Marico Ltd (NS:MRCO): Marico posted in-line revenue growth, however margin was a miss. Revenue/EBITDA grew by 31/3% (HSIE 31/7%). Domestic revenue and volume grew 31/21%, 7/2% 2-year CAGR, a good show despite the COVID pressure. PCNO saw volume growth of 12% YoY, albeit on a low base (-11%), impacted by extended lockdowns in its core south and west markets. VAHO registered 35% YoY value growth (-32% in the base year) and saw a 70bps share gain. Saffola remained a torchbearer (clocked 60/24% value/volume growth), aided by improved penetration and +450bps volume share gain. International continued its momentum (up 20% YoY, +2% base), but Vietnam /Bangladesh struggled on a resurgence in COVID cases. The steep RM inflation continued to impact the margins (GM down 759/311bps YoY/QoQ), but copra prices have been softening. Marico continued its investment in core brands and innovation in the food segment. We expect the growth momentum to sustain and margin pressure to ease in FY22. We raise our EPS estimates for FY23/FY24 by 3/4%, led by an enhanced focus on volume growth. We value Marico at 42x P/E on Jun-23E EPS to derive a target price of INR 545. Maintain ADD.
JSW Energy Ltd (NS:JSWE): Net generation increased 4.3% YoY to 5.1bn unit, led by strong generation across the thermal plant, partially offset by lower output across the hydro stations due to less water flow (YoY). Accordingly, PLF declined across the hydro plant, while it improved for the thermal stations. EBITDA/PAT decreased 6.3%/5.0% YoY to INR7.0bn/INR2.1bn due to increased other expenses and one-off costs related to prepayment charges. After adjusting for this, PAT increased 36% YoY to INR2.6bn (in line with our estimate). The company expects to add 15.5GW of RES capacity by FY30, of which 2.5GW would be added by FY24. It has signed a PPA for 2.25GW of these capacities to date. It plans to venture into the green hydrogen business and demerge from the renewable segment, but these developments are in nascent stages. JSW Energy’s current net D/E stands at 0.4x, while net debt/EBITDA stands at 2.1x. However, we maintain our TP of INR118/share and SELL rating, as the stock price has risen substantially to INR244, which seems unjustifiable to our valuation metrics (RoE - ~7%, FY23 P/E – 37.3x, P/BV – 2.5x).
Container Corporation of India Ltd (NS:CCRI): CONCOR’s Q1FY22 PAT at INR 2.5bn, surprised positively due to improved loads, higher terminal charges, and operating leverage. As per the management’s assessment, the land license fees (LLF) charges for FY22 are revised lower to INR 3.75bn (vs INR 4.5-5bn for FY21), based on the revised land rates (by railways). CONCOR though will go ahead with its proposal to incur an upfront charge of INR 60-70bn for using the railway land. The strategic Khatuwas terminal is now connected to the main DFC. We maintain our ADD rating on the stock with a target price of INR 720 at 28x Jun-23E EPS (our estimates have been marginally tweaked).
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