Results Review for Titan, Astral, Aditya Birla Capital, IRB Infra, Sonata Software

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Titan (NS: TITN ): Titan’s top line grew 22% YoY to INR 141.6bn (HSIE: INR 148.2bn). Jewellery (ex-bullion) sales grew 24% YoY to INR125.6bn (in-line). Festive purchases resulted in double-digit buyer growth in jewellery, moderation was seen after Nov-23 though. Consolidated EBITDAM contracted 55 bps YoY to 11% (in-line). Jewellery EBITM (ex-bullion) contracted by 47bps to 11.8% (in-line), courtesy (1) higher marketing spending to defend market share and (2) lower studded ratio. Non-jewellery growth remained healthy (22%), however disappointed on profitability. We largely maintain our FY25/26 EPS estimates and our SELL rating with a DCF-based TP is INR2,750/sh (implying 48x FY26 P/E).

Astral (NS: ASTL ): We maintain BUY on Astral with a revised target price of INR 2,040/sh (60x its Mar-26E EPS). During Q3FY24, falling resin prices, poor show at the UK adhesive plant, inventory losses and one-off anniversary celebration expenses moderated earnings growth. Thus, consolidated revenue/EBITDA/APAT rose 8/10/22% YoY. Pipes demand has picked up in Q4 and resin prices are near the bottom (as per management). The UK operations have normalised and the Dahej adhesive plant is ramping up well. The bathware segment is also gaining pace and should turn EBITDA positive in FY25. Astral is preparing to launch the Astral brand in paints in Q1FY25E. Thus, consolidated revenue/EBITDA/ APAT should grow at 15/22/26% CAGR during FY23-26E, in our view.

Aditya Birla Capital (NS: ADTB ): Aditya Birla Capital’s (ABCL) disparate performance continued as the lending businesses sustained growth momentum on the back of simultaneous build-up in balance sheet granularity (67% of the NBFC AUM is towards retail + SME + HNI) and relatively stable asset quality outcomes. This is reflected in sustained improvement in franchise earnings (RoE of NBFC/HFC at 17%/14.6%). The non-leveraged businesses (AMC, LI and HI) remain sluggish on account of policy headwinds, seasonality, and competitive intensity. We maintain ADD with a SOTP-based TP of INR187. The lending businesses contribute two-thirds to the SOTP, reflecting a challenging environment for the non-leveraged businesses.

IRB Infra (NS: IRBI ): IRB reported revenue/EBITDA/APAT of INR 19.7/8.7/1.9bn, ahead of our estimates by 9.4/8.4/27.5%. EBITDA margin came in line with our estimate of 44.5% at 44.2% (-501/-137bps YoY/QoQ), primarily due to mix. The OB as of Dec’23 stood at INR 361.8bn (~6x FY23 adjusted revenue), with EPC contributing 19.1% (INR 69.3bn) and O&M contributing 80.9% (INR 293.7bn). The consolidated gross debt as of Dec’23 stood at INR 133.7bn vs. INR 135bn as of Sep’23. IRB expects to infuse equity of INR 4.1bn (excluding TOT-12/13 and Hyderabad ORR) in FY24 and INR 2.2bn in FY25. It maintained its FY24 construction revenue guidance at INR 50-55bn (+20-25% YoY) and construction EBITDA margin at ~25%. It expects total projects worth INR 2trn to be bid out over the next two years on a BOT toll basis. We maintain our ADD rating on the stock. Basis the new order wins, better than expected toll growth and lower interest cost, we increase our SOTP-based target price to INR 56/sh.

Sonata Software (NS: SOFT ): Sonata delivered a strong quarter with International IT services (IITS) revenue growth of 3.0% QoQ CC and IITS margin at 22.6% was higher than estimated. The strong growth was led by the ramp-up of large deals won in the retail and travel verticals. The management maintains its IITS+DPS revenue target of USD 1.5bn by FY26 (implies IITS CQGR of ~4% and DPS CAGR of ~19%) with EBITDA margins in the low 20s. The large deals momentum remains strong (three large deals in the quarter) and the book-to-bill stood at 1.24 (~TCV of USD 104mn). The large deal pipeline remains strong with ~49 large deals under pursuit and ~45% of the large deals are with Fortune 500 clients. The ramp-up of large deals is on track and provides growth visibility. The quant and encore acquisitions have outperformed estimates resulting in an additional earn-out payment of ~USD 21mn. Strong large deal pipeline, improving quality of top-10 accounts, the ramp-up of deals won, Microsoft (NASDAQ: MSFT ) fabric, AI bets and cross-sell opportunities provide revenue growth visibility. We maintain our EPS estimate and ADD rating with a target price of INR 730, based on 25x FY26E EPS. The stock is trading at a P/E of 33/26x FY25/26E EPS.

Aether Industries (NS: AETH ): We retain our BUY rating on Aether Industries, with a target price of INR 1,124, on the back of (1) capacity expansion-led growth, (2) advanced R&D capabilities, (3) technocratic management, (4) market leading position in most of its products, (5) strong product pipeline, and (6) marquee customer base. EBITDA was 1% below our estimate and PAT was 11% below estimate owing to exceptional items. The company has accounted an exceptional item of INR63.7 mn towards the compensation paid to the families of the deceased, medical expenses of the injured, and penalty paid to GPCB. Adjusting for exceptional expenses, APAT was 9% above our estimates.

City Union Bank (NS: CTBK ): City Union Bank’s (CUBK) earnings missed estimates, on the back of sluggish growth and NIM compression from interest reversal on restructured loans that turned NPA, partly offset by lower credit costs. Loan growth continued to be soft (+0.7% QoQ) and will remain a key challenge for the bank, going forward. The management has guided for a double-digit loan growth by the end of FY24 with improvement in MSME productivity via digital initiatives and as the run-down in the KCC book is largely behind. CUBK continued to report negative net slippages, with annualized slippage at 1.8%, thus keeping GNPAs in check at 4.5%. Given incremental margin pressures from continued deposit re-pricing and medium-term opex driven by investments in technology and people, CUBK must accelerate its growth outcomes at the earliest. We tweak our FY24/25E estimates to factor in margin compression, offset by lower credit cost, and maintain BUY, with a TP of INR165 (1.4x Sep-25 ABVPS).

Greenpanel Industries (NS: GREP ): We maintain our BUY rating on Greenpanel with a lower target price of INR 445/share (20x its Mar’26E APAT). We like Greenpanel for its leadership positioning in the high-growth MDF segment, its large retail presence (85% in FY23), healthy margin, and working capital profile. In Q3FY24, Greenpanel’s revenue/EBITDA/APAT fell 8/35/8% YoY. The continued surge in imports, ramp-up of domestic capacity additions, and soaring timber prices flattened its sales volume YoY and compressed gross margin. Greenpanel expects MDF import to reduce FY25 onwards post BIS implementation. Its MDF capacity expansion by 35% (231K CBM) is likely to be commissioned by Q3FY25 end.

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