In today’s briefing:
- Zydus Lifesciences (ZYDUSLIF IN): U.S. Business Is Cloudy; Innovative Portfolio Has A Long Way To Go
- HSIE Results Daily: Voltas, Navin Fluorine International
- Navin Fluorine: New Products and Customer Addition to Drive Growth
- HSIE Results Daily: Reliance Industries, Tata Power, Federal Bank, DCB Bank
- Results Review Q4FY22 – Reliance Industries
Zydus Lifesciences (ZYDUSLIF IN): U.S. Business Is Cloudy; Innovative Portfolio Has A Long Way To Go
- Zydus Lifesciences Ltd (ZYDUSLIF IN) earns more than 40% revenue from the U.S. This business is under continued pricing pressure, which is squeezing the gross profit margin of the company.
- The company has received approval for COVID-19 vaccine in India, which seems to have limited visibility and revenue potential, amid competition and uncertain COVID-19 outlook.
- Zydus has launched one new drug and received approval for another in India. However, its innovation portfolio has to go a long way to become a significant growth contributor.
HSIE Results Daily: Voltas, Navin Fluorine International
- Voltas: Voltas Q4 performance was quite unique; in a strong onset of summer, the market leader lost market share in room air conditioner (RAC) category.
- The industry is witnessing robust demand after the slump of the last two summer seasons, while many markets and brands are witnessing a stock-out situation.
- Navin Fluorine International: We retain our BUY rating on NFIL, with a target price of INR 4,640 on the back of (1) earnings visibility, given long-term contracts;
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Navin Fluorine: New Products and Customer Addition to Drive Growth
- Given the fair visibility in earning in coming years and ability to manage costs, we maintain our recommendation of BUY with revised TP of Rs 4,153/share
- Companies Q4 Revenue was up 21.6% YoY at 409 Cr (against our estimate of 390 Cr), but company reported lower than expected EBITDA of 94 Cr (+12% YoY) against our exp of Rs 103 Cr on account of higher than expected gross margin pressure.
- Effectively, company posted 23% EBITDA margin which was down 300 bps over last quarter (against our estimate 26.4%).
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HSIE Results Daily: Reliance Industries, Tata Power, Federal Bank, DCB Bank
- Reliance Industries: Our ADD rating on Reliance Industries (RIL) with a price target of INR 2,825/sh is premised on (1) recovery in the O2C businesses; (2) continued EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition, and new revenue streams; and (3) potential for further value unlocking in the digital and retail businesses.
- Tata Power: During Q4FY22, Tata Power completed the merger of Mundra into its standalone business and also secured the extension of mining lease in KPC for 10 years.
- Federal Bank: Federal Bank’s (FB) Q4FY22 earnings missed our estimates, largely on account of accelerated absorption of family pension expenses, but these were partly offset by multi-quarter low credit costs (20bps).
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Results Review Q4FY22 – Reliance Industries
- Standalone oil to chemicals (O2C) segment: Revenue grew 53% YoY to INR 1,370bn, primarily due to improved realisation, led by increase in oil prices and higher volumes.
- Oil & gas: Revenue grew ~4x YoY to INR 20bn and EBITDA improved ~5x YoY to INR 15bn, driven by sharp improvement in price realisaton and stable production from the KG D6 block.
- RJPL: Revenue improved to INR 261bn (+21% YoY, +8% QoQ) due to increase in ARPU to INR 168 (+21% YoY, +11% QoQ).
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