April 2022

India Strategy | Earnings drought ending, finally!

India Strategy

Geopolitical
Crisis

Holding the Fort!

Gautam Duggad - Research Analyst ([Link]@[Link])
Investors are advised to refer through important disclosures made at the last page of the Research Report.
April 2021
Motilal 1
Oswal research is available on [Link]/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Contents
India Strategy – Holding the Fort!. ................................................................................................ 3-18
4QFY22 Highlights & Ready Reckoner ......................................................................................... 19-32
Sectors & Companies .................................................................................................................. 33-234
Automobiles ........................................... 33-48 Axis Bank ....................................................... 104 NMDC ............................................................ 165
Amara Raja Batt. ............................................. 38 Bandhan Bank................................................ 105 Nalco ............................................................. 166
Apollo Tyres .................................................... 38 Bank of Baroda ............................................ 105 SAIL ............................................................... 167
Ashok Leyland ................................................. 39 Canara Bank................................................... 106 Tata Steel ...................................................... 167
Bajaj Auto ..................................................... 39 DCB Bank ....................................................... 106 Vedanta ......................................................... 168
Balkrishna Inds ................................................ 40 Equitas Holdings ............................................ 107 Oil & Gas .............................................. 169-182
Bharat Forge ................................................... 40 Federal Bank .................................................. 107 Aegis Logistics ............................................... 175
Bosch .............................................................. 41 HDFC Bank .................................................. 108 BPCL ........................................................... 175
CEAT ................................................................ 41 ICICI Bank .................................................... 108 Castrol India .................................................. 176
Eicher Motors ................................................. 42 IndusInd Bank ................................................ 109 GAIL ........................................................... 176
Endurance Tech. ............................................. 42 Indian Bank .................................................... 109 Gujarat Gas ................................................... 177
Escorts ............................................................ 43 Kotak Mahindra Bank .................................... 110 Gujarat State Petronet .................................. 177
Exide Inds. ....................................................... 43 Punjab National Bank ................................... 110 HPCL .......................................................... 178
Hero Motocorp ............................................... 44 RBL Bank ........................................................ 111 Indraprastha Gas ........................................... 178
Mahindra & Mahindra .................................. 44 State Bank ................................................... 111 IOC ............................................................. 179
Mahindra CIE .................................................. 45 Union Bank .................................................... 112 Mahanagar Gas ............................................. 179
Maruti Suzuki .................................................. 45 SBI Cards ........................................................ 112 MRPL ............................................................. 180
Motherson Sumi ............................................. 46 HDFC Life Insur. ............................................. 113 Oil India ......................................................... 180
MRF................................................................. 46 ICICI Pru Life .................................................. 113 ONGC ......................................................... 181
Sona BLW Precis.............................................. 47 SBI Life Insurance........................................... 114 Petronet LNG ................................................ 181
TVS Motor ....................................................... 47 Max Financial................................................. 114 Reliance Inds. ................................................ 182
Tata Motors .................................................. 48 NBFC ................................................... 115-129 Real Estate ........................................... 183-187
Capital Goods.......................................... 49-56 AAVAS Financiers ........................................... 120 DLF ................................................................ 186
ABB ............................................................... 52 Angel One ...................................................... 120 Godrej Properties .......................................... 186
Bharat Electronics ........................................... 52 Bajaj Finance.................................................. 121 Macrotech Developers .................................. 187
BHEL ............................................................. 53 Can Fin Homes ............................................... 121 Oberoi Realty ................................................ 187
Cummins India .............................................. 53 Chola. Inv & Fin.............................................. 122 Retail - A .............................................. 188-195
Engineers India................................................ 54 HDFC ........................................................... 122 Aditya Birla Fashion ....................................... 193
K E C International .......................................... 54 ICICI Securities ............................................... 123 Avenue Supermarts ....................................... 193
Larsen & Toubro ........................................... 55 IIFL Wealth Mgt ............................................. 123 Shoppers Stop ............................................... 194
Siemens........................................................... 55 L&T [Link] ............................................ 124 Trent ............................................................. 194
Thermax ....................................................... 56 LIC Housing Fin .............................................. 124 V-Mart Retail ................................................. 195
Cement ................................................... 57-66 M & M Financial ............................................ 125 Retail - B .............................................. 196-205
ACC ............................................................... 61 Manappuram Finance.................................... 125 Barbeque Nation ........................................... 199
Ambuja Cements............................................. 61 MAS Financial ................................................ 126 Devyani Intl. .................................................. 199
Birla Corporation ............................................. 62 Muthoot Finance ........................................... 126 Jubilant Foodworks ....................................... 200
Dalmia Bharat ................................................. 62 PNB Housing .................................................. 127 Restaurant Brands ......................................... 200
Grasim Industries ......................................... 63 Repco Home Fin ............................................ 127 Titan Company .............................................. 201
India Cements ................................................. 63 Shriram City Union......................................... 128 Westlife Development .................................. 201
J K Cements ..................................................... 64 Shriram Transport Fin. ................................... 128 Staffing ................................................ 202-205
JK Lakshmi Cem. .............................................. 64 Star Health ..................................................... 129 Quess Corp .................................................... 204
Ramco Cements .............................................. 65 Healthcare........................................... 130-145 SIS ................................................................. 204
Shree Cement ................................................. 65 Ajanta Pharma ............................................... 134 Team Lease Serv............................................ 205
Ultratech Cement............................................ 66 Alembic Pharma ............................................ 134 Technology .......................................... 206-217
Chemicals-Specialty ................................ 67-74 Alkem Lab ...................................................... 135 Coforge ......................................................... 211
Alkyl Amines.................................................... 70 Apollo Hospitals ............................................. 135 Cyient ............................................................ 211
Atul ................................................................. 70 Aurobindo Pharma ........................................ 136 HCL Technologies .......................................... 212
Clean Science .................................................. 71 Biocon............................................................ 136 Infosys ........................................................ 212
Deepak Nitrite ................................................. 71 Cipla ........................................................... 137 L&T Infotech .................................................. 213
Fine Organic .................................................... 72 Divis Labs ....................................................... 137 L&T Technology............................................. 213
Galaxy Surfactants .......................................... 72 Dr Reddy’ s Labs ......................................... 138 Mindtree ....................................................... 214
Navin Fluorine ................................................. 73 Eris Lifescience .............................................. 138 MphasiS ........................................................ 214
NOCIL .............................................................. 73 Gland Pharma ................................................ 139 Persistent Systems ........................................ 215
Vinati Organics ................................................ 74 Glenmark Pharma .......................................... 139 TCS ................................................................ 215
Consumer ............................................... 75-89 Granules India ............................................... 140 Tech Mahindra .............................................. 216
Asian Paints ................................................. 80 GSK Pharma ............................................... 140 Wipro .......................................................... 216
Britannia ......................................................... 80 IPCA Labs. ...................................................... 141 Zensar Tech ................................................... 217
Colgate ............................................................ 81 Jubilant Pharmova ......................................... 141 Telecom ............................................... 218-225
Dabur .............................................................. 81 Laurus Labs .................................................... 142 Bharti Airtel ................................................... 223
Emami ............................................................. 82 Lupin .............................................................. 142 Indus Towers ................................................. 223
Godrej Consumer ............................................ 82 Solara Active Pharma..................................... 143 Reliance Jio.................................................... 224
Hind. Unilever ................................................. 83 Strides Pharma .............................................. 143 Tata Comm .................................................... 224
Indigo Paints ................................................... 83 Sun Pharma ................................................... 144 Vodafone Idea ............................................... 225
ITC ................................................................... 84 Torrent Pharma ............................................. 144 Others.................................................. 226-234
Jyothy Labs ...................................................... 84 Zydus Lifesciences ......................................... 145 APL Apollo Tubes........................................... 226
Marico ............................................................. 85 Infrastructure ...................................... 146-149 BSE ................................................................ 226
Nestle .............................................................. 85 Ashoka Buildcon ............................................ 148 Coromandel International ............................. 227
P&G Hygiene ................................................... 86 G R Infraproject ............................................. 148 EPL ................................................................ 227
Page Industries................................................ 86 IRB Infra ......................................................... 149 Godrej Agrovet .............................................. 228
Pidilite Inds. .................................................... 87 KNR Constructions ......................................... 149 Indiamart Inter. ............................................. 228
Tata Consumer ................................................ 87 Logistics .............................................. 150-154 Indian Hotels ................................................. 229
United Breweries ............................................ 88 Blue Dart Express ........................................... 152 Info Edge ....................................................... 229
United Spirits .................................................. 88 Concor ........................................................... 152 Interglobe Aviation........................................ 230
Varun Beverages ............................................. 89 Mahindra Logistics ......................................... 153 Kaveri Seed.................................................... 230
Consumer Durables ................................. 90-94 TCI Express..................................................... 153 Lemon Tree Hotel.......................................... 231
Blue Star.......................................................... 92 Transport Corp. ............................................. 154 MCX............................................................... 231
CG Consumer Elect.......................................... 92 VRL Logistics .................................................. 154 P I Industries.................................................. 232
Havells India .................................................... 93 Metals ................................................. 155-168 SRF ................................................................ 232
Orient Electric ................................................. 93 Coal India ....................................................... 163 Tata Chemicals .............................................. 233
Voltas .............................................................. 94 Hindalco ...................................................... 163 Trident .......................................................... 233
Whirlpool India ............................................... 94 Hindustan Zinc ............................................... 164 UPL ................................................................ 234
Financials ............................................... 95-114 JSPL ................................................................ 164
AU Small Finance .......................................... 104 JSW Steel ....................................................... 165
 India Strategy | Holding the Fort!

India Strategy
BSE Sensex: 59,035 Nifty 50: 17,640

Holding the Fort!

Earnings growth in FY22 at the highest since FY04; margin headwinds persists

 The Nifty ended FY22 with gains of 19% YoY, marking another year of strong
returns. Given the multitude of challenges (lockdowns announced due to the
second COVID wave, rate hikes by the US Fed, withdrawal of excess global
liquidity, Russia-Ukraine conflict, the relentless rise in commodity prices,
disruption in supply chains, and weak rural demand), the fact that the Nifty is
down barely 5% from its recent high underscores its resilience. The market
never fails to surprise investors. If we had been foretold that: a) Brent Crude oil
prices will be trading over USD100/bbl, b) a war will break out, and c) we will
see FII outflows of USD18b in the last six months, many participants would have
perh aps forecast that the market will be below Oct’21 levels. Yet the Nifty is
down barely 5% from its 52-week high. What has held it together? We believe
three factors have driven this resilience: 1] Strong undertone of corporate
earnings (~35% earnings growth in FY22 – the highest since FY04); 2] Growing
faith of domestic investors, with consistently higher equity allocation, as
reflected in the USD20b of inflows since Oct’21, which more than matched FII
outflows; and 3] The government’s clear intent to drive big reforms be it
disinvestment (Air India), manufacturing (PLI schemes), or supporting those at
the bottom-of-pyramid through targeted welfare schemes.
 Our outlook on corporate earnings and market performance in FY23 is positive.
After a 15% growth in Nifty EPS in FY21 – the first double-digit growth in a
decade, earnings are expected to grow by 35% in FY22. We are building in 19%
growth for FY23, led by BFSI, O&G, and IT. Despite the frightening news
emanating from the Russia-Ukraine war front, US Fed rate hike, tightening
liquidity, and supply chain disruptions, the market has remained resilient on the
back of very strong corporate earnings, which matters the most to market
returns in the long term. We, however, highlight two important concerns. First,
if global inflation remains stubborn and central bankers accelerate the pace of
rate hikes and tighten liquidity, it could pose a headwind to equity valuations.
Second, there are clear pockets of slowdown in domestic rural consumption,
which needs to be tackled with urgency. It is important for this piece of the
equation to recover for earnings to stabilize in the medium term.
 A domestic economic recovery provides relief, with multiple indicators (like GST
collections, power demand, e-invoice) suggesting a good pick-up. Average
monthly GST collections rose 35.5% YoY to INR1.24t in FY22. With crude oil
prices remaining above USD100/bbl, OMCs have started to pass on the increase
to consumers. The ~INR10/liter hike in petrol and diesel prices is likely to raise
freight costs for companies as well as impact consumer sentiment. The US Fed
raised rates by 25bp at its meeting in Mar’22 and set expectations of further
rate hikes at every meeting in CY22. This resulted in the US two-year Treasury
yields topping the 10-year rate, leading to a yield inversion.

April 2022 3
 India Strategy | Holding the Fort!

Sectoral PAT growth quarter  The earnings growth trajectory for the MOFSL Universe continues to remain
ended Mar’22 (%, YoY) healthy, notwithstanding the challenges on multiple fronts. We expect a 4QFY22
earnings growth of 19% YoY, which is the lowest since 1QFY21, but comes on a
Insurance 1515
Banks-PSU 80
high base of 100% growth in 4QFY21. While the aggregate growth is impressive,
Logistics 70 it is narrow and driven by three sectors: BFSI, O&G, and IT. More than half of the
Staffing 53 incremental growth is steered by BFSI, led by a modest revival in credit growth
Banks-PVT 39
and improvement in asset quality trends. Upstream O&G companies are likely to
Utilities 36
Retail 33 benefit from the spike in crude oil prices in 4QFY22, driving aggregate earnings.
NBFC 32 The key drivers in 4QFY22 are: a) BFSI: The sector is likely to report a 51% YoY
Cap. Goods 32 growth in profit and contribute 55%/43% to incremental MOFSL/Nifty earnings
Media 29
Real Estate
growth; b) O&G: High Brent crude oil prices benefitted Upstream O&G
26
Oil & Gas 19 companies, while rising GRM are likely to benefit OMCs, even though retail
MOFSL Univ. 19 margins are likely to turn negative; and c) Technology: The strong demand
Technology 16 environment continued and is likely to drive earnings. The key sectors, which
Metals 9
Consumer 5
are likely to drag earnings, are: a) Autos – A sharp increase in fuel and
Healthcare 2 commodity prices are likely to delay a recovery in margin for OEMs, despite
Cons. Durables 1 some improvement in supply-side constraints (semiconductor shortages); and b)
Infra -9
Cement: Higher coal and petcoke prices are likely to lead to a fall in profitability
Chemicals-Spec -12
Cement -26 for companies, despite the likely increase in blended realizations by 7% YoY.
Auto -51  Nifty/MOFSL Universe to register 23%/19% YoY profit growth in 4QFY22E: We
Telecom Loss expect PBT/PAT to grow by 21%/19% for the MOFSL Universe in 4QFY22. O&G,
Financials, and Technology are likely to contribute 88% of incremental earnings
in 4QFY22E. Excluding Financials, we expect 4QFY22 earnings for the MOFSL
Universe to record a modest 10% YoY growth. Sales for the MOFSL Universe is
likely to grow by 32% YoY, led by higher commodity and energy prices. Excluding
OMCs and Financials, the MOFSL Universe is likely to see a 150bp YoY decline in
operating margins to 20.6%. Sales/EBITDA/PBT/PAT for Nifty companies should
grow by 28%/18%/28%/23% YoY in 4QFY22E. Excluding Financials, we expect
profit to grow by 17% YoY for Nifty companies in 4QFY22. We expect a strong
54%/50% two-year earnings (4QFY20-4QFY22) CAGR for MOSL Universe/Nifty.
 Nifty FY22E/FY23E EPS has seen a minor downward tweak of 0.6%/0.8% to
INR732/INR870. The cut in our FY23 earnings estimates for Autos (10%)/
Cement (10%)/Consumer (6%) is compensated by an increase in the estimates
of Metals (13%) and O&G (7%). HNDL, ONGC, and TATA have recompensed for
the entire cut in FY23 earnings for the rest of the Nifty pack. On a full year basis,
Nifty FY22 EPS is estimated to grow by 35% YoY on a base of 15% EPS growth in
FY21. Metals/O&G/BFSI have contributed 84% of incremental profit growth in
Nifty companies in FY22. We estimate a Nifty EPS growth of 19% in FY23.
 While input cost pressures are impacting margins in Consumer, Autos, Cement,
Specialty Chemicals, and Consumer Durables, BFSI, IT, Utilities, and Telecom
have largely remained unaffected. The impact of rising commodity prices on
earnings for the broader market and the economy is likely to be higher than that
of Nifty companies, as the representation of these sectors in the index is small.
Strong demand visibility in IT, pick up in credit growth, and normalization of
asset quality should lend support to Nifty earnings. Deep cyclical sectors (Energy
and Metals) continue to benefit from higher commodity prices, leading to strong
aggregate earnings growth. Any disruption and demand destruction on account
of higher prices will impact sales volumes for companies, leading to further

April 2022 4
 India Strategy | Holding the Fort!

pressure on operating margins. For the MOFSL Universe, we expect 39%/20%/

16% YoY earnings growth for FY22/FY23/FY24.
 Key model portfolio changes: Our model portfolio positioning continues to
focus on earnings visibility, economic recovery, pricing power, balance sheet
strength and reasonable valuations. We maintain our OW stance on BFSI, IT,
Consumer, Metals and Cement. We maintain our UW positions on Auto and
Energy, albeit, with incremental 100bp addition in RIL. We raise Healthcare to
OW and add Gland Pharma that remains on track for product development in
OW on IT, BFSI, Metals, complex areas of long-acting injectables, hormonal products, peptides and
Cement, Consumer, suspensions. We expect 27% earnings CAGR over FY22-24 for the company. In
Healthcare; UW on Energy, Financials, we are introducing Bank of Baroda where an expected revival in
Autos and Utilities; increased business trends along with improving asset quality will lead to strong earnings
allocations in– RIL. Introduced
growth. We estimate its RoA/ RoE to touch 1.0%/13.7% by FY24. The stock is
Macrotech, Dalmia Bharat, GR
Infra, Restaurants Brands, trading at an attractive valuation of 0.6x FY24E. In Metals, we are replacing SAIL
Gujarat Gas, Lemon Tree with JSPL. SAIL is likely to report a very weak set of numbers for 1QFY23,
weakest among all steel names. Conversely, JSPL is expected to report a better
margin than SAIL. Volume growth for SAIL continues to be minimal v/s JSPL,
where we also have the incremental advantage of captive coking coal mines.
 In Mid-Caps, we are adding: a) Macrotech: ~INR200b of completed and near-
completed inventory that will drive strong sales on a sustained basis. Strong
cash flows to reduce INR70b in leverage over the next two years. b) Dalmia
Bharat: It is a tactical play and after the recent sharp correction, the stock
factors in current negatives in our view. It should benefit from aggressive
capacity expansion plans (to 48.5mtpa by FY24E from 33.7mtpa now) apart from
its cost-saving strategies. The stock valuation is attractive at 10.2x FY24E
EV/EBITDA. c) Gujarat Gas: We expect the company’s volume growth prospects
to remain robust with the addition of over 60 new industrial units, undergoing
expansions, and the emergence of a new ceramic cluster at Aniyari. Cooling of
Spot LNG prices would also result in a quicker volume recovery for GUJGA. d)
After the recent sharp rally, we are replacing Indian Hotels with Lemon Tree,
which will benefit from the room additions carried out in the pre-pandemic
phase, deleveraging in its balance sheet and addition of upscale brand Aurika
Mumbai Hotel in CY23E. e) GR Infra: The company has a strong balance sheet
and it is set to traverse the journey from being just a Roads player to a
diversified EPC player. Its order book now stands at INR230b (2.9x FY22E
revenue). With robust execution capabilities, GR Infra is very well placed to
capitalize on the growth opportunities. f) Restaurant Brands Asia (formerly
Burger King India) offers an opportunistic play on the economy opening up over
the next few quarters, especially with around half of its stores being based in
malls (much higher than peers). With the recent correction, RBA trades at an
attractive valuation of 18.8x consolidated FY24E EV/EBITDA (pre-IND AS), which
is at a 37% discount to that of market leader JUBI.

Top picks
 Largecaps: ICICI Bank, SBI, Infosys, HCL Technologies, Reliance, Titan, Apollo
Hospitals, Hindalco, Bharti Airtel, Ultratech and BoB.
 Midcaps: Ashok Leyland, Macrotech, APL Apollo Tubes, Chola Finance, Indigo
Paints, Restaurant Brands, TCI, GR Infra, Dalmia Bharat, Lemon Tree and Angel
One.

April 2022 5
 India Strategy | Holding the Fort!

Sectoral sales growth for Key sectoral trends/highlights

quarter ended Mar’22 (%, YoY)  The MOFSL Technology Universe is expected to register a median USD revenue
growth of 3.7% QoQ in constant currency terms in 4QFY22. While Tier II players
Oil & Gas 65
will continue to outgrow Tier I companies, the gap should start to shrink on a
Metals 38
high base effect. Among Tier I companies, WPRO will lead the pack in terms of
MOFSL Univ. 32
Chemicals-Spec 29 revenue growth (up 3.5% QoQ CC), followed by TCS (up 3.3%). Profit for the
Staffing 25 MOFSL IT universe is expected to grow by 16% YoY.
Utilities 24
Banks-PSU 23
 The Private Banks Universe should report 11%/41%/39% YoY growth in
Technology 21 PPOP/PBT/PAT. Loan growth is projected to remain strong, led by the Retail
Banks-PVT 19 and SME segments. Slippages are likely to remain modest across segments in
Media 17 4QFY22, barring the MFI business, which may see some tail stress.
Retail 16
Telecom 15  Our NBFC Coverage Universe is likely to report a PBT/PAT growth of 31%/32%
Logistics 12 YoY. We forecast strong YoY earnings growth for BAF, CIFC, LTFH, and LICHF, and
Cons. Durables 11 a sharp sequential decline in earnings for MMFS on higher credit costs. We
Cap. Goods 11
expect credit costs to be sequentially lower in 4QFY22, except for MMFS.
NBFC 10
Insurance 10  PSU Banks are likely to deliver a NII/PPOP growth of 23%/5% YoY and 4%/9%
Cement 10 QoQ in 4QFY22. PAT is projected to grow strongly (up ~80% YoY and 20% QoQ)
Healthcare 8 in 4QFY22. We forecast PSBs to experience continued traction in their operating
Consumer 8
Auto 2
performances, supported by a recovery in business growth.
Infra -5  The Metals Universe should see a modest 9% YoY growth in profits on a higher
Real Estate -6 base (profits were up 4x YoY in 4QFY21), as higher coal prices impacted EBITDA
margins of steel companies. EBITDA margin for the MOSFL Metals Universe is
likely to decline by 710bp YoY to 22.1% in 4QFY22.
 Our Consumer Universe is likely to report muted cumulative growth numbers –
revenue/EBITDA/PAT of 8%/7%/5% – in 4QFY22E. Sales growth will largely be
led by price hikes as volume growth remains constrained, impacted by spiraling
inflation and a slowdown in rural demand. Among large companies, we expect
CLGT, GCPL, NEST, UBBL, and UNSP to report a decline in profit. The same for
HUVR is expected to remain flat YoY.
 The MOFSL Autos Universe is likely to report an aggregate profit decline of 51%
YoY despite an improvement in semiconductor supplies. Excluding TTMT,
earnings are expected to decline by 20% YoY. Wholesale volumes for PVs/CVs
grew 14%/9% YoY, but fell 18%/25% YoY for 2Ws/Tractors. The recent sharp rise
in commodity prices will further delay a margin recovery in OEMs as well as
Auto Component players. We expect the impact of current elevated prices to
reflect from 1QFY23 onwards.
 Earnings for our Healthcare Universe are likely to see a modest 2% YoY growth.
COVID-related offtake, revival in Domestic Formulation core therapies, and a
marginal improvement in ANDA approvals will drive sales growth in 4QFY22. RM
prices and logistics costs are likely to impact the EBITDA margin of companies.
Of the 23 companies in our Coverage Universe, 10 are expected to report a YoY
growth in profit. We expect a 63%/58%/50% YoY growth in profit for DRRD/
CIPLA/DIVI.

April 2022 6
 India Strategy | Holding the Fort!

 The MOFSL Cement Universe should report an EBITDA/PBT/PAT decline of

20%/25%/26%. Aggregate EBITDA margin is likely to contract by 640bp YoY to
17.2%. Higher variable costs (up 29% YoY), due to a rise in coal/petcoke prices,
will continue to impact profitability. All companies, except for DALBHARA, are
likely to deliver a YoY decline in profit.
 The O&G Universe is expected to report sales/EBITDA/PAT growth of 65%/31%/
19% YoY. Higher Brent crude oil prices, strong demand, and improved GRMs are
likely to support earnings. Retail fuel margins for OMCs are likely to be negative
in 4QFY22. Excluding OMCs, the O&G Universe is expected to post 67% profit
growth, led by Upstream oil companies.
 The Telecom Universe should report a loss for the 19th consecutive quarter,
largely led by VIL. We project an ARPU improvement of 9-10% for all three
Telcos as the full benefit of tariff hikes flow through in 4QFY22.

Sources of exhibits in this report include Bloomberg, Sebi, NSE, Capitaline, companies, and MOFSL’s database

April 2022 7
 India Strategy | Holding the Fort!

4QFY22 PREVIEW BFSI to drive earnings growth

Financials and O&G to propel earnings growth in 4QFY22
 Corporate earnings growth in 4QFY22 is likely to be underpinned by raw
material inflation, which will impact the gross margin of companies across
Expect BFSI, O&G sectors. The Russia-Ukraine conflict has disrupted global commodity supply
and IT to lead chains, leading to a sharp uptick in commodity prices.
incremental profit  Credit growth continues to pick up as disbursements grew across various
growth YoY segments. Asset quality trends are likely to remain robust as we expect modest
slippages. Healthy recoveries and upgrades will improve overall asset quality.
 Autos, Cement, Chemicals, Consumer, and Consumer Durables are likely to face
severe gross and EBITDA margin pressures. The momentum in Technology is
likely to continue, propelled by strong revenue growth. The MOFSL Universe is
likely to deliver 19% earnings growth in 4QFY22E, on a higher base of 100%
Revenue/PAT for earnings growth in 4QFY21. Excluding Financials, MOSL Universe earnings
MOFSL Universe to growth for 4QFY22 is projected at 10% YoY.
report 32%/19%  We expect EBITDA/PBT for our MOFSL Universe to grow by 13%/21% YoY.
YoY in 4QFY22 Sequentially, PBT/PAT for the MOFSL Universe should grow by 11%/10% in
4QFY22E. Earnings growth is expected to be driven by BFSI, O&G, and
Technology sectors, accounting for 88% of incremental PAT YoY.
 PSU Banks/Logistics/Private Banks/NBFC/Capital Goods/Real Estate sectors are
likely to report a YoY earnings growth of 80%/70%/39%/32%/32/26%.
 Profits for O&G/Technology/Metal/Consumer/Healthcare companies are
expected to grow by 19%/16%/9%/6%/2% YoY, but decline by 51%/26%/12% for
Sales/PAT for Nifty Auto/Cement/Specialty Chemical companies.
constituents to see  The MOFSL Universe is anticipated to see 13% YoY EBITDA growth. The
28%/23% YoY in operating margin for the MOFSL Universe, excluding Financials and OMCs,
4QFY22 should decline by 150bp YoY to 20.6%.
 The MOSL Universe is likely to post a two-year sales/EBITDA/PBT/PAT CAGR of
24%/25%/65%/54% over 4QFY20-4QFY22E
 Sales/EBITDA/PBT/PAT for Nifty companies is expected to grow at 28%/18%/
28%/23% YoY. The Nifty is likely to post a two-year sales/EBITDA/PBT/PAT CAGR
of 22%/23%/50%/50% over 4QFY20-4QFY22E.
 Nifty FY22/FY23 EPS estimate has seen a marginal downward tweak of
0.6%/0.8% to INR732/INR870. The cut in our FY23 earnings estimates for Autos
(10%) /Cement (10%)/Consumer (6%) is compensated by an increase in the
estimates of Metals (13%) and O&G (7%). Three companies saw an earnings
Nifty FY22E/FY23E upgrade of over 5%, while earnings of 12 companies have been downgraded by
EPS saw modest over 5%.
cuts of 0.6%/0.8%  Companies that have seen upgrades to their FY23E earnings are HNDL (29%),
to INR732/INR870 ONGC (16%), and Tata Steel (16%).
for FY22E/FY23E.  Companies that have seen downgrades to their FY23E earnings are Ultratech
Cement (-19%), Asian Paints (-16%), Shree Cement (-15%), Hero Moto (-14%),
Maruti (-14%), Tata Motors (-13%), Britannia (-12%), HUL (-11%), Eicher (-10%)
and Titan (-10%).

April 2022 8
 India Strategy | Holding the Fort!

Exhibit 1: Nifty/MOFSL Universe to post 23%/19% YoY earnings growth in 4QFY22, respectively (INR b)
EBIDTA
Sales Gr (%) EBIDTA Gr (%) PBT Gr (%) PAT Gr (%) PAT Delta Delta
Margin (%)
Sector Mar-22 YoY Mar-22 YoY Mar-22 YoY Mar-22 YoY INR b Share (%) Chg bp YoY
High PAT growth sectors 4,622 18 1,751 18 1,159 45 874 50 290 84 5
Insurance (5) 556 10 27 1,392 8 LP 10 1,515 10 3 448
Others (17) 476 32 91 55 55 168 42 265 30 9 284
Banks-PSU (6) 682 23 472 5 247 55 181 80 80 23 -1210
Logistics (6) 63 12 10 59 8 80 6 70 2 1 474
Staffing (3) 85 25 4 25 3 46 3 53 1 0 0
Banks-Private (12) 580 19 473 11 355 41 264 39 74 21 -590
Utilities (3) 774 24 331 47 206 47 158 36 42 12 674
Retail (11) 240 16 28 17 16 18 12 33 3 1 18
NBFC (18) 241 10 189 7 148 31 114 32 28 8 -251
Capital Goods (9) 838 11 100 17 90 17 63 32 15 4 63
Media (3) 34 17 10 11 9 17 7 29 2 0 -165
Real Estate (4) 52 -6 15 -5 14 -2 14 26 3 1 16
Med/Low growth sectors 13,832 46 2,109 15 1,735 17 1,256 13 145 42 -401
Oil & Gas (15) 8,154 65 839 32 647 31 471 19 77 22 -263
Technology (13) 1,567 21 375 13 351 15 263 16 36 10 -174
Metals (9) 2,721 38 601 4 475 10 325 9 26 7 -707
Consumer (19) 664 8 153 7 148 8 109 5 5 1 -22
Healthcare (23) 596 8 127 3 100 3 77 2 1 0 -106
Consumer Durables (6) 130 11 14 -4 14 -1 10 1 0 0 -169
PAT de-growth sectors 3,233 5 570 -8 162 -34 85 -51 -89 -26 -264
Infrastructure (4) 62 -5 14 -8 7 -14 5 -9 -1 0 -80
Chemicals-Specialty (9) 66 29 12 -11 11 -11 8 -12 -1 0 -800
Cement (11) 464 10 80 -20 56 -25 39 -26 -14 -4 -645
Automobiles (21) 2,110 2 218 -23 97 -44 72 -51 -75 -22 -331
Telecom (4) 530 15 247 17 -9 Loss -39 Loss 1 0 49
MOFSL Universe (231) 21,687 32 4,430 13 3,056 21 2,215 19 346 100 -344
Nifty (50) 12,737 28 3,152 18 2,200 28 1,605 23 303 -199
Sensex (30) 7,965 27 2,385 18 1,655 31 1,202 26 251 -235

Exhibit 2: MOFSL Universe – expect two-year PBT/PAT CAGR of 65%/54%, respectively (INR b)
PBT (INR b) Growth (%) PAT (INR b) Growth (%)
Sector Mar-20 Mar-21 Dec-21 Mar-22 YoY CAGR 2 Yr QoQ Mar-20 Mar-21 Dec-21 Mar-22 YoY CAGR 2 Yr QoQ
Automobiles (21) 13 174 88 97 -44.2 170.6 10.7 -9 147 56 72 -50.8 LP 28.2
Capital Goods (9) 58 77 56 90 16.7 24.2 61.8 32 48 35 63 31.5 39.3 77.9
Cement (11) 40 75 44 56 -25.3 18.0 26.4 31 53 32 39 -25.8 12.2 22.2
Chemicals-Specialty (9) 8 12 10 11 -11.2 16.3 1.5 8 9 8 8 -12.2 -2.4 0.4
Consumer (19) 108 137 156 148 7.9 16.9 -5.3 85 104 118 109 4.6 13.4 -7.3
Consumer Durables (6) 7 14 10 14 -1.1 35.0 42.3 6 10 7 10 0.6 32.6 48.2
Financials (41) 176 521 709 758 45.5 107.8 6.9 147 378 526 569 50.7 96.7 8.2
Banks-Private (12) 125 251 345 355 41.1 68.6 2.9 96 191 259 264 38.7 66.1 2.0
Banks-PSU (6) -46 159 218 247 55.3 LP 13.4 -26 100 150 181 80.0 LP 20.2
Insurance (5) 16 -2 2 8 LP -27.3 312.4 17 1 5 10 1,515.0 -22.3 110.5
NBFC (18) 81 113 145 148 31.3 35.1 2.5 60 86 112 114 32.3 37.5 2.0
Healthcare (23) 73 97 102 100 2.8 17.3 -1.7 57 76 82 77 1.9 16.6 -5.4
Infrastructure (4) 5 9 6 7 -14.1 23.6 19.0 3 6 4 5 -9.2 25.6 43.9
Logistics (6) 5 4 8 8 80.4 28.8 3.3 3 4 6 6 70.1 30.7 0.8
Media (3) -5 8 10 9 16.6 LP -12.3 -4 6 8 7 29.5 LP -5.7
Metals (9) 105 431 434 475 10.2 112.3 9.4 77 299 307 325 8.6 106.1 6.0
Oil & Gas (15) 114 492 559 647 31.4 138.5 15.9 214 394 418 471 19.4 48.4 12.5
Oil Ex OMCs (12) 161 290 439 519 79.2 79.6 18.2 149 225 326 375 66.7 58.8 14.9
Real Estate (4) 8 14 13 14 -2.1 33.2 2.7 7 11 13 14 25.7 38.5 3.0
Retail (11) 5 13 30 16 17.6 80.6 -46.6 3 9 22 12 32.8 87.6 -45.0
Staffing (3) 2 2 2 3 46.3 12.6 21.8 2 2 2 3 52.6 19.1 37.7
Technology (13) 260 306 343 351 14.5 16.2 2.4 205 227 256 263 16.0 13.5 2.8
Telecom (4) -42 -23 -20 -9 Loss Loss Loss -49 -41 -45 -39 Loss Loss Loss
Utilities (3) 167 140 159 206 46.8 11.1 30.0 109 116 121 158 36.0 20.7 31.1
Others (17) 13 21 44 55 167.7 110.1 25.2 9 11 36 42 265.2 117.8 17.3
MOFSL Universe (231) 1,120 2,525 2,762 3,056 21.0 65.2 10.7 937 1,869 2,012 2,215 18.5 53.8 10.1
Nifty (50) 984 1,713 1,968 2,200 28.5 49.5 11.8 709 1,302 1,446 1,605 23.3 50.4 11.0
Sensex (30) 874 1,268 1,539 1,655 30.5 37.6 7.6 647 951 1,135 1,202 26.4 36.3 5.9

April 2022 9
 India Strategy | Holding the Fort!

MOFSL Universe – sales/PAT to grow 32%/19% YoY, respectively

Exhibit 4: MOFSL Universe earnings to grow 19% YoY, led by
Exhibit 3: MOFSL Universe Sales to post 32% growth YoY BFSI and O&G

126
51

100
31
28
32
25
23

21

17
16

15
15
12

11
11

39
33
9

33
7
4

22
20
2

17

15

15

19
13
22

6
6

4
4

4
4
2
-1

-1
-2

-5

-5

June-17 -7

Mar-18 -14

Mar-20 -24
June-20 -40
June-20 -29

Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21
Mar-17

Mar-19

Mar-21

Mar-22E
June-16

June-18

June-19

June-21
Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21
Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22E
June-16

June-17

June-18

June-19

June-21
Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21
3

Exhibit 5: EBITDA margin to decline 150bp YoY to 20.6% Exhibit 6: PAT margin to decline 80bps YoY to 10.3%

11.0
11.1

10.9
Average: 9.3%

10.4
10.3
10.3

10.2

10.0
22.9

10.3
Average: 20.1%
22.5

9.8
9.7
22.1

9.7

9.4
9.4

9.3

9.1

9.1
21.5
21.4

8.9
21.1
20.9

8.5
8.5

8.3
20.6

8.0
20.2
19.9

19.9
19.8

19.8

7.2
19.6

19.4
19.4

19.2

19.0
18.9

18.9
18.9

18.8
18.7
19.1

4.7
Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21

Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21
Mar-22E

Mar-22E
June-16

June-17

June-18

June-19

June-20

June-21
Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21

June-16

June-17

June-18

June-19

June-20

June-21
Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21
Source: MOFSL, ex fi nancials and ex OMC Source: MOFSL, ex fi nancials and ex OMC

Exhibit 7: Key assumptions

Macro 1QFY22 2QFY22 3QFY22 4QFY22E FY21 FY22E FY23E FY24E
GDP Growth (%) 20.3 8.5 5.4 4.5 -6.6 8.9 6.4 5.9
IIP Growth (%) 44.3 9.5 1.9 0.0 -8.5 10.8 5.2 5.1
Inflation CPI-RU (%) 5.6 5.1 5.0 5.8 6.2 5.4 5.1 4.9
Currency: USD/INR 73.7 74.1 75.0 75.3 74.2 74.5 75.6 76.8
Repo Rate (%) 4.00 4.00 4.00 4.00 4.0 4.0 4.5 5.5

Sectoral 1QFY22 2QFY22 3QFY22E 4QFY22E FY21 FY22E FY23E FY24E

Auto: CV Vol ume growth (%) 377.9 52.7 9.3 7.2 -22.0 31.8 29.8 15.3
Ca r Vol ume growth (%) 361.6 -3.5 -13.2 -3.5 -6.7 12.4 18.7 14.1
Banking: Loan Growth (%) 5.8 6.7 9.1 9.0 5.6 9.0 11.8 13.5
Interest Rate (%): 1Yea r CP Ra te (Avg) 4.64 4.10 4.50 4.87 4.58 4.53 5.48 5.72
10Yea r G Sec (Avg) 6.03 6.19 6.36 6.72 5.97 6.33 6.94 7.12
Cement: Volume growth (%) 43.6 6.0 -2.9 -3.2 1.9 8.7 9.3 7.7
Capital Goods: L&T order Intake (INRb) 266 421 504 691 1,755 1,882 2,108 2,318
Capital Goods: L&T order Intake (% YoY) 12.7 50.4 -31.1 36.3 -5.8 7.2 12.0 10.0
Metal: Steel (USD/Tonne) 882 887 926 898 596 898 819 710
Al umi nium (USD/Tonne) 2,395 2,648 2,765 3,209 1,800 2,754 3,000 2,400
Zi nc (USD/Tonne) 2,913 2,991 3,364 3,650 2,425 3,230 2,900 2,750
Oil: Brent (USD/bbl) 68.6 73.0 79.4 97.8 44.9 79.7 80.0 75.0
Si ngapore GRM (USD/bbl) 2.0 3.8 6.0 6.0 0.5 4.4 6.0 6.0
Technology: $Revenue growth (%) 4.3 4.4 4.4 3.4 1.7 18.5 16.2 13.3

April 2022 10
 India Strategy | Holding the Fort!

Exhibit 8: Sectoral quarterly PAT trend (INR b) – MOFSL Universe to report 10% sequential growth in PAT
Sector Mar-19 June-19 Sep-19 Dec-19 Mar-20 June-20 Sep-20 Dec-20 Mar-21 June-21 Sep-21 Dec-21 Mar-22E
Automobiles 107 36 80 92 -9 -94 75 140 147 6 29 56 72
Ba nks-Pri vate 119 137 121 183 96 139 183 192 191 180 189 259 264
Ba nks-PSU -90 50 38 48 -26 47 82 87 100 123 148 150 181
i ns urance 15 11 7 11 17 14 9 8 1 2 9 5 10
NBFC 84 73 93 90 60 76 87 85 86 55 108 112 114
Ca pi tal Goods 55 21 36 34 32 -6 18 33 48 13 31 35 63
Cement 35 40 26 24 31 23 40 45 53 50 45 32 39
Chemi cals-Specialty 4 6 8 6 8 5 7 8 9 9 8 8 8
Cons umer 84 92 106 104 85 71 102 110 104 90 109 118 109
Cons umer Durables 7 8 6 5 6 2 7 8 10 5 7 7 10
Hea lthcare 52 58 64 58 57 68 83 85 76 85 91 82 77
Infra structure 4 3 3 3 3 1 3 6 6 4 4 4 5
Logi stics 5 3 4 3 3 -1 4 5 4 4 6 6 6
Medi a 6 9 10 7 -4 2 4 8 6 5 5 8 7
Meta ls 119 65 37 38 77 -27 105 208 299 340 392 307 325
Oi l & Ga s 306 246 250 238 214 162 283 296 394 299 386 418 471
Rea l Estate 6 4 6 5 7 -2 5 9 11 6 10 13 14
Reta il 7 9 8 12 3 -13 -1 12 9 -5 13 22 12
Sta ffing 2 2 2 2 2 1 1 1 2 1 2 2 3
Technology 201 187 198 207 205 189 215 234 227 239 247 256 263
Tel ecom -47 -47 -63 -55 -49 -46 -56 -48 -41 -55 -46 -45 -39
Uti l ities 119 96 95 95 109 82 102 98 116 94 95 121 158
Others 28 30 11 29 9 -12 10 18 11 -3 13 36 42
MOFSL Universe 1,228 1,137 1,145 1,238 937 684 1,369 1,646 1,869 1,546 1,900 2,012 2,215

Exhibit 9: Sectoral quarterly PAT growth trend (%, YoY)

Sector Mar-19 June-19 Sep-19 Dec-19 Mar-20 June-20 Sep-20 Dec-20 Mar-21 June-21 Sep-21 Dec-21 Mar-22E
Automobiles -16 -50 -12 33 PL PL -6 53 LP LP -62 -60 -51
Ba nks-Pri vate 81 64 22 46 -20 2 50 5 99 29 3 35 39
Ba nks-PSU Los s LP LP -9 Los s -4 118 80 LP 159 79 73 80
i ns urance -6 7 0 36 12 32 24 -24 -96 -86 -6 -40 1515
NBFC 37 6 33 24 -28 3 -6 -5 43 -27 24 32 32
Ca pi tal Goods 11 -2 8 1 -41 PL -50 -5 48 LP 76 8 32
Cement 22 42 13 18 -9 -41 58 88 70 115 12 -28 -26
Chemi cals-Specialty 28 65 92 49 84 -5 -5 33 8 68 7 -2 -12
Cons umer 10 15 30 26 1 -23 -3 6 23 27 7 7 5
Cons umer Durables -3 4 22 12 -16 -76 18 58 75 161 7 -15 1
Hea lthcare 13 27 20 6 9 19 29 46 33 25 10 -4 2
Infra structure -4 -11 12 -22 -20 -53 -10 90 74 200 39 -35 -9
Logi stics 13 -8 -12 -13 -27 PL -5 34 0 LP 51 27 70
Medi a 41 11 27 -27 PL -73 -60 17 LP 95 30 -3 29
Meta ls -15 -46 -69 -68 -36 PL 182 450 291 LP 273 47 9
Oi l & Ga s 7 -19 -9 -2 -30 -34 13 24 84 84 36 42 19
Rea l Estate 79 -28 -10 21 11 PL -14 70 53 LP 98 52 26
Reta il 5 18 28 20 -49 PL PL 6 165 Los s LP 82 33
Sta ffing 30 31 24 20 9 -55 -29 -23 -7 57 45 43 53
Technology 16 6 4 6 2 1 9 13 11 26 15 9 16
Tel ecom Los s Los s Los s Los s Los s Los s Los s Los s Los s Los s Los s Los s Los s
Uti l ities 6 7 16 0 -8 -15 7 3 7 15 -6 24 36
Others 46 79 0 47 -68 PL -12 -39 30 Los s 29 102 265
MOFSL Universe 33 4 4 6 -24 -40 20 33 100 126 39 22 19

April 2022 11
 India Strategy | Holding the Fort!

Exhibit 10: 58% of companies in the MOFSL Universe seen reporting PAT growth – lowest since Sep’20
Earnings 20 3 10 9 -21 8 4 11 22 7 6 2 -20 -43 10 27 79 126 41 25 25
Gr. (%)
23
30 35 38 29 21 24
45 32 33 34 38 34 36 34 38 42
% of MOFSL Univ. companies

47 44 11
16 66 64 10
17 14 9 12
25 15 21 24 20 19
20 21 23 24 14 20 17
20 18 21 15 21 10
18 15 16 12 14 12
17 15 13 15 11 59
12 16 10 54
35 41 9 8 36 38
23 25 32 31 26 26 26 31 24 30 29 30
19 15 17
Sep 17

Sep 18

Sep 19

Sep 20

Sep 21
Mar 17

Mar 18

Mar 19

Mar 20

Mar 21

Mar 22E
June 17

June 18

June 19

June 20

June 21
Dec 17

Dec 18

Dec 19

Dec 20

Dec 21
PAT Growth Ex OMCs (%) >30% >15-30% >0-15% <0% Ex OMCs (%)
6

Around 38% of companies would grow over 15% YoY and 26% of MOFSL Universe companies would report over 30% PAT growth. ~42% of
MOFSL Universe companies would report declines in profits YoY.

Exhibit 11: Metals, O&G, and BFSI to lead aggregate earnings growth in 4QFY22E; Autos and Cements to drag

15 10 3 2 2 1 1 1
30 28 26 5 3 0
42 36
77 74 1
80 1 14 75

2,215
1,869

2,305

MOFSL…
MOFSL…

MOFSL 4QFY22
MOFSL 4QFY21

Technology

Consumer
Insurance

Staffing
Utilities

Cap. Goods
Metals

Chemicals-Spec
NBFC

Telecom
Retail

Real Estate
Banks-PSU

Cons. Durables

Infra

Cement
Healthcare

Auto
Media
Logistics
Oil & Gas

Banks-PVT

Others

PAT (INRb)
PAT (INRb)

Source: MOFSL

Expect profit for Nifty companies to grow 23% YoY

 We expect EBITDA/PBT/PAT for Nifty companies to grow 18%/28%/23% YoY, led
by BFSI, O&G and IT. Autos & Cement will drag aggregate earnings growth.
 O&G, BFSI, IT and Metals are likely to contribute 95% of incremental profit
growth YoY in 4QFY22E.
 ONGC, ICICIBC, SBIN, RIL, and COAL are likely to contribute two-thirds of
incremental profit growth in Nifty companies in 4QFY22E.
 EBITDA margins for Nifty companies, excluding Financials and OMC, are likely to
decline by 60bp to 22.0%.

April 2022 12
 0
1
June-16

11
June-16 June-16

April 2022
-2
6
Sep-16

14
Sep-16 Sep-16

3
8
Dec-16

13
Dec-16 Dec-16

3
Mar-17 Mar-17

14
Mar-17

Nifty earnings
Telecom, BFSI,
Healthcare, and
O&G likely to lead

-2
June-17

9
June-17 June-17

12
Sep-17

17
Sep-17

12
Sep-17

11
Dec-17

12
Dec-17

13
Dec-17

5
Telecom
304

Mar-18

18
Mar-18

15
Mar-18

Exhibit 15: Nifty EBITDA to grow 18% YoY

5
66

June-18 Banks-PSU

26
June-18

24
June-18
63

Infra

13
Sep-18

14
Sep-18

23
Sep-18
59

NBFC

18
Dec-18

15
Dec-18

22
Dec-18
37

Healthcare

19

10
Mar-19 Mar-19

12
Mar-19
Exhibit 13: Nifty revenues to post 28% YoY growth in 4QFY22E
37

Oil & Gas

7
11
June-19 June-19

8
June-19
36

Utilities

7
Sep-19 Sep-19
0
Sep-19
33

Banks-Pvt

10
Dec-19 Dec-19

Exhibit 14: On a high base, we expect Nifty PAT to grow 23% YoY in 4QFY22
1
Dec-19
30

Metals

-1
Mar-20

-23
Mar-20 -4
Mar-20
27

Agro Chem

-9
June-20 June-20

-30
June-20
-26
Nifty
23

6
10
Sep-20 Sep-20
-4

Sep-20
22

Cap Goods

20

14
Dec-20 Dec-20
2

Dec-20
15

Technology

84

27
Mar-21 Mar-21
6

17

99 Mar-21 Consumer

39
June-21 June-21
-2

46

June-21 Insurance
Exhibit 12: Sector-wise breakdown of Nifty 4QFY22E PAT change YoY (%)

39

22
Sep-21 Sep-21
28

26 Sep-21 Cement

15
Dec-21 Dec-21
Retail
-20 -20

26

Dec-21
Mar-22E Mar-22E
23

18
Auto
-59

28

Mar-22E

13
Source: MOFSL
India Strategy | Holding the Fort!
 India Strategy | Holding the Fort!

Exhibit 16: Nifty earnings snapshot for 4QFY22E (INR b)

Sales Growth (%) EBIDTA Growth (%) PBT Growth (%) PAT Growth (%)
Sector Mar-22 YoY Mar-22 YoY Mar-22 YoY Mar-22 YoY
Ba ja j Auto 76 -11.4 11 -26.3 13 -25.0 10 -27.2
Ei cher Motors 33 11.6 7 6.3 7 7.2 6 8.2
Hero MotoCorp 76 -12.6 9 -25.8 9 -24.3 6 -25.2
Ma hi ndra & Ma hindra 170 27.7 18 -10.3 12 -16.2 9 -12.8
Ma ruti Suzuki 269 12.0 19 -3.9 16 25.6 12 3.2
Ta ta Motors 852 -3.8 88 -31.1 1 -98.0 1 -99.0
Axi s Ba nk 93 23.3 69 0.9 54 51.7 40 51.2
HDFC Ba nk 194 13.2 172 10.6 130 20.2 97 18.4
ICICI Ba nk 129 23.6 107 25.6 86 51.7 65 46.5
IndusInd Bank 40 13.1 34 7.1 19 51.4 14 51.5
Kota k Ma hindra Bank 46 19.7 33 -3.7 30 32.7 22 30.7
Sta te Bank 318 17.5 212 7.8 141 63.4 107 66
HDFC Li fe Insur. 145 12.3 8 90.7 4 18.1 4 11.7
SBI Li fe Insurance 175 12.5 9 72.4 5 -25.8 5 -9.8
Ba ja j Finance 52 35.0 41 32.7 33 80.5 24 81.3
Ba ja j Finserv 175 13.7 175 13.9 39 65.2 24 148.5
HDFC 43 7.0 42 4.4 39 16.3 32 16.3
La rs en & Toubro 540 12.2 70 9.3 62 7.9 42 22.1
Gra s im Industries 64 45.6 9 11.8 7 8.0 5 -3.5
Shree Cement 41 5.3 10 -15.7 8 -18.7 6 -27.8
Ul tra tech Cement 156 8.1 29 -20.7 21 -20.0 14 -20.3
As i an Pa ints 73 10.2 13 0.4 12 2.0 9 7.4
Bri ta nnia 35 10.5 5 -0.2 5 -4.1 4 6.2
Hi nd. Unilever 129 6.1 30 1.0 28 -0.3 20 -2.8
ITC 138 4.1 50 12.4 56 15.0 41 8.7
Nes tle 40 12.0 9 -0.9 8 -2.0 6 -1.2
Ta ta Consumer 31 2.7 4 44.9 4 53.3 2 91.9
Apol lo Hospitals 34 17.8 5 13.3 2 12.5 2 15.9
Ci pl a 51 10.9 11 35.3 9 56.9 7 57.6
Di vi s La bs 24 33.6 10 39.9 10 43.6 7 49.9
Dr Reddy’ s La bs 55 16.8 13 26.4 11 33.6 8 63.0
Sun Pha rma 94 11.1 24 22.2 22 37.5 18 21.5
Ada ni Ports 47 29.6 33 41.9 28 80.2 21 62.7
Hi ndalco 582 43.6 75 38.2 52 73.5 35 100.3
JSW Steel 422 56.8 88 4.4 71 12.7 52 22.1
Ta ta Steel 692 38.4 160 12.9 128 25.5 90 18.3
BPCL 1,232 60.3 33 -34.6 25 -51.8 19 -63.1
ONGC 353 66.6 201 98.8 164 159.6 123 157.5
Rel iance Inds. 2,318 55.0 345 47.6 240 54.0 166 32.5
Ti ta n Company 73 -3.0 7 -14.5 6 -18.9 5 -19.8
HCL Technologies 226 15.1 51 17.1 43 25.3 33 39.5
Infosys 329 24.9 85 17.6 82 18.5 61 19.6
TCS 506 15.7 138 7.9 135 7.6 101 8.9
Tech Ma hindra 121 24.4 21 7.7 19 21.0 14 16.5
Wi pro 207 27.4 46 10.7 40 6.9 31 4.0
Bha rti Airtel 317 23.0 158 28.0 37 134.4 13 304.3
Coa l India 351 31.6 118 47.4 100 55.5 75 62.7
NTPC 309 17.7 113 82.2 57 64.0 43 11.9
Power Gri d Corp. 113 18.4 101 20.1 49 18.9 41 26.8
UPL 148 15.8 33 16.1 23 37.2 15 27.1
Nifty Universe 12,737 28.0 3,152 18.4 2,200 28.5 1,605 23.3
Note: For Fi nancials, s ales represents net i nterest income, a nd EBITDA represents operating profit; Consensus estimates are used for Adani
Ports , Ba jaj Finserv, NTPC, a nd Power Gri d

April 2022 14
 India Strategy | Holding the Fort!

Exhibit 17: Expect 25% PAT CAGR for MOFSL Universe over FY21–24E
Sales EBIDTA EBIDTA PAT PAT Grw / PAT Delta
CAGR (%) CAGR (%) Margin (%) (INR b) CAGR (%) Share (%)
Sector (FY21-24) (FY21-24) FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E (FY21-24) (FY21-24)
High PAT CAGR (>20%) 18 16 19.6 20.3 21.3 5,729 6,920 7,968 52 21 15 28 78
Reta il (11) 32 51 11.6 12.5 13.0 41 71 94 529 73 32 143 2
Rea l Estate (4) 23 40 27.8 32.8 38.3 42 67 103 47 58 54 53 1
Sta ffing (3) 23 24 4.4 4.7 4.9 7 12 16 49 69 27 47 0
Logi stics (6) 20 34 15.9 15.9 16.4 21 25 31 101 20 25 44 0
Ca p. Goods (9) 14 25 10.7 11.8 12.3 141 189 225 57 34 19 36 2
Auto (21) 17 20 10.8 12.5 13.8 168 440 635 -38 161 44 33 7
Fi nancials (43) 15 13 58.4 58.8 58.9 1,986 2,638 3,253 37 33 23 31 33
Ba nks-PVT (12) 17 15 82.4 83.0 83.8 926 1,207 1,496 25 30 24 26 14
Ba nks-PSU (6) 11 11 69.6 70.4 71.2 628 855 1,073 86 36 25 47 14
Ins urance (5) 18 22 1.4 2.7 2.9 26 55 64 -26 112 17 22 1
NBFC (20) 14 12 78.9 78.8 79.2 406 521 620 18 28 19 22 5
Meta ls (9) 17 15 25.5 21.4 21.9 1,378 1,179 1,123 135 -14 -5 24 10
Medi a (3) 19 20 28.3 31.2 31.0 22 34 38 12 54 11 24 0
Infra structure (4) 15 13 24.5 24.6 24.7 17 24 30 11 41 21 24 0
Oi l & Ga s (15) 18 16 11.2 12.3 12.4 1,789 2,033 2,155 44 14 6 20 17
Ex OMCs (12) 20 25 16.7 18.7 18.5 1,390 1,745 1,864 76 26 7 33 20
Others (18) 20 30 17.7 20.4 21.9 115 207 267 177 79 29 86 4
Medium PAT CAGR (0-20%) 13 13 25.1 25.0 25.7 2,516 2,862 3,309 14 14 16 14 20
Cons . Durables (6) 17 16 10.1 11.1 11.1 29 39 45 9 34 15 19 0
Chemi cals-Specialty (9) 20 18 19.6 23.2 24.6 32 42 50 10 30 18 19 0
Technology (13) 17 16 24.4 24.4 24.8 1,006 1,178 1,366 17 17 16 17 9
Hea lthcare (23) 12 13 22.3 23.5 24.3 339 401 482 8 19 20 15 3
Cons umer (19) 13 15 23.0 23.1 24.7 428 487 582 10 14 20 15 4
Cement (11) 12 9 20.1 18.4 21.7 214 214 264 12 0 23 11 1
Uti l ities (3) 8 7 36.7 36.1 35.9 469 502 521 16 7 4 9 2
Negative PAT CAGR 11 16 45.9 47.8 49.5 -184 -142 -83 Loss Loss Loss Loss 2
Tel ecom (4) 11 16 45.9 47.8 49.5 -184 -142 -83 Los s Los s Los s Loss 2
MOFSL (234) 16 15 21.4 22.1 23.1 8,061 9,640 11,194 39 20 16 25 100
Nifty (50) 17 16 23.9 24.4 25.3 5,856 7,029 8,029 40 20 14 24 NA
Sensex (30) 17 16 30.2 30.0 31.2 4,374 5,048 5,940 35 15 18 22 NA
Note: For Banks, sales represent net interest income, and EBITDA represents operating profit; Sensex and Nifty Numbers are free float Source: MOFSL

Exhibit 18: Top upgrades/downgrades for Nifty for FY23E

(INR) Current EPS (INR) EPS UPGRADE / DOWNGRADE (%)
FY22E FY23E FY24E FY22E FY23E FY24E
Hi ndalco 60.3 78.7 59.4 9.3 29.3 0.3
Ta ta Steel 336.1 199.1 191.9 0.8 15.7 41.7
ONGC 42.4 61.9 64.2 11.0 15.6 41.5
Ti ta n Company 24.0 29.4 38.8 -10.4 -10.1 -5.8
Ei cher Motors 61.4 95.1 125.1 -7.2 -10.5 -5.8
Hi nd. Unilever 36.7 38.7 45.2 -2.3 -11.1 -9.4
Bri ta nnia 63.1 66.8 83.1 -0.9 -12.4 -10.6
Ta ta Motors -27.2 19.6 34.1 -14.8 -13.3 -12.0
Ma ruti Suzuki 107.2 214.8 345.2 -4.9 -13.5 -9.4
Hero MotoCorp 124.5 140.0 173.2 -6.5 -14.2 -12.6
Shree Cement 633.5 563.7 672.7 -0.7 -14.8 -7.8
As i an Pa ints 32.8 42.0 53.5 -6.9 -16.2 -7.9
Ul tra tech Cement 195.2 204.4 267.9 -3.5 -19.1 -10.2
Nifty (50) 732 870 1,003 -0.6 -0.8 -0.2
Source: MOFSL

April 2022 15
 Nifty50 FY22E PAT
Nifty-50… 5,856 Nifty50 FY21
Nifty-50 PAT
FY21… 4,182
ONGC 250 ONGC 338

April 2022
Tata Motors 180 Tata Steel 320
Reliance Ind 130 Reliance Ind 151
SBI 112 JSW Steel 148
HDFC Bk 75 SBI 136
TCS 64 Hindalco 79
ICICI Bk 51 ICICI Bk 66
Infosys 47 Axis Bk 64
Axis Bk 41 TCS 60
Hindalco 41 HDFC Bk 55
Bharti Airtel 39 Coal India 54
Maruti Suzuki 32 Bharti Airtel 38
Bajaj Finance 32 Infosys 31
L&T 24 Bajaj Finance 26
ITC 22 Grasim 22
HCL Tech 21 L&T 22
IndusInd Bk 20 IndusInd Bk 20
Kotak Mah Bk 20 ITC 19
HDFC 17 HDFC 19
NTPC 15 Sun Pharma 17
Adani Ports 15 Wipro 14
Coal India 13 HCL Tech 14
Bajaj Finserv 11 Kotak Mah Bk 14
Wipro 10 Power Grid 12
Eicher Mot 9 Bajaj Finserv 12
Asian Paints 9 Titan Co 11
Sun Pharma 9 Exhibit 20: Absolute FY23E PAT change (INR b) for Nifty constituents UPL 10
Exhibit 19: Absolute FY22E PAT change (INR b) for Nifty constituents

Tech Mah 8 Adani Ports 10

Grasim 7 Tech Mah 9
UPL 6 Apollo Hosp. 9
Divis Labs 6 M&M 8
Bajaj Auto 5 Divis Labs 8
Titan Co 5 Dr Reddy’s 7
HUL 5 Cipla 4
Dr Reddy’s 5 HUL 4
Cipla 5 Eicher Mot 3
Power Grid 4 Nestle 2
M&M 4 Ultratech 1
Tata Consumer 3 Tata Consumer 1
Hero Moto 3 Bajaj Auto 1
SBI Life 3 Shree Cement 0
Ultratech 3 Asian Paints 1
HDFC Life 2 SBI Life 1
Apollo Hosp. 2 HDFC Life 2
Nestle 2 NTPC 2
Britannia 1 Britannia 3
Shree Cement 3 Hero Moto 5
BPCL 20 Maruti Suzuki 11
JSW Steel 31 BPCL 34
Tata Steel 164 Tata Motors 107
Nifty50 FY23E PAT
Nifty-50… 7,029 Nifty50 FY22E PAT
Nifty-50… 5,856

16
India Strategy | Holding the Fort!
 India Strategy | Holding the Fort!

Exhibit 21: Nifty performance – expect FF PAT CAGR (FY21–23E) of 28%

Sales (INR b) Sales EBIDTA Margin (%) EBITDA PAT (INR b) PAT Contbn to
CAGR % CAGR % CAGR %
FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E Delta %
Company 21-23 21-23 21-23
High PAT Growth (20%+) 30,050 33,926 36,022 24 24 24 25 25 3,307 4,147 4,687 49 80
Bha rti Airtel 1,167 1,373 1,539 17 49 51 52 24 31 70 100 LP 3
Ta ta Motors 2,852 3,555 4,066 19 11 14 15 19 -104 75 130 490 3
Apol lo Hospitals 145 166 193 25 15 15 15 48 10 12 15 269 0
ONGC 4,937 5,177 5,123 20 20 24 24 49 545 795 824 96 21
Hi ndalco 1,976 2,238 2,213 30 14 15 13 41 134 175 132 79 4
Ta ta Steel 2,519 2,537 2,338 27 27 19 20 26 403 238 230 70 5
Ti ta n Company 283 327 411 23 11 12 12 51 21 26 34 63 1
Axi s Ba nk 336 397 477 17 75 78 81 10 130 171 222 61 4
JSW Steel 1,417 1,677 1,508 45 27 22 25 36 227 196 187 58 4
IndusInd Bank 150 172 203 13 87 87 87 13 48 68 89 55 1
Ba ja j Finance 179 224 274 27 80 78 78 21 71 103 133 52 2
Sta te Bank 1,213 1,348 1,510 10 63 65 67 11 360 471 582 45 9
Ei cher Motors 103 142 167 28 21 22 23 30 17 26 34 37 0
ICICI Ba nk 477 560 663 20 83 84 85 14 228 279 344 31 4
Di vi s La bs 88 106 128 23 43 43 44 26 28 34 41 30 0
La rs en & Toubro 1,576 1,779 1,975 14 12 12 12 18 91 115 133 29 2
Gra s im Industries 209 207 211 29 16 19 19 57 67 74 78 29 1
Rel iance Inds. 7,244 8,321 8,973 33 16 17 17 31 588 718 795 28 10
Coa l India 1,121 1,235 1,292 17 23 23 22 23 181 195 191 24 2
Ba ja j Finserv 213 258 309 20 84 80 78 14 56 67 84 23 1
Ta ta Consumer 124 137 150 9 14 16 16 18 10 13 16 23 0
Ada ni Ports 166 195 222 25 62 64 65 25 60 75 87 22 1
Ma ruti Suzuki 885 1,063 1,278 23 6 8 11 28 32 65 104 22 1
Dr Reddy’ s La bs 215 241 276 13 22 23 24 12 30 35 42 21 0
UPL 452 487 522 12 22 22 23 12 45 51 59 21 1
Medium PAT Growth (0-20%) 12,408 14,274 16,091 15 30 30 31 11 2,388 2,739 3,185 14 22
Sun Pha rma 383 422 480 13 27 27 28 19 77 86 99 19 1
HDFC Ba nk 725 860 1,020 15 90 89 88 15 366 441 521 19 5
Infosys 1,222 1,438 1,640 20 27 27 28 18 225 272 318 19 3
Tech Ma hindra 446 531 602 18 18 18 18 17 55 63 74 18 1
TCS 1,917 2,208 2,493 16 28 28 28 15 386 450 513 18 4
Ci pl a 216 238 265 11 22 23 24 14 29 33 39 17 0
Kota k Ma hindra Bank 169 198 235 14 71 71 72 8 114 133 159 16 1
HDFC 168 186 211 12 95 97 97 11 126 142 163 15 1
ITC 547 600 655 15 34 36 39 18 149 172 202 15 1
Ma hi ndra & Ma hindra 573 695 787 25 12 11 13 8 48 52 70 14 0
HCL Technologies 857 1,002 1,138 15 23 24 24 10 133 154 181 14 1
As i an Pa ints 285 338 369 25 16 17 20 10 31 40 51 12 0
Wi pro 789 902 1,019 21 22 22 22 14 122 132 151 11 1
Nes tle 147 167 189 12 24 23 24 10 23 25 29 9 0
Power Gri d Corp. 412 430 449 4 88 88 88 3 137 141 149 6 1
Ba ja j Auto 326 384 422 18 15 15 16 6 49 54 64 6 0
Hi nd. Unilever 506 562 626 11 24 23 24 7 86 91 106 5 0
SBI Li fe Insurance 585 711 869 20 3 3 3 3 13 16 18 5 0
NTPC 1,154 1,266 1,336 6 31 32 32 6 150 166 181 4 0
Ul tra tech Cement 524 593 626 15 22 20 23 1 56 59 77 4 0
HDFC Li fe Insur. 456 544 659 19 2 2 2 -8 12 14 17 3 0
PAT de-growth (<0%) 4,339 4,419 4,390 24 6 5 6 -13 162 143 157 -16 -2
Hero MotoCorp 294 329 366 3 12 12 13 -1 25 28 35 -3 0
Shree Cement 143 159 172 12 26 23 27 -5 23 20 24 -6 0
Bri ta nnia 140 158 174 10 15 14 16 -5 15 16 20 -7 0
BPCL 3,761 3,774 3,678 28 4 4 4 -18 99 78 78 -23 -2
Nifty (PAT free float) 46,798 52,619 56,502 21 24 24 25 19 3,204 3,809 4,394 28 100

April 2022 17
 India Strategy | Holding the Fort!

WEIGHT
SECTOR WEIGHT / BSE MOST EFFECTIVE SECTOR
RELATIVE TO
PORTFOLIO PICKS 100 WEIGHT STANCE
BSE100
Financials 32.2 34.0 1.8 Overweight
Private Banks 19.2 19.0 -0.2 Neutral
HDFC Ba nk 7.2 7.0 -0.2 Buy
ICICI Ba nk 5.7 7.0 1.3 Buy
Axi s Ba nk 2.4 3.0 0.6 Buy
IndusInd Bank 0.6 2.0 1.4 Buy
PSU Bank 2.2 7.0 4.8 Overweight
SBI 2.2 5.0 2.8 Buy
Ba nk of Baroda 0.0 2.0 2.0 Buy
Diversified Financials 10.8 8.0 -2.8 Underweight
HDFC 4.9 4.0 -0.9 Buy
Muthoot Fi nance 0.0 2.0 2.0 Buy
Chol a . Inv & Fi n. 0.3 2.0 1.7 Buy
Technology 15.0 17.0 2.0 Overweight
Infosys 7.2 8.0 0.8 Buy
TCS 4.2 6.0 1.8 Buy
HCL Technologies 1.4 3.0 1.6 Buy
Consumption / Retail 11.8 10.0 -1.8 Overweight
HUL 2.1 3.0 0.9 Buy
Ti ta n Company 1.1 3.0 1.9 Buy
Godrej Consumer 0.3 2.0 1.7 Buy
Jubi lant Foodworks 0.2 2.0 1.8 Buy
Energy/Telecom 14.8 11.0 -3.8 Underweight
Rel iance Industries 9.7 8.0 -1.7 Buy
Bha rti Airtel 2.0 3.0 1.0 Buy
Healthcare 4.1 6.0 1.9 Overweight
Apol lo Hospitals 0.5 2.0 1.5 Buy
Di vi s La bs 0.6 2.0 1.4 Buy
Gl a nd Pharma 0.0 2.0 2.0 Buy
Cap Goods, Infra & Cement 6.7 6.0 -0.7 Neutral
La rs en & Toubro 2.4 3.0 0.6 Buy
Ul tra tech Cement 0.8 2.0 1.2 Buy
Ma crotech Developers 0.0 1.0 1.0 Buy
Metals / Utilities 7.7 4.0 -3.7 Underweight
JSPL 0.0 2.0 2.0 Buy
Hi ndalco 0.9 2.0 1.1 Buy
Auto 4.8 2.0 -2.8 Underweight
As hok Leyland 0.2 2.0 1.8 Buy
Midcaps/Smallcaps 2.9 10.0 7.1 Overweight
Indigo Pa ints 0.0 1.0 1.0 Buy
TCI 0.0 1.0 1.0 Buy
Res taurant Brands Asia 0.0 1.0 1.0 Buy
APL Apol lo Tubes 0.0 1.0 1.0 Buy
GR Infra projects 0.0 1.0 1.0 Buy
Angel One 0.0 1.0 1.0 Buy
L&T Technology 0.0 1.0 1.0 Buy
Da l mia Bharat 0.0 1.0 1.0 Buy
Guja rat Gas 0.0 1.0 1.0 Buy
Lemon Tree Hotels 0.0 1.0 1.0 Buy
Cash 0.0 0.0 0.00
TOTAL 100.0 100.0

April 2022 18
 India Strategy | Holding the Fort!

Sectors & Companies

BSE Sensex: 59,035 Nifty 50: 17,640 April 2022

MOFSL Universe:
4QFY22 Highlights
&
Ready Reckoner

Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the
full-year numbers. This is because of differences in classification of account heads in the company’s
quarterly and annual results or because of differences in the way we classify account heads as opposed
to the company. All stock prices and indices as on 4 April 2022, unless otherwise stated.

April 2022 19
 India Strategy | Holding the Fort!

MOFSL Universe: 4QFY22 aggregate performance highlights

Exhibit 1: Quarterly Performance - MOFSL Universe (INR b)
Sector Sales EBITDA PAT
(Nos of Cos) Mar-22 Var. % YoY Var. % QoQ Mar-22 Var % YoY Var % QoQ Mar-22 Var % YoY Var % QoQ
Automobi l es (21) 2,110 2.0 10.7 218 -22.8 12.8 72 -50.8 28.2
Ca pi ta l Goods (9) 838 11.1 37.1 100 17.3 49.9 63 31.5 77.9
Cement (11) 464 9.6 14.5 80 -20.3 18.0 39 -25.8 22.2
Chemi cals-Specia l ty (9) 66 29.3 7.2 12 -11.2 1.7 8 -12.2 0.4
Cons umer (19) 664 7.8 -6.6 153 6.7 -6.5 109 4.6 -7.3
Cons umer Durabl es (6) 130 11.3 24.2 14 -3.9 35.4 10 0.6 48.2
Fi na nci a l s (41) 2,059 16.5 7.5 1,161 9.9 8.9 569 50.7 8.2
Ba nks -Pri va te (12) 580 18.8 5.7 473 10.8 6.1 264 38.7 2.0
Ba nks -PSU (6) 682 23.0 4.0 472 4.7 9.0 181 80.0 20.2
Ins ura nce (5) 556 9.7 17.0 27 1,392.5 LP 10 1,515.0 110.5
NBFC (18) 241 10.2 2.4 189 6.8 0.8 114 32.3 2.0
Hea l thca re (23) 596 8.1 -1.3 127 3.0 -3.1 77 1.9 -5.4
Infra s tructure (4) 62 -4.7 25.7 14 -8.0 12.3 5 -9.2 43.9
Logi s ti cs (6) 63 12.2 4.0 10 58.6 3.5 6 70.1 0.8
Medi a (3) 34 17.1 -8.7 10 11.1 -13.6 7 29.5 -5.7
Meta l s (9) 2,721 37.8 14.0 601 4.4 3.5 325 8.6 6.0
Oi l & Ga s (15) 8,154 65.1 25.1 839 31.5 16.0 471 19.4 12.5
Oi l Ex OMCs (12) 3,534 61.9 23.0 668 64.7 18.7 375 66.7 14.9
Rea l Es ta te (4) 52 -5.5 9.5 15 -5.0 14.2 14 25.7 3.0
Reta i l (11) 240 15.7 -14.5 28 17.5 -31.7 12 32.8 -45.0
Sta ffi ng (3) 85 25.2 5.6 4 25.1 10.9 3 52.6 37.7
Technol ogy (13) 1,567 21.2 3.1 375 12.9 1.9 263 16.0 2.8
Tel ecom (4) 530 15.4 4.6 247 16.7 6.0 -39 Los s Los s
Uti l i ti es (3) 774 23.7 15.1 331 46.9 32.5 158 36.0 31.1
Others (17) 476 32.2 8.4 91 55.3 8.7 42 265.2 17.3
MOFSL Universe (231) 21,687 31.6 14.6 4,430 12.6 9.6 2,215 18.5 10.1
Nifty (50) 12,737 28.0 13.4 3,152 18.4 10.2 1,605 23.3 11.0
Sensex (30) 7,965 27.3 11.9 2,385 18.0 7.9 1,202 26.4 5.9
For Ba nks: Sales = Net Interest Income, EBIDTA = Operating Profits. LP: Los s to Profit; PL: Profi t to Loss

Exhibit 2: Quarter-wise sales growth (% YoY)

51.1

Sales for MOFSL Universe is 30.6 28.2 31.6

likely to grow 32% YoY led
by higher commodity and
energy prices

June-21 Sep-21 Dec-21 Mar-22E

Exhibit 3: Quarter-wise net profit growth (% YoY)

PAT growth YoY (%)

126.1

PAT to grow 19% YoY led by

Financials 38.7
22.3 18.5

June-21 Sep-21 Dec-21 Mar-22E

April 2022 20
 India Strategy | Holding the Fort!

Annual performance - MOFSL universe (INR Billion)

Sales (INR b) Chg. YoY (%) EBIDTA (INR b) Chg. YoY (%) PAT (INR b) Chg. YoY (%)
Sector FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Auto (21) 7,360 8,860 10,106 17.7 20.4 14.1 798 1,108 1,395 -2.1 38.9 25.9 168 440 635 -37.7 161.4 44.2
Cap. Goods (9) 2,439 2,758 3,063 17.0 13.1 11.1 262 324 376 34.7 23.9 16.0 141 189 225 57.2 33.8 18.8
Cement (11) 1,597 1,748 1,847 20.6 9.5 5.6 321 321 400 3.5 0.0 24.6 214 214 264 11.7 0.0 23.0
Chemicals-Spec.(9) 240 262 288 43.2 9.1 9.9 47 61 71 9.7 29.2 16.8 32 42 50 9.7 30.1 18.1
Consumer (19) 2,606 2,928 3,244 17.1 12.4 10.8 600 676 802 12.6 12.7 18.7 428 487 582 10.3 13.8 19.7
Cons. Durables (6) 415 492 555 18.7 18.7 12.9 42 55 62 7.3 29.7 13.5 29 39 45 8.9 34.5 15.1
Financials (43) 7,392 8,534 9,954 12.5 15.4 16.6 4,317 5,014 5,864 7.0 16.1 16.9 1,986 2,638 3,253 36.6 32.8 23.3
Banks-PVT (12) 2,147 2,529 3,014 14.1 17.8 19.2 1,768 2,099 2,527 7.2 18.7 20.4 926 1,207 1,496 25.3 30.4 23.9
Banks-PSU (6) 2,560 2,869 3,218 9.2 12.1 12.2 1,782 2,019 2,291 7.5 13.3 13.4 628 855 1,073 86.3 36.1 25.4
Insurance (5) 1,745 2,070 2,492 15.6 18.6 20.4 25 57 72 -36.8 126.6 27.1 26 55 64 -25.9 111.9 17.0
NBFC (20) 940 1,065 1,230 12.8 13.3 15.5 742 839 975 8.0 13.1 16.1 406 521 620 18.3 28.3 19.0
Healthcare (23) 2,416 2,696 3,080 9.2 11.6 14.2 540 633 747 3.7 17.3 18.0 339 401 482 8.0 18.5 20.0
Infrastructure (4) 216 248 287 13.1 14.9 15.7 53 61 71 8.2 15.4 16.1 17 24 30 10.6 41.3 21.2
Logistics (6) 230 272 318 25.5 18.1 16.9 37 43 52 67.5 17.7 21.0 21 25 31 101.0 19.6 24.8
Media (3) 124 169 187 11.9 36.0 10.5 35 53 58 4.9 49.9 9.7 22 34 38 11.8 53.8 10.9
Metals (9) 9,458 10,218 9,663 54.9 8.0 -5.4 2,409 2,188 2,117 72.7 -9.2 -3.2 1,378 1,179 1,123 135.5 -14.4 -4.7
Oil & Gas (15) 28,743 29,287 29,894 59.3 1.9 2.1 3,212 3,603 3,718 36.5 12.2 3.2 1,789 2,033 2,155 43.7 13.7 6.0
Ex OMCs (12) 14,825 16,067 16,744 51.8 8.4 4.2 2,479 2,999 3,096 57.3 21.0 3.2 1,390 1,745 1,864 76.4 25.6 6.8
Real Estate (4) 175 204 257 27.9 16.7 26.0 49 67 98 35.7 37.9 47.1 42 67 103 47.4 58.4 54.4
Retail (11) 865 1,193 1,451 37.7 37.9 21.6 101 150 188 83.7 48.5 25.7 41 71 94 529.4 73.0 31.7
Staffing (3) 305 388 466 22.7 27.3 20.2 13 18 23 10.8 38.1 23.7 7 12 16 48.6 68.8 26.7
Technology (13) 5,888 6,885 7,839 19.7 16.9 13.9 1,439 1,677 1,942 14.5 16.5 15.8 1,006 1,178 1,366 17.4 17.1 15.9
Telecom (4) 1,994 2,273 2,527 7.6 14.0 11.2 916 1,087 1,251 15.0 18.7 15.1 -184 -142 -83 Loss Loss Loss
Utilities (3) 2,687 2,931 3,077 10.4 9.1 5.0 986 1,059 1,104 9.8 7.4 4.3 469 502 521 16.1 7.0 3.9
Others (18) 1,756 2,054 2,293 33.6 17.0 11.7 311 419 503 36.8 34.6 20.0 115 207 267 177.3 79.1 29.4
MOFSL (234) 76,904 84,401 90,396 34.1 9.7 7.1 16,487 18,617 20,842 21.0 12.9 12.0 8,061 9,640 11,194 39.1 19.6 16.1
Ex OMCs (231) 62,986 71,180 77,246 28.3 13.0 8.5 15,754 18,012 20,220 22.6 14.3 12.3 7,662 9,352 10,903 43.5 22.1 16.6
For Ba nks : Sa l es = Net Interes t Income, EBIDTA = Opera ti ng Profi ts
Valuations - MOFSL universe
PE (x) PB (x) EV/EBIDTA (x) ROE (%) EARN. CAGR (%)
Sector FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E (FY21-FY23) (FY21-FY24)
Auto (21) 65.4 25.0 17.3 3.7 3.3 2.9 13.6 9.4 7.0 5.7 13.3 16.9 27.6 32.9
Ca p. Goods (9) 37.4 27.9 23.5 3.6 3.3 3.0 22.3 18.0 15.5 9.7 11.9 12.9 45.0 35.7
Cement (11) 27.3 27.3 22.2 3.2 3.0 2.8 18.5 18.4 14.5 11.6 11.0 12.5 5.7 11.2
Chemi cals-Spec. (9) 51.7 39.7 33.7 10.0 8.3 6.9 35.5 27.2 23.0 19.4 20.9 20.6 19.5 19.0
Cons umer (19) 49.7 43.7 36.5 11.1 10.7 10.1 34.8 30.8 25.8 22.3 24.4 27.6 12.0 14.5
Cons . Durables (6) 61.4 45.6 39.6 9.8 8.5 7.4 40.4 30.8 26.8 15.9 18.7 18.8 21.0 19.0
Fi nancials (43) 23.2 17.5 14.2 2.7 2.4 2.1 N.M N.M N.M 11.5 13.6 14.6 34.7 30.8
Ba nks-PVT (12) 25.1 19.3 15.6 3.3 2.9 2.5 N.M N.M N.M 13.1 14.9 15.9 27.8 26.5
Ba nks-PSU (6) 10.4 7.6 6.1 1.0 0.9 0.8 N.M N.M N.M 9.8 11.9 13.2 59.3 47.1
Ins urance (5) 144.1 68.0 58.2 9.6 8.8 7.9 N.M N.M N.M 6.7 12.9 13.6 25.3 22.4
NBFC (20) 31.1 24.2 20.4 3.7 3.3 2.9 N.M N.M N.M 12.0 13.8 14.4 23.2 21.8
Hea lthcare (23) 30.0 25.3 21.1 4.3 3.7 3.2 18.7 15.7 13.1 14.3 14.5 15.2 13.1 15.4
Infra structure (4) 24.2 17.1 14.1 1.9 1.8 1.6 8.5 7.2 5.8 8.0 10.3 11.2 25.0 23.7
Logi stics (6) 36.5 30.5 24.4 5.2 4.7 4.2 19.6 16.4 13.3 14.2 15.4 17.3 55.1 44.2
Medi a (3) 27.2 17.7 16.0 3.1 2.8 2.5 16.9 10.9 9.7 11.2 15.7 15.7 31.1 24.0
Meta ls (9) 6.8 7.9 8.3 1.9 1.6 1.5 4.8 5.1 5.1 27.9 20.8 17.7 41.9 24.3
Oi l & Ga s (15) 13.3 11.7 11.0 1.8 1.6 1.4 9.1 7.8 7.3 13.2 13.5 12.9 27.8 20.1
Ex OMCs (12) 15.4 12.3 11.5 1.9 1.7 1.5 10.0 7.9 7.3 12.2 13.7 13.1 48.8 33.2
Rea l Estate (4) 56.1 35.4 23.0 3.5 3.2 2.8 52.0 37.3 24.5 6.2 9.0 12.2 52.8 53.3
Reta il (11) 158.3 91.5 69.5 19.1 16.5 14.1 65.2 43.9 34.9 12.1 18.1 20.3 229.9 142.9
Sta ffing (3) 33.5 19.8 15.6 4.4 3.6 2.9 18.0 12.8 10.1 13.2 18.2 18.8 58.4 47.0
Technology (13) 34.4 29.4 25.3 10.1 9.5 9.0 23.2 19.8 17.1 29.3 32.4 35.3 17.2 16.8
Tel ecom (4) -30.7 -39.6 -68.2 22.4 25.3 58.2 8.9 7.0 5.6 -73.1 -63.9 -85.3 Los s -23.8
Uti l ities (3) 8.9 8.3 8.0 1.6 1.5 1.4 7.3 6.7 6.3 18.5 18.4 17.9 11.4 8.9
Others (18) 47.9 26.7 20.7 4.3 3.8 3.3 18.4 13.7 10.9 9.0 14.3 16.1 122.9 85.9
MOFSL (234) 24.4 20.4 17.6 3.5 3.2 2.8 9.9 8.6 7.5 14.5 15.5 16.2 29.0 24.5
MOFSL Ex OMCs (231) 25.4 20.8 17.9 3.6 3.3 2.9 10.1 8.7 7.5 14.3 15.6 16.3 32.4 26.9
N.M.: Not Mea ni ngful

April 2022 21
 India Strategy | Holding the Fort!

Ready reckoner: Quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Ama ra Raja Batt. 565 Neutra l 24,736 17.6 4.6 2,983 -5.7 5.1 1,612 -14.9 11.5
Apol lo Tyres 198 Buy 53,432 6.3 -6.4 5,741 -29.5 -22.7 1,199 -58.4 -46.5
As hok Leyland 121 Buy 79,755 13.9 44.1 4,688 -12.2 109.4 1,757 -17.4 LP
Ba ja j Auto 3764 Neutra l 76,179 -11.4 -15.6 11,230 -26.3 -18.2 9,693 -27.2 -20.2
Ba l krishna Inds 2128 Neutra l 21,929 25.3 5.5 5,166 -5.3 4.9 3,595 -3.4 9.4
Bha ra t Forge 709 Buy 15,332 17.3 -4.3 3,729 11.7 -7.5 2,197 6.6 -16.5
Bos ch 14865 Neutra l 33,485 4.1 7.7 4,417 -4.1 23.6 3,221 -6.9 37.2
CEAT 985 Buy 23,998 4.8 -0.6 1,099 -57.9 -18.0 -180 PL Los s
Ei cher Motors 2506 Buy 32,804 11.6 13.9 7,276 6.3 24.9 6,095 8.2 33.6
Endura nce Tech. 1161 Buy 19,276 -9.6 2.0 2,056 -38.1 1 841 -55.1 -11.2
Es corts 1765 Neutra l 18,189 -17.7 -7.1 2,270 -34.1 -14.2 1,812 -33.2 -10.1
Exi de Inds. 159 Buy 31,243 6.3 -2.3 3,470 -15.8 -6.9 1,895 -22.4 -7.1
Hero Motocorp 2312 Buy 75,920 -12.6 -3.7 8,991 -25.8 -6.3 6,472 -25.2 -5.7
Ma hi ndra & Ma hindra 834 Buy 1,70,393 27.7 11.8 17,589 -10.3 -2.6 8,742 -12.8 -35.4
Ma hi ndra CIE 178 Buy 22,786 4.1 10.4 2,238 -22.0 10.7 917 -39.9 2.8
Ma ruti Suzuki 7775 Buy 2,69,107 12.0 15.8 19,132 -3.9 22.7 12,036 3.2 19.0
Mothers on Sumi 143 Buy 1,78,071 -1.0 4.1 16,382 -18.3 18.5 5,044 -29.4 105.0
MRF 66990 Neutra l 49,760 5.0 3.0 4,721 -36.7 -2.8 1,389 -56.2 -4.8
Sona BLW Precis. 663 Neutra l 5,228 -3.1 5.8 1,276 -8.9 -2.3 629 -10.8 -27.2
Ta ta Motors 447 Buy 8,52,317 -3.8 18.0 87,860 -31.1 29.9 586 -99.0 LP
TVS Motor 633 Neutra l 56,261 5.7 -1.4 5,266 -1.8 -7.3 2,627 -9.2 -8.9
Automobiles 21,10,201 2.0 10.7 2,17,582 -22.8 12.8 72,179 -50.8 28.2
ABB 2132 Buy 20,717 27.2 -1.4 2,044 54.5 10.3 1,555 104.4 6.0
Bha ra t Electronics 219 Buy 61,895 -10.4 67.6 14,523 -26.3 76.7 10,140 -25.0 73.8
BHEL 54 Sel l 87,905 22.6 71.2 1,056 LP 18.4 285 LP 99.5
Cummi ns India 1130 Sel l 14,800 18.7 -14.7 2,156 28.7 -20.3 2,097 13.0 -13.0
Engi neers India 67 Buy 10,020 -10.3 47.0 824 -49.7 31.9 1,027 -33.6 50.9
K E C International 389 Buy 45,552 4.5 36.4 3,294 -7.1 37.8 1,544 -20.5 65.0
La rs en & Toubro 1825 Buy 5,39,745 12.2 36.4 69,830 9.3 54.1 41,735 22.1 103.1
Si emens 2432 Neutra l 39,002 16.3 20.4 4,557 3.2 37.3 3,423 8.4 39.6
Therma x 2003 Neutra l 18,419 17.0 14.1 1,335 -4.4 18.0 943 -12.2 18.6
Capital Goods 8,38,054 11.1 37.1 99,618 17.3 49.9 62,749 31.5 77.9
ACC 2119 Buy 43,916 2.3 3.9 6,123 -28.7 10.3 3,619 -35.1 14.1
Ambuja Cements 311 Neutra l 39,311 8.6 5.2 7,154 -26.8 26.0 4,203 -36.8 40.6
Bi rl a Corpora ti on 1168 Buy 21,218 -0.5 21.2 2,841 -27.5 27.7 852 -53.3 59.4
Da l mi a Bha ra t 1574 Buy 31,242 -0.9 14.4 5,260 -31.4 28.6 1,396 14.0 114.8
Gra s i m Indus tri es 1678 Buy 63,985 45.6 10.6 9,063 11.8 -1.7 4,692 -3.5 -4.0
Indi a Cements 221 Neutra l 14,263 -1.6 28.7 1,473 -26.5 41.5 299 -58.3 804.8
J K Cements 2548 Neutra l 22,221 8.3 14.5 4,024 -8.4 8.5 1,978 -21.6 18.2
JK La ks hmi Cem. 466 Buy 13,698 3.6 14.8 1,762 -34.2 20.4 897 -46.4 19.9
Ra mco Cements 787 Buy 17,544 7.6 13.3 3,073 -31.6 33.1 1,367 -36.2 65.6
Shree Cement 24737 Neutra l 41,375 5.3 16.5 9,922 -15.7 20.2 5,542 -27.8 12.7
Ul tra tech Cement 6741 Buy 1,55,685 8.1 19.9 29,265 -20.7 21.0 14,461 -20.3 23.3
Cement 4,64,457 9.6 14.5 79,960 -20.3 18.0 39,307 -25.8 22.2
Al kyl Amines 3167 Neutra l 3,738 -2.2 -0.8 641 -51.9 -3.7 434 -53.2 -5.5
Atul 9962 Neutra l 14,201 27.3 2.9 2,621 3.1 4.2 1,764 2.3 16.4
Cl ea n Science 2043 Neutra l 2,132 59.2 17.9 775 10.6 1.8 590 11.1 1.8
Deepak Nitrite 2313 Neutra l 18,419 25.9 6.9 3,110 -31.6 -11.6 1,998 -31.1 -17.6
Fi ne Organic 4100 Neutra l 5,207 61.9 11.2 969 111.0 21.6 668 131.3 19.9
Ga l axy Surfactants 2981 Buy 9,877 26.1 6.3 822 -30.0 7.5 467 -40.6 2.4
Na vi n Fluorine 4092 Neutra l 3,897 20.3 6.2 1,111 31.9 13.2 857 20.8 23.9
NOCIL 245 Buy 4,277 32.8 10.0 573 13.9 14.7 351 -2.4 17.5
Vi na ti Orga nics 1974 Buy 4,514 61.3 22.3 999 0.8 7.7 719 1.5 -13.6
Chemicals-Specialty 66,260 29.3 7.2 11,621 -11.2 1.7 7,849 -12.2 0.4

April 2022 22
 India Strategy | Holding the Fort!

Ready reckoner: Quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
As i a n Pa i nts 3118 Neutra l 73,311 10.2 -14.0 13,239 0.4 -14.2 9,346 7.4 -9.4
Bri ta nni a 3271 Buy 34,604 10.5 -3.2 5,043 -0.2 -6.6 3,819 6.2 3.0
Col ga te 1562 Neutra l 13,594 5.9 6.2 3,939 -6.6 3.5 2,692 -14.4 6.7
Da bur 544 Buy 25,719 10.1 -12.6 5,368 21.3 -14.5 4,241 12.2 -15.7
Ema mi 453 Buy 7,526 3.0 -22.6 1,988 22.1 -41.8 1,392 -6.8 -51.4
Godrej Cons umer 771 Buy 28,869 5.7 -12.6 5,577 -3.0 -20.2 3,803 -11.5 -26.0
Hi nd. Uni l ever 2127 Buy 1,28,704 6.1 -1.7 29,861 1.0 -8.9 20,431 -2.8 -10.9
Indi go Pa i nts 1623 Buy 3,010 18.4 13.4 487 13.4 25.9 318 27.9 30.9
ITC 255 Neutra l 1,38,421 4.1 -12.7 50,292 12.4 -1.4 40,764 8.7 -1.9
Jyothy La bs 150 Neutra l 5,255 7.8 -0.6 630 -9.8 4.1 374 -25.8 5.8
Ma ri co 530 Buy 21,859 8.6 -9.2 3,459 8.4 -19.7 2,425 1.9 -21.8
Nes tl e 17782 Neutra l 40,441 12.0 8.2 9,221 -0.9 8.3 5,951 -1.2 3.8
P&G Hygi ene 14317 Buy 8,508 12.0 -22.2 2,110 54.8 -28.8 1,530 46.8 -27.9
Pa ge Indus tri es 43702 Neutra l 9,251 5.0 -22.2 1,950 14.8 -22.2 1,308 13.1 -25.1
Pi di l i te Inds . 2494 Neutra l 25,590 14.5 -10.2 5,114 11.0 -6.9 3,291 6.2 -7.4
Ta ta Cons umer 788 Buy 31,180 2.7 -2.8 4,349 44.9 -5.8 2,175 91.9 -20.9
Uni ted Breweri es 1525 Sel l 15,607 1.1 -1.3 1,918 -26.6 -8.5 1,052 -33.8 -9.9
Uni ted Spi ri ts 909 Neutra l 25,507 14.7 -11.6 3,954 -4.0 -19.4 2,326 -4.6 -20.1
Va run Bevera ges 953 Buy 26,575 18.6 53.2 4,527 18.6 118.1 2,023 56.5 1,126.6
Consumer 6,63,531 7.8 -6.6 1,53,026 6.7 -6.5 1,09,261 4.6 -7.3
Bl ue Star 1098 Neutra l 19,420 20.5 28.9 1,179 15.8 30.2 676 -0.5 42.4
CG Cons umer El ect. 375 Buy 17,339 14.4 23.0 2,419 7.6 20.0 1,812 6.7 22.3
Ha vells India 1180 Neutra l 39,035 17.2 6.9 5,000 -1.1 13.6 3,548 5.8 16.0
Ori ent Electri c 324 Buy 8,750 9.1 29.0 948 -2.0 42.7 589 -6.1 54.6
Vol tas 1276 Neutra l 27,564 3.9 53.7 2,996 -9.4 92.5 2,444 2.8 154.7
Whi rl pool India 1633 Buy 18,031 1.3 25.6 1,387 -26.8 86.6 963 -22.2 132.1
Consumer Durables 1,30,138 11.3 24.2 13,930 -3.9 35.4 10,032 0.6 48.2
Aja nta Pharma 1761 Buy 7,996 5.6 -4.6 2,193 -15.5 -8.5 1,500 -5.8 -21.8
Al embic Pharma 756 Neutra l 12,942 1.1 1.8 2,578 -24.6 0.8 1,597 -36.3 -9.5
Al kem Lab 3470 Buy 21,714 -0.9 -17.1 3,178 -14.4 -36.2 2,458 -22.5 -53.2
Apol lo Hospitals 4562 Buy 33,771 17.8 -7.2 4,667 13.3 -20.5 1,767 15.9 -27.4
Aurobi ndo Pharma 692 Buy 59,299 -1.2 -1.2 9,728 -23.7 -4.3 5,180 -34.4 -7.9
Bi ocon 346 Neutra l 23,250 26.4 6.9 5,980 37.3 5.8 2,171 -14.1 16.2
Ci pl a 1028 Neutra l 51,085 10.9 -6.8 10,777 35.3 -12.5 6,515 57.6 -10.6
Di vi s La bs 4501 Buy 23,889 33.6 -4.2 10,018 39.9 -8.9 7,482 49.9 -17.3
Dr Reddy’ s La bs 4317 Buy 55,217 16.8 3.8 12,737 26.4 6.0 7,668 63.0 7.8
Eri s Li fescience 708 Buy 2,866 3.0 -13.7 965 2.1 -20.7 736 7.9 -26.9
Gl a nd Pharma 3385 Buy 10,221 15.1 -3.9 3,631 10.8 4.1 2,866 10.0 5.0
Gl enmark Pharma 461 Neutra l 29,866 4.4 -0.5 4,923 -5.9 -5.7 2,166 -7.4 -4.6
Gra nules India 314 Neutra l 10,501 31.4 7.2 1,804 -10.7 15.3 1,143 -10.4 29.9
GSK Pha rma 1625 Neutra l 9,224 13.4 13.1 2,179 27.5 10.2 1,672 25.4 7.1
IPCA La bs . 1026 Buy 13,177 18.2 -7.9 2,248 -1.8 -27.0 1,740 8.0 -11.6
Jubi lant Pharmova 435 Neutra l 12,404 -21.5 -5.3 1,837 -51.0 -5.4 427 -76.2 -16.3
La urus La bs 600 Buy 12,200 -13.6 18.6 3,888 -17.7 36.3 2,321 -21.8 49.8
Lupi n 790 Neutra l 39,097 3.3 -6.0 5,257 -25.7 -6.8 2,203 -51.2 -18.3
Sol ara Acti ve Pharma 700 Buy 3,266 -26.5 225.5 224 -77.4 LP -260 PL Los s
Stri des Pharma 360 Buy 8,529 -6.1 7.4 488 -69.4 959.0 -481 PL Los s
Sun Pha rma 926 Buy 93,700 11.1 -4.5 24,043 22.2 -6.4 17,697 21.5 -6.9
Torrent Pha rma 2831 Neutra l 21,162 9.3 0.4 5,461 -6.2 1.5 2,428 -25.1 -2.5
Zydus Li fesciences 364 Buy 40,861 6.2 11.8 8,670 1.4 15.2 6,150 31.1 22.9
Healthcare 5,96,234 8.1 -1.3 1,27,475 3.0 -3.1 77,147 1.9 -5.4
As hoka Buildcon 90 Buy 14,252 2.8 29.1 1,587 -21.1 31.5 1,181 -20.8 55.3
G R Infraproject 1556 Buy 22,784 -13.3 25.3 3,510 -14.2 37.7 1,971 -20.3 49.2
IRB Infra 264 Neutra l 16,017 -0.3 25.2 7,386 -2.8 0.0 1,010 3.6 39.0

April 2022 23
 India Strategy | Holding the Fort!

Ready reckoner: Quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
KNR Cons tructions 293 Buy 9,412 0.6 22.8 1,805 -0.9 13.6 1,020 32.5 28.5
Infrastructure 62,464 -4.7 25.7 14,288 -8.0 12.3 5,181 -9.2 43.9
Bl ue Dart Express 6713 Neutra l 11,845 22.6 -5.6 1,857 6.8 -8.9 1,050 17.9 -14.1
Concor 680 Buy 21,232 9.5 10.6 5,046 167.0 10.7 3,102 211.8 8.3
Ma hi ndra Logistics 506 Neutra l 11,418 17.2 2.1 534 15.8 12.1 88 -42.7 54.4
TCI Expres s 1728 Buy 3,004 7.4 4.7 489 -10.0 3.7 362 -15.0 3.0
Tra ns port Corp. 627 Buy 9,182 2.9 9.6 1,097 23.8 0.5 829 23.3 1.1
VRL Logi s tics 490 Buy 6,730 12.1 -0.8 1,248 30.5 -3.3 537 44.5 -11.2
Logistics 63,410 12.2 4.0 10,271 58.6 3.5 5,968 70.1 0.8
PVR 1907 Neutra l 3,920 136.7 -33.6 -437 Los s PL -60 Los s Los s
Sun TV 498 Buy 9,246 18.2 -10.5 6,402 17.1 -11.3 4,253 -5.5 -7.0
Zee Entertainment 303 Buy 20,939 6.5 -0.9 4,525 -16.3 -5.6 3,001 11.2 -8.3
Media 34,104 17.1 -8.7 10,490 11.1 -13.6 7,195 29.5 -5.7
Hi ndalco 587 Buy 5,81,766 43.6 15.7 74,520 38.2 0.8 34,950 100.3 2.1
Hi ndustan Zinc 325 Neutra l 85,868 23.6 7.5 48,082 24.0 10.0 29,760 19.8 10.2
JSPL 548 Buy 1,50,055 26.3 19.8 38,030 -28.1 14.9 22,570 -23.2 38.7
JSW Steel 733 Buy 4,22,389 56.8 10.9 88,103 4.4 -3.5 52,271 22.1 20.0
Na l co 126 Buy 41,458 46.9 9.9 13,962 47.9 17.3 9,742 55.0 17.2
NMDC 170 Buy 72,561 6.0 23.5 31,447 -25.9 20.4 22,891 -28.0 11.7
SAIL 106 Buy 3,18,133 36.6 26.0 17,572 -71.4 -48.5 4,773 -86.6 -72.2
Ta ta Steel 1339 Neutra l 6,91,649 38.4 13.8 1,60,083 12.9 0.7 90,306 18.3 -7.5
Veda nta 422 Neutra l 3,57,254 26.7 4.8 1,29,179 42.9 20.3 58,001 66.1 38.1
Metals 27,21,134 37.8 14.0 6,00,977 4.4 3.5 3,25,265 8.6 6.0
Aegi s Logi s ti cs 218 Neutra l 15,248 50.8 25.6 1,826 82.3 22.6 1,276 95.1 25.4
BPCL 380 Neutra l 12,32,154 60.3 21.9 33,061 -34.6 -22.9 18,903 -63.1 -23.2
Ca s trol Indi a 104 Buy 13,694 20.3 25.6 2,765 -18.7 4.0 2,021 -17.0 7.2
GAIL 162 Buy 3,22,076 107.1 25.0 38,555 50.3 -8.8 28,840 47.6 -12.3
Guja ra t Ga s 512 Buy 44,415 29.5 -13.7 2,352 -57.6 -0.9 1,017 -70.9 -16.6
Guja ra t Sta te Petronet 274 Buy 3,692 -6.3 -7.5 3,094 -10.1 -8.0 1,947 -6.1 -8.7
HPCL 280 Neutra l 11,72,211 56.6 21.3 2,419 -94.8 -87.1 -5,045 PL PL
Indra pra s tha Ga s 393 Neutra l 22,844 47.3 3.1 4,201 -14.6 -10.5 2,717 -17.9 -11.9
IOC 122 Buy 22,15,488 79.1 32.8 1,35,244 0.2 37.1 81,838 -6.8 39.6
Ma ha na ga r Ga s 825 Buy 11,118 54.9 8.2 2,938 -7.1 185.0 1,908 -10.3 235.9
MRPL 44 Neutra l 2,71,319 99.9 31.6 31,346 267.4 71.2 20,996 539.5 116.7
Oi l Indi a 237 Buy 47,678 84.8 27.6 24,731 482.3 95.2 19,424 111.7 56.0
ONGC 168 Buy 3,53,033 66.6 24.0 2,01,240 98.8 26.0 1,22,649 157.5 40.0
Petronet LNG 198 Buy 1,10,246 45.5 -12.5 10,327 -5.4 -40.4 6,470 3.8 -43.4
Rel i a nce Inds . 2663 Buy 23,18,499 55.0 25.3 3,44,656 47.6 16.0 1,65,648 32.5 2.0
Oil & Gas 81,53,715 65.1 25.1 8,38,755 31.5 16.0 4,70,609 19.4 12.5
Oil Ex OMCs 35,33,862 61.9 23.0 6,68,032 64.7 18.7 3,74,912 66.7 14.9
DLF 387 Neutra l 11,298 -34.0 -27.1 3,711 -18.2 -28.8 4,111 -14.5 -25.3
Godrej Properties 1682 Neutra l 1,366 -68.4 -51.0 -225 Los s Los s -774 PL PL
Ma crotech Developers 1201 Buy 29,778 17.5 44.6 7,584 -6.2 56.1 4,658 60.1 67.0
Oberoi Realty 977 Buy 9,231 16.8 10.9 4,158 11.3 25.4 5,767 101.0 23.3
Real Estate 51,673 -5.5 9.5 15,227 -5.0 14.2 13,762 25.7 3.0
Adi tya Bi rl a Fa s hi on 299 Buy 26,083 43.2 -12.7 2,845 20.9 -51.1 -319 Los s PL
Avenue Superma rts 4107 Neutra l 87,854 18.5 -4.7 8,837 44.2 2.0 5,720 38.2 3.5
Ba rbeque Na ti on 1259 Neutra l 2,674 18.1 -6.7 526 15.6 -19.9 20 -69.4 -86.6
Devya ni Intl . 173 Buy 6,399 47.7 2.5 1,518 35.8 2.7 640 338.2 -2.1
Jubi l a nt Foodworks 2797 Buy 11,284 10.0 -5.5 2,934 17.7 -7.6 1,140 9.3 -17.1
Res ta ura nt Bra nds 112 Buy 3,059 56.0 9.3 430 75.5 30.9 -24 Los s Los s
Shoppers Stop 465 Neutra l 7,979 18.9 -16.1 1,287 34.6 -29.7 9 LP -98.1
Ti ta n Compa ny 2517 Buy 72,681 -3.0 -27.6 6,986 -14.5 -51.6 4,558 -19.8 -55.0
Trent 1295 Neutra l 12,750 64.8 -5.4 1,850 35.5 -36.6 492 -19.9 -63.0

April 2022 24
 India Strategy | Holding the Fort!

Ready reckoner: Quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
V-Ma rt Reta i l 3832 Buy 5,075 44.2 -26.7 449 33.9 -66.8 -84 Los s PL
Wes tli fe Devel opment 475 Neutra l 4,464 24.8 -6.4 636 36.1 -19.8 68 LP -67.3
Retail 2,40,302 15.7 -14.5 28,297 17.5 -31.7 12,221 32.8 -45.0
Ques s Corp 699 Buy 40,066 33.4 8.7 2,043 29.8 14.3 1,510 33.3 70.6
SIS 508 Buy 26,262 7.4 1.0 1,402 13.6 8.1 824 129.4 8.0
Tea m Lease Serv. 4036 Neutra l 18,678 39.3 6.0 392 50.2 4.1 352 31.2 16.5
Staffing 85,006 25.2 5.6 3,837 25.1 10.9 2,687 52.6 37.7
Coforge 4511 Neutra l 17,238 36.6 4.0 3,413 57.4 11.2 2,106 53.1 11.7
Cyi ent 944 Buy 11,680 6.8 -1.3 1,927 2.9 -9.4 1,232 11.4 -6.4
HCL Technologies 1187 Buy 2,26,119 15.1 1.3 51,172 17.1 -2.9 33,288 39.5 -3.3
Infosys 1882 Buy 3,28,578 24.9 3.1 85,492 17.6 1.3 60,720 19.6 4.5
L&T Infotech 6299 Neutra l 43,347 32.6 4.8 8,350 16.7 0.5 6,262 28.2 2.2
L&T Technology 5197 Buy 17,674 22.7 4.7 3,911 33.4 6.4 2,748 41.3 10.5
Mi ndtree 4313 Neutra l 28,831 36.7 4.8 6,094 31.7 2.9 4,425 39.4 1.1
Mpha siS 3314 Buy 32,276 27.9 3.3 5,665 21.3 2.4 3,850 21.5 7.7
Pers i stent Systems 4783 Neutra l 16,159 45.1 8.3 2,682 42.4 6.8 1,869 35.6 5.9
TCS 3770 Buy 5,05,796 15.7 3.5 1,38,181 7.9 3.9 1,01,066 8.9 3.1
Tech Ma hindra 1499 Neutra l 1,21,022 24.4 5.7 20,988 7.7 1.9 14,106 16.5 3.1
Wi pro 606 Neutra l 2,06,990 27.4 1.9 45,564 10.7 2.2 30,914 4.0 4.2
Zensar Tech 383 Buy 11,366 29.6 3.1 1,651 -5.3 4.2 912 0.8 0.4
Technology 15,67,076 21.2 3.1 3,75,091 12.9 1.9 2,63,498 16.0 2.8
Bha rti Airtel 768 Buy 3,16,784 23.0 6.1 1,57,875 28.0 7.4 13,028 304.3 61.4
Indus Towers 221 Neutra l 68,798 6.0 -0.7 36,628 7.3 -1.0 14,940 9.5 -4.9
Ta ta Comm 1235 Neutra l 43,059 5.7 2.9 11,427 12.6 5.6 4,144 39.0 7.2
Voda fone Idea 10 Neutra l 1,01,404 5.5 4.4 41,033 -6.9 7.5 -71,437 Los s Los s
Telecom 5,30,046 15.4 4.6 2,46,962 16.7 6.0 -39,325 Loss Loss
Coa l India 188 Buy 3,51,278 31.6 23.5 1,17,509 47.4 59.1 74,720 62.7 63.9
NTPC 144 Buy 3,09,262 17.7 7.1 1,13,275 82.2 25.8 43,151 11.9 3.4
Power Gri d Corp. 227 Buy 1,13,405 18.4 14.2 1,00,677 20.1 16.8 40,524 26.8 21.0
Utilities 7,73,946 23.7 15.1 3,31,462 46.9 32.5 1,58,395 36.0 31.1
APL Apol lo Tubes 944 Buy 39,724 53.6 23.0 2,647 28.2 30.9 1,713 43.7 48.2
BSE 921 Buy 1,816 22.6 -1.3 533 27.0 -7.7 556 70.8 -9.7
Coroma ndel Int. 807 Buy 40,283 41.0 -20.6 3,066 17.5 -43.7 1,969 26.4 -48.4
EPL 189 Buy 9,257 14.3 4.8 1,360 -2.7 -2.0 461 -18.9 -19.3
Godrej Agrovet 548 Buy 19,357 32.4 -6.9 1,538 37.0 12.9 832 46.9 6.8
Indiamart Inter. 4829 Buy 1,978 10.1 5.2 647 -24.2 -17.9 720 8.1 2.5
Indian Hotels 239 Buy 8,918 45.0 -19.7 1,866 161.6 -42.0 -104 Los s PL
Info Edge 4679 Neutra l 4,510 55.5 11.8 1,306 145.4 16.5 1,266 81.0 13.8
Interglobe Aviation 2013 Neutra l 99,463 59.8 7.0 23,626 283.8 24.0 6,325 LP 392.4
Ka veri Seed 579 Buy 677 5.4 -46.3 -181 Los s PL -175 Los s PL
Lemon Tree Hotel 64 Buy 1,222 28.5 -14.9 465 63.1 -26.5 -156 Los s Los s
MCX 1451 Buy 963 -0.6 7.6 430 -2.8 12.5 376 -2.2 9.5
P I Industries 2862 Buy 13,268 10.8 -2.2 2,787 22.6 -6.0 2,217 23.3 -0.4
SRF 2635 Neutra l 35,278 35.3 5.4 9,110 43.6 7.4 5,727 53.8 21.3
Ta ta Chemicals 1001 Neutra l 32,851 24.6 4.6 5,383 90.4 -1.3 3,175 2,597.2 5.5
Tri dent 54 Buy 18,175 34.6 -7.2 3,344 47.2 -17.1 1,755 79.8 -25.2
UPL 785 Neutra l 1,48,231 15.8 31.2 32,966 16.1 23.7 15,120 27.1 25.5
Others 4,75,972 32.2 8.4 90,893 55.3 8.7 41,776 265.2 17.3
PL: Profi t to Loss ; LP: Loss to Profi t

April 2022 25
 India Strategy | Holding the Fort!

Ready reckoner: Quarterly performance

CMP NII (INR M) OP. PROFITS (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
(INR) RECO Mar-22 Mar-21 Mar-21
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Financials
AU Sma l l Finance 1309 Buy 8,945 36.4 9.0 5,075 35.8 10.7 3,169 87.6 4.9
Axi s Ba nk 784 Buy 93,121 23.3 7.6 69,285 0.9 12.4 40,476 51.2 12.0
Ba ndhan Bank 319 Neutra l 22,869 30.2 7.6 20,276 17.2 4.0 9,491 821.2 10.5
DCB Ba nk 74 Neutra l 3,567 14.6 3.4 2,102 2.5 5.7 871 11.8 15.6
Equi tas Holdings 113 Buy 5,541 23.5 2.5 2,332 -6.7 3.8 1,038 -8.1 -4.0
Federal Bank 103 Buy 16,047 13.0 4.3 9,647 9.0 5.5 5,507 15.3 5.6
HDFC Ba nk 1656 Buy 1,93,772 13.2 5.1 1,71,868 10.6 2.4 96,928 18.4 -6.3
ICICI Ba nk 746 Buy 1,28,883 23.6 5.3 1,07,280 25.6 5.7 64,513 46.5 4.2
IndusInd Bank 988 Buy 39,962 13.1 5.3 33,516 7.1 1.2 14,032 51.5 13.0
Kota k Ma hindra Bank 1836 Neutra l 45,986 19.7 6.1 32,817 -3.7 21.5 21,981 30.7 3.1
RBL Ba nk 142 Buy 10,456 15.4 3.5 6,485 -26.0 2.8 1,984 163.3 27.1
SBI Ca rds 877 Buy 10,722 29.4 7.6 12,775 36.0 11.7 4,482 155.5 16.2
Banks-Private 5,79,872 18.8 5.7 4,73,459 10.8 6.1 2,64,473 38.7 2.0
Ba nk of Baroda 116 Buy 88,626 24.7 3.6 57,802 -7.7 5.4 22,218 LP 1.1
Ca na ra Bank 241 Buy 73,913 32.2 6.4 63,747 11.8 9.9 20,233 100.2 34.7
Indian Bank 161 Buy 45,164 35.5 2.8 33,807 32.7 2.8 7,581 -55.6 9.9
Punja b National Bank 37 Neutra l 81,256 17.1 4.1 53,607 -4.9 5.6 11,604 97.9 3.0
Sta te Bank 513 Buy 3,18,135 17.5 3.7 2,12,409 7.8 14.7 1,07,002 65.9 26.9
Uni on Bank 42 Buy 75,006 38.8 4.5 50,158 -3.2 -1.6 12,040 -9.5 10.9
Banks-PSU 6,82,100 23.0 4.0 4,71,530 4.7 9.0 1,80,678 80.0 20.2
HDFC Li fe Insur. 572 Neutra l 1,44,520 12.3 19.2 8,274 90.7 349.1 3,551 11.7 29.7
ICICI Pru Li fe 509 Buy 1,16,964 -1.5 28.9 6,933 30.7 69.5 3,010 371.9 -3.1
Ma x Fi nancial 789 Buy 78,382 10.3 40.0 NA NA NA 1,624 53.2 41.2
SBI Li fe Insurance 1126 Buy 1,75,001 12.5 -2.9 8,755 72.4 270.2 4,801 -9.8 31.9
Sta r Health 739 Buy 41,010 25.7 51.6 2,925 LP LP -2,779 Los s Los s
Insurance 5,55,877 9.7 17.0 26,887 1,392.5 LP 10,207 1,515.0 110.5
AAVAS Fi nanciers 2517 Sel l 1,624 23.2 2.9 1,315 29.0 3.7 1,037 18.3 16.3
Angel One 1632 Buy 3,650 59.0 3.9 2,323 63.2 5.2 1,757 72.4 6.7
Ba ja j Finance 7489 Buy 51,823 35.0 9.6 40,528 32.7 3.4 24,418 81.3 14.9
Ca n Fi n Homes 661 Buy 2,180 17.4 5.9 1,786 19.3 3.8 1,257 22.6 8.7
Chol a . Inv & Fi n. 700 Buy 14,245 14.0 4.5 9,958 20.3 4.5 6,120 151.6 16.8
HDFC 2679 Buy 43,101 7.0 0.6 42,345 4.4 3.0 32,160 16.3 2.5
ICICI Securities 633 Buy 8,994 21.6 -4.5 4,914 11.4 -3.6 3,611 9.6 -5.1
IIFL Wealth Mgt 1688 Buy 3,644 37.2 -3.6 1,414 24.8 -9.4 1,331 28.8 -13.1
L&T Fi [Link] 85 Buy 14,463 -10.4 -1.5 11,273 -17.7 -4.1 4,064 52.8 31.9
LIC Hous ing Fin 385 Buy 15,135 0.6 4.0 13,253 -0.9 0.6 7,347 84.2 -4.3
M & M Fi nancial 168 Buy 15,698 3.9 -0.7 10,137 -4.1 -4.6 2,592 72.8 -71.0
Ma na ppuram Finance 122 Buy 9,205 -12.4 0.6 4,825 -33.8 6.5 2,830 -39.6 8.4
MAS Fi na ncial 577 Buy 948 21.4 6.9 647 12.6 6.7 421 15.2 4.9
Muthoot Fi nance 1363 Buy 18,649 1.5 -1.1 14,071 3.4 -4.1 10,383 4.3 0.9
PNB Hous ing 409 Neutra l 3,852 -25.9 -7.2 3,736 -30.7 -2.5 1,869 47.1 -0.8
Repco Home Fin 190 Buy 1,467 1.7 -1.7 1,148 -3.3 -3.7 551 -12.8 75.1
Shri ra m Ci ty Union 1696 Buy 9,569 11.5 1.7 6,139 11.3 1.4 3,124 10.7 6.8
Shri ra m Tra nsport Fi n. 1178 Buy 23,122 9.3 2.2 18,843 13.4 -1.2 9,188 21.7 35.0
NBFC 2,41,369 10.2 2.4 1,88,656 6.8 0.8 1,14,059 32.3 2.0
PL: Profit to Loss; LP: Loss to Profit; For Ba nks: Sales = Net Interest Income, EBITDA = Operating Profits; For Life Insurance: Sales = Net
Premi um, EBITDA = Operating Profits

April 2022 26
 India Strategy | Holding the Fort!

Ready reckoner: Full year valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Automobiles 65.4 25.0 17.3 3.7 3.3 2.9 5.7 13.3 16.9
Ama ra Raja Batt. 565 Neutra l 33.6 36.9 42.8 16.8 15.3 13.2 2.1 2.0 1.8 13.1 13.3 14.1
Apol lo Tyres 198 Buy 11.4 12.5 20.0 17.4 15.8 9.9 1.0 0.9 0.9 5.6 5.9 9.0
As hok Leyland 121 Buy -0.8 2.9 6.7 -158 42 18.0 5.5 5.3 4.4 -3.3 12.8 26.5
Ba ja j Auto 3,764 Neutra l 170.5 187.9 220.1 22.1 20.0 17.1 4.2 4.2 4.1 19.4 21.0 24.0
Ba l krishna Inds 2,128 Neutra l 71.1 76.4 91.3 29.9 27.8 23.3 5.9 5.2 4.5 21.2 19.9 20.7
Bha ra t Forge 709 Buy 20.3 24.6 33.2 35.0 28.8 21.4 5.4 4.8 4.0 16.4 17.6 20.4
Bos ch 14,865 Neutra l 403.1 496.8 582.1 36.9 29.9 25.5 4.1 3.7 3.4 11.6 13.1 13.9
CEAT 985 Buy 8.3 31.5 87.5 118.6 31.3 11.3 1.2 1.2 1.1 1.0 3.8 10.0
Ei cher Motors 2,506 Buy 61.4 95.1 125.1 40.8 26.3 20.0 5.4 4.7 4.0 14.0 19.2 21.5
Endura nce Tech. 1,161 Buy 30.8 43.3 55.6 37.7 26.8 20.9 4.2 3.8 3.4 11.7 14.9 17.1
Es corts 1,765 Neutra l 73.6 72.3 87.6 24.0 24.4 20.1 3.1 2.4 2.3 13.9 11.4 12.2
Exi de Inds. 159 Buy 8.9 10.6 12.6 17.9 15.0 12.6 1.8 1.1 1.0 10.2 7.3 8.2
Hero Motocorp 2,312 Buy 124.5 140.0 173.2 18.6 16.5 13.3 3.0 3.0 2.9 16.4 18.3 22.0
Ma h. & Ma h. 834 Buy 40.6 43.9 58.9 20.5 19.0 14.1 2.6 2.3 2.0 13.1 12.8 15.3
Ma hi ndra CIE 178 Buy 13.8 12.6 18.6 12.8 14.0 9.5 1.3 1.2 1.1 10.4 8.9 12.0
Ma ruti Suzuki 7,775 Buy 107.2 214.8 345.2 72.5 36.2 22.5 4.4 4.2 3.7 5.9 11.3 16.5
Mothers on Sumi 143 Buy 4.0 7.6 10.3 36.0 18.8 13.9 3.4 3.0 2.6 9.7 16.8 19.8
MRF 66,990 Neutra l 1,484.6 1,838.2 3,103.4 45.1 36.4 21.6 2.0 1.9 1.8 4.6 5.4 8.6
Sona BLW Precis. 663 Neutra l 5.3 7.5 12.9 125.0 88.2 51.4 21.1 17.8 14.0 19.7 21.9 30.5
Ta ta Motors 447 Buy -27.2 19.6 34.1 -16.4 22.8 13.1 3.8 3.3 2.6 -20.8 15.5 22.1
TVS Motor 633 Neutra l 18.7 23.1 32.2 33.9 27.4 19.7 6.2 5.3 4.3 19.7 20.9 24.2
Capital Goods 37.4 27.9 23.5 3.6 3.3 3.0 9.7 11.9 12.9
ABB 2,132 Buy 19.4 27.2 36.2 109.9 78.5 58.8 11.2 10.2 9.1 10.2 12.9 15.4
Bha ra t Electronics 219 Buy 9.1 10.8 12.9 24.1 20.4 17.0 4.4 3.9 3.4 18.2 19.0 20.0
BHEL 54 Sel l -1.5 1.2 2.0 -36.9 44.8 27.3 0.7 0.7 0.7 -2.0 1.6 2.6
Cummi ns India 1,130 Sel l 28.9 32.0 35.9 39.1 35.3 31.5 6.6 6.3 6.0 16.9 17.8 18.9
Engi neers India 67 Buy 5.1 6.5 7.6 13.2 10.3 8.8 2.6 2.5 2.4 18.4 23.0 25.9
K E C International 389 Buy 15.8 27.5 36.5 24.6 14.1 10.7 2.7 2.3 1.9 10.3 16.5 18.3
La rs en & Toubro 1,825 Buy 65.0 81.9 95.0 28.1 22.3 19.2 3.2 2.9 2.6 11.4 13.0 13.5
Si emens 2,432 Neutra l 29.9 38.3 45.3 81.5 63.5 53.6 8.4 7.6 6.9 10.3 12.0 12.8
Therma x 2,003 Neutra l 27.0 37.4 45.1 74.2 53.5 44.4 6.5 6.0 5.5 8.8 11.2 12.3
Cement 27.3 27.3 22.2 3.2 3.0 2.8 11.6 11.0 12.5
ACC 2,119 Buy 100.5 78.7 110.9 21.1 26.9 19.1 2.8 2.7 2.4 14.1 10.3 13.5
Ambuja Cements 311 Neutra l 10.7 10.5 11.9 29.1 29.5 26.2 2.8 2.7 2.6 22.3 19.2 20.0
Bi rl a Corporation 1,168 Buy 47.5 25.1 63.3 24.6 46.5 18.5 1.6 1.5 1.4 6.5 3.3 8.0
Da l mia Bharat 1,574 Buy 37.7 39.6 55.2 41.8 39.8 28.5 2.2 2.1 2.0 5.4 5.4 7.1
Gra s im Industries 1,678 Buy 102.1 112.6 118.7 16.4 14.9 14.1 2.5 2.4 2.3 13.1 13.5 12.8
India Cements 221 Neutra l 3.0 4.4 9.5 73.5 50.2 23.2 1.2 1.2 1.1 1.6 2.4 5.0
J K Cements 2,548 Neutra l 85.1 85.3 114.9 29.9 29.9 22.2 4.7 4.2 3.6 16.5 14.7 17.6
JK La ks hmi Cem. 466 Buy 29.2 29.4 38.7 16.0 15.9 12.1 2.3 2.1 1.8 15.5 13.8 16.0
Ra mco Cements 787 Buy 25.6 18.9 33.9 30.8 41.6 23.2 3.0 2.9 2.6 10.2 7.0 11.7
Shree Cement 24,737 Neutra l 633.5 563.7 672.7 39.0 43.9 36.8 5.2 4.7 4.2 14.1 11.2 12.2
Ul tra tech Cement 6,741 Buy 195.2 204.4 267.9 34.5 33.0 25.2 3.8 3.6 3.3 12.1 11.5 13.6
Chemicals-Specialty 51.7 39.7 33.7 10.0 8.3 6.9 19.4 20.9 20.6
Al kyl Amines 3,167 Neutra l 43.5 65.8 82.6 72.8 48.1 38.4 16.9 13.3 10.6 25.3 30.9 30.8
Atul 9,962 Neutra l 213.4 277.0 312.6 46.7 36.0 31.9 6.7 5.8 5.0 15.4 17.3 16.9
Cl ea n Science 2,043 Neutra l 21.2 32.5 43.9 96.4 62.8 46.5 29.7 21.2 15.3 35.4 39.4 38.1
Deepak Nitrite 2,313 Neutra l 74.0 79.7 84.8 31.3 29.0 27.3 9.8 7.6 6.2 36.3 29.6 25.0
Fi ne Organic 4,100 Neutra l 62.6 83.5 99.6 65.5 49.1 41.2 14.4 11.9 9.9 23.8 26.6 26.3
Ga l axy Surfactants 2,981 Buy 59.6 83.1 90.8 50.1 35.9 32.8 7.2 6.3 5.5 15.3 18.8 17.9
Na vi n Fluorine 4,092 Neutra l 55.2 86.0 107.5 74.1 47.6 38.1 10.8 9.2 7.7 15.5 20.9 22.0
NOCIL 245 Buy 8.6 11.5 14.1 28.6 21.4 17.4 3.0 2.8 2.5 10.8 13.4 15.2
Vi na ti Orga nics 1,974 Buy 30.9 42.9 57.6 63.9 46.0 34.3 11.2 9.3 7.7 18.9 22.2 24.6

April 2022 27
 India Strategy | Holding the Fort!

Ready reckoner: Full year valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Consumer 49.7 43.7 36.5 11.1 10.7 10.1 22.3 24.4 27.6
As i an Pa ints 3,118 Neutra l 32.8 42.0 53.5 95.1 74.2 58.2 22.0 21.1 19.8 23.8 29.0 35.1
Bri ta nnia 3,271 Buy 63.1 66.8 83.1 51.8 48.9 39.3 17.0 15.9 14.7 37.1 33.5 38.7
Col ga te 1,562 Neutra l 37.6 39.6 42.5 41.5 39.4 36.8 36.4 36.4 36.4 87.8 92.5 99.1
Da bur 544 Buy 10.6 12.1 14.0 51.5 45.2 38.8 11.8 10.7 9.6 23.6 24.8 26.1
Ema mi 453 Buy 18.6 20.7 22.4 24.4 21.9 20.3 9.6 9.1 8.3 42.5 42.6 42.8
Godrej Consumer 771 Buy 17.5 16.8 22.3 44.0 45.9 34.5 7.9 7.7 7.3 18.4 17.0 21.8
Hi nd. Unilever 2,127 Buy 36.7 38.7 45.2 57.9 54.9 47.0 10.7 11.1 11.7 18.3 19.8 24.3
Indigo Pa ints 1,623 Buy 17.1 25.8 36.4 95.0 63.0 44.6 12.0 10.1 8.2 13.5 17.4 20.3
ITC 255 Neutra l 12.1 14.0 16.4 21.0 18.3 15.6 5.2 4.9 4.6 25.0 27.7 30.6
Jyothy La bs 150 Neutra l 4.2 5.6 6.4 35.4 26.9 23.3 4.1 4.1 4.1 11.2 15.3 17.8
Ma ri co 530 Buy 9.4 11.2 13.2 56.2 47.2 40.3 15.1 14.4 13.6 31.4 31.2 34.8
Nes tle 17,782 Neutra l 240.8 260.0 299.9 73.8 68.4 59.3 82.3 78.6 78.6 113.2 117.5 132.6
P&G Hygi ene 14,317 Buy 210.9 263.8 321.1 67.9 54.3 44.6 59.4 53.5 47.8 91.4 103.7 113.4
Pa ge Industries 43,702 Neutra l 427.4 534.4 621.2 102.2 81.8 70.4 50.2 45.4 42.6 49.1 55.5 60.5
Pi di lite Inds. 2,494 Neutra l 25.1 26.9 37.3 99.4 92.6 66.8 19.5 17.8 15.8 21.1 20.1 25.1
Ta ta Consumer 788 Buy 10.4 14.1 17.2 75.6 56.0 45.9 4.8 4.4 4.1 6.5 8.3 9.4
Uni ted Breweries 1,525 Sel l 12.6 17.8 23.4 121 86 65.3 10.6 9.9 9.1 9.0 11.9 14.6
Uni ted Spirits 909 Neutra l 11.5 13.1 16.9 79 70 53.8 13.2 11.5 10.2 16.7 16.6 18.9
Va run Beverages 953 Buy 16.0 24.4 28.9 59.4 39.0 33.0 10.1 8.2 6.8 18.3 23.3 22.5
Consumer Durables 61.4 45.6 39.6 9.8 8.5 7.4 15.9 18.7 18.8
Bl ue Star 1,098 Neutra l 16.5 26.3 33.9 66.4 41.8 32.4 11.0 9.7 8.4 16.5 23.2 26.0
CG Cons umer El ect. 375 Buy 9.4 11.5 12.6 39.7 32.7 29.8 10.3 8.7 7.4 26.1 26.6 24.8
Ha vells India 1,180 Neutra l 19.1 23.3 26.0 61.7 50.6 45.3 12.4 10.7 9.3 20.1 21.2 20.5
Ori ent Electri c 324 Buy 6.4 8.8 10.2 50.3 36.8 31.9 12.5 10.1 8.2 24.8 27.4 25.9
Vol tas 1,276 Neutra l 17.1 24.0 28.5 74.6 53.2 44.8 7.8 7.0 6.3 10.4 13.2 14.0
Whi rl pool India 1,633 Buy 19.1 37.6 45.4 85.7 43.4 36.0 6.8 6.0 5.3 8.0 13.9 14.7
Financials
Banks-Private 25.1 19.3 15.6 3.3 2.9 2.5 13.1 14.9 15.9
AU Sma l l Finance 1,309 Buy 35.3 47.0 61.8 37.1 27.9 21.2 5.6 4.7 3.8 16.4 18.3 19.9
Axi s Ba nk 784 Buy 42.3 55.8 72.5 18.5 14.1 10.8 2.1 1.9 1.6 12.0 14.1 15.9
Ba ndhan Bank 319 Neutra l -5.1 22.0 32.7 -62.0 14.5 9.7 3.2 2.7 2.2 -4.9 20.2 24.9
DCB Ba nk 74 Neutra l 8.4 12.3 16.1 8.9 6.0 4.6 0.6 0.5 0.5 7.2 9.7 11.5
Equi tas Holdings 113 Buy 7.8 12.4 18.6 14.5 9.1 6.1 1.1 1.0 0.9 7.6 11.3 15.4
Federal Bank 103 Buy 9.3 10.7 13.2 11.1 9.6 7.8 1.2 1.1 1.0 11.2 12.0 13.3
HDFC Ba nk 1,656 Buy 66.4 79.9 94.6 25.0 20.7 17.5 3.9 3.4 2.9 16.7 17.4 17.7
ICICI Ba nk 746 Buy 32.9 40.3 49.7 22.7 18.5 15.0 3.1 2.7 2.3 14.7 15.6 16.5
IndusInd Bank 988 Buy 62.2 88.4 114.7 15.9 11.2 8.6 1.6 1.4 1.3 10.7 13.7 15.6
Kota k Ma h. Bank 1,836 Neutra l 57.3 67.3 80.4 32.0 27.3 22.8 3.8 3.3 2.9 11.9 12.3 12.9
RBL Ba nk 142 Buy -1.2 17.1 26.0 -114.4 8.3 5.5 0.7 0.6 0.6 -0.6 7.9 11.1
SBI Ca rds 877 Buy 15.8 25.9 36.3 55.6 33.9 24.1 10.8 8.4 6.4 21.3 27.9 30.0
Banks-PSU 10.4 7.6 6.1 1.0 0.9 0.8 9.8 11.9 13.2
Ba nk of Baroda 116 Buy 14.9 21.8 26.4 7.8 5.3 4.4 0.7 0.7 0.6 9.6 12.7 13.7
Ca na ra Bank 241 Buy 36.7 48.6 58.5 6.6 5.0 4.1 0.7 0.6 0.5 9.8 11.7 12.6
Indian Bank 161 Buy 31.3 42.0 51.6 5.2 3.8 3.1 0.5 0.4 0.4 10.6 13.0 14.1
Punja b Nat. Bank 37 Neutra l 4.2 6.4 8.8 8.8 5.8 4.2 0.4 0.4 0.4 4.8 6.8 8.7
Sta te Bank 513 Buy 40.3 52.8 65.2 12.7 9.7 7.9 1.5 1.3 1.2 13.5 15.3 16.0
Uni on Bank 42 Buy 7.8 11.2 15.8 5.3 3.7 2.6 0.4 0.4 0.3 8.1 10.9 14.1
Insurance 144.1 68.0 58.2 9.6 8.8 7.9 6.7 12.9 13.6
HDFC Li fe Insur. 572 Neutra l 6.0 7.1 8.3 95.9 80.6 68.8 3.7 3.2 2.7 16.3 18.0 17.8
ICICI Pru Li fe 509 Buy 6.1 7.7 7.9 83.9 66.5 64.3 2.2 1.9 1.6 14.6 15.4 16.0
Ma x Fi nancial 789 Buy 9.9 14.4 15.9 79.9 54.7 49.6 2.5 2.1 1.7 17.0 19.4 19.7
SBI Li fe Insurance 1,126 Buy 13.1 16.0 17.9 86.0 70.3 62.9 2.6 2.2 1.9 17.4 18.1 18.6
Sta r Health 739 Buy -21.5 12.1 18.8 -34.4 60.9 39.2 8.5 7.4 6.3 -29.1 13.0 17.3

April 2022 28
 India Strategy | Holding the Fort!

Ready reckoner: Full year valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
NBFC 31.1 24.2 20.4 3.7 3.3 2.9 12.0 13.8 14.4
AAVAS Fi nanciers 2,517 Sel l 43.9 56.1 69.9 57.3 44.9 36.0 7.2 6.2 5.3 13.4 14.8 15.8
Adi tya Birla Ca p 114 Buy 6.6 8.5 10.4 17.2 13.4 10.9 1.8 1.6 1.4 11.0 12.6 13.5
Angel One 1,632 Buy 72.2 87.5 103.3 22.6 18.6 15.8 8.9 6.8 5.3 45.0 41.2 37.6
Ba ja j Finance 7,489 Buy 117.2 170.8 221.6 63.9 43.8 33.8 10.5 8.6 7.0 17.8 21.6 22.8
Ca n Fi n Homes 661 Buy 35.6 40.9 49.4 18.6 16.2 13.4 2.9 2.5 2.1 16.7 16.4 16.9
Chol a . Inv & Fi n. 700 Buy 25.2 31.6 36.9 27.7 22.1 18.9 5.0 4.2 3.5 19.7 20.6 20.0
HDFC 2,679 Buy 61.2 69.1 78.2 43.7 38.8 34.3 4.1 3.8 3.4 12.3 12.6 12.8
ICICI Securities 633 Buy 43.6 46.7 50.3 14.5 13.6 12.6 8.8 7.2 6.0 67.9 58.4 51.9
IIFL Wealth Mgt 1,688 Buy 62.2 75.7 86.2 27.1 22.3 19.6 5.2 5.0 4.8 19.3 23.0 24.9
Indostar Ca pital 239 Buy 4.6 18.4 29.5 51.7 13.0 8.1 0.9 0.8 0.7 1.7 6.4 9.6
L&T Fi [Link] 85 Buy 4.5 7.7 9.6 18.9 11.1 8.9 1.1 1.0 0.9 5.8 9.3 10.6
LIC Hous ing Fin 385 Buy 34.6 49.3 58.6 11.1 7.8 6.6 0.9 0.8 0.7 8.7 10.9 11.8
M & M Fi nancial 168 Buy 5.2 14.1 14.6 32.2 11.9 11.5 1.4 1.3 1.2 4.3 11.0 10.6
Ma na ppuram Fin. 122 Buy 16.0 20.3 24.5 7.6 6.0 5.0 1.2 1.1 0.9 17.2 18.9 19.5
MAS Fi na ncial 577 Buy 28.8 36.1 46.4 20.0 16.0 12.4 2.5 2.2 1.9 13.1 14.7 16.6
Muthoot Fi nance 1,363 Buy 100.5 113.1 128.8 13.6 12.1 10.6 3.0 2.5 2.1 24.0 22.5 21.6
PNB Hous ing 409 Neutra l 50.7 61.0 73.0 8.1 6.7 5.6 0.7 0.7 0.6 9.2 10.2 11.2
Repco Home Fin 190 Buy 32.7 51.3 55.8 5.8 3.7 3.4 0.5 0.5 0.4 9.5 13.4 12.9
Shri ra m Ci ty Union 1,696 Buy 165.9 198.5 237.9 10.2 8.5 7.1 1.3 1.1 1.0 12.8 13.8 14.8
Shri ra m Tra ns. Fin. 1,178 Buy 93.9 124.8 146.8 12.5 9.4 8.0 1.3 1.1 1.0 10.9 12.6 13.3
Healthcare 30.0 25.3 21.1 4.3 3.7 3.2 14.3 14.5 15.2
Aja nta Pharma 1,761 Buy 76.9 85.8 105.2 22.9 20.5 16.7 4.4 3.8 3.2 20.8 19.9 20.9
Al embic Pharma 756 Neutra l 34.1 41.3 46.3 22.2 18.3 16.3 2.7 2.4 2.2 13.1 14.5 14.6
Al kem Lab 3,470 Buy 149.6 157.6 182.1 23.2 22.0 19.1 4.7 4.1 3.5 22.2 19.9 19.7
Apol lo Hospitals 4,562 Buy 67.3 82.2 107.6 67.8 55.5 42.4 11.1 9.3 7.7 18.8 18.9 20.5
Aurobi ndo Pharma 692 Buy 43.2 51.3 60.2 16.0 13.5 11.5 1.7 1.5 1.3 10.9 11.7 12.3
Bi ocon 346 Neutra l 6.9 11.5 17.3 50.3 30.1 20.0 5.1 2.5 2.3 10.5 11.2 12.0
Ci pl a 1,028 Neutra l 35.5 41.3 49.0 28.9 24.9 21.0 4.0 3.5 3.0 13.9 14.0 14.5
Di vi s La bs 4,501 Buy 105.8 128.0 154.3 42.5 35.2 29.2 10.6 8.7 7.2 27.3 27.3 27.2
Dr Reddy’ s La bs 4,317 Buy 183.2 211.4 252.2 23.6 20.4 17.1 3.6 3.1 2.6 16.1 16.1 16.6
Eri s Li fescience 708 Buy 29.1 34.0 39.6 24.4 20.8 17.9 5.1 4.3 3.6 23.0 22.5 22.0
Gl a nd Pharma 3,385 Buy 74.1 95.2 120.4 45.7 35.5 28.1 7.8 6.4 5.2 18.6 19.7 20.4
Gl enmark Pharma 461 Neutra l 35.6 39.3 44.3 13.0 11.7 10.4 1.6 1.4 1.3 13.3 13.1 13.1
Gra nules India 314 Neutra l 16.3 21.1 25.7 19.3 14.9 12.2 3.1 2.6 2.1 17.1 18.7 19.1
GSK Pha rma 1,625 Neutra l 36.6 38.9 44.1 44.4 41.8 36.9 15.7 13.6 11.6 35.4 32.6 31.4
IPCA La bs . 1,026 Buy 37.5 41.9 50.6 27.4 24.5 20.3 4.7 4.0 3.5 18.6 17.8 18.4
Jubi lant Pharmova 435 Neutra l 25.5 27.1 37.7 17.1 16.1 11.6 1.3 1.2 1.1 8.1 8.0 10.2
La urus La bs 600 Buy 15.5 22.0 28.1 38.7 27.3 21.3 9.7 7.5 5.8 28.2 31.0 30.5
Lupi n 790 Neutra l 22.9 26.1 32.4 34.5 30.3 24.4 2.9 2.7 2.5 7.9 9.2 10.8
Sol ara Acti ve 700 Buy 21.4 55.7 85.8 32.7 12.6 8.2 1.6 1.4 1.2 6.6 16.0 21.9
Stri des Pharma 360 Buy -43.8 18.6 33.4 -8.2 19.4 10.8 1.4 1.3 1.2 -15.2 6.8 11.5
Sun Pha rma 926 Buy 32.1 35.7 41.1 28.9 25.9 22.5 4.2 3.7 3.2 15.6 15.3 15.4
Torrent Pha rma 2,831 Neutra l 67.2 86.9 108.4 42.1 32.6 26.1 7.5 6.6 5.7 18.7 21.6 23.3
Zydus Li fesciences 364 Buy 22.1 21.5 22.8 16.4 16.9 15.9 2.1 1.9 1.8 14.8 12.0 11.7
Infrastructure 24.2 17.1 14.1 1.9 1.8 1.6 8.0 10.3 11.2
As hoka Buildcon 90 Buy 13.9 15.8 16.4 6.5 5.7 5.5 1.0 0.8 0.7 14.0 15.9 14.4
G R Infraproject 1,556 Buy 71.6 83.0 106.2 21.7 18.8 14.7 3.5 3.0 2.5 17.5 17.1 18.3
IRB Infra 264 Neutra l 4.8 11.9 15.0 55.4 22.2 17.6 1.3 1.2 1.2 3.0 5.7 6.8
KNR Cons tructions 293 Buy 12.4 16.8 19.9 23.5 17.4 14.7 3.7 3.1 2.5 17.1 19.3 18.9
Logistics 36.5 30.5 24.4 5.2 4.7 4.2 14.2 15.4 17.3
Bl ue Dart Express 6,713 Neutra l 160.9 168.6 172.1 41.7 39.8 39.0 16.2 12.0 9.4 46.0 34.6 27.0
Concor 680 Buy 18.3 22.8 30.1 37.1 29.9 22.6 3.9 3.7 3.5 10.7 12.7 15.8
Ma hi ndra Logistics 506 Neutra l 4.7 10.3 14.9 107.0 49.1 34.0 6.2 5.7 5.0 5.8 12.0 15.5
TCI Expres s 1,728 Buy 33.5 43.1 52.5 51.5 40.1 32.9 12.5 9.8 7.8 26.7 27.5 26.4

April 2022 29
 India Strategy | Holding the Fort!

Ready reckoner: Full year valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Tra ns port Corp. 627 Buy 37.3 41.5 51.9 16.8 15.1 12.1 3.4 2.8 2.3 21.9 20.1 20.8
VRL Logi s tics 490 Buy 17.8 19.5 22.1 27.5 25.2 22.2 6.7 5.6 4.8 25.3 24.3 23.3
Media 27.2 17.7 16.0 3.1 2.8 2.5 11.2 15.7 15.7
PVR 1,907 Neutra l -96.6 35.8 53.4 -19.7 53.2 35.7 9.3 7.9 6.5 -38.1 16.1 20.0
Sun TV 498 Buy 42.3 43.8 46.4 11.8 11.4 10.7 2.6 2.4 2.2 22.9 21.6 20.2
Zee Entertainment 303 Buy 11.8 15.2 16.9 25.6 19.9 17.9 2.7 2.4 2.2 10.9 12.9 12.9
Metals 6.8 7.9 8.3 1.9 1.6 1.5 27.9 20.8 17.7
Hi ndalco 587 Buy 60.3 78.7 59.4 9.7 7.5 9.9 2.3 1.8 1.6 27.0 27.3 17.0
Hi ndustan Zinc 325 Neutra l 23.2 24.6 27.2 14.0 13.2 12.0 4.3 4.7 4.9 30.7 34.2 40.0
JSPL 548 Buy 91.2 74.4 107.4 6.0 7.4 5.1 1.4 1.2 0.9 25.6 17.0 20.4
JSW Steel 733 Buy 94.0 81.3 77.5 7.8 9.0 9.5 2.6 2.2 1.8 39.9 26.4 21.0
Na l co 126 Buy 15.8 18.4 14.3 8.0 6.8 8.8 1.9 1.7 1.5 25.4 26.1 18.1
NMDC 170 Buy 33.7 24.7 22.5 5.1 6.9 7.6 1.5 1.4 1.3 31.1 20.6 17.4
SAIL 106 Buy 25.4 19.7 21.8 4.2 5.4 4.9 0.8 0.8 0.7 21.4 14.7 14.9
Ta ta Steel 1,339 Neutra l 336.1 199.1 191.9 4.0 6.7 7.0 1.6 1.3 1.1 46.7 21.0 17.3
Veda nta 422 Neutra l 51.2 54.3 45.1 8.2 7.8 9.3 2.3 2.0 1.9 29.1 27.8 21.2
Oil & Gas 13.3 11.7 11.0 1.8 1.6 1.4 13.2 13.5 12.9
Aegi s Logistics 218 Neutra l 11.7 12.8 14.6 18.6 17.1 14.9 3.3 2.9 2.6 18.8 18.1 18.2
BPCL 380 Neutra l 47.1 37.3 37.2 8.1 10.2 10.2 1.7 1.5 1.4 19.6 15.8 14.4
Ca s trol India 104 Buy 7.7 7.6 8.3 13.5 13.6 12.5 6.2 5.5 4.9 49.6 43.1 41.5
GAIL 162 Buy 23.4 15.8 17.0 6.9 10.2 9.5 1.3 1.2 1.1 21.2 12.9 12.9
Guja rat Gas 512 Buy 13.7 22.1 26.2 37.3 23.1 19.5 6.6 5.3 4.2 19.3 25.3 24.0
Guja rat St. Petro. 274 Buy 17.2 20.8 22.7 15.9 13.2 12.1 1.8 1.6 1.5 12.2 13.1 12.8
HPCL 280 Neutra l 25.8 39.5 39.6 10.8 7.1 7.1 1.1 1.0 1.0 10.1 14.8 14.0
Indra prastha Gas 393 Neutra l 17.5 18.4 18.9 22.4 21.3 20.8 4.1 3.6 3.2 19.4 18.0 16.4
IOC 122 Buy 28.4 16.3 16.7 4.3 7.5 7.3 0.9 0.8 0.8 22.1 11.6 11.3
Ma ha nagar Gas 825 Buy 66.4 80.9 84.3 12.4 10.2 9.8 2.2 2.0 1.8 19.1 20.7 19.1
MRPL 44 Neutra l 15.6 11.2 9.8 2.8 3.9 4.5 0.8 0.7 0.6 31.8 18.8 14.3
Oi l India 237 Buy 37.2 43.4 43.5 6.4 5.5 5.5 0.9 0.8 0.8 15.3 16.3 14.8
ONGC 168 Buy 42.4 61.9 64.2 4.0 2.7 2.6 0.8 0.7 0.6 23.0 28.2 24.3
Petronet LNG 198 Buy 21.7 21.9 24.2 9.2 9.1 8.2 2.3 2.1 1.9 26.4 24.1 24.2
Rel iance Inds. 2,663 Buy 91.2 111.5 123.4 29.2 23.9 21.6 2.3 2.1 1.9 8.1 9.1 9.3
Real Estate 56.1 35.4 23.0 3.5 3.2 2.8 6.2 9.0 12.2
DLF 387 Neutra l 9.4 16.3 29.1 41.4 23.8 13.3 1.9 1.7 1.5 4.6 7.6 12.3
Godrej Properties 1,682 Neutra l 0.5 17.9 37.1 3,277.1 93.8 45.4 5.6 5.3 4.7 0.2 5.8 11.0
Ma crotech Dev. 1,201 Buy 23.4 25.9 44.7 51.2 46.5 26.9 5.0 4.5 3.9 14.0 10.2 15.5
Oberoi Realty 977 Buy 38.3 55.3 52.4 25.5 17.7 18.6 3.3 2.8 2.5 13.9 17.2 14.1
Retail 158.3 91.5 69.5 19.1 16.5 14.1 12.1 18.1 20.3
Adi tya Birla Fashion 299 Buy -1.6 2.1 2.9 -189.7 140.8 102.6 12.7 11.6 10.4 -6.8 8.6 10.7
Avenue Supermarts 4,107 Neutra l 25.3 40.7 52.0 162.5 101.0 78.9 18.5 15.6 12.9 12.6 17.4 18.6
Ba rbeque Na tion 1,259 Neutra l -6.2 3.3 16.3 -201.5 377.9 77.3 9.8 9.5 8.5 -4.8 2.5 11.0
Devya ni Intl. 173 Buy 1.3 2.9 3.3 132.0 60.4 52.9 28.5 19.2 14.0 37.3 38.0 30.7
Jubi lant Foodworks 2,797 Buy 33.0 41.3 51.1 84.9 67.8 54.7 20.0 16.9 14.4 23.6 25.0 26.3
Res taurant Brands 112 Buy -1.7 0.4 1.5 -67.5 283.5 76.0 2.8 2.8 2.7 -4.1 1.0 3.5
Shoppers Stop 465 Neutra l -6.6 15.0 16.1 -70.6 31.0 28.9 30.7 15.4 10.1 -35.7 66.2 42.1
Ti ta n Company 2,517 Buy 24.0 29.4 38.8 105.0 85.6 64.8 26.1 23.2 21.0 26.5 28.7 34.0
Trent 1,295 Neutra l 3.0 11.7 16.9 436 111 76.6 17.9 15.3 12.6 4.5 15.9 19.3
V-Ma rt Retail 3,832 Buy 3.2 53.5 83.6 1,183 72 45.8 8.3 7.5 6.4 0.7 11.0 15.1
Wes tlife Dev. 475 Neutra l -0.7 4.2 7.8 -725.1 112.9 61.1 15.7 13.8 11.2 -2.1 13.0 20.3
Staffing 33.5 19.8 15.6 4.4 3.6 2.9 13.2 18.2 18.8
Ques s Corp 699 Buy 23.1 45.3 56.9 30.2 15.4 12.3 2.9 2.4 1.9 13.8 22.4 22.6
SIS 508 Buy 18.2 26.5 33.4 27.9 19.2 15.2 1.7 1.4 1.2 13.9 17.2 18.1
Tea m Lease Serv. 4,036 Neutra l 67.5 97.7 130.2 59.8 41.3 31.0 8.9 7.4 5.9 16.2 19.5 21.2

April 2022 30
 India Strategy | Holding the Fort!

Ready reckoner: Full year valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Technology 34.4 29.4 25.3 10.1 9.5 9.0 29.3 32.4 35.3
Coforge 4,511 Neutra l 110.6 149.9 182.3 40.8 30.1 24.7 9.6 8.0 6.7 25.8 29.7 30.2
Cyi ent 944 Buy 45.1 53.4 62.3 20.9 17.7 15.1 3.5 3.2 2.9 16.7 18.9 20.0
HCL Technologies 1,187 Buy 48.8 56.7 66.7 24.3 20.9 17.8 5.1 5.0 4.8 21.3 24.0 27.4
Infosys 1,882 Buy 53.3 64.5 75.5 35.3 29.2 24.9 11.3 10.8 10.2 30.7 37.9 42.2
L&T Infotech 6,299 Neutra l 130.2 161.2 194.6 48.4 39.1 32.4 12.7 10.6 8.9 28.6 29.7 30.0
L&T Technology 5,197 Buy 91.8 115.7 138.2 56.6 44.9 37.6 13.5 11.5 9.8 25.8 27.7 28.2
Mi ndtree 4,313 Neutra l 98.3 116.2 139.1 43.9 37.1 31.0 13.6 11.3 9.4 34.0 33.4 33.3
Mpha siS 3,314 Buy 75.9 95.1 114.3 43.7 34.9 29.0 8.7 7.9 7.1 21.1 24.2 26.2
Pers i stent Systems 4,783 Neutra l 89.5 112.0 136.3 53.5 42.7 35.1 11.2 9.5 8.0 22.6 24.0 24.6
TCS 3,770 Buy 104.0 121.4 138.3 36.2 31.1 27.3 15.3 14.4 13.6 43.3 47.8 51.3
Tech Ma hindra 1,499 Neutra l 61.8 71.3 83.5 24.2 21.0 17.9 4.8 4.3 3.8 20.8 21.6 22.6
Wi pro 606 Neutra l 21.9 24.2 27.6 27.6 25.1 21.9 6.0 6.0 6.0 22.1 24.0 27.6
Zensar Tech 383 Buy 16.6 20.0 25.4 23.0 19.1 15.1 3.3 3.1 2.8 15.2 16.7 19.3
Telecom -31 -40 -68.2 22.4 25.3 58.2 -73.1 -63.9 -85.3
Bha rti Airtel 768 Buy 5.4 12.3 17.7 141.8 62.2 43.3 6.0 4.5 4.1 4.6 8.3 10.0
Indus Towers 221 Neutra l 22.4 24.0 24.6 9.9 9.2 9.0 3.4 3.0 2.7 36.1 34.7 31.8
Ta ta Comm 1,235 Neutra l 53.0 68.0 88.2 23.3 18.2 14.0 21.4 9.8 5.8 171.4 74.1 52
Voda fone Idea 10 Neutra l -10.1 -10.3 -9.5 -1.0 -1.0 -1.1 -0.4 -0.3 -0.2 NM NM NM
Utilities 8.9 8.3 8.0 1.6 1.5 1.4 18.5 18.4 17.9
Coa l India 188 Buy 29.4 31.6 30.9 6.4 5.9 6.1 2.7 2.3 2.1 42.3 39.2 33.8
NTPC 144 Buy 15.5 17.1 18.7 9.3 8.4 7.7 1.0 1.0 0.9 11.6 12.1 12.5
Power Gri d Corp. 227 Buy 19.6 20.2 21.4 11.6 11.2 10.6 2.1 1.9 1.8 18.7 17.8 17.8
Others 47.9 26.7 20.7 4.3 3.8 3.3 9.0 14.3 16.1
APL Apol lo Tubes 944 Buy 20.5 27.1 36.2 46.1 34.8 26.1 11.1 8.5 6.5 27.9 27.7 28.3
BSE 921 Buy 15.7 22.9 30.0 58.7 40.2 30.7 5.4 5.3 5.1 9.3 13.2 16.6
Coroma ndel Int. 807 Buy 48.9 53.3 58.9 16.5 15.1 13.7 3.8 3.3 2.8 25.4 23.3 21.9
EPL 189 Buy 6.7 9.4 11.8 28.4 20.2 16.0 3.3 3.1 2.8 12.0 15.7 18.2
Godrej Agrovet 548 Buy 19.6 26.4 29.2 27.9 20.7 18.7 4.7 4.1 3.5 17.5 21.0 20.2
Indiamart Inter. 4,829 Buy 102.0 115.5 141.5 47.4 41.8 34.1 7.9 6.8 5.9 17.9 17.5 18.5
Indian Hotels 239 Buy -2.3 3.3 5.6 -102.4 73.3 43.0 4.7 4.5 4.1 -6.1 6.2 9.9
Info Edge 4,679 Neutra l 34.0 47.4 54.0 137.7 98.8 86.6 4.5 4.4 4.4 4.9 4.5 5.1
Interglobe Aviation 2,013 Neutra l -100.4 38.3 100.1 -20.1 52.5 20.1 -20.4 -33.4 50.4 207.6 -48.3 -987.1
Ka veri Seed 579 Buy 35.4 51.6 57.7 16.4 11.2 10.0 2.6 2.2 1.8 16.3 21.2 20.0
Lemon Tree Hotel 64 Buy -1.0 1.0 1.4 -63.2 65.0 44 5.9 5.4 4.8 -8.9 8.7 11.5
MCX 1,451 Buy 28.4 41.8 53.4 51.1 34.7 27.2 5.5 5.1 6.0 10.5 15.1 20.2
P I Industries 2,862 Buy 56.7 71.5 87.7 50.5 40.0 32.6 7.1 6.1 5.2 15.0 16.5 17.3
Pi ra mal Enterprises 2,259 Buy 116.1 134.4 160.2 19.4 16.8 14.1 1.5 1.4 1.3 8.1 8.7 9.7
SRF 2,635 Neutra l 59.6 65.8 76.6 44.2 40.0 34.4 9.3 7.6 6.3 23.3 20.9 20.1
Ta ta Chemicals 1,001 Neutra l 43.9 47.3 52.9 22.8 21.2 18.9 1.7 1.6 1.5 7.6 7.7 8.2
Tri dent 54 Buy 1.7 2.2 2.9 32.4 24.2 18.9 6.6 5.3 4.2 22.5 24.4 25.0
UPL 785 Neutra l 58.5 66.5 76.5 13.4 11.8 10.3 1.9 1.6 1.3 23.1 22.2 21.5

April 2022 31
 India Strategy | Holding the Fort!

Sectors & Companies

BSE Sensex: 59,035 Nifty 50: 17,640 April 2022

Sector and Companies Preview Compendium

Automobiles Healthcare
Capital Goods Infrastructure
Cement Logistics
Chemicals-Specialty Metals
Consumer Oil & Gas
Consumer Durables Real Estate
Financials Retail
Banks-Private Staffing
Banks-PSU Technology
Life Insurance Telecom
NBFC

Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the
full-year numbers. This is because of differences in classification of account heads in the company’s
quarterly and annual results or because of differences in the way we classify account heads as opposed
to the company. All stock prices and indices as on 4 April 2022, unless otherwise stated.

April 2022 32
 March 2022 Results Preview | Sector: Automobiles

Automobiles
Company Demand recovery remains K shaped, supply side issues easing up
Amara Raja Batteries Hyper-inflation in commodities to have limited impact in 4QFY22
Ashok Leyland
Bajaj Auto  Volume evolution in 4QFY22 continued to be K-shaped, with some improvement in
Bharat Forge
supply of semi-conductors on QoQ basis, resulting in continued recovery in PVs and
CVs while continued weakness in 2Ws and tractors
BOSCH
 The wholesale volumes grew for PVs (+14% YoY, +33% QoQ) and CVs (+9% YoY, +14%
Ceat
Eicher Motors
QoQ), while volumes declined for 2Ws (-18% YoY, -4% QoQ) and tractors (-25% YoY,
-22% QoQ). 2Ws and tractors have witnessed pressure on wholesales as OEMs focused
Endurance Technologies
on inventory correction
Escorts
 After margins recovering till 1QFY22, there is pressure on profitability for third
Exide Industries
consecutive quarter on YoY basis. However, EBITDA margin for our OEM (excluding
Hero MotoCorp
JLR) universe is likely to be stable on QoQ basis (-270bp YoY) to 8.5% due to operating
Mahindra CIE
leverage and price increases off-setting higher QoQ commodity cost. There is limited
Mahindra & Mahindra
impact in 4QFY22 of sharp inflation in commodity prices due to on-going geo-political
Maruti Suzuki
issues. Except mainstream 2W OEMs and MM, all other OEMs are likely to report QoQ
Motherson Sumi Systems
improvement in margins.
Sona BLW Precision  While we had revised our estimates in first week of Mar-22, we revise our FY23E EPS
Tata Motors estimates further for select companies to reflect for further impact on revenues
TVS Motor Company and/or cost inflation. We lower our estimates for AMRJ (-4%), EXIDE (-6%), MACA
(-17%), MRF (-9.5%), SONACOMS (-8.7%) CEAT (-19%) and APTY (-20%)

PV/CV sustain demand momentum; 2W/tractors remains weak

Volume evolution in 4QFY22 continued to be K-shaped, with some improvement in
supply of semi-conductors on QoQ basis, resulting in continued recovery in PVs and
CVs while continued weakness in 2Ws and tractors. The wholesale volumes grew for
PVs (+14% YoY, +33% QoQ) and CVs (+9% YoY, +14% QoQ), while volumes declined
for 2Ws (-18% YoY, -4% QoQ) and tractors (-25% YoY, -22% QoQ). 2Ws and tractors
have witnessed pressure on wholesales as OEMs focused on inventory correction.
EBITDA margins to remain largely stable on QoQ basis
After margins recovering till 1QFY22, there is pressure on profitability for third
consecutive quarter on YoY basis. However, EBITDA margin for our OEM (excluding
JLR) universe is likely to be stable on QoQ basis (-270bp YoY) to 8.5% due to
operating leverage and price increases off-setting higher QoQ commodity cost.
There is limited impact in 4QFY22 of sharp inflation in commodity prices due to on-
going geo-political issues. Except mainstream 2W OEMs and MM, all other OEMs are
likely to report QoQ improvement in margins.
Multiple headwinds in near term in form of fuel & commodity prices
There are multiple headwinds in the near term viz higher fuel prices and higher
commodity prices. Any substantial increase in fuel prices in short span can lead to
deferment of demand, particularly in CVs and 2W. On the other hand, recent sharp
increase in commodity prices will further delay margin recovery for both OEMs as
well as auto component players. We expect impact of the current elevated prices to
reflect in 1QFY23 onwards. We expect volume recovery to sustain, with volumes
growing 10%/18%/2% CAGR (FY22-24E) for 2Ws/PVs/Tractors. For 3Ws/LCVs/
M&HCVs, we expect volume CAGR of 15%/20%/23% CAGR over FY22-24E.

Jinesh Gandhi – Research Analyst (Jinesh@[Link])

Research Analyst: Vipul Agrawal ([Link]@[Link]) / Aniket Desai ([Link]@[Link])
 March 2022 Results Preview | Sector: Automobiles

Valuation and view

While we had revised our estimates in first week of Mar-22, we revise our FY23E EPS
estimates further for select companies to reflect for further impact on revenues
and/or cost inflation. We lower our estimates for AMRJ (-4%), EXIDE (-6%), MACA
(-17%), MRF (-9.5%), SONACOMS (-8.7%), CEAT (-19%) and APTY (-20%) We prefer
companies with: a) higher visibility in terms of a demand recovery, b) a strong
competitive positioning, c) margin drivers, and d) balance sheet strength. MSIL and
AL are our top OEM picks. Among Auto Component stocks, we prefer BHFC and
APTY. We prefer TTMT as a play on global PVs.

Exhibit 1: Summary of expected quarterly performance (INR m)

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Amara Raja Batt. 565 Neutral 24,736 17.6 4.6 2,983 -5.7 5.1 1,612 -14.9 11.5
Apollo Tyres 198 Buy 53,432 6.3 -6.4 5,741 -29.5 -22.7 1,199 -58.4 -46.5
Ashok Leyland 121 Buy 79,755 13.9 44.1 4,688 -12.2 109.4 1,757 -17.4 LP
Bajaj Auto 3764 Neutral 76,179 -11.4 -15.6 11,230 -26.3 -18.2 9,693 -27.2 -20.2
Balkrishna Inds 2128 Neutral 21,929 25.3 5.5 5,166 -5.3 4.9 3,595 -3.4 9.4
Bharat Forge 709 Buy 15,332 17.3 -4.3 3,729 11.7 -7.5 2,197 6.6 -16.5
Bosch 14865 Neutral 33,485 4.1 7.7 4,417 -4.1 23.6 3,221 -6.9 37.2
CEAT 985 Buy 23,998 4.8 -0.6 1,099 -57.9 -18.0 -180 PL Loss
Eicher Motors 2506 Buy 32,804 11.6 13.9 7,276 6.3 24.9 6,095 8.2 33.6
Endurance Tech. 1161 Buy 19,276 -9.6 2.0 2,056 -38.1 1 841 -55.1 -11.2
Escorts 1765 Neutral 18,189 -17.7 -7.1 2,270 -34.1 -14.2 1,812 -33.2 -10.1
Exide Inds. 159 Buy 31,243 6.3 -2.3 3,470 -15.8 -6.9 1,895 -22.4 -7.1
Hero Motocorp 2312 Buy 75,920 -12.6 -3.7 8,991 -25.8 -6.3 6,472 -25.2 -5.7
Mahindra & Mahindra 834 Buy 1,70,393 27.7 11.8 17,589 -10.3 -2.6 8,742 -12.8 -35.4
Mahindra CIE 178 Buy 22,786 4.1 10.4 2,238 -22.0 10.7 917 -39.9 2.8
Maruti Suzuki 7775 Buy 2,69,107 12.0 15.8 19,132 -3.9 22.7 12,036 3.2 19.0
Motherson Sumi 143 Buy 1,78,071 -1.0 4.1 16,382 -18.3 18.5 5,044 -29.4 105.0
MRF 66990 Neutral 49,760 5.0 3.0 4,721 -36.7 -2.8 1,389 -56.2 -4.8
Sona BLW Precis. 663 Neutral 5,228 -3.1 5.8 1,276 -8.9 -2.3 629 -10.8 -27.2
Tata Motors 447 Buy 8,52,317 -3.8 18.0 87,860 -31.1 29.9 586 -99.0 LP
TVS Motor 633 Neutral 56,261 5.7 -1.4 5,266 -1.8 -7.3 2,627 -9.2 -8.9
Automobiles 21,10,201 2.0 10.7 2,17,582 -22.8 12.8 72,179 -50.8 28.2

Exhibit 2: Volume snapshot 4QFY22 (‘000 units)

4QFY22 4QFY21 YoY (%) 3QFY22 QoQ (%) FY22 FY21 YoY (%)
Two wheelers 4,485 5,452 -17.7 4,694 -4.4 17,940 18,374 -2.4
Three wheelers 205 207 -1.1 210 -2.5 767 609 26.0
Passenger cars 580 588 -1.3 442 31.3 1,886 1,806 4.4
UVs & MPVs 620 459 35.1 458 35.3 1,887 1,314 43.6
Total PVs 1,200 1,047 14.6 900 33.3 3,773 3,120 20.9
M&HCV 104 88 17.9 73 43.3 273 178 53.3
LCV 148 142 3.9 148 -0.4 510 441 15.8
Total CVs 252 230 9.3 221 14.0 783 619 26.6
Tractors 179 239 -25.1 230 -22.0 860 879 -2.2
Total (ex Tractor) 6,142 6,937 -11.5 6,025 2.0 23,264 22,723 2.4
Source: Company, MOFSL

April 2022 34
 March 2022 Results Preview | Sector: Automobiles

Exhibit 3: Commodity prices slightly higher (indexed) Exhibit 4: Trend in key currencies v/s INR (average, indexed)

4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 Spot USD GBP JPY

118

174 111
136

104
134

128
128

125
125

119
118
118

116

116

113
109
106

103
101
97

85
100
119
122
100
128
161
100
113
122
100
118
119
100

100

114
90

99
80
97

Mar-20

Mar-21

Mar-22
Jun-20

Jun-21
Dec-20

Dec-21
Sep-20

Sep-21
Steel Alu Copper Lead Rubber Polymer

Exhibit 5: Margins to remain stable on QoQ basis Exhibit 6: Trend in segment-wise EBITDA margins (%)

Aggregate (excl JLR) 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E

18

11

-3

10.6
11.4

12.8
14.5

12.6

12.2
-10

8.3
7.4
8.7
8.4

8.1
1.1
3.7
3.5
5.1
4QFY18

4QFY20

4QFY22E
4QFY17

2QFY18

2QFY19

4QFY19

2QFY20

2QFY21

4QFY21

2QFY22

2W Cars CVs

Source: MOFSL Source: MOFSL

Exhibit 7: Volume recovers on QoQ basis (ex. 2Ws), driving QoQ margin recovery
Volumes ('000 units) EBITDA margins (%) Adj PAT (INR M)
4QFY22E YoY (%) QoQ (%) 4QFY22E YoY (bq) QoQ (bq) 4QFY22E YoY (%) QoQ (%)
BJAUT 977 -16.5 -17.3 14.7 -300 -50 9,693 -27.2 -20.2
HMCL 1,189 -24.1 -8.0 11.8 -210 -30 6,472 -25.2 -5.7
TVS Motor 857 -7.6 -2.4 9.4 -70 -60 2,627 -9.2 -8.9
MSIL 489 -0.8 13.5 7.1 -120 40 12,036 3.2 19.0
MM 229 13.1 6.8 10.3 -440 -150 8,742 -12.8 -35.4
TTMT (S/A) 243 27.0 22.0 4.9 -340 160 -2,055 -2,196.4 -77.5
TTMT (JLR) * 94 -31.0 13.2 13.0 -230 100 124 -78.1 -285.4
TTMT (Cons) 10.3 -410 90 586 -99.0 -104
Ashok Leyland 49 10.6 43.0 5.9 -180 180 1,757 -17.4 -797.0
Eicher (RE) 186 -9.3 9.5 22.5 -30 200 5,432 11.6 28.6
Eicher (VECV) 20 10.6 25.2 7.6 -130 90 1,249 -2.2 90.2
Eicher (Consol) 22.5 -30 200 6,095 8.2 33.6
Agg. (ex JLR) 4,239 -12.0 -4.0 8.5 -270 -10 45,368 -16.6 11.4
Source: Company, MOFSL

April 2022 35
 March 2022 Results Preview | Sector: Automobiles

Exhibit 8: Revised estimates

FY23E FY24E
Rev Old Chg (%) Rev Old Chg (%)
Bajaj Auto 187.9 185.2 1.5 220.1 213.6 3.0
Hero MotoCorp 140.0 143.8 -2.6 173.2 180.0 -3.8
TVS Motor 23.1 23.9 -3.6 32.2 32.1 0.4
Eicher Motors * 95.1 96.7 -1.6 125.1 128.5 -2.7
Maruti * 214.8 219.0 -1.9 345.2 342.8 0.7
M&M (incl MVML) 43.9 42.6 3.2 58.9 57.3 2.9
Tata Motors * 19.6 19.2 2.0 34.1 33.4 1.9
Ashok Leyland 3.2 3.2 0.0 6.7 6.7 0.7
Escorts 72.3 70.9 2.1 87.6 86.0 1.9
Amara Raja 36.9 38.5 -4.0 42.8 45.1 -5.0
Exide Industries 10.6 11.3 -6.2 12.6 12.7 -0.8
BOSCH 497 508 -2.2 582 603 -3.5
Endurance Tech* 43.3 43.2 0.3 55.6 55.0 1.1
Mahindra CIE * 12.6 15.2 -16.6 18.6 18.8 -0.7
Bharat Forge * 24.6 25.5 -3.4 33.2 33.2 0.0
Motherson Sumi * 5.0 5.2 -2.7 8.0 8.2 -2.1
Sona BLW 7.5 8.2 -8.7 12.9 12.5 3.4
Ceat 31.5 38.9 -19.0 87.5 87.5 0.0
Apollo Tyres* 11.4 14.2 -20.3 20.0 20.2 -0.6
Balkrishna Ind 76.4 78.2 -2.3 91.3 91.3 0.0
MRF 1,838 2,030 -9.5 3,103 3,118 -0.5
*Source: Company, MOFSL

Exhibit 9: Relative performance – three-months (%) Exhibit 10: Relative performance – one-year (%)

Nifty Index MOFSL Automobiles Index Nifty Index MOFSL Automobiles Index
106 130

102 120

98 110

94 100

90 90
Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Sep-21

Mar-22
Jun-21

Dec-21

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

April 2022 36
 March 2022 Results Preview | Sector: Automobiles

Exhibit 11: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Automobiles 65.4 25.0 17.3 3.7 3.3 2.9 5.7 13.3 16.9
Amara Raja Batt. 565 Neutral 33.6 36.9 42.8 16.8 15.3 13.2 2.1 2.0 1.8 13.1 13.3 14.1
Apollo Tyres 198 Buy 11.4 12.5 20.0 17.4 15.8 9.9 1.0 0.9 0.9 5.6 5.9 9.0
Ashok Leyland 121 Buy -0.8 2.9 6.7 -158 42 18.0 5.5 5.3 4.4 -3.3 12.8 26.5
Bajaj Auto 3,764 Neutral 170.5 187.9 220.1 22.1 20.0 17.1 4.2 4.2 4.1 19.4 21.0 24.0
Balkrishna Inds 2,128 Neutral 71.1 76.4 91.3 29.9 27.8 23.3 5.9 5.2 4.5 21.2 19.9 20.7
Bharat Forge 709 Buy 20.3 24.6 33.2 35.0 28.8 21.4 5.4 4.8 4.0 16.4 17.6 20.4
Bosch 14,865 Neutral 403.1 496.8 582.1 36.9 29.9 25.5 4.1 3.7 3.4 11.6 13.1 13.9
CEAT 985 Buy 8.3 31.5 87.5 118.6 31.3 11.3 1.2 1.2 1.1 1.0 3.8 10.0
Eicher Motors 2,506 Buy 61.4 95.1 125.1 40.8 26.3 20.0 5.4 4.7 4.0 14.0 19.2 21.5
Endurance Tech. 1,161 Buy 30.8 43.3 55.6 37.7 26.8 20.9 4.2 3.8 3.4 11.7 14.9 17.1
Escorts 1,765 Neutral 73.6 72.3 87.6 24.0 24.4 20.1 3.1 2.4 2.3 13.9 11.4 12.2
Exide Inds. 159 Buy 8.9 10.6 12.6 17.9 15.0 12.6 1.8 1.1 1.0 10.2 7.3 8.2
Hero Motocorp 2,312 Buy 124.5 140.0 173.2 18.6 16.5 13.3 3.0 3.0 2.9 16.4 18.3 22.0
Mahindra & Mahindra 834 Buy 40.6 43.9 58.9 20.5 19.0 14.1 2.6 2.3 2.0 13.1 12.8 15.3
Mahindra CIE 178 Buy 13.8 12.6 18.6 12.8 14.0 9.5 1.3 1.2 1.1 10.4 8.9 12.0
Maruti Suzuki 7,775 Buy 107.2 214.8 345.2 72.5 36.2 22.5 4.4 4.2 3.7 5.9 11.3 16.5
Motherson Sumi 143 Buy 4.0 7.6 10.3 36.0 18.8 13.9 3.4 3.0 2.6 9.7 16.8 19.8
MRF 66,990 Neutral 1,484.6 1,838.2 3,103.4 45.1 36.4 21.6 2.0 1.9 1.8 4.6 5.4 8.6
Sona BLW Precis. 663 Neutral 5.3 7.5 12.9 125.0 88.2 51.4 21.1 17.8 14.0 19.7 21.9 30.5
Tata Motors 447 Buy -27.2 19.6 34.1 -16.4 22.8 13.1 3.8 3.3 2.6 -20.8 15.5 22.1
TVS Motor 633 Neutral 18.7 23.1 32.2 33.9 27.4 19.7 6.2 5.3 4.3 19.7 20.9 24.2

April 2022 37
 March 2022 Results Preview | Sector: Automobiles

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

Amara Raja Batteries Neutral

CMP: INR565 | TP: INR600 (+6%) EPS CHANGE (%): FY23|24E: -4|-5
 Improving OEM volumes will lead to weaker mix.  Lead prices rose 6%/19% QoQ in 3QFY22/4QFY22,
the impact of both quarters which will reflect in
1QFY23
Quarterly Performance (INR M)
Y/E March (INR m) FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 11,510 19,358 19,601 21,027 18,859 22,642 23,651 24,736 71,497 89,887
YoY Change (%) -36.6 14.2 12.1 33.0 63.8 17.0 20.7 17.6 4.5 25.7
RM Cost (% of sales) 66.5 65.3 66.1 67.4 68.9 70.1 70.3 70.3 66.4 70.0
Staff Cost (% of sales) 7.3 6.0 6.0 5.1 6.3 5.8 5.5 5.6 6.0 5.8
Other Exp (% of sales) 13.0 11.1 12.2 12.4 11.6 12.2 12.3 12.0 12.1 12.1
EBITDA 1,524 3,404 3,064 3,165 2,499 2,689 2,840 2,983 11,159 11,011
Margins (%) 13.2 17.6 15.6 15.1 13.2 11.9 12.0 12.1 15.6 12.3
Depreciation 748 782 791 871 963 986 1,021 1,047 3,192 4,017
Interest 27 25 26 28 32 36 38 35 105 140
Other Income 88 113 352 321 166 264 190 240 874 860
PBT after EO 837 2,710 2,599 2,588 1,670 1,932 1,971 2,141 8,736 7,714
Tax 210 695 667 693 431 491 524 529 2,265 1,975
Tax Rate (%) 25.1 25.6 25.7 26.8 25.8 25.4 26.6 24.7 25.9 25.6
Adj PAT 627 2,015 1,932 1,895 1,239 1,441 1,447 1,612 6,470 5,739
YoY Change (%) -55.5 -8.0 17.5 38.7 97.7 -28.5 -25.1 -14.9 -2.1 -11.3
E: MOFSL Estimates

Apollo Tyres Buy

CMP: INR198 | TP: INR240 (+22%) EPS CHANGE (%): FY23|24E: -12|-1
 Replacement demand is seeing recovery on sequential  RM cost is higher by 5-7% QoQ in 4QFY22. It has taken 3-
basis, with support from growth in OEM sales. 4% price hikes. Under-recovery on RM cost remains in 4Q.
 EU business margin to be adversely impacted by  Earnings downgrade for FY23E driven by higher
seasonality (on QoQ basis), high commodity and energy, assumptions for commodity basket.
partially offset by improved cost efficiencies.

Consolidated - Quarterly Earning Model (INR M)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 28,817 42,949 50,797 50,257 45,845 50,773 57,075 53,432 1,72,820 2,07,125
YoY Change (%) -33.5 7.8 15.5 39.0 59.1 18.2 12.4 6.3 5.7 19.8
EBITDA 2,456 7,070 9,152 8,147 5,668 6,380 7,429 5,741 26,825 25,219
Margins (%) 8.5 16.5 18.0 16.2 12.4 12.6 13.0 10.7 15.5 12.2
Depreciation 3,091 3,308 3,273 3,477 3,404 3,397 3,443 3,464 13,150 13,707
Interest 1,172 1,167 1,049 1,042 1,046 1,036 1,083 1,040 4,430 4,205
Other Income 185 262 228 619 405 289 170 264 1,294 1,127
PBT before EO expense -1,622 2,857 5,058 4,246 1,623 2,236 3,073 1,502 10,539 8,434
Extra-Ord expense 0 6,009 -1,095 13 9 44 5 0 4,927 59
PBT -1,622 -3,153 6,153 4,234 1,613 2,192 3,068 1,502 5,612 8,375
Rate (%) 17.0 21.9 27.9 32.2 20.8 20.7 27.2 20.2 37.6 23.0
Reported PAT -1,346 -2,463 4,438 2,873 1,278 1,738 2,235 1,199 3,502 6,421
Adj PAT -1,346 1,287 3,755 2,880 1,285 1,766 2,238 1,199 6,577 6,467
YoY Change (%) -195.1 55.0 115.9 269.9 -195.5 37.2 -40.4 -58.4 38.1 -1.7
Margins (%) -4.7 3.0 7.4 5.7 2.8 3.5 3.9 2.2 3.8 3.1
E: MOFSL Estimates

April 2022 38
 March 2022 Results Preview | Sector: Automobiles

Ashok Leyland Buy

CMP: INR121 | TP: INR150 (+24%) EPS CHANGE (%): FY23|24E: -9|1
 Improving operators profitability to support M&HCV cycle  New launches in the CNG segment would help AL recover
however recent increase in diesel price is near term market share in the ICV segment
headwind.
 Any progress on fund-raise for the EV subs can be re-  Margins to improve on QoQ basis due to operating
rating trigger. leverage.
Quarterly Performance (S/A)
FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 3,814 19,433 33,408 44,060 17,987 27,543 34,077 48,719 1,00,715 1,28,326
Growth % -90.4 -32.8 7.1 72.9 371.6 41.7 2.0 10.6 -19.6 27.4
Realizations (INR '000) 1,707 1,460 1,441 1,589 1,641 1,619 1,624 1,637 1,519 1,630
Change (%) 18.9 7.5 12.0 5.5 -3.9 10.9 12.7 3.0 8.9 7.3
Net operating revenues 6,509 28,366 48,135 70,005 29,510 44,579 55,352 79,755 1,53,015 2,09,195
Change (%) -88.5 -27.8 19.9 82.4 353.4 57.2 15.0 13.9 -12.4 36.7
RM/sales % 64.1 71.2 74.4 76.9 74.1 76.7 77.9 78.7 74.5 77.4
Staff/sales % 54.4 13.2 9.4 5.7 14.4 9.0 7.8 5.5 10.4 8.1
Other exp/sales % 32.6 12.8 10.9 9.7 16.2 11.3 10.2 10.0 11.6 11.2
EBITDA -3,332 804 2,538 5,342 -1,401 1,347 2,239 4,688 5,351 6,873
EBITDA Margins(%) -51.2 2.8 5.3 7.6 -4.7 3.0 4.0 5.9 3.5 3.3
Interest 768 872 656 771 707 871 668 696 3,068 2,942
Other Income 256 219 341 380 134 209 176 180 1,195 700
Depreciation 1,637 1,712 1,944 2,185 1,835 1,843 1,897 1,957 7,477 7,531
PBT before EO Item -5,481 -1,561 278 2,766 -3,809 -1,157 -149 2,215 -3,999 -2,901
EO Exp/(Inc) 17 17 460 -374 17 -2 -420 0 120 -406
PBT after EO -5,498 -1,578 -182 3,139 -3,826 -1,155 271 2,215 -4,119 -2,495
Effective Tax Rate (%) 29.3 7.1 -6.2 23.2 26.2 28.1 78.7 20.7 23.8 26.3
Adj PAT -3,875 -1,454 157 2,127 -2,811 -832 -252 1,757 -3,045 -2,138
Change (%) -259.1 -277.8 -46.3 -1,899.0 -27.5 -42.8 -260.8 -17.4 -188.9 -29.8
E: MOFSL Estimates

Bajaj Auto Neutral

CMP: INR3,764 | TP: INR3,525 (-6%) EPS CHANGE (%): FY23|24E:1.5|3
 2W domestic market continue to remain weak while and  Realization growth is largely due to price hike associated
export markets for 2Ws. with impact of cost inflation.
 3W volumes recovery in place.

Quarterly Performance (INR Mn)

FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Volumes ('000 units) 443 1,053 1,307 1,170 1,006 1,144 1,181 977 3,973 4,308
Growth YoY (%) -64.5 -10.2 8.7 17.9 127.0 8.6 -9.6 -16.5 (13.9) 8.4
Realization (INR/unit) 69,493 67,935 68,180 73,492 73,419 75,328 76,367 78,000 69,826 75,773
Growth YoY (%) 11.7 3.4 7.3 7.0 5.6 10.9 12.0 6.1 7.7 8.5
Net Sales 30,792 71,559 89,099 85,961 73,860 86,206 90,217 76,179 2,77,411 3,26,462
Change (%) -60.3 -7.2 16.6 26.1 139.9 20.5 1.3 -11.4 (7.3) 17.7
RM/Sales % 67.1 70.7 70.8 71.9 73.0 74.9 74.7 74.3 70.7 74.3
Staff cost/Sales % 11.0 4.5 3.6 3.6 4.9 4.1 3.8 4.4 4.6 4.3
Oth. Exp./Sales % 8.7 7.1 6.2 6.9 6.9 6.5 6.3 6.8 7.0 6.6
EBITDA 4,085 12,662 17,296 15,241 11,198 12,596 13,721 11,230 49,285 48,745
EBITDA Margins (%) 13.3 17.7 19.4 17.7 15.2 14.6 15.2 14.7 17.8 14.9
Other Income 3,379 2,858 3,692 2,836 3,293 3,183 2,728 2,507 12,765 11,711
Extraordinary Inc 0 0 0 0 0 1,416 0 0 0 1,416
Interest 10 27 10 20 23 17 18 27 67 85
Depreciation 638 643 650 662 641 656 698 658 2,593 2,653
PBT after EO 6,817 14,851 20,328 17,395 13,827 16,521 15,733 13,052 59,390 59,133
Effective Tax Rate (%) 22.5 23.4 23.4 23.4 23.3 22.9 22.8 25.7 23.3 23.6
Adj. PAT 5,280 11,382 15,563 13,321 10,612 11,664 12,142 9,693 45,546 44,106
Change (%) (53.1) (18.8) 23.4 1.7 101.0 2.5 (22.0) (27.2) (10.7) (3.2)
E: MOFSL Estimates

April 2022 39
 March 2022 Results Preview | Sector: Automobiles

Balkrishna Industries Neutral

CMP: INR2,128 | TP: INR2,000 (-6%) EPS CHANGE (%): FY23|24E: -2|0
 BIL volumes to grow with commencement of production  Strong demand from both mining and agriculture sector
at BHUJ Plant after brown field expansion started due to steep increase in commodity cost.
operations in Mar-22.
 There will be continuous adverse impact of sharp increase  INR appreciation against EUR will have impact in FY23, as
in commodity costs and logistic cost. 4QFY22 is largely hedged.
Quarterly Earning Model (Standalone) (INR M)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Volumes (Ton) 38,096 61,224 59,810 68,002 68,608 72,748 70,320 73,629 2,27,131 2,85,305
YoY Change (%) -25.7 35.5 26.4 17.3 80.1 18.8 17.6 8.3 12.6 25.6
Realizations (INR '000/ton) 247.2 253.5 250.2 257.3 266.5 285.9 295.6 297.8 252.7 286.7
YoY Change (%) 4.2 3.4 0.0 7.4 7.8 12.8 18.2 15.7 4.1 13.4
Net Revenues 9,417 15,518 14,966 17,499 18,281 20,798 20,790 21,929 57,399 81,797
YoY Change (%) -22.7 40.2 26.5 26.0 94.1 34.0 38.9 25.3 17.2 42.5
Total Expenditure 6,981 10,421 10,282 12,041 13,004 15,299 15,865 16,762 39,724 60,931
EBITDA 2,436 5,097 4,684 5,458 5,277 5,499 4,924 5,166 17,675 20,866
Margins (%) 25.9 32.8 31.3 31.2 28.9 26.4 23.7 23.6 30.8 25.5
Depreciation 996 1,012 1,019 1,034 1,041 1,085 1,145 1,199 4,062 4,470
Interest 24 34 17 23 21 18 18 17 98 74
Other Income 203 454 594 544 632 1,031 626 791 1,795 3,080
PBT before EO expense 1,619 4,505 4,241 4,945 4,847 5,427 4,387 4,742 15,310 19,402
Rate (%) 24.7 24.6 24.1 24.7 26.2 26.4 25.1 24.2 24.5 25.5
Adj PAT 1,218 3,395 3,219 3,722 3,575 4,043 3,286 3,595 11,554 14,453
YoY Change (%) -30.8 16.7 45.9 44.7 193.5 19.1 2.1 -3.4 22.3 25.1
Margins (%) 12.9 21.9 21.5 21.3 19.6 19.4 15.8 16.4 20.1 17.7
E: MOFSL Estimates

Bharat Forge Buy

CMP: INR709 | TP: INR860 (+21%) EPS CHANGE (%): FY23|24E: -3|0
 Export to improve with easing of semi-conductor shortage  Favorable mix will offset impact of RM cost inflation on
in 4QFY22. QoQ basis
 Domestic business to grow on improvement in CVs and PV  Impact of higher RM cost and adverse operating leverage
volumes, though non-auto will be impacted by completion to impact margins.
of one-time oxygen cylinder order in 3QFY22.
S/A Quarterly (INR M)
FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Tonnage 17,840 40,775 50,943 55,837 53,512 57,094 53,365 56,006 1,65,396 2,19,977
Change (%) -70.7 -23.8 8.4 39.0 200.0 40.0 4.8 0.3 -18.0 33.0
Realization (INR '000/ton) 239.3 216.2 203.3 234.1 256.4 279.5 300.2 273.8 220.8 277.4
Change (%) 8.2 -8.1 -11.3 6.7 7.1 29.3 47.7 16.9 -2.5 25.7
Net operating income 4,270 8,815 10,357 13,073 13,718 15,956 16,021 15,332 36,515 61,028
Change (%) -68.3 -30.0 -3.8 48.4 221.3 81.0 54.7 17.3 -20.0 67.1
EBITDA 17 1,660 2,333 3,338 3,910 4,437 4,034 3,729 7,348 16,110
EBITDA Margins (%) 0.4 18.8 22.5 25.5 28.5 27.8 25.2 24.3 20.1 26.4
Non-Operating Income 420 313 352 320 333 322 358 387 1,405 1,400
Interest 299 75 268 137 406 142 118 137 779 803
Depreciation 808 883 964 1006 1019 1026 1031 1076 3,661 4,152
Fx loss/(gain) 46 94 185 -253 -4 -307 -45 0 72 -356
PBT after EO items -716 892 1,214 2,760 2,206 4,009 4,247 2,903 4,149 13,364
Eff. Tax Rate (%) 21.4 21.2 23.6 25.6 24.4 22.2 20.5 24.3 24.8 22.5
Rep. PAT -563 702 927 2,054 1,667 3,118 3,374 2,197 3,121 10,356
Change (%) -132.3 -71.3 -27.5 -380.3 -396.0 343.9 263.9 6.9 -34.1 231.8
Adj. PAT -563 724 968 2,061 2,145 3,033 2,631 2,197 3,190 9,994
Change (%) -132.3 -70.4 -24.2 11,691.5 -480.9 318.7 171.7 6.6 -41.9 213.3
E: MOFSL Estimates

April 2022 40
 March 2022 Results Preview | Sector: Automobiles

Bosch Neutral
CMP: INR14,865 | TP: INR16,300 (+10%) EPS CHANGE (%): FY23|24E: -2|-3.5
 Impact of weak Tractor volumes to be offset by strong CV  Expected lower employee cost to boost operating margin
volumes in 4QFY22.
 Increasing semiconductor availability would be impacted  Restructuring exercise has been completed and will
by tepid 2W and tractor demand support margins.
Quarterly performance (S/A) (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 9,915 24,792 30,296 32,177 24,435 29,180 31,091 33,485 97,180 1,18,191
YoY Change (%) -64.0 7.2 19.4 43.8 146.4 17.7 2.6 4.1 -1.3 21.6
RM Cost (% of sales) 57.7 59.4 57.9 61.4 58.9 62.8 60.8 60.4 59.4 60.8
Staff Cost (% of sales) 24.5 12.4 8.1 9.1 11.1 8.7 9.4 8.2 11.2 9.2
Other Expenses (% of sales) 28.1 16.6 22.2 15.2 17.5 16.3 18.3 18.3 19.1 17.6
EBITDA -1,021 2,881 3,581 4,605 3,066 3,575 3,574 4,417 10,039 14,632
Margins (%) -10.3 11.6 11.8 14.3 12.5 12.3 11.5 13.2 10.3 12.4
Depreciation 728 796 969 921 671 829 851 969 3,414 3,320
Interest 18 13 68 41 32 15 169 34 140 250
Other Income 1,734 1,015 1,113 1,171 990 1,244 803 1,073 5,040 4,110
PBT before EO expense -34 3,086 3,657 4,815 3,353 3,975 3,358 4,487 11,524 15,173
Extra-Ord expense 1,674 4,000 1,467 -1,586 0 0 0 0 5,555 0
PBT after EO Expense -1,707 -914 2,190 6,400 3,353 3,975 3,358 4,487 5,969 15,173
Tax -801 -266 332 1,580 756 255 1,009 1,266 846 3,286
Tax Rate (%) 46.9 29.1 15.2 24.7 22.5 6.4 30.1 28.2 14.2 21.7
Reported PAT -907 -648 1,858 4,820 2,598 3,720 2,349 3,221 5,123 11,887
Adj PAT 530 2,785 3,116 3,459 2,598 3,720 2,349 3,221 9,890 11,887
YoY Change (%) -84.6 -11.1 10.6 13.1 390.4 33.5 -24.6 -6.9 -20.6 20.2
E: MOFSL Estimates

Ceat Buy
CMP: INR985| TP: INR1,150 (+17%) EPS CHANGE (%): FY23|24E: -19|0
 Good recovery in aftermarket will dilute weakness in 2W  Ramp-up at new TBR/PCR plant to support domestic and
demand. export volumes.
 Despite consistent price hikes, there is under-recovery of  Earnings downgrade for FY23E driven by higher
7-9% on account of commodity cost inflation. assumptions for commodity basket.
Consolidated - Quarterly Earning Model (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 11,202 19,785 22,213 22,897 19,064 24,518 24,133 23,998 76,096 91,712
YoY Change (%) -36.1 17.0 26.1 45.5 70.2 23.9 8.6 4.8 12.3 20.5
RM cost (%) 59.7 53.5 54.5 58.0 61.1 63.1 66.0 67.1 56.1 64.5
Employee cost (%) 13.5 8.1 8.1 8.0 9.3 7.0 7.1 7.2 8.9 7.6
Other expenses (%) 17.6 23.5 22.7 22.6 20.9 20.9 21.3 21.1 22.1 21.1
EBITDA 1,020 2,925 3,277 2,608 1,662 2,203 1,341 1,099 9,830 6,305
Margins (%) 9.1 14.8 14.8 11.4 8.7 9.0 5.6 4.6 12.9 6.9
Depreciation 785 839 873 899 965 1,206 1,086 1,106 3,396 4,362
Interest 488 450 419 399 460 496 548 562 1,755 2,066
Other Income 28 38 41 32 39 28 32 82 138 180
PBT before EO expense -225 1,674 2,025 1,342 276 529 -260 -486 4,816 58
Exceptional item 218 0 123 0 0 5 65 0 341 70
PBT -443 1,674 1,903 1,342 276 524 -326 -486 4,476 -13
Tax Rate (%) 12.6 -0.9 36.6 -8.2 41.8 29.2 10.7 48.5 11.5 20.0
Minority Int. & Profit of Asso. Cos. -40 -130 -115 -76 -79 -49 -91 -71 -361 -290
Reported PAT -348 1,819 1,321 1,528 240 420 -200 -180 4,320 280
Adj PAT -155 1,819 1,430 1,528 240 424 -148 -180 4,622 336
YoY Change (%) -125 308 170 116 -255 -77 -110 -112 100.2 -93
Margins (%) -1.4 9.2 6.4 6.7 1.3 1.7 -0.6 -0.7 6.1 0.4

April 2022 41
 March 2022 Results Preview | Sector: Automobiles

Eicher Motors Buy

CMP: INR2,506 | TP: INR3,000 (+20%) EPS CHANGE (%): FY23|24E: -1.6|-2.7
 Recovery of volumes in 4QFY22 aided by better availability  VECV volumes growth offset commodity cost pressure and
of chips for ABS. leads to margin expansion.
 Operating leverage to aid margin recovery.  Higher export and price hikes support realization growth.
Quarterly performance (Consolidated)
FY21 FY22E FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Operating income 8,182 21,336 28,283 29,403 19,743 22,496 28,807 32,804 87,204 103,849
Growth (%) -65.7 -2.7 19.3 33.2 141.3 5.4 1.9 11.6 -4.7 19.1
EBITDA 38 4,711 6,720 6,844 3,630 4,699 5,824 7,276 18,313 21,428
EBITDA Margins (%) 0.5 22.1 23.8 23.3 18.4 20.9 20.2 22.2 21.0 20.6
PAT 102 3,472 5,012 4,571 2,765 3,634 4,202 5,417 13,146 16,018
Share of JV Loss/(PAT)/ Min. Int. 654 39 -314 -690 394 -98 -359 -678 -311.3 -741
Recurring PAT -552 3,433 5,326 5,633 2,371 3,732 4,561 6,095 13,829 16,760
Growth (%) -112.2 -40.0 6.8 85.1 -529.8 8.7 -14.4 8.2 -24.3 21.2

Standalone (Royal Enfield)

(INR Million) FY21 FY22E FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Royal Enfield ('000 units) 57 151 200 205 124 123 170 186 612 602
Growth (%) -68.8 -9.6 9.2 25.6 115.9 -18.0 -15.1 -9.3 -12.0 -1.6
Net Realn (INR '000/unit) 134.3 141.1 140.4 142.8 154.3 176.8 167.4 173.3 140.8 168.5
Change - YoY (%) 4.8 7.7 8.6 6.7 14.9 25.3 19.2 21.3 7.9 19.6
EBITDA 12 4,838 6,580 6,685 3,345 4,427 5,814 7,248 17,865 20,834
EBITDA Margins (%) 0.2 22.8 23.5 22.9 17.5 20.3 20.5 22.5 20.7 20.5

Endurance Technologies Buy

CMP: INR1,161 | TP: INR1,500 (+29%) EPS CHANGE (%): FY22|23E: 0|1
 The slowdown in the underlying 2W industry leads to YoY  QoQ margin decline due to commodity cost inflation
decline in standalone revenue.
 EU business continues to witness impact of semiconductor  Maintain FY23/FY24E EPS as India 2W volumes seems
shortage. bottomed out and current estimates account for semi-
conductor shortages in EU.
Consolidated - Quarterly
Y/E March FY21 FY22E FY21 FY22E
INR m 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,031 17,422 20,409 21,329 16,937 18,876 18,891 19,276 65,191 73,980
YoY Change (%) -67.6 -1.6 24.4 33.0 180.8 8.3 -7.4 -9.6 -5.2 13.5
RM Cost (% of sales) 47.9 54.9 54.1 57.3 53.8 58.6 60.8 61.3 54.8 58.7
Staff Cost (% of sales) 21.9 9.6 8.9 9.1 11.5 8.7 8.8 8.9 10.4 9.4
Other Exp. (% of sales) 23.1 19.1 19.8 18.1 20.3 18.9 19.6 19.2 19.3 19.5
EBITDA 427 2,852 3,521 3,322 2,443 2,600 2,032 2,056 10,123 9,131
Margins (%) 7.1 16.4 17.3 15.6 14.4 13.8 10.8 10.7 15.5 12.3
Depreciation 856 973 1,045 1,118 983 940 914 965 3,991 3,802
Interest 42 35 42 19 15 18 14 20 138 66
Other Income 109 71 58 69 127 82 75 97 307 381
PBT before EO expense -361 1,916 2,493 2,254 1,573 1,724 1,179 1,169 6,301 5,645
Exceptional Item 0 -279 112 0 315 0 0 0 -167 315
PBT after EO -361 2,195 2,380 2,254 1,258 1,724 1,179 1,169 6,468 5,330
Eff. Tax Rate (%) 31.0 23.9 20.2 16.9 23.3 22.7 19.8 28.1 19.7 23.3
Rep. PAT -249 1,672 1,901 1,873 966 1,333 946 841 5,196 4,086
Adj. PAT -249 1,447 1,991 1,873 1,207 1,333 946 841 5,061 4,327
YoY Change (%) -119.2 -14.4 60.5 67.0 -584.5 -7.9 -52.5 -55.1 -5.4 -14.5
E: MOFSL estimates

April 2022 42
 March 2022 Results Preview | Sector: Automobiles

Escorts Neutral
CMP: INR1,765 | TP: INR1,750 (-1%) EPS CHANGE (%): FY23|24E: 2|2
 Weak tractor volumes to impact performance in 4Q.  RM cost inflation, adverse op. leverage to impact margins.
 Sequential growth in CE and railways to support revenues.  Yet to factor in benefits from the Kubota alliance.
Standalone Quarterly Performance (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 10,616 16,397 20,174 22,105 16,715 16,623 19,575 18,189 69,293 71,101
YoY Change (%) -25.4 23.9 23.5 60.1 57.4 1.4 -3.0 -17.7 20.3 2.6
EBITDA 1,196 3,009 3,641 3,447 2,332 2,101 2,646 2,270 11,292 9,350
Margins (%) 11.3 18.3 18.0 15.6 14.0 12.6 13.5 12.5 16.3 13.2
Depreciation 264 274 315 304 314 329 325 333 1,157 1,301
Interest 19 32 33 26 30 36 33 32 110 130
Other Income 298 376 472 399 472 639 400 520 1,546 2,030
PBT 1,211 3,078 3,765 3,516 2,461 2,374 2,688 2,425 11,571 9,949
Rate (%) 23.9 25.3 25.5 22.8 24.8 25.6 25.0 25.3 24.5 25.2
Adj. PAT 922 2,299 2,807 2,713 1,852 1,767 2,015 1,812 8,741 7,446
YoY Change (%) 5.3 106.0 83.4 93.3 101.0 -23.1 -28.2 -33.2 77.4 -14.8
Margins (%) 8.7 14.0 13.9 12.3 11.1 10.6 10.3 10.0 12.6 10.5
E: MOFSL Estimates

Exide Industries Buy

CMP: INR159 | TP: INR209 (+31%) EPS CHANGE (%): FY23|24E: -6|-1
 Improving OEM volumes will lead to weaker mix.  Lead prices rose 6%/19% QoQ in 3QFY22/4QFY22, the
impact of both quarters which will reflect in 1QFY23.
S/A Quarterly Performance (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 15,476 27,534 28,010 29,388 24,864 32,900 31,967 31,243 1,00,408 1,20,974
Growth YoY (%) -44.3 5.5 16.2 43.0 60.7 19.5 14.1 6.3 1.9 20.5
RM(%) 68.8 65.0 64.1 65.7 68.5 67.2 69.0 69.0 65.5 68.4
Employee cost (%) 9.0 6.9 7.4 6.3 7.4 6.5 6.4 6.7 7.2 6.7
Other Exp(%) 12.6 13.9 14.1 14.0 13.6 13.8 13.0 13.3 13.8 13.4
EBITDA 1,485 3,920 4,028 4,123 2,606 4,134 3,726 3,470 13,556 13,936
EBITDA Margin(%) 9.6 14.2 14.4 14.0 10.5 12.6 11.7 11.1 13.5 11.5
Change (%) -63.6 6.8 25.9 52.6 75.5 5.4 -7.5 -15.8 -0.7 2.8
Non-Operating Income 70 148 201 235 152 109 150 161 654 572
Interest 14 63 76 85 109 86 83 82 238 360
Depreciation 914 953 953 974 1,009 1,012 1,041 1,045 3,794 4,106
PBT after EO Exp 627 3,052 3,200 3,300 1,640 3,145 2,753 2,504 10,179 10,041
Effective Tax Rate (%) 29.9 25.0 24.6 26.0 23.5 25.5 25.8 24.3 25.5 25.0
Adj. PAT 440 2,288 2,414 2,441 1,254 2,344 2,041 1,895 7,583 7,534
Change (%) -80.4 -3.6 13.2 45.3 185.4 2.4 -15.5 -22.4 -10.0 -0.6

April 2022 43
 March 2022 Results Preview | Sector: Automobiles

Hero MotoCorp Buy

CMP: INR2,312 | TP: INR2,775 (+20%) EPS CHANGE (%): FY23|24E: -3 |-4
 Performance to be impacted by weakness in volumes.  Margins to be impacted due to RM cost inflation and
operating deleverage.
 Realizations improvement largely pertains to price hikes
taken to pass commodity cist pressure.
Quarterly Performance (S/A) (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes ('000 nos) 565 1,815 1,845 1,567 1,024 1,439 1,292 1,189 5,792 4,944
Growth YoY (%) -69.4 7.3 19.8 17.4 81.4 -20.7 -30.0 -24.1 -9.6 -14.6
Net Realization 52,625 51,620 52,977 55,434 53,559 58,760 61,010 63,858 53,182 59,496
Growth YoY (%) 20.8 15.3 16.7 18.6 1.8 13.8 15.2 15.2 18.2 11.9
Net Op Revenues 29,715 93,673 97,758 86,860 54,871 84,534 78,833 75,920 3,08,006 2,94,158
Growth YoY (%) -63.0 23.7 39.7 39.2 84.7 -9.8 -19.4 -12.6 6.8 -4.5
RM Cost (% sales) 70.5 71.1 70.5 70.4 72.5 72.3 71.0 71.2 70.7 71.7
Staff Cost (% sales) 12.9 5.5 5.3 5.6 7.9 6.0 6.6 6.8 6.2 6.7
Other Exp (% sales) 13.0 9.7 9.8 10.0 10.2 9.1 10.3 10.2 10.1 9.9
EBITDA 1,081 12,864 14,136 12,112 5,148 10,664 9,600 8,991 40,192 34,403
EBITDA Margins (%) 3.6 13.7 14.5 13.9 9.4 12.6 12.2 11.8 13.0 11.7
Other Income 1,485 1,413 2,027 874 1,386 1,569 1,216 1,271 5,799 5,443
Interest 63 46 47 63 61 65 65 59 218 250
Depreciation 1,708 1,732 1,698 1,631 1,630 1,639 1,644 1,656 6,769 6,569
PBT before EO Exp/(Inc) 795 12,500 14,418 11,291 4,844 10,529 9,107 8,547 39,004 33,026
Effective Tax Rate (%) 22.9 23.7 24.8 23.4 24.6 24.5 24.7 24.3 24.0 24.5
Adj. PAT 613 9,535 10,845 8,650 3,654 7,944 6,861 6,472 29,642 24,932
Growth (%) -90.3 3.3 23.2 39.4 496.1 -16.7 -36.7 -25.2 -3.0 -15.9

MRF Neutral
CMP: INR66,990 | TP: INR62,000 (-6%) EPS CHANGE (%): FY23|24E: -10 |-0.5
 Good recovery in aftermarket will dilute weakness in 2W  RM basket is estimated to be higher by 3-5% QoQ in 4QFY22.
demand.
 Despite consistent price hikes, there is under-recovery of 5-  Earnings downgrade for FY23E driven by higher assumptions
7% on account of commodity cost inflation. for commodity basket.
Standalone - Quarterly Earning Model (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 24,306 41,864 45,668 47,377 41,277 48,317 48,299 49,760 1,59,214 1,87,652
YoY Change (%) -44.9 6.0 13.9 30.7 69.8 15.4 5.8 5.0 -0.4 17.9
Total Expenditure 20,991 33,319 36,036 39,921 36,405 43,194 43,442 45,038 1,30,267 1,68,079
EBITDA 3,315 8,544 9,631 7,456 4,872 5,122 4,856 4,721 28,947 19,573
Margins (%) 13.6 20.4 21.1 15.7 11.8 10.6 10.1 9.5 18.2 10.4
Depreciation 2,730 2,839 2,831 2,970 3,007 2,958 2,946 2,989 11,369 11,900
Interest 737 528 638 745 621 566 628 670 2,647 2,484
Other Income 430 443 634 565 924 887 690 817 2,072 3,317
PBT before EO expense 279 5,620 6,797 4,306 2,168 2,485 1,973 1,880 17,003 8,506
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 279 5,620 6,797 4,306 2,168 2,485 1,973 1,880 17,003 8,506
Tax 108 1,590 1,680 1,134 555 652 514 491 4,512 2,212
Rate (%) 38.8 28.3 24.7 26.3 25.6 26.2 26.1 26.1 26.5 26.0
Minority Interest & Profit/Loss of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 171 4,030 5,117 3,173 1,613 1,834 1,458.3 1,388.9 12,490 6,295
Adj PAT 171 4,030 5,117 3,173 1,613 1,834 1,458.3 1,388.9 12,490 6,295
YoY Change (%) -93.6 82.9 116.3 -52.6 845.8 -54.5 -71.5 -56.2 -10.5 -49.6
Margins (%) 0.7 9.6 11.2 6.7 3.9 3.8 3.0 2.8 7.8 3.4
E: MOFSL Estimates

April 2022 44
 March 2022 Results Preview | Sector: Automobiles

Mahindra & Mahindra Buy

CMP: INR834 | TP: INR1100 (+32%) EPS CHANGE (%): FY23|24E: 3|3
 Improved wholesales for SUVs and pickups with easing of  Adverse mix and RM cost inflation to hurt gross margins.
supply chain constraints.
 Tractor demand remains subdued die to sown-cycle  Seasonal increase in other expenses to impact margins
sequentially.

Quarterly Performance (incl MVML) (INR M)

Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 95,308 1,85,270 2,23,978 2,02,223 1,86,777 1,90,600 2,14,134 2,28,788 7,06,779 8,20,248
Growth YoY (%) -56.3 -3.2 3.3 33.3 96.0 2.9 -4.4 13.1 -9.1 16.1
Net Realization 5,86,460 6,21,920 6,23,567 6,59,576 6,29,777 6,98,078 7,11,649 7,44,765 6,28,435 6,99,134
Growth YoY (%) -0.1 8.9 11.5 11.1 7.4 3.0 3.0 12.9 9.0 11.3
Net Op. Income 55,894 1,15,223 1,39,665 1,33,382 1,17,628 1,33,054 1,52,388 1,70,393 4,44,164 5,73,463
Growth YoY (%) -56.4 5.4 15.2 48.1 110.4 15.5 9.1 27.7 -1.0 29.1
RM Cost (% of sales) 64.8 66.8 68.9 69.2 69.6 72.8 74.8 75.4 68.0 73.5
Staff (% of sales) 13.8 6.9 6.3 6.0 7.5 6.0 5.8 5.2 7.3 6.0
Oth. Exp. (% of Sales) 11.1 9.1 8.3 10.2 9.0 8.8 7.6 10.3 9.4 8.6
EBITDA 5,732 19,893 22,955 19,605 16,317 16,598 18,058 17,589 68,186 68,563
EBITDA Margins (%) 10.3 17.3 16.4 14.7 13.9 12.5 11.9 10.3 15.4 12.0
Other income 1,338 3,839 5,618 1,178 2,052 11,048 5,233 1,135 11,973 19,469
Interest 768 1,179 1,039 971 714 425 533 537 3,957 2,209
Depreciation 5,813 5,870 6,043 5,899 5,586 5,807 6,312 6,530 23,624 24,235
EO Income/(Exp) 288 -10,815 -11,240 -8,399 -785 -2,550 0 0 -30,165 -3,335
PBT after EO 777 5,869 10,252 5,514 11,284 18,865 16,447 11,658 22,413 58,253
Effective Tax Rate (%) 12.7 72.4 48.2 70.5 24.2 24.1 17.7 25.0 58.8 22.5
Reported PAT 678 1,618 5,308 1,625 8,556 14,317 13,531 8,742 9,229 45,146
Adj PAT 390 12,916 17,079 10,020 9,340 16,870 13,531 8,742 40,405 48,483
Change (%) -95.8 -4.7 74.1 210.2 2,294.9 30.6 -20.8 -12.8 13.0 20.0
E: MOFSL Estimates

Mahindra CIE Buy

CMP: INR178 | TP: INR240 (+35%) EPS CHANGE (%): CY22|23E: -17|-1
 The management’s focus is on increasing share of new EU impacted by supply chain issues and higher energy
orders to drive growth. price.
 Cost cutting initiatives in both India and EU to support  Domestic sales growth offset impact in EU.
margin.

Quarterly performance (Consol.) (INR M)

(INR m) CY21 CY22E CY21 CY22E
Y/E December 1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Net Sales 21,894 20,425 20,907 20,641 22,786 23,782 24,517 24,155 83,867 95,241
YoY Change (%) 31.7 177.7 23.4 5.4 4.1 16.4 17.3 17.0 38.6 13.6
EBITDA 2,868 2,598 2,685 2,022 2,238 2,558 2,885 3,049 10,173 10,730
Margins (%) 13.1 12.7 12.8 9.8 9.8 10.8 11.8 12.6 12.1 11.3
Depreciation 883 886 835 827 880 930 950 955 3,431 3,715
Interest 142 131 133 127 140 135 130 93 533 498
Other Income 194 116 74 172 145 145 150 146 556 586
PBT before EO expense 2,037 1,697 1,791 1,241 1,363 1,638 1,955 2,148 6,766 7,103
EO Exp/(Inc) 1,425 0 -293 128 0 0 0 0 1,260 0
PBT after EO exp 612 1,697 2,084 1,113 1,363 1,638 1,955 2,148 5,505 7,103
Tax Rate (%) 83.6 19.7 20.1 29.0 32.7 32.7 32.7 32.7 28.9 32.7
Adj. PAT 1,526 1,362 1,456 892 917 1,102 1,316 1,445 5,236 4,781
YoY Change (%) 143.5 -205.9 139.7 -20.2 -39.9 -19.1 -9.6 62.0 390.9 -8.7
Margins (%) 7.0 6.7 7.0 4.3 4.0 4.6 5.4 6.0 6.2 5.0

April 2022 45
 March 2022 Results Preview | Sector: Automobiles

Maruti Suzuki Buy

CMP: INR7,775 | TP: INR9,328 (+20%) EPS CHANGE (%): FY23|24E:-2|1
 Easing of supply chain constraints combined with low  New product launches/platform upgrades to drive growth
channel inventory aiding wholesales. in FY23E.
 It has strong market share in fast growing CNG segment,  Impact of RM cost inflation will be off-set by operating
but weakness in SUV leads to overall lower share. leverage, leading to QoQ increase in margins.
S/A Quarterly Performance (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Financial Performance
Volumes ('000 units) 76.6 393.1 495.9 492.8 353.6 379.5 430.7 488.8 1,458.4 1,652.7
Change (%) -81.0 16.2 13.4 28.2 361.6 -3.5 -13.2 -0.8 -6.7 13.3
Realizations (INR/car) 5,36,104 4,76,802 4,73,038 4,87,538 5,02,545 5,41,151 5,39,766 5,50,514 4,82,264 5,35,299
Change (%) 9.4 -5.0 -0.1 3.0 -6.3 13.5 14.1 12.9 -0.3 11.0
Net operating revenues 41,065 1,87,445 2,34,578 2,40,237 1,77,707 2,05,389 2,32,460 2,69,107 7,03,325 8,84,663
Change (%) -79.2 10.4 13.3 32.0 332.7 9.6 -0.9 12.0 -7.0 25.8
RM Cost (% of sales) 71.5 70.0 72.5 73.9 74.8 75.8 75.3 76.0 72.3 75.5
Staff Cost (% of sales) 17.8 4.4 4.0 3.7 6.0 4.7 4.2 3.8 4.8 4.5
Other Cost (% of sales) 31.7 15.3 13.9 14.1 14.6 15.3 13.8 13.1 15.3 14.1
EBITDA -8,634 19,336 22,261 19,911 8,211 8,549 15,590 19,132 53,453 51,482
EBITDA Margins (%) -21.0 10.3 9.5 8.3 4.6 4.2 6.7 7.1 7.6 5.8
Depreciation 7,833 7,659 7,413 7,410 7,432 7,561 6,400 6,566 30,315 27,959
EBIT -16,467 11,677 14,848 12,501 779 988 9,190 12,566 23,138 23,523
EBIT Margins (%) -40.1 6.2 6.3 5.2 0.4 0.5 4.0 4.7 3.3 2.7
Non-Operating Income 13,183 6,025 9,937 898 5,078 5,227 3,280 3,982 29,464 17,567
PBT -3,457 17,478 24,498 13,075 5,635 5,990 12,218 16,418 51,594 40,261
Adjusted PAT -2,494 13,716 19,414 11,661 4,408 4,753 10,113 12,036 42,297 31,310
Change (%) -117.4 1.0 24.1 -9.7 -276.7 -65.3 -47.9 3.2 -25.1 -26.0

Motherson Sumi Buy

CMP: INR143| TP: INR182 (+27%) EPS CHANGE (%): FY23|24E: -3|-2
 SMRPBV business continues to be impacted by supply side  India PV industry drives domestic growth.
issues.
 PKC revenue remain under pressure as US Class 8 trucks  Margins to improve QoQ due to operating leverage.
get impacted by semiconductor shortage.
Quarterly performance (Consol. Incl DWH) (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 85,039 1,56,735 1,80,283 1,79,892 1,68,505 1,50,168 1,71,018 1,78,071 6,01,950 6,67,762
YoY Change (%) -49.4 -1.6 15.1 18.7 98.2 -4.2 -5.1 -1.0 -5.3 10.9
EBITDA -6,300 15,530 20,410 20,060 14,620 12,080 13,830 16,382 49,700 56,912
Margins (%) -7.4 9.9 11.3 11.2 8.7 8.0 8.1 9.2 8.3 8.5
Depreciation 7,123 7,577 7,615 7,965 7,798 7,696 7,564 7,724 30,280 30,783
Interest 1,115 1,349 1,470 1,475 1,298 1,403 1,367 1,300 5,409 5,368
Other income 481 406 425 580 566 429 471 584 1,891 2,050
PBT before EO expense -14,058 7,010 11,750 11,200 6,090 3,410 5,370 7,941 15,902 22,811
Extra-Ord expense 0 596 25 2 5 0 0 0 623 5
PBT after EO Expense -14,058 6,414 11,725 11,198 6,085 3,410 5,370 7,941 15,280 22,806
Tax Rate (%) 15.2 27.1 -5.7 11.1 29.9 38.4 27.7 28.0 2.1 30.0
Min. Int & Share of profit -3,810 1,088 4,363 2,813 1,367 -67 1,422 674 4,454 3,396
Adj PAT -8,104 3,720 7,980 7,142 2,900 2,169 2,460 5,044 10,737 12,572
YoY Change (%) -344.4 -3.3 195.0 289.5 -135.8 -41.7 -69.2 -29.4 -8.2 17.1
E: MOFSL Estimates

April 2022 46
 March 2022 Results Preview | Sector: Automobiles

Sona BLW Precision Neutral

CMP: INR663| TP: INR645 (-3%) EPS CHANGE (%): FY23|24E: -9|3
 Revenues to be muted due to continued impact of semi-  Commodity cost inflation to impact margins partially
conductor shortages in the global market. offset by operating leverage.
 Ramp-up of existing orders and addition of new orders to  Commodity cost inflation lead to FY23E EPS downgrade
support revenue growth.
Consol. Quarterly Performance
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net operating revenues 1,534 3,843 4,893 5,393 5,007 5,857 4,941 5,228 15,663 21,034
Change (%) 226.5 52.4 1.0 -3.1
RM Cost (% of sales) 43.2 39.3 40.2 42.9 43.4 46.3 42.5 45.4 41.2 44.5
Staff Cost (% of sales) 16.5 8.2 9.1 8.5 8.6 7.5 8.5 8.1 9.4 8.2
Other Cost (% of sales) 21.3 19.9 20.7 22.6 20.3 19.9 22.5 22.1 21.2 21.1
EBITDA 292 1,250 1,467 1,401 1,387 1,544 1,305 1,276 4,412 5,512
EBITDA Margins (%) 19.0 32.5 30.0 26.0 27.7 26.4 26.4 24.4 28.2 26.2
Change (%) 375.2 23.5 -11.0 -8.9 -95.0 -94.7
Depreciation 218 231 240 281 334 355 357 359 969 1,405
EBIT 74 1,020 1,227 1,120 1,054 1,189 949 917 3,442 4,108
EBIT Margins (%) 4.8 26.5 25.1 20.8 21.0 20.3 19.2 17.5 22.0 19.5
Interest 79 78 74 94 86 29 33 46 325 194
Non-Operating Income 16 5 0 3 2 6 50 23 23 81
PBT 10 946 1,154 889 1,102 1,166 966 893 3,002 4,126
Tax 11 225 319 292 279 283 101 264 666 928
Effective Tax Rate (%) 104.5 23.7 27.7 32.9 25.4 24.3 10.5 29.6 22.2 22.5
PAT 0 722 835 597 822 882 864 629 2,336 3,198
Adjusted PAT 0 722 835 705 720 882 864 629 2,444 3,095
Change (%) -1,53,272.1 22.3 3.5 -10.8 -95.4 -95.8

TVS Motor Company Neutral

CMP: INR633 | TP: INR615 (-3%) EPS CHANGE (%): FY23|24E: -4|0
 Weak domestic volume performance partially offset by  RM cost inflation to be diluted by price hikes and INR
decent export performance. depreciation.
 Price hikes, to off-set cost inflation, to drive revenue  Adverse operating to impact margins partially diluted by
growth. cost cutting initiatives.
S/A Quarterly Performance (INR M)
Y/E March (INR m) FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Vols ('000 units) 266.9 867.8 989.5 927.6 657.8 916.7 878.7 857.4 3,051.9 3,311
Growth (%) (71.1) (2.0) 20.4 46.5 146.4 5.6 (11.2) (7.6) (6.5) 8.5
Realn (INR '000/unit) 53.6 53.1 54.5 57.4 59.8 61.1 64.9 65.6 54.9 63.0
Growth (%) 10.8 8.1 8.5 4.3 11.5 15.0 19.2 14.4 9.1 14.8
Net Sales 14,317 46,055 53,914 53,219 39,344 55,969 57,064 56,261 1,67,505 2,08,638
Growth (%) (68.0) 5.9 30.7 52.9 174.8 21.5 5.8 5.7 2.0 24.6
RM (% of sales) 75.9 76.5 76.1 75.3 75.7 76.2 76.3 76.8 76.0 76.3
Emp cost ( % of sales) 13.8 4.7 5.0 5.0 6.6 5.3 5.2 5.1 5.7 5.5
Other exp (% of sales) 13.8 9.5 9.4 9.5 10.7 8.8 8.6 8.8 9.8 9.1
EBITDA -488 4,301 5,111 5,361 2,738 5,404 5,683 5,266 14,286 19,090
EBITDA Margin(%) (3.4) 9.3 9.5 10.1 7.0 9.7 10.0 9.4 8.5 9.2
Interest 523 407 291 195 300 350 279 270 1,416 1,200
Depreciation 911 1,331 1,329 1,366 1,431 1,544 1,546 1,577 4,937 6,098
Other Income 26 111 124 69 16 35 57 90 330 198
PBT before EO Exp -1,896 2,674 3,615 3,869 1,023 3,544 3,915 3,509 8,262 11,991
EO Exp 0 0 0 0 302 -225 0 0 77
PBT after EO Exp (1,896) 2,674 3,615 3,869 722 3,769 3,915 3,509 8,262 11,914
Tax rate (%) 26.7 26.6 26.5 25.2 26.4 26.3 26.3 25.1 25.9 26.0
Adjusted PAT -1,391 1,963 2,656 2,892 755 2,609 2,883 2,627 6,120 8,875
Growth (%) (197.7) 0.5 46.9 191.4 (154.3) 33.0 8.5 (9.2) (0.9) 45.0
E: MOFSL Estimates

April 2022 47
 March 2022 Results Preview | Sector: Automobiles

Tata Motors Buy

CMP: INR447 | TP: INR545 (+22%) EPS CHANGE (%): FY23|24E: 2|2
 India business performance driven by strong growth in  Higher volume and operating leverage to dilute impact of
PVs and CVs. normalization of variant mix JLR models; cost-cutting to
aid performance.
 Strong volume growth with higher contribution from PV to
support operating margin expansion.
Quarterly Performance [Consol] (INR M)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
JLR vols. (incl JV) 65,425 91,367 1,19,658 1,36,461 97,141 78,251 83,110 94,116 4,12,911 3,52,618
JLR Realizations (GBP/unit) 58,452 59,250 58,315 53,289 58,810 60,454 68,168 67,036 56,758 63,569
JLR EBITDA (%) 3.6 11.1 15.8 15.3 9.0 7.3 12.0 13.0 12.8 10.5
JLR PAT (GBP m) -648 117 388 566 -286 -381 -67 124 423 -610
S/A vol. (units) 25,047 1,10,379 1,58,208 1,91,730 1,14,784 1,71,270 1,99,633 2,43,460 4,85,364 7,29,147
S/A Realizations (INR/unit) 10,72,731 8,75,900 9,21,666 10,40,820 10,37,084 10,76,604 10,49,877 10,88,698 3 50
S/A EBITDA (%) -26.2 2.9 7.1 8.3 2.5 3.9 3.3 4.9 4.8 3.8
S/A PAT (INR m) -21,418 -11,661 -6,288 98 -12,960 -8,368 -9,120 -2,055 -39,857 -32,797
Net Op Income 3,19,831 5,35,300 7,56,538 8,86,279 6,64,065 6,13,788 7,22,293 8,52,317 24,97,948 28,52,463
Growth (%) -48.0 -18.2 5.5 41.8 107.6 14.7 -4.5 -3.8 -4.3 14.2
EBITDA 6,356 56,653 1,15,096 1,27,448 52,576 40,498 67,642 87,860 3,05,553 2,48,576
EBITDA Margins (%) 2.0 10.6 15.2 14.4 7.9 6.6 9.4 10.3 12.2 8.7
Depreciation 55,994 56,015 61,288 62,171 62,021 61,233 60,781 62,157 2,35,467 2,46,193
Fx Loss/(Gain) -471 -4,330 -6,231 -6,289 149 -668 -3,138 2,117 -17,322 -1,540
Other Income 6,065 6,332 7,120 6,914 5,816 8,669 7,026 2,580 26,432 24,091
Interest Expenses 18,768 19,496 21,259 21,448 22,033 23,273 24,007 25,008 80,972 94,322
PBT before EO -61,870 -8,196 45,900 57,032 -25,812 -34,671 -6,983 1,157 32,867 -66,308
EO Exp/(Inc) -32 -49 4,226 1,33,465 -25 45 -862 0 1,37,610 -842
PBT after EO Exp -61,837 -8,147 41,674 -76,433 -25,786 -34,716 -6,121 1,157 -1,04,743 -65,466
Tax rate (%) -35.6 57.9 22.7 1.7 -67.6 -29.0 -118.6 -14.9 -24.3 -52.8
PAT -83,842 -3,433 32,222 -75,108 -43,206 -44,766 -13,382 1,330 -1,30,161 -1,00,024
Minority Interest 60 -72 -350 -201 -8 -260 -651 646 -563 -274
Share in profit of Associate -598 360 -2,807 -745 -1,295 611 -1,129 -1,389 -3,790 -3,203
Adj PAT -84,420 -3,165 32,332 57,411 -44,534 -44,371 -16,023 586 2,158 -1,04,342
Growth (%) 135.5 23.1 85.9 (182.1) (47.2) 1,301.9 (149.6) (99.0) -102.4 -4934.7
E: MOFSL Estimates

April 2022 48
 March 2022 Results Preview | Sector: Capital Goods

Capital Goods
Company Order inflows key; execution to remain robust
ABB India Expect a positive outlook in FY23
Bharat Electronics
 Aggregate 4QFY22 revenue for companies under our coverage universe is expected to
BHEL
grow by ~11% YoY. Aggregate EBITDA is projected to increase by ~17% YoY on robust
Cummins India
execution and higher collections in 4QFY22. Cost rationalization and operating
Engineers India leverage to benefit margins. Volatile commodity costs remain a cause of concern. In a
KEC International recent interaction, a management said that many tenders are going for re-bidding.
Larsen & Toubro Aggregate PAT is pegged at INR62.7b (v/s INR47.7b YoY, +32% YoY) on expectations
Siemens of: a) a higher YoY profit in LT and ABB, and b) BHEL reporting profit in 4QFY22.
Thermax  With the economy now opened up and robust execution for all companies, order
inflow and working capital management will be the key monitorables. There is no
issue of labor migration. Commodity costs remain at elevated levels. With
uncertainties relating to the Russia-Ukraine war, commodity prices may remain
volatile in near term may pose a risk to margin as most international orders and some
domestic orders are fixed-price contracts. Hence, one needs to watch out for
commentary on strategy regarding passing on of commodity cost and the possibility of
re-negotiating of contracts at higher commodity costs.

Expect aggregate revenue growth of 11% YoY

We project an aggregate revenue growth of 11% YoY as the favorable base impact
fades away. We expect consolidated as well as core business revenue for LT to grow
by ~12% YoY. Three-year core E&C revenue CAGR for LT is projected at 5% in
4QFY22, indicating a sound business environment. BHEL is likely to clock a revenue
growth of ~23% YoY on a low base, while three-year revenue CAGR is pegged at -
5%, indicating subdued business activity. We forecast the short cycle business of
ABB/SIEM/KKC to post YoY revenue growth of 27%/16%/19%, with a three-year
revenue CAGR of 4%/3%/3% each. Revenue growth for KECI is anticipated at modest
4% YoY. Revenue for BHE is expected to decline by 10% YoY on account of supply-
chain issues. However, its order book remains robust at INR570b. Excluding KECI
and BHE, aggregate revenue is expected to increase by 14% YoY.

Expect EBITDA to grow by 17% YoY on higher operating leverage

We expect aggregate EBITDA to increase by 17% YoY. ABB/KKC is expected to post a
higher operating profit v/s last year due to of a greater operating leverage and a
pickup across its key end-markets. We expect LT’s EBITDA to rise by 9% YoY, with
overall EBITDA margin likely to contract by 40bp due to commodity cost inflation.
BHEL is likely to post an operating profit, supported by higher execution and
ongoing cost rationalization. Excluding BHEL, aggregate EBITDA is likely to remain
flat YoY. We expect EBITDA for KECI to decline by 7% YoY. We expect SIEM to
deliver a flat EBITDA YoY. Commentary on the demand environment in key end-
markets and order prospect guidance will hereafter be key monitorables.

Aditya Kasat – Research Analyst ([Link]@[Link])

April 2022 49
 March 2022 Results Preview | Sector: Capital Goods

Aggregate PAT projected to grow at 32% YoY

We expect an adjusted aggregate PAT of INR63b (+32% YoY) for our coverage
universe (v/s ~INR48b YoY). LT is expected to post an adjusted PAT of INR42b (+22%
YoY) owing to lesser interest cost and lower effective tax rate YoY. BHEL is expected
to post a profit in 4QFY22. Excluding BHEL, aggregate PAT is expected to increase
by ~8% YoY. With execution at full strength, we seek companies with better cost
structures, the ability to quickly execute projects, and higher operational
efficiencies. Our top picks are LT and BHE. Conversely, BHEL and KKC are our top Sell
ideas in the sector.

Exhibit 1: Summary of expected quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
ABB 2132 Buy 20,717 27.2 -1.4 2,044 54.5 10.3 1,555 104.4 6.0
Bharat Electronics 219 Buy 61,895 -10.4 67.6 14,523 -26.3 76.7 10,140 -25.0 73.8
BHEL 54 Sell 87,905 22.6 71.2 1,056 LP 18.4 285 LP 99.5
Cummins India 1130 Sell 14,800 18.7 -14.7 2,156 28.7 -20.3 2,097 13.0 -13.0
Engineers India 67 Buy 10,020 -10.3 47.0 824 -49.7 31.9 1,027 -33.6 50.9
K E C International 389 Buy 45,552 4.5 36.4 3,294 -7.1 37.8 1,544 -20.5 65.0
Larsen & Toubro 1825 Buy 5,39,745 12.2 36.4 69,830 9.3 54.1 41,735 22.1 103.1
Siemens 2432 Neutral 39,002 16.3 20.4 4,557 3.2 37.3 3,423 8.4 39.6
Thermax 2003 Neutral 18,419 17.0 14.1 1,335 -4.4 18.0 943 -12.2 18.6
Capital Goods 8,38,054 11.1 37.1 99,618 17.3 49.9 62,749 31.5 77.9

Exhibit 2: Expect aggregate revenue to grow by ~11% YoY Exhibit 3: Expect EBITDA margin to grow by 100bp QoQ
Capital goods revenue growth (%) Capital goods EBITDA margin (%)
13.0

12.7

11.9
15.1

11.1
10.8
16.1
16.5

14.1
40.6

13.4

11.3
11.1

10.9

10.9
10.8

10.8
10.8

10.8
8.1
4.0
7.8
7.3

7.0
5.0
7.8
0.5

10.4

10.4
10.1

9.7

9.2
9.1
8.3

8.2
-34.3
-6.5

-12.5
-2.9

1QFY21 3.0
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20

2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22E
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22E

Source: MOFSL, Company Source: MOFSL, Company

Exhibit 4: Book-to-bill ratio stable at 2.5x Exhibit 5: Order inflow trend

Order book (INR b) BTB (x) Order intake YoY %
2.8

61

59
2.6
2.6

2.6
2.5
2.5
2.5

2.5
2.5
2.4
2.4

2.4
2.4

2.4
2.4

2.3
2.3
2.3

2.3

2.3
2.2

32
2.2

30
2.2

27
14

48
6

1
0

-7

-3
5,101
4,369
4,387
4,441
4,505
4,548
4,551
4,729
4,611
4,789
4,992
5,033
5,029
4,971
5,086

5,159
5,188
5,091
5,409
5,322
5,332
5,491
5,645

-5

-15
-6
-9

-13
-13
3QFY17 -28

1QFY21 -35
2QFY21-42
3QFY20
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20

4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22

2QFY17
1QFY17

4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20

3QFY21
4QFY21
1QFY22
2QFY22
3QFY22

Source: MOFSL, Company Source: MOFSL, Company

April 2022 50
 March 2022 Results Preview | Sector: Capital Goods

Exhibit 6: Summary of comparative full-year valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Capital Goods 37.4 27.9 23.5 3.6 3.3 3.0 9.7 11.9 12.9
ABB 2,132 Buy 19.4 27.2 36.2 109.9 78.5 58.8 11.2 10.2 9.1 10.2 12.9 15.4
Bharat Electronics 219 Buy 9.1 10.8 12.9 24.1 20.4 17.0 4.4 3.9 3.4 18.2 19.0 20.0
BHEL 54 Sell -1.5 1.2 2.0 -36.9 44.8 27.3 0.7 0.7 0.7 -2.0 1.6 2.6
Cummins India 1,130 Sell 28.9 32.0 35.9 39.1 35.3 31.5 6.6 6.3 6.0 16.9 17.8 18.9
Engineers India 67 Buy 5.1 6.5 7.6 13.2 10.3 8.8 2.6 2.5 2.4 18.4 23.0 25.9
K E C International 389 Buy 15.8 27.5 36.5 24.6 14.1 10.7 2.7 2.3 1.9 10.3 16.5 18.3
Larsen & Toubro 1,825 Buy 65.0 81.9 95.0 28.1 22.3 19.2 3.2 2.9 2.6 11.4 13.0 13.5
Siemens 2,432 Neutral 29.9 38.3 45.3 81.5 63.5 53.6 8.4 7.6 6.9 10.3 12.0 12.8
Thermax 2,003 Neutral 27.0 37.4 45.1 74.2 53.5 44.4 6.5 6.0 5.5 8.8 11.2 12.3

Exhibit 7: Relative performance – three-months (%) Exhibit 8: Relative performance – one-year (%)
Nifty Index MOFSL Capital Goods Index Nifty Index MOFSL Capital Goods Index
102 146

101 132

99 118

98 104

96 90

Jun-21
Mar-21

Sep-21

Dec-21

Mar-22
Dec-21

Jan-22

Feb-22

Mar-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

April 2022 51
 March 2022 Results Preview | Sector: Capital Goods

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter / financial year under review.

ABB Buy
CMP: INR2,132 | TP: INR2,505 (18%) EPS CHANGE (%): CY21|22: -|-
 Expect revenue to increase by ~27% YoY, with higher  Expect EBITDA at INR2b, with EBITDA margin at 9.9%.
growth in the Robotics and Electrification segment.
 Expect adjusted PAT at INR1.6b, aided by lower YoY tax  Watch out for commentary on order inflow outlook across
rate and extraordinary income in the base quarter. domestic and export markets.

Quarterly performance (INR m)

Y/E December CY21 CY22E CY21 CY22E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Sales 16,292 14,250 17,784 21,015 20,717 19,258 21,305 22,623 69,340 83,903
Change (%) 7.0 44.6 10.3 23.6 27.2 35.1 19.8 7.6 -5.2 21.0
EBITDA 1,323 947 1,689 1,852 2,044 1,802 2,016 1,689 5,567 7,550
Change (%) 812.1 304.2 39.2 -5.3 54.5 90.2 19.3 -8.8 4.8 35.6
As a percentage of Sales 8.1 6.6 9.5 8.8 9.9 9.4 9.5 7.5 8.0 9.0
Depreciation 253 284 263 227 250 290 290 272 1,027 1,102
Interest 32 16 20 39 30 20 20 30 107 100
Other Income 253 252 248 599 316 290 293 445 1,596 1,344
Extra-ordinary Income 652 19 (1) 414 - - - - 1,086 -
PBT (Before Exceptional) 1,291 900 1,654 2,185 2,079 1,782 1,999 1,833 6,029 7,692
Tax 530 216 454 717 524 449 504 459 1,918 1,936
Effective Tax Rate (%) 41.0 24.1 27.5 32.8 25.2 25.2 25.2 25.1 31.8 25.2
Reported PAT 1,413 703 1,199 1,882 1,555 1,333 1,495 1,373 5,197 5,756
Adj. PAT 761 683 1,200 1,468 1,555 1,333 1,495 1,373 4,112 5,756
Change (%) 300.5 347.9 40.3 11.4 104.4 95.1 24.6 -6.5 17.1 40.0

Bharat Electronics Buy

CMP: INR219 | TP: INR280 (+29%) EPS CHANGE (%): FY23|24: -|6%
 Expect revenue to decline by 10% YoY to ~INR36b due to  Expect an EBITDA margin of 23.5%, with EBITDA at
supply-chain issues. INR14.5b.
 Expect a robust order book of INR570b, with a book-to-bill  Commentary on diversification of the business and order
ratio of ~3.8x. inflows across non-Defense segments are key
monitorables.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 16,706 31,887 22,962 69,083 16,346 36,606 36,937 61,895 1,40,638 1,51,783
Change (%) (20.5) 16.3 1.1 19.0 (2.2) 14.8 60.9 (10.4) 8.8 7.9
EBITDA 1,467 6,235 4,404 19,706 629 8,565 8,221 14,523 31,811 31,938
Change (%) (57.9) 14.5 24.1 32.9 (57.2) 37.4 86.7 (26.3) 16.5 0.4
As a percentage of Sales 8.8 19.6 19.2 28.5 3.8 23.4 22.3 23.5 22.6 21.0
Depreciation 888 914 945 917 922 941 929 1,402 3,663 4,195
Interest 1 3 2 56 1 5 2 53 61 61
Other Income 184 274 231 572 447 659 593 302 1,261 2,000
PBT 762 5,592 3,688 19,305 152 8,277 7,883 13,370 29,348 29,682
Tax 221 1,622 1,070 5,782 40 2,151 2,050 3,230 8,694 7,471
Effective Tax Rate (%) 29.0 29.0 29.0 29.9 26.5 26.0 26.0 24.2 29.6 25.2
Reported PAT 541 3,971 2,619 13,524 112 6,126 5,834 10,140 20,654 22,211
Change (%) (73.6) 17.0 21.7 30.7 (79.4) 54.3 122.8 (25.0) 15.1 7.5
Adj. PAT 541 3,971 2,619 13,524 112 6,126 5,834 10,140 20,654 22,211
Change (%) (73.6) 17.0 21.7 30.7 (79.4) 54.3 122.8 (25.0) 15.1 7.5

April 2022 52
 March 2022 Results Preview | Sector: Capital Goods

BHEL Sell
CMP: INR54 | TP: INR45 (-20%) EPS CHANGE (%): FY22|23: -|-
 Expect revenue to increase by 23% YoY to INR87.9b  Expect operating profit of INR1.1b, with a YoY
(three-year revenue CAGR: -5%). improvement in higher operating leverage.
 Expect a PAT of INR0.3b, aided by higher operating  Watch out for any movement in receivables and
leverage and cost control measures. commentary on moderation in employee costs.

Quarterly performance (INR b)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (Net) 19.9 37.0 44.5 71.7 29.0 51.1 51.4 87.9 173.1 219.4
Change (%) -56.1 -40.6 -21.6 42.0 45.7 38.3 15.4 22.6 -19.4 26.8
EBITDA -10.6 -6.3 -1.8 -12.6 -4.7 -0.3 0.9 1.1 -31.4 -3.1
Change (%) NA -337.0 -154.6 NA NA NA NA NA NA NA
As a percentage of Sales -53.2 -17.1 -4.0 -17.6 -16.3 -0.6 1.7 1.2 -18.1 -1.4
Interest 1.1 0.9 0.9 0.8 0.8 0.9 0.9 0.9 3.7 3.5
Depreciation 1.2 1.2 1.1 1.3 1.1 1.0 0.7 0.8 4.7 3.6
Other Income 1.0 1.0 0.9 0.8 0.7 0.7 0.9 1.0 3.7 3.4
Exceptional items - - - - - 0.4 - - - 0.4
PBT -12.0 -7.4 -2.9 -13.8 -5.9 -1.5 0.2 0.3 -36.1 -6.9
Tax -3.0 -1.8 -0.6 -3.5 -1.5 -0.3 0.1 0.0 -8.9 -1.7
Effective Tax Rate (%) 25.0 24.6 21.1 25.4 25.0 23.8 29.5 13.2 24.8 25.2
Reported PAT -9.0 -5.6 -2.3 -10.3 -4.5 -0.7 0.1 0.3 -27.2 -4.7
Change (%) NA -569.0 -245.4 NA NA NA NA NA NA NA
Adj. PAT -9.0 -5.6 -2.3 -10.3 -4.5 -1.1 0.1 0.3 -27.2 -5.1
Change (%) NA -569.0 -245.4 NA NA NA NA NA NA NA

Cummins India Sell

CMP: INR1,130 | TP: INR790 (-30%) EPS CHANGE (%): FY23|24: 6%|9%
 Expect domestic/export revenue at INR10.8b/INR4b.  Expect EBITDA at INR2.2b, with a sequential decline in
EBITDA margin.
 Management commentary on demand across various end-  Watch out for commentary on the demand outlook in
markets are a key monitorable. export markets.

Quarterly performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 4,982 11,602 14,243 12,465 11,845 17,274 17,350 14,800 43,292 61,268
Change (%) (62.9) (11.3) (2.0) 18.4 137.8 48.9 21.8 18.7 (16.1) 41.5
EBITDA 29 1,674 2,417 1,675 1,488 2,592 2,705 2,156 5,795 8,941
Change (%) (98.1) 9.8 12.0 151.2 NA 54.8 11.9 28.7 (1.2) 54.3
As a percentage of Sales 0.6 14.4 17.0 13.4 12.6 15.0 15.6 14.6 13.4 14.6
Depreciation 303 327 320 306 309 336 349 301 1,255 1,295
Interest 43 40 46 33 18 22 27 33 162 100
Other Income 666 580 984 1,116 549 694 866 889 3,346 2,998
PBT 349 1,887 3,036 2,452 1,710 2,929 3,195 2,710 7,724 10,544
Tax 72 431 695 595 403 730 786 613 1,794 2,531
Effective Tax Rate (%) 20.7 22.9 22.9 24.3 23.6 24.9 24.6 22.6 23.2 24.0
Adjusted PAT 277 1,456 2,341 1,857 1,307 2,199 2,410 2,097 5,930 8,014
Change (%) (80.4) (20.6) 17.8 53.1 372.5 51.1 2.9 13.0 (8.0) 35.1
Extra-ordinary Income (net) 249 - - - 1,059 - - - 249 1,059
Reported PAT 526 1,456 2,341 1,857 2,366 2,199 2,410 2,097 6,179 9,072
Change (%) (62.9) (20.6) 25.7 57.0 350.2 51.1 2.9 13.0 (1.8) 46.8

April 2022 53
 March 2022 Results Preview | Sector: Capital Goods

Engineers India Buy

CMP: INR67 | TP: INR90 (+34%) EPS CHANGE (%): FY23|24: -|-
 Expect revenue for the Turnkey segment to decline by  Expect EBITDA at INR824m, with an EBITDA margin of
45% YoY. Expect Consultancy revenue to rise by 51% YoY. 8.2%.
 Expect adjusted PAT at INR1,027m (-34% YoY).  Watch out for an update on execution across various sites
as well as order inflow outlook.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,678 6,834 8,367 11,167 7,349 6,479 6,816 10,020 31,047 30,664
YoY Change (%) (36.3) (5.6) (6.1) 30.8 57.1 (5.2) (18.5) (10.3) (3.1) (1.2)
Total Expenditure 4,464 6,062 7,617 9,527 6,306 5,875 6,191 9,196 27,669 27,568
EBITDA 214 773 751 1,640 1,043 603 625 824 3,377 3,096
Margin (%) 4.6 11.3 9.0 14.7 14.2 9.3 9.2 8.2 10.9 10.1
Depreciation 53 60 51 71 49 53 78 61 234 241
Interest 4 5 4 24 3 2 2 29 37 37
Other Income 497 533 480 440 225 284 382 578 1,949 1,468
Extraordinary expense/income - - - (1,240) - - - - (1,240) -
PBT 653 1,241 1,176 1,986 1,217 832 926 1,312 5,055 4,287
Tax 172 314 294 441 311 238 246 285 1,221 1,079
Rate (%) 26.4 25.3 25.0 22.2 25.5 28.5 26.5 21.7 24.1 25.2
Reported PAT 481 927 882 305 906 595 680 1,027 2,595 3,208
Adj. PAT 481 927 882 1,545 906 595 680 1,027 3,835 3,208
YoY Change (%) (61.3) 36.8 (18.8) 19.1 88.4 (35.8) (22.9) (33.6) (10.9) (16.3)
Margin (%) 10.3 13.6 10.5 13.8 12.3 9.2 10.0 10.2 12.4 10.5

KEC International Buy

CMP: INR389 | TP: INR510 (+31%) EPS CHANGE (%): FY23|24: - | -
 Expect revenue to grow by ~4.5% YoY, led by the
 Expect EBITDA margin at 7.2% (-90bp YoY).
international T&D segment.
 Watch out for commentary on execution efficiency and  Projected cost overruns in the SAE business remain a key
working capital management. monitorable.

Quarterly performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 22,068 32,577 32,892 43,605 25,400 35,875 33,400 45,552 1,31,142 1,40,227
Change (%) -8.5 16.0 7.0 18.8 15.1 10.1 1.5 4.5 9.6 6.9
EBITDA 1,949 2,931 2,987 3,546 1,599 2,530 2,390 3,294 11,412 9,812
Change (%) -22.5 -0.2 -6.2 -4.4 -18.0 -13.7 -20.0 -7.1 -7.5 -14.0
As a percentage of Sales 8.8 9.0 9.1 8.1 6.3 7.1 7.2 7.2 8.7 7.0
Depreciation 391 374 380 380 381 386 393 398 1,525 1,557
Interest 663 674 658 632 649 733 824 855 2,627 3,062
Other Income 69 68 39 123 17 33 50 150 299 250
Extra-ordinary Items 0 0 0 0 0 326 0 0 0 326
PBT 965 1,950 1,988 2,657 585 1,444 1,223 2,190 7,559 5,443
Tax 257 525 537 714 124 315 287 646 2,032 1,372
Effective Tax Rate (%) 26.6 26.9 27.0 26.9 21.2 21.8 23.5 29.5 26.9 25.2
Reported PAT 708 1,426 1,451 1,943 461 803 936 1,544 5,527 3,745
Change (%) -20.1 2.5 0.1 0.7 -34.8 -43.7 -35.5 -20.5 -2.3 -32.2
Recurring PAT 708 1,426 1,451 1,943 461 1,129 936 1,544 5,527 4,071
Change (%) -20.1 2.5 0.1 0.7 -34.8 -20.8 -35.5 -20.5 -2.3 -26.3

April 2022 54
 March 2022 Results Preview | Sector: Capital Goods

Larsen & Toubro Buy

CMP: INR1,826 | TP: INR2,270 (+24%) EPS CHANGE (%): FY23|24: -|-
 Expect overall order inflows at INR690b.  Expect consolidated revenue at INR540b, with core E&C
revenue at INR411b.
 Watch out for the demand outlook across various  Commentary on working capital management and
segments and order prospects in FY23. commodity cost impact are the key monitorables.

Quarterly performance (INR b)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 213 310 356 481 293 348 396 540 1,360 1,576
Change (%) -28.3 -12.2 -1.8 8.7 38.0 12.0 11.1 12.2 -6.5 15.9
EBITDA 16.2 33.3 42.8 63.9 31.7 39.9 45.3 69.8 156.2 186.8
Change (%) -47.2 -17.1 3.9 24.8 95.7 19.8 5.9 9.3 -4.3 19.6
Margin (%) 7.6 10.7 12.0 13.3 10.8 11.5 11.5 12.9 11.5 11.8
Depreciation 6.7 7.1 7.0 8.2 7.2 7.3 7.3 7.5 29.0 29.3
Interest 10.6 10.4 9.6 8.5 8.3 7.8 8.1 6.8 39.1 31.0
Other Income 7.8 5.6 10.6 10.3 6.5 5.3 5.7 6.5 34.3 24.0
PBT 6.7 21.4 36.8 57.5 22.7 30.2 35.6 62.0 122.4 150.5
Tax 2.1 6.8 10.4 20.9 7.2 8.8 10.6 15.8 40.1 42.4
Effective Tax Rate (%) 31.0 31.6 28.3 36.3 31.6 29.3 29.8 25.4 32.8 28.2
Adjusted PAT (Before MI & AI) 4.6 14.6 26.4 36.6 15.6 21.3 25.0 46.3 82.3 108.1
Reported PAT 3.0 55.2 24.7 32.9 11.7 18.2 20.5 40.8 115.8 91.3
Change (%) -79.4 118.4 4.9 3.0 287.4 -67.0 -16.7 23.8 21.3 -21.2
Extraordinary Inc./(Exp.) – incl.
1.8 44.1 2.1 -1.2 0.0 1.0 0.0 -1.0 46.8 0.0
discontinued operations
Adjusted PAT 1.2 11.1 22.6 34.2 11.7 17.2 20.5 41.7 69.0 91.3
Change (%) -91.2 -52.1 4.5 11.5 878.0 55.7 -9.0 22.1 -22.4 32.2

Siemens Neutral
CMP: INR2,432 | TP: INR2,135 (-12%) EPS CHANGE (%): FY21|22: -|-
 Expect revenue at INR39b (+16% YoY), with growth across  Expect EBITDA at INR4.6b, with an EBITDA margin of
all segments. 11.7%.
 Expect adjusted PAT at INR3.4b, up 8.4% YoY.  Watch out for commentary across segments and order
inflows.

Quarterly performance (INR m)

FY21 FY22
Y/E September FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Total Revenue 29,011 33,543 27,080 39,997 32,399 39,002 33,478 47,749 1,29,631 1,52,627
Change (%) 15.1 27.9 124.3 13.7 11.7 16.3 23.6 19.4 31.3 17.7
EBITDA 3,611 4,414 2,283 4,287 3,319 4,557 4,068 6,226 14,595 18,170
Change (%) 12.7 102.7 NA -5.3 -8.1 3.2 NA 45.2 47.4 24.5
As a percentage of revenue 12.4 13.2 8.4 10.7 10.2 11.7 12.2 13.0 11.3 11.9
Depreciation 616 581 545 540 538 580 630 682 2,282 2,430
Interest 35 47 56 59 54 50 50 42 197 196
Other Income 570 540 463 616 571 650 700 746 2,189 2,667
Extra-ordinary Items 278 125 0 0 0 0 0 0 403 0
PBT 3,530 4,326 2,145 4,304 3,298 4,577 4,088 6,248 14,305 18,211
Tax 908 1,168 530 1,074 845 1,153 1,030 1,555 3,680 4,584
Effective Tax Rate (%) 25.7 27.0 24.7 25.0 25.6 25.2 25.2 24.9 25.7 25.2
Reported PAT 2,900 3,283 1,615 3,230 2,453 3,423 3,058 4,693 11,028 13,627
Adjusted PAT 2,622 3,158 1,615 3,230 2,453 3,423 3,058 4,693 10,625 13,627
Change (%) 2.9 91.7 NA -1.4 -6.4 8.4 NA 45.3 40.3 28.3

April 2022 55
 March 2022 Results Preview | Sector: Capital Goods

Thermax Neutral
CMP: INR2,003 | TP: INR1,805 (-10%) EPS CHANGE (%): FY23|24: -|-
 Revenue: Expect Energy/Environment/Chemical segment  Expect EBITDA at INR1.3b, with an EBITDA margin of
to grow by 12%/22%/27% YoY. ~7.2%.
 Expect PAT of INR943m.  Watch out for the demand outlook across segments and
various end-markets.

Quarterly performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 11,412 14,106 15,745 10,524 14,693 16,147 18,419 47,913 59,783
Change (%) (28.9) 0.0 19.0 58.3 28.8 14.5 17.0 (16.4) 24.8
EBITDA 793 1,476 1,397 630 1,100 1,131 1,335 3,552 4,197
Change (%) (39.1) 30.4 119.7 NA 38.7 (23.4) (4.4) (12.6) 18.1
As of % Sales 7.0 10.5 8.9 6.0 7.5 7.0 7.2 7.4 7.0
Depreciation 287 291 288 274 274 290 295 1,146 1,133
Interest 47 57 63 48 51 53 56 206 206
Other Income 228 282 358 254 368 292 294 1,077 1,208
Extra-ordinary Items (200) (209) - - - - - (409) -
PBT 687 1,411 1,404 563 1,143 1,080 1,279 3,277 4,064
Tax 175 369 330 139 264 286 336 803 1,024
Effective Tax Rate (%) 25.5 26.2 23.5 24.6 23.1 26.5 26.3 24.5 25.2
Reported PAT 312 833 1,074 424 879 795 943 2,066 3,040
Change (%) 21.6 (2.0) 175.0 NA 181.4 (4.6) (12.2) (2.8) 47.2
Adj PAT 512 1,042 1,074 424 879 795 943 2,474 3,040
Change (%) 99.2 22.6 175.0 NA 71.7 (23.7) (12.2) 16.5 22.9

April 2022 56
 March 2022 Results Preview | Sector: Cement

Cement
Company Sequential recovery; but cost pressures continues to hurt
ACC
Margins to decline as higher costs will offset price increases
Ambuja Cements
Birla Corporation  We expect our coverage universe (excluding Grasim) to report a 5% YoY growth
Dalmia Bharat in revenue, led by higher realization (blended realization is expected to increase
Grasim Industries by 7% YoY). Aggregate sales volume is estimated to decline by 2% YoY.
India Cements  Higher variable costs (up 29% YoY), due to an increase in coal/petcoke prices,
JK Cement will continue to impact profitability. Aggregate EBITDA is expected to fall by 23%
JK Lakshmi Cement YoY. We expect average OPM to fall by 6.5pp YoY (but rise 90bp QoQ) to 17.7%.
The Ramco Cements Average EBITDA/t is expected to fall by 22% YoY (but rise 6% QoQ) to INR963.
Shree Cement Aggregate profit for our coverage companies is estimated to fall by 29% YoY.
UltraTech Cement  Revenue for Grasim is expected to rise by 46% YoY as it will benefit from higher
VSF and caustic soda prices. EBITDA should increase by 12% YoY, led by a 3.1x
increase in EBITDA for the Chemical segment. EBITDA for the VSF segment is
expected to decline by 45% YoY. Profit is expected to fall by 4% YoY due to lower
other income (down 43% YoY) and higher ETR (28.8% v/s 21.3%).

Expect JKCE, ACEM, and TRCL to report volume growth

 We expect 1-3% YoY volume growth for JK Cement, Ramco Cements and
Ambuja Cement in 4QFY22. Other companies are expected to report a volume
decline of 1-5% YoY (11% YoY volume decline for India Cements).
 Volume CAGR over 4QFY19-22 for our coverage companies is expected to be
2.4% (4QFY20 was impacted due to COVID-19 related lockdowns). In FY22, we
estimate volume growth of 8% YoY for our coverage universe.

Average price up 2% QoQ; Mar’22 exit price up 2.8% v/s its 4QFY22 average
 Cement prices improved across regions in 4QFY22 as compared to its Dec’21
exit prices. Higher recovery was seen in East India. We expect average Cement
prices in the region to be up 7% QoQ.
 We believe that average Cement price was up ~2% QoQ in North and South
India, 1.5% QoQ in West India, but remained flat in the Central India.
 As per our estimates, the pan-India average price should be up 2% QoQ (and 5%
YoY) in 4QFY22 and the Mar’22 exit Cement price should be up 2.8% v/s its
average price in 4QFY22. Blended realization for our coverage universe is
expected to improve by 7% YoY and 1% QoQ.

Higher energy and freight costs to impact profitability

 Average opex/t for our coverage universe is expected to increase by 16% YoY
flat QoQ), led by a 29%/3%/8% increase in variable/freight/employee cost and a
12% rise in other expense.
 Though average imported coal and petcoke price was up over 30% QoQ in
4QFY22, the impact of the same will reflect in 1QFY23. We expect average
consumption cost of imported coal/petcoke in 4Q to be similar to that in
3QFY22.
 Average freight cost/t for our coverage universe will increase by 3% YoY, led by
a 10% rise in diesel prices. We expect employee costs to increase on wage hikes

Sanjeev
January Kumar
2022 Singh - Research analyst ([Link]@[Link]) 57
Mudit Agarwal - Research analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Cement

and lower sales volumes. Other expense is expected to increase on

normalization of office expense, higher travel, and ad spends.
 JK Cement is estimated to report the lowest decline of 8% YoY in EBITDA,
followed by a 16% YoY dip in Shree Cement. Other companies under our
coverage are expected to report an EBITDA decline of 21-34% YoY.
 We expect a 9% YoY drop in EBITDA/t for JK Cement followed by a 13%/18% YoY
decline for Shree Cement/India Cements, respectively. EBITDA/t for other
companies under our coverage is expected to decline by 20-34% YoY. On a QoQ
basis, we expect EBITDA/t for our coverage companies to improve, except for JK
Cement (down 8% QoQ on lower White Cement volumes and higher fuel costs),
and Shree Cement (down 1% QoQ on higher fuel costs).

Price hikes and coal prices are key monitorables

 Cement companies are planning to implement price hikes of INR30-50/bag
across regions in Apr’22. The absorption of price hikes needs to be watched as
costs are expected to increase further in 1QFY23.
 Imported coal/petcoke prices remain volatile and imported coal prices have
fallen to USD260/t v/s a peak of over USD400/t in Mar’22. However, the average
procurement cost for companies stood at USD250-300/t. Average opex/t for the
industry can increase by INR400-450/t if current prices sustain.
 We expect Cement capacity additions to outpace that of clinker over FY21-24.
This should lead to an improvement in clinker utilization and profitability for the
industry. We expect clinker utilization, excluding South India, to be more than
90% in the January to March period of FY22-24E. This will boost the pricing
power of manufacturers over that period.
 UTCEM is our top pick, followed by ACC in the largecap space. We prefer BCORP
in the midcap space.

Exhibit 1: Summary of expected quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
ACC 2119 Buy 43,916 2.3 3.9 6,123 -28.7 10.3 3,619 -35.1 14.1
Ambuja Cements 311 Neutral 39,311 8.6 5.2 7,154 -26.8 26.0 4,203 -36.8 40.6
Birla Corporation 1168 Buy 21,218 -0.5 21.2 2,841 -27.5 27.7 852 -53.3 59.4
Dalmia Bharat 1574 Buy 31,242 -0.9 14.4 5,260 -31.4 28.6 1,396 14.0 114.8
Grasim Industries 1678 Buy 63,985 45.6 10.6 9,063 11.8 -1.7 4,692 -3.5 -4.0
India Cements 221 Neutral 14,263 -1.6 28.7 1,473 -26.5 41.5 299 -58.3 804.8
J K Cements 2548 Neutral 22,221 8.3 14.5 4,024 -8.4 8.5 1,978 -21.6 18.2
JK Lakshmi Cem. 466 Buy 13,698 3.6 14.8 1,762 -34.2 20.4 897 -46.4 19.9
Ramco Cements 787 Buy 17,544 7.6 13.3 3,073 -31.6 33.1 1,367 -36.2 65.6
Shree Cement 24737 Neutral 41,375 5.3 16.5 9,922 -15.7 20.2 5,542 -27.8 12.7
Ultratech Cement 6741 Buy 1,55,685 8.1 19.9 29,265 -20.7 21.0 14,461 -20.3 23.3
Cement 4,64,457 9.6 14.5 79,960 -20.3 18.0 39,307 -25.8 22.2

April 2022 58
 March 2022 Results Preview | Sector: Cement

Exhibit 2: Expect aggregate sales volume for our coverage universe to decline by 2% YoY

Aggregate Vol (mt) YoY change (%)

43

24
15 19 19 15 17
6 9 6
0 (1) 2 42 (2)
(3)
(12)

59 59 54 59 68 59 53 60 (29) 56 66 75 60 60 64 74
60
4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22
Source: MOFSL, Company

Exhibit 3: Pan-India average prices up 5% YoY and 2% QoQ; prices up 4-8% YoY across regions, except Central India (up 1%)

4QFY21 3QFY22 4QFY22

379
371
355
351

346

344
344

344

342
342

341

338
337

327
(INR/bag)

316
306
286
285

North Central East West South Average

Source: MOFSL, Industry

Exhibit 4: Expect blended realization to increase by 7% YoY Exhibit 5: USA petcoke price up an avg. 84% YoY/ 15% QoQ
Realization (INR/t) USA Petcoke (USD)
4,675
4,654
4,705
4,633
4,815
5,304
5,113
4,885
4,928
5,160
5,094
5,028
5,079
5,363
5,370
5,409
5,440

185

213
116

125

178
96

82

71

70

66

83

96
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22

1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

Source: Bloomberg, MOFSL Source: MOSFL, Industry

Exhibit 6: Diesel prices up an avg. 10% YoY, down 3% QoQ Exhibit 7: Expect average EBITDA/t to decline by 22% YoY

Diesel price Mumbai (Rs/litre) 97 97 Average EBITDA (INR/t)

94
91
85
79 78
69 69 69 69 69
1,254
1,013

1,074
1,326
1,312
1,205
1,233
1,401
1,164
912
857
744
734
915

920

910
963
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

Source: Bloomberg, MOFSL Source: Company, MOFSL

April 2022 59
 March 2022 Results Preview | Sector: Cement

Exhibit 8: Key operating parameters

Volume (mt) Realization (INR/t) EBITDA (INR/t)
Companies 4QFY22 YoY (%) QoQ (%) 4QFY22 YoY (INR) QoQ (INR) 4QFY22 YoY (INR) QoQ (INR)
ACC 7.8 (2.3) 4.0 5,161 326 80 746 (333) 5
Ambuja Cements 7.4 2.9 4.0 5,218 275 80 961 (388) 168
UltraTech Cement 27.5 (1.2) 18.7 5,671 485 57 1,066 (262) 20
Birla Corporation 4.0 (4.1) 19.3 5,020 164 86 711 (229) 47
India Cements 2.7 (10.9) 26.4 5,352 504 94 553 (118) 59
Shree Cement 7.9 (3.3) 21.3 5,207 422 (215) 1,249 (184) (11)
Dalmia Bharat 6.3 (1.6) 10.8 4,948 36 157 833 (362) 115
JK Cement 3.9 0.5 17.8 5,677 407 (165) 1,028 (100) (88)
JK Lakshmi Cement 2.8 (4.5) 12.8 4,940 388 87 636 (287) 40
The Ramco Cements 3.3 3.3 10.3 5,283 211 144 943 (474) 169
Sector aggregate/avg. 74 (1.6) 14.5 5,440 361 31 963 (270) 53

Exhibit 9: Valuation summary

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Cement 27.3 27.3 22.2 3.2 3.0 2.8 11.6 11.0 12.5
ACC 2,119 Buy 100.5 78.7 110.9 21.1 26.9 19.1 2.8 2.7 2.4 14.1 10.3 13.5
Ambuja Cements 311 Neutral 10.7 10.5 11.9 29.1 29.5 26.2 2.8 2.7 2.6 22.3 19.2 20.0
Birla Corporation 1,168 Buy 47.5 25.1 63.3 24.6 46.5 18.5 1.6 1.5 1.4 6.5 3.3 8.0
Dalmia Bharat 1,574 Buy 37.7 39.6 55.2 41.8 39.8 28.5 2.2 2.1 2.0 5.4 5.4 7.1
Grasim Industries 1,678 Buy 102.1 112.6 118.7 16.4 14.9 14.1 2.5 2.4 2.3 13.1 13.5 12.8
India Cements 221 Neutral 3.0 4.4 9.5 73.5 50.2 23.2 1.2 1.2 1.1 1.6 2.4 5.0
J K Cements 2,548 Neutral 85.1 85.3 114.9 29.9 29.9 22.2 4.7 4.2 3.6 16.5 14.7 17.6
JK Lakshmi Cem. 466 Buy 29.2 29.4 38.7 16.0 15.9 12.1 2.3 2.1 1.8 15.5 13.8 16.0
Ramco Cements 787 Buy 25.6 18.9 33.9 30.8 41.6 23.2 3.0 2.9 2.6 10.2 7.0 11.7
Shree Cement 24,737 Neutral 633.5 563.7 672.7 39.0 43.9 36.8 5.2 4.7 4.2 14.1 11.2 12.2
Ultratech Cement 6,741 Buy 195.2 204.4 267.9 34.5 33.0 25.2 3.8 3.6 3.3 12.1 11.5 13.6

April 2022 60
 March 2022 Results Preview | Sector: Cement

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

ACC Buy
CMP: INR2,119 | TP: INR2,485 (+17%) EPS CHANGE (%): CY22|23: -|-
 Expect sales volume to decline by 2% YoY, whereas  Expect variable cost/t of production to increase by 31%
blended realization should improve by 5% YoY. YoY. Freight cost should decline by 4% YoY.
 Expect EBITDA/t at INR746 v/s INR1,078/INR741 in  Expect opex/t to increase by 14% YoY.
1Q/4QCY21.
Standalone performance (INR m)
Y/E December CY21 CY22E CY21 CY22E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Cement Sales (mt) 7.97 6.84 6.57 7.49 7.79 7.40 6.96 7.32 28.89 29.47
YoY Change (%) 21.5 43.7 1.2 (2.9) (2.3) 8.2 5.9 (2.2) 13.2 2.0
Cement Realization 4,835 5,198 5,096 5,081 5,161 5,361 5,311 5,315 5,044 5,169
YoY Change (%) 4.2 0.7 1.1 4.4 6.7 3.1 4.2 4.6 2.8 2.5
QoQ Change (%) (0.7) 7.5 (2.0) (0.3) 1.6 3.9 (0.9) 0.1
Net Sales 42,919 38,848 37,489 42,258 43,916 43,084 40,086 42,047 1,61,514 1,69,132
YoY Change (%) 22.6 49.4 6.0 2.0 2.3 10.9 6.9 (0.5) 17.2 4.7
EBITDA 8,594 8,747 7,113 5,551 6,123 5,482 6,057 7,233 30,004 24,896
Margin (%) 20.0 22.5 19.0 13.1 13.9 12.7 15.1 17.2 18.6 14.7
Depreciation 1,424 1,456 1,497 1,596 1,604 1,604 1,612 1,688 5,973 6,507
Interest 112 134 171 129 130 130 130 135 546 525
Other Income 432 447 640 529 475 451 496 608 2,048 2,030
PBT before EO Item 7,489 7,604 6,085 4,355 4,864 4,200 4,811 6,019 25,533 19,894
EO Income/(Expense) - (381) - (548) - - - - (929) -
PBT after EO Item 7,489 7,223 6,085 3,807 4,864 4,200 4,811 6,019 24,604 19,894
Tax 1,915 1,885 1,594 1,007 1,245 1,075 1,232 1,541 6,401 5,093
Rate (%) 25.6 26.1 26.2 26.5 25.6 25.6 25.6 25.6 26.0 25.6
Reported PAT 5,574 5,338 4,490 2,800 3,619 3,124 3,579 4,478 18,203 14,801
Adjusted PAT 5,574 5,597 4,490 3,172 3,619 3,124 3,579 4,478 18,834 14,801
Margin (%) 13.0 14.4 12.0 7.5 8.2 7.3 8.9 10.7 11.7 8.8
YoY Change (%) 59.3 89.2 12.4 (26.1) (35.1) (44.2) (20.3) 41.2 27.7 (21.4)

Ambuja Cements Neutral

CMP: INR311 | TP: INR345 (+11%) EPS CHANGE (%): CY22|23: +0.2|+0.7
 Expect sales volume to increase by 3% YoY, led by  Expect variable cost/t of production to increase by 39%
additional volumes from the Marwar Mundwa plant. YoY. Opex/t should increase by 18% YoY.
 EBITDA/t to fall 29% YoY, but rise 21% QoQ to INR978.  Expect depreciation to increase by 26% YoY.

Standalone performance (INR m)

Y/E December CY21 CY22E CY21 CY22E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Sales Volume (mt) 7.24 6.42 6.20 7.16 7.45 7.07 6.65 8.01 27.02 29.18
YoY Change (%) 25 53 9 2 3 10 7 12 19 8
Cement Realization (INR/t) 4,943 5,206 5,150 5,138 5,218 5,318 5,268 5,221 5,105 5,255
YoY Change (%) 3 2 4 4 6 2 2 2 4 3
Net Sales 36,214 33,712 32,373 37,351 39,311 37,957 35,506 42,277 1,39,650 1,55,051
YoY Change (%) 28 55 13 6 9 13 10 13 23 11
EBITDA 9,768 9,597 7,032 5,679 7,154 6,327 6,727 8,336 32,075 28,544
Margin (%) 27.0 28.5 21.7 15.2 18.2 16.7 18.9 19.7 23.0 18.4
Depreciation 1,254 1,304 1,257 1,698 1,575 1,575 1,575 1,544 5,512 6,269
Interest 204 239 215 252 230 230 230 224 909 914
Other Income 552 1,610 362 332 300 5,746 320 405 2,856 6,771
PBT before EO Item 8,861 9,665 5,922 4,061 5,649 10,268 5,242 6,972 28,509 28,131
Extraordinary Inc./(Exp.) 0 0 0 -657 0 0 0 0 -657 0
PBT after EO Exp./(Inc.) 8,861 9,665 5,922 3,404 5,649 10,268 5,242 6,972 27,853 28,131
Tax 2,215 2,434 1,510 888 1,446 2,629 1,342 1,785 7,047 7,201
Rate (%) 25.0 25.2 25.5 26.1 25.6 25.6 25.6 25.6 25.3 25.6
Reported Profit 6,646 7,231 4,412 2,517 4,203 7,639 3,900 5,187 20,805 20,929
Adj. PAT 6,646 7,231 4,412 2,990 4,203 7,639 3,900 5,187 21,278 20,929
YoY Change (%) 67 59 0 (40) (37) 6 (12) 74 19 (2)

April 2022 61
 March 2022 Results Preview | Sector: Cement

Birla Corporation Buy

CMP: INR1,168 | TP: INR1,430 (+22%) EPS CHANGE (%): FY22|23: -1.0|-1.0
 Expect revenue to decline by 1% YoY on a 4% drop in  Opex/t to increase by 10% YoY on a 14% rise in variable
volumes. Expect realization to improve by 3% YoY. cost. Employee/freight cost per ton to increase 17% YoY.
 Expect blended EBITDA/t at INR711 v/s INR940/INR664 in  Depreciation/interest expense for the Yawatmal plant
4QFY21/3QFY22. should start from 1QFY23E.
Consolidated performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales volume (mt) 2.41 3.26 3.55 4.17 3.35 3.27 3.35 4.00 13.55 13.97
YoY Change (%) (33.8) 1.9 3.5 24.5 39.0 0.3 (5.6) (4.1) (0.7) 3.1
Cement Realization (INR/t) 4,935 4,880 4,770 4,856 4,943 4,878 4,934 5,020 4,798 4,948
YoY Change (%) (0.4) 1.5 0.6 0.8 0.2 (0.0) 3.4 3.4 (0.6) 3.1
Net Sales 12,220 16,543 17,766 21,326 17,491 16,978 17,501 21,218 67,855 73,188
YoY Change (%) (35.1) 1.7 3.6 26.2 43.1 2.6 (1.5) (0.5) (1.9) 7.9
Total Expenditure 9,889 12,716 14,153 17,406 14,055 14,306 15,276 18,377 54,163 62,014
EBITDA 2,331 3,827 3,613 3,920 3,436 2,673 2,225 2,841 13,691 11,174
Margin (%) 19.1 23.1 20.3 18.4 19.6 15.7 12.7 13.4 20.2 15.3
Depreciation 877 918 908 1,005 984 982 1,007 1,053 3,708 4,025
Interest 800 760 730 674 639 632 608 684 2,963 2,563
Other Income 190 212 136 135 93 133 69 85 673 379
Profit before Tax 845 2,361 2,112 2,376 1,906 1,192 678 1,190 7,694 4,965
EO (Income)/Expense - - (11) 579 - - (70) - 568 (70)
Profit before Tax after EO 845 2,361 2,122 1,798 1,906 1,192 748 1,190 7,126 5,035
Tax 188 694 638 -696 491 336 144 338 825 1,308
Rate (%) 22.2 29.4 30.1 (38.7) 25.7 28.2 19.2 28.4 11.6 26.0
Reported PAT 657 1,666 1,484 2,493 1,415 855 605 852 6,301 3,727
Adj. PAT 657 1,666 1,474 1,823 1,415 855 535 852 5,620 3,657
Margin (%) 5.4 10.1 8.3 8.5 8.1 5.0 3.1 4.0 8.3 5.0
YoY Change (%) (59.5) 59.4 54.3 27.8 115.3 (48.7) (63.7) (53.3) 11.2 (34.9)

Dalmia Bharat Buy

CMP: INR1,574| TP: INR2,000 (+27%) EPS CHANGE (%): FY22|23: -5.0|-1.0
 Expect sales volume to decline by 2% YoY. Expect  Expect opex/t to increase by 11% YoY on a 23%/6% rise in
realization to rise by 1% YoY. variable/employee cost.
 Expect EBITDA/t of INR833, down 30% YoY, but up 16%  Expect interest expense to decline by 28% YoY.
QoQ.
Consolidated performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales volume (mt) 3.7 4.8 5.8 6.4 4.9 5.1 5.7 6.3 20.7 22.0
YoY Change (%) -19.6 7.4 13.7 24.2 33.6 6.3 -1.7 -1.6 7.3 6.3
Realization (INR/t) 5,194 4,819 4,706 4,912 5,290 5,053 4,791 4,948 4,878 5,008
YoY Change (%) -6.8 -3.7 -0.7 2.3 1.9 4.9 1.8 0.7 -2.7 2.7
QoQ Change (%) 8.1 -7.2 -2.3 4.4 7.7 -4.5 -5.2 3.3
Net Sales 19,010 23,130 27,295 31,535 25,870 25,770 27,310 31,242 1,00,970 1,10,192
YoY Change (%) -25.1 3.4 12.9 27.0 36.1 11.4 0.1 -0.9 4.4 9.1
EBITDA 6,150 6,980 6,820 7,670 7,130 6,210 4,090 5,260 27,620 22,690
Margin (%) 32.4 30.2 25.0 24.3 27.6 24.1 15.0 16.8 27.4 20.6
Depreciation 2,980 2,990 3,260 3,270 2,970 3,030 3,020 3,078 12,500 12,098
Interest 730 720 910 580 560 500 440 418 2,940 1,918
Other Income 550 400 455 395 260 450 300 310 1,800 1,320
PBT before EO Expense 2,990 3,670 3,105 4,215 3,860 3,130 930 2,075 13,980 9,995
Extra-Ord. expense 830 960 -415 -3,665 0 60 0 0 -2,290 60
PBT after EO Expense 2,160 2,710 3,520 7,880 3,860 3,070 930 2,075 16,270 9,935
Tax 240 400 440 2,860 980 930 200 589 3,940 2,699
Rate (%) 11.1 14.8 12.5 36.3 25.4 30.3 21.5 28.4 24.2 27.2
Reported PAT (pre-minority) 1,920 2,310 3,080 5,020 2,880 2,140 730 1,486 12,330 7,236
PAT Adj. for EO items 2,770 3,270 2,655 1,225 2,770 2,150 650 1,396 9,920 6,966
YoY Change (%) 88.4 1,111.1 1,006.3 371.2 0.0 -34.3 -75.5 14.0 342.9 -29.8

April 2022 62
 March 2022 Results Preview | Sector: Cement

Grasim Industries Buy

CMP: INR1,678 | TP: INR1,950 (+16%) EPS CHANGE (%): FY22|23: +2.5|+0.2
 Expect revenue for the VSF/Chemical segment to grow by  Expect EBITDA to increase by 12% YoY. However, OPM is
26%/90% on a 15%/85% YoY growth in realization. estimated to decline by 4.3pp YoY.
 Expect VSF EBITDA to decline by 45% YoY. Expect EBITDA  Expect an EBITDA/kg of INR17 for VSF v/s INR37 in
for the Chemical segment to increase by 3.1x YoY. 4QFY21. Expect margin for the Chemical segment to
improve by 7.8pp YoY; but down 2.2pp QoQ.
Standalone performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 13,357 29,598 36,966 43,943 37,627 49,330 57,847 63,985 1,23,864 2,08,789
YoY Change (%) -73.3 -38.3 -4.2 18.4 181.7 66.7 56.5 45.6 -33.4 68.6
EBITDA -2,257 3,346 6,445 8,109 7,402 8,012 9,221 9,063 15,643 33,699
Margin (%) -16.9 11.3 17.4 18.5 19.7 16.2 15.9 14.2 12.6 16.1
Depreciation 2,029 2,056 2,051 2,145 2,018 2,075 2,218 2,320 8,282 8,630
Interest 658 649 516 536 581 551 534 528 2,360 2,194
Other Income 992 2,816 638 692 649 7,024 406 394 5,137 8,473
PBT before EO Items -3,951 3,456 4,515 6,119 5,453 12,411 6,875 6,609 10,139 31,347
Extraordinary Inc./(Exp.) -577 0 0 -233 0 0 0 0 -810 0
PBT after EO Items -4,529 3,456 4,515 5,886 5,453 12,411 6,875 6,609 9,329 31,347
Tax -1,414 175 1,208 1,256 993 2,942 1,985 1,917 1,224 7,837
Rate (%) 31.2 5.1 26.7 21.3 18.2 23.7 28.9 29.0 13.1 25.0
Reported PAT -3,115 3,281 3,308 4,630 4,459 9,469 4,890 4,692 8,104 23,511
Adj. PAT -2,538 3,281 3,308 4,863 4,459 9,469 4,890 4,692 8,914 23,511
Margin (%) -19.0 11.1 8.9 11.1 11.9 19.2 8.5 7.3 7.2 11.3
YoY Change (%) -151.6 -37.7 66.5 462.1 -275.7 188.6 47.8 -3.5 -43.0 163.7

India Cements Neutral

CMP: INR221 | TP: INR210 (-5%) EPS CHANGE (%): FY22|23: -1.3|-1.5
 Expect volume decline of 11% YoY on a high base of last  Expect variable cost to increase by 28% YoY on higher
year. Expect realization to grow by 10% YoY. coal/petcoke prices. Expect other expense/t to increase by
11% YoY.
 Estimate blended EBITDA/t at INR553 v/s INR671/INR494  Expect opex/t to increase by 15% YoY. Estimate ETR at
in 4QFY21/3QFY22. 33% v/s 27% in 4QFY21.
Standalone performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales volume (mt) 1.43 2.11 2.38 2.99 1.95 2.36 2.11 2.67 8.90 9.08
YoY Change (%) (53.1) (21.0) (10.8) 13.0 36.2 12.0 (11.3) (10.9) (19.2) 2.0
Realization (INR/t) 5,301 5,077 4,881 4,848 5,257 5,043 5,258 5,352 4,985 5,230
YoY Change (%) 9.8 8.7 9.3 11.4 (0.8) (0.7) 7.7 10.4 8.6 4.9
QoQ Change (%) 21.8 (4.2) (3.9) (0.7) 8.4 (4.1) 4.3 1.8
Net Sales 7,570 10,697 11,603 14,496 10,225 11,902 11,085 14,263 44,367 47,474
YoY Change (%) (48.5) (14.1) (2.6) 25.8 35.1 11.3 (4.5) (1.6) (12.3) 7.0
EBITDA 1,557 2,347 2,152 2,005 1,620 1,336 1,041 1,473 8,061 5,470
Margin (%) 20.6 21.9 18.5 13.8 15.8 11.2 9.4 10.3 18.2 11.5
Depreciation 600 601 605 613 545 564 546 568 2,419 2,222
Interest 730 705 685 530 545 511 501 539 2,650 2,096
Other Income 33 57 26 118 31 32 58 80 235 200
PBT before EO expense 261 1,098 889 980 561 293 52 446 3,227 1,351
Extra-Ord. expense 0 0 0 0 0 0 0 0
PBT 261 1,098 889 980 561 293 52 446 3,227 1,351
Tax 91 384 268 264 186 73 19 147 1,007 426
Rate (%) 34.9 34.9 30.2 26.9 33.3 24.9 36.2 33.1 31.2 31.5
Reported PAT 170 714 620 716 374 220 33 299 2,220 925
Adj. PAT 170 714 620 716 374 220 33 299 2,220 925
YoY Change (%) (76.0) 1,327.2 (1,014.7) (250.4) 120.6 (69.2) (94.7) (58.3) 947.7 (58.3)
Margin (%) 2.2 6.7 5.3 4.9 3.7 1.8 0.3 2.1 5.0 1.9

April 2022 63
 March 2022 Results Preview | Sector: Cement

JK Cement Neutral
CMP: INR2,548 | TP: INR2,950 (+16%) EPS CHANGE (%): FY22|23: +3.2|+1.2
 Expect Gray Cement volume to grow by 1% YoY. Expect  Expect realization for Gray Cement to increase by 11%
White Cement volume to decline by 3% YoY. YoY, but the same for White Cement to decline by 4%.
 Expect EBITDA/t at INR1,028 v/s INR1,127/INR1,116 in  Expect variable cost to increase by 21% YoY. Expect opex/t
4QFY21/3QFY22. to rise by 12% YoY.
Standalone performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales volume (mt) 1.77 2.81 3.17 3.89 3.03 3.33 3.32 3.91 11.64 13.59
YoY Change (%) (23.5) 25.5 23.9 46.0 71.4 18.5 4.8 0.5 19.1 16.8
Realization (INR/t) 5,464 5,517 5,556 5,270 5,398 5,510 5,842 5,677 5,437 5,614
YoY Change (%) (5.0) (1.5) 1.2 (4.8) (1.2) (0.1) 5.1 7.7 (2.7) 3.3
QoQ Change (%) (1.3) 1.0 0.7 (5.1) 2.4 2.1 6.0 (2.8)
Net Sales 9,650 15,507 17,601 20,525 16,337 18,355 19,404 22,221 63,283 76,317
YoY Change (%) (27.3) 23.6 25.3 38.9 69.3 18.4 10.2 8.3 15.8 20.6
Total Expenditure 7,497 11,400 13,113 16,134 12,341 14,805 15,696 18,197 48,144 61,040
EBITDA 2,153 4,107 4,488 4,391 3,996 3,550 3,708 4,024 15,139 15,277
Margin (%) 22.3 26.5 25.5 21.4 24.5 19.3 19.1 18.1 23.9 20.0
Depreciation 580 597 622 649 657 687 719 764 2,447 2,827
Interest 572 537 593 529 560 591 653 669 2,232 2,474
Other Income 203 287 303 340 273 480 264 344 1,134 1,361
PBT before EO expense 1,204 3,260 3,576 3,553 3,052 2,752 2,600 2,934 11,594 11,337
Extra-Ord. expense 0 0 0 1,669 0 260 0 0 1,669 260
PBT 1,204 3,260 3,576 1,885 3,052 2,492 2,600 2,934 9,925 11,077
Tax 427 1,025 1,194 1,251 969 803 926 957 3,897 3,656
Rate (%) 35.5 31.4 33.4 66.4 31.8 32.2 35.6 32.6 39.3 33.0
Reported PAT 777 2,235 2,383 633 2,083 1,688 1,673 1,978 6,028 7,422
Adj. PAT 777 2,235 2,383 2,522 2,083 1,948 1,673 1,978 7,917 7,682
YoY Change (%) (49.5) 105.5 73.2 41.4 168.1 (12.8) (29.8) (21.6) 36.9 (3.0)

JK Lakshmi Buy
CMP: INR466 | TP: INR565 (+21%) EPS CHANGE (%): FY22|23: +0.6|-
 Expect sales volume to decline by 5% YoY on a high base  Expect variable/employee cost to rise by 28%/18% YoY.
of last year. Expect realization to increase by 9% YoY.
 Expect EBITDA/t at INR636 v/s INR922/INR595 in  Expect opex/t to increase by 19% YoY. Expect interest
4QFY21/3QFY22. expense to decline by 15% YoY on lower debt.
Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales volume (mt) 1.91 2.39 2.70 2.90 2.66 2.32 2.46 2.77 9.89 10.21
YoY Change (%) (18) 16 16 18 40 (3) (9) (5) 8 3
Realization (INR/t) 4,331 4,381 4,426 4,552 4,633 4,828 4,853 4,940 4,434 4,814
YoY Change (%) (3.1) (3.5) 2.5 5.7 7.0 10.2 9.7 8.5 0.7 8.6
QoQ Change (%) 1 1 1 3 2 4 1 2
Net Sales 8,252 10,448 11,928 13,220 12,315 11,182 11,934 13,698 43,847 49,129
YoY Change (%) (21) 12 19 25 49 7 0 4 8 12
EBITDA 1,433 1,867 1,918 2,679 2,161 1,626 1,464 1,762 7,898 7,013
Margin (%) 17.4 17.9 16.1 20.3 17.5 14.5 12.3 12.9 18.0 14.3
Depreciation 484 493 487 478 460 470 468 473 1,942 1,871
Interest 378 381 367 299 257 237 251 253 1,425 998
Other Income 82 183 207 273 169 163 164 174 745 670
PBT before EO expense 653 1,176 1,272 2,175 1,613 1,081 910 1,210 5,275 4,814
Extra-Ord. expense 0 0 0 309 0 0 0 0 309 0
PBT 653 1,176 1,272 1,865 1,613 1,081 910 1,210 4,966 4,814
Tax 209 370 248 500 426 316 318 313 1,328 1,372
Rate (%) 32.0 31.5 19.5 26.8 26.4 29.2 34.9 25.9 26.7 28.5
Reported PAT 444 806 1,023 1,365 1,187 765 592 897 3,638 3,442
Adj. PAT 444 806 1,023 1,674 1,187 765 748 897 3,947 3,598
YoY Change (%) (36) 76 108 66 167 (5) -27 -46 49 (9)

April 2022 64
 March 2022 Results Preview | Sector: Cement

The Ramco Cements Buy

CMP: INR787 | TP: INR905 (+15%) EPS CHANGE (%): FY22|23: -2.0 |-1.5
 Expect volumes to rise by 3% YoY on additional volumes  Expect variable cost/t to increase by 31% YoY. Expect
from new capacities. Expect realization to rise by 4% YoY. employee/other expense per tonne to rise by 13%/12%
YoY.
 Expect EBITDA/t at INR943 v/s INR1,417/INR774 in  Expect opex/t to increase by 19% YoY. Expect interest
4QFY21/3QFY22. expense to rise by 84% YoY.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales Volume (mt) 1.94 2.21 2.61 3.21 2.14 2.71 3.01 3.32 9.98 11.17
YoY Change (%) -28.2 -18.9 -8.1 9.5 10.4 22.6 15.0 3.3 -10.9 12.0
Realization (INR/t) 5,284 5,558 5,090 5,072 5,648 5,386 5,138 5,283 5,224 5,339
YoY Change (%) 5.9 18.1 13.7 7.3 6.9 -3.1 0.9 4.2 10.7 2.2
QoQ Change (%) 11.8 5.2 -8.4 -0.4 11.4 -4.6 -4.6 2.8
Net Sales 10,418 12,570 13,391 16,306 12,287 14,931 15,491 17,544 52,684 60,253
YoY Change (%) -23.9 -4.3 5.1 17.3 17.9 18.8 15.7 7.6 -1.4 14.4
EBITDA 2,600 4,420 3,970 4,490 3,640 3,938 2,309 3,073 15,480 12,960
Margin (%) 25.0 35.2 29.6 27.5 29.6 26.4 14.9 17.5 29.4 21.5
Depreciation 844 855 896 958 956 985 992 995 3,553 3,928
Interest 299 265 160 152 243 294 253 279 876 1,069
Other Income 101 83 64 99 60 79 68 73 346 280
PBT before EO expense 1,557 3,383 2,977 3,479 2,501 2,738 1,132 1,872 11,397 8,244
PBT 1,557 3,383 2,977 3,479 2,501 2,738 1,132 1,872 11,397 8,244
Tax 461 1,026 964 1,336 811 -2,432 306 468 3,786 -847
Rate (%) 29.6 30.3 32.4 38.4 32.4 21.4 27.1 25.0 33.2 -10.3
Reported PAT 1,096 2,358 2,014 2,144 1,690 5,171 826 1,404 7,611 9,090
Adj. PAT 1,096 2,358 2,014 2,144 1,690 2,152 826 1,367 7,611 6,034
YoY Change (%) -42.9 40.2 112.4 46.6 54.2 -8.7 -59.0 -36.2 26.6 -20.7
Margin (%) 10.5 18.8 15.0 13.1 13.8 14.4 5.3 7.8 14.4 10.0

Shree Cement Neutral

CMP: INR24,737| TP: INR26,215 (+6%) EPS CHANGE (%): FY22|23: +3.5|+1.5
 Expect sales volume to decline by 8% YoY.  Expect EBITDA/t at INR1,249 (-INR184 YoY/-INR11 QoQ).
 Expect blended realization to decline by 4% QoQ, but rise  Expect variable cost/t to increase by 46% YoY, resulting in
9% YoY, after adjusting for traded goods in 3QFY22. a 18% rise in opex/t.
Standalone quarterly performance
FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales Volume (mt) 4.93 6.53 7.16 8.22 6.84 6.32 6.55 7.95 26.84 27.66
YoY Change (%) -18.6 14.2 14.7 19.0 38.7 -3.2 -8.6 -3.3 7.7 3.0
Blended Realization (INR/t) 4,717 4,628 4,620 4,785 5,043 5,073 5,422 5,207 4,677 5,117
YoY Change (%) -5.9 -5.5 1.3 2.7 6.9 9.6 17.4 8.8 2.4 9.4
QoQ Change (%) 1.2 -1.9 -0.2 3.6 5.4 0.6 6.9 -4.0
Net Sales 23,258 30,224 33,094 39,308 34,495 32,059 35,518 41,375 1,25,884 1,43,446
YoY Change (%) -23.4 7.9 16.2 22.2 48.3 6.1 7.3 5.3 5.7 14.0
Total Expenditure 16,252 20,344 22,205 27,537 24,360 23,077 27,262 31,453 86,337 1,06,151
EBITDA 7,006 9,880 10,890 11,772 10,135 8,982 8,255 9,922 39,547 37,294
Margin (%) 30.1 32.7 32.9 29.9 29.4 28.0 23.2 24.0 31.4 26.0
Depreciation 2,714 2,786 2,906 2,993 2,325 2,505 2,521 2,784 11,399 10,135
Interest 706 627 585 553 535 556 551 543 2,471 2,185
Other Income 1,244 1,024 1,068 1,244 1,392 1,500 1,101 1,108 4,580 5,100
PBT before EO Exp. 4,831 7,490 8,466 9,469 8,667 7,420 6,284 7,703 30,257 30,074
Extra-Ord. Expense 0 0 0 0 0 0 0 0 0 0
PBT 4,831 7,490 8,466 9,469 8,667 7,420 6,284 7,703 30,257 30,074
Tax 1,123 2,018 2,204 1,793 2,049 1,643 1,364 2,161 7,536 7,218
Rate (%) 23.3 26.9 26.0 18.9 23.6 22.1 21.7 28.1 23.6 24.0
Reported PAT 3,708 5,473 6,262 7,677 6,617 5,777 4,920 5,542 23,119 22,856
Adj. PAT 3,708 5,473 6,262 7,677 6,617 5,777 4,920 5,542 23,119 22,856
YoY Change (%) 2.1 77.1 102.0 30.5 78.5 5.6 -21.4 -27.8 47.2 -1.1

April 2022 65
 March 2022 Results Preview | Sector: Cement

UltraTech Cement Buy

CMP: INR6,741 | TP: INR7,865 (+17%) EPS CHANGE (%): FY22|23: -3.4|-2.8
 Expect sales volumes to decline by 1% YoY on a 12% dip in  Expect variable cost to increase by 29% YoY. Expect other
White Cement volumes. Expect RMC revenue to increase expense/employee cost to rise by 18%/ 11% YoY.
by 7% YoY.
 Expect EBITDA/t at INR1,066 (v/s -INR262 YoY/+20 QoQ).  Expect interest expense to decline by 54% YoY on a
reduction in debt.
Consolidated performance (INR m)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales Volume (mt) 14.65 20.06 23.88 27.78 21.53 21.64 23.13 27.45 86.42 93.75
YoY Change (%) -31.0 8.4 14.3 28.0 47.0 7.9 -3.1 -1.2 5.0 8.5
Blended Realn.(INR/t) 5,236 5,178 5,135 5,186 5,495 5,553 5,614 5,671 5,175 5,589
YoY Change (%) -3.0 -1.0 2.8 3.7 4.9 7.2 9.3 9.4 0.4 8.0
QoQ Change (%) 4.7 -1.1 -0.8 1.0 6.0 1.1 1.1 1.0
Net Sales 76,711 1,03,871 1,22,620 1,44,056 1,18,298 1,20,168 1,29,849 1,55,685 4,47,258 5,24,000
YoY Change (%) -33.1 7.4 17.5 32.7 54.2 15.7 5.9 8.1 5.4 17.2
Total Expenditure 55,934 76,895 91,599 1,07,152 85,224 93,021 1,05,656 1,26,420 3,31,579 4,10,319
EBITDA 20,777 26,977 31,022 36,904 33,075 27,147 24,194 29,265 1,15,679 1,13,681
Margin (%) 27.1 26.0 25.3 25.6 28.0 22.6 18.6 18.8 25.9 21.7
Depreciation 6,512 6,771 6,739 6,980 6,598 6,774 6,742 6,807 27,002 26,921
Interest 3,943 3,579 3,563 3,772 3,261 2,300 1,823 1,727 14,857 9,111
Other Income 2,788 1,350 2,600 603 2,049 1,401 705 682 7,342 4,836
PBT before EO expense 13,110 17,977 23,320 26,755 25,265 19,474 16,334 21,413 81,162 82,485
Extra-Ord. expense 1,574 646 0 388 0 0 0 0 2,607
PBT after EO Expense 11,536 17,331 23,320 26,367 25,265 19,474 16,334 21,413 78,555 82,485
Tax 3,603 5,662 7,474 8,649 8,269 6,371 -760 6,961 25,387 20,842
Rate (%) 31.2 32.7 32.0 32.8 32.7 32.7 -4.7 32.5 32.3 25.3
Reported PAT 7,933 11,670 15,846 17,719 16,995 13,103 17,094 14,452 53,168 61,643
Minority Interest 9 -6 -3 34 31 33 -17 10 34 57
Adj. PAT 8,882 12,161 15,781 18,142 17,026 13,135 11,725 14,461 54,967 56,348
YoY Change (%) -38.4 71.9 77.2 57.2 91.7 8.0 -25.7 -20.3 31.0 2.5

April 2022 66
 March 2022 Results Preview | Sector: Specialty Chemicals

Specialty Chemicals
Company Concerns on margins to linger…
Alkyl Amines …led by a spike in oil, energy and freight costs
Atul
Clean Science  Brent prices averaged USD100.4/bbl in 4QFY22, increasing 26% QoQ (+65% YoY),
Deepak Nitrite primarily driven by a spike in Mar’22 (of USD20.1/bbl MoM) due to the Russia-Ukraine
Fine Organic conflict. However, Brent softened later on in the month as Russia resumed peace talks
Galaxy Surfactants with Ukraine, after it scaled a record high of USD139/bbl – last seen seven years ago.
 Similarly, prices of organic compounds such as Propylene/Butadiene/Toluene stood at
Navin Fluorine
+14%/44%/+14% QoQ, respectively. Prices of other key raw materials for specialty
NOCIL
chemical companies, such as Acetic Acid/Acetone/Aniline/Phenol, stood at -22%/
Vinati Organics
+11%/-12%/12% QoQ, respectively.
 Concerns remain on international supply chain with challenges persisting in the form of
freight costs. Raw material volatility continued in 4QFY22, adversely affected by Russia-
Ukraine crisis, higher natural gas prices in Europe, fresh COVID-induced lockdown
measures and various plants shutting down in China. However, downstream demand for
chemicals remained robust with capacities being added to meet the growing demand.
 We expect our coverage universe to finish FY22 on a strong note in terms of revenue,
primarily driven by strong demand and pricing action taken by the companies. We
forecast our coverage companies to report: a) sales of +29% YoY /+7% QoQ, b) EBITDA
of -11% YoY/+2% QoQ, and c) PAT of -12% YoY /flattish QoQ in 4QFY22E
 The margins were flat in 3QFY22, due to higher input costs and continuing
freight challenges. However, demand was robust with positive commentaries
from the management on overall demand environment. The same is likely to
continue in 4QFY22 as well with companies having a higher contribution from
the Specialty segment being able to maintain their gross margins better than the
ones with a higher contribution from commodity chemicals.
 Despite the aforesaid challenges, we reiterate our belief that the industry as a
whole stands to benefit in the long term due to: a) accelerated capex, providing
longevity to revenue growth, b) backward/forward integration – moving away
from the commodity vagaries and capturing more of the value chain, and c)
import substitution, thereby capturing market share and growing faster than the
global chemical industry.

Exhibit 1: Expected quarterly performance summary

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Alkyl Amines 3167 Neutral 3,738 -2.2 -0.8 641 -51.9 -3.7 434 -53.2 -5.5
Atul 9962 Neutral 14,201 27.3 2.9 2,621 3.1 4.2 1,764 2.3 16.4
Clean Science 2043 Neutral 2,132 59.2 17.9 775 10.6 1.8 590 11.1 1.8
Deepak Nitrite 2313 Neutral 18,419 25.9 6.9 3,110 -31.6 -11.6 1,998 -31.1 -17.6
Fine Organic 4100 Neutral 5,207 61.9 11.2 969 111.0 21.6 668 131.3 19.9
Galaxy Surfactants 2981 Buy 9,877 26.1 6.3 822 -30.0 7.5 467 -40.6 2.4
Navin Fluorine 4092 Neutral 3,897 20.3 6.2 1,111 31.9 13.2 857 20.8 23.9
NOCIL 245 Buy 4,277 32.8 10.0 573 13.9 14.7 351 -2.4 17.5
Vinati Organics 1974 Buy 4,514 61.3 22.3 999 0.8 7.7 719 1.5 -13.6
Chemicals-Specialty 66,260 29.3 7.2 11,621 -11.2 1.7 7,849 -12.2 0.4

April 2022 Bhushan – Research Analyst ([Link]@[Link])

Swarnendu 67
 March 2022 Results Preview | Sector: Specialty Chemicals

Recommendations and view (snapshot of FY22 and ahead)

 Alkyl Amines (AACL): India’s current demand for ACN stands at 35ktpa, of which
~60% is imported. This presents an import substitution opportunity. AACL
capitalized the ACN plant at its Dahej location in 3QFY22, expanding its capacity
to 30ktpa from 12ktpa. Although, the domestic market would see intensified
competition for ACN with capacity expansion by its peer, and this would impact
AACL’s margins adversely. Exports to play a major role for the company.
 Atul (ATLP): ATLP is implementing projects with an investment of INR15b
(including INR7b in Atul Products) – all via internal accruals. At full capacity,
revenue is projected to reach INR60b. It commissioned projects worth INR2b in
3QFY22. Expansion and new product launches in the Colors business would
enhance ATLP’s credibility and help it gain market share. Continued focus on
cost efficiencies has led to improvement in product yields.
 Clean Science (CSTL): CSTL's streak is driven by its strong R&D capabilities in
technological development of its plant as well as process innovation. CSTL
commenced production of two new products: Para benzoquinone (PBQ) and
TBHQ during 3QFY22. The management expects to generate revenue of more
than INR1b from PBQ and TBHQ going forward. We expect continued market
share gains for the company underpinned by its solid expertise, expansion of
existing capacities and commencement of HALS series that is likely by Sep’22.
 Deepak Nitrite (DN): DN’s vision is to become the largest player in solvents by
taking advantage of import substitution. The management will continue to focus
on bringing additional products under the Fine and Specialty segment and
bridging the gaps in its value chain. DN has been investing in its market
intelligence team, which studies opportunities in new and existing markets.
Improvement is likely to be seen in the performance products and Basic
Intermediates segment in addition to the already robust Phenol segment.
 Fine Organic (FINEORG): FINEORG has long-standing relationships with its
suppliers, which enable it to source raw materials at competitive prices.
Growing awareness and demand for healthier/organic food products would
propel the usage of emulsifiers in the country. a) Ramp-up in the utilization of
additional capacities to optimum levels by FY23-24E as well as b) the strong
demand outlook from the Indian Food Emulsifiers market should help FINEORG
grow at a faster rate than the industry.
 Galaxy Surfactants (GALSURF): The company’s units at Tarapur and Jhagadia
manufacture mild surfactants and non-toxic preservatives, which is seeing good
traction and the management expects the momentum to continue going
forward. Various customers are looking to source their entire chemical
requirements from green/eco-friendly sources by CY30-35. Emergence of
private labels and e-commerce in India would aid growth with management
focusing on expansion of specialty care products.
 Navin Fluorine (NFIL): NFIL has started manufacturing and supply of commercial
quantities for some new customers, which would aid in scaling up of the new
Dahej plant. The Board has also approved debottlenecking of the cGMP-3 plant
and the same should be completed by CY22-end. A new plan for HFCs is to be
announced by the end of CY22. Peak annual revenue from the MPP plant is
likely in the next three years along with a strong pipeline in the specialty
chemicals segment.

April 2022 68
 March 2022 Results Preview | Sector: Specialty Chemicals

 NOCIL: Volume growth of 10% and revenue growth of 45% are expected in FY22.
The management continues to believe in optimal capacity utilization for the
expanded capacity (of 110ktpa), which would be achieved by 1HFY24E. Although,
being conservative, we expect the same by end-FY24 (translating into a volume
CAGR of ~18%). The management guided for debottlenecking of its existing unit in
the near term, even as it evaluates its plans for the next three-to-five years.
 Vinati Organics (VO): Sales growth of: a) 50% YoY in FY22 and b) 25-30% YoY in
FY23-24 is expected, led by a recovery in IBB from Feb’22, commissioning of an
antioxidant plant, and foray into niche chemicals through Veeral Organics. Full
utilization of Veeral Additives in the next three years, post-commissioning in
FY22-end, is expected. VO is confident of being among the top five global
players for Butyl Phenol and AOs over the next 4–5 years; to contribute ~25% of
total sales in 2-3 years down the line.

Exhibit 2: Comparative valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Chemicals-Specialty 51.7 39.7 33.7 10.0 8.3 6.9 19.4 20.9 20.6
Alkyl Amines 3,167 Neutral 43.5 65.8 82.6 72.8 48.1 38.4 16.9 13.3 10.6 25.3 30.9 30.8
Atul 9,962 Neutral 213.4 277.0 312.6 46.7 36.0 31.9 6.7 5.8 5.0 15.4 17.3 16.9
Clean Science 2,043 Neutral 21.2 32.5 43.9 96.4 62.8 46.5 29.7 21.2 15.3 35.4 39.4 38.1
Deepak Nitrite 2,313 Neutral 74.0 79.7 84.8 31.3 29.0 27.3 9.8 7.6 6.2 36.3 29.6 25.0
Fine Organic 4,100 Neutral 62.6 83.5 99.6 65.5 49.1 41.2 14.4 11.9 9.9 23.8 26.6 26.3
Galaxy Surfactants 2,981 Buy 59.6 83.1 90.8 50.1 35.9 32.8 7.2 6.3 5.5 15.3 18.8 17.9
Navin Fluorine 4,092 Neutral 55.2 86.0 107.5 74.1 47.6 38.1 10.8 9.2 7.7 15.5 20.9 22.0
NOCIL 245 Buy 8.6 11.5 14.1 28.6 21.4 17.4 3.0 2.8 2.5 10.8 13.4 15.2
Vinati Organics 1,974 Buy 30.9 42.9 57.6 63.9 46.0 34.3 11.2 9.3 7.7 18.9 22.2 24.6

Exhibit 3: Relative performance – three-months (%) Exhibit 4: Relative performance – one-year (%)

Nifty Index MOFSL Chemicals Index Nifty Index MOFSL Chemicals Index
106 176

101 156

96 136

91 116

86 96
Jun-21

Dec-21
Dec-21

Mar-21

Sep-21

Mar-22
Jan-22

Feb-22

Mar-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

April 2022 69
 March 2022 Results Preview | Sector: Specialty Chemicals

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

Alkyl Amines Neutral

CMP: INR3,167 | TP: INR3,302 (+4%) EPS CHANGE (%): FY22|23: -1|-1
 Expect revenue to be flat with softening of Acetic Acid  Expect EBITDA margin to be flat at 17.2% in 4QFY22 v/s
prices; higher freight rates to sustain 17.7% in 3QFY22 – as Acetic Acid prices cool off.
 Key monitorable – export-led revenue after the expansion  Watch out for an increase in domestic competition, with
of the ACN plant that is pivotal to revenue growth. continued expansion by its immediate competitor.

Standalone - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 2,452 2,913 3,239 3,821 3,918 3,487 3,767 3,738 12,424 14,909
YoY Change (%) -7.9 24.0 26.1 62.8 59.8 19.7 16.3 -2.2 25.1 20.0
Gross Margins (%) 56% 57% 61% 57% 49% 46% 45% 45% 58% 46%
EBITDA 774 953 1,231 1,334 1,109 755 666 641 4,291 3,171
Margins (%) 31.6 32.7 38.0 34.9 28.3 21.6 17.7 17.2 34.5 21.3
Depreciation 70 72 76 73 76 77 79 84 291 316
Interest 19 16 14 14 11 10 10 8 63 39
Other Income 12 27 17 14 20 42 46 31 70 138
PBT before EO expense 696 891 1,158 1,261 1,043 709 623 579 4,007 2,954
PBT 696 891 1,158 1,261 1,043 709 623 579 4,007 2,954
Tax 168 237 313 335 258 169 164 146 1,054 736
Rate (%) 24.2 26.5 27.0 26.6 24.7 23.8 26.3 25.1 26.3 24.9
Reported PAT 528 655 845 926 785 541 459 434 2,953 2,219
YoY Change (%) 50.4 21.5 64.3 88.1 48.8 -17.4 -45.7 -53.2 55.7 -24.9
Margins (%) 21.5 22.5 26.1 24.2 20.0 15.5 12.2 11.6 23.8 14.9

Atul Neutral
CMP: INR 9,962 | TP: INR 10,314 (+4%) EPS CHANGE (%): FY22|23: +3|+3
 Expect revenues to remain flat QoQ (+27% YoY) and  Margins to normalize in the current quarter, in line with
EBITDA margin at 18.5% (v/s 18.2% in 3QFY22). raw material price movements.
 Watch out for EBIT mix improving in the Life Science  Delay in implementation and ramping up of its new
segment after introduction of new products. capacity expansions may impact growth.

Consolidated - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 6,606 10,021 9,529 11,159 10,802 12,500 13,803 14,201 37,315 51,305
YoY Change (%) -36.5 -4.2 -8.5 15.6 63.5 24.7 44.9 27.3 -8.8 37.5
Gross Margins (%) 57% 54% 55% 53% 52% 47% 51% 51% 55% 50%
EBITDA 1,587 2,612 2,430 2,543 2,361 2,187 2,515 2,621 9,171 9,684
Margins (%) 24.0 26.1 25.5 22.8 21.9 17.5 18.2 18.5 24.6 18.9
Depreciation 331 332 334 366 433 440 454 446 1,363 1,773
Interest 27 22 22 24 21 18 19 38 94 96
Other Income 409 65 373 186 296 211 31 232 1,033 770
PBT before EO expense 1,638 2,323 2,447 2,340 2,204 1,940 2,072 2,369 8,747 8,585
PBT 1,638 2,323 2,447 2,340 2,204 1,940 2,072 2,369 8,747 8,585
Tax 459 596 567 595 572 495 530 596 2,217 2,193
Rate (%) 28.0 25.7 23.2 25.4 26.0 25.5 25.6 25.2 25.3 25.6
Minority Interest & Profit/Loss of Asso. Cos. 3 24 24 21 19 17 27 9 73 73
Reported PAT 1,182 1,751 1,904 1,767 1,652 1,461 1,569 1,782 6,603 6,464
YoY Change (%) -20.9 -19.0 9.3 22.6 37.1 -16.1 -18.4 2.3 -3.7 -2.2
Margins (%) 17.8 17.0 19.5 15.5 14.9 11.4 11.0 12.4 17.3 12.3

April 2022 70
 March 2022 Results Preview | Sector: Specialty Chemicals

Clean Science Neutral

CMP: INR 2,043 | TP: INR 2,196 (+7%) EPS CHANGE (%): FY22|23: +3|+1
 Expect revenue growth of 18% QoQ led by increase in  Expect EBITDA margin to dip 570bp QoQ to 36.4%, as
volume and pricing action taken during 4QFY22 there is a continuous uptick in RM costs.
 Key monitorable – performance of the two new products  Key risks – raw material price volatility along with supply
started during 3Q and HALS production update. chain constraints could dampen margins.

Consolidated - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 1,129 1,402 1,254 1,339 1,463 1,532 1,808 2,132 5,124 6,935
YoY Change (%) NA NA NA NA 29.6 9.2 44.2 59.2 35.3
Gross Margins (%) 73% 75% 76% 79% 71% 69% 65% 60% 76% 66%
EBITDA 561 702 625 701 713 687 761 775 2,590 2,937
Margins (%) 49.7 50.1 49.8 52.4 48.8 44.9 42.1 36.4 50.5 42.4
Depreciation 42 40 47 43 58 61 60 71 172 250
Other Income 53 76 71 57 65 86 75 86 256 312
PBT before EO expense 572 738 648 715 721 712 776 789 2,673 2,998
PBT 572 738 648 715 721 712 776 789 2,673 2,998
Tax 153 195 158 184 175 177 196 199 689 747
Rate (%) 26.8 26.4 24.3 25.7 24.2 24.9 25.3 25.2 25.8 24.9
Reported PAT 419 543 491 531 546 535 580 590 1,984 2,252
Adj PAT 419 543 491 531 546 535 580 590 1,984 2,252
Margins (%) 37.1 38.7 39.1 39.7 37.3 34.9 32.1 27.7 38.7 32.5

Deepak Nitrite Neutral

CMP: INR 2,313 | TP: INR 2,374 (+3%) EPS CHANGE (%): FY22|23: -3|+0
 Expect EBITDA margin of 16.9% in 4QFY22 (v/s 20.4% in  Unexpected surge in Brent in the past couple of months
3QFY22) led by RM price volatility. that could lead to margins risk in 4QFY22.
 Demand recovery in OBA and DASDA (performance  Watch out for: Fine & Specialty Chemicals segment as
chemicals); Dyes expected to recover over FY22. margins could rebound in 4QFY22.

Consolidated - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 6,745 9,873 12,347 14,632 15,262 16,814 17,223 18,419 43,598 67,718
YoY Change (%) -35.8 -1.6 10.3 38.6 126.3 70.3 39.5 25.9 3.1 55.3
Gross Margins (%) 51% 51% 45% 48% 46% 37% 37% 33% 48% 38%
EBITDA 1,816 2,757 3,350 4,547 4,515 3,865 3,519 3,110 12,470 15,009
Margins (%) 26.9 27.9 27.1 31.1 29.6 23.0 20.4 16.9 28.6 22.2
Depreciation 310 312 339 565 436 441 455 461 1,526 1,792
Interest 247 196 157 142 109 92 68 62 742 332
Other Income 68 40 49 59 83 84 258 84 215 508
PBT before EO expense 1,326 2,288 2,903 3,899 4,053 3,417 3,253 2,670 10,417 13,393
PBT 1,326 2,288 2,903 3,899 4,053 3,417 3,253 2,670 10,417 13,393
Tax 337 587 737 998 1,026 873 829 672 2,659 3,400
Rate (%) 25.4 25.6 25.4 25.6 25.3 25.6 25.5 25.2 25.5 25.4
Reported PAT 990 1,702 2,166 2,901 3,026 2,543 2,425 1,998 7,758 9,993
YoY Change (%) -24.8 13.2 38.2 68.4 205.8 49.4 12.0 -31.1 27.0 28.8
Margins (%) 14.7 17.2 17.5 19.8 19.8 15.1 14.1 10.8 17.8 14.8

April 2022 71
 March 2022 Results Preview | Sector: Specialty Chemicals

Fine Organic Neutral

CMP: INR 4,100 | TP: INR 3,982 (-3%) EPS CHANGE (%): FY22|23: -3|+4
 Expect revenue to grow 62% YoY (+11% QoQ) and EBITDA  Ever-increasing rise in freight rates, shortage of containers
margin to expand 160bps QoQ to 18.6%. and rise in fuel prices could dampen near-term growth.
 Key monitorable – new capex announcements and foray  Delay in the ramp up in the utilization levels of additional
into new territories through customer additions. capacities could hamper long-term growth visibility.

Standalone - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 2,356 2,658 2,982 3,217 3,599 4,296 4,682 5,207 11,213 17,784
YoY Change (%) -3.2 -3.1 12.1 32.7 52.8 61.6 57.0 61.9 9.3 58.6
Gross Margins (%) 39% 37% 34% 32% 31% 34% 33% 34% 35% 32%
EBITDA 516 488 458 459 499 728 797 969 1,921 2,839
Margins (%) 21.9 18.3 15.4 14.3 13.9 17.0 17.0 18.6 17.1 16.0
Depreciation 111 114 119 124 95 98 101 109 468 403
Interest 18 16 15 12 13 12 12 11 61 49
Other Income 16 40 54 61 60 62 66 45 170 233
PBT before EO expense 403 398 378 384 451 681 750 893 1,562 2,620
PBT 403 398 378 384 451 681 750 893 1,562 2,620
Tax 117 103 97 95 101 181 193 225 413 701
Rate (%) 29.1 26.0 25.8 24.7 22.5 26.6 25.7 25.2 26.4 26.8
Reported PAT 286 295 280 289 349 500 557 668 1,149 1,919
YoY Change (%) -23.6 -49.8 -23.9 -13.2 22.2 69.5 98.8 131.3 -30.9 67.0
Margins (%) 12.1 11.1 9.4 9.0 9.7 11.6 11.9 12.8 10.3 10.8

Galaxy Surfactants Buy

CMP: INR2,981 | TP: INR3,632 (+22%) EPS CHANGE (%): FY22|23: -4|+0
 Expect revenue growth of 26% YoY/6% QoQ backed by  Expect EBITDA margin to be flattish QoQ amid higher
better volumes in the Specialty Products segment. prices of Fatty Alcohol and supply constraints.
 Key monitorable – Update on volume recovery after some  Supply issues may subside but elevated RM and feedstock
of it was lost due to a move to Natural gas from Coal prices may continue to pose a challenge.

Consolidated - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 6,072 7,187 6,747 7,835 8,264 8,773 9,291 9,877 27,841 36,205
YoY Change (%) -8.7 10.8 7.8 19.3 36.1 22.1 37.7 26.1 7.2 30.0
Gross Margins (%) 34% 36% 38% 37% 32% 27% 27% 28% 36% 28%
EBITDA 905 1,215 1,195 1,174 1,085 709 764 822 4,488 3,379
Margins (%) 14.9 16.9 17.7 15.0 13.1 8.1 8.2 8.3 16.1 9.3
Depreciation 164 167 169 240 168 181 177 197 740 724
Interest 48 32 24 30 29 37 28 32 134 126
Other Income 7 46 30 26 45 50 18 32 109 145
PBT 699 1,062 1,032 930 933 541 576 625 3,723 2,674
Tax 134 245 180 143 164 122 120 157 702 563
Rate (%) 19.2 23.0 17.4 15.4 17.6 22.5 20.8 25.2 18.8 21.1
Reported PAT 565 817 852 787 768 419 456 467 3,021 2,111
YoY Change (%) 7.5 21.9 77.6 25.3 36.0 -48.7 -46.5 -40.6 31.1 -30.1
Margins (%) 9.3 11.4 12.6 10.0 9.3 4.8 4.9 4.7 10.9 5.8

April 2022 72
 March 2022 Results Preview | Sector: Specialty Chemicals

Navin Fluorine Neutral

CMP: INR 4,092 | TP: INR 4,299 (+5%) EPS CHANGE (%): FY22|23: +1|+1
 Built in revenue of INR3.9b on sustained quarterly run-  EBITDA margin to improve 180bp QoQ – led by growth in
rate in CRAMS and Specialty businesses in 4QFY22. higher value business.
 Key monitorable – update on the commissioning of the  Watch out for: Quarterly run rate in CRAMs, and
MPP/HPP plants (any delay could be detrimental). sustainable performance of Inorganic Fluorides segment.
Standalone - Quarterly Snapshot (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 2,047 3,077 2,966 3,240 3,139 3,244 3,670 3,897 11,331 13,949
YoY Change (%) -15.3 16.6 17.9 22.3 53.3 5.4 23.7 20.3 10.8 23.1
Gross Margins (%) 58% 56% 54% 53% 55% 55% 56% 57% 55% 56%
EBITDA 521 935 810 842 780 835 981 1,111 3,108 3,708
Margins (%) 25.4 30.4 27.3 26.0 24.8 25.8 26.7 28.5 27.4 26.6
Depreciation 99 100 101 106 109 110 112 120 407 451
Interest 2 3 3 6 4 3 4 3 14 14
Other Income 356 88 104 197 76 85 72 157 745 391
PBT before EO expense 776 920 810 927 743 808 937 1,145 3,433 3,634
Extra-Ord expense 0 0 0 662 0 0 0 0 662 0
PBT 776 920 810 1,589 743 808 937 1,145 4,095 3,634
Tax 260 246 223 373 179 187 246 288 1,103 900
Rate (%) 33.5 26.8 27.6 23.5 24.1 23.2 26.2 25.2 26.9 24.8
Reported PAT 516 673 587 1,216 564 621 692 857 2,992 2,734
Adj PAT 516 673 587 709 564 621 692 857 2,508 2,734
YoY Change (%) 30.6 45.1 29.6 -73.6 9.4 -7.8 17.8 20.8 -37.3 9.0
Margins (%) 25.2 21.9 19.8 21.9 18.0 19.1 18.8 22.0 22.1 19.6

NOCIL Buy
CMP: INR245 | TP: INR310 (+27%) EPS CHANGE (%): FY22|23: +3|+3
 Expect revenue growth of 10% QoQ to INR4.3b (+33% YoY)  EBITDA margins to be flat at 13.4%; absolute EBITDA/mt
on robust demand from the domestic Tyre industry. to grow owing to decrease in Aniline prices
 Key monitorable – new capex announcements in the  Probable risk of higher dumping by China Sunsine (to
Specialty segment. complete its expansion in 1HCY22) to hamper margins.

Standalone - Quarterly Earning Model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 1,065 2,216 2,746 3,220 3,445 3,752 3,889 4,277 9,247 15,362
YoY Change (%) -53.6 5.7 41.3 51.4 223.4 69.3 41.6 32.8 9.3 66.1
Gross Margins (%) 49% 48% 43% 44% 49% 41% 41% 42% 45% 43%
EBITDA 75 312 372 503 727 495 500 573 1,262 2,294
Margins (%) 7.0 14.1 13.6 15.6 21.1 13.2 12.8 13.4 13.6 14.9
Depreciation 88 88 88 98 102 104 105 114 361 425
Interest 3 3 2 2 2 2 3 3 10 10
Other Income 106 9 12 22 10 22 9 13 150 53
PBT before EO expense 91 231 295 426 632 411 400 469 1,042 1,913
PBT 91 231 295 426 632 411 400 469 1,042 1,913
Tax -27 64 74 66 161 106 102 118 177 487
Rate (%) -29.7 27.8 25.1 15.4 25.5 25.8 25.3 25.2 17.0 25.5
Reported PAT 118 166 221 360 471 305 299 351 865 1,426
YoY Change (%) -64.0 -69.9 6.8 60.8 300.3 83.4 35.4 -2.4 -34.0 64.9
Margins (%) 11.0 7.5 8.0 11.2 13.7 8.1 7.7 8.2 9.4 9.3

April 2022 73
 March 2022 Results Preview | Sector: Specialty Chemicals

Vinati Organics Buy

CMP: INR 1,974| TP: INR 2,304 (+17%) EPS CHANGE (%): FY22|23: -5|+2
 Expect revenue growth of 22%/61% QoQ/YoY at INR4.5b  EBITDA margins to contract to 22.1% (from 25.1% in
after recovery in volumes at Mahad plant. 3QFY22)
 Key drivers – Commissioning of Antioxidants plant to aid  Demand pick up for ATBS and IBB to drive revenue; watch
sales growth in FY23. out for new products to be announced in 4QFY22.

Standalone - Quarterly Earning Model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 2,316 2,194 2,235 2,798 3,864 3,741 3,690 4,514 9,543 15,808
YoY Change (%) -21.7 -11.9 -6.3 14.0 66.8 70.5 65.1 61.3 -7.3 65.7
Gross Margins (%) 63% 60% 55% 59% 45% 48% 49% 46% 59% 47%
EBITDA 972 841 721 991 1,015 1,010 928 999 3,525 3,952
Margins (%) 42.0 38.3 32.3 35.4 26.3 27.0 25.1 22.1 36.9 25.0
Depreciation 106 108 108 107 110 113 115 163 429 501
Interest 0 0 0 1 0 0 0 2 2 2
Other Income 86 14 93 66 176 136 146 127 258 585
PBT before EO expense 951 747 706 948 1,081 1,033 959 961 3,352 4,034
PBT 951 747 706 948 1,081 1,033 959 961 3,352 4,034
Tax 228 127 65 240 272 220 126 242 659 859
Rate (%) 24.0 17.0 9.2 25.3 25.1 21.3 13.2 25.2 19.7 21.3
Reported PAT 723 620 641 709 809 814 833 719 2,693 3,175
YoY Change (%) -12.2 -43.6 -4.0 -5.1 11.9 31.1 29.8 1.5 -19.3 17.9
Margins (%) 31.2 28.3 28.7 25.3 20.9 21.7 22.6 15.9 28.2 20.1

April 2022 74
 March 2022 Results Preview | Sector: Consumer

Consumer
Asian Paints Inflationary pressures dent volumes
Britannia Industries The 19 Consumer companies under our coverage universe are likely to report muted
Colgate-Palmolive India cumulative growth numbers – revenue/EBITDA/PAT of 8%/7%/5% – in 4QFY22. This is
Dabur India on a cumulative sales/EBITDA base of 26.7%/26% in 4QFY21. Two year average
Emami sales/EBITDA growth is expected to be 17.2%/16.3%. Sales growth will largely be led
Godrej Consumer Products by price hikes as Staples volumes hover in the negative to slightly positive range,
Hindustan Unilever impacted by spiraling inflation and a slowdown in rural demand. Inflation has been
the theme in 4QFY22, with already elevated commodity costs pushed further upwards
ITC
owing to the Russia-Ukraine war, which broke out in Feb’22. With most companies
Jyothy Laboratories
having taken steep price hikes in 3QFY22, managements were already apprehensive
Marico
of raising prices further as it risked affecting demand. However, spiraling input costs
Nestle India compelled most managements to raise prices further in an effort to protect margins.
Page Industries The recent correction in stock prices has resulted in pockets of opportunities,
Pidilite Industries especially in companies with a lower exposure to commodity cost pressures and
P&G Hygiene and Healthcare strong structural growth visibility. In the case of distribution channels, e-commerce
Tata Consumer Products continues to strengthen its salience for most Consumer companies, while general
United Breweries
trade (GT) remains resilient. Recovery in the MT channel, while still not back to pre-
COVID levels, is certainly well on its way. However, the recovery in certain categories
United Spirits
may not be as strong as consumers tighten their purse strings when looking at
Varun Beverages
discretionary purchases. A few key developments to monitor include: a) a fresh COVID
wave engulfing the country, b) further escalation in the ongoing conflict in Ukraine
continuing to affect commodity costs, and c) extended slowdown in rural demand. On
the positive side, a good Rabi harvest may help boost rural demand.
Discretionary demand takes a back seat
Among the large companies, we expect DABUR to report 10% YoY sales growth (3%
volume growth) and 21.3%/12.2% EBITDA/PAT growth. DABUR has been relatively less
exposed to sharp commodity price increases v/s its Staple peers. Muted performance is
expected from HUVR owing to the impact on margin due to higher palm oil prices and
the underperformance of its Discretionary portfolio. We expect a 4% YoY volume
decline, with sales/EBITDA growth of 6.1%/1% and an adjusted PAT decline of 2.8%.
APNT is likely to report a 10.2% revenue growth, led entirely by price increases, as
volumes decline by 8%. Steep price hikes taken in Nov’21 are likely to result in flat
sequential margins, with 0.4%/7.4% EBITDA/PAT growth. ITC is expected to post a 4%
growth in Cigarette volumes with a 4.1%/12.4% YoY increase in sales/EBITDA. While its
FMCG-Others business is likely to face severe input cost pressures, ITC is relatively
insulated, given the pricing power in its Cigarettes business. Staples are likely to report a
7.4% sales growth over 4QFY22, led by price increases. Among discretionaries, VBL,
INDIGOPN, and PIDI are likely to report strong YoY revenue growth.
Material costs witness sharp inflationary trends
Overall inflation in the commodity basket rose 20% YoY and 2.4% sequentially in
4QFY22. The larger concern has been the move in recent weeks, with spot prices in
key commodities like crude and palm oil at least 30% higher than average prices in
Dec’21. Companies have been compelled to pass on a significant part of the input
cost inflation to consumers, with further price hikes taken during 4QFY22. Gross
margins are likely to remain under pressure, with significant improvement likely only
beyond 1HFY23. The prices of non-Agri commodities remained elevated. Crude
prices continued to surge, up 64.1% YoY and 25.3% sequentially. HDPE/LLP costs,

Research analyst: Krishnan Sambamoorthy ([Link]@[Link]) / Dhairya Dhruv ([Link]@[Link])

Research analyst: Kaiwan Jal Olia (Kaiwan.O@[Link]) / Aditya Kasat ([Link]@[Link])
 March 2022 Results Preview | Sector: Consumer

which affect Packaging/Hair Oil companies, have also been on an uptrend. VAM
prices had softened in Jan’22, but higher crude oil prices pushed VAM prices up in
Feb’22. The same is likely to affect PIDI’s gross margin. While palm oil prices have
fallen from their peaks in early Mar’22, prices still remain elevated (up 57.4% YoY
and 19.5% QoQ). Higher palm costs are likely to impact HUVR, GCPL, and Food
companies (though to a lesser extent). Among other Agri commodities, barley prices
have risen 65.3% YoY and 6.8% QoQ, with prices reaching a fresh peak of over
INR3,000/quintal in Mar’22. Prices for most other Agri-commodities remained
benign. While companies will continue to experience sharp material cost inflation,
price increases taken in 4QFY22 will help relieve margin pressure to some extent.
While larger companies have indicated that advertising spends have not come
down, some companies may use ad spends as a lever to protect operating margins.
Top picks in the Consumer Staples space
GCPL, DABUR, MRCO, and VBL: The appointment of the new CEO at GCPL offers
scope for transformative change, especially if the company is able to robustly grow
the domestic business and introduce better capital allocation. We like DABUR on
account of: a) its focus on the core Healthcare business, b) its power brand strategy, c)
acceleration in innovation and launches, d) an increasing direct distribution reach, e)
narrowing gap v/s domestic peers using analytics, and f) cost savings, which are being
plowed back into the business in the form of higher advertisements. MRCO is the only
company within our coverage that is witnessing an input cost decline in its key raw
material: copra. The ongoing momentum in revenue growth in each of MRCO's core
segments, significantly higher growth rates as well as targets in the Foods portfolio,
and INR4.5-5b targeted from its 'digital first' range of products offer a much-needed
diversification that can lead to higher multiples compared to the past. We like VBL
owing to: a) the revival in out-of-home consumption on the back of an increase in the
pace of vaccine distribution, b) rising penetration in newly acquired regions (Southern
and Western India), and c) the growing penetration of Refrigerators in rural/semi-rural
areas per household as well as power availability for longer hours.
Exhibit 1: Overall performance – Input cost inflation to affect margins
Sector CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Consumer (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Asian Paints 3118 Neutral 73,311 10.2 -14.0 13,239 0.4 -14.2 9,346 7.4 -9.4
Britannia 3271 Buy 34,604 10.5 -3.2 5,043 -0.2 -6.6 3,819 6.2 3.0
Colgate 1562 Neutral 13,594 5.9 6.2 3,939 -6.6 3.5 2,692 -14.4 6.7
Dabur 544 Buy 25,719 10.1 -12.6 5,368 21.3 -14.5 4,241 12.2 -15.7
Emami 453 Buy 7,526 3.0 -22.6 1,988 22.1 -41.8 1,392 -6.8 -51.4
Godrej Consumer 771 Buy 28,869 5.7 -12.6 5,577 -3.0 -20.2 3,803 -11.5 -26.0
Hind. Unilever 2127 Buy 1,28,704 6.1 -1.7 29,861 1.0 -8.9 20,431 -2.8 -10.9
Indigo Paints 1623 Buy 3,010 18.4 13.4 487 13.4 25.9 318 27.9 30.9
ITC 255 Neutral 1,38,421 4.1 -12.7 50,292 12.4 -1.4 40,764 8.7 -1.9
Jyothy Labs 150 Neutral 5,255 7.8 -0.6 630 -9.8 4.1 374 -25.8 5.8
Marico 530 Buy 21,859 8.6 -9.2 3,459 8.4 -19.7 2,425 1.9 -21.8
Nestle 17782 Neutral 40,441 12.0 8.2 9,221 -0.9 8.3 5,951 -1.2 3.8
P&G Hygiene 14317 Buy 8,508 12.0 -22.2 2,110 54.8 -28.8 1,530 46.8 -27.9
Page Industries 43702 Neutral 9,251 5.0 -22.2 1,950 14.8 -22.2 1,308 13.1 -25.1
Pidilite Inds. 2494 Neutral 25,590 14.5 -10.2 5,114 11.0 -6.9 3,291 6.2 -7.4
Tata Consumer 788 Buy 31,180 2.7 -2.8 4,349 44.9 -5.8 2,175 91.9 -20.9
United Breweries 1525 Sell 15,607 1.1 -1.3 1,918 -26.6 -8.5 1,052 -33.8 -9.9
United Spirits 909 Neutral 25,507 14.7 -11.6 3,954 -4.0 -19.4 2,326 -4.6 -20.1
Varun Beverages 953 Buy 26,575 18.6 53.2 4,527 18.6 118.1 2,023 56.5 1,126.6
Consumer 6,63,531 7.8 -6.6 1,53,026 6.7 -6.5 1,09,261 4.6 -7.3

April 2022 76
 March 2022 Results Preview | Sector: Consumer

Exhibit 2: Expect most companies to post muted volume growth in 4QFY22

Quarter ending (growth %) 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E
Asian Paints (dom. Deco.) 10.0 16.0 14.0 11.0 2.5 (38.0) 11.0 33.0 48.0 106.0 34.0 18.0 (8.0)
Britannia (Biscuits) 7.0 3.0 3.0 3.0 0.0 21.0 9.0 3.0 8.0 1.0 5.0 6.0 1.0
Colgate (Toothpaste) 5.0 4.0 4.0 2.3 (8.0) 0.0 4.0 6.0 16.0 8.0 4.0 1.0 2.0
Dabur 4.3 9.6 4.8 5.6 (14.6) (9.7) 16.8 18.1 25.4 34.4 10.0 2.0 3.0
Emami 0.0 0.0 1.0 (2.0) (20.0) (28.0) 10.0 13.0 39.0 38.0 6.2 0.0 (3.0)
Hindustan Unilever 7.0 5.0 5.0 5.0 (7.0) 4.0 14.0 17.0 31.0 9.0 4.0 2.0 (4.0)
ITC (Cigarettes) 8.0 3.0 2.5 2.5 (11.0) (37.0) (12.0) (7.0) 7.0 31.0 9.0 12.5 4.0
Marico (Dom.) 8.0 6.0 1.0 (1.0) (3.0) (14.0) 11.0 15.0 25.0 21.0 8.0 0.0 1.0
Pidilite 4.0 6.0 (1.0) 2.0 (3.1) (58.6) 7.4 22.0 45.0 105.0 25.0 9.4 (2.0)
Source: Company, MOFSL
Exhibit 3: Relative performance – three-months (%) Exhibit 4: Relative performance – one-year (%)
Nifty Index MOFSL Consumer Index Nifty Index MOFSL Consumer Index
104 130

101 120

98 110

95 100

92 90
Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Mar-22
Jun-21

Dec-21
Sep-21
Source: Bloomberg, MOFSL
Exhibit 5: Crude prices rose 64.1% YoY and 25.3% QoQ Exhibit 6: TiO2 prices rose 63.4% YoY and 4.7% QoQ
Brent Crude Index TiO2 price (INR/kg) 450
109

53

250
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22
Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Nov-19

Nov-20
Nov-17

Nov-18

Nov-21
Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22
Nov-17

Nov-18

Nov-19

Nov-20

Nov-21

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 7: VAM prices (till Feb’22) rose 22% YoY, but fell Exhibit 8: Copra prices (till Jan’22) fell 24.4% YoY and 7.3%
13.9% QoQ QoQ

VAM prices (USD/MT) Cochin/Kochi Coconut Oil (INR/100kg)

2,242
15,148
858
11,788
Oct-17

Oct-18

Oct-19

Oct-20

Oct-21
Jun-17

Jun-18

Jun-19

Jun-20

Jun-21
Feb-18

Feb-21
Feb-17

Feb-19

Feb-20

Feb-22

Jan-17

Sep-17
Jan-18

Jan-19

Jan-20

Sep-20
Jan-21

Jan-22
Sep-18

Sep-19

Sep-21
May-17

May-18

May-19

May-20

May-21

Source: Bloomberg, MOFSL Source: Company, MOFSL

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Exhibit 9: HDPE (till Jan’22) prices rose 8.3% YoY, but fell Exhibit 10: LLP (till Jan’22) prices fell 2.8% YoY and 4.7%
2.6% QoQ QoQ
HDPE (INR/kg) Liquid Paraffin (INR/lt)

123 57

102
38
Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-17

Jan-18

Jan-19

Sep-19
Jan-20

Jan-21

Jan-22
Sep-17

Sep-18

Sep-19

Sep-20

Sep-21

Sep-17

Sep-18

Sep-20

Sep-21
May-17

May-18

May-19

May-20

May-21

May-17

May-18

May-19

May-20

May-21
Source: Company, MOFSL Source: Company, MOFSL
Exhibit 12: Malaysian palm oil prices rose 57.4% YoY and
Exhibit 11: PFAD prices rose 58.6% YoY and 21.6% QoQ 19.5% QoQ

Palm Fatty Acid (USD/MT) Palm Oil (MYR/MT)

1,478 6,585

674 2,855
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22
Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Nov-17

Nov-18

Nov-19

Nov-20

Nov-21

Jul-17

Jul-18

Aug-19

Aug-20

Aug-21
Mar-17

Mar-22
Oct-17

Oct-18
Jan-18
Apr-18

Jan-19
Apr-19

Dec-21
Feb-20

Feb-21
Nov-19

Nov-20

May-21
May-20
Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL
Exhibit 14: Gold prices rose 5.8% YoY and 4% QoQ on the
Exhibit 13: Mentha oil prices rose 1.7% YoY and 4.5% QoQ MCX

Mentha Oil (INR/kg) MCX Gold (INR/10gm)

51,283

1,235
1,085
28,681
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22
Jul-19
Jul-17

Jul-18

Jul-20

Jul-21
Nov-17

Nov-18

Nov-19

Nov-20

Nov-21

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22
Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Nov-17

Nov-19
Nov-18

Nov-20

Nov-21

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 15: Wheat prices rose 18.3% YoY and 3.2% QoQ Exhibit 16: Sugar prices rose 9.5% YoY, but fell 3.1% QoQ
Wheat (INR/quintal) Sugar (INR/quintal)

3,845

2,155
3,400
1,634
Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22
Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Nov-17

Nov-18

Nov-19

Nov-20

Nov-21

Aug-21
Aug-19

Aug-20
Mar-17

Mar-22
Jul-18
Jul-17
Oct-17

Oct-18
Jan-18
Apr-18

Jan-19
Apr-19

Feb-20

Dec-21
Feb-21
Nov-19

Nov-20
May-20

May-21

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

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Exhibit 17: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Consumer 49.7 43.7 36.5 11.1 10.7 10.1 22.3 24.4 27.6
Asian Paints 3,118 Neutral 32.8 42.0 53.5 95.1 74.2 58.2 22.0 21.1 19.8 23.8 29.0 35.1
Britannia 3,271 Buy 63.1 66.8 83.1 51.8 48.9 39.3 17.0 15.9 14.7 37.1 33.5 38.7
Colgate 1,562 Neutral 37.6 39.6 42.5 41.5 39.4 36.8 36.4 36.4 36.4 87.8 92.5 99.1
Dabur 544 Buy 10.6 12.1 14.0 51.5 45.2 38.8 11.8 10.7 9.6 23.6 24.8 26.1
Emami 453 Buy 18.6 20.7 22.4 24.4 21.9 20.3 9.6 9.1 8.3 42.5 42.6 42.8
Godrej Consumer 771 Buy 17.5 16.8 22.3 44.0 45.9 34.5 7.9 7.7 7.3 18.4 17.0 21.8
Hind. Unilever 2,127 Buy 36.7 38.7 45.2 57.9 54.9 47.0 10.7 11.1 11.7 18.3 19.8 24.3
Indigo Paints 1,623 Buy 17.1 25.8 36.4 95.0 63.0 44.6 12.0 10.1 8.2 13.5 17.4 20.3
ITC 255 Neutral 12.1 14.0 16.4 21.0 18.3 15.6 5.2 4.9 4.6 25.0 27.7 30.6
Jyothy Labs 150 Neutral 4.2 5.6 6.4 35.4 26.9 23.3 4.1 4.1 4.1 11.2 15.3 17.8
Marico 530 Buy 9.4 11.2 13.2 56.2 47.2 40.3 15.1 14.4 13.6 31.4 31.2 34.8
Nestle 17,782 Neutral 240.8 260.0 299.9 73.8 68.4 59.3 82.3 78.6 78.6 113.2 117.5 132.6
P&G Hygiene 14,317 Buy 210.9 263.8 321.1 67.9 54.3 44.6 59.4 53.5 47.8 91.4 103.7 113.4
Page Industries 43,702 Neutral 427.4 534.4 621.2 102.2 81.8 70.4 50.2 45.4 42.6 49.1 55.5 60.5
Pidilite Inds. 2,494 Neutral 25.1 26.9 37.3 99.4 92.6 66.8 19.5 17.8 15.8 21.1 20.1 25.1
Tata Consumer 788 Buy 10.4 14.1 17.2 75.6 56.0 45.9 4.8 4.4 4.1 6.5 8.3 9.4
United Breweries 1,525 Sell 12.6 17.8 23.4 121 86 65.3 10.6 9.9 9.1 9.0 11.9 14.6
United Spirits 909 Neutral 11.5 13.1 16.9 79 70 53.8 13.2 11.5 10.2 16.7 16.6 18.9
Varun Beverages 953 Buy 16.0 24.4 28.9 59.4 39.0 33.0 10.1 8.2 6.8 18.3 23.3 22.5
Source: Bloomberg, MOFSL

April 2022 79
 March 2022 Results Preview | Sector: Consumer

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL Coverage
Universe. Highlighted columns indicate the quarter/financial year under review.

Asian Paints Neutral

CMP: INR3,118 | TP: INR2,950 (-5%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Expect a volume growth of 2% YoY in 4QFY22.  Tio2 prices rose sharply (up 63.4% YoY and 4.7% QoQ) in
4QFY22.
 Expect GM to decline sharply YoY and QoQ due to a higher  Watch out for commentary on the demand outlook after
inflationary environment. the price hikes.
Quarterly Performance (Consol.) (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Est. Dom. Deco. Vol. growth (%) -38.0 11.0 33.0 48.0 106.0 34.0 18.0 -8.0 7.0 29.5
Net Sales 29.2 53.5 67.9 66.5 55.9 71.0 85.3 73.3 217.1 285.4
Change (%) -42.7 5.9 25.2 43.5 91.1 32.6 25.6 10.2 7.4 31.4
Gross Profit 13.1 23.8 30.6 28.7 21.5 24.7 31.3 26.7 96.2 104.1
Gross Margin (%) 44.7 44.4 45.1 43.2 38.4 34.7 36.8 36.4 44.3 36.5
EBITDA 4.8 12.7 17.9 13.2 9.1 9.0 15.4 13.2 48.6 46.8
Margin (%) 16.6 23.6 26.3 19.8 16.4 12.7 18.1 18.1 22.4 16.4
Change (%) -58.2 32.5 50.3 53.4 88.7 -28.5 -13.7 0.4 16.7 -3.5
Interest 0.2 0.2 0.2 0.3 0.2 0.2 0.3 0.3 0.9 1.0
Depreciation 1.9 1.9 1.9 2.1 2.0 2.0 2.1 2.1 7.9 8.2
Other Income 0.5 0.8 1.0 0.8 0.9 1.4 0.7 0.9 3.0 3.9
PBT 3.2 11.3 16.7 11.5 7.8 8.2 13.8 11.7 42.8 41.5
Tax 0.9 2.9 4.3 2.9 2.0 2.2 3.6 2.6 11.0 10.5
Effective Tax Rate (%) 26.9 25.9 25.8 24.9 26.2 27.1 26.3 22.0 25.7 25.2
Adjusted PAT 2.2 8.5 12.7 8.7 5.7 6.1 10.3 9.3 32.1 31.5
Change (%) -67.4 0.8 62.3 81.1 161.5 -29.0 -18.5 7.4 15.4 -1.9
E: MOFSL Estimates

Britannia Industries Buy

CMP: INR3,271 | TP: INR 3,750 (+15%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Expect 1% volume growth in the base business in 4QFY22.  The sharp decline in GM is due to inflation in key RM.
 EM to be under pressure, but sustain in the teens on cost-  RM cost outlook and commentary on ICDs are key
saving initiatives. monitorables.
Consolidated quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Base business volume growth (%) 21.0 9.0 3.0 8.0 1.0 5.0 6.0 1.0 10.0 3.9
Net Sales 34,207 34,191 31,656 31,308 34,035 36,074 35,750 34,604 1,31,361 1,40,462
YoY change (%) 26.7 12.1 6.1 9.2 -0.5 5.5 12.9 10.5 13.2 6.9
Gross Profit 14,248 14,540 13,642 12,671 13,170 13,531 13,554 12,976 55,100 53,230
Margin (%) 41.7 42.5 43.1 40.5 38.7 37.5 37.9 37.5 41.9 37.9
EBITDA 7,169 6,754 6,115 5,054 5,538 5,583 5,397 5,043 20,578 21,561
Margin (%) 21.0 19.8 19.3 16.1 16.3 15.5 15.1 14.6 15.7 15.4
YoY growth (%) 81.7 37.2 21.8 11.3 -22.8 -17.3 -11.7 -0.2 11.6 4.8
Depreciation 480 485 486 528 491 502 504 522 1,979 2,018
Interest 256 298 318 237 342 390 374 397 1,109 1,503
Other Income 937 735 826 632 605 534 551 597 3,129 2,287
PBT 7,370 6,706 6,137 4,921 5,310 5,226 5,071 4,721 20,620 20,328
Tax 1,944 1,750 1,611 1,326 1,442 1,410 1,362 903 6,630 5,117
Rate (%) 26.4 26.1 26.2 26.9 27.2 27.0 26.9 19.1 32.2 25.2
Adjusted PAT 5,427 4,956 4,526 3,595 3,868 3,816 3,709 3,819 13,989 15,212
YoY change (%) 105.4 22.7 22.5 -3.5 -28.7 -23.0 -18.1 6.2 -0.8 8.7
E: MOFSL estimates

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 March 2022 Results Preview | Sector: Consumer

Colgate Neutral
CMP: INR1,562 | TP: INR1,490 (-5%) EPS CHANGE (%): FY23|24: -1.6|-3.0
 Expect marginal volume growth of 2% YoY in 4QFY22.  Expect YoY contraction in GM on higher material costs.
 Expect EBITDA margin to decline led by GM pressures.  Monitorables: Volume growth, A&P spends, and
performance of launches and the Naturals category.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Toothpaste Volume Gr. (%) 0.0 4.0 6.0 16.0 8.0 4.0 1.0 2.0 6.5 3.8
Net Sales (including OOI) 10,406 12,855 12,319 12,832 11,660 13,524 12,801 13,594 48,412 51,579
YoY change (%) -4.1 5.2 7.4 19.8 12.0 5.2 3.9 5.9 7.0 6.5
Gross Profit 6,883 8,759 8,594 8,683 8,062 9,038 8,526 8,964 32,919 34,590
Gross margin (%) 66.1 68.1 69.8 67.7 69.1 66.8 66.6 65.9 68.0 67.1
EBITDA 3,080 4,093 3,706 4,218 3,552 4,008 3,806 3,939 15,096 15,304
Margin (%) 29.6 31.8 30.1 32.9 30.5 29.6 29.7 29.0 31.2 29.7
YoY growth (%) 2.7 26.7 17.3 60.4 15.3 -2.1 2.7 -6.6 25.6 1.4
Depreciation 454 461 456 455 447 449 439 452 1,825 1,787
Interest 20 18 19 16 15 15 15 25 73 70
Financial other Income 63 76 99 66 52 65 57 67 304 241
PBT 2,669 3,689 3,330 3,814 3,142 3,609 3,408 3,529 13,502 13,688
Tax 687 947 847 667 810 917 885 837 3,148 3,448
Rate (%) 25.7 25.7 25.4 17.5 25.8 25.4 26.0 23.7 23.3 25.2
Adj. PAT 1,982 2,742 2,484 3,147 2,332 2,692 2,523 2,692 10,354 10,239
YoY change (%) 17.2 12.3 24.7 54.1 17.7 -1.8 1.6 -14.4 26.8 -1.1
E: MOFSL estimates

Dabur Buy
CMP: INR544 | TP: INR700 (+29%) EPS CHANGE (%): FY23|24: -2.4|-0.7
 Expect a 5% YoY volume growth in 4QFY22.  Expect a marginal pressure on GM due to higher input
costs.
 Distribution expansion and aggression in product launches  Key monitorables: Demand outlook for Herbal and
to continue. Immunity products, and commentary on rural demand as
well as the international business.
Consolidated quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic FMCG vol. growth (%) -9.7 16.8 18.1 25.4 34.4 10.0 2.0 3.0 12.7 12.9
Net sales 19,800 25,160 27,288 23,368 26,115 28,176 29,418 25,719 95,617 1,09,427
YoY change (%) -12.9 13.7 16.0 25.3 31.9 12.0 7.8 10.1 10.1 14.4
Gross profit 9,784 12,802 13,751 11,390 12,562 13,761 14,222 12,345 47,727 52,889
Margin (%) 49.4 50.9 50.4 48.7 48.1 48.8 48.3 48.0 49.9 48.3
EBITDA 4,166 5,694 5,742 4,425 5,520 6,207 6,275 5,368 20,027 23,370
Margin (%) 21.0 22.6 21.0 18.9 21.1 22.0 21.3 20.9 20.9 21.4
YoY growth (%) -9.0 16.3 16.5 25.6 32.5 9.0 9.3 21.3 11.7 16.7
Depreciation 567 596 572 666 613 633 632 676 2,401 2,555
Interest 78 75 69 86 75 83 111 102 308 370
Other income 718 876 809 850 848 1,124 967 948 3,253 3,888
PBT 4,238 5,899 5,911 4,522 5,681 6,616 6,500 5,537 20,570 24,333
Tax 825 1,067 975 744 1,297 1,558 1,455 1,286 3,611 5,597
Rate (%) 19.5 18.1 16.5 16.4 22.8 23.6 22.4 23.2 17.6 23.0
Adjusted PAT 3,418 4,817 4,920 3,778 4,373 5,044 5,033 4,241 16,933 18,691
YoY change (%) -9.8 10.7 18.9 27.1 28.0 4.7 2.3 12.2 11.0 10.4
E: MOFSL estimates

April 2022 81
 March 2022 Results Preview | Sector: Consumer

Emami Buy
CMP: INR453 | TP: INR540 (+19%) EPS CHANGE (%): FY22|23: 6.8|6.6
 Expect a 3% YoY decline in domestic volumes in 4QFY22.  Expect a 340/410bp YoY change in GM/EM from a low
Advance summer purchases have not been at usual levels. base.
 Watch out for the management’s commentary on the  Outlook for volume growth and growth in rural India are
incremental impact of material prices beyond 4QFY22. key monitorables.
Consolidated quarterly performance (INR m)
Y/E MARCH FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic volume growth (%) -28.0 10.0 13.0 39.0 38.0 6.2 0.0 -3.0 8.5 10.3
Net Sales 4,813 7,348 9,336 7,308 6,610 7,888 9,719 7,526 28,805 31,742
YoY change (%) -25.8 11.3 14.9 37.2 37.3 7.4 4.1 3.0 8.5 10.2
COGS 1,613 2,185 2,766 2,728 2,246 2,464 3,170 2,555 9,292 10,435
Gross Profit 3,200 5,163 6,570 4,580 4,363 5,425 6,549 4,971 19,513 21,307
Gross margin (%) 66.5 70.3 70.4 62.7 66.0 68.8 67.4 66.0 67.7 67.1
EBITDA 1,230 2,571 3,402 1,628 1,697 2,772 3,415 1,988 8,831 9,872
Margin (%) 25.5 35.0 36.4 22.3 25.7 35.1 35.1 26.4 30.7 31.1
YoY change -8.3 33.2 28.9 65.2 38.0 7.8 0.4 22.1 27.9 11.8
Depreciation 194 216 341 240 234 236 242 258 991 970
Interest 47 25 14 47 6 8 18 10 133 43
Other Income 67 79 92 465 107 376 166 128 703 778
PBT 1,056 2,409 3,139 1,806 1,564 2,904 3,322 1,848 8,410 9,638
Tax 95 284 438 326 175 410 491 370 1,142 1,446
Rate (%) 9.0 11.8 13.9 18.0 11.2 14.1 14.8 20.0 13.6 15.0
PAT before Amortization 973 2,133 2,710 1,493 1,404 2,532 2,864 1,392 7,309 8,192
YoY change (%) -6.4 31.6 26.3 52.4 44.4 18.7 5.7 -6.8 25.3 12.1
E: MOFSL estimates

Godrej Consumer Buy

CMP: INR771 | TP: INR1,000 (+30%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Sales growth to be entirely led by price increases, with a  Demand for out-of-home categories such as Hair Color to
likely volume decline. improve.
 Update on strategy refresh initiatives highlighted by the  Watch out for margin improvement in Africa and
new CEO in Dec’21. performance in other international markets.
Consolidated quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales (including OOI) 23,273 29,151 30,554 27,307 28,945 31,637 33,026 28,869 1,10,286 1,22,476
YoY change (%) -0.9 10.8 10.0 26.8 24.4 8.5 8.1 5.7 11.3 11.1
Gross Profit 12,629 16,318 16,822 15,223 15,098 15,760 16,732 14,735 60,992 62,325
Margin (%) 54.3 56.0 55.1 55.7 52.2 49.8 50.7 51.0 55.3 50.9
EBITDA 4,727 6,844 7,112 5,748 6,111 6,792 6,991 5,577 23,883 25,470
Margin (%) 20.3 23.5 23.3 21.0 21.1 21.5 21.2 19.3 21.7 20.8
YoY growth (%) 3.0 18.7 12.6 20.6 29.3 -0.8 -1.7 -3.0 11.4 6.6
Depreciation 493 509 491 545 509 509 542 580 2,039 2,139
Interest 483 313 241 229 273 245 256 186 1,266 960
Other Income 218 139 150 166 209 226 224 245 671 904
PBT 3,968 6,045 6,353 4,882 5,427 6,068 6,107 5,056 21,248 22,658
Tax 147 1,463 1,400 586 1,272 1,267 972 1,253 3,595 4,764
Rate (%) 3.7 24.2 22.0 12.0 23.4 20.9 15.9 24.8 16.9 21.0
Adj. PAT 3,817 4,584 4,956 4,297 4,152 4,803 5,138 3,803 17,653 17,897
YoY change (%) 31.4 9.8 10.2 50.8 8.8 4.8 3.7 -11.5 21.9 1.4
E: MOFSL estimates

April 2022 82
 March 2022 Results Preview | Sector: Consumer

Hindustan Unilever Buy

CMP: INR2,127 | TP: INR2,500 (+18%) EPS CHANGE (%): FY23|24: -1.0|-1.1
 Expect 4% YoY domestic volume decline (including GSKCH)  Outlook on the Nutrition business and rural v/s urban
on a high base of FY21. demand.
 Expect GM to contract by 250bp YoY, led by higher  Outlook on competitive intensity, RM cost, discretionary,
material costs. and out-of-home demand are key monitorables.
Quarterly performance (Standalone) (INR b)
Y/E March FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE FY21 FY22E
Domestic volume growth (%) 4.0 14.0 17.0 31.0 9.0 4.0 2.0 -4.0 16.5 2.8
Net sales 105.6 114.4 118.6 121.3 119.2 127.2 130.9 128.7 460.0 506.0
YoY change (%) 4.4 16.1 20.9 34.6 12.8 11.2 10.4 6.1 18.6 10.0
Gross Profit 54.7 60.7 64.0 63.8 60.1 65.7 68.2 64.5 243.2 258.5
Margin % 51.8 53.0 54.0 52.6 50.4 51.6 52.1 50.1 52.9 51.1
EBITDA 26.4 28.7 28.5 29.6 28.5 31.3 32.8 29.9 113.2 122.4
YoY change (%) -0.1 17.4 16.7 43.2 7.7 9.2 14.9 1.0 18.0 8.1
Margins (%) 25.0 25.1 24.1 24.4 23.9 24.6 25.0 23.2 24.6 24.2
Depreciation 2.4 2.5 2.7 2.5 2.4 2.7 2.6 2.7 10.1 10.3
Interest 0.3 0.3 0.4 0.1 0.1 0.3 0.3 0.1 1.1 0.8
Other income 1.6 1.5 1.0 1.1 0.7 1.1 0.9 1.0 5.1 3.7
PBT 25.3 27.4 26.4 28.1 26.6 29.5 30.9 28.0 107.2 115.0
Tax 5.3 6.5 6.8 6.8 5.7 7.7 7.8 7.6 25.4 28.8
Rate (%) 21.0 23.8 25.6 24.2 21.5 26.0 25.3 27.0 23.7 25.0
PAT bei 18.7 20.4 19.5 21.0 19.6 21.9 22.9 20.4 81.8 86.3
YoY change (%) 7.0 11.1 15.4 43.2 4.8 7.5 17.5 -2.8 21.3 5.5
Extraordinary Inc/(Exp) -1.2 -0.8 -0.4 0.1 -0.3 0.0 -0.7 0.0 -2.3 -
Reported Profit 18.8 20.1 19.2 21.4 20.6 21.9 22.4 20.4 79.5 85.4
E: MOFSL Estimates
Note: Quarterly PAT (bei) is as reported by the company while FY21/FY22E PAT (bei) is adjusted PAT

Indigo Paints Buy

CMP: INR1,623 | TP: INR2,000 (+23%) EPS CHANGE (%): FY22|23: - 7.8|-11.5
 Expect ~18% sales growth over the high base of last year,  Price hikes of 15-20% taken due to steep RM inflation.
led entirely by price hikes.
 Expect marginal sequential GM improvement due to price  Expect better sales in Kerala (~30% contribution) after the
hikes. recovery from the severe impact of COVID in early FY22.
Quarterly Performance (Consol.) 3521.3 24% 24% 29% (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,046 1,548 2,096 2,543 1,560 1,961 2,655 3,010 7,233 9,186
Change (%) -27.3 20.4 22.2 40.8 49.2 26.7 26.6 18.4 15.8 27.0
Gross Profit 465 777 1,040 1,186 710 818 1,138 1,326 3,468 3,993
Gross Margin (%) 44.5 50.2 49.6 46.7 45.5 41.7 42.9 44.1 47.9 43.5
EBITDA 190 291 315 429 202 234 387 457 1,225 1,279
Margin (%) 18.2 18.8 15.0 16.9 12.9 11.9 14.6 15.2 16.9 13.9
Change (%) - - - -7.9 6.1 -19.6 22.8 6.4 34.7 4.4
Interest 14 11 9 4 3 3 3 6 38 14
Depreciation 56 57 62 70 74 77 79 86 244 315
Other Income 2 6 12 16 30 30 23 22 36 106
PBT 122 230 256 371 156 185 328 387 979 1,056
Tax 38 42 68 122 40 49 85 92 286 266
Effective Tax Rate (%) 31.2 18.3 26.6 33.0 25.5 26.6 26.0 23.7 29.2 25.2
Adjusted PAT 84 188 188 249 116 135 243 295 693 790
Change (%) - - - -8.9 38.2 -28.0 29.4 18.8 45.0 13.9
E: MOFSL Estimates

April 2022 83
 March 2022 Results Preview | Sector: Consumer

ITC Neutral
CMP: INR255 | TP: INR245 (-4%) EPS CHANGE (%): FY23|24: -1.3|1.5
 Expect 4% volume growth in Cigarettes.  Expect GM to contract by 170bp YoY due to high RM
cost.
 Input cost pressures in the FMCG-Others business  Outlook on the Agri, Paper and Packaging, and Hotel
remains an overhang. businesses are key monitorables.
Quarterly performance (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Est. cigarette vol. gr. (%) -37.0 -12.0 -7.0 7.0 31.0 9.0 12.5 4.0 -12.3 14.1
Net Sales 89.1 113.1 119.7 132.9 122.2 127.3 158.6 138.4 454.9 546.5
YoY change (%) -21.2 -3.0 1.4 22.6 37.1 12.6 32.5 4.1 -0.3 20.2
Gross Profit 49.6 64.9 68.4 72.2 64.3 72.8 81.4 75.2 248.4 293.8
Margin (%) 55.7 57.4 57.1 54.3 52.6 57.2 51.3 54.3 54.6 53.8
EBITDA 26.5 40.9 43.1 44.7 39.9 46.2 51.0 50.3 155.3 187.4
Growth (%) -42.0 -10.4 -6.5 7.4 50.8 12.9 18.2 12.4 -13.4 20.6
Margin (%) 29.7 36.1 36.0 33.6 32.7 36.3 32.2 36.3 34.2 34.3
Depreciation 4.0 3.8 3.9 3.9 4.0 4.0 4.1 4.3 15.6 16.4
Interest 0.2 0.1 0.1 0.0 0.1 0.1 0.1 0.1 0.6 0.4
Other Income 9.0 6.1 9.7 7.7 4.3 6.8 8.1 9.9 32.5 29.1
PBT 31.3 43.0 48.8 48.5 40.2 48.8 54.9 55.8 171.6 199.7
Tax 7.9 10.5 11.9 11.1 10.0 11.8 13.4 15.1 41.3 50.3
Rate (%) 25.1 24.4 24.4 22.8 25.0 24.2 24.3 27.0 24.1 25.2
Adj. PAT 23.4 32.5 36.9 37.5 30.1 37.0 41.6 40.8 130.3 149.4
YoY change (%) -26.2 -19.2 -13.7 -1.3 28.6 13.7 12.7 8.7 -14.6 14.7
E: MOFSL estimate; full-year COGS also includes contract processing charges (included in other operating expenses on a quarterly basis)

Jyothy Labs. Neutral

CMP: INR150 | TP: INR150 (0%) EPS CHANGE (%):FY23|24: -4.9|-4.6
 Expect standalone net sales to grow by 7.8% YoY on a
 Expect out-of-home categories to see better demand.
higher base.
 Expect EM to contract by 230bp YoY.  An update on the launches and performance of the HI
portfolio are key monitorables.
Standalone quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,287 4,996 4,694 4,873 5,219 5,783 5,287 5,255 18,850 21,544
YoY change (%) 4.1 7.6 15.3 27.5 21.8 15.7 12.6 7.8 13.2 14.3
Gross Profit 1,968 2,373 2,269 2,197 2,250 2,296 2,170 2,283 8,807 8,998
Margin (%) 45.9 47.5 48.3 45.1 43.1 39.7 41.0 43.4 46.7 41.8
Total Exp. 1,186 1,484 1,471 1,499 1,600 1,625 1,564 1,653 5,640 6,442
EBITDA 782 889 798 698 650 671 605 630 3,167 2,556
EBITDA growth (%) 19.4 12.4 22.6 73.9 -16.9 -24.5 -24.2 -9.8 26.8 -19.3
Margin (%) 18.3 17.8 17.0 14.3 12.5 11.6 11.4 12.0 16.8 11.9
Depreciation 187 193 198 200 206 206 210 212 779 833
Interest 51 29 20 18 17 18 18 15 117 67
Other Income 42 39 63 53 48 52 43 47 198 190
PBT 587 706 643 533 476 500 420 451 2,469 1,846
Tax 83 100 121 28 75 79 66 76 332 295
Rate (%) 14.1 14.1 18.8 5.3 15.7 15.7 15.7 16.9 13.4 16.0
Adjusted PAT 504 607 522 505 401 421 354 374 2,138 1,551
YoY change (%) 40.4 14.0 22.8 93.9 -20.5 -30.6 -32.2 -25.8 35.5 -27.5
E: MOFSL estimates

April 2022 84
 March 2022 Results Preview | Sector: Consumer

Marico Buy
CMP: INR530 | TP: INR630 (+19%) EPS CHANGE (%): FY23|24: -6.7|-4.4
 Expect domestic volume growth of 1% on a higher base.  A slowdown in rural India can affect domestic
performance.
 Expect a slight YoY expansion in GM on benign RM prices.  Outlook on RM and margin guidance are key
monitorables.
Quarterly Performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic volume growth (%) -14.0 11.0 15.0 25.0 21.0 8.0 0.0 1.0 9.3 7.5
Net Sales 19,250 19,890 21,220 20,120 25,250 24,190 24,070 21,859 80,480 95,369
YoY Change (%) -11.1 8.7 16.3 34.5 31.2 21.6 13.4 8.6 10.0 18.5
Gross Profit 9,360 9,550 9,950 8,880 10,360 10,270 10,520 9,746 37,780 40,896
Gross margin (%) 48.6 48.0 46.9 44.1 41.0 42.5 43.7 44.6 46.9 42.9
EBITDA 4,670 3,890 4,130 3,190 4,810 4,230 4,310 3,459 15,910 16,809
Margins (%) 24.3 19.6 19.5 15.9 19.0 17.5 17.9 15.8 19.8 17.6
YoY Change (%) 1.3 10.2 10.7 13.1 3.0 8.7 4.4 8.4 8.6 5.7
Depreciation 340 330 360 360 330 330 360 382 1,390 1,402
Interest 90 80 70 100 80 100 100 80 340 360
Other Income 190 270 240 290 270 250 220 270 920 1,010
PBT 4,430 3,750 3,940 3,020 4,670 4,050 4,070 3,268 15,100 16,058
Tax 1,030 690 820 560 1,020 890 900 803 3,240 3,613
Rate (%) 23.3 18.4 20.8 18.5 21.8 22.0 22.1 24.6 21.5 22.5
Minority Interest 90 90 50 80 90 70 70 40 270 270
Adjusted PAT 3,310 2,970 3,070 2,380 3,560 3,090 3,100 2,425 11,590 12,175
YoY Change (%) 3.4 20.2 12.9 16.1 7.6 4.0 1.0 1.9 10.8 5.0
E: MOFSL Estimates

Nestlé India Neutral

CMP: INR17,782 | TP: INR18,700 (+5%) EPS CHANGE (%): CY22|23: 0.0|0.0
 Expect growth momentum in sales to continue.  Expect higher contribution from out-of-home
consumption.
 Expect 200bp/300bp YoY contraction in GM/EM on higher  Watch out for commentaries on in-home consumption
Agri commodity prices. and material costs.
Quarterly performance (INR b)
Y/E December CY21 CY22 CY21 CY22E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Net Sales 36.1 34.8 38.8 37.4 40.4 39.3 43.9 43.4 147.1 167.0
YoY Change (%) 8.6 14.0 9.6 8.9 12.0 13.0 13.0 16.1 10.2 13.5
COGS 15.0 14.9 17.2 16.1 17.6 17.3 19.3 19.3 63.2 73.5
Gross Profit 21.1 19.8 21.6 21.3 22.8 22.0 24.6 24.1 83.9 93.5
Margin (%) 58.5 57.0 55.7 57.0 56.5 56.0 56.0 55.5 57.0 56.0
Operating Exp. 11.8 11.5 12.1 12.8 13.6 12.9 14.3 13.9 48.2 54.7
EBITDA 9.3 8.3 9.5 8.5 9.2 9.1 10.3 10.2 35.7 38.8
Margin (%) 25.8 24.0 24.5 22.8 22.8 23.2 23.4 23.5 24.3 23.2
YoY Growth (%) 16.2 9.9 5.9 12.4 (0.9) 9.3 7.8 19.7 10.9 8.7
Depreciation 0.9 1.0 1.0 1.1 1.1 1.2 1.2 1.3 3.9 4.8
Interest 0.5 0.5 0.5 0.4 0.5 0.5 0.5 0.6 2.0 2.1
Other income 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4 1.2 1.6
PBT 8.1 7.2 8.4 7.3 8.0 7.8 8.9 8.8 31.0 33.5
Tax 2.1 1.9 2.2 1.6 2.0 2.0 2.3 2.2 7.7 8.4
Rate (%) 25.8 26.8 25.9 21.4 25.2 25.2 25.2 25.2 25.0 25.2
Adjusted PAT 6.0 5.2 6.2 5.7 6.0 5.8 6.7 6.6 23.2 25.1
YoY Change (%) 13.1 5.4 3.2 23.6 (1.2) 11.5 7.5 14.9 10.8 8.0

April 2022 85
 March 2022 Results Preview | Sector: Consumer

Page Industries Neutral

CMP: INR43,702 | TP: INR40,400 (-8%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Expect moderate sales growth due to a high base.  Expect marginal GM expansion due to price increases.
 Athleisure demand could taper, given improved mobility.  Watch out for commentary on traction in Kids’ wear and
Athleisure.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,848 7,403 9,271 8,808 5,015 10,840 11,898 9,251 28,330 37,004
YoY change (%) -65.9 -4.5 16.8 62.7 76.1 46.4 28.3 5.0 -3.8 30.6
Gross Profit 1,370 4,106 5,139 5,075 2,895 5,941 6,335 4,996 15,690 20,167
Gross margin (%) 48.1 55.5 55.4 57.6 57.7 54.8 53.2 54.0 55.4 54.5
Other Expenditure 1,717 2,452 2,878 3,377 2,553 3,607 3,828 3,046 10,424 13,034
As a percentage to sales 60.3 33.1 31.0 38.3 50.9 33.3 32.2 32.9 36.8 35.2
EBITDA -347 1,654 2,261 1,698 342 2,334 2,507 1,950 5,266 7,133
Margin (%) -12.2 22.3 24.4 19.3 6.8 21.5 21.1 21.1 18.6 19.3
YoY change P/L 10.9 62.9 192.1 L/P 41.2 10.9 14.8 -1.1 35.5
Depreciation 160 157 156 156 159 165 167 171 629 662
Interest 77 75 74 72 73 74 77 80 297 305
Other Income 61 37 42 56 36 54 71 47 195 207
PBT -524 1,459 2,073 1,526 145 2,148 2,334 1,746 4,534 6,374
Tax -128 350 536 371 36 543 589 439 1,128 1,606
Rate (%) 24.5 24.0 25.8 24.3 24.6 25.3 25.2 25.1 24.9 25.2
PAT -396 1,109 1,537 1,156 109 1,605 1,746 1,308 3,406 4,768
YoY change (%) P/L -3.2 76.6 272.5 L/P 44.8 13.6 13.1 -0.8 40.0
E: MOFSL estimates

P&G Hygiene Buy

CMP: INR14,317 | TP: INR17,000 (+19%) EPS CHANGE (%): FY21|22: -3.2|-3.1
 Expect sales growth of 12% YoY in 3QFY22.  Expect EM expansion of 690bp YoY overall on a low base,
partly led by normalization in ad spends.
 Progress on the Whisper School program.  A&P spends is a key monitorable.
Standalone quarterly earnings (INR m)
Y/E June FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Sales 10,095 10,184 7,597 7,866 10,583 10,930 8,508 8,886 35,741 38,907
YoY Change (%) 18.5 18.5 15.8 24.0 4.8 7.3 12.0 13.0 19.1 8.9
Gross profit 6,663 7,056 5,078 5,352 7,041 7,127 5,530 5,787 24,148 25,484
Margin (%) 66.0 69.3 66.8 68.0 66.5 65.2 65.0 65.1 67.6 65.5
EBITDA 2,293 2,567 1,363 749 3,013 2,965 2,110 1,337 6,972 9,426
Growth 25.8 37.5 -1.5 -32.1 31.4 15.5 54.8 78.6 12.2 35.2
Margin (%) 22.7 25.2 17.9 9.5 28.5 27.1 24.8 15.1 19.5 24.2
Depreciation 118 120 113 126 127 129 135 137 477 528
Interest 4 21 30 7 6 29 20 20 61 75
Other Income 96 94 148 57 58 69 90 111 394 327
PBT 2,267 2,520 1,369 672 2,938 2,875 2,045 1,291 6,828 9,150
Tax 552 698 326 183 756 754 515 281 1,759 2,306
Rate (%) 17.9 21.8 24.9 27.2 25.7 26.2 25.2 21.7 21.3 25.2
Reported PAT 2,539 2,506 983 490 2,183 2,121 1,530 1,011 6,518 6,844
Adj. PAT 1,715 1,822 1,042 490 2,183 2,121 1,530 1,011 5,068 6,844
YoY Change (%) 25.3 34.0 2.6 -29.2 27.3 16.4 46.8 106.4 13.2 35.0
Margin (%) 17.0 17.9 13.7 6.2 20.6 19.4 18.0 11.4 14.2 17.6
E: MOFSL Estimates

April 2022 86
 March 2022 Results Preview | Sector: Consumer

Pidilite Industries Neutral

CMP: INR2,494 | TP: INR2,170 (-13%) EPS CHANGE (%): FY23|24: 0.0|+3.5
 Expect 2% volume decline in the domestic C&B segment.  Expect a YoY contraction in GM on a sharp inflation in RM
prices. On a QoQ basis, GM will expand due to price rises.
 Expect the revival in Real Estate to continue.  Outlook for raw material prices, especially VAM prices, is a
key monitorable.
Consolidated quarterly earning model
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 8,778 18,803 22,990 22,355 19,368 26,264 28,507 25,590 72,927 99,729
YoY change (%) -56.5 4.1 19.3 44.7 120.6 39.7 24.0 14.5 -0.6 36.8
Gross Profit 4,694 10,520 12,588 11,359 9,511 11,924 12,425 11,521 39,160 45,380
Margin (%) 53.5 55.9 54.8 50.8 49.1 45.4 43.6 45.0 53.7 45.5
EBITDA 664 5,126 6,408 4,608 3,476 5,496 5,490 5,114 16,806 19,576
YoY change (%) -85.0 39.2 38.4 53.1 423.7 7.2 -14.3 11.0 4.0 16.5
Margin (%) 7.6 27.3 27.9 20.6 17.9 20.9 19.3 20.0 23.0 19.6
Depreciation 461 479 495 572 566 603 605 658 2,007 2,432
Interest 91 87 121 74 96 124 108 107 372 434
Other Income 200 217 204 173 61 139 52 81 794 333
PBT 312 4,778 5,997 4,135 2,875 4,908 4,830 4,431 15,221 17,043
Tax 159 1,220 1,548 1,038 721 1,159 1,275 1,140 3,964 4,295
Rate (%) 50.8 25.5 25.8 25.1 25.1 23.6 26.4 25.7 26.1 25.2
Adj. PAT 154 3,558 4,449 3,097 2,154 3,749 3,555 3,291 11,258 12,748
YoY change (%) -94.8 2.8 29.1 63.6 1,303.0 5.4 -20.1 6.2 -4.1 13.2
Margin (%) 1.7 18.9 19.3 13.9 11.1 14.3 12.5 12.9 15.4 12.8
E: MOFSL estimates

Tata Consumer Products Buy

CMP: INR788 | TP: INR905 (+15%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Expect revenue for the India Foods business to grow by  Update on input cost pressures in the Foods business.
18% YoY. Expect 2% volume growth in the India branded
Tea business.
 The impact of lower tea prices is a key monitorable.  Update on product launches in the India Foods business.
Consolidated quarterly earning model
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 27,139 27,813 30,696 30,372 30,085 30,331 32,084 31,180 1,16,020 1,23,679
YoY Change (%) 13.4 18.5 23.1 26.3 10.9 9.1 4.5 2.7 20.4 6.6
Total Expenditure 22,313 23,818 27,082 27,370 26,090 26,198 27,467 26,831 1,00,583 1,06,586
EBITDA 4,827 3,996 3,613 3,002 3,995 4,133 4,617 4,349 15,438 17,093
Margins (%) 17.8 14.4 11.8 9.9 13.3 13.6 14.4 13.9 13.3 13.8
Depreciation 619 626 644 659 668 693 698 700 2,547 2,759
Interest 173 179 181 155 204 198 162 150 687 714
Other Income 327 262 195 430 280 396 250 516 1,214 1,442
PBT before EO expense 4,362 3,454 2,983 2,618 3,403 3,638 4,007 4,014 13,417 15,063
Extra-Ord expense 633 -239 -61 -639 -39 -163 -132 0 -307 -334
PBT 4,995 3,215 2,922 1,979 3,364 3,475 3,876 4,014 13,111 14,729
Tax 1,104 871 552 646 957 861 999 1,084 3,173 3,901
Rate (%) 25.3 25.2 18.5 24.7 28.1 23.7 24.9 27.0 23.6 25.9
Minority Interest 180 161 192 205 151 178 250 225 738 804
Profit/Loss of Asso. Cos. -435 389 4 -590 -404 244 24 -531 -633 -667
Reported PAT 3,276 2,571 2,182 539 1,851 2,680 2,651 2,175 8,567 9,357
Adj PAT 2,643 2,712 2,228 1,133 1,881 2,803 2,749 2,175 8,716 9,608
YoY Change (%) 47.0 39.6 31.1 -36.2 -28.8 3.3 23.4 91.9 20.8 10.2
Margins (%) 9.7 9.8 7.3 3.7 6.3 9.2 8.6 7.0 7.5 7.8
E: MOFSL estimates

April 2022 87
 March 2022 Results Preview | Sector: Consumer

United Breweries Sell

CMP: INR1,525 | TP: INR1,100 (-28%) EPS CHANGE (%): FY23|24: -17.0|-11.1
 Expect moderate revenue growth.  Expect GM to witness pressures due to higher barley and
glass bottle prices.
 Increased mobility and on-trade channel to aid recovery.  Recovery trend and outlook for RM are key monitorables.
Standalone quarterly performance (INR m)
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,069 9,006 12,897 15,435 11,180 14,262 15,809 15,607 42,407 56,857
YoY Change (%) -75.3 -42.9 -11.3 8.4 120.6 58.4 22.6 1.1 -34.9 34.1
Gross Profit 2,365 4,707 6,948 8,024 5,404 7,380 7,899 7,662 22,044 28,345
Margin (%) 46.7 52.3 53.9 52.0 48.3 51.7 50.0 49.1 52.0 49.9
EBITDA -957 404 1,965 2,613 954 1,656 2,096 1,918 4,025 6,624
YoY Change (%) P/L -79.0 -11.3 97.6 L/P 309.6 6.7 -26.6 -54 64.6
Margin (%) -18.9 4.5 15.2 16.9 8.5 11.6 13.3 12.3 9.5 11.6
Depreciation 505 612 578 623 552 556 529 570 2,319 2,208
Interest 72 60 53 42 39 47 37 62 227 184
Other Income 14 326 46 116 61 46 60 61 502 228
PBT -1,519 59 1,379 2,064 425 1,098 1,590 1,347 2,054 4,460
Tax -376 18 355 474 117 291 421 295 471 1,124
Rate (%) 24.8 31.5 25.7 23.0 27.4 26.5 26.5 21.9 22.9 25.2
Adj. PAT -1,143 40 1,024 1,590 308 806 1,168 1,052 1,584 3,336
YoY Change (%) P/L -96.5 -4.3 286.0 L/P 1,911.2 14.1 -33.8 -63.0 110.7
Margin (%) -22.5 0.4 7.9 10.3 2.8 5.7 7.4 6.7 3.7 5.9
E: MOFSL estimates

United Spirits Neutral

CMP: INR909 | TP: INR800 (-12%) EPS CHANGE (%): FY22|23: -11.0|-7.9
 Expect an 8% YoY volume growth in 4QFY22.  Demand recovery in the on-trade channel is a key
monitorable.
 Expect an update on the ‘Strategic Refresh’ announced in  The outlook for ENA/molasses and price increases granted
2QFY22 and the strategic review expected by May-end. by states are key monitorables.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Volume growth (%) -49.2 -3.9 -0.8 8.1 61.2 3.5 3.7 8.0 -11.3 13.0
Total revenue 10,302 21,459 24,887 22,244 16,151 24,468 28,847 25,507 78,892 94,973
YoY change (%) -53.6 -6.5 -3.6 11.6 56.8 14.0 15.9 14.7 -13.2 20.4
Gross Profit 4,291 9,041 11,102 9,776 7,205 11,023 12,727 10,968 34,210 41,923
Margin (%) 41.7 42.1 44.6 43.9 44.6 45.1 44.1 43.0 43.4 44.1
EBITDA -776 2,697 3,838 4,118 1,677 4,014 4,907 3,954 9,877 14,552
Margin (%) -7.5 12.6 15.4 18.5 10.4 16.4 17.0 15.5 12.5 15.3
EBITDA growth (%) -119.5 -35.1 -9.5 51.7 L/P 48.8 27.9 -4.0 -34.5 47.3
Depreciation 638 571 614 670 554 655 662 697 2,493 2,568
Interest 499 507 377 275 198 230 338 196 1,658 962
PBT From operations -1,913 1,619 2,847 3,173 925 3,129 3,907 3,061 5,726 11,022
Other income 95 128 194 61 106 35 16 82 478 239
PBT -1,818 1,747 3,041 3,234 1,031 3,164 3,923 3,143 6,204 11,261
Tax -415 463 742 797 168 921 1,012 817 1,587 2,918
Rate (%) 22.8 26.5 24.4 24.6 16.3 29.1 25.8 26.0 25.6 25.9
Adj. PAT -1,403 1,284 2,299 2,437 863 2,243 2,911 2,326 4,617 8,343
YoY change (%) -170.6 -42.8 -11.2 124.1 L/P 74.7 26.6 -4.6 -41.6 80.7
E: MOFSL estimates

April 2022 88
 March 2022 Results Preview | Sector: Consumer

Varun Beverages Buy

CMP: INR953 | TP: INR1,157 (+21%) EPS CHANGE (%): CY22|23: -2.7|-1.5
 Expect CSD sales volumes to grow by 17.6% YoY in  The management commentary on key demand will be a key
1QCY22. monitorable.
 Expect an update on its entry into the non-Beverage
 Update on growing out-of-home consumption led by
category, with new signings with PepsiCo for Kurkure
opening up of offices and an increase in travel.
Puffcorn.
Consolidated quarterly earning model
Y/E December CY21 CY22 CY21 CY22E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Gross Sales 22,409 24,498 23,982 17,343 26,575 30,681 27,813 19,700 88,232 1,04,769
YoY Change (%) 33.7 49.4 33.0 30.3 18.6 25.2 16.0 13.6 36.8 18.7
Total Expenditure 18,593 18,790 19,035 15,268 22,048 22,829 21,684 17,110 71,686 83,670
EBITDA 3,816 5,708 4,947 2,076 4,527 7,853 6,129 2,590 16,546 21,099
Margin (%) 17.0 23.3 20.6 12.0 17.0 25.6 22.0 13.1 18.8 20.1
Depreciation 1,347 1,288 1,385 1,293 1,447 1,388 1,485 1,393 5,313 5,713
Interest 579 468 427 373 380 400 380 375 1,847 1,535
Other Income 57 244 369 9 65 275 416 92 679 847
PBT before EO expense 1,947 4,197 3,504 419 2,765 6,339 4,680 914 10,066 14,698
Extra-Ord. expense 0 0 0 0 0 0 0 0 0 0
PBT 1,947 4,197 3,504 419 2,765 6,339 4,680 914 10,066 14,698
Tax 579 1,009 925 93 664 1,521 1,123 219 2,606 3,528
Rate (%) 29.8 24.0 26.4 22.1 24.0 24.0 24.0 24.0 25.9 24.0
Minority Interest and Profit/Loss of Asso. Cos. 75 106 178 161 79 112 186 221 520 598
Reported PAT 1,293 3,082 2,401 165 2,023 4,706 3,370 474 6,941 10,573
Adj. PAT 1,293 3,082 2,401 165 2,023 4,706 3,370 474 6,941 10,573
YoY Change (%) 153.5 118.9 56.9 -183.6 56.5 52.7 40.3 187.3 113.5 52.3
Margin (%) 5.8 12.6 10.0 1.0 7.6 15.3 12.1 2.4 7.9 10.1

April 2022 89
 March 2022 Results Preview | Sector: Consumer Durables

Consumer Durables
Company Expect robust revenue growth; margin pressure to continue
Blue Star Pick-up in demand due to extreme summers
CG Consumer Elect.  For Consumer Durable companies under our coverage, we expect 4QFY22 revenue to
Havells India increase ~11% YoY (two-year CAGR at ~23%). A large part of the revenue growth will
Orient Electric be led by price hikes, as volume growth remained muted across various categories
Voltas during Jan/Feb’22. We expect aggregate EBITDA to decline 4% YoY, as commodity
Whirlpool of India prices continue to impact gross margins adversely along with normalization of
discretionary cost elements such as employee cost and ad spends. As a result,
adjusted PAT is likely to decline 7% YoY.
 During the first half of the quarter, channel filling was low due to the Omicron-induced
uncertainty. However, as the impact of Omicron faded, channel inventory gradually
scaled back to normal levels. Demand environment is likely to improve further due to
the expectation of above-normal temperatures in the current summer season and
heat waves in various parts of the country. However, one needs to watch out for
demand post the summer season, as price hikes might hurt the demand.
 The management commentaries on underlying demand trends and ability to take further
price hikes hold the key as commodity cost remains volatile and at inflated levels.
Expect revenue growth of ~11% YoY in 4QFY22, led by price hikes
We expect volume to remain flattish or improve marginally YoY as our channel checks
suggest that the first two months of the quarter saw muted volume activity due to the
Omicorn-led uncertainties. However, a pick-up in demand of Air-conditioners/Coolers/
Fans was noticed in Mar’22. Thanks to the price hikes, we expect aggregate revenue
to increase ~11% YoY in 4QFY22. We expect HAVL to grow 17% YoY (two-year CAGR at
~33%). Categories such as Cables and Wires, Lighting, and Small Appliances are likely
to perform better owing to small ticket sizes and higher wear and tear of appliances
across households. Further, categories such as Dishwashers, Laptops, Mobile Phones,
Kitchen Appliances, and Microwaves continue to witness steady growth, though the
high base of last year is catching up now. However, our coverage universe is not
materially exposed to such product categories. We expect a revenue growth of ~11%
for our coverage universe in 4QFY22 (two-year CAGR of ~23%). We forecast topline
growth of 21% for Blue Star, 17% for HAVL and 14% for CROMPTON.
Commodity cost inflation impacting EBITDA
Even after a series of price hikes, several companies are yet to cover commodity
cost inflation entirely. Consumer Electrical companies have taken small quantum of
price increases at regular intervals, while those in White Goods are lagging. Most of
the companies rolled out employee wage hikes at the start of FY22, leading to a
higher cost base v/s FY21. With normalization in the economy, ad spends and other
expenses are normalizing fast. Under our coverage, Consumer Electrical companies
are forecasted to post flattish EBITDA while the same for consumer durable
companies is likely to decline ~11% YoY. We expect EBITDA for companies under
our coverage to decline ~4% YoY.
ORIENTEL and WHIRL are our top picks; await a better entry point for HAVL
and VOLT
Extreme summers in parts of the country would result in elevated demand; we
prefer companies with better cost structures and the ability to sustain price
increases. ORIENTEL is our top pick in the Consumer Electricals sector, while WHIRL
is our preferred play in the White Goods space. We also like HAVL and VOLT for their
superior business models, but due to valuation constraints, we have a Neutral rating
on both companies.

Aditya Kasat – Research Analyst ([Link]@[Link])

April 2022 90
 March 2022 Results Preview | Sector: Consumer Durables

Exhibit 1: Summary of expected quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Blue Star 1098 Neutral 19,420 20.5 28.9 1,179 15.8 30.2 676 -0.5 42.4
CG Consumer Elect. 375 Buy 17,339 14.4 23.0 2,419 7.6 20.0 1,812 6.7 22.3
Havells India 1180 Neutral 39,035 17.2 6.9 5,000 -1.1 13.6 3,548 5.8 16.0
Orient Electric 324 Buy 8,750 9.1 29.0 948 -2.0 42.7 589 -6.1 54.6
Voltas 1276 Neutral 27,564 3.9 53.7 2,996 -9.4 92.5 2,444 2.8 154.7
Whirlpool India 1633 Buy 18,031 1.3 25.6 1,387 -26.8 86.6 963 -22.2 132.1
Consumer Durables 1,30,138 11.3 24.2 13,930 -3.9 35.4 10,032 0.6 48.2

Exhibit 3: Expect EBITDA margin to moderate YoY due to

Exhibit 2: Aggregate revenue to increase ~11% YoY commodity inflation and increasing brand spends
Consumer durables revenue growth (%) Consumer durables EBITDA margin (%)
18.5

18.8
45.3
47.7
24.1
25.4
18.1

19.4

13.4

24.0
36.9
54.9

11.3
0.7
7.6

7.9

5.0

7.8

12.4
12.2
11.9
11.8

11.7
11.3

10.8

10.7
10.5
10.4

10.2
10.1

9.8
9.5
9.4

9.1
9.0

8.9
8.9
-11.2
-50.9

6.1
2QFY19

3QFY20

2QFY22

4QFY18

2QFY20

4QFY21
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19

3QFY19
4QFY19
1QFY20
2QFY20

4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22

3QFY22
4QFY22E

1QFY18
2QFY18
3QFY18

1QFY19
2QFY19
3QFY19
4QFY19
1QFY20

3QFY20
4QFY20
1QFY21
2QFY21
3QFY21

1QFY22
2QFY22
3QFY22
4QFY22E
Source: MOFSL, Company Source: MOFSL, Company

Exhibit 4: Summary of comparative full-year valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Consumer Durables 61.4 45.6 39.6 9.8 8.5 7.4 15.9 18.7 18.8
Blue Star 1,098 Neutral 16.5 26.3 33.9 66.4 41.8 32.4 11.0 9.7 8.4 16.5 23.2 26.0
CG Consumer Elect. 375 Buy 9.4 11.5 12.6 39.7 32.7 29.8 10.3 8.7 7.4 26.1 26.6 24.8
Havells India 1,180 Neutral 19.1 23.3 26.0 61.7 50.6 45.3 12.4 10.7 9.3 20.1 21.2 20.5
Orient Electric 324 Buy 6.4 8.8 10.2 50.3 36.8 31.9 12.5 10.1 8.2 24.8 27.4 25.9
Voltas 1,276 Neutral 17.1 24.0 28.5 74.6 53.2 44.8 7.8 7.0 6.3 10.4 13.2 14.0
Whirlpool India 1,633 Buy 19.1 37.6 45.4 85.7 43.4 36.0 6.8 6.0 5.3 8.0 13.9 14.7

Exhibit 5: Relative performance – three months (%) Exhibit 6: Relative performance – one year (%)

Nifty Index MOFSL Consmer Durables Index Nifty Index MOFSL Consmer Durables Index
126
105

100 118

95 110

90 102

85 94
Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Mar-22
Jun-21

Dec-21
Sep-21

April 2022 91
 March 2022 Results Preview | Sector: Consumer Durables

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter / financial year under review.

Blue Star Neutral

CMP: INR1,098 | TP: INR985 (-10%) EPS CHANGE (%): FY23|24: - |-
 Expect EBITDA at INR1,179m, with an EBITDA margin of
 Expect UCP/EMP revenue to increase 19%/21% YoY
6.1%
 Expect adjusted PAT at INR676m (flat YoY), due to lower  Watch out for commentary on RAC volumes and outlook
other income on the summer season

Quarterly performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 6,260 9,021 11,239 16,116 10,520 12,397 15,062 19,420 42,636 57,400
Change (%) -60.3 -27.8 -9.1 24.0 68.1 37.4 34.0 20.5 -20.5 34.6
EBITDA 14 551 816 1,018 422 707 906 1,179 2,398 3,214
Change (%) -98.8 -25.1 43.0 172.7 NA 28.4 11.1 15.8 -15.2 34.0
As of % Sales 0.2 6.1 7.3 6.3 4.0 5.7 6.0 6.1 5.6 5.6
Depreciation 209 206 259 249 201 204 225 228 923 857
Interest 185 179 149 134 107 112 116 115 647 450
Other Income 86 59 81 398 80 81 134 107 624 402
Extra-ordinary Items 0 0 0 0 0 0 0 0 0 0
PBT -295 225 488 1,033 194 472 700 943 1,452 2,309
Tax -95 74 130 362 65 160 228 286 471 739
Effective Tax Rate (%) 32.3 33.0 26.5 35.1 33.6 33.9 32.5 30.3 32.4 32.0
MI/Share of profit from JV 3 3 9 9 -2 1 3 20 23 22
Reported PAT -197 153 367 680 127 314 475 676 1,004 1,592
Change (%) -125.6 -59.6 87.5 663.7 NA 104.7 29.4 -0.5 -30.0 58.6
Adj PAT -197 153 367 680 127 314 475 676 1,004 1,592
Change (%) -125.6 -61.4 73.6 604.4 NA 104.7 29.4 -0.5 -31.9 58.6

CG Consumer Elect. Buy

CMP: INR375 | TP: INR505 (+34%) EPS CHANGE (%): FY23|24: -|-
 ECD/Lighting revenue to increase 13%/21% YoY, as  Expect EBITDA margin to reduce 80bp YoY to 14% led by
demand environment is expected to improve commodity cost pressure
 Expect PAT to come at INE1.8b (+7% YoY)  Watch out for commentary on secondary sales and price
hikes to be taken by the company

Quarterly Estimates (INR m)

FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 7,132 11,984 13,231 15,153 10,462 13,848 14,102 17,339 47,500 55,750
Change (%) -47.0 11.4 23.5 48.8 46.7 15.6 6.6 14.4 5.3 17.4
EBITDA 988 1,859 1,952 2,248 1,228 2,141 2,016 2,419 7,047 7,804
Change (%) -48.5 43.5 42.6 62.4 24.2 15.2 3.3 7.6 18.1 10.7
As of % Sales 13.9 15.5 14.8 14.8 11.7 15.5 14.3 14.0 14.8 14.0
Depreciation 80 77 69 72 76 101 102 103 297 381
Interest 108 111 106 104 101 80 67 52 429 300
Other Income 188 167 199 203 197 284 138 181 756 800
PBT 988 1,837 1,976 2,276 1,248 2,245 1,986 2,444 7,077 7,923
Tax 251 467 502 577 317 540 504 633 1,797 1,994
Effective Tax Rate (%) 25.4 25.4 25.4 25.4 25.4 24.1 25.4 25.9 25.4 25.2
Adjusted PAT 737 1,371 1,475 1,698 931 1,705 1,481 1,812 5,281 5,929
Change (%) (39.8) 23.2 42.3 70.2 26.3 24.4 0.5 6.7 20.8 12.3
Extra-ordinary Income (net) 0 0 0 767 0 0 0 - 767 -
Reported PAT 737 1,371 1,475 2,465 931 1,705 1,481 1,812 6,048 5,929
Change (%) (39.8) 23.2 (8.4) 147.0 26.3 24.4 0.5 (26.5) 22.2 (2.0)

April 2022 92
 March 2022 Results Preview | Sector: Consumer Durables

Havells India Neutral

CMP: INR1,180 | TP: INR1,290 (9%) EPS CHANGE (%): FY23|24: - |-
 Revenue: HAVL’s core (+15% YoY)/Lloyd (+27% YoY)  Expect EBITDA margin to moderate YoY as brand-related
spends scale up and commodity inflation continues
 Watch out for management’s commentary on further
 Expect PAT of INR3.5b (+5.8% YoY)
strategy for Lloyds

Quarterly performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 14,791 24,518 31,659 33,312 25,982 32,210 36,523 39,035 1,04,279 1,33,750
Change (%) -45.5 9.9 39.5 50.3 75.7 31.4 15.4 17.2 10.6 28.3
Adj EBITDA 1,309 4,207 5,081 5,057 3,531 4,436 4,403 5,000 15,653 17,371
Change (%) -52.9 79.0 88.9 106.1 169.8 5.5 -13.3 -1.1 52.4 11.0
Adj EBITDA margin (%) 8.8 17.2 16.0 15.2 13.6 13.8 12.1 12.8 15.0 13.0
Depreciation 604 591 644 650 616 623 662 654 2,489 2,556
Interest 167 173 152 235 110 111 123 106 726 450
Other Income 322 364 392 372 342 333 488 462 1,450 1,625
Extra-ordinary items - 428 - (330) - - - - 98 -
PBT 860 3,808 4,677 4,544 3,148 4,035 4,107 4,702 13,888 15,990
Tax 226 987 1,186 1,191 805 1,019 1,047 1,154 3,590 4,025
Effective Tax Rate (%) 26.3 25.9 25.4 26.2 25.6 25.3 25.5 24.5 25.8 25.2
Reported PAT 633 3,249 3,491 3,023 2,343 3,016 3,059 3,548 10,396 11,966
Change (%) -64.0 80.2 75.0 70.6 269.9 -7.2 -12.4 17.4 41.8 15.1
Adj PAT 633 2,821 3,491 3,352 2,343 3,016 3,059 3,548 10,298 11,966
Change (%) -64.0 56.5 75.0 89.2 269.9 6.9 -12.4 5.8 40.5 16.2

Orient Electric Buy

CMP: INR324 | TP: INR460 (+41%) EPS CHANGE (%): FY23|24: -5|-8
 Expect ECD segment to grow 11% YoY and Lighting  Expect EBITDA margin at 10.8%, with margin seen
segments to remain flattish YoY moderating YoY on branding spends
 Watch out for commentary on the demand scenario  Current inventory levels in the channel and price hike
across key categories and new launches across products are the key monitorables

Quarterly performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 1,788 4,338 6,183 8,017 4,223 5,944 6,784 8,750 20,326 25,700
Change (%) -68.5 -0.2 24.7 42.4 136.2 37.0 9.7 9.1 -1.4 26.4
Adj EBITDA -193 578 842 968 223 619 665 948 2,195 2,455
Change (%) -143.6 164.2 86.0 48.5 NA 7.1 -21.1 -2.0 24.4 11.8
Adj EBITDA margin (%) -10.8 13.3 13.6 12.1 5.3 10.4 9.8 10.8 10.8 9.6
Depreciation 107 107 108 109 116 117 118 126 432 478
Interest 63 45 46 54 48 50 46 57 207 200
Other Income 9 7 7 40 9 13 9 19 63 50
Extra-ordinary Items - - - - - - - - - -
PBT -353 433 694 845 68 466 509 784 1,619 1,827
Tax -80 109 175 218 18 118 129 196 422 460
Effective Tax Rate (%) 22.7 25.1 25.2 25.8 26.4 25.3 25.2 24.9 26.0 25.2
Reported PAT -273 324 519 627 50 348 381 589 1,198 1,367
Change (%) -244.6 558.9 172.7 75.2 NA 7.2 -26.7 -6.1 52.3 14.2
Adj PAT -273 324 519 627 50 348 381 589 1,198 1,367
Change (%) -244.6 558.9 172.7 75.2 NA 7.2 -26.7 -6.1 52.3 14.2

April 2022 93
 March 2022 Results Preview | Sector: Consumer Durables

Voltas Neutral
CMP: INR1,276 | TP: INR1,200 (-6%) EPS CHANGE (%): FY23|24: 12%|14%
 Expect revenue to grow 4% YoY to INR27.5b  Expect EBITDA margin to contract 160bp YoY led by lower
volumes and high commodity costs
 Expect adjusted PAT to increase by lower single digit to
 Inventory levels in the channel during the current season
INR2.4b
and execution outlook in EMPS are key monitorables

Quarterly Performance (INR m)

FY21 FY22 FY21 FY22E
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 12,969 16,125 19,946 26,517 17,852 16,891 17,936 27,564 75,558 80,242
Change (%) -51.1 13.4 33.6 26.9 37.6 4.7 -10.1 3.9 -1.3 6.2
EBITDA 668 980 1,459 3,307 1,358 1,291 1,556 2,996 6,414 7,202
Change (%) -77.1 -7.5 49.6 72.2 103.4 31.8 6.7 -9.4 -6.6 12.3
As of % Sales 5.1 6.1 7.3 12.5 7.6 7.6 8.7 10.9 8.5 9.0
Depreciation 82 84 84 89 86 95 97 86 339 364
Interest 67 58 32 104 35 62 36 66 262 200
Other Income 674 383 516 316 750 483 288 680 1,889 2,200
PBT 1,192 1,221 1,859 3,430 1,986 1,617 1,711 3,524 7,702 8,838
Tax 258 353 372 821 456 385 425 958 1,804 2,224
Effective Tax Rate (%) 21.6 28.9 20.0 23.9 23.0 23.8 24.8 27.2 23.4 25.2
Share of profit of associates/JV's (123) (84) (208) (232) (312) (196) (326) (122) (646) (955)
Reported PAT 812 784 1,279 2,377 1,218 1,036 960 2,444 5,251 5,658
Change (%) -50.9 -26.4 47.2 49.8 50.1 32.2 -25.0 2.8 1.5 7.7
Adj PAT 812 784 1,279 2,377 1,218 1,036 960 2,444 5,251 5,658
Change (%) -58.4 -29.2 47.2 48.0 50.1 32.2 -25.0 2.8 -5.1 7.7

Whirlpool of India Buy

CMP: INR1,633 | TP: INR2,045 (+25%) EPS CHANGE (%): FY23|24: -6%|-12%
 Expect revenue to remain flat YoY at INR18.1b due to
 Expect EBITDA at INR1.4b, with a margin of 7.7%
huge pent-up demand in base quarter.
 Expect adjusted PAT at INR963m (-22% YoY)  Operating margin and sustainability of the cost structure
are key monitorables

Quarterly performance (INR m)

FY21 FY22
Y/E March FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 10,271 15,995 14,940 17,794 13,406 16,071 14,351 18,031 58,999 61,859
Change (%) -48.0 14.8 17.5 31.5 30.5 0.5 -3.9 1.3 -1.5 4.8
EBITDA 466 1,812 1,270 1,897 555 1,294 744 1,387 5,445 3,980
Change (%) -84.6 27.8 41.6 38.5 18.9 -28.6 -41.4 -26.8 -19.1 -26.9
As of % Sales 4.5 11.3 8.5 10.7 4.1 8.1 5.2 7.7 9.2 6.4
Depreciation 284 424 351 362 331 326 327 381 1,421 1,365
Interest 74 10 68 2 37 59 12 63 153 170
Other Income 142 348 284 132 140 181 170 296 905 787
PBT 251 1,726 1,135 1,663 327 1,090 575 1,240 4,776 3,232
Tax 87 440 293 425 94 284 160 277 1,245 814
Effective Tax Rate (%) 34.4 25.5 25.9 25.6 28.6 26.0 27.8 22.3 26.1 25.2
Extra-ordinary Items 0 0 -197 0 0 -21 0 0 -197 0
Reported PAT 165 1,286 644 1,238 233 785 415 963 3,333 2,417
Change (%) -91.4 3.0 -12.1 41.7 41.7 -39.0 -35.5 -22.2 -30.0 -27.5
Adj PAT 165 1,286 841 1,238 233 806 415 963 3,530 2,417
Change (%) -91.4 3.0 14.9 41.7 41.7 -37.3 -50.7 -22.2 -25.9 -31.5

April 2022 94
 March 2022 Results Preview | Sector: Financials

Financials: Banks and Insurance

4QFY22 earnings estimate (INR b) Business momentum strong; earnings to gain further traction
4Q YoY QoQ
PAT (INR b) Asset quality trends robust; remain watchful of treasury performance
FY22E (%) (%)
Private Banks
 Credit growth picking-up well: Systemic loan is showing signs of a revival with
AUBANK 3.17 87.6 4.9
credit growth accelerating to ~8.5% YoY as of 11th Mar’22, underpinned by
AXSB 40.48 51.2 12.0
BANDHAN 9.49 821.2 10.5
strong disbursements across segments. Disbursement growth across several
DCBB 0.87 11.9 15.6 retail products has surpassed the pre-COVID levels, while the Corporate
EQUITAS 1.04 -8.1 -4.0 segment too witnessed a revival with a focus on high-rated corporates primarily
FB 5.51 15.3 5.6 for working capital needs. We expect the capex cycle to pick-up during 2HFY23,
HDFCB 96.93 18.4 -6.3 which will drive further recovery in loan growth over FY23E. Among the
ICICIBC 64.51 46.5 4.2 segments – Home, Vehicle, Tractor, Unsecured and Small Business will
IIB 14.03 51.5 13.0 continue to do well in 4QFY22 while CV and MFI are likely to trail the
KMB 21.98 30.7 3.1 normalized levels. Credit Cards business is also seeing healthy momentum with
RBK 1.98 163.3 27.1 spends remaining strong over 4QFY22. We estimate: a) systemic loan growth of
Private Total 259.99 37.6 1.8
9.0%/11.8% YoY for FY22/ FY23, and b) our Banking coverage universe to
PSU Banks
deliver 7%/52% PPoP/PAT growth in 4QFY22, respectively.
BOB 22.22 NM 1.1
 Earnings to gain further traction: Our estimates indicate continued traction in
CBK 20.23 100.2 34.7
INBK 7.58 -55.6 9.9
earnings over FY22/FY23 even as we expect treasury income to remain modest
PNB 11.60 97.9 3.0 and near-term opex to remain elevated. Further, this momentum is likely to
SBIN 107.00 65.9 26.9 continue over FY23E as well, as we project Private and PSU banks to report
UNBK 12.04 -9.5 10.9 earnings growth of 30% and 36% in FY23, respectively. Overall, our Banking
PSU Total 180.68 80.0 20.2 coverage universe is anticipated to report earnings growth of 33% in FY23, after
Banks Total 440.67 52.3 8.6 posting strong growth of 46% over FY22E.
Other Financials  Asset quality outlook robust; core credit cost undershooting across banks: We
SBICARD 4.48 155.5 16.2 estimate slippages to remain modest, which along with healthy recoveries and
Life Insurance upgrades would result in an overall improvement in asset quality – barring the
HDFCLIFE 3.55 11.7 29.7
mid-sized banks that could see stable trends. The Retail and SME segments could
IPRULIFE 3.01 371.9 -3.1
experience some slippages; however, the Corporate segment is likely to remain
SBILIFE 4.80 -9.8 31.9
MAXF 1.62 53.2 41.2
resilient. While the performance of restructured book would be important to
Life Total 12.99 27.3 22.1
assess the credit cost trajectory, we nevertheless estimate credit cost to
undershoot across banks, thereby enabling further shore up of contingent /
restructured / SR provisions.
Private Banks – PAT to grow at ~38% YoY in 4QFY22
We estimate private banks to report PPoP growth of ~10% YoY (~6% QoQ) and PAT
growth of ~38% YoY (~2% QoQ) in 4QFY22. Earnings are likely to remain strong, led
by healthy business growth/fee income and a sustained reduction in credit cost.
 Loan growth is projected to remain strong driven by the Retail and SME
segments, while Corporate segment growth would be supported by working
capital requirement and a decline in unutilized credit. Within Retail, we expect
the unsecured segment to witness strong traction. We forecast private bank
loans to grow 15%/17% over FY22/FY23, respectively. We estimate ICICIBC to
deliver 16% YoY loan growth over 4QFY22 and KMB / AXSB to grow ~20%/15%
YoY, respectively. HDFCB/IIB reported growth of ~21%/~13% YoY, respectively.
 Margins would hover in a narrow range, supported by lower cost of funds. The
deployment of excess liquidity and pick-up in loan growth would help maintain a
steady trend in margins, even as the overall rate environment has started
inching up. We forecast NII growth of ~19% YoY, with ICICIBC at ~24%, AXSB at
~23%, KMB at ~20%, and IIB/HDFCB at 13% each in 4QFY22.

Nitin
AprilAggarwal
2022 - Research Analyst ([Link]@[Link]) 95
Research Analyst - Yash Agarwal ([Link]@[Link])/Vinayak Agarwal ([Link]@[Link])
 March 2022 Results Preview | Sector: Financials

 We predict slippages to remain modest and we are optimistic on asset quality.

Slippages are likely to remain modest over 4QFY22 across segments, barring the
MFI business, which could see some tail stress. This would result in an overall
improvement in asset quality. The performance of restructured book would be a
key monitorable. While we remain watchful of the asset quality for mid-sized
banks, we are optimistic on the overall asset quality over the medium term.
PSBs – performance to show continued traction; asset quality improving
We forecast PSBs to experience continued traction in their operating performances,
supported by recovery in business growth and a sustained reduction in provisions
even as opex could remain slightly elevated and treasury performance muted.
Slippages would continue to subside, which along with healthy recoveries would
reinforce the asset quality performance. PSBs are likely to deliver NII/PPoP growth
of 23%/5% YoY (4%/9% QoQ), respectively, while PAT would grow strongly at
~80% YoY (+20% QoQ) in 4QFY22.
Small Finance Banks – AUBANK to deliver yet another robust performance
 We expect AUBANK to report a strong uptick in operating performance and
earnings, propelled by strong recovery in loan growth (AUM growth of 27%
YoY), NII growth and controlled provisions.
 EQUITAS is likely to report PPoP/PAT decline of 7%/8% YoY, respectively.
Life Insurers – premium growth modest; VNB margins to carry a positive bias
We expect premium growth to remain modest on slower ULIP growth; to be offset by
robust demand for Annuity/Guaranteed and Credit Life products. Protection demand
is likely to remain subdued, albeit could see improving trends. SBILIFE/ HDFCB would
post APE growth of 8%/4% YoY, while MAXF/IPRU would see a decline of 4%/6%,
respectively, in 4QFY22E. We project VNB growth to remain in a modest range of 3-8%
across all players. However, VNB margins are likely to see a sequential expansion.
SBICARD: Spends growth robust; asset quality woes nearing end
The momentum in credit card spends and new account sourcing is likely to remain
healthy over 4QFY22E, which will keep the interest and fee income strong.
Restructuring under RBI RE is anticipated to moderate, and asset quality should thus
improve further. While we expect credit costs to improve gradually over the next
few quarters, margins are likely to remain under pressure owing to a low revolve
rate; however, a gradual uptick is expected. The RBI’s review of MDR charges on
spends would continue to remain a key overhang.
Other monitorables
 Performance of restructured book and impact on asset quality – Commentaries
on the slippages, performance of the restructured book, collection efficiency,
and provisioning guidance.
 Outlook for growth and margins – Commentaries on the growth outlook, capex
revival, and the margin outlook.
 Fee income traction / Treasury performance – The traction in fee income and
treasury performance due to a rise in bond yields.
 Technological spends and elevated opex - Outlook on technological spends and
investments in the business that could affect the normalization in opex.

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 March 2022 Results Preview | Sector: Financials

Our top picks – ICICIBC, SBIN, HDFCB, AUBANK, and SBILIFE

ICICIBC: Financial Snapshot (INR b) ICICIBC (BUY)
Y/E March FY22E FY23E FY24E
 ICICIBC has substantially increased its PCR to ~80% as on 3QFY22 – the highest
NII 477 560 663
OP 397 471 564 in the industry – and carries COVID-related provisions of INR64.3b (~0.8% of
NP 228 279 344 loans). Slippages have moderated over the past few quarters and we expect
NIM (%) 4.0 4.1 4.2 these to subside further sharply. ICICIBC is well-cushioned, with higher
EPS (INR) 32.9 40.3 49.7 provisions on its balance sheet and has guided for the normalization of credit
EPS Gr. (%) 36.1 22.4 23.3 costs from FY23 onwards.
ABV/Sh. (INR) 221 258 304
 ICICIBC continues to see strong growth in retail deposits. It has one of the
Cons. BV/Sh. INR 259 298 344
lowest funding costs among peers, enabling it to underwrite profitable business.
Ratios
RoE (%) 14.7 15.6 16.5
The steady mix of: a) a high-yielding book, b) excess liquidity deployment, and c)
RoA (%) 1.7 1.9 2.0 low-cost liability franchise, has resulted in a margin expansion to ~4.1% in
Valuations 3QFY22.
P/BV (x) (Cons.) 2.9 2.5 2.2  ICICIBC is becoming a new growth leader in the SME and Retail segments aided
P/ABV (x) 2.4 2.1 1.8 by continued investments in technology and partnerships with new ecosystem
P/E (x) 16.2 13.2 10.7 players. Overall, we expect a loan CAGR of 18% over FY22-24 for the bank.
*Adj for Investment in subs
 ICICIBC appears firmly placed to deliver healthy sustainable growth, led by its
focus on core operating performance. We estimate an RoA/RoE of 2.0%/16.5%
for FY24E, respectively. Adjusted for subsidiaries, the standalone bank currently
trades at 1.8x FY24E ABV.
SBIN: Financial Snapshot (INR b)
Y/E March FY22E FY23E FY24E SBIN (BUY)
NII 1,213 1,348 1,510  SBIN continues to strengthen its balance sheet and improve its return ratios.
OP 768 879 1,010 The management’s focus has been on building a granular, high-quality loan
NP 333 434 529 portfolio, while maintaining a strong focus on underwriting, which has aided a
NIM (%) 3.0 3.0 3.0 sustained turnaround in its operating performance.
EPS (INR) 37.3 48.6 59.3
 Asset quality has been resilient over the recent past, boosted by improved
EPS Gr. (%) 63.0 30.4 22.0
underwriting and significant mobilization in customer engagement by the
ABV (INR) 261 310 369
Cons. BV. INR 332 381 443 recovery team. PCR has improved to 71% as on 3QFY22 (89% in the Corporate
Ratios book). This, coupled with controlled restructuring (1.2%) and a low SMA book
RoE (%) 13.5 15.3 16.0 (0.2%), will drive a sustained reduction in credit costs (below its long-term
RoA (%) 0.7 0.8 0.9 average).
Valuations  SBIN inarguably has one of the best liability franchises (CASA mix: ~46% as on
P/BV (x) Cons. 1.5 1.3 1.2 3QFY22). This puts it in a better position to manage yield pressure. Moreover,
P/ABV (x)* 1.2 1.0 0.8
the low cost of deposits would continue to support margins, to a large extent.
P/E (x)* 8.1 6.2 5.1
*Adj for investment in subs
 Subsidiaries – SBI MF, SBI Life Insurance, SBI Cards, and SBI Cap – have exhibited
robust performances in the last few years, which could result in value unlocking.
 We estimate FY24E RoA/RoE of 0.9%/16.0%, respectively. Subsidiaries account
for ~31% of the total SOTP. Adjusted for the subsidiaries, the standalone bank
currently trades at 0.8x FY24E ABV.

April 2022 97
 March 2022 Results Preview | Sector: Financials

HDFCB: Financial Snapshot (INR b) HDFCB (BUY)

Y/E March FY22E FY23E FY24E
 HDFCB has been delivering a healthy growth in advances, driven by strong
NII 725 860 1,020
OP 649 765 902 sequential trends in Retail loans. The growth has also been fueled by
NP 366 441 521 Commercial and Rural Banking, while Wholesale advances have seen modest
NIM (%) 4.0 4.1 4.2 trends. We expect a strong uptick and thus estimate loans to report a 17% CAGR
EPS (INR) 66.4 79.9 94.6
over FY22-24, propelled by focused lending to highly rated corporates and a
EPS Gr. (%) 17.3 20.4 18.3
BV/Sh. (INR) 425 492 575 healthy revival in retail loans, particularly the unsecured business.
ABV/Sh. (INR) 411 476 557  Asset quality remains robust with credit costs undershooting the long-term
Ratios trend. HDFCB is thus increasing the contingency buffers prudently, which
RoE (%) 16.7 17.4 17.7
provide comfort and limit the adverse impact on profitability. We estimate
RoA (%) 2.0 2.0 2.1
Valuations credit costs to sustain at ~1.1-1.2% over FY23-24.
P/E(X) 25.0 20.7 17.5  A strong liability franchise along with a pick-up in retail loan growth, primarily
P/BV (X) 3.9 3.4 2.9 the unsecured segment, would support margins. We estimate HDFCB to report
P/ABV (X) 4.0 3.5 3.0
an RoA/ RoE of 2.1%/17.7% in FY24, respectively. HDFCB currently trades at 3.0x
FY24E ABV.
AUBANK: Financial Snapshot (INR b) AUBANK (BUY)
Y/E March FY22E FY23E FY24E
 The management’s focus is on scaling up its key business lines of Vehicle Loans /
NII 31.9 41.6 52.4
OP 18.4 24.3 31.5
MSME Loans. It further aims to expand the new segments of Housing Loans,
NP 11.0 14.7 19.3 Gold Loans, Consumer Durable Financing, and Credit Cards, which should boost
NIM (%) 5.5 5.6 5.5 growth. Overall, we project a 29% CAGR in loan growth over FY22-24.
EPS (INR) 35.3 47.0 61.8  AUBANK has stepped up its efforts towards building a strong liability franchise,
EPS Gr. (%) -7.2 33.2 31.5 with enhanced focus on growing retail deposits (70%). The CASA ratio too has
BV/Sh. (INR) 233 280 342
improved to 39% as on 3QFY22 and is likely to grow further as customer vintage
ABV/Sh. (INR) 225 271 330
Ratios improves. A rise in the retail deposit mix has resulted in significant improvement
RoE (%) 16.4 18.3 19.9 in CoF, which would continue to support margins.
RoA (%) 1.9 2.0 2.0  A high mix of the secured book, coupled with strong underwriting and efficient
Valuations collection management, has enabled AUBANK to report stable asset quality
P/E(X) 37.1 27.9 21.2
despite various headwinds. Collection efficiency showed higher buoyancy and
P/BV (X) 5.6 4.7 3.8
we forecast asset quality to remain steady.
P/ABV (X) 5.8 4.8 4.0
 We expect an RoA/RoE of 2.0%/19.9% by FY24E, respectively. AUBANK currently
trades at 3.8x FY24E BV.
SBILIFE: Financial snapshot (INR b) SBILIFE (BUY)
Y/E March FY22E FY23E FY24E
 SBILIFE has witnessed a strong traction in premium growth across segments,
Net Premiums 585 711 869
with individual WRP delivering a growth of 38% over FY22YTD – much higher
Sh. PAT 13.1 16.0 17.9
NBP gr- unwtd. % 23.5 26.0 24.0
than the industry and other listed peers. Both the agency and banca channels
NBP gr. – APE % 26.3 27.0 26.0 are contributing to growth. We estimate a 26% APE CAGR over FY22-24, led by
Premium gr. % 17.3 21.6 22.3 continued momentum in Non-PAR Savings and Protection products.
VNB margin. % 26.0 26.1 26.4  The share of ULIP has picked up and is showing improving trends. The
RoEV. % 17.4 18.1 18.6 management, however, has started focusing more on the Protection/Non-PAR
Total AUM (INRt) 2.6 3.2 3.8 segments. This would continue to underpin VNB margin expansion.
VNB 37.2 47.6 60.6
 Persistency ratios are holding up well across cohorts, while cost ratios may
EV per share 427 505 599
increase moderately on revival in business growth. However, cost leadership is
Valuations
P/EV (x) 2.6 2.2 1.9 likely to continue.
P/EVOP (x) 18.8 15.5 12.8  We estimate a 28% VNB CAGR over FY22-24, with operating RoEV to sustain at
~19% by FY24E. We further forecast margins to remain steady at ~26% over
FY22-24. SBILIFE currently trades at 1.9x FY24E EV.

April 2022 98
 March 2022 Results Preview | Sector: Financials

Exhibit 1: 4QFY22 earnings estimates

CMP NII (INR M) OP. PROFITS (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
(INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
AU Small Finance 1,309 Buy 8,945 36.4 9.0 5,075 35.8 10.7 3,169 87.6 4.9
Axis Bank 784 Buy 93,121 23.3 7.6 69,285 0.9 12.4 40,476 51.2 12.0
Bandhan Bank 319 Neutral 22,869 30.2 7.6 20,276 17.2 4.0 9,491 821.2 10.5
DCB Bank 74 Neutral 3,567 14.6 3.4 2,102 2.5 5.7 871 11.8 15.6
Equitas Holdings 113 Buy 5,541 23.5 2.5 2,332 -6.7 3.8 1,038 -8.1 -4.0
Federal Bank 103 Buy 16,047 13.0 4.3 9,647 9.0 5.5 5,507 15.3 5.6
HDFC Bank 1,656 Buy 1,93,772 13.2 5.1 1,71,868 10.6 2.4 96,928 18.4 -6.3
ICICI Bank 746 Buy 1,28,883 23.6 5.3 1,07,280 25.6 5.7 64,513 46.5 4.2
IndusInd Bank 988 Buy 39,962 13.1 5.3 33,516 7.1 1.2 14,032 51.5 13.0
Kotak Mahindra Bank 1,836 Neutral 45,986 19.7 6.1 32,817 -3.7 21.5 21,981 30.7 3.1
RBL Bank 142 Buy 10,456 15.4 3.5 6,485 -26.0 2.8 1,984 163.3 27.1
SBI Cards 877 Buy 10,722 29.4 7.6 12,775 36.0 11.7 4,482 155.5 16.2
Banks-Private 5,79,872 18.8 5.7 4,73,459 10.8 6.1 2,64,473 38.7 2.0
Bank of Baroda 116 Buy 88,626 24.7 3.6 57,802 -7.7 5.4 22,218 LP 1.1
Canara Bank 241 Buy 73,913 32.2 6.4 63,747 11.8 9.9 20,233 100.2 34.7
Indian Bank 161 Buy 45,164 35.5 2.8 33,807 32.7 2.8 7,581 -55.6 9.9
Punjab National Bank 37 Neutral 81,256 17.1 4.1 53,607 -4.9 5.6 11,604 97.9 3.0
State Bank 513 Buy 3,18,135 17.5 3.7 2,12,409 7.8 14.7 1,07,002 65.9 26.9
Union Bank 42 Buy 75,006 38.8 4.5 50,158 -3.2 -1.6 12,040 -9.5 10.9
Banks-PSU 6,82,100 23.0 4.0 4,71,530 4.7 9.0 1,80,678 80.0 20.2
HDFC Life Insur. 572 Neutral 1,44,520 12.3 19.2 8,274 90.7 349.1 3,551 11.7 29.7
ICICI Pru Life 509 Buy 1,16,964 -1.5 28.9 6,933 30.7 69.5 3,010 371.9 -3.1
Max Financial 789 Buy 78,382 10.3 40.0 NA NA NA 1,624 53.2 41.2
SBI Life Insurance 1,126 Buy 1,75,001 12.5 -2.9 8,755 72.4 270.2 4,801 -9.8 31.9
Star Health 739 Buy 41,010 25.7 51.6 2,925 LP LP -2,779 Loss Loss
Insurance 5,55,877 9.7 17.0 26,887 1,392.5 LP 10,207 1,515.0 110.5
Note: For Life Insurance - NII represents net premium income, PPOP represents shareholder’s PBT, and PAT represents shareholder's profits

Exhibit 2: Loan growth picks up to 8.5% Exhibit 3: Deposit growth modest at 8.8%
Loans (INR t) Chg YoY (%) Deposits (INR t) Chg YoY (%)
13.3
12.1

12.0
14.5

11.5
11.4
11.1

11.1
12.4

10.5
10.3

10.3
10.0
9.9

9.8

9.8
9.8

9.4

9.4
9.4

9.1

8.8
8.8

8.5

7.9
7.6
7.4
7.5

7.0
6.7
6.6
6.3
6.1

6.1
6.0

5.7
5.7

5.6
5.1

2.9

156.0
106.1

142.6
109.7
108.2
114.3
113.5
118.0
120.3
125.7
126.8
129.1
132.1
135.7
140.8

147.3
151.1
154.5

162.4
162.8
107.0
100.4
103.7
103.0
102.7

109.5
109.3
109.6
116.8
117.2
80.7

97.0
76.6
80.1

86.3
86.1
89.8
93.4
97.7

97.7

1QFY18

2QFY21
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21

3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
3QFY18

1QFY20

3QFY21
1QFY18
2QFY18

4QFY18
1QFY19
2QFY19
3QFY19
4QFY19

2QFY20
3QFY20
4QFY20
1QFY21
2QFY21

4QFY21
1QFY22
2QFY22
3QFY22
4QFY22

Exhibit 4: Margins to hover in a narrow range, supported by lower cost of funds

PSU Private

4.2 4.2 4.2 4.2 4.2 4.1 4.2 4.3 4.3

4.0 3.9 3.9 4.1 3.9 3.9 4.0 4.0 3.9 4.0 4.1 4.1 4.1 4.1 4.2

2.6 2.6 2.4 2.6 2.4 2.5 2.6 2.4 2.8 2.6 2.8 2.7 2.7 2.8 3.0 2.6 3.0 3.0 2.9 2.6 2.8 2.8 2.9 3.0
1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22E

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Exhibit 5: Change in estimates across our universe – earnings broadly unchanged over FY23E/FY24E
Old estimates Revised estimates Change (%)
PAT (INR b)
FY23E FY24E FY23E FY24E FY23E FY24E
Private Banks
AXSB 174.1 225.5 170.9 222.1 -1.9% -1.5%
BANDHAN 35.9 53.0 35.5 52.7 -1.2% -0.5%
DCBB 3.8 5.1 3.8 5.0 0.8% -1.7%
HDFCB 440.5 514.9 440.7 521.4 0.1% 1.3%
ICICIBC 282.8 351.5 278.6 343.5 -1.5% -2.3%
IIB 71.2 91.3 68.4 88.7 -3.9% -2.8%
KMB 92.9 110.3 92.7 110.0 -0.2% -0.2%
FB 22.2 27.7 22.5 27.7 1.6% -0.2%
RBK 9.7 15.2 10.2 15.5 5.4% 2.4%
AUBANK 15.0 20.0 14.7 19.3 -2.6% -3.4%
EQUITAS 4.0 6.4 4.2 6.3 4.8% -0.1%
Total Private Banks 1,152.1 1,420.8 1,142.3 1,412.3 -0.8% -0.6%
YoY growth 31.3% 23.3% 30.2% 23.6%
PSU Banks
BOB 115.7 138.5 113.1 136.8 -2.2% -1.2%
CBK 82.1 98.6 80.0 96.4 -2.5% -2.2%
INBK 52.1 64.2 52.3 64.3 0.4% 0.2%
PNB 64.3 90.4 66.6 91.7 3.6% 1.4%
SBIN 441.9 538.3 433.7 529.1 -1.9% -1.7%
UNBK 82.1 101.9 72.0 101.5 -12.3% -0.4%
Total PSU Bank 838.1 1,031.8 817.6 1,019.8 -2.4% -1.2%
YoY growth 38.7% 23.1% 35.9% 24.7%
Total for Banks 1,990.2 2,452.5 1,959.9 2,432.1 -1.5% -0.8%
YoY growth 34.3% 23.2% 32.5% 24.1%
Other Financials
SBICARD 16.5 26.0 15.3 24.1 -7.8% -7.5%
Source: MOFSL, Company

Large banks continue to Exhibit 6: Snapshot of additional provision buffers as of 3QFY22

carry additional provision Loans COVID/Conting Floating/Additi Total As a percentage
As of 3QFY22
(INR b) ent provisions onal Provisions Provisions of loans (%)
buffers
AXSB* 6,649 50.1 83.9 134.0 2.0
BANDHAN 803 - 16.3 16.3 2.0
DCBB 277 0.8 - 0.8 0.3
HDFCB** 12,609 86.4 14.5 100.9 0.8
ICICIBC 8,140 64.3 - 64.3 0.8
IIB*** 2,286 33.3 - 33.3 1.5
IDFCFIRST 1,164 1.7 - 1.7 0.1
KMB 2,529 10.0 - 10.0 0.4
FB 1,407 - - - 0.0
RBK 581 1.3 - 1.3 0.2
AUBANK 402 3.0 3.0 0.7
EQUITAS 183 - - - 0.0
SBIN 25,784 61.8 - 61.8 0.2
SBICARD 280 1.6 - 1.6 0.6
*AXSB holds total provisions of INR134b, including standard and additional, other than NPA
**Floating provisions for HDFCB stand at INR14.51b
***For IIB, counter-cyclical provisions (INR6.35b) and floating provisions (INR0.7b) are included in PCR
Source: MOFSL, Company

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Restructuring book remains Exhibit 7: Snapshot of restructuring book across banks

controlled for large banks; it Restructured Book
INR b
is relatively higher for mid- Absolute Dec'20 (%) Mar'21 (%) Jun’21 (%) Sep’21 (%) Dec’21 (%)
sized banks AXSB 46.4 0.42 0.30 0.44 0.66 0.63
BANDHAN 66.0 NA 0.76 7.06 11.18 8.22
DCBB 18.8 2.70 4.26 5.39 6.80 6.81
HDFCB 175.0 0.50 0.57 0.80 1.50 1.40
ICICIBC 96.8 0.40 0.54 0.66 1.27 1.19
IIB 75.4 0.60 1.80 2.70 3.60 3.30
KMB 13.6 0.28 0.19 0.25 0.54 0.54
FB 35.2 0.90 1.07 1.86 2.49 2.45
RBK 20.0 1.00 1.58 2.03 3.66 3.44
AUBANK 12.6 0.80 1.85 3.73 3.60 3.10
BOB 206.5 1.40 1.34 2.86 2.95 2.65
SBIN 329.0 0.77 0.73 0.83 1.24 1.20
INBK 203.6 1.62 1.64 2.70 5.85 5.09
PNB 191.0 1.82 NA 2.02 2.60 2.76
UNBK 222.1 0.56 1.10 2.70 3.69 3.32
BOI 119.2 2.54 NA 3.04 3.61 2.97
CBK 192.7 1.62 NA 2.82 2.85 2.78
Source: MOFSL, Company

Exhibit 8: SMA book across banks as of 3QFY22

SMA (% of loans) SMA 0 SMA 1 SMA 2
BoB NA 1.1%
BoI 2.2% 0.6% 0.5%
CBK 1.1% 0.4% 0.3%
INBK NA 4.0% 1.1%
PNB NA NA 0.4%
SBIN NA 0.1% 0.1%
UNBK NA NA 0.5%
BANDHAN 5.3% 2.9% 2.9%
KMB NA NA 0.1%
Source: MOFSL, Company

Exhibit 9: Retail loan growth improves to 12.3%; retail mix Exhibit 10: Credit card/Vehicle growth at ~10% YoY each;
at 30% in Feb’22 housing loan growth at ~7% in Feb’22
Retail Housing YoY (%)
Agri Industry Services Retail Credit Card Vehicle YoY (%)
30%
38.0%

20% 26.0%

10% 14.0%

0% 2.0%

-10% -10.0%
Oct-18

Oct-21
Jun-17
Oct-17

Oct-19

Oct-20
Jun-18

Jun-19

Jun-20

Jun-21
Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22
Oct-17

Oct-18

Jun-19
Oct-19

Oct-20

Oct-21
Jun-17

Jun-18

Jun-20

Jun-21
Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22

Source: MOFSL, RBI Source: MOFSL, RBI

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Exhibit 11: CD ratio picking up, stands at 72% as of 11th Exhibit 12: Three-year G-Sec yield increases 54bp over
Mar’22; expect it to improve gradually 4QFY22; currently at ~5.8%
82.0%
CD Ratio (%) 9.0 Gvt 3 Yr Bond Yield (%)

78.5%
7.5

75.0% 6.0

71.5% 4.5

68.0% 3.0

Mar-19

Sep-19

Mar-20

Sep-20

Mar-21

Sep-21

Mar-22
Jul-19

Jul-20

Jul-21
May-19

May-20

May-21
Jan-20

Jan-21

Jan-22
Nov-19

Nov-20

Nov-21
Mar-12

Mar-14

Mar-16
Jul-15

Mar-18

Mar-20

Mar-22
Jul-13

Jul-17

Jul-19

Jul-21
Nov-12

Nov-14

Nov-16

Nov-18

Source: MOFSL, RBINov-20 Source: MOFSL, BBG

Exhibit 13: Five-year G-Sec yield increases 54bp over Exhibit 14: 10-year G-Sec yield increases 38bp over 4QFY22;
4QFY22; currently at ~6.3% currently at ~6.8%
8.8 Gvt 10 Yr Bond Yield (%)
Gvt 5 Yr Bond Yield (%) 7.8
7.6 7.1

6.4 6.4

5.2 5.7

4.0 5.0
Mar-19

Mar-20

Mar-21

Mar-22
Jul-21
Jul-19

Jul-20
Jan-20

Jan-21

Jan-22
Sep-19

Sep-20

Sep-21
Nov-20
Nov-19

Nov-21
May-19

May-20

May-21
Mar-19

Mar-20

Mar-21

Mar-22
Jul-19

Jul-20

Jul-21
Jan-20

Jan-21

Jan-22
Sep-19

Sep-20

Sep-21
Nov-19

Nov-20

Nov-21
May-21
May-19

May-20

Source: MOFSL, BBG Source: MOFSL, BBG

Exhibit 15: Relative performance – three months (%) Exhibit 16: One-year relative performance (%)

Nifty Index MOFSL Financials Index Nifty Index MOFSL Financials Index
107 130

120
103
110
99
100

95 90
Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Dec-21

Mar-22
Jun-21

Sep-21

Source: MOFSL, Company Source: MOFSL, Company

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Exhibit 17: Valuation summary

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name (INR) Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Financials
Banks-Private 25.1 19.3 15.6 3.3 2.9 2.5 13.1 14.9 15.9
AU Small Finance 1,309 Buy 35.3 47.0 61.8 37.1 27.9 21.2 5.6 4.7 3.8 16.4 18.3 19.9
Axis Bank 784 Buy 42.3 55.8 72.5 18.5 14.1 10.8 2.1 1.9 1.6 12.0 14.1 15.9
Bandhan Bank 319 Neutral -5.1 22.0 32.7 -62.0 14.5 9.7 3.2 2.7 2.2 -4.9 20.2 24.9
DCB Bank 74 Neutral 8.4 12.3 16.1 8.9 6.0 4.6 0.6 0.5 0.5 7.2 9.7 11.5
Equitas Holdings 113 Buy 7.8 12.4 18.6 14.5 9.1 6.1 1.1 1.0 0.9 7.6 11.3 15.4
Federal Bank 103 Buy 9.3 10.7 13.2 11.1 9.6 7.8 1.2 1.1 1.0 11.2 12.0 13.3
HDFC Bank 1,656 Buy 66.4 79.9 94.6 25.0 20.7 17.5 3.9 3.4 2.9 16.7 17.4 17.7
ICICI Bank 746 Buy 32.9 40.3 49.7 22.7 18.5 15.0 3.1 2.7 2.3 14.7 15.6 16.5
IndusInd Bank 988 Buy 62.2 88.4 114.7 15.9 11.2 8.6 1.6 1.4 1.3 10.7 13.7 15.6
Kotak Mahindra Bank 1,836 Neutral 57.3 67.3 80.4 32.0 27.3 22.8 3.8 3.3 2.9 11.9 12.3 12.9
RBL Bank 142 Buy -1.2 17.1 26.0 -114.4 8.3 5.5 0.7 0.6 0.6 -0.6 7.9 11.1
SBI Cards 877 Buy 15.8 25.9 36.3 55.6 33.9 24.1 10.8 8.4 6.4 21.3 27.9 30.0
Banks-PSU 10.4 7.6 6.1 1.0 0.9 0.8 9.8 11.9 13.2
Bank of Baroda 116 Buy 14.9 21.8 26.4 7.8 5.3 4.4 0.7 0.7 0.6 9.6 12.7 13.7
Canara Bank 241 Buy 36.7 48.6 58.5 6.6 5.0 4.1 0.7 0.6 0.5 9.8 11.7 12.6
Indian Bank 161 Buy 31.3 42.0 51.6 5.2 3.8 3.1 0.5 0.4 0.4 10.6 13.0 14.1
Punjab National Bank 37 Neutral 4.2 6.4 8.8 8.8 5.8 4.2 0.4 0.4 0.4 4.8 6.8 8.7
State Bank 513 Buy 40.3 52.8 65.2 12.7 9.7 7.9 1.5 1.3 1.2 13.5 15.3 16.0
Union Bank 42 Buy 7.8 11.2 15.8 5.3 3.7 2.6 0.4 0.4 0.3 8.1 10.9 14.1
Insurance 144.1 68.0 58.2 9.6 8.8 7.9 6.7 12.9 13.6
HDFC Life Insur. 572 Neutral 6.0 7.1 8.3 95.9 80.6 68.8 3.7 3.2 2.7 16.3 18.0 17.8
ICICI Pru Life 509 Buy 6.1 7.7 7.9 83.9 66.5 64.3 2.2 1.9 1.6 14.6 15.4 16.0
Max Financial 789 Buy 9.9 14.4 15.9 79.9 54.7 49.6 2.5 2.1 1.7 17.0 19.4 19.7
SBI Life Insurance 1,126 Buy 13.1 16.0 17.9 86.0 70.3 62.9 2.6 2.2 1.9 17.4 18.1 18.6
Star Health 739 Buy -21.5 12.1 18.8 -34.4 60.9 39.2 8.5 7.4 6.3 -29.1 13.0 17.3

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The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL Coverage
Universe. Highlighted columns indicate the quarter/financial year under review.
AU Small Finance Bank Buy
CMP: INR1,309 | TP: INR1,550 (+18%) EPS CHANGE (%): FY23|24: -2.6|-3.4
 Margin to remain at ~6%  CoF and C/I ratio are the other key monitorables
 Business growth to see strong traction  Asset quality/movement in restructuring book to be key
Quarterly performance (INR m)
FY21 FY22E
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 5,159 5,606 6,331 6,558 7,240 7,531 8,204 8,945 23,654 31,921
% Change (Y-o-Y) 30.4 24.1 24.9 18.2 40.4 34.3 29.6 36.4 23.9 34.9
Other Income 2,258 2,610 6,856 2,766 2,141 1,919 2,756 3,127 14,515 9,943
Total Income 7,416 8,216 13,187 9,325 9,381 9,451 10,961 12,072 38,170 41,864
Operating Expenses 2,961 3,800 4,237 5,587 4,570 5,526 6,376 6,997 16,584 23,468
Operating Profit 4,456 4,416 8,950 3,738 4,811 3,925 4,584 5,075 21,586 18,396
% Change (Y-o-Y) 53.2 59.0 186.1 18.4 8.0 -11.1 -48.8 35.8 80.3 -14.8
Provisions 1,813 327 3,058 1,778 2,065 46 560 830 7,001 3,501
Profit before Tax 2,643 4,089 5,892 1,960 2,747 3,878 4,025 4,245 14,585 14,895
Tax Provisions 635 870 1,102 271 715 1,093 1,004 1,075 2,878 3,887
Net Profit 2,008 3,219* 4,790* 1,690 2,032 2,785* 3,020* 3,169 11,707 11,007
% Change (Y-o-Y) 5.5 87.2 151.9 38.1 1.2 -13.5 -36.9 87.6 73.5 -6.0
Operating Parameters
Deposit (INR b) 267.3 269.8 297.1 359.8 370.1 390.3 442.8 525.9 359.8 525.9
Loan (INR b) 262.5 272.3 302.9 346.1 339.6 358.5 401.8 455.3 346.1 455.3
Deposit Growth (%) 34.7 21.8 24.5 37.5 38.5 44.7 49.0 46.2 37.5 46.2
Loan Growth (%) 13.6 9.8 14.0 28.2 29.4 31.6 32.6 31.6 28.2 31.6
Asset Quality
GNPA (%) 1.7 1.5 1.0 4.3 4.3 3.2 2.6 2.3 4.3 2.3
NNPA (%) 0.6 0.5 0.2 2.2 2.3 1.7 1.3 1.1 2.2 1.1
PCR (%) 63.5 71.0 76.0 49.7 48.8 48.6 50.8 53.1 49.7 53.1
* YoY growth is not comparable due to Aavas stake sale gain

Axis Bank Buy

CMP: INR784 | TP: INR930 (+19%) EPS CHANGE (%): FY23|24: -1.9|-1.5
 Credit costs to remain steady; slippage – a key  Margin to remain stable at ~3.5%
monitorable
 Restructuring / BB & below pool to remain under watch  Business growth to see a healthy traction
Quarterly performance (INR b)
FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 69.9 73.3 73.7 75.5 77.6 79.0 86.5 93.1 292.4 336.3
% Change (Y-o-Y) 19.5 20.1 14.3 11.0 11.1 7.8 17.4 23.3 16.0 15.0
Other Income 25.9 35.7 29.3 46.7 33.6 38.0 38.4 42.9 148.4 152.8
Total Income 95.7 109.0 103.0 122.2 111.2 117.0 124.9 136.0 440.8 489.1
Operating Expenses 37.3 42.4 50.5 53.6 49.3 57.7 63.3 66.7 183.8 237.0
Operating Profit 58.4 66.6 52.5 68.6 61.9 59.3 61.6 69.3 257.0 252.0
% Change (Y-o-Y) -0.8 11.9 -8.6 17.3 5.9 -11.0 17.4 0.9 9.7 -1.9
Provisions 44.2 43.4 37.6 32.9 33.0 17.4 13.3 15.1 169.0 78.8
Profit before Tax 14.3 23.2 14.9 35.7 28.8 41.9 48.3 54.2 88.1 173.2
Tax 3.2 6.3 3.7 8.9 7.2 10.6 12.1 13.7 22.2 43.6
Net Profit 11.1 16.8 11.2 26.8 21.6 31.3 36.1 40.5 65.9 129.6
% Change (Y-o-Y) -18.8 NM -36.4 NM 94.2 86.2 223.7 51.2 304.9 96.6
Operating Parameters
Deposit (INR t) 6.2 6.2 6.4 7.0 7.1 7.4 7.7 8.0 7.0 8.0
Loan (INR t) 5.5 5.6 5.7 6.1 6.1 6.2 6.6 7.0 6.1 7.0
Deposit Growth (%) 13.9 6.8 8.4 9.0 16.0 18.1 20.3 15.2 9.0 15.2
Loan Growth (%) 10.4 8.2 3.6 7.5 12.0 10.1 16.7 14.7 7.5 14.7
Asset Quality
Gross NPA (%) 4.7 4.2 3.4 3.7 3.9 3.5 3.2 3.0 4.0 3.0
Net NPA (%) 1.2 1.0 0.7 1.1 1.2 1.1 0.9 0.8 1.1 0.8
PCR (%) 74.8 77.2 79.0 72.4 69.8 70.2 72.0 72.5 72.4 72.5

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Bandhan Bank Neutral

CMP: INR319 | TP: INR320 (+0%) EPS CHANGE (%): FY23|24: -1.2|-0.5
 NIM to remain stable at ~7.8%  Remain watchful of credit costs / slippages
 Business growth to see traction QoQ  Commentaries around CE / SMA book – key monitorables
Quarterly performance (INR b)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 18.1 19.2 20.7 17.6 21.1 19.4 21.2 22.9 75.6 84.6
% Change (YoY) 15.0 25.8 34.5 4.6 16.7 0.6 2.6 30.2 19.6 11.9
Other Income 3.9 3.7 5.6 7.9 6.0 5.3 7.1 7.0 21.1 25.4
Total Income 22.0 22.9 26.3 25.4 27.1 24.6 28.4 29.9 96.7 110.0
Operating Expenses 6.1 6.8 7.1 8.1 7.8 8.8 8.9 9.6 28.2 35.0
Operating Profit 15.8 16.1 19.2 17.3 19.4 15.8 19.5 20.3 68.6 75.0
% Change (YoY) 16.9 23.4 52.2 13.7 22.3 -1.7 1.4 17.2 25.9 9.4
Provisions 8.5 3.8 10.8 15.9 14.4 56.1 8.1 7.4 39.1 86.0
Profit Before Tax 7.4 12.3 8.5 1.4 5.0 -40.3 11.4 12.8 29.5 -11.0
Tax 1.9 3.1 2.1 0.3 1.2 -10.2 2.9 3.4 7.4 -2.8
Net Profit 5.5 9.2 6.3 1.0 3.7 -30.1 8.6 9.5 22.1 -8.3
% Change (YoY) -31.6 -5.3 -13.5 -80.1 -32.1 NM 35.8 821.2 -27.1 NM
Operating Parameters
Deposits (INR b) 606 661 712 780 773 819 845 897 780 897
Loans (INR b) 697 733 768 816 748 745 803 862 816 862
Deposit Growth (%) 38.7 34.4 29.6 36.6 27.6 23.8 18.7 15.0 36.6 15.0
Loan Growth (%) 68.1 22.6 26.7 22.5 7.2 1.6 4.6 5.6 22.5 5.6
Asset Quality
Gross NPA (%) 1.4 1.2 1.1 6.8 8.2 10.8 10.8 10.8 6.8 10.8
Net NPA (%) 0.5 0.4 0.3 3.5 3.3 3.0 3.0 2.8 3.5 2.8
PCR (%) 66.6 70.0 76.6 50.3 61.8 74.1 74.4 73.7 50.3 73.7

Bank of Baroda Buy

CMP: INR116 | TP: INR150 (+29%) EPS CHANGE (%): FY23|24: -2.2|-1.2
 Earnings to remain strong despite high credit costs  Opex trajectory, particularly employee costs, to be the key
 Slippage to moderate; asset quality to remain steady  Movement in watch-list / stressed pool – key
monitorables
Quarterly performance (INR b)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 68.2 74.1 74.8 71.1 78.9 75.7 85.5 88.6 288.1 328.7
% Change (YoY) 4.9 5.4 4.9 4.5 15.8 2.1 14.4 24.7 4.9 14.1
Other Income 18.2 29.1 29.1 48.5 28.6 35.8 25.2 27.8 123.6 117.5
Total Income 86.3 103.2 103.9 119.6 107.5 111.5 110.7 116.5 411.7 446.2
Operating Expenses 45.9 49.6 53.0 56.9 51.5 54.8 55.9 58.7 205.4 220.8
Operating Profit 40.4 53.6 50.8 62.7 56.0 56.7 54.8 57.8 206.3 225.3
% Change (YoY) -5.5 0.5 2.5 27.3 38.6 5.8 7.9 -7.7 9.2 9.2
Provisions 53.5 28.1 34.5 35.9 40.1 27.5 25.1 28.3 150.7 120.9
Profit before Tax -13.1 25.5 16.3 26.8 16.0 29.2 29.8 29.5 55.6 104.4
Tax -4.4 8.7 5.7 37.3 3.9 8.3 7.8 7.3 47.3 27.2
Net Profit -8.6 16.8 10.6 -10.5 12.1 20.9 22.0 22.2 8.3 77.2
% Change (YoY) NM 127.9 NM NM NM 24.4 107.1 NM 51.8 830.7
Operating Parameters
Deposit (INR b) 9,345 9,543 9,546 9,670 9,313 9,595 9,780 10,008 9,670 10,008
Loan (INR b) 6,867 6,699 6,987 7,063 6,684 6,938 7,322 7,557 7,063 7,557
Deposit Growth (%) 4.3 6.7 6.5 2.2 (0.3) 0.5 2.5 3.5 2.2 3.5
Loan Growth (%) 8.4 5.1 6.8 2.3 (2.7) 3.6 4.8 7.0 2.3 7.0
Asset Quality
Gross NPA (%) 9.4 9.1 8.5 8.9 8.9 8.1 7.3 7.1 8.9 7.1
Net NPA (%) 2.8 2.5 2.4 3.1 3.0 2.8 2.3 2.2 3.1 2.2
PCR (%) 71.9 74.4 73.6 67.3 67.9 67.1 70.6 69.8 67.3 69.8

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Canara Bank Buy

CMP: INR241 | TP: INR300 (+24%) EPS CHANGE (%): FY23|24: -2.5|-2.2
 Business growth to remain steady  Margin to remain stable at ~2.8%; opex to be the key
 Credit costs to stay elevated; restructuring book – a key  Asset quality to remain steady; slippages to moderate
monitorable
Quarterly performance (INR b)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 61.0 63.0 60.9 55.9 61.6 62.7 69.4 73.9 240.6 267.7
% Change (Y-o-Y) 88.1 101.4 77.2 68.4 1.0 -0.5 14.1 32.2 83.3 11.3
Other Income 26.5 31.0 41.5 52.1 41.6 42.7 36.1 40.1 152.9 160.5
Total Income 87.5 94.1 102.4 108.0 103.2 105.4 105.6 114.1 393.5 428.2
Operating Expenses 44.6 48.1 49.7 50.9 48.3 49.4 47.5 50.3 193.4 195.6
Operating Profit 42.9 46.0 52.7 57.0 54.8 56.0 58.0 63.7 200.1 232.6
% Change (Y-o-Y) 75.6 80.7 125.6 179.4 27.9 21.9 10.2 11.8 113.8 16.3
Other Provisions 38.3 39.7 42.1 41.3 34.6 33.6 22.4 34.1 163.0 124.8
Exceptional Item (Exp.) NA NA NA NA NA NA 13.5 NA NA 13.5
Profit before Tax 4.6 6.2 10.6 15.7 20.2 22.4 22.0 29.6 37.1 94.3
Tax 0.5 1.8 3.6 5.6 8.4 9.1 7.0 9.4 11.5 34.0
Net Profit 4.1 4.4 7.0 10.1 11.8 13.3 15.0 20.2 25.6 60.4
% Change (Y-o-Y) 23.5 21.8 111.2 NM 189.8 199.9 115.8 100.2 NM 136.0
Operating Parameters
Deposit (INR b) 9,096 9,488 9,730 10,109 10,218 10,325 10,434 10,685 10,109 10,685
Loan ( (INR b) 6,172 6,163 6,342 6,390 6,485 6,496 6,922 7,093 6,390 7,093
Deposit Growth (%) 48.9 55.7 55.6 61.6 12.3 8.8 7.2 5.7 61.6 5.7
Loan Growth (%) 42.6 43.6 50.1 47.9 5.1 5.4 9.1 11.0 47.9 11.0
Asset Quality
Gross NPA (%) 8.8 8.2 7.5 8.9 8.5 8.4 7.8 7.5 8.9 7.5
Net NPA (%) 4.0 3.4 2.6 3.8 3.5 3.2 2.9 2.7 3.9 2.7
PCR (%) 57.7 60.6 66.3 59.5 61.5 63.9 65.2 65.9 58.8 65.9

DCB Bank Neutral

CMP: INR74 | TP: INR90 (+21%) EPS CHANGE (%): FY23|24: +0.8|-1.7
 Credit costs to remain high on potential stress in SME/LAP  C/I ratio may remain under pressure
 Expect asset quality to remain under pressure;
 NIM compression / loan growth – key monitorables
performance of restructuring book to be the key
Quarterly performance (INR m)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 3,067 3,339 3,348 3,112 3,087 3,233 3,450 3,567 12,866 13,338
% Change (Y-o-Y) 0.6 6.6 3.6 -3.9 0.6 -3.2 3.1 14.6 1.7 3.7
Other Income 776 809 1,566 1,339 1,212 977 1,183 1,396 4,585 4,768
Total Income 3,843 4,148 4,914 4,451 4,299 4,211 4,634 4,963 17,451 18,106
Operating Expenses 1,932 2,016 2,119 2,399 2,277 2,459 2,645 2,861 8,466 10,242
Operating Profit 1,911 2,132 2,795 2,052 2,022 1,751 1,988 2,102 8,985 7,864
% Change (Y-o-Y) 14.8 15.5 47.1 -3.2 5.8 -17.8 -28.8 2.5 19.3 -12.5
Provisions 837 1,015 1,498 1,012 1,565 863 970 945 4,457 4,343
Profit before Tax 1,075 1,117 1,296 1,040 457 888 1,019 1,158 4,528 3,521
Tax 281 294 334 261 119 239 265 286 1,170 908
Net Profit 794 823 962 779 338 649 754 872 3,358 2,612
% Change (Y-o-Y) -2.1 -10.0 -0.5 13.3 -57.5 -21.1 -21.7 11.9 -0.6 -22.2
Operating Parameters
Deposit (INR b) 294.3 287.7 288.6 297.0 306.0 317.7 322.3 329.7 297.0 329.7
Loan (INR b) 250.6 248.8 253.0 259.6 255.0 268.5 276.6 284.3 259.6 284.3
Deposit Growth (%) 2.2 -2.0 -2.9 -2.2 4.0 10.4 11.7 11.0 -2.2 11.0
Loan Growth (%) 4.2 0.3 -0.5 2.4 1.7 7.9 9.3 9.5 2.4 9.5
Asset Quality
Gross NPA (%) 2.4 2.3 2.0 4.1 4.9 4.7 4.7 4.6 4.1 4.6
Net NPA (%) 1.0 0.8 0.6 2.3 2.8 2.6 2.5 2.4 2.3 2.4
PCR (%) 60.0 64.1 70.2 45.2 43.3 45.0 48.0 49.0 45.2 49.0

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Equitas Holdings Buy

CMP: INR113 | TP: INR150 (+33%) EPS CHANGE (%): FY23|24: +4.8|-0.1
 NIM to remain at ~8.9%  Elevated credit costs to keep earnings under pressure
 Remain watchful of asset quality in MSME book; focus to  Business growth to pick up; management commentary
remain on CE and restructuring book would be the key
Quarterly performance (INR m)
Y/E March FY21 FY22E
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 4,043 4,613 4,839 4,486 4,610 4,838 5,408 5,541 17,980 20,399
% Change (YoY) 19.9 31.6 26.1 5.8 14.0 4.9 11.8 23.5 20.2 13.5
Other Income 297 545 1,545 1,784 1,010 1,521 1,341 1,563 4,181 5,435
Total Income 4,339 5,158 6,384 6,270 5,620 6,359 6,749 7,104 22,160 25,833
Operating Expenses 2,919 3,053 3,551 3,771 4,002 4,370 4,502 4,772 13,294 17,646
Operating Profit 1,420 2,105 2,833 2,498 1,618 1,989 2,247 2,332 8,866 8,187
% Change (YoY) 18.8 60.5 78.8 32.6 13.9 -5.5 -20.7 -6.7 48.4 -7.7
Provisions 683 748 1,343 970 1,475 1,421 784 965 3,753 4,645
Profit before Tax 737 1,358 1,490 1,529 142 568 1,463 1,367 5,113 3,542
Tax 160 328 383 400 23 156 382 330 1,270 892
Net Profit 577 1,030 1,107 1,129 119 412 1,081 1,038 3,842 2,651
% Change (YoY) 1.1 108.1 17.6 162.4 -79.3 -60.0 -2.3 -8.1 57.7 -31.0
Operating Parameters
AUM (INR b) 156 167 174 180 178 190 197 207 180 207
Deposits (INR b) 118 129 159 164 171 181 179 187 164 187
Loans (INR b) 144 159 168 168 167 178 183 189 168 189
AUM Growth (%) 27 26 19 17 15 13 13 15 17 15
Deposit Growth (%) 29 29 51 52 45 40 13 14 52 14
Loan Growth (%) 20 23 23 23 16 12 9 12 23 12
Asset Quality
Gross NPA (%) 2.9 2.5 2.3 3.7 4.8 4.8 4.6 4.5 3.7 4.5
Net NPA (%) 1.5 1.0 0.7 1.6 2.4 2.5 2.5 2.3 1.6 2.3
PCR (%) 48.8 50.2 66.2 58.6 51.2 50.1 46.8 49.4 58.6 49.4

Federal Bank Buy

CMP: INR103 | TP: INR130 (+27%) EPS CHANGE (%): FY23|24: +1.6|-0.2
 Business growth to see a gradual pick-up  Credit costs to remain steady on exposure to SMEs
 Asset quality and loans under restructuring – key  NIM to remain stable at ~3.3%
monitorables
Quarterly performance (INR b)
FY21 FY22E
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 13.0 13.8 14.4 14.2 14.2 14.8 15.4 16.0 55.3 60.4
% Change (YoY) 12.3 22.8 24.4 16.8 9.4 7.2 7.1 13.0 19.0 9.2
Other Income 4.9 4.5 4.8 4.7 5.5 4.9 4.8 5.1 19.4 20.4
Total Income 17.8 18.3 19.1 18.9 19.7 19.7 20.2 21.2 74.8 80.8
Operating Expenses 8.5 8.8 9.6 10.0 9.3 10.6 11.1 11.5 36.9 42.6
Operating Profit 9.3 9.5 9.6 8.9 10.4 9.1 9.1 9.6 37.9 38.3
% Change (YoY) 19.1 31.7 28.6 -7.7 11.2 -3.6 -4.4 9.0 18.2 1.1
Provisions 3.9 5.3 4.1 2.4 5.4 2.9 2.1 2.3 16.5 12.8
Profit before Tax 5.4 4.1 5.4 6.4 4.9 6.2 7.0 7.4 21.4 25.5
Tax 1.4 1.1 1.4 1.6 1.3 1.6 1.8 1.9 5.5 6.5
Net Profit 4.0 3.1 4.0 4.8 3.7 4.6 5.2 5.5 15.9 19.0
% Change (YoY) 4.3 -26.2 -8.3 58.6 -8.4 49.6 29.1 15.3 3.1 19.5
Operating Parameters
Deposit (INR b) 1,549 1,567 1,617 1,726 1,694 1,720 1,754 1,817 1,726 1,817
Loan (INR b) 1,213 1,229 1,255 1,319 1,298 1,344 1,407 1,444 1,319 1,444
Deposit Growth (%) 16.9 12.3 11.8 13.4 9.3 9.7 8.5 5.3 13.4 5.3
Loan Growth (%) 8.3 6.1 5.3 7.9 7.0 9.4 12.1 9.5 7.9 9.5
Asset Quality
Gross NPA (%) 3.0 2.8 2.7 3.4 3.5 3.2 3.1 3.0 3.4 3.0
Net NPA (%) 1.2 1.0 0.6 1.2 1.2 1.1 1.1 1.0 1.2 1.0
PCR (%) 59.6 65.7 78.2 65.9 65.7 66.2 66.6 67.2 65.9 67.2

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 March 2022 Results Preview | Sector: Financials

HDFC Bank Buy

CMP: INR1,656 | TP: INR2,000 (+21%) EPS CHANGE (%): FY23|24: +0.1|+1.3
 Business growth to see a healthy traction  Margin to remain at ~4.1%
 Asset quality in Agri/Unsecured book, slippages to be the  Commentary around credit cards and fee income traction
other key monitorables – key monitorables
Quarterly performance (INR b)
FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 156.7 157.8 163.2 171.2 170.1 176.8 184.4 193.8 648.8 725.1
% Change (Y-o-Y) 17.8 16.7 15.1 12.6 8.6 12.1 13.0 13.2 15.5 11.8
Other Income 40.8 60.9 74.4 75.9 62.9 74.0 81.8 83.7 252.0 302.5
Total Income 197.4 218.7 237.6 247.1 233.0 250.9 266.3 277.5 900.8 1,027.6
Operating Expenses 69.1 80.6 85.7 91.8 81.6 92.8 98.5 105.6 327.2 378.5
Operating Profit 128.3 138.1 151.9 155.3 151.4 158.1 167.8 171.9 573.6 649.1
% Change (Y-o-Y) 15.1 18.1 17.3 19.9 18.0 14.4 10.5 10.6 17.7 13.2
Provisions 38.9 37.0 34.1 46.9 48.3 39.2 29.9 41.6 157.0 159.1
Profit before Tax 89.4 101.1 117.7 108.4 103.1 118.8 137.8 130.2 416.6 489.9
Tax 22.8 26.0 30.1 26.5 25.8 30.5 34.4 33.3 105.4 124.0
Net Profit 66.6 75.1 87.6 81.9 77.3 88.3 103.4 96.9 311.2 366.0
% Change (Y-o-Y) 19.6 18.4 18.1 18.2 16.1 17.6 18.1 18.4 18.5 17.6
Operating Parameters
Deposit 11,894 12,293 12,711 13,351 13,458 14,063 14,459 15,590 13,351 15,590
Loan 10,033 10,383 10,823 11,328 11,477 11,988 12,609 13,690 11,328 13,690
Deposit Growth (%) 24.6 20.3 19.1 16.3 13.2 14.4 13.8 16.8 16.3 16.8
Loan Growth (%) 20.9 15.8 15.6 14.0 14.4 15.5 16.5 20.8 14.0 20.8
Asset Quality
Gross NPA (%) 1.4 1.1 0.8 1.3 1.5 1.4 1.3 1.2 1.3 1.2
Net NPA (%) 0.3 0.2 0.1 0.4 0.5 0.4 0.4 0.4 0.4 0.4
PCR (%) 76.2 84.5 88.5 69.8 67.9 70.9 70.8 70.7 69.8 70.7

ICICI Bank Buy

CMP: INR746 | TP: INR1,100 (+47%) EPS CHANGE (%): FY23|24: -1.5|-2.3
 Loan growth to see healthy traction; margin stable at  Credit costs to remain stable; slippages would be the key
~4.0%
 Commentary on asset quality a key monitorable  Movement in stressed loans to remain a key monitorable
Quarterly performance (INR b)
FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 92.8 93.7 99.1 104.3 109.4 116.9 122.4 128.9 389.9 477.5
% Change (YoY) 19.9 16.2 16.0 16.9 17.8 24.8 23.4 23.6 17.2 22.5
Other Income 61.4 40.3 46.9 41.1 40.0 48.0 49.9 52.8 189.7 190.6
Total Income 154.2 133.9 146.0 145.4 149.3 164.9 172.2 181.7 579.6 668.1
Operating Expenses 46.5 51.3 57.8 60.0 60.4 65.7 70.7 74.4 215.6 271.3
Operating Profit 107.8 82.6 88.2 85.4 88.9 99.1 101.5 107.3 364.0 396.9
% Change (YoY) 71.4 20.2 16.8 15.6 -17.5 20.0 15.1 25.6 29.5 9.0
Provisions 75.9 30.0 27.4 28.8 28.5 27.1 20.1 21.5 162.1 97.2
Profit before Tax 31.8 52.7 60.8 56.6 60.4 72.0 81.4 85.8 201.8 299.6
Tax 5.8 10.1 11.4 12.5 14.3 16.9 19.5 21.3 39.9 71.9
Net Profit 26.0 42.5 49.4 44.0 46.2 55.1 61.9 64.5 161.9 227.7
% Change (YoY) 36.2 549.1 19.1 260.5 77.6 29.6 25.4 46.5 104.2 40.6
Operating Parameters
Deposit 8,016 8,329 8,743 9,325 9,262 9,774 10,175 10,584 9,325 10,584
Loan 6,312 6,526 6,990 7,337 7,386 7,649 8,140 8,541 7,337 8,541
Deposit Growth (%) 21.3 19.6 22.1 21.0 15.5 17.3 16.4 13.5 21.0 13.5
Loan Growth (%) 6.5 6.4 10.0 13.7 17.0 17.2 16.4 16.4 13.7 16.4
Asset Quality
Gross NPA (%) 5.5 5.2 4.4 5.0 5.2 4.8 4.1 4.0 5.0 4.0
Net NPA (%) 1.2 1.0 0.6 1.1 1.2 1.0 0.9 0.8 1.1 0.8
PCR (%) 78.5 81.6 86.1 77.8 78.4 80.3 80.2 79.8 77.7 79.8

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IndusInd Bank Buy

CMP: INR988 | TP: INR1,300 (+32%) EPS CHANGE (%): FY23|24: -3.9|-2.8
 Loan/Deposit growth to see a healthy pickup QoQ  Asset quality to remain under watch, led by higher stress
on MFI business; restructuring book to be the key
 Margin to remain stable at ~4.1%  Credit costs to stay elevated as the focus remains on
maintaining higher PCR
Quarterly performance (INR b)
FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 33.1 32.8 34.1 35.3 35.6 36.6 37.9 40.0 135.3 150.1
% Change (YoY) 16.4 12.7 10.8 9.4 7.7 11.6 11.4 13.1 12.2 11.0
Other Income 15.2 15.5 16.5 17.8 17.9 18.4 18.8 18.8 65.6 73.8
Total Income 48.3 48.3 50.5 53.1 53.5 55.0 56.7 58.7 200.9 223.9
Operating Expenses 19.0 19.8 20.9 21.9 21.7 22.8 23.6 25.2 83.6 93.2
Operating Profit 29.3 28.5 29.6 31.3 31.9 32.2 33.1 33.5 117.3 130.7
% Change (YoY) 13.0 8.7 7.5 9.5 8.8 12.9 11.8 7.1 8.9 11.4
Provisions 22.6 19.6 18.5 18.7 18.4 17.0 16.5 14.4 79.4 66.4
Profit before Tax 6.7 8.9 11.1 12.6 13.4 15.2 16.6 19.1 37.8 64.3
Tax 1.6 2.2 2.8 3.4 3.3 3.7 4.2 5.1 9.5 16.2
Net Profit 5.1 6.6 8.3 9.3 10.2 11.5 12.4 14.0 28.4 48.1
% Change (YoY) -64.4 -52.7 -36.6 193.8 99.1 72.9 49.5 51.5 -35.8 69.5
Operating Parameters
Deposit (INR b) 2,113 2,279 2,391 2,559 2,672 2,753 2,845 2,937 2,562 2,937
Loan (INR b) 1,981 2,012 2,071 2,126 2,107 2,208 2,286 2,393 2,126 2,393
Deposit Growth (%) 5.3 10.0 10.3 26.7 26.5 20.8 19.0 14.6 26.8 14.6
Loan Growth (%) 2.4 2.1 -0.1 2.8 6.4 9.7 10.4 12.6 2.8 12.6
Asset Quality
Gross NPA (%) 2.5 2.2 1.7 2.7 2.9 2.8 2.5 2.3 2.7 2.3
Net NPA (%) 0.9 0.5 0.2 0.7 0.8 0.8 0.7 0.7 0.7 0.7
PCR (%) 66.6 76.7 87.3 74.5 71.6 71.6 71.7 71.8 74.5 71.8

Indian Bank Buy

CMP: INR161 | TP: INR200 (+24%) EPS CHANGE (%): FY23|24: +0.4|+0.2
 Loan growth to remain healthy  Margin to remain stable at ~3.0%; opex to be the key
 Stress in SME and restructuring book – key monitorables  Asset quality to remain stable; credit cost steady
Quarterly performance (INR b)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 38.7 41.4 43.1 33.3 39.9 40.8 44.0 45.2 156.7 169.9
% Change (YoY) 117.0 122.4 120.6 66.5 3.1 -1.5 1.9 35.5 106.0 8.4
Other Income 13.3 15.6 11.4 17.4 18.2 19.7 15.6 15.9 60.8 69.3
Total Income 52.0 57.0 54.6 50.8 58.1 60.5 59.5 61.0 217.5 239.2
Operating Expenses 24.5 27.6 26.1 25.3 24.0 27.7 26.6 27.2 103.5 105.6
Operating Profit 27.5 29.4 28.5 25.5 34.2 32.8 32.9 33.8 114.0 133.6
% Change (YoY) 100.4 95.9 48.3 49.6 24.1 11.3 15.5 32.7 75.4 17.2
Other Provisions 21.4 22.3 20.6 17.5 25.6 25.5 24.9 25.0 84.9 101.0
Profit before Tax 6.1 7.1 7.8 8.0 8.6 7.3 7.9 8.8 29.1 32.6
Tax 2.4 3.0 2.7 -9.1 -3.2 -3.6 1.1 1.2 -1.0 -4.6
Net Profit 3.7 4.1 5.1 17.1 11.8 10.9 6.9 7.6 30.0 37.2
% Change (YoY) 1.1 15.0 108.1 NM 220.0 164.2 34.1 -55.6 298.8 23.8
Operating Parameters
Deposits (INR b) 4,891 5,020 5,212 5,381 5,401 5,515 5,626 5,736 5,381 5,736
Loans (INR b) 3,395 3,397 3,628 3,640 3,644 3,604 3,717 3,859 3,640 3,859
Deposit Growth (%) 102.6 98.3 102.3 106.8 10.4 9.9 7.9 6.6 106.8 6.6
Loan Growth (%) 91.2 81.8 95.9 83.9 7.3 6.1 2.4 6.0 83.9 6.0
Asset Quality
Gross NPA (%) 10.9 9.9 9.0 9.9 9.7 9.6 9.1 8.7 9.9 8.7
Net NPA (%) 3.8 3.0 2.4 3.4 3.5 3.3 2.7 2.5 3.4 2.5
PCR (%) 68.1 72.2 75.8 68.1 66.5 68.1 72.2 73.4 68.1 73.4

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 March 2022 Results Preview | Sector: Financials

Kotak Mahindra Bank Neutral

CMP: INR1,836 | TP: INR2,100 (+14%) EPS CHANGE (%): FY23|24: -0.2|-0.2
 Loan growth to see strong traction QoQ  Liability franchise to remain strong; lower cost of funds to
result in stable margins (~4.6%)
 Commentaries around stress in SME book and other  Asset quality to witness improvement
unsecured loans; credit costs to remain stable
Quarterly performance (INR b)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 37.2 39.0 38.8 38.4 39.4 40.2 43.3 46.0 153.4 169.0
% Change (Y-o-Y) 17.4 16.4 13.0 8.0 5.8 3.2 11.8 19.7 13.6 10.1
Other Income 7.7 14.3 12.9 19.5 13.5 18.1 13.6 18.0 54.6 63.3
Total Income 45.0 53.3 51.7 57.9 52.9 58.3 57.0 64.0 208.0 232.3
Operating Expenses 18.7 20.7 22.6 23.8 24.0 27.1 30.0 31.2 85.8 112.4
Operating Profit 26.2 32.6 29.1 34.1 28.9 31.2 27.0 32.8 122.1 119.9
% Change (Y-o-Y) 9.4 30.0 21.8 25.0 10.1 -4.4 -7.1 -3.7 21.9 -1.8
Other Provisions 9.6 3.3 4.2 11.8 7.0 4.2 -1.3 3.3 29.1 13.2
Profit before Tax 16.6 29.3 24.8 22.3 21.9 27.0 28.3 29.6 93.0 106.7
Tax Provisions 4.2 7.4 6.3 5.5 5.4 6.6 7.0 7.6 23.4 26.7
Net Profit 12.4 21.8 18.5 16.8 16.4 20.3 21.3 22.0 69.6 80.0
% Change (Y-o-Y) -8.5 26.7 16.1 32.8 31.9 -7.0 15.0 30.7 17.1 14.9
Deposits (INRb) 2,615 2,616 2,653 2,801 2,866 2,917 3,053 3,207 2,801 3,207
Loans (INRb) 2,040 2,048 2,141 2,237 2,175 2,350 2,529 2,684 2,237 2,684
Deposit growth (%) 12.3 12.2 10.8 6.6 9.6 11.5 15.1 14.5 6.6 14.5
Loan growth (%) -1.9 -4.0 -1.2 1.8 6.6 14.7 18.1 20.0 1.8 20.0
Asset Quality
Gross NPA (%) 2.7 2.6 2.3 3.3 3.6 3.2 2.7 2.5 3.3 2.5
Net NPA (%) 0.9 0.6 0.5 1.2 1.3 1.1 0.8 0.8 1.2 0.8
PCR (%) 68.4 75.6 78.4 63.6 64.8 67.5 71.3 70.0 63.6 70.0

Punjab National Bank Neutral

CMP: INR37 | TP: INR45 (+22%) EPS CHANGE (%): FY23|24: +3.6|+1.4
 Loan growth to see some traction QoQ  Margin to remain stable at ~2.9%; opex to be the key
 SMA and restructuring books – key monitorables  Asset quality to remain under pressure
Quarterly performance (INR b)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 67.8 84.5 83.5 69.4 72.3 63.5 78.0 81.3 304.8 295.2
% Change (YoY) 63.8 98.3 91.6 48.3 6.7 -24.9 -6.5 17.1 74.8 -3.2
Other Income 36.5 22.7 26.8 37.4 38.9 32.8 27.0 28.1 128.1 126.8
Total Income 104.4 107.3 110.3 106.8 111.2 96.3 105.0 109.4 432.9 422.0
Operating Expenses 51.6 52.1 49.0 50.5 47.2 56.1 54.3 55.8 203.1 213.4
Operating Profit 52.8 55.2 61.3 56.3 64.0 40.2 50.8 53.6 229.8 208.6
% Change (YoY) 51.7 54.9 63.0 43.3 21.2 -27.1 -17.2 -4.9 55.9 -9.2
Other Provisions 46.9 45.4 51.8 46.9 49.8 32.6 33.5 35.1 195.0 151.0
Profit before Tax 5.9 9.8 9.6 9.5 14.2 7.6 17.2 18.5 34.8 57.6
Tax 2.9 3.6 4.5 3.6 4.0 -3.5 6.0 6.9 14.6 13.4
Net Profit 3.1 6.2 5.1 5.9 10.2 11.1 11.3 11.6 20.2 44.2
% Change (YoY) -69.7 22.4 NM NM 231.8 78.0 122.7 97.9 501.3 118.4
Operating Parameters
Deposits 10,749 10,697 10,822 11,063 10,976 11,154 11,273 11,462 11,063 11,462
Loans 6,562 6,527 6,605 6,742 6,613 6,732 6,928 7,113 6,742 7,113
Deposit Growth (%) 59.8 53.7 52.7 57.2 2.1 4.3 4.2 3.6 57.2 3.6
Loan Growth (%) 55.6 52.5 55.2 42.9 0.8 3.2 4.9 5.5 42.9 5.5
Asset Quality
Gross NPA (%) 14.1 13.4 13.0 14.1 14.3 13.6 12.9 12.7 14.1 12.7
Net NPA (%) 5.4 4.8 4.0 5.7 5.8 5.5 4.9 4.8 5.8 4.8
PCR (%) 65.3 67.9 71.8 63.1 62.9 63.2 65.2 65.6 62.4 65.6

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 March 2022 Results Preview | Sector: Financials

RBL Bank Buy

CMP: INR142 | TP: INR200 (+41%) EPS CHANGE (%): FY23|24: +5.4|+2.4
 Business growth to see an uptick; margin stable at 4.3%  Credit costs to see gradual moderation
 Asset quality to witness gradual improvement, remain  Management succession would be a near-term overhang
watchful of exposures to MFI / Credit Cards
Quarterly performance (INR m)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 10,413 9,321 9,082 9,061 9,695 9,155 10,104 10,456 37,876 39,410
% Change (Y-o-Y) 27.4 7.3 -1.6 -11.3 -6.9 -1.8 11.3 15.4 4.4 4.1
Other Income 3,333 4,182 5,759 6,884 6,534 5,929 6,199 6,527 20,578 25,188
Total Income 13,746 13,503 14,841 15,945 16,229 15,083 16,303 16,983 58,454 64,598
Operating Expenses 6,849 6,685 6,832 7,179 8,567 8,174 9,995 10,498 27,546 37,233
Operating Profit 6,897 6,818 8,008 8,765 7,661 6,910 6,308 6,485 30,908 27,364
% Change (Y-o-Y) 14.5 7.2 11.7 16.6 11.1 1.4 -21.2 -26.0 13.9 -11.5
Provisions 5,002 4,876 6,058 7,663 13,844 6,515 4,239 3,758 24,017 28,355
Profit before Tax 1,896 1,942 1,951 1,103 -6,182 395 2,069 2,727 6,891 -991
Tax 483 500 480 349 -1,588 87 508 743 1,813 -249
Net Profit 1,412 1,442 1,471 754 -4,595 308 1,561 1,984 5,078 -742
% Change (Y-o-Y) -47.1 165.4 110.2 -34.1 NM -78.6 6.1 163.3 0.4 NM
Operating Parameters
Deposit (INR b) 617.4 645.1 671.8 731.2 744.7 755.9 736.4 782.4 731.2 782.4
Loan (INR b) 566.8 561.6 564.4 586.2 565.3 560.1 581.4 606.7 586.2 606.7
Deposit Growth (%) 1.5 2.7 6.8 26.5 20.6 17.2 9.6 7.0 26.5 7.0
Loan Growth (%) -0.3 -4.0 -5.4 1.0 -0.3 -0.3 3.0 3.5 1.0 3.5
Asset Quality
Gross NPA (%) 3.5 3.3 1.8 4.3 5.0 5.4 4.8 4.5 4.3 4.5
Net NPA (%) 1.7 1.4 0.7 2.1 2.0 2.1 1.9 1.6 2.1 1.6
PCR (%) 53.2 59.4 61.7 52.3 60.9 61.7 62.9 64.2 52.3 64.2

State Bank of India Buy

CMP: INR513 | TP: INR675 (+32%) EPS CHANGE (%): FY23|24: -1.9|-1.7
 Credit costs to remain modest  Asset quality to remain steady
 Loan growth to see a healthy traction QoQ  Margin to remain stable at ~3.1%; traction in fee income
and opex trajectory – key monitorables
Quarterly performance (INR b)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 266.4 281.8 288.2 270.7 276.4 311.8 306.9 318.1 1,107.1 1,213.2
% Change (YoY) 16.1 14.6 3.7 18.9 3.7 10.7 6.5 17.5 12.9 9.6
Other Income 95.0 85.3 92.5 162.3 118.0 82.1 86.7 117.7 435.0 404.5
Total Income 361.4 367.1 380.7 432.9 394.4 393.9 393.6 435.8 1,542.1 1,617.7
Operating Expenses 180.8 202.5 207.3 235.9 204.7 213.1 208.4 223.4 826.5 849.6
Operating Profit 180.6 164.6 173.3 197.0 189.7 180.8 185.2 212.4 715.5 768.2
% Change (YoY) 36.3 -9.6 -4.9 6.7 5.1 9.8 6.9 7.8 5.0 7.4
Provisions 125.0 101.2 103.4 110.5 100.5 1.9 69.7 71.1 440.1 243.3
Exception items (Exp.) NA NA NA NA NA 74.2 NA NA NA 74.2
Profit before Tax 55.6 63.4 69.9 86.5 89.2 104.7 115.5 141.3 275.4 450.7
Tax Provisions 13.7 17.7 17.9 22.0 24.2 28.5 31.2 34.3 71.3 118.1
Net Profit 41.9 45.7 52.0 64.5 65.0 76.3 84.3 107.0 204.1 332.6
% Change (YoY) 81.2 51.9 -6.9 80.1 55.3 66.7 62.3 65.9 40.9 63.0
Operating Parameters
Deposits (INR t) 34.2 34.7 35.4 36.8 37.2 38.1 38.5 39.4 36.8 39.4
Loans (INR t) 23.0 22.9 23.7 24.5 24.3 24.4 25.8 26.7 24.5 26.7
Deposit Growth (%) 16.0 14.4 13.6 13.6 8.8 9.8 8.8 7.0 13.6 7.0
Loan Growth (%) 7.7 6.9 7.6 5.3 5.8 6.5 8.9 9.2 5.3 9.2
Asset Quality
Gross NPA (%) 5.4 5.3 4.8 5.0 5.3 4.9 4.5 4.2 5.0 4.2
Net NPA (%) 1.9 1.6 1.2 1.5 1.8 1.5 1.3 1.2 1.5 1.2
PCR (%) 67.1 71.0 75.2 70.9 67.9 70.1 71.2 71.8 70.9 71.8

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Union Bank of India Buy

CMP: INR42 | TP: INR60 (+44%) EPS CHANGE (%): FY23|24: -12.3|-0.4
 Loan growth to remain modest  Margin to remain stable at ~3.0%; opex to be the key
 SMA and restructuring books – key monitorables  Asset quality to remain steady

Quarterly performance (INR b)

FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 64.0 62.9 65.9 54.0 70.1 68.3 71.7 75.0 246.9 285.2
% Change (YoY) 154.3 116.6 110.2 87.7 9.5 8.5 8.9 38.8 115.9 15.5
Other Income 14.6 24.1 29.7 45.5 27.8 39.8 25.2 24.0 113.4 116.8
Total Income 78.7 87.0 95.6 99.5 97.9 108.1 97.0 99.0 360.3 401.9
Operating Expenses 38.3 38.7 42.9 47.7 46.1 47.3 46.0 48.8 167.7 188.3
Operating Profit 40.3 48.3 52.7 51.8 51.8 60.7 51.0 50.2 192.6 213.7
% Change (YoY) 113.9 115.7 119.3 95.3 28.4 25.7 -3.2 -3.2 109.8 11.0
Provisions 35.6 42.4 52.1 39.0 34.0 37.2 25.5 30.8 168.6 127.5
Profit before Tax 4.8 5.9 0.5 12.8 17.8 23.5 25.5 19.4 24.0 86.1
Tax 1.5 0.7 -6.7 -0.5 6.0 8.2 14.6 7.3 -5.1 36.2
Net Profit 3.3 5.2 7.3 13.3 11.8 15.3 10.9 12.0 29.1 50.0
% Change (YoY) 48.3 NM 26.5 NM 254.9 195.4 49.3 -9.5 NM 71.9
Operating Parameters
Deposit (INR b) 8,925 8,861 8,824 9,238 9,085 9,140 9,375 9,561 9,238 9,561
Loan (INR b) 5,817 5,790 5,829 5,910 5,846 5,810 6,168 6,324 5,910 6,324
Deposit Growth (%) 107.6 100.1 98.3 105.0 1.8 3.2 6.2 3.5 105.0 3.5
Loan Growth (%) 98.0 94.4 89.5 87.6 0.5 0.3 5.8 7.0 87.6 7.0
Asset Quality
Gross NPA (%) 15.0 14.7 13.5 13.7 13.6 12.6 11.6 11.5 13.7 11.5
Net NPA (%) 5.0 4.1 3.3 4.6 4.7 4.6 4.1 4.3 4.7 4.3
PCR (%) 70.3 75.1 78.3 69.6 68.7 66.6 67.5 65.7 69.2 65.7

SBI Cards and Payment Services Buy

CMP: INR877 | TP: INR1,120 (+28%) EPS CHANGE (%): FY23|24: -3.5|-2.8
 Credit costs to remain steady  Restructuring book and asset quality to see moderation
 Traction in fee income would be a key assessment metric  Pressure on margins to be another key monitorable
Quarterly performance (INR b)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 11.4 10.1 9.1 8.3 9.2 9.2 10.0 10.7 38.8 39.1
% Change (Y-o-Y) 52.2 20.0 -3.1 -18.3 -18.7 -9.1 9.9 29.4 9.7 0.7
Other Income 7.8 12.4 13.7 14.0 13.0 15.2 18.7 19.0 47.9 65.9
Total Income 19.2 22.5 22.8 22.2 22.2 24.4 28.6 29.7 86.7 105.0
Operating Expenses 9.0 11.1 13.5 12.9 11.7 13.8 17.2 17.0 47.1 59.7
Operating Profit 10.1 11.4 9.3 9.4 10.5 10.6 11.4 12.8 39.6 45.3
% Change (Y-o-Y) 9.1 37.2 -3.0 -1.2 4.0 -7.2 22.9 36.0 8.0 14.4
Provisions 4.9 8.6 6.5 7.0 6.4 5.9 6.3 6.7 26.4 25.4
Profit before Tax 5.3 2.8 2.8 2.3 4.1 4.6 5.2 6.0 13.2 20.0
Tax 1.3 0.7 0.7 0.6 1.1 1.2 1.3 1.6 3.4 5.1
Net Profit 3.9 2.1 2.1 1.8 3.0 3.4 3.9 4.5 9.8 14.8
% Change (Y-o-Y) 13.8 -45.9 -51.8 110.0 -22.5 67.3 84.0 155.5 -20.9 50.7
Operating Parameters
Loan (INRb) 219.2 219.3 237.0 234.6 230.4 253.9 279.7 297.9 234.6 297.9
Loan Growth (%) 7.2 -1.6 -1.0 2.8 5.1 15.8 18.0 27.0 2.8 27.0
Asset Quality
Gross NPA (%) 1.4 4.3 1.6 5.0 3.9 3.4 2.4 2.0 5.0 2.0
Net NPA (%) 0.4 1.5 0.6 1.2 0.9 0.9 0.8 0.6 1.1 0.6
PCR (%) 68.3 65.6 65.6 77.9 78.2 73.7 65.9 69.3 77.9 69.3

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 March 2022 Results Preview | Sector: Financials

HDFC Life Insurance Neutral

CMP: INR572 | TP: INR700 (+22%) EPS CHANGE (%): FY23|24: -2.2|-2.3
 New business premium to remain modest on strong  VNB growth to remain modest, margins to expand QoQ
trends in Annuity/PAR
 Expense ratio to remain stable; RoEV to stay modest  Improvement in persistency ratio another monitorable
Quarterly performance (INR m)
Policy holder's A/c FY21 FY22E
FY21 FY22E
(INR m) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
First year premium 10,218 16,752 17,722 23,892 12,856 20,780 21,160 25,569 68,584 80,364
Growth (%) -23.0% 15.3% 14.9% 38.7% 25.8% 24.0% 19.4% 7.0% 13.5% 17.2%
Renewal premium 32,391 43,104 45,770 63,504 38,893 50,345 55,430 74,482 184,769 219,150
Growth (%) 24.1% 20.8% 21.5% 14.9% 20.1% 16.8% 21.1% 17.3% 19.4% 18.6%
Single premium 16,016 41,970 32,790 41,706 24,811 45,184 45,958 44,964 132,482 160,916
Growth (%) -38.4% 65.5% 21.8% 23.9% 54.9% 7.7% 40.2% 7.8% 18.3% 21.5%
Net premium income 57,218 100,454 94,870 128,680 75,385 114,440 121,244 144,520 381,223 455,588
Growth (%) -11.3% 34.8% 20.8% 23.0% 31.7% 13.9% 27.8% 12.3% 18.3% 19.5%
PAT 4,511 3,261 2,650 3,179 3,024 2,742 2,737 3,551 13,601 12,052
Growth (%) 6.2% 5.6% 5.9% 2.0% -33.0% -15.9% 3.3% 11.7% 5.0% -11.4%
Key metrics (INRb)
New business APE 12.0 21.4 21.6 28.8 15.6 25.5 26.0 30.1 81.8 96.5
Growth (%) -29.9 21.2 18.3 36.5 30.3 19.4 20.4 4.4 14.2 17.9
VNB 2.9 5.5 5.7 7.8 4.1 6.8 6.9 8.3 21.9 26.1
Growth (%) -42.8 22.1 26.7 51.8 40.2 23.9 21.8 6.4 13.9 19.3
AUM (INR b) 1,400 1,506 1,656 1,738 1,813 1,912 1,947 1,981 1,738 1,981
Growth (%) 8.0 15.0 21.4 36.6 29.5 27.0 17.6 13.9 36.6 13.9
Key Ratios (%)
VNB Margins (%) 24.3 25.6 26.4 27.0 26.2 26.6 26.7 27.5 26.1 27.0
Solvency ratio (%) 190.0 203.0 202.0 201.0 203.0 190.0 190.0 191.8 201.0 191.8

ICICI Prudential Life Insurance Buy

CMP: INR509 | TP: INR700 (+38%) EPS CHANGE (%): FY23|24: -5.7|-9.8
 New business premiums to remain under pressure  Expense ratio to remain stable
 VNB growth to remain modest though margin would  Growth in Non-Linked Savings business to remain healthy
expand
Quarterly performance (INR m)
Policy holder's A/c FY21 FY22E FY21 FY22E
(INR m) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
First year premium 6,275 11,698 13,605 20,293 8,803 15,572 15,475 18,450 51,872 58,300
Growth (%) -50.6% -31.9% -27.4% 23.3% 40.3% 33.1% 13.7% -9.1% -20.3% 12.4%
Renewal premium 41,398 57,742 56,801 69,126 41,375 55,704 54,449 71,409 225,068 222,936
Growth (%) 2.4% 10.2% 8.7% 7.4% -0.1% -3.5% -4.1% 3.3% 7.5% -0.9%
Single premium 9,794 17,894 21,114 31,587 18,523 24,056 23,518 29,025 80,389 95,122
Growth (%) -3.7% 45.2% 81.4% 23.1% 89.1% 34.4% 11.4% -8.1% 34.4% 18.3%
Net premium income 55,511 85,722 89,708 118,793 66,019 92,865 90,740 116,964 349,734 366,588
Growth (%) -10.6% 6.3% 10.3% 13.4% 18.9% 8.3% 1.1% -1.5% 6.4% 4.8%
PAT 2,876 3,032 3,056 638 -1,857 4,446 3,106 3,010 9,601 8,705
Growth (%) 0.9% 0.5% 1.0% -64.5% NM 46.6% 1.7% 371.9% -10.2% -9.3%
Key metrics (INRb)
New Business APE 8.2 14.7 16.7 25.1 12.2 19.8 19.3 23.5 59.9 74.6
Growth (%) -44.0 -22.9 -18.3 27.1 48.1 34.9 15.8 -6.3 -15.7 24.5
VNB 2.0 4.0 4.3 5.9 3.6 5.2 5.2 6.4 16.2 20.3
Growth (%) -35.0 0.2 0.5 25.7 78.1 28.4 20.3 8.1 1.3 25.0
AUM 1,700 1,815 2,049 2,142 2,232 2,371 2,376 2,400 2,142 2,400
Growth (%) 3.6 9.7 19.1 40.0 31.3 30.6 16.0 12.0 40.0 12.0
Key Ratios (%)
VNB Margins (%) 24.4 27.4 25.7 23.6 29.4 26.0 26.7 27.2 25.1 27.2
Solvency ratio (%) 205 206 226 217 194 200 202 200 217 200

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 March 2022 Results Preview | Sector: Financials

SBI Life Insurance Buy

CMP: INR1,126 | TP: INR1,600 (+42%) EPS CHANGE (%): FY23|24: +1.3|+3.4
 New business premiums to see modest trends  Continued cost leadership
 Margins to expand QoQ; VNB growth to remain modest  Protection mix to improve; Non-PAR to remain healthy
Quarterly performance (INR b)
Policy holder's A/c FY21 FY22E
FY21 FY22E
(INRb) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
First year premium 10.9 23.2 32.8 36.6 14.0 36.1 40.7 40.3 103.4 131.2
Growth (%) -34% -9% 5% 45% 29% 56% 24% 10% 5% 27%
Renewal premium 45.8 71.5 84.4 94.6 50.3 77.8 96.5 109.9 296.3 334.5
Growth (%) 30% 28% 24% 16% 10% 9% 14% 16% 23% 13%
Single premium 19.7 36.2 21.6 28.1 21.6 37.0 49.2 29.4 102.9 123.5
Growth (%) 31% 71% 16% 119% 9% 2% 128% 5% 52% 20%
Net premium income 75.9 128.6 137.7 155.6 83.1 146.6 180.3 175.0 497.7 585.0
Growth (%) 14% 27% 18% 31% 10% 14% 31% 12% 23% 18%
PAT 3.9 3.0 2.3 5.3 2.2 2.5 3.6 4.8 14.6 13.1
Growth (%) 5% 131% -40% 0% -43% -18% 56% -10% 2% -10%
Key metrics (INRb)
New Business APE 12.7 27.1 35.0 39.7 16.2 39.7 45.7 42.9 113.7 143.5
Growth (%) -31.7 -3.6 3.6 47.6 27.6 46.5 30.6 8.2 8.2 26.3
VNB 2.6 5.4 7.6 11.0 3.9 10.3 11.7 11.3 26.6 37.2
Growth (%) -21.2 3.8 22.6 103.7 50.0 90.7 53.9 3.2 19.8 40.0
AUM 1,754 1,864 2,095 2,209 2,316 2,442 2,569 2,619 2,209 2,619
Growth (%) 19.3 20.4 27.6 37.7 32.1 31.0 22.6 18.6 37.7 18.6
Key Ratios (%)
VNB margins (%) 20.1 20.3 21.9 27.7 24.1 25.9 25.6 26.4 23.2 26.0
Solvency ratio (%) 239.0 245.0 234.0 215.0 215.0 212.0 209.0 205.3 214.7 205.3

Max Financial Services Buy

CMP: INR789 | TP: INR1,050 (+33%) EPS CHANGE (%): FY23|24: -18.8|-24.0
 New business premiums to remain under pressure  Proprietary channel to exhibit healthy trends while Banca
channel to witness pressure
 VNB margin to expand QoQ; VNB growth to remain  Non-PAR growth to remain healthy; ULIP to be under
modest pressure

Quarterly performance (INR m)

Policy holder's A/c FY21 FY22E
FY21 FY22E
(INR m) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
First Year premium 6,210 11,280 11,980 18,860 8,040 12,280 15,420 17,722 48,334 53,462
Growth (%) -3.9% 7.1% 19.9% 35.7% 29.5% 8.9% 28.7% -6.0% 18.2% 10.6%
Renewal premium 18,520 29,370 28,800 45,230 22,440 34,620 34,220 53,433 121,917 144,713
Growth (%) 6.4% 22.3% 16.3% 13.6% 21.2% 17.9% 18.8% 18.1% 15.0% 18.7%
Single premium 2,780 4,680 5,500 6,970 4,350 6,430 6,340 7,237 19,928 24,357
Growth (%) 4.9% 43.1% 36.1% 39.7% 56.5% 37.4% 15.3% 3.8% 33.3% 22.2%
Gross premium income 27,510 45,330 46,280 71,060 34,840 53,310 56,000 78,382 190,180 222,532
Growth (%) 3.8% 19.9% 19.3% 21.0% 26.6% 17.6% 21.0% 10.3% 17.5% 17.0%
PAT 1,380 270 2,520 1,060 770 710 1,150 1,624 5,230 4,254
Growth (%) 102.9% -68.6% 63.6% -54.2% -44.2% 163.0% -54.4% 53.2% -3.0% -18.7%
Key metrics (INRm)
New Business APE 6,610 11,540 12,250 19,170 8,750 12,830 15,930 18,445 49,570 55,897
Growth (%) -3.5 10.4 21.3 36.1 32.4 11.2 30.0 -3.8 17.0 12.8
VNB 1,130 3,250 3,500 4,610 1,720 3,740 3,960 4,796 12,490 14,216
Growth (%) -15.7 41.3 65.1 43.6 52.2 15.1 13.1 4.0 39.2 13.8
AUM (INRb) 730 778 850 904 937 1,001 1,025 1,046 904 1,046
Growth (%) 14.1 19.6 23.9 32.0 28.4 28.7 20.6 15.6 32.0 15.6
Key Ratios (%)
VNB Margins (%) 17.1 28.2 28.6 24.0 19.7 29.2 24.9 26.0 25.2 25.4
Solvency ratio (%) 212.0 207.0 208.0 196.0 197.0 211.0 207.0 204.4 196.0 204.4

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 March 2022 Results Preview | Sector: Financials - NBFCs

Financials - NBFCs
Company Asset quality improvement and sequentially lower credit
Aavas Financiers
Bajaj Finance
costs on the cards
Can Fin Homes Borrowing costs have been stable but potential increase from 1QFY23 likely
Chola Inv. & Fin.
HDFC  We expect our coverage universe of NBFC – Lending Financials to deliver 10%
ICICI Securities /6%/35% YoY growth in NII/PPoP/PAT, respectively, in 4QFY22. We forecast a strong
IIFL Wealth Management YoY growth in earnings for BAF, CIFC, LTFH and LICHF, while we project a sharp
Angel One sequential decline in earnings for MMFS (driven by higher credit costs).
LIC Housing Finance  In general, 4Q of a fiscal year is a seasonally strong quarter in terms of asset quality
L&T Finance Holdings and we expect 4QFY22 to be no different. We forecast a stronger improvement in
M&M Financial Services asset quality for CIFC, MMFS and Aavas while the improvement for the other NBFCs/
Manappuram Finance HFCs in our coverage will be more measured. Importantly, we expect credit costs to be
MAS Financial Services sequentially lower during the quarter except for MMFS.
Muthoot Finance  Despite the RBI clarification on the NPA circular and the subsequent deferment of the
PNB Housing Finance
guidelines’ implementation to Sep’22, most companies that have implemented the circular
Repco Home Finance
already (in 3Q) will continue to follow the same classification methodology in 4QFY22.
Shriram City Union
Shriram Transport Finance  Collection efficiency (CE) has now normalized and even restructured accounts have
Star Health selectively (depending on the tenure of moratorium provided) started repayments.
 Disbursement momentum is likely to be healthy in 4QFY22 but quite unlike the
seasonally stronger 4Q that is typically expected for vehicle financiers. Momentum for
housing financiers has been robust and we expect this buoyancy to sustain even in
FY23.
 AUM growth is likely to remain muted for short-duration products such as Vehicle
loans as collections continue to improve in 4QFY22E.
 Lenders have largely normalized the excess liquidity on their balance sheets and even
though the LCR requirements have been applicable for the NBFCs/HFCs from 1 Dec’21,
they will not have any significant impact on the margins. Borrowing mix continues to
be optimized and replacement of higher-cost liabilities with lower-cost incremental
borrowings will ensure that increase in borrowing costs for the larger HFCs will be
contained. We forecast a slight decline (of 5-10bp) in weighted cost of funds for our
coverage universe.
 Increased market volatility led to lower cash volumes, while F&O volumes further
gained momentum and remained strong. Resultantly, capital market players shall see
healthy revenue growth. Sequential growth to be supported by strong distribution
income. Momentum in inflows for the Wealth Management domain is likely to remain
robust as monetization of stakes by entrepreneurs through primary market
transactions provides huge opportunities.
 Health insurance industry continues to witness strong premium growth driven by both
retail and group health businesses. SAHIs continue to gain market share, whereas PSU
players’ performances are weak in group health business. However, claim ratios are likely
to remain elevated due to third COVID wave (frequency was higher v/s previous waves but
severity was lower). Non-COVID claims are likely to rise too led by elective surgeries.
 We continue to favor: a) franchises with strong balance sheets and b) those who have
demonstrated resilience during such external disruptions. The buoyancy in the equity
market and higher levels of primary market issuances will continue to remain a
tailwind for the Broking industry in FY23 as well. Our top picks are HDFC, CIFC, SHTF,
and Angel One.

Research Analyst: Abhijit Tibrewal ([Link]@[Link]) / Prayesh Jain ([Link]@[Link])

October 2020 115
Research Analyst: Nitin Aggarwal ([Link]@[Link]) / Urmila Bohra ([Link]@[Link])
 March 2022 Results Preview | Sector: Financials - NBFCs

HFCs: Record levels of retail disbursements while wholesale exhibits

improved momentum
Property registrations data have continued to demonstrate that housing purchases
have remained robust. We continue to believe that demand for own home/ bigger
home, higher affordability and record low interest rates have remained the key
growth drivers. Mortgages segment has continued to witness heightened
competitive intensity, especially from banks. However, we believe that HDFC and
LICHF (aided by their lower cost of funds) would continue to deliver strong retail
home loan disbursements while even others such as PNBHF would exhibit a decent
improvement in retail disbursements. Pressure on balance transfer (out) has now
eased for PNBHF after it reduced its lending rates during 4QFY22. Corporate/
Developer segment for HDFC has started to demonstrate momentum with sanctions
now translating into disbursements and loan book growth.
Affordable Housing Financiers, except Repco, are likely to deliver strong 20%-30%
YoY growth in disbursements. For the likes of Aavas, the RBI NPA guidelines led to
deterioration in the reported GS3 in 3QFY22 but we expect a strong improvement in
4QFY22 and consequently a sharp decline in credit costs. We expect a 150-200bp
improvement in 1+dpd for Aavas during the quarter.

Vehicle Financiers: AUM growth remains subdued with slight improvement

in asset quality
Business volumes in PVs (particularly cars and SUVs) and CVs have exhibited
improvement v/s last quarter. Though M&HCV volumes recovered, the OEMs and
the lenders expect strong improvement in M&HCV volumes from FY23 onwards. We
expect used CV disbursements in 4QFY22 to remain at broadly similar levels (or
improve marginally) as in 3Q for SHTF. Even for MMFS, we expect disbursements to
remain flat QoQ. However, we estimate Chola to deliver a healthy ~50% YoY and
15% QoQ growth in disbursements. AUM growth, however, is likely to remain
muted at 9% / -1% / 8% YoY for CIFC/MMFS/SHTF, respectively. We estimate a QoQ
improvement (45bp-200bp) in asset quality and sequentially lower credit costs for
CIFC and SHTF. However, we believe MMFS would need to increase its provision
coverage on its Stage 3 loans to deliver a net Stage 3 of less than 4%.

Margins to selectively witness some compression

For the vehicle financiers, even though the cost of borrowings has not started to
increase yet because of the re-pricing benefits of higher-cost liabilities, blended
yields have been under minor pressure led by the fixed-rate loan book. We expect a
minor compression in normalized margins for the vehicle financiers. Likewise, for
the gold financiers, we expect the competitive intensity from banks as well as the
aggressive competitive landscape will lead to a compression in spreads/margins in
4QFY22. While most companies have already normalized the excess liquidity on
their balance sheets, we expect them to fully revert to pre-COVID levels of liquidity
in the next quarter. The liquidity requirement from the LCR norms has not resulted
in any significant negative carry.

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 March 2022 Results Preview | Sector: Financials - NBFCs

Gold Financiers: Gold loan demand remains muted and we expect

compression in yields; auctioning to be relatively lower QoQ for MUTH
From the last week of Feb’22 until mid-Mar, teaser rates of 6.9% p.a. (on monthly
interest repayments) and ticket sizes above INR200K-300K were being offered by
both MUTH and MGFL. However, all through 4QFY22, MUTH has been particularly
aggressive in offering teaser rate gold loans and as such we expect MGFL’s gold loan
growth to have suffered. We estimate a sequentially flat gold loan AUM for MGFL
while we build a 5% QoQ gold loan growth for MUTH. Growth for MUTH is likely to
have come at the cost of compression in spreads/margins.

Given that gold prices increased 10% QoQ (source: WGC) and that large part of the
gold loans were disbursed at teaser rates (LTV of 65%-70%), the portfolio LTVs of
gold-loan NBFCs (particularly MUTH) would have declined significantly. Given the
strength in gold prices because of the Russia-Ukraine conflict, we expect auctions to
have been lower v/s expectations at the beginning of the quarter.

In the non-gold portfolio, both MUTH and MGFL have started new disbursements in
MFI and vehicle finance segments. Among the non-gold segments, the MFI remains
the most vulnerable and we would forecast credit costs (also led by write-offs) from
this segment to remain elevated for MGFL even in 4QFY22.

Diversified Financiers: Expect healthy loan growth; asset quality continues

to demonstrate improvement
Wholesale real estate disbursements continue to remain muted. However, business
momentum in other product segments such as MSME and personal loans for SCUF/
BAF has continued to exhibit strong momentum with collections back to normal
levels. While disbursements have been strong, collections have also been robust all
through 4QFY22 resulting in quicker run-off of the loan-book. We anticipate
collections to have improved across product categories for both BAF and SCUF. For
SCUF, we expect disbursements to decline QoQ (3QFY22 was buoyed by festive 2W
volumes), but there should be asset quality improvement and consequent benign
credit costs. Some of the diversified financiers might also choose to utilize their
macro provisions or management overlay created in prior quarters during 4QFY22.

Client acquisition remains healthy in addition to strong momentum in F&O

Retail segment cash ADTO declined 1% and 13% MoM in Jan’22 and Feb’22,
respectively. The decline in Feb’22 was attributable to a sharp market correction led
by geopolitical tension. The volumes are expected to remain muted for Mar’22 as
well. However, the market volatility worked in favor of F&O, which saw continued
volume momentum (up 21%/11% MoM in Jan’22/Feb’22), especially the options
segment. Customer acquisition trend has remained stable for the current quarter.
Angel One has seen improvement in most of the key parameters such as new client
addition, activation rate and F&O ADTO market share in Jan and Feb’22, which will
drive its revenue growth. However, continued investments in client acquisition,
technology and hiring of resources are expected to keep its CI ratio stable. For ISEC,
we expect overall revenue to see marginal decline with muted performance in
corporate finance segment led by volatile equity markets. IIFLWAM should see

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 March 2022 Results Preview | Sector: Financials - NBFCs

steady trends on YoY basis; however, revenue is likely to report some decline
sequentially on moderation in yields for both ABR and TBR assets.

Health insurance premium continues on its growth trajectory

Overall health insurance premium grew 6%/22% YoY in Jan’22/Feb’22, respectively,
whereas retail health premium growth remained strong at 20%/17% YoY during the
same period. We expect the growth trajectory to continue for Mar’22 as well. Star
Health along with other SAHIs has outperformed the industry growth. Star Health
has managed to gain substantial market share backed by its continued focus on
retail business. Claims ratios are likely to moderate during 4QFY22 leading to
improvement in combined ratio for the company.

Exhibit 1: Quarterly performance

NII (INR m) Operating profit (INR m) Net profit (INR m)
CMP Variance Variance Variance Variance Variance Variance
Sector Rating Mar-22 Mar-22 Mar-22
(INR) YoY (%) QoQ (%) YoY (%) QoQ (%) YoY (%) QoQ (%)
AAVAS Financiers 2,517 Sell 1,624 23.2 2.9 1,315 29.0 3.7 1,037 18.3 16.3
Angel One 1,632 Buy 3,650 59.0 3.9 2,323 63.2 5.2 1,757 72.4 6.7
Bajaj Finance 7,489 Buy 51,823 35.0 9.6 40,528 32.7 3.4 24,418 81.3 14.9
Can Fin Homes 661 Buy 2,180 17.4 5.9 1,786 19.3 3.8 1,257 22.6 8.7
Chola. Inv. & Fin. 700 Buy 14,245 14.0 4.5 9,958 20.3 4.5 6,120 151.6 16.8
HDFC 2,679 Buy 46,270 14.9 8.0 42,345 4.4 3.0 34,063 23.1 8.5
ICICI Securities 633 Buy 8,994 21.6 -4.5 4,914 11.4 -3.6 3,611 9.6 -5.1
IIFL Wealth Mgt. 1,688 Buy 3,644 37.2 -3.6 1,414 24.8 -9.4 1,331 28.8 -13.1
Angel One 1,632 Buy 3,650 59% 4% 2,323 63% 5% 1,757 72% 7%
Star Health 739 Buy 41,010 26% 52% 2,952 NA NA -2,779 NA NA
L&T Fin. Holdings 85 Buy 14,463 -10.4 -1.5 11,273 -17.7 -4.1 4,064 52.8 31.9
LIC Housing Fin 385 Buy 15,010 -0.3 3.2 13,128 -1.8 -0.4 7,287 82.7 -5.0
M & M Financial 168 Buy 15,698 3.9 -0.7 10,137 -4.1 -4.6 2,592 72.8 -71.0
Manappuram Finance 122 Buy 9,205 -12.4 0.6 4,825 -33.8 6.5 2,830 -39.6 8.4
MAS Financial 577 Buy 948 21.4 6.9 647 12.6 6.7 421 15.2 4.9
Muthoot Finance 1,363 Buy 18,649 1.5 -1.1 14,071 3.4 0.0 10,383 4.3 0.0
PNB Housing 409 Neutral 3,852 -25.9 -7.2 3,736 -30.7 -2.5 1,869 47.1 -0.8
Repco Home Fin. 190 Buy 1,467 1.7 -1.7 1,148 -3.3 -3.7 551 -12.8 75.1
Shriram City Union 1,696 Buy 9,569 11.5 1.7 6,139 11.3 1.4 3,124 10.7 6.8
Shriram Transport Fin. 1,178 Buy 23,122 9.3 2.2 18,843 13.4 -1.2 9,188 21.7 35.0
NBFC 2,44,414 11.6 3.7 1,88,532 6.7 1.0 1,15,902 34.4 3.6
Note: HDFC Net Profit is PAT adjusted for exceptional items like profit on sale of investments/MTM on investments

Exhibit 2: Relative performance – three months (%) Exhibit 3: One-year relative performance (%)

Nifty Index MOFSL Financials Index Nifty Index MOFSL Financials Index
107 130

120
103
110
99
100

95 90
Mar-22
Jan-22
Dec-21

Feb-22

Mar-21

Mar-22
Jun-21

Dec-21
Sep-21

Source: MOFSL, Company Source: MOFSL, Company

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 March 2022 Results Preview | Sector: Financials - NBFCs

Exhibit 4: Changes in EPS estimates for FY22-23

Old estimates (INR ) New estimates (INR ) Change (%)
Company FY22 FY23 FY22 FY23 FY22 FY23
AAVAS 43.1 55.4 43.9 56.1 1.8 1.2
BAF 116.8 167.7 116.8 167.7 0.4 1.8
CANF 35.7 41.3 35.6 40.9 -0.3 -0.8
CIFC 25.2 31.0 25.2 31.6 0.1 2.2
HDFC 60.7 69.0 61.2 69.1 0.9 0.1
Angel One 72.2 87.5 72.2 87.5 - -
ISEC 43.6 46.7 43.6 46.7 - -
IIFWAM 62.2 75.7 62.2 75.7 - -
Star Health -21.6 12.1 -21.5 12.1 - -
LTFH 4.5 7.7 4.5 7.7 - -
LICHF 33.4 49.4 34.6 49.3 3.7 -0.2
MMFSL 1.8 16.7 5.2 14.1 188.2 -15.5
MASFIN 29.1 36.0 28.8 36.1 -1.2 0.4
Muthoot 100.4 114.9 100.5 113.1 0.1 -1.6
MGFL 16.1 21.0 16.0 20.3 -1.0 -3.0
PNBHF 50.5 61.2 50.7 61.0 0.5 -0.3
REPCO 34.8 50.8 32.7 51.3 -5.9 1.0
SCUF 162.8 198.7 165.9 198.5 1.9 -0.1
SHTF 96.1 132.2 93.9 124.8 -2.2 -5.6
Source: MOFSL, Company, Note: HDFC’s numbers are for the core mortgage business only

Exhibit 5: Valuation summary

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name (INR) Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
NBFC 31.1 24.2 20.4 3.7 3.3 2.9 12.0 13.8 14.4
AAVAS Financiers 2,517 Sell 43.9 56.1 69.9 57.3 44.9 36.0 7.2 6.2 5.3 13.4 14.8 15.8
Aditya Birla Cap 114 Buy 6.6 8.5 10.4 17.2 13.4 10.9 1.8 1.6 1.4 11.0 12.6 13.5
Angel One 1,632 Buy 72.2 87.5 103.3 22.6 18.6 15.8 8.9 6.8 5.3 45.0 41.2 37.6
Bajaj Finance 7,489 Buy 117.2 170.8 221.6 63.9 43.8 33.8 10.5 8.6 7.0 17.8 21.6 22.8
Can Fin Homes 661 Buy 35.6 40.9 49.4 18.6 16.2 13.4 2.9 2.5 2.1 16.7 16.4 16.9
Chola. Inv & Fin. 700 Buy 25.2 31.6 36.9 27.7 22.1 18.9 5.0 4.2 3.5 19.7 20.6 20.0
HDFC 2,679 Buy 61.2 69.1 78.2 43.7 38.8 34.3 4.1 3.8 3.4 12.3 12.6 12.8
ICICI Securities 633 Buy 43.6 46.7 50.3 14.5 13.6 12.6 8.8 7.2 6.0 67.9 58.4 51.9
IIFL Wealth Mgt 1,688 Buy 62.2 75.7 86.2 27.1 22.3 19.6 5.2 5.0 4.8 19.3 23.0 24.9
Indostar Capital 239 Buy 4.6 18.4 29.5 51.7 13.0 8.1 0.9 0.8 0.7 1.7 6.4 9.6
L&T [Link] 85 Buy 4.5 7.7 9.6 18.9 11.1 8.9 1.1 1.0 0.9 5.8 9.3 10.6
LIC Housing Fin 385 Buy 34.6 49.3 58.6 11.1 7.8 6.6 0.9 0.8 0.7 8.7 10.9 11.8
M & M Financial 168 Buy 5.2 14.1 14.6 32.2 11.9 11.5 1.4 1.3 1.2 4.3 11.0 10.6
Manappuram Finance 122 Buy 16.0 20.3 24.5 7.6 6.0 5.0 1.2 1.1 0.9 17.2 18.9 19.5
MAS Financial 577 Buy 28.8 36.1 46.4 20.0 16.0 12.4 2.5 2.2 1.9 13.1 14.7 16.6
Muthoot Finance 1,363 Buy 100.5 113.1 128.8 13.6 12.1 10.6 3.0 2.5 2.1 24.0 22.5 21.6
PNB Housing 409 Neutral 50.7 61.0 73.0 8.1 6.7 5.6 0.7 0.7 0.6 9.2 10.2 11.2
Repco Home Fin 190 Buy 32.7 51.3 55.8 5.8 3.7 3.4 0.5 0.5 0.4 9.5 13.4 12.9
Shriram City Union 1,696 Buy 165.9 198.5 237.9 10.2 8.5 7.1 1.3 1.1 1.0 12.8 13.8 14.8
Shriram Transport Fin. 1,178 Buy 93.9 124.8 146.8 12.5 9.4 8.0 1.3 1.1 1.0 10.9 12.6 13.3

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The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

Aavas Financiers Sell

CMP INR2,517 | TP: INR2,450 (-3%) EPS CHANGE (%): FY22|23: 1.8|1.2
 Expect AUM/disbursement to grow 20%/21% YoY.  Expect a sharp improvement in GS3 to 1.0% - 1.1%
 Expect a largely stable margin QoQ including upfront  Factoring in 1+dpd improvement of 150-200bp and
assignment income in the range of ~INR490m. provision write-backs in 4QFY22.
Quarterly performance INR m
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 2,286 2,430 2,577 2,470 2,630 2,787 2,830 2,914 9,764 11,162
Interest Expenses 1,118 1,144 1,169 1,152 1,128 1,160 1,251 1,290 4,582 4,829
Net Income 1,168 1,287 1,408 1,318 1,502 1,627 1,579 1,624 5,182 6,333
YoY Growth (%) 15 23 32 12 29 26 12 23 20 22
Other income 49 274 523 443 90 468 599 665 1,289 1,821
Total Income 1,218 1,560 1,932 1,761 1,592 2,095 2,178 2,290 6,471 8,155
YoY Growth (%) 4 6 34 28 31 34 13 30 18 26
Operating Expenses 526 634 665 742 673 864 910 975 2,566 3,421
YoY Growth (%) 6 21 6 14 28 36 37 31 12 33
Operating Profits 692 927 1,267 1,019 919 1,231 1,268 1,315 3,905 4,733
YoY Growth (%) 2 -3 55 40 33 33 0 29 23.0 21.2
Provisions 60 81 162 70 170 47 113 -17 371 313
Profit before Tax 632 846 1,105 950 749 1,183 1,155 1,332 3,533 4,420
Tax Provisions 131 184 249 74 150 262 264 296 638 972
Profit after tax 501 662 856 876 599 921 891 1,037 2,895 3,448
YoY Growth (%) 11 -13 26 46 20 39 4 18 16.2 19.1

Angel One Buy

CMP INR1,632 | TP: INR1,900 (17%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Revenue growth momentum to continue driven by strong  Gross customer acquisition run rate to remain stable with
F&O ADTO growth as well as expanding ADTO market improving activation rate.
share in the F&O segment.
 Interest income to grow sequentially driven by gained  Cost-to-income ratio is expected to remain stable
momentum in MTF book. sequentially and decline on YoY basis.
Quarterly Performance (INR m)
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from Operations 1,329 1,706 1,714 2,295 2,600 2,992 3,512 3,650 6,816 12,754
Other Income 290 411 505 721 807 888 936 1,032 2,155 3,662
Total Income 1,619 2,117 2,219 3,016 3,407 3,880 4,448 4,682 8,971 16,416
Change YoY (%) 37.7 85.9 94.3 136.5 110.4 83.3 100.5 55.2 90.0 83.0
Operating Expenses 795 1,074 1,126 1,553 1,744 2,040 2,191 2,309 4,675 8,284
Change YoY (%) 34.4 48.4 96.1 119.3 89.9 94.6 48.7 48.8 77.2
Depreciation 50.0 46.0 47.0 40.0 41.0 45.3 48.3 49.3 183.6 183.9
PBT 774 997 1,046 1,423 1,622 1,795 2,209 2,323 4,112 7,948
Change YoY (%) 6.2 251.9 215.0 230.1 109.5 80.1 111.2 63.2 200.2 93.3
Tax Provisions 164 251 313 404 408 451 562 566 1,131 1,987
Net Profit 610 746 733 1,019 1,214 1,343 1,647 1,757 2,981 5,961
Change YoY (%) -16.3 268.5 204.1 228.6 99.0 80.2 124.7 72.4 184.0 100.0

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Bajaj Finance Buy

CMP INR7,489 | TP: INR9,080 (21%) EPS CHANGE (%): FY22|23: 0.4|1.8
 Strong pick-up in disbursements in 4QFY22, with new loan  AUM growth was strong at 29% YoY/9% QoQ
bookings up ~15% YoY.
 Expect ~ 27% QoQ decline in credit costs in 4QFY22.  Reduction in liquidity to INR100b and no significant
interest income reversals should aid margin.
Quarterly Performance INR m
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 57,932 57,631 57,225 60,343 59,542 66,873 72,623 79,742 2,33,034 2,78,781
Interest expenses 24,976 23,581 23,627 21,956 22,536 23,976 25,345 27,920 94,140 99,776
Net Interest Income 32,956 34,050 33,598 38,388 37,007 42,898 47,277 51,823 1,38,894 1,79,004
YoY Growth (%) 10.3 8.4 -7.1 2.2 12.3 26.0 40.7 35.0 2.9 28.9
Other Operating Income 8,565 7,568 9,360 8,206 7,888 10,447 12,728 10,412 33,797 41,476
Net Income 41,521 41,618 42,958 46,594 44,895 53,345 60,005 62,235 1,72,691 2,20,480
YoY Growth (%) 12.4 4.1 -5.3 -0.5 8.1 28.2 39.7 33.6 2.1 27.7
Operating Expenses 11,567 11,559 13,896 16,060 13,733 20,297 20,814 21,707 53,082 76,551
Operating Profit 29,954 30,059 29,062 30,534 31,162 33,048 39,192 40,528 1,19,608 1,43,930
YoY Growth (%) 24.7 14.9 -3.2 -5.5 4.0 9.9 34.9 32.7 6.3 20.3
Provisions and Cont. 16,857 17,004 13,517 12,308 17,503 13,003 10,512 7,634 59,686 48,652
Profit before Tax 13,097 13,055 15,545 18,226 13,659 20,045 28,680 32,894 59,923 95,277
Tax Provisions 3,474 3,406 4,085 4,760 3,634 5,235 7,427 8,476 15,724 24,772
Net Profit 9,623 9,649 11,460 13,466 10,025 14,810 21,253 24,418 44,198 70,505
YoY Growth (%) -19.5 -35.9 -29.0 42.0 4.2 53.5 85.5 81.3 -16.0 59.5

Can Fin Homes Buy

CMP INR661 | TP: INR 750 (+15%) EPS CHANGE (%): FY22|23: -0.3|-0.8
 Expect ~8% sequential increase in disbursements backed  Anticipate ~17% repayment rate (levels similar to ones
by historically high levels of disbursements in 3QFY22. seen in 4QFY21).
 Expect credit costs of INR98m v/s INR77m in 4QFY21.  Watch out for commentary on margin and asset quality.

Quarterly performance INR m

Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 5,221 5,240 4,996 4,606 4,492 4,626 5,020 5,361 20,064 19,556
Interest Expenses 3,308 3,135 2,892 2,748 2,680 2,708 2,961 3,181 12,083 11,531
Net Interest Income 1,913 2,106 2,104 1,858 1,812 1,918 2,059 2,180 7,980 8,025
YoY Growth (%) 25.3 35.4 21.1 -1.4 -5.3 -8.9 -2.1 17.4 18.3 0.6
Other income 4 18 31 68 16 53 64 58 121 136
Total Income 1,917 2,124 2,135 1,925 1,828 1,971 2,124 2,239 8,101 8,161
YoY Growth (%) 23.8 30.9 20.6 0.1 -4.6 -7.2 -0.6 16.3 18.0 0.7
Operating Expenses 215 252 344 428 303 342 403 453 1,240 1,501
YoY Growth (%) -7.4 0.7 28.2 31.8 40.8 35.8 17.1 5.6 15.2 21.0
Operating Profits 1,702 1,872 1,791 1,497 1,526 1,628 1,720 1,786 6,861 6,660
YoY Growth (%) 29.4 36.4 19.3 -6.3 -10.4 -13.0 -4.0 19.3 18.6 -2.9
Provisions 441 151 16 77 65 -62 164 98 685 265
Profit before Tax 1,260 1,720 1,775 1,420 1,460 1,690 1,557 1,689 6,176 6,396
Tax Provisions 329 436 456 394 372 454 400 431 1,615 1,656
Profit after tax 932 1,284 1,319 1,026 1,088 1,236 1,157 1,257 4,561 4,739
YoY Growth (%) 15.0 31.5 23.7 12.8 16.8 -3.7 -12.3 22.6 21.3 3.9

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Cholamandalam Inv. & Fin. Buy

CMP INR700 | | TP: INR850 (+21%) EPS CHANGE (%): FY22|23: 0.1|2.2
 Expect 9% YoY AUM growth despite healthy disbursement
 Expect ~INR1.7b in credit costs, sharp decline YoY/QoQ.
growth of 49% YoY/15% QoQ.
 Expect ~20bp improvement in spreads, and stable margins
 Watch out for guidance on credit costs and loan growth.
QoQ.
Quarterly Performance INR m
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 20,710 23,580 24,263 23,690 23,712 23,468 24,095 25,082 92,242 96,356
Interest Expenses 11,307 11,852 11,404 11,197 11,038 10,778 10,460 10,837 45,759 43,114
Net Interest Income 9,403 11,728 12,859 12,493 12,674 12,690 13,634 14,245 46,483 53,242
YoY Growth (%) 14.1 35.3 38.6 37.2 34.8 8.2 6.0 14.0 31.6 14.5
Other Income 427 818 786 924 958 1,239 1,208 1,325 2,955 4,730
Total Income 9,830 12,546 13,644 13,417 13,632 13,929 14,842 15,570 49,437 57,972
YoY Growth (%) 4.3 23.0 26.0 32.1 38.7 11.0 8.8 16.0 21.7 17.3
Operating Expenses 3,458 3,551 3,688 5,138 3,705 5,179 5,317 5,612 15,834 19,813
Operating Profit 6,372 8,996 9,956 8,279 9,927 8,750 9,525 9,958 33,603 38,160
YoY Growth (%) 7.5 45.5 51.3 34.8 55.8 -2.7 -4.3 20.3 35.3 13.6
Provisions & Loan Losses 562 3,176 4,446 5,035 5,519 584 2,483 1,732 13,218 10,318
Profit before Tax 5,810 5,820 5,511 3,244 4,407 8,165 7,043 8,226 20,384 27,842
Tax Provisions 1,501 1,501 1,422 812 1,139 2,100 1,805 2,107 5,235 7,151
Net Profit 4,309 4,319 4,089 2,432 3,268 6,065 5,238 6,120 15,149 20,691
YoY Growth (%) 37.1 40.7 5.2 470.1 -24.2 40.4 28.1 151.6 44.0 36.6

HDFC Buy
CMP INR2,679| TP: INR3,200 (+19%) EPS CHANGE (%): FY22|23: 0.9|0.1
 AUM growth likely to be healthy (~13% YoY).  PPOP is likely to grow by only ~4% YoY. ESOP expense
Disbursements in individual loans have been strong with likely at INR0.6b-0.7b in 4QFY22 (lower-than-recent
early momentum in non-individual segment as well. quarterly run-rate).
 Margin to contract 10bp QoQ due to moderation in  Watch out for asset quality commentary in the Corporate
blended yields and negative carry from LCR requirements. segment and commentary on non-individual segment growth.
Quarterly Performance (INR m)
Y/E March FY21 FY22E
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 1,11,524 1,10,020 1,08,374 1,05,930 1,06,471 1,06,831 1,11,569 1,10,387 4,35,847 4,35,256
Interest Expense 78,171 73,991 68,327 65,660 65,219 65,735 68,731 67,285 2,86,148 2,66,970
Net Interest Income 33,353 36,028 40,047 40,271 41,252 41,096 42,838 43,101 1,49,700 1,68,287
YoY Change (%) 9.7 22.1 24.6 13.7 14.5 14.1 7.0 7.0 17.4 12.4
Assignment Income 1,834 1,590 4,103 4,375 2,675 1,278 2,247 3,169 11,903 9,368
NII (including assignment income) 35,188 37,619 44,150 44,646 43,926 42,373 45,085 46,270 1,61,602 1,77,655
YoY Change (%) 5.4 17.0 30.5 18.1 16.8 12.6 2.1 3.6 17.8 9.9
Other Operating Income 484 780 697 899 614 895 811 893 2,866 3,212
Core Income 35,672 38,399 44,847 45,545 44,540 43,268 45,896 47,163 1,64,468 1,80,867
YoY Change (%) 4.9 17.1 29.9 17.3 16.0 12.7 2.3 3.6 17.4 10.0
Operating Expenses 3,964 3,658 5,372 4,986 5,507 5,299 4,780 4,818 17,980 20,403
YoY Change (%) 3.8 -3.5 39.9 41.1 50.5 44.8 -11.0 -3.4 20.0 13.5
Core Operating profits 31,708 34,741 39,476 40,558 39,033 37,970 41,116 42,345 1,46,488 1,60,464
YoY Change (%) 5.0 19.8 28.6 14.9 12.4 9.3 4.2 4.4 17.0 9.5
Provisions 2,990 4,360 5,940 7,190 6,860 4,520 3,930 3,532 20,480 18,842
Core PBT 28,718 30,381 33,536 33,368 32,173 33,450 37,186 38,813 1,26,008 1,41,623
YoY Change (%) 6.4 14.9 20.9 19.0 5.9 10.1 10.9 16.3 15.4 12.4
Profit on Sale of Inv./MTM on Inv. 13,352 1,660 3,874 4,661 6,652 1,444 1,256 2,085 23,542 11,436
Dividend income 2,982 3,230 22 1,106 164 11,713 1,955 1,280 7,340 15,111
One off expense/Prov -9,000 -9,000 0
Other Income 16 47 93 104 57 104 86 106 261 353
PBT 36,068 35,318 37,525 39,239 39,046 46,711 40,482 42,285 1,48,151 1,68,523
YoY Change (%) -9.5 -22.0 -59.0 45.7 10.6 32.3 7.9 7.8 -27.2 13.8
Provision for Tax 5,553 6,617 8,267 7,441 9,039 8,906 7,875 8,222 27,878 34,042
PAT 30,515 28,701 29,258 31,798 30,007 37,805 32,607 34,063 1,20,273 1,34,481
YoY Change (%) -4.7 -27.6 -65.1 42.4 4.5 31.7 11.4 7.1 -32.3 11.8

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ICICI Securities Buy

CMP INR633 | TP: INR1000 (+58%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Cash volumes remained weak in both Jan’22 and Feb’22  Investment banking revenue to see some moderation with
owing to volatile equity markets on geopolitical crisis. lower execution of deals in weak equity market
 Distribution income to remain strong with decent traction environment.
in LI and MF sales as well as tie-up with HDFC Life starting  Cost-to-income ratio is expected to decline sequentially.
to contribute.
Quarterly Performance (INR m)
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from Operations 5,460 6,807 6,201 7,393 7,453 8,564 9,416 8,998 25,862 34,431
Other Income 4 -2 -1 0 24 2 3 -4 0 25
Total Income 5,464 6,805 6,200 7,393 7,477 8,566 9,419 8,994 25,862 34,456
Change YoY (%) 35.9 62.7 46.7 53.4 36.8 25.9 51.9 21.6 49.9 33.2
Operating Expenses 2,870 3,082 2,622 2,980 3,310 3,856 4,321 4,080 11,554 15,567
Change YoY (%) 26.9 31.6 10.4 8.7 15.3 25.1 64.8 36.9 18.9 34.7
PBT 2,594 3,723 3,578 4,413 4,167 4,709 5,099 4,914 14,308 18,889
Change YoY (%) 47.4 102.2 93.3 112.4 60.6 26.5 42.5 11.4 90.0 32.0
Tax Provisions 663 942 908 1,118 1,060 1,197 1,295 1,303 3,631 4,854
Net Profit 1,931 2,782 2,670 3,295 3,107 3,512 3,804 3,611 10,677 14,035
Change YoY (%) 69.7 105.9 94.6 111.4 60.9 26.3 42.5 9.6 97.0 31.4

IIFL Wealth Management Buy

CMP INR1,688 | TP: INR2,100 (+24%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Post a sharp jump in yields in 3QFY22, we expect some  Revenue is expected to decline sequentially led by lower
moderation in yields for both ARR and TBR assets. yields and muted AUM growth.
 Overall AUM growth is likely to remain muted led by  Cost-to-income ratio is expected to rise.
marginal decline in TBR assets.
Quarterly performance INR m
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 1,988 2,120 2,392 2,656 2,834 3,143 3,781 3,644 9,154 13,402
Change (%) -5.7 -8.5 8.2 3.6 42.6 48.3 58.1 37.2 -0.5 46.4
ARR Assets Income 1,277 1,401 1,543 1,608 1,936 2,222 2,451 2,420 5,828 9,029
TBR Assets Income 711 719 849 1,047 898 921 1,330 1,224 3,325 4,374
Operating Expenses 1,299 1,339 1,519 1,523 1,531 1,730 2,220 2,230 5,679 7,710
Change (%) 2.4 2.7 5.2 -6.5 17.8 29.2 46.2 46.4 0.6 35.8
Cost to Income Ratio (%) 65.4 63.2 63.5 57.3 54.0 55.0 58.7 61.2 62.0 57.5
Operating Profits 689 781 873 1,133 1,304 1,413 1,561 1,414 3,474 5,692
Change (%) -18.0 -22.8 13.8 21.0 89.3 80.9 78.8 24.8 -2.3 63.8
Other Income 405 347 406 215 206 480 420 394 1,375 1,500
Profit Before Tax 1,093 1,128 1,279 1,348 1,510 1,893 1,981 1,808 4,849 7,192
Change (%) 21.3 37.5 27.9 851.5 38.1 67.8 54.9 34.1 69.3 48.3
Tax 271 257 314 315 341 458 449 478 1,157 1,726
Tax Rate (%) 24.8 22.8 24.6 23.4 22.6 24.2 22.7 26.4 23.9 24.0
PAT 823 871 965 1,033 1,169 1,435 1,532 1,331 3,692 5,466
Change (%) 33.8 27.3 30.1 NM 42.0 64.6 58.8 28.8 83.5 48.1
PAT Margins (%) 41.4 41.1 40.3 38.9 41.2 45.6 40.5 36.5 40.3 40.8

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L&T Finance Holdings Buy

CMP INR85 | TP: INR100 (+17%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect MFI, Tractor and Housing to be the key growth  Adjusted for any one-offs, we expect the margin to
drivers. Overall, we expect the loan book to contract by improve ~24bp. Fees likely to be higher driven by
~8% YoY led by wholesale infra finance and real estate. improved disbursements.
 Anticipate the company to deliver a sequential decline in  Watch out for commentaries on loan growth and asset
credit costs in 4QFY22. quality in infra and real estate finance.
Quarterly Performance INR m
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 32,952 32,816 33,044 32,236 30,083 29,028 28,744 28,037 1,31,049 1,15,892
Interest Expenses 19,782 18,888 17,238 16,091 15,089 14,417 14,066 13,574 71,999 57,146
Net Interest Income 13,170 13,928 15,806 16,145 14,994 14,611 14,678 14,463 59,049 58,746
Change YoY (%) -5.2 -0.3 7.7 9.3 13.8 4.9 -7.1 -10.4 3.0 -0.5
Other Operating Income 918 1,265 1,633 1,916 1,318 1,490 1,964 2,033 5,732 6,805
Net Operating Income 14,089 15,193 17,439 18,060 16,313 16,101 16,642 16,496 64,782 65,551
Change YoY (%) -15.7 -6.6 0.2 16.5 15.8 6.0 -4.6 -8.7 -1.7 1.2
Other income 2,361 1,008 1,187 1,720 614 826 1,284 1,303 6,276 4,026
Total Income 16,449 16,201 18,627 19,781 16,926 16,928 17,925 17,799 71,058 69,578
Change YoY (%) -6.9 -6.2 0.9 21.9 2.9 4.5 -3.8 -10.0 2.0 -2.1
Operating Expenses 4,175 4,583 4,913 6,078 5,485 5,905 6,167 6,526 19,749 24,083
Change YoY (%) -5.9 -4.3 -7.3 15.5 31.4 28.8 25.5 7.4 -0.2 21.9
Operating Profits 12,275 11,618 13,713 13,703 11,441 11,023 11,759 11,273 51,309 45,495
Change YoY (%) -7.2 -7.0 4.2 25.0 -6.8 -5.1 -14.3 -17.7 2.9 -11.3
Provisions 11,282 8,328 10,227 6,520 9,062 7,830 7,418 5,814 36,357 30,124
Profit before Tax 993 3,290 3,487 7,182 2,379 3,193 4,341 5,459 14,952 15,372
Tax Provisions -481.8 813.1 609 4,523 609 963 1,261 1,395 5,463 4,227
Profit after tax 1,474 2,477 2,878 2,660 1,770 2,230 3,080 4,064 9,489 11,144
Change YoY (%) -73 42 -51.4 -30.9 20.1 -10.0 7.0 52.8 -44.2 17.4

LIC Housing Finance Buy

CMP INR385 | TP: INR470 (+22%) EPS CHANGE (%): FY22|23: 3.7|-0.2
 Expect lower CoF and largely stable yields. We factor in a
 Expect loan growth at 10% YoY, with a largely stable mix.
QoQ improvement of ~4bp in spreads in 4QFY22.
 Estimate provisions of INR3.95b v/s INR3.55b QoQ.  Watch out for commentaries on growth and asset quality.

Quarterly Performance INR m

Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 49,851 49,382 48,761 48,978 48,253 46,734 50,006 51,594 1,96,971 1,96,586
Interest Expenses 37,645 37,002 35,951 33,929 35,500 35,060 35,460 36,459 1,44,526 1,42,478
Net Interest Income 12,206 12,380 12,810 15,049 12,753 11,674 14,546 15,135 52,445 54,108
YoY Growth (%) 3.3 -1.1 2.2 32.7 4.5 -5.7 13.6 0.6 8.8 3.2
Fees and other income -76 437 479 666 338 416 698 648 1,506 2,100
Net Income 12,130 12,817 13,289 15,715 13,091 12,090 15,244 15,783 53,951 56,208
YoY Growth (%) 0.7 0.3 3.7 40.0 7.9 -5.7 14.7 0.4 10.4 4.2
Operating Expenses 1,367 1,615 1,686 2,347 2,815 2,609 2,070 2,530 7,015 10,024
Operating Profit 10,763 11,202 11,603 13,368 10,276 9,481 13,174 13,253 46,936 46,184
YoY Growth (%) -2.0 -1.2 1.5 49.5 -4.5 -15.4 13.5 -0.9 9.9 -1.6
Provisions and Cont. 587 1,109 1,907 9,848 8,346 6,392 3,556 3,949 13,450 22,243
Profit before Tax 10,177 10,093 9,696 3,520 1,929 3,090 9,619 9,304 33,486 23,941
Tax Provisions 2,002 2,184 2,426 -469 395 611 1,945 1,957 6,142 4,908
Net Profit 8,175 7,909 7,270 3,989 1,534 2,479 7,673 7,347 27,343 19,033
YoY Growth (%) 33.9 2.4 21.7 -5.3 -81.2 -68.7 5.5 84.2 13.8 -30.4

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Mahindra Financial Services Buy

CMP INR168 | TP: INR200 (+19%) EPS CHANGE (%): FY22|23: 188.2|-15.5
 Disbursements grew by 52% YoY/13% QoQ in 4QFY22.  Estimate credit costs of INR6.6b led by the write-offs of
 Expect margins to decline QoQ since there were interest INR12b and increase in PCR on Stage 3 loans to ~58%.
income write-backs in the previous two quarters.  Guidance on asset quality and provision write-backs will
be key monitorables.

Quarterly Performance INR m

Y/E March FY21 FY22
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Operating Income 26,405 26,129 25,418 26,000 21,760 25,079 25,317 26,048 1,03,952 98,204
Other Income 144 366 331 375 111 145 114 141 1,277 511
Total income 26,549 26,495 25,749 26,375 21,871 25,224 25,430 26,190 1,05,229 98,715
YoY Growth (%) 10.0 4.3 -1.6 -1.4 -17.6 -4.8 -1.2 -0.7 2.7 -6.2
Interest Expenses 12,646 12,216 11,583 10,887 10,179 10,151 9,514 10,351 47,332 40,195
Net Income 13,903 14,279 14,165 15,488 11,691 15,073 15,916 15,839 57,897 58,520
YoY Growth (%) 8.3 6.7 0.7 11.7 -15.9 5.6 12.4 2.3 6.9 1.1
Operating Expenses 3,457 3,968 4,185 4,915 4,203 4,910 5,294 5,702 16,325 20,110
Operating Profit 10,447 10,311 9,980 10,573 7,488 10,163 10,623 10,137 41,573 38,410
YoY Growth (%) 44.2 25.9 12.4 9.4 -28.3 -1.4 6.4 -4.1 22.3 -7.6
Provisions 8,427 6,194 13,667 8,860 28,186 -3,668 -1,474 6,641 37,348 29,685
Profit before Tax 2,020 4,117 -3,687 1,713 -20,698 13,831 12,096 3,496 4,224 8,725
Tax Provisions 523 1,082 -946 214 -5,411 3,602 3,150 959 873 2,286
Net Profit 1,497 3,035 -2,741 1,500 -15,288 10,229 8,946 2,592 3,352 6,439
YoY Growth (%) 118.7 20.6 -175.0 -32.1 -1,121.3 237.0 -426.3 72.8 -63.0 92.1

Manappuram Finance Buy

CMP INR122 | TP: INR160 (+30%) EPS CHANGE (%): FY22|23: -1.0|-3.0
 Anticipate 2% QoQ growth in consolidated AUM. Expect  Watch out for commentaries on demand in gold loans and
flat QoQ Gold loan growth. asset quality in the MFI and Vehicle segments.
 Factored in a margin compression of ~40bp and spread  Credit cost to remain stable QoQ and a large part of it will
compression of ~80bp on the consolidated book. be attributable to the MFI and housing segments.

Quarterly Performance INR m

Y/E March FY21 FY22
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 14,758 15,473 15,919 15,746 15,216 14,787 14,461 14,542 61,896 59,006
Interest Expenses 5,668 5,710 5,573 5,239 4,931 4,924 5,311 5,337 22,190 20,502
Net Interest Income 9,089 9,763 10,347 10,507 10,285 9,863 9,151 9,205 39,706 38,504
YoY Growth (%) 20.3 17.4 16.2 17.9 13.2 1.0 -11.6 -12.4 15.1 -3.0
Other income 407 307 581 557 521 758 607 555 1,851 2,441
Total Income 9,496 10,070 10,928 11,063 10,806 10,621 9,758 9,760 41,557 40,945
Operating Expenses 3,121 3,545 3,553 3,777 3,720 4,593 5,228 4,935 13,996 18,476
Operating Profit 6,376 6,524 7,375 7,287 7,086 6,028 4,530 4,825 27,561 22,469
YoY Growth (%) 44.5 12.9 21.2 11.0 11.1 -7.6 -38.6 -33.8 22.8 -18.5
Provisions 1,453 1,080 802 1,066 1,223 1,078 1,048 1,050 4,401 4,398
Profit before Tax 4,923 5,444 6,573 6,221 5,864 4,950 3,482 3,775 23,160 18,071
Tax Provisions 1,243 1,390 1,741 1,537 1,495 1,252 872 944 5,911 4,563
Net Profit 3,680 4,054 4,832 4,684 4,369 3,699 2,610 2,830 17,250 13,508
YoY Growth (%) 37.9 -8.2 15.5 17.6 18.7 -8.8 -46.0 -39.6 16.5 -21.7

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MAS Financial Buy

CMP IN577 | TP: INR750 (+30%) EPS CHANGE (%): FY22|23: -1.2|0.4
 Expect AUM to grow 6% QoQ/ ~13% YoY.  Net interest income is likely to grow 7% QoQ.
 Watch out for commentary on asset quality in
 Expect provisions of INR80m in 4QFY22 (largely stable QoQ).
partnered NBFCs.

Quarterly Performance INR M

Y/E March FY21 FY22
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from Operations 1,604 1,523 1,421 1,391 1,485 1,567 1,718 1,839 5,939 6,609
Interest Income 1,416 1,199 1,082 1,141 1,283 1,352 1,473 1,572 4,831 5,679
Gain on assignments 157 245 257 174 149 155 175 192 806 670
Other operating Income 31 79 82 76 53 61 70 75 302 260
Interest expenses 694 701 639 611 699 759 831 891 2,645 3,181
Total income 910 821 782 781 786 808 887 948 3,294 3,428
Growth Y-o-Y (%) -4.4 -14.2 -26.4 -22.8 -13.7 -1.6 13.4 21.4 -17.8 4.1
Operating Expenses 122 125 146 206 149 203 280 300 616 933
Operating Profits 788 696 636 575 636 605 607 647 2,678 2,495
Growth Y-o-Y (%) 4.2 -4.0 -22.7 -26.0 -19.2 -13.1 -4.5 12.6 -13.8 -6.8
Provisions 299 240 152 75 141 90 68 79 749 378
Profit before tax 489 456 484 500 495 515 539 568 1,929 2,118
Growth Y-o-Y (%) -21.9 -8.7 -25.4 7.8 1.3 12.9 11.4 13.7 -15.5 9.8
Tax Provisions 123 114 122 134 127 132 138 147 494 544
Net Profit 366 342 362 365 368 383 401 421 1,435 1,573
Growth Y-o-Y (%) -10.2 -14.9 -25.2 5.9 0.6 12.0 10.8 15.2 -13.8 9.6

Muthoot Finance Buy

CMP INR 1,363| TP: INR1,710 (+25%) EPS CHANGE (%): FY22|23: 0.1|-1.6
 We bake in a QoQ standalone AUM growth of ~5% driven  Expect auctions of ~INR7-8b and improvement in both
by higher volumes since gold prices were up ~10% QoQ. Stage 2 and Stage 3 loans
 Building in a ~50bp sequential compression in margins and  Watch out for commentaries on demand for Gold loans
spreads. and potential auctions in 1QFY23.

Quarterly Performance INR m

Y/E March FY21 FY22
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Income from operations 23,160 25,066 27,168 27,891 26,837 27,920 28,394 28,017 1,03,285 1,11,167
Other operating income 691 768 480 348 301 385 288 284 2,287 1,258
Total Operating income 23,851 25,834 27,649 28,239 27,138 28,304 28,682 28,301 1,05,572 1,12,425
YoY Growth (%) 28.4 20.9 19.1 17.6 13.8 9.6 3.7 0.2 21.1 6.5
Other income 3 11 116 42 11 29 36 34 171 110
Total Income 23,854 25,845 27,765 28,281 27,149 28,333 28,718 28,335 1,05,744 1,12,535
YoY Growth (%) 28.3 20.7 19.6 17.7 13.8 9.6 3.4 0.2 21.2 6.4
Interest Expenses 8,715 9,241 9,455 9,513 9,822 9,794 9,533 9,367 36,924 38,517
Net Income 15,139 16,603 18,309 18,768 17,327 18,539 19,185 18,967 68,819 74,018
Operating Expenses 3,738 4,496 4,410 5,160 3,989 4,397 4,519 4,896 17,804 17,801
Operating Profit 11,400 12,107 13,900 13,608 13,338 14,142 14,666 14,071 51,015 56,217
YoY Growth (%) 39.0 12.7 20.1 23.5 17.0 16.8 5.5 3.4 22.8 10.2
Provisions 146 107 585 111 337 744 889 122 950 2,092
Profit before Tax 11,255 12,000 13,314 13,496 13,001 13,398 13,777 13,950 50,065 54,125
Tax Provisions 2,847 3,056 3,401 3,540 3,290 3,458 3,488 3,566 12,843 13,802
Net Profit 8,408 8,944 9,914 9,957 9,712 9,940 10,289 10,383 37,222 40,323
YoY Growth (%) 58.6 4.2 21.6 22.1 15.5 11.1 3.8 4.3 23.3 8.3

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PNB Housing Finance Neutral

CMP INR409 | TP: INR440 (+8%) EPS CHANGE (%): FY22|23: 0.5|-0.3
 Rebalancing portfolio towards Retail to result in a  Watch out for commentary around capital raise and the
moderation in AUM growth (-13% YoY). rights issue.
 Expect provisions at INR1.35b v/s INR1.3b QoQ.  Watch out for commentaries on asset quality of the
corporate loan book and improvement in retail asset
quality.

Quarterly performance INR m

FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 18,015 19,603 17,579 16,701 16,114 14,999 14,112 13,469 71,898 58,694
Interest Expenses 13,635 13,397 12,462 11,504 11,029 10,348 9,961 9,617 50,998 40,955
Net Interest Income 4,380 6,206 5,116 5,198 5,085 4,651 4,151 3,852 20,901 17,740
YoY Growth (%) -6.2 25.5 19.2 23.0 16.1 -25.1 -18.9 -25.9 15.3 -15.1
Other income 708 612 1,385 1,638 815 865 844 1,288 4,343 3,812
Total Income 5,088 6,818 6,501 6,835 5,900 5,516 4,995 5,140 25,243 21,551
YoY Growth (%) -29.3 -3.8 5.9 19.5 16.0 -19.1 -23.2 -24.8 -3.5 -14.6
Operating Expenses 1,042 1,067 996 1,448 1,152 1,186 1,163 1,404 4,554 4,906
YoY Growth (%) -26.4 -18.9 -26.0 0.4 10.6 11.1 16.7 -3.0 -17.5 7.7
Operating Profits 4,046 5,751 5,505 5,387 4,748 4,330 3,832 3,736 20,689 16,646
YoY Growth (%) -30.0 -0.4 14.9 26.0 17.3 -24.7 -30.4 -30.7 0.3 -19.5
Provisions 751 1,796 2,567 3,506 1,595 1,418 1,295 1,349 8,619 5,657
Profit before Tax 3,295 3,956 2,938 1,881 3,153 2,912 2,537 2,387 12,070 10,989
Tax Provisions 723 823 614 611 720 560 653 518 2,978 2,451
Profit after tax 2,572 3,133 2,324 1,270 2,433 2,352 1,885 1,869 9,092 8,538
YoY Growth (%) -9.6 -14.6 -2.0 -152.5 -5.4 -24.9 -18.9 47.1 53.9 -6.1

Repco Home Finance Buy

CMP INR190 | TP: INR250 (+31%) EPS CHANGE (%): FY22|23: -5.9|1.0
 Expect disbursements to be up 43% QoQ.  Expect spreads to decline 15bp QoQ.
 AUM to decline ~2% YoY while credit costs could be  Watch out for commentary around the asset quality and
potentially elevated to increase the PCR on loan assets guidance on disbursements/AUM growth

Quarterly performance INR m

Y/E March FY21 FY22
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 3,384 3,486 3,568 3,297 3,205 3,304 3,211 3,171 13,518 12,890
Interest Expenses 2,104 2,090 2,024 1,855 1,757 1,744 1,719 1,704 8,072 6,924
Net Income 1,280 1,396 1,544 1,442 1,448 1,560 1,492 1,467 5,446 5,967
YoY Growth (%) 0.7 12.9 17.1 4.6 13.1 11.7 -3.4 1.7 10.6 9.6
Other income 35 16 30 107 19 42 44 58 404 162
Total Income 1,315 1,412 1,574 1,549 1,467 1,602 1,536 1,525 5,850 6,128
YoY Growth (%) 3.6 11.2 19.0 10.7 11.5 13.4 -2.4 -1.6 11.2 4.8
Operating Expenses 235 257 292 361 246 283 344 376 1,144 1,249
YoY Growth (%) 0.1 3.2 6.3 17.6 4.5 10.2 17.9 4.3 7.5 9.1
Operating Profits 1,080 1,155 1,282 1,188 1,221 1,318 1,192 1,148 4,706 4,879
YoY Growth (%) 4.4 13.1 22.3 8.7 13.0 14.1 -7.0 -3.3 12.1 3.7
Provisions 221 72 222 292 783 169 765 400 808 2,118
Profit before Tax 859 1,083 1,061 896 437 1,149 427 748 3,898 2,761
Tax Provisions 219 275 265 264 116 290 112 197 1,022 715
Profit after tax 640 808 796 632 321 859 315 551 2,876 2,046
YoY Growth (%) 2.6 -19.7 14.2 32.5 -49.8 6.3 -60.5 -12.8 2.6 -28.9

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Shriram City Union Finance Buy

CMP INR1,696 | TP: INR2,220 (+31%) EPS CHANGE (%): FY22|23: 1.9|-0.1
 Estimate disbursements of ~INR70b led by MSME and  Expect ~3% QoQ/13% YoY growth in AUM.
personal loans.
 CoF likely to be stable QoQ. While spreads are expected to  Watch out for commentaries on growth and asset quality
remain stable, margins could exhibit a ~30bp decline. in the MSME, 2W and PL segments. Digital play also
remains a key monitorable.

Quarterly Performance INR m

Y/E MARCH FY21 FY22E
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 13,899 13,698 13,978 14,140 14,539 15,147 15,891 16,638 55,716 62,214
Interest expenses 5,375 5,190 5,215 5,559 5,746 6,158 6,486 7,069 21,339 25,458
Net Interest Income 8,525 8,508 8,763 8,581 8,793 8,989 9,406 9,569 34,377 36,756
Y-o-Y Growth (%) -6.7 -5.5 -1.3 1.1 3.1 5.6 7.3 11.5 -3.2 6.9
Fees and Other Income 246 293 414 716 417 696 1,124 767 1,669 3,004
Net Operating Income 8,771 8,801 9,177 9,297 9,210 9,685 10,530 10,336 36,046 39,760
Y-o-Y Growth (%) -8.2 -7.8 -2.4 3.3 5.0 10.0 14.7 11.2 -3.9 10.3
Operating Expenses 3,105 3,182 3,575 3,781 3,517 3,890 4,472 4,196 13,644 16,075
Operating Profit 5,666 5,619 5,602 5,516 5,693 5,795 6,058 6,139 22,402 23,685
Y-o-Y Growth (%) -1.9 -2.2 -2.2 7.2 0.5 3.1 8.1 11.3 0.1 5.7
Provisions 3,102 2,015 1,755 1,638 2,901 2,029 2,184 1,968 8,509 9,082
Profit before Tax 2,564 3,604 3,847 3,878 2,792 3,766 3,873 4,172 13,893 14,602
Tax Provisions 642 1,035 1,050 1,057 712 943 948 1,048 3,785 3,651
Net Profit 1,923 2,569 2,797 2,821 2,080 2,823 2,925 3,124 10,109 10,952
Y-o-Y Growth (%) -24.1 -13.7 -5.8 84.3 8.2 9.9 4.6 10.7 1.0 8.3

Shriram Transport Finance Buy

CMP INR1,178| TP: INR1,515 (+29%) EPS CHANGE (%): FY22|23: -2.2|-5.6
 While Stage 3 could exhibit minor improvement QoQ, we  Estimate spreads to remain stable QoQ while margins
expect continued upgrades from Stage 2 to Stage 1. could decline ~15bp sequentially.
 Baked in provisions of INR6.3b (v/s INR9.8b QoQ),  Watch out for commentaries on AUM growth, asset
including prudential provisions. quality and progress made on the announced merger.
Quarterly Performance
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 41,026 42,997 43,815 44,033 44,793 45,784 46,607 47,302 1,71,281 1,84,486
Interest expenses 22,672 22,629 22,363 22,879 24,981 24,352 23,973 24,179 90,543 97,485
Net Interest Income 18,354 20,368 21,452 21,154 19,812 21,432 22,634 23,122 80,739 87,000
Change YoY (%) -6.4 2.0 7.5 9.4 7.9 -0.1 5.5 9.3 1.0 7.8
Other Operating Income 383 480 569 907 1,688 1,194 1,672 1,292 2,923 5,846
Other Income 38 35 48 39 34 50 45 47 160 175
Net Income 18,775 20,883 22,069 22,100 21,534 22,676 24,351 24,461 83,821 93,022
Change YoY (%) -7.1 -0.9 4.9 10.1 14.7 2.8 10.3 10.7 0.9 11.0
Operating Expenses 3,823 5,125 5,432 5,484 4,791 5,507 5,275 5,619 19,857 21,192
Operating Profit 14,952 15,759 16,637 16,617 16,743 17,169 19,076 18,843 63,964 71,830
Change YoY (%) -3.1 -0.7 2.0 12.8 12.0 3.2 14.7 13.4 2.6 12.3
Provisions 10,646 6,555 6,747 7,236 14,396 6,762 9,843 6,263 31,184 37,264
Profit before Tax 4,306 9,204 9,890 9,380 2,347 10,407 9,233 12,580 32,780 34,566
Tax Provisions 1,105 2,359 2,613 1,831 648 2,694 2,427 3,392 7,908 9,160
Net Profit 3,201 6,846 7,277 7,549 1,699 7,712 6,806 9,188 24,873 25,406
Change YoY (%) -49.5 -10.5 -17.2 238.0 -46.9 6.0 -6.5 21.7 -0.6 2.1

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Star Health Buy

CMP INR739 | TP: INR750 (+1%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Premium growth is expected to remain strong with  Expense ratio to decline both sequentially and YoY.
continued momentum in the health industry.
 Claims ratio to normalize after a surge in 3QFY22 due to  Combined ratio to taper down materially on a YoY and
COVID-related claims. QoQ basis.
Quarterly Performance (INR m)
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross premium 15,386 24,173 21,708 32,618 21,851 28,847 27,045 41,010 93,490 1,18,753
Net written premium 11,537 17,837 16,215 26,205 20,497 27,293 25,568 38,270 71,448 1,11,628
Net earned premium 10,621 14,812 14,196 6,639 22,430 24,167 25,283 33,050 50,228 1,04,930
Investment Income 520 648 487 847 871 971 901 1,115 2,606 3,857
Total Income 11,141 15,460 14,684 7,486 23,301 25,138 26,184 34,165 52,834 1,08,788
Change YoY (%) 30.6 42.7 29.8 -58.1 109.2 62.6 78.3 356.4 8.1 105.9
Incurred claims 5,430 10,907 13,448 13,903 20,415 20,696 26,442 26,951 43,695 94,504
Net commission 1,132 1,896 1,710 1,126 2,665 3,597 3,588 5,185 5,838 15,034
Employee expense 2,100 2,988 2,484 3,912 2,812 3,288 2,990 4,423 11,750 13,513
Other expenses 604 343 722 619 698 1,746 1,388 1,526 2,264 5,358
Total Operating Expenses 9,266 16,134 18,364 19,560 26,590 29,326 34,407 38,085 63,546 1,28,409
Change YoY (%) -1.6 36.0 56.7 59.1 187.0 81.8 87.4 94.7 40.3 102.1
Underwriting profit 1,355 (1,323) (4,168) -12,921 (4,160) (5,159) (9,124) 2,925 -13,318 -23,478
Other charges - - - - (18) (842) - 0.30 - -860
Operating profit 1,875 (675) (3,681) -12,074 (3,271) (3,347) (8,223) -3,921 -10,712 -18,761
Shareholder's P/L
Transfer from Policyholder's 1,875 (675) (3,681) -12,074 (3,271) (3,347) (8,223) -3,921 (10,712) (18,761)
Investment income 374 352 627 382 556 1,112 926 299 1,634 2,892
Total Income 2,249 (322) (3,054) -11,692 (2,715) (2,235) (7,297) -3,622 -9,078 -15,869
Provisions other than taxation - - - - - - 23 -23 344 -
Other expenses 79 71 113 1,091 90 90 363 81 1,038 623
Total Expenses 79 71 113 1,091 90 90 386 58 1,382 623
PBT 2,170 -394 -3,167 -12,783 -2,805 -2,325 -7,683 -3,680 -10,460 -16,492
Change YoY (%) -410.9 -52.4 1,436.5 -320.6 -229.3 490.2 142.6 -71.2 -353.0 57.7
Tax Provisions 546 -73 -747 -3,214 -705 -618 -1,899 -901 -2,204 -4,123
Net Profit 1,624 -321 -2,420 -9,569 -2,100 -1,706 -5,784 -2,779 -8,256 -12,369
Change YoY (%) -332.6 -59.5 1,074.1 -319.1 -229.3 432.1 139.0 -71.0 -403.6 49.8

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 March 2022 Results Preview | Sector: Healthcare

Healthcare
Company Earnings growth to show an uptick despite cost pressures
Alembic Pharma. Geopolitical conflict, China and COVID keep the raw material and logistics
Alkem Lab. costs at elevated levels
Ajanta Pharma
Apollo Hospitals After five quarters of downward trend, we expect 4QFY22 earnings to deliver 5.1%
Aurobindo Pharma YoY growth on an aggregate basis. We forecast sales/EBITDA to grow 8.6%/4.6% YoY
Biocon
to INR540b/118b, respectively, (excluding Apollo Hospitals). COVID-related off-take
Cipla
coupled with revival in Domestic Formulation (DF) core therapies, and marginal
Divi’s Lab.
improvement in ANDA approvals would drive the 4QFY22 sales growth. The
Dr. Reddy’s Lab.
Eris Lifesciences
elevated raw material and logistics costs are anticipated to lower EBITDA and PAT
Gland Pharma growth on an aggregate level for the quarter.
Glenmark Pharma. DF: Brief COVID wave and non-COVID business propel growth in 4QFY22
Granules India
We expect the DF segment sales to grow 14.3% YoY on an aggregate basis for the
GSK Pharma.
companies under our coverage. Better traction was seen in COVID as well as non-
IPCA Lab.
COVID therapies for the quarter. Respiratory, Pain, and Anti-Infective therapies, in
Jubilant Pharmova
Laurus Labs
particular, witnessed strong growth driven by healthy demand and partly by the low
Lupin base of the past year. However, the third wave resulted in muted demand for
Solara chronic therapies. MR-doctor-patient connectivity has improved further and it has
Strides Pharma. returned to near normalcy level post-COVID. Company-wise, we expect DRRD to
Sun Pharma. report 35% YoY growth in DF revenues in 4QFY22 – the highest in our coverage
Torrent Pharma. universe – backed by continued outperformance in Gastro/Cardio/Anti-Diabetes.
Zydus Lifesciences. We forecast ZYDUS/ IPCA/SUNP/GLAXO to deliver 32%/20%/15%/14% YoY growth
in DF sales, respectively, owing to: a) COVID-induced growth (ZYDUS), b) healthy
traction in Pain franchise led by Zerodol (IPCA), b) MR additions (SUNP), and d)
revival in anti-infective segment (GLXO).
US: Gradual recovery on the cards
After two quarters of YoY contraction, we project the US sales to be back on YoY
growth path, albeit at a slower rate. We forecast the US sales to grow 2% YoY in
4QFY22 to USD1.9b on an aggregate basis. The ANDA approvals for our coverage
companies increased slightly to 45 in 4QFY22 from 43 in 3QFY22. The number of
tentative approvals as a percentage of total approvals declined to ~24% in 4QFY22
from ~40% in 3QFY22. While the pricing erosion in base business continued to have
an adverse effect on the US sales run-rate, the new launches are likely to offset the
decline in base business and enable growth for the quarter. With COVID cases
waning and travelling restrictions easing, the pace of inspections is predicted to
improve, thereby boosting approvals.

We expect new launches and market share gains in complex products (including g-
Vascepa) to drive 13%/17% YoY sales growth for DRRD/CIPLA, respectively. We
further forecast SUNP/ZYDUS to deliver marginal YoY growth led by increased
competition in the base portfolio. The price erosion in Sartans and other key
products is likely to be a key drag on ALPM with expected YoY decline of 17% in its
US business.

Tushar Manudhane - Research Analyst ([Link]@[Link])

April 2022 130
Gaurang Sakare - Research Analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Healthcare

DRRD/CIPLA/DIVI to outperform the healthcare pack

We expect DRRD/CIPLA to outperform the rest of our coverage companies with
63%/57% earnings growth YoY, respectively, fueled by market share gains in g-
Vascepa (DRRD) and niche launches like g-Lanreotide (CIPLA). Continued traction in
CRAMS and increased capacity utilization are anticipated to drive strong 50% YoY
earnings growth for DIVI. The Specialty portfolio execution and branded generics
outperformance are likely to propel 22% YoY earnings growth. We expect JP/LPC/
ALPM/TRP/ALKEM to report earnings decline of 76%/51%/36%/25%/23% YoY,
respectively, led by: a) pricing pressure / the impact of import alerts and the COVID
impact on the US Radiopharma (JP), b) headwinds in the US generics and higher raw
material costs (LPC/TRP/ALKEM), and c) delay in injectable approvals in the US and
increased competition in sartans (ALPM). We forecast Apollo Hospitals to deliver
16% YoY growth in earnings, driven by better ARPOB/occupancy and improved
overall operating leverage.
Estimates lowered for APHS, GLAND, and LPC
We have lowered our FY23/FY24 EPS estimates for APHS by 4.2%/5.6%, respectively,
factoring in the gradual revival in hospitals business. We have reduced our FY22/
FY23/FY24 EPS estimates for GLAND by 2.9%/3.7%/4.0%, respectively, considering
lower business prospects with respect to the Sputnik vaccine. We have also reduced
our FY22/FY23/FY24 EPS estimates for LPC by 2.9%/4%/3.6%, respectively, due to
elevated raw material prices and reduced operating leverage.

Exhibit 1: Summary of quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Ajanta Pharma 1761 Buy 7,996 5.6 -4.6 2,193 -15.5 -8.5 1,500 -5.8 -21.8
Alembic Pharma 756 Neutral 12,942 1.1 1.8 2,578 -24.6 0.8 1,597 -36.3 -9.5
Alkem Lab 3470 Buy 21,714 -0.9 -17.1 3,178 -14.4 -36.2 2,458 -22.5 -53.2
Apollo Hospitals 4562 Buy 33,771 17.8 -7.2 4,667 13.3 -20.5 1,767 15.9 -27.4
Aurobindo Pharma 692 Buy 59,299 -1.2 -1.2 9,728 -23.7 -4.3 5,180 -34.4 -7.9
Biocon 346 Neutral 23,250 26.4 6.9 5,980 37.3 5.8 2,171 -14.1 16.2
Cipla 1028 Neutral 51,085 10.9 -6.8 10,777 35.3 -12.5 6,515 57.6 -10.6
Divis Labs 4501 Buy 23,889 33.6 -4.2 10,018 39.9 -8.9 7,482 49.9 -17.3
Dr Reddy’ s Labs 4317 Buy 55,217 16.8 3.8 12,737 26.4 6.0 7,668 63.0 7.8
Eris Lifescience 708 Buy 2,866 3.0 -13.7 965 2.1 -20.7 736 7.9 -26.9
Gland Pharma 3385 Buy 10,221 15.1 -3.9 3,631 10.8 4.1 2,866 10.0 5.0
Glenmark Pharma 461 Neutral 29,866 4.4 -0.5 4,923 -5.9 -5.7 2,166 -7.4 -4.6
Granules India 314 Neutral 10,501 31.4 7.2 1,804 -10.7 15.3 1,143 -10.4 29.9
GSK Pharma 1625 Neutral 9,224 13.4 13.1 2,179 27.5 10.2 1,672 25.4 7.1
IPCA Labs. 1026 Buy 13,177 18.2 -7.9 2,248 -1.8 -27.0 1,740 8.0 -11.6
Jubilant Pharmova 435 Neutral 12,404 -21.5 -5.3 1,837 -51.0 -5.4 427 -76.2 -16.3
Laurus Labs 600 Buy 12,200 -13.6 18.6 3,888 -17.7 36.3 2,321 -21.8 49.8
Lupin 790 Neutral 39,097 3.3 -6.0 5,257 -25.7 -6.8 2,203 -51.2 -18.3
Solara Active Pharma 700 Buy 3,266 -26.5 225.5 224 -77.4 LP -260 PL Loss
Strides Pharma 360 Buy 8,529 -6.1 7.4 488 -69.4 959.0 -481 PL Loss
Sun Pharma 926 Buy 93,700 11.1 -4.5 24,043 22.2 -6.4 17,697 21.5 -6.9
Torrent Pharma 2831 Neutral 21,162 9.3 0.4 5,461 -6.2 1.5 2,428 -25.1 -2.5
Zydus Lifesciences 364 Buy 40,861 6.2 11.8 8,670 1.4 15.2 6,150 31.1 22.9
Healthcare 5,96,234 8.1 -1.3 1,27,475 3.0 -3.1 77,147 1.9 -5.4
Source: Company, MOFSL

April 2022 131

 March 2022 Results Preview | Sector: Healthcare

Exhibit 2: Relative performance – three months (%) Exhibit 3: Relative performance – one-year (%)

Nifty Index MOFSL Health care Index Nifty Index MOFSL Health care Index
105 130

100 120

95 110

90 100

85 90

Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Mar-22
Jun-21

Dec-21
Sep-21
Source: Bloomberg, MOFSL

Exhibit 4: DF sales growth to be ~13% YoY in 4QFY22 as the chronic therapies get back on the growth path

Agg DF sales (INRb) DF sales growth YoY (%)

45.1

115 17.2
20.7
12.5 10.4 11.5 12.8
6.6
-0.4
117 139 141 130 167 163 157 146

4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E

Source: MOFSL, Company

Exhibit 5: Expect the US sales to remain almost flat YoY in 4QFY22

US sales (USDb) US Sales YoY growth (%)

4.0 0.7 2.1
(1.0) 0.2 (3.1)
(5.6) (3.5)
(7.6)

1.9 1.8 1.9 1.9 1.8 1.8 1.8 1.8 1.9

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22E

Source: MOFSL, Company

Exhibit 6: 43 ANDAs approved on an aggregate basis for our Exhibit 7: YoY sales growth for 4QFY22E to pick up v/s
coverage universe in 4QFY22 3QFY22

8 8 Approved ANDAs in 4QFY22 YoY Sales Growth (%)

14.6

7
14.0
13.6
12.9
12.2

11.2
10.6
9.1

8.6
7.7

4 4 4
7.0
6.8
6.6

5.6

3
2 2 2
1
0 0
3QFY21
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21

4QFY21
1QFY22
2QFY22
3QFY22
4QFY22E
STR

SUNP

TRP
ALPM

AJP
CIPLA
DRRD
GNP
CDH

LAURUS

ALKEM
LPC
ARBP

Source: MOFSL, Company Source: MOFSL, Company

April 2022 132

 March 2022 Results Preview | Sector: Healthcare

Exhibit 8: Increased opex to slow EBITDA growth… Exhibit 9: …along with PAT growth in 4QFY22E

Aggregate EBITDA Growth (%) Aggregate PAT Growth (%)

48.9
31.2
29.8
24.3

37.0
22.8

35.0
21.0

26.7
15.3

14.7

23.0
13.5

16.0
14.8
9.5

11.3
9.2
4.7

4.6

9.4

8.9
7.9

5.1
0.9
(3.5)

3.3

(4.1)
3QFY21
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21

4QFY21
1QFY22
2QFY22
3QFY22
4QFY22E
4QFY20
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20

1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22E
Source: MOFSL, Company Source: MOFSL, Company
*Sales, EBITDA, PAT YoY growth figures exclude GLAND and JUBLPHRM due to limited historical data. It also excludes APHS data.

Exhibit 10: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Healthcare 30.0 25.3 21.1 4.3 3.7 3.2 14.3 14.5 15.2
Ajanta Pharma 1,761 Buy 76.9 85.8 105.2 22.9 20.5 16.7 4.4 3.8 3.2 20.8 19.9 20.9
Alembic Pharma 756 Neutral 34.1 41.3 46.3 22.2 18.3 16.3 2.7 2.4 2.2 13.1 14.5 14.6
Alkem Lab 3,470 Buy 149.6 157.6 182.1 23.2 22.0 19.1 4.7 4.1 3.5 22.2 19.9 19.7
Apollo Hospitals 4,562 Buy 67.3 82.2 107.6 67.8 55.5 42.4 11.1 9.3 7.7 18.8 18.9 20.5
Aurobindo Pharma 692 Buy 43.2 51.3 60.2 16.0 13.5 11.5 1.7 1.5 1.3 10.9 11.7 12.3
Biocon 346 Neutral 6.9 11.5 17.3 50.3 30.1 20.0 5.1 2.5 2.3 10.5 11.2 12.0
Cipla 1,028 Neutral 35.5 41.3 49.0 28.9 24.9 21.0 4.0 3.5 3.0 13.9 14.0 14.5
Divis Labs 4,501 Buy 105.8 128.0 154.3 42.5 35.2 29.2 10.6 8.7 7.2 27.3 27.3 27.2
Dr Reddy’ s Labs 4,317 Buy 183.2 211.4 252.2 23.6 20.4 17.1 3.6 3.1 2.6 16.1 16.1 16.6
Eris Lifescience 708 Buy 29.1 34.0 39.6 24.4 20.8 17.9 5.1 4.3 3.6 23.0 22.5 22.0
Gland Pharma 3,385 Buy 74.1 95.2 120.4 45.7 35.5 28.1 7.8 6.4 5.2 18.6 19.7 20.4
Glenmark Pharma 461 Neutral 35.6 39.3 44.3 13.0 11.7 10.4 1.6 1.4 1.3 13.3 13.1 13.1
Granules India 314 Neutral 16.3 21.1 25.7 19.3 14.9 12.2 3.1 2.6 2.1 17.1 18.7 19.1
GSK Pharma 1,625 Neutral 36.6 38.9 44.1 44.4 41.8 36.9 15.7 13.6 11.6 35.4 32.6 31.4
IPCA Labs. 1,026 Buy 37.5 41.9 50.6 27.4 24.5 20.3 4.7 4.0 3.5 18.6 17.8 18.4
Jubilant Pharmova 435 Neutral 25.5 27.1 37.7 17.1 16.1 11.6 1.3 1.2 1.1 8.1 8.0 10.2
Laurus Labs 600 Buy 15.5 22.0 28.1 38.7 27.3 21.3 9.7 7.5 5.8 28.2 31.0 30.5
Lupin 790 Neutral 22.9 26.1 32.4 34.5 30.3 24.4 2.9 2.7 2.5 7.9 9.2 10.8
Solara Active Pharma 700 Buy 21.4 55.7 85.8 32.7 12.6 8.2 1.6 1.4 1.2 6.6 16.0 21.9
Strides Pharma 360 Buy -43.8 18.6 33.4 -8.2 19.4 10.8 1.4 1.3 1.2 -15.2 6.8 11.5
Sun Pharma 926 Buy 32.1 35.7 41.1 28.9 25.9 22.5 4.2 3.7 3.2 15.6 15.3 15.4
Torrent Pharma 2,831 Neutral 67.2 86.9 108.4 42.1 32.6 26.1 7.5 6.6 5.7 18.7 21.6 23.3
Zydus Lifesciences 364 Buy 22.1 21.5 22.8 16.4 16.9 15.9 2.1 1.9 1.8 14.8 12.0 11.7

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 March 2022 Results Preview | Sector: Healthcare

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

Ajanta Pharma Buy

CMP: INR1,761 | TP: INR2,500 (+42%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect DF sales to remain flat YoY on high base of past  Expect Africa (Branded + Institutional) to maintain
year momentum with 18% YoY growth in sales for 4QFY22
 Expect 11% YoY decline in the US sales  Watch out for an outlook on price erosion, launches in the US
Consol. - Quarterly perf. (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,682 7,159 7,487 7,568 7,479 8,848 8,379 7,996 28,897 32,702
YoY Change (%) 9.2 11.4 15.0 11.0 11.9 23.6 11.9 5.6 11.7 13.2
Total Expenditure 4,450 4,417 5,071 4,974 5,278 6,220 5,983 5,803 18,911 23,284
EBITDA 2,232 2,743 2,417 2,594 2,201 2,628 2,396 2,193 9,986 9,418
YoY Change (%) 32.6 54.4 30.0 56.0 -1.4 -4.2 -0.9 -15.5 43.0 -5.7
Margins (%) 33.4 38.3 32.3 34.3 29.4 29.7 28.6 27.4 34.6 28.8
Depreciation 280 283 291 306 309 315 317 333 1,161 1,274
EBIT 1,952 2,459 2,125 2,288 1,892 2,313 2,079 1,860 8,825 8,144
YoY Change (%) 34.1 59.3 30.9 63.1 -3.1 -6.0 -2.2 -18.7 46.4 -7.7
Interest 16 15 26 26 15 4 10 19 83 48
Other Income 131 49 55 25 76 145 240 127 260 589
PBT before EO expense 2,067 2,492 2,155 2,288 1,954 2,454 2,309 1,968 9,002 8,685
Extra-Ord expense 0 0 0 0 -250 -150 0 0 0 -400
PBT 2,067 2,492 2,155 2,288 2,204 2,604 2,309 1,968 9,002 9,085
Tax 589 790 388 695 467 645 392 468 2,463 1,971
Effective Rate (%) 28.5 31.7 18.0 30.4 21.2 24.8 17.0 23.8 27.4 21.7
MI & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 1,478 1,702 1,766 1,593 1,737 1,959 1,918 1,500 6,539 7,113
Adj PAT 1,478 1,702 1,766 1,593 1,540 1,847 1,918 1,500 6,539 6,802
YoY Change (%) 28.9 45.3 63.9 41.4 4.2 8.5 8.6 -5.8 44.6 4.0

Alembic Pharma Neutral

CMP: INR756 | TP: INR810 (+7%) EPS CHANGE (%): FY22|23: (0.7)|(0.7)
 Expect 15% YoY decline in the US sales  DF sales growth to moderate to ~11% YoY
 Watch out for an outlook on pricing erosion in base portfolio  Clarity on new injectable approvals
for the US market and upcoming new launches
Quarterly perf. (Consol.) (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 13,413 14,571 13,143 12,804 13,260 12,923 12,717 12,942 53,931 51,842
YoY Change (%) 41.3 17.4 8.7 6.1 -1.1 -11.3 -3.2 1.1 17.1 -3.9
Total Expenditure 9,340 10,137 9,493 9,387 10,900 10,351 10,160 10,364 38,356 41,775
EBITDA 4,074 4,434 3,651 3,417 2,360 2,572 2,557 2,578 15,575 10,067
YoY Change (%) 80.9 28.3 12.3 4.3 -42.1 -42.0 -30.0 -24.6 27.3 -35.4
Margins (%) 30.4 30.4 27.8 26.7 17.8 19.9 20.1 19.9 28.9 19.4
Depreciation 415 438 470 512 532 546 559 554 1,835 2,191
EBIT 4,489 4,872 4,121 3,929 2,892 3,118 3,116 3,131 17,410 12,257
YoY Change (%) 72.2 27.7 12.3 5.7 -35.6 -36.0 -24.4 -20.3 26.1 -29.6
Interest 67 45 23 26 21 46 43 38 160 148
Other Income 3 32 25 40 19 22 13 24 100 78
PBT 3,595 3,984 3,183 2,919 1,826 2,003 1,967 2,010 13,681 7,806
Tax 668 730 591 545 342 395 325 343 2,533 1,405
Rate (%) 18.6 18.3 18.6 18.7 18.7 19.7 16.5 17.1 18.5 18.0
MI & P/L of Asso. Cos. -87 -80 -334 -133 -162 -86 -122 69 -634 -300
Reported PAT 3,015 3,334 2,926 2,507 1,646 1,693 1,764 1,597 11,781 6,701
Adj PAT 3,015 3,334 2,926 2,507 1,646 1,693 1,764 1,597 11,781 6,701
YoY Change (%) 100.4 35.4 24.9 7.4 -45.4 -49.2 -39.7 -36.3 36.3 -43.1

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 March 2022 Results Preview | Sector: Healthcare

Alkem Labs Buy

CMP: INR3,470 | TP: INR4,130 (+19%) EPS CHANGE (%): FY22|23:0.0|0.0
 Expect India business (74% of sales) to grow 9% YoY, led by  Expect US sales to be steady QoQ at INR5.7b
COVID as well as recovery in core therapies
 Watch out for an outlook on Trade Generics in DF business  Watch out for an outlook on new launches/price erosion
in the US
Quarterly Perf. (Consolidated) (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 19,775 23,628 23,181 21,922 27,314 27,999 26,190 21,714 88,505 1,03,216
YoY Change (%) 6.9 4.4 6.2 7.0 38.1 18.5 13.0 -0.9 6.1 16.6
EBITDA 5,072 6,005 5,291 3,711 5,929 6,243 4,985 3,178 20,079 20,334
YoY Change (%) 91.8 26.4 16.7 22.5 16.9 4.0 -5.8 -14.4 34.2 1.3
Margins (%) 25.6 25.4 22.8 16.9 21.7 22.3 19.0 14.6 22.7 19.7
Depreciation 668 702 690 685 705 728 775 759 2,746 2,967
EBIT 4,404 5,303 4,601 3,026 5,223 5,515 4,210 2,419 17,333 17,366
YoY Change (%) 111.0 26.6 16.8 26.1 18.6 4.0 -8.5 -20.1 87.6 37.7
Interest 171 180 131 107 129 120 106 97 589 451
Other Income 435 355 614 463 467 420 535 484 1,867 1,905
PBT before EO Exp 4,668 5,478 5,084 3,382 5,561 5,815 4,639 2,806 18,611 18,821
EO Exp/(Inc) -260 0 -350 800 0 0 0 0 190 0
PBT after EO Exp 4,928 5,478 5,434 2,582 5,561 5,815 4,639 2,806 18,421 18,821
Tax 696 662 796 89 759 230 -694 270 2,243 565
Rate (%) 14.1 12.1 14.6 3.5 13.6 4.0 -15.0 9.6 12.1 3.0
PAT (pre Minority Interest) 4,232 4,815 4,639 2,492 4,802 5,584 5,334 2,536 16,178 18,256
Minority Interest 12 95 129 92 121 95 77 78 328 371
Reported PAT 4,220 4,721 4,510 2,400 4,681 5,489 5,257 2,458 15,850 17,885
Adj Net Profit 3,997 4,721 4,211 3,172 4,681 5,489 5,257 2,458 16,031 17,885
YoY Change (%) 115.5 20.5 21.0 47.3 17.1 16.3 24.8 -22.5 40.5 11.6

Apollo Hospitals Buy

CMP: INR4,562 | TP: INR5,510 (+21%) EPS CHANGE (%): FY22|23: 0.1|(4.2)
 Expect COVID to affect healthcare services/AHLL segment  Expect pharmacy business to be stable QoQ to INR13.7b
 Update on online traction under Apollo 24/7  Progress on stake sale in Apollo Healthco
Consolidated - Quarterly Earning Model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 21,715 27,607 27,598 28,680 37,602 37,171 36,389 33,771 1,05,600 1,44,933
YoY Change (%) -15.6 -2.8 -5.2 -1.9 73.2 34.6 31.9 17.8 64.9 100.7
Total Expenditure 21,360 24,609 23,696 24,561 32,403 31,021 30,519 29,104 94,226 1,23,047
EBITDA 355 2,998 3,903 4,118 5,199 6,150 5,870 4,667 11,374 21,886
YoY Change (%) -90.0 -27.5 -9.2 8.4 1,365.2 105.1 50.4 13.3 47.0 163.8
Margins (%) 1.6 10.9 14.1 14.4 13.8 16.5 16.1 13.8 10.8 15.1
Depreciation 1,602 1,495 1,250 1,385 1,406 1,448 1,490 1,741 5,731 6,084
Interest 1,274 1,223 1,010 986 947 954 937 873 4,492 3,710
Other Income 77 113 55 205 246 56 172 143 450 618
PBT before EO expense -2,444 394 1,698 1,952 3,093 3,805 3,615 2,196 1,601 12,709
Extra-Ord expense/(Income) 0 -354 0 -252 -2,941 0 0 0 -614 -2,941
PBT -2,444 748 1,698 2,204 6,034 3,805 3,615 2,196 2,215 15,650
Tax -408 66 512 677 986 1,156 1,242 529 847 3,912
Rate (%) 16.7 8.8 30.1 30.7 16.3 30.4 34.4 24.1 38.2 25.0
Minority Interest & Profit/Loss of Asso. Cos. 226 93 -155 -171 42 -25 -60 -100 -8 -143
Reported PAT -2,262 590 1,342 1,699 5,007 2,674 2,433 1,767 1,368 11,880
Adj PAT -2,262 267 1,342 1,524 2,859 2,674 2,433 1,767 870 9,733
YoY Change (%) -495.5 -69.1 45.6 -30.5 NA 902.8 81.3 15.9 -73.4 1,018.6
Margins (%) -10.4 1.0 4.9 5.3 7.6 7.2 6.7 5.2 0.8 6.7

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 March 2022 Results Preview | Sector: Healthcare

Aurobindo Pharma Buy

CMP: INR692 | TP: INR800 (+16%) EPS CHANGE (%): FY22|23: 1.2|0.0
 Expect the US sales to decline 4% YoY to USD379m due to  Expect the EU sales growth at 13.5% YoY, on low base of
limited launches and ongoing price erosion in the US past year
 Watch out for an outlook on margin trend in the EU
 Progress on the US generics/Biosimilars and niche product
business
development

Quarterly performance (Consolidated) (INR m)

Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 59,248 64,834 63,649 60,015 57,020 59,419 60,022 59,299 2,47,746 2,35,761
YoY Change (%) 8.8 15.8 8.0 -2.5 -3.8 -8.4 -5.7 -1.2 7.3 -4.8
EBITDA 13,174 14,328 13,686 12,747 12,094 11,867 10,163 9,728 53,934 43,851
YoY Change (%) 14.9 22.7 13.3 -5.0 -8.2 -17.2 -25.7 -23.7 10.9 -18.7
Margins (%) 22.2 22.1 21.5 21.2 21.2 20.0 16.9 16.4 21.8 18.6
Depreciation 2,555 2,573 2,765 2,660 2,797 2,942 2,991 3,132 10,554 11,862
EBIT 10,618 11,755 10,921 10,087 9,297 8,925 7,172 6,595 43,380 31,989
YoY Change (%) 17.3 27.2 14.0 -9.1 -12.4 -24.1 -34.3 -34.6 11.3 -26.3
Interest 211 157 195 182 129 104 161 42 745 436
Other Income 934 472 328 639 813 947 452 778 2,373 2,990
PBT before EO expense 11,341 12,069 11,054 10,543 9,981 9,768 7,463 7,331 45,008 34,543
Forex loss/(gain) 378 -66 -606 -142 -286 -19 -198 0 -436 -503
Exceptional (expenses)/income 0 0 28,539 7 87 87 348 -174 28,546 348
PBT 10,964 12,135 40,199 10,692 10,354 9,874 8,009 7,157 73,990 35,394
Tax 3,037 3,873 10,591 2,597 2,477 2,709 1,895 1,593 20,098 8,675
Rate (%) 27.7 31.9 26.3 24.3 23.9 27.4 23.7 22.3 27.2 24.5
Minority Interest 120 205 145 84 90 111 71 89 554 360
Reported PAT 7,807 8,057 29,463 8,012 7,787 7,054 6,043 5,475 53,338 26,359
Adj PAT 8,080 8,012 7,660 7,899 7,503 6,977 5,626 5,180 31,650 25,287
YoY Change (%) 26.0 19.7 8.1 -8.2 -7.1 -12.9 -26.5 -34.4 9.9 -20.1

Biocon Neutral
CMP: INR346 | TP: INR370 (7%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect 71% YoY growth in Biologics sales on ramp-up in  Expect Syngene sales to grow 11% YoY in 4QFY22
recent launches and business from newer markets
 Watch out for an update on the market share in Glargine  Progress on new products development in biosimilars
post formulary cover space
Quarterly performance (Consol) (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 16,713 17,448 18,510 18,387 17,610 18,404 21,743 23,250 71,058 81,007
YoY Change (%) 14.6 11.0 7.8 18.1 5.4 5.5 17.5 26.4 12.8 14.0
Total Expenditure 12,590 13,354 14,530 14,030 13,720 13,940 16,090 17,270 54,504 61,020
EBITDA 4,123 4,094 3,980 4,357 3,890 4,464 5,653 5,980 16,554 19,987
YoY Change (%) -5.6 1.6 -10.6 36.8 -5.7 9.0 42.0 37.3 3.3 20.7
Margins (%) 24.7 23.5 21.5 23.7 22.1 24.3 26.0 25.7 23.3 24.7
Depreciation 1,668 1,777 1,860 1,840 1,950 2,020 2,060 2,148 7,145 8,178
EBIT 2,455 2,317 2,120 2,517 1,940 2,444 3,593 3,833 9,409 11,810
YoY Change (%) -21.5 -14.5 -29.6 51.5 -21.0 5.5 69.5 52.3 -10.5 25.5
Interest 125 65 50 340 200 230 150 995 577 1,575
Other Income 183 155 220 450 470 1,050 480 400 1,005 2,400
Extraordinary income 0 -130 50 1,730 0 -700 -770 0 1,650 -1,470
PBT 2,513 2,227 2,350 3,657 1,650 2,054 2,683 3,237 9,097 11,094
Tax 809 223 490 700 570 470 490 780 2,222 2,310
Rate (%) 32.2 10.0 20.9 19.1 34.5 22.9 18.3 24.1 24.4 20.8
Minority Interest 180 261 180 430 240 200 325 286 1,051 1,051
PAT 1,488 1,743 1,680 2,527 840 1,384 1,868 2,171 5,788 7,733
Adj PAT 1,488 1,788 1,672 2,934 1,207 2,394 2,497 2,171 6,624 8,269
YoY Change (%) -27.8 -14.4 -17.6 138.5 -18.9 33.9 49.4 -26.0 -10.6 24.8

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 March 2022 Results Preview | Sector: Healthcare

Cipla Neutral
CMP: INR1,028 | TP: INR980 (-5%) EPS CHANGE (%): FY22|23: 0.0|(0.1)
 The US sales to grow 17% YoY to USD162m driven by new  Expect DF sales growth to moderate to 7% YoY
launches and market share gains in gAlbuterol
 Watch out for an outlook on limited-competition inhaler  Update on a) pre-approval inspection at Goa facility for
pipeline in the US over the medium term gAbraxane, and b) the development of Advair filing
Quarterly Performance (Consolidated) (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 43,462 50,383 51,687 46,065 54,532 55,198 54,789 51,085 1,91,596 2,15,603
YoY Change (%) 9.0 14.6 18.2 5.3 25.5 9.6 6.0 10.9 11.8 12.5
EBITDA 10,488 11,766 12,309 7,962 12,947 12,262 12,310 10,777 42,525 48,295
YoY Change (%) 15.9 29.4 62.3 25.7 23.4 4.2 0.0 35.3 32.6 13.6
Margins (%) 24.1 23.4 23.8 17.3 23.7 22.2 22.5 21.1 22.2 22.4
Depreciation 2,690 2,651 2,484 2,852 2,611 2,531 2,475 2,569 10,677 10,186
EBIT 7,799 9,115 9,825 5,110 10,336 9,731 9,835 8,207 31,849 38,109
YoY Change (%) 22.5 45.5 104.5 59.7 32.5 6.8 0.1 60.6 54.3 19.7
Interest 460 393 479 275 296 380 207 228 1,607 1,110
Other Income 655 535 869 601 649 607 913 551 2,660 2,720
PBT after EO expense 7,993 9,257 10,215 5,437 9,955 9,958 10,541 8,531 32,901 38,985
Tax 2,278 2,638 2,690 1,282 2,837 2,838 2,952 2,296 8,888 10,923
Rate (%) 28.5 28.5 26.3 23.6 26.5 28.5 28.0 26.9 27.0 27.5
Minority Interest -64.8 -35.8 43.6 21.3 -29.2 6.4 302.7 -279.9 -36.0 0.0
Reported PAT 5,780 6,654 7,481 4,134 7,147 7,114 7,287 6,515 24,050 28,062
Adj PAT 5,780 6,654 7,481 4,134 7,881 7,114 7,287 6,515 24,050 28,542
YoY Change (%) 20.9 41.2 113.1 50.5 36.4 6.9 -2.6 57.6 52.7 18.7

Divi’s Laboratories Buy

CMP: INR4,501 | TP: INR5,330 (+18%) EPS CHANGE (%): FY22|23: 0.0|(2.0)
 Expect better traction in contract manufacturing to drive  Expect better operating leverage to drive profitability on
sales growth for 4QFY22 YoY basis
 Update on Kakinada project in terms of capex outlay over  Update on progress of backward integration of the
next 12-15 months Sartans portfolio
Quarterly Performance (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 17,305 17,493 17,014 17,882 19,606 19,875 24,932 23,889 69,694 88,303
YoY Change (%) 48.8 21.0 21.9 28.7 13.3 13.6 46.5 33.6 29.2 26.7
EBITDA 7,001 7,568 7,252 7,163 8,521 8,252 11,003 10,018 28,983 37,794
YoY Change (%) 78.0 48.2 46.8 61.2 21.7 9.0 51.7 39.9 57.3 30.4
Margins (%) 40.5 43.3 42.6 40.1 43.5 41.5 44.1 41.9 41.6 42.8
Depreciation 562 611 682 701 733 774 799 823 2,556 3,128
EBIT 6,439 6,956 6,570 6,462 7,788 7,478 10,204 9,195 26,427 34,666
YoY Change (%) 84.3 49.7 46.9 63.7 21.0 7.5 55.3 42.3 59.6 31.2
Interest 2 2 3 2 3 2 2 2 9 10
Other Income 125 136 168 196 163 191 166 362 626 883
PBT before EO Income 6,562 7,091 6,736 6,656 7,948 7,667 10,368 9,555 27,044 35,539
Forex gain /(Loss) 48 -156 -315 39 196 -71 -31 0 -384 94
PBT 6,610 6,935 6,421 6,695 8,145 7,596 10,337 9,556 26,660 35,633
Tax 1,689 1,739 1,715 1,675 2,574 1,532 1,314 2,064 6,818 7,483
Rate (%) 25.6 25.1 26.7 25.0 31.6 20.2 12.7 21.6 25.6 21.0
PAT 4,921 5,196 4,706 5,020 5,571 6,065 9,023 7,492 19,843 28,150
Adj. PAT 4,819 5,314 4,937 4,992 5,437 6,121 9,050 7,482 20,062 28,090
YoY Change (%) 74.0 46.9 42.7 58.7 12.8 15.2 83.3 49.9 54.4 40.0

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 March 2022 Results Preview | Sector: Healthcare

Dr Reddy’s Labs Buy

CMP: INR4,317 | TP: INR5,170 (+20%) EPS CHANGE (%): FY22|23: (0.4)|0.2
 Expect the US sales to grow 15% YoY to USD270m, driven  India revenue to grow 35% YoY on better traction in the
by ramp-up in key complex products Chronic segment post-COVID and low base of past year
 Business update on the situation in Russia-CIS  Update on Rituximab, Copaxone and complex pipeline
Quarterly Performance - IFRS (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 44,175 48,967 48,408 47,284 49,194 57,632 53,197 55,217 1,89,722 2,15,240
YoY Change (%) 14.9 20.0 10.4 6.7 11.4 17.7 9.9 16.8 13.3 13.5
Total Expenditure 33,046 36,752 38,036 37,204 40,169 44,275 41,179 42,479 1,45,038 1,68,102
EBITDA 11,129 12,215 10,372 10,080 9,025 13,357 12,018 12,737 44,684 47,137
YoY Change (%) 53.1 44.0 1.8 7.2 -18.9 9.3 15.9 26.4 26.4 5.5
Margins (%) 25.2 24.9 21.4 21.3 18.3 23.2 22.6 23.1 23.6 21.9
Amortization 3,140 3,272 3,217 3,169 2,905 2,985 2,976 2,972 12,798 11,838
EBIT 7,989 8,943 7,155 6,911 6,120 10,372 9,042 9,765 31,886 35,299
YoY Change (%) 90.9 73.9 0.7 7.3 -23.4 16.0 26.4 41.3 39.4 10.7
Other Income 800 459 772 1,084 1,305 2,309 714 917 3,115 5,245
PBT before EO expenses 8,789 9,402 7,927 7,995 7,425 12,681 9,756 10,682 35,001 40,544
One-off income/(expense) -781 -5,084 -1,835 0 0 -47 0 -7,700 -47
Profit before Tax 8,789 8,620 2,841 6,160 7,425 12,681 9,709 10,682 27,298 40,497
Tax 2,996 998 2,645 2,536 1,717 2,761 2,644 3,014 9,175 10,136
Rate (%) 34.1 11.6 93.1 41.2 23.1 21.8 27.2 28.2 33.6 25.0
Reported Profit 5,793 7,622 196 3,624 5,708 9,920 7,065 7,668 18,123 30,361
Adjusted PAT 5,793 7,392 5,945 4,704 5,708 9,920 7,112 7,668 23,834 30,408
YoY Change (%) 30.4 29.6 0.0 -17.7 -1.5 34.2 19.6 63.0 9.3 27.6
Margins (%) 13.1 15.1 12.3 9.9 11.6 17.2 13.4 13.9 12.6 14.1

Eris Lifesciences Buy

CMP: INR708 | TP: INR850 (20%) EPS CHANGE (%): FY22|23: 2.7| (0.7)
 Expect muted 3% YoY growth in 4QFY22 due to lower off-  Promotional activities related to new launches to affect
take in certain key products profitability adversely in 4QFY22
 Watch out for an outlook on insulin and insulin analog  Update on launch pipeline over the next 12–15 months
launches
Consolidated - Quarterly Earning Model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 2,932 3,300 3,104 2,782 3,493 3,597 3,322 2,866 12,119 13,277
YoY Change (%) 6.9 15.9 16.5 11.9 19.1 9.0 7.0 3.0 12.8 9.6
Total Expenditure 1,892 2,052 2,032 1,837 2,228 2,199 2,104 1,900 7,813 8,431
EBITDA 1,041 1,248 1,072 945 1,265 1,398 1,217 965 4,306 4,846
Margins (%) 35.5 37.8 34.5 34.0 36.2 38.9 36.6 33.7 35.5 36.5
Depreciation 104 106 106 115 145 150 169 143 430 607
Interest 4 5 4 5 8 11 10 11 18 40
Other Income 13 21 31 22 59 70 52 59 87 239
PBT before EO expense 946 1,158 993 847 1,171 1,308 1,090 870 3,945 4,438
PBT 946 1,158 993 847 1,171 1,308 1,090 870 3,945 4,438
Tax 56 81 91 165 104 124 82 133 394 444
Rate (%) 5.9 7.0 9.2 19.5 8.9 9.5 7.5 15.3 10.0 10.0
Reported PAT 890 1,077 902 682 1,067 1,184 1,008 736 3,551 3,995
Adj PAT 890 1,077 902 682 1,067 1,184 1,008 736 3,551 3,995
YoY Change (%) 5.9 16.2 42.0 21.3 19.8 9.9 11.8 7.9 19.8 12.5
Margins (%) 30.4 32.6 29.0 24.5 30.5 32.9 30.3 25.7 29.3 30.1

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 March 2022 Results Preview | Sector: Healthcare

GSK Pharma Neutral

CMP: INR1,625 | TP: INR1,630 (0%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect 13% YoY growth in 4QFY22 due to increase in  Improved operating leverage to drive profitability as well
uptake of Anti-infectives for the quarter
 Watch out for an outlook on new launches from parent  Scope of price increase with inflation-linked price hikes in
portfolio the portfolio under NLEM
Quarterly Performance (Consol) (INR m)
Y/E March FY21 FY22E FY21 FY22E
(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,486 8,793 7,919 8,138 7,184 9,341 8,159 9,224 29,256 33,908
YoY Change (%) -17.7 -0.3 1.7 4.9 10.8 6.2 3.0 13.4 -9.3 15.9
Total Expenditure 5,345 6,745 6,112 6,429 5,876 6,761 6,181 7,045 23,342 25,863
EBITDA 1,141 2,049 1,807 1,709 1,308 2,581 1,978 2,179 5,914 8,046
YoY Change (%) -31.0 5.6 45.2 -1.5 14.7 26.0 9.5 27.5 -10.0 36.0
Margins (%) 17.6 23.3 22.8 21.0 18.2 27.6 24.2 23.6 20.2 23.7
Depreciation 218 220 175 179 175 174 179 181 786 710
EBIT 923 1,829 1,631 1,530 1,133 2,406 1,799 1,998 5,128 7,336
YoY Change (%) -36.9 6.8 53.8 1.4 22.7 31.6 10.3 30.6 -10.7 43.1
Margins (%) 14.2 20.8 20.6 18.8 15.8 25.8 22.1 21.7 17.5 21.6
Interest 11 9 9 6 8 4 6 13 35 30
Other Income 152 90 140 296 317 150 103 80 1,105 649
PBT before EO Expense 1,065 1,911 1,762 1,820 1,442 2,552 1,897 2,065 6,198 7,956
Tax 278 505 475 487 379 644 335 393 1,661 1,750
Rate (%) 26.1 26.4 26.9 26.7 26.3 25.2 17.7 19.0 28.1 22.0
Adjusted PAT 787 1,406 1,287 1,333 1,063 1,908 1,562 1,672 4,536 6,206
YoY Change (%) -32.9 0.0 38.8 5.1 35.1 35.7 21.3 25.4 -5.0 36.8
Margins (%) 12.1 16.0 16.3 16.4 14.8 20.4 19.1 18.1 15.5 18.3
One-off Expense/(Income) -320 641 -105 1,190 0 0 179 0 1,726 179
Reported PAT before disc. operations 1,107 765 1,393 143 1,063 1,908 1,383 1,672 2,810 6,027
Reported PAT incl disc operations 1,107 765 1,565 143 1,211 2,042 1,504 1,672 3,582 6,429

Gland Pharma Buy

CMP: INR3,385 | TP: INR4,040 (19%) EPS CHANGE (%): FY22|23: (2.1)|(3.7)
 Expect sales growth to sustain on growth in ROW markets  Watch out for an outlook on the core markets business
and India
 Update on product approvals and launches in China  Update on complex product pipeline, Biosimilars and
inorganic expansion opportunities
Consol. - Quarterly perf. (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 8,842 8,315 8,594 8,877 11,539 10,804 10,633 10,221 34,629 43,197
YoY Change (%) 31.1 22.7 33.1 39.8 30.5 29.9 23.7 15.1 31.5 24.7
EBITDA 4,126 2,977 2,642 3,277 4,363 3,765 3,489 3,631 13,022 15,248
YoY Change (%) 56.8 23.7 24.8 36.6 5.7 26.5 32.0 10.8 36.3 17.1
Margins (%) 46.7 35.8 30.7 36.9 37.8 34.9 32.8 35.5 37.6 35.3
Depreciation 242 247 250 249 253 261 278 320 988 1,112
Interest 5 8 12 10 10 10 12 15 34 47
Other Income 321 204 351 472 618 512 457 487 1,348 2,073
PBT before EO expense 4,200 2,926 2,732 3,489 4,718 4,006 3,656 3,783 13,348 16,163
One-off income/(expense) 0 0 0 0 0 0 0 0 0 0
PBT 4,200 2,926 2,732 3,489 4,718 4,006 3,656 3,783 13,348 16,163
Tax 1,064 738 691 885 1,212 986 925 918 3,378 4,041
Rate (%) 25.3 25.2 25.3 25.4 25.7 24.6 25.3 24.3 25.3 25.0
Reported PAT 3,136 2,189 2,041 2,604 3,506 3,020 2,730 2,866 9,970 12,122
Adj PAT 3,136 2,189 2,041 2,604 3,506 3,020 2,730 2,866 9,970 12,122
YoY Change (%) 45.5 -8.9 32.5 59.8 11.8 38.0 33.8 10.0 29.0 21.6

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 March 2022 Results Preview | Sector: Healthcare

Glenmark Pharma Neutral

CMP: INR461 | TP: INR490 (6%) EPS CHANGE (%): FY22|23: 0.0|(2.0)
 Expect 6% YoY growth in DF sales on gradual revival in DF  Growth across LATAM/Europe to be moderate due to COVID
segment post-COVID wave in Jan’22 cases
 Expect US sales to be stable at USD111m on YoY basis.  Watch out for an outlook on API demand and progress on
monetization of the NCE product pipeline
Quarterly performance (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues (Core) 23,448 29,525 27,868 28,599 29,649 31,474 30,024 29,866 1,09,439 1,21,013
YoY Change (%) 2.7 6.8 5.6 5.5 26.4 6.6 7.7 4.4 5.3 10.6
EBITDA 4,781 5,699 5,831 5,234 5,736 5,902 5,222 4,923 21,544 21,782
YoY Change (%) 45.9 42.8 69.9 27.8 20.0 3.6 -10.4 -5.9 45.6 1.1
Margins (%) 20.4 19.3 20.9 18.3 19.3 18.8 17.4 16.5 19.7 18.0
Depreciation 1,132 1,041 1,152 1,111 1,131 1,232 1,189 1,222 4,436 4,774
EBIT 3,648 4,658 4,679 4,124 4,605 4,670 4,032 3,701 17,108 17,009
YoY Change (%) 54.0 52.8 97.3 45.6 26.2 0.2 -13.8 -10.2 61.1 -0.6
Margins (%) 15.6 15.8 16.8 14.4 15.5 14.8 13.4 12.4 15.6 14.1
Interest 937 806 954 833 756 689 667 471 3,531 2,584
Other Income 185 80 151 85 197 128 139 106 501 571
PBT before EO Expense 2,896 3,932 3,876 3,375 4,047 4,109 3,504 3,337 14,078 14,996
One-off loss/(gain) -680 539 396 0 -389 259 74 0 255 -56
PBT after EO Expense 3,576 3,393 3,480 3,375 4,436 3,850 3,430 3,336 13,824 15,052
Tax 1,036 1,054 998 1,036 1,370 1,102 1,033 1,011 4,124 4,516
Rate (%) 29.0 31.1 28.7 30.7 30.9 28.6 30.1 30.3 29.8 30.0
Reported PAT 2,540 2,339 2,482 2,339 3,065 2,577 2,219 2,165 9,700 10,026
Adj PAT 2,057 2,711 2,764 2,339 2,796 2,761 2,271 2,166 9,871 10,031
YoY Change (%) 51.4 36.0 54.8 29.9 35.9 1.9 -17.9 -7.4 42.3 1.6
Margins (%) 8.8 9.2 9.9 8.2 9.4 8.8 7.6 7.3 9.0 8.3

Granules India Neutral

CMP: INR314 | TP: INR320 (2%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect sales to grow 31% YoY led by API/intermediates  Higher raw material prices would continue to drag
off-take and low base of past year margins on YoY basis
 Update on availability/pricing of KSMs  Watch out for an outlook on launch of MUPS-based
products
Quarterly Performance (INR m)
Y/E March FY21 FY22E FY21 FY22E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,356 8,581 8,445 7,993 8,498 8,883 9,795 10,501 32,375 37,678
YoY Change (%) 23.6 22.7 20.0 33.2 15.5 3.5 16.0 31.4 24.6 16.4
EBITDA 1,987 2,489 2,213 2,020 2,014 1,512 1,565 1,804 8,710 6,895
YoY Change (%) 67.5 73.3 35.6 65.7 1.4 -39.3 -29.3 -10.7 59.1 -20.8
Margins (%) 27.0 29.0 26.2 25.3 23.7 17.0 16.0 17.2 26.9 18.3
Depreciation 341 361 368 445 394 398 392 441 1,515 1,625
EBIT 1,647 2,128 1,845 1,575 1,620 1,113 1,173 1,363 7,195 5,270
YoY Change (%) 83.1 87.8 48.6 89.9 -1.6 -47.7 -36.4 -13.5 75.3 -26.8
Margins (%) 22.4 24.8 21.8 19.7 19.1 12.5 12.0 13.0 22.2 14.0
Interest 60 63 72 68 68 55 46 96 263 264
Other Income 56 32 31 33 76 44 49 58 152 226
PBT before EO expense 1,643 2,098 1,803 1,540 1,629 1,102 1,175 1,325 7,085 5,231
Extra-Ord expense 151 -75 -36 0 0 0 -173 0 40 -173
PBT 1,492 2,173 1,839 1,540 1,629 1,102 1,348 1,325 7,045 5,404
Tax 377 537 371 264 427 296 339 182 1,549 1,243
Rate (%) 25.3 24.7 20.2 17.2 26.2 26.8 25.2 13.7 22.0 23.0
(Profit)/Loss of JV/Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 1,115 1,637 1,468 1,276 1,202 807 1,009 1,143 5,496 4,161
Adjusted PAT 1,228 1,580 1,439 1,276 1,202 807 880 1,143 5,524 4,031
YoY Change (%) 47.5 64.9 65.2 96.1 -2.1 -48.9 -38.9 -10.4 66.8 -27.0
Margins (%) 16.7 18.4 17.0 16.0 14.1 9.1 9.0 10.9 17.1 10.7

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 March 2022 Results Preview | Sector: Healthcare

Ipca Laboratories Buy

CMP: INR1,026 | TP: INR1,220 (+19%) EPS CHANGE (%): FY22|23: (2.3)|(0.9)
 Expect sales to grow 18% YoY on strong growth in DF  Expect API sales to be stable QoQ due to regulatory
segment process underway for customers related to Losartan
 Watch out for an outlook on the DF/UK/CIS businesses  Watch out for an outlook on the raw material prices’
impact on margins
Quarterly Performance (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues (Core) 15,344 13,611 14,098 11,147 15,658 15,444 14,305 13,177 54,200 58,016
YoY Change (%) 42.3 6.0 16.2 3.8 2.0 13.5 1.5 18.2 16.6 7.0
EBITDA 5,883 3,602 3,669 2,289 4,165 3,852 3,078 2,248 15,444 13,344
YoY Change (%) 196.1 35.5 34.1 4.2 -29.2 6.9 -16.1 -1.8 61.2 -13.6
Margins (%) 38.3 26.5 26.0 20.5 26.6 24.9 21.5 17.1 28.5 23.0
Depreciation 510 521 535 525 559 570 587 523 2,092 2,238
EBIT 5,373 3,081 3,134 1,764 3,607 3,282 2,492 1,726 13,352 11,106
YoY Change (%) 252.0 42.5 40.7 13.2 -32.9 6.5 -20.5 -2.2 78.6 -16.8
Margins (%) 35.0 22.6 22.2 15.8 23.0 21.3 17.4 13.1 24.6 19.1
Interest 27 23 23 17 18 11 14 14 90 57
Other Income 121 -16 154 199 210 181 129 180 457 700
PBT before EO Expense 5,466 3,041 3,265 1,946 3,799 3,452 2,607 1,891 13,719 11,749
One-off (gain)/ Expense 0 -171 0 0 0 -196 0 0 -171 -196
PBT after EO Expense 5,466 3,212 3,265 1,947 3,799 3,648 2,607 1,891 13,890 11,945
Tax 999 526 567 309 708 679 573 213 2,401 2,174
Rate (%) 18.3 17.3 17.4 15.9 18.6 19.7 22.0 11.3 17.5 18.5
Reported PAT 4,468 2,686 2,698 1,637 3,091 2,969 2,033 1,675 11,488 9,768
Minority Interest -7 -16 -43 -25 -24 -75 -64 64 -91 -99
Adj PAT after Minority Int 4,461 2,528 2,655 1,612 3,067 2,735 1,970 1,740 11,255 9,512
YoY Change (%) 263.5 30.9 34.4 19.3 -31.2 8.2 -25.8 8.0 73.6 -15.5

Jubilant Pharmova Neutral

CMP: INR435 | TP: INR420 (-3%) EPS CHANGE (%): FY22|23: 4.8|(2.7)
 Expect ~22% drop in revenues YoY due to decline across  Watch out for an outlook on expansion plans for Ruby-fill
businesses
 Watch out for an outlook on the Radiopharmacy business  Watch out for an outlook on prices of KSMs imported from
turnaround China
Consolidated - Quarterly Earning Model (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 11,561 15,914 17,713 15,798 16,347 16,575 13,105 12,404 89,059 58,431
YoY Change (%) -47.0 -29.8 -23.5 -33.9 41.4 4.2 -26.0 -21.5 -2.7 -2.7
EBITDA 1,793 3,498 4,928 3,746 3,752 3,395 1,942 1,837 19,004 10,927
YoY Change (%) -60.0 -25.3 -2.9 -30.2 109.3 -2.9 -60.6 -51.0 -3.1 -18.8
Margins (%) 15.5 22.0 27.8 23.7 23.0 20.5 14.8 14.8 21.3 18.7
Depreciation 817 851 959 862 880 998 933 982 4,421 3,793
EBIT 976 2,647 3,968 2,884 2,872 2,397 1,009 855 14,582 7,133
YoY Change (%) -71.8 -24.7 0.7 -29.3 194.2 -9.4 -74.6 -70.4 -2.7 -32.3
Margins (%) 8.4 16.6 22.4 18.3 17.6 14.5 7.7 6.9 16.4 12.2
Interest 479 465 464 433 346 347 366 234 2,469 1,294
Other Income 39 35 36 67 39 45 59 62 154 205
PBT before EO expense 536 2,217 3,540 2,518 2,565 2,094 702 683 12,267 6,044
Extra-Ord expense 0 0 109 103 0 0 0 0 110 0
PBT 536 2,217 3,432 2,414 2,565 2,094 702 683 12,157 6,044
Tax 182 748 1,212 831 860 654 194 165 3,766 1,874
Rate (%) 34.0 33.7 35.3 34.4 33.5 31.2 27.7 24.2 31.0 31.0
Reported PAT 354 1,469 2,189 1,727 1,605 1,428 510 427 8,360 3,970
Adj PAT 354 1,469 2,259 1,795 1,605 1,428 510 427 8,436 3,970
YoY Change (%) -81.8 -41.1 -0.6 -31.1 353.5 -2.8 -77.4 -76.2 -9.5 -31.0
Margins (%) 3.1 9.2 12.8 11.4 9.8 8.6 3.9 3.4 9.5 6.8

April 2022 141

 March 2022 Results Preview | Sector: Healthcare

Laurus Labs Buy

CMP: INR600 | TP: INR700 (+17%) EPS CHANGE (%): FY22|23: (4.2)|0.8
 Expect sales to dip 14% YoY on lower API/formulations sales  Custom Synthesis business expected to grow 47% YoY in
4QFY22
 Watch out for an outlook on ANDA fillings/approvals/  Watch out for an outlook on business prospects from global
launches pace for the formulation business for next 12-24 life science company
months
Consolidated - Quarterly Earning Model (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 9,743 11,388 12,884 14,119 12,785 12,035 10,288 12,200 48,135 47,307
YoY Change (%) 77.0 59.9 76.6 68.3 31.2 5.7 -20.2 -13.6 70.0 -1.7
Total Expenditure 6,960 7,650 8,621 9,397 8,832 8,584 7,435 8,312 32,628 33,162
EBITDA 2,783 3,739 4,263 4,722 3,954 3,451 2,853 3,888 15,507 14,145
YoY Change (%) 220.8 171.3 187.7 146.2 42.0 -7.7 -33.1 -17.7 174.7 -8.8
Margins (%) 28.6 32.8 33.1 33.4 30.9 28.7 27.7 31.9 32.2 29.9
Depreciation 488 510 516 536 585 632 640 676 2,051 2,533
EBIT 2,295 3,229 3,747 4,186 3,368 2,819 2,213 3,212 13,456 11,612
YoY Change (%) 460.8 258.9 272.3 187.2 46.7 -12.7 -40.9 -23.3 256.7 -13.7
Interest 151 137 174 219 266 221 231 246 682 964
Other Income 71 51 69 45 59 28 53 25 237 166
PBT before EO expense 2,215 3,143 3,642 4,012 3,161 2,626 2,035 2,992 13,011 10,813
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 2,215 3,143 3,642 4,012 3,161 2,626 2,035 2,992 13,011 10,813
Tax 497 720 913 1,043 744 586 485 671 3,173 2,487
Rate (%) 22.4 22.9 25.1 26.0 23.6 22.3 23.8 22.4 24.4 23.0
Reported PAT 1,718 2,423 2,729 2,969 2,416 2,040 1,550 2,321 9,838 8,326
Adj PAT 1,718 2,423 2,729 2,969 2,416 2,040 1,550 2,321 9,838 8,326
YoY Change (%) 1,038.0 328.4 271.4 169.6 40.7 -15.8 -43.2 -21.8 285.4 -15.4
Margins (%) 17.6 21.3 21.2 21.0 18.9 16.9 15.1 19.0 20.4 17.6

Lupin Neutral
CMP: INR790 | TP: INR780 (-1%) EPS CHANGE (%): FY22|23: (2.9)|(4.0)
 The US business to stabilize on a low base (+4% YoY to  Update on timelines of b-Pegfilgrastim pending approval in
USD202m) the US
 Update on the regulatory compliance post the inspection of  Watch out for an outlook on cost rationalization measures to
Somerset facility improve profitability
Quarterly Performance (Consolidated) (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 35,276 38,350 39,474 37,831 38,968 40,913 41,609 39,097 1,50,930 1,60,587
YoY Change (%) -9.0 -1.2 4.7 -1.6 10.5 6.7 5.4 3.3 -1.8 6.4
Total Expenditure 30,194 32,538 32,126 30,756 33,426 34,950 35,970 33,839 1,25,614 1,38,185
EBITDA 5,082 5,812 7,347 7,076 5,542 5,963 5,640 5,257 25,316 22,402
YoY Change (%) -32.0 -9.3 56.6 34.7 9.0 2.6 -23.2 -25.7 7.5 -11.5
Margins (%) 14.4 15.2 18.6 18.7 14.2 14.6 13.6 13.4 16.8 14.0
Depreciation 2,146 2,127 2,443 2,157 2,088 2,116 2,034 2,109 8,874 8,347
EBIT 2,935 3,684 4,904 4,918 3,454 3,847 3,606 3,149 16,442 14,055
YoY Change (%) -40.9 -5.0 127.2 58.1 17.7 4.4 -26.5 -36.0 18.8 -14.5
Interest 443 336 309 318 335 344 334 409 1,406 1,422
Other Income 436 250 212 486 278 728 341 353 1,383 1,700
EO Exp/(Inc) 204 0 -440 -96 -4,106 26,279 1,942 0 -332 24,114
PBT 2,725 3,598 5,247 5,182 7,503 -22,048 1,671 3,093 16,751 -9,781
Tax 1,643 1,467 835 540 2,023 -1,099 -3,820 920 4,485 -1,976
Rate (%) 60.3 40.8 15.9 10.4 27.0 5.0 -228.7 29.7 26.8 20.2
Minority Interest -12 -21 -29 -38 -55 -32 -14 29 -101 -72
Reported PAT 1,069 2,110 4,383 4,604 5,425 -20,980 5,477 2,203 12,165 -7,877
Adj PAT 1,150 2,110 4,013 4,518 2,426 3,057 2,695 2,203 11,790 10,381
YoY Change (%) -59.0 -37.4 118.8 76.6 111.0 44.9 -32.8 -51.2 11.5 -12.0
Margins (%) 3.3 5.5 10.2 11.9 6.2 7.5 6.5 5.6 7.8 6.5

April 2022 142

 March 2022 Results Preview | Sector: Healthcare

Solara Buy
CMP: INR700 | TP: INR1,000 (+43%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect sales to revive QoQ with ease of supply-demand  Progress on CRAMS business ramp-up
situation for Ibuprofen
 Progress on ramp-up of products other than Ibuprofen  Update on completion of the Aurore merger
Consolidated - Quarterly Earning Model (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 3,484 3,976 4,267 4,442 4,056 4,016 1,003 3,266 16,169 19,105
YoY Change (%) 5.5 13.2 24.2 49.7 16.4 1.0 -76.5 -26.5 22.3 18.2
Total Expenditure 2,646 2,999 3,214 3,451 3,142 3,298 1,972 3,042 12,310 16,316
EBITDA 838 976 1,053 991 914 719 -968 224 3,859 2,789
YoY Change (%) 31.6 43.5 35.6 97.9 9.1 -26.4 -191.9 -77.4 48.7 -27.7
Margins (%) 24.1 24.6 24.7 22.3 22.5 17.9 -96.5 6.9 23.9 14.6
Depreciation 262 276 274 274 277 284 284 305 1,087 1,160
Interest 198 194 205 248 190 170 178 231 845 769
Other Income 46 61 83 98 59 33 47 52 288 191
PBT before EO expense 423 568 658 566 507 298 -1,384 -260 2,215 1,052
Extra-Ord expense 0 0 0 0 6 1 15 0 0 0
PBT 423 568 658 566 501 297 -1,399 -260 2,215 1,052
Tax 1 1 0 0 0 0 0 0 2 0
Rate (%) 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0
Minority Interest & Profit/Loss of Asso. Cos. 0 0 0 0 0 0 0 0 -1 -1
Reported PAT 423 567 658 566 501 297 -1,399 -260 2,214 1,053
Adj PAT 423 567 658 566 507 298 -1,383 -260 2,214 1,053
YoY Change (%) 59.4 96.4 59.1 217.8 19.9 -47.5 -310.2 -145.9 93.3 -52.5

Strides Pharma Buy

CMP: INR360 | TP: INR450 (25%) EPS CHANGE (%): FY22|23:(NA)| 0.0
 Expect the US sales to improve QoQ to INR3b on better  Expect other regulated markets to grow 17% YoY
traction in existing portfolio and addition of Endo products
 Watch out for an outlook on Stelis CDMO business including  Watch out for an outlook on revival in the US business
Sputnik
Consolidated - Quarterly Earning Model (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,818 7,936 8,320 9,085 6,884 7,215 7,944 8,529 33,159 30,571
YoY Change (%) 14.0 11.0 13.6 46.9 -12.0 -9.1 -4.5 -6.1 20.5 -7.8
EBITDA 1,510 1,572 1,594 1,592 -554 -11 46 488 6,268 -31
YoY Change (%) 22.1 7.2 -11.8 90.2 -136.7 -100.7 -97.1 -69.4 17.2 -100.5
Margins (%) 19.3 19.8 19.2 17.5 -8.0 -0.1 0.6 5.7 18.9 -0.1
Depreciation 491 528 525 519 549 566 609 621 2,063 2,344
EBIT 1,019 1,044 1,069 1,073 -1,102 -576 -563 -133 4,205 -2,375
YoY Change (%) 26.1 -0.2 -22.2 179.9 -208.2 -155.2 -152.7 -112.4 16.6 -156.4
Interest 369 369 347 416 415 436 423 463 1,501 1,735
Other Income 123 129 132 130 135 222 102 60 514 520
PBT before EO expense 773 804 854 788 -1,382 -790 -884 -535 3,219 -3,590
Extra-Ord expense -488 -180 126 29 864 724 185 0 -514 1,773
PBT 1,261 984 729 759 -2,246 -1,514 -1,069 -535 3,733 -5,364
Tax 33 61 108 115 -355 -68 -45 -82 317 -550
Rate (%) 2.6 6.2 14.8 15.1 15.8 4.5 4.2 15.4 8.5 10.3
MI & (P)/L of Asso. Cos. 192 262 270 198 195 234 243 28 922 700
Reported PAT from Continuing Ops. 1,036 662 351 446 -2,086 -1,680 -1,266 -482 2,494 -5,514
Adj. PAT from Continuing Ops. 560 493 458 470 -1,343 -988 -1,089 -481 1,981 -3,913
YoY Change (%) 64.1 -5.9 -40.3 -271.5 -339.8 -300.6 -337.9 -202.4 45.8 -297.6

April 2022 143

 March 2022 Results Preview | Sector: Healthcare

Sun Pharma Buy

CMP: INR926 | TP: INR1,070 (+16%) EPS CHANGE (%): FY22|23: 0.0|0.1
 Expect the US sales to remain almost flat YoY to USD372m as  DF sales to grow 7% YoY due to brief COVID wave in 4QFY22
strong execution in specialty sales would be offset by Taro
performance
 Watch out for an outlook on Specialty portfolio scale-up  Update on starting of clinical trials for additional indication
across key markets using Illumya
Quarterly Performance (Consolidated) (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 74,672 84,588 87,818 84,314 96,694 94,817 98,142 93,700 3,31,392 3,83,353
YoY Change (%) -9.6 6.4 9.2 4.4 29.5 12.1 11.8 11.1 2.5 15.7
Total Expenditure 58,209 62,435 65,023 64,638 69,775 69,196 72,461 69,657 2,50,304 2,81,090
EBITDA 16,463 22,153 22,796 19,676 26,919 25,621 25,680 24,043 81,088 1,02,263
YoY Change (%) -9.2 37.8 38.7 40.7 63.5 15.7 12.7 22.2 25.5 26.1
Margins (%) 22.0 26.2 26.0 23.3 27.8 27.0 26.2 25.7 24.5 26.7
Depreciation 4,959 4,986 5,319 5,535 5,032 5,304 5,537 4,975 20,800 20,847
EBIT 11,504 17,167 17,476 14,141 21,887 20,317 20,144 19,068 60,289 81,416
YoY Change (%) -15.2 51.4 59.4 71.9 90.3 18.4 15.3 34.8 36.7 35.0
Interest 520 333 261 301 351 360 190 489 1,414 1,389
Net Other Income 2,719 3,501 3,699 2,026 2,018 2,921 3,127 3,234 11,945 11,300
PBT before EO Exp 13,703 20,335 20,914 15,866 23,554 22,879 23,080 21,814 70,820 91,327
Less: EO Exp/(Inc) 35,542 1,164 -716 6,836 5,512 1,514 -1,582 0 42,825 5,444
PBT -21,839 19,172 21,631 9,030 18,042 21,365 24,662 21,814 27,995 85,883
Tax 2,459 -312 2,449 550 3,956 1,978 3,354 3,498 5,147 12,786
Rate (%) 17.9 -1.5 11.7 3.5 16.8 8.6 14.5 16.0 7.3 14.0
PAT (pre Minority Interest) -24,298 19,484 19,181 8,480 14,087 19,387 21,308 18,315 22,848 73,098
Minority Interest -7,742 1,356 656 -462 -355 417 720 618 -6,191 1,400
Reported PAT - 16,556 18,128 18,525 8,942 14,442 18,970 20,588 17,697 29,039 71,698
Adj Net Profit* 11,460 16,409 17,809 14,565 19,954 20,484 19,006 17,697 60,242 77,141
YoY Change (%) -13.2 55.4 114.1 97.2 74.1 24.8 6.7 21.5 52.6 28.1

Torrent Pharmaceuticals Neutral

CMP: INR2,831 | TP: INR2,870 (1%) EPS CHANGE (%): FY22|23: (2.3)|(0.3)
 Expect the US sales to decline YoY due to minimal launches  Expect DF sales to grow ~14% YoY, led by better-than-industry
and ongoing price erosion to USD33m for the quarter performance in Chronic portfolio
 Watch out for an outlook on regulatory inspections by the  Progress on new launches in the LATAM segment
USFDA at non-compliant sites
Quarterly performance (Consolidated) (INR m)
Y/E March FY21 FY22E FY21 FY22E
INR m 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 20,560 20,170 19,950 19,370 21,340 21,370 21,080 21,162 80,050 84,952
YoY Change (%) 1.7 0.6 1.5 -0.5 3.8 5.9 5.7 9.3 0.8 6.1
EBITDA 6,770 6,350 6,070 5,820 6,770 6,600 5,380 5,461 25,010 24,211
YoY Change (%) 25.1 17.4 12.4 6.2 0.0 3.9 -11.4 -6.2 15.3 -3.2
Margins (%) 32.9 31.5 30.4 30.0 31.7 30.9 25.5 25.8 31.2 28.5
Depreciation 1,610 1,650 1,670 1,650 1,650 1,680 1,670 1,693 6,580 6,693
EBIT 5,160 4,700 4,400 4,170 5,120 4,920 3,710 3,768 18,430 17,518
YoY Change (%) 35.4 24.3 16.7 9.7 -0.8 4.7 -15.7 -9.6 21.6 -4.9
Interest 1,020 920 910 730 680 710 620 626 3,580 2,636
Other Income 40 60 80 390 400 510 480 460 570 1,850
PBT before EO Expense 4,180 3,840 3,570 3,830 4,840 4,720 3,570 3,602 15,420 16,732
One-off expenses 160 0 0 0 0 0 0 0 160 0
PBT after EO Expense 4,020 3,840 3,570 3,830 4,840 4,720 3,570 3,602 15,260 16,732
Tax 810 740 600 590 1,540 1,560 1,080 1,174 2,740 5,354
Rate (%) 19.4 19.3 16.8 15.4 31.8 33.1 30.3 32.6 17.8 32.0
Reported PAT 3,210 3,100 2,970 3,240 3,300 3,160 2,490 2,428 12,520 11,378
Adj PAT 3,370 3,100 2,970 3,240 3,300 3,160 2,490 2,428 12,680 11,378
YoY Change (%) 56.0 27.0 16.4 38.2 -2.1 1.9 -16.2 -25.1 33.5 -10.3
Margins (%) 16.4 15.4 14.9 16.7 15.5 14.8 11.8 11.5 15.8 13.4

April 2022 144

 March 2022 Results Preview | Sector: Healthcare

Zydus Lifesciences Buy

CMP: INR364 | TP: INR440 (+21%) EPS CHANGE (%): FY22|23: (2.3)|(2.3)
 Expect the US sales to remain flat YoY to USD207m due to  Expect DF sales to grow 19% YoY with contribution from
the ongoing pricing pressure COVID vaccine sales in addition to branded DF sales
 Watch out for an outlook on the ZyCov-D vaccine supply  Update on injectable ANDA filings/approvals for the US in
as booster dose, in light of the easing of the pandemic FY22/23E
Quarterly Performance (Consolidated) (INR m)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 36,399 38,200 37,956 38,467 40,254 37,848 36,550 40,861 1,44,988 1,55,513
YoY Change (%) 4.1 13.5 4.3 2.5 10.6 -0.9 -3.7 6.2 1.7 7.3
EBITDA 8,154 8,634 8,069 8,553 9,330 8,608 7,525 8,670 31,760 34,133
YoY Change (%) 16.2 38.0 15.6 8.1 14.4 -0.3 -6.7 1.4 12.8 7.5
Margins (%) 22.4 22.6 21.3 22.2 23.2 22.7 20.6 21.2 21.9 21.9
Depreciation 1,768 1,790 1,804 1,886 1,827 1,848 1,832 1,631 7,081 7,138
EBIT 6,386 6,844 6,265 6,667 7,503 6,760 5,693 7,039 24,679 26,995
YoY Change (%) 20.4 51.0 19.6 8.8 17.5 -1.2 -9.1 5.6 16.4 9.4
Interest 677 457 268 233 273 301 311 268 1,632 1,153
Other Income 225 275 275 85 316 533 608 381 468 1,838
PBT before EO Income 5,934 6,662 6,272 6,519 7,546 6,992 5,990 7,153 23,515 27,681
EO Exp/(Inc) 0 1,320 0 1,219 0 957 0 0 0 957
PBT after EO Income 5,934 5,342 6,272 5,300 7,546 6,035 5,990 7,153 23,515 26,724
Tax 1,235 1,106 1,147 -2,016 1,415 1,000 1,107 1,288 1,119 4,810
Rate (%) 20.8 20.7 18.3 -38.0 18.8 16.6 18.5 18.0 4.8 18.0
Min. Int/Adj on Consol -159 498 147 -526 -483 27 121 285 2,091 -50
Reported PAT 4,540 4,734 5,272 6,790 5,648 5,062 5,004 6,150 24,487 21,864
Adj PAT 4,540 5,781 5,272 4,689 5,648 5,860 5,004 6,150 20,282 22,662
YoY Change (%) 26.3 73.7 39.2 8.2 24.4 1.4 -5.1 31.1 34.8 11.7
PAT from discontinued operations 156 341 268 224 24,961 25,185
Total Reported PAT (Incl Disc operations) 4,696 5,075 5,272 7,058 5,872 30,023 5,004 6,150 24,487 47,049
YoY Change (%) NA NA NA NA 25.0 491.6 -5.1 -12.9 108.1 92.1
*Note: Total of 4 Quarters of FY21 do not add up to FY21 annual numbers due to restatement of FY21 annual numbers

April 2022 145

 March 2022 Results Preview | Sector: Infrastructure

Infrastructure
Company Execution set to pick up
Ashoka Buildcon
Awarding gathers pace at the end of 4QFY22; execution set to pick up
G R Infraprojects  Project awarding gathered pace in the later part of 4QFY22 after lackluster
IRB Infra. awards in the first 11 months of FY22. NHAI bid out several projects, majorly
KNR Constructions
through the HAM mode, in Mar’22. This has pumped up the order book of
players like GRINFRA and PNCL.
 Execution is expected to pick up in 4QFY22, which is a seasonally strong quarter.

Toll revenue continues to remain robust with the opening up of the

economy; monetization efforts gather pace
 FASTag-based toll collections have gathered pace in 4QFY22 and clocked record
high monthly collections in Mar’22. Implementation of FASTag and improving
traffic movement are leading to stronger toll collections.
 NHAI recently monetized INR62b of toll assets via the toll-operate-transfer (TOT-
7) route, which constitutes the eastern peripheral expressway project in Delhi-
NCR.
 An increase in funds with NHAI will help in improving awarding and construction
activity for the Road sector. With an improved outlook on toll collections,
authorities will be in a position to bid out additional BOT toll projects.
 NHAI debt levels have spiked to INR3.5t at the end of FY22 (FY14: INR250b). This
has been due to the increase in the cost of land acquisition and construction
costs. Hence, raising funds outside budgetary resources remains crucial.

Execution for our Coverage Universe to rise by ~25% sequentially

 We expect execution for our Coverage Universe to rise by 25% QoQ and -5%
YoY.
 Several companies have received appointed dates for HAM projects in the last
few months. This will support execution going forward.

Higher input costs to impact operating profitability

 We expect operating profit to decline by ~8% YoY for our Coverage Universe due
to higher input costs.
 In line with operating performance, we expect net profit for our Coverage
Universe to decline by 9% YoY.

Companies with decent balance sheets are our preferred bets

 KNRC and GRINFRA are our top picks in the sector. We like KNRC owing to its net
cash Balance Sheet on account of its: a) already monetized HAM projects, b)
superior focus on working capital management over growth, and c) robust
execution capabilities.
 We like GRINFRA owing to: a) robust order backlog, driven by recent order inflows,
b) focus on diversification into other segments, and c) prudent bidding strategy and
working capital management.

Alok Deora
December – Research Analyst ([Link]@[Link])
2020 146
Dhirendra Patro – Research Analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Infrastructure

Exhibit 1: Summary of expected quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Ashoka Buildcon 90 Buy 14,252 2.8 29.1 1,587 -21.1 31.5 1,181 -20.8 55.3
G R Infraproject 1556 Buy 22,784 -13.3 25.3 3,510 -14.2 37.7 1,971 -20.3 49.2
IRB Infra 264 Neutral 16,017 -0.3 25.2 7,386 -2.8 0.0 1,010 3.6 39.0
KNR Constructions 293 Buy 9,412 0.6 22.8 1,805 -0.9 13.6 1,020 32.5 28.5
Infrastructure 62,464 -4.7 25.7 14,288 -8.0 12.3 5,181 -9.2 43.9

Exhibit 2: NHAI awarding and construction trend Exhibit 3: FASTag toll collections are on a rise
Tenders awarded by NHAI (in KMs) FASTag Toll Collections (INR b) Volume (In m)
Road construction by NHAI (in KMs) 270
242 231 244
214 214
193
164 192 201 194
158
116
3,071
2,222

3,790
3,067
1,501

4,344
1,988

4,335
2,628

7,396

3,380

3,211
3,979

4,788
4,192

4,043

30.9 27.8 21.3 25.8 29.8 30.8 30.1 33.6 31.8 36.8 36.0 36.3 41.0

Jun-21
Apr-21

Aug-21

Dec-21
Oct-21
May-21

Nov-21
Jul-21
Mar-21

Sep-21

Jan-22

Feb-22

Mar-22
FY16

FY20

FY21
FY15

FY17

FY18

FY19

FY22

Source: NHAI, MOFSL Source: NPCI, MOFSL

Exhibit 4: Relative performance – three-months (%) Exhibit 5: Relative performance – one-year (%)

Nifty Index MOFSL Infrastructure Index Nifty Index MOFSL Infrastructure Index
120 400

110 300

100 200

90 100

80 0
Jun-21

Dec-21
Mar-21

Sep-21

Mar-22
Dec-21

Feb-22

Mar-22
Jan-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 6: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Infrastructure 24.2 17.1 14.1 1.9 1.8 1.6 8.0 10.3 11.2
Ashoka Buildcon 90 Buy 13.9 15.8 16.4 6.5 5.7 5.5 1.0 0.8 0.7 14.0 15.9 14.4
G R Infraproject 1,556 Buy 71.6 83.0 106.2 21.7 18.8 14.7 3.5 3.0 2.5 17.5 17.1 18.3
IRB Infra 264 Neutral 4.8 11.9 15.0 55.4 22.2 17.6 1.3 1.2 1.2 3.0 5.7 6.8
KNR Constructions 293 Buy 12.4 16.8 19.9 23.5 17.4 14.7 3.7 3.1 2.5 17.1 19.3 18.9

April 2022 147

 March 2022 Results Preview | Sector: Infrastructure

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter / financial year under review.

Ashoka Buildcon Buy

CMP: INR90 | TP: INR150 (+67%) EPS CHANGE (%): FY22|23: -3|-
 Expect revenue to increase by 3% YoY to INR14.3b.  Expect EBITDA at INR1.6b, with a marginal sequential rise
in EBITDA margin at 11.1%.
 Expect adjusted PAT to fall by 21% YoY due to a decline in  Watch out for commentary on new project awarding and
operating margin. monetization of other assets.

Standalone quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,724 8,775 9,807 13,870 10,114 9,171 11,037 14,252 38,175 44,574
YoY Change (%) -34.7 6.7 -0.3 10.5 76.7 4.5 12.5 2.8 -3.0 16.8
EBITDA 819 1,309 1,055 2,012 1,199 1,055 1,207 1,587 5,195 5,049
Margin (%) 14.3 14.9 10.8 14.5 11.9 11.5 10.9 11.1 13.6 11.3
Depreciation 223 218 216 216 161 166 167 169 872 662
Interest 166 197 183 225 164 210 249 210 772 832
Other Income 483 498 473 466 472 590 291 318 1,921 1,672
PBT before EO expense 913 1,393 1,129 2,037 1,347 1,271 1,082 1,527 5,472 5,226
Extra-Ord. expense 0 0 0 0 0 0 -7,696 0 0 -7,696
PBT 913 1,393 1,129 2,037 1,347 1,271 -6,614 1,527 5,472 -2,470
Tax 222 346 272 546 334 315 321 346 1,387 1,315
Rate (%) 24.4 24.8 24.1 26.8 24.8 24.8 -4.9 22.6 25.3 -53.3
Reported PAT 691 1,047 856 1,492 1,013 956 -6,935 1,181 4,086 -3,785
Adj. PAT 691 1,047 856 1,492 1,013 956 761 1,181 4,086 3,911
YoY Change (%) 6.8 44.0 0.1 -9.2 46.7 -8.7 -11.2 -20.8 5.5 -4.3
Margin (%) 12.1 11.9 8.7 10.8 10.0 10.4 6.9 8.3 10.7 8.8

G R Infraprojects Buy
CMP: INR1,556 | TP: INR1,900 (+22%) EPS CHANGE (%): FY22|23: -|-
 Expect revenue to decline by 13% YoY to INR22.8b.  Expect EBITDA at INR3.5b, with a sequential rise of
~140bp in EBITDA margin at 15.4%.
 Expect adjusted PAT to fall by 20% YoY due to a decline in  Watch out for commentary on new project awarding and
revenue. monetization of assets through the InvIT route.

Standalone quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 12,318 11,683 22,159 26,284 21,332 16,995 18,184 22,784 72,445 79,295
YoY Change (%) 73.2 45.5 (17.9) (13.3) 20.2 9.5
EBITDA 1,543 2,567 4,904 4,089 3,454 2,779 2,548 3,510 13,104 12,291
Margin (%) 12.5 22.0 22.1 15.6 16.2 16.4 14.0 15.4 18.1 15.5
Depreciation 474 523 594 678 666 710 823 803 2,268 3,002
Interest 331 409 278 377 388 311 297 309 1,396 1,305
Other Income 254 324 311 386 302 339 351 322 1,275 1,314
PBT before EO expense 993 1,959 4,343 3,419 2,702 2,098 1,779 2,719 10,715 9,298
Extra-Ord. expense - - - - - - (31) - - (31)
PBT 993 1,959 4,343 3,419 2,702 2,098 1,779 2,719 10,715 9,298
Tax 283 548 1,131 947 666 467 459 748 2,908 2,340
Rate (%) 28.5 28.0 26.0 27.7 24.7 22.3 25.8 27.5 27.1 25.2
Reported PAT 710 1,411 3,213 2,473 2,036 1,630 1,290 1,971 7,806 6,927
Adj. PAT 710 1,411 3,213 2,473 2,036 1,630 1,321 1,971 7,806 6,958
YoY Change (%) 186.8 15.6 (58.9) (20.3) 13.3 (10.9)
Margin (%) 5.8 12.1 14.5 9.4 9.5 9.6 7.3 8.7 10.8 8.8

April 2022 148

 March 2022 Results Preview | Sector: Infrastructure

IRB Infrastructure Developers Neutral

CMP: INR264 | TP: INR260 (-2%) EPS CHANGE (%): FY22|23: 10.9|2.6
 Expect a 4% YoY decline in Construction revenue. Expect a  Expect a 120bps YoY decline in operating margin to 46.1%
9% YoY growth in revenue from BOT projects. due to commodity price inflation.
 Expect adjusted PAT at INR1b.  Watch out for new order wins in the Construction
segment and overall toll collection trends.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 10,223 11,233 15,472 16,058 16,257 14,652 12,791 16,017 52,986 59,718
YoY Change (%) (42.3) (35.9) (11.2) 1.4 59.0 30.4 (17.3) (0.3) (22.7) 12.7
Total Expenditure 5,447 5,683 8,272 8,458 9,258 7,476 5,407 8,631 27,860 30,772
EBITDA 4,776 5,550 7,200 7,601 6,999 7,176 7,384 7,386 25,127 28,945
Margin (%) 46.7 49.4 46.5 47.3 43.1 49.0 57.7 46.1 47.4 48.5
Depreciation 844 1,285 1,914 1,774 1,364 1,652 1,924 1,850 5,817 6,789
Interest 3,656 4,350 4,407 4,511 4,675 4,770 5,471 4,148 16,924 19,064
Other Income 512 455 477 446 448 392 2,187 390 1,889 3,416
PBT 788 370 1,355 1,761 1,407 1,147 2,176 1,778 4,274 6,508
Tax 331 150 468 496 349 368 487 436 1,445 1,639
Rate (%) 42.0 40.5 34.5 28.2 24.8 32.1 22.4 24.5 33.8 25.2
Share of profit in Associates (759) (417) (192) (290) (340) (356) (962) (332) (1,658) (1,990)
Reported PAT (301) (197) 695 975 719 423 727 1,010 1,172 2,879
Adj. PAT (301) (197) 695 975 719 423 727 1,010 1,172 2,879
YoY Change (%) (114.6) (109.8) (56.5) 0.5 NA NA 4.6 3.6 (82.3) 145.7
Margin (%) (2.9) (1.8) 4.5 6.1 4.4 2.9 5.7 6.3 2.2 4.8

KNR Constructions Buy

CMP: INR293 | TP: INR360 (+23%) EPS CHANGE (%): FY22|23: -|-
 Expect revenue of INR9.4b (flat YoY).  Expect EBITDA at INR1.8b (flat YoY). Expect operating
margin to decline by 30bp YoY.
 Expect adjusted PAT of INR1b (+33% YoY) on lower taxes.  Watch out for updates on new order inflows.

Standalone quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,794 6,012 6,863 9,358 7,400 7,556 7,663 9,412 27,026 32,031
YoY Change (%) 3.2 14.9 23.0 38.5 54.4 25.7 11.7 0.6 21.7 18.5
Total Expenditure 3,850 4,772 5,510 7,536 5,967 5,880 6,074 7,607 21,668 25,528
EBITDA 943 1,240 1,353 1,822 1,433 1,675 1,589 1,805 5,358 6,502
Margin (%) 19.7 20.6 19.7 19.5 19.4 22.2 20.7 19.2 19.8 20.3
Depreciation 331 352 373 388 269 320 358 368 1,444 1,315
Interest 102 158 184 43 79 72 64 75 487 290
Other Income 61 76 266 94 48 105 78 89 496 320
Extra-Ord. expense 0 -90 0 0 0 0 214 0 -90 214
PBT 571 807 1,061 1,485 1,133 1,389 1,246 1,450 3,924 5,218
Tax 173 218 285 715 403 437 452 431 1,392 1,722
Rate (%) 30.3 27.1 26.9 48.2 35.5 31.4 36.3 29.7 35.5 33.0
Reported PAT 398 498 776 770 730 952 1,008 1,020 2,442 3,710
Adj. PAT 398 588 776 770 730 952 794 1,020 2,532 3,496
YoY Change (%) -16.6 39.7 65.3 14.5 83.5 61.9 2.3 32.5 24.1 38.1
Margin (%) 8.3 9.8 11.3 8.2 9.9 12.6 10.4 10.8 9.4 10.9

April 2022 149

 March 2022 Results Preview | Sector: Logistics

Logistics
Company Robust demand environment; diesel prices remain
Blue Dart Express
Container Corporation
unchanged for a large part of 4QFY22
Mahindra Logistics
Daily e-way bill generation touches a record high in Feb’22; domestic Rail
TCI Express
container movement gathers pace
Transport Corporation
 Freight rates have remained firm over the last few months due to a robust
VRL Logistics
demand environment, led by: a) the wedding season b) higher dispatches at
factory gates, c) strong EXIM trade, and d) increased food supplies at APMCs.
This is reflected in the robust surge in e-way bill generation. Average daily e-way
bill generation touched a record high of ~2.4m in Feb’22, indicating sustained
improvement in truck operations.
 EXIM container volumes handled by the Railways registered a growth of 3% YoY
in Jan-Feb’22. Domestic container volumes handled by the Indian Railways have
been seeing a steep rise, up ~22% YoY in Jan-Feb’22. CCRI, which commands
~65% market share in the Indian Rail container cargo movement, will be a direct
beneficiary of it.

Demand environment robust, minor increase in freight rates despite no

change in diesel prices
 Demand continued to remain robust in 4QFY22, leading to higher volumes. This
led to a cumulative rise of ~5% in freight rates, despite no change in diesel
prices during most of 4QFY22.
 The impact of the total diesel price hike of INR9.2/liter in the last two weeks of
Mar’22 will be minimal as freight prices were already increased during the first
two months of 4QFY22.

Operating performance to remain robust

 We expect our Coverage Universe to report sales growth of 12% YoY and 4%
QoQ, EBITDA growth of 59% YoY and 3% QoQ, and PAT growth of 70% YoY (flat
QoQ). CONCOR should witness a strong growth in earnings on a weak base of last
year (due to certain one-time costs like provisioning for land license fee).
 We expect VRLL to report a sales growth of 12% YoY. Addition of new branches will
result in higher volumes, thus boosting revenue. Increasing scale and operational
efficiencies will keep its margin profile elevated.

Expect investment on fleet addition and sorting centers to gather pace

 Organized Logistics operators are well placed to reap the benefits from reforms
like GST and e-way bill, which is propelling higher growth and formalization in
the industry. Logistics companies in our coverage universe are looking to incur
capex towards fleet addition and sorting centers, which will help cater to
incremental volumes.
 VRLL is targeting fleet additions in 1HFY23 and opening branches in the
unexplored territories of North and East India. TRPC is looking to add a new ship
to its fleet in FY23. This will help increase the share of the high-margin Seaways
segment. MAHLOG plans to add 1-5-2m sq. ft. of warehousing space annually
over the next five years.

Alok Deora – Research Analyst ([Link]@[Link])

April 2022 150
Dhirendra Patro – Research Analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Logistics

Exhibit 1: Summary of expected quarterly performance

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Blue Dart Express 6713 Neutral 11,845 22.6 -5.6 1,857 6.8 -8.9 1,050 17.9 -14.1
Concor 680 Buy 21,232 9.5 10.6 5,046 167.0 10.7 3,102 211.8 8.3
Mahindra Logistics 506 Neutral 11,418 17.2 2.1 534 15.8 12.1 88 -42.7 54.4
TCI Express 1728 Buy 3,004 7.4 4.7 489 -10.0 3.7 362 -15.0 3.0
Transport Corp. 627 Buy 9,182 2.9 9.6 1,097 23.8 0.5 829 23.3 1.1
VRL Logistics 490 Buy 6,730 12.1 -0.8 1,248 30.5 -3.3 537 44.5 -11.2
Logistics 63,410 12.2 4.0 10,271 58.6 3.5 5,968 70.1 0.8

Exhibit 2: e-way bill generation Exhibit 3: Movement in freight rates v/s diesel prices
(in m) Intrastate Interstate Total (Base of 100) Freight Index Diesel Index
71.2 73.5 71.6 68.8 130
63.8 64.2 65.9 67.9 61.2
66.1
58.8
54.7 115
30.3 28.2 26.7 25.7
28.4 40.0 24.9 26.0 27.9
25.5 23.9
23.0 20.7 100
14.8
38.4 42.8 35.8 43.2 37.3 43.5 42.1 40.3 85
34.0 39.3 39.9 40.0
25.1
70
Jul-21
Apr-21

May-21

Jun-21

Nov-21
Feb-21

Mar-21

Aug-21

Sep-21

Dec-21

Jan-22

Feb-22
Oct-21

Jul-21
Apr-21
May-21
Jun-21

Nov-21
Feb-21
Mar-21

Aug-21
Sep-21

Dec-21
Jan-22
Feb-22
Oct-21
th
*Data for Feb’22 is up to 27 Feb’22 Source: GSTN, MOFSL Source: IFTRT, MOFSL

Exhibit 4: Relative performance – three-months (%) Exhibit 5: Relative performance – one-year (%)

Nifty Index MOFSL Logistics Index Nifty Index MOFSL Logistics Index
106 140

102 125

98 110

94 95

90 80
Dec-21

Mar-22
Jan-22

Feb-22

Jun-21

Dec-21
Mar-21

Sep-21

Mar-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 6: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Logistics 36.5 30.4 24.4 5.2 4.7 4.2 14.2 15.5 17.3
Blue Dart Express 6,713 Neutral 160.9 168.6 172.1 41.7 39.8 39.0 16.2 12.0 9.4 46.0 34.6 27.0
Concor 680 Buy 18.3 22.8 30.1 37.1 29.9 22.6 3.9 3.7 3.5 10.7 12.7 15.8
Mahindra Logistics 506 Neutral 4.7 10.3 14.9 107.0 49.1 34.0 6.2 5.7 5.0 5.8 12.0 15.5
TCI Express 1,728 Buy 33.5 43.1 52.5 51.5 40.1 32.9 12.5 9.8 7.8 26.7 27.5 26.4
Transport Corp. 627 Buy 37.3 41.5 51.9 16.8 15.1 12.1 3.4 2.8 2.3 21.9 20.1 20.8
VRL Logistics 490 Buy 17.8 19.5 22.1 27.5 25.2 22.2 6.7 5.6 4.8 25.3 24.3 23.3

April 2022 151

 March 2022 Results Preview | Sector: Logistics

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter / financial year under review.

Blue Dart Express Neutral

CMP: INR6,713 | TP: INR7,520 (+12%) EPS CHANGE (%): FY22|23: -|-
 Expect revenue to increase by 23% YoY to INR11.8b, led by  Expect EBITDA at INR1.9b, with EBITDA margin down
an improvement in volumes. 230bp YoY to 15.7%, due to a rise in aviation turbine fuel
(ATF) prices.
 Expect adjusted PAT to increase by 18% YoY to INR1.1b.  Increase in realization, with a rise in ATF prices, is a key
monitorable.

Standalone quarterly snapshot

Y/E March (INR m) FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,142 8,644 10,349 9,662 8,648 11,236 12,548 11,845 32,797 44,276
YoY Change (%) -47.3 8.0 21.0 33.4 108.8 30.0 21.2 22.6 3.6 35.0
EBITDA -1,182 1,475 1,734 1,739 834 1,986 2,039 1,857 3,766 6,716
Margin (%) -28.5 17.1 16.8 18.0 9.6 17.7 16.2 15.7 11.5 15.2
YoY Change (%) -365.3 143.1 159.0 1,009.2 -170.6 34.6 17.6 6.8 100.5 78.3
Depreciation 428 509 547 523 430 433 430 433 2,007 1,726
Interest 75 88 77 78 68 59 54 74 317 256
Other Income 22 19 24 62 58 64 78 54 127 253
PBT before EO expense -1,662 898 1,133 1,201 394 1,558 1,632 1,404 1,569 4,987
Extra-Ord. expense 0 342 -83 0 0 360 0 0 259 360
PBT -1,662 556 1,216 1,201 394 1,198 1,632 1,404 1,311 4,628
Tax -383 142 278 310 100 303 410 354 347 1,169
Rate (%) 23.0 25.6 22.9 25.8 25.4 25.3 25.1 25.2 26.5 25.3
Reported PAT -1,279 414 938 891 294 895 1,222 1,050 963 3,458
Adj. PAT -1,279 756 855 891 294 1,254 1,222 1,050 1,222 3,818
YoY Change (%) -2,887.4 440.1 175.4 -474.4 -123 66.0 43.0 18 373.1 212.5
Margin (%) -30.9 8.7 8.3 9.2 3.4 11.2 9.7 8.9 3.7 8.6

Container Corp. of India (CONCOR) Buy

CMP: INR680 | TP: INR785 (+15%) EPS CHANGE (%): FY22|23: -1|-2
 Expect volumes to increase by 5% YoY.  Expect EXIM/domestic volumes to grow by 2%/17% YoY.
 Expect EBITDA margin to improve to 24%, with a partial  A status update on commissioning of the DFC to be a key
commissioning of the DFC and the management’s focus on monitorable.
high margin long-haul routes.

Standalone quarterly snapshot

Y/E March (INR m) FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 11,891 15,027 17,538 19,393 18,075 18,239 19,200 21,232 63,850 76,746
YoY Change (%) -27.4 -13.6 14.8 23.6 52.0 21.4 9.5 9.5 -1.4 20.2
EBITDA 1,590 3,129 3,719 1,890 4,335 4,265 4,556 5,046 10,329 18,202
Margin (%) 13.4 20.8 21.2 9.7 24.0 23.4 23.7 23.8 16.2 23.7
YoY Change (%) -60.6 -26.5 0.0 -60.2 172.6 36.3 22.5 167.0 -38.3 76.2
Depreciation 1,260 1,272 1,364 1,324 1,303 1,362 1,324 1,456 5,219 5,445
Interest 85 85 84 86 139 135 132 134 340 540
Other Income 588 713 822 732 555 750 632 763 2,855 2,700
PBT before EO expense 833 2,486 3,092 1,212 3,448 3,518 3,733 4,218 7,625 14,917
Extra-Ord. expense 0 0 0 834 0 1 0 0 834 0
PBT 833 2,486 3,092 379 3,448 3,517 3,733 4,218 6,791 14,917
Tax 217 610 714 217 899 876 867 1,116 1,758 3,759
Rate (%) 26.0 24.5 23.1 57.4 26.1 24.9 23.2 26.5 25.9 25.2
Reported PAT 616 1,876 2,379 162 2,549 2,641 2,865 3,102 5,033 11,158
Adj. PAT 616 1,876 2,379 995 2,549 2,641 2,865 3,102 5,867 11,158
YoY Change (%) -73.7 -26.2 9.4 -67.5 313.4 40.8 20.5 211.8 -42.0 90.2
Margin (%) 5.2 12.5 13.6 5.1 14.1 14.5 14.9 14.6 9.2 14.5

April 2022 152

 March 2022 Results Preview | Sector: Logistics

Mahindra Logistics Neutral

CMP: INR506 | TP: INR500 (-1%) EPS CHANGE (%): FY22|23: -4|+1
 Expect revenue to rise by 17% YoY to INR11.4b.  Expect EBITDA at INR534m (+5% YoY). Expect a 40bp
sequential improvement in operating margin.
 Expect adjusted PAT at INR88m (-43% YoY) on higher  Outlook on MM Auto segment sales in 1QFY23 and status
depreciation. on the semiconductor shortage will be key focus areas.

Quarterly snapshot
Y/E March (INR m) FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,105 8,325 10,468 9,740 8,734 10,191 11,179 11,418 32,637 41,522
YoY Change (%) -54.3 -2.3 15.3 20.0 112.8 22.4 6.8 17.2 -6.0 27.2
EBITDA -22 373 530 462 450 500 477 534 1,342 1,961
Margin (%) -0.5 4.5 5.1 4.7 5.2 4.9 4.3 4.7 4.1 4.7
YoY Change (%) -105.5 -1.2 24.8 21.4 NA 34.1 -15.7 -1.2 -15.2 46.1
Depreciation 184 209 243 261 286 328 357 367 897 1,338
Interest 46 45 55 56 62 68 75 78 201 282
Other Income 28 83 18 47 19 20 26 22 175 87
PBT before EO Items -224 202 250 191 122 123 71 112 420 428
Extra-Ord. expense 0 0 0 28 0 0 0 0 28 0
PBT -224 202 250 164 122 123 71 112 392 428
Tax -59 54 66 40 31 31 21 28 100 108
Rate (%) 26.4 26.6 26.2 24.2 25.2 24.7 28.8 25.2 25.6 25.2
Minority Interest/Associates 7 1 -1 2 3 5 6 4 8 18
Reported PAT -158 150 183 126 94 98 57 88 300 338
Adj. PAT -158 150 183 153 94 98 57 88 328 338
YoY Change (%) -184.8 33.7 17.5 59.0 NA -34.6 -68.9 -42.7 -40.7 3.3
Margin (%) -3.9 1.8 1.7 1.6 1.1 1.0 0.5 0.8 1.0 0.8

TCI Express Buy

CMP: INR1,728 | TP: INR2,100 (+22%) EPS CHANGE (%): FY22|23: -4|+3
 Expect revenue to increase by 7% YoY to INR3b, led by  Expect INR489m in EBITDA, with EBITDA margin at 16.3%.
higher volumes.
 Expect adjusted PAT to decrease by 15% YoY.  Revenue share from the new high margin segments are
key monitorables.

Quarterly snapshot
Y/E March (INR m) FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 887 2,130 2,625 2,798 2,229 2,734 2,869 3,004 8,440 10,837
YoY Change (%) -65.4 -21.0 -2.2 17.6 151.2 28.4 9.3 7.4 -18.2 28.4
EBITDA 20 326 453 544 321 453 472 489 1,343 1,734
Margin (%) 2.3 15.3 17.3 19.4 14.4 16.6 16.4 16.3 15.9 16.0
YoY Change (%) -93.1 6.0 32.2 103.8 1,480.3 39.0 4.1 -10.0 10.7 29.1
Depreciation 21 22 22 25 22 24 22 25 90 93
Interest 1 3 2 2 1 3 2 1 8 6
Other Income 15 15 17 31 16 24 21 21 77 83
PBT before EO expense 13 315 447 547 314 450 468 484 1,322 1,718
Extra-Ord. expense 0 0 0 0 0 0 0 0 0 0
PBT 13 315 447 547 314 450 468 484 1,322 1,718
Tax 3 81 111 122 76 109 117 122 316 428
Rate (%) 27.0 25.5 24.8 22.2 24.3 24.3 25.0 25.2 23.9 24.9
Reported PAT 9 235 336 426 238 340 351 362 1,006 1,290
Adj. PAT 9 235 336 426 238 340 351 362 1,006 1,290
YoY Change (%) -95.0 -10.0 31.6 123.9 2,483 44.9 4.5 -15.0 12.9 28.2
Margin (%) 1.0 11.0 12.8 15.2 10.7 12.4 12.2 12.0 11.9 11.9

April 2022 153

 March 2022 Results Preview | Sector: Logistics

Transport Corporation of India Buy

CMP: INR627 | TP: INR880 (+40%) EPS CHANGE (%): FY22|23: -|-
 Expect revenue to rise by 3% YoY to INR9.2b, led by the  Expect EBITDA at INR1.1b (+24% YoY). Expect operating
Freight and Seaways segments. margin to improve by 200bp YoY due to greater revenue
share from the high margin Seaways segment.
 Expect adjusted PAT at INR829m (+23% YoY) due to an  Outlook on return payloads from Myanmar and purchase
improvement in operating margin. of a new ship will be a key monitorable.

Quarterly snapshot
Y/E March (INR m) FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,057 6,969 8,071 8,927 6,961 8,251 8,377 9,182 28,024 32,771
YoY Change (%) -38.5 1.8 14.3 33.7 71.6 18.4 3.8 2.9 3.1 16.9
EBITDA 306 622 797 886 758 1,045 1,092 1,097 2,612 3,992
Margin (%) 7.5 8.9 9.9 9.9 10.9 12.7 13.0 12.0 9.3 12.2
YoY Change (%) -47.6 6.0 23.0 51.3 147.3 67.9 37.0 23.8 8.6 52.8
Depreciation 206 209 233 280 247 256 255 254 928 1,013
Interest 74 69 63 61 47 33 26 35 267 141
Other Income 30 66 46 113 41 29 53 55 255 178
PBT before EO expense 57 410 547 658 504 785 864 863 1,672 3,016
Extra-Ord. expense 0 0 104 26 0 0 0 0 131 0
PBT 57 410 443 632 504 785 864 863 1,541 3,016
Tax 9 84 65 81 64 96 108 109 238 377
Rate (%) 14.9 20.5 14.7 12.8 12.7 12.3 12.5 12.6 15.5 12.5
Minority Interest -6.4 -6.7 -10.9 -8.9 -6.0 -7.5 -7.5 -9.0 -32.9 -30.0
Profit/Loss of Asso. Cos -1 47 52 104 35 73 72 84 201 264
Reported PAT 41 366 418 646 469 754 821 829 1,471 2,873
Adj. PAT 41 366 523 672 469 754 821 829 1,602 2,873
YoY Change (%) -88.1 -23.5 53.6 86.5 1,049 106.0 57.0 23.3 5.2 79.3
Margin (%) 1.0 5.3 6.5 7.5 6.7 9.1 9.8 9.0 5.7 8.8

VRL Logistics Buy

CMP: INR490 | TP: INR665 (+36%) EPS CHANGE (%): FY22|23: -|-
 Expect revenue to increase by 12% YoY to INR6.7b, with  Expect EBITDA at INR1.2b. Expect margin to remain
strong growth in the Goods Transport segment. elevated at 18.5%.
 Expect adjusted PAT to grow by 45% YoY to INR537m.  Progress on newer branch additions and capex on fleet
additions to be a key monitorable.

Quarterly performance
Y/E March (INR m) FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,601 4,393 5,634 6,002 4,138 6,364 6,784 6,730 17,629 24,015
YoY Change (%) -70.3 -16.1 1.1 20.6 158.5 44.9 20.4 12.1 -16.8 36.2
EBITDA -339 869 988 956 361 1,133 1,290 1,248 2,475 4,032
Margin (%) -21.2 19.8 17.5 15.9 8.7 17.8 19.0 18.5 14.0 16.8
YoY Change (%) -138.1 18.8 24.0 68.9 -206.5 30.3 30.6 30.5 -17.0 62.9
Depreciation 419 388 411 380 377 396 444 470 1,598 1,687
Interest 104 90 83 92 95 98 118 95 368 406
Other Income 23 25 51 29 35 18 49 33 129 135
PBT before EO expense -838 417 545 513 -76 657 778 716 637 2,074
Extra-Ord. expense 0 0 0 0 0 0 0 0 0 0
PBT -838 417 545 513 -76 657 778 716 637 2,074
Tax -211 108 148 141 -16 162 173 179 187 498
Rate (%) 25.2 25.9 27.1 27.6 20.5 24.7 22.2 25.0 29.3 24.0
Reported PAT -627 309 397 372 -60 495 605 537 451 1,577
Adj. PAT -627 309 397 372 -60 495 605 537 451 1,577
YoY Change (%) -328.4 -11.1 54.0 1,637.5 -90 60.2 52.2 44.5 -50.0 249.8
Margin (%) -39.2 7.0 7.1 6.2 -1.5 7.8 8.9 8.0 2.6 6.6

April 2022 154

 March 2022 Results Preview | Sector: Metals

Metals
Company Higher costs to impact ferrous margins, non-ferrous
Coal India should remain steady
Hindalco Industries
Hindustan Zinc
We expect the Metals sector to report a divergent trend in profitability in 4QFY22.
Jindal Steel & Power
We expect steel stocks to report a YoY and QoQ contraction in EBITDA and PAT,
JSW Steel
while non-ferrous metals should report strong EBITDA and PAT growth in 4QFY22.
NMDC
The Mining sector should report strong EBITDA and PAT on a YoY and QoQ basis on
National Aluminum Co. the back of a weak base and exceptionally strong performance expectations from
Steel Authority of India COAL. Prices rallied strongly across the board in Mar’22 on expectations of a
Tata Steel shortage in several commodities after the breakout of the Russia-Ukraine conflict.
Vedanta The latter resulted in a ban on several Russian banks from accessing the
international payments messaging system – SWIFT. Overnight, it became difficult to
settle trades in aluminum, steel, coking coal, nickel, alumina, and thermal coal,
resulting in a shortage of these commodities globally and pushed certain commodity
prices to record highs.

For our Metal coverage universe, we expect revenue to grow by ~39% on a YoY
basis, but see EBITDA/PAT growing only by 2.4%/7.5%, given the sharp jump in input
costs, especially for steel companies. Sequentially, we expect a surge of ~15% in
revenue, but EBITDA/PAT is likely to remain moderately higher (~2%/~5%) as input
cost push negates the benefit of higher steel prices. JSP and HNDL are out top picks.

Steel: Traditionally, 4QFY22 is the strongest quarter in terms of demand, sales

volumes, prices, and profitability. However, we saw a complete breakdown of this
trend in 4QFY22. Prices remained sluggish in the first half of 4QFY22 as international
prices continued to slide. A fresh wave of COVID-19 cases in China and a slowdown
there impacted steel prices, which continued to correct in Jan’22, before recovering
in Feb’22. The exceptionally strong price push in Mar’22 was driven by a massive
jump in coking coal prices and resurgence in domestic demand. Steel mills have
been able to pass-through a majority of the cost push in 4QFY22, though the
outlook for 1QFY23 looks murkier.

Non-ferrous metals witnessed a strong price rally, led by: a) a fundamental shortage
in certain commodities like aluminum and nickel, and galloping energy prices,
especially in Europe. Spot energy prices in Europe rose 5x, impacting margins for
energy intensive non-ferrous commodities like aluminum. This led to: a) the
throttling of production at several smelters in Europe, and b) a steep hike in
commodity prices. With several Russian banks out of the SWIFT payments
messaging system, the deficit in several commodities started reflecting in prices.

Mining: COAL continued to report strong e-auction prices due to shortages in

thermal coal globally. The disruption in coal prices began with Indonesia banning
coal exports in Jan’22 to meet domestic demand. Russia contributes almost 20% to
the global seaborne thermal coal trade. A ban on Russian trade further acerbated

Vishal Chandak - Research analyst ([Link]@[Link])

Raval Mistry - Research analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Metals

the situation. This led to a sharp spike in e-auction prices for COAL in Jan-Mar’22. In
the case of iron ore mining, we expect NMDC to report a sequential increase in
EBITDA as prices started recovering from Jan’22 after declining for six months (Jul-
Dec’21).

Ferrous: Margin compression driven by higher input costs

 4QFY22 began on a weak note for HRC prices, with prices remaining flat in Jan’22. It
gathered pace at the start of Feb’22, driven by fresh hikes in coking coal prices. It
rallied in Mar’22 after a massive jump in coking coal prices. The price hike in coking
coal will reflect in 1QFY23, but the hike in HRC will reflect in 4QFY22.
 With a sharp increase in prices starting Mar’22, trade activities resumed. Re-
stocking pushing trade prices higher by INR1,500-2,000/t, resulting in further price
hikes. Steel mills are likely to begin 1QFY23 on a strong note. However, sustaining
prices at current levels will be the most critical for stemming the apparent decline in
margins in 1QFY23.
 Steel prices in the export market rose USD100/t to a record high of USD950/t in
4QFY22, before correcting in the last fortnight of Mar’22 due to a slowdown in
China. HRC export prices were trading at a discount of ~INR800/t v/s domestic
prices at the beginning of 4QFY22. The same increased marginally to ~INR1,250/t at
the end of the quarter.
 Domestic market continues to remain at a strong premium of ~INR8000/t
compared to export HRC prices through the quarter. The companies, which reduced
exports in 4QFY22 on a QoQ basis, are likely to report a better growth in ASP vis-à-
vis domestic averages.
 The price hike was sharper in domestic Rebar as compared to domestic HRC.
Primary Rebar prices rose ~34% in 4QFY22, while primary HRC prices moved ~15%.
This was due to a sharp gap of ~INR10,200/t between primary HRC and Rebar prices
at the beginning of 4QFY22. The same finally shrunk to INR1400/t.
 Both Galvanized and Color Coated Steel prices rose in line with the hike in HRC
prices, though the margin on these products is likely to reduce as the hike does not
cover the increase in the cost of HRC, zinc, aluminum, and paints.
 Iron ore: NMDC stopped raising iron ore prices in Jun’21 after a steep hike in
1QFY22. From Jun’21 to Dec’21, NMDC reduced prices of iron ore fines by
INR2,500/t, erasing the entire gain of INR2,250/t recorded in 1QFY22. Since Jan’22,
it has raised prices by a cumulative INR900/t in 4QFY22. Domestic iron ore prices
have largely been a function of domestic DRI, pellet, and secondary TMT prices. It
means that domestic iron ore prices moved in tandem with the prices of these
products. With a steep increase in thermal coal prices in the international market
and in the e-auction prices of COAL, prices for DRI and secondary TMT rose
significantly, offering some headroom for domestic iron ore prices to move up.
 Coking coal: Prices in the international market continued to rally in 4QFY22. Prices
of premium HCC stood at USD379/t (CNF Paradip port) at the start of 4QFY22. It
touched a peak of USD704/t on 15th Mar’22 on delays in the receding of the La Niña
phenomenon in Australia and weather-related disruptions in the US, before
correcting sharply to USD562/t on growth concerns in China.
 Domestic spot HRC spreads, which stood at USD443/t at the beginning of 4QFY22,
declined to USD329/t.

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 March 2022 Results Preview | Sector: Metals

 We expect EBITDA/t for steel players to contract widely between 5% and 58% QoQ
in 4QFY22, with JSP and JSTL being the least impacted due to its least dependence
on coking coal and the highest price hikes taken, respectively. We expect EBITDA/t
for SAIL to contract by 58% QoQ as it is the most leveraged to coking coal prices.

LME performance remains strong; upstream companies to benefit the most

 Non-ferrous metal prices on the LME continued their march in 4QFY22, driven by an
18%/11%/3% rise in aluminum/zinc/copper prices. Alumina, however, corrected by
1% in 4QFY22 on easing pressure on aluminum production. HNDL should benefit
from the 17% QoQ rise in aluminum scrap spreads. However, continued rise in coal,
coke, and other input costs are likely to restrict EBITDA gains on a QoQ basis for a
few companies in the sector.
 Aluminum continues to remain the favored metal due to continued demand-supply
imbalance. The same could increase if the aluminum smelters in Europe continue to
operate at a throttled utilization rate.
 Coal: Domestic e-auction premium for thermal coal rose sharply on higher
international prices. The latter rose sharply in 4QFY22 due to disruption in the
seaborne trade market as Indonesia temporarily restricted exports. Indonesia is the
largest exporter of thermal coal globally. This led to a massive surge in thermal
export prices from Indonesia to USD141/t on 9th Mar’22 from USD66/t on 18th
Feb’21. Due to the ongoing conflict between Russia and Ukraine, European
countries have started increasing power generation from coal-fired plants, while
coal mining has not matched the pace of rising coal demand. As a result, Europe has
increased coal purchases from South Africa, which, in turn, fueled a massive
increase in South African coal prices to USD328/t from USD110/t over the same
period. However, thermal coal prices have corrected since then on fears of a
slowdown in China.
 We expect e-auction premium for COAL to surge by 90% in 4Q v/s 42% in 3QFY22,
driving profitability sharply higher on both QoQ and YoY basis.

Exhibit 1: Relative performance – three months (%) Exhibit 2: Relative performance – one year (%)

Nifty Index MOFSL Metals Index Nifty Index MOFSL Metals Index
156 116

141 111

126 106

111 101

96 96
Feb-22
Dec-21

Jan-22

Mar-22
Jun-21

Mar-22
Mar-21

Sep-21

Dec-21

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

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Exhibit 3: Domestic HRC prices fell 2% QoQ Exhibit 4: Primary Rebar prices rose 8% QoQ

81,000
80,000
67,000
65,000
53,000 50,000
39,000 35,000

25,000 20,000

May'19
Feb'14
Sep'14
Apr'15

Jan'17

Mar'18

Apr'22
Aug'17

Dec'19

Feb'21
Sep'21
Jul'13

Oct'18

Jul'20
Nov'15
Jun'16

May'19
Aug'17

Dec'19
Jul'13

Apr'15

Apr'22
Feb'14
Sep'14

Jan'17

Mar'18

Feb'21
Sep'21
Oct'18

Jul'20
Jun'16
Nov'15
Source: Steelmint Source: Steelmint

Exhibit 6: Domestic iron ore prices (NMDC fines 64% Fe) fell
Exhibit 5: Coking Coal prices grew 27% QoQ 7% QoQ

7,000
800

600 5,500

400 4,000

200 2,500

0 1,000
Apr'15

May'19
Dec'19
Jul'13
Feb'14
Sep'14

Jan'17
Aug'17
Mar'18

Feb'21
Sep'21
Apr'22
Oct'18

Jul'20
Jun'16
Nov'15

Apr'11

Apr'12

Apr'13

Apr'14

Apr'15

Apr'16

Apr'17

Apr'18

Apr'19

Apr'20

Apr'21

Apr'22
Source: Steelmint Source: Steelmint

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Exhibit 7: Key assumptions for 4QFY22

Key assumptions 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E YoY (%) QoQ (%)
JSW Steel (standalone)
Sales - mt 2.79 4.12 3.90 4.06 3.61 3.79 4.00 4.96 22.1 23.9
Realization/t 36,892 40,769 49,331 60,094 71,909 73,879 72,125 69,744 16.1 -3.3
EBITDA/t 5,122 10,136 14,444 19,756 26,291 22,884 16,993 16,188 -18.1 -4.7
Tata Steel
Standalone (post-merger with BSL)
Sales - mt 2.11 4.87 3.35 3.31 3.99 4.42 4.25 4.96 50.1 16.7
Realization/t 44,344 44,355 53,709 64,153 69,163 73,716 75,210 73,189 14.1 -2.7
EBITDA/t 5,940 11,754 20,035 27,800 33,327 30,385 28,631 23,631 -15.0 -17.5
TSE
Sales - mt 1.94 2.26 2.11 2.47 2.36 2.14 2.16 2.36 -4.5 9.3
EBITDA/t (USD) -43 -27 -46 66 88 211 182 181 173.0 -0.6
SAIL
Sales - mt 2.24 4.21 4.15 4.35 3.33 4.28 3.84 4.75 9.3 23.8
Realization/t 40,534 40,237 47,813 53,531 62,045 62,680 65,745 66,933 25.0 1.8
EBITDA/t -1,801 4,518 12,241 14,145 19,728 16,395 8,881 3,697 -73.9 -58.4
JSP
Sales- standalone 1.56 1.93 1.88 1.91 1.61 2.13 1.82 2.04 6.8 12.1
Realization/t 39,491 40,691 46,577 54,607 64,501 62,259 65,686 70,762 29.6 7.7
EBITDA/t 10,949 12,585 20,833 25,569 28,098 21,216 17,404 16,583 -35.1 -4.7
NMDC
Sales - mt 6.28 6.60 9.28 11.09 8.99 8.99 9.84 12.98 17.0 31.9
Realization/t 3,088 3,378 4,691 6,174 7,248 7,561 5,967 5,590 -9.5 -6.3
EBITDA/t 1,203 1,560 2,982 3,825 4,650 3,466 2,654 2,423 -36.7 -8.7
HNDL
Aluminum sales - kt 303 303 315 329 303 338 325 335 1.8 3.1
Copper sales - kt 58 75 73 107 80 110 110 120 12.1 9.1
Al (incl. Utkal) EBITDA - USD/t 423 527 619 746 1,052 1,296 1,389 1,580 111.8 13.8
Copper EBITDA - USD/t 150 429 431 406 442 432 453 432 6.3 -4.7
Novelis -volumes - kt 781 923 933 983 973 968 930 975 -0.8 4.8
Novelis – adj. EBITDA - USD/t 253 455 476 505 508 553 506 435 -13.8 -14.0
Hindustan Zinc
Refined zinc volumes (India) - kt 163 181 182 198 187 164 212 211 6.6 -0.5
Refined lead volumes (India) - kt 45 57 53 62 49 47 47 49 -21.0 4.3
Silver volumes - t 146 203 183 203 160 152 173 162 -20.2 -6.4
VEDL
Aluminum sales - kt 479 469 502 542 534 569 573 593 9.4 3.5
Aluminum EBITDA - USD/t 359 477 557 693 945 1,102 874 1,123 61.9 28.4
Oil and Gas - kbpoed 159 165 160 165 165 165 159 154 -6.8 -3.4
EBITDA - USD/bbl 4.4 6.3 6.6 8.9 10.0 10.5 11.5 14.1 58.1 22.2
Zinc International - sales - kt 36 52 58 57 60 64 53 49 -14.0 -7.5
Zinc International - EBITDA - USD/t 242 674 661 484 906 630 926 1,286 166.0 39.0
NACL
Aluminum sales - kt 73 123 103 113 91 126 114 119 5.4 4.4
Aluminum EBITDA - USD/t 120 141 287 744 650 902 862 1,212 63.0 40.6
Alumina sales - kt 220 285 344 378 286 318 356 367 -2.9 3.1
Alumina EBITDA - USD/t 38 69 85 120 69 120 176 121 0.5 -31.3
COAL
Sales - mt 120 134 154 165 161 147 174 181 9.4 4.0
NSR - FSA INR/t 1,359 1,412 1,354 1,392 1,394 1,382 1,370 1,380 -0.9 0.7
e-auction premium 17.5 2 8 26 14 13 15 42 62.9 174.8
EBITDA/t 253 297 335 386 302 267 393 583 51.0 48.5

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Exhibit 8: Sales volumes improve QoQ

Sales Volume 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E YoY (%) QoQ (%)
JSW Steel 2.79 4.12 3.90 4.06 3.61 3.79 4.00 4.96 22.1 23.9
Tata Steel 2.11 4.87 3.35 3.31 3.99 4.42 4.25 4.96 50.1 16.7
SAIL 2.24 4.21 4.15 4.35 3.33 4.28 3.84 4.75 9.3 23.8
JSP 1.56 1.93 1.88 1.91 1.61 2.13 1.82 2.04 6.8 12.1
Total 8.69 15.13 13.27 13.63 12.54 14.62 13.91 16.71 22.6 20.1
Source: MOFSL, Company
Exhibit 9: Changes to our estimates
Revised Earlier Change (%)
(INR b) EBITDA PAT EBITDA PAT EBITDA PAT
FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E
JSP 139 187 78 112 134 191 75 115 3% -2% 4% -3%
JSW Steel 382 388 195 186 377 389 191 186 1% 0% 2% 0%
NMDC 95 87 72 66 115 98 87 74 -17% -12% -17% -11%
SAIL 156 163 81 88 142 153 68 81 9% 7% 18% 9%
Tata Steel 482 470 238 230 481 402 237 179 0% 17% 1% 29%
Hindalco 346 278 175 132 324 288 153 136 7% -3% 15% -3%
Hindustan Zinc 172 185 104 115 174 191 105 118 -1% -3% -1% -3%
Nalco 50 40 34 26 58 43 40 28 -14% -6% -15% -7%
Vedanta 469 417 202 168 468 429 202 175 0% -3% 0% -4%
Coal India 288 288 200 197 341 299 240 205 -15% -3% -17% -4%
Aggregate 2,580 2,504 1,380 1,320 2,616 2,482 1,399 1,297 -1% 1% -1% 2%
Source: MOFSL

Exhibit 10: Key commodity prices

Abs. YoY Abs. QoQ
Key commodity prices 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22
YoY (%) QoQ (%)
Non-Ferrous/Oil
Copper-LME USD/t 6,522 7,185 8,492 9,682 9,372 9,696 9,992 1,500 17.7 297 3.1
Aluminum-LME USD/t 1,705 1,919 2,095 2,395 2,648 2,765 3,273 1,178 56.2 508 18.4
Zinc-LME USD/t 2,338 2,634 2,749 2,913 2,991 3,371 3,752 1,003 36.5 381 11.3
Nickel-LME USD/t 14,269 15,975 17,545 17,354 19,111 19,784 28,347 10,802 61.6 8,563 43.3
Lead-LME USD/t 1,875 1,903 2,017 2,123 2,341 2,330 2,335 318 15.8 5 0.2
Alumina-Spot USD/t 273 280 300 277 316 417 411 111 37.2 -6 -1.4
Aluminum Scrap USD/t 1,029 1,160 1,389 1,602 1,705 1,726 2,048 659 47.5 322 18.6
Al. Scrap Spread USD/t 676 759 706 793 943 1,038 1,225 519 73.5 186 18.0
Silver USD/ounce 24 24 26 27 24 23 24 -2 -8.4 1 3.0
Brent USD/bbl 43 45 61 69 73 79 100 39 64.0 20 25.3
China Dom. Steel Prices
China Rebar RMB/t 3,754 4,001 4,499 5,224 5,328 5,108 4,859 361 8.0 -248 -4.9
China HRC RMB/t 3,926 4,163 4,742 5,673 5,744 5,131 4,998 256 5.4 -133 -2.6
China Wire Rod RMB/t 4,016 4,350 4,788 5,698 5,855 5,578 5,303 515 10.8 -275 -4.9
India Steel Prices
India HRC FoB USD/t 492 576 751 974 897 837 809 58 7.8 -27 -3.3
Mumbai HRC INR/t 38,931 46,354 55,255 65,034 65,738 68,877 67,354 12,099 21.9 -1,523 -2.2
Billet Raigarh INR/t 28,648 33,391 38,183 42,960 42,922 45,039 51,656 13,473 35.3 6,617 14.7
Wire Rod - Dom INR/t 36,685 44,354 49,901 50,655 50,751 56,484 59,144 9,243 18.5 2,661 4.7
Mumbai Rebar Primary INR/t 37,285 43,846 49,333 53,127 50,769 57,904 62,250 12,917 26.2 4,346 7.5
Mumbai Rebar Secondary INR/t 31,997 36,575 44,308 48,326 47,628 50,810 59,274 14,967 33.8 8,465 16.7
Spread-Primary-Secondary INR/t 5,287 7,271 5,026 4,801 3,141 7,094 2,976 -2,050 -40.8 -4,119 -58.1
Cold Roll Coil INR/t 44,996 55,712 66,353 79,314 77,615 74,054 72,162 5,809 8.8 -1,892 -2.6
Galvanized Plan INR/t 48,296 55,056 65,719 82,846 82,596 82,985 78,531 12,812 19.5 -4,454 -5.4

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Abs. YoY Abs. QoQ

Key commodity prices 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22
YoY (%) QoQ (%)
Color Coated INR/t 59,627 64,837 72,654 88,781 91,385 92,227 86,377 13,723 18.9 -5,850 -6.3
Durgapur SG Pig Iron INR/t 27,126 30,903 34,527 38,712 38,888 42,157 49,757 15,230 44.1 7,600 18.0
523 628 758 882 887 929 895
Other Benchmark Regions HRC Prices
North West Europe Dom HRC EUR/t 426 530 725 1,045 1,187 1,006 1,060 335 46.2 55 5.4
USA Dom HRC USD/t 502 742 1,165 1,500 1,863 1,841 1,294 130 11.1 -546 -29.7
South Korea HRC FoB USD/t 482 576 754 1,002 1,024 936 850 96 12.7 -86 -9.2
China HRC FoB USD/t 494 565 685 939 976 865 815 130 18.9 -49 -5.7
Vietnam HRC CNF USD/t 507 581 724 971 963 880 845 122 16.8 -35 -4.0
Vietnam HRC CNF INR/t 37,674 42,874 52,744 71,638 71,355 65,230 63,580 10,836 20.5 -1,650 -2.5
Coking Coal prices
HCC Prem India CNF USD/t 127 123 128 160 283 378 507 379 296.2 129 34.0
Met Coke China CNF USD/t 275 316 421 420 471 629 619 198 47.0 -10 -1.5
India CNF South Africa RB1 USD/t 56 70 52 61 87 110 169 117 225.5 58 52.7
Iron ore, Pellets, and Metallics prices
62% CNF China – Aus. USD/t 118 134 167 199 166 109 140 -26 -15.8 31 28.7
K'taka Fines Fe 60% INR/t 1,833 2,460 3,163 4,097 3,873 3,153 2,900 -263 -8.3 -253 -8.0
NMDC 64% Fines (C'garh) INR/t 2,685 3,954 4,385 5,685 5,893 4,535 4,593 208 4.8 58 1.3
NMDC 65%-Lumps INR/t 2,825 4,211 5,083 6,735 6,643 5,290 4,920 -163 -3.2 -370 -7.0
Pellets 64% FoB India USD/t 110 138 184 213 171 134 154 -30 -16.4 20 15.2
Domestic Pellet INR/t 6,954 9,352 11,498 14,090 13,163 10,719 11,181 -317 -2.8 462 4.3
Sponge Iron- Raigarh INR/t 17,999 22,524 25,003 29,201 29,536 30,199 35,226 10,223 40.9 5,026 16.6
Ferro Alloys and Ores
China Chrome Ore (40-42%) USD/t 139 136 163 155 174 162 194 32 19.4 32 19.8
Odisha Chrome Ore (e-auction) INR/t 9,307 12,348 14,326 18,669 20,298 20,531 18,103 3,777 26.4 -2,428 -11.8
Global Mn Ore 38% USD/dmtu 4.20 4.06 4.84 4.68 4.73 4.83 4.98 0.14 2.8 0.15 3.1
Mn Ore India Mn 44% Fe 5% USD/dmtu 4.45 4.35 5.23 5.10 5.38 5.68 6.36 1.13 21.6 0.69 12.1
Balaghat Mn 37.5%, Fe 7% INR/t 12,351 12,783 14,038 14,553 15,334 15,570 15,390 1,352 9.6 -179 -1.2
Silico manganese INR/t 61,189 60,821 76,263 92,055 94,910 1,08,221 1,06,238 29,975 39.3 -1,984 -1.8
Ferro Manganese INR/t 61,375 61,558 72,528 90,223 99,643 1,15,492 1,04,727 32,199 44.4 -10,766 -9.3
Key Currencies
EUR/USD EUR/USD 1.17 1.19 1.21 1.21 1.18 1.14 1.12 -0.08 -6.91 -0.02 -1.89
USD/CNY USD/CNY 6.92 6.62 6.48 6.46 6.47 6.39 6.35 -0.13 -2.08 -0.04 -0.69
USD/GBP USD/GBP 0.77 0.76 0.73 0.72 0.73 0.74 0.75 0.02 2.86 0.00 0.53
USD/INR USD/INR 74.37 73.78 72.90 73.75 74.09 74.13 75.24 2.34 3.21 1.11 1.50
GBP/INR GBP/INR 96.01 97.52 100.53 103.11 102.08 99.91 100.88 0.35 0.35 0.97 0.97
EUR/INR EUR/INR 86.93 88.03 87.85 88.88 87.32 84.75 84.40 -3.45 -3.92 -0.35 -0.41
Source: MOFSL, Bloomberg, Steelmint

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Exhibit 11: Summary of expected quarterly performance [Production to refresh]

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Hindalco 587 Buy 5,81,766 43.6 15.7 74,520 38.2 0.8 34,950 100.3 2.1
Hindustan Zinc 325 Neutral 85,868 23.6 7.5 48,082 24.0 10.0 29,760 19.8 10.2
JSPL 548 Buy 1,50,055 26.3 19.8 38,030 -28.1 14.9 22,570 -23.2 38.7
JSW Steel 733 Buy 4,22,389 56.8 10.9 88,103 4.4 -3.5 52,271 22.1 20.0
Nalco 126 Buy 41,458 46.9 9.9 13,962 47.9 17.3 9,742 55.0 17.2
NMDC 170 Buy 72,561 6.0 23.5 31,447 -25.9 20.4 22,891 -28.0 11.7
SAIL 106 Buy 3,18,133 36.6 26.0 17,572 -71.4 -48.5 4,773 -86.6 -72.2
Tata Steel 1339 Neutral 6,91,649 38.4 13.8 1,60,083 12.9 0.7 90,306 18.3 -7.5
Vedanta 422 Neutral 3,57,254 26.7 4.8 1,29,179 42.9 20.3 58,001 66.1 38.1
Metals 27,21,134 37.8 14.0 6,00,977 4.4 3.5 3,25,265 8.6 6.0
Coal India 188 Buy 3,51,278 31.6 23.5 1,17,509 47.4 59.1 74,720 62.7 63.9
Mining 3,51,278 31.6 23.5 1,17,509 47.4 59.1 74,720 62.7 63.9

Exhibit 12: Valuation summary

CMP EPS (INR) EV/EBITDA (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Metals
Hindalco 587 Buy 60.3 78.7 59.4 6.1 4.7 5.7 2.3 1.8 1.6 27.0 27.3 17.0
Hind. Zinc 325 Neutral 23.2 24.6 27.2 7.5 7.0 6.5 4.3 4.7 4.9 30.7 34.2 40.0
JSP 548 Buy 91.2 74.4 107.4 3.6 3.8 2.7 1.4 1.2 0.9 25.6 17.0 20.4
JSW 733 Buy 94.0 81.3 77.5 6.3 6.5 6.2 2.6 2.2 1.8 39.9 26.4 21.0
Nalco 126 Buy 15.8 18.4 14.3 4.9 4.3 5.5 1.9 1.7 1.5 25.4 26.1 18.1
NMDC 170 Buy 33.7 24.7 22.5 3.6 4.9 5.5 1.5 1.4 1.3 31.1 20.6 17.4
SAIL 106 Buy 25.4 19.7 21.8 3.4 4.3 3.8 0.8 0.8 0.7 21.4 14.7 14.9
Tata 1,339 Neutral 336.1 199.1 191.9 3.4 4.5 4.2 1.6 1.3 1.1 46.7 21.0 17.3
Vedanta 422 Neutral 51.2 54.3 45.1 5.5 5.1 5.8 2.3 2.0 1.9 29.1 27.8 21.2
Mining
Coal 188 Buy 29.4 31.6 30.9 3.8 3.3 3.7 2.7 2.3 2.1 42.3 39.2 33.8

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The tables below provides snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.
Coal India Buy
CMP: INR188 | TP: INR220 (+17%)
 The focus shall remain on the coal price outlook and  Management guidance on FY23 Coal production and
availability of coal for e-auction going forward dispatch will be important along with capex,
diversification through JV.
Quarterly performance (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 184.9 211.5 236.9 267.0 252.8 232.9 284.3 351.3 900.3 1,121.3
Change YoY (%) -25.9 3.8 2.1 -3.1 36.8 10.1 20.0 31.6 -6.3 24.6
Change QoQ (%) -32.9 14.4 12.0 12.7 -5.3 -7.9 22.1 23.5
Adj. EBITDA 28.0 34.0 58.5 79.7 45.9 40.1 73.9 117.5 200.2 277.3
Change YoY (%) -62.7 -20.0 -5.4 -16.2 63.9 18.0 26.2 47.4 -27.1 38.5
Change QoQ (%) -70.6 21.5 72.1 36.3 -42.5 -12.5 84.1 59.1
EBITDA/t 232.4 253.8 379.4 482.7 285.9 272.1 425.0 651.9 349.1 419.0
Depreciation 8.5 8.5 9.2 10.9 10.4 9.3 10.4 10.7 37.1 40.8
OBR -2.5 -5.8 6.9 15.9 -2.6 0.7 5.6 12.3 14.5 16.1
Interest 1.8 1.5 1.6 1.6 1.5 1.4 1.3 2.3 6.4 6.5
Other Income 7.9 10.8 6.5 12.7 6.8 7.8 6.5 7.5 37.9 28.6
EO Inc./(Exp.) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PBT 28.0 40.6 47.4 64.1 43.4 36.5 63.1 99.7 180.1 242.6
Tax 7.2 11.1 16.6 18.2 11.6 7.1 17.5 25.0 53.1 61.1
Tax Rate (%) 25.8 27.3 35.0 28.4 26.8 19.5 27.7 25.0 29.5 25.2
Reported PAT 20.8 29.5 30.8 45.9 31.8 29.4 45.6 74.7 127.1 181.4
Adjusted PAT 20.8 29.5 30.8 45.9 31.8 29.4 45.6 74.7 127.1 181.4
Change YoY (%) -55.1 -16.3 -21.3 -0.7 52.8 -0.4 47.9 62.7 -23.9 42.8
Change QoQ (%) -55.1 42.0 4.5 48.9 -30.9 -7.5 55.2 63.9

Hindalco Industries Buy

CMP: INR587 | TP: INR745 (+27%)
 We expect India Aluminum to report EBITDA/t of  Novelis is likely to report ~5% QoQ increase in shipments
USD1,580/t while Copper business should report USD423/t at 975kt, with an EBITDA of USD446/t
 Details on the capex plans and execution will be the key to  Impact of higher energy and logistics cost in Europe
watch out for should be the key to watch out for
Quarterly performance (Standalone + Utkal) (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Aluminum (sales, kt) 303 303 315 329 303 338 325 335 1,250 1,301
Copper (sales, kt) 58 75 73 107 80 110 110 120 313 420
Net Sales 74,640 95,650 1,14,250 1,44,710 1,33,490 1,73,930 1,84,850 2,05,598 4,29,250 6,97,998
Change (YoY %) -25.9 -4.1 11.4 44.5 78.8 81.8 61.8 42.1 6.6 62.6
Change (QoQ %) -25.5 28.1 19.4 26.7 -7.8 30.3 6.3 11.2
EBITDA 8,930 12,740 15,250 18,790 24,320 34,860 35,990 41,748 55,710 1,36,918
Change (YoY %) -22.8 14.6 25.0 39.7 172.3 173.6 136.0 122.2 15.3 145.8
Change (QoQ %) -33.6 42.7 19.7 23.2 29.4 43.3 3.2 16.0
Aluminum (incl. Utkal) 9,730 11,980 14,550 18,200 23,520 32,470 33,760 39,849 54,460 1,29,599
Copper 660 2,410 2,350 3,220 2,610 3,520 3,900 3,899 8,640 13,929
Interest 4,570 3,890 3,800 3,590 3,730 3,780 4,290 4,592 15,850 16,392
Depreciation 5,140 5,060 4,970 5,260 5,250 6,070 5,410 5,430 20,430 22,160
Other Income 2,450 2,010 1,950 220 810 2,290 10 1,063 6,630 4,173
PBT (before EO item) 1,670 5,800 8,430 10,160 16,150 27,300 26,300 32,789 26,060 1,02,539
EO item -390 -660 -680 230 0 0 0 0 -1,500 0
PBT (after EO item) 1,280 5,140 7,750 10,390 16,150 27,300 26,300 32,789 24,560 1,02,539
Total Tax 440 1,890 2,800 3,860 5,780 9,150 8,960 11,476 8,990 35,366
Tax (%) 34.4 36.8 36.1 37.2 35.8 33.5 34.1 35.0 36.6 34.5
Reported PAT 840 3,250 4,950 6,530 10,370 18,150 17,340 21,313 15,570 67,173
Adjusted PAT 1,096 3,828 5,384 6,385 10,370 18,150 17,340 21,313 16,694 67,173
Novelis Shipments (kt) 781 923 933 983 973 968 930 975 3,620 3,846
Novelis adj. EBITDA (USD m) 253 455 476 505 508 553 506 435 1,689 2,002

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Hindustan Zinc Neutral

CMP: INR325 | TP: INR325 (0%)
 Management commentary on expansion program is
 Expect a 10% QoQ growth in EBITDA on the back of an
critical
increase of ~11% in LME zinc prices and flat volumes.
 Plans to reduce costs further will be crucial
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales
Zinc refined (kt) 163 181 182 198 187 164 212 211 724 774
Lead refined (kt) 45 57 53 62 49 47 47 49 217 192
Silver (t) 146 203 183 203 160 152 173 162 735 647
Zinc LME (USD/t) 1,961 2,338 2,628 2,749 2,913 2,991 3,364 3,726 2,419 3,249
Net Sales 39,890 56,600 60,330 69,500 65,310 61,220 79,900 85,868 2,26,320 2,92,298
Change (YoY %) -20.0 25.5 29.1 58.3 63.7 8.2 32.4 23.6 21.9 29.2
Change (QoQ %) -9.2 41.9 6.6 15.2 -6.0 -6.3 30.5 7.5
EBITDA 15,760 29,520 32,690 38,780 35,580 33,350 43,700 48,082 1,16,750 1,60,712
Change (YoY %) -36.4 39.4 42.8 97.5 125.8 13.0 33.7 24.0 32.0 37.7
Change (QoQ %) -19.8 87.3 10.7 18.6 -8.3 -6.3 31.0 10.0
Finance cost 520 680 1,350 1,310 920 820 500 903 3,860 3,143
DD&A 5,440 6,520 6,390 6,960 6,580 7,020 7,410 7,484 25,310 28,494
Other Income 6,840 3,900 4,500 2,950 3,490 3,110 2,790 2,820 18,190 12,210
PBT (before EO item) 16,640 26,220 29,450 33,460 31,570 28,620 38,580 42,515 1,05,770 1,41,285
EO exp./(income) 0 0 0 0 1,340 0 0 0 0 1,340
PBT 16,640 26,220 29,450 33,460 30,230 28,620 38,580 42,515 1,05,770 1,39,945
Total Tax 3,050 6,820 7,450 8,620 10,400 8,450 11,570 12,754 25,940 43,174
Tax (%) 18.3 26.0 25.3 25.8 34.4 29.5 30.0 30.0 24.5 30.9
Reported PAT 13,590 19,400 22,000 24,840 19,830 20,170 27,010 29,760 79,830 96,770
Adjusted PAT 13,590 19,400 22,000 24,840 21,170 20,170 27,010 29,760 79,830 98,110

Jindal Steel & Power Buy

CMP: INR548 | TP: INR635 (+16%)
 Expect standalone sales volumes at 2.04mt, with pellet  Expect standalone EBITDA/t to drop by 5% QoQ to
sales at 12kt. Expect blended ASP to improve by 8% QoQ. INR16,583 due to rising input costs.
 Management commentary on coking coal mines  We will await further clarity on timelines for opening of
production will be the key to watch out for the thermal coal mines
Standalone quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales volume
Steel (’000t) 1,560 1,930 1,876 1,910 1,610 2,130 1,820 2,040 7,276 7,600
Pellets (’000t) 830 730 400 290 400 200 8 12 2,250 620
Net Sales 61,605 78,534 87,379 1,04,299 1,03,846 1,32,612 1,19,548 1,44,354 3,31,817 5,00,360
NSR (INR/t) 39,491 40,691 46,577 54,607 64,501 62,259 65,686 70,762 45,604 65,837
Change (YoY %) -13.0 19.5 31.6 75.9 68.6 68.9 36.8 38.4 26.5 50.8
Change (QoQ %) -34.4 -249.3 62.2 140.2 -9.6 0.4 -46.5 4.3
EBITDA 17,080 24,289 39,083 48,837 45,237 45,189 31,675 33,829 1,29,288 1,55,931
Change (YoY %) 6.2 93.5 189.1 212.6 164.9 86.1 -19.0 -30.7 123.8 20.6
Change (QoQ %) 9.3 42.2 60.9 25.0 -7.4 -0.1 -29.9 6.8
Interest 6,040 5,536 5,286 5,003 4,443 3,501 3,253 2,435 21,865 13,632
Depreciation 5,616 5,680 5,664 5,476 5,560 5,623 5,634 5,170 22,435 21,986
Other Income 0 115 14 0 306 192 237 300 129 1,035
PBT (before EO item) 5,425 13,188 28,147 38,358 35,541 36,257 23,026 26,525 85,117 1,21,349
Extra-ordinary Income 1,203 59 -1,718 6,532 0 0 0 0 6,075 0
PBT (after EO item) 6,627 13,246 26,429 44,889 35,541 36,257 23,026 26,525 91,192 1,21,349
Total Tax 1,580 3,267 4,173 10,629 8,934 9,144 5,889 6,631 19,649 30,598
Tax (%) 23.8 24.7 15.8 23.7 25.1 25.2 25.6 25.0 21.5 25.2
Reported PAT 5,047 9,979 22,256 34,261 26,607 27,114 17,136 19,894 71,543 90,751
Adjusted PAT 4,132 9,920 23,974 27,729 26,607 27,114 17,136 19,894 65,755 90,751
Change (YoY %) 84.6 6448.1 2373.3 884.1 544.0 173.3 -28.5 -28.3 964.5 38.0
Change (QoQ %) 46.6 140.1 141.7 15.7 -4.0 1.9 -36.8 16.1

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JSW Steel Buy

CMP: INR733 | TP: INR850 (+16%)
 Management commentary on expansion timelines will be  Expect consolidated EBITDA to correct by 4% QoQ to
critical INR88.1b.
 Expect standalone EBITDA/t to decline ~5% to INR16,188,  Performance of overseas subsidiaries on rising costs will
driven by strong input cost-push, especially coking coal. be crucial. Sales volume for US and Italy subsidiaries will
also be critical
Consolidated quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,17,820 1,90,360 2,18,590 2,69,340 2,89,020 3,25,030 3,80,710 4,22,389 7,96,110 14,17,149
Change (YoY %) -40.5 11.3 22.8 50.6 145.3 70.7 74.2 56.8 9.6 78.0
Change (QoQ %) -34.1 61.6 14.8 23.2 7.3 12.5 17.1 10.9
EBITDA 13,410 42,530 59,460 84,400 1,02,740 1,04,170 91,320 88,103 1,99,800 3,86,333
Change (YoY %) -63.9 87.8 170.1 183.7 666.1 144.9 53.6 4.4 79.1 93.4
Change (QoQ %) -54.9 217.2 39.8 41.9 21.7 1.4 -12.3 -3.5
EBITDA (INR per ton) 4,806 10,323 15,053 20,788 28,460 27,198 19,724 17,777 13,436 23,620
EBITDA (USD/t) 64 139 207 285 386 371 305 236 182 317
Interest 10,160 9,590 9,770 10,050 9,930 9,360 12,830 8,556 39,570 40,676
Depreciation 10,470 11,490 12,300 12,530 11,830 12,390 17,640 12,360 46,790 54,220
Other Income 1,320 1,520 1,470 1,610 1,980 9,460 1,540 4,270 5,920 17,250
PBT (before EO Item) -5,900 22,970 38,860 63,430 82,960 91,880 62,390 71,457 1,19,360 3,08,687
EO Items 1,610 1,610
PBT (after EO Item) -5,900 24,580 38,860 63,430 82,960 91,880 62,390 71,457 1,20,970 3,08,687
Total Tax -610 9,100 12,120 20,810 27,190 26,120 17,450 22,554 41,420 93,314
Tax (%) 10.3 37.0 31.2 32.8 32.8 28.4 28.0 31.6 34.2 30.2
Reported PAT -5,290 15,480 26,740 42,620 55,770 65,760 44,940 48,903 79,550 2,15,373
MI (Profit)/Loss 210 -20 120 70 40 -90 -1,590 -393 380 -2,033
Share of P/(L) of Ass. -530 470 -50 120 3,230 6,030 220 3,761 10 13,241
Adjusted PAT -5,610 14,916 26,810 42,810 59,040 71,700 43,570 52,271 78,926 2,26,581
Change (YoY %) -154.6 1,743.8 11,341.6 313.2 -1,152.4 380.7 62.5 22.1 264.0 187.1
Change (QoQ %) -154.2 -365.9 79.7 59.7 37.9 21.4 -39.2 20.0

NMDC Buy
CMP: INR170 | TP: INR200 (+18%)
 Expect a sequential increase in EBITDA at INR31.4b,  Expect iron ore sales volumes at 12.98mt and NSR at
driven by higher volumes. INR5,590/t.
 Management guidance on FY23 volumes should be  We will look forward to the steel plant commissioning
critical timelines
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 19,375 22,299 43,551 68,476 65,122 67,935 58,738 72,561 1,53,701 2,64,356
Change (YoY %) -40.6 -0.5 44.9 114.8 236.1 204.7 34.9 6.0 72.0
Change (QoQ %) -39.2 15.1 95.3 57.2 -4.9 4.3 -13.5 23.5 31%
EBITDA 7,549 10,302 27,686 42,423 41,777 31,146 26,124 31,447 87,959 1,30,493
Change (YoY %) -60.8 -7.4 69.5 174.1 453.4 202.3 -5.6 -25.9 41 48.4
Change (QoQ %) -51.2 36.5 168.8 53.2 -1.5 -25.4 -16.1 20.4 41.4
EBITDA/t (USD) 16 21 40 52 63 47 35 32 36 43
Interest 93 17 16 41 30 17 92 -19 168 120
Depreciation 573 534 605 567 552 596 606 725 2,278 2,478
Other Income 717 884 1,048 850 1,441 888 1,529 192 3,499 4,050
PBT (before EO Item) 7,600 10,634 28,113 42,664 42,635 31,421 26,955 30,934 89,011 1,31,945
PBT (after EO Item) 7,600 10,634 28,113 42,664 42,635 31,421 26,955 30,934 89,011 1,31,945
Total Tax 2,267 2,892 7,020 14,306 10,705 8,010 6,457 8,043 26,485 33,215
Tax (%) 29.8 27.2 25.0 33.5 25.1 25.5 24.0 26.0 29.8 25.2
Reported PAT 5,333 7,742 21,093 28,359 31,930 23,411 20,498 22,891 62,527 98,730
Adjusted PAT 5,333 7,742 21,093 31,791 31,930 23,411 20,498 22,891 65,959 98,730
Change (YoY %) -57.0 2.4 48.7 149.3 498.7 202.4 -2.8 -28.0 41 49.7
Change (QoQ %) -58.2 45.2 172.4 50.7 0.4 -26.7 -12.4 11.7

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Nalco Buy
CMP: INR126 | TP: INR160 (+27%)
 Expect EBITDA to increase by 17% QoQ, driven by strong  Expect aluminum EBITDA at USD1,212/t on the back of
commodity prices. strong LME prices.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Alumina Prodn. (kt) 466 487 555 577 583 530 428 580 2,085 2,121
Aluminum Prodn. (kt) 98 106 102 112 112 114 117 112 418 455
Aluminum Sales (kt) 73 123 103 113 91 126 114 119 412 450
Alumina Sales (kt) 220 285 344 378 286 318 356 367 1,227 1,327
Avg. LME Aluminum (USD/t) 1,497 1,705 1,919 2,095 2,395 2,648 2,765 3,254 1,804 2,765
NSR premiums (USD/t) 203 210 234 265 195 230 265 250 228 235
Alumina NSR (USD/t) 262 286 289 315 349 406 478 467 288 425
Net Sales 13,806 23,749 23,788 28,215 24,746 35,922 37,733 41,458 89,558 1,39,858
Change (YoY %) -33.8 0.5 13.9 45.7 79.2 51.3 58.6 46.9 5.7 56.2
Change (QoQ %) -28.7 72.0 0.2 18.6 -12.3 45.2 5.0 9.9
EBITDA 1,291 2,759 4,339 9,440 5,808 11,273 11,905 13,962 17,828 42,947
Change (YoY %) -39.8 757.8 1,163.5 353.0 350.0 308.6 174.4 47.9 140.9
Change (QoQ %) -38.1 113.7 57.3 117.6 -38.5 94.1 5.6 17.3
Alumina - EBITDA (USD/t) 38 69 85 120 69 120 176 121 83 123
Aluminum - EBITDA (USD/t) 120 141 287 744 650 902 862 1,212 336 916
As a percentage of Net Sales 9.3 11.6 18.2 33.5 23.5 31.4 31.6 33.7 19.9 30.7
Interest 18 18 17 17 18 18 19 19 71 74
Depreciation 1,359 1,432 1,697 1,571 1,491 1,518 1,515 1,507 6,058 6,031
Other Income 333 242 362 530 317 424 720 662 1,466 2,124
PBT (before EO Item) 247 1,550 2,986 8,382 4,616 10,161 11,091 13,098 13,165 38,966
PBT (after EO Item) 247 1,550 2,986 8,382 4,616 10,161 11,091 13,098 13,165 38,966
Total Tax 80 476 588 -974 1,139 2,684 2,783 3,356 170 9,962
Tax (%) 32.6 30.7 19.7 -11.6 24.7 26.4 25.1 25.6 1.3 25.6
Reported PAT 166 1,075 2,398 9,356 3,477 7,477 8,309 9,742 12,995 29,005
Adjusted PAT 166 1,075 2,398 6,287 3,477 7,477 8,309 9,742 9,926 29,005
Change (YoY %) -83.0 NA NA NA NA NA 246.5 55.0 192.2
Change (QoQ %) -83.8 546.1 123.2 162.2 -44.7 115.0 11.1 17.2

April 2022 166

 March 2022 Results Preview | Sector: Metals

SAIL Buy
CMP: INR106 | TP: INR135 (+27%)
 Expect revenue to grow 26% QoQ to INR318b on the back  Expect NSR to grow 2% QoQ to INR66,933/t and NSR-to-
of strong volumes. Expect costs to hurt, resulting in lower RM spread to decline significantly to INR26,095/t.
EBITDA at INR17.6b (down 49% QoQ).  Guidance on capex and debt target for FY23 will be
 Management guidance on handling the coal costs will be important.
critical
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (mt) 2.2 4.2 4.1 4.4 3.3 4.3 3.8 4.8 14.9 16.2
Realization (INR/t) 40,534 40,237 47,813 53,531 62,045 62,680 65,745 66,933 46,255 64,524
Change (YoY %) -11.1 -10.3 18.2 23.9 53.1 55.8 37.5 25.0 6.8 39.5
Net Sales 90,675 1,69,236 1,98,329 2,32,860 2,06,424 2,68,269 2,52,459 3,18,133 6,91,100 10,45,286
Change (YoY %) -38.8 19.8 19.9 44.0 127.7 58.5 27.3 36.6 12.1 51.2
Change (QoQ %) -43.9 86.6 17.2 17.4 -11.4 30.0 -5.9 26.0
NSR to RM Spread (INR/t) 22,562 19,483 29,694 37,119 45,342 41,261 36,531 26,095 27,913 36,528
EBITDA -4,028 19,005 50,775 61,529 65,636 70,169 34,104 17,572 1,27,281 1,87,481
Change (YoY %) NA 63.9 409.0 214.9 NA 269.2 -32.8 -71.4 123.6 47.3
Change (QoQ %) NA NA 167.2 21.2 6.7 6.9 -51.4 -48.5
EBITDA/t (INR) -1,801 4,518 12,241 14,145 19,728 16,395 8,881 3,697 8,519 11,573
Interest 8,863 7,204 6,701 5,404 5,030 4,290 3,158 2,880 28,171 15,358
Depreciation 9,733 9,898 9,813 11,577 10,261 10,556 10,487 10,455 41,020 41,759
Other Income 2,777 1,976 2,163 3,201 1,104 2,306 2,490 2,150 10,117 8,050
PBT (after EO Inc.) -19,847 6,103 36,449 46,085 51,449 57,629 19,310 6,387 68,790 1,34,775
Total Tax -7,144 2,170 23,617 11,647 12,949 14,493 4,879 1,614 30,290 33,934
Tax (%) 36.0 35.6 64.8 25.3 25.2 25.1 25.3 25.3 44.0 25.2
Reported PAT -12,703 3,933 12,832 34,438 38,500 43,136 14,431 4,773 38,500 1,00,841
Adjusted PAT -12,703 2,500 25,721 35,682 38,500 43,136 17,151 4,773 51,200 1,03,564
Change (YoY %) NA NA NA 1124.9 NA 1625.4 -33.3 -86.6 NA 102.3
Change (QoQ %) NA NA 928.8 38.7 7.9 12.0 -60.2 -72.2

Tata Steel Neutral

CMP: INR1,339| TP: INR1,500 (+12%)
 Expect standalone EBITDA/t to fall 22% QoQ to INR22,292  We await details on revival of NINL and timelines for
due to an increase in RM costs and a decline in blended commissioning of Kalinganagar expansion program
NSR.
 TSE to report strong EBITDA at USD181/t, absolute EBITDA  On a consolidated basis, expect EBITDA to decline by 3.7%
will be supported by strong volumes. QoQ to INR153b, led by a decline in standalone EBITDA.
Consolidated quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,54,745 3,89,399 4,19,023 4,99,774 5,33,718 6,02,828 6,07,831 6,91,649 15,62,942 25,18,971
Change (YoY %) -29.1 12.6 18.0 48.0 109.5 54.8 45.1 38.4 4.9 61.2
Change (QoQ %) -24.6 52.9 7.6 19.3 6.8 12.9 0.8 13.8
EBITDA 5,394 62,126 95,682 1,41,841 1,61,106 1,64,561 1,58,937 1,60,083 3,05,043 6,87,417
Change (YoY %) -90.0 62.7 164.3 205.2 2,886.8 164.9 66.1 12.9 71.1 125.4
Change (QoQ %) -88.4 1,051.8 54.0 48.2 13.6 2.1 -3.4 0.7
(As a percentage of Net Sales) 2.1 16.0 22.8 28.4 30.2 27.3 26.1 23.1 19.5 27.3
EBITDA(USD/tss) 15 105 182 248 307 301 303 262 148 302
Interest 20,064 19,480 17,860 18,663 18,114 10,198 15,325 27,175 76,067 70,812
Depreciation 21,747 23,251 23,415 23,924 23,245 22,889 22,441 15,616 92,336 85,134
Other Income 1,879 2,179 2,177 2,722 1,622 2,709 596 10,671 8,956 15,598
PBT (before EO Inc.) -34,538 21,574 56,584 1,01,976 1,21,368 1,34,184 1,21,767 1,27,963 1,45,595 5,47,069
EO Income/(exp.) 584 433 -1,536 -9,913 -1,823 5,160 -1,934 -10,432 -4,940
PBT (after EO Inc.) -33,954 22,007 55,048 92,063 1,19,545 1,39,343 1,19,833 1,27,963 1,35,164 5,42,129
Total Tax 12,676 6,092 15,823 21,950 23,084 15,719 25,674 31,991 56,539 1,21,047
Tax (%) -36.7 28.2 28.0 21.5 19.0 11.7 21.1 25.0 39 22.1
Reported PAT -46,630 15,915 39,226 70,113 96,461 1,23,624 94,159 95,973 78,625 4,21,082
Adj. PAT (after MI and asso.) -44,712 15,185 38,508 76,353 90,893 1,14,022 97,660 90,306 85,334 4,02,519
Change (YoY %) -760.3 -2,926.1 -649.7 453.2 -303.3 650.9 153.6 18.3 722.7 371.7
Change (QoQ %) -424.0 -134.0 153.6 98.3 19.0 25.4 -14.3 -7.5

April 2022 167

 March 2022 Results Preview | Sector: Metals

Vedanta Neutral
CMP: INR422 | TP: INR462 (+10%)
 Expect consolidated EBITDA to increase by 20.3%, led by  Growth will be mainly driven by the Aluminum business.
an uptrend in commodity prices. All other businesses (excluding Steel) are expected to
 Measures taken up to reduce the aluminum cost on a grow on a QoQ basis.
structural basis will be crucial  Revival of volume growth in the oil and gas business and
plans of the management for the same is important
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,59,730 2,11,070 2,27,350 2,82,060 2,84,120 3,04,010 3,40,970 3,57,254 8,80,210 12,86,354
Change (YoY %) -25.3 -3.9 13.2 42.8 77.9 44.0 50.0 26.7 5.8 46.1
Change (QoQ %) -19.1 32.1 7.7 24.1 0.7 7.0 12.2 4.8
Total Expenditure 1,19,800 1,45,760 1,49,780 1,91,690 1,85,410 2,00,380 2,33,550 2,28,075 6,07,030 8,47,415
EBITDA 39,930 65,310 77,570 90,370 98,710 1,03,630 1,07,420 1,29,179 2,73,180 4,38,939
Change (YoY %) -23.2 47.7 48.1 98.5 147.2 58.7 38.5 42.9 40.7 60.7
Change (QoQ %) -12.3 63.6 18.8 16.5 9.2 5.0 3.7 20.3
As a percentage of Net 25.0 30.9 34.1 32.0 34.7 34.1 31.5 36.2 31.0 34.1
Sales
Finance cost 12,520 13,120 13,210 13,250 11,820 10,660 12,160 12,836 52,100 47,476
DD&A 17,330 19,380 19,120 20,550 21,240 21,180 22,740 22,337 76,380 87,497
Other Income 10,250 6,510 8,860 8,590 7,390 6,730 5,770 7,806 34,210 27,696
PBT (before EO item) 20,330 39,320 54,100 65,160 73,040 78,520 78,290 1,01,813 1,78,910 3,31,663
EO exp./(income) 0 -950 0 0 1,340 460 370 -950 2,170
PBT (after EO item) 20,330 40,270 54,100 65,160 71,700 78,060 77,920 1,01,813 1,79,860 3,29,493
Total Tax 5,110 23,690 11,860 -18,860 18,880 19,940 24,380 32,982 21,800 96,182
Tax (%) 25.1 58.8 21.9 -28.9 26.3 25.5 31.3 32.4 12.1 29.2
Reported PAT 15,220 16,580 42,240 84,020 52,820 58,120 53,540 68,831 1,58,060 2,33,311
Profit from Asso. 0 0 0 0 10 0 -10 10
Minority interest 4,890 8,200 9,250 11,960 10,590 11,650 11,900 10,830 34,300 44,970
Adjusted PAT 9,951 21,197 30,243 34,914 43,580 46,930 42,010 58,001 96,304 1,90,521
Change (YoY %) 27.4 374.2 143.5 341.1 338.0 121.4 38.9 66.1 195.3 97.8
Change (QoQ %) 25.7 113.0 42.7 15.4 24.8 7.7 -10.5 35.3

April 2022 168

 March 2022 Results Preview | Sector: Oil & Gas

Oil & Gas

Company name Strong volume play; margins mixed
Aegis Logistics
Refining margins rise, while CGD margins are expected to stay flattish
BPCL
Castrol India  Brent crude prices continue to record an uptick owing to geopolitical tensions, led by
GAIL the war between Russia and Ukraine. Conversely, SG GRM trended higher, driven by a
Gujarat Gas 66%/59% improvement in diesel/ATF cracks. PE, PP, and PVC margins were impacted
Gujarat State Petronet in 4QFY22. CGD margins are likely to remain flat, impacted by the sustaining of higher
HPCL spot LNG prices in 4QFY22, despite price hikes by companies.
 We expect our coverage universe to report a 65% YoY and 25% QoQ growth in sales
Indraprastha Gas
(up 62% YoY and 23% QoQ excluding OMC), a 32% YoY and 16% QoQ growth in EBITDA
IOCL
(up 65% YoY and 19% QoQ excluding OMC), and a 19% YoY and 13% QoQ growth in
Mahanagar Gas
PAT (up 67% YoY and 15% QoQ excluding OMC) due to higher margins and volumes for
MRPL
OMCs. We expect flat EBITDA/scm margins for CGDs on a YoY basis.
Oil India
ONGC  RIL – O2C and Retail to drive strong growth in 4QFY22: We expect a
Petronet LNG consolidated EBITDA of INR345b (+47% YoY/+16% QoQ), led by growth in the
Reliance Industries O2C and Retail segments. We expect an EBITDA of INR168b (+65% YoY/+21%
QoQ) for the O2C segment, INR107b (+29% YoY/+13% QoQ) for RJio, and INR45b
(+25% YoY/+18% QoQ) for the Retail segment.
 OMCs: SG GRM improved to USD7.8/bbl (from +USD1.7/bbl QoQ), led by an
improvement in diesel and ATF cracks (+66%/+59% QoQ).Because of the spike in
crude oil prices, Retail Auto fuel margins are expected to decline to -INR0.5-
1.1/liter in 4QFY22. We maintain our Buy rating on IOCL (the biggest beneficiary
of an increase in refining margin) and our Neutral rating on BPCL and HPCL.
 GAIL (reiterate as our top pick among large caps): We expect gas trading to be
better in the current high spot LNG price environment, with the petchem
business benefitting from better cracks. GAIL has enjoyed the alignment of
operational macros since the start of CY21, and we expect the macros to
support the company over the next couple of quarters as well.
Exhibit 1: Expected quarterly performance summary
CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Sector (INR) RECO Mar-22 Var Var Mar-22 Var Var Mar-22 Var Var
Aegis Logistics 218 Neutral 15,248 %50.8 YoY %25.6 QoQ 1,826 %82.3
YoY %22.6QoQ 1,276 %95.1
YoY %25.4 QoQ
BPCL 380 Neutral 12,32,154 60.3 21.9 33,061 -34.6 -22.9 18,903 -63.1 -23.2
Castrol India 104 Buy 13,694 20.3 25.6 2,765 -18.7 4.0 2,021 -17.0 7.2
GAIL 162 Buy 3,22,076 107.1 25.0 38,555 50.3 -8.8 28,840 47.6 -12.3
Gujarat Gas 512 Buy 44,415 29.5 -13.7 2,352 -57.6 -0.9 1,017 -70.9 -16.6
Gujarat State Petronet 274 Buy 3,692 -6.3 -7.5 3,094 -10.1 -8.0 1,947 -6.1 -8.7
HPCL 280 Neutral 11,72,211 56.6 21.3 2,419 -94.8 -87.1 -5,045 PL PL
Indraprastha Gas 393 Neutral 22,844 47.3 3.1 4,201 -14.6 -10.5 2,717 -17.9 -11.9
IOC 122 Buy 22,15,488 79.1 32.8 1,35,244 0.2 37.1 81,838 -6.8 39.6
Mahanagar Gas 825 Buy 11,118 54.9 8.2 2,938 -7.1 185.0 1,908 -10.3 235.9
MRPL 44 Neutral 2,71,319 99.9 31.6 31,346 267.4 71.2 20,996 539.5 116.7
Oil India 237 Buy 47,678 84.8 27.6 24,731 482.3 95.2 19,424 111.7 56.0
ONGC 168 Buy 3,53,033 66.6 24.0 2,01,240 98.8 26.0 1,22,649 157.5 40.0
Petronet LNG 198 Buy 1,10,246 45.5 -12.5 10,327 -5.4 -40.4 6,470 3.8 -43.4
Reliance Inds. 2663 Buy 23,18,499 55.0 25.3 3,44,656 47.6 16.0 1,65,648 32.5 2.0
Oil & Gas 81,53,715 65.1 25.1 8,38,755 31.5 16.0 4,70,609 19.4 12.5
Oil Ex OMCs 35,33,862 61.9 23.0 6,68,032 64.7 18.7 3,74,912 66.7 14.9
Source: MOFSL

Swarnendu
April 2022 Bhushan – Research Analyst ([Link]@[Link]) 169
 March 2022 Results Preview | Sector: Oil & Gas

Brent crude prices climb further amid a tense geopolitical environment

 Brent crude prices averaged USD100.4/bbl in 4QFY22, climbing 26% QoQ and
65% YoY, due to a spike (of USD20/bbl MoM) in Mar’22 on the back of Russia’s
invasion of Ukraine. Prices cooled off towards the end of Mar’22 as peace talks
between Russia and Ukraine resumed, with supply fears subsiding after it
touched a record high of USD139/bbl – a level last seen seven years ago.
 We expect Brent crude prices to normalize hereafter as the current tense
geopolitical environment stabilizes, while OPEC+ continues to decrease
production cuts as per the scheduled plan (of 0.5mnbopd every month up to
mid-CY22).
 The premium enjoyed by Brent crude over WTI expanded to USD5.9/bbl in 4Q
(from USD2.2/bbl in 3QFY22), while Arab L-H premium remained flat at
USD1.5/bbl.
SG GRM at USD7.8/bbl – the highest in four years
 Singapore GRM improved further QoQ in 4QFY22, led by improved diesel/ATF
cracks (+66%/+59%).
 Improvement in diesel/ATF (up USD7.2/USD6.1 per bbl QoQ to USD18.0/USD16.4
per bbl in 4QFY22) has been gradual and consistent over the quarter. The
improvement in diesel and ATF was aided by opening up of the economies
gradually and increased air travel in the western nations, respectively. Indian
refineries will reap huge benefits as their product baskets are inclined towards
middle distillates.
 Gasoline cracks rose USD2.4/bbl QoQ to USD15.4/bbl – with a MoM uptick
observed in the same. Cracks for LPG/FO declined to -USD21.5/-USD7.9 per bbl
from -USD11.3/-USD6.5 per bbl in 3QFY22.
 Demand for petroleum products in India was impacted due to the lockdown in
Jan’22. MS/HSD demand declined by 1%/4% YoY and 7%/2% QoQ.
 Refineries also saw improved refining throughput at HPCL’s Mumbai refinery
and BPCL’s Kochi refinery (as companies complete their expansion). MRPL’s
refining throughput was flattish in 4QFY22.
Expect petchem margins to soften in 4QFY22
 Naphtha prices increased to USD95.9/bbl (from USD81.6/bbl in 3QFY22), with
cracks declining to USD1.5/bbl (from USD3.4/bbl in 3QFY22).
 Petchem prices for PE/PVC increased YoY, but did not aid deltas for PE/PP/PVC
as they fell 23%/41%/31% YoY and 16%/21%/39% QoQ.
Domestic Oil and Gas production continue to suffer
 Total domestic oil production declined by ~2% YoY in Feb’22, with domestic gas
production up 13% YoY owing to a spurt in production from the KG Basin by RIL.
 LNG imports decreased by 21% YoY and 11% QoQ over Jan-Feb’22. Total gas
consumption rose 12% YoY, but fell 8% QoQ (owing to a decrease in demand
from the Power sector due to a spike in spot LNG prices).

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 March 2022 Results Preview | Sector: Oil & Gas

Exhibit 2: Oil and gas product prices, cracks, and margins (USD/bbl)
(USD/bbl) 3QFY21 4QFY21 1QFY22 2QFY22 4QFY22 YoY (%) QoQ (%)
Oil
WTI 42.6 57.8 66.1 70.6 94.5 122 34
Brent 44.3 60.8 68.8 73.4 100.4 127 37
Dubai 44.6 60.0 66.9 71.7 95.6 114 33
Arab Light-Heavy (0.2) 0.5 1.1 1.5 1.5 nm (4)
Gas
Henry Hub (USD/mmBtu) 2.5 3.4 2.9 4.3 4.6 88 7
Oil to Gas 18.0 19.4 23.7 17.3 21.6 20 25
Exchange Rate (INR/USD) 73.8 72.9 73.8 74.1 75.2 2 2
Product Cracks (v/s Dubai)
LPG (2.0) (10.3) (18.2) (9.3) (21.5) (966) (130)
Gasoline 2.9 5.6 8.0 9.7 15.4 426 59
Diesel 3.1 4.4 4.9 5.1 18.0 479 253
Jet/Kero 2.4 3.3 4.5 5.4 16.4 574 206
Naphtha (1.2) 0.6 (1.0) 1.9 1.5 nm (20)
Fuel Oil (0.3) (3.2) (5.5) (3.0) (7.9) (2,326) (160)
SGRM 1.2 1.8 2.0 3.8 7.8 538 105
Source: MOFSL, Company

Valuation and view (excluding OMCs and RIL)

 GAIL – reiterate Buy in the large cap space: GAIL expects gas transmission
volumes to grow by 7-8% YoY over the next three-to-four years, with a further
upside post-completion of the national gas grid. Increased demand will primarily
accrue from the commissioning of fertilizer plants, ongoing refinery and
petchem expansions, and the development of CGDs (the IX-X round). The
management expects total trading volumes of ~10mmscmd to be sold locally in
FY23 (it is already supplying ~5mmscmd of gas to various fertilizer plants), with
the commissioning and ramp-up at various fertilizer plants.
 PLNG: The current spot LNG price environment has resulted in lower spot cargo
orders being placed over the last few months. The company expects spot LNG
prices to normalize over the next five-to-six months. PLNG has tied-up
16.75mmtpa in contracts (i.e., 95% of the nameplate capacity of 17.5mmtpa in
Dahej), which is cushioning its utilization rate. It is on the cusp of business
diversification, although threshold IRR for new projects stands over 16%.
 CGDs – margin expected to be better: We expect EBITDA margin/scm for
GUJGA/IGL/MAHGL to remain at INR2.6/INR6.2/INR10.1 in 4Q (from INR2.3/
INR6.7/INR3.4 in 3QFY22) on the back of an increase in spot LNG prices as well
as Brent crude prices. We expect total volumes of 10.0/7.5/3.2mmscmd for
GUJGA/IGL/MAHGL v/s 11.4/7.7/3.3mmscmd in 3QFY22.
 ONGC – delay in KG-DWN-98/2 continues: Production delays at the KG-DWN-
98/2 field continue, amid restrictions on international movement due to the
COVID-19 pandemic. OPAL’s performance remains steady and ONGC is
improving process efficiencies to keep its profits positive.

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 March 2022 Results Preview | Sector: Oil & Gas

Exhibit 3: Relative performance – three months (%) Exhibit 4: Relative performance – one year (%)
Nifty Index MOFSL Oil & Gas Index Nifty Index MOFSL Oil & Gas Index
111 146

107 132

103 118

99 104

95 90
Dec-21

Jan-22

Feb-22

Mar-22

Jun-21
Mar-21

Sep-21

Dec-21

Mar-22
Source: Bloomberg, MOFSL

Exhibit 5: Comparative valuations

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Oil & Gas 13.3 11.7 11.0 1.8 1.6 1.4 13.2 13.5 12.9
Aegis Logistics 218 Neutral 11.7 12.8 14.6 18.6 17.1 14.9 3.3 2.9 2.6 18.8 18.1 18.2
BPCL 380 Neutral 47.1 37.3 37.2 8.1 10.2 10.2 1.7 1.5 1.4 19.6 15.8 14.4
Castrol India 104 Buy 7.7 7.6 8.3 13.5 13.6 12.5 6.2 5.5 4.9 49.6 43.1 41.5
GAIL 162 Buy 23.4 15.8 17.0 6.9 10.2 9.5 1.3 1.2 1.1 21.2 12.9 12.9
Gujarat Gas 512 Buy 13.7 22.1 26.2 37.3 23.1 19.5 6.6 5.3 4.2 19.3 25.3 24.0
Gujarat St. Petro. 274 Buy 17.2 20.8 22.7 15.9 13.2 12.1 1.8 1.6 1.5 12.2 13.1 12.8
HPCL 280 Neutral 25.8 39.5 39.6 10.8 7.1 7.1 1.1 1.0 1.0 10.1 14.8 14.0
Indraprastha Gas 393 Neutral 17.5 18.4 18.9 22.4 21.3 20.8 4.1 3.6 3.2 19.4 18.0 16.4
IOC 122 Buy 28.4 16.3 16.7 4.3 7.5 7.3 0.9 0.8 0.8 22.1 11.6 11.3
Mahanagar Gas 825 Buy 66.4 80.9 84.3 12.4 10.2 9.8 2.2 2.0 1.8 19.1 20.7 19.1
MRPL 44 Neutral 15.6 11.2 9.8 2.8 3.9 4.5 0.8 0.7 0.6 31.8 18.8 14.3
Oil India 237 Buy 37.2 43.4 43.5 6.4 5.5 5.5 0.9 0.8 0.8 15.3 16.3 14.8
ONGC 168 Buy 42.4 61.9 64.2 4.0 2.7 2.6 0.8 0.7 0.6 23.0 28.2 24.3
Petronet LNG 198 Buy 21.7 21.9 24.2 9.2 9.1 8.2 2.3 2.1 1.9 26.4 24.1 24.2
Reliance Inds. 2,663 Buy 91.2 111.5 123.4 29.2 23.9 21.6 2.3 2.1 1.9 8.1 9.1 9.3
Source: MOFSL

Our key assumptions

 We assume crude prices at USD80/USD75 per bbl for FY23E/FY24E. Average
crude prices for FY22 stood at USD80.6 per bbl v/s USD44.4 per bbl in FY21.
 We expect the regional benchmark Singapore GRM to stabilize ~USD6/bbl
over the medium-to-long term.

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 March 2022 Results Preview | Sector: Oil & Gas

Prices/margin at multi-quarter highs – SG GRM highest in four years

Exhibit 6: Brent Crude price up 65% YoY and 26% QoQ Exhibit 7: Brent premium to WTI expands to USD5.9/bbl
Brent Crude Price (USD/bbl) Brent less WTI (USD/bbl)
120 12
100.4
90 9
5.9
60 6

30 3

0 0
3QFY17

2QFY18

1QFY19

4QFY19

3QFY20

2QFY21

1QFY22

4QFY22

4QFY22
3QFY17

2QFY18

1QFY19

4QFY19

3QFY20

2QFY21

1QFY22
Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 8: Reuters SG GRM (average) continues to improve Exhibit 9: Gasoline, diesel, and ATF cracks improve QoQ;
QoQ to USD7.8/bbl (v/s USD6.1/bbl in 3QFY22) naphtha, LPG, and FO cracks decline (USD/bbl)
Reuters Singapore GRM (USD/bbl) 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22

18.0

16.4
15.4
12 20
7.8
8

1.5
8
4
(4)
0

(7.9)
(16)
(4)
3QFY17

2QFY18

1QFY19

4QFY19

3QFY20

2QFY21

1QFY22

4QFY22

(21.5)
(28)
Gasoline Naphtha LPG Diesel Jet/Kero Fuel Oil

Source: Bloomberg, MOFSL Source: Reuters, MOFSL

Exhibit 10: Crude differentials remain flat QoQ for Arab L-H Exhibit 11: Spreads over Naphtha for PE, PP, and PVC
at USD1.5/bbl, increase to USD4.8/bbl for Brent-Dubai decline QoQ
In USD/bbl Brent - Dubai Arab L-H USD/MT PE PP PVC
6 4.8 1000

4 800

2 600 570
1.5 550
462
0 400

(2) 200
2QFY19
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19

3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
3QFY17

2QFY18

1QFY19

4QFY19

3QFY20

2QFY21

1QFY22

4QFY22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

April 2022 173

 March 2022 Results Preview | Sector: Oil & Gas

Exhibit 12: Expect net realization of USD102/bbl for ONGC Exhibit 13: Expect LNG imports (mmt) to decrease by 6%
in 4QFY22 QoQ and 10% YoY in 4QFY22
Net Realization Subsidy Burden Gross Realization LNG imports (net RIL) (mmt)

102
76
74
73

69
67

66

66

66
62
61

60
60

58
51
51

49

43
41

102
29 29

76

5.6

5.6
4.5
4.7
4.9
5.5

5.6
5.7
5.3
5.0
6.0
6.4
6.2
7.0
5.3
6.6
6.7
6.2
5.9
6.1
5.9
74
73

69
67

66

66

66
62
61

60
60

58
51
51

49

43
41

4QFY18
4QFY17
1QFY18
2QFY18
3QFY18

1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22*
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY18 FY19 FY20 FY21 FY22

2
Source: Company, MOFSL *Mar’22 data extrapolated for 4QFY22E Source: PPAC, MOFSL
Exhibit 14: GRM snapshot for OMCs (USD/bbl)
IOCL reported GRM BPCL reported GRM HPCL Reported GRM SG GRM (USD/bbl)

9.6
8.3 7.8
7.3

6.6
7.0

10.6
4.1

6.6
6.4 6.5
3.2

3.5
6.0 6.1 6.0

4.1
1.5

2.5

3.3
4.2 3.8

0.8
3.2 3.5
1.6 1.2 1.8 2.0

(2.0)
12.3

10.2

10.0

12.0
(0.9)
4.3

8.6
4.9
8.8
8.0
8.0
5.6
7.9
6.1
9.1
6.5
6.6
7.5
3.7
6.8
5.6
2.7
1.2
2.8
4.1
2.1
4.7
2.8
3.3
1.3
3.4
2.6

0.4

5.8
2.7
2.2

6.6
6.0
2.4
9.7
6.4
7.8
7.8
7.8
2.7

1.2
(9.6)

(1.0)
(0.9) 0.1
4QFY20
1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20

2QFY20

3QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22E
Source: MOFSL, Company
Exhibit 1: EBITDA/scm snapshot for CGDs (INR)
EBITDA/scm GUJGA IGL MAHGL
13.9
12.4 12.1
11.6
10.3 9.9 10.5 10.1
9.2 9.6
8.0 8.7 8.0
7.9 7.9 8.0
6.3 6.5 6.6 6.7 6.2
6.4
4.9 8.1 7.9 3.4
5.6 5.8
4.7 5.1
4.3 4.3 3.4 4.0
2.3 2.6
1QFY20

4QFY20
2QFY20

3QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

Source: MOFSL, Company

Exhibit 2: Volume snapshot for CGDs (mmscmd)
Volumes mmscmd GUJGA IGL MAHGL
11.4 12.1
11.4 11.4
9.3 9.9 9.8 10.0 10.0
9.2 9.3

6.7 4.1 6.8 7.7 7.5

6.3 6.6 6.2 6.3 7.2
5.5 5.3
2.7
3.0 3.0 3.1 2.8 1.1 2.1 2.8 2.9 2.4 3.1 3.3 3.2
4QFY22
1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

April 2022 174

 March 2022 Results Preview | Sector: Oil & Gas

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

Aegis Logistics Neutral

CMP: INR218 | TP: INR239 (+10%) EPS CHANGE (%): FY22|23: +8|0
 Expect India’s LPG consumption to grow by 5% YoY (flat  Recovery in volumes from the in Haldia terminal is a key
QoQ). Imports fell 8% YoY and 17% QoQ over Jan-Feb’22. monitorable after the exit of BPCL. Volumes to be offset
by HPCL.
 Watch out for commissioning of the bottling plant at  Commissioning of Kandla LPG terminal and further
Pipavav and updates on the new station in the Auto Gas updates on AGIS-Vopak JV remain key.
segment.
Consolidated quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,364 6,504 15,455 10,112 6,781 6,352 12,141 15,248 38,435 40,522
YoY Change (%) -67.5 -64.2 -28.7 -18.6 6.5 -2.3 -21.4 50.8 -46.5 5.4
Total Expenditure 5,691 5,481 14,277 9,110 5,730 4,980 10,651 13,422 34,558 34,783
EBITDA 674 1,023 1,179 1,002 1,051 1,372 1,490 1,826 3,876 5,739
Margin (%) 10.6 15.7 7.6 9.9 15.5 21.6 12.3 12.0 10.1 14.2
Depreciation 176 180 179 182 187 189 206 212 716 794
Interest 47 41 41 45 41 36 44 48 173 168
Other Income 50 66 104 149 80 92 81 193 369 446
PBT before EO expense 501 868 1,062 924 903 1,239 1,321 1,760 3,356 5,223
PBT 501 868 1,062 924 903 1,239 1,321 1,760 3,356 5,223
Tax 133 227 280 225 181 226 228 425 864 1,060
Rate (%) 26.5 26.1 26.4 24.3 20.1 18.2 17.3 24.2 25.7 20.3
MI and P/L for Asso. Cos. 70 72 71 46 56 69 75 58 258 258
Reported PAT 298 570 712 654 666 944 1,018 1,276 2,234 3,904

BPCL Neutral
CMP: INR380 | TP: INR404 (+6%) EPS CHANGE (%): FY22|23: -9|-9
 Expect refinery throughput at 8mmt (-5% YoY/+1% QoQ)  Expect reported GRMs at US19.8/bbl, with blended gross
as utilization ramps up at the Kochi refinery. marketing margin at -INR1/liter.
 Expect marketing sales volumes of 10.1mmt (-10% YoY/-  Watch out for further details on EoI submitted by various
10% QoQ), with export sales flat YoY. parties for BPCL’s privatization in FY23.
Standalone - Quarterly Earning Model (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 387.9 501.5 667.3 768.8 709.2 815.4 1,010.5 1,232.2 2,325 3,767
YoY Change (%) -49.2 -22.1 -10.7 11.4 82.9 62.6 51.4 60.3 -18 62
EBITDA 39.7 38.5 43.1 50.6 33.0 44.8 42.9 33.1 172 154
Margins (%) 10.2 7.7 6.5 6.6 4.7 5.5 4.2 2.7 7 4
Forex loss 0.6 -1.5 -0.8 -0.3 0.5 -0.9 0.8 0.9 -2 1.2
Depreciation 10.0 9.9 9.9 10.0 11.4 11.7 11.7 12.6 40 47
Interest 5.9 0.1 2.5 4.8 4.9 3.9 4.5 4.1 13 17
Other Income 5.9 4.2 14.4 16.3 4.5 5.9 6.8 9.8 41 27
PBT 29.3 33.0 41.6 122.4 20.0 36.0 32.8 25.3 226 114
Rate (%) 29.0 31.8 33.2 2.4 24.8 25.1 25.0 25.2 16 25
Adj PAT 20.8 23.3 30.6 51.2 15.6 26.9 24.6 18.9 126 86
YoY Change (%) 93.1 36.5 142.6 -887.3 -24.9 15.5 -19.5 -63.1 271 -32
Key Assumptions
Refining throughput (mmt) 5.1 5.6 7.2 8.4 6.8 7.2 8.0 8.0 26.4 30.0
Reported GRM (USD/bbl) 0.4 5.8 2.5 6.6 4.1 6.0 9.7 19.8 4.1 12.1
Marketing sales volume excld exports (mmt) 7.5 8.9 11.1 11.2 9.6 9.9 11.2 10.1 38.7 40.7
Marketing GM incld inv (INR/litre) 8.9 6.6 6.1 6.0 5.8 6.1 4.1 -1.0 6.9 3.7

April 2022 175

 March 2022 Results Preview | Sector: Oil & Gas

Castrol (India) Buy

CMP: INR104 | TP: INR141 (+35%) EPS CHANGE (%): CY21|22: 0|-6
 Expect volumes at 56.1m liters (-8% YoY/+9% QoQ).  Expect realization ~INR244/liter (+31% YoY/+15 QoQ).
 Expect EBITDA margin to be lower on increase in base oil  Operating margin expansion, product launches, and OEM
prices, with a continued increase in oil prices QoQ. tie-ups remain key.
Quarterly performance (INR m)
Y/E December CY21 CY22E CY21 CY22E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Net Sales 11,387 8,896 10,732 10,906 13,694 12,079 12,811 13,569 41,921 52,153
YoY Change (%) 65.5 81.3 21.5 16.6 20.3 35.8 19.4 24.4 39.9 24.4
EBITDA 3,401 1,975 2,625 2,659 2,765 2,367 2,548 2,734 10,660 41,224
YoY Change (%) 96.6 107.2 -8.9 3.2 -18.7 19.9 -2.9 2.8 30.9 286.7
Margin (%) 29.9 22.2 24.5 24.4 20.2 19.6 19.9 20.2 25.4 79.0
Depreciation 215 199 204 209 213 198 203 208 827 821
Interest 6 7 6 5 3 4 3 13 24 24
Other Income 143 133 84 124 154 143 90 133 484 520
PBT before EO expense 3,323 1,902 2,499 2,569 2,702 2,308 2,432 2,647 10,293 40,899
PBT 3,323 1,902 2,499 2,569 2,702 2,308 2,432 2,647 10,293 40,899
Rate (%) 26.7 26.4 25.6 26.6 25.2 25.2 25.2 25.2 26.3 6.2
PAT 2,436 1,400 1,859 1,886 2,021 1,727 1,819 1,980 7,581 38,357
YoY Change (%) 94.6 114.1 -9.1 0.5 -17.0 23.3 -2.1 5.0 30.1 406.0

GAIL Buy
CMP: INR162 | TP: INR205 (+26%) EPS CHANGE (%): FY22|23: +4|0
 Expect transmission volumes of 112mmscmd (+2% YoY/-  A recovery in demand from Power, Refining, and Petchem
2% QoQ), with EBITDA/scm flat YoY and QoQ. sectors to drive growth post normalization of spot LNG
prices in FY23.
 Expect petchem volumes of ~224kmt, with higher  Key monitorables are the commissioning status of the
realizations. petchem plants in PATA and Usar.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,20,875 1,36,445 1,54,568 1,55,491 1,73,866 2,15,153 2,57,756 3,22,076 5,67,378 9,68,852
Change (%) -34.0 -24.4 -13.0 -12.4 43.8 57.7 66.8 107.1 -21.1 70.8
EBITDA 6,226 13,381 19,195 25,648 24,113 34,751 42,281 38,555 64,451 1,39,700
As a percentage of Net Sales 5.2 9.8 12.4 16.5 13.9 16.2 16.4 12.0 11.4 14.4
Depreciation 4,583 4,843 4,895 4,758 5,086 5,244 5,322 5,407 19,079 21,058
Interest 495 274 331 459 466 424 394 396 1,559 1,679
Other Income 2,413 7,239 4,708 5,684 1,976 7,740 6,518 5,815 20,045 22,049
PBT 3,562 15,503 18,677 26,116 20,537 36,823 43,084 38,568 63,858 1,39,012
Rate (%) 28.3 20.0 20.4 27.0 25.5 22.3 23.7 25.2 23.4 24.0
PAT 2,555 12,397 14,873 19,077 15,299 28,630 32,880 28,840 48,902 1,05,649
Change (%) -80.2 16.5 18.9 -36.8 498.8 130.9 121.1 51.2 -26.1 116.0
Extraord. Tax Prov. Write Back 0 0 405 -467 0 0 0 0 -62 0
Adj. PAT 2,555 12,397 14,469 19,544 15,299 28,630 32,880 28,840 48,964 1,05,649
Change (%) -80.2 16.5 17.3 -49.0 498.8 130.9 127.3 47.6 -34.0 115.8
Key Assumptions
Gas Trans. volume (mmsmd) 90 106 110 110 108 114 114 112 104 112
Petchem sales ('000MT) 183 224 231 234 138 221 217 224 872 800

April 2022 176

 March 2022 Results Preview | Sector: Oil & Gas

Gujarat Gas Buy

CMP: INR512 | TP: INR681 (+33%) EPS CHANGE (%): FY22|23: -18|-9
 Expect volumes of 10mmscmd (-18% YoY/-12% QoQ) as  Expect EBITDA margin at INR2.6/scm (-48% YoY, +16%
higher spot LNG prices impact industrial gas volumes. QoQ).
 Normalization in spot LNG prices after 4QFY22 remains a  Growth in CNG and commissioning of gas supply in newer
key near-term monitorable. GAs remains crucial for volume growth.
Standalone quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 10,829 25,130 28,331 34,289 30,109 36,249 51,444 44,415 98,543 1,62,217
YoY Change (%) -58.6 0.0 13.0 28.6 178.0 44.2 81.6 29.5 -4.3 64.6
EBITDA 1,857 7,330 6,145 5,543 7,229 4,190 2,375 2,352 20,878 16,146
Margin (%) 17.2 29.2 21.7 16.2 24.0 11.6 4.6 5.3 21.2 10.0
Depreciation 823 856 868 868 905 947 969 1,002 3,408 3,823
Interest 401 339 244 180 159 124 140 135 1,163 558
Other Income 149 208 190 188 213 178 353 136 740 879
PBT 783 6,343 5,222 4,682 6,377 3,297 1,619 1,351 17,047 12,644
Rate (%) 25.1 25.1 25.2 25.3 25.3 25.6 24.7 24.8 25.2 25.3
Reported PAT 587 4,748 3,908 3,499 4,762 2,454 1,219 1,017 12,755 9,451
Adj. PAT 587 4,748 3,908 3,499 4,762 2,454 1,219 1,017 12,755 9,451
YoY Change (%) -74.9 -8.2 98.8 42.3 711.7 -48.3 -68.8 -70.9 6.9 -25.9
Total volume (mmscmd) 4.1 9.8 11.4 12.1 10.0 11.4 11.4 10.0 9.4 10.7
CNG 0.7 1.3 1.5 1.7 1.5 2.0 2.2 2.2 1.3 2.0
PNG – Industrials/commercial 2.9 7.9 9.3 9.7 7.9 8.8 8.6 7.1 7.4 8.1
PNG – Households 0.6 0.6 0.6 0.7 0.6 0.6 0.7 0.7 0.6 0.6
EBITDA (INR/scm) 4.9 8.1 5.8 5.1 7.9 4.0 2.3 2.6 6.0 4.2

Gujarat State Petronet Buy

CMP: INR277 | TP: INR418 (+52%) EPS CHANGE (%): FY22|23: -3|0
 Expect transmission volumes of ~29.8mmscmd (-12%  Higher spot LNG prices impacted volumes on a QoQ basis
YoY/-7% QoQ) on account of higher spot LNG prices. from the Power, Refining, and Petchem sectors.
 PNGRB has already taken up the tariff review of GUJS' HPP  Commissioning of Phase II of Mehsana-Bhatinda pipeline
grid to determine the new tariff from FY22 and will adjust and further expansion/debottlenecking of three pipelines
it for the new tax regime. connecting three LNG terminals (in Gujarat) remain key.
Standalone quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,028 4,634 4,590 3,939 4,397 4,474 3,991 3,692 17,191 16,553
YoY Change (%) -21.4 -14.4 1.5 -10.2 9.1 -3.4 -13.1 -6.3 -11.6 -3.7
EBITDA 3,462 3,807 3,984 3,442 3,744 3,806 3,365 3,094 14,694 14,008
Margin (%) 85.9 82.2 86.8 87.4 85.2 85.1 84.3 83.8 85.5 84.6
Depreciation 488 554 511 497 481 491 494 498 2,049 1,964
Interest 290 249 220 174 140 86 53 21 933 300
Other Income 43 515 74 61 38 904 39 29 694 1,010
PBT before EO expense 2,727 3,519 3,328 2,833 3,161 4,133 2,856 2,604 12,406 12,754
Extra-Ord. expense 0 0 0 17 14 0 0 0 17 14
PBT 2,727 3,519 3,328 2,816 3,148 4,133 2,856 2,604 12,389 12,741
Tax 733 808 853 753 828 829 723 657 3,147 3,037
Rate (%) 26.9 23.0 25.6 26.8 26.3 20.1 25.3 25.2 25.4 23.8
Reported PAT 1,994 2,711 2,475 2,063 2,319 3,304 2,133 1,947 9,242 9,704
YoY Change (%) -3.3 -40.4 11.4 -8.0 16.8 21.9 -13.8 -6.1 -16.5 5.0
Margin (%) 49.5 58.5 53.9 52.7 53.0 73.8 53.5 52.7 53.8 58.7
Key Operating Parameters
Transmission Volume (mmscmd) 33.3 39.8 39.4 33.8 36.8 37.5 31.9 29.8 36.6 34.0
Implied Tariff (INR/mscm) 1,297 1,239 1,243 1,277 1,282 1,260 1,343 1,296 1,262 1,295

April 2022 177

 March 2022 Results Preview | Sector: Oil & Gas

HPCL Neutral
CMP: INR280 | TP: INR290 (+4%) EPS CHANGE (%): FY22|23: -30|-4
 Expect refining throughput at 4.7mmt (+8% YoY/+11%  Expect reported GRM at USD19.8/bbl, with gross
QoQ) as HPCL ramps-up its utilization rate post marketing margin at -INR0.6/liter (-111% YoY/-121%
completion of its Mumbai refinery expansion. QoQ).
 Expect marketing sales volumes at 9.5mmt (-6% YoY/-10%  Higher capex (resulting in ballooning debt) and execution
QoQ), hit by lower MS and HSD demand. risk at the Visakhapatnam refinery remain huge concerns.
Standalone quarterly earnings model (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 377.2 517.7 686.6 748.4 724.4 830.6 966.0 1,172.2 2,330.0 3,693.3
YoY Change (%) -46.9 -14.9 -3.0 13.1 92.1 60.4 40.7 56.6 -13.3 58.5
EBITDA 43.5 36.0 33.0 46.7 32.6 30.1 18.7 2.4 159.3 83.9
Margin (%) 11.5 7.0 4.8 6.2 4.5 3.6 1.9 0.2 6.8 2.3
Depreciation 8.7 8.7 8.8 9.4 9.1 9.5 10.2 10.9 35.5 39.7
Forex loss 0.0 -5.7 -3.0 -1.4 0.7 -1.1 -1.4 -1.6 -10.1 -3.4
Interest 3.2 2.6 1.3 2.1 2.5 1.5 2.4 3.0 9.1 9.4
Other Income 5.6 2.4 5.7 4.0 3.7 3.4 4.1 3.1 17.8 14.2
PBT before EO expense 37.3 32.9 31.6 40.7 24.0 23.6 11.6 -6.7 142.5 52.4
PBT 37.3 32.9 31.6 40.7 24.0 23.6 11.6 -6.7 142.5 52.4
Tax 9.1 8.1 8.0 10.5 6.0 4.4 2.9 -1.7 35.8 11.6
Rate (%) 24.5 24.7 25.4 25.8 25.1 18.5 25.1 25.2 25.1 22.2
Adj. PAT 28.1 24.8 23.5 30.2 18.0 19.2 8.7 -5.0 106.6 40.8
YoY Change (%) 247.0 135.4 215.1 193.1 -36.2 -22.4 -63.1 -116.7 192.9 -61.7
Key Assumptions
Refining throughput (mmt) 4.0 4.1 4.0 4.4 2.5 2.5 4.2 4.7 16.4 14.0
Reported GRM (USD/bbl) 0.0 5.1 1.9 8.1 3.3 2.4 6.4 19.8 3.8 8.0
Marketing sales volume incl. exports (mmt) 7.6 8.4 10.4 10.1 8.8 9.1 10.5 9.5 36.6 38.0
Marketing GM incl. inv. (INR/liter) 8.2 6.0 5.2 6.0 5.8 5.9 3.0 -0.6 6.3 3.5

Indraprastha Gas Neutral

CMP: INR393 | TP: INR406 (+3%) EPS CHANGE (%): FY22|23: -2|0
 Expect total volumes of 7.5mmscmd (+10% YoY / -2%  Key monitorable would be increase in sales volumes from
QoQ), clocking growth post the lockdowns nee GAs- existing and the newly awarded ones.
 Expect EBITDA/scm to further normalize to INR6.2 as spot  Passing on APM price increase / OMCs demanding higher
LNG prices rise commissions to sell CNG poses huge risk to IGL’s margins
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,386 13,054 14,462 15,506 12,574 18,312 22,155 22,844 49,408 75,885
Change (%) -59.5 -22.9 -13.1 -0.1 96.9 40.3 53.2 47.3 -23.8 53.6
EBITDA 834 4,071 5,007 4,918 3,809 5,302 4,696 4,201 14,830 18,008
EBITDA (Rs/scm) 3.4 8.0 8.7 8.0 7.9 8.0 6.7 6.2 7.6 7.1
% Change -76.7 3.7 27.8 30.5 356.4 30.2 -6.2 -14.6 -2.4 21.4
Depreciation 682 711 750 761 778 805 835 853 2,904 3,271
Interest 24 23 31 36 29 26 28 36 113 119
Other Income 306 657 259 280 298 775 304 319 1,502 1,695
PBT before EO 435 3,994 4,485 4,400 3,299 5,246 4,137 3,631 13,315 16,312
Tax 117 915 1,137 1,090 857 1,241 1,051 914 3,258 4,062
Rate (%) 26.9 22.9 25.3 24.8 26.0 23.6 25.4 25.2 24.5 123.1
Adj. PAT 318 3,079 3,349 3,310 2,443 4,005 3,085 2,717 10,057 12,251
PAT (Rs/scm) 1.3 6.1 5.8 5.4 5.0 6.0 4.4 4.0 4.6 4.9
Change (%) -85.4 -19.2 18.0 30.6 667.2 30.1 -7.9 -17.9 -11.5 21.8
Gas Volumes (mmscmd)
CNG 1.61 3.91 4.48 4.87 3.65 5.30 5.63 5.43 3.72 5.00
PNG 1.11 1.59 1.78 1.96 1.67 1.94 2.02 2.08 1.61 1.93
Total 2.72 5.50 6.26 6.82 5.32 7.24 7.66 7.51 5.32 6.93

April 2022 178

 March 2022 Results Preview | Sector: Oil & Gas

IOC Buy
CMP: INR122 | TP: INR152 (+25%) EPS CHANGE (%): FY22|23: +15|-3
 Expect refinery throughput of ~18.0mmt (+2% YoY / +3%  Expect reported GRM at USD23.8/bbl, with gross
QoQ) marketing margin at -INR1.0/liter (lower YoY/QoQ)
 Petchem segment to see benefit of better PE/PP cracks on  Recent spurt in refining margins to aid IOCL the most v/s
a sequential basis, backed by spurt in product prices among peers; valuation also the most attractive
Standalone quarterly earnings model (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 624 856 1,063 1,237 1,187 1,354 1,668 2,215 3,781 6,424
YoY Change (%) (52.6) (23.3) (14.7) 4.5 90.2 58.2 56.8 79.1 (22.3) 69.9
EBITDA 55.1 94.3 96.2 135.0 111.3 106.3 98.6 135.2 381 451
Margin (%) 8.8 11.0 9.0 10.9 9.4 7.8 5.9 6.1 10.1 7.0
Depreciation 23.5 24.0 24.7 25.8 26.3 27.1 27.8 28.1 98 109
Interest 11.7 2.2 6.3 10.7 12.6 9.9 9.8 9.9 31 42
Other Income 6.4 7.8 9.0 3.2 5.6 14.3 13.8 12.1 26 46
PBT before EO expense 26.3 83.4 78.0 109.5 78.0 83.7 74.8 109.4 297 346
PBT 26.3 83.4 78.0 109.5 78.0 83.7 74.8 109.4 297 346
Rate (%) 27.3 25.3 36.9 19.8 23.8 24.0 21.6 25.2 27 24
Adj. PAT 19.1 62.3 49.2 87.8 59.4 63.6 58.6 81.8 218 263
Margin (%) 3.1 7.3 4.6 7.1 5.0 4.7 3.5 3.7 5.8 4.1
Key Assumptions
Refining throughput (mmt) 12.9 14.0 17.9 17.6 16.7 15.3 17.4 18.0 62.4 67.4
Reported GRM (2.0) 8.6 2.2 10.6 6.6 6.6 12.0 7.8 4.9 8.2
Domestic sale of refined products (mmt) 14.2 16.0 19.7 18.4 17.2 17.2 19.2 16.6 68.4 70.2
Marketing GM incl. inv. per liter (INR/liter) 8.6 5.9 6.5 6.1 6.2 7.0 3.4 (1.0) 6.8 3.9

Mahanagar Gas Buy

CMP: INR825 | TP: INR1011 (+23%) EPS CHANGE (%): FY22|23: +11|0
 Expect a volume growth of 12% YoY (-2% QoQ) to  Expect EBITDA margin/scm of INR10.1 (-17% YoY/+197%
3.2mmscmd, with CNG volumes up 19% YoY and 1% QoQ. QoQ). The contraction in 3QFY22 was due to the reduction
in APM gas allocation.
 APM price revision and demand for higher commissions to  The addition of MRUs, which could be a game changer for
sell CNG by OMCs raises concerns on current high margin. the company, is a key monitorable.
Standalone quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,618 5,067 6,664 7,177 6,155 8,301 10,278 11,118 21,525 35,853
YoY Change (%) -65.4 -35.3 -10.5 4.5 135.1 63.8 54.2 54.9 -27.6 66.6
EBITDA 800 2,211 3,167 3,162 3,040 3,018 1,031 2,938 9,340 10,027
EBITDA/SCM 7.9 11.6 12.4 12.1 13.9 10.5 3.4 10.1 11.6 9.1
Margin (%) 30.6 43.6 47.5 44.1 49.4 36.4 10.0 26.4 43.4 28.0
Depreciation 423 425 441 448 453 473 482 499 1,737 1,907
Interest 15 20 17 19 17 20 15 19 72 71
Other Income 245 184 204 172 186 226 218 131 805 762
PBT 607 1,950 2,913 2,866 2,756 2,751 752 2,552 8,336 8,810
Rate (%) 25.5 26.0 25.4 25.8 26.0 25.7 24.5 25.2 25.7 25.6
Reported PAT 453 1,443 2,172 2,128 2,041 2,043 568 1,908 6,196 6,559
Adj. PAT 453 1,443 2,172 2,128 2,041 2,043 568 1,908 6,196 6,559
YoY Change (%) -73.4 -46.7 16.7 27.7 351.0 41.5 -73.9 -10.3 -21.9 5.9
Margin (%) 17.3 28.5 32.6 29.6 33.2 24.6 5.5 17.2 28.8 18.3
Sales Volumes (mmscmd)
CNG 0.5 1.3 1.9 2.0 1.6 2.2 2.4 2.4 1.4 2.1
PNG – Total 0.6 0.8 0.9 0.9 0.8 0.9 0.9 0.8 0.8 0.9
Total Volumes 1.1 2.1 2.8 2.9 2.4 3.1 3.3 3.2 2.2 3.0

April 2022 179

 March 2022 Results Preview | Sector: Oil & Gas

MRPL Neutral
CMP: INR44 | TP: INR43 (-1%) EPS CHANGE (%): FY22|23: PL |+1
 Expect refinery throughput of ~4.26mmt (+6% YoY/-3%  Expect reported GRM at USD15/bbl, taking inventory gains
QoQ) as the utilization rate normalizes in 4QFY22. into account and an uptick in SG GRM.
 The desalination plant commissioned in 3QFY22 should  Watch out for its Phase IV expansion plans, which may
help mitigate water availability concerns. further weaken the Balance Sheet.
Standalone quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 44,726 61,823 79,515 1,35,759 1,12,981 1,32,433 2,06,237 2,71,319 3,21,824 7,22,969
YoY Change (%) -51.8 -53.2 -44.7 -3.9 152.6 114.2 159.4 99.9 -36.9 124.6
EBITDA -4,777 1,636 945 8,532 3,660 -764 18,312 31,346 6,336 52,554
Margin (%) -10.7 2.6 1.2 6.3 3.2 -0.6 8.9 11.6 2.0 7.3
Depreciation 2,001 2,098 2,251 2,180 2,131 2,124 2,129 2,254 8,530 8,638
Forex loss 100 -730 -522 73 1,085 -556 170 192 -1,079 891
Interest 1,416 -27 694 1,367 1,983 1,790 1,613 1,545 3,521 6,931
Other Income 254 288 366 276 210 227 525 702 1,185 1,665
PBT before EO expense -8,039 582 -1,113 5,189 -1,329 -3,896 14,926 28,058 -3,451 37,759
PBT -8,039 582 -1,113 5,189 -1,329 -3,896 14,926 28,058 -3,451 37,759
Rate (%) 34.8 38.4 32.1 36.7 35.1 37.7 35.1 25.2 30.3 27.4
Reported PAT -5,244 358 -756 3,283 -863 -2,425 9,690 20,996 -2,405 27,397
YoY Change (%) 4.9 -106.2 106.3 -120.6 -83.5 -776.7 -1,381.7 539.5 -91.2 -1,239.3
Margin (%) -11.7 0.6 -1.0 2.4 -0.8 -1.8 4.7 7.7 -0.7 3.8
Key Assumptions
Refining throughput (mmt) 1.9 2.5 3.1 4.0 3.1 3.2 4.4 4.3 11.5 14.9
Reported GRM (USD/bbl) -1.5 3.9 3.3 6.5 4.5 2.2 9.3 15.0 3.0 7.8

Oil India Buy

CMP: INR237 | TP: INR369 (+56%) EPS CHANGE (%): FY22|23: -1|+2
 Net realization to increase by ~71% YoY and ~30% QoQ, in  Increase in production at the Baghjan field is a key
line with the movement in crude oil prices. monitorable over the medium term.
 Expect oil volumes at 0.74mmt (+6% YoY/+2% QoQ) and  OINL has taken significant provisions in US Shale assets in
gas sales of 0.66bcm (+19% YoY/+5% QoQ). FY21. It will make provisions in Mozambique and Russia
blocks in the future.
Quarterly performance (INR m)
Y/E March FY21 FY22
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 17,439 21,690 21,260 25,795 30,037 33,112 37,367 47,678 86,184 1,48,194
Change (%) -48.3 -32.5 -28.0 -0.4 72.2 52.7 75.8 84.8 -28.9 72.0
EBITDA 1,972 7,373 -938 4,247 12,298 9,134 12,672 24,731 12,654 58,835
As a percentage of Net Sales 11.3 34.0 -4.4 16.5 40.9 27.6 33.9 51.9 14.7 39.7
Change (%) -85.4 -40.7 -108.6 -37.4 523.6 23.9 -1,450.8 482.3 -71.0 364.9
D,D&A 3,585 3,737 3,879 4,176 3,975 4,202 4,678 4,844 15,377 17,699
Interest 1,278 1,217 1,223 1,270 2,221 1,870 1,748 1,766 4,987 7,604
OI (incl. Oper. other inc.) 1,306 1,112 3,712 13,301 671 3,676 9,685 7,840 19,431 21,872
PBT before exceptionals -1,585 3,531 -2,328 12,103 6,774 6,738 15,932 25,961 11,721 55,405
PBT after exceptionals -2,519 2,190 -3,842 11,402 6,774 6,738 15,932 25,961 7,231 55,405
Rate (%) 2.1 -5.7 553.3 24.2 25.0 25.1 21.9 25.2 -86.9 24.2
PAT -2,486 2,390 9,037 8,476 5,079 5,045 12,449 19,424 17,416 41,997
Change (%) -139.8 -61.9 122.4 -8.4 -304.3 111.1 37.8 129.2 -32.6 141.1
Adj. PAT -1,552 3,731 10,551 9,177 5,079 5,045 12,449 19,424 21,906 41,997
Key Assumptions (USD/bbl)
Oil sales (mmt) 0.73 0.72 0.72 0.70 0.72 0.74 0.73 0.74 2.88 2.93
Gas sales (bcm) 0.58 0.55 0.59 0.56 0.61 0.67 0.63 0.66 2.27 2.58
Net Oil Realization 30.4 42.7 44.1 59.8 67.2 71.4 78.6 102.4 44.3 80.4

April 2022 180

 March 2022 Results Preview | Sector: Oil & Gas

ONGC Buy
CMP: INR168 | TP: INR240 (+43%) EPS CHANGE (%): FY22|23: -1|+1
 Expect net realizations to grow by ~76% YoY and ~34%  Expect 6% YoY and 3% QoQ lower oil sales, with gas sales
QoQ, led by an increase in crude oil prices. down 2% QoQ (flat YoY).
 Gas production from the KG Basin remains crucial. Any  Outlook for various field developments remain key for
further delays could dampen near-term sentiment. volume growth going forward.
Standalone quarterly earnings model (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 130.1 169.2 170.2 211.9 230.2 243.5 284.7 353.0 681.4 1,111.5
YoY Change (%) -51.0 -30.9 -28.2 -1.2 76.9 44.0 67.3 66.6 -29.2 63.1
EBITDA 59.1 84.4 83.5 101.2 121.5 132.3 159.7 201.2 328.1 614.7
Margin (%) 45.4 49.9 49.0 47.8 52.8 54.3 56.1 57.0 48.2 55.3
Depreciation 49.5 51.3 62.7 63.7 53.2 46.4 54.6 57.2 227.1 211.3
Interest 4.9 4.4 6.0 5.7 6.2 5.8 5.8 5.7 22.1 23.5
Other Income 4.4 22.4 12.2 31.3 5.3 31.5 14.9 25.5 71.4 77.2
PBT before EO expense 9.0 51.1 27.0 63.1 67.5 111.5 114.2 163.9 150.3 457.2
Extra-Ord. expense 0.0 12.4 0.0 -26.1 0.0 0.0 0.0 0.0 -13.8 0.0
PBT 9.0 38.7 27.0 89.3 67.5 111.5 114.2 163.9 164.0 457.2
Rate (%) 45.1 28.7 53.4 24.6 35.8 -64.5 23.3 25.2 31.4 4.4
Reported PAT 5.0 27.6 12.6 67.3 43.3 183.5 87.6 122.6 112.5 437.1
Adj. PAT 5.0 36.4 12.6 47.6 43.3 85.0 87.6 122.6 103.0 338.6
YoY Change (%) -91.6 -41.9 -70.2 566.6 774.0 133.4 596.6 157.5 -38.3 228.6
Margin (%) 3.8 21.5 7.4 22.5 18.8 34.9 30.8 34.7 15.1 30.5
Key Assumptions (USD/bbl)
Crude oil sold (mmt) 5.2 5.1 5.3 5.2 5.1 5.0 5.1 4.9 20.7 20.1
Gas sold (bcm) 4.2 4.6 4.5 4.4 4.1 4.3 4.3 4.4 17.7 17.1
VAP sold (tmt) 680 836 784 726 784 777 724 794 3,026 3,079

Petronet LNG Buy

CMP: INR198| TP: INR300 (+51%) EPS CHANGE (%): FY22|23: +8|-2
 Total gas consumption rose 12% YoY, but fell 8% QoQ due  Expect total PLNG volumes to decline by 4% YoY (flat
to a decline in demand from the Power sector. QoQ). We model in Dahej/Kochi utilization at 90%/18%.
 Higher spot LNG prices (are dampening demand from the  Ramp-up at Kochi terminal and total volume guidance
Power sector) is a key near-term monitorable. remains key, given the spurt in domestic gas production.
Standalone quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 48,836 62,358 73,282 75,753 85,979 1,08,131 1,25,972 1,10,246 2,60,229 4,30,328
YoY Change (%) -43.3 -33.4 -17.8 -11.6 76.1 73.4 71.9 45.5 -26.6 65.4
EBITDA 9,099 13,632 13,353 10,911 10,543 12,969 17,322 10,327 46,995 51,159
Margin (%) 18.6 21.9 18.2 14.4 12.3 12.0 13.8 9.4 18.1 11.9
Depreciation 1,936 1,952 1,925 2,028 1,916 1,936 1,936 2,026 7,841 7,815
Interest 881 850 815 813 800 794 776 760 3,360 3,131
Other Income 684 1,596 1,111 492 685 816 719 1,104 3,882 3,324
PBT 6,966 12,426 11,724 8,561 8,512 11,055 15,328 8,644 39,677 43,538
Tax 1,764 3,153 2,939 2,328 2,155 2,825 3,893 2,174 10,183 11,046
Rate (%) 25.3 25.4 25.1 27.2 25.3 25.6 25.4 25.2 25.7 25.4
Reported PAT 5,202 9,273 8,785 6,234 6,357 8,230 11,435 6,470 29,494 32,492
Adj. PAT 5,202 9,273 8,785 6,234 6,357 8,230 11,435 6,470 29,494 32,492
YoY Change (%) -7.1 -21.1 30.1 73.6 22.2 -11.2 30.2 3.8 6.5 10.2
Margin (%) 10.7 14.9 12.0 8.2 7.4 7.6 9.1 5.9 11.3 7.6
Key Assumptions
Total Volumes (Tbtu) 190.0 254.0 235.0 218.0 209.0 240.0 208.0 209.9 897.0 866.9
Dahej utilization (%) 82% 110% 100% 92% 88% 102% 89% 90%
Kochi utilization (%) 14% 17% 21% 22% 24% 24% 19% 18%

April 2022 181

 March 2022 Results Preview | Sector: Oil & Gas

Reliance Industries Buy

CMP: INR2663 | TP: INR2,800 (+5%) EPS CHANGE (%): FY22|23: 0|+1
 Expect consolidated EBITDA at INR345b (+47% YoY/+16%  Expect EBITDA at INR168b (+65% YoY/+21% QoQ) for the
QoQ), driven by growth in the O2C and Retail segments. O2C segment, INR107b (+29% YoY/+13% QoQ) for RJio,
and INR45b (+25% YoY/+18% QoQ) for the Retail segment.
 Expect refinery throughput at 15.3mmt. Arab Lt-Hv spread  Updates/clarity on announcements in the new energy
flat QoQ at USD1.5/bbl. Expect EBITDA/mt at USD145.8 business, growth in Retail store additions, and any further
(+73% YoY, +38% QoQ) pricing action in Telecom are key monitorable.
Consolidated - Quarterly Earning Model (INR b)
Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 883 1,112 1,179 1,496 1,399 1,676 1,850 2,318 4,669 7,244
YoY Change (%) -43.8 -25.5 -23.1 9.6 58.6 50.7 57.0 55.0 -21.7 55.2
EBITDA 169 189 216 234 234 260 297 345 807 1,136
Margins (%) 19.1 17.0 18.3 15.6 16.7 15.5 16.1 14.9 17.3 15.7
Depreciation 63 66 67 70 69 72 77 86 266 304
Interest 67 61 43 40 34 38 38 47 212 157
Other Income 44 42 45 32 42 42 40 28 163 153
PBT before EO expense 82 105 150 156 173 192 223 240 493 827
Extra-Ord expense -50 0 1 -8 0 0 -28 0 -56 -28
PBT 132 105 149 164 173 192 251 240 549 856
Rate (%) 2.0 -0.1 0.6 8.5 20.0 19.6 18.7 23.9 3.1 20.6
Minority Interest & P/L of Asso. Cos. -3.1 9.3 17.2 17.5 15.7 17.6 18.6 16.7 41.0 68.6
Reported PAT 132 96 131 132 123 137 185 166 491 611
Adj PAT 84 96 132 125 123 137 162 166 437 588
YoY Change (%) -17.5 -15.7 12.2 30.5 46.7 43.0 22.9 32.5 1.1 34.6
Margins (%) 9.5 8.6 11.2 8.4 8.8 8.2 8.8 7.1 9.4 8.1

April 2022 182

 March 2022 Results Preview | Sector: Real Estate

Real Estate
Company Launches to drive growth in pre-sales in 4QFY22
DLF
Most companies in our coverage universe to report record pre-sales
Godrej Properties
Oberoi Realty
We expect the Residential Real Estate segment to report a strong rebound in 4QFY22, after the
Macrotech Developers
minor hiccups of a third COVID wave, which led to some deferment in home buying towards
the end of 3QFY22. Property registrations in Mumbai surged in Feb-Mar’22, up 51% YoY and
36% QoQ to ~35,000 units in 4QFY22. Our recent visit to Bengaluru and channel checks suggest
that the demand momentum remains strong and Tier I developers continue to gain market
share. As per Knight Frank, the top eight cities registered 9% YoY growth in housing sales in
1QCY22, indicating that the growth momentum has sustained across key markets. On the back
of strong launch pipeline, we expect DLF/GPL/LODHA to deliver a multi-year record in quarterly
pre-sales in 4QFY22, while the delay in the Thane launch for OBER will impact pre-sales. Our
coverage universe is expected to deliver 19% YoY and QoQ growth in pre-sales in 4QFY22 and
can generate collections of INR65b, up 17% YoY and 5% QoQ.

Expect coverage stocks to better their 3QFY22 performance

We expect all stocks in our coverage universe, except OBER, to better their 3QFY22
performance in terms of project launches and pre-sales.
 LODHA: We expect the company to meet its FY22 pre-sales guidance of INR90b
as sales in 4Q could increase by 33% YoY and 29% QoQ to INR34b, driven by
improved demand in the Mid-Income and Premium segment and strong launch
pipeline of ~1.5msf. As per our channel checks, it has launched recently signed
JDA projects in Mira Road/Powai (a western/eastern suburb in Mumbai), along
with tower launches at its existing projects in Palava and Pune.
 OBER: While the absence of any launches will result in a 59% YoY drop in pre-
sales to INR8b, the momentum in ongoing projects has largely remained intact.
We expect volume to decline to 0.5msf in 4QFY22. Launch of the Thane project
in 1QFY23 and potential restart in sales at Three Sixty West, Worli will lead to a
growth in pre-sales in FY23.
 DLF will recognize the balance INR8b of sales booked in ONE Midtown in
4QFY22. The launch of a new phase under ‘value homes’ in Chennai and phase
launches in Independent floors, Gurugram will drive 123% YoY and 17% QoQ
increase in pre-sales to INR24b, which will be a record since 1QFY14.
 GPL may report the highest ever pre-sales of INR32b, up 20% YoY and 105%
QoQ, driven by robust launches, especially in Pune and NCR. Of the pipeline of
9msf slated to be launched in 4QFY22, the company has launched ~5msf,
including phase launches in Pune, NCR, and Kolkata. Performance on business
development could be healthy as indicated by recent press releases.

Key things to watch out for in the 4QFY22 concall

 LODHA: After its QIP, LODHA has been aggressive in business development,
adding 11 projects over the last few quarters. Deal additions in 4QFY22 will be
key to watch out for.
 OBER: With the Thane project now expected to be launched in 1QFY23, we will
focus on its strategy around new project additions in Mumbai and beyond.

Pritesh Sheth – Research Analyst ([Link]@[Link])

Sourabh Gilda – Research Analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Real Estate

 DLF: Commentaries around new projects beyond the identified pipeline of

35msf, incremental insights on back to office from key tenants in its Annuity
portfolio, and clarity on Mumbai land parcel are key monitorables.
 GPL: While performance in Pune and NCR has been strong, we will watch out for
clarity around new launches and project additions in Mumbai, especially post
cancellation of its deal with DBRL.

Near term pressure on margins remain

Prices of key input commodities like steel have rallied ~45% in the past few weeks,
while Cement prices, which were largely flattish on a YoY basis, have increased by 4-
5% recently. Our interactions with companies indicate that margins in the near term
may remain under pressure on account of a sharp rise in commodity cost. The
overall 15-20% increase in cost will require price hikes of 5-6% to mitigate the
impact. Companies will be on the lookout for opportunistic price hikes, without
impacting demand, as they feel the market can absorb a minor price increase.
LODHA is our top pick followed by OBER
The Residential Real Estate segment is witnessing sustained demand trends across
top markets as key drivers such as strong hiring and affordability remain intact. As
developers continue to focus on volumes (with minor price hikes in recent past), the
current scenario of rising cost pressure, which may be short term in nature, will
further tilt the situation in favor of large developers who are better placed to pass
on the inflation in raw material cost.

We see potential for a re-rating in companies, which will provide growth visibility,
on the back of continued business development through robust cash flow. We
prefer LODHA and OBER over DLF and GPL.

Exhibit 1: Expected financial performance summary

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
DLF 387 Neutral 11,298 -34.0 -27.1 3,711 -18.2 -28.8 4,111 -14.5 -25.3
Godrej Properties 1682 Neutral 1,366 -68.4 -51.0 -225 Loss Loss -774 PL PL
Macrotech Developers 1201 Buy 29,778 17.5 44.6 7,584 -6.2 56.1 4,658 60.1 67.0
Oberoi Realty 977 Buy 9,231 16.8 10.9 4,158 11.3 25.4 5,767 101.0 23.3
Real Estate 51,673 -5.5 9.5 15,227 -5.0 14.2 13,762 25.7 3.0

Exhibit 2: Expected operational performance summary

CMP Pre-sales (INR m) Volume (MSF) Collections (INR m)
Variance Variance Variance Variance Variance Variance
Company (INR) Rating Mar’22 Mar’22 Mar’22
YoY (%) QoQ (%) YoY (%) QoQ (%) YoY (%) QoQ (%)
Macrotech Developers 1201 Buy 33,760 33 29 3.1 74 31 21,523 3 1
Oberoi Realty 977 Buy 8,091 -59 -59 0.5 -53 -52 9535 48 -3
Godrej Properties 1682 Neutral 31,587 20 105 3.9 -5 79 19,698 -2 5
DLF 387 Neutral 23,591 123 17 2 156 92 14,116 62 10
Real Estate 97,029 19 19 10 25 45 64,872 16 3
Source: Company, MOFSL

April 2022 184

 March 2022 Results Preview | Sector: Real Estate

Exhibit 3: Relative performance – three-months (%) Exhibit 4: Relative performance – one-year (%)

Nifty Index MOFSL Real Estate Index Nifty Index MOFSL Real Estate Index
210
102
180
98
150

94
120

90 90

Mar-21

Mar-22
Mar-22

Jun-21

Dec-21
Dec-21

Jan-22

Sep-21
Feb-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 5: Operational snapshot for our Real Estate coverage universe

4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E YoY (%) QoQ (%)
Sales (INR b)
DLF 3 2 9 10 11 10 15 20 24 123 17
Godrej Properties 24 15 11 15 26 5 26 15 32 20 105
Macrotech Developers 12 5 11 19 25 10 20 26 34 33 29
Oberoi Realty 2 0 3 10 20 2 8 20 8 -59 -59
Aggregate sales (INR b) 41 22 33 53 82 26 69 81 97 19 19
Volume (msf)
DLF 1.2 0.2 1.2 0.9 0.9 0.8 1.4 1.2 2.3 155.6 91.7
Godrej Properties 3.6 2.5 1.7 2.4 4.2 0.8 3.6 2.2 3.9 -5.5 78.1
Macrotech Developers 1.2 0.6 1.1 1.6 1.8 0.7 1.8 2.4 3.1 74.5 30.9
Oberoi Realty 0.1 0.0 0.1 0.5 1.1 0.1 0.4 1.0 0.5 -52.6 -51.6
Aggregate volume (msf) 6.2 3.3 4.2 5.4 7.9 2.3 7.3 6.9 9.9 24.6 44.3
Collections (INR b)
DLF 7 3 5 6 8 6 14 12 14 75 16
Godrej Properties 14 4 7 13 20 13 17 19 20 -2 5
Macrotech Developers 19 4 11 15 21 17 19 21 22 7 5
Oberoi Realty 4 1 2 7 6 5 4 10 10 48 -3
Aggregate collections (INR b) 44 12 25 41 55 41 54 62 65 17 5
Source: Company, MOFSL

Exhibit 6: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Real Estate 56.1 35.4 23.0 3.5 3.2 2.8 6.2 9.0 12.2
DLF 387 Neutral 9.4 16.3 29.1 41.4 23.8 13.3 1.9 1.7 1.5 4.6 7.6 12.3
Godrej Properties 1,682 Neutral 0.5 17.9 37.1 3,277.1 93.8 45.4 5.6 5.3 4.7 0.2 5.8 11.0
Macrotech Dev. 1,201 Buy 23.4 25.9 44.7 51.2 46.5 26.9 5.0 4.5 3.9 14.0 10.2 15.5
Oberoi Realty 977 Buy 38.3 55.3 52.4 25.5 17.7 18.6 3.3 2.8 2.5 13.9 17.2 14.1

April 2022 185

 March 2022 Results Preview | Sector: Real Estate

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL Coverage
Universe.

DLF Neutral
CMP: INR387 | TP: INR450 (+16%) EPS CHANGE (%): FY22|23: 0|0
 Expect revenue to decrease by 34% YoY to INR12.3b.  Expect new projects and phase launches across the Value
 Expect a 630bp YoY improvement in EBITDA margin. and Premium segment to drive a 123% YoY increase in
pre-sales.

Consolidated quarterly earnings model

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 5,486 16,098 15,430 17,126 11,395 14,809 15,497 11,298 54,141 52,999
YoY Change (%) -58.8 -6.2 15.0 1.1 107.7 -8.0 0.4 -34.0 -11.0 -2.1
Total Expenditure 5,469 11,467 10,440 12,587 7,441 10,226 10,284 7,587 39,963 35,538
EBITDA 17 4,631 4,991 4,539 3,954 4,583 5,213 3,711 14,178 17,461
Margin (%) 0.3 28.8 32.3 26.5 34.7 30.9 33.6 32.8 26.2 32.9
Depreciation 422 397 391 385 379 373 374 451 1,595 1,576
Interest 2,374 2,263 1,985 1,912 1,749 1,759 1,455 950 8,534 5,913
Other Income 984 1,133 1,252 1,940 1,027 756 1,372 554 5,308 3,710
PBT before EO expense -1,795 3,104 3,868 4,182 2,853 3,207 4,757 2,864 9,358 13,681
Extra-Ord. expense 0 962 0 0 0 0 2,244 0 -962 -2,244
PBT -1,795 2,142 3,868 4,182 2,853 3,207 2,512 2,864 10,320 15,926
Tax -14 1,001 1,042 1,594 828 944 600 716 3,623 3,088
Rate (%) 0.8 46.7 27.0 38.1 29.0 29.4 23.9 25.0 33.2 33.2
Minority Interest and Profit/Loss of Asso. Cos. 1,074 1,180 1,687 2,222 1,346 1,526 1,883 1,962 6,163 6,717
Reported PAT -707 2,321 4,512 4,809 3,371 3,790 3,795 4,111 12,860 19,554
Adj. PAT -707 2,834 4,512 4,809 3,371 3,790 5,503 4,111 11,483 16,704
YoY Change (%) NM -17.6 66.2 53.5 -577.1 33.7 22.0 -14.5 7.8 45.5
Margin (%) -12.9 17.6 29.2 28.1 29.6 25.6 35.5 36.4 21.2 31.5

Godrej Properties Neutral

CMP: INR1,682 | TP: INR1,800 (7%) EPS CHANGE (%): FY22|23: 0|0
 Expect revenue to decline by 68% YoY to INR1.3b in  Operationally, GPL can report record pre-sales of INR32b,
4QFY22. up 20% YoY, driven by strong launches.

Consolidated quarterly earnings model

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 723 895 1,705 4,326 862 1,293 2,788 1,366 7,649 6,309
YoY Change (%) -88.6 -65.5 -55.5 -62.8 19.2 44.5 63.5 -68.4 -68.7 -17.5
Total Expenditure 1,258 1,609 2,248 4,657 1,497 1,855 2,839 1,591 9,772 7,782
EBITDA -535 -714 -543 -330 -635 -562 -51 -225 -2,123 -1,473
Margin (%) -74.1 -79.7 -31.9 -7.6 -73.7 -43.4 -1.8 -16.5 -27.7 -23.4
Depreciation 44 49 50 53 51 52 55 52 195 210
Interest 499 493 449 408 417 411 417 784 1,849 2,029
Other Income 1,234 1,607 1,406 1,436 1,758 2,049 1,882 1,543 5,684 7,232
PBT before EO expense 155 352 364 646 655 1,024 1,359 482 1,517 3,520
Extra-Ord. expense 0 0 0 2,284 0 0 0 0 -2,284 0
PBT 155 352 364 -1,638 655 1,024 1,359 482 -767 3,520
Tax 46 155 170 363 186 226 290 177 734 880
Rate (%) 29.5 43.9 46.8 -22.2 28.4 22.1 21.4 36.8 -95.7 25.0
Minority Interest and Profit/Loss of Asso. Cos. -302 -127 -50 78 -299 -441 -679 -1,079 -401 -2,497
Reported PAT -193 71 144 -1,924 170 357 390 -774 -1,902 143
Adj. PAT -193 71 144 360 170 357 390 -774 382 143
YoY Change (%) NM -92.1 -85.5 -76.9 NM NM NM NM -91.4 -62.7
Margin (%) -26.6 7.9 8.4 8.3 19.7 27.6 14.0 -56.7 5.0 2.3

April 2022 186

 March 2022 Results Preview | Sector: Real Estate

Macrotech Developers Buy

CMP: INR1,201 | TP: INR1,700 (+42%) EPS CHANGE (%): FY22|23: (16)|1
 Expect revenue to grow by 22% YoY to INR31b.  Expect pre-sales to increase by 33% YoY to INR34b.
 Expect EBITDA margin to decline by 600bp YoY due to
changes in the product mix

Consolidated quarterly earnings model

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 5,001 9,008 15,141 25,336 16,054 21,238 20,594 29,778 54,486 87,664
YoY Change (%) NA NA NA -20.1 221 136 36 18 0.0 60.9
Total Expenditure 5,537 7,564 10,414 17,252 12,295 17,320 15,737 22,194 40,766 67,546
EBITDA -535 1,444 4,727 8,084 3,759 3,918 4,858 7,584 13,720 20,118
Margin (%) -10.7 16.0 31.2 31.9 23.4 18.4 23.6 25.5 25.2 22.9
Adj. EBITDA (as per co.) 150 1,530 4,500 9,430 5,380 7,780 6,980 NA 17,110 27,204
Margin (%) 3.0 17.0 29.7 37.2 33.5 36.6 33.9 NA 31.4 31.0
Depreciation 204 178 183 170 186 184 187 190 734 748
Interest 2,441 3,012 2,657 3,147 2,451 1,562 1,573 1,537 11,257 7,123
Other Income 724 874 857 776 1,070 778 893 471 3,231 3,212
PBT before EO expense -2,456 -871 2,743 5,543 2,191 2,950 3,991 6,328 4,959 15,460
Extra-Ord. expense 0 4,600 28 0 0 0 0 0 -4,628 0
PBT -2,456 -5,471 2,716 5,543 2,191 2,950 3,991 6,328 9,587 15,460
Tax -971 -1,996 397 2,423 588 719 1,131 1,659 -147 4,097
Rate (%) 39.5 36.5 14.6 43.7 26.8 24.4 28.3 26.2 0.0 0.3
Minority Interest and Profit/Loss of Asso. Cos. -151 151 2 -2 -5 -2 -3 10 -151 0
Reported PAT -1,334 -3,626 2,317 3,122 1,608 2,234 2,864 4,658 9,885 11,363
Adj. PAT (as per co.) -1,380 620 1,250 2,910 1,220 2,870 2,790 4,658 3,400 11,538
YoY Change (%) NM NA NA 750.1 -188 363 123 60 NA 239.4
Margin (%) -27.6 6.9 8.3 11.5 7.6 13.5 13.5 15.6 6.2 13.2

Oberoi Realty Buy

CMP: INR977 | TP: INR1200 (+23%) EPS CHANGE (%): FY22|23: 0|0
 Expect revenue to grow by 17% YoY to INR9b in 4QFY22.  Expect pre-sales volume to decline by 53% YoY on a
 Expect EBITDA margin to decline by 170bp YoY due to higher base and due to the lack of launches in 4QFY22.
changes in the product mix.

Consolidated quarterly earnings model

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,180 3,161 8,284 7,901 2,843 7,543 8,320 9,231 20,526 27,936
YoY Change (%) -80.4 -35.7 57.1 28.4 140.8 138.6 0.4 16.8 -8.3 36.1
Total Expenditure 601 1,296 4,459 4,166 1,594 3,811 5,005 5,073 10,522 15,482
EBITDA 579 1,865 3,825 3,735 1,249 3,731 3,316 4,158 10,004 12,454
Margin (%) 49.1 59.0 46.2 47.3 43.9 49.5 39.8 45.0 48.7 44.6
Depreciation 106 103 103 100 101 101 99 99 412 400
Interest 179 182 202 197 173 171 200 236 760 780
Other Income 88 92 92 108 105 143 142 128 380 517
PBT before EO expense 383 1,672 3,611 3,545 1,080 3,602 3,159 3,951 9,212 11,790
Extra-Ord. expense 0 0 0 0 0 0 0 0 0 0
PBT 383 1,672 3,611 3,545 1,080 3,602 3,159 3,951 9,212 11,790
Tax 117 311 743 680 290 954 837 867 1,851 2,948
Rate (%) 30.6 18.6 20.6 19.2 26.9 26.5 26.5 22.0 20.1 25.0
MI and Profit/Loss of Asso. Cos. 15 16 2 3 17 18 2,353 2,684 36 5,072
Reported PAT 281 1,377 2,870 2,869 806 2,666 4,675 5,767 7,325 13,914
Adj. PAT 281 1,377 2,870 2,869 806 2,666 4,675 5,767 7,325 13,914
YoY Change (%) -81.2 1.9 98.6 15.6 187.2 93.5 62.9 101.0 8.1 90.0
Margin (%) 23.8 43.6 34.6 36.3 28.4 35.3 56.2 62.5 35.7 49.8

April 2022 187

 March 2022 Results Preview | Sector: Retail

Retail
Company
Aditya Birla Fashion and Retail
Demand momentum impacted, but seeing a quick recovery
Avenue Supermarts
Shoppers Stop Swift recovery seen from the Omnicron COVID wave
Trent
V-Mart Retail The Retail market saw a strong revival after the second COVID wave, aided by the
festive season in 3QFY22. This growth came to a halt in Jan’22 which saw some
sluggishness on account of restrictions due to the Omicron COVID wave. Our channel
checks indicate that Feb’22 saw a healthy recovery, with revenue inching closer to pre-
COVID levels, while early trends in Mar’22 indicate a surpassing of pre-COVID revenue
by Apparel players. We expect some impact on revenue for Apparel players, with a
growth of 32.5% YoY and 5.3% QoQ. DMART (Grocery) has seen a soft quarter, with a
17.8% YoY growth on a standalone basis, despite its presence in the non-
Discretionary/Grocery segment. TRENT is expected to post a strong performance, led by
high single-digit SSSG and aggressive store additions. We expect a 43% YoY growth in
revenue for ABFRL. Despite a sluggish recovery in the rural segment, we expect a 44.2%
YoY growth in revenue for VMART.

Pace of store additions to continue

The pace of store additions is expected to continue in 4QFY22 as retailers plan to
improve their store footprint, compensating for the slow store additions in 1HFY22.
Our channel checks suggest that TRENT is on track to add to its targeted 35
Westside stores and over 70 Zudio stores in FY22. It should add 25-30 Zudio stores
(in addition to 44 stores added in 9MFY22) and ~10 Westside stores in 4QFY22E.
ABFRL and SHOP are expected to see a 15-20% addition in their store footprint
annually. VMART announced closure of 11 non-performing stores against 14 store
additions and simultaneously plans to improve its presence in South India.

Raw material and GST hike to impact demand

Most Apparel players have already raised prices by 7-8% to pass on increasing raw
material cost, which resulted in some impact on volumes. However, a higher raw
material cost may compel another round of hikes, which can further impact
demand. In addition to this, a possible GST rate increase to 12% from 5% for
products priced over INR1,000 may pile on additional pressure on value Retail
players like VMart, given the higher proportion of sub-INR1,000 products in the mix.

Maintain our stance on ABFRL/VMART

We reiterate our Buy stance on ABFRL/VMART, given the comfortable
valuations/growth equations vis-à-vis its peers. TRENT has the best growth visibility
and Balance Sheet, which may lead to a possible re-rating in the stock (Neutral).
SHOP’s recent aggressive growth target presents a sound opportunity. However,
execution remains a key monitorable (Neutral). Reliance Retail remains richly
valued, given its growth potential.

Aliasgar Shakir - Research Analyst ([Link]@[Link])

April 2022 188
Harsh Gokalgandhi - Research Analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Departmental Retail

Exhibit 1: Expected quarterly performance summary (INR m)

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Aditya Birla Fashion 299 Buy 26,083 43.2 -12.7 2,845 20.9 -51.1 -319 Loss PL
Avenue Supermarts 4107 Neutral 87,854 18.5 -4.7 8,837 44.2 2.0 5,720 38.2 3.5
Barbeque Nation 1259 Neutral 2,674 18.1 -6.7 526 15.6 -19.9 20 -69.4 -86.6
Devyani Intl. 173 Buy 6,399 47.7 2.5 1,518 35.8 2.7 640 338.2 -2.1
Jubilant Foodworks 2797 Buy 11,284 10.0 -5.5 2,934 17.7 -7.6 1,140 9.3 -17.1
Restaurant Brands 112 Buy 3,059 56.0 9.3 430 75.5 30.9 -24 Loss Loss
Shoppers Stop 465 Neutral 7,979 18.9 -16.1 1,287 34.6 -29.7 9 LP -98.1
Titan Company 2517 Buy 72,681 -3.0 -27.6 6,986 -14.5 -51.6 4,558 -19.8 -55.0
Trent 1295 Neutral 12,750 64.8 -5.4 1,850 35.5 -36.6 492 -19.9 -63.0
V-Mart Retail 3832 Buy 5,075 44.2 -26.7 449 33.9 -66.8 -84 Loss PL
Westlife Development 475 Neutral 4,464 24.8 -6.4 636 36.1 -19.8 68 LP -67.3
Retail 2,40,302 15.7 -14.5 28,297 17.5 -31.7 12,221 32.8 -45.0

Exhibit 2: Relative performance – three-months (%) Exhibit 3: Relative performance – one-year (%)

Nifty Index MOFSL Retail Index Nifty Index MOFSL Retail Index
102 170

99 150

96 130

93 110

90 90
Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Sep-21

Mar-22
Jun-21

Dec-21
Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

April 2022 189

 March 2022 Results Preview | Sector: Departmental Retail

Exhibit 4: Financial snapshot for our Retail coverage universe

4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E YoY (%) QoQ (%)
Total Revenue (INR b)
ABFRL 18.3 3.2 10.3 20.8 18.2 8.1 20.5 29.9 26.1 43.2 -12.7
DMART 62.6 38.8 53.1 75.4 74.1 51.8 77.9 92.2 87.9 18.5 -4.7
SHOP 7.1 0.5 2.9 7.1 6.7 2.0 6.3 9.5 8.0 18.9 -16.1
TRENT 7.2 1.0 4.5 7.3 7.7 3.3 10.2 13.5 12.8 64.8 -5.4
Rel. Retail 344.1 300.8 390.9 359.9 447.6 366.6 432.0 548.9 589.2 31.6 7.3
VMART 3.3 0.8 1.8 4.7 3.5 1.8 3.4 6.9 5.1 44.2 -26.7
Aggregate revenue (INR b) 442.7 345.2 463.4 475.1 557.9 433.6 550.4 700.8 728.9 30.7 4.0
YoY growth (%) 7.2 -22.1 -2.2 -9.7 26.0 25.6 18.8 47.5 30.7
Gross Profit (INR b)
ABFRL 9.4 1.3 4.9 10.9 9.8 4.1 11.0 16.3 13.6 39.5 -16.6
DMART 8.5 5.5 7.7 11.7 11.0 6.8 11.6 14.2 13.2 20.5 -7.1
SHOP 2.8 0.2 0.9 2.7 2.7 0.8 2.4 3.9 3.2 16.3 -17.4
TRENT 3.4 0.1 1.8 4.1 4.1 1.8 5.3 6.9 6.0 44.8 -13.8
Rel. Retail 86.0 75.2 97.7 90.0 111.9 51.3 60.5 76.8 82.5 -26.3 7.3
VMART 0.9 0.2 0.5 1.7 1.0 0.6 1.0 2.6 1.5 40.8 -42.3
Aggregate Gross Profit (INR b) 111.1 82.6 113.6 121.1 140.5 65.3 91.9 120.7 119.9 -14.7 -0.7
YoY growth (%) 8.0 -28.6 -6.9 -11.4 26.5 -20.9 -19.1 -0.3 -14.7
Gross margin (%)
ABFRL 51.3 41.3 47.5 52.4 53.6 50.7 53.4 54.7 52.2 -140bp -250bp
DMART 13.6 14.2 14.5 15.5 14.8 13.1 14.9 15.4 15.0 20bp -40bp
SHOP 40.0 32.1 32.5 38.6 40.9 38.7 38.2 40.6 40.0 -90bp -60bp
TRENT 46.5 13.3 40.9 56.4 53.2 53.6 52.1 51.2 46.7 -650bp -450bp
Rel. Retail 25.0 25.0 25.0 25.0 25.0 14.0 14.0 14.0 14.0 -11pp 0bp
VMART 28.5 30.8 28.8 36.7 29.8 31.0 30.7 37.0 29.1 -70bp -790bp
Aggregate gross margin (%) 25.1 23.9 24.5 25.5 25.2 15.1 16.7 17.2 16.5 -870bp -80bp
EBITDA (INR b)
ABFRL 1.5 -3.6 -0.1 3.6 2.4 -1.7 3.1 5.8 2.8 20.9 -51.1
DMART 4.2 1.1 3.3 6.9 6.1 2.2 6.7 8.7 8.8 44.2 2.0
SHOP 0.8 -1.0 -0.3 0.9 1.0 -0.6 0.7 1.8 1.3 34.6 -29.7
TRENT 0.9 -1.2 0.1 1.8 1.4 -0.3 2.2 2.9 1.9 35.5 -36.6
Rel. Retail 25.6 10.8 20.1 30.9 36.2 19.4 29.1 38.2 45.2 25.0 18.3
VMART 0.3 -0.1 -0.0 1.0 0.3 -0.0 0.2 1.4 0.4 33.9 -66.8
Aggregate EBITDA (INR b) 33.2 6.1 23.0 45.2 47.3 19.0 42.1 58.8 60.5 27.9 2.9
YoY growth (%) 31.2 -81.7 -33.7 7.1 42.4 213.0 83.0 30.1 27.9
EBITDA margin (%)
ABFRL 8.2 -111.6 -0.7 17.6 12.9 -20.8 15.3 19.5 10.9 -200bp -860bp
DMART 6.7 2.9 6.2 9.1 8.3 4.3 8.6 9.4 10.1 180bp 70bp
SHOP 10.8 -189.9 -11.9 13.4 14.2 -31.2 11.2 19.2 16.1 190bp -310bp
TRENT 12.9 -123.7 1.4 24.8 17.7 -9.7 21.7 21.6 14.5 -310bp -710bp
Rel. Retail 7.4 3.6 5.1 8.6 8.1 5.3 6.7 7.0 7.7 -40bp 70bp
VMART 8.4 -7.5 -0.2 22.1 9.5 -1.1 6.1 19.6 8.9 -70bp -1070bp
Aggregate EBITDA margin (%) 7.5 1.8 5.0 9.5 8.5 4.4 7.6 8.4 8.3 -20bp -10bp
PAT (INR b)
ABFRL -1.5 -4.1 -1.9 0.6 -2.0 -3.5 0.1 1.9 -0.3 -83.7 NM
DMART 2.7 0.4 2.0 4.5 4.1 1.0 4.2 5.5 5.7 38.2 3.5
SHOP -1.3 -1.2 -1.0 -0.2 -0.4 -1.2 -0.0 0.5 0.0 LP -98.1
TRENT 0.0 -1.4 -0.5 0.8 0.6 -0.8 1.3 1.3 0.5 -13.5 -63.0
Rel. Retail 14.6 10.5 13.6 12.5 15.6 13.6 16.1 20.4 21.9 40.4 7.3
VMART -0.1 -0.3 -0.2 0.5 -0.0 -0.3 -0.1 0.6 -0.1 NM NM
Aggregate PAT (INR b) 14.5 3.9 12.0 18.7 18.0 8.8 21.4 30.3 27.7 54.3 -8.4
YoY growth (%) 1.9 -79.3 -37.1 -14.8 24.0 124.8 77.7 62.2 54.3
Source: Company, MOFSL

April 2022 190

 March 2022 Results Preview | Sector: Departmental Retail

Exhibit 5: Aggregate revenue growth (YoY %) Exhibit 6: Expected revenue growth for 4QFY22 (YoY %)
Aggregate revenue (INR b) YoY growth (%) 64.8
47.5
463.4 30.7

475.1
26.0 25.6 43.2 44.2
18.8
345.2

7.2
-2.2 31.6
-9.7 18.5 18.9

557.9

700.8
442.7

433.6

550.4

728.9
-22.1

ABFRL

TRENT

Rel retail

VMART
4QFY21

3QFY22
4QFY20

1QFY21

2QFY21

3QFY21

1QFY22

2QFY22

4QFY22E

DMART

SHOP
Source: Company, MOFSL Source: Company, MOFSL

Exhibit 7: Aggregate growth in gross profit (YoY %) Exhibit 8: Change in gross margin (YoY %)
Aggregate Gross Profit (INR b) 4QFY22E Gross Margin (%) Change in Gross Margin (bp)
Aggregate gross margin (%)
25.1 -140bps -90bps -70bps
23.9 24.5 25.5 25.2
20bps
16.7 17.2 16.5 -650bps
15.1
52.2 40.0
14.0 29.1
111.1

113.6

121.1

140.5

120.7

119.9

15.0 46.7
82.6

65.3

91.9

-1100bps
ABFRL

Rel. Retail
TRENT

VMART
DMART

SHOP
4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22E

Source: Company, MOFSL Source: Company, MOFSL

Exhibit 9: Aggregate EBITDA growth (margin, %) Exhibit 10: Aggregate PAT growth (YoY %)
Aggregate EBITDA (INR b)
Aggregate PAT (INR b) YoY growth (%)
Aggregate EBITDA margin (%)
9.5
8.5 8.4 8.3
7.5 7.6 124.8
18.7
14.5

12.0

77.7 62.2
3.9

5.0 54.3
4.4 24.0
6.1

1.9 -14.8
-37.1
1.8
18.0

21.4

30.3

-79.3 27.7
8.8
23.0

42.1
33.2

45.2

47.3

19.0

58.8

60.5

4QFY21
4QFY20

1QFY21

2QFY21

3QFY21

1QFY22

2QFY22

3QFY22

4QFY22E
2QFY21

2QFY22
4QFY20

1QFY21

3QFY21

4QFY21

1QFY22

3QFY22

4QFY22E

Source: Company, MOFSL Source: Company, MOFSL

April 2022 191

 March 2022 Results Preview | Sector: Departmental Retail

Exhibit 11: Retail coverage KPI snapshot

2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22E
Total store count
Madura EBOs 2,544 2,656 2,699 2,662 2,686 2,813 2,866 2,874 2,917 3,036 3,366
Pantaloons 331 343 342 342 339 344 346 342 347 361 391
DMART 189 196 214 216 220 221 234 238 246 263 284
Shoppers Stop 84 89 84 84 85 84 84 83 80 83 87
Westside 161 167 165 166 166 169 174 184 191 197 209
Zudio 62 74 80 84 88 101 133 137 147 177 203
V-Mart 239 257 266 266 264 274 279 282 368 374 378
Store additions
Madura EBOs 38 112 43 -37 24 127 53 8 43 119 330
Pantaloons 17 12 -1 0 -3 5 2 -4 5 14 30
DMART 5 7 18 2 4 1 13 4 8 17 21
Shoppers Stop 1 5 -5 0 1 -1 0 -1 -3 3 4
Westside 6 6 -2 1 0 3 5 10 7 6 12
Zudio 12 12 6 4 4 13 32 4 10 30 26
V-Mart 12 18 9 0 -2 10 5 3 86 6 4
Total store additions 91 172 68 -30 28 158 110 24 156 195 427
Source: Company, MOFSL

Exhibit 12: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Retail 158.3 91.5 69.5 19.1 16.5 14.1 12.1 18.1 20.3
Aditya Birla Fashion 299 Buy -1.6 2.1 2.9 -189.7 140.8 102.6 12.7 11.6 10.4 -6.8 8.6 10.7
Avenue Supermarts 4,107 Neutral 25.3 40.7 52.0 162.5 101.0 78.9 18.5 15.6 12.9 12.6 17.4 18.6
Barbeque Nation 1,259 Neutral -6.2 3.3 16.3 -201.5 377.9 77.3 9.8 9.5 8.5 -4.8 2.5 11.0
Devyani Intl. 173 Buy 1.3 2.9 3.3 132.0 60.4 52.9 28.5 19.2 14.0 37.3 38.0 30.7
Jubilant Foodworks 2,797 Buy 33.0 41.3 51.1 84.9 67.8 54.7 20.0 16.9 14.4 23.6 25.0 26.3
Restaurant Brands 112 Buy -1.7 0.4 1.5 -67.5 283.5 76.0 2.8 2.8 2.7 -4.1 1.0 3.5
Shoppers Stop 465 Neutral -6.6 15.0 16.1 -70.6 31.0 28.9 30.7 15.4 10.1 -35.7 66.2 42.1
Titan Company 2,517 Buy 24.0 29.4 38.8 105.0 85.6 64.8 26.1 23.2 21.0 26.5 28.7 34.0
Trent 1,295 Neutral 3.0 11.7 16.9 436 111 76.6 17.9 15.3 12.6 4.5 15.9 19.3
V-Mart Retail 3,832 Buy 3.2 53.5 83.6 1,183 72 45.8 8.3 7.5 6.4 0.7 11.0 15.1
Westlife Dev. 475 Neutral -0.7 4.2 7.8 -725.1 112.9 61.1 15.7 13.8 11.2 -2.1 13.0 20.3

April 2022 192

 March 2022 Results Preview | Sector: Departmental Retail

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL Coverage
Universe.

Avenue Supermarts Neutral

CMP: INR4,107 | TP: INR4,500 (+9.6%) EPS CHANGE (%): FY23|24: (1.7)|(3.4)
 Expect consolidated sales to grow by 18.5% YoY for 4Q.  Store additions have gathered pace in 2HFY22, with
 Expect EBITDA margin to improve to 8.5% in FY22E. DMART adding 21 stores in 4Q.

Consolidated quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 38,832 53,062 75,420 74,117 51,831 77,889 92,178 87,854 2,41,431 3,09,753
YoY Change (%) -33.2 -11.4 10.8 18.5 33.5 46.8 22.2 18.5 -2.9 28.3
Total Expenditure 37,714 49,767 68,529 67,990 49,589 71,204 83,513 79,018 2,24,000 2,83,324
EBITDA 1,118 3,295 6,891 6,127 2,242 6,686 8,665 8,837 17,431 26,429
YoY Change (%) -81.3 -36.3 15.5 46.8 100.6 102.9 25.7 44.2 -18.1 51.6
Depreciation 948 1,007 1,137 1,050 1,074 1,160 1,283 1,624 4,142 5,142
Interest 88 93 113 123 108 124 140 170 417 541
Other Income 506 522 453 481 315 275 260 470 1,962 1,319
PBT 588 2,717 6,094 5,436 1,374 5,677 7,502 7,513 14,835 22,065
Tax 187 732 1,625 1,297 420 1,499 1,976 1,793 3,840 5,688
Rate (%) 31.8 26.9 26.7 23.9 30.6 26.4 26.3 23.9 25.9 25.8
Reported PAT 401 1,985 4,470 4,139 954 4,178 5,525 5,720 10,994 16,377
Adj. PAT 401 1,985 4,470 4,139 954 4,178 5,525 5,720 10,994 16,377
YoY Change (%) -87.6 -38.5 16.4 53 137.9 110.4 23.6 38 -15 49
E: MOFSL estimates

ABFRL Buy
CMP: INR299 | TP: INR350 (+17%) EPS CHANGE (%): FY23|24: (34.3)|(29.3)
 Expect revenue to decline by 13% sequentially in 4QFY22,  Expect revenue from Madhura/Pantaloons to grow by
impacted by the Omicron COVID wave. 39%/37% in 4QFY22.
 Expect revenue from the Ethnic Wear segment to touch  Expect Madhura to add 330 EBO stores in 4QFY22.
INR3.4b in FY22.

Consolidated quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 3,230 10,281 20,762 18,216 8,120 20,543 29,871 26,083 52,489 84,617
YoY Change (%) -84.4 -55.4 -19.6 -0.6 151.4 99.8 43.9 43.2 -40.3 61.2
Total Expenditure 6,834 10,358 17,116 15,863 9,807 17,408 24,050 23,238 50,171 74,503
EBITDA -3,604 -76 3,646 2,353 -1,687 3,135 5,821 2,845 2,318 10,114
YoY Change (%) -214.8 -102.3 -10.7 56.6 -53.2 -4,203.8 59.7 20.9 -80.9 336.3
Depreciation 2,369 2,415 2,311 2,533 2,378 2,416 2,509 2,454 9,628 9,756
Interest 1,262 1,449 1,106 1,209 852 876 884 900 5,026 3,513
Other Income 1,785 1,432 570 177 243 252 243 84 3,963 822
PBT -5,449 -2,509 798 -1,212 -4,674 96 2,671 -425 -8,372 -2,332
Tax -1,346 -626 214 743 -1,156 37 727 -106 -1,015 -499
Rate (%) 24.7 25.0 26.8 -61.3 24.7 38.5 27.2 25.0 12.1 21.4
Reported PAT -4,104 -1,883 584 -1,955 -3,518 59 1,944 -319 -7,357 -1,833
Adj. PAT -4,104 -1,883 584 -1,955 -3,518 59 1,944 -319 -7,357 -1,833
YoY Change (%) -2,003.3 -944.6 -14.9 33.4 -14.3 -103.1 232.6 -83.7 2061.3 -75.1
E: MOFSL estimates

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 March 2022 Results Preview | Sector: Departmental Retail

Shoppers Stop Neutral

CMP: INR465 | TP: INR430 (-7.5%) EPS CHANGE (%): FY23|24: 0|0
 Expect revenue to grow by 19% YoY in 4QFY22.  Expect an addition of four new stores in 4QFY22 for
 Expect an addition of six stores in 4QFY22 for Beauty. Shoppers Stop. Total store count to reach 87 by Mar’22.
Total store count to reach 146 by Mar’22.  Expect margin to be hit sequentially due to the Omicron
COVID wave.

Standalone quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Revenue from Operations 539 2,924 7,076 6,712 2,011 6,316 9,513 7,979 17,251 25,819
YoY Change (%) -93.5 -65.4 -28.8 -5.4 272.9 116.0 34.4 18.9 -49.0 49.7
Total Expenditure 1,563 3,271 6,127 5,756 2,638 5,610 7,683 6,693 16,717 22,624
EBITDA -1,024 -347 949 956 -628 706 1,829 1,287 534 3,194
EBITDA Margin (%) -189.9 -11.9 13.4 14.2 -31.2 11.2 19.2 16.1 3.1 12.4
Depreciation 997 941 1,003 906 878 903 812 849 3,847 3,441
Interest 552 607 535 505 509 520 497 494 2,200 2,020
Other Income 1,040 631 310 207 641 676 146 69 2,188 1,531
PBT before EO expense -1,533 -1,265 -279 -248 -1,373 -41 666 13 -3,325 -735
PBT -1,533 -1,365 -279 -372 -1,523 -41 666 13 -3,549 -885
Tax -382 -342 -72 -1 -346 -10 164 3 -797 -189
Rate (%) 24.9 25.1 25.9 0.4 22.7 25.6 24.6 25.2 22.5 21.3
Reported PAT -1,151 -1,023 -207 -371 -1,178 -30 502 9 -2,752 -696
Adj. PAT -1,112 -1,123 -207 -247 -1,028 -30 502 9 -2,688 -546
YoY Change (%) -1,476.6 NM 296.7 -66.4 -7.6 -97.3 -342.3 -103.8 254.1 -79.7
E: MOFSL estimates

Trent Neutral
CMP: INR1,295 | TP: INR1,180 (-9%) EPS CHANGE (%): FY23|24: 0|0
 Expect revenue to grow by 64.8% YoY in 4QFY22, aided by  Expect Westside/Zudio to add 12/26 new stores in
strong store additions. 4QFY22.
 Expect EBITDA margin at 14.5% v/s 17.7% in 4QFY21.

Standalone quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 963 4,521 7,254 7,737 3,273 10,204 13,478 12,750 20,475 39,705
YoY Change (%) -87.4 -44.7 -16.6 7.0 239.8 125.7 85.8 64.8 -35.6 93.9
Total Expenditure 2,155 4,457 5,454 6,371 3,591 7,991 10,561 10,900 18,437 33,043
EBITDA -1,191 64 1,800 1,366 -318 2,213 2,917 1,850 2,038 6,662
EBITDA Margin (%) -123.7 1.4 24.8 17.7 -9.7 21.7 21.6 14.5 10.0 16.8
Depreciation 585 578 578 617 622 666 734 755 2,359 2,777
Interest 574 583 606 618 686 726 734 719 2,380 2,865
Other Income 529 364 426 724 523 949 296 282 2,042 2,050
PBT before EO expense -1,822 -733 1,042 855 -1,102 1,769 1,746 657 -658 3,070
Extra-Ord. expense 0 0 0 -63 0 -130 0 0 -63 -130
PBT -1,822 -733 1,042 792 -1,102 1,639 1,746 657 -721 2,940
Tax -428 -252 245 223 -265 383 417 165 -211 701
Reported PAT -1,395 -481 797 569 -838 1,256 1,329 492 -510 2,240
Adj. PAT -1,395 -481 797 614 -838 1,356 1,329 492 -465 2,339
YoY Change (%) -340.7 -225.6 42.9 2,231.9 -39.9 -381.9 66.8 -19.9 -130.1 -602.6
E: MOFSL estimates

April 2022 194

 March 2022 Results Preview | Sector: Departmental Retail

V-Mart Retail Buy

CMP: INR3,832 | TP: INR4,450 (+16%) EPS CHANGE (%): FY23|24: 0.1|0.1
 Expect a 27% QoQ decline in 4QFY22 revenue, impacted  Improvement in profitability in the ‘Unlimited’ segment,
by restrictions due to the Omicron COVID wave. through improved throughput, will be a key focus area.
 Expect EBITDA margin at 8.9% v/s 9.5% in 4QFY21.

Standalone quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 781 1,755 4,700 3,519 1,774 3,380 6,920 5,075 10,755 17,149
YoY Change (%) -82.8 -44.1 -16.4 5.8 127.3 92.6 47.2 44.2 -35.3 59.5
Total Expenditure 839 1,758 3,662 3,183 1,794 3,173 5,567 4,625 9,442 15,159
EBITDA -58 -3 1,038 336 -20 206 1,353 449 1,312 1,989
EBITDA margin (%) -7.5 -0.2 22.1 9.5 -1.1 6.1 19.6 8.9 12.2 11.6
Depreciation 263 257 254 256 255 272 404 403 1,030 1,334
Interest 146 147 150 146 156 169 212 215 589 752
Other Income 14 150 3 43 45 41 26 57 210 168
PBT -454 -257 637 -23 -385 -195 764 -113 -97 71
Tax -117 -68 158 -8 -98 -53 193 -29 -35 13
Rate (%) 25.8 26.3 24.9 35.6 25.4 27.3 25.2 25.4 35.8 18.0
Reported PAT -336 -190 479 -15 -287 -141 571 -84 -62 59
Adj. PAT -336 -190 479 -15 -287 -141 571 -84 -62 59
YoY Change (%) -291.1 5.1 -17.8 -82.5 -14.6 -25.4 19.3 469.1 -112.6 -194.5
E: MOFSL estimates

April 2022 195

 March 2022 Results Preview | Sector: Retail (Consumer Discretionary)

Retail (Consumer Discretionary)

Company name
Strong momentum in revenue to continue led by dine-in recovery
Barbeque Nation Hospitality Limited impact of Omicron. Outlook buoyant.
Devyani International
Jubilant FoodWorks
 We expect ~4% YoY aggregate revenue growth for TTAN, JUBI, DEVYANI, WLDL,
Restaurants Brand Asia
RBA and BARBEQUE in 4QFY22, primarily led by resumption of consumer mobility.
Titan Company
While the Omicron wave temporarily affected performance in Jan’22, there was
Westlife Development
subsequent bounce back. While most Restaurant players have raised prices to
beat the high commodity inflation, some impact on profitability can be expected
due to raw material inflation in 4QFY22.
 TTAN is expected to post a tepid quarter on the back of a weakness in the Jewelry
segment (declining 4% YoY in 4QFY22), led by: a) subdued activity in Jan’22 owing
to the Omicron wave, and b) higher gold prices in Mar’22 led by geopolitical
tensions. Notably, this decline comes on a strong base of 71% growth in 4QFY21
which was aided by a large B2B sale. Watches and Eyewear segments will also
deliver YoY growth of 12% and 5%, respectively. We expect TTAN’s overall sales to
decline 3% YoY to INR72.7b. With a healthy studded contribution, the quarter is
likely to see a gross margin expansion of 200bp YoY to 24.1%.
 Barring JUBI, all our coverage companies within the Food Service Industry (FSI) –
DEVYANI, WLDL, RBA and BARBEQUE – are likely to deliver strong double-digit
SSSG in their domestic businesses, led by: a) increased mobility driving
discretionary consumption, especially in the dine-in channel and at mall outlets,
and b) improved performance of the delivery channel v/s pre-COVID levels. JUBI’s
high focus on the delivery channel may lead to underperformance in 4QFY22 as
consumption trends are inclined towards out-of-home consumption. As
elaborated in our recent FSI thematic note, all Restaurant players will continue to
expand their store networks, given the improved opportunities after the lifting of
COVID-related restrictions. We expect a strong 48%/25%/15% sales growth YoY
for DEVYANI/WLDL/BARBEQUE. We expect RBA to post a 56% growth in the
domestic business in 4QFY22. We expect JUBI to continue its relative
underperformance in 4QFY22, with a low double-digit growth YoY. Recovery in
dine-in will significantly benefit DEVYANI, WLDL, and BARBEQUE, which have a
considerably high salience to the channel. With a strong revenue growth YoY, we
expect double-digit EBITDA growth for each of these players. However, high
commodity inflation may dampen it to some extent.

Aggressive expansion by branded players to continue

 Branded players, in both Jewelry and FSI, are seeing improved opportunities after
the lifting of COVID-related restrictions, due to: a) closure of smaller branded and
unorganized players during the pandemic, leading to market share gains, b) a shift
towards trusted brands, c) a pickup in in-home consumption and the delivery
channel, and d) adoption of technology by consumers benefitted larger players
(who invested in technology).
 We believe in the long-term potential and structural opportunity for all the
aforesaid players. We are bullish on TTAN, owing to expected gains from the
unorganized sector and continued strong wedding. We have a BUY rating on JUBI,

Krishnan Sambamoorthy – Research analyst ([Link]@[Link])

Research analyst: Dhairya Dhruv ([Link]@[Link]) / Kaiwan Jal Olia (Kaiwan.O@[Link])
 March 2022 Results Preview | Sector: Retail (Consumer Discretionary)

given its strong, unparalleled moats of delivery, value, and technology. We also
prefer DEVYANI owing to its strong growth outlook, robust fundamentals of KFC,
and turnaround potential in Pizza Hut. Our bullish stance on RBA is driven by its
multiple levers to unlock growth, supported by inexpensive valuations.

Exhibit 1: Summary of expected quarterly performance. Healthy YoY sales growth. Sequential decline led by strong festive
season demand in 3QFY22
CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Barbeque Nation 1259 Neutral 2,674 18.1 -6.7 526 15.6 -19.9 20 -69.4 -86.6
Devyani Intl. 173 Buy 6,399 47.7 2.5 1,518 35.8 2.7 640 338.2 -2.1
Jubilant Foodworks 2797 Buy 11,284 10.0 -5.5 2,934 17.7 -7.6 1,140 9.3 -17.1
Restaurant Brands Asia 112 Buy 3,059 56.0 9.3 430 75.5 30.9 -24 Loss Loss
Titan Company 2517 Buy 72,681 -3.0 -27.6 6,986 -14.5 -51.6 4,558 -19.8 -55.0
Westlife Development 475 Neutral 4,464 24.8 -6.4 636 36.1 -19.8 68 LP -67.3
Retail 2,40,302 15.7 -14.5 28,297 17.5 -31.7 12,221 32.8 -45.0

Exhibit 2: LTL sales growth for Tanishq at 31% in 3QFY22,

due to strong festive and wedding demand… Exhibit 3: …with strong volume growth

Tanishq- LTL Growth (%) 117 Jewelry volume Growth %

124
101
66
47 45 47
32 27 31 24 20 15
6 6 (3) 6
12 17 14 10 9 7 (14) (5) (20) (14)
2 2 (31)
(9) (9)
(18)
(81)

2QFY21
3QFY21
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21

4QFY21
1QFY22
2QFY22
3QFY22
1QFY20
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19

2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22

Source: Company, MOFSL Source: Company, MOFSL

Exhibit 4: Gold prices increase by an average 5.8% YoY and 4% QoQ in 4QFY22

YoY (%)
40.4%
34.0% 31.5%
26.0%
21.4% 22.1%
14.8%
7.6% 10.3%
4.5% 7.5% 3.7% 6.8% 4.0% 5.8%
0.4%

-2.7% -4.8%
-6.7% -8.0%
3QFY18

2QFY19

1QFY20

4QFY20

3QFY21

2QFY22
1QFY18

2QFY18

4QFY18

1QFY19

3QFY19

4QFY19

2QFY20

3QFY20

1QFY21

2QFY21

4QFY21

1QFY22

3QFY22

4QFY22

Source: Bloomberg, MOFSL

April 2022 197

 March 2022 Results Preview | Sector: Retail (Consumer Discretionary)

Exhibit 5: Expect strong SSSG performance by all restaurant players in 4QFY22

4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22E 4QFY22E
No. of stores
Domino's 1,335 1,354 1,264 1,314 1,360 1,380 1,435 1,495 1,550
McDonald's (WLDL) 319 320 311 304 305 305 310 316 330
KFC (Devyani) - - 214 240 264 284 309 339 364
Pizza Hut (Devyani) - - 258 273 297 317 351 391 417
Barbeque Nation 164 162 162 163 164 166 167 174 184
Restaurants Brands Asia 260 259 261 270 265 270 274 294 320

Net store additions

Domino's 10 19 -90 50 46 20 55 45 55
McDonald's (WLDL) 4 1 -9 -7 1 0 5 9 14
KFC (Devyani) - - - 26 24 20 25 25 25
Pizza Hut (Devyani) - - - 15 24 20 34 23 26
Barbeque Nation - -2 0 1 1 2 1 8 10
Restaurants Brands Asia 5 -1 2 9 -5 5 4 20 26

SSSG (%)
Domino's -3.4 -61.4 -20.0 -1.7 11.8 114.2 26.3 6.0 5.0
McDonald's (WLDL) -6.9 -54.0 -40.7 -24.0 10.5 183.0 83.7 30.0 22.0
KFC (Devyani) - - -51.6 -13.0 19.6 158.0 72.0 23.8 15.0
Pizza Hut (Devyani) - - -37.3 -11.0 13.4 216.1 73.5 24.7 20.0
Barbeque Nation -16.7 -95.8 -66.9 NA 19.9 960.0 184.0 42.7 13.0
Restaurants Brands Asia -5.4 -68.9 -48.6 -34.8 -4.9 270.0 140.0 65.0 40.0
Source: Companies, MOFSL

Exhibit 6: Three-months’ relative performance (%) Exhibit 7: One-year relative performance (%)

Nifty Index MOFSL Retail Index Nifty Index MOFSL Retail Index
102 168

99 150

96 132

93 114

90 96
Mar-22
Dec-21

Jan-22

Feb-22

Mar-21

Mar-22
Jun-21

Dec-21
Sep-21

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 8: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco
FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Retail 158.3 91.5 69.5 19.1 16.5 14.1 12.1 18.1 20.3
Barbeque Nation 1,259 Neutral -6.2 3.3 16.3 -201.5 377.9 77.3 9.8 9.5 8.5 -4.8 2.5 11.0
Devyani Intl. 173 Buy 1.3 2.9 3.3 132.0 60.4 52.9 28.5 19.2 14.0 37.3 38.0 30.7
Jubilant Foodworks 2,797 Buy 33.0 41.3 51.1 84.9 67.8 54.7 20.0 16.9 14.4 23.6 25.0 26.3
Restaurant Brands Asia 112 Buy -1.7 0.4 1.5 -67.5 283.5 76.0 2.8 2.8 2.7 -4.1 1.0 3.5
Titan Company 2,517 Buy 24.0 29.4 38.8 105.0 85.6 64.8 26.1 23.2 21.0 26.5 28.7 34.0
Westlife Dev. 475 Neutral -0.7 4.2 7.8 -725.1 112.9 61.1 15.7 13.8 11.2 -2.1 13.0 20.3

April 2022 198

 March 2022 Results Preview | Sector: Retail (Consumer Discretionary)

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

Barbeque Nation Hospitality Neutral

CMP: INR1,259 | TP: INR1,370 (+9%) EPS CHANGE (%): FY23|24: -|62.2
 Expect 13% SSSG with a continued recovery in dine-in.  Expect 10 additional Barbeque Nation stores in 4QFY22.
 Expect the recovery in dine-in to continue. Expect  Watch out for commentary on SSSG, delivery, and
delivery to drive incremental sales. extension kitchens.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
SSSG (%) -95.8 -66.9 -21.2 19.9 960.0 184.0 42.7 13.0 -44.3 67.3
No. of stores 162 162 163 164 166 167 174 184 164 184
Net Sales 98 761 1,948 2,263 1,020 2,209 2,867 2,674 5,071 8,769
YoY change (%) - - - 18.5 939.1 190.3 47.1 18.1 -40.1 72.9
Gross profit 30 473 1,278 1,508 600 1,450 1,886 1,738 3,288 5,674
Margin (%) 30.1 62.1 65.6 66.6 58.9 65.6 65.8 65.0 64.8 64.7
EBITDA -361 -42 412 455 -178 413 657 526 464 1,418
EBITDA growth (%) - - - 82.0 N/M N/M 59.6 15.6 -71.8 205.7
Margin (%) -367.6 -5.5 21.1 20.1 -17.5 18.7 22.9 19.7 9.1 16.2
Depreciation 306 301 313 291 289 304 340 375 1,212 1,308
Interest 222 224 217 186 166 153 172 195 849 686
Other Income 152 117 86 106 74 85 45 68 460 272
PBT -736 -451 -32 83 -559 41 190 25 -1,136 -303
Tax -131 -86 2 19 -120 10 44 5 -197 -61
Rate (%) 17.8 19.1 -5.4 23.0 21.5 24.9 23.2 20.0 17.3 20.2
Adjusted PAT -605 -365 -34 64 -439 31 146 20 -940 -242
YoY change (%) - - - N/M N/M L/P L/P L/P - -

Devyani International Buy

CMP: INR173 | TP: INR210 (+21%) EPS CHANGE (%): FY23|24: 1.9|1.7
 Expect KFC to deliver 45% sales growth, led by 15% SSSG  Expect Pizza Hut to deliver 62% sales growth, led by 20%
and 25 store additions. SSSG and 26 store additions.
 Higher mobility in 4QFY22 to benefit the dine-in business.  Watch out for commentary on ADS and delivery.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
KFC - No. of stores NA 214 240 264 284 309 339 364 264 364
PH - No. of stores NA 258 273 297 317 351 391 417 297 417
KFC - SSSG (%) NA -51.6 -13.0 19.6 158 72.0 23.8 15.0 -33.7 35.0
PH - SSSG (%) NA -37.3 -11.0 13.4 216.1 73.5 24.7 20.0 -30.3 53.5
Net Sales 927 2,299 3,791 4,331 3,528 5,161 6,244 6,399 11,348 21,331
YoY change (%) - - - - 280.6 124.4 64.7 47.7 -25.2 88.0
Gross Profit 649 1,559 2,603 3,091 2,511 3,664 4,457 4,512 7,902 15,144
Margin (%) 70.0 67.8 68.7 71.4 71.2 71.0 71.4 70.5 69.6 71.0
EBITDA -179 448 883 1,118 616 1,233 1,478 1,518 2,269 4,845
EBITDA growth (%) - - - - -444.6 175.5 67.5 35.8 -11.2 113.5
Margin (%) -19.3 19.5 23.3 25.8 17.4 23.9 23.7 23.7 20.0 22.7
Depreciation 580 658 514 543 482 526 558 598 2,295 2,163
Interest 312 422 493 301 324 328 296 318 1,528 1,266
Other Income 471 260 53 -144 47 52 39 49 641 186
PBT -599 -372 -71 129 -144 431 663 651 -913 1,601
Tax -4 -9 2 -17.0 0 6 9 11.4 -11 26
Rate (%) 0.7 2.4 -3.4 -13.1 0.2 1.3 1.4 1.7 1.2 1.6
Adjusted PAT -595 -363 -73 146 -143 425 654 640 -902 1,575
YoY change (%) - - - - N/M L/P L/P 338.2 - L/P

April 2022 199

 March 2022 Results Preview | Sector: Retail (Consumer Discretionary)

Jubilant FoodWorks Buy

CMP: INR2,797 | TP: INR3,650 (+30%) EPS CHANGE (%): FY23|24: -1.4|-1.3
 Expect 6.5% LFL growth on a high base.  Expect net addition of 55 Domino’s stores in 4QFY22.
 Price hikes in Dec’21 to aid margin in 4QFY22.  Watch out for commentary on the Sri Lanka business.
Standalone quarterly performance (INR m)
Y/E March FY21 FY22 Consolidated Consolidated
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE FY21 FY22E
No. of stores (Domino’s) 1,354 1,264 1,314 1,360 1,380 1,435 1,495 1,550 1,360 1,550
LFL growth (%) -61.5 -18.8 -0.2 13.7 120.4 29.4 7.5 6.5 -16.8 27.0
Net Sales 3,803 8,055 10,572 10,259 8,790 11,007 11,935 11,284 33,119 43,997
YoY change (%) -59.5 -18.5 -0.2 14.3 131.1 36.6 12.9 10.0 -15.7 32.8
Gross Profit 2,967 6,346 8,278 7,947 6,788 8,613 9,262 8,689 25,856 33,860
Gross margin (%) 78.0 78.8 78.3 77.5 77.2 78.2 77.6 77.0 78.1 77.0
EBITDA 241 2,147 2,786 2,492 2,115 2,860 3,174 2,934 7,712 11,224
EBITDA growth (%) -89.0 -8.7 9.9 47.0 778.7 33.2 13.9 17.7 -11.9 45.5
Margin (%) 6.3 26.7 26.4 24.3 24.1 26.0 26.6 26.0 23.3 25.5
Depreciation 908 1,030 876 858 890 902 1,006 1,050 3,754 4,021
Interest 419 412 405 370 418 416 446 480 1,627 1,805
Other Income 127 311 156 110 80 93 109 120 731 416
PBT -959 1,016 1,661 1,373 887 1,635 1,831 1,524 3,062 5,814
Tax -233 247 410 330 206 407 457 384 757 1,465
Rate (%) 24.3 24.3 24.7 24.0 23.2 24.9 25.0 25.2 24.7 25.2
Adjusted PAT -726 769 1,251 1,043 681 1,228 1,374 1,140 2,305 4,349
YoY change (%) P/L -13.0 20.6 130.7 L/P 59.6 9.8 9.3 -22.5 88.6

Restaurants Brand Asia Buy

CMP: INR112 | TP: INR150 (+34%) EPS CHANGE (%): FY23|24: -|-
 Burger King to deliver 56% YoY sales growth led by 40%  Resumption in mobility and complete easing of
SSSG and 26 store additions. restrictions to aid recovery in the dine-in channel and at
mall outlets.
 Higher mobility in 4QFY22 to benefit the dine-in business.  Watch out for commentary on BK Café and Stunner menu.
Quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
SSSG (%) -68.9 -48.6 -34.8 -4.9 270.0 140.0 65.0 40.0 -35.0 85.9
No. of stores 259 261 270 265 270 274 294 320 265 320
Net Sales 385 967 1,632 1,961 1,497 2,454 2,799 3,059 4,945 9,809
YoY change (%) -81.9 -54.0 -28.4 2.6 288.9 153.7 71.5 56.0 -41.2 98.4
Gross Profit 240 620 1,042 1,285 976 1,605 1,849 2,034 3,188 6,464
Margin (%) 62.3 64.2 63.9 65.6 65.2 65.4 66.1 66.5 64.5 65.9
EBITDA -250 3 152 245 15 256 328 430 150 1,029
EBITDA growth (%) P/L -98.7 -41.7 17.1 L/P 7,973.2 115.9 75.5 -85.6 586.6
Margin (%) -64.9 0.3 9.3 12.5 1.0 10.4 11.7 14.0 3.0 10.5
Depreciation 313 309 335 319 329 334 344 331 1,275 1,338
Interest 213 211 234 163 167 167 168 178 821 680
Other Income -15 139 127 34 37 43 32 56 285 167
PBT -791 -377 -290 -204 -444 -202 -152 -24 -1,662 -821
Tax 0 0 0 0 0 0 0 0 0 0
Rate (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted PAT -791 -377 -290 -204 -444 -202 -152 -24 -1,662 -821
YoY change (%) - - - - - - - - - -

April 2022 200

 March 2022 Results Preview | Sector: Retail (Consumer Discretionary)

Titan Company Buy

CMP: INR2,517 | TP: INR2,910 (+16%) EPS CHANGE (%): FY23|24: -10.1|-5.8
 4% decline in Jewelry over a strong base which had a large  Expect healthy growth of 11% in Watches and Eyewear
B2B order and higher gold prices in Mar’22. post lifting of lockdowns.
 Gross margin likely to expand YoY with improved studded  Watch out for outlook on store additions and demand.
share.
Consolidated Quarterly Performance (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 19.8 45.5 76.2 74.9 34.7 74.9 100.4 72.7 216.4 282.7
YoY change (%) -61.6 -2.3 16.7 59.1 75.5 64.6 31.7 -3.0 2.8 30.6
Gross Profit 4.3 14.2 17.2 16.6 7.8 18.8 25.4 17.5 52.3 69.4
Margin (%) 21.9 31.2 22.6 22.1 22.4 25.0 25.3 24.1 24.2 24.6
EBITDA -2.5 3.1 8.5 8.2 1.4 9.7 14.4 7.4 17.2 32.9
EBITDA growth % P/L -40.1 8.2 33.4 L/P 209.3 70.0 -9.0 -30.8 90.9
Margin (%) -12.8 6.9 11.1 10.9 3.9 12.9 14.4 10.2 8.0 11.6
Depreciation 0.9 0.9 1.0 0.9 1.0 1.0 1.0 1.0 3.8 4.0
Interest 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 2.0 2.1
Other Income 0.4 0.5 0.4 0.6 0.5 0.6 0.6 0.5 1.9 2.1
PBT -3.6 2.2 7.4 7.3 0.4 8.7 13.4 6.4 13.3 28.9
Tax -0.6 0.4 2.1 1.6 0.2 2.3 3.3 1.5 3.5 7.3
Rate (%) 17.9 20.2 28.5 22.2 53.8 26.2 24.7 23.2 26.5 25.2
Adjusted PAT -2.9 1.7 5.3 5.7 0.2 6.4 10.1 4.9 9.8 21.6
YoY change (%) P/L -44.6 7.5 65.5 L/P 268.4 90.9 -13.8 -35.4 120.7
E: MOSL Estimates

Westlife Development Neutral

CMP: INR475 | TP: INR490 (+3%) EPS CHANGE (%): FY23|24: -5.2|0.0
 Expect 22% SSSG in 4QFY22 driven by its omni-channel  Recovery in the dine-in channel to continue convenience
focus. channels will stay elevated v/s pre-COVID levels.
 Expect 14 new store additions in 4QFY22.  Watch out for commentary on price hikes.
Consolidated quarterly performance (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
SSSG (%) -54.0 -40.7 -24.0 10.5 183.0 83.7 44.0 22.0 -27.1 50.0
No. of McDonald's restaurants 320 311 304 305 305 310 316 330 305 330
Net Sales 939 2,095 3,251 3,576 2,592 3,854 4,768 4,464 9,860 15,678
YoY Change (%) -75.4 -47.2 -24.9 6.3 176.0 84.0 46.7 24.8 -36.3 59.0
Gross profit 533 1,331 2,136 2,378 1,695 2,495 3,165 2,906 6,377 10,261
Margin (%) 56.8 63.5 65.7 66.5 65.4 64.7 66.4 65.1 64.7 65.5
EBITDA -423 -13 437 468 25 444 793 636 469 1,899
YoY Change (%) -186.5 -102.2 -38.3 28.8 L/P L/P 81.4 36.1 -78.1 304.6
Margin (%) -45.0 -0.6 13.5 13.1 1.0 11.5 16.6 14.3 4.8 12.1
Depreciation 353 351 350 342 332 338 348 377 1,396 1,394
Interest 215 217 210 204 203 204 210 241 845 859
Other Income 182 146 82 33 64 40 43 50 443 196
PBT -809 -435 -40 -45 -446 -59 279 68 -1,329 -158
Tax -203 -109 0 19 -112 -15 70 0 -293 -56
Rate (%) N/M N/M N/M N/M N/M N/M 25.3 0.0 N/M 35.6
Adj. PAT -605 -325 -41 -65 -334 -44 208 68 -1,036 -102
YoY Change (%) P/L P/L P/L - - - - L/P -1,216.1 -90.2
Margin (%) -64.5 -15.5 -1.3 -1.8 -12.9 -1.1 4.4 1.5 -10.5 -0.6

April 2022 201

 March 2022 Results Preview | Sector: Others

Staffing
Quess Corp Growth to sustain; margins to be stable
Security & Intelligence
Services India
TeamLease Services Strong demand to propel growth in 4QFY22
 We expect our Staffing coverage universe to deliver sales/EBITDA/PAT growth of
25%/25%/11% YoY, respectively, in 4QFY22.
 We forecast strong topline as most of the industries have recovered from the
pandemic. Entertainment and retail should see good growth, while BFSI, e-
commerce and industrials are picking up due to PLI and Make in India initiatives.
 Temporary staffing would be another growth area due to an impressive demand
environment in this space.
 The demand from IT sector remains strong and is not likely to slow down in the
medium term.

QUESS to lead the sequential revenue growth trajectory

 QUESS is likely to lead the sequential revenue growth trajectory supported by
broad-based demand in general as well as specialized staffing.
 We forecast some moderation in headcount additions in 4QFY22.

Expect stable margins

 We anticipate the margin changes to hover in a narrow range (+20 to +40 bp)
QoQ. We further project margins to be flat YoY.
 Margin expansion will be muted in 4QFY22 due to substantial wage inflation
(especially for IT services), as well as other investments by the companies.

Valuation and view: Long-term outlook is positive

 The Staffing sector has already passed the peak of uncertainty as the economy
has opened up and witnessed a good rebound. The market shift to organized
players will be one of the key growth drivers. This makes staffing an attractive
play in the long term.
 We maintain our positive stance on the sector with a BUY rating on QUESS and
SIS and a Neutral rating on TEAM.

Exhibit 1: Expect revenue to grow 5.6% QoQ

Revenue (INR b) EBITDA (INR b)
Company 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%) 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%)
SIS 26.3 26.0 1.0 24.5 7.4 1.4 1.3 8.1 1.2 13.6
TeamLease 18.7 17.6 6.0 13.4 39.3 0.4 0.4 4.1 0.3 50.2
Quess 40.1 36.8 8.7 30.0 33.4 2.0 1.8 14.3 1.6 29.8
Aggregate 85.0 80.5 5.6 67.9 25.2 3.8 3.5 10.9 3.1 25.1
EBITDA margin (%) Adjusted PAT (INR b)
Company 4QFY22E 3QFY22 QoQ (bp) 4QFY21 YoY (bp) 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%)
SIS 5.3 5.0 40.0 5.0 30.0 0.8 1.0 -18.1 1.0 -19.4
TeamLease 2.1 2.1 - 1.9 20.0 0.4 0.3 16.5 0.3 31.4
Quess 5.1 4.9 20.0 5.2 -10.0 1.5 0.9 70.6 1.1 33.3
Aggregate 4.5 4.3 20.0 4.5 - 2.7 2.2 22.5 2.4 10.9
Source: Company, MOFSL

Mukul Garg - Research analyst ([Link]@[Link])

April 2022 1
Raj Prakash Bhanushali - Research analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Others

Exhibit 2: Change in estimates

Sector Revised EPS (INR) Earlier EPS (INR) Change (%)
FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
SIS 18.2 26.5 33.4 18.2 26.5 33.4 0.0 0.0 0.0
TeamLease 67.5 97.7 130.2 68.0 98.3 130.9 -0.7 -0.6 -0.5
Quess 23.1 45.3 56.9 23.1 45.3 56.9 0.0 0.0 0.0
Source: Company, MOFSL

Exhibit 3: Expected quarterly performance summary

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Quess Corp 699 Buy 40,066 33.4 8.7 2,043 29.8 14.3 1,510 33.3 70.6
SIS 508 Buy 26,262 7.4 1.0 1,402 13.6 8.1 824 129.4 8.0
Team Lease Serv. 4036 Neutral 18,678 39.3 6.0 392 50.2 4.1 352 31.2 16.5
Staffing 85,006 25.2 5.6 3,837 25.1 10.9 2,687 52.6 37.7
Source: Company, MOFSL

Exhibit 4: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Staffing 33.5 19.8 15.6 4.4 3.6 2.9 13.2 18.2 18.8
Quess Corp 699 Buy 23.1 45.3 56.9 30.2 15.4 12.3 2.9 2.4 1.9 13.8 22.4 22.6
SIS 508 Buy 18.2 26.5 33.4 27.9 19.2 15.2 1.7 1.4 1.2 13.9 17.2 18.1
Team Lease Serv. 4,036 Neutral 67.5 97.7 130.2 59.8 41.3 31.0 8.9 7.4 5.9 16.2 19.5 21.2
Source: Company, MOFSL

April 2022 203

 March 2022 Results Preview | Sector: Others

The tables below provide a snapshot of actual and estimated numbers for IT companies under the MOFSL coverage universe.
Highlighted columns indicate the quarter/financial year under review.

Quess Buy
CMP INR699| TP: INR850 (+21%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect sequential improvement in margins underpinned
 Expect strong topline growth to sustain in 4QFY22.
by strong growth.
 Growth to remain broad based across business lines.  Commentary on margins to be a key monitorable.

Consolidated quarterly performance

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 24,094 26,151 28,079 30,046 29,869 32,278 36,850 40,066 1,08,370 1,39,064
YoY Change (%) 0.5 -1.3 -4.8 0.3 24.0 23.4 31.2 33.4 -1.4 28.3
Total Expenditure 22,797 24,753 26,571 28,472 28,540 30,719 35,061 38,023 1,02,593 1,32,344
EBITDA 1,297 1,397 1,508 1,574 1,329 1,559 1,788 2,043 5,777 6,719
Margin (%) 5.4 5.3 5.4 5.2 4.4 4.8 4.9 5.1 5.3 4.8
Depreciation 594 578 562 551 497 486 494 500 2,285 1,978
EBIT 703 820 946 1,023 831 1,073 1,295 1,543 3,491 4,742
Margin (%) 2.9 3.1 3.4 3.4 2.8 3.3 3.5 3.9 3.2 3.4
Interest 379 323 245 166 218 195 184 180 1,113 777
Other Income 76 243 99 34 48 74 29 75 451 227
PBT before EO expense 399 740 800 890 662 952 1,140 1,438 2,829 4,192
Recurring Tax 178 318 345 -251 356 186 254 -72 590 724
Rate (%) 44.6 42.9 43.1 -28.2 53.7 19.5 22.3 -5.0 20.8 17.3
MI and P/L of Asso. Cos. 107 0 -1 8 0 0 0 0 114 -1
Adjusted PAT 114 423 456 1,133 306 766 885 1,510 2,125 3,468
Extraordinary items -250 -77 0 1,715 -140 354 0 0 1,388 214
Reported PAT 365 499 456 -582 446 412 885 1,510 738 3,254
YoY Change (%) -37.3 -23.2 -39.1 -90.8 22.4 -17.4 94.3 -359.6 -117.1 341.1
Margin (%) 1.5 1.9 1.6 -1.9 1.5 1.3 2.4 3.8 0.7 2.3

SIS Buy
CMP INR508| TP: INR670 (+32%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Expect strong growth aided by broad-based performance.  Outlook on the FM business would be a key monitorable.
 Expect margin to improve propelled by strong growth.

Consolidated quarterly earnings model

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 21,667 21,579 23,575 24,452 23,793 24,309 26,008 26,262 91,273 1,00,372
YoY Change (%) 7.9 3.3 8.2 10.7 9.8 12.7 10.3 7.4 7.6 10.0
Total Expenditure 20,459 20,282 22,106 23,219 22,580 23,079 24,711 24,860 86,065 95,230
EBITDA 1,209 1,297 1,469 1,233 1,214 1,231 1,297 1,402 5,208 5,142
Margin (%) 5.6 6.0 6.2 5.0 5.1 5.1 5.0 5.3 5.7 5.1
Depreciation 285 283 277 285 270 264 283 287 1,130 1,104
Interest 373 333 286 282 246 247 245 230 1,273 967
Other Income 48 84 75 73 39 26 35 80 279 181
PBT 599 765 982 739 738 745 804 965 3,085 3,252
Tax 200 268 299 387 212 112 38 145 1,154 507
Rate (%) 33.4 35.0 30.5 52.3 28.8 15.0 4.7 15.0 37.4 15.6
Minority Interest and P/L of Asso. Cos. -3 3 -2 7 -6 -8 -3 4 5 -13
Adjusted PAT 396 500 681 359 519 626 763 824 1,936 2,732
YoY Change (%) -47.2 -34.3 -13.0 -66.5 31.2 25.1 12.0 129.4 -42.5 41.1
Margin (%) 1.8 2.3 2.9 1.5 2.2 2.6 2.9 3.1 2.1 2.7

April 2022 204

 March 2022 Results Preview | Sector: Others

TeamLease Neutral
CMP INR4036 | TP: INR4040 (+0%) EPS CHANGE (%): FY22|23: -0.7|-0.6
 Topline would continue to be strong as most of the  Expect flattish margins due to wage inflation and other
sectors have already recovered. investments.
 Headcounts will continue to grow in double digits as the  Commentary on margins to be a key monitorable.
demand remains strong.

Consolidated quarterly performance

FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 11,364 11,291 12,754 13,405 13,768 15,236 17,621 18,678 48,815 65,302
YoY Change (%) -9.2% -10.9% -6% 1% 21.1% 34.9% 38% 39% -6.1% 34%
Total Expenditure 11,119 11,061 12,506 13,144 13,473 14,894 17,244 18,286 47,830 63,897
Reported EBITDA 246 230 248 261 295 342 377 392 985 1,406
Margin (%) 2.2% 2.0% 1.9% 1.9% 2.1% 2.2% 2.1% 2.1% 2.0% 2.2%
Reported EBIT 164 146 164 174 203 230 279 292 648 1,004
Margin (%) 1.4% 1.3% 1.3% 1.3% 1.5% 1.5% 1.6% 1.6% 1.3% 1.5%
Interest 26 19 12 12 8 14 10 15 69 47
Other Income 41 115 98 93 46 54 51 75 347 226
PBT before EO expense 179 243 250 255 240 270 319 352 926 1,182
Extra-Ord. expense 0 30 0 0 -26 750 0 0 30 724
Reported PBT 176 210 246 254 266 -480 319 352 885 458
Tax 5 24 15 -15 -3 14 17 0 29 28
Rate (%) 3% 11% 6% -6% -1% -3% 5% 0% 3% 6%
Reported PAT 171 186 231 196 269 -493 302 352 785 431
YoY Change (%) -9% -8% -9% -167% 57% -365% 31% 79% 124% -45%
Margin (%) 1.5% 1.6% 1.8% 1.5% 2.0% -3.2% 1.7% 1.9% 1.6% 0.7%
Adjusted PAT 171 216 231 268 243 257 302 352 887 1,155
YoY Change (%) -9% 7% -9% 40% 42% 19% 31% 31% 6% 30%
Margin (%) 1.5% 1.9% 1.8% 2.0% 1.8% 1.7% 1.7% 1.9% 1.8% 1.8%

April 2022 205

 March 2021 Results Preview | Sector: Technology

Technology
Coforge Focus on pricing as margin pressures continue to grow
Cyient
Demand remains strong, base effect playing out
HCL Tech.
 Our IT Services coverage universe should witness good median revenue growth
Infosys
in 4QFY22E (up 3.7% CC QoQ and 25.4% YoY), while EBIT/PAT growth of
L&T Infotech
2.3%/3.1% QoQ will be relatively muted due to an unseasonal dip in margin on
L&T Technology
continued supply pressures.
Mindtree
 Revenue commentary should remain strong in 4QFY22E, with no impact from
Mphasis the Russia-Ukraine war and inflation on demand. While Tier II players would
Persistent Systems continue to outgrow Tier I companies, the gap should start shrinking in 4QFY22.
TCS Revenue growth is expected to moderate QoQ in 4QFY22 as a high base effect
Tech Mahindra comes into play.
Wipro  Tier I companies should deliver revenue growth in a narrow range (2.8-5.1%
Zensar QoQ CC), with the exception of HCLT due to product seasonality, while Tier II
players will grow in a 2.5-8% range, excluding CYL, which will decline due to the
impact of the semiconductor shortage on the DLM business).
 We expect the demand outlook to remain strong in FY23, although the initial
guidance (INFO, HCLT, and LTTS) may bake in a potential impact on demand
from elevated inflation in the US and Europe. Companies will continue to post
strong growth numbers on the back of tailwinds for the industry on account of
Digital and Cloud transformation initiatives with enterprise clients. Hiring trends
in recent quarters indicate continued strength in demand with good visibility.
 Continued strong commentary and upward revision in guidance from ACN (up
7% in the last two quarters) suggests strength in the demand momentum.
 The commentary on margins, the impact of an upward price revision, and the
medium-term growth outlook will be key monitorables for 4QFY22E.
WPRO/PSYS to lead revenue growth within the Tier I/midcap space
 We expect Tier I IT organic revenue growth to be in a narrow band, with WPRO
leading with a revenue growth of 3.5% QoQ CC, followed by TCS/INFO at 3.3%/
3.1%. While TECHM is likely to deliver the highest reported growth (up 5.1%
QoQ CC), acquisitions will contribute half of that. HCLT will see muted growth at
1.1% QoQ CC due to P&P seasonality (Services growth of 4.3%).
 Among Tier II players, we expect good revenue traction at PSYS (8% QoQ CC),
although it will gain 250bp from recent acquisitions. MTCL/LTTS is expected to
grow by ~5%/4.5% QoQ CC in 4QFY22E.
Supply-side challenges remain an overhang on margins
 We may see muted margins on account of wage inflation and slower growth in
4QFY22. The same for Tier I companies will be in the -100bp to +10bp range.
The Tier II pack will operate in a wider range (-150bp to +130bp).
 Among Tier I players, we see a margin dip for TECHM/INFO to the tune of -80bp/
-50bp due to higher employee costs, while the same for others will be stable.
 In the Tier II pack, we expect CYL to see a significant margin dip of -150bp on
one-time SG&A costs, followed by LTI with a -90bp hit. COFORGE should see a
margin improvement of 130bp on a reversal of discounts.
 Attrition should remain at elevated levels and supply will continue to lag ever-
increasing demand. There may be some moderation in attrition starting FY23.

Mukul Garg - Research analyst ([Link]@[Link])

April 2021 1
Raj Prakash Bhanushali - Research analyst ([Link]@[Link])
 March 2021 Results Preview | Sector: Technology

 We see pricing flow through as a key monitorable over the next two quarters as
commentary from across the universe is indicating increased price comfort on
deals. This should start reflecting in FY23 revenue and will help companies to
offset some of the margin headwinds.
PAT growth to remain strong, despite margin pressures
 We expect our Tier I IT coverage universe to deliver a PAT growth of ~15% YoY
and ~3% QoQ. HCLT/TECHM/INFO is expected to report a PAT growth of
~39%/21%/20% YoY. TCS/WPRO should report a PAT growth of ~9%/~4% on a
YoY basis due to margin compression.
 Tier II players are expected to report a robust PAT growth (~31% YoY and ~4%
QoQ), driven by strong revenue growth (and margin expansion for a few
names), but partially offset by lower EBIT margins. COFORGE/LTTS/MTCL is
expected to lead the Tier II pack in terms of YoY PAT growth, while ZENT will see
flattish trends after seeing a dip in 3QFY22.
Valuation and view: Prefer INFO/HCLT/LTTS
 While valuations remain elevated, we remain positive on a good demand
environment and a sustainable double-digit revenue growth in the medium
term. We see continued strength in demand, led by: 1) increased deals on a full-
scale Digital transformation, 2) upward price revisions, and 3) higher spends on
Cloud migration by large corporates.
 Continuation of the strong sequential growth momentum and expectation of a
qualitative commentary on growth for FY23 should help sustain the rally in IT
stocks, despite their premium valuations.
 We prefer Tier I players over their Tier II counterparts, given their relative
valuation attractiveness and tendency to narrow down the valuation differential
over time. Among Tier I players, we prefer INFO, HCLT, and TCS. We expect INFO
to deliver a top quartile growth, backed by strong deal wins and price revision.
HCLT is one of the key beneficiaries of Cloud adoption at scale, given its
expertise in IMS. TCS remains best positioned to benefit from the long term
structural tailwinds in Tech Services and should see a relative pickup in growth
as the base effect and increased aggression aid it.
 Among Tier II IT, we prefer LTTS and ZENT. We expect LTTS to deliver strong
growth over the medium term, led by robust demand for ER&D services. ZENT
remains a high confidence play on a business recovery due to a change in the
management and the adoption of a new strategy, though there are huge margin
headwinds in the near term.
Exhibit 1: Expect Tier I revenue (USD) to grow by ~3% QoQ
Revenue (USD m) Revenue (INR b)
Company 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%) 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%)
TCS 6,726 6,524 3.1 5,989 12.3 506 489 3.5 437 15.7
INFO 4,369 4,250 2.8 3,613 20.9 329 319 3.1 263 24.9
WPRO 2,728 2,640 3.3 2,152 26.7 207 203 1.9 162 27.4
HCLT 3,007 2,978 1.0 2,696 11.5 226 223 1.3 196 15.1
TECHM 1,609 1,534 4.9 1,330 21.0 121 115 5.7 97 24.4
Tier I aggregate 18,439 17,925 2.9 15,780 16.9 1,389 1,348 3.0 1,156 20.1
EBIT margin (%) Adjusted PAT (INR b)
Company 4QFY22E 3QFY22 QoQ 4QFY21 YoY 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%)
TCS 25.1 25.0 10.0 26.8 -170.0 101 98 3.1 93 8.9
INFO 23.0 23.5 -50.0 24.5 -150.0 61 58 4.5 51 19.8
WPRO 17.5 17.5 10.0 21.0 -350.0 31 30 4.6 30 4.4
HCLT 18.1 19.0 -100.0 16.6 150.0 33 35 -3.3 24 39.1
TECHM 14.0 14.8 -80.0 16.5 -240.0 14 14 2.9 12 20.8
Tier I aggregate 21.4 21.7 -30.0 22.9 -150.0 241 234 2.7 209 15.0

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Exhibit 2: Expect Tier II revenue (USD) to grow by 4% QoQ

Revenue (USD m) Revenue (INR b)
Company 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%) 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%)
LTI 576 553 4.2 447 28.8 43 41 4.8 33 32.6
LTTS 235 225 4.4 198 19.0 18 17 4.7 14 22.7
MTCL 383 366 4.6 288 33.0 29 28 4.8 21 36.7
MPHL 429 414 3.7 342 25.4 32 31 4.3 25 28.9
COFORGE 230 222 3.7 172 33.3 17 17 4.0 13 36.6
PSYS 215 199 7.9 153 40.6 16 15 8.3 11 45.1
ZENT 151 147 2.7 120 25.7 11 11 3.1 9 29.6
CYL 155 158 -1.6 150 3.6 12 12 -1.3 11 6.8
Tier II aggregate 2,375 2,284 4.0 1,871 27.0 179 171 4.4 137 30.6
EBIT margin (%) Adjusted PAT (INR b)
Company 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%) 4QFY22E 3QFY22 QoQ (%) 4QFY21 YoY (%)
LTI 17.1 17.9 -90.0 19.4 -230.0 6.3 6.1 2.2 4.9 28.2
LTTS 19.0 18.6 40.0 16.6 240.0 2.7 2.5 10.5 1.9 41.3
MTCL 18.7 19.2 -50.0 18.6 20.0 4.4 4.4 1.1 3.2 39.4
MPHL 14.9 15.2 -30.0 16.2 -130.0 3.9 3.6 7.7 3.2 21.5
COFORGE 16.4 15.1 130.0 13.6 280.0 2.3 2.0 11.7 1.4 58.9
PSYS 13.5 14.0 -50.0 13.2 30.0 1.9 1.8 5.9 1.4 35.6
ZENT 10.3 10.1 30.0 14.8 -450.0 0.9 0.9 0.5 0.9 -0.1
CYL 12.4 13.9 -150.0 12.6 -20.0 1.2 1.3 -6.4 1.1 11.3
Tier II aggregate 16.0 16.3 -30.0 16.5 -50.0 23.6 22.6 4.4 18.0 30.9
Source: Company, MOFSL

Exhibit 3: Growth cooling off due to base effect

USD Revenue Growth Tier I USD Revenue Growth Tier II

10%
5%
0%
-5%
-10%
2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22E
Source: MOFSL, Company

Exhibit 4: Moderation in Tier I margins higher than that of Tier II

EBIT Margins Tier I EBIT Margins Tier II

25%
20%
15%
10%
5%
0%
4QFY20

1QFY21

2QFY21
2QFY20

3QFY20

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

Source: MOFSL, Company

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Exhibit 5: Cross-currency growth and impact on expectations for 4QFY22 (%)

CC USD growth USD growth Cross-currency
QoQ (%) QoQ (%) impact (bp)
TCS 3.3 3.1 -20
INFO 3.1 2.8 -20
WPRO 3.5 3.3 -20
HCLT 1.1 1.0 -10
TECHM 5.1 4.9 -20
LTI 4.4 4.2 -10
LTTS 4.5 4.4 -10
MTCL 4.8 4.6 -10
MPHL 3.8 3.7 -10
COFORGE 3.7 3.7 -
PSYS 8.0 7.9 -10
ZENT 2.5 2.7 20
CYL -1.3 -1.6 -30
Source: Company, MOFSL

Exhibit 6: 4QFY22 currency highlights (INR)

Rates (INR) Change (QoQ)
USD EUR GBP AUD USD EUR GBP AUD
Average 75.20 84.98 100.77 54.90 -0.53% -0.61% -0.48% 0.27%
Closing 75.93 84.55 99.62 56.83 2.03% 0.45% -0.67% 5.22%
Source: Bloomberg, MOFSL

Exhibit 7: 4QFY22 currency highlights (USD)

Rates (USD) Change (QoQ)
EUR GBP AUD EUR GBP AUD
Average 1.13 1.34 0.73 -0.88% -0.74% 0.00%
Closing 1.12 1.31 0.75 -1.22% -2.67% 4.21%
Source: Bloomberg, MOFSL

Exhibit 8: Relative performance – three-months (%) Exhibit 9: Relative performance – one-year (%)

Nifty Index MOFSL Technology Index Nifty Index MOFSL Technology Index
140
103

120
97

91 100

85 80
Dec-21

Jan-22

Feb-22

Mar-22

Jun-21
Mar-21

Sep-21

Dec-21

Mar-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

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Exhibit 10: Changes in our estimates

Revised EPS (INR) Earlier EPS (INR) Change (%)
FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
TCS 104 121 138 105 125 141 -1 -3 -2
INFO 53 64 75 54 66 77 -1 -3 -2
WPRO 22 24 28 22 24 28 -0 -1 -0
HCLT 49 57 67 49 58 68 -0 -1 -1
TECHM 62 71 84 63 72 84 -1 -1 -1
LTI 130 161 195 132 165 199 -1 -2 -2
LTTS 92 116 138 94 119 143 -2 -3 -4
MTCL 98 116 139 99 117 140 -1 -1 -0
MPHL 76 95 114 76 96 115 -0 -1 -0
COFORGE 111 150 182 112 152 183 -1 -2 -1
PSYS 89 112 136 90 112 136 -0 -0 0
ZENT 17 20 25 17 21 26 -1 -4 -4
CYL 45 53 62 47 56 65 -3 -5 -4
Source: Company, MOFSL

Exhibit 11: Expected quarterly performance summary

Companies CMP Sales (INR b) EBIT (INR b) Adjusted net profit (INR b)
Variance Variance Variance Variance Variance Variance
(INR) Rating Mar’22E YoY (%) QoQ (%) Mar’22E YoY (%) QoQ (%) Mar’22E YoY (%) QoQ (%)
TCS 3,757 Buy 505.8 15.7 3.5 127.2 8.4 3.9 101.1 8.9 3.1
INFO 1,902 Buy 328.6 24.9 3.1 75.6 17.4 1.1 60.8 19.8 4.5
WPRO 601 Neutral 207.0 27.4 1.9 36.3 6.3 2.3 31.1 4.4 4.6
HCLT 1,169 Buy 226.1 15.1 1.3 40.9 25.6 -3.9 33.4 39.1 -3.3
TECHM 1,487 Neutral 121.0 24.4 5.7 17.0 6.0 0.1 14.2 20.8 2.9
LTI 6,173 Neutral 43.3 32.6 4.8 7.4 16.9 -0.4 6.3 28.2 2.2
LTTS 5,117 Buy 17.7 22.7 4.7 3.4 40.7 7.0 2.7 41.3 10.5
MTCL 4,249 Neutral 28.8 36.7 4.8 5.4 38.1 2.1 4.4 39.4 1.1
MPHL 3,347 Buy 32.3 28.9 4.3 4.8 18.7 2.3 3.9 21.5 7.7
COFORGE 4,407 Neutral 17.2 36.6 4.0 2.8 64.3 12.9 2.3 58.9 11.7
PSYS 4,721 Neutral 16.2 45.1 8.3 2.2 49.0 4.7 1.9 35.6 5.9
ZENT 377 Buy 11.4 29.6 3.1 1.2 -9.6 5.8 0.9 -0.1 0.5
CYL 922 Buy 11.7 6.8 -1.3 1.4 4.8 -11.7 1.2 11.3 -6.4
Sector aggregate (INR b) 1,567 21.2 3.1 326 13.4 1.7 264 16.3 2.8
Source: Company, MOFSL

Exhibit 12: Comparative valuation

EPS EPS Dividend
CMP M-cap (INR) CAGR (%) yield (%) P/E (x) RoE (%)
Company (INR) (INR b) FY22E FY23E FY24E FY22-24E FY22E FY22E FY23E FY24E FY22E FY23E FY24E
CYL 922 10,169 45.1 53.4 62.3 17.5 2.4 20.4 17.3 14.8 16.7 18.9 20.0
HCLT 1,169 3,172 48.8 56.7 66.7 16.9 3.1 23.9 20.6 17.5 21.3 24.0 27.4
INFO 1,902 8,003 53.1 64.5 75.5 19.2 2.1 35.8 29.5 25.2 30.7 37.9 42.2
LTI 6,173 1,08,194 130.2 161.2 194.6 22.3 0.8 47.4 38.3 31.7 28.6 29.7 30.0
LTTS 5,117 53,998 91.8 115.7 138.2 22.7 0.6 55.7 44.2 37.0 25.8 27.7 28.2
MTCL 4,249 70,035 98.3 116.2 139.1 19.0 1.0 43.2 36.6 30.5 34.0 33.4 33.3
MPHL 3,347 62,862 75.9 95.1 114.3 22.7 1.4 44.1 35.2 29.3 21.1 24.2 26.2
COFORGE 4,407 26,839 110.6 149.9 182.3 28.4 1.0 39.8 29.4 24.2 25.8 29.7 30.2
PSYS 4,721 36,079 89.5 112.0 136.3 23.4 0.6 52.8 42.1 34.6 22.6 24.0 24.6
TCS 3,757 13,897 104.0 121.4 138.3 15.3 2.1 36.1 31.0 27.2 43.3 47.8 51.3
TECHM 1,487 1,445 61.8 71.3 83.5 16.3 2.1 24.1 20.9 17.8 20.8 21.6 22.6
WPRO 601 3,297 21.9 24.2 27.6 12.3 3.1 27.4 24.9 21.8 22.1 24.0 27.6
ZENT 377 8,519 16.6 20.0 25.4 23.5 1.8 22.6 18.8 14.9 15.2 16.7 19.3
Source: Company, MOFSL

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The tables below provide a snapshot of actual and estimated numbers for IT companies under the MOFSL coverage universe.
Highlighted columns indicate the quarter/financial year under review.

Coforge Neutral
CMP INR4407| TP: INR4740 (8%) EPS CHANGE (%): FY22|23: 0.1|-1.6
 There is no weakness in demand and growth should  The supply-side scenario is extremely challenging.
continue to remain strong in 4QFY22. Margin may improve, despite that guided by the
management in 3QFY22.
 BFS, in particular, will be good for the company.  Its FY23 guidance will be a key monitorable.

Quarterly performance (Ind AS)

Y/E March FY21 FY22 FY21 FY22E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Rev. (USD m) 140 155 161 172 200 213 222 230 628 864
QoQ (%) -9.4 10.2 4.1 7.2 15.8 6.6 4.1 3.7 5.9 37.6
Revenue (INR m) 10,570 11,537 11,906 12,615 14,616 15,694 16,581 17,238 46,628 64,129
YoY (%) 10.1 11.1 10.9 13.7 38.3 36.0 39.3 36.6 11.5 37.5
GPM (%) 31.5 32.6 32.0 32.0 29.9 32.1 32.4 34.0 32.0 32.2
SGA (%) 14.4 13.8 14.0 14.0 13.7 13.5 12.9 13.3 14.0 13.3
EBITDA (INR m) 1,686 2,048 2,009 2,168 2,229 2,788 3,068 3,413 7,911 11,498
EBITDA margin (%) 16.0 17.8 16.9 17.2 15.3 17.8 18.5 19.8 17.0 17.9
EBIT (INR m) 1,221 1,588 1,547 1,719 1,705 2,190 2,502 2,825 6,075 9,222
EBIT margin (%) 11.6 13.8 13.0 13.6 11.7 14.0 15.1 16.4 13.0 14.4
Other income 48 -63 19 109 52 -77 -122 86 113 -61
ETR (%) 20.5 19.9 21.1 22.3 18.2 21.1 15.1 22.5 21.0 19.4
Minority Interest -30.0 -15.0 -15.0 -44.0 -76.0 -148.0 -135.0 -150.0 -104.0 -509.0
Adj. PAT 979 1,207 1,220 1,376 1,361 1,519 1,885 2,106 4,782 6,871
QoQ (%) -22.5 23.3 1.1 12.8 -1.1 11.6 24.1 11.7
YoY (%) -4.2 1.0 -1.1 8.9 39.0 25.8 54.5 53.1 1.4 43.7
Adj. EPS (INR) 15.7 19.9 19.8 22.3 21.9 24.5 30.4 33.9 77.4 110.6

Cyient Buy
CMP INR922 | TP: INR1120 (+22%) EPS CHANGE (%): FY22|23: -3.2|-4.7
 Expect a muted 4QFY22 for CYL. Revenue will decline by 1-  Expect margin to dip by over 100-150bp on account of
2%. Services will grow by 1% QoQ. some non-recurring SG&A expenses.
 DLM will see a 12% QoQ decline in 4QFY22 due to the  The impact of the semiconductor shortage on CLM growth
semiconductor shortage. The same will rebound in FY23. in FY23 and normalization of the Rail vertical will be key
monitorables.
Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 131 135 141 150 144 150 158 155 557 607
QoQ (%) -12.5 3.4 4.7 6.0 -4.3 4.6 5.2 -1.6 -10.9 9.0
Revenue (INR m) 9,917 10,033 10,443 10,932 10,582 11,116 11,834 11,680 41,325 45,212
YoY (%) -8.9 -13.4 -5.6 1.8 6.7 10.8 13.3 6.8 -6.7 9.4
GPM (%) 30.5 35.7 34.6 36.0 35.9 38.4 36.3 36.0 34.3 36.7
SGA (%) 20.5 19.9 18.8 18.9 18.2 19.8 18.4 19.5 19.5 19.0
EBITDA 995 1,589 1,650 1,873 1,878 2,074 2,128 1,927 6,107 8,007
EBITDA margin (%) 10.0 15.8 15.8 17.1 17.7 18.7 18.0 16.5 14.8 17.7
EBIT 511 1,105 1,165 1,382 1,388 1,557 1,641 1,448 4,163 6,034
EBIT margin (%) 5.2 11.0 11.2 12.6 13.1 14.0 13.9 12.4 10.1 13.3
Other income 575 -14 83 40 147 58 105 187 684 497
ETR (%) 25.0 23.1 23.6 22.2 25.1 25.0 24.6 24.6 23.4 24.8
Adj. PAT 814 839 954 1,107 1,150 1,212 1,316 1,232 3,714 4,911
QoQ (%) 8.1 3.1 13.7 16.0 3.9 5.4 8.6 -6.4
YoY (%) -9.9 -14.9 -11.9 47.0 41.3 44.4 37.9 11.4 -0.3 32.2
EPS (INR) 7.4 7.6 8.7 10.1 10.5 11.1 12.1 11.3 33.8 45.1

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HCL Technologies Buy

CMP INR1169| TP: INR1530 (+31%) EPS CHANGE (%): FY22|23: 0.8|-0.6
 Margin in Services should improve from 3QFY22 levels,
 Expect 4QFY22E to be modest due to P&P seasonality
but lower P&P margin will drag down overall profitability
(1%QoQ revenue growth).
by 90bp.
 Expect its core Services business to maintain its strong  Outlook on Services and the P&P business in FY23 will be
growth momentum (4.3% QoQ CC growth). key monitorables.
Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 2,356 2,507 2,617 2,696 2,720 2,791 2,978 3,007 10,175 11,495
QoQ (%) -7.4 6.4 4.4 3.0 0.9 2.6 6.7 1.0 2.4 13.0
Revenue (INR b) 178 186 193 196 201 207 223 226 754 857
YoY (%) 8.6 6.1 6.4 5.7 12.5 11.1 15.7 15.1 6.7 13.6
GPM (%) 39.9 41.2 42.0 36.5 39.2 38.2 37.6 37.0 39.9 38.0
SGA (%) 12.4 12.7 12.0 12.6 12.8 13.0 12.4 12.8 12.4 12.8
EBITDA 46 50 54 44 49 49 53 51 193 201
EBITDA margin (%) 25.6 26.6 28.2 22.2 24.5 23.5 23.6 22.6 25.6 23.5
EBIT 37 40 44 33 39 39 43 41 153 162
EBIT margin (%) 20.5 21.6 22.9 16.6 19.6 19.0 19.0 18.1 20.4 18.9
Other income 2 1 1 2 2 2 2 2 7 8
ETR (%) 24.0 24.1 24.1 30.2 21.7 20.5 22.4 22.5 25.4 21.8
Adjusted PAT 29 31 34 24 32 33 34 33 119 133
QoQ (%) -7.3 7.5 9.2 -30.5 34.7 1.5 5.5 -3.3
YoY (%) 31.7 18.5 13.0 -24.3 10.0 3.9 0.3 39.5 7.4 11.5
EPS 10.8 11.6 12.6 8.8 11.8 12.0 12.7 12.3 43.8 48.8

Infosys Buy
CMP INR1902| TP: INR2260 (+19%) EPS CHANGE (%): FY22|23: -1.3|-2.9
 Expect some moderation in growth as a high base in 3Q  Expect an impact on margin on account of higher than
will play out in 4QFY22. normal visa costs and supply-side challenges.
 Expect the order book and demand commentary to  Initial guidance on FY23 revenue growth remains a key
remain strong. monitorable. We expect a low teen guidance.
Quarterly performance (IFRS)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 3,121 3,312 3,516 3,613 3,782 3,998 4,250 4,369 13,562 16,399
QoQ (%) -2.4 6.1 6.2 2.8 4.7 5.7 6.3 2.8 6.1 20.9
Revenue (INR m) 237 246 259 263 279 296 319 329 1,005 1,222
YoY (%) 8.5 8.6 12.3 13.1 17.9 20.5 22.9 24.9 10.7 21.6
GPM (%) 33.6 35.8 35.3 34.8 33.7 33.1 32.8 32.7 34.9 33.0
SGA (%) 10.9 10.5 9.9 10.3 10.0 9.5 9.3 9.7 10.4 9.6
EBITDA 61 71 74 73 74 79 84 85 279 323
EBITDA margin (%) 25.9 28.8 28.6 27.6 26.6 26.6 26.5 26.0 27.8 26.4
EBIT 54 62 66 64 66 70 75 76 246 286
EBIT margin (%) 22.7 25.3 25.4 24.5 23.7 23.6 23.5 23.0 24.5 23.4
Other income 4 5 6 5 6 5 5 7 20 22
ETR (%) 26.2 28.0 27.1 26.8 27.5 27.1 26.7 26.0 27.0 26.8
PAT 42 48 52 51 52 54 58 61 194 225
QoQ (%) -1.7 14.0 7.3 -2.3 2.3 4.4 7.2 4.5
YoY (%) 11.9 20.6 16.6 17.5 22.3 11.9 11.8 19.6 16.7 16.2
EPS (INR) 10.0 11.4 12.2 11.9 12.2 12.9 13.8 14.4 45.5 53.1

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LTI Neutral
CMP INR6173| TP: INR6420 (4%) EPS CHANGE (%): FY22|23: -1.3|-2.3
 Sequential revenue growth should moderate to a low  The Manufacturing vertical may see some drag in 4QFY22.
single-digit from a high single-digit.
 Slight dip in utilization and higher employee cost will lead  Commentary around the deal pipeline and wins remain a
to a 50-100bp margin hit. key monitorable.
Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 390 405 428 447 470 509 553 576 1,670 2,109
QoQ (%) -4.8 3.6 5.8 4.6 5.1 8.3 8.6 4.2 9.5 26.3
Revenue (INR m) 29,492 29,984 31,528 32,694 34,625 37,670 41,376 43,347 1,23,698 1,57,018
YoY (%) 18.7 16.6 12.2 8.5 17.4 25.6 31.2 32.6 13.7 26.9
GPM (%) 32.5 34.8 35.0 32.0 31.0 31.0 31.0 30.7 33.6 30.9
SGA (%) 12.4 12.0 11.7 10.1 12.3 11.5 10.9 11.4 11.5 11.5
EBITDA 5,920 6,856 7,320 7,155 6,478 7,332 8,311 8,350 27,251 30,471
EBITDA margin (%) 20.1 22.9 23.2 21.9 18.7 19.5 20.1 19.3 22.0 19.4
EBIT 5,139 5,957 6,501 6,329 5,682 6,482 7,426 7,396 23,926 26,987
EBIT margin (%) 17.4 19.9 20.6 19.4 16.4 17.2 17.9 17.1 19.3 17.2
Other income 450 174 492 268 1,039 938 811 954 1,384 3,742
ETR (%) 25.5 25.5 25.8 25.9 26.1 25.6 25.6 25.0 25.7 25.6
Adj. PAT 4,164 4,568 5,192 4,886 4,968 5,517 6,125 6,262 18,810 22,872
QoQ (%) -2.6 9.7 13.7 -5.9 1.7 11.1 11.0 2.2
YoY (%) 17.1 26.8 37.8 14.3 19.3 20.8 18.0 28.2 23.7 21.6
EPS (INR) 23.7 26.0 29.5 31.0 28.3 31.4 34.9 35.6 107.0 130.2

LTTS Buy
CMP INR5117| TP: INR5800 (+13%) EPS CHANGE (%): FY22|23: -0.1|-0.4
 Expect strong growth as the demand environment  Supply scenario should start normalizing in 4QFY22.
remains favorable.
 Expect EBIT margin to expand QoQ to 19%.  Commentary around deal wins and its FY23 guidance
remains key monitorables.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 171 178 190 198 206 217 225 235 737 883
QoQ (%) -12.5 4.1 6.8 3.9 4.2 5.7 3.5 4.4 -6.3 19.9
Revenue (INR m) 12,947 13,138 14,007 14,405 15,184 16,077 16,875 17,674 54,497 65,810
YoY (%) -3.9 -6.3 -1.6 -0.4 17.3 22.4 20.5 22.7 -3.0 20.8
GPM (%) 26.8 30.1 30.8 32.3 33.4 33.3 33.7 34.2 30.1 33.7
SGA (%) 10.9 12.4 11.1 11.9 12.4 11.6 12.0 12.1 11.6 12.0
EBITDA 2,059 2,328 2,756 2,931 3,177 3,493 3,675 3,911 10,074 14,256
EBITDA margin (%) 15.9 17.7 19.7 20.3 20.9 21.7 21.8 22.1 18.5 21.7
EBIT 1,567 1,801 2,132 2,391 2,623 2,964 3,144 3,363 7,891 12,094
EBIT margin (%) 12.1 13.7 15.2 16.6 17.3 18.4 18.6 19.0 14.5 18.4
Other income 30 457 374 221 334 180 259 353 1,082 1,126
ETR (%) 26.0 26.4 25.4 25.2 26.6 26.6 26.7 26.0 25.7 26.4
PAT 1,173 1,655 1,861 1,945 2,162 2,300 2,488 2,748 6,634 9,698
QoQ (%) -42.7 41.1 12.4 4.5 11.2 6.4 8.2 10.5
YoY (%) -42.4 -19.6 -8.8 -5.0 84.3 39.0 33.7 41.3 -19.0 46.2
EPS (INR) 11.1 15.7 17.6 18.4 20.4 21.8 23.6 26.0 62.8 91.8

April 2021 213

 March 2021 Results Preview | Sector: Technology

Mindtree Neutral
CMP INR4249 | TP: INR4310 (1%) EPS CHANGE (%): FY22|23: -0.5|-0.9
 Expect strong growth across all verticals, led by BFS and  Expect some margin pressure due to salary hikes and
TTH. retention costs. Attrition to remain elevated.
 Expect strong order book and demand patterns.  Outlook on deal wins, top client, and margin are key
monitorables.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 253 261 274 288 311 350 366 383 1,077 1,410
QoQ (%) -9.1 3.1 5.0 5.1 7.7 12.8 4.7 4.6 -1.1 31.0
Revenue (INR m) 19,088 19,260 20,237 21,093 22,917 25,862 27,500 28,831 79,678 1,05,110
YoY (%) 4.1 0.6 3.0 2.9 20.1 34.3 35.9 36.7 2.6 31.9
GPM (%) 26.3 27.5 30.6 29.9 29.0 28.9 30.4 30.1 28.6 29.7
SGA (%) 8.1 7.9 7.5 7.9 8.8 8.4 8.8 9.0 7.8 8.8
EBITDA (INR m) 3,478 3,784 4,679 4,626 4,645 5,307 5,921 6,094 16,567 21,967
EBITDA margin (%) 18.2 19.6 23.1 21.9 20.3 20.5 21.5 21.1 20.8 20.9
EBIT (INR m) 2,881 3,215 3,962 3,913 4,063 4,697 5,289 5,403 13,971 19,452
EBIT margin (%) 15.1 16.7 19.6 18.6 17.7 18.2 19.2 18.7 17.5 18.5
Other income 17 232 489 275 589 623 581 577 1,013 2,370
ETR (%) 26.5 26.4 26.6 24.2 26.2 25.0 25.5 26.0 25.9 25.7
PAT 2,130 2,537 3,265 3,173 3,434 3,989 4,375 4,425 11,105 16,223
QoQ (%) 3.3 19.1 28.7 -2.8 8.2 16.2 9.7 1.1
YoY (%) 129.8 87.9 65.7 53.9 61.2 57.2 34.0 39.4 76.0 46.1
EPS (INR) 12.9 15.4 19.8 19.2 20.8 24.2 26.5 26.8 67.4 98.3

Mphasis Buy
CMP INR3347 | TP: INR3880 (+16%) EPS CHANGE (%): FY22|23: 0.0|-0.2
 Expect continued strength in the Direct business.  Expect margin to remain flat QoQ.
 Expect the decline to continue in the DXC business, with a  Its outlook with regard to growth in FY23 remains a key
high single-digit QoQ decline. monitorable.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 305 327 334 342 363 385 414 429 1,309 1,591
QoQ (%) -4.5 7.2 2.0 2.5 6.0 6.1 7.5 3.7 5.6 21.6
Revenue (INR m) 22,882 24,354 24,743 25,243 26,909 28,693 31,237 32,276 97,222 1,19,115
YoY (%) 10.9 12.8 8.7 7.6 17.6 17.8 26.2 27.9 9.9 22.5
GPM (%) 28.9 30.3 31.0 31.0 28.4 28.8 29.7 29.5 30.3 29.1
SGA (%) 10.7 11.7 12.2 12.5 10.2 10.7 12.0 11.9 11.8 11.3
EBITDA 4,178 4,524 4,654 4,671 4,895 5,185 5,530 5,665 18,027 21,275
EBITDA margin (%) 18.3 18.6 18.8 18.5 18.2 18.1 17.7 17.6 18.5 17.9
EBIT 3,583 3,924 4,048 4,054 4,271 4,528 4,704 4,811 15,609 18,314
EBIT margin (%) 15.7 16.1 16.4 16.1 15.9 15.8 15.1 14.9 16.1 15.4
Other income 182 114 218 182 310 277 90 323 696 1,000
ETR (%) 27.0 25.9 23.7 25.2 25.8 25.6 25.4 25.0 25.4 25.5
PAT 2,750 2,992 3,255 3,169 3,397 3,574 3,575 3,850 12,166 14,396
QoQ (%) -22.0 8.8 8.8 -2.6 7.2 5.2 0.0 7.7
YoY (%) 3.7 9.3 10.2 -10.1 23.5 19.5 9.8 21.5 2.5 18.3
EPS (INR) 14.6 15.9 17.2 16.7 17.9 18.8 18.9 20.3 64.2 75.9

April 2021 214

 March 2021 Results Preview | Sector: Technology

Persistent Systems Neutral

CMP INR4721 | TP: INR4500 (-5%) EPS CHANGE (%): FY22|23: -0.4|-0.4
 Expect the strong (~8%) growth to continue, led by  All three verticals will see good growth. Tech may see
acquisitions (Data Glove, Shree Partners, and SCI). some impact due to the CE-CLM change.
 Expect some impact on margin due to provision for ESOP  Medium-term growth and margin outlook should be key
and one-time M&A-related costs. monitorables.
Quarterly performance (IFRS)
Y/E March FY21 FY22 FY21 FY22E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 131.0 136.1 146.2 152.8 166.8 182.3 199.1 214.9 566 763
QoQ (%) 3.1 3.9 7.4 4.6 9.2 9.3 9.2 7.9 12.9 34.8
Revenue (INR m) 9,914 10,077 10,754 11,134 12,299 13,512 14,917 16,159 41,879 56,888
QoQ (%) 7.0 1.7 6.7 3.5 10.5 9.9 10.4 8.3
YoY (%) 19.1 13.9 16.5 20.2 24.1 34.1 38.7 45.1 17.4 35.8
GPM (%) 33.0 34.7 34.3 33.9 33.5 33.5 33.8 33.7 34.0 33.6
SGA (%) 18.2 18.3 17.3 17.0 16.6 16.9 16.9 17.1 17.7 16.9
EBITDA 1,464 1,658 1,825 1,883 2,090 2,244 2,511 2,682 6,830 9,527
EBITDA margin (%) 14.8 16.4 17.0 16.9 17.0 16.6 16.8 16.6 16.3 16.7
EBIT 1,029 1,218 1,364 1,464 1,740 1,873 2,083 2,181 5,075 7,877
EBIT margin (%) 10.4 12.1 12.7 13.2 14.1 13.9 14.0 13.5 12.1 13.8
Other income 192 157 286 385 365 303 281 323 1,020 1,273
ETR (%) 26.2 25.8 26.7 25.5 24.6 25.7 25.4 25.4 26.1 25.3
PAT 900 1,020 1,209 1,378 1,587 1,618 1,764 1,869 4,507 6,837
QoQ (%) 7.4 13.3 18.6 13.9 15.2 1.9 9.1 5.9
YoY (%) 9.1 18.5 37.5 64.3 76.3 58.6 45.9 35.6 32.4 51.7
EPS (INR) 11.8 13.3 15.8 18.0 19.8 21.2 23.1 24.4 59.0 89.5

TCS Buy
CMP INR3757 | TP: INR4150 (+10%) EPS CHANGE (%): FY22|23: -1.0|-3.0
 Growth should continue to remain in a narrow band for  Deal wins in 4Q should remain stable as compared to
TCS, despite strong demand momentum. 3QFY22.
 Margin may remain flattish sequentially, despite a  Commentary around the medium- to long-term growth
favorable operating leverage. outlook will be a key monitorable.

Quarterly performance (IFRS)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
IT Services Revenue (USD m) 5,059 5,424 5,702 5,989 6,154 6,333 6,524 6,726 22,174 25,737
QoQ (%) -7.1 7.2 5.1 5.0 2.8 2.9 3.0 3.1 0.6 16.1
Overall Revenue (INR b) 383 401 420 437 454 469 489 506 1,642 1,917
QoQ (%) -4.1 4.7 4.7 4.0 3.9 3.2 4.3 3.5
YoY (%) 0.4 3.0 5.4 9.4 18.5 16.8 16.4 15.7 4.6 16.8
GPM (%) 39.4 40.9 41.6 41.2 40.4 40.4 40.0 40.0 40.8 40.2
SGA (%) 15.8 14.7 15.0 14.4 14.8 14.8 15.0 14.9 15.0 14.9
EBITDA 100 115 122 128 127 130 133 138 465 528
EBITDA margin (%) 26.2 28.7 29.1 29.3 27.9 27.8 27.2 27.3 28.4 27.5
EBIT 90 105 112 117 116 120 122 127 425 485
EBIT margin (%) 23.6 26.2 26.6 26.8 25.5 25.6 25.0 25.1 25.9 25.3
Other income 5 7 5 8 6 10 10 8 25 33
PBT 95 113 117 125 122 130 132 135 450 518
ETR (%) 25.8 24.8 25.4 25.9 25.8 25.6 25.7 25.0 25.5 25.5
Adj. PAT 70 85 87 93 90 97 98 101 335 386
Exceptional items 0 -10 0 0 0 0 0 0 -10 0
Reported PAT 70 75 87 93 90 97 98 101 326 386
QoQ (%) -12.9 6.5 16.3 6.4 -2.7 6.9 1.6 3.1
YoY (%) -13.5 -6.9 7.2 14.7 28.1 28.6 12.4 8.9 0.4 18.5
EPS (INR) 18.7 19.9 23.2 25.0 24.4 26.0 26.4 27.2 86.7 104.0

April 2021 215

 March 2021 Results Preview | Sector: Technology

Tech Mahindra Neutral

CMP INR1487 | TP: INR1590 (7%) EPS CHANGE (%): FY22|23: -1.4|-2.1
 Expect 5% CC growth, led by broad based growth within  Expect deal wins to remain within the USD500-700m
the Communication and Enterprise verticals. quarterly band.
 Expect margin (excluding one-off gains in 3QFY22) to be in  Outlook on margin and growth in the Telecom vertical in
line with last quarter, despite the management’s FY23 will be key monitorables.
expectations of an improvement.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 1,208 1,265 1,309 1,330 1,384 1,473 1,534 1,609 5,111 5,999
QoQ (%) -6.7 4.8 3.4 1.6 4.1 6.4 4.1 4.9 -1.4 17.4
Revenue (INR b) 91 94 96 97 102 109 115 121 379 446
YoY (%) 5.2 3.3 -0.1 2.5 12.0 16.1 18.7 24.4 2.7 17.9
GPM (%) 28.5 31.4 32.9 33.7 31.7 31.7 30.1 30.2 31.7 30.9
SGA (%) 14.2 13.3 13.3 13.7 13.3 13.3 12.1 12.9 13.6 12.9
EBITDA 13 17 19 19 19 20 21 21 68 80
EBITDA margin (%) 14.3 18.2 19.6 20.0 18.4 18.3 18.0 17.3 18.1 18.0
EBIT 9 13 15 16 15 17 17 17 54 66
EBIT margin (%) 10.1 14.2 15.9 16.5 15.2 15.2 14.8 14.0 14.2 14.8
Other income 4 1 2 0 2 2 2 2 6 9
ETR (%) 25.5 24.6 24.8 26.4 23.9 29.4 26.9 26.5 25.3 26.7
Adj. PAT 10 11 13 12 14 13 14 14 46 55
QoQ (%) -4.8 9.5 23.0 -7.5 11.7 -1.1 2.2 3.1
YoY (%) 1.3 -5.3 14.3 18.6 39.2 25.7 4.5 16.5 7.2 20.0
Reported PAT 0.0 0.0 0.0 -1.3 0.0 0.0 0.0 0.0 -1.3 0.0
EPS (INR) 10 11 13 11 14 13 14 14 44 55

Wipro Neutral
CMP INR601 | TP: INR640 (6%) EPS CHANGE (%): FY22|23: -0.4|-0.7
 The demand environment continues to remain favorable.  Expect momentum in employee addition to continue, but
will taper a little bit.
 Margin to remain flat, despite some travel costs accruing  The management’s guidance for 1QFY23 and deal wins
on account of operating leverage. will be a key monitorable.

Quarterly performance (IFRS)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
IT Services Revenue (USD m) 1,922 1,992 2,071 2,152 2,415 2,580 2,640 2,728 8,137 10,362
QoQ (%) -7.3 3.7 3.9 3.9 12.2 6.9 2.3 3.3 -1.4 27.3
Overall Revenue (INR b) 149 151 157 162 183 197 203 207 619 789
QoQ (%) -5.1 1.4 3.7 3.7 12.4 7.8 3.3 1.9
YoY (%) 1.3 -0.1 1.3 3.4 22.4 30.1 29.6 27.4 1.5 27.4
GPM (%) 30.5 30.3 33.4 32.4 30.1 30.1 29.7 29.7 31.7 29.9
SGA (%) 13.3 11.8 12.2 11.9 12.9 12.8 12.8 12.7 12.3 12.8
EBITDA 33 35 42 41 41 44 45 46 151 175
EBITDA margin (%) 22.1 23.0 26.6 25.3 22.4 22.2 22.0 22.0 24.3 22.1
IT Services EBIT (%) 19.1 19.2 21.7 21.0 17.8 17.8 17.6 17.5 20.3 17.7
EBIT margin (%) 18.0 18.6 21.6 21.0 17.8 17.8 17.5 17.5 19.8 17.7
Other income 4 4 5 3 6 3 2 4 16 15
ETR (%) 22.1 22.5 22.1 20.7 16.1 22.0 21.3 22.5 21.8 20.5
PAT 24 25 30 30 32 29 30 31 108 122
QoQ (%) 2.8 3.2 20.3 0.2 8.7 -9.3 1.3 4.2
YoY (%) 3.5 -3.4 20.8 27.8 35.2 18.9 0.0 4.0 11.0 13.2
EPS (INR) 4.2 4.3 5.2 5.4 5.9 5.3 5.4 5.6 18.8 21.9

April 2021 216

 March 2021 Results Preview | Sector: Technology

Zensar Technologies Buy

CMP INR377| TP: INR530 (+41%) EPS CHANGE (%): FY22|23: -1.5|-3.5
 Supply-side pressures will dampen growth due to  Expect deal wins to be higher than 3QFY22.
fulfillment issues.
 Supply-side issues, hiring costs, and lower growth are  The management’s outlook on medium-term growth
headwinds for the company. and margin will be key monitorables.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 125 126 123 120 127 142 147 151 494 567
QoQ (%) -7.2 0.5 -2.4 -2.1 5.8 11.6 3.7 2.7 -12.7 14.8
Revenue (INR m) 9,485 9,364 9,065 8,767 9,368 10,506 11,025 11,366 36,681 42,265
YoY (%) -7.4 -8.9 -7.7 -10.2 -1.2 12.2 21.6 29.6 -8.5 15.2
GPM (%) 29.6 34.8 34.6 34.9 34.8 30.6 29.6 29.9 33.4 31.1
SGA (%) 14.6 15.4 14.1 15.0 16.4 15.2 15.3 15.4 14.8 15.5
EBITDA 1,418 1,818 1,863 1,743 1,726 1,612 1,584 1,651 6,842 6,573
EBITDA margin (%) 14.9 19.4 20.6 19.9 18.4 15.3 14.4 14.5 18.7 15.6
EBIT 979 1,390 1,442 1,298 1,300 1,144 1,110 1,174 5,109 4,728
EBIT margin (%) 10.3 14.8 15.9 14.8 13.9 10.9 10.1 10.3 13.9 11.2
Other income 28 -171 -82 -56 95 142 152 80 -281 469
ETR (%) 26.2 26.5 26.5 25.3 26.5 25.5 26.9 26.0 26.1 26.2
Adj. PAT 727 878 987 905 1,010 944 909 912 3,497 3,775
QoQ (%) 2.6 20.7 12.3 -8.3 11.6 -6.5 -3.7 0.4
YoY (%) -6.8 16.1 157.9 27.6 38.9 7.5 -7.9 0.8 33.0 8.0
EPS (INR) 3.2 3.9 4.3 3.9 4.4 4.2 4.0 4.0 15.3 16.6

April 2021 217

 March 2022 Results Preview | Sector: Telecom

Telecom
Company The full benefit of the tariff hikes to drive revenue
Bharti Airtel
Indus Towers Tariff hikes to drive growth
RJio The Telecom sector is expected to see an industry-wide improvement in ARPUs in
Tata Communications 4QFY22 on account of the flow through of the tariff hike in Dec’21, which will be
Vodafone Idea partly offset by the impact of SIM consolidation. We project a 9-10% ARPU
improvement for all three telcos, aided by the full benefit of tariff hikes to flow
through in 4QFY22. With a large base of dual SIM card phenomenon in the market,
the tariff hike is gradually reducing the use of dual SIM cards. We expect RJio and
Bharti to witness market share gains from SIM card consolidation. Accordingly, we
project Bharti India Wireless/VIL/RJio’s revenue to grow by 9%/4.4%/9.2% QoQ.
Bharti’s consolidated revenue should grow by 6.1% QoQ, aided by: a) improvement
in the India Wireless business, b) subscriber additions in Home Broadband, and c)
revenue growth of 2% QoQ in the Enterprise business.

Cleanup of dual SIMs to arrest subscriber growth

The industry is continuing to see higher subscriber churn on account of: a) High
gross subscriber decline in RJio due to a cleanup of inactive subscribers by the
company (which has a limited impact on its revenue), and b) SIM card consolidation
triggered by the tariff hike. Telcos are likely to see a muted subscriber growth in
4QFY22 on account of the SIM card consolidation in the low-ARPU subscriber
categories, which are highly sensitive to pricing and have limited arbitrage in pricing.
This may be skewed towards weaker players, leading to a market share loss for VIL.
We expect a marginal rise (0.5%/2.4% QoQ) in subscribers for Bharti/RJio. VIL’s
subscriber base can witness a greater churn and decline by 1.6% QoQ.

EBITDA to improve aided by ARPU

We expect healthy flow of revenue growth in EBITDA, with an incremental EBITDA
margin of 63%/67% for Bharti/RJio, led by a strong tariff. The recent diesel price
increase should have a limited impact.

We estimate Bharti’s India Wireless/VIL/Rjio’s EBITDA to grow by 11.4%/7.5%/12.5%

QoQ, aided by an incremental EBITDA margin of 63%/68%/67%. Bharti’s
consolidated EBITDA should increase by 7.4% QoQ.

Aliasgar
JanuaryShakir
2021 - Research Analyst ([Link]@[Link]) 218
Harsh Gokalgandhi - Research Analyst ([Link]@[Link])
 March 2022 Results Preview | Sector: Telecom

5G: Expect rationalization in pricing

The Telecom Regulatory Authority of India’s (TRAI) recommendation on spectrum
pricing is likely to be floated in the near future, with the possibility of 5G auctions in
the latter part of CY22. We could see increased preparation from telcos towards 5G
with investments in network fiberization among others to create capability. Telcos
expect some rationalization in prices for the spectrum.

Exhibit 1: Expected quarterly performance summary

CMP SALES (INR M) EBDITA (INR M) NET PROFIT (INR M)
Var Var Var Var Var Var
Sector (INR) RECO Mar-22 Mar-22 Mar-22
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Bharti Airtel 768 Buy 3,16,784 23.0 6.1 1,57,875 28.0 7.4 13,028 304.3 61.4
Indus Towers 221 Neutral 68,798 6.0 -0.7 36,628 7.3 -1.0 14,940 9.5 -4.9
Tata Comm 1235 Neutral 43,059 5.7 2.9 11,427 12.6 5.6 4,144 39.0 7.2
Vodafone Idea 10 Neutral 1,01,404 5.5 4.4 41,033 -6.9 7.5 -71,437 Loss Loss
Telecom 5,30,046 15.4 4.6 2,46,962 16.7 6.0 -39,325 Loss Loss

Exhibit 2: Player-wise QoQ ARPU trend (INR) Exhibit 3: Player-wise QoQ ARPU growth trend (%)

Bharti (India) VIL RJio Bharti (India) VIL RJio

14.1
11.0
178

3.3

5.5
4.8
4.1
166

9.0
9.0
165
163
162

7.4

7.0
6.5
157

5.6
5.5
154

4.9
153

4.8
4.5
152

4.4
151

3.8
3.8

3.2
146

2.5
145

145

1.9
1.9
144

1.7

1.7
140

0.7
138

0.1
138
135

131

0.7
129

128
128
128

123
122

121
121

119

115
114
109

109
108

107

107

104

-0.9
-0.8

-2.8
-8.5
-3.3

-5.8

4QFY21*-11.6
-12.7
1Q
1Q

2Q

3Q

4Q

2Q

3Q

4Q

1Q

2Q

3Q

4QE

1QFY20*

2QFY20*

3QFY20*

4QFY20*

1QFY21*

2QFY21*

1QFY22*

2QFY22*

3QFY22*
3QFY21*

4QFY22E*
FY20 FY21 FY22E

Source: Company, MOFSL **Represents performance of the Vodafone Idea merged entity
Source: Company, MOFSL

Exhibit 4: Player-wise QoQ data on traffic trends (b GB) Exhibit 5: Player-wise QoQ growth trend in data traffic (%)
Bharti (India) VIL RJio Bharti (India) VIL RJio
24.6
23.4
23.0

17.0 13.2
20.3

21.6
10.6 10.6
16.7
15.9

7.9 16.3
14.2

14.2

0.4
8.9 8.2
15.2

8.5 14.9

5.2 14.6
12.8

14.0
12.3
12.1
12.0

13.3
9.3 13.1
11.3
11.3

12.2
10.9

10.8

11.7
3.4 10.7
8.410.3
9.2
8.5

8.8
7.6
7.2
6.5

6.3
6.0

5.5
5.5

5.5

5.3
5.5

5.2

4.6
4.9
4.8

4.5

4.5
4.3
4.2

4.1
3.8
3.5
3.2

1.7
0.5

0.4
0.0
1QFY20*

2QFY20*

3QFY20*

4QFY20*

1QFY21*

2QFY21*

3QFY21*

4QFY21*

1QFY22*

2QFY22*

3QFY22*

4QFY22E*
1Q

2Q
2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

3Q

4QE

FY20 FY21 FY22E

Source: Company, MOFSL*Represents performance of the Vodafone Idea merged entity

Source: Company, MOFSL

April 2022 219

 March 2022 Results Preview | Sector: Telecom

Exhibit 6: Aggregate India Wireless revenue and growth trends (QoQ, %)

Agg. India wireless revenue (INR b)
Agg. India wireless revenue growth (QoQ, %)
800 16
10 8
7
600 1 2 -1 2
4
1 1
5
1
5 3 5 3 4
-2 0 -2
400 -5 -6 -6 -5
-9 -10 -10
200

3QFY21
4QFY21
1QFY22
2QFY22
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21

3QFY22
Source: TRAI, MOFSL

Exhibit 7: Aggregate India Wireless subscriber and growth trends (MoM, %)

1,200 Wireless Subsriber (m) Wireless Subsriber net additions (m)

1,180 13
10
4 3 3 3 5 4 3 4 1 3 3 -1 6 8 2 4 6 0 0 1
1,160 -3 -3 -6 -3 -6
-8 -13 -9
1,140 -21
-29
1,120
1,100
Aug-19

Mar-20

Aug-20

Mar-21

Aug-21
Jul-19

Oct-19

Jul-20

Oct-20

Jul-21

Oct-21
Jun-19

Jun-20

Jun-21
Jan-21

Dec-21
Dec-19
Jan-20
Feb-20

Apr-20

Dec-20

Apr-21

Jan-22
Sep-19

Sep-20

Feb-21

Sep-21
Nov-19

Nov-20

Nov-21
May-20

May-21
Source: TRAI, MOFSL

Exhibit 8: Relative performance – three-months (%) Exhibit 9: Relative performance – one-year (%)

Nifty Index MOFSL Telecom Index Nifty Index MOFSL Telecom Index
146
106

102 132

98 118

94 104

90 90
Mar-21

Mar-22
Sep-21
Jun-21

Dec-21
Mar-22
Dec-21

Jan-22

Feb-22

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 10: Comparative valuation

CMP EPS (INR) PE (x) PB (x) ROE (%)
Company Name INR Reco FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E FY22E FY23E FY24E
Telecom -31 -40 -68.2 22.4 25.3 58.2 -73.1 -63.9 -85.3
Bharti Airtel 768 Buy 5.4 12.3 17.7 141.8 62.2 43.3 6.0 4.5 4.1 4.6 8.3 10.0
Indus Towers 221 Neutral 22.4 24.0 24.6 9.9 9.2 9.0 3.4 3.0 2.7 36.1 34.7 31.8
Tata Comm 1,235 Neutral 53.0 68.0 88.2 23.3 18.2 14.0 21.4 9.8 5.8 171.4 74.1 52
Vodafone Idea 10 Neutral -10.1 -10.3 -9.5 -1.0 -1.0 -1.1 -0.4 -0.3 -0.2 NM NM NM

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Exhibit 11: Wireless KPI comparison

FY20 FY21 FY22 YoY QoQ
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (%) (%)
EOP Wireless subscribers (m)
Bharti (India) 277 279 283 284 280 294 308 321 321 323 323 325 1.0 0.5
VIL 320 311 304 291 280 272 270 268 255 253 247 243 -9.2 -1.6
RJio 331 355 370 388 398 406 411 426 441 430 421 431 1.1 2.4
Avg. Wireless subscribers (m)
Bharti (India) 280 278 281 283 282 287 301 315 321 322 323 324 2.9 0.2
VIL 327 316 308 298 285 276 271 269 262 254 250 245 -8.8 -2.0
RJio 319 343 363 379 393 402 408 419 433 435 425 426 1.8 0.2
ARPU (INR/month)
Bharti (India) 129 128 135 154 157 162 166 145 146 153 163 178 22.5 9.0
VIL 108 107 109 121 114 119 121 107 104 109 115 123 15.0 7.0
RJio 122 128 128 131 140 145 151 138 138 144 152 165 19.6 9.0
MOU/subscriber (minutes)
Bharti (India) 888 848 898 965 994 1,005 1,027 1,053 1,044 1,053 1,061 1,072 1.8 1.0
VIL 690 669 674 688 678 673 673 657 641 630 620 626 -4.7 1.0
RJio 821 789 760 771 756 773 796 820 815 835 901 901 9.9 0.0
Wireless traffic (b min)
Bharti (India) 737 717 759 822 820 861 925 997 1,002 1,020 1,030 1,041 4.4 1.1
VIL 676 631 624 616 579 555 547 529 503 480 465 461 -12.9 -1.0
RJio 786 813 826 876 891 932 975 1030 1060 1090 1150 1152 11.8 0.2
Data usage/subscriber (GB)
Bharti (India) 11.9 13.1 13.9 15.0 16.7 16.4 16.8 16.8 18.9 19.1 18.7 19.4 15.5 3.8
VIL 7.4 8.2 9.0 9.7 11.0 10.6 10.9 11.7 13.3 13.5 12.8 14.2 21.6 10.6
RJio 11.4 11.7 11.1 11.3 12.0 11.8 13.0 13.3 15.6 17.6 18.3 19.3 44.8 5.0
Data traffic (b GB)
Bharti (India) 4.2 4.8 5.5 6.5 7.2 7.6 8.5 9.2 10.8 11.3 11.3 12.3 33.7 8.8
VIL 3.2 3.5 3.8 4.1 4.5 4.3 4.5 4.9 5.5 5.5 5.2 6.0 23.7 14.6
RJio 10.9 12.0 12.1 12.8 14.2 14.2 15.9 16.7 20.3 23.0 23.4 24.6 47.4 5.2
Source: Company, MOFSL

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Exhibit 12: Quarterly financials

FY20 FY21 FY22 YoY QoQ
1Q* 2Q* 3Q* 4Q* 1Q* 2Q* 3Q* 4Q* 1Q* 2Q* 3Q* 4QE* (%) (%)
Revenue (INR b)
Bharti (India Wireless) 109 110 112 130 129 138 148 141 143 152 161 175 24.6 9.0
Bharti (consolidated) 207 211 213 237 239 251 265 257 269 283 299 317 23.0 6.1
VIL 113 108 111 118 107 108 109 96 92 94 97 101 5.5 4.4
RJio 117 131 140 148 166 175 185 174 180 187 193 211 21.7 9.2
EBITDA (INR b)
Bharti (India Wireless) 39 40 40 51 52 59 65 67 70 75 79 89 32.3 11.4
Bharti (consolidated) 83 89 87 102 104 111 121 123 130 138 147 158 28.0 7.4
VIL 37 33 34 44 41 42 43 44 37 39 38 41 -6.9 7.5
RJio 47 51 56 62 70 75 81 83 86 90 95 107 29.2 12.5
EBITDA margin (%)
Bharti (India Wireless) 35.7 36.3 35.9 39.2 40.6 42.6 43.7 47.5 49.2 49.2 49.4 50.5 565bps 20bps
Bharti (consolidated) 39.9 41.9 40.8 42.9 43.5 44.2 45.5 47.9 48.3 48.8 49.2 49.8 378bps 47bps
VIL 32.4 30.9 30.8 37.3 38.4 38.5 39.3 45.9 40.5 41.1 39.3 40.5 -7bps -179bps
RJio 40.0 39.1 40.0 41.6 42.3 42.9 43.9 47.8 47.9 48.0 49.2 50.7 530bps 120bps
PAT (INR b)
Bharti (consolidated) (28.7) (230.4) (10.4) (52.4) (159.3) (7.6) 8.5 7.6 2.8 11.3 8.3 13.0 -2.8 -26.8
VIL (48.7) (509.2) (64.4) (116.4) (254.6) (72.2) (45.3) (70.2) (73.2) (71.3) (72.3) (71.4) 59.5 1.4
RJio 9 10 14 23 25 28 33 34 35 35 36 44 9.8 2.5
EPS (INR)
Bharti (5.6) (44.9) (2.0) (9.7) (29.2) (1.4) 1.6 1.4 0.5 2.1 1.5 2.3 -3.8 -26.8
VIL (5.6) (58.3) (2.2) (4.1) (8.9) (2.5) (1.6) (2.4) (2.5) (2.5) (2.5) (2.5) 59.5 1.4
RJio 0.2 0.2 0.3 0.5 0.6 0.6 0.7 0.7 0.8 0.8 0.8 1.0 9.8 2.5
*Represents performance of the Vodafone Idea merged entity Source: Company, MOFSL

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The tables below provide a snapshot of the actual and estimated numbers of companies under the MOFSL Coverage
Universe. Highlighted columns indicate the quarter/financial year under review.

Bharti Airtel Buy

CMP: INR768 | TP: INR910 (+19%) EPS CHANGE (%): FY23|24: 0|40.5
 Expect 9% QoQ ARPU growth in 4QFY22, aided by the  Expect India mobile subscribers to remain flattish
tariff hike. sequentially.
 Expect Indian Wireless’ revenue growth of 9% QoQ.  Enterprise business to see a sequential revenue growth
of 2%.

Consolidated quarterly earnings model (INR b)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 239 251 265 257 269 283 299 317 1,006 1,167
YoY Change (%) 15.4 18.6 24.2 8.5 12.2 13.0 12.6 23.0 15.7 16.0
Total Expenditure 135 140 145 134 139 145 152 159 552 594
EBITDA 104 111 121 123 130 138 147 158 454 573
YoY Change (%) 25.7 24.9 38.3 21.3 24.7 24.8 22.0 28.0 26.0 26.2
Depreciation 72 73 75 75 77 82 85 89 294 334
Net Finance cost 35 38 40 39 42 40 44 41 151 167
Other Income 6 -2 -2 6 7 7 8 9 6 31
PBT before EO expense 4 -2 4 16 17 23 26 37 14 104
Extra-Ord. expense 117 0 46 -4 0 -7 0 0 159 -8
PBT -114 -2 -42 20 18 30 26 37 -145 112
Tax 38 4 43 5 8 10 10 15 89 43
Rate (%) -33.6 -167.6 -103.7 25.2 47.0 34.0 37.5 40.0 -61.7 38.9
MI and P/L of Asso. Cos. 7 7 5 8 7 9 8 9 27 33
Reported PAT -159 -8 9 8 3 11 8 13 -157 35
Adj. PAT -4 -7 -3 3 3 6 8 13 -12 30
YoY Change (%) -68.8 -33.7 -72.4 -168.4 -161.1 -179.8 -370.7 304.3 -71.6 -356.8
E: MOFSL estimates

Indus Towers Neutral

CMP: INR221 | TP: INR250 (+13%) EPS CHANGE (%): FY23|24: 0|0
 Expect tenancy and rental rates to stay flat sequentially.  Expect tower additions of 1,500 in 4QFY22.
 Expect revenue to grow by 6% YoY, but decline by 0.7%  Expect consolidated EBITDA margin to remain constant
QoQ in 4QFY22. at 53.2% in 4QFY22.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from operations 60,859 63,591 67,361 64,918 67,970 68,765 69,274 68,798 2,56,729 2,74,807
YoY Change (%) 64.0 74.8 4.5 2.9 11.7 8.1 2.8 6.0 1,615.8 7.5
Total Expenditure 30,279 32,854 31,837 30,790 32,803 32,532 32,287 32,170 1,25,760 1,29,792
EBITDA 30,580 30,737 35,524 34,128 35,167 36,233 36,987 36,628 1,30,969 1,45,015
YoY Change (%) 61.3 63.6 8.6 19.6 15.0 17.9 4.1 7.3 1,800.9 15.2
Depreciation 12,681 13,088 14,302 13,323 13,198 13,161 13,244 13,430 53,394 53,033
Interest 3,205 3,297 3,900 3,619 3,768 3,665 3,793 3,755 14,021 14,981
Other Income 339 816 1,056 772 569 927 939 523 2,983 2,958
PBT 15,033 15,168 18,378 17,958 18,770 20,334 20,889 19,965 66,537 79,958
Tax 3,827 3,861 4,778 4,320 4,617 4,749 5,181 5,025 16,786 19,572
Rate (%) 25.5 25.5 26.0 24.1 24.6 23.4 24.8 25.2 25.2 24.5
Reported PAT 11,206 11,307 13,600 13,638 14,153 15,585 15,708 14,940 49,751 60,386
Adj. PAT 11,206 11,307 13,600 13,638 14,153 15,585 15,708 14,940 49,751 60,386
YoY Change (%) 26.3 17.4 2.2 38.3 26.3 37.8 15.5 9.5 542.9 20.1

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Reliance Jio
CMP: INR | TP: INR EPS CHANGE (%): FY23|24: 0.5|(0.5)
 Expect monthly subscriber additions of 3m in 4QFY22.  Expect EBITDA margin to improve by 150bp to 50.7% in
4QFY22.
 Expect ARPU to grow by 9% sequentially to INR165, led
by price hikes.
Quarterly earnings model (INR b)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenue 166 175 185 174 180 187 193 211 699 772
YoY Change (%) 41.8 33.1 32.4 17.0 8.7 7.2 4.6 21.7 28.7 10.5
Total Expenditure 96 100 104 91 94 97 98 104 390 394
EBITDA 70 75 81 83 86 90 95 107 309 378
Margin (%) 42.3 42.9 43.9 47.8 47.9 48.0 49.2 50.7 44.2 49.0
Depreciation 27 29 29 30 31 32 36 39 115 137
Finance Cost 12 10 9 8 8 11 13 10 38 42
Other Income 3 2 1 0 0 0 2 0 5 2
PBT 34 38 44 45 47 47 48 58 161 201
Tax 9 10 11 11 12 12 12 15 41 51
Rate (%) 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
PAT 25 28 33 34 35 35 36 43 120 150
Margin (%) 15.2 16.3 17.8 19.4 19.5 18.8 18.7 20.6 17.2 19
YoY Change (%) NA NA 1.4 0.4 0.4 0.2 0.1 0.3 116% 25%

Tata Communications Neutral

CMP: INR1,235 | TP: INR1,450 (17.4%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Expect the decline in Voice revenue to continue.  Expect an improved deals funnel to drive revenue.
 Expect revenue from Digital Services/Incubation Services
to grow 5%/15% sequentially in 4QFY22E.

Consolidated quarterly earning

model (INR m)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 44,029 44,011 42,228 40,733 41,028 41,740 41,849 43,059 1,71,001 1,67,676
YoY Change (%) 5.6 3.0 -0.1 -7.4 -6.8 -5.2 -0.9 5.7 0.2 -1.9
Total Expenditure 33,612 32,436 31,767 30,581 31,167 30,612 31,024 31,632 1,28,395 1,24,434
EBITDA 10,418 11,575 10,461 10,152 9,861 11,129 10,825 11,427 42,606 43,241
YoY Change (%) 26.2 38.8 37.5 16.8 -5.3 -3.9 3.5 12.6 29.5 1.5
Depreciation 5,899 5,719 5,570 5,950 5,318 5,416 5,425 5,276 23,139 21,435
Interest 1,163 1,064 1,044 931 962 908 835 805 4,202 3,509
Other Income 147 761 82 577 134 364 188 300 1,568 986
PBT before EO expense 3,503 5,553 3,929 3,848 3,714 5,169 4,754 5,646 16,833 19,283
Exceptional (gain)/loss 105 540 114 -12 -56 -127 -85 0 747 -269
PBT 3,398 5,013 3,815 3,859 3,771 5,296 4,839 5,646 16,085 19,552
Tax 812 1,153 711 872 793 1,038 958 1,421 3,549 4,210
Rate (%) 23.9 23.0 18.6 22.6 21.0 19.6 19.8 25.2 22.1 21.5
MI and P/L of Asso. Cos. 8 15 12 -5 17 4 -72 81 30 30
Reported PAT 2,578 3,845 3,092 2,992 2,961 4,254 3,952 4,144 12,505 15,311
Adj. PAT 2,683 4,384 3,206 2,980 2,905 4,126 3,867 4,144 13,253 15,043
YoY Change (%) 236.9 632.8 447.6 189.1 8.3 -5.9 20.6 39.0 340.2 13.5

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Vodafone Idea Neutral

CMP: INR10 | TP: INR9.5 (-5%) EPS CHANGE (%): FY23|24: (1.7)|(2.2)
 Expect organic ARPU to inch up 7% sequentially in
 Expect subscriber base to decline by 4m (net) in 4QFY22.
4QFY22, aided by price hikes.
 Expect sequential revenue growth of 4%, aided by
improved ARPU.

Consolidated quarterly earning model (INR b)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 107 108 109 96 92 94 97 101 420 384
YoY Change (%) -5.4 -0.5 -1.8 -18.3 -14.1 -12.8 -10.8 5.5 -6.7 -8.4
Total Expenditure 66 66 66 52 54 55 59 60 250 229
EBITDA 41 42 43 44 37 39 38 41 169 155
YoY Change (%) 12.3 24.1 25.3 0.7 -9.5 -7.0 -11.0 -6.9 13.6 -8.6
Depreciation 60 60 58 58 60 59 57 60 236 236
Share in Profits from Associates 1 1 1 0 0 0 0 0 2 0
Net Finance Costs 37 47 47 47 52 51 53 53 178 209
PBT before EO expense -55 -65 -62 -61 -75 -71 -72 -71 -243 -290
Extra-Ord. expense 199 8 -17 10 -2 0 0 0 200 -2
PBT -255 -72 -45 -70 -73 -71 -72 -71 -443 -288
Tax 0.0 0.0 0.0 -0.2 0.0 0.0 0.1 0.1 -0.2 0.1
Rate (%) 0.0 0.0 0.0 0.3 0.0 -0.1 -0.1 -0.1 0.0 -0.1
Reported PAT -255 -72 -45 -70 -73 -71 -72 -71 -442 -288
Adj. PAT -55 -65 -62 -60 -75 -71 -72 -71 -243 -290
YoY Change (%) 30.8 4.3 7.3 9.9 35.4 10.8 15.9 18.1 -99.9 19.5

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 March 2022 Results Preview | Sector: Others

Others | Various Sectors

The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL coverage
universe. Highlighted columns indicate the quarter/financial year under review.

APL Apollo Tubes Buy

CMP INR944 | TP: INR1,272 (+35%) EPS CHANGE (%): FY23|24: +6 |+6
 Expect volume growth of 27% YoY/37% QoQ during  Outlook on steel prices and utilization levels holds the
4QFY22. key.
 EBITDA likely to grow 28% YoY in 4QFY22, assuming
EBITDA/MT of INR4,798 (+1% YoY).
Consolidated - Quarterly Earning Model
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 11,098 22,021 26,009 25,870 25,343 30,839 32,304 39,724 84,998 1,28,210
YoY Change (%) -46.4 39 22.9 37 128.4 40 24.2 53.6 11 50.8
Total Expenditure 10,387 20,330 23,688 23,805 22,796 28,617 30,281 37,077 78,210 1,18,771
EBITDA 711 1,691 2,321 2,065 2,547 2,222 2,023 2,647 6,787 9,439
Margins (%) 6.4 7.7 8.9 8 10 7.2 6.3 6.7 8 7.4
Depreciation 239 251 262 275 265 273 272 300 1,028 1,110
Interest 212 159 147 144 128 107 109 108 661 452
Other Income 49 101 83 126 102 114 79 50 359 345
PBT before EO expense 309 1,382 1,995 1,772 2,256 1,956 1,721 2,289 5,458 8,222
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 309 1,382 1,995 1,772 2,256 1,956 1,721 2,289 5,458 8,222
Tax 90 356 507 428 572 495 442 576 1,381 2,084
Rate (%) 29.1 25.7 25.4 24.2 25.3 25.3 25.7 25.2 25.3 25.4
Minority Interest & P/L of Asso. Cos. 51 105 167 152 211 148 123 0 475 481
Reported PAT 168 921 1,320 1,192 1,474 1,313 1,156 1,713 3,602 5,656
Adj PAT 168 921 1,320 1,192 1,474 1,313 1,156 1,713 3,602 5,656
YoY Change (%) -67.6 67.1 77.8 109.8 778.1 42.5 -12.4 43.7 51.3 57
Margins (%) 1.5 4.2 5.1 4.6 5.8 4.3 3.6 4.3 4.2 4.4

BSE Buy
CMP INR921 | TP: INR890 (-3%) EPS CHANGE (%): FY22|23: -7.2|5.2
 Overall revenue from operations to remain subdued.  Revenue from services to corporate to remain muted led
by decline in IPO activities amid volatile equity markets.
 Expect some decline in equity transaction volumes.  Cost-to-income ratio is expected to increase sequentially.
Cons. quarterly performance (INRm)
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from operations 1,032 1,284 1,182 1,481 1,527 1,818 1,840 1,816 4,979 7,001
YoY Change (%) -5.7 18.0 7.1 23.8 47.9 41.6 55.7 22.6 11.1 40.6
Total Expenditure 1,049 1,031 1,087 1,061 1,063 1,278 1,262 1,283 4,228 4,886
EBITDA -17 253 95 420 464 540 578 533 751 2,116
Margins (%) -1.6 19.7 8.0 28.4 30.4 29.7 31.4 29.4 15.1 30.2
Depreciation 132 145 149 153 116 117 123 129 579 484
Interest 22 24 29 28 42 52 52 52 103 197
Investment income 589 350 440 219 331 440 346 302 1,598 1,419
PBT before EO expense 418 434 357 458 637 811 750 655 1,667 2,853
Extra-Ord expense 121 267 97 88 94 79 89 89 573 351
PBT 297 167 260 370 543 733 660 565 1,094 2,502
Tax 73 -192 62 165 161 280 244 170 109 854
Rate (%) 24.7 -114.8 24.0 44.6 29.6 38.2 36.9 30.0 9.9 34.1
MI & P/L of Asso. Cos. 101 101 126 121 152 198 196 160 449 706
Other comprehensive 0 0 -12 0 0 0 3
Reported PAT 325 460 312 326 534 651 616 556 1,434 2,353
YoY Change (%) -21.5 25.4 -31.7 NA 64.6 41.3 97.6 70.8 25.8 53.3
Margins (%) 24.1 19.0 18.3 17.5 28.0 29.1 26.7 24.4 36.9 40.3

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Coromandel International Buy

CMP INR807 | TP: INR1,002 (+24%) EPS CHANGE (%): FY23|24: -1.1|-1.3
 Expect manufacturing fertilizer/trading volumes to  Expect 153bp YoY EBITDA margin contraction.
grow/decline by 10.5%/34% YoY, respectively in 4QFY22.
 Expect crop protection revenue to grow 15% in 4QFY22.  Current on the ground demand scenario for the Kharif
season is a key monitorable.
Quarterly Earning Model
Y/E March FY21 FY22 FY21 FY22E
Consolidated 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 32,132 46,113 35,330 28,560 36,639 61,475 50,736 40,283 1,42,135 1,89,133
YoY Change (%) 50.8 -5.1 7.8 -0.5 14.0 33.3 43.6 41.0 8.2 33.1
Total Expenditure 28,007 37,682 30,338 25,950 31,808 54,043 45,288 37,217 1,21,977 1,68,356
EBITDA 4,125 8,431 4,993 2,610 4,831 7,432 5,449 3,066 20,158 20,777
Margins (%) 12.8 18.3 14.1 9.1 13.2 12.1 10.7 7.6 14.2 11.0
Depreciation 421 420 423 467 423 421 429 471 1,731 1,743
Interest 434 253 205 164 171 192 178 180 1,057 721
Other Income 107 82 89 158 218 189 259 220 435 885
PBT before EO expense 3,376 7,841 4,453 2,136 4,455 7,008 5,101 2,635 17,806 19,198
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 3,376 7,841 4,453 2,136 4,455 7,008 5,101 2,635 17,806 19,198
Tax 896 1,967 1,130 575 1,104 1,819 1,298 663 4,568 4,884
Rate (%) 26.5 25.1 25.4 26.9 24.8 26.0 25.4 25.2 25.7 25.4
Minority Interest & P/L of Asso. Cos. -26 -15 -16 2 -27 -4 -13 3 -54 -42
Reported PAT 2,506 5,889 3,338 1,559 3,378 5,193 3,816 1,969 13,292 14,356
Adj PAT 2,506 5,889 3,338 1,559 3,378 5,193 3,816 1,969 13,292 14,356
YoY Change (%) 301.4 16.9 26.2 -33.5 34.8 -11.8 14.3 26.4 24.8 8.0
Margins (%) 7.8 12.8 9.4 5.5 9.2 8.4 7.5 4.9 9.4 7.6

EPL Buy
CMP INR189 | TP: INR250 (+32%) EPS CHANGE (%): FY23|24: -2 |-2
 Expect AMESA and EAP regions to record double-digit  Outlook on capex plans and commodity prices holds the
growth (+20% YoY each), while Europe would be muted in key.
4QFY22.
 Expect revenue to grow 14% YoY, while EBITDA to decline  To watch out for an update on the America Travel Tube
2% YoY on higher raw material prices. business.

Consolidated - Quarterly Earning Model

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 7,415 7,703 7,686 8,102 7,991 8,701 8,834 9,257 30,906 34,783
YoY Change (%) 17.7 5.4 8.1 17.5 7.8 13.0 14.9 14.3 11.9 12.5
Total Expenditure 5,949 6,041 6,101 6,704 6,542 7,107 7,447 7,897 24,795 28,993
EBITDA 1,466 1,662 1,585 1,398 1,449 1,594 1,387 1,360 6,111 5,790
Margins (%) 19.8 21.6 20.6 17.3 18.1 18.3 15.7 14.7 19.8 16.6
Depreciation 579 578 588 601 619 622 642 645 2,346 2,528
Interest 162 97 84 86 89 97 103 90 429 379
Other Income 51 32 32 30 53 14 31 35 145 133
PBT before EO expense 776 1,019 945 741 794 889 673 659 3,481 3,015
Extra-Ord expense 161 0 0 0 0 0 0 0 161 0
PBT 615 1,019 945 741 794 889 673 659 3,320 3,015
Tax 159 334 220 155 189 297 82 178 868 746
Rate (%) 25.9 32.8 23.3 20.9 23.8 33.4 12.2 27.0 26.1 24.7
Minority Interest & P/L of Asso. Cos. -12 -15 -16 -18 -26 -85 -20 -21 -61 -152
Reported PAT 444 670 709 568 579 507 571 461 2,391 2,118
Adj PAT 605 670 709 568 579 507 571 461 2,552 2,118
YoY Change (%) 113.6 -15.8 18.0 17.0 -4.3 -24.3 -19.5 -18.9 17.8 -17.0
Margins (%) 8.2 8.7 9.2 7.0 7.2 5.8 6.5 5.0 8.3 6.1

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 March 2022 Results Preview | Sector: Others

Godrej Agrovet Buy

CMP INR548 | TP: INR692 (+26%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Volumes in the animal feed business to grow 21.5% YoY  Prices of raw materials such as maize and soybean are the
(flattish QoQ). key monitorables.
 Outlook on the performances of Astec, palm oil, and the  Revenue/EBIT of the palm oil segment to grow 100%/
domestic crop protection segment holds the key. 252% YoY, respectively.
Quarterly Earning Model
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 15,542 17,239 15,262 14,625 19,928 21,541 20,785 19,357 62,667 81,611
YoY Change (%) -8.7 -6.9 -14.4 -2.0 28.2 25.0 36.2 32.4 -8.2 30.2
Total Expenditure 13,882 15,508 14,137 13,502 18,232 19,636 19,423 17,819 57,029 75,111
EBITDA 1,659 1,732 1,124 1,122 1,695 1,904 1,362 1,538 5,638 6,499
Margins (%) 10.7 10.0 7.4 7.7 8.5 8.8 6.6 7.9 9.0 8.0
Depreciation 366 391 390 393 408 424 445 450 1,540 1,726
Interest 128 96 63 178 130 156 165 175 465 626
Other Income 83 83 131 99 104 56 104 104 396 369
PBT before EO expense 1,248 1,328 802 651 1,262 1,381 857 1,017 4,029 4,516
Extra-Ord expense 0 0 0 0 0 0 173 0 0 173
PBT 1,248 1,328 802 651 1,262 1,381 684 1,017 4,029 4,343
Tax 338 345 220 152 327 376 175 256 1,055 1,134
Rate (%) 27.1 26.0 27.4 23.3 26.0 27.2 25.6 25.2 26.2 26.1
Minority Interest & P/L of Asso. Cos. 25 -88 -34 -67 -126 -87 -142 -71 -164 -425
Reported PAT 885 1,070 616 566 1,060 1,093 651 832 3,137 3,635
Adj PAT 885 1,070 616 566 1,060 1,093 778 832 3,137 3,807
YoY Change (%) 16.5 2.9 19.4 191.4 19.7 2.1 26.4 46.9 25.0 21.4
Margins (%) 5.7 6.2 4.0 3.9 5.3 5.1 3.7 4.3 5.0 4.7

IndiaMART Buy
CMP: INR4829 | TP: INR7100 (+47%) EPS CHANGE (%): FY22|23: -3.3|-6.1
 Expect good volume growth but revenue conversion will
 Expect ARPU to remain rangebound.
take time.
 Expect margin contraction due to normalization of costs  Pick-up in paid subscribers and margins are the key
and wage hikes along with headcount additions. monitorables.
Consolidated quarterly earnings model
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 1,531 1,632 1,736 1,797 1,816 1,824 1,881 1,978 6,696 7,499
YoY Change (%) 4.1 4.2 5.3 5.6 18.6 11.8 8.4 10.1 4.9 12.0
Total Expenditure 798 815 858 943 930 992 1,093 1,331 3,414 4,346
EBITDA 733 817 878 854 886 832 788 647 3,282 3,153
Margin (%) 47.9 50.1 50.6 47.5 48.8 45.6 41.9 32.7 49.0 42.0
Depreciation 44 44 38 35 32 28 30 30 161 120
Interest 18 18 16 15 14 14 13 13 67 54
Other Income 337 179 246 104 294 314 219 343 866 1,170
PBT before EO expense 1,008 934 1,070 908 1,134 1,104 964 947 3,920 4,149
Extra-Ord. expense 0 0 0 109 0 0 0 0 109 0
PBT 1,008 934 1,070 799 1,134 1,104 964 947 3,811 4,149
Tax 263 234 263 226 240 264 231 227 986 962
Rate (%) 26.1 25.1 24.6 28.3 21.2 23.9 24.0 24.0 25.9 23.2
Minority Interest and P/L of Asso. Cos. 4 2 5 16 15 18 31 0 27 64
Reported PAT 741 698 802 557 879 822 702 720 2,798 3,123
Adj. PAT 741 698 802 666 879 822 702 720 2,907 3,123
YoY Change (%) 131.6 684.3 105.1 50.3 18.6 17.8 -12.5 8.1 133.9 7.4
Margin (%) 48.4 42.8 46.2 37.1 48.4 45.1 37.3 36.4 43.4 41.6

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Indian Hotels Buy

CMP INR239 | TP: 275 (+15%) EPS CHANGE (%): FY23|24: +6|+8
 Revenue to grow 45% YoY (decline 20% QoQ) in 4QFY22.  Key market demand scenario, improvement in occupancy
EBITDA to increase 162% YoY (decline 42% QoQ) in the and ARR are the key monitorables.
same period.  To watch out for an update on corporate bookings.
 Performance update on international hotels is vital.

Quarterly Earning Model

Y/E March FY21 FY22 FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 1,436 2,567 5,599 6,150 3,446 7,284 11,112 8,918 15,752 30,759
YoY Change (%) -85.9 -74.5 -59.2 -42.1 139.9 183.8 98.5 45.0 -64.7 95.3
Total Expenditure 4,096 4,070 5,766 5,437 4,934 6,555 7,895 7,052 19,369 26,436
EBITDA -2,660 -1,503 -167 713 -1,488 728 3,218 1,866 -3,618 4,323
Margins (%) -185.2 -58.6 -3.0 11.6 -43.2 10.0 29.0 20.9 -23.0 14.1
Depreciation 1,001 1,028 1,023 1,043 1,025 1,018 999 1,030 4,096 4,072
Interest 879 968 1,121 1,061 1,097 1,139 1,249 1,100 4,028 4,585
Other Income 317 669 547 115 258 239 227 120 1,647 844
PBT before EO expense -4,223 -2,831 -1,764 -1,277 -3,354 -1,189 1,197 -144 -10,095 -3,489
Extra-Ord expense -861 -205 -280 -254 -203 108 102 0 -1,600 7
PBT -3,362 -2,626 -1,484 -1,023 -3,150 -1,297 1,095 -144 -8,495 -3,497
Tax -693 -429 -307 -124 -450 -113 232 -48 -1,553 -379
Rate (%) 20.6 16.3 20.7 12.1 14.3 8.7 21.2 33.0 18.3 10.8
Minority Interest & P/L of Asso. Cos. 130 103 12 14 73 22 103 7 259 205
Reported PAT -2,799 -2,300 -1,189 -913 -2,773 -1,206 760 -104 -7,201 -3,323
Adj PAT -3,445 -2,454 -1,399 -1,103 -2,926 -1,125 837 -104 -8,401 -3,318
YoY Change (%) NA NA NA -349.4 -15.1 -54.2 NA NA -359.5 -60.5
Margins (%) -239.9 -95.6 -25.0 -17.9 -84.9 -15.4 7.5 -1.2 -53.3 -10.8

Info Edge Neutral

CMP: INR4697 | TP: INR4820 (3%) EPS CHANGE (%): FY22|23: 0.0|0.0
 Recruitment vertical to see a strong performance, led by
 Real Estate vertical should perform well due to a revival.
continued demand for technology.
 Outlook on investee companies a key monitorable.
Standalone quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 2,801 2,561 2,723 2,900 3,197 3,517 4,033 4,510 10,986 15,257
YoY (%) -10.4 -19.1 -15.0 -10.2 14.1 37.3 48.1 55.5 -13.7 38.9
Salary costs 1,297 1,363 1,315 1,515 1,518 1,605 1,839 2,055 5,490 7,017
Ad and Promotion costs 256 502 503 557 459 617 805 857 1,817 2,738
Other Expenses 203 181 224 296 223 232 268 293 904 1,016
EBITDA 1,046 516 682 532 997 1,063 1,121 1,306 2,775 4,486
EBITDA Margin (%) 37.3 20.1 25.0 18.3 31.2 30.2 27.8 28.9 25.3 29.4
Depreciation 111 110 109 106 103 99 97 113 436 412
EBIT Margin (%) 33.4 15.8 21.0 14.7 28.0 27.4 25.4 26.4 21.3 26.7
Other Income 203 263 316 406 410 440 426 474 1,188 1,749
PBT bef. Extra-ordinary 1,122 654 875 819 1,290 1,392 1,438 1,644 3,469 5,765
Provision for Tax 290 142 176 120 281 377 326 378 728 1,361
ETR (%) 25.8 21.8 20.1 14.6 21.7 27.1 22.6 23.0 21.0 23.6
PAT bef. Minority 832 512 699 667 1,010 83,557 3,291 1,266 2,709 89,124
EOI 0 0 0 -32 0 82,542 2,178 0 -32 84,720
Adjusted PAT 832 512 699 699 1,010 1,015 1,113 1,266 2,677 4,403
QoQ (%) 5.6 -38.5 36.6 0.1 44.4 0.6 9.6 13.8
YoY (%) 11.1 -39.2 -23.3 -11.3 21.3 98.5 59.3 81.0 -18.6 64.5
EPS (INR) 6.8 4.0 5.4 5.2 7.8 7.8 8.6 9.8 21.3 34.0

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InterGlobe Aviation Neutral

CMP INR 2,013 | TP: INR 2,246 (+12%) EPS CHANGE (%): FY22|23: NM|-5
 Expect RPK at 18b (+36% YoY) as travel picks up after the
 Expect yields at INR5.1 (+16% QoQ), led by a reversal in
lockdown impose due to the third COVID wave in Jan’22,
demand since the third week of Jan’22 and pricing of 15-
with PLF at 89% (up from 80% in 3QFY22) and an ASK of
day forward tickets also sustaining.
20.7b (+8% YoY)
 Outlook on replacement of older aircraft with new aircraft
 The most significant monitorable will be opening up of
deliveries from Airbus. Also, expansion to new Tier II and
international travel, which remains key in the near term.
III routes will aid better yields going forward.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,667 27,410 49,100 62,229 30,069 56,085 92,948 99,463 1,46,406 2,78,564
YoY Change (%) -91.9 -66.2 -50.6 -25.0 292.2 104.6 89.3 59.8 -59.1 90.3
EBITDAR -15,443 2,806 9,030 6,156 -14,176 2,513 19,053 23,626 2,550 31,016
Margin (%) -201.4 10.2 18.4 9.9 -47.1 4.5 20.5 23.8 1.7 11.1
Net Rentals 757 743 642 662 523 649 1,273 1,035 2,805 3,479
EBITDA -16,200 2,063 8,388 5,495 -14,698 1,864 17,780 22,591 -255 27,537
Margin (%) -211.3 7.5 17.1 8.8 -48.9 3.3 19.1 22.7 -0.2 9.9
Depreciation 10,964 11,264 11,565 13,195 13,171 12,479 12,336 12,531 46,987 50,517
Interest 5,097 5,625 5,415 5,282 5,555 5,688 6,011 5,760 21,420 23,014
Other Income 3,768 2,878 2,326 1,392 1,631 1,899 1,851 2,026 10,363 7,407
PBT -28,494 -11,948 -6,266 -11,590 -31,793 -14,404 1,285 6,325 -58,298 -38,587
Rate (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Reported PAT -28,494 -11,948 -6,266 -11,590 -31,793 -14,404 1,285 6,325 -58,298 -38,587
EPS -74.0 -31.0 -16.3 -30.1 -82.6 -37.4 3.3 16.4 -151.5 -100.2
YoY Change (%) -337.4 12.1 -227.8 32.7 11.6 20.6 -120.5 -154.6 2,249.3 -33.8

Kaveri Seed Buy

CMP INR579 | TP: INR693 (+20%) EPS CHANGE (%): FY23|24: 0.0|0.0
 Revenue in the non-cotton segment to grow 5.5% YoY in  Demand trend for the Kharif season and cotton sowing in
4QFY22. India are the key monitorables.
 New product launches in cotton and non-cotton
segments.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,195 1,340 1,185 643 6,298 1,476 1,261 677 10,363 9,711
YoY Change (%) 14.6 13.9 -2.8 1.8 -12.5 10.1 6.3 5.4 11.4 -6.3
Total Expenditure 4,325 1,174 1,083 801 4,302 1,412 1,187 858 7,383 7,758
EBITDA 2,869 167 102 -158 1,996 64 74 -181 2,980 1,953
Margins (%) 39.9 12.4 8.6 -24.6 31.7 4.3 5.9 -26.7 28.8 20.1
Depreciation 55 56 56 56 48 50 55 56 222 208
Interest 1 2 0 2 0 0 0 0 5 1
Other Income 235 105 75 42 151 151 68 47 457 416
PBT before EO expense 3,049 214 121 -174 2,099 165 87 -191 3,210 2,160
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 3,049 214 121 -174 2,099 165 87 -191 3,210 2,160
Tax 84 -20 30 4 52 37 16 -11 98 93
Rate (%) 2.8 -9.4 24.4 -2.4 2.5 22.3 18.7 6.0 3.1 4.3
Minority Interest & P/L of Asso. Cos. -11 1 0 4 -10 0 6 4 -7 0
Reported PAT 2,953 235 91 -174 2,037 128 76 -175 3,105 2,067
Adj PAT 2,953 235 91 -174 2,037 128 76 -175 3,105 2,067
YoY Change (%) 28.6 72.1 10.4 -329.3 -31.0 -45.3 -16.1 0.8 19.9 -33.4
Margins (%) 41.0 17.5 7.7 -27.0 32.4 8.7 6.1 -25.9 30.0 21.3

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Lemon Tree Hotels Buy

CMP INR64 | TP: INR84 (+32%) EPS CHANGE (%): FY23|24: +13|+14
 Revenue to grow 29% YoY (decline 15% QoQ) in 4QFY22.
 To watch out for: a) an update on corporate
EBITDA to increase 63% YoY (decline 26% QoQ) in the
bookings, and b) the capex status of Aurika Mumbai.
same period.
 Demand scenario in key markets and improvements in
ARR and occupancy rates are the key monitorables.

Quarterly performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Sales 407 476 684 951 422 969 1,437 1,222 2,517 4,049
YoY Change (%) -71.1 -68.8 -65.7 -46.0 3.7 103.6 110.1 28.5 -62.4 60.9
Total Expenditure 363 393 483 666 422 630 804 757 1,905 2,613
EBITDA 44 83 201 285 -1 339 633 465 613 1,436
Margins (%) 10.7 17.5 29.4 30.0 -0.2 35.0 44.1 38.1 24.3 35.5
Depreciation 271 270 273 261 262 262 254 265 1,076 1,043
Interest 469 463 454 431 432 446 438 440 1,817 1,756
Other Income 31 60 22 19 21 19 24 35 133 99
PBT before EO expense -665 -590 -504 -388 -673 -351 -36 -205 -2,147 -1,264
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT -665 -590 -504 -388 -673 -351 -36 -205 -2,147 -1,264
Tax -71 -62 -48 -142 -75 -14 20 -10 -322 -80
Rate (%) 10.7 10.4 9.5 36.5 11.2 4.1 -56.2 4.9 15.0 6.3
MI & P/L of Asso. Cos. -175 -157 -144 -78 -196 -128 -37 -38 -555 -400
Reported PAT -419 -371 -312 -168 -401 -208 -19 -156 -1,271 -784
Adj PAT -419 -371 -312 -168 -401 -208 -19 -156 -1,271 -784
YoY Change (%) NA NA NA NA NA NA NA NA NA NA
Margins (%) -103.0 -78.0 -45.7 -17.7 -95.2 -21.5 -1.3 -12.8 -50.5 -19.4

MCX Buy
CMP INR1,451 | TP: INR1,870 (+29%) EPS CHANGE (%): FY22|23: -13.2|-9.6
 Future ADTO is expected to see marginal decline  Benefits from charging transaction fees on options
sequentially as volumes continue to shift towards the premium (started from 3QFY22) will continue to play out
options segment.  EBITDA margin to further expand as operating leverage
 Increased volatility in commodity prices globally along plays out
with margin norms to drive volumes in the options
segment
Quarterly Performance (INRm)
FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 730 1,197 1,009 970 876 832 896 963 3,906 3,567
Q-o-Q Gr. (%) -30.7 63.9 -15.7 -3.9 -9.7 -5.0 7.6 7.6 4.4 -8.7
Staff Costs 178 202 195 177 208 206 204 208 752 826
Other expenses 287 338 327 351 300 288 309 326 1,303 1,222
Depreciation 48 52 59 61 67 66 67 68 221 267
EBIT 217 605 428 381 302 272 315 362 1,631 1,251
Margins (%) 29.7 50.5 42.4 39.3 34.5 32.7 35.2 37.6 41.8 35.1
Interest Costs 1 1 1 1 1 0 1 1 2 3
Other Income 497 178 248 115 213 161 145 141 1,038 660
PBT bef. Exceptional items 714 783 675 495 515 432 460 502 2,667 1,909
Tax 150 197 -42 110 116 100 111 126 415 453
Rate (%) 21.1 25.2 -6.2 22.3 22.5 23.2 24.1 25.0 15.6 23.7
PAT 564 586 718 384 398 327 344 376 2,252 1,456
Q-o-Q Gr. (%) -25.2 3.8 22.6 -46.5 3.5 -17.9 5.2 9.5 -4.8 -35.4
EPS (INR) 11.1 11.5 14.1 7.5 7.8 6.4 6.8 7.4 44.2 28.5
Total volumes (INR t) 14.5 25.5 21.4 20.3 19.2 21.0 21.7 25.0 81.7 86.8
Q-o-Q Gr. (%) -42.9 76.0 -16.0 -5.5 -5.5 9.7 3.1 15.4
Y-o-Y Gr. (%) -18.1 10.0 4.1 -20.2 32.0 -17.7 1.0 23.3 -6.0 6.2

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PI Industries Buy
CMP INR2,862 | TP: INR3,332 (+16%) EPS CHANGE (%): FY23|24: +1.8|+1.8
 Expect CSM business to grow 11% YoY in 4QFY22.  Expect domestic business to grow 10% in 4QFY22.
 To watch out for an update on acquisition in the pharma  New product launches in both domestic and CSM
segment. segments are the key monitorables.

Quarterly Performance
Y/E March FY21 FY22 FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 10,601 11,577 11,621 11,971 11,938 13,542 13,563 13,268 45,770 52,311
YoY Change (%) 40.6 27.6 36.7 40.0 12.6 17.0 16.7 10.8 36.0 14.3
Total Expenditure 8,309 8,776 8,866 9,697 9,449 10,622 10,598 10,481 35,648 41,150
EBITDA 2,292 2,801 2,755 2,274 2,489 2,920 2,965 2,787 10,122 11,161
Margins (%) 21.6 24.2 23.7 19.0 20.8 21.6 21.9 21.0 22.1 21.3
Depreciation 427 433 440 448 487 492 503 515 1,748 1,997
Interest 96 76 66 44 34 34 33 28 282 129
Other Income 82 336 389 442 277 277 260 445 1,249 1,259
PBT before EO expense 1,851 2,628 2,638 2,224 2,245 2,671 2,689 2,689 9,341 10,294
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 1,851 2,628 2,638 2,224 2,245 2,671 2,689 2,689 9,341 10,294
Tax 444 451 682 425 405 370 466 471 2,002 1,712
Rate (%) 24.0 17.2 25.9 19.1 18.0 13.9 17.3 17.5 21.4 16.6
Minority Interest & P/L of Asso. Cos. -48 1 2 1 -32 5 -3 1 -44 -29
Reported PAT 1,455 2,176 1,954 1,798 1,872 2,296 2,226 2,217 7,383 8,611
Adj PAT 1,455 2,176 1,954 1,798 1,872 2,296 2,226 2,217 7,383 8,611
YoY Change (%) 43.2 76.6 61.4 62.4 28.7 5.5 13.9 23.3 61.7 16.6
Margins (%) 13.7 18.8 16.8 15.0 15.7 17.0 16.4 16.7 16.1 16.5

SRF Neutral
CMP INR2,635 | TP: INR2,707 (+3%) EPS CHANGE (%): FY23|24: +2|+2
 Expect chemicals/packaging/technical textiles segments to  Outlook on the specialty chemicals and the
grow 40%/30%/32% YoY, respectively, in 4QFY22. fluorochemicals businesses holds the key.
 To watch out for an update on the planned capex of the
chemicals business.

Consolidated - Quarterly Earning Model

Y/E March FY21 FY22 FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 15,452 21,008 21,464 26,077 26,994 28,390 33,459 35,278 84,000 1,24,120
YoY Change (%) -12.4 20.9 16 40.4 74.7 35.1 55.9 35.3 16.5 47.8
Total Expenditure 11,728 15,188 16,018 19,734 20,350 21,846 24,980 26,167 62,667 93,344
EBITDA 3,723 5,821 5,446 6,343 6,644 6,544 8,479 9,110 21,333 30,776
Margins (%) 24.1 27.7 25.4 24.3 24.6 23 25.3 25.8 25.4 24.8
Depreciation 1,040 1,140 1,166 1,185 1,230 1,303 1,324 1,410 4,531 5,266
Interest 432 362 285 262 275 234 294 295 1,340 1,097
Other Income 101 98 217 130 138 111 107 130 545 486
PBT before EO expense 2,353 4,417 4,213 5,026 5,277 5,118 6,968 7,535 16,008 24,898
Extra-Ord expense & DO 89 101 -220 -85 -72 -206 -335 0 -116 -613
PBT 2,264 4,316 4,432 5,111 5,349 5,324 7,303 7,535 16,123 25,511
Tax 493 1,164 1,185 1,302 1,396 1,500 2,247 1,808 4,144 6,952
Rate (%) 21 26.4 28.1 25.9 26.5 29.3 32.3 24 25.9 27.9
Reported PAT 1,771 3,152 3,247 3,809 3,953 3,825 5,055 5,727 11,979 18,560
Adj PAT 1,860 3,253 3,028 3,724 3,881 3,619 4,720 5,727 11,864 17,946
YoY Change (%) 16 58.6 -9 68.3 108.7 11.2 55.9 53.8 29 51.3
Margins (%) 12 15.5 14.1 14.3 14.4 12.7 14.1 16.2 14.1 14.5

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Tata Chemicals Neutral

CMP INR1,001 | TP: INR1,029 (3%) EPS CHANGE (%): FY23|24: +0 |+0
 Current demand scenario of soda ash in the key markets  Performance updates on the North America and India
of Tata Chemicals is a key monitorable. businesses are the key monitorables.
 Outlook on soda ash pricing.  To watch out for an update on energy costs for the Europe
business.

Consolidated - Quarterly Earning Model

Y/E March FY21 FY22 FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 23,482 26,094 26,061 26,362 29,772 30,226 31,416 32,851 1,01,998 1,24,265
YoY Change (%) -9.1 -5.8 -0.7 10.9 26.8 15.8 20.5 24.6 -1.5 21.8
Total Expenditure 19,884 22,231 21,342 23,535 23,760 25,217 25,964 27,468 86,992 90,868
EBITDA 3,598 3,863 4,719 2,827 6,012 5,009 5,451 5,383 15,006 21,856
Margins (%) 15.3 14.8 18.1 10.7 20.2 16.6 17.4 16.4 14.7 17.6
Depreciation 1,899 1,924 1,854 1,916 1,975 1,999 2,034 2,050 7,593 8,058
Interest 1,179 836 809 850 812 838 686 690 3,674 3,026
Other Income 587 686 427 645 543 564 391 613 2,344 2,110
PBT before EO expense 1,107 1,787 2,483 707 3,769 2,735 3,122 3,256 6,084 12,882
Extra-Ord expense 0 0 0 0 0 110 0 0 0 110
PBT 1,107 1,787 2,483 707 3,769 2,625 3,122 3,256 6,084 12,771
Tax 358 571 538 511 853 723 661 798 1,978 3,034
Rate (%) 32.3 31.9 21.7 72.3 22.6 27.5 21.2 24.5 32.5 23.8
MI & P/ of Asso. Cos. 616 512 337 78 36 -105 -549 -716 1,542 -1,334
Reported PAT 133 705 1,609 118 2,880 2,007 3,010 3,175 2,564 11,071
Adj PAT 133 705 1,609 118 2,880 2,118 3,010 3,175 2,564 11,182
YoY Change (%) -91.6 -75.3 -3.7 -93.6 2,068.30 200.5 87.1 2,597.20 -67.7 336.1
Margins (%) 0.6 2.7 6.2 0.4 9.7 7 9.6 9.7 2.5 9

Trident Buy
CMP INR54 | TP: INR66 (22%) EPS CHANGE (%): FY23|24: +0|-1
 Expect textile/paper segments’ revenues to increase  Outlook on paper and yarn prices holds the key.
38%/17% YoY, respectively, in 4QFY22.
 Growth in the home textiles segment and the overall  To watch out for an update on the company’s capex plans.
order book for the textiles business are the key
monitorables.
Standalone - Quarterly Earning Model
Y/E March FY21 FY22 FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,079 11,714 12,899 13,500 14,770 16,626 19,577 18,175 45,193 69,148
YoY Change (%) -45.8 -11.4 19.3 36.3 108.6 41.9 51.8 34.6 -3.8 53
Total Expenditure 5,898 9,467 10,545 11,229 11,036 12,651 15,545 14,832 37,139 54,064
EBITDA 1,181 2,247 2,355 2,271 3,734 3,975 4,032 3,344 8,054 15,084
Margins (%) 16.7 19.2 18.3 16.8 25.3 23.9 20.6 18.4 17.8 21.8
Depreciation 824 831 830 880 874 867 775 780 3,365 3,297
Interest 231 123 132 234 250 199 224 250 720 923
Other Income 54 32 50 26 29 101 35 32 162 196
PBT before EO expense 181 1,325 1,443 1,184 2,638 3,010 3,067 2,345 4,132 11,061
Extra-Ord expense 0 0 -570 304 0 0 252 0 -266 252
Forex (gain)/loss 49 9 -27 -85 -62 -54 3 0 -54 -113
PBT 132 1,316 2,040 964 2,700 3,063 2,813 2,345 4,451 10,921
Tax 31 313 443 208 665 775 721 590 994 2,752
Rate (%) 23.5 23.8 21.7 21.5 24.6 25.3 25.6 25.2 22.3 25.2
MI & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 101 1,002 1,598 756 2,035 2,288 2,091 1,755 3,457 8,169
Adj PAT 150 1,012 1,000 976 1,973 2,234 2,346 1,755 3,138 8,308
YoY Change (%) -87.7 -24.8 163.5 240.8 1,219.70 120.8 134.5 79.8 -2.7 164.8
Margins (%) 2.1 8.6 7.8 7.2 13.4 13.4 12 9.7 6.9 12

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 March 2022 Results Preview | Sector: Others

UPL Neutral
CMP INR785 | TP: INR842 (7%) EPS CHANGE (%): FY23|24: +1|+1
 Expect double-digit revenue growth across geographies,  The company’s debt reduction and capex plans are the key
ex-Europe, in 4QFY22. monitorables.
 To watch out for an update on the demand outlook of the
 Expect revenue and EBITDA growth of 16% YoY each in
agrochemicals industry on higher agri commodity
4QFY22.
scenario.

Cons.: Quarterly Earning Model (Incl-Arysta)

Y/E March FY21 FY22 FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 78,330 89,390 91,260 1,27,960 85,150 1,05,670 1,12,970 1,48,231 3,86,940 4,52,021
YoY Change (%) -0.9 14.4 2.6 14.9 8.7 18.2 23.8 15.8 8.2 16.8
Total Expenditure 60,540 71,310 69,180 99,570 66,520 85,220 86,320 1,15,265 3,00,600 3,53,325
EBITDA 17,790 18,080 22,080 28,390 18,630 20,450 26,650 32,966 86,340 98,696
Margins (%) 22.7 20.2 24.2 22.2 21.9 19.4 23.6 22.2 22.3 21.8
Depreciation 5,220 5,330 5,420 5,760 5,510 5,660 6,000 6,100 21,730 23,270
Interest 5,510 3,430 7,450 4,210 6,070 3,590 5,290 4,000 20,600 18,950
Other Income 670 750 670 490 480 470 700 500 2,580 2,150
Exch. difference on trade rec./payable -1,280 1,410 60 1,880 890 1,140 2,210 0 2,070 4,240
PBT before EO expense 9,010 8,660 9,820 17,030 6,640 10,530 13,850 23,366 44,520 54,386
Extra-Ord expense 1,000 2,110 -780 800 630 400 530 0 3,130 1,560
PBT 8,010 6,550 10,600 16,230 6,010 10,130 13,320 23,366 41,390 52,826
Tax 1,430 1,120 1,090 3,220 -1,520 2,490 1,670 5,491 6,860 8,131
Rate (%) 17.9 17.1 10.3 19.8 -25.3 24.6 12.5 23.5 16.6 15.4
MI & P/L of Asso. Cos. 1,070 800 1,570 2,380 760 1,300 2,290 2,755 5,820 7,105
Reported PAT 5,510 4,630 7,940 10,630 6,770 6,340 9,360 15,120 28,710 37,590
Adj PAT 6,750 6,653 9,405 11,900 10,153 7,450 12,048 15,120 34,708 44,770
YoY Change (%) 14.8 50.1 13.3 46.9 50.4 12 28.1 27.1 29.9 29
Margins (%) 8.6 7.4 10.3 9.3 11.9 7.1 10.7 10.2 9 9.9

April 2022 234

Motilal Oswal India Strategy Gallery
 March 2022 Results Preview | Sector: Others

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