AMP

STRICTLY CONFIDENTIAL

22 July 2024
ANTIQUE’S MORNING PRESENTATION
FROM THE RESEARCH DESK
Market Snapshot
Global Indices Closing % Chg % YTD
QUARTERLY RESULTS REVIEW
Dow Jones 40,288 (0.9) 6.9
Reliance Industries NASDAQ 17,727 (0.8) 18.1
Earnings short of consensus-weak O2C and retail FTSE 8,156 (0.6) 5.5
HDFC Bank CAC 7,535 (0.7) (0.1)
NIM may have troughed; balance sheet to hog the limelight DAX 18,172 (1.0) 8.5
Kotak Mahindra Bank Russia 1,152 (0.2) 6.3
NIM moderates; PAT augmented by one-off gain Bovespa 1,27,617 (0.0) (4.9)
UltraTech Cement Nikkei 40,064 (0.2) 19.7
Market share gains; improving return ratios to drive re-rating Hang Seng 17,418 (2.0) 2.2
Wipro Shanghai Composite 2,982 0.2 0.2
A muted quarter
JSW Steel Indian Indices Closing % Chg % YTD
Volume expansion benefits to accrue in 2HFY25; high debt a concern Sensex 80,605 (0.9) 11.6
Bharat Petroleum Corporation Nifty 24,531 (1.1) 12.9
Hit by poor GRMS and LPG under-recovery MSCI India 1,086 (1.6) 17.8
JSW Energy CNX Midcap 55,908 (2.1) 21.1
An operationally stable quarter BSE Smallcap 52,482 (2.2) 23.0
Union Bank of India
PAT impacted by higher provisions on standard assets Flows (USD mn) Prev. Day MTD
Indian Hotels Company FII 199 604
Muted quarter but annual revenue guidance intact MF (227.0) 42.4
Persistent Systems
Decent quarter but valuation remains high Provisional flows (USD mn)
Dalmia Bharat FIIs 180
May lag peers on volumes, profitability Local (55)
Transformers And Rectifiers (India)
Beat on all fronts Volumes USD bn % Chg
Shoppers Stop Cash (NSE + BSE) 18.9 17.7
Miss on profitability; increase Intune store addition guidance F&O (net) 1,834.8 (47.8)
South Indian Bank
Core operating performance below expectation FII F&O Stock Fut Index Fut
Rallis India Net ($ mn) 1,537 (171)
Operational profit disappoints; downgrade to SELL OI (%) - 13.0

ADR/GDR Losers Last % Chg

Global News Wipro 6.1 (11.6)
Reliance 72.9 (4.3)
n The Dow slumped 377.49 points or 0.9 percent to 40,287.53, the Nasdaq
slid 144.28 points or 0.8 percent to 17,726.94 and the S&P 500 fell 39.59 Infosys 21.7 (2.6)
points or 0.7 percent to 5,505.00. HDFC 59.5 (1.3)
n The Nikkei 225 Index shed 0.16% to close at 40,064 while the broader Topix Dr Reddy 78.1 (1.2)
Index fell 0.27% to 2,861 on Friday, with Japanese shares hitting multi-week
lows as investors reacted to the latest inflation figures. Data showed that Japan's
headline inflation rate remained unchanged at 2.8% in June, while the core
inflation rate rose to 2.6% from 2.5%. While coming slightly less than market
forecasts of 2.7%, the latest reading reinforced market expectations that the
Bank of Japan could raise interest rates from current near-zero levels when it
meets in late July. Meanwhile, local chip stocks stabilized after selling off on
Thursday amid reports that the US was considering tighter curbs on chip exports
to China.

Please refer to disclosures at the end of the Research Report

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 2

Sectoral indices Delivery Spike

Closing % Chg % MTD % YTD Company Volume Spike (%) Chg (%)
BSE Auto 56,500 (2.5) (1.4) 33.8 Tata Chemicals Ltd 12,29,852 168% -1.54%
BSE Bank 60,167 (0.7) 0.9 10.6 Tata Steel Ltd 3,92,93,572 142% -5.16%
BSE Cap Goods 71,599 (1.8) (1.0) 28.7 Infosys Ltd 1,47,00,503 142% 1.99%
BSE Cons dur 57,501 (2.0) (2.3) 15.0 Punjab National Bank 1,43,59,572 115% -1.96%
BSE FMCG 22,059 (0.3) 7.3 7.8 Exide Industries Ltd 26,71,971 108% -2.74%
BSE IT 40,620 (0.2) 9.9 12.8 United Spirits Ltd 6,74,928 95% -0.13%
BSE Health 38,156 (1.6) 2.8 20.9 NMDC Ltd 54,56,189 80% -5.43%
BSE Metal 31,517 (4.1) (4.6) 16.8 Tata Power Co Ltd/The 90,06,569 55% -3.67%
BSE Oil 30,812 (2.9) 4.5 33.8 Hindustan Petroleum Corp Ltd 63,33,125 45% -4.47%
BSE Power 7,710 (2.7) (3.1) 32.5 Steel Authority of India Ltd 1,64,29,641 43% -4.10%
BSE PSU 21,842 (2.5) 3.0 40.4
BSE Realty 8,558 (2.4) (0.9) 38.3
BSE TECK 18,570 (0.3) 8.2 16.5

Derivatives Update
Long Build Up
Company Last % Chg % Chg OI OI (in 000)
APOLLOTYRE 523.25 5.29 21.43 12,943
LALPATHLAB 2,986.95 0.28 14.63 1,006
HAL 4,795.20 4.69 12.08 14,547
DALBHARAT 1,815.25 5.92 9.79 4,096
Nifty Outperformers SAIL 141.65 4.35 7.38 1,72,432
Price % Chg % MTD % YTD Short Build Up
Infosys Ltd 1,793 2.0 14.4 16.9 Company Last % Chg % Chg OI OI (in 000)
Itc Ltd 475 0.9 11.7 2.7 LTTS 4,888.15 (3.10) 24.68 1,655
Asian Paints Ltd 2,946 0.5 1.0 (13.4) MPHASIS 2,866.70 (1.06) 12.33 4,077
Britannia Industries Ltd 5,878 0.1 7.3 10.1 INFY 1,795.65 (1.87) 7.91 52,568
Ltimindtree Ltd 5,763 0.1 7.0 (8.5) INDIACEM 348.40 (0.67) 7.19 28,979
Hcl Technologies Ltd 1,595 - 9.2 8.8 GLENMARK 1,412.50 (0.11) 4.23 4,914
Titan Co Ltd 3,259 (0.1) (4.3) (11.3) Short Covering
Company Last % Chg % Chg OI OI (in 000)
Nifty Underperformers ITC 475.25 (0.78) (2.14) 1,52,603
Price % Chg % MTD % YTD BERGEPAINT 523.30 (0.33) (0.32) 20,916
Tata Steel Ltd 158 (5.2) (9.3) 13.0 Long Unwinding
Bharat Petroleum Corp Ltd 304 (4.5) (0.0) 34.8 Company Last % Chg % Chg OI OI (in 000)
Jsw Steel Ltd 889 (4.5) (4.5) 1.0 ATUL 6,967.95 2.60 (14.59) 1,321
Hindalco Industries Ltd 663 (3.9) (4.4) 7.8 SYNGENE 729.45 1.75 (9.16) 9,609
Oil & Natural Gas Corp Ltd 320 (3.6) 16.6 55.9 NAVINFLUOR 3,554.35 3.41 (7.11) 1,909
Ntpc Ltd 365 (3.5) (3.6) 17.2 EICHERMOT 4,830.15 2.07 (6.97) 3,715
Coal India Ltd 488 (3.4) 3.1 29.8 TATASTEEL 157.74 5.76 (6.91) 2,90,983

Bulk Deals
Security Name Client Name Buy/Sell Qty Price Value (mn)
Navkar Corporation Ltd. Stallion Asset Pvt Ltd Buy 1716406 125.37 215
Ganesh Green Bharat Ltd Cinco Stock Vision LLP Sell 322200 460.65 148
Maha Tel Nigam Ltd. Quadrature Capital Vector SP Limited Sell 1507143 69.00 104
Indiabulls Hsg Fin Ltd Plutus Wealth Management LLP Buy 1350000 67.90 92
Ganesh Green Bharat Ltd Statsol Research LLP Sell 181200 460.65 83
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 3

Nifty Nifty P/E Nifty P/B

24000 36 4.5
4.0
21000 31
3.5
18000
26 3.0
15000
2.5
12000 21
2.0
9000 16 1.5
Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24

Source: Bloomberg

Sensex FII Provisional Flows (INR bn) DII Provisional Flows (INR bn)
75000 290 155
230 130
65000 105
170 80
55000 110 55
45000 50 30
5
35000 (10)
(20)
(70) (45)
25000
Jul-20 Jul-21 Jul-22 Jul-23 Jul-24
(130) (70)
Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24
Source: Bloomberg

Economy, Money & Banking Commodities Update

Forex Rate Last % Chg % MTD % YTD Commodities Last % Chg % MTD % YTD
INR~USD 83.7 (0.0) (0.3) (0.5) Gold ($/Ounce) 2,401 (1.8) 3.2 16.4
INR~EUR 91.0 0.5 (1.9) 1.0 Crude Oil ($/Bl) 80 (3.2) (1.7) 11.8
INR~GBP 108.0 0.6 (2.3) (2.1) Aluminium ($/t) 2,295 (1.4) (7.8) (2.2)
Copper ($/t) 9,179 (0.8) (2.9) 8.5
Bond Market Last Chg (bps) MTD (bps) YTD (bps) Zinc ($/t) 2,717 (1.2) (5.6) 2.9
10 Year Bond 7.0 (0) (5) (21) Lead ($/t) 2,082 (2.2) (4.4) 2.3
Interbank call 5.8 - (49) (49) Nickel ($/t) 15,986 (1.0) (6.2) (2.4)

INR/USD Gold and silver prices (USD/Tr.Oz) Crude prices (USD/barrel)

84 2500 30 95
2200 27
83 24 75
1900
21
1600
18
82 1300 55
15
1000 12
81 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 35
Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24
Gold (LHS) Silver (RHS)

Source: Bloomberg

Inflation vs 10 year yield Nifty premium/discount NSE volatility index (%)

20 40 35.0 30
31.5
15 26
10 30
19.4 22
5 20
0 8.2 18
-5
10
14
Jul-23

Jul-24
Oct-22

Jan-23

Apr-23

Oct-23

Jan-24

Apr-24

0 10
7-Jun
29-Mar

12-Apr

26-Apr

5-Jul

19-Jul
21-Jun
10-May

24-May

-10 -1.8
WPI Inflation (%) 10 Yr Yield (%) 12-Jul 15-Jul 16-Jul 18-Jul 19-Jul

Source: Bloomberg
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 4

CMP : INR 3,109 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD ê
: INR 3,268 çè
Reliance Industries
Target Price Change : No Change Earnings short of consensus-weak O2C and retail
Target 1HFY27 EV/EBITDA (x) : 12.7
Reliance Industries' (RIL) 1QFY25 EBITDA of INR 388 bn (-8.8 % QoQ, +1.8 %
EBITDA Change FY25/ 26/ 27 : -5%/-2%/-2%
YoY) is lower than our estimate of INR 402 bn and consensus estimate of
INR 398 bn. The decline was largely expected, primarily driven by weak
O2C earnings due to weaker cracks. Retail was also below expectations.
Varatharajan S. PAT of INR 151.4 bn (-20.1 % QoQ, -5.5 % YoY) is lower than our estimate of
+91 22 6911 3425 INR 165 bn and consensus of INR 172 bn. We cut our FY25 EBITDA estimate
[email protected] by 5% mainly on account of poor O2C earnings while keep our FY26 and
Kishan Mundhra FY27 estimates largely unchanged. We increase our valuation multiple for
+91 22 6911 3426 Jio on account of the better industry outlook but is offset by higher capex in
[email protected] the retail segment. Consequently, we keep our target price (INR 3,268, 12.7x
1HFY27 EV/EBITDA) largely unchanged but downgrade the stock to HOLD
from BUY on account of the recent run-up in the stock price.

Market data O2C business: Lower benchmark GRMs hit the segment
Sensex : 80,605 EBITDA of INR 131 bn (-22% QoQ, -14% YoY) declined sequentially. The quarter was hampered
Sector : Oil & Gas by lower gasoline (-36% QoQ), gasoil (-36%), and ATF (-37%) spreads, partly compensated
Market Cap (INR bn) : 21,045.0 by some QoQ improvement in petrochemical spreads and crude and FO procurement cost
Market Cap (USD bn) : 251.554 advantage. Singapore GRM was down a whopping USD 3.8/bbl. Significantly, improvement
O/S Shares (mn) : 6,765.8
in PVC price, PVC-EDC, polyester, PP-naphtha, PTA-PX, benzene-naphtha, and butadiene
52-wk HI/LO (INR) : 3218/2220
spreads helped cushion the refining fall. We believe in June Russian crude discounts improved
Avg. Daily Vol ('000) : 5,428
helping cushion refining weakness, while RIL reports optimization of aromatic components
Bloomberg : RELIANCE IN
blending in gasoline vs. PX and maximization of chemicals (likely benzene due to favorable
Source: Bloomberg
spreads) and maximization of domestic sale of fuels (strong gasoline demand growth and
Valuation
good marketing margins), all of them incrementally compensating for weak refining. Looking
FY25e FY26e FY27e
ahead, expect the overall market to remain supported by seasonal demand for gasoline,
EPS (INR) 108.5 123.0 127.7
further upside to aviation fuel demand, and potential weather and geopolitical disruptions
P/E(x) 28.6 25.3 24.3
P/BV(x) 2.4 2.3 2.1
likely tightening the fuel market.
EV/EBITDA(x) 12.9 11.2 10.1 Digital services (Jio) stable; tariff hike impact from the next quarter
Dividend Yield (%) 0.3 0.3 0.3
EBITDA of INR 149 bn (+2% QoQ, +9% YoY). Addition of 8 mn customers during the quarter
Source: Company, Antique
vs. 10.9 mn in 4Q. ARPU was constant QoQ at INR 181.7. Per capita data consumption
Returns (%) increased from 28.7 GB/day to 30.3 GB/day. The company's total 5G subscribers were
1m 3m 6m 12m
~130 mn vs. ~108 mn in the previous quarter. 5G accounts for 31% of Jio's wireless data
Absolute 7 6 14 20
traffic vs. 28% in the previous quarter. Crossed 1 mn FWA connections.
Relative 2 (4) 1 0
Source: Company, Antique Retail-A weak quarter
Shareholding pattern Revenue was weaker than expected at INR 756 bn (-1.4% QoQ, 8%YoY). EBITDA was INR
57 bn (-3.5% QoQ, +10% YoY) while the EBITDA margin was 7.5% (-14 bps QoQ, +14 bps
Promoters : 50%
YoY). The quarter was likely affected by the extreme heat wave and the elections. The company
Public : 50%
Others : 0%
is streamlining operations by closing some stores and looking at margin expansion for the
business as a whole. Fashion & lifestyle was weak during the quarter while grocery and
Source: Bloomberg consumer electronics were strong. Gross store addition was 331 while the net store added
Price performance vs Nifty were only 82, taking the total store count to 18,918 (vs. 18,836 in 4Q). Has 316 mn registered
130 customers (+4% QoQ, +18% YoY), 296 mn footfalls (+9% QoQ, +19% YoY) & 334 mn
120 transactions (+7% QoQ, +6% YoY); with the QoQ improvement in these metrics the topline
110 decline makes it look stark. Digital Commerce & New Commerce's contribution remained
100
90
stable at 18% of total revenue. Metro scaled to 200+ stores with the opening of 30+ stores
80 during the quarter. JioMart witnessed growth of 16% YoY.
Jul-23 Nov-23 Mar-24 Jul-24
Reliance Ind NIFTY
Source: Bloomberg, Indexed to 100
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 5

Oil & Gas-Lower production leads to QoQ decline in profitability

EBITDA of INR 52 bn (-7% QoQ, 29.8% YoY) was on expected lines. The quarter was impacted
by a marginal decline in volume and realization. Gas production was 28.7 mmscmd (vs.
29.7 mmscmd QoQ) and likely had some maintenance. Oil/ condensate production of 21,640
bbl/day.
Capex inches up
Capex of INR 287 bn for the quarter (vs. INR 232 bn in 4Q). Net debt of INR 1.12 trn vs INR
1.16 trn QoQ. Capex rate still relatively high given the completion of 5G and slower retail,
petrochem, and new energy investments.

Investment Summary
O2C is facing headwinds due to poor benchmark GRMs but is likely to improve. Benefits of
Russian discounts continue to accrue. The petrochemical environment continues to remain
weak. Telecom continues to have a strong outlook. Retail operations are being rationalized
and has had a couple of weak quarters but things should start looking up from hereon. New
energy giga factories are expected to start coming online in the next six months. However, we
believe that the recent run-up limits an upside from hereon. Downgrade the stock to HOLD
from BUY.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 6

Table 1: Financial summary

(INR bn) 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%)
Sales 2,318 2,076 11.7 2,365 -2.0
Cost of Material Consumed 1,535 1,317 16.5 1,535 0.0
% of sales 66.2 63.4 64.9
Employee cost 71 66 7.1 68 3.7
% of sales 3.1 3.2 2.9
Other expenses 325 312 4.1 337 -3.7
% of sales 14.0 15.0 14.3
Total Exp 1,930 1,695 13.9 1,940 -0.5
EBITDA 388 381 1.8 425 -8.8
Margin % 16.7 18.4 18.0
Other income 40 39 2.3 46 -14.1
Depreciation 136 118 15.5 136 0.2
Interest exp 59 58 1.4 58 2.7
PBT 232 244 -4.7 278 -16.5
Exceptionals 0 0 0
PBT after exceptional 232 244 -4.7 278 -16.5
Tax 58 61 -5.3 66 -12.0
Tax Rate % 24.9 25.1 23.6
Reported Net Profit 174 183 -4.5 212 -17.9
Adjusted Net Profit 174 183 -4.5 212 -17.9
Less: Minority interest 23 22 2.7 23 0.7
PAT attributable to Owners
of the Company 151 160 -5.5 190 -20.1
EPS (INR) 22 24 -5.5 28 -20.1
Source: Company, Antique

Exhibit 1: EBITDA hit as O2C declines Exhibit 2: Retail revenue growth moderates
500 900 70.0%
(INR bn) (INR bn)
450 800 60.0%
400 50.0%
700
350 40.0%
600
300 30.0%
250 500
20.0%
200 400
10.0%
150 300
0.0%
100
200 -10.0%
50
100 -20.0%
0
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25

0 -30.0%
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25

Petchem Upstream Organised retail Digital services Others

Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 7

Exhibit 3: Retail margin remains steady Exhibit 4: Jio's YoY revenue growth in double digits…
9.0% 400 (INR bn) 50.0%
8.0% 350 45.0%

7.0% 40.0%
300
35.0%
6.0%
250 30.0%
5.0%
200 25.0%
4.0%
150 20.0%
3.0%
15.0%
2.0% 100
10.0%
1.0% 50 5.0%
0.0% 0 0.0%
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25

1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25
Source: Company, Antique Source: Company, Antique

Exhibit 5: …entirely led by subs addition… Exhibit 6: …as ARPU remains stagnant
600 20 200 (INR)
(mn) (mn)
180
500 15
160
10 140
400
5 120
300 100
0
80
200
-5 60
100 -10 40
20
0 -15
0
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25

1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25
EOP subs Net subs addition

Source: Company, Antique Source: Company, Antique

Exhibit 7: O2C throughput constant Exhibit 8: Product sales mix stable

21 20
(MMT) (MMT)

20
15

19
10
18

17 5

16 0
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25

15
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25

Transportation fuels Polymers Fibre Intermediates

Polyesters Chemicals and others
Source: Company, Antique Source: Company, Antique
 250
350
450
550
650
750
850
250
350
450
550
650
750
850
950
1,050
Jun-19
Jun-19
Sep-19
Sep-19

($/MT)
Dec-19
Dec-19

($/MT)
Mar-20
Mar-20

Source: Company, Antique

Source: Company, Antique
Jun-20
Jun-20
Sep-20
Sep-20
Dec-20

Exhibit 12: PP-Naphtha

Exhibit 10: PE-Naphtha
Dec-20
Mar-21
Mar-21
Jun-21
ANTIQUE STOCK BROKING LIMITED

Jun-21
Sep-21
Sep-21
Dec-21

Petrochemicals Margin Trend

Dec-21
Mar-22 Mar-22
-10
10
20
30
40
50
60

0
Jun-22 Jun-22
Sep-22 Sep-22
1Q21
Dec-22 Dec-22
Mar-23 Mar-23 2Q21
(USD/bbl)

Jun-23 Jun-23 Source: Company, Antique

Sep-23 Sep-23 3Q21
Dec-23 Dec-23
Mar-24 Mar-24 4Q21
Jun-24 Jun-24
Gasoline

1Q22

0
100
200
300
400

2Q22

300
400
500
600
700
800
900
1,000
1,100
1,200
Jun-19
Jun-19 Sep-19
Sep-19 3Q22
($/MT)

Dec-19

($/MT)
Dec-19
Exhibit 9: Margins decline for key products

Mar-20 4Q22

Source: Company, Antique

Source: Company, Antique
Mar-20
Jun-20
FROM THE RESEARCH DESK

Jun-20
Sep-20 1Q23
Exhibit 11: PE-Ethane

Sep-20

Exhibit 13: PP-Propane

Gasoil

Dec-20
Dec-20 2Q23
Mar-21
Mar-21
Jun-21
Jun-21 3Q23
Sep-21
Sep-21
Dec-21 Dec-21 4Q23
Mar-22 Mar-22
Jun-22 Jun-22 1Q24
Sep-22 Sep-22
Dec-22 2Q24
Dec-22
Mar-23 Mar-23
Jet Kero

3Q24
Jun-23 Jun-23
Sep-23 Sep-23 4Q24
Dec-23 Dec-23
Mar-24 Mar-24 1Q25
Jun-24 Jun-24
22 July 2024 | 8
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 9

Exhibit 14: PVC-EDC/ Ethylene Exhibit 15: PX-Naphtha

900 ($/MT) 600 ($/MT)
800
700 500

600
400
500
400
300
300
200
200
100
0 100
Jun-19
Sep-19
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Jun-23
Sep-23
Dec-23
Mar-24
Jun-24

Jun-19
Sep-19
Dec-19

Jun-20
Sep-20
Dec-20

Jun-21
Sep-21
Dec-21

Jun-22
Sep-22
Dec-22

Jun-23
Sep-23
Dec-23

Jun-24
Mar-20

Mar-21

Mar-22

Mar-23

Mar-24
Source: Company, Antique Source: Company, Antique

Exhibit 16: PTA-PX Exhibit 17: MEG-Ethane

180 200
($/MT) ($/MT)

160 100

140
0
120
-100
100

80 -200

60 -300
Jun-19

Jun-20

Jun-21

Jun-22

Jun-23

Jun-24
Sep-19
Dec-19
Mar-20

Sep-20
Dec-20
Mar-21

Sep-21
Dec-21
Mar-22

Sep-22
Dec-22
Mar-23

Sep-23
Dec-23
Mar-24

Jun-19
Sep-19
Dec-19

Jun-20
Sep-20
Dec-20

Jun-21
Sep-21
Dec-21

Jun-22
Sep-22
Dec-22

Jun-23
Sep-23
Dec-23

Jun-24
Mar-20

Mar-21

Mar-22

Mar-23

Mar-24
Source: Company, Antique Source: Company, Antique

Table 2: SoTP
Net equity
Segment 1HFY27 EBITDA Multiple (x) EV Net debt Equity Stake (INR mn) INR /share
O2C 7,22,679 8.5 61,42,771 61,42,771 100% 61,42,771 908
Upstream 1,64,578 5.0 8,22,892 8,22,892 100% 8,22,892 122
Fuel retail 20,000 5.0 1,00,000 1,00,000 50% 50,000 7
New Energy 13,50,000 13,50,000 100% 13,50,000 200
Energy total 9,07,257 84,15,663 3,16,859 80,98,804 80,98,804 1,197

Telecom 7,82,395 11.5 89,97,540 12,86,122 77,11,419 66% 51,22,695 757

Retail 3,43,743 26.7 91,64,114 2,55,168 89,08,946 84% 74,39,861 1,100

Other Investments 214

Total 20,33,395 13.1 2,65,77,318 18,58,149 2,47,19,169 2,06,61,361 3,268
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 10

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net Revenue 87,78,350 90,10,640 1,02,72,236 1,08,96,309 1,15,34,491 PBT 9,48,010 10,47,270 11,78,552 13,71,135 14,93,309
Op. Expenses 73,56,730 73,88,310 84,84,281 88,70,639 93,66,231 Depreciation & amortisation 4,03,190 5,08,320 5,38,130 5,97,131 6,31,019
EBITDA 14,21,620 16,22,330 17,87,955 20,25,670 21,68,259 Interest expense 1,95,710 2,31,180 2,24,229 2,15,121 2,06,942
Depreciation 4,03,030 5,08,320 5,38,130 5,97,131 6,31,019 (Inc)/Dec in working capital (1,96,340) 63,660 (1,81,664) (38,050) (33,248)
EBIT 10,18,590 11,14,010 12,49,825 14,28,539 15,37,240 Tax paid (62,970) (1,19,610) (1,88,408) (2,16,606) (2,33,267)
Other income 1,17,340 1,60,570 1,52,957 1,57,718 1,63,010 Less: Interest/Dividend Income Received (1,12,400) (1,07,450) (1,52,957) (1,57,718) (1,63,010)
Interest Exp. 1,95,710 2,31,180 2,24,229 2,15,121 2,06,942 Other operating Cash Flow (24,880) (35,490) - - -
Extra Ordinary Items -gain/(loss) 240 3,870 - - - CF from operating activities 11,50,320 15,87,880 14,17,883 17,71,013 19,01,745
Reported PBT 9,39,980 10,39,530 11,78,552 13,71,135 14,93,309 Capital expenditure (13,18,020) (13,75,760) (8,57,858) (10,70,923) (8,33,920)
Tax 2,03,760 2,57,070 2,96,407 3,42,251 3,71,965 Inc/(Dec) in investments 2,94,440 1,69,750 - - -
Reported PAT 7,36,220 7,82,460 8,82,145 10,28,884 11,21,344 Add: Interest/Dividend Income Received 1,11,230 63,000 1,52,957 1,57,718 1,63,010
Minority Interest 73,860 93,990 1,47,758 1,96,373 2,57,370 CF from investing activities (9,12,350) (11,43,010) (7,04,901) (9,13,206) (6,70,910)
PAT attributable to owners of the co. 6,62,360 6,88,470 7,34,387 8,32,511 8,63,974 Inc/(Dec) in share capital 5,190 1,98,370 - - -
Adjusted PAT 6,62,540 6,91,373 7,34,387 8,32,511 8,63,974 Inc/(Dec) in debt 3,66,690 67,790 1,91,008 27,139 24,038
Adjusted EPS (INR) 97.9 101.8 108.5 123.0 127.7 Dividend Paid (50,830) (60,890) (64,277) (64,277) (64,277)
Interest Paid / Others (2,16,500) (3,71,730) (3,45,152) (3,36,044) (3,27,864)
Balance sheet (INR mn) CF from financing activities 1,04,550 (1,66,460) (2,18,421) (3,73,182) (3,68,103)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Net cash flow 3,42,520 2,78,410 4,94,561 4,84,626 8,62,732
Share Capital 67,660 67,660 67,660 67,660 67,660 Opening balance 3,61,780 6,86,640 9,72,250 14,66,811 19,51,437
Reserves & Surplus 70,91,060 78,67,150 86,12,097 92,53,729 99,20,992 C & CE of Subsidiaries under liquidations (17,660) 7,200 - - -
Networth 71,58,720 79,34,810 86,79,757 93,21,389 99,88,652 Closing balance 6,86,640 9,72,250 14,66,811 19,51,437 28,14,169
Debt 44,72,390 45,44,140 47,35,148 47,62,287 47,86,325
Minority Interest 11,30,090 13,23,070 15,96,698 19,18,941 23,02,181 Growth indicators (%)
Net deferred Tax liabilities 6,03,240 7,22,410 8,28,861 9,50,822 10,84,379 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Capital Employed 1,33,64,440 1,45,24,430 1,58,40,464 1,69,53,439 1,81,61,537 Revenue(%) 25.4 2.6 14.0 6.1 5.9
Gross Fixed Assets 1,02,09,340 1,12,69,460 1,38,35,648 1,51,86,571 1,60,30,491 EBITDA(%) 28.7 14.1 10.2 13.3 7.0
Accumulated Depreciation 29,61,290 34,69,610 37,65,961 42,72,182 48,16,836 Adj PAT(%) 13.1 4.4 6.2 13.4 3.8
Capital work in progress 29,37,520 33,88,550 16,80,220 14,00,220 13,90,220 Adj EPS(%) 6.7 3.9 6.7 13.4 3.8
Net Fixed Assets 1,01,85,570 1,11,88,400 1,17,49,907 1,23,14,610 1,26,03,875
Investments 23,55,600 22,56,720 23,55,600 23,55,600 23,55,600 Valuation (x)
Non Current Investments 11,70,870 11,95,020 11,70,870 11,70,870 11,70,870 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Current Investments 11,84,730 10,61,700 11,84,730 11,84,730 11,84,730 P/E 31.8 30.6 28.6 25.3 24.3
Current Assets, Loans & Advances 35,33,140 41,14,740 45,59,954 51,64,672 61,35,841 P/BV 2.9 2.7 2.4 2.3 2.1
Inventory 14,00,080 15,27,700 15,34,042 15,94,675 16,49,509 EV/EBITDA 16.63 14.51 12.93 11.19 10.06
Debtors 2,84,480 3,16,280 3,66,540 4,00,402 4,31,152 EV/Sales 2.69 2.61 2.25 2.08 1.89
Cash & Bank balance 6,86,640 9,72,250 14,66,811 19,51,437 28,14,169 Dividend Yield (%) 0.3 0.3 0.3 0.3 0.3
Loans & advances and others 11,61,940 12,98,510 11,92,561 12,18,158 12,41,011
Current Liabilities & Provisions 27,09,870 30,35,430 28,24,998 28,81,442 29,33,779
Financial ratios
Liabilities 26,72,020 29,93,240 27,87,148 28,43,592 28,95,929
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
RoE (%) 8.9 9.2 8.8 9.2 8.9
Provisions 37,850 42,190 37,850 37,850 37,850
RoCE (%) 8.9 9.1 9.2 9.7 9.7
Net Current Assets 8,23,270 10,79,310 17,34,956 22,83,229 32,02,062
Asset/T.O (x) 0.9 0.8 0.8 0.8 0.8
Application of Funds 1,33,64,440 1,45,24,430 1,58,40,464 1,69,53,439 1,81,61,537
Net Debt/Equity (x) 0.4 0.3 0.2 0.2 0.1
Per share data EBIT/Interest (x) 5.8 5.5 6.3 7.4 8.2
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
No. of shares (m) 6,766 6,766 6,766 6,766 6,766
Margins (%)
Diluted no. of shares (m) 6,766 6,766 6,766 6,766 6,766
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
EBITDA Margin(%) 16.2 18.0 17.4 18.6 18.8
BVPS (INR) 1058.0 1172.7 1282.9 1377.7 1476.3
EBIT Margin(%) 11.6 12.4 12.2 13.1 13.3
CEPS (INR) 168.4 190.8 209.9 240.3 259.0
PAT Margin(%) 7.45 7.54 7.04 7.53 7.39
DPS (INR) 8.5 9.0 9.5 9.5 9.5
Source: Company Antique
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 11

CMP : INR 1,607 1QFY25 RESULT REVIEW

Reco
Target Price
: BUY çè
: INR 1,900 çè
HDFC Bank
Target Price Change : No Change NIM may have troughed; balance sheet to hog the limelight
Target 1HFY27 P/BV (x)* : 2.2
HDFCB’s reported PAT of INR 162 bn (RoA of 1.8%) was 3% below our estimate
EPS Change FY25/ 26/ 27 : -3%/-3%/ 0% but 2% above consensus estimate. NII of INR 298 bn was in line with our
* for banking business, INR 219 for subsidiaries estimate. Reported NIM of 3.47% improved 3 bps QoQ and was better than
consensus expectation of a flat NIM (marginally below our expectation). Fee
Sohail Halai
+91 22 6911 3413
income was weaker than expected. Growth of deposits and loans were
[email protected] muted QoQ on end-of-period basis, however, were up 4.6% QoQ and 0.8%
Sarvesh Mutha
QoQ respectively on average basis. The bank continues to reduce borrowings
+91 22 6911 3498 which declined by 9.5% QoQ (after a 10% QoQ decline in 4QFY24). LDR
[email protected] improved marginally to 103.5% while LCR improved to 123% (115% in 4QFY24
Raju Barnawal and 110% in 3QFY24). Asset quality remained stable (net slippage ratio of
+91 22 6911 3429 0.8% and credit cost of 42 bps). The bank has to demonstrate that it can
[email protected] grow its margins sustainably in the backdrop of slow loan growth as
compared to deposits. Overall, we reduce our FY25/ 26 earnings by 3%
Market data while we maintain FY27 estimates. Maintain BUY with an unchanged TP of
Sensex : 80,605 INR 1,900 (valuing the core banking business at 2.2x 1HFY27 BV and INR
Sector : BANKS 219 for subsidiaries, pre-merger 10-year average P/BV of 3.4x).
Market Cap (INR bn) : 12,228.5 In-line NII with marginal NIM improvement
Market Cap (USD bn) : 146.169 NII of INR 298 bn (+26% YoY; 3% QoQ; 4% YoY on pro-forma merged base estimate of
O/S Shares (mn) : 7,608.1 1QFY24) was in-line. NIM improved marginally by 3 bps QoQ to 3.47% on total assets. Both
52-wk HI/LO (INR) : 1794/1363 yield on assets and cost of funds were stable QoQ during the quarter at 8.4%/ 4.9%.
Avg. Daily Vol ('000) : 20,407 Management has articulated that they intend to garner deposits by increasing engagement
Bloomberg : HDFCB IN and service delivery rather than raising interest rates. Costs were controlled at INR 166 bn vs.
Source: Bloomberg
an estimate of INR 170 bn on account of lower other expenses with cost to income ratio at
Valuation 41% and cost to assets at 1.9%. Fees was below our expectation at INR 84 bn vs. est. of INR
FY25e FY26e FY27e 94 bn. Therefore, core PPP at INR 217 bn was 3% below estimate—2.4% of average assets.
EPS (INR) 88 103 122 Credit cost stayed flat at 42 bps. Overall, PAT was 3% below our estimate at INR 162 bn
BVPS (INR) 629 708 801 (35% YoY, -2% QoQ) but 2% higher than consensus est. of INR 159 bn.
P/E Ratio 15.9 13.6 11.4 Balance sheet growth muted; LCR improves sequentially
P/BV (x)* 2.2 2.0 1.7
NIM (%) 3.6 3.7 3.8
End-of-period deposit was flat QoQ due to high unexpected outflow from current account
Source: Antique; balances; although, on an average balance basis deposits grew 4.6% QoQ. EOP current
* adjusted for subs; FY25-27 - Merged financials a/c balance declined 14% QoQ while savings a/c balance was flat. Average CASA
Returns (%) increased 3.3% QoQ as against 5% decline on end-of-period basis (average CASA ratio
1m 3m 6m 12m stood at 36%). LCR improved to 123% (115% in 4QFY24 and 110% in 2QFY24). There was
Absolute (3) 5 9 (5) continued reduction in borrowings with 9.5% decline sequentially after a 10% decline in
Relative (7) (5) (3) (21) 4QFY24. High-cost borrowings will start reducing from FY25 onwards. EOP loans declined
Source: Company, Antique 0.9% QoQ (11% YoY on pro-forma basis) but average loans were up 0.8% sequentially.
Therefore, the loan to deposit ratio came down marginally to 103.5% vs. 104.4% with the
Shareholding pattern
management articulating that growing retail deposits faster than loans is the bank’s primary
Promoters : 0% focus, hence, bringing down LD ratio much faster.
Public : 100% Asset quality not a challenge; contingency buffer at 1.1% of loans
Others : 0%
Asset quality remains stable with GNPA/ NNPA at 1.3%/ 0.4%. Slippage and net slippage
Source: Bloomberg ratio increased marginally QoQ to 1.4% and 0.8% respectively on account of higher fresh
Price performance vs Nifty slippages and lower recoveries and upgrades. Management mentioned that all indicators
point to book quality remaining strong. Overall contingent and floating provisions stood at
135
125 1.1% of loans.
115
105
Investment Summary
95 Despite such a humongous merger, important ratios of profitability, asset quality such as NIM,
85
75 cost to income, GNPA, and RoA have stayed range bound with an improving trend in the last
Jul-23 Nov-23 Mar-24 Jul-24 couple of quarters which signifies the resilient nature of the bank. Hence, we continue to
HDFC Bank NIFTY remain positive on the bank and expect the bank to clock a RoA of 1.8%–1.9% and RoE of
Source: Bloomberg, Indexed to 100 15%–16% over FY25-27E. Maintain BUY.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 12

Table 1: Quarterly earnings snapshot

Profit and Loss (INR m) 1QFY25 1QFY24 YoY %* 4QFY24 QoQ % 1QFY25E Deviation (%)
Net Interest Income 2,98,371 2,35,991 26.4 2,90,768 2.6 2,99,044 -0.2
Other Income 1,06,681 92,299 15.6 1,81,663 -41.3 1,17,146 -8.9
Reported Fee income 84,381 75,989 11.0 91,363 -7.6 93,646 -9.9
Core Income 3,82,753 3,11,979 22.7 3,82,131 0.2 3,92,690 -2.5
Other non-core Income 22,300 16,310 36.7 90,300 -75.3 23,500 -5.1
Operating Expenses 1,66,206 1,40,569 18.2 1,79,688 -7.5 1,70,079 -2.3
Employee 58,489 47,821 22.3 69,362 -15.7 56,443 3.6
Others 1,07,717 92,748 16.1 1,10,326 -2.4 1,13,636 -5.2
Core Operating Profits 2,16,546 1,71,410 26.3 2,02,442 7.0 2,22,611 -2.7
Operating Profits 2,38,846 1,87,720 27.2 2,92,742 -18.4 2,46,111 -3.0
Provisions 26,021 28,600 -9.0 1,35,116 -80.7 29,839 -12.8
PBT 2,12,826 1,59,120 33.8 1,57,626 35.0 2,16,272 -1.6
Taxes 51,078 39,602 29.0 -7,493 -781.7 49,743 2.7
PAT 1,61,748 1,19,518 35.3 1,65,119 -2.0 1,66,530 -2.9
Source: Company, Antique; * * 4QFY24 and 1QFY25 numbers are for the merged entity. Hence, YoY numbers are not comparable

Table 2: We reduce our FY25-26 earnings estimates by 3%

Old Estimates New Estimates Change (%)
INR bn FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27
Net Interest Income 1,264 1,483 1,695 1,225 1,411 1,654 -3.1 -4.8 -2.4
Other Income 502 584 691 452 520 614 -10.1 -11.0 -11.2
Total Income 1,766 2,066 2,386 1,676 1,931 2,268 -5.1 -6.6 -5.0
Operating Expenses 730 837 960 689 771 887 -5.6 -7.8 -7.6
Operating Profits 1,036 1,229 1,427 988 1,159 1,381 -4.7 -5.7 -3.2
Provisions 140 183 230 117 145 182 -16.4 -20.6 -21.0
PBT 896 1,047 1,197 871 1,014 1,199 -2.9 -3.1 0.2
Tax 206 241 275 200 233 276 -2.9 -3.1 0.2
PAT 690 806 921 670 781 923 -2.9 -3.1 0.2
Source: Company, Antique

Exhibit 1: Long-term 1-year forward P/BV, trading just above -2 SD valuation

4.90

4.40

3.90

3.40

2.90

2.40

1.90

1.40
Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18

Apr-19

Apr-20

Apr-21

Apr-22

Apr-23

Apr-24

P/BV Avg PB -1SD +1SD -2SD +2SD

Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 13

Conference Call Highlights

n The bank acknowledges this to be a period of transition post merger.
n Deposits are short of expectations. 1QFY25 is seasonally a weak quarter. Net accretion
has normally been in line with the system.
n However, there were unexpected outflows in current account balances at the end of the
period. The bank has a relatively higher market share in current account.
n It wants to avoid pressure of garnering period-end numbers. It wants to maintain healthy
average balances.
n The bank’s primary focus is accelerating the core retail deposit franchise. Retail deposits
are a kind of a segment for branch catchment.
n Management stated that it will be growing slower in advances vs. deposit growth. It is in
the bank’s interest to bring down LD ratio much faster.
n NIM, CASA, cost to income, GNPA, RoA have been range bound post merger. The
organization’s Inherent resilience is intact.
n Deposit momentum has been increasing across multiple products.
n Has not received any regulatory directive to reduce LCR.
n The bank continues to maintain its objective of profitable growth.
n Interest rates will not be the primary determinant for garnering more deposits. Customer
engagement and service delivery will be the key differentiator.
n The bank has tried to remain disciplined on pricing of deposits.
n It continues to stay rather conservative on unsecured personal loans and is happy to slow
down growth.
n The bank has organically achieved PSL and most of its sub targets. Achieving targets
under the small & marginal farmers and weaker sections are not easy but management
believes that given their strong presence and wider distribution network the bank is
looking to meet this trajectory. The addition of branches would help over the longer term
but it will still be difficult.
n Replacing high-cost borrowings will start from FY25.
n Cost of incremental deposits continue to be range bound.
n Business mix will determine the trajectory of margins. NIM is expected to remain stable.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 14

Table 3: Quarterly DuPont: Core PPoP improved to 2.4% (as % of average assets)
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Interest Income 6.7 7.1 7.6 7.6 7.8 8.1 8.2 8.0 8.1
NII 3.7 3.9 4.1 3.9 3.8 3.3 3.3 3.3 3.3
Other Income 1.2 1.4 1.5 1.5 1.5 1.3 1.3 2.0 1.2
Fee Income 1.2 1.3 1.3 1.3 1.2 1.0 0.9 1.0 0.9
Operating Cost 2.0 2.1 2.2 2.3 2.3 1.8 1.8 2.0 1.9
Employee Expense 0.7 0.6 0.7 0.7 0.8 0.6 0.6 0.8 0.7
Other Expenses 1.3 1.4 1.5 1.5 1.5 1.2 1.2 1.2 1.2
Core PPP 2.9 3.1 3.1 2.9 2.8 2.4 2.4 2.3 2.4
PPP 2.9 3.2 3.4 3.1 3.0 2.7 2.7 3.3 2.7
Provisions 0.6 0.6 0.5 0.5 0.5 0.3 0.5 1.5 0.3
NPL Provisions 0.6 0.6 0.5 0.5 0.5 0.3 0.3 0.3 0.3
PBT 2.3 2.6 2.9 2.7 2.6 2.4 2.2 1.8 2.4
Tax 0.6 0.7 0.7 0.7 0.6 0.5 0.4 -0.1 0.6
PAT 1.8 2.0 2.2 2.0 1.9 1.9 1.9 1.9 1.8
Leverage 8.5 8.6 8.7 8.7 8.7 8.4 8.4 8.2 8.0
ROEs 15.0 16.8 18.8 17.6 16.7 16.0 15.8 15.3 14.4
Source: Company, Antique; * 2Q, 3Q, 4QFY24 and 1QFY25- Merged entity numbers

Table 4: DuPont Analysis: RoA expected to sustain at ~1.8%-1.9%% over FY25-27 (% of average assets)
Y/E March FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E
NII 4.2 4.2 4.0 4.0 3.8 3.9 3.2 3.2 3.3 3.4
Other Income 1.6 1.5 1.7 1.5 1.5 1.4 1.4 1.2 1.2 1.3
Fee Income 1.3 1.3 1.3 1.1 1.2 1.2 0.9 1.0 1.1 1.1
CEB 1.2 1.2 1.2 1.0 1.0 1.1 0.8 0.8 0.9 1.0
Forex 0.2 0.1 0.2 0.1 0.2 0.2 0.1 0.1 0.2 0.2
Non-core Income 0.2 0.2 0.3 0.4 0.3 0.1 0.5 0.2 0.2 0.2
Operating Cost 2.4 2.3 2.2 2.0 2.0 2.1 1.9 1.8 1.8 1.8
Employee Expense 0.7 0.7 0.7 0.6 0.6 0.7 0.7 0.6 0.6 0.6
Other Expenses 1.6 1.6 1.5 1.4 1.3 1.4 1.2 1.2 1.2 1.2
Core PPP 3.1 3.3 3.2 3.1 3.0 3.0 2.3 2.4 2.5 2.7
PPP 3.4 3.4 3.5 3.5 3.4 3.1 2.8 2.6 2.7 2.9
Provisions 0.6 0.7 0.9 1.0 0.8 0.5 0.7 0.3 0.3 0.4
NPL Provisions 0.5 0.6 0.7 0.7 0.5 0.5 0.3 0.3 0.3 0.4
PBT 2.8 2.8 2.6 2.5 2.6 2.6 2.1 2.3 2.4 2.5
Tax 1.0 1.0 0.7 0.6 0.6 0.6 0.3 0.5 0.5 0.6
RoA 1.8 1.8 1.9 1.9 1.9 2.0 1.8 1.8 1.8 1.9
Leverage 10.4 9.3 8.9 7.2 6.1 6.2 8.4 8.4 8.4 8.4
ROE 18.9 17.0 16.8 13.6 11.8 12.2 14.9 14.8 15.4 16.1
Source: Company, Antique; * FY24-27E - Merged entity numbers
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 15

Exhibit 2: LDR ratio declined sequentially Exhibit 3: Advances and deposit growth - base effect kicking in
115.0 110.5 26.0
110.0 107.3
104.4 103.5 24.0
105.0 22.0
100.0
20.0
95.0
18.0
90.0 87.2 87.8 86.9 88.4 86.9
85.0 84.5
82.9 81.7 82.7 16.0
85.0 80.7
78.5 78.4 78.7 77.5 14.0
80.0 77.1 76.6 76.1
75.0 12.0

70.0 10.0

1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25
Loans to Deposits (%) Loans to Deposits + Borrowings (%) Advances Gr YoY (%) Deposits Gr YoY (%)
Source: Company, Antique Source: Company, Antique; 2Q, 3Q & 4QFY24 YoY growth numbers are on pro-forma merged basis

Exhibit 4: NIM improved marginally QoQ Exhibit 5: Fee income declined QoQ
4.6 2.8
4.30

4.4
4.10

2.4
4.2
2.0
4.0
3.66
3.63
3.60

3.60

3.8 1.6
3.47
3.44
3.40

3.6
3.40

1.2
3.4
0.8
3.2
3.0 0.4
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

NIM - on IEA (%) NIM - on Total Assets (%) Fee income to average assets (%) Cost to average assets (%)
Source: Company, Antique Source: Company, Antique

Exhibit 6: Core PPoP as a % of average assets back to 2.4% Exhibit 7: RoA at 1.8% with credit cost remaining low at 0.4%
3.4 2.2 1.6

3.2 1.4
2.0
1.2
3.0
1.8
1.0
2.8
0.7

1.6 0.8
2.6
0.5
0.5

0.6
0.4

1.4
0.4

2.4 0.4
1.2
2.2 0.2
1.9
1.9
1.9
1.9
1.8
2.8
2.4
2.4
2.3
2.4

2.0 1.0 0.0

1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25

Core PPP to average assets (%) RoA (%) Credit cost (%, RHS)
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 16

Exhibit 8: Slippage ratios were stable sequentially Exhibit 9: Loan growth to pick up in FY26/ 27
5.0 28.0
4.5 26.0
4.0 24.0
3.5 22.0
3.0 20.0
2.5 18.0
2.0 16.0
1.5 14.0
1.0 12.0
0.5
10.0
0.0
8.0
4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Slippages ratio (%) Net Slippages ratio (%) Deposits Gr YoY (%) Loan Gr YoY (%)
Source: Company, Antique Source: Company, Antique

Exhibit 10: NIM on IEA to be on an improving trajectory

over FY25–27E Exhibit 11: Fee income contribution expected to remain stable
5.0
2.6
4.8
2.3
4.6
4.4 2.0
4.2 1.7
4.0
1.4
3.8
1.1
3.6
3.4 0.8

3.2
4.6

4.6

4.6

4.7

4.7

4.4

4.3

4.2

4.3

3.5

3.6

3.7

3.8

0.5
FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
3.0
FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

Fee income to average assets (%) Cost to average assets (%)

Source: Company, Antique Source: Company, Antique

Exhibit 12: Core PPP/ average assets expected to be Exhibit 13: RoA expected to be around 1.8%-1.9%
at 2.4%–2.7% over FY25–27E
3.4 2.00 1.2
1.95 1.1
3.2
1.90
1.0
3.0 1.85
1.80 0.9
2.8
1.75 0.8
2.6 1.70 0.7
2.4 1.65
0.6
1.60
2.2 0.5
1.9

1.8

1.8

1.8

1.8

1.9

1.9

1.9

1.9

1.8

1.8

1.8

1.9

1.55
3.0

2.3

2.4

2.5

2.7

2.0 1.50 0.4

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

Core PPP to average assets (%) RoA (%) Credit cost (%, RHS)
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 17

Table 5: Quarterly performance

1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 QoQ % YoY %*
Profit and Loss (INR mn) Merged Merged Merged Merged
Net Interest Income 1,94,814 2,10,212 2,29,878 2,33,518 2,35,991 2,73,852 2,84,713 2,90,768 2,98,371 3 26
Other Income 63,882 75,956 84,998 87,312 92,299 1,07,078 1,11,370 1,81,663 1,06,681 -41 16
Trading profits -10,770 -3,870 2,614 -377 5,520 10,410 14,700 75,900 2,200 -97 -60
Total Income 2,58,697 2,86,167 3,14,877 3,20,830 3,28,289 3,80,931 3,96,084 4,72,431 4,05,053 -14 23
Operating Expenses 1,05,018 1,12,246 1,24,636 1,34,621 1,40,569 1,53,992 1,59,611 1,79,688 1,66,206 -8 18
Operating Profits 1,53,678 1,73,922 1,90,241 1,86,209 1,87,720 2,26,939 2,36,473 2,92,742 2,38,846 -18 27
Provisions 31,877 32,401 28,064 26,854 28,600 29,038 42,166 1,35,116 26,021 -81 -9
PBT 1,21,801 1,41,520 1,62,176 1,59,355 1,59,120 1,97,901 1,94,307 1,57,626 2,12,826 35 34
PAT 91,960 1,06,058 1,22,595 1,20,475 1,19,518 1,59,761 1,63,725 1,65,119 1,61,748 -2 35
Asset Quality
GNPA 1,80,337 1,83,010 1,87,639 1,80,190 1,90,641 3,15,779 3,10,117 3,11,733 3,30,257 6 73
NNPA 48,877 48,827 50,243 43,684 47,769 80,728 76,641 80,917 95,084 18 99
GNPA (%) 1.3 1.2 1.2 1.1 1.2 1.3 1.3 1.2 1.3
NNPA (%) 0.4 0.3 0.3 0.3 0.3 0.4 0.3 0.3 0.4
PCR (Calc, %) 72.9 73.3 73.2 75.8 74.9 74.4 75.3 74 .0 71.2
Slippage (%), Calc 2.5 1.9 2.1 1.4 1.7 1.5 1.3 1.3 1.4
Ratios - calculated (%)
Fees to Total Income 24.9 24.1 22.8 24.2 22.4 22.2 21.4 20.0 22.3
Cost to Core Income 39.0 38.7 39.9 41.9 43.6 41.6 41.9 45.3 41.3
Tax Rate 24.5 25.1 24.4 24.4 24.9 19.3 15.7 -4.8 24.0
CASA (Reported) 45.8 45.4 45.4 44.4 42.5 37.6 37.7 38.2 36.3
Loan/Deposit 86.9 88.4 86.9 85.0 84.5 107.3 110.5 104.4 103.5
RoA 3.5 2.0 2.2 2.0 1.9 1.9 1.9 1.9 1.8
RoE 15.0 16.8 18.8 17. 6 16.7 16.0 15.8 15.3 14.4
Margins (%) - Calculated
Yield on loans 7. 9 8.5 9.0 9.2 9.5 9.5 9.5 9.4 9.5
Yield on funds 7.5 7. 9 8.4 8.5 8.8 8.9 9.0 8.9 9.1
Spreads 3.9 4.0 4.3 4.2 4.0 3.2 3.3 3.3 3.3
Margins 4.2 4.3 4.5 4.4 4.3 3.6 3.6 3.6 3.7
Margins (%) - Reported 4.0 4.1 4.1 4.1 4.1 3.4 3.4 3.4 3.5
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 18

Table 5: Quarterly performance (contd...)

Balance-sheet (INR bn) 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 QoQ % YoY %*
Net Worth 2,503 2,541 2,675 2,802 2,938 4,050 4,223 4,402 4,587 4 56
Deposits 16,048 16,734 17,332 18,834 19,131 21,729 22,140 23,798 23,791 0 24
Investments 4,962 5,191 5,273 5,170 5,658 7,234 6,749 7,024 7,088 1 25
Advances 13,951 14,799 15,068 16,006 16,157 23,312 24,461 24,849 24,635 -1 52
Total Assets 21,098 22,279 22,953 24,661 25,017 34,163 34,926 36,176 35,672 -1 43
Deposits (INR bn)
CA 2,206 2,300 2,277 2,735 2,524 2,477 2,558 3,100 2,673 -14 6
SA 5,141 5,297 5,352 5,625 5,606 5,700 5,799 5,987 5,964 0 6
CASA 7,346 7,597 7,630 8,360 8,130 8,177 8,357 9,087 8,637 -5 6
CASA ratio (%) 45.8 45.4 44.0 44.4 42.5 37.6 37.7 38.2 36.3
Loans (INR bn)
Gross loans 14,082 14,933 15,205 16,142 16,300 23,546 24,693 25,078 24,869 -1 53
Net loans 13,951 14,799 15,068 16,006 16,157 23,312 24,461 24,849 24,635 -1 52
Corporate 3,639 3,968 3,923 4,097 4,046 4,281 4,363 5,075 4,805 -5 19
Commercial & Rural 4,981 5,447 5,885 6,465 6,428 7,244 7,731 8,056 8,128 1 26
Retail 5,579 5,805 5,913 6,172 6,578 11,803 12,189 12,627 12,817 2 95
Mortgage Loans 1,534 1,624 1,700 1,788 1,873 7,171 7,432 7,744 7,880 2 321
Personal loans 1,479 1,548 1,646 1,717 1,767 1,787 1,815 1,846 1,859 1 5
Auto 1,040 1,088 1,124 1,174 1,217 1,255 1,280 1,311 1,330 1 9
Payment products 801 820 833 861 904 909 971 1,002 1,034 3 14
2W 92 96 98 99 104 110 113 118 120 2 16
Gold loans 88 94 100 108 117 126 131 138 149 8 27
Other retail 544 536 411 424 595 445 446 469 445 -5 -25
IBPC/CRDS (117) (288) (516) (592) (753) (809) (578) (680) (881)
Franchise
Branches 6,378 6,499 7,183 7,82 1 7,860 7,945 8,091 8,738 8,851
ATM 18,620 18,868 19,007 19,727 20,352 20,596 20,688 20,938 21,163
Employees 1,52,511 1,61,027 1,66,890 1,73,222 1,81,725 1,97,899 2,08,066 2,13,527 2,13,069
Source: Company, Antique; * 2Q, 3Q, 4QFY24, and 1QFY25 are merged numbers. Hence, YoY numbers are not comparabl
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 19

Financials
Profit and loss account (INR mn) Capital Adequacy Ratio
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Interest Income 16,15,856 25,83,406 30,23,937 34,00,241 38,85,644 RWA (INRm) 1,58,66,350 2,46,80,281 2,73,47,128 3,09,46,190 3,52,08,469
Interest Expense 7,47,433 14,98,081 17,99,337 19,89,254 22,31,996 Tier I (%) 17.1 16.8 17.0 17.0 16.9
Net Interest Income 8,68,422 10,85,325 12,24,600 14,10,987 16,53,648 Tier II (%) 2.2 2.0 1.9 1.7 1.6
% NII Growth 20.6 1.4 12.8 15.2 17.2 Total CAR (%) 19.3 18.8 18.9 18.7 18.5
Fee Income 2,38,440 2,81,607 3,23,847 3,88,617 4,66,340
Non-interest income 3,12,148 4,92,410 4,51,678 5,19,631 6,14,336 Business Ratios
Net Revenue 11,80,571 15,77,735 16,76,278 19,30,618 22,67,984 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Employees Expenses 1,55,124 2,22,402 2,40,194 2,69,018 3,09,370 Credit / Deposit(%) 85.0 104.4 96.5 93.2 91.6
Other Op. Expenses 3,21,397 4,11,458 4,48,489 5,02,308 5,77,654 Investment / Deposit (%) 27.5 23.1 24.1 24.7 25.5
Operating Profit 7,04,050 9,43,875 9,87,594 11,59,292 13,80,960 CASA (%) 44.4 38.2 36.7 36.8 37.5
% OP Growth 9.9 2.4 4.6 17.4 19.1 RoaA (%) 1.9 1.8 1.8 1.8 1.9
Tax 1,43,766 1,00,830 2,00,248 2,33,309 2,75,827 Core RoE (%) 17.2 14.9 14.8 15.4 16.1
Total Provisions 1,19,197 2,34,922 1,16,951 1,44,905 1,81,710 Dividend Yield (%) 1.2 1.2 1.4 1.7 1.9
Net Profit 4,41,087 6,08,123 6,70,396 7,81,078 9,23,422
Key assumptions
Balance sheet (INR mn) Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Deposits
Capital 5,580 7,597 7,597 7,597 7,597 Deposit growth (%) 20.8 16.9 18.0 18.0 16.0
Reserves and Surplus 27,96,410 43,94,861 49,09,055 55,08,142 62,16,406 Cost of deposits (%) 3.9 4.5 5.1 5.0 5.0
Deposits 1,88,33,946 2,37,97,863 2,80,81,478 3,31,36,144 3,84,37,927 Advances
Borrowings 20,67,656 66,21,531 56,58,804 50,61,442 45,75,073 Advances growth (%) 16.9 12.3 9.0 14.0 14.0
Other Liabilities & Provisions 9,57,222 13,54,379 15,59,432 17,95,779 20,68,211 Yield on advances (%) 8.6 8.8 9.4 9.4 9.4
Total liabilities 2,46,60,815 3,61,76,231 4,02,16,365 4,55,09,104 5,13,05,214 Investments
Investments growth (%) 13.5 14.3 16.0 16.0 16.0
Cash & Balances with RBI 11,71,608 17,86,832 17,12,126 17,24,687 11,60,759 Yield on investments (%) 6.4 6.7 7.0 6.9 6.9
Bal. with banks/ call money 7,66,043 4,04,642 8,42,444 6,62,723 7,68,759
Investment 51,70,014 70,24,150 81,48,014 94,51,696 1,09,63,967
Earnings Ratios
Loans and advances 1,60,05,859 2,48,48,615 2,70,84,991 3,08,76,889 3,51,99,654
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Interest Inc. / Avg.assets (%) 7.1 7.6 7.9 7.9 8.0
Fixed Assets 80,166 1,13,990 1,31,088 1,50,752 1,73,364
Interest Exp./ Avg. assets (%) 3.3 4.4 4.7 4.6 4.6
Other Assets 14,67,125 19,98,002 22,97,702 26,42,358 30,38,711
NIM (%) 4.3 3.5 3.6 3.7 3.8
Total assets 2,46,60,815 3,61,76,231 4,02,16,365 4,55,09,104 5,13,05,214
Int. exp/ Int earned (%) 46.3 58.0 59.5 58.5 57.4
Asset Quality Oth. Inc./ Tot. Inc. (%) 26.4 31.2 26.9 26.9 27.1
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Staff exp/Total opt. exp (%) 32.6 35.1 34.9 34.9 34.9
Gross NPA (INR mn) 1,80,191 3,11,733 4,77,256 5,40,068 6,95,119 Cost/ Income Ratio (%) 40.4 40.2 41.1 40.0 39.1
Gross NPA (%) 1.12 1.24 1.74 1.73 1.95 Prov./ Operating Profit (%) 16.9 24.9 11.8 12.5 13.2
Net NPA (INR mn) 43,685 3,64,444 1,24,086 1,40,418 1,80,731 Loan loss prov./Avg. loans (bps) 80.3 100.0 45.0 50.0 55.0
Net NPA (%) 0.27 1.47 0.42 0.41 0.44
% coverage of NPA 75.8 (16.9) 74.0 74.0 74.0
Per Share Data
Delinquencies (%) 1.8 1.3 1.8 1.9 2.0
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Book value per share (INR) 495 562 629 708 801
Source: Company, Antique;
Note: FY23 are standalone and FY24 to 27 are merged numbers Adj. BVPS (INR) 489 528 618 695 785
Price/ Adj. Book value* 3.1 2.5 2.2 2.0 1.7
EPS(INR) 79 80 88 103 122
P/E Ratio* 20.3 17.6 15.9 13.6 11.4
DPS 19.0 19.3 23.2 27.6 30.8
Source: Company Antique; * adjusted for subs
Note: FY23 are standalone and FY24 to 27 are merged numbers;
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 20

CMP : INR 1,822 1QFY25 RESULT REVIEW

Reco
Target Price
: BUY çè
: INR 2,000 çè
Kotak Mahindra Bank
Target Price Change : No Change NIM moderates; PAT augmented by one-off gain
Target 1HFY27 P/BV (x) : 2.2 Consol (SoTP)
Kotak Mahindra Bank (KMB) reported standalone PAT of INR 62.5 bn, which
EPS Change FY25/ 26/ 27# : 20%/ -2%/ -1% adjusted for one-time exceptional gain of INR 35.2 bn on account of stake
# Standalone sale in general insurance stood at INR 35 bn (2% YoY, in line with our estimate)
and adjusted RoA stood at 2.4%. NII was marginally below our estimate
Sohail Halai
+91 22 6911 3413
and grew 10% YoY/ -1% QoQ and NIM (adjusted for IT refund in the last
[email protected] quarter) declined by 16 bps QoQ. Fee income grew 23% YoY/ -9% QoQ and
Raju Barnawal opex grew 14% YoY leading to core PPP growth of 12% YoY (3% below
+91 22 6911 3429 estimate). Gross slippages were stable while net slippages increased QoQ
[email protected] to 0.9%, leading to increase in credit cost to 55 bps (vs. 46 bps in 4QFY24).
Sarvesh Mutha Loans grew 4% YoY (19% YoY) driven by the corporate segment (7% QoQ)
+91 22 6911 3498 while the unsecured segment saw moderation. Deposits were flat QoQ (16%
[email protected]
YoY) and LD ratio inched up from 84% to 87% QoQ. Subsidiary performance
was better than expectations, with the exception of life insurance, while AMC
and the broking business performed well. We increase our standalone FY25
Market data
PAT estimate by 20% to factor in one-off gain (adjusted for this no change in
Sensex : 80,605
core earnings) and reduce FY26/ 27 estimates by 2%/ 1% respectively. We
Sector : BANKS
maintain BUY rating with an unchanged TP of INR 2,000 valuing the bank at
Market Cap (INR bn) : 3,621.3
2.3x 1HFY27 and assign INR 452 for subsidiaries.
Market Cap (USD bn) : 43.285
O/S Shares (mn) : 1,988.0 NIM declined QoQ, one-offs boost PAT: NII grew 10% YoY/ -1% QoQ (1% below
52-wk HI/LO (INR) : 1988/1544 expectation) and reported NIM declined by 26 bps, adjusted for which one-off in 4QFY24
Avg. Daily Vol ('000) : 6,242 declined was 16 bps QoQ to 5% (-55 bps YoY). Management attributed the higher growth
Bloomberg : KMB IN in low-yielding corporate book and increase in cost of funds to have impacted NIM. Fees
Source: Bloomberg grew 23% YoY. Other income (ex-fees) increased to INR 6.9 bn vs. INR 5.1 bn in 4QFY24.
Valuation Core PPP grew 12% YoY/ -8% QoQ. Opex grew 14% YoY/ 2% QoQ. Credit cost increased
FY25e FY26e FY27e
from 42 bps to 55 bps QoQ. PAT, adjusted for one-off gain, increased by 2% YoY/ -15%
Consol BV (INR) 754 852 967
QoQ (adjusted RoA at 2.4%).
Consol EPS (INR) 108 103 121 Loan growth was strong while deposit growth was flat QoQ: Loans grew 19%
Price/ BV (x)* 2.4 2.1 1.9 YoY/ 4% QoQ (customer assets grew 3% QoQ/ 20% YoY) and was led by corporate/ SME
P/E Ratio (x)* 16.9 17.8 15.0 portfolio growth of 7%/ 3% QoQ (21% YoY) respectively. Unsecured retail loan growth moderated
RoA (%) 2.5 2.0 2.0 with PL/ CC reporting growth of 1% QoQ (25% YoY) vs. 4% QoQ in the previous quarter. The
Source: Company, Antique; * On consol basis share of unsecured retail loan (incl. microfinance) have come down marginally to 11.6% (vs.
11.8% QoQ). CV, mortgage, and business banking book grew 3%/ 4%/ 4% QoQ respectively.
Returns (%)
Retail MFI book grew 4% QoQ. Deposits were flat QoQ and CASA declined by 5% QoQ
1m 3m 6m 12m
(CASA ratio at 43.4% vs. 45.5% QoQ). LD ratio inched up from 84% to 87% on QoQ basis.
Absolute 4 2 3 (4)
Relative 0 (8) (8) (20) Asset quality was stable; net slippages inched up: Gross slippage ratio was stable
Source: Company, Antique QoQ at 1.6% while net slippages inched up from 0.7% to 0.9% QoQ. GNPL/ NNPL were
stable QoQ at 1.4%/ 0.3% respectively. PCR declined from 76% to 75% QoQ. Management
Shareholding pattern
mentioned that some stress was visible in low-ticket unsecured personal loans/ credit cards
Promoters : 26% and the MFI portfolio, but overall asset quality is expected to hold well.
Public : 74% Subsidiary performanc e : Kotak Prime reported 6% YoY growth in PAT (4% QoQ), NII
Others : 0% grew 14% YoY/ 2% QoQ and the loan book was up 21% YoY/ 4% QoQ. Kotak Securities’
Source: Bloomberg PAT grew 83% YoY/ 6% QoQ with the overall market share stable at 10%. Kotak AMC
reported PAT growth of 17% QoQ (65% YoY) and average AUM grew 10% QoQ (35% YoY).
Price performance vs Nifty
Life insurance PAT declined by 10% YoY and total premium income grew 8% YoY (-62%
135 QoQ) as PAT was impacted by higher distribution costs.
125
115 Investment Summary
105
95 The bank’s overall performance was broadly in line with our expectation. While we expect
85
75 NIMs to moderate further, it would still be among the higher end of the industry and on the
Jul-23 Nov-23 Mar-24 Jul-24 current balance sheet size, loan growth is expected to remain above industry and gain
Kotak Mahindra NIFTY market share. RoA to stay at +2% and strong capital position continues to provide KMB the
Source: Bloomberg, Indexed to 100 opportunity to go for the inorganic route that could add to the performance. Maintain BUY.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 21

Table 1: Quarterly earnings

Profit and Loss (INR mn) 1QFY25 1QFY24 YoY % 4QFY24 QoQ % 1QFY25E Diff (%)
Net Interest Income 68,424 62,337 9.8 69,094 -1.0 69,312 -1.3
Other Income 29,290 26,833 9.2 29,783 -1.7 28,183 3.9
Reported Fee income 22,400 18,270 22.6 24,670 -9.2 23,683 -5.4
Core Income 90,824 80,607 12.7 93,764 -3.1 92,995 -2.3
Other non-core Income 6,890 8,563 -19.5 5,113 34.8 4,500 53.1
Operating Expenses 45,173 39,674 13.9 44,261 2.1 45,771 -1.3
Employee 18,705 16,470 13.6 18,264 2.4 18,995 -1.5
Others 26,468 23,204 14.1 25,997 1.8 26,776 -1.2
Core Operating Profits 45,651 40,933 11.5 49,503 -7.8 47,224 -3.3
Operating Profits 52,541 49,496 6.2 54,616 -3.8 51,724 1.6
Provisions 5,785 3,643 58.8 2,637 119.3 4,876 18.6
Exceptional item 35,199 - NA - NA - -
PBT 81,955 45,853 78.7 51,978 57.7 46,847 74.9
Taxes 19,457 11,330 71.7 10,645 82.8 11,806 64.8
Reported PAT 62,498 34,523 81.0 41,333 51.2 35,042 78.4
Adjusted PAT 35,200 34,523 2.0 41,333 -14.8 35,042 0.5
Subsidiaries
Kotak Mahindra Prime 2,320 2,180 6.4 2,230 4.0 2,300 0.9
Kotak Mahindra Investments 1,380 1,020 35.3 1,290 7.0 1,300 6.2
Kotak Mahindra Capital Company 810 550 47.3 970 -16.5 375 116.0
Kotak Securities 4,000 2,190 82.6 3,780 5.8 2,750 45.5
International subsidiaries 680 320 112.5 590 15.3 275 147.3
Kotak Mahindra AMC & Trustee Co 1,750 1,060 65.1 1,500 16.7 1,550 12.9
Kotak Mahindra Life Insurance 1,740 1,930 -9.8 1,090 59.6 2,250 -22.7
Others + General insurance 340 1,080 -68.5 237 43.5 1,275 -73.3
Consolidated PAT 48,220 44,853 7.5 53,020 -9.1 47,117 2.3
Equity Affiliates -3,870 -3,340 15.9 350 -1,205.7 -2,400 61.3
PAT (after minority interest/ adj.) 44,350 41,513 6.8 53,370 -16.9 44,717 -0.8
Source: Company, Antique

Table 2: We revise our FY25/ 26/ 27 standalone earnings by 20%/ -2%/ -1% respectively for FY25-27E
Old Est. Revised Est. Change (%)
INR bn FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27
Net Interest Income 291.8 334.1 390.1 283.3 318.4 372.3 -2.9 -4.7 -4.6
Other Income 113.0 131.0 151.1 152.2 133.8 157.8 34.7 2.2 4.5
Total Income 404.8 465.1 541.2 435.4 452.2 530.1 7.6 -2.8 -2.1
Operating Expenses 200.7 233.3 271.1 195.4 227.1 264.0 -2.6 -2.6 -2.6
Operating Profits 204.1 231.8 270.1 240.0 225.1 266.1 17.6 -2.9 -1.5
Provisions 22.7 32.2 37.4 24.7 30.4 35.2 8.9 -5.8 -5.8
PBT 181.4 199.5 232.7 215.3 194.7 230.9 18.7 -2.4 -0.8
Tax 45.7 50.3 58.6 52.7 49.1 58.2 15.4 -2.4 -0.8
Standalone PAT 135.7 149.3 174.1 162.5 145.6 172.7 19.8 -2.4 -0.8
Consolidated PAT 187.2 208.5 242.5 214.0 203.8 241.1 14.3 -2.3 -0.6
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 22

Exhibit 1: One-year forward P/BV consolidated—valuation has moved up from -2 SD

4.50

4.00

3.50

3.00

2.50

2.00

1.50
Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20

Jul-21

Jul-22

Jul-23

Jul-24
P/BV Avg PB -1SD +1SD -2SD +2SD
Source: Company, Antique

Conference Call Highlights

n The bank has sold stake in the general insurance subsidiary which has resulted in one-
time exceptional gain of INR 35.2 bn.
n With respect to RBI circular on investment classification norm, the bank’s reserves increased
by INR 34 bn.
n On RBI’s supervisory action, management has stated that they are on track and have
appointed an external auditor and scope of audit has been finalized in consultation with
the regulator. Management has not specified a timeline with respect to lifting of the
digital ban.
n The bank is seeing good growth momentum in working capital loans and its focus is now
on SME and mid-market strategy in corporate loans.
n The bank’s mortgage book continues to grow well and it has seen an uptick in lending
yield in home loan as well as LAP.
n The bank’s unsecured retail loans have slowed down due to lower disbursements in PL
and embargo on new credit card onboarding digitally.
n The bank is seeing some stress in low-ticket the unsecured retail loan segment due to
overleveraging and it has tightened its risk filters.
n KMB’s credit cost increased sequentially due to loss in unsecured retail book in the small
ticket segment.
n It remains committed to increase the unsecured retail loan segment share to 15% in a risk
calibrated manner.
n With respect to MFI loans, the bank is seeing some stress building up in some pockets of
Maharashtra, Tamil Nadu, Madhya Pradesh, Rajasthan, and some part of UP. Election,
heat wave, and monsoon have impacted collection efficiency.
n Deposit growth, particularly CASA, continues to be a challenge. The bank is strongly
focusing on CASA products and have launched a bundle of products on savings as well
as on the current account side.
n Management has stated that KMB’s deposit book has largely repriced and rates have
stabilized.
n The bank is looking to open 150-200 branches in FY25.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 23

Table 3: SoTP: We value the bank at INR 2,000 (2.2x 1HFY27 consolidated BV)
SOTP Valuation Value (INR bn) INR per share % To Total
Lending Business 3,401 1,712 86
Kotak Mahindra Bank 3,076 1,548 77
Kotak Prime (Car and other loans) 197 99 5
Kotak Investment Company (LAS) 105 53 3
Others 23 12 1
Asset Management Business 182 94 5
Capital Markets related Business 315 158 8
Kotak Securities 283 142 7
Kotak Investment Banking (KMCC) 33 16 1
Kotak Life Insurance 279 141 7
Kotak General Insurance 18 9 0
Value of Subsidiaries 1,118 565 28
20% holding company discount 224 113 6
Subsidiaries Value after 20% discount 895 452 23
SOTP 3,971 2,000 100
Source: Company, Antique

Table 4: Earnings snapshot

Kotak Group Earnings Snapshot (% of total) FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Kotak Mahindra Bank (Standalone) 66 68 69 70 70 73 76 76 71 72
Kotak Mahindra Prime 10 8 8 5 7 6 5 5 6 6
Kotak Mahindra Investments 4 3 3 3 3 2 3 3 4 4
Lending Business 80 79 80 78 81 81 83 84 82 82
International subsidiaries 2 2 1 2 1 1 1 1 1 1
Kotak Mahindra AMC & Trustee Co 1 3 4 3 4 4 3 3 4 4
Kotak Investment Advisors 0 0 1 1 1 2 2 2 2 2
Asset Management Business 3 5 6 6 5 6 6 6 7 7
Kotak Securities 8 6 6 8 9 6 7 7 7 6
Kotak Mahindra Capital Company 1 1 1 1 2 1 1 1 1 1
Capital Market Business 9 6 7 9 11 7 8 8 8 7
Kotak OM Life Insurance 7 7 7 7 3 7 4 4 5 5
Consol. PAT Including Kotak Life 100 100 100 100 100 100 100 100 100 100
Source: Company, Antique

Table 5: Loan growth was driven by strong growth in corporate segment (INR mn)
INR mn 1QFY25 1QFY24 YoY % 4QFY24 QoQ % % of Loans
Commercial Vehicles 3,79,410 2,85,300 33 3,68,330 3 10
Home loans & LAP 11,08,500 9,51,470 17 10,67,260 4 28
Agri & MFI 3,76,920 3,34,500 13 3,78,330 0 10
Tractor 1,58,000 1,39,160 14 1,58,020 0 4
Consumer Bank (secured) 3,75,910 2,99,060 26 3,59,970 4 10
PL Business Loans and consumer durables 2,03,170 1,66,920 22 2,00,490 1 5
Credit Cards 1,46,440 1,13,600 29 1,45,050 1 4
Corp Banking 9,35,810 7,75,690 21 8,73,100 7 24
SME 2,81,860 2,33,120 21 2,72,470 3 7
Other advances 93,550 71,490 31 94,270 -1 2
Loans 38,99,570 32,85,820 19 37,60,753 4
Total Customers assets 43,58,270 36,22,040 20 42,33,240 3
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 24

Table 6: Lending business led by the bank

1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Kotak Mahindra Bank (standalone)
Loans (INR mn) 28,01,710 29,40,232 31,07,340 31,98,612 32,85,820 34,82,841 35,95,880 37,60,753 38,99,570
Gr. YoY, % 28.8 25.1 22.9 17.9 17.3 18.5 15.7 17.6 18.7
NII (INR mn) 46,970 50,994 56,529 61,026 62,337 62,966 65,535 69,094 68,424
Gr. YoY, % 19.2 26.8 30.4 35.0 32.7 23.5 15.9 13.2 9.8
PAT (INR mn) 20,712 25,807 27,919 34,956 34,523 31,910 30,050 41,333 62,498
NNPL (%) 0.6 0.6 0.4 0.4 0.4 0.4 0.3 0.3 0.4

Kotak Prime
Loans (INR mn) 2,42,970 2,59,570 2,69,830 2,87,920 2,95,750 3,16,400 3,29,440 3,44,810 3,58,930
Gr. YoY, % 16.0 18.5 10.9 18.8 21.7 21.9 22.1 19.8 21.4
NII (INR mn) 4,170 4,080 4,200 4,380 4,430 4,600 4,740 4,930 5,030
Gr. YoY, % 35.8 20.7 11.1 2.6 6.2 12.7 12.9 12.6 13.5
PAT (INR mn) 1,570 2,220 2,250 2,240 2,180 2,080 2,390 2,230 2,320
NNPL (%) 1.5 1.3 1.1 0.9 0.8 0.8 0.8 0.8 0.9

Kotak Investments
PAT (INR mn) 630 780 860 1,000 1,020 1,260 1,570 1,290 1,380

Lending Business (including Bank)

PAT (INR mn) 22,912 28,807 31,029 38,196 37,723 35,250 34,010 44,853 66,198
Gr. YoY, % 27.9 22.0 24.3 20.1 64.6 22.4 9.6 17.4 75.5
Contribution to consol PAT 83.2 79.8 77.7 83.7 90.9 79.0 79.7 84.0 149.3
Source: Company, Antique; Note: Q1FY25 PAT includes one-time exceptional gain of INR 35.2 bn

Table 7: Capital market business and AMC business reported strong growth
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
K-sec
Market Share 4.3 5.0 5.8 6.4 7.5 8.8 10.3 10.2 10.1
PAT (INR mn) 2,190 2,240 2,410 1,820 2,190 3,240 3,060 3,780 4,000
KMCC
PAT (INR mn) 510 220 280 480 550 270 350 970 810
Capital Market Business
PAT (INR mn) 2,700 2,460 2,690 2,300 2,740 3,510 3,410 4,750 4,810
YoY Gr. (%) -2.9 -18.3 -27.9 -21.8 1.5 42.7 26.8 106.5 75.5
AMC - PAT 1,200 1,110 1,720 2,280 1,380 1,650 2,030 2,090 2,430
YoY Gr. (%) -12.4 -10.5 -9.5 86.9 15.0 48.6 18.0 -8.3 76.1
Life Insurance 2,480 2,700 3,300 2,050 1,930 2,470 1,400 1,090 1,740
YoY Gr. (%) -202.1 74.2 33.6 -23.2 -22.2 -8.5 -57.6 -46.8 -9.8
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 25

Table 8: DuPont Analysis: RoA to stay at +2% (% of average assets) over FY25/ 27E
Y/E March FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Net Interest Income 3.8 4.0 4.0 3.9 4.0 4.1 4.1 4.7 4.8 4.4 4.3 4.4
Fee income 1.2 1.3 1.4 1.5 1.4 1.2 1.4 1.5 1.6 1.5 1.5 1.6
Core Income 5.0 5.3 5.4 5.3 5.4 5.3 5.5 6.2 6.3 5.9 5.8 5.9
Operating Expenses 3.0 2.8 2.7 2.6 2.6 2.3 2.6 3.0 3.1 3.0 3.1 3.1
Employee cost 1.5 1.4 1.2 1.1 1.2 1.0 1.1 1.2 1.3 1.2 1.3 1.3
Others 1.5 1.4 1.4 1.5 1.5 1.3 1.5 1.8 1.8 1.8 1.8 1.8
Core operating Profits 2.0 2.5 2.7 2.7 2.8 3.0 2.9 3.2 3.3 2.9 2.8 2.8
Operating Profits 2.2 2.9 3.0 2.9 3.0 3.2 3.0 3.2 3.6 3.7 3.0 3.1
Provisions 0.5 0.4 0.4 0.3 0.7 0.7 0.2 0.1 0.3 0.4 0.4 0.4
NPA 0.4 0.3 0.3 0.3 0.4 0.5 0.3 0.1 0.3 0.3 0.4 0.4
PBT 1.7 2.5 2.6 2.6 2.3 2.5 2.8 3.1 3.3 3.3 2.6 2.7
Tax 0.6 0.9 0.9 0.9 0.6 0.6 0.7 0.8 0.8 0.8 0.7 0.7
RoA 1.1 1.7 1.7 1.7 1.8 1.9 2.1 2.4 2.5 2.5 2.0 2.0
Leverage (x) 8.2 8.1 7.8 7.7 7.8 7.0 6.3 6.2 6.3 6.3 6.2 6.4
RoE 9.4 13.7 13.2 13.0 13.9 13.1 13.2 14.7 16.0 15.9 12.3 12.9
Source: Company, Antique

Table 9: Quarterly DuPont Analysis: RoA remained strong at 2.4% (adjusted for one-off gain)
1QFY23 2QFY23 3Q2023 4Q2023 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Net interest income 4.4 4.7 5.0 5.1 5.0 4.8 4.9 4.8 4.5
Fee income 1.6 1.5 1.5 1.6 1.5 1.5 1.6 1.7 1.5
Core Income 5.9 6.2 6.5 6.7 6.4 6.4 6.4 6.5 6.0
Cost/ Core income (%) 49.7 49.9 51.1 45.3 49.2 48.1 49.3 47.2 49.7
Operating cost 3.0 3.1 3.3 3.1 3.2 3.1 3.2 3.1 3.0
- Employee Expenses 1.1 1.3 1.3 1.2 1.3 1.3 1.3 1.3 1.2
- Other Expenses 1.9 1.8 2.0 1.8 1.9 1.8 1.9 1.8 1.8
Core operating profit 3.0 3.1 3.2 3.7 3.3 3.3 3.3 3.4 3.0
Fx and other non-core Income -0.4 0.2 0.2 0.2 0.7 0.2 0.1 0.4 0.5
Operating Profit 2.6 3.3 3.4 3.9 3.9 3.5 3.4 3.8 3.5
Provisions 0.0 0.1 0.1 0.1 0.3 0.3 0.4 0.2 0.4
Exceptional item - - - - - - - - 2.3
PBT 2.6 3.2 3.3 3.8 3.7 3.2 3.0 3.6 5.4
Tax 0.6 0.8 0.8 0.8 0.9 0.8 0.7 0.7 1.3
ROAA 1.9 2.4 2.5 2.9 2.8 2.44 2.22 2.9 4.1
Leverage (x) 5.8 5.7 5.8 5.9 5.9 5.9 5.9 6.1 5.9
ROAE 11.3 13.6 14.3 17.2 16.2 14.5 13.2 17.4 24.6
Source: Company, Antique; Note: RoA and RoE for 1QFY25 adjusted for one time exceptional gain stood at 2.4%/14.2% respectively
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 26

Exhibit 2: Loan growth was strong while deposit Exhibit 3: NIM declined 16 bps QoQ (adjusted for
growth moderated 4QFY24 one-off)
35 6.0 40
30 35
5.5
25 30
20 5.0
25
15
4.5 20
10
15
5 4.0
10
0
3.5
-5 5

-10 3.0 0

1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
Loan Gr YoY (%) Deposits Gr YoY (%) NIM (%) NII Gr YoY (%, RHS)
Source: Company, Antique Source: Company, Antique

Exhibit 4: Core fee to average assets share remains strong Exhibit 5: Core PPoP growth moderated
1.9 3.4 4.0 40
3.2
1.7 32
3.0 3.5
1.5 24
2.8
1.3 2.6
3.0 16
2.4
1.1
2.2 8
0.9 2.5
2.0 0
2.9
3.1
2.7
2.9
2.8
3.1
2.9
2.9
2.8
2.7
2.7
3.0
3.0
3.1
3.2
3.7
3.3
3.3
3.3
3.4
3.0
0.7 1.8
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25

2.0 -8
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
Core Fee income to average assets (%)
Cost to average assets (%, RHS) Core PPP to average assets (%) Core PPP Gr YoY - RHS (%)
Source: Company, Antique Source: Company, Antique

Exhibit 6: RoA remained strong at 2.4% (adjusted for

one-off gain) Exhibit 7: Headline NPL ratios were stable
3.0 4.0 85.0
1.4
3.5 80.0
2.6 1.2 75.0
3.0
1.0 70.0
2.2 2.5
0.8 65.0
2.0
60.0
1.8 0.6 1.5
55.0
0.4 1.0
1.4 50.0
0.2 0.5
1.7
2.2
2.0
1.5
1.3
2.3
1.9
1.7
1.7
2.0
2.1
2.6
1.9
2.4
2.5
2.9
2.8
2.4
2.2
2.9
2.4

45.0
1.0 0.0 0.0 40.0
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25

1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25

RoA (%) Credit cost (%, RHS) GNPL (%) NNPL (%) PCR (%, RHS)
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 27

Exhibit 8: Loan & deposit growth expected to be healthy Exhibit 9: Expecting moderation in NIM over FY25/ 27E
30 5.5 30.0

25
5.0 25.0

20
4.5 20.0
15
4.0 15.0
10

3.5 10.0
5

0 3.0 5.0

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Deposits Gr YoY (%) Loan Gr YoY (%) NIM (%) NII Gr YoY (%, RHS)
Source: Company, Antique Source: Company, Antique

Exhibit 10: Fee income contribution is expected to Exhibit 11: Core PPP share is expected to be at 2.8%-2.9%
remain stable over FY25–27E
1.7 3.2 50.0
3.4
1.6 45.0
3.0
3.2 40.0
1.5 35.0
2.8 3.0
1.4 30.0
2.8
2.6 25.0
1.3 2.6 20.0
2.4 15.0
1.2 2.4
10.0
1.1 2.2 2.2
5.0
2.0 0.0
1.0 2.0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

1.8 -5.0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Fee income to average assets (%)
Cost to average assets (%, RHS) Core PPP to average assets (%) Core PPP Gr YoY (%, RHS)
Source: Company, Antique Source: Company, Antique

Exhibit 12: Expect net slippage ratio to rise marginally as

the credit cycle normalizes Exhibit 13: RoA expected to sustain at ~2%+ over FY25–27E
3.0 1.6 3.0 0.9
1.4 0.8
2.5 2.5
1.2 0.7
2.0 1.0 2.0 0.6
0.8 0.5
1.5 1.5
0.6 0.4
1.0 0.4 1.0 0.3
0.2 0.2
0.5 0.5
0.0 0.1
0.0 -0.2 0.0 0.0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

Slippages ratio (%) Net Slippages ratio - RHS (%) RoA (%) Credit cost (%, RHS)
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 28

Financials
Profit and loss account (INR mn) Business Ratios
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Interest Income 3,42,509 4,57,989 5,36,762 6,14,680 7,14,811 Credit / Deposit(%) 88.1 83.8 85.2 85.2 85.2
Interest Expense 1,26,989 1,98,057 2,53,501 2,96,302 3,42,515 Investment / Deposit (%) 33.4 34.6 35.8 36.4 37.1
Net Interest Income 2,15,519 2,59,932 2,83,261 3,18,378 3,72,296 CASA (%) 52.8 45.5 41.9 41.5 41.2
% NII Growth 28.1 20.6 9.0 12.4 16.9 RoaA (%) 2.4 2.5 2.5 2.0 2.0
Fee Income 67,900 84,640 96,490 1,13,858 1,34,352 Core RoE (%) 14.7 16.0 15.9 12.3 12.9
Non-interest income 70,831 1,02,731 1,52,180 1,33,849 1,57,843 Dividend Yield (%) 0.1 0.1 0.1 0.1 0.1
Net Revenue 2,86,350 3,62,663 4,35,440 4,52,227 5,30,139
Employees Expenses 55,478 68,926 79,955 94,346 1,11,329 Key assumptions
Other Op. Expenses 82,392 97,862 1,15,477 1,32,799 1,52,719 Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Operating Profit 1,48,480 1,95,875 2,40,008 2,25,082 2,66,092 Deposits
% OP Growth 23.2 31.9 22.5 -6.2 18.2 Deposit growth (%) 16.5 23.6 14.0 16.0 16.0
Tax 34,517 42,321 52,739 49,069 58,179 Cost of deposits (%) 3.5 4.5 4.9 5.0 5.0
Total Provisions 4,570 15,737 24,746 30,363 35,221 Advances
Net Profit 1,09,393 1,37,816 1,62,523 1,45,650 1,72,691 Advances growth (%) 17.9 17.6 16.0 16.0 16.0
Yield on advances (%) 9.1 10.2 10.2 10.0 10.0
Balance sheet (INR mn) Investments
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e Investments growth (%) 20.7 28.0 18.0 18.0 18.0
Capital 9,933 9,940 9,940 9,940 9,940 Yield on investments (%) 5.8 6.4 6.5 6.5 6.5
Reserves and Surplus 8,19,667 9,56,455 11,47,059 12,87,279 14,53,533
Deposits 36,30,961 44,89,537 51,18,073 59,36,964 68,86,879 Earnings Ratios
Borrowings 2,39,163 2,83,681 3,12,049 3,43,254 3,77,579 Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Other Liabilities & Provisions 1,98,299 2,63,164 3,02,639 3,48,035 4,00,240 Interest Inc. / Avg.assets (%) 7.5 8.4 8.3 8.3 8.4
Total liabilities 48,98,022 60,02,778 68,89,760 79,25,472 91,28,171 Interest Exp./ Avg. assets (%) 2.8 3.6 3.9 4.0 4.0
NIM (%) 5.2 5.2 4.8 4.6 4.7
Cash & Balances with RBI 1,99,656 3,62,520 3,87,507 3,55,628 3,14,276 Int. exp/ Int earned (%) 37.1 43.2 47.2 48.2 47.9
Bal. with banks/ call money 1,25,768 1,65,364 1,27,952 1,48,424 1,72,172 Oth. Inc./ Tot. Inc. (%) 24.7 28.3 34.9 29.6 29.8
Investment 12,14,037 15,54,038 18,33,764 21,63,842 25,53,333 Staff exp/Total opt. exp (%) 40.2 41.3 40.9 41.5 42.2
Loans and advances 31,98,612 37,60,753 43,62,473 50,60,469 58,70,144 Cost/ Income Ratio (%) 48.1 46.0 44.9 50.2 49.8
Fixed Assets 19,203 21,553 24,786 28,504 32,779 Prov./ Operating Profit (%) 3.1 8.0 10.3 13.5 13.2
Other Assets 1,41,349 1,39,343 1,53,278 1,68,605 1,85,466 Loan loss prov./Avg. loans (bps) 15 45 61 64 64
Total assets 48,98,625 60,03,570 68,89,760 79,25,472 91,28,171
Per Share Data
Asset Quality Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e Consolidated BV (INR) 561 652 754 852 967
Gross NPA (INR mn) 57,683 52,748 66,961 88,873 1,20,344 Consolidated EPS (INR) 75 92 108 103 121
Gross NPA (%) 1.8 1.4 1.5 1.7 2.0 Book value per share (INR) 401 466 562 633 716
Net NPA (INR mn) 11,933 12,706 18,749 24,885 33,696 Adj. BVPS (INR) 377 438 529 595 673
Net NPA (%) 0.4 0.3 0.4 0.5 0.6 Price/ Book value* 3.2 2.8 2.4 2.1 1.9
% coverage of NPA 79.3 75.9 72.0 72.0 72.0 EPS(INR) 55 69 82 73 87
Delinquencies (%) 1.5 1.6 1.5 1.5 1.5 P/E Ratio* 24.2 19.9 16.9 17.8 15.0
DPS 1.8 2.2 2.6 2.3 2.8
Capital Adequacy Ratio Source: Company Antique; * On consol basis
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
RWA (INR mn) 37,22,955 46,22,749 53,74,013 62,61,123 73,02,537
Tier I (%) 21.8 19.3 20.7 20.0 19.4
Total CAR (%) 21.8 20.6 20.7 20.0 19.4
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 29

CMP : INR 11,268 1QFY25 RESULTS REVIEW

Reco
Target Price
: BUY çè
: INR 12,400 é
UltraTech Cement
Target Price Change : 3% Market share gains; improving return ratios to drive re-rating
Target 1HFY27 EV/EBITDA (x) : 18
UltraTech Cement's (UTCEM) 1QFY25 consolidated EBITDA/ton of INR 951 was
EBITDA Change FY25/ 26/ 27 : -7%/ -5%/ 0% broadly in line with our/ consensus estimates after adjusting for one-off
higher brand building expense of INR 75/ton. Domestic grey cement volume
grew 6% YoY vs. low single-digit industry growth, while realization declined
2.4% QoQ-both in line with our estimates. UTCEM's domestic grey cement
Krupal Maniar capacity is likely to see 12% CAGR from 140 mtpa in FY24 to ~195 mtpa in
+91 22 6911 3419 FY27, including the announced acquisition of 10.75 mtpa of Kesoram
[email protected]
Industries. Historically, UTCEM has grown via acquisitions and hence further
Harshal Milan Mehta, CFA M&A cannot be ruled out, driving higher volume growth. Besides,
+91 22 6911 3428 management is targeting INR 300/ton cost savings over the next three years
[email protected] via internal efficiencies, excluding fuel cost change/ reduction. Factoring in
weak realizations, we cut our FY25-26E EBITDA by 7% and 5% respectively,
while continuing to maintain our FY27E EBITDA. We raise our target multiple
by a notch to 18x to factor in inorganic optionality and improving return
Market data ratios (to >15% from FY26 from <12% in FY24), and raise our target price to
Sensex : 80,605 INR 12,400 (earlier INR 12,000) based on 18x 1HFY27E EV/EBITDA. Maintain
Sector : Cement BUY. Reiterate UTCEM as our top pick in the sector.
Market Cap (INR bn) : 3,250.2
1Q EBITDA/ton at INR 951, down 6% YoY/ 19% QoQ
Market Cap (USD bn) : 38.851
O/S Shares (mn) : 288.7 Consolidated EBITDA was flat YoY/ declined 26% QoQ to INR 30.4 bn. Blended realization
52-wk HI/LO (INR) : 12078/7941 de-grew ~2% QoQ to INR 5,596 whereas grey cement realization decreased 2.4% QoQ.
Avg. Daily Vol ('000) : 495 Total costs/ton declined 4% YoY (rose ~1% QoQ-1% above estimate). Other expenses increased
Bloomberg : UTCEM IN 17% YoY/ 6% QoQ owing to one-off higher branding expense of INR 75/ton. RM + P&F
Source: Bloomberg costs/ton decreased 8% YoY/ 2% QoQ, while freight cost/ton fell 4% YoY/ 1% QoQ.
Valuation Management mentioned of spot cement prices being lower by 1.5% vs. 1QFY25 average
FY25e FY26e FY27e and expects price increase only post monsoon.
EPS (INR) 268.3 352.3 443.2
Costs-a major catalyst for profitability improvement
P/E (x) 42.0 32.0 25.4
P/BV (x) 5.1 4.5 4.0 Management expects operating costs to decline by INR 300/ton (vs. INR 200-300/ton
EV/EBITDA (x) 22.6 18.2 14.9 earlier) over the next three years led by: a) Increase in the share of blended cement (due to
Dividend Yield (%) 0.7 0.9 1.1 higher share of composite cement); b) Investment in green power (targeted to reach 60% by
Source: Company, Antique FY27 from 29% currently); c) Decline in lead distance (savings of more than INR 75/ton led
Returns (%) by commissioning of new grinding units), increase in share of AFR (targeted to reach 15%
1m 3m 6m 12m
over the next few years from 5%-6% currently) and higher operating leverage. Management
Absolute 2 20 12 35
expects fuel cost to decline from ~USD 150/ton to USD 130/ton over the next 3-4 quarters
Relative (2) 9 (1) 13
(savings of ~INR 80-100/ton) with majority of the savings expected in 4QFY25. Share of
Source: Bloomberg petcoke is likely to increase to >50% for the rest of FY25 vs. 37% in 1QFY25.
Shareholding pattern All expansions on track; to reach 200 MT capacity by FY27
Promoters : 60%
UTCEM remains on track to increase cement capacity to ~200 MT by FY27 (incl. Kesoram)
Public : 40% and would be adding 16 MT/ 12 MT/ 15 MT organically in FY25/ 26/ 27 respectively. CCI
Others : 0% approval has been received from Kesoram and the same would be consolidated with UTCEM
retrospectively from April 1, 2024 (accordingly, we have factored the same in FY25) subject
Source: Bloomberg
to pending approval of NCLT. It has guided for organic capex of INR 80-90 bn per annum
Price performance vs Nifty for FY25-27E.
150
140 Investment Summary
130
120 We factor in 12% volume CAGR during FY25-27E and expect EBITDA/ton to improve to ~INR
110
100 1,168/ INR 1,301 in FY26E/ 27E respectively from ~INR 1,088/ton in FY24E owing to lower
90 fuel prices, better cost efficiencies, and operating leverage. UTCEM currently trades at ~16.5x
Jul-23 Nov-23 Mar-24 Jul-24
EV/EBITDA and at USD 200 EV/ton based on 1HFY27E EBITDA estimates. Key risks:
Ultratech Cements NIFTY
Lower demand/ prices and higher cost escalations.
Source: Bloomberg Indexed to 100
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 30

Conference Call Highlights

n Demand: Witnessed resurgence of demand in Bihar and AP. Demand in AP is expected
to be enough to absorb all capacities. Rural has picked up in 1Q with 9% YoY growth for
the company. Overall, demand is expected to pick-up from 3Q with the government's
infra push. UTCEM plans to add 16 MT capacity in FY25 (40% addition). Capacity
utilization stood at 85% in 1Q (85%-90% in the South/ West, 82%-85% in the North/
Central, and 80% in the East). Expect 7%-8% growth for industry and double digit growth
for Ultratech for FY25. For 1Q, industry growth is likely to be ~3%.
n White cement/ RMC: White cement revenue declined 1% YoY/ 18% QoQ to INR 5.6
bn (~3% of revenue), RMC revenue grew 20% YoY/ declined 5% QoQ to INR 15 bn
(8% of revenue). RMC plants grew 36% YoY to 316 plants with RoCE of 39%.
n Prices: Price declined ~2% in 1Q. Prices in July declined 1.5% vs. 1Q avg. Expect price
increase post monsoon.
n Cost: Expect total cost savings of INR 300/ton (vs. INR 200-300/ton guided earlier).
n Input cost: Petcoke mix stood at 37% in 1Q and is expected to go upwards of 45% for
FY25. Expect substantial improvement in fuel prices from 4QFY25 onwards since the
company has some high priced coal contracts which might be utilized till 3QFY25.
n Green energy: Green energy share stood at 29% and is expected to increase to 40%-
45%/ 60% by end of FY25/ 27.
n Freight: Lead distance declined from 400 kms to 385 kms QoQ (savings of INR 45/
ton). Expect it to decline below 375 kms.
n Other expense: Incurred one-off branding expenses in 1Q. Other expense expected
to normalize to INR 675/ton going ahead.
n Capex: UTCEM incurred a capex of INR 20 bn in 1Q and is expected to incur INR 80-
90 bn each for FY25 and FY26.
n Others: a) Trade mix rose 300 bps QoQ to 68%; b) Blended cement share stood at
71%; c) CC ratio stood at 1.46 (target 1.54); d) Road share stood at 75%.
n Financial investment in India Cement: UltraTech Cement's acquisition of 23%
stake in India Cements is a strategic non-controlling financial investment and expected to
capitalize on market condition.
n RAK Ceramics becomes a subsidiary: UTCEM concluded an open offer for RAK
White Cement in the UAE, consolidating its position at 54% in the company. The UAE
economy is booming and provides UTCEM an opportunity to increase its footprint in the
space of white cement and putty in those markets. From 2QFY25 onwards, RAK White
Cement to become a subsidiary of UltraTech.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 31

Quarterly performance
Table 1: Actual vs. estimated performance
(INR mn) Actual Estimated % Variance Consensus % Variance
Net sales 1,78,790 1,78,047 0.4 1,81,107 (1.3)
EBITDA 30,393 32,662 (6.9) 32,681 (7.0)
EBITDA margin (%) 17.0 18.3 -135bps 18.0 -105bps
Adj net income 16,641 17,797 (6.5) 17,271 (3.6)
FDEPS (INR) 56.5 60.4 (6.5) 58.6 (3.6)
Source: Company, Antique

Table 2: Quarterly financials

(INR mn) Q1FY25 Q1FY24 YoY% Q4FY24 QoQ%
Sales 1,80,696 1,77,371 1.9 2,04,189 (11.5)
Cost of Material Consumed 1,18,990 1,19,260 (0.2) 1,32,954 (10.5)
% of sales 65.9 67.2 -139bps 65.1 74bps
Employee cost 7,382 7,070 4.4 7,494 (1.5)
% of sales 4.1 4.0 10bps 3.7 13.0
Other expenses 23,931 20,550 16.5 22,602 5.9
% of sales 13.2 11.6 166bps 11.1 217bps
Total Exp 1,50,303 1,46,879 2.3 1,63,050 (7.8)
EBIDTA 30,393 30,492 (0.3) 41,139 (26.1)
Margin % 16.8 17.2 -37bps 20.1 -333bps
Other income 1,657 1,737 (4.6) 1,356 22.2
Depreciation 8,425 7,491 12.5 8,149 3.4
Interest expenses 2,556 2,108 21.3 2,612 (2.1)
Profit Before Tax 21,069 22,630 (6.9) 31,735 (33.6)
Exceptional item 325 - NA (720) NA
PBT after exceptional 20,744 22,630 (8.3) 32,455 (36.1)
Tax 4,471 5,765 (22.4) 8,519 (47.5)
Tax Rate % 21.6 25.5 -392bps 26.3 -470bps
Reported Net Profit 16,273 16,865 (3.5) 23,935 (32.0)
Adjusted Net Profit 16,598 16,865 (1.6) 23,215 (28.5)
EPS (INR) 56.3 57.2 (1.6) 78.8 (28.5)
Source: Company, Antique

Table 3: We have reduced FY25/FY26 EBITDA estimates by 7%/5% while maintained FY27 EBITDA
Change in estimates FY25E FY26E FY27E
Old New % Chg Old New % Chg Old New % Chg
Revenue (INR bn) 798.3 801.7 0.4 911.5 893.7 (2.0) 1,024.4 979.7 (4.4)
EBITDA (INR bn) 158.9 147.8 (7.0) 191.0 181.4 (5.0) 218.4 217.6 (0.4)
EBITDA margin (%) 19.9 18.4 -147bps 21.0 20.3 -66bps 21.3 22.2 89bps
Net profit (INR bn) 91.6 79.3 (13.4) 114.0 104.1 (8.7) 134.8 131.0 (2.8)
EPS (INR) 310.0 268.3 (13.5) 385.9 352.3 (8.7) 456.1 443.2 (2.8)
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 32

Table 4: Our FY25-26E EBITDA estimates are 5-8 % below consensus

Consensus Antique Variance
INR mn FY25E FY26E FY25E FY26E FY25E FY26E
Revenue 7,80,603 8,81,046 8,01,726 8,93,714 3 1
EBITDA 1,60,074 1,89,955 1,47,792 1,81,383 (8) (5)
APAT 91,187 1,11,509 79,328 1,04,133 (13) (7)
Source: Company, Antique

Table 5: Key assumptions

FY19 FY20 FY21 FY22 FY23 FY24 FY25e FY26e FY27e
Capacity (MTPA) 114.4 114.7 118.1 124.8 134.0 141.2 175.7 187.7 202.4
utilization (%) 85.9 71.9 78.5 77.4 81.7 86.6 89.2 85.5 85.7
Volume (mn ton) 85.9 82.3 86.2 94.0 105.7 119.2 141.3 155.3 167.2
Volume growth (%) 32.9 (4.1) 4.7 9.0 12.4 12.7 18.6 9.9 7.7
Realization/ton (INR) 4,764 5,038 5,127 5,501 5,898 5,859 5,600 5,687 5,795
YoY realization (%) 0.8 5.7 1.8 7.3 7.2 (0.7) (4.4) 1.5 1.9
Cost/ton (INR) 3,991 3,989 3,845 4,371 4,979 4,863 4,628 4,588 4,558
RM Cost/ton (INR) 811 765 822 847 919 999 1,003 1,022 1,025
Employee Cost/ton (INR) 267 305 273 270 259 255 236 237 235
Power Cost/ton (INR) 1,099 1,029 966 1,291 1,750 1,534 1,392 1,348 1,339
Freight Cost/ton (INR) 1,201 1,181 1,165 1,246 1,326 1,333 1,295 1,283 1,261
Other Cost/ton (INR) 613 709 620 716 725 742 702 698 697
EBITDA/ton (INR) 856 1,128 1,341 1,225 1,005 1,088 1,046 1,168 1,301
Capex (INR bn) 197.2 (28.5) 13.4 57.0 70.0 92.6 100.5 95.0 93.4
Net Debt (INR bn) 219.6 166.8 63.5 35.5 27.0 28.1 16.1 (16.4) (76.2)
Source: Company, Antique

Table 6: Maintain BUY with a target price of INR 12,400

Particular INR bn
EV/E method Sep-26E
Sep'26E EBITDA (INR bn) 199
EV/E multiple (x) 18
EV (INR bn) 3,591
Net debt (Sep '26E) (46)
Equity value 3,637
No. of shares (mn) 295
Sep'26 Target Price (INR) 12,400
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 33

Exhibit 1: Capacity to grow at 13% CAGR over FY24-27E Exhibit 2: Volume to grow at 12% CAGR over FY24-27E
Regionwise Cement Capacity Split FY23E (%) 180 100

South 160 90
North
16% 20% 80
140
70
120
60
100
50
80
40
East 60
30
20%
40 20
20 10
West
22% 0 0

FY25E

FY26E

FY27E
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24
Central
22% Sales Volume (mn ton) Utilization (%) (RHS)

Source: Company, Antique Source: Company, Antique

Exhibit 3: Revenue to grow at 11% CAGR over FY24-27E Exhibit 4: EBITDA to grow at 19% CAGR over FY24-27E
1,200 40 250 30
35 25
1,000
30 200 20
15
800 25
150 10
20
600 5
15
100 0
400 10
(5)
5 50 (10)
200
0 (15)
0 (5) 0 (20)
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Revenues (INR bn) Growth (RHS) EBITDA (INR bn) EBITDA Growth (%) (RHS)

Source: Company, Antique Source: Company, Antique

Exhibit 5: EBITDA/t to improve to INR 1,301 by FY27E Exhibit 6: UTCEM to turn net cash by FY26E
1,600 40 250 4

1,400 3
30 200
3
1,200 150
20
2
1,000
10 100 2
800
50 1
0
600 1
(10) 0
400 0
(20) -50
200 (1)
-100 (1)
0 (30)
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
FY25E

FY26E

FY27E
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

EBITDA/ton (INR/ton) YoY change (%) (RHS) Net debt (INR bn) Net debt/EBITDA (x) (RHS)

Source: Company, Antique Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 34

Exhibit 8: ROE and ROCE to touch 17% / ~22 % by FY27E

Exhibit 7: Capex of INR 289 bn over FY24-27E respectively
250 25

200
20
150

100 15
50
10
0

-50
5
-100

-150 0

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
FY25E

FY26E

FY27E
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24
OCF (INR bn) Capex (INR bn) RoCE (%) RoE (%)

Source: Company, Antique Source: Company, Antique

Exhibit 9: EV/EBITDA 1-yr. forward

24 (x)
22

20

18

16

14

12

10

8
Jul-19

Jul-20

Jul-21

Jul-22

Jul-23

Jul-24
Oct-19

Jan-20

Apr-20

Oct-20

Jan-21

Apr-21

Oct-21

Jan-22

Apr-22

Oct-22

Jan-23

Apr-23

Oct-23

Jan-24

Apr-24
EV/EBITDA Mean + 1 Std Dev Mean - 1 Std Dev Mean

Source: Company, Antique

Exhibit 10: EV/ton 1-yr. forward

250 (USD/ton)

200

150

100
Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24
Oct-19

Apr-20

Oct-20

Apr-21

Oct-21

Apr-22

Oct-22

Apr-23

Oct-23

Apr-24

EV/ton Mean Mean - 1 Std Dev Mean + 1 Std Dev

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 35

Financials (consolidated)
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net Revenue 6,32,401 7,09,081 8,01,726 8,93,714 9,79,690 PBT 74,123 93,282 1,05,033 1,37,959 1,73,589
Op. Expenses 5,26,201 5,79,396 6,53,935 7,12,331 7,62,127 Depreciation & amortization 28,880 31,453 37,126 41,559 45,609
EBITDA 1,06,199 1,29,686 1,47,792 1,81,383 2,17,564 Interest expense 8,227 9,680 11,579 8,665 7,680
Depreciation 28,880 31,453 37,126 41,559 45,609 (Inc)/Dec in working capital 8,616 (1,618) (516) 728 1,019
EBIT 77,319 98,233 1,10,665 1,39,824 1,71,955 Tax paid (23,349) (24,183) (26,258) (34,490) (43,397)
Other income 5,031 6,170 5,948 6,799 9,314 Less: Interest/Div. Income Recd. 5,031 6,170 5,948 6,799 9,314
Interest Exp. 8,227 9,680 11,579 8,665 7,680 Other operating Cash Flow (16,075) (17,356) (7,656) (16,265) (20,203)
Extra Ordinary Items -gain/(loss) - (720) - - - CF from operating activities 85,454 97,428 1,25,256 1,44,954 1,73,611
Reported PBT 74,123 94,002 1,05,033 1,37,959 1,73,589 Capital expenditure (69,981) (92,642) (1,00,536) (94,981) (93,434)
Tax 23,349 24,183 26,258 34,490 43,397 Inc/(Dec) in investments (9,611) 5,480 20,000 20,000 (5,000)
Reported PAT 50,774 69,820 78,775 1,03,469 1,30,192 Add: Interest/Div. Income Recd. 5,031 6,170 5,948 6,799 9,314
Minority Int./Profit (loss) From Asso. 135 (231) (277) (332) (398) CF from investing activities (74,562) (80,993) (74,588) (68,181) (89,119)
Net Profit 50,640 70,050 79,052 1,03,801 1,30,590 Inc/(Dec) in share capital - - 60 - -
Adjusted PAT 50,640 71,001 79,328 1,04,133 1,30,988 Inc/(Dec) in debt 8,979 (8,023) (10,000) (10,000) (10,000)
Adjusted EPS (INR) 175.4 242.7 268.3 352.3 443.2 Dividend Paid (10,969) (20,206) (23,572) (29,465) (35,358)
Others (998) 8,850 4,878 5,235 5,614
Balance sheet (INR mn) CF from financing activities (2,989) (19,378) (28,634) (34,230) (39,744)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Net cash flow 7,903 (3,663) 22,033 42,542 44,748
Share Capital 2,887 2,887 2,947 2,947 2,947 Opening balance 3,592 11,495 7,832 29,865 72,408
Reserves & Surplus 5,40,358 5,99,388 6,54,867 7,29,203 8,24,435 Closing balance 11,495 7,832 29,865 72,408 1,17,155
Networth 5,43,245 6,02,274 6,57,814 7,32,150 8,27,382
Debt 1,11,007 1,02,984 92,984 82,984 72,984 Growth indicators (%)
Minority Interest 108 (122) (399) (731) (1,129) Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net deferred Tax liabilities 62,536 64,429 69,583 75,150 81,162 Revenue (%) 20.2 12.1 13.1 11.5 9.6
Capital Employed 7,16,895 7,69,565 8,19,982 8,89,553 9,80,398 EBITDA (%) -7.8 22.1 14.0 22.7 19.9
Gross Fixed Assets 7,09,032 7,74,032 8,76,032 9,71,032 10,56,032 Adj PAT (%) (29.3) 40.2 11.7 31.3 25.8
Accumulated Depreciation 1,76,750 2,08,203 2,45,330 2,86,889 3,32,498 Adj EPS (%) (42.7) 38.3 10.6 31.3 25.8
Capital work in progress 70,349 97,828 96,364 96,344 1,04,778
Net Fixed Assets 6,02,631 6,63,657 7,27,066 7,80,488 8,28,312 Valuation (x)
Goodwill 63,292 63,455 63,455 63,455 63,455 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Investments 72,969 67,490 47,490 27,490 32,490 P/E (x) 64.2 46.4 42.0 32.0 25.4

Non Current Investments 470 470 470 470 470 P/BV (x) 6.0 5.4 5.1 4.5 4.0

Current Investments 72,499 67,020 47,020 27,020 32,020 EV/EBITDA (x) 31.5 25.8 22.6 18.2 14.9

Current Assets, Loans & Adv. 1,74,456 2,12,688 2,56,984 3,15,115 3,74,013 EV/Sales (x) 5.3 4.7 4.2 3.7 3.3

Inventory 66,118 83,297 91,091 96,269 99,295 Dividend Yield (%) 0.3 0.6 0.7 0.9 1.1

Debtors 38,670 42,782 49,086 54,780 60,100

Cash & Bank balance 11,495 7,832 29,865 72,408 1,17,155
Financial ratios
Loans & advances and others 58,173 78,777 86,942 91,658 97,462
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
RoE (%) 9.7 12.4 12.6 15.0 16.8
Current Liabilities & Provisions 1,96,453 2,37,724 2,75,013 2,96,994 3,17,871
RoCE (%) 13.0 15.8 16.7 19.3 21.7
Liabilities 1,88,167 2,28,444 2,50,190 2,66,506 2,81,675
Asset/T.O (x) 1.1 1.2 1.2 1.2 1.2
Provisions 8,286 9,281 24,822 30,488 36,196
Net Debt/Equity (x) 0.0 0.0 0.0 (0.0) (0.1)
Net Current Assets (21,997) (25,036) (18,028) 18,121 56,142
EBIT/Interest (x) 10.0 10.8 10.1 16.9 23.6
Application of Funds 7,16,895 7,69,565 8,19,982 8,89,553 9,80,398

Per share data Margins (%)

Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 16.8 18.3 18.4 20.3 22.2
No. of shares (mn) 289 289 289 295 295
EBIT Margin (%) 12.2 13.9 13.8 15.6 17.6
Diluted no. of shares (mn) 289 289 289 295 295
PAT Margin (%) 8.0 10.0 9.9 11.7 13.4
BVPS (INR) 1,882.4 2,086.1 2,231.2 2,482.3 2,804.2
CEPS (INR) 275.5 354.1 394.3 493.3 598.0 Source: Company Antique

DPS (INR) 38.0 70.0 80.0 100.0 120.0

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 36

CMP : INR 557 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD ê
: INR 560 ê
Wipro
Target Price Change : -3% A muted quarter
Target 1HFY27 P/E (x) : 21 Wipro reported 1QFY25 revenue of USD 2,625 mn, down 1% CC QoQ vs. our
EPS Change FY25/ 26/ 27 : -3%/ -2%/ -2% estimate of flat revenue growth, which is at near the lower end of the -1.5%
to +0.5% guidance. Although the company did suggest that it is in a better
position compared to the start of the first quarter, guidance suggest muted
growth in the next quarter as well. For 2QFY25, IT Services business is
expected to grow sequentially in the range of -1.0% to +1.0% in CC terms. On
Vikas Ahuja the positive side, deal momentum continues to remain strong with the
+91 22 6911 3439 company reporting large deal TCV of USD 1.2 bn versus the past four-quarter
[email protected] average of USD 1.1 bn. Wipro continues to experience positive momentum in
Ashish Bansal its Consulting business while it sees strong booking growth in Capco. IT
[email protected] services EBIT margin was up 10 bps on a sequential basis to 16.5%; improved
utilization, increased fixed-price productivity, and overhead optimization have
been the key factors driving performance. Management remains confident
about maintaining margin within a narrow range with the likelihood of
improving it in coming quarters. We continue to value Wipro at 21x 1HFY27
EPS, which is at a 10% discount compared to its peers, Infosys and HCLT. We
Market data are reducing the target price to INR 560 (from INR 575) in accordance with the
Sensex : 80,605 lower forward EPS estimates and downgrading the rating to HOLD (from
Sector : IT
BUY) due to the lack of an upside following a 15% rally in the past month.
Market Cap (INR bn) : 2,914.4 1QFY25 result highlights
Market Cap (USD bn) : 34.836 Wipro reported 1QFY25 revenue of USD 2,625 mn, down 1% QoQ in CC terms, lower than
O/S Shares (mn) : 5,230.5 our estimate of flat revenue growth. In YoY organic terms, revenue declined 4.9% CC vs.
52-wk HI/LO (INR) : 580/375 peers—TCS (+4%), Accenture (-1%), HCLT (+5%), Infosys (+2%), LTIM (+4%), and LTTS (+6%).
Muted discretionary spending by clients impacted revenue during the quarter. IT services EBIT
Avg. Daily Vol ('000) : 12,221
margin was up 10 bps on a sequential basis at 16.5% aided by improved utilization, fixed
Bloomberg : WPRO IN price productivity and optimization of overheads. Further, management expects restructuring
Source: Bloomberg of subsidiaries and realizing synergies with the acquired entities as the margin levers of the
Valuation future. Wipro signed 10 large deals during the quarter which is four less than the previous
FY25e FY26e FY27e
quarter, however, large deal TCV of USD 1.2 bn was slightly above the past four-quarter
average of USD 1.1 bn. Overall TCV stood at USD 3.3 bn. Headcount increased marginally
EPS (INR) 21.5 24.8 26.9
by 0.1% QoQ to 2,34,391. Net utilization improved by 80 bps QoQ to 87.7%. TTM attrition
P/E (x) 26.0 22.5 20.7 moderated 10 bps QoQ to 14.1%. The company saw a reduction in the USD 75 mn+ and
P/BV (x) 3.7 3.6 3.4 USD 50 mn+ buckets by three and two clients respectively. However, contribution from top
EV/EBITDA (x) 16.7 14.8 13.5 customers improved by 20 bps QoQ, while the top 10 customer contribution improved by 50
Dividend Yield (%) 2.0 2.3 2.7 bps QoQ. The company continues its strategy of prioritizing efforts to boosting revenue from
Source: Company, Antique
its top clients. AI is set to become one of the primary focus areas for the company in the
foreseeable future with investments in employee upskilling and building industry specific
Returns (%) solutions to continue.
1m 3m 6m 12m Revenue impacted by continued weakness across all verticals and geographies, except BFSI,
Absolute 12 23 15 33 Consumer, and North America
Relative 8 12 2 11 Revenue during the quarter was pulled down by weakness in ERU (down 6.5% QoQ),
Source: Company, Antique Manufacturing (down 3.4%), Healthcare (down 2.9%), Communication (down 2%), and
Technology (down 0.7%); while BFSI was up 0.3% QoQ and Consumer was up 1.5%. The
Shareholding pattern
positive developments in Capco over the past few quarters have been beneficial for the BFSI
Promoters : 73% vertical which grew 3.4% sequentially. All geographies except Americas 1 (up 0.3% QoQ)
Public : 27%
saw a sequential decline. Americas 2/ Europe/ APMEA were down 0.9%/ 1.9%/ 4.4%
respectively. Of the 10 deals signed during the quarter, one deal each was booked in
Others : 0%
telecom, manufacturing, healthcare, and BFSI which the company expects to start ramping
Source: Bloomberg up in the quarters ahead. Further, management is positive of the momentum to return in
consumer and communication verticals. Management highlighted Americas and Europe are
Price performance vs Nifty expected to show growth aided by a strong pipeline but APMEA may remain soft.
145 Investment Summary
135
125 Wipro’s revenue growth over the past 5–6 quarters has underperformed its large peers due
115 a higher than expected decline in consulting and discretionary. Although the company did
105 suggest that it is in a better position as compared to the start of the first quarter, guidance
95
85 suggest muted growth in the next quarter as well. We continue to value Wipro at 21x 1HFY27
Jul-23 Nov-23 Mar-24 Jul-24 EPS, which is at a 10% discount compared to its peers, Infosys and HCLT. We are reducing
Wipro NIFTY
the target price to INR 560 (from INR 575) in accordance with the lower forward EPS estimates
and downgrading the rating to HOLD (from BUY) due to the lack of an upside following a
Source: Bloomberg, Indexed to 100
15% rally in the past month.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 37

Table 1: Financial Summary

INR mn 1QFY25 4QFY24 QoQ 1QFY24 YoY FY23 FY24 FY25e FY26e FY27e
IT services revenues (USD mn) 2,626 2,657 -1.2% 2778.5 -5.5% 11,234 10,805 10,665 11,508 12,456
IT services revenues 2,18,963 2,20,796 -0.8% 2,27,554 -3.8% 9,03,301 8,93,816 8,89,314 9,59,590 10,38,641
Consolidated revenues 2,19,576 2,22,083 -1.1% 228310 -3.8% 9,11,624 8,97,603 8,91,766 9,57,466 10,36,517
IT services EBIT 36,057 36,195 -0.4% 36,517 -1.3% 1,40,783 1,44,196 1,37,932 1,55,347 1,68,145
IT services EBIT Margins 16.5% 16.4% 7 bps 16.0% 42 bps 15.6% 16.1% 15.5% 16.2% 16.2%
Consolidated PAT 29,911 28,346 5.5% 28,701 4.2% 1,13,500 1,10,452 1,12,302 1,29,869 1,40,941
EPS 5.7 5.4 5.5% 5.1 11.5% 20.7 20.7 21.5 24.8 26.9
Source: Company, Antique

Exhibit 1: Revenue declined 1% QoQ in CC terms, below our expectation

15%

10%

4.1%
3.3%

3.1%
3.0%

3.0%

2.1%
2.0%

0.6%
12.0%
0.4%

5%

8.1%
0%
-7.5%

-0.3%
-0.6%

-1.0%
-1.7%
-2.0%
-5%

-2.8%
-10%
4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25
CC revenue growth QoQ
Source: Company, Antique

Exhibit 2: IT services EBIT margin was up 10 bps QoQ at 16.5% in line with our expectation
24%

22%

20%

18%

16%

14%
17.6%

19.1%

19.2%

21.7%

21.0%

19.0%

17.8%

17.6%

17.0%

15.0%

15.1%

16.3%

16.3%

16.0%

16.1%

16.0%

16.4%

16.5%
12%

10%
4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

IT services EBIT Margins

Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 38

Exhibit 3: Forward PE discount to remain with larger peers on lower growth expectation
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
-50.0%
-60.0%

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24
wipro discount to Infosys Wipro discount to TCS
Source: Company, Antique

Table 2: Key metrics

1Q23 2Q23 3Q23 4Q23 Q124 Q224 Q324 Q424 Q125
Revenue (USD mn) 2,756.1 2,817.4 2,821.4 2,839.5 2,778.5 2,713.0 2,656.1 2,657.4 2,625.9
QoQ cc growth (%) 2.1% 4.1% 0.6% -0.6% -2.8% -2.0% -1.7% -0.3% -1.0%
Geography-wise (%)
Americas 1 28.7% 28.8% 29.1% 28.5% 28.8% 29.8% 31.0% 30.4% 30.9%
Europe 28.2% 28.0% 28.8% 29.3% 29.5% 28.6% 27.7% 27.8% 30.8%
Americas 2 31.1% 31.1% 30.6% 30.5% 30.0% 29.9% 30.0% 30.7% 27.6%
APMEA 12.0% 12.1% 11.5% 11.7% 11.7% 11.7% 11.3% 11.1% 10.7%
Vertical break up (%)
Communications 4.9% 4.8% 4.6% 4.5% 4.6% 4.3% 4.0% 3.8% 3.8%
Consumer 18.6% 19.0% 19.0% 18.9% 18.7% 18.7% 18.8% 18.7% 19.2%
Energy, Natural Resources & Utilities 11.1% 11.2% 11.4% 12.2% 12.0% 11.6% 11.8% 11.9% 11.2%
Finance Solutions 35.5% 35.3% 35.0% 34.4% 33.9% 33.6% 32.7% 33.5% 34.0%
Healthcare, Life Sciences & Services 11.4% 11.4% 11.9% 12.1% 12.2% 12.7% 13.9% 14.1% 13.9%
Manufacturing & Technology 18.4% 18.4% 18.1% 17.9% 18.6% 19.1% 18.8% 18.0% 17.9%
Client composition (%)
Top customer 3.2% 3.2% 3.2% 3.2% 3.1% 3.0% 3.0% 3.8% 4.0%
Top 5 12.9% 13.0% 13.3% 12.5% 12.5% 12.3% 12.1% 13.4% 13.6%
Top 10 20.8% 20.8% 21.2% 20.2% 20.5% 20.6% 20.5% 22.0% 22.5%
Client data
USD 100m + 20 19 19 19 21 22 22 22 22
USD 75m + 30 29 29 29 28 28 31 32 29
USD 50m+ 50 52 52 53 51 51 46 45 43
USD 20m+ 120 122 119 117 123 122 121 116 117
USD 10m+ 196 199 204 210 207 207 203 205 192
USD 5m+ 313 314 312 315 319 313 305 301 301
USD 3m+ 427 434 440 436 444 437 430 409 407
USD 1m+ 719 745 755 766 769 774 750 741 735
Deal wins
Deal- Large deal TCV (USD bn) 1.1 0.7 1.0 1.1 1.2 1.3 0.9 1.2 1.2
Utilization (IT Services and Consulting)
Net Utilization (Excluding Trainees 83.8% 79.8% 79.7% 81.7% 83.7% 84.5% 84.0% 84.8% 87.7%
Attrition % 23.0% 22.9% 21.2% 19.4% 17.3% 15.5% 14.2% 14.2% 17.3%
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 39

Table 3: Change in Estimates

Old New Change
FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E
Revenue 9,01,850 9,73,066 10,53,175 8,91,828 9,57,466 10,36,517 -1.1% -1.6% -1.6%
EBIT 1,39,680 1,57,994 1,71,001 1,38,731 1,55,461 1,68,297 -0.7% -1.6% -1.6%
PAT 1,15,553 1,32,133 1,43,368 1,12,302 1,29,869 1,40,941 -2.8% -1.7% -1.7%
EPS 22.1 25.2 27.4 21.5 24.8 26.9 -2.8% -1.7% -1.7%
EBIT Margin 15.5% 16.2% 16.2% 15.6% 16.2% 16.2% 0.1% 0.0% 0.0%
PAT Margin 12.8% 13.6% 13.6% 12.6% 13.6% 13.6% -0.2% 0.0% 0.0%
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 40

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net Revenue 9,04,876 8,97,603 8,91,828 9,57,466 10,36,517 PBT 1,47,714 1,47,443 1,48,502 1,74,417 1,89,181
Op. Expenses 7,36,340 7,27,773 7,23,500 7,70,230 8,33,822 Depreciation & amortization 33,402 34,071 29,597 31,775 34,398
EBITDA 1,68,536 1,69,830 1,68,328 1,87,236 2,02,695 (Inc)/Dec in working capital (14,556) 18,051 33,120 4,646 2,837
Depreciation 33,402 34,071 29,597 31,775 34,398 Tax paid (30,218) (15,360) (35,112) (43,604) (47,295)
EBIT 1,35,134 1,35,759 1,38,731 1,55,461 1,68,297 Other operating Cash Flow (5,741) (7,989) (1,087) (944) (944)
Other income 22,657 24,236 22,659 31,755 33,684 CF from operating activities 1,30,601 1,76,216 1,75,019 1,66,289 1,78,176
Interest Exp. 10,077 12,552 12,888 12,800 12,800 Capital expenditure (14,834) (10,510) (31,214) (33,511) (36,278)
Reported PBT 1,47,714 1,47,443 1,48,502 1,74,417 1,89,181 Inc/(Dec) in investments (1,10,756) 1,776 - - -
Tax 33,992 36,089 35,112 43,604 47,295 Add: Interest/Div. Income Received 41,525 20,414 - - -
Reported PAT 1,13,722 1,11,354 1,13,389 1,30,813 1,41,885 CF from investing activities (84,065) 11,680 (31,214) (33,511) (36,278)
Minority Int./Profit (loss) From Asso. 18 669 1,042 944 944 Inc/(Dec) in share capital 12 13 - - -
Net Profit 1,13,704 1,10,685 1,12,347 1,29,869 1,40,941 Inc/(Dec) in debt (16,584) (20,513) - - -
Adjusted PAT 1,13,704 1,10,685 1,12,347 1,29,869 1,40,941 Dividend Paid (32,814) (5,218) (79,236) (93,642) (1,08,049)
Adjusted EPS (INR) 20.7 20.7 21.5 24.8 26.9 Others (11,495) (1,56,849) - - -
CF from financing activities (60,881) (1,82,567) (79,236) (93,642) (1,08,049)
Balance sheet (INR mn) Net cash flow (14,345) 5,329 64,569 39,135 33,850
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Opening balance 1,03,833 91,861 96,951 1,61,520 2,00,656
Share Capital 10,976 10,450 10,450 10,450 10,450 Closing balance 91,861 96,951 1,61,520 2,00,656 2,34,505
Reserves & Surplus 7,70,777 7,40,773 7,73,840 8,10,066 8,42,959
Networth 7,81,753 7,51,223 7,84,290 8,20,516 8,53,409 Growth indicators (%)
Debt 1,50,093 1,41,466 1,41,466 1,41,466 1,41,466 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Minority Interest 5 5 5 5 5 Revenue 14.4 (0.8) (0.6) 7.4 8.3
Net deferrei Tax liabilities (2,100) (1,817) (1,817) (1,817) (1,817) EBITDA 2.4 0.8 (0.9) 11.2 8.3
Capital Employed 9,29,751 8,90,877 9,23,944 9,60,170 9,93,063 Adj PAT (7.0) (2.7) 1.5 15.6 8.5
Net Fixed Assets 1,31,704 1,14,356 1,15,973 1,17,710 1,19,590 Adj EPS (7.0) 0.2 3.5 15.6 8.5
Goodwill 3,07,970 3,16,002 3,16,002 3,16,002 3,16,002
Investments 3,30,732 3,33,844 3,33,844 3,33,844 3,33,844 Valuation (x)
Non Current Investments 21,500 22,673 22,673 22,673 22,673 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Current Investments 3,09,232 3,11,171 3,11,171 3,11,171 3,11,171 P/E (x) 26.9 26.9 26.0 22.5 20.7
Current Assets, Loans & Adv. 4,03,297 3,86,438 4,62,875 5,15,744 5,66,133 P/BV (x) 3.9 4.0 3.7 3.6 3.4
Inventory 1,188 907 901 967 1,047 EV/EBITDA (x) 17.2 17.0 16.7 14.8 13.5
Debtors 1,86,865 1,73,822 1,85,696 1,99,363 2,15,823 EV/Sales (x) 3.2 3.2 3.2 2.9 2.6
Cash & Bank balance 91,861 96,951 1,61,520 2,00,656 2,34,505 Dividend Yield (%) 1.4 0.2 2.0 2.3 2.7
Loans & advances and others 1,23,383 1,14,758 1,14,758 1,14,758 1,14,758
Current Liabilities & Provisions 2,43,976 2,59,770 3,04,758 3,23,137 3,42,513
Financial ratios
Liabilities 2,41,427 2,57,799 3,02,787 3,21,166 3,40,542
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
RoE (%) 15.8 14.4 14.6 16.2 16.8
Provisions 2,549 1,971 1,971 1,971 1,971
RoCE (%) 18.2 17.6 17.8 19.9 20.7
Net Current Assets 1,59,321 1,26,668 1,58,117 1,92,607 2,23,620
Asset/T.O (x) 3.1 3.4 3.5 3.3 3.2
Application of Funds 9,29,751 8,90,877 9,23,944 9,60,170 9,93,063
Net Debt/Equity (x) (0.3) (0.4) (0.4) (0.5) (0.5)
Per share data EBIT/Interest (x) 15.7 12.7 12.5 14.6 15.8
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
No. of shares (mn) 5,476 5,289 5,222 5,222 5,222
Margins (%)
DilutEI no. of shares (mn) 5,486 5,328 5,235 5,235 5,235
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 18.6 18.9 18.9 19.6 19.6
BVPS (INR) 142.5 141.0 149.8 156.7 163.0
EBIT Margin (%) 14.9 15.1 15.6 16.2 16.2
CEPS (INR) 26.8 27.3 27.3 31.1 33.7
PAT Margin (%) 12.3 12.0 12.3 13.1 13.2
DPS (INR) 8.0 1.0 11.0 13.0 15.0
Source: Company Antique
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 41

CMP : INR 890 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD çè
: INR 899 ê
JSW Steel
Target Price Change : -5% Volume expansion benefits to accrue in 2HFY25; high
Target 1HFY27 EV/EBITDA (x) : 7.3
EBITDA Change FY25/ 26/ 27 : -3%/ -3%/ -5%
debt a concern
JSW Steel's 1QFY25 standalone revenue at ~INR 326.5 bn (4.2% above our
estimate) was flat YoY and declined 7.6% QoQ with sequentially lower sales
volume, partially offset by higher realizations. Standalone steel volume at
~5.1 MT (1.8% above our estimate) was higher by 3.2% YoY but fell 10.5%
Pallav Agarwal sequentially (primarily impacted by lower exports). Blended steel realization
+91 22 6911 3411 at INR 63,306 per ton declined by 4% YoY but improved 3.2% QoQ (aided by
[email protected] better product mix). Standalone EBITDA at INR 42.8 bn (3.4% below our
estimate) fell by 12.1% YoY and 3.8% QoQ (impacted by lower volume and
Suman Kumar inventory revaluation losses offsetting the decline in raw material costs).
+91 22 6911 3416 Consolidated net debt at the end of 1QFY25 rose 8.5% sequentially to INR
[email protected] 802 bn; net debt to EBITDA rose QoQ to 3x level from 2.6x at the end of FY24
(reasonably high in comparison to peers). Steel spreads are expected to be
aided sequentially in 2QFY25 with USD 23-28 per ton decline in coking coal
costs and softened iron ore prices. We incorporate the FY24 Annual Report,
maintain HOLD rating at a TP of INR 899 (earlier INR 945) basis 1HFY27E EV/
Market data EBITDA target multiple of 7.3x. As valuations are rich and debt levels high,
Sensex : 80,605 and we would prefer more attractive entry levels.
Sector : Metals Sales volume higher YoY but declined QoQ impacted by lower exports
Market Cap (INR bn) : 2,175.1
Standalone steel volume at 5.1 MT (1.8% above our estimate) grew by 3.2% YoY but declined
Market Cap (USD bn) : 25.999 by 10.5% QoQ impacted by sequentially lower exports (declined QoQ to ~0.6 MT from 1.3
O/S Shares (mn) : 2,445.5 MT in 4QFY24; stood at ~10% of consolidated India operation sales of 5.9 MT). Domestic
52-wk HI/LO (INR) : 959/723 sales stood at the highest-ever level of 5.3 MT (up 14% YoY and 3% QoQ). Management
Avg. Daily Vol ('000) : 1,788 maintained consolidated sales guidance for FY25 at 27 MT (~9% higher from FY24 level of
24.8 MT), supported by ramp up of Vijayanagar and BPSL expansions.
Bloomberg : JSTL IN
Source: Bloomberg Steel spreads to improve in 2QFY25
Valuation Blended steel realization at INR 63,306 per ton declined by 4% YoY but rose by 3.2% QoQ.
EBITDA per ton at INR 8,399 was lower by 14.8% YoY and improved 3.2% sequentially,
FY25e FY26e FY27e
aided by lower costs-primarily attributable to a sequential fall of USD 23 per ton in coking
EPS (INR) 48.7 63.1 65.2 coal costs. However, EBITDA was impacted due to the inventory revaluation loss (effected by
P/E (x) 18.3 14.1 13.6 steel price fall in June) and planned shutdown costs offsetting lower raw material costs.
P/BV (x) 2.5 2.2 2.0 Management expects steel spreads to be aided sequentially by approx. USD 23-28 per ton
EV/EBITDA (x) 9.2 7.8 7.5
decline in coking coal costs and softening of iron ore prices. On a long-term basis, successful
commencement of operations at MDR mine in Mozambique could help insulate operations
Dividend Yield (%)0.7 0.7 0.7 against price volatility.
Source: Company, Antique
Subdued performance of foreign subsidiaries impact consolidated operations
Returns (%) The USA plate and pipe mill reported an EBITDA of ~USD 13 mn (USD 23.7 mn in 4QFY24),
1m 3m 6m 12m while the Ohio plant reported higher EBITDA loss of USD 15.6 mn (EBITDA loss of USD 5.2
Absolute (3) 3 9 12 mn in 4QFY24). The Italian subsidiary reported an EBITDA of ~EUR 7.7 mn (EUR 7.5 mn in
Relative (7) (7) (3) (7) 4QFY24). Bhushan Power and Steel reported an EBITDA of INR 6.7 bn (INR 5.4 bn in
4QFY24) while coated products reported an EBITDA of INR ~3.7 bn (26% sequentially lower
Source: Bloomberg
than INR 5 bn in 4QFY24).
Shareholding pattern Consolidated net debt higher QoQ and YoY
Promoters : 45% Consolidated net debt at the end of 1QFY25 rose 8.5% sequentially to INR 802 bn (excluding
Public : 55%
revenue acceptance of USD 1.8 bn and capital acceptance of USD 124 mn). It was pushed
higher sequentially by a capex of INR 44.7 bn and acceptance payout of USD 300 mn. Net
Others : 0% debt to EBITDA rose QoQ to 3x level from 2.6x level at the end of FY24 (reasonably high in
Source: Bloomberg
comparison to peers). FY25 capex guidance stands at INR 200 bn (slump sale of the ongoing
30 mtpa slurry pipeline project to JSW Infrastructure has been approved in order to prudently
Price performance vs Nifty allocate capital for steel-making capacity expansion).
160
Investment Summary
140
120 Domestic steel demand is expected to stay resilient while macroeconomic revival across
developed countries could support higher exports. FY25 would witness the ramp up of BPSL
100 phase 2 expansion (additional 1.5 mtpa) and 5 mtpa Vijaynagar brownfield expansion,
80 with full benefits accruing FY26 onwards. We incorporate the FY24 Annual Report, maintain
Jul-23 Nov-23 Mar-24 Jul-24 HOLD rating at a TP of INR 899 (earlier INR 945) basis 1HFY27E EV/EBITDA target multiple
JSW Steel NIFTY of 7.3x. As valuations are rich and debt levels high, and we would prefer more attractive
Source: Bloomberg, Indexed to 100 entry levels.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 42

Table 1: JSW Steel, quarterly performance (INR mn)

Standalone summary 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%) FY25TD CPLY (FY24) YoY (%)
Sales 3,26,540 3,27,910 (0.4) 3,53,410 (7.6) 3,26,540 3,27,910 (0.4)
Stock adjustment 5,180 (9,210) n.a. 5,780 (10.4) 5,180 (9,210) n.a.
Cost of Material Consumed 1,63,240 1,80,370 (9.5) 1,91,670 (14.8) 1,63,240 1,80,370 (9.5)
% of sales 50.0 55.0 -502 bps 54.2 -424 bps 50.0 55.0 -502 bps
Employee cost 6,600 5,900 11.9 5,850 12.8 6,600 5,900 11.9
% of sales 2.0 1.8 22 bps 1.7 37 bps 2.0 1.8 22 bps
Other expenses 1,08,770 1,02,240 6.4 1,05,690 2.9 1,08,770 1,02,240 6.4
% of sales 33.3 31.2 213 bps 29.9 340 bps 33.3 31.2 213 bps
Total Exp 2,83,790 2,79,300 1.6 3,08,990 (8.2) 2,83,790 2,79,300 1.6
EBITDA 42,750 48,610 (12.1) 44,420 (3.8) 42,750 48,610 (12.1)
Margin % 13.1 14.8 -173 bps 12.6 52 bps 13.1 14.8 -173 bps
Other income 3,960 4,380 (9.6) 4,510 (12.2) 3,960 4,380 (9.6)
Depreciation 14,600 12,650 15.4 14,600 - 14,600 12,650 15.4
Interest expenses 15,900 14,570 9.1 15,690 1.3 15,900 14,570 9.1
Profit Before Tax 16,210 25,770 (37.1) 18,640 (13.0) 16,210 25,770 (37.1)
Exceptional item 0 0 0.0 -2400 n.a. 0 0 n.a.
PBT after exceptional 16,210 25,770 (37.1) 16,240 (0.2) 16,210 25,770 (37.1)
Tax 4,160 8,720 (52.3) 6,170 (32.6) 4,160 8,720 (52.3)
Tax Rate % 25.7 33.8 -817 bps 38.0 -1233 bps 25.7 33.8 -817 bps
Reported Net Profit 12,050 17,050 (29.3) 10,070 19.7 12,050 17,050 (29.3)
Adjusted Net Profit 12,050 17,050 (29.3) 12,470 (3.4) 12,050 17,050 (29.3)
EPS (INR) 5.0 7.1 (29.3) 5.2 (3.4) 5.0 7.1 (29.3)

Key operating metrics 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%) FY25TD CPLY (FY24) YoY (%)
Crude steel production (MT) 5.3 5.4 (2.6) 5.7 (6.9) 5.3 5.4 (2.6)
Saleable steel volume (MT) 5.1 4.9 3.2 5.7 (10.5) 5.1 4.9 3.2
Average realization (INR/ton) 63,306 65,966 (4.0) 61,353 3.2 63,306 65,966 (4.0)
EBITDA/ton (INR) 8,399 9,860 (14.8) 7,807 7.6 8,399 9,860 (14.8)
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 43

Table 2: JSW Steel, quarterly performance (INR mn) continue...

Consolidated summary 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%) FY25TD CPLY (FY24) YoY (%)
Sales 4,29,430 4,22,130 1.7 4,62,690 (7.2) 4,29,430 4,22,130 1.7
Stock adjustment 10,000 (21,950) n.a. 5,340 87.3 10,000 (21,950) n.a.
Cost of Material Consumed 2,15,340 2,35,650 (8.6) 2,50,180 (13.9) 2,15,340 2,35,650 (8.6)
% of sales 50.1 55.8 -568 bps 54.1 -393 bps 50.1 55.8 -568 bps
Employee cost 12,480 11,610 7.5 11,510 8.4 12,480 11,610 7.5
% of sales 2.9 2.8 16 bps 2.5 42 bps 2.9 2.8 16 bps
Other expenses 1,36,510 1,26,360 8.0 1,34,420 1.6 1,36,510 1,26,360 8.0
% of sales 31.8 29.9 185 bps 29.1 274 bps 31.8 29.9 185 bps
Total Exp 3,74,330 3,51,670 6.4 4,01,450 (6.8) 3,74,330 3,51,670 6.4
EBITDA 55,100 70,460 (21.8) 61,240 (10.0) 55,100 70,460 (21.8)
Margin % 12.8 16.7 -386 bps 13.2 -40 bps 12.8 16.7 -386 bps
Other income 1,640 3,310 (50.5) 2,420 (32.2) 1,640 3,310 (50.5)
Depreciation 22,090 19,000 16.3 21,940 0.7 22,090 19,000 16.3
Interest expenses 20,730 19,630 5.6 20,620 0.5 20,730 19,630 5.6
Profit Before Tax 13,920 35,140 (60.4) 21,100 (34.0) 13,920 35,140 (60.4)
PBT after exceptional 13,920 35,140 (60.4) 21,100 (34.0) 13,920 35,140 (60.4)
Tax 5,130 10,520 (51.2) 6,900 (25.7) 5,130 10,520 (51.2)
Tax Rate % 36.9 29.9 692 bps 32.7 415 bps 36.9 29.9 692 bps
Minority Interest 220 900 (75.6) 230 (4.3) 220 900 (75.6)
Share of profit from associates (120) (340) n.a. (980) n.a. (120) (340) n.a.
Reported Net Profit 8,450 23,380 (63.9) 12,990 (34.9) 8,450 23,380 (63.9)
Adjusted Net Profit 8,450 23,380 (63.9) 12,990 (34.9) 8,450 23,380 (63.9)
EPS (INR) 3.5 9.7 (63.9) 5.4 (34.9) 3.5 9.7 (63.9)
Source: Company, Antique; LP = loss to profit

Table 3: SoTP valuations

1HFY27e EBITDA - INR mn 3,81,115
Target multiple 7.3
Target EV - INR mn 27,97,382
Less: Net debt 1HFY27e - INR mn 7,43,939
Add: 1HFY27e CWIP @ 0.4x book - INR mn 1,36,280
Target market capitalization - INR mn 21,89,724
Target price - INR per share 899
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 44

Exhibit 1: Volumes rose YoY but fell QoQ impacted by lower exports
6.0 50

40
5.0
30
4.0
20

3.0 10

-
2.0
(10)
1.0
(20)

- (30)

1QFY13
2QFY13
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
Sales volume (MT) YoY (%) - RHS

Source: Company, Antique

Exhibit 2: EBITDA declined YoY and QoQ impacted by higher iron ore costs and sequentially
lower volume
1,00,000 600
90,000 500
80,000
400
70,000
60,000 300

50,000 200
40,000 100
30,000
-
20,000
10,000 (100)

- (200)
1QFY13
2QFY13
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25
EBITDA (INRm) YoY growth % RHS

Source: Company, Antique

Exhibit 3: EBITDA per ton lower YoY but higher sequentially

30,000

25,000

20,000

15,000

10,000

5,000

-
1QFY13
2QFY13
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
1QFY24
2QFY24
3QFY24
4QFY24
1QFY25

EBITDA INR per tonne

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 45

Financials
Profit and loss account (INR bn) Cash flow statement (INR bn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Revenues 1,660 1,750 1,839 2,086 2,237
PBT 52 130 163 207 211
Expenses 1,474 1,468 1,521 1,714 1,847
Depreciation 75 82 87 98 113
EBITDA 185 282 318 372 390
Interest 69 81 71 71 70
Depreciation & amortisation 75 82 87 98 113
(Inc)/ Dec in working capital 48 (93) 35 36 (6)
EBIT 111 201 231 274 277
Tax paid (15) (44) (42) (51) (50)
Other income 10 10 3 4 4
CF from operating activities 229 155 314 361 339
Interest expense 69 81 71 71 70
Capex (159) (218) (200) (230) (200)
Profit before tax 52 130 163 207 211
(Inc)/ Dec in Investments 1 (24) - - -
Extraordinaries 6 6 - - -
CF from investing activities (158) (243) (200) (230) (200)
Tax 15 44 42 51 50
Inc/ (Dec) in debt 94 48 (10) 3 (14)
Profit after tax 43 91 121 156 161
Dividends & Interest paid (87) (96) (86) (71) (70)
Minorities and share of associates (1) (3) (3) (3) (3)
Others -45 52 -26 -54 -61
Rep. PAT after minority/asso. 41 88 118 153 158
CF from financing activities (37) 4 (122) (122) (145)
Adj. PAT after minority/asso. 36 82 118 153 158
Net cash flow 33 (84) (9) 9 (6)
EPS (INR) 14.7 34.0 48.7 63.1 65.2
Add: Opening balance 174 207 123 115 124
Closing balance 207 123 115 124 118
Balance sheet (INR bn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Growth indicators (%)
Share Capital 2 2 2 2 2 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Reserves & Surplus 655 774 853 953 1,052 Revenue 13.4 5.5 5.1 13.4 7.3
Networth 657 777 855 956 1,054 EBITDA (52.5) 52.2 12.7 17.0 4.8
Debt 832 880 869 872 858 PAT (83.4) 131.4 43.2 29.6 3.3
Minority Interest 13 21 23 24 26 EPS (83.4) 131.4 43.2 29.6 3.3
Deferred tax/ other liabilities 79 94 94 94 94
Capital Employed 1,582 1,771 1,841 1,946 2,032 Valuation
Gross Fixed Assets 1,386 1,530 1,638 1,868 2,163 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Accumulated Depreciation 343 411 498 597 710 P/E (x) 60.5 26.1 18.3 14.1 13.6
Net Assets 1,043 1,118 1,140 1,271 1,453 P/BV (x) 3.3 2.8 2.5 2.2 2.0
Capital work in progress 222 297 388 388 293 EV/EBITDA (x) 15.1 10.4 9.2 7.8 7.5
Investments 48 72 72 72 72 EV/Sales (x) 1.7 1.7 1.6 1.4 1.3
Current Assets Loans & Advances Dividend Yield (%) 0.4 0.8 0.7 0.7 0.7
Inventory 331 378 410 425 447
Debtors 71 75 85 85 91
Financial ratios
Cash & Bank 207 123 115 124 118 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Loans & advances and others 187 208 155 175 192 RoE 5.3 11.5 14.4 16.8 15.7

Current Liabilities & Provisions RoCE 6.5 9.6 10.9 12.5 12.1

Creditors 512 489 512 581 619 Debt/Equity (x) 1.0 1.0 0.9 0.8 0.7

Provisions 17 19 18 20 22 EBIT/Interest (x) 1.6 2.5 3.3 3.8 3.9

Net Current Assets 268 277 234 207 207

Margins (%)
Goodwill on consolidation 1 6 6 6 6
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Application of Funds 1,582 1,771 1,841 1,946 2,032
EBITDA 11.2 16.1 17.3 17.8 17.4
Per share data* EBIT 6.7 11.5 12.6 13.1 12.4

Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e PAT 2.1 4.7 6.4 7.3 7.0

No. of shares (mn) 2,417 2,437 2,437 2,437 2,437 Source: Company Antique

BVPS (INR) 271.8 321.3 353.8 395.4 436.2

CEPS (INR) 45.6 67.8 84.7 103.8 112.0
DPS (INR) 3.4 7.3 6.0 6.0 6.0

Source: Company, Antique; * on fully diluted number of shares

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 46

CMP : INR 300 1QFY25 RESULTS REVIEW

Reco
Target Price
: BUY çè
: INR 378 çè
Bharat Petroleum Corporation
Target Price Change : No Change Hit by poor GRMS and LPG under-recovery
Target 1HFY27 EV/EBITDA (x) : 6.0
Bharat Petroleum Corporation (BPCL) reported 1QFY25 EBITDA of INR 56.5
EBITDA Change FY25/ 26/ 27 : No Change bn (INR 92.1 bn QoQ, INR 158.1 bn YoY), better than our estimate of INR 49.5
bn but in line with consensus of INR 57.5 bn. PAT was at INR 30.1 bn (INR
55.7 bn QoQ, INR 105.5 bn YoY), higher than our estimate of INR 24 bn and
Varatharajan S. consensus of INR 26.2 bn. The decline is profitability was on expected lines
+91 22 6911 3425 on account of low GRMs and LPG under-recovery. The company's debt
[email protected] declined further to INR 152 bn (INR 187.7 bn QoQ, 279.4 YoY) leading to debt
Kishan Mundhra
equity ratio improving to 0.19x. We believe that the GRMs would recover
+91 22 6911 3426 from hereon and the LPG under-recoveries would be reimbursed by the
[email protected] Government. Consequently, we keep our estimates unchanged and maintain
BUY on the stock with a TP of INR 378 based on 6x 1HFY27 EV/EBITDA.
Decent refining performance
The implied GRM for the quarter was USD 7.86/bbl (vs. USD 12.5/bbl QoQ , USD 11.64/
Market data
bbl YoY), slightly better than our estimate of USD 7.5/bbl. Bina's performance substantially
Sensex : 80,605
declined after a strong show in the previous quarters as realized GRM stood at USD 12.76/
Sector : Oil & Gas
Market Cap (INR bn) : 1,318.0
bbl (18.7 QoQ, 18.8 YoY). Also Mumbai declined substantially to USD 4.66/bbl and Kochi
Market Cap (USD bn) : 15.755
to USD 8.45/bbl. 39% of the throughput during the quarter was Russian crude oil. There is
O/S Shares (mn) : 4,338.5 significant reduction in discount on crude oil on YoY basis, however, sequentially the discount
52-wk HI/LO (INR) : 344/166 is stable. Crude throughput was 10.1 MMT (-2% QoQ, - 3% YoY).
Avg. Daily Vol ('000) : 18,264 Marketing continues to gain market share
Bloomberg : BPCL IN
We estimate the company's marketing & others gross margin to be INR 76.5 bn (vs. INR 99
Source: Bloomberg
bn QoQ, INR 152 bn YoY, adjusted for inventory). On a per unit level, BPCL realized a gross
Valuation margin of INR 5.4/kg compared to INR 7.4/kg in the previous quarter and INR 11.7/kg in
FY25e FY26e FY27e
1QFY24. As opposed to a loss in previous quarter, the company had a marketing inventory
EPS (INR) 31.9 32.3 32.9
gain of INR 4 bn in the current quarter. Total marketing volume was 13.2 MMT (flat QoQ,
P/E(x) 9.4 9.3 9.1
+3% YoY). Sequentially, the company gained 164 bps in market share of petrol and 113
P/BV(x) 1.6 1.4 1.3
bps market share in diesel.
EV/EBITDA(x) 6.1 6.2 6.7
Dividend Yield (%) 8.7 8.7 9.0 LPG under-recoveries hit performance
Source: Company, Antique The current quarter had LPG under-recovery of ~INR 23 bn. The company had a buffer of
Returns (%) INR 2.8 bn at the start of the previous quarter which was totally offset. So now there is a
1m 3m 6m 12m negative buffer of INR 20.2 bn. LPG being a regulated and controlled product, it is likely
Absolute (1) 4 26 58 that the government will reimburse the amount to the company just like in the previous instances
Relative (5) (6) 12 32 and this loss will then be accordingly reversed.
Source: Company, Antique
New capex to peak in FY27-28
Shareholding pattern BPCL is embarking on a big capex cycle after a pause of 2-3 years because of divestment.
Promoters : 53% Total capex outlay of INR 1.7 trn is bifurcated-INR 750 bn for Refining and Petrochemicals,
Public : 47% INR 80 bn for pipeline capex, INR 200 bn for Marketing, INR 320 bn for Upstream
Others : 0% (Mozambique and Brazil), INR 250 bn for Gas, and INR 100 bn for Green Energy. Only
those projects that meet the company's benchmark returns will be undertaken. Peak capex
Source: Bloomberg
will happen in FY27/ 28 and will lead to a peak D/E of 1.0x in the next five years.
Price performance vs Nifty
190
Investment Summary
170
150
GRMs have marginally improved after a setback in the previous quarter. We feel that the
130 weakness in the Singapore GRM is only temporary and should normalize to its long-term
110 average of USD 5-6/bbl. BPCL's refining performance continues to be superior relative to its
90 peers and we believe that the stock will continue to handsomely outperform the benchmark.
Jul-23 Nov-23 Mar-24 Jul-24
The stock remains attractively valued at 4.8x 1HFY27 EV/EBITDA (adjusted for investments)
BPCL NIFTY
Source: Bloomberg, Indeed to 100
and is offering a dividend yield of 4.0%. Reiterate BUY with a TP of INR 378 (post bonus
adjustment).
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 47

Table 1: Results snapshot

Particulars (INR mn) 1QFY25 1QFY24 YoY (%) 3QFY24 QoQ (%)
Net sales 11,30,960 11,29,782 0.1 11,65,551 -3.0
COGS 10,06,095 9,08,860 10.7 9,95,425 1.1
% of sales 89.0 80.4 85.4
Employee cost 7,815 8,825 -11.4 8,490 -8.0
% of sales 0.7 0.8 0.7
Other Expenses 60,545 53,990 12.1 69,504 -12.9
% of sales 5.4 4.8 6.0
Total Exp 10,74,456 9,71,675 10.6 10,73,419 0.1
EBITDA 56,505 1,58,107 -64.3 92,132 -38.7
% of sales 5.0 14.0 7.9
Other Income 5,058 4,920 2.8 4,691 7.8
Finance Costs 4,435 6,793 -34.7 5,243 -15.4
Depreciation 16,808 16,093 4.4 17,165 -2.1
PBT 40,320 1,40,141 -71.2 74,415 -45.8
Exceptionals 0 0 -17,980
PBT after exceptional 40,320 1,40,141 -71.2 92,395 -56.4
Tax 10,173 34,622 -70.6 14,191 -28.3
Tax rate 25.2 24.7 15.4
Reported Net Profit 30,148 1,05,519 -71.4 42,244 -28.6
Adjusted Net Profit 30,148 1,05,519 -71.4 60,224 -49.9
Adjusted EPS (INR) 7.1 49.6 -85.8 28.2 -75.0
Source: Company, Antique

Conference Call Takeaways

n The company expects annualized growth in petrol to be ~5% and diesel to be
around 1.5%-2%.
n The current quarter saw a significant fall in international product cracks on
QoQ basis. Despite this, refineries recorded a GRM of USD 7.86/bbl which is higher
than Singapore GRM.
n Two new petrochemical projects were announced in the previous year. The licenses
and PMCs for all petrochemical units have been onboarded. Further, site
grading and ground breaking activities have commenced at the Bela Petrochemical
project.
n Domestic market sales share grew by 3.2% YoY.
n The company commissioned about 170 plus new retail outlets and 41 CNG retail
outlets.
n 200 klpd bioethanol plant at Bargarh, Orissa is nearing completion and
should commission soon.
n In buffer account of domestic LPG, the company has reported a negative amount. LPG is
a controlled product and pricing is decided by Government of India. The company will
continue to recognize the loss in LPG sales as hit in P&L and will recognize the credit
compensation from the government only when it clarifies its support on the compensation.
n The impact of LPG during this quarter was around INR 23 bn. The company
has a buffer of INR 2.8 bn. So now there is a negative buffer of INR 20.2 bn. If the
Saudi CP goes on the higher side, the company will then start incurring losses.
n Capex guidance for FY25 is around INR 164 bn, of which INR 26 bn has been
spent.
n Announced plans will take a refining capacity to 45 MMT, however, the company is
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 48

exploring additional capacity beyond 45 MMT.

n Total debt is ~INR 427 bn on the group level and surplus cash is ~INR 150 bn.
n Mozambique cost escalation due to delay is ~USD 3-4 bn. Therefore, the
total capex is expected to be ~USD 19 bn. IRR will get impacted.
n Turnaround plans in Bina and Kuti refineries. For Bina, the turnaround will be
between August to September. No plans for when the Mumbai refinery will turnaround.
n Current cracks - For gasoline, USD 8.58 is the average and for gasoil it is USD 15.
n The company has a land parcel in Allahabad. It can handle 10 mmta capacity of
refinery if required.
n Refining margins still at good levels as they are better than the 10-year
average. Cracks are on the lower side. Cracks will improve in coming quarters.
n By FY28-29, after all projects are completed, profits should see a
substantial growth.
n Cumulative investments till date in BPRL is around INR 370 bn.
n For Bina expansion, the expected capex is INR 490 bn. It is an integrated
project. Capex in the current year will only be INR 20 bn, but major milestones have
been achieved.
n Freight rates are comparatively better.

Exhibit 1: Refining moderates Exhibit 2: GRMs decline

250 (INR bn) 30.0 (USD/bbl)
200
25.0
150
20.0
100
50 15.0
0
10.0
-50
5.0
-100
-150 0.0
Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24
Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

-5.0

Refining Marketing Singapore GRM BPCL Reported GRM

Source: Company, Antique Source: Company, Antique

Exhibit 3: Refinery throughput slightly moderates Exhibit 4: Product volume growth stable
11.0 (MMT)
(MMT) 12.0 20%

10.0 15%
10.0
10%
9.0 8.0
5%
6.0 0%
8.0
-5%
4.0
7.0 -10%
2.0
-15%
6.0 0.0 -20%
Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Jun-22
Dec-22
Jun-23
Dec-23
Jun-24

5.0
Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

HSD LPG MS ATF YoY

Source: Company, Antique Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 49

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e
Net Revenue 53,34,675 50,69,114 43,00,523 44,53,712 45,80,006 PBT 22,167 3,55,484 1,82,132 1,84,965 1,87,997
Op. Expenses 52,45,784 46,27,543 40,52,051 42,06,654 43,27,602 Depreciation & amortisation 63,474 67,501 67,772 71,950 72,594
EBITDA 88,892 4,41,571 2,48,473 2,47,059 2,52,404 Interest expense 32,164 24,730 23,557 18,621 24,750
Gross Profit 3,96,976 7,16,912 5,36,672 5,50,662 5,68,365 (Inc)/Dec in working capital (610) (13,000) - - -
Depreciation 63,450 67,501 67,772 71,950 72,594 Tax paid (8,013) (88,195) (37,679) (38,617) (38,920)
EBIT 25,442 3,74,069 1,80,701 1,75,108 1,79,809 Less: Interest/Dividend Income Received (15,035) (15,871) (24,987) (28,477) (32,938)
Other income 21,839 24,125 24,987 28,477 32,938 Other operating Cash Flow 12,493 26,974 - - -
Interest Exp. 32,165 24,730 23,557 18,621 24,750 CF from operating activities 1,06,640 3,57,622 2,10,794 2,08,442 2,13,483
Extra Ordinary Items -gain/(loss) (13,559) (17,980) - - - Capital expenditure (73,768) (87,970) (1,70,000) (2,00,000) (3,00,000)
Reported PBT 1,557 3,55,484 1,82,132 1,84,965 1,87,997 Inc/(Dec) in investments 5,824 (33,691) - - -
Tax 3,465 88,749 43,629 44,714 45,065 Equity/debt investments (8,050) (9,784) - - -
Reported PAT (1,908) 2,66,735 1,38,503 1,40,251 1,42,931 Add: Interest/Dividend Income Received 12,022 14,832 24,987 28,477 32,938
Adjusted PAT 11,651 2,84,715 1,38,503 1,40,251 1,42,931 CF from investing activities (63,973) (1,16,612) (1,45,013) (1,71,523) (2,67,062)
Adjusted EPS (INR) 2.7 65.6 31.9 32.3 32.9 Inc/(Dec) in share capital - 3,786 - - -
Inc/(Dec) in debt (1,528) (1,79,067) (16,816) 74,776 1,02,164
Balance sheet (INR mn) Dividend Paid (12,815) (53,288) (55,364) (55,364) (57,494)
Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e Finance cost (22,314) (26,092) (23,557) (18,621) (24,750)
Share Capital 21,294 21,294 43,385 43,385 43,385 CF from financing activities (36,657) (2,54,660) (95,737) 791 19,920
Reserves & Surplus 4,98,668 7,25,385 7,86,432.54 8,71,319.13 9,56,756.71 Net cash flow 6,010 (13,650) (29,956) 37,710 (33,659)
Networth 5,19,962 7,46,679 8,29,818 9,14,704 10,00,142 Opening balance 12,803 18,813 5,163 (24,793) 12,917
Debt 4,47,751 2,78,806 2,61,990 3,36,766 4,38,930 Closing balance 18,813 5,163 (24,793) 12,917 (20,742)
Net deferred Tax liabilities 70,683 66,706 72,656 78,753 84,899 Bank balance 2,391 39,743 39,743 39,743 39,743
Capital Employed 10,38,396 10,92,192 11,64,464 13,30,224 15,23,971 Cash and bank balance 21,204 44,906 14,950 52,660 19,001
Gross Fixed Assets 11,90,334 12,59,248 13,79,248 14,59,248 16,39,248
Accumulated Depreciation 3,24,374 3,91,875 4,59,647 5,31,597 6,04,191 Growth indicators (%)
Capital work in progress 56,733 87,804 1,37,804 2,57,804 3,77,804 Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e
Net Fixed Assets 9,22,693 9,55,177 10,57,405 11,85,455 14,12,861 Revenue(%) 23.37 -4.98 -15.16 3.56 2.84
Investments 1,38,722 1,44,580 1,44,580 1,44,580 1,44,580 EBITDA(%) -47.77 396.75 -43.73 -0.57 2.16
Non Current Investments 95,951 1,01,673 1,01,673 1,01,673 1,01,673 Adj PAT(%) -84.90 2343.76 -51.35 1.26 1.91
Current Investments 42,771 42,907 42,907 42,907 42,907
Current Assets, Loans & Advances Valuation (x)
Inventory 3,80,647 4,28,351 4,28,351 4,28,351 4,28,351 Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e
Debtors 67,219 83,282 83,282 83,282 83,282 P/E (x) 111.7 4.6 9.4 9.3 9.1
Cash & Bank balance 21,204 44,906 14,950 52,660 19,001 P/BV (x) 2.5 1.7 1.6 1.4 1.3
Loans & advances and others 77,380 73,564 73,564 73,564 73,564 EV/EBITDA (x) 18.96 3.38 6.06 6.24 6.65
Current Liabilities & Provisions EV/Sales (x) 0.32 0.29 0.35 0.35 0.37
Liabilities 5,41,027 6,06,081 6,06,081 6,06,081 6,06,081 Dividend Yield (%) 1.3 14.0 8.7 8.7 9.0
Provisions 28,442 31,587 31,587 31,587 31,587
Net Current Assets (23,020) (7,565) (37,521) 189 (33,470)
Financial ratios
Application of Funds 10,38,396 10,92,192 11,64,464 13,30,224 15,23,971
Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e
RoE (%) 2.2 45.0 17.6 16.1 14.9
Per share data RoCE (%) 4.6 37.4 18.2 16.3 14.9
Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e Asset/T.O (x) 6.0 5.5 4.4 4.0 3.6
No. of shares (m) 4,339 4,339 4,339 4,339 4,339 Net Debt/Equity (x) 0.7 0.3 0.2 0.3 0.4
Diluted no. of shares (m) 4,339 4,339 4,339 4,339 4,339 EBIT/Interest (x) 1.5 16.1 8.7 10.9 8.6
BVPS (INR) 119.85 172.11 191.27 210.83 230.53
CEPS (INR) 14.18 77.04 47.55 48.91 49.68
Margins (%)
Year ended Mrch 31 FY23 FY24 FY25e FY26e FY27e
Source: Company, Antique
EBITDA Margin(%) 1.7 8.7 5.8 5.5 5.5
EBIT Margin(%) 0.5 7.4 4.2 3.9 3.9
PAT Margin(%) 0.2 5.6 3.2 3.1 3.1
Source: Company Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 50

CMP : INR 704 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD çè
: INR 661 çè
JSW Energy
Target Price Change : No Change An operationally stable quarter
Target 1HFY27 P/E (x) : SoTP based
JSW Energy (JSW) reported a consolidated EBITDA of INR 14 bn, up 16% YoY.
EPS Change FY25/ 26/ 27 : No Change
The YoY increase is mainly attributable to the addition of Ind Bharat Unit 1
(INR 1 bn) and addition of renewable capacities as generation increased by
44% in the renewable portfolio (INR 0.8 bn). JSW has reiterated its plan to
Vishal Periwal
increase installed capacity of ~40% YoY (i.e. 2.7 GW) in FY25E to reach 10
+91 22 6911 3414
[email protected] GW. Further, it is aiming at 20 GW capacity by FY30E (i.e. a capacity CAGR of
18% over FY24–30E). For the incremental addition of 10 GW post FY25E, it
Pranav Furia
+91 22 6911 3467 has PPA of 2.6 GW in hand and the remaining ~7.4 GW is open. Growth
[email protected] beyond FY25E is dependent upon timely receipt of PPA. Though pipeline and
planned capacity CAGR over the next five years is robust, but CMP (valuation
of ~3.8x 1HFY27E BV) is factoring in the growth. Thus, we resume coverage
with HOLD rating with SoTP-based TP of INR 661. Key catalyst for stock
Market data
performance is the timely receipt of PPA.
Sensex : 80,605
Sector : Utilities Generation driven by renewables
Market Cap (INR bn) : 1,232.2
In 1QFY25, JSW generated 7.9 BU, up 18% YoY and in this renewable generation is up 44%
Market Cap (USD bn) : 14.728
O/S Shares (mn) : 1,747.8
YoY and thermal generation was at 4.6 BU, up 4.4% YoY. Within thermal, the increase is due
52-wk HI/LO (INR) : 752/285 to the newly commissioned Ind Bharat (366 MU vs. nil YoY) and it offset the decline in
Avg. Daily Vol ('000) : 2,241 Vijaynagar generation (745 MU vs. 1074 MU YoY). The PLF of 1QFY25 at Ratnagiri was
Bloomberg : JSW IN 88%, Barmer at 66%, Ind Bharat at 52%, and Vijaynagar at 43%. The operational performance
Source: Bloomberg
of hydro (1.34 GW) was 1.8 BU, up 63% YoY; solar (675 MW) was 356 MU, up 24% YoY;
Valuation and wind assets (3676 MW) generated 1047 MU, up 40% YoY.
FY25e FY26e FY27e
EPS (INR) 14.7 16.6 18.2 PAT driven by EBITDA increase and other income
P/E (x) 47.8 42.4 38.6 JSW reported revenue of INR 28,795 mn, down 1.7% YoY. The decline is due to lower realization
P/BV (x) 4.4 4.0 3.7
on account of lower fuel cost (which is pass through in nature). EBITDA was at INR 14,177 mn,
EV/EBITDA (x) 20.9 18.8 17.4
Dividend Yield (%) 0.2 0.2 0.3
up 16% YoY. EBITDA margin was 49.2% vs. 41.7% in 1QFY24, up due to the addition of
Source: Company, Antique
renewable capacity and also better spread on merchant. PAT stood at INR 5,342 mn, up 84%
YoY and 54% QoQ. PAT was supported by other income that was at INR 1,632 mn, up 91%
Returns (%)
1m 3m 6m 12m YoY, due to treasury gains and prior period payments received during the quarter.
Absolute 1 12 41 139 10 GW addition over FY25–30E
Relative (3) 2 25 99
Source: Bloomberg JSW is well on track to achieve its near-term target of 10 GW by FY25, the spot light now
shifts to the timeline of the commissioning of the next 10 GW beyond FY25E. As of now, the
Shareholding pattern
company has a pipeline of ~10.5 GW which includes group captive capacities of 4.9 GW.
Promoters : 70% Of the ~10.5 GW capacity, PPAs are in place for 2.6 GW. There are necessary board
Public : 30%
approvals in place to sign a PPA for group captive requirements. The standard time between
Others : 0%
signing a PPA and plant commissioning is 18–24 months. Overall, management is confident
Source: Bloomberg
of achieving 20 GW before the target date of FY30E.
Price performance vs Nifty
260 Investment Summary
225
190 Power demand in the 1QFY25 is up 11% and JSW is taking strides to capture this incremental
155 demand. In addition to adding renewable capacities, it is also focusing on battery storage,
120
85
pump storage hydro plants, and green hydrogen capacities. After the recent equity raise, the
Jul-23 Nov-23 Mar-24 Jul-24 balance sheet has strength to capture growth as net debt to equity is below 1x (vs. 1.3x as of
JSW Energy NIFTY FY24), net Debt to EBITDA (excl. CWIP) at 2.2x. We resume coverage with Hold rating and
Source: Bloomberg Indexed to 100
a TP of INR 661/share and await better price point to turn BUY.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 51

Table 1: Financial highlights

Quarter Ended Year Ended
In INR mn Jun-24 Jun-23 % Chg Mar-24 % Chg FY24 FY23 % Chg
Net Sales 28,795 29,279 (1.7) 27,559 4.5 1,14,859 1,03,322 11.2
EBIDTA 14,177 12,221 16.0 11,685 21.3 53,818 32,822 64.0
Other income 1,632 854 91.2 1,235 32.2 4,554 5,352 (14.9)
PBIDT 15,809 13,075 20.9 12,920 22.4 58,372 38,175 52.9
Depreciation (3,755) (3,979) (5.7) (4,267) (12.0) (16,334) (11,692) 39.7
Interest (5,111) (4,857) 5.2 (5,332) (4.2) (20,534) (8,443) 143.2
PBT 6,982 4,260 63.9 3,389 106.0 21,669 18,353 18.1
Tax (1,641) (1,356) 21.0 63 (2,683.6) (4,423) (4,627) (4.4)
Adjusted PAT 5,342 2,904 84.0 3,453 54.7 17,247 13,726 25.7
Reported PAT 5,342 2,904 84.0 3,453 54.7 17,247 14,802 16.5
No. of shares (mn) 1,744 1,744 1,744 1,744 1,744
EBIDTA margin (%) 49.2 41.7 42.4 46.9 31.8
PBIDT margin (%) 54.9 44.7 46.9 50.8 36.9
EPS - annualized (INR) 12.2 6.7 84.0 7.9 54.7 9.9 7.9 25.7
Source: Company, Antique

Table 2: Operational highlights

Net generation Quarter Ended Year Ended
In million units Jun 24 Jun 23 % Chg Mar 24 % Chg FY24 FY23 % Chg
Ratnagiri (1200 MW) 2,117 1,939 9.2 2,097 1.0 7,850 5,714 37.4
Barmer (1080 MW) 1,388 1,418 (2.1) 1,754 (20.9) 6,329 6,544 (3.3)
Vijaynagar (860 MW) 745 1,074 (30.6) 1,018 (26.8) 4,068 3,550 14.6
Ind Bharat (350 MW) 366 - NM 196 NM 196 - NM
Nandyal (18MW) 22 10 120.0 23 (4.3) 85 13 553.8
Total Thermal 4,638 4,441 4.4 5,088 (8.8) 18,528 15,821 17.1
Hydro (1345 MW) 1,840 1,144 NM 369 398.6 4,913 5,596 (12.2)
Solar ( 675 MW) 356 366 NM 357 (0.3) 1,311 412 218.2
Wind (1847 MW) 1,047 748 40.0 584 79.3 3,110 29 10,624.1
Total Renewable 3,243 2,258 43.6 1,310 147.6 9,334 6,037 54.6
Total 7,881 6,699 17.6 6,398 23.2 27,862 21,858 27.5
Source: Company, Antique

Conference Call Highlights

n The RPO obligations are set to increase from 22% currently to 30% in FY25 and 43% in
FY30, thus increasing interest in FDRE solutions and hybrid power.
n Hydro generations are at 1.8 BU, up 61% YoY due to better hydrology in Sutlej river.
n The company has totally locked in capacity of 15 GW. Besides having secured PPA for
the 10 GW assets, including operational and under construction projects, the company
secured PPA for 2 GW capacity. The company also has necessary board approvals in
place for signing PPA for 1 GW group captive requirements.
n Ind Bharat is expected to continue to supply power to short-term markets in the near
future. It enters into RTC power supply contracts to avoid intra price volatility of spot
market.
n The company has commenced construction of 1.0 GWh SECI project with expected
commissioning by June 2025.
n For green hydrogen project, work has started for 3,800 TPA project for JSW Steel and is
expected to be commissioned by 4QFY25.
n The company has secured the necessary transmission and evacuation facilities for all
under construction assets.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 52

Table 3: Sum-of-the-parts
Type of Assets Details 1HFY27E EBITDA EV/EBITDA (x) EV
Thermal Standalone 15,676 10.0 1,56,755
Thermal Barmer 9,712 10.0 97,121
Thermal Ind Bharat 4,330 10.0 41,136
Total Thermal 2,95,013
Hydro BASPAII 2,225 14.0 31,153
Hydro Karcham Wangtoo 11,477 14.0 1,60,682
Hydro Kutehr 3,914 14.0 54,801
Total Hydro 2,46,636
Renewable SECI + Group Cap 27,934 14.0 3,91,074
Mytrah Mytrah 14,743 14.0 2,06,399
Total Renewable 9,35,738
Transmission JPTL 837 10 8,374
Total 90,849
Development pipeline Discounted at 15% 48,324 7.0 3,38,265

Enterprise Value 14,85,760

Investments in JSW Steel 44,418
Net Debt 3,77,404
Equity Value 11,52,774
Outstanding shares 1,744
Target Price 661
Source: Company, Antique

Exhibit 1: JSW Energy PBV band at its peak

5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jul/14

May/20

Jul/21

Feb/22
Jan/15

Sep/15

Nov/16

Jun/17

Jan/18

Aug/18

Dec/20

Sep/22

Nov/23

Jun/24
Apr/16

Mar/19

Oct/19

Apr/23

P/B (2 yr fwd) STD +1 STD -1 Avg P/B

Source: Bloomberg
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 53

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net Revenue 1,03,318 1,14,859 1,47,398 1,70,245 1,88,121 PBT 23,104 21,669 34,404 39,142 43,045
Op. Expenses (70,499) (61,041) (73,104) (84,033) (92,636) Depreciation & amortization 10,663 16,334 20,588 24,841 29,095
EBITDA 32,819 53,818 74,294 86,212 95,485 Interest expense 8,443 20,534 23,830 26,568 27,553
Depreciation (11,692) (16,334) (20,588) (24,841) (29,095) (Inc)/Dec in working capital (16,945) 25,875 1,836 3,910 3,981
EBIT 21,127 37,484 53,706 61,370 66,390 Tax paid (4,627) 2,384 (8,670) (10,177) (11,192)
Other income 5,352 4,554 4,527 4,340 4,209 Less: Interest/Div. Income Recd. (5,352) (4,554) (4,527) (4,340) (4,209)
Interest Exp. (8,443) (20,534) (23,830) (26,568) (27,553) Other operating Cash Flow 5,556 (19,906) (37) (45) 45
Extra Ordinary Items -gain/(loss) 1,393 165 - - - CF from operating activities 20,843 62,336 67,423 79,899 88,319
Reported PBT 19,429 21,669 34,404 39,142 43,045 Capital expenditure (1,39,537) (1,04,161) (1,50,000) (1,20,000) (1,00,000)
Tax (4,627) (4,423) (8,670) (10,177) (11,192) chng in investments 68,865 22,449 (1,133) 8 (88)
Reported PAT 14,802 17,247 25,734 28,965 31,854 Add: Interest/Div. Income Recd. 5,352 4,554 4,527 4,340 4,209
Minority Int./Profit (loss) From Asso. (19) (24) (30) (35) (39) CF from investing activities (65,320) (77,157) (1,46,605) (1,15,652) (95,879)
Net Profit 14,782 17,223 25,704 28,930 31,815 Inc/(Dec) in share capital - - 49,950 - -
Adjusted PAT 13,390 17,058 25,704 28,930 31,815 Inc/(Dec) in debt 1,79,409 65,094 50,000 60,000 60,000
Adjusted EPS (INR) 8.1 10.4 14.7 16.6 18.2 Dividend Paid (3,288) (3,468) (2,570) (2,893) (3,181)
Others (1,02,846) (44,877) (23,831) (26,566) (27,550)
Balance sheet (INR mn) CF from financing activities 73,275 16,748 73,549 30,540 29,269
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Net cash flow 28,798 1,927 (5,633) (5,212) 21,709
Share Capital 16,405 16,412 17,443 17,443 17,443 Opening balance 11,341 40,139 42,066 36,433 31,222
Reserves & Surplus 1,69,883 1,91,905 2,63,958 2,89,995 3,18,629 Closing balance 40,139 42,066 36,433 31,222 52,931
Networth 1,86,288 2,08,317 2,81,401 3,07,438 3,36,072
Debt 2,48,172 3,13,266 3,63,266 4,23,266 4,83,266 Growth indicators (%)
Minority Interest 1,054 1,825 1,825 1,825 1,825 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net def. Tax liabilities and other liabilities 63,734 15,959 14,819 14,819 14,819 Revenue 26.5 11.2 28.3 15.5 10.5
Capital Employed 4,99,248 5,39,368 6,61,311 7,47,349 8,35,982 EBITDA -8.0 64.0 38.0 16.0 10.8
Gross Fixed Assets 3,34,785 3,84,005 4,84,005 5,84,005 6,84,005 Adj PAT -23.5 27.4 50.7 12.6 10.0
Accumulated Depreciation (84,580) (1,00,915) (1,21,502) (1,46,344) (1,75,438) Adj EPS -24.3 27.7 41.8 12.6 10.0
Capital work-in-progress 47,882 1,02,823 1,52,823 1,72,823 1,72,823
Net Fixed Assets 2,98,087 3,85,914 5,15,326 6,10,485 6,81,390 Valuation (x)
Investments 1,26,701 1,02,942 1,02,942 1,02,942 1,02,942 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Non-current Investments 1,26,701 1,02,942 1,02,942 1,02,942 1,02,942 P/E (x) 86.5 67.7 47.8 42.4 38.6
Current Assets, Loans & Adv. 1,07,743 86,648 87,869 85,695 1,11,437 P/BV (x) 6.2 5.5 4.4 4.0 3.7
Inventory 9,871 8,307 10,096 9,795 10,823 EV/EBITDA (x) 43.8 27.9 20.9 18.8 17.4
Debtors 15,319 8,442 12,115 13,993 15,462 EV/Sales (x) 13.9 13.1 10.5 9.5 8.8
Cash & Bank balance 40,139 42,066 36,433 31,222 52,931 Dividend Yield (%) 0.3 0.3 0.2 0.2 0.3
Loans & advances and others 42,415 27,833 29,225 30,686 32,220
Current Liabilities & Provisions 33,283 36,136 44,825 51,773 59,786
Financial ratios
Liabilities 32,457 35,880 44,421 51,307 59,271
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
RoE (%) 9.5 8.6 10.5 9.8 9.9
Provisions 826 256 404 466 515
RoCE (%) 6.1 7.3 9.0 8.8 8.5
Net Current Assets 74,460 50,512 43,043 33,922 51,650
Asset/T.O (x) 0.2 0.2 0.2 0.6 0.6
Application of Funds 4,99,248 5,39,368 6,61,311 7,47,349 8,35,982
Net Debt/Equity (x) 1.1 1.3 1.2 1.4 1.4
Per share data EBIT/Interest (x) 3.1 2.0 2.4 2.5 2.6
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
No. of shares (mn) 1,645 1,641 1,744 1,744 1,744
Margins (%)
Diluted no. of shares (mn) 1,645 1,641 1,744 1,744 1,744
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 31.8 46.9 50.4 50.6 50.8
BVPS (INR) 113.3 126.9 161.3 176.3 192.7
EBIT Margin (%) 20.4 32.6 36.4 36.0 35.3
CEPS (INR) 17.7 24.6 26.6 30.8 34.9
PAT Margin (%) 12.3 14.3 16.9 16.6 16.5
DPS (INR) 2.0 2.1 1.5 1.7 1.8
Source: Company Antique
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 54

CMP : INR 136 1QFY25 RESULT REVIEW

Reco
Target Price
: BUY çè
: INR 170 çè
Union Bank of India
Target Price Change : No Change PAT impacted by higher provisions on standard assets
Target 1HFY27 P/BV (x) : 1.1
Union Bank of India (UNBK) reported a PAT of INR 36.8 bn (14% YoY), which
EPS Change FY25/ 26/ 27 : -6%/ -4%/ -3% was 4% lower than our estimate of INR 38.2 bn, impacted by higher
provisions on standard assets of INR 13 bn due to stress anticipated in two
corporate accounts. NII grew 6% YoY/ flat QoQ and was in line with our
Sohail Halai
estimate and NIM remained stable QoQ. Reported fee income grew 34%
+91 22 6911 3413
[email protected] YoY/ 42% QoQ led by PSLC income of INR 9.6 bn (vs. INR 5.5 bn YoY & nil
QoQ). Opex declined by 19% QoQ due to wage revision provision of INR
Raju Barnawal
+91 22 6911 3429
13.3 bn in the base quarter. Core PPP growth was at 14% YoY/ 6% QoQ,
[email protected] 17% higher than our estimate. Slippages declined from 1.7% to 1.2% QoQ
due to decline in slippages across segments. Net loans grew 14% YoY/ 1%
Sarvesh Mutha
+91 22 6911 3498
QoQ and deposits grew by 9% YoY/ flat QoQ, thereby LD ratio increased
[email protected] from 71.3% to 71.8% QoQ. LCR improved to 138% and Tier 1 is comfortable
at ~14%. We marginally reduce our earnings estimates on account of higher
provisions and expect RoA of ~1% and RoE of 15%–16% over FY25–27.
Market data Maintain BUY with a TP of INR 170 (1.1x 1HFY27 BV).
Sensex : 80,605
NII in-line; PSLC income partially offsets higher provisions on standard assets
Sector : Banks
Market Cap (INR bn) : 1,035.5 NII grew 6% YoY/ flat QoQ and NIM remained stable QoQ at 3.05%. Yield on funds
Market Cap (USD bn) : 12.377
decreased by 9 bps QoQ which compensated for 5 bps QoQ decline in cost of deposits.
O/S Shares (mn) : 7,633.6
Yield on loans declined sequentially during the quarter as there was reduction in interest
52-wk HI/LO (INR) : 173/83
recovery from written-off accounts which stood at INR 6 bn as against INR 8 bn in the
Avg. Daily Vol ('000) : 14,667
previous quarter. Management has maintained its NIM guidance of 2.8%–3% in FY25.
Other income grew 16% YoY (-4% QoQ), within which fee income was up 34% YoY/ 42%
Bloomberg : UNBK IN
Source: Bloomberg
QoQ. Fee income was driven by INR 9.6 bn of PSLC income (vs. INR 5.5 in 1QFY24). Opex
grew at 10% YoY/ -19% QoQ on account of one-time wage provision of INR 13.3 bn
Valuation provided during 4QFY24. Core PPP grew 14% YoY/ 60% QoQ. Provisions increased 37%
FY25e FY26e FY27e YoY/ 119% QoQ due to INR 13 bn provisions taken on standard assets as the bank anticipates
EPS (INR) 20.3 21.9 23.6 stress in two corporate accounts. Credit cost inched up from 69 bps to 75 bps QoQ. PAT grew
BVPS (INR) 134.2 150.0 166.9 14% YoY and RoA for the quarter came in at 1.1%.
PE (x) 6.7 6.2 5.8
Deposit growth was soft leading to marginal increase in LD ratio sequentially
P/BV (x) 1.0 0.9 0.8
RoA (%) 1.0 1.0 1.0 Net loans grew 14% YoY/ 1% QoQ driven by 7% QoQ (34% YoY) growth in overseas book.
Source: Company, Antique The bank’s RAM portfolio grew by 2% QoQ/ 15% YoY, within which retail, agricultural, and
SME loans grew 3% QoQ (12% YoY), 3% QoQ (23% YoY), and 1% QoQ (7% YoY) respectively.
Returns (%) Within retail, the housing book grew 3% QoQ (10% YoY), vehicle loans grew 24% YoY, and
1m 3m 6m 12m
educational loans grew 45% YoY. The corporate book declined 1% QoQ (+8% YoY).
Absolute (8) (4) (0) 59
Management has maintained its guidance for a loan growth of 11%–13% in FY25. Deposits
Relative (12) (13) (11) 33 grew 9% YoY/ flat QoQ with CASA declining 3% QoQ leading to CASA ratio declining
Source: Bloomberg
QoQ to 33.4% vs. 34.2%. Average LCR increased from 132% to 138% QoQ and the domestic
Shareholding pattern LD ratio increased from 71.3% to 71.8% QoQ.

Promoters : 75% Asset quality stable, slippages declined sequentially

Public : 25% The bank reported an annualized gross slippage ratio of 1.2% (vs. 1.7% in 4QFY24) due to
Others : 0% decline in slippages across business segments with agriculture slippages declining from 3.4%
to 1.5% QoQ, SME slippages from 3.6% to 2.2% QoQ and retail from 1.8% to 1.6% QoQ.
Source: Bloomberg
Net slippages for the quarter stood at 0.2% (vs. 0.4% QoQ). GNPL/ NNPL ratio declined
Price performance vs Nifty marginally QoQ to 4.5%/ 0.9% vs. 4.8%/ 1.0%. PCR ratio increased from 79% to 81% QoQ
205 (93.5% including TWO). Restructured book declined 11% QoQ and stood at 1.4% of loans.
165 Investment Summary
125
UNBK has been delivering RoA in the range of 1%–1.1% from the last five consecutive
85 quarters led by a favorable credit cycle, healthy NII performance, and stable asset quality.
Jul-23 Nov-23 Mar-24 Jul-24 And as it progresses, earnings volatility could be possible which needs to be monitored.
Union Bank NIFTY Nevertheless, given that valuations are reasonable and capital ratio (CET 1 at ~14%) is
Source: Bloomberg Indexed to 100 healthy, we maintain BUY.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 55

Table 1: Quarterly Earnings

Profit and Loss (INR mn) 1QFY25 1QFY24 YoY % 4QFY24 QoQ % 1QFY25E Deviation (%)
Net Interest Income 94,121 88,397 6 94,366 0 95,006 -0.9
Other Income 45,092 39,033 16 47,074 -4 37,124 21.5
Reported Fee income 28,680 21,330 34 20,130 42 21,137 35.7
Core Income 1,22,801 1,09,727 12 1,14,496 7 1,16,142 5.7
Other non-core Income 16,412 17,703 -7 26,944 -39 15,987 2.7
Operating Expenses 61,360 55,637 10 76,111 -19 63,482 -3.3
Employee 35,680 31,833 12 48,291 -26 36,218 -1.5
Others 25,680 23,804 8 27,820 -8 27,264 -5.8
Core Operating Profits 61,441 54,090 14 38,385 60 52,660 16.7
Operating Profits 77,853 71,793 8 65,329 19 68,647 13.4
Provisions 27,558 20,050 37 12,596 119 15,557 77.1
PBT 50,295 51,743 -3 52,734 -5 53,090 -5.3
Taxes 13,507 19,379 -30 19,628 -31 14,865 -9.1
PAT 36,789 32,364 14 33,106 11 38,225 -3.8
Source: Company, Antique

Table 2: We reduce our earnings estimates for FY25-27E

Old Est New Est Change (%)
INR bn FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27
Net Interest Income 393.5 435.2 478.5 387.1 429.5 473.4 -1.6 -1.3 -1.1
Other Income 149.5 160.9 169.8 151.4 156.1 164.9 1.3 -3.0 -2.9
Total Income 543.0 596.0 648.3 538.5 585.6 638.3 -0.8 -1.8 -1.5
Operating Expenses 259.8 282.8 307.9 258.1 280.9 305.8 -0.7 -0.7 -0.7
Operating Profits 283.2 313.2 340.4 280.5 304.7 332.5 -1.0 -2.7 -2.3
Provisions 61.3 80.4 91.1 68.4 80.4 91.1 11.6 0.0 0.0
PBT 221.9 232.8 249.3 212.1 224.3 241.4 -4.4 -3.7 -3.2
Tax 56.6 59.4 63.6 57.3 57.2 61.5 1.2 -3.7 -3.2
PAT 165.3 173.5 185.7 154.8 167.1 179.8 -6.4 -3.7 -3.2
Source: Industry, Antique

Table 3: DuPont Analysis: RoA is expected to sustain at 1% over FY25-27E

Y/E MARCH (%) FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025E FY2026E FY2027E
Net Interest Income 4.3 2.3 2.4 2.4 2.5 2.7 2.7 2.6 2.6 2.5
Core Fee Income 1.6 0.8 0.6 0.5 0.6 0.7 0.8 0.6 0.6 0.6
Fee to core Income 26.8 24.9 20.2 18.4 18.6 20.2 22.2 19.7 19.5 19.5
Core Income 5.9 3.1 3.0 2.9 3.0 3.3 3.5 3.3 3.2 3.1
Operating Expenses 3.0 1.5 1.8 1.6 1.6 1.8 1.8 1.7 1.7 1.6
Cost/core Income ratio 50.0 48.2 58.4 55.4 54.0 53.4 52.0 53.5 52.6 52.0
Employee cost 1.4 0.7 1.0 0.9 0.9 1.0 1.1 1.0 1.0 0.9
Emp/Total Exp Ratio 47.1 49.6 56.9 53.8 54.9 56.5 58.8 57.1 56.7 56.2
Others 1.6 0.8 0.8 0.7 0.7 0.8 0.8 0.7 0.7 0.7
Core Operating Profits 3.0 1.6 1.2 1.3 1.4 1.5 1.7 1.5 1.5 1.5
Non-Interest income 2.2 0.9 1.2 1.1 1.1 1.2 1.2 1.0 0.9 0.9
Trading and others 0.6 0.1 0.6 0.6 0.5 0.5 0.4 0.38 0.31 0.27
Operating Profits 3.6 1.7 1.8 1.9 1.9 2.1 2.1 1.9 1.8 1.8
Provisions 7.0 3.2 2.2 1.6 1.2 1.1 0.5 0.5 0.5 0.5
NPA 7.2 3.1 2.1 1.3 1.0 1.0 0.5 0.4 0.4 0.4
Others -0.2 0.1 0.1 0.4 0.1 0.1 0.0 0.1 0.0 0.0
PBT -3.5 -1.5 -0.4 0.2 0.8 1.0 1.6 1.4 1.3 1.3
Tax -0.8 -0.2 0.3 0.0 0.3 0.3 0.6 0.4 0.3 0.3
Tax Rate 23.1 16.1 -72.5 -21.1 39.0 30.5 36.3 27.0 25.5 25.5
RoA -2.7 -1.3 -0.7 0.3 0.5 0.7 1.0 1.0 1.0 1.0
Leverage (x) 21.7 49.0 27.7 18.3 18.0 17.9 16.3 15.2 15.3 15.6
RoE -57.7 -61.8 -18.5 5.1 8.4 12.2 16.7 16.0 15.4 14.9
Source: Industry, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 56

Table 4: Quarterly Du-Pont: RoA sustained at 1%-1.1% for the last 5 consecutive quarters
Y/E MARCH 1Q2023 2Q2023 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 1Q2025
Interest Income 6.2 6.7 6.8 7.0 7.3 7.6 7.6 7.7 7.5
Interest Expended 3.6 3.9 4.0 4.4 4.6 4.8 4.9 4.9 4.9
Net Interest Income 2.6 2.8 2.8 2.6 2.8 2.8 2.8 2.8 2.7
Core Fee Income 0.6 0.5 0.6 0.5 0.7 0.6 0.6 0.7 0.8
Fee to core income 18.1 16.2 16.5 17.1 19.4 17.3 18.9 21.0 23.3
Core Income 3.2 3.4 3.4 3.2 3.4 3.4 3.4 3.5 3.5
Operating Expenses 1.7 1.7 1.7 2.1 1.7 1.7 1.7 2.2 1.8
Cost to Core Income 53.5 50.5 51.1 67.3 50.7 50.8 50.1 63.7 50.0
Employee cost 0.9 0.9 0.9 1.3 1.0 0.9 1.0 1.4 1.0
Emp cost to Opex (%) 53.6 54.9 53.9 61.9 57.2 55.1 57.9 63.4 58.1
Others 0.8 0.8 0.8 0.8 0.7 0.8 0.7 0.8 0.7
Core operating Profits 1.5 1.7 1.7 1.0 1.7 1.7 1.7 1.3 1.8
Non-Interest income 1.0 1.1 1.1 1.7 1.2 1.1 1.1 1.4 1.3
Trading and others 0.4 0.6 0.5 1.1 0.6 0.6 0.5 0.6 0.5
Operating Profits 1.9 2.2 2.2 2.2 2.2 2.2 2.2 1.9 2.2
Provisions 1.1 1.4 1.0 0.9 0.6 0.5 0.5 0.4 0.8
NPAs 1.2 1.0 0.8 1.1 0.6 0.5 0.4 0.4 0.5
Others -0.1 0.4 0.2 -0.2 0.0 0.0 0.2 -0.1 0.3
PBT 0.7 0.8 1.2 1.2 1.6 1.7 1.7 1.5 1.4
Tax 0.2 0.2 0.4 0.4 0.6 0.6 0.6 0.6 0.4
Tax Rate 28.1 26.1 37.4 28.4 37.5 35.6 35.1 37.2 26.9
RoA 0.5 0.6 0.7 0.9 1.0 1.1 1.1 1.0 1.1
Leverage (x) 17.6 17.3 17.3 17.5 17.4 16.4 15.6 15.4 14.9
RoE 9.4 10.8 12.7 15.5 17.6 17.7 16.8 14.9 15.7
Source: Company, Antique

Conference Call Highlights

n Management continues to guide for a loan growth of 11%-13% and deposits growth is
expected to be at 9%-11%.
n The bank holds excess SLR to the tune of INR 650 bn.
n Pursuant to RBI’s new norms on investment classification, the bank has a positive impact.
It has added INR 17 bn to the general reserve due to the classification.
n NIM is expected to be in the range of 2.8%-3% in FY25.
n The bank has reported sequential decline in cost of funds. It is mindful of the liquidity
condition and it does not expect much increase in cost of funds in coming quarters.
n Yield on loans declined sequentially during the quarter as there was reduction in interest
recovery from written-off accounts which stood at INR 6 bn as against INR 8 bn in the
previous quarter. Also, the bank has not significantly increased MCLR rate.
n It is looking to bring down GNPA ratio to 4% by the end of FY25 (4.5% in 1QFY25).
n The bank is looking at cost to income ratio to be in the range of +45%.
n RoA is expected to remain at ~1%+.
n The bank has reported strong PSLC income during the quarter at INR 9.6 bn which is not
expected to be there in the coming quarter.
n The bank is looking to open 200-250 branches in FY25. These branches will be premium
branches serving high-end customers.
n The bank is not expecting any major rise in delinquencies due to Telangana Farm loan
waiver.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 57

Table 5: Quarterly performance snapshot

INR mn 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 QoQ (%) YoY (%)
Profit and Loss
Interest Income 1,81,742 1,96,817 2,08,829 2,20,045 2,34,779 2,45,870 2,53,630 2,63,501 2,63,644 0 12
Loans 1,22,592 1,38,108 1,50,313 1,56,588 1,66,389 1,75,041 1,83,766 1,94,514 1,93,616 -0 16
Investment 52,456 53,076 53,481 54,536 55,847 56,163 56,582 56,083 56,982 2 2
Others 6,695 5,632 5,034 8,921 12,543 14,666 13,281 12,905 13,046 1 4
Interest Expenses 1,05,925 1,13,767 1,22,548 1,37,540 1,46,382 1,54,609 1,61,950 1,69,135 1,69,523 0 16
Net Interest Income 75,817 83,050 86,281 82,506 88,397 91,261 91,680 94,366 94,121 0 6
Other Income 28,169 32,763 32,708 52,692 39,033 36,952 37,743 47,074 45,092 -4 16
Trading profits 2,700 1,700 1,680 6,080 7,750 6,810 6,110 7,830 7,000 -11 -10
Recoveries 5,030 10,030 10,900 29,540 6,920 8,560 10,260 14,140 9,540 -33 38
Fee income 16,790 16,020 17,100 16,990 21,330 19,030 21,320 20,130 28,680 42 34
Others 3,649 5,013 3,028 82 3,033 2,552 53 4,974 -128 -103 -104
Total Income 1,03,986 1,15,813 1,18,989 1,35,198 1,27,430 1,28,212 1,29,423 1,41,441 1,39,213 -2 9
Operating Expenses 49,510 50,042 52,798 66,964 55,637 56,004 56,648 76,111 61,360 -19 10
Employee 26,530 27,462 28,483 41,422 31,833 30,853 32,795 48,291 35,680 -26 12
Others 22,980 22,580 24,315 25,542 23,804 25,151 23,853 27,820 25,680 -8 8
Operating Profits 54,476 65,771 66,192 68,234 71,793 72,208 72,776 65,329 77,853 19 8
Provisions 32,811 40,768 30,359 29,356 20,050 17,679 17,478 12,596 27,558 119 37
PBT 21,664 25,003 35,832 38,878 51,743 54,530 55,298 52,734 50,295 -5 -3
Taxes 6,080 6,526 13,384 11,055 19,379 19,416 19,399 19,628 13,507 -31 -30
PAT 15,585 18,477 22,448 27,823 32,364 35,114 35,899 33,106 36,789 11 14
Ratios (%)
Fees of Total Income 16.1 13.8 14.4 12.6 16.7 14.8 16.5 14.2 20.6 637 386
Cost to Core Income 53.5 50.5 51.1 67.3 50.7 50.8 50.1 66.5 50.0 -1,651 -74
Tax Rate 28.1 26.1 37.4 28.4 37.5 35.6 35.1 37.2 26.9 -1,037 -1,060
CASA (Cal) 36.2 35.6 35.3 35.6 34.6 34.7 34.4 34.2 33.4 -80 -120
Loan/Deposit 68.1 69.7 71.0 68.2 68.3 70.6 73.5 71.3 71.8 49 347
Margins - Quarterly
Margins 3.0 3.2 3.2 3.0 3.1 3.2 3.1 3.1 3.1 -4 -8

Balance sheet (INR bn) 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 QoQ (%) YoY (%)
Networth 723 741 763 783 814 899 935 970 1,024 6 26
Deposits 9,928 10,433 10,650 11,177 11,281 11,376 11,725 12,215 12,242 0 9
CA 597 654 672 740 671 651 708 738 669 -9 0
SA 2,996 3,063 3,088 3,201 3,180 3,231 3,263 3,363 3,325 -1 5
CASA 3,593 3,717 3,760 3,941 3,851 3,882 3,971 4,101 3,995 -3 4
Investments 3,507 3,420 3,352 3,393 3,431 3,423 3,354 3,379 3,426 1 0
Advances 6,764 7,275 7,564 7,618 7,705 8,036 8,621 8,708 8,787 1 14
Assets 11,570 12,047 12,367 12,808 12,861 13,144 13,498 13,920 14,025 1 9

Gross advances 7,286 7,737 8,040 8,099 8,185 8,472 8,960 9,049 9,122 1 11
Agricultural 1,355 1,439 1,507 1,520 1,536 1,655 1,776 1,838 1,889 3 23
MSME 1,147 1,201 1,237 1,250 1,277 1,338 1,367 1,357 1,370 1 7
Retail 1,394 1,467 1,540 1,597 1,624 1,683 1,734 1,775 1,823 3 12
Corporate 3,390 3,630 3,756 3,732 3,747 3,796 4,082 4,078 4,040 -1 8

Loan Mix (%)

Agricultural 18.6 18.6 18.7 18.8 18.8 19.5 19.8 20.3 20.7 40 194
MSME 15.7 15.5 15.4 15.4 15.6 15.8 15.3 15.0 15.0 1 -59
Retail 19.1 19.0 19.2 19.7 19.8 19.9 19.4 19.6 20.0 37 15
Corporate 46.5 46.9 46.7 46.1 45.8 44.8 45.6 45.1 44.3 -78 -150
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 58

Financials
Profit and loss account (INR mn) Capital Adequacy Ratio
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Interest Income 8,07,433 9,97,780 11,09,517 12,46,694 13,99,890 RWA (INR mn) 57,84,342 66,41,880 74,96,031 84,61,826 1,04,26,710
Interest Expense 4,79,780 6,32,076 7,22,409 8,17,176 9,26,476 Tier I (%) 13.9 14.9 14.7 14.4 13.0
Net Interest Income 3,27,653 3,65,704 3,87,107 4,29,518 4,73,414 Tier II (%) 2.1 2.0 1.7 1.5 1.3
% NII Growth 17.9 11.6 5.9 11.0 10.2 Total CAR (%) 16.0 16.9 16.5 16.0 14.2
Fee Income 82,861 1,04,553 95,119 1,04,357 1,14,561
Non-interest income 1,46,332 1,60,802 1,51,412 1,56,075 1,64,866 Business Ratios
Net Revenue 4,73,985 5,26,506 5,38,519 5,85,593 6,38,280 Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Employees Expenses 1,23,897 1,43,772 1,47,366 1,59,155 1,71,888 Credit / Deposit(%) 92.8 111.4 125.1 139.0 153.0
Other Op. Expenses 95,416 1,00,628 1,10,691 1,21,760 1,33,936 Investment / Deposit (%) 12.3 17.9 20.3 21.9 23.6
Operating Profit 2,54,672 2,82,106 2,80,463 3,04,678 3,32,457 CASA (%) 35.3 33.6 31.3 30.2 29.0
% OP Growth 16.4 10.8 -0.6 8.6 9.1 RoaA (%) 0.7 1.0 1.0 1.0 1.0
Tax 37,045 77,821 57,263 57,188 61,546 Core RoE (%) 12.2 16.7 16.0 15.4 14.9
Total Provisions 1,33,294 67,802 68,377 80,411 91,099
Net Profit 84,333 1,36,483 1,54,823 1,67,079 1,79,812
Key assumptions
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Balance sheet (INR mn) Deposits
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e Deposit growth (%) 8.3 9.3 12.0 13.0 14.0
Capital 68,347 76,336 76,336 76,336 76,336 Cost of deposits (%) 4.1 5.0 5.2 5.2 5.3
Reserves and Surplus 7,14,995 8,93,354 10,04,702 11,24,865 12,54,186 Advances
Deposits 1,11,77,163 1,22,15,284 1,36,81,118 1,54,59,663 1,76,24,016 Advances growth (%) 15.3 14.3 14.0 14.0 14.0
Borrowings 4,31,375 2,69,484 2,96,432 3,26,075 3,58,683 Yield on advances (%) 8.0 8.8 8.8 8.8 8.7
Other Liabilities & Provisions 4,15,644 4,65,119 5,58,143 6,41,864 7,38,144 Investments
Total liabilities 1,28,07,525 1,39,19,576 1,56,16,731 1,76,28,804 2,00,51,364 Investments growth (%) (2.6) (0.4) 8.0 12.0 14.0
Yield on investments (%) 6.2 6.6 6.7 6.6 6.6
Cash & Balances with RBI 5,02,543 5,28,975 5,90,793 6,14,287 6,92,079
Bal. with banks/ call money 6,18,962 6,64,054 7,52,461 8,50,281 9,69,321
Earnings Ratios
Investment 33,92,990 33,79,035 36,49,358 40,87,281 46,59,500 Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Loans and advances 76,18,455 87,07,761 99,26,847 1,13,16,606 1,29,00,931 Interest Inc. / Avg.assets (%) 6.5 7.5 7.5 7.5 7.4

Fixed Assets 88,256 92,228 94,995 97,844 1,00,780 Interest Exp./ Avg. assets (%) 3.9 4.7 4.9 4.9 4.9

Other Assets 5,86,319 5,47,524 6,02,276 6,62,503 7,28,754 NIM (%) 2.9 3.0 2.9 2.8 2.7

Total assets 1,28,07,525 1,39,19,576 1,56,16,731 1,76,28,804 2,00,51,364 Int. exp/ Int earned (%) 59.4 63.3 65.1 65.5 66.2
Oth. Inc./ Tot. Inc. (%) 30.9 30.5 28.1 26.7 25.8
Asset Quality Staff exp/Total opt. exp (%) 56.5 58.8 57.1 56.7 56.2
Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e Cost/ Income Ratio (%) 46.3 46.4 47.9 48.0 47.9
Gross NPA (INR mn) 6,09,873 4,30,983 4,21,526 4,35,904 4,72,422 Prov./ Operating Profit (%) 52.3 24.0 24.4 26.4 27.4
Gross NPA (%) 7.5 4.8 4.1 3.7 3.6 Loan loss prov./Avg. loans (%) 1.9 0.8 0.7 0.8 0.8
Net NPA (INR mn) 1,29,274 89,899 99,880 1,19,906 1,51,663
Net NPA (%) 1.7 1.0 1.0 1.1 1.2
Per Share Data
% coverage of NPA 78.8 79.1 76.3 72.5 67.9 Year-ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Delinquencies (%) 1.9 1.6 1.8 1.8 1.8 Book value per share (INR) 106 120 134 150 167
Adj. BVPS (INR) 93 111 125 139 153
Source: Company, Antique
Price/ Book value 1.3 1.1 1.0 0.9 0.8
EPS(INR) 12 18 20 22 24
P/E Ratio 11.0 7.6 6.7 6.2 5.8
Source: Company Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 59

CMP : INR 580 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD çè
: INR 550 çè
Indian Hotels Company
Target Price Change : No Change Muted quarter but annual revenue guidance intact
Target 1HFY27 EV/EBITDA (x) : 22
EBITDA Change FY25/ 26/ 27 : -1%/ -2%/ -2% Indian Hotels Company (IHCL) reported 1QFY25 consolidated revenue of INR
15.5 bn, up 6% YoY but marginally lower than our forecast. Post-COVID
recovery, for the first time, we have revenue and EBITDA growth in single
digits, impacted by elections, an extreme heatwave, and fewer wedding dates.
Vikas Ahuja
+91 22 6911 3439 RevPar growth came in at a low single digit, the lowest in the past three
[email protected] years. However, the company remains confident about growth bouncing
Ashish Bansal back in coming quarters and maintains its double-digit growth forecast for
[email protected]
the year. In fact, the company has already started witnessing a very strong
pick-up in just the first three weeks of July registering 20% plus revenue
growth. Moreover, there are 12 additional auspicious dates from July'24 to
March'25 compared to the same period last year, which could lead to a strong
Market data
resurgence in Indian weddings and a continued demand-supply imbalance
Sensex : 80,605
Sector : Hospitality
in the coming years. We have marginally reduced our revenue and EBITDA
Market Cap (INR bn) : 822.6 estimates but keep the target price unchanged at INR 550. We retain HOLD
Market Cap (USD bn) : 9.833 rating given the current valuation and continue to value IHCL at 22x EV/EBITDA
O/S Shares (mn) : 1,423.4
on 1HFY27E EBITDA.
52-wk HI/LO (INR) : 663/371
Avg. Daily Vol ('000) : 2,899 1QFY25 result highlights:
Bloomberg : IH IN
Source: Bloomberg
IHCL reported a consolidated revenue of INR 15.5 bn, up 6% YoY, marginally below our
Valuation expectation of 8%. Revenue during the quarter was impacted by temporary headwinds like
FY25e FY26e FY27e the election, extreme heat wave, and fewer wedding dates. However, the management is
EPS (INR) 10.8 12.5 14.3 optimistic of structural tailwinds being intact. Room and F&B revenue increased by 7% and
P/E (x) 53.6 46.5 40.6 2% YoY, respectively, while the management fees segment saw a 16% growth. IHCL foresees
P/BV (x) 7.7 6.8 5.9
a rise in contribution from its capital-light portfolio, including management fees, leading to
EV/EBITDA (x) 33.2 29.4 25.0
Dividend Yield (%) 0.3 0.3 0.3 overall business margin expansion. EBITDA margin stood at 29% vs. 28% in 1QFY24.
Source: Company, Antique Standalone revenue grew by 5% YoY to INR 9.3 bn with an EBITDA margin of 35.1%.
Returns (%) Standalone occupancy improved to 76% from 75% in 1QFY24; ARR/ RevPAR rose by 2%/
1m 3m 6m 12m 4% YoY to INR 12.9k/ INR 9.8k. International hotels ARR stood at USD 450, down 4% YoY
Absolute (6) (3) 20 44 and occupancy stood at 74%, up 2% YoY. RevPAR improved by 3%/ 18% YoY in the USA
Relative (10) (12) 7 20
and Cape Town but decreased by 7% YoY in the UK. IHCL signed on 16 hotels and opened
Source: Bloomberg
six new ones this quarter. The company achieved the milestone of having 325+ hotels under
Shareholding pattern
its portfolio.
Promoters : 38%
Public : 62% Investment Summary
Others : 0%
IHCL's 1Q results were marginally below our estimates, the company missed on ARR but other
Source: Bloomberg
business and occupancy continue to remain strong compensating for lower pricing. We maintain
Price performance vs Nifty
HOLD rating given the current valuation and the TP at INR 550. We continue to value IHCL at
160
22x EV/EBITDA on 1HFY27E EBITDA. We have marginally reduced our revenue and EBITDA
140
120 estimates but keep the target price unchanged. We expect the company to maintain a valuation
100 premium to peers due to its strong brand, which helps pricing and occupancy levels. In
80 addition, the company will get preference over peers in getting hotels on management contracts,
Jul-23 Nov-23 Mar-24 Jul-24
which will help improve margins further.
Indian Hotel NIFTY
Source: Bloomberg Indexed to 100
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 60

Table 1: Financial summary

INR mn 1QFY25 1QFY24 YoY 4QFY24 QoQ FY23 FY24 FY25e FY26e FY27e
Revenues 15,502 14,664 6 19,053 (19) 58,099 67,688 74,079 80,619 90,613
EBITDA 4,496 4,102 10 6,598 (32) 18,046 21,571 24,647 27,425 31,674
EBITDA Margins 29.0% 28.0% 34.6% 31.1% 31.9% 33.3% 34.0% 35.0%
EBIT 3,323 3,011 10 5,401 (38) 13,885 17,028 20,025 22,825 27,074
EBIT Margins 21.4% 20.5% 28.3% 23.9% 25.2% 27.0% 28.3% 29.9%
PAT 2,342 2,106 11 3,931 (40) 10,026 12,590 15,378 17,717 20,304
EPS 1.7 1.6 12 2.9 (41) 7.1 8.9 10.8 12.5 14.3
Source: Company, Antique

Exhibit 1: ARR and occupancy trend

20,000 85.0%

76.0%
18,000

74.7%

74.7%
80.0%

72.1%
16,000

70.4%

79.1%
70.0%
14,000 75.0%
66.6%

76.8%
75.9%
12,000
70.0%
10,000
58.4% 65.0%
8,000
56.6%

6,000 60.0%
4,000
11,348

10,569

11,397

11,003

15,456

16,915

12,614

12,972

18,111

17,546

12,906
8,273

55.0%
2,000
0 50.0%
2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

2Q24

3Q24

4Q24

1Q25
ARR ( INR) Occupancy (RHS)

Source: Company, Antique

Exhibit 2: Revenue and EBITDA margin

25,000 40.0%
29.8%

29.0%
29.0%

28.0%

35.0%

37.3%
35.4%

20,000 24.8%
23.9%

34.6%
32.9%

30.0%
18.2%

15,000 25.0%

20.0%
10.0%

10,000 15.0%

10.0%
5,000
11,112

12,661

12,326

16,858

16,254

14,664

14,332

19,638

19,053

15,502
7,284

8,721

5.0%

0 0.0%
2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

2Q24

3Q24

4Q24

1Q25

Revenue EBITDA margin (RHS)

Source: Company, Antique

Table 2: Change in estimates

Old New Change
FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E
Revenue 74,588 82,301 92,364 74,079 80,619 90,613 -0.7% -2.0% -1.9%
EBITDA 24,808 28,020 32,319 24,647 27,425 31,674 -0.6% -2.1% -2.0%
PAT 15,408 18,140 20,764 15,378 17,717 20,304 -0.2% -2.3% -2.2%
EBITDA Margin 33.3% 34.0% 35.0% 33.3% 34.0% 35.0% 0.0% 0.0% 0.0%
PAT Margin 20.7% 22.0% 22.5% 20.8% 22.0% 22.4% 0.1% -0.1% -0.1%
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 61

Table 3: Key hotels metrics

Revenue (INR mn) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
IHCL 3,446 7,284 11,112 8,721 12,661 12,326 16,858 16,254 14,664 14,332 19,638 19,053 15,502
EIH 952 2,290 3,601 3,010 3,943 4,011 5,864 6,371 4,981 5,306 7,413 7,413
Chalet 695 1,284 1,642 1,480 2,529 2,477 2,898 3,378 3,108 3,145 3,737 4,183
Lemon Tree 422 969 1,437 1,195 1,920 1,967 2,335 2,527 2,223 2,272 2,887 3,312
ITC hotels 1,337 3,110 4,955 4,074 5,807 5,604 7,393 8,087 6,249 6,750 8,725 9,310
Taj GVK 248 560 820 643 855 891 1,054 1,036 916 894 1,111 1,158
Oriental hotels 247 523 763 661 886 888 1,057 1,114 926 910 1,021 1,075
Total 7,347 16,019 24,330 19,784 28,601 28,163 37,460 38,767 33,066 33,610 51,263 52,414 15,502

Revenue y-o-y growth1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
IHCL 140% 184% 98% 42% 267% 69% 52% 86% 16% 16% 16% 17% 6%
EIH 220% 218% 101% 40% 314% 75% 63% 112% 26% 32% 26% 16%
Chalet 32% 118% 93% 51% 264% 93% 76% 128% 23% 27% 29% 24%
Lemon Tree 4% 104% 110% 26% 356% 103% 63% 111% 16% 15% 24% 31%
ITC hotels 436% 255% 99% 35% 334% 80% 49% 98% 8% 20% 18% 15%
Taj GVK 664% 434% 126% 46% 244% 59% 29% 61% 7% 0% 5% 12%
Oriental hotels 437% 231% 66% 25% 259% 70% 39% 69% 4% 3% -3% -4%
Average 276% 220% 99% 38% 291% 78% 53% 95% 14% 17% 21% 19% 6%

EBITDA Margins 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
IHCL -43% 10% 29% 18% 30% 24% 35% 33% 28% 25% 37% 35% 29%
EIH Hotels -104% -3% 24% 6% 25% 21% 36% 32% 31% 27% 44% 41%
ITC hotels (EBIT) -119% -16% 11% -7% 20% 15% 20% 25% 22% 20% 27% 28%
Chalet -12% 27% 25% 21% 40% 34% 39% 45% 35% 40% 44% 44%
Lemon Tree 0% 35% 44% 18% 46% 48% 54% 55% 47% 45% 48% 53%
Taj GVK -15% 24% 35% 20% 35% 35% 31% 24% 29% 24% 36% 35%
Oriental hotels -51% 9% 26% 18% 28% 26% 31% 29% 24% 22% 28% 25%
Average -49% 12% 28% 13% 32% 29% 37% 35% 30% 30% 38% 37% 29%

Occupancy 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
IHCL (Standalone) 29% 57% 67% 58% 70% 70% 72% 75% 75% 76% 77% 79% 76%
Chalet 36% 56% 60% 55% 78% 71% 65% 74% 70% 73% 71% 76%
EIH Hotels 22% 51% 74% 56% 72% 70% 77% 80% 70% 67% 79% 81%
Lemon Tree 30% 51% 58% 46% 65% 66% 68% 74% 70% 72% 66% 72%
Samhi Hotels 73% 71% 70% 72% 71% 72% 71% 76%
Park hotels 92% 92% 90% 93% 94% 93% 90% 92%

ARR (INR) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
IHCL (Standalone) 7,024 8,273 11,348 10,569 11,397 11,003 15,456 16,915 12,614 12,972 18,111 17,546 12,906
Chalet 3,523 3,882 5,078 5,429 7,457 7,930 10,168 11,304 10,317 9,610 10,974 11,862
EIH Hotels 7,778 8,942 11,483 11,468 11,451 11,177 16,736 17,963 13,579 13,736 19,985 19,713
Lemon Tree 2,362 3,028 3,901 4,093 4,822 4,917 5,738 5,824 5,237 5,268 6,333 6,605
Samhi Hotels 4,594 4,743 5,011 5,852 5,408 5,441 5,959 6,279
Park hotels 5,310 5,506 6,399 6,897 5,901 6,154 7,286 7,463

RevPAR (INR) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
IHCL (Standalone) 1,992 4,679 7,559 6,176 8,021 7,681 11,137 12,634 9,428 9,840 13,918 13,885 9,810
Chalet 1,268 2,174 3,047 2,986 5,816 5,630 6,609 8,365 7,222 7,015 7,792 9,015
EIH Hotels 1,711 4,560 8,497 6,422 7,906 7,824 12,887 14,370 9,505 9,203 15,788 15,968
Lemon Tree 700 1,544 2,246 1,888 3,138 3,257 3,877 4,287 3,678 3,775 4,176 4,754
Samhi Hotels 3,337 3,402 3,671 4,285 3,810 3,916 4,248 4,830
Park hotels 4,885 5,066 5,768 6,414 5,547 5,709 6,562 6,847
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 62

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net Revenue 58,099 67,688 74,079 80,619 90,613 PBT 12,946 16,655 19,869 22,825 26,274
Op. Expenses 40,054 46,116 49,432 53,194 58,939 Depreciation & amortization 4,161 4,543 4,623 4,600 4,600
EBITDA 18,046 21,571 24,647 27,425 31,674 Interest expense 2,361 431 1,997 2,000 2,000
Depreciation 4,161 4,543 4,623 4,600 4,600 (Inc)/Dec in working capital 241 359 (1,156) (625) (956)
EBIT 13,885 17,028 20,025 22,825 27,074 Tax paid (2,504) (3,089) (5,089) (5,706) (6,569)
Other income 1,389 1,829 1,842 2,000 1,200 Less: Interest/Div. Income Recd. (503) (1,188) (1,842) (2,000) (1,200)
Interest Exp. 2,361 2,203 1,997 2,000 2,000 Other operating Cash Flow (511) 1,640 - - -
Extra Ordinary Items -gain/(loss) 33 - - - - CF from operating activities 16,190 19,351 18,403 21,093 24,150
Reported PBT 12,946 16,655 19,869 22,825 26,274 Capital expenditure (4,706) (6,370) (5,500) (5,500) (5,500)
Tax 3,232 4,639 5,089 5,706 6,569 Inc/(Dec) in investments 2,910 (6,526) - - -
Reported PAT 9,714 12,016 14,780 17,119 19,706 Add: Interest/Div. Income Recd. 350 796 1,842 2,000 1,200
Mino. Int./Profit (loss) From Asso. (312) (575) (598) (598) (598) CF from investing activities (1,446) (12,100) (3,658) (3,500) (4,300)
Net Profit 10,026 12,590 15,378 17,717 20,304 Inc/(Dec) in share capital 13 65 - - -
Adjusted PAT 9,993 12,590 15,378 17,717 20,304 Inc/(Dec) in debt (13,370) (8,318) - - -
Adjusted EPS (INR) 7.0 8.9 10.8 12.5 14.3 Dividend Paid (644) (1,545) (2,841) (2,841) (2,841)
Others (1,277) (48) (1,997) (2,000) (2,000)
Balance sheet (INR mn) CF from financing activities (15,279) (9,847) (4,838) (4,841) (4,841)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Net cash flow (534) (2,595) 9,906 12,753 15,009
Share Capital 1,420 1,423 1,423 1,423 1,423 Opening balance 7,835 7,301 4,706 14,612 27,365
Reserves & Surplus 78,399 93,143 1,05,681 1,20,557 1,38,020 Closing balance 7,301 4,706 14,612 27,365 42,373
Networth 79,820 94,567 1,07,104 1,21,980 1,39,443 Bank balance 3,233 10,149 10,149 10,149 10,149
Debt 31,390 27,362 27,362 27,362 27,362 Cash and bank balance 10,534 14,855 24,761 37,514 52,523
Minority Interest 6,601 6,721 7,415 8,109 8,803
Net deferred Tax liabilities 1,567 1,437 1,437 1,437 1,437 Growth indicators (%)
Capital Employed 1,19,378 1,30,087 1,43,318 1,58,888 1,77,045 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Gross Fixed Assets 81,728 86,736 87,613 88,513 89,413 Revenue 90.1 16.5 9.4 8.8 12.4
Capital work in progress 3,242 2,310 2,310 2,310 2,310 EBITDA 345.8 19.5 14.3 11.3 15.5
Net Fixed Assets 84,970 89,045 89,923 90,823 91,723 Adj PAT NM 26.0 22.1 15.2 14.6
Goodwill 6,536 6,623 6,623 6,623 6,623 Adj EPS NM 26.0 22.1 15.2 14.6
Investments 18,910 22,612 23,904 25,196 26,489
Non Current Investments 11,337 15,371 16,663 17,955 19,247 Valuation (x)
Current Investments 7,573 7,242 7,242 7,242 7,242 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Current Assets, Loans & Adv. 26,271 30,278 41,340 54,718 70,683 P/E (x) 82.4 65.4 53.6 46.5 40.6
Inventory 1,092 1,164 1,392 1,515 1,703 P/BV (x) 10.3 8.7 7.7 6.8 5.9
Debtors 4,465 4,765 5,692 6,195 6,963 EV/EBITDA (x) 46.4 38.4 33.2 29.4 25.0
Cash & Bank balance 10,534 14,855 24,761 37,514 52,523 EV/Sales (x) 14.4 12.2 11.1 10.0 8.7
Loans & advances and others 10,180 9,494 9,494 9,494 9,494 Dividend Yield (%) 0.3 0.3 0.3 0.3 0.3
Current Liabilities & Provisions 17,310 18,472 18,472 18,472 18,472
Liabilities 14,051 15,072 15,072 15,072 15,072
Financial ratios
Provisions 3,259 3,400 3,400 3,400 3,400
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
RoE (%) 13.3 14.4 15.3 15.5 15.5
Net Current Assets 8,961 11,806 22,868 36,246 52,211
RoCE (%) 13.0 15.1 16.0 16.4 16.8
Application of Funds 1,19,378 1,30,087 1,43,318 1,58,888 1,77,045
Asset/T.O (x) 0.6 0.7 0.7 0.7 0.7
Per share data Net Debt/Equity (x) 0.2 0.1 (0.0) (0.1) (0.2)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e EBIT/Interest (x) 6.5 8.6 10.9 12.4 14.1
No. of shares (mn) 1,420 1,420 1,420 1,420 1,420
Diluted no. of shares (mn) 1,420 1,420 1,420 1,420 1,420
Margins (%)
BVPS (INR) 56.2 66.6 75.4 85.9 98.2
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 31.1 31.9 33.3 34.0 35.0
CEPS (INR) 9.8 11.7 13.7 15.3 17.1
EBIT Margin (%) 23.9 25.2 27.0 28.3 29.9
DPS (INR) 1.5 2.0 2.0 2.0 2.0
PAT Margin (%) 16.8 18.1 20.3 21.4 22.1
Source: Company, Antique
Source: Company Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 63

CMP : INR 4,580 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD çè
: INR 4,000 çè
Persistent Systems
Target Price Change : No Change Decent quarter but valuation remains high
Target 1HFY27 P/E (x) : 32
Persistent Systems (PSYS) reported another quarter of industry-leading
EPS Change FY25/ 26/ 27 : No Change growth, 5.6% QoQ increase in USD terms and slightly above our expectation
of 5%. Much of this growth came from the Healthcare & Life Sciences vertical,
but it was spread across broad-based accounts rather than being
concentrated in large accounts. EBIT margin declined by 50 bps, which was
Vikas Ahuja in line with our estimate, but was boosted by one-offs totaling 100 bps.
+91 22 6911 3439
[email protected]
Specifically, a reversal of earn-out credits from past acquisitions contributed
60 bps and changes in the useful life of computer and networking assets
Ashish Bansal
[email protected] added 40 bps. Adjusted margin was nearly 100 bps below expectation and
the company saw a 210 bps increase in sub-contractor costs. Despite this,
the company aims to achieve a margin similar to FY24 in FY25, with a
medium-term target to improve it by 200 to 300 bps over the next three years.
The total contract value for the quarter was USD 462.8 mn, including USD
Market data 310.8 mn in new bookings, which was higher than the last four-quarter
Sensex : 80,605 average of USD 280 mn. We broadly retain our estimates for FY25-27,
Sector : IT maintain HOLD rating, and keep the target price unchanged at INR 4,000 (at
Market Cap (INR bn) : 706.1 a PE multiple of 32x 1HFY27 earnings).
Market Cap (USD bn) : 8.440
1QFY25 result highlights
O/S Shares (mn) : 154.1
52-wk HI/LO (INR) : 4929/2317 Persistent reported a revenue of USD 328 mn, up 5.6% QoQ in USD terms and better than
Avg. Daily Vol ('000) : 661 our expectation of 5.0%. EBIT margin declined 50 bps on a sequential basis to 14% impacted
Bloomberg : PSYS IN by one-time visa cost of 60 bps, increase in sub-contractor cost by 210 bps to support on-site
Source: Bloomberg ramp-up and higher SG&A expense of 70 bps. The company is working on cost optimization
Valuation program to improve margins and expects them to rebound in the subsequent quarter. Some
FY25e FY26e FY27e
partial benefits of the program benefitted the company in the current quarter with increased
EPS (INR) 89.4 112.6 136.4
utilization (+90 bps), operational efficiencies (+90 bps), and reversal of earn-out credit
P/E (x) 51.2 40.7 33.6
pertaining to past acquisitions (+60 bps). Deal momentum remains strong with total trailing
P/BV (x) 12.8 11.8 10.4 12 month TCV (new) at USD 463 mn vs. an average of USD 457 mn for the last four quarters.
EV/EBITDA (x) 34.4 28.0 22.5 ACV (new) at USD 198 mn vs. an average of USD 173 mn for the last four quarters. PSYS
Dividend Yield (%) 1.3 1.3 1.3 saw an increase in the USD 75 mn+ client bucket with the addition of a client. Growth was
Source: Bloomberg
led by the top 5 and top 10 clients, up 53% and 9.5% QoQ respectively in USD terms.
Headcount declined to 23,519, down 1.4% QoQ. Attrition increased by 40 bps QoQ to
Returns (%)
11.9% and utilization increased by 210 bps to 82.1% vs. 80.0% in 4Q. Sequentially, there
1m 3m 6m 12m
was an increase of 4 days in billed DSO to 67 days.
Absolute 19 18 17 78
Relative 14 7 4 48 Growth largely broad-based across all verticals and geographies, except Hi-tech and ROW
Source: Bloomberg which declined sequentially
Shareholding pattern Growth was led by Healthcare, which was up 16.5% QoQ and 66.8% YoY in USD terms,
BFSI was up 5.9% QoQ and 7.1% YoY, while Hi-tech was down 0.5% QoQ but up 2.4% YoY.
Promoters : 31%
The company highlighted the BFSI vertical crossing the USD 100 mn revenue mark for the first
Public : 68%
time ever. Among geographies, North America grew by 6.4% QoQ and 18.2% YoY in USD
Others : 1%
terms, Europe was up 5.6% QoQ but down by 7.1% YoY. The decline in Europe was primarily
Source: Bloomberg attributed to the sales force business, India was up 2.4% QoQ and 15.7% YoY and ROW
Price performance vs Nifty was down -10.3% QoQ but up 65.6% YoY.
200
180
Investment Summary
160
140 We continue to expect that Persistent's revenue growth will be industry-leading in FY25/ 26E,
120 driven by market share gains and a strong deal pipeline. We maintain HOLD rating and
100
80 keep our 1HFY27 target P/E multiple unchanged at 32x with a target price of INR 4,000.
Jul-23 Nov-23 Mar-24 Jul-24 Our rating is largely based on the relatively expensive valuation compared to peers, as it is
Persistent Sys NIFTY trading at a 40%/ 50% forward P/E premium to Coforge and Mphasis.
Source: Bloomberg, Indexed to 100
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 64

Table 1: Financial summary

INR mn Q1FY25 Q4FY24 QoQ (%) Q1FY24 YoY (%) FY23 FY24 FY25e FY26e FY27e
Revenues (US$ mn) 328.2 310.9 5.6 282.9 16.0 1,036 1,186 1,383 1,592 1,844
Revenues 27,372 25,905 5.7 23,212 17.9 83,506 98,216 1,15,370 1,32,736 1,53,789
Gross Profit 9,043 8,619 4.9 7,933 14.0 28,191 32,985 38,435 45,707 54,350
EBIIT 3,840 3,744 2.6 3,466 10.8 12,472 14,149 16,615 20,467 25,171
EBIT Margin 14.0% 14.5% 14.9% 14.9% 14.4% 14.4% 15.4% 16.4%
PAT after minority Interest 3,064 3,153 (2.8) 2,774 10.5 9,211 11,421 13,525 17,034 20,632
EPS 20.3 20.8 (2.8) 15.1 33.9 30.5 72.3 89.4 112.6 136.4
Source: Company, Antique

Exhibit 1: Reported revenue up 5.6% QoQ, slightly above our expectation

12%
10%
8%
6%

3.4%
3.1%

3.1%

3.1%

3.1%
3.0%
4%
1.1%

11.1%
4.9%

3.9%

7.4%

4.6%

9.2%

9.3%

9.2%

9.1%

5.8%

3.4%

3.9%

5.6%
2%
0%
-2%
-1.8%

-4%
1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25
QoQ revenue growth

Source: Company, Antique

Exhibit 2: EBIT margin came in line with our expectations at 14%

18%
16%
14%
12%
10%
8%
6%
4%
10.4%

12.1%

12.7%

13.2%

13.5%

13.9%

14.0%

14.0%

14.3%

14.6%

15.4%

15.4%

14.9%

13.7%

14.5%

14.5%

14.0%
9.8%

8.9%

8.7%

9.2%

2%
0%
1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

EBIT margin

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 65

Table 2: Key metrics

4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25
Revenue (USD mn) 127.1 131.0 136.1 146.2 152.8 166.8 182.3 199.1 217.3 241.5 255.6 264.4 274.6 282.9 291.7 300.6 310.9 328.2
QoQ growth (%) -1.8% 3.1% 3.9% 7.4% 4.6% 9.2% 9.3% 9.2% 9.1% 11.1% 5.8% 3.4% 3.9% 3.0% 3.1% 3.1% 3.4% 5.6%
Geography-wise (%)
America 80.2 80.4 82.9 81.1 79.2 78.9 78.7 79.2 78.6 78.4 78.6 77.1 77.9 79.2 79.2 79.7 80.1 80.7
Europe 8.8 10.2 7.6 8.8 10.0 9.5 8.8 8.3 8.4 8.5 8.3 9.0 10.3 9.7 9.5 8.9 7.8 7.8
APAC 11.0 9.4 9.5 10.1 10.8 11.6 12.5 12.5 13.0 13.1 13.1 13.9 11.8 11.1 11.3 11.4 12.1 11.5
Client composition (%)
Top 5 41.5 40.8 41.6 37.8 36.4 36.5 35.8 36.1 32.5 30.8 26.9 24.7 26.5 27.9 28.3 28.0 29.2 30.7
Top 6-10 8.4 8.2 8.9 9.2 9.9 10.2 9.6 8.9 9.6 9.9 9.8 10.3 10.9 11.7 11.2 11.3 10.8 10.8
Top 10 49.9 49.0 50.5 47.0 46.3 46.7 45.4 45.0 42.1 40.7 36.7 35.0 37.4 39.6 39.5 39.3 40.0 41.5
Headcount Metrics
Technical 9,835 10,027 10,001 11,533 12,706 13,833 14,657 15,721 17,283 20,144 20,941 21,033 21,295 21,511 21,263 21,738 22,224 21,866
Sales & Business Development 263 274 268 277 273 308 296 294 317 367 387 405 414 428 443 465 484 510
Others 534 528 551 628 701 763 926 974 999 1,127 1,148 1,160 1,180 1,191 1,136 1,133 1,142 1,143
Total 10,632 10,829 10,820 12,438 13,680 14,904 15,879 16,989 18,599 21,638 22,476 22,598 22,889 23,130 22,842 23,336 23,850 23,519
Utilization (%)
Including trainees 78.7 78.5 81.2 81.0 79.1 80.1 82.8 83.0 80.6 79.5 79.9 77.6 77.3 78.3 80.6 81.5 80.0 82.1
Source: Company, Antique

Table 3: Change in estimates

Old New Change
FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E
Revenue 1,14,649 1,31,906 1,52,827 1,15,370 1,32,736 1,53,789 0.6% 0.6% 0.6%
EBIT 16,473 20,325 24,997 16,615 20,467 25,171 0.9% 0.7% 0.7%
PAT 13,473 17,102 20,746 13,525 17,034 20,632 0.4% -0.4% -0.5%
EPS 89.1 113.0 137.1 89.4 112.6 136.4 0.4% -0.4% -0.5%
EBIT Margin 14.4% 15.4% 16.4% 14.4% 15.4% 16.4% 0.0% 0.0% 0.0%
PAT Margin 11.8% 13.0% 13.6% 11.7% 12.8% 13.4% 0.0% -0.1% -0.2%
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 66

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net Revenue 83,506 98,216 1,15,370 1,32,736 1,53,789 PBT 12,409 14,962 17,680 22,267 26,971
Op. Expenses 68,315 80,973 95,403 1,08,286 1,24,005 Depreciation & amortization 2,719 3,094 3,352 3,982 4,614
EBITDA 15,191 17,243 19,967 24,449 29,784 (Inc)/Dec in working capital (4,377) (2,052) (6,911) (2,293) (2,896)
Depreciation 2,719 3,094 3,352 3,982 4,614 Tax paid (3,405) (3,414) (4,155) (5,233) -
EBIT 12,472 14,149 16,615 20,467 25,171 Less: Interest/Div. Income Recd. (39) (95) (1,065) (1,800) (1,800)
Other income (64) 813 1,065 1,800 1,800 Other operating Cash Flow 2,251 (282) 320 400 400
Reported PBT 12,409 14,962 17,680 22,267 26,971 CF from operating activities 9,558 12,213 9,221 17,323 27,288
Tax 3,198 3,541 4,155 5,233 6,339 Capital expenditure (8,632) (2,791) (2,839) (2,839) (2,839)
Reported PAT 9,211 11,421 13,525 17,034 20,632 Inc/(Dec) in investments 3,879 (2,502) - - -
Net Profit 9,211 11,421 13,525 17,034 20,632 Add: Interest/Div. Income Recd. 539 597 1,065 1,800 1,800
Adjusted PAT 9,211 11,421 13,525 17,034 20,632 CF from investing activities (4,213) (4,695) (1,774) (1,039) (1,039)
Adjusted EPS (INR) 61.0 75.5 89.4 112.6 136.4 Inc/(Dec) in share capital - 1,608 - - -
Inc/(Dec) in debt (40) (2,234) (1,974) - -
Balance sheet (INR mn) Dividend Paid (2,981) (4,084) (10,620) (12,390) (12,390)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Others (1,019) (1,227) - - -
Share Capital 764 770 770 770 770 CF from financing activities (4,039) (5,937) (12,594) (12,390) (12,390)
Reserves & Surplus 38,887 48,807 53,255 57,900 66,142 Net cash flow 1,305 1,581 (5,146) 3,894 13,860
Networth 39,651 49,577 54,026 58,670 66,913 Opening balance 4,031 5,336 6,918 1,771 5,666
Debt 4,285 2,073 99 99 99 Closing balance 5,336 6,918 1,771 5,666 19,525
Minority Interest 2 2 2 2 2
Net deferred Tax liabilities (1,129) (1,360) (1,360) (1,360) (1,360) Growth indicators (%)
Capital Employed 42,809 50,293 52,767 57,412 65,654 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Capital work in progress 161 335 335 335 335 Revenue 46.2 17.6 17.5 15.1 15.9
Net Fixed Assets 14,193 11,637 11,125 9,982 8,207 EBITDA 58.5 13.5 15.8 22.4 21.8
Goodwill 7,184 10,913 10,913 10,913 10,913 Adj PAT 33.4 24.0 18.4 25.9 21.1
Investments 6,396 8,266 8,266 8,266 8,266 Adj EPS 35.0 23.8 18.4 25.9 21.1
Non Current Investments 4,516 5,539 5,539 5,539 5,539
Current Investments 1,880 2,727 2,727 2,727 2,727 Valuation (x)
Current Assets, Loans & Adv. 37,956 41,853 40,596 48,705 67,790 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Debtors 15,705 16,761 20,650 24,864 30,090 P/E (x) 75.1 60.7 51.2 40.7 33.6
Cash & Bank balance 5,336 6,918 1,771 5,666 19,525 P/BV (x) 17.4 14.0 12.8 11.8 10.4
Loans & advances and others 16,915 18,175 18,175 18,175 18,175 EV/EBITDA (x) 45.3 39.7 34.4 28.0 22.5
Current Liabilities & Provisions 22,256 22,086 19,384 21,706 24,435 EV/Sales (x) 8.2 7.0 6.0 5.1 4.4
Liabilities 5,689 8,139 9,560 10,999 12,744 Dividend Yield (%) 1.1 0.9 1.3 1.3 1.3
Provisions 16,566 13,947 9,824 10,706 11,691
Net Current Assets 15,701 19,767 21,212 26,999 43,355
Financial ratios
Miscellaneous expenses (140) 234 1,777 1,777 (5,039) Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Application of Funds 42,809 50,293 52,767 57,412 65,654 RoE (%) 25.1 25.6 26.1 30.2 32.9
RoCE (%) 31.1 32.1 34.3 40.4 43.8
Per share data Asset/T.O (x) 2.9 3.2 3.6 3.8 3.5
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Net Debt/Equity (x) (0.1) (0.2) (0.1) (0.1) (0.3)
No. of shares (mn) 151 151 151 151 151
Diluted no. of shares (mn) 151 151 151 151 151
Margins (%)
BVPS (INR) 262.6 327.7 357.1 387.8 442.3 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
CEPS (INR) 79.0 95.9 111.6 138.9 166.9 EBITDA Margin (%) 18.2 17.6 17.3 18.4 19.4

DPS (INR) 50 42 60 60 60 EBIT Margin (%) 14.9 14.4 14.4 15.4 16.4
PAT Margin (%) 11.0 11.5 11.6 12.7 13.3
Source: Company Antique
Source: Company Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 67

CMP : INR 1,817 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD çè
: INR 1,770 çè
Dalmia Bharat
Target Price Change : No Change May lag peers on volumes, profitability
Target 1HFY27 EV/EBITDA (x) : 10
Dalmia Bharat’s (DALBHARA) 1Q EBITDA/ton at INR 901 (increased INR 160/
EBITDA Change FY25/ 26/ 27 : -1%/ 1%/ 0% ton QoQ and INR 30/ton YoY) was 8%/ 19% above our/ consensus estimates
owing to higher realizations. Blended realization/ton remained flat QoQ at
INR 4,893 (vs. a decline of 2%–3% in its core markets) owing to rationalization
of discounts, while volume grew 6% YoY to 7.4 MT (in-line). Total cost/ton
Krupal Maniar declined 7% YoY/ ~4% QoQ (in-line). Weak exit prices (down 2%–3% QoQ in
+91 22 6911 3419 2Q) in DALBHARA’s key markets of the East and South may keep DALBHARA’s
[email protected] profitability range-bound in the near term. Given the announced JPA acquisition
may be at risk (as the same has been admitted by NCLT) and with the delay in
Harshal Milan Mehta, CFA
+91 22 6911 3428 organic capex announcement, DALBHARA may continue to lag larger peers
[email protected] both in growth and profitability, in our view. We broadly maintain our FY25–
26E estimates with an unchanged target price of INR 1,770 based on 10x
1HFY27E EV/EBITDA. Our FY25/ 26E EBITDA are 6%/ 11% lower vs. consensus.
Retain HOLD. Key risks include higher demand/ prices and lower costs.
Market data Volume grew 6 % YoY; blended realization remained flat QoQ
Sensex : 80,605
Sector : Cement
Revenue remained flat YoY/ declined 16% QoQ to INR 36 bn (consensus/ Antique est.: INR
Market Cap (INR bn) : 341.1 36 bn). Cement prices declined by 2%–3% in 1QFY25 and 1Q exit prices are 3% lower vs. the
Market Cap (USD bn) : 4.077 1Q average. Prices are likely to remain soft till the time monsoon retreats and may increase only
O/S Shares (mn) : 187.5 post that. Improvement in brand positioning, rationalization in discounts, and improvement in
52-wk HI/LO (INR) : 2431/1651 product mix have led to better realizations. The company has booked a one-time provision of
Avg. Daily Vol ('000) : 585 INR 1.1 bn w.r.t. JPA in 1Q and has provided for any risks till date and doesn’t expect further
Bloomberg : DALBHARA IN provisions. Management has guided for 1.5x industry volume growth in FY25 as well as in the
Source: Bloomberg medium term. It is expecting 8% volume growth for the industry and 12% for Dalmia in FY25.
Valuation EBITDA/ton rose ~4 % YoY/ 22 % QoQ to INR 904 led by better realization
FY25e FY26e FY27e
For 1Q, the overall blended cost of INR 3,989 declined ~7% YoY/ ~4% QoQ (in-line). RM +
EPS (INR) 58.4 71.6 80.3
P&F cost/ton declined 12% YoY/ 8% QoQ. Freight cost at INR 1,122/ton declined 3% YoY/
P/E (x) 31.1 25.4 22.6
QoQ due to reduction in lead distance and optimization of clinker movement. Other expenses
P/BV (x) 1.9 1.7 1.6
(on an absolute basis) increased ~3% YoY/ declined 20% QoQ. Fuel consumption cost stood
EV/EBITDA (x) 12.2 10.8 9.8
at INR 1.38/kcal in 1QFY25 (vs. INR 1.45/kcal in 4QFY24) and management expects it to
Dividend Yield (%) 0.5 0.6 0.7
decline 1%–2% going ahead.
Source: Company, Antique

Returns (%) Retains guidance of 110–130 MT by 2031; interim target of 75 MT stands delayed
1m 3m 6m 12m Net debt (excl. IEX investment) increased by INR 6 bn QoQ to INR 28.5 bn. Net debt/EBITDA
Absolute (2) (6) (18) (11) remained broadly flat at 0.17x. Management has delayed its interim target of 75 MT to 2028
Relative (6) (15) (27) (26) (2027 earlier), however, they have maintained the long-term guidance of 110–130 MT by
Source: Bloomberg 2031. Management has guided for a capex of INR 35–40 bn for FY25. The company is likely
Shareholding pattern to provide a detailed growth roadmap after 12 months. There is scope for brownfield expansion
in the South, additionally the company has limestone mines in MP and Rajasthan.
Promoters : 56%
Public : 44%
Targets for cost reduction of INR 150–200/ton over the next three years
Others : 0% Management has guided for INR 150–200/ton cost reduction (excl. fuel price changes) in
Source: Bloomberg
the next three years led by improvement in green energy mix, share of captive coal, reduction
in logistic cost (INR 50–100/ton), and higher direct dispatches. Fuel cost stood at INR 1.38/
Price performance vs Nifty kcal and a 1%–2% improvement is expected going ahead. It plans to commission the Brinda/
130 Mandla coal mines by FY25/ 26. Green energy share stood at 35% and the target is to take
120 it to 50%/ 60% by 4QFY25/ FY26.
110
100 Investment Summary
90
80 We factor 8% volume CAGR over FY24–26E and expect EBITDA/ton to improve from ~INR
Jul-23 Nov-23 Mar-24 Jul-24 913/ton in FY24 to INR 929 in FY25E, INR 976/ton in FY26E, and INR 1,006 in FY27E led
Dalmia Bharat NIFTY by lower fuel costs and better cost efficiencies. The stock currently trades at a valuation of
Source: Bloomberg Indexed to 100
10.3x 1HFY27E EV/EBITDA and ~USD 90 EV/ton.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 68

Conference Call Highlights

n JPA: Volumes stood at 0.4 MT in 1QFY25. The company booked one-time provision of
INR 1.1 bn in 1Q. Has provided for any risks to date and don’t expect further provisions.
In discussion with interim resolution professional (IRP) for tolling arrangement with JPA.
There is lot of acceptance from dealers in the Central region and can supply cement to
the Central regions from the Eastern plants.
n Capacity: Retains guidance of 110-130 MT by 2031 (mix of organic and inorganic) to
become a pan-India player. Interim target of 75 MT now delayed to 2028. The company
will provide a growth roadmap after 12 months. There is scope for brownfield expansion
in the South, additionally the company has limestone mines in MP and Rajasthan.
n Volume: Targets 1.5x industry volume growth in FY25 as well as in the medium term.
Expecting 8% volume growth for industry and 12% for Dalmia in FY25.
n Prices: Cement prices declined by 2%-3% in 1QFY25 and 1Q exit prices are 3% lower
vs. the 1Q average. Prices are likely to remain soft till monsoon and may increase post
monsoon. Improvement in brand positioning, rationalization in discounts, and improvement
in product mix have led to better realizations.
n Costs: Targets for INR 150-200/ton reduction (excl. fuel price changes) in the next
three years led by improvement in green energy mix, share of captive coal, reduction in
logistic cost (INR 50-100/ton) and higher direct dispatches.
n Input costs: Fuel cost stood at INR 1.38/kcal and expects 1%-2% improvement going
ahead. Plans to commission Brinda/ Mandla coal mine by FY25/ 26.
n Green energy: Green energy share stood at 35% and it targets to take it to 50%/
60% by 4QFY25/ FY26.
n Freight: Freight cost at INR 1,122/ton declined 3% YoY/ QoQ due to reduction in lead
distance (declined by 17 km QoQ to 272 km) and optimization of clinker movement.
n Capex: Stood at INR 6.6 bn in 1Q and expects it to be INR 35-40 bn for FY25. Peak net
debt/EBITDA expected to be 2:1.
n Consolidation: There is still time for consolidation to fully play out and is likely to
accelerate.
n Others: a) Trade mix declined 100 bps QoQ to 64%; b) Expect to accrue/ collect
incentives of INR 3 bn for FY25; c) Blended cement share declined 100 bps QoQ to
86%; d) CC ratio remained flat QoQ at 1.67; e) Overall market share – ~7%.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 69

Quarterly performance
Table 1: Actual vs. estimated performance
(INR mn) Actual Estimated % Variance Consensus % Variance
Net sales 36,210 36,425 (0.6) 35,905 0.8
EBITDA 6,690 6,172 8.4 5,642 18.6
EBITDA margin (%) 18.5 16.9 153bps 15.7 276bps
Adj net income 2,540 1,742 45.8 1,438 76.6
FDEPS (INR) 13.5 9.3 45.8 7.6 76.6
Source: Company, Antique

Table 2: Quarterly financials

(INR mn) Q1FY25 Q1FY24 YoY(%) Q4FY24 QoQ(%)
Sales 36,210 36,240 (0.1) 43,070 (15.9)
Cost of Material Consumed 21,920 22,770 (3.7) 27,880 (21.4)
% of sales 60.5 62.8 -230bps 64.7 -420bps
Employee cost 2,280 2,220 2.7 2,020 12.9
% of sales 6.3 6.1 17bps 4.7 0.0
Other expenses 5,320 5,150 3.3 6,630 (19.8)
% of sales 14.7 14.2 48bps 15.4 -70bps
Total Exp 29,520 30,140 (2.1) 36,530 (19.2)
EBIDTA 6,690 6,100 9.7 6,540 2.3
Margin % 18.5 16.8 164bps 15.2 329bps
Other income 500 570 (12.3) 1,200 (58.3)
Depreciation 3,170 3,990 (20.6) 3,280 (3.4)
Interest expenses 950 830 14.5 940 1.1
Profit Before Tax 3,070 1,850 65.9 3,520 (12.8)
Exceptional item 1,130 - NA - NA
PBT after exceptional 1,940 1,850 4.9 3,520 (44.9)
Tax 490 410 NA 320 53.1
Tax Rate % NA 22.2 NA 9.1 NA
Minority Interest 40.0 140.0 (71.4) 50.0 (20.0)
Reported Net Profit 1,410 1,300 8.5 3,150 (55.2)
Adjusted Net Profit 2,540 1,300 95.4 3,150 (19.4)
EPS (INR) 13.5 6.9 95.4 16.8 (19.4)
Source: Company, Antique

Table 3: Per ton analysis

(INR/ton) 1QFY25 1QFY24 YoY(%) 4QFY24 QoQ(%)
Volumes (mn ton) 7.43 7.00 6.1% 8.81 -15.7%
Raw material costs 815 809 6 1,111 -296
Power & Fuel Cost 1,020 1,289 -269 897 122
Freight Cost 1,118 1,156 -38 1,158 -41
Staff Cost 307 317 -10 229 78
Other Cost 716 736 -19 753 -36
Total Cost/ton 3,976 4,306 -7.7% 4,149 -4.2%
Realization/ton 4,877 5,177 -5.8% 4,892 -0.3%
EBITDA/ton 901 871 30 743 158
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 70

Table 4: We have broadly maintained our EBITDA estimates

FY25E FY26E FY27E
Old New % Chg Old New % Chg Old New % Chg
Revenue (INR mn) 1,54,580 1,48,139 (4.2) 1,69,451 1,62,279 (4.2) 1,85,752 1,76,137 (5.2)
EBITDA (INR mn) 28,730 28,336 (1.4) 32,005 32,465 1.4 36,056 36,133 0.2
EBITDA margin (%) 18.6 19.1 54bps 18.9 20.0 112bps 19.4 20.5 110bps
Net profit (INR mn) 10,204 10,973 7.5 11,854 13,456 13.5 13,955 15,102 8.2
EPS (INR) 54.3 58.4 7.5 63.1 71.6 13.5 74.2 80.3 8.2
Source: Company, Antique

Table 5: Our FY25/ 26 EBITDA are 6%/ 11% below consensus

Consensus Antique Variance
INR Mn FY25E FY26E FY25E FY26E FY25E FY26E
Revenue 1,60,021 1,81,022 1,48,139 1,62,279 (7) (10)
EBITDA 30,013 36,303 28,336 32,465 (6) (11)
APAT 9,920 12,790 10,973 13,456 11 5
Source: Company, Antique

Table 6: Key assumptions

FY19 FY20 FY21 FY22 FY23 FY24 FY25e FY26e FY27e
Capacity (MTPA) 24.9 25.8 34.0 36.6 37.9 46.6 47.1 49.5 49.5
utilization (%) 75.0 74.9 60.9 60.7 68.0 61.8 64.8 67.2 72.6
Volume (mn ton) 18.7 19.3 20.7 22.2 25.8 28.8 30.5 33.3 35.9
Volume growth (%) 10.1 3.3 7.2 7.3 16.1 11.7 6.0 9.0 8.0
Realization/ton (INR) 5,077 4,967 5,088 5,056 5,256 5,100 4,855 4,879 4,904
YoY realization (%) 0.4 (2.2) 2.4 (0.6) 4.0 (3.0) (4.8) 0.5 0.5
Cost/ton (INR) 4,033 3,875 3,742 3,994 4,357 4,187 3,926 3,903 3,898
RM Cost/ton (INR) 956 857 861 664 769 939 869 867 867
Employee Cost/ton (INR) 347 350 345 339 299 303 303 296 290
Power Cost/ton (INR) 940 901 809 1,155 1,428 1,083 922 915 915
Freight Cost/ton (INR) 979 982 1,009 1,061 1,088 1,113 1,095 1,095 1,095
Other Cost/ton (INR) 811 785 719 775 773 750 738 731 731
EBITDA/ton (INR) 1,044 1,092 1,346 1,062 899 913 929 976 1,006
Capex (INR bn) 9.3 13.5 16.0 17.9 36.7 27.1 28.0 28.0 28.0
Net Debt (INR bn) 31.4 28.6 9.4 (11.3) 6.7 4.8 5.4 9.9 11.9
Source: Company, Antique

Table 7: Retain HOLD with a target price of INR 1,770

EV/E method Sep-26E
Sep 26E EBITDA (INR bn) 34.3
EV/E multiple (x) 10.0
EV (INR bn) 343
Net debt (Sep 26E) 11
Equity value 332
No. of shares (mn) 188
Sep’26 Target Price (INR) 1,770
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 71

Exhibit 1: Capacity to grow at 2% CAGR over FY24–27E Exhibit 2: Volume to grow at 8% CAGR over FY24–27E
Regionwise Capacity Split FY23E (%) 35 90
East 80
60% 30
70
25
60
20 50

15 40
30
10
20
5
10
0 0

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
West South
8% 32%
Sales Volume (mn ton) Utilization (%) (RHS)
Source: Company, Antique Source: Company, Antique

Exhibit 3: Revenue to grow at 6% CAGR over FY24–27E Exhibit 4: EBITDA to grow at 11% CAGR over FY24–27E
200 80 45 80
180 70 40 70
160 60
60 35
140 50
30
120 50 40
25
100 40 30
20
80 30 20
60 15
10
20
40 10 0
20 10 5
(10)
0 0 0 (20)
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Revenues (INR bn) Growth (RHS) EBITDA (INR bn) EBITDA Growth (%) (RHS)
Source: Company, Antique Source: Company, Antique

Exhibit 5: EBITDA/ton to improve to INR 1,006 by FY27E Exhibit 6: Net debt to increase by ~INR 4 bn over FY24–27E
1,400 50 70 8

40 60
1,200 6
30 50
1,000
40 4
20
800 30
10 2
600 20
0
10 0
400
(10) 0
200 (2)
(20) -10

0 (30) -20 (4)

FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

EBITDA/ton (INR/ton) YoY change (%) (RHS) Net debt (INR bn) Net debt/EBITDA (x) (RHS)
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 72

Exhibit 7: Capex of INR 81 bn over FY25–27E Exhibit 8: RoCE/ RoE to improve to high single digits by FY27E
40 10

35 9
8
30
7
25 6
20 5

15 4
3
10
2
5 1
0 0
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
OCF (INR bn) Capex (INR bn) RoCE (%) RoE (%)
Source: Company, Antique Source: Company, Antique

Exhibit 9: EV/EBITDA 1-yr forward Exhibit 10: EV/ton 1-yr forward

20 x 160 USD/ton
18 140
16
120
14
12 100
10 80
8 60
6
40
4
2 20
0 0
Jul-20

Jul-21

Jul-22

Jul-23

Jul-24
Jan-21

Jan-22

Jan-23

Jan-24

Jul-19

Jul-20

Jul-21

Jul-22

Jul-23

Jul-24
Jan-20

Jan-21

Jan-22

Jan-23

Jan-24
EV/EBITDA Mean + 1 Std Dev EV/ton Mean
Mean - 1 Std Dev Mean Mean - 1 Std Dev Mean + 1 Std Dev
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 73

Financials
Profit and loss account (INR mn) Cashflow statement (INR mn)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net Revenue 1,35,400 1,46,800 1,48,139 1,62,279 1,76,137 PBT 16,180 10,860 14,402 17,919 19,959
Op. Expenses 1,12,240 1,20,520 1,19,803 1,29,814 1,40,004 Depreciation & amortization 13,050 14,980 12,670 12,791 14,045
EBITDA 23,160 26,280 28,336 32,465 36,133 Interest expense 2,320 3,860 4,044 4,536 4,910
Depreciation 13,050 14,980 12,670 12,791 14,045 (Inc)/Dec in working capital (770) (1,126) (1,532) (1,091) (1,187)
EBIT 10,110 11,300 15,666 19,674 22,088 Tax paid (2,420) (2,160) (3,255) (4,260) (4,634)
Other income 1,360 3,420 2,780 2,780 2,780 Less: Interest/Div. Income Recd. (1,360) (3,420) (2,780) (2,780) (2,780)
Interest Exp. 2,320 3,860 4,044 4,536 4,910 Other operating Cash Flow (6,740) (2,270) (4,219) (4,578) (5,070)
Extra Ordinary Items -gain/(loss) 7,030 - - - - CF from operating activities 20,260 20,724 19,330 22,536 25,242
Reported PBT 16,180 10,860 14,402 17,919 19,959 Capital expenditure (36,690) (27,090) (28,000) (28,000) (28,000)
Tax 2,420 2,160 3,255 4,260 4,634 Inc/(Dec) in investments 21,800 (9,380) - - -
Reported PAT 13,760 8,700 11,147 13,658 15,325 Add: Interest/Div. Income Recd. 1,360 3,420 2,780 2,780 2,780
Minority Int./Profit (loss) From Asso. (440) (270) (174) (202) (223) CF from investing activities (13,530) (33,050) (25,220) (25,220) (25,220)
Net Profit 13,320 8,430 10,973 13,456 15,102 Inc/(Dec) in share capital - 6 - - -
Adjusted PAT 6,290 8,430 10,973 13,456 15,102 Inc/(Dec) in debt 4,610 10,360 2,000 6,000 2,000
Adjusted EPS (INR) 34.0 44.8 58.4 71.6 80.3 Dividend Paid (1,258) (1,690) (1,876) (2,064) (2,251)
Others (8,832) 6,620 7,174 202 223
Balance sheet (INR mn) CF from financing activities (5,480) 15,296 7,298 4,139 (29)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Net cash flow 1,250 2,970 1,408 1,454 (7)
Share Capital 370 376 376 376 376 Opening balance 1,600 2,850 5,820 7,228 8,683
Reserves & Surplus 1,55,910 1,67,590 1,83,687 1,95,079 2,07,930 Closing balance 2,850 5,820 7,228 8,683 8,676
Networth 1,56,280 1,67,966 1,84,063 1,95,455 2,08,306
Debt 38,950 49,310 51,310 57,310 59,310 Growth indicators (%)
Minority Interest 1,160 1,100 1,274 1,476 1,699 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net deferred Tax liabilities 16,340 17,950 17,604 17,385 17,029 Revenue(%) 20.7 8.4 0.9 9.5 8.5
Capital Employed 2,09,750 2,32,656 2,50,581 2,67,957 2,82,674 EBITDA(%) (1.7) 13.5 7.8 14.6 11.3
Gross Fixed Assets 2,28,480 2,51,320 2,77,320 3,03,320 3,29,320 Adj PAT(%) (22.8) 34.0 30.2 22.6 12.2
Accumulated Depreciation 78,930 93,910 1,06,580 1,19,370 1,33,415 Adj EPS(%) (22.8) 31.9 30.2 22.6 12.2
Capital work in progress 18,590 22,840 24,840 26,840 28,840
Net Fixed Assets 1,68,140 1,80,250 1,95,580 2,10,790 2,24,745 Valuation (x)
Goodwill 7,300 5,270 5,270 5,270 5,270 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Investments 35,250 44,630 44,630 44,630 44,630 P/E (x) 54.3 40.5 31.1 25.4 22.6
Non Current Investments 5,890 5,900 5,900 5,900 5,900 P/BV (x) 2.2 2.0 1.9 1.7 1.6
Current Investments 29,360 38,730 38,730 38,730 38,730 EV/EBITDA (x) 15.0 13.2 12.2 10.8 9.8
Current Assets, Loans & Adv. 39,170 44,890 46,642 51,453 55,582 EV/Sales (x) 2.6 2.4 2.3 2.2 2.0
Inventory 13,160 12,180 11,770 13,338 14,477 Dividend Yield (%) 0.4 0.5 0.5 0.6 0.7
Debtors 7,000 8,360 8,929 9,781 10,616
Cash & Bank balance 2,850 5,820 7,228 8,682 8,676
Financial ratios
Loans & advances and others 16,160 18,530 18,715 19,651 21,813 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Current Liabilities & Provisions 40,110 42,384 41,541 44,186 47,552 RoE (%) 4.0 5.2 6.2 7.1 7.5

Liabilities 36,910 38,934 37,746 40,011 42,960 RoCE (%) 5.5 6.7 7.6 8.7 9.0

Provisions 3,200 3,450 3,795 4,175 4,592 Asset/T.O (x) 0.9 0.8 0.8 0.8 0.8

Net Current Assets (940) 2,506 5,101 7,267 8,030 Net Debt/Equity (x) 0.0 0.0 0.0 0.1 0.1

Application of Funds 2,09,750 2,32,656 2,50,581 2,67,957 2,82,674 EBIT/Interest (x) 4.9 3.8 4.6 5.0 5.1

Per share data Margins (%)

Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
No. of shares (mn) 185 188 188 188 188 EBITDA Margin(%) 17.1 17.9 19.1 20.0 20.5

Diluted no. of shares (mn) 185 188 188 188 188 EBIT Margin(%) 7.5 7.7 10.6 12.1 12.5

BVPS (INR) 844.8 893.4 979.1 1,039.7 1,108.0 PAT Margin(%) 4.6 5.6 7.3 8.2 8.4

CEPS (INR) 144.9 126.0 126.7 140.7 156.2 Source: Company Antique

DPS (INR) 6.8 9.0 10.0 11.0 12.0

Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 74

CMP : INR 716 1QFY25 RESULT REVIEW

Reco
Target Price
: BUY çè
: INR 861 çè
Transformers And Rectifiers (India)
Target Price Change : No Change Beat on all fronts
Target 1HFY27E (P/E) : 35x
Transformers & Rectifier (TRIL) 1QFY25 results stood above our estimates on
EPS change FY25E/26E/27E : No Change all fronts. Revenue stood at INR 3.1 bn (+103% YoY) v/s est. of INR 2.6 bn
was above our estimates on account of better than anticipated execution
during the quarter. EBITDA of INR 385 mn (+914% YoY) was well ahead of
Amit Shah our estimate of INR 196 mn leading to EBITDA margins of 12.4% v/s our est.
+91 22 6911 3466 of 7.5%. PAT stood at INR 184 mn v/s loss of INR 177 mn handsomely beating
[email protected] our estimate of INR 72 mn. TRIL is undertaking an ambitious capacity
expansion program, which will not only make the company India's largest
Dhirendra Tiwari transformer manufacturer, but also one amongst the few that has control of
+91 22 6911 3436 key inputs through backward integration. Given the unprecedented demand
[email protected] tailwinds, we maintain Buy rating on the stock with a target price of INR 861
Prathamesh Rane
valuing the company at 35x 1HFY27E EPS.
[email protected] Result highlights
n Revenue of INR3.1b (+103% YoY) was above our estimate of INR2.6b supported by
better execution.
Market data
n Gross margin for the quarter stood at 27.9% (+250 bps YoY), ahead of our expectation
Sensex : 80,605 of 26% potentially driven by better revenue mix.
Sector : Capital Goods
Market Cap (INR bn) : 107.4
n Operating profit for the quarter stood at INR 385 mn (+914% YoY), meaningfully
above our estimate of INR 196 mn.
Market Cap (USD bn) : 1.284
O/S Shares (mn) : 150.1 n EBITDA margin stood at 12.4% (+9.9pps YoY), above our estimate of 7.5%
52-wk HI/LO (INR) : 846/76 n Other income stood at INR 40mn (+100% YoY), above our estimate of INR 22mn
Avg. Daily Vol ('000) : 208
n Effective tax rate stood at 25.9% vs. est. of 25.2%.
Bloomberg : TRIL IN
Source: Bloomberg n PAT for the quarter stood at INR 184 mn v/s Loss of INR 177mn in 1QFY24 & above our
estimate of INR 72mn supported than higher than estimated other income.
Valuation
FY25e FY26e FY27e
n Order inflow for the quarter stands at INR 7 bn while order backlog stands at
INR29.3 bn.
EPS (INR) 9.6 19.5 29.7
P/E (x) 75.0 36.7 24.1 FY25 management guidance intact; aim to achieve ~INR 45-50bn revenue & mid-teen margins
P/BV (x) 9.5 7.7 6.0 by FY27
EV/EBITDA (x) 37.2 19.3 13.7 The company is confident to achieve revenue guidance of INR 20 bn & ~14% margin guidance
Dividend Yield (%) 0.1 0.3 0.4 for the full year and it is hopeful of booking revenue of ~ INR 45-50 bn & margins in the
range of 16-17% by FY27 on a standalone level. It reiterated margin expansion would be
Source: Bloomberg
on account of backward integration & improved demand which has led to better realization.
Returns (%) The company has already started on the journey towards backward integration of key critical
1m 3m 6m 12m components. Key products backward integrated include tanks, radiators, bushings & core
Absolute (7) 8 162 568
CRGO would lead to 100 bps margin expansion on the standalone level going ahead.
Relative (11) (2) 133 456 Post QIP, TRIL stands committed to complete its plans capex and scale up capacity through
Source: Bloomberg inorganic acquisition
TRIL recently raised INR 5 bn through QIP route to augment its capacity through inorganic
Shareholding pattern
route and also do backward integration to have better control on its input materials, timely
Promoters : 66% complete the orders on hand and further scale up the business margins. The management
Public : 34%
expects Changodar facility expansion for IDT solar transformers to be completed by December
2024 which will help TRIL to meet unprecedented demand for solar & green hydrogen
Others : 0%
transformers & expects output of around 12,000 to 15,000 MVA on a yearly basis from the
Source: Bloomberg plant. This upcoming facility will unlock significant opportunities in the sunrise sectors of green
hydrogen and renewable energy.
Price performance vs Nifty
1,040
Investment Summary
880
720 We expect TRIL to report exponential growth over the next three years, with revenue and PAT
560 rising by 3.6x and 10x in FY27 from the base of FY24. The company has an investment plan
400 of INR 5 bn and has announced to raise INR 5 bn capital. Despite a meaningful re-rating in
240 2024, it trades at a discount to its peers. We believe that the valuation gap should narrow
80
Jul-23 Nov-23 Mar-24 Jul-24
over the coming years, given the company's growth objectives and accelerated earnings
delivery. The company's balance sheet has meaningfully improved and return ratios are
Trans. & R. (India) NIFTY
indicative of superior execution. We maintain buy rating with a target price of INR 861,
Source: Bloomberg Indexed to 100
valuing the company at 35 x its 1HFY27E earnings.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 75

Conference Call Highlights

n The company is looking forward to optimize prospects for FY25, anticipating enhancements
across financial metrics and focus is on enhancing technical skills, forecasting leadership
readiness & improving overall competitiveness across manufacturing, sales & engineering
divisions.
n Successfully exported 220/253 MVA EAF Transformer, one of the largest ratings ever
manufactured globally
n Order Book stood at INR 29.2 bn. Order Inflow during the quarter stood at INR 7 bn
n The company strategy is achieving streamlined balance sheet by reducing debtors &
optimizing inventory management and ultimate aim to become debt-free company going
ahead.
n Inquiries order breakup - Power and solar transformer - 95% and Distribution transformer - 5%.
n Size of the order received from Statcom transformer -INR 2 bn
n Traction transformer consists of 5-7% of entire order book.
n Received Maiden order of 193 MVA single phase STATCOM Transformer.
n Backward integration will add 100 bps in standalone on the EBITDA margin levels.
n Requirement of transformers for Adani is 1000 per year
n EBIT margin for tank manufacturers is more than 25%.
n Majority of the products getting exported are the special duty & Solar transformers
n Supplied transformers for green hydrogen to GE USA.

Table 1: Quarterly Performance

Particulars (INR mn) 1QFY25 1QFY24 YoY (%) 4QFY24 FY24 FY23 YoY (%)
Total revenues (net) 3,116 1,534 103.2 5,003 12,733 13,420 (5.1)
RM 2,246 1,144 96.4 3,558 9,518 10,718 (11.2)
% of Sales 72.1 74.6 -250 bps 71.1 74.8 79.9 -512 bps
Staff cost 97 88 10.9 175 446 381 17.2
% of Sales 3.1 5.7 -260 bps 3.5 3.5 2.8 67 bps
Other operating expenses 388 264 46.7 644 1,570 1,263 24.3
% of Sales 12.4 17.2 -479 bps 12.9 12.3 9.4 292 bps
Total expenditure 2,731 1,496 82.6 4,377 11,535 12,362 (6.7)
EBITDA 385 38 913.7 626 1,199 1,058 13.3
EBITDA Margin (%) 12.36% 2.48% 10 bps 12.52% 9 7.9 153 bps
Depreciation 63 57 10.8 55 227 226 0.7
Interest 115 145 (20.7) 111 498 466 6.7
Other income 40 20 100.5 23 87 119 (26.7)
PBT 248 (143) (272.9) 483 561 484 15.8
Tax 64 34 91.3 127 217 113 91.4
Tax rate (%) 25.9% -23.4% 49 bps 26.2% 38.7 23.4 1528 bps
Reported net profit 184 (177) NM 356 344 371 (7.3)
Adjusted net profit 184 (177) NM 356 344 371 (7.3)
EPS (INR) 1.3 (1.2) NM 2.5 2.4 2.6 (7.3)
Source: Company, Antique
 1QFY21 8% 1QFY21 -31%
2QFY21 11% 2QFY21 15%
3QFY21 10% 3QFY21 -20%
4QFY21 7% 4QFY21 71%

Source: Company, Antique

Source: Company, Antique
1QFY22 7% 1QFY22
85%
2QFY22 7% 2QFY22 50%
3QFY22 4% 3QFY22 99%

EBITDA (INR mn)

Revenue INR mn
4QFY22 4% 4QFY22 18%
ANTIQUE STOCK BROKING LIMITED

1QFY23 7% 1QFY23 30%

2QFY23 9% 2QFY23 24%
Exhibit 1: Revenue jumps 103% YoY

3QFY23 9% 3QFY23 -2%

4QFY23 7% 4QFY23 31%
1QFY24 2% 1QFY24 -45%

Exhibit 3: EBITDA margins expands +9.9 pps YoY

2QFY24 8% 2QFY24 -20%
3QFY24 9% 3QFY24 14%
Revenue growth%

EBITDA margin (%) RHS

4QFY24 13% 4QFY24 18%
1QFY25 10% 103%
1QFY25

1QFY21 25%

-300
-200
-100
0
100
200
300
400

1QFY21 2QFY21 28%

2QFY21 3QFY21 26%
3QFY21 4QFY21 22%

Source: Company, Antique

Source: Company, Antique

4QFY21
FROM THE RESEARCH DESK

1QFY22 21%
1QFY22
2QFY22 17%
2QFY22
3QFY22 3QFY22 17%

PAT (INR mn)

4QFY22 4QFY22 18%
1QFY23
1QFY23 17%
2QFY23
2QFY23 22%
3QFY23
Gross Margin

4QFY23 3QFY23 24%

Exhibit 2: Gross Margin expands 250 bps

Exhibit 4: PAT register profit of INR 184mn

1QFY24 4QFY23 19%

2QFY24 1QFY24 25%
3QFY24
2QFY24 21%
4QFY24
PAT growth%

3QFY24 23%
1QFY25
4QFY24 29%
0%

1QFY25 28%
200%
400%
600%
800%

-600%
-400%
-200%
1000%
22 July 2024 | 76
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 77

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net Revenue 13,960 12,947 21,646 35,021 46,752 PBT 571 644 2,002 4,095 6,221
Op. Expenses 12,751 11,606 18,838 29,755 39,184 Depreciation & amortization 245 247 331 478 604
Gross Profit 1,977 1,915 2,006 2,378 3,230 Interest expense 463 507 649 876 935
EBITDA 1,209 1,341 2,808 5,266 7,568 (Inc)/Dec in working capital (896) (1,022) (1,745) (3,562) (3,905)
Depreciation 245 247 331 478 604 Tax paid (129) (213) (505) (1,032) (1,568)
EBIT 964 1,094 2,477 4,788 6,964 CF from operating activities 254 163 733 855 2,288
Other income 87 58 174 183 192 Capital expenditure (103) (158) (2,000) (1,500) (1,500)
Interest Exp. 480 508 649 876 935 Inc/(Dec) in investments 194 149 141 141 141
Reported PBT 571 644 2,002 4,095 6,221 CF from investing activities 92 (9) (1,859) (1,359) (1,359)
Tax 147 174 505 1,032 1,568 Inc/(Dec) in share capital (479) (508) 4,251 (876) (935)
Reported PAT 423 470 1,498 3,063 4,654 Inc/(Dec) in debt 83 (107) - - -
Net Profit 423 470 1,498 3,063 4,654 Dividend Paid (27) (27) (150) (306) (465)
Adjusted PAT 423 470 1,498 3,063 4,654 Others (26) 543 14 - -
Adjusted EPS (INR) 3.0 3.3 9.6 19.5 29.7 CF from financing activities (449) (98) 4,115 (1,182) (1,400)
Net cash flow (104) 56 2,989 (1,686) (471)
Balance sheet (INR mn) Opening balance 303 229 272 3,046 1,219
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Closing balance 229 272 3,046 1,219 606
Share Capital 133 143 157 157 157
Reserves & Surplus 3,808 5,402 11,650 14,407 18,595 Growth indicators (%)
Networth 3,941 5,544 11,807 14,563 18,752 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Debt 3,303 2,559 2,559 2,559 2,559 Revenue 20.2 (7.3) 67.2 61.8 33.5
Minority Interest 67 85 85 85 85 EBITDA 63.2 10.9 109.4 87.5 43.7
Net deferred Tax liabilities 18 (36) (111) (111) (111) Adj PAT 196.5 11.1 218.5 104.5 51.9
Capital Employed 7,329 8,152 14,339 17,096 21,284 Adj EPS 196.5 11.1 189.6 104.5 51.9
Gross Fixed Assets 2,773 2,940 4,940 6,440 7,940
Accumulated Depreciation 1,242 1,488 1,819 2,297 2,901 Valuation (x)
Capital work in progress 34 36 36 36 36 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net Fixed Assets 1,565 1,489 3,158 4,180 5,076 P/E (x) 241.1 217.1 75.0 36.7 24.1
Investments 9 42 42 42 42 P/BV (x) 24.1 18.4 9.5 7.7 6.0
Non Current Investments 9 42 42 42 42 EV/EBITDA (x) 86.8 77.9 37.2 19.3 13.7
Current Assets, Loans & Adv. 10,284 10,116 18,019 24,004 31,025 EV/Sales (x) 7.5 8.1 4.8 2.9 2.2
Inventory 2,714 2,748 4,595 7,434 9,924 Dividend Yield (%) 1.5 - 0.1 0.3 0.4
Debtors 6,395 6,163 8,303 11,993 16,011
Cash & Bank balance 229 272 3,046 1,219 606
Financial ratios
Loans & advances and others 946 933 2,076 3,358 4,483
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
RoE (%) 11.3 9.9 17.3 23.2 27.9
Current Liabilities & Provisions 4,528 3,495 6,879 11,130 14,858
RoCE (%) 14.7 14.9 23.6 31.6 37.3
Liabilities 4,477 3,417 6,820 11,034 14,730
Asset/T.O (x) 7.9 7.3 7.3 6.7 5.9
Provisions 51 78 59 96 128
Net Debt/Equity (x) 0.8 0.5 0.2 0.2 0.1
Net Current Assets 5,756 6,621 11,140 12,874 16,167
EBIT/Interest (x) 2.2 2.3 4.1 5.7 7.7
Application of Funds 7,329 8,152 14,339 17,096 21,284

Per share data Margins (%)

Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 8.7 10.4 13.0 15.0 16.2
No. of shares (mn) 133 143 157 157 157
EBIT Margin 6.9 8.4 11.4 13.7 14.9
Diluted no. of shares (mn) 133 143 157 157 157
PAT Margin 3.0 3.6 6.9 8.7 10.0
BVPS (INR) 29.7 38.9 75.3 92.9 119.6
CEPS (INR) 5.0 5.0 11.7 22.6 33.5 Source: Company Antique

DPS (INR) 10.5 - 1.0 2.0 3.0

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 78

CMP : INR 777 1QFY25 RESULT REVIEW

Reco
Target Price
: BUY çè
: INR 933 ê
Shoppers Stop
Target Price Change : -3% Miss on profitability; increase Intune store addition guidance
Target 1HFY27 EV/EBITDA (x) : 10
Shoppers Stop’s (SHOP) 1QFY25 revenue performance was in line while
EBITDA Change FY25/ 26/ 27 : -15%/ -12%/ -7% profitability was below our expectations. Revenue (non-GAAP) grew 2%,
impacted by fewer wedding dates, election, and the extreme heat wave. Despite
overall muted demand, value fashion and premium fashion are witnessing
strong traction. Intune has turned EBITDA positive during the quarter and SHOP
Abhijeet Kundu has increased its store addition guidance to 80 stores vs. 60 earlier. In our
+91 22 6911 3430 view, the success of Intune stores can drive the next leg of growth in the coming
[email protected]
years. Profitability was impacted due to higher overheads, however, cost
Dhiraj Mistry rationalization will enable the company to improve margins. Post the 1QFY25
+91 22 6911 3434 performance, factoring near term margin pressure, we have cut our EBITDA
[email protected]
estimates by 15%/ 12%/ 7% for FY25/ 26/ 27. We maintain our positive stance
and expect SHOP’s performance to improve driven by a) Recovery in demand
during the festive season, b) Aggressive expansion in Intune and the beauty
business, and c) Higher footfalls/ SSSG (%) led by better customer service. We
Market data maintain BUY recommendation with a revised TP of INR 933 (previously INR
Sensex : 80,605 960), valuing the stock at 10x 1HFY27 EV/EBITDA.
Sector : Retail
Revenue grew 5%; performance driven by beauty segment
Market Cap (INR bn) : 85.7
Market Cap (USD bn) : 1.024 On a standalone basis, SHOP’s revenue grew 5.3% YoY to INR 10.3 bn (five-year CAGR:
O/S Shares (mn) : 110.0 6%). On non-GAAP basis, revenue grew 2%, majorly driven by the premium portfolio and
52-wk HI/LO (INR) : 920/616 beauty segment. The average transaction value (ATV) grew 7% YoY to INR 4,890 and average
Avg. Daily Vol ('000) : 228 selling price (ASP) grew by 4% to INR 1,697 owing to premiumization. Items per ticket improved
Bloomberg : SHOP IN by 4%. Private brands’ performance declined 12% YoY with a revenue of INR 1.5 bn,
Source: Bloomberg contributing 12% of total sales. Intune revenue was INR 360 mn with sales per sq. ft. of INR
Valuation 11,000 for stores opened till Mar’24. SHOP witnessed increased contribution from women’s
FY25e FY26e FY27e western wear, while its performance in Indian wear and kids wear remained strong. The
EPS (INR) 4.0 13.2 28.3 beauty brand business grew 5% YoY to INR 2.1 bn (contributing 17% of total sales) driven by
P/E (x) 194.2 58.7 27.5 strong 18% growth in the fragrance category.
P/BV (x) 23.2 16.7 10.4
Margin expansion restricted due to higher overheads; Intune and beauty business are
EV/EBITDA (x) 11.6 9.6 7.3
EBITDA positive
EV/Sales (x) 1.9 1.6 1.3
Source: Company, Antique Gross margin contracted 171 bps YoY to 40.6%. Staff cost grew 3.7% YoY to INR 1 bn, while
other expenses grew 21.3% YoY to INR 1.8 bn. Accordingly, EBITDA declined 17.5% YoY to
Returns (%)
INR 1.4 bn. EBITDA margin contracted 381 bps YoY to 13.7%. Notably, new businesses
1m 3m 6m 12m
Absolute 6 10 12 1
Beauty and Intune turned EBITDA positive during the quarter. Depreciation/ interest grew
Relative 2 (1) (0) (16)
11.1% YoY/ 11.6% YoY to INR 1.2 bn/ INR 604 mn respectively. Consequently, recurring
Source: Bloomberg PAT registered a loss of INR 225 mn.
Shareholding pattern Intune expansion guidance increased to 80 stores
During the quarter, SHOP opened two departmental stores and nine Intune stores, taking the
Promoters : 66%
total store count to 114 departmental, 87 beauty, 31 Intune, seven Home Stop, and 20
Public : 34%
Others : 0%
airport stores as of July’24. The company has increased its expansion plans for Intune and is
aspiring to add 80 stores in FY25 vs. 60 stores stated previously. 1QFY25 capex stood at INR
Source: Bloomberg
450 mn. Capex for FY25 is around INR 2.25–2.50 bn.
Price performance vs Nifty
Investment Summary
135
125 Post the 1QFY25 performance, we have cut our EBITDA estimates by 15%/ 12%/ 7% for
115
105 FY25/ 26/ 27. We expect sales/ EBITDA growth of 14%/ 17% CAGR over FY24–27E driven
95 by aggressive store addition of Intune. Future performance will be driven by a) Recovery in
85
75 demand during the festive season, b) Aggressive expansion of Intune and the beauty business,
Jul-23 Nov-23 Mar-24 Jul-24 c) Higher footfalls/ SSSG (%) led by better customer service through programs. We maintain
Shoppers Stop NIFTY BUY recommendation with a revised target price of INR 933, valuing the stock at 10x 1HFY27
Source: Bloomberg Indexed to 100 EV/EBITDA.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 79

Conference Call Highlights

n Demand remained subdued due to the prolonged heat wave, fewer wedding dates,
and elections.
n LFL growth for the quarter was negative 6%. April and May were negative while June
turned positive.
n Beauty and Intune were EBITDA positive during the quarter.
n June revenue grew 7% YoY, benefitting from the start of EOSS.
n Omni channel sales remained flat.
n Customer acceptance towards the business is increasing sequentially.
n The capex is expected to be INR 2.25-2.50 bn for FY25. The company may have to
borrow INR 1 bn during the year for expansion.
n The higher other expenditure is due to opening of stores. The company is working on
rationalization of costs to improve margins.
n The company is expected to grow in double digits over the next two years. The company
expects mid-single digit margin for FY25.
n Store expansion: The company opened nine Intune stores during the quarter. The
company has increased store addition guidance for FY25 to 80 stores vs. 60 earlier.
Sales per sq. ft. (SPF) is around INR 11k for stores opened till Mar’24. SPF for six stores
that have completed three quarters are upward of INR 14k. The average store size
opened for department stores are around 25,000-30,000 sq. ft. and for Intune stores it
is around 5,000 sq. ft. Also, the company is working on rationalization of store size.
n First Citizen – First Citizen members contributed 80% to total sales, recording 67%
repeat and 13% new members. Premium Black Card members contributed 14% to overall
sales, growing +5% YoY. During 1QFY25, Black Card renewal was at 76%.
n Private brands – Private brands’ sales stood at INR 1.5 bn with an overall contribution
of 12% to sales and 18% to apparel sales. Full price sell-thru improved for the SS24
range. Slow moving inventory in private labels has been reduced by INR 210 mn vs. INR
650 mn in Mar’24. Private labels are impacted by men and women brands. The company
decided to discontinue some of the brands that are not performing in line with the
company’s expectations. The impact of brand discontinuation and space rationalization
is 1.1% of sales.
n Intune - SHOP added nine stores during the quarter, taking the total count to 31. Full
price sell-thru stood at +75% in SS24 with strong conversion at 33%.
n Beauty & Beauty distribution – Revenue stood at INR 2.1 bn, +5% YoY, outperforming
other segments with 17% contribution to overall sales. Beauty distribution business sales
amounted to INR 390 mn with its network having expanded to over 444 doors. Its total
brand portfolio expanded to 27 brands.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 80

Table 1: Quarterly financials – standalone

INR mn 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%)
Total Sales 10,337 9,816 5.3 9,997 3.4
COGS 6,141 5,664 8.4 5,946 3.3
Gross Profit 4,196 4,152 1.1 4,051 3.6
Gross margin (%) 40.6 42.3 -171 bps 40.5 7 bps
Staff cost 1,001 966 3.7 913 9.6
% of Net sales 9.7 9.8 -15 bps 9.1 55 bps
Other Expenses 1,774 1,463 21.3 1,497 18.6
% of Net sales 17.2 14.9 226 bps 15.0 219 bps
EBITDA 1,421 1,723 -17.5 1,641 -13.4
EBITDA Margin % 13.7 17.6 -381 bps 16.4 -267 bps
Depreciation 1,167 1,050 11.1 1,118 4.4
Interest 604 541 11.6 568 6.3
Other income 35 73 -51.2 346 -89.8
PBT -315 204 -254.0 301 -204.6
Tax -89 55 -262.8 69 -229.9
effective tax rate % 28.4 26.9 154 bps 22.9 555 bps
Recurring profit -225 149 -250.8 232 -197.1
Profit Margin % -2.2 1.5 -370 bps 2.3 -450 bps
Extraordinary item 0 0 16
Reported PAT -225 149 -250.8 216 -204.2
Source: Company, Antique

Table 2: Actual vs. estimated performance

INR mn Actual Antique est. Var (%) Consensus Var (%)
Revenue 10,337 10,208 1.3 10,564 (2.1)
EBITDA 1,421 1,791 (20.7) 1,833 (22.5)
EBITDA Margin 13.7 17.5 -380 bps 17.4 -361 bps
Net profit (225) 171 NA 229 (198.3)
Source - Company, Antique

Table 3: Change in estimates

FY25 FY26 FY27
INR mn New Old Chg (%) New Old Chg (%) New Old Chg (%)
Revenue 45,907 49,052 (6.4) 53,398 57,133 (6.5) 62,924 66,076 (4.8)
EBITDA 7,373 8,631 (14.6) 9,009 10,284 (12.4) 11,487 12,280 (6.5)
EBITDA Margin 16.1 17.6 -153 bps 16.9 18.0 -113 bps 18.3 18.6 -33 bps
PAT 440 1,369 (67.8) 1,456 2,397 (39.2) 3,112 3,696 (15.8)
EPS 4.0 12.4 (67.8) 13.2 21.8 (39.2) 28.3 33.6 (15.8)
Source - Company, Antique
 ANTIQUE STOCK BROKING LIMITED

2QFY18 91 2QFY18 10.7% 2QFY18 8.5%

3QFY18 166 3QFY18 8.9% 3QFY18 0.9%
4QFY18 240 4QFY18 8.5% 4QFY18 -16.0%
1QFY19 401 1QFY19 10.2% 1QFY19 -9.2%

14% last year

2QFY19 147 2QFY19 10.3%

Source: Company, Antique

Source: Company, Antique
Source: Company, Antique 2QFY19 3.2%
3QFY19 256 3QFY19 10.4% 3QFY19 3.7%
4QFY19 486 4QFY19 9.2% 4QFY19 -6.9%
1QFY20 176 1QFY20 12.0% 1QFY20 0.7%
2QFY20 36 2QFY20 12.0% 2QFY20 -2.2%
3QFY20 143 3QFY20 12.0% 3QFY20 -0.5%
4QFY20 -410 4QFY20 12.0% 4QFY20 -10.4%
1QFY21 -1067 1QFY21 15.0% 1QFY21 -93.5%
2QFY21 -895 2QFY21 15.5% 2QFY21 -65.4%
3QFY21 -404 3QFY21 13.4% 3QFY21 -28.8%
FROM THE RESEARCH DESK

4QFY21 95 4QFY21 13.0% 4QFY21 -5.4%

1QFY22 660 1QFY22 14.2% 1QFY22 272.9%

Exhibit 3: Gross margin contracted 171 bps to 40.6%

2QFY22 568 2QFY22 14.0% 2QFY22 116.0%
3QFY22 207 3QFY22 14.0% 3QFY22 34.4%
4QFY22 -81 4QFY22 13.2% 4QFY22 5.8%
Pvt label revenue contribution (%)

1QFY23 351 1QFY23 14.3% 1QFY23 368.4%

2QFY23 304 2QFY23 15.2% 2QFY23 59.6%
3QFY23 21 3QFY23 14.1% 3QFY23 19.0%
4QFY23 304 4QFY23 13.5% 4QFY23 29.1%
1QFY24 11 1QFY24 14.0% 1QFY24 4.2%
2QFY24 -51 2QFY24 14.0% 2QFY24 1.7%
3QFY24 -112 3QFY24 13.0% 3QFY24 6.6%
4QFY24 11.8% 4QFY24 9.1%
Exhibit 2: Private label revenue contribution decreased to 12% during the quarter from

4QFY24 -266
1QFY25 -171 1QFY25 12.0% 1QFY25 5.3%
Exhibit 1: Standalone revenue grew 5.3% driven by the premium portfolio and beauty segment
22 July 2024 | 81
 ANTIQUE STOCK BROKING LIMITED

2QFY18 83 2QFY18 76%

3QFY18 83 3QFY18 76%
4QFY18 83 4QFY18 75%
1QFY19 83 1QFY19 77%
2QFY19 83

Source: Company, Antique

Source: Company, Antique 2QFY19 75%
3QFY19 83 3QFY19 76%
4QFY19 84 4QFY19 76%
1QFY20 89 1QFY20 82%
2QFY20 89 2QFY20 79%
3QFY20 89 3QFY20 84%
4QFY20 85 4QFY20 79%
1QFY21 84 1QFY21 76%
2QFY21 85 2QFY21 83%
3QFY21 84 3QFY21 83%
FROM THE RESEARCH DESK

4QFY21 84 4QFY21 72%

1QFY22 83 1QFY22 72%
Exhibit 5: Departmental store count increased to 114

2QFY22 80 2QFY22 75%

Department Store Count
Contribution to revenue (%)

3QFY22 83 3QFY22 72%

Exhibit 4: First Citizen contribution to revenue stands at 80%

4QFY22 88 4QFY22 76%

1QFY23 90 1QFY23 80%
2QFY23 91 2QFY23 77%
3QFY23 96 3QFY23 77%
4QFY23 98 4QFY23 77%
1QFY24 98 1QFY24 80%
2QFY24 102 2QFY24 77%
3QFY24 105 3QFY24 78%
4QFY24 112 4QFY24 78%
1QFY25 114 1QFY25 80%
22 July 2024 | 82
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 83

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Net Revenue 39,984 42,132 45,907 53,398 62,924 PBT 1,621 1,011 597 1,973 4,217
Gross Profit 16,710 17,169 19,051 22,000 25,799 Depreciation & amortization 3,816 4,361 4,823 5,099 5,375
Op. Expenses 32,996 35,016 38,534 44,390 51,437 Interest expense 2,092 2,236 - - -
EBITDA 6,988 7,116 7,373 9,009 11,487 (Inc)/Dec in working capital (1,683) (1,116) (2,026) (3,910) (3,384)
Depreciation 3,816 4,361 4,823 5,099 5,375 Tax paid (36) 53 (156) (517) (1,105)
EBIT 3,172 2,754 2,549 3,909 6,112 Less: Interest/Div. Income Recd. (13) (557) (376) (413) (455)
Other income 561 557 376 413 455 Other operating Cash Flow (175) 176 - - -
Interest Exp. 2,092 2,236 2,328 2,349 2,349 CF from operating activities 5,622 6,164 2,862 2,232 4,649
Extra Ordinary Items -gain/(loss) 20 65 - - - Capital expenditure (1,444) (1,738) (2,750) (3,000) (3,000)
Reported PBT 1,621 1,011 597 1,973 4,217 Inc/(Dec) in investments 893 486 - - -
Tax 429 272 156 517 1,105 Add: Interest/Div. Income Recd. 31 14 376 413 455
Reported PAT 1,192 739 440 1,456 3,112 Others - (128) - - -
Net Profit 1,192 739 440 1,456 3,112 CF from investing activities (520) (1,367) (2,374) (2,587) (2,545)
Adjusted PAT 1,212 804 440 1,456 3,112 Inc/(Dec) in share capital 27 2 - - -
Adjusted EPS (INR) 11.1 7.3 4.0 13.2 28.3 Inc/(Dec) in debt (3,304) (3,470) - - -
Others (1,891) (1,421) - - -
Balance sheet (INR mn) CF from financing activities (5,169) (4,889) - - -
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e Net cash flow (67) (92) 488 (354) 2,104
Share Capital 548 550 550 550 550 Opening balance 321 254 162 650 296
Reserves & Surplus 1,771 2,690 3,130 4,586 7,699 Closing balance 254 162 650 296 2,400
Networth 2,320 3,240 3,680 5,136 8,249
Net deferred Tax liabilities (3,312) (3,043) (3,043) (3,043) (3,043) Growth indicators (%)
Non-Current Liabilities (Lease Liab) 22,487 26,069 26,069 26,069 26,069 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Capital Employed 22,535 27,513 27,954 29,410 32,522 Revenue 60.3 5.4 9.0 16.3 17.8
Gross Fixed Assets 40,549 49,679 52,429 55,429 58,429 EBITDA 161.2 1.8 3.6 22.2 27.5
Accumulated Depreciation 19,533 23,894 28,718 33,817 39,193 Adj PAT - -33.7 -45.2 230.6 113.7
Capital work in progress 296 174 174 174 174 Adj EPS - -33.9 -45.2 230.6 113.7
Net Fixed Assets 21,311 25,958 23,885 21,785 19,410
Investments 734 554 554 554 554 Valuation (x)
Non Current Investments 480 554 554 554 554 Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Current Investments 254 - - - - P/E (x) 70.4 106.4 194.2 58.7 27.5
Current Assets, Loans & Adv. 20,628 22,831 25,673 29,303 35,492 P/BV (x) 36.8 26.4 23.2 16.7 10.4
Inventory 14,863 16,153 18,456 22,344 26,283 EV/EBITDA (x) 12.3 12.1 11.6 9.6 7.3
Debtors 304 703 754 851 996 EV/Sales (x) 2.1 2.0 1.9 1.6 1.3
Cash & Bank balance 254 162 650 296 2,400
Loans & advances and others 5,207 5,813 5,813 5,813 5,813
Financial ratios
Current Liabilities & Provisions 20,139 21,830 22,158 22,233 22,934
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
RoE (%) 52.3 24.8 12.0 28.4 37.7
Liabilities 20,100 21,830 22,158 22,233 22,934
RoCE (%) 16.6 12.0 10.5 14.7 20.2
Provisions 39 - - - -
Asset/T.O (x) 1.8 1.6 1.7 1.9 2.0
Net Current Assets 489 1,001 3,515 7,070 12,558
Net Debt/Equity (x) 0.2 0.3 0.2 0.2 (0.1)
Application of Funds 22,535 27,513 27,954 29,410 32,522
EBIT/Interest (x) 1.8 1.5 1.3 1.8 2.8
Per share data
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
Margins (%)
No. of shares (mn) 110 110 110 110 110
Year ended 31 Mar FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 17.5 16.9 16.1 16.9 18.3
Diluted no. of shares (mn) 110 110 110 110 110
EBIT Margin (%) 7.9 6.5 5.6 7.3 9.7
BVPS (INR) 21.2 29.5 33.5 46.7 75.0
PAT Margin (%) 3.0 1.9 1.0 2.7 4.9
CEPS (INR) 45.7 46.4 47.9 59.6 77.2
Source: Company Antique
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 84

CMP : INR 27 1QFY25 RESULT REVIEW

Reco
Target Price
: HOLD çè
: INR 32 çè
South Indian Bank
Target Price Change : No Change Core operating performance below expectation
Target 1HFY27 P/BV (x) : 0.8
South Indian Bank’s (SIB) reported PAT of INR 2.9 bn (45% YoY) was higher
EPS Change 26/ 27 : -2%/ -3%
than our estimate of INR 2.8 bn (RoA of 1%) due to strong non-core income.
NII growth was marginally below our expectation (7% YoY/ -1% QoQ) as
Sohail Halai NIM declined by 12 bps QoQ to 3.3% due to 15 bps decline in loan yields,
+91 22 6911 3413 which in turn declined due to interest income reversals of INR 150 mn and 12
[email protected]
bps rise in cost of funds partially compensated by 37 bps rise in investment
Raju Barnawal
+91 22 6911 3429
yields. Fee income growth was lower than our expectation and opex was at
[email protected] 15% YoY/ 1% QoQ leading to muted core PPP YoY (-2% YoY, 10% below
Sarvesh Mutha estimate). Loan growth was at 12% YoY/ 3% QoQ led by the corporate
+91 22 6911 3498 segment (6% QoQ/ 24% YoY), excluding which growth was flat at 0.4%
[email protected]
QoQ (4% YoY). Gross and net slippage ratio inched up to 1.9%/ 0.7% (vs.
1.6%/ -0.5% respectively in 4QFY24) leading to a rise in credit cost to 60 bps
Market data (21 bps in 4QFY24). We revise our FY25–27 earnings by 0.5%/ -3% and
Sensex : 80,605 maintain HOLD rating on the stock with an unchanged TP of INR 32, valuing
Sector : BANKS the bank at 0.8x 1HFY27 BV.
Market Cap (INR bn) : 71.2
Market Cap (USD bn) : 0.851 Decline in NIM and lower than expected fees impact core PPP : NII grew 7%
O/S Shares (mn) : 2,616.2 YoY/ -1% QoQ (2% below estimate) as NIM declined by 12 bps QoQ to 3.4%. NIM decline
52-wk HI/LO (INR) : 37/18 was due to 15 bps decline in yield on loans on account of interest reversal of INR 150 mn on
Avg. Daily Vol ('000) : 24,217 agri slippages and cost of funds increase of 12 bps, this was partially compensated by 37
Bloomberg : SIB IN bps QoQ rise in investment yields. Management guided for NIM of 3.5% over the medium
Source: Bloomberg
term. Fees grew 25% YoY/ -2% QoQ and opex growth was at 15% YoY (-1% QoQ) leading
Valuation to a core PPP decline of 2% YoY. Non-core income growth was strong 11% YoY/ 51% QoQ
FY25e FY26e FY27e
at INR 2.3 bn due to INR 600 mn of recovery from written-off accounts and INR 600 mn of
EPS (INR) 3.8 4.2 5.3
PSLC income. This compensated for increase in credit cost at 60 bps (vs. 21 bps in 4QFY24)
BPVS (INR) 35.8 39.5 44.1
P/E (x) 7.2 6.5 5.1
and RoA remained stable QoQ at 1%.
P/BV (x) 0.8 0.7 0.6 Loan growth ex-corporate remained flat at 0.4% sequentially: G ross loans grew
NIMs 3.1 3.1 3.3
3% QoQ (12% YoY) driven by the corporate segment (24% YoY/ 6% QOQ), SME & agri
Source: Company, Antique
book de-grew 4% QoQ, and retail growth was at 8% QoQ as there has been inter classification
Returns (%) between retail and SME loans. Gold loan (agri + non-agri) grew by 5% QoQ (13% YoY) and
1m 3m 6m 12m within retail, home loan book grew 1% QoQ, vehicle and credit card grew 9% QoQ. Deposits
Absolute (3) (1) (4) 30
grew 2% QoQ/ 8% YoY, within which CASA grew 1.5% QoQ, resultantly CASA ratio was
Relative (6) (10) (14) 8
stable QoQ at 32%. LD ratio increased from 76.6% to 77.4% QoQ.
Source: Company, Antique

Shareholding pattern Slippage inched up QoQ due to seasonality in agri slippages: The bank reported
gross slippages of INR 3.4 bn (annualized slippage ratio of 1.9% vs. 1.6% QoQ). Rise in
Promoters : 0%
slippages was mainly due to increase in agri slippages from 0.9% to 2% and SME loan
Public : 100%
slippages increased from 3.6% to 4.4% QoQ. Corporate slippages remains NIL. GNPL/
Others : 0%
NNPL ratio decline was stable QoQ at 4.5%/ 1.4% respectively. PCR too were stable QoQ
Source: Bloomberg
at 69%. Total net stress loans (including NNPA + restructured loans + SR) declined from 2.6%
Price performance vs Nifty to 2.3% QoQ.
180
160 Investment Summary
140
120 While RoA during the quarter was strong and sustained at 1%, but weaker core PPP leaves
100 room for volatility and dependence seems to be high on non-core income gains. Further, loan
80
Jul-23 Nov-23 Mar-24 Jul-24 growth continues to be driven by corporate segment and we await to see acceleration in non-
South Indian Bank NIFTY corporate portfolio. Therefore, despite reasonable valuations, we maintain HOLD rating on
Source: Bloomberg, Indexed to 100 the stock. We will continue to monitor the bank’s core profitability trend.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 85

Table 1: Quarterly earnings

Profit and Loss (INR mn) 1QFY25 1QFY24 YoY % 4QFY24 QoQ % 1QFY25E Deviation (%)
Net Interest Income 8,658 8,078 7.2 8,747 -1.0 8,786 -1.5
Other Income 4,217 3,613 16.7 3,460 21.9 3,400 24.0
Reported Fee income 1,870 1,500 24.7 1,910 -2.1 2,000 -6.5
Core Income 10,528 9,578 9.9 10,657 -1.2 10,786 -2.4
Other non-core Income 2,347 2,113 11.1 1,550 51.4 1,400 67.7
Operating Expenses 7,798 6,788 14.9 7,872 -0.9 7,767 0.4
Employee 4,187 4,030 3.9 4,127 1.5 4,209 -0.5
Others 3,611 2,759 30.9 3,745 -3.6 3,558 1.5
Core Operating Profits 2,730 2,789 -2.1 2,785 -2.0 3,019 -9.6
Operating Profits 5,077 4,902 3.6 4,335 17.1 4,419 14.9
Provisions 1,130 1,985 -43.1 406 178.1 740 52.7
PBT 3,947 2,917 35.3 3,929 0.5 3,679 7.3
Taxes 1,006 894 12.5 1,054 -4.5 927 8.5
PAT 2,941 2,024 45.4 2,876 2.3 2,752 6.9
Source: Company, Antique

Table 2: We revise our FY26/ 27 estimates by -2%/ -3% respectively

Old New Change %
INR bn FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27
Net Interest Income 35.8 40.7 48.0 35.3 39.8 46.7 -1.6 -2.2 -2.7
Other Income 15.0 16.7 18.3 15.8 17.4 19.1 5.4 4.2 4.1
Total Income 50.8 57.3 66.3 51.0 57.1 65.8 0.5 -0.3 -0.8
Operating Expenses 33.2 36.9 41.0 33.0 36.6 40.7 -0.8 -0.8 -0.8
Operating Profits 17.6 20.4 25.3 18.0 20.5 25.1 2.8 0.5 -0.9
Provisions 4.4 5.6 6.3 4.7 5.8 6.6 8.7 4.5 3.6
PBT 13.2 14.9 19.0 13.3 14.7 18.5 0.9 -1.1 -2.4
Tax 3.3 3.7 4.8 3.4 3.7 4.7 2.1 0.1 -1.2
PAT 9.9 11.1 14.2 9.9 10.9 13.8 0.5 -1.5 -2.8
Source: Company, Antique

Table 3: RoA expected to be at 0.8%-0.9% over FY25/ 27E

DU PONT ANALYSIS (%) FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Net interest income 2.4 2.5 2.4 2.5 2.3 2.4 2.5 2.3 2.9 3.0 2.8 2.8 2.9
Fee income 0.6 0.6 0.7 0.8 0.7 0.7 0.8 1.0 1.1 1.0 1.1 1.1 1.1
Core income 3.0 3.1 3.1 3.3 3.0 3.1 3.3 3.3 4.0 4.0 3.9 3.9 4.0
Operating costs 1.7 1.9 1.7 1.7 1.7 1.8 2.1 2.1 2.2 2.6 2.6 2.6 2.6
Employee Costs 1.1 1.1 1.0 0.9 0.9 1.0 1.3 1.2 1.3 1.5 1.4 1.4 1.4
Other Expenses 0.6 0.7 0.7 0.8 0.8 0.8 0.8 0.9 1.0 1.1 1.2 1.2 1.2
Core Operating Profit 1.3 1.2 1.4 1.7 1.3 1.3 1.3 1.2 1.8 1.3 1.3 1.3 1.4
Treasury Income 0.3 0.2 0.4 0.2 0.1 0.4 0.5 0.1 (0.4) 0.3 0.2 0.2 0.1
Operating Profit 1.5 1.4 1.8 1.9 1.4 1.7 1.7 1.3 1.5 1.7 1.4 1.5 1.6
Provisions 0.8 0.6 0.9 1.2 1.0 1.6 1.6 1.4 0.4 0.3 0.4 0.4 0.4
NPA Provisions 0.4 0.7 1.0 0.9 0.8 1.1 1.5 1.2 0.6 0.4 0.4 0.4 0.4
Other provisions 0.4 (0.1) (0.1) 0.4 0.2 0.5 0.1 0.2 (0.2) (0.1) 0.0 0.0 0.0
PBT 0.7 0.8 0.9 0.6 0.4 0.2 0.1 (0.1) 1.1 1.4 1.1 1.0 1.2
Tax 0.3 0.3 0.3 0.2 0.2 0.0 0.0 (0.1) 0.3 0.4 0.3 0.3 0.3
ROA 0.5 0.5 0.6 0.4 0.3 0.1 0.1 0.0 0.7 1.0 0.8 0.8 0.9
Leverage (x) 17.1 17.1 16.5 16.3 17.3 18.5 18.0 17.6 17.5 15.2 14.0 14.3 14.5
ROE 7.9 9.3 9.4 7.0 4.9 2.0 1.2 0.8 13.1 14.5 11.1 11.1 12.6
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 86

Table 4: Quarterly performance snapshot

Profit and Loss (INR mn) 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 QoQ (%) YoY (%)
Net Interest Income 6,034 7,264 8,252 8,572 8,078 8,306 8,190 8,747 8,658 -1 7
Other Income 2,463 2,551 -342 3,454 3,613 3,558 4,524 3,460 4,217 22 17
Total Income 8,497 9,815 7,910 12,026 11,691 11,864 12,714 12,207 12,875 5 10
Operating Expenses 5,329 5,558 5,877 6,410 6,788 7,259 7,880 7,872 7,798 -1 15
Operating Profits 3,168 4,257 2,032 5,616 4,902 4,604 4,835 4,335 5,077 17 4
Provisions 1,394 1,793 414 390 1,985 513 486 406 1,130 178 -43
NPA provisions 1,810 1,660 620 780 2,470 700 460 410 1,200 193 -51
PBT 1,774 2,464 1,618 5,226 2,917 4,092 4,349 3,929 3,947 0 35
Taxes 621 233 591 1,887 894 1,344 1,295 1,054 1,006 -5 13
PAT 1,154 2,231 1,028 3,339 2,024 2,748 3,054 2,876 2,941 2 45
Asset Quality
GNPA 37,986 38,561 38,436 37,083 38,039 37,139 36,824 36,203 37,199 3 -2
NNPA 18,005 16,471 15,299 12,936 13,257 12,340 12,123 11,346 11,515 1 -13
GNPA (%) 5.9 5.7 5.5 5.1 5.1 5.0 4.7 4.5 4.5
NNPA (%) 2.9 2.5 2.3 1.9 1.9 1.7 1.6 1.5 1.4
PCR (Calculated, %) 53 57 60 65 65 67 67 69 69
Slippages 4,540 3,700 3,310 3,580 4,870 3,150 2,670 2,840 3,410 20 -30
Slippage Ratio (%) 3.2 2.6 2.3 2.4 3.1 1.9 1.6 1.6 1.9
Credit Cost (%) 1.2 1.0 0.4 0.5 1.4 0.4 0.2 0.2 0.6
Restructured Loans 21,980 19,970 17,810 15,160 12,970 11,590 8,940 7,720 6,640 -14 -49
% of Loans 3.50 3.03 2.62 2.17 1.81 1.60 1.19 0.99 0.83
Ratios (%)
Non Int. to Total Income 29.0 26.0 -4.3 28.7 30.9 30.0 35.6 28.3 32.8
Cost to Core Income 63.0 58.1 54.5 51.2 62.2 63.2 70.8 69.0 61.9
Tax Rate 35.0 9.5 36.5 36.1 30.6 32.8 29.8 26.8 25.5
Loan/Deposit 73.4 76.9 77.3 78.7 77.7 77.2 78.4 79.0 79.9
CAR 16.3 16.0 16.3 17.3 16.5 16.7 15.6 19.9 18.1
Tier I 13.6 13.4 13.7 14.7 14.0 14.2 13.4 17.7 16.7
Ratios - reported (%)
Yield on advances 8.1 8.5 8.8 9.3 9.2 9.3 9.3 9.3 9.2
Cost of Deposits 4.4 4.2 4.3 4.6 4.9 5.0 5.2 5.3 5.4
Cost of Funds 4.4 4.2 4.3 4.6 4.9 5.0 5.2 5.3 5.4
NIMs 2.7 3.2 3.5 3.7 3.3 3.3 3.2 3.4 3.3
Balance Sheet (INR B)
Gross Advances 648 680 701 721 742 749 777 805 827 3 11
Deposits 882 885 907 917 955 971 992 1,019 1,035 2 8
CASA Deposits 303 305 307 302 312 311 315 327 332 2 7
Franchise
Branches 927 926 928 940 941 944 948 955 955
ATMs 1,272 1,275 1,277 1,289 1,296 1,310 1,315 1,321 1,298
Employees 9,553 9,608 9,733 9,677 9,894 9,962 9,939 9,836 9,728
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 87

Table 4: Quarterly performance snapshot (continued...)

(INR bn) 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 QoQ (%) YoY (%)
Balance Sheet
Loans 628 658 679 698 717 726 753 781 801 2.6 11.7
Investments 224 251 229 246 259 259 253 240 228 (4.8) (12.0)
Deposits 882 885 907 917 955 971 992 1019 1035 1.6 8.4
Borrowings 47 85 48 70 56 59 42 39 30 (24.4) (47.6)
Total Assets 1006 1058 1038 1077 1105 1127 1135 1174 1180 0.5 6.7
Deposits Break Up
CASA Deposits 303 305 307 302 312 311 315 327 332 1.5 6.5
% of total Deposits 34.4 34.5 33.8 33.0 32.6 32.0 31.8 32.1 32.1
Savings 255 255 253 252 260 260 260 266 273 2.5 4.9
% of total Deposits 28.9 28.9 27.9 27.5 27.2 26.8 26.2 26.1 26.4
Current 49 50 53 50 52 51 55 61 59 (2.7) 14.8
% of total Deposits 5.5 5.7 5.9 5.4 5.4 5.3 5.5 6.0 5.7
Term Deposits 579 579 600 614 643 660 676 692 703 1.6 9.3
% of total Deposits 65.6 65.5 66.2 67.0 67.4 68.0 68.2 67.9 67.9
Loan book by Geography (%)
Kerala 41.3 40.0 39.3 39.7 37.0 37.3 36.0 35.0 34.0
South (ex-Kerala) 33.1 34.5 34.3 34.9 35.0 34.3 34.0 34.0 33.0
Rest of India 25.7 25.5 26.3 25.4 28.0 28.4 30.0 31.0 33.0
Source: Company, Antique

Table 5: Quarterly DuPont analysis: RoA remained at 1%

(%) 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Interest income 6.5 6.7 7.2 7.5 7.4 7.6 7.7 7.9 7.9
Interest expenses 4.1 3.9 4.1 4.2 4.5 4.7 4.8 4.9 4.9
Net interest income 2.4 2.8 3.1 3.2 3.0 3.0 2.9 3.0 2.9
Fee income 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.7 0.6
Core Income 2.9 3.4 3.7 3.8 3.6 3.6 3.5 3.7 3.6
Operating cost 2.1 2.2 2.2 2.4 2.5 2.6 2.8 2.7 2.7
- Employee Expenses 1.2 1.3 1.3 1.2 1.5 1.5 1.6 1.4 1.4
- Other Expenses 0.9 0.9 1.0 1.2 1.0 1.1 1.2 1.3 1.2
Core operating profit 0.8 1.2 1.4 1.4 1.1 1.0 0.7 1.0 0.9
Fx and other non-core Income 0.5 0.4 -0.7 0.7 0.7 0.7 1.0 0.5 0.8
Operating Profit 1.3 1.7 0.8 2.1 1.8 1.6 1.7 1.5 1.7
Provisions 0.6 0.7 0.2 0.1 0.7 0.2 0.2 0.1 0.4
PBT 0.7 1.0 0.6 2.0 1.1 1.5 1.5 1.4 1.3
Tax 0.2 0.1 0.2 0.7 0.3 0.5 0.5 0.4 0.3
Tax rate % 35.0 9.5 36.5 36.1 30.6 32.8 29.8 26.8 25.5
ROAA 0.5 0.9 0.4 1.3 0.7 1.0 1.1 1.0 1.0
Leverage (x) 16.9 16.8 16.6 16.2 16.1 16.0 15.6 14.2 13.1
ROAE 7.8 14.5 6.5 20.5 11.9 15.7 16.9 14.2 13.1
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 88

Financials
Profit and loss account (INR mn) Capital Adequacy Ratio
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Interest Income 72,332 86,128 97,377 1,09,980 1,24,533 RWA (INR mn) 4,62,248 5,01,438 6,34,883 7,45,003 8,41,140
Interest Expense 42,211 52,808 62,125 70,208 77,842 Tier I (%) 14.7 17.7 15.3 14.4 14.2
Net Interest Income 30,121 33,321 35,252 39,773 46,690 Tier II (%) 2.5 2.3 1.8 1.5 1.3
% NII Growth 34.5 10.6 5.8 12.8 17.4 Total CAR (%) 17.3 19.9 17.1 15.9 15.5
Fee Income 11,771 11,635 13,560 15,052 16,778
Non-interest income 8,126 15,155 15,760 17,352 19,078 Business Ratios
Net Revenue 38,247 48,476 51,011 57,125 65,769 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Employees Expenses 13,004 16,929 17,775 19,908 22,297 Credit / Deposit(%) 76.2 76.6 75.9 75.9 75.9
Other Op. Expenses 10,170 12,871 15,187 16,706 18,376 Investment / Deposit (%) 26.9 23.5 23.3 23.5 23.7
Operating Profit 15,073 18,677 18,049 20,511 25,095 CASA (%) 33.0 32.1 31.3 30.6 29.9
% OP Growth 20.8 23.9 -3.4 13.6 22.4 RoaA (%) 0.7 1.0 0.8 0.8 0.9
Tax 3,331 4,587 3,394 3,748 4,724 Core RoE (%) 13.1 14.5 11.1 11.1 12.6
Total Provisions 3,991 3,389 4,738 5,814 6,570 Dividend Yield (%) - 1.1 1.4 1.5 1.9
Net Profit 7,751 10,701 9,917 10,949 13,802
Key assumptions
Balance sheet (INR mn) Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Deposits
Capital 2,093 2,616 2,616 2,616 2,616 Deposit growth (%) 2.8 11.2 13.0 13.0 13.0
Reserves and Surplus 64,654 85,646 94,407 1,04,081 1,16,275 Cost of deposits (%) 4.3 5.1 5.4 5.4 5.3
Deposits 9,16,514 10,19,203 11,51,699 13,01,420 14,70,604 Advances
Borrowings 69,939 39,121 43,854 48,960 56,735 Advances growth (%) 16.4 11.8 12.0 13.0 13.0
Other Liabilities & Provisions 23,783 27,543 30,098 32,929 36,051 Yield on advances (%) 8.8 9.3 9.5 9.6 9.6
Total liabilities 10,76,982 11,74,128 13,22,673 14,90,006 16,82,281 Investments
Investments growth (%) 14.9 (2.7) 12.0 14.0 14.0
Cash & Balances with RBI 46,392 66,597 75,653 80,885 89,932 Yield on investments (%) 5.6 6.4 6.5 6.4 6.4
Bal. with banks/ call money 24,413 33,625 46,068 52,057 58,824
Investment 2,46,418 2,39,770 2,68,543 3,06,139 3,48,998
Earnings Ratios
Loans and advances 6,98,044 7,80,607 8,74,279 9,87,936 11,16,367
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Interest Inc. / Avg.assets (%) 7.0 7.7 7.8 7.8 7.9
Fixed Assets 8,779 9,665 9,879 10,879 11,879
Interest Exp./ Avg. assets (%) 4.1 4.7 5.0 5.0 4.9
Other Assets 52,935 43,865 48,251 52,111 56,280
NIM (%) 3.3 3.3 3.1 3.1 3.3
Total assets 10,76,982 11,74,128 13,22,673 14,90,006 16,82,281
Int. exp/ Int earned (%) 58.4 61.3 63.8 63.8 62.5
Asset Quality Oth. Inc./ Tot. Inc. (%) 21.2 31.3 30.9 30.4 29.0
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Staff exp/Total opt. exp (%) 56.1 56.8 53.9 54.4 54.8
Gross NPA (INR mn) 37,083 36,213 40,772 46,064 52,307 Cost/ Income Ratio (%) 60.6 61.5 64.6 64.1 61.8
Gross NPA (%) 5.13 4.50 4.52 4.52 4.54 Total Prov./ Operating Profit (%) 26.5 18.1 26.3 28.3 26.2
Net NPA (INR mn) 12,936 11,346 13,354 15,060 16,989 Loan loss prov./Avg. loans (bps) 1.0 0.5 0.6 0.6 0.6
Net NPA (%) 1.85 1.45 1.53 1.52 1.52 Source: Company Antique

% coverage of NPA 65.1 68.7 67.2 67.3 67.5

Delinquencies (%) 2.5 1.9 2.0 2.0 2.0

Per Share Data

Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Book value per share (INR) 30.2 32.4 35.8 39.5 44.1
Adj. BVPS (INR) 26.2 29.6 32.4 35.7 44.1
Price/ Book value 0.9 0.8 0.8 0.7 0.6
EPS(INR) 3.7 4.1 3.8 4.2 5.3
P/E Ratio 7.3 6.6 7.2 6.5 5.1
DPS - 0.3 0.4 0.4 0.5

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 89

CMP : INR 325 1QFY25 RESULTS REVIEW

Reco
Target Price
: SELL ê
: INR 250 ê
Rallis India
Target Price Change : -7% Operational profit disappoints; downgrade to SELL
Target 1HFY27 P/E (x) : 20
Rallis India (Rallis) reported muted 1QFY25 results missing our and
EPS Change FY25/ 26/ 27 : -29%/ -22%/ -15% consensus estimates on all fronts. Key highlights are 1) Domestic revenue
was up 13% YoY led by +20% growth in volume; 2) International business
(IBD) revenue was down 5% YoY, led by realization decline; volume was up
Manish Mahawar 19% YoY; 3) Seeds revenue was down 15% YoY; 4) Gross margin was down
+91 22 6911 3427
[email protected]
~30 bps at 38% due to a) Poor product mix as the seeds business declined
and b) Pricing pressure in the export market; 5) EBITDA was down 8% YoY
Darshita Shah with margin contraction of ~120 bps YoY at 13%, impacted by a) Poor gross
+91 22 6911 3431 margin and b) INR 50 mn one-off expense; 6) Launched four/ one/ fourteen
[email protected] products in crop protection/ crop nutrition/ seeds business in the domestic
Jenish Karia market; 7) Capex guidance for FY25 is INR 1 bn. The company is cautious
+91 22 6911 3406 about the export market and expects a gradual recovery during the year.
[email protected] However, demand in the domestic market is buoyant post the recent pick-up
in monsoon. Considering the slower than anticipated recovery in seed
revenue and EBITDA margin, we cut FY25/ 26/ 27 estimates by 29%/ 22%/
Market data 15% respectively. We upgrade our PE multiple from 18x to 20x (vs. Dhanuka/
Sensex : 80,605 Bayer’s 22x/ 25x) as the agrochemical industry has largely bottomed out
Sector : Agrochemicals and we expect a YoY recovery in FY25. However, we downgrade the stock
Market Cap (INR bn) : 63.1 from HOLD to SELL with a revised TP of INR 250 (earlier INR 270) citing premium
Market Cap (USD bn) : 0.755 valuations (five-year average 30x, high/ low 51x/ 14x).
O/S Shares (mn) : 194.5 Lower prices in the export market and decline in seeds impact growth
52-wk HI/LO (INR) : 358/205
Consolidated revenue was flat YoY to INR 7.8 bn vs. our estimate of INR 8.4 bn. Domestic
Avg. Daily Vol ('000) : 1,785 crop protection business was up 13% YoY to INR 4.3 bn led by +20% volume growth. IBD
Bloomberg : RALI IN was down 5% YoY to INR 1.3 bn due to a price drop YoY while volume was up 19%. Export
Source: Bloomberg market demand continues to remain muted and is only expected to recover in 2HFY25. The
Valuation company has been witnessing price challenges in Acephate, Hexaconazole, Pendimethalin,
FY25e FY26e FY27e and Metribuzin. Further, Acephate and Pendimethalin continues to see demand challenges
EPS (INR) 7.5 10.4 13.9
as well, while demand for Hexaconazole and Metribuzin is stable. Seeds revenue was
down 15% YoY to INR 2.2 bn due to supply constraints and focus on management of inventory.
BVPS (INR) 99.0 107.0 118.4
P/E (x) 43.5 31.1 23.4 Pricing pressure in the export market and mix deterioration impact operational performance
P/BV (x) 3.3 3.0 2.7 Rallis’s gross margin contracted by 30 bps to 38%. We believe this was due to a) Mix
RoE (%) 7.7 10.1 12.3 deterioration with the contribution of seeds coming down to 28% vs. 34% YoY and b) Pricing
Source: Company, Antique pressure in the export market. EBITDA came in at INR 960 mn (Antique est.: INR 13 bn) down
13% YoY. EBITDA performance was lower due to a) Lower gross margin and b) INR 50 mn
Returns (%) one-off expense towards “Progressive Electoral Bond”. Crop care EBITDA was down -17% at
1m 3m 6m 12m INR 480 mn with margin at 8.6% vs. 11.2% in the base quarter. Further, the company saw
Absolute (1) 16 27 48 margin contraction on YoY basis both in the domestic and export market. Seeds business
Relative (5) 5 13 23 EBITDA was INR 480 mn, down 8% YoY with margin expanding by ~180 bps to 22% led by
Source: Bloomberg focus on cost rationalization.
Shareholding pattern New product launches, CSM opportunities, capex, and focus on R&D to drive future growth
In 1QFY25, the company launched four new products in the crop protection business, of
Promoters : 55%
which one is u/s 9(3). It has also launched one product in the crop nutrition business and
Public : 45% fourteen products in the seeds business for the domestic market. The company has largely
Others : 0% concluded the INR 8 bn future capex, which will largely be towards maintenance. It has also
Source: Bloomberg
guided for a capex of INR 1 bn for FY25. It has mentioned that it will be focusing on
a) Improving its digital presence enabled by AI and ML with a larger focus
Price performance vs Nifty on improving the back-end, retail footprint, and automation in manufacturing,
165 b) Becoming a collaborative player and building more relationships with
145 innovators to launch new products in the B2C market, c) Grow herbicides
125
and crop nutrition portfolio, and d) Introduce biologicals.
105 Investment Summary
85 The anticipated recovery in the agrochemical industry, new product launch pipeline, and
Jul-23 Nov-23 Mar-24 Jul-24 expected steady scale-up of the CSM business will result in long-term growth for the company.
Rallis India NIFTY However, considering the premium valuations, we downgrade the stock from HOLD to SELL
Source: Bloomberg Indexed to 100 with a revised TP of INR 250 (earlier INR 270).
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 90

Other Key Takeaways

n Outlook:
l The company mentioned that it will be focusing on a) Improving its digital presence
enabled by AI and ML with a larger focus on improving the back-end, retail footprint,
and automation in manufacturing, b) Becoming a collaborative player and build
more relationships with innovators to launch new products in the B2C market, c)
Grow herbicides and crop nutrition portfolio, and d) Introduce biologicals.
l The company is cautious about the export market and expects a gradual recovery
during the year.
l Demand in the domestic market is buoyant post the recent pick-up in monsoon.
n Domestic business:
l Topline growth of 13% was led by 23% volume growth and 10% price decline YoY.
l Volume growth was led by growth in the herbicides portfolio and strong growth in
Clasto, which was launched in FY24.
l The company’s margins were lower YoY due to sales return from the Rabi season last
year.
n International business:
l Topline decline of 5% was led by 19% volume growth, however, it was steep pricing
pressure across products of Acephate, Pendimethalin, Metribuzin, and Hexaconazole.
l It is witnessing challenges in Acephate and Pendimethalin w.r.t. to lower demand.
l Demand for Hexaconazole and Metribuzin continues to be steady.
n Seeds business:
l Has been facing supply shortages. Further, it has been focusing on keeping inventory
in check.
l Cotton acreages have come down significantly in North India, however, it has not
witnessed any decline in demand for Diggaz. It aims to close FY25 with the highest-
ever volumes in hybrid cotton.
l Further, 15% topline decline is due to supply constraints in hybrid paddy and maize.
n Other updates:
l Increase in other expenses is led by increased spends for digital and IT-related
expenses, where the company is aiming to streamline the back-end, automate
manufacturing, and set-up platforms to gain visibility of channel inventory movement
on the ground level for both crop protection and seeds.
l Seeds have the highest EBITDA margin, followed by crop nutrition and then by the
crop protection segment.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 91

Table 1: Financial snapshot – consolidated

Profit & Loss (INR mn) 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%) FY25E FY24 YoY (%)
Revenues 7,830 7,820 0.1 4,360 79.6 28,342 26,480 7.0
Cost of Material Consumed 4,840 4,810 0.6 2,440 98.4 16,639 15,770 5.5
% of sales 61.8 61.5 30 bps 56.0 585 bps 58.7 59.6 (85 bps)
Employee cost 670 660 1.5 660 1.5 2,877 2,620 9.8
% of sales 8.6 8.4 12 bps 15.1 (658 bps) 10.2 9.9 26 bps
Other expenses 1,360 1,250 8.8 1,200 13.3 5,477 4,980 10.0
% of sales 17.4 16.0 138 bps 27.5 (1,015 bps) 19.3 18.8 52 bps
Total expenditure 6,870 6,720 2.2 4,300 59.8 24,993 23,370 6.9
EBITDA 960 1,100 (12.7) 60 1,500.0 3,349 3,110 7.7
Margin % 12.3 14.1 (181 bps) 1.4 1,088 bps 11.8 11.7 7 bps
Other income 50 30 66.7 60 (16.7) 179 160 12.1
Depreciation 310 250 24.0 330 (6.1) 1,338 1,140 17.3
Interest expenses 50 30 66.7 80 (37.5) 250 180 38.9
Profit Before Tax 650 850 (23.5) (290) -- 1,941 1,950 (0.5)
PBT after exceptional 650 850 (23.5) (290) -- 1,941 1,960 (1.0)
Tax 170 220 (22.7) (80) -- 489 480 1.9
Tax Rate % 26.2 25.9 27 bps 27.6 -- 25.2 24.5 71 bps
Reported Net Profit 480 630 (23.8) (210) -- 1,452 1,480 (1.9)
Adjusted Net Profit 480 630 (23.8) (210) -- 1,452 1,470 (1.3)
EPS (INR) 2.47 3.24 (23.8) (1.08) -- 7.46 7.56 (1.3)
Source: Company, Antique

Table 2: Change in estimates

(INR in mn) FY25E FY26E FY27E
Rallis India Old New (%) Old New (%) Old New (%)
Revenue 30,501 28,342 (7.1) 35,173 32,582 (7.4) 40,608 37,499 (7.7)
EBITDA 4,134 3,349 (19.0) 5,005 4,245 (15.2) 5,876 5,263 (10.4)
PAT 2,039 1,452 (28.8) 2,598 2,030 (21.9) 3,161 2,703 (14.5)
EPS 10.5 7.5 (28.8) 13.4 10.4 (21.9) 16.3 13.9 (14.5)
Source: Antique

Table 3: Actual vs. estimated performance

Particulars (INR mn) Actual ASBLe Var (%) Cons. Est. Var (%)
Revenues 7,830 8,371 (6.5) 8,577 (8.7)
EBITDA 960 1,279 (24.9) 907 5.8
EBITDA margin (%) 12.3 15.3 (302 bps) 10.6 169 bps
Adjusted PAT 480 684 (29.9) 706 (32.0)
Source: Company, Antique, Bloomberg
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 92

Table 4: Quarterly revenue

Particulars (INR mn) 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Domestic Sales 3376 5104 3421 2786 3953 6023 3651 2770 3775 5721 3870 2489 4266
Growth (%) 31.2 3.0 9.4 25.1 17. 1 18.0 6.7 (0.6) (4.5) (5.0) 6.0 (10.1) 13.0
International Sales 1339 1909 2580 2062 2019 3188 2413 2206 1413 1594 1785 1611 1342
Growth (%) (7.5) 22.0 19.0 (7.6) 50.8 67.0 (6.5) 7.0 (30.0) (50.0) (26.0) (27.0) (5.0)
Seeds/Organic Manure Sales 2691 256 280 260 2657 280 240 250 2620 950 320 260 2220
Growth (%) 3.1 (65.0) (31.7) 1.2 (1.3) 9.6 (14.3) (3.8) (1.4) 239.3 33.3 4.0 (15.3)
Total Revenue 7405 7268 6282 5108 8628 9491 6303 5226 7808 8265 5975 4360 7828
Growth (%) 11.7 0.3 10.1 8.3 16.5 30.6 0.3 2.3 (9.5) (12.9) (5.2) (16.6) 0.3
Source: Company

Table 5: Revenue contribution

Particulars (%) 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Domestic Sales 45.6 70.2 54.5 54.5 45.8 63.5 57.9 53.0 48.3 69.2 64.8 57.1 54.5
International Sales 18.1 26.3 41.1 40.4 23.4 33.6 38.3 42.2 18.1 19.3 29.9 36.9 17. 1
Seeds/Organic Manure Sales 36.3 3.5 4.5 5.1 30.8 3.0 3.8 4.8 33.6 11.5 5.4 6.0 28.4
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Company

Table 6: Quarterly EBITDA

Particulars (INR mn) 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Crop Care (Domestic +Intl) 380 1080 790 220 570 1390 711 180 580 1270 790 300 480
Growth (%) (15.6) 0.9 (3.7) (35.3) 50.0 28.7 (10.0) (92.7) 1.8 (8.6) 11.1 66.7 (17.2)
Seeds/Organic Manure Sales 830 (200) (110) (250) 560 (210) (180) (840) 520 60 (170) (240) 480
Growth (%) 1.2 -- -- -- (32.5) -- -- -- (7.1) (128.6) (5.6) (71.4) (7.7)
Total EBITDA 1,210 880 680 (30) 1,130 1,180 531 (660) 1,100 1,330 620 60 960
Growth (%) (4.7) (24.8) 13.3 -- (6.6) 34.1 (21.9) -- (2.7) 12.7 16.8 -- --
Source: Company

Table 7: Quarterly EBITDA margin

Particulars (%) 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Crop Care (Domestic +Intl) 8.1 15.4 13.2 4.5 9.5 15.1 11.7 3.6 11.2 17. 4 14.0 7.3 8.6
Seeds/Organic Manure Sales 30.8 (78.3) (39.3) (96.2) 21.1 (75.0) (75.0) (336.0) 19.8 6.3 (53.1) (92.3) 21.6
Consolidated EBITDA margin 16.3 12.1 10.8 (0.6) 13.1 12.4 8.4 (12.6) 14.1 16.1 10.4 1.4 12.3
Source: Company
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 93

Exhibit 1: Domestic revenue Exhibit 2: International revenue

25,000 20 12,000 60

13.1

14.5

14.9
INR in mn % INR in mn %

12.0
12.0

34.8
15 50

9.3
10,000

49.5

24.4
20,000 40

20.0
14.8

20.0
4.9
10

17.4
12.2

12.0
30

11.8
8,000

10.2

7.0
(1.4)

0.0

9.7
(2.2) 5
(2.2)

8.0
15,000 20

4.8
4.7
2.1
-3.5
- 6,000 10

(20.2)
10,000 (5) -
(14.1)

4,000
(10)

(34.7)
(10)
5,000 (20)
2,000
(15) (30)
- (20) - (40)

FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
Revenue Growth (%) Revenue Growth (%)
Source: Company, Antique Source: Company, Antique

Exhibit 3: Gross margin (%) Exhibit 4: EBITDA margin (%)

50 % 19 %
45
17
45

44

40
44
44
42
42

17
41
41
41
41

40
40

15

16
39

35
38

16
38

15
15

15
15
35

30
13

14
13
25

13
12
11

12
12
20

12

11
15 9
10
7
5

7
- 5
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E

FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
Source: Company, Antique Source: Company, Antique

Exhibit 5: New product launches in crop protection segment Exhibit 6: Innovation turnover index (%)
14 Nos 18 %
16
12
16

16
14
15

15

10
12
13
8
12

10
11

11

11

11
10

10

6 8

4 6
7

2 4
1

1
10

13
2

2
0
FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

1QFY25

-
FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

Source: Company, Antique Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 94

Financials
Profit and loss account (INR mn) Cash flow statement (INR mn)
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Net Revenue 29,670 26,484 28,342 32,582 37,499 PBT 1,281 1,957 1,941 2,714 3,613
Gross Profit 10,236 10,706 11,703 13,435 15,493 Depreciation & amortization 914 1,141 1,338 1,488 1,638
Op. Expenses 27,486 23,372 24,993 28,337 32,236 Interest expense 122 177 250 250 250
EBITDA 2,183 3,112 3,349 4,245 5,263 (Inc)/Dec in working capital (57) (98) 291 (900) (992)
Depreciation 914 1,141 1,338 1,488 1,638 Tax paid (495) (601) (489) (684) (910)
EBIT 1,270 1,971 2,011 2,758 3,626 Less: Interest/Div. Income Recd. (27) (10) (179) (206) (237)
Other income 127 156 179 206 237 Other operating Cash Flow 100 77 - - -
Interest Exp. 122 177 250 250 250 CF from operating activities 2,168 2,691 3,151 2,661 3,361
Extra Ordinary Items -gain/(loss) 4 5 - - - Capital expenditure (1,860) (806) (1,500) (1,500) (1,500)
Reported PBT 1,279 1,955 1,941 2,714 3,613 Inc/(Dec) in investments 312 (373) - (247) (272)
Tax 360 476 489 684 910 Add: Interest/Div. Income Recd. 127 156 179 206 237
Reported PAT 919 1,479 1,452 2,030 2,703 CF from investing activities (1,421) (1,023) (1,321) (1,541) (1,535)
Net Profit 919 1,479 1,452 2,030 2,703 Inc/(Dec) in debt 460 (1,014) (155) (250) (250)
Adjusted PAT 919 1,479 1,452 2,030 2,703 Dividend Paid (584) (485) (486) (486) (486)
Adjusted EPS (INR) 4.7 7.6 7.5 10.4 13.9 Others (286) (344) - - -
CF from financing activities (410) (1,843) (641) (736) (736)
Balance sheet (INR mn) Net cash flow 337 (175) 1,190 384 1,090
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e Opening balance 105 442 267 1,456 1,840
Share Capital 195 195 195 195 195 Bank Balance 19 48 48 48 48
Reserves & Surplus 17,106 18,100 19,066 20,610 22,826 Cash and Bank Balance 461 315 1,505 1,888 2,978
Networth 17,301 18,295 19,260 20,804 23,020
Debt 1,038 16 111 111 111 Growth indicators (%)
Net deferred Tax liabilities 123 6 6 6 6 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Capital Employed 18,461 18,316 19,377 20,921 23,137 Revenue 13.9 (10.7) 7.0 15.0 15.1
Gross Fixed Assets 9,481 12,528 13,377 14,877 16,377 EBITDA (20.4) 42.5 7.6 26.8 24.0
Accumulated Depreciation 3,288 3,998 5,336 6,823 8,461 Adj PAT (44.0) 60.9 (1.8) 39.9 33.1
Capital work in progress 1,794 191 191 191 191 Adj EPS (44.3) 61.1 (1.5) 39.9 33.1
Net Fixed Assets 7,987 8,721 8,232 8,245 8,107
Goodwill 1,958 1,958 2,609 2,609 2,609 Valuation (x)
Investments 2,227 2,522 2,522 2,770 3,042 Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Non Current Investments 33 48 48 48 48 P/E (x) 69.1 42.9 43.5 31.1 23.4
Current Investments 2,194 2,474 2,474 2,722 2,994 P/BV (x) 3.7 3.5 3.3 3.0 2.7
Current Assets, Loans & Adv. 15,805 16,834 17,217 19,818 23,438 EV/EBITDA (x) 28.2 19.4 17.7 13.8 10.9
Inventory 7,929 8,079 7,750 8,918 10,250 EV/Sales (x) 2.1 2.3 2.1 1.8 1.5
Debtors 4,986 5,791 5,047 5,802 6,678 Dividend Yield (%) 0.8 0.8 0.8 0.8 0.8
Cash & Bank balance 461 315 1,505 1,888 2,978
Loans & advances and others 2,430 2,648 2,915 3,209 3,533
Financial ratios
Current Liabilities & Provisions 9,516 11,718 11,203 12,520 14,059
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
RoE (%) 5.4 8.3 7.7 10.1 12.3
Liabilities 5,883 5,998 5,926 6,820 7,838
RoCE (%) 7.7 11.6 11.6 14.7 17.5
Provisions 3,633 5,720 5,277 5,700 6,221
Asset/T.O (x) 2.1 1.9 2.0 2.2 2.3
Net Current Assets 6,289 5,115 6,014 7,298 9,380
Net Debt/Equity (x) (0.1) (0.2) (0.2) (0.2) (0.3)
Application of Funds 18,461 18,316 19,377 20,921 23,137
EBIT/Interest (x) 11.4 12.0 8.8 11.9 15.5
Per share data
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
Margins (%)
No. of shares (mn) 195 195 195 195 195
Year-ended March 31 FY23 FY24 FY25e FY26e FY27e
EBITDA Margin (%) 7.4 11.7 11.8 13.0 14.0
Diluted no. of shares (mn) 195 195 195 195 195
EBIT Margin (%) 4.3 7.4 7.1 8.5 9.7
BVPS (INR) 88.9 94.1 99.0 107.0 118.4
PAT Margin (%) 3.1 5.6 5.1 6.2 7.2
CEPS (INR) 9.4 13.5 14.3 18.1 22.3
DPS (INR) 2.5 2.5 2.5 2.5 2.5 Source: Company Antique

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 95

Valuation Guide
Company Reco CMP TP Return M. Cap M. Cap Net profit (INR bn) EPS (INR) P/E (x) EV/EBITDA (x) P/BV (x) RoE (%) RoCE (%) Absolute (%)
(INR) (INR) (%) (INR bn) (USD bn) FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY26 FY26 FY26 1m 12m

AGROCHEM & FERTILIZERS

Bayer Cropscience Hold 6,530 5,850 (10) 293.5 3.5 8.8 9.9 11.1 195.2 220.8 247.1 33.4 29.6 26.4 24.9 22.1 19.6 9.3 32.3 41.6 0 42
Coromandel Intl. Buy 1,595 1,670 5 469.8 5.6 18.8 21.6 27.5 63.2 73.1 93.3 25.2 21.8 17.1 17.0 14.7 11.3 3.7 18.4 26.1 3 63
Dhanuka Agritech Buy 1,684 1,770 5 76.8 0.9 2.8 3.3 4.0 60.8 72.7 87.3 27.7 23.2 19.3 19.6 16.1 13.2 4.5 21.0 28.1 0 117
Paradeep Phosphates Buy 86 120 39 70.5 0.8 6.7 7.6 7.9 8.2 9.3 9.7 10.6 9.3 8.9 7.5 6.4 5.8 1.5 16.9 16.4 1 37
PI Industries Buy 3,835 4,390 14 581.9 7.0 15.2 17.7 20.4 100.3 116.2 134.3 38.3 33.0 28.6 25.1 21.1 17.8 5.1 16.4 21.7 2 4
Rallis India Sell 325 250 (23) 63.1 0.8 1.5 2.0 2.7 7.5 10.4 13.9 43.5 31.1 23.4 17.7 13.8 10.9 3.0 10.1 14.7 -3 49
Sharda Cropchem Buy 495 560 13 44.7 0.5 2.2 3.1 3.6 24.5 33.9 40.0 20.2 14.6 12.4 7.5 5.7 4.7 1.7 11.9 15.2 11 -3
Sumitomo Chemical India Buy 499 540 8 249.1 3.0 5.0 6.2 7.3 9.9 12.3 14.6 50.3 40.5 34.3 38.9 31.4 26.8 7.3 19.6 26.1 1 22
UPL Buy 543 770 42 407.3 4.9 19.8 33.1 43.0 26.4 44.1 57.3 20.5 12.3 9.5 7.0 5.6 4.8 1.4 12.2 13.4 -4 -14
BUILDING MATERIALS
Apollo Pipes Buy 622 940 51 25.7 0.3 0.7 1.0 1.5 16.3 23.7 34.8 38.2 26.3 17.9 18.1 12.6 8.6 2.9 11.8 15.6 -4 -18
Astral Buy 2,272 2,600 14 610.3 7.3 8.1 9.9 11.6 30.3 36.7 43.1 75.0 62.0 52.8 46.6 38.5 32.6 12.6 22.5 29.1 0 18
Cera Sanitaryware Buy 8,720 9,620 10 113.4 1.4 2.7 3.1 3.5 205.5 236.7 269.2 42.4 36.8 32.4 31.4 27.5 23.8 6.6 19.0 24.6 -4 15
Finolex Industries Hold 318 260 (18) 197.4 2.4 5.8 6.7 7.7 9.3 10.9 12.5 34.1 29.3 25.4 27.0 23.6 20.8 3.1 10.8 12.9 -4 69
Greenlam Industries Buy 560 820 46 71.4 0.9 1.5 2.7 3.8 11.9 20.9 29.9 47.3 26.8 18.8 19.9 14.3 11.4 5.0 20.2 17.0 -9 18
Kajaria Ceramics Buy 1,374 1,620 18 218.8 2.6 5.2 6.4 8.2 32.8 40.5 51.8 41.9 34.0 26.5 25.3 20.9 16.7 6.1 19.4 25.0 2 -4
Prince Pipes and Fittings Buy 671 870 30 74.2 0.9 2.1 2.7 3.3 18.8 24.2 30.2 35.7 27.8 22.2 20.4 16.2 12.9 3.7 14.3 18.4 -3 6
Somany Ceramics Buy 741 1,000 35 30.4 0.4 1.3 1.7 2.3 32.5 42.6 56.5 22.8 17.4 13.1 11.8 9.3 7.0 3.1 19.0 20.3 0 1
Supreme Industries Buy 5,784 6,880 19 734.7 8.8 13.6 16.2 18.7 107.3 127.5 147.6 53.9 45.4 39.2 37.0 31.3 27.0 10.3 24.6 29.2 -1 66
CEMENT
ACC Buy 2,620 3,050 16 492.0 5.9 22.6 26.0 28.8 120.4 138.3 153.1 21.8 18.9 17.1 11.6 9.7 8.4 2.4 13.3 17.9 1 48
Ambuja Cement Buy 678 740 9 1,669.8 20.0 42.8 50.7 60.0 17.4 20.6 24.4 39.0 32.9 27.8 21.3 17.1 14.5 2.9 9.1 14.2 3 63
Birla Corp Hold 1,503 1,730 15 115.7 1.4 5.6 6.3 7.1 72.1 81.7 91.9 20.8 18.4 16.4 8.8 8.3 7.8 1.5 8.5 9.5 -2 25
Dalmia Bharat Hold 1,819 1,770 (3) 341.1 4.1 11.0 13.5 15.1 58.4 71.6 80.3 31.2 25.4 22.6 12.2 10.8 9.8 1.7 7.1 8.7 0 -5
Grasim Industries Buy 2,743 2,850 4 1,821.3 21.8 15.0 17.0 16.4 22.7 25.5 24.7 121.0 107.4 111.1 73.4 65.6 59.6 3.2 3.0 4.2 11 53
Heidelberg Hold 226 190 (16) 51.2 0.6 2.1 2.5 2.8 9.4 10.9 12.3 24.1 20.7 18.3 12.3 10.7 9.6 3.4 16.6 19.9 5 30
JK Cement Buy 4,285 5,150 20 331.1 4.0 9.9 11.4 13.6 128.5 147.9 176.0 33.3 29.0 24.3 15.1 13.5 11.8 4.6 17.1 16.0 1 35
JK Lakshmi Cement Buy 844 970 15 99.3 1.2 6.0 6.8 7.8 50.6 57.5 66.0 16.7 14.7 12.8 9.3 8.4 7.8 2.5 18.3 17.5 2 27
Nuvoco Vistas Hold 337 400 19 120.2 1.4 3.4 4.3 5.2 9.4 12.2 14.6 35.7 27.7 23.0 8.7 8.2 7.5 1.2 4.6 7.1 -4 -4
Orient Cement Hold 326 225 (31) 66.7 0.8 2.4 2.8 3.5 11.6 13.9 17.0 28.0 23.5 19.1 12.2 10.8 10.0 3.1 13.9 17.8 40 128
Shree Cements Buy 27,284 32,300 18 984.4 11.8 28.3 32.6 38.0 785.5 904.9 1,052.1 34.7 30.2 25.9 17.5 15.2 13.2 3.8 13.3 17.1 0 18
Ramco Cement Hold 778 840 8 183.8 2.2 3.9 5.6 6.9 16.5 23.6 29.3 47.0 33.0 26.5 13.9 12.0 10.5 2.3 7.1 8.9 -8 -12
UltraTech Cement Buy 11,258 12,400 10 3,250.2 38.8 79.3 104.1 131.0 268.3 352.3 443.2 42.0 32.0 25.4 22.1 17.8 14.6 4.5 15.0 19.3 6 39
FMCG & RETAIL
Aditya Birla Fashion & Retail Hold 316 302 (4) 320.3 3.8 -2.4 1.8 4.2 -2.4 1.8 4.1 -132.5 179.8 76.1 18.8 14.2 12.0 8.1 4.6 8.6 0 48
Arvind Fashions Buy 474 659 39 63.3 0.8 1.1 2.0 2.8 8.2 14.8 21.1 57.5 32.1 22.5 10.5 8.0 6.3 4.3 13.5 20.2 -8 43
Asian Paints Hold 2,946 3,105 5 2,825.8 33.8 51.5 56.6 62.5 53.7 59.0 65.2 54.9 49.9 45.2 39.0 34.8 30.9 11.6 24.8 28.9 2 -16
Avenue Supermarts Hold 5,011 5,098 2 3,260.6 39.0 34.5 44.0 53.4 53.1 67.6 82.1 94.4 74.1 61.0 62.5 49.3 40.4 12.0 16.2 21.9 4 36
Bajaj Consumer Care Buy 270 300 11 38.7 0.5 1.8 2.0 2.2 12.6 14.2 15.7 21.3 18.9 17.1 15.6 12.9 10.9 2.6 14.7 17.9 0 27
Colgate Palmolive Hold 3,121 2,810 (10) 848.9 10.1 14.9 16.3 17.7 54.8 59.8 65.1 56.9 52.2 47.9 39.6 36.1 32.9 33.4 69.4 105.8 10 71
Dabur India Buy 633 718 13 1,121.7 13.4 20.9 23.9 26.8 11.8 13.5 15.2 53.5 46.8 41.7 40.8 35.7 31.7 9.3 20.9 24.4 7 12
Devyani International Buy 175 222 27 211.3 2.5 1.8 3.0 3.7 1.5 2.5 3.1 116.6 70.2 56.5 21.7 16.5 13.9 13.7 21.7 28.8 2 -12
Emami Buy 800 816 2 351.2 4.2 8.6 9.6 10.7 19.6 22.0 24.6 40.7 36.4 32.5 33.1 29.1 25.6 11.2 32.8 38.6 14 90
Godrej Consumer Buy 1,452 1,652 14 1,485.0 17.7 23.7 31.1 36.4 23.2 30.4 35.6 62.6 47.7 40.7 40.8 33.9 29.1 9.8 21.6 28.0 7 37
Hindustan Unilever Hold 2,727 2,574 (6) 6,407.3 76.6 105.5 115.4 126.5 44.9 49.1 53.8 60.7 55.5 50.6 41.9 38.1 34.5 12.6 22.7 28.0 12 5
Honasa Consumer Hold 462 440 (5) 149.9 1.8 1.5 2.2 2.6 4.7 6.7 8.0 99.2 69.3 57.7 47.9 37.2 26.8 10.3 16.0 28.1 3
ITC Buy 475 511 8 5,929.9 70.9 217.1 241.5 268.6 17.4 19.3 21.5 27.3 24.5 22.1 21.3 18.8 16.4 5.8 26.0 33.6 13 -3
Jubilant Foodworks Hold 560 511 (9) 369.6 4.4 4.8 6.9 8.1 7.3 10.5 12.2 77.2 53.3 45.9 21.3 17.5 15.5 12.5 25.5 33.5 1 20
Jyothy Labs Buy 496 605 22 182.1 2.2 4.4 5.1 6.0 12.0 14.0 16.3 41.2 35.5 30.5 31.9 27.4 23.3 7.6 23.0 30.2 11 104
Kansai Nerolac Buy 272 364 34 219.5 2.6 7.9 9.2 10.4 9.8 11.4 12.8 27.7 23.8 21.2 16.8 14.1 12.3 3.3 14.6 19.7 -1 -16
Kewal Kiran Buy 670 1,013 51 41.3 0.5 1.7 2.0 2.2 28.1 31.8 35.7 23.8 21.0 18.8 19.1 16.3 14.1 4.3 20.3 26.0 -6 -2
Marico Buy 669 721 8 865.7 10.3 16.2 19.2 22.1 12.6 14.9 17.2 53.3 44.9 39.0 37.2 31.5 27.3 16.8 40.6 46.7 10 24
Nestle Hold 2,598 2,720 5 2,504.7 29.9 35.0 40.4 47.1 36.3 41.9 48.8 71.6 62.1 53.2 48.4 42.1 36.3 51.7 90.8 123.9 4 13
Patanjali Foods Buy 1,594 2,144 34 577.1 6.9 14.8 23.1 28.6 40.9 63.9 79.0 39.0 24.9 20.2 27.9 17.4 13.3 4.3 18.5 23.2 9 20
Restaurant Brands Asia Buy 109 145 33 54.3 0.6 -0.7 -0.2 0.1 -1.4 -0.5 0.2 -78.1 -226.1 468.1 13.4 10.5 8.6 3.1 -1.4 13.1 1 -3
Radico Khaitan Buy 1,689 1,996 18 225.8 2.7 4.2 5.5 6.4 31.1 41.1 47.6 54.3 41.1 35.5 32.3 26.2 22.8 7.0 18.5 21.1 -5 21
Sapphire Foods India Buy 1,526 1,966 29 97.3 1.2 0.5 1.2 2.1 7.1 18.9 33.1 215.3 80.8 46.1 17.4 12.4 9.2 6.4 8.3 21.6 -4 7
Shoppers Stop Buy 779 933 20 85.7 1.0 0.4 1.5 3.1 4.0 13.2 28.3 194.6 58.9 27.5 11.7 9.6 7.4 16.7 28.4 14.7 3 0
Titan Co Ltd Buy 3,259 4,490 38 2,893.3 34.6 44.5 59.4 73.4 50.1 67.0 82.7 65.0 48.7 39.4 42.7 33.4 27.3 15.9 38.5 34.5 -4 9
Trent Buy 5,166 5,521 7 1,836.6 22.0 18.3 25.9 32.4 51.6 72.8 91.2 100.2 70.9 56.6 61.9 44.6 35.4 20.8 29.3 41.5 -2 201
United Spirits Buy 1,298 1,513 17 943.9 11.3 14.4 17.1 19.5 19.8 23.5 26.9 65.7 55.1 48.3 46.9 39.4 34.1 10.5 20.3 33.8 3 25
Vedant Fashion Buy 1,036 1,446 40 251.7 3.0 4.7 5.6 6.5 19.6 23.1 26.9 53.0 44.9 38.5 31.9 26.9 22.7 10.5 25.7 32.9 -7 -19
V-Mart Retail Buy 3,202 3,276 2 63.3 0.8 -0.4 0.4 0.6 -18.4 19.8 31.7 -173.6 161.6 100.9 20.6 14.7 12.8 8.4 5.3 10.2 13 44
Westlife Foodworld Hold 851 897 6 132.6 1.6 0.8 1.6 2.1 5.2 10.1 13.5 164.8 84.1 62.9 31.8 23.8 19.8 17.3 22.2 39.9 4 -5
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 96

Valuation Guide
Company Reco CMP TP Return M. Cap M. Cap Net profit (INR bn) EPS (INR) P/E (x) EV/EBITDA (x) P/BV (x) RoE (%) RoCE (%) Absolute (%)
(INR) (INR) (%) (INR bn) (USD bn) FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY26 FY26 FY26 1m 12m

INDUSTRIALS & ENGINEERING

ABB Buy 7,621 9,884 30 1,614.8 19.3 17.5 23.0 29.9 82.7 108.8 141.2 92.2 70.1 54.0 72.5 54.6 41.9 18.7 29.1 39.7 -9 81
Bharat Dynamics Buy 1,468 1,643 12 538.0 6.4 7.3 12.0 14.8 19.9 32.7 40.3 73.8 44.8 36.4 68.4 36.3 28.8 11.1 26.8 27.2 -4 149
Bajaj Elec. Hold 993 1,075 8 114.4 1.4 2.1 3.1 4.0 18.6 26.7 34.7 53.4 37.1 28.6 28.7 21.0 16.5 6.5 18.4 21.9 -6 -12
BEML Buy 4,637 5,216 12 193.1 2.3 3.4 4.9 7.2 81.6 117.0 172.8 56.8 39.6 26.8 35.6 25.5 17.8 5.7 15.3 16.0 6 176
Bharat Electronics Buy 306 339 11 2,239.0 26.8 45.5 56.3 67.5 6.2 7.7 9.2 49.2 39.7 33.1 36.2 28.8 23.6 10.1 27.6 28.4 0 145
BHEL Buy 294 361 23 1,024.1 12.2 18.5 34.8 43.8 5.3 10.0 12.6 55.3 29.4 23.4 36.8 20.7 16.7 3.7 13.0 27.2 0 211
Blue Star Hold 1,640 1,518 (7) 337.2 4.0 5.7 7.8 9.4 27.6 37.8 45.8 59.5 43.4 35.8 38.9 28.8 24.0 9.7 24.3 31.2 -3 108
Cochin Shipyard Hold 2,543 890 (65) 669.1 8.0 5.4 5.5 6.9 20.6 21.1 26.3 123.5 120.8 96.5 116.3 120.0 104.3 11.7 10.0 13.4 19 662
Crompton Consumer Buy 428 503 18 275.2 3.3 5.4 7.1 9.1 8.5 11.0 14.2 50.5 39.0 30.2 30.8 24.2 18.9 7.4 20.1 23.2 0 47
Cummins India Hold 3,559 3,965 11 986.7 11.8 16.5 19.8 24.2 59.5 71.3 87.3 59.8 49.9 40.8 50.8 41.4 33.0 13.2 27.7 36.4 -9 89
Engineers India Hold 262 239 (9) 147.2 1.8 3.5 4.4 5.3 5.6 6.9 8.4 46.6 37.8 31.3 40.1 30.1 23.4 5.3 16.5 19.0 2 94
Garden Reach Shipbuilders Buy 2,455 962 (61) 281.3 3.4 3.2 3.5 3.8 27.8 30.9 33.4 88.3 79.5 73.5 98.7 85.1 73.5 12.5 16.6 22.9 49 310
GE T&D Hold 1,515 1,470 (3) 388.0 4.6 3.5 6.0 9.1 13.7 23.4 35.4 110.8 64.8 42.8 70.7 43.2 28.8 17.7 31.6 48.7 -4 495
Jupiter Wagons Ltd Hold 620 588 (5) 263.0 3.1 4.7 6.0 7.8 11.3 14.6 19.0 54.9 42.4 32.7 40.4 31.3 24.2 9.7 25.6 30.6 -11 217
Havells India Hold 1,769 1,908 8 1,108.7 13.3 17.3 21.4 26.3 27.6 34.2 42.1 64.0 51.7 42.0 42.8 34.5 27.9 10.6 22.4 29.4 -6 36
Hindustan Aeronautics Buy 4,800 6,145 28 3,210.3 38.4 68.9 83.5 99.1 103.0 124.9 148.2 46.6 38.4 32.4 32.6 26.4 22.5 8.3 23.1 24.2 -7 149
Hitachi Energy Buy 11,190 14,164 27 474.3 5.7 3.6 7.8 12.2 85.0 183.5 288.6 131.6 61.0 38.8 77.0 41.5 27.0 22.0 41.2 56.6 1 166
Honeywell Automation Buy 53,398 62,362 17 472.1 5.6 6.0 7.7 10.7 675.4 872.11,206.6 79.1 61.2 44.3 61.7 46.6 32.4 10.1 17.7 24.4 -4 25
KEC International Buy 868 937 8 223.2 2.7 7.5 12.0 17.2 29.0 46.8 67.0 29.9 18.6 13.0 15.0 11.2 7.9 3.8 22.9 24.2 0 40
Kirloskar Pneumatic Buy 1,350 1,807 34 87.5 1.0 2.0 2.6 3.2 30.9 40.5 49.9 43.6 33.4 27.1 30.7 22.9 18.1 6.5 21.3 19.6 1 110
Kirloskar Oil Engines Buy 1,232 1,591 29 178.6 2.1 4.4 5.8 7.2 30.5 39.8 49.6 40.3 31.0 24.8 25.4 19.6 15.6 5.3 18.4 23.4 -11 200
Lakshmi Machine Works Hold 15,640 18,023 15 167.1 2.0 3.8 5.1 6.9 359.1 477.2 649.2 43.5 32.8 24.1 33.5 24.4 17.2 5.1 16.4 21.5 -4 12
Linde India Hold 8,144 9,312 14 694.6 8.3 7.4 9.9 12.2 87.1 115.9 143.3 93.5 70.3 56.9 62.0 46.9 38.0 14.3 22.3 27.9 -3 78
Larsen & Toubro Buy 3,619 4,204 16 4,974.9 59.5 162.2 226.2 276.7 115.8 161.5 197.6 31.2 22.4 18.3 20.7 16.0 13.0 4.1 19.8 14.8 2 40
PTC Indiustries Buy 13,722 13,010 (5) 198.2 2.4 1.0 2.9 6.3 69.8 201.0 433.7 196.5 68.3 31.6 111.8 44.5 22.5 19.7 33.3 37.0 2 252
Mazagon Dock Shipbuilders Buy 5,131 3,548 (31) 1,034.8 12.4 16.3 18.9 21.8 80.6 93.6 108.2 63.6 54.8 47.4 72.7 61.7 51.3 11.6 22.8 31.9 32 175
Siemens Buy 6,850 8,738 28 2,439.5 29.2 30.6 41.5 58.6 86.0 116.5 164.6 79.7 58.8 41.6 60.2 44.1 31.0 13.4 24.5 33.2 -8 90
Thermax Hold 4,972 5,454 10 592.5 7.1 7.5 10.3 14.3 66.4 91.5 126.7 74.9 54.4 39.2 55.5 40.8 29.4 9.5 18.9 22.8 -1 101
Titagarh Rail Systems Buy 1,656 1,669 1 223.0 2.7 4.6 6.3 7.8 36.1 49.6 61.6 45.9 33.4 26.9 32.8 24.1 19.2 6.4 21.2 30.8 5 169
Transformers & Rectifiers India Buy 716 861 20 107.4 1.3 1.5 3.1 4.7 9.6 19.5 29.7 74.9 36.6 24.1 38.1 20.6 14.4 7.7 23.2 31.6 -7 781
Voltas Hold 1,478 1,515 3 488.9 5.8 8.1 10.4 13.5 24.4 31.5 40.7 60.4 46.9 36.3 44.4 34.7 26.7 6.9 15.4 21.1 -1 93
INFRASTRUCTURE
Ashoka Buildcon Buy 221 224 1 62.0 0.7 4.2 5.1 6.1 14.9 18.2 21.8 14.9 12.1 10.1 9.9 8.2 6.6 1.1 9.7 10.9 -7 138
Dilip Buildcon Hold 508 404 (20) 74.2 0.9 4.0 4.4 5.3 29.3 32.5 39.0 17.3 15.6 13.0 6.2 5.7 5.0 1.2 7.7 14.1 -6 109
IRB Infra Buy 67 90 35 404.2 4.8 11.1 13.7 16.6 1.8 2.3 2.8 36.3 29.6 24.3 14.3 12.1 10.7 2.5 8.7 7.5 1 159
IRCON International Buy 316 359 14 297.3 3.6 9.4 10.7 12.4 10.0 11.4 13.2 31.6 27.8 24.0 30.9 24.9 19.1 4.0 15.4 11.1 14 239
KNR Constructions Ltd. Buy 344 360 5 96.7 1.2 4.6 5.2 6.1 16.3 18.5 21.8 21.0 18.6 15.7 12.1 10.9 9.4 2.3 13.2 18.4 -2 42
NBCC Sell 172 30 (83) 309.3 3.7 4.9 5.5 5.6 2.7 3.1 3.1 62.6 55.9 55.1 56.9 46.5 44.7 10.5 20.3 20.6 3 315
NCC Ltd. Buy 309 314 2 194.1 2.3 9.2 11.7 14.4 14.6 18.6 23.0 21.2 16.6 13.4 9.6 8.1 6.7 2.2 14.1 22.5 -4 121
RITES Buy 726 802 11 174.4 2.1 4.8 5.6 6.5 20.0 23.4 26.9 36.2 31.0 26.9 23.4 20.0 16.7 5.9 20.0 18.7 2 60
Rail Vikas Nigam Ltd Hold 614 233 (62) 1,279.7 15.3 14.9 16.7 17.8 7.2 8.0 8.6 85.8 76.5 71.7 91.3 81.1 71.1 11.6 16.0 9.3 50 349
Welspun Ent. Buy 465 447 (4) 64.3 0.8 3.3 4.9 4.2 24.0 35.3 31.0 19.4 13.2 15.0 13.7 9.4 11.9 2.0 15.9 18.7 3 102
IT
Cyient Hold 1,831 1,950 6 203.1 2.4 8.0 9.3 10.5 73.8 86.3 96.8 24.8 21.2 18.9 14.2 12.1 10.6 3.8 18.4 22.9 -2 24
FirstSource Sol. Buy 245 230 (6) 170.5 2.0 6.2 7.5 8.4 8.9 10.7 12.0 27.6 22.8 20.4 16.1 13.7 12.0 3.9 18.1 15.7 19 76
HCL Tech Buy 1,595 1,750 10 4,327.1 51.7 174.1 192.1 209.7 63.6 70.0 76.1 25.1 22.8 21.0 15.8 13.9 12.5 6.8 29.5 38.1 10 43
Infosys Hold 1,793 1,825 2 7,444.4 89.0 268.7 302.9 331.0 64.9 73.1 79.9 27.6 24.5 22.4 18.5 16.3 14.6 7.3 30.8 42.0 17 35
LTI Mindtree Hold 5,763 6,000 4 1,706.7 20.4 49.2 57.3 65.6 166.1 193.6 221.5 34.7 29.8 26.0 23.7 20.1 17.3 6.5 23.4 30.9 12 17
L&T Technology Services Hold 4,880 4,750 (3) 516.5 6.2 13.4 15.0 16.7 126.8 142.4 158.6 38.5 34.3 30.8 24.9 21.8 19.1 8.2 25.2 32.3 0 21
Mphasis Buy 2,874 2,900 1 543.4 6.5 16.7 18.8 21.2 88.9 100.0 112.3 32.3 28.7 25.6 20.1 17.7 15.6 5.3 19.1 23.6 18 23
Coforge Ltd Buy 5,984 6,200 4 399.1 4.8 10.5 12.9 14.9 157.7 193.3 224.0 37.9 31.0 26.7 22.2 18.6 16.1 8.6 29.6 37.3 11 29
Persistent Sys Hold 4,583 4,000 (13) 706.1 8.4 13.5 17.0 20.6 89.4 112.6 136.4 51.3 40.7 33.6 35.1 28.5 23.0 11.8 30.2 40.4 16 93
TCS Hold 4,302 4,275 (1) 15,566.5 186.0 504.1 563.6 624.4 139.3 155.8 172.6 30.9 27.6 24.9 21.4 19.4 17.4 12.6 48.0 60.1 13 28
TeamLease Buy 2,930 3,950 35 49.1 0.6 1.7 2.0 2.2 98.7 111.4 128.1 29.7 26.3 22.9 24.9 20.3 16.4 4.4 18.3 19.1 3 19
Tech Mahindra Buy 1,491 1,475 (1) 1,458.4 17.4 43.4 55.7 65.1 49.1 63.0 73.7 30.4 23.7 20.2 18.7 15.2 13.0 5.4 22.2 31.2 7 25
Wipro Hold 557 560 1 2,914.4 34.8 112.3 129.9 140.9 21.5 24.8 26.9 26.0 22.5 20.7 15.3 13.6 12.4 3.6 16.2 19.9 14 38
Zensar Technologies Buy 748 775 4 169.4 2.0 6.7 7.4 8.4 29.3 32.6 36.8 25.5 22.9 20.3 17.3 14.8 12.8 3.6 17.0 22.9 -1 54

contd...
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 97

Valuation Guide
Company Reco CMP TP Return M. Cap M. Cap Net profit (INR bn) EPS (INR) P/E (x) EV/EBITDA (x) P/BV (x) RoE (%) RoCE (%) Absolute (%)
(INR) (INR) (%) (INR bn) (USD bn) FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY26 FY26 FY26 1m 12m
METALS & MINING
APL Apollo Tubes Buy 1,489 1,744 17 413.4 4.9 9.9 14.6 19.9 35.6 52.8 71.8 41.9 28.2 20.7 27.0 19.3 14.7 7.6 30.0 34.2 -10 5
Hindalco Industries Buy 663 793 20 1,489.9 17.8 115.3 120.1 126.0 51.8 54.0 56.7 12.8 12.3 11.7 6.8 6.5 6.1 1.1 9.6 11.7 -3 53
Hindustan Zinc Sell 642 380 (41) 2,711.6 32.4 98.9 108.0 115.1 23.4 25.6 27.2 27.4 25.1 23.6 16.1 14.9 14.0 12.3 53.0 52.2 -3 102
HI-Tech Pipes Buy 145 182 26 21.7 0.3 0.9 1.4 2.0 5.0 8.0 11.1 29.3 18.1 13.0 14.2 9.9 7.2 2.8 16.4 19.2 6 74
Indian Hume Pipe Buy 416 414 (1) 21.9 0.3 0.7 1.1 1.3 14.0 20.3 25.4 29.8 20.5 16.4 16.2 12.9 10.9 2.2 11.4 14.0 0 54
Jindal Steel & Power Buy 946 1,108 17 965.4 11.5 64.9 90.3 102.4 64.2 89.3 101.3 14.7 10.6 9.3 8.1 6.3 5.5 1.6 16.0 17.5 -12 51
JSW Steel Hold 889 899 1 2,175.1 26.0 117.7 152.5 157.6 48.3 62.6 64.7 18.4 14.2 13.8 9.2 7.9 7.5 2.3 16.8 14.7 -5 13
JTL Industries Buy 221 271 23 38.0 0.5 1.7 2.3 2.8 9.5 12.8 15.7 23.2 17.3 14.0 17.1 12.6 10.3 3.4 21.6 27.5 0 20
Kirloskar Ferrous Buy 724 785 8 100.9 1.2 4.0 7.6 8.9 28.7 54.2 63.6 25.2 13.3 11.4 14.3 8.7 7.5 3.7 31.5 32.1 1 48
MOIL Buy 488 564 16 99.4 1.2 8.0 10.1 11.9 39.6 49.6 58.2 12.3 9.8 8.4 7.6 5.7 4.5 2.5 28.4 38.3 -6 163
NALCO Buy 186 235 26 342.2 4.1 27.3 32.5 33.5 14.8 17.7 18.3 12.6 10.5 10.2 7.1 5.9 5.5 1.8 18.5 23.8 -4 102
NMDC Buy 229 294 29 670.4 8.0 76.7 88.5 96.7 26.2 30.2 33.0 8.7 7.6 6.9 5.9 4.9 4.2 1.9 26.6 34.5 -15 106
SAIL Hold 142 161 14 585.7 7.0 56.3 63.9 70.6 13.6 15.5 17.1 10.4 9.2 8.3 6.6 6.0 5.4 0.9 10.0 10.3 -9 57
Tata Steel Buy 158 190 21 1,969.6 23.5 121.2 178.9 204.8 9.7 14.3 16.4 16.2 11.0 9.6 7.8 6.1 5.4 1.6 15.8 16.0 -12 35
Venus Pipes Hold 2,092 2,160 3 42.5 0.5 1.2 1.7 1.9 58.5 83.9 96.1 35.8 24.9 21.8 22.2 16.4 14.6 6.0 27.4 30.9 -4 74
Vedanta Hold 440 465 6 1,634.8 19.5 154.4 188.5 208.5 41.5 50.7 56.0 10.6 8.7 7.8 5.2 4.4 4.0 4.0 49.7 28.7 -6 58
OIL & GAS
BPCL Buy 304 378 25 1,318.0 15.8 138.5 140.3 142.9 31.9 32.3 32.9 9.5 9.4 9.2 6.1 6.3 6.7 1.4 16.1 16.3 -1 56
GAIL Sell 220 185 (16) 1,444.9 17.3 90.7 84.3 90.9 13.6 12.7 13.6 16.1 17.4 16.1 11.4 11.7 10.5 2.0 11.7 12.0 2 97
Gujarat Gas Buy 619 690 11 426.3 5.1 14.1 19.4 21.8 20.5 28.3 31.7 30.3 21.9 19.5 18.1 13.4 11.9 4.3 20.9 25.1 3 32
HPCL Buy 342 424 24 727.0 8.7 84.0 79.8 81.5 39.5 37.5 38.3 8.7 9.1 8.9 7.0 7.0 6.8 1.5 16.8 11.7 0 70
IGL Hold 529 426 (19) 370.2 4.4 15.9 17.8 18.8 22.7 25.4 26.8 23.3 20.8 19.7 15.2 13.4 12.3 3.3 17.1 21.9 12 7
Indian Oil Corp Buy 165 217 31 2,336.9 27.9 233.8 241.5 278.6 17.0 17.5 20.2 9.7 9.4 8.2 7.3 6.8 5.8 1.1 12.3 11.1 -1 67
Mahanagar Gas Hold 1,698 1,493 (12) 167.7 2.0 10.3 10.4 11.1 103.9 105.5 112.9 16.3 16.1 15.0 9.1 8.7 7.9 2.7 17.5 22.8 14 59
Oil India Buy 571 534 (7) 929.0 11.1 66.4 73.4 69.7 40.8 45.1 42.8 14.0 12.7 13.3 9.6 8.3 8.3 1.8 14.6 16.6 22 232
ONGC Buy 320 338 6 4,021.3 48.1 370.8 428.8 387.6 29.5 34.1 30.8 10.8 9.4 10.4 5.5 4.7 4.8 1.1 12.6 15.1 19 87
Petronet LNG Buy 343 325 (5) 514.4 6.1 36.9 38.4 37.6 24.6 25.6 25.1 13.9 13.4 13.7 9.3 9.7 9.8 2.6 20.3 21.7 7 59
Reliance Industries Hold 3,110 3,268 5 21,045.0 251.5 734.4 832.5 864.0 108.5 123.0 127.7 28.7 25.3 24.4 12.9 11.2 10.1 2.3 9.2 9.7 7 23
PHARMA & HEALTHCARE
Alkem Hold 5,134 4,652 (9) 613.8 7.3 22.8 25.2 25.4 190.4 210.5 212.4 27.0 24.4 24.2 20.9 18.4 16.3 4.5 19.7 23.1 0 39
Alembic Pharma Hold 1,080 940 (13) 212.4 2.5 6.7 8.0 8.8 33.8 40.8 44.6 31.9 26.5 24.2 18.7 15.7 14.3 3.5 14.2 17.2 24 56
CIPLA Sell 1,486 1,221 (18) 1,199.6 14.3 34.2 40.3 45.3 42.5 50.0 56.2 34.9 29.7 26.4 21.2 17.7 15.4 3.6 12.9 18.0 -4 42
Concord Biotech Buy 1,673 1,920 15 175.0 2.1 4.1 5.1 6.4 39.1 48.3 61.3 42.8 34.6 27.3 30.4 24.3 18.9 8.1 25.4 33.1 7
Divi's Laboratories Ltd Sell 4,520 3,198 (29) 1,199.9 14.3 21.1 24.5 27.0 79.6 92.2 101.7 56.8 49.0 44.4 39.0 33.1 29.6 7.4 15.8 20.6 0 23
Dr Reddys Sell 6,636 5,267 (21) 1,107.0 13.2 36.3 41.1 46.8 217.3 246.1 280.6 30.5 27.0 23.6 18.1 15.6 13.3 3.2 12.5 16.8 10 25
IOL Chemicals Buy 403 467 16 23.7 0.3 2.1 2.4 2.2 36.0 41.0 36.9 11.2 9.8 10.9 6.5 5.4 5.4 1.2 12.6 16.6 -3 8
JB Chemicals Hold 1,791 1,631 (9) 277.9 3.3 7.5 8.7 10.0 48.6 56.3 64.6 36.9 31.8 27.7 22.8 19.5 16.8 3.4 23.2 28.7 2 43
Dr Lal Pathlabs Sell 2,994 2,291 (23) 249.9 3.0 4.2 5.0 5.9 50.3 60.3 70.6 59.5 49.6 42.4 35.1 29.3 25.0 52.1 22.4 29.6 12 31
Laurus Labs Hold 440 353 (20) 237.4 2.8 5.5 7.2 8.0 10.2 13.4 14.8 43.2 32.9 29.7 18.9 15.6 14.4 4.5 14.7 15.8 2 26
Lupin Buy 1,787 1,958 10 814.6 9.7 28.6 32.8 38.6 62.7 72.0 84.7 28.5 24.8 21.1 16.6 14.7 12.2 4.2 18.1 22.7 14 91
Mankind Pharma Buy 2,129 2,438 15 853.0 10.2 23.2 26.1 29.7 57.9 65.2 74.1 36.8 32.7 28.7 26.2 22.7 19.3 6.2 20.7 25.0 -2 12
Metropolis Healthcare Sell 1,978 1,718 (13) 101.3 1.2 1.7 2.2 2.8 33.4 43.1 55.1 59.3 45.9 35.9 28.9 23.5 18.8 7.1 16.5 20.8 2 42
Solara Active Pharma Sell 548 361 (34) 23.0 0.3 0.4 0.9 1.4 8.7 19.6 28.5 63.0 27.9 19.2 13.7 10.9 8.8 1.9 7.5 8.0 21 55
Torrent Pharma Buy 2,946 3,337 13 997.1 11.9 20.5 27.4 33.6 60.6 81.1 99.3 48.6 36.3 29.7 25.6 21.3 18.0 11.3 33.4 35.6 4 52
Vijaya Diagnostic Centre Hold 760 796 5 78.0 0.9 1.6 2.0 2.4 15.2 19.2 23.8 50.1 39.6 31.9 27.5 22.2 18.0 4.0 22.1 24.6 -2 68
Zydus Life Science Hold 1,144 888 (22) 1,151.6 13.8 33.3 37.3 40.3 33.1 37.1 40.1 34.5 30.8 28.6 23.5 20.5 18.4 4.4 15.2 18.5 5 87
REALTY
Arvind SmartSpaces Buy 697 1,112 59 31.7 0.4 0.7 1.1 1.5 17.1 26.8 36.2 40.8 26.0 19.2 24.8 16.6 13.0 4.3 18.2 24.2 1 109
Brigade Enterprise Buy 1,270 1,620 28 293.5 3.5 6.8 8.2 10.3 29.7 35.5 44.8 42.8 35.7 28.4 21.1 18.8 16.1 28.5 17.3 15.0 -7 121
Century Textile & Industries Buy 2,186 3,470 59 244.2 2.9 2.8 4.2 4.6 25.5 37.6 41.5 85.7 58.2 52.6 30.2 24.0 21.8 5.4 9.6 11.2 -1 129
DLF Buy 816 1,071 31 2,020.8 24.2 37.4 44.4 56.5 15.1 17.9 22.8 54.0 45.6 35.8 78.4 65.1 62.0 4.2 9.8 7.0 -5 63
Godrej Properties Buy 3,246 3,677 13 902.5 10.8 13.2 30.5 39.6 47.3 109.6 142.5 68.6 29.6 22.8 145.1 76.9 61.6 6.3 23.7 19.2 8 99
Kolte Patil Buy 411 765 86 31.2 0.4 1.7 1.8 1.9 22.1 24.0 25.1 18.6 17.1 16.4 7.1 6.5 6.0 3.0 19.3 19.6 -7 11
Macrotech Developers Buy 1,449 1,634 13 1,441.3 17.2 29.3 33.8 39.5 29.5 34.0 39.8 49.1 42.6 36.4 35.2 31.2 26.7 6.1 15.3 16.1 -9 105
Nexus Select Trust Buy 152 151 (0) 229.7 2.7 7.3 8.6 9.3 4.8 5.7 6.1 31.6 26.6 24.8 16.0 14.3 14.2 1.7 6.1 7.9 10 31
Oberoi Realty Buy 1,671 1,842 10 607.7 7.3 27.3 32.6 37.1 75.1 89.8 102.2 22.2 18.6 16.4 17.9 14.8 12.6 3.1 17.9 20.9 -11 58
Phoenix Buy 3,962 3,214 (19) 708.1 8.5 10.3 12.1 13.0 57.6 67.8 72.8 68.7 58.4 54.4 33.7 30.4 28.6 6.2 11.2 10.8 10 141
Prestige Estates Buy 1,788 2,198 23 716.5 8.6 15.4 18.9 30.6 38.5 47.1 76.3 46.5 37.9 23.4 25.7 21.7 14.4 4.9 12.8 12.9 -10 230
Sobha Buy 1,847 3,003 63 175.2 2.1 3.4 5.9 8.2 31.5 55.1 76.7 58.6 33.5 24.1 27.2 18.2 13.6 5.1 18.7 21.9 -10 239
Sunteck Realty Buy 601 656 9 88.0 1.1 3.1 2.8 2.4 21.4 19.4 16.7 28.1 30.9 36.0 - - - 2.5 8.2 10.4 -1 59
TELECOM
Bharti Airtel Buy 1,462 1,590 9 8,737.4 104.4 181.1 245.0 318.2 31.6 42.8 55.5 46.2 34.2 26.3 11.7 9.8 8.1 7.2 23.2 19.5 3 65
TEXTILE
Arvind Ltd Buy 373 491 32 97.5 1.2 4.5 6.0 7.4 17.3 23.1 28.4 21.5 16.1 13.1 10.6 8.5 7.0 2.1 14.1 16.4 1 174
KPR Mills Hold 831 942 13 284.0 3.4 10.9 12.1 13.6 31.8 35.4 39.9 26.2 23.4 20.8 18.5 16.6 14.9 4.6 21.4 26.0 -6 29
Welspun Living Buy 172 215 25 167.2 2.0 9.7 12.6 13.6 9.9 12.9 14.0 17.3 13.3 12.3 10.3 8.3 7.3 2.6 20.7 21.2 19 72
contd...
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 98

Valuation Guide
Company Reco CMP TP Return M. Cap M. Cap Net profit (INR bn) EPS (INR) P/E (x) EV/EBITDA (x) P/BV (x) RoE (%) RoCE (%) Absolute (%)
(INR) (INR) (%) (INR bn) (USD bn) FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY26 FY26 FY26 1m 12m

UTILITIES
CESC Buy 167 153 (9) 221.9 2.7 17.6 23.2 21.7 13.3 17.5 16.3 12.6 9.6 10.2 10.2 8.4 7.4 1.6 17.3 12.0 11 123
COAL India Buy 488 557 14 3,007.4 35.9 358.9 374.5 405.2 58.2 60.8 65.7 8.4 8.0 7.4 7.8 7.2 6.5 2.5 34.7 18.7 2 113
Indian Energy Exchange Sell 169 114 (32) 150.8 1.8 4.0 4.4 4.8 4.4 5.0 5.4 38.0 34.0 31.2 33.9 30.5 28.1 11.9 37.5 38.4 -7 37
JSW Energy Hold 705 661 (6) 1,232.2 14.7 25.7 28.9 31.8 14.7 16.6 18.2 47.8 42.5 38.7 21.0 18.8 17.4 4.0 9.8 8.8 -3 145
NHPC Buy 106 95 (10) 1,067.5 12.8 45.1 52.0 61.0 4.4 5.1 5.9 24.2 21.0 17.9 21.4 17.8 15.6 2.4 11.9 6.8 5 126
NTPC Buy 365 383 5 3,535.9 42.3 157.1 182.1 219.3 16.2 18.8 22.6 22.5 19.4 16.1 12.0 11.0 9.7 2.1 11.1 9.3 1 87
Power Grid Buy 332 319 (4) 3,089.7 36.9 164.7 182.7 214.3 17.7 19.6 23.0 18.8 16.9 14.4 10.9 10.1 9.0 2.9 17.9 18.7 2 81
PTC India Buy 217 227 5 64.2 0.8 3.8 4.5 5.2 12.9 15.2 17.6 16.8 14.2 12.4 9.6 7.3 6.0 1.4 10.2 26.4 6 96
SJVN Ltd Buy 141 163 16 553.7 6.6 18.0 21.8 22.4 4.6 5.6 5.7 30.7 25.4 24.8 19.4 16.2 15.2 3.5 14.1 8.8 7 181
Torrent Power Hold 1,527 1,159 (24) 733.7 8.8 28.2 31.8 35.7 58.8 66.1 74.2 26.0 23.1 20.6 13.5 12.3 11.3 4.6 21.2 18.7 2 149
Tata Power Buy 414 450 9 1,323.3 15.8 38.9 49.1 58.8 12.2 15.4 18.4 34.0 27.0 22.5 16.8 14.1 12.6 3.5 12.9 8.2 -6 91
MIDCAPS - OTHER
CCL Products Buy 591 870 47 78.9 0.9 2.7 3.7 5.4 20.3 28.1 40.7 29.1 21.0 14.5 18.5 14.4 11.0 3.6 18.5 12.5 -2 -6
EPL Ltd. Buy 221 340 54 70.4 0.8 3.5 4.8 5.8 11.0 15.0 18.3 20.1 14.7 12.1 8.6 6.6 5.7 2.7 19.6 23.8 14 -1
Ganesha Ecosphere Buy 1,441 1,910 33 36.5 0.4 1.4 1.6 2.4 51.8 61.2 91.4 27.8 23.5 15.8 15.4 13.8 9.8 2.7 12.1 13.9 8 39
Gravita India BUY 1,332 1,340 1 92.0 1.1 2.8 3.4 4.0 40.5 49.8 57.3 32.9 26.8 23.3 23.4 19.3 17.2 6.7 28.0 25.1 -13 103
Indian Hotels Hold 578 550 (5) 822.6 9.8 15.4 17.7 20.3 10.8 12.5 14.3 53.4 46.3 40.4 33.2 29.4 24.9 6.7 15.5 16.4 -9 47
Chalet Hotels Buy 765 950 24 166.9 2.0 3.7 4.8 6.8 18.0 23.3 33.0 42.6 32.8 23.2 22.3 18.5 13.7 3.9 12.6 13.9 -8 67
Mold-Tek Packaging Buy 782 1,160 48 26.0 0.3 0.8 1.1 1.4 25.2 33.4 43.3 31.0 23.4 18.1 16.9 13.4 10.8 3.5 16.0 14.0 -3 -25
Raymond Buy 2,091 3,905 87 139.2 1.7 8.0 10.7 12.6 119.6 161.2 189.4 17.5 13.0 11.0 11.3 8.8 7.4 2.2 18.2 18.2 34 88
Solar Industries Hold 10,869 9,310 (14) 983.6 11.8 12.0 15.4 18.3 132.5 170.0 202.2 82.0 63.9 53.8 50.7 40.0 33.5 16.9 30.1 37.1 8 188
Varun Beverages Buy 1,560 1,890 21 2,026.7 24.2 28.8 37.8 49.0 22.1 29.1 37.7 70.4 53.6 41.4 41.1 32.5 26.2 15.9 34.2 33.2 -2 95
Yatra Online Buy 123 181 47 19.3 0.2 0.6 1.2 1.2 3.9 7.4 7.7 31.4 16.8 16.0 17.2 9.8 8.7 2.1 13.3 15.4 -4

Company Reco CMP TP Return M. Cap M. Cap Net profit (INR bn) BVPS (INR) P/BV (x)* NNPA Ratio (%) P/E (x) RoE (%) RoA (%) Absolute (%)
(INR) (INR) (%) (INR bn) (USD bn) FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY26 FY26 FY26 1m 12m

FINANCIALS
Axis Bank Buy 1,292 1,375 6 3,994.5 47.7 281.4 321.5 387.9 550.0 631.2 729.3 2.2 1.9 1.6 0.4 0.4 0.4 12.4 17.6 1.8 4 33
Bank of Baroda Buy 251 315 26 1,295.9 15.5 191.3 208.4 230.3 228.4 260.6 296.2 1.1 1.0 0.8 0.4 0.3 0.6 6.2 16.5 1.1 -10 27
Canara Bank Buy 113 140 24 1,024.0 12.2 153.5 171.9 196.0 100.9 116.0 133.3 1.1 1.0 0.8 1.0 0.9 1.4 6.0 17.5 1.0 -5 67
City Union Bank Buy 156 185 19 115.3 1.4 10.2 11.6 12.3 125.6 139.7 154.6 1.2 1.1 1.0 1.9 1.9 1.8 9.9 11.8 1.4 -4 19
DCB Bank Buy 132 175 33 41.2 0.5 6.7 7.8 9.0 172.4 195.5 222.5 0.8 0.7 0.6 1.1 1.1 1.2 5.3 13.5 1.0 -7 6
Equitas SFB Buy 90 125 40 101.8 1.2 9.1 12.0 14.8 58.8 66.9 76.9 1.5 1.3 1.2 1.2 1.2 1.1 8.4 16.9 1.9 -14 -7
Federal Bank Buy 191 200 5 468.6 5.6 39.9 46.0 54.2 133.0 148.5 165.5 1.4 1.3 1.2 0.6 0.6 0.8 10.1 13.4 1.2 8 43
HDFC Bank Buy 1,607 1,900 18 12,228.5 146.2 670.4 781.1 923.4 629.4 708.3 801.5 2.2 2.0 1.7 0.4 0.4 0.4 15.6 15.4 1.8 -4 -4
ICICI Bank Buy 1,249 1,350 8 8,788.1 105.0 436.3 475.3 557.0 381.3 435.4 498.9 2.8 2.4 2.0 0.5 0.5 0.4 18.4 16.4 2.0 8 25
IndusInd Bank Buy 1,432 1,925 34 1,115.5 13.3 103.3 121.4 140.7 909.41,032.61,173.3 1.6 1.4 1.2 0.6 0.6 0.7 9.2 16.1 1.9 -6 2
Karur Vysya Bank Buy 210 250 19 167.9 2.0 18.1 19.4 21.9 144.2 164.9 188.4 1.5 1.3 1.1 0.3 0.3 0.3 8.7 15.6 1.5 0 63
Kotak Mahindra Bank Buy 1,822 2,000 10 3,621.3 43.3 162.5 145.6 562.2 632.7 2.5 2.2 - 0.4 0.5 24.9 12.3 2.0 3 -8
L&T Finance Buy 176 220 25 438.1 5.2 30.8 37.9 45.0 103.5 114.9 128.5 - - - 0.6 0.6 0.6 11.6 2.9 -4 36
Punjab National Bank Hold 117 130 12 1,282.9 15.3 150.1 183.2 198.3 100.1 112.5 126.1 1.2 1.0 0.9 0.5 0.5 0.5 7.0 15.7 1.0 -7 86
Shriram Finance Buy 2,811 3,300 17 1,056.6 12.6 82.2 96.5 112.6 1,466.2 1,672.9 1,922.6 1.9 1.7 1.5 2.8 2.9 3.0 10.9 16.4 3.3 0 53
State Bank of India Buy 889 975 10 7,937.1 94.9 682.7 711.0 822.8 414.1 477.8 551.5 1.7 1.4 1.2 0.6 0.6 0.6 11.2 17.0 1.0 6 45
South Indian Bank Hold 27 32 16 71.2 0.9 9.9 10.9 13.8 35.8 39.5 44.1 0.8 0.7 0.6 1.5 1.5 1.5 6.5 11.1 0.8 -2 44
Ujjivan Small Bank Buy 43 65 50 84.0 1.0 12.1 13.5 14.8 36.2 44.0 52.6 1.2 1.0 0.8 0.4 0.4 0.4 5.6 18.9 2.5 -10 2
Union Bank of India Buy 136 169 25 1,035.5 12.4 154.8 167.1 179.8 134.2 150.0 166.9 1.0 0.9 0.8 1.0 1.1 1.2 6.2 15.4 1.0 -8 50
*Adjusted for subsidiaries

Company Reco CMP TP Return M. Cap M. Cap VNB (INR bn) EVPS (INR) P/EV (x) P/VNB (x) RoEV (%) Absolute (%)
(INR) (INR) (%) (INR bn) (USD bn) FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY25 FY26 FY27 FY26 1m 12m

Insurance
HDFC Life Insurance Buy 636 760 20 1,367.8 16.3 41.1 48.6 57.0 253.7 294.4 341.7 2.5 2.2 1.9 20.5 15.5 11.4 16.9 9 -2
ICICI Prudential Life Insurance Buy 643 710 10 927.7 11.1 26.2 30.5 34.9 335.9 383.2 436.9 1.9 1.7 1.5 16.6 12.1 8.3 14.7 6 17
LIC of India Buy 1,108 1,160 5 7,009.7 83.8 110.4 120.5 132.5 1,261.6 1,376.7 1,501.4 0.9 0.8 0.7 NA NA NA 10.1 8 74
Max Life Insurance* Buy 1,013 1,280 26 349.7 4.2 23.1 27.0 31.4 722.0 854.3 1,007.8 2.2 1.9 1.6 12.4 8.9 6.0 18.8 2 26
SBI Life Insurance Buy 1,648 1,910 16 1,650.3 19.7 65.7 77.2 90.0 692.4 821.7 972.1 2.4 2.0 1.7 14.5 10.7 7.6 19.1 13 28
*Valuations after factoring 20% holdco discount
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 99

Events Calendar July/ August 2024

Monday Tuesday Wednesday Thursday Friday Saturday Sun

15 July 16 July 17 July 18 July 19 July 20 July 21 July

Gravita India
HDFC Bank
JK Cement
Kirloskar Pneumatic
Kotak Mahindra Bank

22 July 23 July 24 July 25 July 26 July 27 July 28 July

Coforge Ltd ICICI Prudential Life Petronet LNG Ramco Cement CIPLA ICICI Bank
Zensar Technologies Axis Bank Nestle Dr Reddys
Torrent Pharma Cyient Sumitomo Chemical
ICICI Securities Mphasis
Tech Mahindra

29 July 30 July 31 July 1 Aug 2 Aug 3 Aug 4 Aug

Bharat Electronics Crompton Consumer
Kansai Nerolac Lakshmi Machine Works
Maruti Suzuki India
TeamLease

5 Aug 6 Aug 7 Aug 8 Aug 9 Aug 10 Aug 11 Aug

Marico Blue Star ABB Jubilant Foodworks
Cummins India
Gujarat Gas
TVS Motors

12 Aug 13 Aug 14 Aug 15 Aug 16 Aug 17 Aug 18 Aug

Hindalco Industries
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 22 July 2024 | 100

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