Indian Oil Corporation (NSE:IOC): Our REDUCE rating on Indian Oil Corporation (IOCL), with a target price of INR 124, is premised on margin pressure due to increasing petchem supplies/capacity, lower refining margins, and moderation in auto fuel marketing margins. IOCL’s Q3FY25 reported EBITDA at INR 71bn (-54% YoY, +89% QoQ) and APAT at INR 28.7bn (-64% YoY, +14.9x QoQ) came in below our estimates. Earnings were impacted by weak performance from petchem segment, lower refining margins, inventory loss and absorption of under-recovery on LPG. Reported GRMs came in below our estimate at USD 2.9/bbl (-78% YoY, +86% QoQ). IOCL’s gross debt stood at INR 1,314bn (+24% YoY, -8% QoQ).
DLF (NSE:DLF): DLF reported a strong quarter with presales of INR 120.9bn (+33.7%/16x YoY/QoQ), largely due to its uber-luxury launch ‘The Dahlias in DLF 5’, which witnessed a strong demand with 173 units (c.42% of inventory) getting sold in nine weeks. Value-wise, the launch pipeline stands at INR 440bn, of which INR 430bn is earmarked for the uber-luxury segment. Collections improved significantly, driven by robust bookings with INR 31.2bn (+23.9%/+31.5% YoY/QoQ). DLF maintained net cash status at INR 43.3bn (vs INR 28.3bn net cash in Q2FY25). Moreover, developer is heading towards launch of its next uber luxury project DLF 5, along with Privana 3 in, FY26 which will further improve margins. Moreover, DLF is aiming to launch its Mumbai project in Q4FY25. On the back of a strong response from the recent launch of its uber-luxury project Dahlias, we believe that uber luxury demand is here to stay for long. Moreover, the first residential launch in Mumbai and timely launches of Downtown commercial projects in Gurugram and Chennai are expected to serve as key growth catalysts, moving forward. Hence, given (1) the strong presales momentum supported by price hikes, (2) robust launch plans, and (3) an expected increase in office occupancy levels, we maintain BUY on DLF with a TP of INR 988/share.
Macrotech Developers (NSE:MACE): Macrotech Developers Ltd (MDL) recorded presales of INR 45.1bn (+32.3/+5.1% YoY/QoQ), maintaining its quarterly run-rate of >INR 40bn. Presales growth is led by strong demand across segments with premium to luxury segments leading the way. MMR/Pune/Bengaluru market saw presales of INR 41.2/2.5/1.4bn. Collections were INR 42.9bn (+65.6/+41.1% YoY/QoQ). The embedded EBITDA margin on presales was ~35%. In terms of launches, MDL has launched a GDV of INR 103bn in 9MFY25 with a saleable area of 6.3msf. Key growth drivers include land monetization at Palava, targeting INR 80bn in township presales by 2030 with high margins of c.50%. MDL is aiming for INR 15bn in annuity income by FY31 and it plans to transition completely to a POCM-based accounting by FY27. MDL expects that in FY26, the presales contribution from Bangalore shall increase significantly. Moreover, the developer is also looking to enter a few more geographies in coming years. With respect to concerns about ongoing legal dispute involving trademark infringement and passing-off claims with the House of Abhinandan Lodha, MDL highlighted that there shall be no operational impact. Given robust growth visibility, better-than-expected GDV addition, and uptick in land prices (Palava may see price and volume increase as new infra projects get commissioned over the FY25 end), we keep our TP unchanged at INR 1,311/sh and maintain ADD.
Balkrishna Industries (NSE:BLKI): Balkrishna Industries' (BKT) Q3FY25 EBITDA margin at 24.8% was above our estimate of 24.5%, supported by higher volumes (5% YoY vs our estimate of a flattish YoY volumes) and lower other expenses. The volume beat came from a 60% YoY growth in the RoW (Rest of the World) and a 14% YoY growth in the Americas regions. Management has credited better growth in these regions to materializing of the branding activities and investments done in the past. Despite better volume growth in Q3FY25, management stuck to its FY25 volume guidance of “minor volume growth”. Additionally, it does not have visibility of recovery in the European market. We expect margins to be under pressure in Q4FY25 as higher RM cost and freight costs (which rose in Nov and Dec 2024) could impact the financials with a lag. Considering near term uncertainties and lack of clear visibility of business normalization, we continue maintaining our target P/E multiple at near -1SD, valuing it at 19x Dec-26 EPS, maintain SELL rating with a revised TP of INR 2,092.
JK Cement (NSE:JKCE): We maintain our REDUCE rating on JK Cement (JKCE), with a revised TP of INR 4,475/sh (13x Mar-27E consolidated EBITDA), owing to its expensive valuation. In Q3FY25, JKCE’s consolidated volume rose 5% YoY on rebound in grey cement sales while the white/putty continued to decline. Blended unit EBITDA also recovered INR 350/MT QoQ to INR 1,005/MT, led by higher incentives, fuel cost reduction, op-lev gains and absence of large maintenance expense booked in Q2. We estimate JKCE’s grey cement profitability will rebound, benefiting from its healthy ramp-up of expanded capacity, accelerated expansion on cool-off in fuel cost, rise in low-cost green energy consumption and logistics savings and recovery in cement prices. However, the white segment outlook remains weak owing to aggressive competition from the paint majors. Additionally, overall valuations remain expensive.
CDSL (NSE:CENA): CDSL posted a weak set of numbers with a 14% QoQ decline in revenue, lower than our estimate of a 10% decline. This decline was led by a drop in transaction charges, lower KYC revenue, and a drop in e-voting revenue (seasonality). The drop in transactions was a function of pricing cuts and volume decline, while the online data charges decline was due to a drop in account additions and lower fetches. The demat account additions rate stood at ~3mn in the quarter vs ~4mn in Q2. However, CDSL continues to maintain its leadership position with a 79% market share and ~93% incremental share. The annuity revenue stream is stable and constitutes ~30% of the revenue. The increase in the number of folios for the current fiscal will reflect in Q1FY26E numbers, and the annuity revenue will remain strong for FY26E. The weakness in market-linked revenue will lead to a growth slowdown in FY26E following two years of strong growth. The margin declined in the quarter was due to the revenue drop and elevated tech expenses, and the company intends to keep investing in technology to maintain its competitive edge. We cut our revenue estimate by ~8% for FY26/27E, led by market weakness and EPS estimates by ~13-14% due to the margin drop. We expect growth to moderate in FY26E and EBITDA margin to be at ~60%. We maintain our ADD rating with a target price of INR 1,340, based on 40x FY27E EPS. The stock is trading at a P/E of 48/40x FY26/27E EPS.
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