Results Review for ABB India, United Spirits, Phoenix Mills, Oil India, Birla Corp

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ABB India (NS: ABB ): ABB (ST: ABB ) reported strong Q3CY23 revenue/EBITDA/PAT at INR 27.7/4.4/3.6bn beating our estimate at all level by 11/36/34%. This was mainly on the back of a higher EBITDA margin, which was at an all-time quarterly high of 15.8% (+588/+194bps YoY/QoQ). Margin expansion was mainly aided by higher capacity utilization kicking in oplev, higher price realization mainly in EL segment, favorable product mix, and a higher proportion of services, at 16%, in the revenue mix. MO witnessed a large order within its railway division from a Vande Bharat OEM. ABB is anticipating a higher capex cycle in railways and is thus planning to expand and enhance its MO manufacturing capacity. ABB is, however, witnessing a slowdown in demand for LV motors because of diminishing pent-up demand and global slowdown. For Q3CY23, order inflow (OI) was INR 30bn, taking the order backlog to INR 80bn. The punchy valuation limits further stock upside, thus, we maintain REDUCE with an increased TP of INR 4,080/sh (rolled over to 60x Sep-25 EPS).

United Spirits (NS: UNSP ): UNSP’s Q2 print was largely in line with revenue/EBITDA/PAT growing by -1/6/21%. On LFL, revenues were up 12%, led by increasing P&A mix and improved footprint & saliency of innovation/renovation offerings. P&A volume/revenue grew by 4/13% YoY, led by improved market saliency of offerings, which were recently renovated/innovated. The popular segment volumes fell 11% (rebased) as sustained inflation and duty increases in some states continued to have a bearing on demand. In addition to weak popular and low prestige, there are early signs of demand slowdown even in mid-prestige. GM sustained its sequential improvement trend (43.4%), aided by forward cover and price increase. However, with ENA prices expected to remain elevated, we bake in slow recovery to pre-COVID margin at c.48%. Despite achieving 17% EBITDAM in H1FY24, management remains cautious for H2FY24 and expects slightly above 15% EBITDAM in FY24. It is driven by input cost pressure, demand slowdown and brand investments. However, UNSP remains confident in medium to long-term of double-digit revenue growth with higher EBITDA growth. We cut our EPS by 3/2% for FY24/25. We value UNSP at 47x P/E on Sep-25E EPS (standalone) to arrive at a TP of INR 1,100 (including INR 80/share of RCB+ non-core assets). Maintain ADD.

Phoenix Mills (NS: PHOE ): Phoenix Mills (PHNX) reported muted revenue/EBITDA/APAT at INR 8.8/5.1/2.8bn, missing our estimates by 13/14/6%. Consumption improved to INR 26.4bn (+21%/+3% YoY/QoQ). PHNX is ramping up its office portfolio intending to achieve 7.1msf of leased office assets by FY26 from 2.5msf of the current operational portfolio. In FY24, Phase 1 comprising 0.8msf of the office assets in Hebbal, Bengaluru, is expected to become operational. PHNX has not achieved any prelease in this asset, however, it has a pipeline of 2msf and expects occupancy to reach 75% within a year of completion. PHNX acquired land in Thane with 3msf developable potential and is evaluating multiple options on asset class to develop. Densification is emerging as the new growth driver, and we incorporate a 10-15% rental hike in line, with PHNX office rent guidance, the addition of office space, a strong business development pipeline, and robust cash generation as the other triggers. We maintain BUY, with an increased SOTP of INR 2,280/sh.

Oil India (NS: OILI ): Our ADD recommendation on Oil India with a target price of INR 320 is premised on oil and gas production growth at 3% CAGR over FY24-26E, attractive valuations of 4.8x Mar-25 EPS—a 20% discount to long-term average P/E of 6x, 0.6x Mar-25 P/Bv with RoE of ~15% and a dividend yield of ~8%. However, this is offset by limited earnings potential, owing to the levy of a windfall tax on crude oil prices and a decline in the price of domestically produced APM gas. Q2FY24 EBITDA stood at INR 25bn, coming in ahead of our estimate, however, PAT at INR 3.3bn came in well below our estimate, mainly impacted by a provision for service tax/GST on royalty of INR 24bn.

Deepak Nitrite (NS: DPNT ): We maintain SELL on Deepak Nitrite (DNL), with a price target of INR 1,419 (WACC 12%, terminal growth 4%). The stock is currently trading at 24x FY25E EPS. We believe that (1) high input costs will continue to put pressure on the company’s margin and (2) further growth in DPL is capped as the phenol plant is already running at over full capacity. EBITDA/APAT were 8/5% below our estimates, owing to lower-than-expected revenue.

The Ramco Cements (NS: TRCE ): We maintain a REDUCE rating on The Ramco Cements with a revised target price of INR 1,030/share (12x Sep-25E EBITDA), owing to expensive valuations and elevated balance sheet outlook. It reported strong performance in Q2FY24, as volume grew 38/7% YoY/QoQ. NSR declined 3% QoQ on weak pricing in the south. However, as opex too fell 5% QoQ, unitary EBITDA expanded INR 75/MT QoQ to INR 865/MT. Management expects 20%+ volume growth in FY24. The 0.9mn MT brownfield SGU in Odisha is expected by Jan-24. We estimate gearing to remain elevated (net debt/EBITDA >2x), owing to aggressive expansions.

Endurance Technologies (NS: ENDU ): Endurance Q2 consolidated PAT at INR 1.55bn was in line with our estimate. Europe business saw a 70bps QoQ margin decline to 15.4%, largely due to seasonality. In India, while the premium segment in 2Ws is seeing good demand, growth prospects for entry 2W segment appear bleak, given the incremental impact of sub-par monsoon expected on rural sentiment. Further, consumer sentiment in Europe has sharply deteriorated, given the recessionary trends in the region. The weak consumer sentiment is visible in the slower run rate of Endurance’s business wins in Europe for H1. However, given the reduction in energy costs in Europe, we factor in consolidated margin to improve to 14% by FY25E (from 11.8% in FY23). While we have factored in most of the key positives, the valuation at 28.5x FY25E earnings appears expensive. Reiterate REDUCE with a revised target of INR 1,508 (earlier INR 1,467), as we roll forward to Sep-25 EPS (unchanged target multiple of 25x).

Brigade Enterprises (NS: BRIG ): Brigade Enterprises Ltd (BEL) reported strong presales of 1.7msf (+39%/+14% YoY/QoQ), valued at INR 12.5bn (+57%/+25% YoY/QoQ), with average realization touching an all-time high of INR 7,466psf. The higher realization is on the back of a price hike taken with an average hike of +15%/+9% YoY/QoQ. Most of the presales were sustenance sales with two projects of 1.15msf launched during the quarter contributing 35% by volume and 30% by value to the overall presales. BEL has a total launch pipeline of 11.1msf for the next four quarters, of which 6.5msf of project with a GDV of INR 65bn is planned for H2FY24. The Mount Road Chennai project (i.e. TVS land) is expected to be launched in Q4FY24. In terms of BD, BEL added 42 acres of land across Bengaluru, Chennai, and Hyderabad, with 7msf of saleable area and a GDV of 77bn. BEL paid the remaining INR 2.3bn towards Kokapet land, Hyderabad, during the first week of October. Given BEL’s strong cash position of INR 15.7bn, a robust business development pipeline, and a healthy balance sheet, we remain constructive. We reiterate BUY, with an increased TP of INR 815/sh to account for new project additions in Hyderabad, Bengaluru and Chennai and building in a price hike of 5-10%.

Century Plyboards (NS: CNTP ) India: We maintain our BUY rating on Century Ply, with an unchanged target price of INR 745/sh (35x its Sep’25E consolidated EPS). We like Century for its strong franchise (pan-India distribution, aggressive marketing, and a wide range of SKUs), leadership presence in most wood segments, market share gains and healthy return ratios. In Q2FY24, revenue rose 10% YoY, led by strong growth in the MDF (+26% aided by Punjab brownfield expansion) and ply (+11% YoY) segments. EBITDA declined 15% YoY on weak performance in laminates and particle board segments. APAT declined 31% YoY, owing to lower EBITDA, higher capital charges and tax outgo. Its capex plan in all segments is running on track.

Multi Commodity Exchange (NS: MCEI ): MCX reported a strong revenue growth of 13% QoQ, driven by options, while profitability was impacted by a payout of INR 1.25bn to 63moons and higher SGF contribution. The new CDP went live on 16th October and is running smoothly without any major issues. Post the transition, the volume was impacted for two weeks but gradually returned to normal levels. The management team’s focus will be on product launches, higher algo volumes, and scaling FPI and DII volumes with HFT and DMA. The launch of monthly expiry contracts every week and Index options will draw the interest of options traders but is subject to regulatory approvals. We expect options notional/premium CAGR of +76/53% over FY23-26E. The options revenue grew 28% QoQ, led by higher premium ADTV, but the premium to notional ratio is coming down gradually (1.84% vs 1.96% in Q1). We remain constructive on the options’ growth story, supported by increasing active traders, a new tech platform, shorter-duration options, and regulatory tailwinds. We increase our revenue estimates by ~3% for FY26E and increase multiple to 30x vs 28x earlier. We maintain our BUY rating with a target price of INR 2,850, based on a P/E of 30x Dec-25E core PAT + net cash ex SGF.

Birla Corporation (NS: BRLC ): We maintain our BUY rating on Birla Corporation (BCORP), with an unchanged target price of INR 1,465/share (8.5x Sep-25E consolidated EBITDA). We continue to like BCORP for its large retail presence in the lucrative north/central regions. We expect a recovery in margins on Mukutban’s ramp-up, incentive accrual H2FY24 onwards, falling fuel prices, and other ongoing cost rationalization initiatives. In Q2FY24, BCORP delivered healthy volume growth (+15% YoY) and unit EBITDA improved by INR 20 per MT QoQ to INR 678 per MT, aided by lower input/freight costs. Mukutban production is ramping up, albeit at a slower pace.

Ami Organics (NS: AMIO ): We retain our ADD rating on Ami Organics (AO), with a target price of INR 1,248 (WACC 11%, terminal growth 6%) on the back of (1) expansion of its speciality chemicals portfolio, (2) contribution from long-term contracts which shall start contributing to revenue from Q4FY24, and (3) strong product pipeline in its advanced pharma intermediate business. EBITDA was 33% below our estimates, mainly owing to a 4% lower-than-expected revenue, higher-than-expected employee cost and higher-than-expected operating expenses. The company has made a provision of INR 318mn towards the impairment of its investment in a JV, Ami Oncotheranostics LLC. Therefore, AO reported a loss of INR170mn in the quarter. Adjusted for exceptional items, the profit for the quarter was INR44mn.

Ashoka Buildcon (NS: ABDL ): Ashoka Buildcon (ASBL) reported largely in-line numbers with revenue/EBITDA/APAT at INR 15.6/1.4/0.7bn. EBITDA margin: 9.2% (+47/+463bps YoY/QoQ, vs. our estimate of 8.5%, owing to lower fixed and other overheads, partly offset by higher volatility in input and raw material prices). With no order wins in Q2FY24, its order inflow for H1FY24 stands at INR 22.9bn, taking OB as of Sep’23 to INR 148bn (~2.3x FY23 revenue, L1 of INR 2.7bn). The standalone gross/net debt as of Sep’23 stood at INR 11.2/8.9bn vs. INR 9.9/7.3bn as of Jun’23. ASBL guided for infusing equity of INR 1.5/0.6bn in HAM projects in H2FY24/25 and capex of INR 1bn in FY24, of which INR 0.8bn was already incurred in H1FY24. It maintained its FY24 revenue guidance to grow by 15% YoY and an EBITDA margin of 8-9% in H2FY24. Given a truncated ordering period owing to elections and weaker-than-expected NHAI ordering, it maintained its FY24 inflow guidance at a lower level of INR 50-60bn. Given the strong OB, improving visibility on asset monetization, and likely cash inflow from asset monetization (INR 31bn), we maintain BUY, with an unchanged SOTP of INR 202/sh (9x Sep-25E EPS), while factoring in a higher valuation for HAM assets (1.3x P/BV) and +INR 19/sh for BOT assets.

ITD Cementation (NS: ITCM ): ITD Cementation (ITD) reported quarterly revenue/EBITDA/APAT of INR 16.1/1.6/0.5bn. EBITDA margins: 9.8% (+405/+101bps YoY/QoQ, vs. our estimate of 8.7%, owing to lower input and raw material prices and lower employee expenses, partly offset by higher fixed and other overheads). With an OI of INR 45.8bn in Q2FY24, the H1FY24 inflow stood at INR 48.2bn (-32.7% YoY, vs. FY24 guidance of INR 80bn+), taking the Sep’23 OB to INR 220.8bn (~4.3x FY23 revenue). The OB is well-diversified, providing a natural hedge from a slowdown in any particular business segment. The net D/E, as of Sep’23, stood at 0.34x vs. 0.49x as of Jun’23. ITD maintained its FY24 revenue guidance at INR 70bn+ with an EBITDA margin of 10%+. ITD has incurred a capex of INR 2.4bn in H1FY24 towards construction plants and equipment. With this, it does not expect much capex excluding the Bangladesh marine project. Given the better margin profile and stronger execution in H1FY24, we reiterate BUY, with an unchanged TP of INR 254/sh (11x Sep-25E EPS).

Neogen Chemicals (NS: NEOE ): Our BUY recommendation on Neogen Chemicals (NCL) with a target price of INR 2,099/sh is premised on (1) entry into the new age electrolyte manufacturing business, (2) increasing contribution of the high-margin CSM business to revenue, (3) capacity-led growth momentum in legacy business, and (4) improving return ratios and strong balance sheet, going forward. NCL’s EBITDA/APAT will grow at a CAGR of 38/45% over FY23-28E while RoE will improve from 11% in FY23 to 31% in FY28E. Q2 EBITDA/APAT were 21/52% below our estimates, owing to 13% lower-than-expected revenue and higher-than-expected finance costs.

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