides (0.4) (2.8) 15.7 6.5 4.3 4.5 8.0 10.0 9.0
- Others 23.5 6.6 9.1 14.0 7.7 12.0 18.0 17.6 17.3
- RCCL (Park Avenue/Kamasutra) 50.2 10.0 10.0
IBD
- Indonesia/ 12.6 11.2 4.4 (3.7) (3.1) 14.2 12.0 10.0 9.7
- Africa (including SON) 12.2 (5.7) 7.9 22.1 12.0 (6.8) (10.0) 10.0 9.7
- Others (32.4) (27.9) 20.1 11.7 (4.1) 5.3 5.0 8.0 5.0
EBIT Margin (%)
Domestic 25.4 25.0 25.1 23.6 23.0 25.2 25.8 26.3 26.6
Indonesia 24.4 24.8 27.2 22.6 20.0 23.9 24.5 24.5 24.5
Africa 5.3 6.7 4.3 3.5 4.0 7.6 12.0 12.5 14.0
Others 0.1 0.9 10.7 12.0 5.9 2.8 5.1 7.2 5.4
GCPL: Consolidated Profit model, balance sheet, cash flow model (Ind-AS), March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
Profit model (Rs mn)
Net revenues 98,433 103,143 99,108 110,286 122,765 133,160 140,961 150,961 166,948 183,682
EBITDA 20,630 21,176 21,430 23,883 23,951 24,305 29,435 34,893 39,600 44,340
Other income 1,828 2,020 1,966 1,597 1,920 2,857 3,909 3,866 4,345 4,754
Interest expense (1,607) (2,243) (2,174) (1,266) (1,102) (1,757) (2,964) (1,551) (1,171) (912)
Depreciation (1,557) (1,700) (1,973) (2,039) (2,099) (2,363) (2,410) (2,631) (2,994) (3,271)
Extraordinary items 1,796 8,624 887 (445) (98) (541) 24,769— — — —
Pretax profits 21,089 27,878 20,136 21,730 22,573 22,500 3,202 34,576 39,781 44,910
Tax (4,047) (3,537) (4,336) (3,595) (3,719) (4,303) (7,588) (9,361) (9,747) (11,127)
Minority Interest 11 6 8 (0) 3 0 0 0 0 0
Net Income 17,053 24,348 15,809 18,134 18,857 18,197 (4,386) 25,215 30,034 33,783
PAT after MI but before EO/Norm tax 14,505 14,791 14,079 17,653 17,931 17,566 19,163 23,916 28,595 32,344
Earnings per share (Rs) 14.2 14.5 13.8 17.3 17.5 17.2 18.7 23.4 28.0 31.6
Balance sheet (Rs mn)
Total shareholder's equity 62,583 72,669 78,984 94,389 115,559 137,942 125,986 139,290 155,228 172,358
Total borrowings 35,076 33,821 35,184 7,595 16,077 10,340 31,546 19,046 9,046 4,046
Other financial liabilities 7,540 2,176 1,886 11,578 644 576 358 358 358 358
Deferred tax liability 1,946 (4,728) (5,701) (6,378) (6,796) (6,412) (2,804) (2,804) (2,804) (2,804)
Minority Interest — — — — — — — — — —
Total liabilities and equity 107,144 103,937 110,352 107,184 125,485 142,446 155,087 155,891 161,829 173,959
Net fixed assets incl CWIP 83,989 87,223 92,366 88,711 92,373 98,824 103,479 106,736 106,911 105,585
Investments 9,973 5,160 6,720 6,791 10,154 30,290 35,143 35,143 35,143 35,143
Cash 9,602 8,947 7,702 6,722 11,078 3,907 5,469 2,441 7,205 19,640
Net current assets 3,581 2,607 3,566 4,960 11,880 9,424 10,996 11,571 12,570 13,591
Total assets 107,144 103,937 110,352 107,184 125,485 142,446 155,087 155,891 161,829 173,959
Free cash flow (Rs mn)
Operating cash flow (excl working capital) 17,543 17,463 18,620 20,208 19,867 20,573 25,259 26,534 30,962 34,342
Working capital (155) 6 (2,613) 88 (5,362) 933 (4,559) (576) (999) (1,021)
Capital expenditure (3,115) (2,077) (1,520) (1,639) (2,765) (2,274) (3,072) (5,888) (3,170) (1,945)
Free cash flow 14,273 15,392 14,487 18,658 11,741 19,233 17,628 20,071 26,793 31,376
Key ratios (%)
Sales growth 5.7 4.6 (3.9) 11.3 11.3 8.4 5.9 7.1 10.6 10.1
EPS growth 11.2 2.0 (4.8) 25.4 1.6 (2.0) 9.1 24.8 19.6 13.1
EBITDA margin 21.0 20.5 21.6 21.7 19.5 18.3 20.9 23.1 23.7 24.1
Gross margin 56.6 55.8 57.0 55.3 50.5 49.7 55.2 56.5 56.9 57.1
Ad spends (% of sales) 8.2 8.1 7.5 6.6 6.1 7.4 9.5 10.0 9.9 9.9
Employee cost (% of sales) 10.7 10.6 10.3 10.2 9.0 8.3 8.9 8.3 8.3 8.2
ROE (%) 25.1 21.9 18.6 20.4 17.1 13.9 14.5 18.0 19.4 19.7
ROCE (%) 14.0 14.7 13.7 16.5 15.4 13.1 12.9 14.7 17.0 18.0

RESULT
Dr Reddy's Laboratories (DRRD) REDUCE

Pharmaceuticals
CMP(₹): 6,258 Fair Value(₹): 5,935 Sector View: Neutral NIFTY-50: 22,303 May 07, 2024
Muted end to the fiscal Company data and valuation summary

DRRD delivered a subdued 4QFY24, much lower than our estimates. The miss Stock data
was driven by lower gRevlimid sales, muted growth across markets and
CMP(Rs)/FV(Rs)/Rating 6,258/5,935/REDUCE
higher R&D spends. While the prevailing US tailwinds provide stability,
52-week range (Rs) (high-low) 6,506-4,383
absence of any meaningful approvals for DRRD stays a concern. We also
Mcap (bn) (Rs/US$) 1,044/12.5
highlight that a further pick-up in base domestic growth and profitability will
ADTV-3M (mn) (Rs/US$) 2,352/28.2
be critical in the post-gRevlimid era for DRRD. At ~25X ex-gRevlimid FY2026E
EPS, we believe the stock is fairly priced. REDUCE with an FV of Rs5,935. Shareholding pattern (%)
We bake in 4.5% ex-gRevlimid US sales CAGR over FY2024-27E
DRRD’s 4QFY24 sales, at Rs70.8 bn, grew 12.5% yoy ((-)7% versus KIE), with 8.2
4.9
weakness across regions, except RoW. EBITDA, at Rs17.8 bn ((-)18% versus 26.7
7.8
KIE), declined 12% qoq. DRRD’s US sales declined 2.2% qoq, led by lower 8.0
gRevlimid sales at ~US$100 mn (down 9% qoq, (-)13% versus KIE) and pricing
erosion in a few other molecules. We bake in slightly higher gRevlimid sales of
44.5
US$438/368 mn in FY2025/26E. After a lean patch of 2.5 years now, DRRD is
guiding for 25+ material launches in the US in the next 3-4 years. Going forward, Promoters FPI s MFs BFIs Retail Others
apart from the peptides, we build in key launches such as gPentasa, gCopaxone
and gVenofer; we also factor in the ramp-up for a few existing products. While
Absolute 1 1 27
traction in CRO/CDMO has been healthy, DRRD’s generic API performance has Rel. to Nifty 2 (0) 3
been disappointing for the past three years, despite an enhanced focus. DRRD Rel. to MSCI India 1 (3) (8)
is guiding for elevated R&D at 8.5-9.0% of sales in FY2025E due to higher
complex filings. In another development, DRRD’s CFO Mr Parag Agarwal has Forecasts/Valuations 2024 2025E 2026E
resigned to pursue philanthropic opportunities and Mr M V Narasimham, who EPS (Rs) 335.5 351.5 348.8
EPS growth (%) 38.5 4.8 (0.7)
is currently Deputy CFO, has been elevated to CFO from August 1, 2024.
P/E (X) 18.7 17.8 17.9
Uptick in DRRD’s subpar life-for-life domestic performance is critical
P/B (X) 3.7 3.1 2.7
Not surprisingly, DRRD expects a very slow sales ramp-up from the recently EV/EBITDA (X) 12.7 11.2 10.7
announced 51:49 JV with Nestle for nutraceutical brands and is guiding for RoE (%) 21.6 18.9 16.1
minimal contribution from this JV over the next couple of years. According to Div. yield (%) 0.6 0.7 0.7
IQVIA, DRRD’s 4QFY24 domestic Rx sales grew 8.9% yoy, outperforming the IPM Sales (Rs bn) 279 315 332
by 320 bps. In our recent report, we highlighted that while its domestic sales EBITDA (Rs bn) 78 87 87
have demonstrated a seemingly healthy 10.5% CAGR over FY2017-24, adjusted Net profits (Rs bn) 56 58 58
for in-licensing, acquisitions and divestments, DRRD’s like-for-like organic
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
domestic sales CAGR over FY2017-24 is merely ~7.5%. After a subdued FY2024
Prices in this report are based on the market close of
(5% yoy decline), we build in a healthy 17% domestic sales CAGR for DRRD over May 07, 2024
FY2024-27E, largely aided by aggressive in-licensing. We expect in-licensing
and M&A to remain an integral part of DRRD’s domestic strategy. DRRD stays
optimistic on growth prospects in the EU and EMs, led by new launches and
improved offtake in China. Overall, we factor in double-digit CAGRs across most
ex-US segments over FY2024-27E. Despite biologics being one of the focal
Related Research
points, we expect any meaningful gains for DRRD only beyond FY2027E.
→ DRRD: Leaning rather heavily on partnerships
Fairly priced; retain REDUCE with FV of Rs5,935
in India
→ IPM pulse: The fiscal year ends on a low note
We tweak our FY2025-26E EBITDA by 0-5% on higher sales assumptions. At
→ DRRD: Slow and steady
CMP, we believe the US strength and anticipated recovery in key branded
markets are priced in. Roll forward and retain REDUCE with an FV of Rs5,935
(Rs5,825 earlier). Full sector coverage on KINSITE
Alankar Garude, CFA Samitinjoy Basak Aniket Singh

22
DRRD—4QFY24 interim results

March fiscal year-ends, 2023-25E (Rs mn)
4QFY24 4QFY24E 4QFY23 3QFY24 %KIE %yoy %qoq FY2024 FY2023 %yoy FY2025E FY2024 %yoy
Sales 70,830 76,231 62,968 72,148 (7.1) 12.5 (1.8) 279,164 245,879 13.5 315,054 279,164 12.9
Cost of sales (29,347) (31,788) (26,971) (29,945) (7.7) 8.8 (2.0) (115,557) (106,536) 8.5 (132,171) (115,557) 14.4
Gross profit 41,483 44,443 35,997 42,203 (6.7) 15.2 (1.7) 163,607 139,343 17.4 182,883 163,607 11.8
SG&A (excl. impairment) (20,476) (20,691) (17,992) (20,228) (1.0) 13.8 1.2 (77,201) (68,026) 13.5 (86,494) (77,201) 12.0
R&D (6,877) (5,870) (5,366) (5,565) 17.2 28.2 23.6 (22,873) (19,381) 18.0 (26,640) (22,873) 16.5
EBITDA 17,842 21,742 15,829 20,180 (17.9) 12.7 (11.6) 78,388 64,592 21.4 86,629 78,388 10.5
Depreciation (incl. impairment) (3,539) (3,930) (3,190) (3,880) (9.9) NM (8.8) (14,858) (7,789) 90.7 (16,880) (14,858) 13.6
Other income 656 980 281 967 (33.1) 133.5 (32.2) 4,199 341 1,129.9 4,000 4,199 (4.7)
Income from associate companies 35 24 76 27 45.8 (53.9) 29.6 147 370 (60.3) (681) 147 (563.3)
Interest / finance costs 1,022 900 799 963 13.6 27.9 6.1 3,994 2,853 40.0 3,900 3,994 (2.4)
Exceptional items - - 5,566 - (3) 4,867 - (3)
Pretax profits 16,016 19,716 19,361 18,257 (18.8) (17.3) (12.3) 71,867 65,234 10.2 76,968 71,867 7.1
Pretax profits (adjusted) 15,843 19,786 13,795 18,367 (19.9) 14.8 (13.7) 71,873 55,500 76,968 71,873 7.1
Tax (2,946) (4,929) (3,663) (4,468) (16,186) (15,300) (18,626) (16,186)
Minority interest — — — — — — - -
Net income 13,070 14,787 9,592 13,789 (11.6) 36.3 (5.2) 55,684 45,067 23.6 58,342 55,684 4.8
Net income (adjusted) 12,897 14,857 10,132 13,899 (13.2) 27.3 (7.2) 55,687 40,200 38.5 58,342 55,687 4.8
EPS (Rs) 78.7 89.1 57.8 83.1 (11.6) 36.3 (5.2) 335.4 271.5 23.6 351.5 335.4 4.8
Adjusted EPS (Rs) 77.7 89.5 61.0 83.7 (13.2) 27.3 (7.2) 335.5 242.2 38.5 351.5 335.5 4.8
Tax rate (%) 18.4 25.0 18.9 24.5 22.5 23.5 24.2 22.5
Segment wise sales

Domestic formulation 11,265 13,091 12,834 11,800 (13.9) (12.2) (4.5) 46,407 48,947 (5.2) 60,923 46,407 31.3
Global generics 49,926 53,753 41,423 51,295 (7.1) 20.5 (2.7) 198,971 164,821 20.7 217,651 198,971 9.4
US 32,626 35,275 25,321 33,492 (7.5) 28.8 (2.6) 129,796 101,704 27.6 139,854 129,796 7.7
Total Europe 5,208 5,307 4,960 4,970 (1.9) 5.0 4.8 20,535 17,603 16.7 22,383 20,535 9.0
Russia 5,000 6,200 5,200 5,900 (19.4) (3.8) (15.3) 22,300 21,200 5.2 25,913 22,300 16.2
CIS 2,200 2,600 2,300 2,300 (15.4) (4.3) (4.3) 8,700 8,600 1.2 9,744 8,700 12.0
RoW 4,892 4,370 3,642 4,633 11.9 34.3 5.6 17,640 15,714 12.3 19,756 17,640 12.0
PSAI 8,219 8,488 7,787 7,839 (3.2) 5.5 4.8 29,801 29,069 2.5 32,781 29,801 10.0
Proprietary products and others 1,420 900 924 1,214 57.8 53.7 17.0 3,985 3,042 31.0 3,700 3,985 (7.2)
% margin
Gross margin 58.6 58.3 57.2 58.5 27 bps 140 bps 7 bps 58.6 56.7 193 bps 58.0 58.6 -56 bps
SG&A 23.9 22.0 23.5 22.7 22.3 24.5 22.1 22.3
R&D 9.7 7.7 8.5 7.7 8.2 7.9 8.5 8.2
EBITDA margin 25.2 28.5 25.1 28.0 -333 bps 5 bps -278 bps 28.1 26.3 181 bps 27.5 28.1 -58 bps
Key highlights from DRRD’s 4QFY24 concall:
Outlook: DRRD has maintained its long-term guidance of 25% EBITDA margin and 25% RoCE.
US:
Outlook: Overall, sentiment in the US market remains unchanged. DRRD expects growth momentum
in the US to continue in FY2025E.
4QFY24 performance: US sales stood at US$392 mn in 4QFY24. gRevlimid sales have declined qoq
in 4QFY24. Excluding gRevlimid, US sales have also dropped qoq due to price erosion in few products.
New launches: DRRD launched 5/21 new molecules in the US in 4QFY24/FY2024. DRRD is planning
to launch 20+ molecules in the US in FY2025E.
gLumify: gLumify has already been approved and DRRD expects to launch it in 1QFY25.
India:
Outlook: DRRD expects to grow its domestic sales in double digits.

Nestle JV: It will take time to bring these brands into India, register them and build them in India. For
the first few years, there will be investments, with revenues coming in only after the first couple of
years. While there is potential for this to be a meaningful business, it will take time to build it.
Dr Reddy's Laboratories
Pharmaceuticals India Research
23
Threat from generics and channel consolidation: Given the gaps in quality of unbranded generics,
DRRD does not expect any imminent threat to branded generics. Organized pharmacies are still a
small portion of the overall IPM.
Reliance on contract manufacturers: ~60% of DRRD’s India supplies are manufactured in-house. This
quantum is expected to increase.
EMs:
New launches: DRRD launched 7/106 new products in 4QFY24/FY2024.

Russia: DRRD expects Russia to grow in double digits in FY2025E.
China: DRRD is witnessing good traction in China. DRRD is listing 14-15 molecules annually and
expects this momentum to continue.
Biosimilars: DRRD expects meaningful launches in developed markets from FY2027E. DRRD expects an
approval for bRituximab in the UK soon.
Peptides: Peptides is a very important segment for DRRD. It is putting efforts in APIs and formulations
for peptides such as Liraglutide.
Financials:
R&D: R&D will be 8.5-9.0% of sales in FY2025E. Increase in R&D is due to higher number of filings,
with a focus on complex products across small molecules and biosimilars. 60% of total R&D spends
are on small molecules, 20% on biosimilars (largely clinical trials) and the remaining 20% is on APIs
and other initiatives.
Gross margins: Favorable product mix, offset by brand divestment income, led to yoy expansion in
gross margins.
SG&A: DRRD expects SG&A (as % of sales) to remain in a similar range (27.7% in FY2024) in FY2025E.
Capex: 75% of the capex is toward expansion projects (API, injectables, biosimilars and Aurigene)
and the rest is toward maintenance.
ETR: At 18.4% in 4QFY24, ETR was lower due to a one-time benefit accruing on account of the reversal
of a tax provision, remeasurement of deferred tax assets owing to an increase in US state tax liability
and adoption of corporate tax rates under section 115 BAA of the Income Tax Act. DRRD expects
effective tax rate to be 24-25%.
Inventory: Precautionary measures to avoid loss of sales due to the ongoing Red Sea crisis led to
sequential increase in inventory.
FCF: DRRD generated FCF of Rs5.29 bn in 4QFY24. FCF generated during FY2024, before acquisition
related payout, stood at Rs26.72 bn.
Net cash: Rs64.6 bn.

DRRD’s 4QFY24 highlights: Lower sales and higher R&D spends drive miss
DRRD’s 4QFY24 reported sales at Rs70.8 bn (12.5% yoy, (-)2% qoq), which missed our estimates by 7%.
Coupled with lower sales, EBITDA missed our estimates by 18% due to higher R&D spends. Overall, gross
margins at 58.6% remained flat qoq (30 bps versus KIE, 140 bps yoy). Gross margins for global generics
and PSAI segments stood at 62% (flat qoq) and 20.4% ((-)900 bps qoq), respectively, in 4QFY24. R&D
expenses at 9.7% of sales (200 bps versus KIE) increased sharply by 200 bps qoq. Reported EBITDA, at
Rs17.8 bn, was down 12% qoq (13% yoy, (-)18% versus KIE), with EBITDA margin of 25.2% ((-)280 bps
qoq, (-)330 bps versus KIE). Tax rate was lower at 18.4% in 4QFY24, compared with 24.5% in 3QFY24.
PAT for the quarter stood at Rs13.1 bn, missing our estimates by 12% (36% yoy, (-)5% qoq). 4QFY24
capex stood at Rs5 bn, with net cash of Rs64.6 bn. DRRD generated FCF of Rs5.3 bn during the quarter.
24
Segmental highlights:
North America: US sales declined 3% qoq (29% yoy) to Rs32.5 bn, missing our estimates by 7%. We
believe DRRD reported ~US$100 mn of gRevlimid sales in the US in 4QFY24 (lower than our
expectation of US$115 mn) as against ~US$110 mn in 3QFY24. According to DRRD, the yoy growth
was owing to an increase in volumes of the base business and revenues from new product launches,
partly offset by price erosion. The sequential decline was driven by a decrease in base business
volumes and price erosion in select brands. During this quarter, DRRD launched five new products in
the US. As of March 31, 2024, cumulatively 86 generic filings are pending for approval with the USFDA
(81 ANDAs and 5 NDAs under 505(b)(2) route). Out of these 86 pending filings, 50 are Para IVs and
24 have 'First to File' status.
Europe: Europe reported revenues of Rs5.2 bn (5% yoy).

Domestic formulations: Overall, domestic sales declined 12% yoy ((-)4.5% qoq) to Rs11.3 bn, 14%
lower than KIE estimates. Adjusted for brand divestment income, revenues grew 11% yoy in 4QFY24.
During the quarter, DRRD launched three new brands in the country. According to DRRD, the like-for-
like domestic growth in FY2024 was in mid-single digits.
Emerging markets: EM revenues grew 9% yoy ((-)6% qoq), with contributions from (1) Russia sales,
at Rs5 bn, declined 4% yoy ((-)15% qoq) majorly due to currency devaluation, partially offset by price
increases, (2) CIS sales of Rs2.2 bn ((-)5% yoy, (-)7% qoq) and (3) ROW sales of Rs4.9 bn (34% yoy).
PSAI, PP and others: PSAI sales, at Rs8.2 bn, grew 6% yoy (5% qoq), mainly driven by revenues from
new products, favorable forex, partially offset by a price decline. PP and other sales stood at Rs1.4 bn
(54% yoy).
Other key highlights:
Impact of government grants: During 4QFY24 and FY2024, an amount of Rs810 mn and Rs4,232 mn,
respectively, and during 4QFY23 and FY2023, an amount of Rs305 mn and Rs3,111 mn, respectively,
representing government grants has been accounted for as a reduction from cost of materials
consumed.
Impairment of non-current assets: ‘Impairment of non-current assets, net’ for FY2024 includes
reversal of impairment loss of Rs226 mn in March 2024, with respect to Saxagliptin/Metformin
(gKombiglyze-XR) and Enalaprilat (gVasotec) pursuant to the launch of these two products during the
year. Consequent to adverse market conditions with respect to certain products related to intangibles
and software platforms, DRRD assessed the recoverable amount of certain products and recognized
impairment loss of Rs86 mn and Rs99 mn pertaining to products and software platforms, respectively,
forming part of the Global Generics and Others segments in FY2024.
CFO quits; Deputy CFO elevated to CFO: Mr Parag Agarwal will retire as CFO, effective from August 1,
2024, consequent to his decision to expand his involvement in philanthropy for the cause of animals. Mr
M V Narasimham, currently Deputy CFO, is being elevated to CFO of DRRD, with effect from August 1,
2024. Presently, he is also a Member of the Management Council and Senior Management Personnel of
the company. Mr Narasimham joined DRRD in 2000 and has held various positions of increasing
responsibility across finance in the company. He was leading the finance operations of the business
segments PSAI and Global Generics during 2006-12. Since 2012, he has been heading the Corporate
Finance (Direct and Indirect Taxation, Consolidation and Corporate Analytics) along with Global
Business’ finance involving India and overseas operations.
25
DRRD received a total of two final low competition approvals in 4QFY24

List of low competition approvals, March fiscal year-end, 2024
No. of
Generic Name Treatment Opportunity
Approval
Final approvals
Open-angle glaucoma or
Lumify (OTC) Brimondinie There are two Para IV filers. Dr Reddy’s (Slayback) is FTF.
high fluid pressure in the 1st
0.025% Ophthalmic Solution Tartrate Litigation is ongoing with Dr Reddy’s and settled with Lupin.
eye
Adjunct to general
Succinylcholine Chloride anesthesia, to facilitate
100mg/5ml (20mg/ml) Succinylcholine tracheal intubation, and to
1st All patents have expired.
Intramuscular, Intravenous Chloride provide skeletal muscle
Solution relaxation during surgery or
mechanical ventilation.
Source: US FDA, Kotak Institutional Equities
DRRD—quarterly sales DRRD—quarterly R&D expenses

March fiscal year-ends, 2022-24 (Rs bn, %) March fiscal year-ends, 2022-24 (Rs bn, %)
Sales (Rs bn, LHS) %yoy (RHS) R&D (Rs bn, LHS) %sales (RHS)
80 50 8.0 20
72 71
68 67 69 6.9
70 63 63 7.0
58 40
60 53 54 52 6.0 5.4 5.4 5.6 15
49 4.9 4.8 5.0
50 5.0 4.5 4.5 4.3
30 4.2 4.3
40 4.0 10
30 20 3.0
20 2.0 5
10
10 1.0
0 0 0.0 0
1QFY22
4QFY22
1QFY23
4QFY23
1QFY24
3QFY24
4QFY24
2QFY22
3QFY22
2QFY23
3QFY23
2QFY24
1QFY22
2QFY22
4QFY22
1QFY23
4QFY23
1QFY24
3QFY24
4QFY24
3QFY22
2QFY23
3QFY23
2QFY24
Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities
DRRD—quarterly EBITDA DRRD—quarterly PAT

EBITDA (Rs bn, LHS) %EBITDA margin (RHS) PAT (Rs bn, LHS) %PAT margin (RHS)
24 40 18 30
20.6
20.5 19.9 20.2 14.9
20 18.9 15 14.0 13.9 25
17.8 12.9
30 12.6
15.8
16 12 11.2 20
13.4 12.0 11.7 9.9 10.1
9.2 8.4
12 9.0 20 7.1
9 5.7 6.3 15
8
6 10
10
4
3 5
0 0
0 0
2QFY22
3QFY22
4QFY22
3QFY23
4QFY23
1QFY24
4QFY24
1QFY22
1QFY23
2QFY23
2QFY24
3QFY24
1QFY22
3QFY22
4QFY22
2QFY23
4QFY23
2QFY24
3QFY24
2QFY22
1QFY23
3QFY23
1QFY24
4QFY24
26
DRRD—quarterly domestic sales DRRD—quarterly US generics sales

March fiscal year-ends, 2022-24 (Rs bn, %) March fiscal year-ends, 2022-24 (US$ mn, %)
Domestic formulations (Rs bn, LHS) %yoy (RHS) US generics (US$ mn, LHS) %yoy (RHS)
15 80
13.3 450 80
12.8 389 384 401 391
11.4 11.5 11.3 11.5 11.9 11.8 11.3 400 351 375 70
12 10.6 60
10.3 350 312 60
9.7
300 265 50
9 40 255 248
236 230
250 40
6 20 200 30
150 20
3 0 100 10
50 0
0 (20) 0 (10)
1QFY22
3QFY22
1QFY23
2QFY23
4QFY23
2QFY24
4QFY24
2QFY22
4QFY22
3QFY23
1QFY24
3QFY24
3QFY22
4QFY22
2QFY23
3QFY23
2QFY24
3QFY24
1QFY22
2QFY22
1QFY23
4QFY23
1QFY24
4QFY24
DRRD—quarterly Europe, Russia and other EM sales DRRD—quarterly PSAI and proprietary products sales
Europe, Russia & other EMs (Rs bn, LHS) %yoy (RHS) PSAI & proprietary products (Rs bn, LHS) %yoy (RHS)
20 17.1 40 12 120
17.4 17.4 17.8 17.3 10.2
15.6
16.5 16.4 16.1 16.6 9.6
16 30 8.7 9.1 90
9 8.1 8.3 8.5 8.7
13.1 13.2 7.8
7.8 7.3 60
7.1
12 20
6 30
8 10
0
3
4 0 (30)
0 (10) 0 (60)
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY22
2QFY22
3QFY22
4QFY22
1QFY22
3QFY22
1QFY23
2QFY23
4QFY23
2QFY24
4QFY24
2QFY22
4QFY22
3QFY23
1QFY24
3QFY24
27
Gross margins in global generics remained flat, while PSAI margins declined sequentially by ~900 bps
DRRD—quarterly gross margins, March fiscal year-ends, 2020-24 (%)
Global generics PSAI

70
62.0
60 65.4 64.6
57.6 63.9 63.6 61.9
61.4 59.4 61.7
50 58.2 57.6 57.9 57.7 56.9 57.8 58.2
55.5 55.9 55.0
40 33.4 31.7
30.0 28.4 29.428.6
26.8 25.3 25.9 25.2
30 24.6
21.6 22.5
18.4 18.2 17.8
20 15.7 15.0
10 3.6
7.2
0
2QFY20
1QFY21
4QFY21
3QFY22
2QFY23
1QFY24
1QFY20
3QFY20
4QFY20
2QFY21
3QFY21
1QFY22
2QFY22
4QFY22
1QFY23
3QFY23
4QFY23
2QFY24
3QFY24
4QFY24
We tweak DRRD's EBITDA estimates by 0-5% over FY2025-26E on higher sales assumptions
DRRD—changes in estimates, March fiscal year-ends, 2025-27E (Rs mn, %)
New estimates Old estimates % change
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Sales 315,054 332,284 335,426 310,462 322,115 1.5 3.2
Gross profit 182,883 190,398 185,684 179,768 182,879 1.7 4.1
Gross margin (%) 58.0 57.3 55.4 57.9 56.8 14 bps 53 bps
EBITDA 86,629 86,512 77,139 86,237 82,026 0.5 5.5
EBITDA margin (%) 27.5 26.0 23.0 27.8 25.5 -28 bps 57 bps
Net income 58,342 57,906 50,276 59,168 55,684 (1.4) 4.0
EPS (Rs) 351.5 348.8 302.9 356.4 335.4 (1.4) 4.0
28
We forecast DRRD to deliver 6% sales CAGR over FY2024-27E

DRRD—revenue model, March fiscal year-ends, 2018-27E (Rs mn, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Global generics 114,021 122,919 138,112 154,404 179,170 213,768 245,378 278,573 292,150 291,311
North America 59,824 59,957 64,659 70,494 74,915 101,704 129,796 139,854 139,670 123,687
Europe 8,216 7,873 11,707 15,404 16,631 17,603 20,535 22,383 24,621 27,084
India 23,321 26,179 28,946 33,419 41,957 48,947 46,407 60,923 66,904 73,491
Russia & CIS 16,530 20,560 23,400 23,280 29,100 29,800 31,000 35,657 39,223 43,145
Others 6,130 8,350 9,400 11,807 16,567 15,714 17,640 19,756 21,732 23,905
PSAI 21,992 24,140 25,747 31,982 30,740 29,069 29,801 32,781 36,059 39,665
Proprietary products 4,200 4,700 7,883 450 599 525 582 700 825 950
Others 1,714 2,108 2,847 2,886 3,882 2,517 3,403 3,000 3,250 3,500
Total 142,035 153,867 174,589 189,722 214,391 245,879 279,164 315,054 332,284 335,426
% yoy growth
Global generics (1.2) 7.8 12.4 11.8 16.0 19.3 14.8 13.5 4.9 (0.3)
North America (5.9) 0.2 7.8 9.0 6.3 35.8 27.6 7.7 (0.1) (11.4)
Europe 8.0 (4.2) 48.7 31.6 8.0 5.8 16.7 9.0 10.0 10.0
India 0.8 12.3 10.6 15.5 25.5 16.7 (5.2) 31.3 9.8 9.8
Russia & CIS 8.5 24.4 13.8 (0.5) 25.0 2.4 4.0 15.0 10.0 10.0
Others 5.1 36.2 12.6 25.6 40.3 (5.1) 12.3 12.0 10.0 10.0
PSAI 3.4 9.8 6.7 24.2 (3.9) (5.4) 2.5 10.0 10.0 10.0
Proprietary products 97.2 11.9 67.7 (94.3) 33.1 (12.4) 10.8 20.3 17.9 15.2
Others (14.0) 23.0 35.1 1.4 34.5 (35.2) 35.2 (11.8) 8.3 7.7
Total 1.0 8.3 13.5 8.7 13.0 14.7 13.5 12.9 5.5 0.9
% of sales
Global generics 80.3 79.9 79.1 81.4 83.6 86.9 87.9 88.4 87.9 86.8
North America 42.1 39.0 37.0 37.2 34.9 41.4 46.5 44.4 42.0 36.9
Europe 5.8 5.1 6.7 8.1 7.8 7.2 7.4 7.1 7.4 8.1
India 16.4 17.0 16.6 17.6 19.6 19.9 16.6 19.3 20.1 21.9
Russia & CIS 11.6 13.4 13.4 12.3 13.6 12.1 11.1 11.3 11.8 12.9
Others 4.3 5.4 5.4 6.2 7.7 6.4 6.3 6.3 6.5 7.1
PSAI 15.5 15.7 14.7 16.9 14.3 11.8 10.7 10.4 10.9 11.8
Proprietary products 3.0 3.1 4.5 0.2 0.3 0.2 0.2 0.2 0.2 0.3
Others 1.2 1.4 1.6 1.5 1.8 1.0 1.2 1.0 1.0 1.0
29
We forecast negative 3% adjusted EPS CAGR for DRRD over FY2024-27E, led by slump in FY2027E gRevlimid sales
DRRD—financial summary, March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Net revenues 142,028 153,851 174,600 189,722 214,391 245,879 279,164 315,054 332,284 335,426
Gross profit 77,092 85,430 94,839 104,059 116,601 139,684 167,806 186,883 194,798 190,484
Staff costs (32,149) (33,562) (33,879) (36,854) (40,494) (44,980) (50,300) (55,330) (60,863) (66,949)
R&D expenses (18,265) (15,607) (15,410) (16,541) (17,482) (19,381) (22,873) (26,640) (28,428) (27,323)
Other expenses (14,761) (15,328) (16,250) (17,705) (21,587) (23,047) (26,490) (31,164) (32,358) (32,916)
EBITDA 22,891 31,333 40,942 44,773 46,101 64,592 78,388 86,629 86,512 77,139
Depreciation & amortisation (11,762) (12,400) (12,472) (12,796) (11,824) (12,656) (14,855) (16,880) (17,762) (18,644)
EBIT 11,917 20,933 25,989 32,959 37,038 52,277 67,732 73,749 73,150 63,295
Net interest 2,080 1,117 1,478 1,653 2,119 2,853 3,994 3,900 3,800 3,700
Other income 344 438 561 480 703 370 147 (681) (758) (843)
Exceptional items — — (13,307) (6,768) (7,562) 4,867 (3) — — —
Profit before tax 14,341 22,488 18,032 28,324 32,298 60,367 71,870 76,968 76,192 66,152
Tax & deferred Tax (4,535) (3,648) 1,466 (9,175) (8,730) (15,300) (16,186) (18,626) (18,286) (15,876)
Less: minority interest — — — — — — — — — —
Net income 9,806 18,840 19,498 19,149 23,568 45,067 55,684 58,342 57,906 50,276
Net income (adjusted) 9,806 16,563 21,582 25,917 31,130 40,200 55,687 58,342 57,906 50,276
EPS (Rs) 59.1 113 117 115 142 271 335 351 349 303
EPS (Rs) (adjusted) 59.1 100 130 156 188 242 335 351 349 303
Balance sheet
Equity 126,460 140,197 154,988 176,417 192,124 232,861 282,548 333,468 383,953 426,807
Other liabilities 48,526 46,849 55,242 62,806 74,463 78,800 89,567 94,565 96,987 99,379
Net fixed assets 115,959 110,926 101,871 120,665 119,646 118,596 140,585 137,705 133,942 129,298
Cash 20,968 24,757 25,740 34,573 44,365 61,798 61,327 89,967 133,806 176,239
Other current assets 88,677 89,744 104,630 110,930 133,458 142,457 186,726 214,884 225,714 231,172
Total assets 225,604 225,427 232,241 266,168 297,469 322,851 388,638 442,556 493,462 536,709
Cashflow statement
Operating cash flow before working capital 25,219 35,668 45,948 42,112 49,368 77,442 85,662 75,222 75,668 68,920
Change in working capital (8,964) (5,771) (7,536) (8,288) (13,823) (7,855) (20,182) (23,160) (8,408) (3,065)
Free cash flow 5,351 22,406 32,297 8,569 20,559 50,723 38,045 38,062 53,260 51,854
Margins and ratios
Gross profit margin (%) 53.7 54.2 53.8 54.3 53.1 56.7 58.6 58.0 57.3 55.4
EBITDA margin (%) 16.1 20.4 19.9 23.6 21.5 26.3 28.1 27.5 26.0 23.0
Tax rate (%) 31.6 16.2 (8.1) 32.4 24.0 25.3 22.5 24.2 24.0 24.0
RoAE (%) 7.8 12.4 14.6 15.6 16.9 18.9 21.6 18.9 16.1 12.4
RoACE (%) 5.2 11.3 18.4 13.9 16.2 21.6 25.0 22.6 21.4 18.4
RESULT
JSW Energy (JSW) SELL

Electric Utilities
CMP(₹): 584 Fair Value(₹): 275 Sector View: Cautious NIFTY-50: 22,303 May 08, 2024
Aggressive growth path; expensive valuations Company data and valuation summary
JSW Energy closed FY2024 with a strong 64% yoy growth in EBITDA to Rs53.8 Stock data
bn, aided by (1) the acquisition of Mytrah, which contributed Rs14 bn of
CMP(Rs)/FV(Rs)/Rating 584/275/SELL
EBITDA, (2) higher merchant sales and (3) the commissioning of new assets
52-week range (Rs) (high-low) 652-240
(renewable and thermal). Underlying EBITDA growth, excluding Mytrah, was
Mcap (bn) (Rs/US$) 1,021/12.2
more modest at 22%. Consolidated PAT stood at Rs17.2 bn (up 27% yoy).
ADTV-3M (mn) (Rs/US$) 2,278/27.3
JSW Energy continues to focus on an aggressive growth path, with
investments in new thermal and renewable assets, as well as storage Shareholding pattern (%)
solutions. While the plans and execution are encouraging, we believe all
positives are captured in CMP at 31X FY2026E EPS and 3X P/B. Maintain 3.85.0
SELL with a revised SoTP-based FV of Rs275/share (Rs235/share earlier). 8.3
0.9
8.4
Mytrah acquisition and strong merchant sales aid higher EBITDA
JSW Energy reported 4QFY24 revenue of Rs27.6 bn (+3.2% yoy, +8% qoq), 73.7
EBITDA of Rs11.6 bn (+57% yoy, +5% qoq) and PAT of Rs3.5 bn (+29% yoy, +52%
qoq)―the profit growth was aided by a deferred tax adjustment as PBT declined Promoters FPI s MFs BFIs Retail Others
7% yoy. Growth in 4QFY24 EBITDA (in comparison to 4QFY23) was aided by (1)
Rs2.4 bn EBITDA from Mytrah, (2) Rs0.8 bn incremental EBITDA owing to short-
Absolute (3) 18 124
term merchant sales and (3) Rs0.6 bn incremental EBITDA from long-term
Rel. to Nifty (2) 17 101
PPAs. Generation in 4QFY24 stood at 6,397 MUs (+26% yoy), aided by (1) Rel. to MSCI India (3) 14 90
incremental 602 MUs at Mytrah, (2) incremental 380 MU generation owing to
higher merchant sales (thermal) and 227 MUs through PPAs (thermal) and (3) Forecasts/Valuations 2024 2025E 2026E
156 MUs from organically added renewable capacities. Standalone EBITDA of EPS (Rs) 10.5 15.3 19.8
Rs4.7 bn (+38% yoy, -8% qoq) was aided by higher generation at the Ratnagiri EPS growth (%) 26.8 46.0 29.1
plant. Blended thermal PLF was healthy at 73% in 4QFY24 (66% in FY2024), P/E (X) 55.6 38.1 29.5
although Vijaynagar continued to operate at a lower PLF of 59% in 4QFY24 (58% P/B (X) 4.6 3.6 3.3
in FY2024). The overall blended PLF improved sequentially to 67%, though it EV/EBITDA (X) 22.7 16.3 14.3
RoE (%) 8.7 10.9 11.6
was lower yoy (74% in 4QFY23)―hydro saw a significantly lower PLF of 13%.
Div. yield (%) 0.3 0.3 0.3
JSW Energy commissioned unit-1 (350 MW) at Ind-Barath in January 2024―the
Sales (Rs bn) 115 154 166
plant generated 196 MUs of energy, adding revenues of Rs1.2 bn. EBITDA
EBITDA (Rs bn) 54 76 86
contribution was lower at Rs0.3 bn―management attributed the lower EBITDA
to higher expenses in the initial phase of the project. JSW’s net debt rose to
Rs266 bn as of March 2024 from Rs263 bn as of December 2023 and Rs222 bn Source: Bloomberg, Company data, Kotak Institutional Equities estimates
as of March 2023, with net debt/equity at 1.3X. Prices in this report are based on the market close of
May 07, 2024
Generation capacity additions remain on track
JSW Energy has installed capacity of 7.2 GW, after it recently commissioned
Unit-1 (350 MW) at Ind-Barath in January 2024. It also plans to commission
Unit-2 (350 MW) at Ind-Barath in 1QFY25E, with the balance under-construction
capacity (renewable and hydro) on track to be commissioned in FY2025E,
taking the operational capacity to ~10 GW. We highlight that installed capacity
increased from 4.8 GW in FY2022 to 7.2 GW in FY2024, with a higher share of
renewable capacity in the portfolio.
Full sector coverage on KINSITE
Murtuza Arsiwalla Abhishek Khanna

31
Growth at very pricey valuations; maintain SELL

JSW Energy has strong growth aspirations, targeting 20 GW capacity by FY2030E (from 10 GW in
FY2025E). Traditionally, JSW Energy has had a measured approach to new investments, always being
mindful of return on investments. Most recently, it shelved plans for setting up module manufacturing
capacities. In addition to new power capacities, the company is pursuing investment in battery storage/
pump storage hydro plants, and investment in green hydrogen capacities. However, at 3X P/B and 31X
P/E, the CMP factors all of the aggressive growth plans, making it hard to reconcile the price-value gap.
We maintain our SELL rating with a revised SoTP-based FV of Rs275/share (Rs235/share earlier).
Mytrah acquisition and higher revenue from bilateral (merchant) transactions aided yoy EBITDA growth in 4QFY24
Interim results for JSW Energy (consolidated), March fiscal year-ends, 2023-25E (Rs mn)
(% Chg.)
4QFY24 4QFY24E 4QFY23 3QFY24 KIE yoy qoq 2024 2023 (% chg.) 2025E
Net sales 27,559 26,641 26,700 25,428 3 3 8 114,859 103,318 11 153,551
Cost of fuel (11,992) (10,224) (16,157) (10,679) 17 (26) 12 (47,070) (59,373) (21) (60,096)
O&M (3,881) (3,806) (3,089) (3,641) 2 26 7 (13,971) (11,127) 26 (16,996)
EBITDA 11,685 12,611 7,453 11,108 (7) 57 5 53,818 32,818 64 76,458
Other income 1,235 982 1,358 1,186 26 (9) 4 4,554 5,352 (15) 5,887
Interest & finance charges (5,332) (5,234) (2,331) (5,208) 2 129 2 (20,534) (8,443) 143 (28,606)
Depreciation (4,267) (4,119) (2,913) (4,001) 4 46 7 (16,334) (11,692) 40 (20,454)
PBT 3,321 4,241 3,567 3,086 (22) (7) 8 21,504 18,036 19 33,286
Provision for tax (net) 64 (1,292) (686) (779) (105) (109) (108) (4,423) (4,627) (4) (6,489)
Net profit before minority interest 3,384 2,949 2,881 2,306 15 17 47 17,081 13,408 27 26,796
Minority interest/share in profit of associates 129 - (160) 7 146 169 (64)
Net profit 3,513 2,949 2,721 2,313 19 29 52 17,227 13,578 27 26,732
Extraordinary — — - 0 - 1,200 -
EPS (Rs/share) 2.1 1.8 1.7 1.4 10.5 8.3 16.3
EBITDA margin (%) 42.4 47.3 27.9 43.7 46.9 31.8 49.8
Tax rate (%) (1.9) 30.5 19.2 25.3 20.6 25.7 19.5
Key operating parameters
Net generation (mn units) 6,398 6,185 5,067 6,128 3 26 4 27,863 21,868 27 36,841
Average realization (Rs/kwh) 4.3 4.3 5.3 4.1 0 (18) 4 4.1 4.7 (13) 4.2
Fuel cost (Rs/kwh) 2.4 2.2 3.6 2.3 9 (35) 4 2.6 3.8 (31) 3.3
O&M (Rs/kwh) 0.6 0.6 0.6 0.6 (1) (0) 2 0.5 0.5 (1) 0.5
EBITDA Contribution (Rs/kwh) 1.8 2.0 1.5 1.8 (10) 24 1 1.9 1.5 29 2.1
Other highlights from the earnings call
Generation. JSW Energy achieved net generation of 6,398 MUs in 4QFY24, +26% yoy. The
improvement is primarily attributable to 602 MU generation at the acquired Mytrah portfolio, 380 MUs
of incremental generation in the quarter owing higher merchant sales (thermal), 227 MUs of
incremental generation through thermal PPAs, and 156 MUs from organically added renewable
capacities. The quarter had 34 MUs lower hydro generation on a yoy basis. Blended thermal PLF was
healthy at 73% in 4QFY24 (66% in FY2024), though Vijaynagar continued to operate at a lower PLF of
59% in 4QFY24 (58% in FY2024). The overall blended PLF improved sequentially to 67%, though it was
lower yoy (74% in 4QFY23)—hydro saw a significantly lower PLF of 13%.
Finance costs. JSW Energy’s finance costs increased to Rs5.3 bn (+129% yoy, +2% qoq)—this
included Rs1.9 bn of finance costs for Mytrah, Rs0.5 bn of incremental cost for the standalone
business, and Rs0.6 bn combined increase for Ind Barath, new renewable capacities and other uses.
Mytrah. JSW Energy had concluded the acquisition of Mytrah (1,753 MW for Rs105 bn) in 4QFY23
which reported an EBITDA of Rs12 bn in FY2023. For 4QFY24, Mytrah reported Rs2.4 bn of EBITDA
(+21% qoq); the sequential improvement was owing to better blended PLF of 17%. Net generation
increased 3% yoy driven by higher machine availability in wind, but partly offset by lower solar
radiation. For FY2024, EBITDA stood at Rs13.76 bn. The receivables for Mytrah declined 50% yoy to
Rs4 bn.
Ind-Barath. JSW Energy commissioned unit-1 (350 MW) at Ind-Barath in January 2024, the plant
generated 196 MUs of energy, adding revenues of Rs1.2 bn. EBITDA contribution was lower at Rs0.3
bn—management attributed the lower EBITDA to higher expenses in the initial phase of the project. It
plans to commission unit-2 (350 MW) of Ind-Barath in 1QFY25E.
JSW Energy
Electric Utilities India Research
32
Net debt for JSW Energy increased to Rs 266 bn as of March 2024 from Rs263 bn as of December
2023 (Rs222 bn as of March 2023). The qoq increase included Rs27.6 bn of new debt taken during
the quarter.
Receivable days (excluding the Mytrah acquisition) for the company improved yoy to 54 days as of
March 2024 (60 days as of March 2023), coupled with 21% yoy reduction in the receivables.
JSW Energy has 2.6 GW of projects under construction, including 350 MW (unit-2) at Ind-Barath and
2.2 GW under various renewable projects (240 MW hydro + 1,970 MW wind)—these are expected to
be commissioned in FY2025.
Management has signed MOUs for 6.2 GW of incremental renewable generation assets with JSW Steel,
laying the growth path beyond 2025
JSW Energy operational, under-construction capacity and future pipeline, March fiscal year-ends,
2024-30 (GW)
25
3.4 19.5 20.0
20
6.2
15
2.0 0.2 9.9
10 0.4
7.3
5
0
Ind-Barath
Capacity by FY2025
Capacity by FY2030
MOUs with JSW Steel
Under construction
Under construction
Pipeline projects
Operational capacity
Total
(renewable)
(hydro)
(wind)
Standalone EBITDA beat our estimate, aided by higher generation at the Ratnagiri plant
Interim results for JSW Energy (standalone), March fiscal year-ends, 2023-25E (Rs mn)
(% chg.)
4QFY24 4QFY24E 4QFY23 3QFY24 KIE yoy qoq 2024 2023 (% chg.) 2025E
Net sales 12,360 13,249 16,466 12,757 (7) (25) (3) 51,291 57,392 (11) 53,984
Fuel costs (6,242) (7,910) (11,520) (6,330) (28,480) (39,981) (29) (35,989)
O&M (1,431) (1,358) (1,542) (1,354) (5,628) (5,342) 5 (5,797)
(Decrease)/increase in banking energy — — — — — — —
EBITDA 4,687 3,981 3,405 5,074 18 38 (8) 17,183 12,070 42 12,198
EBITDA margin (%) 37.9 30 21 40 34 21 23
Other income 532 289 504 221 2,104 2,799 (25) 2,498
Interest & finance charges (1,354) (1,173) (1,333) (1,178) (4,779) (2,598) 84 (5,040)
Depreciation (641) (672) (769) (650) (2,695) (3,174) (15) (3,015)
PBT 3,223 2,424 1,807 3,467 33 78 (7) 11,813 9,096 30 6,642
Provision for tax (net) 199 (678) (490) (957) (2,311) (3,186) (27) (2,594)
Net profit 3,422 1,746 1,316 2,510 96 160 36 9,502 5,910 61 4,048
Extraordinary — — - — - 1,200 -
EPS (Rs/share) 2.1 1.1 0.8 1.5 5.8 3.6 2.5
EBITDA margin (%) 37.9 30 21 40 34 21 23
Tax rate (%) -6.2 28 27 28 20 35 39
Key operating parameters
Net generation (mn units) 3,115 3,120 2,750 3,138 (0) 13 (1) 11,917 9,263 28.7 11,767
Average realization (Rs/kwh) 3.97 4.25 5.99 4.07 (7) (34) (2) 4.30 6.20 (30.5) 4.59
Fuel cost (Rs/kwh) 2.00 2.54 4.19 2.02 (21) (52) (1) 2.39 4.32 (44.6) 3.06
O&M (Rs/kwh) 0.46 0.44 0.56 0.43 6 (18) 6 0.47 0.58 (18.1) 0.49
Contribution (Rs/kwh) 1.50 1.28 1.24 1.62 18 22 (7) 1.44 1.30 10.7 1.04
JSW Energy
33
JSW Energy’s EBITDA was aided by earnings from Mytrah and higher short-term sales
Consolidated EBITDA (with other income) bridge, March fiscal year-ends, 4QFY23-4QFY24 (Rs bn)
14 0.8 0.6 0.3 12.9

0.4
12 2.4
-0.4
10 8.8
8
6
4
2
0
Ind-Barath
Others
4QFY23 EBITDA
4QFY24 EBITDA
Other renewable
Mytrah
Higher short-term
Higher long-term sales

sales
Mytrah saw a sequential improvement in EBITDA to Rs2.4 bn owing to higher PLFs; Ind-Barath (unit 1) saw
small EBITDA in 4QFY24
Performance of power generation assets of JSW Energy, March fiscal year-ends, 2023-25E (Rs mn)
(% Chg.)
4QFY24 4QFY23 3QFY24 yoy qoq 2024 2023 (% chg.) 2025E
Vijaynagar + Ratnagiri (Standalone)
Revenue (Rs mn) 12,360 16,470 12,760 (25.0) (3.1) 51,291 57,392 (10.6) 53,984
EBITDA (Rs mn) 5,218 3,910 5,295 33.5 (1.4) 19,287 14,868 29.7 14,697
Operational performance
Net generation (MU) 3,115 2,750 3,138 13.3 (0.7) 11,917 9,263 28.7 11,767
Realization (Rs/kwh) 4.0 6.0 4.1 (33.7) (2.4) 4.3 6.2 (30.5) 4.6
Cost of production (Rs/kwh) 2.3 4.6 2.4 (49.8) (3.6) 2.7 4.6 (41.5) 3.3
EBITDA (Rs/kwh) 1.7 1.4 1.7 17.8 (0.7) 1.6 1.6 0.8 1.2
Barmer
Revenue (Rs mn) 8,090 7,480 7,050 8.2 14.8 28,814 30,260 (4.8) 30,575
EBITDA (Rs mn) 2,580 2,440 2,250 5.7 14.7 9,210 9,080 1.4 9,696
Net generation (MU) 1,754 1,730 1,564 1.4 12.1 6,329 6,544 (3.3) 6,329
Realization (Rs/kwh) 4.6 4.3 4.5 6.7 2.3 4.6 4.6 (1.5) 4.8
Cost of production (Rs/kwh) 3.1 2.9 3.1 7.8 2.4 3.1 3.2 (4.3) 3.3
EBITDA (Rs/kwh) 1.5 1.4 1.4 4.3 2.2 1.5 1.4 4.9 1.5
Karcham Wangtoo + Baspa
Revenue (Rs mn) 1,710 1,860 2,110 (8.1) (19.0) 13,710 13,282 3.2 13,795
EBITDA (Rs mn) 1,360 1,340 1,970 1.5 (31.0) 13,040 11,699 11.5 13,534
Net generation (MU) 369 403 634 (8.4) (41.8) 4,913 5,595 (12.2) 6,630
Realization (Rs/kwh) 4.6 4.6 3.3 0.4 39.2 2.8 2.4 17.5 2.1
Cost of production (Rs/kwh) 0.9 1.3 0.2 (26.5) 329.5 0.1 0.3 (51.8) 0.0
EBITDA (Rs/kwh) 3.7 3.3 3.1 10.8 18.6 2.7 2.1 26.9 2.0
Mytrah
Revenue (Rs mn) 2,940 2,540 NA 15.7 15,740 17,652
EBITDA (Rs mn) 2,440 2,010 NA 21.4 14,030 15,899
Net generation (MU) 613 506 NA 21.1 3,336 3,378
Realization (Rs/kwh) 4.8 5.0 NA (4.4) 4.7 5.2
Cost of production (Rs/kwh) 0.8 1.0 NA (22.1) 0.5 0.5
EBITDA (Rs/kwh) 4.0 4.0 NA 0.3 4.2 4.7
Ind-Barath
Revenue (Rs mn) 1,230 NA NA 1,231 11,406
EBITDA (Rs mn) 300 NA NA 300 6,458
Net generation (MU) 196 NA NA 196 2,281
Realization (Rs/kwh) 6.3 NA NA 6.3 5.0
Cost of production (Rs/kwh) 4.7 NA NA 4.7 2.2
EBITDA (Rs/kwh) 1.5 NA NA 1.5 2.8
JSW Energy
34
Average realization and fuel cost in 4QFY24 declined on a yoy basis

Realization and fuel cost trend of JSW Energy, March fiscal year-ends, 1QFY20-4QFY24 (Rs/kwh)
Average realization (Rs/kwh) Average fuel cost (Rs/kwh)

6.0
5.2 5.3 5.3
5.0
4.1 4.2 4.4 4.2 4.2 4.3 4.2 4.4
4.1 4.3
3.9 3.8
4.0 3.7 3.5 3.6 3.6
3.4 3.4 3.3
3.2 3.2 3.1 3.1
2.9 2.7 2.8
3.0 2.6 2.7
2.4 2.2 2.6 2.5
2.3 2.4
2.1 2.1 2.3
2.0
1.0
-
1QFY20
4QFY20
1QFY21
2QFY21
1QFY22
2QFY22
1QFY23
2QFY23
3QFY23
2QFY24
3QFY24
4QFY24
2QFY20
3QFY20
3QFY21
4QFY21
3QFY22
4QFY22
4QFY23
1QFY24
JSW Energy’s net debt-equity ratio increased a tad; cost of debt rose 6 bps sequentially to 8.64%
Net debt and equity for JSW Energy, March fiscal year-ends, 1QFY20-4QFY24 (Rs bn, X)
Net worth (Rs bn, LHS) Net debt (Rs bn, LHS) Net debt/equity (X, RHS)
300 1.3 1.3 1.4
1.2 1.2 1.2
250 1.2
1.0
200
0.7 0.8
150 0.6
0.5
0.5 0.5 0.4 263 266 0.6
0.4 0.4 0.4 243
0.4 0.4 222 229
100
0.4
50 85 77 67 98 0.2
66 65 60 70 77 79
62 159
122 130 139 145 158 161 174 166 176 184 186 191 199 210 208
- -
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
JSW Energy
35
Rs1.9 bn finance cost impact due to Mytrah acquisition

Finance cost bridge, March fiscal year-ends, 3QFY23-3QFY24 (Rs bn)
6 0.1
0.4 5.3
0.1
5 0.5
1.9
4
3
2.3
2
Others
Ind-Barath
Standalone
Mytrah
New RE capacity
4QFY24
4QFY23
Prices of imported coal averaged ~US$95/ ton in 4QFY24

Imported coal prices (US$/ton) and currency (Rs/US$), March fiscal-year ends, 2017-24
Coal (US$/ton, LHS) USD:INR (Rs, RHS)

490 86
440
81
390
340 76
290
71
240
190 66
140
61
90
40 56
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Jun-16
Sep-16
Sep-17
Sep-18
Sep-20
Sep-19
Sep-21
Sep-22
Sep-23
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Dec-16
Mar-23
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-22
Mar-24
Source: Bloomberg, Kotak Institutional Equities
JSW Energy
36
Imported coal spreads improved in 4QFY24

Imported coal spreads, March fiscal year-ends, 2013-24 (Rs/kwh)
Coal Spread (Rs/kwh)

10
8
6
4
2
-
Mar-13
Mar-14
Mar-16
Mar-17
Mar-18
Mar-20
Mar-21
Mar-22
Mar-24
Mar-15
Mar-19
Mar-23
(2)
(4)
(6)
(8)
(10)
Source: IEX, Bloomberg, Kotak Institutional Equities
We raise our earnings estimates for JSW Energy

JSW Energy, changes in estimates, March fiscal year-ends; 2024-26E
Revised estimates Old estimates Change (%)
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Revenues 153,551 165,690 179,422 150,788 158,629 NA 2 4 NA
EBITDA 76,458 85,558 94,949 74,817 80,636 NA 2 6 NA
Net income 26,732 34,521 38,659 24,817 31,201 NA 8 11 NA
Source: Kotak Institutional Equities estimates
We value JSW Energy at Rs275/share

Valuation of power project portfolio of JSW Energy based on March 2026E earnings
Capacity Cost Ownership Value
Type (MW) (Rs bn) (Rs mn / MW) (%) (Rs bn)
Vijaynagar + Ratnagiri Thermal 2,060 65 32 100 24
Barmer Thermal 1,080 69 64 100 31
Ind Barath Thermal 700 52 75 100 28
Nandyal Thermal 18 1 50 100 1
Thermal generation 3,858 187 84
Himachal Baspa Hydro 1,391 87 62 100 63
Kutehr Hydro 240 28 115 100 23
Hydro generation 1,631 114 86
Renewable Renewable 2,550 131 51 100 74
Renewable Mytrah Renewable 1,753 105 60 100 64
Renewable (Future) Renewable 10,210 408 40 100 21
Renewable generation 14,513 644 158
Jaigadh Power Transco Transmission 74 2
JSW Steel 48
Total value 20,002 945 47 378
Cash and investments 102
Equity value 480
No. of Shares 1.7
Value per share (Rs) 275
JSW Energy
37
We expect a step-up in revenues and bottom-line over the next few years
Profit model, balance sheet, cash model of JSW Energy, March fiscal year-ends, 2020-26E (Rs mn)
2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model
Net revenues 82,727 69,222 76,138 103,318 114,859 153,551 165,690 179,422
EBITDA 29,569 29,066 30,157 32,818 53,818 76,458 85,558 94,949
Other income 2,870 2,375 5,260 5,352 4,554 5,887 7,396 7,485
Interest (expense)/income (10,511) (8,957) (8,462) (8,443) (20,534) (28,606) (30,261) (32,312)
Depreciation (11,681) (11,669) (11,311) (11,692) (16,334) (20,454) (21,292) (23,006)
Pretax profits 10,247 10,814 15,644 18,036 21,504 33,286 41,400 47,115
Tax (1,119) (1,946) (4,219) (2,983) (3,938) (6,489) (6,848) (8,426)
Deferred taxation 789 (813) (729) (1,644) (484) — — —
Minority interest 468 (101) (63) 169 146 (64) (31) (31)
Net income 10,385 7,955 10,633 13,578 17,227 26,732 34,521 38,659
Extraordinary items 615 — 6,654 1,200 — — — —
Reported profit 10,999 7,955 17,286 14,778 17,227 26,732 34,521 38,659
Earnings per share (Rs) 6.3 4.8 6.5 8.3 10.5 15.8 19.8 22.2
Balance sheet
Paid-up common stock 16,419 16,423 16,397 16,405 16,412 17,443 17,443 17,443
Total shareholders' equity 116,456 145,070 174,149 186,288 208,317 281,664 312,697 347,867
Deferred taxation liability 1,899 3,784 9,291 11,232 13,390 13,390 13,390 13,390
Minority interest (238) (87) 21 1,054 1,825 2,496 2,526 2,557
Total borrowings 98,672 87,969 89,426 250,511 315,730 399,163 411,066 438,347
Total liabilities and equity 216,790 236,736 272,886 449,085 539,262 696,712 739,679 802,161
Net fixed assets 170,746 159,575 150,756 243,807 283,064 404,832 423,540 460,534
Capital work-in progress 3,913 4,728 20,906 47,882 102,851 80,506 72,841 65,943
Investments 18,536 40,522 66,232 60,328 70,349 70,349 70,349 70,349
Goodwill 6,398 6,398 6,398 6,398 6,398 6,398 6,398 6,398
Cash 2,007 4,792 11,341 40,139 42,066 101,710 141,392 180,638
Net current assets (excl. cash) 15,190 20,721 17,253 50,532 34,534 32,918 25,160 18,300
Net current assets (incl. cash) 17,197 25,513 28,594 90,670 76,600 134,627 166,551 198,938
Total assets 216,790 236,736 272,886 449,085 539,262 696,712 739,679 802,161
Ratios
Net debt/equity (%) 83.2 57.4 44.8 112.3 130.2 104.7 85.6 73.5
Return on equity (%) 8.9 6.1 6.7 7.5 8.7 10.9 11.6 11.7
Book value per share (Rs) 72.1 90.6 111.9 120.4 135.1 169.2 186.9 207.1
ROCE (%) 5.0 4.4 5.9 4.5 4.3 5.4 5.8 6.1
JSW Energy
RESULT
Lupin (LPC) SELL

Pharmaceuticals
Operationally on track Company data and valuation summary

LPC posted a marginal operating miss in 4QFY24, owing to lower branded Stock data
sales and higher R&D spends. Nevertheless, with a ~5X surge in adjusted
CMP(Rs)/FV(Rs)/Rating 1,611/1,400/SELL
PAT, albeit on a low base, FY2024 was a solid year for LPC. This has been
driven by a healthy pace of new launches, a benign US generics pricing
Mcap (bn) (Rs/US$) 734/8.8
environment and improved execution. While we appreciate the enhanced
ADTV-3M (mn) (Rs/US$) 1,965/23.5
trajectory, at CMP, we believe the ~13% adjusted EPS CAGR over FY2024-27E
is well encapsulated. Accordingly, we retain SELL with an FV of Rs1,400. Shareholding pattern (%)
FY2025E guidance reflects steady growth momentum 5.72.2

10.0
LPC’s 4QFY24 sales stood at Rs49.6 bn (12% yoy, (-)4% versus KIE), with
EBITDA at Rs10 bn ((-)4% versus KIE) and in-line EBITDA margin at 20.1%. 16.8
47.0
4QFY24 US sales, at US$209 mn, declined 1.5% qoq, despite sequentially higher
gSpiriva sales of ~US$32 mn due to incremental competition in gPrezista and 18.3
lower seasonal sales. According to IQVIA, LPC’s domestic sales grew 5.5% yoy,
a tad below IPM growth in 4QFY24. LPC is guiding for overall topline growth of Promoters FPI s MFs BFIs Retail Others
~10% yoy (KIE: ~9% yoy) and EBITDA margin of 20%+ (KIE: 20.1%) in FY2025E,
with a further upside after the relaunch of gMyrbetriq. We bake in an 11% Absolute 1 1 129
domestic sales CAGR over FY2024-27E, led by the ramp-up of the new divisions. Rel. to Nifty 2 (1) 105
In addition, for ex-US and ex-India markets, we bake in a 9-11% sales CAGR over Rel. to MSCI India 0 (3) 94
FY2024-27E, with continued traction across South Africa, Canada and Mexico.
Slew of launches and benign pricing to drive US sales over FY2024-26E EPS (Rs) 46.5 54.4 62.5
EPS growth (%) 391.8 17.0 14.9
After the ongoing litigation, we expect LPC to relaunch gMyrbetriq in the US in
P/E (X) 34.7 29.6 25.8
early 2QFY25 and bake in US$59/27 mn gMyrbetriq sales in FY2025/26E. While
P/B (X) 5.1 4.5 3.9
we factor in earlier-than-expected launches of gMyrbetriq and gOracea, we now
EV/EBITDA (X) 18.7 16.0 13.9
bake in gDulera’s launch only in early FY2026E versus FY2025E. We build in
RoE (%) 15.7 16.1 16.2
LPC’s entry in gVictoza and gSaxenda only in 2HFY26. Accordingly, we now
Div. yield (%) 0.2 0.6 0.7
estimate US sales of US$905/959 mn in FY2025/26E. Aided by a slew of new
Sales (Rs bn) 200 219 239
launches, we forecast a 14% US sales CAGR over FY2024-26E. Apart from
Albuterol and gSpiriva contributing 30%+ to overall FY2024-26E EPS, LPC’s
earnings also reflect non-recurring exclusivity benefits from gSuprep and
gProlensa currently, and gTolvaptan later, thus creating a valuation dichotomy. Source: Bloomberg, Company data, Kotak Institutional Equities estimates

Step change in earnings trajectory factored in; retain SELL with FV of Rs1,400 May 07, 2024
We highlight LPC’s EBITDA margins have swung from mid-single digits in

1QFY23 to ~20% in 2HFY24. We expect EBITDA margins to be at 19-21% over
the next few quarters (LPC has guided for 22-23% over the next 2-3 years), led
by increased pivot toward complex generics in the US, lower contribution from
the low-margin in-licensed domestic portfolio and challenges in branded
Related Research
markets (except Brazil) being gradually addressed. Largely driven by higher US
sales, we raise LPC’s FY2025E EPS by ~7%, while keeping the FY2026E EPS → Lupin: A step change
largely unchanged. We ascribe an unchanged 22X P/E multiple to LPC and roll- → IPM pulse: The fiscal year ends on a low note
forward to June 2026E to derive an FV of Rs1,400 (Rs1,375 earlier). In our view, → Pharmaceuticals: A fine quarter awaits
the strong run-up in the stock price captures the step change in LPC’s earnings
trajectory. Retain SELL.
Alankar Garude, CFA Samitinjoy Basak Aniket Singh

39
LPC—4QFY24 interim results

Exhibit 1: March fiscal year-ends, 2023-25E (Rs mn)
4QFY24 4QFY24E 4QFY23 3QFY24 %KIE %yoy %qoq FY2024 FY2023 %yoy FY2025E FY2024 %yoy
Total revenues 49,608 51,463 44,301 51,974 (3.6) 12.0 (4.6) 200,108 166,417 20.2 218,505 200,108 9.2
Gross profit 33,869 34,326 26,800 34,714 (1.3) 26.4 (2.4) 133,673 98,619 35.5 146,170 133,673 9.3
Employee expenses (9,002) (8,937) (7,730) (8,892) 0.7 16.5 1.2 (34,946) (30,872) 13.2 (38,091) (34,946) 9.0
R&D expenses (4,255) (3,500) (3,050) (3,567) 21.6 39.5 19.3 (15,265) (12,770) 19.5 (16,446) (15,265) 7.7
Other expenses (10,644) (11,523) (10,243) (11,875) (7.6) 3.9 (10.4) (45,374) (37,020) 22.6 (47,643) (45,374) 5.0
EBITDA 9,968 10,366 5,778 10,380 (3.8) 72.5 (4.0) 38,089 17,958 112.1 43,989 38,089 15.5
Other income 293 290 373 294 0.9 (21.5) (0.4) 1,219 757 60.9 1,316 1,219 8.0
Exceptionals (2,013) — — — (2,013) — — (2,013)
Interest (713) (785) (926) (740) (9.2) (23.0) (3.7) (3,116) (2,743) 13.6 (2,136) (3,116) (31.5)
Depreciation (2,559) (2,660) (2,640) (2,572) (3.8) (3.1) (0.5) (9,956) (8,807) 13.0 (11,367) (9,956) 14.2
Pretax profits 4,977 7,211 2,585 7,361 (31.0) 92.5 (32.4) 24,223 7,165 238.1 31,802 24,223 31.3
Tax (1,295) (1,442) (161) (1,174) (10.2) 703.8 10.3 (4,867) (2,688) 81.1 (6,837) (4,867) 40.5
Minority interest (88) (60) (64) (56) 46.5 36.7 57.5 (211) (176) 19.8 (211) (211) —
Net income - reported 3,594 5,709 2,360 6,131 (37.0) 52.3 (41.4) 19,145 4,301 345.1 24,754 19,145 29.3
Net income - adjusted 5,607 5,709 2,360 6,131 (1.8) 137.6 (8.6) 21,157 4,301 391.9 24,754 21,157 17.0
Reported EPS (Rs) 7.9 12.5 5.2 13.5 (37.0) 52.3 (41.4) 42.1 9.6 340.2 54.4 42.1 29.3
Adjusted EPS (Rs) 12.3 12.5 5.2 13.5 (1.8) 137.6 (8.6) 46.5 9.5 391.9 54.4 46.5 17.0
Tax rate (%) 26.0 20.0 6.2 15.9 20.1 37.5 21.5 20.1
Segment wise sales - -
Domestic formulation 16,015 16,412 14,786 17,251 (2.4) 8.3 (7.2) 66,565 60,760 9.6 73,469 66,565 10.4
North America 19,006 18,924 15,503 18,885 0.4 22.6 0.6 72,462 54,173 33.8 80,019 72,462 10.4
EMEA 5,318 5,280 4,535 5,170 0.7 17.3 2.9 19,234 15,513 24.0 21,394 19,234 11.2
Growth markets + RoW 6,031 6,819 5,253 6,714 (11.6) 14.8 (10.2) 24,834 21,163 17.3 26,939 24,834 8.5
API 2,581 2,918 3,226 2,779 (11.5) (20.0) (7.1) 11,415 11,091 2.9 12,785 11,415 12.0
Other operating income 657 1,110 998 1,175 (40.8) (34.2) (44.1) 3,545 3,717 (4.6) 3,899 3,545 10.0
Total 49,608 51,463 44,301 51,974 (3.6) 12.0 (4.6) 200,108 166,417 20.2 218,505 200,108 9.2
% margin
Gross margin 68.3 66.7 60.5 66.8 66.8 59.3 66.9 66.8
Staff cost 18.1 17.4 17.4 17.1 17.5 18.6 17.4 17.5
R&D expenses 8.6 6.8 6.9 6.9 7.6 7.7 7.5 7.6
Other expenditure 21.5 22.4 23.1 22.8 22.7 22.2 21.8 22.7
EBITDA reported 20.1 20.1 13.0 20.0 19.0 10.8 20.1 19.0
LPC—key highlights from 4QFY24 concall:
Guidance:
Revenues: LPC expects to grow its overall topline by ~10% yoy in FY2025E.
EBITDA margins: LPC expects to generate overall EBITDA margins of 20%+ in FY2025E, with some
further upside likely from the relaunch of gMyrbetriq.
R&D spends: LPC expects yoy increase in overall R&D expenses in FY2025E, with sustenance of
4QFY24 quarterly run-rate.
US:
Guidance: LPC expects to sustain US sales at US$200 mn+ over the coming quarters. With various
launches in FY2025E and FY2026E, LPC expects to drive US sales closer to US$1 bn in FY2026E.
Price erosion: Price erosion in LPC’s base business remained flat qoq at single digits. The company
expects price erosion to remain at similar levels over the next 12 months.
Drug shortages: According to LPC, there are still a lot of concerns around drug shortages in the US,
which should help keep price erosion at similar levels over the next 12 months. Most of these
shortages are attributable to economic unviability of the products.
4QFY24 performance: In 4QFY24, LPC witnessed lower sales in gPrezista due to incremental
competition. Sales of seasonal products were sequentially slightly lower in 4QFY24.
Focus on non-OSD launches: In FY2024, 80% of new product sales in the US were from non-OSD
products. In FY2025E, LPC expects 70%+ of new launches to be non-OSD products.
Inhalation portfolio: In 4QFY24, inhalation products contributed to ~40% of US sales.
Lupin
40
Filings: LPC filed 6 products in FY2024, with the quantum declining due to higher focus on more
impactful filings. In FY2025E, LPC plans to file 11-15 products.
gSpiriva:
 Market share: LPC has a ~30% market share and expects gSpiriva to be a major growth lever in
FY2025E. According to the company, the slight moderation in market share over the past few
weeks is not significant. It has not witnessed any tapering of the order book and expects to reach
market share of 30-35% in FY2025E.
 Pricing: In FY2024, pricing has remained more or less similar since its launch date. LPC expects
list prices to remain stable in FY2025E.
 Capping on OOP costs: Boehringer has announced a ceiling on OOP cost at ~US$35 per month for
its inhalers from June 1, 2024. LPC will assess the impact of this and decide whether it warrants
any change in strategy in June.
 Respimat: LPC expects to file by end-FY2025E.
gMyrbetriq: LPC launched gMyrbetriq 25 mg on April 22, 2024. Soon after, a US court imposed a
temporary restraining order on LPC, advocating it to pause shipments of the product, owing to an
appeal filed by Astellas. LPC expects further clarity over the next few days and hopes to relaunch the
product shortly.
Albuterol: LPC’s market share improved slightly qoq to 23.4% in 4QFY24, with some uptick due to
seasonality. According to the company, manufacturing MDI products is difficult; hence, the company
expects stable market share.
gSuprep: While there was no impact in 4QFY24, LPC expects to see the impact of competition on
gSuprep sales in 1QFY25.
gDulera: LPC has met US FDA recently and is working on a CRL response. It does not expect a launch
in FY2025E.
Ellipta: LPC has been making good progress on the platform and expects to report material progress
by end-FY2025E.
gAmbisome: LPC has exited from gAmbisome, as the product was not progressing in line with its
expectations.
Liraglutide: LPC hopes to launch gSaxenda and gVictoza in FY2026E and expects the market to be
competitive.
Peptides: Within peptides, LPC has launched Ganirelix in 4QFY24.

gSlynd: This is a Para-IV filing, and the company expects to receive the final approval in August 2024.
Compliance: LPC is on track with its remediation efforts at Tarapur and Mandideep Unit -1. In 4QFY24,
it completed successful US FDA inspections at Dabhasa and Aurangabad, with zero observations.
Nagpur Unit 2: LPC expects 5-6 filings from its Nagpur facility over the next few years. Currently, the
company sells 2 products from this unit, of which 1 is sold in the US. The US FDA carried out an
inspection at this unit ~12 months ago.
EBITDA margins: According to LPC, its complex products generate much higher EBITDA margins
than the OSD products.
India:
Guidance: LPC expects to outperform the IPM by ~200 bps in FY2025E.

Rx business: The India Rx business grew 8.7% yoy in 4QFY24. Ex-Cidmus, LPC’s Rx business grew
9.3% yoy during the quarter.
Therapeutic areas: In 4QFY24, LPC’s core therapies such as respiratory and cardiac have grown
faster than the IPM.
Lupin
41
In-licensed portfolio: LPC’s in-licensed portfolio contributed to ~11% of its Rx sales in 4QFY24 (15-
16% in 4QFY23).
Field force: Currently, LPC’s field force strength stands at 10,000, which includes 7,500 MRs.
Trade generics: LPC has proposed to carve out a separate subsidiary for the trade generics segment.
According to the company, this would remain a higher growth segment, with a relatively higher
presence in Tier-2/3 towns and across hospital and institutional channels.
New launches: LPC launched 28 products in FY2024 and plans to launch 25 products in India in
FY2025E.
Diagnostics: Currently, LPC has 40 labs under operation. LPC’s EBITDA loss in the diagnostics
segment increased yoy in FY2024. It expects the losses to continue in FY2025E and decline
subsequently in FY2026E.
Regulatory scrutiny: According to LPC, the government is showing intent to move up on the quality
curve. LPC did not experience any disruption for any of its CMOs. It has a very robust system of vendor
management in place.
EU:
4QFY24 performance: The sequential improvement in 4QFY24 was led by higher qoq sales in
Germany and the UK.
gFostair: LPC has dominant market share in 13 countries, both through direct and partnered
presence, with FY2024 sales of US$20 mn+.
Growth markets:
South Africa: LPC has witnessed a turnaround in South Africa over the past couple of quarters. LPC
had been facing headwinds due to currency issues, as a majority of the portfolio is being imported.
Philippines: EBITDA margins are higher than corporate levels.

Mexico: After the opening up of its facility (which was shut for 10 months), LPC expects robust
traction in Mexico in FY2025E.
Brazil: LPC expects another challenging year for Brazil in FY2025E. It is a relatively low margin
business.
Biosimilars: LPC has been focusing more on biosimilars. It is still awaiting US FDA approval for
Pegfilgrastim and is in the process of resubmitting the CRL response. In bEnbrel, LPC has witnessed
good growth in FY2024. Until date, the company has incurred spends of Rs4-5 bn for its biologics
infrastructure. It expects biosimilars R&D to be less than 10% of overall R&D spends in FY2025E.
4QFY24 financial performance:
Gross margins: Gross margins improved qoq due to better product mix, especially in the US.
gSpiriva’s ramp-up has contributed to 400-500 bps improvement in gross margins over the past few
quarters.
Other operating income: Other operating income reduced qoq due to lesser PLI benefit.
Employee expenses: Staff costs, as a percentage of sales, increased qoq due to higher impact of
ESOPs being partially offset by lower domestic sales.
Working capital: Net working capital days increased qoq, largely due to higher inventory days.
Net debt: Rs4.77 bn.
ESG: LPC received a score of 69 out of 100 from S&P Global, placing it in the top-95 percentile among
pharma companies.
Lupin
42
LPC received a total of four key low competition approvals in 4QFY24

Exhibit 2: List of low competition approvals, March fiscal year-end, 2024
Generic Name Treatment No. of Approval Opportunity
Final approvals
Dapagliflozin and Total US sale: US$6 mn. Sun is likely to enjoy 180 days exclusivity. Lupin is not
Qtern10 mg/5 mg, 5mg/5mg Tablet Type 2 diabetes 1st
Saxagliptan litigated.
Restore the normal sinus rhythm
Multaq Dronedarone Total US sales: US$368 mn. There are 10 Para IV filers. Litigation is settled with
in patients with paroxysmal or 1st
400mg Tablet Hydrochloride all. 6 FTFs will enjoy shared 180 days exclusivity.
persistent atrial fibrillation
Postoperative pain and
Bromsite0.075%; Ophthalmic Solution/Drops Bromfenac Sodium 1st Total US sales - US$15 mn. Lupin is the sole Para IV filer and has won litigation.
inflammation of the eye
Levonorgestrel and Ethinyl There are 2 Para IV filers. Litigation is settled with Lupin and Xiromed was not
Balcoltra0.1 mg/0.02 mg Tablet Prevent pregnancy 2nd
Estradiol litigated. Xiromed has already launched its generic.
Dry eye disease (an eye disorder
Alrex0.2% Ophthalmic Suspension Loteprednol Etabonate in which tears do not provide 2nd All patents have expired. Sentiss pharma have already launched their generic.
sufficient eye lubrication)
Source: US FDA, Kotak Institutional Equities
LPC—4QFY24 highlights: Marginal operating miss on lower branded sales and higher R&D spends
Marginally lower sales ((-)4% versus KIE) largely offset by healthy gross margins at 68.3% (150 bps
qoq): LPC’s 4QFY24 revenues of Rs49.6 bn (12% yoy, (-)5% qoq) missed our estimates by 4%. Gross
margins stood at 68.3% (150 bps qoq, 780 bps yoy), 160 bps higher than our estimates. R&D spends at
8.6% of sales increased sharply by 170 bps qoq (180 bps versus KIE). Staff expenses and other expenses
grew 16.5% yoy and 4% yoy, respectively, in 4QFY24. Reported EBITDA stood at Rs10 bn ((-)4% versus
KIE, (-)4% qoq), with EBITDA margins remaining flat qoq at 20.1% (in line with KIE). Reported PAT, at
Rs3.6 bn, was 37% below our estimates ((-)41% qoq), led by a one-time impairment charge of Rs2 bn
related to intangible assets (including discontinued ANDAs) and certain tangible assets. Adjusted PAT,
at Rs5.6 bn ((-)2% versus KIE, (-)9% qoq), grew 138% yoy. Effective tax rate stood at 26% (1,010 bps qoq).
Operating working capital stood at Rs56.9 bn, as of March 2024. Capex for the quarter amounted to
Rs1.1 bn. The company has net debt of Rs4.8 bn, implying a net debt-equity ratio of 0.03X.
Segment-wise highlights:
North America: US sales in 4QFY24, at US$209 mn, declined 1.5% qoq (US$212 mn in 3QFY24; (-)2%
versus KIE estimate of US$213 mn). We estimate that LPC reported gSpiriva sales of ~US$32 mn in
the US for 4QFY24. The company launched 6 products in 4QFY24 in the US, including gProlensa. It
received 12 ANDA approvals from the USFDA and filed 1 ANDA in 4QFY24. As of March 2024, the
company has 431 cumulative ANDA filings and has received 314 approvals to date, along with 51 FTF
filings, including 18 exclusive FTF opportunities.
India: India formulation sales, at Rs16 bn (8% yoy), accounting for 34% of LPC’s 4QFY24 sales, were
2% behind our estimates. LPC launched seven brands across therapies during the quarter.
Europe, the Middle East and Africa: EMEA sales were Rs5.3 bn (17% yoy), accounting for 11% of
overall sales. Within the EMEA, South Africa sales, at ZAR438 mn, grew 5% yoy (18% qoq), while
Germany sales, at EUR10 mn, remained flat yoy.
Growth markets: Growth markets posted sales of Rs5.1 bn (16% yoy), accounting for 10% of overall
sales. Among key growth markets, Mexico, Philippines and Australia posted yoy sales growth in
4QFY24, while Brazil posted yoy sales decline. Brazil sales, at BRL51 mn, declined 32% yoy; Mexico
sales, at MXN192 mn, grew 26% yoy; PHP sales, at PHP930 mn, grew 71% yoy; Australia sales, at
AUD29 mn, grew 21% yoy.
API: Global API sales stood at Rs2.6 bn, ((-)20% yoy, (-)7% qoq), accounting for 5% of overall sales.
Cumulative US DMF filings stood at 157, as of March 2024.
Diagnostics and digital therapeutic services: In view of increased business activities of diagnostics
services and digital therapeutics, LPC has disclosed the performance of its pharmaceuticals business
and other services (diagnostics and digital therapeutics) separately, from July 1, 2023. In 4QFY24,
LPC’s diagnostics and digital therapeutic businesses generated revenues of Rs203 mn (163% yoy,
12% qoq). The segment posted a total loss before tax of Rs366 mn in 4QFY24, as compared with
losses of Rs308 mn in 3QFY24 and Rs283.3 mn in 4QFY23. In FY2024, LPC’s diagnostics and digital
therapeutics business posted revenues of Rs671 mn (167% yoy), while incurring losses before taxes
of Rs1,253 mn (loss of Rs992 mn in FY2023).
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43
LPC—quarterly overall sales LPC—quarterly overall R&D expenses

Exhibit 3: March fiscal year-ends, 2022-24 (Rs bn, %) Exhibit 4: March fiscal year-ends, 2022-24 (Rs bn, %)
Sales (Rs bn, LHS) yoy growth (%, RHS) R&D (Rs bn, LHS) to sales (%, RHS)
60 30 5 15
50 52 50 4.3
50 48
44 20 4 3.7 3.7 3.8 3.6
43 41 42 41 43 3.5 3.4 3.4
3.4
39 37 3.3
40 2.9 3.1 10
10 3
30
0 2
20 5
(10) 1
10
0 (20) 0 0
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
LPC—quarterly EBITDA LPC—quarterly adjusted PAT

EBITDA (Rs bn, LHS) EBITDA margin (%, RHS) Adjusted PAT (Rs bn, LHS) PAT margin (%, RHS)
12 30 8 30
10.4 6.1 5.6
9.6 10.0 5.4 4.9 5.5
10 9.2 4.5 4.9
8.6 20
4 2.4
8 20 1.3 1.5
10
5.6 5.8
6 5.3 0
4.5
3.7 0
4 10 (0.9)
2.7 2.3
(4)
2 (10)
(5.2)
0 0 (8) (20)
3QFY22
1QFY22
2QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
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44
LPC—quarterly US sales LPC—quarterly India sales

Exhibit 7: March fiscal year-ends, 2022-24 (US$ mn, %) Exhibit 8: March fiscal year-ends, 2022-24 (Rs bn, %)
US sales (US$ mn, LHS) qoq growth (%, RHS) India sales (Rs bn, LHS) yoy growth (%, RHS)
250 40 20 40
213 212 209 16.917.3
202 16.4 15.815.2 16.4 16.0
15.4 14.9 14.8
200 184 181 14.7 30
172 177 175 181 20 15 13.5
159
150 20
121
0 10
100 10
(20) 5
50 0
0 (40) 0 (10)
4QFY23
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
1QFY24
2QFY24
3QFY24
4QFY24
2QFY22
3QFY23
4QFY24
1QFY22
3QFY22
4QFY22
1QFY23
2QFY23
4QFY23
1QFY24
2QFY24
3QFY24
LPC—quarterly EMEA sales LPC—quarterly LatAM sales

EMEA (Rs bn, LHS) yoy growth (%, RHS) LATAM (Rs bn, LHS) yoy growth (%, RHS)
3 100 2 60
1.7 1.7
1.7 1.7
2.2 1.6 1.6 1.7
2.1 1.5
1.4 30
1.9 1.3 1.3
2 1.8 1.8 1.7 50 1.2
1.5 1.6 1.5
1.4 1.4
1.2 1 0
1 0
(30)
0 (50) 0 (60)
4QFY23
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
Lupin
45
LPC—quarterly ROW sales LPC—quarterly API sales

ROW (Rs bn, LHS) yoy growth (%, RHS) API (Rs bn, LHS) yoy growth (%, RHS)
6 5.5 100 4 60
4.8 3.4
4.6 3.2
5
4.0 3 2.8 2.7 2.8 2.6 30
3.8 3.7 2.7 2.6 2.6
4 3.5 3.6 50 2.5 2.5
3.1 2.2
2.8 3.0
3 2.4 2 0
2 0
1 (30)
1
0 (50) 0 (60)
1QFY22
4QFY24
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
We estimate cumulative US$279 mn sales from gSpiriva over FY2024-26E

Exhibit 13: gSpiriva’s build-up, March fiscal year-ends, 2024-27E (US$ mn, %)
2024 2025E 2026E 2027E
gSpiriva build-up
US$/INR 83 83 84 84
gSpiriva sales (US$ mn) 75 96 108 90
US sales (US$ mn) 815 905 959 942
gSpiriva contribution to US sales (%) 9.2 10.6 11.3 9.6
Overall sales (Rs mn) 200,108 218,505 238,907 253,893
gSpiriva contribution to overall sales (%) 3.1 3.6 3.8 3.0
Overall EPS (Rs) 46.5 54.4 62.5 66.6
gSpiriva contribution to overall EPS (%) 17.7 19.0 18.7 14.6
We raise LPC’s FY2025E EPS by ~7% due to higher US sales, while keeping FY2026E EPS unchanged
Exhibit 14: LPC—changes in estimates, March fiscal year-ends, 2025-27E (Rs mn, %)
New estimates Old Estimates Changes %
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Sales 218,505 238,907 253,893 216,560 239,527 0.9 (0.3)
Gross profits 146,170 160,119 170,280 144,119 160,172 1.4 (0.0)
Gross margin (%) 66.9 67.0 67.1 66.5 66.9 35 bps 15 bps
EBITDA 43,989 49,398 52,441 42,469 49,842 3.6 (0.9)
EBITDA margin (%) 20.1 20.7 20.7 19.6 20.8 52 bps -13 bps
Adjusted PAT 24,754 28,435 30,332 23,181 28,433 6.8 0.0
EPS (Rs) 54.4 62.5 66.6 50.9 62.5 6.8 0.0
Lupin
46
LPC—key US products
Exhibit 15: March fiscal year-ends, 2017-27E (US$ mn)
2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Key product sales (US$ mn)
Fortamet + Glumetza 426 135 70 42 20 12 14 14 15 20 21
OC basket 129 135 60 61 58 51 47 48 48 48 48
Gavis basket 100 133 91 86 74 73 97 89 71 69 65
Lisinopril family 46 40 60 75 70 62 46 47 48 49 50
Cephs family 83 78 71 80 22 50 47 47 47 47 47
Key new launches (US$ mn)
Solosec 9 17 5 10 12 14 15 15 15
Levothyroxine 26 37 29 12 13 11 11 8
ProAir 27 108 87 74 76 77 77
Spiriva 75 96 108 90
Dulera 27 27
Base business & other launches 412 408 345 271 392 479 488 495
Total sales 1,197 898 778 800 720 739 634 813 905 959 942
We forecast 8% sales CAGR over FY2024-27E, for LPC

Exhibit 16: LPC—revenue split, March fiscal year-ends, 2018-27E (Rs mn, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Domestic formulations 41,253 46,382 51,385 52,712 60,041 60,760 66,565 73,469 81,340 90,155
Export formulations 103,415 103,848 85,417 82,735 91,981 90,849 118,583 128,352 139,215 143,550
North America 58,939 55,924 58,212 55,520 57,556 54,173 72,462 80,019 86,049 85,068
Europe 5,937 6,171 6,453 6,831 7,459 8,822 11,821 13,240 14,564 16,020
South Africa 5,314 5,735 5,910 5,950 6,132 6,691 7,413 8,154 8,969 9,866
LatAm 5,790 5,658 6,143 5,405 5,774 6,595 5,909 6,500 7,150 7,865
RoW 6,671 6,467 7,258 9,029 11,326 14,568 18,925 20,439 22,483 24,732
API 10,901 13,464 12,999 13,823 9,904 11,091 11,415 12,785 14,063 15,470
Other operating income 2,443 3,488 2,320 2,360 2,127 3,717 3,545 3,899 4,289 4,718
Total 158,042 167,182 153,748 151,630 164,055 166,417 200,108 218,505 238,907 253,893
% yoy growth
Domestic formulations 8.6 12.4 10.8 2.6 13.9 1.2 9.6 10.4 10.7 10.8
Export formulations (15.0) 0.4 (17.7) (3.1) 11.2 (1.2) 30.5 8.2 8.5 3.1
North America (28.7) (5.1) 4.1 (4.6) 3.7 (5.9) 33.8 10.4 7.5 (1.1)
Europe 8.5 3.9 4.6 5.9 9.2 18.3 34.0 12.0 10.0 10.0
South Africa 14.4 7.9 3.0 0.7 3.1 9.1 10.8 10.0 10.0 10.0
RoW (0.2) (3.1) 12.2 24.4 25.4 28.6 29.9 8.0 10.0 10.0
API (7.9) 23.5 (3.5) 6.3 (28.4) 12.0 2.9 12.0 10.0 10.0
Other operating income (34.8) 42.8 (33.5) 1.7 (9.9) 74.8 (4.6) 10.0 10.0 10.0
Total (9.7) 5.8 (8.0) (1.4) 8.2 1.4 20.2 9.2 9.3 6.3
% of sales
Domestic formulations 26.1 27.7 33.4 34.8 36.6 36.5 33.3 33.6 34.0 35.5
Export formulations 65.4 62.1 55.6 54.6 56.1 54.6 59.3 58.7 58.3 56.5
North America 37.3 33.5 37.9 36.6 35.1 32.6 36.2 36.6 36.0 33.5
Europe 3.8 3.7 4.2 4.5 4.5 5.3 5.9 6.1 6.1 6.3
South Africa 3.4 3.4 3.8 3.9 3.7 4.0 3.7 3.7 3.8 3.9
RoW 4.2 3.9 4.7 6.0 6.9 8.8 9.5 9.4 9.4 9.7
API 6.9 8.1 8.5 9.1 6.0 6.7 5.7 5.9 5.9 6.1
Other operating income 1.5 2.1 1.5 1.6 1.3 2.2 1.8 1.8 1.8 1.9
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47
We build in a 13% adjusted EPS CAGR over FY2024-27E for LPC

Exhibit 17: LPC—summary financials, March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Net revenues 158,042 167,182 153,748 151,630 164,055 166,417 200,108 218,505 238,907 253,893
Gross profit 105,298 108,724 99,442 98,007 99,242 98,619 133,673 146,170 160,119 170,280
Staff costs (28,647) (31,513) (29,868) (28,259) (29,893) (30,872) (34,946) (38,091) (41,519) (44,841)
R&D expenses (18,510) (15,731) (16,330) (14,430) (14,024) (12,770) (15,265) (16,446) (17,271) (17,693)
Other expenses (26,665) (32,658) (29,695) (29,649) (33,745) (37,020) (45,374) (47,643) (51,931) (55,307)
EBITDA 31,475 28,822 23,549 25,669 21,581 17,958 38,088 43,989 49,398 52,441
Depreciation & amortisation (10,859) (10,850) (9,703) (8,874) (9,510) (8,807) (9,956) (11,367) (12,227) (13,087)
EBIT 20,616 17,972 13,846 16,795 12,071 9,151 28,132 32,622 37,170 39,353
Net interest (2,044) (3,078) (3,629) (1,406) (1,428) (2,743) (3,116) (2,136) (1,852) (1,702)
Other income (13,105) 240 (2,684) 1,363 (24,365) 757 (794) 1,316 1,408 1,507
Profit before tax 5,468 15,134 7,533 16,751 (13,722) 7,165 24,222 31,802 36,726 39,158
Tax & deferred Tax (2,885) (9,017) (11,571) (4,485) (1,372) (2,688) (4,867) (6,837) (8,080) (8,615)
Less: minority interest (71) (71) 43 (101) (187) (176) (211) (211) (211) (211)
Net Income reported 2,513 6,046 (3,995) 12,165 (15,280) 4,301 19,145 24,754 28,435 30,332
Net Income adjusted 17,156 9,446 9,785 12,165 10,592 4,301 21,157 24,754 28,435 30,332
EPS reported (Rs) 5.6 13.4 (8.9) 27.0 (34.0) 9.5 42.1 54.4 62.5 66.6
EPS adjusted (Rs) 38.1 21.0 21.7 27.0 23.5 9.5 46.5 54.4 62.5 66.6
Balance sheet
Equity 136,171 137,891 125,812 138,581 122,220 125,428 143,735 164,169 187,642 212,681
Other liabilities 58,120 59,384 81,167 49,705 57,551 61,691 69,538 72,302 75,944 78,970
Total liabilities 126,882 141,603 124,027 97,523 95,992 104,131 96,237 97,001 98,643 99,669
Net fixed assets 129,602 127,264 88,777 89,470 81,521 92,378 93,365 92,997 91,770 89,682
Investments 11,357 13,694 6,624 6,771 12,114 12,668 12,131 12,131 12,131 12,131
Cash 16,429 30,971 47,926 41,193 19,205 17,329 20,495 29,184 45,541 66,295
Other current assets 105,667 107,565 106,512 98,671 105,372 107,184 113,982 126,857 136,844 144,242
Total assets 263,054 279,494 249,839 236,104 218,212 229,559 239,972 261,170 286,285 312,350
Cashflow statement
Operating cash flow before working capital 27,706 21,662 24,280 20,143 3,839 15,707 35,629 36,805 41,471 44,281
Tax paid (5,584) (9,394) (5,112) (7,155) (469) (2,432) (3,261) (6,837) (8,080) (8,615)
Change in working capital (10,194) (5,002) (9,592) (1,925) (150) 3,265 855 (10,796) (7,152) (5,234)
Free cash flow 1,978 6,806 7,957 11,441 (5,362) 3,976 27,195 16,009 24,319 29,047
Margins and ratios
Gross profit margin (%) 66.6 65.0 64.7 64.6 60.5 59.3 66.8 66.9 67.0 67.1
EBITDA margin (%) 19.9 17.2 15.3 16.9 13.2 10.8 19.0 20.1 20.7 20.7
Tax rate (%) 52.8 59.6 153.6 26.9 (10.1) 37.5 19.6 21.6 22.1 22.1
RoAE (%) 12.6 6.9 7.4 9.2 8.1 3.5 15.7 16.1 16.2 15.2
RoACE (%) 9.5 3.8 (4.8) 9.3 7.5 4.4 15.5 16.7 17.9 18.5
Lupin
RESULT
IRB Infrastructure (IRB) ADD

Capital Goods
Well-placed with growth capital Company data and valuation summary

IRB reported in-line results as strong execution (project ramp-up and Stock data
improved toll collection) was aided by a steady margin performance. With
CMP(Rs)/FV(Rs)/Rating 66/70/ADD
private InvIT distributing cash flow to IRB, we believe this sets the stage well
for the company to participate in the growing bid pipeline for BOT/TOT
Mcap (bn) (Rs/US$) 399/4.8
projects at a time when competition is limited. We retain ADD rating with a
ADTV-3M (mn) (Rs/US$) 1,585/19.0
revised FV of Rs70 (Rs65 earlier) as we roll forward to March 2026E.
4QFY24 results: Steady performance Shareholding pattern (%)
IRB saw strong topline growth of 27% in 4QFY24 (in line with estimates) driven
by 33% growth in EPC execution (ramp-up across projects), which was aided by
17% growth in BOT revenues (toll revenues for the Mumbai-Pune (MIPL) and 34.4
43.4
Ahmedabad-Vadodara projects were up 21.1%/11.5% yoy for the quarter).
Strong execution was aided by steady margin across segments (EBITDA
5.4
margins came in at 43.2%, 60 bps ahead our expectation) due to better-than- 3.7
9.0 4.1
expected performance in the construction segment. Overall reported PAT came
in 6% below expectation due to onetime expense related to debt refinancing. Promoters FPI s MFs BFIs Retail Others
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
The order book remains strong at Rs348 bn (-4% qoq—provides strong visibility
for three years on EPC). The private InVIT distributed Rs4.64 bn to its Absolute (2) (4) 135
shareholders in FY2024 while it reported a loss of Rs1.3 bn for the quarter on Rel. to Nifty (1) (6) 112
Fair Value adjustments. Rel. to MSCI India (2) (8) 101
NHAI’s focus shifting toward BOT and monetization—IRB best-placed Forecasts/Valuations 2024 2025E 2026E
NHAI’s awarding was pretty weak in FY2024 (2,500 km FY2024 versus 4,500 km EPS (Rs) 1.0 2.2 2.7
in FY2023). Due to ballooning debt levels, NHAI has shifted its focus toward EPS growth (%) (15.9) 115.5 22.9
asset monetization (multiple TOT bundles have been awarded last quarter). IRB P/E (X) 65.8 30.5 24.8
with strong balance sheet has won multiple TOT projects and now has 38% P/B (X) 2.9 2.9 2.8
share of the TOT segment and the private InVIT’s ability to self-fund projects EV/EBITDA (X) 17.0 13.9 12.5
would further open up prospects for the company. Currently, NHAI has RoE (%) 4.5 9.5 11.5
identified 33 projects worth ~Rs1 tn, which are expected to be bid out under Div. yield (%) 2.2 3.1 3.6
TOT monetization program over the next 12-18 months. Sales (Rs bn) 74 86 92
Rs444 bn BOT pipeline provides strong near-term visibility for order
BOT projects have started making a comeback after years of focus on EPC and
HAM projects as 100% of the construction cost is borne by the developer. The Source: Bloomberg, Company data, Kotak Institutional Equities estimates
NHAI has identified 15 projects worth Rs444 bn, which are expected to be Prices in this report are based on the market close of
May 07, 2024
awarded in the coming months (the medium-term pipeline for BOT is ~Rs2 tn—
expected to be ordered over the next two years). We think players such as IRB
with a strong balance sheet could be a key beneficiary and could garner a
healthy market share (as per IRB, competition is expected to be primarily among
six or seven players, although EPC players in participation with financial
partners could also bid for these projects).
Revise estimates by -3% to -1% for FY2025-26 and Fair Value to Rs70
We fine-tune estimates by -3%/-1% for FY2025-26 as we adjust our interest cost
and share of profit estimates for the InvIT. Our Fair Value increases to Rs70
(from Rs65) as we roll forward to March 2026E. We retain ADD rating.
Deepak Krishnan Aditya Mongia Sai Siddhardha P

49
Results were in line with estimates driven by steady execution and stable toll collection
IRB (consolidated)—4QFY24—key numbers, March fiscal year-ends (Rs mn)
%change
4QFY24 4QFY24E 4QFY23 3QFY24 vs est. yoy qoq FY2024 FY2023 % change FY2025E FY2024 % change
Net Sales 20,612 20,712 16,200 19,685 (0) 27 5 74,090 64,016 16 86,149 74,090 16
Construction 14,211 13,881 10,725 13,319 2 33 7 49,314 42,786 15 58,630 49,314 19
BOT 6,401 6,831 5,475 6,366 (6) 17 1 24,776 21,230 17 27,519 24,776 11
Total Expenses (11,714) - (8,612) (10,991) 7 (40,772) (31,726)
Direct expenses (9,792) - (7,075) (8,985) 9 (32,990) (24,955)
Employees cost (958) - (815) (1,065) (10) (3,940) (3,461)
Other expenditure (963) - (722) (941) 2 (3,842) (3,310)
EBITDA 8,898 8,823 7,587 8,695 1 17 2 33,318 32,291 3 39,816 33,318 20
Other income 4,433 960 789 1,088 362 462 308 7,928 3,017 163 4,642 7,928 (41)
PBDIT 13,331 9,783 8,377 9,783 36 59 36 41,246 35,307 17 44,458 41,246 8
Depreciation (2,742) (2,468) (2,221) (2,513) 11 23 9 (9,949) (8,321) 20 (11,223) (9,949) 13
EBIT 10,589 7,315 6,156 7,270 45 72 46 31,297 26,986 16 33,236 31,297 6
Interest (6,145) (3,570) (3,733) (4,327) 42 (18,633) (15,146) 23 (15,152) (18,633) (19)
PBT 4,443 3,745 2,423 2,943 19 83 51 12,663 11,840 7 18,084 12,663 43
Tax Expense (1,201) (1,236) (753) (561) 114 (3,456) (3,569) (3) (5,153) (3,456) 49
Recurring PAT 3,242 2,509 1,669 2,382 29 94 36 9,207 8,271 11 12,931 9,207 40
Minority interest
Share of profit or loss from SPV (1,353) (500) (368) (507) 167 (3,148) (1,070) 464 (3,148)
Reported PAT 1,889 2,009 1,302 1,875 (6) 45 1 6,059 7,201 (16) 13,396 6,059 121
Key ratios (%)

Direct expenses/sales 47.5 - 43.7 45.6 44.5 39.0
Employees cost/sales 4.6 - 5.0 5.4 5.3 5.4
Other expenditure/sales 4.7 - 4.5 4.8 5.2 5.2
EBITDA margin 43.2 42.6 46.8 44.2 45.0 50.4 46.2 45.0
PBDIT margin 64.7 47.2 51.7 49.7 55.7 55.2 51.6 55.7
PBT margin 21.6 18.1 15.0 14.9 17.1 18.5 21.0 17.1
PAT margin 15.7 12.1 10.3 12.1 12.4 12.9 15.0 12.4
Effective tax rate 27.0 33.0 31.1 19.0 27.3 30.1 28.5 27.3
Recurring EPS (Rs) 0.5 0.4 0.3 0.4 1.5 1.4 2.1 1.5
Margins remained steady for EPC segment while declined yoy for BOT segment
IRB—key segmental numbers—4QFY24, March fiscal year-ends (Rs mn)
%change
4QFY24 4QFY24E 4QFY23 3QFY24 vs est. yoy qoq FY2024 FY2023 % change FY2025E FY2024 % change
Revenues 20,612 20,712 16,200 19,685 (0) 27 5 74,090 64,016 15.7 86,149 74,090 16.3
Construction 14,211 13,881 10,725 13,319 2 33 7 49,314 42,786 15.3 58,630 49,314 18.9
BOT 6,401 6,831 5,475 6,366 (6) 17 1 24,776 21,230 16.7 27,519 24,776 11.1
EBITDA 8,898 9,065 7,588 8,695 (2) 17 2 33,318 32,292 3.2 39,816 33,318 19.5
Construction 3,246 3,054 2,536 3,018 6 28 8 11,343 12,801 (11.4) 14,658 11,343 29.2
BOT 5,652 6,011 5,052 5,677 (6) 12 (0) 21,975 19,491 12.7 25,159 21,975 14.5
Margins (%) 43.2 43.8 46.8 44.2 45.0 50.4 46.2 45.0
Construction 22.8 22.0 23.6 22.7 23.0 29.9 25.0 23.0
BOT 88.3 88.0 92.3 89.2 88.7 91.8 91.4 88.7
PBT 4,444 2,423 2,942 83.4 51.1 12,663 11,839 7.0

Construction 3,691 2,023 2,423 82.5 52.3 10,602 10,218 3.8
BOT 753 400 519 88.3 45.1 2,061 1,621 27.1
PAT 3,242 1,669 2,382 94.2 36.1 9,225 6,654 38.6

Construction 2,582 1,357 2,000 90.3 29.1 7,578 5,283 43.5
BOT 660 312 382 111.5 72.8 1,647 1,372 20.1
IRB Infrastructure
Capital Goods India Research
50
Order backlog remained steady on a qoq basis

Breakup of the order backlog of IRB at end-4QFY24, March fiscal year-ends (Rs bn)
Order backlog: Rs348 bn
Ongoing BOT/HAM projects

16%
O&M of InVIT projects

84%
NHAI has increased focus on monetization with IRB being the leading player with 38% share
Due to ballooning debt levels, NHAI has shifted its focus toward asset monetization (multiple TOT
bundles have been awarded last quarter). IRB with its strong balance sheet has won multiple TOT
projects over the past couple of months—(1) Hyderabad ORR and (2) TOT bundle 12 & 13. Overall, IRB
now has 38% share of the TOT segment and with the private InvIT’s ability to self-fund projects would
further open up prospects of IRB participating in upcoming projects. Currently, NHAI has identified 33
projects worth ~Rs1 tn, which are expected to be bid out under TOT monetization program over the next
12-18 months.
IRB now has 38% share in the TOT segment aided by recent wins
IRB has added three key projects HYD ORR, TOT-12&13 over the recent couple of months
Particular Name of the Awardee Value (in Rs bn)
TOT-1 Macquaire-Ashoka Buildcon JV 97
TOT-3 Cube Highways 50
TOT-5(A-1) Adani 10
TOT-5(A-2) DP Jain 13
TOT-7 Indian Highway Concessions Trust (CDPQ) 63
TOT-9 NIF 31
MP-TOT IRB 83
HYD ORR IRB 74
TOT-12 IRB 44
TOT-13 IRB 17
TOT-15 To be bid out in FY24
TOT-16 To be bid out in FY24
T ot a l 580
IRB's share 218
IRB's share % 38%
Source: NHAI, Company, Kotak Institutional Equities
IRB Infrastructure
51
NHAI has identified 33 projects worth Rs1 tn, which will be part of next tranche of TOT
monetization
Region Number of projects Length (Km)
Jaipur 4 413
Uttar Pradesh 4 597
Bhubaneshwar 3 284
Tamil Nadu 3 136
Patna 2 324
Nagpur 4 210
Raipur 3 170
Ranchi 3 172
Bengaluru 2 221
Vijaywada 2 122
Hyderabad 2 89
Delhi 1 4
Total 33 2,742
Source: NHAI
Rs444 bn BOT pipeline provides strong near-term visibility for order

BOT projects have started making a comeback after years of focus on EPC and HAM projects as
100% of the construction cost is borne by the developer. The NHAI has identified 15 projects worth
Rs444 bn, which are expected to be awarded in coming months. The medium-term pipeline consists
of 53 projects worth Rs2 tn, which IRB expects would be ordered out over the next 18 months. As
per IRB, competition is expected to be primarily among 6 to 7 players, although EPC players in
participation with financial partners could also bid for these projects.
We in our model bake in IRB having 10% share of the Rs2 tn two-year pipeline. This implies an equity
contribution of Rs60 bn and debt of Rs140 bn (equity contribution could be lower for brownfield
expansion that can be undertaken under private InVIT). In our estimates, IRB will be ending FY2026 with
a net debt/EBITDA ratio of 2.9X, which gives it adequate capacity to bid for these projects.
BOT projects now provide a strong near-term pipeline for IRB

15 BOT projects worth Rs444 bn are expected to be awarded over the next couple of months
BOT Projects expected to be awarded in FY24
Sr No Project Project cost (in Rs bn) Project Length (in Km)
1 Guwahati Ring Road 55 65
2 Chennani-Nashri Tunnel 18.8 9
3 Agra Gwalior Greenfield 37.38 88.4
4 Karmala-Tembhurni 9.83 60
5 Sangli-Kolhapur 7.49 33.8
6 Kasarwadi-Rajgurunagar 59.54 30
7 Ahmendnagar Solapur section Pkg 1 of Surat Chennai Expressway 22.89 62
8 Ahmendnagar Solapur section Pkg 2 of Surat Chennai Expressway 20.26 65.5
11 Pune-Shirur 61.7 56
12 Talegoan-Chakan-Shikarapur 42.02 54
13 4L of Balance length in Chennai -Tirupathi 25 83
14 Armoor-Mancherial 31.75 131.3
15 4 Lane Aligarh -Tappal section of NH 334(D) 14.79 72.4
Total 444 937
Source: NHAI
IRB Infrastructure
52
Medium-term pipeline for IRB is 53 BOT projects worth Rs2 tn, which are expected to be awarded over next 18 months
Division Number of projects Length (Km) Total project cost (Rs bn)
Uttar Pradesh 6 1,344 503
Maharashtra 14 522 395
Tamil Nadu 4 737 261
Karnataka 5 759 168
Kerala 2 214 161
Bihar 4 431 147
Andhra Pradesh 7 363 133
Odhisha 4 258 128
Rajasthan 1 110 48
Madhya Pradesh 1 95 45
Telangana 1 113 30
Jammu and Kashmir 1 10 25
Punjab 1 107 24
Uttarakhand 1 52 15
Haryana 1 98 14
Total 53 5,213 2,096
Source: NHAI
NHAI is now increasingly moving to TOT (asset monetization) and BOT projects to manage its overall debt position, which should be
favorable for IRB
Details of NHAI debt, March fiscal year-ends (Rs bn)
NHAI Debt (Rs bn)

4,000
3,480 3,492
3,500
3,070
3,000
2,490
2,500
2,000 1,794
1,500 1,225
1,000 754
453
500 186 241 249
174
56 51 68
-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Source: NHAI, Rajya Sabha questions
IRB Infrastructure
53
Debt servicing forms nearly 18-20% of total allocation for NHAI

Details of total allocation and debt servicing from NHAI, March fiscal year-ends (Rs bn)
Project based Total Debt Debt servicing as %

Year Budgetary Allocation IEBR InVIT financing allocation servicing of total allocation
2019 312 612.2 924 144.0 15.6
2020 277 749.9 1,027 193.5 18.8
2021 460 651.0 97.3 1,208 254.9 21.1
2022 730 651.0 73.5 140.0 1,595 401.9 25.2
2023RE 1,583 8.0 100.0 150.0 1,841 324.4 17.6
2024BE 1,622 0.0 1,622 332.6 20.5
2025E 1,870 1,870 316.3 16.9
2026E 2,200 2,200 408.4 18.6
2027E 2,500 2,500 421.0 16.8
2028E 2,600 2,600 532.4 20.5
Source: Budget documents, NHAI, Kotak Institutional Equities
We revise our estimates by -3%/-1% as we fine-tune our financial charge and share of profit from the InvIT
Change in estimates for IRB (consolidated), March fiscal year-ends (Rs mn)
New estimates Old estimates % revision
2020 2021 2022 2023 2024 2025E 2026E 2027E 2025E 2026E 2025E 2026E
Income statement
Total operating income 68,522 52,987 58,037 64,016 74,090 86,149 91,969 97,522 86,149 91,969 — —
Construction 50,156 36,334 40,162 42,786 49,314 58,630 61,922 63,902 58,630 61,922 — —
Toll collection BOT 18,366 16,652 17,875 21,230 24,776 27,519 30,047 33,621 27,519 30,047 — —
Total operating costs (38,808) (27,859) (30,061) (31,724) (40,772) (46,333) (48,712) (50,491) (46,333) (48,712) — —
Construction expenses (36,529) (26,282) (28,368) (29,985) (37,971) (43,973) (46,132) (47,607) (43,973) (46,132) — —
BOT expenses (2,279) (1,577) (1,694) (1,739) (2,801) (2,360) (2,580) (2,885) (2,360) (2,580) — —
EBITDA 29,714 25,127 27,976 32,292 33,318 39,816 43,257 47,031 39,816 43,257 — —
Other income 1,949 1,889 5,517 3,017 7,928 4,642 5,013 5,323 4,642 5,013
PBDIT 31,664 27,016 33,494 35,309 41,246 44,458 48,270 52,354 44,458 48,270 — —
Financial charges (15,643) (16,924) (18,906) (15,146) (18,633) (15,292) (15,698) (16,736) (15,152) (15,598) 1 1
Depreciation (4,683) (5,817) (6,828) (8,321) (9,949) (11,223) (11,678) (13,050) (11,223) (11,678) — —
Pre-tax profit 11,338 4,275 7,760 11,841 12,663 17,944 20,895 22,569 18,084 20,995 (1) (0)
Taxation (4,543) (1,445) (1,882) (3,569) (3,456) (5,153) (5,996) (6,943) (5,153) (5,996)
PAT 6,794 2,830 5,877 8,272 9,207 12,791 14,898 15,626 12,931 14,998 (1) (1)
Share of profit/loss from SPVs 415 (1,658) (2,262) (1,070) (3,148) 264 1,145 2,683 464 1,145
Adjusted PAT 7,210 1,172 3,616 7,202 6,059 13,056 16,043 18,309 13,396 16,143 (3) (1)
EPS (Rs) 2.1 0.3 0.6 1.2 1.0 2.2 2.7 3.0 2.2 2.7
Key ratios (%)
EBITDA margin 43.4 47.4 48.2 50.4 45.0 46.2 47.0 48.2 46.2 47.0
PAT margin 10.5 2.2 6.2 11.3 8.2 15.2 17.4 18.8 15.5 17.6
RoE 11.1 1.7 3.7 5.6 4.5 9.5 11.5 12.9 10.1 12.1
Yoy growth (%)
Revenues 3.7 (22.7) 9.5 10.3 15.7 16.3 6.8 6.0 16.1 6.8
EBITDA 1.2 (15.4) 11.3 15.4 3.2 19.5 8.6 8.7 17.9 8.6
PAT (15.2) (83.7) 79.5 99.2 (15.9) 115.5 22.9 14.1 109.9 20.5
IRB Infrastructure
54
We revise our SoTP-based Fair Value to Rs70 as we roll forward to March 2026E
SoTP analysis of IRB, March fiscal year-ends (Rs/share)
Per share
Net asset Value IRB's stake Value of IRB's stake contribution to IRB
Roads (Rs mn) (%) (Rs mn) (Rs) Asset valuation methodology
Operating Assets
Ahmedabad Vadodara (2,717) 100 (2,717) (0) Two-year forward FCFE
Mumbai-Pune 31,741 100 31,741 5 Two-year forward FCFE
3 HAM Projects 8,730 60 5,238 1 1X book value
Private InVIT 300,221 153,113 25
Ganga Expressway 40,365 51.0 20,586 3 Two-year forward FCFE
Palsit Dankuni 11,165 51.0 5,694 1 Two-year forward FCFE
Hyderabad ring road 77,374 51.0 39,461 7 Two-year forward FCFE
IRB Westcoast Tollway Limited 9,809 51.0 5,003 1 Two-year forward FCFE
Solapur Yedeshi Tollway Limited 12,506 51.0 6,378 1 Two-year forward FCFE
Yedeshi Aurangabad Tollway Limited 31,389 51.0 16,009 3 Two-year forward FCFE
Kaithal Tollway Limited 10,009 51.0 5,105 1 Two-year forward FCFE
AE Tollway Limited 8,606 51.0 4,389 1 Two-year forward FCFE
Udaipur Tollway Limited 8,375 51.0 4,271 1 Two-year forward FCFE
Chittorgarh Gulabpura Tollway Limited 11,583 51.0 5,907 1 Two-year forward FCFE
Kishangarh Gulabpura Tollway Limited 12,112 51.0 6,177 1 Two-year forward FCFE
IRB Hapur Moradabad Tollway Limited 27,702 51.0 14,128 2 Two-year forward FCFE
Samkhayali Santalpur BOT 5,025 51.0 2,563 0 1.2X book value
Lalitpur Lakhnadon TOT 27,150 51.0 13,847 2 1.2X book value
TOT-13 7,050 51.0 3,596 1 1.2X book value
Public InVIT, Construction, Investments and Other assets
Other investment in Sindhudurg, Public InVIT, Real estate

29,339 100.0 29,339 5 1X book value
and Yedeshi Aurgangabad Tollway Arbitration Award
6X two-year forward EV/EBITDA bakes in recovery in

EPC 98,875 100.0 98,875 16 order inflows from FY2024, 8% revenue CAGR over
next 3 years along with debt reduction
Internal loan given to private invIT 30,000 100.0 30,000 5 1X book value
Potential BOT projects 72,000 100.0 72,000 12 1.2X book value
Total 417,588 70
IRB Infrastructure
55
Consolidated financials of IRB Infrastructure, March fiscal year-ends, 2013-27E (Rs mn)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Income statement
Total operating income 36,872 37,319 38,475 51,279 58,459 56,941 66,070 68,522 52,987 58,037 64,016 74,090 86,149 91,969 97,522
Construction 25,988 25,364 20,029 30,049 34,675 38,047 44,142 50,156 36,334 40,162 42,786 49,314 58,630 61,922 63,902
Toll collection BOT 10,884 11,955 18,356 21,231 23,784 18,894 21,928 18,366 16,652 17,875 21,230 24,776 27,519 30,047 33,621
Total operating costs (20,540) (19,782) (16,358) (24,676) (27,976) (30,147) (36,697) (38,808) (27,859) (30,061) (31,724) (40,772) (46,333) (48,712) (50,491)
Construction expenses (19,126) (18,189) (13,871) (21,694) (24,540) (27,190) (34,121) (36,529) (26,282) (28,368) (29,985) (37,971) (43,973) (46,132) (47,607)
BOT expenses (1,414) (1,593) (2,487) (2,983) (3,436) (2,957) (2,576) (2,279) (1,577) (1,694) (1,739) (2,801) (2,360) (2,580) (2,885)
EBITDA 16,333 17,537 22,117 26,603 30,483 26,794 29,373 29,714 25,127 27,976 32,292 33,318 39,816 43,257 47,031
Other income 1,301 1,214 1,130 1,271 1,232 1,687 1,955 1,949 1,889 5,517 3,017 7,928 4,642 5,013 5,323
Financial charges (6,153) (7,561) (9,312) (10,639) (13,327) (9,667) (11,200) (15,643) (16,924) (18,906) (15,146) (18,633) (15,292) (15,698) (16,736)
Depreciation (4,415) (4,770) (7,071) (8,533) (8,548) (5,440) (5,395) (4,683) (5,817) (6,828) (8,321) (9,949) (11,223) (11,678) (13,050)
Pre-tax profit 7,066 6,419 6,865 8,702 9,840 13,373 14,733 11,338 4,275 7,760 11,841 12,663 17,944 20,895 22,569
Taxation (1,530) (1,823) (1,441) (2,306) (2,685) (5,444) (6,233) (4,543) (1,445) (1,882) (3,569) (3,456) (5,153) (5,996) (6,943)
Net profit 5,536 4,596 5,424 6,396 7,155 7,930 8,500 6,794 2,830 5,877 8,272 9,207 12,791 14,898 15,626
Share of profit/(loss) from 9 SPVs or ext income — — — — — — — 415 (1,658) (2,262) (1,070) (3,148) 264 1,145 2,683
Minority interest 31 (5) 6 4 1 — — — — — — — — — —
Adjusted PAT 5,567 4,591 5,429 6,400 7,155 7,930 8,500 7,210 1,172 3,616 7,202 6,059 13,056 16,043 18,309
EPS (Rs) 1.7 1.4 1.5 1.8 2.0 2.3 2.4 2.1 0.3 0.6 1.2 1.0 2.2 2.7 3.0
Balance sheet
Share holder's funds 32,556 35,607 43,609 48,363 52,716 56,925 63,151 66,829 69,008 125,656 133,789 137,445 138,329 140,200 143,201
Minority interest 1,092 356 351 355 — — — — — — — — — — —
Loan funds 87,761 110,841 125,762 156,261 139,631 138,256 165,931 85,240 180,851 166,853 167,397 186,490 165,837 148,922 138,041
Total sources of funds 121,667 146,947 385,391 407,759 449,306 347,787 362,124 290,382 373,946 404,258 408,398 427,999 405,095 386,394 374,252
Net block 104,248 130,411 365,991 390,565 310,826 367,115 367,320 280,657 277,673 273,336 264,798 255,214 247,262 234,836 220,903
Investments 620 145 88 1,483 2,574 9,533 6,532 41,537 48,078 49,042 51,409 96,928 96,928 96,928 96,928
Cash & bank balances 14,710 15,012 15,798 15,008 13,077 12,678 15,603 22,707 23,380 17,438 24,171 17,626 10,165 6,136 9,725
Net current assets (ecl. cash) 2,089 1,379 3,515 703 (4,006) (41,539) (27,330) (54,519) 24,815 64,441 68,019 58,230 50,741 48,494 46,696
Total application of funds 121,667 146,947 385,391 407,759 449,306 347,787 362,124 290,382 373,947 404,257 408,398 427,999 405,095 386,394 374,252
Cash flow
Operating profit before working capital changes 16,104 16,928 21,806 25,568 29,030 23,037 25,095 27,536 23,914 29,349 30,669 34,641 39,570 43,418 48,095
Change in working capital / other adjustments 239 710 (2,136) 2,812 4,709 37,533 (14,209) 27,189 (79,334) (39,625) (3,579) 9,789 7,490 2,247 1,798
Net cashflow from operating activites 16,343 17,638 19,671 28,380 33,739 60,570 10,885 54,725 (55,420) (10,276) 27,091 44,430 47,060 45,665 49,892
Capex (29,149) (30,459) (27,092) (43,889) 22,740 (71,633) (24,017) 51,466 (23,484) (16,044) (7,759) (50,934) (6,405) (2,909) (3,379)
Free cash flow (12,806) (12,821) (7,421) (15,508) 56,479 (11,063) (13,131) 106,190 (78,904) (26,320) 19,332 (6,504) 40,655 42,757 46,513
Yoy growth (%)

Revenues 17.7 1.2 3.1 33.3 14.0 (2.6) 16.0 3.7 (22.7) 9.5 10.3 15.7 16.3 6.8 6.0
EBITDA 19.3 7.4 26.1 20.3 14.6 (12.1) 9.6 1.2 (15.4) 11.3 15.4 3.2 19.5 8.6 8.7
PAT 11.1 (17.5) 18.2 17.9 11.8 10.8 7.2 (15.2) (83.7) 208.4 99.2 (15.9) 115.5 22.9 14.1
Key ratios (%)
EBITDA margin 44.3 47.0 57.5 51.9 52.1 47.1 44.5 43.4 47.4 48.2 50.4 45.0 46.2 47.0 48.2
PAT margin 15.1 12.3 14.1 12.5 12.2 13.9 12.9 10.5 2.2 6.2 11.3 8.2 15.2 17.4 18.8
Net debt: Equity (X) 2.2 2.7 2.5 2.9 2.4 2.2 2.4 0.9 2.3 1.2 1.1 1.2 1.1 1.0 0.9
RoE 18.2 13.5 13.7 13.9 14.2 14.5 14.2 11.1 1.7 3.7 5.6 4.5 9.5 11.5 12.9
RoCE 9.3 7.5 4.8 3.6 3.9 3.4 4.2 5.1 3.7 4.6 4.4 4.7 5.8 6.9 7.9
IRB Infrastructure
RESULT
Max Financial Services (MAXF) BUY

Insurance
CMP(₹): 970 Fair Value(₹): 1,225 Sector View: Attractive NIFTY-50: 22,303 May 08, 2024
Fares well Company data and valuation summary

Max Life reported a good 4QFY24 with 14% APE growth as well as sequential Stock data
margin expansion. The overall trajectory remains strong with step-up in the
CMP(Rs)/FV(Rs)/Rating 970/1,225/BUY
agency business (even as Axis Bank remains challenging to predict) and
third-party channels, although the latter will continue to put pressure on
Mcap (bn) (Rs/US$) 335/4.0
margins. We revise estimates and FV to Rs1,225 (from Rs1,200); retain BUY.
ADTV-3M (mn) (Rs/US$) 1,311/15.7
Margins expand qoq Shareholding pattern (%)

Max Life reported a strong performance in 4QFY24. VNB growth at 7% yoy
6.5
reflected 14% growth in APE (up 31% excluding one-offs) and contraction in
23.9
VNB margins by 190 bps yoy. Unlike most peers, margins expanded qoq to 25.8
28.5% from 27.2%, reflecting the benefit of higher volumes despite sequential 4.3
4.8
decline in share of protection in favor of ULIPs.
34.6
Continues to gain share, margins under pressure
Exhibit 5 shows that Max Life has gained share in the private sector. The Promoters FPIs MFs BFI s Retail Others
company will likely continue to deliver superior growth for following reasons:
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
Absolute (4) 1 53
Focus remains on growing the ex-Axis Bank business. It is challenging to predict
Rel. to Nifty (3) (1) 29
the pace of growth in Axis Bank (~10% yoy in FY2024). The bank added Tata AIA
Rel. to MSCI India (5) (3) 18
in Dec 2023 and Aditya Birla SL will join the bank in FY2025E; this poses counter
share risk. Axis Bank has explicitly called out 65-70% counter share of Max Life. Forecasts/Valuations 2024 2025E 2026E
Offline proprietary (agency and affiliates) growth was impressive at 18% yoy in EPS (Rs) 1.7 1.9 2.1
FY2024 with ex-one-off (polices above Rs0.5 mn sold in March 2024) up by over EPS growth (%) 312.3 12.5 14.8
40%; the company has grown agency force by 54% yoy, this will provide further P/E (X) 585.0 520.2 453.1
tailwinds to growth in this segment. P/B (X) 4.9 4.9 4.8
EV/EBITDA (X) 554.7 496.1 434.7
FY2024 saw high growth in third-party channels, i.e. online proprietary (includes
RoE (%) 0.8 0.9 1.1
aggregators etc.) of 79%; other (than Axis Bank) business was up 29% yoy.
Div. yield (%) 0.0 0.0 0.0
Pressure on margins Sales (Rs bn) 1 1 1
The company will continue to pursue growth in the third-party channels. We EBITDA (Rs bn) 1 1 1
believe that margins in these channels may be lower than other channels due Net profits (Rs bn) 1 1 1
to higher competition and payouts. While the company will likely deliver faster
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
growth and operating leverage further plays out, margins may remain subdued;
we are modelling flat/marginal VNB compression in FY2026E. Product and May 07, 2024
channel mix will remain key sensitivities. Unconfirmed media reports suggest
that the regulator may reconsider increasing surrender penalties on traditional
policies; this anyway makes it challenging to model margins.
Retain BUY; FV Rs1,225

We are revising our EV estimates down by ~1%, reflecting lower variance and
unwinding, even as we raise VNB forecasts by 2%, reflecting 5-6% higher APE and
margin compression. Max Life will likely deliver ~20% operating RoEV with 17%
VNB CAGR and 20% EVOP CAGR during FY2024-27E. It remains our preferred pick
with a superior growth trajectory and focus on proprietary (agency) channel even
as higher third-party business may put pressure on margins.
Nischint Chawathe M B Mahesh, CFA Varun Palacharla Abhijeet Sakhare Ashlesh Sonje, CFA
57
Exhibit 1: Max Life – quarterly summary, March fiscal year-ends, 2018-24, 4QFY23-4QFY24
4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 YoY (%) 2018 2019 2020 2021 2022 2023 2024 YoY (%)
Key items (Rs bn)
PBT 0.7 1.0 1.6 2.2 (0.6) (187) 6.2 6.2 6.0 5.1 3.9 5.1 4.2 (17)
AUM 1,229 1,291 1,342 1,426 1,508 23 522 630 680 904 1,075 1,229 1,508 23
APE 25.4 11.1 16.5 18.0 28.7 13 32 40 41 50 56 62 74.3 19
VNB 7.7 2.5 4.2 4.9 8.2 7 6.6 8.6 9.0 12.5 15.3 19.5 19.7 1
VNB margin (%) 30.3 22.2 25.2 27.2 28.6 -175 bps 20.2 21.7 21.6 25.2 27.3 31.2 26.5 -465 bps
Embedded value 162.6 169.4 179.1 187.1 194.9 20 75.1 89.4 99.8 118.3 141.7 162.6 194.9 20
Operating RoEV (%) 27.3 14.0 18.9 20.1 26.7 -59 bps 20.6 22.4 20.3 18.5 19.2 22.1 20.2 -190 bps
Key ratios (%)
Expense to premium 14.1 17.4 13.9 13.9 12.2 -184 bps 12.9 13.2 14.5 14.2 13.5 14.2 13.8 -40 bps
Solvency ratio 190 188 184 179 206 1600 bps 275 242 207 196 201 190 206 1600 bps
Exhibit 2: Max Life – key metrics, March fiscal year-ends, 4QFY22-4QFY24, 2023-24 (Rs bn)
4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 YoY (%) 2023 2024 YoY (%)
APE 18.4 10.1 11.9 15.1 25.4 11.1 16.5 18.0 28.7 13.2 62.5 74.3 19.0
VNB 5.9 2.1 3.7 5.9 7.7 2.5 4.2 4.9 8.2 6.6 19.5 19.7 1.2
VNB margin (%) 31.9 21.1 31.3 39.3 30.3 22.2 25.2 27.2 28.6 -175 bps 31.2 26.5 -465 bps
4QFY24 highlights
Max Life reported 17% yoy decline in PAT to Rs4.2 bn in FY2024.
 Underwriting profits were down 90% yoy to Rs0.2 bn in FY2024 driven by higher new business strain
of Rs16.0 bn (Rs13.4 bn in FY2023) due to higher volumes. Back book surplus was up 4% yoy to
Rs16.3 bn as the company reset assumptions, specifically on mortality in the group business.
Max Life reported 13% yoy growth in APE in 4QFY24 and 175 bps yoy decline in margins, leading to
muted 7% yoy growth in VNB. For full year FY2024, APE growth was strong at 19%, 465 bps decline in
margins led to muted 1% growth in VNB.
 Margin decline was largely driven by shift in product mix toward ULIPs (up to 35% in FY2024 from
27% in FY2023).
Par and ULIPs drove growth, reporting 66-107% yoy APE growth; retail protection growth was also
strong at 60% yoy. Non-par was down 42% yoy in 4QFY24.
Banca growth picked up in 4QFY24 to 16% yoy from 3% yoy growth reported in 3QFY24. Agency
growth moderated to 10% yoy in 4QFY24 (23-57% in the previous three quarters) due to an inflated
base. Adjusted for one-off in the base period, agency APE was up 44% yoy in 4QFY24.
Max Life reported 17% APE growth in FY2024, higher than peers (2-16%) and industry (4%). This was
largely driven by a strong pickup in the agency channel.
Higher new business strain leads to lower underwriting profits

Exhibit 3: Underwriting profits for Max Life, March fiscal year-ends, 4QFY23-4QFY24, 2019-24 (Rs bn)
4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 YoY (%) 2019 2020 2021 2022 2023 2024 YoY (%)
Undewriting profits (0.1) 0.2 0.5 1.1 (1.5) NM 4.3 4.3 3.8 1.5 2.5 0.2 (90.2)
New business strain (4.8) (3.5) (3.3) (3.4) (5.7) NM (5.9) (7.6) (8.6) (9.3) (13.2) (16.0) NM
Backbook surplus 4.7 3.7 3.8 4.5 4.2 (9) 10.2 11.9 12.4 10.8 15.6 16.3 4.1
Shareholders surplus 0.7 0.7 1.2 0.4 1.0 41 1.3 1.1 1.4 2.4 1.9 3.4 77.8
Max Financial Services

Insurance India Research
58
Max Life fared better than peers in FY2024

Max Life fared better than listed peers in FY2024, reporting 19% APE growth (-2 to +17% for peers).
Resultantly, market share of Max Life in the individual business rose to 6.4% from 5.8% in FY2023. The
growth was largely driven by sharp pickup in other banca channels (up 29%) and online business (79%).
Margin compression was a tad higher at 465 bps (121-738 bps for peers) due to higher share of non-par
in the base period.
Exhibit 4: Key metrics of listed life insurers, March fiscal year-ends, 4QFY22-4QFY24
Key metrics YoY (%) Key metrics YoY (%)
4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 2022 2023 2024 2023 2024
APE (Rs bn)
HDFC Life 52 23 30 32 47 69 22 15 (2) (8) 97.6 133 133 37 (0)
ICICI Prudential Life 33 15 21 19 36 26 (4) 3 5 10 77.3 86 90 12 5
LIC 191 95 131 132 NA (12) 7 NA 504 567 555 12 (2)
Max Life 25 11 17 18 29 38 10 39 19 13 55.9 62 74 12 19
SBI Life 46 30 52 61 53 11 4 33 13 17 143.0 168 197 18 17
VNB margin (%)
HDFC Life 29.3 26.2 26.3 26.8 26.1 -8 bps -58 bps -197 bps -2 bps -317 bps 27.4 27.5 26.3 14 bps -121 bps
ICICI Prudential Life 32.0 30.0 28.0 22.9 21.5 226 bps -101 bps -308 bps -1106 bps -1052 bps 28.0 32.0 24.6 403 bps -738 bps
LIC 19.2 13.7 15.3 20.0 NA 5 bps 539 bps NA 15.1 16.2 17.3 103 bps 116 bps
Max Life 30.3 22.2 25.2 27.2 28.6 -156 bps 108 bps -615 bps -1203 bps -175 bps 27.3 31.2 26.5 385 bps -465 bps
SBI Life 31.3 28.8 28.5 27.4 28.1 269 bps -154 bps -300 bps -42 bps -321 bps 25.9 30.2 28.0 426 bps -215 bps
VNB (Rs bn)
HDFC Life 15 6 8 9 12 69 20 7 (2) (18) 27 37 35 37 (5)
ICICI Prudential Life 11 4 6 4 8 36 (7) (7) (29) (26) 22 28 22 28 (19)
LIC 37 13 20 26 NA (12) 46 NA 76 92 96 20 5
Max Life 8 2 4 5 8 31 16 12 (18) 7 15 19 20 28 1
SBI Life 14 9 15 17 15 21 (1) 21 11 5 37 51 55 37 9
Max Life has gained market share in FY2024

Exhibit 5: Individual APE market share of life insurers, March fiscal year-ends
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Bajaj Allianz 2.2 1.9 1.6 1.9 2.2 2.5 2.6 3.3 4.2 5.0 5.8
Aditya Birla Sun Life 1.8 1.8 1.5 1.7 1.7 2.4 2.3 2.6 2.5 2.9 2.8
Canara HSBC 0.6 0.8 1.0 1.2 1.3 1.3 1.3 1.4 1.6 1.6 1.6
HDFC Standard Life 5.2 7.3 7.6 6.8 7.5 8.2 9.0 10.0 10.1 10.8 10.4
ICICI Prudential 7.2 11.3 11.3 12.0 11.8 10.3 9.0 7.2 7.2 6.5 6.6
Max Life 3.9 4.8 4.8 5.0 5.1 5.6 5.5 6.4 6.2 5.8 6.4
PNB Met Life 1.3 1.8 2.1 1.9 1.9 2.0 1.8 1.9 2.0 2.1 2.1
Reliance Life 2.5 3.0 2.0 1.3 1.1 1.3 1.2 1.2 1.1 1.0 1.0
SBI Life 6.2 7.7 9.7 11.2 12.3 12.9 13.3 13.5 14.7 14.6 15.8
Tata AIA 0.5 0.6 1.4 2.0 2.2 3.2 3.7 4.5 5.1 6.8 6.8
Private sector 37.8 48.9 51.5 53.9 56.2 58.0 57.2 59.7 62.9 65.8 67.8
Top 4 22.5 31.1 34.4 35.0 36.6 37.0 36.9 37.2 38.2 37.7 39.3
Private (ex-Top 4) 15.2 17.9 17.1 18.9 19.6 21.0 20.3 22.5 24.7 28.0 28.5
Select tier-II players 2.8 2.5 3.0 3.9 4.4 5.7 6.3 7.8 9.3 11.8 12.6
Source: IRDA, LI Council, Kotak Institutional Equities
Par and ULIP drive overall APE growth

Non-par savings fall yoy. Max Life reported 29% decline in non-par segment in 4QFY24. Even after
adjusting for the inflated base, there was a decline of 6% in non-par APE. Non-par was down 25% yoy
as the base period had high sales of newly launched products. The company launched SWAG Elite
and SWAG Pension that has offset the drop in demand for non-par. We expect the share of non-par to
remain low at 34% over the medium term (34% in FY2024 and 48% in FY2023).
Par growth remains strong. Participating products grew at 66% yoy in 4QFY24, driven by the
bancassurance channel. Share of par in bancassurance product mix was up 900 bps yoy to 18% in
FY2024.

59
ULIP was also strong. ULIP was also strong at 107% yoy and share in product mix was up to 41% (up
1,874 bps yoy and down 881 bps qoq). The company launched small and mid-cap funds during the
quarter, likely leading to sharp growth in ULIPs in 4QFY24.
Protection momentum strong. Retail protection was up 60% yoy in 4QFY24. The company launched
a new term offering targeting the affluent segment, which resulted in 24% yoy growth in ticket size in
the segment. Group protection was down 42% yoy, largely driven by lower group term business.
 In FY2024, APE growth was strong at 62-63% in retail protection and credit protect; group term
growth was lower at 25%.
Par and ULIP drive growth; non-par savings pick up sequentially

Exhibit 6: Product mix, March fiscal year-ends, 4QFY23-4QFY24, 2018-24
YoY QoQ YoY
4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 (%) (%) 2018 2019 2020 2021 2022 2023 2024 (%)
APE mix (%)
PAR 10.1 17.0 23.7 18.5 14.8 475 bps -364 bps 43.0 40.0 30.2 19.0 20.0 13.0 18.0 500 bps
Individual protection 4.5 8.0 9.7 9.0 6.4 187 bps -259 bps 4.0 6.0 8.2 9.0 7.5 6.0 8.0 200 bps
Group protection 3.5 11.0 6.0 5.5 1.8 -171 bps -364 bps 4.0 4.0 5.2 5.0 6.5 5.0 5.0 0 bps
Non-par savings 56.8 38.0 28.0 34.5 35.6 -2118 bps 105 bps 8.0 9.0 18.2 30.0 29.0 48.0 34.0 -1400 bps
ULIP 22.6 25.0 33.4 32.5 41.4 1874 bps 881 bps 41.0 42.0 38.2 37.0 37.0 27.0 35.0 800 bps
APE (Rs bn)
Overall APE (Rs bn) 25.4 11.1 16.5 18.0 28.7 13 60 32.5 39.5 41.2 49.6 55.9 62.5 74.3 19
PAR 2.6 1.9 3.9 3.3 4.3 66 28 14.0 15.8 12.4 9.4 11.2 8.1 13.4 65
Individual protection 1.2 0.9 1.6 1.6 1.8 60 14 1.3 2.4 3.4 4.5 4.2 3.7 5.9 59
Group protection 0.9 1.2 1.0 1.0 0.5 (42) (47) 1.3 1.6 2.1 2.5 3.6 3.1 3.7 19
Non-par savings 14.4 4.2 4.6 6.2 10.2 (29) 65 2.6 3.6 7.5 14.9 16.2 30.0 25.3 (16)
ULIP 5.7 2.8 5.5 5.8 11.9 107 103 13.3 16.6 15.7 18.3 20.7 16.9 26.0 54
Number of policies (NoP) growth was strong in par, protection and ULIP
Exhibit 7: Segment-wise ticket size and number of policies, March fiscal year-ends, 2019-24, 4QFY23-4QFY24
Number of policies (# '000)
Participating 31 24 41 32 42 35 307 224 149 148 104 139 34
Individual protection 49 36 46 46 61 24 175 183 219 176 147 189 29
Non-par savings 94 38 35 48 101 7 40 84 147 161 230 222 (3)
ULIPs 39 20 39 33 73 87 123 106 131 131 116 165 42
Ticket size (Rs '000)
Participating 85 88 98 103 100 18 52 59 66 81 83 98 18
Individual protection 29 28 33 37 36 24 13 19 22 24 27 34 26
Non-par savings 159 115 98 112 111 (30) 88 96 106 105 136 110 (19)
ULIPs 151 153 150 190 160 6 139 156 145 168 153 163 7

60
Retail protection and credit life growth was strong in FY2024

Exhibit 8: APE and yoy growth in protection sub-segments, March fiscal year-ends, 2023-24
(Rs bn) APE (LHS) Growth yoy (RHS)

(%)
8.0 63.1 62.3 72.0
6.0 54.0
4.0 36.0
25.4
2.0 18.0
4.0 6.5 2.4 3.0 0.7 1.1

- -
2023 2024 2023 2024 2023 2024
Retail protection Group term life Group credit life
Proprietary channels grow faster

Bancassurance growth picked up. Banca channels reported 16% yoy growth in 4QFY24, higher than
3% yoy growth reported in 3QFY24. Axis Bank channel reported 13% yoy growth, on adjusted basis,
the growth was strong at 22%; Bajaj Life reported 14% growth at Axis Bank in 4Q. Other banca
channels reported sharp rise in premiums to Rs2.2 bn from Rs0.7 bn in 4QFY23. Management
highlighted that growth in the Axis Bank channel will pick up in FY2025E; the company will maintain
65-70% counter share albeit mom swings.
Proprietary channels drive growth. Adjusted for an inflated base, proprietary channels reported 44%
yoy growth in 4QFY24. In FY2024E, growth in the channel was strong at 28% driven by strong 79%
pickup in online proprietary channels. Offline channels (agency+associates) also reported strong
growth of 34% in FY2024 on an adjusted base.
 Agency force was up 46% in FY2024 driven by strong addition during the year. The growth in the
channel will likely remain high as these agents scale up during FY2025-26E.
 Management highlighted that the strong pickup in online channels was driven by savings products.
Max Life’s market share in online savings has increased to 23% from 10% earlier.
Proprietary channel grew faster in FY2024

Exhibit 9: Channel mix, March fiscal year-ends, 2019-24, 4QFY23-4QFY24
Overall APE mix (Rs bn) 25.4 11.1 16.5 18.0 28.7 13 39.5 41.5 49.6 55.9 62.5 74.3 19
Proprietary 10.5 4.2 6.8 7.2 11.5 10 11.6 12.8 14.0 16.1 23.1 29.6 28
Online 2.9 3.9 6.9 79
Offline 13.4 19.2 22.7 18
Bancassurance 14.4 6.5 9.8 10.5 16.6 16 27.6 28.4 35.3 39.5 38.7 43.4 12
Axis Bank 12.7 5.4 8.6 9.9 14.4 13 22.5 23.6 31.2 36.0 34.7 38.3 10
Others 1.6 1.0 1.2 0.6 2.3 39 5.1 4.7 4.1 3.5 4.0 5.1 29
Others 0.5 0.5 - 0.3 0.6 15 0.3 0.3 0.3 0.3 0.8 1.4 81
Overall APE mix (%)
Proprietary 41.2 37.8 40.8 39.9 39.9 -131 bps 29.4 30.9 28.3 28.8 36.9 39.8 286 bps
Online 5.1 6.2 9.3 310 bps
Offline 24.0 30.7 30.5 -25 bps
Bancassurance 56.7 58.0 59.2 58.6 57.9 128 bps 69.9 68.4 71.2 70.7 61.9 58.4 -349 bps
Axis Bank 50.2 48.9 51.7 55.2 50.0 -20 bps 57.0 57.0 63.0 64.5 55.5 51.5 -405 bps
Others 6.4 9.2 7.4 3.5 7.9 148 bps 12.9 11.4 8.2 6.2 6.4 6.9 56 bps
Others 2.2 4.1 — 1.5 2.2 3 bps 0.7 0.7 0.5 0.5 1.2 1.8 63 bps

61
Proprietary mix has shifted to ULIPs from non-par savings Bancassurance mix has shifted to par from non-par savings
Exhibit 10: Product mix for proprietary channels, March fiscal Exhibit 11: Product mix for bancassurance channel, March
year-ends, 2016-24 (%) fiscal year-ends, 2016-24 (%)
ULIP Non-participating saving ULIP Non-participating saving
Non-participating protection Participating Non-participating protection Participating
100 100
17 15 20 18
26 26 22
2 29 29 34
80 4 80 39 36
7 10 49 47 45 48 43
- 3 52
10 21 26
11 14
60 46 60 14
17 37 12
1 1
23 21 11
40 40 2 12 24 35
72 73 2 36 33 53
60 58 14 4
47 16 51 48
20 20 39 2 4
34 33 34 4
22 25 2
18 14 17 18
9
0 0
2016
2017
2018
2019
2020
2021
2022
2023
2024
2022
2016
2017
2018
2019
2020
2021
2023
2024
Agency force grew by 46% yoy in 2024

Exhibit 12: Individual agents, March fiscal year-ends, 2014-24 (# ‘000)
Additions Deletions Agents

50 120
103
40
90
70
30 61
54 57 55
51 48 60
43 44 45 46
20
30 31 29 31
26 26 25 23 30
10 23 22
16 21 24 17 23 36 36 14 24 22 16
- -
2014
2015
2016
2017
2018
2024
2019
2020
2021
2022
2023
Source: LI Council, Kotak Institutional Equities
Persistency improved in most buckets

Exhibit 13: Persistency, March fiscal year-ends, 11MFY22 onwards (%)
11MFY22 2MFY23 5MFY23 8MFY23 11MFY23 2MFY24 5MFY24 8MFY24 11MFY24 YoY (bps)
13th month 85 84 84 83 84 84 84 85 87 300
25th month 68 68 67 68 68 69 70 70 70 200
37th month 61 61 61 61 61 61 62 63 63 200
49th month 56 56 56 57 57 57 65 65 66 900
61st month 50 50 50 51 51 51 58 58 58 700

62
Margins flat in medium term, downside risk in near term

APE growth for Max Life will be driven by pickup across channels. Focus on agency will deliver faster
growth in the medium term. Max will continue to step up on other (third-party) channels in FY2025E as
well. The company launched 37 new products, which contributed 45% of its business in FY2024. Per
management, new product launches continue even as it has re-priced some of its non-par products
recently. We are building 18% APE growth for FY2025E (15-16% for peers) reflecting faster growth.
Growth at Max. We model 17% growth for next two years. However, we find margin pressure (marginal
compression in FY2025E and flat thereon) to reflect higher payouts in the faster-growing third-party
channels. Overall VNB trajectory remains strong at 17% CAGR during FY2024-27E.
Operating RoEV likely to remain strong at ~20%

Max Life reported moderate operating RoEV of 20% in FY2024. We expect 20% operating RoEV to
continue. We bake in (1) 17% APE growth over FY2024-27E, (2) flat margins, (3) muted operating variance
(<1% of EVOP over FY2024-27E) and (4) unwind rate of 8.4-8.8%.
Operating RoEV strong at ~20-21%

Exhibit 14: EV walk, March fiscal year-ends, 2016-27E (Rs bn)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Opening embedded value 52.3 56.2 65.9 75.1 89.4 99.8 118.3 141.7 162.6 194.9 234.7 281.0
Methodology changes — — — — — — — 0.0 0.0 0.0 0.0 0.0
Assumption change — — — — — (3.4) — 0.0 0.0 0.0 0.0 0.0
VNB 3.8 5.0 6.6 8.6 9.0 12.5 15.3 19.5 19.7 22.9 27.1 31.5
Expected return in force 5.1 5.3 6.4 7.0 8.1 8.6 10.3 12.5 13.7 16.4 20.7 24.7
Operating variance (0.0) 0.9 0.6 1.3 1.0 0.8 (2.8) (0.6) (0.6) — — —
Investment varinace — 1.7 (0.5) 3.5 (3.2) 3.8 0.6 (10.4) (0.5) 0.5 0.5 0.5
Dividend payout (4.4) (3.2) (3.9) (6.0) (4.6) (3.8) — — — — (2.0) (2.0)
Closing embedded value 56.2 65.9 75.1 89.4 99.8 118.3 141.7 163 195 234.7 281.0 335.7
EVOP 8.9 11.2 13.6 16.8 18.1 18.5 22.8 31.3 32.9 39.3 47.8 56.2
RoEV (%) 7.4 17.3 13.9 19.0 11.7 18.6 19.8 14.7 19.9 20.4 19.7 19.5
Operating RoEV (%) 17.0 19.9 20.6 22.4 20.3 18.5 19.2 22.1 20.2 20.2 20.4 20.0
Unwinding rate (%) 9.8 9.5 9.7 9.3 9.1 8.6 8.7 8.8 8.4 8.4 8.8 8.8
VNB margins remain rangebound over the medium term

Exhibit 15: APE, VNB and VNB margins, March fiscal year-ends, 2016-27E (Rs bn)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
APE 21.1 26.4 32.5 39.5 41.5 49.6 55.9 62.5 74.3 87.7 102.6 120.1
VNB 3.8 5.0 6.6 8.56 9.0 12.5 15.3 19.5 19.7 22.9 27.1 31.5
VNB margins (%) 17.9 18.9 20.2 21.7 21.6 25.2 27.3 31.2 26.5 26.1 26.4 26.2

63
Exhibit 16: Change in estimates, March fiscal year-ends, 2025-26E

New estimates (Rs bn) Old estimates (Rs bn) Change (%)
2025E 2026E 2025E 2026E 2025E 2026E
Opening embedded value 195 235 198 237 (1.6) (1.0)
VNB 23 27 22 26 2.1 2.4
Expected return in force 16 21 17 21 (6.1) (1.0)
Operating variance — — 1 1 (100.0) (100.0)
Investment varinace 1 1 1 1 — —
Dividend payout — (2) (2) (2) NM NM
Closing embedded value 235 281 237 283 (1.0) (0.8)
EVOP 39 48 40 48 (2.7) (0.1)
RoEV (%) 20.4 19.7 19.6 19.6 79 bps 17 bps
Operating RoEV (%) 20.2 20.4 20.4 20.2 -22 bps 17 bps
APE (Rs bn) 88 103 84 96 4.6 6.4
VNB margin 26.1 26.4 26.8 27.5 -65 bps -104 bps
We value Max Life at 2.1X FY2026E EV

Exhibit 17: Appraisal value of Max Life, March fiscal year-ends, 2023-27E
2023 2024 2025E 2026E 2027E
New business value (VNB, Rs bn) 19.5 19.7 22.9 27.1 31.5
New business multiple (NBM, X) 11.4 11.4 11.4 11.4 11.4
Strucutral value (SV= VNB X NBM,Rs bn) 222 225 261 309 359
Appraisal value (AV= EV+SV, Rs bn) 385 420 496 590 694
Appraisal value/ EV (X) 2.4 2.2 2.1 2.1 2.1
Appraisal value/ VNB (X) 19.7 21.3 21.6 21.8 22.1
Value of Max FS at 80% stake and 10% holdco discount (Rs bn) 277 302 357 425 500
Value per share of Max FS (Rs) 803 876 1,035 1,232 1,448
Exhibit 18: Valuation comparison of life insurers, March fiscal year-ends, 2023-26E
Market EVOP CAGR
FV Price cap. Price/EV (X) Price/VNB (X) (2023-26E) Price/EVOP (X) Operating RoEV (%)
(Rs) (Rs) (Rs bn) 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E (%) 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E
HDFC Life 775 595 1,279 3.2 2.7 2.3 2.0 35 37 31 27 13 20 18 16 14 21.6 17.5 17.1 16.8
ICICI Prudential Life 685 564 813 2.3 1.9 1.7 1.5 29 36 32 27 9 15 16 13 11 17.4 14.1 14.4 14.6
LIC 1,300 985 6,227 1.1 0.8 0.8 0.7 68 65 62 61 6 11 12 10 9 10.9 9.2 8.9 8.8
LIC core 755 4,777 1.7 1.4 1.2 1.3 52 50 48 47 6 8 9 7 7 NA NA NA NA
Max FS 1,225 1,018 351 3.0 2.5 2.1 1.7 25 25 21 18 15 16 15 12 10 22.1 20.2 20.2 20.4
SBI Life 1,675 1,444 1,447 3.1 2.6 2.1 1.8 29 26 22 19 14 16 15 13 11 22.9 20.8 20.5 20.1

RESULT
Kansai Nerolac (KNPL) REDUCE

Commodity Chemicals
Subdued print Company data and valuation summary

KNPL reported flat revenues (0-1% yoy) in decorative paints and about 8% Stock data
growth in industrial paints in 4Q. Management (1) highlighted thrust on
CMP(Rs)/FV(Rs)/Rating 284/290/REDUCE
growth initiatives to narrow growth gap versus peers, (2) expects near-DD (8-
10%) volume/value growth for decorative/industrial segments, (3) guided
Mcap (bn) (Rs/US$) 229/2.7
margin pressure in the ST in decorative paints due to rise in competitive
ADTV-3M (mn) (Rs/US$) 134/1.6
intensity and (4) expects DD EBITDA margin in the industrial segment to
sustain. Even as KNPL’s execution improved (and market share loss ceased) Shareholding pattern (%)
in FY2024, it remains more vulnerable to the rise in competitive intensity than
the #1/#2 players. 7.31.5
8.1
4QFY24: Subdued growth and weak margin delivery continue 3.4
4.7
KNPL’s 4Q revenue grew 3.5% yoy to Rs16.6 bn, in line with our estimates. The
decorative paints segment registered flat (~0-1%)/DD(~10%) value/volume 75.0
growth. Negative price/mix of 9-10% was due to price cuts and higher salience
of commodity products such as putty (mix deterioration). Industrial coatings
Promoters FPI s MFs BFIs Retail Others
delivered HSD (KIE estimate: 8% yoy) value growth, led by decent automotive
and performance coatings demand, but growth slightly moderated from 3Q. GM
increased by 320/(-)145 bps yoy/qoq to 34.8% (KIE: 36.4%) on weak base and Absolute (1) (11) 8
RM deflation (on yoy basis). EBITDA grew 17.5% yoy to Rs1.8 bn (KIE: Rs2.1 bn) Rel. to Nifty 0 (13) (16)
and margin was up 130/(-)245 bps yoy/qoq to 10.8% (KIE 12.4%; the miss was Rel. to MSCI India (1) (15) (26)
on account of weaker than expected GM). Staff costs/other expenses, grew

+16%/ +11.3% yoy to Rs1.05 bn/Rs2.9 bn (2.7%/(-)0.6% above our estimate).
EPS (Rs) 8.6 8.9 9.4
Recurring PAT grew 28.2% yoy to Rs1.2 bn (KIE: Rs1.3 bn). KNPL plans to
EPS growth (%) 43.6 3.3 5.2
expand its existing capacities at the Sayakha and Bawal plants.
P/E (X) 32.9 31.8 30.2
FY2024: Revenue grew 4.4% yoy to Rs74 bn. We estimate LSD/HDD growth in
P/B (X) 4.6 4.3 4.0
decorative/industrial paints. GM increased 545 bps to 35.5%, benefitting from
EV/EBITDA (X) 20.9 20.3 19.3
RM deflation. EBITDA grew 29% yoy to Rs10.3 bn and margin stood at 13.8%,
RoE (%) 14.5 13.8 13.6
up 262 bps yoy, strong GM expansion was partly offset by increased
Div. yield (%) 1.2 1.6 1.7
investments. Recurring PAT grew to Rs6.9 bn.
Sales (Rs bn) 74 80 87
Corrective actions yielding results; near-term guidance unchanged EBITDA (Rs bn) 11 11 11
KNPL’s corrective actions to narrow growth gap (new businesses, Paint+,
adding feet on the street, improved influencer outreach, focus on projects, new Source: Bloomberg, Company data, Kotak Institutional Equities estimates
product launches, higher media investments, etc.) have yielded results, as we Prices in this report are based on the market close of
can see in better-than-market growth across these verticals and increasing May 07, 2024
salience. In the near term, management guided industrial division to deliver
growth in line with last year’s trends, given the ongoing positive sentiment (auto
demand and infra spending), and maintain margins at current sustainable DD
levels (10-12%). In decorative paints, management retained its HSD (8-10%)
volume growth (led by rural recovery and success in ongoing business
initiatives), with no further deterioration in mix, and some margin pressure due Related Research
to higher competitive intensity.
→ Kansai Nerolac: Underperformance continues
Roll over and maintain FV at Rs290; REDUCE → Kansai Nerolac: Weak topline growth
We tweak decorative revenue growth and margin expectations. Net result: 0-2% → Kansai Nerolac: Weak topline print
cut in FY2025-26 EPS estimates. We roll over and maintain FV at Rs290 (implies
31X June 2026E PE).
Jaykumar Doshi Umang Mehta Praneeth Reddy

65
Analyst meet takeaways

Demand environment. During 4Q, decorative paints’ volume grew in double-digits, led by ongoing
growth initiatives. Rural (tier 3 and 4 markets) demand conditions have shown some recovery (more
evidenced in the industrial compared to decorative paints), but continued to lag urban markets (tier 1
and 2 markets). As KNPL is slightly over-indexed in rural compared to industry, the weakness in rural
impacted overall growth in recent quarters. Industrial segment growth slightly moderated given some
reduced activity in the election period. Decorative-industrial segments contribution to topline stood at
about 55-45 (probably slightly changed, with better growth in industrial paints over the past year).
Going ahead, in the near term (FY2025E), management guided (1) for decorative paints, growth will
be volume-led. Volume growth could be in HSD (~8-10% range) with some (~200 bps) variation, and
driven by low pricing and rural recovery. Product mix is not expected to deteriorate further from the
current levels. In medium-to-long term, KNPL is hopeful of sector reestablishing its growth
relationship with the GDP growth (industry to grow at ~1X GDP growth), akin to trends witnessed
over last 20-30 years, (2) for industrial division, management maintains a positive outlook in light of
encouraging trends in automotive production activity and increased government spending, and
expects growth to track current year growth levels, with (a) auto segment growth slightly moderating,
and (b) industrial segment compensating that growth shortfall, despite some slowdown in the high
performance coatings over the first two quarters amidst ongoing election season (low capex).
Margin outlook. For FY2024, KNPL witnessed GM expansion of ~320 bps yoy due to stable RM prices.
However, this GM expansion was not entirely translated to EBITDA margin increase (up ~260 bps yoy
to 13.8%), as GM expansion was offset by (1) increase in other expenses due to elevated marketing
spends (Rs3.5 bn+; 4.5-5% of sales in FY2024) to improve visibility and mind share, (2) higher
investments in digital initiatives and (3) increase in staff costs on account of additional manpower
recruitment to support growth initiatives. Management noted that industrial segment EBITDA margin
improved significantly over the past two years to DD levels, which are healthy and sustainable.
Going ahead, KNPL intends to maintain industrial segment margins at current levels (10-12%), as
these levels are deemed to be sustainable. In the decorative paints segment, given the increase in
competitive intensity, margins can remain under check in the near term (12-18 months). However, as
most of the investments in terms of digital capabilities and team additions are in place, other
expenses growth is expected to moderate, offering some potential for margin improvement if market
grows (operating leverage). Management noted that, although the steps they take such as increasing
premium share in decorative paints and cutting down on low-margin in industrial paints are margin
accretive, they like to stay highly competitive in the low-end/economy and commodity segments
(putty), which can counter the above positive margin impact, in order to chase growth.
Decorative. During 4Q, KNPL’s volume (DD) and value (flat) growth disparity increased relative to
previous quarters due to price cuts, and higher salience of commodity products such as putty.
 Market share. Management acknowledged that KNPL’s market share over the last year was more
or less stable at 10% levels (overall lost market share in last 2-2.5 years). KNPL’s growth gap versus
industry has narrowed down over past few years, led by successful rollout of new businesses,
products, projects business, etc. However, there is still a gap versus industry growth, largely due to
weak rural markets, which is dragging overall performance. As rural recovery picks up, KNPL is
confident of performing on-par/slightly ahead of market.
 Region-wise performance. KNPL has better market share in the North and East, and its
performance was better in these markets. South and West markets, where KNPL is under-indexed,
are lagging on overall growth.
 New products. KNPL introduced a total of 15 products over FY2024 and the contribution of NPD
to overall sales stood at ~10%.
 New businesses (construction chemicals and wood finishes). KNPL is witnessing strong growth
in the new businesses, led by distribution expansion. Salience of new businesses has improved
~180 bps yoy in FY2024.
 Paint+. KNPL introduced four new products in Paint+ range in FY2024. Paint+ is a unique
proposition and it insulates them from regular competition, as they are the only player offering
products with such differentiated performance-centric proposition in the premium category. Paint+
salience is in the HSD, and it increased ~150 bps in the premium products range in FY2024.
Kansai Nerolac
Commodity Chemicals India Research
66
 Distribution. KNPL intends to increase its distribution by double-digits (~10% yoy). KNPL
highlighted that 25% of its dealers are exclusive in nature, while the rest are multi-brand dealers
KNPL is implementing new initiatives and rolling out new businesses with 30% of its dealer network
that contribute to 30% of sales, and noticed that they are growing on-par or ahead of market in
such dealer points.
 NXTGEN painting services. KNPL added team and necessary infrastructure over the past 12-18
months. The team is now actively generating leads in ~250 cities and has capability to work on 5k
sites in a month. KNPL is generating decent share from paint as a service segment and this
contribution has been growing month-on-month.
 Influencer engagement. KNPL’s promotion team actively engages with influencers such as
painters (trains/incentivizes them), architects (5k+), interior designers, contractors (for projects
business) to promote the advantages of Paint+ products. KNPL noticed that this influencer
segment plays a key role in one-on-one communication and in promoting premium products.
 Primary to secondary. KNPL is making efforts to increase the secondary sales by adding more feet
on street to approach leads and painter community, and connect with dealers for conversions.
 Projects business continues to do well and has grown slightly better than industry in the last year.
KNPL expanded its project business to 75 towns and increased salience by 100 bps in FY2024.
They have also launched separate brand for project business and expanded portfolio in the last
year. The projects business’ salience is below 10% for KNPL, while at industry level it is at 15%.
Industrial. Industrial coatings experienced decent demand conditions, but slightly moderated from
3Q, resulting in HSD (~8% yoy) value growth in 4Q. The share of auto-non auto segments stood at 70-
30. In the automotive business, KNPL continues to launch technologically superior products in new
areas (such as seam sealers, underbody coats, alloy wheels, etc.), with an aim to increase the
addressable market. For FY2024, KNPL managed to grow the industrial division in HSD yoy, and
gradually recover the margins to targeted levels (improve from LSD few years ago to DD), led by
premiumization, defocus on low margin segments, and timely price hikes. Management also
highlighted that it holds some pricing power in industrial paints, given its service and technology
capabilities.
 Auto OEM. KNPL is the #1 player in automotive across sub-segments and has ~60% market share
in automotive paints. Auto segment witnessed steady and healthy revenue growth during 4Q, led
by (1) Passenger vehicles – KNPL witnessed 7% growth in demand, led by SUV and 100%+ growth
in EV, (2) 2 and 3 wheelers – registered DD (10%) value growth, led by rural recovery. KNPL’s market
share in 2-wheeler is very high and demand recovery in 2H (after subdued growth in 1H) bodes well
for growth, (3) CV – weak demand (3% yoy) from M&HCV. (4) Tractors – subdued demand
continues ((-)12% yoy) due to high inventory levels.
 Auto refinish. KNPL is relatively a new entrant with low market share (single-digit) but is seeing
strong traction in the premium category, led by the addition of A-class body shops. KNPL intends
to increase the market share by focusing only on the premium segment.
 Performance coatings. KNPL exited the low margin business completely and is focusing more on
premium segments. As a result, the salience of the premium segment has been going up. (1) Liquid
coatings witnessed strong growth and premium salience increased 70 bps yoy, (2) Powder
coatings witnessed marginal growth in 4Q, but premium segment increased salience by 120 bps.
International subsidiaries’ performance. (1) Nepal – net sales degrowth as economic conditions
continue to be challenging, (2) Bangladesh – witnessed sales degrowth as restriction on non-essential
imports continue, and (3) Sri Lanka – strong DD growth as economy is on a recovery path.
Branding and advertising. KNPL is #2 player in mind share (better-positioned than market share) and
has been increasing marketing expenditure over the last two years.
Manufacturing capacity update. Management guided capex of Rs3 bn for FY2025E, of which Rs1 bn
is attributed to normal capex, Rs1.5 bn for expansion capex and Rs0.5 bn for backward integration
capex. KNPL’s current capacity stands at 610 mn liters per year and is further expanding decorative
paints capacity in Vizag (greenfield; commissioning in 2QFY25) and Jainpur (brownfield;
commissioning in 3QFY25). Together, they can increase decorative paints capacity by 25-30% (overall
capacity can go up to 700 mn+ liters per year). KNPL intends to execute back-end integration for its
automotive paints segment, by adding resins capacity in Sayaka and Bawal.
Kansai Nerolac
67
Capital allocation. KNPL has a net cash of Rs15.5 bn as of FY2024. Going ahead, KNPL intends to
utilize these funds for (1) capacity augmentation, (2) backward integration, (3) rewarding
shareholders through special dividend (Rs3.75 in FY2024 versus Rs2.7 in FY2023), (4) maintaining
liquidity in a hyper-competitive environment, and (5) exploring business opportunities.
Grasim impact. Management called out that the impact of Grasim entry so far has not been
significant, as it takes time for a new player to create any impact. The schemes such as 10% extra
grammage, warranty, digital tinting machines, etc. have not led to any meaningful disruption.
Others. (1) KNPL has noticed an increase in trade margins over the last two years, given increase in
competitive intensity, (2) products provided by parent company attract royalty of 3-5%. However, as %
of overall sales, the royalty component is negligible, (3) KNPL is currently able to track 20% of its
secondary sales, and expects to increase it to 50-60% in the next few years and (4) Japanese
contribution to total automotive sale is at 60%.
Interim standalone results of Kansai Nerolac Paints, March fiscal year-ends (Rs mn)
(% change)
Net operating revenue 16,617 16,580 16,051 18,149 0.2 3.5 (8.4) 73,933 70,810 4.4
Material cost (10,842) (10,549) (10,986) (11,583) 2.8 (1.3) (6.4) (47,697) (49,553) (3.7)
Gross profit 5,775 6,031 5,066 6,566 (4.2) 14.0 (12.1) 26,236 21,257 23.4
Gross margin (%) 34.8 36.4 31.6 36.2 -163 bps 319 bps -143 bps 35.5 30.0 546 bps
Employee cost (1,048) (1,021) (904) (1,051) 2.7 15.9 (0.3) (4,018) (3,338) 20.3
Other expenditure (2,935) (2,954) (2,637) (3,116) (0.6) 11.3 (5.8) (11,989) (9,980) 20.1
Total expenditure (14,826) (14,524) (14,527) (15,749) 2.1 2.1 (5.9) (63,704) (62,871) 1.3
EBITDA 1,791 2,056 1,525 2,399 (12.9) 17.5 (25.3) 10,229 7,939 28.8
EBITDA margin (%) 10.8 12.4 9.5 13.2 -162 bps 128 bps -245 bps 13.8 11.2 262 bps
Other income 320 197 143 224 63.0 124.1 43.3 931 308 202.0
Interest (32) (37) (25) (32) (14.6) 28.6 (2.2) (125) (97) 28.1
Depreciation (458) (464) (420) (462) (1.3) 9.0 (1.0) (1,800) (1,646) 9.3
Pretax profits 1,623 1,752 1,223 2,129 (7.4) 32.7 (23.8) 9,236 6,504 42.0
Tax (417) (430) (283) (552) (3.1) 47.4 (24.5) (2,375) (1,639) 44.9
Recurring PAT 1,205 1,321 940 1,576 (8.8) 28.2 (23.5) 6,861 4,864 41.0
Extraordinary items (190) — — — 4,968 —
Net profit (reported) 1,015 1,321 940 1,576 (23.1) 8.0 (35.6) 11,829 4,864 143.2
Recurring EPS 1.5 1.6 1.2 1.9 (8.8) 28.2 (23.5) 8.5 6.0 41.0
Income tax rate (%) 25.7 24.6 23.1 26.0 113 bps 256 bps -25 bps 25.7 25.2 50 bps
Costs as a % of net operating revenues
Material cost 65.2 63.6 68.4 63.8 162 bps -320 bps 142 bps 64.5 70.0 -547 bps
Employee cost 6.3 6.2 5.6 5.8 15 bps 67 bps 51 bps 5.4 4.7 71 bps
Other expenditure 17.7 17.8 16.4 17.2 -16 bps 123 bps 49 bps 16.2 14.1 212 bps
Note:
(1) Exception item during FY2024 is profit of Rs6.6 bn from sale of land (Rs5.3 bn net of taxes assuming 22% LTCG on land sale)
Key changes to estimates, Kansai Nerolac Paints, March fiscal year-ends, 2025-26E
Revised Earlier Change (%)
2025E 2026E 2025E 2026E 2025E 2026E
Revenues (Rs mn) 79,568 86,615 79,723 86,871 (0.2) (0.3)
Revenue growth (%) 7.6 8.9 7.9 9.0
Gross margin (%) 34.5 33.5 34.7 33.9 -21 bps -41 bps
EBITDA (Rs mn) 10,304 10,567 10,643 11,119 (3.2) (5.0)
EBITDA margin (%) 13.0 12.2 13.4 12.8 -41 bps -61 bps
Net income (Rs mn) 7,167 7,390 7,155 7,556 0.2 (2.2)
EPS (Rs/share) 8.9 9.1 8.9 9.3 0.2 (2.2)
Kansai Nerolac
68
Revenue growth in decorative paints, March fiscal year-ends (Rs mn)

Revenue growth (yoy %) 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24E
APNT Standalone (India decorative paints) (8.4) (44.1) 5.8 26.1 46.2 97.1 36.2 27.8 21.6 59.0 19.6 0.7 12.4 7.0 (0.0) 5.2 1.0
Berger Standalone (13.2) (47.9) 7.4 24.0 53.0 96.0 26.1 22.0 9.5 53.7 22.5 7.2 14.0 11.0 2.8 6.4 3.0
KNPL (India decorative paints) (9.0) (48.0) 8.0 17.0 33.0 85.0 21.0 13.0 3.0 41.0 11.0 (4.0) 13.0 5.0 (2.0) 3.0 1.0
(20.0) 49.2
KNPL underperformance versus Asian
0.6 3.9 (2.2) 9.1 13.2 12.1 15.2 14.8 18.6 18.0 8.6 4.7 (0.6) 2.0 2.0 2.2 —
Paints (ppts)
4-yr CAGR growth (%)

APNT Standalone (India decorative paints) 19.9 17.2 13.6 16.3 17.0 14.6 14.3 19.2
Berger standalone (decorative paints) 16.0 15.6 13.6 13.5 14.9 14.3 14.6 18.4
KNPL (India decorative paints) 12.0 11.6 5.3 8.9 9.2 9.2 6.9 11.8
Note:
(1) APNT and BRGR revenue growth is as per KIE estimates
Kansai Nerolac Decorative volume growth trends, March fiscal year-ends, 4QFY17-4QFY24
100 82
80
60
40 29
20 20 23 19
17 15 15 16 18 18
11 10 13 9 13 10 10
20 8 6
1 (1) - (1)
8 (8) (8)
-
(20)
(40)
(40)
(60)
4QFY17
1QFY18
4QFY18
1QFY19
2QFY19
1QFY20
2QFY20
3QFY20
4QFY20
3QFY21
4QFY21
1QFY22
4QFY22
1QFY23
2QFY23
1QFY24
2QFY24
3QFY24
2QFY18
3QFY18
3QFY19
4QFY19
1QFY21
2QFY21
2QFY22
3QFY22
3QFY23
4QFY23
4QFY24
Kansai Nerolac gross margin and Crude price movement, March fiscal year-ends, 4QFY18-4QFY24
Crude price- Brent (LHS, Rs per 10 Barrels) KNPL's GM (RHS, %)

100,000
41.6
44
39.2
38.5
38.4
38.4
38.3
38.3
38.0
80,000 41
37.5
36.3
36.2
35.7
35.5
38
34.8
34.5
34.4
34.3
35.3
60,000
35
31.6
30.2
29.9
29.5
28.9
32
28.6
40,000
27.4
29
20,000 26
4QFY18
1QFY19
2QFY19
3QFY19
2QFY20
3QFY20
4QFY20
1QFY21
4QFY21
1QFY22
2QFY22
3QFY22
3QFY23
4QFY23
1QFY24
4QFY19
1QFY20
2QFY21
3QFY21
4QFY22
1QFY23
2QFY23
2QFY24
3QFY24
4QFY24
Kansai Nerolac
69
New products, Paint+ and premiumization executed by KNPL in FY2024
Standalone financials of Kansai Nerolac, March fiscal year-ends, 2017-27E (Rs mn)
2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model
Net revenues (1) 39,991 45,866 51,736 49,432 46,900 58,984 70,810 73,933 79,568 86,615 93,802
EBITDA 7,307 7,898 7,420 7,816 8,331 6,211 7,939 10,229 10,304 10,567 11,655
Depreciation (695) (758) (905) (1,199) (1,390) (1,538) (1,646) (1,800) (1,863) (1,950) (2,099)
Other income 982 724 619 269 387 329 308 931 1,279 1,402 1,418
Interest expense — — — (50) (75) (99) (97) (125) (100) (100) (100)
PBT 7,594 7,864 7,134 6,836 7,253 4,902 6,504 9,236 9,620 9,919 10,874
Tax (2,535) (2,700) (2,461) (1,482) (1,835) (1,186) (1,639) (2,375) (2,453) (2,529) (2,773)
Extraordinary items — — — — (108) 27 — 4,968 — — —
Reported PAT 5,059 5,164 4,674 5,354 5,310 3,743 4,864 11,829 7,167 7,390 8,101
Recurring PAT 5,059 5,164 4,674 5,354 5,418 3,717 4,864 6,861 7,167 7,390 8,101
Recurring EPS (diluted) (Rs) 6.3 6.4 5.8 6.6 6.7 4.6 6.0 8.5 8.9 9.1 10.0
Balance sheet
Total equity 28,053 31,251 34,245 37,868 40,809 41,709 46,074 56,531 60,115 63,810 67,860
Total borrowings 288 183 97 — — — — — — — —
Current liabilities 6,841 8,440 7,666 6,606 9,497 10,204 12,462 13,060 14,164 15,537 16,955
Other liabilities 1,044 1,096 1,051 1,450 1,785 2,044 2,215 2,657 2,657 2,657 2,657
Total equity and liabilities 36,226 40,971 43,059 45,924 52,091 53,957 60,751 72,248 76,936 82,004 87,472
Cash and cash equivalents 7,804 8,809 2,769 4,714 7,434 2,901 5,929 15,525 17,684 19,153 21,085
Other current assets 17,062 18,115 22,895 20,981 23,683 29,147 32,198 33,105 35,484 38,470 41,493
Net fixed assets 9,466 10,066 13,159 17,059 17,249 18,760 19,947 20,736 20,885 21,498 22,012
CWIP 1,421 3,431 3,147 1,644 2,058 2,239 1,126 1,516 1,516 1,516 1,516
Goodwill — — — 27 12 2 2 2 2 2 2
Total assets 36,226 40,971 43,059 45,924 52,091 53,957 60,751 72,248 76,936 82,004 87,472
Cash flow
Operating cash flow excl. w-cap 5,257 5,311 4,556 6,353 7,017 4,657 6,326 8,269 7,851 8,038 8,882
W-cap changes (1,808) (1,537) (3,452) (147) (631) (4,066) (2,464) 682 (1,275) (1,613) (1,605)
Operating cash flow 3,450 3,774 1,104 6,206 6,387 591 3,862 8,951 6,576 6,425 7,277
Interest expense (net) 75 231 192 41 73 36 41 46 1,179 1,302 1,318
Capital expenditure (2,042) (3,332) (5,233) (2,170) (965) (2,138) (1,113) (2,326) (2,013) (2,562) (2,613)
Acquisitions/divestment (107) (38) (829) — — — — — — — —
Free cash flow 1,301 404 (4,958) 4,036 5,422 (1,547) 2,749 6,625 4,563 3,862 4,664
Key metrics and ratios
Revenue growth (%) 7.0 14.7 12.8 (4.5) (5.1) 25.8 20.1 4.4 7.6 8.9 8.3
Gross margin (%) 41.4 39.5 36.2 38.1 37.9 30.0 30.0 35.5 34.5 33.5 33.6
A&P (% of sales) 6.8 6.0 5.0 5.0 3.1 3.6 3.8 4.8 5.0 5.0 5.0
Employee cost (% of sales) 5.0 4.9 4.9 5.4 5.5 4.9 4.7 5.4 5.2 5.1 5.0
EBITDA margin (%) 18.3 17.2 14.3 15.8 17.8 10.5 11.2 13.8 13.0 12.2 12.4
PAT margin (%) 12.7 11.3 9.0 10.8 11.6 6.3 6.9 9.3 9.0 8.5 8.6
Net debt (7,517) (8,625) (2,672) (4,714) (7,434) (2,901) (5,929) (15,525) (17,684) (19,153) (21,085)
Net debt/equity (X) (0.3) (0.3) (0.1) (0.1) (0.2) (0.1) (0.1) (0.3) (0.3) (0.3) (0.3)
Book value (Rs/share) 34.7 38.7 42.4 46.8 50.5 51.6 57.0 69.9 74.4 78.9 83.9
RoAE (%) 19.1 17.4 14.3 14.8 13.8 9.0 11.1 13.4 12.3 11.9 12.3
RoACE (%) 16.4 15.7 13.0 14.4 13.2 8.6 10.7 12.2 10.8 10.4 10.8
Kansai Nerolac
RESULT
Navin Fluorine (NFIL) REDUCE

Specialty Chemicals
Significant recovery is some distance away Company data and valuation summary
NFIL’s 4QFY24 results were weak, as expected, amid demand headwinds in Stock data
agrochemicals/CDMO and price pressures in R-22. The timeline for a
CMP(Rs)/FV(Rs)/Rating 3,377/2,970/REDUCE
significant recovery is now pushed back to at least 2HFY25. Under-
52-week range (Rs) (high-low) 4,946-2,899
absorption of overheads related to the new fluorospecialty plant could be an
Mcap (bn) (Rs/US$) 167/2.0
added near-term headwind. Our Fair Value, rolled forward to June 2025, falls
ADTV-3M (mn) (Rs/US$) 915/11.0
to Rs2,970 (30X June 2026E P/E) from Rs3,120. Maintain REDUCE.
Weak 4QFY24 results, as expected, versus a high base Shareholding pattern (%)
Revenues fell 14% yoy against a tough base, but recovered 20% qoq. The CDMO
business unit (BU) was again the worst hit yoy, registering a revenue drop of 7.9
76% yoy against a difficult base, as demand dried up, while High Performance 28.8
22.0
Products (HPP) registered a modest 3% yoy growth. Specialty Chemicals did
manage to grow 26% yoy, owing to newly commissioned projects. EBITDA
10.1 15.6
margins recovered 320 bps qoq, but remained under pressure versus levels
15.6
from a year ago (down 1,070 bps yoy) due to lower prices of R-22 and an
adverse shift in the revenue mix away from the high-margin CDMO business. Promoters FPI s MFs BFIs Retail Others
1933
Gross margins fell 930 bps yoy/410 bps qoq to just 50%—a five-year low.
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of
However, NFIL managed to keep opex and finance costs along with D&A under Absolute 7 9 (29)
check, while a low tax rate (11%) helped cushion the impact on net profit. Rel. to Nifty 8 7 (53)
A significant recovery may be back-ended at best in FY2025 Rel. to MSCI India 7 5 (64)
For the Specialty Chemicals and CDMO BUs, management suggested that a Forecasts/Valuations 2024 2025E 2026E
demand recovery will set in only from 2HFY25, as destocking continues in the EPS (Rs) 44.1 48.9 91.5
near term and NFIL works to rebuild its order pipeline in CDMO. Key drivers of EPS growth (%) (41.8) 11.0 87.1
revenue growth for FY2025 will be (1) a full year’s worth of contribution from P/E (X) 76.6 69.0 36.9
the 4.5 KTPA R-32 plant (commissioned in 2QFY24), (2) a 30% yoy increase in P/B (X) 7.0 6.5 5.6
revenues from the Honeywell project (assuming the improved utilization rates EV/EBITDA (X) 45.3 38.5 23.7
of 4QFY24 can be maintained), (3) the commencement of supplies from the Rs6 RoE (%) 9.6 9.8 16.3
bn agrochemical intermediates plant by June 2025 and (4) growth in CDMO, Div. yield (%) 0.4 0.3 0.4
driven by shipments under the Fermion contract and new commercial-stage Sales (Rs bn) 21 26 33
order wins. However, the margin recovery will be gradual, from 18% in 4QFY24 EBITDA (Rs bn) 4 5 8
to 20% in the initial phase, then to 25% once operating leverage kicks in. Net profits (Rs bn) 2 2 5
Cut FY2025E/26E EPS by a further 32%/12% Source: Bloomberg, Company data, Kotak Institutional Equities estimates
Revenue estimates stand reduced by 6%/4%, as we factor in the headwinds in Prices in this report are based on the market close of
May 07, 2024
Specialty Chemicals and CDMO. EBITDA estimates suffer sharper cuts of
30%/16%, as margin estimates are toned down, especially for FY2025,
considering the softness in the early part of the upcoming year along with the
likelihood of under-absorbed overheads pertaining to the Rs6 bn project. Lower
finance costs, amid still-healthy operating cash flows, help mitigate the impact
on EPS. However, our revised estimates now imply only 11% EPS growth in Related Research
FY2025 due to margin pressures and higher finance costs along with D&A as → Navin Fluorine: Demand weakness takes a
new projects—particularly the Rs6 bn intermediate—commence operations.
→ heavy toll
Navin Fluorine: Weak 2Q, choppy near-term
Thereafter, we build in a margin recovery in FY2026, as new projects scale up, trendsFluorine: Industry downturn is more of a
→ Navin
but this is more than adequately priced in current valuations, leading to our
worry than CEO departure
cautious stance.
Abhijit Akella, CFA Sumit Kumar Eesha Mohanty

71
Key takeaways from the earnings call

CDMO BU: The BU was impacted due to deferral of sales in the quarter and inability of certain molecules
to progress to the next phase. Management expects major revenue contribution from the business unit
starting 2HFY25, as order pipelines are being built up. Some orders in the pipeline include an existing
MSA with a European CDMO major, a new major pharma customer added in the UK, a validation
campaign PO in hand for an EU major and POs in hand for 2 RSMs to be delivered in CY2025 for a drug
recently approved by the FDA in the US. Management expects annual revenue of the business unit to
gradually ramp up from current levels of $40 mn. Specifically on the Fermion contract, management
expects reasonable revenues to be reported in CY2024, then double in CY2025 and then triple in
CY2026. NFIL aims to build a 50:50 revenue mix from early stage and commercial-stage molecules.
The Phase 1 capex outlay for the CGMP4, amounting to Rs1.6 bn, is expected to be commissioned by
end-CY2025.
Specialty Chemicals BU: The business unit faced headwinds due to destocking by global customers and
aggressive dumping by Chinese manufacturers. The company has added one molecule at Dahej and two
molecules in Surat (including a performance material molecule for a US major). Performance materials
are an emerging area for the company and products here would include solar grid HF, semiconductor
grade HF, advanced materials going to specialized applications (such as data centers for energy
efficiency) that would find application in solar grids and data centers for energy efficiency going beyond
just electronic applications. MPP-1 recorded 80% capacity utilization on a Rs2.6 bn revenue potential in
FY2024. However, the MPP is likely to be impacted in FY2025 from global headwinds and is expected to
ramp up slowly from 2HFY25. NFIL has a basket of 8-9 molecules for MPP-1. The company has recorded
a contingent liability of Rs900 mn, as one of its customers has funded capex for the new fluorospecialty
chemical project. Of BU revenues, 80-90% are from the agrochemical industry.
HPP BU: The business unit recorded higher sales from its newly commissioned R-32 capacity, which was
more than offset by lower exports of R-22 and lower HFO revenues. Management commented that the
Honeywell plant has stabilized and production was significantly higher in 4QFY24. Management guided
to a 30% volume increase in FY2025, if the 4QFY24 run-rate is maintained. HF, R-22 and R-32 ran at full
utilization during the quarter. Management also remained upbeat about the R-32 demand scenario in
India and backed its decision to double R-32 capacity. The AHF expansion schedule remains on track
and is expected to commission by end-FY2025/early FY2026. The dedicated agrochemical unit is
expected to start operations from June 2024. Additional R-32 capacity, with a capex of Rs840 mn, is
expected to be commissioned by February 2025.
Others:
NFIL has narrowed their selection choices for the CEO position. Management expects to conclude the
selection process very soon.
Management commented that the margin decline is due to lower CDMO revenues and lower gas prices.
It expects EBITDA margin to move gradually to 20% and then to 25% with operating leverage.
Management guided to Rs 5-6 bn of both OCF and capex for FY2025. NFIL will likely spend increasing
capex on performance/advanced materials business in the next 12-18 months.
The total dividend declared by the Board stands at Rs15 per share.
Navin Fluorine
Specialty Chemicals India Research
72
NFIL reported weak 4QFY24 results versus a difficult base

Interim results of NFIL, March fiscal year-ends (Rs mn)
Change (%)
4QFY24 4QFY24E 4QFY23 3QFY24 KIE yoy qoq FY2024 FY2023 % chg. FY2025E yoy (%)
Net sales 6,020 5,316 6,971 5,001 13.2 (13.6) 20.4 20,650 20,774 (0.6) 25,779 24.8
Raw material (3,010) (2,398) (2,837) (2,297) 25.5 6.1 31.1 (9,354) (8,960) 4.4 (12,245) 30.9
Gross profit 3,009 2,918 4,134 2,704 3.1 (27.2) 11.3 11,296 11,814 (4.4) 13,534 19.8
Employee costs (713) (745) (730) (745) (4.4) (2.3) (4.4) (2,858) (2,494) 14.6 (3,381) 18.3
Other expenses (1,196) (1,263) (1,387) (1,202) (5.3) (13.7) (0.5) (4,455) (3,817) 16.7 (5,382) 20.8
EBITDA 1,101 910 2,018 757 20.9 (45.5) 45.4 3,983 5,503 (27.6) 4,770 19.8
EBITDA margins (%) 18.3 17.1 28.9 15.1 116 bps (1,066)bps 315 bps 19.3 26.5 (720)bps 18.5 (4.1)
Other income 125 119 40 119 5.0 213.0 5.0 559 357 56.3 573 2.6
Interest cost (174) (177) (140) (177) (1.4) 24.5 (1.4) (746) (275) 170.9 (1,043) 39.9
Depreciation (257) (256) (76) (249) 0.3 238.3 3.3 (962) (626) 53.5 (1,312) 36.4
PBT 794 596 1,842 450 33.2 (56.9) 76.4 2,834 4,959 (42.8) 2,989 5.5
Exceptionals 0 0 0 521 NM NM (100) 521 - - NM
Tax (90) (119) (478) (191) (24.2) (81.1) (52.7) (650) (1,207) (46.1) (564) (13.2)
Reported PAT 704 477 1,364 780 47.5 (48.4) (9.8) 2,705 3,752 (27.9) 2,424 (10.4)
Adjusted PAT 704 477 1,364 362 47.5 (48.4) 94.7 2,184 3,752 (41.8) 2,424 11.0
Reported EPS 14.2 9.6 27.4 15.7 47.9 (48.2) (9.6) 54.6 75.7 (27.9) 48.9 (10.4)
Adjusted EPS (Rs) 14.2 9.6 27.4 7.3 47.9 (48.2) 95.2 44.1 75.7 (41.8) 48.9 11.0
Key ratios (%)
Gross margins 50.0 54.9 59.3 54.1 (490)bps (931)bps (409)bps 54.7 56.9 (217)bps 52.5 (220)bps
EBITDA margins 18.3 17.1 28.9 15.1 116 bps (1,066)bps 315 bps 19.3 26.5 (720)bps 18.5 (78)bps
Tax rate 11.4 20.0 25.9 42.5 (862)bps (1,456)bps (3,111)bps 22.9 24.3 (139)bps 18.9 (406)bps
BU-wise sales
- HPP 2,970 2,887 2,890 2,510 2.9 2.8 18.3 9,550 8,860 7.8 11,526 20.7
- Specialty chemicals 2,570 1,947 2,040 1,770 32.0 26.0 45.2 8,500 7,430 14.4 11,000 29.4
- CDMO 480 475 2,030 730 1.2 (76.4) (34.2) 2,620 4,480 (41.5) 3,275 25.0
- Others (1) 8 11 (9) NM NM NM (20) 4 NM (22)
Total 6,020 5,316 6,971 5,001 13.2 (13.6) 20.4 20,650 20,774 (0.6) 25,779 24.8
CDMO revenues plunged 76% yoy; Specialty Chemicals registered 26% yoy growth
Consolidated segment-wise performance of NFIL, 1QFY21 onward, March fiscal year-ends
1QFY 21 2QFY 21 3QFY 21 4QFY 21 1QFY 22 2QFY 22 3QFY 22 4QFY 22 1QFY 23 2QFY 23 3QFY 23 4QFY 23 1QFY 24 2QFY 24 3QFY 24 4QFY 24
S e gm e nt r e ve nue ( Rs m n)
HPP 740 1,070 1,040 1,170 1,150 1,200 1,550 1,510 1,520 1,920 2,530 2,890 1,690 2,380 2,510 2,970
Refrigerants 460 580 470 580 590 550 720 800
Inorganic fluorides 280 490 570 590 560 650 830 710
Specialty Chemicals 970 1,050 1,220 1,310 1,330 1,220 1,520 1,590 1,760 1,770 1,860 2,040 2,300 1,860 1,770 2,570
CDMO 340 990 710 760 670 820 720 880 700 500 1,250 2,030 930 480 730 480
Others 99 79 121 124 115 150 (0.5) 109 (4.8) 2 (4.2) 11 (8.5) -2 (8.8) (0.5)
T ot a l 2,149 3,189 3,091 3,364 3,265 3,390 3,790 4,089 3,975 4,192 5,636 6,971 4,912 4,718 5,001 6,020
Y oy gr owt h ( %)
HPP (43.5) (12.3) (3.7) 9.3 55.4 12.1 49.0 29.1 32.2 60.0 63.2 91.4 11.2 24.0 -0.8 2.8
Refrigerants (41.0) (17.1) (17.5) 3.6 28.3 (5.2) 53.2 37.9
Inorganic fluorides (47.2) (5.8) 11.8 15.7 100.0 32.7 45.6 20.3
Specialty chemicals 12.8 11.7 25.8 26.0 37.1 16.2 24.6 21.4 32.3 45.1 22.4 28.3 30.7 5.1 -4.8 26.0
CDMO 36.0 110.6 51.1 40.7 97.1 (17.2) 1.4 15.8 4.5 -39.0 73.6 130.7 32.9 -4.0 -41.6 -76.4
T ot a l (14.5) 16.8 18.7 21.6 51.9 6.3 22.6 21.6 21.7 23.7 48.7 70.5 23.6 12.5 (11.3) (13.6)
Cont r ibut ion t o r e ve nue ( %)
HPP 34.4 33.6 33.6 34.8 35.2 35.4 40.9 36.9 38.2 45.8 44.9 41.5 34.4 50.4 50.2 49.3
Refrigerants 21.4 18.2 15.2 17.2 18.1 16.2 19.0 19.6
Inorganic fluorides 13.0 15.4 18.4 17.5 17.2 19.2 21.9 17.4
Specialty chemicals 45.1 32.9 39.5 38.9 40.7 36.0 40.1 38.9 44.3 42.2 33.0 29.3 46.8 39.4 35.4 42.7
CDMO 15.8 31.0 23.0 22.6 20.5 24.2 19.0 21.5 17.6 11.9 22.2 29.1 18.9 10.2 14.6 8.0
Navin Fluorine
73
NFIL’s EBITDA margins recovered partially off a low base

NFIL’s consolidated EBITDA margins (%), 1QFY20 onward, March fiscal year-ends
31.0 28.9
28.4
27.6
28.0 26.0 25.4 26.0
25.0 25.1 24.9 25.0 24.8 24.9
24.3 23.8
25.0 23.0 23.3
22.4
22.0 20.8
18.3
19.0
16.0 15.1
13.0
10.0
3QFY21
4QFY21
1QFY22
2QFY22
3QFY24
4QFY24
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
List of NFIL’s ongoing capex projects

A nnounc e m e nt Ca pe x ( Rs m n) Re ve nue ( Rs m n/ye a r ) De t a ils
Capex for cGMP4 facility with a capacity of 200KL has been approved. Expected to
Feb-24 2,880
commission by end of CY2025.
4,500 TPA capacity expansion of R32 at Surat facility. The project is expected to
Feb-24 840
commission by Feb-25
40KTPA of AHF capacity, primarily meant for captive use along with some merchant
Mar-23 4,500 NA
sales to the extent of marketable surplus. Commissioning early-FY2026.
NFIL announced a capex for debottlenecking for a new molecule in HPP business unit in
Jul-22 800 2,000
Surat. Later revealed this is R-32.
NFIL has entered into a multi-year contract with a large multinational company for
May-22 5,400 6,000 manufacture and supply of a key fluoro specialty chemicals. This capacity is expected to
get commissioned by CY2023 end.
Feb-22 700 Debottlenecking of CRAMS cGMP3 facility, expected to be completed by 3QFY23
NFIL entered into a Rs8 bn contract over a period of five years with a global player for key
Nov-21 1,250 1,600 agro intermediate. This capex is expected to be completed by FY2023 end and full ramp
up expected in two years.
MPP for agrochemical intermediates with expected commissioning by 1HFY23. This

Dec-20 1,950 2,700
plant is expected to fully ramp up in three years.
Long-term contract of US$410 mn over a period of seven years with Honeywell for supply
Feb-20 4,400 4,000 of hydrofluoroolefins (HFOs). This project is expected to start generating revenue
towards 1QFY23 end (versus earlier FY2022 end).
Navin Fluorine
74
We expect broad-based revenue growth for NFIL over FY2024-2026

Revenue breakdown (Rs mn) and growth (%), March fiscal year-ends, 2019-2027E
2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Revenue (Rs mn)
HPP 4,770 4,680 4,010 5,400 8,860 9,550 11,526 13,871 15,184
Refrigerants 2,800 2,610 2,080 2,660 2,660 3,325 4,323 6,268 6,581
Inorganic fluorides 1,970 2,070 1,930 2,740 2,740 2,603 2,603 2,603 2,603
Honeywell contract — — — — 3,460 3,622 4,600 5,000 6,000
Specialty chemicals 3,000 3,810 4,530 5,660 7,430 8,500 11,000 14,670 17,404
CDMO 1,780 1,730 2,790 2,980 4,480 2,620 3,275 4,094 5,117
Total 9,550 10,220 11,330 14,040 20,770 20,670 25,801 32,634 37,705
Growth (%, yoy)
HPP 22.3 (1.9) (14.3) 34.7 64.1 7.8 20.7 20.3 9.5
Refrigerants 14.3 (6.8) (20.3) 27.9 — 25.0 30.0 45.0 5.0
Inorganic fluorides 35.9 5.1 (6.8) 42.0 — (5.0) — — —
Honeywell contract — — — — NM 4.7 27.0 8.7 20.0
Specialty chemicals 33.3 27.0 18.9 24.9 31.3 14.4 29.4 33.4 18.6
CDMO (30.9) (2.8) 61.3 6.8 50.3 (41.5) 25.0 25.0 25.0
Total 9.5 7.0 10.9 23.9 47.9 (0.5) 24.8 26.5 15.5
We cut FY2025E/26E EPS by a further 32%/12%

Change in estimates (Rs mn, unless specified)
New estimates Old estimates Change in estimates (%)
Rs mn, except as specified 2025E 2026E 2027E 2025E 2026E 2025E 2026E
Revenues 25,779 32,610 37,678 27,538 33,960 (6.4) (4.0)
EBITDA 4,770 7,812 9,676 6,797 9,278 (29.8) (15.8)
EBITDA margin (%) 18.5 24.0 25.7 24.7 27.3 (25.0) (12.3)
PAT 2,424 4,537 6,010 3,563 5,153 (32.0) (12.0)
EPS (Rs) 48.9 91.5 121.3 71.9 104.0 (32.0) (12.0)
Navin Fluorine
75
We now see only modest EPS growth in FY2025

NFIL financial summary, March fiscal year-ends, 2019-2027E (Rs mn unless specified)
2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model
Sales 9,959 10,616 11,794 14,534 20,774 20,650 25,779 32,610 37,678
EBITDA 2,184 2,635 3,093 3,548 5,503 3,983 4,770 7,812 9,676
Other income 344 333 444 339 357 559 573 604 574
Interest (8) (53) (18) (19) (275) (746) (1,043) (1,196) (1,213)
Depreciation (275) (370) (442) (479) (626) (962) (1,312) (1,662) (1,762)
Adjusted profit before tax 2,244 2,545 3,077 3,389 4,959 2,834 2,989 5,558 7,275
Tax expenses (770) 1,436 (1,108) (812) (1,207) (650) (564) (1,022) (1,264)
Extraordinary items — — 501 53 — 521 — — —
Reported PAT 1,491 4,052 2,575 2,631 3,752 2,705 2,424 4,537 6,010
Adjusted PAT 1,491 1,786 2,199 2,591 3,752 2,184 2,424 4,537 6,010
Adjusted EPS (Rs) 30 36 44 52 76 44 49 92 121
Balance sheet
Equity 10,724 14,122 16,339 18,442 21,850 23,827 25,818 29,681 34,799
Total borrowings 41 14 25 1,045 8,487 13,399 16,899 17,899 17,399
Other long-term liabilities 493 289 498 437 546 951 951 951 951
Current liabilities and provisions 1,813 1,861 2,113 3,931 4,411 5,593 6,344 7,345 8,087
Total liabilities 13,072 16,285 18,975 23,855 35,293 43,770 50,013 55,877 61,237
Net fixed assets 2,850 3,642 3,759 3,776 14,718 16,854 26,179 29,542 32,806
Other long-term assets 4,615 4,808 3,268 9,887 5,913 11,383 5,773 5,773 5,773
Cash and investments 2,253 3,513 6,284 2,000 659 5,136 5,449 5,143 5,229
Current assets 3,354 4,323 5,663 8,193 14,003 10,396 12,613 15,419 17,430
Total assets 13,072 16,285 18,975 23,855 35,293 43,770 50,013 55,877 61,237
Free cash flow
Operating cash flow before working capital 1,516 2,239 3,280 2,851 4,672 3,889 4,779 7,395 8,985
Working capital changes (615) (706) (1,255) (2,104) (5,307) 3,610 (1,465) (1,806) (1,269)
Net finance costs (4) (11) (171) (148) 245 713 1,043 1,196 1,213
Cash flow from operations 905 1,544 2,197 895 (881) 6,786 2,271 4,393 6,503
Capital expenditure (616) (1,077) (987) (5,758) (7,555) (6,783) (5,025) (5,025) (5,025)
Free cash flow 289 467 1,210 (4,863) (8,436) 3 (2,754) (632) 1,478
Key ratios/metrics
Gross Margin (%) 52.1 54.4 54.4 54.2 56.9 54.7 52.5 53.5 54.5
EBITDA margin (%) 21.9 24.8 26.2 24.4 26.5 19.3 18.5 24.0 25.7
Net debt/equity (X) (0.2) (0.2) (0.4) (0.1) 0.4 0.3 0.4 0.4 0.3
Book value (Rs/share) 217 286 330 372 441 481 521 599 702
Adjusted RoAE (%) 14.5 14.4 14.4 14.9 18.6 9.6 9.8 16.3 18.6
RoACE (%) 11.5 13.1 12.5 13.1 14.8 7.1 6.9 11.0 13.0
RoIC (%) 24.2 21.3 21.2 26.3 20.7 9.6 9.4 13.3 15.3
Navin Fluorine
76
March 2024: Results calendar

Mon Tue Wed Thu Fri Sat Sun
6-May 7-May 8-May 9-May 10-May 11-May 12-May
Cartrade Tech Century Textiles Balaji Amines Abbott India Aarti Industries APL Apollo Tubes J K Cement
CG Power & Industrial Chambal Fertilisers Bharat Forge Alembic Pharmaceuticals ABB CCL Products
DCM Shriram CreditAccess Gramin Canara Bank Alkyl Amines Bank of Baroda
Godrej Consumer Products Delta Corp. Capri Global Asian Paints Bank of India
Grindwell Norton Dr Reddy's Laboratories Godrej Agrovet BPCL Cholamandalam Financial
Gujarat Fluorochemicals Graphite India GSPL CAMS Cipla
Gujarat Gas IDFC Hero MotoCorp Escorts Kubota Dr Lal Pathlabs
Happiest Minds Indraprastha Gas Home First Finance HPCL Eicher Motors
Indian Bank IRB Infrastructure India Shelter Indian Overseas Bank Fine Organic
Lupin Jindal Saw Kalpataru Projects Intellect Design Finolex Industries
Marico JSW Energy L&T Mahanagar Gas GE Shipping Co.
Route Mobile Jupiter Wagons Piramal Enterprises Orient Electric Kalyan Jewellers
Kajaria Ceramics SKF Punjab National Bank Piramal Pharma
KEC International Sterlite Technologies Quess Corp. Polycab
Latent View Sula Vineyards Rain Industries Punjab & Sind Bank
Max Financial Services Tata Power Relaxo Footwear Sapphire Foods
Navin Fluorine TVS Motor State Bank of India Syrma SGS Technology
PB Fintech Westlife Foodworld Timken Tata Motors
Pidilite Industries Vardhman Textiles TCI Expresss
Sonata Software Thermax
SRF Union Bank
United Breweries VIP Industries
Aditya Birla Capital AIA Engineering Clean Science & Technology Akzo Nobel India GlaxoSmithkline Pharma Ujjivan Small Finance Bank
Bombay Burmah Apar Industries Granules India Biocon Global Health
CE Info System Apollo Tyres Honeywell Auto Container Corp. JSW Steel
Cera Sanitaryware Archean Chemical ICRA Crompton Greaves Consumer NHPC
Chalet Hotels BASF India Jyothy Laboratories Endurance Technologies Pfizer
DLF Bharti Airtel LIC Housing Finance Hindustan Aeronautics Poly Medicure
Jindal Steel and Power BLS International NCC Infibeam Avenues Rashtriya Chemicals & Fertilizers
Sanofi India Colgate-Palmolive (India) NLC India Info Edge
Tube Investments Devyani International PFC Krishna Institute of Medical Science
UPL Jubilant Ingrevia Rail Vikas Mahindra & Mahindra
Varun Beverages PVR Inox Signature Global Motherson Sumi Wiring
Zomato Radico Khaitan Trident V-Guard Industries
Ruchi Soya
Shree Cement
Shyam Metalics
Siemens
V-Mart Retail
Zydus Wellness
Bharat Electronics Aether Industries Gujarat Pipavav Port Bikaji Foods Bosch
Deepak Nitrite Gujarat State Fertilizers & Chemicals HEG Esab India Hindalco Industries
PI Industries Indigo Paints Page Industries JM Financial
RateGain Jubilant Foodworks Vaibhav Global Manappuram Finance
United Spirits
27-May 28-May 29-May 30-May 31-May
Sumitomo Chemical Amara Raja Energy & Mobility Cummins India Apollo Hospitals
Medplus Health Services Deepak Fertilisers
TTK Prestige Emami
Ipca Laboratories
Samvardhana Motherson
Source: BSE, NSE, Kotak Institutional Equities
India Research
77
Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 7-May-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024 2025E 2026E 2024 2025E 2026E 2024 2025E 2026E 2024 2025E 2026E 2024 2025E 2026E 2024 2025E 2026E Traded Delivered
Automobiles & Components
Apollo Tyres SELL 478 375 (22) 304 3.6 638 29 27 28 17 17 17 2.1 1.9 1.8 7 7 7 14 12 11 1.0 1.3 1.5 12 4
Ashok Leyland REDUCE 194 170 (12) 570 6.8 2,936 9 10 9 21 20 21 5.5 4.7 4.2 12 12 13 28 25 21 1.9 2.0 1.9 39 20
Bajaj Auto SELL 8,678 6,200 (29) 2,423 29 279 268 289 311 32 30 28 9.7 9.2 8.6 25 23 21 30 31 32 0.9 2.7 2.9 56 23
Balkrishna Industries SELL 2,444 1,950 (20) 472 5.7 193 66 76 89 37 32 28 5.6 4.9 4.3 21 18 16 16 16 17 0.7 0.8 0.9 10 5
Bharat Forge SELL 1,240 850 (31) 577 6.9 466 22 33 39 57 38 31 7.8 6.7 5.7 24 20 18 14 19 20 0.5 0.5 0.6 21 11
CEAT SELL 2,349 1,850 (21) 95 1.1 40 169 157 151 14 15 16 2.4 2.1 1.9 7 7 7 18 15 13 1.3 1.6 1.6 6 3
CIE Automotive ADD 486 500 3 184 2.2 378 21 24 28 23 20 17 3.1 2.8 2.5 13 12 10 14 15 15 1.0 1.3 1.4 4 3
Eicher Motors SELL 4,622 3,100 (33) 1,266 15.2 272 147 154 166 31 30 28 8.2 7.1 6.2 26 24 22 28 25 24 1.0 1.1 1.3 38 19
Endurance Technologies SELL 1,900 1,500 (21) 267 3.2 141 45 56 66 42 34 29 5.4 4.8 4.3 21 17 15 13 14 15 0.5 0.6 0.7 3 2
Escorts Kubota SELL 3,441 2,150 (38) 380 4.6 111 94 104 112 36 33 31 4.1 3.7 3.4 32 28 25 11 11 11 0.4 0.5 0.5 11 4
Exide Industries SELL 453 300 (34) 385 4.6 850 12 15 16 37 31 28 2.9 2.7 2.5 20 18 16 9 9 9 0.4 0.6 0.6 45 17
Hero Motocorp SELL 4,477 3,675 (18) 895 10.7 200 213 233 249 21 19 18 5.0 4.6 4.3 14 13 12 25 25 25 3.3 3.6 3.9 40 19
Mahindra & Mahindra ADD 2,192 1,800 (18) 2,725 32.6 1,159 89 85 93 25 26 24 4.9 4.2 3.6 21 19 16 22 17 17 0.6 0.6 0.6 81 45
Maruti Suzuki SELL 12,364 10,500 (15) 3,887 46.5 314 420 444 479 29 28 26 4.6 4.2 3.8 19 18 16 18 16 16 1.0 1.4 1.5 77 39
MRF SELL 124,515 87,000 (30) 528 6.3 4 4,909 4,361 4,691 25 29 27 3.2 2.9 2.6 12 12 11 13 11 10 0.2 0.2 0.2 20 6
Samvardhana Motherson ADD 125 125 (0) 850 10.2 6,776 3 5 6 36 24 21 3.5 3.1 2.8 11 9 8 10 14 14 0.6 0.6 0.7 36 18
Schaeffler India ADD 3,822 3,500 (8) 597 7.2 156 58 62 73 66 61 52 12.4 11.2 10.0 44 40 34 20 19 20 0.1 0.1 0.0 4 2
SKF ADD 4,633 4,400 (5) 229 2.7 49 107 132 150 43 35 31 8.5 7.4 6.4 31 25 22 20 21 21 0.7 0.8 0.9 2 2
Sona BLW Precision REDUCE 614 620 1 360 4.3 583 9 12 15 67 51 42 12.8 10.8 9.1 39 31 26 21 22 23 0.2 0.4 0.6 17 8
Tata Motors ADD 989 950 (4) 3,786 45.3 3,677 64 71 79 15 14 12 5.6 3.9 3.0 7 6 5 44 33 27 0.2 0.2 0.3 130 53
Timken ADD 3,399 2,800 (18) 256 3.1 75 47 60 76 72 56 45 10.8 9.1 7.6 48 37 30 16 18 19 0.1 0.1 0.0 4 2
TVS Motor SELL 1,980 1,180 (40) 940 11.3 475 44 47 53 45 42 37 12.5 10.4 8.7 28 24 22 31 27 25 0.6 0.6 0.7 23 11
Uno Minda ADD 722 660 (9) 414 5.0 571 15 17 19 49 43 38 8.4 7.1 6.1 28 24 21 17 17 16 0.3 0.3 0.4 5 3
Varroc Engineering ADD 503 500 (1) 77 0.9 153 37 26 33 14 20 15 4.1 3.4 2.8 11 9 7 30 17 18 — — — 2 1
Automobiles & Components Cautious 22,672 271.5 26.4 24.7 22.5 5.5 4.7 4.1 14.3 13.0 11.6 21 19.1 18.2 0.8 1.1 1.2 705 322
Banks
AU Small Finance Bank ADD 630 650 3 468 5.6 743 23 32 41 27 20 16 3.4 2.8 2.4 — — — 13 16 16 — — — 28 12
Axis Bank BUY 1,128 1,225 9 3,482 41.7 3,087 81 84 96 14 13 12 2.3 2.1 1.8 — — — 18 16 16 0.1 1.1 1.3 151 84
Bandhan Bank BUY 181 270 49 292 3.5 1,611 20 26 29 9 7 6 1.4 1.2 1.0 — — — 15 17 17 1.7 2.2 2.4 36 16
Bank of Baroda ADD 259 280 8 1,340 16.0 5,178 33 30 31 8 9 8 1.3 1.2 1.1 — — — 16 13 12 2.6 2.3 2.4 58 22
Canara Bank REDUCE 577 530 (8) 1,046 12.5 1,814 81 78 86 7 7 7 1.5 1.3 1.1 — — — 18 16 15 2.9 2.8 3.0 59 22
City Union Bank ADD 154 155 0 114 1.4 740 14 14 16 11 11 10 1.5 1.3 1.2 — — — 13 12 12 1.8 1.8 2.1 8 4
DCB Bank BUY 134 160 20 42 0.5 313 17 19 23 8 7 6 0.9 0.9 0.8 — — — 11 11 12 1.3 1.8 2.5 4 2
Equitas Small Finance Bank ADD 95 115 21 108 1.3 1,135 7 8 10 13 12 9 1.9 1.7 1.5 — — — 14 15 16 — — — 5 3
Federal Bank BUY 160 190 19 389 4.7 2,435 15 15 17 10 10 9 1.4 1.3 1.2 — — — 15 12 12 0.8 1.5 1.6 33 14
HDFC Bank BUY 1,506 1,750 16 11,449 137.1 7,597 80 91 107 19 17 14 2.6 2.4 2.1 — — — 17 15 16 1.3 1.5 1.7 387 233
ICICI Bank BUY 1,132 1,300 15 7,954 95.2 7,023 58 59 65 19 19 17 3.4 3.0 2.7 — — — 19 16 16 0.9 1.0 1.2 209 112
IndusInd Bank BUY 1,453 1,800 24 1,131 13.5 778 115 130 142 13 11 10 1.8 1.6 1.4 — — — 15 15 14 1.1 1.3 1.4 63 32
Karur Vysya Bank BUY 187 195 4 149 1.8 802 19 20 23 10 9 8 1.6 1.4 1.3 — — — 16 16 16 2.6 2.8 3.2 6 3
Punjab National Bank SELL 122 105 (14) 1,347 16.1 11,011 7 12 13 17 10 9 1.5 1.3 1.2 — — — 8 12 12 1.7 2.8 3.1 92 27
SBI Cards and Payment Services BUY 716 900 26 680 8.1 951 25 27 41 28 26 17 5.6 4.7 3.8 — — — 22 20 24 0.4 0.5 0.6 16 8
State Bank of India BUY 802 850 6 7,157 85.7 8,925 60 63 69 13 13 12 2.1 1.9 1.6 — — — 15 14 14 1.5 1.5 1.5 189 79
Ujjivan Small Finance Bank ADD 54 65 21 105 1.3 1,929 6 7 7 8 8 8 1.7 1.5 1.3 — — — 24 20 18 2.4 2.5 2.7 7 3
Union Bank ADD 142 155 9 1,082 13.0 7,634 19 23 24 7 6 6 1.3 1.1 0.9 — — — 17 17 15 3.3 3.9 4.1 45 20
Utkarsh Small Finance Bank BUY 53 70 31 59 0.7 1,099 5 6 6 12 9 8 2.0 1.7 1.4 — — — 20 19 18 0.0 0.0 0.0 5 2
YES Bank SELL 23 19 (17) 687 8.2 28,768 0 1 1 53 24 15 1.6 1.5 1.4 — — — 3 6 9 0.0 0.0 0.0 135 39
Banks Attractive 39,080 467.9 15.0 13.7 12.2 2.1 1.9 1.7 14.4 13.9 13.9 1.2 1.5 1.6 #N/A 736
Source: Company, Bloomberg, Kotak Institutional Equities estimates
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Building Products
Astral SELL 2,069 1,600 (23) 556 6.7 269 21 28 33 98 74 62 17.4 14.5 12.1 58 46 39 19.2 21 21 0.1 0.2 0.2 16 7
Building Products Cautious 556 6.7 98.2 73.5 62.0 17.4 14.5 12.1 57.9 45.7 39.3 17.7 19.7 19.4 0.1 0.2 0.2 16 7
Capital goods
ABB REDUCE 6,888 4,600 (33) 1,460 17.5 212 59 72 84 117 95 82 24.6 19.9 16.3 95 77 66 23 23 22 0.0 0.1 0.1 38 14
Bharat Electronics SELL 227 130 (43) 1,662 19.9 7,310 5 5 6 48 43 38 10.8 9.7 8.7 35 30 27 24 24 24 1.0 1.1 1.2 77 36
BHEL SELL 280 70 (75) 976 11.7 3,482 (1) (2) 1 NM NM 211 3.6 3.7 3.7 NM 2,200 62 NM NM 2 0.0 0.1 (0.1) 110 34
Carborundum Universal SELL 1,495 1,320 (12) 284 3.4 190 24 30 36 62 51 42 9.1 8.0 6.9 38 32 27 16 17 18 0.3 0.4 0.5 3 2
CG Power & Industrial SELL 571 365 (36) 872 10.4 1,527 6 7 8 103 83 70 28.9 20.0 14.6 77 61 52 28 24 21 0.3 0.3 0.4 24 13
Cochin Shipyard SELL 1,247 540 (57) 328 3.9 263 27 24 30 46 53 41 6.7 6.2 5.6 35 37 28 15 12 14 0.6 0.6 0.7 50 13
Cummins India ADD 3,372 3,450 2 935 11.2 277 56 69 82 60 49 41 15.7 14.0 12.3 56 46 39 28 30 32 0.9 1.1 1.4 24 11
G R Infraprojects SELL 1,333 920 (31) 129 1.5 97 65 58 89 20 23 15 2.2 2.0 1.8 13 14 10 11 9 13 0.0 0.0 0.0 3 2
IRB Infrastructure ADD 66 70 6 399 4.8 6,039 1 2 3 66 31 25 2.9 2.9 2.8 17 14 13 4 9 12 2.2 3.1 3.6 19 8
Kalpataru Projects ADD 1,207 1,050 (13) 196 2.3 160 35 66 83 34 18 14 3.7 3.1 2.6 13 9 8 11 18 20 0.3 0.4 0.4 7 3
KEC International REDUCE 740 630 (15) 190 2.3 257 17 34 45 43 22 17 4.6 3.9 3.2 16 11 9 11 19 21 0.3 0.5 0.7 8 3
L&T SELL 3,428 3,100 (10) 4,712 56.4 1,373 98 115 140 35 30 25 6.6 5.8 5.0 23 20 17 18 21 22 0.8 1.0 1.2 106 64
Siemens SELL 6,095 3,950 (35) 2,170 26.0 356 65 79 94 94 77 65 14.7 12.9 11.2 74 61 51 17 18 19 0.3 0.3 0.4 18 8
Thermax ADD 4,559 3,550 (22) 543 6.5 113 54 62 77 85 74 59 11.7 10.5 9.2 70 56 41 15 15 17 0.3 0.3 0.3 8 4
Capital goods Cautious 14,857 177.9 56.0 46.5 37.2 8.0 7.2 6.4 34.7 29.1 24.4 14.3 15.6 17.3 0.6 0.7 0.8 #N/A 215
Commercial & Professional Services
SIS REDUCE 434 470 8 63 0.7 147 13 22 27 33 20 16 2.6 2.3 2.0 12 10 9 8 12 13 0.0 0.0 0.0 0 0
TeamLease Services REDUCE 3,150 2,500 (21) 53 0.6 17 69 93 119 46 34 26 6.4 5.4 4.5 39 29 23 14.2 17.3 18.5 — — — 2 1
Commercial & Professional Services Neutral 115 1.4 37.7 24.4 19.5 3.6 3.1 2.7 16.7 14.2 11.9 9.5 12.7 13.7 0.0 0.0 0.0 2 1
Commodity Chemicals
Asian Paints REDUCE 2,913 3,100 6 2,794 33.5 959 58 60 62 50 48 47 14.9 13.1 11.7 35 34 32 32 29 26 1.0 1.1 1.2 44 26
Berger Paints SELL 513 485 (5) 598 7.2 1166 10 11 12 50 47 44 11.6 10.1 8.9 31 30 28 25 23 21 0.9 0.9 0.9 8 3
Indigo Paints REDUCE 1,382 1,400 1 66 0.8 48 33 37 40 42 37 35 7.3 6.4 5.7 25 22 21 19 18 17 0.5 0.7 0.9 1 1
Kansai Nerolac REDUCE 284 290 2 229 2.7 808 9 9 9 33 32 30 4.6 4.2 4.0 21 20 19 14 14 14 1.2 1.6 1.7 2 1
Tata Chemicals SELL 1,068 770 (28) 271 3.2 255 45 26 31 24 41 34 1.2 1.2 1.2 8 9 9 5 3 4 1.4 1.4 1.4 51 16
Commodity Chemicals Cautious 3,958 47.4 45.0 46.0 43.6 7.6 7.0 6.5 27.5 27.6 26.1 16.9 15.3 15.0 1.0 1.1 1.2 106 47
Construction Materials
ACC REDUCE 2,436 2,300 (6) 458 5.5 188 112 117 137 22 21 18 2.8 2.5 2.3 13 11 9 14 13 13 0.3 1.0 1.1 14 5
Ambuja Cements SELL 594 445 (25) 1,463 17.5 2,463 15 19 21 40 32 28 3.2 2.7 2.5 21 15 12 9 10 9 0.3 0.4 0.5 25 11
Dalmia Bharat ADD 1,766 1,900 8 331 4.0 187 44 56 73 40 31 24 2.0 1.9 1.8 13 12 10 5 6 8 0.5 0.5 0.6 11 6
Grasim Industries REDUCE 2,421 2,135 - 1,620 19.4 664 115 127 134 21 19 18 1.9 1.7 1.6 10 9 8 9 9 9 0.4 0.5 0.6 26 13
J K Cement SELL 3,911 2,800 (28) 302 3.6 77 101 131 152 39 30 26 5.6 4.8 4.1 16 14 12 16 17 17 0.4 0.4 0.4 7 4
Nuvoco Vistas Corp. ADD 326 365 12 116 1.4 357 4 8 13 79 41 25 1.3 1.3 1.2 10 8 8 2 3 5 0.0 0.0 0.0 2 1
Orient Cement REDUCE 229 210 (8) 47 0.6 205 9 10 12 27 22 20 2.7 2.5 2.2 11 9 8 10 12 12 1.0 1.0 1.0 3 2
Shree Cement SELL 25,400 19,000 (25) 916 11.0 36 647 739 804 39 34 32 4.5 4.1 3.7 20 17 15 12 13 12 0.4 0.5 0.6 12 6
The Ramco Cements SELL 757 630 (17) 179 2.1 236 16 25 34 46 31 22 2.5 2.3 2.1 15 13 11 5 8 10 0.2 0.3 0.4 7 4
UltraTech Cement SELL 9,682 7,200 (26) 2,795 33.5 289 244 318 359 40 30 27 4.6 4.2 3.8 22 18 16 12 14 15 0.4 0.5 0.3 41 23
Construction Materials Cautious 8,227 98.5 33.3 27.3 24.1 3.1 2.8 2.5 15.3 12.7 11.1 9.4 10.2 10.5 0.4 0.5 0.5 147 76
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Consumer Durables & Apparel
Aditya Birla Fashion and Retail REDUCE 253 220 (13) 257 3.1 1,054 (7) (5) (3) NM NM NM 6.3 5.3 5.7 19 14 11 NM NM NM — — — 22 9
Campus Activewear ADD 242 275 14 74 0.9 304 3 4 6 96 57 44 11.7 9.7 8.2 37 27 22 13 19 20 — — 0.6 5 2
Cello World ADD 912 950 4 193 2.3 212 16 18 21 59 50 42 16.8 13.5 11.1 39 31 26 44 30 29 — 1— 0.7 4 3
Crompton Greaves Consumer ADD 322 300 (7) 207 2.5 640 7 8 10 48 38 31 6.9 6.1 5.3 29 25 21 15 17 18 0.8 0.8 0.8 15 9
Eureka Forbes BUY 450 680 51 87 1.0 208 5 7 10 93 67 44 2.2 2.2 2.1 46 35 24 2 3 5 — — — 4 3
Havells India SELL 1,673 1,260 (25) 1,048 12.6 628 20 25 31 83 66 55 14.1 12.7 11.3 55 44 37 18 20 22 0.4 0.6 0.7 23 12
Page Industries SELL 34,370 31,000 (10) 383 4.6 11 569 615 712 60 56 48 22.8 19.2 16.3 39 36 31 42 37 37 0.9 1.0 1.2 12 7
Polycab SELL 5,809 4,060 (30) 873 10.5 150 115 125 144 51 46 40 11.1 9.4 8.1 35 31 27 24 22 22 0.5 0.5 0.6 29 12
TCNS Clothing Co. REDUCE 433 420 (3) 27 0.3 69 (30) (5) 2 NM NM 254 6.7 6.7 6.0 (32) 22 15.6 NM NM 2 — — — 1 1
Vedant Fashions REDUCE 962 980 2 234 2.8 243 17 19 22 56 50 43 14.6 12.3 10.3 35 29 24 28 27 26 — — — 4 2
Voltas SELL 1,389 930 (33) 460 5.5 331 12 24 30 121 57 46 8.1 7.4 6.6 89 45 39 7 13 15 0.3 0.5 0.6 28 12
Whirlpool SELL 1,453 1,090 (25) 184 2.2 127 18 25 36 82 58 40 5.0 4.7 4.3 42 31 22 6 8 11 0.2 0.3 0.4 13 7
Consumer Durables & Apparel Cautious 4,028 48.2 86.9 63.2 50.2 9.7 8.6 7.7 40.8 31.6 26.2 11.2 13.6 15.4 0.4 0.5 0.6 160 78
Consumer Staples
Britannia Industries ADD 5,174 5,400 4 1,246 14.9 241 89 100 114 58 52 46 31.6 27.2 24.2 39 35 31 57 56 56 1.4 1.7 2.0 22 12
Colgate-Palmolive (India) REDUCE 2,863 2,425 (15) 779 9.3 272 49 54 59 59 53 49 42.5 40.2 38.0 41 37 34 75 77 80 1.6 1.8 2.0 11 5
Dabur India ADD 558 600 7 990 11.8 1,772 10 12 13 54 47 42 10.0 9.1 8.3 41 36 32 20 20 21 1.0 1.1 1.3 14 9
Godrej Consumer Products BUY 1,322 1,450 10 1,353 16.2 1,023 19 23 28 71 57 47 10.7 9.7 8.7 46 39 34 15 18 19 0.8 0.8 1.0 13 8
Hindustan Unilever ADD 2,379 2,625 10 5,591 66.9 2,350 43 46 52 55 51 46 11.0 10.7 10.3 39 36 32 20 21 23 1.8 1.7 1.9 58 39
Honasa Consumer ADD 428 450 5 139 1.7 322 3 5 7 135 86 59 12.6 10.7 8.8 98 62 42 12 13 16 0.0 0.0 0.0 3 2
ITC ADD 440 460 4 5,498 65.8 12,428 16 18 19 27 25 23 7.8 7.4 7.1 21 19 17 28 29 31 3.2 3.4 3.7 134 80
Jyothy Labs SELL 457 420 (8) 168 2.0 367 10 11 13 44 40 36 9.5 8.5 7.5 34 30 27 23 22 22 1.0 1.2 1.3 6 3
Marico REDUCE 584 565 (3) 755 9.0 1,290 11 13 14 51 46 42 19.6 18.3 17.0 37 33 30 39 41 42 1.6 1.8 2.0 10 6
Nestle India ADD 2,509 2,550 2 2,419 29.0 964 41 36 41 62 70 61 72.4 49.5 37.2 42 47 41 135 84 69 1.3 0.8 1.0 32 19
Sula Vineyards ADD 537 640 19 45 0.5 84 11 13 15 49 42 36 7.5 6.6 5.9 26 23 20 16 17 17 0.5 0.6 0.8 8 4
Tata Consumer Products ADD 1,099 1,150 5 1,048 12.5 983 16 17 21 71 65 53 6.5 5.4 5.2 46 35 30 9 9 10 0.7 0.8 0.9 29 16
United Breweries ADD 2,005 1,875 (6) 530 6.3 264 18 30 38 112 67 53 12.5 11.4 10.4 67 42 34 12 18 20 0.7 1.1 1.4 7 3
United Spirits ADD 1,202 1,160 (4) 875 10.5 727 16 19 22 76 62 55 12.3 11.2 10.3 50 42 37 17 19 19 0.2 0.8 1.0 13 7
Varun Beverages ADD 1,443 1,400 (3) 1,875 22.4 1,299 16 21 26 91 70 55 27.0 20.2 15.3 53 40 32 34 33 32 0.2 0.2 0.2 37 22
Consumer Staples Attractive 23,308 279.1 47.7 43.7 39.0 12.0 11.0 10.2 34.5 31.0 27.5 25 25 26 1.7 1.7 1.9 397 236
Diversified Financials
360 One ADD 749 850 13 269 3.2 355 23 24 30 33 32 25 7.8 7.3 6.8 — — — 25 24 28 2.3 2.4 3.0 8 5
Aavas Financiers BUY 1,594 2,100 32 126 1.5 79 62 74 90 26 22 18 3.3 2.9 2.5 — — — 14 14 15 0.0 0.0 0.0 11 6
ABSL AMC ADD 534 580 9 154 1.8 288 27 28 30 20 19 18 4.9 4.4 4.0 — — — NM NM NM 3.0 3.1 3.4 2 1
Aptus Value Housing Finance ADD 323 370 15 161 1.9 499 12 14 17 26 23 19 4.3 3.8 3.3 — — — 17 18 18 1.2 1.3 1.5 3 2
Bajaj Finance NR 6,873 - - 4,254 50.9 618 234 286 362 29 24 19 5.5 4.6 3.8 — — — 22 21 22 0.3 0.5 0.7 118 59
Bajaj Finserv ADD 1,615 1,825 13 2,577 30.9 1,593 51 60 70 32 27 23 5.0 4.2 3.5 — — — 17 17 17 0.1 0.1 0.1 28 13
Cholamandalam ADD 1,306 1,375 5 1,097 13.1 840 41 50 61 32 26 21 5.8 4.9 3.9 — — — 20 19 19 0.1 0.1 0.3 24 14
Computer Age Management Services REDUCE 3,180 3,100 (3) 156 1.9 49 71 86 99 45 37 32 17.1 14.6 12.5 — — — 41 42 42 1.4 1.7 2.0 14 7
CRISIL SELL 4,283 3,700 (14) 313 3.8 73 90 101 114 48 42 38 15.6 13.9 12.5 — — — 33 32 32 1.3 1.5 1.7 4 2
Five Star Business Finance ADD 771 875 13 226 2.7 291 29 35 44 27 22 18 4.3 3.6 3.0 — — — 18 18 19 — — — 6 3
HDFC AMC REDUCE 3,765 3,650 (3) 804 9.6 213 91 104 115 41 36 33 11.4 10.7 10.0 — — — 29 30 32 1.9 2.2 2.4 23 10
Home First Finance BUY 878 1,200 37 78 0.9 88 34 40 50 26 22 17 3.7 3.2 2.7 — — — 15 16 17 — — 0.6 2 1
ICRA REDUCE 5,060 5,150 2 49 0.6 10 153 175 198 33 29 26 4.6 4.3 4.1 — — — 14 15 16 — — 0 0 0
India Shelter BUY 577 685 19 62 0.7 106 25 30 39 23 19 15 2.7 2.3 2.0 — — — 14 13 14 — — — 1 1
Kfin Technologies REDUCE 761 700 (8) 130 1.6 171 14 17 21 53 44 37 11.4 10.1 8.9 — — — 19 20 20 1— 0.9 1 6 3
L&T Finance Holdings SELL 161 140 (13) 401 4.8 2,480 9 12 14 17 14 12 1.7 1.6 1.4 — — — 10 12 13 1.6 2.2 2.6 10 4
LIC Housing Finance BUY 623 725 16 343 4.1 550 86 84 83 7 7 8 1.3 1.2 1.1 — — — 16 14 12 2.2 2.2 2.1 18 8
Mahindra & Mahindra Financial ADD 257 285 11 317 3.8 1,234 14 20 24 18 13 11 1.9 1.7 1.5 — — — 10 13 14 2.5 1.6 1.9 12 6
Muthoot Finance ADD 1,676 1,620 (3) 673 8.1 401 101 120 143 17 14 12 2.8 2.4 2.1 — — — 18 18 19 1.2 1.4 1.7 14 6
Nippon AMC ADD 575 610 6 362 4.3 630 18 19 21 33 30 27 9.1 8.8 9.1 — — — 30 30 33 2.9 3.0 3.3 7 4
SBFC REDUCE 81 90 11 87 1.0 1,107 2 3 4 37 26 20 3.6 3.1 2.7 — — — 11 12 13 0.0 0.0 0.0 6 3
Shriram Finance BUY 2,486 3,000 21 934 11.2 376 191 232 278 13 11 9 2.0 1.7 1.5 — — — 16 17 17 1.2 1.4 1.7 48 27
UTI AMC REDUCE 909 950 5 116 1.4 127 60 45 47 15 20 19 2.6 2.6 2.5 — — — 19 13 13 5.2 4.0 4.1 2 1
Diversified Financials Attractive 13,689 163.9 24.6 20.8 17.5 4.0 3.5 3.0 16.3 16.7 17.0 0.8 0.9 1.0 369 187
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Electric Utilities
CESC SELL 142 115 (19) 189 2.3 1,326 10 12 13 14 12 11 1.4 1.3 1.2 7 7 6 11 12 12 3.2 3.0 3.3 11 5
JSW Energy SELL 584 275 (53) 1,021 12.2 1,744 10 15 20 56 38 30 4.6 3.6 3.3 23 16 14 9 11 12 0.3 0.3 0.3 27 11
NHPC SELL 97 60 (38) 975 11.7 10,045 4 5 6 24 19 16 2.5 2.4 2.2 26 12 10 11 13 14 2.2 2.8 3.2 134 38
NTPC SELL 349 270 (23) 3,386 40.5 9,895 20 22 24 17.8 15.6 14 2.1 2.0 1.8 11 10 9 12 13 13 2.0 2.3 2.4 72 39
Power Grid SELL 295 240 (19) 2,746 32.9 9,301 18 18 19 16.5 16.1 15 3.0 2.8 2.6 9 9 8 19 18 18 3.6 3.7 3.9 77 43
Tata Power SELL 436 240 (45) 1,394 16.7 3,196 11 10 13 41 44 33 4.3 3.9 3.5 16 16 14 11 9 11 — — — 95 32
Electric Utilities Cautious 9,711 116.3 20.8 18.7 16.9 2.7 2.5 2.3 12.0 10.6 9.6 13.0 13.2 13.5 2.1 2.2 2.4 416 168
Electronic Manufacturing Services
Amber Enterprises ADD 3,978 4,000 1 134 1.6 34 50 80 104 79 50 38 6.4 5.7 5.0 29 22 18 8 12 14 0.0 0.0 0.0 9 3
Avalon Technologies SELL 515 410 (20) 34 0.4 65 4 10 14 118 51 38 5.9 5.3 4.7 54 32 22 5 11 13 0.0 0.0 0.0 1 1
Cyient DLM SELL 663 570 (14) 53 0.6 79 8 16 20 86 43 34 5.8 5.1 4.4 44 30 22 7 12 13 0.0 0.0 0.0 4 2
Dixon Technologies SELL 8,304 5,800 (30) 497 5.9 59 67 126 163 124.2 65.7 51 29.3 19.9 14.0 69 38 29 27 36 32 0.0 0.0 0.0 31 10
Kaynes Technology ADD 2,461 2,850 16 157 1.9 58 24 31 49 101.8 79.8 50 5.7 5.3 4.7 58 42 28 9 8 11 0.0 0.0 0.0 8 5
Syrma SGS Technology REDUCE 475 500 5 84 1.0 176 7 11 16 64 42 29 5.0 4.5 3.9 40 26 19 8 11 14 — — — 4 2
Electronic Manufacturing Services Cautious 959 11.5 99.8 58.1 43.0 10.2 8.7 7.2 51.5 32.8 24.8 10.2 14.9 16.7 0.0 0.0 0.0 57 24
Fertilizers & Agricultural Chemicals
Bayer Cropscience SELL 5,389 5,190 (4) 242 2.9 45 181 204 226 30 26 24 8.5 8.1 7.7 21 18 17 29 32 33 2.9 3.2 3.6 1 1
Godrej Agrovet ADD 567 600 6 108 1.3 192 18 23 30 32 24 19 3.7 3.4 3.0 19 15 11 12 14 17 1.3 1.7 2.2 1.1 0.7
Rallis India SELL 270 200 (26) 52 0.6 195 8 9 11 36 29 25 2.9 2.7 2.5 17 14 12 8 9 10 0.9 1.1 1.3 5 2
UPL SELL 476 390 (18) 356 4.3 751 (18) 8 28 NM 57 17 1.4 1.4 1.3 13 8 6 NM 3 8 1.1 1.1 1.1 25 11
Fertilizers & Agricultural Chemicals Cautious 758 9.1 610.5 32.8 19.1 2.3 2.2 2.1 15.2 10.1 8.0 0.4 6.9 10.9 1.7 1.8 2.0 33 15
Gas Utilities
GAIL (India) SELL 193 150 (22) 1,267 15.2 6,575 14 14 15 13 13 13 2.1 2.0 1.9 11 10 10 16 15 14 3.9 4.2 4.4 51 22
GSPL REDUCE 291 360 24 164 2.0 564 23 13 12 13 22 24 1.6 1.6 1.6 6 11 12 13 7 7 2.8 3.1 3.1 12 6
Indraprastha Gas SELL 437 375 (14) 306 3.7 700 29 28 29 15 16 15 3.7 3.3 3.0 11 11 11 27 22 21 2.3 2.4 2.5 15 7
Mahanagar Gas SELL 1,338 1,050 (22) 132 1.6 99 131 93 90 10 14 15 2.6 2.4 2.1 7 9 9 28 17 15 3.2 2.4 2.4 11 4
Petronet LNG SELL 298 190 (36) 446 5.3 1,500 24 21 22 12 14 14 2.5 2.2 1.9 7 9 9 22 17 15 3.4 1.7 0.8 27 12
Gas Utilities Cautious 2,316 27.7 13.1 14.2 14.0 2.3 2.1 2.0 9.5 9.8 9.7 17.5 14.9 14.0 3.5 3.3 3.3 115 52
Health Care Services
Apollo Hospitals ADD 5,900 6,600 12 848 10.2 144 63 113 143 94 52 41 12.1 10.1 8.3 36 27 21 14 21 22 0.1 0.2 0.3 42 22
Aster DM Healthcare ADD 342 375 10 171 2.0 498 7 13 17 46 26 20 3.6 3.2 2.8 10 8 7 8 13 15 — — — 17 9
Dr Lal Pathlabs ADD 2,323 2,500 8 194 2.3 83 43 51 58 54 46 40 10.5 9.5 8.6 30 26 22 21 22 22 1.0 1.2 1.3 7 3
Global Health REDUCE 1,401 1,160 (17) 376 4.5 268 18 22 28 77 64 50 13.2 11.2 9.4 43 36 29 18 19 20 0.2 0.2 0.3 10 6
KIMS ADD 2,059 2,275 11 165 2.0 80 41 54 68 50 38 30 8.2 6.8 5.5 27 21 17 18 19 20 0.0 0.0 0.0 3 2
Max Healthcare REDUCE 805 705 (12) 783 9.4 971 13 16 20 60 51 40 8.3 7.2 6.2 41 34 27 15 15 17 0.1 0.2 0.2 30 19
Metropolis Healthcare REDUCE 1,779 1,600 (10) 91 1.1 51 27 41 49 67 44 36 8.4 7.5 6.6 32 24 20 13 18 20 0.4 0.7 0.8 8 3
Narayana Hrudayalaya ADD 1,279 1,365 7 261 3.1 204 41 43 51 31 29 25 8.8 6.8 5.3 22 19 16 33 26 24 — — — 6 4
Rainbow Children's Medicare ADD 1,450 1,215 (16) 147 1.8 102 21 26 30 69 55 48 11.9 10.1 8.6 35 28 24 19 20 19 0.3 0.3 0.4 5 3
Health Care Services Neutral 3,036 36.4 61.4 45.9 36.9 9.2 7.8 6.6 30.1 24.2 19.6 15.0 17.0 17.9 0.2 0.2 0.3 128 70
Hotels & Restaurants
Chalet Hotels ADD 878 900 3 191 2.3 218 13 21 32 67 42 28 6.8 5.8 4.8 35 23 17 13 15 19 0.0 0.0 0.0 4 2
Devyani International ADD 162 178 10 195 2.3 1,204 1 1 2 177 173 107 18.0 17.1 15.9 32 23 19 11 10 15 0.0 0.0 0.0 7 4
Indian Hotels ADD 566 640 13 806 9.6 1,423 9 14 18 64 40 32 8.5 7.2 6.0 36 25 20 14 20 21 0.3 0.4 0.4 27 13
Jubilant Foodworks REDUCE 480 480 (0) 317 3.8 660 4 5 6 124 101 75 13.7 12.4 11.0 29 25 21 11 13 16 0.3 0.3 0.4 18 10
Lemon Tree Hotels REDUCE 150 130 (13) 119 1.4 792 2 5 6 61 30 24 12.8 10.2 8.2 25 14 12 22 38 38 0.9 1.2 1.4 8 4
Restaurant Brands Asia REDUCE 103 105 2 51 0.6 495 (1) (1) (1) NM NM NM 2.8 2.8 2.9 21 17 13 NM NM NM 0.0 0.0 0.0 3 2
Samhi Hotels BUY 186 270 45 41 0.5 218 (8) 6 10 NM 32 19 4.0 3.6 3.1 21 13 11 NM 12 17 0.0 0.0 0.0 5
Sapphire Foods BUY 1,413 1,730 22 90 1.1 64 5 4 8 260 336 174 7.0 6.8 6.6 19 17 14 3 2 4 0.0 0.0 0.0 4 2
Westlife Foodworld REDUCE 886 745 (16) 138 1.7 156 5 5 8 190 191 114 22.1 20.2 17.7 38 34 27 12 11 17 0.0 0.0 0.0 2 1
Hotels & Restaurants Attractive 1,948 23.3 98.3 56.1 41.6 9.1 8.0 6.9 30.8 22.4 18.1 9.3 14.3 16.7 0.2 0.3 0.3 78 37
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Insurance
HDFC Life Insurance BUY 552 775 40 1,188 14.2 2,020 7 9 10 76 61 53 8.1 7.6 7.2 — — — 11 13 14 0.3 0.4 0.5 39 22
ICICI Lombard REDUCE 1,685 1,550 (8) 830 9.9 493 39 50 60 43 33 28 6.9 5.9 5.0 — — — 17 19 19 0.4 0.5 0.5 20 12
ICICI Prudential Life BUY 578 685 19 833 10.0 1,441 6 6 7 98 90 80 7.6 7.2 6.7 — — — 8 8 9 0.6 0.6 0.6 16 8
LIC BUY 922 1,300 41 5,829 69.8 6,325 55 50 53 17 18 17 8.0 6.1 4.8 — — — 59 37 31 — — — 59 23
Max Financial Services BUY 970 1,225 26 335 4.0 345 2 2 2 585 520 453 — — — — — — 1 1 1 — — — 16 9
PB Fintech ADD 1,244 950 (24) 561 6.7 455 1 7 13 1,130 187 95 — — — 1 5 9 — — — 28 16
SBI Life Insurance BUY 1,450 1,700 17 1,452 17.4 1,005 19 20 23 77 72 64 10.0 8.9 8.0 — — — 14 13 13 0.2 0.2 0.2 24 13
Star Health and Allied Insurance ADD 540 625 16 316 3.8 585 14 18 22 37 29 24 5.0 4.3 3.6 — — — 14 16 16 — — — 6 4
Insurance Attractive 11,345 135.8 27.0 28.0 25.7 7.9 6.5 5.5 29 23 21 0.1 0.1 0.1 207 107
Internet Software & Services
Cartrade Tech SELL 848 530 (38) 40 0.5 51.5 3 14 16 305 59 53 2.1 2.0 2.0 43 33 27 0.7 3.5 3.8 0.0 0.0 0.0 3 1
FSN E-commerce Ventures ADD 172 165 (4) 490 5.9 2,875.0 0 1 2 774 201 109 34.5 29.5 23.2 147 80 53 4.5 15.8 24 — — — 13 6
Indiamart SELL 2,755 2,450 (11) 165 2.0 59.9 60 69 82 46 40 34 9.3 7.6 6.2 40 32 26 18.9 21 20 0.1 0.1 0.1 8 4
Info Edge ADD 5,885 6,300 7 761 9.1 129.0 65 71 86 91 83 69 6.6 6.2 5.9 75 67 55 7.5 7.8 8.8 0.3 0.3 0.4 21 10
Just Dial BUY 1,026 1,150 12 87 1.0 85.0 43 55 63 24 19 16 2.2 1.9 1.7 19 11 8 9.4 11.1 11.2 — — — 11 4
Zomato BUY 191 230 20 1,689 20.2 9,131 0 2 4 557 86 45 8.6 7.7 6.5 2,037 88 43 1.6 9.4 15.6 0.0 0.0 0.0 122 70
Internet Software & Services Attractive 3,232 38.7 165 78 50 7.9 7.1 6.2 148 69 43 4.8 9.1 12.6 0.1 0.1 0.1 176 95
IT Services
Cyient BUY 1,794 2,275 27 199 2.4 111 66 79 91 27 23 20 4.4 3.9 3.5 15 13 11 18 18 19 1.7 2.2 2.7 10 6
HCL Technologies ADD 1,331 1,600 20 3,612 43.2 2,716 58 62 69 23 22 19 5.3 5.2 4.9 14 13 12 24 24 26 3.9 4.1 4.4 62 38
Infosys BUY 1,441 1,750 21 5,981 71.6 4,146 59 63 71 25 23 20 6.8 6.3 5.9 16 15 13 30 28 30 3.2 3.3 3.7 139 88
KPIT Technologies SELL 1,510 1,050 (30) 414 5.0 273 21 27 37 71 55 41 19.1 14.9 11.7 41 33 25 30 30 32 0.4 0.6 0.7 23 11
L&T Technology Services SELL 4,505 4,400 (2) 476 5.7 106 123 129 149 36 35 30 8.9 7.8 6.9 23 23 20 25 24 24 0.9 1.1 1.2 12 5
LTIMindtree REDUCE 4,699 4,800 2 1,392 16.7 296 155 168 201 30 28 23 6.9 6.1 5.4 20 19 16 25 23 24 1.4 1.7 1.9 29 17
Mphasis REDUCE 2,287 2,400 5 432 5.2 189 82 90 103 28 26 22 4.9 4.7 4.4 17 16 14 19 19 20 2.4 2.8 3.1 16 7
Persistent Systems REDUCE 3,362 3,450 3 518 6.2 155 74 84 106 46 40 32 10.5 9.0 7.6 30 26 20 26 24 26 0.8 0.9 1.1 28 13
RateGain ADD 670 900 34 79 0.9 119 13 16 22 53 41 31 5.2 4.8 4.1 36 27 20 13 12 14 0.0 0.0 0.0 5 2
Tata Elxsi SELL 7,138 5,400 (24) 445 5.3 62 127 138 166 56 52 43 17.7 15.7 13.7 41 37 31 35 32 34 1.0 1.2 1.4 14 7
Tata Technologies SELL 1,039 700 (33) 422 5.0 406 17 21 25 61 51 42 13.1 11.6 10.2 44 35 29 22 24 26 1.0 1.0 1.2 20 10
TCS ADD 3,979 4,300 8 14,396 172.4 3,619 130 142 157 31 28 25 15.4 14.0 12.6 22 20 18 50 53 52 1.5 2.9 3.2 146 85
Tech Mahindra REDUCE 1,292 1,220 (6) 1,137 13.6 890 32 46 61 41 28 21 4.3 4.3 4.1 22 16 12 10 15 20 2.6 3.0 3.1 35 18
Wipro SELL 464 440 (5) 2,425 29.0 5,231 21 24 25 22 20 18 3.3 2.8 2.5 13 11 10 14 15 15 0.2 0.2 1.9 44 18
IT Services Neutral 31,928 382.3 28.5 25.9 22.9 7.9 7.2 6.6 18.6 17.0 15.1 27.8 28.0 28.9 1.9 2.6 3.0 582 325
Media
PVR INOX ADD 1,307 1,500 15 128 1.5 98 11 28 43 118 47 31 1.5 1.5 1.4 20 14 11 1 3 5 0.1 0.2 0.3 10 5
Sun TV Network BUY 634 725 14 250 3.0 394 49 52 55 13 12 12 2.4 2.2 2.1 9 8 7 20 19 19 3.9 4.3 4.7 5 2
Zee Entertainment Enterprises SELL 134 150 12 128 1.5 960 7 7 9 20 18 15 1.2 1.2 1.1 13 10 9 6 7 8 2.2 3.0 3.0 50 21
Media Attractive 506 6.1 18.9 16.7 14.6 1.7 1.6 1.6 11.6 9.9 8.6 9.1 9.9 10.7 2.5 3.0 3.2 65 28
Metals & Mining
Gravita India BUY 907 1,225 35 63 0.7 69 35 44 54 26 21 17 7.5 5.7 4.4 20.3 15.4 12.5 34 31 30 0.6 0.7 0.9 2 1
Hindalco Industries ADD 620 675 9 1,394 16.7 2,220 44 53 56 14 12 11 1.3 1.2 1.1 6.9 6.1 5.6 10 11 10 0.7 0.8 0.9 63 32
Hindustan Zinc SELL 446 310 (30) 1,884 22.6 4,225 18 23 23 24 19 19 12.4 12.4 12.4 13.7 11.3 11.0 55 65 65 2.9 5.2 5.2 12 6
Jindal Steel and Power BUY 924 900 (3) 943 11.3 1,020 49 62 86 19 15 11 2.2 1.9 1.7 9.8 8.4 6.4 12 14 17 0.3 0.7 1.4 25 9
JSW Steel REDUCE 857 860 0 2,097 25.1 2,417 48 66 85 18 13 10 2.7 2.3 1.9 9.2 7.4 6.1 16 19 21 0.8 1.2 1.5 28 11
National Aluminium Co. SELL 177 130 (26) 324 3.9 1,837 9 14 15 19 13 12 2.3 2.1 1.9 10.7 7.5 7.1 12 17 16 2.1 3.2 3.4 57 18
NMDC SELL 261 195 (25) 764 9.2 2,931 22 18 19 12 14 14 3.0 2.7 2.4 8.1 9.6 9.0 26 20 19 4.2 3.5 3.7 60 25
SAIL SELL 156 70 (55) 645 7.7 4,130 4 6 7 36 27 23 1.1 1.1 1.1 10.6 9.9 9.5 3 4 5 1.0 1.3 1.5 97 30
Tata Steel REDUCE 164 140 (15) 2,050 24.6 12,224 4 10 16 43 17 10 2.0 1.9 1.6 11.7 8.5 6.6 5 11 17 0.6 1.5 2.4 109 40
Vedanta SELL 396 320 (19) 1,472 17.6 3,717 4 28 31 102 14 13 4.8 4.5 4.1 6.1 5.6 5.1 4 32 33 7.4 5.5 5.9 73 31
Metals & Mining Cautious 11,635 139.3 23.1 15.2 12.4 2.5 2.3 2.0 9.0 7.7 6.6 10.8 14.9 16.4 2.2 2.6 2.9 525 202
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Oil, Gas & Consumable Fuels
BPCL SELL 604 440 (27) 1,311 15.7 2,129 133 52 54 5 12 11 1.9 1.8 1.6 3.4 7.3 7.1 47 16 15 10.0 3.9 4.1 75 26
Coal India SELL 456 375 (18) 2,810 33.6 6,163 61 46 49 8 10 9 3.4 2.9 2.5 7.2 8.6 7.6 53 32 29 5.6 5.5 5.5 73 29
HPCL SELL 514 320 (38) 729 8.7 1,419 104 59 60 5 9 9 2.0 1.8 1.6 5.3 8.5 8.5 46 22 19 8.1 4.6 4.7 54 19
IOCL SELL 160 105 (34) 2,259 27.1 14,121 28 14 15 6 11 10 1.3 1.2 1.1 4.0 6.6 6.1 25 11 11 7.3 3.7 4.0 78 30
Oil India REDUCE 637 475 (25) 690 8.3 1,084 63 62 66 10 10 10 1.8 1.6 1.5 8.4 7.8 7.1 19 17 16 2.4 3.2 3.6 50 15
ONGC REDUCE 274 250 (9) 3,442 41.2 12,580 41 42 40 7 6 7 1.1 1.0 0.9 3.8 3.8 3.7 17 16 14 4.5 4.9 4.6 67 29
Reliance Industries ADD 2,803 3,200 14 18,965 227.1 6,766 103 125 139 27 22 20 2.4 2.2 2.0 13.3 11.1 9.6 9 10 10 — 0.4 0.4 208 118
Oil, Gas & Consumable Fuels Neutral 30,207 361.7 12.2 14.3 13.5 2.0 1.8 1.7 7.6 8.2 7.4 16.4 12.7 12.2 2.5 1.9 1.9 606 266
Pharmaceuticals
Aurobindo Pharma REDUCE 1,124 1,000 (11) 659 7.9 586 56 67 77 20 17 15 2.3 2.1 1.9 11 9 8 12 13 13 1.3 1.6 1.9 28 13
Biocon REDUCE 295 260 (12) 354 4.2 1,202 2 8 15 125 38 20 1.6 1.5 1.4 17 13 10 1 4 7 1.1 0.9 1.8 30 12
Blue Jet Healthcare ADD 380 410 8 66 0.8 173 10 13 16 37 29 23 8.1 6.7 5.5 26 20 16 24 26 26 0.6 0.9 1.1 1
Cipla ADD 1,387 1,545 11 1,120 13.4 806 52 57 64 27 24 22 4.2 3.7 3.3 16 15 13 16 16 16 0.9 0.9 1.1 26 13
Concord Biotech REDUCE 1,557 1,450 (7) 163 2.0 105 30 37 47 52 42 33 10.7 9.0 7.5 37 30 24 22 23 25 0.5 0.6 0.8 2 1
Divis Laboratories SELL 3,890 3,025 (22) 1,038 12.4 265 60 79 101 65 49 39 7.7 7.2 6.5 46 34 27 12 15 18 1.0 1.1 1.2 24 13
Dr Reddy's Laboratories REDUCE 6,258 5,935 (5) 1,044 12.5 166 335 351 349 19 18 18 3.7 3.1 2.7 13 11 11 22 19 16 0.6 0.7 0.7 28 15
Gland Pharma SELL 1,711 1,400 (18) 282 3.4 164 51 63 70 34 27 24 3.2 2.9 2.6 19 15 13 10 11 11 - - - 11 6
Glenmark Life Sciences BUY 830 900 8 102 1.2 123 38 44 50 22 19 17 4.4 3.9 3.5 15 13 11 21 22 22 2.7 2.8 2.9 2 1
Laurus Labs SELL 431 300 (30) 231 2.8 536 3 8 13 144 53 34 5.6 5.1 4.4 33 22 17 4 10 14 0.4 - - 11 5
Lupin SELL 1,611 1,400 (13) 734 8.8 455 46 54 62 35 30 26 5.1 4.5 3.9 19 16 14 16 16 16 0.2 0.6 0.7 24 13
Mankind Pharma ADD 2,217 2,275 3 888 10.6 401 46 56 69 49 39 32 10.1 8.5 7.1 35 28 23 22 23 24 0.5 0.6 0.8 20 12
Sun Pharmaceuticals ADD 1,515 1,455 (4) 3,636 43.5 2,399 39 48 56 39 31 27 5.8 5.0 4.4 26 21 18 16 17 17 0.6 0.6 0.7 52 33
Torrent Pharmaceuticals REDUCE 2,619 2,325 (11) 886 10.6 338 47 62 77 56 42 34 11.7 9.5 7.7 26 22 19 23 25 25 0.3 0.4 0.5 8 4
Pharmaceuticals Neutral 11,203 134.2 35.3 29.1 25.0 4.8 4.3 3.8 21.2 17.8 15.2 13.7 14.7 15.1 0.5 0.6 0.7 267 142
Real Estate
Brigade Enterprises ADD 1,094 1,025 (6) 253 3.0 231 13 27 35 87 40 32 7.3 6.3 5.3 29 16 13 9 17 18 0.2 0.2 0.2 5 3
Brookfield India Real Estate Trust ADD 253 290 14 111 1.3 439 0 10 15 1,232 25 17 1.1 1.2 1.2 17 12 11 NM 3 5 7.6 9.2 10.0 1 1
DLF ADD 856 840 (2) 2,119 25.4 2,475 10 16 23 84 53 38 5.3 4.9 4.4 114 80 46 7 10 12 0.2 0.2 0.2 47 20
Embassy Office Parks REIT RS 345 - (100) 327 3.9 948 9 11 13 37 33 27 1.4 1.5 1.5 17 14 13 4 4 6 6.2 6.5 6.8 5 4
Godrej Properties SELL 2,781 1,780 (36) 773 9.3 278 27 38 54 104 74 51 7.7 7.0 6.2 (644) 255 159 8 10 13 — — — 28 10
Macrotech Developers ADD 1,118 1,260 13 1,112 13.3 995 17 40 48 67 28 23 6.4 5.2 4.2 43 21 17 11 20 20 — — — 17 11
Mindspace REIT ADD 352 390 11 209 2.5 593 9 11 13 37 31 27 1.5 1.5 1.5 16 14 13 4 5 6 5.9 6.2 6.7 1 0
Nexus Select Trust ADD 132 145 10 200 2.4 1,515 4 5 6 31 26 23 6.9 8.8 12.3 15 14 13 25 29 45 7.0 7.1 7.5 1 0
Oberoi Realty REDUCE 1,470 1,245 (15) 534 6.4 364 47 54 90 31 27 16 3.8 3.4 2.8 22 18 11 13 13 19 0.1 0.1 0.1 12 6
Phoenix Mills REDUCE 2,975 2,495 (16) 532 6.4 179 62 84 97 48 35 31 5.6 4.9 4.2 26 18 16 12 15 15 0.1 0.1 0.2 20 11
Prestige Estates Projects ADD 1,471 1,160 (21) 590 7.1 401 31 11 17 48 130 85 5.3 5.1 4.8 33 26 20 12 4 6 0.1 0.1 0.1 14 9
Signature Global SELL 1,241 1,175 (5) 174 2.1 141 13 38 27 97 32 46 21.0 12.7 10.0 76 26 31 41 49 25 — — — 9 2
Sobha SELL 1,821 1,050 (42) 173 2.1 95 15 50 45 120 36 41 6.6 5.7 5.1 45 19 21 6 17 13 0.2 0.2 0.3 7 3
Sunteck Realty BUY 415 550 33 61 0.7 140 19 22 60 21 19 7 1.9 1.7 1.4 18 15 6 9 10 22 0.2 0.2 0.2 2 1
Real Estate Attractive 7,167 85.8 60.2 40.8 30.7 4.4 4.1 3.8 38.0 25.9 19.8 7.3 10.1 12.3 0.9 0.9 1.0 169 80
Retailing
Avenue Supermarts SELL 4,660 3,800 (18) 3,033 36.3 651 39 51 63 120 92 74 16.2 13.8 11.6 74 58 47 15 16 17 — — — 24 14
Metro Brands REDUCE 1,067 1,125 5 290 3.5 272 12 16 20 87 67 54 16.4 13.9 11.8 40 33 27 20 23 23 — 1— 0.6 4 2
Titan Company ADD 3,271 3,600 10 2,904 34.8 888 39 47 57 83 69 57 30.9 23.5 18.2 56 47 39 33 39 36 0.3 0.4 0.5 48 27
Trent ADD 4,504 4,600 2 1,601 19.2 356 25 50 70 178 90 65 39.4 27.6 19.3 83 58 42 27 36 35 — — — 57 28
Retailing Neutral 6,227 93.7 107.9 80.7 64.4 23.1 18.5 14.8 65.4 52.0 41.9 21 23 23 0.1 0.2 0.2 134 71
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Specialty Chemicals
Aarti Industries SELL 720 480 (33) 260 3.1 363 11 15 20 64 48 36 5.0 4.6 4.1 29 23 18 8 10 12 0.2 0.3 0.6 13 5
Atul SELL 6,121 3,970 (35) 180 2.2 29 110 166 198 56 37 31 3.5 3.3 3.0 26 18 16 7 9 10 0.3 0.5 0.6 5 2
Castrol India SELL 194 175 (10) 191 2.3 989 9 10 11 22 20 18 9.0 8.3 7.6 15 14 12 43 44 44 3.9 4.1 4.4 15 6
Clean Science & Technology ADD 1,301 1,540 18 138 1.7 106 22 30 51 58 43 25 11.5 9.4 7.2 42 31 19 22 24 32 0.3 0.4 0.7 2 1
Deepak Nitrite REDUCE 2,514 2,190 (13) 343 4.1 136 56 65 81 45 39 31 7.2 6.2 5.2 31 28 24 17 17 18 0.3 0.2 0.3 10 4
Navin Fluorine REDUCE 3,377 2,970 (12) 167 2.0 50 44 49 92 77 69 37 7.0 6.5 5.6 45 39 24 10 10 16 0.4 0.3 0.4 11 6
Neogen Chemicals BUY 1,495 1,870 25 39 0.5 26 14 25 50 107 60 30 5.0 4.8 4.2 39 32 20 6 8 15 0.1 0.2 0.5 1 0
Pidilite Industries ADD 2,951 3,075 4 1,501 18.0 508 37 44 51 80 67 57 18.3 16.3 14.5 54 46 40 24 26 27 0.6 0.8 1.0 15 9
PI Industries ADD 3,520 3,830 9 532 6.4 152 108 114 128 33 31 28 6.2 5.3 4.5 26 22 20 21 18 18 0.4 0.4 0.6 17 10
SRF BUY 2,417 2,660 10 716 8.6 296 45 64 95 54 38 25 6.3 5.6 4.7 28 21 15 12 16 20 0.5 0.6 — 15 8
Vinati Organics SELL 1,600 1,100 (31) 166 2.0 104 29 38 48 55 42 33 6.3 5.6 4.9 37 29 22 13 14 16 0.3 0.4 0.5 2 1
Specialty Chemicals Neutral 4,234 50.7 53.0 43.2 34.0 8.1 7.2 6.2 33.6 27.5 22.2 15.3 16.5 18.3 0.6 0.7 0.8 105 52
Telecommunication Services
Bharti Airtel ADD 1,286 1,200 (7) 7,647 91.6 5,967 21 39 52 60 33 25 8.8 6.7 5.4 11 9 7 15 23 24 0.4 0.4 0.5 104 65
Indus Towers REDUCE 338 350 3 911 10.9 2,695 22 24 27 15 14 13 3.4 2.7 2.4 7 6 5 25 21 20 - 2.1 5.2 75 33
Vodafone Idea RS 12 — — 823 9.9 67,879 (7) (4) (4) NM NM NM NM NM NM 20 17 16 NM NM NM — — — 140 37
Tata Communications SELL 1,720 1,525 (11) 490 5.9 285 42 47 64 41 37 27 27.4 18.7 12.6 14 12 10 73 61 56 1.0 1.1 1.5 19 8
Telecommunication Services Attractive 9,871 118.2 NM 490.9 76.2 95 26 23 12.1 9.9 8.4 NM 5.3 30 0.4 0.6 0.9 338 144
Transportation
Adani Ports and SEZ BUY 1,288 1,550 20 2,782 33.3 2,160 42 49 61 31 26 21 5.3 4.5 3.8 20 17 14 18 18 19 0.2 0.4 0.6 60 24
Container Corp. SELL 1,002 720 (28) 611 7.3 609 21 25 29 47 40 35 5.2 4.9 4.6 29 25 22 11 13 14 1.0 1.2 1.4 25 11
Delhivery BUY 447 570 27 330 3.9 749 (3) (0) 2 NM NM 195 3.6 3.5 3.4 225 66 38 NM NM 2 — — — 14 9
Gateway Distriparks ADD 102 119 17 51 0.6 500 5 6 7 19 17 14 2.6 2.3 2.1 14 11 9 14 15 16 1.7 1.8 2.0 1 1
GMR Airports SELL 79 63 (20) 477 5.7 6,036 (1) (0) 1 NM NM 137 NM NM NM 28 15 12 NM NM 25 — — — 38 16
Gujarat Pipavav Port REDUCE 202 167 (17) 97 1.2 483 8 10 11 24 20 18 4.0 3.8 3.6 15 13 11 17 19 21 2.8 3.3 3.7 19 7
InterGlobe Aviation BUY 3,949 4,700 19 1,524 18.2 383 189 180 211 21 22 19 151.8 19.1 5.0 8 6 5 NM 155 68 — — — 64 34
JSW Infrastructure SELL 243 205 (16) 510 6.1 2,119 6 7 9 43 34 28 6.4 5.6 20.8 26 24 21 20 17 19 0.2 0.6 0.7 17 9
Mahindra Logistics SELL 444 340 (23) 32 0.4 71 (8) 7 16 NM 63 29 6.4 5.9 5.1 17 12 9 NM 10 19 — — — 2 1
Transportation Attractive 6,413 76.8 35.1 30.3 24.3 7.2 5.9 4.9 17.1 13.9 11.5 20 19.6 20 0.3 0.4 0.5 241 110
KIE universe 284,788 3,410 25.6 23.5 20.5 4.0 3.6 3.2 15.2 13.9 12.2 15.8 15.4 15.7 1.2 1.4 1.5
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2024 means calendar year 2023, similarly for 2025 and 2026 for these particular companies.
(c) Exchange rate (Rs/US$)= 83.5
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DISCLAIMERS, DISCLOSURES & LEGAL

Distribution of ratings/investment banking relationships
Kotak Institutional Equities Research coverage universe
Percentage of companies covered by Kotak Institutional

70%
Equities, within the specified category.
60%
Percentage of companies within each category for which
Kotak Institutional Equities and or its affiliates has
50%
provided investment banking services within the previous
12 months.
40% * The above categories are defined as follows: Buy = We
31.9% 33.1% expect this stock to deliver more than 15% returns over
30% the next 12 months; Add = We expect this stock to deliver
5-15% returns over the next 12 months; Reduce = We
19.0% expect this stock to deliver -5-+5% returns over the next
20% 16.0% 12 months; Sell = We expect this stock to deliver less than
-5% returns over the next 12 months. Our target prices
10% 5.7% are also on a 12-month horizon basis. These ratings are
3.8% used illustratively to comply with applicable regulations. As
1.9% 1.9%
of 31/03/2024 Kotak Institutional Equities Investment
0%
Research had investment ratings on 263 equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities

As of March 31, 2024
Ratings and other definitions/identifiers
Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our Fair Value estimates are also on a 12-month horizon basis.Our Ratings System does not take into account short-term volatility in stock prices related
to movements in the market. Hence, a particular Rating may not strictly be in accordance with the Rating System at all times.
Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the
following designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable
regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or
strategic transaction involving this company and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a
sufficient fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in
effect for this stock and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.
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May 08, 2024 NIFTY50 [May 07]: 22,303

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Godrej Consumer Products (GCPL) BUY

Investor meet 2024 takeaways Company data and valuation summary

organic EBITDA growth (achieved ~20%+ growth; mid-20s excluding media

Jaykumar Doshi Umang Mehta Praneeth Reddy

4QFY24—A well-rounded quarter

Comments on 4QFY24 performance

Godrej Consumer Products

Investor Meet 2024 takeaways

Guidance for FY2025E and beyond, across businesses

Godrej Consumer Products

Godrej Consumer Products

Success stories in Indonesia and India on driving access

 Trials. GCPL achieved significant expansion in door-to-door sampling, with 10 mn households

Godrej Consumer Products

India’s K-shaped recovery poses peculiar challenges for India FMCG

 FY2025E strategy—GCPL’s 3-pronged strategy entails

Godrej Consumer Products

GCPL is launching premium innovations in India

GCPL is entering premium categories in India

Godrej Consumer Products

 Household insecticides is GCPL’s most profitable category globally. Management highlighted

Godrej Consumer Products

Molecule change had a meaningful impact on GCPL’s market share in HI in 2008

GCPL is planning to launch its RNF-molecule based LV in June 2024

Godrej Consumer Products

Godrej Consumer Products

Godrej Consumer Products

GCPL’s shift to EDLP helped achieve pricing parity across channels

Godrej Consumer Products

ROW business: aspirational EBITDA shape

External volatility cannot be wished away in ROW business

Godrej Consumer Products

▪ Focus on LT fundamentals. Business is also strengthening its LT fundamentals by improving

Godrej Consumer Products

Impairment. GCPL currently holds about Rs40 bn Goodwill/intangibles/assets pertaining GAUM/US

Godrej Consumer Products

Source: Company, Kotak Institutional Equities

Godrej Consumer Products

Source: Company, Kotak Institutional Equities

Revised Earlier Change (%)

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities

Godrej Consumer Products

GCPL’s geography-wise IBD revenue breakdown (Rs mn)

4QFY24 4QFY23 3QFY24

Source: Company, Kotak Institutional Equities

GCPL's geography-wise IBD margins including forex impact (%)

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

Godrej Consumer Products

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Godrej Consumer Products

Dr Reddy's Laboratories (DRRD) REDUCE

Muted end to the fiscal Company data and valuation summary

Alankar Garude, CFA Samitinjoy Basak Aniket Singh

DRRD—4QFY24 interim results

Segment wise sales

Source: Company, Kotak Institutional Equities estimates

Key highlights from DRRD’s 4QFY24 concall:

Outlook: DRRD expects to grow its domestic sales in double digits.