Container Corporation (NS:CCRI): While CONCOR’s 4QFY21 APAT at INR 779mn was impacted by several one-offs, the long-pending LLF (land license fees) issue is now resolved as the revised charges are significantly lower than expected at INR 4.5bn (vs. expectations of INR 6bn+). This resolution has ended the policy overhang and paved the way for the company’s privatisation. We increase our FY23E EPS by 4% and set a revised target price of INR 690 at 28x on FY23E earnings (22x earlier; 10% premium to average PE multiple).
Alkem Laboratories Ltd (NS:ALKE): Alkem’s Q4 results were below expectations. Adjusting for one-offs, EBITDA margin declined to 16.9% (+214bps YoY, -590bps QoQ), owing to lower-than-anticipated gross margin and front-ending of marketing spend. The outlook for India business remains strong, driven by a recovery in the acute segment (given its leadership position in the space), steady market share gains in chronic and tailwinds in vitamins. In the US, while Q4 disappointed (-12% QoQ), the launch momentum is expected to improve (double-digit launches planned), which should drive 10% CAGR over the next two years. We trim our EPS estimates by 3%/2% for FY22/23e to factor in the lower gross margin. Revise TP to INR 3,320/sh. Maintain BUY.
Emami (NS:EMAM): Emami 4QFY21 result was a mixed bag with the marginal beat in revenue and miss in EBITDA margin. Revenue posted 37% YoY growth (HSIE 34.5%), clocking a two-year revenue CAGR of 7%. It was a broad-based recovery with most brands and channels seeing healthy trends. The domestic business grew by 44% (FY21 10%) with a volume growth of 39% (6% 2-year CAGR). Healthcare and Pain management brands remained the outperformers and registered 67% (45% in FY21) and 38% (23% in FY21) growth in 4Q respectively. The exit rate for these brands is also showing a promising outlook for FY22. Boroplus and Kesh King recovered well, delivering 15% growth in FY21; we expect growth moderation in FY22. The Navratana range declined by 8% due to the company missing out on seasonal demand, and a similar impact is expected in FY22. Male grooming remained a drag and posted 26% decline in FY21 (29% decline in FY20). Gross margin dipped by 250bps YoY, resulting in slower-than-expected EBITDA margin expansion of 378bps to 22.3% (HSIE 24.7%). However, FY21 saw massive >450bps YoY expansion in EBITDA margin to 30.7%. Growth recovery in FY21 was inspiring and we factor in 9% revenue CAGR for FY21-24 with sustaining EBITDA margin at 30%. We increase the EPS estimate by 2/3% for FY22/FY23. We value Emami at 25x P/E on Jun-23E EPS to derive a TP of INR 450. Maintain REDUCE.
TTK Prestige (NS:TTKL): TTK Prestige’s 4QFY21 beat ours as well as the street’s expectation. Revenue grew by 45% YoY (HSIE 31%), clocking 12% 2-year CAGR. It was broad-based growth as cookers/cookware/appliances posted 49/67/34% YoY growth. Kitchen and home appliances categories have recovered well in 2HFY21 and TTK has capitalised on the spur in demand. It gained a 1-1.5% market share in cookers and cookware. However, the big surprise came at gross margin, which expanded by 200/400bps YoY/QoQ to 45.6% (40-quarter high) despite the steep raw material inflation. It was driven by favourable product mix and channel mix (traditional channel is margin accretive), price hike, and benefit of carrying forward old inventory. Hence, the EBITDA margin expanded by >900bps YoY to 18.5% (an all-time high). TTK has recovered well after a weak quarter 1HFY21, clocking 5/21% revenue/EBITDA growth in FY21. Even though we had non-consensus earnings and TP, we increase our EPS by 4% for FY23. As the company is a pure B-C play and its earnings visibility is improving, we increase the target multiple to 40x (38x earlier) on Jun-23E EPS. Our target price is INR 8,880. Maintain ADD.
Mahanagar Gas Ltd (NS:MGAS): Our ADD recommendation on Mahanagar Gas (MGL) and a price target of INR 1,255 are premised on its loyal customer base in CNG and commercial establishments (together comprising ~79% of the sales mix in FY21), which is less price-sensitive than the industrial customer base and enables the company to maintain higher per-unit margins than peers. 4QFY21 EBITDA/APAT was 2/3% below estimates, owing to higher-than-expected raw material and operating costs and lower-than-expected other income, which were offset by a 4% rise in revenue.
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