Results Review for Infoedge, HPCL, JK Cement, Devyani, Radico Khaitan

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Infoedge: Infoedge reported a decent quarter with better-than-expected revenue, billings, and margin performance in a challenging environment. The core recruitment segment billing was flat YoY (-4% YoY in Q1) due to the continued slowdown in IT hiring (~60% of recruitment), offset by traction in non-IT sectors like BFSI, travel, auto, construction, etc. Recruitment billings have witnessed two strong years of >30% YoY growth, which is slowing down in FY24E due to the base effect and lower hiring activity. The margin for the recruitment segment continues to be an impressive ~59-60%. 99acres and Jeevansathi continue to witness growth with a focus on improving profitability. The combined loss of 99acres and Jeevansathi, at 0.34bn, is down 40% YoY due to lower ad spending. The recruitment slowdown is behind, and pick-up is expected in H2, with 99 acres continuing to be the growth engine. The recruitment margin will be in the range of 58-60% and will be driven by a continued focus on spending efficiency. We maintain our BUY rating with a SoTP-based TP of INR 5,055, valuing Naukri at 35x EV/EBITDA, 99acres/Jeevansathi+Shiksha at 5/3x P/S, while Zomato (NS: ZOMT ) and Policybazaar (NS: PBFI ) have been assigned the market value (~15% discount). The core recruitment business is trading at 26x FY25E EV/EBITDA vs an average of >35x.

Hindustan Petroleum (NS: HPCL ) Corporation: Our ADD rating on Hindustan Petroleum Corporation (HPCL) with a price target of INR 310 is premised on robust refining and marketing margins, offset by elevated debt, owing to higher capex plans. Q2FY24 EBITDA came in at INR 82bn, marginally below our estimate, owing to lower-than-expected gross refining margins and marketing sales volumes, however, this was offset by higher crude throughput and higher-than-expected gross refining margins (GRMs).

JK Cement (NS: JKCE ): We maintain our REDUCE rating on JK Cement (JKCE), with a revised TP of INR 3,135 (11x Sep-25E consolidated EBITDA). In Q2FY24, JKCE reported robust 22% YoY grey cement volume growth (ramp-up of its Panna capacity). Fuel costs further cooled off by INR 150/MT QoQ in Q2 and even freight costs fell 6% QoQ. These along with a 3% QoQ grey NSR rise drove up consolidated unit EBITDA by INR 153/MT to INR 1,036. We estimate unit EBITDA to rebound by ~INR 350/MT YoY in FY24, owing to a cool-off in fuel cost, healthy ramp-up of central capacity and large incentive accruals from FY24 onwards. The upcoming expansion in UP and MP will increase grey cement capacity to 24mn MT in FY25E and drive volume growth. The paint business is gradually ramping up and is expected to turn EBITDA positive by FY25-end.

Devyani International (NS: DEVY ): Devyani reported yet another weak print on most growth metrics. India revenue grew 12% led by store addition (+24%) while international fell 26% on the devaluation of the Nigerian currency. SSSG remained weak, KFC/PH at -4/-10% (Sapphire 0/-20%) as the demand environment continued to impact QSR consumption (aided by an additional Shravan month). Devyani’s KFC was more impacted than its sister franchisee due to higher exposure to southern markets (high non-veg mix). GM improved for both brands, but RoM for both KFC/PH contracted by 210/930bps YoY to 19.4/7.7% (Sapphire +130/-750bps). PBT fell by a sharp 53% with the PBT margin coming in at 4% (down 540bps). We remain cautious about QSR performance despite near-term catalysts (World Cup, festive season) and expect pressure on both demand and margin to persist. We cut our EPS for FY24/FY25/FY26 by 7/2/1% and value Devyani at 50x P/E on Sep’25 EPS to arrive at a TP of INR 115. Maintain REDUCE.

Radico Khaitan (NS: RADC ): Radico’s Q2FY24 print was operationally in line with revenue/EBITDA growing by 22/35%, led by a resilient P&A momentum. IMFL revenue was up 15% with volume contracting by 3% YoY to 6.96mn cases (4-year CAGR at 5%). Non-IMFL revenues (country liquor, bulk alcohol, etc.) continue to see sharp growth and were up 50% to INR 2.26bn (25% of total revenue). P&A volumes/revenue grew by 22/36% (HSIE 20/28%) while realizations grew by 11% YoY. P&A volume four-year CAGR came at c.18%. Regular volumes/revenue fell by 17/16% (HSIE -10/-7%). GM expanded YoY/QoQ by 260bps/50bps to 44.1% (HSIE 43.5%) aided by price increase in country liquor and premiumisation of IMFL business. EBITDAM expanded by 130/60bps YoY/QoQ to 13.1% (HSIE 13%). EBITDA grew by 35% on a favourable base (-19% last year, 2-year CAGR at 4%) to INR 1,212mn (HSIE 1,204mn). Whilst we remain positive about Radico’s success in product innovation and luxury portfolio scale-up, we remain cautious about margin recovery (RM volatility, growth in regular portfolio) and costs related to capex to impact earnings. We maintain our EPS estimates and value Radico at 30x P/E on Sep-25 EPS to arrive at a TP of INR 1,000. Maintain REDUCE.

Sobha (NS: SOBH ): Sobha’s (SDL) reported its highest-ever quarterly presales in value and volume at INR 17.24bn (+48%/+18% YoY/QoQ) and 1.7msf (+26%/+21% YoY/QoQ) resp. The average price realization was INR 10,223 (+17%/-3%, YoY/QoQ). The total launch pipeline for the next two years is 15msf, of which 6-7msf launch is planned for FY24, and 5/1/1msf is planned for Bengaluru/NCR/other markets. Of this, SDL launched the Neopolis project in Bengaluru during Q3FY24 with a saleable area of 3.4msf. SDL until now has sold 40% of the launched inventory (825 units launched approx. INR 6.5bn sold) with APR north of 11,500psf. EBITDA margin improves sequentially to 10.2% (-397/+298bps YoY/QoQ). This was on account of the completion of legacy projects. In terms of business development (BD), SDL expects to spend INR 2.5-3bn in FY24. JD/JVA route will be preferred whilst outright land purchases would be funded by robust internal accruals. Net debt at the consolidated level inched further downward to INR 14.4bn (INR 15.7bn in Q1FY24) on the back of a strong collection of INR 14.5bn. We maintain BUY with an unchanged TP of INR 1,024.

Kolte Patil (NS: KOLT ) Developers: KPDL reported strong presales of INR 6.3bn (+72%/-10% YoY/QoQ), with an average realisation of INR 6,426 per sq. ft. (-3%/-15% YoY/QoQ). 55% of the total H1FY24 presales (INR 13bn) were backed by new launches which were worth INR 20bn. KPDL is confident of surpassing presales of INR 28bn for FY24 and expects INR 35bn in FY25. This is on the back of INR 21bn worth of inventory, INR 30bn worth of priority launches, and an additional INR 40-50bn worth of new phase launches. The Pune region contributed 95% of the total H1FY24 presale value, which KPDL is expecting to lower to 70% by FY25. FY24TD, KPDL added INR 34.5bn worth of projects and for the rest of FY24, it expects to add INR 45bn worth of projects. The society redevelopment project (GDV of INR 9.5bn) in MMR is expected to be launched by H1FY25. Another high-value project added to the MMR i.e. Mulund (GDV of INR 9bn) is expected to be launched by H1FY25. Navi Mumbai project in Vashi (GDV of INR 3bn) is expected to be launched in Q4FY24. Liquidity is comfortable with net D/E at 0.05x (board-approved limit of 0.50x) paves the way for accelerated BD activities. Given strong business development and better-than-expected price realisation (5-10% increase), we maintain BUY and increase our TP to INR 534.

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