3QFY25 results recap—The good, the bad and the ugly

19 February 2025

3QFY25 AP
S REC
RESULT

The darkest hour before dawn!

Pankaj Chhaochharia Dhirendra Tiwari Research Team

+91 22 6911 3340 +91 22 6911 3436 +91 22 6911 3300
[email protected] [email protected] [email protected]

Strictly confidential
 19 February 2025
Pankaj Chhaochharia, +91 22 6911 3340, [email protected]
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
The darkest hour before dawn! Research Team, [email protected]

Indian equities have corrected by ~15% (since the recent high #2 Are we in a structural slowdown?
seen on September 26, 2024), primarily driven by sharp FPI We believe that the growth slowdown in India is more cyclical in nature, primarily
equity outflow with regards to concerns of elevated valuation driven by monetary (slower credit growth) and fiscal tightening (lower government
and a domestic growth slowdown relative to other Emerging
capital spending due to union and state elections). Off late both these factors
Markets.
have started reversing helped by higher government capex spending, resumption
We continue to believe that the correction in the ongoing bull of a rate cut cycle(with another expected in April policy given benign food
market provides an opportunity to accumulate stocks within prices), liquidity injection, and tax sops, especially to the middle class. We
investment-linked themes. Our key overweight sectors remain believe that the aforesaid reasons would help revive growth in coming quarters.
unchanged: industrials & defence, power utilities and consumer
#3 Do we expect further earnings downgrade?
discretionary (like real estate, retail, hotels, consumer durable).
The current earnings season saw ~1% earnings downgrade and The last two quarters saw a sharp earnings downgrade of ~4% and ~3% for
our revised FY25/ 26/ 27 EPS stands at 1,025/ 1,178/ 1,345. FY25 and FY26 respectively. Post the recent earnings downgrade, Nifty 50
Our Mar'26 Nifty 50 target stands revised at 26,000 (earlier FY25-27 ~14% earnings CAGR expectation on a low base appears reasonable.
26,500) based on 19x FY27 EPS of 1,345. Moreover, 4QFY25 earnings growth is expected to be ~7% for our broader
In this report, we have attempted to address some investor coverage universe, which appears achievable. Going ahead, we expect the
concerns pertaining to earnings, valuation and macros. We have intensity of earnings downgrade to recede given our expectation of a pick-up in
also highlighted our sector and stock preferences at this juncture. domestic growth and reasonable earnings growth.

#1 Have earnings disappointed? #4 Is the capex cycle losing steam?

3QFY25 earnings have been broadly in line with our expectations. Nifty 50 (ex. In our recently concluded capex conference (where 50+ corporates participated),
financial, commodity & telecom) revenue/ EBITDA/ PAT grew by 8%/ 7%/ 8% corporates are optimistic in terms of domestic demand. Post the lull in capex
respectively. Our broader coverage universe's (ex. financial, commodity & telecom) activity during the first eight months of FY25 (due to election and other execution
revenue/ EBITDA/ PAT grew by 7%/ 5%/ 6% respectively. Sectors that challenges), business activity seems to be resuming and is likely to be steady in
disappointed are oil marketing companies (OMC), building material, railway, FY26. Sectors like power, renewable, metro, and real estate continue to be in
infrastructure, and cement; while an earnings beat was seen in defence, metals, capex mode.
oil & gas (ex. OMC), telecom. In terms of count the earnings season fared better
#5 Are there any signs of a pick-up in urban consumer demand?
than the last quarter with 64 stocks within Nifty 200 seeing an earnings miss
(greater than 5%) as compared to 75 in the previous quarter. On the other hand, During the quarter, the urban market underperformed the rural market. Overall
an earnings beat was seen in 58 stocks (as compared to 57 in the previous management commentary suggest that rural demand is likely to further strengthen
quarter). helped by better income aided by robust Kharif and Rabi crops. Management

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expects urban demand to gradually recover helped by lower inflationary pressures. the middle class, and lower inflationary pressures; and iv) Expect the earnings
Moreover, we expect that the recently announced rate cut (another one likely in downgrade intensity to recede in coming quarters. Our empirical analysis also
April) and the tax sops announced in the recently concluded Union Budget to suggest that market recoveries are led by cyclical sectors like capital goods,
further aid demand. banks, metals, auto, and mid-caps. Accordingly, we continue to like industrials &
#6 Does valuation provide comfort? defence, power utilities and consumer discretionary (like real estate, retail,
Post the recent correction of ~15% since September 2024, market valuation is hotels, consumer durable).
now trading near long-term average valuation in terms of price to earnings, Key sectoral highlights:
price to book, and bond-equity earnings yield basis. Valuation in terms of market
1. Our real estate coverage companies had a mixed quarter with a
cap to GDP has also corrected significantly, but still near +1 Standard Deviation, few doing stellar sales booking numbers, whereas a few others continue
which is mainly due to record equity supply in the last few years. to see launch challenges due to delay in approvals thus pushing a few
#7 Will FPI equity outflow persist? launches to FY26. Overall, demand continues to be healthy and the
Foreign portfolio investor (FPI) equity outflow from select Emerging Market (EM) right product should continue to see strong absorption.
economies has been to the tune of ~USD 54 bn since Oct'24. Within EMs a 2. Our railway coverage universe's operational performance was below
sharp outflow has been seen in India (~USD 22 bn), primarily due to the relatively expectations, led by IRCON and Titagarh. However, management is
higher downgrade in growth outlook and rich valuation. We believe that the FPI confident about a robust business outlook buoyed by a sustainable
equity outflow may recede in near term as a) FPI equity flow as a percentage of backlog of wagon orders.
market cap below -1 Standard Deviation; b) Reasonable valuation; c) Growth is 3. Our industrial coverage universe's operational performance was
likely to improve in coming quarters given tailwinds both in the form of monetary broadly in line with our expectations despite moderation in execution
and fiscal impulses; and d) Low FPI ownership in India despite strong fundamentals. and witnessed a growing order backlog. Capex demand across
#8 Sectors to play at the current juncture segments largely driven by spending in public infrastructure continues
Our empirical analysis of past correction (based on 20 episodes of greater than to be robust; however, there was a slowdown in short cycle private
capex. Slowdown in economic activity is believed to have bottomed
10% correction, ex-global financial crisis and Covid-19) suggest that a) Market
out and could recover going ahead.
corrections have been on an average to the tune of 14% and b) The correction
period on an average was 70 days. The current correction has been to the tune 4. Defence companies reported earnings ahead of our expectations
of ~15% and has been ongoing for the last 144 days. At the current juncture, driven by Bharat Electronics and Mazagon Dock. The adverse
we believe that there is limited downside as i) The current correction has already geopolitical situation has helped in strong ordering for defence related
breached the average correction level seen during the previous episodes; ii) FPI products.
equity outflow is below -1 Standard Deviation; iii) Expect growth to pick-up 5. Our cement coverage universe's 3Q volume was broadly in line
nudged by higher government capex spending, rate cuts, tax sops, especially for with our estimates while EBITDA/ton was 10% below our estimate.

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6. In the utilities sector, power demand was +2.7% YoY in 3QFY25 due 12. Agro-chemical companies (ex. UPL) reported numbers broadly in
to a milder winter compared to the base quarter. The lull in January-25 line with our expectations. Domestic companies' EBITDA margin
was due to above normal temperature. Overall, our coverage universe remained under pressure due to a) Lower realization and b) Higher
witnessed flat revenue/ EBITDA YoY. The long term growth of gencos rebates. Export focused companies witnessed robust volume growth
will continue to be fueled by capacity addition. Coal India had a weak on the back of strong demand from across geographies, which was
quarter, with declining volumes coupled with reduced e-auction partially offset by lower realization.
premium and lower FSA realization. 13. Building material demand was muted as against expectation of a
7. Our coverage banks reported an earnings beat, primarily due to recovery in 2HFY25. Operating deleverage and discounts to counter
muted demand also impacted margins.
PSU banks on account of lower than expected provision, while private
banks' earnings were largely in line with estimates. However, PSU 14. Our FMCG universe's revenue performance was broadly in line with
bank performance was relatively weak both in terms of net interest expectations while profitability was below our expectations. Broad
income and in terms of net interest margin. The asset quality based inflation affected both consumer demand and input cost. Urban
performance was mixed, with elevated slippages in retail unsecured markets underperformed rural markets. Notably, alcobev companies
loans, including MFI loans. outperformed consumer staples and paint companies on all parameters.

8. The life insurance sector witnessed APE growth of 13% for private 15. In the discretionary retail space, urban demand was under pressure
while rural demand was stable. Consequently, urban fashion retailers
insurers in 3QFY25 and 19% for 9MFY25. The impact of surrender
focused on improving profitability led by gross margin expansion and
value regulation changes has been effectively mitigated by insurers
cost control initiatives. Jewelry retailers posted strong growth in sales,
thus limiting the VNB margin impact to <100 bps.
while margins were impacted by heightened competition and volatility
9. IT services reported earnings largely in line with our estimates. EBIT in gold prices.
margin improved for all top 5 IT companies in the range of 20-100 bps 16. Consumer durable reported a mixed quarter with strong beat by
QoQ, largely in-line with the expectation. Commentaries by most Bajaj Electricals while Havells and Voltas disappointed. Going forward,
companies suggest client sentiment is improving as macro uncertainties companies remain positive on industry demand. Additionally, with the
recede, resulting in higher deal activities, and expects FY26 to be summer season anticipated to be harsh, we expect the companies to
better than FY25. deliver better performance.
10. Oil & gas companies reported lower than expected operating 17. Hotel companies saw strong pricing growth across all key markets
earnings, mainly driven by oil marketing companies (impacted by lower driven by robust demand for both leisure and business. Management
GRMs, LPG under-recovery despite strong marketing margins) and city highlighted strong demand visibility for 4Q driven by large-scale events
gas companies because of APM gas cut. like the Mahakumbh, concerts, conferences, and weddings. They
further anticipate growth in 1QFY26 to be better as compared to last
11. Ferrous earnings was impacted due to lower steel prices, though
year due to an extended wedding season and the absence of election
partly off-set by the softening coking coal cost. We expect lower coking
impact.
coal and iron ore cost and stable steel prices to aid steel spreads in
4QFY25. Non-ferrous companies continue to outperform helped by 18. Bharti Airtel posted strong result helped by higher ARPU and stronger-
firm prices and lower input commodity cost. than-expected subscriber recovery post the SIM consolidation.

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Pankaj Chhaochharia, +91 22 6911 3340, [email protected]
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Top Picks Research Team, [email protected]

Company M Cap CMP TP Return EPS (INR) PE (x) P/B (x) ROE (%)
(USDbn) (INR) (INR) (%) FY25 FY26 FY27 FY25 FY26 FY27 FY26 FY26
Large Cap (>US$10 bn)
Bharti Airtel 114.9 1,669 1,900 14 40 55 72 41.8 30.4 23.1 7.2 26.3
ICICI Bank 101.0 1,243 1,460 17 65 71 82 19.0 17.6 15.2 2.3 16.9
Ultratech 37.5 11,309 12,800 13 222 298 394 51.0 38.0 28.7 4.7 13.0
Titan 32.9 3,222 4,184 30 43 56 70 75.3 57.5 46.2 17.9 35.4
NTPC 34.7 311 428 38 20 21 22 15.7 15.0 14.3 1.8 12.1
Bharat Electronics 20.6 245 376 54 7 7 9 35.8 33.2 26.0 8.2 26.1
Trent 20.4 4,998 7,363 47 46 68 93 108.5 73.3 53.6 21.0 28.6
Siemens 19.8 4,844 7,089 46 81 98 121 59.9 49.7 40.2 9.6 20.6
HDFC Life 15.3 619 830 34 8 10 12 19.8 14.9 10.8 2.1 16.7
Havells 10.9 1,511 1,933 28 24 30 39 63.2 49.8 39.1 9.5 20.6
Mid cap (USD 3 bn – 10 bn)
Mazagon Dock Shipbuilders 9.1 1,962 2,757 41 71 75 95 27.7 26.3 20.6 7.5 31.6
BHEL 7.5 187 300 61 4 9 12 41.6 20.2 16.2 2.4 12.1
Oberoi Realty 6.7 1,591 2,593 63 75 90 102 21.2 17.7 15.6 2.9 17.9
Hitachi Energy 5.1 10,494 17,075 63 87 185 285 121.0 56.7 36.9 20.5 41.4
Voltas 4.7 1,227 1,779 45 29 36 47 42.0 34.3 26.0 5.5 17.1
JK Cement 4.0 4,517 5,100 13 91 116 146 49.7 38.8 30.9 5.2 14.2
Radico Khaitan 2.9 1,891 2,500 32 26 38 50 73.2 49.3 37.8 8.4 17.8
Sumitomo Chemicals 2.7 476 580 22 10 12 14 46.1 38.4 32.9 6.9 19.5
Aditya Birla Real Estate 2.7 2,065 3,448 67 26 38 42 80.9 54.9 49.7 5.1 9.6
Brigade Enterprise 2.7 974 1,666 71 36 42 54 27.2 22.9 18.1 3.6 19.7
Small cap (< USD 3 bn)
PTC Industries 1.8 10,735 19,639 83 52 112 335 204.6 95.8 32.1 10.3 11.3
Chalet Hotels 1.7 668 1,150 72 15 22 29 44.1 30.8 23.0 3.8 13.0
Transformers & Rectifiers India 1.3 367 712 94 6 11 16 59.2 32.3 23.2 7.5 25.8
BEML 1.2 2,587 4,114 59 63 98 147 41.1 26.3 17.6 3.3 13.3
Quess Corp 1.0 596 1,000 68 28 35 41 21.5 17.1 14.4 2.6 16.3
Paradeep Phosphates 0.9 95 140 48 5 7 9 17.2 12.9 10.1 1.7 14.3
HG Infra 0.8 1,053 1,825 73 84 94 108 12.6 11.2 9.7 2.1 19.5
Kirloskar Pneumatic 0.8 1,006 1,456 45 34 41 49 30.0 24.6 20.7 4.8 21.2
Arvind Fashions 0.6 396 667 68 7 12 17 52.8 33.7 22.8 3.7 11.1
Source: Bloomberg, Antique Price as on 18th February 2025

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Model portfolio
Company Recom. Price Market Cap Portfolio wt P/E P/B RoE
(INR) (USD bn) (%) FY26e FY26e FY26e
ICICI Bank Buy 1,243 101.0 8.0 15.2 2.5 17.0
HDFC Bank Buy 1,723 151.7 5.0 14.6 2.2 15.7
SBI Buy 726 74.5 5.0 8.0 1.3 16.8
Bank of Baroda Buy 206 12.3 2.5 4.6 0.7 16.2
HDFC Life Buy 619 15.3 2.5 10.8 1.8 16.6
L&T Finance Buy 132 3.8 1.0 7.3 1.0 14.9
Karur Vyasa Bank Buy 218 2.0 1.0 7.6 1.1 15.9
Financials 25.0
HCL Tech Buy 1,726 53.9 5.0 21.7 7.1 32.6
Tech Mahindra Buy 1,705 19.2 3.0 21.6 6.3 29.0
Mphasis Buy 2,579 5.6 1.5 22.4 4.4 20.4
Quess Buy 596 1.0 1.0 14.4 2.4 17.3
Cyient Buy 1,470 1.9 1.0 15.2 2.8 19.5
IT Services 11.5
United Spirirs Buy 1,335 11.2 1.5 47.1 9.4 21.3
Marico Buy 626 9.3 1.5 39.1 13.6 37.8
Radico Khaitan Buy 1,891 2.9 0.5 37.8 6.8 19.6
Cons staples 3.5
Titan Buy 3,222 32.9 2.0 46.2 13.7 33.6
Trent Buy 4,998 20.4 2.0 53.6 15.1 28.2
Oberoi Realty Buy 1,591 6.7 1.5 15.6 2.5 17.1
ADITYA BIRLA REAL ESTATE LTD Buy 2,065 2.7 1.0 49.7 4.7 9.8
Brigade Enterprise Buy 974 2.7 0.5 18.1 16.8 20.4
Arvind Fashions Buy 396 0.6 0.5 22.8 3.0 13.3
Chalet Hotels Buy 668 1.7 0.5 23.0 3.2 15.1
Arvind Ltd Buy 319 1.0 0.5 12.9 1.7 13.8
Cons disc 8.5

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Model portfolio
Company Recom. Price Market Cap Portfolio wt P/E P/B RoE
(INR) (USD bn) (%) FY26e FY26e FY26e
Mahindra & Mahindra No Coverage 2,790 39.9 3.0 23.7 4.6 20.5
Hero Motocorp No Coverage 3,841 8.8 2.0 15.1 3.6 24.5
Ashok Leyland No Coverage 222 7.5 2.0 19.2 5.3 29.4
Auto 7.0
Reliance Ind Buy 1,225 190.8 3.0 19.0 1.8 9.6
HPCL Buy 320 7.8 2.5 7.0 1.3 19.2
Oil India Buy 399 7.5 2.5 8.2 1.1 14.4
Energy 8.0
Torrent Pharma Buy 3,042 11.8 3.0 31.4 10.2 34.9
Sumitomo Chemical Buy 476 2.7 1.5 32.9 5.8 19.2
Paradeep Phosphates Buy 95 0.9 0.5 10.1 1.5 16.0
Health Care/Chemicals/Agro-chem 5.0
L&T Buy 3,220 51.0 2.0 16.3 3.2 21.0
Siemens Buy 4,844 19.8 2.0 40.2 8.4 22.4
Bharat Electronics Buy 245 20.6 2.0 26.0 6.8 28.4
ABB Buy 5,142 12.5 2.0 40.7 10.5 28.3
Mazgaon Deck Buy 1,962 9.1 1.5 20.6 6.0 32.3
BHEL Buy 187 7.5 1.5 16.2 2.2 14.1
Hitachi Energy Buy 10,494 5.1 0.5 36.9 14.8 46.6
PTC Industries Buy 10,735 1.9 0.5 32.1 7.9 27.8
BEML Buy 2,587 1.2 0.5 17.6 2.8 17.2
Transformers & Rectifiers Buy 367 1.3 0.5 23.2 5.8 28.1
Kirloskar Oil Engines Buy 621 1.0 0.5 14.8 2.4 17.6
HG Infra Buy 1,053 0.8 0.5 9.7 1.7 18.5
Industrials & Defence 14.0

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Model portfolio
Company Recom. Price Market Cap Portfolio wt P/E P/B RoE
(INR) (USD bn) (%) FY26e FY26e FY26e
Ultratech Cement Buy 11,309 37.6 2.5 28.7 4.1 15.5
Astral Buy 1,363 4.2 0.5 44.4 7.4 17.8
Supreme Industries Buy 3,663 5.4 0.5 34.1 6.4 20.1
JK Cement Buy 4,517 4.0 0.5 30.9 4.5 15.7
Building Material 4.0
Hindalco Buy 611 15.8 1.5 10.5 0.9 9.3
NMDC Buy 63 6.4 1.5 6.3 1.4 23.5
Nalco Buy 180 3.8 0.5 8.2 1.4 18.8
Materials 3.5
NTPC Buy 311 34.7 2.0 14.3 1.6 11.9
Coal India Buy 361 25.6 2.0 5.4 1.5 31.1
Tata Power Buy 340 12.5 1.0 17.0 2.3 13.3
Utilities & Logistics 5.0
Bharti Airtel Buy 1,669 114.9 4.0 23.1 5.7 27.5
Telecom 4.0
Havells Buy 1,511 10.9 0.5 39.1 7.9 22.1
Voltas Buy 1,227 4.7 0.5 26.0 4.8 19.8
Consumer Durable 1.0
Cash 0.0
Total 100.0
Source: Antique; Price as on 18th February 2025

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Nifty 50 results were largely in line with our estimates

Sales EBITDA PAT

YoY % % YoY % % YoY % %
Sectors (INR mn) Dec-24 growth Variance Dec-24 growth Variance Dec-24 growth Variance
Auto ex TTMT 9,53,310 14.5 -2.4 1,44,477 16.2 0.4 1,09,714 12.7 -0.7
Cement 1,69,710 1.4 -1.0 28,871 -11.3 -2.5 14,748 -16.6 0.5
Consumption 7,50,979 8.9 -3.3 1,61,646 1.4 -1.4 1,26,477 0.6 5.2
Energy 39,07,176 2.2 2.1 7,03,375 9.8 3.7 3,14,291 2.9 -3.0
Health Care 3,42,840 11.2 1.6 92,867 20.1 12.1 64,805 22.2 11.4
Industrials 7,04,239 18.8 3.0 79,082 16.2 0.7 46,749 21.7 1.2
IT Services 17,12,509 3.3 0.2 4,04,739 7.6 1.3 2,81,285 13.9 2.2
Materials 15,45,821 0.6 3.1 2,64,667 -6.8 9.1 1,12,270 -22.0 10.2
Pvt Bank 7,70,541 7.7 -0.6 6,12,025 9.1 0.0 3,95,388 4.0 -0.1
NBFC 1,49,721 19.1 -3.5 1,00,520 37.2 -14.9 78,163 43.2 21.3
PSU Bank 4,14,455 4.1 -2.3 2,35,508 77.9 -10.2 1,68,914 84.3 7.7
Telco 4,51,293 19.1 4.4 2,45,966 24.1 6.9 91,220 260.1 73.5
TTMT 11,35,750 2.7 -2.6 1,30,320 -15.0 -16.0 54,510 -22.4 -15.3
Grasim 81,203 26.9 3.4 2,706 -48.2 -11.0 -1,687 -171.4 -6.1
Insurance 1,05,090 12.6 2.2 28,000 10.3 -2.0
Utilities 6,01,888 1.3 -3.3 2,59,406 0.5 -3.1 1,10,934 -2.6 -3.7
Total 1,37,96,524 5.5 0.4 34,66,174 10.3 -0.1 19,95,781 11.4 3.6
Total ex fin 1,23,56,718 5.2 0.6 25,18,122 5.9 1.7 13,25,316 6.8 3.4
Total ex fin & commodity 69,03,721 8.0 -0.7 15,50,080 6.7 -0.3 8,98,755 13.6 5.1
Total ex fin, commodity, telecom & TTMT 53,16,678 8.4 -0.7 11,73,794 6.6 0.4 7,53,025 8.3 2.0
Source: Bloomberg, Antique;
Note – For Insurance APE & VNB is considered instead of Sales & PAT. For Banks NII & PPoP is used instead of Sales & EBITDA. The above data is not adjusted for free-float

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A similar trend seen within broader coverage universe

Sales EBITDA PAT

YoY % % YoY % % YoY % %
Antique coverage (INR mn) Dec-24 growth Variance Dec-24 growth Variance Dec-24 growth Variance
AgroChem 2,74,433 19.5 7.8 41,317 109.3 6.4 21,660 (1,148.0) 81.7
Cement ex Grasim 4,59,400 (2.0) (1.8) 69,049 (26.8) (10.4) 22,452 (48.9) (18.1)
FMCG 5,99,933 6.2 (2.4) 1,39,925 1.3 (2.3) 1,15,180 1.2 5.2
Consumer Discretionary 2,09,827 5.0 (1.7) 35,929 (3.1) 3.3 20,441 (3.4) 10.9
Retail 4,69,116 19.3 (0.0) 54,442 16.0 (2.1) 28,477 18.4 (2.8)
Industrials ex Siemens 9,41,536 16.3 0.6 94,280 13.3 (5.8) 55,678 21.1 (6.7)
Defence 1,99,723 23.2 2.6 48,054 34.5 23.1 39,856 22.0 14.0
Railway 95,456 (4.7) (10.2) 6,933 (16.2) (18.4) 7,650 (7.7) (4.9)
Consumer Durable 1,38,539 13.7 (1.7) 11,138 35.6 (3.5) 6,789 40.2 (10.7)
IT 19,88,610 3.8 0.2 4,50,240 7.4 1.1 3,09,860 12.7 1.7
Metals 22,31,397 5.3 2.9 3,94,239 9.6 6.1 1,39,227 7.4 14.2
Oil_Gas ex OMC 33,96,758 2.8 1.0 7,00,338 4.3 7.0 3,10,289 (7.9) 0.1
OMC 41,70,149 (2.0) 3.5 2,06,672 (14.5) (52.4) 1,05,456 (12.1) (60.1)
Telecom 4,51,293 19.1 4.4 2,45,966 24.1 6.9 91,220 260.1 73.5
Real estate 1,55,821 26.5 4.6 51,088 36.9 16.3 38,216 60.1 21.6
Textile 61,088 10.3 (0.7) 8,227 (0.5) (6.2) 4,231 (7.1) (11.8)
Infrastructure 1,51,622 (9.5) (10.3) 21,839 (16.5) (13.2) 7,057 (35.2) (27.9)
Building Material 90,161 2.1 (4.2) 9,825 (20.1) (21.3) 4,987 (30.5) (32.7)
Utilities 11,27,851 0.4 (2.7) 4,02,292 (0.0) (2.3) 1,95,574 (8.8) (5.1)
Midcap 1,22,457 30.4 (2.1) 28,097 32.2 (1.2) 14,980 38.4 (8.4)
PSU Bank 8,22,835 3.1 (2.5) 5,31,640 30.7 (4.3) 3,49,448 50.5 9.6
Private Bank 8,42,692 7.9 (0.7) 6,55,152 9.1 0.0 4,19,445 3.3 (0.5)
Insurance 2,50,060 (4.5) (6.2) - - - 57,320 (6.0) (6.6)
Total 1,93,31,959 4.0 0.8 42,09,388 8.4 (4.1) 23,63,806 9.8 (3.0)
Total ex financial 1,74,16,372 4.0 1.2 30,22,596 5.1 (4.9) 15,37,593 5.8 (5.9)
Total ex financial, commodity 76,18,068 7.9 (0.4) 17,21,347 7.5 0.2 9,82,621 13.3 4.7
Total ex financial, commodity & telecom 71,66,775 7.3 (0.7) 14,75,381 5.1 (0.8) 8,91,401 5.9 0.6
Source: Bloomberg, Antique;
Note – For Insurance APE & VNB is considered instead of Sales & PAT. For Banks NII & PPoP is used instead of Sales & EBITDA.

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 -30.0
-10.0
10.0
30.0
50.0
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19

Source: Bloomberg, Antique;

2QFY19
3QFY19
4QFY19
1QFY20
2QFY20

Antique Stock Broking Limited

3QFY20
Sales grew by 7.9% YoY

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

-30.0
-10.0
10.0
30.0
50.0
Sales, YoY% growth
3QFY22
4QFY22
4QFY17 1QFY23
1QFY18 2QFY23
2QFY18 3QFY23
3QFY18 4QFY23
4QFY18 1QFY24
1QFY19 2QFY24
2QFY19 3QFY24
3QFY19 4QFY24
4QFY19 1QFY25
1QFY20 2QFY25
2QFY20
7.9

3QFY25
PAT grew by 13.4% YoY

3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
-30.0
-10.0
10.0
30.0
50.0

1QFY22
2QFY22
3QFY22 4QFY17

Net profit, YoY% growth

4QFY22 1QFY18

Source: Bloomberg, Antique; Data is Ex Financials, Metals, Oil & Gas

1QFY23 2QFY18
2QFY23 3QFY18
3QFY23 4QFY18
4QFY23 1QFY19
Source: Bloomberg, Antique;

1QFY24 2QFY19
2QFY24 3QFY19
3QFY24 4QFY19
4QFY24 1QFY20
1QFY25 2QFY20
2QFY25 3QFY20
Corporates delivered high single-digit operating earnings growth

3QFY25 4QFY20
13.4

1QFY21
2QFY21
EBITDA growth was 7.6% YoY

3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
EBITDA, YoY% growth

4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
19 February 2025

1QFY25
2QFY25
7.6

3QFY25
11
 19 February 2025

Earnings season fared better than last quarter

n In terms of count, earnings season was better than last quarter with 58 Earnings season fared better than last quarter
80 75 73 75
companies reported earnings beat greater than 5% (more than previous
68 69
quarter of 57 companies) while 64 companies reported earnings miss 6264 63 64 64
5860 59 57 58
greater than 5% (significantly lower than previous quarter of 75 60 55
52
49
companies).

n Within sectors, results were better than expectation in metals, cement, 40

power and PSU Bank. On the other hand, earnings disappointed in 3QFY23 1QFY24 3QFY24 1QFY25 3QFY25
Positive surprise Negative surprise
multiple sectors.
Source: Bloomberg, Antique;
Sector-wise earnings beat/miss
Earnings beat/miss No of stocks 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25
Information Technology 13 7.7 -30.8 -30.8 -23.1 7.7 -30.8 0.0 7.7 -23.1
Capital Goods 18 22.2 38.9 16.7 11.1 0.0 27.8 11.1 22.2 -11.1
Consumer Services 9 -33.3 0.0 -33.3 -11.1 -22.2 -11.1 0.0 -66.7 -44.4
Construction Materials 5 -20.0 -20.0 80.0 80.0 40.0 60.0 -100.0 -100.0 20.0
Power 11 -18.2 0.0 -27.3 -9.1 -9.1 -36.4 27.3 -36.4 9.1
Metals & Mining 9 -33.3 33.3 77.8 -11.1 33.3 -33.3 -11.1 33.3 66.7
Services 5 -60.0 -20.0 20.0 40.0 20.0 -60.0 20.0 -80.0 -80.0
Healthcare 13 -38.5 -53.8 7.7 7.7 38.5 23.1 23.1 -15.4 0.0
Consumer Durables 6 -66.7 0.0 -33.3 0.0 -50.0 -50.0 0.0 -50.0 -66.7
Automobile and Auto Components 15 -13.3 40.0 26.7 53.3 0.0 6.7 6.7 -26.7 -20.0
Oil, Gas & Consumable Fuels 12 16.7 0.0 25.0 41.7 -16.7 -33.3 -16.7 -58.3 0.0
"Fast Moving “Consumer Goods" 12 33.3 33.3 25.0 16.7 -8.3 0.0 -8.3 41.7 -16.7
Telecommunication 5 -60.0 20.0 -40.0 -80.0 0.0 0.0 60.0 -40.0 0.0
Chemicals 7 0.0 0.0 -42.9 -28.6 -28.6 -28.6 -28.6 -42.9 0.0
Realty 6 33.3 83.3 -33.3 16.7 -33.3 66.7 33.3 0.0 0.0
Construction 3 33.3 -33.3 -33.3 0.0 -33.3 33.3 -100.0 -33.3 0.0
NBFC 22 27.3 18.2 18.2 13.6 9.1 4.5 9.1 0.0 4.5
Pvt Bank 11 27.3 18.2 36.4 9.1 -27.3 -9.1 18.2 18.2 -18.2
PSU Bank 9 44.4 22.2 22.2 33.3 33.3 22.2 11.1 66.7 55.6
Insurance 5 -40.0 20.0 80.0 -20.0 -40.0 0.0 -20.0 20.0 60.0
Grand Total 197 -1.0 10.2 10.7 9.6 -1.0 -3.0 2.5 -9.1 -3.0
Source: Antique, Bloomberg
Note: Earnings beat ratio is calculated by difference in number of stocks reported adjusted income ahead and below consensus by 5% and divided by number of stocks

Antique Stock Broking Limited 12

 19 February 2025

Earnings downgrade got further accentuated in 3QFY25

n In terms of count, earnings season saw 45 companies getting earnings 150 121 130
118 120
upgrade for FY26 lower than previous quarter of 50 companies while 8985 96 92
100 79 76 8188
130 companies got downgraded higher than previous quarter of 121 53 57 50 45
companies. 50

n Within sectors, downgrades were seen across sectors barring construction 0

Mar-24 Jun-24 Sep-24 Dec-24 Mar-24 Jun-24 Sep-24 Dec-24
and PSU banks.
FY25 FY26
Upgrade Downgrade

NSE 200 FY25 FY26

Sector name No of stocks NER NER NER NER Change in NER NER NER NER Change in
Dec-24 Sep-24 Jun-24 Mar-24 Dec'24 NER Dec-24 Sep-24 Jun-24 Mar-24 Dec'24 NER
Information Technology 13 -46.2 15.4 -7.7 -76.9 -61.5 -46.2 -46.2 -23.1 -76.9 0.0
Capital Goods 19 -36.8 -63.2 0.0 47.4 26.3 -36.8 -42.1 0.0 52.6 5.3
Consumer Services 9 -77.8 -55.6 -33.3 -11.1 -22.2 -55.6 -55.6 -11.1 -11.1 0.0
Construction Materials 5 -100.0 -100.0 -60.0 0.0 0.0 -100.0 -100.0 -60.0 -40.0 0.0
Power 11 -27.3 -45.5 -18.2 0.0 18.2 -27.3 -36.4 -27.3 18.2 9.1
Metals & Mining 9 -22.2 -11.1 -44.4 22.2 -11.1 -11.1 -22.2 -33.3 55.6 11.1
Services 5 -80.0 -80.0 60.0 -20.0 0.0 -80.0 -60.0 -20.0 40.0 -20.0
Healthcare 13 -7.7 -23.1 15.4 -23.1 15.4 -38.5 -38.5 23.1 15.4 0.0
Consumer Durables 6 -66.7 -33.3 -33.3 0.0 -33.3 -66.7 -33.3 33.3 33.3 -33.3
Automobile and Auto Components 15 -66.7 -53.3 -13.3 46.7 -13.3 -73.3 -53.3 20.0 46.7 -20.0
Oil, Gas & Consumable Fuels 12 -41.7 -75.0 25.0 33.3 33.3 -50.0 -50.0 50.0 33.3 0.0
"Fast Moving “Consumer Goods" 12 -83.3 -66.7 -41.7 -16.7 -16.7 -83.3 -58.3 -16.7 0.0 -25.0
Telecommunication 5 20.0 0.0 60.0 40.0 20.0 -20.0 -60.0 -20.0 40.0 40.0
Chemicals 7 -57.1 -14.3 0.0 -57.1 -42.9 -57.1 -42.9 0.0 -57.1 -14.3
Realty 6 -33.3 66.7 33.3 -33.3 -100.0 -16.7 33.3 -66.7 -66.7 -50.0
Construction 3 0.0 -100.0 -33.3 100.0 100.0 33.3 -33.3 -33.3 33.3 66.7
NBFC 24 4.2 -16.7 -12.5 16.7 20.8 -8.3 -4.2 0.0 8.3 -4.2
Pvt Bank 11 -54.5 -18.2 -18.2 -36.4 -36.4 -72.7 -45.5 -18.2 -27.3 -27.3
PSU Bank 9 66.7 11.1 0.0 11.1 55.6 0.0 -22.2 22.2 33.3 22.2
Insurance 5 80.0 -20.0 -20.0 0.0 100.0 -40.0 40.0 40.0 -20.0 -80.0
Grand Total 200 -31.5 -32.5 -8.5 2.0 1.0 -42.5 -35.5 -3.5 8.0 -7.0
Source: Antique, Bloomberg
Net Earnings revision (NER) is calculated by difference in total number of stocks with earnings upgrade and downgrade and divided by number of stocks
Earnings upgrade is change in estimates more than 0.2% and downgrade is change in estimate less than -0.2%

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 19 February 2025

Another quarter of sharp earnings downgrade

NSE 200 Average revision FY25 FY26

Sector name No of stocks Dec-24 Sep-24 Jun-24 Mar-24 Dec-24 Sep-24 Jun-24 Mar-24
Information Technology 13 -1.3 0.1 -0.7 -4.8 -0.8 -0.5 -0.4 -4.7
Capital Goods 19 -3.4 -4.7 -1.5 5.4 -2.4 -3.7 -1.1 8.2
Consumer Services 9 -8.8 -9.3 -0.8 -3.5 -7.8 -5.5 0.2 -1.2
Construction Materials 5 -16.4 -24.0 -8.6 -2.8 -13.3 -18.0 -0.4 0.2
Cement 11 -2.2 -3.3 0.6 -3.7 -8.7 -4.2 -5.2 -3.4
Metals & Mining 9 -10.5 -11.1 -4.5 7.6 -6.8 -0.5 -2.1 14.1
Services 5 -5.8 -10.2 67.5 20.2 -5.4 -5.4 2.6 4.1
Transport 13 -3.2 -3.3 1.1 0.2 -3.4 -0.3 1.1 2.2
Consumer Durables 6 -4.6 -1.8 -0.3 0.9 -4.0 -0.8 1.7 2.9
Auto 15 -3.8 -3.5 -0.8 0.6 -4.0 -3.2 0.9 1.9
Oil & Gas 12 -7.4 -11.1 0.5 1.7 -3.2 -4.1 3.4 3.6
FMCG 12 -3.2 -3.8 -0.9 -0.9 -3.9 -2.1 0.3 -0.5
Telecom 5 0.6 -0.5 2.4 5.6 -1.1 -4.3 1.8 10.5
Chemicals 7 -4.5 -6.2 -3.4 -9.0 -5.5 -3.7 -0.5 -4.8
Realty 6 -3.0 3.5 4.6 -1.2 -1.7 3.4 1.2 -1.6
Construction 3 -2.5 -8.4 -1.5 3.9 0.0 -0.3 -1.8 0.4
NBFC 24 -5.8 -0.6 1.9 -22.5 1.5 0.2 2.3 -0.6
Pvt Bank 11 -5.6 -3.7 -1.3 -2.8 -5.4 -3.3 -1.6 -1.7
PSU Bank 9 3.4 0.9 -0.6 -0.3 0.3 -4.4 3.8 1.9
Insurance 5 2.6 -0.3 1.1 0.1 -0.7 0.8 1.6 -1.0
Grand Total 200 -4.3 -4.3 1.3 -2.4 -3.4 -2.6 0.4 1.5

Source: Antique, Bloomberg

Antique Stock Broking Limited 14

 19 February 2025

4QFY25 estimate looks reasonable

Sales EBITDA PAT

Antique coverage (YoY %) 9MFY25 Q4FY25 Implied FY25e 9MFY25 Q4FY25 Implied FY25e 9MFY25 Q4FY25 Implied FY25e
AgroChem 7. 4 11.4 8.5 22.3 56.1 31.2 65.6 79.4 69. 9
Cement ex Grasim -3.4 11.5 0.9 -19.7 10.1 -10.8 -39.3 -2.6 -28.1
FMCG 4.7 -3.3 2.5 2.0 -1.7 1.0 2.0 -4.4 0.4
Consumer Discretionary 3.6 13.8 6.1 -7. 2 18.7 -1.4 -14.0 -0.8 -11.1
Retail 16.8 19.7 1 7. 6 16.1 25.6 18.4 16.0 46.1 22.7
Industrials 14.4 1 9.3 15.9 18.5 35.7 24.4 19.4 47. 2 29. 6
Defence 1 7. 9 26.3 21.4 35.1 3.8 19.9 35.4 2.0 21.1
Railway -9.1 12.1 -2.7 -17.1 8.7 -9.1 -12.4 8.1 -6.3
Consumer Durable 18.1 18.1 18.1 37.9 43.1 39. 6 47.5 51.3 48.8
IT 3.8 13.4 6.6 7. 6 10.0 9. 1 10.6 5.3 8.3
Metals 0.7 3.6 1.7 9. 9 25.8 15.3 11.6 118.4 38.8
Oil_Gas ex OMC 4.5 12.1 6.3 3.5 16.7 6.9 -2.3 1.6 -1.3
OMC -1.1 -29.5 -9.2 -57.9 -13.9 -50.2 -71.4 - 49.4 -67.8
Real estate 23.7 60.9 36.1 38.5 32. 8 36.3 47. 8 39. 7 44.7
Textile 6.8 1 7. 5 9. 7 -0.3 31.5 8.4 -4.0 49. 6 8.9
Infrastructure -3.3 -5.8 -2.7 -0.7 -33.0 -10.4 -22.0 -4.0 -16.0
Building Material 2.6 8.1 4.2 -11.2 -6.1 -9.7 -18.5 -4.1 -13.7
Utilities 3.0 7. 3 4.1 5.2 6.6 5.5 -0.3 4.4 0.8
Midcap 23.6 18.9 22.4 30.2 30.6 30.3 41.3 6.6 31.8
Telecom 11.3 18.9 13.2 12.3 22.6 14.8 80.3 59.2 73.9
PSU Bank 4.8 7. 8 5.6 1 9.0 5.8 15.2 30.4 -13.5 16.8
Private Bank 10.9 9. 2 10.5 14.7 -0.7 10.4 11.1 1.0 8.4
Insurance 18.2 13.9 16.8 - - - 8.9 14.9 10.9
Total 4.0 1.4 3.3 3.2 10.6 5.3 2.0 7.0 3.2
Total ex financial 3.5 0.7 2.8 -1.7 13.8 2.6 -5.3 12.8 -0.8
Total ex financial, commodity & telecom 6.4 13.4 8.4 6.6 11.7 8.3 6.2 9.8 7.0
Source: Bloomberg, Antique;
Note – For Insurance APE & VNB is considered instead of Sales & PAT. For Banks NII & PPoP is used instead of Sales & EBITDA.

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 19 February 2025

FII equity selling in India is significantly higher than other EMs

FPI equity flow (USD mn) Select emerging markets flow
10,000 20,000

5,000 10,000
-1,627 -3,765
-
-
-10,000
-5,000
-20,000

-10,000 -30,000
Nov-23

Nov-24

Aug-22

Nov-22

Aug-23

Nov-23

Aug-24

Nov-24
Feb-23

May-23

Aug-23

Feb-24

May-23
May-24

Aug-24

Feb-25

Feb-23

Feb-24

May-24

Feb-25
Source: Bloomberg, Antique Source: Bloomberg, Antique

FPI Equity flow USD bn (Oct-Feb'25 ) FPI equity flow is below -1sd
1.0
0.0
0.6
-5.0 -0.0 -0.5 -0.5 -1.4
-1.8 -2.5 -2.7 0.2
-4.4
-10.0
-8.6 -9.4 -0.2 Taper Tantrum
-15.0 Demonetization NBFC crisis
-0.6 Global Financial crisis US rate hike & war
-20.0 Covid-19 outbreak outbreak
-1.0
Feb-07
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Feb-21
Feb-22
Feb-23
Feb-24
Feb-25
-25.0 -21.8
India
Thailand

South korea
Brazil

Vietnam
Philippine

Malaysia

Indonesia

South Africa

Taiwan
Turkey

3mth cummulative FPI equity flow as % of market cap

Avg
Avg +1 S.D
Avg -1 S.D
Source: Bloomberg, Antique Source: Bloomberg, Antique

Antique Stock Broking Limited 16

 19 February 2025

Due to expensive valuation and domestic slowdown relative to other EMs

India valuation now within comfort zone Growth downgrade in India highest within EMs
CY25e Real 6m 3m 1m 6m 3m 1m
GDP (%) prior prior prior Current change change change
120 India* 6.7 6.6 6.5 6.5 -0.2 -0.1 0.0
100 Brazil 2.0 2.0 2.0 2.1 0.1 0.1 0.1
Russia 1.6 1.6 1.5 1.5 -0.1 -0.1 0.0
80 China 4.5 4.5 4.5 4.5 0.0 0.0 0.0
(%)

South Africa 1.7 1.7 1.7 1.6 -0.1 -0.1 -0.1

60 Ta i w a n 2.6 2.6 2.8 2.8 0.2 0.2 0.0
Indonesia 5.1 5.1 5.0 5.0 -0.1 -0.1 0.0
40
Thailand 3.1 3.0 3.0 3.0 -0.1 0.0 0.0
20 Malaysia 4.6 4.7 4.7 4.7 0.2 0.0 0.0
US 1.7 1.9 2.1 2.2 0.5 0.3 0.1
Feb-11

Feb-12

Feb-13

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22

Feb-23

Feb-24

Feb-25
UK 1.3 1.3 1.4 1.2 -0.1 -0.1 -0.2
Germany 1.1 0.8 0.4 0.4 -0.7 -0.4 0.0
MSCI India Prem/Disc to MSCI EM France 1.2 1.0 0.8 0.8 -0.5 -0.3 0.0
Italy 1.0 1.0 0.8 0.7 -0.3 -0.3 -0.1
Avg
Global 3.1 3.1 3.0 3.0 -0.1 -0.1 0.0
Avg + 1 SD
EM 4.3 4.3 4.2 4.2 -0.1 -0.1 0.0
Avg - 1 SD DM 1.7 1.7 1.7 1.8 0.1 0.1 0.0
Source: Bloomberg, Antique Source: Bloomberg, Antique

Antique Stock Broking Limited 17

 19 February 2025

Due to monetary and fiscal tightening

Regulatory tightening resulted in slow loan growth Fiscal tightening due to elections
20.0 Apr - Dec Capex YoY % Center State Total
9mFY14 29.4 9.8 20.4
15.0 9mFY15 -11.2 20.0 1.9
9mFY16 33.5 23.2 28.4
10.0 9mFY17 -3.8 38.1 16.1
9mFY18 30.8 -12.3 6.5
5.0
9mFY19 -10.5 22.6 4.9
0.0 9mFY20 20.6 0.6 9.8
9mFY21 20.9 -22.4 -0.6
Dec-15

Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21

Dec-22

Dec-23

Dec-24
9mFY22 26.8 49.2 35.4
9mFY23 25.1 9.3 18.3
Source: Bloomberg, Antique 9mFY24 37.5 35.1 36.6
9mFY25 1.7 -1.3 0.6
Source: Bloomberg, Antique

Antique Stock Broking Limited 18

 19 February 2025

Which seems to be reversing

Expect another 25bps rate cut in April Food prices have further cooled in February
10.0
Avg daily retail prices (YoY %)
9.0 30.0
8.0
7.0 20.0
6.0
5.0 10.0

20.8
12.0

25.5
27.0
27.6
10.8
21.8

1.0
0.9

0.6
0.4

0.3

0.0
1.2

9.5
4.0
3.0 0.0
Feb-02

Feb-04

Feb-06

Feb-08

Feb-10

Feb-12

Feb-14

Feb-16

Feb-18

Feb-20

Feb-22

Feb-24

-0.3

-0.6
-4.3
-10.0
Vegetable Cereals Oil Fruits Pulses Milk
India repo rate % Dec-24 Jan-25 till 18-Feb-25
Source: Bloomberg, Antique Source- CEIC, Antique Note – In vegetables we have Potato, Tomato and Onion; In Cereals we
have Wheat and Rice; In Oil we have Sunflower, Palm and Mustard Oil; In Fruits we have Apple and
Government spending to accelerate Banana; In Pulses we have Tur, Moong and Masur dal.

Center State Total

Jan - Mar Gross Tax Revenue Capital Tax Revenue Capital Tax Revenue Capital
YoY % Revenue exp exp Revenue exp exp Revenue exp exp
JFM FY14 11.3 -2.2 -34.4 3.7 13.0 5.6 8.1 5.3 -7.1
JFMFY15 13.7 1.3 92.2 5.8 20.9 23.6 10.5 11.7 39.0
JFMFY16 9.6 10.8 16.5 30.8 11.6 49.6 17.9 11.3 39.3
JFMFY17 17.1 -1.8 62.0 10.9 4.4 7.4 14.4 1.8 21.5
JFMFY18 1.0 3.2 -75.4 11.9 13.8 -16.5 5.6 9.4 -36.9
JFMFY19 12.6 -7.0 268.1 14.1 11.7 9.7 13.3 4.5 44.5
JFMFY20 -4.4 28.2 -16.0 -12.1 -0.9 -16.3 -7.9 9.1 -16.2
JFMFY21 9.9 123.9 45.7 19.6 16.7 36.2 14.0 59.9 39.5
JFMFY22 13.3 -3.7 71.9 38.3 12.4 5.5 24.5 3.3 29.4
JFMFY23 13.2 5.0 24.5 -4.6 10.2 24.7 4.3 7.4 24.6
JFMFY24 11.2 -1.1 10.1 12.5 7.7 6.3 11.8 3.2 8.1
JFMFY25 12.3 3.4 21.2 23.6 28.6 61.5 17.5 16.2 41.9
Source: Antique, Bloomberg; Note: JFM stands for January, February and March

Antique Stock Broking Limited 19

 19 February 2025

Management speaks

Antique Stock Broking Limited 20

 19 February 2025

Demand Outlook

Sector Name Key takeaways

Consumption
FMCG - Rural demand expected to improve, but urban discretionary consumption remains cautious.
- Commodity inflation to drive selective price increases in food & FMCG.
- Shift towards smaller packs to persist, impacting volume growth metrics.
- Gradual urban demand recovery expected as inflation stabilizes.
- Premiumization to continue, led by beauty, high-end FMCG, and specialty foods.
- Rural growth to strengthen, supported by better incomes & targeted distribution strategies.
Retail - Consumer sentiment remained weak during the quarter, with urban markets continuing to witness demand moderation.
- Premiumization is a major driver of growth.
- Mid-tier and mass-market segments are experiencing consumption pressure.
- Tier 2 & 3 Cities Showing Recovery.
Consumer Durables - RAC demand is expected to remain strong on account of upcoming summer season. RAC industry is under-penetrated and thus has
potential to delivery strong growth.
Auto - 2W - Two-wheeler industry expected to grow at a CAGR of 8-10%
- Expect premium motorcycles & scooters to outpace entry-level bikes.
- EV market share to reach ~10-12%, driven by better affordability & charging infra.
Auto - PV - SUVs will continue driving sales; hatchbacks & sedans remain weak.
- Festive demand normalization is expected in Q4 FY25.
- India may become a key EV & hybrid manufacturing hub for global markets.
- Exports stable, but geopolitical risks & currency fluctuations remain concerns.
Hotels - Strong demand visibility for 4Q driven by large-scale events like the Mahakumbh, concerts, conferences and weddings.
- Expect 1QFY26 to be better compared to last year due to an extended wedding season and the absence of election impact.
- Pricing is slowing down earlier than expectation - ADR growth to slow down to single digit in 2HCY25.
Building Materials - Demand was impacted by lower infrastructure and project spending. The demand uptake in 4Q is yet to begin.
- Demand muteness is more persistent in the retail segment.
- Companies remain optimistic for demand revival from FY26 onwards and have guided for a double digit volume growth.
Agrochem - Decent volume growth in 3QFY25 driven by strong demand on account of lower channel inventory and high acerages.
- Management expects the volume growth to continue in 4QFY25 and FY26 as well.
Source: Antique, Bloomberg

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 19 February 2025

Demand Outlook

Sector Name Key takeaways

Capex
Industrials - Public Investment has slowed down due to recent center and state elections recently and private investment has been episodic at
best.
- Economic activity is believed to be bottomed out and expected to be improved going ahead.
- Witnessed slowdown in private sector capex however, with recent announcements in budget, companies are expected to see
positive impact on businesses from the Government's continued emphasis on building infrastructure.
Railways - Private ordering has been strong and expect tendering to happen in the government pipeline.
- Expect metro projects to aid railway companies.
Cement - Industry is expected to grow at 7-8% in 4QFY25 with similar growth rate for FY26 on the back of pick up in Govt. spending.
- Rural demand is also expected to be strong owing to better monsoon and good harvest improving cash flows in the rural markets.
Global linked
IT Services - Commentaries by most companies suggest client sentiments are improving as macro uncertainties recede resulting in higher deal
activities and expects FY26 to be better than FY25.
Pharma - Steady domestic pharma growth is driven by chronic therapies.
- Branded & specialty drugs to contribute more to revenue.
- Strong demand is seen in biosimilars & complex generics.
Metals & Mining - Steel demand continues to remain strong with stability in prices, safeguard duties are awaited. Input costs are expected to remain
benign for both ferrous and non-ferrous companies.
Oil & Gas - CGDs: CNG volume expected to grow at 10-12% YoY and OMCs: As per IOC, India's fuel demand is expected to grow to 252
MMT by FY26, reflecting >4% annual growth.
Real Estate - Demand for right product (ticket size, location etc.) continue to remain strong.
- Approval challenges to continue. A few companies may miss on guidance.
Textile - Some revival is seen in export demand.
- Red sea crisis continues to hamper supply chain.
- Tariff uncertainty and looming inflation in US a challenge.

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 19 February 2025

Demand Outlook

Sector Name Key takeaways

Financials
Banks - Expect loan growth in FY25 to be in its current range of 11-12% YoY.
- Deposits growth continue to be a key constraint for loan growth and growth in unsecured lending has moderated sharply from the
peak.
- Loan growth in the corporate segment is yet to pick up and challenge on pricing power in the system is continued.
- Elevated slippages in unsecured lending may lead to further and sharp increase in credit cost for the banks.
NBFC - Strong vehicle, mortgage & SME loan demand is expected to continue.
- Slight pressure is on unsecured loans due to cautious lending.
- Expansion in Tier 3 & Tier 4 markets to drive loan book growth.
- Stability in cost of funds to support lending.
Insurance - Mid-teen APE growth is expected to sustain in the medium term, with margin recovery is expected as high-value products gain
traction.
- FY25 is expected to be a reset year for margins, with improvements anticipated over the medium term.

Antique Stock Broking Limited 23

 19 February 2025

Margin Outlook

Sector Name Key takeaways

Consumption
FMCG - HUL & GCPL expected to maintain stable margins despite cost pressures.
- Britannia's margin outlook depends on commodity price stabilization.
- Small pack consumption trend could impact gross margin mix.
- Premiumization to drive margin expansion in high-end FMCG & beauty categories.
- Input cost management & supply chain efficiencies will be key for stability.
- Rural penetration & cost control to improve operating leverage.
Retail - Sustained High Margins in Premium Segments & Cost Optimization to drive Margin Expansion.
- Retailers are prioritizing profitable locations and efficient store formats rather than rapid expansion, ensuring sustainable margin
improvement.
Auto - 2W - Sustained premiumization & volume growth to drive EBITDA margins above 15%
- Higher EV adoption may dilute margins initially but improve with scale.
Auto - PV - Premiumization & hybrid models will drive margin expansion.
- EV costs will reduce with scale, improving long-term profitability.
- Localization & cost controls will enhance margins in domestic & export markets.
Hotels - We expect margins to improve gradually in the medium to long term through a shift in portfolio mix.
- Most companies are now moving towards asset light model and other high margin businesses which remains a strong tailwind.
Telecom - July tariff hikes have been fully absorbed in ARPU by Bharti Airtel and partly by Jio. Bharti management expect nominal growth in
ARPU hereon.
Building Materials - Margins in 3Q were impacted by operating deleverage and mix deterioration (due to increase in projects mix). However, expect
steady margins from FY26 onwards.
Agrochem - Pricing pressure continued in 3QFY25 and expects to continue for next couple of quarters (specially for the generic products) due
to cheap imports coming for China.
- However, companies are expecting margins to improve from FY26 driven by the lower RM prices and higher contribution from
newly launched products.

Antique Stock Broking Limited 24

 19 February 2025

Margin Outlook

Sector Name Key takeaways

Capex
Infrastructure - Most of the company guided inflow pick up in 1HFY26 , inflow didn't materialize in FY25 due to elections and ministries settle
post the union and state elections.
- 3QFY25 executions suffered as the billing cycles have elongated and overall muted order books.
- Ministry outlay is unchanged for Railway and Road is up +2% in FY26 BE. But scheme wise (led by water, Urban housing) outlay
has seen an increase. Say Jal Jeevan Mission outlay is up 195% in FY26BE over FY25 RE, Amrut is +67%, Metro +27%, River
linking +20%, Bharat net +107%.
Power Utilities - The long term growth of gencos will continue to be fueled by capacity addition. Power PSUs' FY26E capex target is guided to
increase, for NTPC it is +15% YoY, Powergrid +25%, NHPC +25% vs. FY25.
- Though power demand was +2.7% YoY in 3QFY25, due to a milder winter compared to the base quarter. The cheaper price
discovery on exchange (-26% YoY at INR 3.71/KWh), meant that IEX recorded healthy volume growth of +17% YoY.
Cement - Cement prices have likely bottomed out but are expected to be volatile due to increased supply in the market.
- Margins are expected to inch up in FY26 on the low base of FY25 as profitability was lower due to muted demand and cement
prices.
- Sustained price hikes remain a key monitorable for uptick in margins.
Global linked
IT Services - Margins are expected to remain range bound for most companies, until revenue growth rebounds strongly, which continues to be
a key margin driver.
Pharma - Higher-margin segments (biosimilars, branded drugs) is to contribute more.
- EBITDA margins is expected to improve by 50-100 bps per year across key players.
Metals & Mining - Margins expected to be stable / soften marginally due to subdued steel prices. Non ferrous margins to fare better.
Oil & Gas - Margins for CGDs are expected to improve marginally in 4Q vs 3Q on part restoration in APM gas. For OMCs, refining margin
are expected to recover while Auto-fuel retail margins will remain robust. For upstream, Oil & Gas realizations will remain
largely flat.
Financials
Banks - NIM of the bank is expected to remain under narrow range.
- PSU banks are guiding for stable NIM.
NBFC - NIM stabilization is expected as repo rate cuts come into play.
- Cost of funds is to remain largely steady, supporting profitability.
- Increased loan book diversification (home, SME, vehicle) to aid margin resilience.
Insurance - FY25 is expected to be a reset year for margins, with improvements anticipated over the medium term, driven by a higher share of
high-margin products (reducing ULIP and increasing non-PAR & protection products).The worst impact on margins is behind us.
Source: Antique, Bloomberg
Antique Stock Broking Limited 25
 19 February 2025

Will past market correction provide any guidance?

Period of correction Market correction Duration of

in India Reasons Nifty 200 correction (days)
May 2006 - June 2006 Rise in US inflation 32% 35
Feb 2007-Mar 2007 Slowdown concern in US & China 12% 12
Jul 2007 - Aug 2007 Slowdown concern in US & China 12% 26
Jan 2008 - Oct 2008 Global Financial Crisis (GFC) 54% 178
Oct 2009 - Nov 2009 Lingering effects of GFC 11% 14
Jan 2010 - Feb 2010 Elevated domestic inflation with growth slowing down 11% 18
April 2010 - May 2010 Elevated domestic inflation with growth slowing down 9% 29
Nov 2010 - Feb 2011 High domestic inflation and lack of reforms 15% 52
July 2011 - Dec 2011 High inflation, lack of reforms, Eurozone Debt crisis, US & India slowdown 22% 148
Feb 2012 - June 2012 Euro-zone debt crisis 14% 101
July 2013 - Aug 2013 INR depreciation and Taper Tantrum 14% 36
Jul 2015 - Feb 2016 China slowdown 19% 218
Sep 2016 - Nov 2016 Demonetization 12% 74
Jan 2018 - March 2018 LTCG on equities, rising US inflation 9% 58
Aug 2018 - Oct 2018 NBFC crisis 15% 59
June 2019 - Aug 2019 Domestic slowdown and US-China trade war 12% 80
Feb 2020 - Mar 2020 Growth slowdown due to Covid-19 out-break 38% 40
Oct 2021 - Dec 2021 Global inflationary pressures accompanied with recession fears 10% 63
Jan 2022 - Mar 2022 Global inflationary pressures accompanied with recession fears 14% 49
Apr 2022 - Jun 2022 Global inflationary pressures accompanied with recession fears 15% 74
Dec 2022 - Nar 2023 Rate Hikes, FII Selling 11% 113
Sep2024 - Feb 2025 Tariff Tantrum, domestic slowdown 15% 144
Average 17 % 74
Average (ex GFC, Covid-19) 14% 70
Source: Antique, Bloomberg

Antique Stock Broking Limited 26

 19 February 2025

Market recoveries are led by cyclicals

Avg performance of past 20

correction in excess of 10%
(Ex GFC, Covid-19) During Correction phase +1m +3m +6m
Nifty-50 -13.7 8.6 12.8 16.5
Nifty-200 -14.1 8.8 13.3 17.0
MSCI EM -11.0 6.3 7.0 8.7
Nifty Midcap -15.1 9.5 15.0 20.1
Nifty Bank -15.5 9.7 18.1 24.3
Capital Good -17.1 11.2 17.2 23.8
FMCG -9.0 8.4 12.0 18.4
Energy -13.2 8.7 12.8 14.6
Auto -13.7 10.1 13.9 18.0
Pharma -9.6 6.3 8.0 12.1
Metal -17.4 12.1 15.4 19.9
IT Services -9.7 4.7 6.1 8.8
Source: Antique, Bloomberg

Antique Stock Broking Limited 27

 19 February 2025

Expect Nifty 50 FY25-27 EPS to grow at ~14%, on a low base

Nifty 50 EPS is expected to grow at 14.6% CAGR FY25-27 Nifty 50 Sector-wise growth (%)
1,500 50 Sectors FY24a FY25E FY26E FY27E
(INR) Auto ex TTMT 28.7 10.3 13.8 12.2
40 Cement 14.9 (25.0) 41.0 36.4
1,000 30 Consumption 12.1 (0.6) 14.8 14.6
20 Bank 39.1 0.8 9.6 16.5
Energy 22.4 (11.8) 14.1 2.8
10
500 Health Care 21.6 (8.4) 18.3 13.7
226

221
167
153

1,014
1,025
1,178
1,345
119

Industrials 26.6 25.0 34.7 23.0

273
260

307
335
366
389
428
383
402
462
443
462
528
730
789
73
86

-10 IT Services 4.1 7.5 15.4 10.0

0 -20 Materials 8.4 (0.7) 31.4 13.9
NBFC 23.1 14.1 20.9 21.3
FY02

FY04

FY06

FY08

FY10

FY12

FY14

FY16

FY18

FY20

FY22

FY24a

FY26e
Utilities 9.3 12.8 7.9 7.7
Insurance 3.1 11.0 15.5 15.2
Nifty EPS Nifty EPS YoY % - RHS Total 29.1 1.1 15.0 14.2
Total (Ex financial) 23.5 0.5 18.6 12.2
Source: Bloomberg, Antique Total (ex financial & commodity) 26.6 5.1 18.0 14.7
Source: Bloomberg, Antique
EPS contribution by sector (FY25 – 26) EPS contribution by sector (FY25 – 27)
(INR) 1178 (INR) 1,345
1,300 1,400
1,200 15 7 9 8 6 3
1,100 1025 18 13 9 9 7 6 4 5 4 3 2 21 19 20 14
40 17 17
1,200 1025 30 24 29
1,000 115
900 1,000
800 800
700
600 600
Bank

Industrials

Auto ex TTMT
Consumption
Telco

Health Care

Insurance
Energy
IT Services

Cement
Materials

TTMT
FY25e

NBFC

FY26e
Utilities

Bank

Industrials

Auto ex TTMT

TTMT
Consumption
Telco

Health Care
Cement
Insurance
Energy
IT Services

Materials

NBFC
FY25e

FY27e
Utilities
Source: Bloomberg, Antique Source: Bloomberg, Antique

Antique Stock Broking Limited 28

 19 February 2025

Valuations are now near average levels

P/B is just below long term average Equity valuation relative to bonds remain below average

4.5 2.0 (x)

1.5
3.5
1.0
2.5
0.5

Feb-11

Feb-12

Feb-13

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22

Feb-23

Feb-24

Feb-25
1.5
Feb-10
Feb-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Feb-21
Feb-22
Feb-23
Feb-24
Feb-25
Bond Equity Earnings Yield ratio
Avg
1 yr fwd PB Ratio Avg Avg + 1 SD
Avg + 1 SD Avg - 1 SD Avg - 1 SD
Source: Bloomberg, Antique; Source: Bloomberg, Antique;

P/E multiples are near long term average Expensive partly due to record primary issuance
30.0 160.0
(x)
140.0
25.0 120.0
100.0
20.0 80.0
60.0
15.0 40.0

Feb-11

Feb-12

Feb-13

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22

Feb-23

Feb-24

Feb-25
10.0
Feb-10
Feb-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Feb-21
Feb-22
Feb-23
Feb-24
Feb-25

Trailing Market cap as a % of GDP

Avg
Nifty 50 1yr fwd PE Avg Avg + 1 SD
Avg + 1 SD Avg - 1 SD Avg - 1 SD
Source: Bloomberg, Antique; Source: Bloomberg, Antique;

Antique Stock Broking Limited 29

 19 February 2025

Strong domestic inflow continues, helped by SIP

MF Equity Flow (INR bn) SIP flow (INR bn)

300 264
750.0 250

550.0 200
150
350.0
100
150.0 55.0
50
(50.0) 0
Aug-22

Nov-22

Aug-23

Nov-23

Aug-24

Nov-24
Feb-23

May-23

Feb-24

May-24

Feb-25

Jul-21

Jul-22

Jul-23

Jul-24
Oct-21

Jan-22

Apr-22

Oct-22

Jan-23

Apr-23

Oct-23

Jan-24

Apr-24

Oct-24

Jan-25
Source: Bloomberg, Antique; Source: Bloomberg, Antique;

Source: Bloomberg, Antique;

Antique Stock Broking Limited 30

 19 February 2025

Sectoral Discussion

Antique Stock Broking Limited 31

 19 February 2025
Manish Mahawar, +91 22 6911 3427, [email protected]
Riju Dalui, +91 22 6911 3431, [email protected]
Agrochemicals - Neutral Jenish Karia, +91 22 6911 3406, Jenish [email protected]

Domestic performance remains subdued; exports recover YoY Quarterly financials and variance
Companies under our coverage universe reported a decent set of numbers. Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
Export/global focused companies witnessed low to mid-single digit YoY Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
growth mainly driven by higher volumes, while domestic companies reported UPL 1,09,070 10.3 1.9 21,620 419.7 16.2 9,040 NA (1,045.6)
high single-digit to low double-digit growth. Revenue/ EBITDA/ PAT growth
were +10%/ +130%/ +120% YoY vs. expectation of +11%/ +110%/ - Bayer Cropscience 10,569 10.7 1.5 197 (84.6) (83.8) 342 (63.3) (60.1)
18% respectively. The sharp improvement in profitability for our coverage PI Industries 19,008 0.2 (4.2) 5,120 (7.5) (0.2) 3,727 (16.9) (3.1)
universe was mainly on account of the sharp growth reported by UPL led by Rallis India 5,220 (12.7) (14.4) 440 (29.0) (33.4) 110 (54.2) (58.7)
a forex gain of INR 980 mn and one-time tax reversal of INR 5.9 bn. Ex-UPL Dhanuka Agri 4,453 10.4 2.2 756 21.5 7.4 550 21.3 14.2
revenue/ EBITDA/ PAT growth were flat/ -1%/ -12% YoY vs. expectation
Sharda Cropchem 9,293 46.9 17.0 1,542 230.3 77.0 311 570.6 166.6
of -2%/ -5%/ +7% respectively. Domestic companies’ EBITDA margin
remained under pressure due to a) Lower realization on the back of excess Sumitomo Chemical 6,419 18.4 0.1 1,061 61.2 9.2 874 59.8 (2.5)
supply and b) Higher rebates and incentives. Export/global focused Coromandel Int'l 69,352 26.9 18.4 7,218 101.7 (0.0) 5,118 121.6 6.6
companies witnessed robust volume growth on the back of strong demand Paradeep Phosph. 41,049 58.2 21.2 3,363 19.1 (2.5) 1,588 45.7 (3.6)
from across geographies which was partially offset by lower realization. Total Agrochemi. 1,64,032 10.0 1.2 30,735 130.4 9.2 14,955 NA 171.4
EBITDA margin expansion trend continued due to i) Lower RM prices and ii)
Phasing out the impact of high-cost inventory. Total Fertilizer 1,10,401 37.0 19.4 10,581 65.2 (0.8) 6,705 97.3 4.0
Total Agri Input 2,74,433 19.5 7.8 41,316 109.3 6.4 21,660 NA 81.1
For fertilizer companies, revenue was up 37% vs. expectation of 15% led
by a strong volume growth due to lower channel inventory and strong Rabi Source: Company, Antique
season on the back of higher reservoir levels. EBITDA/ PAT were up 65%/
97% largely due to backward integration and MRP hikes as well as last Top Picks: Sumitomo Chemical, Sharda Cropchem, and Paradeep
year’s low base. Phosphates

Revenue growth in 3QFY25 (% YoY) EBITDA margin trend (bps)

80 2,000.0
60 1,500.0
1,000.0
40 500.0
20 -
(500.0)
- (1,000.0)
(20) (1,500.0)
Rallis
UPL

Dhanuka
Bayer

Sumitomo

Paradeep
Coromandel
PI

Rallis
UPL

Dhanuka
Bayer

PI

Sumitomo

Paradeep
Coromandel
Sharda

Sharda
Phos

Phos
Int'l

Int'l
Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 32

 19 February 2025
Manish Mahawar, +91 22 6911 3427, [email protected]
Riju Dalui, +91 22 6911 3431, [email protected]
Agrochemicals Jenish Karia, +91 22 6911 3406, Jenish [email protected]

C Good Sharda Cropchem

Result recap - Stellar performance continues;
C Good Paradeep Phosphate
Result recap - All round strong performance
D Bad
Result recap - Subdued quarter; volume-led
Rallis

upbeat outlook n During 3QFY25, sales were up 58% YoY at

recovery in the medium term
n Topline was up 47% YoY led by 49% volume INR 41 bn vs. our estimate of INR 34 bn. n Consolidated revenue was down 13% at INR
growth YoY; agchem volume was up +50% Overall volume/ manufactured/ traded 5.2 bn (9MFY25: INR 22 bn, up 1% YoY) vs. our
YoY, albeit on a low base. Gross margin surged 47%/ 32%/ 212% YoY (9M: 13%/ estimate of INR 6.1 bn. Domestic crop protection
business declined by 2% YoY to INR 3.8 bn led
expansion of ~665 bps to 33% YoY led by 8%/ 60%). Volume growth was fueled by by 4.5% decline in realization. IBD was down
strong volume growth and stable RM prices. strong demand on the back of good Rabi season 38% YoY at INR 1.1 bn due to a price drop of
EBITDA (ex-forex loss) was INR 1.5 bn, up aided by higher reservoir levels as well as 4% YoY while volume was down by 34%. Seeds
230% YoY (our estimate of INR 865 mn). For entry into newer markets like North India. revenue was down by 7% YoY at INR 298 mn.
FY25, the company has maintained its 15%– Capacity utilization was at 90% vs. 72% YoY Gross margin was up by 350 bps at 46% vs. our
18% volume growth and 15%–18% EBITDA aided by strong production at both Paradeep est. of 44%. We believe gross margin
margin guidance. It has highlighted that and Goa facilities. improvement was on the back of 1) Superior
product mix and 2) Benefits from lower RM prices.
channel destocking is largely over and expects Our Take However, EBITDA came in at INR 440 mn
the gradual recovery to continue in FY25 and (9MFY25 INR 3.1 bn, flat YoY) vs. our estimate
beyond. n We believe Paradeep Phosphates has a healthy
of INR 660 mn, with flat margin YoY.
business model aided by strong volume growth
Our Take visibility and strong backward integration and Our Take
n We expect the global agchem industr y supply chain. Further, the merger with MCFL n Demand in the domestic market is improving
demand to recover gradually. Hence, we will only enable PPL to achieve a higher pan- while pricing pressure continues to impact
expect SHCR to be a key beneficiary of the India market share, synergies, and stronger overall growth in the domestic market. The
company has resolved to continue strengthening
same. However, the uptick in prices is expected brand recall.
its herbicide portfolio to capture growth in the
to be gradual as supply is abundant. Recommendation - BUY domestic market. We believe the persistent
Recommendation - BUY challenges in the export business and subdued
n Maintain BUY with a TP of INR 140 valuing performance in the domestic business due to
n Maintain BUY with a TP of INR 870 valuing the stock at 15x FY27 EPS. pricing pressure continue to impact the margins
the stock at 18x FY27 EPS. negatively in the medium term.
Recommendation - HOLD
n We upgrade the stock from SELL to HOLD with
a revised TP of INR 290 valuing it at 20x FY27
EPS.

Antique Stock Broking Limited 33

 19 February 2025
Manish Mahawar, +91 22 6911 3427, [email protected]
Jenish Karia, +91 22 6911 3406, Jenish [email protected]
Building Materials - Positive Aditya Mehta, +91 22 6911 3460, [email protected]

The anticipated recovery in 2HFY24 did not flow through in 3QFY25. Quarterly financials and variance
4QFY25 is also expected to remain muted. The demand scenario continues
Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
to remain muted through 4QFY25 as well. Operating deleverage and
discounts to counter muted demand impacted margins. Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
Apollo Pipes 3,079 39.0 8.9 233 15.6 14.6 64 (29.7) 25.8
Pipes: Low PVC prices in the open market and low channel inventory resulted
in pipe companies reporting volume growth of -3% to 13% YoY. Operating Astral 13,970 2.0 (4.6) 2,195 7.0 (8.5) 1,141 0.5 (15.6)
deleverage and aggressive discounting to offload inventory build-up impacted Cera Sanitaryware 4,523 3.1 (3.0) 615 0.2 (6.5) 464 (10.0) (7.7)
EBITDA margins. Demand continues to remain muted for 4Q as well. Finolex Industries 10,012 (1.8) (2.6) 834 (30.4) (38.2) 767 (8.3) (44.4)
Tiles: 3Q volume growth ranged between 5%–7%. Mix deterioration and Greenlam Industries 6,020 6.9 (10.3) 635 (10.7) (21.8) 125 (50.3) (59.7)
operating deleverage impacted margins in 3Q. Volume growth is expected Greenpanel Industries 3,594 (6.8) 0.6 173 (71.2) (48.5) 85 (75.4) (12.3)
to be in single digits in FY25. Kajaria Ceramics 11,637 1.0 (3.4) 1,487 (16.8) (15.4) 777 (25.4) (23.0)
Overall, our coverage universe’s revenue grew 2% YoY/ -4% vs. our Prince Pipes 5,777 (6.6) (2.8) 30 (96.1) (92.1) (204) NA NA
estimates. EBITDA margin stood at 10.9% (our est. of 13.3%). Net profit
Somany Ceramics 6,449 5.3 (1.9) 535 (9.4) (22.0) 117 (48.0) (58.4)
declined 31% YoY/ -33% vs. our estimate. In the near term, demand uptake
from the housing and infrastructure sector remains the key monitorable for Supreme Industries 25,099 2.5 (7.2) 3,088 (18.5) (22.0) 1,650 (29.9) (29.6)
the pipes and tiles segments. Total 90,162 2.1 (4.4) 9,826 (20.1) (21.6) 4,986 (30.5) (32.7)
Top Picks: We prefer Astral, Supreme Industries, Greenpanel Source: Company, Antique
Industries in the sector.
Revenue growth in 3QFY25 (% YoY) EBITDA margin contraction (bps YoY)
50 (%) 200 (bps)
40 -
(200)
30 (400)
20 (600)
10 (800)
(1,000)
- (1,200)
(10) (1,400)
Industries

Industries

Prince Pipes

Greenpanel
Greenlam

Sanitaryware
Apollo Pipes

Ceramics

Ceramics
Industries

Supreme

Industries

Industries
Greenpanel
Sanitayware

Ceramics

Apollo Pipes

Ceramics

Prince Pipes
Greenlam
Industries
Astral
Somany

Supreme
Industries

Astral

Somany
Finolex
Kajaria

Industries
Finolex
Kajaria
Cera

Cera

Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 34

 19 February 2025
Manish Mahawar, +91 22 6911 3427, [email protected]
Jenish Karia, +91 22 6911 3406, Jenish [email protected]
Building Materials Aditya Mehta, +91 22 6911 3460, [email protected]

C Good Apollo Pipes

Result recap - A strong quarter; long-term
D Bad Greenpanel Industries
Result recap - RM and pricing pressures erode
D Bad Prince Pipes and Fittings
Result recap - Muted volumes and inventory
growth looks promising MDF margin losses erode margin
n Apollo beat our estimates delivering n Greenpanel reported MDF volume/ revenue n Prince reported a volume decline of 3% YoY
consolidated/ standalone volume growth of decline of 2%/ 6% YoY in 3Q (in line with our in 3QFY25 (+4% YoY in 9M), in line with our
43%/ 13% YoY in 3Q. Operating deleverage estimates) impacted by pricing pressure from estimate. Growth was impacted by industry-
and consolidation of Kisan Mouldings domestic market imports. Export volumes (-8% wide challenges of PVC price volatility, channel
impacted consolidated EBITDA/kg of INR 8.6 YoY) were carefully picked to cover fixed costs destocking, and low infrastructure spending.
(-19%/ -4% YoY vs. our estimate). Retail and on FOB basis. FY25 domestic volume growth Management expects PVC prices to have
infra segment demand continued to remain guidance of 10% will not be achieved bottomed out. Additional RM inventory was
weak; channel inventory levels remained low. (9MFY25 domestic volume growth of 2% YoY). stock piled in anticipation of demand. INR 300
Expecting demand revival in housing, agri, and Domestic volume growth guidance (for existing mn/ INR 55-60 mn inventory/ bathware loss
channel restocking (as PVC prices have capacity) of 8%-10% in FY26 and 40%-50% and 3% dealer incentives resulted in EBITDA
bottomed out) in 4QFY25. Management CU for the 231k cbm plant (commercializing margin contracting to 0.5% (INR 0.7/kg). On
expects resumption of government infra in Mar'25). Average monthly industry import an adjusted basis, EBITDA margin contracted
spending soon. The INR 1.1 bn QIP funds along stood at 10k cbm/ 20-22k cbm for 2QFY25/ 815 bps YoY to 5.7% (INR 8/kg vs. estimate
with INR 3 bn of operating cash flow generated 3QFY25. MDF EBITDA margin (5.1%) of INR 9.1/kg).
over FY24-28 will be used to fund 28.5 kmtpa/ impacted by pricing pressure, additional Our Take
40-50 kmtpa of brownfield/ South India dealer incentives, increased wood prices, and
greenfield expansion. Current capacity of 216 higher fuel costs, missed our estimate. n Prince has been spending on product portfolio
kmtpa to increase to 360 kmtpa by FY28. expansion, expanding geographical reach, and
Our Take increasing brand spends giving it the pricing
Our Take n We expect Greenpanel to deliver a revenue/ power. Margins are expected to improve with
n We believe the successful ramp up of the EBITDA/ PAT CAGR of 12%/ 19%/ 20% over improving mix and operating leverage.
acquired and new capacities will translate into FY24-27 (FY19-24: 27%/ 34%/ 43%). Recommendation - BUY
strong volume and EPS growth FY27 onwards. Recommendation - BUY n Maintain BUY with a TP of INR 470 based on
Recommendation - BUY n Recommend BUY with a TP of INR 510 based a PE multiple of 28x FY27 EPS.
n Recommend BUY with a TP of INR 480 based on a PE of 25x FY27 EPS.
on 30x FY27 P/E.

Antique Stock Broking Limited 35

 19 February 2025

Krupal Maniar, +91 22 6911 3419, [email protected]

Cement - Neutral Sanjit Tambe, +91 22 6911 3428, [email protected]

Our coverage universe's 3Q volume was broadly in line with our estimates Quarterly financials and variance
while EBITDA/ton was 10% below our estimate. Our coverage universe's
Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
revenue declined marginally YoY/ rose 11% QoQ, while EBITDA de-grew
Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
27% YoY/ inched up 31% QoQ during the quarter. Volume grew 8% YoY/
UTCEM 1,69,710 2.9 (1.0) 28,871 (11.3) (2.5) 14,695 (17.3) 0.1
11% QoQ. Blended realization inched up 0.6% QoQ/ declined 8% YoY.
ACEM Console 85,022 4.6 (3.1) 8,855 (48.9) (39.8) 2,415 (70.7) (56.0)
Total cost/ton decreased by ~3% YoY/ ~2% QoQ (in-line). Blended EBITDA/
ACC 52,073 8.2 2.6 4,789 (47.1) (30.8) -754 PL N/A
ton decreased by INR 380 YoY/ increased QoQ by INR 122 to INR 791
SRCM 42,355 (13.6) (4.8) 9,466 (23.3) 6.1 2,294 (68.8) (16.7)
(Antique est.: INR 880). Profitability is expected to be improve in the
DALBHARA 31,810 (11.6) (3.6) 5,110 (34.1) (6.9) 621 (77.7) (50.7)
subsequent quarters led by better demand growth and price hikes. Demand
JKCE 28,190 (0.8) 0.7 4,921 (21.3) 4.2 1,892 (33.3) 35.4
is likely to pick up in subsequent quarters led by a favorable base,
NUVOCO 24,093 (0.5) (5.7) 2,582 (37.1) (22.1) -614 NA N/A
government spending, and pent-up demand. Cement prices have begun to
BCORP 22,567 (2.4) 2.1 2,479 (34.5) (17.0) 312 NA (52.2)
inch up as well from Nov'24 and 4Q being a seasonally strong quarter,
TRCL 19,835 (6.0) (2.9) 2,791 (29.6) (10.6) -62 PL N/A
more price hikes await.
JKLC 14,968 (12.1) (2.6) 2,018 (33.2) 4.1 594 NA 13.1
Top Picks: UTCEM, SRCM, and JKCE ORCMNT 6,434 (14.4) (2.0) 581 (49.7) (18.7) 101 (77.5) (54.9)
STRCEM 7,188 10.3 3.8 1,042 (29.9) 19.3 90 (87.7) N/A
HEIM 5,428 (10.6) 2.7 333 (49.2) (44.9) 52 (83.5) (82.8)
Total 3,39,962 (1.6) (3.1) 44,966 (26.8) (10.3) 6,942 (49.2) (17.4)
GRASIM 81,203 26.9 3.4 2,706 (48.2) (11.0) -1,687 PL N/A
Source: Company, Antique; Profit to Loss = PL
3QFY25 volume growth (YoY%) 3QFY25 EBITDA/t vs estimated 3QFY25 realization growth (QoQ%)
2.0 3.2 0.6 1.6
9.1

8.4
20.3
17.0

16.2

11.2
7.2

0.1 0.0
4.6
2.4

(0.4) (0.2)
1,000

1,079
1,012
(0.8) (0.9) (1.5)
448
676
ACEM… 537
803
551
671
765
783
291
550
973
666
648
553
712
450
546

639
704
951
976
(3.8)
-1.4
-1.9
-5.3

-7.3

ACC

BCORP
DALBHARA

JKCE

SRCM
NUVOCO
JKLC
HEIM

ORCMNT

TRCL
UTCEM
ACEM…

BCORP

NUVOCO

SRCM
ACC

ACEM Console

DALBHARA

JKCE

JKLC
HEIM

ORCMNT

TRCL

UTCEM
BCORP

NUVOCO
ACC

JKLC

ORCMNT
SRCM
DALBHARA

JKCE

TRCL
HEIM

UTCEM
Average

3QFY25 3QFY25e
Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 36

 19 February 2025

Krupal Maniar, +91 22 6911 3419, [email protected]

Cement Sanjit Tambe, +91 22 6911 3428, [email protected]

C Good
Result recap—Above expectation
Shree Cement
C Good
Result recap—Below expectation
JK Cement
D Bad Ambuja Cement
Result recap—Below expectation
n SRCM's 3QFY25 EBITDA of INR 9.5 bn (down n Consolidated EBITDA at INR 4.9 bn (down 21%) n ACEM's 3QFY25 recurring consolidated
23% YoY) was ~10% ahead of consensus was 4%/ 7% ahead of our/ consensus estimates EBITDA at INR 8.8 bn declined sharply 49%
estimate. The company continues to deliver YoY and 9% QoQ and was 33%/ 41% below
industry-leading profitability of INR 1,080 (up mainly due to lower costs. our/consensus estimates.
INR 300/ton QoQ) led by lower costs and n Consolidated volume grew 4.6% YoY and 13% n The increasing share of the South market via
higher realization QoQ. sequentially, owing to increased volume in the consolidation of Pennna Cement and higher
n Cement realization inched up 2.8% QoQ (still Central region. non-trade sales led to lower realization (down
down 8.5% YoY) driven by focus on n Blended realization grew 0.6% QoQ resulting 1% QoQ vs. our estimate of 2% rise).
premiumization and better cement prices in the n Consolidated volume at 16.5 mn MT grew
in consolidated EBITDA/ton of INR 1,000 vs.
North compared to other regions. 17% YoY/ 16% QoQ led by 7% organic
n Total cost/ton declined ~4% YoY/ QoQ led by our estimate of INR 973. Total cost at INR 4,956/ volume growth and the rest via consolidation
cost optimization and efficiency measures. RM + ton was flat YoY/ down 5% QoQ. RM + P&F of various acquisitions. MSA volume was at
P&F cost declined 11% YoY/ flat QoQ. Blended cost/ton declined 5% YoY/ 3% QoQ owing to 4.5 mn MT split equally between ACC and
EBITDA/ton at INR 1,079 was lower/ higher lower fuel prices. ACEM while Sanghi/ Penna volumes stood at
~INR 307 YoY/ QoQ (Antique est.: INR 1,012/ 0.5/ 0.9 mn MT.
ton). n Accordingly, EBITDA/ton more than halved by
n Revenue de-grew 10% YoY to INR 44 bn, in line
Our Take INR 435/ton YoY and INR 372/ton QoQ to
with our/ consensus estimates, as volumes were n We factor 9% volume CAGR over FY24-27E and INR 360/ton vs. our estimate of INR 576/ton
largely flat YoY/ up 15% QoQ to 8.7 MT (in- expect consolidated blended EBITDA/ton to also owing to lower profitability of acquired
line). assets.
decline from INR 1,079/ton in FY24 to INR 960
Our Take in FY25 before improving to INR 1,059 in FY26E Our Take
and INR 1,106 in FY27E led by lower fuel costs
n We factor 10% volume CAGR over FY25-27E n We factor 14% consolidated volume CAGR
and better cost efficiencies.
and expect standalone blended EBITDA/ton over FY24-27E and expect EBITDA/ton to
to improve from INR 1,217/ton in FY24 to Recommendation - BUY reduce from INR 1,082/ton in FY24 to INR
INR 1,317/ton by FY27E led by lower fuel 749 owing to lower realizations/ higher costs
costs and better cost efficiencies, and higher n We had raised our TP to INR 5,100 (earlier and subsequently inch up to INR 1,091 by
realization. INR 5,000) based on 16x FY27E EV/EBITDA. FY27E led by improved cost efficiencies.
Recommendation - BUY Maintain BUY. The stock currently trades at Recommendation - BUY
~15x FY27E EV/EBITDA and USD 150 EV/
n We had raised our target multiple to 17x EV/ n We maintain BUY rating on ACEM with a target
ton.
EBITDA (earlier 16x) on improving profitability price of INR 585 based on 17x consolidated
and raised our target price to INR 30,250 FY27 EV/EBITDA. Stock is trading at ~15x
(earlier INR 28,800). Maintain BUY. FY27E EV/EBITDA and USD 123.
Antique Stock Broking Limited 37
 19 February 2025
Amit Shah, +91 22 6911 3466, [email protected]
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Consumer Electricals - Positive Yash Sarda, [email protected]

Consumer Durables - Mixed Performance Quarterly financials and variance

RAC segment: Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
Strong performance in a seasonally lean quarter due to the festive season. Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
RAC industry is expected to continue to do well due to the upcoming BJE 12,897 5.0 (0.2) 874 58.9 40.8 334 (12.0) 71.1
summer season and low penetration level of room air-conditioners. Blue Star 28,074 25.3 3.1 2,094 34.8 3.9 1,200 19.4 (11.0)
Electrical segment: Crompton Con 17,692 4.5 (1.9) 1,880 25.5 6.4 1,119 31.0 10.9
Consumer electrical reported a mixed quarter. Bajaj Electricals reported Havells 48,825 11.0 (3.2) 4,316 (0.2) (10.8) 2,828 (1.8) (16.3)
strong growth in Morphy Richards and small domestic appliances category. Voltas 31,051 18.3 (2.5) 1,974 594.5 (11.4) 1,308 LP (18.3)
Crompton reported growth in pumps and appliances category. However, Total 1,38,539 13.7 (1) 11,138 35.6 (2.9) 6,788 40.2 (9.9)
Havells' ECD segment witnessed margin pressure.
Source: Company, Antique; Loss to Profit = LP
Revenue for the universe registered a 14% YoY growth. EBITDA for the
sector grew by 36% YoY led by 130 bps YoY improvement in EBITDA
margin. PAT underperformed our estimate by 9.9% but grew 40% YoY, as
Voltas turned profitable. Going forward, companies remain positive on
industry demand. Additionally, with the summer season anticipated to be
harsh, we expect the companies to deliver better performance.
Top earnings surprises: Bajaj Electricals
Our preferred picks: Crompton, Havells, and Voltas
Revenue growth (% YoY) EBITDA margin (%, 3QFY25, 3QFY24) PAT growth (% YoY)
30 25 15.0 40.0 31
11
25 7 7 9 9 10 19
18 10.0 7 6 20.0
20 4
15 11 5.0 1 0.0
10 5 5 0.0 -12 -2
5 -20.0
Crompton
BJE

Voltas
Blue Star

Havells
0

BJE

Crompton

Havells

Voltas (Loss
Blue Star
Con
Crompton
BJE

Havells

Voltas
Blue Star

to Profit)
Con
Con

3QFY25 3QFY24 Growth (%)

Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 38

 19 February 2025
Amit Shah, +91 22 6911 3466, [email protected]
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Consumer Electricals Yash Sarda, [email protected]

C Good Crompton
Margin led beat on the operational performance
n Crompton's 3QFY25 performance was ahead
C Good
In-line operational performance
Blue Star

n Blue Star's 3QFY25 performance was in-line

C Good Bajaj Electricals
Beat on operational performance
n BJE posted a revenue of INR 12.9 bn (+5% YoY)
of our estimates. Consolidated revenue stood with of our estimates. Consolidated revenue due to growth in consumer products segment
at INR 17.7 bn (+4.5% YoY), marginally below stood at INR 28 bn (+25.3% YoY; est. of INR (+8.5% YoY) but lighting segment de-grew (-7.5%
our estimate of INR 18.9 bn. Gross margin 27.2 bn). Gross margin improved by 20 bps
YoY to 24.4% (est. 25.2%). Operating profit YoY). EBITDA for the quarter improved
stood at 33.3% (+80 bps YoY), above our
for the quarter stood at INR 2.1 bn (+34.8% meaningfully to INR 874 mn (+58.9% YoY; est.
estimate of 32.9% due to improvement in
product mix. EBITDA stood at INR 1.9 bn YoY), also in line with our expectation of INR of INR 621 mn). EBITDA margin witnessed a
(+25.5% YoY; est. of INR 1.8 bn) and EBITDA 2 bn. Again, operating margin also was in 230 bps YoY improvement and stood at 6.8%
margin came in at 10.6% (est. of 9.4%) due to line with our estimate of 7.5% (+60 bps YoY; (est. of 4.8%) due to strong margin in the
ECD segment reporting better than estimated est. of 7.4%). PAT stood at INR 1.2 bn (+19.4% consumer products segment. PAT for the quarter
margin. PAT witnessed a 31% YoY growth to YoY), below our estimate of INR 1.3 bn, led by stood at INR 334 mn (-12% YoY) due to lower
INR 1.1 bn and was above our estimate of INR higher interest cost (INR 159 mn; est. of INR other income.
1 bn. 75 mn) and lower other income (INR 87 mn;
est. of INR 150 mn). Our Take
Our Take
Our Take n BJE's operational performance over the last
n Crompton intends to sustain its growth two years has been weak given rural weakness
trajectory in the ECD segment. In Butterfly, we n Blue Star has been able to maintain its market
share along with strong focus on penetrating and limited offering in the premium product
believe that the continuous focus on retail portfolio where demand existed.
channel, and new product launches will help Tier 3, 4, and 5 towns. With the upcoming
the company maintain its margin going ahead. summer season anticipated to be harsh, we Recommendation - HOLD
believe Blue Star will be one of the key
Recommendation - BUY beneficiaries. n Given the strong operational performance, we
n With a focus on offering premium products Recommendation - HOLD have increased our FY25 EPS by 9%, but have
and Butterfly restructuring nearing an end, reduced FY26/ 27 EPS by 2%/ 2%. We have
n We are enthused by Blue Star's strategic plans also reduced our exit multiple to 32x (earlier
Crompton's operational performance is
to maintain market share along with strong
expected to remain strong. We have 35x) and continue to maintain HOLD rating with
focus on penetrating Tier 3, 4, and 5 towns.
marginally tweaked our FY25/ 26/ 27 EPS However, given the premium valuation, we a revised TP of INR 805 (earlier INR 901) and
by 5%/ -1%/ -2% and reduced our exit multiple retain HOLD with a TP of INR 1,946 (valuing await a better entry point.
to 34x (earlier 35x) and continue to maintain its UCP business at 50x its FY27E EPS, and
BUY rating with a revised TP of INR 474 (earlier EMP and professional electronics segment
INR 496), valuing the company at 34x its each at 20x its FY27E EPS) and await a better
FY27E EPS. entry point.

Antique Stock Broking Limited 39

 19 February 2025

Financials - Banks - Positive Raju Barnawal, +91 22 6911 3429, raju.barnawal@ antiquelimited.com

Another soft quarter, RoA moderated sequentially Quarterly financials and variance
Coverage banks reported an aggregate PAT of INR 769 bn (20% YoY/ -3% Net interest income PPOP PAT
QoQ, 4% above estimate) primarily due to the PSU banks on account of
lower than expected provision while private banks' earnings was largely in INR mn 3QFY25 % YoY % Var 3QFY25 % YoY % Var 3QFY25 % YoY % Var
line with estimate. On the core operating front, PSU banks reported PPP HDFC Bank 3,06,533 7.7 -0.2 2,50,004 5.7 0.2 1,67,355 2.2 -0.1
growth of 40% YoY/ -3% QoQ (5% below estimate) and private banks' PPP ICICI Bank 2,03,706 9.1 -0.7 1,68,866 14.7 0.5 1,17,924 14.8 3.6
was in line with estimate and grew 11% YoY/ 2% QoQ. Sector RoA Axis Bank 1,36,059 8.6 -1.0 1,05,339 15.2 0.0 63,038 3.8 -3.3
declined from 1.5% to 1.4% QoQ, within which private banks' RoA declined Kotak Mahindra Bank 71,963 9.8 1.4 51,810 13.5 0.5 33,048 10.0 -1.7
8 bps QoQ to 1.8% while PSU banks RoA declined from 1.2% to 1.1%
IndusInd Bank 52,281 -1.3 -3.1 36,007 -10.0 -4.1 14,024 -39.0 -10.7
QoQ.
Federal Bank 24,313 14.5 -1.7 15,695 9.2 -2.5 9,554 -5.1 -10.3
NIM performance of private banks were largely in line with expectations,
City Union Bank 5,877 13.9 1.1 4,360 19.8 4.2 2,860 13.0 2.4
while PSU banks' NIM performance was weak. Among PSUs, NIM
contraction was higher for BOB and SBIN. NII growth for the coverage DCB Bank 5,429 14.5 -1.4 2,711 28.2 12.4 1,514 19.6 7.1
universe moderated further to5.5% YoY and 1% QoQ and was 2% below Karur Vysya Bank 10,788 7.7 -0.4 8,153 20.6 7.1 4,960 20.5 7.5
expectation. The miss on NII was more significant for PSU banks, which South Indian Bank 8,693 6.1 -1.4 5,288 9.4 4.5 3,419 12.0 22.1
grew by 3% YoY/ flat QoQ (2.5% below estimate). On the other hand, Equitas SFB 8,184 4.2 -3.7 3,329 -7.6 -10.3 663 -67.2 -60.5
private banks saw NII growth of 8% YoY and 1% QoQ. NIM is expected to
Ujjivan SFB 8,867 3.1 -4.9 3,592 -21.5 -10.8 1,086 -63.8 -37.6
remain in narrow range and with the rate cycle forecast to be shallow, the
impact of the rate cut will likely be moderate, especially for private banks. Pvt Banks 8,42,692 7.9 -0.7 6,55,152 9.1 0.0 4,19,445 3.3 -0.5

The asset quality performance was mixed, with elevated slippages in retail
unsecured loans, including MFI loans. Most of the lenders have slowed State Bank of India 4,14,455 4.1 -2.3 2,35,508 77.9 -10.2 1,68,914 84.3 7.7
their growth in unsecured loans and adopted a cautious approach. Credit Bank of Baroda 1,14,169 2.8 -6.1 76,642 9.3 -3.8 48,373 5.6 4.7
costs for select private players stood elevated, while PSBs continued to Canara Bank 91,486 -2.9 -5.7 78,366 15.2 5.9 41,042 12.3 3.9
remain at lower level. Most banks have indicated a bottoming of stress in Punjab National Bank 1,10,323 7.2 0.4 66,206 4.6 -2.2 45,082 102.8 17.8
4QFY25 and gradual recovery expected from 2HFY26 onwards. We remain Union Bank of India 92,403 0.8 1.4 74,918 2.9 3.9 46,036 28.2 21.1
watchful of the asset quality in the unsecured segment.
PSU Banks 8,22,835 3.1 -2.5 5,31,640 30.7 -4.3 3,49,448 50.5 9.6
Loan growth moderated to 11% YoY/ 3% QoQ (compared to 13% in
2QFY25). PSU banks recorded a loan growth of 13% YoY/ 4% QoQ,
CoverageBanks 16,65,527 5.5 -1.6 11,86,792 17.8 -2.0 7,68,894 20.4 3.9
while private banks reported growth of 8% YoY/ 2% QoQ. Notably healthy
growth was seen by ICICIBC, KMB, DCB, KVB, SBIN, and PNB. Deposit Source: Company, Antique
growth for the coverage universe was 11% YoY/ 2% QoQ. This led to a
rise in the overall LDR. We expect loan growth for FY25 to be in the range
of 11%-12%, as challenges in deposit growth and the resulting higher LDR
remains a constraint.
Strong: KMB, ICICIBC; Weak: IIB and AXSB
Top picks: ICICIBC, KVB, and SBIN
Antique Stock Broking Limited 40
 19 February 2025

Financials - Banks - Positive Raju Barnawal, +91 22 6911 3429, raju.barnawal@ antiquelimited.com

NIM (%) Return on assets (%)

10.00

7.69
9.20
2.10
8.00 1.80
4.91

1.50
4.27

4.11
4.08
3.99

3.67
6.00
3.46

3.27

3.24

3.14
3.12

3.10
1.20

2.92
2.90
2.88
4.00 0.90
0.60
3.43
4.25
3.93
4.93
3.93
3.11
3.58
3.30
4.03
3.19
7.39
8.60
3.01
2.94
2.83
2.93
2.91
2.00
0.30
0.00 0.00
HDFCB

KMB
IIB

Equitas SFB

SBIN

CBK
PNB
Ujjivan SFB
DCB
KVB
ICICIBC
AXSB

FB
CUB

SIB

BOB

UNBK

2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
2QFY25
3QFY25
2QFY25 3QFY25 Pvt. Banks (%) PSU Banks. (%) Coverage (%)

Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 41

 19 February 2025

Financials - Banks - Positive Raju Barnawal, +91 22 6911 3429, raju.barnawal@ antiquelimited.com

We revise our FY25/26/27 earnings estimate by 1%/-1.4%/-1% respectively

Company Rating CMP Revised TP Change in Estimate (%)
(INR) TP(INR) Change (%) NII PPP PAT
FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27
HDFC Bank * Buy 1,717 2,000 -2 0.1 -1.0 -1.5 -0.1 -1.7 -2.1 -0.2 -2.5 -2.1
ICICI Bank * Buy 1,251 1,460 0 -0.6 -3.0 -3.3 0.3 -1.1 -1.1 1.2 -1.1 0.1
Axis Bank * Buy 993 1,300 -6 -0.8 -4.8 -5.1 -0.9 -5.1 -4.0 -3.0 -7.3 -5.1
Kotak Mahindra Bank # Buy 1,945 2,100 0 0.4 -0.9 -1.0 0.3 -0.6 -0.4 -0.4 -1.3 -1.3
IndusInd Bank Buy 1,048 1,300 -4 -1.1 -2.0 -2.3 -0.2 2.2 1.9 -3.6 -2.0 -0.4
Federal Bank Buy 182 230 -4 -1.8 -5.6 -6.4 -2.4 -7.0 -5.3 -5.3 -8.3 -1.8
City Union Bank Buy 161 200 0 -0.2 -0.9 0.3 0.9 3.3 3.0 1.2 3.5 2.9
Karur Vysya Bank Buy 219 270 0 -0.4 -3.3 -0.5 1.3 -5.3 -1.3 3.2 -5.1 0.1
DCB Bank Buy 108 160 -3 -0.5 -3.2 -0.7 15.1 0.3 3.0 15.0 2.0 2.5
South Indian Bank Hold 24 29 -5 -1.9 -4.2 -3.7 -1.3 -7.2 -4.6 5.4 -0.9 2.4
Equitas SFB Buy 61 85 -10 -2.8 -6.3 -5.7 -8.0 -13.6 -9.2 -43.9 -19.9 -12.2
Ujjivan SFB Buy 32 40 -10 -2.9 -6.1 -5.8 -4.5 -12.0 -10.4 -11.6 -13.1 -10.7
State Bank of India Buy 728 950 -3 -0.8 -0.3 -0.8 -1.6 1.2 0.0 2.8 1.6 -0.1
Bank of Baroda Buy 207 290 -8 -3.4 -7.1 -5.7 -2.7 -8.9 -7.9 -1.4 -7.6 -3.8
Canara Bank Buy 85 120 -11 -1.7 -5.4 -2.5 2.7 -5.1 -3.3 1.9 -5.5 -4.3
Punjab National Bank Hold 93 110 -4 0.6 0.0 0.7 1.0 2.7 6.8 7.1 6.0 8.3
Union Bank Buy 109 150 -6 0.8 1.7 -2.5 1.6 5.1 1.7 6.8 7.9 3.1
Overall -0.7 -2.0 -2.2 -0.3 -1.4 -1.4 1.0 -1.4 -1.0
Source: Company, Antique; * Adjusted for subsidiaries; # Consolidated

Antique Stock Broking Limited 42

 19 February 2025

Financials - Banks Raju Barnawal, +91 22 6911 3429, raju.barnawal@ antiquelimited.com

C Good ICICI Bank

Result recap—Strong performance continues
C Good Kotak Mahindra Bank
Good performance amidst challenging
D Bad
Result recap—Tough quarter
Axis Bank

n ICICIBC delivered steady quarter with PAT

environment n AXSB reported weak performance in terms of
growth of 15% YoY (4% above estimate, 2.4% n KMB reported stable operating performance asset quality, loan growth, deposits growth,
RoA). NII grew 9% YoY/ 2% QoQ and NIM with stable NIM and QoQ decline in slippages and margins while profitability was largely in
declined marginally by 2 bps QoQ. Fee growth along with stable credit cost. PAT stood at INR line with estimate. The bank reported a PAT of
was strong at 16% YoY while opex was lower 33 bn (10% YoY) was in-line with estimate INR 63 bn (4% YoY/ -9% QoQ), RoA of 1.7%
at 5% YoY leading to core PPP growth of 15% and RoA stood at 2.1%. NII grew 10% YoY/ vs. our estimate of INR 65 bn. NII grew 9%
YoY. Loan growth was healthy at 14% YoY/ 2.5% QoQ and NIM surprised positively and YoY/ 1% QoQ and NIM declined by 6 bps
3% QoQ. Deposit growth moderated to 14% increased by 2 bps QoQ. Fee income grew QoQ. Fees grew 6% YoY leading to core PPP
YoY/ 1.5% QoQ. Slippage ratio increased 10% YoY/ 2% QoQ and opex grew 8% YoY growth of 14% YoY. Loan growth slowed down
from 1.8% to 2.1% QoQ (ex-agri.: 1.9%). leading to core PPP growth of 12% YoY. Loan and stood at 9% YoY/ 1.5% QoQ as retail
Management has stated that the asset quality growth was healthy at 15% YoY/ 3.6% QoQ loan growth moderated sharply to 11% YoY.
in its portfolio continues to be stable. Credit and deposits growth was 16% YoY/ 3% QoQ. Deposit growth was low at 9% YoY/ 1% QoQ
cost was low at 38 bps. Gross slippage ratio declined from 2.1% to leading to domestic LDR remaining elevated
Our Take 1.8% QoQ and credit cost was stable QoQ at at 89% (vs. 88% in 2QFY25) and overall LDR
0.7%. at 92.6%. CASA grew 2% YoY/ -2% QoQ and
n The bank continues to consistently deliver steady CASA ratio moderated from 40.6% to 39.5%
performance with industry leading return ratios, Our Take
QoQ.
healthy asset quality, low credit cost, and n The bank's overall operating performance was
resilient balance sheet. Liability profile remains in-line and we expect with healthy business Our Take
strong. The bank's strong contingency buffer of growth. More importantly, the improved asset n AXSB posted weak performance compared to
INR 131 bn (1% of loans) provides comfort and quality with stable credit costs should be a key its peers with lower business growth,
it would help it to protect earnings in case of positive. While we anticipate a moderation in moderation in NIM, sequential increase in
any future stress. NIM going forward, the bank expects it to slippages with higher credit cost.
Recommendation - BUY remain at the higher end of the industry. Recommendation - BUY
n We expect RoA and RoE to be in the range of
Recommendation - BUY n We expect RoA and RoE of 1.6% and 15%-
~2.2% and 16%-17% over FY26/ 27E. n We expect the bank to deliver RoA of over 2% 16% over FY26/ 27E. Maintain BUY.
Maintain BUY. and RoE of 12%-13% over FY26/ 27E.
Maintain BUY.

Antique Stock Broking Limited 43

 19 February 2025

FMCG - Neutral Abhijeet Kundu, +91 22 6911 3430, [email protected]

Alcobev outperform staples and paint in a muted environment Quarterly financials and variance
Our FMCG universe's 3QFY25 revenue performance was broadly in line
while profitability was below our expectations. During the quarter, revenue Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
grew by 5.2% YoY while EBITDA and PAT were almost flat. Broad-based Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
inflation affected both consumer demand and input cost. Urban markets
underperformed rural markets. Bajaj Consumer 2,293 (2.7) (2.3) 284 (23.9) (15.5) 275 (26.9) (18.4)
Notably, alcobev companies outperformed consumer staples and paint Colgate 14,618 4.7 (3.0) 4,544 (3.0) (5.2) 3,228 (2.2) (4.3)
companies on all parameters. Alcobev coverage sales/ EBITDA grew 13%/ Dabur 33,553 3.1 1.1 6,819 2.1 0.5 5,224 1.6 3.2
28% while consumer staple coverage sales/ EBITDA grew 6%/ 1%. Paint Emami 10,495 5.3 (1.6) 3,387 7.6 (1.8) 3,006 7.1 (1.5)
coverage sales/ EBITDA declined by 5%/ 19% (with 20% drop in Asian
Paint's EBITDA). In case of alcobev companies, the mass (regular segment) GCPL 37,684 3.0 5.7 7,559 (16.4) (2.1) 5,020 (14.3) (2.7)
witnessed recovery during the quarter, albeit on a low base of the previous HUL 1,54,080 1.4 (2.2) 35,700 0.8 (0.3) 25,400 (0.0) (1.9)
corresponding period. The premiumization trend in alcobev continued Honasa 5,175 6.0 1.0 261 (24.1) 271.6 260 0.5 605.5
aiding a healthy sales growth. Additionally, the opening up of the Andhra
Pradesh market aided sales performance of this sector. ITC 1,70,528 8.6 (7.2) 58,284 1.6 (6.1) 56,890 2.1 11.1
Consumer staples performance was broadly muted. Emami followed by Jyothy Labs 7,045 4.0 1.9 1,158 (2.4) (1.1) 874 (3.9) 0.0
Marico were relatively better performers within staples. Marico 27,940 15.4 0.5 5,330 3.9 (0.9) 3,990 4.2 (3.3)
Paint coverage companies' performance was impacted by overall muted Nestle 47,621 3.9 0.2 11,193 (0.8) 3.9 7,305 (8.3) 2.4
demand, weak festive season, and heightened competitive intensity (leading Patanjali Foods 91,031 15.1 2.0 5,406 57.1 12.1 3,709 71.3 12.4
to increase in cost of operations).
United Spirits 34,320 14.8 1.2 5,880 19.7 (2.2) 5,380 54.6 32.9
In our view, drop in inflation would be the key monitorable for recovery in
staples. Paints we believe would witness continued moderation in the short Radico Khaitan 12,942 11.5 4.8 1,840 28.8 2.7 960 30.0 0.6
term. Asian Paints 85,494 (6.1) (5.1) 16,367 (20.4) 7.6 11,105 (23.3) 7.3
We continue to be constructive on the alcobev sector due to premiumization Kansai Nerolac 19,219 0.2 (0.8) 2,351 (3.7) 11.0 1,867 21.0 38.5
benefits and an expected moderation in raw material inflation in the coming Total 7,63,778 5.2 (2.1) 1,67,530 (0.3) (1.1) 1,35,068 0.8 6.6
quarters.
Source: Company, Antique
Top Picks: Radico Khaitan and United Spirits
Revenue growth (% YoY) EBITDA growth (% YoY) EBITDA expansion (bps)
20 100 400
11.5
14.8
15.1
15.4

159
8.6

67
69
57
15 80
6.0
5.3
4.7
4.0
3.9
3.1
(2.7)

3.0

60

29
(6.1)

10
1.4

-
0.2

20
40
(16)

5
(20)
(24)

(466)
(344)
(343)
(248)
(239)
(210)
(201)
(112)
(108)
(49)
(19)
(14)
8
4
2
2
1

20
- (400)
-
(5) (20)
Nestle (1)
Jyothy Labs (2)
Colgate (3)
Kansai Nerolac (4)

(10) (40) (800)

Colgate

Honasa
Dabur

Patanjali Foods
Bajaj Consumer

Nestle
Asian Paints

Kansai Nerolac

United Spirits
HUL
GCPL

Radico Khaitan
ITC
Jyothy Labs

Marico
Emami

Dabur

Patanjali Foods
Bajaj Consumer
Asian Paints

United Spirits
GCPL

HUL

Radico Khaitan
ITC

Colgate

Honasa

Dabur
Asian Paints

Patanjali Foods
Nestle
Bajaj Consumer

Kansai Nerolac

United Spirits
GCPL

HUL
ITC
Marico
Emami

Jyothy Labs
Marico

Emami
Source: Company Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 44

 19 February 2025

FMCG Abhijeet Kundu, +91 22 6911 3430, [email protected]

C Good
Result recap
Allied Blenders & Distillers
E In-line
Result recap
Radico Khaitan
D Bad Bajaj Consumer Care
Result recap—below expectations
n ABDL's performance was strong with 12% n RDCK's 3QFY25 performance was strong with n BAJAJCON witnessed a broad-based
volume growth in P&A segment and significant revenue/ EBITDA/ PAT of 11%/ 29%/ 30% underperformance over our and consensus
improvement in profitability resulting from driven by strong growth in P&A segment and expectations led by muted hair oil demand and
efficiencies. Overall volume grew 11% with recovery in Regular segment. P&A (Prestige & higher raw material prices. Revenue/ EBITDA/
P&A/ popular segment volume growth of Above) brands sustained strong performance PAT dropped 3%/ 24%/ 27% during the
with volume/ value growth of 18%/ 25% and
12%/ 11% benefiting from strong consumer quarter.
6% realization growth despite the challenging
demand during the festive season. demand environment Our Take
Our Take Our Take n The company has increased spends to revamp
n Going ahead, we expect the strong n In the near term, we expect strong demand in its route to market (RTM), under project
performance to continue on the back of a) New P&A brands to continue and RDCK to deliver Aarohan. These investments/ spends in the
launches in its premium & luxury segment and mid-teens volume growth on the back of new current challenging environment further
scaling up brands in the P&A segment backed product launches, better execution, and scaling amplifies the negative impact on margins.
by strong distribution network. b) Driving up of existing brands. Going ahead, Going ahead, we expect a gradual recovery
profitable growth in the popular segment with profitability is expected to improve further with in business.
favorable state mix. c) Improving profitability higher contribution from the P&A segment,
Recommendation - BUY
on premiumization of portfolio, cost moderation in grain prices, and improvement
rationalization, and backward integration. in non-IMFL business profitability. n Post the 3QFY25 performance, we cut our
Recommendation - BUY earnings estimates by 17%/ 14%/ 16% for
Recommendation - BUY FY25/ 26/ 27. We expect BAJAJCON to
n We expect RDCK to report strong performance
n We increase our earnings estimates by 8%- deliver sales/ earnings CAGR of 11%/ 14%
with sales/ EBITDA/ earnings CAGR of 15%/
10% for FY25-27E largely driven by over FY25- 27E after factoring in the acquisition
26%/ 38% on the back of strong growth in
improvement in profitability and our target of the Banjara brand and in view of the gradual
P&A brands (15%/ 22% growth in P&A brands
multiple to 45x PER (previously 42x) factoring volume/ value over FY24-27E) and margin recover y in sales. We maintain BUY
improvement in growth visibility. We maintain improvement on the back of backward recommendation with a revised TP of INR 239
BUY recommendation with a revised TP of INR integration and premiumization of portfolio. (previously INR 284), valuing the stock at a
476 (previously INR 405), valuing the stock at We maintain BUY recommendation with a TP PER of 20x on FY27E earnings.
45x PER on FY27E EPS. of INR 2,500 based on a PER of 50x FY27E
EPS.

Antique Stock Broking Limited 45

 19 February 2025
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Amit Shah, +91 22 6911 3466, [email protected]
IDR Industrials - Positive Prathamesh Rane, [email protected]

Execution momentum moderates; business outlook remains promising Quarterly financials and variance
Our industrial coverage universe's operational performance was broadly in Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
line with our expectations despite moderation in execution and witnessed a Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
growing order backlog. Capex demand across segments largely driven by ABB 33,649 22.0 8.6 6,573 57.6 19.1 5,319 54.1 19.6
spending in public infrastructure continues to be robust, however, witnessed BHEL 72,771 32.2 4.0 3,042 40.5 (13.0) 1,248 169.4 (21.0)
Cummins 30,860 21.8 6.8 6,000 11.5 9.3 5,140 13.0 10.7
slowdown in short cycle private capex. Slowdown in economic activity has
EIL 7,502 (12.4) (21.8) 912 90.6 3.9 881 75.4 7.2
believed to be bottomed out and could recover going ahead. Given recent
GE Vernova T&D 10,737 28.0 (11.7) 1,797 86.1 (7.7) 1,427 189.2 4.0
announcements in Budget, we expect healthy impact on businesses from
Hitachi Energy 16,203 27.2 3.0 1,669 145.5 32.6 1,374 498.1 111.2
Government's continued emphasis on building infrastructure. Execution Honeywell 10,908 1.8 (7.4) 1,420 (11.6) (19.6) 1,321 3.3 (9.5)
witnessed decent growth registering 15% YoY revenue growth (+4% above KEC 53,494 6.8 (7.5) 3,745 21.6 (13.7) 1,296 33.7 (28.9)
expectations) whereas operating profit for the coverage universe saw a 12% KOEL 11,636 2.5 (9.1) 1,170 (12.0) (27.5) 650 (20.9) (38.8)
YoY growth (-2% below expectations) with EBIDTA margin contracted a mere KKPC 3,400 10.2 (9.7) 486 (7.7) (26.3) 360 3.0 (24.1)
40 bps YoY to 10.1% broadly in-line with our expectations. This was on Linde 6,059 (14.2) (21.4) 1,922 3.2 (6.1) 1,140 (2.7) (10.7)
account of robust performance reported by ABB, Hitachi, Cummins, and LMW 7,108 (39.1) (18.4) 326 (71.2) (48.3) 292 (69.8) (43.9)
TARIL. Companies are optimistic about the near to medium-term business L&T 6,46,678 17.3 2.1 62,549 8.6 (6.5) 33,588 14.0 (9.2)
outlook with enquiry level strong across industries and increasing demand Siemens 35,872 (3.3) NA 4,009 (11.5) NA 3,721 (9.6) NA
for their products. Thermax 25,078 7.9 (7.3) 1,890 0.8 (31.1) 1,137 2.5 (43.8)
Top earnings surprises: Hitachi Energy, Cummins TRIL 5,453 49.3 (3.7) 779 127.3 (5.1) 505 276.9 (2.5)
Total 9,77,406 15.4 4.4 98,288 12.1 (1.8) 59,399 18.6 (0.5)
Top Earnings misses: LMW Ex - Siemens 9,41,534 16.3 0.6 94,279 13.3 (5.8) 55,678 21.1 (6.7)
Top Picks: ABB, Siemens, BHEL, KOEL, TARIL & KKPC Source: Company, Antique; For Siemens - SIEM Nos (ex-energy business) hence YoY not comparable

Revenue growth (% YoY) EBITDA margin (%, 3QFY25, 3QFY24) PAT growth (% YoY)
75.0 40.0 800
49
32
28
27

50.0 600
22
22
17

30.0
10

25.0 400
8
7

-12
-39

Hitachi… 498
277
GE… 189
169
-14
3
2

54
-3

20.0

75

34
14
13

-70
-21
-10
200

3
3
3
0.0

-3
10.0 0
-25.0
0.0 -200

Hitachi…
GE…

-50.0
GE…
Hitachi…

LMW
KEC
L&T

Thermax
BHEL
EIL
ABB

Honeywell

Linde

KOEL
Cummins

KKPC

Siemens
TRIL
L&T
LMW
Honeywell

Thermax
Linde

KEC
KOEL

EIL

BHEL
ABB
Cummins

Siemens
KKPC

TRIL
TRIL

Cummins

LMW
KKPC

KEC
KOEL

EIL
Siemens

Linde
BHEL

ABB

L&T

Thermax

Honeywell

Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 46

 19 February 2025
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Amit Shah, +91 22 6911 3466, [email protected]
IDR - Industrials Prathamesh Rane, [email protected]

C Good Cummins India

A marginal beat on all fronts; maintain BUY
C Good Hitachi Energy India
Healthy all-round performance; maintain BUY
D Bad Thermax
Legacy orders dent profitability; maintain HOLD
n KKC's 3QFY25 performance was marginally n HEI's 3QFY25 overall performance was n Thermax's 3QFY25 results missed our
ahead of our estimates on all fronts supported meaningfully above our expectations on all estimates on the profitability front. Revenue
by a) Better than expected revenue booking fronts. HEI registered a revenue growth of 27% booking at INR 25.0 bn (+8% YoY; est. of INR
both in the domestic and export markets and YoY, in line with our estimate, supported by 27 bn) missed our estimate by 7%. However, a
b) Margins being ahead of expectations strong in-hand order execution. EBITDA margin sharp miss of 31% was registered on the
supported by better than estimated revenue expanded 500 bps to 10.3% vs. our est. 8.0%, profitability front with EBITDA coming in at
mix. For the quarter, KKC reported a revenue driven by better revenue mix in favor of higher INR 1.9 bn (+0.8% YoY; est. INR 2.7 bn) &
of INR 30.8 bn (+22% YoY) supported by
margin exports as well as service orders. margin at 7.5% (-50 bps YoY; est. 10.1%)
robust growth in the domestic market (+18%
Our Take impacted by weaker than estimated margin in
YoY) and export business (+43% YoY). 3Q
the industrial infrastructure segment. Thermax
EBITDA stood at INR 6.0 bn (+12% YoY) n Given the traction in key target sectors like
beating our estimate of INR 5.5 bn supported is confident of improving the segment's
HVDC, high-speed rail, and data centers, we profitability in FY26 as a majority of the legacy
by superior margin performance of 19.4% (-
expect this ordering momentum to continue in orders in the FGD segment are nearing
180 bps YoY; est. of 19.0%)
the near to medium term. We also expect completion.
Our Take margins to improve substantially for HEI in
FY26 as incremental orders that are being Our Take
n Near-term business environment looks
challenging given increased competitive finalized are witnessing improved margins. n We trim our estimates by 5%/ 18%/ 25% for
intensity from competitors to gain market share Recommendation - BUY FY25/ 26/ 27 respectively to factor in the
under the CPCB IV regime and also as the miss on margin in the industrial infrastructure
macro environment looks challenging. n We maintain BUY rating with a revised TP of segment and given premium valuation.
INR 17,075, valuing HEI at a PE multiple of
Recommendation - BUY 60x FY27E EPS. Recommendation - HOLD
n We marginally cut our FY26/ 27E estimates n We maintain HOLD rating on the stock with a
by 4%/ 7% respectively and also trim our exit revised TP of INR 3,545 (earlier INR 5,300)
multiple to 44x (earlier 48x) FY27E earnings. given the current premium valuation and await
We maintain BUY rating on the stock with a a better entry point.
revised TP of INR 3,622 (earlier INR 4,289)

Antique Stock Broking Limited 47

 19 February 2025
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Amit Shah, +91 22 6911 3466, [email protected]
IDR - Defence - Positive Prathamesh Rane, [email protected]

BEL leads the way; future growth levers remain strong Quarterly financials and variance
The 3QFY25 operational performance of our defence coverage universe Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
was broadly in line with our expectations on all fronts. Execution for our Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
coverage universe was steady registering 23% YoY revenue growth (in line BDL 8,321 38.3 3.4 2,615 120.2 70.9 1,472 9.0 (12.5)
with our expectations), whereas operating profit for the coverage universe BEML 8,758 (16.4) (26.6) 604 8.0 (61.1) 248 (48.8) (76.3)
saw a 34% YoY growth (+23% above expectation) with EBIDTA expanding BEL 57,561 39.1 14.1 16,533 57.5 42.4 13,161 47.3 43.3
210 bps YoY to 24.1% (+400 bps above expectation). With better Cochin Shipyard 10,699 4.7 (15.1) 2,417 (22.4) 9.0 1,843 (25.7) (15.9)
operational efficiency, better execution, cost efficiency, and continuous
GRSE 12,710 37.7 (3.1) 753 54.6 (1.0) 982 11.2 (6.5)
innovation we expect the defence players to continue to deliver robust
PTC Industries 669 20.8 (16.8) 153 (0.6) (36.6) 142 75.3 (19.3)
performance in the coming quarters. The adverse geopolitical situation has
HNAL 69,569 14.8 6.3 16,808 17.2 10.7 14,326 14.3 6.3
been a positive influence for these companies leading to strong ordering
for defence related products. We maintain our positive stance on defence Mazagon Dock 31,436 33.1 (2.2) 8,171 51.5 37.4 7,682 29.9 24.9
PSUs and expect further re-rating of the sector in the medium term. Total 1,99,724 23.2 2.6 48,054 34.5 23.1 39,855 22.0 14.0
Source: Company, Antique
Top earnings surprises: BEL, Mazagaon Dock
Top Earnings misses: BEML
Top Picks: BEL, PTC Industries, Hindustan Aeronautics,
Mazagaon Dock, BDL

Revenue growth (% YoY) EBITDA margin (%, 3QFY25, 3QFY24) PAT growth (% YoY)
50.0 35.0 90
39

38

38

75
33

30.0

47
60
21

25.0
15

25.0

30
20.0

14

11
30
-16

-49
15.0

-26
5

9
10.0
0.0 0
5.0
BDL

Shipyard
BEL

GRSE

PTC Industries

HNAL

BEML

BDL

Shipyard
BEL
PTC Industries

HNAL

GRSE

BEML
Mazagon

Mazagon
Cochin

Cochin
0.0
Dock

-30

Dock
Shipyard

Industries

HNAL

BDL
BEL

BEML

GRSE
Mazagon
Cochin

-25.0
PTC

Dock

-60

Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 48

 19 February 2025
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Amit Shah, +91 22 6911 3466, [email protected]
IDR - Defence Prathamesh Rane, [email protected]

C Good Bharat Dynamics

Execution gains momentum; one-off provision
C Good Bharat Electronics
An operationally robust quarter; margins
D Bad
A weak quarter; maintain BUY
BEML

dents profitability continue to surprise positively n BEML reported disappointing 3Q operational

n BDL registers strong 3QFY25 execution having n BEL reported strong operational performance performance with revenue/ PAT declining
prioritized delivery of orders where supply surpassing our expectations on all key parameters, 16%/ 49% on YoY basis. Revenue stood at
chain is well in place and expects the with revenue booking as well as profitability INR 8.7 bn (-16% YoY) and missed our
momentum to continue and close FY25 with a expectation of INR 11.9 bn as the Vande
meaningfully exceeding our estimates for the
revenue of INR 30 bn+. Incrementally, with Bharat sleeper coach prototype is yet to receive
the geopolitical issues between Israel and quarter. BEL registered strong execution during
approval from the railways, thus impacting
Hamas subsiding, BDL is expected to retain its the quarter with revenue booking of INR 57.6 revenue booking of INR 5 bn+.
execution momentum in FY26 and clock +30% bn (+39% YoY) while an equally strong
revenue growth in FY26. 3QFY25 profitability performance was showcased on the profitability Our Take
suffered on account of one-time provision it front with EBIDTA growth of 57.5% YoY supported n The only bright spot for the quarter was order
incurred on an erroneous contract (INR 1.3 by margin expansion of 330 bps YoY to 28.7% inflow which stood at INR 45.4 bn supported
bn), adjusting for which the margin surpassed (est. of 23%) by the Chennai Metro order worth INR 36.6
our expectation meaningfully and stood at bn.
31.4% (+11.7 pps YoY). Our Take
Recommendation - BUY
Our Take n BEL has over the years developed multiple
n Given the sharp operational miss, we trim our
levers of growth by a) Establishing robust
n With supply chain issues now receding, BDL's FY25/ 26/ 27 estimates by 23%/ 15%/ 15%
operational performance is expected to remain infrastructure, b) Strong relationship with
respectively and also scale down our TP to
healthy as it has a large order book of INR government entities, c) Diversifying into non- INR 4,114 (earlier TP INR 5,185), valuing
200 bn+ to be executed. defence businesses to create new growth the stock at 28x (earlier 30x) its FY27E EPS.
Recommendation - BUY avenues, d) Installation of new factories, e)
Increased focus on R&D.
n Exports, which are 13% of the order book
currently, have the potential to grow Recommendation - BUY
meaningfully as the Cabinet Committee on n We continue to like Bharat Electronics given
Security has approved the export of Akash its robust order book position, strong pipeline,
missiles to nine countries. We therefore swift execution, and consistent delivery of
continue to maintain an optimistic stance on +20% margin. We thus maintain BUY rating
the stock and retain BUY rating with an
on the stock with a TP of INR 376, valuing the
unchanged TP of INR 1,351 as we retain our
earnings for FY25/ 26/ 27. company at 40x its FY27E EPS.

Antique Stock Broking Limited 49

 19 February 2025
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Amit Shah, +91 22 6911 3466, [email protected]
IDR - Railway - Positive Prathamesh Rane, [email protected]

Soft Quarter Quarterly financials and variance

Our railways coverage universe's operational performance was below Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
expectations, led by Ircon and TRSL. Ircon faces issues with inflow in a Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
competitive environment while TRSL faced some supply chain issues and JWL 10,298 15.0 (7.6) 1,487 19.5 (7.4) 964 18.3 (7.8)
delayed revenue recognition as some projects are in the design phase.
Titagarh 9,022 (5.5) (19.4) 1,001 (9.6) (29.6) 689 (8.1) (27.0)
Execution registered 4.7% YoY revenue de -growth (10% below
expectation). EBITDA for the coverage universe saw a 16% YoY decline Ircon 24,704 (11.5) (12.4) 879 (49.5) (48.1) 1,787 (3.5) (0.9)
(18% below expectation) with EBIDTA margin contracting 100 bps YoY to RITES 5,758 (15.7) (12.2) 1,173 (30.5) (10.5) 1,094 (15.1) 5.6
7.3% (72 bps below our estimate). Major contraction was seen in Rites as RVNL 45,674 (2.6) (7.2) 2,393 (3.9) (2.8) 3,116 (13.1) (3.2)
the share of competitive orders increased in overall execution. However, Total 95,455 (4.7) (10.2) 6,932 (16.2) (18.4) 7,650 (7.7) (4.9)
management of these companies are confident about a robust business
Source: Company, Antique
outlook buoyed by a sustainable backlog of wagon orders. Ircon and RVNL
will look to secure orders in railway infrastructure while as an alternative
source Ircon is looking for opportunities in roads and RVNL is exploring
exports. RITES is focused on building its export order backlog and thus
boost revenue going ahead. With growing traction in emerging sectors,
the wagon companies expect to further expand their presence across various
business lines, including brake disc, braking system, and exports.
Top Pick: Titagarh Rail Systems

Revenue growth (% YoY) EBITDA margin (%, 3QFY25, 3QFY24) PAT growth (% YoY)
30.0 30.0

18.3
25.0

24.7
15.0

20.4
25.0 20.0
-15.7

14.4
13.9

20.0
11.6
11.1

10.0
0.0 15.0
6.2
0.0

5.3
5.2
10.0
3.6
-2.6

-8.1

RITES -15.1

RVNL -13.1
-5.5

-10.0

-3.5
Ircon -11.5

5.0
-25.0 0.0 -20.0

Titagarh
JWL
Titagarh

RVNL
JWL

RITES
Titagarh

RVNL
JWL

RITES

Ircon
Ircon

Source: Company,Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 50

 19 February 2025
Dhirendra Tiwari, +91 22 6911 3436, [email protected]
Amit Shah, +91 22 6911 3466, [email protected]
IDR - Railway Prathamesh Rane, [email protected]

C Good Jupiter Wagons

A marginal miss on the operational front
D Bad
An operationally weak quarter
IRCON

n JWL's 3QFY25 performance marginally missed n The weak execution trend continues for Ircon,
our estimates on the operational front. with 3QFY25 revenue at INR 25 bn, down
Revenue stood at INR 10.3 bn (+20% YoY), 12% YoY and 12% below our and consensus
marginally missing our estimate of INR 11.1 estimates. Margins too continue to be on the
bn, impacted by weaker than estimated volume declining trend as the 3QFY25 margin came
in railway wagons & CV bodies and in at 3.6% vs. 4.5% QoQ and 6.2% YoY. The
components. Gross margin stood at 24.7%
margin contraction was because of losses in
(+160 bps YoY), in line with our estimate of
the Chennai Metro project and overall
24%. EBITDA stood at INR 1.5 bn (+20% YoY)
missing our estimate of INR 1.6 bn impacted increase in revenue share of completed orders.
by weaker than estimated revenue booking. With this the EBITDA came in at INR 0.9 bn,
PAT at INR 964 mn (+18% YoY) also missed down 50% YoY and 50% below estimate. The
our estimate of INR 1 bn. decrease in EBITDA led to a PAT of INR 1.4
bn, down 24% YoY. PAT was supported by
Our Take higher other income that came in at INR 1 bn,
n We firmly believe that JWL stands as a top-tier up 19% YoY, and lower tax rate of 20% vs.
player in the field of mobility solutions, 25% YoY.
particularly in the railways and roadways
domain. We believe the company is well placed Our Take
to register a revenue/ earnings CAGR of n With increased competition the order inflow
18%/ 23% over FY24-27E supported by strong has been muted. While the bid pipeline is
capabilities that it has developed on multiple expected to be INR 600 bn, there are 20-25
fronts coupled with sectoral tailwinds that it
players chasing it, thus the pie for each player
enjoys in the business segments that it operates
in. remains INR 30 bn, which may not be enough
to move past INR 120 bn execution.
Recommendation - HOLD
Recommendation - HOLD
n We retain HOLD rating on the stock given weak
ordering activity and near-term sectoral n We have a HOLD rating on the stock with a TP
challenges, and scale down our TP to INR 468 of INR 152, valuing its core EPC at 25x PER.
(earlier INR 507) valuing it at a P/E multiple
of 32x its FY27E EPS.

Antique Stock Broking Limited 51

 19 February 2025
Vikas Ahuja, +91 22 6911 3439, [email protected]
Ashish Bansal, [email protected]
Information Technology - Neutral Rhea Baid, [email protected]

Indian IT companies reported decent performance in 3QFY25 despite being Quarterly financials and variance
impacted by furloughs, largely in line with our estimates. Among top 5 IT
Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
companies, TCS reported flat growth QoQ in CC terms, while HCLT/ Infosys/
Company (INR bn) (%) (%) (INR bn) (%) (%) (INR bn) (%) (%)
TechM and Wipro reported growth of 3.8%/ 1.7%/ 1.2% and 0.1%.
CoForge 33 32 2.9 5.2 5.1 2.0 2.0 2.2 (9.4)
Infosys raised its FY25 revenue growth guidance to 4.5%-5% in CC from
Cyient - DET 15 15 (0.3) 2.6 2.8 (7.9) 1.2 1.4 (11.6)
3.75%-4.5% earlier. While, HCLT narrowed its guidance to 4%-4.5% in
HCL Technologies 299 299 (0.1) 68.7 68.0 1.1 46.1 45.5 1.3
CC from 3.5%-5% earlier. Wipro expects Q4 revenues to grow in the
range of -1% to 1% in CC. EBIT margin improved for all top 5 IT companies Infosys 418 412 1.4 101.2 98.6 2.6 68.1 65.1 4.5
in the range of 20-100 bps QoQ, largely in-line with the expectation. We LTIM 97 96 0.4 15.9 15.6 2.3 10.9 11.1 (2.1)
saw a higher-than-expected EBIT margin expansion in Wipro on the back of LTTS 27 26 0.3 4.9 4.9 1.1 3.2 3.3 (2.4)
improved execution rigor. Commentaries by most companies suggest client Mphasis 36 36 (0.5) 6.8 6.5 4.6 4.3 4.2 2.5
sentiment is improving as macro uncertainties recede, resulting in higher Persistent 31 30 1.1 5.4 5.4 (0.6) 3.7 3.7 1.5
deal activities, and expects FY26 to be better than FY25. TCS 640 643 (0.4) 168.9 170.0 (0.6) 123.8 121.6 1.8
Top Picks: HCLT and MPHL TechM 133 134 (0.7) 18.1 18.0 0.7 9.8 11.2 (12.1)
Wipro 223 222 0.5 47.9 45.2 6.0 33.5 32.0 4.8
Firstsource 21 21 1.6 3.2 3.1 2.9 1.6 1.6 0.7
Zensar 13 13 (0.1) 2.1 2.0 1.2 1.6 1.6 1.3
Total 1,984 1,980 0.0 451 445 0.0 310 304 0.0
Source: Company, Antique

Constant currency revenue performance USD YoY revenue growth for Tier 1 IT
of Tier 1 IT vendors vendors EBIT margin performance
12% 25%
1.7%
0.5%

3.8%
4.0%

0.1%
0.0%
0.0%

8%
4% 2% 20%
0%

24.5%
24.5%
15%

21.3%
21.1%
-8%

19.5%
19.2%

17.5%
16.6%
-4%
-0.5%

3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
2QFY25
3QFY25
10%
5%
TCS Infosys HCLT Wipro (IT 0%
Services) TCS Infosys TCS Infosys HCLT Wipro
Reported Expected HCL Tech Wipro (IT Services) Reported Expected
Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 52

 19 February 2025
Vikas Ahuja, +91 22 6911 3439, [email protected]
Ashish Bansal, [email protected]
Information Technology Rhea Baid, [email protected]

C Good TechM
Beat on all key parameters, margin recovery on C Good Wipro
Margin resilience drives optimism amidst modest
D Bad Cyient
Muted outlook, CEO departure likely to weigh
track growth on stock performance
n TechM reported 3QFY25 revenue growth of n Wipro posted IT services revenue of USD 2,629 n Cyient DET revenue grew by 2.4% QoQ in
1.2% QoQ in CC terms, ahead of our estimate mn, up 0.1% QoQ growth in CC terms, CC, in-line with our expectation. Going into
of 0.5%, driven by the BFSI and HC verticals exceeding our forecast. For 4QFY25, the IT 4Q, the company is experiencing some
which grew 2.7% and 4.5% QoQ in CC, while services business is projected to grow by -1% to challenges in execution due to delay in deal
the Communication vertical was flat but is +1% in CC terms. The deal momentum was conversions and have revised its revenue
expected to improve gradually. Management decent, with 17 large deals with TCV of USD 1 growth guidance for FY25 to -2.7% YoY in CC
commentary suggests that the overall demand bn. The Capco business continues to demonstrate
terms from flat growth previously, implying 4Q
environment is showing a gradual strong demand, achieving 11% YoY growth and
growth to be muted. They expect to rebound
improvement, with pockets of demand visible a 9% YoY increase in its order book. EBIT margin
by 1QFY26 helped by strong deal wins and a
in the prioritized markets of North America, stood at 17.5%, better than our estimates. The
Europe, and APAC, resulting in deal activities company is optimistic about maintaining margins healthy pipeline. EBIT margin declined by 72
growing sequentially. EBIT margin expands within a tight range moving forward. bps QoQ to 13.5%, below our expectation.
sequentially by 60 bps QoQ to 10.2%, above Management anticipates BFSI enterprise budgets The company also reduced its EBIT margin
our expectation. The company retained its for CY25 to grow, while the healthcare client guidance for 4QFY25 to 13.5% from 16%.
FY27 EBIT margin guidance of 15% and to budgets are expected to rise at a slower pace. Our Take
achieve industry leading growth. Our Take n Weak exit guidance for FY25 and a change in
Our Take n The company indicated that its overall business top management have resulted in execution
n Overall, given the strong deal performance, appears to be gradually improving along with risk in the near term.
continued traction in key verticals, and an improvement in its margin profile. Recommendation - Buy
significant investments made for long term Recommendation - Hold
sustainable growth, we believe TechM is well- n We think that the valuation has become
positioned as it enters a new calendar year. n We currently have a HOLD rating with a TP of inexpensive post the correction. We have a
INR 315, valuing the stock at 22x FY27 EPS, BUY rating on the stock with a TP of INR 1,950,
Recommendation - Buy which is at a 15% discount to its peers, Infosys valuing DET at 23x FY27 EPS and DLM at 20%
n We have a BUY rating on the stock with a TP and HCLT. discount on market cap in SoTP valuation.
of INR 1,975, valuing it at 25x FY27 EPS, in
line with our valuation multiple for Infosys.

Antique Stock Broking Limited 53

 19 February 2025
Vikas Ahuja, +91 22 6911 3439, [email protected]
Ashish Bansal, [email protected]
Indian Hospitality - Neutral Rhea Baid, [email protected]

Hotel companies saw strong pricing growth across all key markets driven by Quarterly financials and variance
robust demand for both leisure and business. IHCL and Chalet Hotels
Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
reported ADR growth of 11% and 17% YoY leading to revenue growth of
Company (INR bn) (%) (%) (INR bn) (%) (%) (INR bn) (%) (%)
29% and 23% YoY respectively, largely in line with our expectations.
IHCL 25.3 29.0 (0.0) 9.6 31.3 (0.0) 5.8 28.9 0.1
Further IHCL and Chalet reported EBITDA margins of 38% and 46%
Chalet 4.6 23.0 (0.0) 2.0 23.3 (0.0) 1.0 36.6 0.0
respectively, in line with our expectations. Management highlighted strong
demand visibility for 4Q driven by large-scale events like the Mahakumbh, Source: Company, Antique

concerts, conferences, and weddings. They further anticipate growth in

1QFY26 to be better compared to last year due to an extended wedding
season and the absence of election impact. Despite a decent operating
performance, valuations corrected over the last few months due to base
catching up and ADR growth expected to come down to single-digit in
2HCY25. Post the recent correction, valuation of most hotel companies
looks favorable.
Top Pick: Chalet Hotels

IHCL - ARR and occupancy trend Chalet hotels - ARR and occupancy trend

78%

76%
74%

74%
76%
77%
79%
76%
78%
78%

73%
75%
75%

71%

71%

71%
70%

70%
72%
70%
70%

65%
67%

22,000 85% 17,000 85%

60%
58%

56%

55%
57%

75% 75%
17,000 12,000 65%
65%

36%
55%
29%

12,000 55%
45% 7,000 45%
7,000 35%
35%
2,000 25% 2,000 1Q22 25%
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25
2Q25
3Q25
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25
2Q25
3Q25

ARR Occupancy ARR Occupancy

Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 54

 19 February 2025
Vikas Ahuja, +91 22 6911 3439, [email protected]
Ashish Bansal, [email protected]
Indian Hotels Rhea Baid, [email protected]

C Good
growth outlook
Chalet Hotels
A decent quarter with strong near-term RevPAR C Good Indian Hotels Company
A decent quarter with strong 4Q outlook
n IHCL reported revenue of INR 25.3 bn, up
n Chalet Hotels reported a revenue of INR 4.6 29% YoY, in line with our expectation.
bn, up 22% YoY and in line with our Revenue was driven by strong demand for both
expectation, driven by strong 17% growth in leisure and business, leading to strong rate
hospitality and 91% growth in rental and growth across all markets. ADR and RevPAR
annuity segments. The hospitality segment grew 11% and 13% YoY respectively. EBITDA
reported a growth of 17% in ADR and RevPAR margin expanded 70 bps YoY to 38%, in line
on same-store basis aided by strong demand with our expectation. Further, the company
across all markets. Going into 4Q, management expects robust growth in 4Q aided by several
expects hospitality segment performance to be large-scale events like the Mahakumbh,
better than in 3Q and anticipates the double- concerts like Coldplay, and the extended
digit RevPAR growth momentum to continue in wedding season. The company remains
the near term driven by an extended wedding confident of achieving its double-digit growth
season, growth in domestic and international guidance for the year, excluding TajSATS
corporate travel, and MICE. Additionally, they consolidation.
also see strong growth momentum in the leasing
Our Take
space to continue over the next 2-3 quarters.
n We expect IHCL to maintain a valuation
Our Take
premium to peers due to its strong brand, which
n We expect growth to remain extremely strong helps pricing and occupancy levels. In addition,
for hospitality companies led by the opening the company will get preference over peers in
up of international travel and corporate getting hotels on management contracts, which
demand continuing to come back strongly. will help improve margins further.
Recommendation - BUY Recommendation - HOLD
n Chalet Hotels continues to remain our top pick n We have a HOLD rating on IHCL with a TP of
within the hospitality space with a TP of INR INR 750, valuing the stock at 27x FY27 EV/
1,150, valuing the stock at 22x FY27 EV/ EBITDA due to relatively high valuation.
EBITDA.

Antique Stock Broking Limited 55

 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Infrastructure Pranav Furia, +91 22 6911 3467, [email protected]

Eying order inflows Quarterly financials and variance

In 3QFY25, execution suffered as the billing cycles have elongated with
Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
overall muted order books. Order books have depleted, providing less Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
revenue visibility. However, NCC and HG Infra are a stark exception having
Ahluwalia 9,520 (7.3) (15.7) 844 (24.6) (12.1) 494 (30.1) (12.8)
secured orders in the last 12-15 months. NCC has an order backlog of INR
Ashoka Buildcon 17,920 (16.0) (6.7) 1,633 (7.5) (5.5) 605 (30.2) (26.7)
555 bn (book to bill 2.9x) and order inflow YTDFY25 was INR 200 bn.
While HG Infra has an order book of INR 151 bn (2.6x TTM revenue) and Dilip Buildcon 21,549 (16.2) (11.8) 2,096 (34.2) (22.0) 217 (73.7) (67.6)
sees healthy prospects in railways and solar, apart from roads. The sector HG Infra 15,085 12.0 (2.6) 2,501 16.7 7.6 1,366 11.7 2.1
needs order inflow after a muted FY24 and 9MFY25 in terms of awarding. IRB Infra 17,806 (9.5) (4.6) 7,394 (15.0) (11.0) 653 (72.6) (47.6)
Things are expected to improve as most of the awarding happens at the flag IRCON 24,704 (11.5) (12.4) 879 (49.5) (48.1) 1,787 (3.5) (0.9)
end of the year and after ministries settle post the Union and state elections. KNR 7,435 (17.9) (13.6) 1,516 2.9 10.2 783 (8.5) (12.2)
Ministry outlay is unchanged for Railway and Road and is up +2% in FY26 NCC Ltd. 46,710 (1.6) (10.5) 4,095 (14.6) (17.5) 1,854 (12.9) (19.0)
BE. But scheme-wise (led by water, urban housing) the outlay has seen an PNC 12,051 (33.2) (25.0) 1,460 (39.0) (27.3) 826 (45.3) (35.3)
increase. For instance, Jal Jeevan Mission outlay is up 195% in FY26BE PSP Projects 6,232 (10.5) (18.7) 354 (50.5) (48.8) 61 (81.3) (82.3)
over FY25 RE, Amrut is +67%, metro +27%, river linking +20%, Bharat net RITES 5,758 (15.7) (12.2) 1,173 (30.5) (10.5) 1,094 (15.1) 5.6
+107%. In roads, though the outlay is muted, but the key to watch for is RVNL 45,674 (2.6) (7.2) 2,393 (3.9) (2.8) 3,116 (13.1) (3.2)
pick-up in awards. MORTH awarded 542 km in December 2024 (up 84% Welspun Enterprises 6,834 17.1 1.8 790 (20.1) (26.5) 694 (10.5) (23.4)
YoY), 9MFY25 awarding was 5,270 km vs. 6,216 km YoY. Major awarder Infra Total 2,37,277 (8.5) (10.2) 27,126 (18.3) (14.1) 13,549 (26.0) (17.4)
in infra this year continues to be states like Maharashtra, and is secured by
Infra Total ex Railway 1,61,142 (9.4) (10.6) 22,683 (16.8) (13.1) 7,551 (34.9) (27.0)
the likes of Ashoka Buildcon, HG, and PNC Infratech.
Source: Company, Antique
Top Picks: HG Infra and NCC

Revenue Growth YoY (%) EBITDA growth YoY (%) PAT growth YoY (%)
20.0 40.0 20.0
(24.6)

(34.2)
16.7
(15.0)
(49.5)

(14.6)
(39.0)
(50.5)
(30.5)

(20.1)
(7.5)

(3.9)
2.9
(7.3)

(9.5)

(2.6)
(16.0)
(16.2)
12.0

(11.5)
(17.9)

(33.2)
(10.5)
(15.7)

17.1

11.7
10.0 20.0 -
- - (20.0)

(30.1)
(30.2)
(73.7)

(72.6)
(3.5)
(8.5)
(12.9)
(45.3)
(81.3)
(15.1)
(13.1)
(10.5)
(10.0) (40.0)
(1.6)

(20.0) (20.0)
(60.0)
(30.0) (40.0) (80.0)
(60.0)
Ashoka…

Welspun…
(40.0)
Dilip…
Ashoka…

Welspun…

(100.0)

Dilip…
Ashoka…

Welspun…
IRB Infra
Ahluwalia

NCC Ltd.
Dilip Buildcon

PSP Projects
IRCON

RITES
RVNL
HG Infra
Ahluwalia

NCC Ltd.
IRB Infra
IRCON

RITES
RVNL
PSP Projects
HG Infra

Ahluwalia

IRB Infra
IRCON

NCC Ltd.

RVNL
PSP Projects
HG Infra

RITES
KNR

PNC
KNR

PNC

KNR

PNC
Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 56

 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Infrastructure Pranav Furia, +91 22 6911 3467, [email protected]

C Good HG Infra
A good quarter with double-digit revenue growth
D Bad
Weak quarter as margins disappoint
Ahluwalia
D Bad PSP Projects
A weak quarter, UP finally concluded
n The company reported a revenue of INR 11 n Revenue came in at INR 9.5 bn, down 7% YoY n PSP had a weak quarter, with lower execution
bn, up 22% YoY and 3% below our and and 16%/ 17% below our/ consensus resulting in a revenue of INR 6 bn, down 11%
consensus estimates. The EBITDA came in at estimates. The weakness was due to the higher YoY and 19%/ 12% below our/ consensus
INR 2.5 bn, up 17% YoY and 4%/ 1% ahead effect of ban on construction activities in Delhi expectations. EBITDA margin contracted,
of our/ consensus estimates. Margin for the NCR region, which accounts for 33% of the leading to an EBITDA of INR 354 mn, down
quarter was 16.6% vs. 15.9% in 3QFY24. company's order book. EBITDA margin came 50% YoY, 49% below our and consensus
With a healthy operating performance, in at 8.86% vs. 10.9% (our estimate of 8.5%). expectations. This is partly attributable to
adjusted PAT came in at INR 1.4 bn, up 12% Although the margins are lower YoY, they have weaker execution and costs related to the UP
YoY, 4%/ 2% below consensus/ our estimates. been on an increasing trend since the last two project and certain asset write-off. EBITDA
Slower growth in PAT was due to slightly higher quarters as execution picks up. Thus EBITDA margin was 5.7% vs. 10.3% YoY and 6.7%
interest cost that came in at INR 0.3 bn, up came in at INR 0.8 bn, down 25% and 12%/ QoQ. To make matters worse, the effective tax
32% YoY. 18% below our/ consensus estimates. With rate was 40% vs. 26% YoY. PAT came in at INR
Our Take the decline in EBIDTA, PAT came in at INR 494 61 mn, down 81% YoY and 82% below our
mn, down 30% YoY and 13%/ 23% below and consensus estimates.
n HGIEL's revenue growth should be better than our/ consensus estimates. n PSP's key positives are its track record of
peers that have guided for flattish to low double-
digit revenue growth in FY25E. On the order Our Take delivering robust revenue growth and
inflow front, the company expects inflow of n With the strong order book of (4x TTM
consistent order wins. With the SDB and UP
INR 110-120 bn. It took a timely decision to revenue), good inflow momentum, completion orders behind, execution and margin should
diversify from roads and build a good order of certain slow-moving projects, and ramp up improve in 4QFY25. The stake sale to Adani
book at a time when road awarding is weak. of large-ticket orders, execution may pick up offers fresh opportunities too.
in FY26, with the ramping up of execution Recommendation - BUY
Recommendation - BUY
margins may also reach double-digit mark. n We have a BUY rating on the stock with PER
n We retain BUY on HGIEL and value its core
Recommendation - HOLD of 15x FY27E EPS to arrive at a target price of
EPC on a PER of 16x FY27E EPS to arrive at a
INR 793.
target price of INR 1,825. n We maintain HOLD rating with a TP of INR
729/share, valuing the stock at 15x FY27 EPS.

Antique Stock Broking Limited 57

 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Infrastructure Pranav Furia, +91 22 6911 3467, [email protected]

EPS Change
EPS post Q3FY25 result

Stock Name FY25E FY26E

Traditional Road contractors
IRB Infra NA NA
GR Infraprojects -1% -9%
PNC Infra -13% -9%
HG Infra 0% -2%
KNR Constructions 2% -6%
Dilip Buildcon -24% -26%
Ashoka Buildcon -3% -10%
Welspun Enterprises NA -2%
Diversified Order book / Buildings
NCC -16% -12%
Ahluwalia -12% -12%
ITD Cementation 0% 6%
Jkumar Infra 1% 2%
PSP Projects -30% -10%
Source: Bloomberg

Antique Stock Broking Limited 58

 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Infrastructure Pranav Furia, +91 22 6911 3467, [email protected]

Valuation Scenario - Stress case scenario

Current (Discount) / Premium of PBv wrt its

10Y 10Y
Stocks PBv (x) avg PBv +1 STD -1 STD avg PBv +1 STD -1 STD
Road Focused Order book
IRB INFRA 1.4 1.0 1.5 0.5 40% -7% 180%
G R INFRAPROJECT 1.0 1.8 2.3 1.4 -43% -55% -24%
PNC INFRATECH LT 1.0 1.6 1.9 1.3 -38% -48% -22%
HG INFRA ENGINEE 1.8 1.7 2.2 1.2 7% -19% 53%
KNR CONSTRUCTION 1.4 2.0 2.4 1.6 -30% -41% -11%
DILIP BUILDCON L 1.0 1.4 2.1 0.6 -29% -55% 64%
ASHOKA BUILDCON 1.2 1.1 1.6 0.6 6% -26% 89%

Diversified Order Book

LARSEN & TOUBRO 5.6 2.7 3.3 1.9 105% 67% 193%
NCC 1.3 1.0 1.4 0.5 27% -13% 138%
ITD CEMENTATION 3.1 2.0 2.0 1.1 56% 56% 182%
PSP PROJECTS LTD 1.6 2.2 2.8 1.6 -29% -44% -2%
AHLUWALIA CONTRA 1.8 2.4 3.0 1.7 -23% -39% 7%
J.KUMAR INFRAPRO 1.3 1.0 1.5 0.5 33% -12% 179%
Source: Bloomberg

Antique Stock Broking Limited 59

 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Infrastructure Pranav Furia, +91 22 6911 3467, [email protected]

Order Book to bill

9MFY25 Order book

Stock INR bn Visibility x Geography Major Segment

Road Focused
IRB 32 1 Across India Road
G R INFRAPROJECT 169 2 North Roads, Tunnel, transmission ,Railways & Metro
PNC INFRATECH LT 159 2 North Roads, Water & Irrigation
HG INFRA ENGINEE 151 3 North, South & East Roads , Railways, Solar
KNR CONSTRUCTION 39 1 South Roads, Irrigation , water
DILIP BUILDCON L 166 2 Across India Roads, Irrigation, water , metro, railway, mining
ASHOKA BUILDCON 165 2 Across India Power T&D, Road , Railways, Building
WELSPUN ENTERPRISES 145 5 West, North & South Roads & Water
Diversified Order Book, Building
NCC LTD 555 3 Across India Building, Transportation, Water, Rail, T&D, mining,
Irrigation
AHLUWALIA CONTRA 163 4 West, North, East Building, Hospitals
ITD CEMENTATION 199 3 Across India Metro, Ports, Bridges, Highways, Marine
J.KUMAR INFRAPRO 205 4 West, North Metro, Flyovers, Bridges, Roads, Civil
PSP PROJECTS LTD 60 2 West Building, Hospitals
Source: Bloomberg

Antique Stock Broking Limited 60

 19 February 2025

Insurance - Positive Krupal Maniar, +91 22 6911 3419, [email protected]

The life insurance sector witnessed APE growth of 13% for private insurers in 3QFY25 and 19% for 9MFY25, while LICI saw a 24% decline in 3QFY25
but managed a 6% growth in 9MFY25. The slow growth in LICI's APE was likely due to the pre-ponement of sales in 2QFY25 ahead of the SV regulation
change in October 2024. VNB growth remained muted at 9%-11% for both 3QFY25 and 9MFY25, with VNB margin contracting by 150 bps and 220
bps for private insurers, respectively. However, LICI's margin improved by 50 bps in 9MFY25, supported by a shift in its product mix. The impact of
surrender value regulation changes has been effectively mitigated by insurers through strategies like clawback commissions, price revisions, policy term
modifications, and deferred payouts, limiting the VNB margin impact to <100 bps. FY25 is expected to be a reset year for margins, with improvements
anticipated over the medium term, driven by an increasing share of high-margin products. Valuations at 1.4-1.8x FY27E P/EV appear attractive given that
companies may still double their VNB over the next 4-5 years despite change in regulations.
Top Picks: HDFCLIFE and MAXF

Quarterly performance and variance

3QFY25 9MFY25
APE VNB VNB Margin (%) APE VNB VNB Margin (%)
3QFY25 3QFY24 % YoY 3QFY25 3QFY24 % YoY 3QFY25 3QFY24 9MFY25 9MFY24 % YoY 9MFY25 9MFY24 % YoY 9MFY25 9MFY24
HDFCLIFE 35.7 31.9 11.8 9.3 8.6 8.3 26.1 26.9 102.9 85.6 20.2 25.9 22.7 13.9 25.1 26.5
IPRU 24.4 19.1 27.8 5.2 4.4 18.6 21.2 22.9 69.1 54.3 27.1 15.8 14.5 8.5 22.8 26.7
SBILIFE 69.4 61.4 13.0 18.7 16.8 11.3 26.9 27.4 159.7 144.0 10.9 42.9 40.4 6.2 26.9 28.1
MAXF 21.1 18.0 17.5 4.9 4.9 - 23.2 27.2 57.3 45.6 25.7 12.6 11.5 8.9 21.9 25.3
Pvt Cos 150.6 130.3 15.5 38.1 34.6 9.9 25.3 26.6 389.0 329.6 18.0 97.1 89.1 8.9 25.0 27.0
LICI 99.5 131.6 -24.4 19.3 26.3 -26.9 19.4 20.0 379.8 357.9 6.1 64.8 59.4 9.1 17.1 16.6
Total 250.1 262.0 -4.5 57.3 61.0 -6.0 22.9 23.3 768.8 687.5 11.8 161.8 148.5 9.0 21.1 21.6
Source: Company, Antique

Antique Stock Broking Limited 61

 19 February 2025

Insurance Krupal Maniar, +91 22 6911 3419, [email protected]

C Good
Result recap—Above expectation
HDFC Life
C Good Max Financial Serv.
Result recap—Above expectation
D Bad
Result recap—Below expectation
SBI Life

n HDFCLIFE's 9MFY25 APE grew by 20% YoY n MAXF's subsidiary Axis Max Life's 9MFY25 n SBILIFE's 9MFY25 APE grew 11% YoY to INR
to INR 103 bn while 3QFY25 APE grew by APE grew 26% YoY to INR 57.3 bn, 159 bn (1% above estimate) on a relatively
12% (in-line). high base.
outperforming private industry growth by 19%
n In terms of individual APE, the share of ULIP/ YoY. n ULIP grew 21% YoY, non-par savings grew 7%
non-par savings rose to 37% and 35% vs. 32% while par savings declined 7% YoY. Protection
n The growth was largely led by ULIP (70% YoY) APE declined 12% YoY, annuity APE declined
and 28% during 9M while the share of par
declined from 28% to 18%. Retail protection and protection (37% YoY), while non-par and 16% YoY, and group savings declined 30%
APE rose 28% during 9MFY25 with +20% annuity grew only 6% YoY and par declined YoY.
growth in Tier 1 cities and +30% growth in 16% YoY. n In terms of channel, growth was mainly led by
Tier 2/ 3 cities. n 9MFY25 VNB grew 9% YoY to INR 12.6 bn, agency which grew 28% YoY.
in-line with consensus/ 5% below our estimate, n VNB grew 6% YoY to INR 42.9 bn (1% above
n VNB grew 14% YoY to INR 26 bn with VNB estimate) with VNB margin declining 120 bps
margin declining 140 bps YoY to 25.1 % (in- while VNB margin declined 340 bps YoY to
21.9% due to a higher ULIP mix (44% vs. 35% YoY to 26.9% owing to adverse product mix.
line with our estimates/ better than consensus) n Given the large base, SBI Bank channel (63%
owing to impact of an adverse business profile. last year) and the impact of surrender value of 9MFY25 APE) growth has been slowing in
n VNB margin likely surprised consensus as the regulation changes. recent quarters and it grew 7% in 9MFY25.
same improved 180 bps QoQ for 3QFY25 as n Management expects APE growth to be 300- Management now expects a lower ~10%
~100 bps impact in 2Q was due to delay in re- 500 bps higher than the industry with VNB growth in this channel vs. the earlier
pricing non-par products, better product level margin improving to ~25% in the medium term expectation of ~15% in the medium-term.
margins, especially in ULIP and net surrender led by better product mix (targeting ULIP n Higher growth in the non-banca channel may
value impact on margins was restricted to 30 between 35%-40%) and operating leverage. impact profitability, in our view.
bps (vs. 100 bps gross impact indicated by the n Management expects retail APE to grow >15%
Our Take led by >25% growth in the non-banca channel
management in 2Q).
n Valuations at 1.7x FY27E P/EV and implied with 27%- 29% VNB margin over the medium-
n Management remains confident of 18%-20%
8.7x FY27E P/VNB seems attractive, given our term.
APE growth and >15% VNB growth for FY25.
expectation of 18% APE, 15% VNB, and 21%
Our Take EV CAGR over FY24-27E. Our Take
n Valuations at 1.8x FY27E P/EV and ~9x FY27E Recommendation - BUY n We now factor in a lower 11%-12% APE/ VNB
P/VNB seem attractive, considering expected CAGR in the banca channel over FY24-27E.
~17%-18% APE/ VNB CAGR over FY24-27E. n Maintain BUY with a revised DCF-based TP of The SBILIFE stock currently trades at an implied
Recommendation - BUY INR 1,400 implying 2.2x FY27E P/EV and 16x 1.6x FY27E P/EV and 8x FY27E P/VNB.
P/VNB assuming 20% holding company Recommendation - HOLD
n Maintain BUY with a revised DCF-based TP of
discount. The separate listing of Axis Max Life
INR 830. Reverse DCF implied ~7.5% VNB n Our target price implies FY27E P/EV of 1.8x
CAGR over the next 10 years discounted at may remove holdco discount and unlock value and P/VNB of 12x. We had downgraded the
12.5% with 5.5% terminal growth. over the next two years. stock to HOLD from BUY earlier.
Antique Stock Broking Limited 62
 19 February 2025

Metals - Neutral Pallav Agarwal, +91 22 6911 3411, [email protected]

Non-ferrous continues to outperform ferrous Quarterly financials and variance

3QFY25 EBITDA for companies under our coverage witnessed a sequential Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
decline in flat steel prices partly offset by higher long product prices impacted Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
SAIL 2,44,896 4.9 (3.1) 20,250 (5.4) (31.4) 973 (61.8) (87.9)
by weak global prices. Softening coking coal cost partly mitigated the Tata Steel* 5,36,483 (3.0) 3.4 59,035 (5.7) 31.6 4,528 (46.6) LP
impact of lower steel price. Domestic demand outlook remains stable with JSW Steel* 4,13,780 (1.3) (0.2) 55,790 (22.3) 11.4 8,200 (66.0) 71.3
the fourth quarter being a seasonally strong one and given the expected Nalco 46,622 39.3 4.6 23,275 200.8 28.3 15,829 224.1 26.3
Hindalco 2,37,760 17.2 9.3 26,670 35.4 8.0 14,630 74.6 15.2
resumption of government infrastructure capex. Lower coking coal and iron
NMDC 65,308 20.7 0.8 24,089 18.7 (4.1) 19,438 11.4 (4.2)
ore cost could aid steel spreads in 4QFY25 with stability in steel prices. Hindustan Zinc 85,560 17.0 7.6 44,580 26.6 1.1 26,470 29.9 2.7
Jindal Steel & Power* 1,17,507 0.4 1.2 21,839 (23.2) (1.5) 9,505 (50.7) 10.3
Non-ferrous prices have been firm and alumina prices jumped sequentially
Kirloskar Ferrous 16,093 4.2 (1.8) 1,766 (18.3) (1.9) 613 (34.8) (8.5)
aiding NALCO's profits. Higher linkage thermal coal availability and lower MOIL 3,668 19.8 (4.3) 952 6.4 (27.9) 637 17.7 (29.1)
input commodity costs drove margins in 3QFY25 and costs are expected to Vedanta* 3,91,150 10.1 4.6 1,11,040 30.2 5.8 35,470 76.2 11.8
remain stable sequentially for non-ferrous metal makers in 4QFY25. Total 21,58,827 4.8 2.6 3,89,286 9.5 6.2 1,36,292 7.2 14.5
Steel pipes and tubes
Top Picks: Hindalco, NALCO, NMDC, MOIL, Tata Steel, and APL Apollo Tubes* 54,327 30.0 8.5 3,456 23.6 3.8 2,170 31.1 11.3
JSPL. Indian Hume Pipe 3,806 19.5 13.8 373 (0.9) 11.5 144 (5.1) 26.1
JTL Industries* 4,514 (20.4) (10.1) 351 (17.4) (14.2) 249 (17.4) (21.1)
Venus Pipes and Tubes 2,313 11.7 (3.7) 371 (5.0) (11.2) 180 (22.8) (20.6)
Hi-Tech Pipes* 7,610 20.8 10.6 402 27.4 (2.7) 191 33.6 11.7
Source: Company, Antique; *consolidated financials; Loss to Profit = LP

Revenue growth in 3QFY25 (% YoY) EBITDA margin trend (%) PAT margin trend (%)
50 60 40
40 40 30
30 20
20 10
20
- -

Kirloskar…
Kirloskar…
10

SAIL

JSW Steel*
Nalco

MOIL
Tata Steel*

H. Zinc

Vedanta*
Hindalco

JSPL*
NMDC
Nalco

Vedanta*
SAIL
Tata Steel*
JSW Steel*

H. Zinc
Hindalco
NMDC

JSPL*

MOIL
-
Kirloskar…
SAIL
Tata Steel*
JSW Steel*

H. Zinc

Vedanta*
Nalco
Hindalco
NMDC

MOIL
JSPL*

(10)

Dec-23 Sep-24 Dec-24 Dec-23 Sep-24 Dec-24

Source: Company, Antique *consolidated financials Source: Company, Antique *consolidated financials Source: Company, Antique *consolidated financials

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 19 February 2025

Metals Pallav Agarwal, +91 22 6911 3411, [email protected]

C Good
Result recap - Above expectation
Nalco
E In-line
Result recap—In line
Hindustan Zinc
D Bad
Result recap—Below expectation
SAIL

n Nalco's standalone revenue at INR 46.6 bn n Standalone revenue rose by 17% YoY and 4% n Standalone revenue at ~INR 244.9 bn
rose 39.3% YoY and 16.5% QoQ, primarily QoQ to INR 85.6 bn aided by higher zinc and improved by 4.9% YoY and declined
aided by stronger alumina and aluminum prices silver prices and INR depreciation, marginally marginally QoQ. Steel deliveries at 4.4 MT
and higher alumina volume, but partly offset offset by lower metal volumes and lead prices. grew by 16% YoY and 8% QoQ while blended
by lower aluminum volume. The positive impact EBITDA at INR 44.6 bn grew by 27% YoY and steel realization at ~INR 55,281 per ton
of stronger alumina, aluminum prices, and 9% sequentially. The cost of zinc metal declined by 9.8% YoY and 8.1% QoQ. EBITDA
lower raw material costs drove 3QFY25 production, excluding royalty, declined by at ~INR 20.3 bn was marginally below
performance. EBITDA at INR 23.3 bn sharply 3.5% YoY and 1.9% QoQ in INR terms to INR consensus but materially below our estimate,
rose by 200.8% YoY and 50.3% QoQ; it was 87,960 per ton. Adjusted PAT at INR 26.5 bn declining by 5.4% YoY and 30.3% QoQ.
28.3% above our estimate and 30.4% higher rose by 30% YoY and 11% QoQ. Our Take
than consensus. Our Take n Management expects domestic steel prices to
Our Take n Zinc and silver prices have been firm with the recover in 4QFY25 after the weakness in
n Spot alumina prices have corrected to USD global refined zinc market balance expected 3QFY25, witnessed primarily in the flat
530 per ton from peak levels of ~USD 800 to be in a marginal deficit in CY25. Plans are products segment. Softer coking coal prices
per ton but are still 30%-40% higher than our underway to raise the metal concentrate would support steel spreads in 4QFY25. The
FY26/ 27 assumptions. An additional 1 mtpa capacity to 1.45 mtpa first and then to 2 mtpa long-term growth plan to enhance the
of alumina volume along with higher captive over the medium term, while 160 ktpa Debari cumulative capacity by 15 mtpa would entail
coal mining would support profits despite a roaster and debottlenecking initiatives would an outlay of INR 1 trn FY26 with no major
reduction in alumina prices. raise refined metal capacity to 1.2 mtpa by incremental capacity addition till FY31.
Recommendation - BUY FY26. Recommendation - HOLD
n We maintain BUY rating with a TP of INR 261
Recommendation - HOLD n We maintain HOLD rating as volume growth
based on a target multiple of 6.3x FY27E EV/ n We maintain our TP of INR 451 at a target prospects remain muted and deleveraging
EBITDA. multiple of 7.3x FY27E EV/EBITDA with a might be impacted given the large planned
HOLD rating. capex outlay on capacity expansion. We have
a TP of INR 118 based on a target multiple of
6.3x FY27 EV/EBITDA.

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 19 February 2025
Varatharajan S., +91 22 6911 3425, [email protected]
Manish Divekar, +91 22 6911 3426, [email protected]
Oil & Gas - Negative Kartikey Billaiya, +91 22 6911 3448, [email protected]

Reliance Industries: Strong EBITDA beat on robust retail and O2C Quarterly financials and variance
performance. Retail revenue up 18.4% QoQ to INR 903 bn on festive
demand. O2C outperformed on better GRMs and polymer deltas. Telecom Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
EBITDA lagged as July tariff hikes weren't fully absorbed. ARPU missed at Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
INR 203.3, but net subscriber base grew to 482.1 mn (+3.3 mn). Near-
term retail growth may slow due to consolidation. BPCL 11,31,358 -2.0 5.9 75,804 21.7 -27.5 46,492 36.8 -28.5
OMCs: Weak results on lower GRMs, inventory losses, and INR 117 bn GAIL 3,49,578 2.1 8.6 28,378 -25.8 -18.5 14,274 -49.8 -31.6
LPG under-recovery, despite strong marketing margins. HPCL outperformed PLNG 1,22,269 -17.1 -6.5 12,477 -26.9 8.8 8,670 -27.2 11.3
peers in refining. LPG loss reimbursement expected, but timing uncertain
(likely FY26 for FY25 losses). HPCL 10,99,796 -0.8 4.7 59,702 175.9 -36.8 30,229 471.2 -46.4
Upstream: ONGC beat estimates on higher volumes (crude realization IGL 37,591 5.7 -9.2 3,636 -35.5 -12.1 2,858 -27.1 5.6
at USD 74.2/bbl, gas at USD 6.68/mmbtu), despite a 3% YoY production IOCL 19,38,995 -2.6 1.4 71,166 -54.9 -69.8 28,735 -64.4 -79.9
dip. Oil India missed on lower sales and realization (USD 71.4/bbl crude,
USD 6.5/mmbtu gas), though production rose 1% YoY. GUJGA 41,529 5.7 6.0 3,805 -5.0 -16.8 2,216 0.6 -14.3
CGD: Weak margins across the sector on lower APM gas allocation, with OINL 52,397 -9.9 -3.3 21,327 -9.8 -4.4 12,218 -22.9 -18.3
INR 2-3/scm sequential margin decline. Volume growth was strong: MGL ONGC 3,37,168 -3.1 6.7 1,89,681 10.5 5.8 82,399 -16.7 -12.4
and Gujarat Gas outperformed, IGL exceeded estimates. Margin pressure
likely to persist on structural APM gas decline. RIL 24,38,650 7.0 1.6 4,37,890 7.7 7.2 1,85,400 7.4 12.5
Utilities: GAIL EBITDA muted on a sharp drop in trading segment MAHGL 17,576 12.0 0.7 3,144 -29.9 -7.4 2,254 -29.0 -3.7
performance; NG transmission volumes weak due to lower gas-based power Total 75,66,905 0.6 2.9 9,07,009 -0.7 -17.8 4,15,745 -9.0 -27.6
demand. Petronet LNG met expectations, but volumes were soft (228 tbtu)
Total (Ex OMCs) 33,96,756 4.0 2.3 7,00,337 4.3 4.7 3,10,289 -7.9 0.1
on high LNG prices and weak gas-based power demand. 'Use or pay' dues
of INR 16.7 bn remain outstanding. Source: Company, Antique
Top Picks: Oil India, ONGC, and HPCL
GRM & Auto-fuel margins trend Brent oil & APM price trend
30 20 150 10
(USD/bbl) (USD/mmbtu)
10 8
100 6
10 0
50 4
-10 2
-10 -20 0 0
Dec-19

Sep-20
Dec-20

Sep-21
Dec-21

Sep-22
Dec-22

Sep-23
Dec-23

Sep-24
Dec-24
Mar-20
Jun-20

Mar-21
Jun-21

Mar-22
Jun-22

Mar-23
Jun-23

Mar-24
Jun-24

Dec-19

Sep-20
Dec-20

Sep-21
Dec-21

Sep-22
Dec-22

Sep-23
Dec-23

Sep-24
Dec-24
Mar-20
Jun-20

Mar-21
Jun-21

Mar-22
Jun-22

Mar-23
Jun-23

Mar-24
Jun-24
Singapore GRM (USD/bbl) Petrol/diesel margins (INR/ltr, RHS) Oil prices APM prices (RHS)
Source: Company, Antique Source: Company, Antique

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 19 February 2025
Varatharajan S., +91 22 6911 3425, [email protected]
Manish Divekar, +91 22 6911 3426, [email protected]
Oil & Gas Kartikey Billaiya, +91 22 6911 3448, [email protected]

C Good
Result Recap
Reliance Industries
E In-line
Result Recap
ONGC
D Bad
Result Recap
GAIL

n Reliance Industries posted a robust EBITDA of n ONGC reported a revenue of INR 337 bn (-1% n GAIL reported weak EBITDA at INR 28.4 bn (-
INR 438 bn (+12% QoQ, +7.7% YoY), beating QoQ, -3% YoY), marginally beating our estimate. 24% QoQ, -26% YoY), missing our estimate by
our/ Bloomberg estimates by 7%/ 5%, driven Standalone EBITDA stood at INR 189.7 bn (+4% 19%. The big miss was on account of a surprisingly
by strong retail and O2C performance. QoQ, +11% YoY). However, adjusted PAT came sharp fall in trading segment EBITDA by 60%
in at ~INR 82.4 bn (- 31% QoQ, -17% YoY), QoQ (though partly anticipated). The trading
Telecom EBITDA lagged due to incomplete
missing our estimate due to lower-than-expected segment hit during the quarter was largely due
absorption of July tariff hikes, while Retail other income of INR 18.1 bn (28% below our to lower gains from USA contracted Henry Hub
surprised with 18% QoQ revenue growth estimate) and higher depreciation of INR 67.8 volume as spread between HH and oil-linked
driven by the festive season. PAT of INR 185.4 bn (+21% QoQ, +33% YoY). Oil and gas gas has narrowed. Reported PAT at INR 37 bn
bn (+12% QoQ and +7.4% YoY) was 12.5%/ production for the quarter was 10.07 MMT (+1% which was inflated as the company booked an
1.2% higher than our/ Bloomberg consensus QoQ, -3% YoY), beating our estimate by 4%. KG exceptional income of INR 24.4 bn, adjusting
estimates. 98/2 is currently producing 35,000 bbls/day for which, core PAT was at INR 14.3 bn (-47%
of oil and 3 mmscmd of gas. QoQ, -50% YoY).
Our Take
Our Take Our Take
n Post the 18% correction in stock price over the
n We believe ONGC is all set to deliver healthy
past six months, stock valuation has turned n We believe the pipeline business value is
production growth in recent times with the ramp- capped, since integrated network volume is set
attractive. Despite the 3Q disappointment on up of 98/2 field production. Oil price and gas
incomplete tariff absorption, the telecom to hit 75% threshold next year. In the case of
price realizations remain strong compared to
outlook is robust with strong subscriber growth trading business too, volume growth is unlikely
historical levels, leading to strong free cash flow
and another round of tariff hike over the next to drive a corresponding increase in earnings
generation. Production growth received a big
boost with the TSP deal over and above the KG and valuation due to fall in margins.
18 months. Post the restructuring, Retail is likely
basin driven production growth. This TSP deal Petrochemical has recovered over the past one
to emerge stronger even as O2C and Oil &
will also drive recoverable reserve upside. year and is likely to benefit from the
Gas remains stable. commissioning of new projects. We see limited
Premium APM gas and the removal of "windfall
Recommendation - BUY tax" are significant re-rating triggers currently upside from current levels.
n Upgrade to BUY from HOLD with a revised SoTP ignored by the market, in our view. Recommendation - HOLD
target price of INR 1,456/share. Recommendation - BUY n We maintain HOLD with a revised SoTP TP of
n Reiterate BUY with a revised TP of INR 336/ INR 180/share.
share.

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 19 February 2025

Biplab Debbarma, CFA +91 22 6911 3418, [email protected]

OTA - Attractive Tanishk Khinvasra, +91 22 6911 3437, [email protected]

B2C challenges still persist; hotel & packages, MICE looking attractive Quarterly financials and variance
n Some challenges still persist on the B2C side, esp. air ticketing which are Revenue Growth Variance EBITDA Growth Variance APAT Growth Variance
likely to ease to some extent. Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
n Travel and tourism market to witness healthy growth led by macro level Yatra Online Ltd. 2,353 113 18 136 275 36 100 37 25
changes. As of 9MFY25, domestic air travel witnessed 161.3 mn Total 2,353 113 18 136 275 36 100 37 25
passengers, a 6.21% YoY growth. Source: Company, Antique; LP = Loss to profit
n High potential of growth for the organized MICE market.
n Corporate travel market is likely to witness healthy growth and size is
expected to double by FY30 in coming periods led by economic growth
and technological advancements.
n OTAs are central to growth, leveraging technology and data analytics to
provide seamless travel experience for corporates.
Outlook
Long term growth story for the travel and tourism industry remains intact led
by macro factors. Existing challenges on B2C side are likely to ease to some
extent. B2B segment expected to witness healthy growth leading to growth
in H&P and MICE segment and will aid in margin expansion.
Top Picks: Yatra

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 19 February 2025

Biplab Debbarma, CFA +91 22 6911 3418, [email protected]

OTA Tanishk Khinvasra, +91 22 6911 3437, [email protected]

C Good Yatra
A strong quarter; H&P and MICE business picking
up pace
n YATRA's 3QFY25 highlights are its strong
performance in the hotel & packages (HP)
business and growth in the MICE business. Gross
H&P segment bookings grew by 83% YoY while
air ticketing saw a decline of 15% YoY. In
3QFY25, YATRA saw a 113% YoY jump in
revenue to INR 2.35 bn due to outperformance
of the HP segment and incremental contribution
from the MICE business. Revenue less Service
Costs (RLSC) (gross margin) grew 25% YoY to
INR 1,041 mn. The ongoing emphasis on
growing the B2B vertical, including corporate
clients and MICE, will support YATRA in
enhancing its operating margin.
Our Take
n Despite challenges in the air ticketing segment,
volumes have now stabilized. Strong
momentum has been seen in the corporate
client and MICE business. Increasing share of
B2B in the overall business will help in margin
expansion, improving profitability.
Recommendation - BUY
n We maintain a BUY rating and reduce the
stock's target price to INR 136 (from INR 166)
valuing it at a P/E of 24x on FY27E earnings.

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 19 February 2025

Retail - Positive Abhijeet Kundu, +91 22 6911 3430, [email protected]

Broad-based wedding dates, festivities fail to drive demand Quarterly financials and variance
In the discretionary space, urban demand was under pressure while rural Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
demand was stable. Consequently, urban fashion retailers like ABFRL, Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
Shoppers Stop, and Arvind Fashions focused on improving profitability and ABFRL 43,047 3.3 1.3 6,349 14.8 12.5 (334) - -
witnessed double-digit EBITDA growth led by gross margin expansion and Arvind Fashion 12,028 6.9 0.9 1,655 15.7 3.8 477 31.3 (2.5)
cost control initiatives. Trent continued to be a clear outperformer in the Dmart 1,55,652 17.5 1.3 12,352 10.2 (4.4) 7,846 6.5 (7.4)
fashion retail space, though it witnessed a moderation in same store sales Kewal Kiran 2,552 27.5 1.2 469 20.8 (1.2) 261 (21.7) (28.5)
growth to high single-digit. Value fashion and semi urban retailers like V- Shoppers Stop 13,115 8.7 2.5 2,399 11.4 12.8 488 37.2 84.1
Mart Retail witnessed healthy growth in sales and profitability. Shoppers Titan 1,60,970 23.3 (0.8) 17,630 21.0 0.7 11,848 13.9 (0.8)
Stop outperformed our expectations, posting mid-single digit same store Senco Gold 21,025 27.3 6.9 1,076 (40.6) (49.0) 611 (44.1) (52.3)
sales growth aided by festive demand. However, Vedant Fashions' Trent 45,347 36.9 (1.5) 8,376 34.4 (6.1) 4,693 36.6 (8.1)
performance belied our expectations despite the festive season and a well Vedant Fashion 5,113 7.8 (10.2) 2,422 0.1 (16.8) 1,580 0.2 (17.5)
spread marriage season. Jewelry retailers posted strong growth in sales, V-Mart Retail 10,267 15.5 (0.0) 1,714 43.2 21.9 716 153.7 125.9
while margins were impacted by heightened competition and volatility in Devyani 12,944 53.5 0.1 2,192 49.9 0.4 (56) - -
gold prices. Grocery retailer, Dmart's performance was weak due to Jubilant 16,111 18.9 - 3,128 10.6 (6.0) 599 (1.8) (27.0)
increasing competition from quick commerce/ online retailers in metro RBA 4,954 11.2 (1.0) 776 9.7 4.1 (186) - -
cities leading to higher discounting, impacting gross margins. Amidst weak Sapphire 7,565 13.7 3.1 1,343 10.3 11.8 127 29.5 40.1
consumer demand, JUBI reported volume-led growth. Other QSR players' Total 5,17,228 19.6 0.4 62,766 16.1 (2.2) 28,739 15.1 (5.7)
performance was impacted due to the weak demand environment. Source: Company, Antique
Top Picks: Titan, Trent, and Arvind Fashions
Revenue growth YoY EBITDA growth YoY EBITDA margin expansion (YoY)
60 60 400

104
147
323
45
54 34 43 50
50 40 21 21 200
37
0 10 10 10 11 11 15 16 -
40 20
30 23 27 27 - (200)
17 19

(22)
(21)
(34)
(41)
Vedant… (365)

(54)
(53)
Senco Gold (584)
14 15

Kewal Kiran (101)

Jubilant (145)
20 9 11 (20) (400)
10 3 7 8 (40) (41) (600)
(800)

Shoppers…
Arvind…
(60)
Shoppers…
Vedant…

Arvind…

-
V-Mart…
Shoppers…
Vedant…
Arvind…

Trent
RBA

ABFRL
Dmart
Devyani

Titan

V-Mart Retail
Sapphire
Senco Gold

RBA

ABFRL

Kewal Kiran

Trent
Dmart
Sapphire
Jubilant

Titan

V-Mart Retail
Devyani
ABFRL

RBA

Senco Gold
Kewal Kiran
Trent
Dmart
Jubilant
Titan

Devyani
Sapphire

Source: Company, Antique Source: Company, Antique Source: Company, Antique

Antique Stock Broking Limited 69

 19 February 2025

Retail Abhijeet Kundu, +91 22 6911 3430, [email protected]

E In-Line
Result recap—Inline expectations
Trent
C Good
Result recap—Above Expectations
Shoppers Stop
D Bad
Result recap—below expectations
Senco Gold

n Trent's 3QFY25 performance was marginally n SHOP's 3QFY25 performance was above our n Senco Gold's 3QFY25 performance was
below estimates with sales/ EBITDA/ PAT estimates with revenue/ EBITDA growth of 8%/ disappointing with gross/ EBITDA margins
growth of 37%/ 34%/ 37% with high single- 11% YoY and LFL growth of 4%. Revenue (non- contracting by 738 bps/ 584 bps YoY due to
digit Like-For-Like (LFL) in overall fashion. GAAP) grew 7% driven by strong growth in hedging losses and inferior product mix (lower
Our Take premium portfolio and expansion in Intune contribution from studded jewelry), which was
stores. higher than our and consensus expectations.
n In our view, after delivering strong double-
digit LFL growth and aggressive store addition, Our Take Our Take
the base is becoming high for Trent, resulting n Going forward, management is confident of n Going ahead, we believe that the company's
in moderation of growth momentum. However, maintaining LFL growth momentum in 4QFY25 growth will be driven by a) The calibrated
the performance remains strong on an absolute and FY26 based on management initiatives. expansion of its showroom network in East and
basis and would continue to significantly Future performance will be driven by a) A North India (striking a balance between
outperform peers over the medium to long term, gradual recovery in demand during the COCO and FOFO), b) Strong brand recall due
in our view. wedding season, b) Aggressive expansion of to continuous marketing initiatives, and c)
Recommendation - BUY Intune and beauty business, c) Higher footfalls/ Increasing shift to organized jewelry.
SSSG (%) led by better customer service Recommendation - BUY
n We expect sales/ EBITDA/ PAT of 35%/ 40%/ through programs.
46% CAGR over FY24-27E driven by the n We have cut our earnings estimates by 21%/
addition of 50 stores of Westside and 580 of Recommendation - BUY 9%/ 7% for FY25/ 26/ 27 and now expect
Zudio over FY25-27. Overall, we remain n We maintain our estimates and positive stance Senco to deliver revenue/ EBITDA/ PAT CAGR
optimistic about Trent's future growth potential on SHOP on the back of a gradual recovery in of 20%/ 18%/ 19% over FY24-27E driven by
and we maintain BUY recommendation with a demand and successful scaling up of Intune, store expansion and high single-digit SSSG
revised TP of INR 7,363 (previously INR 7,642) premium, and the beauty portfolio. We maintain growth. We maintain BUY recommendation
based on FY27E SoTP valuation. BUY recommendation with a TP of INR 1,016, and a target price of INR 594, based on 30x
valuing the stock at 10x FY27 EV/EBITDA. FY27 earnings.

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 19 February 2025

Real Estate - Positive Biplab Debbarma, +91 22 6911 3418, [email protected]

3QFY25 was a better quarter compared to 2Q; launch challenges persist Quarterly financials and variance
Companies under our coverage had a mixed quarter with a few doing stellar Residential Sales/ Actuals
sales booking numbers, including DLF, Macrotech Developers, Brigade, and Booking (INR mn) 2QFY25E 2QFY25A 1QFY25 4QFY24 3QFY24 2QFY24 1QFY24 YoY % Q o Q % Var%
Sunteck. Whereas a few others continue to see launch challenges due to Arvind Smartspaces 5,200 4,640 2,010 3,230 2,800 3,690 1,350 26 131 (11)
delay in approvals, prominent amongst them are Prestige Estates, Aditya Brigade Enterprise 12,400 18,208 10,858 22,430 15,244 12,491 9,960 46 68 47
Birla Real Estate, Sobha, Kolte-Patil, and Arvind Smartspaces. On the other
Aditya Birla Real Estate 13,000 14,120 2,620 28,810 1,890 7,080 2,070 99 439 9
hand, Godrej Properties and Oberoi Realty both had a good quarter but
DLF 6,000 6,920 64,040 14,620 90,470 22,280 20,400 (69) (89) 15
below expectations. The eleven residential companies under our coverage
reported sales booking of INR 331 bn (52%/ 13% QoQ/ YoY) in 3QFY25. Godrej Properties 52,000 51,980 86,370 95,190 57,200 50,340 22,540 3 (40) (0)
The total sales booking estimate/ guidance for FY25 for these companies is Kolte Patil 7,750 7,700 7,110 7,430 7,460 6,320 7,010 22 8 (1)
INR 1,250 bn, of which 66% was achieved in 9MFY25. Based on 9MFY25 Macrotech Developers 42,900 42,700 40,300 42,300 34,100 35,300 33,500 21 6 (0)
numbers and launch pipeline in 4QFY25, we expect Sobha, Kolte-Patil, and Oberoi Realty 11,000 14,425 10,670 17,644 7,869 9,650 4,763 49 35 31
Arvind Smartspaces to miss guidance with Prestige Estates only likely to miss Prestige Estates 53,500 40,226 30,295 47,070 53,261 70,920 39,147 (43) 33 (25)
guidance depending on launch of the Indirapuram project. Other companies Sobha 15,800 11,785 18,740 15,040 19,516 17,240 14,647 (32) (37) (25)
would surpass guidance, which includes DLF, Macrotech, Brigade, Aditya Sunteck Realty 4,750 5,240 5,020 6,780 4,550 3,950 3,860 33 4 10
Birla Real Estate, Godrej Properties, and Sunteck. Balance sheet of all
Total 2,24,300 2,17,944 2,78,033 3,00,544 2,94,360 2,39,261 1,59,247 (9) (22) (3)
companies, except Aditya Birla Real Estate, witnessed significant reduction
of debt; the aggregate net debt of the eleven companies is down 40% from Source: Company, Antique

its net debt in 3QFY24, primarily due to fund raising by some companies and
healthy internal accruals. Both the office and retail portfolio show high
occupancy and new assets are showing strong leasing traction. Retail Malls
Outlook Retail consumption 3Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
(INR mn) FY25e FY25a FY25a FY25 FY24 FY24 FY24 FY24 YoY % QoQ% Var%
Approval challenges persist and a few launches may slip to FY26. Thus,
launches are the key monitorable. However, demand continues to be healthy Nexus Select Trust 35,000 35,000 29,741 29,772 27,784 33,297 29,584 29,334 5 18 -
and the right product should continue to see strong absorption. Phoenix Mills 37,000 40,040 32,790 32,160 28,330 32,960 26,400 25,738 21 22 8
Total 72,000 75,040 62,531 61,932 56,114 66,257 55,984 55,072 13 20 4
Top Picks: Aditya Birla Real Estate, Oberoi Realty, Brigade
Enterprises Source: Company, Antique

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 19 February 2025

Real Estate Biplab Debbarma, +91 22 6911 3418, [email protected]

D Bad Aditya Birla Real Estate

Result recap - Strong real estate performance
C Good Oberoi Realty
Result recap - Sales uptick from Thane launch;
C Good Brigade Enterprises
Result recap - Strong quarter; continues to fire
n ABREL’s 3QFY25 quarter highlight is the
weak sustenance sales on all cylinders
healthy sustenance sales in Niyaara, which n OBER’s 3QFY25 highlights are (i) An uptick in n BRGD’s 3QFY25 key highlight is the strong
contributed 55% of its sales booking. In the sales due to launch of the Thane project, (ii) sales booking number in the quarter. In
quarter, driven entirely by sustenance sales, Weak sustenance sales, and (iii) A slew of 3QFY25, BRGD reported sales booking of INR
particularly from Niyaara Worli and Ojasvi acquisitions—Mulund, Alibaug, and Bandra 24.9 bn (63% YoY) and rental revenue of INR
Bengaluru, ABREL recorded sales bookings of Reclamation (technically in 4Q). Other 2.8 bn (13% YoY). The strong sales booking
INR 6.76 bn (257% YoY). With 9MFY25 sales highlights of the quarter are the improved performance was primarily driven by strong
booking of INR 23.5 bn, ABREL needs to launch performance by its commercial office segment response to the launch of Brigade Gateway in
all of its planned projects with GDV of INR 80 which is seeing continued improvement in Hyderabad.
bn in 4QFY25 to meet its sales booking occupancy and rental income. Although, in Our Take
guidance of ~INR 70-80 bn for FY25. 3QFY25 OBER recorded a strong sales
booking of INR 19.2 bn (144% YoY) in n With 9MFY25 sales bookings at INR 54 bn
Our Take (up 43% YoY), unsold inventory of INR 60 bn
3QFY25, it was lower than the expected INR
n With absorption rate of inventory continuing 25+ bn. and launch pipeline of INR 40 bn in 4QFY25,
to be strong and ABREL having a strong we expect BRGD to easily surpass INR 80 bn
pipeline in 4QFY25, we expect the company Our Take sales booking in FY25, clocking 30%-35% YoY
to easily surpass its guidance of INR 70–80 bn n We believe going forward with significant land growth. Approval challenges persist, which
in FY25. parcels at disposal for launches, ready-to-move might derail launches.
Recommendation - BUY inventory seeing an uptick, and OGC Thane Recommendation - BUY
receiving strong response, OBER is expected
n ABREL is our top pick and we reiterate BUY to ride the upcycle. n We introduce Brigade as our third top pick
with a TP of INR 3,448. and we maintain BUY rating with a target price
Recommendation - BUY of INR 1,666.
n We maintain BUY rating with a revised TP of
INR 2,593 (previously INR 2,826). OBER is our
second top pick after Aditya Birla Real Estate.

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 19 February 2025
Varatharajan S., +91 22 6911 3425, [email protected]
Manish Divekar, +91 22 6911 3426, [email protected]
Telecom - Positive Kartikey Billaiya, +91 22 6911 3448, [email protected]

Quarterly financials and variance

C Good Bharti Airtel
Result recap-Higher ARPU, subscriber gains result in a strong quarter Company
Bharti Airtel
Revenue Growth Variance
(INR mn) YoY (%)
4,51,293 19.1
EBITDA Growth Variance
(%) (INR mn) YoY (%)
4.4 2,45,966 24.1 6.9
PAT
(%) (INR mn)
91,220
Growth Variance
YoY (%)
260.1
(%)
73.5
n Bharti Airtel posted strong result with a revenue of INR 451 bn (+9%
QoQ, +19% YoY), beating our/ Bloomberg estimates by 4%/ 3%. EBITDA Source: Company, Antique
came in at INR 246 bn (+13% QoQ, +24% YoY), ahead of our/ Bloomberg
estimates by 7%/ 4%. The beat was driven by (1) Higher ARPU at INR
245 (+5% QoQ, +18% YoY; though 1% below our estimate), reflecting
the full absorption of July 2024 tariff hikes and (2) Stronger-than-expected
subscriber recovery post the SIM consolidation, reaching 356.6 mn
(+1% QoQ, +3% YoY), with a sequential net gain of ~5 mn vs. our
estimate of ~1.5 mn. 3Q numbers were also inflated as Indus Towers'
results were proportionately consolidated for 43 days after becoming a
Bharti Airtel subsidiary on November 19, 2024, post buyback. Adjusted
PAT (ex-exceptional income) stood at INR 91 bn (+116% QoQ, +260%
YoY).
Our Take
n Another round of tariff hike in FY27 and a fall in wireless capex will
drive record high free cash flow, while driving RoE to unchartered mid-
20s.
Recommendation - BUY
n We maintain BUY rating on the stock with a DCF-based target price of
INR 1,900.

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 19 February 2025

Textiles - Neutral Biplab Debbarma, +91 22 6911 3418, [email protected]

Uncertainty over tariff regime in the US and Red Sea crisis are dampeners Quarterly financials and variance
n Export demand in garment witnessing some preliminary traction, Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
particularly in the RMG segment. Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
n With cotton prices at comfortable levels, the increase in export demand Arvind Ltd. 20,900 11 (0) 2,400 11 2 1,000 9 19
bodes well for textile players. KPR Mill 15,292 23 (4) 3,022 11 (10) 2,023 8 (10)
n If demand continues, a slew of capex announcements are expected. Welspun Living 24,896 3 2 2,805 -17 (8) 1,208 -32 (30)
Total 61,088 10 (1) 8,227 0 (6) 4,231 -7 (12)
n Although freight costs have started rationalizing, but supply chain is
witnessing some disruption due to the Red Sea crisis. Source: Company, Antique

n Home textiles witnessed challenges.

n Uncertainty regarding US tariffs.
Outlook
Market demand showing signs of coming off the bottom, though caution prevails
due to change in regime in the export market. Furthermore, stability in cotton
price around INR 55,000/candy would provide relief in cotton inventory
management. However, demand revival yet to see significant traction.
Top Pick: Arvind

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 19 February 2025

Textiles Biplab Debbarma, +91 22 6911 3418, [email protected]

D Bad Arvind
Result recap - Textile volume recovering; AMD a
D Bad Welspun Living
Result recap - Margin contraction continues
D Bad KPR Mill
Result recap - Uptick in volume but subdued
dampener n WELSPUNL’s highlight for 3QFY25 is its
margin
n ARVND’s 3QFY25 highlight is the muted AMD continued contraction in margin. WELSPUNL, n KPR’s 3QFY25 highlight is the volume uptick
segment performance. Although in the textile despite the challenging export demand, but margin subdued below 20%. The
segment, all the sub-segments (woven, denim witnessed 3% YoY growth and reported company’s net debt continues to be zero.
and garments) witnessed volume growth (YoY), revenue of INR 24.9 bn in the quarter. Overall improvement in volume in all
realizations continue to show a downward However, EBITDA has shown de-growth of 17% segments, including yarn (15% YoY), garments
trend across the three sub-segments. Garment YoY due to EBITDA margin contraction (-279 (22% YoY) and sugar (296% YoY); however,
volume continues to clock above 9 mn pieces bps YoY) to 11.3%. The margin contraction ethanol saw a dip in volume (-34% YoY). Textile
for the fourth consecutive quarter and is was due to higher freight cost due to the Red realization saw a marginal improvement with
expected to touch 10 mn pieces by 4QFY25. Sea issue, MTM loss due to currency hedging, yarn segment witnessing 2% YoY growth and
However, AMD faced muted growth of 9% YoY and one-time adverse product mix. This is the garment segment 4% YoY growth.
in 3QFY25 and in 9MFY25 it grew by 5%. A fifth consecutive quarter in which the margin Our Take
strong 4Q is expected for AMD as well as other has contracted.
segments, including garment. n Overall, the result is positive on account of
Our Take volume and average realization growth in the
Our Take n The company is optimistic of margin improving textile segment, although margin is still sub
n We believe a strong 4Q won’t be sufficient to going forward but revised the margin guidance 20%. With no significant greenfield capex
recoup the loss of work in 1Q and add to it the to 14% from its earlier guidance of 15%- announced in the garment segment we see
uncertainty regarding the macroeconomic 15.5%. Caution prevails due to freight cost limited upside in the stock.
environment, especially tariff uncertainty in and uncertainty regarding US tariff on the back Recommendation - HOLD
the export market. of change in regime and inflationary pressures
in the US. We reduce our earnings estimates n We maintain HOLD with a revised TP of INR
Recommendation - BUY 911 (previously INR 926), valuing the stock at
for FY25/ 26/ 27 by -9%/ -9%/ -10% due to
n We maintain BUY rating and reduce ARVND’s margin concerns. a PE multiple of 25x on FY27E.
target price to INR 470 (from INR 529) valuing
the stock at a P/E of 19x on FY27E earnings. Recommendation - BUY
Arvind is our top pick in textile sector. n We maintain BUY with a reduced TP of INR
182 (previously INR 209), valuing the stock at
a PE multiple of 15x on FY27E basis.

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 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Utilities – Positive Pranav Furia, +91 22 6911 3467, [email protected]

A stable quarter, eyeing power demand pick up Quarterly financials and variance
In the utilities sector, power demand was +2.7% YoY in 3QFY25, due to a Revenue Growth Variance EBITDA Growth Variance PAT Growth Variance
milder winter compared to the base quarter. Peak demand of 224 GW was Company (INR mn) YoY (%) (%) (INR mn) YoY (%) (%) (INR mn) YoY (%) (%)
witnessed during 3QFY25 in Dec'24. The long term growth of gencos will
CESC 38,610 1.5 -6.9 9,100 0.4 -8.3 2,650 -5.7 -15.04
continue to be fueled by capacity addition. Power PSUs' FY26E capex
COAL 3,57,798 -1.0 2.3 1,23,172 -5.0 0.1 84,912 -17.5 -7.07
target is guided to increase in the Union Budget, for NTPC it is +15% YoY,
Powergrid +25%, NHPC +25% vs. FY25. The cheaper price discovery on IEX 1,313 13.9 2.2 1,128 13.0 1.0 1,031 15.5 2.80
exchange (-26% YoY at INR 3.71/KWh), meant that IEX recorded healthy JSW 24,389 -4.1 -15.1 9,137 -17.7 -22.4 1,575 -32.2 -31.79
volume growth of +17% YoY to reach 33 BU in 3QFY25. Coal India NHPC 22,868 11.3 13.7 10,215 35.8 42.9 6,312 1.3 17.25
however had a weak quarter, with declining volumes (down 1% YoY) coupled NTPC 4,09,922 0.2 -6.3 1,16,005 1.7 -7.1 47,114 3.1 -5.83
with reduced e-auction premium (76% vs. 117% YoY) and lower FSA PWGR 1,12,330 -2.7 2.1 95,380 -6.6 -1.6 38,617 -4.1 -1.65
realization during the quarter (down 1%). Overall, our coverage universe SJVN 6,710 23.5 11.3 4,629 25.6 14.6 1,488 -9.3 33.14
witnessed flat revenue/ EBITDA YoY. In the short term, power demand
TPWR 1,53,911 5.1 -5.1 33,526 38.7 6.9 11,876 10.4 3.12
continues to show sluggish growth (up 3% YoY in January-25, 10MFY25 at
Power Total 11,27,850 0.4 -2.5 4,02,292 0.0 -1.9 1,95,575 -8.4 -4.65
4% YoY). The lull in January-25 was due to above normal temperature.
According to IMD the country's mean temperature in January-25 was 18.98 Source: Company, Antique
degrees Celsius, the third highest for the month since 1901 and is just
behind 1958 and 1990. Domestic/ household accounted for 1/4th of
total power demand in the country and this along with muted economic
activity led to lower power demand.
Top Picks: Large Cap - Powergrid Corp, NTPC and SMID - IEX

Revenue growth (YoY %) EBITDA growth (YoY %) PAT growth (YoY %)

30.0 60.0 20.0

20.0 40.0 10.0

10.0 20.0 0.0

SJVN
IEX

NHPC

TPWR
Power Total
CESC
COAL

PWGR
JSW

NTPC
-10.0
0.0 0.0 SJVN
NHPC

TPWR
Power Total
CESC
COAL
IEX

PWGR
NHPC

SJVN
TPWR
Power Total
CESC

IEX

PWGR
COAL

JSW

NTPC
JSW

NTPC

-20.0
-10.0 -20.0
-30.0
-40.0
-40.0
Source: Company, Antique Source: Company, Antique Source: Company, Antique

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 19 February 2025

Vishal Periwal, +91 22 6911 3414, [email protected]

Utilities Pranav Furia, +91 22 6911 3467, [email protected]

C Good IEX
Growing and valuation below historical average C Good
Capex inching up
Power Grid
D Bad JSW Energy
Week result, impacted by merchant sales
n The company reported a revenue of INR 1,313 n While the numbers were in line, the capex n While generation grew by 10%, JSW reported
mn, up 14% YoY. This was on the back of 17% and capitalization trends were positive. Capex a revenue of INR 34 bn, down 4% YoY.
volume growth; the slightly lower revenue was at INR 77 bn, flat YoY and capitalization Capacity addition was offset by lower merchant
growth is attributable to the increased share of was INR 34 bn, up 92% YoY. Revenue for the realizations. Merchant markets were impacted
REC (8% vs. 7% YoY) where the transaction quarter was INR 112 bn, down 3% YoY, mainly by (1) Sluggish power demand growth, (2)
fees is slightly lower and due to certain due to a decline in pass-through depreciation Higher overall generation from hydro plants.
incentives offered to partners on some products. charges. EBIDTA decline was a little more The poor merchant performance dragged
EBITDA INR 2.6 bn lower to INR 9 bn, down
EBITDA margin was 85.9% vs. 86.6% in steeper at 7% YoY at INR 95 bn, partly due to
17% YoY (~30% below our/ consensus
3QFY24. PAT stood at INR 1,031 mn, up 15% new tariff regulations pertaining to O&M
estimates). PAT stood at INR 1.5 bn, down 32%
YoY. PAT was supported by other income at INR expenses. Other income came in strong at INR
YoY and ~55% below our and consensus
285 mn, up 10%. IGX's 3QFY25 PAT was INR 5.1 bn, 90% compared to the base quarter. estimates. Other income was at INR 2 bn, up
83 mn, up 13% YoY on strong volume growth. Adjusted Pat was INR 38 bn, flat YoY. 70% YoY.
Our Take Our Take Our Take
n Due to the company's experience in running n PWGR is the best proxy to play the transmission n JSW is a play on aggressive capacity addition.
and operating an exchange, it can launch new capex in India. The company has increased Over the mid to long term, in addition to adding
verticals like Green RTM product, 11-month FY25E capex/ capitalization to INR 230 bn/ renewable capacities, JSW plans to add
contract (40 BU opportunity), International INR 180 bn vs. the earlier INR 180 bn/ INR battery storage capacities, pump storage hydro
Carbon Exchange, and Coal Exchange. Over 110 bn. We like it for a RoE plus incentive plants, and green hydrogen capacities and
the mid to long term, an uptick in renewable profile of 20%. The stock offers a dividend inorganic growth. The balance sheet has
power (from 44% share in FY24 to 60% by yield of 3%-4% over FY25-27E. strength to capture growth as net debt to equity
FY30) offers continuous opportunity for volume is 1x (vs. 1.3x as of FY24), net debt to EBITDA
Recommendation - BUY
uptick for power exchanges in India. (excl. CWIP) is at 2.8x.
n We value PWGR at 3x PBV, to arrive at a TP of
Recommendation - BUY Recommendation - HOLD
INR 353 per share. BUY.
n We retain BUY with a TP of INR 249 per share n We have a HOLD rating on the stock with SoTP-
valuing it at 40X FY27 EPS. based TP of INR 563 per share.

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Vishal Periwal, +91 22 6911 3414, [email protected]

Utilities Pranav Furia, +91 22 6911 3467, [email protected]

Valuation snapshot
PBV x (Discount) / Premium of PBv wrt its

PBv 10Y 10Y

Stocks 2 yr forward avg PBv +1 STD -1STD avg PBv +1 STD -1STD
INDIAN ENERGY EXCHANGE 9.1 11.9 15.5 7.9 -23% -41% 15%
JSW ENERGY LTD 2.2 1.7 2.7 1.7 32% -20% 32%
COAL INDIA LTD 1.6 2.2 3.0 1.4 -27% -46% 15%
CESC LTD 1.2 0.7 1.0 0.4 71% 20% 200%
SJVN LTD 2.2 1.6 2.6 0.7 36% -14% 214%
TORRENT POWER LTD 3.2 1.8 3.0 0.7 78% 7% 357%
NHPC LTD 1.6 0.8 1.3 0.3 94% 19% 417%
TATA POWER CO 2.4 1.6 2.4 0.7 51% -3% 239%
POWERGRID CORP 2.4 1.4 2.1 0.8 68% 12% 194%
NTPC 1.4 1.0 1.3 0.6 47% 6% 133%
Source: Company, Antique

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 19 February 2025
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Disclosure of Interest Statement Companies where there is interest
l Analyst ownership of the stock - Yes for Apollo Pipes, Ganesha Ecosphere, Hi-Tech Pipes, Jio Financials, PTC Industries, Reliance Industries.
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