Titan (NS:TITN): Consolidated jewellery sales (ex-bullion) grew 27% YoY to INR117.8bn (HSIE: in-line). Gold jewellery demand witnessed a step-up jump post the Jul-24 customs duty (CD) cut. This gold rush lasted well into mid-September (consol. topline growth stood at 16% YoY at INR 145.3bn, in-line). Margins, however, disappointed. Normalising for the INR2.9bn hit due to customs duty reduction, jewellery EBITM (consolidated) contracted 486bps YoY to 8.3% vs HSIE’s 9% (note: normalised standalone jewellery EBITM came at 11.4%). Non-jewellery businesses performed well. While we tone down our FY25 EPS by 9.5%, FY26/27 estimates remain largely unchanged. We maintain our REDUCE rating with a revised DCF-based TP of INR2,950/sh (implying 50x Sep-26 P/E).
ABB India (NS:ABB): ABB (ST:ABB) reported a weak quarter where revenue/EBITDA/PAT at INR 29.1/5.4/4.4bn missed our estimates by 11/10/9%. The company achieved a muted Q3CY24 order inflow at INR 33.4bn (+11%/-3% YoY/QoQ, slight impact due to delay in large order finalisation, extended monsoons), taking the backlog to INR 100bn. Gross margins came in at 43.4%, supported by better prices and provision reversal. EBITDA margin of 18.6% (+271/-61bps YoY/QoQ, 18.4% est.) was impacted by higher warranty remeasurement. ABB saw some slowdown in ordering and believes that whilst demand is robust, in the near term, there could be some consolidation in awards. Some of the large orders’ finalisation got pushed into coming quarters whilst the government capex has seen delays. We have recalibrated our estimates to factor in lower-order intake. We reduce our TP to INR 8,145/sh (rolled over to 75x Dec-26 EPS). Given the limited upside, we maintain ADD.
Mankind Pharma (NS:MNKI): EBITDA (+25% YoY) was led by 14% YoY sales growth (India formulation up 10% YoY, consumer healthcare +20%, and exports grew 57% YoY), higher gross margin (+202 bps YoY), and steady costs (staff/ SG&A was up 13/ 12% YoY). In FY25, Mankind expects (1) double-digit revenue growth, (2) steady India formulation growth (to beat IPM growth) and consumer healthcare (double-digit growth), (3) exports to sustain growth momentum led by growth visibility in the US and RoW market, (4) GM to improve YoY, (5) EBITDA margin at 25-26%, and (6) Bharat Serum (BSV) integration on track – it expects 15% growth in FY25 and FY26 and 15-20% growth FY27 onwards with consistent improvement in the margin. While the BSV acquisition (of ~INR 136.3 bn) will be EBITDA margin accretive, the debt-funded acquisition will dilute the near-term EPS (accretive from FY27). Mankind’s (ex-BSV) growth visibility in India (acute recovery and scale-up in chronic segment), exports growth momentum, and margin expansion for each FY25/26/27 stay. Factoring in Q2 and BSV business, we have cut EPS by 7% for FY25/26E (increased debt at ~INR 100 bn) and revised TP to INR 2,900 (40x Q3FY27E vs. 35x Q1FY27E). ADD stays.
Dr Reddy’s Laboratories (NS:REDY): EBITDA^ grew (13% YoY) as +16% YoY sales growth (-4% QoQ US, +18% YoY in India, PSAI up 20%) was partly offset by lower GM (-43 bps YoY) and higher staff/R&D/SG&A (+9/ 33/ 30% YoY). DRRD expects (1) to sustain growth in the US over the next 1-2 years and gRevlimid to be meaningful product in FY25/26, (2) India to see double-digit growth in FY25, led by new launches (16 new launches in H1), scale-up in key therapies, and in-licensing opportunities, organic growth to sustain at 9-10% in FY25, and (3) R&D at 8.5-9% (vs 8.6% in H1FY25) and higher value products (NCEs, biosimilars, peptides, and specialty) for the global market. The company completed the Northstar (Nicotinell, NRT category) transaction in Sep’24 and operationalised JV (in Aug’23) with Nestle (NS:NEST) India in Q2FY25. Factoring Q2 performance and Nicotinell business, we have raised EPS by 1/3% for FY25/26E. We have rolled forward TP to INR 1,330 (26x Q3FY27E EPS + INR 20/sh from gRevlimid). REDUCE stays as for DRRD beyond gRevlimid, there is not enough pipeline to sustain growth and margin momentum, which would lead to core earnings (ex-Revlimid) growth concerns.
Berger Paints (NS:BRGR): BRGR’s revenue remained flat at INR27.7bn (in-line). Volume/value growth for Q2 stood at 3.6%/-0.4%. Decorative business saw single-digit volume growth, impacted by weather conditions and flooding in key markets. The premium segment performed well, while mass-consumption products experienced flat/negative growth. A new team has been established to drive market share growth in urban markets, with management targeting an increase from 10% to 15% over the next three years. GM improved by 58bps to 41.7%. EBITDA margin contracted 147bps to 15.6% (HSIE: 16.7%) due to higher employee costs. We cut our EPS estimates by 1-2% for FY25/26 and retain our REDUCE rating with a DCF-based TP of INR500/sh (implying 41x Sep-26E P/E).
KEC International (NS:KECL): KECI reported a mixed set of numbers in Q2FY25, with the highest-ever order inflow during the quarter and a relatively weak to muted EBITDA margin profile. Its revenue/EBITDA/APAT beat/(miss) stood at 1.5/-3.8/-17.2%. The standalone (~88% revenue) EBITDA margin also remained weak at 5.1%. KECI maintained reverting to 9-10% EBITDA margins by Q4FY25 on the back of legacy projects getting completed. KEC (TADAWUL:4310) continues to surprise with the Order Inflow (OI) of INR 134.8bn, largely led by T&D, civil and railways segments at 69/9/10%, respectively. The order book (OB) as of Sep’24 stood at INR 341bn (~1.7x FY24 revenue), while L1 stood at INR 84.1bn. Further, KEC plans to transfer its cables business to a subsidiary (KEC Asian Cables Limited) by January 2025 as management remains optimistic about long-term growth (revenue of INR 28-29bn by FY27). KEC expects to realise INR 7-8bn of receivables in FY25, aiding its existing liquidity. KECI expects 15% FY25 revenue growth. Given the slip in the margin, we have tweaked our estimates lower. Given INR 8.7bn fundraising, robust inflows, expected margin expansion and likely higher valuation for the cable business, we increase our P/E valuation from 18x to 20x. Owing to the limited upside on our revised target price of INR 1,017/sh, we maintain an ADD rating on KECI.
V-MART Retail (NS:VMAR): V-Mart KPIs mean reverting from the bottom continues to play out, led by – (1) paring down of Limeroad losses, (2) profitability improvement led by the closure of non-performing stores, and (3) recovery in footfalls/sales density. Revenue grew 20.3% YoY to INR6.61bn (-in-line). Core V-MART operations rose 27% YoY to INR5.37bn (in-line). Q2 SSSG stood at 15% (vs. -6% in Q2FY24). ASP, overall, was up by 6% (mainly due to a change in product mix). GM/EBITDAM came in at 33.6/5.8% (HSIE: 33.7/4.8%). Inventory days reduced to 111 (vs. 132 in Q2FY24). We’ve increased FY26/27 EBITDA estimates (3-4%) to account for a better recovery. Our DCF-based TP stands revised at INR3,400/sh (earlier INR3100/sh), implying 26x Sep-26 EV/EBITDA. However, the recovery story seems to have played out at 33x Sep-26 EV/EBITDA. Hence, we downgrade the stock to SELL.
Sai Silks (Kalamandir) (NS:SAIS): Sai Silk's (SSKL) revenue grew by 6.3% YoY to INR3.47bn (H1 SSSG stood at -6.5%, however, it has been on an up move. SSSG is expected to be strong in H2, backed by higher wedding dates). Blended revenue per sq. ft. stood at ~INR 20k. Demand recovery is seen in Q2. SSKL added 2 VML format stores in Q2 (area addition: 16k sq. ft). Expansion guidance remains unchanged at ~75k sq. ft in FY25. GM improved 56bps YoY to 42.2% (in-line) courtesy a better product mix. EBITDAM contracted 88bps YoY to 15.9% (HSIE: 16%), primarily due to front-loading of new store expenses. We maintain our estimates for FY25/26 and our BUY rating with a DCF-based TP of INR280/sh (implying 20x Sep-26E P/E).
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