Indian Oil (NS:IOC) Corporation: Our REDUCE rating on Indian Oil Corporation (IOCL), with a target price of INR 145, is premised on margin pressure due to increasing petchem supplies/capacity, moderation in refining margins, and lower auto-fuel marketing margins. IOCL’s Q4FY24 reported EBITDA at INR 104bn (-32% YoY, -33% QoQ) and APAT at INR 48bn (-52% YoY, -40% QoQ) came in below our estimates. Earnings were impacted by weak performance from the petchem segment, lower refining margins, inventory loss and higher-than-expected expenses. Sequentially, the marketing gross margin improved to INR 4.6/ltr from INR 4.3/ltr in Q3FY24. Reported GRMs came in below our estimate at USD 8.4/bbl (-45% YoY, -38% QoQ).
Star Health and Allied Insurance (NS:STAU): STARHEAL printed soft NEP growth (+15% YoY), as the company lowered its retention ratio to 92% (FY23~95%), retail health GDPI exhibited modest growth (+17% YoY) despite a price hike in its flagship product, exhibiting a 67bps market share erosion. Loss ratios eased to 64% (-356bps QoQ) but remained elevated at 66.5% (+146bps YoY), driving COR to 96.7% for FY24 (+133bpsYoY). We expect STARHEAL to deliver a rebound in growth (~21% CAGR over FY24-26E) and stable loss ratios, benefitting from a price hike in its flagship product and tighter underwriting and claims review process. As the largest standalone health insurer (FY24 retail GDPI market share at 33%), our thesis is anchored on a strong distribution network, retail-dominated business mix, and best-in-class opex ratios. We expect the company to clock 21%/21% revenue/PAT CAGR over FY24-26E and RoEs in the range 15-16% for FY25E/26E, maintain BUY with a revised TP of INR665 (DCF derived multiple at 31x FY26 P/E and 4.4x Mar-26E P/ABV).
Birlasoft (NS:BIRS): Birlasoft (BSOFT) posted in-line results with revenue increasing by 1.6% QoQ and margin expanding, a positive in the current context. BSOFT’s growth potential is supported by its highly scalable and resilient service line and senior management induction over the past year. Strong large client mining, BFSI growth opportunity, and consistent operational improvement (incl. cash flows) are clear positives. Deal wins have been muted and can accelerate on the expanded pipeline. Medium-term margin levers remain as the company gets closer to the USD 1bn revenue threshold. We factor 11.2% and 15.1% revenue growth for FY25/26E and EBITDAM at 16.2/17.0%, translating into 17% EPS CAGR over FY24-26E, maintain ADD on BSOFT with TP of INR 800, 26x FY26E EPS.
IndiaMART (NS:INMR) InterMESH: IndiaMART posted revenue growth of 3.1% QoQ, led by continued improvement in realisation. The paid supplier addition improved to ~3K in the quarter but was lower than the historical average of >7K/quarter. The higher churn in the silver monthly bucket has impacted the paid supplier additions and the cash collections. The churn is expected to stabilise in the next two quarters and reach ~5K/quarter. The collections growth has slowed down to 16% YoY in Q4 (~21% for FY24) vs a historical average of ~20% due to a slowdown in net additions and lower upselling opportunity. However, the ARPU improvement continues (+10% YoY) led by migration to a higher price/tenure package and lower churn in the gold and platinum bucket (~50% of paid suppliers and ~75% of revenue and monthly churn is ~1%). The growth engine is tuned to deliver ~20% growth in collections and the stickiness of high-paying customers reflects platform quality. The margin will expand gradually as investments are over and growth leads to margin expansion, with the operating range between 29-30%. We increase our EPS estimate by ~4% for FY25/26E due to better margins. We maintain BUY with a DCF-based TP of INR 2,900 (~38x FY26E EPS), led by revenue/EPS CAGR of 19/17% over FY24-26E.
Can Fin Homes (NS:CNFH): Can Fin Homes (CANF) reported yet another set of mixed results with sub-par loan growth (+11% YoY), offset by marginal NIM reflation amidst the current interest rate environment (3.96%) and muted credit costs (2bps). Disbursals continued to be muted (-9% YoY) due to moderation in demand in select segments, greater competitive intensity, and process tweaks. The management has guided for loan growth of 15% for FY25, on the back of investments in branches (six branches opened in Q4, 12 in FY24), widening of the customer funnel (digital sourcing, APF etc.) and shift towards higher ticket sizes. As highlighted in our Company Update, the management is looking to strengthen its governance framework and add new pillars for the next leg of sustainable and profitable growth. We tweak our FY25/FY26 earnings estimates for better-than-expected NIMs, partially offset by higher margins, maintain BUY with revised RI-based TP of INR940 (2.1x Mar-26 ABVPS).
Shoppers Stop (NS:SHOP): The top line grew 9.1% YoY to ~INR10bn (in-line), sales density for department store business remains weak. Margins disappointed too. GM/Pre IND-AS EBITDAM decreased 266/152bps YoY to 40.5/3.6%, courtesy (i) provision for obsolescence of private brand inventory of INR 140 mn and (ii) investments in beauty and ‘Intune’ brand. Private brands were a disappointment whereas the “Intune” execution currently remains at par with guidance. We reduce our FY25/26 EBITDA estimates by 1.9/1.2% respectively to account for normalising profitability in the core business. We maintain our SELL rating, with a DCF-based TP of INR630/sh, implying 20x Mar-26E EV/EBITDA.
Symphony (NS:SYMP): Symphony’s Q4 revenue grew by 8% YoY (6% below HSIE/consensus) with its domestic revenue growing by 6% (8% below HSIE) while RoW revenue grew by 12% (in-line). EBITDAM expansion of 970bps to 17.2% (HSIE: 19.1%) was supported by (1) tactical pricing action, (2) softening RM costs, (3) value engineering, and (4) improved performance of subsidiaries. On the domestic front, the summer season has started on a strong footing, given above-normal temperatures and prolonged heatwaves across the country. Symphony remains well-placed to benefit from this, given its focus on (1) product innovation, (2) enhancing distribution (semi-urban and rural), and (3) increasing presence in alternate channels (c.35% vs. 10% pre-COVID). Within RoW, IMPCO Mexico and GSK China continue to report strong performance while CT Australia remains plagued by macro headwinds. However, management’s strategic initiatives have led to a narrowing of losses. We expect only a gradual recovery in RoW execution, which is still WIP. We marginally tweak our FY25/FY26 earnings estimates and value the stock at 30x P/E on Mar’26E EPS to derive a TP of INR 955. Maintain REDUCE.
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