2 August 2021

Motilal Oswal values your support in the Today’s top research idea
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and Sun Pharma: Superior performance across segments led to
Trading team. We request your ballot.
strong earnings beat

 SUNP’s 1QFY22 earnings were well above our expectation, led by over 25%
growth in all segments, except API. Steady traction in the Specialty portfolio,
recovery in the core portfolio of Branded Generics, new launches in US
Market snapshot Generics, and partial benefit of COVID-related products led to strong growth in
Equities - India Close Chg .% CYTD.% 1QFY22 earnings.
Sensex 52,587 -0.1 10.1  We remain positive on SUNP on the back of: a) its strategy of NCE-led brand
Nifty-50 15,763 -0.1 12.7
Nifty-M 100 27,815 1.1 33.5
building in developed markets, b) industry leading market share in the Branded
Equities-Global Close Chg .% CYTD.% Generics market of DF, EM, and RoW, c) its Complex Generics pipeline and
S&P 500 4,395 -0.5 17.0 improving operating leverage. We value SUNP at 25x 12-months forward
Nasdaq 14,673 -0.7 13.8
earnings to arrive at our TP of INR900. We maintain our Buy rating.
FTSE 100 7,032 -0.7 8.9
DAX 15,544 -0.6 13.3
Hang Seng 9,233 -1.9 -14.0 Research covered
Nikkei 225 27,284 -1.8 -0.6
Commodities Close Chg .% CYTD.% Cos/Sector Key Highlights
Brent (US$/Bbl) 75 0.5 47.3
Gold ($/OZ) 1,814 -0.8 -4.4 Sun Pharma Superior performance across segments led to strong earnings beat
Cu (US$/MT) 9,701 -1.0 25.2
NTPC Profits in-line, aided by other income
Almn (US$/MT) 2,598 -0.4 31.6
Currency Close Chg .% CYTD.% IOCL Better-than-expected margins drive beat
USD/INR 74.4 0.2 1.9
USD/EUR 1.2 -0.1 -2.8
Britannia Inds. Flat sales healthy given the extraordinary base
USD/JPY 109.7 0.2 6.3 Marico In line result; gross margin likely to have troughed
YIELD (%) Close 1MChg CYTD chg
UPL | Indus Towers | Bandhan Bank | P I Industries | JSW Energy |
10 Yrs G-Sec 6.2 0.00 0.3
Cholaman.Inv.&Fn | Container Corpn. | Shriram Trans. | Laurus Labs |
10 Yrs AAA Corp 6.8 0.00 0.2
Flows (USD b) 30-Jul MTD CY21
Deepak Nitrite | B H E L | LIC Housing Fin. | AAVAS Financiers |
FIIs -0.52 -1.88 6.72 Other Notes Aditya Bir. Fas. | Exide Inds. | Shri.City Union. | Aegis Logistics |
DIIs 0.40 2.47 1.64 K E C Intl. | JK Lakshmi Cement | PVR | Orient Electric |
Volumes (INRb) 30-Jul MTD* YTD* Equitas Holding | Shoppers Stop | Automobiles |
Cash 830 682 774 EcoScope: House Hold | Fiscal Deficit | GST Update
F&O 28,849 53,868 44,821
Note: *Average

Chart of the Day: Sector holdings (FIIs/DIIs – highest QoQ change in Consumer Durables; decline in PSU
Banks, Metals, Retail, and Utilities)
Change in FII/DII holdings (QoQ)
FII QoQ chg (bp) DII QoQ chg (bp)
60 70 60 60
30 30 40
20 20
0 10 10 0 0 0 10 20 0 10

-10 -20 -10

-30 -40-30 -40
-60 -50 -60 -60 -60
-80 -70
-100 -90
-110 -140
-140
Cap Goods

Telecom
Healthcare

Banks-PSU

NBFC
Metals

Auto
Banks-PVT

Insurance
Cons. Durables

Cement

Technology

Real Estate
Retail

Utilities

Oil & Gas

Nifty-500
Chemicals
Consumer

Research Team ([email protected])

Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 In the news today
Kindly click on textbox for the detailed news link

1 2
Adani Group to enter Indian EV industry records INR 25,045 crore investments in last
petrochemicals business seven months
through Adani Petrochemicals The Covid-19 pandemic and its damage to the Indian economy did not
The Adani Group announced its deter the discerning investors from lapping up opportunities in the
intention to enter the electric vehicle and e-mobility sector. A large number of financial deals
petrochemicals business by and the funds involved vindicate this fact.Collective investment done by
registering a new company called e2W, e4W, EV component makers, electric commercial vehicles, and last-
Adani Petrochemicals Limited on mile delivery companies was recorded at INR 25,045.31 crores during
Friday, as per regulatory January-July 2021.
disclosures made to the stock
exchanges.

3 4
Rainfall seven per cent below GST collection recovers to a
normal in July: IMD 3-month high of Rs 1.16 trn in
After its vigorous revival in the July 5
first week of July that saw floods, The goods and services tax (GST)
cloudburst and landslides in collection recovered to a three- India's fuel demand picks up
several parts of the country, the month high in July, exceeding the in July, petrol consumption at
Southwest Monsoon ended with a Rs 1.1 trillion-mark, as economic pre-Covid level
seven per cent deficit for the activity resumed after most states India's fuel demand picked up in
month, the India Meteorological eased Covid-19 restrictions, the July as easing of pandemic-
Department (IMD) said on Sunday. official data showed. related restrictions accelerated
economic activity, helping petrol
consumption reach pre-Covid
levels, preliminary sales data
showed on Sunday.

6 7
Launch of housing units falls FPIs pull out net investments
54% in April-June quarter: worth Rs 11,308 cr from
Report equities in July
Launch of housing units dipped Foreign portfolio investors (FPI)
by 54% in April-June quarter to pulled out net investments
34,053 units from the previous worth Rs 11,308 crore from
quarter when developers across Indian equities in July. Investors
the country launched 74,196 turned cautious amid concerns
units, according to a report by of rising cases of Covid-19 in
PropEquity, real estate data, several countries. High oil prices
research and analytics firm. also weighed on the investor
sentiments, analysts said.

2 August 2021 2
 31 July 2021
1QFY22 Results Update | Sector: Healthcare

Sun Pharma
Estimate change CMP: INR773 TP: INR900 (+16%) Buy
TP change Superior performance across segments led to strong earnings beat
Rating change
Improving traction in Specialty products
Motilal Oswal values your support in  SUNP’s 1QFY22 earnings were well above our expectation, led by over 25%
the Asiamoney Brokers Poll 2021 for
India Research, Sales, Corporate
growth in all segments, except API. Steady traction in the Specialty portfolio,
Access and Trading team. recovery in the core portfolio of Branded Generics, new launches in US
We request your ballot. Generics, and partial benefit of COVID-related products led to strong growth
in 1QFY22 earnings.
 We raise our FY22E/FY23E earnings estimate by 5%/6% to factor in: a)
continued ramp-up in Ilumya-led Specialty portfolio, b) addition of products
in the Specialty portfolio, and c) strong COVID-related offtake, revival in core
Bloomberg SUNP IN therapies, and healthy pace of launches in Domestic Formulation (DF). We
Equity Shares (m) 2,399 value SUNP at 25x 12-months forward earnings to arrive at our TP of
M.Cap.(INRb)/(USDb) 1857 / 25 INR900.
52-Week Range (INR) 780 / 453  We remain positive on SUNP on the back of: a) its strategy of NCE-led brand
1, 6, 12 Rel. Per (%) 14/18/12 building in developed markets, b) industry leading market share in the
12M Avg Val (INR M) 5068
Branded Generics market of DF, EM, and RoW, c) its Complex Generics
pipeline and improving operating leverage. We maintain our Buy rating.
Financials & valuations (INR b)
Y/E MARCH 2021 2022E 2023E
Revenue growth/operating leverage drives earnings
Sales 331.6 382.2 425.6  Sales grew 30% YoY to INR96.7b (est. INR86b) in 1QFY22.
EBITDA 81.3 99.6 109.9  DF sales rose 39% YoY to INR33.1b (34% of sales). US sales grew 35% YoY to
Adj. PAT 60.2 71.0 80.8 USD380m (29% of sales). RoW sales increased by 35% YoY to USD185m (14%
EBIT Margin (%) 18.2 20.6 20.7
of sales). Sales in EM were up 25% YoY to USD218m (19% of sales). API sales
Cons. Adj. EPS (INR) 25.0 29.5 33.6
EPS Gr. (%) 52.6 17.9 13.8 declined by 7% YoY to INR5.2b (5% of sales).
BV/Sh. (INR) 193.1 218.2 247.3  Gross margin fell 100bp YoY to 72.6% in 1QFY22.
Ratios  However, EBITDA margin expanded 580bp YoY to 27.8% (est. 24.3%), due to
Net D:E -0.07 -0.06 -0.13 lower staff expense/other expenditure excluding R&D (-540bp/-190bp YoY
RoE (%) 13.1 14.4 14.4 as a percentage of sales).
RoCE (%) 9.9 11.5 11.5
 EBITDA was up 64% YoY to INR27b (est. INR20.9b).
Payout (%) 43.0 15.2 12.7
Valuations  The exceptional expense of INR6.3b is on account of: a) additional provision
P/E (x) 30.9 26.2 23.0 of USD60m by Taro, related to an ongoing civil anti-trust matters; b) INR1.5b
EV/EBITDA (x) 21.6 17.7 15.6 towards impairment of an acquired intangible asset under development;
Div. Yield (%) 0.5 0.5 0.5 and c) INR382m in writing down of assets, which classified as held.
FCF Yield (%) 4.0 0.4 3.3
 Adjusting for the same, PAT grew 74% YoY to INR20b (est. INR15b).
EV/Sales (x) 5.3 4.6 4.0
Highlights from the management commentary
Shareholding pattern (%)  Specialty sales stood at USD148m v/s USD143m. A QoQ rise in global
As On Jun-21 Mar-21 Jun-20 Specialty sales is seen, despite the entry of g-Absorica in the market.
Promoter 54.5 54.5 54.7  SUNP guided at healthy double-digit growth in the Specialty portfolio in
DII 22.0 21.6 20.1 FY22. Japan and Australia remain promising markets for Ilumya.
FII 11.5 11.7 12.7  COVID-19 and allied products contributed 8-10% of DF sales in 1QFY22.
Others 12.1 12.2 12.5
Adjusting for the same, YoY growth is ~25%, led by superior growth in the
FII Includes depository receipts
core portfolio and partly due to a low base of the past year.
 Overall R&D spending to be 7-8% of sales for FY22.
 R&D spends for the Specialty portfolio is 26% of total R&D spends.
 Other expenses are yet to normalize to pre-COVID levels. It is expected to
increase in 2QFY22, subject to the COVID-19 situation.

2 August 2021 3
 Valuation and view
 We raise our FY22E/FY23E earnings estimate by 5%/6% to factor in: a) continued
ramp up in Specialty sales in the US, with incremental opportunities from in-
licensed products, b) the benefit of an expanded field force in the DF segment,
c) stable Taro business, and d) new product launches in US Generics.
 We expect 16% earnings CAGR over FY21-23E, led by 15%/13% revenue growth
in the US/DF. We raise our TP to INR900/share on a 25x 12-months forward
earnings basis.
 We remain positive on SUNP due to: a) investments in the global Specialty
portfolio improving overall profitability, b) a robust pipeline of NDAs/ANDAs,
and c) revival in the Branded Generics segment. We maintain our Buy rating.

Quarterly performance (consolidated) (INR b)

Y/E March FY21 FY22 FY21 FY22E FY22E Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Revenue 74.7 84.6 87.8 84.3 96.7 93.0 96.1 96.5 331.4 382.2 85.9 12.6
YoY Change (%) -9.6 6.4 9.2 4.4 29.5 9.9 9.4 14.4 2.5 15.3 15.0
Total Expenditure 58.2 62.4 65.0 64.6 69.8 69.6 71.6 71.6 250.3 282.6 65.0
EBITDA 16.5 22.2 22.8 19.7 26.9 23.4 24.5 24.8 81.1 99.6 20.9 29.0
YoY Change (%) -9.2 37.8 38.7 40.7 63.5 5.7 7.3 26.3 25.5 22.9 26.8
Margin (%) 22.0 26.2 26.0 23.3 27.8 25.2 25.5 25.8 24.5 26.1 24.3
Depreciation 5.0 5.0 5.3 5.5 5.0 5.2 5.3 5.4 20.8 20.8 5.6
EBIT 11.5 17.2 17.5 14.1 21.9 18.3 19.2 19.4 60.3 78.8 15.3
YoY Change (%) -15.2 51.4 59.4 71.9 90.3 6.4 9.9 37.4 36.7 30.7 33.2
Interest 0.5 0.3 0.3 0.3 0.4 0.2 0.2 0.1 1.4 0.9 0.3
Net Other Income 2.7 3.5 3.7 2.0 2.0 2.3 2.6 3.1 11.9 9.9 2.9
PBT before EO Exp. 13.7 20.3 20.9 15.9 23.6 20.3 21.6 22.4 70.8 87.8 17.9 31.2
Less: EO Exp./(Inc.) 35.5 1.2 -0.7 6.8 5.5 0.0 0.0 0.0 42.8 5.5 0.0
PBT -21.8 19.2 21.6 9.0 18.0 20.3 21.6 22.4 28.0 82.3 17.9
Tax 2.5 -0.3 2.4 0.6 4.0 2.7 3.0 2.6 5.1 12.3 2.2
Rate (%) 17.9 -1.5 11.7 3.5 16.8 13.5 14.0 11.5 7.3 14.0 12.5
PAT (pre Minority Interest) -24.3 19.5 19.2 8.5 14.1 17.6 18.6 19.8 22.8 70.0 15.7
Minority Interest -7.7 1.4 0.7 -0.5 -0.4 -0.3 -0.2 -0.2 -6.2 -1.0 0.8
Reported PAT -16.6 18.1 18.5 8.9 14.4 17.8 18.8 19.9 29.0 71.0 15.0 -3.4
Adj. Net Profit* 11.5 16.4 17.8 14.6 20.0 17.8 18.8 19.9 60.2 71.0 15.0 33.4
YoY Change (%) -13.2 55.4 114.1 97.2 74.1 8.7 5.5 36.9 52.6 17.9 30.5

Key performance Indicators (consolidated)

Y/E March FY21 FY22E FY21 FY22E FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE
Domestic Formulations (INR b) 23.9 25.3 27.5 26.7 33.1 29.0 30.3 28.7 103.4 121.0 27.2
YoY Change (%) 3.2 0.7 9.4 12.9 38.5 14.5 10.0 7.3 6.0 17.0 14.0
US sales (INR b) 21.4 24.9 27.6 26.9 28.0 28.5 29.4 31.4 100.8 117.4 25.9
YoY Change (%) (28.0) 4.3 10.8 (0.7) 31.1 14.3 6.4 16.6 (4.4) 16.4 21.3
RoW and EM (INR b) 23.5 28.8 27.8 25.9 29.7 29.4 30.1 30.9 106.0 120.1 27.9
YoY Change (%) (7.2) 12.1 11.6 4.8 26.7 2.0 8.0 19.4 5.8 13.3 19.0
APIs (INR b) 5.5 5.1 4.5 4.4 5.1 5.4 5.6 6.0 19.5 22.2 4.4
YoY Change (%) 20.1 9.1 (10.5) (9.9) (7.0) 6.0 25.0 37.4 1.8 13.7 (20.0)
Cost Break-up
RM Cost (% of Sales) 26.4 25.4 26.6 26.6 27.4 26.8 26.5 25.9 26.2 26.8 26.2
Staff Cost (% of Sales) 23.6 20.2 19.6 19.9 18.2 18.9 18.8 19.0 20.7 18.8 20.0
R&D Expenses (% of Sales) 5.6 7.2 6.4 6.5 6.1 6.5 7.0 7.6 6.5 6.8 6.9
Other Cost (% of Sales) 22.4 21.0 21.5 23.6 20.4 22.2 21.7 21.0 22.1 21.5 22.0
Gross Margin (%) 73.6 74.6 73.4 73.4 72.6 73.2 73.5 74.1 73.8 73.2 73.8
EBITDA Margin (%) 22.0 26.2 26.0 23.3 27.8 25.2 25.5 25.8 24.5 26.1 24.3
EBIT Margin (%) 15.4 20.3 19.9 16.8 22.6 19.7 20.0 20.1 18.2 20.6 17.8

2 August 2021 4
 RESULTS
2 August 2021
FLASH Results Flash | Sector: Utilities

NTPC
BSE SENSEX S&P CNX
52,587 15,763
CMP: INR118 Buy
Profits in-line, aided by other income
Financials & Valuations (INR b)
Y/E March 2021 2022E 2023E  Adj. for one-offs, NTPC's S/A PAT (excl. FC u/r) was broadly flat YoY at
Net Sales 1,134 1,255 1,363.8 INR33.1b (est: INR33.7b) on the back of higher other income.
EBITDA 358.8 399.3 449.2  Other income at S/A was up 35% YoY to INR7.6b (est: INR5.1b) and was
NP 152.0 156.0 168.0 boosted by dividends of INR3b from subs and JVs. LPS was lower at INR2.65b
EPS (INR) 15.7 16.1 17.3 v/s INR4.73b in the previous year.
EPS Gr. (%) 13.6 2.6 7.7
 Adjusted for the dividends from subs and JVs, PAT nos. (excl. FC u/r) would
BV/Sh. (INR) 129.7 137.6 145.3
RoE (%) 12.4 12.0 12.2 be INR30.6b.
RoCE (%) 7.4 7.1 7.6  Commercial capacity was up 25MW QoQ to 64.5GW, led by the
Payout (%) 39.2 43.5 49.1 commercialization of solar capacities.
Div. Yield 5.2 5.9 7.2  FC under-recoveries stood at INR1.9b (v/s est. INR1.8b and INR2.25b in the
previous year). FC under-recoveries were led by Simhadri (INR1.1b) and
Rihand (INR0.5b). Plant availability factors at coal-based plants were
marginally down YoY to 93.7% (v/s 95.8% in the previous year).
 PLF at coal-based plants rose to 69.7% (v/s 58.2% in the previous year). PLF
incentives stood at INR1.7b v/s INR1.4b in the previous year.
 Reported S/A PAT was up 27% YoY to INR31.5b. The jump in reported nos. is
attributable to the impact of INR8b in rebates in the previous year.
 Profit from JVs was higher at INR2b (v/s INR1.3b in the previous year), led by
better profits at Meja.
 At the consolidated level, reported profits were up 17% YoY to INR34.5b,
while adjusted profits would be down 5% YoY to INR34.6b.
 Profit for THDC was lower at INR0.48b (v/s INR1.25b in the previous year)
due to lower water availability. Profits at NEEPCO were higher at INR1.2b
(v/s <INR0.1b in the previous year) due to the commissioning of Kameng.

Quarterly Performance (Standalone) – INR m

Y/E March FY21 FY22E FY21 FY22E FY22 var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Sales 242.6 250.2 254.3 262.7 268.3 297.7 294.1 266.7 1,010 1,127 273.6 -2
Change (%) -1.8 5.9 1.3 -9.7 10.6 19.0 15.6 1.5 -1.5 11.6 12.8
EBITDA 85.5 75.3 82.9 62.2 82.3 86.1 89.5 85.6 305.8 343.5 90.3 -9
Depreciation 25.3 25.3 25.6 28.0 26.8 28.2 28.5 27.6 104.1 111.0 28.2
Interest 20.8 17.7 20.1 15.9 19.9 19.3 21.9 25.9 74.6 86.9 22.7
Other income 5.7 13.5 7.6 16.7 7.6 4.3 4.9 4.0 43.5 20.8 5.1 49
Exceptional -8.0 -5.6 0.0 0.0 0.0 0.0 0.0 0.0 -13.6 0.0 0.0
PBT 37.0 40.1 44.8 35.0 43.3 42.9 44.0 36.2 156.9 166.3 44.5 -3
Tax 12.3 5.1 11.7 -9.8 11.8 10.8 11.1 1.2 19.3 35.0 11.2
PAT 24.7 35.0 33.2 44.8 31.5 32.1 32.9 34.9 137.7 131.4 33.3 -6
Change (%) -5.1 7.4 10.7 257.6 27.3 -8.5 -0.8 -22.0 36.2 -4.6 34.8
Adj. PAT (excl. FC u/r) 33.2 41.6 33.7 38.6 33.1 32.5 33.3 34.3 147.0 133.1 33.7 -2
Change (%) 22.7 19.7 16.1 17.0 -0.4 -21.8 -1.1 -11.1 18.8 -9.4 1.5

2 August 2021 5
 31 July 2021
1QFY22 Results Update | Sector: Oil & Gas

IOCL
Estimate change CMP: INR103 TP: INR157 (+53%) Buy
TP change
Rating change Better-than-expected margins drive beat
Motilal Oswal values your support in the
 IOCL reported a beat on our estimates, led by higher-than-estimated reported
Asiamoney Brokers Poll 2021 for India GRM (USD6.6/bbl), marketing margins (INR6.2/lit), and marketing sales
Research, Sales, Corporate Access and volumes (-6% QoQ – despite the second COVID wave led lockdowns). Thus,
Trading team. We request your ballot.
EBITDA stood at INR111b (+65% est., +102% YoY, -18% QoQ), with PAT at
INR59b (+211% YoY, -32% QoQ).
 SG GRM is averaging higher MoM at USD2.9/bbl in July (v/s USD2/bbl in
1QFY22), the highest ever since the COVID outbreak in Feb'20. Recovery is
entirely driven by higher demand for gasoline (margins at USD10.1; +USD3
Bloomberg IOCL IN MoM); while ATF and gasoil margins remain the same MoM at USD4.3/4.7.
Equity Shares (m) 9,181  With the total phasing out of the COVID lockdowns and closure of refinery
M.Cap.(INRb)/(USDb) 971.5 / 13.1 complexes (est ~3mnbopd over the next 2–3 years), the refining margin
52-Week Range (INR) 118 / 71 would return to its long-term average (of USD5–6/bbl).
1, 6, 12 Rel. Per (%) -5/-3/-23  Consol. debt declined further to INR857b in 1QFY22 (down 16% v/s end-
12M Avg Val (INR M) 2238 FY21). We maintain Buy, with combined FCF yield and dividend of ~21-25%
over FY22–24E. It trades at 6.1x consol. FY23E EPS and 0.7x FY23E PBV.
Marketing margin outshines; petchem margin remains robust
Financials & Valuations (INR b)
Y/E March 2021 2022E 2023E
 Refining: EBITDA stood at INR24.9b (-61% QoQ).
Sales 3,639 4,855 5,120  Refining throughput was in-line at 16.7mmt (+29% YoY; -5% QoQ),
EBITDA 406 348 348 translating to a utilization rate of 96% in 1QFY22.
Adj. PAT 218 159 156  Reported GRM came in at USD6.6/bbl (our est. of USD5/bbl) v/s –USD2/bbl
Adj. EPS (INR) 23.7 17.3 17.0 in 1QFY21 and USD10.6/bbl in 4QFY21.
EPS Gr. (%) 130.8 (27.1) (1.5)
 The utilization of high sulfur crude oil stood at 56.0% in 1QFY22 (v/s 54.8%
BV/Sh.(INR) 121.8 130.3 138.7
Ratios
in 4QFY21 and 54.5% in FY21).
Net D:E 0.9 0.9 0.9  Marketing: EBITDA stood at INR54.3b (+58% QoQ).
RoE (%) 21.0 13.7 12.6  Marketing sales volumes came in at 17.2mmt (+21% YoY; -6% QoQ).
RoCE (%) 10.4 8.4 7.9  Marketing margin (incl. inv.) were at INR6.2/lit (v/s our est. INR4.1).
Payout (%) 50.6 50.7 50.6  Petchem: EBITDA stood at INR19.9b (+173% YoY; -12% QoQ).
Valuations
 EBITDA/mt continued to be robust at USD412 (flat QoQ v/s our estimate of
P/E (x) 4.3 6.0 6.1
P/BV (x) 0.8 0.8 0.7 USD356), while petchem sales were down 11% QoQ to 0.66mmt.
EV/EBITDA (x) 4.9 5.8 5.9  Petchem margins for IOCL were robust (flat QoQ) despite PE/PP delta
Div. Yield (%) 11.7 8.5 8.4 softening from multi-year highs (since the start of 1QFY22) and averaging
FCF Yield (%) 46.7 9.9 10.4 5%/9% lower QoQ.
 Pipeline: EBITDA stood at INR15.7b (+37% YoY; -2% QoQ).
Shareholding pattern (%)  Throughput was up 32% YoY and down 9% QoQ to 19.9mmt, with the total
As On Jun-21 Mar-21 Jun-20 pipeline capacity utilization at 83% – impacted by lower petroleum product
Promoter 51.5 51.5 51.5 demand amid the lockdowns.
DII 12.5 13.1 14.0 Valuation and view – maintain Buy
FII 6.7 5.8 6.3  The capex guidance for FY22 stands at INR285b. The company is set to
Others 29.3 29.6 28.2 commission various projects over the next three years, which would drive
FII Includes depository receipts further growth. The refinery projects currently underway are expected to be
completed as follows: the Panipat refinery (to 25mmtpa) by Sep’24, Gujarat
refinery (to 18mmtpa) by Aug’23, and Baruni refinery (to 9mmtpa) by
Apr’23. Three products’ pipelines are 85–94% complete and expected to be
commissioned in 4QFY22.
 IOCL has traded at a huge discount in the recent past decade owing to its
capex cycle and CPSE-led liquidity. We value it at 1.1x Sep’23 PBV, to arrive
at TP of INR157. Maintain Buy.

2 August 2021 6
 Standalone - Quarterly Earning Model (INR Billion)
Y/E March FY21 FY22 FY21 FY22E FY22 Var. vs
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE est.
Net Sales 624 856 1,063 1,237 1,187 1,007 1,381 1,243 3,781 4,817 1,152.6 3%
YoY Change (%) (52.6) (23.3) (14.7) 4.5 90.2 17.6 29.9 0.5 (22.3) 27.4 84.7
EBITDA 55.1 94.3 96.2 135.0 111.3 64.2 70.3 69.1 381 315 67.4 65%
Margins (%) 8.8 11.0 9.0 10.9 9.4 6.4 5.1 5.6 10.1 6.5 5.9
Depreciation 23.5 24.0 24.7 25.8 26.3 27.7 28.2 30.5 98 113 27.1 -3%
Interest 11.7 2.2 6.3 10.7 12.6 9.9 9.9 7.2 31 40 9.9 27%
Other Income 6.4 7.8 9.0 3.2 5.6 11.3 12.7 21.2 26 51 15.2 -63%
PBT before EO expense 26.3 83.4 78.0 109.5 78.0 37.9 44.9 52.5 297 213 39.0 100%
PBT 26.3 83.4 78.0 109.5 78.0 37.9 44.9 52.5 297 213 39.0 100%
Rate (%) 27.3 25.3 36.9 19.8 23.8 25.2 25.2 25.2 27 25 25.2
Adj PAT 19.1 62.3 49.2 87.8 59.4 28.4 33.6 39.3 218 161 29.2 104%
Margins (%) 3.1 7.3 4.6 7.1 5.0 2.8 2.4 3.2 5.8 3.3 2.5
Key Assumptions
Refining throughput (mmt) 12.9 14.0 17.9 17.6 16.7 18.0 18.0 18.0 62.4 70.7 16.0 4%
Reported GRM (2.0) 8.6 2.2 10.6 6.6 4.0 4.0 4.0 4.9 4.6 5.0 32%
Domestic sale of refined products (mmt) 14.2 16.0 19.7 18.4 17.2 16.7 20.4 19.2 68.4 73.5 16.4 5%
Marketing GM incld inv per litre (INR/litre) 8.6 5.9 6.5 6.1 6.2 4.4 4.3 4.3 6.8 4.8 4.1 50%
E: MOFSL Estimates

2 August 2021 7
 RESULTS
31 July 2021
FLASH Results Flash | Sector: Consumer

Britannia Ind.
BSE SENSEX S&P CNX
52,587 15,763
CMP: INR3,420 Buy
Flat sales healthy given the extraordinary base; lower margin
Concall Details led to in line EBITDA and PAT
Date: 2nd Aug 2021  BRIT’s consolidated sales were flat YoY at INR34b (est. INR31.1b) in 1QFY22.
Time: 10:00 am IST Consolidated EBITDA declined by 22.8% YoY to INR5.5b (in line). Consolidated
Dial-in: PBT fell 28% YoY to INR5.3b (in line). Consolidated adjusted PAT declined by
+91 22 6280 1313/
28.7% YoY to INR3.9b (in line).
+91 22 7115 8214
 Growth in the base business volume is likely to be -2% in 1QFY22 (est. -10%).
Diamond Pass
 Consolidated gross margin contracted by 300bp YoY to 38.7%. Higher staff cost
(+10bp YoY) and other expenses (+160bp YoY) resulted in a 470bp YoY
Financials & Valuations (INR b)
Y/E Mar 2021 2022E 2023E contraction in EBITDA margin to 16.3% (est. 17.5%).
Sales 131.4 139.4 158.5  Standalone sales were flat YoY in 1QFY22, while EBITDA/adjusted PAT
Sales Gr. (%) 13.2 6.1 13.8 declined by 22%/9.7% YoY. EBITDA margin contracted by 470bp YoY to 16.2%.
EBITDA 25.1 25.4 29.1
Margins (%) 19.1 18.2 18.3  Imputed subsidiary sales and EBITDA declined by 16.7% and 33.4%,
Adj. PAT 18.5 18.3 21.5 respectively, in 1QFY22. Imputed subsidiaries registered a loss of INR763m in
EPS (INR) 76.8 75.8 89.2 1QFY22 as against a profit of INR298m in 1QFY21.
EPS Gr. (%) 31.0 -1.3 17.7
BV/Sh.(INR) 147.3 199.2 217.0
Ratios Highlights from the press release
RoE (%) 46.5 43.8 42.9  Prices of palm oil and crude continued to increase.
RoCE (%) 29.2 27.5 28.1
 BRIT will take a calibrated price increase as the situation normalizes.
Payout (%) 80.0 80.0 80.0
Valuations  It re-launched Good Day Choco-chip cookies with a surprise campaign and
P/E (x) 44.5 45.1 38.3 launched 50-50 Potazos in the northeast.
P/BV (x) 23.2 17.2 15.8  BRIT’s brands were back on TV and its full range of products in the market as
EV/EBITDA (x) 32.5 31.6 27.4
Div. Yld (%) 1.8 1.8 2.1 the supply chain impact wasn’t as severe as the first COVID wave.

Consolidated quarterly performance (INR b)

Y/E March FY21 FY22 FY21 FY22E FY22E Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Base business volume growth (%) 21.0 9.0 3.0 8.0 -2.0 6.5 9.0 10.0 10.0 3.9 -10.0
Net Sales 34.2 34.2 31.7 31.3 34.0 36.9 35.8 32.6 131.4 139.4 31.1 9.3
YoY change (%) 26.7 12.1 6.1 9.2 -0.5 8.0 13.0 4.2 13.2 6.1 -9.0
Gross Profit 14.2 14.5 13.6 12.7 13.2 15.5 15.2 14.7 55.1 58.6 12.8
Margin (%) 41.7 42.5 43.1 40.5 38.7 42.0 42.5 45.1 41.9 42.1 41.0
EBITDA 7.2 6.8 6.1 5.1 5.5 6.7 6.6 6.5 25.1 25.4 5.5 1.4
Margin (%) 21.0 19.8 19.3 16.1 16.3 18.2 18.5 20.0 19.1 18.2 17.5
YoY growth (%) 81.7 37.2 21.8 11.3 -22.8 -0.7 8.0 29.1 36.1 1.1 -23.8
Depreciation 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 2.0 2.3 0.5
Interest 0.3 0.3 0.3 0.2 0.3 0.4 0.5 0.7 1.1 1.9 0.4
Other Income 0.9 0.7 0.8 0.6 0.6 0.8 0.9 1.0 3.1 3.3 0.7
PBT 7.4 6.7 6.1 4.9 5.3 6.6 6.4 6.1 25.1 24.4 5.3 0.5
Tax 1.9 1.7 1.6 1.3 1.4 1.7 1.6 1.4 6.6 6.1 1.3
Rate (%) 26.4 26.1 26.2 26.9 27.2 25.2 25.2 23.4 26.4 25.2 25.2
Adjusted PAT 5.4 5.0 4.5 3.6 3.9 4.9 4.8 4.7 18.5 18.3 4.0 (2.1)
YoY change (%) 105.4 22.7 22.5 -3.5 -28.7 -1.0 5.8 30.7 31.2 -1.3 -27.2
E: MOFSL estimates

2 August 2021 8
 31 July 2021
1QFY22 Results Update | Sector: Consumer

Marico
Estimate changes
TP change
CMP: INR546 TP: INR635 (+16% ) Buy
Rating change In line result; gross margin likely to have troughed
Motilal Oswal values your support in the  MRCO’s 1QFY22 result was in line with our expectations. Sales momentum
Asiamoney Brokers Poll 2021 for India continues to remain healthy. With Copra prices sharply declining from their
Research, Sales, Corporate Access and
Trading team. We request your ballot. peak in recent months, coupled with price increases taken, the
management said gross margin is likely to revive in 2Q before increasing
significantly in 2HFY22.
 It maintained its strong growth guidance for the Foods business, with sales
targeted at INR5b by the end of FY22 and INR8.5-10b by FY24. Honey,
Bloomberg MRCO IN Noodles, and Soya Chunks are doing very well.
Equity Shares (m) 1,290  Allied with sales of INR5b now targeted from e-commerce focused brands
M.Cap.(INRb)/(USDb) 705.5 / 9.5
52-Week Range (INR) 553 / 333
by FY24 (target shared for the first time in its 1QFY22 result call), there is a
1, 6, 12 Rel. Per (%) 3/18/10 much required diversification of the portfolio, boosting its medium-to-long-
12M Avg Val (INR M) 1161 term topline growth prospects.
 With sustained healthy topline momentum in its core brands now allied
Financials & Valuations (INR b) with newer revenue streams, higher P/E multiples compared to the past are
Y/E March 2021 2022E 2023E justified. We maintain our Buy rating on the stock.
Sales 80.5 91.7 101.0
Sales Gr. (%) 10.0 14.0 10.1
EBITDA 15.9 17.5 20.7 Sales beat; margin weaker than expected
EBITDA Margin. % 19.8 19.1 20.5  Consolidated net sales grew 31.2% YoY to INR25.3b (est. INR24.6b) in
Adj. PAT 11.6 12.9 15.3 1QFY22. The domestic business grew 34.8% YoY. Consolidated EBITDA grew
Adj. EPS (INR) 9.0 10.0 11.8 3% YoY to INR4.8b (in line). PBT grew 5.4% YoY to INR4.7b (in line). Adjusted
EPS Gr. (%) 10.4 10.9 18.7
PAT grew 7.6% YoY to INR3.6b (in line).
BV/Sh.(INR) 25.1 35.3 37.5
 Consolidated gross margin contracted by 760bp YoY to 41% (est. 45.4%).
Ratios
RoE (%) 37.0 33.0 32.5 As a percentage of sales, lower staff (-110bp YoY to 5.9%), other
RoCE (%) 34.2 30.3 30.0 expenditure (-110bp YoY to 9.15), and A&P expenses (-20bp YoY to 6.9%)
Payout (%) 84.4 83.4 81.6 meant EBITDA margin contracted by 520bp to 19% in 1QFY22.
Valuations  Business Segments: Sales for Parachute/VAHO/Saffola grew 20%/35%/60%
P/E (x) 60.8 54.8 46.2
YoY in 1QFY22 on the back of 12%/34%/24% growth in volumes.
P/BV (x) 21.8 15.5 14.6
EV/EBITDA (x) 43.5 39.2 33.2
Div. Yield (%) 1.4 1.5 1.8 Highlights from the management commentary
 The management feels gross margin (GM) has bottomed out in 1Q and
Shareholding pattern (%) ought to recover in 2Q, with performance likely to be much better in
As On Jun-21 Mar-21 Jun-20 2HFY22. GM in FY22 may be slightly lower than FY21 levels.
Promoter 59.6 59.6 59.6  The management plans to undertake aggressive cost rationalization in FY22
DII 9.7 10.2 10.0
as well (saved INR1.5-2b last year). Better Analytics, inventory efficiencies
FII 25.1 24.1 23.8
(reduced 26% of SKUs in FY21), and a hybrid way of working will lead to
Others 5.7 6.0 6.6
FII Includes depository receipts structural cost savings.
 Update on new products: It has done very well in Honey and Noodles, with
an encouraging response. Saffola Oodles is among the top five selling Pasta
and Noodle brands on Amazon, while MealMaker Soya Chunks already has
14% market share in Modern Trade and is now available nationally.

2 August 2021 9
 Valuation and view
 Sustained topline momentum, with improving margin prospects over the trough
seen in 1QFY22, has led to a 1.9%/4.4% increase in FY22E/FY23E EPS.
 a) Ongoing topline growth momentum in each of its core segments, b)
significantly higher growth rates as well as targets in the Foods portfolio, and c)
INR4.5-5b now targeted from its ‘Digital-first’ range of products are highly
encouraging developments for a business that had only ~6% sales CAGR over
FY15-20, before reporting double-digit growth in FY21.
 The much required diversification could lead to higher multiples compared to
the past. Valuations at 46.2x FY23E EPS appear inexpensive, given the promise
of strong earnings growth compared to the past. We target 50x Sep’23E EPS to
arrive at our TP of INR635/share, implying a 16% upside. We maintain our Buy
rating.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E FY22 Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Domestic volume growth (%) -14.0 11.0 15.0 25.0 21.0 9.0 5.0 2.0 9.3 9.3 19.0
Net Sales 19,250 19,890 21,220 20,120 25,250 23,072 23,342 20,078 80,480 91,742 24,640 2.5%
YoY Change (%) -11.1 8.7 16.3 34.5 31.2 16.0 10.0 -0.2 10.0 14.0 28.0
Gross Profit 9,360 9,550 9,950 8,880 10,360 10,386 10,735 10,017 37,780 41,498 11,182
Gross margin (%) 48.6 48.0 46.9 44.1 41.0 45.0 46.0 49.9 46.9 45.2 45.4
EBITDA 4,670 3,890 4,130 3,190 4,810 4,420 4,520 3,799 15,910 17,549 4,869 -1.2%
Margin (%) 24.3 19.6 19.5 15.9 19.0 19.2 19.4 18.9 19.8 19.1 19.8
YoY Change (%) 1.3 10.2 10.7 13.1 3.0 13.6 9.4 19.1 8.3 10.3 4.3
Depreciation 340 330 360 360 330 353 364 401 1,390 1,448 357
Interest 90 80 70 100 80 81 78 77 340 315 91
Other Income 190 270 240 290 270 292 288 301 920 1,150 266
PBT 4,430 3,750 3,940 3,020 4,670 4,278 4,366 3,622 15,100 16,937 4,687 -0.4%
Tax 1,030 690 820 560 1,020 963 982 846 3,240 3,811 1,055
Rate (%) 23.3 18.4 20.8 18.5 21.8 22.5 22.5 23.3 21.5 22.5 22.5
Minority Interest 90 90 50 80 90 70 50 60 270 270 80
Adjusted PAT 3,310 2,970 3,070 2,380 3,560 3,245 3,334 2,717 11,590 12,856 3,552 0.2%
YoY Change (%) 3.4 20.2 12.9 16.1 7.6 9.3 8.6 14.1 10.4 10.9 7.3
E: MOSFL estimates

2 August 2021 10
 31 July 2021
1QFY22 Results Update | Sector: Agri

UPL
Estimate change CMP: INR808 TP: INR760 (-6%) Neutral
TP change
Rating change Higher fixed costs weigh on margins
Operating performance below our expectation
Motilal Oswal values your support in the
Asiamoney Brokers Poll 2021 for India  UPLL reported a muted operating performance despite gross margin
Research, Sales, Corporate Access and expansion, weighed by higher fixed costs (+10% YoY) and logistic costs. The
Trading team. We request your ballot.
gross margin expansion was attributable to a better product mix as well as
realization, partially offset by higher raw material cost. In 1QFY22, the
company’s net debt further increased INR26b and stood at INR215b as of
Jun’21.
Bloomberg UPLL IN
 Net profit was above our expectation, led by tax benefits, despite UPLL
Equity Shares (m) 765
reporting a muted operating performance during the quarter. Factoring in
M.Cap.(INRb)/(USDb) 617.6 / 8.3 the same, we maintain our estimates for FY22/FY23 as well as our Neutral
52-Week Range (INR) 865 / 399 rating, with TP of INR760.
1, 6, 12 Rel. Per (%) 2/31/35
12M Avg Val (INR M) 4586 Realization and product mix change lead to gross margin improvement
 UPLL reported revenue growth of 9% YoY to INR85.2b (est INR85b) in
Financials & Valuations (INR b) 1QFY22 (volume growth: +6%, price: +2%, and exchange: +1%). EBITDA was
Y/E Mar 2021 2022E 2023E up 5% YoY to INR18.6b (est INR20b). The EBITDA margin contracted 80bp
Sales 386.9 420.4 454.3 YoY to 21.9%. Reported PAT grew 23% YoY to INR6.8b. However, adjusted
EBITDA 86.3 96.6 107.2
for exceptional items and the exchange impact, adj PAT stood at INR10.2b
PAT 34.7 45.4 52.6
EBITDA (%) 22.3 23.0 23.6
(up 50% YoY v/s est INR8.6b).
EPS (INR) 45.4 59.4 68.7  In 1QFY22, strong revenue growth was seen across regions (India: 27%,
EPS Gr. (%) 29.9 30.9 15.7 LatAm: +24%, and NA: +19%), barring Europe (-11% YoY) and RoW (-14%
BV/Sh. (INR) 234 421 504 YoY).
Ratios
 India revenue grew 27% despite (i) delayed monsoons in parts, (ii) the
Net D/E 1.2 0.9 0.6
RoE (%) 20.3 23.2 22.5
second COVID wave, and (iii) delayed upward price revisions. Strong volume
RoCE (%) 12.1 14.3 15.1 growth (~14%) in Glufosinate (Ferio, Sweep Power), coupled with higher
Payout (%) 26.6 20.0 20.0 price realization (by ~7%), aided performance.
Valuations  Revenue was up 24% YoY in LatAm on the back of strong growth across the
P/E (x) 17.8 13.6 11.8
region, with Brazil leading with 40% growth. Strong volume growth in Perito
EV/EBITDA (x) 9.7 8.4 7.2
Div Yield (%) 1.2 1.4 1.7
(by ~2x) and Sperto (by ~1.8x) in Brazil, coupled with higher price realization
FCF Yield (%) 9.1 8.4 9.8 for Perito, led to overall growth in the region.
 North America revenue grew 19% YoY on the back of higher volumes,
Shareholding pattern (%) strong realizations, and an increase in acreage for major row crops.
Jun-21 Mar-21 Jun-20  Europe sales de-grew 11% on supply constraints and unfavorable weather
Promoter 28.0 28.0 27.9 conditions. UK Mancozeb-based formulations (Manzate and Nautile) were
DII 16.2 16.0 13.2
phased out to 2Q.
FII 37.9 37.8 40.6
 RoW revenue declined 14% YoY due to unfavorable weather conditions,
Others 18.0 18.3 18.4
lower volumes, and supply constraints, which partially offset the growth
Note: FII includes depository receipts
seen in some RoW regions.

2 August 2021 11
 Highlights from management commentary
 Debt: Gross debt as of Jun’21 stood at INR251b (v/s INR238b as of Mar’21). Net
debt stood at INR215b as of Jun’21 (v/s INR189b as of Mar’21). In 1QFY22, UPLL
borrowed USD250m in sustainability loans, taking the total sustainability loans
to USD750m. Loans were utilized entirely for acquisition loan repayments –
acquisition loans currently stand at USD1.5b. Sustainability loans were taken at
the rate of LIBOR +30bp.
 Maintained FY22 guidance: Revenue growth is guided at 7–10%, with EBITDA
growth at 12–15% and net debt to EBITDA at <2x.
 Pre-orders: UPLL had ~USD500m+ worth of advance orders in Brazil in the first
five months of CY21.

Valuation and view

 The global Agrochemicals market is set to gain from better farm economics on
account of firm/rising global agri commodity prices, which would in turn drive
agrochemical consumption.
 UPLL reduced net debt by INR31.4b and achieved 2.2x net debt to EBITDA in
FY21 v/s the 2x guidance. However, net debt to EBITDA (including perpetual
bonds) stood at 2.5x in FY21 v/s 3.4x in FY20. Furthermore, the company’s net
debt further increased by INR26b in 1QFY22 and stood at INR215b as of Jun’21.
 The stock has traded at average P/E of 12.6x over the last three years on a one-
year forward basis. However, we ascribe 11x P/E (~15% discount to its three-
year average).
 Net profit was above our expectation, led by tax benefits, despite UPLL
reporting a muted operating performance during the quarter. Factoring in the
same, we maintain our estimates for FY22/FY23 as well as our Neutral rating,
with TP of INR760.

Cons.: Quarterly Earnings Model (incl Arysta) (INR m)

Y/E March FY21 FY22 FY21 FY22 FY22 Var
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE %
Net Sales 78,330 89,390 91,260 1,27,960 85,150 97,844 1,00,237 1,37,214 3,86,940 4,20,445 84,958 0%
YoY Change (%) -0.9 14.4 2.6 14.9 8.7 9.5 9.8 7.2 8.2 8.7 8.5
Total Expenditure 60,540 71,310 69,180 99,570 66,520 77,402 74,553 1,05,363 3,00,600 3,23,838 64,922
EBITDA 17,790 18,080 22,080 28,390 18,630 20,442 25,684 31,850 86,340 96,607 20,036 -7%
Margins (%) 22.7 20.2 24.2 22.2 21.9 20.9 25.6 23.2 22.3 23.0 23.6
Depreciation 5,220 5,330 5,420 5,760 5,510 5,600 5,750 6,100 21,730 22,960 5,450
Interest 5,510 3,430 7,450 4,210 6,070 3,000 5,500 3,200 20,600 17,770 3,500
Other Income 670 750 670 490 480 780 700 500 2,580 2,460 700
Exch. difference on trade rec./payable -1,280 1,410 60 1,880 890 0 0 0 2,070 890 0
PBT before EO expense 9,010 8,660 9,820 17,030 6,640 12,622 15,134 23,050 44,520 57,447 11,786
Extra-Ord expense 1,000 2,110 -780 800 630 0 0 0 3,130 630 0
PBT 8,010 6,550 10,600 16,230 6,010 12,622 15,134 23,050 41,390 56,817 11,786
Tax 1,430 1,120 1,090 3,220 -1,520 2,777 2,573 4,841 6,860 8,670 2,004
Rate (%) 17.9 17.1 10.3 19.8 -25.3 22.0 17.0 21.0 16.6 15.3 17.0
MI & P/L of Asso. Cos. 1,070 800 1,570 2,380 760 896 1,758 2,666 5,820 6,080 1,198
Reported PAT 5,510 4,630 7,940 10,630 6,770 8,950 10,803 15,544 28,710 42,066 8,584 -21%
Adj PAT 6,750 6,653 9,405 11,900 10,153 8,950 10,803 15,544 34,708 45,449 8,584 18%
YoY Change (%) 14.8 50.1 13.3 46.9 50.4 34.5 14.9 30.6 29.9 30.9 32.3
Margins (%) 8.6 7.4 10.3 9.3 11.9 9.1 10.8 11.3 9.0 10.8 10.1
Note: Adjusted PAT = Reported PAT + forex adjustment + exceptional item

2 August 2021 12
 30 July 2021
1QFY22 Results Update | Sector: Telecom

Indus Towers
Estimate change CMP: INR222 TP: INR250 (+13% ) Neutral
TP change
Steady tenancy adds drive in-line EBITDA growth; outlook unclear
Rating change
 Revenue/EBITDA grew 4.7%/3%, led by steady 3k tenancy adds and lower
Motilal Oswal values your support in opex driving 4.1% rental EBITDA growth. Adjusted for one-time lower
the Asiamoney Brokers Poll 2021 for
India Research, Sales, Corporate operating expenses, rental EBITDA was up 2.5% QoQ.
Access and Trading team.  Net tenancy additions at 3k have been stable and improved in the last year,
We request your ballot.
with significantly lower exits reported. However, lower penalty receipts from
VIL in FY23E should taper growth. Subsequently, we estimate a consolidated
FY21–23E revenue/EBITDA CAGR of 5.1%/6.8%. Furthermore, given the weak
long-term outlook, we maintain Neutral.

Bloomberg INDUSTOW IN EBITDA up 3% QoQ (in-line)

Equity Shares (m) 1,897  Proforma consol revenue grew 4.7% QoQ (in-line) to INR67.9b; rental
M.Cap.(INRb)/(USDb) 598.7 / 8 revenue grew 1.7% sequentially (in-line) to INR42b. New tenancy adds came
52-Week Range (INR) 282 / 150 in at a steady 3k, with rental rates up 1% to INR42,730/tenant.
1, 6, 12 Rel. Per (%) -7/-18/-24  Proforma consol EBITDA increased 3% QoQ to INR35.2b (in-line), aided by
12M Avg Val (INR M) 1904 4% revenue growth.
 Rental EBITDA grew 4.1% QoQ to INR35.7b on improved revenue
Financials & Valuations (INR b) performance and decline in repairs (-11% QoQ) and other expenditure (-
Y/E March FY21 FY22E FY23E
32.3% QoQ). Consequently, rental EBITDA margins improved ~200bps to
Net Sales 256.7 277.1 283.7
84.9% in 1QFY22. Energy EBITDA loss widened to INR606m v/s INR238m in
EBITDA 131.0 146.5 149.3
Adj. PAT 49.8 58.6 59.1
4QFY21. Adjusted for a 50% reduction in operating expenses, which may be
EBITDA Margin (%) 51.0 52.9 52.6 reversed, rental EBITDA was up by 2.5% QoQ.
Adj. EPS (INR) 18.5 21.7 21.9  PBT/PAT was up 4.5%/3.8% QoQ to INR18.8b/INR14.2b (in-line).
EPS Gr. (%) -1.0 17.7 1.0  Capex for 1QFY22 stood at INR7.5b (INR12.9b in 4QFY21); the count of
BV/Sh. (INR) 58.9 64.6 70.5 towers was increased by 1772 in 1QFY22 (v/s 3,715 in 4QFY21) to 1,80,997.
Ratios
Net D:E 0.3 0.1 0.0 Highlights from management commentary
RoE (%) 29.6 35.2 32.5  The quarter was impacted by a cyclone in 13 circles, which affected
RoCE (%) 25.0 29.6 28.2 business and cost.
Payout (%) 152.2 74.2 73.5  Opportunities in 5G (telcos already doing a trial-run), building solutions,
Valuations and small cells, among others, remain high; with reducing churn, tenancies
EV/EBITDA (x) 5.1 4.4 4.2 should remain healthy.
P/E (x) 12.6 10.7 10.6
 25% of the increase in trade receivables during the quarter was
P/BV (x) 4.0 3.6 3.3
attributable to timing issues, while the remainder was due to delay in
Div. Yield (%) 10.4 6.0 6.0
FCF Yield (%) 11.3 13.1 12.6
payment by a customer. Indus has sufficient security cover towards the
pending amounts.
Shareholding pattern (%)  Energy margins would be reversed as customers shift from the pass-
As On Jun-21 Mar-21 Jun-20 through model to the fixed energy model, and both parties would benefit
Promoter 69.9 69.9 53.5 from the investments to reduce energy cost.
DII 2.7 2.4 4.9
FII 26.8 27.1 40.6 Valuation and view
Others 0.7 0.6 1.0  The long-term network upgrade opportunity in the Telecom sector towards
FII Includes depository receipts 5G, fiberization, small cells, and indoor coverage would continue to drive
growth in the Telecom Passive Infrastructure industry. Recovery in tenancy
adds and a reduction in exits have also brought about stability in earnings.

2 August 2021 13
  However, FY23E onwards, the exit penalty receipts from VIL would reduce.
Furthermore, its situation remains precarious, weighed by ballooning debt and
its inability to raise funds and improve its liquidity. This remains the biggest
overhang for Indus Towers as VIL remains a large client and the Tower-sharing
business has a limited business case for single-tenancy operations. On the other
hand, the threat from RJio’s increased focus in the Tower Infrastructure space
may weaken Indus’ positioning.
 We factor in a revenue/EBITDA CAGR of 5.1%/6.8% over FY21–23E and arrive at
TP of INR250 – implying EV/tenancy of 2m and EV/EBITDA of 5.7x. The stock
garners healthy dividend yield of 10.4%, which could cushion against a further
downside. Maintain Neutral.

Quarterly Performance
Y/E March FY21 FY22E FY21 FY22E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Revenue from operations 60,859 63,591 67,361 64,918 67,970 68,841 69,702 70,536 2,56,729 2,77,052
YoY Change (%) 64.0 74.8 4.5 2.9 11.7 8.3 3.5 8.7 1,615.8 8.4
Total Expenditure 30,279 32,854 31,837 30,790 32,803 32,440 32,497 32,814 1,25,760 1,30,555
EBITDA 30,580 30,737 35,524 34,128 35,167 36,400 37,205 37,722 1,30,969 1,46,497
YoY Change (%) 61.3 63.6 8.6 19.6 15.0 18.4 4.7 10.5 1,800.9 16.4
Depreciation 12,681 13,088 14,302 13,323 13,198 13,749 13,749 13,749 53,394 54,996
Interest 3,205 3,297 3,900 3,619 3,768 3,786 3,786 3,786 14,021 15,143
Other Income 339 816 1,056 772 569 601 601 632 2,983 2,402
PBT 15,033 15,168 18,378 17,958 18,770 19,466 20,271 20,819 66,537 78,760
Tax 3,827 3,861 4,778 4,320 4,617 4,900 5,102 5,240 16,786 20,198
Rate (%) 25.5 25.5 26.0 24.1 24.6 25.2 25.2 25.2 25.2 25.6
Reported PAT 11,206 11,307 13,600 13,638 14,153 14,566 15,169 15,579 49,751 59,467
Adj PAT 11,206 11,307 13,600 13,638 14,153 14,566 15,169 15,579 49,751 59,467
YoY Change (%) 26.3 17.4 2.2 38.3 26.3 28.8 11.5 14.2 542.9 18.3
E: MOFSL Estimates

Key Performance Indicators

Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Bharti Infratel Standalone
Total Towers (nos) 42,339 43,110 43,510 43,910 44,310 44,710 45,110 45,510 43,910 45,510
Total Co-locations (nos) 75,435 76,565 77,165 77,765 78,065 78,365 78,665 78,965 77,765 78,965
Average sharing factor 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7 1.8 1.8
Sharing revenue per
45,173 47,400 47,874 48,353 48,595 48,837 49,082 49,327 47,048 48,961
operator per month (INR)
Rental EBITDA margin (%) 81.7 81.0 84.8 84.2 86.2 85.2 85.3 85.4 83.0 85.5
Energy EBITDA margin (%) (3.3) (5.4) (2.3) (1.0) (2.3) 2.0 3.0 3.0 (3.0) 1.4
EBITDA Margins (%) 50.2 48.3 52.7 52.6 51.7 52.9 53.4 53.5 51.0 52.9
EBIT Margin (%) 29.4 27.8 31.5 32.0 32.3 32.9 33.7 34.0 30.2 33.0
Adj. PAT Margins (%) 18.4 17.8 20.2 21.0 20.8 21.2 21.8 22.1 19.4 21.1
E:MOFSL Estimates

2 August 2021 14
 1 August 2021
1QFY22 Results Update | Sector: Financials

Bandhan Bank
Estimate change CMP: INR291 TP: INR330 (+13%) Neutral
TP change
Rating change
Asset quality deteriorates; CE remains key monitorable
Motilal Oswal values your support in the
SMA overdue/restructured book increases to ~21%/6.6%
Asiamoney Brokers Poll 2021 for India  Bandhan Bank (BANDHAN) reported 1QFY22 PAT of INR3.7b, above our
Research, Sales, Corporate Access and
estimate – supported by margin improvement (170bp QoQ) and lower
Trading team. We request your ballot.
provisions v/s MOFSLe– even as MFI loans / total AUM declined 9%/~8%
QoQ. On the liability front, the CASA ratio came in stable at ~43%, while the
proportion of retail deposits improved to ~83% (v/s 79% in FY21).
 Slippage was elevated at INR16.8b (annualized slippage ratio of ~9%), with
Bloomberg BANDHAN IN MFI slippage at ~INR10.4b. Therefore, the GNPA ratio increased 137bp QoQ
Equity Shares (m) 1,611 to ~8.2%. Provisions were elevated, with annualized credit cost at 7.2% of
M.Cap.(INRb)/(USDb) 469.2 / 6.3
loans. Thus, the provision coverage ratio (PCR) improved to ~62% of loans
52-Week Range (INR) 430 / 251
1, 6, 12 Rel. Per (%) -12/-19/-53
(v/s 50% in FY21). The restructured book increased sharply to ~INR53b
12M Avg Val (INR M) 4291 (6.6% of total AUM). SMA loans surged to 21%, while a large portion of the
SMA overdue in Assam was eligible for a relief package. As a result, LGDs
Financials & Valuations (INR b) would remain controlled.
Y/E March FY21 FY22E FY23E  Collection efficiency (excluding NPAs) in the MFI portfolio stood at 86%
NII 75.6 90.7 110.2 (~85% for West Bengal) and remains a key monitorable in the near term.
OP 68.6 82.4 100.7
NP 22.1 25.1 52.3
Overall, asset quality remains uncertain, and we estimate credit costs to
NIM (%) 7.6 7.7 7.9 remain elevated at 5.5% of loans for FY22 (similar to FY21 levels). Maintain
EPS (INR) 13.7 15.6 32.5 Neutral.
EPS Gr. (%) -36.5 13.9 108.5
Restructured portfolio grows to 6.6% of AUM; PCR improves to ~62%
BV/Sh. (INR) 108.1 117.8 143.2
ABV/Sh. (INR) 95.7 107.3 134.6  Bandhan reported PAT of INR3.7b (v/s estimate of INR1.8b) despite
Ratios elevated provisions of INR13.7b (annualized credit cost at 7.2% of loans). NII
RoE (%) 13.5 13.8 24.9 growth came in at 17% YoY (4% above estimate) despite sequential decline
RoA (%) 2.1 2.0 3.6 in AUM growth (~8% QoQ), supported by 170bp QoQ expansion in margins
Valuations
to 8.5%. Other income grew 38% YoY, supported by a benign base. PPOP,
P/E(X) 21.3 18.7 9.0
P/BV (X) 2.7 2.5 2.0 thus, grew ~18% YoY to INR18.7b (5% beat).
P/ABV (X) 3.0 2.7 2.2  AUM declined ~8% QoQ (up 8% YoY) on ~9% QoQ decline in the MFI
portfolio and 4% QoQ decline in the housing portfolio. The share of the MFI
Shareholding pattern (%) portfolio stood at ~66% of total AUM (v/s ~67% in FY21). Total
As On Jun-21 Mar-21 Jun-20 disbursements in the MFI portfolio during the quarter stood at INR60b,
Promoter 40.0 40.0 61.0
while collections came in at INR135b, resulting in sequential AUM decline.
DII 2.0 1.9 8.0
FII
 Deposits grew ~28% YoY to INR773b, led by ~48% YoY growth in CASA
35.4 34.9 14.5
Others 22.6 23.2 16.6
deposits to ~INR332b. As a result, the CASA ratio stood at 42.9% (v/s 43.4%
FII Includes depository receipts in FY21). The proportion of retail deposits improved to ~83% (v/s 79% in
FY21).
 On the asset quality front, slippage stood elevated at INR16.8b (annualized
slippage ratio of ~9%). Therefore, the GNPA ratio increased 137bp QoQ to
~8.2%, while the NNPA ratio declined 22bp QoQ to 3.29%. Provision
coverage improved to 61.8% (v/s 50.3% in FY21). Furthermore, the total
restructured book stands at INR40.6b (7.6% of AUM) in the MFI portfolio

2 August 2021 15
 and ~INR12b in the housing portfolio. Thus, the total restructured book stood at
~INR53b (6.6% of AUM). Total SMA overdue increased sharply to ~21% (v/s 8.6%
in FY21 and 16.6% in 3QFY21). Collection efficiency (excluding NPAs) in the MFI
portfolio stood at 86%, with 85% for West Bengal, while it dropped to 67% for
Assam. This was largely due to strict lockdowns and political interference
through the announcement of waivers / relief packages.
 In Assam, the majority of the SMA overdue was eligible for a relief package.
The total Assam portfolio stood at INR63.5b (12% of MFI loans), of which
INR35.8b was eligible for the Assam relief package. Furthermore, in the non-
eligible portfolio of INR27.7b, nearly 76% of the portfolio is making part/full
payments. Thus, INR6.6b of the portfolio is stressed, of which INR4.8b is already
recognized as NPA, resulting in incremental stress of INR1.8b. The total SMA 1/2
overdue in Assam stood at ~INR16b (24.6% of loans). This suggests the majority
of the SMA overdue is eligible for a relief package. The bank is also carrying
provisions of INR8b on this portfolio, which leaves room for the possibility of a
write-back in the Assam portfolio as the relief package is implemented.
Highlights from management commentary
 Slippage from the MFI portfolio was ~INR10.4b, with recoveries and upgrades of
INR5.1b. At the portfolio level, total slippage stood at INR16.8b, while recoveries
and upgrades at ~INR10b.
 The bank has availed CGFMU (a guarantee from the central govt) on the total
portfolio of INR143b.
 Nil disbursements were made in Assam during the quarter. Also, there were nil
disbursements under the credit guarantee scheme.
Valuation and view
BANDHAN reported higher-than-estimated PAT, supported by margin expansion.
This was despite elevated slippages/provisions due to (a) the second COVID wave
(which severely impacted the MFI sector) and (b) the disturbance in credit culture
due to loan waivers. Restructuring/SMA overdue in the MFI book increased sharply.
Provision coverage increased to ~62%, which gives us some comfort. Collection
efficiency in the MFI portfolio stood at 86%, with 85% for West Bengal – closer to
the rest of India. Overall, asset quality remains uncertain as the pool of
restructured/SMA overdue remains high. Thus, we estimate credit cost to remain
elevated at 5.5% of loans for FY22 (similar to FY21 levels). Maintain Neutral, with
revised TP of INR330 (2.4x FY23 ABV).

2 August 2021 16
 Quarterly performance (INR m)
Y/E March FY21 FY22E FY21 FY22E FY22E V/S our
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE Est
Net Interest Income 18,115 19,231 20,717 17,570 21,141 21,777 23,139 24,683 75,634 90,739 20,315 4%
% Change (YoY) 15.0 25.8 34.5 4.6 16.7 13.2 11.7 40.5 19.6 20.0 12.1
Other Income 3,868 3,818 5,533 7,873 5,334 5,858 6,800 8,161 21,091 26,152 4,969 7%
Total Income 21,983 23,049 26,250 25,443 26,474 27,636 29,938 32,844 96,724 1,16,892 25,284 5%
Operating Expenses 6,141 6,773 7,109 8,148 7,763 8,392 8,979 9,401 28,172 34,536 7,398 5%
Operating Profit 15,842 16,275 19,141 17,295 18,711 19,243 20,959 23,443 68,553 82,356 17,886 5%
% Change (YoY) 16.9 24.5 51.4 13.7 18.1 18.2 9.5 35.5 25.9 20.1 12.9
Other Provisions 8,491 3,945 10,687 15,943 13,749 12,683 11,220 11,130 39,066 48,783 15,425 -11%
Profit Before Tax 7,351 12,330 8,454 1,352 4,962 6,560 9,739 12,312 29,487 33,573 2,460 102%
Tax 1,853 3,130 2,128 321 1,231 1,653 2,454 3,122 7,432 8,460 620 99%
Net Profit 5,498 9,200 6,326 1,030 3,731 4,907 7,285 9,191 22,055 25,113 1,840 103%
% Change (YoY) -31.6 -5.3 -13.5 -80.1 -32.1 -46.7 15.2 792.0 -27.1 13.9 -66.5
Operating Parameters
Deposits (INR b) 606 661 712 780 773 819 859 912 780 912 802 -4%
Loans (INR b) 697 733 768 816 748 838 861 890 816 890 836 -11%
Deposit Growth (%) 38.7 34.4 29.6 36.6 27.6 23.9 20.7 17.0 36.6 17.0 32.2 460
Loan Growth (%) 68.1 22.6 26.7 22.5 7.2 14.4 12.1 9.1 22.5 9.1 19.9 1,268
Asset Quality
Gross NPA (%) 1.4 1.2 1.1 6.8 8.2 7.3 7.6 8.0 6.8 8.0 7.4 -78
Net NPA (%) 0.5 0.4 0.3 3.5 3.3 3.6 3.4 2.7 3.5 2.7 4.1 77
PCR (%) 66.6 70.0 76.6 50.3 61.8 52.0 58.0 66.4 50.3 66.4 47.0 -1,484
E: MOFSL estimates

2 August 2021 17
 RESULTS
31 July 2021
FLASH Results Flash | Sector: Agri

PI Industries
BSE SENSEX S&P CNX
52,587 15,763
CMP: INR2,948
Performance below our expectations
Conference Call Details
Date: 2nd Aug 2021  Revenue stood at INR11.9b (est. INR13.1b) in 1QFY22, up 13% YoY.
Time: 3:30 pm IST  EBITDA stood at INR2.5b (est. INR2.7b), up 9% YoY.
Dial-in details:
 EBITDA margin contracted by 80bp YoY to 20.8% (est. 20.3%) due to higher
+91 22 6629 0018
employee and other expenses. Gross margin stood at 43.8% (+170bp YoY).
Employee/other expenses stood at 10%/12.9% (+60bp/+190bp YoY).
 Adjusted PAT grew by 29% YoY to INR1,872m (est. INR2,100m) mainly aided by
higher other income (+238% YoY to INR277m) and lower tax rate (18% v/s 24%
last year).

Quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22 FY22E Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Sales 10,601 11,577 11,621 11,971 11,938 13,958 13,436 14,104 45,770 53,436 13,076 -9
YoY Change (%) 40.6 27.6 36.7 40.0 12.6 20.6 15.6 17.8 36.0 16.7 23.3
Total Expenditure 8,309 8,776 8,866 9,697 9,449 10,541 10,219 10,972 35,648 41,182 10,421
EBITDA 2,292 2,801 2,755 2,274 2,489 3,416 3,217 3,132 10,122 12,254 2,655 -6
Margin (%) 21.6 24.2 23.7 19.0 20.8 24.5 23.9 22.2 22.1 22.9 20.3
Depreciation 427 433 440 448 487 465 500 515 1,748 1,967 455
Interest 96 76 66 44 34 45 45 45 282 169 45
Other Income 82 336 389 442 277 437 437 437 1,249 1,588 437
PBT before EO expense 1,851 2,628 2,638 2,224 2,245 3,343 3,109 3,009 9,341 11,706 2,592 -13
Extra-Ord. expense 0 0 0 0 0 0 0 0 0 0 0
PBT 1,851 2,628 2,638 2,224 2,245 3,343 3,109 3,009 9,341 11,706 2,592
Tax 444 451 682 425 405 635 591 572 2,002 2,203 493
Rate (%) 24.0 17.2 25.9 19.1 18.0 19.0 19.0 19.0 21.4 18.8 19.0
Minority Interest and Profit/Loss of
-48 1 2 1 -32 1 2 1 -44 -28 0
Asso. Cos.
Reported PAT 1,455 2,176 1,954 1,798 1,872 2,707 2,516 2,436 7,383 9,531 2,100
Adj. PAT 1,455 2,176 1,954 1,798 1,872 2,707 2,516 2,436 7,383 9,531 2,100 -11
YoY Change (%) 43.2 76.6 61.4 62.4 28.7 24.4 28.8 35.5 61.7 29.1 44.3
Margin (%) 13.7 18.8 16.8 15.0 15.7 19.4 18.7 17.3 16.1 17.8 16.1

2 August 2021 18
 31 July 2021
1QFY22 Results Update | Sector: Utilities

JSW Energy
Estimate change CMP: INR251 TP: INR180 (-28%) Sell
TP change
Miss on account of higher operating and finance costs
Rating change
Scaling up in Renewables, but current valuations capture upcoming plans
Motilal Oswal values your support in  JSW Energy (JSWE)’s results reflect the impact of higher operating and
the Asiamoney Brokers Poll 2021 for
India Research, Sales, Corporate finance costs, leading to lower profitability. At the consolidated level,
Access and Trading team. EBITDA was down 6% YoY to INR7.0b, 7% below our estimate of INR7.5b.
We request your ballot.
 The co. has set its sights on improving its Renewables footprint, with plans
to reach a total of 10GW of installed capacity by FY25 (v/s 4.5GW currently).
PPAs have been signed for SECI IX (810MW) and captive projects (958MW).
However, even as we build in the successful commissioning of 2.2GW of RE
projects over the next 2–3 years, the current price rightly factors this in. We
Bloomberg JSW IN
Equity Shares (m) 1,640
roll forward our valuation to FY24, with revised Target Price of INR180/sh
M.Cap.(INRb)/(USDb) 411.6 / 5.5 (earlier: INR130/sh). We maintain our Sell rating on the stock.
52-Week Range (INR) 258 / 45
1, 6, 12 Rel. Per (%) 49/233/404 Profit miss on higher-than-expected O&M expenses and interest costs
12M Avg Val (INR M) 573
 JSWE's 1QFY21 EBITDA was down 6% YoY to INR7.0b (v/s our estimate of
INR7.5b). The miss on our no. was on account of higher-than-expected
Financials & Valuations (INR b)
other expenses. Other expenses were up 55% YoY to INR1.3b, weighed by
Y/E MARCH 2021 2022E 2023E
Sales 69.2 85.9 96.3
higher repair and O&M costs.
EBITDA 29.1 30.1 35.5  Interest costs increased 13% QoQ / 21% YoY to INR2.9b (est. INR1.9b) on
Adj. PAT 8.0 9.3 11.2 account of an INR0.9b prepayment and certain write-offs on INR-
EBITDA Margin (%) 42.0 35.0 36.9 denominated loans related to JSW Hydro. Other income was up 62% YoY to
Cons. Adj. EPS (INR) 4.9 5.7 6.8 INR1.3b on higher late payment surcharge (LPS) income. PAT was down 6%
EPS Gr. (%) -4.7 16.9 20.8 YoY to INR2.0b (our est: INR2.6b).
BV/Sh. (INR) 88.5 92.1 96.8  Hydro generation was down 15% YoY, with EBITDA for the segment
Ratios declining 14% YoY to INR2.8b. EBITDA at Barmer declined 15% YoY to
Net D:E 0.5 0.6 0.8
INR2.3b (v/s INR2.8b in the previous year).
RoE (%) 6.1 6.3 7.2
 Net debt increased to INR65.7b (v/s INR62.1b at end-FY21). Receivables
RoCE (%) 7.3 7.3 7.6
declined YoY to INR19b (v/s INR27b in 1QFY21), but were higher than FY21
Payout (%) 41.2 35.3 29.2
Valuations
levels (INR13b).
P/E (x) 51.6 44.2 36.6
P/BV (x) 2.8 2.7 2.6 Management commentary highlights
EV/EBITDA(x) 16.7 16.7 15.3  The co. has entered into a framework agreement with Fortescue for
Div. Yield (%) 0.8 0.8 0.8 collaboration on and the scoping of green hydrogen. With scalability, lower
power costs, and improved efficiency, JSWE expects the cost of green
Shareholding pattern (%) hydrogen to come down and be lower than grey hydrogen over the next 5–
As On Jun-21 Mar-21 Jun-20 7 years.
Promoter 74.7 74.7 74.9
 JSWE has also taken in-principle approval from the board for the
DII 6.5 7.2 9.4
FII
reorganization of its Green (hydrogen) and Grey (thermal) Power
5.9 5.6 6.8
Others 13.0 12.6 9.0 businesses. A sub-committee would evaluate the potential options and
FII Includes depository receipts viability for the separation of these businesses.
 JSWE has signed PPAs for SECI IX (810MW) and captive projects (958MW).
The co. expects SECI X (450MW) to be signed in 2Q. Works at Kutehr are
ongoing, and the co expects the project to be commissioned by 2QFY25.

2 August 2021 19
 Current price bakes in upcoming projects; maintain Sell
 The co. has plans to build a presence in the Renewables space, with plans to
reach 10GW of overall capacity by FY25 (v/s 4.5GW currently). With 1) a healthy
balance sheet position (net debt/equity: 0.5x) and 2) JSWE’s current capacity
generating strong cash flows (~87% of JSWE’s 4.5GW is under long-term PPAs),
the company does have room to grow. However, even as we build in the
successful commissioning of 2.2GW of RE projects over the next 2–3 years, the
current price rightly factors this in. Its plans for green hydrogen are in the initial
stages, and with little clarity on capital commitments and production, we do not
account for it.
 We roll forward our valuations to FY24 and raise our SOTP-based Target Price to
INR180/sh (earlier: INR130sh), capturing a) the addition of Kutehr (240MW), and
b) an increase in value for JSWE’s stake in JSW Steel . However, with the sharp
run-up in the stock over the past three months, the possible value-accretion is
captured more than adequately. Accordingly, we reiterate our Sell rating on the
stock.

Quarterly performance (consolidated) – INR m

Y/E March FY21 FY22 FY21 FY22E FY22 vs Est
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Sales 18,052 19,386 16,089 15,696 17,275 24,244 20,335 24,070 69,222 85,924 21,497 -20
YoY Change (%) -25.2 -8.5 -17.4 -12.5 -4.3 25.1 26.4 53.4 19.1
Total Expenditure 10,596 10,148 10,044 9,368 10,292 14,360 13,756 17,463 40,156 55,871 13,978 -26
EBITDA 7,455 9,238 6,044 6,328 6,984 9,884 6,579 6,607 29,066 30,054 7,519 -7
Margins (%) 41.3 47.7 37.6 40.3 40.4 40.8 32.4 27.4 42.0 35.0 35.0
Depreciation 2,895 2,916 2,916 2,942 2,882 3,053 3,054 3,231 11,669 12,221 3,032 -5
Interest 2,404 2,072 1,912 2,569 2,901 1,892 1,912 2,005 8,957 8,710 1,908 52
Other Income 816 610 504 445 1,320 717 534 416 2,375 2,787 786 68
PBT before EO expense 2,973 4,860 1,720 1,261 2,521 5,656 2,147 1,787 10,814 12,110 3,365 -25
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0 0
PBT 2,973 4,860 1,720 1,261 2,521 5,656 2,147 1,787 10,814 12,110 3,365 -25
Tax 787 1,364 338 270 466 1,244 472 481 2,759 2,664 740
Rate (%) 26.5 28.1 19.7 21.4 18.5 22.0 22.0 26.9 25.5 22.0 22.0
MI and Associates 53 -25 147 -74 43 -1 148 -40 101 150 41
Reported PAT 2,132 3,521 1,235 1,066 2,011 4,412 1,527 1,346 7,955 9,296 2,584 -22
Adj PAT 2,132 3,521 1,235 1,066 2,011 4,412 1,527 1,346 7,955 9,296 2,584 -22
YoY Change (%) -13 0 -4 -2 -6 25 24 26 -5 17 21
Source: MOFSL, Company

2 August 2021 20
 RESULTS
1 August 2021
FLASH 1QFY22 Results Flash | Sector: Financials

Cholamandalam Inv. & Finance

CMP: INR476 Buy
Conference Call Details
One-offs
Linkled
for to
theacall
PAT miss; Muted disbursements; PAT beat despite elevated credit costs
Date: 2nd August 2021  CIFC reported 1QFY22 PAT of INR3.3b (11% beat), up 34% QoQ/down 24%
Time: 10:00am IST YoY. This was on account of strong control over opex (12% below our
estimates) and despite elevated credit costs, which were up 10% QoQ to
INR5.5b (annualized: 3.2%). NIM on AUM (calculated) stood at 7.4% and
was up 20b QoQ.
Bloomberg CIFC IN
 PAT beat, however, belies the poor on-the-ground demand in 1QFY22 and
Equity Shares (m) 820
M.Cap.(INRb)/(USDb) 390.4 / 5.2 gives credence to CIFC’s conservative underwriting. Disbursements were
52-Week Range (INR) 601 / 197 muted (down 55% QoQ / flat YoY) across both Vehicle Finance (VF) and
1, 6, 12 Rel. Per (%) -7/6/83 LAP. We believe the blip in disbursements in 1QFY22 is only transitory and
12M Avg Val (INR M) 2333 could be a function of the widespread lockdowns and CIFC’s core
customer segment’s inability to make a purchase decision. Given the
Financials & Valuations (INR b)
strong demand improvement since the relaxation of the lockdowns and
Y/E March 2021 2022E 2023E
improvement in business activity, we expect a strong pickup in
Total Income 49.4 56.0 57.2
PPP 33.6 38.2 37.1
disbursements from 2QFY22.
PAT 15.1 17.6 21.8  In our view, most of the asset quality deterioration in 1QFY22 could be a
EPS (INR) 18.5 21.5 26.6 result of its ‘earn and pay’ CV customer’s inability to earn in Apr/May’21
EPS Gr. (%) 44.0 16.5 23.4 and to make repayments. This could have led to forward flows into
BV (INR) 117 136 160 Stage2/3. Collection efficiencies improved MoM in Jun’21; we should see a
Valuations gradual improvement in asset quality over the remainder of FY22.
NIM (%) 7.1 7.3 6.8
 CIFC weathered the COVID-19 pandemic well in FY21. Despite high credit
C/I ratio (%) 32.0 31.8 35.1
costs in 1QFY22, we expect these to normalize over the next two quarters –
RoAA (%) 2.2 2.3 2.7
once the lockdowns are further relaxed and activity resumes at full
RoE (%) 17.1 17.0 17.9
Payout (%) 10.8 9.3 9.4 normalcy. The stock trades at 3.0x FY23E P/BV. We look to revise our
Valuations estimates after the analyst call and maintain our BUY rating on the stock.
P/E (x) 25.8 22.1 17.9 Disbursements impacted by slower activity; AUM down 3% QoQ
P/BV (x) 4.1 3.5 3.0  Disbursements stood at INR36.4b, down 55% QoQ, due to muted business
Div. Yield (%) 0.4 0.4 0.5
volumes across product segments. ECLGS disbursements during the
quarter were insignificant (<INR100m).
 The quarterly repayment rate declined to 8.3% (non-annualized) from its
usual run-rate of 9.5–10%. This slightly mitigated the muted disbursements
and led to AUM decline of 3% QoQ / up 7% YoY to INR678b.
 Within VF, while the AUM mix was largely stable QoQ, CIFC witnessed
reduced traction in Used CV / Refinance.
Spreads improve 20bp QoQ and remain healthy; opex controlled
 Yield on loans improved 10bp QoQ to 15.2% despite excess liquidity on
the B/S increasing on a sequential basis.
 CIFC continues to benefit from a declining interest rate environment. Over
the past year, cost of funds (CoF) has fallen 100bp to 7.0%. Going forward,
we think there is limited scope for a significant reduction in CoF.
 As a result, spreads improved 20bp QoQ / 120bp YoY to 8.2% in 1QFY22.
 Total opex was down ~28% QoQ / up 7% YoY to INR3.7b, led by strong
control over other operating expenses (up 18% YoY / down 12% QoQ).

2 August 2021 21
 Asset quality shows signs of stress buildup; CIFC upfronted provisions
 GS2 + GS3 deteriorated 10.7% QoQ. Restructuring under RBI OTR 2.0 stood at
INR26.8b (~4% of EAD). The asset classification benefit extended by the RBI
under “OTR 2.0” was used to the extent of 3.86%, and the remainder was
classified under Stage 3. Total restructured advances outstanding stood at ~5.4%
of EAD and have been prudently classified under Stage 2. (For further details on
the restructuring, see Exhibit 1.)
 CIFC released INR4b in management overlay provisions (primarily Stage 1
COVID provisions, where customers continued to be in Stage 1 on a sequential
basis) in 1QFY22. The company utilized this towards higher provisions (as per
regular norms) on customers moving from Stage 1/2 to Stage 3.

Valuation and view

 We expect strong recovery in disbursements from 2QFY22. Also, we expect
asset quality to show gradual recovery – given the pickup in business activity
and improvement in collections in the second half of Jun’21. Recovery in asset
quality may be quicker if states such as Kerala, West Bengal, and Odisha (which
are still reeling under relatively stringent lockdowns) start showing an
improvement in business activity. The stock trades at 3.0x FY23E P/BV. We look
to revise our estimates after the earnings call on 2nd Aug 2021. We maintain our
BUY rating on the stock.

Exhibit 1: Movement in restructured pool of advances

Total restructuring done INR m % of EAD
Till 4QFY21 (A) 14,626 2.2%
In 1QFY22 (B) 26,816 4.0%
Till 1QFY22 (C = A + B) 41,442 6.2%
Outstanding restructured pool (D) 36,360 5.4%
Exited out of restructured pool or moved into Stage 3 (E = C - D) 5,082 0.8%

2 August 2021 22
 CIFC: Quarterly Performance (INR m)
Y/E March FY21 FY22
1QFY22E v/s Est.
1Q 2Q 3Q 4Q 1Q
Interest Income 20,710 23,580 24,263 23,690 23,712 23,334 2
Interest Expenses 11,307 11,852 11,404 11,197 11,038 10,805 2
Net Interest Income 9,403 11,728 12,859 12,493 12,674 12,530 1
YoY Growth (%) 14.1 35.3 38.6 37.2 34.8 33.3
Other Income 427 818 786 924 958 659
Total Income 9,830 12,546 13,644 13,417 13,632 13,189 3
YoY Growth (%) 4.3 23.0 26.0 32.1 38.7 34.2
Operating Expenses 3,458 3,551 3,688 5,138 3,705 4,219 -12
Operating Profit 6,372 8,996 9,956 8,279 9,927 8,969 11
YoY Growth (%) 7.5 45.5 51.3 34.8 55.8 40.8
Provisions & Loan Losses 562 3,176 4,446 5,035 5,519 5,000 10
Profit before Tax 5,810 5,820 5,511 3,244 4,407 3,969 11
Tax Provisions 1,501 1,501 1,422 812 1,139 1,020 12
Net Profit 4,309 4,319 4,089 2,432 3,268 2,949 11
YoY Growth (%) 37.1 40.7 5.2 470.1 -24.2 -31.6
Key Parameters (Calc., %)
Yield on loans 14.6 15.7 15.4 14.6 14.6
Cost of funds 8.0 8.0 7.4 7.1 7.0
Spread 6.7 7.8 8.0 7.5 7.7
NIM 6.6 7.8 8.2 7.7 7.8
C/I ratio 35.2 28.3 27.0 38.3 27.2
Credit cost 0.4 1.9 2.6 2.9 3.2
Tax rate 25.8 25.8 25.8 25.0 25.9
Balance Sheet Parameters
Disbursements (INR b) 36 65 79 81 36
Growth (%) -58.1 -12.5 6.0 42.5 1.3
AUM (INR b) 635 672 687 700 678
Growth (%) 10.4 13.3 13.1 15.6 6.8
AUM mix (%)
Vehicle finance 73.7 73.3 72.6 72.0 71.4
Home Equity 20.6 20.6 21.0 21.1 21.4
Home loans & Others 5.6 6.0 6.3 6.9 7.2
Borrowings (INR b) 585 606 620 637 632
Growth (%) 6.2 8.4 12.9 15.9 8.0
Asset Quality Parameters
GS 3 (INR B) 20.0 19.0 24.9 27.1 45.5
GS 3 (%) 3.3 3.0 3.8 4.0 6.8
NS 3 (INR B) 11.7 10.9 14.0 15.1 29.3
NS 3 (%) 2.0 1.7 2.2 2.3 4.6
PCR (%) 41.6 43.0 43.5 44.3 35.5
Total ECL (%) 2.4 2.6 3.1 3.6 4.4
Vehicle finance AUM mix (%)
LCV 21.2 20.9 20.4 20.8 20.8
Cars & MUV 17.1 17.0 17.0 17.0 17.4
3W & SCV 6.2 6.2 5.9 5.7 5.5
Used CV 25.7 25.9 26.9 26.7 26.1
Tractor 8.7 9.2 9.6 9.8 10.4
HCV 11.9 11.1 10.1 9.7 9.4
CE 5.3 5.5 5.8 6.1 6.2
Two wheeler 3.9 4.2 4.3 4.3 4.2
E: MOFSL estimates

2 August 2021 23
 30 July 2021
1QFY22 Results Update | Sector: Logistics

Container Corporation
Estimate change CMP: INR644 TP: INR780 (+21%) Buy
TP change
Rating change
DFC commissioning to drive earnings growth
Earnings outlook positive on account of improving margins
Motilal Oswal values your support in the  Container Corporation (CCRI) reported surprisingly strong 1QFY22 earnings
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and – reported EBITDA at INR4.3b beat our estimate by 31%, led by better-
Trading team. We request your ballot. than-expected realization and lower-than-expected LLF provisioning.
 We believe the commissioning of the Dedicated Freight Corridor (DFC) is a
big positive for CCRI as this would aid margin expansion through higher
double stacking and improved asset utilization.
 We raise our FY22E/FY23E EPS estimate by 9%/7%. We maintain our Buy
rating on expected volume and margin benefits from DFC.
Bloomberg CCRI IN
Equity Shares (m) 609 Better realization drives 31% beat on EBITDA
M.Cap.(INRb)/(USDb) 392.6 / 5.3
 Revenue/EBITDA/PAT grew 52%/173%/313% YoY to
52-Week Range (INR) 748 / 352
1, 6, 12 Rel. Per (%) -8/35/4
INR18.1b/INR4.3b/INR2.5b and came in +5%/+31%/+34% v/s our estimate.
12M Avg Val (INR M) 1652 This was led by better realization and lower-than-expected LLF
provisioning.
Financial Snapshot (INR b)  Blended realization improved 12% YoY to INR18,226/TEU (+4% v/s our
Y/E MARCH 2021 2022E 2023E
estimate). EXIM/Domestic realization stood at INR16,032/INR28,347 per
Sales 63.8 75.0 93.1
EBITDA 10.3 17.0 21.3 TEU, up 12%/3% YoY and 3%/3% above our estimate.
Adj. PAT 5.9 10.5 13.6  Total volumes rose 35% YoY to 991,746 TEUs v/s our est. of 978,726 TEUs,
EBITDA Margin (%) 16.2 22.6 22.9 with EXIM/domestic volumes at 815,077/176,669 TEUs (+30%/+69% YoY).
Adj. EPS (INR) 9.6 17.2 22.4
 The EBITDA margin stood at 24% (est 19%).
EPS Gr. (%) (42.0) 78.7 30.1
BV/Sh. (INR) 167 174 183  Land Licensing Fee (LLF) provisioning during the quarter stood at INR1.14b
Ratios (v/s INR2.2b in 4QFY21).
Net D:E (0.4) (0.4) (0.5)
RoE (%) 5.8 10.1 12.5 Highlights from management commentary
RoCE (%) 5.8 10.4 12.8  The company has revised down the LLF liability for FY22 to INR3.8b (v/s
Payout (%) 55.0 60.0 60.0
INR4.5b earlier) in consultation with the land revenue department.
Valuations
P/E (x) 66.9 37.4 28.8  It plans to enter a 35-year lease agreement with the Railways for its 24
P/BV (x) 3.8 3.7 3.5 terminals by making a 99% upfront payment for the market value of the
EV/EBITDA(x) 34.2 20.3 15.7 land, which should be in the range of INR60–70b. The upfront payment
Div. Yield (%) 0.7 1.6 2.1
FCF Yield (%) 1.5 3.0 3.8 would be financed through debt (~INR35b) and cash on the books.
 The management guided at 12%/100% YoY growth in FY22 revenue/PAT.
Shareholding pattern (%)  The increase in realizations is sustainable on account of 1) a rise in loaded
As On Jun-21 Mar-21 Jun-20 running and 2) higher terminal usage charges.
Promoter 54.8 54.8 54.8  DFC has commenced operations from 29th July. This is expected to reduce
DII 16.3 16.5 14.4 the running time and attract more traffic, driving the shift in volumes from
FII 24.9 24.0 26.7
road to rail. It would also aid margins – as lower run times and higher loads
Others 4.0 4.7 4.2
would lead to higher double stacking and higher asset utilization.
FII Includes depository receipts
Valuation and view
 CCRI is a direct play on the upcoming large rail freight infrastructure (DFC).
 We expect a ~44% CAGR in EBITDA over FY21–23E, led by healthy volume
growth and margin improvement on operating leverage benefits.
 The stock trades at 15.7x FY23E EV/EBITDA. We derive DCF-based TP of
INR780/share based on a WACC of 11.5%.

2 August 2021 24
 Quarterly earnings model (INR m)
Y/E March FY21 FY22 FY21 FY22E Var.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QFY22E (%)
Net Sales 11,891 15,027 17,538 19,393 18,075 17,845 19,289 19,775 63,850 74,984 17,234 5
YoY Change (%) -27.4 -13.6 14.8 23.6 52.0 18.7 10.0 2.0 -1.4 17.4 44.9
EBITDA 1,590 3,129 3,719 1,890 4,335 3,976 4,270 4,391 10,329 16,972 3,299 31
Margin (%) 13.4 20.8 21.2 9.7 24.0 22.3 22.1 22.2 16.2 22.6 19.1
YoY Change (%) -60.6 -26.5 0.0 -60.2 172.6 27.1 14.8 132.4 -38.3 64.3 107.5
Depreciation 1,260 1,272 1,364 1,324 1,303 1,345 1,345 1,387 5,219 5,380 1,345
Interest 85 85 84 86 139 113 113 86 340 450 75
Other Income 588 713 822 732 555 700 700 1,045 2,855 3,000 700
PBT before EO expense 833 2,486 3,092 1,212 3,448 3,218 3,512 3,963 7,625 14,142 2,579 34
Extra-Ord. expense 0 0 0 834 0 0 0 0 834 0 0
PBT 833 2,486 3,092 379 3,448 3,218 3,512 3,963 6,791 14,142 2,579 34
Tax 217 610 714 217 899 837 913 1,011 1,758 3,660 671
Rate (%) 26.0 24.5 23.1 57.4 26.1 26.0 26.0 25.5 25.9 25.9 26.0
Reported PAT 616 1,876 2,379 162 2,549 2,382 2,599 2,952 5,033 10,482 1,908 34
Adj. PAT 616 1,876 2,379 995 2,549 2,382 2,599 2,952 5,867 10,482 1,908 34
YoY Change (%) -73.7 -26.2 9.4 -67.5 313.4 27.0 9.2 196.6 -42.0 78.7 209.6
Margin (%) 5.2 12.5 13.6 5.1 14.1 13.3 13.5 14.9 9.2 14.0 11.1

2 August 2021 25
 1 August 2021
1QFY22 Results Update | Sector: Financials

Shriram Transport Finance

Estimate change CMP: INR1,391 TP: INR1,600 (+15%) Buy
TP change
Healthy disbursements; NIM and credit costs surprise negatively
Rating change
Elevated credit costs led to a large PAT miss; disbursements remain strong
Motilal Oswal values your support in  PAT declined by 77% QoQ and 47% YoY to INR1.7b in 1QFY22 (~71% miss).
the Asiamoney Brokers Poll 2021 for
India Research, Sales, Corporate Credit cost was elevated at INR14.4b (~4.9% annualized).
Access and Trading team.  Reported NIM at 6.4% was impacted by higher interest expenses and
We request your ballot.
excess liquidity on the Balance Sheet. Disbursements were strong (down
15% QoQ), albeit a little surprising, even in a COVID-disrupted quarter.
 Restructuring was minimal, with the total restructured pool contained
~72bp. It carries COVID-related provisions of INR28.5b (2.4% of AUM).
 Looking at its disbursement/collections trajectory, we estimate a strong
Bloomberg SHTF IN FY22E, 10% AUM growth, and a RoA/RoE of ~1.8/11%. Management on
Equity Shares (m) 227 the call mentioned that it has restarted evaluating the merger process
M.Cap.(INRb)/(USDb) 371.2 / 5 within the group companies, which may be a near-term overhang till the
52-Week Range (INR) 1535 / 556
1, 6, 12 Rel. Per (%) 3/-6/64
final decision/scheme is announced. We maintain our Buy rating, with a
12M Avg Val (INR M) 3866 TP of INR1,600/share at 1.5x FY23E P/BV.

Financials & Valuations (INR b) Disbursements were unusually strong relative to peers; CE at 94% in Jun’21
Y/E March 2021 2022E 2023E  Disbursements fell 15% QoQ to INR127b, but must be viewed in the light
Net Inc. 83.8 88.4 100.3
of a very strong 4QFY21. AUM grew ~2% QoQ and 7% YoY to INR1.19t.
PPP 64.0 66.1 74.5
PAT 24.9 25.0 35.1
Used CVs continued to be a focus area, while New Vehicle and Business
EPS (INR) 98 92 130 Loans continued to be a drag on AUM growth.
EPS Gr. (%) -10.9 -6.1 40.8  Collection efficiency (CE) stood at 92%/87%/94% in Apr’21/May’21/Jun’21.
BV/Sh (INR) 849 961 1,064 The repayment rate in 1QFY22 stood at 38% v/s ~45% in 4QFY21.
Ratios
NIM (%) 7.7 7.4 7.5
C/I ratio (%) 23.7 25.2 25.7 Deterioration in S2 and S3 was against minimal restructuring; S3 PCR up
RoA (%) 2.0 1.8 2.4 210bp QoQ in 1QFY22
RoE (%) 12.7 10.6 12.9  Rather than restructure, SHTF thought it prudent to allow the GS2/GS3 to
Payout (%) 22.0 24.0 24.0 deteriorate by ~260bp/110bp QoQ to 14.5%/8.2%. It raised PCR on GS3 by
Valuations
~210bp to 44.2%. Write-offs and termination losses stood at INR3.6b.
P/E (x) 14.2 15.1 10.7
P/BV (x) 1.6 1.4 1.3  SHTF made additional COVID-19 provisions of INR2.61b. A large part of
Div. Yield (%) 1.3 1.3 1.9 this overlay was in the Passenger Vehicle segment. Total management
overlay on account of COVID-19 stood at INR28.53b (~240bp of AUM).
Shareholding pattern (%)  In 1QFY22, it restructured outstanding advances of INR3.43b (~30bp of
As On Jun-21 Mar-21 Jun-20 AUM). The restructuring pipeline is not very high, and it may end up doing
Promoter 25.1 26.5 26.3 an additional INR3b in 2QFY22. Total restructured pool (including OTR 1.0
DII 11.7 6.9 2.3
and 2.0) stood at INR8.56b (~72bp of AUM).
FII 57.5 61.0 63.7
Others 5.7 5.6 7.8
FII Includes depository receipts Excess liquidity impacts margin; reported NIM declines by 42bp QoQ to 6.4%
 The decline in reported NIM was weighed by: a) high liquidity (INR171b),
and b) higher interest expenses because of some borrowings, which were
booked at the fag-end of Mar’21.
 The management said it will bring down excess liquidity to three months
of repayments by Dec'21 and this can significantly reduce the negative
carry and improve margin.

2 August 2021 26
 Key highlights from the management commentary
 The collection trend in Jul'21 is better than Jun'21. The management expects
rollbacks from Stage 2/3 in 2QFY22.
 It feels the pent-up demand is quite high and expects to benefit from the same
in Aug-Sep'21 disbursements.

Valuation and view

Over the last three years, the company has diversified into newer sources of
borrowing, such as retail NCDs and ECBs. The share of ECBs in total borrowings has
increased meaningfully to 21% (from 13% six quarters back). It was also able to tap
the debt market in the last four quarters. While demand was weak over the last two
years, strong signs of a demand revival was seen in 2HFY21. We expect this to
continue into FY22 as well. We now model in ~12% AUM CAGR for SHTF over FY21-
24E.

Despite elevated credit costs in 1Q, it has still guided for less than 2.5% credit costs
in FY22. This has perhaps to do with the SRTO customer segment that largely
deploys its vehicle in essential services. The company would have budgeted a very
healthy CE trajectory in the coming quarters to give such guidance on credit costs.

We remain cautious of any newer COVID wave, which can derail this momentum
and impact asset quality. We cut our FY22E/FY23E EPS estimate by ~25%/13% to
factor in higher credit costs and a lower topline. We maintain our Buy rating, with a
TP of INR1,600 per share at 1.5x FY23E P/BV.
Over the last three years, the company has diversified into newer sources of
borrowing, such as retail NCDs and ECBs. The share of ECBs in total borrowings has
increased meaningfully to 21% (from 13% six quarters back). It was also able to tap
the debt markets in the last four quarters. While demand was weak over the last
two years, strong sign of a demand revival was seen in 2HFY21 and we expect this to
continue in FY22 as well. We now model an AUM CAGR of ~12% for SHTF over FY21-
FY24E.

2 August 2021 27
 Quarterly performance (INR m)
Y/E March FY21 FY22 1Q Act v/s
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY22E Est. (%)
Interest Income 41,026 42,997 43,815 44,033 44,793 45,689 47,059 48,512 1,71,281 1,86,053 44,363 1
Interest expenses 22,672 22,629 22,363 22,879 24,981 24,856 25,602 26,187 90,543 1,01,626 22,764 10
Net Interest Income 18,354 20,368 21,452 21,154 19,812 20,833 21,458 22,325 80,739 84,427 21,599 -8
Change YoY (%) -6.4 2.0 7.5 9.4 7.9 2.3 0.0 5.5 1.0 4.6 17.7
Other Operating Income 383 480 569 907 1,688 700 700 712 2,923 3,800 925 83
Other Income 38 35 48 39 34 45 50 55 160 183 45 -25
Net Income 18,775 20,883 22,069 22,100 21,534 21,578 22,208 23,091 83,821 88,410 22,569 -5
Change YoY (%) -7.1 -0.9 4.9 10.1 14.7 3.3 0.6 4.5 0.9 5.5 20.2
Operating Expenses 3,823 5,125 5,432 5,484 4,791 5,310 5,847 6,357 19,857 22,305 5,618 -15
Operating Profit 14,952 15,759 16,637 16,617 16,743 16,268 16,361 16,734 63,964 66,105 16,951 -1
Change YoY (%) -3.1 -0.7 2.0 12.8 12.0 3.2 -1.7 0.7 2.6 3.3 13.4
Provisions 10,646 6,555 6,747 7,236 14,396 6,500 6,000 5,759 31,184 32,655 9,000 60
Profit before Tax 4,306 9,204 9,890 9,380 2,347 9,768 10,361 10,975 32,780 33,450 7,951 -70
Tax Provisions 1,105 2,359 2,613 1,831 648 2,461 2,611 2,777 7,908 8,496 2,036 -68
Net Profit 3,201 6,846 7,277 7,549 1,699 7,306 7,750 8,198 24,873 24,954 5,916 -71
Change YoY (%) -49.5 -10.5 -17.2 238.0 -46.9 6.7 6.5 8.6 -0.6 0.3 84.8
Key Operating Parameters (%)
Yield on loans (Cal) 16.0 16.6 16.7 16.4 16.5 16.6 16.6 16.6 15.8
Cost of funds (Cal) 9.6 9.5 9.3 9.0 9.4 9.3 9.4 9.4 9.0
Spreads (Cal) 6.4 7.1 7.4 7.4 7.0 7.2 7.2 7.2 6.8
NIMs (Reported) 6.4 6.7 6.9 6.8 6.4 6.7
Credit Cost 3.8 2.3 2.4 2.5 4.9 2.2 1.9 1.8 3.0
Cost to Income Ratio 20.4 24.5 24.6 24.8 22.2 24.6 26.3 27.5 23.7
Tax Rate 25.7 25.6 26.4 19.5 27.6 25.2 25.2 25.3 24.1
Balance Sheet Parameters
AUM (INR B) 1,118 1,133 1,149 1,172 1,193 1,214 1,250 1,288 1,172
Change YoY (%) 5.1 4.8 5.5 6.8 6.8 7.1 8.8 9.8 6.8
Loans (INR B) 1,034 1,043 1,059 1,083 1,091 1,117 1,150 1,191 1,083
Change YoY (%) 4.6 3.6 4.0 5.9 5.5 7.0 8.7 10.0 5.9
Disbursements (INR B) 10 65 126 150 127 140 160 168 350
Change YoY (%) -92.0 -51.2 10.5 37.8 1,192.1 116.0 26.9 12.5 -26.8
Borrowings (INR B) 953 959 963 1,062 1,053 1,074 1,106 1,124 1,062
Change YoY (%) 5.1 5.9 5.2 12.5 10.6 12.0 14.9 5.8 12.5
Loans/Borrowings (%) 108.5 108.8 110.0 102.0 103.6 104.0 104.0 106.0 102.0
Debt/Equity (x) 5.3 4.7 4.6 4.9 4.5 4.9
Asset Quality Parameters (%)
GS 3 (INR B) 89.3 82.2 81.7 83.0 96.6 82.9
Gross Stage 3 (% on
8.0 7.3 7.1 7.1 8.2 7.1
Assets)
NS 3 (INR B) 54.9 49.5 48.0 48.1 53.9 48.1
Net Stage 3 (% on
5.2 4.7 4.5 4.4 4.9 4.4
Assets)
PCR (%) 38.6 39.7 41.2 42.1 44.2 42.0
ECL (%) 6.5 6.6 6.7 6.8 7.6 6.5
Return Ratios (%)
ROAA (Rep) 1.1 2.2 2.3 2.3 0.5 2.0
ROAE (Rep) 7.1 14.2 14.1 14.2 3.0 12.7
E: MOFSL Estimates

2 August 2021 28
 31 July 2021
1QFY22 Results Update | Sector: Healthcare

Laurus Labs
Estimate change CMP: INR641 TP: INR800 (+25%) Buy
TP change
Formulation/Synthesis outshines; API underperforms
Rating change
Building of Non-ARV drivers/capacity on track
Motilal Oswal values your support in the  Laurus Labs (LAURUS) 1QFY22 earnings missed our expectations. The robust
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and performances in the Finished Dosage Formulations (FDF) and Synthesis
Trading team. We request your ballot. segments were more than offset by a muted show in the Active Pharma
Ingredients (API) segment. That said, in addition to having an established
business in the Anti-Retroviral (ARV) segment, LAURUS is on track to build
new levers for future growth in Contract Development and Manufacturing
Operations (CDMO) and Non-ARV API/Formulation.
Bloomberg LAURUS IN  We tweak our FY22E/FY23E EPS estimate, factoring in a) moderation in the
Equity Shares (m) 532
API business, b) strong traction in Synthesis and FDF, and c) enhanced
M.Cap.(INRb)/(USDb) 343.8 / 4.6
capacity in the Bio business. We continue to value LAURUS at 24x 12M
52-Week Range (INR) 698 / 152
forward earnings to arrive at TP of INR800. We remain positive on LAURUS
1, 6, 12 Rel. Per (%) -6/72/266
on the back of a) the scale-up in Biologics as well as Synthesis CDMO, b) its
12M Avg Val (INR M) 1921
product development/addition capacity in the Non-ARV segment, and c) a
healthy order book for the Non-ARV API business. Reiterate BUY.
Financials & valuations (INR b)
Y/E MARCH FY21 FY22E FY23E
Sales 48.1 62.7 75.9 Superior product mix drives profitability as well as YoY earnings growth
EBITDA 15.5 20.1 25.0  Revenue grew 31% YoY to INR12.8b (est. INR13.6b) in 1QFY22.
Adj. PAT 9.8 12.9 16.4
 The YoY growth in 1QFY22 was primarily supported by a) 95% YoY growth in
EBIT Margin (%) 28.0 28.1 28.9
Cons. Adj. EPS (INR) 18.3 24.1 30.5 Custom Synthesis (CS) to INR2b (15% of sales) and b) 48% YoY growth in
EPS Gr. (%) 285.4 31.3 26.8 Formulation sales to INR5.2b (41% of sales) – led by better demand in the
BV/Sh. (INR) 48.7 69.2 95.2 LMIC region and portfolio expansion in the developed markets.
Ratios
Net D:E 0.5 0.4 0.2  API revenue edged up (5% YoY) to INR5.5b (43% of sales). Oncology API
RoE (%) 45.0 41.0 37.3 grew 16% YoY to INR600m. The ARV-API segment rose 23% YoY to INR4.1b,
RoCE (%) 30.6 30.3 30.7 partially offset by a sharp fall (43% YoY) in Other API to INR769m.
Payout (%) 15.1 15.1 15.1
Valuations
 The gross margin (GM) expanded 250bp YoY to 56.7% on a superior product
P/E (x) 35.3 26.9 21.2 mix. The EBITDA margin expanded 230bp YoY to 30.9% (est. 31.8%) on
EV/EBITDA (x) 23.2 17.9 14.2 account of a better gross margin. Lower employee costs (down 150bp as a
Div. Yield (%) 0.4 0.5 0.6
FCF Yield (%) 0.1 0.8 1.9
percentage of sales) were offset by higher other expenses (up 140bp as a
EV/Sales (x) 7.5 5.7 4.7 percentage of sales).
 EBITDA grew 42% YoY to INR4b (est. INR4.3b).
Shareholding pattern (%)  PAT grew 41% YoY to INR2.4b on strong sales growth and superior margins.
As On Jun-21 Mar-21 Jun-20
Promoter 27.3 27.5 32.1 Highlights from management commentary
DII 4.2 3.6 8.8
 LAURUS remains committed to a USD1b revenue target for FY23.
FII 21.5 20.7 16.1
 There was no one-off in Custom Synthesis during the quarter; thus,
Others 47.0 48.3 43.0
FII includes depository receipts
performance is expected to sustain going forward.
 The debottlenecking benefit would be visible from 2QFY22.
 YoY growth in the FDF segment was driven by robust demand in LMIC and
product additions in the developed markets.
 The ARV sales share is expected to reduce to 33% by FY25 (from 66%
currently).

2 August 2021 29
  LAURUS filed two ANDAs in 1QFY22, taking the total US filings to 28 ANDAs.
 It in-licensed six products, three of which have been launched and three of
which would be launched in the coming quarters.
 LAURUS validated two additional products for the EU market, with an upside
expected FY23 onwards.

Valuation and view

 We tweak our EPS estimates for FY22/FY23, factoring in a) benefit from the
debottlenecking exercise for FDF, b) enhanced filing pace / product approvals,
which would benefit Non-ARV formulations in the developed markets, c)
capacity buildup for the Non-ARV segment, d) better prospects in the Synthesis
segment and scale-up in the Enzymes/Biologics segment, and e) the
normalization of the API business.
 We expect an earnings CAGR of 29% over FY21–23E, led by a sales CAGR of
42%/42%/9% in the FDF/Synthesis/API segment and ~80bp margin expansion.
We value LAURUS at 24x 12M forward earnings to arrive at TP of INR800.
 LAURUS is on track to build pillars of growth in CDMO (Synthesis/Biologics) and
Non-ARV Formulation/API through a) product development and b) ensuring the
timely availability of manufacturing capacity/capabilities. Reiterate Buy.

Consolidated - Quarterly Earnings Model (INR m)

Y/E March FY21 FY22E FY21 FY22E vs Est
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Sales 9,743 11,388 12,884 14,119 12,785 14,060 16,675 19,130 48,135 62,650 13,640 -6.3
YoY Change (%) 77.0 59.9 76.6 68.3 31.2 23.5 29.4 35.5 70.0 30.2 40.0
Total Expenditure 6,960 7,650 8,621 9,397 8,832 9,631 11,272 12,805 32,628 42,539 9,303
EBITDA 2,783 3,739 4,263 4,722 3,954 4,429 5,403 6,326 15,507 20,111 4,338 -8.9
YoY Change (%) 220.8 171.3 187.7 146.2 42.0 18.5 26.7 34.0 174.7 29.7 55.9
Margins (%) 28.6 32.8 33.1 33.4 30.9 31.5 32.4 33.1 32.2 32.1 31.8
Depreciation 488 510 516 536 585 600 650 698 2,051 2,533 560
EBIT 2,295 3,229 3,747 4,186 3,368 3,829 4,753 5,628 13,456 17,578 3,778 -10.8
YoY Change (%) 460.8 258.9 272.3 187.2 46.7 18.6 26.9 34.5 256.7 30.6 64.6
Margins (%) 23.6 28.4 29.1 29.6 26.3 27.2 28.5 29.4 28.0 28.1 27.7
Interest 151 137 174 219 266 275 290 216 682 1,047 230
Other Income 71 51 69 45 59 60 65 67 237 251 50
PBT before EO expense 2,215 3,143 3,642 4,012 3,161 3,614 4,528 5,479 13,011 16,782 3,598 -12.2
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0 0
PBT 2,215 3,143 3,642 4,012 3,161 3,614 4,528 5,479 13,011 16,782 3,598 -12.2
Tax 497 720 913 1,043 744 842 1,019 1,255 3,173 3,860 827
Rate (%) 22.4 22.9 25.1 26.0 23.6 23.3 22.5 22.9 24.4 23.0 23.0
Reported PAT 1,718 2,423 2,729 2,969 2,416 2,772 3,509 4,225 9,838 12,922 2,770 -12.8
Adj PAT 1,718 2,423 2,729 2,969 2,416 2,772 3,509 4,225 9,838 12,922 2,770 -12.8
YoY Change (%) 1,038.0 328.4 271.4 169.6 40.7 14.4 28.6 42.3 285.4 31.3 61.3

2 August 2021 30
 31 July 2021
1QFY22 Results Update | Sector: Chemicals

Deepak Nitrite
Estimate changes
TP change
CMP: INR2,039 TP: INR2,350 (+15% ) Buy
Rating change Focus on advance/high-value products intensifies
 Deepak Nitrite (DN) reported a beat on our estimates, driven by better-
Motilal Oswal values your support in the than-expected margins in Phenolics and margins expansion in Basic
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and Chemicals. The EBIT margin for the Fine & Specialty and Performance
Trading team. We request your ballot. Products segments contracted.
 Despite the huge beat on our estimate, we continue to highlight the risk
of overall margin contraction from the normalization of phenolics
product prices. As a result, we build in an EBITDA margin of 27% in
FY22E (up from 26% earlier) and 26% for FY23/24E. That said, strong
Bloomberg DN IN
Equity Shares (m) 136
domestic demand for phenolics, with higher exports to countries such as
M.Cap.(INRb)/(USDb) 278.1 / 3.7 the US and China, could keep product prices and margins strong in this
52-Week Range (INR) 2085 / 567 segment – presenting an upside risk to our estimates.
1, 6, 12 Rel. Per (%) 13/96/191
 At the 50th AGM, the management guided that the company aims to
12M Avg Val (INR M) 1641
transition from being a chemical intermediates company to an advance
Financials & Valuations (INR bn)
products one (leaning towards life sciences – the need of the hour). On
Y/E March FY21 FY22E FY23E this path:
Sales 43.6 54.4 62.3  DN would continue to focus on bringing more products under the Fine &
EBITDA 12.5 14.6 16.3 Specialty segment and close the gaps in the production value chain.
PAT 7.8 9.5 10.7 Around 125 acres of land at Dahej (called Dahej-II) would be developed to
EPS (INR) 56.9 69.4 78.2 focus primarily on advance specialty/intermediates in the Life Sciences
EPS Gr. (%) 27.0 21.9 12.7
segment, especially in fluorination.
BV/Sh.(INR) 172 231 297
 In addition to the capex plans of INR4b per year in Deepak Nitrite, the
Ratios
board has approved further investments in Deepak Phenolics (DPL): (a)
Net D:E 0.2 0.1 (0.0)
RoE (%) 39.6 34.4 29.6 INR3.5b in specialty intermediates and (b) INR7b in downstream
RoCE (%) 29.4 29.4 26.9 products (for the higher production of solvents). It aims to be the largest
Payout (%) 9.7 15.0 15.0 player in Solvents and capitalize on import substitution.
Valuations  We reiterate that the increased focus on advance/high-value products
P/E (x) 35.8 29.4 26.1 would aid margin expansion and sustainability for the company – of which
P/BV (x) 11.9 8.8 6.9 investors are most wary. This would further result in re-rating of multiples
EV/EBITDA (x) 22.7 19.2 17.0
for the stock – as the mix of specialty/complex chemistry products
Div. Yield (%) 0.3 0.5 0.6
FCF Yield (%) 2.8 1.5 2.1 increases.
 Even on a conservative margin assumption, we forecast an EBITDA/PAT
Shareholding pattern (%) CAGR of 14–16% over FY22–24E. The stock trades at relatively cheaper
As On Jun-21 Mar-21 Jun-20 valuations (v/s peers in our Coverage Universe) of 26x FY23E EPS and 17x
Promoter 45.7 45.7 45.7 FY23E EV/EBITDA. Valuing the company at 28x Sep’23E EPS, we arrive at
DII 10.4 11.6 13.5 TP of INR2,350. Maintain Buy.
FII 11.4 11.9 11.5
Others 32.5 30.8 29.3 Beat on our estimates …
FII Includes depository receipts  Revenue came in at INR15.3b (+20% est.; +126% YoY / +4% QoQ), driven
by a continually robust performance from the Phenolics segment.
 Revenue for Phenolics grew 7% QoQ to INR10b (+202% YoY) on the back
of sturdy product prices in 1QFY22.
 Revenue for Basic Chemicals was up 2% QoQ (+70% YoY) to INR2.5b.
 Revenue for Fine & Specialty was flat QoQ at INR2.1b (+48% YoY).

2 August 2021 31
  Revenue for Performance Products at INR0.9b, missed our estimate (-14% est.;
+55% YoY / +8% QoQ).
 EBITDA posted a beat of 27% at INR4.5b in 1QFY22 (+149% YoY / -1% QoQ). The
gross margin saw a 200bp QoQ drop to 46%. The EBITDA margin contracted
150bp QoQ to 29.6%. PAT stood at INR3b (+30% est.; +206% YoY / +4% QoQ).
…driven by margin expansion in Phenolics and Basic Chemicals
 EBIT in Phenolics rose 8% QoQ to INR2.9b, with the margin at 29% (+100bp
QoQ). The margin continued to witness an uptick for eight quarters on the trot.
 EBIT in Basic Chemicals grew 20% QoQ to INR0.85b, led by a spike in margins to
34% (+500bp QoQ – the highest ever after 4QFY18).
 The EBIT margin in Performance Products stood at just 2%, continuing its
sequential drop (declining for the last six quarters now).
 EBIT in Fine & Specialty stood at INR0.7b, with 600bp QoQ margin contraction to
33% (v/s 44% in FY21). In percentage terms, contribution from this segment to
the total revenue shrank further to 13% (from 18% in FY21), with EBIT
contribution of 15% (v/s 30% in FY21).

Valuation and view

 The management guided that it would continue to look at first-time products in
the country, which would facilitate import substitution, with further integration
in current processes. The company has been investing in building up the market
intelligence team, which studies opportunities in newer and existing markets.
 The IPA expansion and captive power plant are expected to get commissioned
by end-1HFY22. The captive power plant would make DPL more competitive in
this segment.
 Further recovery in demand for OBA and DASDA (i.e., performance chemicals) is
expected over FY22, while demand for agrochemical and personal care products
continues to be robust.
 Despite a capex plan of INR18b over the next three years, it is expected to turn
net cash positive by FY23E, with FCF generation of INR17.4b over FY22–24E.
We maintain a Buy rating, with one of the best ROE profiles under our coverage.

Consolidated - Quarterly Snapshot (INR m)

Y/E March FY21 FY22 FY21 FY22E FY22 Var (%)
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE
Gross Sales 6,745 9,873 12,347 14,632 15,262 13,180 13,179 12,821 43,598 54,443 12,770 20%
YoY Change (%) -35.8 -1.6 10.3 38.6 126.3 33.5 6.7 -12.4 3.1 24.9 89.3
Gross Margins (%) 51% 51% 45% 48% 46% 45% 45% 45% 48% 45% 46%
EBITDA 1,816 2,757 3,350 4,547 4,515 3,513 3,475 3,074 12,470 14,576 3,548 27%
Margins (%) 26.9 27.9 27.1 31.1 29.6 26.7 26.4 24.0 28.6 26.8 27.8
Depreciation 310 312 339 565 436 448 448 460 1,526 1,792 379 15%
Interest 247 196 157 142 109 88 70 92 742 358 114 -4%
Other Income 68 40 49 59 83 41 51 43 215 218 59 39%
PBT before EO expense 1,326 2,288 2,903 3,899 4,053 3,019 3,008 2,564 10,417 12,643 3,115 30%
PBT 1,326 2,288 2,903 3,899 4,053 3,019 3,008 2,564 10,417 12,643 3,115 30%
Tax 337 587 737 998 1,026 760 757 639 2,659 3,182 784
Rate (%) 25.4 25.6 25.4 25.6 25.3 25.2 25.2 24.9 25.5 25.2 25.2
Reported PAT 990 1,702 2,166 2,901 3,026 2,259 2,251 1,925 7,758 9,461 2,331 30%
YoY Change (%) -24.8 13.2 38.2 68.4 205.8 32.7 3.9 -33.6 27.0 21.9 135.6
Margins (%) 14.7 17.2 17.5 19.8 19.8 17.1 17.1 15.0 17.8 17.4 18.3

2 August 2021 32
 31 July 2021
1QFY22 Results Update | Sector: Capital Goods

BHEL
Estimate change CMP: INR59 TP: INR40 (-33%) Sell
TP change
Rating change Another loss making quarter as execution disappoints
No respite in sight, land monetization may not be feasible
Motilal Oswal values your support in the
Asiamoney Brokers Poll 2021 for India  BHEL reported another loss-making 1QFY22, with revenue coming in 12%
Research, Sales, Corporate Access and below our expectation. It reported a net loss of INR4.5b, slightly higher than
Trading team. We request your ballot.
our expected loss of INR4.3b. If not for the provision reversal of INR1.8b,
reported losses would have been even higher.
 Of the total order book of INR1.02t, the executable order book stands at
INR708b. BHEL is favorably placed in a few L1 orders. However, these orders
are yet to finalize into final awarding. With commodity prices surging since
Bloomberg BHEL IN
BHEL was declared L1 in these orders, we see a higher chance of margin
Equity Shares (m) 3,482
M.Cap.(INRb)/(USDb) 207 / 2.8
turning adverse in new orders as well.
52-Week Range (INR) 80 / 27  Higher fixed cost continues to dent operating performance. The company is
1, 6, 12 Rel. Per (%) -10/51/22 yet to show a significant improvement in pending receivables, with total
12M Avg Val (INR M) 3469 debtors at INR309b in 1QFY22 (v/s INR313b at the end of last year). In spite
of the management’s ongoing efforts, we expect receivables to remain
Financials & Valuations (INR b) elevated in the near future. The management revealed that BHEL only has
Y/E Mar 2021 2022E 2023E right to use its land bank and can’t monetize the same directly. This leaves
Sales 173.1 218.2 247.1 out the land monetization option value for any upside case in BHEL. We
EBITDA -31.4 -4.6 10.3
PAT -27.2 -6.9 4.2
maintain our estimates, TP of INR40/share, as well as our Sell rating.
EBITDA (%) -18.1 -2.1 4.2
EPS (INR) -7.8 -2.0 1.2 Operating performance disappoints
EPS Gr. (%) NA NA NA
 Losses continue: Revenue grew 46% YoY to INR29b and was 12% below our
BV/Sh. (INR) 76.1 74.1 74.4
Ratios expectation. Gross margin declined by 90bp to 33.2%. Other expenses stood
Net D/E -0.1 -0.1 0.0 at just 2.8% of sales, on a provision reversal of INR1.8b. Despite lower other
RoE (%) -10.3 -2.7 1.6 expenses, operating loss stood at INR4.7b, slightly higher than our estimate.
RoCE (%) -8.8 -1.5 2.6
Payout (%) (0.0) - 70.0 Net loss came in at INR4.5b v/s our expectation of INR4.3b.
Valuations  Segmental highlights: a) Power: Revenue rose 89% YoY to INR21.2b in
P/E (x) NA NA 49.1 1QFY22. Operating loss stood at INR1.8b (v/s a loss of INR5.7b YoY).
P/BV (x) 0.8 0.8 0.8
EV/EBITDA (x) NA NA 19.6
Industry: Revenue fell 22% YoY to INR6.1b in 1QFY22. Operating loss stood
Div Yield (%) 0.0 - 1.4 at INR1.2b (v/s a loss of INR2.5b YoY).
FCF Yield (%) 1.5 (0.8) (4.4)  Order book fell 6% YoY INR1,021b, with an order book-to-revenue ratio of
~6x. Segment-wise order book is as follows: Power – INR846b, Industry –
Shareholding pattern (%) INR112b, and international orders – INR63b.
As On Jun-21 Mar-21 Jun-20
 Order inflows stood ~INR32.5b in 1QFY22 (Power – INR25b, Industry –
Promoter 63.2 63.2 63.2
DII 12.4 12.5 18.1
INR6.9b, and international orders – INR0.6b).
FII 4.7 4.5 5.1
Others 19.8 19.9 13.6 Highlights from the management commentary
FII Includes depository receipts  BHEL is favorably placed in: a) 2*660MW NTPC Talcher main plant package,
b) steam generators (700MW, 12 units) for nuclear Power plants based on
PHWR technology, and c) a number of FGD, boiler modifications, and
emission control orders. It is L1 in NPCIL tender for the 6*700 MW turbine
island package (~INR108b).
 Total receivable stood at INR309b v/s INR313b at the end of FY21, with
Centre/state/private/export forming 36%/43%/13%/8%.

2 August 2021 33
  The management said the land parcels are not owned by the company, but has
the right to use these land parcels. This implies that the company can’t monetize
its land bank directly as the ownership is with state governments.
 Of the INR1.02t order book, the executable order book stands at INR708b. BHEL
is working hard to bring down the breakeven revenue level to INR300b. In our
view, even a revenue base of INR300b is difficult to achieve with its current
order book and ordering pipeline.

Valuation and view

 BHEL continues to struggle with: a) a weak ordering environment in the Power
sector, b) higher receivables (over INR300b), and c) huge FY21 employee cost
(~31% of sales). In FY21, working capital stood elevated ~101% of sales
(99%/63% of sales FY20/FY19), weighed by a higher inventory and receivables,
and poor execution.
 We maintain our earnings estimate (FY22E to be loss making) and our TP of
INR40 (FY23E EV/EBITDA multiple of 12x) on the stock. We see further downside
risk to order inflow and our revenue assumption for FY23E/FY24E. We maintain
our Sell rating.

Quarterly performance (INR b)

Y/E March FY21 FY22E FY21 FY22E FY22E Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE
Sales (Net) 19.9 37.0 44.5 71.7 29.0 46.5 52.0 90.7 173.1 218.2 33.0 -12.1%
Change (%) -56.1 -40.6 -21.6 42.0 45.7 25.8 16.8 26.5 -19.4 26.1 65.8
EBITDA -10.6 -6.3 -1.8 -12.6 -4.7 -1.8 -1.2 3.3 -31.4 -4.6 -4.4 NA
Change (%) NA -337.0 -154.6 NA NA NA NA NA NA NA NA
As a percentage of Sales -53.2 -17.1 -4.0 -17.6 -16.3 -4.0 -2.4 3.6 -18.1 -2.1 -13.4
Interest 1.1 0.9 0.9 0.8 0.8 0.9 0.9 1.1 3.7 3.7 0.9
Depreciation 1.2 1.2 1.1 1.3 1.1 1.2 1.2 1.3 4.7 4.8 1.2
Other Income 1.0 1.0 0.9 0.8 0.7 0.9 0.9 1.3 3.7 3.9 0.8
PBT -12.0 -7.4 -2.9 -13.8 -5.9 -3.0 -2.4 2.2 -36.1 -9.2 -5.7 NA
Tax -3.0 -1.8 -0.6 -3.5 -1.5 -0.8 -0.6 0.5 -8.9 -2.3 -1.4
Effective Tax Rate (%) 25.0 24.6 21.1 25.4 25.0 25.2 25.2 24.7 24.8 25.2 25.2
Reported PAT -9.0 -5.6 -2.3 -10.3 -4.5 -2.3 -1.8 1.6 -27.2 -6.9 -4.3 NA
Change (%) NA -569.0 -245.4 NA NA NA NA NA NA NA NA
Adj. PAT -9.0 -5.6 -2.3 -10.3 -4.5 -2.3 -1.8 1.6 -27.2 -6.9 -4.3 NA
Change (%) NA -569.0 -245.4 NA NA NA NA NA NA NA NA

2 August 2021 34
 30 July 2021
1QFY22 Results Update | Sector: Financials

LIC Housing Finance

Estimate change CMP: INR410 TP: INR525 (+28%) Buy
TP change
Rating change Miss across the board; asset quality surprises negatively
 PAT declined by 81% YoY (78% miss) to INR1.5b in 1QFY22. Higher than
Motilal Oswal values your support in the
Asiamoney Brokers Poll 2021 for India estimated finance costs of INR36b led to a 13% miss on our NII estimate.
Research, Sales, Corporate Access and Elevated credit costs of INR8.3b (est. INR4.5b) added to the large PAT miss.
Trading team. We request your ballot.
Large wage revisions undertaken in 1QFY22 have led to a spike in operating
expenses, leading to a weak operating performance (PPOP miss of 23% at
INR10.3b. Adjusted for wage revision, it was a 13% miss).
 It delivered a healthy loan growth in Home loans. However, LAP and
Bloomberg LICHF IN developer book growth has slowed down. Collection efficiency improved to
Equity Shares (m) 505 98% in Jun’21.
M.Cap.(INRb)/(USDb) 207.2 / 2.8  Asset quality surprised negatively, with a sharp rise (+44% QoQ) in GS3 to
52-Week Range (INR) 542 / 256
INR138b. GS3 rose to 5.9% v/s 4.1% QoQ. The GS3 coverage ratio declined
1, 6, 12 Rel. Per (%) -13/-10/16
12M Avg Val (INR M) 2174 by 650bp QoQ to ~33%. Total restructured pool stood at INR53.5b (2.3% of
loans), of which a large part (INR47b) is Builder loans.
Financials & Valuations (INR b)  While asset quality pain has been pronounced, we draw comfort from
Y/E March 2021 2022E 2023E LICHF’s ability to source low-cost liabilities (due to its strong parentage),
NII 52.4 52.4 58.9 favorable Housing Finance cycle, and 11-12% RoE. Valuation at 0.9x FY23E
PPP 46.9 45.1 52.4
P/BV is attractive. Even though LICHF is still working with the stock
PAT 27.3 19.6 29.0
EPS (INR) 54.2 35.6 52.7
exchanges to resolve issues around the capital raise, we have it factored
EPS Gr. (%) 13.8 -34.3 48.1 into our estimates. We reiterate our BUY rating with a TP of INR525/share
BV/Sh (INR) 398 436 479 (1.1x FY23E BVPS).
Ratios
NIM (%) 2.4 2.2 2.2
Second COVID wave impacts business activity; disbursements impacted
C/I ratio (%) 13.0 15.8 13.0
RoAA (%) 1.2 0.8 1.1
 Home loan/LAP/Builder loan disbursements stood at
RoE (%) 14.4 8.9 11.5 INR76.5b/INR7.65b/INR2.4b and were 40%/35%/20% of 4QFY21 levels.
Payout (%) 15.7 17.5 17.5  Total loan book was flat QoQ at INR2.32t (up 11% YoY). Loan mix in 1QFY22
Valuations was tilted slightly in favor of Home loans ~78.3%.
P/E (x) 7.6 11.5 7.8
 The share of disbursements from cities other than the top seven continues
P/BV (x) 1.0 0.9 0.9
Div. Yield (%) 2.1 1.3 1.9
to decline at 56% v/s 61%/58% in 3Q/4QFY21.

Shareholding pattern (%) Big surprise on credit cost, Stage 3 PCR fell sharply to 33%
As On Jun-21 Mar-21 Jun-20  The sharp spike in GS3 assets at INR138b (up 44% QoQ) has led to a higher
Promoter 40.3 40.3 40.3 provisioning charge. Stage 3 PCR fell to 33% v/s 40% QoQ.
DII 15.6 16.8 10.6  There was a sharp deterioration in asset quality across product segments.
FII 28.8 28.2 34.3 Developer/Project GNPA deteriorated to 24.4% (down 640bp QoQ). Our
Others 15.3 14.7 14.8
estimates suggest that in addition GS3, its Developer/Project book has at
FII Includes depository receipts
least 25% of restructured advances and ~16% in Stage 2.
 Total restructured advances stood at INR53.5b (of which ~88% were loans
to Corporate/Developers). Against this, LICHF has made additional
provisions of INR5b. Around INR1.5b of COVID-related provisions were
booked in 1QFY22. There were no write-offs in the quarter.

2 August 2021 35
 Spreads under pressure
 Yields (calculated) declined by ~36bp QoQ/118bp YoY to 8.3%, while cost of
funds inched up 13bp QoQ to 6.9% (down 108bp YoY). As a result, spreads
compressed by 48bp QoQ to 1.45% (up 10bp YoY).
 Finance charges of INR36b (up 5% QoQ) booked in 1QFY22 surprised us, as the
incremental cost of funds raised at 5% is down 12bp QoQ. The share of CP
borrowings fell 200bp down to 4%, offset by a 100bp gain each in the share of
bank/NCD borrowings at 26%/55%.

Highlights from the management commentary

 The management expects a higher disbursement volume run-rate in 2QFY22
(similar to 4QFY21).
 Once every four years, there is a wage revision. LICHF has paid INR1.3b in
arrears in 1QFY22. It expects a 15% YoY rise in employee expenses in FY22.

Valuation and view

 We expect the capitalization/leverage concerns for LICHF to be ironed out once
they are able to resolve the stalemate on the equity capital raise with the
exchanges. However, asset quality has surprised us negatively. Given its
parentage, it has been able to raise debt capital at low rates, which should keep
margin healthy in a highly competitive environment.
 We cut our FY22E EPS estimate by ~40% to factor in higher opex (because of the
one-time impact from wage revisions) and elevated credit costs. While we
expect FY22E to be impacted, we estimate ~1.1%/12% RoA/RoE in FY23E, after
having penciled in the likely impact of the preferential allotment of fresh equity
shares to the promoter. We maintain our Buy rating with a TP of INR525/share
(1.1x FY23E BVPS).

2 August 2021 36
 Quarterly performance (INR m)
Y/E March FY21 FY22 FY22E
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE Var. (%)
Interest Income 49,851 49,382 48,761 48,978 48,253 48,776 49,751 51,711 1,96,971 1,98,490 47,859 1
Interest Expenses 37,645 37,002 35,951 33,929 35,500 35,855 36,572 38,192 1,44,526 1,46,119 33,250 7
Net Interest Income 12,206 12,380 12,810 15,049 12,753 12,921 13,179 13,518 52,445 52,371 14,609 -13
YoY Growth (%) 3.3 -1.1 2.2 32.7 4.5 4.4 2.9 -10.2 8.8 -0.1 19.7
Fees and other income -76 437 479 666 338 250 275 337 1,506 1,200 390 -13
Net Income 12,130 12,817 13,289 15,715 13,091 13,171 13,454 13,856 53,951 53,571 14,999 -13
YoY Growth (%) 0.7 0.3 3.7 40.0 7.9 2.8 1.2 -11.8 10.4 -0.7 23.7
Operating Expenses 1,367 1,615 1,686 2,347 2,815 1,696 1,813 2,131 7,015 8,455 1,640 72
Operating Profit 10,763 11,202 11,603 13,368 10,276 11,475 11,641 11,724 46,936 45,117 13,359 -23
YoY Growth (%) -2.0 -1.2 1.5 49.5 -4.5 2.4 0.3 -12.3 9.9 -3.9 24.1
Provisions and Cont. 587 1,109 1,907 9,848 8,346 5,500 3,500 3,069 13,450 20,415 4,500 85
Profit before Tax 10,177 10,093 9,696 3,520 1,929 5,975 8,141 8,656 33,486 24,702 8,859 -78
Tax Provisions 2,002 2,184 2,426 -469 395 1,240 1,689 1,802 6,142 5,126 1,860 -79
Net Profit 8,175 7,909 7,270 3,989 1,534 4,735 6,452 6,854 27,343 19,576 6,999 -78
YoY Growth (%) 33.9 2.4 21.7 -5.3 -81.2 -40.1 -11.3 71.8 13.8 -28.4 -14.4
Key Operating Parameters (%)
Yield on loans (Cal.) 9.49 9.34 9.00 8.66 8.31 8.32 8.28 8.27 9.03 8.26
Cost of funds (Cal.) 7.94 7.82 7.45 6.73 6.86 6.89 6.86 6.89 7.24 6.72
Spreads (Cal.) 1.55 1.52 1.54 1.93 1.45 1.43 1.42 1.38 1.79 1.54
Margin (Cal.) 2.32 2.34 2.36 2.66 2.20 2.20 2.19 2.16 2.33 2.13
Credit Cost (Cal.) 0.11 0.21 0.35 1.74 1.44 0.94 0.58 0.49 0.62 0.85
Cost-to-Income Ratio 11.3 12.6 12.7 14.9 21.5 12.9 13.5 15.4 13.0 15.8
Tax Rate 19.7 21.6 25.0 -13.3 20.5 20.8 20.8 20.8 18.3 20.8
Balance Sheet Parameters
Loans (INR b) 2,098 2,133 2,202 2,320 2,325 2,364 2,440 2,561 2,281 2,522
Change YoY (%) 6.1 5.1 5.7 10.2 10.8 10.8 10.8 10.4 9.7 10.6
Indiv. Disb. (INR b) 34 116 160 212 84 120 160 210 522 574
Change YoY (%) -63.9 -0.8 30.7 94.0 147.4 3.1 0.0 -0.7 17.8 10.0
Borrowings (INR b) 1,883 1,903 1,955 2,076 2,064 2,097 2,165 2,270 2,079 2,270
Change YoY (%) 8.8 6.4 5.7 8.6 9.6 10.2 10.7 9.4 8.6 9.2
Loans/Borrowings (%) 111.5 112.1 112.6 111.8 112.7 112.7 112.7 112.8 109.7 111.1
Asset Quality Parameters
GS 3 (INR b) 59.4 59.5 59.0 95.6 137.9 95.6 133.4
Gross Stage 3 (% on Assets) 2.8 2.8 2.7 4.1 5.9 4.1 5.2
NS 3 (INR b) 32.7 31.8 29.5 57.4 91.8 57.4 74.7
Net Stage 3 (% on Assets) 1.6 1.5 1.4 2.5 4.0 2.5 3.0
PCR (%) 44.9 46.6 49.9 39.9 33.5 39.9 44.0
ECL (%) 1.27 1.30 1.34 1.71 2.03 1.71 2.03
Loan Mix (%)
Home loans 76.8 76.5 77.0 77.9 78.3 77.9 78.3
LAP 16.2 16.3 15.8 15.3 15.0 15.3 15.0
Non-Individual loans 7.0 7.2 7.2 6.8 6.7 6.8 6.7
Borrowing Mix (%)
Banks 20.0 22.8 24.5 25.0 26.0 25.0 26.0
NCD 62.0 59.9 56.7 54.0 55.0 54.0 55.0
Subsidiary Debt 1.0 0.5 0.5 1.0 1.0 1.0 1.0
Deposits 8.0 8.6 8.7 9.0 9.0 9.0 9.0
NHB 5.0 5.0 4.7 5.0 5.0 5.0 5.0
CP 4.0 3.1 4.8 6.0 4.0 6.0 4.0
E: MOFSL estimates

2 August 2021 37
 31 July 2021
1QFY22 Results Update | Sector: Financials

AAVAS Financiers
Estimate change CMP: INR2,530 TP: INR2,820 (+12%) Neutral
TP change
Rating change
Ability to recover and bounce back will be put to test
Increase in 1+dpd transitory in our view
Motilal Oswal values your support in
the Asiamoney Brokers Poll 2021 for  PAT grew 20% YoY, but fell 32% QoQ, to INR599m (in line) in 1QFY22. NII
India Research, Sales, Corporate rose 14% QoQ and 29% YoY, while operating profit fell 10% QoQ (7% beat).
Access and Trading team.
We request your ballot. However, higher-than-expected credit cost of INR170m (est. INR110m) led
to the in line PAT.
 Sharp deterioration in 1+dpd to 12.7% (up 620bp QoQ), relative to some of
its other peers who have reported their 1QFY22 numbers, could be
indicative of the stress that was seen at the time of demonetization and
Bloomberg AAVAS IN higher proportion of self-employed customers in the mix.
Equity Shares (m) 78  Given the strength of this franchise, we remain convinced that it can script
M.Cap.(INRb)/(USDb) 198.1 / 2.7 a gradual improvement in its 1+dpd and GS3 once collections further
52-Week Range (INR) 3068 / 1285 improve, led by a recovery in economic activity. Our estimates are largely
1, 6, 12 Rel. Per (%) -6/26/54
12M Avg Val (INR M) 246
unchanged and we are building in ~50bp/35bp of credit costs in
FY22E/FY23E. We maintain our Neutral rating with a TP of INR2,820/share,
Financials & Valuations (INR b) given that the stock trades at rich valuations of 6.3x FY23E P/BV.
Y/E March 2021 2022E 2023E
Disbursements decent, but could have been better; AUM up 21% YoY
NII 5.2 6.4 7.7
PPP 3.9 4.6 5.7  Disbursements fell 54% QoQ to INR4.63b. Unlike preceding quarters, the
PAT 2.9 3.4 4.2 disbursement mix was unusually skewed towards other Mortgage loans.
EPS (INR) 36.9 42.9 54.0 Disbursements in 1QFY22 included 15% of MSME loans (v/s 7.3% in
EPS Gr. (%) 15.9 16.3 26.0 1QFY21), which were classified as other Mortgage loans. However, the
BV/Sh. (INR) 306 349 403
company clarified that this skew was more pronounced in Apr-May’21 and
Ratios (%)
NIM 7.6 7.7 7.6 got normalized towards its usual mix in Jun’21.
C/I ratio 39.7 40.0 38.3  The repayment rate declined to ~13% v/s the trend rate of 16-17%.
Credit cost 0.54 0.48 0.35 Mitigated by a slightly lower run-off, AUM was up 21% YoY and 2% QoQ.
RoA 3.5 3.4 3.6  It is important to note here that AAVAS did not undertake any direct
RoE 12.9 13.1 14.4
assignments in 1QFY22, which led to nil upfront assignment income.
Payout (%) 0.0 0.0 0.0
Valuation  AAVAS entered Odisha and opened its first branch. Odisha has low
P/E (x) 68.4 58.8 46.7 penetration in the low-ticket Housing Finance segment, and anyone
P/BV (x) 8.2 7.2 6.3 establishing distribution here could have a first-mover advantage.
Div. Yield (%) 0.0 0.0 0.0
Minor deterioration in asset quality; restructuring pool at 1.2%
Shareholding pattern (%)  AAVAS reported a Gross Stage 3 of 1.14% (up 16bp QoQ). PCR on Stage 3
As On Jun-21 Mar-21 Jun-20 assets fell to 25% (down 220bp QoQ), but provisions on S1/S2 loans
Promoter 50.1 50.1 53.5 (including restructuring provisions) rose 18bp.
DII 8.1 8.5 13.0  There was a sharp deterioration in 1+dpd, which stood at 12.7% (up 620bp
FII 32.1 31.9 24.5
QoQ) and is more indicative of the stress that was seen at the time of
Others 9.7 9.6 9.1
FII Includes depository receipts
demonetization. The management said a very high proportion of its
customers, who missed their EMIs in Apr-May’21, paid their EMI in Jun’21.
This suggests that while there is less likelihood of forward flows,
improvement in 1+dpd will be gradual over the next three quarters.
 AAVAS has restructured loans worth INR1.15b (1.2% of AUM) under RBI
OTR 2.0. At the end of RBI OTR 2.0 restructuring window, the management
said that the total restructured pool could potentially be less than 2%.

2 August 2021 38
  It utilized part of the COVID-19 management overlay in 1QFY22. Aggregate
COVID-19 overlay declined to INR148m (~15bp of AUM/~19bp of on book loans)
v/s INR190m QoQ.

Passing on lower CoF benefit to stem BT-OUT to peers

 Cost of borrowings fell 15bp QoQ. While reported yields declined by ~17bp
QoQ, spreads were broadly stable. On a calculated basis, yields/spreads were
actually up ~15bp/30bp QoQ.
 AAVAS reduced its base rate by 15bp from 1 Apr'21 onwards. Contrary to what
others may interpret, we don’t see yield pressures for AAVAS. Given its
relatively better ability to borrow from NHB (1QFY22 incremental borrowing
cost: 4.62%), it saw its blended CoF decline by ~15bp. AAVAS is passing on the
benefits in its CoF to retain customers and ensure that the BT-OUT to peers
remains low.

Highlights from the management commentary

 The management expects a gradual reduction in 1+dpd, based on its experience
from the first COVID wave last year.
 AAVAS was not able to process 100% of the restructuring pipeline because of
time constraints. It expects total restructured pool at less than 2% by the end of
the restructuring window for OTR 2.0.

Valuation and view

 AAVAS has a sustainable business model, which it can utilize to scale up profitably
across geographies over the long term. Its technology adoption and relentless
focus on asset quality have made it stand out among peers. While there appears
to be a transient stress build-up in asset quality (particularly in the elevated
1+dpd), we expect AAVAS to start moving towards the more sustainable 1+dpd of
~5% from 2Q onwards and reach there by FY22-end, provided there are no more
disruptions from any new COVID wave. Disbursements (though slightly skewed
towards MSME and other Mortgage loans) were decent, but we expected slightly
better. With no undue pressure on spreads, levers to further reduce the opex
ratio, and ability to deliver superior asset quality, with benign credit costs, AAVAS
is well positioned to take advantage of the huge opportunity in the low-ticket
Housing Finance segment.
 While transitory disruptions because of COVID-19 cannot be completely ruled out,
it has all the ingredients in place to deliver calibrated AUM growth (by penetrating
deeper in existing geographies and expanding to newer states). AAVAS can
sustainably grow its AUM by ~20% over the next five years. Over the next three
years, we expect productivity improvements from past investments in
people/branches and build up in operating leverage to lead to ~40bp reduction in
the cost ratio to 2.7%. While its RoE is slightly muted because of low leverage, we
model in a RoA/RoE of 3.6%/14.4% in FY23E. We maintain our Neutral rating, with
a TP of INR2,820/share (7x FY23E P/BV).

2 August 2021 39
 Quarterly performance (INR m)
Y/E March FY21 FY22 1Q v/s
FY21 FY22
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY22E Est.
Interest Income 2,286 2,430 2,577 2,470 2,630 2,709 2,831 3,127 9,764 11,298 2,519 4
Interest Expenses 1,118 1,144 1,169 1,152 1,128 1,162 1,220 1,392 4,582 4,902 1,134 -1
Net Income 1,168 1,287 1,408 1,318 1,502 1,548 1,611 1,735 5,182 6,396 1,385 8
YoY Growth (%) 15 23 32 12 29 20 14 32 20 23 19
Other income 49 274 523 443 90 305 447 450 1,289 1,292 145 -38
Total Income 1,218 1,560 1,932 1,761 1,592 1,853 2,058 2,185 6,471 7,688 1,530 4
YoY Growth (%) 4 6 34 28 31 19 7 24 18 19 26
Operating Expenses 526 634 665 742 673 730 800 875 2,566 3,078 668 1
YoY Growth (%) 6 21 6 14 28 15 20 18 12 20 27
Operating Profit 692 927 1,267 1,019 919 1,123 1,258 1,310 3,905 4,610 862 7
YoY Growth (%) 2 -3 55 40 33 21 -1 28 23.0 18.1 25 0.0
Provisions 60 81 162 70 170 90 80 61 371 401 110 55
Profit before Tax 632 846 1,105 950 749 1,033 1,178 1,249 3,533 4,209 752
Tax Provisions 131 184 249 74 150 207 236 249 638 842 158 -5
Profit after tax 501 662 856 876 599 826 943 1,000 2,895 3,367 594 1
YoY Growth (%) 11 -13 26 46 20 25 10 14 16.2 19
Key Parameters (%)
Yield on loans 13.6 13.5 13.4 13.2 13.0 13.2 12.7
Cost of funds 8.1 7.9 7.7 7.4 7.3 7.8 7.0
Spread 5.5 5.6 5.7 5.8 5.7 5.4 5.8
NIM - YTD 6.2 6.8 7.4 7.7 6.9 7.6 7.7
Credit cost 0.3 0.4 0.8 0.3 0.7 0.4 0.3 0.2 0.5 0.5
Cost-to-Income Ratio
(%) 43.2 40.6 34.4 42.1 42.3 39.4 38.9 40.1 39.7 40.0
Tax Rate (%) 20.8 21.8 22.5 7.8 20.1 20.0 20.0 20.0 18.1 20.0
Balance Sheet parameters
AUM (INR b) 79.4 83.7 88.2 94.5 96.2 99.7 104.2 114.1 94.5 114.1
Change YoY (%) 24.7 23.9 22.6 21.3 21.2 19.2 18.1 20.7 21.3 20.7
AUM mix (%)
Home loans 73.4 73.5 73.4 73.5 72.7 73.5 72.8
Mortgage loans 26.6 26.5 26.6 26.5 27.3 26.5 27.2
Loans (INR b) 63.6 66.9 69.7 75.2 77.6 79.8 83.4 91.3 75.2 91.3
% of AUM 80.1 79.9 79.0 79.6 80.7 80.0 80.0 80.0 21.7 21.4
Disbursements (INR b) 2.1 6.7 7.6 10.1 4.6 7.4 8.5 12.4 26.6 33.0
Change YoY (%) -68.3 3.5 1.5 17.5 117.1 11.0 11.3 22.6 -9.3 24.0
Borrowings (INR b) 56.8 60.3 64.8 63.5 64.9 68.1 71.5 77.6 63.5 77.6
Change YoY (%) 42.9 42.2 18.6 14.3 13.0 10.3 22.3 18.6 22.3
Borrowings/Loans (%) 89.3 90.1 93.0 84.3 83.6 85.4 85.8 85.0 84.3 85.0
Debt/Equity (x) 2.6 2.7 2.8 2.6 2.6 2.7 2.7 2.8 2.6 2.8
Asset Quality (%)
GS 3 (INR m) 294.8 312.7 704.6 739.1 894.2
G3 (%) 0.46 0.5 1.0 0.98 1.14
NS 3 (INR m) 205.4 211.5 503.8 537.7 670.4
NS3 (%) 0.3 0.3 0.7 0.7 0.9
PCR (%) 30.3 32.4 28.5 27.2 25.0
ECL (%) 0.4 0.5 0.7 0.7 0.8
Return Ratios - YTD
(%)
RoA (Rep.) 2.6 2.9 3.2 3.5 2.6
RoE (Rep.) 9.4 10.8 12.2 12.9 9.8

2 August 2021 40
 1 August 2021
1QFY22 Results Update | Sector: Retail

Aditya Birla Fashion and Retail

Estimate changes
TP change
CMP: INR225 TP: INR270 (+20% ) Buy
Rating change Strong revenue recovery, but leverage on the rise
Motilal Oswal values your support in the  EBITDA loss was down to INR1.6b (v/s INR3.5b YoY), led by strong 2.5x
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and revenue recovery YoY, much better than estimated (although still 63%
Trading team. We request your ballot. below pre-COVID levels). The gross margin also inched to normalcy (up
810bp YoY). Subsequently, net loss declined to INR3.3b (v/s INR4.3b).
 Given the quicker recovery, we revise up our FY22E estimates, but maintain
our FY23E estimates, keeping EBITDA at 18% above FY20 levels. The rise in
net debt by INR5.5b is a dampener. However, it should largely reverse with
Bloomberg ABFRL IN
Equity Shares (m) 772
revenue recovery and the payment of the final tranche of the INR2.5b rights
M.Cap.(INRb)/(USDb) 209.1 / 2.8 issue. Maintain Buy.
52-Week Range (INR) 234 / 117
1, 6, 12 Rel. Per (%) 4/36/43 Massive beat on EBITDA, but net loss in-line
12M Avg Val (INR M) 549
 Revenue grew 2.4x YoY to INR7.7b (16% beat) on the back of higher
operational days and continued aggression in e-commerce. Revenues were
Financials & Valuations (INR b)
INRb FY21 FY22E FY23E 63% lower v/s pre-COVID levels of 1QFY20.
Sales 51.8 77.7 102.0  The gross margin surged 810bp YoY to 49.6%, with no
EBITDA 2.7 7.9 14.5 provisioning/markdowns. It is inching toward normalcy (40bp miss),
Adj. PAT -6.5 -3.5 0.0
EBITDA Margin (%) 5.3 10.2 14.2
implying a lower impact from the second COVID wave.
Adj. EPS (INR) -7.1 -3.0 0.0  SG&A cost grew 47% YoY, chasing revenue growth. Better-than-expected
EPS Gr. (%) 3,769.5 -58.3 -100.1 revenue and an improving gross margin drove an EBITDA beat of 49%.
BV/Sh. (INR) 29.3 22.2 22.2
EBITDA loss was down to INR1.6b v/s INR3.5b in 1QFY21 (pre-COVID EBITDA
Ratios
Net D:E 0.9 0.9 0.0 of INR3.1b).
RoE (%) -34.5 -13.1 0.0  The management indicated a cost reduction of INR1.7b QoQ, attributable to
RoCE (%) -4.5 -1.6 7.3 INR920m/INR820m in savings from rental/other expenses. Subsequently,
Payout (%) 0.0 0.0 0.0
Valuations net loss was down to INR3.3b (v/s estimated loss of INR4.3b).
P/E (x) -31.7 -75.8 64,012.6  Lifestyle Brands achieved 43% of pre-COVID revenue, with EBITDA loss at
EV/EBITDA (x) 87.1 36.9 19.9 INR790m (v/s INR1,050m QoQ). Pantaloons reported revenue 25% below
EV/Sales (x) 4.6 3.8 2.8
Div. Yield (%) 0.0 0.0 0.0
pre-COVID levels due to a higher non-operational mall presence.
FCF Yield (%) 4.2 0.4 2.7 Nevertheless, EBITDA loss narrowed to INR550m v/s INR720m QoQ.

Shareholding pattern (%) Highlights from management commentary

As On Jun-21 Mar-21 Jun-20  Sharp revenue recovery from the second COVID wave is expected, with July
Promoter 56.1 56.1 59.1
seeing strong recovery in the Lifestyle Brands / Pantaloons segment, at
DII 17.0 18.1 22.7
FII
85%/70% of pre-COVID levels.
14.4 14.5 7.0
Others 12.5 11.4 11.3  Net debt rose by INR5.5b to INR12b in 1QFY22, of which INR2b/INR3.5b was
FII Includes depository receipts towards inventory/funding operations; this should reverse with revenue
recovery and the payment of the final tranche of the INR2.5b rights issue.
 It plans to launch two new ethnic wear brands by next quarter – one each
under Men’s Ethnic Wear and Women’s Ethnic Wear – and expects to
achieve breakeven in these over the next 2–3 years.
 The sequential drop in gross margins (370bps) was attributable to the
absorption of manufacturing costs amid closures through May and partly in
June.

2 August 2021 41
 Valuation and view
 ABFRL has consistently improved its earnings graph, with a revenue/EBITDA
CAGR of 37%/75% over FY14–19. Considering the dented growth in FY20, the
revenue/EBITDA CAGR would stand at 32%/55% over FY14–20 (FY20 pre-Ind-AS
116 EBITDA of INR4.5b).
 Since the recent fundraise through a rights issue and strategic stake sale to
Flipkart, leverage has come under control. It saw a spike in net debt by INR5.5b
to INR12b in 1QFY22, but this should largely reverse with revenue recovery and
the payment of the final tranche of the INR2.5b rights issue.
 While the near-term increase in losses from expansion in the Ethnic Wear
vertical remains a concern, we expect this to be largely offset by lower losses
from other businesses and growth in the Lifestyle Brands / Pantaloons business.
 We value ABFRL on an SOTP basis and assign EV/EBITDA of 20x to the Lifestyle
Brands and Pantaloons segments. We further assign EV/sales of 1x to other
businesses, slightly upping our multiple – given the quicker recovery and
improving balance sheet. Subsequently, we arrive at TP of INR270. Maintain
Buy.

Standalone - Quarterly Earning Model (INR m)

Y/E March FY21 FY22E FY21 FY22E FY21 Est
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE 4QE Var (%)
Revenue 3,200 10,186 20,590 17,836 7,740 18,755 28,665 23,392 51,811 78,552 6,665 16.1
YoY Change (%) -84.5 -55.7 -19.6 -1.9 141.9 84.1 39.2 31.2 -40.7 51.6 -5.9
Total Expenditure 6,713 10,203 16,906 15,266 9,358 17,453 23,635 20,174 49,088 70,620 9,827 -4.8
EBITDA -3,513 -17 3,685 2,570 -1,618 1,303 5,029 3,218 2,724 7,932 -3,162 -48.8
Change, YoY (%) -211.9 -100.5 -9.9 64.7 -53.9 -7,586.80 36.5 25.2 -77.8 191.2 -10
Depreciation 2,334 2,375 2,271 2,470 2,275 2,419 2,419 2,563 9,450 9,675 2,348
Interest 1,253 1,440 1,095 1,196 838 913 913 987 4,984 3,650 1,244
Other Income 1,765 1,408 570 202 242 197 197 153 3,946 789 986
PBT -5,335 -2,424 888 -893 -4,489 -1,831 1,895 -179 -7,764 -4,604 -5,768 -22.2
Tax -1,336 -611 224 455 -1,137 -458 474 -45 -1,268 -1,166 -1,442
Rate (%) 25 25.2 25.2 -50.9 25.3 25 25 25 16.3 25.3 25
Reported PAT -3,999 -1,813 664 -1,348 -3,352 -1,374 1,421 -134 -6,496 -3,438 -4,326 -22.5
Adj PAT -3,999 -1,813 664 -1,348 -3,352 -1,374 1,421 -134 -6,496 -2,497 -4,326 -22.5
YoY Change (%) -1,954.90 -674.6 -9 -3.9 -16.2 -24.2 114.1 -90.1 4474.9 -61.6 8.2
E: MOFSL Estimates

Key Performance Indicators

Y/E March FY21 FY22E FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Pantaloons
SSSG (%) -92% -57% -27% -11% 156% -30% 0% 40% 3% -20%
Store Adds 0 -3 5 2 -4 10 8 11 4 25
Total Stores 342 339 344 346 342 352 360 371 346 371
EBITDA Margin (%) -87.8 19.2 23.4 14.4 -85.0 19.2 23.4 0.9 14.8 10.0
Lifestyle Business
SSSG (%) -86.0 -50.0 -20.0 -1.7 187.0 13.0 0.0 -36.3 -37.1 -1.1
EBO Stores 2,222 2,247 2,341 2,341 2,380 2,440 2,510 2,591 2,341 2,591
- New stores -31 25 94 0 39 60 70 81 88 250
Value Stores 440 439 472 525 494 554 624 775 525 775
- New stores -6 -1 33 53 -31 60 70 151 79 250
EBITDA Margin (%) -44.3 9.2 17.4 15.4 -14.2 6.3 16.1 18.5 10.7 10.9
Gross Margins (%) 41.4 47.4 52.3 53.3 49.6 47.0 52.2 51.4 51.0 51.0
EBITDA Margins (%) -109.8 -0.2 17.9 14.4 -20.9 3.2 16.3 10.9 5.3 7.8
PAT Margins (%) -125.0 -17.8 3.2 -7.6 -43.3 -8.2 5.0 0.5 -12.5 -3.2
E:MOFSL Estimates

2 August 2021 42
 30 July 2021
1QFY22 Results Update | Sector: Automobile

Exide
Estimate changes
TP change
CMP: INR179 TP: INR215 (+20% ) Buy
Rating change Revenue beat; margin impacted by higher RM cost
Motilal Oswal values your support in the Captive smelters dilute higher lead prices
Asiamoney Brokers Poll 2021 for India  EXID’s topline performance was driven by growth in both Auto and
Research, Sales, Corporate Access and
Trading team. We request your ballot. Industrial segments in 1QFY22, while margin was restricted due to
commodity cost inflation. We expect a cyclical recovery in demand
from the OEM segment in FY22, along with strength in the Aftermarket
segment, with a continuous shift from the unorganized to the
organized segment.
Bloomberg EXID IN  We largely maintain our earnings estimate. We maintain our Buy
Equity Shares (m) 850 rating, with a TP of ~INR215/share (~14x FY23 EPS + INR25/share for
M.Cap.(INRb)/(USDb) 151.8 / 2
the Insurance business).
52-Week Range (INR) 221 / 150
1, 6, 12 Rel. Per (%) -2/-21/-23 Higher lead cost inflation hurt margin
12M Avg Val (INR M) 755  Revenue/EBITDA/PAT declined by 15%/37%/49% QoQ
(+61%/+75.5%/+185% YoY) to INR24.9b/INR2.6b/INR1.25b in 1QFY22.
Financials & Valuations (INR b)  Gross margin contracted by 280bp QoQ (+20bp YoY) to 31.5% (est.
Y/E MARCH 2021 2022E 2023E 34.5%) due to lead cost inflation.
Net Sales 100.4 118.4 133.4
EBITDA 13.6 15.4 18.9
 EBITDA margin fell 350bp QoQ (+90bp YoY) to 10.5% (est. 11.1%). This
Adj. PAT 7.6 8.8 11.6 was due to operating deleverage and higher staff costs (up by 110bp
Adj. EPS (INR) 8.9 10.4 13.6 QoQ to 7.4% as a percentage of sales). EBITDA declined by 37% QoQ
EPS Gr. (%) -10.0 16.3 31.0 (+75.5% YoY) to INR2.6b (est. INR2.2b).
BV/Sh. (INR) 81.1 88.3 98.7
 Adjusted PAT declined by 49% QoQ (+185%YoY) to ~INR1.25b (est.
Ratio
Net D:E -0.1 -0.3 -0.3 ~INR1b).
RoE (%) 11.0 11.8 13.8
Highlights from the press release
RoCE (%) 11.8 12.6 14.7
Payout (%) 22.4 30.8 23.5  Growth was achieved by both the Automotive and Industrial divisions,
Valuations despite COVID-related disruptions in 1QFY22.
P/E (x) 20.0 17.2 13.1  Replacement volumes for both Automotive and UPS batteries were
P/BV (x) 2.2 2.0 1.8
robust.
Div Yield (%) 1.1 1.8 1.8
FCF Yield (%) 7.1 9.1 6.4  Demand from Infrastructure, OEM, and Export markets exceeded the
company’s expectations.
Shareholding pattern (%)  The company is focusing on sales transformation and various cost
As On Jun-21 Mar-21 Jun-20 control measures as core strategies to boost profits.
Promoter 46.0 46.0 46.0
Valuation and view
DII 23.3 24.6 22.9
 We largely maintain our earnings estimates. EXID would see a lesser
FII 11.8 12.0 9.1
Others 18.9 17.5 22.1
impact of lead price inflation on account of its captive smelter. It should
FII Includes depository receipts have a better mix, owing to a higher Aftermarket share.
 We prefer EXID as it offers a superior risk-reward considering its market
leadership, technological alliances, backward integration, and better
mix.
 Lithium batteries pose a risk to the 2W and 3W segment (~15% of
revenue) and Industrial segment (~26% of revenue).
 The stock trades at 17.2x/13.1x FY22E/FY23E standalone EPS. We cut
our P/E multiple to 14x from 15x to account for risk from EVs. Valuing it
~14x standalone Mar’23E EPS + INR25/share for the Life Insurance
business, we maintain our Buy rating with a TP of ~INR215 per share.

2 August 2021 43
 Standalone quarterly performance (INR m)
Y/E March FY21 FY22E FY21 FY22E FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE
Net Sales 15,476 27,534 28,010 29,388 24,864 30,012 31,371 32,166 1,00,408 1,18,413 20119
Growth YoY (%) -44 5 16 43 61 9 12 9 2 17.9 30
EBITDA 1,485 3,920 4,028 4,123 2,606 3,722 4,368 4,690 13,556 15,387 2223
Change (%) -64 7 26 53 76 -5 8 14 -1 13.5 50
Depreciation 914 953 953 974 1009 1050 1070 1089 3794 4,218 1000
Interest 14 63 76 85 109 80 60 71 238 320 75
Non-Operating Income 70 148 201 235 152 225 250 276 654 902 230
PBT after EO Exp. 627 3,052 3,200 3,300 1,640 2,817 3,488 3,806 10,179 11,752 1378
Tax 188 764 786 859 385 702 870 973 2596 2,930 344
Effective Tax Rate (%) 30 25 25 26 24 25 25 26 26 24.9 25
Adj. PAT 440 2,288 2,414 2,441 1,254 2,115 2,619 2,834 7,583 8,821 1035
Change (%) -80 -4 13 45 185 -8 8 16 -10 16.3 135
Key performance indicators
Cost Break-up
RM (%) 68.8 65.0 64.1 65.7 68.5 67.5 66.0 65.2 65.5 66.7 65.5
Employee cost (%) 9.0 6.9 7.4 6.3 7.4 6.5 6.4 6.3 7.2 6.6 8.4
Other Exp. (%) 12.6 13.9 14.1 14.0 13.6 13.6 13.7 13.9 13.8 13.7 15.0
Gross Margin (%) 31.2 35.0 35.9 34.3 31.5 32.5 34.0 34.8 34.5 33.3 34.5
EBITDA Margin (%) 9.6 14.2 14.4 14.0 10.5 12.4 13.9 14.6 13.5 13.0 11.1
EBIT Margin (%) 3.7 10.8 11.0 10.7 6.4 8.9 10.5 11.2 9.7 9.4 6.1
Lead Price (INR/kg) 127.4 139.2 140.3 146.7 156.2 138.4 156.2 154.7
Change (%) -2.8 -2.5 -3.6 9.9 22.6 0.1 12.8 21.4
E: MOFSL estimates

2 August 2021 44
 30 July 2021
1QFY22 Results Update | Sector: Financials

Shriram City Union Finance

Estimate change CMP: INR1,856 TP: INR2,150 (+16%) Buy
TP change
No major deterioration in asset quality; restructuring minimal
Rating change
Elevated credit costs drive PAT miss
Motilal Oswal values your support in the
Asiamoney Brokers Poll 2021 for India  Shriram City Union Finance (SCUF) posted PAT of INR2.1b (up 8% YoY; 14%
Research, Sales, Corporate Access and miss) in 1QFY22. PPOP was largely in-line at INR5.7b (flat YoY). While NII
Trading team. We request your ballot.
stood at INR8.8b (in-line), credit costs stood at INR2.9b (~16% above est.),
leading to the PAT miss.
 1QFY22 was characterized by a sequentially muted performance in
disbursements (due to lockdowns) and ~55bp deterioration in GS3.
Bloomberg SCUF IN  The company should deliver RoE/RoA of ~14%/4% in FY23E. We maintain
Equity Shares (m) 66 our Buy rating, with TP of INR2,150 per share (1.4x FY23E BVPS).
M.Cap.(INRb)/(USDb) 122.5 / 1.6 Disbursements impacted by second COVID wave; AUM flat QoQ
52-Week Range (INR) 2175 / 645  In 1QFY22, disbursements were impacted across products. Auto/LAP loans
1, 6, 12 Rel. Per (%) 8/69/141
witnessed the highest sequential decline at 79%/52%; MSME/2W loans also
12M Avg Val (INR M) 74
fell 40%/20% QoQ to INR10.9b/INR12.3b. The repayment rate stood at 15%
Financials & Valuations (INR b)
(down ~410bp QoQ). As a result, AUM was flat QoQ at INR296b.
Y/E March 2021 2022E 2023E  As MSME financing has taken a backseat in the past few quarters, its share
NII 34.4 36.9 41.2 in the AUM mix has declined ~935bp to 49% over the past year. In Shriram
PPP 22.4 24.3 27.0 Housing, the loan book was flat QoQ at INR39.1b (up 65% YoY). The GNPL
PAT 10.1 11.2 13.3 ratio deteriorated 43bp QoQ to 2.3%.
EPS (INR) 153 169 202
EPS Gr. (%) 1 10 20 Minor deterioration in GS3; restructuring still minimal; spreads improve
BV/Sh. (INR) 1,230 1,369 1,541  GS 3 deteriorated by ~55bp QoQ to 6.9%. In 1QFY22, SCUF made
Ratios additional COVID-related provisions of INR34.68m. The total management
NIM (%) 11.7 12.0 12.2
overlay stood at INR7.2b (~2.4% of AUM).
C/I ratio (%) 37.8 37.7 38.1
RoA (%) 3.1 3.2 3.6  Total ECL provisions increased by INR640m QoQ to INR21b. SCUF holds
RoE (%) 13.2 13.0 13.9 3.8% PCR on Stage 1 and 2 loans and 52% PCR on Stage 3 loans. ECL/EAD of
Payout (%) 25.9 17.8 14.8 7.1% is among the highest in our NBFC Coverage Universe.
Valuations  Advances worth INR390m were restructured in 1QFY22. The total
P/E (x) 12.1 11.0 9.2
restructured pool, including that restructured under RBI OTR 1.0, stood at
P/BV (x) 1.5 1.4 1.2
Div. Yield (%) 1.8 1.3 1.3 INR1.92b (~65bp of AUM).
 While cost of funds (calculated) declined ~21bp sequentially to 8.9%,
Shareholding pattern (%) calculated yields (on AUM) stood at 19.7% (up ~20bp QoQ). Spreads
As On Jun-21 Mar-21 Jun-20 improved 40bp QoQ to 10.8%.
Promoter 34.6 34.6 33.9
Better performing 2W portfolio vis-à-vis peers
DII 3.8 3.5 5.7
 The 2W loan portfolio of SCUF consists purely of 2W, and all other vehicle
FII 28.3 28.5 26.8
Others 33.3 33.4 33.6 loans (including any 3W) are categorized as “auto” loans. It is important to
FII Includes depository receipts highlight here that Bajaj Finance had suggested that it was seeing
disproportionately high stress, particularly in its 3W loan portfolio.
 Hero and Honda 2W form 80–85% of the 2W portfolio, while Bajaj 2W
forms only ~8%. Moreover, its 2W portfolio has ~35% scooters, and in
SCUF’s view, asset quality in the scooter portfolio has usually been better
than in motorbikes – since scooters are used by the entire family.

2 August 2021 45
 Preparing for transformation from physical to hybrid model
 SCUF is looking to improve its digital presence by introducing digital personal
loans (PL) and 2W loans on an app by Aug’21. Even digital gold loans are
expected to be rolled out by Nov’21. However, personal loans would remain a
cross-sell product.
 With this digital offering and its partnerships with fintechs, the company would
look to acquire a new segment of customers, streamline its processes, and
reduce the TAT for the current customer as well.
Shriram Housing – aspiring for bigger and better
 Shriram City has already infused INR2b in its housing subsidiary and intends to
infuse another INR3b over the remainder of FY22.
 The new book stands at 76% of the total loan book, and GNPA on the last three
years of underwriting is 1.13%.
 Shriram Housing aspires to grow AUM to ~INR55b by end-FY22. The growth
states would continue to be the six key states of Gujarat, Maharashtra, AP,
Telangana, Karnataka, and Tamil Nadu. By Mar'22, it plans to open another 170
branches contiguous with the current branch network.
Highlights from management commentary and other highlights
 Demand for restructuring was fairly limited, and it processed INR390m of OTR
during the quarter. The restructuring pipeline is not very high. It may end up
doing an additional INR700–800m in restructuring in 2QFY22.
 Capital adequacy remained strong, with Tier I at 30% (up ~90bp QoQ).
 Opex declined 7% sequentially (up 13% YoY) to INR3.5b (est. INR3.4b), led by
lower establishment expenses. Employee expenses were up 7% QoQ. The C/I
ratio fell ~250bp QoQ to 38%, led by opex savings.
Valuation and view
 The loan book growth was muted given the impact on disbursements (from
lockdowns). However, the liability-side and liquidity issues faced by the
company immediately after the pandemic outbreak have now receded into the
sidelines. Despite its presence in vulnerable product segments such as MSME,
2W, and Personal Loans, asset quality performance has been encouraging, with
minimal restructuring. With equity infusion of INR2b from the parent, Shriram
Housing would look forward to strong growth and carving out its niche in the
Affordable Housing Finance segment.
 SCUF has improved its underwriting across product segments. Also, its strong
focus on collections has resulted in improving asset quality outcomes (despite a
transient QoQ blip), with benign credit costs even in a pandemic-impacted year.
 While we expect AUM growth to remain muted at ~7% in FY22E, we build in a
~12% CAGR in AUM over FY21–24E. We cut our FY22E PAT estimates by ~10%,
factoring in higher credit costs. Given the visibility around likely loan
growth/credit costs, we model in RoA/RoE of 3.6%/14% in FY23E. We maintain
our Buy rating, with TP of INR2,150 per share (1.4x FY23E BVPS).

2 August 2021 46
 Quarterly Performance INR m
Y/E MARCH FY21 FY22E Act v/s
FY21 FY22E 1QFY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE Est. (%)
Interest Income 13,899 13,698 13,978 14,140 14,539 14,829 15,126 15,101 55,716 59,596 14,246 2.1
Interest expenses 5,375 5,190 5,215 5,559 5,746 5,832 5,919 5,248 21,339 22,745 5,476 4.9
Net Interest Income 8,525 8,508 8,763 8,581 8,793 8,997 9,207 9,853 34,377 36,850 8,771 0.3
Y-o-Y Growth (%) -6.7 -5.5 -1.3 1.1 3.1 5.7 5.1 14.8 -3.2 7.2 2.9
Fees and Other Income 246 293 414 716 417 525 575 652 1,669 2,169 450 -7.4
Net Operating Income 8,771 8,801 9,177 9,297 9,210 9,522 9,782 10,506 36,046 39,020 9,221 -0.1
Y-o-Y Growth (%) -8.2 -7.8 -2.4 3.3 5.0 8.2 6.6 13.0 -3.9 8.3 5.1
Operating Expenses 3,105 3,182 3,575 3,781 3,517 3,600 3,600 3,993 13,644 14,711 3,425 2.7
Operating Profit 5,666 5,619 5,602 5,516 5,693 5,922 6,182 6,512 22,402 24,309 5,796 -1.8
Y-o-Y Growth (%) -1.9 -2.2 -2.2 7.2 0.5 5.4 10.3 18.1 0.1 8.5 2.3
Provisions 3,102 2,015 1,755 1,638 2,901 2,000 2,000 2,128 8,509 9,029 2,500 16.0
Profit before Tax 2,564 3,604 3,847 3,878 2,792 3,922 4,182 4,384 13,893 15,281 3,296 -15.3
Tax Provisions 642 1,035 1,050 1,057 712 1,059 1,129 1,226 3,785 4,126 890 -20.0
Net Profit 1,923 2,569 2,797 2,821 2,080 2,863 3,053 3,159 10,109 11,155 2,406 -13.5
Y-o-Y Growth (%) -24.1 -13.7 -5.8 84.3 8.2 11.5 9.1 12.0 1.0 10.3 25.1
Key Operating Parameters (%)
Yield on loans (calc., %) 19.3 19.6 19.9 19.5 19.7 20.3 20.5 19.6 20.0 18.6
Cost of funds (calc., %) 9.6 9.6 9.2 9.1 8.9 8.9 8.9 7.9 8.8 8.7
Spreads (%) 9.7 10.0 10.7 10.4 10.8 11.4 11.6 11.8 11.3 9.9
Cost to Income Ratio (%) 35.4 36.2 39.0 40.7 38.2 37.8 36.8 38.0 37.8 37.7
Credit cost (calc., %) 4.3 2.9 2.5 2.3 3.9 2.7 2.7 2.8 2.9 3.0
Tax Rate (%) 25.0 28.7 27.3 27.3 25.5 27.0 27.0 28.0 27.2 27.0
Balance Sheet Parameters
Disbursements (INR b) 13.3 30.6 62.0 65.7 45.6 56.5 66.5 65.2 171.5 233.8
Growth (%) -78.9 -41.1 6.5 21.3 243.9 84.6 7.3 -0.8 -24.5 36.3
AUM (INR b) 284.5 275.4 285.5 295.7 296.0 289.1 299.7 316.4 295.7 316.4
Growth (%) -6.3 -7.4 -3.4 1.7 4.1 5.0 5.0 7.0 1.7 7.0
Repayments (INR b) 19.7 39.7 51.9 55.4 45.3 63.4 55.9 48.5 166.7 213.1
Rep. rate (annualized, %) 27.0 55.8 75.4 77.7 61.3 85.6 77.3 64.7 57.3 72.1
Borrowings/AUM ratio (%) 76.2 79.1 81.9 86.5 88.5 91.5 89.1 84.5 86.5 84.5
Asset Quality Parameters (%)
Gross Stage 3 (INR b) 20.5 18.2 18.3 18.8 20.4 18.8 16.0
Gross Stage 3 ratio (%) 7.3 6.7 6.5 6.4 6.9 6.8 5.5
Net Stage 3 (INR b) 10.2 8.3 8.7 8.8 9.9 8.8 4.3
Net Stage 3 ratio (%) 3.9 3.3 3.3 3.2 3.6 3.2 1.5
ECL Stage 3 (INR b) 10.3 9.9 9.7 10.0 10.6 10.0 11.7
PCR (%) 50.4 54.3 52.7 53.3 51.7 53.2 72.9
Segmental GS3 ratio (%)
SME loans 7.8 7.5 7.4 7.3 7.7
2-wheeler 6.8 5.9 5.8 5.8 6.6
Gold loans 4.4 3.5 3.0 2.9 3.5
Personal Loans 11.7 10.9 10.7 10.5 11.1
Others
CRAR (%) 28.8 30.1 29.6 28.6 29.5
Shriram HFC AUM (INR b) 23.7 27.2 31.4 39.3 39.1

2 August 2021 47
 31 July 2021
1QFY22 Results Update | Sector: Oil & Gas

Aegis Logistics
Estimate change CMP: INR320 TP: INR365 (+14%) Neutral
TP change
Recovery in Gas business delayed by the second wave of COVID
Rating change
 AGIS reported earnings in line with our estimates, as robust performance in
Motilal Oswal values your support in the the Liquids division continues to countervail the subdued Gas business.
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and
 The Gas business was affected by the second wave of COVID-led lockdowns,
Trading team. We request your ballot. with clogged ports impacting throughput volumes, while demand for Auto
LPG and Cylinders (from Hotels/Restaurants) were low due to restrictions.
 The management said the Gas division would recover to pre-COVID levels
in 2HFY22, with Jun-Jul’21 already seeing a bounce back in volumes.
Factoring in the same, we forecast FY22E/FY23E Gas Logistics volumes at
Bloomberg AGIS IN 3.2mmt/4mmt (from 3.5mmt/4.3mmt earlier) and 4.5mmt in FY24E.
Equity Shares (m) 334  The liquids terminal at Mangalore (+50,000KL) and Haldia (+54,000kl) were
M.Cap.(INRb)/(USDb) 112 / 1.5 commissioned in 1Q, and would contribute significantly to segmental
52-Week Range (INR) 394 / 181
revenue starting 2QFY22.
1, 6, 12 Rel. Per (%) -7/-1/34
 AGIS has established a JV – Aegis Vopak Terminals (AVTL) – in which it will
12M Avg Val (INR M) 155
hold 51% stake, with the balance held by Vopak.
 A capex program of INR25-45b is planned for the JV over the next five years,
starting FY23. It would be funded via internal accruals, debt, and some cash
Financials & Valuations (INR b)
injection by both shareholders.
Y/E March 2021 2022E 2023E
 Such a high and ambitious capex would burden AGIS’ Balance Sheet, with
Sales 38.4 42.3 69.8
the focus shifting away from the LPG business, which may increase
EBITDA 3.9 5.4 6.8
Adj. PAT 2.2 3.4 4.4
uncertainty. Considering the same, we maintain our Neutral rating with a TP
Adj. EPS (INR) 6.7 10.1 13.3 of INR365 per share.
EPS Gr.% 124.3 51.1 31.3 Liquids business continued its robust performance
BV/Sh.INR 58.0 65.1 74.4  EBITDA came in line with our estimate at INR1b (+56% YoY, +5% QoQ).
Ratios  Other expenditure includes INR30m as provision of commission to directors.
Net D:E 0.0 -0.1 -0.2  ESOP of INR3.35b (charged over the last seven quarters) has been
RoE (%) 12.4 16.4 19.0 completed.
RoCE (%) 12.6 16.1 19.2  PAT stood at INR0.7b (+123% YoY, +2% QoQ) with a lower tax rate of 20%.
Payout (%) 29.9 29.9 29.9 Segmental analysis – business to return to normalcy in 2HFY22
Valuation  EBITDA in the Liquids division fell 9% QoQ to INR0.5b (+23% YoY). New
P/E (x) 47.8 31.7 24.1
liquid capacity at Mangalore and Haldia started contributing in 1QFY22.
P/BV (x) 5.5 4.9 4.3
 EBITDA in the Gas division declined by 29% QoQ to INR0.65b (-17% YoY).
EV/EBITDA (x) 27.6 19.4 14.9
 Logistics throughput volumes fell 19% YoY and 21% QoQ to 568kmt,
Div. Yld (%) 0.6 0.9 1.2
impacted by the second COVID wave. The lockdown impacted cargo
FCF Yld (%) 0.8 3.3 4.6
movement at ports. Pipavav and Haldia ports were also impacted by
hurricanes (although there was no impact to AGIS’ terminals). In Jun’21,
Shareholding pattern (%)
throughput saw a bounce back with the economy opening up.
As On Jun-21 Mar-21 Jun-20
 Sourcing volumes fell 37% YoY to 100kmt (-49% QoQ).
Promoter 57.7 57.7 59.7
 Distribution volumes were down a mere 10% QoQ to 31kmt (+139% YoY),
DII 1.9 2.3 2.8
FII 15.0 14.8 12.8
primarily driven by Industrial sales.
Others 25.4 25.2 24.8  LPG Industrial volumes were up 200% YoY at 22kmt (+2% QoQ) as
FII Includes depository receipts private industries continued operations during the lockdowns.
 Auto Gas volumes fell 40% QoQ (+21% YoY) at 3.5kmt, as lockdowns
curbed the movement of people. LPG Cylinder volumes fell 22% QoQ to
5kmt (doubled YoY on a lower base).

2 August 2021 48
 Valuation and View: Focus has shifted away from LPG Logistics
 AGIS expects a growth in its Mumbai assets, in which it has 100% stake. Further
growth opportunities would include VLGC compliant jetties and expansion of its
LPG/Liquids assets.
 We expect logistics volumes to record 15% CAGR, with ~20% EBITDA CAGR
over FY21-24E. We expect strong free cash flow generation of ~INR13.4b in
FY22-24E (combined FCF yield of ~13%).
 Developments in the LPG Logistics business like debottlenecking of Uran Chakan
pipeline (in Mumbai) and commissioning of the railway gantry at Pipavav are
expected to drive the next leg of growth for AGIS. With the recent JV
announcement, the focus would shift away from the LPG Logistics business
towards the storage business/solutions.
 AGIS trades at 24x FY23E EPS of INR13.3 and 15x FY23E EV/EBITDA. We value
AGIS using the DCF methodology to arrive at a fair value of INR365/share. We
maintain our Neutral rating.

Consolidated quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E FY22 Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Sales 6,364 6,504 15,455 10,112 6,781 9,880 11,727 13,869 38,435 42,256 12,009 -44
YoY Change (%) -67.5 -64.2 -28.7 -18.6 6.5 51.9 -24.1 37.2 -46.5 9.9 88.7
EBITDA 674 1,023 1,179 1,002 1,051 1,268 1,462 1,613 3,876 5,394 1,098 -4
Margin (%) 10.6 15.7 7.6 9.9 15.5 12.8 12.5 11.6 10.1 12.8 9.1
Depreciation 176 180 179 182 187 193 198 212 716 790 187 0
Interest 47 41 41 45 41 42 42 43 173 168 49 -17
Other Income 50 66 104 149 80 58 90 194 369 423 47 70
PBT before EO expense 501 868 1,062 924 903 1,092 1,312 1,552 3,356 4,859 909 -1
PBT 501 868 1,062 924 903 1,092 1,312 1,552 3,356 4,859 909 -1
Rate (%) 26.5 26.1 26.4 24.3 20.1 25.2 25.2 28.2 25.7 25.2 25.2
MI and P/L of Asso. Cos. 70 72 71 46 56 72 71 60 258 258 65 -13
Reported PAT 298 570 712 654 666 744 911 1,055 2,234 3,376 615 8
E: MOFSL estimates

2 August 2021 49
 RESULTS
31 July 2021
FLASH Results Flash | Sector: Capital Goods

KEC International
BSE SENSEX S&P CNX
52,587 15,763
CMP:INR427 Buy
Strong execution, but commodity price inflation
Conference Call Details dents margin
Date: 2nd August 2021
1QFY22 snapshot
Time: 10:00am IST
 Revenue grew 15% to INR25.4b and was 10% ahead of our expectation.
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+91-22-6280 1213
 EBITDA fell 18% YoY to INR1.6b and was 17% below our expectation.
 EBITDA margin stood at 6.3% (-250bp YoY) v/s our expectation of 8.3%,
Financials & Valuations (INR b) indicating the impact of commodity price inflation.
Y/E Mar 2021 2022E 2023E  Adjusted PAT declined by 35% YoY to INR461m and was 36% below our
Sales 131.1 141.2 155.4 expectation.
EBITDA 11.4 12.7 14.8  Net debt and acceptances increased by INR6b YoY to INR39.4b.
PAT 5.5 6.5 8.1
 Domestic business saw a margin contraction of 150bp YoY to 9.6%.
EBITDA (%) 8.7 9.0 9.6
EPS (INR)
 Order inflows grew 128% YoY to INR44b. Order book (including L1)
21.5 25.5 31.7
EPS Gr. (%) (2.3) 18.5 24.4 stands at INR260b.
BV/Sh. (INR) 130.7 152.9 181.4
Ratios
Net D/E 0.5 0.4 0.3
RoE (%) 16.5 16.7 17.5
RoCE (%) 14.2 14.9 16.1
Payout (%) 12.6 10.6 8.5
Valuations
P/E (x) 19.8 16.7 13.5
P/BV (x) 3.3 2.8 2.4
EV/EBITDA (x) 11.1 9.8 8.2
Div Yield (%) 0.6 0.6 0.6
FCF Yield (%) 6.9 4.8 4.8

Consolidated quarterly performance (INR m)

FY21 FY22 FY21 FY22E MOSL Var.
Y/E March 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE
Sales 22,068 32,577 32,892 43,605 25,400 35,183 36,182 44,480 1,31,142 1,41,244 23,171 10%
Change (%) -8.5 16.0 7.0 18.8 15.1 8.0 10.0 2.0 9.6 7.7 5.0
EBITDA 1,949 2,931 2,987 3,546 1,599 3,061 3,365 4,635 11,412 12,660 1,923 -17%
Change (%) -22.5 -0.2 -6.2 -4.4 -18.0 4.4 12.7 30.7 -7.5 10.9 -1.3
As a percentage of Sales 8.8 9.0 9.1 8.1 6.3 8.7 9.3 10.4 8.7 9.0 8.3
Depreciation 391 374 380 380 381 420 430 455 1,525 1,686 400
Interest 663 674 658 632 649 600 600 490 2,627 2,339 600
Other Income 69 68 39 123 17 75 70 160 299 322 70
PBT 965 1,950 1,988 2,657 585 2,116 2,405 3,850 7,559 8,957 993 -41%
Tax 257 525 537 714 124 569 646 1,068 2,032 2,408 267
Effective Tax Rate (%) 26.6 26.9 27.0 26.9 21.2 26.9 26.9 27.7 26.9 26.9 26.9
Reported PAT 708 1,426 1,451 1,943 461 1,547 1,758 2,782 5,527 6,549 726 -36%
Change (%) -20.1 2.5 0.1 0.7 -34.8 8.5 21.2 43.2 -2.3 18.5 2.6
Recurring PAT 708 1,426 1,451 1,943 461 1,547 1,758 2,782 5,527 6,549 726 -36%
Change (%) -20.1 2.5 0.1 0.7 -34.8 8.5 21.2 43.2 -2.3 18.5 2.6

2 August 2021 50
 31 July 2021
1QFY22 Results Update | Sector: Cement

J K Lakshmi Cement
Estimate change CMP: INR692 TP: INR800 (+16%) Buy
TP change
Rating change Cost inflation impacting margin
Motilal Oswal values your support in Deleveraging to drive 14% EPS CAGR over FY21-23E
the Asiamoney Brokers Poll 2021 for  Volume declined by only 8% QoQ to 2.66mt in 1QFY22 on account of higher
India Research, Sales, Corporate
Access and Trading team.
clinker sales, which led to EBITDA growth of 51% YoY to INR2.2b, despite a
We request your ballot. miss on realization and margin.
 Cost inflation is a significant worry for JKLC as the cost of coal and diesel has
moved up sharply, while prices are expected to fall seasonally in the near
term. Given the reasonable valuation (7.3x FY23E EV/EBITDA) and growth
optionality from the announced 2.5mtpa expansion in North India through
Bloomberg JKLC IN its subsidiary Udaipur Cement Works (UCWL), we maintain our Buy rating.
Equity Shares (m) 118
M.Cap.(INRb)/(USDb) 81.4 / 1.1
Weaker margin offset by higher clinker sales
52-Week Range (INR) 815 / 243
 Standalone revenue/EBITDA/adjusted PAT rose 49%/51%/167% YoY to
1, 6, 12 Rel. Per (%) 20/104/99
12M Avg Val (INR M) 245 INR12.3b/INR2.2b/INR1.2b, beating our estimate by 16%/12%/30% on
account of higher clinker sales.
Financial Snapshot (INR b)
 EBITDA/t, however, was weaker than expected at INR813/t (-12% QoQ; +8%
Y/E Mar 2021 2022E 2023E
Sales 43.8 50.1 53.6 YoY) due to greater clinker sales and higher-than-expected raw material cost
EBITDA 7.9 7.9 8.9 and other expenses.
Adj. PAT 3.9 4.1 5.2  As expected, cement volumes declined by 18% QoQ to 2.29mt (+43% YoY),
EBITDA Margin (%) 18.0 15.8 16.6
Cons. Adj. EPS (INR) 33.5 35.0 43.8 partially offset by a sharp 2.7x QoQ jump in clinker sales to 0.37mt. Overall
EPS Gr. (%) 48.7 4.2 25.3 volumes were down just 8% QoQ to 2.66mt (+40% YoY).
BV/Sh. (INR) 177 207 245  On a blended basis, realization grew to INR4,633/t (+2% QoQ; +7% YoY) and
Ratios
cost/t rose to INR3,820 (+5% QoQ; +7% YoY).
Net D:E 0.2 -0.0 -0.2
RoE (%) 20.8 18.2 19.4
RoCE (%) 15.4 15.2 17.8 Highlights from the management commentary
Payout (%) 12.1 12.9 12.6
 In 1QFY22, prices corrected a bit in North India, but remained stable in the
Valuations
P/E (x) 20.6 19.8 15.8 East and in Gujarat. The same is expected to improve in Sep’21, led by an
P/BV (x) 3.9 3.3 2.8 uptick in demand on account of a retreating monsoon.
EV/EBITDA(x) 9.3 8.9 7.3  It has built up fuel inventory to cover up the next 4-5 months of
EV/ton (USD) 77 74 68
Div. Yield (%) 0.5 0.7 0.8 requirements, but has guided at a consumption cost of INR8,000/t in 2Q,
FCF Yield (%) 8.8 7.1 8.3 and expects it to inch up further in 3QFY22. The same stood at INR7,000/t in
1QFY22.
Shareholding pattern (%)  FY22 capex guidance stands at INR1.7b for JKLC (including INR1.4b for the
As On Jun-21 Mar-21 Jun-20
Sirohi WHRS and other projects).
Promoter 46.2 46.2 46.2
 At UCWL, capacity debottlenecking of clinker/cement to 1.5mt/2.2mt (from
DII 28.4 27.2 20.8
FII 10.3 10.6 10.4
1.2mt/1.6mt) has been completed. It will now start work on the expansion
Others 15.1 16.0 22.6 project, which should get commissioned over the next 2-3 years.
FII Includes depository receipts

2 August 2021 51
 Valuation and view
 While the standalone business would see muted volume growth over FY21-24E
due to capacity constraints, margin should expand from an improvement in
volume mix, lower clinker sales, and higher Blended Cement sales.
 The announced 2.5mtpa expansion in North India through its subsidiary UCWL
provides growth visibility beyond FY24E.
 JKLC trades at 7.3x FY23E EV/EBITDA and at USD68/t on an EV/capacity basis,
which is at a discount of ~30% to its replacement cost. We value the stock at 8x
Sep’23E EV/EBITDA to arrive at our TP of INR800. We maintain our Buy rating.

Quarterly performance (INR m)

Y/E March FY21 FY22 FY21 FY22E FY22E Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Sales Dispatches (mt) 1.91 2.39 2.70 2.90 2.66 2.46 2.70 2.90 9.89 10.73 2.27 17
YoY Change (%) (18.2) 15.8 15.8 17.8 39.5 3.2 0.3 -0.1 7.7 8.5 18.9
Realization (INR/t) 4,331 4,381 4,426 4,552 4,633 4,713 4,638 4,711 4,434 4,674 4,677 -1
YoY Change (%) (3.1) (3.5) 2.5 5.7 7.0 7.6 4.8 3.5 0.7 5.4 8.0
QoQ Change (%) 0.6 1.1 1.0 2.9 1.8 1.7 -1.6 1.6 2.7
Net Sales 8,252 10,448 11,928 13,220 12,315 11,604 12,542 13,668 43,847 50,130 10,595 16
YoY Change (%) -20.8 11.7 18.7 24.6 49.2 11.1 5.2 3.4 8.4 14.3 28.4
EBITDA 1,433 1,867 1,918 2,679 2,161 1,829 1,741 2,177 7,898 7,908 1,933 12
Margin (%) 17.4 17.9 16.1 20.3 17.5 15.8 13.9 15.9 18.0 15.8 18.2
Depreciation 484 493 487 478 460 480 510 558 1,942 2,008 500
Interest 378 381 367 299 257 240 230 227 1,425 953 270
Other Income 82 183 207 273 169 180 200 219 745 768 180
PBT before EO expense 653 1,176 1,272 2,175 1,613 1,289 1,201 1,611 5,275 5,714 1,343 20
Extra-Ord. expense 0 0 0 309 0 0 0 0 309 0 0
PBT 653 1,176 1,272 1,865 1,613 1,289 1,201 1,611 4,966 5,714 1,343 20
Tax 209 370 248 500 426 387 360 427 1,328 1,600 430
Rate (%) 32.0 31.5 19.5 26.8 26.4 30.0 30.0 26.5 26.7 28.0 32.0
Reported PAT 444 806 1,023 1,365 1,187 903 841 1,184 3,638 4,114 913 30
Adj. PAT 444 806 1,023 1,674 1,187 903 841 1,184 3,947 4,114 913 30
YoY Change (%) -36 76 108 66 167 12 (18) (29) 49 4 106

Per tonne analysis (INR/t)

Net realization 4,331 4,381 4,426 4,552 4,633 4,713 4,638 4,711 4,434 4,674 4,677 -1
RM cost 1,121 1,050 1,120 1,095 1,091 1,150 1,150 1,248 1,096 1,162 1,100 -1
Employee expenses 424 335 323 273 312 337 333 312 331 323 366 -15
Power, oil, and fuel 690 863 799 782 908 950 980 887 789 930 910 0
Freight and handling outward 870 852 901 935 934 944 949 958 893 947 940 -1
Other expenses 473 498 571 545 574 589 582 557 527 575 508 13
Total expenses 3,579 3,598 3,714 3,630 3,820 3,970 3,994 3,961 3,635 3,937 3,824 0
EBITDA 752 783 712 922 813 743 644 750 799 737 853 -5
E: MOFSL estimates

2 August 2021 52
 1 August 2021
1QFY22 Results Update | Sector: Media

PVR
Estimate change CMP: INR1,402 TP: INR1,500 (+7% ) Neutral
TP change Curtailed opex to limit losses; gradual re-opening in sight
Rating change
 PVR reported EBITDA loss of INR1.3b (better than est), similar to 1QFY21, as
Motilal Oswal values your support in the curtailed opex during the second COVID wave led lockdowns restricted
Asiamoney Brokers Poll 2021 for India
Research, Sales, Corporate Access and losses.
Trading team. We request your ballot.  A strong pipeline of movie releases and the gradual lifting of restrictions,
coupled with the quicker recovery seen in most retail segments, remain key
for revival. Nevertheless, the advancement of OTT and recent capital raise
could be an overplay on valuations. Our FY23E nos remain intact and factor
4%/5% above FY20 nos. Maintain Neutral.
Bloomberg PVRL IN
Equity Shares (m) 61
M.Cap.(INRb)/(USDb) 85.2 / 1.1 Operating losses rise as cinemas operate on relaxed capacity
52-Week Range (INR) 1592 / 961  PVR’s 1QFY22 revenue fell 73% QoQ to INR511m (up ~11x YoY, 94% below
1, 6, 12 Rel. Per (%) 5/-15/-10 1QFY20) as cinema operators witnessed operational shutdown due to the
12M Avg Val (INR M) 2421
second COVID wave gradually from April’21.
 Overall fixed opex was down 42% QoQ on account of business closures, but
Financials & Valuations (INR b)
Y/E March FY21 FY22E FY23E
jumped 41% YoY to INR1.8b. (75% below 1QFY20 levels).
Sales 2.8 12.0 38.5  Prudent cost-cutting measures curtailed rent / employee expenses to
EBITDA -4.6 -3.0 6.7 57%/11% YoY QoQ, but CAM charges pending negotiations, which have
Adj. PAT -5.6 -5.0 1.7 seen total cost provisioning, rose 8% QoQ.
EBITDA Margin (%) -165.3 -25.0 17.5  On a pre-Ind-AS 116 basis, EBITDA loss stood at INR1.3b, similar to INR1.2b
Adj. EPS (INR) -91.6 -81.9 28.6
in 1QFY21 and INR1.4b in 4QFY21. The cost increase was proportionate to
EPS Gr. (%) NM NM -135.0
BV/Sh. (INR) 301.7 219.9 248.5 the revenue growth, underscoring the company’s strong grip on cost.
Ratios  Total screen count remained constant at 842, while avg. ticket prices /
Net D:E 2.2 3.6 3.2 spends per hour increased 4%/1% QoQ to INR191/INR96.
RoE (%) NM -31.4 12.2  As of 29th July 2021, 12 states and two UTs in India as well as Sri Lanka
RoCE (%) NM -12.8 11.3
(Colombo), accounting for 526 screens across 111 properties, were re-
Payout (%) 0.0 0.0 0.0
Valuations
opened with restrictions in place. Certain other states, including
P/E (x) NM -17.1 48.9 Maharashtra, are also allowing cinemas to open up.
P/BV (x) 4.6 6.4 5.6  Net debt stood at ~INR7.5b, with total liquidity at ~INR8.5b, including
EV/EBITDA (x) NM -32.4 14.3 unutilized sanctioned credit lines. There are no plans for any fresh capital
Div Yield (%) 0.0 0.0 0.0 raise.

Shareholding pattern (%)

Highlights from management commentary
As On Jun-21 Mar-21 Jun-20
Promoter
 The company expects the movie release line-up to commence from
17.1 17.1 18.6
DII 26.4 24.5 29.8 September-end. Recovery is expected to speed up during the festive season
FII 38.2 42.6 37.0 starting October 2021, with big-budget movies scheduled for release.
Others 18.4 15.8 14.7  The exclusive window of four weeks for multiplexes may be reduced in the
FII Includes depository receipts current environment, but this would only be for the near term. However,
the terms are expected to return to normal levels by the end of this fiscal
or, at the maximum, by the start of the next fiscal.
 The Food business would coincide with cinema openings and is expected to
pick up over 3–4 weeks as the cinema business stabilizes.

2 August 2021 53
 Valuation and view
 With ~INR8.5b in liquidity, PVR has sufficient cash to meet its fixed expenses
over the next 4–5 quarters. Subsequently, a further reduction in rentals/CAM
would aid cost savings.
 A strong movie pipeline bodes well, but restrictions in capacity and slow
recovery in footfall continue to raise uncertainty. Subsequently, PVR’s
profitability and business scale are expected to remain muted over the next 1–2
years as even the management has refrained from giving guidance.
 As highlighted in our recent report (click here), with the rising scale and traction
of movie releases over OTT platforms since the pandemic – coupled with
subscriber growth and even the strong reception by mainstream actors – the
dynamics of the industry could change. This is evident from the reducing
exclusive window for multiplexes over OTT as well as the simultaneous releases
seen over OTT and multiplexes. However, the management has indicated that
this may change once normalcy returns.
 We expect the business to normalize by FY23E, with revenue/EBITDA reaching
FY20 levels of INR38.5b/INR6.7b. However, the rich valuation it has commanded
historically may contract. We value the company at 14x FY23E EBITDA to arrive
at Target Price of INR1,500. Maintain Neutral.

Quarterly Performance (INR m)

Y/E March FY21 FY22E FY21 FY22E FY22 Est. Var
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Sales 43 436 634 1,656 511 1,538 3,734 6,162 2,769 11,953 128 300
YoY Change (%) -99.5 -95.5 -93.1 -74.3 1096.3 252.8 489.1 272.1 -91.9 331.7 199.3
Total Expenditure 1,286 1,246 1,722 3,091 1,807 2,957 4,250 5,927 7,345 14,941 1,279 41
EBITDA -1,243 -810 -1,088 -1,435 -1,296 -1,419 -516 235 -4,576 -2,988 -1,152 13
YoY Change (%) -178.4 -141.7 -160.4 -435.4 4.3 75.1 -52.6 -116.4 -179.4 -34.7 -7.4
Depreciation 603 583 585 612 577 595 595 614 2,383 2,381 626 -8
Interest 353 351 402 384 377 447 452 534 1,490 1,810 374 1
Other Income 83 0 0 253 198 139 97 97 336 530 23 766
PBT before EO expense -2,116 -1,744 -2,075 -2,179 -2,052 -2,322 -1,466 -816 -8,114 -6,648 -2,128 -4
Extra-Ord expense 2 4 0 0 0 0 0 0 0 0 0
PBT -2,118 -1,749 -2,075 -2,179 -2,052 -2,322 -1,466 -816 -8,114 -6,648 -2,128 -4
Tax -707 -587 -707 -538 -633 -581 -367 -93 -2539.3 -1673.3 -532 19
Rate (%) 33.4 33.6 34.1 24.7 30.8 25.0 25.0 11.5 31.3 25.2 25.0
MI & Profit/Loss of Asso. Cos. 1 1 1 0 0 0 0 0 3 0 0
Reported PAT -1,410 -1,161 -1,366 -1,641 -1,419 -1,742 -1,100 -722 -5,577 -4,983 -1,596 -11
Adj PAT -1,410 -1,161 -1,366 -1,641 -1,419 -2,317 -1,463 -814 -5,577 -6,012 -2,123 -33
YoY Change (%) -340.6 -252.7 -293.1 374.5 0.7 99.6 7.0 -50.4 -426.5 7.8 50.6

2 August 2021 54
 31 July 2021
1QFY22 Results Update | Sector: Capital Goods

Orient Electric
Estimate change
CMP: INR323 TP: INR395 (+22%) Buy
TP change
Rating change
Revenue surprised positively, demand holding up well
Commodity price inflation weighs on gross margin
Motilal Oswal values your support in
the Asiamoney Brokers Poll 2021 for
 Revenue came in 6% above our estimate in 1QFY22. Commodity cost
India Research, Sales, Corporate inflation impacted the ECD segment the most. However, OEL’s cost saving
Access and Trading team.
program ‘Sanchay’ arrested the decline in gross margin. EBITDA margin
We request your ballot.
stood 110bp below our estimate of 6.4% due to commodity cost inflation
pressures and negative operating leverage. Adjusted profit stood at
INR50m v/s our estimate of INR79m.
 Working capital stood elevated owing to higher inventory and marginal
Bloomberg ORIENTEL IN increase in receivables. While working capital days is expected to
Equity Shares (m) 212 moderate from current levels, it is expected to remain elevated for a
M.Cap.(INRb)/(USDb) 68.5 / 0.9 couple of quarters, owing to inventory built up and the possibility of a
52-Week Range (INR) 368 / 172 supply chain disruption due to a third COVID wave. The company
1, 6, 12 Rel. Per (%) 3/14/44 continues to be a net cash company, a feat achieved in 4QFY21.
12M Avg Val (INR M) 146  OEL’s cost structure (with higher employee costs and ad spends as a
percentage of sales) makes it a strong operating leverage story. As the
economy recovers from the pandemic, it can witness a strong margin
Financials & Valuations (INR b)
Y/E Mar 2021 2022E 2023E expansion. We maintain our FY22E earnings, but increase the same for
Sales 20.3 25.0 29.2 FY23E by 7%, a function of operating leverage, as we raise our revenue
EBITDA 2.2 2.4 3.1 estimate marginally by 3%. Our TP stands at INR395 (on an unchanged
PAT 1.2 1.4 1.9 target multiple of 45x FY23E EPS). On a FY23E P/E multiple basis, OEL is
EBITDA (%) 10.8 9.8 10.7
trading at a discount of 30%/14% v/s HAVL/CROMPTON. On an EV/EBITDA
EPS (INR) 5.6 6.5 8.7
EPS Gr. (%) 52.3 15.2 34.4 basis, the discount stands at 40%/36%. We maintain our Buy rating.
BV/Sh. (INR) 21.5 26.0 32.1
Ratios
Revenue above our estimate
Net D/E (0.5) (0.2) (0.3)  1QFY22 snapshot: Revenue stood at INR4.2b, 6% above our estimate. The
RoE (%) 26.3 25.0 27.2 two-year revenue CAGR stood at -14% (almost similar to CROMPTON).
RoCE (%) 30.4 28.3 29.9 EBITDA stood at INR223m (v/s a loss last year), 13% below our estimate.
Payout (%) 22.1 30.0 30.0
Valuations EBITDA margin stood at 5.3%, below our estimate of 6.4% on account of
P/E (x) 57.2 49.6 36.9 commodity cost inflation pressures and lower operating leverage. PBT
P/BV (x) 15.0 12.4 10.0 stood at INR68m. The effective tax rate stood at 26.4% (v/s 22.7% YoY).
EV/EBITDA (x) 30.1 27.7 21.4
Div Yield (%) 0.4 0.6 0.8
Adjusted PAT stood at INR50m (v/s a loss last year), below our estimate of
FCF Yield (%) 5.7 (1.2) 2.4 INR79m.
 Key segmental highlights: a) Electrical Consumer Durables – revenue
Shareholding pattern (%) stood at INR3.2b in 1QFY22, 8% above our estimate. EBIT margin stood at
As On Jun-21 Mar-21 Jun-20 7%. b) Lighting and Switchgear – revenue stood at INR982m in 1QFY22, in
Promoter 38.5 38.5 38.5
line with our estimate. EBIT margin stood at 10.5%.
DII 22.4 22.6 21.2
FII 8.8 9.2 5.1 Other key takeaways
Others 30.4 29.7 35.2  The share of e-commerce in sales varies across different categories (max
FII Includes depository receipts ~20%). Its overall share in sales is still in single-digits. Categories like
Appliances have the highest share.

2 August 2021 55
  Premium Fans (~INR4,000/unit) constitute less than 10% of total Fan sales.
Decorative Fans (~INR2,500/unit) and Premium Fans account for ~45% of total
Fan sales.
 OEL has increased prices by 15-20% across categories since the uptrend in
commodity prices.

Valuation and view

 While the recent lockdown has led to lower offtake, normal inventory level in
the channel is expected to aid primary sales as demand stabilizes. We believe
OEL is best placed to capture pent-up demand, with its strong manufacturing
and distribution capabilities. We raise our FY23E EPS estimate by 7%, while
largely keeping its FY22E EPS unchanged. We forecast a revenue/EBITDA
/adjusted PAT CAGR of 17%/19%/23% over FY21-24E. We value OEL at 45x
FY23E EPS, with a TP of INR395. At the CMP, the stock trades at a FY22E/FY23E
P/E of 50x/37x. Our longer term thesis indicates a reduction in the margin
differential between OEL and leading FMEG peers (refer to our initiation
report). On a FY23E P/E multiple basis, OEL is trading at a discount of 30%/14%
v/s HAVL/CROMPTON, while on an EV/EBITDA basis, the discount stands at
40%/36%. We maintain our Buy rating.

Quarterly performance (INR m)

FY21 FY22E FY21 FY22E MOSL Var.
Y/E March 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE
Sales 1,788 4,338 6,183 8,017 4,223 4,988 6,833 8,955 20,326 25,000 3,978 6.2%
Change (%) -68.5 -0.2 24.7 42.4 136.2 15.0 10.5 11.7 -1.4 23.0 122.5
Adj. EBITDA -193 578 842 968 223 473 812 931 2,195 2,440 256 -12.7%
Change (%) -143.6 164.2 86.0 48.5 NA -18.2 -3.5 -3.8 24.4 11.1 -232.9
Adj. EBITDA margin (%) -10.8 13.3 13.6 12.1 5.3 9.5 11.9 10.4 10.8 9.8 6.4
Depreciation 107 107 108 109 116 115 120 120 432 471 110
Interest 63 45 46 54 48 50 50 52 207 200 50
Other Income 9 7 7 40 9 10 15 41 63 75 10
Extra-ordinary Items - - - - - - - - - - -
PBT -353 433 694 845 68 318 657 801 1,619 1,844 106 -35.7%
Tax -80 109 175 218 18 80 165 201 422 464 27
Effective Tax Rate (%) 22.7 25.1 25.2 25.8 26.4 25.2 25.2 25.1 26.0 25.2 25.2
Reported PAT -273 324 519 627 50 238 492 600 1,198 1,380 79 -36.8%
Change (%) -244.6 558.9 172.7 75.2 NA -26.7 -5.3 -4.3 52.3 15.2 -129.0
Adj. PAT -273 324 519 627 50 238 492 600 1,198 1,380 79 -36.8%
Change (%) -244.6 558.9 172.7 75.2 NA -26.7 -5.3 -4.3 52.3 15.2 -129.0

Segmental sales (INR m)

FY20 FY21 FY22
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Electrical Consumer Durables 4,291 2,832 3,248 4,545 1,035 3,044 4,605 6,456 3,241
Lighting and Switchgear 1,392 1,514 1,709 1,086 753 1,294 1,579 1,561 982
YoY growth (%)
Electrical Consumer Durables 31.7 16.3 14.1 (4.5) (75.9) 7.5 41.8 42.0 213.2
Lighting and Switchgear 29.5 16.9 25.9 (32.9) (45.9) (14.5) (7.6) 43.7 30.5
EBIT
Electrical Consumer Durables 435 264 402 716 (71) 512 685 926 227
Lighting and Switchgear 139 109 226 123 48 189 230 225 103
EBIT margin (%)
Electrical Consumer Durables 10.1 9.3 12.4 15.8 (6.8) 16.8 14.9 14.3 7.0
Lighting and Switchgear 10.0 7.2 13.2 11.3 6.4 14.6 14.6 14.4 10.5

2 August 2021 56
 1st August 2021
1QFY22 Results Update | Sector: Financials

Equitas Holdings
Estimate change CMP: INR129 TP: INR160 (+25%) Buy
TP change
Business growth muted; collection efficiency shows a healthy
Rating change
recovery in Jul’21
Motilal Oswal values your support in
Restructured book increases sharply
the Asiamoney Brokers Poll 2021 for
India Research, Sales, Corporate  Equitas Small Finance Bank reported a PAT of INR119m (MOSLe: INR705m)
Access and Trading team. impacted by higher opex and elevated provisions on account of
We request your ballot.
restructuring. Business growth remains muted, with non-MFI AUM flat
QoQ, while the MFI portfolio declined. Liability momentum continues to
stay strong, with CASA ratio improving to 40%.
 On the asset quality front, slippages stood elevated as collections were
impacted due to the second COVID wave. However, higher upgrades
Bloomberg EQUITAS IN
Equity Shares (m) 342 provided some support. GNPA/NNPA increased by 103bp/80bp QoQ, while
M.Cap.(INRb)/(USDb) 43.9 / 0.6 the restructuring book stood elevated at INR13.3b (~7.5% of loans).
52-Week Range (INR) 138 / 40 Collection efficiency for Jun’21 stood at 83.5%, which improved further to
1, 6, 12 Rel. Per (%) 37/66/114
mid-90s in Jul’21, providing comfort on recovery trends. We cut our
12M Avg Val (INR M) 319
FY22E/FY23E earnings estimates by 36%/14%. We maintain our BUY rating.
Financials & Valuations (INR b)
Y/E March FY21 FY22E FY23E Higher opex and elevated provisioning impacts earnings; asset quality
NII 18.0 20.6 25.0 deteriorates
OP 8.9 8.6 11.5  PAT stood ~INR119m (79% YoY decline, miss to our estimate) in 1QFY22,
NP 3.8 2.9 5.4
impacted by higher opex and elevated provisions, as the bank made
NIM (%) 8.4 7.8 7.8
EPS (INR) 11.2 8.6 15.8
provisions on the restructuring book.
BV/Sh. (INR) 99.4 105.6 117.9  NII grew 14% YoY (+3% QoQ; in line), with NIM expanding by 30bp QoQ to
ABV/Sh. (INR) 93.5 96.6 108.9 7.87%. Other income was up 2.5x (low base) at INR1b (-42% QoQ).
Ratios  Opex grew 37% YoY (+6% QoQ), resulting in an increase in the C/I ratio to
RoE (%) 12.5 8.3 14.2
70.9% (v/s 60.2% in 4QFY21). PPOP growth stood at 16% YoY (24% miss).
RoA (%) 1.7 1.1 1.7
Valuations  Total AUM grew ~15% YoY (-1% QoQ) to INR178b, affected by a 3% QoQ
P/E(X) 11.4 15.0 8.1 decline in the MFI/Vehicle portfolio. The share of MFI in total AUM declined
P/BV (X) 1.3 1.2 1.1 to 17.5% (v/s 23.2%/18.1% in 1Q/4QFY21). Non-MFI grew 23% YoY (flat
P/ABV (X) 1.4 1.3 1.2 QoQ), led by a 24%/70% growth in Small Business loans/MSE finance.
Disbursements stood at INR12.7b (up 1.2x/-50% QoQ) in 1QFY22.
Shareholding pattern (%)  Deposits (excluding CD) growth stood strong (48% YoY) at INR170b, led by
As On Jun-21 Mar-21 Jun-20
Promoter
189% growth in CASA (26% QoQ growth in SA deposits), while TD grew 9%
0.0 0.0 0.0
DII 32.1 33.2 30.3 YoY, resulting in an improvement in the CASA ratio to 40% (+600bp QoQ).
FII 28.9 28.4 28.2  On the asset quality front, the GNPA/NNPA ratio increased by 103bp/80bp
Others 39.0 38.4 41.6 QoQ to 4.76%/2.38%, impacted by higher slippages, even as upgrades stood
FII Includes depository receipts strong. PCR moderated to 51.2% (v/s 58.6% in 4QFY21). The total
restructuring book stood at INR13.3b (7.5% of loans) and the management
guided at a total restructuring of ~INR21.5b (~12% of loans).
 Collection efficiency (CE) was impacted over 1QFY22 and stood at 83.5% in
Jun’21, while the billing efficiency stood at 69.5%. However, CE improved in
Jul’21 to the mid-90s. CE across segments: MFI at 67% (91% in Jul’21), Small
Business loans at 85% (98.7% in Jul’21), and Vehicle Finance at 89%.

2 August 2021 57
 Highlights from the management commentary
 CE in the X bucket across states: Tamil Nadu grew to 98.2% in Jul’21 from 64%
in Jun’21, Chennai: 99%, Erode: ~96%, and the rest are in the range of 96-99%.
 Vehicle Finance: CE improved further in Jul’21. Billing efficiency has improved to
75-80% in Jul’21 from 69% in Jun’21.
 The bank expects the amalgamation to get completed in ~12 months.
 Credit cost based on current trends is expected to be ~2.5% for FY22. Credit cost
should moderate from 2HFY22.

Valuation and view

Equitas reported a muted 1QFY22, with AUM growth impacted due to the lockdown,
while higher provisioning dented earnings. Deposit growth remains robust, led by
healthy traction in SA deposits. On the asset quality front, CE was impacted over
1QFY22, which resulted in a deterioration in asset quality. However, it showed a
strong recovery in Jul’21, pointing towards a quicker recovery. Restructured book
increased to 7.5% of loans (guidance of ~12%), which keeps us watchful on asset
quality in the near term. We cut our FY22E/FY23E earnings estimate by 36%/14%
and build in higher (2.5%) credit cost for FY22E. We estimate a RoA/RoE of
1.7%/14.2% for FY23E. We maintain our Buy rating with a revised TP of
INR160/share (1.5x FY23E ABV).

Quarterly performance (INR m)

Y/E March FY21 FY22 FY22E Var.
FY21 FY22E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Net Interest Income 4,043 4,613 4,839 4,486 4,610 4,938 5,328 5,697 17,980 20,573 4,682 -2
% Change (YoY) 19.9 31.6 26.1 5.8 14.0 7.0 10.1 27.0 20.2 14.4 15.8
Other Income 297 637 1,463 1,784 1,036 1,158 1,239 1,332 4,181 4,766 858 21
Total Income 4,339 5,249 6,302 6,270 5,647 6,096 6,568 7,029 22,160 25,339 5,539 2
Operating Expenses 2,919 3,053 3,551 3,771 4,002 4,157 4,274 4,328 13,294 16,760 3,383 18
Operating Profit 1,420 2,197 2,750 2,498 1,644 1,939 2,294 2,702 8,866 8,579 2,157 -24
% Change (YoY) 18.8 67.5 73.6 32.6 15.8 -11.7 -16.6 8.1 48.4 -3.2 51.9
Provisions 683 839 1,261 970 1,502 1,168 1,074 927 3,753 4,670 1,214 24
Profit before Tax 737 1,358 1,490 1,529 142 772 1,220 1,775 5,113 3,908 943 -85
Tax 160 328 383 400 23 194 307 459 1,270 984 238 -90
Net Profit 577 1,030 1,107 1,129 119 577 912 1,316 3,842 2,925 705 -83
% Change (YoY) 1.1 108.1 17.6 162.4 -79.3 -44.0 -17.6 16.6 57.7 -23.9 22.3
Operating Parameters
AUM (INR b) 156 167 174 180 178 190 201 216 180 216 183 -2
Deposits (INR b) 118 129 159 164 171 176 188 203 164 203 169 1
Loans (INR b) 144 159 168 168 167 177 185 195 168 195 172 -3
AUM Growth (%) 27 26 19 17 15 14 16 20 17 20 17 -291
Deposit Growth (%) 29 29 51 52 45 36 18 24 52 24 43 179
Loan Growth (%) 20 23 23 23 16 11 10 16 23 16 19 -324
Asset Quality
Gross NPA (%) 2.9 2.5 2.3 3.7 4.8 4.8 4.7 4.7 3.7 4.7 4.8 -2
Net NPA (%) 1.5 1.0 0.7 1.6 2.4 2.1 2.0 2.2 1.6 2.2 2.1 32
PCR (%) 48.8 50.2 66.2 58.6 51.2 58.5 59.0 53.8 55.6 53.8 58.0 -679
E: MOFSL estimates

2 August 2021 58
 30 July 2021
1QFY22 Results Update | Sector: Departmental Retail

Shoppers Stop
Estimate change CMP: INR267 TP: INR 245 (-8% ) Neutral
TP change
Performance in 1QFY22 better than that during the first
Rating change
COVID wave
Motilal Oswal values your support in the
Asiamoney Brokers Poll 2021 for India  Lower impact of the second COVID wave, led to a revenue growth of 3.7x to
Research, Sales, Corporate Access and INR2.1b, but fell 76% v/s pre-COVID (1QFY20) levels. The management’s
Trading team. We request your ballot.
focus on Online and Beauty has increased revenue share to 18%/19%,
which has cushioned the impact in a weak market condition.
 We have marginally inched up our revenue/EBITDA estimate for
FY22E/FY23E, factoring in almost 98% of a revenue recovery in FY23E to
pre-COVID levels. Weak footfalls in the Lifestyle Apparel category have
Bloomberg SHOP IN
Equity Shares (m) 88 historically hurt earnings growth. We maintain our Neutral rating, with a TP
M.Cap.(INRb)/(USDb) 29.2 / 0.4 of INR245/share.
52-Week Range (INR) 291 / 144
1, 6, 12 Rel. Per (%) 12/22/35
12M Avg Val (INR M) 78
Revenue 76% below pre-COVID levels
 Standalone revenue grew 3.7x to INR2.1b (93% beat), but fell 76% v/s
Financials & Valuations (INR b)
1QFY20 levels, as the impact of the second COVID wave has certainly been
Y/E March FY21 FY22E FY23E much lesser.
Sales 17.3 23.6 33.0  Gross margin expanded 660bp YoY to 38.7%, with an improving private
EBITDA 0.5 2.8 5.6 label mix. This is 410bp lower than pre-COVID EBITDA margin of 42.8%.
Adj. PAT -3.0 -1.2 0.1  Operating loss stood at INR628m (15% beat) as against a pre-COVID EBITDA
EBITDA Margin (%) 3.1 11.7 16.9
of INR1,382m on lower revenue and a decline in gross margin. Net loss
Adj. EPS (INR) -33.8 -13.8 1.6
stood at INR1,178m (v/s our estimate of a loss of INR1,336m).
EPS Gr. (%) 84.9 -59.1 -111.4
BV/Sh. (INR) 14.3 -0.6 0.5  Overall recovery in Jun’21 was 49% v/s the corresponding period in FY20. It
Ratios improved further in Jul’21, with an overall recovery of 71%.
Net D:E 10.1 26.9 17.5
RoE (%) -187.0 -100.6 20.6 Highlights from the management commentary
RoCE (%) -3.9 2.4 9.2  Store opening: SHOP is planning to open 30 stores over the next two years.
Payout (%) 0.0 0.0 0.0
Of this, 20-22 stores will be Shoppers Stop and remaining Beauty. It will
Valuations
P/E (x) -7.9 -19.3 170.0 deepen its presence in smaller towns, with smaller size stores, to improve
EV/EBITDA (x) 80.8 14.8 6.7 efficiency.
EV/Sales (x) 2.5 1.7 1.1  Focus on private labels: The management plans to increase share of private
Div. Yield (%) 0.0 0.0 0.0 labels to 25-30% from ~15% over the next 2-3 years with new product
FCF Yield (%) -1.7 7.5 12.9 launches. This should improve margin, along with scale benefits.
 It is ramping online sales to 18% of revenue, of which 75% contribution was
Shareholding pattern (%)
As On
from captive sites, on the back of continued investment in technology and
Jun-21 Mar-21 Jun-20
Promoter 65.5 65.5 63.9
marketing.
DII 19.9 19.9 20.8  Capex program: It plans to spend INR0.8-1b in FY22, which should be
FII 5.8 5.8 6.7 funded internally through a business recovery and available credit lines.
Others 8.9 8.9 8.6  Cost savings: SHOP plans to save INR2b in FY22 v/s INR4.3b in FY21, which
FII Includes depository receipts largely came from lease rental and other opex savings.

2 August 2021 59
 Valuation and view
 Rising sales from the Omnichannel and Beauty is quite encouraging, with an
improving share and target to significantly ramp up its reach and product
portfolio. The management plans to add stores at a steady pace and increase its
presence in lower tier cities.
 But a higher presence in malls, declining footfalls, and regular closures of non-
performing stores raise concerns over store profitability.
 Since SHOP caters to the Lifestyle Apparel Retail segment, it could see a more
pronounced impact as it has a higher share of stores in Malls (over 80%), which
are highly impacted by COVID-19 restrictions.
 Our channel checks suggest that consumers have been down trading to Value
Apparel from Lifestyle products, and this may put pressure on a recovery.
SHOP’s higher average store sizes v/s peers (30-40k sq ft) may also drive higher
operating cost.
 We have marginally inched up our revenue/EBITDA estimate for FY22E/FY23E,
factoring in almost 98% of revenue recovery to pre-COVID levels by FY23E. We
value SHOP on a SoTP basis, assigning an EV/EBITDA of 10x to the standalone
(SHOP) and EV/sales of 1x to Crossword on a FY22E basis to arrive at our TP of
INR245. We maintain our Neutral rating.

Standalone quarterly earnings model (INR m)

Y/E March FY21 FY22 FY21 FY22E FY22E Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)
Total Revenue from Operations 539 2,924 7,076 6,712 2,011 5,339 8,944 7,262 17,251 23,555 1,041 93
YoY Change (%) -93.5 -65.4 -28.8 -5.4 272.9 82.6 26.4 8.2 -49.0 36.5 93.0
Total Expenditure 1,563 3,271 6,127 5,756 2,638 4,918 7,074 6,159 16,717 20,790 1,778 48
EBITDA -1,024 -347 949 956 -628 421 1,870 1,102 534 2,766 -737 -15
EBITDA Margin (%) -189.9 -11.9 13.4 14.2 -31.2 7.9 20.9 15.2 3.1 11.7 -70.8
Depreciation 997 941 1,003 906 878 910 933 1,010 3,847 3,731 884 -1
Interest 552 607 535 505 509 575 575 642 2,200 2,300 575 -12
Other Income 1,040 631 310 207 641 410 410 179 2,188 1,641 410 56
PBT before EO expense -1,533 -1,265 -279 -248 -1,373 -654 772 -370 -3,325 -1,625 -1,786 -23
PBT -1,533 -1,365 -279 -372 -1,523 -804 772 -370 -3,549 -1,925 -1,786 -15
Tax -382 -342 -72 -1 -346 -165 194 -93 -797 -409 -449
Rate (%) 24.9 25.1 25.9 0.4 22.7 20.5 25.2 25.2 22.5 21.2 25.2
Reported PAT -1,151 -1,023 -207 -371 -1,178 -639 578 -277 -2,752 -1,516 -1,336 -12
Adj. PAT -1,112 -1,123 -207 -247 -1,028 -489 578 -277 -2,688 -1,216 -1,336 -23
YoY Change (%) -1,476.6 NM 296.7 -66.4 -7.6 -56.4 -379.1 12.1 254.1 -54.8 20.2
E: MOFSL estimates

2 August 2021 60
 Sector Update| 2 August 2021

Automobiles
Motilal Oswal values your support
in the Asiamoney Brokers Poll 2021 Escorts
for India Research, Sales,
Corporate Access and Trading CMP: INR1,184 TP: INR1,322 (+12%) Neutral
team. We request your ballot.
Below our estimate at 6.6k, up by 16% CAGR (v/s Jul’19)
Volumes grew 23% YoY, but fell 48% MoM due to seasonality

 It posted a 16% CAGR (v/s Jul’19) in Tractor dispatches to 6.6k units in Jul’21
(est. 8.8k units).
 It posted a 16% CAGR (v/s Jul’19) in domestic Tractor sales to ~6k units (est.
8.2k). The same grew by 22% YoY, but fell 49% MoM.
Stock Info  It posted a 20% CAGR (v/s Jul’19) in Tractor exports to 509 units (est. 550 units).
Bloomberg ESC IN The same grew by 38% YoY, but fell 12% MoM.
Equity Shares (m) 135  Sales of Construction Equipment grew 43% YoY and 40% MoM to 367 units.
M.Cap.(INRb)/(USDb) 159.7 / 2.1  We expect Tractor volumes to grow by ~6% in FY22E, implying a monthly run-
52-Week Range (INR) 1465 / 1075 rate of ~10k units, or a 3% residual decline. We are estimating a 10% growth in
1, 6, 12 Rel. Per (%) -3/-15/-35 Construction Equipment for FY22E, implying a monthly run-rate of 416 units, or
a 2.7% residual decline.
Financials Snapshot (INR b)
 The stock trades at 13.9x/12.5x FY22E/FY23E EPS. We maintain our Neutral
Y/E March 2021 2022E 2023E
Sales 70.1 76.3 81.8
rating.
EBITDA 11.3 11.3 12.5
EBITDA Margin. % 14.4 13.1 13.6 Management commentary:
Adj. PAT 8.7 8.6 9.6 Tractors: The three-week slowdown in monsoon activity from mid-Jun’21 to mid-
EPS (INR) 86.3 85.5 94.4 Jul’21 temporarily affected sowing of Kharif crops, leading to some slowdown in
EPS Gr. (%) 59.8 -0.9 10.5 sales in Jul’21. However, monsoon activity has now turned normal, and sowing has
BV/Sh. (INR) 497.0 576.5 663.9 picked up in the last few days. This should augur well for the remaining months of
Ratios the year. Most dealerships are now open and are able to fully serve customers.
RoE (%) 21.4 15.9 15.2
Commodity inflation continues to put pressure on margin, despite three price
RoCE (%) 28.6 21.5 20.5
increases in the last nine months.
Payout (%) 8.7 7.0 7.4
Valuations Outlook for the Construction Equipment segment: The on-ground situation eased
P/E (x) 13.7 13.9 12.5 in Jul’21. Liquidity is still tight, and the management expects funding availability to
P/BV (x) 2.4 2.1 1.8 improve going forward. Demand is expected to recover to its full potential from
EV/EBITDA (x) 9.5 9.2 7.8 Oct’21 onwards post the monsoon season. Commodity price inflation remains to be
Div. Yield (%) 0.6 0.5 0.6 watched.
FCF yield (%) 6.4 2.1 4.8

Snapshot of volumes for Jul’21

YoY MoM Two-year CAGR Residual Residual FY22 YTD
Change Change FY22E Gr. growth monthly monthly
Company sales Jul’21 Jul’20 Jun’21 Jul’19 %
(%) (%) estimate (%) (%) run-rate run-rate
ESC 6,564 5,322 23.3 12,533 -47.6 4,860 16.2 1,13,145 6.0 -3.1 10,081 8,125
Domestic 6,055 4,953 22.2 11,956 -49.4 4,505 15.9 1,09,760 7.8 0.0 9,901 7,639
Exports 509 369 37.9 577 -11.8 355 19.7 3,385 -31 -64.5 180 486
Const. Equipment 367 256 43.4 262 40.1 4,304 10 -2.7 416 243

2 August 2021 61
 Maruti Suzuki
CMP: INR6,979 TP: INR8,200 (+17.5%) Buy
Stock Info
Bloomberg MSIL IN
In line; volumes grew by 22% CAGR (v/s Jul’19) to 162.5k units
Equity Shares (m) 302 MSIL clocked the highest ever exports at 21.2k units
M.Cap.(INRb)/(USDb) 2108.1 / 28.3
52-Week Range (INR) 8400 / 6130  MSIL’s Jul’21 Wholesales were in line with our estimate ~162.5k units, up 22%
1, 6, 12 Rel. Per (%) -7/-17/-28
CAGR (v/s Jul’19), 50% YoY and 10% MoM.
Financials Snapshot(INR b)  Domestic volumes grew by 19% CAGR (v/s Jul’19) to 141.2k units (est. 141.5k
Y/E MARCH 2021 2022E 2023E units). The same grew 39% YoY and 8% MoM.
Sales 703.3 946.4 1,043.5  Compact segment volumes grew by 11% CAGR (v/s Jul’19) to 73k units (est. 74k
EBITDA 53.5 72.1 116.3 units). The same grew by 38% YoY and 4% MoM.
Adj. PAT 42.3 55.6 90.9
 Mini segment volumes grew by 30% CAGR (v/s Jul’19) to 19.7k units (est. 21k
Cons. Adj.
145.3 187.7 304.7 units). The same grew by 14% YoY and 13% MoM.
EPS (INR)
EPS Gr. (%) -22.7 29.2 62.3  It posted a 50% CAGR (v/s Jul’19) in UV volumes to ~34.3k units (est. 31.6k
BV/Sh. (INR) 1,700 1,840 2,040 units). The same grew 79% YoY and 12% MoM.
Ratios  It posted a 26% CAGR (v/s Jul’19) in the LCV segment to 2.8k units (est. 2.7k
RoE (%) 8.2 10.0 14.7 units). The same grew 24% YoY and 44.5% MoM.
RoCE (%) 10.1 12.7 18.9
 It posted a 51% CAGR (v/s Jul’19) in export volumes to 21.2k units (est. 17.5k
Payout (%) 31.0 53.3 39.4
units). The same grew by 214% YoY and 25% MoM. This is the highest ever
Valuations
48.0 37.2 22.9
export numbers achieved by the company.
P/E (x)
P/BV (x) 4.1 3.8 3.4  We estimate FY22E volumes to grow by ~29.5% YoY, implying a residual growth
EV/EBITDA (x) 31.1 22.5 13.4 of 8%, or run-rate of ~171.6k units.
Div. Yield (%) 0.6 1.4 1.7  The stock trades at 37.2x/22.9x FY22E/FY23E earnings. We maintain our BUY
rating.

Snapshot of volumes for Jul’21

YoY MoM Two-year CAGR Residua FY22
Residual
l YTD
Change Change FY22E Growth growth monthly monthly
Company sales Jul’21 Jul’20 Jun’21 Jul’19 %
(%) (%) estimate (%) run-rate
(%) run-rate
MSIL 1,62,462 1,08,064 50.3 1,47,368 10.2 1,09,264 21.9 18,88,856 29.5 7.8 1,71,5971,29,019
LCVs 2,768 2,232 24.0 1,916 44.5 1,732 26.4 39,309 33.0 24.3 4,061 1,706
Vans 10,057 8,501 18.3 9,218 9.1 9,814 1.2 1,35,554 29.0 13.8 12,964 7,960
Mini segment 19,685 17,258 14.1 17,439 12.9 11,577 30.4 2,81,355 24.4 9.2 26,804 16,731
Compact (incl. Dzire Tour) 72,996 52,836 38.2 70,417 3.7 59,308 10.9 9,28,724 25.1 5.0 86,039 60,103
Midsize - CIAZ 1,450 1,303 11.3 602 140.9 2,397 -22.2 16,207 17.0 3.7 1,530 992
UVs 34,282 19,177 78.8 30,756 11.5 15,178 50.3 3,31,461 35.1 9.0 29,012 24,841
Domestic 1,41,238 1,01,307 39.4 1,30,348 8.4 1,00,006 18.8 17,32,611 27.2 7.5 1,60,410 1,12,333
Export 21,224 6,757 214.1 17,020 24.7 9,258 51.4 1,56,245 62.5 12.1 11,188 16,686

2 August 2021 62
 Hero MotoCorp
CMP: INR2,764 TP: INR3,650 (+32%) BUY
Stock Info Below our estimate; volumes stood at 454.4k units (-8% two-year CAGR)
Bloomberg HMCL IN
Equity Shares (m) 200
HMCL also commenced Retail sales in its key market of Mexico
M.Cap.(INRb)/(USDb) 552.2 / 7.4
52-Week Range (INR) 3616 / 2609  HMCL’s volumes declined by 3% MoM (two-year CAGR of 8%, -12% YoY) to
1, 6, 12 Rel. Per (%) -5/-29/-37 454.4k units (est. 514.5k units).
 We estimate volumes to grow by 20% in FY22E, implying a residual growth of
Financials Snapshot (INR b)
Y/E MARCH 2021 2022E 2023E 16%, or a run-rate of 684k units.
Sales 308.2 377.3 416.5  “India’s rural economy and semi-urban market is expected to bounce back on
EBITDA 40.4 50.8 59.4 hopes of a good monsoon and customers’ preference for personal mobility.
Adj. PAT 29.8 37.4 43.8 HMCL continues to monitor the on-ground situation and remains optimistic
Adj. EPS (INR) 149.4 186.8 218.6
about continuously improving consumer sentiment in the coming months, with
EPS Gr. (%) -2.3 25.0 17.0
BV/Sh. (INR) 760.7 826.0 909.6
the onset of the festive season,” it said in a press release.
Ratios  Most Retail touchpoints of the company are operational across India, although
RoE (%) 20.3 23.6 25.2 localized lockdowns imposed by certain states in the wake of sporadic COVID-19
RoCE (%) 19.9 23.1 24.7 cases continue to restrict customer movement.
Payout (%) 70.3 64.2 61.8  In keeping with its aggressive expansion plans in its global business, HMCL also
Valuations
commenced Retail sales in its key market of Mexico. The company introduced
P/E (x) 18.5 14.8 12.6
P/BV (x) 3.6 3.3 3.0 an extensive portfolio of products, including Motorcycles and a Scooter, thereby
Div. Yield (%) 3.8 4.3 4.9 catering to diverse customer segments. These include popular Motorcycles such
FCF Yield (%) 6.6 6.8 7.7 as the Xpulse 200, Xpulse 200T, Hunk 190, Hunk 160R, Hunk 150, Eco 150 TR,
Eco 150 Cargo, and Ignitor 125, and the Dash 125 Scooter.
 HMCL trades at 14.8x/12.6x FY22E/FY23E EPS. We maintain our BUY rating.

Snapshot of volumes for Jul’21

YoY MoM Two-year CAGR Residual Residual FY22 YTD
Change Change FY22E Growth growth monthly monthly
Company sales Jul’21 Jul’20 Jun’21 Jul’19 %
(%) (%) estimate (%) (%) run-rate run-rate
HMCL 4,54,398 5,14,509 -11.7 4,69,160 -3.1 5,35,810 -7.9 69,49,847 20.0 16.1 6,83,870 3,69,722

2 August 2021 63
 Eicher Motors
CMP: INR2,532 TP: INR3,157(+25%) Buy
Stock Info
Bloomberg EIM IN
Equity Shares (m) 273
Below our estimate; RE at 44k units, down 10% CAGR (v/s Jul’19)
M.Cap.(INRb)/(USDb) 692.1 / 9.3 Volumes for VECV rose by 3% CAGR (v/s Jul’19) to 4,271 units (est. 3,629 units)
52-Week Range (INR) 3036 / 2007
1, 6, 12 Rel. Per (%) -5/-21/-20  Royal Enfield’s (RE) dispatches declined by 10% CAGR (v/s Jul’19) to 44k units
(est. 54.5k units). The same grew by 9% YoY and 2% MoM.
Financials Snapshot (INR b)
Y/E March FY21 FY22E FY23E  We estimate RE volumes to grow by 36.5% in FY22E, implying a residual growth
Sales 87.2 121.2 146.3 of 30%, or a run-rate of 83.5k units. There is downside risk to our estimates.
EBITDA 18.3 28.4 37.9  VECV’s wholesales were above our estimate. Volumes grew by 3% CAGR (v/s
Adj. PAT 13.5 22.6 32.3
Jul’19) and 96% YoY to 4,271 units (est. 3,629 units).
Adj EPS (INR) 50.7 82.7 118.5
EPS Gr (%) -24.3 63.1 43.2  For VECV, we estimate 41% growth in volumes for FY22E, implying a monthly
BV/Sh (INR) 419 482 575 run-rate of 6,017 units.
Ratios  The stock trades at 30.6x/21.4x FY22E/FY23E consolidated EPS. We maintain our
RoE (%) 12.9 18.1 22.4 Buy rating.
RoCE (%) 12.6 18.1 22.4
Payout (%) 34.5 24.2 21.1
Valuations
P/E (x) 49.9 30.6 21.4
P/BV (x) 6.0 5.3 4.4
Div. Yield (%) 0.7 0.8 1.0
FCF Yield (%) 1.7 3.4 3.8

Snapshot of volumes for Jul’21

YoY MoM Two-year CAGR Residual FY21 YTD
FY22E Change Residual
Change Change monthly Monthly
Jul’21 Jul’20 Jun’21 Jul’19 % estimate (%) growth (%)
(%) (%) run-rate Run rate
Royal Enfield 44,038 40,334 9.2 43,048 2.3 54,185 -9.8 8,35,439 36.5 29.8 83,470 41,920
VECV 4,271 2,184 95.6 2,438 75.2 4,048 2.7 58,217 41.1 30.4 6,017 2,519
Domestic LMD 2,579 1,169 120.6 1,264 104.0 2,361 4.5 25,116 -6.0 -18.3 2,505 1,270
Domestic HD 839 404 107.7 420 99.8 559 22.5 7,714 6.0 -14.6 706 517
Domestic Buses 135 161 -16.1 76 77.6 775 -58.3 2,333 -74.2 -77.4 245 94
VTI 78 49 59.2 68 14.7 47 28.8 1,080 -2.4 -14.9 105 61
Domestic 3,631 1,783 103.6 1,828 98.6 3,742 -1.5 36,243 -17.9 -30.2 3,560 1,942
Exports 640 401 59.6 610 4.9 306 44.6 5,025 10.0 -24.4 339 578

2 August 2021 64
 Tata Motors
CMP: INR294 TP: INR400 (+36%) Buy
In line; volumes grew by 22% CAGR (v/s Jul’19) to 54.1k
PVs above our estimate at 30.3k units; CVs below our estimate at 23.8k units
Stock Info
Bloomberg TTMT IN
Equity Shares (m) 3,598
 TTMT posted a 4% CAGR decline (v/s Jul’19) in CV volumes (below our estimate)
M.Cap.(INRb)/(USDb) 1047 / 14.1 to 23.85k units (est. 25.5k units). The same grew 88% YoY and 8% MoM. It
52-Week Range (INR) 361 / 102 posted a 9% CAGR decline (v/s Jul’19) in M&HCV volumes to ~7.8k (below our
1, 6, 12 Rel. Per (%) -14/-2/144 estimate of 9.3k). LCV volumes were flat (v/s Jul’19) ~16k units (in line with our
12M Avg Val (INR M) 17629 estimate of 16.2k).
Financials Snapshot (INR b)  It posted an 82% CAGR growth (v/s Jul’19) in UV volumes to 14.8k units (est.
Y/E March 2021 2022E 2023E 12.5k units). The same grew 178% YoY and 25% MoM. It posted a 58% CAGR
Net Sales 2,498 3,041 3,748 growth (v/s Jul’19) in Car volumes to 15.5k units (est. 13.6k units). The same
EBITDA 357.8 390.0 557.6 grew 59.5% YoY and 26% MoM.
Adj. PAT 2.2 12.1 132.9
 We are estimating ~57% growth in M&HCV volumes for FY22E, implying a 36%
Adj. EPS (INR) 0.6 3.2 34.7
residual growth, or monthly a run-rate of ~14.4k units. For LCVs, we estimate
EPS Gr. (%) -102.2 462.7 994.3
BV/Sh. (INR) 144.3 147.4 181.1
23% volume growth in FY22E, implying a residual growth of 6.5%, or a run-rate
Ratios of 20.6k units
Net D/E (x) 2.1 2.0 1.7  For UVs, we are estimating 90% growth in FY22E, implying a residual growth
RoE (%) 0.4 2.2 21.1 rate of 54%, or a monthly run-rate of 14.8k vehicles. For Cars, we are estimating
RoCE (%) 11.3 5.2 12.8 28% growth for FY22E, implying a residual growth rate of 8%, or a monthly run-
Payout (%) 0.0 0.0 2.9 rate of 15.7k vehicles.
Valuations  Overall, we estimate a 43% growth in total volumes for FY22E, implying a 21%
P/E (x) 521.5 92.7 8.5
residual growth, or a monthly run-rate of ~64.4k units.
P/BV (x) 2.0 2.0 1.6
 The stock trades at 4.8x FY22E/2.9x FY23E EV/EBITDA. We maintain our Buy
EV/EBITDA (x) 4.4 4.8 2.9
Div. Yield (%) 0.0 0.0 0.3
rating with a TP of ~INR400/share (Mar’23E SoTP based).
FCF Yield (%) 8.7 -33.9 22.6

Snapshot of volumes for Jul’21

YoY MoM Two-year CAGR Residual Residual FY22 YTD
Company Change Change FY22E Growth growth monthly monthly
Jul’21 Jul’20 Jun’21 Jul’19 %
sales (%) (%) estimate (%) (%) run-rate run-rate
TTMT 54,119 27,714 95.3 46,265 17.0 36,312 22.1 6,92,478 42.7 21.0 65,447 42,226
HCVs 7,813 2,460 217.6 7,141 9.4 9,408 -8.9 1,41,497 56.9 35.9 14,371 6,633
LCVs 16,035 10,228 56.8 14,959 7.2 16,255 -0.7 2,12,569 23.1 6.5 20,638 11,866
CVs 23,848 12,688 88.0 22,100 7.9 25,663 -3.6 3,54,066 34.7 16.9 35,009 18,498
Cars 15,497 9,714 59.5 12,321 25.8 6,182 58.3 1,73,924 28.0 7.8 15,653 12,175
UVs 14,774 5,312 178.1 11,844 24.7 4,467 81.9 1,64,488 89.8 53.9 14,785 11,553

2 August 2021 65
 26 July 2021

ECOSCOPE
The Economy Observer

Household financial savings up marginally in 4QFY21…

…but physical savings surge

 To improve our understanding of Indian households’ financial position, we have started estimating and publishing
quarterly data on household (HH) savings. Household savings in India have two components: net financial savings (NFS)
and physical savings. The latter is almost double the former and two-thirds of total HH savings. While the RBI produces
quarterly data on HH NFS, this is done with a lag of 5–6 months. Replicating the RBI’s methodology, we produce our own
quarterly estimates of HH NFS with a 3–4 months’ lag1. Our calculations suggest HH NFS stood at 8.7% of GDP in 4QFY21,
only marginally higher than 8.5% of GDP in 3QFY21. This implies HH NFS surged to 11.6% of GDP in FY21 from 8% of GDP
in FY20.
 Using monthly data on stamp and registration charges (S&RCs) collected by the state governments, we have also
prepared quarterly estimates of HH physical savings 2. Notwithstanding COVID-19, S&RCs surged in 2HFY21, to the extent
that they came in just 2% YoY lower in FY21 (vis-à-vis 36% YoY decline in 1HFY21). This implies HH physical savings
increased sharply in 4QFY21, driving total household savings higher.
 Accordingly, as per our estimates, HH (gross) savings in India increased to 24% of GDP in 4QFY21 from 21-22% of GDP in
the previous two quarters and the peak of 28% of GDP in 1QFY21. In other words, HH savings rose to 23.3% of GDP in
FY21 from 19.3% of GDP in FY20.
 A comparison with other large nations reveals HH savings (as % of GDP) have increased across countries. However, the
rise in HH savings in India in FY21 (1.2x FY20 levels) was the slowest vis-à-vis other nations (as high as 4.0x in Japan). A
slower rise in HH savings means the contribution of pent-up demand in growth recovery would be limited in India
compared with other nations.
 Overall, the combination of higher debt, in consumption and lower rise in savings (owing to the lack of direct fiscal
support) confirm further worsening in household financial position 3 in FY21. Accordingly, growth recovery in the post-
COVID era is likely to be slower in India compared with that in other nations.

Household NFS up only slightly in 4QFY21… …but physical savings surge very strongly
HH NFS (% of GDP) MOFSL Estimates Official data# (% of GDP) NFS Physical savings HH savings
22.4
21.0 28.0
24.1
5.7 20.9 21.8
18.8 19.2

9.8 10.4 15.4

7.8 8.0 8.5 8.2 8.7 11.1 13.3
7.1 7.2 11.8 11.4
22.4

7.1 7.8 9.8 8.5 8.7

FY19 FY20 1QFY21 2QFY21 3QFY21 4QFY21

FY19 FY20 1QFY21 2QFY21 3QFY21 4QFY21
# As published by CSO/RBI Source: Various national sources, CEIC, MOFSL
1 Our estimates of Household financial savings differ slightly from the official estimates on quarterly/annual basis. There are two key reasons for
differences: 1) information on household deposits is not readily available; and 2) Non-SCBs lending is defined differently (RBI seems to have taken
personal loans of NBFCs as “Household liabilities”, while we have included agricultural and trade loans also).
2 In order to arrive at physical savings, we estimate household investments using ‘stamp duties & registration charges’ (S&RCs) collected by states

(available on monthly basis). Construction (real estate) sector accounted for 65-70% of household investments in the past four years and S&RCs
were ~8% of construction investments during the period. Using these ratios, we have arrived at household investments, which are equal to
physical savings (by definition).
3 Ideally, Personal disposable income (PDI) = Private final consumption expenditure + household savings. However, in India, PDI is estimated

indirectly. Our estimates of PDI, thus, are not directly comparable with the official estimates (available with 10-month lag on annual basis).

2 August 2021 66
 30 July 2021

ECOSCOPE
The Economy Observer

Gross tax collections remain strong in 1QFY22…

…but spending grows just 0.7% YoY during the quarter
 Gross taxes have remained strong thus far in FY22. Over Apr–Jun’21, they stood at 1.5x the gross taxes collected over
Apr–Jun’20. At INR2.2t, gross taxes accounted for 24.2% of the budgeted target (FY22BE) in 1QFY22, the highest in the
past 25 years.
 While indirect taxes eased moderately in Jun’21 due to lower GST collections, direct taxes were stronger during the
month. The former stood at INR2.9t (25% of FY22BE, the highest in 14 years), while the latter at INR2.5t (22.2% of
FY22BE) in 1QFY22.
 Non-tax revenue collections fell a little below INR100b in Jun’21, from INR996b a month ago. This indicates that May’21
figures were driven entirely by dividend transfers by the RBI. On account of this dividend, government non-tax receipts
expanded to INR1.3t in 1QFY22 (52% of FY22BE, the highest ever on record).
 Total government receipts grew a whopping 256% YoY to INR5.5t in 1QFY22 (27.7% of FY22BE, just marginally lower than
the previous peak of 27.8% of BE in FY11).
 Total government expenditure grew only 0.7% YoY in 1QFY22, led by massive 26.3% YoY growth in capital spending,
while revenue spending contracted 2.4% YoY during the quarter. Therefore, total spending stood at INR8.2t, accounting
for 23.6% of FY22BE, the lowest rate in the past seven years. In 1QFY22, the government achieved a fifth of its capital
spending target for the year.
 Interestingly, subsidy payments by the government grew 12.9% YoY in 1QFY22, implying growth of 692% YoY in Jun’21
alone (after declining 17.6% YoY during Apr–May’21).
 As a result of very high growth in receipts vis-à-vis marginal growth in expenditure, the government’s fiscal deficit in
1QFY22 stood at INR2.7t (18.2% of FY22BE, the lowest since FY98).
 The slow fiscal spending was also reflected in the large cash balances with the RBI, which explains the huge liquidity
surplus. While this implies that fiscal spending may pick up in the remaining nine months of FY22, we continue to believe
that the government fiscal deficit may come in at ~6.5% of GDP during the year (v/s 6.8% in FY22BE).

…but total spending was at a seven-year low during the

Government gross receipts were at 11-year highs in 1QFY22… quarter
Gross receipts 32 Total Spending
32 (% of BEs) 27.7 (% of BEs)
23.6
24 24

16 16

8 8

0 0
Jun-17
Jun-99

Jun-01

Jun-03

Jun-05

Jun-07

Jun-09

Jun-11

Jun-13

Jun-15

Jun-19

Jun-21

Jun-99

Jun-01

Jun-03

Jun-05

Jun-07

Jun-09

Jun-11

Jun-13

Jun-15

Jun-17

Jun-19

Jun-21

Data for 1Q of all years Data for 1Q of all years

Source: Controller General of Accounts (CGA), MOFSL

2 August 2021 67
 Fiscal deficit in the first three months was just 18.2% of
Government has achieved a fifth of its capex target for FY22 FY22BE
(% BE/RE) Revenue exp Capital exp 112 Fiscal Deficit

36 (% of BE)
84
27 24.2
20.1 56
18
28 18.2
9

0 0
Jun-18
Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-19

Jun-20

Jun-21

Jun-99

Jun-15
Jun-01

Jun-03

Jun-05

Jun-07

Jun-09

Jun-11

Jun-13

Jun-17

Jun-19

Jun-21
Data for 1Q of all years Data for 1Q of all years
Source: CGA, MOFSL

2 August 2021 68
 1 August 2021

ECOSCOPE
The Economy Observer
GST collections grew one-third YoY in Jul’21
 Total gross Goods & Services Tax (GST) collections grew 33.1% YoY to INR1.16t in Jul’21, marking the highest collection in
three months and the second highest in FY22 so far. The government has now achieved 36% of its budgeted aim
(FY22BE), higher than 26.1% of FY21RE collected during the corresponding months of last year.
 On a sequential basis, GST collections grew at a 13-month high of 25.4% MoM in Jul’21, post a contraction of 9.6% MoM
in Jun’21 and 27.4% MoM in May’21.
 Within total GST in Jul’21, CGST collections amounted to INR222b, while SGST collections totaled INR285.4b. GST
collections on both imports/domestic activity expanded 37%/32% YoY to INR279b/INR885b in Jul’21.
 “GST collection from the returns filed between 1st Jul’21 and 5th Jul’21 of INR49.4b crore had also been included in the GST
collection in the press note for Jun’21, since taxpayers, with an aggregate turnover up to INR50m, were granted various
relief measures in the form of waiver/reduction in interest on delayed return filing for 15 days for the return filing month
of Jun’21 in the wake of second COVID wave,” the Finance Ministry said in its press release.
 Additionally, daily e-way bill generation in Jul’21 stood at 2m units (up to 25th Jul’21), closer to levels seen prior to the
second COVID wave.
 As states opened up after the lockdowns and given the downward trajectory in active COVID-19 cases, the economic
situation improved in Jun’21, indicating fast-paced GST collections during the month. A concurrent increase in COVID-19
vaccination, along with resilience to the feared third COVID wave, will aid a further resumption in economic activity,
leading to higher GST collections in the coming months.

The government has collected 36% of the overall budgeted

estimate for FY22BE GST collections grew 33.1% YoY in Jul’21 to INR1.2t
GST Collections (INRt) GST collections, INR t
12.0 12.6 1.8
11.6 11.4 1.4
10.3
8.9 1.2
1.2 1.0
4.5
0.9
0.6
FY18A

FY19A

FY20A

FY21RE

Apr'21-Jul'21
FY22BE
FY21(P)

0.0
Mar-20

Mar-21
Jul-20

Jul-21
Jan-21
Sep-20
May-20

Nov-20

May-21

Source: Budget documents , MOFSL Source: Finance Ministry, MOFSL

Daily e-way bill collections in Jul’21 closer to that prior to the second COVID wave
Daily E-Way Bill Generation, m units

2.1 2.1 2.3 2.3

1.9 1.9 2.0 2.0 2.0
1.6 1.6 1.8
1.4 1.3
0.8
Aug-20

Dec-20

Mar-21
Oct-20

Jul-21
Jul-20
Jun-20

Jun-21
Jan-21

Apr-21
Sep-20

Feb-21
Nov-20
May-20

May-21

Source: CEIC , MOFSL

2 August 2021 69
 In conversation

Tech Mahindra: Aims double-digit organic growth in FY22; wage

hikes impacted margins in Q1FY22; CP Gurnani (MD & CEO),
Milind Kulkarni (CFO)
 Focused on large deals, brings order backlog and predictability
 Capital allocation focus towards cloud and artificial intelligence
 Made 5G investments in software defined network and
 Would be able to maintain growth and margin trajectory
 Company will continue to invest for future
 Wage hikes and higher number of onsite contractor impacted margin
 Higher utilisation, offshoring and operating leverage offset margin pressure
 Committed to double-digit organic revenue this year; organic growth at 3% in Q1
 Company had planned for 16-18% attrition
 Not shy of giving another salary hike if market moves in that direction
 Should be able to maintain employee addition at this pace
 Looking at deal wins between $800m-$1 bn every quarter
 Signed one of our largest deals in healthcare in Q1

PVR: Opening 200-250 screens today; awaiting Maharashtra

opening; Nitin Sood, CFO
 70% of our total strength has received permission to open
 Awaiting Maharashtra opening soon
 Opening 200-250 screens today
 Will re-open bulk of our cinemas in the next 2 weeks

CONCOR: Domestic, export business in July better than pre-

COVID levels; V Kalyana Rama, CMD
 Business is better than pre-COVID levels now. Q1 results are the best ever results in
the history of company
 Imports haven’t picked up, but exports are very strong
 Saw good demand growth in domestic vertical too
 Have maintained freight rates, but margins have improved. Empty running has
increased during the quarter
 Increase in business has aided margin. July better than pre-COVID levels for
domestic and export business
 DFS started running last evening onwards. Things will move to DFC over the next
few days

2 August 2021 70
 JK Lakshmi Cement: Sees uptick in urban demand; expects
growth of 8-10% in FY22; Shailendra Chouksey, WTD
 Q1FY22 volumes were partly impacted by COVID lockdowns
 Volumes in June went up 15% YoY, this is very encouraging
 Focus on infra spends by Government is helping demand
 Stripped of clinker sales, core cement EBITDA/t was at Rs. 950/t
 WHRS facility will be commissioned by December 2021 which will save power costs
 Higher pet coke prices is a bit of a worry
 Will not raise equity for expansion purposes

Union Bank: Won’t raise capital in FY22, prepared to handle 3rd

COVID-19 wave; Rajkiran Rai G, MD & CEO
 Expect 2% credit cost for FY22
 Have recognised most of the pain in Q1FY22
 NARCL will take sometime w.r.t regulatory approvals and other formalities
 Have identified Rs. 7000-8000 crore of NPAs to shift to ARC
 No issues in retail, agri & MSME sector
 Still some pain in corporate sector
 Expect loan growth of 8% for FY22 vs FY21
 Expect net interest margin to be around 3% levels
 Will not look to raise capital in FY22
 Company is better prepared to handle the 3rd wave of COVID-19

GHCL: Textile businesss margin improving, bullish on the soda

ash business; RS Jalan, MD
 We have not done well in the consumer segment
 Extension of ROSCTL will make textile industry competitive
 Believe next few quarters are going to be strong for textile industry
 Impact of price hikes will be seen in coming quarter
 Costs have seen some pressure due to higher fuel costs
 Demerger should be completed by December 2021
 May see one such acquisition being done in Q2FY22
 Expect couple of acquisitions in FY22
 We have been able to increase prices by 10-12%
 Margin will be better in textile business

2 August 2021 71
 Solar Industries: Export profit margin is around 21-22%; capex
for FY22 has been market at Rs. 315 crore;
Shalinee Mandhana, CFO
 Made sales of Rs. 143 crore to Coal India
 Coal India will continue to contribute around 16-18% to sales
 Company exports to 55 countries currently
 Company’s export margin is around 21-22%
 Capex for FY22 has been market at Rs. 315 crore

Greenpanel Industries: Saw 12% improvement in domestic MDF,

6% in export realisations; V Venkatramani, CFO
 Situation improving from July
 Saw 12% improvement in domestic MDF and 6% in export realisations
 Will see export realisation increase by 20% this quarter
 Raw material and logistics costs have increased
 MDF demand has increased in the domestic market
 Imports in Indian market are low currently

Sotve Kraft: Bets on higher end of 15-25% growth; expect margin

at 14-15%; Rajendra Gandhi, MD
 First and last quarter are relatively soft and the second and third are big quarters for
the company
 From June, large format stores and retail stores started operating
 Target 15-25% of growth in FY22 for domestic market, can reach the upper band
(25%) without any disruption
 Will invest 3-4% of revenue on ad spends
 Seeing pressure of rising input costs but as a cost-plus company, it’s able to pass on

CCL Products: Looking at growth around 15% in FY22; targeting

an expansion in Vietnam by Q1FY23; Challa Srishant, MD
 Looking at growth of around 15% in FY22
 Vietnam has localised lockdowns
 Company is able to continue operations in Vietnam without any impact
 Commissioning of additional capacity done, commercial production will start next
month
 Domestic market should do revenue of Rs. 200 crore in current year
 Focus is on top line growth for the next few years
 Seeing 20-30% growth in freeze dried business
 Targeting expansion in Vietnam by Q1FY23

2 August 2021 72
 Click excel icon
for detailed Valuation snapshot
valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY21 FY22E FY23E FY21 FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E
Automobiles
Amara Raja Neutral 720 865 20 37.9 41.6 48.2 -2.1 9.8 15.9 17.3 14.9 2.6 2.3 15.9 16.5
Apollo Tyres Buy 223 300 34 11.5 18.9 23.3 38.1 64.5 23.0 11.8 9.6 1.0 1.0 9.1 10.4
Ashok Ley. Buy 133 156 17 -1.0 2.6 6.6 -188.0 LP 156.6 51.3 20.0 5.2 4.4 10.5 24.0
Bajaj Auto Neutral 3831 4250 11 167.8 196.1 226.9 -6.8 16.8 15.7 19.5 16.9 4.3 4.2 22.2 25.1
Balkrishna Inds Neutral 2373 2425 2 60.9 74.5 89.9 22.7 22.3 20.7 31.9 26.4 6.5 5.5 22.1 22.6
Bharat Forge Buy 772 885 15 1.9 18.9 31.6 -78.5 901.7 67.0 40.8 24.4 5.9 4.9 15.3 22.1
Bosch Neutral 14958 16000 7 335.4 460.8 571.8 -20.6 37.4 24.1 32.5 26.2 4.1 3.6 13.2 14.7
CEAT Buy 1356 1775 31 114.3 74.0 121.2 100.2 -35.2 63.7 18.3 11.2 1.5 1.4 8.7 12.9
Eicher Mot. Buy 2532 3137 24 50.7 81.9 117.6 -24.3 61.5 43.7 30.9 21.5 5.3 4.4 18.2 22.3
Endurance Tech. Buy 1730 1800 4 36.0 48.4 63.9 -5.4 34.5 31.9 35.7 27.1 6.0 5.2 17.9 20.6
Escorts Neutral 1184 1322 12 86.3 85.5 94.4 59.8 -0.9 10.5 13.9 12.5 2.1 1.8 15.9 15.2
Exide Ind Buy 179 215 20 8.9 10.4 13.6 -10.0 16.3 31.0 17.2 13.1 2.0 1.8 11.8 13.8
Hero Moto Buy 2764 3650 32 149.4 186.8 218.6 -2.3 25.0 17.0 14.8 12.6 3.3 3.0 23.6 25.2
M&M Buy 743 1027 38 33.8 42.9 52.1 12.8 27.0 21.4 17.3 14.3 2.2 2.1 13.5 14.4
Mahindra CIE Buy 269 295 10 2.8 15.6 17.7 -70.1 452.6 13.6 17.3 15.2 1.9 1.8 11.6 12.1
Maruti Suzuki Buy 6979 8200 18 145.3 187.7 304.7 -22.7 29.2 62.3 37.2 22.9 3.8 3.4 10.0 14.7
MRF Neutral 79912 84000 5 - 3,320.8 3,972.7 -10.2 10.3 19.6 24.1 20.1 2.3 2.1 10.0 10.8
Motherson Sumi Buy 234 309 32 3.4 8.4 12.1 -8.2 148.1 43.1 27.8 19.4 5.1 4.3 19.7 24.0
Tata Motors Buy 294 400 36 0.6 3.2 34.7 -102.2 462.7 994.3 92.7 8.5 2.0 1.6 2.2 21.1
TVS Motor Neutral 579 625 8 12.9 25.2 32.9 -0.9 95.5 30.6 23.0 17.6 5.4 4.3 25.7 27.0
Aggregate 33.8 43.4 64.0 27.1 16.5 3.3 2.9 12.2 17.6
Banks - Private
AU Small Finance Buy 1220 1200 -2 38.0 28.6 39.7 67.9 -25 38.7 42.6 30.7 5.4 4.6 13.5 16.1
Axis Bank Buy 709 925 30 22.4 45.1 60.9 271.0 101 35.2 15.7 11.6 1.9 1.7 12.8 15.2
Bandhan Bank Neutral 291 330 13 13.7 15.6 32.5 -36.5 14 108.5 18.7 9.0 2.5 2.0 13.8 24.9
DCB Bank Neutral 105 100 -5 10.8 10.9 15.4 -0.7 1.0 41.3 9.6 6.8 0.8 0.7 9.2 11.8
Equitas Hold. Buy 129 160 25 11.2 8.6 15.8 57.6 -23.9 85.0 15.0 8.1 1.2 1.1 8.3 14.2
Federal Bank Buy 87 110 26 8.0 9.3 12.5 2.8 16.9 33.7 9.4 7.0 1.0 0.9 11.3 13.8
HDFC Bank Buy 1426 1800 26 56.6 66.2 79.3 17.8 16.9 19.9 21.5 18.0 3.4 2.9 16.7 17.3
ICICI Bank Buy 683 835 22 24.2 30.8 39.0 97.0 27.2 26.7 22.2 17.5 2.9 2.5 13.8 15.3
IndusInd Buy 981 1200 22 39.9 65.0 94.3 -41.4 62.6 45.1 15.1 10.4 1.6 1.4 11.1 14.4
Kotak Mah. Bk Neutral 1655 1900 15 50.4 55.3 67.3 12.2 9.7 21.7 29.9 24.6 3.4 3.0 11.5 12.4
RBL Bank Buy 193 250 30 8.5 15.6 24.4 -14.6 83.3 56.5 12.4 7.9 0.9 0.8 7.1 10.4
SBI Cards Buy 1036 1200 16 10.5 17.7 29.4 -25.3 68.8 66.2 58.6 35.3 12.5 9.4 23.6 30.5
Aggregate 31.2 29.9 29.4 21.8 16.9 3.0 2.6 13.6 15.3
Banks - PSU
BOB Neutral 80 85 6 1.6 7.5 13.9 35.6 367.6 86.0 10.7 5.8 0.5 0.5 4.9 8.7
Indian Bank Buy 139 175 26 26.6 36.1 48.0 92.3 35.7 32.9 3.8 2.9 0.4 0.4 12.1 14.5
SBI Buy 432 530 23 25.1 40.7 51.6 13.3 62 26.8 10.6 8.4 1.3 1.1 13.6 14.9
Union Bank (I) Neutral 37 55 49 4.5 7.9 11.8 -140.6 73 50.1 4.7 3.1 0.4 0.3 8.2 11.4
Aggregate 60.4 70 35 9 7.0 1.0 0.9 10.3 12.4
NBFCs
AAVAS Financiers Neutral 2523 2820 12 36.9 42.9 54.0 15.9 16.3 26.0 58.8 46.7 7.2 6.3 13.1 14.4
Aditya Birla Cap Buy 116 140 21 4.7 5.5 6.7 22.8 18.5 21.8 20.9 17.2 1.9 1.7 9.3 10.2
Bajaj Fin. Buy 6229 6750 8 73.5 117.7 168.6 -16.3 60.2 43.3 52.9 36.9 8.8 7.2 17.9 21.4
Can Fin Homes Buy 540 660 22 34.2 34.8 39.8 21.3 1.7 14.2 15.5 13.6 2.4 2.0 16.4 16.1
Cholaman.Inv.&F
Buy 476 - 18.5 22.2 29.1 44.0 20.0 31.0 21.5 16.4 3.5 2.9 17.5 19.4
n
HDFC Buy 2441 3275 34 54.5 61.9 71.1 10.8 13.6 14.9 39.4 34.3 3.7 3.5 12.4 13.1
HDFC Life Insur. Neutral 664 725 9 6.7 7.2 8.5 4.8 6.5 18.8 92.6 78.0 4.4 3.7 15.4 17.8
ICICI Pru Life Buy 634 700 10 6.7 6.7 8.0 -10.1 0.5 18.4 94.3 79.6 2.7 2.3 15.0 16.2
IIFL Wealth Mgt Buy 1408 1500 7 42.0 50.2 60.2 82.0 19.6 19.9 28.0 23.4 4.7 4.6 16.3 19.9
IndoStar Neutral 338 355 5 -17.3 14.4 19.6 -50.7 LP 35.7 23.4 17.3 1.1 1.0 4.7 6.1
L&T Fin Holdings Buy 88 110 25 3.8 5.9 8.2 -54.7 53.1 39.6 15.0 10.7 1.1 1.0 7.5 9.7

2 August 2021 73
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for detailed Valuation snapshot
valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY21 FY22E FY23E FY21 FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E
LIC Hsg Fin Buy 411 525 28 54.2 35.6 52.7 13.8 -34.3 48.1 11.5 7.8 0.9 0.9 8.9 11.5
Manappuram Fin.Buy 207 205 -1 20.4 24.4 28.8 16.3 19.9 18.0 8.5 7.2 1.9 1.6 25.3 24.2
MAS Financial Buy 815 1020 25 26.3 26.8 32.0 -13.8 2.2 19.1 30.4 25.5 3.5 3.1 12.3 13.1
Max Financial Buy 1122 1200 7 12.2 14.1 18.6 -15.8 15.4 32.0 79.6 60.3 3.4 2.9 18.6 20.1
M&M Fin. Buy 151 175 16 2.7 5.6 19.2 -81.5 106.4 241.1 27.0 7.9 1.2 1.1 4.6 14.7
Muthoot Fin Buy 1556 1725 11 92.8 114.5 131.0 23.3 23.4 14.4 13.6 11.9 3.3 2.7 26.8 24.8
Piramal Enterp. Buy 2318 2150 -7 62.6 119.7 136.0 -355.3 91.0 13.6 19.4 17.0 1.5 1.5 8.4 8.8
PNB Housing Neutral 671 750 12 55.3 55.5 74.6 43.8 0.4 34.4 12.1 9.0 1.2 1.1 10.0 12.3
Repco Home Fin Buy 340 440 30 46.0 51.8 57.3 2.6 12.7 10.6 6.6 5.9 0.9 0.8 14.3 13.9
SBI Life Insurance Buy 1100 1250 14 14.6 14.6 16.7 2.4 0.2 14.4 75.4 65.9 2.6 2.2 16.8 17.4
Shriram City
Buy 1856 2150 16 153.2 169.0 202.3 1.1 10.3 19.7 11.0 9.2 1.4 1.2 13.0 13.9
Union
Shriram Trans. Buy 1391 1600 15 98.3 92.0 130.0 -10.9 -6.4 41.3 15.1 10.7 1.4 1.3 10.6 12.9
Aggregate 12.7 24.1 28.3 26.6 20.7 3.1 2.8 11.8 13.6
Capital Goods
ABB Buy 1699 2000 18 11.9 20.5 29.0 -28.4 72.6 41.8 83.0 58.5 9.1 8.2 11.0 14.0
Bharat Elec. Buy 185 215 16 8.5 10.0 10.7 15.1 18.1 6.6 18.5 17.3 3.6 3.2 19.8 18.7
BHEL Sell 59 40 -33 -7.8 -2.0 1.2 84.5 Loss LP NM 49.1 0.8 0.8 -2.7 1.6
Cummins Sell 852 535 -37 20.1 23.1 26.8 -13.6 15.0 15.7 36.8 31.9 5.2 4.9 14.0 15.5
Engineers India Buy 75 95 27 5.4 6.1 7.0 -20.1 12.0 14.6 12.3 10.7 2.9 2.8 22.0 24.5
K E C Intl. Buy 427 - 21.5 25.5 31.7 -2.3 18.5 24.4 16.8 13.5 2.8 2.4 16.7 17.5
Larsen & Toubro Buy 1601 1835 15 82.5 64.9 80.4 21.2 -21.3 24.0 24.7 19.9 2.8 2.5 11.4 12.8
Siemens Neutral 1954 1900 -3 21.3 32.1 37.8 -32.6 51.0 17.7 60.8 51.7 6.7 6.1 11.0 11.8
Thermax Neutral 1417 1400 -1 22.0 32.8 42.2 16.5 49.1 28.8 43.3 33.6 4.5 4.2 10.5 12.4
Aggregate -28.6 61.7 29.5 31.2 24.1 3.1 2.8 9.9 11.8
Consumer
Durables
Blue Star Sell 843 700 -17 10.4 16.9 25.2 -31.9 62.4 48.6 49.8 33.5 8.4 7.5 16.9 22.3
CG Cons. Elec. Buy 487 530 9 8.4 9.7 11.4 20.7 14.8 18.1 50.4 42.7 13.4 11.3 26.6 26.4
Havells Neutral 1174 1120 -5 16.5 20.2 22.4 40.4 22.9 11.1 58.1 52.3 12.1 10.4 20.9 20.0
Orient Electric Buy 323 395 22 5.6 6.5 8.7 52.3 15.2 34.4 49.6 36.9 12.4 10.0 25.0 27.2
Voltas Neutral 1059 1060 0 15.9 18.8 22.9 -5.1 18.4 21.7 56.4 46.3 6.4 5.8 11.4 12.6
Whirlpool India Buy 2199 2900 32 27.8 36.3 52.8 -25.9 30.3 45.6 60.6 41.7 8.7 7.4 14.3 17.7
Aggregate 9.5 22.5 22.2 55.8 45.7 9.8 8.5 17.6 18.6
Chemicals
Alkyl Amines Neutral 4382 3825 -13 57.9 65.8 85.0 57.0 13.7 29.2 66.6 51.6 21.8 16.8 36.9 36.8
Atul Neutral 9036 10000 11 218.0 258.8 290.0 -2.3 18.7 12.1 34.9 31.2 6.0 5.1 18.4 17.7
Deepak Nitrite Buy 2039 2350 15 56.9 69.4 78.2 27.0 21.9 12.7 29.4 26.1 8.8 6.9 34.4 29.6
Fine Organic Neutral 3000 3135 5 37.5 50.5 78.3 -31.0 34.7 55.2 59.4 38.3 10.9 9.1 19.5 25.8
Galaxy Surfact. Buy 3120 3520 13 85.2 89.2 106.7 31.1 4.7 19.6 35.0 29.2 7.2 6.1 22.3 22.5
Navin Fluo.Intl. Neutral 3659 4040 10 51.2 57.5 95.8 -37.3 12.4 66.5 63.6 38.2 9.5 7.9 16.0 22.6
NOCIL Buy 261 275 5 5.2 9.3 12.5 -34.0 78.9 34.1 28.1 20.9 3.2 2.9 11.7 14.5
Vinati Organics Buy 1978 2170 10 26.2 38.4 50.5 -19.3 46.5 31.6 51.5 39.2 10.9 8.9 23.2 25.1
Aggregate 3.5 19.6 23.6 40.4 32.7 8.4 6.9 20.7 21.2
Cement
Ambuja Cem. Neutral 411 385 -6 9.0 11.9 13.9 24.2 32.4 16.2 34.4 29.6 3.7 3.4 11.2 11.9
ACC Buy 2393 2480 4 78.4 112.2 116.8 8.5 43.1 4.1 21.3 20.5 3.1 2.8 15.6 14.4
Birla Corp. Buy 1494 1554 4 73.0 69.1 100.2 11.3 -5.4 45.1 21.6 14.9 1.9 1.7 9.3 12.3
Dalmia Bhar. Buy 2139 2480 16 54.8 59.7 79.2 377.1 8.9 32.7 35.8 27.0 2.9 2.6 8.4 10.2
Grasim Inds. Neutral 1551 1465 -6 85.7 106.2 116.9 -2.9 23.9 10.1 14.6 13.3 2.3 2.2 4.8 5.0
India Cem Neutral 192 206 7 7.2 6.3 8.9 947.7 -11.9 40.5 30.3 21.6 1.0 1.0 3.4 4.7
J K Cements Buy 3257 3350 3 91.0 110.5 133.5 45.5 21.4 20.8 29.5 24.4 5.7 4.8 20.9 21.3
JK Lakshmi Ce Buy 692 800 16 33.5 35.0 43.8 48.7 4.2 25.3 19.8 15.8 3.3 2.8 18.2 19.4
Ramco Cem Neutral 1093 1000 -8 32.3 36.5 41.4 26.5 13.2 13.2 29.9 26.4 4.0 3.5 14.3 14.3
Shree Cem Neutral 28257 27530 -3 640.8 729.4 866.0 47.2 13.8 18.7 38.7 32.6 5.8 5.0 16.0 16.5

2 August 2021 74
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for detailed Valuation snapshot
valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY21 FY22E FY23E FY21 FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E
Ultratech Buy 7624 8770 15 190.4 237.5 305.7 31.0 24.7 28.8 32.1 24.9 4.2 3.8 14.5 16.4
Aggregate 23.6 22.3 18.9 25.9 21.8 3.5 3.1 13.4 14.3
Consumer
Asian Paints Neutral 2959 3070 4 33.4 36.4 45.4 15.4 8.9 24.8 81.3 65.1 20.4 18.4 26.1 29.7
Britannia Buy 3420 - 76.8 75.8 89.2 31.0 -1.3 17.7 45.1 38.3 17.2 15.8 43.8 42.9
Colgate Neutral 1704 1770 4 38.1 39.8 42.2 26.8 4.5 6.1 42.8 40.4 39.8 39.8 92.8 98.4
Dabur Buy 601 650 8 9.6 10.3 12.4 11.0 7.2 20.2 58.4 48.6 13.1 11.8 23.0 25.5
Emami Buy 560 630 13 16.3 16.8 18.8 31.1 3.1 11.8 33.4 29.8 11.8 11.7 38.5 39.4
Godrej Cons. Buy 988 1070 8 17.3 18.7 21.7 21.9 8.2 15.9 52.9 45.6 10.2 9.7 19.8 21.9
HUL Buy 2334 2840 22 34.8 38.4 47.5 11.5 10.4 23.7 60.7 49.1 11.6 11.6 19.0 23.6
ITC Neutral 205 225 10 10.6 12.2 14.4 -14.8 15.3 17.6 16.8 14.3 3.8 3.7 24.0 26.2
Jyothy Lab Neutral 170 168 -1 5.8 5.1 6.3 28.7 -11.7 22.5 33.0 27.0 4.4 4.2 13.2 16.0
Marico Buy 546 635 16 9.0 10.0 11.8 10.4 10.9 18.7 54.8 46.2 15.5 14.6 33.0 32.5
Nestle Neutral 17703 18600 5 217.4 239.7 276.2 7.6 10.2 15.3 73.9 64.1 83.3 81.6 113.6 128.6
Page Inds Neutral 31504 30000 -5 305.3 419.4 507.4 -0.8 37.4 21.0 75.1 62.1 36.2 33.6 48.2 54.2
Pidilite Ind. Neutral 2278 1960 -14 22.2 23.8 29.7 -7.3 7.6 24.6 95.6 76.7 17.9 15.4 20.1 21.6
P&G Hygiene Buy 12691 15900 25 166.8 225.8 288.3 22.2 35.3 27.7 56.2 44.0 41.6 35.0 80.0 86.4
Tata Consumer Buy 756 794 5 9.5 11.4 15.3 20.8 20.2 35.1 66.5 49.3 4.6 4.3 7.1 9.0
United Brew Sell 1428 1130 -21 4.6 16.3 21.6 -71.8 257.5 32.4 87.5 66.1 9.8 9.0 11.6 14.2
United Spirits Buy 640 800 25 6.4 11.1 14.6 -41.6 75.2 31.2 57.5 43.8 9.5 7.8 16.4 17.7
Varun Beverages Buy 762 806 6 7.5 11.0 22.1 -30.7 47.1 100.4 69.0 34.4 8.4 6.9 12.8 21.9
Aggregate 2.0 13.0 20.2 47.0 39.1 10.5 10.0 22.4 25.6
Healthcare
Alembic Phar Neutral 788 970 23 59.9 40.8 50.8 36.3 -31.9 24.4 19.3 15.5 2.7 2.4 15.4 17.0
Alkem Lab Buy 3455 3730 8 134.1 140.1 160.7 40.5 4.5 14.7 24.7 21.5 4.8 4.1 20.9 20.4
Ajanta Pharma Buy 2289 2780 21 73.9 80.3 97.9 44.6 8.6 21.9 28.5 23.4 5.7 4.8 21.7 22.4
Aurobindo Buy 917 1150 25 54.0 59.4 66.9 9.9 9.9 12.7 15.4 13.7 2.1 1.9 14.8 14.5
Biocon Neutral 387 390 1 5.5 6.9 10.6 -10.6 25.4 52.5 55.8 36.6 5.7 5.1 10.5 14.7
Cadila Buy 586 740 26 19.8 23.8 26.4 34.8 20.3 10.8 24.6 22.2 3.5 3.1 16.2 14.9
Cipla Neutral 920 910 -1 30.0 33.3 38.2 52.7 11.1 14.7 27.7 24.1 3.6 3.2 13.1 13.2
Divis Lab Buy 4905 5260 7 75.6 98.1 129.8 54.4 29.8 32.3 50.0 37.8 11.7 9.6 25.5 27.9
Dr Reddy’s Neutral 4713 5200 10 143.6 191.3 218.1 9.3 33.3 14.0 24.6 21.6 3.9 3.3 16.8 16.6
Gland Pharma Buy 3948 4460 13 60.9 86.7 110.9 29.0 42.2 28.0 45.6 35.6 8.8 7.1 21.4 22.0
Glenmark Neutral 608 630 4 35.0 39.4 45.0 42.3 12.7 14.0 15.4 13.5 2.1 1.9 14.7 14.7
GSK Pharma Neutral 1608 1600 -1 29.4 34.7 40.0 4.4 18.0 15.1 46.3 40.2 15.9 13.6 34.3 33.8
Granules India Buy 379 440 16 22.3 23.4 27.4 66.8 5.0 17.1 16.2 13.8 3.4 2.8 23.7 22.3
IPCA Labs Buy 2102 2320 10 88.7 90.6 96.2 73.6 2.2 6.1 23.2 21.8 4.7 4.0 22.2 19.7
Jubilant
Buy 687 830 21 54.1 48.8 56.2 -9.5 -9.8 15.0 14.1 12.2 2.0 1.7 15.0 15.0
Pharmova
Laurus Labs Buy 641 800 25 18.3 24.1 30.5 285.4 31.3 26.8 26.6 21.0 9.3 6.7 41.0 37.3
Lupin Neutral 1107 1240 12 26.2 39.3 47.9 12.2 50.3 21.8 28.1 23.1 3.3 3.0 12.3 13.6
Solara Active
Buy 1645 1950 19 45.0 78.4 96.3 93.2 74.3 22.8 21.0 17.1 3.1 2.6 22.1 22.7
Pharma
Strides Pharma Buy 770 920 19 22.2 39.1 48.8 45.9 76.4 24.9 19.7 15.8 2.3 2.0 12.0 13.6
Sun Pharma Buy 774 900 16 25.0 29.5 33.6 52.6 17.9 13.8 26.2 23.0 3.5 3.1 14.4 14.4
Torrent Pharma Neutral 3070 2800 -9 74.9 80.4 95.2 33.5 7.3 18.4 38.2 32.2 8.0 6.9 22.1 23.0
Aggregate 34.9 17.1 17.9 27.8 23.6 4.3 3.7 15.5 15.9
Infrastructure
Ashoka Buildcon Buy 107 150 40 14.6 11.4 12.9 5.5 -21.9 13.3 9.5 8.3 0.9 0.8 10.1 10.5
IRB Infra Neutral 164 150 -9 3.3 5.4 8.9 -82.3 63.1 63.3 30.2 18.5 0.8 0.8 2.7 4.4
KNR
Buy 273 280 3 9.0 13.3 16.6 24.1 47.8 24.7 20.5 16.4 3.4 2.9 18.3 19.0
Constructions
Aggregate 18.6 14.4 1.3 1.2 7.1 8.4
Media
PVR Neutral 1402 1500 7 -93.2 -81.9 28.6 -389.6 Loss LP NM -17.1 6.4 5.6 -31.4 12.2

2 August 2021 75
 Click excel icon
for detailed Valuation snapshot
valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY21 FY22E FY23E FY21 FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E
Sun TV Buy 579 640 10 38.6 41.3 42.7 10.8 7.1 3.5 14.0 13.6 3.1 2.9 22.6 21.8
Zee Ent. Neutral 203 190 -6 11.1 13.8 15.9 101.7 24.5 15.6 14.7 12.7 1.8 1.6 12.5 13.1
Aggregate -18.6 18.1 43.8 21.3 14.8 2.6 2.3 12.1 15.8
Metals
Hindalco Buy 444 485 9 24.6 42.6 45.9 40.7 73.4 7.6 10.4 9.7 1.9 1.6 20.0 18.2
Hind. Zinc Neutral 321 300 -6 18.9 23.6 25.6 17.3 25.1 8.1 13.6 12.5 4.0 3.8 30.2 31.0
JSPL Buy 432 475 10 61.4 65.5 47.2 - 6.6 -28.0 6.6 9.2 1.1 1.0 19.0 11.8
JSW Steel Buy 737 840 14 32.8 93.8 87.0 262.5 186.2 -7.2 7.9 8.5 2.7 2.2 39.9 28.2
Nalco Buy 93 94 1 5.4 10.8 9.2 629.4 99.2 -15.0 8.7 10.2 1.5 1.4 17.7 13.9
NMDC Buy 181 215 19 22.5 39.6 27.6 47.0 75.9 -30.4 4.6 6.6 1.5 1.4 36.2 22.5
SAIL Buy 142 175 23 13.1 37.6 24.3 - 187 -35.5 3.8 5.9 1.0 0.9 30.5 16.9
Tata Steel Neutral 1434 1215 -15 69.0 275.6 159.3 661.2 300 -42.2 5.2 9.0 1.8 1.6 40.4 18.8
Vedanta Neutral 302 300 -1 25.9 42.9 36.5 195.3 66 -14.8 7.0 8.3 1.7 1.6 24.6 19.6
Aggregate 176.9 116.8 -21.8 6.8 8.7 1.8 1.6 26.3 18.3
Oil & Gas
Aegis Logistics Neutral 319 365 14 6.7 10.1 13.3 124.3 51.1 31.3 31.6 24.0 4.9 4.3 16.4 19.0
BPCL Buy 446 570 28 63.2 27.7 38.5 165.6 -56.2 38.9 16.1 11.6 2.0 1.8 11.7 16.5
Castrol India Buy 138 170 23 5.9 8.5 8.5 -29.6 44.8 -0.2 16.2 16.2 8.6 7.8 56.3 50.5
GAIL Buy 140 210 50 10.9 16.8 17.4 -34.0 54.7 3.5 8.3 8.0 1.1 1.1 15.5 14.6
Under
Gujarat Gas 716 - 18.5 22.7 25.4 6.9 22.8 11.7 31.5 28.2 8.4 6.6 30.2 26.2
Review
Gujarat St. Pet. Buy 346 435 26 16.4 17.8 19.2 -16.5 8.2 8.2 19.5 18.0 2.3 2.1 12.5 12.1
HPCL Neutral 261 310 19 70.0 32.6 42.2 192.8 -53.4 29.4 8.0 6.2 1.0 0.9 12.7 15.5
IOC Buy 103 157 52 23.7 17.3 17.0 130.8 -27.1 -1.5 6.0 6.1 0.8 0.7 13.7 12.6
IGL Neutral 558 490 -12 14.4 16.9 18.2 -11.5 17.6 7.6 33.0 30.7 5.8 5.1 18.8 17.8
Mahanagar Gas Buy 1167 1315 13 62.7 86.6 80.0 -21.9 38.1 -7.6 13.5 14.6 3.1 2.7 24.5 19.8
MRPL Sell 45 42 -6 -1.4 0.8 7.5 -91.2 LP 904.2 59.4 5.9 1.0 0.9 1.7 16.2
Under
Oil India 167 - 19.4 26.3 26.2 -15.2 35.8 -0.5 6.3 6.4 0.7 0.6 11.0 10.2
Review
ONGC Buy 115 150 30 16.1 24.5 27.4 23.8 52.2 11.6 4.7 4.2 0.6 0.6 13.6 13.7
PLNG Buy 218 310 42 19.7 19.9 23.3 6.5 1.0 17.5 11.0 9.3 2.5 2.3 24.3 25.9
Reliance Ind. Buy 2035 2485 22 67.7 88.7 113.7 1.1 30.9 28.2 23.0 17.9 1.7 1.6 7.9 9.3
Aggregate 34.2 8.1 19.1 14.3 12.0 1.4 1.3 10.1 11.0
Retail
Avenue
Neutral 3501 3220 -8 17.0 22.8 38.7 -15.5 34.6 69.3 153.3 90.5 16.0 13.5 11.4 16.8
Supermarts
Aditya Birla
Buy 225 270 20 -7.1 -3.0 0.0 3,769.5 Loss LP NM - 10.1 10.1 -13.1 0.0
Fashion
Burger King Buy 180 210 16 -4.3 -1.6 0.1 66.9 Loss LP NM 2,413.6 11.3 11.2 -9.8 0.5
Jubilant Food. Buy 3776 3630 -4 17.5 34.3 50.5 -22.5 96.4 47.2 110.1 74.8 31.2 24.6 28.3 32.9
Shoppers Stop Neutral 267 230 -14 -32.0 -14.9 1.0 117.4 Loss LP NM 260.1 -515.6 524.9 -215.0 -
Titan Company Buy 1715 2040 19 11.0 18.2 29.2 -35.4 65.1 60.2 94.2 58.8 18.3 16.3 20.5 29.4
Trent Neutral 924 820 -11 -5.1 -0.2 9.0 -270.1 Loss LP NM 102.8 13.3 11.7 -0.3 13.0
V-Mart Retail Buy 3868 3880 0 -3.4 2.6 41.1 -112.6 LP 1,464.5 1,471.7 94.1 8.4 7.7 0.6 8.6
Westlife Develop Neutral 562 470 -16 -6.7 -1.6 4.2 ###### Loss LP NM 134.1 19.2 16.8 -5.5 13.3
Aggregate -69.5 219.7 108.3 167.8 80.5 16.5 14.4 9.9 17.9
Technology
Cyient Buy 986 1090 11 33.8 45.0 54.4 0.1 33.2 20.9 21.9 18.1 3.7 3.3 16.8 19.4
HCL Tech. Buy 1025 1180 15 43.8 49.3 58.9 7.5 12.5 19.6 20.8 17.4 4.2 4.0 21.1 23.6
Infosys Buy 1610 1770 10 45.6 52.6 65.6 17.1 15.5 24.7 30.6 24.5 9.8 9.3 30.6 39.0
L & T Infotech Neutral 4685 4280 -9 107.0 121.1 147.8 23.6 13.2 22.0 38.7 31.7 9.6 8.1 26.8 27.7
L&T Technology Buy 3710 3380 -9 62.8 87.3 109.1 -19.0 38.9 25.0 42.5 34.0 9.6 8.1 24.4 26.0
Mindtree Neutral 2864 2620 -9 67.4 83.6 100.8 75.7 24.1 20.6 34.3 28.4 9.3 7.9 29.3 30.0
Mphasis Buy 2598 2770 7 64.2 77.7 99.0 1.7 21.0 27.3 33.4 26.2 6.8 6.2 21.6 25.1
Coforge Neutral 5087 4760 -6 78.8 116.9 153.6 4.4 48.3 31.4 43.5 33.1 10.4 8.6 26.2 28.4
Persistent Sys Neutral 3145 3130 0 59.0 84.0 104.2 32.4 42.4 24.0 37.4 30.2 7.4 6.3 21.3 22.6

2 August 2021 76
 Click excel icon
for detailed Valuation snapshot
valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY21 FY22E FY23E FY21 FY22E FY23E FY22E FY23E FY22E FY23E FY22E FY23E
TCS Neutral 3168 3400 7 86.7 107.2 125.7 0.6 23.6 17.3 29.6 25.2 12.8 12.1 44.6 49.4
Tech Mah Neutral 1209 1220 1 51.7 61.0 71.7 6.9 18.0 17.5 19.8 16.9 3.8 3.4 20.5 21.7
Wipro Neutral 587 580 -1 18.8 20.8 25.2 14.3 11.1 20.8 28.2 23.3 5.8 5.8 21.0 25.0
Zensar Tech Buy 417 470 13 15.3 17.5 22.6 31.0 14.3 29.3 23.8 18.4 3.6 3.2 15.8 18.3
Aggregate 7.5 17.4 20.0 29.2 24.4 8.5 8.0 29.1 32.7
Telecom
Bharti Airtel Buy 562 690 23 -1.3 4.9 8.5 -82.5 LP 72.7 113.8 65.9 5.0 4.7 4.5 7.3
Indus Towers Neutral 222 250 13 18.5 21.7 21.9 -1.0 17.7 1.0 10.2 10.1 3.4 3.2 35.2 32.5
Vodafone Idea 8 -8.4 -8.6 -8.1 11.7 Loss Loss NM NM -0.4 -0.3 48.8 31.1
Tata Comm Neutral 1447 1250 -14 46.5 50.6 66.7 340.2 8.8 31.9 28.6 21.7 26.5 11.9 172 75.8
Aggregate Loss Loss Loss -28 -38.8 23.3 149.7 -82.5 -385.5
Utiltites
Coal India Buy 143 185 29 20.6 25.4 28.1 -23.9 23.2 10.5 5.6 5.1 2.1 1.8 37.3 35.3
CESC Buy 838 905 8 100.1 106.4 111.4 2.4 6.4 4.7 7.9 7.5 1.0 1.0 13.8 13.5
Indian Energy
Neutral 431 410 -5 7.2 9.2 10.6 19.9 28.2 15.6 47.0 40.7 21.0 18.2 47.8 47.9
Exchange
JSW Energy Sell 251 180 -28 4.9 5.7 6.8 -4.7 16.9 20.8 44.2 36.6 2.7 2.6 6.3 7.2
NHPC Neutral 26 28 7 3.0 3.1 3.6 4.5 2.7 16.0 8.6 7.4 0.8 0.7 9.1 10.0
NTPC Buy 118 - 15.7 16.1 17.3 13.6 2.6 7.7 7.3 6.8 0.9 0.8 12.0 12.2
Power Grid Buy 171 270 58 23.9 25.2 26.4 16.0 5.8 4.7 6.8 6.5 1.2 1.1 18.3 18.1
Torrent Power Neutral 455 480 5 22.9 31.1 35.0 -18.2 35.8 12.4 14.6 13.0 1.9 1.8 14.0 14.2
Tata Power Buy 125 122 -2 4.2 5.5 5.9 12.6 30.4 7.1 22.6 21.1 1.8 1.7 8.3 8.4
Aggregate -1.3 9.7 8.5 7.7 7.1 1.2 1.2 16.1 16.3
Others
BSE Buy 1249 1120 -10 30.9 46.5 67.9 24.1 50.4 45.9 26.8 18.4 2.4 2.3 8.8 12.5
Concor Buy 644 780 21 9.6 17.2 22.4 -42.0 78.7 30.1 37.5 28.8 3.7 3.5 10.1 12.5
Coromandel Intl Buy 918 1050 14 45.3 52.7 57.8 24.6 16.3 9.7 17.4 15.9 4.3 3.6 27.0 24.6
EPL Buy 246 320 30 8.0 10.0 12.4 17.8 24.4 24.5 24.6 19.8 4.0 3.6 17.5 19.3
Indiamart Inter. Buy 7145 8610 21 96.6 119.5 129.9 86.5 23.7 8.7 59.8 55.0 11.2 9.5 20.5 18.7
Indian Hotels Buy 146 180 23 -7.1 -3.0 1.8 -359.5 Loss LP NM 79.8 5.4 5.1 -10.5 6.6
Interglobe Neutral 1648 1600 -3 -151.7 -181.8 51.2 2,249.3 Loss LP NM 32.2 -9.2 -12.8 204.1 -33.2
Info Edge Neutral 5216 4800 -8 21.3 26.1 39.4 27.5 22.2 51.0 200.1 132.6 14.3 13.4 7.2 10.4
Godrej Agrovet Buy 698 717 3 16.3 21.6 24.1 25.0 32.3 11.7 32.3 28.9 5.8 5.2 19.1 18.9
Kaveri Seed Buy 721 917 27 51.6 56.0 61.1 19.7 8.6 9.1 12.9 11.8 2.8 2.3 24.3 21.7
Lemon Tree
Buy 41 54 31 -1.6 -1.1 1.0 1,232.4 Loss LP NM 41.0 3.9 3.5 -9.4 9.0
Hotel
MCX Buy 1600 1940 21 44.2 39.3 55.6 -4.8 -11.1 41.6 40.7 28.8 5.4 4.9 13.6 17.8
Quess Corp Buy 867 960 11 14.9 30.8 47.9 -18.6 107.2 55.3 28.2 18.1 3.5 2.8 17.2 21.9
PI Inds. Buy 2948 - 48.6 64.5 83.0 61.7 32.8 28.6 45.7 35.5 7.2 6.1 17.0 18.5
SIS Buy 481 600 25 23.7 20.8 28.8 -1.7 -12.4 38.5 23.2 16.7 1.5 1.3 15.7 18.2
SRF Neutral 8660 7230 -17 196.9 270.0 312.5 29.0 37.2 15.7 32.1 27.7 6.3 5.2 21.4 20.4
Tata Chemicals Neutral 764 683 -11 10.1 23.8 42.2 -68.2 136.6 77.3 32.1 18.1 1.3 1.3 4.2 7.2
Team Lease Serv. Buy 4256 4200 -1 51.9 74.9 104.9 6.1 44.4 40.1 56.8 40.6 9.3 7.6 17.8 20.5
Trident Buy 21 20 -5 0.7 1.0 1.4 3.2 55.3 36.1 20.0 14.7 2.7 2.3 14.4 17.0
UPL Neutral 808 760 -6 45.4 59.4 68.7 29.9 30.9 15.7 13.6 11.8 1.9 1.6 23.2 22.5

2 August 2021 77
 Index and MOFSL Universe stock performance

Index 1 Day (%) 1M (%) 12M (%) Index 1 Day (%) 1M (%) 12M (%)
Sensex -0.1 0.2 39.4 Nifty 500 0.2 1.4 51.3
Nifty-50 -0.1 0.3 42.0 Nifty Midcap 100 1.1 3.1 80.6
Nifty Next 50 0.4 2.2 48.2 Nifty Smallcap 100 0.4 8.1 111.7
Nifty 100 0.0 0.5 42.8 Nifty Midcap 150 0.9 3.2 80.0
Nifty 200 0.1 0.8 46.9 Nifty Smallcap 250 0.5 8.0 113.0
Company 1 Day (%) 1M (%) 12M (%) Manappuram Fin. -0.6 22.8 26.4
Automobiles 0.9 -5.2 37.9 MAS Financial Serv. -0.6 -4.7 28.5
Amara Raja Batt. 3.6 -3.3 3.0 Max Financial 0.6 5.7 99.4
Apollo Tyres 3.3 -0.6 106.4 ICICI Pru Life -0.4 3.4 39.7
Ashok Leyland 6.0 8.4 170.2 ICICI Sec 0.1 13.1 59.7
Bajaj Auto 1.8 -7.3 25.7 Company 1 Day (%) 1M (%) 12M (%)
Balkrishna Inds 2.8 5.9 87.6 IIFL Wealth Mgt 8.2 20.6 40.8
Bharat Forge -1.7 1.3 100.3 PNB Housing -0.6 -1.7 219.8
Bosch 0.2 -0.5 15.2 Repco Home -2.3 -8.7 124.8
CEAT 1.8 -0.3 59.7 SBI Life Insuran -2.5 9.1 20.3
Eicher Motors 0.1 -5.2 19.6 Shriram City Union 2.4 8.2 180.2
Endurance Tech. 2.9 6.3 88.4 Shriram Trans. 1.4 3.7 103.6
Escorts 4.1 -3.0 4.8 Capital Goods -0.2 3.1 86.5
Exide Inds. 2.4 -2.0 16.1 ABB 0.9 -5.9 96.0
Hero Motocorp 0.6 -4.8 2.2 Bharat Elec. -2.1 3.8 93.1
M&M 1.6 -4.5 24.3 BHEL -1.2 -9.7 61.5
Mahindra CIE -1.5 13.2 156.3 Cummins 1.2 -5.3 114.1
Maruti Suzuki -0.2 -7.1 11.4 Engineers India 0.4 -5.8 13.9
MRF 0.3 -0.2 31.0 K E C Intl -0.4 -5.7 52.8
Motherson Sumi -1.8 -3.2 150.3 L&T 0.4 6.7 76.2
Tata Motors 0.3 -13.4 183.5 Siemens 0.0 -3.4 71.0
TVS Motor Co. 3.2 -6.6 44.1 Thermax -0.2 -4.7 91.1
Banks-Private -0.2 -1.7 51.0 Consumer Durables 0.5 2.3 69.6
AU Small Fin. Bank 2.2 17.7 72.1 Blue Star 0.2 3.3 72.6
Axis Bank -1.1 -5.3 66.5 CG Cons. Elec. 3.4 12.1 99.0
Bandhan Bank -0.4 -11.9 -13.8 Havells -0.2 19.8 103.0
DCB Bank 0.0 1.4 34.8 Voltas 2.7 3.6 78.0
Equitas Holdings -2.8 36.7 153.5 Whirlpool India 2.7 -1.6 3.7
Federal Bank 1.8 0.3 61.4 Orient Electric -3.4 2.9 83.4
HDFC Bank 0.6 -4.8 35.7 Chemicals
ICICI Bank -0.7 8.2 97.9 Alkyl Amines 2.1 21.8 385.4
IndusInd Bank -1.1 -3.5 88.7 Atul -0.7 0.7 77.6
Kotak Mah. Bank 0.8 -3.0 19.2 Deepak Nitrite 7.4 12.8 230.6
RBL Bank 0.9 -8.3 14.2 Fine Organic 2.3 3.3 48.2
SBI Cards 1.9 6.8 41.1 Galaxy Surfact. 0.6 3.2 94.4
Banks-PSU -0.3 -3.1 75.4 Navin Fluo.Intl. 2.4 -2.4 110.4
BOB -0.4 -6.6 74.6 NOCIL -0.8 20.6 149.4
Indian Bk 0.0 -4.1 138.5 Vinati Organics 1.1 8.2 104.6
SBI -2.3 3.0 131.4 Cement 0.0 10.6 125.6
Union Bk -3.0 -4.5 25.8 Ambuja Cem. 0.5 20.7 85.8
Company 1 Day (%) 1M (%) 12M (%) ACC 1.3 18.7 65.4
NBFCs -0.3 0.1 52.6 Birla Corp. 0.2 23.3 147.7
Aditya Birla Cap -0.6 -1.2 108.5 Dalmia Bhar. 0.2 13.0 185.9
Bajaj Fin. -2.6 3.5 93.5 Grasim Inds. 0.3 2.1 157.4
Cholaman.Inv.&Fn -2.2 -7.2 122.3 India Cem -0.4 0.1 71.6
Can Fin Homes -1.4 3.3 49.0 J K Cements 1.9 14.2 118.8
HDFC 1.1 -1.4 34.8 JK Lakshmi Ce -5.9 19.8 138.0
HDFC Life Insur. 0.2 -3.2 4.6 Ramco Cem 2.4 6.5 56.5
Indostar Capital 0.6 -3.4 31.0 Shree Cem 2.3 2.6 32.1
L&T Fin.Holdings 2.4 -5.0 58.0 Ultratech -1.0 12.5 83.5
LIC Hsg Fin -1.1 -12.6 55.5 Consumer 0.2 -0.1 17.4
M&M Fin. 1.8 -3.6 15.1 Asian Paints -1.3 -1.1 69.7
Muthoot Fin -0.5 5.0 19.6 Britannia 0.4 -6.3 -10.1
Note: Sectoral performance are of NSE/BSE Indices

2 August 2021 78
 Index and MOFSL Universe stock performance

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%)
Colgate -0.3 1.1 19.0 BPCL -0.7 -4.8 6.3
Dabur 2.7 5.6 21.9 Castrol India -1.9 -3.4 19.5
Emami 1.4 -0.2 134.9 GAIL 1.4 -6.7 44.5
Godrej Cons. 0.1 13.6 44.9 Gujarat Gas 1.4 8.3 150.4
HUL 0.0 -5.5 6.3 Gujarat St. Pet. -2.1 3.9 71.7
ITC -0.5 1.1 6.0 HPCL -0.9 -10.9 17.1
Jyothy Lab -0.9 10.0 41.9 IOC -0.7 -4.4 16.5
Marico 3.5 3.0 49.8 IGL 2.1 0.1 38.7
Nestle -1.2 0.1 7.1 Mahanagar Gas 5.2 2.7 18.2
Page Inds -0.1 6.7 60.7 MRPL -2.3 -13.0 19.9
Pidilite Ind. -0.9 5.8 68.8 Oil India 2.0 6.0 72.1
P&G Hygiene -0.6 -4.8 22.4 ONGC 0.4 -2.1 48.3
Tata Consumer 0.6 0.3 78.0 PLNG 1.5 -3.4 -10.7
United Brew 0.6 -1.4 47.9 Reliance Ind. -1.0 -3.6 -3.5
United Spirits 0.4 -3.2 11.3 Retail
Varun Beverages 1.1 4.4 67.0 Aditya Bir. Fas. -1.1 4.2 82.8
Healthcare 3.6 0.8 34.0 Avenue Super. 0.0 4.7 71.5
Alembic Phar 1.2 -19.9 -20.1 Burger King 0.3 13.5
Alkem Lab 3.7 8.1 35.7 Jubilant Food 1.4 22.6 113.5
Ajanta Pharma -4.4 6.7 51.4 Shoppers St. 0.1 12.1 74.5
Aurobindo 1.0 -5.0 11.8 Titan Co. -1.5 -1.0 64.6
Biocon 1.1 -4.4 -4.2 Trent 1.0 8.5 67.9
Cadila 2.5 -9.2 60.3 V-Mart Retail -0.3 38.0 116.6
Cipla 4.3 -5.3 34.2 Westlife Develop -0.2 12.5 58.4
Divis Lab 1.2 11.3 91.5 Technology 0.4 4.5 69.3
Dr Reddy’s 0.9 -13.1 4.4 Cyient -1.2 14.6 203.4
Gland Pharma -1.3 15.5 HCL Tech. 1.8 4.2 47.5
Glenmark 2.7 -6.9 37.6 Infosys -0.4 1.8 67.4
GSK Pharma -1.2 7.0 11.4 L&T Infotech 1.0 15.2 96.7
Granules 2.1 14.1 36.4 L&T Technology 0.8 27.8 146.3
IPCA Labs -1.9 3.8 20.5 Mindtree 2.1 10.1 164.9
Jubilant Pharmo 0.3 -6.1 -0.4 Mphasis -2.6 21.6 125.2
Laurus Labs 6.0 -5.7 305.0 Coforge -1.7 22.4 162.6
Lupin 2.0 -3.7 24.4 Persistent Sys 0.8 7.2 243.5
Solara Active 1.0 -2.4 150.6 TCS -0.9 -5.3 39.1
Strides Pharma -0.6 1.4 83.0 Tech Mah 7.2 10.4 79.2
Sun Pharma 10.1 14.6 51.8 Wipro -0.7 7.5 106.5
Torrent Pharma 1.1 5.8 26.0 Zensar Tech -1.3 33.9 147.1
Infrastructure 0.3 2.1 40.2 Telecom -0.3 4.9 13.3
Ashoka Buildcon 1.7 -3.0 107.0 Bharti Airtel -0.9 7.0 1.6
IRB Infra.Devl. 2.8 1.5 33.5 Indus Towers 0.1 -7.0 15.4
KNR Construct. -1.7 14.7 169.0 Idea Cellular 0.2 -16.9 3.2
Media 1.9 -0.1 38.5 Tata Comm 1.3 12.5 99.9
PVR 3.0 5.0 29.3 Utiltites 0.1 -5.0 70.6
Sun TV 6.1 9.3 50.1 Coal India 0.8 -2.3 11.3
Zee Ent. 1.9 -5.5 44.6 CESC 0.1 8.8 50.7
Metals -0.7 10.6 170.3 Indian Energy Ex -0.8 14.8 139.4
Hindalco -3.0 19.4 174.4 JSW Energy 0.4 49.1 443.4
Hind. Zinc -0.8 -5.6 52.5 NHPC Ltd 1.0 0.0 28.4
JSPL -1.3 8.6 136.7 NTPC 1.2 1.5 36.5
JSW Steel -1.5 7.8 243.9 Power Grid 2.2 -1.8 28.9
Nalco 0.5 19.2 187.4 Tata Power 1.8 2.4 160.1
NMDC -0.9 -1.6 108.5 Torrent Power 0.7 -1.0 42.3
SAIL 0.0 8.7 314.6 Others
Tata Steel -1.7 22.9 291.0 BSE 0.7 38.7 148.2
Vedanta 4.5 14.8 170.8 Coromandel Intl 6.2 2.1 19.1
Oil & Gas -0.2 -4.5 16.3 Concor 2.2 -7.8 43.2
Aegis Logistics -0.5 -7.0 73.4 EPL Ltd 1.5 -12.1 19.9

2 August 2021 79
 Index and MOFSL Universe stock performance

Company 1 Day (%) 1M (%) 12M (%)

Indiamart Inter. 0.1 2.2 174.7
Godrej Agrovet 6.0 10.2 53.5
Indian Hotels -1.5 3.1 89.5
Interglobe -0.3 -4.2 75.3
Info Edge 0.2 6.1 64.3
Kaveri Seed 0.3 -1.2 21.5
Lemon Tree Hotel -1.3 -1.5 75.4
MCX -0.7 5.2 -2.6
Piramal Enterp. 0.0 -3.2 69.3
PI Inds. 0.0 1.2 67.7
Quess Corp 6.1 6.1 152.5
SIS -0.1 11.9 40.5
SRF 9.3 19.0 130.4
Tata Chemicals 1.6 5.4 146.4
Team Lease Serv. 8.3 17.6 138.9
Trident 4.8 26.3 220.2
UPL -1.4 2.0 74.1

2 August 2021 80
 NOTES

2 August 2021 81
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For U.S:
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOFSL is not a registered
investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordi ngly, in the absence of specific exemption under the Acts,
any brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-
6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to
which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as
amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S.
registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule
2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore:
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore,
as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in
Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communi cation. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of
"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately
discontinue any use of this Report and inform MOCMSPL.
Disclaimer: The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the m edia or reproduced
in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments.
Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be
suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient.
Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult
its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-
investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The
Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The
Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own
account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in
this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in
publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information
and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or
resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction.
The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm,
not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person
accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse
and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com.
CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate
Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products
and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of
MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is
subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: [email protected], Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.

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