In today’s briefing:
- Britannia Industries (BRIT IN) | Time for a Good Snack
- SAIL: Outlook Challenging Despite Robust Performance; Downgrade to HOLD
- Jyothy Laboratories – Sales in 4QFY22 Were in Line.
- Kajaria Ceramics – Ramping up of Capacity Shall Support Volume; Operating Margi
- Kaveri Seeds – Revenue Fell 6% YoY in FY22 Due to Lower Cotton/Maize (Down 24%/16%) Volumes.
- Mindspace Business Parks REIT – Strong Revival in Physical Occupancy; ROFO Asse
- Nuvoco Vistas Corporation Ltd – Good Results Amid Challenging Environment
- Sapphire Foods – Available Always in All Ways
- Aditya Birla Fashion and Retail – A Strong Recovery in Business, Particularly the Lifestyle
- Sail – Earnings Beat Driven by Lower RM Costs
Britannia Industries (BRIT IN) | Time for a Good Snack
- Aggression in adjacencies, market share gains and under indexed rural exposure presents an opportunity.
- COGS Inflation, Risk of downgrading in case of a further hike loom and is a potential risk.
- YTD Britannia Industries (BRIT IN) is an outperformer and could remain so.
SAIL: Outlook Challenging Despite Robust Performance; Downgrade to HOLD
- SAIL Q4FY22 results were largely in line with our estimates. The company delivered a strong sales volume of 4.706 Million Tonnes (MT), up 8% YoY and 23% QoQ, marginally ahead of our estimate of 4.6 MT.
- Topline stood at Rs 30,759 Cr, a slight beat vs our estimate of Rs 29,236 Cr and up 32% YoY and 22% QoQ, led by higher steel prices and sales volumes
- We downgrade the rating on SAIL to HOLD from BUY and value it at 4.0x FY24E EBITDA to arrive at a target price of Rs 75/share (Rs 125/share earlier), against the CMP of Rs74/share.
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Jyothy Laboratories – Sales in 4QFY22 Were in Line.
- Sales in 4QFY22 were in line. Gross margin was affected due to elevated raw material prices.
- Revenue growth is key for a company with sales of only ~INR22b. The likelihood of a consistent 15% sales growth (essential for any re-rating) continues to appear difficult, despite JYL’s efforts to ramp up its total and direct reach.
- With margin likely to remain under pressure over the next few quarters due to high input costs, its earnings growth prospects remain weak.
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Kajaria Ceramics – Ramping up of Capacity Shall Support Volume; Operating Margi
- Revenue grew by 15.7% YoY and 3.1% QoQ to Rs11,018mn: KCL reported revenue of Rs11,018mn in 4QFY22, up 15.7% YoY and 3.1% QoQ.
- Revenue from in-house tiles segment grew by 19.1% YoY to Rs5,587mn in 4QFY22 due to growth in blended pricing and volume.
- The company has taken price hikes at regular intervals, which led to blended realization growth of Rs424/sq mt in 4QFY22 vs Rs417/sq mt in 3QFY22.
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Kaveri Seeds – Revenue Fell 6% YoY in FY22 Due to Lower Cotton/Maize (Down 24%/16%) Volumes.
- Revenue fell 6% YoY in FY22 due to lower cotton/maize (down 24%/16%) volumes.
- Cotton seed volumes were impacted by lower cotton acreage and the use of illegal herbicide-tolerant Bt (HTBt) seeds, which impacted sales of branded seeds.
- Maize volumes fell due to no sales to the government.
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Mindspace Business Parks REIT – Strong Revival in Physical Occupancy; ROFO Asse
- Revenue up by 5.9% QoQ and 7.5% YoY in 4QFY22 to Rs4,666mn: Revenue increased by 5.9% QoQ and 7.5% YoY to Rs4,666mn in 4QFY22.
- EBITDA margin contracts by 190bps QoQ but expands by 690bps YoY in 4QFY22 to 75.1%
- Adjusted PAT stood at Rs1,262mn in 4QFY22 v/s Rs1,362mn in 3QFY22 and Rs1,143mn in 4QFY21
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Nuvoco Vistas Corporation Ltd – Good Results Amid Challenging Environment
- 4QFY22 performance: Nuvoco has reported extremely good set of numbers given the challenging environment with EBITDA of Rs4.25bn against our expectation of Rs3.8bn.
- Capex update: Nuvoco plans to augment its cement volume by ~2.4mn mt from both north and east regions.
- Outlook: Given the increased competition in the eastern region post recent capex by various companies, it will be challenging for Nuvoco to sustain this performance.
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Sapphire Foods – Available Always in All Ways
- The Indian Food Service Industry (FSI) is expected to clock 9% CAGR in the coming years, with QSRs likely to grow faster at 23% CAGR over FY20-25.
- SAPPHIRE’s new scalable Restaurant economic model is a game-changer. Its omnichannel strategy and reduction in store sizes, along with other elements of the model, have led to a big shift in SAPPHIRE’s unit economics.
- KFC India’s business is on a strong footing, with a healthy ADS and profitability.
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Aditya Birla Fashion and Retail – A Strong Recovery in Business, Particularly the Lifestyle
- A strong recovery in business, particularly the Lifestyle segment, saw 59% YoY jump in ABFRL’s 4QFY22 EBITDA backed by 25% YoY revenue growth and 210bp gross margin improvement.
- Net debt at INR5b too was comfortable even after building inventory for the upcoming season and new stores.
- With healthy recovery and growth momentum across verticals, we raise our FY23E/24E EBITDA by 7-8%, modeling strong 40% EBITDA CAGR over FY22-24E.
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Sail – Earnings Beat Driven by Lower RM Costs
- SAIL reported an inline revenue at INR308b (up 32 % YoY and 22 % QoQ) in 4QFY22, driven by an improved mix of higher ASP and sales volume.
- Recently, the government announced various measures to cool down prices (refer Exhibit 1).
- Coking coal has been hovering above USD 500 for the last four months, The La-Nina phenomenon in Australia is over.
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