India: Delhivery, Oriental Hotels, Indraprastha Gas, Axis Bank Ltd, GTPL Hathway Limited, Ultratech Cement, ICICI Bank Ltd, Tata Metaliks and more

• 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.