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HDFC Securities Institutional Equities
ITC - The underlying core remains strong
ITC Ltd. delivered another quarter with a beat in earnings. Net revenue and Ebitda clocked 3/22% YoY growth versus the expectation of 5/14%. Cigarette revenue growth was at 17% YoY (our estimate: 14%), with volume growth at ~15% (6.5% three-year compound annual growth rate). With consistent stability in the taxes and demand environment, we expect volume CAGR to remain healthy in the coming quarters (we model 4% volume CAGR in FY24/FY25).
Tata Power - Continues to deliver strong performance
In Q3 FY23, Tata Power Company Ltd.'s consolidated revenue increased 29.5% YoY to Rs 141 billion, below our estimate of Rs 150 billion (down 5.5%). Strong operational performance across its regulated, standalone (including Mundra), coal special purpose vehicle and renewable business were the key underpinnings. Ebitda grew marginally by 42.9% YoY on the back of higher availability at Mundra, capacity addition in renewables and higher efficiencies in the distribution business.
Marico - In-line show
Marico Ltd.'s consolidated revenue was up 3% YoY, domestic revenue/volume were up 2/4% YoY (three-year CAGR at 10/6%). Domestic volume was supported by the Saffola franchise. Parachure revenue/volume were up -6/2% YoY (market share continued to expand) while value added hair oil value was down by 3%. The domestic demand for the mass segment continues to be weak; however, premium continues to grow. Packaged food categories have seen strong growth, which was witnessed for Marico's Saffola franchise too (foods grew 31%).
Mahanagar Gas - Higher realisation support margins
Our optimism on Mahanagar Gas Ltd. is premised on lower volume growth compared to peers and uncertain long-term volume growth visibility since no new geographical areas were won in the 9/10/11th round of city gas distribution bids. Q3 FY23 Ebitda, at Rs 2.6 billion, and adjusted profit after tax, at Rs 1.7 billion, came above our estimates, owing to higher than-expected realisation, lower employee cost, and higher other income.
CDSL - Moderating revenue growth
Central Depository Services India Ltd. delivered a weak performance, with revenue declining 5.2% QoQ (lower than the estimate), owing to a sharp drop in e-voting revenue (seasonality) while excluding e-voting, revenue was up 1.8% QoQ. The annuity revenue stream (~33% of revenue) continues to remain strong while KYC revenue remained weak due to lower fetches. The pace of beneficiary owner account addition has moderated; however, CDSL continues to gain market share (71.9% market share with ~78 million BO accounts).
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