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HDFC Securities Institutional Equities
Dabur - Expect better growth and margin print in FY24
Dabur India Ltd. delivered consolidated revenue/domestic volume growth of 6/1% YoY versus the expectation of 7/1%. The domestic business grew by 4.7% while the international business posted a 1% growth. While primary sales were impacted by trade destocking, secondary sales grew in double digits. Dabur's healthcare/home and personal care/food and beverage grew -5/-4/+29% YoY. The healthcare segment was impacted by the high base of the previous year (omicron-led); homecare continued to lead growth in the HPC segment. F&B continued to grow at a fast clip with management aiming to double the business over the next four-five years.
TVS Motor - Margin maintained despite EV ramp-up
TVS Motors' Q4 adjusted profit after tax at Rs 3.64 billion came ahead of our estimate of Rs 3.3 billion, led by the better-than-expected margin. TVS Motors was able to improve margin QoQ despite the ramp-up of iQube in the quarter and that is commendable. TVS Motors continued to outperform peers even in FY23:
it gained a 100 bps market share in motorcycles to touch a record-high level of 8.9%;
in scooters, it is the biggest gainer and its market share is up 220 bps to 23.6%;
even in two-wheeler electric vehicles, TVS Motors has now emerged as the second-largest player and sold 97,000 units of iQube in FY23. With supply challenges now largely over, we expect TVS' outperformance to continue on the back of the ramp-up of its launches, including the new Ronin and Raider.
Tata Power - Continues to deliver strong performance
In Q4 FY23, Tata Power Company Ltd.'s consolidated revenue increased 4.1% YoY to Rs 124 billion, below the consensus estimate of Rs 130 billion (down 5.0%). Strong operational performance across its regulated, standalone (including Mundra), coal special purpose vehicle and renewable businesses were the key underpinnings. Ebitda grew materially by 45.5% YoY on the back of higher availability at Mundra, capacity addition in renewables, and higher efficiencies in the distribution business.
Cholamandalam Investment - Spectacular execution raises the bar
Cholamandalam Investment and Finance Company Ltd. reported a stellar quarter with profit and loss outcomes significantly ahead of our estimates on the back of an extraordinary surge in assets under management growth (+38.5% YoY), 20 bps reflation in net interest margins (7.8%), and improving asset quality.
It maintained its strong disbursal momentum (+65% YoY; +20% QoQ), led by a contribution from across product segments. The management remains upbeat about growth prospects despite a high base with increased portfolio diversification (share of vehicle finance at 63%) and increasing penetration of non-vehicle segments in existing branches.
KEC International - Rerating contingent on margin recovery
KEC International Ltd. reported Q4 FY23 numbers with a slight recovery in the consolidated margins. However, the standalone margin continues to be at multi-year low levels. With FY23 order inflow of Rs 223.8 billion (versus revised guidance of Rs 180-190 billion) and level-one on Rs 35 billion, the order book as of March 2023 stood at Rs 340 billion (~two times FY23 revenue). There has been movement in collections from Afghanistan as KEC received Rs 500 million in Q4 FY24 and it expects another Rs 2 billion by May-23 end.
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