Nuvama Strategy Report Compendium of Conference Calls Q1FY24 Covering

August 2023
Compendium of conference calls: Q1FY24
Quarterly Quotes
Headwinds
galore
On a firm footing to
Debt
ride the trend
woes
Challenges
ahead
Policy push Growth
levers
in place
Demand
swing Consolidation
Debt to be wave
rolled over Rising
ad spends
Costs in
control
Nuvama Research Team

Nuvama Institutional Equities
research@nuvama.com
Q1FY24 conference call highlights
Investor and Corporate,
Quarterly numbers matter; they lend a quantitative as well as qualitative

sheen to what has been (Q1FY24 review). But management quotes go far
beyond plain-vanilla numbers: they offer deeper insights into what individual
companies are doing, how they are thinking and how market participants are
perceiving them. That one can benchmark them to industry peers or their
previous observations and/or collate them by sector extends their relevance
well beyond the results or near-term influences. Management quotes are,
hence, far more significant and relevant than mere numbers for the market.
Ongoing management commentaries also entail links and threads to a bigger

picture as to what’s happening—not only at individual companies, but also
in the sector and markets. Besides, they contain a key element of guidance,
helping investors identify winning ideas and shed potential losers. So, more
than the numbers, it’s the linkage across numbers that’s of bigger import.
We try to tie the threads via links to previous quarters (Q4FY23) and
(Q3FY23).
In this edition, we note that aggregate PAT for our coverage swelled to 49%
YoY (Q4FY23: 15% YoY growth)—riding on a large swing in OMC profits and
strong growth in BFSI. Key highlights: i) Top line slowdown broadening:
BSE500 top line slowed further to 6% with nearly 30% of them posting top-
line contraction (usually happens during a crisis). The slowdown is more
pronounced in global-oriented sectors (IT, chemicals), followed by low-ticket
consumption while high-end consumption and capex seem to be doing well.
High domestic real rates and a slowing global economy risk broadening the
slowdown. ii) Margins to rescue: While top line slowed, EBITDA growth for
BSE500 (ex-commodities and BFSI) accelerated to 22% (Q4FY23: 13% YoY) as
lower input prices boosted margins. However, with input prices stabilising,
top line will be critical in shaping margins hereon. iii) BSE500 wage bill
growth strong at 18%: Falling input prices boosted India Inc.’s gross profits.
Hence, despite strong wage bill growth, margins expanded. Going ahead,
gross profits should moderate as demand slows amid stable input prices. In
such a scenario, either wage bill or margins weaken. We reckon the former
is more likely as seen many times in the past. iv) Banks’ purple patch could
be ending: FY23 was a purple patch in banking history with improving NIMs,
rising credit growth and lower credit costs. However, in Q1FY24, NIMs
contracted, although credit growth is strong (but stable) and credit costs still
benign. v) Nifty earnings stable: FY24E EPS growth remains largely
unchanged at 15–16% (versus 11% in FY23). This is essentially premised on
top line and margins holding up. We see risks to the same, and maintain that
earnings downgrade risks are likely.
For those in a hurry, a roundup of key takeaways, quotes and notables that
could be reflective of the issues that matter is included. The compendium
captures the essence and nuances of what companies are saying bottom-up.
We do hope you find this product useful and, as always, welcome feedback
to make it better and more relevant for you.
Nuvama Research Team
Nuvama Research is also available on research.nuvama.com, Bloomberg - NUVA, Thomson Reuters, and Factset Nuvama Wealth Management Ltd
A roundup of key takeaways
While operating performance was in line, other

income drove the PAT outperformance AMCs
“We see a positive scenario on the demand side,

especially for second half of this year and onwards.
The singular focus as we move ahead will be
growth and market share. We will see more
launches of new models over the next few quarters
Automobiles as we intend to win big in the premium segment”
—Mr Niranjan Gupta, CEO, Hero MotoCorp
“Indian economy continues to exhibit

stronger-than-expected growth
momentum with robust domestic
investment providing the necessary
support amidst weaker external sector Banking
dynamics”
—Mr Dinesh Khara, chairman, SBI
“IT Staffing mandates are down significantly. IT

companies are focusing more on productivity
enhancement from current workforce rather than
hiring fresh”
Business Services
—Quess Corp
Demand is robust in the run-up to elections.

Realisations fell despite healthy demand on account of
heightened competitive intensity. Softening fuel prices Cement
will aid profitability in Q2/Q3FY24; however, it might
be short-lived as prices have started rising since July,
which can put pressure on fuel costs going ahead
Margin improvement continues; but regional players

have emerged. Urban still outpacing rural for most
FMCG companies
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“We are in the midst of a growing demand

environment on the back of a positive real estate cycle
already kicking in and government's continued Home Decor
emphasis on infrastructure development”
— Mr Ashok Kajaria, CMD, Kajaria Ceramics
Optimism on capex cycle; is re-rating on the cards?

Industrials
NHAI awarding remained muted; however, robust

order inflow was seen for construction companies Infrastructure
While protection growth resumed, most

Insurance managements have guided for a softer VNB
margin performance
Zomato’s strong GOV/revenue growth in Q1FY24

along with guidance of more than 40% YoY growth in
adjusted revenue for the next two years underscores Internet
management’s confidence and provides much-needed
visibility
“I think the amount of deal activity in High-Tech

is pretty healthy, including some of the larger
clients we have in High-Tech. So overall, I'm
much more bullish in terms of High-Tech at this
point of time in terms of the activities that we
IT are seeing “
—Mr Debashis Chatterjee, CEO, LTIMindtree
“Rural demand seems to have bottomed out, whereas

urban continues to remain resilient” Logistics
— Mahindra Logistics
Nuvama Research is also available on research.nuvama.com, Bloomberg - NUVA, Thomson Reuters, and Factset Nuvama Institutional Equities 3
Content issue starting to resolve; audiences are

Media back to theatre
Profitability dips amid seasonally lower volume;

expect production cuts in China in H2CY23, which
shall support prices
Metals & Mining
Oil & Gas Petrochemicals
Oil & Gas Super normal marketing pips muted refining
Petrochemicals CGDs
Margin expansion on reduced input cost offset
by muted volumes
Dual tailwinds: US price erosion worries ease off and

input costs softening to benefit in coming quarters Pharmaceuticals
Energy security overrides green transition; best

Power of both worlds: thermal + RE
“We see significant buoyancy in the industry, despite

high interest rates. Residential demand continues to
be high. Overall a healthy market.”
Real Estate
—Mr Amit Kumar Sinha, MD & CEO. Mahindra
Lifespace Developers
“With China aggressively dumping products and

cutting prices, demand environment remains
Specialty very sluggish
Chemicals
Feature phone-to-smartphone upgrades, shift from

prepaid to postpaid and increased data consumption
Telecom
drove growth in ARPU
Contents
Agri Inputs
Coromandel International ..................................................................................... 12
Dhanuka Agritech .................................................................................................. 13
Rallis India .............................................................................................................. 14
Sharda Cropchem .................................................................................................. 16
UPL ......................................................................................................................... 17
Auto & auto components
Amara Raja Batteries ............................................................................................. 21
Apollo Tyres ........................................................................................................... 22
Ashok Leyland ........................................................................................................ 23
CEAT ....................................................................................................................... 24
Eicher Motors ........................................................................................................ 25
Escorts Kubota ....................................................................................................... 26
Hero Motocorp ...................................................................................................... 27
Mahindra and Mahindra........................................................................................ 28
Maruti Suzuki ......................................................................................................... 29
Sona BLW Precision ............................................................................................... 30
Tata Motors ........................................................................................................... 31
TVS Motors ............................................................................................................ 33
Uno Minda ............................................................................................................. 34
Banks, financial services and insurance
Axis Bank ................................................................................................................ 37
Bandhan Bank ........................................................................................................ 38
Bank of Baroda ...................................................................................................... 39
Federal Bank .......................................................................................................... 41
Five Star Business Finance ..................................................................................... 43
HDFC AMC ............................................................................................................. 26
HDFC ...................................................................................................................... 45
HDFC Bank ............................................................................................................. 46
HDFC Life Insurance ............................................................................................... 48
ICICI Bank ............................................................................................................... 50
ICICI Lombard GI .................................................................................................... 51
ICICI Prudential Life ............................................................................................... 53
IDFC First Bank ....................................................................................................... 55
IndusInd Bank ........................................................................................................ 57
Kotak Mahindra Bank ............................................................................................ 59
Mahindra & Mahindra Financial Services .............................................................. 61
Max Financials ....................................................................................................... 63
Nippon Asset Management ................................................................................... 65

PB Infotech ............................................................................................................ 66
Punjab National Bank ............................................................................................ 67
SBI Life Insurance ................................................................................................... 68
Shriram Finance ..................................................................................................... 69
State Bank of India ................................................................................................. 72
UTI Asset Management ......................................................................................... 74
Bearing
Schaeffler India ...................................................................................................... 78
Cement
Grasim.................................................................................................................... 80
Shree Cement ........................................................................................................ 81
UltraTech Cement .................................................................................................. 82
Defence
Bharat Electronics .................................................................................................. 84
Construction
Ahluwalia Contracts ............................................................................................... 87
Ashoka Buildcon .................................................................................................... 88
Capacit’e Infraprojects........................................................................................... 90
G R Infraprojects .................................................................................................... 91
J Kumar Infraprojects ............................................................................................. 93
KNR Constructions ................................................................................................. 95
NBCC ...................................................................................................................... 96
Nagarjuna Construction Company......................................................................... 97
PNC Infatech .......................................................................................................... 98
Titagarh Wagons .................................................................................................... 99
Engineering & Capital Goods
ABB ...................................................................................................................... 101
AIA Engineering ................................................................................................... 102

Cummins India ..................................................................................................... 103
CG Power ............................................................................................................. 104
GE T&D................................................................................................................. 105
Hitachi Energy ...................................................................................................... 102
Kalpataru Projects ............................................................................................... 107
KEC International ................................................................................................. 108
Larsen & Toubro .................................................................................................. 109

Thermax ............................................................................................................... 111
Consumer Goods6
Adani Wilmar ....................................................................................................... 113
Asian Paints ......................................................................................................... 115
Bajaj Consumer Care ........................................................................................... 120
Berger Paints ....................................................................................................... 123
Britannia Industries ............................................................................................. 126
Dabur ................................................................................................................... 129
Emami .................................................................................................................. 134
Godrej Consumer ................................................................................................. 136
HUL ...................................................................................................................... 140
Indigo Paints ........................................................................................................ 143
ITC ........................................................................................................................ 146
Marico.................................................................................................................. 149
Nestle ................................................................................................................... 153
Pidilite .................................................................................................................. 154
Tata Consumer Products ..................................................................................... 157
United Spirits ....................................................................................................... 165
Healthcare
Apollo Hospitals ................................................................................................... 168
Dr Lal PathLabs .................................................................................................... 170
Fortis Healthcare ................................................................................................. 172
Healthcare Global ................................................................................................ 174
Medplus Healthcare Services .............................................................................. 176
Vijaya Diagnostic .................................................................................................. 178
Hotels/Hospitality/Aviation
Indian Hotels ........................................................................................................ 180
InterGlobe Aviation ............................................................................................. 181
Lemon Tree Hotels............................................................................................... 183
Home Décor
Century Plyboards ............................................................................................... 186
Greenlam Industries ............................................................................................ 189
Greenpanel Industries ......................................................................................... 191
Greenply Industries ............................................................................................. 194
Kajaria Ceramics .................................................................................................. 197
Prince Pipes ......................................................................................................... 200
Somany Ceramics................................................................................................. 205
Supreme Industries .............................................................................................. 208
Venus Pipes.......................................................................................................... 212
IT
Birlasoft................................................................................................................ 216
Coforge ................................................................................................................ 217
Cyient ................................................................................................................... 218
Eclerx ................................................................................................................... 219
First Source Sollutions ......................................................................................... 220
HCL Technologies ................................................................................................. 221
Infosys .................................................................................................................. 222
L&T Technology Services Ltd ............................................................................... 223
LTMindtree .......................................................................................................... 224
Persistent Systems ............................................................................................... 225
Redington ............................................................................................................ 226
Tata Consultancy Services ................................................................................... 227
Tech Mahindra ..................................................................................................... 228
Wipro ................................................................................................................... 229
Zensar Technologies ............................................................................................ 230
Internet
Info Edge .............................................................................................................. 232
Zomato................................................................................................................. 234
Media
PVR Inox ............................................................................................................... 238
Zee Entertainment Enterprises ............................................................................ 241
Metals & Mining
Hindalco Industries .............................................................................................. 246
Hndustan Zinc ...................................................................................................... 247
Jindal Stainless ..................................................................................................... 248
Jindal Steel & Power ............................................................................................ 249
JSW Steel ............................................................................................................. 250
SAIL ...................................................................................................................... 252
Shyam Metalics .................................................................................................... 253
Tata Steel ............................................................................................................. 255
Vedanta ............................................................................................................... 257
Oil & Gas, Petrochemicals
GAIL ..................................................................................................................... 260
Gujarat Gas .......................................................................................................... 262
Mahanagar Gas .................................................................................................... 264
Petronet LNG ....................................................................................................... 266
Sterling and Wilson .............................................................................................. 267
Pharmaceuticals
Anjanta Pharma ................................................................................................... 269
Alkem Laboratories .............................................................................................. 270
Aurobindo ............................................................................................................ 272
Biocon .................................................................................................................. 274
Cipla ..................................................................................................................... 276
Divi’s Laboratories ............................................................................................... 278
Dr. Reddy’s Laboratories ..................................................................................... 280
Glenmark Pharmaceuticals .................................................................................. 282
IPCA Laboratories ................................................................................................ 284
Lupin .................................................................................................................... 286
Natco Pharma ...................................................................................................... 289
Sun Pharmaceuticals............................................................................................ 290
Torrent Pharmaceuticals ..................................................................................... 292
Zydus Lifesciences................................................................................................ 294
Power
India Grid Trust .................................................................................................... 296
Real Estate
Brigade Enterprises .............................................................................................. 298
DLF ....................................................................................................................... 299
Godrej Properties ................................................................................................ 300
Macrotech Developers ........................................................................................ 301
Oberoi Realty ....................................................................................................... 304
Phoenix Mills ....................................................................................................... 306
Sobha ................................................................................................................... 308
Sunteck Realty ..................................................................................................... 310
Retail
Bata India ............................................................................................................. 313
Devyani International .......................................................................................... 315
FSN E-Commerce Ventures (Nykaa...................................................................... 316
Jubilant FoodWorks ............................................................................................. 317
Metro Brands ....................................................................................................... 318
Page Industries .................................................................................................... 320
Restaurant Brands Asia ........................................................................................ 322
Sapphire Foods India Ltd ..................................................................................... 323
Shoppers Stop ...................................................................................................... 324
Titan Company ..................................................................................................... 326
Varun Benerages ................................................................................................. 328
Vedant Fashions .................................................................................................. 329
V-Mart Retail ....................................................................................................... 331
Specialty Chemicals
Aarti Industries .................................................................................................... 334
Anupam Rasayane ............................................................................................... 336
Deepak Nitrite ..................................................................................................... 337
Fine Organic Industries Ltd .................................................................................. 339
Galaxy Surfactants ............................................................................................... 340
Gujarat Flourochemcails ...................................................................................... 341
Jubilant Ingrevia ................................................................................................... 343
PCBL ..................................................................................................................... 344
P I Industries ........................................................................................................ 346
SRF ....................................................................................................................... 348
Textiles
Welspun India ...................................................................................................... 351
Telecom
Route Mobile ....................................................................................................... 353
Sterlite Technologies ........................................................................................... 354
Miscellaneous
Balkrishna Industries ........................................................................................... 356
Bharat Forge ........................................................................................................ 357
PDS ....................................................................................................................... 358
RHI Magnesita India ............................................................................................. 359
Sheela Foam ........................................................................................................ 360
Solar Industries .................................................................................................... 361
VIP Industries ....................................................................................................... 363
Agri Inputs
Coromandel International
Operational highlights
 Demand for fertiliser remain strong as there was not much inventory in the
system
 Company to continue focus on complex fertiliser and driving its sales of unique
grade to maximise raw material availability
 DAP trading to remain opportunistic driven by market condition and availability

of material
 Share of subsidy business in revenues were at 86% while at EBITDA it was 84%
 Management expect fertiliser volume growth in FY24 to remain firm for the
company
 Cropchem division witnessed weakness due to high channel inventory and falling
prices. International environment remained weak
 On fertiliser, raw material prices like ammonia etc continue to witness weakness.
Rock phosphate prices, though holding on, are likely to come down with falling
phos acid prices.
 Confident of maintaining manufactured fertiliser EBITDA / mt margins at

INR5,500-6,000/mt. Expect softening RM prices to protect margins
Capex plan to drive growth

 CIL has chalked down various capex plans to drive growth
 Capacity addition and backward integration including mining of rock phosphate

in fertiliser business
 MPP plant at Dahej and further investment opportunity in crop nutrient segment
 Leveraging its chemical capability and customer connect to drive specialty

chemical and CDMO business with investment of ~INR10bn
 Investment in new age businesses like drones, which are related to its existing
business. These investment plans will continue to clock capex led growth while
using strong cash flow generated internally
Dhanuka Agritech
Business highlights
 Current inventory level of ~INR4bn.
 Sales returns in the quarter have been high due to falling prices as channel
returned the high-cost inventory.
 Dhanuka have introduced new molecules Implode – a Maize herbicide, Mesotrax

– a herbicide for Maize & Sugarcane, Defend – an insecticide for paddy BPH, and
six Biologiq products. These new introductions are expected to add good
volumes and to the company’s top line.
 Herbicide sales contributed 54% as this is the peak season for Herbicide followed
by 27% from insecticide. Fungicide and other remained at ~10%.
 With heavy monsoon, west region contributed 41% while north at 30%, south
20% and east 10%.
Dahej plant to be commissioned by end-August

 Expecting production to start in third week of August
 To start with production of Bifenthrin Technical, expecting positive gross

contribution
 Revenue contribution in FY24 INR500, ~20% gross margins, no positive EBITDA

in first year
 However with pick up in utilisation in FY25, revenue contribution to increase to

~INR800mn with positive contribution at EBITDA.
 Looking at formulation exports, expect to grow in next 3-4 years
 Overall capex INR2.60bn, INR2bn to be capitalised in FY24
 One formulation unit, one insecticide MPP plant for synthetic pyrethroids, and
a MPP weedicide plant
 EBITDA margins – 12–15%, can go up post orders from Japanese customers
Industry scenario improves significantly

 After tepid June, positive growth in July.
 The sowing of rice, cotton and oilseeds has also gained momentum after a slow
start, but planting is still lagging behind in pulses, which are down by about 10%
in area.
 Chanel inventory was high till Q1FY23 as farmer level consumption was weak.
However with strong pick up in demand in July, current inventory levels in the
markets are low.
 With government putting ban on non-basmati rice exports and changing

geopolitical scenario, it is expected that agri commodity prices would stay firm.
 Sowing in July has improved significantly as per government’s sowing data.
Rallis India
Business update
 Late monsoon caused delayed sowings – Kharif sowing down by 3%; Crop and
Segment shifts impacted Q1 FY24
 Declining Agro-chemical prices impacted Exports in Q1 FY24, input material

prices remain volatile
 Excess channel inventories impacting volume growth
 Export of one new intermediate under Contract manufacturing has commenced
 North-west India currently having excessive rainfall, agri input consumption

therefore taking time to pick up however overall sentiment in the right direction
 Dahej SEZ MPP - Trial production has been commenced, 60% capacity utilisation
expected to be achieved in FY24
 Focus remains on expanding distribution network - wholesale as well as retail
 Innovation T/O index in FY23 was 13%, company expects to reach 15% by end of
FY24
New product launches in FY24
 Gateway (Chlorantraniliprole 18.5 % SC) - I
 Gateway Gr (Chlorantraniliprole 0.4 % GR)- I
 Boris Super (Pyriproxyfen 8% + Diafenthiuron 30% SE)- I
Crop Care
 Crop Care revenue de-grew by 13% to INR 5190 Mn. Multiple factors especially
falling prices, lower global demand and delayed monsoon led to lower revenues
 Domestic Crop care de-grew by 4.5% due to delayed season amid late monsoon
and falling prices
 Exports declined by 29.6% primarily due to volume drop arising from higher
global inventories
 EBITDA higher by 2% at 580 Mn , supported by dynamic pricing and improved

product mix
Seeds
 Seeds revenue de-grew by 2% to INR 2620 Mn, EBITDA lower by 7% at INR 520
Mn, PAT lower by 7% at INR 350 Mn which is reflective of EBIDTA trend
 All around efforts on placement and demand generation activities helped to

largely offset impact of late and scattered monsoon
 Margins lower due to higher marketing costs to support demand generation
 The new hybrid seed molecule launched recently seeing good volumes, 4L
packets sold in current quarter compared to 1L in Q1FY23, product expected to
grow even more
Outlook
 Revenue mix aspiration FY25E – 60% Domestic, 40% International
 Navigated price issues by adopting portfolio level perspective, instead of product

level
 Pricing growth unlikely to happen in near term, volume to be key driver for
overall growth
 International markets cautious as inventory on higher sides, for domestic

markets as season progresses consumption to increase and new product
launches to support growth
 Domestic business impacted by delayed monsoons coupled with excess channel

inventories leading to decreased volumes
Sharda CropChem
Q1FY24 – Operational highlights
 Overall volumes declined by 11% while price / product mix change impacted
revenue growth by 18%. Currency was positive 6.5%.
 Europe regions sales down by 21%, NAFTA 14%, LATAM 51% and ROW 16%. All
the markets reported drop in sales.
 Volume in Europe declined by 37% and LATAM by 53%. Lower volumes in Europe
and LATAM regions on account of high inflation, ongoing recession and adverse
weather conditions.
 However, volume in NAFTA and ROW increased by 49% and 47%, respectively
but weakening realisations and change in product mix led to overall drop in sales.
Prices in US has seen sharpest drop.
 Gross profit is impacted by INR710mn led by inventory write-down. Raw Material

and Finished goods sales price have reduced substantially. This has led to a stock
revaluation as per Accounting Policy and has impacted the GP and profitability.
 Non-agrochem business (primarily include belting fabrics) witnessed revenue

decline of 23% YoY. However, EBIT in this business remained stable at INR433mn.
This business did not witness any inventory losses however demand scenario
may weaken going forward.
 Most of the raw material prices have gone to pre-covid level with correction of
30-50% in prices.
Outlook and guidance

 Though current environment remains weak, it is mainly led by inventory
destocking across the channel.
 Management expect input prices probably has bottomed out, however inventory
destocking may continue from manufacturers in China and poor demand at
farmers level.
 Amid uncertainty and falling realisations, management is expecting 10% revenue

growth in FY24 vs earlier 15% growth guidance led by volume growth, mainly in
H2FY24.
 Management refrained away from margin guidance as softening RM prices may

impact profitability. In long run, company expects to resume gross margins at 28-
32% level.
Deterioration in working capital

 Current quarter witnessed sharp increase in working capital to 120 days from 91
days previous year. This is led by sharp jump in inventory days from 68 to 85
days. High sales returns led to high inventory.
 Further increase in debtor days from 109 days to 120 days impacted working
capital.
 Company expect to resume to previous level of WC by end of the current year.
UPL
Overall crop protection remaind challenging
 Crop protection business was impacted by industry-wide headwinds globally –
Channel Destocking - Distributors opting for need-based tactical purchase
Aggressive price competition from Chinese post patent exporters
 Demand at the farm level continues to remain strong; expect channel demand
to recover in H2FY24
 Differentiated and sustainable portfolio has performed resiliently growing by 7%

YoY, comprising 37% of the crop protection revenue versus 27% LY
 Contribution margin improved by 198bp YoY led by improved portfolio and

region mix combined with better margins at Advanta
 Undertaking cost reduction initiative of $100 Mn over period of next 24 months;

with at least 50% being realized in FY24
 Reduced net debt by USD160mn YoY; non-recourse factoring by USD250mn YoY
UPL Corp. (global arm): Muted Q1 performance, in line with industry

 Revenue Variance: Volume: -17%, Price: -10%, FX: +3%
 Significant decline in herbicide volume and prices, and product bans in Europe
 Increase in differentiated and sustainable portfolio, primarily led by volume;

revenue share increased to 35% vs. 24% LY
 Overall revenues declined by 24% to INR58bn while EBITDA declined by 65% to

INR5.6bn. EBITDA margins were mere 9.6%
 Region wise – LATAM reported 15% drop in ales while North America were down
highest at 56%. Europe region sales were down by 19% and ROW by 10%
Outlook
 Demand at the grower level continues to be strong. Channel inventory gradually

normalizing
 Channel demand to remain weak in Q2FY24 with recovery expected in H2FY24
 Undertaking cost reduction initiative of $100 Mn over a period of next 24

months; with at least 50% being realized in FY24
UPL SAS (India subsidiary): Delayed sowing/price pressure impacts

results
 Revenue Variance: Volume: -7% YoY, Price: -7% YoY
 Revenue impacted by delayed Kharif sowing activities, pricing pressure on post-

patent side, and high channel inventory
 Differentiated portfolio fared better led by traction in new /recent launches

(Apache, Oxalis, Centurion and Canora) and helped curtail margin impact
 Implemented cost optimisation initiatives, resulting in SG&A being lower by 5%

YoY
Outlook
 Novel range of launches in pipeline - Spruce, Feego, Fascinate, Flash, Argyle,

Sperto, Mono SG, Sekito, Lexicon
 Improved monsoon from June-end onwards to aid demand recovery and drive
much better performance in Q2FY24 as against Q1FY24
Advanta (global seed business) – Maintain growth momentum with

improved operating profitability
 Volume: +14%, Price: +9%, FX: +3%
 Revenue growth driven by robust traction in following portfolios –
o Field Corn across India, Thailand, Ecuador, Peru
o Fresh Corn in Indonesia
o Grain Sorghum in USA
 Contribution margins expanded by 523 bps YoY driven by –
o Improved Mix: Strong growth in high-margin portfolios
o Good recovery in India Vegetable business
 Outlook
 Expect to see healthy demand for rest of FY24
UPL Specialty Chemicals: Revenue impacted in line with crop

protection; margins stable
 Decline in revenue primarily on account of slowdown in the agrochemical as well
as the broader chemical industry
 Entered a new chemistry by commissioning and commencing production at the

phosgene plant in Dahej during the quarter
o Manufacture and market phosgene derivative products
o Phosgene will also be used in group’s agchem production
 Commissioned the 61MW hybrid wind and solar power plant with
commencement of power supplies in Jun-23. Will help reduce energy costs and
carbon footprint
Outlook
 Expected to perform better in line with the recovery in the agro and specialty
chemicals markets
Working capital and key financials

 Working capital days increased by 14 days as on Jun-23 primarily due to –Payable
days declined by 18 days, Reduction in non-recourse factoring by INR17bn on a
YoY-basis
 In USD terms, net debt at USD3.19bn as of Jun-23 - lower by USD160mn YoY.

Adjusted for lower factoring, net debt would have stood at USD2.94bn (down by
USD410mn YoY)
 Cash generated by business (before WC)*: INR2.7bn in Q1FY24 (vs INR14.2bn

Q1FY23)
 Lowered its guidance for FY24 to revenue growth to 1-5% from (6-10%) and
EBITDA 3-7% growth (from 8-12%)
Automobiles
Amara Raja Batteries

 FY24 growth outlook for 4W replacement is at 6-7%, 2W replacement at 11-12%
and Telecom/UPS segments at double-digits.
 With reference to Jan’23 fire accident, insurance amount of INR1bn has been
received and further amount of INR3.4bn is expected in future.
 Post the damage to tubular plant in fire accident, the new plant will be setup
over next 18-20 months. During this phase, the tubular business will be carried
on through trading route, resulting in lower blended margins.
 Other expenses has reduced due to increased usage of renewable energy

sources, which was setup at an investment of INR3bn.
 Capacity utilization stands at ~75% in automotive (Of this, 2W is at ~80%) and

~95% in Industrial segments. FY24 capex is planned at INR4bn towards lead
recycling capacity and other ongoing expansion programmes. Considering high
utilization levels, company may consider further greenfield expansion in lead
acid battery space.
 The new energy business has been transferred to subsidiary Amara Raja
Advanced Cell Technologies Private Limited (ARACT) as of 1st June. In new energy
business company sells battery packs and chargers to customers in 3W (Piaggio,
M&M), 2W and Industrial segments.
 Lithium cell manufacturing facility with capacity of 2GWH and investment of

INR15bn is expected to start production in FY26. Initially, the cell chemistry will
be NMC, and more cell chemistries will be added at later stages. This facility
would have asset turnover of 1-1.2x, which management hopes to increase to
1.4-1.5x with productivity improvement efforts.
Apollo Tyres
 In Q1FY24 volumes declined YoY in both India and Europe regions.
 In India, volumes declined by 5%, led by 30% decline in exports. Replacement

volumes grew 3% and OEM volumes grew slightly.
 In Europe, PCLT market declined by 13%, mainly on account of high channel

inventory and mild winters. All season continued to outperform overall market
with minimal decline. Further TBR and OHT segments declined by 33% and 35%,
respectively. In comparison, company’s volumes reduced by 5% in PCLT.
 In Europe, company has gained ~15bps market share in PCLT and ~20 bps share
in OHT segment.
 Pricing environment has remained stable in domestic and overseas markets.
 In Q1FY24, RM basked reduced by 2% QoQ. In Q2FY24, RM is expected to be flat

or slightly increase QoQ.
 Net debt decreased from INR43bn in Mar’23 to INR38bn in Jun’23. The gross debt
also came down INR56bn in Mar‘23 to INR54bn in Jun’23.
 Capacity utilization at 75% in India and 80% in Europe
 FY24 capex expected at INR11bn. Of this, standalone capex stands at INR6.8bn.

Capex relates to maintenance, R&D, digitization and de-bottlenecking efforts.
Ashok Leyland
 MHCV industry growth expected at 8-10% and LCV industry growth at 5-6% in
FY24. Growth drivers for MHCVs are likely to be better macros, government
thrust on infra spending, higher replacement demand and strong growth in
buses.
 Market share gains expected in FY24 on the back of network expansion in non-
South regions and new products.
 Focus continues on electrification, and launches are planned in LCVs and Buses
in coming quarters.
 In Q1, power solutions segment volume doubled YoY to 8,776 units, owing to
anticipated pre-buying before change in emission norms for gensets. Considering
strong Q1, Q2/Q3 volumes are likely to be muted. The implementation date for
change in emission norms has been postponed by 12 months by government.
 In Q1, spares revenue grew by 30% YoY.
 Commodity costs increased sequentially in Q1. Considering recent trends,

reduction in expected in Q2 and Q3.
 Notable margin expansion is expected in FY24 owing to better net pricing,

commodity deflation and cost reduction efforts.
 Capex is planned at INR7bn in FY24. Investments planned at INR12bn in Switch

Mobility.
 Effective tax rate expected at 30% in FY24 and 25% in FY25.
CEAT
 In Q1FY24, OEM segment share stood at 27%, which is 2% lower than FY23 levels.
This could normalize in coming quarters.
 FY24 volume outlook is moderate for domestic market, with expectations of 1)

high single digit/ low double-digit growth in 2Ws, 2) high single digit growth in
PVs and 3) low single digit in TBR.
 Exports expected to pick-up in H2FY24. OHT segment is expected to do well.

Regions witnessing improvement include Middle East, SAARC and Africa.
Company to enter US market PV/CV segments in Q4FY24.
 EVs: In 2Ws, company has 40%+ share. In PVs, it has tied up with OEMs such as
M&M, MG Motors, Tata Motors and Kia Motors. In TBR, it has tied up with Tata
Motors, VECV, JBM Auto and BYD.
 Premiumisation: In PV-OEM space, there is notable shift towards large diameter

tyres. Company’s product mix will notably shift towards large tyres from Q2FY24
onwards.
 RM cost to be broadly stable in Q2FY24 in comparison to Q1FY24. There is

marginal increase in carbon black and crude prices, but the impact may not be
much in Q2FY24, as company is holding 60 days of RM inventories.
 Q1FY24 interest cost stood at INR695mn. Q2FY24 cost to remain at broadly

similar levels. Cost of debt to increase 20-30bps ahead.
 Capacity utilization at 75%/75%/90% for 2Ws/PVs/CVs.
 FY24 capex guidance maintained at INR7.5bn. New project of 45,000 TBR tyres
capex planned at Chennai with investment of INR7bn spread over FY24-26.
 OTR capacity to reach 105 TPD this quarter, and further addition of 55TPD
expected by FY25..
Eicher Motors
 Demand remains healthy and upcoming festive season growth is expected to be
positive. Company has planned a slew of product launches in a staggered manner
to support volumes and addressable market ahead.
 The share of >250cc motorcycles stands at ~8% versus ~3% ten years ago. This
share is expected to further increase over the medium to long term.
 In overseas markets, despite weak demand situation in Q1, the company has
been able to gain share in most markets. Market share stands at 8% in Americas,
9% in APAC and 9% in EMEA regions in middle weight motorcycles.
 Five assembly units (Brazil, Argentina, Colombia, Thailand and Nepal) at overseas
markets are functioning at a single shift, and ramp-up of production is expected
as demand conditions improve.
 In Q1, non-vehicle revenues (spares and accessories) grew by 25% YoY.
 EV product development and efforts on supply chain build-up remains on track.
 Commodity cost headwinds are behind, and company has taken a price increase
of 1.5% in Q2.
 VECV: CV volumes are expected to grow in FY24, on better macros, normal

rainfall season and increasing infra investments.
Escorts Kubota
Agri segment
 Tractor industry growth expected at low to mid single digits in FY24, as a result
of encouraging trends in rainfall season and positive haulage (non-agri) demand.
 In Q1, Escorts gained share owing to better mix (industry growth was better in
strong markets) and market share gains in opportunity markets. Market share
gains in opportunity markets is driven by network expansion, focus on <30HP
segment and increased marketing efforts.
 Going forward, focus is on new products across categories, and cross-selling

initiatives (between Kubota and Escorts sales network) to improve volumes.
 In Q1, exports through Kubota channel contributed to ~32% of volumes
 Exports are expected to pickup from Sep’23 onwards, as company will launch
more products and enter more regions through Kubota network.
 Q1 margin expansion was supported by price increase (1% in Jun’23) and

commodity deflation (2.5% reduction from peak levels).
 FY24 EBIT margin expected at 13-14%.
 Dealer inventory stands at 5-6 weeks as of Jun’23.
Construction Equipments segment
 In Q1, served industry growth was at 30% YoY, and Escorts outperformed with
growth of 42%. New launch in compactors also supported volumes.
 Q1 margin expansion was supported by price increase (1% in Apr’23), better mix
and commodity deflation. Product mix has improved with better share of higher
tonnage products.
 FY24 growth expected in double digits and margin to sustain at Q1 levels.
Railways segment
 Q1 growth was supported by new products (brake pad/discs), higher

exports/spares and large order-book.
 Pending orderbook stands at INR9.5bn as of Jun’23.
 Q1 margin was supported by better scale and mix. FY24 EBIT margin guidance at
16-17%.
Others
 Regulatory approvals received for cancellation of 21mn treasury shares.
 NCLT approval for amalgamation with Kubota Agri Machinery expected within 6
months.
 Kubota Agri Machinery is focusing on localization efforts. Engine localization is

planned at new greenfield plant, which is expected by 2026.
Hero MotoCorp
 Recently launched models that have received a positive response include Harley
X440, Passion, Super Splendor XTEC, Xoom 125 and Glamor 125. Company
expects to launch a series of premium 2Ws ahead.
 To focus more on the premium range of vehicles, upgradation of outlets for

premium customer experience is in progress. Company expects to have 200-300
premium outlets over next few quarters.
 Vida electric scooter has received a positive response, and model is likely to be
made available in 100+ cities by Dec'23 versus 36 cities currently. Multiple EVs
across various use cases are expected to be launched over the next few years.
 2W demand outlook remains positive on robust urban and replacement

demand. Rural demand is expected to improve on policy push, healthy monsoon
and peaking of inflation/interest rates. Festive season growth is likely to be
positive.
 ICE margin to remain in range of 14–16% ahead.
 In Q1FY24, share of losses from associates increased due to one-time costs for
Ather, relating to refund of charger costs to customers.
 Dealer inventory stands at six weeks, versus a normal level of six–seven weeks.
Mahindra and Mahindra

Auto
 In Q1, supply issues negatively impacted production by a small quantum, at

~5,000 units in SUVs and ~2,000 units in pickups. Supply issues are mostly
behind.
 Order book remains large at 281,000 units relating to 117,000 units for Scorpio,
77,000 units for XUV700, 68,000 units for Thar, 11,000 units for XUV300/400 and
8,400 units for Bolero.
 SUV production capacity expansion plan on track to improve from 39,000

units/month currently to 49,000 units/month in Mar’24.
 Electric XUV400 production ramp-up is happening slowly. Company could miss

the first year target of ~18,000 units. Company does not see any risk on meeting
CAFE2 targets in FY24.
 Timeline for launch of five EVs based on dedicated platform timeline remains
unchanged, between Dec-24 to Oct-26. Expect EV share of 20-30% in SUVs by
F27.
 In E-PV entity, Temasek would invest Rs12bn in CCPS (compulsorily convertible

preference shares), to be converted into shareholding of 1.49% to 2.97%. This
represents a valuation range of INR404-806bn. With this investment, the
valuation goes up by 15% from upto INR701bn to upto INR806bn.
 Commodity environment is benign and run-out of introductory pricing in certain

models should support margins to remain elevated.
Farm
 Farm implements revenue grew 24% to INR1.8bn. Expect 40% growth in FY24.
Industry size stands at INR60-70bn.
 Terms of trade has improved in rural, which is supporting sentiments. Improving

terms of trade, normal monsoon and better Kharif sowing are positive factors,
which should help Tractor demand in FY24.
Others
 Medium term outlook maintained: Consolidated EPS growth target remains at

15-20% with ROE of 18%
 RBL Bank Investment: Company has said that the investment (INR4bn for 3.5%
stake) is based on a long-term view (7-10 years). The primary purpose has been
to understand banking, which will enable to enhance the value of financial
services business. Further investment is not expected, unless there is
compelling strategic value.
Maruti Suzuki
 Scheme of arrangement: With objective of bringing in efficiency in production
and supply chain, all production related activities are being brought under listed
entity. The consideration would be at book value of ~INR127bn, through cash or
share swap (to be decided in next board meeting). The amalgamation will include
the EV assembly line, but not the battery facility. This amalgamation is expected
to be completed by Mar-24.
 Pending order-book stands at ~355,000 units. Of this, 93,000 units are for Ertiga,
48,000 units for Brezza, 27,000 units for Grand Vitara, 23,000 units for Jimny,
23,000 for Fronx and 8,000 units for Invicto. Production is improving sequentially
owing to better supplies.
 Q1FY24 retails grew 8% YoY to ~380,000 units. Dealer inventory stood at

~125,000 units as of Jun’23. Q2FY24 retails growth to be subdued due to delay
in commencement of festive season this year.
 Q1FY24 first time buyer demand stands at 40% vs. 42-44% earlier, owing to
postponement of purchases by entry level customers.
 Q1FY24 CNG vehicle demand remains strong, with highest ever sales share of
27%.
 Q1FY24 margin was impacted by one-off of ~80bps relating to retention related

payments to employees.
 Margins are likely to improve ahead due to commodity deflation.
Sona BLW Precision

 Revenue share of traction motors reduced to 2.5% in Q1FY24 vs. 4% in FY23,
owing to lower production of E-2Ws due to reduction of FAME subsidies. This
represents a revenue loss of INR250mn. Management expects a revenue loss of
INR1.2bn in FY24 vs. the earlier budget plan.
 Q1FY24 EBITDA margin has expanded due to better scale and mix (lower share
of traction motors). For driveline products, RM cost is lower but other expenses
are higher. In case of traction motors, RM cost is higher due to bought out
components, but other expenses are lower.
 Order-book has marginally increased to INR220bn in Jun-23 versus INR215bn in

Mar-23. Of the pending order-book, 78% is from EVs.
 New orders worth INR13bn was added during the quarter. Major ones include:
i) Differential assembly for Class5 E-CVs (NA). ii) Hub wheel traction motor for E-
2Ws (India). iii) Mid-drive traction motor & controller for E-OHVs (India). iv) Final
drive differential assembly for recreational OHVs (Overseas).
 Company has tied up with Equipmake for motors and inverters with power
output of 100-440kW for E-Buses and E-LCVs. Details of tie-up are: i) Equipmake
to provide validated design for setting up manufacturing facility in India and
production will start in 2025. ii) Sona would have exclusive rights to sell these
products in the licensed territory (India, Thailand, and select South Asian
markets). iii) Sona will supply to Equipmake as well for other markets such as
Europe and US. iv) Royalty payment will be applicable.
 Novelic acquisition is expected to complete by Aug-23. Sona is validating the

products for Indian conditions, and production is expected to commence in 2025.
 Blended EBITDA margin is expected to remain in range of 25-27% for the

company on annual basis.
 Differential assembly cost for CVs are in range of USD150-750/unit.
 Starter motor segment is expected to shrink over the long term due to EV
penetration.
 Customer concentration: No customer is greater than 20% and top-5 customers

form 70-75% of revenues. In EVs, the biggest customer forms 70-75% of
revenues.
Tata Motors
Consolidated
 Scheme of arrangement: Company has announced cancellation of DVR shares,
and allotment of ordinary shares, in ratio of 7 ordinary shares for every 10 DVR
shares. This translates to 23% premium to the previous day closing price for DVR
shares. The transaction will reduce the total share capital by ~4% making it EPS
accretive for shareholders. The transaction is expected to be completed in 12-15
months, subject to regulatory approvals.
 Net automotive debt reduced to INR417bn vs. INR43.7bn in Mar’23.
 Q1FY24 FCF stood at INR25bn.
JLR
 JLR order book remains strong at 185,000 units, with 76% contribution from RR,
RRS & Defender models.
 Average production of Range Rover/Range Rover Sport in Q1FY24 has increased

to 2,800 units/week vs. 2,600 units/week in Q4FY23.
 UK/Europe share in overall volumes has reduced owing to supply issues.
 ICE share in retails has reduced to 26% (vs. 34% in Q1FY23), while mild hybrids
has increased to 61% (54%) and BEVs/PHEVs has increased to 13% (12%).
 Q1FY24 margin expansion yoy was driven by favourable volume, mix, pricing and
foreign exchange revaluation offset partially by higher inflation and supplier
claims. Reported margin was at 8.6%. However, excluding one-time impact,
margin is at 7.5%. The one-time impact was due to production being ~10,000
units higher than dispatches.
 Q1FY24 FCF at GBP451mn, and FY24 target remains at GBP2bn.
 Q1FY24 Capex at GBP0.7bn, and FY24 target remains at GBP3bn. Capitalization

rate expected at 50-60% for FY24.
 Q2FY24 production and cashflow is expected to be lower than Q1 reflecting the

annual summer plant shutdown, while wholesales and profitability are expected
to be more in line with recent quarters.
 Tata Sons subsidiary Agratas to setup a battery plant in UK at investment of

GBP4bn, with chemistry flexibility (NMC and LFP).
India CV
 Market share in Q1 was partially impacted by constrained availability of some
vehicles due to BS6 Phase II transition / ramp up. Availability has now normalized.
 Focus would be to regain market share through upgraded product portfolio that
offers better cost of ownership, value added offerings to customers (such as
Telematics) and increased marketing efforts.
 Q1FY24 non-vehicle-business revenue grew by 25% over Q1FY23.
 Q1FY24 margin expansion yoy was driven by favourable volume, mix and pricing.
Going ahead, reduction in steel prices will support margin expansion.
 In E-Buses, 100 buses were deployed in Q1FY24. A total of 600 buses are
operational.
 In E-LCVs, 500 units were sold in Q1FY24.
 TML Smart City Mobility Solutions has deployed 200 buses, and has posted
revenue of INR1.3bn in Q1FY24.
India PV
 Share in volumes has reduced to petrol vehicles to 63% (vs. 72% in Q1FY23) and
diesel vehicles to 15% (20%), while CNG has increased to 8% (3%) and BEVs has
increased to 14% (5%).
 E-PV EBITDA was at -9.7% in Q1FY24 due to input/marketing cost increases.

Margins should improve ahead new gen aggregates, localization activities, lower
input costs and receipt of PLI incentives.
 ICE-PV EBITDA was at 8.6% in Q1FY24 vs. 8.5% in FY23.
 India CV & PV capex expected at INR80bn in FY24.
TVS Motors
 2W industry growth in FY24 to be supported by robust urban demand and
moderate growth in rural demand.
 Exports have reached a trough, and are expected to normalize in H2FY24.
 iQube electric scooter continues to witness healthy demand despite reduction in

FAME incentives. iQube model is available in 309 stores, and availability to
increase to 600 stores by end FY24. iQube model has been launched in Nepal,
and likely to be launched in more overseas markets.
 Focus remains on EVs, with new E-2W launch scheduled in Q2FY24 and E-3W
launch in Q3FY24.
 Margins to improve ahead on price increases and commodity deflation. Price

increase of 0.5% taken in Q2FY24.
 TVS Credit Services registered Q1 PBT of INR1.57bn vs. INR1.11bn last year. Post
the recent stake sale, TVSL holding is likely to be 81%.
 FY24 capex expected at INR10bn and investments at INR9bn.
Uno Minda
Switches
 Received incremental order from Korean company. Gaining share from Indian
and Korean companies.
 Q1FY24 exports were lower due to slow ramp of American OEM and slowdown
in Europe.
 Expansion of 4W switch plants at Chennai (by Q2FY24) and Farrukhnagar (by

Q3FY24) to support growth ahead.
Lightings
 Received orders for ambient lighting and head/rear lamps from leading new age
EV OEM.
 Q1FY24 revenue was supported by ramp-up of Gujarat plant (Rs300m in

Q1FY24).
Alloy wheels (AW)
 New customers and better volumes witnessed from anchor customers.
 Q1FY24 revenue breakup stands as follows: 4W AW at Rs3.5bn (including

Rs0.5bn for Kosei Minda) and 2W AW at Rs1.4bn.
 Kosei Minda has been consolidated from Q1 FY24 and turnaround plan includes
refurbishment of assets, consolidation of non-profitable exports and common
procurement with Minda Kosei.
 Expansion of Ahmedabad plant for PV and Supa phase 1 for 2W by Q1FY24 to

support growth ahead.
 Expects 2W AW market share to improve from ~10% currently to 16% ahead.
Acoustics
 Received order from Korean company.
Seatings
 Received order for pneumatic and mechanical suspended seats.
 Start of production for 3 new EV OEM planned in next 6 months.
Other segments
 Q1 growth led by EV products and sensors & controllers (includes wireless

charger).
 Won a large order for wireless charger for BEV and ICE program of an Indian
OEM.
 Sensor & controller revenues stood at Rs2bn in Q1FY24 and expect over INR8bn
revenue in FY24.
 EVs: Received an annual order of INR3bn including chargers for 2W/3W and RCD
for PV.
 EV systems plant (under JV) in Farrukhnagar has started two assembly lines and
capacity would further expand in H2FY24.
 EV specific orders increased to INR13.5bn in Q1FY24 vs INR9.6bn in Q4 FY23.

Orders included chargers, BMS, controllers and motors for both 2W (Friwo JV)
and LCV segments.
 In Q1FY24, profit from associates improved led by higher profits for TG, Denso
Ten and Roki.
 Denso Ten JV received a large infotainment order from Japanese OEM.

Expansion to be completed for TG Minda for airbags by FY25 and TMRN for
seatbelts by H2FY26.
Others
 Expect FY24 EBITDA margin to be near FY23 level. PLI scheme benefit could start
flowing in FY24.
 Net debt stands at INR10.9bn as of Jun’23 vs INR10.8bn as of Mar’23. Interest

cost increased owing to INR800mn borrowing for Pune land and higher interest
rates.
 Capex expected at INR6-7bn in FY24.
Banking
Axis Bank
Retail loans
 Retail loans grew 21% YoY/ 2% QoQ to INR4978bn.
 Of the total retail book, 77% of the book is secured (with home loans comprising
of 32%) and unsecured disbursements remain in the range of 20-25% since last
4 quarters.
 Disbursements for housing loans grew 8% YoY, small business banking grew 46%
and personal loan disbursements grew 21% YoY.
Corporate banking
 Total corporate book grew 22% YoY to INR8585bn. SME book grew 24% YoY to
INR876bn.
 The mid-corporate book grew 38% YoY. Combined portfolio of mid-corporates

and small business loans grew 32% YoY and constitutes 20% of the total loan
book (up by 600bp compared to Q1FY23).
 Disbursement pipeline for corporate loans is healthy with pipeline consisting of

~70% for term loans and balance 30% for working capital.
 The share of unsecured disbursements have remained in the range of 20% to

25% in the last four quarters.
Operating expenses
 Operating expenses during the quarter were INR82bn growing 28% YoY/ 12%
QoQ primarily on account of BAU expenses in relation to Citi acquisition which
were not there in Q1FY23 (and only 1 month expense in Q4FY23).
 Technology related expenses stood at 8% of the total operating expenses.
 Staff cost during the quarter was INR26.9bn (+23% YoY and 24% QoQ) and it
was on account of a full quarter of cost for Citi employees, increments and
annual incentives to employees, addition of 8,366 employees in Q1FY24 to the
tech team and growth businesses and marginal impact of gratuity
Branches
 The bank will likely open ~400 branches in FY24.
Other key highlights

 Management reiterated that it expects Axis Bank’s business to outgrow the
industry growth by 400-600bps in medium to long term
 Cost of deposits stood at 4.62% as of Q1FY24 and the management expects it

to rise further in FY24E, though the pace of increase would be moderate
 CET-1 ratio stood at 14.38%, well above the requirement for protecting its ‘AAA
domestic rating’. The prudent Covid provisions translate to a capital cushion of
48bp.
 The management reiterated that Citi will remain ROE accretive post integration,
but the cost ratios might remain sticky until the integration phase is over.
Bandhan Bank
Loans
 Total loans grew 6.7% YoY/declined 5.5% QoQ to INR1,031.7bn. The QoQ decline
in the loans was attributed to: i) Decline in MFI book by 9.7% QoQ on account of
weather disturbances in few states and seasonality. MFI loans had declined 6%
QoQ/9% QoQ in Q1FY23/Q1FY22. ii) Repayment of a short-term loan account of
INR21.5bn in TD-OD. Growth in retail and CB continue to be strong.
 Retail loan book, which includes gold loans, personal loans, two-wheeler loans
and auto loans, grew ~86% YoY to INR33.7bn.
 Commercial Banking, which includes FIG and SME, grew 78% YoY to INR215.5bn.
 Housing finance was sluggish last quarter (declined -0.6% QoQ), however,
Bandhan is witnessing normalcy in this segment now. During Q1FY24, housing
loans grew 1.4% QoQ to INR269.5bn.
 Management guided for overall loan growth of 20%+ in FY24 and stated that it
would focus on the retail segment and diversification.
Deposits
 Deposits grew at 16.6% YoY to INR1084.8bn – faster than the industry growth of
~12% YoY primarily because of focus on granular deposits by Bandhan and
growth in retail TD (+10.7% QoQ/ 16.5% YoY)
 During the quarter, liability customers increased 3.4% QoQ/ 11.5% YoY (~0.7mn
new customers), transaction volumes increased 9% QoQ/ 50% YoY, value of
transactions improved 5% QoQ / 15% YoY. Digital transactions grew 49% YoY and
average digital transaction per customer account grew 33% YoY.
 Decline in CASA deposit (-8.8% QoQ) was attributed to the seasonal impact.
However, management believes that CASA ratio of 36% is healthy.
 Deposits are expected to grow faster than the loans at 24%+ YoY.
RBI notification on new IRAC norms

 Pursuant to the RBI notification on the new IRAC norms, which came into effect
from April, loans guaranteed under NCGTC schemes/funds were required to be
classified as NPAs as they become NPA. However, there was no requirement to
make provisions on such loans by the banks.
 Bandhan had provided loans guaranteed by NCGTC under the ECLGS scheme and
the CGMFU Scheme. It further has a coverage of 86% of the NPAs covered under
these schemes (even where it is not required to make provisions).
 Loans under the CGMFU Scheme were already being classified as NPA on
becoming 90+dpd and accordingly there was no impact on GNPA of the RBI
notification. However, loans of INR5.8bn under the ECLGS scheme were re-
classified in Q1FY24 and treated as NPA.
 Between ARC and CGMFU, the total amount of recovery is INR2.7bn, of which
INR2.3bn in ARC and INR0.4bn in CGMFU pool.
 The recovery process under ECLGS is slower than CGMFU and, therefore, takes
time for an NPA to move out of the book. However, management expects that
CGMFU-like process shall be introduced for ECLGS as well in six months or so.
Bank of Baroda
Reiterates guidance for FY24E
 Loan growth to be above the industry growth by 1-2% i.e. ~13-14%
 Retail book to grow 4-5% above the industry growth.
 Corporate book to grow 12-13%.
 Overseas book will grow in-line with the total loan book growth.
 Management guides to maintaining RoA of 1%.
Loans
 Management aspires to bring the retail: corporate book mix to 65:35 in couple
of years. Presently, the retail book constitutes ~27% whereas the corporate
book constitutes ~43% of the total domestic loans.
 The pipeline in the corporate book is good with strong demand from
infrastructure and renewable sectors and industrial sector for working capital
loans.
Deposits
 BoB will focus on growing CASA. CASA has remained soft for the industry.
 Term deposits grew 3.6% QoQ of which, bulk TDs grew 11% while retail TD was
flat QoQ.
 There is marginal difference in the term deposit rates between retail and
wholesale.
Yield, cost and margins

 Overall margins declined 26bp QoQ to 3.27% and management maintained its
guidance of 3.3% for FY24E.
 The yields could increase as the MCLR book is not repriced fully yet. Further,
change in mix by increasing the retail share would also contribute to margins,
though not significantly (~5bp). This will offset the increase in cost of deposits.
Stressed book
 As of Q1FY24, total outstanding restructured book stood at INR130bn (down by
~30bn from Q4FY23). Of the total book, INR5bn has slipped into NPA. Total
provisions on the restructured book is INR15.5bn.
 Total SMA-1 and SMA-2 book stood at INR150bn.
 Further, some of the stress accounts on which provisions are created are as
follows: one power account of INR2.55bn, GoFirst account with INR6.39bn and
a hospitality account of INR0.87bn. Though these accounts are not restructured,
management has made provisions on a prudent basis.
 On the GoFirst account, 30% of the exposure is backed by ECLGS, and 35% is
backed by consortium collateral. The provision of INR6.39bn is more than the
unsecured part (35%). Management is expecting full recovery from this account.
Asset quality
 Recovery during the quarter was lower QoQ (INR9.86bn in Q1FY24 versus
INR17.95bn in Q4FY23) as large accounts were settled in Q4FY23.
 Management has targeted recoveries (including upgrades and write-offs) of

INR120bn for FY24E.
 During the quarter, RBI had implemented a penalty of INR5.7mn, reason for
which was not discussed.
 Fraud accounts were entirely provided for (INR0.29bn), during the quarter. Of
which, INR0.16bn was on account of incremental frauds during the quarter.
 Collection efficiency was lower during the quarter at 97% as one large account
was collected after the quarter. Including that, the CE would have been 98.9%.
 Reported credit cost higher QoQ at 70bp was on account of additional floating
provisions of INR2bn and account specific provisions of INR4.2bn made in the
quarter. Management stated that if the specific credit cost is below the guided
range, it may make further floating provisions
Other highlights
 Management has made higher tax provisions during the quarter on a prudent
basis leading to higher tax rates.
 On the credit card business, the financial and legal due diligence is
completed and the prospective investors are evaluating the reports.
Federal Bank
Loans
 Management believes that the credit opportunities are shaping up well and
demand is intact across segments. Demand in July-2023 is sustaining and should
continue in Q2FY24 as well.
 Management reiterated its stance that it would refrain from venturing into
riskier segments even when it generates higher yields. FB would not
compromise on the quality of retail lending.
 Loan mix as of Q1FY24 was as follows: Repo linked: ~49%, MCLR linked ~14%,
linked to other benchmarks ~10% (of which base-rate linked is 4.5%) and fixed
rate book at ~27%.
 On the portfolio mix, the management stated that the unsecured book would
not exceed 10% and the share of any segment would not exceed 15% of the
total portfolio. It would continue with the current retail: wholesale mix of
~54:46.
 For home loans, there is no slowdown witnessed in the geographies where FB

operates.
Deposits
 Deposits grew 4% QoQ/21% YoY to INR2,225bn in Q1FY24 largely aided by the
withdrawal of INR 2,000 notes.
 45% of deposits are within Kerala. FB has ~70% of its network in the semi-urban
and rural areas across India excluding Kerala. These branches are taking a higher
share of incremental deposits.
 Of the incremental deposit growth, 15% is attributable to the fintech

partnerships.
 Cost of TDs is ~6.4% and the incremental cost is ~6.5%. Blended cost of SA
deposits stood at 3.2% (similar level in Q4FY23).
 During the quarter, cost of funds stood at 5.32% and the management expects
that this might increase to 5.40% in Q2FY24.
 Retail deposits as per LCR stood at ~85-86% (at its peak, it was ~95%) and the
management aspires to bring this to ~88-89%.
Asset quality
Slippages during the quarter increased to INR4.90bn from INR4.36bn in Q4FY23
largely driven by higher slippages in retail restructured loans. Of the total retail
slippage, ~30% was from the restructured book on which moratorium ended in
Q4FY23.
Guidance
 Management maintained the loan growth guidance of 18-20%.
 NIM guidance for FY24 is ~3.3% (excluding the expected capital raise).
 RoA guidance of ~1.30-1.35% is maintained.
 Management maintained the credit cost guidance of ~40-50bp for FY24.
Other highlights
 During the quarter, FB’s chairman Mr. C Balagopal retired and the new chairman
took charge on June 27, 2023.
 Breakdown of miscellaneous income of INR1640mn is as follows: INR520mn

from net gains on sale of PSLC, INR300mn of trading gains, INR250mn from
recovery from written off assets, INR150mn of dividend income from subsidiary,
INR 120mn from profit on revaluation and balance from other miscellaneous
income.
Five Star Business Finance

Loans
 Outstanding loan portfolio rose 10% QoQ/ 43% YoY and stood at INR75.8bn as
of Q1FY24.
 The company revised its growth guidance from 30% plus to 35% plus AUM
growth in the medium term which would be driven by the levers of branch
expansion, employee strength (number of officers per branch), and increase in
the average lending ticket size.
 The management revised the guidance upwards as it believes that the impact of
Covid has waned, collections are back to pre-covid levels and momentum in
Q1FY24 is similar to Q2FY23 and Q3FY23 – which are generally strong quarters.
Borrowings
 The company has well-diversified profile of lenders of about 50 banks, with SBI
being the largest lender. Of the total borrowings, ~35% is from the top-5 lenders
with an average tenure (at origination) being 5.5 to 6 years.
 The company had sanction of INR8.9bn, of which, it availed INR7.3bn at the cost
of 9.18%. The all-in-cost of these loans was 9.5% (vs 9.53% in Q4FY23). Most of
the sanctions are based on MCLR rates (6-12 month duration).
 During the quarter, CARE upgraded the credit rating to AA- and now, the
company has AA- rating from all the major rating agencies.
 The current leverage on the balance sheet is ~2x and the management guided
that this would go up to 4-4.5x in a medium to long-term resulting in RoE of
~18%.
Margins
 Margins declined 73bp QoQ to 17.74% largely because of the increasing leverage
on the balance sheet.
 Going forward, management believes that the NIMs would be in the guided
range as the interest rates decline would impact only the incremental book. In
the medium term, spreads will be normalized by 100-125bp.
Distribution network
 The company had earlier guided for opening 50-60 new branches in FY24E.
During the quarter, the company added 13 branches, taking the total number of
branches to 386.
 Generally, a newly opened branch in the southern region achieves break even
within 6 months from its inception; however, for the branches opened in
northern region, management expects the break-even period to be about 9-10
months.
 The biggest competitors for the company in the newer geographies are SFBs and
the regional players.
 The branch additions resulted in disbursal growth of 99% for the year. Loan
disbursement grew 2% QoQ to INR11.2bn – first time where Q1 disbursements
have exceeded Q4 disbursements.
Asset quality
 GS3 assets increased 5bp QoQ/29bp YoY to 1.41%, whereas 90+dpd increased
4bp QoQ to 1.08%. 30+dpd declined 83bp to 9.68%.
 Restructured book stood at 0.76% of AUM and the company has a coverage of
~50% on the restructured book. OF the total restructured book, 90% is standard.
 The 90+dpd book increased 5bp QoQ to 1.41% because of seasonality.
 PCR on the overall book improved from 1.61% in Q4FY23 to 1.64% in Q1FY24,
whereas PCR on stage-3 is 44.19%. Management stated that it would like to bring
the PCR to 40%.
 Overall improvement in the asset quality was driven by strong collections.
Average lending ticket size

 The average ticket size has increased to ~INR340,000.
 The management further guided that ATS might increase to ~INR450,000 due to
inflation in a period of 3-5 years.
Other highlights
 During the quarter, total investments increased from INR1.4bn to INR3.6bn as
fixed deposits were moved to investments in mutual funds as the yields were
higher. This has marginally impacted the CAR
 Opex during the quarter was INR1.2bn declining 3% QoQ primarily because
Q4FY23 had a few one-offs on account of higher provisioning and some other
opex which were not incurred in Q1FY24.
 Credit cost is expected to be 75–100bp.
 The current book (non-delinquent accounts) is at 85% (82% pre-Covid) and the
management aims to increase this to 88% by March 2024 and 90% in the long
term.
 The company comfortable liquidity position of ~INR14bn on the balance sheet,

of which INR1.6bn pertains to undrawn sanctions.
HDFC AMC
 Revenue yields: Revenue yield dropped 3bp YoY, 1bp QoQ to 47.3bps as a
percentage of QAAUM in Q1FY24. Management attributed the fall in revenue
yield to churning of its legacy AUM. New inflows continue to come in at lower
revenue yields compared to existing AUM. Also, there has been significant net
inflows in larger schemes which has resulted in incrementally lower yields.
Blended equity yield for the quarter at 66-68bps.
 Rationalization in brokerages: Management indicated that there has been some

rationalization in distributor commission payouts in the market. In last few years
there due to launch of a number of new NFO brokerage were high which seem
to be settling now. This rationalization has helped the company to slow down
pace dilution in revenue yields.
 HDFC-HDFC bank merger: Management is very optimistic about the opportunity

arising out of the merger. Company has ~ 30% counter share for gross inflows of
HDFC bank, management plans to collaborate to increase this.
 Product pipeline: Transportation & logistics fund and Cancer cure fund are the
two products in pipeline. Management believes that the company has best in
class product suite across asset classes, and does not need to launch a lot of new
schemes.
 Debt funds: Even after major tax setback for debt funds in The Finance Bill 2023,
industry witnessed net inflow INR 574bn in Q1FY24 in debt category. Short
duration products such as money market funds saw major traction. Long
duration products may attract investors when markets have more confidence
about downward movement in interest rates.
 Passives strategy: Owing to number of product launches in last few years,

management believes that the company has good suite of passive funds, and
strategy would be to engage with market makers to increase liquidity in ETF’s.
 Competition: Management believes that the opportunity in Indian asset

management space is huge and it would attract a lot of new entrants in the
industry. HDFC AMC will benefit from best in class product range, huge partner
network, robust processes and passion to help investor create long term wealth.
 SIP: Management stated that growing SIP is the number one priority of the
company as gives long-term visibility of flows. HDFC AMC crossed INR1tn SIP
AUM with strong SIP book INR18.9bn, increasing SIP market 250bp to 12.9% in
Q1FY24.
HDFC Bank
Loans
 Retail advances grew 4% QoQ/ 18% YoY to INR6578bn and was primarily driven
by housing loans (HL), which grew 6.3% QoQ/22.9% YoY to INR1084bn. Post-
merger, the home loan logins are 20% more than the pre-merger.
 Personal loans (PL) grew 2.9% QoQ/ 19.5% YoY to INR1767bn and the moderate
growth QoQ was attributed to seasonality factor. The management stated that
the even where there are opportunities to grow the PL faster, the bank will have
a calibrated approach to grow this book.
 Management would evaluate the wholesale book (of HDFC Ltd) prospects for 1-
2 quarters before building it up and would take a call thereafter on its growth.
It clearly stated that it would not be doing land financing and project financing
that does not meet the regulatory requirements.
 On a proforma basis, gross advances (merged) grew 13% YoY (16% YoY ex-IBPC)
to INR22.4tn. Core loan growth (excluding HDFC’s wholesale book) grew 19%
YoY to INR22.1tn.
 As of Q1FY24, HDFCB has sufficient PSL and RIDF. Management aspires to get
away with the PSL and RIDF requirement over a long term.
 Management expects loan growth of ~17-18 YoY over a long term period.
Deposits
 Incremental retail deposits were ~INR380bn during the quarter and constituted
83.5% of the total deposits as of Q1FY24 (82% in Q1FY23) whereas wholesale
deposits grew 9% YoY.
 On a pro forma basis, total deposits (merged) grew 16% Yoy (19% ex-wholesale
deposits of HDFC Ltd) to INR20.6tn.
 Cost of funds increased during the quarter to 4.0% (3.7% in Q4FY23) largely
because of the funding mix. Management stated that the pricing of the deposits
is at or below the competitor’s pricing as the bank is not willing to gain deposits
by lead pricing; it is rather focusing on customer engagement.
 HDFCB added 2.4mn new liability relationships in Q1FY24 (2.6mn in 4QFY23 and
10.6mn in FY23).
Liquidity
 LCR stood at 126% as at Q1FY24 versus 116% in Q4FY23 and 108% in Q1FY23.
 Proforma LCR i.e. including estimated HDFC Ltd’s book is over 120%.
Distribution and opex

 HDFCB added 39 branches in Q1FY24 and 1,482 during last 12 months. The
branches take ~18-24 months to break-even.
 The bank added ~29,000 people in last 12 months and ~8,500 people during the
current quarter.
 HDFCB has 4.6mn payment acceptance points (+37% YoY), of which, 2.8mn
merchants are accepting from the VYAPAR app.
 Home loans are now provided from 4,336 branches (twice the number as of Jun-
22).
 Management stated that it is making use of the benign credit cost environment
for expansion and believes that the distribution network will be the key in the
medium and long term.
 Cost to income ratio stood at 42.8% and the management believes that this
would come down once the investments start flowing through.
 CRB is done out of 90 districts.
 Rural business has expanded to ~170,000 villages and management believes

that it is on track to achieve the target of 200,000 villages
Asset quality
 Slippage ratio of 35bp in Q1FY24 or INR58bn.Recoveries and upgrades of
INR26.5bn (or 16bp) and write off of INR31bn (19bp.)
 Of the total GNPL of 1.17%, 103bp is NPL and 14bp is standard but classified as
NPL because other facilities are classified as NPLs
 Credit cost was 70bp during the quarter (67bp in Q4FY23 and 91bp in Q1FY23)
gross of recoveries and 51bp net of recoveries (44bp in Q4FY23)
Credit cards
HDFCB issued 1.5mn cards during the quarter and the total cards issued stood at
18.4mn as of Q1FY24. Customer spending increased 10% QoQ and 30% YoY.
Merger-related
 Merger related cost would include stamp duty, technology costs, etc, however,
it would not be a significant amount. It would also incur cost on capital assets
for the required infrastructure.
 Liabilities of ~INR 6.3tn (including deposits) moved from HDFC Ltd to HDFC bank.
 Home loan book of HDFC Ltd will be moved from prime lending rate to repo-
rate based pricing.
 HDFC Ltd has ~4mn customers of which, management believes that it has
opportunity to get 2.5-3mn customers to the bank.
HDFC Life Insurance

 Growing HDFC Bank channel: With change in relationship to parent-subsidiary,
both the companies will focus on increasing engagement with customers within
the group. According to the company its counter share within the HDFC Bank
channel has increased slightly by 50-100bp in Q1FY24. The company is engaging
with the Bank and refocusing on laggard branches, and increasing geographical
penetration. Further HDFC Life also satated that it is seeing an improvement in
sales of individual protection within the HDFC bank channel.
 Margins: Management stated that it expected VNB margin for FY24 to be at

similar levels of FY23 as it tries to realize synergies of the Exide Life acquisition.
Margin expansion can be expected post FY24E. Margins have been affected due
to change in product mix in Q1FY24 due to forwarding of demand for non-PAR
products in March-23 due to tax changes. This was mainly as a result of lower
scale benefits i.e. fixed cost absorbtion.
 Demand and guidance: Company expects the demand for protection segment
to remain high and that the current growth rate in this segment is sustainable.
Management expects VNB expansion in FY24E to be led by APE growth rather
than any significant margin expansion. The company has maintained market
share in credit life across partners. Growth in individual protection due to
increasing visibility, data analytics, and fast on ground conversion. Management
has guided for a stronger growth in Q2FY24 and H2FY24 would be better than
H1FY24. APE growth of 13% can be attributed to 9% growth in number of
policies sold and 3% growth in average ticket size. Management re-stated that
growth excluding the impact of one-time demand seen in FY23 of INR 11bn
would be ~15%.
 Expansion beyond tier -1: Company is focused to expand to Tier 2 & 3 cities
with improved underwriting metrics and risk management systems. Better
underwriting metrics have been adopted by understanding underwriting and
risk assessment models of successful NBFCs catering this market. Exide life had
a good presence in Tier 2 & 3 cities in southern India. Average ticket size for Tier
2 cities is around 85k (Tier 1 ~130K) which was better than management’s
expectation. Management expects ticket size in tier 3 cities to be ~INR 70k-75k
is also higher than management expectation. Management expects profitability
from Tier 2 cities will be in par as relevant risks have been priced in. Persistency
improved from 84% to 87% in tier 2 markets, and from 80% to 84% in tier 3
markets.
 Exide merger: Company has witnessed synergies of merger in terms of both cost
reduction and entry to new market. Exide life had a good presence in Tier 2 & 3
cities in southern India. On cost front, branch expenses and general corporate
expenses have been rationalised which helped the company get to margin
neutrality ahead of plan. Persistency of Exide portfolio was inferior to HDFC
Life’s portfolio but there has been improvement ~400bp across cohorts.
 Technology expenses: Under project inspire, company expects a total outlay of

INR 1bn for FY24E & FY25E each towards improvement in technology across
various functions.
 Non-linked savings policies: Company believes that demand for traditional

saving products will pick up again. Company has experienced growth of 30%-
40% in non-PAR products for INR2-4 lakh category in Q1FY24, whereas share of
policies above INR 0.5mn in ticket size continues to remain high.
 Economic variances: Economic variance for Q1FY24 is INR 8.1bn as the equity
the markets have rallied around 10% in this quarter compared to the company’s
expectation of 2-2.5%, contributing to INR5bn vs. fixed income contributed to
~INR 3.1bn.
ICICI Bank
Loan book
 The bank’s share of unsecured retail loans i.e. personal loans and credit card has
increased to 12.8% in Q1FY24 from 12.3% in Q4FY23.
 Of the total domestic loan book, ~31% of loans are fixed rate, while 69% are
floating (46% are repo-linked, 3% are linked to other benchmarks and 20% are
mainly MCLR linked).
 Overseas loan portfolio declined 29% YoY (5% QoQ) and stood at 3.1% of the
total loan book as of Q1FY24 (3.3% in Q4FY23). The decline was primarily due
to maturities in the short-term non-India linked trade finance book.
Margins
 NIM declined 12bp QoQ to 4.78% in Q1FY24 reflecting the lagged impact of
increase in deposit rates over the last year, offset in part by an increase in loan
and investment yields.
 The impact of interest on income tax refund on NIM was 3 bps in Q1FY24 (Nil in
Q4FY23 and 3bp in Q1FY23).
Operating expenses
 Employee costs during the quarter were INRINR38.8bn increasing 36% YoY /
14% QoQ despite the higher base in Q4FY23 (one-off retirement related
provisions) primarily on account of annual incentive payout, promotions and
employee addition in last 12 months. Management stated that it would
continue to hire employees for next few quarters.
 The non-employee related expenses grew 20% YoY (2% QoQ) and were mainly
driven by retail business sourcing and technology costs.
 Tech spends was at ~9% of total Q1FY24 operating expenses (9.3% in FY23).
 Management stated that the bank would continue to invest in technology,

distribution, people and its brand going forward as well.
ICICIBC added 174 branches in the quarter, (182 in Q4FY24) to take the total network
to 6,104 branches.
Non-interest income
 Fee income grew ~14% YoY primarily led by fee from retail, rural and business
banking and SME. Fee from these segments comprise 78% of the total fee
income.
 During the quarter, ICICIBC received total dividend of INR 2.91bn (versus
INR3.47bn in Q1FY23) from its subsidiaries and the YoY decline was on account
of lower final dividend from ICICI Securities Primary Dealership.
Other highlights
 LCR for Q1FY24 stood at 122% (similar to Q4FY23).
 During the quarter, ICICIBC redeemed Tier-1 bonds of ~INR40bn.
ICICI Lombard GI
Motor business
 Motor OD competitive intensity is high and company remains cautiously

optimistic.
 Loss ratio for motor OD improved 660bp YoY to 67% in Q1FY24, management is
hopeful to maintain this loss ratio on back of strong underwriting & data
analytics based decision-making process.
 Company continued to focus on profitable sub-segments using historical

granular data and rebalancing CV mix to 21% and two-wheeler mix at 30.3% for
Q1FY24.
 Given no TP rate hike in FY24, the company reduced its exposure to the CV
segment where it expects higher loss inflation
Health business
 Loss ratio for employee–employer segment stands at 92.6% in Q1FY24;

management expects loss ratio to be 90-95% for MSME clients and 95-100% for
big corporates.
 Loss ratio for retail health segment is ~64%.
 Retail health net earned premium increased 15.6% YoY to INR 2.6bn due to price
hike ~19% in Feb-23.
 Company continues to grow retail health in line with SAHI growth and is gaining
market share. For Q1 market share improved by 10bp to 3.1%.
Other business segments
 Catastrophic event (cyclone) during the quarter affected property & casualty
segment, the net impact of claims because of cyclone losses has been about
INR350mn or 90bp on loss ratio.
 Most of the impact of the cyclone led loss is in the fire, and engineering
segments.
 Due to El-nino, management has opted for cautious approach in crop segment
and has provided for loss ratio of 102.1%; and aims to keep revenue from this
segment below 5% of total revenues.
 Management estimates price softening in fire & engineering segment to be 5-

6%.
 Industry moving away from IIB rates has impacted premium growth but
company has still managed to grow the property segment.
Distribution
 IL Take Care app surpassed 5.6mn download (incremental downloads of 1mn in

the quarter). Idea behind the app is to provide a platform for continuous
engagement with clients for various GI needs and eventually cross-sell and
upsell.
Other highlights
 Management indicated that a large number of players in the industry are

operating 30-35% above the prescribed expense threshold (EOM regulations),
which might be fuelling their growth. ICICI Lombard is well within the prescribed
limits, and any action by the regulator may benefit the company.
 Management stated that move to IND-AS could benefit combined ratios by upto
400bp.
ICICI Prudential Life

Business environment and performance
• Implementation of use and file procedure for unit-linked insurance plans (ULIPs)
and combi plans (combination of life & health insurance plans) by IRDAI are
positive for the industry enabling development of the insurance industry and
ease of doing business.
• APE growth will be the key driver to VNB in future as against VNB margin which
helped the company grow VNB two fold in four years.
• Well placed with solvency of 203.4% as on Q1FY24, ability to raise additional

sub-debt if required.
• Expense ratio (cost/TWRP) jumped 390bp YoY to 27.7% due to continued

investment in building distribution capacity for further growth, and manpower
cost for activation of newer channels.
APE & VNB
- APE growth was impacted by decline in group protection, ICICI Bank channel
and in other bank channels.
- Management expects expect savings business to grow in line with nominal GDP
growth of the country, protection and annuity business to grow ahead of the
savings business.
- VNB margin declined 100bp YoY to 30% in Q1FY24 due to change in product mix
& spike in expense ratios.
- VNB declined 7% YoY as 1) share of group protection declined and 2) within non-
linked savings participating products saw higher sales. This largely offset the
strong growth in retail protection.
Distribution
• Company has added 7,841 new agents in Q1FY24. Agency channel has grown
20%/22% in May-23/June-23, weak APE growth in Q1FY24 due to spill over to
March due to changes in tax regulations.
• ICICI Bank channel’s APE weakened 34.6% YoY to INR 1.97bn. Growth from
other bank channels was muted due to advancement of purchases from
customers in Q4FY23 on the back of regulatory changes. Management expects
this impact to taper off.
Product mix
• Under group segment, credit life continues to do well and management expects
group term insurance sales to improve in near future. Growth has been
impacted in GTI business due to pressure on pricing. GTI business had seen
significant improvement in pricing during COVID-19.
• Management remained non-committal on growth prospects of ICICI Bank
channel as the bank continues to focus only on term protection and annuity
products, with ULIP offering being on shelf.
• Retail protection APE grew 61.8% YoY to 1.1 bn as distribution channels re-
aligned to sales of this product and underwriting restrictions eased.
Management perceives this segment as mutli-year growth opportunity and will

continue to focus on it. The company has also seen an increase in number of
policies sold.
• Hugh-ticket customers have been migrating from non-participating to unit

linked plans, and there has also been a decline in average ticket size of non-
participating products.
• Management is planning to scale interest rate guarantee products with strict

hedging for interest rate risk management.
 IPRU has launched constant maturity funds as insurance companies have tax
advantage over mutual funds in this category.
IDFC First Bank

Loan book
 The overall loan book grew 7% QoQ/25% YoY to INR1716bn.
 Retail loan book grew 6.8% QoQ /27% YoY to INR973bn and the QoQ growth
was largely driven by consumer loans and wheels. Credit cards grew off a lower
base. The bank issued more than 1.17mn cards in Q1FY24. LAP was flat QoQ as
the bank sold off some part of the book.
 Credit cards are largely provided to its existing customers and the bank is
looking to add more co-branded cards with additional benefits for general
customers.
 Infrastructure book decelerated 44% YoY and constitutes ~2.2% of the total
funded assets now.
 The bank is ensuring that it has limited business risk on its book as ~28% of the
book is backed by mortgage.
Deposits
 Deposits grew 9% QoQ/44% YoY to INR1485bn, whereas CASA deposits rose
27% YoY/flat QoQ to INR71.8bn. Excluding the outflow of one large chunky
account of INR21bn, CASA deposits grew 3% QoQ.
 Management stated that though the bank is not at par with large private banks
in terms of providing end-to-end solutions to current account holders; it
believes that, it has the opportunity to build such solutions.
 The average cost of SA deposits was 5.6%.
 Management believes that the growth in deposits is despite the rate-cuts that
the bank has taken recently.
Non-interest income
 The bank is gaining traction in trade finance, cash management, supply chain
management, etc, and management believes that the bank is moving towards
being a universal bank.
 Fee and other income in Q1FY24 was INR1341, growing ~49% YoY. Retail fee
constitutes 91% of the total fee income.
 As of Q1FY24, fee as a percentage of total assets stood at ~2.2%.
Margins
NIM declined 8bp QoQ to 6.33% in Q1FY24, and management stated that they
believe NIM would be stable hereon.
Asset quality
 GNPA ratio declined 33bp QoQ to 2.17%. Excluding the infra book, GNPA ratio
was 1.71%
 Restructured book stood at 0.47% of the funded assets and 25% of the book is
provided for. Of the total restructured book, ~85% is secured.
 Collection efficiency (excluding arrears and repayments) stood at 99.5%

resulting is low retail SMA of 0.85% (reduction of 32% over Q1FY23).
IDFCB added 15 branches in Q1FY24 taking the total network to 824 branches.
Other highlights
 LCR for Q1FY24 stood at 125%, and management stated that they would
maintain the LCR at the current level.
 During the quarter, the bank’s long-term credit rating has been upgraded by
CRISIL and ICRA.
IndusInd Bank
Overall loan book
 Loans grew 22% YoY to INR3013bn driven equally by corporate and retail book.
 Of the total loan book, 46% is retail book while 54% is corporate book. Large part
of the corporate book is on floating rate. Management stated that it would
continue to have share of retail book at 43-45% and corporate book at 55-57%
in the total book.
Retail book
 Retail business segments showed strong growth with business banking and credit
cards growing 7% QoQ each and VF growing 4% QoQ, whereas MFI declined 0.7%
QoQ.
 Strong momentum in the retail book led to core fee income growth of 2% QoQ
and 19% YoY to INR21.19bn. Share of retail fee improved to 73% in Q1FY24 (70%
in Q4FY23).
Vehicle Finance
 Vehicle finance grew 4% QoQ / 21% YoY to INR 783bn; disbursements grew 18%
YoY led by demand in commercial vehicles, utility vehicles and cars; however,
demand was muted for tractors and 2Ws. Management expects improvement in
disbursements and recovery in 2HFY24.
Microfinance segment
 Disbursements grew 12% YoY to INR84.1bn. NTB disbursements in terms of
number of borrowers grew 19% YoY.
 During the quarter, IIB added 5,04,000 new customers. Active borrower base
increased 5% YoY.
 Collection efficiency stood at 99.2% for standard book.
 Gross slippages decreased to INR3.6bn in Q1FY24 from INR5.9bn in Q4FY23.
 Management expects the MFI book to grow at 18-20% in FY24E with large part
of the growth coming in H2FY24.
Corporate book
 Corporate book grew 3.9% QoQ driven by broad-based growth across segments.
Small corporates grew 10% QoQ, large and mid-corporates grew 3% QoQ.
Corporates with less than INR5bn grew 14% QoQ.
 Going forward, management aspires to increase the share of small corporate

book from the current 10.5% to 20% within the corporate book.
 Yield on corporate advances increased 10bp QoQ as large part of the corporate
book is on floating rate and IIB passed on the increased interest rates to the
customers. Going forward, the yields are expected to stabilize.
 Share of top-20 accounts in the corporate book has reduced sharply over a
period, and constitute 12-13% of the total corporate book.
 The portion of ‘AA and above’ rated customers has increased from 73% in
Q4FY23 to 76% in Q1FY24.
 During the quarter, there were no slippages in the corporate book.
Deposits
 Deposits grew 3% QoQ / 15% YoY to INR3470bn. Deposits as per LCR grew 21%
YoY and share of retail deposits stood at 43.4%.
 Deposits from affluent segment grew 22% YoY to INR444bn in Q1FY24 and AUM
of affluent segment stood at INR688bn (+17% YoY). NR deposits grew 9% QoQ to
INR 372bn.
 Cost of deposits stood at 6.12% in Q1FY24 and the management expects it to

decline by 10-15bp by end of FY24E.
Margins
NIM improved by 1bp QoQ / 8bp YoY to 4.28%. The management maintained its
guidance on NIM 4.2-4.3%, which would be achieved through: i) change in loan mix
ii) cost of deposits expected to normalize and iii) risk of cost getting downsized
Operating expenses
 Opex during the quarter was INR32.4bn growing 6% QoQ largely on account of
employee addition, technology spends, annual appraisal action and expansion in
distribution network.
 The bank will continue to make investment in physical and digital distribution.
Management aims to open 250-300 branches in FY24E.
 During last 12 months, the bank has added ~12,600 employees.
 The cost to income for Q1FY23 remained elevated at 46% and would continue to
remain at these levels for FY24E. Thereafter, the management believes that cost-
to-income ratio would be in the range of 41% to 43% in FY25E and thereafter, it
would settle between 40-41%.
Liquidity
IIB maintained average surplus liquidity of ~INR440bn during the quarter with
liquidity coverage ratio of 132% Q1FY24 versus 123% in Q4FY23.
Other highlights
 Security receipts net of provisions stood at INR13.3bn as at Q1FY24. The bank
provided INR 1.3bn on SRs
 During the quarter, part of the non-rated portfolio book got rated and even the
non-utilised limits got reduced resulting in lower RWA.
 The bank awaits formal communication from RBI on promoter stake increase.
Kotak Mahindra Bank

Financial performance
 Non-core income was high at 20% of PPOP versus 5% QoQ.
 Of the total non-core income of INR8.6bn, INR2.5bn was treasury related,

INR3bn was from dividends and the bank received chunky income from
alternates.
 NII grew 2% QoQ / 33% YoY. Core fees declined 5% QoQ. While some seasonality
in core fees sequentially in Q1 is a normal trend, even YoY growth in core fees is
soft at 10%.
 NIM declined 18bp QoQ to 5.57%. Yield on loans rose 36bp QoQ driven by a sharp
increase in the share of unsecured loans from 10% to 11.5% QoQ. CoF rose 35bp
QoQ.
 Total loans grew 17% YoY / 3% QoQ, a tad lower than expected. Growth in
secured retail loans including mortgages decelerated to 18% YoY / 2% QoQ while
unsecured loans grew faster at 51% YoY / 8% QoQ. SME and agri loans were flat
QoQ. Corporate loans grew 7% QoQ (on a low base) and 9% YoY.
 Deposits grew 6% QoQ / 21% YoY. Fixed rate SA continued to be weak remaining
flat QoQ and declining 5% YoY. However, total SA grew 2% QoQ led by a sharp
25% QoQ rise in floating rate SA. The bank’s sweep deposits grew 24% QoQ (non-
annualized) and made a meaningful contribution to deposit growth.
 Opex grew sharply by 31% YoY / 9% QoQ. Management explained that excluding
annual increments, opex growth would be 20%.
 PPOP excluding non-core income grew 27% YoY but declined 7% QoQ while total
PPOP grew 78% YoY / 6% QoQ. The QoQ decline in core PPOP is higher than
peers.
 Gross credit cost rose sharply from 23bp to 54bp QoQ, but remains lower than
the normalized level, so not a concern. The bank continues to draw down Covid
provisions. The draw down in Q1 was INR500mn compared to INR280mn QoQ.
 The tax rate normalized in Q1FY24. In Q4FY23, it was lower because of a write-
back of provisions.
 PAT grew 67% YoY and declined 1% QoQ.
 Management explained that high attrition is limited to junior employees while

attrition in middle and top management remains low.
Sweep deposits – Higher effective SA rate

 The bank’s sweep deposits grew at a high, non-annualized rate of 24% QoQ and
already form 7.4% of total deposits.
 The bank is very optimistic about this product because while sweep deposits are
more expensive than normal savings deposits they are cheaper than pure term
deposits.
 The blended cost of sweep deposits at 5.2% is ~170bp higher than ordinary SA
but it is cheaper than term deposits of ~7%.
 By launching this product, Kotak has effectively offered higher SA rates.
 Kotak’s deposit franchise remains relatively weaker than ICICI’s and HDFC Bank’s
which is why the bank needed a product like sweep which would offer higher
rates than ordinary SA.
CEO remains optimistic on growth

 The CEO retains his optimism on the country’s growth outlook and on the bank’s
future growth.
 According to him, India has emerged strong out of Covid. India’s

political equations with many nations have improved. The difference
between the Fed’s and RBI’s policy rate has narrowed significantly.
With a strong economy and improving political equations, “The Stars
are aligned for India”.
Mahindra & Mahindra Financial Services

Initial comments
 MMFS witnessed best-ever Q1 in terms of asset quality parameters, which is
generally affected by seasonality. Management believes that this is a reflection
of economic activity leading to better cash flows.
 Disbursements during the quarter were INR121.6bn (+28% YoY). MMFS has been
gaining market share across its product lines on the back of relatively higher
disbursements considering the seasonality in the first quarter.
 The increased focus in the pre-owned vehicle segment is yielding good results
for MMFS.
 Overall, the outlook on asset quality and collection efficiency remains strong.
Cost of funds
 Cost of funds increased during the quarter as the old borrowings at lower rates
had matured and were replaced by new borrowings at higher rates.
 Cost of funds in not likely to come down in the near term.
Margins
 Net interest margin stood at 6.8% as of Q1FY24 primarily on account of increase
in cost of borrowings and change in the product mix. Of the total decline of 40bp,
~50% could be attributable to higher cost of funds.
 Going forward, the increase in share of pre-owned segment in the portfolio

would offset the increased cost of funds, aiding margins.
 Further, NIM compression on account of mass affluent customers would be

offset by lower opex and credit cost. Presently, such customers constitute ~10-
12%.
 Management had guided for a NIM of 7.5% by end-FY25E and is positive on

closing the financial year around this number, if the pricing and product mix play
out as desired.
Asset quality
Gross Stage 3
 Management believes that Q1FY24 was one of the best Q1s in terms of asset
quality as the Gross Stage 3 assets have declined QoQ, contrary to the general
seasonality impact.
 The GS3 ratio stood at 4.3% versus 4.5% in Q4FY23 and 8.0% in Q1FY23. The
decline is largely attributable to the higher collection efficiency.
 In FY23, management had opted for aggressive termination and settlement

agreements to contain the NPA ratio. However, going forward, the repossession
and settlement would be normalised as the management has achieved the
desired level of NPA ratio.
 Collection efficiency for Q1FY24 stood at 94% (similar to Q1FY23) and the
management expects this trend to continue.
Write-offs
 Write-offs during the quarter were INR3.1bn. MMFS had changed its policy on
write-off. Earlier, the write-offs were taken in September and March, whereas
currently, the write-offs are taken every quarter.
 Though the management did not provide a clear guidance on the write-off
amount for FY24E, it stated that the write-offs for remaining quarters could be
around the current quarter’s amount.
Credit cost
 Credit cost increased during on account of seasonality. However, as the festive
season picks up from Q2FY24, the management expects credit cost to improve
by end of FY24E.
 The floods in northern region has not affected the credit cost as there is no dip
in the collection efficiency in those regions.
Other highlights
 Share of SME in total disbursements declined QoQ to 3% (7% in Q4FY23 and
Q1FY23) as the matured book is running down faster. The incremental
disbursements looks healthy though, at 45% YoY growth.
 MMFS has no plans to raise capital in the near term as it is well-capitalised
 Growth in disbursements led to higher capital consumption as Tier-1 ratio

declined by 100bp QoQ to 18.9%. There was no increase in the operational risk.
Max Financials
 Axis deal: Management clarified that the option of additional 0.98% stake sale
to Axis group would be through a secondary sale of MFSL to Axis group.
Management expects the deal to conclude within six months. Post completion
of the deal, the company is expected to start the process of direct listing of Max
Life.
 Guidance: Management guides for double-digit growth for FY24 despite high
base of Mar-23. Management guided for Q2FY24 APE growth of around 20% and
given strong bolstering of solvency management now expects growth from Axis
Bank channel to improve and a medium term growth guidance of 20% over 3-4
years.
 Margin: Management guided for margin of 27–28% for FY24E (lower than FY23)
as the company focuses more on top-line growth and continues to invest in
proprietary and bancassurance distribution channels. Management indicated
that it was adding 26% to the manpower at bank channels, and it was adding
offices and agents.
 Axis bank channel: Management mentioned that Axis Bank channel contributed
51% of total APE. Counter share at axis bank continues to remain in the 68-72%.
 Other Bank channels: Management indicated that growth slowdown over FY23
is attributable to adoption of open architecture by Axis Bank and YES Bank. These
channels have now stabilized and that the company now expects growth from
the banca channel to improve. Max Life in the past few quarters has added Tamil
Nadu Mercantile Bank, Ujjivan Small Finance Bank, DCB Bank, Capital Small
Finance Bank and South Indian Bank. Management expects strong scale up from
these channels and expects contribution from the new bank partners to improve
to 6-7% of total APE.
 Propriety channels: Management aims to open 100 new branches during FY24
to enhance distribution from this channel. The company has also added two large
brokers, three large co-operatives, and additional agents to grow business.
Product mix
 Non-PAR savings: Management indicated that there has not been any material
impact of tax changes as the segment continues to grow well. Company has
revised IRR downward for non-PAR products due to changes in yield curve and
this should enhance profitability in coming quarters. Management has also
guided for a 30-35% contribution from NPAR in FY24E.
 Annuity: Management stated that it had set up a process of procuring annuity

business which entails tapping into the corporate retirement cycle and NPS
ecosystem. Growth in Q1 was driven by group annuity but the business is still
very granular as the company has to sell the same to individuals who are retiring.
The B2B business comes along from time to time and can be lumpy.
 Protection: Company reported a 36% growth in protection as management

explained that demand improved and supply side constraints eased. The
company has worked on buffering of capacity in underwriting, re-negotiating and
on boarding a new reinsurance partner, and improving underwriting flexibilities
on underwriting with re-insurers. There has been some loosening of
underwriting standards. According to the company, the business is now more
well understood by companies and re-insurers and this is aiding penetration to
additional cities. Group protection has seen substantial improvement as the

company has added partners. Management expects momentum to sustain and
growth to improve from this line.
 ULIPs: Management expects sales of ULIPs to pick up as market conditions

remain buoyant. Strategy will be to grow using bank and online channels. Will be
selective to whom the product will be offered.
 PAR: SWAG PAR product launched. Sales have been strong margin profile is
better than other PAR products.
 Individual APE Product mix: Management highlighted that individual APE

product mix comprise 20% participating, 41% non-participating savings, 29% unit
linked insurance and 10% protection products.
 Solvency: Capital infusion by axis bank will improve solvency margin by ~40%
which the management aims to fuel future growth. Management aims to grow
protection and annuity mix where capital requirements are high.
 EOM regulations: Management indicated that no material changes in total

expense level due to the regulation, but there could be reclassification of certain
expenses.
 IFRS: Management mentioned that the company is selected in the first tranche
to implement IFRS and is working closely with regulator in this regard.
 EV: Economic variance in Q1FY24 EV is at INR 1.33bn.
Nippon Asset Management

 Yields: Management attributed decline in blended yields to 1) TER structure as
TER has to be reduced with increase in AUM as per prescribed slabs, 2)
moratorium on B30 incentives by SEBI, 3) reduction of TER of certain debt funds
to garner AUM and increase absolute contribution, 4) shift in product mix from
high yielding equity assets to ETF/liquid, 5) churning of old AUM and new flows
coming at lower TER. Management expects the compression of yield by 3-4 bps
YoY due this.
 Equity market share: NAM’s QAAUM equity market share improved 33bp to
6.5% because of 20% market share in net inflows (equity + hybrid) in Q1 and
strong performance.
 SIP market share: Management indicated greater focus on scaling SIP book as it
provides long-term revenue visibility. SIP AUM surged 43%YoY to INR 686bn; SIP
book for Jun23 at INR 12.2bn. NAM’s 5-year SIP AUM retention ratio stood at
63%, which is significantly higher than industry’s 25%.
 ETF market share: Management attributed leadership position in ETF segment

(70% volume share and 14% AUM market share) to being the one if the first
player to offer ETF products and nature of product as liquidity attracts investors
and investors in turn bring in liquidity.
 Commission structure: Management indicated growth was despite any change

in the commission structure. Company distributes around 70/65/55% to banks
and large distributors/national distributors/IFA’s respectively. NAM’s derives
around 40% of business from small partners versus industry average of around
20-25% where commission is lower.
 Debt AUM: Management attributed debt AUM increase of 18.5% QoQ to 1) net
inflows in short term funds 2) high closing AUM in Mar-23 due to tax changes
impacting QAAUM for Q1FY24.
 Admin & other expenses: Management attributed increase in admin & other
expenses to 1) inflationary adjustments 2) increase in marketing spends to create
brand visibility. Management reiterated its commitments to keep discretionary
spends under control.
 New fund launch: Management believes the company has well diversified
product suite and will launch new funds only if the opportunity is scalable.
Notably, company has not launched any new fund in last 18 months.
 EPFO mandate: NAM has been selected as one of the mutual fund houses to
manage ETF allocation of EPFO. NAM has been allocated 25% of the total ETF
allocation in their Nifty ETF & Sensex ETF funds. Yield on this AUM to be at par
with existing assets in given funds at 4-5bp.
PB Fintech
 Management maintained its guidance of positive APAT in FY24 and INR 10bn
APAT in FY27.
PolicyBazaar
 Renewal revenue ARR for the company (includes Paisabazaar) was at INR 4.2bn
(+53% YoY). This typically operates at over 85% margins and is a significant
source of profit growth to company.
 Management indicated that improvement in take rate was primarily as a result
of mix change; which moved more towards protection.
 Management highlighted that sales of new health & term products was at 40%
YoY; protection products saw growth after being subdued for the last two years,
while savings products witnessed a subdued quarter.
 Management believes that revenue from health & life insurance segment
should grow at 2-3x industry growth.
PaisaBazaar
 Management highlighted that the credit business it has reached run rate of
INR160bn disbursal and 0.58mn credit card issuance on an annualized basis.
 Management indicated that EBITDA margin for Paisabazaar stood at around 6-

7% after being EBITDA positive in Dec-22. Management aims to expand EBITDA
margin to 20% over the next few quarters.
 Management highlighted that 75% of cards issued and 44% of unsecured loans
are end to end digital.
 Management indicated that 75% of disbursals were from existing customers

demonstrating good repeat behavior. The trail revenue grew to 14% of the total
credit business revenue.
New initiatives
 New Initiatives revenue has grew 11.2% YoY to INR 1.49bn in Q1 while the
Adjusted EBITDA improved YoY to INR 0.46 bn, moving from a -40% margin to -
10% it indicates that it has grown while building efficiencies.
 PB Partners, agent aggregator platform, continues to lead the market in scale &
efficiency of operations. PB Partners has the highest proportion of Non-Motor
business covering 80% of the pin codes across India.
 Management guided for investment of INR 1.5-2.5bn every year to grow POSP
business.
Punjab National Bank

Guidance
 Credit growth of 12-13% and deposit growth of 10-11% in FY24
 CASA ratio will be 43-44%
 Profitability will double.
 NIM could correct marginally as deposits continue to reprice. 25% of deposits

are yet to reprice. NIM guidance of 2.9-3% versus current NIM of 3.08%.
 GNPL of 6.5% from earlier guidance of 7%
 Incremental asset quality remains strong with NPL of 0.2% in new agri loans,
1.56% in MSME, 0.18% in retail and 0.01% in corporate. Low NPLs in new loans
post Covid indicates that credit scoring has improved.
 Credit cost guidance maintained at 1.5-1.75%.
SBI Life Insurance

 Guidance: Management has maintained APE growth guidance of 20-25% with
margins in the range of 28-30% for FY24E. APE growth will be key driver to VNB
growth.
 Product Mix: SBI Life saw strong demand for ULIP as its contribution to product
mix improved 575bp YoY to 52.6% of APE on back of strong capital markets and
good fund performance. Share of Non PAR in product mix declined 907bp YoY
to 19.2%, management expects demand for non-par products to revive and
share in product mix in line with FY23 ~24-25%. The Company does not have a
target product mix as it tries to satisfy customer needs.
 Group Protection: Group protection grew 33.3% YoY to 1.6bn. Product mix of
group protection was 45/55% for credit life/group term. Management is
optimistic about growing the credit life product as disbursements grow on back
of better economic conditions. Attachment rate at SBI for credit protect product
is ~45%.
 Margins: VNB margin declined 160bp/264bp YoY/QoQ to 28.8% due to shift in

product mix from non-PAR products to ULIPs. Management indicated the
margin to stay in 28-30% range.
 Growth in ULIP: ULIP APE grew 16.9% YoY to INR15.9bn, contributing 52.6% in
product mix (+575bp YoY). Capital market rally and better performance of funds
aided to the growth.
 Change in economic assumptions had adverse impact of 110bp to VNB margins.

Yield curve has steepened at the shorter end of the curve whereas in the long-
term yield curve has flattened; steep short-term yield curve had impact on the
ULIPs, whereas later duration when yield curve has flattened, this has a negative
impact on some of the traditional business.
 Distribution: Company added 32k agents in Q1FY24, total agents count grew to
222k. Company has made structural changes in agency network, result of which
will be visible over next three quarters of the year. Agency contribution to
individual APE mix declined 255bp YoY to 26.6%. Bancassurance led with 68.6%
(+197bp YoY) in individual APE distribution mix.
 EoM & commission regulations: Company indicated that they were very
comfortably placed in terms of the percentage of expenses prescribed by
regulator. Company is in process of revaluating and framing policy around the
same.
Shriram Finance
NIM – No pressure on yield, CoF has peaked
 CoF rose 7bp QoQ to 8.89%. Marginal CoF is 8.6%. Management does not expect
CoF to rise from here.
 There is no pressure on yield. Yield on advances declined ~8bp in Q1FY24

primarily impacted by higher disbursements towards new vehicles in Q4FY23,
compressing the yields.
 The loss on yield on new vehicles could not be offset by a higher proportion of
gold/personal loans because the base of these loans remains small. Around 10%
of CVs + passenger vehicle loans are for pre-owned vehicles.
 With increase in cost of funds and decline in yields, margin declined from 8.55%
in Q4FY23 to 8.32% in Q1FY24.
 The company has no feedback on the timing of a possible rating upgrade.
Business environment remains positive.

 Growth in CV looks slower than other segments because of a high base. Demand
for new vehicles has improved because with higher vehicle prices. Truckers had
postponed purchases for 3-4 years and are now buying new vehicles. There is no
idle capacity. Earlier, pre-Covid, the capacity utilization was 20-21 days, which
has improved to 25-27 days.
 Demand from cab aggregators has also picked up. They have not replaced their
vehicles for three years, which is why the demand from this segment has now
doubled.
 Growth in MSME is strong. NBFCs are not competing with banks for share of
MSME. They are competing with unorganized lenders. Shift from unorganized
channels to NBFCs is the key driver of MSME growth for SFC and other NBFCs.
Segment wise AUM growth

 Of the total growth in vehicle financing, ~6-7% was on account of financing for
new vehicles and the balance growth on account of value-based growth.
 In Q1FY24, 250 more branches of erstwhile STFC started offering gold loans. In
total ~500 branches of STFC now offer gold loans and the plan is to roll out gold
loans in every erstwhile STFC branch. Every branch that starts offering gold loans
needs to hire 3-4 employees. The main cost of adding gold loan as a product in a
branch is employee cost.
 Like for gold, even for personal loans growth has been driven by more erstwhile
STFC branches offering the product. To ensure proper checks, the pre-approved
limit of a personal loan is capped at INR50,000. If a higher amount needs to be
lent, more checks are done. Also, DSAs of personal loans are paid commissions
for the number of loans not for the value.
 Entire book in personal loans consists of existing customers, of which majority

are two-wheeler (‘2W’) customers where more than 75% of outstanding 2W loan
is repaid. More than 70% of the 2W portfolio is from the rural and semi urban
areas.
 Management stated that the OEM industry is expected to grow by 10-12% in

FY24E. In that case, the 2W portfolio of SFL could grow by more than 15%. There
are no issues in the asset quality for MSME and 2W in the current environment.
 SFL has collaborated with fintechs for sourcing of loans and presently, ~5% of the
AUM is sourced through them. Fintech sourcing would be for the young, tech-
savvy customers, however, branch network is likely to remain the key driver of
AUM growth.
 Going forward, management is aiming to shift the portfolio mix towards higher
yielding products like gold loans, MSME and personal loans. The mix of these
products as of Q1FY24 is ~20% of the total AUM
Tie-up with PayTM announced, tie-up with Airtel Payments in

progress
 The company has announced a tie-up with PayTM to lend to merchants who have
transacted on PayTM for more than a year. SFL will lend short-term credit of 90-
180 days, working capital loans and term loans of INR200,000. Payment for
short-term credit will directly come from the wallet.
 PayTM will not share credit risk. The merchant is not exclusive to SFL and could
have borrowed from other lenders. To ensure proper risk assessment SFL is
building a credit rule engine which is easy to set up using API.
 Yield would be 15-18% after netting sourcing fee paid to PayTM.
 SFL is also in talks with Airtel Payments Bank for a similar tie-up
 Total loan portfolio from these tie-ups will be capped at 5-6%.
Management overlay of INR 10bn

 The company utilized management overlay of INR990mn versus a much higher
amount in earlier quarters. The outstanding stock of management overlay is INR
10.08bn.
 Management highlighted that the overlay is attributed to individual contracts. So

the overlay would be utilized or reversed upon the closure of each contract.
 A large proportion of the overlay would be utilized because borrowers typically

ask for discounts on settlement.
Explaining the sharp jump in employee expenses

 Employee expenses rose sharply by 14% QoQ or INR 1bn due to rationalization
(aligning SCUF with STFC), regular increment and an increase of ~2,300 in the
employee count QoQ. Of the total increase INR 0.65bn is from rationalisation.
 On a YoY basis ~12,000 employees have been added with 1,750 in gold loans.
Liquidity
 SFL has excess liquidity buffer of INR161.7bn, which is equivalent to three
months liquidity requirement (~INR 157.9bn).
 LCR for the quarter 202.8% versus 209% in Q4FY23. The management stated that
as per SFL’s policy, it would always carry a liquidity buffer for at least three
months and desires to maintain the LCR between 150-200%.
Asset quality
 PCR on personal loans is ~47% and it likely to be increased to 50% in the next few
quarters.
 During the quarter, SFL utilized Covid provisions of INR 990M. Outstanding covid
provisions stood at INR10.08bn as of Q1FY24.
 On ECL provisions, stage 1 past due was 8.0% (8.04% in Q4FY23), stage 2 past
due was 18.88% (18.00% in Q4FY23) and LGD at 42.32% (42.27% in Q4FY23).
Shriram Housing Finance Limited

 During the quarter, LAP segment grew faster as a new team was introduced for
the segment. The mix between home loans and LAP would be maintained as per
the requirements of NHB. Going forward, share of home loans would be
maintained at 62-65%.
 The capital position is strong and the management believes that there is no stress
on the capital requirement
 The steady state RoA is expected to be around 2.75-2.80% for FY24E
 The RoE for FY24E is expected to be ~15.5%.
Guidance
 Management reiterated the AUM growth guidance of 15% for FY24E, though the
full year guidance would be clearly stated by end of 2QFY24 after evaluating the
state of rural economy and the impact of monsoon.
 Cost to income ratio on a steady state is expected to be 27-28%
 Aiming for NIM of 8.5% in FY24E.
 RoE for FY24E is expected to be ~15-16%.
Other highlights
 Debt to equity ratio decreased marginally to 3.60x from 3.65x on account of
utilization of excess liquidity.
 ALM buckets continue to remain positive and the surplus in the 1-year bucket is
INR268.6bn as of Q1FY24.
 During the quarter, S&P upgraded the international rating of SFL from BB minus
to BB.
State Bank of India

Loans
 On corporate loans, SBIN has a pipeline of INR3.5tn, out of which INR1.2tn has
already been sanctioned.
 Xpress credit loans constitute ~ 10% of the total loan book and these loans are
provided to the corporate salary account holders only. Of the total, ~94-95%
constitute salary accounts of armed forces and government employees and ~4-
5% pertains to employees employed with large corporates.
 Xpress credit book continues to perform well in terms of asset quality. Most of
the GNPA is attributable to delays in payment of salary on the part of some state
governments and from deceased borrowers.
 Management has gone slow in the overseas book in the light of global economic
challenges.
 Of the total loan book, ~74% is linked to floating rates and the balance 26% is
fixed rate.
 The system credit growth is expected to be ~14-15% for FY24E and management
expects similar growth rate for SBIN.
Asset Quality
 Gross NPA ratio stood at 2.76% as of Q1FY24 – which is the lowest in last ten
years.
 The restructuring book stood at INR 227bn as at Q1FY24 and management

stated that the book is behaving well as the SMA-1 and SMA-2 are within the
range of ~11% as against the provision of 30%.
 In Q1FY24, rural NPA were at 11.28%, management guided that they plan to
bring this ratio down to single digit by the end of FY24.
 Of the total slippage of INR 76.6bn in Q1FY24, SBI has already reversed INR7bn
in retail, INR3bn in agriculture, INR6bn in SME totalling to INR16bn in Jul-23 /
Q2FY24
Deposits
 Management expects deposits to grow at 12-14% in FY24, in line with the
expected industry growth.
 SBI has term deposit repayment of INR1.2tn-INR1.4tn per month against a total
outstanding deposit base of INR43tn and the average maturity of TDs is over a
year.
 Commenting on the competition from HDFCB merged entity on deposits,

management stated HDFCB is looking for aggressive physical distribution
whereas SBIN is looking to expand digitally and physically in addition to the
business correspondents.
 SBIN has tweaked its strategy to focus on CA accounts from trade, commerce
and industries and it believes that the strategy will help arrest the fall in CA.
CI ratio
 The unadjusted cost to income ratio stood at ~50% while core cost to income
ratio stands at 54% in Q1FY24. Around 40% of employees are on defined
benefit. CI ratio can improved through better productivity and higher income as
employee base and cost are sticky.
Other highlights
 SBIN is well capitalized with CET-1 ratio improving from 9.72% in Q1FY23 to
10.19% in Q1FY24. With the current capital level, SBIN can support a loan book
of INR7tn against current loan book of INR33tn.
 During the quarter, ~63% of the SA accounts and ~35% of the retail accounts
were sourced through YONO.
 SBIN has excess SLR of around INR4tn.
 Management plans to open ~300 new branches in FY24.
 There are no plans to list SBI MF.
UTI Asset Management

NIM – No pressure on yield, CoF has peaked
 CoF rose 7bp QoQ to 8.89%. Marginal CoF is 8.6%. Management does not expect
CoF to rise from here.
 There is no pressure on yield. Yield on advances declined ~8bp in Q1FY24

primarily impacted by higher disbursements towards new vehicles in Q4FY23,
compressing the yields.
 The loss on yield on new vehicles could not be offset by a higher proportion of
gold/personal loans because the base of these loans remains small. Around 10%
of CVs + passenger vehicle loans are for pre-owned vehicles.
 With increase in cost of funds and decline in yields, margin declined from 8.55%
in Q4FY23 to 8.32% in Q1FY24.
 The company has no feedback on the timing of a possible rating upgrade.
Business environment remains positive.

 Growth in CV looks slower than other segments because of a high base. Demand
for new vehicles has improved because with higher vehicle prices. Truckers had
postponed purchases for 3-4 years and are now buying new vehicles. There is no
idle capacity. Earlier, pre-Covid, the capacity utilization was 20-21 days, which
has improved to 25-27 days.
 Demand from cab aggregators has also picked up. They have not replaced their
vehicles for three years, which is why the demand from this segment has now
doubled.
 Growth in MSME is strong. NBFCs are not competing with banks for share of
MSME. They are competing with unorganized lenders. Shift from unorganized
channels to NBFCs is the key driver of MSME growth for SFC and other NBFCs.
Segment wise AUM growth

 Of the total growth in vehicle financing, ~6-7% was on account of financing for
new vehicles and the balance growth on account of value-based growth.
 In Q1FY24, 250 more branches of erstwhile STFC started offering gold loans. In
total ~500 branches of STFC now offer gold loans and the plan is to roll out gold
loans in every erstwhile STFC branch. Every branch that starts offering gold loans
needs to hire 3-4 employees. The main cost of adding gold loan as a product in a
branch is employee cost.
 Like for gold, even for personal loans growth has been driven by more erstwhile
STFC branches offering the product. To ensure proper checks, the pre-approved
limit of a personal loan is capped at INR50,000. If a higher amount needs to be
lent, more checks are done. Also, DSAs of personal loans are paid commissions
for the number of loans not for the value.
 Entire book in personal loans consists of existing customers, of which majority

are two-wheeler (‘2W’) customers where more than 75% of outstanding 2W loan
is repaid. More than 70% of the 2W portfolio is from the rural and semi urban
areas.
 Management stated that the OEM industry is expected to grow by 10-12% in

FY24E. In that case, the 2W portfolio of SFL could grow by more than 15%. There
are no issues in the asset quality for MSME and 2W in the current environment.
 SFL has collaborated with fintechs for sourcing of loans and presently, ~5% of the
AUM is sourced through them. Fintech sourcing would be for the young, tech-
savvy customers, however, branch network is likely to remain the key driver of
AUM growth.
 Going forward, management is aiming to shift the portfolio mix towards higher
yielding products like gold loans, MSME and personal loans. The mix of these
products as of Q1FY24 is ~20% of the total AUM
Tie-up with PayTM announced, tie-up with Airtel Payments in

progress
 The company has announced a tie-up with PayTM to lend to merchants who have
transacted on PayTM for more than a year. SFL will lend short-term credit of 90-
180 days, working capital loans and term loans of INR200,000. Payment for
short-term credit will directly come from the wallet.
 PayTM will not share credit risk. The merchant is not exclusive to SFL and could
have borrowed from other lenders. To ensure proper risk assessment SFL is
building a credit rule engine which is easy to set up using API.
 Yield would be 15-18% after netting sourcing fee paid to PayTM.
 SFL is also in talks with Airtel Payments Bank for a similar tie-up
 Total loan portfolio from these tie-ups will be capped at 5-6%.
Management overlay of INR 10bn

 The company utilized management overlay of INR990mn versus a much higher
amount in earlier quarters. The outstanding stock of management overlay is INR
10.08bn.
 Management highlighted that the overlay is attributed to individual contracts. So

the overlay would be utilized or reversed upon the closure of each contract.
 A large proportion of the overlay would be utilized because borrowers typically

ask for discounts on settlement.
Explaining the sharp jump in employee expenses

 Employee expenses rose sharply by 14% QoQ or INR 1bn due to rationalization
(aligning SCUF with STFC), regular increment and an increase of ~2,300 in the
employee count QoQ. Of the total increase INR 0.65bn is from rationalisation.
 On a YoY basis ~12,000 employees have been added with 1,750 in gold loans.
Liquidity
 SFL has excess liquidity buffer of INR161.7bn, which is equivalent to three
months liquidity requirement (~INR 157.9bn).
 LCR for the quarter 202.8% versus 209% in Q4FY23. The management stated that
as per SFL’s policy, it would always carry a liquidity buffer for at least three
months and desires to maintain the LCR between 150-200%.
Asset quality
 PCR on personal loans is ~47% and it likely to be increased to 50% in the next few
quarters.
 During the quarter, SFL utilized Covid provisions of INR 990M. Outstanding covid
provisions stood at INR10.08bn as of Q1FY24.
 On ECL provisions, stage 1 past due was 8.0% (8.04% in Q4FY23), stage 2 past
due was 18.88% (18.00% in Q4FY23) and LGD at 42.32% (42.27% in Q4FY23).
Shriram Housing Finance Limited

 During the quarter, LAP segment grew faster as a new team was introduced for
the segment. The mix between home loans and LAP would be maintained as per
the requirements of NHB. Going forward, share of home loans would be
maintained at 62-65%.
 The capital position is strong and the management believes that there is no stress
on the capital requirement
 The steady state RoA is expected to be around 2.75-2.80% for FY24E
 The RoE for FY24E is expected to be ~15.5%.
Guidance
 Management reiterated the AUM growth guidance of 15% for FY24E, though the
full year guidance would be clearly stated by end of 2QFY24 after evaluating the
state of rural economy and the impact of monsoon.
 Cost to income ratio on a steady state is expected to be 27-28%
 Aiming for NIM of 8.5% in FY24E.
 RoE for FY24E is expected to be ~15-16%.
Other highlights
 Debt to equity ratio decreased marginally to 3.60x from 3.65x on account of
utilization of excess liquidity.
 ALM buckets continue to remain positive and the surplus in the 1-year bucket is
INR268.6bn as of Q1FY24.
 During the quarter, S&P upgraded the international rating of SFL from BB minus
to BB.
Bearing
Schaeffler India Limited

Opening remarks
Economy & Industry
 Q1 GDP at 6.1%, on growth path backed by moderating inflation.
 India is the fast growing economy in the world.
 IIP growth in 2023 due to healthy run of the capital goods sector.
 We expect that Strong growth in economy will continue in India
 2W segment showing signs of recovery in Q2CY’23.
 PV segment growth continues on the back of new launches, positive sentiments,

and dampening semi conductors' shortages
 CV segment growth moderated due to Technology changes and price increases.
 Cement production grew by 6% YoY on the back strong growth in the

infrastructure.
 Localisation is the key strategy that company is focusing.
 E-mobility sector: Series production of eaxles, motors is ~ Euro 300-mn

opportunity for 7 years. In addition, company is on track for the next year
production.
Business highlights
 Automotive Technologies growth continues despite subdued market conditions
 Strong growth in Automotive Aftermarket on the back of network penetration and

product expansion.
 Strong growth in Automotive Aftermarket on the back of network penetration and

product expansion. Especially wind industries is picking up from June23.
 Expansion of Savli Plant and investments for Hosur Greenfield Plant continue
 Entering second half of 2023 cautiously on the back of sluggish global demand
outlook
 Target: Company is targeting to procure renewable power for their all factories.
 Strong performance for the quarter across all domestic businesses and Exports
performance moderated owing to global demand conditions
Cement
Grasim Industries
Paints segment
Grasim is on track to commission at least two plants (out of the six planned plants)
and commence operations in this segment by Q4FY24. Capex guidance of INR100bn
stays intact. The total outlay for the paints biz till end-Q1FY24 stood at INR36.4bn.
B2B e-commerce business

Grasim sees huge opportunity in the B2B e-commerce segment. As per the company,
the total size of the construction material industry is ~USD100bn of which digital
penetration is a mere <2%. Grasim expects the online/digital trade to rise to 10% in
2-3 years offering huge scope of growth.
Birla Pivot, the full-scale B2B E-commerce platform for building materials, has been
launched in Maharashtra, Madhya Pradesh, and Delhi. The platform will ensure on-
time delivery and superior quality products such as Cement, Steel, Tiles, Plywood &
Doors, Paints & Ply, Sanitary & Plumbing, among others. The team has successfully
on-boarded more than 120 brands across various categories.
Capex update
Q1FY24 total capex stood at INR13.8bn, of which INR10.5bn was spent for Paints biz.
FY24 budgeted capex stands at INR57.9bn – INR43.4bn for paints/B2B e-commerce.
Total capex for FY23 was INR43bn ~INR20bn in paints, INR9.5bn in viscose biz,
INR12.1bn in chemicals biz and the balance in other businesses.
Other highlights
EBITDA for textiles stood at INR430mn vs. INR230mn in Q4FY23 and INR970mn in
Q1FY23. Linen profitability was impacted by slower demand and high flax fibre rates.
EBITDA for insulators biz stood at INR130mn versus EBITDA of INR140mn in Q4FY23.
Net debt for the standalone balance sheet stood at INR35.2bn (INR17.8bn at end-
FY23; INR4.85bn as on 31 December 2022).
Excluding investments in new businesses and AB Capital, existing businesses

continue to generate free cash flow at the standalone level.
Shree Cement
Demand
Demand outlook continues to stay firm for FY24 – in the run-up to general elections.
Industry volumes should grow in double digits in FY24.
Prices
Industry couldn’t take price hike in Q1 despite strong demand.
Capex
Current expansion projects are on track with: i) Nawalgarh GF expansion by Q3FY24;

and ii) Andhra Pradesh (Guntur expansion) in Q2FY25.
The company announced a capex of INR70bn towards adding clinker capacity of

3.65MTPA in Pali (likely GU capacity of 3MTPA each in Pali, Rajasthan and Etah – UP).
Further, 3.65mtpa will be added in Kodla (Karnataka) (likely GU capacity of 3MTPA
each in Kodla and Bengaluru). This will increase the overall capacity of the company
to ~68MTPA. The GU in Bangalore and Etah may be via subsidiaries.
Both Pali and Kodla units should have 40-50 MW WHRS capacities.
Capex for FY24 and FY25 will be INR 35bn each.
Other operational updates
Capacity utilisation stood at 79% in Q1FY24 v/s 78 in Q4FY23%.
Trade mix was 79% in Q1FY24.
The lead distance reduced to 449 kms from 463 kms in Q4FY23.
Premium products mix contributed to ~9% of trade sales. The aim is to reach 15% by
FY25.
 The company is diversifying into RMC business starting with a plan to set up five
ready mix units by the end of FY24.
UltraTech Cement
Demand
Cement demand stood strong across regions driving 20% YoY volume growth for
UTCL.
Demand outlook continues to stay firm for FY24 – in the run up to general elections.
The industry volumes should grow more than 10% in FY24.
Other operational updates
Capacity utilisation stood at 89% in Q1FY24 v/s 83 in Q1FY23%.
Trade mix was 68% while share of blended cement stood at 70%.
The clinker conversion ratio stood at 1.44x which is the highest achieved by the company
so far.
The lead distance reduced to 410 km from 429 km in Q1FY22.
Premium products mix contributed to 21.7% of trade sales (up 26% YoY).
Pet coke made up for 42% of the fuel mix versus 52% in the previous quarter. Imported
Coal was 46%, domestic coal was 7% and 5% was alternate fuel.
Revenues for the RMC business surged 37% YoY.
Defence
Bharat Electronics
Questions and answers
Q. Order inflows guidance for FY24.
A. We hold by the INR200bn+ order inflows guidance for FY24.
Q. Content BEL does in LUH, LCH to HAL (share in overall value). 4-5 large orders in
pipeline.
A. In discussion with HAL on this but can’t give you value unless we move ahead as
it’s premature. Fuses, EW for ships INR10bn+, INR60bn+, equipment for OPV and
other vessels GRSE, L&T, GSL etc. INR81bn we already got in Q1. Small spare orders
etc. orders will keep on coming.
Q. QRSAM/LRSAM progress.
A. QRSAM – trial reports are submitted to armed forces. We have given some rough
order pricing as well on which they are working. They would now be working on
proposal etc. which will go through by FY25. Value of order will depend on number
of regiments we get. MRSAM – initial discussions are there. QRSAM progress is much
ahead than MRSAM.
Q. Receivables and cash position.
A. INR70bn receivables on BS and cash level is also reasonably good. No budgetary
constraints.
Q. Non-defence segment. Exports.
A. Metro – we already delivered one system. CBTC, super SCADA etc. will come in a
phased manner. Significant business incoming will take 1-2 years. Working on civil
aviation part as well. Working closely with MOD to raise exports as government is
quite aggressive on this. We are targeting USD $90mn exports in FY24, roughly 2x of
what we did in FY23. We are scaling up software service segment as well.
Q. Revenue guidance for FY24. Materialising of MoUs.
A. Right on track for 17% revenues growth for FY24 which is INR200bn+ as far as
execution is concerned. It takes time to materialise MoUs into revenue generation
but we are working on it and will be visible in next couple years.
Q. Defence vs non-defence (EVMs/VVPATs etc.). Capex for FY24.
A. INR8-9bn revenues from EVMs expected in FY24. For FY24, 80-85% and 15-20%
non-defence. INR7-8bn capex (maintenance as well as growth) estimated for current
year.
Q. Employee costs. Provisions write back.
A. Extra contract labour, DA etc. led to increase (nothing very off). Not much
provisions write back as of now. Further creation of provisions can be there. Interest
income has increased in other income line item.
Q. Execution over next few years given capacity expansion ongoing. Order
pipeline.
A. Nelamuru - new building coming. Nagpur, Ibrahimpatnam facilities coming up for
fuses. Hyderabad facility for micro components etc. 15-17% revenue growth
guidance over next two years. With normal run-rate of fresh orders we will be
around the same range but with any large ticket order can reach to INR700-800bn
by let’s say FY26.
Q. Order pipeline.
A. P-75 I programme, QRSAM, submarines, other ship building programs, spares and
maintenance etc. makes a good pipeline.
Q. Exports in Q1FY24. IACC, Akash execution timeframe. Drone project with DRDO.
A. INR870mn exports in Q1FY24. We are right on track on execution of IACC which
is approx. INR80bn value (INR20bn is left and will be executed over coming period
of time). Akash System is worth approx. INR53bn. We are developmental partner
along with HAL, can’t comment on this as of now. These will be medium as well as
long altitude high range drones.
Q. Margin guidance for FY24. Indigenisation.
A. Roughly 40% GMs and 21-23% EBITDA margin for FY24 guidance. Indigenisation
is linked more to R&D expenditure (continue to be at 6-7% of revenues).
Q. Fuses order.
A. INR2bn+ total capex for Nagpur facility for manufacturing of fuses. Can expect
order in next six months (fuse order from MOD).
Q. Exports. Triton EV order.
A. TR modules to Philippines, electronics to Israel, Airbus to Japan. Other countries
include Maldives, Nigeria, Brazil, America etc. which we supply/in talks with. Have
supplied one set of battery to Triton, and waiting for them to comeback. We haven’t
factored any of its execution from the current order book in our guidance.
Q. Uttam Radar. Non-defence (as a % of OB).
A. Two players are there – one private and then us. Non-defence is 6% of order book,
execution is 12-24 months.
Q. Order book breakdown.
A. Defence is 90%. Non-defence is 6%. EW segment is INR150bn out of INR650bn
OB.
Q. Nomination vs competitive ordering mix. Products vs services mix.
A. Nomination based order book is 95%. Products is 90% and services is 10%.
Construction
Ahluwalia Contracts
Guidance for FY24
1. Order inflow: INR25bn (over and above the INR44bn orders already won and
INR28.4bn project where the company is L1).
2. Revenue: 20%-plus YoY growth.
3. EBITDA margin: 11%
4. Capex: INR1bn
Order book surges sequentially

ACIL ended Q1FY24 with an order book of ~INR118bn – its highest-ever.
It is currently L1 in an International jewellery park project in Mumbai worth

~INR28.4bn; the company expects LoA within the next three months.
The company has a bid pipeline of INR25bn and is looking for orders from the
hospital, institutional, industrial and private residential segments to shore up its
order book.
The share of infrastructure segment in the order book has grown significantly during
the quarter and now makes up ~32% of the order book (~10% at end-FY23).
Public sector projects make up ~76% of ACIL’s order book (45% from the central
government and balance from state government); the balance comes from the
private sector. Most private sector orders pertain to commercial realty and
institutional segments, wherein payments have not been a major issue.
The Western region makes up ~38% of the company’s order book; North India
accounts for one-third. Share of Eastern region reduced QoQ to 25% from 38% in
Q4FY24.
Company maintains net cash position

The company has marginal levels of gross debt; net cash stood at INR5.4bn as at end-
Q1FY24.
Leverage remains comfortable with net debt to equity at negative 0.4x.
Working capital cycle deteriorated QoQ to 49 days (42 days in Q4FY23).

1. EBITDA margin: EBITDA margins increased ~90bp YoY (down ~200bp QoQ) to
10.8% in Q1FY24.
2. Capex: Ahluwalia Contracts incurred ~INR240mn towards capex in Q1FY24 and

plans to spend INR1bn in FY24.
3. Competitive intensity: Management mentioned that the competitive intensity

remains high however, they are comfortably placed w.r.t the order book and
can hence pick and choose the projects.
4. Fired price contracts makes up 30% of the total order book.
Ashoka Buildcon
Highlights
 FY24 guidance
5. Revenue growth: 15% YoY
6. EBITDA margins: 8-8.5% in FY24 and 10-10.5% in FY25
7. Order Inflow: INR50-70bn
8. Capex: INR1bn
 Order book visibility: ABL ended the quarter with an order book of ~INR169bn
(book-to-bill of 2.6x). It won orders worth ~INR22.8bn in the power sector in
Q1FY24. The execution period of this project is 24 months and the company will
earn ~10% EBITDA margins.
Muted ordering by NHAI and intense competition compelled ABL to reduce its
order win target of new projects in FY24 to INR50-70bn.
ABL has identified a bid pipeline of INR250bn worth of highway projects and
~INR100bn from the other segments.
 Q1FY24 revenue breakdown: INR11.6bn from roads, INR1.5bn from railways,

INR1.2bn from power T&D and INR0.6bn from other businesses like the RMC
business, the CGD business, smart infrastructure and others.
 Q1FY24 order book (OB) breakdown: Road EPC (34%), road HAM (9%), railways
(8%), power T&D (36%), buildings (13%) and CGD (0.1%).
 Margin: EBITDA margin during the quarter declined ~520bp YoY and ~280bp
QoQ to 4.6%. Management indicated that margins were lower as the company
had made a one-time provision of ~INR560mn in the current quarter related to
execution of power project.
It indicated that margins would remain under pressure over the next couple of
quarters post which they should improve as recent contracts are at better rates
(double digit margins).
Adjusted PAT margin during the quarter too declined ~600bp YoY and ~300bp
QoQ to just 1.1%.
 Debt: Standalone debt is ~INR9.9bn (~INR8.8bn at end-FY23), which comprises

~INR1.3bn of equipment loans and ~INR8.6bn of working capital loans.
Standalone net debt:equity stands at 0.22x (0.18x at end-FY23).
Debt at consolidated level is INR70bn (up ~INR830mn QoQ).
Debt on BOT/HAM projects declined QoQ and now stands at ~INR51bn (INR52bn
at end-FY23).
Management expects the debt levels to come down as the asset monetization
process goes through.
 Working capital cycle: Net working capital cycle improved QoQ to 134 days (140
days at end-FY23).
 Equity commitment: Pending equity commitment is ~INR1.7bn of which

~INR1.1bn will be infused in FY24 and the balance ~INR0.6bn in FY25.
 Asset monetisation: Ashoka Buildcon had entered into an agreement with PE

major KKR in Q3FY22 to sell five BOT projects for ~INR13.4bn. Out of this, it was
supposed to use ~INR12bn to provide an exit to SBI-Macquarie (SBI-M), which
had invested in Ashoka Concessions Limited (ACL) (Refer to: BOT stake sale: A re-
rating trigger). However, the company terminated this deal in May-23 as they
could not get approval from the NHAI to transfer the Dhankuni Kharagpur Road
project.
ABL has reinitiated the divestment process of these five assets and is hopeful of
closing the deal by end-FY24. The company is confident of closing the deal at a
higher valuation than the previous one.
Apart from this, the company is also looking to monetize its 11 HAM assets and
is actively looking for buyers. ABL prefers a direct sale of these assets rather than
an InVIT and is targeting to complete the monetization process for seven
completed projects by Dec-23, two other projects by Mar-24 and the remaining
two projects by Dec-24. The management expects to sign the SPA within the next
month. The total equity invested in these 11 HAM projects is ~INR12bn while the
balance equity requirement is INR1.7bn.
 Chennai ORR: In Apr-22, the company also entered into a Share purchase
agreement with National Investment and Infrastructure Fund Limited (NIIF) for
sale of 100% equity of Chennai ORR project for aggregate financial consideration
of INR6.9bn. Out if this, INR4.5bn will flow to ABL (~INR2.5bn towards loan
repayment and balance ~INR2bn towards the stake sale). Management expects
to close this deal by Oct-23.
 Jaora-Nayagaon: ABL has entered into an agreement with NIIF to sell 74% of its
economic interest in JTCL; the balance 26% stake in the project is held by
Macquarie group (refer to: Jaora Nayagaon stake sale brings cheer). The project
has a debt of ~INR1.5bn. The equity value for the entire 100% stake is INR6.9bn,
which translates to ~INR5.1bn equity value for the company for its 74% stake.
Adjusting for the ~INR1.8bn loan given by JTCL to the company/ACL, the net cash
inflow for the company will stand at ~INR3.3bn. The equity invested in the project
is ~INR2.9bn. The company expects the transaction to be completed by Dec-23.
 CGD business: In Mar-23, Ashoka Buildcon and its JV partner Morgan Stanley
entered into a share purchase agreement to sell their 100% stake in UEPL (which
owns the CGD business of the group) to MGL for a total consideration of
INR5.3bn. The total equity invested in this business by the two partners was
~INR1.4bn (in addition to debt of ~INR1.8bn), which translates to a healthy P/BV
of ~3.8x. ABL owns 51% stake in the JV and has invested INR670mn to date.
(Refer to: CGD divestment to add value). This transaction is also expected to get
completed by Oct-23.
 All the above road asset monetization proceeds will be first utilized towards
providing an exit to SBI-M and the balance cash flows will be used to pare off
debt. The company has charged INR240mn in the finance cost of the
consolidated financial statements as payable to SBI-M. They had already
provided INR720mn in Q4FY23 for the same purpose. Thus the total outstanding
payable to them is ~INR13bn. The company will have to keep on providing
~INR240mn each quarter until a full exit has been given to the investor.
 Capex: ABL spent ~INR470mn during Q1FY24 towards capex spends.
 Toll collection: The toll revenues increased 10% YoY and 2% QoQ during the
current quarter.
Capacit’e Infraprojects
 BDD Chawls (MHADA) project: Till date, 14 buildings (out of 33) have been
handed over to the company. The remaining buildings would be handed over in
FY24. Total billing was INR280mn in Q1FY24 and management expects INR400-
450mn execution per quarter from Q3FY24 onwards (company’s share).
 CIDCO project: Work on six sites has already commenced and the seventh site
has been handed over to the company. Environmental clearances have also
been received. The company clocked revenue of INR1bn in Q1FY24 in this
project and it expects INR600mn monthly revenues from the project starting
Q3FY24 onwards.
 Bank guarantees: Capacit’e is in talks with lenders for increasing in its banking
limits – fund based and non-fund based limits. It has already received sanctions
for non-fund based limits of ~INR1.5bn from SBI and another INR3bn is expected
to be sanctioned from other banks shortly.
 Retention money: With the sanctions received from the bank, the company
expects to realize ~INR500mn in H1FY24 and ~INR400mn in H2FY24 (out of the
total outstanding of INR1.7bn). Management also expects to realize INR500-
600mn from the old outstanding debtors in FY24.
G R Infraprojects
Key highlights
 Guidance for FY24
9. Order intake: INR200bn
10. Revenue growth: 5-10% YoY growth
11. EBITDA margins: 14-15%
12. Capex: INR2-2.5bn
 Order book visibility: GRIL ended the quarter with an order book of ~INR196bn
(book-to-bill of 2.5x). It is also L1 in three projects totalling ~INR73bn, taking its
order book to INR268bn with a book to bill of 3.4x.
Of the three L1 projects, two are ropeway projects while the third one is an
NHPC civil construction project.
Orders currently under execution stand at INR110bn.
 Orders intake: The company won INR18.2bn new HAM orders from NHAI
during the quarter. For FY24, the company is targeting INR200bn order
intake and is hopeful of winning some EPC projects.
 Q1FY24 order book breakdown: Road EPC+HAM (90%), transmission (1%),

railways (2%) MMLP (4%) and tunnel works (3%).
 Revenues: Q1FY24 revenues at INR21.5bn were down 13% YoY but up 8% QoQ.
 Margin: EBITDA margin during the quarter plunged ~500bp YoY but rose ~10bp
QoQ to 14.6%.
The company received early completion bonus/GST claim amount of ~INR4.2mn

during the quarter (INR103mn in Q4FY23 and INR1,329mn in Q1FY23).
 Debt: Standalone debt decreased to ~INR8.8bn (~INR10.8bn at end-FY23).

Standalone net debt:equity stands at 0.08x (0.16x at end-FY23).
Gross debt at consolidated level is INR59.6bn (up ~INR2.8bn QoQ).
 Working capital cycle: Net working capital cycle (adjusted for loans given to
subsidiaries) improved to 107 days (118 days at end-FY23).
 Exposure to HAM/BOT projects:
1. Equity infused/loans and advances given: INR21.6bn till date.
2. Equity commitment: Pending equity commitment is INR23.8bn of which

the company will infuse ~INR6.5bn in FY24 and INR8-9bn each in FY25 and
FY26.
 Asset monetisation: The company has formed an InViT to monetise its HAM
projects; it expects this to bring down its cost of capital. This will be a public
listed InViT. The company will initially transfer seven completed HAM projects
with a debt of INR38bn to the InViT.
The InVIT has got final observations from SEBI and approval for change of
ownership of only one project is pending from NHAI. Management expects to
launch the issue by Sep-23.
 Capex: The company plans to do a capex of INR2-2.5bn in FY24.
 Bids submitted: The company has already submitted bids for INR120bn projects
of which INR107bn were for roads and balance for other segments. Of these,
bids for projects worth INR76bn were yet to opened, as at June-23 end.
 Bid pipeline: GRIL has identified a bid pipeline of INR900bn of which INR750bn
is for roads sector (~INR200-250bn for EPC projects and balance for HAM) and
the remaining in other sectors.
Credit rating: CARE Ratings has upgraded the credit rating of the company from
CARE AA; Stable to CARE AA+; Stable during the quarter.
J Kumar Infraprojects
Guidance for FY24
 Order intake: INR80bn
 Revenue: 15% YoY growth in FY24 and 18–20% in FY25/FY26
 EBITDA margin: 14–15%
 Capex: ~INR2.5bn
Order inflow surges during the quarter

The company has won four new orders to date in FY24 totalling INR36bn (JKIL’s share
is INR34bn) in the roads segment from NHAI.
Management indicated they will target metro rail tenders to shore up the order
book. It is also looking at orders in the High Speed Rail segment, sewage and bridges
and flyovers segment.
Till date, it has already bid for projects worth INR37bn, for which bids are yet to
open. These include two NHAI projects worth INR15bn, Kanpur Metro project of
INR10bn and a Delhi PWD project of INR5bn.
J Kumar has a bid pipeline of INR250bn going ahead. The segment wise split is:
INR60-70bn in flyovers and bridges, INR30bn in building works, INR60bn in metro
segments, INR90bn in roads and INR20bn in the water division.
Order book improves QoQ

The company ended Q1FY24 with an order book of ~INR144bn (~INR119bn at end-
FY23). With a book-to-bill of 3.3x, the current order book implies revenue visibility
for the next couple of years.
It is currently L1 in orders worth ~INR41bn (JKIL’s share) which consists of:
 GMLR twin tunnel project – INR31bn.
 A building redevelopment project in Delhi – INR5.4bn.
 Flyover on JVLR – INR3.8bn
 Finishing works for stations on Metro Line 2B – INR1bn
Share of metro rail projects declined QoQ to ~40% of the company’s order book
(~53% as at end-FY23). On the other hand, the share of flyovers has increased (37%
now compared to 18% as at end-FY23).
Margins improve sequentially

EBITDA margin at 14.3% increased ~20bp YoY/25bp QoQ. PAT margins too inched
up ~20bp YoY (down~10bp QoQ) to 6.4%.
Leverage edges down QoQ

Gross debt marginally decreased QoQ to INR5.1bn; however, cash levels improved
from ~INR3.8bn at end-FY23 to ~INR4.5bn at end-Q1FY24. As a result, the company’s
net debt declined to ~INR600mn. Net debt to equity is comfortable at 0.02x (0.06x
at end-FY23). Management expects the gross debt levels to inch up to INR5.5-6bn
by the end of the current financial year.
Working capital cycle on the other hand improved to 124 days in Q1FY24 (128 days
in Q4FY23).
Other highlights
 Chennai Elevated Corridor: The company won four packages from NHAI in this
project (worth INR35.7bn) of which JKIL’s share is ~INR34bn. JKIL will execute the
entire contract whereas the JV partner will provide technical guidance.
 Mumbai Metro Line-3 is 88% complete and will be fully completed by end-FY24.
The first phase from SEEPZ to BKC is likely to commence operations by the end
of the fiscal year.
 Dwarka Expressway: J Kumar’s scope of work in this project had increased by

INR4.6bn in the previous quarter. Management expects the project to be 95%
complete by end-FY24.
 Mobilisation advance: The outstanding mobilisation advances are INR5.3bn
 Capex: JKIL incurred a capex of INR330mn in Q1FY24 and is planning to incur

capex of INR2.5bn in FY24.
KNR Constructions
 Revenue breakdown: During Q1FY24, irrigation projects contributed ~INR2bn
to revenues (INR9.2bn in FY23).
 Telangana receivables: Total outstanding receipts from the Telangana

government stand at ~INR6.9bn as on date (INR5bn at end-FY23).
 HAM project portfolio: KNR has an overall portfolio of five HAM projects: four
from NHAI and one from K-SHIP (Karnataka). Only one of these HAM projects –
Oddanchatram-Madathukulam has achieved PCOD till date.
 Completion status of HAM projects: Oddanchatram-Madathukulam: 93.1%

(90.1% at end-Q4FY23), K-SHIP project: 74.8% (72.2%), Ramanattukara-
Valanchery: 40.2% (24.5%), Valanchery-Kappirikkad: 42% (26.4%) and Chittor-
Thatchur: 10.9% (0% in Q4FY24).
 Equity contribution: Of the total INR7.3bn equity requirement, KNR has

invested ~INR4bn equity in its HAM projects till date. Incremental equity needed
for the entire HAM portfolio is INR3.3bn - INR1.5bn in FY24, ~INR1.6bn in FY25
and INR0.2bn in FY26.
For the three new HAM projects awaiting appointed date, total equity
requirement is INR2.3bn of which 50% is expected to be invested in FY25 and
25% each in FY26 and FY27.
 Capex: INR330mn incurred in Q1FY24.
 Diversification: KNR is planning to tap into urban infra development

opportunities in the railways and the metro segment. It is also looking to
increase its presence in the irrigation segment. The company is also actively
bidding in the Western and the Central regions such as Maharashtra and
Madhya Pradesh.
 Credit rating: CRISIL has upgraded the long-term rating of the company from
CRISIL AA-/Positive to CRISIL AA/Stable and has reaffirmed the short term rating
as CRISIL A1+.
NBCC
13. Seed money: The company has invested INR9.2bn as seed money on various
projects. Accrued interest as on Jun-23 stands at INR2.8bn.
14. Amrapali Project: The company had received an order worth INR83bn in this
project of which it has already booked INR50bn revenues till date and expect
revenue contribution of INR20bn in FY24. It plans to complete this project
during the current year.
The management also expects to get additional business in this project worth
INR80-90bn by Sep-23, which would be executed over a period of three years.
15. WTC project: The company has cumulatively sold ~INR65bn of inventory in this
project. It has an unsold inventory of ~INR50bn and expects to monetize
~INR40bn in FY24.
16. Sarojini Nagar: NBCC has initiated the process for bulk sale of this project during
the quarter. It expects the project to get fully sold in FY24 for INR13.5bn.
17. Real Estate sales: NBCC sold INR0.2bn worth of inventory in Q1FY24. The major
ongoing projects are in Bhubaneshwar, Lucknow (commercial) and Kolkata with
a total sales value of ~INR11bn. The company expects to sell this inventory
completely in FY24.
18. Further, they have already awarded tender for construction in Patna and will
soon float tenders for development in Jaipur and Coimbatore. Going forward,
the company is targeting more redevelopment projects and is looking at
geographies like Mumbai and Kerala.
Nagarjuna Construction Company

Management call highlights
1. FY24 guidance:
 Revenue growth: 20% growth YoY
 EBITDA margin: Flat YoY
 Order inflow: INR200bn
 Capex: INR2.8bn
2. Order book: Order inflows during the quarter were ~INR81.5bn. NCC ended the
quarter with an order book of ~INR541bn (book-to-bill of 3.4x) – it’s highest
ever.
Given its segmental diversification, NCC would, in our view, sustain its strong run in
order inflows (refer to NCC - Firing on all cylinders).
3. Q1FY24 order book breakdown: Buildings (50%), roads (11%), water and
environment and railways (15%), electric (15%), irrigation (1%), mining (9%) and
others.
4. Margin improve YoY in Q1FY24: EBITDA margin during the quarter improved by
~40bp YoY to 9.9% (10.6% in Q4FY23). PAT margins too, rose ~20bp YoY to 4.2%
in Q1FY24.
Management believes margins should get support from softening commodity

prices and completion of projects won in the pre-covid era (which have lower
margins compared with newer projects).
5. Andhra orders: Total outstanding orders from Andhra stand at ~INR34bn.
6. Karnataka orders: Total outstanding orders from Karnataka stand at ~INR40bn

of which ~INR22bn are metro rail projects.
Debt: The gross debt increased in Q1FY24 to ~INR13.1bn (INR9.8bn at end-

FY23) still, this was the lowest 1st quarter debt over the past decade.
Net debt also increased to INR6.2bn (INR3.3bn at end-FY23). Consequently, net

debt to equity inched up to 0.1x (0.05x at end-FY23).
7. Working capital cycle: Working capital cycle too deteriorated sequentially to

122 days (118 days at end-FY23).
8. NCC Urban Vizag deal: During Q4FY22, the company had sold its entire stake in
its subsidiary NCC Vizag Urban Infrastructure. The equity invested by NCC in this
subsidiary was INR0.5bn. It will receive ~INR2bn from this sale; it has already
received INR475mn as at Mar-22 end. However, the subsequent tranches have
not been received thereafter. The total outstanding receivables from this deal is
~INR5bn of which the company expects to receive ~INR1.5bn in FY24 The
company will get interest on the delayed payment.
9. GMLR Project: NCC-J Kumar JV has emerged L1 in the Goregaon-Mulund Link

Road (GMLR) project worth INR63bn (NCC’s share is ~INR31bn). The execution
period is five years. The JV will have to purchase two new TBM machines valued
at ~INR3-3.5bn each. Management expects to get the LOA within a month’s
time and start work by Oct-23.
PNC Infatech
 Order book split: Road projects constitute 58% of order-book with the balane
coming from water/canal projects.
 Andhra irrigation project: Work has already commenced on the irrigation

project in Andhra Pradesh but progress remains slow. The management has
already applied for extension for completion of this project by two years.
Around ~INR9.6bn work is pending on the project. PNC executed ~INR140mn in
this project in Q1FY24 and expects to execute ~INR1bn in FY24.
 Water supply projects: The company’s share of work in the various projects that
it has received under the ‘Jal Jeevan Mission’ (JJM) project in Uttar Pradesh is
~4800 villages.
The company had booked INR10.4bn revenues on the project till end-FY23;
execution during Q1FY24 stood at INR4.2bn. ~INR50bn of works are still pending
to be executed and the management expects to execute ~INR20bn in FY24 and
the balance in FY25.
 Our view on water projects: Over the past couple of years, the government has
made its intention clear about targeting the water supply segment in a big way.
It has already launched the Jal Jeevan Mission, envisioned to provide safe and
adequate drinking water through individual household tap connections by 2024
to all households in rural India.
In the budget, outlay for water supply has risen 29% YoY to INR772bn; within
this, the outlay for JJM component has increased by 27% YoY.
PNC management indicated that it will bid for phase-4 of JJM project in Uttar
Pradesh going ahead and expects to win INR10bn of new orders from this
segment in FY24. We believe PNC can be a significant beneficiary of the uptick
in awarding in the water segment.
 Margins: EBITDA margin stood at 13.2% (down ~150bp YoY and ~10bp QoQ),
while PAT margin at 8.4% were down 110bp YoY/30bp QoQ.
 Toll collections: Toll revenues were up 3% YoY/7% QoQ in Q1FY24 at INR997mn.
 HAM Monetization: PNC is in talks with various potential investors to

monetize its HAM assets. The management has identified 11 HAM and one
BOT toll (Bareilly-Almora) project for monetization. The company has
received a few offers and targets to complete the deal in FY24. The total
debt on these 12 assets is INR69bn and equity infused is INR17bn.
Titagarh Wagons
Other highlights
 Indian Railways order: Titagarh had won the single-largest order ever for the
company from the IR for 24,177 wagons for a contract price of ~INR78bn. The
delivery time for this order is 39 months. This contract is fully covered with both
upward and downward price variation clause; however, there would not be any
free issue of materials, resulting in higher working capital requirements.
Execution on the order has already commenced and the division is working near
its full capacity of 700 wagons per month. The company is also working to
increase its manufacturing capacity to 1,000 wagons per month and targets to
achieve this in the current fiscal itself.
Total wagon production in FY23 stood at ~5,500 wagons and the companies
wishes to increase this to an average of 3,000 wagons per quarter by end-FY24.
 Vande Bharat order: Titagarh in a JV with BHEL has emerged as the L2 bidder in
the first tender to supply 200 Vande Bharat trains. The TWL-BHEL JV will
manufacture 80 trains of 16 coaches each at a price of INR1.2bn per train. TWL
will have a shareholding of 51% in the JV.
Apart from this, the JV would have an AMC contract of 35 years with a total
contract value of ~INR135bn.
The first prototype is expected to be delivered by Mar–Apr 2025 with full-scale
production expected to begin from Oct-25. 12 trains are to be delivered in the
first year, 18 in the second and 25 trains each during the next two years.
 Forged wheel sets: The TWL–R K Forgings JV had won a contract for supplying
15,40,000 forged wheels to IR by quoting a price of ~INR126bn. The JV will be a
50-50 partnership.
While IR has assured a committed offtake of 80,000 wheels, the JV plans to
create a factory with annual capacity of 200,000 wheels. The balance will either
be sold to third parties or exported and used for captive consumption by TWL.
The overall capex for the factory would be INR9.5–10bn; of this, INR3.5–4bn
would be equity (TWL’s share will be 50% of this or ~INR1.8bn) and raise debt at
the SPV level for the balance. The company expects to set up the production unit
over the next 18–24 months and start delivering by FY26.
 CRRC contract: The company has also received an order to manufacture 204
coaches for Bangalore Metro on a “Job Contract basis” from the CRRC.
 Capacity expansion and capex: On the wagon front, Titagarh is looking to
increase its annual wagon building capacity from existing 8,400 to 12,000 at
capex of INR1.25bn.
On the passenger rolling stock side, the company currently has capacity to
produce 250 passenger rolling stock coaches per year at its Uttarpara (West
Bengal) plant. It is expanding annual production capacity to 850 coaches at a cost
of INR2.5bn. This capacity would be fungible and could be used to produce
metro/mono rail as well as Vande Bharat coaches.
 Order book: The order book of the company stood at INR279bn at end-Q1FY24.
 Wagon execution: The company has ramped up its execution during the year
and delivered 5,498 wagons in FY23 (3,274 wagons in FY22).
Engineering & Capital Goods
ABB
Opening remarks
 Theme for the quarter is F&B: India’s food processing industry is expected to
reach $535bn by FY25 from $290bn in FY22. Fastest growing segments are
packaged goods, dairy, meat & marine. ABB’s offerings include drives, motors,
automation & instrumentation, robots, MV & LV switchgears, digital power train.
 Focus areas: Warehouse & logistics, datacentres, railways & metro, renewables,
electronics and automotive. Enhance areas: Pharma & healthcare, water &
wastewater, food & beverage, textiles, pulp & paper, marine & ports, rubber &
plastics. Sustain areas: Oil, gas & chemicals, buildings & infra, power distribution,
cement, metals & mining.
 Expanded manufacturing footprint of energy efficient drives portfolio.
 Cash position at INR40.92bn. Board has approved a special dividend of 275%.
 Order backlog grew 29% YoY to INR77.27bn.
 Volume, price and product mix drove higher margins.
 Focus for H2CY23: Building up order momentum, sustainable margin momentum

etc.
AIA Engineering
Quarterly performance
 EBITDA margin improved from 24.8% in Q4FY23 to 27.7% in Q1FY24 due to
improved product mix (higher large castings) and lag effect of pass on of lower
freight and raw material cost. As per management, it should normalize to 22-24%
margin on full year basis.
 AIA has been able to use 22% of power requirement from captive power plant
with a total generation of 38MW
 Other income of INR595mn included INR560mn (INR485mn in Q4FY23) from

treasury and foreign exchange gain of INR28.6mn (INR152.8mn in Q4FY23)
 The order book stood at INR6.1bn as on Jun-23
Guidance
 Management guides 30kt additional volume in FY24 (in Q1FY24, it was up 6.1kt
YoY) and sustainable EBITDA margins of 22-24% (Q1FY24:27.7%). Average
blended realization should be ~5% lower than Q1FY24 average of ~165k/t. Focus
remains on mining sector.
 The tax rate for FY24 is guided at 23% (Q1FY24: 26.5%)
 Management has guided a capex of INR5.1bn spread across FY24 and FY25. Out
of this INR2bn is towards the re-organisation of warehouses and plants,
automation, extra lines and debottlenecking (adding 20kt non-grinding media by
Dec’2023) etc.
 Additional INR2.5bn will be spent on expanding grinding media capacity by

80ktpa, which is expected to be completed by FY24-end. Remaining INR600mn
will be spent on setting up captive renewable power
 AIA has already spent INR630mn of capex in Q1FY24
Others
 AIA has a net cash of INR27.5bn (INR25.6bn at FY23-end) as on June23 with an
average yield of 7%
 Working capital days reduced to 100 days compared to 118 days historically due
to reduction in the inventory which inturn is due to easing of supply chain.
 The sunset review on import tax of 11.8% in Brazil is being reviewed (duty was
applied for 5 years). The outcome of the process is expected to conclude by
March’24. AIA exports 8k-10k grinding media to Brazil.
 North America, Austria, Latin America and CIS are the key and critical export
markets and company is trying to increase its penetration with more customer
on boarding.
 AIA remains bullish on copper and gold volume growth. Company’s primary focus
is on conversion of mines to use more of high chrome grinding media as
compared to forged media
Cummins India
Opening remarks
 CPCB-IV norms’ products launched in power gen segment. Will continue to
deliver superior performance.
 CIL reported record revenue for the quarter driven by strong domestic demand.
Export revenues level similar to previous quarter.
 Domestic: Power gen INR8.73bn, 76% increase YoY and 30% increase QoQ.
Distribution INR5.34bn, 28% increase YoY and 11% increase QoQ. Industrial
(domestic) INR2.36bn, flat YoY and 9% increase QoQ. Exports – HHP INR2.44bn
5% increase YoY and 18% increase QoQ. LHP: INR2.01bn, flat YoY and 17%
decrease QoQ.
 FY24 guidance: Double-digit growth vs FY23. Continue to grow at 2x of GDP.
CG Power
Opening remarks
 Overall, it was a very good quarter. PBT of the company came as highest ever of
Q1 in recent times. Order backlog stands at INR49bn.
 Margins were higher YoY on account of volume growth, softening input costs, a
favourable product mix and procurement efficiencies.
 ROCE (annualised) for Q1FY24 was at 45% as against 38% in Q1FY23.
 CG Power subsequent to the quarter ended June 30, 2023 has concluded sale of
QEI LLC, USA for a total consideration of USD10.5mn free of cash/ debt.
GE T&D
Opening remarks
 Q1FY24 order inflows at INR10.1bn versus INR6bn in Q1FY23, up by 68% on a
YoY basis. Order backlog increased to INR39.4bn.
 Net debt improved by INR560mn in Q1FY24 standing at INR1,170mn vs

INR1,730mn in Q4FY23.
Hitachi Energy
Opening remarks
 India’s GDP expected to grow at 6.5% (as per RBI) for FY23-24. Manufacturing
PMI hit a 31-month high in May’23.
 Government to provide ~INR1.5tn worth incentives to 12 states for power sector

reforms.
 Fresh order wins in Q1FY24 was ~INR 11.4bn. Key order wins include: a) Over 200
traction transformers by BLW, CLW, b) Utilities and new industries lead orders
for various ratings of GIS and dry-type transformers, c) Power transformer orders
for data center and other EPCs, d) Traditional power and renewable integration
utilities continue driving orders for AIS substations.
 Sequentially topline was down mainly due to chips & electronics shortage.
 Export contribute >30% of total orders in Q1FY24. Orders are of 400kV GIS order
from power utility in Singapore, 400kV GIS order from agri-tech manufacturer in
Greece etc.
 Order backlog at INR70bn providing revenue visibility of >20 months.
 We stick to 10% EBITDA margin target by FY25.
 Export will be 25% of our topline and expected to follow the same trend going
forward.
 Despite short-term challenges, we remain optimistic with continued order

growth momentum and stay focused on increasing operational efficiencies while
expanding our portfolio in hybrid segments. Accelerated energy transition
presents a medium to long-term opportunity for our technologies, particularly
high-growth segments, including renewables, data centers and HVDC.
 We have successfully time-tested prototype unit of 765kV, 500 MVA transformer

to meet new specification criteria by Central Electricity Authority (CEA).
Kalpataru Projects
 Consolidated Revenue growth 15% YoY led by improved execution and healthy
order book in flagship businesses
 Consolidated EBITDA margin at 9% (+40 bps YoY) on back of robust project

progress and operational leverage
 Higher debt in 1QFY24 is to meet working capital (2.7% of sales and higher
depreciation on back of higher capex last year.
 Acquired balance stake of 49% in Fasttel (Brazil); EBITDA margin recovery in

Fasttel driven by closure of legacy projects.
 Divestment of Vindyachal road asset (VEPL) at advanced stage; Targeting to

complete the process by the end of Dec-23
 Expect net debt to start declining from Q2 FY24 onwards given recovery of
milestone linked collections and closure of projects
 KPIL has entered in to Latina America and Europe geography for T&D business.
 Secured orders of INR 73.8bn YTD FY24 (Q1 FY24: INR51.2bn and Q2 FY24 till
date: INR 22.6bn) ; Additional L1 Position of around INR40bn+
 Average Per Day Revenue ~INR6.1mn for Q1 FY24, compared to INR5.68mn in

Q1 FY23.
 Guidance in FY24 : Revenue 30% growth , OI ~INR260bn and PBT margin ~4-5%
and EBITDA margins ~8-8.5%
 Update on Income tax raid: Management is expecting there will be no material

adjustment in 1QFY24 result.
 No impact on tendering of T&D business due to election.
 Management is expecting a one international project in Oil& gas segment by end

of FY24.
 In Ling mota subsidiary – Growth will be ~10-15% next 2 years with a PBT margin
of ~4.5-5%.
 Borrowing cost for road projects is ~9-10%.
 In 1QFY24 there is a reduction in value of the projects and some of projects got
cancelled due to environment clearance didn’t get in Fasttel (Brazil Subsidiary)
 Fund provide by standalone for road projects is ~ INR 400mn in1QFY24 used for
debt repayment and ~INR 700mn for FY24 will be used to repay the debt.
 Update on share pledge: Current share pledge is ~47%. Management is

expecting there will be a reduction in pledge every quarter.
 In railway segment margin is lower due to intense competition, a lot of working

capital and long time for project closure led to high interest cost.
 Update on North America market: Bullish on market but challenging to enter

the market. KIPL is exploring a multiple opportunities for acquisition in North
America.
KEC International
 Revival of SAE business and deliver the positive PBT in Q1FY24
 Afghanistan - Total collections received in the last two quarters stand at over
INR2.60bn. Balance amount should be receive by end of FY24.
 Q1FY24 robust growth across business segments. Delivering a consistent growth
in Revenues on the back of better execution in T&D and civil business. Healthy
growth in T&D and civil business.
 Largest contributor in order inflow growth (30%) from India T&D , civil and
railways business segment.
 Working on 1 Solar projects in Karnataka ~600 MW. Company will bid in more
renewable projects.
 Legacy project in brazil: Completed Q3FY23. No EPC projects, only supply
projects. EBITDA is positive. Large amount of loan is refinance so expecting a
+PBT by Q3FY24.
 Revenue guidance for FY24 is ~INR 200bn and OI ~ INR 250bn in FY24.
 Revenue mix from export business is ~37% in Q1FY24. (100% T&D).
 Borrowing has come down in Q1FY24 by INR 3.5bn vs Q1FY23.
 PAT decline in SA led by project mix and in Q1FY23 large profitable projects were
executed. Couple of legacy project settle in Q1FY24 led to impact profitability.
Segment wise
T&D
 Robust revenue growth ~33% YoY stood at INR21.8bn

 YTD Order intake of over INR18bn, growth of ~50% YoY
 Highest ever order book & L1 ~INR 180bn+
Civil
 Robust revenue growth ~60% YoY stood at INR9.5bn
 Orders of INR13.70bn - Industrial, residential and commercial building segments
Railways
 Revenue growth of ~8% YoY stood at INR7.6bn

 Order intake of over INR7.5bn ; growth of over 80% YoY
 Expanded presence into the international market, with S&T order in Bangladesh
Oil & Gas
 Revenue growth of ~13% YoY stood at INR7.6bn

 Strong order book + L1 of INR10bn
Solar
 Execution in progress of our largest solar project of 500 MW in Karnataka
Larsen & Toubro

Opening remarks
 Domestic activity remains resilient. PMI is indicating a sustained expansion.
Growth momentum to continue with stable inflation and normal monsoon.
 Conditions for a continued capex cycle remain favourable with sectors such as
Infra, power (including renewables), petrochemicals and defence driving strong
growth.
 We continue to see plenty opportunities in core industrialization, energy

transition, etc.
 INR100bn of share buyback (excludes tax). Special dividend of INR6/sh. Within

defence and engineering segment, we signed an agreement with an European
player for P-75 I submarine program. Hyderabad daily ridership on 3 rd July
crossed 5,00,000 riders/day; however it touched 5,36,000 riders/day yesterday.
 LTI-Mindtree has entered Nifty 50 index starting 13th Jul’23. Financial Services
reached > 80% of retaliation of its book, three years in advance of its Lakshaya
2026 target.
 17% NWC has improved 360bps on YoY basis. 12.8% RoE on trailing 12M basis
(130bps improvement TTM and 60bps from Mar’23).
 Group order inflows came in at INR655bn, 57% YoY growth. Projects &
manufacturing: INR504bn, 79% YoY growth, which includes mainly infra and
hydrocarbon. International orders within P&M at 35% vs 33% in Q1FY23. Share
of private orders within domestic P&M is 24% vs 32% in Q1FY23.
 Prospects pipeline – INR10.07tn for 9MFY24 vs INR7.52tn for 9MFY23. Sharp

improvement in hydrocarbon sub-segment raised the projects pipeline.
INR9.73tn was the order pipeline as of start of FY24. Infra: INR5.85tn vs 5.47tn
as of Q1FY23. Hydro: INR3.47tn vs INR1.02tn as of Q1FY23. Power: INR0.45tn vs
INR0.6tn as of Q1FY23 and rest INR0.29tn vs INR0.43tn as of Q1FY23.
 Order book is at INR4.12tn as of Jun’23. P&M is largely India centric, with 70% of
OB being domestic, while 20% of OB is funded by bilateral / multilateral agencies.
Of Domestic OB of INR2.92tn – central Govt. 12%, state Govt. 29%, PSUs 39% and
private is 20%.
 INR17bn orders deleted from order book. Slow moving orders is less than 1% of
the order book.
 Group level EBITDA margin was at 10.2% (80bps drop YoY). Drop is due to past
pressure of legacy EPC projects.
 NWC/sales has come down by 90bps sequentially as Q1 is generally a seasonally

weak quarter of customer’s collections. Trailing 12M ROE is at 12.8%
(improvement of 130bps YoY).
 Infra order inflows came in at INR401bn (vs INR183bn in Q1FY23): Rail,

renewables, minerals & metals, real estate driving growth. 9MFY24, INR5.85tn
infra pipeline comprises of domestic INR4.61bn and INR1.24tn overseas.
Transportation is 23%, B&F is 21%, water and effluent treatment is 18%, heavy
civil is 17%, power T&D (incl. renewables) is 15% and metals & minerals at 6%.
Infra is INR3.01tn of order book. Execution 3 years. Q1FY24 margin is well within
our own internal budget.
 Energy projects order prospects: INR3.92tn for 9MFY24. Hydro is INR3.47tn

(offshore at INR1tn, onshore at INR2.3tn) and power is INR0.45tn. OB for energy
is INR728bn as of June’23.
 Hi-tech manufacturing order prospects: INR252bn for 9MFY24. Order book is

INR256bn as of June’23.
 Hyderabad Metro: 2,85,000 riders/day in Q1FY23 to 4,22,000 riders/day in

Q1FY24. Avg. ridership in Jan to Mar’23 at 4,08,000 riders/day. Avg. ridership as
of Jun’23, 4,45,000 riders/day. Higher margin is due to consolidation of Nabha
profits and improved ridership. INR3.35bn PAT loss in Q1FY24 was due to higher
interest costs despite better ridership.
 Outlook: Higher govt. capex in green energy (incl. RE T&D). Higher investments
in industrialization, O&G and energy transition in overseas markets. Robust order
pipeline and confident of sustaining growth momentum on a sustainable basis.
 FY24 guidance: OI growth of 10-12% and revenue growth of 12–15%. For

Q2FY24, we are reasonably well placed in some large orders. 9% EBITDA margin
guidance in P&M segment. NWC/revenues guidance of 16–18%.
Thermax
Opening remarks
 We did ‘okay’ in a couple of segments and would have done better in Industrial
Infra segment. We expect the rest of year to do better than what we have done
in Q1.
 Orders perspective – descent performance in most segments except chemicals

due to volumes. Enquiry pipeline is decent, commodity prices are stable and on
overall execution perspective – it was quite a comfortable quarter.
Consumer Goods
Adani Wilmar
Highlights of the quarter
 This quarter the company grew at 21%.
 The major losses were in export of non basmati and white rice as there was a ban
in the export of non basmati rice and an increase in duty by 20% in export of
white rice.
 Edible oil imports grew 19% YoY in Q1 FY24 (Oil Year has seen imports grow by
22% YoY)
 Soft oils imports (soyabean & sunflower oil) was higher due to low prices.
 Demand for packaged foods is expected to stay healthy.
Macro context
 Edible oil prices has stabilised, black sea corridor is closed. This ideally should not
be closed.
 October onwards rural market should continue doing better.
 India imported 22% more oil and has started consuming more.
 A 12-15% growth should be India’s growth story and the company expects to be
in line with these number going into the next quarters.
 Erratic weather patterns- The company expects sugar, pulses except tur (which
is facing some pressure) and oil to be comfortable if the weather continues to
remain as it is. The main pressure will be on wheat and rice but the only good
thing about Edible oil prices stabilizing is that it has always been expensive and a
bigger basket. So, if edible oil prices remains stable there is not much to worry
about.
 If the losses due to raw material price and hedging is not taken in context, the
business EBITDA margin stood at 3600-4000/ton and EBITDA as a percentage of
revenue will depend on inflationary pressure.
 Expectation- Foods and FMCG- this quarter 21-22% of growth and since demand
and supply is coming back it should be close to 25-30% volume growth and
revenue growth.
 Multiple headwinds like Ukraine-Russia War, Indonesia export ban on Palm etc.
during FY23 continued to impact Q1FY24
 Continue decline in Edible Oil prices witnessed (palm, soya and sun).
Kohinoor brand
 The new advertisement on Kohinoor has come after 4-5 years. The company felt
they have to come with a new media break.
 Both FFortune and Kohinoor have their own strengths.
 Kohinoor have been one of the most preferred basmati rice brand.
 Whip Kohinoor have 135 odd distributors, large edible oil distributor 1500
distributors of edible oil are distributing Kohinoor.
 Synergizing its edible oil distributors, Kohinoor now is present at 55000 outlets .
 The company expects a double digit volume growth for the next 2-3 years from
edible oil and basmati rice portfolio.
 Historically Kohinoor have been strong in south and west. West and south will
continue to push Fortune.
Market share
 Continued dominance in Edible Oils, MS gains in Wheat Flour.
 Edible Oil: Continued to maintain market share at 19.5%. Market share ~1.5x of
the next competitor. Potential to consolidate market share, since ~50% share is
held by regional brands.
 Wheat flour: Market share now stands at 5%.
 Rice: Market share declined to 5.9%; Kohinoor had a MS% of 1.3% in MAT Jun-
23.
Reach and supply chain
 Direct Reach now > 0.6mn+ Outlets, 2x of FY20.
 Coverage: 21,700+ Rural Towns
 Rural Saliency now ~31% in terms of volumes, 6.7x of FY20.
 Focus to continue increasing the rural town coverage.
 AWL has 90 depots with ~2mn Sq. Ft of depot storage space.
 18% of dispatches through multi-modal logistics and 57% of dispatches were

directly sent to customers and ~5% of dispatches through green fuel.
 3yrs target is to reach 1mn outlets.
 Increased reach will help in synergize the food and FMCG business and will help
in direct penetration.
D2C
 Fortune mart: No of outlets- 33 across 26 cities, with INR2,384 average order

value and 84% conversion rate. Sales growth now 10x of Q1FY22.
 Fortune Online: No of cities -25, with 64,000+ downloads, with 38,600+ orders in
FY23 with AOV of INR1,143. GMV growth now at 15x of Q1FY22.
Reasons impacting Profitability
 If the other player had held this position with the edible oil, they would have also
had face the same problems.
 Hedge losses- high price raw material and misalignments of hedges. Rest all
parameters have performed the way they should have.
 Gross margin absolute loss is INR3bn, which is due to the above reasons.
 Inventory loss: Due to decline in edible oil prices.
 Hedges dis-alignment: Hedge prices didn’t move in-line with physical prices,
hence loss in inventory was not fully compensated by the gain in hedges.
 Disproportionate allocation of TRQ: AWL incurred higher material cost compared

to other players, in month of Apr-23.
Others
 Competitive intensity- regional player going faster than national players. Edible
oil have seen regional player, each of the state has a local brand but nationally
no brand emerged. Its not easy for a smaller player because of the pressures.
 Nationally for wheat there are only 2 brands ITC and Adani.
 With volatile prices local players are not able to cope up and buy wheat
 Kings is the 3rd largest brand.
 AWL is 2nd largest palm oil brand.
 AWL is interested in assets but not in acquisition.
 Growth differs between urban and rural - 31% rural and 69% urban for edible oil
Bigger growth in rural market in the coming quarters.
 As Q1FY23 volumes were low going forward this type of strong double digit is
expected.
 There is 600 tonnes daily capacity with Guhana plant.
 Infra is increasing. Confident with the continuance of expansion plan.
 Seeing increase in purchase of 5ltr and 15ltr edible oil packs. Share is increasing
of 5 and 15ltr indicating that price are on comfortable level reflecting consumers
confidence
 Consumer have seen prices coming off which may have lead them to increase
their consumption
 Overall volume recorded 25% and brand volume of 39%.
 Interest cost what you look today shall continue for the next quarters.
 One of the output of the increased reach is a very high growth in packed edible
oil.
Asian Paints
Decorative business
 There was volume-led growth for the quarter with double-digit volume growth
of 10%; coming on a high base of previous year (37% in Q1FY23) with broad base
growth across regions.
 Continued and consistent path of 17.5% volume growth on a four-year
compounded growth rate basis.
 Double-digit volume growth across rural & urban markets; Rural growth
improving.
 With raw materials having deflated, the company may also look if price
corrections are required going ahead.
 Over four years, both rural and urban centres are growing equally well with
similar double-digit CAGRs.
 Mix in the quarter led by Economy & Premium range products.
 Maintained strong growth in Smartcare Waterproofing, Premium Wood Finishes,
Enamels and Economy emulsions.
 Robust expansion of distribution footprint catering to ~0.16mn retail
touchpoints and added 6,000 retail touch points in Q1FY24.
 Sustained strong demand for Safe Painting Service (SPS) & Trusted Contractor
Service (TCS) catering to over 650 towns with revenue almost doubling in
Q1FY24.
 Robust growth in Projects/Institutional business continued led by factories,
builder and government sector.
 APL continued its focus on innovation with NPD’s contribution to about 11% of
the overall revenues.
 APL continues to progress well on capacity expansion, backward integration
initiatives.
Margins
 The company is seeing GMs at nine-quarter high. GMs were driven by sourcing
and formulation efficiencies and softening raw material prices.
 The overall margins are closely governed with how raw material prices pan out.
 Overall EBITDA margin band continues to be 18–20%.
Innovation
 11–13% contribution to revenue comes from innovative products.
 Nilaya Naturals is an innovation and super luxurious product with 90% organic
(earth safe) ingredients.
 This is the company’s attempt to enter the super luxury space.
 Some innovation and premium/luxury products that the company has are
Hydolox Extreme Waterproofing, Anti insect paint, Premium PU finish and Luxury
exterior paint.
Home Decor
 Contributed ~4% to decorative business, and is the no. 1 integrated home décor
player.
 APL is no 1 player in decorative lighting and no 2 player in fabric and furnishing.
 Collaborations with Sabyasachi, Jaipur Rugs, Sarita Handa for the home décor
business.
 The business entered in Wooden Flooring, uPVC Doors/ other new categories.
 There are around 44 Beautiful Homes stores in India and is no 1 player in

wallcovering and textures.
 The home décor business is expected to perform better in H2FY24.
 The combined business of kitchen and bath is about close to INR8.3bn. Kitchen
also has a hardware business, which contributes roughly 40% to the kitchen
business, facing a slowdown due to price changes implemented in the market.
The company would be satisfied with 25% yearly growth in the bath and kitchen
businesses.
Kitchen business
 The business de-grew by 12% YoY; Q1FY23 had a high base due to price increases.
 Growth in FKD business, Components business slow.
 Large focus on efficiency, to improve profitability of the business and has now
broken even at the PBDIT level.
Bath business
 The business de-grew by 28% YoY led by high base in Q1FY23 due to price
increase.
 Launched new website and app to enhance brand.
White Teak (offers decorative & designer lights)
 Net sales stood at INR260mn in Q1FY24 with 28.4% YoY growth.
 Expanding geographic footprint and growing traction across the Beautiful Homes
network.
 Acquired further 11% stake in June’23 for a cash consideration of INR538mn as

part of staggered buyout plan. At 60% ownership stake, it has become APL’s
subsidiary.
Weatherseal (uPVC Windows and Doors)
 Net sales of INR98mn in Q1FY24, more than doubling revenue YoY.
 Gaining from increasing retail footprint and synergies with APL network.
International business
 International business de-grew by 1.4% in INR terms; In CC terms it registered a

growth of 3.8%.
 Strong double-digit growth in Middle East.
 Sri Lanka business has positive trajectory on stabilized economic conditions &
forex availability.
 Subdued performance in key markets; high inflation and currency devaluation

impacted Egypt; Slowdown in economy triggering muted construction activity in
Nepal; Forex pressures and macro uncertainties impacted Bangladesh.
 Continued focus on pre lux category and softening raw material prices
supporting PBDIT margins.
 Drop in PBT levels due to slowdown in key Asian economies.
 Business was hit in Asia, particularly Nepal where it de grew. This had an effect
on Asia business and overall International business. Large part of profitability
comes from Nepal, but since it was impacted, overall profits dipped.
 Places such as Bangladesh and Sri Lanka had suffered currency depreciation,
which impacted the performance.
Industrial business
 PPGAP - Sustained double-digit revenue growth driven by Automotive OEM and

Refinish segment. Improved price realizations and softening raw material prices
led to improvement in margins across all segments.
 APPPG - Robust double-digit revenue growth led by strong growth in Protective

segment. Improved sales mix coupled with softening raw material prices led to
improved margins.
 Powder coating and protective coating business has been picking up across the
industry with many players expanding.
Outlook for FY24
 Indian economy continues to be the only bright spot in world economy and key
contributor to global growth. High correlation of domestic GDP growth with
paint industry to ensure the company’s grow well, and APL will continue to
aggressively pursue growth.
 The company will continue to focus on growth.
 Monsoons today have been quite good and the company expects rural demand
to be better in H2FY24.
 Near-term comfort on moderating raw material prices.
 Longer festive season augurs well for the peak season demand.
 Focus on scaling up our industrial businesses and further energise Home Décor
categories.
 Continue to stay watchful on challenges in key geographies in International

portfolio - Nepal, Bangladesh and Egypt.
Entry of local players/unorganized players
 The bottom-of-the-pyramid is a strong market for the company. It has been

expanding distribution to create local footprints.
 It has taken initiatives such as launching schemes to attract retailers to stock APL
products.
Other
 Overall product mix was led by the economy and premium ranges.
 Distribution expansion continues to be strong. The company has added 6,000

retail touch points in Q1FY24.
 Larger festival impact will be in Q3FY24.
 New products take usually one–two years to be launched.
Bajaj Consumer Care

Detailed takeaways
Outlook
 Company is confident of growing in double digits in FY24.
 International business contribution has now gone up to nearly 5% (versus earlier

2-3%). It will be one of the growth drivers going ahead. Contribution of around
20-25% of turnover on a longer-term basis is the aspiration.
 Ad spends as a percentage of sales are expected to be 16-18%.
 MT/ecommerce has a combined salience of 17% with MT having more salience

than Ecommerce. Going ahead, this salience can grow to 20-22% in the long run.
 Company does not anticipate any large CAPEX at the moment.
 Benefits of low tax are going to get normalized by 2027.
 Company will continue to pursue inorganic growth.
 Henna is not the only launch within ethnic range, more products will be launched
under the ethnic range.
 Overall hair oil market witnessed recovery after 8 quarters. Industry grew 7% in
urban markets. Rural markets have been flat this quarter. Markets in Q1 saw
recovery across all hair oil segments.
Volume, Pricing and Demand
 ADHO portfolio grew 9% with double-digit volume growth. Overall volume

growth for company as well as ADHO is roughly 100-110bp higher than value
growth.
 This is the second quarter of consistent growth in ADHO. ADHO's percentage

contribution to total sales in Q1 is 86%. (It came down from 93% in the last to
85% and now stands at 86%). ADHO continues to be a good growth driver for the
company. In terms of distribution, more work needs to be done; more in rural
compared to urban.
 Urban continued to steer growth on back of loyalty programs.
 Rural saw sequential recovery aided by distribution and LUP; but still needs to be
watched up. Q2 and Q3 are expected to see good growth in Rural.
 Company will observe what is happening in competition and take pricing actions.
Company may look at taking some price hikes in few products second half of the
year.
NPDs
 On sequential basis, NPDs have grown 23% sequentially.
 Sales of NPDs is about INR310mn in Q1FY24 (vs INR240mn in Q4FY23; Q1FY23:

INR280mn).
 Company launched 100% Pure Henna Powder with higher Lawsone content than
Leading brands
 Launched two variants under Nomarks brand.
 2 new specific SKUs of AD Soaps planned for launch in Q2 for MT and E-

Commerce.
Modern trade/Ecommerce
 Company had been under-indexed in MT and ecommerce and has started to

scale up in last 6-7months.
 They have a combined salience of 17% with MT having more salience than
Ecommerce. Going ahead, this salience can grow to 20-22% in the long run.
 MT is at times higher profit than GT, but sometimes below. Ecommerce is a low
profit compared to MT. Almond drops has a significant presence in Ecommerce.
 Company has started to add newer SKUs in Ecomm/MT.
 Middle East & Africa grew by 23% with new partner appointment in Saudi Arabia
and new launches in UAE. Will look if any inorganic growth is required in these
regions.
 Rest of World (RoW) grew by 77% with opening of two new geographies. Some
new countries have been added.
 Bangladesh local operations scaling up as per plan. It is not an easy market to

crack since its dominated by a single large player.
 International business contribution has now gone up to nearly 5% (versus earlier

2-3%). It will be one of the growth drivers going ahead. Contribution of around
20-25% of turnover on a longer term basis is the aspiration.
Raw materials/ Margins
 LLP prices saw increase in Q1 (roughly 16%). The movement of LLP with Crude,
they do replicate but since LLP is a very small component of crude, it moves more
with regards to demand and supply.
 Consumption prices of LLP is Q2 is expected to be down on YoY basis; but

quantum is difficult to comment at the moment.
 RMO continued to decline in Q1 with good mustard harvest, however glass prices
were up.
 Focus will be to improve margins while improving portfolio with more focus on
improving overall EBITDA numbers instead of just looking at percentage
numbers.
 Management highlighted that based on crude and RMO prices, company feels
that 18-20% EBITDA margins is achievable.
Ad spends
 Will continue to invest in Advertisements across portfolio, with more focus on

digital channels.
 Ad spends as a percentage of sales are expected to be 16-18%
 With ADHO remaining a focus, TV and digital ad spends will continue.
 There is a drop of around INR20mn in Ad spends on YoY.
Coconut hair oil
 Coconut market is close to about INR50bn based on MRP (Net sales INR35bn).
Market has seen a Q1FY24 growth of about 5%.
 Company is still a very small player in coconut oil. With the product offering and
the Bajaj brand, company is optimistic of seeing good growth going forward.
 New SKUs in LUP are being launched to penetrate.
 Coconut hair oil gives company a double digit EBITDA. Focus has been to get into
MT and ecommerce.
 National launch of coconut happened four quarters ago.
 Company has been taking initiatives to do more in Coconut oil - it a large market.
 On an overall basis, company has a long term aspiration as it fits well in its
portfolio.
 The last six quarters have been encouraging enough for the company to continue
investing in this portfolio.
Others
 Bajaj Resource (held by Bajaj family) which owns the trademark gets the royalty.
 Bajaj ADHO is more of a brand story rather than ingredient story, while coconut
oil is a commodity and gets sold on price.
 Launch of soap was more of range completion, such as offering a basket of Bajaj
premium body and hair care products.
Berger Paints
Outlook
 No major capacity expansion planned for the year.
 Company expects double digit revenue growth in FY24, as the demand outlook
remains good in view of positive monsoon progress, infrastructure spends and
extended festive season
 The company maintains its stance to get net cash positive by end of FY24
 Since Diwali is delayed, higher growth rate in Q3FY24 is expected. Growth rate
in Q2FY24 is expected to be similar to Q1FY24.
 Due to rainy season in July, Q2FY24 is expected to be moderate for most of the
players
 Company may want to spend more in Q3/Q4 compared to rest of the quarters.
Ad spends are expected to be between 3.5 to 4% towards the end of the year.
 Market share gains in East have been higher compared to gains on national level.
 Normally new products need 4 to 5months to roll out properly.
 Company has no intention to get into other categories apart from paints and
waterproofing (including tiles and adhesives). No intention to get into home
décor.
 Berger paints is still under-penetrated in India. As and when it continues to

penetrate market, it will see more opportunity irrespective of how the paint
market is growing.
Volume growth and CAGR
 Despite high base, company managed to secure double digit volume and value
growth.
 Overall volume growth at 12.7% and decorative at ~14%.
 Last 2year/3year value CAGR growth rates are higher since company had taken
price hikes.
Margins
 38-40% gross margin is the indicative gross margin around which company would
want to stay.
 In case of new products, gross margins are based on product type. Economy
range have lower margins and vice versa.
 EBITDA margins have improved to 18.5% (since this did not have any one-off
expenses); steady state EBITDA margin range should be between 17% to 18%.
Debt position
 Net debt showed further reduction in Q1FY24. (Now stands at INR2.4bn).
 The company maintain its stance to get net cash positive by end of FY24
Discounts
 Discounts depend on mix. In some categories is has moved up and in some

downwards.
 Enamels discounts went up substantially and emulsion discount hasn’t even

moved.
 Enamel plays a crucial role in this quarter so discounts are aggressive; however,
in next quarter emulsions discount will be more.
Update on One-offs in earlier quarter
 Andhra Govt. payment - Out of the INR3bn, company has already received
INR2.8bn. The balance amount is expected to be received in next 1 to 2 months.
 Fire loss in factory - Berger has already applied for insurance and is expected to
receive the money in next 3 to 4months.
Decorative business
 Healthy double-digit volume and value growth continued in spite of very high
base and an inflationary environment. Volume growth is around 14%.
 Both urban and rural markets showed improvements in the quarter.
 Decorative grew faster than industrial in Q1FY24.
Project
 Company has strong presence in the project business. Salience of project

business has been around 8 to 10%.
 This business grows on how the builder segment moves.
 Project business is still in growth phase and doing better than retail.
Industrial business
 Auto GI and Protective Division have done well even on high bases.
 Protective coatings and General Industrial business continued its steady growth
for the quarter aided marginally by the impact of improved price realization
 Powder Coatings business line showed a degrowth for the quarter due to high
base effect and downturn in fan industry. However the company expect the
business to turnaround in Q2FY24 and has already started to see revival from
July.
 Automotive business had a modest growth on account of subdued growth in the

two wheeler industry.
Regional competition
 Regional competition had reduced during Covid period.
 Stronger regional players have bounced back in the decorative as well as

industrial side, but it is not expected to hamper listed paint players.
International:
 Nepal operations underperformed due to country specific issues (high inflation

and high interest cost) and will rebound in the coming quarter.
 Bolix S.A, Poland: The overseas subsidiary had a strong quarter with growth in
both topline (revenue) and profitability. This growth was driven by good
performance in the U.K. business.
 BJN Nepal: The overseas subsidiary had another quarter of degrowth in both
topline and profitability. This decline can be attributed to a slowdown in the
construction sector and steep inflation.
Other:
 Company plans to introduce 1 or 2 products in every quarter to fill up the gaps.
 Depreciation expense related to Sandila plant have more or less been done. Only
additional scale up expenses are expected going forward.
 Ad spends to sales ratio are similar to Q1FY23 (3% to 3.5%). Company may
accelerate Ad spends from Q3 onwards. It may want to spend more in Q3/Q4
compared to rest of the quarters. Ad spends are expected to be between 3.5 to
4% towards the end of the year.
 Some more product launches are due in waterproofing segment; expected to be

done in next one year. Currently it already has 70-75% of the offerings.
Britannia Industries
PLI
 The company has received PLI incentive eligibility certificate from Tamil Nadu,
and has booked INR70-80mn in Q1. In Q4FY23, BRIT had received PLI benefits for
2 years at one go. Starting in Q1FY24, it will get INR150mn a quarter. GST benefits
from new plants will come in gradually.
 In Q4FY23, other operating income shot up (17% of PBT) due to PLI that the
company got from government. For CY21-22 the company realised the money in
Q4FY23 of INR900mn. In Q1FY24, Company has received PLI incentive eligibility
certificate from Tamil Nadu, and has booked INR70-80mn in Q1.
Volume/pricing
 Company had a transaction growth (packs sold) of 9% YoY in Q1FY24 (at par with
the revenue growth).
 As inflation has receded, local players have started to add back grammage;
company has also taken steps in that direction to remain competitive.
 In terms of pricing corrections, it is a combination of grammage additions in some

products and pricing actions in terms of promotions. Being market leader,
company had taken first mover advantage on all price hikes. However, company
had to take some price corrections in order to remain competitive, since
competitors had taken price cuts and/or had not taken earlier price hikes.
 It continues to closely monitoring stock-price situation of commodities
 The company will continue to monitor and ensure necessary pricing strategies to
remain competitive and drive market share growth.
 FY24 is expected to be flat from a pricing-growth perspective.
 On the volume front, volumes are expected to recover gradually in terms of

tonnage.
 The company has taken price reversals (grammage addition/price cuts) of

roughly 1.8%; company had taken price increases till Q4 end and had also taken
some in Q1, but along with that there were some price rationalization.
Market share
 BRIT’s market share has been flat.
 Local players have been the gainer of market share. When inflation is high, local
players walk away and when things start to normalize, local players return and
start operating large schemes for consumers. Management remains confident
that it will be able to get back in few months.
Margin/inflation
 Palm oil has seen huge deflation; roughly 21% YoY. Laminates and corrugated
boxes too have deflated.
 Flour has seen 3% YoY/1% QoQ inflation. Sugar has also seen 1% YoY inflation.
 Wheat/flour production has not been very healthy this year, but the company
continues to be covered for the next two–three months.
 Margins are expected to stay in a similar range.
Innovation
 Total innovation is about 4% of top line and likely to remain to remain in a band
of 4-5%.
 Transition to PET bottles are doing well.
 PET Milkshakes are now sourced from its new factory i.e. Ranjangaon.
 Company launched rich milk shares and coconut in this season.
 New categories have started to do really well.
Adjacencies
 Seen some green shoots in Cake category. Strengthened Rusk portfolio with
regional core flavours such as Butter Rusk in East.
 Similar to biscuits, regional players have emerged in rusk (there are nearly 2,500
local competitors in rusk) and cake. Company didn’t have Rusk commissioned in
the north, but now has commission rusk line in UP.
 'Britannia the laughing cow' cheese is expected to be a good source of growth

going forward. Company has started to launch IN10 cheese sachets. Initial
response for cheese has been very good and company remains very optimistic
on the cheese business. There were some distribution shortages in cheese in
Q1FY24.
 Dairy is expected to see double digit growth. Company is in the process of scaling
dairy factories and once it has scaled up, it will see cost efficiencies.
 International has been a good story with Middle east and Africa growing in high
double digit.
 Nepal continues to see high double-digit growth with expanded margins.

Company started business in Egypt which has grown in high double digits.
 Supply of SMP, SCM & Butter for captive consumption in Bakery from its Dairy
Plant in Ranjangaon has begun.
Distribution
 Direct reach now at 26.7lakh outlets.
 Focus state growths have been much higher than the growth at rest of India
(grew 2.2x times versus growth in rest of India)
 Rural distribution has grown over 2x in 5years; now company has 28,000 rural
preferred dealers.
Setting up technologically superior factories
 Company has scaled up Barabanki plant in UP in Q1FY24. It now has set up 5

new product lines.
 Tirunelveli plant in Tamil Nadu has also been scaled up in Q1FY24. It has set up 5
new product lines here as well.
Other:
 The company increased advertising & promotion expenses to support brand and
drive innovation.
 ICDS as at Q1FY24 stand at INR7.6bn between Bombay Dyeing and Bombay

Burmah.
 Markets are little sluggish compared to the past.
 There has been sluggishness in the rural market for the company; although
company has been growing faster than others in rural. Urban markets have also
been slightly sluggish.
 The single largest contributor for other expense growth was ad spends (grew
from 3.5% of the top line to 4.2% of top line).
 Ad spends are expected to stay in the range of 4–4.2% of sales.
 Capex plans: Some more investments are coming up in Ranjangaon, some

capacity expansion in Bihar (capacity constraints), planning for some extension
in Orissa. Roughly INR4-4.5bn capex can be expected in FY24.
Dabur
Business highlights
Healthcare
 Major change was advocacy for healthcare, Dabur is doing well in ayurvedic, and
has also started allopathic advocacy, which is doing a INR1500mn incremental
sales
 Baby care at present is restricted for ecommerce unless completely established,

and did INR200mn last year and will see INR500mn in FY24.
 Targeting 10% CAGR for healthcare and investing money in power brands for
healthcare.
 NPDs will be introduced to increase TAM for healthcare.
 Healthcare should trend in high single digit to low double-digit growth
Health Supplements
 The Glucose portfolio experienced an impact due to unseasonal rains.
 However, despite this setback, the Ex-Glucose and Health Supplements

segments witnessed a growth of 10%.
 Additionally, the company continued to gain market share in the Chyawanprash

and Honey categories.
 The company reported overall growth of 5.5% in Q1FY24 and 8.2% growth on a
four-year CAGR basis.
 Honey news – Dabur’s honey stand by purity and in compliance with all FSSAI
and is manufactured at US FDA certified facilities. Every batch is tested on 65
parameters of FSSAI. 500 bps market share gained in Honey.
Digestives
 The digestives segment showed strong growth of 14.3% in Q1FY24, driven by

robust double-digit growth in the Hajmola franchise.
 This growth is particularly impressive considering it was achieved on a high base,

which had previously seen a growth rate of 39.5%.
OTC
 The OTC segment demonstrated remarkable growth of 24.3% in Q1FY24, with its
brands performing strongly.
 The success can be attributed to the outstanding performance of key brands such
as Lal Tail, Honitus, Dabur Health Juices, and Shilajit, all of which reported
double-digit growth rates.
 Additionally, the company gained approximately 140 basis points (bps) in market
share in the Baby Massage Oils category and 20 bps in the Cough & Cold segment,
further contributing to overall growth of the OTC portfolio.
Ethicals
 The Ethicals segment experienced growth of 7.3% in Q1FY24.
 Additionally, the company recently established a Therapeutics division,

comprising a team of over 400 product specialists dedicated to advocating and
selling the Healthcare portfolio to allopathic doctors.
 This strategic move likely contributed to the segment's growth and expansion
within the market.
Home and Personal Care (HPC)
Oral Care
 The toothpaste portfolio's growth was driven by Dabur Red, helping the
company consolidate its #2 position in the dentifrice segment.
 Dabur Red's market share increased by 50bp, resulting in a toothpaste market

share of 16.9%.
 LDM observed a 11% growth.
 The oral care observed a growth of 13% in Q1FY24 and a 12% growth on 4 year
CAGR basis.
 Naturals accounts around 30-31 % share and there was 200bp improvement in
naturals,
 Naturals as category grew 2.5% in volume but for Dabur it grew 9% and the
company has taken share from no 1 player
 50% gain happened in Dabur Red.
 In 5-6 years - 50% of portfolio will become naturals and will continue to take
share,
 Price points are similar for naturals and non-naturals.
 There was 8% volume growth in oral care and targeting double-digit growth for
FY24.
Hair Oils
 Despite the category's growth of 3.7% in value terms, Dabur's Hair Oils portfolio
recorded a solid growth of 10%.
 Moreover, the market share for the hair oils portfolio improved by
approximately 200 bps, reaching its highest ever mark of 17.4%.
 Dabur made a successful entry into the 1,000 crore cooling hair oil category with
Dabur Cool King.
 Launched in May in North, Bihar and UP - Dabur Cool King. Initial response has
been positive and gained 15% relative MS from competitors. This is a INR10bn
category and has 25-30% repeat purchase rate. Offers non perpetual cooling
which no other competitor has got and hence pushing it
 The hair oil observed a growth of 10% in Q1FY24 and a 5.2% growth on 4 year
CAGR basis.
Shampoo
 The Shampoos portfolio posted a growth of 9% in Q1 FY24, even on a high base

of 17% growth.
 The company managed to increase its market share in the shampoo category by
about 10 bps.
 The shampoo portfolio observed a growth of 9% in Q1FY24 and a 13% growth on

4 year CAGR basis.
Home Care
 The Odonil and Odomos products experienced robust double-digit growth.
 Odonil strengthened its #1 position in the air fresheners category, with an

increase of 10 bps in market share.
 Meanwhile, Odomos saw a significant market share increase of about 340 bps.
 Additionally, the company witnessed a market share increase of 30 bps in bleach

creams.
 The home care portfolio observed a growth of 14.5% in Q1FY24 and a 12.1%
growth on 4 year CAGR basis.
Skin Care
 Gulabari registered double-digit growth in the Skin Care category, Saw MS

increase of 30 bps in bleach creams.
 The skincare portfolio registered a growth of 3.5% in Q1FY24 and 1% growth on

a four-year CAGR basis.
Food & Beverages
 Overall, while the Beverage business faced challenges, the Foods category
experienced substantial growth, driven by the addition of Badshah Masala and
the strong performance of the Hommade brand.
 Dabur's focus on innovation and portfolio expansion in the Foods segment seems
to be paying off and offsetting the impact of adverse weather conditions on the
Beverage business.
Beverages
 The beverage business faced challenges due to the impact of unseasonal rainfall
in North and West India, resulting in a decline of 2% in growth.
 Despite this setback, the Fruit drinks under Real Koolerz continued to perform
well, contributing positively to the overall portfolio.
 The company managed to gain market share in the juices and fruit drinks
segment.
 Peers have witnessed 25% decline in beverages, Dabur only witnessed 1.6%
decline in beverages. In terms of no of reaches it increased by 4-5%.
 Full-year beverages will be muted, but this will be positive for Dabur due to
salience in margins.
 Volume growth has been negative for beverages, which led to overall value
decline.
Foods
 The Foods category showed robust growth at 35% in Q1FY24.
 Food basket inflation is around 11%, spices is around 19% inflation, food
concentrate also witnessing inflation.
 The addition of Badshah Masala to the portfolio significantly contributed to the

growth momentum. Badshah Masala saw a remarkable growth rate of 24%.
 The Hommade brand performed well, driven by innovation and portfolio

expansion.
 Hommade growing at 33-34% (focused on north) and leveraging both

distribution of Badhshah for west and south.
 Badhshah will also start in south.
 Foods will exit at INR4500mn this year and next year foods target will be
INR5000mn.
Rural and urban
 Overall market is recovering especially rural, which grew by 4%.
 Money is back in rural and price increase has come down and will come down in
coming quarters, and volumes will increase in coming quarters.
 Both urban rural growing well now and gap will keep narrowing.
 40-45% of business coming from rural.
 Price increase impact is now in base and hence uptrading happening.
Overall business
 Rural/Urban grew 8%/10% for Dabur, and has witnessed secular growth across
portfolio.
 MT had some issues, but now is back growing at 18%, and targeting e-commerce
to be 9% of sales by FY24.
 Ad spends was cut back last year due to huge inflation but not abated,
international saw some inflation and hence investing back in advertisement.
 8-9% of sales should be media investment and money will keep going in media.
 International business changes made last year reflected this quarter and for full
year targeting double-digit growth in international business in CC and INR terms.
 Lot of inventory in ecommerce in healthcare is now deflated inventory.
 OTC and Ethicals is 50-50 mix and margins profiles are similar.
 30% is out-of-home consumption for beverages.
 30–40% of contribution for the whole year for beverages comes from the
summer season.
 There was 6–7% price increase and 6-7% volume growth for healthcare and 7-
8% volume growth in HPC.
Others
 Considering acquisitions of D2C brands for premium play across categories, if

financially worthwhile.
 HPC and healthcare deflation and will continue in upcoming quarters
 Food as a segment is very salience; 25% of business coming from summer

salience food portfolio; HPC and heathcare will be even salient in coming
quarters.
 Innovation a % of sales stood at 3-4%. Out of which 10% was Baby care. Coolking
recorded INR60mn revenue; launching Odomos LUP going forward; Coconut
water doing well, Real fiz will exit at INR2bn and Dabur ghee at INR100mn exit;
Hajmola grew 15% and 10% of this is coming from innovation; INR100-110mn
coming from ayurvedic; Health juice growing at 20%.
 The company has a planned capex of INR4-4.5bn.
Emami
Outlook
 EBITDA margins expected to expand by 200-250bp YoY in FY24.
 Company remains optimistic that hospital transaction gets completed by end of

August, 2023. Post hospital transaction, complete pledge will reduce to 18-20%
depending on the stock price.
 INR450-500mn would be the quarterly range of depreciation and amortization

rate.
 Domestic volumes grew by 3% YoY. Innovations contributed 2.5% to topline in

Q1FY24 (Expected to be 3% for full year). Company does not have any plans at
present to de-seasonalize portfolio
 Allopathic doctor coverage: Focus is going to be on expanding Ayurvedic doctors;

no immediate plan to expand on allopathic doctor coverage. In medical business,
company is focusing on market share gains; will come through organic expansion
and doctor additions.
 Male grooming had a very high base in Q1FY23. Going forward, company remains
confident to see double digit growth from Q2 onwards.
 Healthcare (10-12% of topline) is expected to see double digit growth.
 Boroplus and Navratna is expected to see 6-7% growth.
 Company is getting aggressive on A&P.
 Company will be generating MAT credit till FY26. From FY17, it will start utilizing
it.
Summer portfolio
 Unseasonal rainfall across the country impacted summer products.
 Despite bad summer season, Dermicool grew by 9% YoY due to distribution

efforts undertaken by the company.
 Summer portfolio contributed roughly 41% in Q1FY24.
Distribution channels
 Contribution from Modern trade and Ecommerce to domestic business has

grown to 19.4%.
 Company entered late into these two channels and has been focusing on these
channels in the last 8 to 10 quarters; as a result these channels have been
growing at 50-60% every quarter. Given decent size now, going forward, it is
expected to grow 15-20% as focus will be on a Profitable growth. In the next 2 to
3 years, it can reach to 25-26% of topline in the long term.
 Company has also launched exclusive SKUs only for these channels (which were
not there earlier)
 In the last four years, e-commerce salience has grown from 0% to ~10%.
 In FY24, focus is to work on improving margins in the modern trade and

ecommerce channel.
 Company now has almost 1 mn outlets. GT has remained flat.
 The key challenge now is to increase throughput from per store; which will be
majorly done through trade-marking initiatives.
Rural
 There are still challenges in rural.
 Some markets have been better but company would need to wait before it sees
long term sustainable growth.
 Major growth is coming from the existing international markets from bigger
brands.
 While company is growing in almost all existing international regions, it is facing

currency issues, such as in regions of Russia.
 Since international business has started to provide decent profitability,
 Navratna (largest), fair and handsome(second largest), Crème 21, 7 Oils in One,
Boroplus, OTC portfolio are the key brands in International market.
 Bangladesh and Africa (OTC) is a non-Indian consumer base.
 Egypt has been weak in this quarter. Ex-Egypt, growth has been 17% YoY.
 International business is expected to grow at 15% in the long term.
Product-specific
 Navratna Cool talc and Dermicool combined have a revenue of INR3bn.

Dermicool products are not cannibalizing Navratna Cool Talc.
 Company has sufficient bandwidth to invest in advertising for both products.
 The market size of cooling hair oils is very large. Company has not lost any market
share in it (Navratna oil)
 Kesh king on overall basis is expected to grow around 7-8% for next few years.
Shampoo is expected to grow faster than Oils. Shampoo contribution is expected
to increase consistently.
 Within Boroplus, most of the growth has come from Boroplus Soap.
 Within healthcare, OTC had a challenge of high base in covid. Vitality products,
digestives are something on which company had started to focus since they were
not dependent on seasons.
D2C companies
 TruNativ and Man company have grown by roughly 27% YoY. Sales contribution
is expected to be around 4-5% from each in FY23.
The Man company has done breakeven on EBITDA in this quarter
Godrej Consumer Products

Outlook
 HI will be medium term accretive growth for GCPL going forward.
 Continuing category development and relevance-building initiatives in Air care.
 MAT credit will be availed in FY24/25.
 Palm oil prices- In recent past again stable and is nothing extra ordinary. GCPL is
passing on reasonable cost to consumer but palm oil is looking slightly
inflationary but significantly lower than last year.
 Net cash positive would be as on June end, which has been 2-3 months before
target which is still at marginally lower end.
 RCCL acquisition has been good so far and has been as per plan and by end of
FY24 the goal is to be EPS positive. Overhead synergy will flow in Q3 and high
single digit EBITDA margin targeting overall. And from Q4 onwards, things will
improve. Downstocking will continue in Q2 but not in Q3/Q4.
 GCPL is bullish on volume goals and has significantly moved money from working
capital to automation which supply chain needs in order to increase productivity.
Overall business
 The overall results were ahead of company's expectations.
 Gross Margin increased by 1,130 basis points YoY.
 Working Media Investment increased by 125% YoY.
 EBITDA Margins reached 25.0%, up 250 basis points YoY.
 Double-Digit UVG of 12% (Reported) and 10% (Organic).
 Home Care Volume Growth in the teens and Personal Care (Organic) in the mid-
single digits.
 Price deflation in soaps and currency depreciation in Nigeria impacted UVG.
 During the quarter company launched Magic Floor Cleaner.
Home Care
 Home care grew by 14%.
 Household Insecticides (HI) sustain double-digit volume and value growth.
 Performance led by strong growth in premium formats.
 Scaling up distribution of access packs of Goodknight Mini Liquid Vaporizer and

HIT No-gas Spray.
 Continue to drive category adoption and penetration for long-term sustainable

growth.
 HI had good season especially in North.
 HI growth was driven by weaker summer and extended season; impact of some
market development and non mosquito format done pretty well.
 HI is not a category where GCPL can say it is a potential victory category and has
to work more on it.
 HI will be medium term accretive growth for GCPL going forward.
Air fresheners
 Air Fresheners continue to consistently deliver strong double-digit growth.
 Aer continues to gain share and enjoy market leadership.
 Performance led by robust growth in Aer Pocket, Aer Matic and Car Range.
 Continuing category development and relevance-building initiatives.
Personal care
 Personal care grew by 2%.
 Personal Wash delivers high-single digit volume growth; value growth in low-
single digit as the benefit of lower input cost was passed on to consumers.
 Growth ahead of category led by effective media campaigns and micro marketing
initiatives.
 Magic hand wash delivers strong double-digit volume growth.
 Hair Colour grew in mid-single digits due to high base (launch of 15 Godrej Expert
Crème access pack); 2-year CAGR in teens.
 Growth led by steady performance across formats.
 Scaling up distribution of the access pack of Godrej Selfie Shampoo Hair Colour.
 Soaps category didn’t had same salience of local players 10-15 years ago, now is
a consolidated category and hence not major salience now.
 Margins in soaps have not crossed historic levels and GCPL's real goal is volume
growth in soaps category.
 Shampoo hair colour is a material and fast growing segment, in Q1FY24 the
company introduced INR15 pack in south which is gaining traction.
RCCL acquisition
 Integration of Park Avenue and KamaSutra brands on track.
 Primary sales were INR480mn crore and secondary sales were more than 2x of
primary sales.
 Improvement in channel hygiene underway – reduced channel inventory and

took stock returns.
 Kicked off category development initiatives backed by media investments.
 Completed ERP integration; distribution and manpower integration underway.
 RCCL acquisition has been good so far and has been as per plan.
 By end of FY24 the goal is to be EPS positive.
 Overhead synergy will flow in Q3 and high single digit EBITDA margin targeting
overall. And from Q4 onwards, things will improve.
 There was 1.5 months consolidation in numbers of RCCL.
 Initial run rate of RCCL was INR1500mn/quarter but due to downstocking led the
distributors sitting on 80-90 days inventory levels. Hence, taken return to large
tune due to down stocking leading to NSV lower than GSV.
 Downstocking will continue in Q2 but not in Q3/Q4.
International Business update
Indonesia
 Sales grew by 15% (constant currency) aided by structural initiatives taken last
year.
 EBITDA margins at 19.5%, up 420 bps YoY led by reduction in trade promotions
and scale leverage.
 EBITDA incl. Forex margin at 19.4%, up 410 bps YoY.
 Continue to focus on category development initiatives, increase media

investments and launch access packs to augment GT distribution.
 Inventory days came down from 95 days to 58 days.
Africa, USA and Middle East
 Sales growth of 16% in constant currency terms.
 Performance in INR terms was impacted by the devaluation of NAIRA.
 Continue to deliver healthy double-digit growth in FMCG categories.
 EBITDA margins at 11.8%, up 350 bps YoY led by gross margin expansion.
 EBITDA incl. Forex margin at 7.8%, up 140 bps YoY.
 Nigeria impact will be severe in upcoming quarters, due to accounting translation

effect.
 Price increase in Nigeria will be pass on to consumers.
 At NAIRA 450/USD entire translation was happening, hence accounting

translation will happen at current rate of NAIRA 750/USD and due to this overall
sales growth in INR will be impacted but not PAT.
 Blended rate was NAIRA 650/USD and this will move to NAIRA 750/USD hence
cost of purchase will increase which will get passed on to consumers, and out of
which partly is passed and more will get passed with a lag of 2 months.
Others
 MAT credit will be availed in FY24/25.
 Palm oil prices- In recent past again stable and is nothing extra ordinary. GCPL is
passing on reasonable cost to consumer but palm oil is looking slightly
inflationary but significantly lower than last year.
 Net cash positive would be as on June end, which has been 2-3 months before
target which is still at marginally lower end.
Capex of INR9bn
 GCPL has high scale in industries when operating in categories hence prefers
insourcing also many categories are differentiated with enough secret sauce and
high margins and GCPL has the capability to manufacture the same in-house.
 GCPL's lots of business are automated hence insourcing is preferred.
 Coil business in HI is outscored, rest majority of business is insourced.
 GCPL is bullish on volume goals and has significantly moved money from working
capital to automation which supply chain needs in order to increase productivity.
Hindustan Unilever
Q1FY24 performance
 HUL delivered a resilient and competitive performance in Q1FY24 with

Underlying Sales Growth (USG) of 7% and Underlying Volume Growth (UVG) of
3%. EBITDA margin at 23.6% was up 40 bps YoY. Profit After Tax before
exceptional items (PAT before exceptional items) grew 9% and Profit After Tax
(PAT) grew 8%.
 The company reported an EBITDA margin at 23.6%, which was up 40 bps YoY.
PAT (before exceptional item) was up 9% YoY. PAT at INR24.72bn was up 8% YoY.
Sequentially vs Q4FY23, gross margin was up 140bp and A&P was stepped up by
110bp.
 It continue to manage its business dynamically to drive savings harder and

provide the right price-value equation to its consumers. The company remain
focused on building back its gross margin and investing competitively in A&P.
 Urban continues to outpace rural, rural turned positive in this quarter, this
growth has come due to volume decline in base.
 Most commodities remaining stable. Within portfolio, do see some divergence

due to trade reducing stock levels.
 Increasing spends in digital now at pre-covid levels.
 Royal expense, salary increase, capability investment, led to YoY increase in total
expenditure
 The company reported a two-year CAGR volume growth of -4% for rural sector
while overall flattish growth.
 Coffee, milk, barely witnessed significant price inflation, peak Sep-22 company
has seen 600bp impact in GM,
 A&P is now at peak; however, price reduction and grammage increases have
been on the cards.
Home care
 Home Care delivered another quarter of strong performance with 10% revenue
growth and mid-single digit UVG. Both Fabric Wash and Household Care grew
double-digit led by focused market development actions and premiumization.
Comfort in Wardrobe Premium Fragrance Hangers, Vim Shudhham Cleaning
Spray and Gel were launched in the quarter.
 The double-digit growth was on a high base.
 Fabric Wash witnessed double-digit growth balanced between price and volume
Premium portfolio outperforms, market share gains continue.
 Household Care witnessed double-digit volume-led growth driven by

outperformance in Dishwash.
 Home care is a high-margin high growth market.
Beauty & Personal Care
 BPC delivered 4% revenue growth with mid-single digit UVG. All in BPC had
volume-based growth.
 Skin Care and Colour Cosmetics grew double-digit on the back of strong
performance in premium portfolio.
 Hair Care delivered mid-single digit UVG led by Tresemme, Indulekha and Clinic
Plus. Innovations and future formats continue to do well.
 Skin Cleansing had modest volume-led growth with Lux and Hamam continuing
to outperform.
 Further price reductions were taken in detergent portfolio in this quarter.
 Market development actions in bodywash continue to yield good results.
 Oral care delivered strong double-digit growth led by Close-Up. During the
quarter, Dove Men+ Care range, Indulekha Soap, Pond’s Anti Pigmentation
Serum were launched.
Foods & Refreshment
 F&R revenue grew 5% with near flat UVG.
 Tea saw modest volume led growth as the category continued to witness
consumers downgrading due to higher inflation in premium teas vis-à-vis loose
tea.
 HFD continue to grow competitively with both Horlicks and Boost performing
well.
 Foods grew in mid-single digit led by strong performance in Ketchup and Food
Solutions.
 Ice Cream grew in mid-single digit on an exceptionally high base. Unseasonal

rains impacted ice cream consumption in the quarter. Horlicks Millet Biscuits,
range of Knorr Chinese Sauces and Bru Cold Coffee were launched in the quarter.
 In HFD, most commodities are higher than expectations.
 Currently there is widening gap between premium tea loose tea, saw
downgrading in tea.
BPC
 Modest volume led growth in skin cleansing driven by Lux and Hamam. Price
reductions taken in soaps portfolio in Q3FY23 and Q4FY23. Market development
actions in bodywash continue to yield good results.
 Mid single-digit volume growth in hair care led by Tresemme Indulekha and Clinic
Plus, Innovations and future formats continue to do well.
 Double-digit growth in Skin Care and Colour Cosmetics driven by strong

performance in premium portfolio.
 Skin cleansing- shares are lower than 10–15 years, the segment that was not
making profit had to be rolled back; focus remains on competitive price value
equation.
 Largest player in skin cleaning, grown skin care 4x, huge opportunity to gain
market share, see up trading in skin cleansing,
 High digit growth in oral care led by Close-Up.
Business outlook for coming quarters
 Weather related risks continue- Impact on inflation and rural demand to be

monitored
 Gradual recovery in volumes- High levels of cumulative inflation, consumption to

recover gradually
 If commodities remain where they are, our price growth to be flattish/negative

in the coming quarters
 Competitive intensity to go up further, focused on growing our consumer

franchise and sustaining our volume growth momentum
 Right price value equation and building back gross margin § Step up in A&P
investments
 Gradual recovery in market volumes to mid-single digit.
 Last year had 11-12% pricing growth this year this would be flat or merely
negative.
 Weather term remains erratic, el nino heat waves impact, cropping of rice pulses
impact; consumer still facing high level of inflation, volume recovery to be
gradual.
Others
 Rohit Jawa, CEO and Managing Director commented that FMCG markets are
recovering gradually although the operating environment remains challenging.
 In this context, HUL has delivered a resilient and competitive performance whilst
stepping up its EBITDA margin.
Indigo Paints
Detailed takeaways
Outlook
 Indigo paints is back on the trend to grow at 2x to 3x of the industry growth rate,
and management remains confident of outpacing the industry growth.
 Waterproofing products have started to see good traction.
 Company has started work on a new water based paint plant at Jodhpur of
90,000 KLPA capacity, which is expected to be operational by the end of FY25.
 The company also implementing a solvents-based paint plant at Jodhpur of

12,000KLPA, which is expected to be operational during FY25.
 Strong growth momentum of Q1 has continued to flow in the month of July as

well.
 The company has witnessed high growth in July. Kerala has been seeing double-
digit growth.
 Indigo is focused on profitable growth.
 RM prices have continuously declined, but the company does not expect any
major change in the major and micro paint environment.
 Gaining market share in east and west India, Share of Kerala has been going down
the overall pie from 35% to 1-1.5% down every year. Today it is at around 28%
will now come to 25% by year-end.
 Expecting the sales growth to outpace the industry growth in the upcoming
quarters as well; Sales during July’23 has been exceptionally good.
 Sales growth in tier-1/2 cities ahead of tier-3/4, rural, and Indigo expects the
trend to continue.
 On the B2B front, Apple Chemie has started expanding the operations outside
the state of Maharashtra and has ramped up the sales and marketing team.
Business update
 Sales grew at more than 3x the industry growth rate.
 The company’s special focus on tier-1/2 cities along with various initiatives aided
sales growth.
 Company continued its advertising spends as part of its long-term brand building
strategy, and had launched a campaign to promote economy range of products.
 Comprehensive range of water proofing products was launched across the

country and that showing good sales traction.
 Trial production carried out successfully at new plant in Tamil Nadu and
expecting final few approvals for commercial production.
Q1FY24 (standalone)
 Q1FY24 Operational Income has expanded by 23.67% over Q1FY23, from

INR2.23bn to INR2.77bn.
 Gross margin expanded to 47.58% in Q1FY24 over 45.19% in Q1FY23 and 46.82%
in Q4FY23
 EBITDA and PAT have expanded by 35.31% and 57.15% respectively over Q1FY24
 EBITDA margin expanded significantly to 17.23% from 15.75% in Q1FY23
 PAT margin also expanded significantly to 11.15% compared to 8.87% in Q1FY23.
 Growth in Net revenue for the quarter at 3.0x-3.5x the industry growth of 6.5%-
7.0%.
 Gross margin continues to be the highest in the industry at 47.58%. Expecting

the gross margins to hover at high level for the rest of the year.
 The company continues to focus on brand building and spent INR21.05 Cr in the
quarter, which is largely similar to the quantum spent last year. But the expense
as a percentage of revenue decreased to 7.60% compared to 9.42% (in Q1FY23)
which contributed to the EBITDA margin.
Q1FY24 (consolidated)
 Subsequent to the acquisition of 51% of Apple Chemie, The company is now

presenting the consolidated financials in addition to the standalone financials.
 On a consolidated basis: - Sales growth was 28.76% on YoY basis.
 Gross Margin at 47.33% compared to 45.19% in Q1FY23.
 EBITDA Margin at 17.03% compared to 15.75% in Q1FY23.
 PAT Margin at 10.78% compared to 8.87% in Q1FY23.
Apple Chemie
 Indigo Paints and Apple Chemie have been working together to bring in synergies
in revenues, cost and finance.
 Apple Chemie has started expanding operations outside the state of

Maharashtra and has ramped up the sales and marketing team and in sometime
and be a PAN India brand.
 Apple Chemie itself has the capability to be a PAN India player; hence, company
will continue to works towards growing organically PAN India.
 Apple Chemie last year had INR400-420mn. Order book at the moment suggests
that company would do 40% or more growth in the existing geography and
existing customer base. It is expected to gather much higher momentum in the
second half of the year. A possibility of touching INR2bn in few years is very
feasible; however, the pace at which it can be achieved needs to be watched.
 The expansion of Apple Chemie is not expected to see any margin dilution since
the margins profiles are more or less similar to Indigo paints.
Ad spends
 Ad spends as a % of sales has dropped to 7.6% (versus 9.42% in Q1FY23). One

can expect this trend to continue going ahead.
 Going forward, there will be an increase in Ad spends as a whole number, but

the increase rate will be lower than the sales growth. As a result, ad spends as a
% of sales will be lower.
Distribution
 The company continues to focus on distribution expansion. Active dealers and

tinting machine count stood at 16,693 and 8657 respectively.
 The company added two more depots in North India to improve the distribution
efficiency and intends to open more depots going ahead.
Primers + Distempers + Others
 Primers and distempers are both low value products. However, distempers is of
much lower value.
 The volumes in distempers were higher than primers in Q1 as a result the overall
volume growth is higher than value growth.
Others
 Company has planned a phased expansion of sales force throughout the year.
 There is no separate team for selling waterproofing and construction chemicals.
 Growth in T1/T2 has been 1.5x the growth of small towns. By end of FY24, T1/T2
is expected to contribute 38-40% of top line.
 Dealer count and throughput per dealer were low in T1/T2 cities and company
has been working on it. Increasing throughput per dealer is a higher focus.
 Company does not intend to use credit as a tool to grow.
 The revenues reported as per Ind AS is net of all discounts.
ITC
Q1FY24 key highlights
Robust growth in FMCG – Others
 Segment Revenue up 16.1% YoY to exceed 5000 cr. in a quarter for the first time.
 Staples, Biscuits, Noodles, Beverages, Dairy, Agarbatti and premium Soaps drive
growth.
 Notebook sales continue to witness strong growth.
 Segment EBITDA margins at 11.0% (+325 bps YoY) ̶ Segment PBIT at 2.1x of LY.
Continued strong performance in Cigarettes segment
 Net Segment Revenue up 10.9% YoY; Segment PBIT up 11.2% YoY
Best-ever Q1 in Hotels business
 Segment Revenue up 8.1% YoY on high-base; Segment PBIT up 17.0% YoY.
 Strong growth in ARRs.
 Segment EBITDA margin up 140 bps YoY to 33.9% (+1640 bps over pre-pandemic
levels) driven by higher RevPAR, structural cost interventions & operating
leverage.
Agri Business segment revenue up 31% YoY (excluding wheat exports)
 Segment PBIT up 25.3% YoY driven by Value Added Agri products and Leaf
Tobacco.
Paperboards, Paper & Packaging segment
 Subdued demand conditions (domestic and exports), low priced Chinese supplies
in global markets, sharp reduction in global pulp prices and high-base effect
weigh.
 Lower realisations and sharp increase in input costs (viz. wood, coal) exert
pressure on margins.
 Segment Revenue down 6.5% YoY (2-yr. CAGR +16%); Segment PBIT down 22.9%
YoY (2-yr. CAGR +10%).
 Integrated business model, Industry 4.0 initiatives, strategic investments in pulp

import substitution, High Pressure Recovery Boiler and proactive capacity
augmentation in Value Added Paperboards partly mitigate pressure on margins.
Detailed takeaways
FMCG – Others
 Segment revenue up 16.1% YoY.
 Strong growth in staples, biscuits, noodles, beverages, dairy, agarbatti and

premium soaps.
 Education and Stationery Products business continued to witness strong

traction.
 Robust growth in both urban and rural markets.
 Strong traction witnessed in both traditional and emerging channels (viz. Modern
Trade, e-Commerce, Quick Commerce).
 Segment EBITDA margins expanded 325 bps YoY to 11.0%.
 Margin expansion driven by multi-pronged interventions viz., premiumisation,

supply chain optimisation, judicious pricing actions, digital initiatives, strategic
cost management and fiscal incentives.
FMCG – Cigarettes
 Net segment revenue up 10.9% YoY; segment PBIT up 11.2% YoY.
 Innovation & democratising premiumisation across segments.
 Several differentiated variants launched recently continue to perform well
 Market standing reinforced by fortifying the product portfolio.
Hotels business
 Strong growth in ARRs across properties drives revenue growth.
 Occupancy moderated on a high base due to relatively few wedding dates during
the quarter and pre-planned renovations.
 6 new hotels added to the ITC Hotels Group during the quarter.
 Healthy pipeline of management contracts under Mementos, Welcomhotel,

Storii, Fortune and WelcomHeritage brands - Phased openings over the next few
quarters
 Segment EBITDA margin expanded by 140 bps YoY to 33.9%; margin expansion
driven by higher RevPAR, curated packages, finest F&B offerings and strategic
cost management initiatives.
Agri business
 Strong growth in value added Agri products.
 Leveraging strong customer relations & agile execution and new state-of-the-art
value-added Spices processing facility in Guntur.
 Strategic sourcing support to Branded Packaged Foods Businesses – Wheat,

Dairy, Beverages and Spices.
 Restrictions imposed on wheat & rice exports in the backdrop of inflationary

headwinds and food security concerns weigh on Revenues.
 Robust growth in Leaf Tobacco Revenue and Margins.
 State-of-the-art facility at Mysuru for manufacture and export of Nicotine and

Nicotine Derivative products.
Paperboards, Paper & Packaging
 Subdued demand conditions, low priced Chinese supplies in global markets,

steep decline in global pulp prices on a high base and relatively muted customer
offtake in domestic markets (destocking) weighed on performance during the
quarter.
 Décor and Fine paper grades witnessed resilient performance.
 Sharp escalation in wood & coal costs; Integrated business model and strategic
interventions in import pulp substitution, High Pressure Recovery Boiler, digital
interventions and cost competitive fibre chain partially mitigated inflationary
impact.
 New business development is being accelerated in domestic and export markets

offering innovative and customised solutions, with special focus on consumer
electronics and sustainable paperboards and packaging.
 Sustainable Products portfolio continues to witness strong growth.
 Capacity utilisation at the recently commissioned Nadiad unit in Gujarat

continues to be ramped up progressively.
ITC Infotech
 Investments continue in Capability building in strategic focus areas and

infrastructure.
 DXP Services integration successfully completed.
 Consistent increase in Total Contract Value (TCV) signings - Commenced

execution on multi-year, multi-million dollar deals - A Leading Fortune 500 client
& A Top-10 global hospitality chain.
ITC demerger – Share entitlement ratio
 Unlike mergers/demergers involving different sets of shareholders, 100% of the

ultimate economic beneficial interest of the Hotels business shall remain with
ITC shareholders—60% directly, 40% through ITC.
 Consequently, the share entitlement ratio need not be determined based on fair
valuations of the companies concerned.
Marico
Overall
 Clear green shoots in rural is not yet visible.
 International business have been steady despite macro-economic and currency

devaluation headwinds in some of the geographies.
 Foods continued its healthy scale up with 24% value growth YoY, aided by steady
growth in core and newer franchises.
 Nearly, 85% of the portfolio either sustained or gained market share and
penetration on MAT basis.
 From Q2FY24, company will see reasonable improvements in the VAHO

portfolio.
 Deflation in Q1FY24 impacted parachute and copra prices are expected to move
sideways for few more months. Uptick in growth parachute would be probably
seen from Q2.
 In Q3/Q4, there will be better EBITDA margins without YoY cutting down on A&P.
 The deflation in Saffola oils (which led to up to 30% price cuts) is not expected to
happen in other quarters. The deflatoin numbers will keep on declining and in
second half, there should not be any deflation.
 The share of Parachute in modern trade channel is not low.
 Number of households that buy saffola oats is higher than saffola oil. All products
that are designed for saffola ensure that taste is a key differentiating factor.
 Company is investing in millets in a big way.
Demand environment
 Downtrend in retail inflation continues- Retail inflation at sub 5% levels
 FMCG volume growth stays in positive territory
 Pricing growth tapering sequentially; growth likely to be volume-led going ahead
 Higher pricing still weighing on rural demand
 Erratic weather patterns, early onset of El-Nino and spatial distribution of rainfall
could influence recovery in overall sentiment
Domestic business
 The company recorded a 23.2% consolidated EBITDA margin, 9% consolidated

EBITDA Growth and 12% Consolidated PAT Growth (excl. one-offs)
 ~85% of the portfolio either sustains or gains market share and penetration on
MAT basis pricing drops in key domestic portfolios and currency headwinds in
international markets subdue revenue growth.
 The company registered a 494bps YoY expansion on gross margins, 7% YoY

increase in A&P spends and 253bps YoY EBITDA margin expansion.
Core portfolios
 Parachute Coconut Oil (34% of Domestic Revenues), (-2%) volume growth and
(-5%) value growth.
 Saffola Franchise (Edible Oils + Foods) (24% of Domestic Revenues), (-13%) value
growth and a low double digit volume growth
 Value Added Hair Oils (25% of Domestic Revenues), ~20bps gain in value market
share and a flattish value growth.
 Higher share of voice driving brand salience and relevance across key portfolios
Healthy Scale-up in Foods continues
 The company gained a 42% value market share in Saffola Oats maintaining its
leadership position and it recorded a 25% growth in food value.
Foray into Plant-based Nutraceuticals through strategic investment in ‘Plix’
 With a Current ARR of ~INR1.5bn, Plix is committed to the mission of ‘Making

Nutrition Fun’. Extensive product range across Weight Management, Hair &
Beauty, Sleep and Lifestyle Nutrition categories. One of the leading players in the
online plant-based nutrition segment.
Premium Personal Care
 On course to contribute ~10% of domestic business in FY24
International Business
 International business records 9% CC growth in Q1FY24.
 Bangladesh: 9% Q1 CC growth across core and new portfolios
 Vietnam: 5%Q1CC growth; Economic slowdown impacts HPC category
 South Africa: 37% Q1 CC growth; Broad based performance
 Mena: 15% Q1 CC growth; Double-digit growth in Gulf region and Egypt Broad-
based performance.
Margins
 The blended margin of premium personal care and food should be similar to
company's core portfolio in sometime.
 Company is confident to cross the 20% EBITDA margin in FY24. On a full year
basis, GMs are expected to expand ~300bps.
 As the company scales up in foods, it will start working on improving margins in

the food portfolio.
 Premium personal care such as serums, male grooming and skin care have the
capability to generate higher EBITDA margins. In oats, company is confident to
achieve core business margins.
 Overseas margins are largely driven by gains in Copra pricing.
Pricing/volumes
 Company witnessed destocking by trade in Saffola Oils owing to a sharp fall in

vegetable oil prices (Company took price cuts to the tune of 30%).
 The pricing deflation in domestic portfolio has started to tape off, thus company
will start to see positive revenue growth in H2FY24.
Raw materials
 Copra prices declined by 8% sequentially and 7% YoY, aided by flush season

supplies.
 Prices should remain range bound with a slight upward bias in the near-term as
the seasonal supplies slow down and festive demand picks up.
 Rice Bran Oil (RBO) prices declined 16% QoQ and 38% YoY, in line with the sharp
correction in the international vegetable oil complex. Liquid Paraffin (LLP) was
flat and HDPE was down 15% YoY.
New acquisition – Plix
 Plix is majorly online. The current run-rate of INR1.5bn is impressive and

company will look at going to Omni-channel when it feels comfortable.
 The burn rate of Plix is lower than other D2C startups in similar business; it
mirrors Beardo.
 Company does want to run the business like its core categories because D2C
brands need to have a different strategy.
 Nutraceuticals and wellness is an exciting category for Marico.
 While acquisitions, things such as capital allocation, compliance and quality of

product is non-negotiable.
 In India, plant based protein is expected to be a big market.
 Company looks at companies which have a high repeat rate and good rating on
e-commerce platforms.
 Gross margins of Plix is high. Plix brand can afford to have a digital first model,
given that it has high gross margins.
Economic outlook
 Volume trends in the FMCG sector seem to be improving; incremental green

shoots in rural still awaited.
 Healthy offtakes along with market share and penetration gains across key
categories; indicating likelihood of uptick in volume growth in coming quarters.
 Domestic volume growth resilient, despite material impact of one-offs.
 International business sustained its strong growth trajectory.
 Robust expansion in gross and operating margins, while making adequate A&P
investments to maintain SoV>SoM
Outlook for FY24
 Expectations of a gradual volume recovery, especially in rural, remains intact.

However, the impact of erratic weather patterns on agri-incomes to be
monitored.
 Foods and Premium Personal Care on course to contribute ~20% of domestic

revenues (<10% in FY21).
 Growth uptick in Parachute CNO and VAHO from Q2. Saffola Oils to stay stable
amidst volatility in vegetable oil prices.
 With incremental gross margin tailwinds in Q1, expect highest ever operating
margin (20%+) in FY24.
 Pricing decline to taper off from Q2 onwards. Revenue growth to move into
positive territory in H2.
 Growth momentum in International to continue.
Nestle
Product groups’ performance – Q2CY23 (domestic)
Prepared Dishes and Cooking Aids: Registered double-digit growth driven by MAGGI
Noodles and aided through distribution expansion and impactful consumer
activations.
Milk Products and Nutrition: Delivered strong double-digit growth despite
inflationary pressures. Growth driven by Milkmaid and Peptamen. Growth was
further aided by the launch of Resource Fibre choice and Everyday Zero added sugar.
Confectionery: Registered double-digit growth led by KITKAT and MUNCH.
Performance was supported by strong consumer engagement and media
campaigns.
Beverages: The product group registered robust double-digit growth led by greater
household penetration NESCAFE Classic, NESCAFE Sunrise and NESCAFE GOLD for
both hot and cold coffee occasions. NESCAFE continued the journey of innovation,
with the launch of cold coffee premix NESCAFE ALL-IN-1 FRAPPE.
Petcare Business: Continues to provide complete nutrition for cats and dogs. Felix
has received positive feedback from trade and cat parents.
Commodity outlook
Commodities such as edible oils, wheat and packaging materials have been in the
lower price range. A reversal of price trend is noted in fuels with prices softening in
second quarter after reaching higher level towards the end of quarter one. In fresh
milk, there has been price stability. Robusta prices are elevated and are expected to
remain volatile.
New launches
 Nestle Launched three notable new products in the Indian market - Resource
Fiber Choice, a unique and effective gut health solution that is proven to help
relieve constipation and improve gut health, Everyday Zero - the dairy whitener
with no added sugar and MUNCH Breakfast Cereals.
Pidilite
Ooutlook
 Current quarter's revenue growth is primarily driven by robust volume growths

in Domestic Consumer & Bazaar ('C&B') businesses.
 In the near-term growths will largely be volume led.
 A good monsoon, increased construction activity and stab e input prices enable
us to look at the future with increased optimism.
 We remain committed to drive profitable volume growth through investment in

our brands with enhanced customer engagements and build resilient and agile
supply chain.
 Targeting EBITDA margin of 20-24%.
 PIDI is seeing demand uptick in wood adhesives, 2/3rd demand is renovation and
balance is new construction.
 From demand perspective whole construction sector seeing an upturn and

people are willing to invest more in homes.
 In India B2B growth is healthy due to government spending in construction.
 Quite optimistic about next 6 months, long festive season and stable input prices.
VAM prices will go around 1000 in next 6 months
 Crude will have 2 quarters impact, current buying is at USD900/ton current

consumption is at USD1100/ton
 July month was disruption - 7 plants in HP close to Chandigarh had closure and
had consolidation for warehouse at Ambala, however in August September not
have further disruption.
 Consistently investing 3.5-4% of sales in capex
 The pioneer category will be 60/40 by end of year.
 Greater focus on brand building and will remain on higher levels.
C&B
 Domestic C&B registered broad-based growth across categories/ geographies

with underlying volumes growth of 11.7%.
 Consumer & Bazar Segment ('C&B') grew by 9% with Domestic C&B business
registering double digit revenue and Underlying Volume Growth
 However, Exports C&B products declined due to challenging demand conditions

in the overseas markets.
 Domestic subsidiaries continued to deliver robust sales growth driven by C&B

businesses. EBITDA margins also improved.
 Price premium stands at ~10-15% in wood adhesive area, however this quarter
reduced prices given vam prices declined but still maintains the premium price
band on lower prices as well.
 From demand perspective whole construction sector seeing an upturn and

people are willing to invest more in homes.
 The company is expanding in tiles adhesive space.
B2B
 B2B registered single digit revenue decline, largely due to lower exports and
lower demand from export-oriented industries.
 B2B – exports majorly to US and Europe of which US market is optimistic and is

little more part of exports
 Nepal is suffering tremendously forex shortage,
 Bangladesh is suffering from lack of forex and also Eid came in same quarter
hence lot of holidays.
 In India B2B growth is healthy due to government spending in construction.
Performance overview
 Current quarter's standalone net sales growth of 6.2%, on a previous year higher
base (QI 23: 62.5%), was driven by strong Underlying Volume Growth of 7.9%
(UVG: Volume growth including impact of change in product mix).
 Consolidated net sales growth of 5.6% was driven by C&B growth.
 Gross Margins continued to expand both sequentially and YOY, mainly on

account of moderation in input prices along with operational efficiencies. Part of
these gains were reinvested in the form of increased A&SP spend and other
growth-related initiatives.
 Domestic subsidiaries continued to deliver robust sales growth driven by

businesses with improved EBITDA margins.
 Part of gains were reinvested in A&P spends which stood at 3.6% compare to
2.1% in base quarter.
 The product mix is pretty much in line hence reporting UVG.
 Material cost squeeze led to gross margins expansion.
 In Enamels, PIDI has made progression and volume growth will be key driver.
 PIDI’s Genie app contributes ~25% of sales.
International subsidiaries
 International subsidiaries (excl Pidilite USA Inc.) sales were in line with previous
year, largely due to uncertain economic conditions, currency devaluation
challenges in some countries & local inflation pressures with flat EBITDA.
Urban rural markets
 The Urban & Rural markets grew in double digits with rural markets continued
to grow faster, signalling a gradual recovery in the rural economy.
 In last 12 months added 17,000 villages. In home improvement PIDI has deepest
distribution with 8000 PKDs in villages , each is launching new innovation will
hope to go subsn in nextx 12 months, volume gtowth will be key, in enamels
made progress through digital more than 25% of sales through genie app.
 Rural growth rate was 1.5x the urban in this quarter.
 Margin discounts for urban are similar to rural.
 Frieght and logistic higher in rural. Urban business is tend to be higher on scheme
and discount due to competition intensity.
Raw material prices
 VAM has corrected from USD2200/ton levels to USD1150/ton levels.
 Current VAM prices are in the range of USD850-900/ton
 Quite optimistic about next 6 months, long festive season and stable input prices.
VAM prices will go around 1000 in next 6 months
 Crude will have 2 quarters impact, current buying is at USD900/ton current

consumption is at USD1100/ton
Waterproofing
 Waterproofing is strong and growing healthy.
 Waterproofing is 15 -18% of sales
 Most paint companies have reclassified their traditional paint products as

waterproofing.
 Every paint company has different waterproofing, PIDI uses new construction
and renovation,
 Paint companies sell most renovation and less construction- 9/10 consumer
named Dr fixit in waterproofing product,
 In organised construction - 7/10 building using water proofing, in India housing

its 4/10 in urban and 2/10 houses in rural
Others
 Working capital situation is healthy and PIDI has a healthy cash position.
 Seven manufacturing plants opened in this CY - 2 for roff; 2 for construction

chemical and 1 each of JV businesses.
 Looking for initiatives in AI – aims to add 3-4 manufacturing facilities per year.
 On its premium front ICA pidilite is a strong and has minimum price point 750/ltr.
 Every year PIDI will add one or more category across portfolio.
 For Paints, its early days and difficult to say.
 Consistently investing 3.5-4% of sales in capex
 The pioneer category will be 60/40 by end of year.
 Greater focus on brand building and will remain on higher levels.
 4yrs ago very small player in tile adhesives and now no2 player
 ICA pidilite business is now close to INR4bn and reaching benchmarks.
In July, 7 plants in HP close to Chandigarh had closure and saw consolidation for
warehouse at Ambala.
Tata Consumer Products

Overall
 The company had another strong quarter with consolidated revenue growth of
12% (11% constant currency) driven by strong growth in India business.
Consolidated EBITDA grew 19%. During the quarter, India Beverages grew 10%,
with tea volumes growing 3% YoY. NourishCo continued its momentum with a
60% revenue growth YoY. India Foods grew 24%with volumes up 6%.
 Tata Sampann delivered yet another strong quarter, growing 51% YoY.
International business recorded 7% revenue growth (-4% ex-acquisitions in
constant currency), with EBIT growth of 11%. Tata Starbucks opened 16 new
stores during the quarter. Its top line grew 21% YoY.
 It continued to drive “India Growth” businesses –combined, they grew 58% and
accounted for 20% of the India business during Q1FY24.
 While volume market share in tea was slightly lower on a MAT basis, it was
broadly stable vs the same quarter last year. While the Tata Salt franchise gained
share, overall salt market share saw a marginal dip led by the lower-priced
brands in the portfolio.
 At the company level, the EBITDA margin expanded by 80bps YoY, led by
improvement in both the India as well as International business. The profitability
profile of the company’s growth businesses improved significantly, primarily led
by NourishCo.
 The company continued to invest behind its brands with A&P-to-sales for its India
Branded business at 7.1%
 This was yet another busy quarter in terms of new launches with Innovation-to-
Sales at 5%. Tata Soulfull entered several new categories.
 It is strengthening distribution in Rurban towns and are on track to reach 4m

outlets (numeric reach) by Sep’23.
 Decent volume and market share in tea and salt helping in driving the whole
portfolio.
 Q- commerce- has been in upswing in last 7-8 months, however cost economies
should work in order to scale up further. Q-commerce growing stronger than
average , online space in tea business TCPL is market leader.
Progress on S&D; momentum continues in alternative channels
 On track to reach 4m outlets by Sep’23, effectively doubling its total reach since
Sep’20.
 The company continued to increase bandwidth at the front end through split
routes for salesmen in Ten Lac Plus Population (TLP) towns. The results have
been encouraging so far.
 Rurban focus – expanding direct distribution in smaller towns by upgrading sub-

distributors/appointing new distributors.
 The company recorded a revenue growth of 22% in Q1FY24 through modern

trade and 28% through e-commerce
Tata Soulfull entered new categories with exciting new launches, expanding its
Total Addressable Market (TAM)
 NutriDrink+ Kids is a smoothie mix with the goodness of 6natural grains

sweetened with Jaggery in mouth-watering flavors designed for kids.
 NutriDrink+ offers grain-based drinks in two flavours, Almond and Cocoa Lite. It
is aimed at adults and offers 10g of protein per serve.
 Millet Granola, packed with 20% crunchy millets and 24% Fruit & Nut, launched
to complement the existing Muesli range further strengthening its offerings in
the premium cereal category
 Tata Soulfull Oats+ is a plain oats + 20% millets offering, that can be prepared in
under 5 minutes, and offers the benefits of high fiber, high protein, and lasting
energy.
 Tata soulful- strong brand, product and team, led to significant improvements in
market share, it has mid to high single digit market share range in cereals, masala
oats has strong double digit market share
 Soulfull margin are better than entire portfolio.
Continuing the momentum on innovation
 Tata Coffee Gold Cold Brew: Steeped for more than 12 hours for a strong, rich
velvety taste. Launched in 3 flavours–Mocha, Classic and Hazelnut.
 Tata Spring Alive: Pristine packaged water with natural minerals intact,
competitively priced.
 1868 Range Extension and Tea Bags: Adding to its premium 1868 range with 4
variants of milk teas and 3 green teas. Launch of tea bags ensures flavits with
convenience
 Tata Sampann RavaIdli, RavaDosa: Popular breakfast mixes to offer its

consumers healthier options in a convenient format
 Tata Sampann Daliya: Launched raw Daliya, marking its entry into a highly salient
category in the North making it the perfect fit for Tata Sampann
 Tata Sampann South Hing: Expanding its range of South Spices with a high value
product –Asafoetida Powder (Hing) in line with its hyperlocal strategy
 Tata Sampann Yumside International Cuisine: Global cuisine-based RTEs viz.

pastas, noodles are currently only offered by Yumside in the Indian market and
are a strong differentiated play
Key commodities’ movement
 North India tea prices increased in line with annual trends, as it entered the
plucking season. Prices were 7% lower YoY.
 South India tea prices during the quarter were 11% higher YoY.
 Kenyan tea prices remained range bound sequentially
 Arabica prices for the quarter saw a slight uptick QoQ but were 17% lower YoY.
 Robusta saw a sharp increase with average prices for the quarter reaching
$c119/lbs owing to tight global supplies, up 27% YoY.
 Some signs of softening in coffee coming up.
 Last year, tea prices were on reverse trend , flat to marginal down tread in tea is
witnessed.
 Salt - total cost to come down a bit (imported coal and dollar price -stable, brine
has seen uptick). Price cuts not happening as of now since no cuts anticipated. .
Broadly playing in a flat cost environment. Have the ability to recover the 33%
hike once the prices play out.
India packaged beverages
 Revenue for the quarter grew 2%,with 3% volume growth, recording another
consecutive quarter of positive volume growth.
 This brings the 4-year revenue CAGR of the business to 7% in Q1FY24.
 Tata Tea Premium and Tata Tea Agni, two of its largest brands, experienced
robust volume growth during the quarter. This indicates a strong demand for its
tea products and reflects positively on its market position.
 TCPL (Tata Consumer Products Limited) has successfully retained its market
leadership in the e-commerce channel for the 26th consecutive month. This
achievement highlights its company's ability to adapt to the digital landscape and
maintain a competitive edge in online sales.
 The revenue from its coffee segment demonstrated impressive growth, showing
a YoY increase of 21% during the quarter. This growth signals a favorable
response from consumers towards its coffee offerings and represents a
significant contribution to its overall financial performance.
 In the modern trade channel, the tea segment of the company achieved a growth
rate of 1.7 times the overall category growth, reflecting the strong performance
and increased market share of Tata Consumer Products Limited in this
distribution channel. This outperformance indicates the successful execution of
its sales and marketing strategies, which have resonated with consumers and
helped us gain traction over its competitors.
 Tea crop has not been great due to heatwaves, tea margins are not where they
should be, will take one more quarter to normalise.
India Foods
 Salt revenue recorded a substantial growth of 18% during the current quarter,
despite being compared to a high base from the same period last year when salt
revenue grew by 20% in Q1FY23. This performance showcases the resilience and
consistent demand for its salt products in the market. With this quarter's growth,
the 4-year revenue CAGR (Compound Annual Growth Rate) for salt now stands
at an impressive 17%.
 Tata Sampann, its product line offering various food products, delivered an
exceptional performance during the quarter, achieving a remarkable 51% year-
on-year growth. It is worth noting that this impressive growth occurred on a
relatively softer base, considering that in Q1FY23, the growth for Tata Sampann
was 6%. This significant growth indicates the successful execution of its business
strategies and highlights the increasing popularity of Tata Sampann among
consumers.
 The salt business margin remained within the normative range during the
quarter. This stability in margins demonstrates its ability to effectively manage
costs and maintain profitability in the highly competitive salt market. Despite
market fluctuations, its focus on operational efficiency has allowed them to
sustain healthy margins in this segment.
 The Tata Soulfull portfolio, which encompasses a range of nutritious and

innovative food products, continued its strong trajectory during the quarter. The
growth was driven by distribution gains for the existing portfolio, indicating
successful efforts to expand its product reach across various markets.
Additionally, the introduction of new and innovative products further
contributed to the brand's growth and consumer appeal
 investment thesis- Will not be category creators and will rather introduce a brand
in the existing category. Shipping out one more category in next 96 hours. TCPL’s
core has to do very well before they expand.
 Salt volume stood at 5% in Q1FY24.
 TCPL is focussing both on spices and pulses. From the margin perspective since
the margin in spices is significantly higher than in pulses. TCPL is the only
company in India to offer pulses. It takes time to move consumer habit.
Frequency of purchases of blends is lower than pures . South requires a different
tweak in spices.
 EBITDA margins in spices are significantly higher than pulses but spices is a sticky
category especially blended, wherein frequency of purchase is lower.
 Spending money on brand building for Sampann.
NourishCo (100% subsidiary)
 The business demonstrated a robust revenue growth of 60% during the quarter,
even when compared to an elevated base of 110% growth in Q1FY23. This
impressive performance is particularly noteworthy considering the adverse
weather conditions during the period, showcasing its ability to overcome
challenges and capitalize on opportunities in the market.
 The brand’s flagship drink, Tata Gluco+, continued to thrive, registering a

remarkable growth of 61%. This indicates the product's strong acceptance
among consumers and the effectiveness of its marketing and distribution efforts.
Additionally, Tata Copper+ also performed exceptionally well, achieving a growth
rate of 71%, further solidifying its position in the market for these products.
 The business's profitability showed significant improvement, primarily driven by

effective cost management strategies and operating leverage. These measures
enabled us to optimize costs while capitalizing on increased sales, leading to
enhanced overall profitability for the business.
 The ongoing efforts in GTM (Go-To-Market) expansion and capacity addition

have been instrumental in further establishing and strengthening its national
footprint. These strategic initiatives have allowed us to reach new markets and
expand its reach, making its products more accessible to consumers across the
country.
 Tata Gluco+ Jelly, one of its innovative product offerings, experienced its highest
production and sales in Jun'23. This exceptional growth can be attributed to the
successful ramp-up of production capacity, enabling us to meet the increased
demand for this product. The positive response from consumers reflects the
appeal of this unique offering in the market.
 Its new product developments, Tata Spring Alive, and Tata Coffee Cold Brew have
seen a strong initial response from consumers. These products have been well-
received in the market, indicating that its innovation efforts are paying off and
resonating with customers' preferences. The encouraging reception to these
new products bodes well for their future growth and success.
 In water category TCPL’s market share is not even mid single digit, so lot potential
to grow
 NourishCo is contribution margin is inching up and hence is EBITDA accretive, By

end of this year NourishCo will be profitable.
 Copper plus is 40% of NourishCo portfolio
 Hypothesis in NourishCo business was great differentiated products which could

lead to portfolio and geographic expansion and is in 70-80% in India. Not gonna
travel more than 200km with products because the freights are expensive.
Expanding the mineral water play. Target for this year is to hit a fits digit number.
 NourishCo has expanded distribution significantly-in 80 % of the country. Long

way to go in distribution expanding portfolio. Remain confident to continue to
deliver strong numbers in NourishCo.
Tata Coffee (subsidiary)
 The overall revenue for the quarter exhibited a solid growth rate of 11%, driven
primarily by the outstanding performance of the plantations business.
 The plantations business showed exceptional growth, with a remarkable 31%

increase in revenue during the quarter. This growth was primarily attributed to
higher sales of Arabica coffee and increased revenues from coffee trading
activities.
 Despite facing challenges due to unprecedented inflation in coffee prices, the

extractions business managed to achieve a moderate growth rate of 2% year-on-
year. The impact of higher coffee prices on demand was a significant factor
influencing the growth in this segment.
 The Vietnam business delivered strong results, with robust sales and improved
profitability. The performance was bolstered by increased sales of premium
products, indicating a positive response from consumers.
 The overall profitability of the business improved significantly, thanks to higher

realization from sales and effective cost management efforts. These factors
combined to drive better financial performance for the company.
 The process of obtaining regulatory approvals for the proposed merger of Tata
Consumer Products Limited (TCPL) with Tata Coffee is currently underway. The
matter is in its final stages of the process and is being reviewed by the National
Company Law Tribunals (NCLTs). This merger is expected to have significant
implications for both companies, potentially leading to increased synergies and
strengthening their positions in the market.
 Tata Coffee Vietnam was recognized for its commitment to food safety and
excellence. The company received the prestigious "Food Safety Excellence
Award" from the Confederation of Indian Industry (CII) at the 13th CII Food safety
awards. This recognition highlights Tata Coffee Vietnam's efforts and dedication
to maintaining high standards of food safety, ensuring the quality and safety of
its products.
Tata Starbucks (JV)
 The company's revenue experienced substantial growth, increasing by 21% year-

on-year during the quarter. This significant growth indicates a strong
performance and increasing demand for the company's products or services.
 The company expanded its retail presence by adding 16 new stores and
successfully entered fits new cities during the quarter. This strategic expansion
into untapped markets and cities represents the company's commitment to
reaching a wider customer base and capturing new opportunities for growth.
 Despite the significant addition of new stores, the business managed to remain
EBIT (Earnings Before Interest and Taxes) positive during the quarter. This
positive financial performance highlights the company's ability to efficiently
manage costs and generate profits, even in the face of rapid expansion.
 My Starbucks Rewards loyalty program tender was at 25%.
International operations
UK
 In constant currency terms, the revenue for the quarter experienced a modest
growth of 1%. However, when reported, the revenue growth was more
substantial, reaching 6%. This indicates that fluctuations in currency exchange
rates might have affected the revenue figures, but overall, the company showed
positive growth.
 The company's three brands, Tetley, Teapigs, and Good Earth, all gained valuable
market share during the quarter. This demonstrates the effectiveness of the
company's brand strategies and their ability to attract and retain customers in a
competitive market.
 The benefits of the restructuring initiatives undertaken by the company are

starting to materialize. The positive impact of these restructuring efforts is
becoming evident, likely leading to improved operational efficiency, cost savings,
and enhanced overall performance.
USA
 Coffee revenue for the quarter experienced a decline of 5%. This decline can be
attributed to the lapping of previous price increases and continued softness in
the coffee category, which impacted overall sales.
 Tetley, one of the company's brands, continued to outperform the mainstream

black tea category during the quarter. This suggests that Tetley's products were
well-received by consumers, leading to a higher market share and better
performance compared to other black tea offerings in the market.
 Teapigs, another brand owned by the company, demonstrated significant growth

that outpaced the specialty tea category in both volume and value terms. This
strong growth indicates the brand's popularity and success in attracting
consumers within the specialty tea market segment.
Canada
 The company's revenue for the quarter experienced a decline of 7%, primarily
due to softness in the tea category. The challenging market conditions and lower
consumer demand in the tea segment contributed to the decrease in revenue.
 Despite the overall decline in the tea category, Tetley, one of the company's
brands, continued to outperform the regular tea category during the quarter.
This suggests that Tetley's products maintained their competitive edge and
attracted more consumers compared to other regular tea offerings in the
market.
 The company confirmed the listing for the launch of Live Teas 2.0 in Metro and
Walmart. This listing signifies that the new product offering, Live Teas 2.0, will be
available in these prominent retail chains, which could potentially open up new
growth opportunities for the company.
Outlook
Macros
 The company has observed improving demand trends for its core categories,
which is a positive sign for its business. However, it is cautiously optimistic about
the future, as it is subject to factors like rural recovery and a normal monsoon,
which can impact consumer behavior and demand patterns.
 On the global front, inflationary pressures appear to be reaching a plateau.

Nevertheless, its needs to closely monitor the demand trends in its key
international markets. Global economic conditions, changing consumer
preferences, and any further inflationary pressures in these markets may
influence its sales and performance in those regions.
 No significant disruption in supply chain and logistics due to heavy rains.
Business
 In Q1FY24, the company achieved impressive double-digit topline growth, and

there was also an expansion in the EBITDA margin. This indicates that the
company's revenue is growing at a healthy rate, and its operational efficiency is
improving.
 The interventions implemented for the India tea business have yielded positive
results, resulting in volume-led growth. However, the volume growth is still
below the company's medium-term aspiration, indicating room for further
improvement in this segment.
 Despite steep price increases taken earlier, the salt business has seen volume
growth. For the remainder of FY24, growth in the salt business is expected to be
driven by volumes and premiumization, which indicates a focus on high-quality
products and capturing higher-value market segments.
 The company's "growth businesses" have shown strong performance and

significantly increased their contributions over the past few years. Nourishco, the
RTD (Ready-to-Drink) business, continued its standout performance despite
adverse weather conditions, demonstrating resilience and market success.
 The joint venture with Tata Starbucks has been performing well, with a growth
rate of 21% during the quarter. This joint venture now has a considerable
presence with 348 stores across 46 cities, reflecting a successful partnership.
 In the international business, pricing actions and structural interventions have

led to sequential improvement in margins for three quarters. However, demand
softness remains an area to watch, suggesting a need for continued attention to
market dynamics in international markets.
 The integration of the Tata Coffee business is expected to be completed in this

financial year after receiving NCLT approval. This integration may further
contribute to the company's growth and performance.
 Despite continuing investments in new businesses, the EBITDA margin has

improved. The company will maintain its focus on driving profitable growth in
the future, indicating a commitment to sustainable financial performance.
United Spirits
IPL
 Royal Challengers Sports Private Limited (RCSPL) is the only operating subsidiary
of UNSP. It has stepped up earnings, driven by revenues from the Indian Premier
League the new media rights cycle.
 The first 10 years of men's IPL were at EBITDA loss, and later on it turned EBITDA-
positive. In eight years, even women's team is expected to touch the inflection
point, and break even or become profitable.
 UNSP generated nearly INR3bn in profit from men's IPL and INR900mn loss from
women's IPL. This is expected to stay for next 5 years.
 The IPL profit and loss gets set once in 5years, the biggest drivers is media rights
and sponsorships. On a worse case, this PNL is expected to remain flat.
Demand:
 Company witnessed robust performance in P&A segment. P&A segment volumes

grew by 10.3%.
 Lower prestige and Popular segment remained under pressure due to inflation
impacting consumers. This part has been under pressure since few quarters.
 Consumption was resilient in April to June quarter. Q1FY24 is the weakest
quarter for company but company has fared well in this quarter.
 Beer category has come back quite strong post covid, but spirits continued its
momentum even post covid. Consumers have become much acceptable in terms
of trying out new trends.
Karnataka tax hike
 Duty increase in states are not a welcoming move.
 Tax rates in Karnataka are already higher and a 20% tax increase means that
UNSP's brands price will be up by 14-15% with no benefit to the company.
 Experience suggests that there could be a negative impact with such an hike and
it could put pressure on Karnataka volumes.
Wipe-out of accumulated losses
 Company has successfully wiped out accumulated losses in Q1FY24.

Management had highlighted earlier that once UNSP wipes out accumulated
losses, company will look at formulation of a dividend policy to give back to
shareholders.
 However, company will continue to identify any growth opportunities and utilize
the cash when needed.
P&A
 This is the second consecutive quarter of double digit growth in P&A segment.
 100% normalization of BIO has happened in this quarter, along with ramp up of
innovations/renovations has helped the company achieve this.
 Company's focus will be to juice out the benefit from innovation and renovation
as much as possible.
A&P
 A&P is an important component and company will continue to invest in A&P.
 BIO portfolio has returned as per expectations and the company started to put
back investments in A&P for BIO.
Margins
 Reported Gross margin was 43.6%. Excluding the one-off benefit of INR130mn
driven by a write-back, underlying gross margin stood was 43.0%, continuing the
sequential quarter-on-quarter improvement.
 On raw materials front, ENA continues to be under inflation. Glass is completely

a sellers' market and there is a consolidation happening in the industry. April and
May has been inflationary. High Inflation in glass started in August and
September. Furnace oil has come down but not as much as company expected.
As crude comes down, it is expected to come down.
 EBITDA margin stood at 17.7%. This was largely driven by gross margin expansion
and productivity across the value chain.
Others
 Company remains confident on guidance of double digit top-line growth.
 Multi-year supply chain agility programme is on track.
 60% of other expenses are variable and it would change based on volumes. The
balance 40% are fixed corporate overheads.
 Company is optimistic of UK-FTA deal to flow through. If the 150% duty goes
down to 100%, there would be a 5% change in prices; if it goes down to 50%, one
can see 12-15% impact. However, whenever it comes through it will have a
positive impact.
 Salience from Karnataka state (popular segment) has reduced post sale of the
popular portfolio.
 North is 60% of company's national scotch market. The share of growth of North
is highest in the overall algorithm.
 The executives have a combination of stock appreciation rights of UNSP and

Diageo, while for the next year it is stock appreciation rights of UNSP.
 Spirits markets as a whole is in mid-single digit. In Short to medium term, mid-

single digit growth is expected to stay.
 Launched Godawan 100 in May 2023. Company received good response for
Godwan 100 and it fetched upwards of INR90,000/bottle
 Royal challengers has expanded its reach in Orrisa and Chandigarh. It is now in
80%+ salience markets.
 Antiquity has reach 50% salience of market. Johnnie walker blonde was one of
the biggest premium launch. Now available in 9+ states and focus would be to
expand markets.
Healthcare
Apollo Hospitals
Hospitals
 Last year OP was higher as it had covid patients as well. Like-to-like basis, there
is growth. Tamil Nadu: OP growth lower due to holiday season and travel
restrictions. Jul’23 looking good. Occupancy is picking up.
 ARPOB: FY24: INR60,000 sustainable at healthy levels.
 Payor mix: pre-covid versus now: Self pay 40% to 45%. Insurance 25–28% to 44%.
After Delhi: IPS ,which is now 7%, is 15% in Delhi.
 IP volumes grew 6% YoY.
 Occupancy: will take more time to reach to 70%. No capex required. Bed addition
will not impact occupancy. Adding beds in Calcutta and Bangalore, where
occupancy is already 75%. Gurgaon will come year after that where occupancy is
72%.
 Mature hospital margin: Increase in surgical mix which has resulted in higher cost
of materials. This is aided by higher insurance patients given their high
propensity to pay. Doctor fees related to this went up this quarter. Taken tariff
correction in middle of this quarter. Next quarter should go up.
 New hospital margin: lower due to higher surgical mix, increase in marketing
spends, and clinical talent for future growth.
 Indraprastha: occupancy 72%. Hired doctors. Performance improved. There will

be some capex on that land. Looking to expand in that region.
Apollo HealthCo – pharmacy/24/7

 Reasons for lower GMV growth QoQ or lower take rate: 1) Lower discount of
13.7% resulting in lower pharmacy sales. 2) <INR200 bill value – let go of the
system. 3) Pincode – logistic or fulfilment cost did not make sense. 7-10% dip in
pharmacy revenues.
 GMV split Q1FY24: Pharmacy: INR3.5bn. Diagnostics INR300mn. Remaining from

IP/OP business and teleconsultation. Q4FY23: Pharmacy INR3.75bn. Diagnostic
INR220mn.
 Take rate declined from 42-43% to 33%. Expect to improve in July-23. 35-40%
take rate in Q2.
 24/7 cost to GMV ratio: FY24: 20-22%. 28% in Q1FY24. 32% in Q4FY23. Cost will
come down. On track to achieve operational breakeven by Q4FY24.
 Discounts: 160bps-200bps difference between online and offline earlier.

Curtailed online discounts so as not to confuse customers. Offline: 12–12.5%;
Online:13.7%.
 Average order value has also gone up.
 Combined pharmacy grew by 24% YoY. EBITDA margin pre Ind AS: 2.5-3% (Added
1000 stores in FY23 which will take 12-15 months to breakeven). FY24: 500-600
stores.
 Transacting user base: Q4FY23 990,000.
Financials and others

 Tax rate: 25% standalone. Bengaluru and Lucknow– new tax regime next year.
Consolidated – higher as not paying tax due to losses in Apollo HealthCo.
 Ind AS 116 impact: INR300mn in healthcare services and INR280mn in AHLL.
 AHLL –margin impacted due to drop in network growth and specialised

manpower. Going forward should improve.
Dr Lal PathLabs
Business highlights
 10% non-covid growth was largely realisation led- 3% price hikes; 2.5% volumes
and balance is mix.
 Reported 6.1% growth in samples. 6.9mn patient visits; this was flat YoY on
unusually high base of last quarter. Over last 4-years, organic patient growth has
been 7%. Patient visits were lower this quarter. Contemplating whether this was
because of price increase. Trends are improving though. Bundled packages could
be reason why patient visits are lower. Annualised basis may see smart recovery
in volumes.
 INR789 realisation per patient vs INR727 last quarter +8.6%. This was higher due
to higher Swasthfit contribution, price hikes and test mix. 3% price hikes benefit
to revenues.
 Revenue per test will always decline as Swasthfit contribution increases. But
revenue per patient going up. Test per patient has gone up sharply due to higher
Swasthfit contribution.
 Do not think 27% margin is sustainable. H1 margin are usually higher than H2
due to better text mix (high gross margin) and volumes. Retain guidance of pre-
covid level margin i.e. 25%.
 Other expenses grew mere 2% YoY due to provision on debtors of about

INR50mn in the base. Efforts on improving material cost and operational
efficiency has played out well. Rental cost is also going down due to shift to
franchises. Also, invested heavily in IT in last 3-4 quarters. Will re-look at this and
invest more if required.
 Key Initiatives: 1) Digital- Total lab automation supported by digital intelligence

completed. Investments in digital infrastructure started yielding positive results.
2) Marketing efforts – Launched Bharat ka Vishwas. This campaign will help pivot
the discussions on quality rather than pricing. Launched D2C programmes by
Suburban in Mumbai and Pune. 3) Geographical expansion: In addition to 3 labs
opened in last quarter, commenced operations of 4 more labs. Expansion
remains on track. Deeper into Tier 2/3 towns to expand reach. South and west
India remain key.
 32% overall revenues from Delhi NCR share. Delhi NCR growth has gone up this
quarter, but this is unlikely to sustain.
 Effective tax rate – ~25%. This quarter was higher because of notional
depreciation. Standalone tax rate is 25%.
 Open for inorganic opportunities as and when it comes.
Suburban
 Revenues of INR370mn – non-covid is about INR360mn. Volume growth is
slightly muted. Margin – improved. 11-13% range.
 Looking at updating lab infrastructure and indulging in aggressive marketing

activity.
Industry/competition/strategy
 Shift towards evidence based treatment post pandemic, which is a positive shift.
Higher awareness and increase in customer with brand awareness.
 Tier 2/3 markets are yet to open up. Unorganised sectors will still be existent,
but organised players are yet to make inroads.
 Covid allied sales has an overlap with non-covid samples.
 Other players are expected to take price hikes based on their specialties.
 Competition: Hospitals are getting more aggressive.
Fortis Healthcare
Hospitals
 Margin guidance -19-20% retained. Expect improved performance going
forward. Smaller assets had softer quarter. Unseasonal rains disrupted the
routine work as well as summer vacations had an impact on occupancy.
Unfavourable payor mix also impacted margin. Loss making facilities – Sacred
Heart, Bangalore and Malar. Oncology which grew faster had lower contribution
margin.
 Excluding Arcot road, 80bps improvement in margin. Certain one-time costs –

Anandpur building regularisation costs of INR35mn and incremental legal cost of
INR30mn. Also changed the way EBITDA is being reported – now will deduct
corporate expenses as well. There is opportunity to curtail costs by 1% in staff
cost over a period of 2 years. Want to grow oncology, which is low margin
business, in-line with the market. Also focussing on high margin specialties-
gynaec , renal and pulmo (contribution fell in Q1).
 Plan to achieve 70% occupancy on extended bed capacities. BG Road and Mulund
may have lower occupancy initially but confident to have better occupancy in
other hospital expansion. Occupancy is trending upward toward 70% (based on
current month). There is no pent up demand. Earlier there was pick up in elective
surgeries.
 Expect ARPOB to grow at 4-5% for FY24 implying ~INR58,000. Don’t expect high
surgical mix seen in Q1 to sustain and seasonal benefit. ARPOB growth in Q1 was
led by price increases (~2-3%) and healthy surgical mix.
 Key priorities: portfolio rationalisation, pursue various growth opportunities that

provide attractive synergy and bed expansion. Bed expansion and advance
equipment procurement on track such as installed Da Vinci in Fortis Noida. On
track to open 1400 beds in 2-3 years. Key facilities– Mulund, FMRI, Noida,
Shalimar Bagh, Faridabad and few more. Plan to reach scale and size of 450-500
beds. Waiting for OC for Bangalore facility. All approvals in place for Kolkata, will
operationalise 80 beds soon.
 Manesar – Plan to start with 100-125 beds from 1 year from now. Expect to ramp
it up faster, given its in core market and by 2 years from now, should
commercialise entire facility. Breakeven – 18 months. This is over and above
1400 brownfield bed additions.
 Key medical therapies– oncology grew 34% YoY and now contributes 14% of
hospital revenues. Top 6 specialties contributed 60% of hospital revenues. On-
boarded clinical specialists in neurology, pulmonology, urology. To grow these
specialities.
 International business continue to take traction, and accounts for 8.5% of overall
hospital business revenues. Expect it to reach double-digit revenues soon. In
absolute terms, have already surpassed the pre-covid levels. Have been growing
at 20% in last 2 years.
 Key developments: 1) In Jul’23 sold Arcot Road hospital for INR1.25bn. The
hospital clocked revenues of INR510mn and EBITDA loss of INR360mn in FY23. 2)
Hope to close acquisition of Manesar hospital shortly.
 Beds for P&L perspective: 4,100. ARPOB and occupancy calculated on 4100 beds.
Network will have 4500+ beds.
 Nursing attrition is a challenge for the entire industry. May see this kind of stretch
for next 3-4 years as they tend to go abroad for experience and better salaries.
This is well factored-in in the margin guidance.
SRL
 Non-covid revenues grew 9% YoY.
 Do not require any approval other than the usual ones for IPO.
Healthcare Global
Acquisitions
 The Indore and Nagpur facilities were acquired for inorganic growth. Both the
facilities have an established marketplace and boast attractive locations in
Central India.
 Indore: Acquired a comprehensive 50-bed cancer centre in Indore scalable to 100

beds for propelling growth in Central India. The Indore Center has the number
one market share in private cancer care in Indore. In all modalities, it has a top
three position. It has a very high percentage of good-margin business. It doesn't
do any scheme business. Plan to add another center in the coming two years.
 Nagpur had a complex structure. Infrastructure company and LLP, which was
operating company. HCG, NCHRI, LLP, which is HCG’s operating hospital, and
NCHRI, which is 100% owned by Dr. Mehta. Earlier, revenue share arrangement.
Now buying the stake in infrastructure will provide operational efficiency. In both
places, will become 100% owner.
 Expect > INR140–150mn incremental EBITDA in Indore and Nagpur. Net debt on
the balance sheet to increase by INR1.07bn, out of which consideration for the
acquisition shall be ~INR770mn while INR300mn shall be consolidation of debt
of the Nagpur Center.
Financials/Others
 Looking to keep net debt/EBITDA at 2–2.5x.
 Not doing any green-fields. On acquiring hospital with positive revenue and
EBITDA, but at lower multiples. Payback 6–7 years.
 Established multiple robotic surgery units across India.
 Lower EBITDA growth due to 2 reasons: i) Investment in clinical talent for driving
growth. Start to see leverage from Q3 onwards. ii) Due to delayed LINAC
machines installation and upgradation, 300 operating days were wasted on radio
therapy which impacted revenues from radio oncology. Radiation business down
by 1%, which has an 80% margin, i.e. INR40-45mn revenues lost. Expect higher
leverage going forward.
 Four out of five LINAC machines already operational in Q2. These machines will
be operational in Q2 and will drive EBITDA in Q3 and Q4. Also evaluating adding
a machine in Kolkata, Nagpur and Vizag (three of its well performing centers) on
radiation, which will probably come, beginning of next year.
 New center margin levers: i) operating leverage from doctors; ii) Nagpur center
acquisition to add 40-50bps. Borivali and Jaipur centers are already close to 20%
margin. Focusing to drive revenue growth in South Mumbai and Kolkata centers.
Believe EBITDA would play out in future. Right now these centers are driving
down margin by 100-150bps. Breakeven expected in Q4FY24.
 Emerging centers such as Jaipur and Nagpur were driving growth in Chemo
admissions in previous quarters, which have now normalised. Expects Mumbai
and Kolkata centers to drive this growth in future.
 Share of government scheme patients in overall revenue is ~20%.
 Milann: Future growth will primarily be from Bangalore. Shutting down Delhi
Center and efforts in place to improve Chandigarh. Cost for setting up one Milann
center is INR30–50mn.
Medplus Healthcare Services

Business and financials
 Gross margin impacted by incremental 0.4% discount, reduction in private labels
due to extended summer and delayed monsoon and small one time inventory
write-down.
 No change in top-line growth guidance. Store opening guidance for FY24 – 800-
1000 stores. Plan to expand in MP, Chhattisgarh and Kerala. May look to expand
in North India but not as of now.
 New offering – Medplus Advantage Pharma fund in Hyderabad. Annual

subscription fee – INR499. But initially offering at INR49.
o Medplus branded products at discounted price of 50-80%. Launched with

433 pharma products. Plan to take it to 700-800 in coming months. Plan to
expand in Hyderabad and rest of Telangana.
o Uptick has been fantastic. As of July, 14% of products sold are of Medplus
brands. Margin accretive despite being sold at discount. Bring in more
customers to stores, especially those lost in last few years. Earlier private
label used as substitute for non- availability of certain prescribed drugs, but
now actively selling it at discounted price. Initially margin would be affected
marginally, but should add to the topline and provide a sticky customer
base.
o Manufacturing – Short-listed 10 different manufacturers. Those have one

of the best facilities in the country, which should ensure quality.
o Rationale- More customers looking to take unbranded generic products.

People have realised that there is no big difference in efficacy of drugs.
Hence, Medplus felt the need to set up own brands.
o Old private labels vs Medplus brands assuming INR100 MRP: Old private
label net revenue INR83, after cost, GST, realisation is INR50. Medplus
brands – net revenues INR40-45 after 60% discount; INR21-22 EBITDA.
o Avg. discount – 60%. Net savings to customers 40% vs branded.
 Less than 2 year old stores contributing negative to EBITDA. Of the stores opened
in Jul’22-Dec-22 – 58% achieved breakeven in 6 months.
 Opened 995 stores in last 1 year. Majority of the additions happened in West
Bengal (52) and Karnataka. Avg. size of stores 542 sq.ft. 2855 stores are <600 sq.
ft. and 1120 stores are > 600 sq. ft.
 To augment warehouse in Chennai and Delhi next quarter. Automation benefit

3% cost could down to 2%.
 E-pharmacy - reduced discount but 1 or 2 players still continue to be aggressive.

Do not see smaller manufacturers as significant competition.
 12+ month stores revenue was 89% of pharmacy revenue. EBITDA of INR452mn
with 4% margin.
 Inventory turnover 114 days in 1st year. 12+ month fall to 41 days. Inventory 1
year old stores: 35 days of inventory, start with INR1.8mn and 30-35 days in
warehouse. After 1 year, those stores doing INR100,000 per day, improves to 28
-30 days.
 If all stores were 2 year+ stores – 5% EBITDA margin on steady state basis (pre-
Ind As).
Diagnostics
 Currently, there are 4 full service and 7 level 2 centres and 122 collection centres.
 Change in subscription plans in Jul’23 – scalable – family members can be added

any time during the plan. Plan price increased to INR150. But offering INR150
discount for early renewal. No change to benefits.
 On time renewal run rate is 15%. 30% for those renewing after 60 days of expiry.
 Crossed 100,000 membership. As on 30 June, 105000 membership covering

186000 lives vs 92000 active plan and 162000 lives as on Mar-23. Sold 332 plans
in June.
 Usually, achieve EBITDA neutral in 8th month.
Vijaya Diagnostic
Expansion
 Kolkata – Expect to breakeven within 12 months. It may take 1/2 quarter more
to breakeven compared to centers in AP&T, given its outside the core market.
Plan is to make it a home market in next 4-5 years. Target is to become leader
in this market. Vijaya is the first one to introduce such high end technologies in
whole of North Kolkata.
 North Kolkata –doing more specialised work. Good response from doctors. Plan
is to grow slowly.
 Taken price increase on few tests because of input cost increase. But only
contributes to 1% of revenues.
 Less than 1% of revenues coming from aggregators. No impact from these.

Vijaya has strong brand recall in home market.
 Wellness packages – over time have evolved. Growing because of education,

age group, lifestyle, etc. especially after covid, more people are opting for it.
Package price ranges from INR450 to INR18,000. Spoke centers are actually
generating these.
 Upcoming hubs Mahabubnagar and Gulbarga in next 2-3 months. On track to

open 15 centers annually.
 Tirupati breakeven timeline not comparable with Punjagutta. Only gamma

camera is present in Tirupati and no Pet CT. Punjagutta is also doing very well.
Punjagutta and Rajahmundary saw improved performance.

 PAT adjusted for depreciation is INR205mn, i.e. 16-17% YoY. After excluding
WDV depreciation of the three big hubs (not present in base and EBITDA
breakeven), PAT growth is even higher at 30-31% YoY.
 Net 50,000 footfalls from covid on YoY base. Adjusted for this, patient growth
was also in double digits. Moreover, recent digital initiatives have removed
inefficiency, by making single bill to patients even if the patients visit different
Vijaya centers for different tests.
Hotels/Hospitality/Aviation
Indian Hotels
Q1FY24
 IHCL is undertaking higher marketing spends which partially explains the

increase in other costs
Industry
 50% of the incremental supply is coming in Tier II and Tier III cities.
Hotel expansion
 Of the 11 new hotels signed in Q1FY24, 7 are conversions or brownfield and

should open within in 24 months
 Brand Vivanta is only for subcontinent expansion under management contracts
 On the international expansion – company will evaluate between management

contracts and leases based on locations. Preference is for leases in Europe given
the expectation of lower cost of capital on owned land.
 IHCL is well aware of the operations of Zambia. Plan a similar turnaround as the
Cape Town property.
 Once domestic operations are totally in place, company will contemplate

international operations. Focus remains on domestic properties.
Revenue initiatives
 Company is taking multiple in-house initiatives to drive revenues. Gave

examples for Taj Lands End (new clubhouse) and Taj West End (new chambers).
Ginger
 As per IHCL, Lemon Tree’s positioned marginally higher than Ginger.
 IHCL remains confident of Ginger’s outlook.
 Renovated/Lean Luxe Ginger are priced 30% higher than traditional Ginger
properties.
Management contracts
 Management fees revenues has more than doubled to INR1bn in Q1FY24 vs.
Q1FY20.
Outlook
 Company is seeing very good momentum even in the month of July. Also
normalization of international arrivals along with other events can keep
occupancies stable.
InterGlobe Aviation
Q1FY24 management call: Key takeaways
Highest-ever revenue of INR558bn in Q1FY24
Q1FY24 remained strong on the back of robust demand, increased scale of

operations, favourable foreign currency movement and an increase in load factors.
The company added 12 aircrafts to its fleet during the quarter. The company also
achieved PLFs of 89% during the quarter. The company has a pending order of 480
aircrafts (all CFMs) by 2030.
Indigo serves 26.2mn customers in Q1FY24
With strong domestic connectivity of 79 domestic destinations and 37 international

destinations during the quarter, the company was able to serve over 26.2Mn (up
30% YoY) customers during Q1FY24. It further aims to serve 100Mn customers in
FY24.
Yields to decline substantially QoQ in Q2FY24
The management expects yield to dip sequentially in Q2FY24 by 10-15% given the
seasonal weakness, festivity plans, increase in capacity, increase in fuel cost and
resumption of grounded fleet.
Robust order book
The company has a robust order book of 980 aircrafts. This includes the largest order
placed for 500 aircraft in Jul23. Indigo aims to add ~500 aircraft by end of the decade
and the remaining ~500 by 2035.
Continue to focus on International business

Indigo will continue to focus on its international segment. It has expanded its
international footprint with seven code share agreements at 37 international
locations. Further, it plans to launch new code share agreements to US to four
destination to enhance its intenational connectivity. It also aims to add six new
routes during the quarter to Baku, Jakarta, Tashkent etc.
The company will launch VC arm to aid growth

The VC arm with a beginning corpus of 0.07bn plans to invest in the companies
operating around the aviation sector (hospitality, travel, lifestyle etc). This help add
value and provide additional triggers for growth
Expects inflationary pressures on operating costs

The company will closely monitor airport charges and maintenance cost although
they expect that a large part of the costs have been accounted for in Q1FY24.
Higher other income

The increase in other operating income was largely driven by VGF gap funding and
credits being considered in the current year.
Growing market share in the International Market

The company has a market share of ~16% (All carriers – intl and domestic in and out
of India) and has ambitions to grow the same. The company sees India as a global
aviation hub owing to its vast population and big market. The company also aims to
expand its international market share with co share agreements.
Accumulated tax losses to be set off

The company currently has accumulated tax losses in the range of INR 160 Bn.
Engine issues and strategy on engine sourcing going ahead

The engine failures are occurring in the engines sourced from Pratt & Whitney.
Detailed investigations are being carried out on these aircrafts and this could
potentially impact ~9 aircrafts to add along side the ~35 aircrafts which have already
been grounded). Now the company is sourcing CFM engines which have a similar
fuel efficiency.
Lemon Tree Hotels

Industry
 There is not any case of premium hotels having higher pricing power. It is a price
category wise demand supply situation. Events like G20 helped premium hotels
in Delhi.
Company
 LT believes it has created a strong IT system/customer acquisition, which has

helped the company get higher bookings/occupancy versus earlier.
Q1FY24
 In FY23 the focus was to reprice. Company increased rates by 50% vs. pre covid.
This led to a fall in occupancy. Focus this year is on building demand back at the
new price level.
By city
 A very large portfolio in Bangalore is the Keys brand (380 rooms), which is still
struggling and that is dragging the city average.
 The Lemon Tree in Bangalore has seen RevPar growth of 17-18%.
 According to STR occupancy of Udaipur market was 40% and LT had a 10%
premium. Company has outperformed its category set. LT believes the
performance of Aurika in H2FY24 will be significantly better. There are already
15 weddings, which have been booked. Each wedding gives INR10mn of EBITDA.
 In Gurgaon, company was less dependent on IT corporates. Other corporate

segments, which are key drivers of LT’s hotels in Gurgaon have come back to
normal and helped the company’s property.
By segment
 Target to increase retail portion to 66% of revenues (ex-corporate).
Aurika Mumbai
 All 669 rooms will be in ready across October.
 Lemon Tree Premier in Mumbai only became operational fully post covid. Initial
demand build-up happened at INR6,500 when the hotel launched in Oct 2019.
At present the hotel is doing INR8,500 at 90% occupancy. Typical pricing
difference between Lemon Tree Premier and 5 star is INR4,000.
 Maratha Sheraton and JW Marriott on retail side is priced between INR12,000-

20,000 in July
 Company has given a INR1.7bn EBITDA target and company believes that is
conservative. Company expects MIAL to be a significant contributor to EBITDA
from Q4FY24.
 LT is targeting 100 rooms/day from the crew business at INR8,000/day.
Management contract
 Cost increase is also coming from scale-up of management contract business.

Incremental costs will be INR80-90mn per annum.
Fleur
 Conversion of CCPS will take APG’s stake to 41% in Fleur.
 Economics interest is 65.6% and shareholding is 59%. Incremental economics

interest comes from management fees.
Outlook
 Company will do significantly better in occupancy in Q2. It is already at 74%

occupancy. Expects ARR to increase by 8% YoY.
 LT is doing better in July than in Q1FY24.
 LT is targeting a signing of 40 management contract hotels. Management fees

guidance (INR bn): FY24 – 0.5, FY25- 0.75, FY26 -1.3 to 1.5. Fees will triple in 2.5
years.
 Expects ARR’s to increase higher than 15%.
 While for industry Q2 is the worst quarter, for LT Q2 is better than Q1.
 Lemon Tree on standalone will be debt free in two years and Fleur will be debt
free 1.5 years after that.
 LT expects pricing to increase by 8% YoY in Q2FY24, ~15% IN Q3FY24 and 5% in

Q4FY24. On a blended level LT believes ARR’s can increase by 15% given the
current demand supply situation.
Home Decor
Century Plyboards
Opening remarks
 YoY- Held up the topline
 Difficult market situation
 Company focusing on value added products
 Fire resistant MDF to be launched.
 Second line at Hoshiarpur is stabilised.
 Particle board suffering on both value and margin fronts
 First quarter was below expectations
Outlook
 Plywood – 6-7% volume growth and 10% value growth with 14% EBITDA margins
 Laminates – 12-15%+ value growth with 12-14% EBITDA margins
 MDF – 20% volume with 25% EBITDA margins
 Particle board – expect improvement in revenues and EBITDA margins
 This year will be about laminates.
 Company wants to gain from shift from unorganised to organised.
 Laminates: revised guidance because of delay in commissioning;
 MDF guidance revised due to streamlining of the line
Plywood
 Commercial veneer as a segment is used only for internal consumption
 Only lower grade product is sold outside
Particleboard
 Promising area for some time
 Capex – multi levels model
 More economical
 Difference sizes
 Increased organised players- continuous presses
 Office furniture and industrial uses
 Number of OEM increasing
 Premiumisation- prelaminated particle board
Capex
 Capex plans:- Laminates slight delay to Q3FY24.
 MDF will be operational in H2FY24.(early Q4FY24)
 Plywood expansion at Hoshiarpur by Q1FY25
Demand
 Demand perspective:- interest rate increase has hurt the ability to convert from
home buying to building materials
 Demand is already coming back, but heavy rains affecting
 In August end or September, demand should come back significantly
 Demand is back to normal levels
 Heightened competition from unorganised players continues.
 Going forward, demand scenario is very robust. Real estate cycle helping.
 Indian market size: Govt of India has been contemplating PLI in furniture.
 Most of the exports will be from MDF or Particle board
MDF
 Total capacity should increase by 30% in next 2 years.
 Market has continuously grown.
 Company expects to gain market share and rampup its capacity.
 Capacity to increase from Approx 2.1 million cbm to 3million cbm.
 Premium production to increase from current 34% to 40% in FY24
 Company has not taken any price cuts.
 International prices are falling.
 25-30,000 cbm is coming into India per month via imports
 Price war leads to disaster in the market.
 Company doesn’t see a big problem with capacity additions.
 Any new comer will sell at a lower price.
 ADD on MDF:- no progress on that front
 Capacity at Hoshiarpur is not fully up and running
 OEM Mix: all the premium products of 34%- mostly going to OEMs.
 Growth guidance : 20% in FY24;
 Company will be able to export from the south plant. Currently cannot export
from its north plant.
 MDF is used primarily for residential purposes.
 MDF and particle board are cannibalising lower grade plywood
Laminates
 New prime and sainik laminates were launched
 Tie-up with Manish Malhotra
 Will be back with 13-15% of margins in laminates
 Long term margins guidance: 14-16%
 New launches expected:
o Atomic cubicle range to be launched
o 10 feet sized laminates- focused on exports
 Launch expense:
o new launches, branding (INR 30-40mn)
o recurring expenses like man power (10-15mn)
 Export realisation is lower than domestic realisation. Export contribute 30% of

total revenues.
Particle board
 Increase in Capex amount for particle board
 Increase in Euro conversion rate, company is provisioning for a higher conversion

rate
 Majority is used for commercial purposes
 Company has even exported some particle board.
 Hardly any additional capacity is coming up.
 Multiple small players. – costing of smaller players are higher than organised
players.
 In automotive plants, the quantity is controlled and higher quality products can
be manufactured
 Commercial production: end of FY25
Raw material
 None of the players own any plantation.
 Other players can have lesser density for MDF products- company doesn’t have
any plan for lighter MDFs
 Timber prices: April saw a price drop and hence company had delayed the price
hike.
 Timber prices have gone up in June(5%) and has gone up significantly thereafter.
 Company has taken price hikes in July. Plan to take another.
 Company has been able to take hikes only to the tune of timber price hikes.
 Timber costs form 50% of total raw materials. Company has imported some raw
materials
 Chemical prices have come down.
Greenlam Industries
Opening remarks
 Company has retained prices
 Production of laminates was the highest
 Started plywood in the quarter
 Very encouraging response from dealers
 Net working capital days stood at 72days
Demand
 Overall demand scenario remains sluggish for domestic markets.
 In export markets, the Indian manufacturers are acquiring some market share by
replacing the regional players.
Guidance
 Management maintained their guidance of 25% revenue growth in FY24E.
Raw materials
 Raw material prices have corrected
 . Management believes that input cost will be remain at Q1 levels for FY24E.
Laminates
 During the quarter company achieved highest production volume of 4.68mn
sheets. Port disturbance curbed the export.
 Revenue affected INR200Mn (150-160,000 sheets) which will be recovered in

Q2FY24.
 Domestic volumes stood at 2.4mn sheets, growth of 29%YoY. In value terms the
same came in at INR2.38Bn, a growth of 13%YoY. Export volumes stood at 1.7mn
sheets, a decline of 8%YoY & 12%QoQ & in value terms the same was INR2.33Bn,
growth of 6%YoY & degrowth of 8%QoQ.
 GP margins improved due to lower input cost & higher ASP lead by better
product-mixEBITDA margins did not expand on account of higher advertisement
spends & higher employee cost incurred during the quarter.
Veneer and allied segments

 Deco veneer biz revenue decline by 7.5% sequentially, volumes were down by
8%YoY to 0.27msqm & ASP stood at 916/sqm. Utilization for the quarter stood
at 25%.
 Floor biz revenue declined by 10.7%YoY & grew by 20.7%QoQ to Rs103Mn.

Utilization stood at 10%.
 Door segment revenue improved by 92.6%YoY & 9.5%QoQ to Rs70Mn.

Utilization came in at 14%.
Particle Board
 For Particle Boards, Year-1 will be at 50% utilization & should be break-even at
EBITDA-level.
 On PBT, first year will be a loss & from therafter management expects the same
to turn profitable.
Plywood
 Plywood has been launched in southern India & company will price their
products at 2-4% discounts Vs other organized peers in the said market.
 GRLM has appointed ~300 dealers
Greenpanel Industries
Opening remarks
 Plant shutdown in the quarter
 High timber and other raw material costs
 Higher brand – 3.9% of sales
 6000cbm volumes loss due to plant shutdown- loss of INR60mn
 INR70mn spent on plant upgradation
 INR 160mn spent on MDF expansion in Q1; total INR660mn spent on MDF
 Net debt: INR (-1.65bn)
Outlook
 Some pressure on demand side;
 Additional supplies along with import prices falling hurt MDF- however, company
doesn’t expect them to be long lasting
 Gross margins should be at this level. 58.1% in Overall as a 59.6% in MDF as long
as mix between domestic and export continues.
 MDF Volume growth -12-15% guidance for FY24
 EBITDA margins: 23-25% for MDF
 Export prices will increase in Q2FY24.
 Not expecting substantial volume gain in Q2FY24.
 Targeting segments with better realisation
 Higher operational leverage will help achieve the margin guidance
Thin and thick MDF

 AP plant will start manufacture of thin mdf.
 Thin MDF contributes 35-40% of total mdf consumption
Value-added mix
 Value added product share: 49% in Q1FY23-51%in Q4FY23-54% in Q1FY24
 Target to achieve 65% of value added in mid term
 Value added was 54% of domestic volumes
Plywood
 Plywood guidance:
o double digit volume growth
o 8-10% revenue growth
 Plywood peak revenue: INR2.8bn
OEM
 Just started focusing on OEM segment. Can start seeing the effect in Q2FY24.
 Share of direct OEMs volumes is 10-12% of domestic volumes in FY23. OEM

share: 12% in Q1FY24.
 8-10,000cbm on a monthly basis by OEM is possible.
 OEM margins is dependent on the location where it is sold.
 8-10,000cbm from OEM segment, balance from regular sectors.
 Target OEM: 75-80% of OEMs will be industrial grade.
Export
 Company is deliberately curtailing export volumes due to pricing pressures.
 Lower density products are not being offered to export market.
 Cost of export material and industrial grade is same. Realisation of export grade
will be lower.
Plant shutdown
 This plant shutdown: long term worn-out part was to be changed
 First time in 14 years
Capital allocation
 Distribution of cash on the BS depends on the business condition
 Exploring other business but at nascent stage. No concrete plans at this time
Capex
 Spent approx. INR670mn till date. No borrowings as yet
 Of the INR6bn capex- INR2.6bn to be serviced by debt and rest via internal
accrual
 Capex of INR6bn: to generate 1:1 revenue
 Fixed Asset TurnOver to increase to 1.3/1.4 when share of value added increases
 Peak revenue: INR8bn
Raw material
 Inventory days high: timber availability has been muted and keeping in mind
monsoon season(no harvest of timber)
 Timber price increase: As compared Q4FY23, 2% higher - UK and 3% higher in AP

in Q1FY24.
 In Q2FY24, timber at AP plant has risen by excess of 10%, but at UK plant no

change
 Q1FY23: timber North INR4.9; South INR3.06 and Q1FY24: timber North INR5.68;
South INR9.65
 No major impact of floods on the raw material.
 Current Timber inventory – approx. 90,000 tonnes- 15/20days of production
 Marginal reduction in Q1 as compared to Q4FY23 in chemical prices. In July, resin

prices have been 10% lower than Q1FY24.
Imports
 Primary importers: retailing in local markets and OEM, majority in thick mdf
segment
 Price differential: Location dependent 5-10% between imports and us.
 7-8% price lower for a particular segment of MDF. This we are doing by reducing
timber and increasing resins
 Imports are sort of stable at this quantity. Supplies to India are dependent on
realisation in the rest of the world.
MDF
 Vol growth of 12-15% guidance maintained
 On retail side, no substantial pressure on realisation.
 On OEM side, pressure on realisation.
 No price hikes, no plans.
 MDF segment margins have bottomed out
Branding expenses and Other expenses

 Branding activity of INR 150mn. Target AD spends: 2-2.5% of revenues. Q1 saw
4% of total revenue because of IPL and TV commercial
 Transportation cost have increased to 5% of sales (from 4% of sales):- UK plant

was shut for 19 days. South plant had to transport the wood. Hence higher
transport cost in the quarter.
 Effective tax rate of 25% for FY24E
 Sustainable quarterly OCF: INR700-750mn; OCF for Q1FY24: INR530mn
Greenply Industries
Opening remarks
 Realisation has improved by 3%. Better product mix helped contribute.
 Company maintains the 10% plywood volume growth guidance for FY24.
 Timber pries still hurting.
 Price hike imminent in Q2, but will be visible in H2.
 Double-digit plywood margins for the FY24.
 Elevated Debt levels for MDF business.
 Plantation: 27.8 Saplings across the country.
 Commercial operation of MDF started in the quarter.
 Core distribution network. West and central India focused.
 5th May start of MDF
 INR2.75/3bn of sale in MDF for FY24 revenue guidance.
Remarks on Q1
 Timber prices continue to remain elevated across the country.
 Greenply is primarily a premium product driven company.
Guidance
 Volume growth in plywood business for FY24: 10%
 Plywood margins: double digit
 MDF volume guidance for FY24: 100,000cbm
 MDF revenue guidance for FY24: INR 2.75/3bn
Outlook
 Growth is sub-optimal.
 Market is slightly subdued at this time
 June was a dampener.
 Price Gap between organised and unorganised has fallen to 11%.
Raw Materials
 Extent of increase in timber prices: QoQ: 10% expected in Q2FY24
 Timber remains a challenge- don’t expect prices to come down in the next 6/9
months
 When new plantations come into play 5-6quarters, prices might stabilize
 Raw materials: More than 60% is domestically sourced (200kms radius)
 Prices in south are more advantageous than west.
MDF
 100,000cbm volumes in FY24: MDF volume guidance
 Company does not plan any export revenue from MDF segment
 Very difficult to predict MDF prices. Interior grade is non-value-added; rest all is
value added
 MDF volume guidance: 100,000cbm in FY24. 160,000cbm in FY25 and Full

utilisation in 3 years
 Import parity price of MDF- INR 20,000/cbm (18+2)
 ADD in MDF: Company is not eligible because it is not two year old. Greenply is
not taking into cognizance of the ADD
 Trade and institutional business: Receivable days is higher in institutional.

Company focusing on institutional
 MDF: zero warehouses. Currently 250+Active dealers/distributors
 Target: 800/900 dealers or distributors
 The MDF line can produce both thick and thin MDFs. 1.55mm to 35mm
thickness. Any size that the market demand
 Company also plans to produce Boiler – 1150 density- fire retardant – to be

launched in Q2FY24- only available with Action Tesa
 Brand Greenply will attract MDF. Plant in west also adds to the advantage.
 Depreciation of INR310mn in MDF in FY24
 Consolidated depreciation for Q2FY24 will be INR30/35mn higher than Q1FY24

and it will be sustainable.
 MDF wont breakeven on PBT levels
Plywood
 Pricing is at par with competition. In certain markets, 1-2% cheaper than
competition (like in NCR)
 Expecting a bounce back in Q2 onwards. Markets have not been supportive in

Q1FY24.
 Taking a price hike in next month
Capex
 Company plans to enter into a 50:50 JV - INR300/400mn to be spent over two-
three years.
 Regular capex for plywood and MDF
Debt
 Borrowing has grown gradually in the quarter. INR520–530mn to sustain
throughout the FY24
 Interest cost for MDF: INR390mn in FY24
 Debt repayment schedule: FY24 – INR410/420mn; FY25 – INR560mn; FY26 –

INR640mn
Gabon
 Investment in Gabon(working capital): INR2.55/2.60bn
 It remains an uncertain market
 Company not very bullish on it. Demand side not exciting as of now
Miscellaneous
 Other sales related costs have also gone up
 Budgeted ad spends for FY24: 3-3.5% of Sales (Plywood, Sandila and MDF).
 A&P spends in Q1FY24: 4.8% of the total sales for the quarter
 No major orders from USA
 NWC: 40-41 days; company expects to remain in this range. Due to rainy season,
some amount of inventory is held with the company
 Bareily plant not working in the favour of the company. New lines for some
products didn’t work out
 JV model has not given successful results
 Receivable issue has not affected the company
 Some supply side issues also hurt the company
Kajaria Ceramics
Opening remarks
 New launches Real estate in previous year will push volumes growth in H2FY24.
 First Quarter was slow due to subdued demand in April and May.
 Sikandarabad and Gailpur Capacity expansion in August 2023 will manufacture

larger tiles(value added) and newer kilns will be more efficient.
 Various new products:
o GVT products of 300SKUs- Marble like slabs also.
o PVT 1200X800mmm- substitute of marbles and granite.
o Kerovit products- New colours
 INR 48bn of export by the tile industry
 USA/UK/Israel/Mexico- export countries.
 During the quarter:-
o Bathware – 17% revenue increase- INR840mn in Q1FY24
o Plywood revenue decline – INR 140mn (INR200mn in Q1FY23)
o Adhesives revenue-INR100mn
 EBITDA-15.9% driven by reduction in fuel cost
 NWC = 62Days
Guidance
- Volume growth:13-15%
- Revenue growth:14-16%
- EBITDA: 14/16%
Outlook
 Excessive heavy rainfalls all over the country have hurt July month.
 Impetus should come after September 2023.
 Manufacturing volumes was down because Sikandrabad was shut down for
upgradation. Plant was shutdown for the whole quarter.
 Large slabs- high value products. North plant will also start producing.
Demand
 Demand was subdued
 Company expecting Ad campaigns to work to push volumes.
 Ad spends have increased- which will help the company in achieving the target
Exports
 INR 48bn of export by the tile industry in Q1FY24
 Majority exports are from Morbi only
 Dubai showroom is helping in the export front.
 23% value growth of exports in Q1FY24
Fuel prices
 Average Fuel Prices INR39; Q2 also same line
 Q1FY24:
o North:INR39;
o South: INR44;
o West: INR37
 33% of north plant’s fuel requirement is met by biofuel.
 Overall 20% of total fuel is met by biofuel
 Biofuel is INR22 per scm at the moment
 Morbi gas price (per scm): INR41 (including tax) and Propane is INR41.6.
 INR 1.50-1.7bn saving in fuel
Brand spends
 Q1 Ad Spends: INR260mn
 Target ad spends: INR1.35bn
 Massive ad campaign in beginning of August
Industry
 After September, things will be better.
 Industry has been flattish; Export has picked up
 General elections will push demand from infrastructure segment.
 Morbi is the export hub.
 In 2020-23, hardly any addition of plants in Morbi- due to GST. Organised

players have been able to take market from unorganised sector.
Plywood
 Plywood: FY23 revenues: INR770mn, FY24 target is INR1bn
 Sales team in a month or two. Still maintaining the guidance.
 Plywood made INR400mn and laminates made INR370mn in FY23
Sanitary ware/Faucet ware

 Bathware segment: 30%+ volume growth guidance for the whole FY24
Adhesives
 Adhesives revenues: INR100mn in Q1FY24
 FY23 INR380mn Adhesive of PBT of INR70mn;
 FY24 Target of Revenues INR650mn with PBT of INR160/170mn
 FY25 target is INR1bn
Nepal
 Nepal profit-FY25- INR150mn
Capex
 Capex FY24E: INR 3.7bn
 INR 3.7bn breakup –
o Sikandrabad INR700mn
o Nepal-INR900mn
o Bathware is INR800mn
o Corporate office INR500mn
o Rest maintenance capex
Pricing
 Pricing for Kajaria have been stable. Some trade benefits will be given to dealers.
 Pricing differential is 6-10 from second players and 20-25% differential with
Morbi (fallen from 40-45% pre-gst)
JV and Outsourcing
 JV: didn’t do well in last; This year it should INR400/500mn+
 In JVs, massive reduction of fuel costs have been passed on to the JVs. Generally
PVT is manufactured from JVs
 Because of higher outsourcing, ROCE will also grow
 PVT is outsourced from Morbi- those are value added and hence the outsourced
realisation is higher than Own manufactured realisation.
Miscellaneous
 Currently: 1840dealers; target is 2000dealers. 500 Exclusive Kajaria dealers
 30% and more orders coming from earlier silent distributors
 Depreciation fall in Q1FY24:- Veneer Subsidiary is no longer contributing to

depreciation
 Giving benefit to dealers due to savings in gas costs.
 3% is the discount offered by the company to distributors.
 Employee cost:- It will continue downwards
Prince Pipes
Opening remarks
 During the quarter, operations were disrupted.
 Dispatches of fittings faced highest disruption.
 Pipe fittings ratio should normalise in the second quarter.
 Disruption is behind in Q2FY24.
 Highest June quarter volume numbers.
 Mrs Ameesha Vora being inducted in Board of Directors.
 Buoyancy in demand will continue in agri and infrastructure.
 Shift to branded products will help.
 Bathware: launched luxury product range.
 Encouraging demand from distribution network.
 Concept of bathroom has evolved to more lifestyle statement.
 First order for bathware received in August.
 Water tanks vertical: started inhouse manufacturing last fiscal; Scaling the tanks
business further.
 8th manufacturing facility in Bihar- Land has been acquired.
 Cater to demand in East India- fast growing.
 Akshay Kumar continues to be face of Prince via OMG2.
 Inventory days at 73 days in Jun 23.
 Polymer prices expected to be stable.
 Channel financing after recourse shifted to dealers- No of channel has increased

from 76 to 132.
 Realisation per ton should improve hereon.
 5,000 tickets will be distributed across India by Prince to distributors and retailers
for OMG2.
Volume outlook
 July volumes have been encouraging.
 July has been PVC-heavy.
 Double digit volume growth for FY24E.
 There will be restocking with price hikes.
 3-5 years- high double digit growth.
Margin outlook
 13-14% is a fair estimate; the company is still aiming higher.
 Product mix, operating leverage and cost absorption along with new and
innovative products will help expand margins.
Industry
 Reals estate continues to do well.
 Polymer prices have been stable.
 Competitive intensity: not a new phenomenon- everybody adds capacity.
 Supply will never outpace demand.
 No need for predatory pricing. Growth will be sustainable and profitable.
Bathware segment
 Investing in the right people, branding (because they are front of the wall
vertical) and extensive distribution network.
 INR150bn industry- 65% is organised- it should grow double digit in the near
future.
 Combination of retail and projects.
 Tie-up with large real estate developers.
 Things shall fall into place in the next few months.
 Losses in Q1FY24: launch expenses: INR20mn(one time).
 On annual basis, INR50/60mn on employees and INR100/120mn on branding to

be spent.
 Manufacturing for faucets has to be inhouse. Company plans to do so in 18

months.
 Investing in brand has to be long term.
 Extensive investment have to be made in digital advertisement, visual

merchandising and brand visibility.
 Target audience is home owners and interior designers and architects.
 Company is prepared to make investment; 18-24 months is how much the

company expects it to bleed.
 Better business in terms of operating margins.
 Company will focus on retail and projects both.
 Largest segment will be luxury.
 Company is focused on mass premium segment.
Company-specific
 Plumbing has grown in double digits.
 Company is focusing on building mateirals- plumbing and SWR.
 INR 1.64bn- Net cash.
 INR1.95bn of Cash and Cash equivalent.
 Company sales 15-20% in East India.
 Company’s investment in branding has helped the pricing power of the company.
 Project segment: 25% of total revenues, earlier it was concentrated to big

metros. But now tier-2 cities coming up.
Infrastructure projects
 Infra projects – DWC and HDPE; company is careful about the receivable days
and doesn’t want to stretch at the moment. (3-5% of total revenues).
 HDPE: Jaipur and Hyderabad- will expand at Hyderabad and the new Biharplant.
 DWC: Large part for Prince; launched in 2017- past 2/3 years has seen very strong
volume CAGR.- only solution replace cement pipes.
Value-added products
 Value added products: CPVC and PPR and PVC fittings.
 Contribution: Pipes fittings has been 30-35% of the revenues
 CPVC-20/25% of revenues.
 PPR-4/5% of revenues.
 Fittings are extremely value added for the company.
 Pipes: fittings ratio: Generally 32%, Q1 was only 25% of revenues
Channel financing
 No of dealers: 132 (from 70s).
 Enrolment is in progress.
Inventory
 Inventory loss – INR100mn in the quarter.
 Sourcing of Raw materials: 60:40 import: domestic.
Demand
 Buoyancy in demand will continue in agri and infrastructure.
CPVC
 CPVC prices have been softening.
 Almost 5% drop in finished CPVC.
 There is more room for correction- this augurs well in the long term.
 More domestic manufacturing capacities coming up.
 This works well from a growth perspective in the next 5 years.
Jal Jeevan Mission

 The company participates in JMM through dealers only.
 Jal se Nal- continue to see on-ground demand.
 The company doesn’t sell to Govt directly. Company supplies only through
channel.
 JJM is an added bonus for prince pipes.
 Company will participate as long as the receivable cycles is disciplined.
 It will continue to be a driver for the industry.
Plumbing
 Q1 volumes were affected.
 But next quarters should do well.
 Company is well equipped to tap into the growth.
Capacity
 Utilisation has been 50-55% on installed capacity.
 Telangana has seen good utilisation (35-40% after being set up).
 East plant: Phase 1: 35000 tonnes and then Phase 2.
 Brownfield capacity expansion: primarily in SWR, HDPE at Jaipur, Telangana,

Haridwar and Dadra.
 General lead time is 3-4 months for adding brownfield capacity.
 Bihar should start by end of FY25.
 323FY23-350FY24E-390FY26E.
 20/30KT in FY24 and Bihar(40KT) to be added.
PVC prices
 Expected to remain range bound going ahead.
 Sourcing of Raw materials: 60:40 import: domestic.
ERP disruption
 The ERP disruption in April and beginning of May.
Ad spends
 Ad spends: QFY24: INR120mn.
 FY24E: 2% of the total revenues of piping business plus water tanks,
 FY24E: INR100-120mn for bathware.
Capex
 Largely for bottlenecking at existing plants and new plant in Bihar.
 Capex for FY24E: INR 1bn for existing plants.
 East plant projections will be ready in Q2FY24.
 Long term- company will produce all kind of pipes in Bihar- water tanks will start
from day 1.
 Expect Bihar plant to be one of the largest plant in 3 years.
 The East India is witnessing strong growth.
 Everything sells in East India-PVC, CPVC and underground pipes.
Somany Ceramics
Opening remarks
 There has been pressure in the market
 Capacity utilisation only 70%: tiles
 Things are looking much better
 Sales grew by 8% and double digit growth in FY24E
 Q1: Gas prices have softened
 Mid 40- early 40s current gas prices
 Sanitaryware: flat but Bathware grew by 20%.
 Advertisement: in line 2.5% of revenues in quarter
 Working capital management
 Debtor days now at 38 days (down 2 days)
 Inventory days down 1 day
 Some routine maintenance shutdown in the quarter
 Somany fine: soluble salt portfolio (part of PVT portfolio):
 The plant was not working at maximum utilisation and had been shut for 3-4
months.
 Already arrangements in place for soluble
 Q1FY24: Net dealer addition: 50+ & Net showroom addition: 25+
Outlook
 FY24 Volume guidance: double digit
 10.5% -11% margin guidance for FY24E
Industry
 ADD on Chinese products in India.
 China has higher ADD in Europe than Indian tiles
 Maximum addition of capacity in between FY21-23,
 It was put by Morbi players, predominantly for exports.
 Capacity of the Company grew by 18/19%
 Freight rate and gas rates increased in January 2023- leading to fall in exports.
 Currently, INR1.7/1.8bn exports from Morbi- the plants are getting utilised
 No significant capacities coming up because:-
o Large capacities of wall tiles are lying unutilised. Morbi land is getting
expensive.
o Margins getting squeezed hence payback period extending
Gas prices
 Plant wise Gas prices in Q1FY24:
o Morbi: INR43
o North: INR46
o South: INR60
 Current Gas prices: Blended: INR 41
o South: INR50
o North: INR41
o Morbi: INR40
 Blended INR 45: Q1FY24; INR 50: Q4FY23; INR 61: Q1FY23
Fuel cost
 Margins should improve 50 bps because of fuel savings
 4 plants running on propane; Propane gas was just little bit lower than natural
gas during the quarter
 Company may shift to natural gas.
 Gas is available at INR40; Government departments difference
 Fuel sourcing: Buy spot only in South; Buy GSPCL(3m) in West; Buy from
Gail(25Yr) and IGX(spot trading) in North
Product mix
 PVT: decline by 2%
 GVT: improvement by 2%
 Ceramic: decline by 1/2%
 GVT should be above 35% in FY24E
Bathware and Sanitaryware

 Sanitaryware - South has not done well; North and west did well.
 Mix of Sanitaryware: Q1FY23:INR 330mn(Q1FY24 INR330mn) Bathware: INR

200mn(Q1FY24: INR 260mn)
 INR3bn for Bathware: FY24E- 3/3.5% higher margins than tiles
 Company expects INR 5bn revenues from bathware in three years
Company-specific
 Company focused on retails
 Project includes: private real estate developers- 75% is retail: 7% is pvt builder;
2% is exports; 1% organised retail and 15% to Government
 Company has not taken any serious cuts on MRP. Last correction was from
excise to GST
 Only 6-7% to real estate projects
 Company can save more days in working capital days
Utilisation
 Capacity Utilisation in Q1FY24:-
o Tile: 70%
o Sanitaryware: 58%:
o Faucet: 70%
 Some scheduled maintenance;
Brand
 2.5%+ brand spend
Demand
 Post Diwali, major pickup
 Q2 is much better than Q1
 Sales price is not under pressure
 North had rains and it might affect some demand
 Demand issue: project and retail; project becomes weaker in Rains
 Inflationary pressures and labour pressure
Capex
 Early Q3- large sized tiles
 25% addition in the last 24 months
 Nepal plant coming up next year
 Maintenance capex in FY24E: INR 400/500mn
Margin
 YoY: 1.2% gross margin expansion
 Some margin expansion can come from gas prices softening
Supreme Industries
Opening remarks
 PVC prices: Polymer prices witnessed a downward bias and continue to fall,
albeit in range bound manner. During the quarter, prices of various polymers fell
INR5 to INR8 per kg, except for polypropylene, which fell off INR13 per kg,
causing moderate inventory losses across product segments.
 New product: The Company has taken in hand a project to make PVC window &
Doors at its’ newly acquired 32 acres site 15km away from Kanpur (U.P.). The
initial capacity planned will be 10,000 Tons per annum. The Company intends to
sell window profile & complete window from this site. Later on Company will put
up window making facilities at several of its’ manufacturing sites. The envisaged
investment in this project will be about INR1.6bn and after attaining full capacity,
the company may add additional turnover of about INR3.5bn annually in this
segment.
 New products in pipes: The company is ready to seize the business opportunities
and continues to commit desired investment. During the year Company has plans
to add 4 additional systems viz. (i) PP multilayer silent pipe system (ii) Gas Piping
system (iii) PE/AL/PE piping system and (iv) PPR pipe system for Industrial
applications along with its existing 36 Systems in its’ flagship Plastics Piping
Business.
 Project execution has commenced for setting up of dedicated greenfield unit at

Malanpur (M.P.) to manufacture varieties of Industrial and ball valves. The
Company continues to commit new investment to increase range of value-added
products in its piping business. Expansion of capacities and enlarging the product
basket is underway, which would increase installed capacities of this division to
7,50,000 M.T. per annum by end of FY 24 against present capacity of 6,00,000
M.T. per annum.
 Value added products in packaging films: The company continues to focus more
on Made-up product sales from Cross Laminated Film which would help in better
realizations and improved profitability. Company’s Plan to introduce newly
developed Cross Plastic Film is progressing well and plant with a capacity of 2500
MT per annum should be in operation by end of FY 24.
 Furniture: The company’s furniture business is expected to grow well during the
year backed by softening of PP prices and introduction of several premium
products in the range. The Company has 244 no. of show rooms as on 30th
June,2023 and are being added regularly where quality furniture produced by
the Company is available.
 In Industrial Components division, Passenger Vehicle segment in auto sector is

continuing its bullish trend and expected to remain positive during the year.
Impending festive season and overall positivity in the economy should help the
appliance segment of the division gather steam going forward.
 The Material Handling Division’s product portfolio is doing reasonably well

keeping in pace with the major drivers of Material Handling products like
Automobile, FMCG, Whitegoods and Retail. To meet the diverse needs of the
customers, newer products are being introduced. Supplies of tailor-made
solutions with customized crates are growing and most models of garbage bins
range have started selling well.
 Composite LPG Cylinder division continues to supply new age composite LPG
Cylinders to Indian Oil Corporation against its LOI as per schedule being received.
It is also pursuing vigorously with other oil marketing companies for promoting
Composite Cylinders in domestic market showcasing the safety to human life
what they provide. Efforts continue to expand geographical reach and add new
customers, which is a lengthy process due to nature of the product.
 In Protective Packaging Division, strategy to drive growth both in volume and

value with enhanced profitability across product lines is yielding positive results.
Division continues to focus on development of new applications, value
engineering to provide best product with customized solutions and increase its
export business by strengthening distribution reach in newer markets.
 The Performance Packaging Division of the Company is functioning optimally

with its existing capacity. The division serves different market segments in food
and various non- food industries and working towards post extrusion value
added products for better margins. The Company has a capex plan in excess of
INR7.5bn for the current year including carry forward commitments of previous
year. Entire Capex shall be funded from internal accruals.
Inventory loss
 INR400mn loss
 INR3/kg loss
Volumes
 Last year Q1FY23 was very weak
 This year Q1FY24 growth was driven by Agri and Infrastructure segment
 Govt taking about strong spends in Infra segment
 Incremental growth coming in from East – now the company has three plants
 Supreme Industries is a dominant player in East India
Industry
 Overall market size was 4.2 mn tonnes (65% organised sector)
Demand
 Housing demand is growing strong and is expected to remain strong
 Seeing strong demand from Infra segment also, that’s expected to remain strong
Guidance
 20% Plus overall volume growth
 23-24% in plastic pipes
 64000 tonnes– Industrial, material handling
 64000 tonnes – Packaging volumes
 67000 – Composite cylinder
 14% plus margins
 INR110bn revenues in FY24
Government business
 Doing Govt business only with Maharastra govt
 Apart from that doing Composite cylinder with govt led PSU
PVC prices
 PVC Prices started firming up already
 Increase in value added products also expected to drive margins
 Volatility will always remain in PVC prices but not as much as FY21
 International prices have gone up by $50-100 in last 4 weeks
Margins
 14.27% PVC margins impacted by inventory loss and product mix change towards
agri and infra segment (mainly Nal se Jal)
 7000 extra tonnes into Nal se Jal compared to Q1FY24
 12000 tonnes overall sold towards Nal se Jal
 10% overall contribution to volumes
Nal se Jal
 INR4.8bn in 30 months period Maharashtra government order.
 Out of this must have supplied INR1bn
 Either advance payment or LC
 Low-margin business
PVC windows and doors market

 4.5mn tonnes market in China
 100,000 tonnes in India market
 With population almost same, opportunity is huge
 Several players/fabricators/foreign companies there in this business
 Guidance on this segment is too early to give and the company believes let
production start first
 Value-added product with 17%-plus margins
Channel Inventory
 Normal to lower side of inventory
CPVC
 12% contraction in CPVC
 North and East contraction was more especially due to counterfeit products
 Most of the companies facing competition from counterfeit products
 Taken legal action also and won also but in the process lost volumes
 But management is confident of recovering the volumes
 In plumbing, company has definitely seen growth
CPVC prices
 Prices have started going down
 Passing on the fall in prices to channel too
Water tanks
 Demand is very strong
Simpolin
 From this year, the product will get into value-added segment
Incentive – pvc resin

 Annual incentive of INR50 paisa a kg
Composite cylinder
 Expanded capacity in Feb 2023 only
 70% utilisation on Composite cylinder by FY24
 100,000 units capacity
 Can sell 90,000 pieces
Supreme Petrochem
 Inventory loss hit performance in Q1FY24
 Bottom is done with
 Demand is pretty strong
 Company is doing well on expansion plans also
Plastic pipes
 Investments being made this may be available only next year including industrial
pipes, etc
 Money will be invested this year, growth will come next year
Utilisation
 Against 200,000 tonnes quarterly capacity, produced 150,000 tonnes, which is
75% utilisation
Venus Pipes
Opening remarks
 FY23 special year – IP and expanded capacity
 Robust performance
 Commenced commercial production for seamless, backward and backward

integration
 Optimistic of demand scenario
SS industry
 Seeing shift towards organised led by ADD,
New Capacity
 Adding 400 MT p.m this month
 48inch to 56inches diameter enhancement
 Increasing operating efficiency
 Capex of INR400-450mn from internal accruals
 SS pipes, Lsaw- 56 inch pipes. Highest proportion will be 56 inch pipes. 80% of oil
and gas demand will be from 56 inch pipes.
Q1FY24 performance
 Higher demand for seamless.
 Revenue for welded flat because of fall in realisation due to fall in raw materials
 Decline of 13-15% in welded realisation.
 % of seamless:40-50%: volume terms 50-60% will be welded
 Highest ever revenue; it increased by 58%.
 Inquires continue.
 Volume growth: 25% QoQ in Q1FY24
Margins
 Backward integration
 Increase in share of sale seamless pipes and direct sales
 Small sized tubes will be higher value added products
Guidance
 FY24: 70% utilisation of 33600MT. (improving guidance)
 85-90% of installed capacity utilization of existing capacity in seamless in FY24
 Revenue potential from capacity: 2-2.5 times of FY23 (achieved by FY25)
 EBITDA per kg. No dilution in EBTIDA per kg for seamless or welded.
 50-60% welded pipes
 30% increase in blended EBITDA
Exports
 With backward integration, exports should increase a lot
 Participating in global trade and fairs
Europe
 European economic situation:- last 24 month, numerous challenges
 Geopolitical problems disrupting demand. Higher inflation higher interest rates.
 Energy prices are highest ever
 Labour crisis- cost of labour has increased multiple folds.
 Local manufacturers in Europe have not any significant additions or technology

spends
 Venus pipes has improved and updated technologies.
 Venus improved its market share by improving the
 New player sees big gestation period which for Venus pipes is over
 Strong brand and timely supply of quality products
 Multifold opportunities available
 Export: acceptability of Indian steel pipes in Europe is very good.
Current order book

 INR2bn (INR350-400mn exports) as on date
 Order book is for 90-100days.
 Chinese lower quality has been disrupting;
 Pipeline looks very robust
 Delivering customer experience
Demand and end-user industries

 Mother hollow pipes for seamless pipes further enhance quality.
 Demand from oil and gas, pharma companies
 Europe will provide multiple fold opportunities for Venus.
 With new capacities, export should be able to see good traction in volumes.
 Predominant sectors: Chemical and engineering. Company has been expanding

to pharma, food processing. Railway sector very good demand. Demand received
from wagon manufacturers.
 LSAW: demand from water/ oil & gas/ chemical/ fertilizers
 Great traction from demand after ADD on Chinese imports; more pressure can
be sustained.
 ADD on Chinese imports helped India.
 Europe is not taking Chinese imports. Won’t be impacting India.
Miscellaneous
 Other players LSAW facility are for carbon steel. SS Lsaw plant is at par with other
players.
 Hari-Om completely in different sector. EBITDA has been improving due to

backward integration. Higher direct sales, higher exports.
Debt and WC days

 Gross debt: 40Crores short term+80crores long term= 120; 105 Crores net debt;
Working capital days: 100-105(net)
Piercing versus extrusion

 Some industry specifically demand for extrusion. Acceptability is almost the
same.
 Venus plans to stick to its piercing line. Piercing is accepted in domestic and
international market
 Very few players have extrusion facility.
Exports market
 Backward integration of follow pipes
 Going ahead, share of exports is likely to inch up
 Trying to penetrate the export market. Chemicals industry is affected but the
company leverages other industries
 It would be a combination of- other part of country and export market.
 Very good demand from USA and African market, apart from Europe.
IT
Birlasoft
 Revenue cross USD150mn mark for the first time in history. It includes USD2mn
in revenue from Invacare.
 Deal wins: Signed TCV of USD146mn. Management expects deal flow to improve
materially in the coming quarters. Deal flows are generally lumpy. Some of the
projects slipped to Q2. They expect Q2 booking to be higher than Q1. Pipeline is
growing and they have not lost any deal to competition. They see growth
momentum across Top 20 accounts, which grew 2.7% QoQ.
 Gen-AI: Management highlighted training of 500 consultant on Gen-AI

technologies. They have started developing multiple solutions across clients as
well as coal generation capabilities. They rolled out Gen-AI solution for one of
their life sciences customers.
 Verticals: Management highlighted BFSI and Manufacturing to be key

contributors of growth whereas from a service line perspective, growth drivers
are Infrastructure and ERP.
BFSI business is very small for them and not correct to compare it with their
peers. They work with payment services companies; Financial services
Infrastructure companies among others. Impact due to slowdown in banking
vertical do not affect them as they do not have big banking clients yet but want
to work with the larger banks going forward. T
hey have reclassified life science business as Life sciences and services, means
any company that deliver services to Life Sciences clients or to the end client are
now reclassified under life sciences and services. They expect life science and
Manufacturing to continue to grow going forward.
 ERP services line: ERP business saw shrinking QoQ for almost eight quarters and
now it is bottoming out. They will see growth going forward. They have hired
leadership across verticals. They have seen strong interest in ERP and
Infrastructure after change in leadership and well positioned to capture market
share in ERP business.
 Margins: EBITDA improvement of 170bps. Improvement led by better Gross

margins, lower SG&A, better utilization and improvement in attrition rate.
Management believes to exit the year with more than 16% EBITDA margins. One
month of negative impact of margins due to the salary hike which they intent to
begin from September. Their endeavor to mitigate the costs due to the salary
hikes. Expect ETR to be 25% for FY24. They have made significant change from
compensation point. ESOP is linked to performance for all CXOs including Angan.
 Outlook: Revenue to growth on QoQ basis. Their endeavor is to do better than

industry on QoQ basis. IT Services industry to see impact of current macro
environment in FY24. Overall tech spend to remain healthy, spending to be
focused on customer experience and cost saving initiative.
 M&A: They will be focusing on exaction for couple of quarters. Management will
not acquire for revenue aggregation but will only acquire for capabilities.
 Leadership addition: One level below CXO leadership is hired. They are in the
process of hiring a Chief Operating Officer and will have COO on board soon.
Also, looking to hire head of the RoW business vertical.
Coforge
 Segmental performance: BFS and Insurance were the key growth contributor.
Insurance registered second consecutive quarter of strong growth. Other
verticals saw good growth momentum. They continue to see banks struggling
with decisions in the short to medium term given the uncertain macros. They
continue to observe macro very closely for the time being.
 America grew by 5.6% sequentially while EMEA remained flat. They saw strong
growth across their top customers during the quarter. Management talked about
their resilient performance under an uncertain macro environment by their
continued ability to expand their footprint within their key accounts. The
offshore revenue saw further pickup and stood at 51% of the total revenues once
again. Retail and commercial outside mortgages do seem to be seeing a slight
uptick. Asset Wealth Management continues to be resilient, but overall the
sector is still in a wait and watch mode.
 Margins: Gross margin increased by 30bp YoY while SG&A increased by 80bp YoY
reflecting a 50bp decline in margin YoY. Margin decline QoQ was in-line with
their usual quarterly margin progression through the year. Management remains
confident on their annual margin guidance of 18.3% adjusted EBITDA.
 Delivered adjusted EBITDA Margin of 16%. The decrease in Adjusted EBITDA

margin QoQ was on account of four factors: salary hikes, increase in headcount
(added 1000 employees to support growth), the impact of hedge loss in the
quarter (around 60bp) and visa cost seasonality in Q1.
 Deal: Sixth consecutive quarter of more than USD300mn with an order intake at
USD531mn during the quarter. US contributed USD155mn, EMEA was at
USD346mn and ROW at USD30mn to order intake. Signed USD300mn large deal
with an existing BFS customer. Furthermore, another USD65million with more
than 50% of it representing new business signed with an existing customer again
in the BFS space.
 Guidance: Management maintained 13-16% revenue growth guidance. Gross

margin to improve by 50bp YoY and committed to deliver adjusted EBITDA of
18.3%.
 Demand environment continued to remain stressed. Management remains

confident and continues to find avenues for growth. They are seeing initial signs
of softening in logistics and hospitality. Demand environment in Travel and
Transportation continues to be strong and growth will be in-line with the
company’s growth.
 Generative AI: Management highlighted four small Gen AI based projects. They
are keeping an eye on their BPO business. Testing is one of the area where AI
based interventions may disrupt revenue streams. Embedding AI into all their
service offerings. They have a core team of around 1,000-trained AI specialists
across the hyperscalers and the partner platforms. On net basis, they believe AI
to be growth contributor.
Cyient
 Reclassification: Cyient have reclassified reporting into three-business segments
– DET, DLM and Others.
 DET (Digital, Engineering & Technology) includes erstwhile Services and Small
engineering part business, which was part of DLM earlier (USD0.9mn revenue,
0.5% of DET revenue).
 DLM (listed business).
 Others, which includes Aerospace tooling business, which was earlier in DLM.
This is the business, which it will consider carving out in future.
 Segments: Transportation grew 3.5% QoQ, airline and MRO continue to look
strong. Connectivity effected by wireless operated business shrunk.
Sustainability grew 4.5% QoQ organically. New Growth Areas decline of 6.5%
QoQ, decline can be attributed due to Hi-tech and Semi-con de-growth while
demand in Automotive remain strong. Healthcare was strong, expect healthcare
to rebound in H2FY24.
 All three-sub segment in Aero has growing really well. Air passenger miles are
back to 2019 level. Management remain positive on aero travel side. On Defence
side, they have seen growth as countries around the world has increased
investment on defence post Russia-Ukraine war. Their goal is to grow all these
sub segment in double digit.
 They have seen softness in wireless business. Across the Communication services
providers spending is muted. However, they are seeing continuous spending on
wireline side supported by Government spending around RDOF & BEAD
programs. They expect Hi-Tech to remain flat in FY24. Semiconductor demand
for automotive is strong while they see softness from Consumer / data centre.
 Order growth: Order intake grew 32% YoY.
 The legal suit in US, on Cyient, by its ex-employee has been dismissed.
 Margin performance: EBIT margin was 16.1%, grew 93bps QoQ and 327bps YoY.
Increased by continued improved in SG&A cost, which was result of previous cost
saving initiative. Utilization is at 86% on like for like basis.
 They have seen some delay in the area of discretionary spends where they can
defer and not necessarily significant.
eClerx
 Revenue impacted by macro headwinds esp. in larger client on digital side of the
business.
 Expect recover than revenue decline in Q2, although, we expect demand

challenges to continue due to macro challenges. Revenue in Q2 to be similar to
Q4FY23.
 Overall pipeline is good. Decline in Q1 was due to lower pipeline in Q4.

Management highlighted better pipeline and they have seen improvement in
pipeline in all three-business areas. They should see improvement in revenue
trajectory during the year. They will get better clarity as they move forward.
Client are facing challenges. Due to overall macro environment, clients are
delaying their decision-making.
 They are seeing demand on regulatory and compliance side.
 Margin decline larger than usual was due to wage hike, sales hiring onsite and
revenue decline. There is also some one-off cost (0.6%).
 Capex was higher due to starting of campus in Airoli. Expect increase in attrition
in Q2, will be lower than usual Q2 attrition.
 They are working on Gen-AI esp. on Digital and customer engagement side. They
are going more than 30 POC. They see Gen-AI as huge opportunity for us.
 They do not see Gen-AI to have any major impact on them on short to medium
term. It is actually an opportunity for them, to enhance end user experience. In
customer operation, demand they are seeing on Cx side.
 They do not expect cannibalization in revenue from Gen-AI. Roughly, 10% of

revenue comes from Tech. Their portfolio mix is different from their peers. In
their case, they have many teams with small headcount. They are looking to grow
next Top 10 faster than Top 10.
 There is no insourcing challenges as of now. They had some roll offs in Q1 and
Q4 but not seeing anything large.
 Work in area of Trade process and Trade lifecycle. There is loose link to trading
volume. However, changes in regulation is larger driving factor for them.
 Certain percentage of business rolls off due to short-term work. Sometime, client
chose to defocus on area. Historically, there is certain percentage of work which
roll offs every year. Second bucket of roll offs happens usually due to some
corporate event. There was bunching of these events between FY16-FY19 which
impacted eClerx’s growth. These are unpredictable in nature – can happen
anytime.
FirstSource Solutions
 Revenue decline of 1.6% was in-line with their expectations.
 Mortgages was 9% of revenue vs 17% a year ago. Mortgage business has now
stabilized as volumes have bottom out. They believe worst of the volatility is
behind them. Outlook for Mortgage remain unchanged. The origination volumes
inched up slightly in the last few months, their clients expect refi activity to pick
up only after the Fed reversed direction on interest rate movement. Housing
demand remains strong in US.
 Collection Segment: Macro indicators continue to suggest an increase in

business activity in the near future. US credit card delinquencies continue to rise
and they are at 2.43% versus 2.25% last quarter. Charge-offs were 2.9% versus
2.54% last quarter, sixth consecutive quarterly increase post COVID. They
maintain their assessment of gradual recovery in this business through the year,
especially in H2. Then the legal collection, which would see an uptick from Q4 of
this year or perhaps even Q4-Q1 of next year. They continue to make good
progress in acquiring new clients and cross selling into their portfolio.
 Client metrics: Client addition remains strong this quarter; added 10 new clients
with 4 in Foreign BFS, 5 in healthcare and 1 in CMT. They continue to engage
their mortgage clients of strategic cost saving program and they had a very solid
sales quarter. Management highlighted addition of 2 new clients and expansion
of 3 existing auto plant clients this quarter. They have further cemented with Top
clients and signed them as primary partner for the next 10 years. They will be
moving 3% of the Top client’s revenue to offshoring. Deal win Top client will be
margin accretive in nature.
 Healthcare remain steady, flat CC YoY. Provider benefitted from US Health

emergency lifting. They expect growth to emerge from H2. They are seeing some
slowdown in HPSS. They continue to make progress on enrolling Top 10
healthcare insurer. They expect strong growth in HPSS. Within Healthcare,
decline was due to HPSS while Provider had some seasonality. Within HPSS
decline was due to some contract coming to end and some volume decline in few
decline.
 CMT segment saw 7% YoY growth CC, despite of offshore to onshore movement.
Outside of Top 10 clients, overall growth remains strong.
 In UK, BFS performance remains strong. However, the pace of growth is slower
than last year due to combination of lower volumes across the industry given the
challenging economic environment and some movement from onshore to off
shore. UK economy has seen some slowdown while US industry remains strong.
 Outlook: Maintained revenue growth guidance of 2-5% CC and margin guidance

of 11-12%. Guidance include 3% headwind from last year’s base effect in the
market and headwind of 3.5%-4% from onshore-offshore portfolio rebalancing.
Will be making USD50mn investment on Top client contract. Their medium term
goal to improve margin by 25-30bps each year remains same. They expect HPSS
to be growth driver in FY24. They expect steady growth in collection, mortgage
and provider segments. Big chunk of shift to come from Q2 to Q3 quarter due
to shift in Top client revenue from onsite to offshore.
HCL Technologies
 HCL had seasonally soft Quarter. Services business revenue performance was
lower than HCL’s expectations.
 Service lines: IT and business services shows good momentum, most of which
were offset by reduction in discretionary spend on digital. ERD business
continues to be soft driven by large verticals.
 Industry verticals: Three largest vertical (Manufacturing, life sciences and

Financial services) delivered strong double-digit growth driven by execution of
large deals (helped offset the reduction in discretionary spend). Tech and
Telecom vertical growth decline due to cut in discretionary spend. HCL
highlighted strong pipeline and that growth will pick up in coming quarters.
 Gen AI: Approach to Gen AI has driven by engineering and innovation. HCL
highlighted to be an early adopter of Gen AI, integrating AI within silicon to
infrastructure, apps, data and business processes.
 Software: HCL is making a good progress with go-to-market strategy and is

focused on strong renewal approach. HCL continue to focus on large deals in
software with 11 large deals signed in this quarter.
 Bookings were lower than last few quarters. Expect some spike in coming
quarters, which will make up for the drop in the current quarter. Pipeline
continue to grow. Last two quarters have seen jump in efficiency led programs.
 Net headcount reduced by ~2500 while it added 1500 freshers. Headcount

declined as they choose not to backfill attrition. We will skip wage hike this time
for senior management and delay hike for junior employees.
 Services EBIT margins decline by 120bps with headwind of 10bps from currency
and utilization contributed about 36bps, Travel and other cost contributed
headwind of 33bps. Had one time benefit in previous quarter, which contributed
headwind of 42bps.
 Performance in Q1 was lower than our expectations. In Tech and Telecom, we

saw more drops than expected. Some of the projects HCL were expecting to start
in second half of the quarter but did not happened. Tech and Telecom vertical
has stabilized.
 HCL is confident on achieving the guidance. They have backed in uncertainty in

their guidance. Ask rate around guidance has increased. Their ask rate for the
lower end of the guidance has gone up to 3.2% CQGR. We are confident on
achieving guidance based on pipeline. Significant part of the pipeline can convert
into revenue which gives them confidence. HCL expect performance to improve
during the course of the year.
 Most of the conversations around Gen AI is more innovation-led and one of the
benefits regarding efficiency, which can lead to deflation but it is 2-3 years away.
They believe it will get offset with many projects. We have 140 projects related
to Gen AI. Expect to see some uptick in small projects.
Infosys
 Large deals: Infosys won large deal of USD2.3bn of which 56% was net new.
Value of deals for financial services was 50% of the overall large deal value in Q1.
Infosys announced a mega deal of USD2bn value after the close of Q1. Their
pipeline of deal wins is strong. Topaz, AI and Generative AI are resonating well
with clients.
 Generative AI: Infosys highlighted working on 80 Gen AI projects for their clients.
Have trained 40,000 employees on generative AI as they see opportunities for
new work and productivity improvements through this technology.
 Segmental performance: Infosys highlighted clients stopping work or slowing

down work on transformation programs and discretionary work in Financial
Services and Telecom vertical. Also seeing impact in Hi-Tech vertical and some
parts of Retail.
 Large and regional banking clients in US were resilient this quarter. Financial
Institutions are looking to outsource the non-core business while delayed
decision-making impacted growth.
 Margins: Infosys have launched margin expansion program including pyramid

efficiency automation, generative AI improvements in critical portfolios reducing
their indirect costs among others.
 Operating margin decline by 20bps QoQ with 70bp benefit came from
improvement in cost efficiency, which more than offset by 90bps headwind from
increase in higher variable pay and promotion. Infosys have some headroom to
improve margin further.
 Demand environment: They are very positive on Cloud and now with generative
AI. These are resonating well with their clients. Constraint is weak macro
environment. Macro environment is affecting overall in Europe. Financial
Services and the sub-segments there in telco and in some parts of retail, those
impacted in Europe.
 Guidance: Infosys cut its guidance to 1–3.5% YoY due to a mega deal wins overall
traction and cost efficiency automation and differentiated digital cloud and
generative AI capabilities. Growth lowered due to lower mega deal wins and
longer ramp-up time. Guidance cut was due to change in demand environment
for discretionary and transformation work. They have also seen delay in closure
of large deal-wins and ramp-up of closed deal-wins.
L&T Technology Services

 Transportation vertical: Demand continues to be strong in Auto, led by EV &
truck. Additionally, it won USD20mn deal this quarter. Continue to invest in
Transportation vertical and seeing incremental opportunity in connected car.
 Plant Engineering: Vertical was impacted by supply delay and delay in design
decision making. Expect it to bounce back from Q2, have seen some
improvement in decision making in June-July. Expect growth in Q2 and beyond.
 Industrial Products: Vertical was impacted by decision delay. Seeing good

pipeline in this vertical.
 Telecom & Hi-tech: Marginal decline on organic basis. Additionally, Won

USD50mn deal. There is weakness in semi-conductor side. It is seeing
opportunity as global manufacturing company moved production from China to
India. SWC is integrated in Telecom & Hi-Tech division. Seen early wins and
partnership with Telecom services provider. It expect to see growth in combined
business, although, challenges might continue in next few quarters.
 Medical Devices: It is seeing demand in this vertical. Pipeline gives confidence

that growth momentum to improve.
 Transportation to continue to grow in coming quarter due to growth in EV. In

Industrial products, it expects growth to come back in Plant Engg in next quarter.
It is bit conservative on Hi-Tech side. Seeing good traction in Medical Devices but
how much can we monetize of that is yet to be seen.
 It is increasing investment in AI, Software defined vehicle and Cyber Security.

Within AI, will focus on Manufacturing, Auto and medical segments. Will
strengthen AI team in coming months.
 It grew in Q1, despite of delay in decision-making and is seeing improvement in

decision making and have strong pipeline.
 It maintained 20% CC revenue growth guidance on reported basis and 10%

organic growth guidance.
 EBIT margin was slightly down organically due to investment on ramping up deal.
SWC has lower margin profile, due to which reported margin came in at 17.2%.
This quarter other expense was lower due to sub-con cost and lower legal cost.
Don’t expect Other expense to increase or decrease from current level as % of
revenue.
 Segmental margin improved in 2 out of 5 verticals on QoQ basis.
 Telecom and Hi-Tech margin came in at 8.8% vs reported margin of 12% in

Q4FY23 due to acquisition of SWC and investment made on large deal wins.
 Attrition is expected to come down further in coming quarters.
 It expect to achieve 17% EBIT level in FY24and aspire to improve EBIT margin to
17.5% by H1FY26.
 Net headcount will increase by 720 people in Q2 from Q1.
 DSO on organically basis were 92 days vs 90 days in Q4FY23. Combined DSO came
in at 117 days within guided range of 115-120 days.
LTIMindtree
 Q1 played out the way LTIMindtree expected. Some of the aspects of delay and
hiring freeze which LTIM expected to go by the end of Q1 but that did not
happen.
 FY24 double-digit growth guidance looks challenging now. Management

highlighted 10% increase in pipeline and in an overall activity.
 Segmental: BFSI grew 12.1% YoY, this vertical is showing resilience despite of
macro challenges and have seen deal wins from vendor consolidation. Some
clients are continuing with hiring freeze and delay in decision-making.
 Manufacturing and Resource, clients are continuing with their investment in

Industry 4.0. Energy clients are focusing on core business optimization.
 Retail and CPG is seeing long-term commitment from client like roll out of ERP
platform. TTH is experiencing robust demand for leisure travel, although,
corporate travel is yet to pick up. Impact in ROW slowdown is client specific. Lot
of apprehensions is there in Retail, LTIM will wait and watch this vertical and do
not see any radical sign of recovery here. Media and Entertainment is shifting to
AI based products.
 In Hi-Tech, some of the closure they had in previous quarters has started to ramp
up in Q1. Deal activity in Hi-Tech is healthy. LTIM is much more bullish in terms
of activity they are seeing in Hi-tech. Most of the Hi-Tech clients will start their
financial year in July so LTIM will check for trend of spending.
 Attrition will continue to show downward trend on LTM basis, Utilization

increases to 84.4%. They had planned wage increase in July and are still confident
about exit at 17-18% margin range.
 Reclassification of 1000 employees, which has increased Gross Margin. EBIT

Margin Bridge is, gross margins improved by 170bp, of which 120bp is on account
of reclassification, 70bp due to operational efficiencies led by increased
utilization and offset by seasonal visa costs of 20bp. A corresponding increase of
120bp in SG&A costs due to the reclassification and 20bp impact on account of
increased marketing spend. The impact of reclassification was EBIT neutral.
 Continue to see good sales activity and a healthy win ratio, resulting in a robust
deal pipeline. At the same time, continue to see delays in decision-making and
hiring phases.
 They are not seeing budget flush kind of scenario. Clients are focusing on ROI
based investment or where there is a need from a risk and compliance
perspective. If client sees stability in interest rate regime, they might start
increase their spending on tech. Managed Services contract are building and
providing long term growth visibility as soon as LTIM sees some growth in
discretionary spend, overall growth can accelerate given there would be no
headwinds.
Persistent Systems
 Revenue growth: Services revenue grew 2.7% QoQ and IP revenue grew 8% QoQ.
Persistent continue to delivery top quartile growth despite of challenging macro
environment. It remains cautiously optimistic about growth outlook.
 Deal wins: Deal-wins were bit lower due to some of them slipped to next quarter.
It has increased investment in S&M to support growth and investing in new tech
growth area like Gen-AI. It expect ACV and TCV will reflect that in coming
quarters. Pipeline remain good but decision making slow and will continue to
remain slow in the next 1-2 quarters.
 Margins: Higher provision impacted margin by 10bp and higher travelling and
office opening charger impacted by 20bp. Wage hike is fully implemented from
1st July. Have enough levers to improve margins using many lever including
increasing utilization and operating leverage among others.
 Rational to open offices in Tier 2 and Tier 3 cities was based on employee’s home
location and talent pool availability.
 Macro impact: Not every customer is getting impacted equally. Clients are
communicating that next 1-2 quarters are tough then they expect to invest.
During the last few months, it has seen some pullback rather than acceleration
in spends.
 Segmental colour: BFSI came strong but next few quarters it might be soft.
Within Healthcare, it deals in four areas: payer, provider, pharma and scientific
equipment. Scientific Equipment client benefited from Covid are now seeing
slowdown.
 Software licenses cost increase due to investment in internal cyber security

software and also software used for training.
 Top client: Top client to be stable customer going forward. It is at decent margin
given its revenue contribution. Top client is already working on its own AI
strategy.
 Gen-AI: In Gen-AI target is to train 16k employees. Also leveraging Gen-AI tech
across organization internally. It is in discussion with 50+ clients on Gen-AI.
Expect Gen-AI adoption to increase significantly in the next 3-4 quarters.
 Persistent is also working with hyperscalers on their machine learning related

technologies, which is the underlying thing behind all this for enterprises in
healthcare, life sciences. It is very closing collaborating with AWS and Microsoft.
 On M&A Front: Have full integrated acquired companies and is active again on
M&A front, will update in coming quarters.
Redington
 Solid execution across businesses and geographies. Continue to gain share in
markets and secure new opportunities
 Highest ever revenue for any Q1 quarter
 Building deeper partnerships
 Delivery has been broad based and with growth across all geographies
 PAT down due to interest costs and factoring charges. Largely impacted in ROW
 Digital transformation been a key catalyst of growth
 Focused on building competencies to provide managed services for public and

private cloud and security
 Technology demand related to work from home de-grown. Smartphone and PC

shipments have declined in recent quarters
 Demand robust for data center infrastructure products network and cloud
products
 Grown enterprise products by 40%. New technologies are leading growth
 Geographies are consumption and investment driven
 Guidance for GDP growth across geographies have reduced
 Although inflation cooling off, it remains high in most parts of the world. Cost of
capital has gone up
 Currency devaluation in currencies of operating countries like Nigeria Egypt

Ghana
 Out of the shortage issue but some challenges continue in networking

equipment
 Expect constrained demand environment in access products but much better in

other categories like data centers and cloud
 Expect reasonable revenue growth and margins going forward
Tata Consultancy Services

 Wage hike in Q1 impacted margin by 200bps which was partially offset by
operating efficiency and low sub con cost.
 Added 523 employees, as it continue to focus driving efficiency for existing

employees. TCS continues to hire freshers and will hire in current quarter as well.
 Will continue to use levers to improve margins like utilization. Margin will
improve during the course of the year similar trajectory like previous periods.
 LTM attrition declined to 17.8%. Attrition will be back in historical range in H2.
 See most caution in North America while UK continue to remain strongest geo.
 Ignio saw 37 new deal wins and 26 go-live; TCS BaNCS had 7 new wins and 8 go-
live; Quartz jas one go live; TCS OmniStore, one win and one go-live; HOB one
win and one go-live; iON saw, 23 wins and 24 go-live
 Want to create talent pool of 100k employees on Gen AI. Partnering with all
hyperscalers.
 Won two deal in UK public sector, further enforcing our presence in UK market.
 Not hear concern related to banking crisis. Large banks actually benefited from
this.
 While demand is still good but client are reviewing project underway. Project
where there is not clear ROI – next phase of the project is put on pause.
 Too early to say that H2FY24 will be better than H1.
 Manufacturing is doing well due to smaller base. Supply chain situation is

improving. Difficult to say how long it will last. Essential retail is doing well, which
specialty retail is facing challenges. We also had significant market share gain in
this vertical.
 Client are seeing challenges due to macro uncertainty at the same time they see
gaps to fill in their tech adoption.
 Client are taking month on month approach, which is leading to limited visibility.
Client are coming back with reduced scope. Flavour of the quarter is Generative
AI. Every conversion with client, we have this discussion on Gen AI. Working on
50 proof of work.
 Everybody is curious about Gen AI value but it is not yet impacted our deals. Time
to market will be redefined by Gen AI. All the tech adoption previously has led to
increase in scope of work which led to even more employee addition. Multiple
teams with many verticals are trying to use this tech. We are executing 50
projects.
Tech Mahindra
 Mohit (CEO Designate): TechM had a challenging quarter. He remain very
optimistic in medium to long term. They are still in 4-5 months of transition
period.
 Revenue performance: Management believes revenue drop due to

transformative projects coming to an end and one-off customer declaring
bankruptcy. Their result could have been better. This quarter is a blip in their
growth trajectory. Decline 0.4% QoQ in Enterprise while Telecom decline by
more than 9%. TCV came in at USD359mn, down 39%QoQ/55% YoY.
 Margins: Margins impacted due to 3 areas of drop: Revenue drop impacting

margin (-70bps), one time provision in quarter due to certain customer declaring
bankruptcy (-200bp). Seasonality in Comviva impacting margin (-50bps) and
Wage hike impacted by -130bp. Majority of wage inflation is already done in Q1
and for small part of senior management, it will happen in the following quarter.
 Sub-contractor costs: Sub con cost was 16% of revenue and now reduced to 14%
over the last 3-4 quarters and management will continue to work to get to 10%
and below. They end up replacing sub con with a full time headcount. 100bps cut
in sub con cost leads to 25bps in savings.
 Employee metrics: Management will work on pyramid broadening by bringing

more juniors into the organization. They will continue to drive off shoring and
have room to improve by 400-500bps in medium term. They have trained 8k
employee on Gen-Ai capabilities. Management is investing and will continue
investing on Quantum computing and AI.
 Segmental Performance: Europe decline due to decline in communication

vertical and project closures that led to the cut in discretionary spend. RoW
declines sequentially driven by the seasonality and certain closures in network
services projects. Most of the headwind in communication are behind them.
However, Telecom clients are still not investing aggressively on capex or opex.
They will have slow and gradual recovery going forward. Lot of re-prioritization
will happen on digital transformation projects. Telecom are looking at higher ROE
projects. Within Manufacturing, it is getting digital with more and more creation
of embedded software. They are very well entrenched with Automotive and Aero
and seeing strong demand in these two areas.
 Client: Management highlighted quarterly revenue impact of USD6-7mn due to

client bankruptcy. Most of the revenue slowdown impact happened during the
second half of the quarter. Management were seeing some pressure in Top 10
customers in the last couple of quarters and getting closer towards the bottom-
out phase.
 Generative AI: Management will announce more investments in quantum

computing, cyber security and AI. 5G connected solutions and networks,
experience management through WAN will continue to be strong differentiators
and will convert them into solutions for clients.
Wipro
 Q1 was another quarter of strong deal wins. Had highest booking in 8 quarters.
Added 2 new account in USD100mn+ bracket taking total to 21. USD100mn+
account doubled in the last 2.5 years.
 Wipro is seeing some softness in revenue. Despite revenue challenges, Wipro

held margins higher than last year Q1. Highlighted productivity in fixed price
projects, managing fixed cost and employee utilization. Expect margins to be in
similar range like last few quarters in Q2 as well. Wipro will do wage hike in Q3
like last year. There is still some room to drive utilization higher.
 Segmental Performance: Americas 1 order bookings in terms of TCV grew 37%

YoY led by healthcare and medical devices. Hi-tech and BFSI are the two sectors
that were impacted the most due to software discretionary spend. Completed
transition to four business services lines, which is helping them to faster time to
market. Tech spending is normalizing.
 Wipro is winning more deal than ever before and has been consistent for the last
3-4 quarters. There is reduction in discretionary spends. Clients have budget but
they were slow in deploying and this year is turning out to be better than
expected. Market is not dramatically different from what they saw in last
quarter.
 Wipro mentioned higher discretionary spend in two of its acquisition, Capco and
Rizing. Wipro highlighted that it is winning against their competitors that their
strategy is really paying off.
 Wipro has cut tail account while scaling large accounts.
 Except for consulting rest of the service line, continue to perform very well and
in-line with overall growth rate of the company.
 AI can and will change fundamental of every model. Wipro had delivered 2000
AI engagement. They are using Gen-AI for multiple use cases and will train their
entire workforce on AI in next 12 months.
 Gen-AI is fundamental shift in the way every businesses operate. Wipro expects
greater and greater efficiency in every sector and vertical. They see significant
productivity improvement for customer as well as in their internal operations.
Majority of the USD1bn investment on AI will be organic. Will be investing in
research, capabilities, investment in Wipro ventures, platforms training as well
as M&A.
 Wipro’s ambition to achieve 17%–17.5% margin continues to remain, although,

in short term it might be below the target.
Zensar Technologies
 Segmental performance: Zensar highlighted good traction in the Europe region
from both long-standing and new clients’ perspective. Good growth momentum
in South Africa. Their sustained focus through their data experience engineering
and cloud mix has led to a steady growth. They are witnessing consistent growth
in BFSI over the last few quarters aided by new deal wins at some of their key
clients. They see softness in the overall demand environment of Hi-tech,
Manufacturing and consumer services vertical.
 Margins: Gross Margins increased by 170bps. EBITDA improved by 420bps QoQ.

This includes onetime benefit of 100bps in R&D credit received during the
quarter. Improvement in EBITDA was due to 1.1% increase in utilization.
Continued to focus on efficiency in Sales and Marketing function. They would like
to maintain margin at mid teen level.
 Order book: Management track order based on renewal, new client and existing
client (new business). Existing client (new business) had best wins. Order book at
USD154mn supported by healthy renewal and new deal wins.
 Demand environment: Management continues to see softness in the overall

demand environment. The near-term demand environment continues to be
challenging resulting in delayed decision-making and slowdown in spend. They
are certain of reduction in the long-term secular growth in IT industry over the
last two years. They have increased their addressable market and service line
investments.
 They have very small market share in BFSI therefore less impacted by macro
changes. Clients are looking to work with smaller IT Services providers, which can
deliver at lower price points.
 Clients continue to differ or optimize their capital spend and scaled back their
budgets. This has resulted in reprioritization of spend at client sides.
Discretionary projects witnessing a reduction in scope as they are getting
deferred.
 Attrition continues to see downtrend on account of easing supply-side issues and

their employee-centric policies. Management gave wage hike in Q1 and wage
hike was lower than last year.
 Management mentioned cross selling is working well for them. They have
opened nine new accounts, which is slightly more on run rate basis. They are
seeing lot of traction on experience services due to cross selling. They are seeing
traction in Enterprise SaaS and advance engineering services. Newer service
offerings will see faster growth.
 Continue to focus on improving offerings around Generative AI through supply

chain analytics.
 Management to continue focus on pass-through revenue as per their stated

strategy.
Internet
Info Edge
Business highlights
 Total billings at INR5.23bn, down 0.2% YoY
 Total Revenue at INR5.84bn, up 15.1% YoY
 Deferred Revenue at INR8.0bn, up 15.2% YoY
 Cash balance INR35.6bn vs 34.4bn in Q1FY23
Recruitment – Naukri
 Billings at INR3.97bn, down 4.2% YoY
 Revenue at INR4.46bn, up 15.3% YoY
 Operating EBITDA at INR2.63bn, up 17% YoY with margin of 59%
 CFO at INR2.06bn
 Challenging environment in IT hiring leading to some pressure on billings growth
 Non IT sectors maintained reasonable growth
 Pricing remains stable
 Delayed spending has led to resource rationalization
 Job Speak index on declining trend
Real Estate – 99acres
 Billings at INR734mn, up 20.1% YoY
 Revenue at INR827mn, up 24.7% YoY
 Operating EBITDA at INR-225mn vs INR-354mn in Q1FY23
 CFO of INR-400mn
 Billing growth has been good and reflects positive sentiment in real estate
market
 Traffic increased in mid-teens
 User actions indicate strong demand for Q2FY24
 Increased number of brokers on the platform
 Listing realization continues to improve driven by price hikes
 Will continue to invest to generate leads
Matrimony - Jeevansathi
 Revenue at INR194mn, down 15.3% YoY
 Operating EBITDA at INR-180mn vs INR-276mn in Q1FY23
 New products for monetization has shown some traction. Will continue to
monitor
Education - Shiksha
 Revenue at INR358mn, up 14.6% YoY
 Operating EBITDA at INR-10mn vs INR53mn in Q1FY23
 Healthy growth in traffic
 Continue to make long term investment
Zomato
Q How much was IPL impact on food delivery GOV growth? Similar impact from
the World Cup?
A IPL doesn’t have too much impact except few matches towards fag end.
Seasonality has to do with the school holidays. Four years ago business was very
different and don’t have enough data points. Do expect some upside from world cup
Q AOV in Blinkit is higher than competitors. How sustainable is it?
A Business deals with wide variety. AOV tends to move with seasons. Were also
supply constraint. There are seasonal changes in consumption patterns, which also
drives AOV. There will be variability in AOV
Q Reason for QoQ drop in employee expenses, excluding ESOP? Is there a annual
hike?
A Largely a function of rightsizing done in the December quarter. Last quarter had
severance payouts. Cycle is July to July. Impact in Q2 of annual hike
Q Any changes implemented on Blinkit? Have delivery costs per order changed in
Blinkit?
A Changes in April were to bring all delivery partners at same earnings levels.
Delivery cost did not change significantly during the quarter. Most of the
improvement in contribution on operating leverage of fixed assets
Q What were the risky bets called out in shareholder letter?
A Changes on people side and changes to drive growth with Zomato Gold.
Q GOV mix for Blinkit?
A Don’t give break out for product categories. Always looking to bring more
convenience. Increasing size of portfolio where products can be made available in
10 minutes
Q Did Blinkit delivery cost jump due to disruption in Delhi NCR?
A Delivery changes were not significant and don’t expect it to change materially
going forward. Disruptions were due to misunderstanding. Some of the stores were
shut for few days. Had weaker April and May but have recovered
Q Will food delivery growth come largely from user growth?
A Yes and in this quarter too growth was driven by user growth
Q Would you be considering cash for shareholder return?
A Not at this point of time, but will reconsider as business scales and competitive
dynamics change
Q Where contribution margin should settle for 4-5% Adjusted EBITDA food
delivery?
A In the past have spoken about 8% contribution margin but with operating leverage
can get 4-5% adjusted ebitda margin even with bit lower contribution margin
Q How much of Hyperpure growth came from contribution to Blinkit? Synergies

between food delivery and quick commerce for delivery cost?
A Growing in core restaurants business and also supplying to sellers on Blinkit. Have
taken some initiatives on technology side for getting some synergies but as of now
not actively. Making sure that both the business scale well with adequate drivers
Q What instils confidence of 40% adjusted revenue growth with nominal GDP
growth of 10%? Is this organic growth?
A 40% guidance is for overall revenue level. Even for last few quarters, have grown
north of 50% YoY. Some businesses will grow faster than others. Yes, 40% growth is
organic guidance.
Q QSR companies’ outlook on delivery is not buoyant. Is there some difference?
A QSR contributes single digit % of business. Most of the business is through small
restaurants and outlet chains. No reason to believe that shouldn’t be able to grow
well.
Q Shouldn’t there be bit of stress restaurants are facing with increase in food
inflation
A Restaurants are spending aggressively for ad on the platform and this has also led
to increase in take rates. Small restaurants also take up increase in prices.
Q Will path of 2.5% to 5% adjusted ebitda margin in food delivery be linear in

nature?
A Confident of getting there in few quarters but difficult to say if it will be linear.
Q Are 100 new stores addition guidance in the new cities or increasing depth in the
existing cities?
A Most of the new store additions in the existing geographies. These are where there
are high level polygons with strong volumes.
Q Do you really need a separate app for Dining out ?
A Not saying that Going out (Dine in + Live) will not be on Zomato app. Still
experimenting. Don’t have a firm view for now.
Q How much more scope for take rates in food delivery?
A Large increase in take rates of food delivery because of ad sales as restaurants are
spending. Ads also meaningful driver of revenue expansion in Blinkit with journey
less mature than food delivery.
Q Any impact because of floods?
A Yes these events do have hyperlocal impact. Gurgaon had some impact last few
days.
Q GOV in Blinkit per store would remain steady?
A GOV per store depends more if it is for new locations. In the high order density
locations expect demand to increase faster. Number of factors to consider like the
polygon.
Q Steady state employee cost as % of revenue?
A Organisation is right sized. September quarter will have impact of annual hike.
Should grow at some multiple of inflation.
Q Behaviour of Gold vs non-gold?
A AOVs are slightly higher for Gold and ordering frequency is also higher.
Q How inflation impact business across segments?
A Food inflation is impacting restaurants but as they get impacted they also spend
on advertisement on the platforms.
Q Investments made in Gold? Where will this normalise?
A Hard to say when it will normalise. There are pockets when investments need to
be made. Won’t be able to put specific number on investment and where it is likely
to go
Q Have platform fees been tried?
A It’s a business call and will take evaluate if it is needed for the business
Q Have there been addition of new restaurants?
A Largely new restaurants have been added. Every quarter some shut down and
many open up. Some geographies not adequately penetrated. Those also add up to
the total restaurants
Q How do delivery riders getting cross-utilised benefit? Any colour?
A This is not specific strategy that is being deployed. Don’t necessarily use the fleet
for other use cases or entities.
Q Levers for moving adjusted EBITDA of Blinkit towards profitability. Could you
quantify ad sales are volume led or price led?
A Levers are operating leverage, expansion of wallet share of customers leading to

order growth and revenue growth. Ad sales have largely been volume led and having
not taken price increases
Media
PVR INOX
Regional movies’ share
 The company needs to grow more in southern regions in order to garner a higher
share in total regional films. Southern films travel deep into southern centers and
thus company should focus more on southern regions.
 40-45% of total screen additions are in south Indian region alone. Company
entered in new cities such as Nazamabaad this year.
 In large cities in South, company has also been working with newer properties.
Synergies
 Ticket synergy benefits are expected to kick in from the Q2/Q3/Q4, while the
synergy benefits from F&B are already on track.
 Advertising revenue is lacking behind. On cost synergies, company is already

running slightly ahead.
 The company is planning to open 150-165 screens in FY24.
F&B revenue
 Menus have been changed and new items have been added.
 Few Inox theatres have also started to serve non-veg.
 Company has also launched products at different SKUs
 All these efforts combined have led to an improvement in F&B revenues.
 The INR99 pricing has been seeing good response.
Newly launched 30-minute trailer shows
 Company has received fantastic response on trailer show; has received 22%
occupancy in these shows.
 Almost 40% of the customers, have been noticed to book ticket for at least one
of the movies (which were screened in theatre)
Movie performance in Q1FY24
 Volatility in Hindi box office has reduced considerably. Hollywood films, which
have been low last year, have been compensated.
 The quarter witnessed a muted start in April, with limited movie releases in Hindi.
The box office picked up pace in the month of May with the release of, ‘The
Kerala Story’ which turned out to be the biggest release of this quarter along with
other super hits such as ‘Fast X’ and ‘Guardians of the Galaxy Vol. 3’ from
Hollywood, and ‘2018’ from Malayalam.
 The momentum continued in June with the release of ‘Adipurush’, which

recorded highest weekend admissions in 2023. Unfortunately, the movie did not
do well post its first weekend.
 Company is witnessing MoM increases in footfalls.
 Other movies that delivered reasonable performances were ‘Spiderman: Across

the Spiderverse’, ‘The Flash’, and ‘Transformers: Rise of the Beasts’ from
Hollywood. Regional movies like ‘Carry on Jatta 3’ in Punjabi (crossed INR1bn
worldwide) and ‘Baipan Bhari Deva’ in Marathi, which were released towards the
end of the quarter, have achieved remarkable record-breaking success.
 Q1FY24 saw the release of the highest number of Hollywood movies post-
pandemic, which, combined with a robust performance at the Box Office, led to
an impressive growth of 70% in QoQ box office collections for Hollywood films.
 The recent success of Hollywood blockbusters like ‘Oppenheimer’, ‘Mission

Impossible: Dead Reckoning Part 1’ and ‘Barbie’ reaffirms belief that audience’s
enthusiasm for theatrical movie going remains intact when there is compelling
content.
Pipeline for FY24
 There is robust content line-up across languages in FY24. Upcoming release slate
includes several highly anticipated Hindi movies such as ‘Oh My God 2’ starring
Akshay Kumar, ‘Gadar 2’ starring Sunny Deol, and ‘DreamGirl 2’ starring
Ayushman Khurana in August; ‘Jawaan’ starring Shahrukh Khan in September;
‘Ganapath’ starring Tiger Shroff and ‘Tejas’ starring Kangana Ranaut in October;
‘Tiger 3’ starring Salman Khan in November; ‘Yodha’ starring Sidharth Malhotra
and ‘Dunki’ starring Shahrukh Khan in December.
 Hollywood releases, including ‘The Meg 2 : The Trench‘, ‘Blue Beetle’, ‘Teenage
Mutant Ninja Turtles: Mutant Mayhem’, ‘Gran Turismo’ and ‘Retribution’ in
August; ‘The Equalizer 3’, ‘The Nun 2’, ‘A Haunting in Venice’, ‘My Big Fat Greek
Wedding 3’, ‘Dumb Money’ and ‘Expendables 4’ in September; ‘Kraven: The
Hunter’, ‘Paw Patrol : The Mighty Movie’, ‘The Exorcist : Believer’, ‘Killers of the
Flower Moon’, ‘Saw 10’ in October; ‘Dune part 2’, ‘The Marvels’, Disney’s ‘Wish’
& ‘Napoleon’ in November, among others, also have high expectations.
 From the regional genre, there are, ‘Jailer’ starring Rajinikanth, ‘Bhola Shankar’
starring Chiranjeevi and ‘King of Kotha’ starting Dulquer Salmaan in August;
‘Kushi‘ starring Vijay Deverekonda and Samantha Prabhu, ‘Viduthalai Part 2’
starring Vijay Sethupathi and ‘Salaar’ starring Prabhas in Sep’23, among others.
Others
 The company is on the verge of signing contracts for cricket World Cup matches
(specially Indian team matches) and will be screening the matches. Company is
confident of receiving corporate participation in screening of these matches.
 Net debt levels have moved up by INR700mn.There could be volatility in debt a

on QoQ basis based on the requirements, but the annual guidance more or less
remains the same. At present, company does not intent to raise any funds for
the year. It plans to fulfill requirements through internal accruals.
 Contract with BMS has ended and PVR has renewed the contract with revenue
sharing basis. Inox contract is already on revenue sharing basis.
 There are no merger related expenses appearing in Q1FY24.
 Q1FY24 witnessed a 11% increase in admissions from 30.5mn admissions in

Q4FY23 to 33.9mn admissions in Q1FY24. Company had screened a lot of shows
in Q1FY24.
 ‘Barbie’ and ‘Oppenheimer’ have performed exceptionally well, and the

company has followed dynamic pricing for the same.
 The company witnessed built up in Bollywood films with the success for recent
three Hollywood films.
 ‘Jawaan’ movie has been delayed due to VFX and augment marketing efforts.
 In next 4 to 6 weeks, the Hollywood films strike is expected to cool off. The lineup
of current Hollywood moves remains robust which do not have any delay.
 The company closed 14 underperformed screens in Q1FY24, which formed part

of the earlier identified 50 screens.
 Q4 is the lowest quarter in terms of electricity consumption, while Q1/Q2 and

Q3 have higher electricity consumption.
 Most of the newly opened properties have been structured at minimum amount
guarantee or revenue sharing, whichever is higher.
 PVR and INOX loyalty program is coming to an end, and towards H2 company will
work on a new customized loyalty program.
Zee Entertainment Enterprises

Detailed takeaways
Outlook
 Ad recovery seeing some green shoots from late June and July. Q2FY24 will see
more green shoots in ad revenue but pace is moderate, but positive momentum
will continue going forward.
 Zee is finally seeing some benefits of NTO 3.0 in revenues but will take more
couple of quarters of full-fledged benefits.
 Zee is looking at stories and narratives which they can context it according to the
region.
 Zee has started experimenting with Telugu, Marathi, Bengali and Odiya
programmes on Zee5; These regions have out perform on national tv side as well,
hence experimenting on digital side.
 Zee is still investing in Zee5 mainly in content and tech for better user interface.
 As a movie producer, Zee is looking at this at dynamic level with a fair bit of
regional and Hindi mix.
 There is legal arrangement between Zee and Star regarding sharing TV

broadcasting of ICCI.
 Continue to invest in ZeeTV, Zee Marathi, Zee Tamil & Movies to further grow
market share.
 Further strengthen market position in Bangla, Odiya, Telugu & Kannada Also
strengthen new channels: Zee Punjabi, Biskope, Keralam, Chitramandir, Picchar,
Thirai.
 ZMC Hindi movies acquisition share strong track record of acquiring new Hindi
movies title.
Merger
 Mr Punit Goenka’s case and merger proceedings both are different things, and
all clauses relating to merger will be same except the clause regarding Punit if
he is not being named as MD and CEO of merged entity.
Advertisement revenue
 Zee continues to see muted ad spends, but there were some green shots.
 Q1FY24 started on a slow note due to IPL, growth was led in back end of Q1 by
FMCG as there was pickup in their ad spends.
 Q2FY24 will see more green shoots but pace is moderate, but positive
momentum will continue going forward.
 Ad recovery seeing some green shoots from late June and July.
 FMCG industry accounts for 60% of ad revenue business.
 Zee is currently not in a position to give robust growth picture but positive
momentum will go up especially in festive season.
 FMCG is high category salience with high degree of sensitivity.
 Domestic Ad revenues amounted to INR9.02bn.
 Quarter-on-Quarter (QoQ) performance showed a decline of 6.4%.
 Year-on-Year (YoY) performance indicated a decline of 2.6%.
Subscription revenue
 Subscription revenue experienced a YoY increase of 18%.
 This growth is attributed to the impact of NTO 3.0 and the ZEE5 platform, which
likely attracted more subscribers.
Other sales and services revenue
 Other sales and services revenue saw a significant YoY increase of 42%.
 The growth is supported by revenue from theatrical releases of movies,

indicating successful performances at the box office.
Operating cost
 Programming and Technology cost increased YoY due to higher content cost in
movies (including theatrical releases) and investment in ZEE5.
A&P and Other Expenses
 Marketing costs increased YoY, primarily driven by higher spending on new

shows, movies, and theatrical releases.
International revenue breakdown
 Advertising revenue for Q1FY24 was INR391mn.
 Subscription revenue for the same period was INR1,062mn.
 Other sales and services revenue for Q1FY24 amounted to INR213mn.
Broadcasting
 IPL 2023 saw 32% YoY growth in television rating compare to last season.
 Linear TV viewership was at five quarter high.
 Zee is finally seeing some benefits of NTO 3.0 in revenues but will take more
couple of quarters of full-fledged benefits.
 The incremental revenue from NTO 3.0 is flowing into pay tv eco system and
marketing spends.
 South markets for Zee is growing at a faster pace and is at a 30 month high for
Zee Tamil; Zee Telugu is also at all-time high; zee Punjab is no 1 channel in Punjab
and Chandigarh.
 Zee TV and Zee Marathi still remain on the challenging end.
 Zee is programming in regional content; there are 2 layers one is ad supported

tier and the other is pay wall where there is original content and by programming
more in regional content through pay wall will drive more people to subscription.
 Zee is looking at stories and narratives which they can context it according to the
region.
 Viewership share gain is market to market dynamics- few of them are multiplayer
and while others are 2 player market; for eg- There is multiplayer market in
Malayalam region and where there was consolidation of market share for Zee.
 Continue to invest in ZeeTV, Zee Marathi, Zee Tamil & Movies to further grow
market share.
 Further Strengthen market position in Bangla, Odiya, Telugu & Kannada Also
strengthen new channels: Zee Punjabi, Biskope, Keralam, Chitramandir, Picchar,
Thirai
Zee 5
 Zee5 revenues were up 21% YoY.
 Sequentially cost base steady with prudent cost management, despite wage
escalation and increment.
 32 shows and movies (including five originals) released during the quarter.
 Viewership and subscription has improved YoY and QoQ.
 Zee has started experimenting with Telugu, Marathi, Bengali and Odia
programmes on Zee5; These regions have out perform on national tv side as well,
hence experimenting on digital side.
 EBITDA loss for Zee5 stood at INR3,421mn, which increased YoY and QoQ. This
was due to lower revenues leading to operating deleverage.
 EBITDA losses have flown through revenue, wherein revenue + EBITDA loss, QoQ
are steady,
 Zee will still invest in content and tech for better user interface.
Zee Studio
 ZEE Studio: 3 Hindi and 4 other language movies released during Q1FY24
 Among big movies – ‘Gadar 2’ to release this week and ‘Maidaan’ to release in
later end of year.
 As a movie producer, Zee is looking at this at dynamic level with a fair bit of
regional and Hindi mix.
Zee Music Company (ZMC)
 2nd Largest Music Label with ~137mn Subscribers on YouTube
 Zee Music Company witnessed 13% QoQ growth on video views & 3 Mn
subscribers' addition during quarter on back of new age catalogue
 ZMC Hindi movies acquisition share strong track record of acquiring new Hindi
movies title
Others
 The cash and treasury investments of the company as of Jun’23 stood at

INR5,344mn, including Cash balance of INR3,942mn and FDs of INR1,402mn
 Lease liabilities and other borrowings for the quarter stood at INR622mn.
 IndusInd case - Both parties have withdrawn; Standard chartered case – still in
progress with both parties cooperating as required; IDBI case has been dismissed
 Any payments made relating to settlement and proceedings are within

provision.,
 In last quarter, Zee discounted its Sugarbox operations.
 Out of INR4200mn invested in Sugarbox, INR3000mn is written off, and the

balance remains on standalone books, which is not relevant from consolidated
point of view.
 The board has formed an interim committee wherein professional and senior
leaders there and regarding any material or big decision board is consulted.
 Zee had implemented cash and carry model few quarters back and because of
litigation with SITI it has not receiving payment and hence not recognized the
same in revenue,
 Zee had switched off signal to SITI in last quarter and had reached a settlement
with certain lenders of SITI in Q4FY23.
 There is legal arrangement between Zee and Star, regarding sharing TV

broadcasting of ICCI.
Metals & Mining
Hindalco Industries
Aluminium business
 Hindalco remains in the first quartile of the global cost curve
 Primary aluminium CoP was down by 2% QoQ (guided flat CoP earlier) in
Q1FY24. Management expects the CoP to further reduce by 3% QoQ owing to
improved coal linkage and lower e-auction prices.
 Coal mix in Q1FY24: Linkage at 41%, E-auction at 53%. Management expects the
linkage to improve to 57-60% in Q2FY24 and can sustain at that level
 Company has not hedged further in Q1FY24. Approx 11% of FY24 aluminum
volume is hedged at USD2,755/t for FY24. Management expects aluminium
prices to remain range-bound at USD2,100-2,300/t for FY24 but does not wish
to hedge volume further at these prices.
Copper business
 Management has guided EBITDA to improve in Q2FY24 as copper smelter
shutdown has completed and can produce cathode at optimum capacity. During
Q1FY24, it imported copper cathodes and convert into copper wire rods.
Project update
 The 34ktpa aluminium extrusion plant in Silavassa has begun commercial
production
 The additional 350ktpa alumina expansion via debottlenecking at Utkal is in

progress
 Coal mines: Chakla mine of 4.5mtpa capacity is progressing well (expected to

start production in Q4FY26 guided earlier)
 Meenakshi mine (10-12mtpa) is still awaiting for regulatory approval for final
allotment. The delay is due to the fact that law does not permit to transfer land
to private company wherein land was acquired under Coal Bearing Act. This
issue is expected to be resolved soon.
 Hindalco has recently won Meenakshi west coal mine of 6-7mtpa capacity at a
premium of 33.75%.
Capex
 FY24 capex guided at INR40-45bn (INR8bn in Q1FY24) in India and USD1.6-1.9bn
(USD333mn in Q1FY24) for Novelis. Management expects majority of this to be
funded via internal accruals.
 Consol Net debt increased by INR45bn QoQ to INR384.6bn amid increase in

working capital
Hindustan Zinc
 The refined zinc cost of production (ex-royalty) at USD1,194/t, was down by 2%
QoQ due to lower thermal coal cost and improved linkage further supported by
improved operational efficiencies and better grades. HZ with its focus on cost
optimization has been able to save USD100/t in last two quarters.
 The mined metal production at 257kt was down 15% QoQ due to mine
preparation activities being carried out in Q1 every year.
 HZ has opted for a new tax regime. The tax rate stood at 25% in Q1FY24.
Guidance
 Cost of production and capex guidance remained unchanged
 Refined Zinc (ex-royalty) cost of production in FY24 is expected to be in the range

of USD1,125-1,175/t (FY23: USD1,257/t). Given the current structure,
management is confident on achieving the cost of production towards the lower
end of the guidance.
 FY24 project capex is guided to be between USD175-200mn. Additionally,

management guides maintenance capex of USD400mn, out of which USD90 has
been spent in Q1FY24. Besides USD50mn is spent on growth capex.
Project update
 Management is targeting the production from Rajpura Dariba mill and fumer
plant in Q2FY24.
 The roaster and fertilizer plant are expected to get commissioned in the next 18-
20 months, with roaster expected to commission in 14 months. The
commissioning of roaster is expected to add 50-55kt to the production
 The alloy plant execution is in process and is expected to be commissioned in

Q2FY24
Others:
 The brand fee is 2% of turnover
 Grade of material improved from 6.9% to 6.7%.
 HZ does not has any open hedge position
 The hearing on transferring general reserves to retained earnings is scheduled

on 31st July 23
Jindal Stainless
Management remains confident on the domestic stainless demand on the back of
government impetus on infrastructure.
Volume guidance: Management maintained the volume guidance of 2.1-2.2mt

for FY24 and a volume growth of 20-25% YoY in FY25.
Management guided the higher growth coming in 400series going ahead in terms of
demand, while in terms of volume 300 series will remain high.
Debt and capex guidance

Net debt: JDSL’s net debt increased to ~INR53bn (INR49.3bn including JUSL in Mar-
23) at Q1FY24 which included JUSL’s INR19.4bn debt and part of the consideration
which JDSL paid to acquire 74% stake in JUSL. JDSL has acquired the remaining 74%
stake acquisition of JUSL at a cash of INR9.58bn in July’23 (some amount paid in
Q1FY24).
Management expects a peak net debt of INR53-54bn in FY24
Capex: The capex for FY24 is guided at INR32–33bn. This would be largely spent on
the following: JUSL: INR2.5bn, Maintenance and sustenance: INR5bn, Renewable
power that includes INR1.5bn of equity infusion and INR10bn for Indonesia project.
Management has not stated any capex volume for FY25, however informed it to be
lower than FY24
The capex spent on Q1FY24 stood at INR14bn (majority of the capex for FY24 is
done in Q1FY24 owing to the partial payment for JUSL acquisition and ~INR5.5bn
investment for Indonesian project
Others
The ramp up of the 1mtpa brownfield SS expansion is on track. Management expects
additional volume of 40-50kt/month from August.
The domestic subsidiaries of JDSL is doing well, while the overseas are lagging behind
because of their dependencies in export market. Management has guided the
overseas subsidiaries performance to improve from Q3FY24
Management is confident to meet the domestic demand with its current capacity
for the next 2-3 years. JDSL will take a call for next phase of expansion in FY25. JDSL’s
focus is to increase its downstream capacity to 70-75% v/s ~50% currently with
possibility of increasing the capacity of cold rolling mills.
Management expects the payback period of Rathi Steel to be 5-7 years, as they
would want to check the penetration level of SS long product
JDSL will repatriate income via monthly dividend from Indonesia project. It will
eventually attract 10% dividend tax
Jindal Steel & Power

 Sales volume, at 1.84mt was down by 9% QoQ due to weaker demand owing to
seasonality factor. Exports constituted ~10% of volume
 As per Management, though domestic steel realization were soft, higher export
realization and better product mix helped in ~2% QoQ increase in blended
realization. Additionally, despite higher coking coal cost, overall CoP was down
by 2% QoQ as JSPL was able to produce more iron ore from its captive Tensa
mines. As per PPT, QoQ EBITDA improvement was due to lower CoP (INR5.48bn
QoQ) & other cost reduction (INR3.5bn QoQ), offset partially by lower volume (-
INR2.36bn QoQ and prices (-INR1.75bn QoQ)
Projects
 JSPL has successfully commissioned its 6mtpa pellet plant at Angul in
August. Until the new 3.3mtpa BoF commissions (guides by Q2FY25), this pellets
will be sold externally.
 The company has signed a mining lease for Gare Palma IV/6 and Utkal C coal
mine. It is expected to start mining activities within Q2FY24 after receiving few
more statutory clearances. The total capacity of both these mines stands at
7.3mtpa.
Capex and expansion project

 JSPL’s capex plan remains of ~INR240bn over a period though FY26-27 focussing
on both volume and margin expansion. It spent INR19bn in Q1FY24
 Its 5.5mtpa Hot Strip mill (help in product mix improvement) is expected to be
commissioned by Q3FY24.
 The commissioning of 18mtpa slurry pipeline is delayed further by a quarter. It is

expected to get commissioned by Q1FY25 now
 Other volume expansion project (3.3mtpa BoF)’s commissioning is now further

delayed by two quarters and now Management guides it to be commissioned by
Q2FY25, taking total capacity to 12.9mtpa
 Management has still not decided on the steel making route (BoF/EAF) for
further 3mtpa expansion, taking total capacity to 15.9mtpa. It might go for
downstream expansion like cold rolled, galvanised products etc.
Net debt and Cash balance

 JSPL has been able to reduce its debt to INR68.1bn compared to INR69.5bn in
Q4FY23.
 The cash flow during the quarter is as follows: Opening cash balance : INR47bn,
Working capital build up: INR4bn, Operational cashflow: INR22.5bn, capex :
INR19bn(primarily in Angul). Repaid loan: INR23bn, Raised freshloan: INR10.7bn.
Cash balance: INR38bn
JSW Steel
Macro environment
 Management remained optimistic on the domestic demand on the back of
government spending on manufacturing activities and infrastructure
development
 Management expects the domestic steel demand in FY24 to increase by 8-9%

YoY contributing to 10-11mt of additional volume.
 Standalone derived steel realisation at INR65,966/t, up by INR1,261/t due to
improved product mix, increase of VAP contribution to 61% v/s 60% in Q4FY23.
Besides, it was inflated due to despatch of pre-booked high-priced export order
of Feb-March in Q1FY24
 Steel inventories went up by 330kt QoQ due to channel destocking and weather
disruptions in Western India.
 The capacity utilisation stood at 92% in Q4FY23 v/s 94% in Q4FY23 due to
maintenance shut down at few sites
 The coking coal cost in Q1FY24 was USD285/t, up by USD11/t QoQ.
 Acceptance from revenue and capex stood at USD2.6bn and USD207mn

respectively.
 The free cash flows stood at INR2.6bn in Q1FY24
Guidance:
 Management expects the coking coal cost to be down by USD45-50/t QoQ
thereby offsetting the steel price decline in Q2FY24.
 Volumes are expected to be better QoQ on the back of better demand and
liquidation of inventory from Q1FY24.
 Steel prices have bottomed out and management doesn’t foresee any further
decline
 The exports are expected to be ~15% of volume. FY24 total production at

26.34mt and sales at 25mt
Capex and debt

 JSW has outlined a capex of INR519bn spread over a period of FY24-26. The capex
for FY24 is guided at INR188bn. INR40.9bn was spent in Q1FY24.
 Capex is focussed on enhancing the capacity by 6.5 mtpa by FY24-end. The 5mtpa
of brownfield expansion to come at Vijaynagar and 1.5mtpa at Bhushan Power.
 The next phase of expansion will begin post FY25 to increase the capacity to
50mtpa.
 At 50mtpa, proportion of long will increase to 30% compared to 25% currently
 The Net debt increased to INR667bn compared to INR593bn in Q4FY23.
Project updates
 Management expects the iron ore mines in Karnataka and Goa to get operationalize
soon. JSW may continue to look for auctioning of more iron ore mines.
 In terms of coking coal. JSW currently has 2 coking coal mines giving 1mt of clean
coking coal that fulfils 5-6% of the total requirement. Management guided that they
may continue to look for more assets to strengthen their backward integration
 The 1.5mtpa Coke Oven battery at Vijaynagar is expected to get
commissioned by Q2FY24
 Merger of JISPL with JSW Steel has been approved by NCLT and will be completed
in Q2FY24.
 JSW completed acquisition of downstream producer, National Steel and Agro.
SAIL
Guidance
 Management has guided for production volume of 19mt for FY24.
 In Q2FY24, management expects the coking coal cost to remain low at

~INR22K/t, fall of ~INR3,800/t QoQ.
 Management expects some uptick in prices in September and as a result, it

guides blended steel realization to be down marginally by INR800-1000/t QoQ in
Q2FY24. However, in July, prices were down by ~INR2,700/t from Q1FY24
average
 Employee expenses is guided at INR115-120bn for FY24
Capex and debt

 Management has guided gross debt (ex-IND AS) to reduce to ~INR220bn by FY24-
end (FY23: INR256.6bn, Q1FY24: INR294.1bn)
 The capex guidance for FY24 is raised to INR68bn compared to INR65bn guided
earlier. This includes INR15-20bn for maintenance purpose and remaining for
debottlenecking and expense towards placing orders for further expansion
 The capex spent in Q1Y24 stands at INR9.2bn
Growth and expansion plan

 SAIL has articulated a plant to expand its capacity to 35mt by FY32 in phases. In
next 3 years, it will do bottlenecking at different plants which will enhance its
capacity by 3-3.5mtpa
 It will start with 3mtpa expansion at Bokaro and 4.5mtpa expansion at IISCO
plant. It has received the principal approval for ISSCO and Bokaro expansion and
DPR is expected to get finalised by Q4FY24. Thereafter, they will start expansion
at the Durgapur plant.
Others
 The inventory during the quarter stood at 1.4mt
 NSR for flats stood at INR57,700/t and INR55,000/t for longs
 Iron ore inventory at the Gua mine is for internal consumption and shall be
utilised for palletization and beneficiation purpose. The finalization of prices with
Railways for FY22 delivery (1-1.2mt/year) is expected to be concluded in
Q2FY24/Q3FY24. Currently, SAIL is booking at adhoc price of INR67,500/t. Even
if final price is finalized at INR5,000/t more, it will help in additional revenue of
~INR12bn for last two years.
Shyam Metalics
Projects update
 Out of initial capex of INR39.5bn, SMEL has spent 82% (i.e. INR32.3bn) till
Q1FY24. The balance capex of ~INR7.2bn will be spent within FY24. It has
capitalised INR23.79bn until now. Total CWIP as on 30th june 2023: INR24.6bn.
 The Blast Furnace of 600ktpa and coke oven of 450ktpa is expected to be

commissioned by Dec-23. The ductile iron pipe of 200ktpa will get commissioned
by Sep-25.
 The first phase of color-coated sheet (250ktpa) is expected to be commissioned

by FY24-end and the next phase (150ktpa) by FY26. It has spent INR950mn out
of INR6bn till Q1FY24
Capex guidance
 SMEL has announced further capex and laid down a plan of INR39.15bn (SMEL’s
share is INR36.65bn) for its next phase of expansion which includes INR6.25bn
(SMEL’s share: INR3.75bn) capex on Ramsarup spread across for 3 years (FY24-
26). With the completion of the proposed capex, the finished steel capacity will
increase to ~4.4mtpa (incl Ramsarup’s facility). Ramsarup will have 0.4mtpa DI
Pipe mill along with 85ktpa wire drawing mill.
 Management has guided the capex of ~INR21bn/INR24bn/INR10bn for

FY24/25/26, which includes ongoing as well as proposed capex. It spent
INR3.83bn in Q1FY24
 Management expects all the new capacity to get commissioned by end-FY26, and
expect the IRR of 20%+ from incremental capex.
 Management is confident of meeting . majority of the incremental capex from

its internal accruals.
Capital allocation
 The company seeks to invest 70% of the total cash generated into the business,
retain 20% as a liquidity surplus and return 10% to shareholders.
Operational guidance
 Management has guided the thermal coal and iron ore prices to fall in Q2FY24.
 SMEL expects to generate an operating cash flow of ~INR18bn in FY24. The

operating cash flow generated in Q1FY24 stood at INR3bn.
Mittal Corp: awaiting final approval from NCLT
 Regarding Mittal Corporation acquisition, the matter has been heard at the NCLT,
Mumbai branch and judgment is reserved. Once SMEL takes control of Mittal
Corporation, management expects the operations to come in full swing in FY25.
SMEL will set up ladle furnace at its Sambalpur plant, Odisha and will produce
stainless steel billets (132ktpa). It would then send this to Mittal Corp’s
Pitampura, Indore plant and roll it into finished products. Initially, SMEL will
spend ~INR600mn to start the plant. It is yet to pay ~INR3.5bn to acquire the
plant.
Others
 Net cash stood at INR4.98bn at Q1FY24-end (Q4FY23 Net cash of INR5.6bn). It
still has to pay INR3.5bn to acquire Mittal Corp.
 Promoter has to prune down its stake from 88% to 75% by Jun-23 to meet the
SEBI guidelines. Management informed they are working on it and that it would
be done via a combination of QIP and OFS.
Tata Steel
 Consolidated production at 7.74mt, down from 7.8mt due to planned
maintenance shutdown in Netherlands, which commenced in April’23 and last
until Q2FY24.
 In India, steel prices increased by ~INR1,000/t QoQ driven by contract sales,

which are booked with a lag of 2-3 months.
 Average coking coal cost was up by USD10-12/t QoQ in Q1FY24
 Other income at INR16.4bn included INR9.0bn one off income on execution of

long-term lease agreement with Tata Blue Scope with respected to color coated
lines at Angul and Khopoli.
 Tata steel long performance improved, reporting an EBITDA of INR1.6bn

compared to INR20mn in Q4FY23 due to ramp of NINL
Guidance
 Management guides average coking coal cost for India business to come down
by ~USD57/t QoQ and for Europe, it should come down by USD46/t QoQ in
Q2FY24
 Steel realisation is expected to come down by INR3,100/t QoQ in Q2FY24 for

domestic business and by GBP38-40/t in Europe. This implies almost flat
EBITDA/t at both India and Europe.
 Steel volume is guided to be higher by 1.5mt YoY for FY24. The incremental
volume will come from NINL ramp up (running at 0.9mtpa run rate) and 0.5mtpa
debottlenecking at Kalinganagar.
 Management expects the Netherland operation to come back to normal

production level in Q3FY24 and turn to positive EBITDA.
 As Tata’s major assets are nearing an end of life, Management will soon take a
call on the future operations of UK. Management is in talk with the UK
government and is hopeful of resolution soon
Debt and capex guidance

 Net debt increased by INR35.8bn QoQ to INR713bn due to increase in working
capital. The working capital build up stood at INR25bn in Q1FY24. Though the
working capital remained stable at 34 days compared to 37days in Q4FY23, the
rise was due to some price effect.
 Management maintained the guidance to reduce net debt by USD1bn for FY24
and endeavour to maintain a net debt/EBTIDA at 2-2.5x despite higher capital
allocation (can breach for time being in case of any extra-ordinary development).
 The capex for FY24 is guided at INR160bn with focus on completion of

Kalinganagar expansion. Tata steel has spent INR40.8bn in Q1FY24. The amount
spend in Kalinganagar expansion until now stands at INR189bn.
Projects
 The 5mtpa expansion at Kalinganagar is progressing well and Blast furnace is
expected to start commissioning from March 2024
 Debottlenecking at its Steel mill shop should add 0.5mtpa volume from Q3FY24.
 A 2.2mtpa cold rolling mill is in process of commissioning. Full commissioning

should happen by FY24-end.
 The next phase of expansion may start at NINL where Tata can set 4-4.5mtpa
capacity. The detailed engineering work will start soon and Management will
take a final call in FY25
 The 6mtpa pellet plant has also started benefiting Tata in terms of cost saving. It
stops buying pellets from the market and even sells a part of the volume. As per
our calculation, Tata should earn an average EBITDA/t of ~INR4,000/t
(~INR21.6bn, assuming 90% capacity utilisation) on it as it has captive iron ore
mine.
 The relining of BF6 in Netherlands is financed by internal accruals of Netherlands

plant and will start contributing from Q3FY24.
 NINL has ramped up and is operating at a capacity of 0.9mtpa. All the facilities in
NINL are back on track. The coke plant should start production by August’23. The
NINL iron ore mines are also being utilised.
Others
 Tata Steel UK has completely de-risked its UK operation from pension liabilities
by selling assets and liabilities to the insurer. Currently, pension has residual
surplus of GBP200mn. This will not have any cash flow impact
 Management informed that on an average, Tata Steel Netherlands used to make

EBITDA/t of EUR70-140 and free cash flows of EUR200mn+
 Tata steel has around 500mt of iron ore reserves available for the next 30-
40years. However, Tata steel will continue to participate in iron ore auctions.
 European operations to benefit in H2FY24 from the energy hedge.
 The bigger BF in Europe BF7 is up for relining in 2026/2027. BF6 is the

last relining as of now as Tata plans to transition from Blast furnace to DRI based
production with EAF
 Tata is not looking for any inorganic expansion.
Vedanta
Aluminium (28% of Q1FY24 Consolidated EBITDA)
 Aluminium recorded EBITDA/t of USD391, flat QoQ as lower aluminium price was
offset by lower CoP. Aluminium CoP reduced by USD123/t QoQ to USD2,055/t
due to lower power cost which inturn was due to lower thermal coal cost.
Alumina cost was up by ~USD22/t QoQ in Q1FY24 due to lower percentage of
domestic consumption of bauxite and higher usage of external alumina.
 Management has guided the cost to come down by USD25/t of alumina in

Q2FY24.
 The 3mtpa alumina expansion is expected to be completed in two phases with

1.5mtpa in Q3FY24 (earlier guided Q2FY24) and remaining 1.5mtpa in Q4FY24.
Balco’s 0.5mtpa aluminium expansion is guided to be completed by Q1FY25.
 Currently, it has to procure 100% bauxite (50% domestic), 55% alumina and 85%
thermal coal from market. The next three years (by FY26) is critical for aluminium
business and will set the tone for future profitability. It can have 60% captive
bauxite (9mtpa), 92% captive alumina (5mtpa) and 100% captive coal (34mtpa)
which will help in producing 2.8mtpa aluminium with cost in the ist quartile of
the world cost curve.
 We expect the cost of production to come down with improved coal linkages
and commissioning of its coal and bauxite mine.
 Kurloi (8mtpa to be commissioned in 4QFY24: 45-50paise/unit (guidance

given earlier).
 Radhikapur (6mtpa, target operation from Q1FY25): 50- 55paise/unit
(guidance given earlier)
 Ghogharpalli (1.2bn tonnes reserves, 20mtpa to be commissioned by
Q4FY25
 Sijmali bauxite mine (9mtpa) to be commissioned by Q3FY25
Oil and Gas (18% of consolidated EBITDA)

 EBITDA, at INR11.4bn, was down by 27% QoQ due to decline in production, which
fell to 135kboepd against 137kboepd in Q4FY23. Earnings were further hit due
to higher exploration write off (INR3.12bn v/s INR390mn in Q4FY23).
 CoP was lower by 7% QoQ to US$13.8/boe driven by optimisation of polymer

consumption and cost
 Management targets higher production YoY with initial success on infill

campaigns of 27 wells.
Zinc international (4.4% of consolidated EBITDA)

 Zinc international EBITDA dipped by 37% QoQ to INR2.8bn due to lower zinc
prices and higher CoP. CoP ex Tc/Rc increased to USD1,020/t from USD966 in
Q4FY23
 Sales volume increased to 68kt, up by 8% QoQ driven by operational efficiencies
 Management targets to complete Gamsberg phase- 2 project by H2FY24.
 THL Zinc Venture has taken USD850mn of external debt to repay internal debt
(OCRP) from VEDL. This was used to pay dividend in Q1FY24.
Zinc India (52% of consolidated EBITDA)

 EBITDA came in at INR33.5bn, down 21% QoQ due to lower zinc prices (down
17% QoQ) and volume. Refined zinc at 208kt was down by 3.7% QoQ and lead at
50kt, down 7.4% QoQ. Silver prices rose 8% QoQ and helped silver EBIT to
increase by 5.5% QoQ to INR11.3bn
 Lower revenue was partially offset by lower cost of production (refined zinc CoP
(ex-royalty) stood at USD1,194/t, down 1.6% QoQ). The decline in CoP is due to
lower thermal coal cost and improved coal linkage (28% compared to 26% in
Q4FY23).
Others
 Steel and raw material business has been put under strategic review. Sale is an
option for any part of the business. Review encompasses steel manufacturing at
Bokaro, iron ore mines in Karnataka, Odisha and Liberia, pig iron plant in Goa,
and met coke plant in Gujarat
 VEDL has extended duration for inter-corporate loan of USD449mn to related

party, Twin Star Holding till Dec-24.
 Vedanta board has approved the strategic decision to enter the semiconductor
business through acquisition of SPV from Twinstar Technologies. It is looking for
JV and technology partnership. Under PLI scheme, 50% of capital subsidy is to be
granted by Central Government and 20% by State government
 Management is awaiting NoC from lenders to shift INR125.87bn of general

reserve to retained earnings. It is facing procedural delays only. No timeline has
been provided.
 Brand fee payment to VRL has been increased from 2% to 3% of annual turnover
for six years. Shareholders’ approval is not required until 5%.
 Average cost of borrowings stood at 8.7%
Oil & Gas
GAIL
Q1FY24 operational highlights
The company recorded Gas trading volumes of 99mmscmd, natural gas volumes of
116mmscmd mainly due to downstream curbs and a capacity utilization of 56%
during Q1FY24. Petchem production stood at 164 TMT a with a capacity utilization
of 82%. LHC production was 243 TMT (5% higher QOQ) with a capacity utilization of
69%. LPG transmission for the quarter stood at 1,073TMT with 94% plant utilization.
CGD: Aims to add 100 CNG stations and 0.2Mn D-PNG connections in two years
The company has an infrastructure of 154 CNG stations and ~270,000 D-PNG
connections during the current quarter. The company added 1 new CNG station and
~77,000 new D-PNG connections during the current quarter. The physical volume
during the quarter stood at 0.3 mmscmd. The company plans to add over 100 CNG
stations and ~200,000 new VPNG connections over the next 2 years. The company
ay evaluate monetization CGD assets going ahead.
GAIL Gas segment highlights (Profit up13%QoQ)
During the current quarter, the gross turnover stood at INR22bn vs INR25bn QOQ.
PBT stood at INR1bn vs INR0.9bn QoQ (+13%). Volumes were flat QOQ at 5.3
mmscmd. During the quarter, the company added ~1,600 new D-PNG connections
bringing the total number of connections ~870,000. Total CNG stations stood at 456.
Project update
Mumbai Nagpur pipeline is 1,522 kms long, of which 698kms is expected to be

completed by Dec’23. The Haldiya – Jagdishpur pipeline is expected to be
commissioned by June 2024. Bangalore-Kochi pipeline expected to be completed by
Nov’24.
Capex to be incurred majorly on pipeline extension
The company has incurred a capital expenditure of INR ~24bn during Q1FY24. The
company aims to spend ~INR90-100bn in FY24 (INR40bn on pipelines, INR30bn on
petrochemicals, INR7bn on operational expenditure, INR35bn to infuse equity in
subsidiaries and JVs and INR2bn in CGDs)
Petchem to remain weak; to breakeven with gas price below USD10/mmbtu
Intl polymer prices have come down significantly in recent times. The company was
unable to recover the entire fixed and hence incurred a loss in the business during
the current quarter. Although, the company will be able to source gas at lower prices
going ahead which will help reduce cost significantly. Mgmt believes will turn EBITDA
positive provided gas prices remain below USD10/mmbtu (delivered price
~USD12/mmbtu).
Revised tariff shall aid profitability going ahead
Introduction of integrated tariff led to improvement in revenue by INR6.6bn in

Q1FY24. Management expects further upward revision of tariff by PNGRB which
shall help the company aid its margins profile.
Transmission volumes to remain strong; 123mmscmd for FY24
Mgmt expects transmission volumes to grow by further 6-7% taking volumes to

123mmscmd at end-FY24. Further it expects volumes to increase to 135-
140mmscmd by FY26 driven by rise in utilization of pipeline and higher CGD offtake.
Pipeline utilization expected to improve to 60% from 56% currently.
Aims net carbon zero by 2040
GAIL is likely to stall 3GW of renewable energy by 2030 and plant to go net carbon
zero by 2040.
APM deallocation and One-off provision dragged transmission profitability
APM de-allocation (from 0.6mmscmd to 0.4mmscmd) and one-off provision due to

an arbitration case led to a negative INR2.3bn impact on EBITDA. However, the same
is unlikely to be incurred going ahead.
Gujarat Gas
Largest among the CGDs with presence in 27GAs
GGL is the largest CGD Company with a total pipeline network of 36,000kms, 800+
CNG stations (of which 169 commissioned in new GAs) and D-PNG customers of
~1.9Mn. Inustrial and commercial customer base stands at 4,300 and 14,000
customers respectively.
Operational highlights for Q1FY24
During the quarter GGL added 46,000 customers (up 33%YoY) and added xx new
CNG stations. It also completed 0.1mn kg CNG sales in its new Thane and Palghar
GA.
CNG to continue its robust growth going forward
The share of CNG and D-PNG increased to 35% during the quarter vs 31% YoY. The
mgmt. expects CNG segment growth to continue led by increase in OEM fitted CNG
models, reduction in diesel variants and improvement in CNGs competitiveness vs
diesel. Further, GGL will continue to aggressively expand into new GAs such as
Ahmedabad, Thane, Rajasthan etc. Its volumes in new GAs stand at 0.5-0.6mmscmd
which will go upto 1mmscmd by FY25.
Invested INR1bn in GSPC LNG (Mundra LNG terminal)
GGL invested INR1bn in GSPC for 7.87% stake in the company which shall entail
synergy benefits of LNG receiving storage etc. GSPC has a total regasification
capacity of 5MMTPA.
GGL currently caters to ~60% of volumes in Morbi
The total potential of volumes in Morbi stands a ~8-8.5mmscmd. However, the

current demand of 7-7.5mmscmd is met 60% by Industrial gas (~4mmscmd) and
remaining by propane (~3mmscmd). Additionally, ~50% of the ceramic players in
Morbi have the ability to switch between I-PNG and propane
Planned capex of INR1-1.2bn pa for next three years
The planned capex for next three years stands at INR1-1.2bn to be incurred equally
towards expansion in new GAs (steel pipelines, plastic branches), existing GAs
(expansion activities) and remaining for CNG. Additionally, GGL aims to add 60-70
new CNG stations in FY24 and FY25 while augmenting its existing CNG stations.
Expansion in new GAs for Industrial volumes
The company is looking to expand to new GAs such as Thane, AHmedaba, Rajasthan
for industrial volumes which has a potential of 1.5mmscmd+ and is aggressively
laying down infrastructure for the same.
Gas sourcing mix
Its sourcing mix in Q1FY24 comprises APM (~2.9mmscmd at USD6.5/mmbtu), term

contracts (~4mmsmcd at 12–14% slope to Brent), and the remainder at spot prices
(at ~USD12/mmbtu). Within priority sector volumes: APM – 90%, and remaining by
HPHT and spot. Currently receiving spot volumes at ~USD11/mmbtu.
Expect propane prices to go up due to cyclicality; currently at INR34-35/scm
Propane prices are cheaper during the summer and is eoected to go up going
forward benefiting GGL. Propane prices have already increased to USD470/ton (Sept
forwards). In scm terms propane prices are currently at INR34-35/scm while I-PNG
is at INR 38/scm. Expect prices to come at par once the price increase in effective.
Mahanagar Gas
Operational highlights of Q1FY24
During the quarter, MGL’s operational reach increased to 2.2mn households (added
0.05mn). 312 CNG stations were operational during Q1. It added 76 I&C customers
(4,589 overall) during Q1FY24. Total pipeline infrastructure stood at 6,612 km as of
Jun-2023. Volumes stood at 1.84 million kgs/ day during the quarter (1.81 mn kg/day
YoY). Industrial volumes stood at 0.32mmscmd and commercial volumes stood at
0.13mmscmd
Raigad operations are in full swing

MGL’s operational reach increased to 0.7mn households (added 69k household in
Q1) in Raigad district. Added 1 CNG stations in Q1 (total 28 stations are operational).
Laid 6.5km pipeline taking total to 399kms as on Jun-2023.
Low CNG prices YoY led to volumes dip in Q1
Management highlighted that CNG realization grew 27% YoY in Q1 to INR79 (+INR
62 YoY). This led to YoY dip in CNG volumes. Besides, number of CNG buses also
dropped this quarter (YY basis). Furthermore, M&HCV (high consumer of CNG)
converting into CNG also dropped which were around 300-400 last year.
CNG vehicle conversions increased QoQ

Over 14,750 vehicles (new and retrofit) converted to CNG during the quarter vs
13,500 QoQ. Commercial vehicles were around 1,200 (1,300 QoQ). Private cars were
9,750 (8,800 QoQ).
APM allocation reduced slightly in Q1FY24 on a sequential basis
APM allocation during the quarter stood at 89% which 91% QoQ. Other requirement
was met through HP-HT and some through Spot. RIL mix in I&C volumes were
0.1mmscmd.
MoU signed for CBG and LNG dispensing stations
MGL has signed two MOU’s during the quarter. One MoU is signed with BMC for
setting up CBG plant dispensing around 1,000 ton CBG per day. Other MoU is signed
with Baidyanath LNG for setting up LNG dispensing stations at several places in and
outside Maharashtra. MGL is targeting 5-6 LNG stations over the next 10-12 months
(targeting mainly heavy vehicles and buses).
LNG will be priced at discount to diesel (say 15-20% discount). Investment required
is INR 50-60 mn (excluding land). Company shall try and capture two segments (B2B:
offer more discount) and B2C (slightly lesser discount). Management mentioned
that 10% discount to diesel is workable.
Capex guidance intact

MGL incurred a capex of INR1.5bn in Q1FY24. Further expects to incur capex INR6-
8bn in FY24 and FY25.
MHRTC bus addition is ramping up
Management mentioned that MHRTC currently has 120+ busses (which was in
double digit two months ago). Company is targeting to induct 450 more buses in 8
MHRTC bus depo by Nov-December 2023. These buses consume 80kgs/day. Hence
there is potential of 40,000kgs/day which translates to 0.6mmscmd).
Volumes have picked up in Q2, long-term guidance of 5–6% stays intact
Management mentioned that CNG volumes have started to pick up in June and July.
Besides, CNG conversion has also started to increase led by recent price cut.
Company re-iterates its long term volume guidance of 5-6% Company has guided for
long term EBITDA margins guidance of INR10/scm
Petronet LNG
Healthy volumes outlook
Management mentioned that during April-2023, company has bought 21 cargoes of

which 11 were service cargoes. Management expects more cargoes to come during
Q1FY24. Gorgon volumes at Dahej stood at 9.7TBTUs during Q4FY23.
PLNG eyes lower prices under renewed long-term deal with Qatar gas
Currently, the company buys 8.5MTPA of LNG under its deal with Qatar and will seek
for additional 1MTPA in supplies once it renews its long-term deal with Qatar.
Current pricing – 12.67% slope to brent, plus a fixed charge of about 50
cents/mmbtu.
Utilization to improve on falling LNG prices
Management mentioned that utilisation has started to improve with falling LNG
prices. Dahej Utilisation stood at 96% in Q1FY24 which will remain high aided by fall
in gas prices and increase in demand.
Use-or-Pay charges to be recovered from customers
The company aims to recover the use or pay charges to the tune of INR11bn from
its customers by the end of FY24 (2.85 Bn from NHPC, 0.26 bn from HPCL, 1.79 Bn
from Torrent power and 1.25bn from ATGL).
LNG and Compressed Biogas (CBG) plants
The company has 4 LNG and compressed biogas stations which are almost ready for
use and will begin production shortly.
Petchem plant set up is in the process
Management mentioned that petchem plant is in the process. Company is in the

process of taking all the necessary approvals from the board. This shall take ~6
months.
Gopalpur East coast FSRU terminal under feasibility test
Gopalpur’s east coast FSRU-based LNG terminal is under feasibility test and due
diligence process before signing an agreement with the Gopalpur port trust. The
total capital cost remains at INR23bn although the operating expenditure will be
low.
Regasification tariffs and contribution
Regas contribution stands at INR7bn and tariffs stand at INR 59.12/ mmbtu at Dahej
and INR 85/mmbtu at Kochi
No change in dividend policy
There is no change in the dividend policy of the company. The management expects
to pay out 100% of the paid up capital as dividend every year.
Project expansion plans
Tank construction of over 50% has been completed and the company is going to
hand out more contracts shortly. Company shall also incur INR16.5bn capex for jetty
construction. Company is thinking of setting up one more plant in Kochi with
estimated capex of INR6bn.
Sterling and Wilson

Nigeria project deal to be signed by Q2FY24
Company is targeting agreement closure by Q2FY24, with bulk of the revenues be
recognised in FY25 and FY26. The company also guided for 10-12% margins from the
Nigeria project with an order value of ~USD1.5 bn.
Indemnity receivable shall largely be used to repay debt
Company's indemnity stands at ~ INR2.7 bn as on July 2023. These could further rise
by 30th September 2023. Majority of the indemnity losses shall get crystallised in
FY24 and FY25. Proceeds from such indemnity shall largely be used to repay debt.
Revenue recognition from NTPC shall reflect in H2FY24
The site for order I has been mobilised and orders have been placed with the sub-
contractors. Engineering work on order II has started and orders with the sub-
contractors shall be placed soon. Timeline for the completion of this project is 18
month with bulk of the revenue booking happening in H2FY24.
Bid pipeline remains strong across geographies
The company has an order bid pipeline of ~22GW. India accounts for ~58% of this
pipeline. The company is targeting a 18-20% hit rate in the domestic market and a
14-15% hit rate in the international market. Company is targeting 4-5GW (INR50-
60bn) domestic projects in FY24.
Plans for battery storage and wind projects
The company has executed small battery storage projects, both domestically and
internationally. Further, the company is working on closing one big battery storage
project by FY24. The company also has in house capabilities to execute wind-solar
(hybrid) projects and is working to enhance the same. There will be no significant
capex requirements for these projects.
No significant capex for new Bids
The company is confident that it is fully geared up with sufficient capacities in place,
a huge sub-contractor base considering the current roll out scenario to meet any
additional requirements. No significant capex will thus be required.
Well-devised strategies for International EPC projects
All materials supplied by the company are at fixed price contracts thereby
minimising risk/exposure in any materials. The correction in module prices will help
the company improve its EPC margins (turnkey international projects). Rise in
module prices shall fairly be pass through.
Deleverage Balance sheet in FY24
Company’s Net debt rose INR 1.3bn to INR21bn in Q1FY24 vs INR 19.7bn as
of March-2023. Company target to achieve significant debt reduction by
Q4FY24E aided by receivables recovery, indemnity inflows, and negative
working capital
Pharmaceuticals
Ajanta Pharma
Financial
 Expect gross margin to be at Q1FY24 levels i.e ~75%
 R&D expenses to inch-up at ~6% of revenues for FY24
 EBITDA margin guidance of 25% (+/-1% retained for FY24). Will keep on
improving on this beyond FY24
 Income tax rate at same level as Q1
 Capex FY24: INR2bn including new corporate office. Will be judicious in spending
 Aspiring to grow in mid-teens in the medium term
 Freight: At pre-Covid levels (~4% of revenues). Expect to remain at this level for
the rest of FY25
US
 Q2:Q4FY24 revenues to be along the same lines. Mid-single digit growth for
FY24; this does not include gChantix
 7-8 filings and 5-6 launches planned for FY24
 Price erosion has stabilised quite a lot. Should be ‘high single digit’
 gVimovo commercialised in last quarter. gChantix is work-in-progress; depends

on regulatory landscape; getting ready to launch; could be Q4FY24 or Q1FY25.
Topiramate – bound by confidentiality
India
 In covered market 4th largest player
 Guidance: Low-teen growth. Aspire to grow in low-teens beyond FY24
 Trade Gx: ~INR360mn, ~9-10% YoY growth. Its unlikely to cannabalise branded
growth
EM branded and Institutional

 Asia: Mid-teens growth in FY24 maintained in Asia
 Africa: Paris strike impacted shipments to Africa. Maintain FY24 guidance of mid-
teens growth
 Institutional: Unpredictable as growth depends on funding of procurement

agencies
Alkem Laboratories
Financials and guidance
 Confidence of achieving 16% EBITDA margin guidance. Softening of select raw
materials, easing freight costs and cost optimisation efforts led to improved
EBITDA margin.
 GM could improve due to price increase in price control products, better India
mix, etc. GM guidance: 59-59.5%
 R&D guidance: 5% of revenues.
 Still have headroom to improve raw material prices, but need to watch out for it.
Pen-G and Cephalosporin is still tough.
 Budgeted INR1.1bn of cost savings this fiscal. Sizable amount in Q1 as well.
 Other expenses higher on account of marketing expenses (spent more in Q1),

offset by lower R&D and freight. Marketing spends should down in coming
quarters. Fx gain is not in other expenses.
 12,000 MRs. Average productivity INR540,000. Acute INR590,000 and chronic

INR350,000.
 Capital allocation: Adequately deployed capital in sales rep. No more expansion

from here expected. Not changed dividend policy yet.
 Capex in Q1: INR800mn. FY24 guidance: INR3-3.5bn. This includes major portion
on biosimilar.
 Enzene: Not only biosimilar, but CDMO also looks healthy and offers huge
opportunity. Plan to do INR2.60bn this year (INR1.6bn in FY23). Capex: INR1.5-
1.7bn this year. EBITDA level: aim to achieve breakeven next year. Look to double
this in next couple of years’ time. In talks with both large and small companies.
Could be subsidiary of large innovator companies or small biopharma.
 There was one-off depreciation related to US entity in Q1FY23.
 Revised up ETR guidance to 17-19% this year mainly because of mix change i.e.
profits from non-exempted plants due to higher exports business.
India
 Double digit growth looks difficult, but confident of high single digit growth in
India. Have grown lower than IPM this quarter. Also will depend on how Q2 acute
season plays out. Expect branded generic and trade generic contribution to
remain same. IPM is expected to grow at 8% this year.
 Chronic to grow in mid-teens. Growth in chronic therapies was 15.8% and

continued to outperform market growth of 9.9%. Gained 1 rank in both CNS and
anti-diabetic therapy in this quarter. Cardiac is settled. Anti-diabetic
outperforming well.
 Full benefit of price increase to come in Q2. It started from Jun’23.
 Trade generics: Taken price hikes in Q1. It comes in lumps and have seen low
single digit price hikes historically. In OTX, it could be similar to branded hikes of
5%. Contributed to 17-18% of revenues. Moat is relationship with stockists and
retainers built over years. Moreover, consumers know about these companies
and these are actual brands. This is not only pricing game.
 In long run, trade generics could have structural impact on branded generics.
 Make higher margin in acute business. Chronic business – 18-20%.
 No plans to enter consumer healthcare at this point.
 In Q1, price erosion was in high single digit. In Q2, it is still in high single digit. But
this is better than double-digit price erosion in FY23.
 No one-time business this quarter. Believe this is sustainable. All geographies

have contributed to this growth.
 US growth was largely driven by existing business aided by volume uptick as well
as price erosion. The base quarter i.e. Q1FY23 was down quite a lot. Pretty
modest growth compared to Q1FY22.
 Planned 8 launches in US.
 US is profitable excluding corporate overheads.
 Dabigatran: Still not in US market. Working on supply chain.
 gSuprep: Will not be in US market in near future.
Aurobindo
US
 No one-offs this quarter. Volume led growth by leveraging global scale. Well
positioned for this year.
 Price erosion: stable now (similar to Q4). This will continue given all supply
disruptions.
 Puerto Rico site shutdown- no impact on profits. USD52mn revenues in FY23 and
negligible EBITDA. Can lead to 0.5% improvement in EBITDA margin.
 Pfizer: Damage in warehouse and not in manufacturing facility. There could be

1-2 month delay in supplies from Pfizer resulting in some small business gains.
But don’t expect significant gains. ARBP does have overlapping portfolio.
 Eugia: maintain track record of 20+ launches. No blockbusters.
o US sales (injectable and specialty products) USD91mn. Globally USD122mn

on proforma basis (USD105mn last few quarters). Endeavour is to take it to
USD130mn+. Global sales which was USD411mn last year to reach
USD500mn+ in FY24.
o gRevlimid will be one-off. Stopped giving that USD650-700mn global

injectable guidance.
o Mid-teens EBITDA margin. Market improvement vs last year.
o Europe accounts for only USD60-70mn revenues. US is the biggest market.

Also present in multiple RoW markets, but key markets are US, Europe,
Canada, Brazil, Columbia, South Africa.
o 6th position in US in Eugia injectable. (earlier was 8-9th).Volumes are growing.
o 95% of the entire injectable and specialty business is under one basket. Only
4-5% remaining (such as Canada, etc) which will happen n 3-4 months’ time.
 gRevlimid: treat it as one-off opportunity. Launch from 1st October. Third wave –
lesser volumes. But pricing expected to be stable till end of 2025. Opportunity in
US is much bigger than other markets.
 Of the 169 injectable ANDA filing, 130 received final approval.
 Of the 18 plants; 17 are under VAI classification and only 1 under WL.
 Opsumit: under settlement. Launch not in 2024-2025. Sometime later.
 Myrbetriq: launch not anytime soon. Under settlement.
Other business
 Europe: driven by orals due to supply shortages at competitors’ end. Its broad
product portfolio and customer coverage helped them in gaining market share.
 Europe: Seasonality and purchase patterns. EUR200mn + -5%, this range should
be retained.
 Pen G – Indian capacity estimated to be at 30000 tonnes. ARPB putting 15000 of

which 40-45% for own consumption. Take time to ramp up. Oct-24 will get full
ramp up. Clarity in month of Feb’24.
Biosimilars and Vaccines

 Launches to start from FY25. 1 oncology biosimilar could be launched in India
this year. India- Looking for co-marketing opportunities. Also attempt to
establish own marketing footprint to commercialise oncology and immunology
biosimilar.
 Pipeline is healthy. By 2028, it will have 4 oncology biosimilar in Europe and 2 in

US. 6-7 products in immunology in RoW market.
 Vaccines: Missed this year tender. Not interested in retail business but vaccines
for WHO. Strive to gain manufacturing license this year and bid in next tender
i.e. in May and June 2024. Subject Experts Committee approval in place for 15
valent pneumococcal vaccine. Ongoing 2+1 dosing in 550 children. Take 3-6
months to complete documental formalities. Currently in 4th month.
Financial/others
 Gross margin – subdued due to business and product mix – 1) high betalactum
API sales which have lower gross margin; 2) Europe done well, which has lower
gross margin but provide operating leverage. 3) 0.6% impacted by lower
operating income mainly due to export PLI incentive due to timing issues.
 Eligible for INR2bn PLI benefit every year. Accrued INR400mn. 0.6% drop in
export benefit due to timing issue.
 EBITDA margin FY24 (excluding gRevlimid):18%. Adjusted EBITDA margin already

at 17.8% (Puerto Rico 0.5% and PLI 0.6%). With Operating leverage can achieve
18% EBITDA margin for FY24. Will look at operating leverage than gross margin
expansion.
 Capex: INR1.5-2bn for forward plants for Pen-G. China plant –Start by Apr 24 for
Europe business. Barring Unit 15, which is dedicated for Europe, rest other plants
are for multiple geographies.
 Capex for Q1FY24: USD95.3mn. PLI capex USD34mn. USD160mn cumulative

investments in Pen-G.
 USD INR 82.15.
 FCF: USD29.5mn before PLI and new market investments. Net cash of
USD178mn. Gross debt USD674mn.
 Board considered restructuring of Eugia vertical. Planning to start the process

which was kept on hold last year.
Biocon
Biosimilars
 Core EBITDA margin expected to return to mid-30%s by the end of FY24. It was
impacted due to phasing of tenders in EM and higher rebates in pegfilgrastim
based on legacy contracts. This is expected to normalise.
 Rebates in pegfilgrastim: Managed care customer, legacy Viatris contract had

higher rebates which led to USD15mn charge. Impacted both topline and margin.
This has been reset from beginning of July. Expect this to recover over next few
quarters. Pegfilgrastim – 16% share vs 8% last year. In July week, prescription
share reached to 19%. Biocon is leader among pegfilgrastim biosimilars.
 WAC is list price. Not net price. Biocon Biologics maintain good cost position and
hence you see good growth and profitability.
 Ustekinumab and Denosumab clinical trial on track and expect to file by end of
2023 and 2024 respectively. Aflibercept: In litigation with Regeneron. Confident
about how things are progressing. Looking for interchangeability.
 bAspart: Do not require PAI inspection again. Malaysia: Submitted CAPA plan to
agency in Jul’23.
 Pricing: difference in different channels and different products. In other

products, seeing good growth.
 Semglee: 12% market share in Jun’23 vs 8% last year (based on prescription

filled); NRx over 15% indicating strong ongoing adoption (based on prescription
written). New large customer added in US with exclusive market. This is not
reported in IQVIA.
 Trastuzumab: 11% share in Jun’23 vs 9% last year. Growth led by new customer
contracts.
 Adalimumab – Launched on 1st July. Comprises of several channels each

requiring different strategies. Biocon’s dual pricing strategy will help it to
participate in all these segment and are in active discussion. In Europe – gained
18% and 10% share in France and Germany respectively.
 Bevacizumab – CRL received due to facility in Bangalore. There have never been
questions on scientific matter.
 EMs: - strong uptake in glargine, trastuzumab and Rh insulin. Advanced markets:

EMs- 75%:25%.
 Licensing income may not happen in every quarter. But as Biocon sees
opportunities in out-licensing, this will appear.
 FY24: will see operational and organisational integration of Viatris business.

Integrated 70 countries in EMs in Jul’23. Accelerating North America and Europe
as well. Tracking ahead of plan vs a 2 year transition service agreement.
 8 biosimilar in the market and 12 in pipeline.
 Biosimilar market is expected to quadruple by 2030, to be led by USD200bn of

originator biologics losing exclusivity (As per Mckinsey).
 Interchangeability – not have in Jul’23. Working on it.
Generics
 Retain mid-teen generics revenue growth for FY24 (could do higher double digit).
Will see better H2. Brownfield capacity expansion to add to growth. Bulk of
growth to come from formulations where looking to lock in additional contracts
but also from immunosuppressant APIs. Achieved 30-40% market share in
statins, and hope to get additional market share in immunosuppressant.
 Expect 17-20% growth over period of 5 years. Focus areas: 1) Fermentation

(precision, potent, microbial etc. which not done before). 2) Peptides. 3)
Injectable –forward integrate peptides and fermentation base APIs. 4) Synthetic
pipeline – both onco and non- onco. Could be statin (leadership position in
APIs).Selectively look for it.
 Peptide and formulations should drive margin expansion. Profit will be driven by
few drugs such as Copaxone (hope to get approval), liraglutide, etc.
Fermentation business is very profitable but is being cannibalised by synthetic
products, which were under pressure over last few years.
 15 peptides in the pipeline. Filed liraglutide in US, Europe and other markets.
Filed both strengths - Victoza and Saxenda. Weight loss and diabetics market size
could be USD100bn in next 10 years.
 Semaglutide: Novo is working with pure play CDMO players rather than working
with generic companies like Biocon. Biocon will develop all 3 strengths.
Recombinant route is cheaper and more effective. However, in clinical trials have
difficulty as required extensive phase1 trial. That is why people prefer synthetic
route. Biocon will try both paths.
 INR6bn spent on Vizag immunosuppressant API facility. Looking to lock more

customers in EM. Expect revenues to start from H2CY24.
 Breakup of revenues: INR2bn formulations, INR4bn API and remaining is other

income.
 Pricing – mixed trends. Last month seeing price easing.
 Growth in this quarter was driven by US generic formulations, which benefitted

from additional contracts. Also new product launches in ex-US markets. Traction
in immunosuppressant portfolio.
 Work on new injectable facility and expansion of peptide and fermentation

capacities commenced in Bengaluru. Expected to be completed in next two
years.
Financials/Others
 Capex: USD150mn BBL for Malaysia expansion. Generics: USD80-100mn.
Syngene: USD85mn
 Fx loss of INR90mn vs loss of INR380mn last year.
 Net R&D spend were 12% of revenue ex-Syngene.
 Generics business is INR10bn cash positive. After dividend, could INR7-8bn.
 Net debt: USD1.2bn (excluding structured investments).
Cipla
US
 Growth was mainly led by base business improvement. QoQ improvement in
gRevlimid is not significant. Volume share is negligible. Base business has grown
impressively.
 Base business growth is a combination of different factors including rebalancing

of supply chain, how buying programmes of different channel are being serviced
(earlier buying from domestic players only), etc. Channel wants certainty of
supply. Do not think prices have increased for drugs under shortages. Price
pressure environment is lesser in general. Primary sales are also happening since
audit of chargebacks do not indicate of inventory build-up.
 Price erosion has improved from low double digit/ high single digit to slightly
lower.
 US sales level will be USD210–215mn per quarter. On top of this will be peptide
and other launches. Base business would be little short of that. Expect 4-5
peptide launch in next 2 years. Plan to file more peptide products in coming
years. Peptides and other launches are not dependent on Goa and Indore
inspection.
 gAdvair – de-risked to another in-house facility in US. Plan to take this product
to the market in a period of 12 months with no incremental generic competition
expected.
 gAbraxane: De-risked to CMO site. Expect to file it from both sites. Only thing
pending is the site. Teva was first filer and recently received approval. They have
not launched yet, expected it to be a phased launch. Market is supply constraint.
AGs are getting what they have been asked to supply. Periodically, there are
times when AG can supply and when brands can supply.
 Albuterol: share has stabilised now. Largest family of albuterol i.e. proair had
issues previously, which helped Cipla. So share decline was a kind of
readjustment. But still hope to go up hereon.
 Leuprolide – will see increase in market share going forward. Earlier, company
was waiting for pricing negotiations.
 USFDA: Indore facility was inspected in Feb-23. Already initiated corrective

action. Awaiting inspection classification from USFDA. Goa – re-inspection
expected in H2FY24.
 Dulera: not sure if that product is for US.
India
 India grew 12% YoY. Of this new product contributed 2%. Galvus would be a little
less than that.
 Branded franchise – doing well. All therapies firing, particularly respiratory,

cardiac (heart failures, structural heart diseases), anti-diabetic (galvus),
neurology – bouncing back there. New launch pipeline pretty strong.
 MR strength: 10,000. Respiratory is larger share. 75-80% for chronic (including

specialty). Acute would be 20%.
 Added 200–250 reps in Q1FY24. Plan to add another 400 by Q2, post which will
stop. Payback from reps is within 6-9 months.
 There is strong volume and new product introduction growth. Tier2-6 cities
seeing strong growth through deepening of healthcare, particularly in the area
of anti-infective and respiratory. They have the ability to pay for it.
 Trade generics doing relatively well. In Tier 1, therapies are getting upscale to
better molecules.
 Trade generics market size– 25% of overall pharmaceutical market.
 Consumer: Q1 and Q2 is usually peak season. ORS is larger category and hence,
saw muted quarter due to weak seasonality. Despite this, growth was
impressive.
SAGA
 Will focus on private market and improve margins.
 Will be able to grow in FY24.
 Lot of focus will be on margin.
Financials, outlook and others

 Guidance: EBITDA margin at 23% (22% earlier). Confidence stems from all
businesses.
 Net cash position improved QoQ. Debt comprises mainly of ZAR720mn.
 Capex: INR10-15bn annually. Combination of capacity enhancements, de-risking,

maintenance. 50% maintenance – mainly related to biotech, sustainability
related, improving efficiency.
 Recall cost of albuterol provided in this quarter.
Divi’s Laboratories
Business
 Growth drivers – contrast media, sartans, soon-to-expire patented products.
Potential impact of price pressures in the US and Europe on operating margin
could be there, but remain optimistic for opportunities that keep emerging for
quality API manufacturer in generics.
 Next few years will be better than last 5 years. Expect bigger basket in generics.
Good opportunities in custom synthesis. More life style medicine than life saving.
 Revenue to grow in double-digit (excluding molnupiravir). See improvement in

terms of margin and growth.
 Growth in mature generic APIs is slower at single digit. But on 5000 tonnes, it is
also substantial. Generics prices have come down as demanded by the
customers. But raw material prices have also come down. Retained the extra
margin.
 Raw material prices – downward trend happening and expect continued

stabilisation in coming quarter. Focusing on optimising inventory levels. Mitigate
sourcing risk and strengthening domestic sourcing – reliance on China has
reduced.
 Custom Synthesis business doing good. 2 Projects at commercial stage and

gearing for full production capacity. Can retain margin on custom synthesis.
 Contrast media API- various countries and customers are under review. MRI
contrast media tracking well and expect to complete validation by end of this FY.
Contrast media is also there in generic markets (like India). Growing very fast in
both generic and branded markets.
 Carotenoids – need more capacity. Hence, putting Unit -3, which will come online
Q1-Q2FY25. There is competition.

 Gross margin improved QoQ due to softening of raw material prices and change
in product mix. Yield improvement and reduction of manufacturing costs due to
energy efficient operations also helped margin. High cost material has already
been consumed in previous quarter.
 EBITDA margin – comfortably do 35-40%.
 Constant currency growth: -29% in Q1FY24.
 Generics: Custom synthesis is 60:40 vs 59:41 for Q4FY23; and 56:44 for FY23.
 Nutraceuticals: INR1.78bn vs INR1.5bn for Q4FY23 and INR6.6bn in FY23.
 Exports accounted for 86% of sales. Exports to Europe and US was 67%.
 Fx. gain of INR30mn vs INR560mn gain in Q1FY23.
 Capitalised INR330mn of assets this quarter. CWIP INR3.89bn of which Kakinada

related is INR1.3bn. Gross block in FY23: INR68bn.
 Cash on books INR42.08bn. Receivables INR17.20bn. Inventories INR29.67bn.

Dividend INR7.96bn scheduled payout in the first week of Sep’23.
 Unit 3 (Kakinada) greenfield project with initial capex of INR15bn for phase 1.
Scope for further expansion. This will manufacture starting materials, advanced
intermediates, nutraceutical APIs, complex API. This will free up Unit 1 and Unit
2 for custom synthesis projects and generics.
Dr. Reddy’s Laboratories

Financials and strategy
 Adjusted for divested brands sales grew 35% YoY and 12% QoQ. Generics
business particularly EMs, Europe and US performed well.
 Improvement in gross margin was due to improvement in product mix, better

manufacturing leverage, partly offset by brand divestments.
 Gross margin 56-59% for next few quarters. Seeing softening of solvent prices,
freight costs and new product launches.
 Expected ETR 24-25%. Tax rate changed in Q1 due to change in jurisdictional mix
in earnings.
 Capital allocation – DRRD is open for acquisitions. India and EM rank higher. But
will also grab opportunities in in US and EU.
 FCF before acquisition INR6.24mn i.e. USD82mn. Net cash at USD608mn as on

30th June 2023.
 R&D: marginally upward trend as it continues to invest in business.
 USD INR rate 82.06. Hedges: USD760mn @ 82.7-84.4; RUB7,675mn @ 1.045;

AUD3.7mn @ 57.9 maturing next 12 months.
 Receivables: Broadly in line with business growth.
North America
 QoQ growth was led by increase in gRevlimid sales, new launches such as
Regadenoson, Mayne pharma acquisition, market share expansion in existing
products, partly offset by relatively lower price erosion.
 Mayne contribution lower this quarter. Mayne pickup would be in coming

months. Launch more products. USD100mn annualised sales.
 Volumes improving. Saw relatively less price erosion. Should see something
similar in coming quarter.
 Regadenoson: multi-player product. Launched in April. Happy with the way

market share is progressing.
 Launched 8 new products in Q1.
Other segments
 Russia – pickup in allergy season and aided by lower base.
 PSAI – DRRD expects to see growth and improvement of profitability on account

of volume pick up, collaboration of opportunities and new launches.
 China: Starting to see the results. Bigger impact will be seen in FY25. Looking for
USD180mn additional revenues from China.
India
 India grew in high single digits after adjusting for lost sales from divested brands,
NLEM impact.
 Signed 2 innovative deal this quarter.
 Remains priority market. Key focus on ramping up of existing portfolio, scaling

up recently acquired brands, improving field force productivity and trade
generics.
 Looking for some partnerships or product acquisitions. Some are FY25/26

onwards.
 Expenses will be marginal such as on licensing fee, some local trials, etc. Do not
anticipate major use of cash and expect higher returns.
Biosimilars
 Working on 11 biosimilars. Starting from 2027.
 Rituximab- BLA accepted by USFDA and MHRA. Expect to get approval in 12-18
months.
Glenmark Pharmaceuticals
US
 Expect 4-6% growth in FY24. Expect to launch 12-15 products in FY24. Also,
Monroe will commercialise in H2FY24. And site transfers from Baddi will kick in
in H2.
 Stabilisation of growth in US due to improvement in new product launch

execution, opportunities from market disruption, and pricing erosion has
improved.
 Monroe remediation largely done. Expect commercial sales from Monroe from
H2FY24.
 Goa and Baddi remediation will continue in Q1 as well. Post which will invite
agency for inspection.
 Respiratory: Clinical trial ongoing for generic Flovent pMDI; expect to file in FY24.
Plan to file at least one more generic respiratory pMDI in the U.S. in FY24 and
continue filing momentum beyond FY24.
 8 ANDA approvals and 8 launches in FY23. 8 filings in FY23 and 10-12 filings
targeted in FY24.
 Settlement with 3 plaintiff groups. USD87.5mn payable over two financial years.
Subject to final approval of court. Company has not admitted any liability.
India
 India business could grow at 8-10%. This is after accounting for INR1.5bn lost
sales from divested brands.
 MR: 4800 (after divestments).
 Base business growth remains strong on full year basis – growth was 12%. There
could be quarter on quarter variations.
 Adjusted for covid, divested brands, impact of NLEM price revisions, India
business reported 5.1% YoY growth in Q4FY23.
 First company to launch Lobeglitazone + Metformin for Type 2 diabetes.

Launched teneligliptin combinations and sitagliptin combinations. No. 5 in
cardiology. Leaders in heart failures.
 Glenmark Consumer Care (GCC) business revenues were at INR672mn;

secondary growth of 15% driven by volumes. INR 2,330 Mn sales in FY23 with
growth of 30%, led by volume growth in key brands and launch of new extension.
Europe, RoW
 Europe: Expect to continue 20% growth in FY24. This year growth was driven by
Western Europe. Doing well in both generics and specialty. Respiratory is doing
well.
 Europe: 4 respiratory filings in Q4 which should drive revenues in FY25 and

beyond.
 Philippines – double digit growth as per secondary market.
 Respiratory and Derma are key therapies in Asia. Ryaltris continue to do well;
launched in Malaysian market in Q4. Gained good market share in Australia at
18.1% market share by partner.
Ryaltris
 Revenues: USD20-25mn in FY23 and looking at USD40-45mn in FY24.
 Filed marketing applications in more than 70 countries. Commerialised in 27

countries through its own commercial channel or through partners.
 Partner in EU has started commercialising activities in Austria, Belgium, Spain

and France. Plan to enter new markets in FY24.
 US: Hikma consulted clinical advisory board and received positive feedback from
senior allergy doctors.
Ichnos
 Investments in Ichnos in FY23- USD85.2mn as against USD; 89.1mn
Financial
 Exceptional item Q4FY23: INR910mn in remediation cost; INR1.37bn legal costs
(last trials for Zetia were going). Total is about INR2.28bn. There was also
transaction related costs of INR2.60bn. For FY23, remediation cost for both US
and India plants was INR2.19bn.
 Remediation costs mainly relates to consultants and people working there. Cost
of maintaining US plant was roughly USD22mn during the year and about
INR440mn in Q4FY23 in India (Goa and Baddi). FY24 will see very little
remediation cost. Gross block for Monroe USD250mn.
 Net debt is higher due to increase in working capital cycle. There is a sudden
change in geography mix – more sales from EU and RoW and less from Europe.
Hence debtor days are higher by about 45 days. Should come down going forward
by about 15 days – will be closer to 100 days. This will be more sustainable.
Inventory- 85 days. Don’t like to go below this. Also there was impact of currency.
Continue to hold FY26 guidance of zero net debt. Focus will be on FCF generation
for debt reduction.
 While giving net guidance earlier, there was no visibility on gZetia settlement.
Hence net debt guidance would depend on GLS divestment.
 FY24 guidance: R&D: 8-8.5% of sales; in FY24. EBITDA margin in FY24: 19-20%+
Capex -INR6-7bn in FY24.
 ETR in FY23: adjusted for tax on GLS dividends, INR650-700mn tax on brand
divestments is 38-39%. Cash tax is 31%. Guided for similar tax rates in FY24 i.e.
38-39% P&L tax and 31% cash tax. Expect to reduce this in less than 2 years’ time
to 25%. Also, with reduced Ichnos spends, this should come down as there is no
set off available in Switzerland. Still have MAT credit of INR7bn. This will be over
in 2 years’ time.
 Fx loss of INR780mn in Q4FY23, recorded in other income. FY23 : INR2.16bn fx

loss.
 Accrued expenses INR4bn across geographies – sitting on liability side.
 Interest cost: INR1.09bn. Should be somewhere around this. As debt component

decreases, this should reduce. Majority of debt is USD denominated. Interest
cost higher – 10% of gross debt.
IPCA Laboratories
India
 FY24 revenue growth guidance: 12–14% (industry to grow at 10%).
 All therapies, except anti-bacterial (5% growth) have done well. Pain: +15%,
cardio +10%. CNS – 21%. Derma – +24%. Urology +26%. Opthal +15%. Cough &
cold +11%.
 Sales force productivity is improving. Except ophthalmology division, which will

take three years to become productive, other divisions are performing well. CNS
– 1 more division started and is close to breakeven. Rheumatoid arthritis (300
people)– 2nd division became productive within 1st year. Contributing to margin
as well. Cardiac – of the 2 divisions, 1 division has reached breakeven in 1st year.
2nd division will take one more year. Pain - Zerodol – 300 people – good traction.
But overall, the pain market has gone down. Growth, which was 19% earlier, has
come down to 15%.
 In Jun’23, Ipca grew at 13% versus 11% industry growth. NLEM impact of 16% in
Q4FY23 was partially offset by price increase taken in Q1. Two ranks gained over
FY23 in the chronic segment. 15th rank maintained in acute.
 6180 MRs. PCPM INR422,000 vs INR408,000 lakh last year.
Exports and API

 Branded exports to grow by 12-14% in FY24. Lower guidance is on account of
depreciation in the ruble.
 Generic exports to grow by 7–8% in FY24
 API to decline by 10-12% in FY24 due to lower realisations on account of softer

KSMs and some decline in anti-malarial APIs. Next year should deliver 10-12%. In
Q1FY24, anti-malarial business declined from INR630mn to INR190mn due to
poor demand, price decline in certain APIs on account of softer KSMs. Eg. KSMs
of sartans, which was USD18-20, has come down to USD6. Losartan, which was
sold in market at USD100-120mn, has come to USD55-60. KSM manufacturers
are losing money. Believe this is temporary and KSM prices should go up.
Contracts are usually short term and no issue in terms of passing of cost in case
of KSM price increase.
 Institutional to decline by 15% on account of lower demand of anti-material

injectable and plant closure for upgradation in Q1. Injectable business is around
INR900mn annually. In Q1FY24, sales was down due to lower procurement from
agencies, shutdown of injectable plant (now operational). 1 more month to get
approval from WHO. Started product from injectable.
 US inspection: no repeat observation or data integrity related issues. Ratlam

inspection closed in mid-June. Hope to hear from USFDA in 90 days.
 US: focus is on formulations and not much on APIs.
 UK business FY24 INR1.3bn vs INR640mn last financial year. Good traction from
European markets. Except South Africa where it has lost tenders, other
businesses should do well.
 KSM continuous process integration plant (INR300-400mn capex) to start from

Oct- Nov.
 Dewas site: by year end small domestic business should start. Business should
scale up next year. Expect European authorities to inspect in H2FY24. FY24: Plant
will be in losses.
Financials
 Expect 6-8% overall revenue growth in FY24. All guidance without Unichem and
on standalone basis.
 EBITDA margin FY24: 19-19.5% (excluding other income) (versus 16.2% in FY23 –
standalone; consol difference 100bps) mainly driven by gross margin. Drag from
subsidiaries should come down. Material cost to sales ratio to improve from
35.5% in FY23 to 31.5-32% in FY24. This is on account of improvement in
formulation business, sales force productivity improvement, softer input costs
and cost optimisation.
 Unichem is also improving performance. Will not be able to guide until Ipca takes
control. Unichem: Integration will start by September end i.e. Q3 (from the date
of control). Open offer to start on 28 Aug and close by 8 th Sep. By 20th Sep all
payments should be done.
 Not much increase in other expenses. Productivity increase in sales force has also
helped.
 Capex INR3bn in FY24. This includes investment in Biotech plant of about

INR1.5bn. Bioreactor capacity – 1500-2000 lt. Filing will be for global markets.
 Net borrowing will remain at INR10bn. Finance cost: INR1-1.2bn in FY24. Interest
rate is around 7-7.5%.
Lupin
Financials and strategy
 Retained EBITDA margin guidance of Q4FY24 exit run rate of 18%+. Could be
even higher. FY24 could be 15%+. Expect EBITDA margin to improve QoQ.
 US margin continues to improve – 4th quarter in a row. This coupled with

improved productivity in India from expanded sales force and Spiriva launch
should improve margin QoQ.
 GM – should sustain at this level. Improvement due to favourable mix, softer API
prices (excluding excipients) and PLI.
 R&D to sustain at current levels in absolute terms. It was higher QoQ on account
of injectable and biosimilar - ranibizumab clinical trials, completion of Risperdal
Consta trials. R&D split: 50% for complex comprising of 20% inhalation, 20%
injectable and 10% biosimilars. Curtailed spends on NCE front, low single digit
mn$. If positive result, may look for partner and no plans to commercialise on
own.
 Other expenses increased QoQ due to consultancy charges for nitrosamine

impurities which should decrease and higher SG&A for India business. Employee
expenses increase QoQ due to increments (~7.5% across the globe).
 EBITDA margin adjusted for milestone income stood at 14.4%. +50bps QoQ on
account of high gross margin partially offset by higher expense and PLI benefit in
base.
 ETR 21-22% in FY24. It was lower due to turnaround in US subsidiary, which had
losses and increases sales from Sikkim plant which is under tax benefit.
 WC reduced from 119 days in Mar-23 to 103 in Jun’23.Repaid working capital

debt in India and repaid some debt in Australia.
 Licensing income Abbvie: couple years out for next. Risk profile has improved
significantly so quantum of potential milestone income has gone up.
 Incorporated subsidiary – API intermediate space CDMO. Not large companies

doing well. There is an opportunity. Still need to finalise concrete plans. Capital
allocation: Lions share is going in India and higher growth products and
geographies. For this subsidiary, will go for external capital.
 Diagnostics – started to see some synergies. CDMO – will be a significant.
US
 Spiriva: Expect to launch in late Q2FY24. Haven’t heard of AG launch in near term.
This could be because LPC is only generic in the market place and generic
substitution likely to be gradual and brand may want to maximise its value.
Market size USD1bn (only handihaler; respimat is top of that). Lupin will find a
way to convert respimat to handihaler. Based on other DPIs, expect generic
substitution to ramp up over time from 25% to 40% (hopefully by middle of next
year). Expect to ramp up in next 2 years.
 Large % of pipeline consists of injectable products.
 Indore site clear (Pithampur Unit 2) - Ophthalmic opportunity in 5-6 products. To

start with Prolensa this fiscal and 3-4 more products in next fiscal from
Brimonidine, etc. Opthalmic product shortages in the marketplace should give

good opportunity.
 Inhalation – Apart from Spiriva DPI, have made significant progress in Elipta
(expect to file by end of this fiscal), and also in Respimat (more so in next fiscal).
Learned to work on dual combination drugs (learning from Advair). Being
developed in Coral Springs and team is excited about its development. Also
working on 3 combination drugs. Also made some progress on MDI. But watching
carefully due to green propellants. Working on both 505j as well as novel
propellant version MDIs for differentiation and exclusivity in the marketplace.
 Injectables – Expect multiple product approvals starting from end of this fiscal
due to Nagpur site clearance. It will start from Glucagon launch. Already
launched Thiamine in partnership with Caplin. Following both 505j and 505b2
route. 9 products in active pipeline this year. In 5 years aim to reach USD100mn+
revenues. Important plants – Nagpur. And some will be partnered products.
Completed trials for Risperdal Consta. Plan to file next quarter. 2+ years to
launch.
 Also made progress in respiratory nasal spray and implants and devices
(currently in clinics).
 Myrbetriq: New patent on which innovator is suing. But Lupin is confident on the
outcome. Market size: USD2bn+. Limited no. of players on Day 1.
 US generics base business: price erosion low single. Expect it to sustain in low to
mid-single digit. Due to lot of pricing pressure in last couple of years which
pushed lot of companies to exit market. And this has led to drug shortages, which
is a huge concern heard from FDA, stakeholders, etc. This should continue going
forward.
 Pegfilgrastim- Expect USFDA clarity on Pune site inspection outcome soon.
 Ranibizumab – made incremental spends. This will be for US and through

partners in other markets.
India
 India grew 13.6% YoY adjusted for NLEM and Cidmus brand in sales. Diabetes has
sprung back to growth (vs declining). Confident of consistent above market
growth from Q2 onwards. New divisions and addition of 1,300 sales force in
Q3/Q4FY23 should contribute.
 Innovative portfolio – Ondero going off patent in Aug-23. Lot of it reflected in

reduced pricing. 2025 and 2026 will see one more product going off patent. May
see lumpiness. But expect to grow in double digits.
 May add 500 force each year later. Significant headroom to grow in chronic since
Lupin is not No.1 in any of these. Also, severely underrepresented in oncology
and CNS.
Others
 Institutional TB and API business has done well.
 API – 7ACA and core business sales recovered handsomely. It was suppressed in
last 2 years. Cephalosporins are back. Picking up in certain products. Likely to
stay at this level. Further increase in API sales will come from new products. Pen
G prices are still high.
 Fostair – good % of revenues in Europe and expect it to peak in FY25 i.e. should
be meaningful contributor in FY25. Doing well in UK, launched in Germany last
month, other countries through partners in Italy.
 South Africa – bumper Q4 in anticipation of price hikes in Q1. Likewise in

Philippines. Issues in plant in Mexico. Brought down the overall results in Q1.
These should pick up.
 EMs- have always been double-digit growth market. Also have better-than-
company level EBITDA margin.
Natco Pharma
Products
 Semaglutide: Sole FTF on one particular strength (partner is Viatris)
 Olaparib: FTF (partner is Alembic)
 Erdafitinib: own filing. Current market size ~USD40mn; can go up to USD 150mn
 Lonsurf: Litigation still on. Unclear about launch timelines
 Several USD30-100mn products
 gRevlimid: Q2 should be at par with Q1
 Cannot build generic business model based on shortages as these opportunities

are short lived
Domestic
 Oncology going well. There was a one-time order in Q2
 Should grow at the industry rate (10-15%)
 Doing well on cardio-diabetes front. New launches should drive 50% of growth
 Agro: Q2 should do better than Q1
 Agro: On target for INR1.5-2bn revenue target. Expect INR4-5bn in next 3 years
 Agro: Filing CTPR in US and Brazil too.
 Agro: Have pipeline for next year
Financial
 One-time special employee incentive of INR170mn
 Litigation related expense provision of INR 510mn
 Q2 should be a similar quarter; Q3 things will slow down and Q4 will seep pick-
up again
 FY24: Can cross INR10bn PAT (conservatively) and up to INR12bn. Anything

more than this depends on how the market plays
 INR13.9bn cash and INR1bn debt
Others
 US front end is the only business that is making losses
 Looking at acquisition both in India and abroad
Sun Pharmaceuticals
Specialty
 Global specialty sales +21% YoY to reach USD232mn. US specialty continue to
do well YoY. QoQ dip was on account of seasonality in Levulan sales. Havent
seen any impact on Ilumya of launch of Humira biosimilars.
 Specialty R&D accounted for 35.8% of total R&D spends.
 Ilumya for psoriasis arthritis – taken steps to accelerate pace of trial.

Accelerating new enrolment of sites and activating new sites. Will share trial
completion timeline once see pick up in enrolment.
 Deuruxolitinib: No update regarding this. Idea is to file this product at the

earliest. There is no slowdown on 8mg. Patient involvement is very high for
Alopecia Areata indication. Also, efficacy of SUNP’s product is also good.
 Philogen – Nidlegy for Europe, Australia and New Zealand. Currently in phase 3
trials for skin cancer. Prescribed by the same doctors as Odomzo. Good follow
on treatment.
 Presented data on two phase 1 studies in Jun’23 GL0034 in ADA conference.

Quite excited with early results. Plan to initiate phase 2 clinical trial shortly.
 Received Health Canada approval of Winlevi in Jun’23.
 Xelpros: under shortage in US.
 Sezaby: not a single source of purchase. Need to go to various hospitals and

formularies. Not an immediate spurt in sales.
US
 Significant contribution from gRevlimid sales. Expect it to be lumpy in nature.
 Not seen any significant opportunity from drug shortages. Also, SUNP do not
have large portfolio of injectable products.
 Launched 2 generic products on ex-Taro basis.
 Taro- formed special committee and need to finalise lawyers and bankers. At
some point negotiation will begin for buying back Taro. Derma business is under
constant pricing pressure. As a standalone business, it will be difficult for it to
show meaningful profitability.
 Mohali: No need for re-inspection for restarting supplies. Supplies from Mohali
have not started. Whether have regained share is based on market dynamics
and contracts with customers.
India/EM/others
 India growth muted on account of price reduction in Sitagliptin after patent
expiry in Jul’23 (volumes healthy), full quarter impact of NLEM which came in
Dec-Jan.
 Expect to grow in-line with market in India or even higher. Cequa – Initial
response has been good. Launched 10 new products in Q1FY24.
 EMs Branded formulations stood at USD261mn +6.5 YoY. CC terms 14% YoY.
Romania and Brazil has done well.
 RoW – USD195mn; +2.6% YoY.
 China Medical System Holdings CMS have good presence in derma and
ophthalmology.
Financials
 Impaired AA012 product for vitiligo indication.
 FY24 revenue guidance: high single digit consolidated growth retained.
 Repaid USD277mn debt this quarter.
 Taro PAT adjusted for one-time expense of plant relocation stood at INR
USD14.9mn.
 R&D: continue to invest in both global generics and specialty.
 Nigeria currency impact was on mark to market payables.
 Other expenses were higher on account of normalisation of selling and

distribution expenses.
Torrent Pharmaceuticals
India
 India growth stood at 16% adjusted for NLEM impact of 1.5% – TRP growth of
11% and 5% from Curatio. Chronic grew in double digits. However, acute season
was weak. Gastro (~INR10bn business) was impacted by seasonality. Expect it to
recover in coming months.
 Expect India to outperform market growth in coming quarters. This should be

driven by improvement in base business, productivity improvement in certain
divisions, realisation in Curatio integration synergies, and national rollout of
Consumer portfolio. Products launched last year are contributing now and
should drive growth in coming 1 year. No new major launches planned for this
year.
 Internal volume trend is positive. Based on secondary data - Torrent vs IPM

overall growth 9% vs 4%. Volume/Price/NI -3%/7%/4.5% vs IPM -4%/5%/3%.
 Curatio: 18% growth in Q1. Teddy bar is now INR1bn brand. Top 5 products have
grown in high teens portfolio. Margin is now 7% higher than pre-acquisition.
Expect it to move to India base business level. PCPM is INR500,000 versus
INR360,000 pre-acquisition. Restructured few divisions as focus remains on top
5 brands.
 NLEM – 10% contribution. One-time price reduction impact.
 Consumer portfolio: 230 sales reps across the country for consumer distribution.
No plans to add more in this fiscal. Advertisement spends may not be higher
going forward. Shelcal seeing positive outcome. Plan to start national rollout in
coming few months. Also started pilot of Unienzyme in few states. Teddy Bar
from Curatio portfolio is also planned.
 Sitagliptin – INR100mn per month revenue run rate within 12 months of launch.
TRP is No.1 among generics.
 In-licensed portfolio - Empagliflozin of Boheringer. Don’t expect it to be large

brand. Patent to expire in FY25. Expect it to leverage the brand.
 Metro contribution is higher than industry average.
 5500 MRs.
 Trade generics – complimentary to branded generics. Limited cannibalisation.

Expect both to grow.
US
 USD36mn sales – down 8% YoY. Adjusted for one-offs, growth was 1%.
 Did not see any material price erosion. Q1 is more of a price stability story. Buyers
had difficulty in supplies by chasing low cost supplier.
 Dahej – optimistic of clearance in Sep/Oct. Last inspection had only 2

observations, which were not significant. Mid-single digit to low double digit
products pending – should see approval.
 Indrad – waiting for re-inspection. Date not committed by USFDA.
 1st product commercialised in July from Ankleshwar.. Pipeline of 10 products

over next 4 years.
 Focus will be to make niche and maintain profitable business.
 High single digit filing in the US. Some of the products will start getting approval
from september onwards, subject to plant clearance.
 Given no. of approvals and filings, it won’t be difficult to reach USD50mn per
quarter in next 3-4 years. But don’t expect US business share to go up
significantly from current 10% as other businesses continue to grow at higher
rate.
 Revlimid –Late launcher. Not a FY23/24/25 opportunity.
Brazil
 BRL114mn sales grew -2% YoY. BRL 215mn adjusted for postponed sales which
happened in July i.e. 12% cc growth.
 H2 is always stronger.
 As per IQVIA Mar-23, TRP grew 15% vs market growth of 11%.
 Launched 1 product in Q1FY24, which is pregabalin. 5 additional launches in

balance year.
 Generic. 8.87% market share in covered market.
 Added 77 CNS reps in last 18 months. Add 26 more reps in Aug.
Germany
 YoY growth driven by tender wins in last 3 quarters. Should see pickup in Q4FY24
due to additional tender win this quarter.
 Steady sequential recovery. Better conversion on existing tenders. 2 products

launched. Expect this to continue.

 Margin could improve by 75-100bps in next 1 year if no negative from generics.
Margin- confident to maintain Q1 margin in rest of the year. Have room to
improve from here as well.
 Other expenses in Q1 should sustain. As a % of sales higher due to lower Brazil

sales.
 ETR: 29% for FY24. Lower because of Curatio tax benefit.
 Capital allocation –focus is on India, branded generics and generics generics in

this order. US is not a focus area. Also diversified R&D spends.
 1.3x net debt to EBITDA. For rest of the year would be repaying additional INR6bn
debt.
 Gross margin improved 3pp. Expect substantial portion of it to be sustainable.

Improvement was led by 1) better branded business and price increases; 2)
generics – good product mix; 3) Cost efficient measures taken in H2FY23 playing
out.
 Other income – one-off – INR200mn.
 Others – Europe B2B business and insulin manufacturing for others. Declined due
to lower uptick in insulin business, relating to Novo Nordisk. Should come back.
 Other major countries include Mexico, UK and Philippines.
Zydus Lifesciences
US
 Q1FY24: 4 products launched; 20 new approvals received; 4 products filed
 Q1FY24: Higher volume, new product launches drove growth. Pricing was stable
 FY24: Expect US biz to grow in double digits (from high-single). Building in

competition in H2FY24
 Expect few limited competition launches annually for next few years
 Linagliptin: Not in 1-2 years
 gVascepa: Launch in Q3. Want to get complex API supply chain in order
 Complex injectable launches in next 2-3 years
 2 REMS product yet to be launched (Q3/Q4 likely). Important launches
 Transermal launches: Need to ramp up supply chain, scale up batches. Hence

takes time. Expect at least 2 launches in FY24
India
 Retained leadership position in nephrology. Fastest growing company in
oncology
 Q1: 6% volume growth
 Expect better than expected market growth
 Biosimilar biz scaling up well. Expanding capacity
 Financial
 Expect margins to improve 150-200bps (from 50-100bps). Expect competition on

lead compound
 R&D: 8% of sales
 Capex spend geared toward US. Overall capex spend of INR8-10bn annually
 NCE
 Saroglitazar: Ph.2b/3 for PBC and Ph.2b for NASH for US market. ~80% patients
recruited. Also PCOS and NAFLD
 MAb: Working on 2 molecules. Patient recruitment done for 1 molecule
 Hepatitis E: Trials ongoing
Inspection
 Oral solids plant at Ahmedabad SEZ 0 obs during Pre-Approval inspection
 Biologics fill-finish plant at Ahmedabad SEZ 0 obs during inspection
Power & Ports
India Grid Trust

 Peak power demand witnessed YoY rise of 4.7%.
 Share of renewable in generation has increased from 39.9% to 41.8% during the
period.
 Fund requirement estimated for generation capacity addition from 2022-32:

INR34tn.
 Transmission projects worth ~INR 1.4tn are likely to be awarded through

competitive bidding in near future as per NCT. Power Sector in India to witness
investments over ₹ 35tn with focus on RE and its integration.
 Update on VRET acquisition: Transaction closure process underway; received

SEBI approval and expecting a closure in last week of August 2023.
 Received SEBI approval for de-classification of Sterlite Power Transmission

Limited (SPTL) as a Sponsor.
 FY24 DPU guidance at INR13.80 for the year.
 AUM at INR 229 billion; Net Debt/AUM at ~60.1% - well below the 70% cap as
per SEBI regulations.
 Post-Acquisition of VRET: AUM ~INR 269bn and Net debt/AUM is ~65%.
 DSO days1 at 66 as of Jun’23 vs 65 days as of Jun’22.
 Weighted average cost of borrowing for incremental debt at ~7.70% in Q1FY24.
 Cash balance is ~INR 10.41bn in Q1FY24 and gross borrowing is ~INR146bn in

Q1FY24.
 Approvals are in place for further capital raise ~INR15Bn to maintain adequate
headroom for growth.
 VRET acquisition funding: Mix of Debt , equity and internal accrual.
 Company is focusing on maintaining stable operations for predictable and

sustainable distribution while looking for value accretive acquisitions.
 Company is proactively participating in synergistic greenfield bidding

opportunities across power transmission and BESS.
Real Estate
Brigade Enterprises
Management call: Key highlights
1. Management commentary: Management’s commentary on its various business
lines:
 Real estate: Housing demand remains strong and sales are increasing
despite mortgage rate hikes/house price increase.
 Leasing business: The company leased ~0.06msf space during Q1FY24. It

leased ~0.01msf in BTG and 0.03msf in WTC Chennai during the quarter.
 Retail business: The mall business has recovered strongly with

consumption surpassing the pre-Covid levels. Consumption in Q1FY24 was
up 12% YoY.
 Hospitality: Hotel biz reported occupancy of 67% during the quarter, down
just 1% QoQ (62% pre-covid).
ARRs in hotels (INR6,214 in Q1FY24, up 16% YoY) continued to improve and

are higher than pre-covid levels of ~INR5,400.
The hospitality segment EBITDA came in at INR381mn (INR388mn in

Q4FY23).
2. Financial performance: Q1FY24 revenues came in at INR6.5bn (down 28% YoY

and 22% QoQ). EBITDA margins during the quarter stood at 26.7% (up 90bp YoY
and 270bp QoQ) while adjusted profit stood at INR385mn (down 51% YoY and
26% QoQ).
3. Sales: Pre-sales for the quarter stood at 1.5msf (including landowner space share
of ~0.18msf), up 18% YoY but down 38% QoQ. In value terms, pre-sales at
INR10bn (including landowner space share of INR1.4bn) were up 22% YoY but
down 33% QoQ.
FY23 pre-sales stood at 6.3msf (up 34% YoY), valued at INR41bn (up 36% YoY), its
best-ever for any year.
DLF
We summarise management’s thought process regarding various facets of business:
1. Profits improve YoY: Q1FY24 revenues came in at INR14.2bn (down 1% YoY and
2% QoQ). EBITDA margin decreased by 86bp YoY but up 30bp QoQ to 27.8% in
Q1FY24. Adjusted net profit stood at INR5.3bn (up 12% YoY but down 8% QoQ).
2. Housing business: Management indicated that demand outlook remains

optimistic and the industry trends are positive.
3. DCCDL: Rentals during Q1FY24 came in at ~INR10.4bn (up 13% YoY but down 1%
QoQ).
4. Office portfolio: Overall office portfolio occupancy levels stood at ~88.6% during
the quarter.
The company started earning rentals from the Downtown Gurugram Phase I
project in FY23. ~93% of the office space in this project has been leased.
Weighted average rentals at INR119/sft are higher than Cyber Park rentals.
Work on the Downtown Phase II project of 2msf is progressing well with ~1.5msf
space already pre-leased (including hard options).
5. Retail portfolio: DLF has commenced/is in advanced planning stages for

construction of retail destinations across multiple locations and intends to
double its retail portfolio from current 4.2msf within the next 4-5 years. Overall
retail occupancy remained flat during the quarter at 96.5% (98% for DCCDL).
6. Q1FY24 sales: During the quarter, DLF posted net sales of INR20.4bn (down 76%
QoQ as bookings in the previous quarter were aided by ~INR80bn bookings in the
Arbour project launched during Q4FY23).
Godrej Properties
1. Godrej Summit project: Godrej Projects Development Limited (“GPDL”), a
wholly owned subsidiary of GPL, for one of its projects, Godrej Summit in
Gurugram, which was completed in phases in 2017 and 2018, recently
appointed an external expert to undertake a detailed independent assessment
of a quality issue discovered in the project. This assessment identified the
presence of chloride in the concrete used in the project, which when in contact
with water, leads to corrosion of steel reinforcement.
The external experts further advised that with the required repair and
maintenance framework, the building is expected to perform as per its intended
design life. Accordingly, GPL has provided an amount of INR1.55bn towards
repair, maintenance, customer claims, or any ancillary costs in the Q1FY24
results. GPDL believes that it has the ability to claim against the contractors who
constructed Godrej Summit.
GPDL has also made an offer to buy back units or provide rentals to all the unit
holders of the project and will account for the buyback if and when the
intending customers execute the relevant documentation with GPDL.
Management indicated that pre-sales in the project were INR10bn plus. It

believes only a small portion of units will come back even though the offer is
open to all consumers. The offer has been open for last few weeks; ~50
customers are seriously exploring it. GPL has done ~10 agreements for buyback
till now. If GPL buys these units back, it can sell them post repairs. It believes it
can sell them again at the buy back price (INR5000-7000/sft) which is linked to
the prices at which the units were sold initially.
Considering that negotiations are ongoing and the exact liability amount isn’t
clear yet, uncertainty about this project is likely to continue for sometime, in
our view.
2. Financial performance: Q1FY24 revenues came in at INR9.4bn (up 283% YoY

but down 43% QoQ). EBITDA loss stood at INR1.5bn (vs profit of INR3.5bn in
Q4FY23 and loss of INR0.1bn in Q1FY24). Interest costs decreased 14% YoY/45%
QoQ to INR297mn. Other income surged 82% YoY/71% QoQ to INR3.3bn. Net
profit (for equity holders of parent) increased 174% YoY but down 70% QoQ to
INR1.3bn.
3. Price increase: GPL has increased prices across geographies in Q1FY24. On an

average they took a 3-5% QoQ price hike at the portfolio level. The Mumbai
projects saw a 2-4% QoQ price appreciation, Pune projects 3-5% whereas the
Southern region witnessed 2-3% price increase QoQ in Q1FY24. Management
guided that they intend to take more price hikes in FY24.
4. New sales: New sales during Q1FY24 stood at ~INR22.5bn (down 11% YoY and
44% QoQ). The commercial segment did not contribute towards the sales during
the quarter; hence, the entire sales came from residential projects alone.
In volume terms, bookings during Q1FY24 came in at ~2.25msf, down 20% YoY
and 57% QoQ.
For FY24, the company has maintained its guidance of INR140bn in pre-sales.
Macrotech Developers
 Financial performance: Q1FY24 revenues came in at INR16.2bn (down 40%
YoY/50% QoQ). EBITDA margins came in at 20.4% (up 300bp YoY but down 330bp
QoQ) while adjusted net profit for the period came in at INR1.8bn, down 76%
QoQ/40% YoY.
 Adjusted EBITDA margin: At 29%, it is down ~500bp YoY/~100bp QoQ.
 Embedded EBITDA margin: Lodha is the first real estate company in India to give
the embedded EBITDA margin figures from Q2FY23 onwards. It is the estimated
EBITDA margin on pre-sales (excluding DM sales) of the period with lifecycle
costs, excluding finance cost. Embedded EBITDA margins came in at 30% for the
quarter (31% in Q4FY23), in line with the management guidance of embedded
margin of 30% for FY24 (32% for FY23).
Management mentioned that margins in the Bengaluru and Pune markets are
~200bp lower than those realized in the MMR market.
 Pre-sales guidance: The company maintained its guidance for 20% CAGR in pre-
sales over FY23-26E and 20% RoE for FY24E. They envisage pre-sales of INR145bn
in FY24E with operating cash flows of INR60bn and new project additions of over
INR175bn.
 Share of JDAs in pre-sales: The share of JDA projects in overall pre-sales during
the quarter stood at 35%. Management expects this to increase to 40% in FY24E.
 Pre-sales: New sales value surged 11% QoQ/17% YoY to ~INR33.5bn in Q1FY24. This
is the best-ever Q1 pre-sales for the company. Lodha has guided for INR145bn in pre-
sales for FY24, of which it has achieved 23% in Q1 and requires 21% YoY growth in
bookings in Q2–Q4 FY24 to meet its guidance.
Walk-ins remain healthy with a conversion rate of ~8% during the current
quarter.
The 20% YoY growth in pre-sales is likely to be a mix of three factors: i) Price increase
of 6–7% YoY; ii) volume growth of 3–4% in existing projects; and iii) 10% increased
contribution from new projects.
 Pre-sales split: Contribution from the South-Central Mumbai region increased to

~35% during the quarter from ~28% in the previous quarter. Pune’s contribution
also increased in Q1FY24 to 15% from ~8% in Q4FY23. The share of Eastern
suburbs and Extended eastern suburbs micro-markets was in the range of 11–
18% each, whereas that of Thane and Western suburbs stood at 8-9% each.
Extended Western suburbs did not contribute much to the sales during Q1FY24.
Share of Offices and Retail (for sale) stood at 2% in the quarterly sales value.
In terms of segmental contribution, the affordable and mid-income segment

accounted for 65% of the residential sales during the quarter (in line with the
historical average of 63–64%).
 Price increase: On an average, Q1FY24 sales realisation was up 1% compared

with average prices during FY23. Management has guided for a hike of 6–7% YoY
in FY24 on a base of 7–8% price hikes taken in FY23.
 Area delivered: Completions at 0.7msf in Q1FY24 were down 79% QoQ/42%

YoY. For the balance part of FY24, management is expecting completions of
~5.6msf.
 Project launches: The company launched three new projects spanning ~1.8msf,
and with a GDV ~INR15.1bn during the quarter; of these, one project was in Pune
while the others were in MMR. Of the three projects launched during the
quarter, two were JDA projects.
For the remaining part of FY24, the company plans to launch 22 projects spanning
9.4msf with a GDV of ~INR125.6bn. Project launch in Bengaluru is expected in
Q2FY24.
 Collections: During Q1FY24, gross collections declined 8% YoY/18% QoQ to

INR24bn.
 Unsold inventory decreases sequentially: The company’s ready unsold

inventory declined YoY and QoQ to ~INR86.2bn while ongoing unsold inventory
was also down ~6% sequentially to ~INR189bn (INR201bn in Q4FY23 and
INR192bn in Q1FY23).
Around 67% of this ready inventory belongs to the mid-income and affordable
segment. The share of luxury and premium segment mainly in the South and Central
Mumbai micro-markets continued to reduce from 36% in the previous quarter to
33% in Q1FY24.
As far as ongoing projects are concerned, the company had ~INR189bn of unsold
inventory at end-Q1FY24; of this, ~INR2.5bn belonged to office and retail projects
with the balance being residential projects.
The company’s increasing focus on affordable and mid-income projects is

evident from the fact that luxury and premium projects form less than half of
the ongoing unsold inventory.
 Township projects: The share of township projects (Palava and Upper Thane) in
sales declined to ~18% during the quarter (19% in Q4FY23 and 24% in Q1FY23).
 Business development: The company added five new projects aggregating

~7.1msf, and with an estimated GDV of ~INR120bn to its project portfolio during
the quarter.
With this, Lodha has achieved 69% of its business development guidance for FY24
(of ~INR175bn).
The project added in the Western suburbs in the current quarter is in Alibaug
where the formal launch is expected in the next three-four quarters.
On an average, the company’s upfront refundable investment in these projects

is 5–6% of GDV and PBT margins are ~18% of GDV while project-level RoEs are
upwards of 50%. Thus, higher sales contribution from JDA projects going ahead
is likely to boost the company’s RoE.
 V Hotel: Lodha has also emerged as L1 bidder for a land parcel in Juhu in Mumbai
owned by V Hotels Ltd. It is a 6.1-acre land parcel which currently has a 367 key
hotel built on it. Lodha plans to develop a residential project here (carpet area of
0.7msf plus). The company has paid some proportion of the consideration in the
current quarter however, the same has yet not been included in the business
development for Q1FY24 as definitive agreements are pending to be signed.
 Cash flows: During the quarter, net collections stood at ~INR21.2bn, while the
net increase in debt was INR1.9bn (net cash surplus available for distribution
capital providers was INR9.7bn in Q4FY23 and INR4.4bn in Q1FY23).
Out of the ~INR8,200mn of spends towards land, approvals and JV/JDA investments,
~INR7,000mn is towards the new JDA agreements entered into in the current
quarter. Some portion of this is also towards future projects for which a formal
agreement is yet to be signed.
For FY24, the company expects to earn operating cash flows of INR60bn. It said that
the growth in OCF is less than the growth in pre-sales and collections as they would
like to build up an annuity portfolio, which would provide a regular stream of cash
flows to the company. They expect to earn ~INR5bn of annuity income by FY26 and
INR15bn by FY31.
Higher construction expenses and increased investments in Land and JDAs led to
Lodha ending the quarter with a net cash deficit of 8% of collections in Q1FY24.
 Debt: The company ended the quarter with net debt of ~INR72.6bn for its Indian
operations. Debt increased ~INR1.9bn QoQ owing to notable investments in
business development during the quarter.
However, management indicated the company remains on track to achieve its

full-year guidance of debt reduction below the ceiling of 1x net debt to OCF and
0.5x net debt-to-equity; this would imply significant debt reduction in H2FY24.
Management indicated that business development will moderate in the

remaining part of the year.
 Interest rate: Average cost of debt declined ~15bp to 9.65% during the quarter.
It is down ~45bp YoY despite ~250bp in rate hikes by the RBI.
 Modest impact of cost inflation: The company has witnessed a moderation in

construction cost since Mar-22.
The construction cost inflation since the start of FY21 is at an annualised rate of
~6% p.a. This, in turn, implies an impact of <2% for the overall cost on the
company’s portfolio.
 Accounting policy changed: Lodha has changed its revenue recognition policy so
that the financials track the operational performance more closely.
As per the earlier Project Completion Method (PCM), revenues were linked with
the receipt of Occupation Certificate (OC) whereas underlying profitability of
business is linked to sales and construction progress basis, based on which cash
flow comes in.
As per the new policy, sales beginning 1st April, 2023 will be accounted for using
the Percentage of Completion Method (PCOM). Thus, there will be gradual
impact of this transition on P&L. The financials are expected to start tracking the
underlying pre-sales by FY26 as contract entered prior to 31st March, 2023 would
still continue to be recognized under PCM and the management anticipates that
these projects should be complete by then.
Oberoi Realty
1. Financial performance: Q1FY24 revenues at INR9.1bn were flat YoY but down 5%
QoQ. EBITDA margin at 52.1% were down 180bp YoY but up 1,370bp QoQ.
Reported profit stood at INR3.2bn, down 20% YoY and 33% QoQ.
2. Q1FY24 revenue by project (not exhaustive):

 Sky City: ~INR2.7bn (~INR1.5bn in Q4FY23).
 Goregaon projects: ~INR1.9bn (~INR2.1bn).
 Mulund projects: ~INR1.5bn (~INR1.7bn).
 Three-Sixty West: Nil (~INR2.3bn)
3. New sales value declined sequentially in Q1FY24: Total new sales in Q1FY24
were 110 units (107 units in Q4FY23, and 164 units in Q1FY23), aggregating
~0.24msf (down 11% QoQ/41% YoY) and worth INR4.8bn (down 29% QoQ/37%
YoY). Pre-sales were down as there was no contribution from the Worli project
during the quarter.
4. Three-Sixty West Project: There was no sales recorded in the current quarter
from this project. However, management indicated that sales velocity is picking
up in this project and would contribute to the new sales in Q2FY24.
5. New launches: The company did not launch any project during the quarter.
It plans to launch the Thane Pokhran Road project by end of Oct-23 and the
Kolshet Road project after that. The Kolshet Road project has five towers, the
contract for which have already been awarded to L&T; construction has
commenced there. In the Pokhran Road project, Oberoi plans to launch three
towers initially and expects to award the contract soon.
It is also planning to launch a new tower in the Goregaon project in FY24.
6. Glaxo land: The company is yet to decide whether to developer a residential or

commercial project here.
7. Business development: The company entered into an MOU to acquire land

admeasuring ~6.4acres, which is contiguous to the existing lands owned by
them on Pokhran Road 2, Thane in Q1FY24. They have also signed LOI for a
redevelopment project in Mumbai and are awaiting to sign the development
agreement.
OBER is working on multiple business development deals. These include a

redevelopment project in Peddar Road. It is also working on a redevelopment
project in Tardeo where substantial work on the rehab part is completed.
Management expects to announce multiple deals going ahead.
8. Collections: Collections during Q1FY24 doubled YoY (up 30% QoQ) to
~INR11.1bn.
9. Rental assets witness sequential increase in revenues: Occupancy was flat QoQ
in Oberoi Mall in Q1FY24 (at 96%); operating revenue came in at ~INR378mn
(INR365mn in Q4FY23 and ~INR376mn in Q1FY23).
While occupancy in Commerz I remained flat QoQ at 56% in Q1FY24, it improved

YoY from 53% in Q1FY23. On the other hand, occupancy in Commerz II in Q1FY24
declined QoQ to 80% from 86% in Q4FY23 (flat YoY).
Lease rentals from both these assets came in at ~INR348mn in Q1FY24

(~INR370mn in Q4FY23 and INR350mn in Q1FY23).
The company has received part OC for the Commerz III and has handed over
space to the anchor tenants for fit outs.
Management also expects to launch the Borivali mall in mid-CY24.
Westin Goregaon: Occupancy during Q1FY24 came in at 82% (84% in Q4FY23

and 91% in Q1FY23); RevPAR at ~INR9,525 was up 14% YoY but down 18% QoQ.
10. Cash flows: The company’s operating cash outflow in Q1FY24 at ~INR7.7bn
improved compared with outflow of ~INR22.5bn in Q4FY23. However, higher
investing cash outflow meant that net business cash flow (operating less
investing cash flow) was nil during the quarter.
11. Leverage: The company’s gross debt to equity inched down QoQ to 0.3x (0.32x
in Q4FY23 and 0.27x in Q1FY23); the net debt to equity also decreased QoQ to
0.22x (0.25x in Q4FY23 and 0.16x in Q1FY23). Management expects the debt
levels to reduce going ahead as the collections from Mulund and Worli projects
improve.
Phoenix Mills
 Financial performance: Q1FY24 revenues at INR8.1bn were up 41% YoY and 11%
QoQ. EBITDA margin during the quarter came in at 60.7%, up 450bp YoY and
160bp QoQ. Adjusted profit stood at INR2.4bn during the quarter, up 49% YoY
and 17% QoQ.
 Consumption revival: Management opined that the pace of recovery in retail

consumption is robust.
Consumption in Q1FY24 stood at INR25.7bn, up 18% YoY. On a like-to-like basis

(after adjusting for the Phoenix Citadel and Phoenix Palladium Ahmedabad
malls, which opened in Dec-22 and Feb-23 respectively), the consumption is up
9% YoY.
Consumption in FY23 was INR92.5bn and 133% of FY20 levels. On an LTL-basis, it

was 119% of pre-covid levels.
Retail consumption in Jul-23 at INR9.3bn is up 15% YoY. On a like-to-like basis, Jul-
23 consumption is up 6% YoY.
 Retail rentals: Retail rentals during Q1FY24 came in at ~INR3.8bn, up 17% YoY.
They were up 4% YoY (LTL).
 Both the leased occupancy and trading occupancy across malls have improved
QoQ.
 Retail collections came in at INR6.1bn in Q1FY24, up 18% YoY.
 Under-construction malls: Management expects to operationalise the new

Bengaluru and Pune malls in Q2-Q3FY24.
 Kolkata mall: The project has received building plan sanctions from the
Municipal Corporation. Excavation work has been completed.
 Indore mall: PML commenced the operation of its Phoenix Citadel mall in Indore
in Dec-22. This is the largest mall in central India. In Jun-23, it had a leased
occupancy of 94% while trading occupancy was 87% in Jul-23 (79% in Apr-23,
42% in Dec-22).
 Ahmedabad mall: PML commenced the operation of its Palladium Ahmedabad

mall in Feb-23. In Jun-23, it had a leased occupancy of 93% while trading
occupancy was 68% in Jul-23 (57% in Apr-23). Trading density has crossed
INR1,000/sft.
 Business development: PML is looking for opportunities in the different regions

like Jaipur, Chandigarh, Navi Mumbai, NCR, Hyderabad and Thane.
 Office segment: The total income from the commercial portfolio in Q1FY24 was
INR449mn (INR433mn in Q4FY23), up 11% YoY. Q1FY24 EBITDA at INR261mn
was down marginally QoQ but up 11% YoY.
PML has enjoyed robust leasing traction during the current fiscal with YTD gross
leasing of ~0.176msf (renewed area of ~87k sft and signed new deals of 88k sft).
 Hospitality segment: Occupancy in St. Regis remained strong at 82% during the
quarter (85% in Q1FY23). ARRs at INR 16,504 during the quarter were up 38%
YoY.
Occupancy in the Agra hotel increased to 72% during Q1FY24 (62% in Q1FY23).
ARRs at INR4,408 in Q1FY24 were up 18% YoY.
 Residential division: The company sold inventory worth ~INR1.4bn during the
quarter (INR5.5bn in FY23, INR3.4bn in FY22) in its residential segment. YTD
sales stand at ~INR2.3bn.
 Residential: To enhance its footprints in the housing space, PML plans to

develop a premium housing project in Alipore, Kolkata. The ~1msf project will
have ~INR20bn revenue potential over a five year period. The land cost will be
~INR4.14bn. The project will need capex of ~INR10bn (including land cost).
Around 80% of the construction cost is likely to be funded through customer
advances. Fencing work has been completed.
 Leverage: The net debt (at group level) decreased to ~INR21.8bn (~INR22.8bn
during Q4FY23).
Within this, the company’s share of net debt was at ~INR16.3bn (~INR17.8bn as
on Mar-23 end).
 Interest rate: PML’s average cost of debt trended up to 8.87% in Jun-23 (8.74%
in Mar-23, 8.41% in Dec-22, 7.89% in Sep-22).
Sobha
 Segmental performance
19. Real estate: Q1FY24 revenue came in at INR7.4bn (up 62% YoY down 23%
QoQ).
20. Manufacturing/contracting business: The division’s Q1FY24 revenue stood

at INR2bn (up 38% YoY but down 32% QoQ).
 Project launches: Sobha did not launch any new project during the current
quarter; however, it released ~0.8msf of additional inventory in the ongoing
projects (mainly in Kerala). FY23 launches stood at ~3.5msf. FY22 launches stood
at ~1.7msf. Launches during FY21 stood at ~3.2msf (~1.6msf during FY20).
The company has an impressive launch pipeline of ~16.2msf of residential and

commercial projects across various geographies.
It plans to launch ~4-5msf of projects in the next six months.
 Launch outlook: Sobha is targeting 17 residential project launches (aggregating

15.1msf) in Bengaluru, GIFT City, NCR, Chennai, Coimbatore, Kochi and
Trivandrum over FY24/25. In the commercial segment, it plans to launch one
project each in Bengaluru and Thrissur and two projects in the NCR with a
leasable area of 1.1msf. Thus, total launch pipeline stands at 17 projects
spanning ~16.2msf.
 Entering new markets: Bengaluru will continue to dominate Sobha’s sales; at

the same time, the company has entered markets such as Hyderabad to
diversify its geographical presence. Over the medium term, it wants 40% of its
sales to come outside Bengaluru.
 Sales: Overall sales value in Q1FY24 at ~INR14.6bn implies an increase of 28%

YoY (flat QoQ) and was Sobha’s best-ever; the company’s share of sales value at
~INR11.3bn is up 19% YoY (down 6% QoQ).
In terms of pre-sales by volumes, Q1FY24 new sales volumes came in at ~1.4msf

(down 6% QoQ, but up 3% YoY).
Management has guided for double digit growth in pre-sales in FY24.
 Diversification: Bengaluru contributed ~60% to the overall sales volumes (63%

in Q4FY23) and 54% towards new sales value led by higher realisations and
increased share of luxury housing during the quarter. New sales also surged 31%
QoQ in the Kerala region (Kochi, Thrissur, Calicut and Thiruvananthapuram) due
to additional inventory released in ongoing projects during the quarter. Sales
volumes in the GIFT city and the NCR were also up 15-17% QoQ each.
 Share of luxury segment continues to increases in Q1FY24: During Q1FY24, the

INR30mn plus category made up 37% of sales (25% in FY23), while the INR10–
20mn category accounted for 28% during the quarter.
There had been significant increase in the share of houses in the <INR10mn
category earlier (up from 21% in FY19 to 34% in FY20); the share declined in
FY21 (down to 20%) but again increased to 24% in FY23 and stood at 23% in
Q1FY24.
 Realisation: Average price realisation during Q1FY24 rose 6% QoQ/25% YoY to

~INR10,506/sq.ft. Q1FY24 realisations were the best-ever in the company’s
history driven by increased share of luxury housing during the quarter.
 Inventory: Unsold completed inventory inched up QoQ to 0.11msf worth

INR830mn (~INR340mn in Q4FY23)—among the lowest in the real estate
industry.
 Unsold area: Overall unsold area however decreased QoQ to 5.17msf (7.33msf
at end-Q4FY23).
Net cash flows from ongoing projects increased to ~INR36.8bn during the quarter.
The balance receivables from sold ongoing project inventory and completed projects
stand at ~INR66.8bn, which exceeds the balance project cost to be spent on
completing the projects.
 Presence in commercial space: The company has currently ~0.4msf of

completed rental assets (its share of leasable area); it has another ~1.1msf
commercial projects in the pipeline.
 Collections: Collections in Q1FY24 stood at INR13.6bn (up 21% YoY but down 5%
QoQ0; Q4FY23 had witnessed the highest-ever quarterly collections.
 Cash flows: Net OCF (collections less operating costs) declined to INR1.9bn
during the quarter (INR3.3bn during Q4FY23 and INR1.5bn in Q1FY23).
After meeting interest and dividend commitments, net cash flow stood at
~INR1.5bn during the quarter (INR2.8bn in Q3FY23 and INR1bn in Q4FY23).
Net cash flow during the quarter stood at INR702mn (INR1.3bn in Q4FY23 and
INR2.2bn in Q1Y23). The cash flows declined on account of higher project
expenses and overhead outflows.
Sunteck Realty
1. Q1FY24 performance: Q1FY24 revenues were INR706mn (down 51% YoY but
up 44% QoQ). EBITDA margins came in at negative 10.6% (31.5% in Q1FY23 and
negative 18.6% in Q4FY23). Net loss was INR67mn (loss of INR279mn in Q4FY23
and profit of INR249mn in Q1FY23).
2. Pre-sales: Q1FY24 pre-sales stood at INR3.9bn, up 16% YoY but down 28% QoQ.
Management expects the sales and collection to pick up once the festive season
sets in.
Sales breakdown by segment:
 Upper Mid-income projects (Sunteck city, Vasai, Mira Road): INR3bn
 Lower Mid-income projects (Naigaon): INR642mn
 Other projects: INR201mn
Apart from the Naigaon project, BKC and ODC projects have historically contributed
a lion’s share to the company’s sales.
FY23 pre-sales stood at INR16bn and the management has guided for ~25-30% YoY
growth in pre-sales for FY24.
Sunteck has identified seven growth engines to shore up its pre-sales growth by
FY25E. The identified pipeline of projects have a GDV of INR303bn. Construction
spends of INR85-90bn would be incurred on these projects.
3. Launches: The company is planning to launch the Kalyan project within the next
3-4 months and the Nepean Sea Road project within the next 9-12 months. The
Nepean Sea Road project has an area of ~0.2msf. The Borivali, Sion and Jaipur
projects do not have a launch visibility in the next 12 months.
4. Collections: Collections in Q1FY24 totalled ~INR2.9bn (up 1% YoY but down 13%
QoQ).
Collections to pre-sales ratio has been strong at >50% over the previous years. In
Q1FY24, the ratio improved QoQ to ~74% from 61% in Q4FY23 (~86% in Q1FY23).
Q1FY24 collections split: ~INR470mn from uber-luxury projects, INR1.2bn from

upper mid-income projects, INR536mn from lower mid-income projects and
INR700mn from other projects.
5. BKC Project: The company did not sell any inventory in this project during
Q1FY24. Management expects sales traction to improve going ahead and is
hopeful of closing some deals in Q2-Q3FY24.
6. Pricing: Sunteck did not take any price hikes in Q1FY24.
7. Business development: SRL has added six projects spanning ~25.5msf since the
pandemic.
The projects include:
 Vasind project: Refer to Sunteck Realty - Vasind project addition boosts portfolio
 Vasai project: Refer to Sunteck Realty - Vasai project addition adds cheer
 Borivali West project: Refer to Sunteck Realty - Borivali project addition boosts
value.
 Kalyan project: Refer to Kalyan project addition boosts prospects
 Mira Road project: In Q2FY23, SRL added a 2.5msf project in Mira Road near
Mumbai under the JDA mode (refer to, Portfolio growth continues unabated). This
project was launched in late Q4FY23.
Management indicated that they are negotiating 4-5 new deals and are hopeful of
closing three of these deals soon. Two of these deals are for outright purchase of
land while three are on JDA model.
8. Cash flow: The company generated a positive net operating cash flow of
INR760mn in Q1FY24 (~INR740mn in Q1FY23).
The pending receivables from the sales already done is INR21bn and the pending
construction cost is INR11bn.
Business cash flow (operating less investing cash flow) stood at ~INR1.7bn in FY23
(negative ~INR1.2bn in FY22).
9. Debt: SRL ended Q1FY24 with a net debt of ~INR5.1bn and a net debt:equity of
0.13x.
10. Leasing:
 BKC 51: The company has already pre-leased the entire space and is looking
to earn an annualized rentals of INR360mn (SRL share). They had invested
capital of INR1.3bn in this project and are estimating an ROIC of 30%.
OC has been received for this project and fit-outs are nearly completed.
Rentals are expected to start from the next month (Refer to Leasing in
Sunteck BKC51 brings cheer)
 Sunteck Icon: This commercial asset is also nearing completion and is

expected to be pre-leased at similar rentals.
Retail
Bata India
Q1FY24:
 Mass category business continues to remain sluggish. However, the school

category was extremely positive this year, which was a miss this year.
 Volumes were flat YoY.
 Bata saw industry moving into EOSS much earlier into early part of June i.e. 2
weeks before schedule. Company had to prepone EOSS because of the industry
starting early and not because of the company’s inventory situation.
 Distribution business has been impacted because of mass segment issues.

Company has not taken any price hike since the last 8-9 months.
 There is SSSG decline. Inflation and wedding shift have impacted performance.
Company is looking forward to the festive season.
 Growth in the mass category was lower than the premium category.
Stores:
 Last two quarters company has seen net COCO additions but focus is on
franchise.
 Store addition will continue to be driven by franchise - ~80%.
 Company has done significant store additions for last 18 months. Expects this to
continue for the next couple of quarters.
 There is a visibility of 3-5 years to keep adding franchise stores
Other:
 Apparel range is INR800-1,300
 ERP will go live in Q4FY24.
 Company is seeing export orders come through. 1/3rd of the global production
of Bata, happens in India. Approximately 100mn pairs are sold globally. Majority
of this is sold in China and Bata is looking at this as an opportunity.
 Company has done 3PL of its largest warehouses which will help moderate
employee costs. Similarly with its warehouse in South India.
Franchise:
 Company has an outright franchise model with capex and inventory spent by
the partner. Margins are in the range of 30-35% for the franchise partner.
 Revenues accounted are net of margins.
Brands:
 Hush Puppies was muted due to the shift in the wedding calendar. Casual
portfolio did well. Targeting highest ever store addition in this brand this year.
 Premium brands make up 30-35% of revenues and have grown higher.
 Open footwear, Sandak have seen lower growth than industry average.
 Sneaker studios embedded stores have shown an improvement in share of

sneakers and SSSG
 Brand wise share - Comfit: 8%, Sneakers: 20%, Hush Puppies: 20%.
Outlook:
 Inventory for the company is at comfortable levels.
 As premium segment growth normalizes, Bata believes growth across players

will normalize.
Devyani International
Q1FY24
 There has been an increase in minimum wage especially in Karnataka, which has
led to the increase in employee expenses. Also, regular increment hikes are
taken from April of every year.
KFC
 Material prices have been stable for KFC. Potentially, the worst of the gross
margin pressure is behind.
 KFC works well during evening hours with the lunch level being muted. The
value layer is a focus to address that.
 Targeting 120 store addition for KFC
PH
 As per DIL, cheese and milk prices have started stabilizing.
 Company took a very small price hike to mitigate the gross margin issue and
pressure from flavour fun pizza range launch.
 Price hikes along with launch of premium menu helped improve gross margins
QoQ despite the RM increases.
 Going back to 15% brand margin could take a few quarters more.
 Price increase/adjustment was little under 1%.
 Considering an addition of 70-75 stores in PH in FY24.
 Priority in this format is to build transactions.
 The moderation in growth in this category is happening because of additional

choices within the category and also beyond.
Vaango
 Vaango continues to remain airport and mall focused brand.
Outlook
 Even if there is a fall in prices, DIL is not in favour of taking price cuts.
FSN E-Commerce Ventures (Nykaa)

Beauty & Personal Care (BPC)
 This quarter saw heavy retailer funded discounts to activate growth.
 Gross margin contracted due to an adverse mix (Physical retail, online and own
brands) and pullback of advertising spends.
 BPC growth was in-line with expectations.
 Pink Summer sale was done last year also. In the last year, company has done 4
sale periods, similar to this year. Many years back, company used to do two sale
periods in a year.
 As per Nykaa, one of the trends world over is higher growth in skin care versus
make-up.
 There is a marginal softness in the advertising income due to 1) Company

launched its adtech platform – self serve ad platforms versus Nykaa driven
management earlier. Potentially some D2C brands which don’t have the
bandwidth had some issues. 2) There was a marginal pullback on spends from
D2C brands, not so much from FMCG or BPC brands.
 Expect to see a similar trends as Q1 to continue in Q2. Aggression on

spends/activation will be driven in Q3 quarter.
 As per Nykaa, BPC’s GMV growth is around 5-7% ahead of industry.
Fashion
 No plans to expand Nykaa fashion’s MBO store business.
 July has been good and there is a normalization of growth.
 Company has deprioritized a lot of categories and put focus on the women’s
wear segment
 One improvement in fashion has been the improvement in GMV to NSV

conversion.
 Margin drivers 1) Focus on right categories - as an example company gave up a

lot of tech accessories business 2) focus on cart charges 3) own brands.
B2B
 Hitting peak profitability will take a few years, potentially between 2-6 years.
Others
 Off roll warehouse costs have been reclassified as fulfillment expenses. This
number is INR1bn on an annual basis.
 Nykaa has had a strong annual evaluation process to distinguish high

performers and average performers.
Outlook
 Incremental margin improvement will be driven non-BPC segments. There will

be a marginal improvement in BPC.
Jubilant FoodWorks
Q1FY24
 Demand remains patchy even into July. Demand in malls remains muted.
 Sales continue to be order driven
 Employee costs increase: 1) minimum wage increase 2) Store expansion and 3)

Mix impact – there has been a lower share of variable employees which gets
reported in other expenses.
 Saw lower footfalls in mall stores, which could have impacted dine-in sales.
Overall, there is no specific factor JFL can highlight.
Domino’s
 Bangalore has seen higher level or order led growth driven by the 20 min
delivery
 At present, 60% of the orders are delivered in less than 20 mins
 QoQ increase in cheese has moderated. While vegetables have spiked, overall
basket remains under control.
 MAU has fallen primarily driven by a reduction in performance marketing.
 Competition: Pizza is a USD1bn category and the focus is to drive shift from
unorganized to organized. Regional competition is not an issue.
 Company expects the ICC cricket world cup to be a driver of sales.
 1,400 of the 1,850 stores are in the new Pizza theatres design. This has driven a
12-20% improvement in weekly ADS dine-in sales.
 JFL believes that contribution from loyalty programme should be ideally around
60% and not more
Popeyes
 JFL highlighted that supply chain in Popeyes is not a challenge
 Company is looking at more cities in South India. It has drawn up a plan for a
North India entry.
Outlook
 Remain commitment for full year guidance for Domino’s and Popeyes
 JFL believes margins should remain stable or improve from here unless there is
a significant spike in inflation
 Long-term target is to stabilize margins between 23-24%. As per the

management was that 26% was unsustainable. Historic margins were achieved
in a significant deflationary environment.
 Once Bangalore commissary is fully commissioned, there will be saving on

operational costs. Impact on depreciation will not be significant.
Metro Brands
Q1FY24 performance:
 Q1FY23 had a strong base driven by pent-up buying, higher auspicious dates,
wardrobe refresh etc.
 Revenues are 82% higher vs pre covid. Store growth is approximately 48-50%
higher. In FY20, revenue/sq.ft was ~INR16,900.
 Premium consumer continued to shop in the company’s store
 On the gross margin staying stable Metro highlighted that even for non-owned
brands, there are multiple brands where the terms of trade are very much
similar to own brands.
 There has been a reclassification in footwear category between menswear and

unisex
 Non-in house brands growth was driven by Crocs and Fitflop
 Store level ASP increase is 3% including accessories. Considering only footwear

the ASP increase is 6%.
Store addition:
 Company has multiple Crocs stores planned.
Brands:
 Excluding Jibbitz, Crocs ASP has increased from INR2,900 to INR3,000.
 70% of the inventory are core products.
Fila:
 Metro believes it will be better positioned by the end of H1FY24
 Company has access to Fila collection library. It also engages design houses
where it feels there is a product gap
 Post-acquisition also, some shipments of inventory came in. By Q3FY24

company expects the old inventory to be run down.
 Focus is to be affordable premium. Sweet spot of pricing as per Metro for Fila is
INR4,000-6,000.
 Company sees an opportunity of 300-500 stores based on looking at the current

reach of similar brands.
 Expect the brand to break-even by Q4FY24.
Quality Control Order:
 Company expects some potential disruption and to mitigate the same it has
stocked up inventory.
Customer:
 Premium customer higher share is driven by the price hikes the company takes
and also the collection it has put out in its stores.
Ecommerce:
 A lot of the growth is driven by omni channel initiative where more stores are
being linked online. In addition, company is creating an exclusive line of
products.
 Online business growth is primarily being driven by the company’s own brands.
 Company is not selling premium brands like Da Vinci online. ASP online is
INR1,000.
Outlook:
 Demand continues to remain sold with some normalization
 Gross margin guidance remains between 55-57%
 Continue to see demand for its products remain strong even post the quarter
Page Industries
Industry:
 There has been an acceleration in inventory, which is affecting industry

practises. There are lot of offers and discounts on play due to inventory in the
system at present.
 As per Page, competition is sitting on 9-12 months of inventory. Page is at 105

days.
Q1FY24:
 Page saw a -11.5% YoY contraction in volumes in Q1FY24
 Page implemented a diligent control on expenses to protect margins
 Absolute inventory was INR14.3bn as of Q1FY24.
 Gross margin contraction was due to the high base impact (higher overhead
absorption). Also, aggressive market environment has impacted.
 As per company definition, GM was 53%.
 Page highlighted that secondary sales are in-line with primary sales.
 Employee cost reduction is a function of natural attrition. Also given the

elevated inventory, there was limited manpower requirement. Majority of the
reduction is on manufacturing side.
 Advertising expenses (% of sales): Q4FY23 - 1.9%, Q1FY24 - 2.5%.
 Company had taken a price hike in August 2022. At present, there is no need to
take a price hike.
Category:
 In women’s market, the organized category is very low. Company has formed
dedicated teams for women and Junior, which as per Page is already having
some benefits. Margin in both these categories are similar to the company
average.
 Men’s premium category is having the highest growth across Page’s category.
Athleisure is going through a flux across the industry.
 As per the company, Page is competitive/cheaper in pricing versus peers.
Expansion:
 Ecommerce showed growth of 43% YoY
 Focus is also on growing the D2C business segment.
ARS implementation:
 ARS implementation has been making significant progress
 Impact of ARS has been taken care of. There is no impact to sales.
Manufacturing:
 Orissa project will commence by Q4FY23.
Outlook:
 Last two weeks has seen some improvement. Too early at this point to give any
outlook. Company is hoping for some improvement in demand during festive
season.
 Focus on maintaining margins between 19-21% EBITDA margin
 At present Page is postponing capex
 Company is comfortable with the inventory position. Inventory is at around 100

days.
 Normal advertising spend range is between 4-4.5%. The spends will pick-up in
the later part of the year.
Restaurant Brands Asia

BK India
 INR99 menu is the 2.0 value strategy. This has driven a high 7% traffic growth in
dine-in.
 The company has not taken any price hikes this quarter. Gross margins were
maintained driven by Café business, in addition to leverage in procurement. Had
the INR99 menu not been launched, GM would have been higher by 100bp.
 Completed opening 400 stores in India
 Increasing consumer base to include family and kids
 Looking at multiple product layer: Premium layer, Whopper and value layer.
This will be supported by the Café offerings.
 RBA’s focus is to increase revenues and Restaurant EBITDA.
 SSSG was driven by dine in traffic. SSTG in dine-in was 10% plus with SSSG of
7%.
 Target to reach 450 stores by FY24-end.
 Delivery share was 40% in Q1FY24.
 RBA highlighted while value is one layer, premium is also an important element.
During Festive, RBA plans to advertise the Whopper range further.
 Despite an expected weak Q2FY24, RBA expects 10% SSSG to be achieved.

World Cup could also be a trigger.
 Bk Café: Generally, half of the ADS is incremental and half is cannibalisation. At

present Café ADS is ~INR15,000.
BK Indonesia
 A clear strategy to break even and turn profitable.
 BK Indonesia stores has been rationalised; the company may rationalize a few
more, specifically in malls that saw lower footfalls post-covid. This shall be
completed next quarter. Looking at rationalising single-digit count of stores.
 Staple diet in the country includes rice and fried chicken
 For burger players generally 70% is Chicken and 30% is other meat. For BK, it
was the other way round.
 From the campaign, the chicken contribution touched 50%.
Popeye’s
 Popeye’s ADS is 2x of BK and Restaurant EBITDA is high double digit.
 Target to open 25 Popeye’s stores in FY24.
Other
Looking at increasing digital penetration – kiosk, table ordering and 100% known
guests in both geographies.
Sapphire Foods
Q1FY24
 Seen RM inflation cooling off which has helped improve gross margins improve
in both brands
KFC
 GM benefit along with tighter cost control drove one of the highest Restaurant
EBITDA margin
 Majority of the gross margin benefit has played out. Company is targeting a
restaurant margin of 20%.
Pizza Hut
 Focus on higher marketing spends in the brand
 While SSSG was down, company has not seen any decline in transactions
 PH stores in FY24 will be lower than FY23
 While company has got the product and value equation right , company has to
build consumer franchise
 As per the company, potentially the presence of multiple regional players is also
impacting performance
 While company launched 10 core pizzas, it removed another 12. Last time this
exercise was done was four years ago
 There is no major impact from Devyani International opening stores as trade

areas are restricted
Sri Lanka
 Impact on consumer demand continues to remain impacted due to inflation and

higher taxes. Company believes
 Inflation in month of June has come down to 10% vs, 80-90% last Oct-Nov.
 Expect recovery to set-in from 2024.
Shoppers Stop
Q1FY24 performance
 Q1FY23 had the benefit of pent-up demand. LTL growth for Q1FY24 was 1%.
 Mass and masstige segment in Apparel remain under pressure. Overall branded
business is ahead due to Beauty and Non-apparel. Share of private apparel in
overall apparel was flat YoY. The western womenswear segment (especially
jeans) and sleepwear struggled.
 June has been better, and July continues on trends similar to June.
 Share of premium watches saw a significant improvement.
 Items per transaction grew by 4%.
 Early EOSS drove higher footfalls. SS expedited discounting to normalize

inventory.
 On reduction on other expenses: In Q1FY23 the timing of the lease agreement

led to a spike. Moderation of that along with focus on optimizing costs led to a
reduction in costs.
 On the volume level, the company saw flat growth.
Store addition
 Company would have opened 2-3 department stores, which got delayed due to
pending approvals.
 Guntur and Cochin were to open in March. Both these stores did not get their
occupation certificate. Guntur will open on 10th of August and Cochin will open
on 19th August.
 The company expects five stores by H1FY24 and three stores to open in Q3FY24.
 75% of store expansion will be in Tier II towns.
Intune
 Early results are extremely encouraging.
 ASP is INR450–500.
 The company plans to open 10 stores in Intune by Q2FY24.
 Current back-end capacity is enough to take the expansion ahead to FY25.
 The company expects gross margins for Intune to be similar to company

average.
Others
 The company plans to churn 20–25% of brands to keep the freshness of looks
for customer.
 NPS score has increased from 60 to 75.
Beauty
 The company is opening a large beauty format in Q3 in Kolkata. Size will be

~9,000 Sq.ft for this store.
Beauty distribution
 The business was marginally ahead of budget in Q1FY24 and company is on

track to achieve the target of INR1.8-2.0bn in FY24. Armani and Nard will be
drivers to achieve this.
Capex
 Capex will be around INR2bn (including technology opex spends) per annum to
be funded via internal accruals
Working capital
 WC increased due to higher procurement on SOR basis and lower sale of private
label
 Net borrowing will be INR1-1.2bn until Q2FY24 given the shift in festive season,
Expects significant cash generation by December driven by festive and post
EOSS in December.
 Inventory at present remains elevated primarily for the private brands
Outlook
 Expect Q2 to have moderate growth due to shift in festive season.
 Margin guidance of high single digit remains (Pre INDAS EBITDA + OI on gross
sales).
 Medium term target is to achieve high single digit low double-digit growth
revenue growth. Majority of the growth will be mix (premiumzation) and
volume driven. SS has no plans to take price hikes.
 ESOP expenses should be around INR100-110mn in FY24. FY25 should be much

lower with further reduction in FY26. Dilution will not be more than 1.8–1.9%.
 Without new initiatives (Intune, footwear private label, SS Beauty online), costs
would have increased by 6–7% versus the reported 10%. Ssbeauty.in
investment related to building the platform is done, incremental investment on
marketing. Company expects Intune to break-even in Y1 itself.
Titan Company
Jewellery
 Demand in April was muted in the first half, which picked up in the second part
of the month. May was muted, but June saw a spurt in demand. Also,
moderation in gold prices during June aided demand.
 The Jewellery margins are very much a part of the scheduling for the year.
Guidance of 12–13% margins remains.
 There is no structural change in the margin structure for the business.
 Chosen to invest in growth as a strategy as the market share gain opportunity is

far higher than worrying about margins for a quarter.
 As per the company, gold exchange remains a huge opportunity.
 There was a lot of uncertainty in customer demand, which company activated

via gold exchange
 Exchange plus wedding as a combo has helped delivered the strong growth.
 Some geographies did deliver lower growth
 Company continues to see good growth even now as we speak.
 Volumes is largely driven by buyer growth. Grammage growth is not a KPI.
 Ambition is to gain 1% point of market share every year. At present, Titan is at

7%.
 Gold Exchange Programme: Overall 50% was the share of gold exchange in
Q1FY24. The share of non-Tanishq gold was 35% in gold exchange and 15% in
Tanishq gold exchange. Typically, this is 31% for Non Tanishq and 9-10% for
Tanishq.
 Exchange gold customer is bought on spot versus gold on lease (GOL)

procurement. What stabilizes the margins is the upselling opportunity. On a
blended basis, exchange is not margin dilutive. It is only when the company
runs aggressive offers, it becomes margin-dilutive.
 Margin protection will come from 1) Geography mix 2) Product mix – Work on
studded and wedding 3) Lightweight jewellery has potential for higher gross
margins. As per company, it is not competition but the current volatile
environment, which has motivated action.
 Q2/Q4 are high studded ratio quarters, which drives margins higher.
 Capital employed has come down due to GOL coming down to 27% versus 50%
on average. This will get corrected in due course. Capital employed will start
correcting in coming quarters.
 Entire impact of the gold price rationalization will be absorbed by Titan
 At present, Titan adds 30–40 stores. Company is looking at accelerating its

expansion further.
 July has been as good as Q1FY24. Titan is not counting any adverse impact of
adhik maas in its expectation for Q2FY24.
 Brand building initiatives: 1) Focus on regional campaigns and regional

collections – TN, AP, Telangana and West Bengal 2) Focus towards high value
studded. Launched two collections. In a year normally company has 3-4. 3)
Rivaah: Wedding segment is a strategic driver and it needs a 360 degree
approach. 4) Offers in general
 New product share was 20-25%
International Jewellery
 On plan to achieve 24 stores in FY24. At present at 7. Plan is to add 5 more in

the US and 13 in GCC
 Profitability is better than planned. USA profitability is better than GCC
 Targeting to reach a stock turn of 2x, similar to Tanishq at present
 Each of these stores will require an investment of USD6-8mn per store.
 On course to do better than what Titan guided during analyst meet last year.
 Looking at other markets like Singapore, Australia
 Focus remains on Indian Diaspora. Titan mentioned that in Abu Dhabi has a
decent share of non-Indians customers.
Watches & Wearables
 Analog has seen a decline in volumes. Wearables has seen a significant increase
in volumes.
 Margins will be in the 12-13% range
 Capital employed increase is driven by inventory and receivables. Higher

commerce sales has led to the increase in receivables. Higher inventory will
remain till Q2 end.
Eyecare
 Contribution of ecommerce is 6-7%. On Flipkart, company mainly sells low end

products (primarily Fasttrack brand). Titan does not expect share to increase
beyond 10%.
Outlook
 On plan for the profit projections for the year
 Revenue growth will be higher than EBITDA/PAT growth
Varun Bevgerages
Q2CY23:
 One of the plants supplying juices in North India was impacted by heavy rains.
This led to a contraction in juices volumes.
 Performance was strong in geographies where weather was not impacted.
 Other income increase was partially driven by certain forex adjustments.
Capex:
 New capacity in Congo and India will be operational before start of next season
 Of the three plants, company is targeting to open one of the plants in CY23.
 Total capex in India may go up INR24-25bn. Incremental capex in H2FY23 will be

INR5bn, mainly for next year’s capacity.
 Versus base guidance of INR15bn, additional capex of INR4bn is for setting up a

new plant in DRC.
 Company may come back to last year’s debt figure by end of CY23.
 Asset turn on the capex is ~1.8-2.0x.
 VBL is constrained by capacity in juices and dairy
International business:
 Bigger territories of Morocco and Zimbabwe have seen significant growth
 VBL remains in constant discussion with Pepsico Global. Hence any opportunity
that comes up, company will evaluate.
 South Africa per capita consumption is ~50% higher than India. The market is
more than 1bn cases.
Products:
 Dairy and Tropicana sales are more focused in the North. This will change by
next year’s key season period as capacity improves.
 Dairy-based products have a 6 month shelf like – higher than carbonated

beverages. Distribution is similar to the existing set-up. Realization is 15-20%
higher than carbonated beverages.
 Juices and dairy combined is 7-8% of volumes.
Vedant Fashions
Industry
 MBO channel contracted 40% in Q1FY23 – a ballpark for industry growth.
Q1FY24
 Significantly less wedding dates. Also, Q1FY23/H1FY23 had a strong base.
 H1FY23 was 42% of business which is much higher than historic trends
 Las time such a phenomenon happened was in Q1FY17. May-June had low
wedding dates but overall for FY17, the company ended the year with a 16-17%
growth. Approximately 66% of the business was done in H2 of the year.
 Wedding dates: 37 auspicious dates in Q1FY23 versus 22 wedding dates in

Q1FY24. No wedding dates in April and July (shopping for which happens in
June) impacted performance further.
 Growth in non-groom segment was faster than groom segment. This, as per the
company, was driven by the recent campaign of the company
 Divergence versus Jewellery: Purchase of Jewellery happens many months in

advance unlike apparel.
 The conversion ratio was impacted by the new store addition.
 Other expenses include carriage, job works, marketing and lease. Majority of
the components are fixed. Very limited proportion of stores are on revenue
share basis.
 There was growth across all metrics like ABS, ABV etc.
Products
 Focus on kids category and also influencer driven marketing in Mohey
Twamev
 Twamev customer set is with an annual income of INR5–30mn. Manyavar target

audience income stands from INR0.5–5mn.
 Twamev will be a format where 2 store staff will attend to a customer versus 1
on 1 in Manyavar
 Men’s wear in Twamev is ~2x of Manyavar in terms of average pricing. In terms

of women’s wear it is 3x.
 Average Bill value in Twamev is ~3x of Manyavar
 VFL already signed 2 new stores. Plans to sign 3–4 more in the coming year.
 Approximate share of women’s wear in Twamev is 45–50%
 All Twamev stores lease are on VFL’s book.
 Twamev has been opened with the best performing franchises of VFL
Customer insights
 As per VFL, women customers of Mohey start to shop approximately 45 days

before the event whereas for Twamev the shopping happens 90 days before the
event. This could partially explain the high share in Twamev for women’s wear.
Mohey
 Conversion rate and metrics are improving in combination stores
 In terms of flagship EBO, it will take some time. Hoping for the EBO to be
launched in early Q3FY24.
 Mohey had slow but decent growth. Mohey got introduced in 7 new stores.
Competition
 Impact on stores where competition has opened is similar to overall average
Store expansion
 Company does not enter a new market with a flagship store
Outlook
 In Q3FY24 no. of wedding dates are ~50% higher YoY. H2 overall is 30-40%
higher.
V-Mart Retail
Industry performance
 There is a month on month visibility of improvement in performance especially

in Eastern India.
 The contraction in revenues has stopped.
 UP and South India continues to remain impacted.
 Seen lower per capita consumption during Eid
 Footfalls have seen an improvement
 Rains have been normal except for UP and parts of West Bengal
Q1FY24
 Shifting to new warehouses had some impact on performance in June and July
 Lower wedding dates also impacted consumption
 East and North east demonstrated strong progress. AP and Telangana were
bottom performers. South SSSG was -11%.
 Share of online revenues increased to 5% (3% earlier).
 Ex of marketing spends, expenses grew only 8% YoY.
 Kirana inventory also includes warehouse. Store level Kirana inventory is around
50 days and warehouse is around 10 days.
Stores
 Majority of Tier III cities are located in UP, which remains under pressure.
 Company has been facing some issues in footfall counting. The growth in
footfalls is partially a clerical issues. Also, conversion is lower due to additional
supply in the market.
 Company’s focus will remain on core Vmart customers. Not keen on ultra-fast
fashion value customers.
Unlimited
 Unlimited performance was impacted in parts of AP and Telanga. Kerala and TN

were very good.
 Unlimited’s margin is higher on Post IND basis due to higher rent component.
On Pre IND AS VMart would be higher.
LimeRoad
 Losses for FY24 to remain at 20% of group EBITDA.
 Expect LimeRoad EBITDA contribution to break-even by Q3FY24
 Proper control on cost via data has driven part of the improvement in
contribution margin.
 ASP of LimeRoad is INR600 at present. Company expects ASP to soften in the

future and expects basket size to increase.
Supply chain
 New warehouse will take 6 months to stabilize
Design
 Work on improving design quality continues. VMart expects a refreshed

collection by next AW season
 60% of customers who shop are women. Collection is focusing on young families
and youth.
Outlook
 Expect customers/consumption to bounce back from Q3FY24 as festive also sets

in.
 Debt will increase by the end of Q2. By end of the FY24, debt will be flat YoY.
Specialty Chemicals
Aarti Industries
Factors impacting demand
 Decreased revenues due to volume decline, drop in prices of key raw materials
(RM), and margin contraction caused by excessive supply from China.
 Weakness is more driven by inventory correction across the channel while end
user industry demand like in agrochem is still not impacted at farmer level
 Long-term contracts and demand for specific additive products remained strong.
 Demand in domestic market are hit due to excessive dumping from China and
lower prices and yuan depreciation
 Global inventory correction is triggered by i) Normalisation of inventory level

post logistics and supply chain easing out ii) China reopening and dumping
material globally iii) rising interest cost adversely affecting inventory holding
capacity of trade
 Q1FY24 Volume in NCB are down by 15%YoY while in Hydrogenation it is down

by 15%. However, Nitrotoulene volumes have gone up significantly by 75% as
domestic agrochemical demand picked up sharply. However in current quarter,
demand has weakened and likely to impact Q2FY24 volumes of nitrotoulene
Demand environment by end user industry

 Textile – Has witnessed longest slowdown with no definite recovery and still
remains weak
 Pigments – Has started witnessing some greenshoots
 Agrochem – Depends on product to product. However huge inventory build up

globally by channel is affecting demand
 Polymers additives – Is witnessing weak demand
Impact on end uses

 Noted significant impact on discretionary end uses and slower-than-expected
recovery in Dyes & Pigments segment.
 Global inventory correction, including in Agrochemicals, led to sharp demand

contraction in May and June, affecting exports and domestic supply targeting
global markets.
Global market challenges

 Higher global interest rates and inflationary costs, coupled with smoother global
logistics, contributed to inventory corrections in various markets.
 China's economic slowdown affected domestic demand, resulting in surplus

volumes originating from China. Depreciation of Chinese currency against the
INR added to competitiveness challenges for Indian manufacturers, leading to
margin contraction in some products.
Negative operating leverage hit PAT while lower tax rates help
 Demand weakness in industries like Dyes and Pigments, Agrochemicals, and Auto
led to EBITDA performance decline, with gradual recovery expected in H2 FY24.
 Lower capacity utilization contributed to EBITDA impact.
 Key cost elements, such as energy prices and RM costs, exhibited normalization
trends and fluctuations in Q1 FY24. The company's robust pricing mechanisms
aimed to offset volatility and protect customers from price shifts.
 Gained advantages from higher tax depreciation and exemptions, resulting in

lowered tax liability.
 Current quarter benefited from lower tax rates (3%) as company enjoyed MAT
credit on commissioning of cogen plant. Expect tax rates to be 10% for current
year
Dicamba capex still being evaluated

 Its long term contract for manufacturing dicamba intermediate became
troublesome post contract cancellation. AIL has been contemplating for
strategies to revive this plant.
 Given current weakness in global agrochem market and weak herbicide markets
globally due to drought in global market, AIL is still contemplating for
opportunities to change in strategies at this plant and expect to decide over next
two quarters
 This plant being dedicated and continuous process for manufacturing of

particular molecule will require significant changeover to manufacture alternate
products
Capex and Guidance and growth revival

 Expanded NCB Capacity:
Successfully commenced commercial operations of the expanded NCB Capacity.
 Renewable Power Generation Partnership:
Formed a strategic partnership with Renew Power to operationalize a renewable

power generation unit, boasting a substantial capacity of 13 MW.
This collaboration strategically addresses the company's power requirements by

harnessing a cost-effective and sustainable energy source, aligning with the
growing trend towards renewable energy.
 Management is expecting current ongoing weakness and inventory destocking

will impact current year growth.
 Though environment remain uncertain, it has earlier guided for FY25 EBITDA at
INR17bn led by pick up in utilisation of incurred capex. Though due to
uncertainity, company refrain from commenting on its previous target, it
believes that there can be deviation of 10% as growth is pushed ahead
 Management is likely to continue with ongoing capex plan in existing chemistries

and new chemistries like chloro toluene
 Current net debt is at INR26.5bn with gross debt of INR30bn. Company don’t
expect net debt / equity going above 0.7x at peak.
Anupam Rasayan
Business highlights
 Revenue growth in current quarter is impacted by global weakness due to
inventory liquidation
 However management is confident of growth reviving back in H2FY24 while

H1FY24 to remain muted
 Expect commissioning of new LOIs to contribute ~INR2bn to sales in FY24
 Maintain revenue growth guidance of 20%-plus while maintaining margins.
 Company will continue to focus on working capital reduction. However current

weakness may lead to 1-2 quarter delays
 In pharma, focus to be on ssubstitute “Key Starting Materials”; to be

manufactured for the first time in India and Advanced Intermediates
 With backward integration through TANFAC, company is confident of sustained

growth in fluorinated molecules
New LoIs signed

In Q1FY24, we have signed LoI’s worth INR40,660mn with Japanese and American
MNCs for niche life sciences and specialty chemical molecules. These LoIs
demonstrates the increasing confidence of global MNCs in its technical capabilities
and sustainable supply chain.
In Q1FY24, commercialized two new fluorinated pharma molecules out of 10 new

molecules to be launched in FY24.
MoU with 3xper Innoventure in pharma

Company signed MoU with 3xper Innoventure Limited, a subsidiary of Tube
Investments of India Limited for supply of targeted and identified new age pharma
molecules. These molecules will be manufactured using cutting-edge flow
chemistry-based continuous reaction technology. This MoU aligns with its strategic
objective of increasing the target market for its chemistries and expanding itsr
pharma portfolio.
Capex on track
Company incurred capex of INR1,240mn till Q1FY24 out of the INR6,700mn
announced, with majority of the capex to be incurred as per plan in FY24.
Deepak Nitrite
Financials
 PAT performance decreased due to demand and a decline in product values. The
first quarter also saw an additional impact on PAT due to destocking activities.
 DNL experienced notable fluctuations in exchange rates between USD and INR,
with a high point of 82.85 and a low of 81.61. Company adopted dynamic hedging
tactics. As a result, there was a profit of INR 2.4 mn in Q1FY24. This contributed
to an overall treasury gain of INR 88.4 mn
 DPL's Net Debt to Equity ratio was 0.03x, improved versus previous year's 0.13x.
 Domestic: Export Mix = 81:19
Business Update
 Overall performance was affected by challenges across the industry related to
inventory reduction and continued sluggishness in European and other markets.
 The rapid expansion of China's market access resulted in causing significant

declines in sales revenue. This effect appears to be temporary.
 End-user industries of plywood, construction and auto seeing an improving trend

sequentially. However dyes, pharma, agro and textiles remain flat.
 Capacities working at lower than full capacity
 In May 2023, the company achieved highest ever production in SNI production.
 Successfully grew market share in various products – enhancing wallet shares.
 It began exporting agro and pharma products to China
 Commenced captive power supply for sustainable growth
 Advance Intermediates revenues flattish YoY at INR 7.19 Bn. Sodium Nitrite plant
working at lower utilisation levels.
 During Q1FY24, DN undertook successful pilot of a new agro intermediate

product for a long-term commitment
Phenolics
 The Phenol plant achieved its highest daily production record, although it also
underwent an annual shutdown of 15 days during the quarter.
 Revenues for Phenolics segment fell 19% YoY to INR 10.89 Bn.
 Revenue and EBITDA decline was in-line with contraction of Phenol spreads
during the quarter on a Y-o-Y basis due to disproportionate imports from China.
 Demand for phenol is growing, but supply has been significantly faster.
 Destocking of inventory to soften in Q2 as compared to Q1
 Debottlenecking of Phenol facility has commenced and the same is expected to

increase the production by close to 10% over FY23 levels
 Company is confident of able to run the plant at 150% original capacity

(200,000mtpa) on consistent basis post debottlenecking
DCLT & Govt. of Gujarat – INR 50 Bn MOU

 Deepak Chem Tech Limited (DCTL) has entered into a Memorandum of
Understanding (MoU) worth INR 50 bn with the Government of Gujarat.
 Under this agreement, DCTL will engage in the production of Specialty Chemicals,
Phenol, Acetone, and Bisphenol within the state of Gujarat. Around INR 35 bn is
to be attributed towards Phenolics segment and the rest towards Specialty
chemicals
 The company is set to allocate an investment of roughly INR 50 bn for these

projects, with the initial phase projected to commence in the FY24-45. Capex to
be incurred majorly through internal accruals and taking leverage on debt
 DCTL's to finalize these projects by the FY26-27, expected to generate a revenue

equivalent to approximately 1.5 times the initial investment.
Capex
 New projects to come up mostly on the basis of contractual agreements.
However brownfield expansions to be on contractual as well as non-contractual
basis.
 Company is building a world-class R&D centre near Vadodara
 Photohalogenation + Halex plant anticipated to be operational in the H2FY24.
 The Acid plant project to initiate commercial production in the FY24.
 Brown field projects of increasing existing process and product lines are expected
to be commissioned by FY24 end
 MIBK and MIBC is expected to be commissioned on schedule in H1 FY25
 Sodium Nitrite Project in Oman is on track and progressing well, as planned
Outlook
 Deepak Phenol results in Q2FY24 to be better on YOY and QoQ basis, although
Deepak nitrite results to be flattish on YoY but likely to witness sequential
recovery
 On consolidated basis, improvement to be witnessed in Q2FY24 on QoQ
 DNL’s EBITDA margins for FY24 to range around 20-22%, while at consolidated
levels it shall remain at 15-18%
Fine Organics
 Capacity utilisation reached optimum level during last quarter. However
Patalganaga plant has still to reach optimum utilisation
 Thailand plant in JV to commission by Sep’23. Though this is initially very small

capacity and post commissioning, it will further evaluate opportunity of
expansion under phase 2, depending upon the success of this plant.
 Expect capacity constraints next year, will not be able to take new customers till
new plants comes on stream. No scope of debottlenecking, scope of mix
improvement also limited
 Greenfield plant at Gujarat is still awaited for approvals from the government
 Domestic demand is strong while global demand, mainly from the US is showing
weakness as channel resumes to inventory destocking. Destocking is happening
with fall in RM prices and easing of supply and logistic challenges
 Top line was impacted by moderation in RM prices and decline in freight rates.
RM prices broadly has corrected with no visibility in near term
 Given poor experience of land acquisition in Gujarat and earlier in Maharashtra

and delays in approvals, FOIL is now exploring opportunity of land acquisition
simultaneously in Maharashtra also.
 FOIL has gained market share in the US / Europe and to ensure uninterrupted
supplies to its key customers, FOIL is also exploring opportunities in setting up
plant or acquisition opportunity in the US
 Management is confident of strong demand while capacity is constraint for the

company in current scenario.
 Company has been extensively working on new product development in fields of

cosmetics, pharma, feed additives
Galaxy Surfactants
Performance highlights
 This has been a relatively stable quarter with progressive improvement of supply
side factors along with pickup in demand ensured a healthy 7.4% Volume growth
for this quarter.
 ROW Lower Single Digit decline YoY but improvement QoQ
 India Strong Double-Digit Growth YoY and QoQ
 AMET Volumes Flat YoY but decline QoQ on account of the Eid Holidays
 Performance Surfactant's
Revenue: Stood at Rs 5.8bn
Volume: Double-digit volume growth YoY but flat QoQ
Speciality Care
Revenue: Stood at INR3.62bn
Volume: Lower single-digit decline YOY but improvement QOQ
Fatty Alcohol prices in this quarter decreased to an average price of $ 1,240 /MT vs,
average prices of $ 2,287 /MT in Q1FY23. The same was $ 1,403 /MT in Q4FY23
Expect global markets to pick up in H2FY24

 Egypt and Turkey markets have struggled with hyperinflation and currency
depreciation
 Turkey is making come back with scenario normalising
 Developed markets have bottomed out and expected to start witnessing

recovery from H2FY24.
 Developed markets have seen significant pressure in premium segment products

and shift towards mass and masstige, which has relatively affected its speciality
chemical products
 Demand environment in Indian markets remain robust and is witnessing strong

growth across the segments
Outlook and guidance

 Management remain positive on India growth story. Easing inflationary
pressures and progressive improvement in macros should aid consumption in
AMET and Developed Markets
 Maintain volume growth guidance of 6-8%
 EBITDA margins is looking at INR22,000 / mt – 22,750/mt
 Capex at 1.5bn is likely to be maintained on both – surfactant and speciality
 Currently operating at 68% utilisation level
Gujarat Fluorochemicals
Financial Highlights
 Consolidated revenue in Q1FY24 stood at INR12.1bn, reflecting a YoY decline of
9%.
 Consolidated EBIDTA amounted to INR3.48bn, marking a decrease of 24%

compared to the previous year.
 In terms of EBIDTA margins, Q1FY24 recorded a rate of 29%, which is a decrease

from the 34% in Q1FY23.
 The consolidated PAT for Q1FY24 reached INR2bn, showing a YoY reduction of
34%. Despite destocking challenges, the Advance Materials business (specifically
fluoropolymers) continues to perform well.
 Planned capex for FY24 amounts to INR 15 bn
Bulk chemicals
 Revenues for Q1FY24 declined 43% YoY to INR 1.67 bn
 Throughout the quarter, the plants were operating at their maximum capacity.
 The prices of caustic soda and MDC remained low due to excessive production
capacities and decreased demand.
 Both demand and prices are expeted to stay subdued in the upcoming quarters.
Fluorochemicals
 Revenues for Fluorochemicals remained stable YoY at INR 3.3bn.
 The quantities and costs of refrigerants were influenced by a lackluster summer,

both domestically and internationally.
 Fluorochemicals faced challenges due to sluggish demand from end-user sectors

and an influx of supplies from China.
 There is an anticipation of heightened demand for refrigerants in the latter half

of FY24, particularly in international markets.
Fluoropolymers
 Fluoropolymers segment reported revenues of INR 6.74 bn, similar to Q1FY23
 Despite the decline in export volumes due to destocking, prices have remained
consistent. Foresee a positive trend in prices in the upcoming quarters, driven by
enhancements in the product mix.
 There will be a gradual increase in volume growth as the effects of destocking

diminish and the utilization of new fluoropolymers' capacity rises.
Capex plan may spill over given uncertainty

 Management expects its capex plan of FY24 of INR15bn which primarily included
R-32 gas (expected capacity of 10,000mt), PVDF and other fluoropolymer
expansion and LIPF capacity may witness some spill over by 1-2 quarters.
 Though overall capex plans remain intact including R32 as of now. However,
management is expecting pick up in approvals from battery manufacturers for
EVs in near term is likely to drive growth visibility.
 GFL is continuously witnessing improvement across its fluoropolymers basket

including PVDF.
 Though commodity grades fluoropolymers may witness some price competition

from China, in high grade, realisation remain strong.
 Industry scenario is right now challenging, as even EVs in China and Europe have
witnessed some moderation. Though it is expected to remain short lived, as most
of this is driven by inventory destocking.
Jubilant Ingrevia
Specialty chemicals
 Demand from Agrochemical customers globally continues to face headwinds due
to exceptionally higher pipeline inventories.
 Demand from Pharmaceutical and other customers has improved, leading to

better price realization and margins from these products, including CDMO.
 Global coal prices are going down and customer expectations are adjusting
accordingly; however the realisations to improve coming forward. Business
continue to focus on optimising energy cost through various initiatives both on
generations as well as on consumption side.
 Two intermediates of Diketne approved to be commercialised by Q4FY24, more

products already in line for approval that shall improve overall profitability
Nutrition and health solutions

 Niacinamide sales volumes improved significantly, resulting into revenue
growth.
 Witnessed improved price realisation due to higher demand in the segment.
 Business continue to maintain global leadership position in Niacinamide and

focus on Niche segments like Food & Cosmetics.
 Planning to enhance capacity for Specialty Premix products to cater to the

improved demand.
Chemical Intermediates – face lower realisation

 We continue to improve our market share of key product Acetic Anhydride,
despite the challenges of lower demand from Agrochemical end-use segment.
 Witnessed lower price realisation in the segment due to pricing pressure from
Agro end-use of Acetic Anhydride and lower realisation of Ethyl Acetate in
Exports market.
 In Speciality Ethanol, business continues to rationalize sales to niche customers.
 Business continues to rationalize sales of Ethyl Acetate due to excess supply,

while the demand for Ethyl Acetate has further impacted negatively in EU and
US regions.
Capex
 Newly commissioned Acetic Anhydride plant at Bharuch is ramping up as
expected.
 NHI business developmental work for Food grade Vitamin B4 is almost over and
business is at advance stage of finalising capex for GMP compliant facility of
Vitamin B4, approval shall take place in the ensuing quarter.
 GMP and non-GMP plants for CDMO products, commissioned in the last quarter
are ramping up as per plan and are helping to meet increased demand from
CDMO customers.
 FY24 cash outflow for capex INR6-7bn, FY25 cash outflow to be about INR5bn,
capacity utilisations to reach 70% by the end of FY24.
PCBL
Financials
 In Q1FY24, the consolidated sales volume was 123,086MT. Sales volumes for
tyre segment/performance chemical/specialty black amounted to 82,737MT/
28,569 MT/11,780 MT.
 Q1FY24 sales mix between domestic/international was 82,274MT/40,812MT.
 Q1FY24 power generation increase 8% YoY to 156MU – external sales volume of

98MU marking an 11% YoY increase. Average realisation from power sales
remains stable at INR3.79/kWh.
 Sudden jump in tax rate due to completion of 17 years of gestation period of tax
benefits for power business.
 Consolidated EBITDA/MT reached INR17,447.
 Yields improving due to technological advancement provided by Chennai plant,

leading to increased productivity.
Capex
 The first phase of the greenfield facility in TN was commissioned in mid-April.
During the quarter, PCBL (TN) achieved production volume of 6,296MT and sales
volume of 5,028MT. Utilisation rates of this plant stood at 40-45%.
 Production ramp-up from Phase-1 of the TN plant expected in subsequent

quarters – approvals from major customers currently underway. Phase-2
anticipated to be commissioned in Q2FY24.
 New green power generation capacity of 24MW at TN site expected to become

operational in Q2FY24.
 The first phase, consisting of 20,000MTPA of the 40,000MTPA specialty chemical

capacity at the Mundra plant in Gujarat, was commissioned on July 10, 2023. This
will enable PCBL to meet the growing demands of its existing customers, enhance
customer serviceability, and explore new opportunities.
 Company's total specialty black capacity now stand at 92,000tonne.
 Announcement of another capex to be declared soon.
Outlook
 PCBL continues to experience increasing demand for specialty black, including
new customer additions.
 Growth in domestic tyre demand is supported by strong momentum from the

OEM segment and an improvement in replacement demand.
 The company remains cautious about the global demand outlook, considering
the impact of high inflation in developed economies on consumption.
 PCBL is actively working on strengthening its supply chain, improving product

mix, and implementing cost optimization initiatives.
 The long-term prospects of the specialty segment appear positive, and PCBL
expects sustained growth momentum in business potential. The margins in the
specialty segment are expected to remain strong, driven by changes in the global
supply chain, consumption patterns, and robust demand.
 The company has taken various initiatives to expand its presence in overseas
markets and is focused on increasing the contribution of exports to total sales.
 Sanctions on Russia creating a massive impact on European markets benefitting

the Indian companies
 From FY24, PCBL expects to add capacity of 80-100,000tonnes per year to sustain
the increasing demand, capex shall amount to INR 50-60,000/ tonne
PI Industries
Q1FY24 performance highlights
 Achieved strong 24% YoY revenue growth (21% excluding Pharma segment).
 Notable 33% export growth (excluding Pharma), driven by 29% volume increase
and favorable dynamics in pricing, currency, and product mix.
 Domestic revenues subdued due to delayed monsoons, resulting in a 13%

volume decline, with a focus on revenue quality and efficient working capital.
 Pharma contributed INR 443 mn (3% of total revenue) with growth in Q1 FY24.
 Improved Gross Margin to 47% (+267 basis points) due to better product mix and
Pharma business.
 Overheads increased by 16%, excluding Pharma, due to CSM exports, new

product promotion, and one-time Pharma business expenses.
 EBITDA grew by 35% to INR 4,726 mn, with a 209 basis points improvement in
margin due to product mix and operating leverage.
 PAT increased by 46% due to EBITDA growth and lower ETR despite higher
depreciation.
 In domestic market, launched one new molecule in Q1FY24 and on track of

launching 3-4 new molecules by end of FY24. This is in addition of 7 innovative
products launched in FY23.
 Though weak monsoon has impacted domestic sales. July month has witnessed
significant improvement is likely to drive demand in kharif season.
 Continued focus on horticulture crops. Horticulture contribute ~30% of domestic

sales. While in domestic market around 25% contribution is from horticulture
crops.
 PI is continuously enhancing focus on electronics and fine chemicals. It expects

some products likely to come out of fine chemicals, however initial stage
contributions from these products will remain muted.
 Of acquired assets in pharma, company expects near term EBITDA margins at 14-
15% range. However with higher utilization and efficiency bring in, margins in
next 2 year to reach to 20-22%.
Total capex and acquisitions

 Total capital expenditure for Q1FY24 amounts to INR 6,490 mn, which includes
Pharma acquired assets worth INR 5,249 mn through a business combination.
 Excluding the addition of Pharma assets, the capex stands at INR 1,241 mn
(compared to INR 506 mn in Q1FY23).
 The focus on driving higher capacity utilization and enhancing throughput

remains ongoing.
Balance sheet remains strong

 Other non-current assets comprise Fixed deposits totaling INR1,780mn.
 Trade working capital, in terms of Days of Sales, improved to 83 by June 30, 2023,
compared to 102 days as on June 30, 2022.
 Inventory levels of INR15,265mn and INR14,049mn (excluding Pharma) were

reduced in terms of Days of Sales to approximately 73 compared with 89 days as
on June 30, 2022.
 Cash flow from operating activities increased by ~60%, reaching INR3,028mn,

and INR3,455mn excluding Pharma (compared to INR1,915mn in Q1FY23).
 The surplus cash, net of debt, is recorded at INR28,066mn.
QIP and long-term strategy

 QIP funds remained invested in deposits and debt mutual funds, following a
Statutory Liquidity Ratio (SLR) philosophy.
 The final deployment of funds aligns with PI Industries' long-term growth

strategy.
Guidance
 Maintains guidance of 18-20% growth in revenues excluding revenues from
pharma. Though is sees strong growth visibility for its products and not seeing
any inventory destocking like situation in its products basket, it remain cautious
on growth outlook given global uncertainty.
 Expect to maintain EBITDA margins at 24-25% driven by product mix and

operating leverage
SRF
Specialty chemical business
 Inventory rationalization by customers, some PO rescheduling, currently being
witnessed
 The segment reported healthy performance through sustainable efficiency

improvements and technology interventions
 Ongoing projects progressing as per plan. Expected to commission over the next
few quarters; likely to contribute positively going forward
 Engagement with customers for complex downstream products / AIs remains

strong, Launched 2 new products each in Agro and Pharma
 Agrochemical companies focusing on inventory rationalization
 Certain key raw material prices continue to show signs of softening; still higher
than their long-term average
Outlook
 Current inventory rationalization seems transitory; may last for a couple of

quarters. However, customer traction still strong
 China + 1 remains intact, global customers’ de-risking theme continues. Focus on

commissioning new plants and their ramp up
Fluorochemicals business
 Business performance was impacted due to Chinese dumping across geographies
due to weak local demand. Weak domestic summer season impacted HFCs
demand. Industrial chemicals witnessed lower demand due to stagnant pharma
and agro industry
 Business to focus on commissioning and ramp up of ongoing projects in FY24 -

Projects close to INR11bn expected to be capitalised in FY’24. PTFE trial runs
initiated – customer approvals to commence shortly
 De-stocking of HFCs to continue in the short-term. However, long term global

demand outlook for refrigerant gas remains strong and sustainable.
 Mandatory installation of AC systems in truck cabins expected to bolster the

domestic demand for ref gases in the
Outlook
 Industrial chemical prices may witness continued pressure
 Lower Chinese inventory levels over the next two quarters
 Strong demand outlook of HFCs
 Focus on PTFE product approvals to ensure plant ramp up
 Expect better performance in H2 FY’24, long term story remains intact
 Expected schedule of production cut in CY24 in the US are expected to boost

demand for HFCs
Packaging films business

 Business continues to face significant margin pressure.
 Commodity prices falling leading to inventory corrections
 Hungary operations showing improvement compared to Q4FY’23
 Aluminium foil project on track and expected to be commissioned in Q3 FY24
 Several BOPP & BOPET film lines commissioned in India and globally in the recent
past, some deferment / delays being witnessed
 Demand supply mismatch scenario expected to continue, especially in BOPET
 Downcycle at its peak; industry overcapacity to taper over time
Technical textiles business

 Lower Caprolactum price impacted overall revenues
 NTCF volumes gaining traction when compared to Q4 FY23
 Improved performance of Belting Fabrics and Polyester
 Industrial Yarn, with greater emphasis on high-end VAP sales
 Phase – 1 of the Solid Woven Fabric, which is a part of the Belting Fabrics
portfolio successfully commissioned
 Demand for Nylon Tyre Cord Fabric expected to remain stable
 Domestic demand for Belting Fabrics expected to remain strong
Capex plan intact

Amid uncertainty, management is expecting commissioning of capex of ~INR30bn in
FY24 including fluoropolymers of ~INR11bn, speciality chemicals ~INR15bn and
aluminium foil ~INR4bn is expected to drive growth, most of which is likely to
commission in H2FY24.
Textiles
Welspun India
 Operating cash flow continued to increase due to the capital employed and the
fall in debt.
 The footfalls in the sales are looking to improve in the coming months and does
indicate a positive market sentiment for the quarter.
 Company was able to bag new customers in the USA and Middle East for
prestigious hospitality projects and they have signed contracts with hospitality
chains in EU. They have good orders in pipeline for export customers.
 The Wellspun is in the top 10 companies worldwide in the home hospitality

business.
 The new logo symbolizes the company's dedication towards doing things right
and doing the right things. They are also looking to call it as Wellspun Living and
adopting this nomenclature expects to have new adaptability and company's
approach to changing new market dynamics.
 The company is looking forward to have small investments in terms of printing

and they are very well covered owing to their future plans.
 The company has guided to reduce net debt INR10bn by FY24-end. They have
also guided for 10% annualised sales growth in FY24/FY25 with potential EBITDA
margins of 15%.
Telecom
Route Mobile
 Q1 is traditionally not a strong quarter. Sequential de-growth in revenue due to
sharp devaluation of Naira currency and decline in traffic of players acquired in
last quarter. Overall, 29.5bn transactions processed in the quarter
 Signed direct contract with world’s largest ecommerce and cloud computing
company for CPaaS services in 10 countries including India.
 Increase in billable transaction due to increased volumes in India which grew

double digit sequentially
 Added 100 new customers in Q1FY24
 NLD volumes increased significantly and have gained market share
 Management maintained revenue guidance of 20% for FY24.
 Expect to increase it based on deal closing in coming periods. A large global deal
win and few large firewall deals in pipeline provides good prospects for
FY24Working on the GTM together
 Route Mobile connection with operators in high growth areas will help Telesign
expand their services
 Reinvestment in Proximus Opal aligns interest and look for value creation
 Proximus provides instant access to a large enterprises in US which are

customer base of Telesign. Route was finding difficulty in penetrating the US
market. This deal will help for cross selling and upselling especially for ILD
 Synergies will be derived on both revenue and cost side
 Already working out on synergy blueprint with the transition team and Telesign
team and engaging a global consulting firm
 Presents sizable revenue opportunity for Route Mobile from ILD volume
 Cost savings will be done by optimising the joint fixed costs and labour
consolidation
Sterlite Technologies
 Strategic priorities remain the same: grow optical networking business
 Optimising raw material and fixed costs in optical products business
 Consolidating global services in projects of choice
 5G deployments continue to be strong
 532 operators have invested in 5G as of June 2023. 254 have already launched
commercial 5G services. 41 carriers in 20 countries have launched standalone
5G networks
 4.7mn new home passes expected in UK
 China Mobile tender awarded to industry of 108mn fkm for 2023-2024. Share
well distributed between key players
 Average cable price in RMB remains unchanged vs previous year
 Medium term OFC demand volume to go to 638mn fkm. Demand contracted by

3.4% in H12023 led by 11% contraction in North America
 Global market share ex China remained stable at 11% in H123. Expect market
share to increase H2FY24 onwards
 OFC volume lower QoQ. Realisation lower qoq on account of geographical mix
 Looking to increase share in EMEA India and APAC to fill volume gaps from US
 Driving new product development
 Engaged tier 1 management consulting firm for optimising costs
 Secured profitable projects in services business: System integrator for setting

up ICT infrastructure and fibre rollout for 5G deployment of private Indian telco
 New customers acquired in STL Digital. Strong deal flow in Q1FY24
 Strategic partnership with SAP and Google
 Open order book for digital services INR9bn
 Expect digital losses to go down with ramp up of revenues
 Continued to win multimillion orders in optical business from US and Europe
 Guidance of 7-9% growth for FY24
 Expect to move to Net Debt to EBITDA to lower than 2.5x
Miscellaneous
Balkrishna Industries
 Q1FY24 volume loss stood at 4,000–5,000MT, owing to disruptions at the Bhuj
plant and the Mundra port (on account of cyclone Biparjoy in June).
 In Q1FY24, the Agri segment share reduced to 58.5% (64% in Q1FY23), while OTR
share increased to 37.8% (32.8%). OEM share reduced to 26% (27.8%), while
replacement share increased to 71.8% (69.8%).
 In Q1FY24, domestic volume grew by 19% YoY to 21,012 MT.
 In Q1FY24, carbon black sales contributed to 6% of revenues.
 The OEM segment market share gains are expected to sustain in FY24.
 Global channel inventory has reached largely normal levels.
 Hedge rate to improve for FY24 at INR87-88/EUR vs. INR85.3/EUR in FY23.
 Input costs to remain largely stable going forward.
 FY24 capex planned at INR5.5-6bn. Of this, maintenance capex is expected to be

INR2.5–3bn. The balance will be spent towards new product development like
rubber tracks, giant solid tires to widen product basket in end markets along with
higher investments in brand building and marketing efforts.
 The market share goal stands at 10%, to be reached in three–four years versus
current market share at 5–6%.
 Gross debt stands at INR28.61bn and cash reserves at INR22.45bn as of Jun-23.
Bharat Forge
 In Q1, new orders stood at INR2bn, relating to PV and Industrial segments.
 New orders in defence stands at INR2.8bn, to be executed over the next 18

months. This increases the pending export order book to INR23bn.
 Domestic artillery guns order expected to commence in 6 months.
 Consolidated defence revenue stood at INR2.5bn in Q1, and defence

contribution to overall revenue in FY24 expected at ~10%.
 NA Class8 industry expected to be stable this year.
 Oil & Gas segment expected to witness flat revenue growth in FY24.
 In Europe subsidiaries, PBT turnaround expected in FY24. In US subsidiary,

EBITDA turnaround expected in Q4FY24.
 Kalyani Powertrain expected to see a turnaround in 2-3 years. In near-term focus

is on building capacity for EV parts.
Consolidated capex planned at INR10bn in FY24, to be met by internal accruals.
PDS
Value-accretive Ted Baker acquisition
Ted Baker acquisition was completed in June 2023 for INR1.5 bn. The company saw
an incremental INR 300mn revenue from this business with a 9% PAT. Company aims
to generate INR4-5bn in revenues from this acquisition.
Manufacturing sales declined on extended EID holidays

Reduction in manufacturing was mainly due to both the Eid festivals falling in the
same quarter. Factories have been doing direct business with the customer (50-65%
of productions). Along with these factors, the company has also opted to change the
management of these factories (transition in process)
New contract with Jerry to flow through top line from Q2

Contract is signed and being operationalised. Integration is underway and will start
contributing to the top line from Q2
Healthy guidance for FY24

Anticipate single digit growth overall during FY24 with the first half of the year being
muted in terms of growth. Pick up is expected from the second half of the year as
inventory pile up reduces along with the incoming festival season. The company
mentions the improvement in customer intent on orders which will further help
boost margins. Management has re-iterated 50bp growth in annual EBITDA margins.
Higher tax rate led by TED Baker profits, change in Bangladesh tax
structure
Ted Baker operates in the UK, wherein taxation is higher. TED baker contributed to
top line in Q1FY24. Besides, Bangladesh government has increased taxation from
0.5% to 1% on receivables.
RHI Magnesita India

 Management has guided the turnover for FY24 would be at a lower range of
INR40-45bn (last quarter, it guided at higher range) and maintained its
sustainable margin guidance of 14-15%
 In Q1FY24, RHI exiting capacity operated at 85% utilisaiton, while Dalmia and Hi-
Tech operated at 54% capacity utilisation (Q4: 51% CU). Overall RHI operated at
an average capacity utilisation of 64%.
 Management expects the export contribution to increase in ensuing quarters

(11% in Q1FY24)
 Dalmia margin in Q1FY24 improved to 12.6% v/s 10.2% in Q4FY23 along with Hi-
Tech margin that improved to 22.6% compared to 17.1% in Q4FY23.
 RHI’s current debt position stands at INR5bn. The company has successfully
repaid the debt of INR9.8bn taken for acquisition through money received from
QIP(INR7.5bn) and remaining INR2.3bn though internal accruals. The company
has cash balance of INR3.6bn.
 The working capital days reduced to 87days compared to the peak of 105days in
H1FY22.
 RHI capex plan of INR3bn remains intact for the refurbishment of Dalmia and Hi-
Tech unit. However, management is not aggressive to spend it immediately. It
plans to utilise it over the next 3-5 years. RHI’s focus is to optimise the production
facility at both Hi-Tech and Dalmia without much capex.
 Dalmia OCL’s name has been changed to RHI Magnesita Refractories Ltd (RHIRL)
wef 9th of August 2023
Sheela Foam
Q1FY24
 After a long time, RM prices have started rationalising (after seven–eight

quarters). According to the company, these prices are here to stay.
 Polyol has corrected from INR174/kg to INR139/kg.
 The company rationalised the sales of Sleepx online, which led to the fall in
volumes. Sleepwell’s performance has been stable.
 The reduction of Sleepx also helped improve gross margins.
 There was a one-off forex loss of INR100mn in Q4FY23, which did not accrue.
Also, the company kept costs under tight control given the moderation in
volumes due to Sleepx drawdown.
 One-off charge: The fire incident happened at a vendor facility, which was
owned by SFL.
Brands
 Going forward, the Sleepx brand will be gradually rationalised. The brand will
be priced higher to make it profitable. SFL will not focus on driving sales.
 Mattress for every Indian product/plant should be commissioned by October of

this year
 Exports at present are facing a headwind. Anti-dumping duty has been imposed
in the US.
Acquisition:
 Revenue synergies: There is a lot of overlap of products between Sleepwell and

Kurl-on, which creates a lot of confusion. Clarity on positioning and product
range will help drive the brands independently. Also respective regional
presence for both will help cross leverage the opportunity.
 At present, Kurl-On will remain a subsidiary of the company. In a couple of years

company may consider merging the entity.
 SFL has ensured than Furlenco turns EBITDA-positive by October and PAT-
positive by end-December. It won’t need any further cash infusion as per SFL.
Outlook
 The company expects profitability to improve further over coming quarters.
 In FY24, the company expects net debt to EBITDA to end at 2–2.5x, and this
should be less than 1x beyond that as Kurl-on also gets integrated.
 Majority of the future capex will be for maintenance. This will be approximately
INR100mn each for SFL and Kurl-on.
Solar Industries
Business highlights
 SOIL achieved higher revenue & margins despite the negative impact of currency
fluctuation & falling raw material prices
 During the quarter, it registered a volume growth of 13%
 Working on increasing its global manufacturing presence from 8 to 12 countries
 Two new greenfield projects in India are expected to commission during the year
 Encountered additional losses due to foreign exchange, which is in the range

ofINR330mn and because of the hyperinflation around INR80mn has been
provided in this quarter. It expects that the currencies should settle and should
not see such fluctuations.
 In current quarter, there were unseasonal rains, especially in the north part of
the country. So that has impacted demand from housing sector. But it is
expecting strong demand from Q3 onwards
 Raw material prices year-on-year basis, have come down by 35% and on from
the previous Q4 it has come down by 13%.
 Current order book (ex-defence) has reduced as the Coal India orders are likely
to be completed by the month of October this year and company is expecting
the new RFPs to come in the month of September. So once it receives the new
orders this order book will jump further
 Its recently increased capacity in initiating systems and ancillary which has
supported revenue growth in initiating systems by 43%
 Defence revenues includes exports revenues also. In exports, company has

already started receiving orders from export market, which are also included in
its current order book of defence.
Defence
 In Q1FY24, it has done INR1.5bn and from Q3 onwards, it is expecting a surge in
our revenue from defense and that will help it to achieve annual guidance of
INR7bn. There is possibility to overshooting it, but as of now it maintains its
guidance.
 The final trials of Pinaka rockets are likely to be completed soon
 SOIL has developed many of the products in association with DRDO and
some of the products we are developing on its own. Expect strong product
basket to help drive its defence business.
 Last year, it has seen a very strong growth in Nigeria and Turkish, but in this
quarter it has seen that there is a negative impact due to currency fluctuations
and lot of due to political reasons. Management think that all these were stabilize
and from Q3 onwards we will see improvement in business
 Among key global markets, most of the markets are EBITDA positive except south
Africa. Management is confident about turning this EBITDA positive in FY24
Guidance and balance sheet/capex

 Expecting annual volume growth of 15–20% as guided in the previous quarter,
mainly driven by robust demand from CoaI & Institutional sector
 EBITDA margins expected at 20-22%
 The orderbook stands at INR26.7bn, which includes the defence orderbook of

INR10.5bn
 Capex plans for FY24 remains at INR7.5bn, out of which it has done ~INR1.2bn in
Q1FY24.
 As current net debt is INR7bn. It expects to generate strong free cash flows to
spend in capex from internal accruals. While debt for the current year is likely to
come down further
 It expects working capital improvement in current year mainly because in the last
years, it was buying ammonium nitrate from international on advance payments
and now those things have stabilized. Now, those materials are available on
credit
 Defence business revenue guidance maintained at INR7bn
VIP Industries
Demand/growth
 While air travel continued its growth momentum, demand was impacted due to
the wedding season. Also demand was impacted due to higher replacement
cycle in luggage as there was significant purchases last year as travel opened up.
 There was also muted growth in the interior regions.
 Challenging situation at Bangladesh facility also impacted growth. Alternate

arrangements could only be put in place in the latter half of the quarter. This
led to short supply of key ranges in soft luggage. GM was impacted due to under
absorption of costs. ~3-4% growth was lost due to this factor.
 Growth in trade channel was 16% (70% of the revenues) was reasonable.
Balance 30% i.e. CSD and institutional saw contraction. Institutional in last year
was exceptionally high due to one-time Haj order.
 Supply chain impact was higher in VIP and Skybags
 Underlying growth would have been better, had there been better supplies.
 As per VIP, demand in the value range has been higher.
Margins
 GM is lower due to lower production in Bangladesh, thus under-absorption of

overheads and unfavourable mix both in brands and channel..
 Mix impact on gross margin was 2%.
 Other expenses is higher due to higher advertising expenses, legal fees and
additional warehousing in anticipation of higher business.
 Versus INR320mn, INR510mn was spent on A&P in Q1FY24.
Channel
 In CSD, the company is replacing 50% of the collection to drive growth back.
 E-commerce presents the opportunity to sell premium range.
Manufacturing
 Full impact of in-house manufacturing is still to play out. Also company is

ploughing back some benefits via production of value range.
 Normalizing supplies will take 2–3 months.
 To mitigate the Bangladesh fire company tried double shift, import from China
and appointing vendors in India
 The plant which got impacted had a higher share of VIP and Skybags
Company
 30-35% of revenues come from new design launches
Outlook
 Demand environment continues to remain muted in the immediate. Outlook for

festive remains robust though.
 Targeting 12-15% growth with expectation of stabilization of demand. For gross

margin, the company is targeting 52–53% and 16–17% on the EBITDA margin
side.
 Going forward, VIP will be moderating A&P spends depending on the demand
environment. Investments in channel will continue.
 By FY25, the company is targeting to reach 250 additional towns in total 80% of
the towns with a population above 30,000
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Nuvama Strategy Report Compendium of Conference Calls Q1FY24 Covering

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Nuvama Strategy Report Compendium of Conference Calls Q1FY24 Covering

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August 2023

Compendium of conference calls: Q1FY24

Nuvama Research Team

Investor and Corporate,

Quarterly numbers matter; they lend a quantitative as well as qualitative

Ongoing management commentaries also entail links and threads to a bigger

A roundup of key takeaways

While operating performance was in line, other

“We see a positive scenario on the demand side,

—Mr Niranjan Gupta, CEO, Hero MotoCorp

“Indian economy continues to exhibit

“IT Staffing mandates are down significantly. IT

Demand is robust in the run-up to elections.

Margin improvement continues; but regional players

“We are in the midst of a growing demand

— Mr Ashok Kajaria, CMD, Kajaria Ceramics

Optimism on capex cycle; is re-rating on the cards?

NHAI awarding remained muted; however, robust

While protection growth resumed, most

Zomato’s strong GOV/revenue growth in Q1FY24

“I think the amount of deal activity in High-Tech

“Rural demand seems to have bottomed out, whereas

Content issue starting to resolve; audiences are

Profitability dips amid seasonally lower volume;

Oil & Gas Petrochemicals

Oil & Gas Super normal marketing pips muted refining

Dual tailwinds: US price erosion worries ease off and

Energy security overrides green transition; best

“We see significant buoyancy in the industry, despite

“With China aggressively dumping products and

Feature phone-to-smartphone upgrades, shift from

Nippon Asset Management ................................................................................... 65

AIA Engineering ................................................................................................... 102

CG Power ............................................................................................................. 104

Kalpataru Projects ............................................................................................... 107

KEC International ................................................................................................. 108

Larsen & Toubro .................................................................................................. 109

VIP Industries ....................................................................................................... 363

 DAP trading to remain opportunistic driven by market condition and availability

 Confident of maintaining manufactured fertiliser EBITDA / mt margins at

Capex plan to drive growth

 Capacity addition and backward integration including mining of rock phosphate

 Leveraging its chemical capability and customer connect to drive specialty

 Dhanuka have introduced new molecules Implode – a Maize herbicide, Mesotrax

Dahej plant to be commissioned by end-August

 To start with production of Bifenthrin Technical, expecting positive gross

 Revenue contribution in FY24 INR500, ~20% gross margins, no positive EBITDA

 However with pick up in utilisation in FY25, revenue contribution to increase to

 Looking at formulation exports, expect to grow in next 3-4 years

 Overall capex INR2.60bn, INR2bn to be capitalised in FY24

 EBITDA margins – 12–15%, can go up post orders from Japanese customers

Industry scenario improves significantly

 With government putting ban on non-basmati rice exports and changing

 Sowing in July has improved significantly as per government’s sowing data.

 Declining Agro-chemical prices impacted Exports in Q1 FY24, input material

 Excess channel inventories impacting volume growth

 Export of one new intermediate under Contract manufacturing has commenced

 North-west India currently having excessive rainfall, agri input consumption

 Focus remains on expanding distribution network - wholesale as well as retail

New product launches in FY24

 Gateway (Chlorantraniliprole 18.5 % SC) - I

 Gateway Gr (Chlorantraniliprole 0.4 % GR)- I