In today’s briefing:
- Dr. Reddy’s Laboratories (DRRD IN) 4QFY22: Double-Digit Sales Growth; One-Off Charge Impacted Profit
- 4QFY22 Results Update – Bharti Airtel
- DLF – Rising Interest Rate Risk Overshadows Strong Performance
- Dr. Reddy’s Laboratories – Strong Growth Across Business Segments
- Equitas Small Finance Bank – MD & CEO Resignation to Be an Overhang near Term
- 4QFY22 Results Update – Galaxy Surfactants
- Gland Pharma Ltd. – In-Line with Estimates; Upgrade to Buy on Valuation Comfort
- 4QFY22 Results Update -Indraprastha Gas
- 4QFY22 Results Update – ITC
- JK Lakshmi Cement Ltd.- Exceptional Results; Strong Rerating Candidate
Dr. Reddy’s Laboratories (DRRD IN) 4QFY22: Double-Digit Sales Growth; One-Off Charge Impacted Profit
- Dr. Reddy’s Laboratories (DRRD IN) reported 15% y/y growth in revenue in Q4, driven by strong performance across all the markets. Adjusted for one-offs, net profit grew 54% y/y.
- Despite pricing pressure, the U.S. business should continue its growth momentum with better traction in key products launched in FY22 and upcoming new launches, including generic version of Revlimid.
- Inflationary pressure (raw material, freight), lower offtake of COVID-related products in India, and currency headwinds in emerging markets are some downside risks for the company.
4QFY22 Results Update – Bharti Airtel
Continues to deliver strong EBITDA and FCF growth – Bharti Airtel (Airtel) witnessed strong EBITDA growth of 9% QoQ and healthy FCF generation driven by 9% ARPU improvement and healthy incremental margin.
Tariff hikes drive strong India Mobile EBITDA growth of 12% QoQ – Airtel’s consolidated revenue/EBITDA rose 6%/9% QoQ (3% above est.) to INR315b/INR160b, respectively, on strong performances of India Mobile and the Home segment.
Key highlights from the management call – Management expects the next round of hike, which could take place in the current fiscal to help reach INR200 target.
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DLF – Rising Interest Rate Risk Overshadows Strong Performance
- Strong launch pipeline will continue to drive its sales performance – Sales bookings grew by 2.6x YoY to INR27b (est. INR24b) in 4QFY22. It ended FY22 on a high, with the best ever pre-sales of INR73b (up 136% YoY).
- Office portfolio on track to deliver 19% rental CAGR over FY22-24 – Occupancy in DCCDL’s Office portfolio increased by 200bp QoQ to 88%, but sustained at 97% in Retail, resulting in a marginal rise in portfolio occupancy to 89%.
- Key highlights from the management call – Cash flow: DLF is generating an FCF of INR5-7b per quarter and is confident about maintaining a similar run-rate.
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Dr. Reddy’s Laboratories – Strong Growth Across Business Segments
- Dr. Reddy’s reported revenue at Rs54,368mn, up 15% YoY and 2.2% QoQ. EBITDA stood at Rs12,981mn, up 14.6% YoY and 2.5% QoQ.
- EBITDA margin stood at 23.9%, down 9bps YoY, but up 8bps QoQ.
- Profit After Tax (PAT) stood at Rs875mn, down 84.2% YoY and 87.6% QoQ.
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Equitas Small Finance Bank – MD & CEO Resignation to Be an Overhang near Term
- Will change in MD & CEO impact reverse merger or application for universal bank license?
- Strong management team to drive growth and profitability: Mr. Murali Vaidyanathan, Head of Liabilities and Mr Rohit Phadke, Head of Assets have been promoted to Executive Director’s position (subject to RBI and shareholders’ approval).
- Valuation: We have a BUY rating on Equitas Small Finance Bank with a target price (TP) of Rs84.
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4QFY22 Results Update – Galaxy Surfactants
- Inventory gain and improvement in product mix aids margin – GALSURF reported a beat on our 4QFY22 estimates, with EBITDA (INR/kg) at INR25.2 (98% higher than our estimate, +35% YoY) on inventory gains, new contract terms, and improvement in the product mix.
- Margin rebounds sharply; revenue marginally above our estimate – Revenue stood at INR10.5b (up 34% YoY and 13% QoQ).
- Valuation and view – maintain Buy – In FY22, realization stood at INR157/kg, with gross margin at INR46.8/kg (+10% YoY) and EBITDA/kg at INR17.1 (down 10% from INR19/kg in FY21).
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Gland Pharma Ltd. – In-Line with Estimates; Upgrade to Buy on Valuation Comfort
- The company has guided for a capex of Rs3,000mn in FY23, which will be invested in the Pashmelyaram facility, API expansion and expansion of Enoxaparin production capacity.
- The company expects 9-10% revenue growth from new product launches. New product launches are expected to deliver better margins than the existing portfolio.
- Gland is looking at acquiring late stage complex injectable assets / fermentation API assets.
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4QFY22 Results Update -Indraprastha Gas
- Concerns remain despite a decent performance in 4QFY22 – IGL reported a beat on our EBITDA estimate, although volumes were strong YoY.
- Volumes in line; margin is above our estimate – Total volumes were in line at 7.74mmscmd (up 14% YoY and 1% QoQ).
- Valuation and view – maintain Neutral – IGL can increase its sales volume from new areas such as Rewari, Karnal, and Muzzafarnagar; Haryana City Gas; and the newly awarded GAs in the 10th round — a) Kaithal (Haryana), (b) Ajmer, Pali, and Rajsamand (Rajasthan), and c) Kanpur, Fatehpur, and Hamirpur (Uttar Pradesh).
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4QFY22 Results Update – ITC
EBITDA and PAT in line; cigarette volumes resilient – ITC’s 4QFY22 EBITDA and PAT growth came in line with our estimates.
Sales beat led by Agri business and Paperboards – ITC’s revenue grew 16.8% YoY to INR155.3b (est. INR138.4b) in 4QFY22.
Valuation and view – ITC’s re-rating would depend on sustained earnings growth going back to the high-teens levels witnessed in the first half of the last decade (at 18% CAGR) which had slowed down to 6.6% CAGR over the latter half of the decade.
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JK Lakshmi Cement Ltd.- Exceptional Results; Strong Rerating Candidate
- 4QFY22 performance: JK Lakshmi reported exceptional numbers, with EBITDA coming in at Rs2.76bn, up 3% YoY and 73% ahead of our estimate.
- Substantial control in costs: The company has been diligently working on optimizing its cost structure and believes that the same has started bearing fruits.
- Capex plans: Udaipur Cement Work Ltd.’s (UCWL) expansion plan worth Rs16.5bn to add 2.5mn mt capacity in Rajasthan (Rs7bn in the first year and Rs9.5bn in the second year) is expected to be commissioned by FY24.
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