India Strategy | Review 1QFY25
India Strategy
BSE Sensex: 79,106
Refer to our Jun’24
Quarter Preview
Nifty-50: 24,144
Earnings review – 1QFY25: A muted quarter, as expected!
OMC’s drag 1Q; Nifty EPS cut 1.7%/1% for FY25/26
OMCs temper corporate earnings:
The 1QFY25 corporate earnings came in line,
with overall growth primarily propelled once again by domestic cyclicals. Notable
contributions were witnessed from the Healthcare, Real Estate, Capital Goods,
and Metals sectors. In contrast, earnings growth was adversely affected by OMCs.
Domestic cyclicals ignite resilience:
The aggregate earnings of the MOFSL
Universe companies were in line with our expectations and grew 1% YoY (vs. our
est. of -1% YoY). Earnings for the Nifty-50 rose 4% YoY (vs. our est. of +3%). The
aggregate performance was hit by a drag from OMCs. Excluding OMCs, the MOFSL
Universe and Nifty posted 12% and 9% earnings growth vs. expectations of +10%
and +7%, respectively. The overall earnings growth was fueled once again by
domestic cyclicals, such as Automobiles (+28% YoY) and BFSI (+16% YoY), with
improved contributions from Healthcare (+29% YoY), Real Estate (+62% YoY),
and Capital Goods (+23% YoY). Metals also reported a strong earnings growth of
18% YoY (vs. our est. of 1% YoY drop), driven by Vedanta, Hindalco, and Tata
Steel. Excluding BFSI, profits for the MOFSL Universe would have declined 6%
YoY (vs. our est. of -8% YoY).
Heavyweights on the march:
Nifty delivered a 4% YoY PAT growth (vs. our est.
of +3%).
Nifty reported first quarter of a single digit EBITDA growth (5%) in
four years, (last time Nifty posted single digit EBITDA growth in Sep’20). Also,
4% PAT growth is the lowest since the Pandemic quarter (June’20).
Five Nifty
companies – HDFC Bank, Tata Motors, ICICI Bank, Maruti Suzuki, and TCS –
contributed 127% of the incremental YoY accretion in earnings. Conversely,
BPCL, JSW Steel, ONGC, Reliance Industries, and Grasim Industries contributed
adversely to the Nifty earnings.
The beat-miss dynamics:
The beat-miss ratio for the MOFSL Universe was
unfavorable, with 43% of the companies missing our estimates, while 29%
reported a beat at the PAT level. For the MOFSL Universe, the earnings upgrade-
to-downgrade ratio has turned weaker for FY25E as 46 companies’ earnings
have been upgraded by >3%, while 107 companies’ earnings have been
downgraded by >3%. The earnings upgrade/downgrade ratio of 0.4x was the
worst since 1QFY21. EBITDA margin of the MOFSL Universe (ex-Financials)
contracted 120bp YoY to 16.3%.
Report card:
Of the 24 sectors under our coverage, 7/11/6 sectors reported
profits above/in line/below our estimates. Of the 263 companies under coverage,
77 exceeded our profit estimates, 113 posted a miss, and 73 were in line.
FY25E earnings highlights:
The MOFSL Universe is likely to deliver sales/EBITDA/
PAT growth of 9%/9%/11% YoY in FY25. The Financials and Metals sectors are
projected to be the key growth drivers, with 16% and 38% YoY earnings growth,
respectively. They are likely to contribute 78% of the earnings growth.
Nifty EPS experiences a downgrade of 1.7%/1% for FY25E/FY26E:
The Nifty EPS
estimate for FY25 was cut by 1.7% to INR1,115, largely owing to Reliance
Industries, ONGC, and BPCL. FY26E EPS was also trimmed by 1% to INR1,316
(from INR1,330) as upgrades in Infosys, Coal India, Tata Motors, and Maruti
were offset by downgrades in ONGC, Axis Bank, HDFC Bank, ICICI Bank, and
Indusind Bank.
1QFY25: Expectations vs. delivery
% of companies that have declared results
Above Expectations
In-line
Below Expectations
MOFSL
PAT
Nifty
29
28
43
24
40
36
Gautam Duggad – Research Analyst
(Gautam.Duggad@MotilalOswal.com)
Research Analyst: Deven Mistry
(Deven@MotilalOswal.com)
/
Aanshul Agarawal
(Aanshul.Agarawal@Motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
PAT growth YoY in 1QFY25 (%)
14
12
The top earnings upgrades in FY25E:
Coal India (10.8%), Dr. Reddy’s Labs (6.7%),
Apollo Hospital (4.4%), Adani Ports (4.3%), and Tata Steel (3.3%).
The top earnings downgrades in FY25E:
BPCL (-16.3%), Bharti Airtel (11%), Hero
Motocorp (-9.4%), JSW Steel (-8.2%), and Indusind Bank (-7.7%).
1
-6
MOFSL Ex BFSI
Ex
Ex
Univ.
Metals OMCs
& Oil
Key sectoral highlights
–
1)
Banks:
The banking sector reported a soft quarter amid
tepid business growth, NIM moderation, and a slight increase in provisioning
expenses, mainly for private banks. NIM contracted for most banks as cost pressures
persisted amid intense competition for liabilities and continued pressure on CASA
mix. Public sector banks (PSBs) reported a mild compression in margins as new
investment guidelines led to better investment yields, which supported margins. 2)
Autos:
OEMs reported ~10% YoY volume growth in 1QFY25, with nearly all the
OEMs contributing to this broad-based growth. 2Ws led the way with around 11%
YoY growth, followed by PV at 6% YoY growth. CVs and tractors both posted 4% YoY
growth. Demand is expected to stay robust during the upcoming festive season,
driven by a favorable monsoon and new product launches. 3)
Consumer:
Our
coverage universe posted revenue growth of 6% YoY (est. 8%) in 1QFY25 vs. 4% in
4QFY24, showing an improving consumption trend. In the staples sector, demand
has been steadily increasing, with signs of growth in rural markets. There is a YoY
improvement in volume growth, and further improvement is expected in the coming
quarters. 4)
Oil & Gas:
The performance was below our estimate, due to OMCs.
Though EBITDA was in line, HPCL, MRPL, PLNG, and AEGISLOG missed our estimates.
However, GAIL, GUJS, IGL, IOC, and MGL beat our estimates. Adjusted PAT was 9%
below our estimates (down 42% YoY). Adjusted PAT, excluding OMCs, was also 8%
below our estimate (down 5% YoY). 5)
Technology:
The IT services companies
(MOFSL Universe) reported healthy performance (beating our estimates) in 1QFY25
with a median revenue growth of 1.2% QoQ CC. With a mild recovery in
discretionary spending among BFSI clients, their focus is now transitioning from the
cost-takeout deals to “high-priority” transformation deals in some pockets.
Nonetheless, the overall pressure on discretionary spending persists. 6)
Healthcare:
Our coverage companies (excluding hospitals) reported in-line sales, while EBITDA/
PAT beat our estimates by 6% each in 1QFY25. The profitability was driven by: 1)
lower raw material costs, 2) reduced intensity of price erosion in US generics, and c)
launch of niche products.
Our view:
We anticipate the earnings momentum to continue; albeit, the
magnitude of its growth is likely to moderate to ~15% over FY24-26. The
corporate earnings scorecard for 1QFY25 has met expectations, with
heavyweights such as HDFC Bank, Tata Motors, ICICI Bank, Maruti Suzuki, and
TCS driving the aggregate. The earnings spread has been decent, with 57% of
the MOFSL Coverage Universe either meeting or exceeding profit expectations.
However, growth has primarily been led by the BFSI and Auto sectors. The Nifty
is trading at a 12-month forward P/E of 20.1x, near to its own long-period
average of 20.4x.
Industrials and Capex, Consumer Discretionary, Real Estate,
and PSU Banks are our key preferred investment themes.
We remain OW on
PSU Banks, Consumption, Industrials, and Real Estate. We recently raised IT to
marginal OW from UW, while we cut Auto from OW to UW. We also turned OW
on Healthcare from Neutral, while maintaining our UW stance on Private Banks
and Energy within
our model portfolio.
August 2024
2
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 1: Preferred ideas
Company
Preferred large cap stocks
ICICI Bank
State Bank
Hind. Unilever
Larsen & Toubro
HCL Technologies
Mahindra & Mahindra
Coal India
Titan Company
Hindalco
Mankind Pharma
MCap CMP
EPS (INR)
EPS CAGR (%)
PE (x)
PB (x)
ROE (%)
(USDb) (INR) FY24 FY25E FY26E FY24-26
FY24 FY25E FY26E FY24 FY25E FY26E FY24 FY25E FY26E
96.7
85.4
76.2
58.0
52.6
40.7
37.3
36.1
16.6
10.6
1,162
803
2,724
3,544
1,626
2,746
505
3,402
622
2,215
58.4
75.2
43.7
94.5
57.9
88.7
60.7
39.3
45.6
47.8
64.1
89.4
47.9
105.8
62.5
106.4
61.9
46.0
61.1
54.5
73.2
103.2
53.6
136.0
68.5
124.7
68.1
56.9
63.7
62.4
12.0
17.1
10.8
20.0
8.8
18.5
5.9
20.4
18.1
14.4
18.8
10.0
51.9
39.9
26.7
21.7
7.1
96.9
12.3
48.1
18.1
9.0
56.8
33.5
26.0
25.8
8.1
74.0
10.2
40.6
15.9 3.3 3.0 2.5 18.9 17.7 17.3
7.8 1.7 1.5 1.3 18.8 18.8 18.2
50.8 10.4 12.3 11.9 20.2 21.8 23.7
26.1 6.0 5.0 4.3 14.8 15.8 17.8
23.7 6.1 6.6 6.7 23.5 25.4 28.2
22.0 4.4 5.3 4.4 22.3 22.3 21.9
7.4 3.2 3.1 2.6 45.2 37.7 34.5
59.8 36.1 24.7 19.2 32.9 37.8 36.1
9.8 1.6 1.5 1.3 13.6 15.8 14.4
35.5 9.8 8.1 6.9 22.8 21.4 20.9
8.0 6.9 14.4 14.7 15.6
7.0 6.4 7.8 13.5 8.0
12.9 11.1 25.6 25.8 28.9
6.9 5.7 31.1 35.9 36.8
12.1 10.3 15.3 19.3 22.2
10.1 8.3 18.5 18.9 19.2
15.8 13.4 20.3 19.8 20.5
1.3 1.1 11.6 11.4 13.0
12.3 9.3 28.8 26.0 24.9
2.9 2.5 43.3 32.9 26.1
Preferred midcap/smallcap stocks
Indian Hotels
10.3 612 8.9 10.5 12.9
20.5
66.7 58.2 47.5 8.9
Godrej Properties
9.5 2,871 26.9 52.0 34.4
13.1
85.5 55.2 83.4 6.4
Persistent Systems
8.7 4,765 75.1 88.9 114.0
23.2
53.1 53.6 41.8 12.2
Ashok Leyland
8.6
246 9.1 11.8 14.6
26.3
18.7 20.8 16.9 5.7
Kalyan Jewellers
7.0
569 5.8 8.4 11.3
39.6
73.8 67.5 50.3 10.5
KEI Industries
4.6 4,282 64.4 80.0 99.1
24.0
53.7 53.5 43.2 9.9
Metro Brands
4.2 1,308 12.7 14.8 18.1
19.2
90.2 88.4 72.3 16.4
PNB Housing
2.6
831 58.1 69.8 88.8
23.7
10.8 11.9 9.4 1.1
Cello World
2.2
888 15.6 18.7 23.6
23.1
49.7 47.4 37.6 14.3
Angel One
2.1 2,114 135.9 179.9 205.8
23.1
22.4 11.8 10.3 8.3
Note: LP = Loss to profit; Large Cap, Mid Cap and Small Cap Stocks listed above are as per SEBI categorization
Performance in line: BFSI and Automobiles drive earnings; OMCs drag
The MOFSL Universe’s sales/EBITDA/PBT/PAT grew 7%/3%/2%/1% YoY (vs. est.
of +9%/+2%/-1%/-1%). Excluding OMCs, the MOFSL Universe companies
recorded sales/EBITDA/PBT/PAT growth of 8%/10%/12%/12% YoY (v/s est. of
+9%/9%/9%/10%) in 1QFY25.
The 1QFY25 corporate earnings met expectations, with overall growth primarily
propelled once again by domestic cyclicals. Notable contributions were witnessed
from the Healthcare, Real Estate, Capital Goods, and Metals sectors. In contrast,
earnings growth was adversely affected by OMCs.
The banking sector reported a soft quarter amid tepid business growth, NIM
moderation, and a slight rise in provisioning expenses, mainly for private banks.
NIM contracted for most banks as cost pressures persisted amid intense
competition for liabilities and continued pressure on CASA mix. The public sector
banks (PSBs) reported a mild compression in margins as new investment
guidelines led to better investment yields, which supported margins.
The EBITDA margin for the MOFSL Universe (ex-Financials) contracted 120bp YoY
to 16.3%.
The gross margin for half of the sectors contracted, while the margin for half
expanded in 1QFY25. Seven of the 14 major sectors under MOFSL Coverage
reported a contraction in gross margin YoY.
August 2024
3
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 2: Sector-wise 1QFY25 performance of the MOFSL Universe companies (INRb)
Sales
Sector
(no of companies)
Jun-24
Chg. %
YoY
10
13
-1
3
6
25
54
13
17
6
13
20
74
12
-3
10
0
1
4
10
21
16
10
4
3
7
7
6
9
8
7
8
Var.
over
Exp. (%)
2
1
-2
2
-1
7
7
-2
0
-2
-6
-1
5
0
-3
-3
-1
-2
-6
-2
-6
0
-2
0
-1
3
-2
-2
0
-1
1
0
EBIDTA
Chg. %
Jun-24
YoY
410
93
75
30
214
19
2
1,563
688
601
22
239
13
204
12
56
9
535
851
688
34
56
4
428
295
84
4,975
3,412
3,589
4,812
3,525
2,819
20
20
-9
-10
5
32
23
13
18
4
11
19
90
23
-2
11
-8
17
-26
1
43
13
9
7
5
-3
3
-1
11
10
5
9
Var.
over
Exp. (%)
5
0
-10
0
-4
6
-10
1
3
0
-13
-1
13
5
-2
-3
-4
5
-3
-3
-4
0
-7
2
0
19
1
1
1
1
1
1
PBT
Chg. %
Jun-24
YoY
304
84
43
22
203
19
1
1,271
575
480
24
177
14
169
7
40
8
380
524
444
36
30
2
397
18
34
3,589
2,319
2,686
3,510
2,638
2,061
29
19
-21
-18
3
31
19
15
17
11
27
13
92
31
-5
19
-8
19
-40
-5
79
6
19
8
LP
-25
2
-4
15
12
4
9
Var.
over
Exp. (%)
9
0
-15
0
-5
10
-8
1
1
2
-2
-3
20
8
0
0
1
18
-10
-9
29
-6
-14
3
1,894
33
2
3
3
3
2
1
PAT
Chg. %
Jun-24
YoY
223
55
33
16
151
14
1
946
433
347
23
132
10
127
4
34
6
267
369
309
28
22
2
292
-22
31
2,597
1,651
1,961
2,537
1,894
1,462
28
23
-20
-19
3
34
22
16
17
13
28
12
69
29
-7
22
-5
18
-42
-5
62
6
7
8
Loss
-30
1
-6
14
12
4
9
Var.
over
Exp. (%)
5
-1
-6
2
-6
10
-6
1
2
2
-3
-4
9
5
1
5
6
19
-9
-8
18
-7
-21
2
Loss
45
2
2
2
2
1
0
Automobiles (25)
2,903
Capital Goods (11)
832
Cement (11)
527
Chemicals-Specialty (12)
163
Consumer (18)
860
Consumer Durables (5)
193
EMS (5)
22
Financials (50)
2,641
Banks-Private (13)
915
Banks-PSU (6)
880
Insurance (6)
501
NBFC - Lending (20)
318
NBFC - Non Lending (5)
27
Healthcare (24)
838
Infrastructure (3)
46
Logistics (8)
149
Media (3)
46
Metals (10)
2,810
Oil & Gas (15)
7,763
Ex OMCs (12)
3,561
Real Estate (11)
117
Retail (19)
512
Staffing (4)
114
Technology (12)
1,881
Telecom (4)
620
Others (13)
510
MOFSL Universe (263)
23,545
MOFSL Ex Financials (213)
20,905
MOFSL Ex Metals & Oil (238)
12,973
MOFSL Ex OMCs (260)
19,344
Nifty (50)
14,360
Sensex (30)
10,404
LP: Loss to profit; PL: Profit to loss
Exhibit 3: Earnings at a glance for the MOFSL and Nifty Universes
Sector
MOFSL Universe (263)
MOFSL Ex OMCs (260)
MOFSL Ex Metals & Oil (238)
MOFSL Ex Financials (213)
Nifty (50)
Nifty Ex OMCs (49)
Nifty Ex Metals & Oil (43)
Nifty Ex Financials (39)
MOFSL Ex Nifty Companies
PAT (INR b)
Jun-24
(actual)
2,597
2,537
1,961
1,651
1,894
1,864
1,457
1,243
822
Growth (%)
est YoY
-1
10
12
-8
3
7
11
-1
-6
actual YoY
1
12
14
-6
4
9
13
0
-4
QoQ
-6
-3
-4
-7
-7
-6
-6
-7
-3
Var. over
Exp. (%)
2
2
2
2
1
1
1
1
2
PAT
vs. Exp
In Line
In Line
In Line
In Line
In Line
In Line
In Line
In Line
In Line
August 2024
4
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 4: PAT grew 1% YoY for the
MOFSL Universe
MOFSL Universe
Exhibit 5: PAT declined 6% YoY for the
MOFSL Universe, excluding Financials
231
MOFSL Ex Financials
Exhibit 6: PAT rose 14% YoY for the
MOFSL Universe, sans Metals & O&G
MOFSL Ex Metals & Oil
76
54
145
52 47
23 1814
-3
2
17
29
10
43
50
1
17
8
3
-19-12
7
49 55 33
4
18 13
39
33 30 34
31
23
23 18
14
-6
Exhibit 7: PAT growth for the Nifty
Universe stood at 4% YoY
107
Nifty Universe
Exhibit 8: PAT for the Nifty Universe,
sans Financials, was flat YoY
150
Nifty Ex Financials
Exhibit 9: PAT grew 13% YoY for the
Nifty Universe, sans Metals & O&G
Nifty Ex Metals & Oil
56
35 32
30
49
38
26
22 23
10 11
17
35 29
19
12
40 22
16 19
-2 0
9
25 30
21
7
4
0
19
14 10
23
23
17 16
13
Earnings upgrade-to-downgrade ratio unfavorable for FY25E
For the MOFSL Universe, however, the earnings upgrade-to-downgrade ratio
has turned weaker for FY25E as 46 companies’ earnings have been upgraded by
>3%, while 107 companies’ earnings have been downgraded by >3%. The
earnings upgrade/downgrade ratio of 0.4x was the worst since 1QFY21.
The spread of earnings was satisfactory, with 57% of our Coverage Universe
either meeting or exceeding profit expectations. Of the 263 companies under our
coverage, 77 exceeded our estimates, 113 posted a miss, and 73 were in line on
the PAT front.
Of the 24 sectors under our coverage, 7/11/6 sectors reported profits above/in
line/below our estimates.
August 2024
5
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 10: The upgrade-to-downgrade ratio trend for the MOFSL Universe – worst since 1QFY21
2.7
Earnings upgrade/downgrade ratio
1.7
0.8
0.8
1.0
1.7
0.7
0.3
0.7
0.3
0.6
0.7
0.6
0.7
0.9
0.9
0.9
1.0
0.6
0.9
0.4
Exhibit 11: Surprise/miss ratio for the MOFSL Universe at
0.7x in 1QFY25
MOFSL Universe PAT (Surprise / Miss ratio)
3.4
2.4
1.8
0.8
0.90.8
1.21.1
2.3
1.8
Exhibit 12: Sectoral surprise/miss ratio at 1.2x, for the
MOFSL Universe, in 1QFY25
MOFSL Sector PAT (Surprise / Miss ratio)
10.0
6.5 7.0
1.5
1.0
1.5
1.1
0.9
1.3
1.4
1.2
1.0 0.9
5.0
1.0 0.8
2.3
1.2 1.7 1.3 0.5 0.5 0.9 1.2
2.8
0.9
0.7
1.2
Exhibit 13: Two and three-year profit CAGR for the MOFSL Universe
EBITDA (INR b)
CAGR (%)
PBT (INR b)
CAGR (%)
PAT (INR b)
CAGR (%)
Sector
1QFY22 1QFY23 1QFY25 2-year 3-year 1QFY22 1QFY23 1QFY25 2-year 3-year 1QFY22 1QFY23 1QFY25 2-year 3-year
Automobiles
154
174
410
53
39
45
52
304
141
89
8
13
223
319
205
Capital Goods
42
60
93
25
30
31
49
84
31
40
18
31
55
33
46
Cement
91
82
75
-4
-6
70
60
43
-15
-15
51
44
33
-13
-13
Chemicals-Specialty 28
39
30
-12
2
23
33
22
-19
-2
18
25
16
-20
-3
Consumer
130
177
214
10
18
120
164
203
11
19
89
123
151
11
19
Consumer Durables
7
10
19
34
37
7
10
19
38
38
5
7
14
40
40
EMS
0
1
2
25
85
0
1
1
37
87
0
1
1
42
91
Financials
1,023 1,009 1,563
24
15
442
674 1,271
37
42
334
507
946
37
42
Banks-Private
430
442
688
25
17
229
361
575
26
36
174
272
433
26
36
Banks-PSU
451
383
601
25
10
166
182
480
62
42
123
133
347
61
41
Insurance
3
20
22
4
100
3
15
24
26
100
4
14
23
26
78
NBFC - Lending
136
158
239
23
21
39
110
177
27
66
29
82
132
27
65
NBFC - Non Lending 5
7
13
40
40
5
6
14
50
41
4
5
10
44
38
Healthcare
140
129
204
26
13
113
101
169
29
14
89
78
127
28
13
Infrastructure
12
17
12
-15
1
5
11
7
-23
8
3
8
4
-27
7
Logistics
36
47
56
9
15
24
33
40
10
19
21
29
34
7
16
Media
7
13
9
-15
10
6
10
8
-15
7
5
8
6
-14
6
Metals
665
638
535
-8
-7
526
494
380
-12
-10
373
333
267
-11
-11
Oil & Gas
609
676
851
12
12
416
371
524
19
8
301
244
369
23
7
Real Estate
15
25
34
16
31
8
18
36
40
66
7
15
28
38
59
Retail
6
51
56
5
112
-7
33
30
-5
LP
-6
25
22
-5
LP
Staffing
3
3
4
9
11
2
2
2
5
10
1
2
2
0
22
Technology
337
363
428
9
8
317
326
397
10
8
239
242
292
10
7
Telecom
212
242
295
10
12
-35
-24
18
LP
LP
-55
-48
-22
Loss
Loss
Others
7
39
84
47
129
-27
6
34
133
LP
-25
2
31
305
LP
MOFSL Universe
3,526 3,794 4,975
15
12
2,087 2,426 3,589
22
20
1,475 1,688 2,597
24
21
Nifty Universe
2,387 2,759 3,525
13
14
1,538 1,937 2,638
17
20
1,096 1,352 1,894
18
20
August 2024
6
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 14: Sales for the MOFSL Universe up 7% YoY (est. 9%)
53
43
32
29
18
7
-2 -1 -5
-30
-5
2
26
29
17 13
Exhibit 15: EBITDA for the MOFSL Universe up 3% YoY (est. 2%)
54
44
23
22
12 11
8
1
8 10
28 30
15
10
4 3 6 6
7
4 2
11
14
3
-7
-15
Exhibit 16: PAT growth for the MOFSL Universe at 1% YoY
(est. -1%)
145
108
19
36
43
23 18 14
-3
52 47
2
17
29
10
Exhibit 17: EBITDA margin, excluding Financials, contracted
120bp YoY to 16.3%
4
3
4
-24
-44
1
.
.
Exhibit 18: MOFSL Universe (ex-Nifty) posted a decline of 4% YoY in profits, due to OMCs
210
150
82
45
3
-10
-7
-22
-59
43
15
12
-6
13
101
101
58
4
-29
-15
-4
Exhibit 19: Sales growth for the MOFSL Universe, excluding
Nifty companies, stood at 6% YoY
58
35 32
7
-2 -1 -3
-33
-5
16
3
29
53
31
18 13
0
-1
4 5
Exhibit 20: EBITDA growth was flat YoY for the MOFSL
Universe, excluding Nifty companies
66 64
30
37
19
4
5
-1
-11
-17
-5
0
7
40 46
23
8
21
6
3
0
-12
August 2024
7
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Margin contracts owing to a high base
Sales for the MOFSL Universe companies grew 7% YoY (in line). Excluding Metals
and O&G, sales growth was in line at 9% YoY (in line).
Sectoral sales growth: EMS (54%), Consumer Durables (25%), NBFC-Lending
(20%), Real Estate (21%), Private Banks (17%), Retail (16%), and Capital Goods
(13%).
EBITDA margin for the MOFSL Universe (ex-Financials) contracted 120bp YoY to
16.3%. Gross margins for half of the sectors contracted.
In 1QFY25, seven of the 14 major sectors under MOFSL Coverage reported a
contraction in gross margin YoY.
Exhibit 21: Gross margin contracted in several sectors due to a high base
Change in
1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 GM bps
YoY
Real Estate
45.1
46.3
50.8
41.1
46.2
54.4
50.5
45.3
49.6
53.1
55.8
51.3
54.4
485
Healthcare
63.5
63.4
63.0
62.8
62.4
64.0
64.0
63.7
65.1
65.6
65.9
67.2
68.1
301
Infrastructure
35.3
40.8
41.4
36.0
40.7
71.4
39.1
36.6
36.7
40.2
51.7
33.0
39.5
273
Automobiles
30.8
29.1
29.8
29.3
31.6
32.0
33.3
34.0
34.9
34.7
36.0
36.4
36.5
167
Consumer
49.2
49.6
48.7
48.7
47.6
48.5
50.0
51.2
51.6
52.6
53.0
53.7
52.8
126
Technology
35.8
35.5
35.2
34.5
33.1
33.6
34.4
34.5
33.9
34.0
34.4
34.3
35.1
115
Retail
31.9
32.6
33.8
34.0
33.3
32.9
32.0
31.9
31.1
30.8
31.4
31.3
31.1
2
Metals
62.7
60.7
57.5
55.6
58.1
49.9
53.0
55.8
54.6
51.7
57.4
55.3
54.5
-6
Consumer Durables 19.6
16.7
16.0
14.8
18.8
18.5
19.5
18.4
25.4
27.2
26.6
25.4
25.1
-22
Others
42.3
40.0
44.5
41.7
44.1
39.6
44.7
42.8
50.5
45.3
46.3
46.4
49.5
-92
Logistics
15.8
18.5
18.6
18.5
51.5
49.9
48.4
50.8
52.7
51.7
52.0
52.2
51.8
-99
Chemicals-Specialty 54.5
51.5
53.2
53.8
53.3
51.0
54.8
54.3
54.6
53.3
54.1
54.2
52.6
-200
Oil & Gas
24.2
22.9
20.8
21.8
16.8
17.0
18.4
22.5
25.2
25.0
22.2
22.7
21.6
-364
Cement
65.5
61.5
56.2
55.1
54.5
50.4
51.1
51.0
58.1
53.8
55.6
53.7
53.9
-419
Source: 200 companies that form part of the MOFSL Universe, excluding Financials, Telecom, Media, and Staffing
Exhibit 22: Several sectors recovered YoY in terms of operating margin
Jun-23
Mar-24
Jun-24
August 2024
8
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 23: Financials’ contribution was up in 1Q; it
rd
accounted for more than 1/3 of the overall profit pool
Financials
Contribution to MOFSL universe profits (%)
36.5
30.0
36.1
32.3
PAT (INR b)
35.6
36.4
Exhibit 24: Auto sector’s contribution to the overall profit
pool declined marginally in 1QFY25
Automobiles
Contribution to MOFSL universe profits (%)
7.1
5.5
0.8
7.4
6.8
7.9
8.8
PAT (INR b)
8.8
8.6
31.8
33.1
34.2
Exhibit 25: IT sector’s contribution to the overall profit pool
improved in 1QFY25
PAT (INR b)
Technology
Contribution to MOFSL universe profits (%)
15.0 14.3
11.4
10.5
10.7
11.1
10.5
11.2
Exhibit 26: Consumer sector’s contribution increased in
1QFY25
Consumer
Contribution to MOFSL universe profits (%)
7.1
6.5
5.7
5.6
5.4
5.3
PAT (INR b)
14.3
7.3
5.1
5.8
Exhibit 27: Metals’ PAT contribution to the MOFSL Universe
increased in 1QFY25
Metals
Contribution to MOFSL universe profits (%)
19.8
7.9
PAT (INR b)
Exhibit 28: O&G’s PAT contribution to the overall profit pool
reduced in 1QFY25
Oil & Gas
Contribution to MOFSL universe profits (%)
21.3
PAT (INR b)
24.6
24.1
18.2
18.0
14.2
6.7
9.6
8.8
7.4
9.4
7.7
10.3
14.5
15.6
17.0
August 2024
9
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Performance highlights of the Nifty constituents in 1QFY25
Top five stocks account for ~127% of the incremental profit YoY
Sales/EBITDA/PBT/PAT growth for Nifty constituents was in line at +7%/+5%/
+4%/+4% YoY in 1QFY25. Excluding Financials, profits for Nifty constituents were
flat YoY (vs. est. of -1%).
Among Nifty constituents, 24% exceeded our PAT estimates, while 36% missed
our estimates.
Tata Motors, Maruti Suzuki, HCL Tech, Tata Steel, Sun Pharma, Adani Ports, Coal
India, Eicher Motors, SBI Life Insurance, Dr. Reddy’s Labs, and Ultratech Cement
delivered higher-than-estimated earnings.
In contrast, BPCL, JSW Steel, ONGC, Reliance Industries, Grasim Industries, Asian
Paints, Titan Company, Tata Consumer, ITC, Bharti Airtel, Nestle, IndusInd Bank,
HDFC Life Insurance, Divis Labs, Hero Motocorp, Axis Bank, and M&M missed
our profit estimates.
Two Nifty companies witnessed earnings upgrades of over 5% in their FY25 EPS
estimates, while eleven companies witnessed downgrades of over 5%.
Exhibit 30: Nifty EBITDA up 5% YoY (est. 4%) in 1QFY25
42
Exhibit 29: Nifty sales up 7% YoY (in line) in 1QFY25
47
38
17
8
0
0
-5
-26
-4
2
28 27 24
29
18
13
6 5 6 7
28
15
22
17 16 16
21 21
10
13 13
10 11
7
6 4 8
-2
6
5
-11
Exhibit 31: Nifty PAT up 4% YoY (est. 3%)
107
85
Exhibit 32: Nifty EBITDA margin (ex-Financials) contracted
80bp YoY to 19.7%
38
12 5 9
10
20
26 22 23
10 11 17
35
29
19 12
4
-23 -32
August 2024
10
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 33: BFSI and Metals to drive FY25E earnings for the Nifty
Sector
Automobiles
BFSI
Capital Goods
Cement
Consumer
Healthcare
Logistics
Metals
Oil & Gas
Retail
Technology
Telecom
Utilities
Others
Nifty
FY21
179
1,044
68
100
292
129
45
344
776
10
836
-7
271
11
4,098
FY22
76
1,433
84
130
319
172
59
926
1,107
23
958
35
303
8
5,634
PAT (INR b)
FY23
FY24
289
2,026
104
115
386
181
77
540
1,089
33
1,022
82
310
27
6,281
624
2,541
130
134
438
220
89
599
1,550
35
1,055
113
369
35
7,931
FY25E
678
2,894
145
135
460
259
111
777
1,497
41
1,165
181
381
43
8,768
FY26E
793
3,381
187
168
511
301
132
923
1,804
51
1,316
309
419
43
10,340
FY21
74
25
-23
0
1
38
-10
45
20
-35
7
Loss
21
15
19
FY22
-57
37
24
31
9
33
30
169
43
138
15
Loss
12
-29
38
Growth YoY (%)
FY23
FY24
278
41
24
-11
21
6
30
-42
-2
40
7
LP
3
249
11
116
25
25
16
13
21
16
11
42
7
3
39
19
29
26
FY25E
9
14
12
1
5
18
24
30
-3
17
10
60
3
22
11
FY26E
17
17
29
24
11
16
19
19
21
24
13
71
10
0
18
Exhibit 34: Sectoral upgrades/downgrades for the MOFSL Universe
PAT (INR b) - preview
Sector
FY25E
FY26E
Automobiles
980
1,153
Capital Goods
298
379
Cement
261
312
Chemicals-Specialty
76
96
Consumer
630
702
Consumer Durables
54
69
EMS
9
14
Financials
4,233
5,023
Banks-Private
1,944
2,281
Banks-PSU
1,543
1,813
Insurance
100
122
NBFC - Lending
598
751
NBFC - Non Lending
46
56
Healthcare
517
616
Infrastructure
22
28
Logistics
147
182
Media
27
34
Metals
1,176
1,459
Oil & Gas
2,133
2,451
Excl. OMCs
1,736
2,012
Real Estate
123
160
Retail
121
161
Staffing
12
15
Technology
1,230
1,381
Telecom
-30
103
Others
150
208
MOFSL Universe
12,169
14,548
Note: PL: Profit to loss; LP: Loss to profit
PAT (INR b) - review
FY25E
FY26E
963
1,152
296
375
233
301
75
99
628
706
55
69
9
14
4,163
4,896
1,884
2,201
1,558
1,794
86
107
588
739
46
54
532
631
22
28
148
187
26
32
1,197
1,472
1,993
2,440
1,681
2,005
130
159
119
161
11
15
1,234
1,400
-33
121
145
211
11,945
14,467
Upgrade/downgrade (%)
FY25E
FY26E
-1.7
-0.1
-0.7
-1.1
-10.7
-3.5
-1.0
2.8
-0.4
0.5
1.8
-0.1
-0.6
2.7
-1.6
-2.5
-3.1
-3.5
0.9
-1.1
-14.1
-12.2
-1.7
-1.6
0.6
-2.2
2.9
2.4
-0.6
-1.0
0.6
2.4
-5.9
-5.7
1.8
0.9
-6.6
-0.4
-3.1
-0.4
5.5
-0.7
-1.1
-0.5
-6.0
-5.3
0.3
1.4
9.4
16.6
-3.9
1.7
-1.8
-0.6
Growth YoY (%)
FY24
FY25E FY26E
94
13
20
32
22
27
30
0
29
-29
10
31
16
8
12
23
32
25
33
58
59
30
16
18
27
11
17
34
20
15
11
16
24
30
18
26
43
48
17
25
24
19
-12
24
28
12
22
26
17
7
26
0
38
23
80
-18
22
21
6
19
17
38
22
-1
38
35
-3
61
30
4
10
13
Loss
Loss
LP
98
15
46
34
11
21
August 2024
11
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 35: Nifty delivered 4% YoY profit growth in 1QFY25
Sales
EBITDA
PBT
PAT
EBITDA Margin
Chg. Chg.
Chg. Chg.
Chg. Chg.
Chg. Chg.
Jun
Var. Jun
Var. Jun
Var. Jun
Var. Jun 2024 Chg. YoY
YoY QoQ
YoY QoQ
YoY QoQ
YoY QoQ
2024
(%) 2024
(%) 2024
(%) 2024
(%)
(%)
bp
(%) (%)
(%) (%)
(%) (%)
(%) (%)
NA 37
-6 67
1
7
1 45
5 155
-2 75
0 10
2 239
-3 42
-5 35
8 128
-4 40
0 59
-4 6
3 12
2
-4
-1
0
1
-7
0
-1
3
11
1
1
-5
-1
0
1
1
-3
4
-4
-4
0
24
15
17
39
8
7
160
69
56
77
167
103
11
44
115
101
37
40
21
53
264
197
47
29
33
51
14
31
11
27
13
11
13
22
7
23
14
24
21
15
23
9
18
13
25
15
25
12
5
5
6
3
15
2
3
4
6
5
1
1
0
-2
0
22
11
2
-4
-2
-20
-22
-64
-52
5
44
1
5
-4
-9
12
-36
-18
5
21
13
22
-4
-15
3
5
7
30
-1
-4
-42
7
8
-22
12
-3
8
-17
1
17
-4
6
-3
20
-4
-8
2
2
-26
5
-3
6
5
-9
7
11
0
-10
-39
-38
-3
NA 22 107
12 26 25
0
4
58
7 47 47
13 87 63
7 52 56
-2 5
34
2 213 34
1 31 24
8 35 24
11 71 25
4 34
2
2 57 22
-9 6
23
4 13 14
4
-9
-1
-4
-4
0
5
3
4
13
1
4
-7
2
18
3
1
-6
8
0
3
-3
-5
-6
1
-7
-2
5
-5
0
10
-15
-13
-5
-43
1
26
15
16
27
7
5
147
53
47
60
162
90
10
40
141
81
36
29
19
47
230
53
69
21
15
42
5
10
232
120
12
16
14
40
-1
2,638
19
19
17
19
14
16
14
16
8
17
8
8
7
6
5
4
2
2
5
2
1
0
0
-7
-1
5
-6
-3
-4
-11
-4
-24
-60
-71
PL
4
221
12
16
-6
-6
25
-37
35
14
17
4
30
8
-15
1
3
11
35
1
-4
7
3
3
-26
8
-4
9
-18
4
24
-14
7
-7
27
-10
-15
1
1
-34
5
-16
-9
-2
-16
-7
-7
-2
-34
-46
PL
-2
NA 15
116
26 13
112
-1 3
83
6 36
47
59 55
46
11 34
38
30 5
36
3 162
35
5 26
29
13 29
26
17 48
26
-9 26
23
15 43
20
-9 4
20
2 11
20
0
-9
2
-2
-3
-8
4
-1
5
5
0
5
-7
6
45
-6
1
-7
12
-2
1
-5
-6
-10
0
-3
-17
-7
-11
-9
11
-17
-30
-8
PL
2
20
11
12
20
5
5
111
39
28
21
121
64
7
30
110
60
26
22
14
35
170
29
51
17
11
34
3
7
151
89
9
12
8
30
-1
1,894
19
19
18
18
16
15
15
14
12
10
9
7
5
5
4
4
2
2
2
2
1
1
0
-1
-1
-2
-5
-5
-5
-11
-11
-25
-64
-71
PL
4
124 NA
9
18
20
2
-6
7
-28 35
7
-3
-36 31
-2
5
15 13
3
9
-6
7
31 -12
7
13
-20 -16
3
9
3
10
36
2
-1
16
3
2
-36
1
-3
5
-19
6
26
-15
6
-8
15
-15
-18
-1
-1
-28
3
-17
-20
-7
-20
-9
-12
-7
-35
-46
PL
-7
0
-10
4
-2
0
-8
4
-1
3
-4
0
1
-8
5
49
-6
0
-7
8
-2
1
-20
-6
7
-2
-6
-21
-9
-9
-9
4
-17
-41
-9
PL
1
14.5
12.2
13.3
12.7
14.4
13.2
6.2
80.1
61.0
28.2
28.8
14.9
20.9
29.4
26.5
20.2
14.4
25.6
73.6
17.7
5.6
82.0
83.1
10.2
29.6
26.7
26.2
23.3
20.2
31.7
75.1
23.8
73.1
27.7
76.8
64.3
51.2
36.6
16.8
17.6
86.8
15.3
9.4
16.7
52.8
12.0
18.9
12.8
5.0
4.7
24.5
3.4
3.5
1.8
3.4
1.1
2.4
-0.2
0.5
0.9
1.3
-0.2
1.3
0.1
1.0
0.9
1.3
0.6
2.0
-0.8
0.6
0.4
4.4
0.5
0.0
-2.2
1.5
0.3
0.4
1.9
0.6
1.4
0.2
-5.6
-2.6
-2.6
-0.7
-1.2
-2.3
-0.4
-1.2
-0.7
0.8
-0.1
-1.6
-4.7
-0.1
-4.2
-3.9
-9.0
-6.1
-0.4
Company
High PAT growth
Adani Enterp.
255 12 -13
Tata Steel
548 -8
-7
Apollo Hospitals
51
15
3
Maruti Suzuki
355 10
-7
Tata Motors
1,080 6
-10
Hindalco
570
8
2
SBI Life Ins.
156 15 -38
HDFC Bank
298 26
3
Adani Ports
70
11
1
Sun Pharma
125
6
6
NTPC
444 14
4
M&M
270 12
7
HCL Tech.
281
7
-2
Divis Labs
21
19
-8
Eicher Motors
44
10
3
Med/Low PAT growth
Bajaj Auto
119 16
4
Hero Moto
101 16
7
Cipla
67
6
9
Shriram Finance
52
25
3
Britannia
43
6
4
HDFC Life Ins.
128 10 -39
ICICI Bank
196
7
2
Bajaj Finance
84
25
4
L&T
551 15 -18
Bajaj Finserv
259 34
-4
TCS
626
5
2
Infosys
393
4
4
Nestle
48
3
-9
Wipro
220 -4
-1
Coal India
365
1
-3
Axis Bank
134 12
3
HUL
157
1
3
IndusInd Bk
54
11
1
Dr Reddy’s Labs
77
14
8
Kotak Mah. Bk
68
10
-1
SBI
411
6
-1
Bharti Airtel
385
3
2
Negative PAT Growth
ITC
185
8
3
Ultratech Cem.
181
2
-12
LTIMindtree
91
5
3
Power Grid Corp
100
1
-8
Tata Consumer
44
16
11
Titan Co.
133 12
6
Reliance Inds.
2,318 12
-2
ONGC
353
4
2
Tech Mahindra
130 -1
1
Asian Paints
90
-2
3
JSW Steel
429
2
-7
BPCL
1,131 0
-3
Grasim Inds
69
11
2
Nifty Universe
14,360 7
-4
Note: PL: Profit to loss; LP: Loss to profit
1 67
0 30
2 16
-6 87
-2 7
2 12
-1 388
-5 186
0 16
-2 17
2 55
11 57
0
3
1 3,525
August 2024
12
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Nifty EPS experiences a downward revision
The Nifty EPS estimate for FY25 was cut 1.7% to INR1,115, largely owing to
Reliance Industries, ONGC, and BPCL. FY26E EPS was also reduced by 1% to
INR1,316 (from INR1,330) as upgrades in Infosys, Coal India, Tata Motors, and
Maruti were offset by downgrades in ONGC, Axis Bank, HDFC Bank, ICICI Bank,
and Indusind Bank.
The top earnings upgrades in FY25E:
Coal India (10.8%), Dr Reddy’s Labs (6.7%),
Apollo Hospital (4.4%), Adani Ports (4.3%), and Tata Steel (3.3%).
The top earnings downgrades in FY25E:
BPCL (-16.3%), Bharti Airtel (11%), Hero
Motocorp (-9.4%), JSW Steel (-8.2%), and Indusind Bank (-7.7%).
Current EPS (INR)
FY25E
61.9
353.8
92.4
51.2
9.9
65.4
59.8
49.3
44.5
47.9
89.4
143.5
36.8
486.0
105.8
19.9
61.1
62.5
226.5
58.7
166.8
17.3
22.0
275.5
101.2
106.4
58.0
90.7
77.7
64.1
46.0
97.4
316.4
113.9
47.9
155.6
85.6
16.6
91.0
261.3
122.4
55.9
231.5
31.4
29.0
7.7
1,115
EPS Upgrade / Downgrade (%)
FY25E
FY26E
10.8
3.2
6.7
7.6
4.4
-1.5
4.3
4.4
3.3
3.1
3.1
5.9
3.0
4.1
2.6
1.5
1.4
-1.1
1.2
2.4
1.0
-0.9
0.3
0.1
0.1
-0.9
0.0
4.1
0.0
0.0
0.0
0.0
-0.1
0.2
-0.1
0.2
-0.3
-0.2
-0.4
-0.4
-0.5
2.8
-0.7
-0.6
-1.0
0.1
-1.0
-3.3
-1.3
-1.0
-1.6
-3.1
-1.8
-0.1
-1.8
-3.0
-2.0
-1.4
-2.3
-2.0
-2.4
-1.6
-3.7
-1.9
-3.9
-0.4
-4.6
0.0
-4.8
-4.4
-5.3
-3.0
-5.6
-7.8
-6.3
0.8
-6.4
-3.3
-6.6
-3.1
-7.7
-8.0
-8.2
-1.1
-9.4
-8.8
-11.0
2.1
-16.3
-2.4
-23.3
-19.2
-1.7
-1.0
EPS Growth (%)
FY24
FY25E
FY26E
18
2
10
30
12
10
30
48
34
16
24
19
-62
264
39
10
3
19
2628
2
17
16
19
18
-28
8
43
1
10
12
21
19
15
10
14
8
62
-10
11
57
13
16
25
12
29
10
5
17
1
34
4
6
8
10
20
18
23
39
12
12
2
8
19
9
5
9
-2
8
11
23
18
30
10
14
12
34
20
17
31
0
13
1
13
15
-8
30
22
28
10
14
7
17
24
22
6
17
29
15
20
4
11
27
45
3
12
37
6
11
15
6
15
29
13
22
-3
-5
16
39
7
29
20
6
24
150
52
39
40
13
20
37
60
71
1272
-54
22
15
6
25
24
11
18
Exhibit 36: FY25E EPS revisions – Two Nifty constituents saw upgrades of over 5%, while eleven witnessed downgrades of over 5%
Company
Coal India
Dr Reddy’ s Labs
Apollo Hospitals
Adani Ports
Tata Steel
Infosys
Tata Motors
Sun Pharma
Tech Mahindra
Hind. Unilever
State Bank
TCS
Nestle
Maruti Suzuki
Larsen & Toubro
SBI Life Insurance
Hindalco
HCL Technologies
Shriram Finance
Cipla
LTIMindtree
ITC
Wipro
Bajaj Finance
Britannia
Mahindra & Mahindra
Asian Paints
HDFC Bank
Divis Labs
ICICI Bank
Titan Company
Kotak Mahindra Bank
Bajaj Auto
Reliance Inds.
ONGC
Eicher Motors
Axis Bank
Tata Consumer
Grasim Industries
Ultratech Cement
IndusInd Bank
JSW Steel
Hero MotoCorp
Bharti Airtel
BPCL
HDFC Life Insur.
Nifty (50)
FY24
60.7
317.1
62.4
41.3
2.7
63.3
58.7
41.4
41.1
43.7
75.2
126.3
41.0
429.0
94.5
18.9
45.6
57.9
191.3
52.5
154.8
16.4
20.4
233.7
88.7
88.7
57.9
80.0
60.0
58.4
39.3
91.6
276.1
102.9
46.3
146.3
80.7
14.6
95.6
244.5
115.5
36.7
204.6
19.7
63.3
7.3
1,006
FY26E
68.1
389.0
124.0
61.1
13.7
78.1
69.9
58.4
63.6
53.6
103.2
155.4
40.8
565.2
136.0
23.2
63.7
68.5
279.2
65.6
198.8
18.8
24.5
359.2
113.9
124.7
65.7
104.5
95.1
73.2
56.9
113.5
380.9
144.8
53.5
172.8
98.3
20.2
105.2
336.6
151.1
78.0
277.4
53.8
35.4
9.6
1,316
August 2024
13
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 37: We estimate a 15% CAGR for the Nifty free-float PAT over FY24–26
Sales (INR b)
Company
High PAT Growth (20%+)
Tata Steel
Bharti Airtel
JSW Steel
Apollo Hospitals
Bajaj Finserv
Divis Labs
Tech Mahindra
Bajaj Finance
Adani Ports
Shriram Finance
Titan Company
Larsen & Toubro
Tata Consumer
Medium PAT Growth (0-20%)
Sun Pharma
Reliance Inds.
Ultratech Cem.
M&M
Hindalco
Bajaj Auto
State Bank
Hero MotoCorp
Infosys
HDFC Life Ins.
Maruti Suzuki
IndusInd Bk
HDFC Bank
LTIMindtree
Britannia
ICICI Bank
Cipla
Kotak Mah. Bank
HUL
Dr Reddy’s Labs
SBI Life Ins.
Adani Enterp.
Axis Bank
TCS
HCL Tech.
Eicher Motors
Wipro
ONGC
Power Grid Corp
ITC
Tata Motors
Asian Paints
NTPC
Coal India
Grasim Inds.
PAT de-growth (<0%)
Nestle
BPCL
Nifty (PAT free float)
FY24
10,309
2,292
1,500
1,750
191
354
78
520
296
267
188
511
2,211
152
45,974
478
9,011
709
991
2,160
447
1,599
375
1,537
620
1,419
206
1,085
355
168
743
258
260
619
279
806
994
499
2,409
1,099
162
896
6,430
453
709
4,379
355
1,785
1,423
258
4,725
244
4,481
61,009
FY25E FY26E
11,455
2,387
1,650
1,934
213
476
91
535
368
308
225
594
2,497
177
48,375
531
9,340
733
1,156
2,369
513
1,717
410
1,630
737
1,521
230
1,243
377
182
830
277
291
656
324
950
1,022
550
2,569
1,161
176
891
6,172
494
769
4,495
375
1,867
1,497
319
4,463
210
4,253
64,294
13,024
2,601
1,896
2,169
248
596
106
570
472
350
274
692
2,857
192
52,783
592
10,163
884
1,345
2,456
602
1,946
467
1,782
880
1,689
273
1,424
418
200
952
304
340
716
377
1,106
1,022
621
2,775
1,267
197
936
6,149
517
834
5,092
423
1,997
1,694
342
4,549
233
4,316
70,356
Sales
EBITDA Margin (%)
EBITDA
CAGR %
CAGR %
FY24 FY25E
FY26E
24-26
24-26
12
24
26
28
21
7
10
14
15
34
12
52
53
56
17
11
16
18
20
25
14
13
13
14
21
30
73
68
63
20
16
28
31
32
24
5
11
13
16
24
26
81
81
80
26
14
59
59
60
15
21
76
76
77
22
16
10
10
11
18
14
11
11
11
17
12
15
16
17
18
7
24
25
27
12
11
26
27
28
16
6
18
19
21
16
12
18
19
20
17
17
13
14
14
19
7
11
12
12
9
16
20
20
21
18
10
54
64
66
21
12
14
15
15
15
8
24
24
25
11
19
6
6
6
18
9
13
14
14
15
15
77
75
76
14
15
87
82
83
12
8
18
18
19
12
9
19
19
19
11
13
78
79
81
15
9
24
25
26
11
14
75
75
75
14
8
24
24
25
9
16
28
28
28
15
17
7
7
7
17
1
11
12
12
5
12
74
76
78
15
7
27
28
28
9
7
22
22
22
8
10
27
27
26
10
2
19
20
20
5
-2
17
18
20
7
7
87
86
85
6
8
37
37
37
8
8
14
14
14
9
9
21
21
21
8
6
29
28
29
6
9
34
35
35
12
15
9
7
9
18
-2
11
6
7
-19
-2
24
25
25
0
-2
10
5
6
-22
7
23
24
26
13
PAT (INR b)
FY24 FY25E FY26E
863 1,195 1,623
34
123
171
113
181
309
90
137
191
9
13
18
81
112
135
16
21
25
36
39
56
144
171
223
89
111
132
72
85
105
35
41
51
130
145
187
14
16
20
6,757 7,413 8,526
100
119
141
696
771
979
71
75
99
106
128
150
101
136
141
77
88
106
671
797
921
41
46
56
243
271
324
16
17
21
135
153
178
90
95
118
608
689
794
46
49
59
21
24
27
409
450
514
42
47
53
182
194
226
103
113
126
53
59
65
19
20
23
35
43
43
249
264
303
462
517
560
157
172
189
40
43
47
110
116
128
583
603
674
156
171
179
205
216
235
225
220
257
56
56
63
213
211
241
374
382
420
63
60
69
310
159
191
40
36
39
271
124
151
4,458 4,953 5,848
PAT Contbn to
CAGR %
Delta %
24-26
37
32
125
6
65
8
46
4
41
0
29
2
26
0
25
1
24
3
22
2
21
1
20
1
20
2
20
0
12
73
19
2
19
12
19
1
19
2
18
2
17
1
17
10
17
1
15
3
15
0
15
2
14
1
14
8
13
1
13
0
12
4
12
0
11
2
11
1
11
0
11
0
11
0
10
2
10
4
10
1
9
0
8
1
7
4
7
1
7
1
7
1
6
0
6
1
6
2
5
0
-22
-5
0
0
-25
-5
15
100
August 2024
14
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
FY25E earnings highlights: Metals, Banks, and Technology to
drive the incremental earnings
The MOFSL Universe is likely to deliver sales/EBITDA/PAT growth of 9%/9%/11%
YoY in FY25E. The Metals, Banks, and Technology sectors are projected to be the
key growth drivers, with 38%, 15%, and 10% YoY earnings growth, respectively.
They are likely to contribute 78% to the earnings growth in FY25E.
Exhibit 38: Metals, Banks, and Technology to lead the incremental profits for FY25E (PAT, INR b)
109
103 102 89
327 264 193 117
54
48
36
33
27
19 15
13 12
7
4
4
3
2
1
432
Exhibit 39: Delta contribution to FY25E profit for the MOFSL Universe (%)
28
23
Delta Contribution (%)
17
10
10
9
9
8
5
4
3
3
2
2
1
1
1
1
0
0
0
0
0
-38
August 2024
15
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
The 12M earnings revision stable for MOFSL Universe in FY25E
Autos, Metals, and Healthcare witness upgrades
Over the last one year, earnings revisions for the MOFSL Universe remained flat.
NBFC Non-lending, Autos, Metals, Healthcare, and PSU Banks saw major
upgrades of 46%, 16%, 14%, 8%, and 6%, while Spec Chem, Logistics, and Media
witnessed significant earnings downgrades of 35%, 29%, and 26%, respectively.
Exhibit 40: Autos, Metals saw major earnings upgrades, while Spec. Chemicals saw downgrades over the last one year
46
16
14
8
6
1
1
1
% revision in PAT
0
-2
-8
-8
-10
-10
-13
-21
-22
-26
-29
-35
Note: Comparable MOFSL Universe of 226 companies
Exhibit 41: Annual Sales/EBITDA/PAT estimates for the MOFSL Universe
Sales (INRb)
Gr. YoY (%)
Sector
FY24 FY25E FY26E FY24 FY25E FY26E
Automobiles
11,401 12,391 14,015 20
9
13
Capital Goods
3,380 3,877 4,507 19 15
16
Cement
2,264 2,390 2,744
3
6
15
Chemicals-Specialty
620
699
789
-8
13
13
Consumer
3,259 3,506 3,876
6
8
11
Consumer Durables
638
741
853
20 16
15
EMS
75
109
152
39 45
40
Financials
10,539 11,957 13,839 17 13
16
Banks-Private
3,358 3,836 4,437 21 14
16
Banks-PSU
3,411 3,645 4,077 12
7
12
Insurance
2,541 2,987 3,511 15 18
18
NBFC - Lending
1,145 1,368 1,670 26 19
22
NBFC - Non Lending 84
121
143
36 45
18
Healthcare
3,137 3,497 3,934 14 11
12
Infrastructure
191
201
235
4
6
17
Logistics
580
661
779
16 14
18
Media
189
193
214
11
2
11
Metals
11,168 12,120 13,263 -2
9
9
Oil & Gas
35,321 37,454 40,056 -5
6
7
Excl. OMCs
18,872 19,173 20,079 -3
2
5
Real Estate
463
569
675
11 23
19
Retail
1,885 2,288 2,755 21 21
20
Staffing
431
485
559
12 12
15
Technology
7,356 7,753 8,416
5
5
9
Telecom
2,422 2,642 3,017
6
9
14
Others
2,027 2,252 2,589
4
11
15
MOFSL Universe
97,347 1,05,785 1,17,270
4
9
11
EBITDA (INRb)
FY24 FY25E FY26E
1,568 1,738 2,023
388 470 572
380 396 518
119 134 166
805 878 979
61
77
95
8
13
19
5,761 6,638 7,793
2,574 2,897 3,407
2,171 2,513 2,867
124 146 179
859 1,024 1,271
34
58
69
701 841 970
51
56
65
215 248 299
42
43
52
1,884 2,357 2,775
4,623 4,135 4,854
3,164 3,394 3,947
132 170 219
212 267 333
15
18
22
1,654 1,783 1,992
1,142 1,272 1,525
310 359 460
Gr. YoY (%)
FY24 FY25E FY26E
51 11
16
20 21
22
26
4
31
-18 13
23
12
9
11
21 26
24
16 51
52
17 15
17
23 13
18
8
16
14
-3 18
23
26 19
24
21 70
18
22 20
15
-4 10
17
18 15
21
6
2
21
-1 25
18
55 -11 17
19
7
16
19 28
29
11 26
25
14 23
23
4
8
12
12 11
20
31 16
28
9
18
PAT (INRb)
FY24 FY25E FY26E
854 963 1,152
241 296 375
233 233 301
68
75
99
579 628 706
42
55
69
6
9
14
3,590 4,163 4,896
1,691 1,884 2,201
1,294 1,558 1,794
74
86
107
499 588 739
31
46
54
429 532 631
17
22
28
121 148 187
24
26
32
871 1,197 1,472
2,425 1,993 2,440
1,589 1,681 2,005
94
130 159
86
119 161
7
11
15
1,117 1,234 1,400
-134 -33
121
126 145 211
Gr. YoY (%)
FY24 FY25E FY26E
94 13
20
32 22
27
30
0
29
-29 10
31
16
8
12
23 32
25
33 58
59
30 16
18
27 11
17
34 20
15
11 16
24
30 18
26
43 48
17
25 24
19
-12 24
28
12 22
26
17
7
26
0
38
23
80 -18 22
21
6
19
17 38
22
-1 38
35
-3 61
30
4
10
13
Loss Loss LP
98 15
46
11
21
20,071 21,893 25,729 22
10,798 11,945 14,467 34
Source: MOFSL
August 2024
16
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
SECTOR-WISE:
Highlights / Surprise / Guidance
AUTOS: Healthy profitability in 1Q but emerging headwinds indicate caution
Growth moderating in PVs, tractors and CVs likely to see recovery in H2:
Auto OEMs reported ~10% YoY
volume growth in 1QFY25, with nearly all OEMs contributing to this broad-based growth. 2Ws led the pack with
11% YoY growth, followed by PV with 6% YoY growth. CVs and tractors posted 4% YoY growth each. However,
channel inventory is gradually rising, especially in PVs. Favorable monsoon and upbeat rural sentiments points
towards a demand revival in the upcoming festive season. Overall, 2Ws are likely to post high single digit growth
in FY25E. A positive rural sentiment is likely to help revive tractor demand from the festive season. Also, given
the continued infra push by the Government, CV demand is likely to revive in H2, and is in line with OEMs
guidance. On the other hand, PVs are likely to see low single digit growth in FY25E due to continued weakness in
car demand.
Exports – demand outlook uncertain:
2W exports volume grew ~12% YoY albeit over a low base, while 3W
export volumes declined 2%. The 2W demand outlook remains uncertain due to ongoing macro challenges
across key export regions of Africa. Even in developed regions like Europe and North America, demand outlook
remains subdued with most global OEMs now reducing their forecasts for CY25. Thus, exports outlook remains
subdued for FY25E across segments and in most of India’s key export regions.
Beat on profitability driven by better gross margin and favorable mix:
Total revenue/EBITDA/PAT for our
coverage universe grew ~10%/20%/28% YoY. While revenue was in line, we noted that the beat on EBITDA/PAT
was driven largely by a favorable product mix. The outperformance was primarily driven by strong operational
performance from TTMT. Excluding TTMT, results were mostly in line with our expectations. EBITDA margin for
our coverage universe expanded 110bp YoY to 14.1% (est. 13.7%). For our OEM universe (excluding JLR),
revenue grew ~9% YoY, largely aided by volume growth. Gross margin expanded 270bp YoY/80bp QoQ to 70.7%,
while EBITDA margin expanded ~190bp YoY/20bp QoQ to 13.4%.
Expect margins to moderate in the coming quarters:
Commodity prices are seeing a gradual uptick, including
aluminum, copper, lead, and rubber. Margins are also likely to be under pressure due to rising discounts,
particularly in PVs. For companies with global operations, we anticipate persistent demand uncertainty and
elevated freight costs due to issues in the Red Sea. As a result, we believe EBITDA margin has likely peaked at
14.1% in 1Q and will see some moderation in the coming quarters.
Several EPS downgrades amid incremental margin headwinds:
While this quarter has seen several downgrades
in FY25 EPS estimates, downgrades have been higher in Auto Ancs than in Auto OEMs. Among OEMs, we saw
EPS downgrades in HMCL (-9%), EIM (-5%) and ESCORTS (-5%) largely due to lower than expected operating
performance. Amongst ancillary companies, the most notable earnings downgrades were for CRAFTSMA (-20%),
EXID (-14%), APTY (-11%), ARENM (-10%), BHFC (-10%), BOS (-8%), HAPPYFORG (-9%). Most of these companies
have seen higher earnings cut due to weaker Q1. Our ratings remained unchanged during the quarter.
Valuation and view:
It is now an established fact that the majority of easy gains in auto OEM stocks are now
behind us, as we have witnessed significant volume growth across segments over the last two years, and input
costs also appear to have bottomed out. Hence, one will have to make selective micro strategies to outperform
from hereon. In this backdrop, MSIL is our top pick in Auto OEMs along with MM. Among Auto Ancillaries, our
top picks are MOTHERSO and CRAFTSMA.
Surprises:
BIL, CIEINDIA, EIM, MSIL, MRF, MOTHERSO, TTMT
Misses:
APTY, AL, BOS, CRAFTSMA, EXID, HAPPYFORG, HMCL, MM, MSUMI, TIINDIA
Guidance highlights:
MSIL:
As per the company, 1Q volumes were affected by heatwaves and elections. However, the management
has maintained its FY25 volume growth guidance for the industry at 4%, led by an expected pickup in demand
amid good rainfall across India so far. Dealer inventory stands at 37 days as of 1Q end (vs. 30 days optimal
inventory).
August 2024
17
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
MM:
Automotive –
MM has reiterated its FY25 volume growth guidance of mid- to high-teens YoY for its UV
segment. Despite tepid demand, new launches should help MM outperform.
Tractors –
Reiterated its growth
guidance of ~5% for FY25. Given positive trade terms, a good monsoon outlook, increased government spending
in rural areas and Navratra in 2HFY25, there could be an upside risk to the current guidance.
TTMT:
JLR-
Some of the markets, such as EU and China, are under pressure. North America is improving and
demand in the UK is recovering. The current order book stands at ~104k units vs. ~133k units in 4QFY24.
CV –
While CV demand as of Jul’24 was weak, it is expected to bounce back in 2HFY25 as structural demand drivers
remain intact.
PV-
Channel inventory for TTMT stood at 35-40 days (vs. 30 days normally).
AL:
Stable macro, normal monsoons and budget focus on infrastructure would drive growth in FY25. The
management remained upbeat on MHCV demand recovery in FY25. Fleet age is at its peak currently at 10-11
years (vs. avg-7-8 years). It is expected to unlock replacement demand in the next 2-3 years.
BJAUT:
Domestic –
It anticipates 6-8% YoY volume growth for the industry in FY25, with the 125cc and above
category outperforming. EVs, including 2W and 3Ws, contributed 14% of the domestic revenue.
Exports –
Small
but steady recovery visible. BJAUT expects 2Q to be better than 1Q. BJAUT anticipates 50-70bp cost inflation in
the coming quarters.
HMCL:
The company indicated good recovery in both entry and 125cc segments in the last couple of quarters.
Rural growth is ahead of urban growth for HMCL. The company plans to fill up dealer stocks ahead of an
anticipated strong festive season. Inventory level relative to pre-festive period is under control, as per
management.
TVSL:
With normal monsoon expected for this fiscal, TVSL expects rural recovery to drive momentum for the
industry in the coming quarters. The management expects the 2W industry to post 10%+ growth in FY25. While
African markets face currency devaluation, LATAM and the Middle East offer significant opportunities for TVSL.
Despite some challenges in Bangladesh, management expects stabilization soon.
Norton:
It is going to launch six
new products over the next three years, with the first launch likely by FY26 end.
EIM:
EIM is currently seeing improving conversion rates. Hence, the management is hopeful that demand for the
middle-weight motorcycles, especially for RE, will pick up in the festive season. EIM is witnessing some green
shoots in its key export regions. It is seeing healthy growth in Latin America. Even APAC demand is picking up.
The company has also recently introduced the Super Meteor in Brazil.
VECV –
While near-term demand remains
weak, the management expects CV demand to revive in 2H given the government’s infra push and driven by
steady replacement demand.
MOTHERSO:
2Q automobile production will remain muted due to holidays in Aug’24. For FY25, global light
vehicle production is likely to decline a bit or remain flat YoY.
BHFC:
CV – The management does not expect any major pick-up in 2Q but expects a good revival in 2H for
domestic CVs, based on discussions with OEMs. Defense – The management indicated that India needs 4k guns
of different platforms. Given the war going on in different regions globally, there is huge demand for
replacement of various guns. Non-Auto exports – While aerospace remained muted in 1Q, the management
expects this business to post 15-20% growth in FY25 and then strong double-digit growth from FY26 onward as
the company starts executing orders (segment revenue stood at INR2.5b in FY24).
BIL:
After 24% YoY volume growth in 1Q, BIL has guided for minor volume growth YoY in FY25 as it expects
demand headwinds in its key markets in Europe, North America and the Middle East in the coming quarters.
There has been some channel filling as well by distributors due to increased transit time on account of the Red
Sea crisis. The freight cost was 6.4% in 1Q and is expected to increase to 8-9% of revenue in 2Q, largely due to
the Red Sea crisis. It also expects a 2-3% increase in RM costs in 2Q.
August 2024
18
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 42: Key operating indicators
Volumes ('000 units)
EBITDA Margins (%)
Adj PAT (INR M)
1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%) 1QFY25 1QFY24 YoY (bp) 4QFY24 QoQ (bp) 1QFY25 1QFY24 YoY (%) 4QFY24 QoQ (%)
Bajaj Auto
1,102 1,027 7.3 1,069
3.1
20.2 19.0
130
20.1
20
19,884 16,648 19.4 19,360
2.7
Hero MotoCorp 1,535 1,353 13.5 1,392 10.3
14.4 13.8
60
14.3
10
11,226 9,462 18.6 10,161 10.5
TVS Motor
1,087 953
14.1 1,063
2.3
11.5 10.6
90
11.3
10
5,773 4,677 23.4 4,854
18.9
Maruti Suzuki
522
498
4.8
584
-10.6 12.7
9.2
340
12.3
40
36,499 24,851 46.9 38,778 -5.9
M&M
333
301
10.6
285
16.8
14.9 13.6
130
13.1
180
26,126 21,200 23.2 20,001 30.6
TTMT India CV** 94
89
5.8
111
-15.8 11.6
9.4
220
11.9
-30
15,350 9,360 64.0 19,840 -22.6
TTMT India PV** 139
140
-1.1
156
-10.8
5.8
5.2
50
7.3
-150
1,730 1,860 -7.0 5,330 -67.5
JLR
110
106
4.0
121
-8.4
15.8 16.3
-50
16.3
-50
496
323
53.6
789
-37.1
Ashok Leyland
44
41
6.2
56
-22.0 10.6 10.0
60
14.1
-350
5,256 5,768 -8.9 9,485 -44.6
Eicher - RE
226
228
-0.7
228
-0.7
27.9 26.0
190
27.6
30
10,880 9,139 19.1 9,833
10.6
Eicher - VECV
20
20
0.7
26
-23.4
7.6
7.8
-20
7.8
-20
2,329 1,810 28.7 2,702 -13.8
Aggregate **
5,179 4,708 10.0 5,019
3.2
13.4 11.5
200
13.2
30 1,15,780 1,02,496 13.0 1,38,283 -16.3
** PBT instead of PAT; JLR in GBP m; Source: MOFSL, Company
Exhibit 43: Aggregate EBITDA margin improved 20bp QoQ to
13.4% led by better mix, cost savings and favorable Fx
Aggregate (excl JLR)
11.7
12.0
7.5
-4.3
8.4
9.2
11.0
8.2
11.7
11.2
12.7
13.2
Exhibit 44: Gross margins improved 80bp QoQ led by
improved mix
73.1
Agg RM cost (%, Ex JLR)
75.1 75.4 75.5 73.7
73.2
59.7 59.6
58.8
75.4
75.6
74.0
73.4 72.3
72.1
9.9
9.9
71.5
70.7
11.5
12.8
13.4
Source: MOFSL, Company
Revised EPS Estimates (INR)
Rev
316.4
231.5
57.1
155.6
484.9
106.4
59.8
11.8
97.2
53.0
14.1
736
62.1
23.7
34.8
6.4
10.6
153.0
26.5
84.1
4,752.7
1.7
60.2
142.2
31.8
FY25E
Old
329.1
255.4
55.3
164.3
485.8
108.2
58.1
11.7
102.6
59.0
16.4
802
65.5
23.5
38.7
6.5
10.6
160.9
29.8
87.8
4,582.8
1.8
63.4
176.6
34.7
Chg (%)
-3.9
-9.4
3.3
-5.3
-0.2
-1.6
3.0
1.4
-5.3
-10.2
-13.9
-8.2
-5.2
0.8
-10.2
-0.8
0.0
-4.9
-11.1
-4.2
3.7
-6.1
-4.9
-19.5
-8.5
Rev
380.9
277.4
70.0
172.8
565.1
124.7
69.9
14.6
124.1
62.3
18.0
872
81.2
28.9
46.8
8.2
13.3
192.6
33.0
109.1
5,557.1
2.1
75.1
218.5
44.4
Source: MOFSL, Company
FY26E
Old
382.4
304.2
65.4
178.2
542.9
128.9
67.2
14.0
123.9
66.5
19.6
938.9
85.6
29.6
48.9
8.5
13.3
197.5
35.8
113.4
5,113.5
2.2
79.2
245.0
45.2
BJAUT
HMCL
TVSL
EIM *
MSIL *
MM
TTMT *
AL
ESCORTS
ARE&M
EXID
BOSCH
ENDU
CIEINDIA
BHFC
MOTHERSO *
SONACOMS
CEAT
APTY *
BIL
MRF
MSUMI
TIINDIA
CRAFTSMA
HAPPYFORG
* Consolidated
Chg (%)
-0.4
-8.8
7.1
-3.0
4.1
-3.3
4.1
3.8
0.1
-6.2
-7.9
-7.1
-5.1
-2.3
-4.3
-3.4
0.0
-2.5
-7.7
-3.8
8.7
-4.9
-5.2
-10.8
-1.8
August 2024
19
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
CAPITAL GOODS: Better-than-expected ordering; execution surprises
Ordering above expectations:
Order inflow momentum was largely unaffected by key events such as elections
and budget, barring a few companies that are exposed to private capex (TMX, TRIV) and high base effect (BHE).
Sectors such as power T&D, renewable energy, data centers, real estate, defense, etc. are seeing strong traction.
Private investments have been selective, with sectors such as data centers, metals, real estate, automotive, etc.
driving growth. Ordering activity is expected to see a healthy pick-up 2HFY25 onward, as enquiries are expected
to translate into firm orders.
Execution growth largely above estimates:
For
our coverage universe, execution grew by 13% YoY (vs. our
estimate of 12%) on the back of healthy opening order books, with EPC companies posting 14% growth and
product companies clocking 12% growth. Accordingly, LT, KKC, BHE saw healthy revenue growth, while SIEM,
POWERIND, KPIL and ABB were noticeably weaker. ABB was affected by certain issues at clients’ end, while SIEM
missed estimates presumably owing to a higher share of government contracts. KPIL experienced labor shortage
owing to elections and heatwaves, which had a bearing on execution.
Margin trajectory a mixed bag:
As commodity prices remained largely benign, EPC players witnessed sequential
margin improvements, with 2HFY25 poised to see a healthy expansion. Product companies are relatively better
placed with a shorter execution cycle, robust demand, and tech-led offerings, which enable them to enjoy better
pricing power. Accordingly, aggregate EBITDA grew 20% YoY, in-line with our estimates. However, aggregate PAT
growth of 20% YoY came in below our expectations of 24%. Notable examples include ABB, KKC, KOEL and TRIV,
which reported healthy margin expansion in 1QFY25.
Export weakness persists:
While LT, TRIV and POWERIND reported an uptick in international ordering, KKC saw
a 22% decline in export revenue owing to continued weakness in key markets amid high inflation and
geopolitical tensions. Notably, there was a sequential improvement of 13%, suggesting that it could bottom out
soon. However, sustainability of the same would be a key monitorable going ahead.
Top picks:
With the recent correction in stock prices, we remain positive on LT, ABB and BHE in our coverage
universe.
Surprises:
KKC, KOEL, TRIV
Misses:
TMX, POWERIND, KPIL, SIEM
Guidance highlights:
Most managements remained positive on a strong order pipeline given the government’s emphasis on capex-led
growth. A meaningful uptick is expected in 2HFY25, with a healthy ramp-up seen in domestic ordering.
LT:
Maintained FY25 revenue and order inflow guidance at 15% and 10%, respectively, with core margin
guidance of 8.25%. For the rest of FY25, the order pipeline is ~INR9t.
BHE:
Maintained FY25 revenue growth guidance of 15%, margin guidance of 23-25% and order inflow guidance
of INR250b (excluding QRSAM).
KKC:
Maintained double-digit revenue growth guidance for FY25 at 2x the GDP growth rate.
KOEL:
Outlined its ambition – “2B2B” – to achieve USD2b size in the next five years. Margins to be in double
digits.
KECI:
Maintained FY25 order inflow guidance at ~INR250b, revenue growth of 15% and margin guidance of 7.5%.
Double-digit margin performance is expected in FY26.
KPIL:
Reiterated FY25 guidance of 20% revenue growth, PBT margin at 4.5-5%, NWC below 100 days and capex
guidance at ~INR5b. Order inflow guidance is INR220-230b.
TRIV:
Domestic ordering expected to pick up 2HFY25 onward; export opportunities continue to be robust.
August 2024
20
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 45: Aggregate order book seeing a steady build-up (INR b)
Order book (INR b)
6,070 6,276
4,711 4,838
4,320 4,501
4,265
4,228 4,244
5,326 5,506
6,707
7,352
7,029 7,138
4,022
3,931
Source: Company, MOFSL
Exhibit 46: Aggregate revenue growth (%)
Capital goods revenue growth (%)
Exhibit 47: Aggregate EBITDA growth (%)
Capital goods EBITDA growth (%)
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 48: Aggregate EBITDA margin (%)
Capital goods EBITDA margin (%)
Exhibit 49: Aggregate PAT growth (%)
Capital goods PAT growth (%)
228
81
5 3
6 24
-27
40
25
25
19 38 38 25 27
20
-77
Source: Company, MOFSL
Source: Company, MOFSL
CEMENT: Volume growth moderates to ~4%; EBITDA/t at INR827 (est. INR895)
Lower realization (down 6% YoY vs. our estimate of 4% decline) led to a miss on EBITDA/t:
Blended realization
for our coverage universe declined ~6% YoY (and 3% QoQ; ~2% below our estimate) due to price correction
during the quarter. Volume growth for our coverage universe moderated to ~4% YoY (in line), amid general
elections, labor unavailability, and extreme heat waves. ACC reported the highest volume growth of ~9% YoY,
followed by SRCM/UTCEM, which posted 8%/7% YoY volume growth, and DALBHARA/JKCE, which clocked
6%/5% YoY growth. ACEM/TRCL’s volume rose 2%/1% while, JKLC’s volume was flat YoY. BCORP/ICEM’s volume
declined 1%/26% YoY. Consequently, revenue (excl. GRASIM) declined ~2% YoY. GRASIM’s standalone revenue
rose 11% YoY in 1QFY25, aided by incremental revenue from its new growth businesses (Birla Opus and Birla
Pivot). Its VSF segment’s revenue was up 6% YoY while, chemical segment’s revenue declined 4% YoY due to
lower volume (down 3% YoY).
August 2024
21
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Gross margin for our cement coverage improves marginally by 1.4pp YoY to 56.5%,
led by reduced input
material costs (average variable cost/t declined 9% YoY). Freight cost/employee cost per ton declined 4%/3%
YoY, while other expenses/t increased 3% YoY.
Aggregate EBITDA for coverage companies declined 9% YoY
(including GRASIM, which registered an EBITDA decline of 52% YoY due to higher losses in new growth
businesses), and OPM dipped 1.25pp YoY to 14.3% (est. 15.6%).
The EBITDA of JKCE/JKLC/DALBHARA grew
19%/13%/8% YoY, while that of UTCEM was flat. The EBITDA of SRCM/TRCL declined 2%/6% YoY, while that of
ACC/BCORP/ACEM declined 12%/13%/32% YoY. ICEM reported an operating loss of INR310m vs. EBITDA of
INR50m in 1QFY24.
Average EBITDA/t stood at INR827 vs. INR907/INR1,010 in 1QFY24/4QFY24.
PAT declines 20% YoY (ex-Grasim, PAT down ~11%):
Aggregate interest/depreciation expenses for our coverage
universe grew 14%/18% YoY, and other income increased 21% YoY.
Aggregate profit declined 11% YoY to
INR33.6b for cement companies (profit down 20% YoY to INR33.1b, including GRASIM, as it reported a loss of
INR521m vs. PAT of INR3.6b in 1QFY24).
DALBHARA/JKCE profit grew ~83%/49% YoY in 1QFY25. Conversely,
PAT declined 45-55% for BCORP/SRCM/TRCL, ~10-21% for ACC/ACEM/JKLC, and ~1% YoY for UTCEM in 1QFY25.
ICEM reported a net loss of INR1.2b (vs. a net loss of INR753m in 1QFY24).
Higher earnings downgrade due to continuing pricing pressure:
We cut our FY25 EBITDA estimates by ~6-8% for
ACC/ACEM/TRCL/UTCEM and ~11-19% for BCORP/GRASIM/JKLC/SRCM. We cut our FY26 EBITDA estimates by
~4-6% for BCORP/SRCM/GRASIM. We largely maintained our earnings estimates for DALBHARA/JKCE.
Top picks:
UTCEM is our top pick in the sector followed by JKCE.
Surprises:
DALBHARA
Misses:
ACC, ACEM, BCORP, GRASIM, ICEM, JKLC, SRCM, and UTCEM
Guidance highlights:
Consolidation is intensifying in the industry, and this should benefit in the longer term. Cement demand is expected
to improve in 2HFY25, backed by infrastructure and housing segments. Cement demand is estimated to grow
between 6-7% YoY in FY25, considering muted growth in 1HFY25. Cement prices have further declined ~1-2% in
Jul’24 vs. avg. of 1QFY25, and is likely to remain soft till CY24-end.
UTCEM:
Rural volumes for UTCEM grew ~9% YoY in 1Q, while there was lower demand from the infrastructure
segment. Volume growth should be in double digits in FY25E vs. 7-8% for the Industry. Price improvement, if
any, is expected only in 2HFY25. It anticipates cost savings to be around INR300/t over the next three years.
ACEM:
Consol. volume grew 3% YoY in 1QFY25. It reiterated its capacity target of 140mtpa and cost reduction
targets of INR530/t by FY28. The acquisition process of Penna is at an advanced stage and likely to be completed
in 2QFY25. Consol. capex was pegged at INR100b for the expansions (including Penna acquisition), cost
efficiency, and maintenance capex. It expects cash and cash equivalent to be around INR100b by FY25-end.
SRCM:
SRCM expects volume growth to be in line with the industry in FY25. The share of green power stood at
~54% in 1QFY25, which is likely to increase to ~62% by 1QFY26. It is currently working on the 15.4mtpa grinding
capacity addition at various locations, to be commissioned in phases until FY26-end.
DALBHARA:
Management reiterated DALBHARA’s volume growth at 1.5x of the industry’s growth rate. It
identified areas of sustainable cost reduction of INR150-200/t in the next three years by reducing variable costs.
The intermittent capacity target of 75mtpa is deferred to FY28 vs. the previous timeline of FY27. Further, it will
share a detailed expansion plan, including the location and timeline of commissioning, after 12 months.
JKCE:
The company’s Central India expansion achieved 93% capacity utilization. Reiterated its cost-saving target
of INR150-200/t over the next two years through logistics cost optimization and the increasing share of green
energy and alternative fuel. The company’s long-term capacity target is 45-50mtpa vs. 24mtpa currently.
JKLC:
Lower volume and weak realization hurt overall performance. However, it has implemented various
efficiency measures since the last one year, which helped to reduce costs. It is expecting further cost savings of
INR50-75/t in the coming years. The announced merger of UCWL and other wholly owned subsidiaries with JKLC,
will drive synergies, simplify corporate structure, and strengthen the balance sheet/cash flows for faster growth.
August 2024
22
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
BCORP:
Lower realization was due to a change in market mix and a sharp correction in cement prices in BCORP’s
core markets (Rajasthan and Uttar Pradesh). Currently, it is increasing capacity in its core market (eastern UP) by
expanding capacity at the Kundanganj plant. It is likely to be commissioned in 1HFY26. BCORP reiterated its
capacity target of 25mtpa by FY27E vs. 20mtpa currently.
Exhibit 51: Blended realization was down 6% YoY
Realization (INR/ton)
4
6
YoY Change (%)
5
Exhibit 50: Sales volume grew ~4% YoY in 1QFY25
Aggregate Vol (mt)
43
24
6
(29)
9
6
(3) 0
18
9
19 15
12 12
8
12 4
YoY change (%)
8
7
7
3
3
4
4
-2
0
1
-4
-6
0
-3
42 56 66 75 60 60 64 75 70 66 72 84 83 75 78 95 87
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 52: Aggregate EBITDA declined 5% YoY in 1QFY25
Aggregate EBITDA (INR b)
51
37 43 43
-6
-26 -20 -18
-46
-7
0
10
YoY Change (%)
78
60
29
Exhibit 53: Average EBITDA/t was down 9% YoY in 1QFY25
Average EBITDA (INR/t)
-5
-25
Source: Company, MOFSL; Note: *EBITDA excluding Grasim
Source: Company, MOFSL
CHEMICALS: Margins still under pressure; revenue trend reverses
Overall performance:
Revenue was in line with our estimates (AACL, ATLP, DN, NFIL and SRF beat our estimates
while PI and VO posted a miss). EBITDA was in line with our estimates too (AACL, ATLP, DN, GALSURF, NFIL beat
our estimates, while CLEAN, NOCIL, TTCH and VO came in below our estimates). Adj. PAT was in line with our
expectation (CLEAN, NOCIL, SRF, TTCH and VO missed our estimates, while the rest were above our estimates).
Aggregate revenue was up 3% YoY to INR163.4b (reversing the decline trend of the past four quarters), EBITDA
declined 10% YoY to INR30b and adj. PAT declined 19% YoY to INR16.2b.
Aggregate gross margin for our coverage universe decreased 200bp YoY (vs. decline of 10bp YoY in 4QFY24).
FINEORG, NFIL, NOCIL, SRF, TTCH and VO saw their gross margin decline YoY. Aggregate EBITDA margin dipped
260bp YoY. AACL, ATLP, CLEAN, DN, PI and VO showed expansion in their EBITDAM YoY, while there was a
contraction for the rest of the companies in our coverage universe.
Ratings and earnings revisions:
After 1Q earnings,
we upgraded ATLP, but there were no rating downgrades.
However, we lowered our estimates for DN, NOCIL and TTCH and raised our estimates for ATLP.
Top picks:
PI
is well-positioned for near-term growth, driven by strong CSM business momentum from a solid
order book, new molecule commercialization, domestic product launches, and its recent pharma API and CDMO
acquisition. We expect a CAGR of 16%/18%/ 13% in revenue/ EBITDA/adj. PAT over FY24-27. For
ATLP,
with end-
user market demand improving, overall demand is expected to rise in 2HFY25, as the company undertakes
projects to enhance plant efficiency, expand capacities, and increase market share.
August 2024
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 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Surprises:
AACL, ATLP, DN, GALSURF, NFIL
Misses:
CLEAN, NOCIL, TTCH, VO
Guidance highlights:
CLEAN:
The company anticipates improved margins within a few quarters as it scales up and covers fixed costs.
CFCL has commenced production of 3 HALS products, namely HALS 622, HALS 944 and HALS 783, with another
product to start production in Aug’24.
DN:
The management expects it to gain traction with the commissioning of the downstream products. Demand
pressure on Benzene and Propylene could affect near-term Phenol spreads. Margin pressure would persist in the
short term due to reduced dependency on single customer or single geography.
FINEORG:
Prices of some vegetable oils have risen and the company expects volatility to continue due to the
weather impact on the crops. The overall lead time and freight costs are high due to the container availability
issues because of the Red Sea crisis.
GALSURF:
A rise in rural spending owing to above-normal monsoons would drive strong demand in the Indian
market. In the RoW region, improving household spending has slowly translated into strong demand for
masstige categories. The management is confident of delivering high-single-digit growth in FY25 in the AMET
region.
NFIL:
The AHF and R32 capex are on track to be commissioned by end FY25/early FY26 and Feb’25, respectively.
The management has reiterated its target to achieve USD100m revenue in CDMO business by FY27. Phase I of
cGMP4 plant is well on track to be commissioned by end CY25. The management expects demand in Spec Chem
to recover in 2HFY25.
NOCIL:
The management is confident of the long-term prospects of the tire industry as it looks to invest in
capacity expansion, technology upgrades, and R&D to enhance product quality and sustainability. NOCIL has
been working on various new products in the pipeline.
PI:
The management maintains its revenue growth guidance of 15% in FY25, with gross/EBITDA margins of ~50-
51%/25-26%. The company plans to incur a capex of ~INR8-9b in FY25. PI will focus on aggressive
commercialization of new products in FY25 (~8-10 launches).
SRF:
The Chemical business is likely to witness a revival in 2HFY25. FY25 margins to be +/- 2% of FY24. SRF plans
to incur a total capex of ~INR15-19b in FY25 (including INR6b toward the commissioning of three new
fluoropolymer facilities).
TTCH:
Overall, soda ash demand is balanced and is expected to remain similar for the next couple of quarters. It
will incur ~INR20b of capex over FY25-28E to increase soda ash capacity by ~20%, bicarb by ~30% and silica by
5x.
Exhibit 54: Revenue for our coverage universe
Aggregate Revenue (INR b)
153.1
170.0
172.8
122.6
130.4
140.4
163.6
168.2
158.2
155.4
150.0
156.7
163.4
August 2024
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 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 55: Gross margin for our coverage universe
Aggregate Gross margin (%)
Exhibit 56: EBITDAM for our coverage universe
Aggregate EBITDAM (%)
Exhibit 57: EBIT margin for our coverage universe
Aggregate EBIT margin (%)
Exhibit 58: PAT margin for our coverage universe
Aggregate adj. PAT margin (%)
August 2024
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 Motilal Oswal Financial Services
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CONSUMER - FMCG: Steady recovery in volume growth; sustains margin expansion
Improving demand in 1Q; promising outlook for 2HFY25:
Our coverage universe posted revenue growth of 6%
YoY (est. 8%) in 1QFY25 vs. 4% in 4QFY24, showing an improving consumption trend. In the staples sector,
demand has been steadily increasing, with signs of growth in rural markets. There was an improvement in
volume growth YoY and further improvement is expected in coming quarters. Harsh summer conditions and
election-related restrictions have affected out-of-home consumption in categories like HI, beverages, alcoholic
beverages, and paints, while boosting demand for cooling products. The outlook for rural markets remains
positive. In our coverage universe, four companies reported double-digit revenue growth, while two saw
revenue contraction. Revenue growth was largely in line with our estimates for 15 out of 18 companies under
our coverage. Godrej Consumer, UBBL and Varun Beverages missed our estimates.
Gross margin recovery intact; A&P spending remains high:
The trajectory of gross margin expansion was stable
for most companies, with some companies beating our estimates. Companies continue to focus on marketing
and distribution, which led to slower EBITDA margin expansion than the gross margin increase. There is
expectation of a price hike in 2HFY25 to offset rising raw material prices. Our coverage universe posted EBITDA
growth of 5% YoY (est. 9%) in 1QFY25. Excluding ITC, EBITDA growth was 7% in 1QFY25.
PBT and PAT below expectations:
For nine of the 18 coverage companies, PBT was either ahead of or in line
with our estimates, with a better-than-expected performance by CLGT and UNSP. Conversely, there were
notable misses by APNT, INDIGOPN, ITC, NESTLE, GCPL, VBL and UBBL. Aggregate PBT growth was 3% YoY (est.
9%). Aggregate PAT growth stood at 3% YoY (est. 10%).
Outperformer (1Q):
HMN, JYL, CLGT
Under performer (1Q):
APNT, VBL, NESTLE, PAGE, TATACONSUMER and UBBL
Near-term outlook:
With stable macro drivers along with expectation of favorable monsoon, we expect volume
growth to continue to accelerate in FY25. Companies are focusing on the traditional framework (distribution
reach, product launches, consumer offers, etc.) to gain the growth momentum. Some companies are expected
to take a price hike in 2HFY25 to offset the recent RM inflation trend. Gross margin has already recovered well
for most companies; hence, a further expansion in FY25 will be category/company-specific. EBITDA margins are
expected to improve at a moderate pace over the medium term, supported by operating leverage, a better
product mix, and growth in the premium portfolio. Local competition, rural pickup, pricing activities, and RM
prices remain key monitorables.
Top picks – HUVR, GCPL and DABUR:
We are positive on
HUVR,
as we believe its wide product basket and
presence across price segments should help the company achieve a steady growth recovery. Under the new
leadership of Mr. Rohit Jawa, HUVR is expected to take corrective actions to address the white space,
particularly in BPC and F&R. The company commands strong leadership in Home Care, which can be capitalized
during improving macros.
GCPL
is consistently working to expand the total addressable market for its India
business through product innovations to drive frequency. Besides, there has been a consistent effort to address
the gaps in profitability and growth in its international business. We see margin headroom from the RCCL and
Indonesia businesses. The valuation is expensive, but earnings are expected to outperform peers.
DABUR:
Recovery in rural markets should support its portfolio, as it is heavily skewed toward rural areas. In the domestic
business, we expect healthcare, oral care, and food businesses to grow faster than others. The distribution drive
will further contribute to rural growth. EBITDA margin has remained in the range of 19-20% for the past several
years. The margin is expected to improve in the coming years due to a better mix of products (such as higher
healthcare offerings) and increased pricing in high market-share brands.
Guidance highlights:
Commentary on improvement in consumption is positive considering normal monsoons,
improving macros, continued government spending, and lower inflation. Most of the companies are witnessing
recovery in the rural markets and expect volume growth in FY25.
APNT:
The management expects double-digit volume growth for FY25. It expects a 5-6% gap in volume and
value growth in the near term. It is anticipating 1.5% inflation in 2Q and may need to implement additional price
increases in the future. EBITDA will be sustained in the range of 18-20%.
BRIT:
The company aspires to achieve double-digit volume growth in FY25, along with stable prices. The
management remains positive on the growth outlook of the non-biscuit portfolio and expects it to outperform
the biscuit portfolio by 1.5x. BRIT focuses on expanding distribution network, primarily in the rural, while also
August 2024
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 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
innovating products and scaling up in related categories. The management anticipates 4% to 5% inflation in the
coming months due to rising flour, sugar, and cocoa prices. EBITDA margin is expected to remain stable YoY in
FY25.
DABUR:
The management expects volume growth in mid-to-high single digits and revenue growth in high single
digits to low double digits in FY25. Revenue growth will be largely volume-led for the coming quarters. The
management expects to achieve better EBITDA margin than 1Q’s 19.6%.
HMN:
The company aims for double-digit revenue growth in FY25, mainly led by volume. Ad spending is
expected to be aggressive due to new product launches in FY25. The effective tax rate will moderate for the
remaining quarters and it will be at 10-11% for the next two years.
HUVR:
There will be a moderate pace of improvement in EBITDA margin in the near term at around 23-24%. The
urban organized trade and premium portfolio stayed resilient and led growth for FMCG. The company expects
gradual improvement in FMCG and rural demand and expects price growth in 2HFY25.
GCPL:
GCPL plans to increase its market share in rural areas by doubling outlet coverage and tripling village
coverage through Project Vistaara 2.0. It has increased capex and is focusing on high single-digit volume growth
in India and Indonesia. It aims to increase EBITDA margins in Indonesia from the current 20% to 25%. GUAM's
EBITDA margins stood at 14% in 1Q, which GCPL aims to increase to 15%.
MRCO:
The
company aims to deliver double-digit revenue growth in FY25. It expects volume trends to maintain
the upward trajectory, supported by stable retail inflation, a favorable monsoon season, and government
budget allocations aimed at boosting the rural economy. Another round of price increases can be taken if copra
prices rise further.
PIDI:
The management has upheld its guidance for double-digit underlying volume growth for FY25. The gap
between volume and value is anticipated to close in 2HFY25. Over the next 2-3 years, rural market growth is
estimated to be 1.5x that of urban markets. EBITDA margin is expected to be 20-24% in the medium term.
UBBL:
Premium volume remained strong, with a 44% surge, particularly driven by Kingfisher Ultra, Ultramax and
Heineken. UBBL aims to grow volume at 8-9% with market shares gains. The company is prioritizing its efforts to
strengthen the portfolio over the next 1-2 years with incremental margin improvements.
VBL:
It expects strong double-digit growth in 3QCY24 and is on track to deliver healthy double-digit volume
growth in CY24. The company witnessed almost ~100% utilization of plant in Apr’24 before the commissioning of
new capacities.
Exhibit 59: Quarterly volume growth
Volume growth (%)
Asian Paints
Britannia
Colgate
Dabur
Emami
Godrej Consumer
HUL
ITC
Marico
Nestle
Page Industries
UBBL
United spirits
1QFY23
37.0
-2.0
-2.5
5.0
9.6
-6.0
6.0
26.0
-5.0
7.0
150.0
121.0
17.9
2QFY23
10.0
5.0
-2.5
1.0
-1.0
-5.0
4.0
20.0
3.0
8.8
1.0
23.0
8.3
3QFY23
0.0
3.0
-4.5
-3.0
-3.9
3.0
5.0
15.0
4.0
-2.3
-11.0
4.0
-25.0
4QFY23
16.0
3.0
0.5
1.0
2.0
13.0
4.0
11.5
5.0
5.1
-15.0
3.1
-27.3
1QFY24
10.0
0.0
3.0
3.0
3.0
10.0
3.0
8.0
3.0
5.4
-11.5
-12.4
5.8
2QFY24
6.0
0.0
-1.0
3.0
2.0
4.0
2.0
5.0
3.0
5.4
-8.8
7.0
1.0
3QFY24
4QFY24
1QFY25
12.0
10.0
7.0
5.5
6.0
8.0
-1.0
1.0
7.0
4.0
3.0
5.2
-1.0
6.4
8.7
5.0
9.0
8.0
2.0
2.0
4.0
-1.0
2.0
3.0
2.0
3.0
4.0
4.0
4.0
4.0
4.6
6.1
2.6
8.0
10.9
5.0
-1.8
3.7
3.5
Source: Company, MOFSL
August 2024
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 Motilal Oswal Financial Services
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Exhibit 60: Revenue/EBITDA/PAT growth for 1QFY25
Company Name
Asian Paints
Britannia
Colgate
Dabur
Emami
Godrej Consumer
HUL
Indigo Paints
ITC
Jyothy
Marico
Nestle
Page Industries
Pidilite
Tata consumer
United Breweries
United Spirits
Varun Beverages
Revenue
89,697
42,503
14,967
33,491
9,061
33,316
1,57,070
3,110
1,84,573
7,418
26,430
48,140
12,775
33,954
43,521
24,730
23,520
71,969
1QFY25
YoY %
-2%
6%
13%
7%
10%
-3%
1%
8%
8%
8%
7%
3%
4%
4%
16%
9%
8%
28%
EBITDA
16,938
7,537
5,083
6,550
2,165
7,262
37,440
474
67,484
1,335
6,260
11,209
2,433
8,127
6,674
2,847
4,580
19,912
1QFY25
YoY %
-20%
9%
22%
8%
14%
7%
2%
-4%
1%
14%
9%
5%
2%
15%
22%
28%
19%
32%
1QFY25
YoY %
11,868
-25%
5,295
16%
3,640
26%
5,084
8%
1,702
21%
4,649
25%
26,455
2%
262
-16%
50,939
0%
1017
17%
4,640
9%
7,377
5%
1,652
4%
5,721
21%
3,031
-5%
1733
27%
2,990
25%
12,526
26%
Source: Company, MOFSL
PAT
YoY (bp)
QoQ (bp)
-422
-49
56
-162
238
-175
24
297
88
22
203
-66
19
60
-179
-675
-230
-41
90
157
51
428
39
-220
-36
249
235
406
77
-70
171
485
174
589
74
477
Source: Company, MOFSL
Exhibit 61: Gross and EBITDA margin expansion in 1QFY25
Companies
Asian Paints
Britannia
Colgate
Dabur
Emami
Godrej Consumer
Hind. Unilever
Indigo Paints
ITC
Jyothy Labs
Marico
Nestle
Page Industries
Pidilite Inds.
Tata Consumer
United Breweries
United Spirits
Varun Beverages
Gross Margin
42.5%
43.4%
70.6%
47.8%
67.7%
55.9%
52.0%
46.6%
60.5%
51.3%
52.3%
57.6%
54.1%
53.8%
44.9%
43.0%
44.5%
54.7%
YoY (bp)
-40
147
222
119
226
211
152
-73
-130
342
227
283
90
479
274
247
85
222
QoQ (bp)
-117
-149
134
-81
188
-26
-32
-226
-271
179
67
85
-189
38
-121
131
115
-159
EBITDA Margin
18.9%
17.7%
34.0%
19.6%
23.9%
21.8%
23.8%
15.2%
36.6%
18.0%
23.7%
23.3%
19.0%
23.9%
15.3%
11.5%
19.5%
27.7%
Exhibit 62: Sales grew 6.2% YoY for our consumer universe
Consumer aggregate YoY sales growth (%)
32.5
30.6
15.9 18.1
13.0
17.2
7.0
9.8
3.6 4.4 3.8 3.8
6.2
Exhibit 63: Aggregate EBITDA margin maintained in 1Q
Consumer aggregate EBITDA margins (%)
25.1
23.3 23.0
23.6 23.8
22.9
22.4 22.5
24.5
24.7 24.3
24.9
22.5
Source: Company, MOFSL
Source: Company, MOFSL
August 2024
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 Motilal Oswal Financial Services
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Exhibit 64: Aggregate adjusted PAT up 3.4% YoY in 1QFY25
Consumer aggregate YoY PAT growth (%)
34.8
27.4
9.8
6.2
11.0
12.0
11.1
14.5
19.2
17.5
14.3
7.8
3.4
Source: Company, MOFSL
CONSUMER - QSR: Weakness persists; pressure on profitability
Sluggish demand trajectory:
The quick service restaurant (QSR) industry continues to face demand challenges,
grappling with weak unit economics and intense market competition. There has been improvement in the
delivery channel, as consumer traffic was positive, driven by consumer offers and heatwave impact. Dine-in
demand remained weak, with most brands delivering a double-digit decline. Our coverage universe posted
revenue growth of 6% YoY (organic growth) in 1QFY25 vs. 7% in 4QFY24 and 14% in 1QFY24. SSSG/ADS
continued to decline, barring Restaurant Brand Asia (BK) and Jubilant, which reported SSSG/LFL of 3%/3%.
Westlife/Devyani KFC/Devyani PH/Sapphire KFC/Sapphire PH registered same-store sales decline of
7%/7%/9%/6%/7%.
Slower store addition; expects stable momentum in FY25:
The store addition momentum slowed during the
quarter due to sluggish unit economics across brands. The management has maintained their store addition
guidance for FY25; however, we expect slower store openings in FY25.
Pressure on profitability:
With underlying growth remaining weak, companies witnessed a significant impact on
their unit economics. Both restaurant margin and EBITDA margin contracted for most of the brands in 1Q. PBT
was down >60% YoY during the quarter. PBT for Devyani, Sapphire, Westlife and Jubilant declined by 37%, 65%,
89% and 33% YoY, respectively. However, RBA reduced its loss from INR541m to INR522m.
Outperformer (1Q):
Jubilant Foodworks, RBA
Underperformer (1Q):
Sapphire, Devyani, Westlife
Near-term outlook:
We expect QSR companies to sustain growth weakness in the near term, which will likely
keep operating margins under pressure. Following a sharp dip in margins, any further dips will be closely
monitored. We are watchful for any recovery signs (particularly for dine-in) in 2HFY25 and pace of store addition
in FY25.
Guidance highlights:
JUBI:
For FY25, Domino's plans to open 180 stores in India, 50 in Turkey and 20 in Bangladesh. It also aims to
open 70 COFFY stores, 50 Popeyes stores, and 25 Hong's Kitchen outlets. The company has not increased prices
in the last eight quarters and has no plan to raise prices. It focuses on giving more value to gain more share.
Devyani:
It expects that the demand scenario will improve during the festive season and the focus will be on the
value-driven portfolio to fuel growth. The company is on track to reach 2,000 store network by FY25. The food
court opening, in partnership with PVR, will start in 4QFY25.
Westlife:
The company has guided 15-18% operating margin (pre-Ind-AS) and 18-20% operating margin (Post-
Ind-AS) in the medium term. It targets to open 45-50 stores in FY25 with a focus on South India, smaller towns,
and drive-thru. It aims to reach 580-630 restaurants by FY27. The company aims for 15-18% contribution of
McCafé to total business by FY27.
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 Motilal Oswal Financial Services
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Sapphire:
The company is making efforts to improve dine-in, including specific menus, value offerings, and lunch
advertising to attract customers. Sapphire aims to achieve 500 KFC stores by Dec’24 and remains cautious about
the store expansion of PH. It added only 1 store so far in CY24.
RBA:
The companies aims to reach 510 restaurants by the end of FY25 and 700 stores by FY27. Indonesia
operations are expected to achieve cash break-even in FY25. The management guides to achieve 69% GP margin
by FY27, driven by increasing profitability in the delivery business.
Barbeque:
The management plans to open 100 new stores (10 in BBQ international, 40 stores in Premium CDR
(Toscano and Salt) and 50 in BBQ India) over the next three years and reach 325 stores by FY27. The
management guides
~
68% GP margins for FY25.
Exhibit 65: Quarterly trends
Particulars
Revenue Growth
Barbeque Nation
Devyani
Jubilant
Sapphire
Restaurant Brands
Westlife
Total
SSSG
Barbeque Nation
Devyani - KFC
Devyani - PH
Jubilant (LFL)
Sapphire - KFC
Sapphire - PH
Restaurant Brands
Westlife
Store (India)
Barbeque Nation
Devyani
Jubilant
Sapphire
Restaurant Brands
Westlife
PBT (INR M)
Barbeque Nation
Devyani
Jubilant
Sapphire
Restaurant Brands
Westlife
PBT Margins
Barbeque Nation
Devyani
Jubilant
Sapphire
Restaurant Brands
Westlife
1QFY23
209%
100%
41%
80%
64%
108%
75%
182%
64%
32%
28%
65%
47%
66%
97%
195
961
1,676
516
328
331
208
771
1,642
356
(509)
318
7%
11%
13%
7%
-10%
6%
2QFY23
41%
45%
17%
36%
47%
49%
34%
23%
13%
3%
8%
15%
23%
27%
40%
205
1,047
1,753
550
334
337
69
700
1,619
269
(551)
420
2%
9%
13%
5%
-10%
7%
3QFY23
14%
27%
10%
17%
21%
28%
18%
-1%
3%
-6%
0%
3%
-4%
9%
20%
212
1,120
1,814
599
379
341
67
736
1,194
336
(559)
480
2%
9%
9%
6%
-11%
8%
4QFY23
12%
28%
8%
13%
29%
22%
17%
-3%
2%
-3%
-1%
2%
-4%
8%
14%
216
1,184
1,863
627
391
357
(125)
412
930
123
(800)
277
-4%
5%
7%
2%
-16%
5%
1QFY24
3%
20%
6%
20%
25%
14%
14%
-8%
-1%
-5%
-1%
0%
-9%
4%
7%
212
1,230
1,891
660
396
361
(55)
603
1,014
336
(541)
406
-2%
7%
8%
5%
-9%
7%
2QFY24
-3%
10%
5%
14%
19%
7%
9%
-11%
-4%
-10%
-1%
0%
-20%
4%
1%
212
1,298
1,949
692
404
370
(151)
330
963
214
(507)
302
-5%
4%
7%
3%
-8%
5%
3QFY24
1%
7%
3%
12%
15%
-2%
6%
-5%
-5%
-13%
-3%
-2%
-19%
3%
-9%
210
1,387
2,007
725
441
380
75
97
819
140
(399)
231
2%
1%
6%
2%
-7%
4%
4QFY24
6%
5%
6%
13%
16%
1%
7%
1%
-7%
-14%
0%
-3%
-15%
2%
-5%
211
1,429
2,096
748
455
397
(9)
44
508
8
(921)
20
0%
0%
4%
0%
-15%
0%
1QFY25
-6%
6%
10%
10%
6%
0%
6%
-7%
-7%
-9%
3%
-6%
-7%
3%
-7%
213
1,473
2,148
762
456
403
(55)
381
683
118
(522)
45
-2%
3%
5%
2%
-8%
1%
CONSUMER DURABLES: Strong revenue growth; UCP segment outperforms
Revenue growth higher than our estimates:
Revenue for our consumer durables coverage universe increased 25%
YoY in 1QFY25 (7% above our estimates), primarily led by higher-than-estimated growth in the AC segment.
Revenue of VOLT/HAVL grew 46%/20% YoY, led by robust growth in the AC segment on a favorable base.
Revenue growth for Polycab/KEII/RRKABEL stood at 21%/16%/13% YoY, supported by healthy demand growth in
the Cables and Wires (C&W) segment. The RAC segment witnessed robust demand as a harsh summer season
August 2024
30
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
led to higher secondary as well as primary sales. Companies indicated that channel inventory also reduced
significantly, leading to improvement in working capital. Revenue growth for VOLT (UCP)/Lloyd stood at
51%/48% YoY. In the C&W segment, a higher base of previous year, general elections and heatwaves impacted
wires demand, whereas demand for cables remained strong. Aggregate C&W revenue grew ~11% YoY vs. our
estimate of ~12% growth.
Aggregate EBITDA 6% higher than estimates; margin recovery seen:
Aggregate EBITDA for our coverage universe
grew 32% YoY (~6% higher than our estimates). VOLT reported ~129% YoY growth in EBITDA, aided by a profit in
its EMPS segment vs. a loss reported in 1QFY24 (~64% beat). HAVL’s EBITDA grew 42% YoY as higher-than-
estimated EBIT in Lloyd was offset by lower-than-estimated EBIT in C&W and switchgear segments. KEII/Polycab
EBITDA grew 20%/6% YoY (in line), while RRKABEL EBITDA declined 16% YoY (~27% miss due to weak margins).
Aggregate EBITDA margin improved 60bp YoY to ~10% (in line). Industry players have taken a price hike to offset
a surge in input material costs. We expect margins to sustain at these levels in coming quarters.
Adjusted PAT above our estimates:
Aggregate PAT increased 34% YoY (10% higher than our estimate). PAT growth
stood at 159% YoY for VOLT, followed by 42%/24% for HAVL/KEII. However, PAT of Polycab/RRKABEL declined
1%/13% YoY.
Upgrades/downgrades:
We upgraded VOLT’s FY25/FY26 EPS estimates by 19%/4% given the outperformance in
1Q and higher profits in EMPS segment. We downgraded RRKABEL’s FY25/FY26 EPS estimates by 11%/4% due to
the underperformance in 1Q and continuing losses in FMEG business till FY26E. We maintained our earnings
estimates and ratings for other coverage companies.
Surprises:
VOLT and KEII
Misses:
RRKABEL and Polycab
Polycab:
Demand should pick up with the rise in government spending. Currently, commodity prices are stable,
and channel inventory is at a normal level. Margins should improve going forward. Further, the new guidance as
part of the project leap will be shared in FY25. Polycab has raised its focus on switches and switchgear segments,
where the competitive intensity is low and margins are better.
KEII:
The company
expects revenue growth of ~16-17% YoY in FY25, aided by brownfield expansion at Pathredi
plant, likely to be completed in 2QFY25. Sales through dealers increased 29% YoY and contributed 53% to
revenue vs. 47% in 1QFY24. It expects margin of ~11% in FY25, and an improvement of 1pp by FY27E.
RRKABEL:
Volumes of cables should grow ~30% YoY vs. 13-14% YoY growth for wires. Export volumes remained
flat due to delayed shipments. However, volumes lost in 1Q were covered in Jul’24. It expects a 60-80bp
improvement in margins in the C&W segment in FY25. In FMEG, there was additional A&P spending of INR120m
due to the ongoing brand transition.
HAVL:
Demand for wires rebounded to normal levels in Jul’24, and there were price hikes across categories in
1QFY25. Though the management refrained from giving any guidance for Lloyd’s FY25 profitability, it mentioned
that Lloyd remains on a strong footing as its own manufacturing has helped in offering differentiated products
and led to margin improvement. In the switchgear segment, the contribution margin will be around 38-41%.
VOLT:
UCP’s overall volume grew 67% YoY in 1Q, and it maintained its leadership position in the RAC segment
with an exit market share of 21.2% as of Jun’24. In EMPS, domestic projects continued to grow, and the outlook
remains positive. In the international project, the UAE and Saudi Arabia delivered good performance, leading to
revenue growth, which, along with strong execution and controlled costs, led to profits following losses in the
last six quarters.
Guidance highlights:
August 2024
31
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 66: Aggregate* UCP revenue and growth
UCP revenue (INR b)
123
41 34
8
26
YoY Growth (%)
Exhibit 67: Aggregate* UCP EBIT and margin
UCP EBIT (INR b)
7.6
5.9
4.6
6.4
4.6
1.3
6.3
3.2
UCP EBIT Margin (%)
7.5 7.4
4.7
3.3 4.1
31
49
10 17 20 15 22 22
20 18 22 38 44 20 25 46 50 24 31 60 75
1.5 1.1 1.0 2.4 2.0 0.3 0.8 2.9 2.4 0.8 1.3 4.5 5.5
Source: Company, MOFSL; Note: *In UCP revenue and EBIT we consider VOLT, HAVL, Blue star
Exhibit 68: Aggregate* C&W revenue and growth
Cables and wires Revenue (INR b)
72
43
51
30 41
YoY Growth (%)
Exhibit 69: Aggregate* C&W EBIT and margin
Cables and Wires EBIT (INR b)
EBIT Margin (%)
32 22
15 14 13
15 18 11
10
9
10 11 10 10
13 12 13
12
13
13
12
33 50 56 65 50 58 64 74 66 71 73 87 73
3.3 4.7 5.7 7.2 4.9 5.6 7.7 9.4 8.3 9.2 9.1 11.8 8.7
Source: Company, MOFSL; Note: *In Cables and Wires revenue and EBIT we considered Polycab, KEII, HAVL
EMS: Strong revenue growth momentum continues with healthy order inflows
Strong revenue growth across EMS players:
The EMS sector reported another strong quarter with aggregate
revenue growth of 75% YoY. This was driven by the execution of a strong order pipeline. The sector witnessed
healthy order inflows, which rose 28% YoY (order book growth excludes Dixon and Amber). Dixon led the pack with
2x YoY revenue surge, followed by Syrma (93%), Kaynes (70%), Amber (41%), Cyient DLM (19%) and Data Pattern
(16%). In contrast, Avalon posted a revenue decline of 15% YoY. For our coverage universe (ex. Dixon and Amber),
revenue jumped 54% YoY vs. our est. of ~44% YoY.
The order book remains healthy with inflows across the end-user industries:
The order inflows were healthy across
sectors. During the quarter, Kaynes secured three major long-term orders in Aerospace & Outerspace, Industrial
& EVs, and Medical sectors. Avalon won orders in both the US and Indian markets across the mobility, clean
energy, and industrial segments. Syrma posted a healthy growth in consumer order flows, followed by industrials
and automotive. However, Cyient DLM witnessed a decline of 15% YoY in its order book due to the lumpy nature of
its business. Among the EMS basket, Kaynes/Avalon/Syrma clocked the highest order inflow, up 68%/32%/29% YoY,
followed by Data Patterns (up 5% YoY).
Gross margin remains muted due to the unfavorable product mix:
Gross margin for our coverage universe
contracted ~530bp YoY to 23.3%. The companies that recorded the strongest growth (such as Dixon/Kaynes/
Syrma) have reported a gross margin contraction of 110bp/350bp/710bp YoY. This contraction was primarily due
to a change in the product mix (towards low-margin products). Conversely, DATAPATT recorded a margin
expansion of 1,000bp aided by the higher mix of production revenue, while CYIENTDL and AVALON reported a
slight margin expansion of 30bp and 40bp YoY, respectively. Driven by strong revenue growth, EBITDA for the
basket grew 23% YoY; EBITDA margin contracted 200bp YoY owing to gross margin contraction, partly offset by
strong operating leverage.
August 2024
32
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
The quarter witnesses one earnings upgrade and two downgrades:
We upgraded our earnings estimates for
Kaynes by 8%/10% for FY25/FY26, while we downgraded our earnings estimates for Avalon (31%/12%) and Syrma
(7% in FY25E; maintained our estimates for FY26E). We largely maintained our FY25/FY26 EPS estimates for Cyient
DLM and Data Patterns.
Surprises:
Cyient DLM and KAYNES
Misses:
AVALON and SYRMA
Guidance highlights:
Kaynes:
The company expects revenue to surpass INR30b in FY25 and exceed previous guidance of 60% YoY
growth. KAYNES expects strong EBITDA margins of ~15% in FY25. Export mix should increase to 20% by FY26.
Avalon:
Despite weak performance in 1Q, Avalon raised its FY25 revenue growth guidance to 16-20% vs. 14-16%
earlier. It expects healthy growth from 2QFY25. Exports (US business) are likely to make up 60% of the revenue
mix in FY25, which the company expects to reduce to 50% in the long term. Gross margin is likely to be ~33-35%
Syrma SGS:
Management maintained its revenue growth target of ~40-45% for FY25, with an EBITDA margin of
~7% (including PLI and forex gains/ losses). The increasing mix of industrial and healthcare segments and higher
exports may boost its margins in the remainder of FY25.
Cyient DLM:
CYIENTDL retained its guidance for ~30% revenue CAGR with double-digit margins during the
medium term.
DATAPATT:
The company expects healthy revenue growth in FY25. Its 2HFY25 is expected to be much stronger
than 1H, due to the nature of orders received. The company maintained its guidance of ~20-25% revenue CAGR
over the next two to three years, with EBITDA margin at ~35-40%.
Exhibit 70: Key operating indicators
Revenue (INR m)
1Q
1Q
YoY
4Q
FY25
FY24 (%)
FY24
5,040
2,972 69.6 6,373.04
1,995
2,351 -15.2 2,168.10
2,579
2,171 18.8
3,618
11,599 6,013 92.9 11,341
1,041
897
16.0
1,823
65,798 32,715 101.1 46,580
24,013 17,020 41.1 28,055
1,12,064 64,139 74.7 99,958
22,253 14,404 54.5 25,323
QoQ
(%)
-20.9
-8.0
-28.7
2.3
-42.9
41.3
-14.4
12.1
-12.1
EBITDA margins (%)
1Q 1Q YoY 4Q QoQ
FY25 FY24 (bp) FY24 (bp)
13.3 13.5 -30 14.9 -170
2.2 6.9 -470 7.9 -570
7.8 9.2 -150 10.5 -280
3.8 6.1 -230 6.5 -270
35.7 31.0 470 51.0 -1530
3.8 4.0 -30 3.9 -10
8.2 7.8 40 7.9
30
5.5 6.3 -80 7.2 -170
7.8 9.8 -200 12.5 -470
1Q
FY25
508
-23
106
193
328
1,337
724
3,172
1,112
Adj PAT (INR m)
1Q
YoY
4Q QoQ
FY24 (%) FY24 (%)
246 106.0 813 -37.5
71 -132.6 71 -132.7
54
97.7 227 -53.4
285 -32.3 349 -44.8
258 26.9 711 -53.9
688 94.2 952 40.4
456 58.7 947
NA
2,059 54.1 4,070 -22.0
914 21.6 2,171 -48.8
Source: MOFSL, Company
Kaynes
Avalon
Cyient DLM
Syrma SGS
Data Patterns
Dixon
Amber
Agg.
Agg. (ex. Dixon, Amber)
Exhibit 71: Aggregate EBITDA margin remained under
pressure due to…
13.9%
13.0%
10.8%
9.8%
Aggregate (ex Dixon & Amber)
14.8%
12.5%
10.4%
11.4%
7.8%
Exhibit 72: …unfavorable product mix that adversely
impacted aggregate gross margin
Aggregate (ex Dixon & Amber)
32.8%
31.7%
30.7%
30.3%
28.6%
28.1%
27.9%
25.8%
23.3%
Source: MOFSL, Company
Source: MOFSL, Company
August 2024
33
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 73:
Our revised EPS estimates (INR)
Revised
54.3
6.5
14.5
9.0
39.9
FY25E
Old
50.3
9.3
14.6
9.7
39.7
Chg (%)
8
-31
-1
-7
1
Revised
90.6
14.0
21.9
15.4
53.1
FY26E
Old
82.5
15.9
21.9
15.3
54.0
Chg (%)
10
-12
0
1
-2
Kaynes
Avalon
Cyient DLM
Syrma SGS
Data Patterns
FINANCIALS – BANKS: Earnings trajectory hit by tepid business growth and NIM pressures; remains
watchful on liability growth
The banking sector reported a soft quarter amid tepid business growth, NIM moderation and a slight rise in
provisioning expenses, mainly for private banks. NIM declined for most banks as cost pressure persisted amid
intense competition for liabilities and continued pressure on CASA mix. Public sector banks (PSBs) reported a
mild compression in margins as new investment guidelines led to better investment yields, which supported
margins. Opex growth normalized after elevated wage/pension provisions, which lasted until 4QFY24. Credit
growth was below our expectations for most banks, barring FB, which reported robust business growth. Growth
in corporate segment was tepid, while unsecured retail loan growth also moderated. We have cut our growth
estimates for many banks. We expect systemic credit growth of ~12% in FY25E as the CD ratio remains elevated,
while growth in corporate and unsecured retail is likely to remain muted.
NII growth was steady at 13% YoY for private banks (excluding HDFCB) and 6.5% YoY for PSBs. In our coverage
universe, IDFCB reported highest NII growth at 25% YoY, followed by Bandhan at 21% YoY, which reported a
healthy quarter. BOB and DCB reported lowest NII growth at 5.5% YoY. Further, we believe that NII growth
should moderate as cost pressure keeps building. As a result, we believe that the NII growth trajectory should
lag credit growth over the coming quarters. We remain watchful on the margin trajectory as the funding cost
remains elevated and a potential turn in the rate cycle will moderate lending yields. Most banks witnessed a
slight decline in margins, barring HDFCB, which reported a 3bp QoQ expansion in NIMs. KMB reported a sharp
decline of 26bp QoQ. Most of the PSBs reported a mid-single-digit contraction in NIMs, supported by investment
yields amid new investment norms.
Fresh slippages increased slightly following a seasonal trend in 1Q, while recoveries and upgrades stood healthy.
As a result, asset quality ratios were steady for most banks. While there was some deterioration in asset quality
of unsecured loans, most lenders have adopted a cautious stance on underwriting and are growing slower in this
segment. Most PSBs have guided for a controlled credit cost (PNB halved the FY25 credit cost guidance to 0.5%),
supported by healthy recoveries and lower slippages. Private banks should see a slight increase as most of the
recoveries are now behind. PCR increased slightly for select players but remained healthy, while the
restructured book continued to follow a declining trend.
Private Banks – Business growth tepid; margin pressure continues:
Advances growth witnessed a decline in 1Q
as it was a seasonally weaker quarter. However, ICICIBC saw healthy credit growth of 3.3% QoQ. Among mid-
sized banks, FB reported a strong quarter, with both advances and deposits growing at 5.4% QoQ. The CASA
ratio declined for most banks as many witnessed good inflows in CA deposits in 4Q, which unwound in 1QFY25.
NIM compression was modest as deposits were largely repriced; however, the bias remains negative. Slippages
inched up for select banks but were still under control, while steady recoveries and upgrades led to relatively
stable asset quality ratios.
Public Sector Banks – Earnings momentum steady; asset quality improves further:
NII saw a marginal decline of
1% QoQ as NIMs declined for most banks even as investment yields improved on the back of revised investment
guidelines. Slippages remained under control for most banks, though select banks reported higher agri slippages.
Recoveries and upgrades also remained healthy. As a result, the GNPA ratio improved 3-75bp QoQ. Overall, PCR
continued to be at healthy levels of ~71-88%. Restructured and SMA book too witnessed a sequential decline.
August 2024
34
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Small Finance Banks – Business growth healthy; asset quality trends mixed:
AUBANK reported healthy business
growth as advances jumped 43% YoY (merged basis), led by growth in both retail and wholesale segments. The
CASA ratio remained stable at 33% post-merger. Asset quality was stable with GNPA and NNPA ratios at 1.8%
and 0.6%, respectively. EQUITASB reported healthy AUM growth of 16% YoY/3.1% QoQ, led by used CVs, SBL
and HFs, while MFI declined as the management remains cautious amid rising delinquencies in the sector.
Deposit growth stood at 3.1% QoQ. NIMs declined to 7.9% as the bank continued to witness a decline in the
CASA ratio to 31% from the highs of 52% in FY22. The bank created accelerated provisions in 1Q to qualify for
the universal banking license, which resulted in the sharp earnings decline.
Our view:
After 1QFY25 earnings, we have lowered our growth estimates for many banks. We estimate a 12.5%
CAGR in loans over FY24-26E. We remain vigilant about margins and the delinquency cycle in unsecured loans
and factor in a marginal increase in credit cost for private banks and SBI. We have cut our estimates for private
banks by 3% for FY25 and FY26. For PSBs, we have raised our estimates by 1% for FY25 and reduced our earnings
by 1% for FY26. Robust balance sheets, strong contingency buffers and reasonable sector valuations keep us
positive on the sector, though the return outlook remains modest.
Our preferred picks
are ICICIBC, HDFCB, SBIN
and FB.
Surprises: INBK, PNB, BANDHAN, AUSFB
Misses: AXIS, SBIC, IIB, EQUITASB
Guidance highlights
HDFCB
is focusing on deposits, which have fallen short of expectations due to seasonality. The bank emphasizes
that it is not bound by any specific LDR, but lowering its LDR lies in the bank’s interest. The bank is motivated to
decrease its LDR swiftly while ensuring profitability.
KMB
is making efforts to build its strong and stable deposits franchise and focuses on garnering deposits at a
lower cost. Due to excess liquidity at the end, the bank provided credit at lower yields, with slow disbursements
in micro-credit loans. Due to the RBI order, there was no impact on the existing business operations, but Kotak
811 and credit card business were affected by the order.
ICICIBC
mentioned that there is no internal target for loan growth and that deposit growth should be sufficient
to support loan growth. Consistent loan growth is anticipated, driven by retail, SME, and business banking
segments. The bank noted that deposits remain tight, with wholesale deposits being even tighter, leading to
some increases in deposit rates. However, deposits are not a constraint for loan growth, although there is
competition for advances. On the draft discussion paper on LCR, the bank stated that LCR will impact advances
and deposits, with an estimated 10-15% effect on LCR.
AXSB
remains well-capitalized and continues to pursue growth effectively. The bank has identified promising
opportunities in corporate lending and is prepared to proceed as long as the underwriting standards are met. It
has seen a rise in credit cost in 1Q, of which 55% of the increase was attributed to the timing differences; the
effective credit costs would be 67bp (a 30bp impact). About 32% of gross slippages are linked accounts that are
standard; as these slippages regularize, so does the linked provision.
SBIN
delivered a healthy performance with 16% credit growth and guides for 15% growth, backed by broad-
based sector growth. The CD ratio is expected to be 70%, potentially rising to 72%, while credit cost should be
controlled at 0.5%. The C/I ratio remains below 50%, and it expects income growth. The bank expects NIMs to
stay at the current levels, with expected variation of +/-10bp. In terms of asset quality, there is no sign of stress
build-up as underwriting remains strong, with some slippages in the agricultural sector.
IIB
targets 18%-23% loan growth, with retail loans making up 45%-50%. During 1Q, IIB was cautious about
disbursements in vehicle and microfinance during the election phase; they have already picked up in Jul’24. In
other segments, the bank expects ~18-20% YoY growth in vehicle finance, 28-30% growth in retail, ~18-20%
growth in mid-corporate, ~10-12% growth in large corporate growth. The CD ratio stood at 87.2%, which IIB
expects to maintain in range of 88-90% going forward.
August 2024
35
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
BOB
advances dipped 1.7% QoQ, while the bank continues to focus on retail segment. There was a
reclassification benefit of INR20-INR30m due to the RBI’s revised investment guidelines. BOB has also reduced
its bulk deposits in the current quarter. The bank expects NIMs to be steady at 3.15% (+/-5bp). The bank
maintains its growth guidance of 12-14% for FY25 and deposit growth guidance of 10-12%. BOB expects to
maintain its CD ratio in the range of 80-82%. Further, the bank expects the credit cost of less than 0.75%.
Exhibit 74: Earnings decline led by NIM moderation, muted business growth and rise in credit cost for select private banks
INR b
AUBANK
AXSB
BANDHAN
BoB
CBK
DCBB
FB
HDFCB
ICICIBC
IDFCFB
IIB
INBK
KMB
PNB
RBK
SBIN
UNBK
Total Banking Coverage
1QFY25
19.2
134.5
30.1
116.0
91.7
5.0
22.9
298.4
195.5
46.9
54.1
61.8
68.4
104.8
17.0
411.3
94.1
1779.6
NII
YoY (%)
54.1
12.5
20.7
5.5
5.8
5.5
19.5
26.4
7.3
25.4
11.1
8.3
9.8
10.2
19.5
5.7
6.5
11.5
QoQ (%)
43.6
2.7
4.8
(1.6)
(4.3)
(2.1)
4.4
2.6
2.4
5.1
0.6
2.7
(1.0)
1.1
6.3
(1.3)
(0.3)
1.0
1QFY25
9.9
101.1
19.4
71.6
76.2
2.1
15.0
238.8
160.2
18.8
39.5
45.0
52.5
65.8
8.6
264.5
77.9
1270.3
PPOP
YoY (%)
80.9
14.7
24.2
(8.5)
0.2
(1.6)
15.2
27.2
13.3
25.5
3.1
8.9
6.2
10.3
32.7
4.6
8.4
10.9
QoQ (%)
48.8
(4.1)
5.6
(11.7)
3.1
(12.1)
35.2
(18.4)
6.6
13.1
(3.2)
4.6
(3.8)
2.6
(3.2)
(8.0)
19.2
(4.2)
PAT
1QFY25
YoY (%)
QoQ (%)
5.0
29.9
35.5
60.3
4.1
(15.4)
10.6
47.5
1,846.8
44.6
9.5
(8.8)
39.1
10.5
3.9
1.3
3.5
(15.6)
10.1
18.2
11.4
161.7
35.3
(2.0)
110.6
14.6
3.3
6.8
(11.0)
(6.0)
21.7
2.2
(7.6)
24.0
40.6
7.0
35.2
2.0
(14.8)
32.5
159.0
8.0
3.7
29.0
5.4
170.4
0.9
(17.7)
36.8
13.7
11.1
774.8
15.6
(5.0)
Source: MOFSL, Company
Exhibit 75: NIMs continue to moderate though pace of decline has come-off
NIM (%)
AUBANK
AXSB
BANDHAN
BoB
CBK
DCBB
FB
HDFCB
ICICIBC
IDFCFB
IIB
INBK
KMB
PNB
RBK
SBIN
UNBK
4QFY24
5.10
4.06
7.60
3.27
3.07
3.62
3.21
3.44
4.40
6.35
4.26
3.52
5.28
3.10
5.45
3.30
3.09
1QFY25
6.00
4.05
7.60
3.18
2.90
3.39
3.16
3.47
4.36
6.22
4.25
3.53
5.02
3.07
5.67
3.22
3.05
YoY (bp)
28
(5)
30
(9)
(15)
(44)
(4)
(63)
(42)
(11)
(4)
(8)
(55)
(1)
14
(11)
(8)
QoQ (bp)
90
(1)
-
(9)
(17)
(23)
(5)
3
(4)
(13)
(1)
1
(26)
(3)
22
(8)
(4)
Source: MOFSL, Company
August 2024
36
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 76: Loan growth remained tepid, deposit growth was also weak
INR b
AUBANK*
AXSB
BANDHAN
BoB
CBK
DCBB
FB
HDFCB
ICICIBC
IDFCFB
IIB
INBK
KMB
PNB
RBK
SBIN
UNBK
Total Banking Coverage
1QFY25
897
9,801
1,216
10,870
9,506
422
2,208
24,635
12,232
2,026
3,479
5,256
3,900
9,546
867
37,928
8,885
1,43,673
Loans
YoY (%)
42.6
14.2
23.8
12.8
11.2
18.9
20.3
52.5
15.7
21.0
15.5
14.5
18.7
10.5
18.6
17.2
15.3
20.4
QoQ (%)
22.5
1.6
0.4
2.0
2.0
3.1
5.4
(0.9)
3.3
4.1
1.3
2.1
3.7
2.2
3.2
2.4
2.0
1.9
Deposits
CASA ratio (%)
1QFY25
YoY (%)
QoQ (%)
1QFY25
YoY (%)
QoQ (%)
973
40.4
11.6
33.0
(200)
-
10,625
12.8
(0.6)
42.0
(400)
(100)
1,332
22.8
(1.5)
33.4
(264)
(372)
13,498
12.5
1.7
40.6
29
(71)
13,348
11.9
1.7
31.0
(202)
(131)
517
20.2
4.7
25.4
(56)
(62)
2,661
19.6
5.4
29.3
(258)
(11)
23,791
24.4
(0.0)
36.0
(650)
(220)
14,261
15.1
0.9
40.9
(237)
(125)
2,097
35.8
4.5
46.6
12
(65)
3,985
14.8
3.6
36.7
(323)
(121)
7,009
11.0
1.9
39.0
(123)
(174)
4,474
15.8
(0.3)
43.4
(560)
(210)
14,083
8.5
2.8
40.1
(182)
(136)
1,014
18.4
(2.1)
32.6
(474)
(266)
50,055
10.5
1.8
40.7
(218)
(41)
12,404
10.0
1.5
33.4
(120)
(80)
1,76,127
13.7
1.5
39.4
* AU Bank Nos on merged with FIncare, Source: MOFSL, Company
1QFY25 (%)
NNPA
0.63
0.34
1.15
0.69
1.24
1.18
0.60
0.39
0.43
0.59
0.60
0.39
0.35
0.60
0.74
0.57
0.90
QoQ change (bp)
GNPA
NNPA
11
8
11
3
39
4
(4)
1
(9)
(3)
10
7
(2)
-
9
6
(1)
1
2
(1)
10
3
(18)
(4)
-
1
(75)
(13)
4
-
(3)
-
(22)
(13)
1QFY25 (%)
Slippage Ratio
3.46
2.09
3.24
0.29
0.39
4.57
0.84
1.55
1.81
NA
1.89
1.71
1.42
0.87
3.94
1.08
1.06
Exhibit 77: Asset quality deteriorates for select banks; although credit cost remains broadly under control
Asset quality
(%)
AUBANK
AXSB
BANDHAN
BoB
CBK
DCBB
FB
HDFCB
ICICIBC
IDFCFB
IIB
INBK
KMB
PNB
RBK
SBIN
UNBK
GNPA
1.67
1.43
3.84
2.92
4.23
3.23
2.13
1.24
2.16
1.88
1.92
3.95
1.39
5.73
2.65
2.24
4.76
4QFY24 (%)
NNPA
0.55
0.31
1.11
0.68
1.27
1.11
0.60
0.33
0.42
0.60
0.57
0.43
0.34
0.73
0.74
0.57
1.03
PCR
67.6
78.5
71.8
77.3
70.9
66.4
72.3
74.0
80.8
68.8
70.6
89.5
75.9
87.9
72.7
75.0
79.1
GNPA
1.78
1.54
4.23
2.88
4.14
3.33
2.11
1.33
2.15
1.90
2.02
3.77
1.39
4.98
2.69
2.21
4.54
PCR
67.6
78.1
73.7
76.6
71.0
65.2
71.9
71.2
80.2
69.4
70.6
90.0
74.9
88.4
73.1
74.4
80.9
PCR
-
(45)
184
(76)
12
(123)
(36)
(283)
(56)
59
1
55
(104)
50
40
(61)
178
Exhibit 78: Snapshot of restructured book across Banks (%)
Restructured book
Absolute Jun’22 Sep’22
Dec’22
Mar’23 Jun’23 Sep’23 Dec’23 Mar’24 Jun’24
AXSB
14.1
0.45
0.38
0.3
0.22
0.21
0.2
0.18
0.16
0.14
BANDHAN NA
2.35
0.2
NA
NA
NA
NA
NA
NA
NA
DCBB
9.9
6.1
5.45
4.94
4.51
3.97
3.4
3
2.62
2.34
HDFCB
NA
0.76
0.53
0.42
0.31
NA
0.22
NA
NA
NA
ICICIBC
27.4
0.8
0.7
0.5
0.4
NA
0.32
0.29
0.26
0.22
IIB
11.8
2.1
1.5
1.25
0.84
0.66
0.54
0.48
0.40
0.34
KMB
3.2
0.39
0.34
0.25
0.22
0.19
0.15
0.13
0.10
0.08
FB
18.3
2.22
2.03
1.81
1.62
1.4
1.3
1.1
0.97
0.83
RBK
3.8
2.9
2.21
1.67
1.21
1.05
0.89
0.63
0.51
0.44
AUBANK
3.6
2.1
1.7
1.4
1.2
1
0.8
0.7
0.60
0.40
BOB
NA
2.46
2.12
1.87
1.5
1.31
NA
1
NA
NA
SBIN
160.2
1
0.93
0.85
0.8
0.69
0.62
0.54
0.47
0.43
INBK
78.8
4.2
3.9
3.37
2.51
2.19
2.12
1.93
1.67
1.51
PNB
NA
2
1.8
1.54
1.32
NA
NA
NA
NA
NA
UNBK
118.6
2.92
2.6
2.38
2.2
2
1.71
1.57
1.48
1.30
CBK
NA
2.41
2.09
1.75
NA
NA
NA
NA
NA
NA
INR b
August 2024
37
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 79: We cut our earnings estimate for private banks by ~3% for FY25-26E; while earnings for PSBs remain steady
PAT (INR b)
Private Banks
AXSB
BANDHAN
DCBB
HDFCB
ICICIBC
IDFCFB
IIB
KMB
FB
RBK
AUBANK
EQUITASB
Total Private Banks
YoY growth
Total Private Banks (Ex HDFCB)
YoY growth
PSU Banks
BOB
CBK
INBK
PNB
SBIN
UNBK
Total PSU Bank
YoY growth
Total for Banks
YoY growth
Total for Banks (Ex of HDFCB)
YoY growth
Other Financials
SBICARD
PAYTM
Old estimates
FY25E
FY26E
279.9
38.5
6.4
701.6
460.4
35.6
103.2
148.4
42.7
14.9
22.0
9.2
1,862.7
14.8%
1,161.1
14.4%
197.8
167.4
97.7
133.5
705.6
157.3
1,459.2
18.3%
3,322.0
16.3%
2,620.3
16.5%
29.1
-17.3
328.9
44.0
7.8
818.6
524.4
47.6
127.8
167.1
51.1
19.5
29.4
12.5
2,178.7
17.0%
1,360.1
17.1%
228.2
192.3
116.2
167.8
810.7
180.0
1,695.1
16.2%
3,873.8
16.6%
3,055.2
16.6%
39.6
-7.2
Revised estimates
FY25E
FY26E
264.3
42.3
6.1
688.7
450.0
31.7
95.2
148.0
42.5
14.3
21.7
7.1
1,812.0
11.7%
1,123.2
10.7%
194.3
165.0
101.8
140.9
713.2
158.3
1,473.5
19.4%
3,285.5
15.0%
2,596.7
15.5%
26.7
-21.5
303.3
48.8
7.5
793.8
514.1
45.2
117.6
170.8
50.5
18.9
28.9
11.4
2,110.7
16.5%
1,316.9
17.2%
220.7
189.0
115.2
169.1
802.6
179.0
1,675.6
13.7%
3,786.2
15.2%
2,992.5
15.2%
35.8
-9.1
Change (%)
FY25E
-5.6%
10.0%
-4.3%
-1.8%
-2.3%
-10.8%
-7.8%
-0.3%
-0.6%
-4.3%
-1.2%
-22.3%
-2.7%
-3.3%
FY26E
-7.8%
10.8%
-3.8%
-3.0%
-2.0%
-5.0%
-8.0%
2.2%
-1.2%
-3.2%
-1.7%
-9.1%
-3.1%
-3.2%
-1.8%
-1.5%
4.2%
5.6%
1.1%
0.6%
1.0%
-1.1%
-0.9%
-3.3%
-1.7%
-0.8%
0.8%
-1.0%
-0.6%
-1.2%
-2.3%
-2.1%
-8.3%
NA
-9.5%
FINANCIALS – NBFC: Seasonally muted quarter; NIM bottoming out; MFI impacted by over-leveraging
NBFCs (incl. HFCs) under our coverage universe reported AUM growth of ~20% YoY/4% QoQ. Vehicle financiers
clocked AUM growth of 26% YoY; large HFCs (PNBHF and LICHF) grew 5% YoY; affordable and small-ticket HFCs
saw 15% YoY growth; NBFC-MFIs grew 24% YoY (flat QoQ); and gold loan NBFCs grew ~21% YoY. In 1QFY25,
NII/PPoP/PAT grew 21%/19%/13% YoY for our coverage (excl. PIEL).
In line with expectations, NIM for HFCs (including affordable HFCs) was either broadly stable QoQ or contracted
because of pressure on yields and an increase in the portfolio cost of borrowings (CoB). Large HFCs, such as
PNBHF, reported stable NIM QoQ, while LICHF reported a ~40bp QoQ decline in NIM, due to a decline in yields
and lower recoveries from NPA accounts. Among small HFCs, CANF, AB Housing Finance and Aavas reported a
sequential NIM compression in 1Q.
For vehicle financiers, NIM was largely stable for CIFC and SHFL, with clear signs of NIM bottoming out, and we
expect NIMs to start expanding in 2HFY25. NIM for MMFS declined ~40bp QoQ because of lower recoveries and
interest income reversals on fresh slippages into Stage 3. Vehicle financiers continued to guide for NIM
expansion in FY25, driven by stability in CoB and expected improvement in yields. An expected cut in global
interest rates and repo rates would be incrementally positive for fixed-rate vehicle financing. Most VFs
acknowledged that the economic activity, and consequently CV demand, remained relatively muted in Apr-
May’24 because of general elections. CV demand is expected to recover when the festive season begins in India.
A majority of NBFC/HFC/MFIs reported deterioration in asset quality due to seasonality and disruptions from
elections/heatwaves. MFIs attributed the continued slippages to customer over-leveraging, low center meeting
August 2024
38
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
attendance and high attrition at the branch manager/loan officer levels. Poonawalla, PNBHF and SHFL reported
a QoQ improvement in GS3. Credit costs were significantly higher for NBFC-MFIs, which exhibited weaker loan
growth and sharper deterioration in asset quality. Fusion and Spandana reported the highest sequential increase
in GS3 of ~260bp and ~110bp, respectively, resulting in higher ECL provisioning.
HFCs/AHFCs – Competitive intensity remains high; minor impact from the RBI’s fair practices code circular:
HFCs
saw weakness in disbursements in the seasonally weakest quarter of the year for the mortgage business.
HomeFirst and AB Capital Housing Finance reported a sequential improvement in disbursements, while CANF
attributed weaker disbursements to impacted states of AP and Telangana. Disbursements in LICHF were weaker
than expectations, which will make the management’s guidance for double-digit loan growth in FY25 difficult to
achieve. For affordable HFCs in particular, there was a minor impact from the RBI’s fair practices code circular,
which guided that disbursements be booked and interest charged to customers only after the cheque was
handed over. Competitive intensity remained high, which impacted incremental yields for HFCs. All affordable
HFCs (except for HFFC and Repco) reported a sequential moderation in margins because of the pressure on yields
and a rise in CoB (in some cases).
Vehicle financiers – NIM bottomed out and should expand in FY25; some fatigue seen in vehicle loan
disbursements:
Disbursements grew 19% YoY for the cohort of three vehicle financiers. While SHFL and CIFC
have a diversified AUM mix, we have classified them under vehicle financiers for this exercise. Asset quality
deteriorated for CIFC and MMFS, while it was largely stable for SHFL. CIFC reported sequential improvement in
NIM because of improvement in yields, while NIM for SHFL was impacted by weaker growth in higher-yielding
product segments like personal loans and gold loans.
Diversified financiers – Stress from unsecured small-ticket personal loans running its course, resulting in
growth calibration and higher credit costs:
Diversified lenders, including BAF, AB Capital, LTFH and even SHFL,
continued to calibrate their growth in personal loans. Most of these lenders, including Poonawalla,
acknowledged stress in small-ticket personal loans and the consequent risk aversion to this product segment.
While LTFH did not exhibit any significant stress in rural business loans (MFI portfolio), it remains vulnerable
given that the sector is going through a period of heightened uncertainty on improvement in collections.
Gold financiers – Strong gold loan growth along with decent tonnage growth and customer additions:
MUTH/MGFL reported ~11%/10% QoQ growth in gold loans. MGFL/MUTH reported a sequential decline in NIM
of ~15bp/50bp, driven by moderation in yields and increase in CoB. Asirvad MFI (subsidiary of MGFL) and Belstar
(subsidiary of MUTH) acknowledged the stress in the MFI segment, which resulted in higher credit costs.
Microfinance institutions (MFIs) – Asset quality deteriorated even as loan growth was muted; elevated credit
costs impacted profitability:
Significant deterioration in asset quality across the microfinance sector, with
FUSION, in addition to other reasons, acknowledging the problem of customer overleveraging, which resulted in
defaults. Spandana attributed its asset quality deterioration to general elections, heatwaves and attrition in
select geographies. CREDAG continued to see forward flows into higher buckets and reported a lower collection
efficiency, resulting in a rise in GS3. Disbursement growth was healthy for FUSION/Spandana at ~31%/37% YoY.
MFIs have aligned their business teams and have become compliant with the guardrails proposed by MFIN. All
three MFIs could potentially increase their credit cost guidance in 1HFY25 results.
Our view:
There is an expectation of global interest rate cuts in 2HCY24, which (if and when it happens) will be
positive for the NBFC sector (particular fixed-rate lending like vehicle finance and MSME). The microfinance
sector could go through a difficult patch for the next few quarters because the problem of customer over-
leveraging is broad-based (spread across different states) and this stress will run its course before things
improve. We have a
positive
stance on the sector, driven by expectations of margin expansion for vehicle
financiers in FY25 and benign credit costs. Vehicle financiers are better placed than other product segments as
their margins have bottomed out and are expected to gradually expand as the existing book is replaced with
higher-yielding new loans. PMAY CLSS announced in the Union budget will spur housing purchases and give a
gradual fillip to demand for mortgages. Our preferred ideas are CIFC, SHFL and PNBHF.
Surprises:
PNBHF, CIFC, SHFL
Misses:
FUSION, Spandana, LICHF, CANF, Poonawalla
Rating Change:
Fusion
August 2024
39
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Guidance highlights:
a) Vehicle financiers expects business momentum to improve during the festive season; b) MUTH
continues to guide for ~15% YoY growth in gold loans in FY25, while MGFL reduces its guidance to ~15% YoY (from
~20% YoY) growth in consol. AUM; c) BAF guides for ~26-28% AUM growth, expects NIMs to stabilize over the next
two quarters and credit costs of 1.75%-1.85%; and d) PNBHF guided for retail loan growth of ~17% in FY25 and guides
that ~40%-42% of the incremental loans will come from emerging and affordable segments.
Exhibit 80: PBT up 13% YoY for our NBFC coverage universe*
PBT - YoY growth (%)
182
112
79
28
26
25
43
41
25
20
Q4 2024
13
Q1 2025
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Source: MOFSL, Company, *MOFSL universe excl. PIEL and Indostar
Exhibit 81: LICHF loan growth has lagged the industry, while
PNBHF retail loan growth has been gaining momentum
1QFY24
8
7
6
5
4
4
4
3
4
1HFY24
9MFY24
FY24
Q1 2025
8
Exhibit 82: Loan growth moderated for CANF and Repco
while it was stable for Aavas
1QFY24
1HFY24
9MFY24
FY24
Q1 2025
23 22 23 22 22
18
16
13
11
9
8 9
8
7 7
LICHF
PNBHF
Source: MOFSL, Company;
Note: YoY AUM growth for large HFCs
AAVAS
CANF
Repco
Source: MOFSL, Company;
Note: YoY AUM growth for affordable housing financiers
Exhibit 83: CIFC is best placed among vehicle financiers to
exhibit strong growth in the subsequent quarters
1QFY24
1HFY24
9MFY24
FY24
Q1 2025
37 35
Exhibit 84: Gold loan growth picking up pace, aided by
higher gold prices, tonnage growth and customer additions
FY23
1QFY24
23 25
12
15
1HFY24
9MFY24
Q1 2025
40 42 40
28 27
19 20 21
21 21
25
24
19 21
9
23
8
1
-2
SHFL
MMFS
CIFC
MUTH
MGFL
Source: MOFSL, Company
Note: YoY AUM growth for vehicle financiers
Source: MOFSL, Company
Note: YoY AUM growth for gold financiers
August 2024
40
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 85: PAT (ex-PIEL) grew 13% YoY for our NBFC coverage universe*
INR m
AAVAS
ABCAP (NBFC)
ABCAP (HFC)
BAF
CANF
CIFC
Fivestar
HomeFirst
IIFL Finance
LTHF
LICHF
MMFSL
MASFIN
MGFL
Muthoot
PIEL
PNBHF
PFL
REPCO
SHFL
CREDAG
FUSION
SPANDANA
Total (ex Piramal)
1QFY25
2,446
17,089
2,270
83,653
3,214
25,738
4,829
1,464
14,381
24,330
19,891
17,836
1,237
15,378
23,049
7,238
6,421
5,761
1,833
52,339
5,103
3,979
4,342
3,36,582
NII
PPOP
PAT
NIM
YoY (%) QoQ (%) 1QFY25 YoY (%) QoQ (%) 1QFY25 YoY (%) QoQ (%) 1QFY25 YoY (bp) QoQ (bp)
8
3
1,695
15.8
-6.8
1,261
14.9
-11.6
6.9
-0.9
-0.1
19
1
12,009
20.5
5.1
6,210
20.3
6.2
6.4
-0.5
-0.2
19
8
908
1.4
3.3
660
1.5
-8.3
4.2
-0.9
-0.2
25
4
69,475
25.3
8.4
39,120
13.8
2.3
9.8
-0.6
-0.2
13
-2
2,796
12.9
2.9
1,996
8.8
-4.5
3.6
0.1
-0.2
40
9
18,499
38.1
13.6
9,422
29.8
-11.0
6.8
0.2
0.1
31
5
3,547
35.9
6.6
2,516
36.9
6.6
19.3
-1.0
-0.5
18
7
1,191
21.9
4.9
878
27.0
5.2
5.8
-0.9
-0.0
10
-13
6,877
-14.9
-12.9
2,881
-32.3
-22.9
7.7
-0.2
-0.7
31
4
14,676
18.9
7.8
6,853
29.2
23.9
11.2
1.8
-0.0
-10
-11
17,715
-11.9
-7.0
13,002
-1.8
19.2
2.8
-0.4
-0.4
13
-2
11,345
13.5
-3.3
5,130
45.5
-17.1
6.8
-0.6
-0.4
32
8
1,183
25.0
5.2
704
23.0
3.5
6.8
0.2
0.0
19
3
9,814
22.4
5.1
5,565
11.7
-1.2
14.5
-0.3
-0.5
22
8
17,153
22.5
13.6
10,787
10.6
2.1
11.8
-0.2
-0.2
6
2
2,373
-75.5
-324.6
1,815
-64.3
32.4
5.0
-3.0
-1.0
4
3
5,422
6.9
-4.3
4,328
24.6
-1.5
3.7
-0.2
-
37
2
4,321
46.9
5.6
2,916
45.7
-12.1
10.0
-0.5
-0.9
12
4
1,380
10.7
7.3
1,054
18.4
-2.4
5.1
-
-
25
3
38,541
23.3
-1.3
19,806
18.2
1.8
9.1
0.3
-0.1
33
6
7,093
30.4
3.9
3,977
14.1
0.1
13.0
-
-0.1
35
10
2,978
26.5
2.4
-356
-129.6
-126.8
11.6
0.7
0.0
48
12
2,869
51.7
7.8
557
-53.4
-56.7
15.9
1.2
0.8
21
2
2,51,489
19.2
3.9
1,39,267
12.7
-0.7
Source: MOFSL, Company, *MOFSL universe excl. PIEL and Indostar
Exhibit 86: Advances/AUM growth
INR b
AAVAS
ABCAP (NBFC)
ABCAP (HFC)
BAF
CANF
CIFC
Five Star
HomeFirst
IIFL Finance
LTHF
LICHF
MMFSL
MASFIN
MGFL
Muthoot
PIEL
PNBHF
PFL
REPCO
SHFL
CREDAG
FUSION
SPANDANA
Total
1QFY25
178
1,073
204
3,542
356
1,554
103
105
696
887
2,887
1,063
104
449
843
706
725
270
137
2,334
263
122
117
18,720
Advances/AUM
YoY (%)
21.8
24.9
40.6
31.1
9.4
35.4
36.4
34.7
2.1
12.9
4.4
22.6
23.4
21.2
24.7
10.4
7.7
51.7
8.3
20.8
20.6
25.5
32.5
19.5
QoQ (%)
3.1
1.6
10.7
7.1
1.6
6.8
7.3
8.0
-11.8
3.7
0.6
3.6
2.5
6.8
11.2
2.5
1.8
7.9
1.4
3.8
-1.5
6.2
-2.1
3.6
Source: MOFSL, Company
August 2024
41
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 87: Asset quality snapshot
4QFY24
Asset Quality (%)
AAVAS
ABCAP (NBFC)
ABCAP (HFC)
BAF
CANF
CIFC
Fivestar
HomeFirst
IIFL Finance
LTFH
LICHF
MMFSL
MASFIN
MGFL
Muthoot
PIEL
PNBHF
PFL
REPCO
SFL
CREDAG
FUSION
SPANDANA
GNPA
0.9
2.5
1.8
0.85
0.8
2.5
1.7
2.3
3.2
3.3
3.4
2.4
1.9
3.3
2.2
1.5
1.2
4.1
5.5
1.2
2.9
1.5
0.9
NNPA
0.7
1.3
NA
0.4
0.4
1.4
1.2
1.2
0.8
1.6
1.3
1.5
1.7
NA
0.8
0.9
0.6
1.5
2.7
0.4
0.6
0.3
0.7
PCR
28.8
49.9
NA
57.0
48.6
46.4
29.7
49.1
75.5
51.4
63.2
38.9
NA
NA
65.3
37.4
49.3
65.2
51.8
70.8
79.7
79.9
28.8
GNPA
1.0
2.5
1.6
0.86
0.9
2.6
1.7
2.3
3.1
3.3
3.6
2.5
2.0
4.0
2.4
1.4
0.7
4.3
5.4
1.5
5.5
2.6
1.0
1QFY25
NNPA
0.7
1.3
NA
0.4
0.5
1.5
1.3
1.1
0.8
1.7
1.5
1.5
1.7
NA
1.0
0.9
0.3
1.7
2.7
0.5
1.3
0.5
0.7
PCR
28.8
49.5
NA
56.1
47.0
45.5
27.5
51.3
75.3
49.6
59.8
39.1
NA
NA
60.0
32.5
52.4
61.8
51.1
69.2
78.1
79.8
28.8
GNPA
7
1
-22
1
9
14
4
-5
-1
-1
16
12
10
70
28
-15
-49
17
-6
28
258
110
7
QoQ Change
(bp)
NNPA
5
2
1
7
10
7
-7
0
5
18
7
0
PCR
2
-40
-97
-160
-95
-221
220
-17
-172
-337
23
23
-535
-3
-495
-27
316
21
-342
1
-64
11
-160
66
-157
24
-9
5
2
Source: MOFSL, Company
FINANCIALS – NON-LENDING: Strong volume growth for capital market players; mixed profitability
trends for general insurers; subdued VNB margins for life insurers
Growth in F&O and cash volumes:
Activity in the capital market space was volatile during 1QFY25, with F&O and
cash volumes scaling new highs, demat account addition touching 10.9m, and the number of NSE active clients
increasing to 44.2m. This translated into strong revenue growth for Angel One (+76% YoY). However, operating
margins continued to be under pressure, due to investments in customer acquisition, IPL advertisement costs
and expansion of new businesses.
Exchanges continue to gain traction:
For BSE,
stable momentum in derivatives products owing to increased
member participation, rising awareness about products, and a shift in Bankex expiry led to share gains. Star MF
continued to report a healthy performance, with 72% YoY jump in volumes and revenue surging 2x YoY to
INR479m. MCX reported strong revenue growth, led by higher volume growth. Total volumes jumped 116.8%
YoY to INR112.3t. Futures volumes stood at INR16.9t, up 27% YoY and 53% QoQ. Option volumes surged 148%
YoY and 33% QoQ to INR95.4t. MCX will soon launch crude sunflower, gold 10 gram (monthly futures) and
cotton wash sheet oil (currently under the testing phase).
VNB margins muted for life insurers:
Life insurance players reported healthy premium growth, led by ULIPs.
IPRU/SBILIFE/HDFCLIFE reported APE growth of 34%/20%/23% YoY. However, VNB margins for
IPRU/SBILIFE/HDFCLIFE contracted 590bp/200bp/120bp on a YoY basis. LIC in 1QFY25 reported APE growth of
21% YoY, with VNB margins expanding 20bp YoY to 13.9%. The margin expansion was restricted by an adverse
product mix (lower non-par share and higher ULIP share) and pressure on non-par margins.
Profitability improved in the motor segment:
General insurance firms posted decent growth in premiums,
underpinned by strong auto sales, steady high demand for health insurance, and commercial lines growing in
line with economic growth. Profitability in the motor segment improved considerably, but the loss ratio in the
health segment was elevated. For Star Health, the increased claims ratio led to an increase in the combined ratio
(~350bp above our estimates). ICICIGI/STARHEAL posted YoY NEP growth of 16% each and PAT growth of
49%/11% YoY.
Strong performance by asset management firms:
AAUM of the MF Industry crossed INR61t as of 1QFY25, up
37% YoY/11.5% QoQ. Total equity AAUM grew 14.5% QoQ, while non-equity AUM rose 7.6% QoQ. Net inflows
August 2024
42
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
stood at INR3.06t vs. INR822b in 4QFY24. SIP flows continued to gain traction, with INR625.4b flows in 1QFY25
vs. INR573b in 4QFY24. For CAMS, profitability was supported by a YoY increase in the share of non-MF business
and an improving mix of equity AUM in the total MF AUM. 360ONE’s total revenue surged on account of strong
growth in TBR income. While ARR yields declined YoY, TBR yields doubled, which led to an increase in overall
yields for 360ONE. The developments around new businesses (mid-market segment and launch of the global
platform) are on track.
Valuation and view:
Steady strong trajectories in F&O and cash volumes translated into strong performances by
capital market-related players, such as brokers and exchanges. These trends have further strengthened with
customer acquisitions and record-high turnover. Angel One, with its strategy to diversify its revenue base over the
longer term, is well poised to leverage emerging trends. BSE should see strong business momentum with its rising
share in derivatives volumes and the price hikes implemented for Sensex. The focus for MCX is on new product
launches, which will boost its revenue and profitability over the medium term. General insurers have witnessed
decent premium growth in line with economic growth, with scale benefits to follow. IRDAI has announced new
regulations regarding surrender values, to be implemented from 1st Oct’24. The product and commission construct
could undergo significant changes, leading to volatility in premium growth for the rest of FY25. Nevertheless, over
the medium term, we believe these changes are favorable for customers and will bring back growth.
Our top picks
are ANGELONE, STARHEAL and SBILIFE.
Surprises:
360ONE, Angel One, BSE
Misses:
STARHEAL
Guidance highlights:
360ONE:
The monetization of the mid-market segment starts in Aug’24. Objectives of the global platform are: 1)
to become the preferred advisor for the India allocation part of the client's portfolio, and 2) become an advisor
and effectively be able to help manage the entire global portfolio as an advisor rather than as a pure executor.
Total net flows are expected at ~12-15% of ARR AUM (INR250-300b of net flows expected in FY25). In Asset
Management, 360ONE expects to end the year with INR80-100b of net flows (INR130-140b of gross flows).
ANGELONE:
Regarding the true-to-label charges regulation, Angel One will eventually implement it using its
levers to offset it. Despite the measures reported by media and SEBI's move to limit F&O volumes for the retail
segment, the management is confident that it will be able to mitigate the volume impact through a number of
levers, including pricing action. EBIDTA margins are likely to sustain at current levels (ex-IPL) in case of no action
from the regulator. In case of an adverse impact of regulatory changes, the management believes it has levers to
offset the impact, but margins can be hit for a short term. Excluding regulatory changes, the management is
confident of reaching pre-QIP level RoE in the medium term.
BSE:
BSE is working on uniform charges across client segments, which will be announced separately. The charges
will be closer to the unit realization earned and would not hit the company’s revenue. BSE is facing challenges
related to differential regulatory fees and clearing & settlement charges. It has requested the regulators to
reconsider the differential regulatory fees and the reply is still awaited. Any relief would be positive for BSE.
CAMS:
CAMS announced a strategic partnership with Google Cloud to re-architect the RTA platform. The new
platform will integrate state-of-the-art practices in service design, database design (and performance) and
embed state-of-the-art security protocols. CAMS continues to make investments in Non-MF business and it does
not expect any material changes in overall costs for FY25. It aspires to increase the non-MF share by ~2% every
year. CAMS expects ~15-20% YoY growth in the AIF segment.
MCX:
The regulatory requirement to redesign the existing charge structure (INR17.5 to INR26 per million on
futures contracts and INR400-500 per million of premium) to make it uniform and equal for all its members. The
current slab-wise structure is dependent on volume or activity of members. The new structure will be in effect in
Oct’24 and the exchange will issue further directions in this regard. MCX will soon launch crude sunflower, gold
10 gram (monthly futures) and cotton wash sheet oil, as they are under the testing phase. Electricity futures
contract are in the pipeline, awaiting approval from the regulators.
August 2024
43
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
ICICIGI:
ICICIGI maintains its combined ratio guidance of 101.5% (FY25 exit rate). The management guides that
the loss ratio would remain ~65-70% for the retail health segment and ~94-95% for the corporate health
segment. The corporate health segment has seen rationalization in terms of pricing, which has presented an
opportunity for ICICIGI to grow in the segment.
STARHEAL:
More-than-expected frequency on account of fever and other cases resulted in higher loss ratios in
1QFY25. If regulation comes up on composite licenses, the company is ready to launch new protection plans in
life and non-life segments. The management expects GWP of INR300b and PAT of INR25b by FY28. Loss ratio
trends will inch up in the coming quarters vs. the previous year.
HDFCLIFE:
It aims to double its APE and VNB in the next four years. APE growth will be driven by the HDFC Bank
channel and agency channel, where investments have been made. VNB growth will come from a favorable mix
(share of ULIPs to decline) and higher rider attachments. It expects a 100bp impact on VNB margins from
surrender charges, considering no changes by the company in the new environment. The impact is relatively
lower as it assumes miniscule surrender profits in VNB margin calculations. HDFCLIFE expects moderation in
share of ULIPs to continue as new product launches in other segments pick up momentum. Strong growth was
seen in non-par products, especially in new variants in click-to-achieve segment.
IPRU:
PRU has recently launched a product in ULIP, which will have claim-based commissions, and it has seen
good acceptance. The impact of surrender charges is not likely to be material as the share of non-linked
business, and non-par within that, is significantly lower than the industry level. Any impact would be absorbed
through changes in product and commissions. IPRU’s own online channel and web aggregators are significant
contributors to retail protection and this channel is seeing a high degree of competition. Pricing has been
changed, which has affected the demand in the short term. IPRU expects growth to come back in the medium
term.
LIC:
LIC has to make the products competitive, which might hurt margins; however, the introduction of new
products might offset the impact. The medium-term target for VNB margins is 20%+, with the focus on Non-par
business. On a policy basis, 13M persistency has improved. Persistency can improve further if the ticket sizes are
increased; however, with the challenges of affordability, small ticket sizes still remain.
SBILIFE:
It has guided 18-20% premium growth and ~28% VNB margin for FY25. To revive the protection
segment, SBILIFE is working actively with SBI and, based on its customer data, it will launch a protection product
on the YONO app with pre-authorization, simple product features, and competitive pricing. Further, it plans to
launch a new product in Aug’24 for the HNI segment with a higher sum assured. Higher non-medical limits are
also being implemented.
1QFY25
9,150
6,002
3,314
6,078
2,344
Revenue
YoY (%)
76
48
27
QoQ (%)
5
5
7
1QFY25
3,968
3,354
1,498
EBITDA
YoY (%)
34
70
36
QoQ (%)
-14
23
5
1QFY25
2,927
2,437
1,070
2,643
1,109
1QFY25
5,804
3,189
1QFY25
4,777
2,254
5,195
1,04,611
PAT
YoY (%)
33
31
41
160
464
PAT
YoY (%)
49
11
PAT
YoY (%)
15
9
36
10
QoQ (%)
-14
0
4
148
26
QoQ (%)
12
124
QoQ (%)
16
30
-36
-24
INR m
Broking/Wealth/RTA
ANGELONE
IIFLWAM
CAMS
Exchanges
BSE
MCX
General Insurance
ICICIGI
STARHEAL
Life Insurance
HDFCLIFE
IPRU
SBILIFE
LIC
182
24
61
29
Gross Premium
1QFY25
YoY (%)
QoQ (%)
79,311
20
27
34,759
18
-30
APE
1QFY25
YoY (%)
QoQ (%)
28,660
23
-39
19,630
34
-46
36,400
20
-32
1,15,600
21
-45
2,839
305
195
1,326
1,140
30
Underwriting Profit/(Loss)
1QFY25
YoY (%)
QoQ (%)
-3,466
NA
NA
1,404
-3
NA
VNB
1QFY25
YoY (%)
QoQ (%)
7,180
18
-42
4,720
8
-39
9,700
11
-36
16,100
23
-56
August 2024
44
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
HEALTHCARE: Strong growth for pharma; hospitals witness muted YoY ARPOB growth
Our coverage companies (excluding hospitals) reported in-line sales and higher-than-estimated EBITDA/PAT (6%
beat each) in 1QFY25. Profitability was driven by lower raw material costs, reduced intensity of price erosion in US
generics and the launch of niche products.
On an aggregate basis, sales/EBITDA/PAT grew 11.4%/23.2%/27.1% YoY. EBITDA margins expanded 240bp YoY.
Among hospitals, APHS/MAX/MEDANTA were largely in line with our estimates. On an aggregate basis, sales and
EBITDA were in line with our estimates, while PAT was below our estimates by 6.3%. The performance was driven
by an increased number of in-patient/out-patient treatment. ARPOB growth was meagre 2-3% YoY for the quarter.
Sales/EBITDA/PAT grew 16%/21%/25% YoY on an aggregate basis.
Out of 20 companies, nine reported a better-than-expected performance. Specifically, LPC/PIRPHARM/AJP/ZYDUS
beat our earnings estimates by 41%/27%/26%/25%. Five out of 20 companies delivered a miss on estimates.
BIOS/GLAND/LAURUS missed our estimates by 32%/26%/23%.
US sales
growth was robust at 10.2% YoY (in cc terms) to USD2.5b on an aggregate basis for our coverage
companies. An improved segmental mix, increased niche launches, better traction in existing products, and
lower price erosion in the base portfolio resulted in healthy YoY growth in US generics.
Among our coverage companies, LPC delivered the highest YoY growth of 25.4% in US sales, led strong
momentum in respiratory products, including Tiotropium/Albuterol and new product launches like
Mirabegron/Doxycycline. Moreover, DRRD delivered 19% YoY growth in US sales, led by increased market share
in the base portfolio, integration of Mayne portfolio, new launches, and higher volume off-take of differentiated
products. ALPM’s US segment delivered 17% YoY growth, led by market share gains in few products. However,
GNP/TRP witnessed a 5%/14% YoY decline in US sales due to the lack of approvals, price erosion in the base
business and regulatory issues at their respective facilities (GNP).
On an overall basis, our coverage companies received approvals for 65 ANDAs (57 final approval and 8 tentative
approvals) in 1QFY25.
On an aggregate basis,
domestic formulation (DF)
saw YoY growth of 13% in 1QFY25, higher than the growth
seen in the previous seven quarters. Among therapies, Cardiac/GI/Derma delivered 12%/11%/10% YoY growth,
outperforming IPM (9% YoY growth). However, Respiratory/Anti-infective/Anti-diabetic underperformed IPM by
1.6%/6.4%/7.4%. Among our coverage companies, ERIS delivered the highest YoY growth of 54% (partly due to
acquisition of portfolio), followed by LPC/SUNP/DRRD, which delivered 18%/16%/15%.
Among our coverage companies, 4 companies have seen earnings upgrades, while two have seen earnings
downgrades post 1QFY25 results. The maximum upgrades in FY25/FY26 earnings were seen in ZYDUS
(13%/14%), LPC (17%/17%), IPCA (10%/9%), DRRD (7%/7%). Conversely, BIOS (22%/14%), LAURUS (8.5%/8.2%),
and GLAND (5%/2%) witnessed maximum downgrades in earnings estimates.
Top picks:
SUNP, MANKIND, MAXHEALTH
Surprises:
AJP, ALKEM, DRRD, GRAN, IPCA, LPC, SUNP, ZYDUSLIF
Misses:
ALPM, BIOS, DIVI, GLAND, LAURUS
Guidance highlights
SUNP
intends to oppose the motion filed in the US court to prevent Leqselvi (Deuruxolotinib) launch. SUNP
would start phase-II trial for GL0034 in 2HCY24. SCD-044 topline data readout would be 1HCY25 compared to
2HCY24. Phase-III for MM-II will start in 1HCY25 and phase-II of GL0034 will start in 2HCY25.
DRRD
expects Abatacept launch in Dec’26. The company expects SG&A expenses to be ~25-27% of revenue in
FY25. DRRD launched three products in the US, which would see robust momentum in FY25.
DIVI
expects general API prices to stabilize in the next few quarters. The company ordered two reactors of 500L
capacity for peptide manufacturing (GLP1 product). The Kakinada facility will start operations in 4QFY25. DIVI is
planning to file DMFs for the products expiring in FY25, which will aid growth from FY26 onward.
CIPLA
has guided for 24.5%-25.5% EBITDA margin in FY25. It expects US generics quarterly sales run rate at
USD230-245m in FY25. The company plans to launch g-Advair from the Invagen plant in 4QFY25.
BIOS
anticipates muted growth in 2Q due to pricing challenges but expects a rebound in 2H, driven by new
formulation launches, including Liraglutide in the UK. Overall, generic business is expected to grow in high-single
August 2024
45
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
digits in FY25. BIOS expects traction in b-adalimumab in CY25. The company will start the supply of Abflibercept
in Canada in Jun’25. The management expects to launch Hulio in 2HFY25.
LPC
guided for high-single digit growth in the US in FY25. The company completed phase III clinical trial for
biosimilar Lucentis (Ranibizumab). The potential launches for FY25 are Doxycycline, g Pred Forte, Doxorubicin
HCL and a couple of ophthalmic products. R&D spending will be INR18b for FY25. LPC expects DF business to
outperform IPM by 20-30%. The company plans to launch 20 products in FY25 in DF business.
ZYDUSLIF
expects 28-29% EBITDA margins in FY25. It has guided for double-digit YoY growth in the US in FY25.
The company intends to launch 25+ products in the US market in FY25. ZYDUSLIF expects R&D spending to be
8% of sales in FY25. The company has 505b2 approval for all three NDAs related to Sitagliptin. Clinical trials for
Sarglitazar PBC indication are expected to be complete by 2QFY26.
APHS
guided for GMV to grow by 50% YoY in FY25. Apollo 24/7 will breakeven in the next four to six quarters.
APHS remains confident of achieving mid-teens revenue growth and EBITDA margin expansion of ~100bp in
FY26.
LAURUS
maintained its outlook for FY25. The company expects ARV business revenue of INR25b in FY25. It plans
to invest INR2b to build a fermentation facility, which will be operational in 1QFY27. Laurus intends to lower
debt to 2.5x by Mar’25.
GLAND
expects mid-teens growth in the base business in FY25. It expects breakeven in Cenexi business by
4QFY25. Gland is witnessing traction in the biologics space for advanced stage CDMO contracts in monoclonal
antibodies and novel plasma-based proteins. It is collaborating with big CDMO players for biosimilar CDMO and
in-licensing opportunities.
TRP
expects growth in FY25 to be led by 7-8 approvals in US business, while Brazil business will grow by 12-13%
in FY25. TRP plans to add 300-400 MRs in FY25. TRP aims to be net cash position by FY26.
IPCA
guided for standalone revenue growth of 9%, with EBITDA margins of 21-22% in FY25. IPCA targets to
launch 5-6 products in FY25 and 6-7 products in FY26 in the US. IPCA is expanding Unichem’s business across
various geographies and expects benefits in 2HFY26.
MAXHEALTH
expects to sustain ARPOB growth (7% YoY for existing hospitals in 1Q), primarily driven by an
increase in the surgical mix share in new hospitals and the optimization of case mix/payor mix in existing sites.
ARPOB at Lucknow and Nagpur hospitals will increase by ~35-40% YoY to INR60-65k in FY25. Max Dwarka is
expected to breakeven in next 6-8 months. The company is operationalizing additional 140 beds at Lucknow.
Moreover, it will set up a 450-bed tower in Lucknow in 24 months for a capex of INR4.5b.
MEDANTA
is entering the Mumbai market by setting up 550+ bed super specialty hospital for a capex of
INR12b+ and expects commercialization in next 3-4 years. Medanta has partnered with a real estate company in
Indore to set up a 300-bed facility after the clearance of regulatory hurdles.
Exhibit 89: DF sales grew 12.6% YoY in 1QFY25
DF sales growth YoY (%)
45.1
13.4
10.5
13.3
Exhibit 88: US sales grew 10.2% YoY in 1QFY25 (CC terms)
Growth YoY (%)
27.2
12.3
0.7
5.1
(3.0) (3.4)
0.6 (0.2)
10.3
10.2
17.2
11.5 13.8
-2.7
12.6
8.0 7.9 9.3 8.4 8.2 5.5 9.0
Ex-APHS/MAXHEALT/MEDANTA
Source: MOFSL, Company
Ex-APHS/MAXHEALT/MEDANTA
Source: MOFSL, Company
August 2024
46
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 90: Aggregate EBITDA up 22.2% YoY to INR190b in 1QFY25 for pharma universe
Aggregate EBITDA (INRb)
200
180
160
Aggregate EBITDA Growth (%)
37.0
20.9
16.7
45.0
31.4
35.0
140
22.2
25.0
15.0
120
12.6
3.9
130
1QFY22
133
2QFY22
1.8
127
3QFY22
3.3
117
4QFY22
114
(12.6)
1QFY23
3.9
136
2QFY23
100
8.7
10.8
80
5.0
60
40
(5 .0)
20
138
3QFY23
129
4QFY23
156
1QFY24
164
2QFY24
161
3QFY24
170
4QFY24
190
(1 5.0)
0
1QFY25
Ex-APHS/MAXHEALT/MEDANTA/SOLARA
Source: MOFSL, Company
Exhibit 91: Aggregate PAT up 29.3% YoY in 1QFY25 for pharma companies under coverage
140
Aggregate PAT (INRb)
86
20.1
10.8
1.2
5.2
(9.2)
(16.1)
1QFY23
2QFY23
70
Aggregate PAT Growth (%)
31.9
49.6
29.3
60.0
50.0
120
40.0
100
80
20.5
(0.9)
(0.1)
21.6
30.0
20.0
60
10.0
40
-
20
83
0
89
2QFY22
81
3QFY22
73
4QFY22
81
3QFY23
73
4QFY23
92
1QFY24
104
2QFY24
98
3QFY24
109
4QFY24
119
1QFY25
(1 0.0)
(2 0.0)
1QFY22
Ex-APHS/MAXHEALT/MEDANTA/SOLARA
Source: MOFSL, Company
INFRASTRUCTURE: General elections, monsoons hurt execution; subdued awarding activity by NHAI
keeps order inflows muted
Execution declines YoY due to general elections and monsoons in many parts of the country:
Infrastructure
companies within our coverage universe (excluding IRB) reported a revenue decline of 19% YoY in 1Q FY25,
primarily because of general elections, monsoons, delays in land acquisition and subsequent delays in Appointed
Dates (AD) for several projects. KNR/GRIL revenue declined 30%/12% YoY. NHAI awarding was sluggish in 1QFY25,
and both the companies, KNR and GRIL, are exploring non-road infrastructure opportunities like power
transmission projects, water projects and solar EPC projects in order to diversify their order book. The
management of KNR and GRIL guided for flat growth or a decline in FY25. Execution is likely to improve in 2HFY25
across our coverage companies.
Awarding activity remains subdued in FY25; pipeline robust:
Awarding activity by NHAI has been subdued with
only ~50km of projects awarded in YTDFY25 vs. the full-year target of ~5,000km. Since there is a huge tender
pipeline, order inflows could kick in materially only in 2HFY25. The management of GRIL and KNR guided for
order inflows of INR200b and INR50-60b, respectively, in FY25. In the face of sluggishness in awarding activity by
NHAI, both the companies will focus on the diversification of order book toward non-roads segments.
Elevated input costs keep margins in check:
Companies within our coverage reported a 170bp YoY drop in EBITDA
margin due to muted execution and elevated input costs in 1QFY25. Though steel and aluminum prices have
corrected ~30% from their highs in Apr’22, the prices remain at elevated levels. Cement prices have decreased ~8%
from their highs in Oct’23.
Focus on asset monetization:
NHAI’s primary focus is on asset monetization as a means to generate funds
beyond budgetary allocations. NHAI has set up an asset monetization cell and has a monetization target of
INR540b in FY25. The cell will advise on planning, conduct market analysis, and identify high-revenue assets. In
FY24, NHAI exceeded its target by awarding four ToT bundles worth INR159b. For FY25, NHAI plans to offer a
dozen bundles for private bids, aiming to achieve significantly higher monetization than the INR400b reached in
FY24
47
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Top picks:
Awarding activities by NHAI and execution have been muted and are expected to improve only in
2HFY25. Companies with decent order backlogs, a solid financial position, and presence in multiple segments are
well positioned to benefit in the near to medium term. Our preferred choice in the space is KNR.
Exhibit 92: Revenue down 19% YoY for our coverage
universe
Infra aggregate sales (INR b)
33.7
26.2
27.3
31.7
33.3
25.2
27.1
33.3
Exhibit 93: Gross margin contracts on YoY basis
Infra aggregate gross margin (%)
28.2
28.8
27.2
27.1
26.5
31.2
27.6
26.3
25.9
26.2
Exhibit 94: EBITDA contracts on YoY and QoQ basis
Infra aggregate EBITDA margin (%)
19.3
Exhibit 95: APAT margins improves on YoY basis
Infra aggregate APAT margin (%)
12.5
10.4
9.2
10.1
10.1
10.7
8.9
8.7
10.4
17.1
15.9
15.8
15.8
14.3
13.8
15.1
14.1
Note: Data in charts above is for our coverage universe excluding IRB
Logistics: Volumes remain muted amid elections; network expansion and technology adoption in focus
for most of the companies; port operators continue to gain market share
Logistics activity remains muted in 1QFY25, private port operators’ cargo grows faster than the industry:
Logistics activity remained subdued in 1QFY25 due to elections and a labor shortage. Logistics companies
(excluding APSEZ and JSWINFRA) achieved ~9% YoY revenue growth. Revenue dropped ~4% QoQ, but organized
freight operators expect better results for FY25. Multimodal logistics outperformed pure freight and express
logistics. APSEZ and JSWINFRA reported ~8% and ~9% YoY growth in cargo volumes, respectively, with market
share gains driven by efficiency and expansion.
Margins deteriorate YoY due to weak volumes, competitive pressure, and elevated operating expenses:
Gross
margin for our coverage universe, barring APSEZ and JSWINFRA, stood at 28.9% in 1QFY25 (down 160bp YoY and
70bp QoQ). Elevated operating expenses, such as elevated fuel prices and high toll charges, continued to
pressurize margins for fleet operators. EBITDA margin for our coverage universe, excluding APSEZ and
JSWINFRA, contracted 70bp YoY and 100bp QoQ to 12.0%. APSEZ’s margins stood at 61% in 1QFY25 (up 90bp
YoY/240bp QoQ), and JSWINFRA’s margin was 51% in 1QFY25 (down 40bp YoY and 200bp QoQ). With volume
ramp-up at recently acquired ports/terminals, volumes are likely to be strong ahead for APSEZ and JSWINFRA.
Organized players with pan-india network and technological advantage to gain higher market share:
The
introduction of GST, e-way bills, and reduced e-invoicing turnover limits have driven businesses to partner with
organized logistics providers. Express companies are expanding their infrastructure and digitalizing operations.
August 2024
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This positions them to capture higher volumes. The government's port privatization efforts present
opportunities, with APSEZ and JSWINFRA well-placed to benefit due to their strong balance sheets.
Top picks:
APSEZ is our preferred choice in this space.
Guidance
APSEZ:
In FY25, APSEZ expects cargo volumes of 460-480 MMT, revenue of INR 290-310b, EBITDA of INR 170-
180b with a net debt-to-EBITDA ratio of 2.2-2.5x, and plans a capex of INR 115b, primarily for ports, logistics,
and renewables, including 1,000 MW of solar and wind power with imported panels from China.
JSWINFRA:
The company
expects cargo growth of 10-12% in FY25, with volumes recovering from 2QFY25
following the Dolvi facility shutdown, and targets a long-term cargo volume CAGR of 15-17% driven by
opportunities in the government's port privatization scheme. While the Navkar acquisition may impact short-
term RoCE, management anticipates long-term RoCE of 18-19% as part of its broader strategy to expand into
full-service logistics and last-mile connectivity.
VRLL:
Management expects volume growth of around 10% in FY25 and 12-14% in FY26, driven by branch
network expansion, including a net addition of 36 branches in 1Q and a target of at least 100 branches in FY25,
with a focus on Eastern and Northeastern markets. Additionally, a good monsoon and a stronger rural economy,
particularly in textile and agro-commodities, which account for ~40% of total tonnage, should boost volume
growth for the remainder of FY25.
TRPC:
In FY25, TRPC expects revenue and PAT growth of 10-15%, with marginal margin improvement driven by
the supply chain and freight businesses, supported by growth in the auto and infrastructure sectors. During
1QFY25, joint ventures performed well, with Concord achieving ~14% YoY revenue growth, the cold chain
business growing ~33% despite profitability challenges from new truck depreciation and interest, and
Transystem registering ~11% YoY revenue growth and 26% YoY PAT growth.
BDE:
As overall demand improves, a further pickup in volumes is anticipated in the remainder of FY25. The
standalone EBITDA margin has started to expand as capacity utilization has improved and BDE has shifted some
volumes from third-party cargo to its own aircraft. PBT margins are expected to remain in the 7-8% range going
forward, with no margin impact from hub expansion, and management expects a healthy demand outlook to
drive better profitability.
CCRI:
In FY25, EXIM volume is projected to grow by 15% and domestic volume by 25%, leading to an overall
volume growth of 18-20%, with margins expected around 25%; the rail coefficient is anticipated to increase due
to rising rice exports, softening ocean freight rates, and the commissioning of the DFC at Nava Sheva by March
2025. Domestic volume growth will be driven by new bulk cement initiatives, a long-term shipping line tie-up in
September 2024, double stacking at Nava Sheva, and partnerships with major companies like Jindal, Tata, and
Reliance for end-to-end logistics. The First Mile Last Mile (FMLM) mix, currently at 25% of volumes, is targeted to
reach 50% in FY25 and 85% in FY26, with FMLM margins around 25%.
MAHLOG:
MLL targets revenue of INR 100b and a RoE of 18% by FY26, focusing on mid-teens growth in the 3PL
business to generate INR 65b in revenue and rapidly expand its network services. The express business is
expected to achieve 15% QoQ growth, with 8-9% of volumes returning from existing customers lost in 1Q FY25
and 7-8% from new accounts, with nearly half of the growth driven by the FMCG segment.
TCIE:
TCIE anticipates a 10% revenue growth in FY25 and 12-15% in FY26, with margins normalizing at 14% plus
from 2QFY25; new value-added services are expected to contribute 20-25% to revenue by FY25, and by FY26,
the company plans to have 7-8 fully automated centers, each requiring around INR 500m in capex.
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Exhibit 96: Sales improved YoY for our coverage universe
Logistics aggregate YoY sales growth (%)
80.5
Exhibit 97: Margins contracted on a QoQ basis due to the
drop in volumes amid elections
32.8 33.1 32.7
MOSL universe Logistics Gross margin (%)
33.2
31.2
30.1
30.9 30.5 30.5
25.2
10.1 8.8
30.8
14.4
10.0 8.4
-0.3
29.5
29.3 29.5 28.9
6.0
6.7 9.6 9.2
Exhibit 98: EBITDA margin continued to dip due to temporary weakness in volumes and competitive pressure
MOSL universe Logistics EBITDA margin (%)
14.5
16.4
16.3
15.9
15.6
14.9
13.9
13.6
13.9
13.3
13.0
12.0
12.7
Note: Data in charts above is for our coverage universe excluding APSEZ & JSWINFRA
Source: Company, MOFSL
METALS: Muted operating performance owing to weak volumes; decline in coal costs supports margins
Volume growth subdued across the board
Ferrous:
Companies within our coverage universe reported sales volume growth of +5% YoY, lower by 8% QoQ
during the quarter. Volume growth was impacted due to high imports into the country.
Non-Ferrous:
HNDL witnessed weak volume during the quarter, with domestic aluminum volumes declining 4% YoY
whereas the copper volume remained flat YoY. However, its international aluminum business (Novelis) saw 8% YoY
volume growth in 1QFY25, led by strong demand from the beverage can segment. HZ zinc volumes rose marginally
by 2% YoY due to plant availability and pyro operations, while the silver volumes declined 7% YoY due to WIP build-
up. Vedanta posted +3% YoY volume growth for aluminum business, while international zinc business saw a steep
volume decline of 45% YoY during the quarter.
Mining:
COAL’s sales (dispatches) rose 5% YoY to 197mt, while NMDC’s sales declined 8% YoY to 10.1mt.
ASP improved sequentially; declined YoY:
ASP for ferrous companies under coverage increased 2-4% QoQ,
excluding JSP (down 3% QoQ). On a YoY basis, companies across our coverage posted ASP decline in the range of
~5-10% YoY. Even the non-ferrous companies such as HZ/VED/HNDL reported revenue growth of 7% YoY each,
despite muted volumes.
EBITDA/t improved QoQ over favorable ASP and lower input costs:
a) Ferrous:
EBITDA/t for our coverage
companies (excl. JSTL) increased in 1QFY25, over muted coal cost. Tata Steel reported an EBITDA/t increase of
26% YoY and 10% QoQ as the operating losses from EU operations continues to narrow down. In 1QFY25, TSE
reported EBITDA loss/t of USD28 vs. MOSL est. USD26 (vs. USD98 in 1QFY24 and USD38 in 4QFY24). EBITDA/t for
JSTL declined 27% YoY and 1% QoQ on account of certain one-offs, including inventory valuation impact.
b) Non-
ferrous:
EBITDA for non-ferrous companies spiked ~40% YoY on account of strong pricing and muted costs
during the quarter. The biggest improvement was visible in VEDL.
August 2024
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Capacity enhancement:
a) Ferrous:
TATA is doubling its domestic crude steel capacity to 40mt from 21mt and the BF
at Kalinganagar was commissioned in 4QFY24; its incremental benefits are expected to accrue in FY26. Similarly, JSP
is doubling its finished steel capacity to 13.75mt by FY26 (with a capex INR310b) from 7.25mt and also
commissioned the HSM plant. It is expected to end the year with a 50% capacity expansion rate. The BOF-II plant is
under construction and delayed to complete by Mar25 (earlier 2QFY25) and BOF-III by 3QFY26. JSTL’s 5mt
Vijayanagar facility is expected to come on stream by 3QFY25 and the slurry pipeline is expected to be completed by
FY26. SAIL plans to increase its capacity from 20mtpa of crude steel to 35mtpa by the end of FY31. SAIL plans to set
up a 4.1mt Greenfield flat steel facility at IISCO, predominantly focused on HRC and CRC facility afterwards.
b) Non-ferrous:
Novelis’s (HNDL) Bay Minette facility is expected to be completed in 2HCY26 and would take 18-24
months to fully ramp up.
Top picks:
COAL, JSTL, and HNDL
Surprises:
TATA, NMDC and VEDL
Guidance highlights:
TATA:
Management expects the NSR for domestic operations to decline INR1,500/t in 2QFY25 sequentially. ASP for
the UK operation will remain flat QoQ, while the Netherlands could see GBP60/t QoQ reduction in 2QFY25. Coal
costs for India operations are likely to be USD15/t lower QoQ, and in the Netherlands, the coal costs are anticipated
to decline USD26/t QoQ in 2QFY25. Management guided that Sep’24 will be the last month of operating losses for
the UK business and it will start reporting breakeven or marginal operating profit.
JSTL:
Iron ore costs declined marginally QoQ, while coking coal costs declined by USD23/t sequentially during
1QFY25. For 2QFY25, management guided coal costs to decline further by USD22-28/t and the iron ore price to
remain soft, which would lead to margin accretion.
JSP:
Based on current price trends, management expects coking coal costs to moderate USD30-35/t in 2QFY25. Iron
ore costs would reduce by ~INR500-INR1000/t in 2QFY25. Blended realization would soften 1% going forward, as the
overall steel prices remain soft.
SAIL:
For 2QFY25, management expects coking coal costs to remain flat QoQ, due to high cost coal inventory. The
share of indigenous coking coal stands at 15%, and SAIL is aiming to reach the 20-25% levels, with the owned Tasra
captive coal mine. For 2QFY25, management guided NSR to decline INR1,000-1,500/t QoQ. Rebar prices would
rebound as the government infra spending picks up.
HNDL:
Management expects coal costs to remain flat QoQ. Focus remains on downstream expansions at Silvassa
Extrusion and Aditya FRP projects, which are currently on track and are expected to be commissioned by FY26. For
FY25, the management expects capex of INR55-60b for India operation and USD1.4-2.1b for Novelis ongoing capex.
Heavy flooding affected operations at Novelis’ Sierre plant and it is expected to restart production by end-2Q. Due to
this, an impact of USD30m to adj. EBITDA will be seen.
VEDL:
Management expects to realize a higher premium going forward on account of the higher VAP product. Cost
of aluminum is expected to be around USD1,600/t and zinc is likely to be ~USD1,000/t in the near to medium term.
BALCO expansion is scheduled to be commissioned this year in 4QFY25 (earlier 3QFY25), and the operation is likely
to commence from 1QFY26.
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Exhibit 99: Domestic spot steel spreads (USD/t) contracted
and are currently below the LTA
800
650
500
350
200
Domestic HRC -RM Spreads (USD/t)
Avg Spread last 7 yrs
Exhibit 100: Coking coal (USD/t) moderated significantly
from the peak
800
600
400
200
0
Source: MOFSL, Steelmint
Exhibit 101: HRC (INR/t) corrected after Jun’24 on account
of increasing imports
81,000
67,000
Exhibit 102: Rebar (INR/t) prices corrected owing to soft
demand and monsoon season kicking in
80,000
65,000
50,000
35,000
20,000
53,000
39,000
25,000
Source: MOFSL, Steelmint
Source: MOFSL, Steelmint
Exhibit 103: Aluminum prices witnessed steep correction to
USD2,200/t after peaking at USD2,600/t
4,600
3,800
3,000
2,200
1,400
Exhibit 104: Zinc prices reversed to USD2,500/t after hitting
USD3,000/t
4,900
4,100
3,300
2,500
1,700
Source: MOFSL, Bloomberg
Source: MOFSL, Bloomberg
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Exhibit 105: Copper prices back to USD8,500/t levels
12,500
10,500
8,500
6,500
4,500
Exhibit 106: Lead prices plunged to USD1,900/t
2,500
2,250
2,000
1,750
1,500
Source: MOFSL, Bloomberg
Source: MOFSL, Bloomberg
Exhibit 107: EBITDA/t for steel companies under our coverage (consolidated)
EBITDA/t
JSW Steel
Tata Steel
SAIL
JSPL
3QFY23
7,963
5,661
5,007
12,513
4QFY23
12,158
9,279
6,247
10,775
1QFY24
12,340
7,186
4,245
14,283
2QFY24
12,341
6,037
4,429
11,372
3QFY24
11,967
8,760
5,638
15,705
4QFY24
1QFY25
9,100
9,003
8,271
9,059
3,879
5,536
12,162
13,585
Source: MOFSL, Company
OIL & GAS: LPG losses drag down OMC performance; CGD margins robust, barring GUJGA
Overall performance:
Revenue came in 6% below our estimate (up 4% YoY). Excluding OMCs, revenue was in line
with our estimate (up 10% YoY). EBITDA was in line with our estimate (down 26% YoY), with HPCL, MRPL, PLNG
and AEGISLOG missing our estimates and GAIL, GUJS, IGL, IOC and MGL beating our estimates. Excluding OMCs,
EBITDA was also in line with our estimate (up ~1% YoY). Adjusted PAT was 9% below our estimates (down 41%
YoY). Adjusted PAT, excluding OMCs, was also 8% below our estimate (down 5% YoY).
RIL:
Jio’s revenue/EBITDA/PAT increased ~2% QoQ each (in line) in 1QFY25, led by 7.9m subscriber additions.
ARPU was flat QoQ. Reliance Retail posted soft revenue and EBITDA growth. RIL standalone missed our estimates
mainly due to weak O2C performance, led by a sharp correction in refining cracks.
Upstream:
For ONGC and OINL, reported EBITDA came in line with our estimates. ONGC’s production volumes
were marginally low YoY, OINL’s oil/gas production grew 6%/9.8% YoY.
OMCs – LPG under-recovery drags performance:
IOCL’s
beat was driven by strong marketing margins (INR4.8/lit
vs. our est. of INR3.9/lit) and a turnaround in the petrochemical division. However,
HPCL
missed our estimate due
to lower-than-expected marketing margin of INR3/lit (est. INR4.1/lit).
BPCL’s
EBITDA came in line, with implied
marketing margin 19% above our est. at INR4.8/lit. For OMCs, reported GRM was in line with or above our
estimates.
OMCs’
1Q earnings took a significant hit due to LPG under-recovery of INR41.2b/INR23.5b/INR20b for
IOCL/HPCL/BPCL.
CGDs:
MAHGL and IGL
beat our estimates thanks to higher-than-expected EBITDA/scm of INR11.9/INR7.4 (est.
INR10.9/INR6.7). Volumes for MAHGL/IGL increased by 13%/5% YoY to 3.9/8.6mmscmd. However,
GUJGA’s
reported EBITDA was in line with our estimate, as higher-than-estimated volumes were offset by low margin.
EBITDA/scm stood at INR5.4/scm. Total volumes came in at 11mmscmd (up 19% YoY).
Gas Utilities – Robust transmission volumes drive performance:
GAIL
beat EBITDA/PAT estimates by 32%/21%,
driven by stronger performance in the gas transmission and natural gas marketing segments (natural gas
transmission volume 6% above our estimate).
GUJS’s
EBITDA was also 32% above our estimate at INR3b, led by
strong transmission volume (10% beat in total volumes) and lower other expenses.
Ratings and earnings revisions:
OMCs
– Owing to LPG under-recovery, we cut BPCL/HPCL FY25E PAT estimates by
16%/35%, conservatively accounting for the losses.
GAIL
– We raise our FY25/FY26 EPS estimates by 16%/6% as
we increase trading EBIT to INR55b/INR53b in FY25/FY26 (from INR36b/INR47b earlier) after a strong 1Q
August 2024
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performance, and build in the impact of impending tariff hike in LPG pipelines. Following
MAHGL’s
strong 1Q
financial performance and 13% YoY volume growth, we raise our FY25/FY26 EPS estimates by 16%/17%.
Top picks:
GAIL
– During FY24-26E, we estimate an 11% PAT CAGR driven by: 1) an increase in natural gas
transmission volumes to 140mmscmd in FY26 (120mmscmd in FY24); 2) a substantial improvement in petchem
segment’s profitability over 2HFY25-FY26 as new petchem capacity will be operational and low inventories
globally will drive re-stocking demand, thus improving spreads; and 3) healthy trading segment profitability with
management guided EBIT of INR45b.
HPCL
– It remains our preferred pick among the three OMCs. We see the
following as key catalysts for the stock: 1) demerger and potential listing of lubricant business, 2) the
commissioning of its bottom upgrade unit, and 3) the start of Rajasthan refinery at 4QFY25 end.
ONGC –
ONGC
has guided for 12%/27% growth in crude oil/gas production volume over the next three years, driven by rising
production from KG 98/2 asset, Daman upside development, and monetization of stranded gas reserves. While
volume guidance is upbeat, execution is vital, and should ONGC achieve guided volumes, we see upside risk to
our and Street earnings estimates.
GUJS
– We expect volumes to jump to ~38.5mmscmd in FY26, as it is a
beneficiary of: 1) the upcoming LNG terminals in Gujarat, and 2) an improved demand owing to the focus on
reducing industrial pollution.
Surprises:
MAHGL, IGL, GUJS, GAIL, IOCL
Misses:
BPCL, HPCL, OINL, ONGC, RIL, OINL
Guidance highlights:
RIL:
The management expects the increase in global oil demand to normalize at ~1mb/d (vs. 2.1mb/d in the
previous year). In the near to medium term, driving season shall increase gasoline demand, and ~1mbd/ capacity
may get affected due to hurricane. Demand for both fuels and downstream in India is expected to remain
resilient, which may lead to margin improvements. Geopolitical tensions and higher freight rates due to
disruptions in the Red Sea have kept the markets volatile and might pose certain challenges.
GAIL:
The management expects natural gas transmission volumes to rise to 132/142/152mmscmd by the end of
FY25/FY26/FY27. For the trading segment, the management guides EBIT of at least INR45b in FY25. For petchem,
the management is hopeful of healthy FY25 profitability.
Upstream:
ONGC
management expects total crude oil/gas production volume (incl. JV) to rise by 12%/27% to
23.1mmt/25.9mmt by FY27, mainly driven by KG-98/2 and Daman upside development. Gas production from the
KG-98/2 asset, which will begin in 4QFY25, is expected to ramp up to 6mmscmd by FY25 end, while oil production
could ramp up to 30,000bopd by 4QFY25.
OINL
management reiterated its target of increasing production from
6.5mmtoe in FY24 to 9mmtoe by FY26. Oil production is expected to ramp up from 3.4mmt in FY24 to 3.8mmt
and more than 4mmt in FY25/FY26, while gas production is likely to be 5bcm by FY26. The company plans to drill
78 wells in FY25 and 100 wells in FY26/FY27.
OMCs:
HPCL
management has guided for consol. EBITDA of INR400b by FY28. Chhara terminal shall be
commissioned in Nov’24/Dec’24. HRRLs’ refining portion will be commissioned in 4QFY25. The main petchem unit
is 85% complete and shall achieve mechanical completion by 1HFY26. HPCL targets 700tmt-750tmt lube sales in
FY25. At Visakh, throughput will go up to 3.5-4mmt per quarter in 4QFY25, and GRM benefits of USD3/bbl may be
observed at peak utilization. The management guided for a capex of INR140-150b per year for the next 4-5 years.
BPCL
is looking to augment refining capacity further and exploring a 9-12mmtpa project on the East or West
coast, over and above the plan of expanding the refining capacity to 45mmtpa.
CGDs:
IGL
management guided for a robust 8-10% YoY growth in CNG volume. However, DTC volumes may
continue to decline for the next few years, while buses still account for ~20% of overall volumes.
MAHGL
management’s guidance on margin and volume growth remains conservative (7% volume growth ex-UEPL) with
EBITDA/scm of INR10-12. Volume growth at UEPL was in mid-teens and can be sustained for the next 6-7 years.
GUJGA
management guided for a conservative annualized volume CAGR of ~5-7% for FY25. Capex shall be
INR10b for FY25; For FY26/FY27/FY28, capex would range INR10b-15b per year. EBITDA/scm guidance of INR4.5-
5.5 was maintained.
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Exhibit 108: Implied gross marketing margin (INR/lit)
Implied marketing margin (INR/lit)
IOCL
BPCL
HPCL
Exhibit 109: Reported refining margin (USD/bbl)
IOCL reported GRM
36.0
26.0
16.0
6.0
(4.0)
1.2
(0.9)
0.1
1.2
1.8
2.0
3.8
6.0
8.0
USD/bbl
21.2
9.5
7.1
6.2
8.2
4.0
5.5
7.3
BPCL reported GRM
HPCL Reported GRM
SG GRM (USD/ bbl)
3.5
Exhibit 110: Exhibit 3: Sales volume of CGDs (mmscmd)
Volumes mmscmd
GUJGA
11.4
9.8
12.1
10.0
11.4
11.4
9.9
IGL
9.8
7.6
6.2
4.1
6.3
2.8
6.8
5.3
2.9
2.4
3.1
3.3
3.2
3.4
3.5
3.4
3.4
3.4
3.6
3.7
7.2
7.7
7.7
7.9
8.1
7.3
8.1
8.3
8.2
8.3
8.5
8.7
3.8
8.6
3.9
MAHGL
9.3
9.7
9.9
11.0
8.9
9.2
9.2
2.7
2.8 1.1
5.5
2.1
Exhibit 111: Exhibit 4: EBITDA/scm trend for CGDs (INR)
EBITDA/scm
GUJGA
IGL
MAHGL
6.6
8.0
3.4
8.7
8.0
7.9 8.0
6.7
7.2
8.6
6.2
7.1
5.7
8.6
8.6
7.2
7.4
6.6
August 2024
55
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
REAL ESTATE: Demand remained intact in seasonally weakest quarter
Sales up 78% YoY:
Our coverage universe reported bookings of INR283b, up 78% YoY, and despite seasonality,
the traction sustained on a sequential basis. While the individual performance was healthy for most of the
companies, timely launches for few companies like DLF, GPL, MLIFE and SOBHA enabled them to outperform
peers. GPL reported the best performance with ~4x YoY increase in bookings, aided by a strong response to its
premium project launch in NCR and Bengaluru.
Pre-sales volume grew by 57% YoY and our coverage universe witnessed 13% YoY growth in realization, driven
by price hikes and product mix change. For LfL product, the price hikes were calibrated at a low single digit.
Double-digit growth aspiration intact:
Our coverage universe posted a 43% CAGR in cumulative bookings over
FY21-24 and they aspire for 20-30% growth in FY25 despite a high base. Over the last few quarters, business
development has remained equally strong, led by GPL and LODHA, which added new projects worth GDV of
INR212b and INR203b, respectively, and the traction sustained in 1QFY25 too. Consequently, companies have
identified a vast launch pipeline for FY25, which can support their future growth aspirations.
Launches dominated by few players:
Unlike in 2HFY24, which saw broad-based launches from all key
developers, only a handful of players like GPL, DLF and SOBHA successfully launched multiple new projects.
Cumulative launches in 1QFY25 stood at 22msf (vs. 7msf in 1QFY24). FY24 saw 88msf of new launches from
coverage universe (vs. 66msf in FY23), which will further pick up as most of them have less than 12 months of
inventory. We expect our coverage universe to launch more than 130msf of projects in FY25.
Collections:
Total collections for 1QFY25 increased 30% YoY to INR169b. However, collection efficiency
(collections-to-sales) was low at 65% vs. TTM average of 66%, due to a higher share of sales from new projects.
With progress in construction, we expect efficiency to pick up going ahead resulting in higher collections.
P&L performance – mixed bag:
Aggregate revenue for coverage universe increased 18% YoY to INR113b (44%
below our estimate). The individual performance was a mixed bag as LODHA/OBER/BRGD/PEPL reported healthy
revenue growth and GPL/KOLTE/SOBHA/MLFIE were affected by lower project deliveries. Cumulative EBITDA
stood at INR33.8b, up 35% YoY, with EBITDA margin of 29% (vs. 26% in 1QFY24).
View:
The operational performance of our coverage universe was in line with our expectations. We retain our
FY25 pre-sales estimates for all the companies, except for KPDL, where we lower our expectation by 13% as we
incorporate phase-wise launches of key projects. We continue to see re-rating potential in companies, which
would provide further growth visibility on the back of strong business development through robust cash flows.
We retain PEPL, SOBHA and GPL as our top picks.
Positive Surprises:
GPL
Negative Surprises:
BRGD
Company commentary:
LODHA:
LODHA noted that demand has been consistent across segments and a premiumization trend is
emerging. The company had 24k footfalls with 8.2% conversion vs. 7.3% in 1QFY24. LODHA is approaching the
end of its pilot phase in Bengaluru with the success of two projects. The management is now evaluating a new
city that can be a potential market and will decide on it by FY25 end.
OBER:
The Pokhran Road project in Thane remains on schedule for launch during the festive season. Additionally,
there are plans to launch a new tower in Borivali and Goregaon in 2HFY25. LODHA will launch its Gurugram, Adarsh
Nagar, Worli and Tardeo projects in FY26.
DLF:
DLF targets to launch INR420b worth of projects in FY25 across all segments. The luxury project in Goa will
be launched in 2Q; Luxe 5 and the Mumbai project will be launched in 3Q, and the subsequent phases of Privana
in 4QFY25. The management maintained the earlier guidance of INR170-180b of bookings in FY25. However, it
indicated that except for the ultra-luxury project in DLF 5, all the new projects are likely to follow the previous
trend of monetizing significant (80-90%) inventory during the launch.
GPL:
The management remains confident about the sustainability of the demand for a couple of years and
highlighted that we are in the early-to-mid-stage of the cycle. GPL remains on track to meet or exceed its
guidance for all key parameters.
PEPL:
PEPL had minimal inventory to sell as the new launches were hit by regulatory delays, and hence, bookings
were muted in 1QFY25. Demand remains strong, and the company has enough pipeline to capitalize on it. The
August 2024
56
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
management is confident of meeting the 20-25% growth guidance in bookings and can even exceed it if launches
occur on time.
BEL:
Launches during the quarter contributed 35% to total pre-sales during 1QFY25. The company maintained its
13msf launch guidance but it will be tilted toward the second half, with 2QFY25 launches to be similar to 1Q.
MLIFE:
The management aims to launch over INR35b worth of inventories across seven projects in the next
three quarters. The key among them include Kandivali Phase 2, Malad redevelopment, Citadel, Pune phase 3,
and the plotted project in Jaipur.
SOBHA:
The inventory of 9msf across the ongoing projects provides healthy visibility. Additionally, SOBHA plans
to launch 6msf over the next three quarters across all markets, and it continues to target bookings of INR85b in
FY25 with an upward bias. SOBHA now intends to foray into Mumbai and Noida but will remain calibrated in the
approach.
KOLTE PATIL:
So far in FY25, the company has launched INR15b worth of projects and it remains on track to
launch INR80b of inventory and achieve bookings of INR35b in FY25. As a result, the quarterly sales run rate of
INR7-7.5b will increase in 2Q.
Exhibit 113: …while volumes were up 57% YoY
Sales volumes (msf)
149%
283
75%
78%
13%
36% 27%
2% 2%
17%
41% 37%
0%
2%
57%
Growth YoY %
Pre-sales (INR b)
187%
247
91%
52%
119 153
171
28%
147
153 159
29%
44%
4%
159
52%
233
84%
Growth YoY %
294
Exhibit 112: Pre-sales for coverage universe rose 78% YoY….
280
9%
14.5 16.1 19.1 14.1 14.9 16.4 22.3 14.1 20.9 22.5 22.7 22.1
Exhibit 114: Collections improved 30% YoY in 1QFY25
83%
52%
38%
92
115
113
123
34%
123
7%
Collections (INRb)
64%
Growth YoY %
171 169
30%
6%
Exhibit 115: Expect coverage stocks to deliver 25% YoY
growth in bookings
Bookings (INRb)
FY24 FY25E
42%
28%
29% 32%
24% 46% 23%
24%
22% 20%
161
130
18% 16%
149 156
21%
27%
136
August 2024
57
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 116: Estimate changes for our Coverage Universe
Old
INR b
DLF
Godrej Properties
Macrotech
Oberoi Realty
Prestige Estates
Brigade
Sobha
Mahindra Lifespaces
Sunteck
Kolte Patil
FY25E
74
35
138
47
104
50
42
4
14
20
Old
INR b
DLF
Godrej Properties
Macrotech
Oberoi Realty
Prestige Estates
Brigade
Sobha
Mahindra Lifespaces
Sunteck
Kolte Patil
FY25E
27
3
37
26
28
16
6
-1
4
3
Old
INR b
DLF
Godrej Properties
Macrotech
Oberoi Realty
Prestige Estates
Brigade
Sobha
Mahindra Lifespaces
Sunteck
Kolte Patil
FY25E
40
10
23
18
7
8
3
1
2
1
Old
INR b
DLF
Godrej Properties
Macrotech
Oberoi Realty
Prestige Estates
Brigade
Sobha
Mahindra Lifespaces
Sunteck
Kolte Patil
FY25E
189
270
178
59
260
85
85
30
25
40
Old
INR b
DLF
Godrej Properties
Macrotech
Oberoi Realty
Prestige Estates
Brigade
Sobha
Mahindra Lifespaces
Sunteck
Kolte Patil
FY25E
117
218
125
48
152
56
66
22
17
26
FY26E
147
263
144
65
218
78
76
31
24
36
FY25E
101
218
125
48
152
56
66
22
17
25
FY26E
229
321
213
79
305
105
110
36
31
45
FY25E
180
270
178
59
260
85
85
30
25
35
Collections
New
FY26E
135
263
144
65
218
78
76
31
24
34
FY25E
-14%
0%
0%
0%
0%
0%
0%
0%
-1%
-7%
FY26E
44
11
34
26
10
9
7
1
3
3
FY25E
37
14
23
18
7
8
3
1
2
1
Pre-sales
New
FY26E
230
321
213
79
305
105
110
36
31
43
FY25E
-5%
0%
0%
0%
0%
0%
0%
0%
0%
-13%
Change
FY26E
-8%
0%
0%
0%
0%
0%
0%
0%
0%
-5%
FY26E
30
2
52
35
32
18
11
-1
5
6
FY25E
27
2
37
26
28
16
6
-2
3
3
PAT
New
FY26E
40
10
34
26
10
9
7
1
3
3
FY25E
-8%
52%
-1%
0%
0%
0%
0%
-17%
-1%
0%
Change
FY26E
0%
0%
0%
0%
0%
0%
0%
0%
-1%
-4%
FY26E
80
37
181
64
114
50
50
5
18
30
FY25E
74
35
138
47
104
50
42
4
14
20
EBITDA
New
FY26E
30
2
52
35
32
18
11
-1
5
6
FY25E
0%
-20%
0%
0%
0%
0%
0%
58%
0%
0%
Change
FY26E
-9%
-9%
0%
0%
0%
0%
0%
-9%
1%
-1%
Revenue
New
FY26E
80
37
181
64
114
50
50
5
18
30
FY25E
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Change
FY26E
0%
0%
0%
0%
0%
0%
0%
0%
0%
-1%
Change
FY26E
0%
0%
0%
0%
0%
0%
0%
0%
0%
-1%
August 2024
58
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
RETAIL: Demand momentum remains weak; recovery expected from 2HFY25
Revenue growth continues to be driven by footprint additions:
The aggregate revenue for the segment grew 16%
YoY to INR270b for 1QFY25, which was mainly driven by 11% YoY footprint additions. LFL growth for the quarter
continued to remain weak for most of the players, except Trent (double-digit SSSG), V-Mart (+11% SSSG), and DMart
(+4% SSSG). Various management teams stated the quarter has witnessed lower footfalls due to heat waves,
general elections, and a continuously weak consumption environment. Trent continues to remain an outlier, with
57% YoY revenue growth led by strong footprint additions and healthy LFL growth. In addition, V-Mart reported
SSSG for the third consecutive quarter, leading to 16% YoY revenue growth.
Store additions ebb in 1QFY25:
Though store additions supported revenue growth, most of the retailers have
slowed down the pace of additions, barring Zudio, Intune, and DMart. Weak demand environment and
rationalization of the loss-making stores resulted in net closures/slow store additions.
Net store addition in
1QFY25 for the MOFSL Retail sector was 45 to reach 11,463 stores (vs. +119/+375 store adds QoQ/YoY).
This is
largely led by net closure in Madhura, Pantaloons, Westside, and Manyavaar stores.
Weak LFL weigh on margins:
The moderation in RM prices and premiumization led to 60bp YoY improvement in
gross margin (aggregate) to 30.3% (+140bp in 4QFY24). However, weak LFL for retailers resulted in a 60bp YoY
contraction in operating margin to 11.6% (+10bp QoQ). Aggregate EBITDA grew 10.6% YoY to INR31.5b. With
management confident on recovery from 2HFY25, the margins could improve. Consequently, aggregate PAT
grew 21% YoY to INR11.5b led by Trent, as its PAT doubled YoY. Excluding Trent, the aggregate PAT was flat YoY.
Top picks:
TRENT and V-Mart
Surprises:
TRENT and V-Mart
Guidance highlights:
ABFRL:
a) It expects an improved demand environment in the upcoming wedding and festive season, and it
guided to open ~25 Pantaloons stores during the year, and b) expects TCNS to turn profitable in 2HFY25.
Shoppers Stop:
a) Management expects double-digit revenue growth fueled by ~8-9% area additions and SSSG,
and b) a mid-single-digit (pre-Ind-AS) EBITDA for FY25, which will be driven by rationalization of larger-sized
stores and cost optimization.
Vedant Fashion:
a) Jul’24 saw positive LFL YoY and management anticipates the business to normalize, and b)
expects higher area additions in 2HFY25, with consistent guidance of 14-15% additions.
VMART: a)
Management anticipates adding 40-50 stores in FY25, with the possibility of closing 5-7 stores and b)
guiding for ~10% or high single digits SSSG, which should bring back pre-Ind-AS EBITDA margin of ~8.5%.
Campus Activewear:
The company has strengthened its distribution side by adding a few more superstockists
and eight new distributors.
Metro Brands:
a) Expect to open 100/225 stores (excluding FILA but including Footlocker) in the next one/two
fiscal years with long-term guidance of 30-33% EBITDA margin and 15-17% PAT margin, b) the management is
noticing a pick-up in business environment QoQ. However, headwinds persist in some casual footwear, athletic
footwear, and the Crocs range. It expects SSS to pick up in 3QFY25 as there are no headwinds regarding the
marriage season weakness.
August 2024
59
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 117: Revenue grew 16% YoY led by Trent, V-Mart,
and DMart
Aggregate revenue (INR b)
25.0
YoY growth (%)
Exhibit 118: Gross margin improved 60bp YoY led by RM
moderation and premiumization
Aggregate Gross Profit (INR b)
Aggregate gross margin (%)
29.8
30.2
29.1
27.6
30.3
18.4
14.3
13.7
15.0
16.6
16.2
29.1
28.0
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 119: Margin contracted 60bp YoY due to weak SSS
Aggregate EBITDA (INR b)
13.1
12.2
Aggregate EBITDA margin (%)
13.3
Exhibit 120: Profitability improved YoY due to Trent
Aggregate PAT (INR b, LHS)
YoY growth (%, RHS)
10.9
11.5
11.5
11.6
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 121: Snapshot of Retail store additions
Total Stores
ABFRL
DMART
SHOP
TRENT
VMART
Raymond
Branded Apparels
Vedant Fashion
Metro
Campus
Bata
Relaxo
Total coverage stores
YOY
Absolute adds QoQ
1QFY24
4,188
327
276
632
431
1054
311
662
789
225
2,100
389
10,330
21%
375
2QFY24
4,056
336
281
661
437
1065
345
669
817
240
2,150
394
10,386
18%
56
3QFY24
4,753
341
290
715
454
1086
380
673
840
250
2,204
399
11,299
17%
913
4QFY24
4,664
365
306
811
444
1065
409
676
839
268
2,231
405
11,418
15%
119
1QFY25
4,607
371
320
823
448
1070
424
662
854
270
2,285
399
11,463
11%
45
YoY
10.0
13.5
15.9
30.2
3.9
1.5
36.3
0.0
8.2
20.0
8.8
2.6
11.0
QoQ
-1.2
1.6
4.6
1.5
0.9
0.5
3.7
-2.1
1.8
0.7
2.4
-1.5
0.4
Source: Company, MOFSL
Retail - Jewelry: Subdued revenue growth; improvement in margins
Jewelry companies reported muted revenue growth during the quarter due to a rise in gold prices, extreme
heatwaves, elections and fewer wedding days, except for Kalyan, which delivered 27% revenue growth. The
pace of store addition will continue, with Titan (Jewelry), Kalyan, and Senco likely to add 37/24/6 stores during
the quarter (taking total count to 974/277/165). Operating margin also expanded despite high gold prices and
competitive pressure. In Kalyan jewelers, a higher revenue mix from franchise stores affected reported margin.
The demand environment is healthy, and a revival in footfalls has been visible post-reduction in customs duty.
August 2024
60
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
We remain optimistic about the jewelry category and expect a continued rapid shift in consumer purchasing
behavior from unorganized/local to organized channels.
Outperformer (1Q):
Kalyan Jewelers, Senco
Under-performer (1Q):
Titan
Guidance highlights:
TTAN:
The
company hopes that the recent moderation in gold prices will provide relief on gross margins,
especially for studded products. It aims to open 40 to 50 Tanishq stores and 70 to 80 Mia/Caratlane stores in
FY25. The company will transform 20 to 30 stores into significantly larger stores.
Kalyan Jewelers –
The company will open 80 showrooms in FY25, mainly in non-south and tier 2 and tier 3 cities.
The management expects to reach 5% PBT margin (consolidated) in FY25.
Senco:
The company aims for 18-20% revenue growth in FY25, with 12-13% expected from SSSG and the rest
from new store openings. The guidance of 18-20% profit growth may be moderated by the duty impact and
expected to be 15-18%. Store guidance of 18 to 20 stores in FY25 is maintained.
TECHNOLOGY: Steady demand with positive bias for high-priority project spending
Aggregate performance:
The IT services companies within the MOFSL Universe reported healthy performance
(beating our estimates) in 1QFY25 with median revenue growth of 1.2% QoQ CC. With a mild recovery in
discretionary spending among BFSI clients, their focus is now slightly transitioning from cost-takeout deals to
“high-priority” transformation deals in some pockets. Nonetheless, the overall pressure on discretionary
spending persists. That said we believe the cycle could be turning and clients are beginning to reinvest their
savings from cost-reduction programs to reduce technological debt.
Healthy revenue growth:
The Tier-1 players experienced a median revenue growth of 1.5% QoQ CC, while Tier-2
companies reported a growth of 0.8% QoQ CC dragged by CYL’s weak performance of -5.0% QoQ CC. Excluding
CYL, Tier-2 reported in-line growth of 1.6% QoQ CC. WPRO (-1.0% QoQ CC) and CYL (-5.0% QoQ CC) were clear
disappointments. On the margins front, Tier-1 companies reported ~20bp QoQ decline, while Tier-2 companies
posted a decline of ~150bp QoQ primarily due to a 250bp QoQ contraction in CYL’s margin. The margin
contraction for tier-1 was majorly attributed to wage hikes and reduction in ER&D margin (HCLT), while tier-2
reported weak margin owing to some one-offs, higher SG&A, and visa costs for selective names.
TCV back to normal run-rate:
The deal TCV growth normalized (down 23% QoQ) for Tier-1 companies, with
Infosys being an exception in 1QFY25. The tier-2 companies followed the same trend with a 20% sequential
decline. INFO’s deal wins remained strong in 1Q as the company reported the highest number of large deal wins
at 34, with a TCV of USD4.1b (57.6% net new deals). Within Tier-2, Coforge experienced moderate growth due to
a high base in 4Q, while MPHL reported strong growth from a low base in 4Q. The 1Q book-to-bill was decent at
1.0x for both Tier-1 and Tier-2 players.
Headcount movement:
The hiring activities were muted in 1Q; the net headcount declined 1.7k for Tier-1, while
Tier-2 saw a net addition of ~150. The attrition rate remained range bound at lower levels for the majority of
companies, and utilization improved further across the board in 1QFY25.
Top picks:
We prefer HCLT and LTIM among large-caps and PSYS in the mid-cap space. HCLT managed
seasonality well and is poised for a strong 2H with an achievable 2.5% growth target. Its FCF metrics have
meaningfully improved and now match those of TCS and Infosys, justifying a premium valuation. LTIM is well-
positioned for growth in data engineering and ERP modernization, positioning it well to capture the pre-GenAI
expenditures. We anticipate LTIM to outperform its large-cap peers and expect a low double-digit CC growth for
FY26. PSYS’ strong earnings growth and strategic shift to platform-based services for GenAI spending support a
projected 17% USD revenue CAGR and ~25%+ EPS CAGR, justifying a premium valuation multiple.
Significant Beat:
Infosys/LTIM (revenue growth), HCLT (revenue growth & margin), and Persistent (revenue growth)
Significant Miss:
Cyient (revenue growth & margin), Wipro (margin), and LTTS (revenue growth & margin)
Significant Surprise:
Cyient (revenue guidance cut)
August 2024
61
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Major EPS upgrades/downgrades:
Infosys’ FY25E and FY26E EPS were upgraded by 3% and 6%, respectively.
LTTS’ FY25E/FY26E EPS were reduced by 5%/1%. Cyient’s (DET business) FY25E and FY26E EPS were cut by 17%
and 6%, respectively. ZENT’s FY25E/FY26E EPS were upgraded by 6%/1%.
Guidance highlights
TCS:
The company remains cautious about the near-term demand amid adverse macros, while it is quite
optimistic about the secular long-term demand. Management does not see a material change in customer
behavior. Clients continue to prioritize high-ROI, cost-optimization projects over discretionary projects. Further,
it stated that BFSI clients are expected to increase spending on an integrated cloud model, and the company
sees some positive movement in BFSI. FY25 is likely to be better than FY24, with broad-based growth across
verticals and geographies.
INFO:
Management revised its revenue growth guidance in this quarter to 3-4% CC for FY25 and maintained its
margin guidance in the range of 20-22%.
WPRO:
Positive momentum is visible among the US consumers, Capco business, and BFSI sectors. The company
believes WPRO is in a better position now than in 1QFY25. It expects revenue from the IT Services business to be
in the range of -1.0% to +1.0% in CC terms for 2QFY25. The company expects margin to sustain to its current
level with an upward bias.
HCLT:
Management is optimistic about growth improvement in 2QFY25 compared to 1Q, both at the company
and IT services levels. Sequential growth is expected across verticals and geographies, except for the Financial
Services vertical, which will be affected by State Street divestment (~80bp impact). HCLT maintained services
organic revenue growth at 3-5% CC and EBIT margin at 18-19% for FY25.
TECHM:
Management anticipates the weakness in communications to continue; however, it expects to see
improvement on a YoY basis going forward. TECHM is focused on the strategy pillar of better integration of
portfolio companies and consistently working towards increasing its offshoring mix.
LTIM:
Management expects growth momentum to continue in 2QFY25 as deals won in the earlier quarter are
ramping up according to the plan. Some verticals, especially BFSI, have high-priority projects kicking in as well,
which renders confidence for a strong 2Q. The sustained deal TCV and healthy deal pipeline give confidence to
the management to deliver better performance in FY25. LTIM expects margins to improve going forward as
revenue growth itself serves as a key margin lever, alongside optimizing the pyramid structure.
Exhibit 122: Nifty IT rallied during 1Q results, but faced setbacks due to global uncertainty
NIFTY IT
112
106
107
102
97
101
NIFTY INDEX
Source: Company, MOFSL
August 2024
62
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 123: Tier-1 returned to decent revenue growth in 1Q
Tier I Revenue Growth (USD, YoY %)
13.8%
10.9%
8.9%
6.8%
Exhibit 124:
Tier-2’s revenue growth continued to moderate
Tier II Revenue Growth (USD, YoY %)
22.2%
17.8%
12.6%
4.4%
10.1%
2.5%
0.8% 0.4%
1.9%
7.8% 6.7%
6.7%
7.6% 6.1%
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 125: BFSI rebounded to growth in 1QFY25
22%
Tier-1 Companies BFSI QoQ Growth
Tier-2 Companies BFSI QoQ Growth
12.5%
12%
4.5%
10%
3.3%
2.6% 3% 1.4% 4% 3.2%
3%
0.5%
-2%
3QFY23
0.3%
1%
2%
1.3% 2%
1QFY22
2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
-1% -0.8% -0.6% 0%
-1.4%
-1%
-1.4%
4QFY23 1QFY24 2QFY24 3QFY24 4QFY24
1QFY25
Source: Company, MOFSL
Exhibit 126: Margins moderated for both tier-1 and tier-2 players
20.4
Tier I EBIT Margin (%)
20.1
19.2
14.6
15.4
Tier II EBIT Margin (%)
20.1
19.9
19.0
19.9
20.1
19.9
14.9
13.5
13.9
14.0
14.8
14.7
14.9
Source: Company, MOFSL
Exhibit 127:
Median utilization (%) inched up 100bp QoQ in 1Q
IT Sector - Median Utilization (incl. trainees %)
82.9%
Exhibit 128: Median attrition (%) inched up 20bp in 1Q
IT Sector - Mediam Attrition (%)
23.8% 23.8%
21.7%
19.8%
17.3%
14.6%
12.9% 12.5%
12.7%
83.9%
80.7%
81.5% 81.8% 81.9% 81.6%
79.9% 79.7%
Figures excl. TCS and HCLT; CYL excl. from 1QFY24; LTTS excl. from
1QFY23; MPHL (Offshore); Source: Company, MOFSL
Figures exclude MPHL; Source: Company, MOFSL
August 2024
63
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
TELECOM: Moderate growth due to flat ARPU, RJio continues to gain market share
The Indian telecom sector registered revenue/EBITDA growth of 1.5%/1.8% QoQ in 1QFY25, led by a 0.7% increase
in subscribers (7.7m net adds QoQ). ARPU was flat. The market share shift continues, with RJio/BHARTI gaining
subscribers. From 2QFY25 onward, the tariff hike (of 15-20%) should translate into the revenue increase (by 11%-
13% in the next 2-3 quarters), which will also be aided by the ongoing transitions from prepaid to postpaid plans, the
migration of subscribers from 2G to 4G networks, and effective data monetization strategies. The recent 5G ramp-up
has not contributed meaningfully to revenue growth. Companies remain focused on deleveraging their balance
sheets. Capex is expected to moderate in FY25 for BHARTI/RJio, while VIL’s capex is likely to remain around INR500-
550b over the three years to support network upgrade.
Market share gain continues by RJio/BHARTI; VIL subscriber loss slows down
RJio and BHARTI continued to gain subscriber market share and revenue, albeit at a slower pace. RJio/BHARTI added
8m/2m subscribers (vs. 11m/7m adds QoQ) against VIL’s loss of 2.5m (vs. 2.6m loss QoQ). For VIL, the rate of
subscriber loss has decelerated, with a loss of ~2.5m subscribers in the last two quarters vs. an average loss of 4m
subscribers per quarter over the previous eight quarters. Companies continued to witness consistent growth in 4G
subscribers, with both RJio/BHARTI gaining around 7.9m/6.3m 4G subscribers in 1QFY25. VIL’s 4G subscriber base
was flat sequentially. The churn remained elevated for RJio/BHARTI/VIL at 1.7%/2.8%/4.0%. With the higher mobile
number portability and churn, we expect the consolidation to continue.
Margin profile remained stable
Incremental margin remained steady at ~62%. Margins have improved for BHARTI/RJio, led by subscriber adds-led
operating leverage. BHARTI (India)/RJio reported 50bp/10bp QoQ margin improvements to 55.6%/52.6%. VIL’s
margins contracted by 60bp QoQ to 20%.
For RJio/VIL, ARPU remained flat QoQ at INR182/INR146 (vs. 2% growth in last eight quarters for VIL). Only BHARTI
witnessed an increase in ARPU by 1% QoQ (INR2) to INR211, attributed to 4G and postpaid led mix improvement.
Capex moderating for BHARTI
BHARTI (India) capex declined 20% sequentially to INR68b (vs. INR85b QoQ). As a result, BHARTI’s consol capex
also declined to INR80b (vs. INR105b QoQ).
VIL capex slightly increased to INR7.6b (vs. INR5.5b QoQ).
For BHARTI (India) /RJio, annual network capex stood at INR331b/INR533b in FY24, significantly above VIL,
despite having higher capacity. Capex is expected to be moderate in FY25 for BHARTI/RJio.
VIL’s capex was significantly lower than that of BHARTI/RJio in last many years. With the fund raise, it is
expected to be in the range of INR500b-INR550b over the next three years. BHARTI and RJio have already
deployed 5G in the majority of their operating circles, while VIL expects to roll out 5G in the next six months and
expand its 4G coverage.
For 1QFY25, net debt of BHARTI/VIL stood at INR1.3t/INR2.0t. RJio’s net debt stood at INR1.6t as of FY24.
VIL’s fund raise aided Indus viability:
VIL’s fund raise and network investment will benefit Indus Towers in terms of
towers and tenancy additions and will also give comfort in the collection of past dues (INR46b). Indus Towers
reported revenue growth of +2.6% QoQ in 1QFY25, led by strong tower/rental adds of 6.2k/6.4k and INR7.6b in
provision write-back. As a result, EBITDA/PAT grew 11%/4% QoQ. Tower additions were led by only one operator,
which led to a decline in average sharing factor (ASF).
TCOM steady DPS segment growth offset others:
TCOM reported a 1% decline in revenue QoQ (in line), led by a
decline in all segments, except DPS, which grew 3% QoQ. EBITDA margin improved 140bp QoQ to 20%, led by M&A
synergies and the termination of loss-making contracts. Organic business EBITDA margin remained in line with the
long-term guidance at 23.3%.
Top picks:
BHARTI
Positive surprise:
Indus Towers
Guidance highlights:
BHARTI:
The company does not need to raise the Rights issue money. Overall capex for FY25 will be lower than
FY24, and going forward, it will moderate. The organic FCF generation would be used in deleveraging and
dividend payments.
August 2024
64
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
VIL:
It expects the churn rate to come down after the next quarter as the capex deployment will commence. The
management expects unique towers to increase to 210-220k from 183k. Capex guidance remains in the range of
INR500-550b over the next three years, with the majority of the capex to be front-ended.
TCOM:
The company reiterated its long-term target of 23-25% EBITDA margin, but in the short-term, margin
may remain under pressure. It aims to double data revenue by FY27. TCOM expects to maintain or improve
EBITDA margins from 20% and expects ROCE to dilute further in 2Q. The order book, which has been flat for the
past few quarters, saw good growth in 1Q, largely led by a couple of large deal wins.
Indus Towers:
It expects steady collections and recoveries of past dues. However, the increase in towers for VIL
will require more clarity. BHARTI’s plans to roll out 5G and add more towers will be a good opportunity for the
company and it expects loading revenue to increase.
Exhibit 129: Operator-wise active subscriber market share
(%)
48%
36%
24%
12%
0%
Exhibit 130: Operator-wise ARPU (INR)
Bharti (India)
240
180
120
60
0
FY22
FY23
FY24
FY25
Vi
RJio
RJio
Bharti
Vi
Other players
Exhibit 131: Wireless KPI comparison
1Q
EOP Wireless SUBS (m)
Bharti (India)
Idea
RJio
Avg. Wireless Subs (m)
Bharti (India)
Idea
RJio
ARPU (INR/month)
Bharti (India)
Vi
RJio
MOU/Sub (min)
Bharti (India)
Idea
RJio
Wireless traffic (B min)
Bharti (India)
Idea
RJio
Data usage/Sub (Gb)
Bharti (India)
Idea
RJio
Data traffic (B Gb)
Bharti (India)
Idea
RJio
321
255
441
321
262
433
146
104
138
FY22
2Q
3Q
323
253
430
322
254
435
153
109
144
323
247
421
323
250
425
163
115
152
4Q
326
244
410
324
246
416
178
124
168
1Q
327
240
420
327
242
415
183
128
176
FY23
2Q
3Q
328
234
428
328
237
424
190
131
177
332
229
433
330
232
430
193
135
178
4Q
335
226
439
334
227
436
193
135
179
1Q
339
221
449
337
224
444
200
139
181
FY24
2Q
3Q
342
220
460
340
221
454
203
142
182
346
215
471
344
218
465
208
145
182
4Q
352
213
482
349
214
476
209
146
182
FY25 YoY QoQ
1Q (%) (%)
355
210
490
353
211
486
211
146
182
4.7 0.6
-5.1 -1.2
9.2 1.6
4.9 1.3
-5.5 -1.2
9.4 2.0
5.5
5.0
0.7
1.0
0.0
0.0
1,044 1,053 1,061 1,081 1,104 1,082 1,094 1,122 1,138 1,123 1,127 1,158 1,128 -0.9 -2.6
641
630
620
610
620
599
613
623
627
613
614
627
607 -3.2 -3.2
815
835
901
962 1004 968
984 1001 1006 976
981 1008 974 -3.2 -3.3
1,002 1,020 1,030 1,051 1,079 1,063 1,082 1,124 1,149 1,148 1,161 1,210 1,195 4.0 -1.2
503
480
465
449
450
427
426
425
421
406
401
402
385 -8.5 -4.3
1060 1090 1150 1200 1250 1230 1270 1310 1340 1330 1370 1440 1420 6.0 -1.4
18.9
13.3
15.6
10.8
5.5
20.3
19.1
13.5
17.6
11.3
5.5
23.0
18.7
12.8
18.3
11.3
5.2
23.4
19.2
12.9
19.7
11.8
5.2
24.6
19.9
13.3
20.8
12.6
5.4
25.9
20.8
14.1
22.2
13.5
5.7
28.2
20.8
14.2
22.5
13.9
5.8
29.0
20.8
14.2
23.2
14.2
5.8
30.3
21.6
14.7
24.9
15.3
6.0
33.2
22.2
14.9
26.6
16.1
6.1
36.3
22.5
14.6
27.3
16.8
6.0
38.1
23.1
14.7
28.6
24.3 12.3 4.9
15.4 4.8 5.0
30.3 21.4 5.7
16.1 19.2 26.0 19.2
6.0
6.1 1.8 1.0
40.9 44.1 32.8 7.8
Source: MOFSL, Company
August 2024
65
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Exhibit 132: Financials
1Q
Revenue (INR b)
Bharti (India wireless)
Bharti (consolidated)
Idea
RJio
EBITDA (INR b)
Bharti (India wireless)
Bharti (consolidated)
Idea
RJio
EBITDA Margin (%)
Bharti (India wireless)
Bharti (consolidated)
Idea
RJio
PAT (INR b)
Bharti (consolidated)
Idea
RJio
EPS (INR)
Bharti
Idea
RJio
143
269
92
180
70
130
37
86
49.2
48.3
40.5
47.9
FY22
2Q
3Q
152
283
94
187
75
138
39
90
49.2
48.8
41.1
48.0
161
299
97
193
79
147
38
95
49.4
49.2
39.3
49.2
4Q
176
315
102
209
89
160
46
105
50.6
50.9
45.4
50.3
1Q
182
328
104
219
93
165
43
110
51.2
50.4
41.6
50.1
FY23
2Q
3Q
190
345
106
225
99
176
41
115
52.4
51.0
38.6
51.0
194
358
106
230
104
185
42
120
53.8
51.5
39.4
52.2
4Q
195
360
105
234
105
187
42
122
53.8
51.9
40.0
52.2
1Q
204
374
107
240
112
196
42
126
54.8
52.3
39.0
52.3
FY24
2Q
3Q
210
370
107
248
115
195
43
130
54.9
52.7
40.0
52.3
216
379
107
254
119
198
44
133
55.1
52.3
40.8
52.3
4Q
221
376
106
260
122
194
43
136
55.1
51.5
40.9
52.4
FY25
1Q
225
385
105
265
125
197
42
139
55.6
51.2
40.0
52.6
YoY
(%)
10.5
2.8
-1.4
10.1
12.2
0.6
1.1
10.7
85bps
-117bps
100bps
26bps
158.0
-18.0
12.0
152.8
-41.2
12.0
QoQ
(%)
2.1
2.4
-0.9
2.0
3.0
1.8
-3.0
2.3
50bps
-32bps
-86bps
14bps
100.8
-16.2
2.0
96.8
-38.1
2.0
2.8 11.3 8.3 20.1 16.1 21.5 15.9 30.1 16.1 13.4 24.4 20.7 41.6
(73.2) (71.3) (72.3) (65.6) (73.0) (76.0) (79.9) (64.2) (78.4) (87.4) (69.9) (76.7) (64.3)
35.0 35.3 36.2 41.7 43.4 45.2 46.4 47.2 48.6 50.6 52.1 53.4 54.5
0.5
(2.5)
0.8
2.1
(2.5)
0.8
1.5
(2.5)
0.8
3.6
(2.0)
0.9
2.9
(2.3)
1.0
3.8
(2.4)
1.0
2.8
(2.5)
1.0
5.3
(1.3)
1.0
2.8
(1.6)
1.1
2.4
(1.8)
1.1
4.3
(1.4)
1.2
3.7
(1.5)
1.2
7.2
(0.9)
1.2
Source: MOFSL, Company
August 2024
66
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
ANNEXURE:
MOFSL UNIVERSE (ACTUAL V/S EXPECTATIONS)
Sales (INR b)
Gr (%)
Var. over
Jun-24 YoY QoQ Exp. (%)
2,903.1 10.3 -3.3
1.5
31.3
13.0 12.0
4.7
63.3
1.4
1.2
-0.6
86.0
5.0 -23.7
-1.2
119.3 15.7
3.9
2.2
27.4
29.6
1.6
7.2
23.4
9.9
0.4
-1.3
43.2
3.8
2.0
-2.1
31.9
8.8
6.7
4.6
22.9
-1.2
-5.5
-2.0
11.5
10.9
4.1
2.6
43.9
10.2
3.2
3.4
28.3
15.3
6.0
-0.2
22.9
-1.5 10.1
-3.8
43.1
5.9
7.6
-1.9
3.4
3.5
-0.5
-8.4
101.4 15.7
6.6
-4.3
270.4 12.0
7.4
-3.6
355.3
9.9
-7.1
1.5
21.8
16.7 -2.1
-1.2
70.8
11.9 13.9
10.8
288.7 28.5
7.5
-0.8
8.9
22.0
0.9
-2.3
1,080.5 5.7
-9.9
4.5
19.6
10.1 -0.1
-3.5
83.8
16.0
2.5
-0.8
832.1 13.3 -20.3
1.0
28.3
12.8 -8.1
-11.1
42.0
19.6 -50.8
11.0
23.0
4.3
-0.5
10.8
13.3
27.6 -21.7
-3.1
37.2
2.8 -27.7
-7.8
45.1
6.3 -26.8
0.2
13.4
6.2
-3.5
12.3
551.2 15.1 -17.8
3.1
52.0
6.8
-9.5
-15.3
21.8
13.0 -21.0
-0.8
4.6
23.1
1.1
8.6
527.1 -0.6
-9.4
-2.1
51.6
-0.9
-4.5
0.8
45.2
-4.5
-5.5
-3.0
21.9
-9.1 -17.5
-10.7
36.2
-0.3 -15.9
-0.2
68.9
10.5
1.9
-0.2
9.7
-30.3 -22.0
-15.7
28.1
1.6
-9.6
-2.3
15.6
-9.6 -12.2
-6.2
20.9
-6.8 -21.9
-5.9
48.3
-2.7
-4.7
-4.6
180.7
1.9 -11.5
-0.2
163.4 3.3
4.3
1.9
4.0
-2.5 12.1
6.3
13.2
11.8
9.1
8.8
EBITDA (INR b)
Gr (%)
Var. over
YoY QoQ Exp. (%) Jun-24
19.5 -3.0
5.1
222.6
16.7
5.6
-2.7
2.4
-13.5 -15.8
-10.3
3.3
11.0 -42.8
-14.0
5.3
23.6
4.7
3.6
19.9
46.8
0.5
9.0
4.8
17.7 -0.4
-0.2
3.8
11.1 -6.7
-13.2
4.7
-1.1
-2.2
3.7
1.5
-2.8
-0.2
3.0
2.2
-7.9
-4.6
-9.5
0.5
14.2
3.3
4.2
11.0
16.4
1.3
-1.7
2.0
0.1
23.0
-5.4
2.9
14.4 -4.2
-12.9
2.8
-2.6
0.5
-9.2
0.6
21.0
7.4
-8.6
11.2
22.4 21.9
4.0
26.1
50.9 -3.9
6.7
36.5
15.3 -18.0
-12.8
1.5
2.1
13.2
17.6
5.6
44.2
4.0
3.6
9.9
23.5
1.2
-1.5
1.4
14.4 -8.7
12.7
55.3
11.1 10.5
2.1
1.5
25.7
3.7
-3.2
5.8
20.4 -28.4
-0.4
55.4
55.6 -4.0
-2.3
4.4
41.0 -58.9
7.6
7.8
37.2 -14.1
13.0
4.2
42.3 -73.7
-61.1
0.1
0.0 -21.5
-7.4
1.2
10.6 -30.3
-9.1
0.9
28.0 10.9
37.8
1.3
15.3 -22.4
4.3
27.9
22.1 -21.3
-26.0
5.8
6.8 -48.3
-33.6
1.1
34.8
6.4
13.1
0.8
-8.6 -25.4
-10.4
33.1
-11.9 -19.1
-7.2
3.7
-31.9 -19.0
-10.6
5.8
-13.3 -45.3
-25.7
0.3
8.4
2.3
24.1
2.3
-51.7 -38.3
-43.3
-0.5
PL
PL
PL
-1.2
19.2 -13.2
3.7
1.9
13.3 -33.9
-10.6
0.7
-6.5 -23.4
1.9
0.4
-1.7 -31.0
-22.6
3.2
-0.3 -26.1
-6.4
16.7
-9.7
9.1
0.0
16.3
6.9
14.8
13.2
0.5
22.5 51.3
33.2
1.1
PAT (INR b)
Gr (%)
YoY
QoQ
28.2
-8.8
23.1
7.2
-19.4
-29.6
-8.9
-44.6
19.4
2.7
52.7
-2.3
20.2
-4.3
13.8
-17.5
2.8
-1.8
1.3
-6.0
-28.6
-14.7
19.9
2.9
24.7
4.6
2.4
19.6
15.6
-1.5
-0.3
-2.9
18.6
10.5
23.2
30.6
46.9
-5.9
20.9
-22.2
-3.3
19.9
65.5
8.4
24.0
-4.3
46.1
-28.4
4.6
-37.7
23.4
18.9
22.6
-36.7
49.6
-3.7
46.2
-56.5
33.0
-25.2
332.4
-90.8
-7.1
-33.1
106.9
-42.3
30.5
14.5
11.7
-35.6
26.9
-28.0
17.4
-41.7
31.9
5.5
-19.6
-35.4
-21.1
-25.5
-10.0
6.6
-45.4
-82.7
82.9
-11.1
PL
PL
Loss
Loss
49.3
-13.3
-10.4
-55.2
-55.0
-70.8
-45.3
-52.0
-1.0
-27.7
-18.6
11.0
-1.8
27.1
9.8
90.6
Var. over
Exp. (%)
4.9
-4.1
-23.4
-19.6
0.4
15.7
-3.4
-14.0
0.5
7.7
-33.6
9.1
0.5
-3.4
-16.5
-7.9
-9.8
-12.3
6.5
-16.1
24.1
6.5
-3.6
34.7
-6.3
-1.3
-1.4
-2.8
4.0
9.8
-85.0
-9.7
6.8
46.2
3.0
-22.1
-26.3
13.4
-6.0
-12.1
21.6
-65.4
115.3
PL
Loss
23.6
-29.7
2.9
-41.6
7.5
1.6
20.0
44.2
Company
Automobiles
Amara Raja Energy
Apollo Tyres
Ashok Leyland
Bajaj Auto
Balkrishna Inds
Bharat Forge
Bosch
CEAT
CIE Automotive
Craftsman Auto
Eicher Motors
Endurance Tech.
Escorts Kubota
Exide Inds.
Happy Forgings
Hero Motocorp
Mahindra & Mahindra
Maruti Suzuki
Motherson Wiring
MRF
Samvardhana Motherson
Sona BLW Precis.
Tata Motors
Tube Investments
TVS Motor
Capital Goods
ABB India
Bharat Electronics
Cummins India
Hitachi Energy
Kalpataru Proj.
KEC International
Kirloskar Oil
Larsen & Toubro
Siemens
Thermax
Triveni Turbine
Cement
ACC
Ambuja Cements
Birla Corporation
Dalmia Bharat
Grasim Industries
India Cements
J K Cements
JK Lakshmi Cem.
Ramco Cements
Shree Cement
Ultratech Cement
Chemicals-Specialty
Alkyl Amines
Atul
Jun-24
410.5
4.3
9.1
9.1
24.2
7.1
6.5
5.2
3.8
3.6
2.0
11.7
3.7
3.3
4.9
1.0
14.6
40.2
45.0
2.4
11.4
27.8
2.5
155.1
2.4
9.6
93.2
5.4
9.4
4.7
0.5
3.1
2.7
2.0
56.2
6.9
1.4
1.0
75.3
6.8
6.5
2.6
6.7
3.3
-0.3
4.9
2.2
3.2
9.2
30.4
30.0
0.8
2.2
August 2024
67
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Company
Clean Science
Deepak Nitrite
Fine Organic
Galaxy Surfactants
Navin Fluorine
NOCIL
P I Industries
SRF
Tata Chemicals
Vinati Organics
Consumer
Asian Paints
Britannia
Colgate
Dabur
Emami
Godrej Consumer
Hind. Unilever
Indigo Paints
ITC
Jyothy Labs
Marico
Nestle
Page Industries
Pidilite Inds.
Tata Consumer
United Breweries
United Spirits
Varun Beverages
Consumer Durables
Havells India
KEI Industries
Polycab India
R R Kabel
Voltas
EMS
Avalon Tech
Cyient DLM
Data Pattern
Kaynes Tech
Syrma SGS Tech.
Financials
Banks-Private
AU Small Finance
Axis Bank
Bandhan Bank
DCB Bank
Equitas Small Fin.
Federal Bank
HDFC Bank
ICICI Bank
IDFC First Bank
IndusInd Bank
Kotak Mahindra Bank
RBL Bank
Sales (INR b)
EBITDA (INR b)
Gr (%)
Var. over
Gr (%)
Var. over
Jun-24 YoY QoQ Exp. (%) Jun-24 YoY QoQ Exp. (%) Jun-24
2.2
19.1 -1.5
-4.5
0.9
24.3
0.2
-5.9
0.7
21.7
22.5
1.9
16.4
3.1
47.4
2.7
11.5
2.0
5.1
-4.5
-2.5
-4.8
1.2
-19.8 -7.9
-2.3
1.0
9.7
3.4
4.9
0.2
1.2
0.7
22.1
12.2
0.8
5.2
6.6 -13.0
9.3
1.0
-12.1 -8.8
20.9
0.5
3.7
-6.2
4.4
-0.4
0.4
-27.3 -8.3
-25.8
0.3
20.7
8.3
18.8
-5.8
5.8
24.7 32.0
4.1
4.5
34.6
3.8
-3.0
5.4
6.2
-13.8 -12.8
-4.1
2.7
37.9 -10.2 9.0
-4.0
5.7
-45.0 29.6
-11.8
1.4
5.2
19.6 -4.7
-6.4
1.3
24.6 -16.7
-16.7
0.9
860.2 6.2
7.5
-1.4
214.3
4.8
10.2
-3.9
150.6
89.7
-2.3
2.7
-2.3
16.9
-20.2 0.1
-15.0
11.9
42.5
6.0
4.4
0.5
7.5
9.4
-4.3
-4.0
5.3
15.0
13.1
0.4
3.7
5.1
21.6 -4.5
8.2
3.6
33.5
7.0
19.0
-0.5
6.6
8.3
40.3
-0.7
5.1
9.1
9.7
1.7
1.6
2.2
13.9
2.6
1.4
1.7
33.3
-3.4
-1.6
-8.0
7.3
6.5
-4.5
-7.4
4.6
157.1
1.4
3.3
1.0
37.4
2.2
5.9
0.9
26.5
3.1
7.8 -19.2
-4.6
0.5
-3.5 -44.0
-21.1
0.3
184.6
7.5
3.0
0.5
67.5
1.2
1.8
-4.5
50.9
7.4
8.0
12.4
-1.4
1.3
13.7 23.1
1.4
1.0
26.4
6.7
16.0
-1.1
6.3
9.1
41.6
-1.3
4.6
48.1
3.3
-8.6
-4.9
11.2
5.1 -16.5
-7.1
7.4
12.8
3.9
28.7
-3.1
2.4
2.0
48.1
-7.3
1.7
34.0
3.7
17.0
-3.1
8.1
15.0 40.9
0.1
5.7
43.5
16.3 10.8
-1.9
6.7
22.4
6.0
-1.5
3.0
24.7
8.8
16.0
-5.6
2.8
27.8 100.5
-7.8
1.7
23.5
8.3 -11.8
-0.1
4.6
18.9 26.5
11.2
3.0
72.0
28.3 66.7
-5.2
19.9
31.8 101.4
-5.8
12.5
192.9 24.8 -0.1
7.1
18.9
32.4 -2.8
6.2
13.5
58.1
20.1
6.7
1.5
5.7
42.4 -9.8
-2.6
4.1
20.6
15.6 -11.0
3.2
2.1
20.4 -10.9
3.2
1.5
47.0
20.8 -16.0
2.5
5.8
6.3 -23.4
-1.9
4.0
18.1
13.2
3.1
2.3
0.9
-15.9 -17.7
-27.2
0.6
49.2
46.5 17.1
24.8
4.2
128.6 122.4
63.6
3.3
22.3 54.5 -12.1
7.0
1.7
22.5 -45.4
-9.6
1.1
2.0
-15.2 -8.0
-8.8
0.0
-73.0 -74.6
-72.2
0.0
2.6
18.8 -28.7
-1.0
0.2
0.0 -47.5
8.7
0.1
1.0
16.0 -42.9
-9.3
0.4
33.6 -60.0
-4.8
0.3
5.0
69.6 -20.9
4.7
0.7
66.2 -29.8
6.7
0.5
11.6
92.9
2.3
15.5
0.4
20.7 -39.5
-19.5
0.2
2,640.6 13.2 -9.2
-1.8
1,563.0 12.6 -3.9
1.0
946.1
914.8 17.0
3.1
0.3
688.4
18.5 -5.7
2.6
433.4
19.2
54.1 43.6
-0.2
9.9
80.9 48.8
21.7
5.0
134.5 12.5
2.7
1.0
101.1
14.7 -4.1
3.2
60.3
30.1
20.7
4.8
2.9
19.4
24.2
5.6
13.7
10.6
5.0
5.5
-2.1
-5.6
2.1
-1.6 -12.1
-12.5
1.3
8.0
7.9
2.0
-1.0
3.4
9.1
-9.2
1.5
0.3
22.9
19.5
4.4
0.1
15.0
15.2 35.2
3.5
10.1
298.4 26.4
2.6
1.7
238.8
27.2 -18.4
1.6
161.7
195.5
7.3
2.4
0.1
160.2
13.3
6.6
4.7
110.6
46.9
25.4
5.1
0.0
18.8
25.5 13.1
8.0
6.8
54.1
11.1
0.6
-3.1
39.5
3.1
-3.2
-5.7
21.7
68.4
9.8
-1.0
-4.0
52.5
6.2
-3.8
0.2
35.2
17.0
19.5
6.3
2.4
8.6
32.7 -3.2
-3.8
3.7
PAT (INR b)
Gr (%)
Var. over
YoY
QoQ Exp. (%)
11.9
-6.2
-18.9
35.1
3.4
15.1
-13.3
-5.5
5.2
6.0
2.9
20.3
-16.8
-27.3
30.8
-18.9
-33.8
-19.3
17.2
21.5
12.5
-29.6
-38.5
-12.3
-73.8
LP
-24.8
23.9
-17.7
-19.0
3.4
6.3
-5.6
-24.6
-6.9
-17.2
16.3
-1.3
-0.2
26.2
-4.2
9.1
7.7
42.1
2.9
20.5
2.0
-3.8
24.6
-19.1
-7.4
2.5
5.8
0.1
-15.6
-51.2
-26.8
-0.2
-0.6
-6.1
16.6
30.1
4.1
8.7
45.9
0.5
5.1
-19.3
-7.6
4.3
52.7
-6.5
20.5
51.4
1.2
-5.4
-19.9
-21.3
27.3
114.3
-14.4
24.8
-26.6
14.1
26.0
133.1
-12.0
33.7
0.6
10.3
42.0
-8.8
4.5
23.8
-11.0
10.2
-0.9
-27.5
-6.0
-13.4
-18.2
-26.9
158.5 222.0
75.9
21.6
-48.8
-5.9
PL
PL
PL
97.7
-53.4
13.3
26.9
-53.9
3.9
106.0
-37.5
14.6
-32.3
-44.8
-27.5
15.7
-3.9
0.8
17.4
-2.1
1.7
29.9
35.5
18.8
4.1
-15.4
-5.9
47.5 1846.8
30.6
3.5
-15.6
-7.1
-86.5
-87.6
-85.2
18.2
11.4
3.9
35.3
-2.0
4.6
14.6
3.3
4.0
-11.0
-6.0
-0.1
2.2
-7.6
-7.2
2.0
-14.8
-1.9
29.0
5.4
8.8
August 2024
68
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Company
SBI Cards
Banks-PSU
Bank of Baroda
Canara Bank
Indian Bank
Punjab National Bank
State Bank
Union Bank
Insurance
HDFC Life Insur.
ICICI Lombard
ICICI Pru Life
Max Financial
SBI Life Insurance
Star Health
NBFC - Lending
AAVAS Financiers
Bajaj Finance
Can Fin Homes
Chola. Inv & Fin.
CreditAccess
Five-Star Business
Fusion Micro
Home First Fin.
IIFL Finance
L&T Finance
LIC Housing Fin
M & M Financial
Manappuram Finance
MAS Financial
Muthoot Finance
PNB Housing
Poonawalla Fincorp
Repco Home Fin
Shriram Finance
Spandana Sphoorty
NBFC - Non Lending
360 ONE WAM
Angel One
BSE
Cams Services
MCX
Healthcare
Ajanta Pharma
Alembic Pharma
Alkem Lab
Apollo Hospitals
Aurobindo Pharma
Biocon
Cipla
Divis Labs
Dr Reddy’ s Labs
ERIS Lifescience
Gland Pharma
Glenmark Pharma
Sales (INR b)
Gr (%)
Var. over
Jun-24 YoY QoQ Exp. (%)
14.8
19.7
4.4
2.0
879.6 6.5
-1.0
-2.1
116.0
5.5
-1.6
-0.2
91.7
5.8
-4.3
-5.1
61.8
8.3
2.7
0.5
104.8 10.2
1.1
1.2
411.3
5.7
-1.3
-3.7
94.1
6.5
-0.3
0.3
500.9 12.8 -37.3
-5.8
128.1
9.7 -38.8
-6.7
45.0
15.9
3.1
-7.4
82.8
12.3 -45.3
-13.6
54.0
10.8 -49.7
-8.0
155.7 14.9 -38.3
0.0
35.2
15.7
3.7
-0.3
318.4 20.4
2.5
-1.1
2.4
8.1
3.2
-3.1
83.7
24.5
4.4
-0.9
3.2
12.7 -1.9
-4.2
25.7
39.7
9.3
0.9
9.3
28.7
5.2
0.7
4.8
31.4
4.6
0.0
4.0
34.6 10.2
8.0
1.5
17.5
7.0
0.3
14.4
9.7 -12.6
-3.7
21.0
19.9
5.7
0.0
19.9 -10.0 -11.1
-7.5
17.8
12.6 -1.6
-5.4
15.4
19.4
2.9
-0.5
1.8
27.5
4.2
-1.9
23.0
21.7
8.0
2.7
6.4
3.7
3.0
-4.7
5.8
36.8
2.4
-5.2
1.7
8.5
3.0
1.8
52.3
24.6
2.9
-0.2
4.3
48.0 12.5
5.1
26.9 73.6 10.8
5.4
6.0
47.8
4.8
16.7
9.2
76.0
4.7
2.5
6.1
181.9 24.4
2.9
3.3
26.8
6.7
0.7
2.3
60.8 29.4
4.2
837.8 11.6
3.6
-0.5
11.4
12.1
8.6
3.9
15.6
5.1
2.9
-0.3
30.3
2.2
3.3
-1.5
50.9
15.1
2.9
1.4
75.7
10.5 -0.2
-1.2
34.3
0.3 -12.4
-13.3
66.9
5.8
8.6
-0.9
21.2
19.1 -8.0
-3.7
76.7
13.9
8.3
3.7
7.2
54.2 30.6
2.8
14.0
16.0 -8.8
-7.4
32.4
6.9
5.9
-1.5
EBITDA (INR b)
Gr (%)
Var. over
Jun-24 YoY QoQ Exp. (%) Jun-24
19.0
25.4
3.7
1.2
5.9
600.9
3.6
-2.3
0.3
347.3
71.6
-8.5 -11.7
-7.8
44.6
76.2
0.2
3.1
-4.0
39.1
45.0
8.9
4.6
2.1
24.0
65.8
10.3
2.6
-4.8
32.5
264.5
4.6
-8.0
2.5
170.4
77.9
8.4
19.2
10.1
36.8
22.1
10.9 -45.1
-13.4
22.8
7.2
17.7 -41.8
0.3
4.8
-3.5
Loss Loss
Loss
5.8
4.7
7.8 -39.2
-5.6
2.3
2.5
2.8 -69.1
-22.0
1.6
9.7
11.5 -35.8
-2.4
5.2
1.4
-3.5
LP
-45.2
3.2
238.6
19.2
3.9
-1.0
132.4
1.7
15.8 -6.8
-5.2
1.3
69.5
25.3
8.4
2.9
39.1
2.8
12.9
2.9
-3.0
2.0
18.5
38.1 13.6
7.7
9.4
7.1
30.4
3.9
-0.1
4.0
3.5
35.9
6.6
-0.3
2.5
3.0
26.5
2.4
5.8
-0.4
1.2
21.9
4.9
3.6
0.9
6.9
-14.9 -12.9
-14.6
2.9
14.7
18.9
7.8
-1.8
6.9
17.7
-11.9 -7.0
-7.5
13.0
11.3
13.5 -3.3
-10.0
5.1
9.8
22.4
5.1
2.0
5.6
1.2
25.0
5.2
-2.6
0.7
17.2
22.5 13.6
3.9
10.8
5.4
6.9
-4.3
-7.4
4.3
4.3
46.9
5.6
-8.6
2.9
1.4
10.7
7.3
5.4
1.1
38.5
23.3 -1.3
-4.5
19.8
2.9
51.7
7.8
9.1
0.6
13.0
89.7 21.0
13.0
10.2
3.4
70.2 22.9
28.7
2.4
4.0
33.7 -13.5
21.8
2.9
2.8
305.2 195.2
4.6
2.6
1.5
36.1
4.5
-2.1
1.1
1.3
1140.0 30.0
-4.1
1.1
203.6
23.4 11.0
4.7
126.6
3.6
28.1 29.5
26.2
2.6
2.4
19.2 -8.9
-10.6
1.3
6.1
56.4 51.4
22.0
5.5
6.8
32.6
5.4
-0.3
3.1
16.9
47.2
0.5
0.1
9.0
6.2
-12.9 -32.2
-31.5
-1.6
17.2
14.9 30.4
-1.2
11.8
6.2
23.4 -14.9
-8.8
4.3
21.3
4.0
20.4
7.7
13.9
2.5
47.3 47.2
2.6
0.8
2.6
-10.1 -26.3
-26.0
1.4
5.9
34.5 16.6
-4.0
3.4
PAT (INR b)
Gr (%)
YoY
QoQ
0.2
-10.3
13.2
-8.4
9.5
-8.8
10.5
3.9
40.6
7.0
159.0
8.0
0.9
-17.7
13.7
11.1
27.6
13.5
15.0
16.2
48.7
11.7
8.9
29.7
51.4
LP
36.3
-35.9
10.8
124.1
12.5
-0.9
14.9
-11.6
13.8
2.3
8.8
-4.5
29.8
-11.0
14.1
0.1
36.9
6.6
PL
PL
27.0
5.2
-32.3
-22.9
29.1
23.8
-1.8
19.2
45.5
-17.1
11.7
-1.2
23.0
3.5
10.6
2.1
24.6
-1.5
45.7
-12.1
18.4
-2.4
18.2
1.8
-53.4
-56.7
68.7
15.8
31.2
0.4
32.5
-13.9
159.6 148.3
41.3
3.9
464.2
26.3
29.1
9.1
30.8
39.3
11.6
-24.7
90.1
79.4
83.2
20.3
51.9
-10.7
PL
PL
18.3
35.5
20.3
-20.0
2.0
14.9
-12.3
2.0
-25.9
-25.0
206.4 102.6
Var. over
Exp. (%)
-7.8
1.5
-3.1
-1.3
8.9
8.1
1.0
2.8
-3.2
-8.2
0.8
-6.0
-25.3
30.5
-22.4
-3.7
-6.3
-0.9
-6.7
1.7
-2.1
1.3
PL
2.1
-34.2
1.3
4.4
-2.8
-3.3
-3.5
-8.2
-0.6
-9.2
9.8
-1.5
-33.0
8.8
9.4
21.2
6.5
-0.3
-4.8
5.5
33.2
-19.1
39.9
2.3
-7.1
PL
3.8
-16.3
8.2
-6.8
-32.2
16.6
August 2024
69
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Company
Global Health
Granules India
GSK Pharma
Ipca Labs.
Laurus Labs
Lupin
Mankind Pharma
Max Healthcare
Piramal Pharma
Sun Pharma
Torrent Pharma
Zydus Lifesciences
Infrastructure
G R Infraproject
IRB Infra
KNR Constructions
Logistics
Adani Ports
Blue Dart Express
Concor
JSW Infra
Mahindra Logistics
Transport Corp.
TCI Express
VRL Logistics
Media
PVR Inox
Sun TV
Zee Entertainment
Metals
Coal India
Hindalco
Hindustan Zinc
JSPL
JSW Steel
Nalco
NMDC
SAIL
Tata Steel
Vedanta
Oil & Gas
Oil Ex OMCs
Aegis Logistics
BPCL
Castrol India
GAIL
Gujarat Gas
Gujarat State Petronet
HPCL
Indraprastha Gas
IOC
Mahanagar Gas
MRPL
Oil India
ONGC
Jun-24
8.6
11.8
8.1
20.9
11.9
56.0
28.9
19.3
19.5
125.2
28.6
62.1
45.7
19.0
18.5
8.2
148.9
69.6
13.4
21.0
10.1
14.2
10.5
2.9
7.3
46.0
11.9
12.8
21.3
2,809.7
364.6
570.1
81.3
136.2
429.4
28.6
54.1
240.0
547.7
357.6
7,762.6
3,561.2
16.0
1,131.0
14.0
336.7
44.5
3.4
1,138.0
35.2
1,932.4
15.9
232.5
58.4
352.7
Sales (INR b)
Gr (%)
Var. over
YoY QoQ Exp. (%)
11.4
6.5
4.8
19.7
0.3
-0.1
7.0 -12.4
0.6
31.8
2.9
-3.0
1.1 -17.0
-16.4
21.5 12.9
11.3
12.2 18.5
2.4
19.1
7.8
1.8
11.6 -23.6
-0.5
6.3
6.0
-5.0
10.3
4.2
-4.0
20.8 12.2
9.8
-3.1 -15.3
-3.0
-11.9 -12.0
-3.0
13.4 -10.1
1.4
-11.9 -30.5
-11.7
10.3 -2.3
-2.6
11.3
0.9
-2.9
8.5
1.5
-1.5
9.3
-9.5
-5.5
15.0 -7.9
-2.5
9.8
-2.1
-1.6
10.0 -3.1
1.2
-3.9
-7.6
-6.7
7.9
-5.4
2.2
-0.2
5.6
-0.9
-8.8
-5.2
1.9
-3.2 37.6
-7.7
7.4
-1.8
2.1
1.4
-3.5
-1.7
1.3
-2.5
0.3
7.6
1.8
-2.3
11.6
7.7
3.4
8.2
1.0
-0.4
1.7
-7.2
1.9
-10.1 -20.2
-26.4
0.4 -16.6
0.9
-1.5
-8.6
-6.5
-7.9
-6.7
-5.6
6.0
0.7
3.7
4.0
-1.8
-6.1
10.0 -1.4
-2.0
-23.8 -12.8
-46.2
0.1
-3.0
11.4
4.8
5.5
1.3
3.9
4.1
3.5
17.7
7.6
9.4
-14.8 -26.2
11.6
1.6
-0.7
7.8
3.3
-2.1
2.9
-2.2
-2.4
-24.6
3.4
1.4
5.6
9.8
-8.2
-8.7
25.7
1.4
-2.4
4.3
1.8
-5.2
Jun-24
1.9
2.6
2.3
3.9
1.7
13.6
7.2
4.9
2.0
35.3
9.2
21.1
12.4
2.5
8.6
1.4
55.9
42.4
1.1
4.3
5.1
0.7
1.0
0.3
0.9
9.4
-0.4
7.1
2.7
534.7
115.4
75.0
39.5
28.4
55.1
9.3
23.4
22.2
66.9
99.5
851.3
687.6
2.3
56.5
3.2
45.3
5.4
3.0
20.8
5.8
86.3
4.2
6.2
24.7
186.2
EBITDA (INR b)
Gr (%)
Var. over
YoY QoQ Exp. (%) Jun-24
3.7
0.1
-4.2
1.1
64.2
1.4
5.6
1.3
60.2 -10.4
9.1
1.8
33.5 22.0
7.1
1.9
2.7 -29.1
-23.3
0.1
109.0 36.6
40.9
9.0
10.5 22.4
1.6
5.7
15.2
0.0
-3.9
3.1
54.5 -61.4
27.1
-0.9
11.2 20.8
8.0
28.8
16.8
4.6
-1.8
4.7
37.6 29.8
24.8
14.4
-2.1 -11.0
-2.0
4.2
-21.6 -17.5
-7.9
2.0
10.2 -3.7
2.7
1.4
-21.7 -33.3
-16.0
0.8
11.2
0.4
-2.5
33.6
13.1
5.0
1.0
26.3
-3.4 -21.5
-27.3
0.5
10.3 -11.7
-15.8
2.6
14.0 -11.4
-7.7
3.0
-0.5 17.1
2.0
-0.1
3.0
-5.1
-2.8
0.9
-29.4 -27.0
-26.8
0.2
-14.7 -17.5
-6.1
0.1
-8.0 30.6
-4.2
5.6
PL
PL
Loss
-1.4
-10.2 38.9
-15.0
5.5
75.3 29.2
33.8
1.5
16.9
8.9
5.4
266.9
3.4
17.3
18.1
109.6
31.3 12.3
6.8
34.0
17.9
8.1
4.6
23.5
8.0
16.2
-7.7
13.4
-21.8 -10.0
-12.9
8.5
57.2 -15.6
-17.9
5.9
17.4 11.3
33.5
19.6
34.6 25.5
-9.7
3.2
29.4
1.4
12.4
13.2
54.9 13.4
5.2
36.1
-26.5 -11.8
-2.7
369.4
0.7
-4.2
-2.9
309.2
18.6 -24.3
-6.2
1.3
-64.2 -39.0
-5.1
30.1
4.1
9.8
-4.4
2.3
73.3 27.3
31.6
27.2
38.1 -9.4
-2.7
3.3
-10.5 -20.4
32.3
2.1
-78.2 -57.3
-36.3
3.6
-9.4 11.3
7.9
4.0
-61.0 -19.2
15.6
26.4
-19.7 6.3
8.0
2.8
-72.5 -73.7
-56.4
0.7
5.9
5.6
0.5
14.7
-4.3
7.0
-0.2
89.4
PAT (INR b)
Gr (%)
YoY
QoQ
4.2
-16.6
112.7
3.9
58.6
-5.1
24.9
106.7
-52.7
-83.2
214.9
76.9
17.2
21.1
1.0
-7.0
Loss
PL
26.1
2.6
24.6
4.9
28.2
22.5
-6.6
-22.8
-3.2
-10.5
4.6
-25.9
-26.8
-39.2
22.2
5.5
28.7
14.9
-13.8
-32.2
4.6
-13.3
16.9
-20.1
Loss
Loss
10.6
-12.9
-31.0
-29.4
-60.4
-37.6
-5.3
34.4
Loss
Loss
-6.2
37.2
195.9
38.5
17.8
26.0
4.1
26.2
38.0
7.2
19.4
15.1
-20.7
43.0
-63.9
-34.9
76.3
-13.0
18.8
37.2
52.9
80.0
112.3
9.3
319.5 129.8
-41.5
-25.9
-5.4
-15.5
13.5
-33.0
-71.4
-45.9
3.1
7.4
71.1
25.1
53.3
-10.4
-7.5
-18.8
-94.3
-87.5
-8.4
4.9
-80.8
-45.4
-22.8
7.4
-93.8
-94.3
-9.1
-27.7
-10.8
-9.4
Var. over
Exp. (%)
-8.8
9.5
7.3
11.6
-81.7
77.6
5.8
-12.7
Loss
8.7
-3.5
24.2
0.7
9.1
-0.1
-14.6
4.5
13.0
-38.4
-21.6
-9.8
PL
3.4
-28.0
-33.5
6.3
Loss
-10.5
47.9
18.7
48.8
-3.1
8.4
-5.6
-41.4
-20.6
31.6
-49.5
18.4
38.7
-8.9
-8.0
2.5
-8.6
-6.4
20.9
0.2
45.4
-71.4
9.2
11.5
9.8
-88.3
-19.5
-9.1
August 2024
70
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Company
Petronet LNG
Reliance Inds.
Real Estate
Brigade Enterpr.
DLF
Godrej Properties
Kolte Patil Dev.
Macrotech Developers
Mahindra Lifespace
Oberoi Realty
Phoenix Mills
Prestige Estates
Sobha
Sunteck Realty
Retail
Aditya Birla Fashion
Avenue Supermarts
Barbeque Nation
Bata India
Campus Activewear
Devyani Intl.
Jubilant Foodworks
Kalyan Jewellers
Metro Brands
Relaxo Footwear
Restaurant Brands
Sapphire Foods
Senco Gold
Shoppers Stop
Titan Company
Trent
Vedant Fashions
V-Mart Retail
Westlife Foodworld
Staffing
Quess Corp
SIS
Team Lease Serv.
Updater Services
Technology
Coforge
Cyient
HCL Technologies
Infosys
L&T Technology
LTIMindtree
Mphasis
Persistent Systems
TCS
Tech Mahindra
Wipro
Zensar Tech
Telecom
Bharti Airtel
Indus Towers
Sales (INR b)
Gr (%)
Var. over
Jun-24 YoY QoQ Exp. (%)
134.2 15.1 -2.7
-9.9
2,317.8 11.7 -2.0
-0.8
116.8 20.7 -26.0
-5.7
10.8
64.8 -36.7
-5.7
13.6
-4.3 -36.2
-7.7
7.4
-21.0 -48.2
6.4
3.4
-40.3 -35.3
-16.2
28.5
76.0 -29.2
-17.7
1.9
91.9 1216.6
17.6
14.1
54.4
6.9
41.2
9.0
11.5 -30.8
-1.1
18.6
10.8 -14.0
-3.7
6.4
-29.5 -16.1
-33.7
3.2
348.2 -25.9
28.0
511.5 16.4 10.4
-0.1
34.3
7.3
0.6
-1.5
140.7 18.6 10.5
-0.1
3.1
-5.6
2.6
-14.5
9.4
-1.4 18.4
-7.1
3.4
-4.1
-6.8
-8.9
12.2
44.3 16.7
2.4
14.4
9.9
8.1
1.3
55.4
26.5 22.1
-0.8
5.8
-1.1
-1.2
-9.2
7.5
1.3
0.1
-3.7
4.9
16.2 11.7
-3.1
7.2
9.8
13.7
-2.0
14.0
7.5
23.4
-9.2
10.3
5.3
3.4
-4.8
132.7 11.5
6.2
1.7
39.9
57.4 25.3
8.5
2.4
-23.0 -34.0
-8.8
7.9
15.9 17.6
0.0
6.2
0.3
9.6
-3.7
113.6 10.1
2.3
-2.3
50.0
8.8
1.9
-0.1
31.3
5.1
-0.2
-8.6
25.8
18.8
6.1
2.1
6.5
13.1
3.2
-4.2
1,880.8 3.7
1.3
0.4
24.0
8.1
1.8
-1.2
16.8
-0.6
-9.9
-5.9
280.6
6.7
-1.6
0.4
393.2
3.6
3.7
1.3
24.6
7.0
-3.0
-2.7
91.4
5.1
2.8
1.8
34.2
5.2
0.3
-1.2
27.4
17.9
5.7
0.5
626.1
5.4
2.2
0.6
130.1 -1.2
1.0
0.3
219.6 -3.8
-1.1
-0.9
12.9
5.0
4.7
1.9
620.3 3.5
1.5
-0.7
385.1
2.8
2.4
-0.4
73.8
4.3
2.6
-0.2
Jun-24
13.7
387.7
33.7
2.9
2.3
-1.3
0.3
7.6
-0.4
8.2
5.3
8.0
0.6
0.3
56.1
3.6
12.2
0.5
1.8
0.5
2.2
2.8
3.8
1.8
1.0
0.6
1.2
1.1
1.4
12.5
6.1
1.1
1.0
0.8
3.8
1.8
1.4
0.2
0.4
428.3
3.1
2.7
58.6
103.1
4.6
16.1
6.2
4.6
167.4
15.6
44.4
2.0
295.4
197.1
45.0
EBITDA (INR b)
Gr (%)
Var. over
YoY QoQ Exp. (%) Jun-24
16.2 24.4
-10.4
10.0
1.8
-8.8
-5.5
151.4
43.3 -29.1
-4.3
28.3
67.4 -32.4
-8.0
0.8
-42.3 -69.7
-56.6
6.4
Loss
PL
PL
5.2
-69.5
LP
-7.2
0.1
129.3 -27.7
-18.9
4.8
Loss Loss
Loss
0.1
72.0
3.4
43.8
5.8
7.9 -15.3
2.5
2.3
51.2 -3.8
61.5
2.3
-14.5 -9.9
-52.9
0.1
LP
-79.5
-20.6
0.2
13.3 14.2
-0.3
22.0
22.6 26.3
12.3
-2.1
18.0 29.4
-5.2
7.7
8.8
-7.0
-16.0
0.0
-22.8 1.5
-32.4
0.8
-21.8 -19.0
-20.6
0.3
28.8 28.5
11.3
0.3
0.6
9.4
0.2
0.5
16.4 22.8
0.2
1.8
-3.3 13.7
-10.8
0.9
-8.0 -17.8
-17.9
0.4
29.0 13.5
-4.2
-0.3
2.3
20.6
-2.1
0.1
61.8 24.0
34.4
0.5
-17.5 -13.4
-26.4
-0.2
10.8
4.7
5.3
7.2
67.0 27.9
16.1
3.4
-23.9 -35.6
-3.2
0.6
88.7 146.0
47.5
0.1
-24.1 3.7
-7.4
0.0
9.1
8.0
-7.2
2.0
19.4 -5.8
0.5
0.9
-1.2 63.7
-19.7
0.6
-15.5 -39.3
-32.2
0.2
24.5
1.6
50.3
0.3
6.9
0.2
1.8
291.8
-5.9 -24.7
-22.1
1.3
-16.0 -20.9
-17.3
1.5
7.4
-3.9
1.8
42.6
4.8
7.7
3.9
63.7
0.8
-9.3
-6.1
3.1
-1.8
4.6
1.0
11.4
5.4
-3.2
0.3
4.0
7.6
0.2
-2.3
3.1
11.7 -2.6
1.3
121.1
-2.3 11.1
9.7
8.5
6.0
1.4
2.0
30.0
-14.8 -3.4
-5.4
1.6
4.5
2.5
0.2
-22.5
0.6
1.8
-3.0
29.3
29.4 10.6
17.1
19.3
PAT (INR b)
Gr (%)
YoY
QoQ
26.5
35.4
-5.5
-20.1
62.0
-23.2
117.3
-59.4
22.5
-29.9
288.3
8.5
-86.4
LP
182.4
-28.0
LP
-82.2
81.7
-25.8
-3.1
-28.7
-12.9
66.1
-49.8
-13.9
LP
-77.5
5.8
21.4
Loss
Loss
17.5
37.4
Loss
Loss
-20.6
33.4
-19.3
-22.5
-17.2
753.4
-31.5
49.2
23.4
29.0
-1.7
6.1
-21.2
-27.7
Loss
Loss
-67.1
301.5
85.3
59.4
PL
PL
-5.4
-7.3
130.8
38.1
-32.0
-46.0
LP
LP
-88.7
319.6
6.9
44.9
81.3
-13.4
-28.3
LP
-24.8
-29.3
27.2
32.0
7.8
0.2
-27.3
-40.7
-16.9
-25.1
20.5
6.8
7.1
4.8
0.8
-8.0
-1.5
3.1
2.1
2.9
10.5
-2.8
8.9
-3.2
-10.9
-12.2
4.6
5.9
1.1
-8.9
Loss
Loss
0.8
-0.9
42.9
4.0
Var. over
Exp. (%)
-3.0
-9.1
17.9
-25.0
-16.2
171.3
23.9
-18.8
7.1
46.5
7.5
912.7
-88.4
-10.0
-6.9
Loss
-6.1
Loss
-33.1
-21.6
56.5
-11.1
-4.9
-11.4
-28.0
Loss
-52.3
40.6
PL
-8.6
12.5
-5.1
LP
-66.1
-21.3
1.9
-41.6
-42.1
25.8
1.6
-43.3
-23.1
13.3
0.9
-7.4
-2.2
-4.9
-4.7
-0.3
4.1
4.5
8.6
Loss
-20.1
19.4
August 2024
71
 Motilal Oswal Financial Services
India Strategy | Review 1QFY25
Company
Tata Comm
Vodafone Idea
Others
APL Apollo Tubes
Cello World
Coromandel International
EPL
Godrej Agrovet
Indian Hotels
Interglobe Aviation
Kajaria Ceramics
Lemon Tree Hotel
MTAR Tech
One 97 Comm.
UPL
Zomato
Sales (INR b)
Gr (%)
Var. over
Jun-24 YoY QoQ Exp. (%)
56.3
18.1 -1.0
-3.5
105.1 -1.4
-0.9
-0.9
509.7 7.4
-5.1
3.0
49.7
9.4
4.4
-0.5
5.0
6.1
-2.3
-2.6
47.3 -16.9 20.9
-15.4
10.1
10.7 -2.1
-1.2
23.5
-6.4 10.1
-13.0
15.5
5.7 -18.6
-2.6
195.7 17.3
9.8
12.9
11.1
4.6 -10.2
1.4
2.7
20.6 -18.1
-3.4
1.3
-15.9 -10.3
-1.1
15.0 -35.9 -33.8
0.7
90.7
1.2 -35.6
1.3
42.1
74.1 18.1
10.5
Jun-24
11.2
42.0
84.0
3.0
1.3
5.1
1.9
2.3
4.5
57.7
1.7
1.2
0.2
-7.9
11.5
1.8
EBITDA (INR b)
PAT (INR b)
Gr (%)
Var. over
Gr (%)
YoY QoQ Exp. (%) Jun-24
YoY
QoQ
9.8
6.4
1.9
2.5
-34.9
-33.8
1.1
-3.0
-0.7
-73.5
Loss
Loss
-2.6
2.3
19.4
30.9
-30.3
-4.9
-1.8
7.6
-7.5
1.9
-0.2
13.3
8.5
-3.0
-0.2
0.8
6.6
-7.0
-28.7 85.3
-27.0
3.1
-37.1
94.0
16.9 -2.7
-1.5
0.6
18.2
-5.1
17.2 52.8
1.2
1.4
28.3
136.6
9.6 -31.9
-0.7
2.5
11.7
-40.5
11.8 32.0
49.2
27.3
-11.7
44.0
-1.3
-2.9
2.8
0.9
-16.4
-12.3
10.1 -32.9
-8.0
0.2
-15.6
-70.4
-51.9 -8.9
-28.7
0.0
-78.2
-9.1
Loss Loss
Loss
-8.4
Loss
Loss
-28.0 -40.7
-18.2
-2.0
PL
PL
LP
105.8
-14.7
2.5 12550.0 44.6
Var. over
Exp. (%)
2.1
Loss
45.2
-5.5
-1.0
-33.7
2.6
4.4
3.5
73.7
-4.1
-18.8
-67.6
Loss
Loss
15.1
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REPORT GALLERY
RECENT STRATEGY/THEMATIC REPORTS
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RECENT INITIATING COVERAGE REPORTS
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Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall be within following 30 days take
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9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
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