Results Review for Dabur, Godrej Properties, Alkyl Amines, Kajaria Ceramics

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Dabur India Ltd. (NS: DABU ): Dabur’s Q1 performance was inspiring with a beat in revenue, volume, and EBITDA. Revenue growth was at 32% YoY (HSIE 22%), 2-year CAGR at 7%. Domestic revenue/volume growth was at 35/34% YoY, 2-year CAGR at 12/10% vs. Britannia’s 12/13%, Nestle’s 8/6%, Marico’s 7/2%, Colgate’s 4/0%, Emami’s 3/2%, and HUL’s 2/0%. Dabur’s healthcare/HPC/F&B grew 30/26/80% YoY (vs. +29/-15/-34% in Q1FY21 and +23/+33/+28% in Q4FY21). The international business saw a continued recovery, growing 29% YoY. EBITDA growth was at 33% YoY (HSIE 23%), while EBITDA margin was in line at 21%. We remain positive about Dabur's ability to deliver strong revenue growth, led by its positioning as a natural and trusted brand along with its power brands strategy. We maintain our EPS estimates. We increase our target multiple to 50x P/E (45x earlier) on Jun-23E to factor in its consistent outperformance vs peers and result-oriented renewed strategies. Our target price is INR 625. Maintain ADD.

Godrej Properties Ltd (NS: GODR ): Godrej Properties Ltd (GPL) reported an operationally weak Q1FY22 with presales volume of 0.8msf (-69.3%/-81.5% YoY/QoQ) and value of INR 4.9bn (-67.5%/-81.1% YoY/QoQ). Despite the weak performance, we expect GPL to register presales growth in FY22, given (1) near normalization of sales momentum in June/July-21, (2) robust launch pipeline (13.3 msf), (3) strong balance sheet with surplus cash of ~INR 35bn, and (4) well-recognized brand positioning. We roll forward our valuation to Jun-23, and increase our target price to INR 1,500/sh (earlier INR 1,323/sh) to account for surplus cash (INR 35bn) deployment in new land acquisitions. However, given punchy valuations, we reiterate REDUCE, as all the positives seem fairly priced in.

Alkyl Amines Chemicals Ltd (NS: ALKY ): We maintain SELL on Alkyl Amines with a price target of INR 3,200 (WACC 10%, terminal growth 5%). The stock is currently trading at 55.6x FY23E EPS. We believe that the current valuation already factors in positives from the potential volume growth, post doubling of the acetonitrile plant capacity, and ~40% additional capacities of the aliphatic amines plant. The rising raw material prices are looking like a dampener and can put pressure on the margins in FY22. EBITDA/APAT were 5/1% below our estimates, owing to higher-than-expected raw material costs, offset by lower-than-expected depreciation, higher-than-expected other income, and lower-than-expected tax outgo.

Kajaria Ceramics Ltd (NS: KAJR ): We maintain our BUY rating on Kajaria Ceramics (KJC) with an unchanged target price of INR 1,130/share (19 Jun’23E consolidated EBITDA). We continue to like KJC for its superior margin in the tiles segment (function of its robust distribution and cost controls) and its fast expansion in its bathware and ply businesses. In Q1FY22, KJC’s consolidated revenue/EBITDA/APAT fell by 41/58/66% QoQ to INR 5.62/0.80/0.43bn respectively (with the lockdown impacting consolidated revenue). Its QoQ margin compression is much lower vs peers. With demand recovering from June onwards, tiles prices have increased by ~3% in July, boosting cost pass-through and, hence, the margin should rebound. KJC’s upcoming capacities will continue to support its market share, strengthening its leadership position in the domestic market.

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