India

• Vedant Fashions, owner of India’s leading homegrown brand for premium ethnic wear for men – Manyavar, will launch its IPO on Feb 4th at a price range of Rs824-866/share.
• The USD420 mn IPO suggests an equity valuation of USD2.8 bn implying forward P/E of around 70X at a premium to apparel peers but in line with consumer good companies.
• The rapid growth in demand for premium ethnic-branded-wear for men have helped Vedant Fashions emerge as a segment leader with a pan India presence and attractive growth outlook.

• Coforge offers system integration, apps & BPO services to BFSI, travel & healthcare verticals.
• Revenues and PAT grew at a CAGR of ~12% each over the past five years
• Target Price and Valuation: We value Coforge at Rs 5870 i.e. 30x P/E on FY24E EPS

• IndusInd reported FY 3Q22 bottom-line results improved 4.8% linked quarter, driven by stronger core revenues and a lower provision;
• NCOs remain elevated and show no sign of abating, and net new NPLs increased 31.6% annualized; and
• IndusInd’s reserve needs to increase closer to 75% with a shortfall of INR 30 bn – representing two quarters of pre-tax results.

• Lodha Developers (LODHA IN), also known as Macrotech, announced last week the merger of its three listed subsidiaries into the parent entity.
• These three entities are namely National Standard India Ltd (NSIL), Roselabs Finance Ltd (RFL) and Sanathnagar Enterpriseses Ltd (SEL). All of them are listed on the BSE.
• However, when we look at the business and financials of these companies, the decision and the entire story-line along with swap ratio/valuation raises questions.

• Colgate Palmolive (India) (CLGT) reported an in-line quarter vs our estimates across key performance metrics
• Reported Revenue growth was 3.8% yoy at Rs. 1,271 Cr (our estimate Rs. 1,285 Cr) led by volume growth of 3% in our view (3% our estimate) and ~1% price/mix growth.
• Maintain BUY with revised TP of Rs. 1,650 (earlier Rs. 1,765) at 39x FY24E EPS.

• Infosys is India’s second-largest provider of consulting and IT services to clients across the globe
• It is also among the fastest-growing IT services organization in the world and leader in the offshore services space
•  The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clients

• Coforge Ltd (Coforge) Q3FY22 results stood below our expectations. The company’s revenue grew by 4.2% QoQ in CC terms to Rs 1,658 C
• Operating profits were reported at Rs 323 Cr, exhibiting a growth of 8.8% QoQ and operating margins witnessed a marginal growth of 90bps QoQ and stood at 19.5%
• We recommend a BUY rating on the stock and assign a 28x P/E multiple to its FY24E earnings of Rs 177.8/share which gives a TP of Rs 5,060 /share. TP implies an upside of 15% from CMP.

• Bharti Airtel (Airtel) is India’s second largest telecom operator with a revenue market share of ~36% as on Q2FY22
• The company has ~35.5 crore wireless customers in India (November, 2021) and ~12.9 crore subscribers across operations in 14 African countries.
• We remain constructive on Airtel and maintain BUY rating with a revised SOTP target price of Rs 860

• In a recent Insight, Regulating ESG Ratings in India: Outline of SEBI’s Proposed Regulatory Framework, I summarised SEBI’s proposed regulatory framework for ESG ratings in India.
• This Insight goes a bit further, looking at implications of regulation on stocks of ESG ratings providers (ERPs), especially Credit Rating Agencies (CRAs) and Research Analysts (RAs).
• Downside risk are minimal for ERPs, but a few scenarios and stipulations related to conflicts of interest and compensation (how ERPs are paid, and by whom) could have an impact.

• Can Fin Homes (CANF) reported encouraging numbers in Q3FY22 with the pick-up in loan growth led by higher disbursements, improved NIMs due to higher yields, and strong asset quality
• AUM grew 20% YoY/6% QoQ, led by higher disbursements (up 123% YoY/12% QoQ).
• We believe CANF has notable scope for expansion in valuations and we maintain a BUY with a revised target price of Rs 750.

• 3 Independent Directors of PTC India Financial Services (PTCIF IN) have resigned from their positions.
• The Company shows a pattern of poor Corporate Governance and Management has done little to resolve these issues.
• The shoddy governance practices range from appointment process of the CFO to the opaque barrier of communication between the management and the rest of the board.

• The review period for the March rebalance of the NIFTY Index (NIFTY INDEX) ends 31 January. We see 2 potential changes at the rebalance which should be announced end February.
• There is a high probability of Apollo Hospitals Enterprise (APHS IN) replacing Indian Oil Corp (IOCL IN), while there is a lower probability of Info Edge India replacing Coal India Ltd.
• The impact on the stocks is between 3-9 days of ADV, while the impact increases to between 9-22 days of delivery volume.

• Incorporated in 1959, Torrent has a strong presence in domestic and semi-regulated markets and a growing presence in regulated markets.
• Revenues – India including CRAMs (53%), Brazil (8%), US (16%) and Germany (13%)
• Target Price and Valuation: We value Torrent at Rs 3235 i.e. 28x P/E on FY24E EPS of Rs 115.5

• Cipla is a global pharma company with over 1,500+ products in 65 therapeutic categories, with over 50 dosage forms
• Cipla supplies branded and generic medicines to over 170 countries globally.
• Target Price and Valuation: We value Cipla at Rs 1100 i.e. 24x P/E on FY24E EPS of Rs 44.6 + | 31 NPV for gRevlimid.

Federal Bank: Federal Bank (FB)’s Q3FY22 earnings were broadly in line with our estimates as declining credit costs (64bps) were partially offset by muted reflation in asset yields and lower other income. Asset quality continues to be impressive with negative net slippages, stable credit costs at 64bps, and a steady restructured pool (2.6%). While loan growth witnessed healthy traction (+12% YoY), asset yields continue to be soft, which is likely to reflate only gradually through exercising of pricing power and growth in unsecured retail (credit cards, PL, MFI, etc.).

• Maruti Suzuki (MSIL) is the market leader in the domestic passenger vehicle (PV) space
• Market leader in each sub-segment – cars (62.2%), UV (21.6%), vans (96.6%)
• Target Price and Valuation: Introducing FY24E, we roll over our valuations and now value MSIL at Rs 8,760 i.e., 30x P/E on FY24E EPS (previous target Rs 6,000)

• Zensar Technologies (Zensar) offers application & IMS services to hi-tech, manufacturing, retail and BFSI.
• Zensar has grown organically and inorganically over the years
• Target Price and Valuation: We value Zensar at Rs 525 i.e. 20x P/E on FY24E

• Adani Wilmar (6596700Z IN) is looking to raise up to US$482m in its upcoming India IPO.
• In our view, we doubt that the firm would be able to trade close to its blue chip FMCG peers, given its small FMCG component combined with overall weaker margins.
• In this note, we will look at updates since our last note, undertake a peer comparison, and share our thoughts on valuation.

• We interact with Channels of Symphony Ltd (SYML IN) , Sheela Foam Ltd (SFL IN) , Relaxo Footwears (RLXF IN) to understand the demand environment and competitive positioning.
• Symphony Ltd (SYML IN) channels are reporting some market share loss, Sheela Foam Ltd (SFL IN) ‘s operating and competitive positioning is encouraging. 
• For Relaxo Footwears (RLXF IN) , school reopening could be possible upside catalysts. 

•  Vodafone Idea (VIL) is India’s third largest telecom operator with ~24.7 crore wireless customers in India
• Given the balance sheet stress and delayed 4G network expansion, it lags the key listed peers in terms of 4G network coverage, ARPU and margins
• While recent government relief measures ensure survival of VIL, staying competitive will be function of how quickly it raises funds

• Loan growth accelerates; asset quality remains robust. AXSB delivered a strong operational performance, with net profit up 224% YoY
• Growth steady across business segments; asset quality strengthens further
• PAT grew 224% YoY and 15% QoQ to INR36.14b in 3QFY22, aided by steady revenue growth and controlled provisions

• Gland Pharma reported a good set of numbers with revenue for the Q3FY22 growing by 23.7% on a YoY basis
• The strong growth was majorly driven by robust performance in the emerging markets as well as the India market while core markets reported an encouraging 10.5% growth
• We, therefore, recommend a HOLD rating on the stock with a target price of Rs 3,575/share.

• HDFC AMC is among the largest and profitable mutual funds with an AUM of ~| 4.4 lakh crore as on December 2021
• Strong distribution network with 227 branches and over 70,000 empanelled distribution partners
• Target Price and Valuation: Given concerns on declining market share, we value HDFC AMC at ~29x FY24E EPS and revise our target price from Rs 3000 to Rs 2550

Lower realization/higher costs led to 9%/6% drop in FY23E/FY24E EBITDA, which along with higher debt assumptions resulted in 20%/14% decline in profit estimates, respectively. Though, TRCL’s near-term outlook looks challenging due to higher fuel costs (INR570/t increase in 3QFY22 variable cost v/s FY21 average), we expect the company to benefit from commissioning of new capacities. The stock trades at 15.9x/12.9x FY23E/24E EV/EBITDA and USD165/t capacity.

• Ramco Cements is the dominant player in South India with cement capacity of 19.4 MT spread across Tamil Nadu, Andhra Pradesh, Odisha and West Bengal
• In terms of sales, South contributes ~71% of sales while East contribute 24%, which is served via grinding units in WB (2 MT) and AP (2 MT
• Target Price and Valuation: We value Ramco at Rs 1,130 i.e.17x FY23E EV/EBITDA

Q3FY22 performance of SBI Cards (SBIC) was directionally strong in terms of
gross account additions (1mn), spending growth (46% QoQ) and asset quality
(credit cost/GNPA of 9.0%/2.4% vs 9.3%/3.4% in Q2FY22). The activation rates
(30-day) are also high at 52% in Q3FY22 vs 50% in Q2FY22. Maintain buy with share price target of Rs. 1060

• Supreme Industries (SIL) is India’s leading plastic processing company with a presence in four major segments
• Market leader in the PVC pipe industry with a value market share of 14%
• Target Price and Valuation: We roll over our valuation on FY24E and value the stock at 28x P/E FY24E EPS with a revised target price of Rs 2625.

• Adani Wilmar (6596700Z IN) is a leading FMCG food company in India. It is set to launch an IPO to raise Rs36,000 million ($483 million) at a price of Rs218-230.
• In Adani Wilmar IPO Initiation: Cooking up a Business, we noted that the business is navigating the high commodity prices by delivering high growth and creditable margin performance.  
• In this note, we present our valuation methodology. Our valuation analysis suggests that the IPO price range is attractive. The offer period is from 27 to 31 January.

• Suzuki reported its 3QFY22 results on Tuesday with revenue of INR236bn (+15.0% QoQ, -0.2% YoY) and OP of INR12.5bn implying an OPM of 5.3% compared to 0.5% in 2QFY22. 
• The reported revenue was 1.1% lower than the consensus estimates, while OP was 165.9% higher (INR7.8bn). 
• That reads positive overall but we are concerned that margins are still not on track to achieve consensus estimates for next FY.

• Polycab is the largest manufacturer of wire & cable in India
• The company also entered the fast moving electrical goods (FMEG) space in 2014 and has recorded strong segment revenue CAGR of 43% in the last five years
• Target Price and Valuation: We revise our target price to Rs 3000/share valuing stock at 35x P/E on FY24E EPS

• Biocon Limited reported revenue growth of 17.5% (est. 8.9%) which is majorly driven by biosimilars (+27.6%, YoY) and generic (+8.3%, YoY) segment
• In generic, the launch of Everolimus and uptake in API has improved sales despite continuous pricing pressure in the US
• Therefore, we recommend a BUY rating with a Target Price of Rs 425, implying an upside of 14% from the CMP.

• PCBL Ltd (name changed from Phillips Carbon Black) is the leading manufacturer of carbon black, which is used as a reinforcing material in tyres.
• PCBL also derives ~8% of sales volume from speciality carbon black, which fetches high margins and finds application in paints, plastics among others
• Target Price and Valuation: Introducing FY24E, we roll over our valuations and now value PCBL at unchanged target price Rs 320 i.e. 12x P/E on FY23E-24E avg. EPS

RIL reported standalone revenue of INR 1,112bn (+81% YoY; +15% QoQ) and EBITDA of INR 139bn, (+60% YoY; +12% QoQ), 3% below our estimates in Q3. Standalone APAT was at INR 102bn (+18% YoY, +10% QoQ; HSIE:INR 113bn).

• HDFC Life is among the most dominant players in the Indian life insurance industry with a strong distribution network, parentage, operating metrics.
• Balanced product mix with focus on non-par, protection & annuity business 
• Target Price and Valuation: We value HDFC Life at 3.4x FY24E EV with TP of Rs 800.

• ICICI Bank (ICICIBC) reported yet another strong performance in Q3FY22 with a 25% YoY earnings growth
• The bank’s NII grew 25% YoY with a healthy loan book growth of 16% YoY and stable NIMs (3.97%)
• We maintain a BUY rating on the stock with a revised target price of Rs 990/share (SOTP basis core book at 2.8x FY24E and Rs 182 Subs. Value), implying an upside of 23% from the CMP.

Kajaria Ceramics: We reiterate our BUY rating on Kajaria Ceramics (KJC), with an unchanged target price of INR1,450/sh (21x its Dec-23E consolidated EBITDA). KJC reported robust growth across tiles, bathware, and ply segments, riding on both healthy demand and market share gains, which drove its revenue by 27% YoY. However, elevated gas prices muted EBITDA/APAT growth to 1/3% YoY. KJC is confident to continue to gain market share, as it is eying a 15%+ tiles volume growth CAGR for the next three years.

• ICICI Securities Limited (ISEC) is an integrated and technology-based firm offering a wide range of services
• ISEC manages total assets of Rs 5.6 Tn for clients across different products
• We recommend a BUY rating on the stock with a target price of Rs 856/share, implying an upside of 10% from the CMP.

• ICICI reported FY 3Q22 earnings of INR 61.9 bn, increasing INR 6.8 bn (12.4%) linked quarter, driven by net interest and fee improvement and a provision cut;  
• Net new NPLs continued to increase 11.4% on an annualized basis at FY 3Q22 versus INR 44.1 bn 43.7% at FY 3Q21; and   
• We find that ICICI is short on reserves to the tune of INR 116 bn or just over a half year of ICICI’s core operating result.

• Asian Paints delivered topline for Q3FY22 a shade above our and street estimates
• However, on profitability front it was a mixed bag performacne with Gross Margins continuing to witnesse inflationary headwinds
• We revise our rating to HOLD (BUY earlier) with a revised TP of Rs. 3,200 (Rs. 3,300 earlier) we continue to value the stock at 57x FY24E EPS.

• Bajaj Auto (BAL) Q3FY22 results stood slightly ahead of our expectations, particularly on the margin front.
• The company reported net revenues of Rs 9,022 Cr (our estimate – Rs 8,928 Cr) v/s Rs 8,910 Cr in Q3FY21, posting a flattish growth YoY
• We maintain our BUY rating on the stock with a revised TP of Rs 4,250/share (Rs 4,500 earlier) (which includes Rs 320/share for the company’s stake in PMAG) as we value the stock at 17x its FY24E EPS.

• Asian Paints (APL) is India’s largest decorative paint company. The company derives ~98% revenue from the paints business
• Strong distribution network of 70,000 dealers, 2x more than the No. 2 player
• We revise our target price to Rs 3870/share and value APL at 66x P/E FY24E EPS

• Mastek Ltd (Mastek) offers data, apps, cloud services to public & private enterprise in the UK, US, Middle East, Asia Pacific and India
• The company’s recent acquisition of Evosys has enabled Mastek to provide end-to-end solutions and improves margins from ~14% to 21%
• We now assign BUY rating to the stock (from HOLD earlier). We value Mastek at Rs 3,360 i.e. 26x P/E on FY24E EPS

• VST Industries (VST) is among the oldest cigarette players in India, involved in manufacturing and marketing cigarettes as also trading unmanufactured tobacco
• The company has two cigarettes manufacturing facilities in Hyderabad, AP. 
• Target Price and Valuation: We arrive at a revised target price of Rs 3425, valuing the business at 14x FY24 earnings.

• Havells India (HIL) is India’s leading electrical appliances & equipment manufacturer with a diversified product portfolio
• In all its business segments, Havells has a strong presence in the organised product category with market share ranging between 6% and 20%
• We value the stock at 53x FY24 EPS and revise the target price to Rs 1515/share
• Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• Hindustan Unilever (HUVR IN) performance was in-line with our and street expectations on key performance metrics.
• Reported sales grew by 10.4% yoy at Rs. 13,092Cr with underlying domestic consumer sales growth (USG) of 11% on the back of a 2% UVG (our estimate 2%)
• Maintain BUY with revised TP of Rs. 2,700 (earlier Rs. 2,900) valuing the stock at 56x FY24E EPS. At CMP, risk-reward appears fair from a long-term perspective.

• Biocon mainly operates in biologics (biosimilars), small molecules (generics), branded formulations and contract research (Syngene)
• Robust biosimilar portfolio with partners like Viatris, Sandoz (for future launches), Adagio among others
• Target Price and Valuation: We value Biocon at Rs 410 on SOTP basis

Yet another quarter of superior credit growth

• Adani Wilmar (6596700Z IN) is a leading FMCG food company in India. It is set to launch an IPO to raise Rs36,000 million ($483 million) at a price of Rs218-230.
• The business is navigating the high commodity prices by delivering high growth (price increases) and creditable margin performance in face of higher raw material costs. 
• Overall, this IPO is worth a closer look. The offer period is from 27 to 31 January. The shares will be listed on 8 February.   

• PVR Ltd (PVRL IN) ‘s December performance on ATP and SHP was very encouraging. If the trend sustains we believe the earnings recovery would be much faster than anticipated. 
• New trends in content consumption, strong content pipeline and truce with OTT players make a case for a solid recovery for the Industry.
• PVR has historically traded at an average of 11.4x EV/EBITDA. Based on our current estimates and conservative 10.5x multiple, there is a return potential of >20% from these levels.

• Maintain FY22-23 estimates and BUY
• 3Q22 sales supported by exports
• Speciality black to continue to drive ASP increase
• Valuation undemandingMention this in the para and mention what’s it trading at versus peers; Low emissions

It has doubled its Capex run-rate FY22 onwards to expand capacities, all through internal accruals. It expects its margin to rebound on full benefit of the price hikes taken in Q3 and if gas prices stabilise around current levels. We reiterate our BUY rating on Kajaria Ceramics (KJC), with an unchanged target price of INR1,450/sh (21x its Dec-23E consolidated EBITDA). KJC reported robust growth across tiles, bathware, and ply segments, riding on both healthy demand and market share gains, which drove its revenue by 27% YoY.

Mphasis: With continued momentum in the direct business (+9% QoQ CC) and healthy deal wins (eight consecutive quarter of TCV> USD 200mn), we reiterate Mphasis (MPHL) as our preferred pick in the mid-tier IT space. MPHL’s growth is expected to be driven by (1) expansion in the direct business (organic +6.3% QoQ); (2) strong traction in BFSI vertical (increase in tech spend by global banks); (3) continued growth in the top-10 accounts (+9.5% QoQ); (4) increasing share/size of large deal wins (signed four large deal wins in Q3 with one at USD 92mn in healthcare); (5) Blink acquisition, which is aiding new deal wins (two synergy deal wins); and (6) better growth alignment with hyperscalers.

• Strong volume growth in Tier 1/2 locations aided revenue surprise, while RM inflation hurt profitability in Q3.
• Impact of price hikes and demand revival in Tier 3/4 locations could be the possible catalysts to monitor going into Q4 
• Valuations apart,  Asian Paints (APNT IN) market share gaining ability, strategic positioning and possibility of revenue surprise suggest the trade is best BULLISH and not BEARISH on APNT.

• Bajaj Finance Ltd (BAF IN) reported record quarterly profit of INR 2,125cr on the back of strong growth in AUM and improving asset quality.
• BAF has launched its Phase 1 digital transformation. This quarter, it shared detailed updates around it. It is now working on year-long step-wise Phase 2 launch.
• With liquidity buffer normalizing, asset quality improving, and customer acquisition accelerating led by digital initiatives, we believe BAF is at an interesting inflection point.

CEAT’s revenue grew ~9% YoY (-2% QoQ) to INR24.1b, but EBITDA fell 59% YoY (39% QoQ) in 3QFY22 to INR1.3b (INR2.1b est.). It incurred a first quarterly loss in a decade at INR148m (v/s PAT of INR1.4b in 3QFY21). Its 9MFY22 revenue grew 27% YoY but EBITDA/PAT declined 28%/83.5% YoY. Volumes fell 5.5% YoY (3% QoQ), impacted by a decline in replacement (14% YoY) and OEM (7% YoY) but offset by strong exports (+27% YoY).

Bajaj Auto (BJAUT)’s 3QFY22 beat was driven by lower RM cost pressures and favorable Fx. While exports remained robust and domestic 3W continued to recover, domestic 2Ws are yet to see recovery. In EVs, BJAUT is focusing on aggressively rolling out Chetak after ironing out supply chain issues. The e-3W launch is planned for FY23E. While we maintain our EPS estimates, we cut our P/E multiple to 16x (v/s 18x earlier) to account for hyper-competition in e-2Ws and the EV threat to…

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

NII fell 19% YoY and 11% QoQ to INR4.15b (20% below expectation). Provisions at INR1.3b were below our estimate of INR2.4b. Disbursements declined ~5% QoQ to INR28.3b. Accordingly, AUM decreased 5% QoQ and 14% YoY to ~INR665b. GNPA and NNPA rose ~170bp and 155bp QoQ to 7.6% and 4.9% (as a percentage of loans), respectively, with Stage 3 PCR declining 760bp to 36%. ECL/EAD also declined ~40bp sequentially to 4.4%.

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

Cyient (CYL)’s 3QFY22 revenue grew 5.2% QoQ in USD terms, above our estimate of 3.6% QoQ growth, led by beat on both Services (+4.4% QoQ CC) and DLM (+12.8% QoQ USD). Services growth was driven by Portfolio (10.0% QoQ), Aerospace (3.9% QoQ), and Communication (3.5% QoQ), while Rail Transportation (-9.5% QoQ) was weak. The 3Q EBIT margin saw a minor 14bps QoQ drop to 13.9% (above expectation), with improvement in Services (+14bp QoQ), compensated by weaker margins in DLM (-80bps QoQ).

• Rallis India is a leading agrochemical company with a presence across agri input value chain and a strong, healthy pipeline of sustainable products.
• The company has a diversified portfolio, supported by a strong channel network of more than 6,700 dealers and 79,000 retailers
• We value Rallis India at 22x P/E FY23E EPS to arrive at a revised target price of Rs 305 per share (earlier Rs 305 per share).

• Bajaj Auto (BAL) is the second largest motorcycle manufacturer and largest 3-W OEM domestically (FY21 market share at 18%, 50.6% respectively)
• Exports comprised ~52% of FY21 volumes; >125 cc motorcycles constituted ~28% of FY21 volumes with Pulsar 125 enjoying good success
• We value BAL at Rs 3,460 on SOTP basis (17x PE on FY23-24E average standalone EPS, stake in PMAG; previous target Rs 4,220)

The task (ahead) is a tough one – eye on mid-to-long-term while navigating multiple near-term challenges. Firstly, supply-side inflation of such scale amidst demand slowdown is a tough situation to be in – any price hikes (RM inflation-led) will have a visible impact on demand volume.

JSW Energy: Higher realisation and increased generation at the Vijayanagar and hydro plants boosted Q3FY22 PAT by 126% YoY to INR3.2bn (above ours and consensus estimate). Net generation, however, declined 2.6% YoY to 4.5bn units, owing to lower generation across the Ratnagiri plant (on plant maintenance). Accordingly, PLF declined for the Ratnagiri stations, but was up for Vijayanagar and hydro plants; it was largely flat for the Barmer station. EBITDA too increased 31% YoY, aided by an improved topline and flat fuel cost (given job work arrangement by the company).

• Larsen & Toubro Infotech (LTI) offers application development, IMS, digital solution services to BFSI, retail, health, media & hi-tech verticals
• LTI has 71 Fortune-500 clients with a presence in North America & Europe
• We maintain BUY rating on the stock Target Price and Valuation: We value LTI at Rs 8050 i.e. 42x FY23E EPS

• Delhivery (1058656D IN) is the largest and fastest-growing 3PL express parcel delivery player in India by revenue in FY21. It has won SEBI approval to raise up to $1 billion.  
• The fundamentals are mixed as it has been unable to leverage its leading position and strong growth to deliver profits or cash generation.  
• Based on the draft red herring prospectus, we are cautious about this potential IPO as the negatives outweigh the positives.  

• Oriental Hotel (OHL) operates in South India with Indian Hotels Company (IHCL) being one of the promoter entities
• The company owns and operates seven hotels with ~825 rooms across business & leisure locations in the south
• We remain positive on the company and maintain our BUY rating. We value the stock at Rs 73 i.e. 30x FY23E EV/EBITDA

Our earlier report, India’s gas sector to benefit from syzygy ahead’, highlighted how CNG/LNG Retail sales have been declining by 3%/11% CAGR for China Gas Holdings/ENN Energy for the past five years. On the contrary, the Industrial segment continued to grow for these companies at 19-20% CAGR for the past few years. Due to high Real Estate prices, we don’t expect the Industrial segment to grow in Delhi. Other areas…

• Axis Bank (AXSB.IN) [Axis] has become the frontrunner to purchase Citigroup’s (C.US) India [Citi India] consumer business; 
• The Citi India transaction would represent a negative adjusted net spread of 41 bp for Axis – intimating a negative return on investment of 1.0%; and
• As many customers have hit the exit button, we have already witnessed Citi India’s retail loan portfolio decline 6.7% YOY prior to FY 2022 COVID-19 protocols.

• GTPL Hathway (GTPL) is a leading MSO (No. 1 in terms of subscribers) offering cable television (CATV) and broadband services
• Expansion into new states and digitisation has led to strong topline and earnings growth of ~27% and ~86% CAGR, respectively, over FY16-21
• We roll over to FY24 and value GTPL at Rs 290 i.e. 14x FY24E P/E

UTCEM’s 3QFY22 performance was impacted by cost inflation, primarily energy and other costs, leading to a 6.7pp YoY fall in EBITDA margin and 19% YoY fall in EBITDA/t. EBITDA fell 22% YoY, despite higher other operating income (up 2.3x YoY). Adjusted for tax write-backs, profit fell 26% YoY. The industry has seen peak of the fuel cost inflation and imported/domestic petcoke prices have declined 38%/33% from its peak in Nov-21. This should help cost moderate from 1QFY23.

• UltraTech is the largest cement manufacturer in India with a domestic capacity of 114.5 MT
• It has grown through the organic and inorganic routes and added around ~30 MT of capacity in the last three years.
• We remain positive on the company and maintain BUY rating. Valued at Rs 9,300 i.e.19.0x FY23E EV/EBITDA

ICICIBC has been the best performer in the Banking sector (despite the consensus Buy tag) as it delivered 80%/42% returns over FY21/FY22 YTD. Its market capitalization ranking within the BFSI space has improved to two from five in FY18. Stability of the top management has helped improve its operational performance. Mr. Sandeep Bakhshi’s appointment as CEO has brought stability which enabled value creation and drove re-rating as bank delivered 31% CAGR in m-cap since FY1821 v/s 7% over FY10-18.

• Tata Metaliks (TML) is a subsidiary of Tata Steel, which was established in 1990
• TML has manufacturing facilities in Kharagpur, West Bengal, which produces pig iron and ductile iron (DI) pipes.
• We value TML at Rs 975 i.e. 6.5x FY23E EV/EBITDA

Unitary EBITDA fell 20/17% YoY/QoQ to INR 1,046/MT. The company is hopeful that cost inflation has peaked out and, with demand picking up, all of this should bolster volume growth and lead to margin rebound Q4 onwards. UltraTech Cement : We maintain BUY on UltraTech (UTCEM) with an unchanged target price of INR 8,775/share (16x Dec’23E consolidated EBITDA). We continue to like the company for its strong growth and margin outlook and balance sheet management.