Q2FY24 Post Results Review

INSTITUTIONAL RESEARCH
Q2FY24 Post Results Review

18th November 2023
Auto & Auto Ancillaries

Ashok Leyland Ltd. Target: INR 208 Previous Target: INR 215 (Rating: Retained Buy)
Particulars (Rs mn) Q2FY24 Q2FY23 YoY (%) Q1FY24 QoQ (%) Q2FY24E Deviation
Revenue 96,380 82,660 16.6% 81,893 17.7% 1,00,745 -4.3%
EBITDA 10,798 5,373 101.0% 8,208 31.6% 11,628 -7.1%
EBITDA Margin 11.2% 6.5% 466 bps 10.0% 116 bps 11.5% (34) bps
Adj PAT 5,782 1,931 199.4% 5,769 0.2% 6,854 -15.6%
Key reasons for deviation: Result was below expectation on account of 1) lower than expected growth in the realization as some price increase taken in the earlier
quarter couldn’t sustain, 2) exceptional expenses of Rs 229mn, and 3) higher than the expected effective tax rate.
Outlook post results: MHCV industry reported 10% YoY growth H1FY24, seeing demand across sectors. Buses demand is holding good, while LCVs to pickup in H2. On the
margins, the steel prices have softened, and will remain soft for a few months. This, along with internal cost rationalization measures to help in margin improvement.
Ashok Leyland will move to the new tax regime from FY25. FY24 capex will be ~Rs 6bn. Defense will see Rs 8-10bn revenue in FY24, order pipeline for the next couple of
years is strong. On Switch Mobility, the BoDs approved Rs 12bn investment in one or more tranches in the next few months. It has 1,200 eBus orders in hand, and 10K
eLCVs LOIs
Eicher Motors Ltd. Target: INR 4,101 Previous Target: INR 3,737 (Rating: Accumulate to Buy)
Revenue 41,145 35,194 16.9% 39,864 3.2% 40,741 1.0%
EBITDA 10,872 8,216 32.3% 10,208 6.5% 10,489 3.7%
EBITDA Margin 26.4% 23.3% 308 bps 25.6% 78 bps 25.7% 68 bps
Adj PAT 10,163 6,569 54.7% 9,183 10.7% 9,238 10.0%
Key reasons for deviation: Result was above estimates on account of 1) pricing action, 2) better mix, 3) higher than expected benefits from soft commodities, and 4) one-
off non-recurring income of Rs 500mn sitting in Other income line item, relates to grants received from SIPCOT.
Outlook post results: New competition is likely to expand the market. RE has exceptional brands, community, new products & reach to deal with the competition. The
management looks confident of continuing good show ahead. Exports impacted due to macro challenges, return to normalcy is expected in a couple of months. There are
no plans to accelerate EV launch owing to high cost. Showcased Electric Himalayan prototype, which is just a concept and not ready for the production. Annual capex will
remain 2-3% of revenue.
Bajaj Auto Ltd. Target: INR 5,645 Previous Target: INR 5,180 (Rating: Retained Accumulate)
Revenue 1,07,773 1,02,028 5.6% 1,03,098 4.5% 1,09,424 -1.5%
EBITDA 21,329 17,587 21.3% 19,539 9.2% 21,292 0.2%
Adj PAT 18,361 15,300 20.0% 16,648 10.3% 17,699 3.7%
Key reasons for deviation: Numbers broadly matched our estimates. Mix & higher than expected benefits from soft commodity prices lifted up margins, and hence PAT
was ~4% higher than our estimates.
Outlook post results: QoQ exports recovery continued in Q2FY24, slow & steady recovery will continue. The company is actively doing business development in 11 new
markets. On domestic, to report double-digit growth in festivals, expect 2W industry to report 5-8% growth in FY24. A few new launches & upgrades will come in H2. The
Government continues to increase CNG fuel pump network, hence the steady growth in CNG should continue, where Bajaj is well placed. On 2W EVs, to launch a full
range of Chetak models, expand reach & capacity (10K units). 3W EV launch is successful in two cities, will expand to 40 in six months. Triumph's capacity to expand from
5K to 10K units monthly, and to increase network from 20 to 100 in domestic, and will start exports as well. Margin expected to remain stable QoQ as commodities have
more or less stabilized.
Hero MotoCorp Ltd. Target: INR 3,884 Previous Target: INR 3,520 (Rating: Retained Buy)
Revenue 94,454 90,754 4.1% 87,673 7.7% 92,736 1.9%
EBITDA 13,283 10,383 27.9% 12,063 10.1% 12,926 2.8%
Adj PAT 10,538 7,161 47.2% 9,447 11.5% 10,111 4.2%
Key reasons for deviation: Numbers broadly matched our estimates. PAT was ~4% above our estimates driven by higher benefits from soft commodity prices, pricing
action, mix & internal cost reduction measures.
Outlook post results: Demand is positive post festivals as marriage season to kick-in from November. More new launches to happen on the premium motorcycle &
scooters side. 25K+ order book for X440, will service in four months. On exports, QoQ good growth is happening, markets are coming back, and the company is looking at
further scaling-up volumes in H2. On EVs, Hero is working on creating the right infrastructure in FY24, new launches to follow in FY25, expect to launch an affordable
product portfolio. Going forward, operating leverage to kick-in, but the excess margin will deploy back to big premium launches, EVs, digital, etc. FY24 capex is ~Rs 10bn,
will majorly spend on EVs, premiumization.
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1
Maruti Suzuki India Ltd. Target: INR 12,432 Previous Target: INR 10,357 (Rating: Accumulate to Buy)
Revenue 3,70,621 2,99,308 23.8% 3,23,269 14.6% 3,72,670 -0.5%
EBITDA 47,842 27,689 72.8% 29,830 60.4% 41,477 15.3%
Adj PAT 37,165 20,615 80.3% 24,851 49.6% 32,219 15.4%
Key reasons for deviation: Margin improvement was driven by higher than expected benefits of soft commodity prices, better mix (higher UV sales of ~37% in Q2FY24 vs.
~29% in Q1FY24 vs. ~21% in Q2FY23) cost reduction, and operating leverage benefits.
Outlook post results: Expect industry growth of 5% in FY24, while Maruti will grow by 10% for the same period. The order book is at 250K units, and most of the order
backlog has SUVs in it. Sooner or later the small car segment has to revive due to low penetration, and people will want to upgrade from 2Ws. By FY30, Maruti will have
28 models from 17 at present. Most of the model launches will cater to that area where there is a growth. On exports, have target to sell 750-800K units by FY30. Mixed
outlook for margins, while the focus is to improve margins as well as to grow market share. FY24e capex will be Rs 80bn.
TVS Motor Company Ltd. Target: INR 1,692 Previous Target: INR 1,467 (Rating: Retained Accumulate)
Revenue 81,446 72,192 12.8% 72,179 12.8% 83,792 -2.8%
EBITDA 8,998 7,365 22.2% 7,638 17.8% 9,237 -2.6%
EBITDA Margin 11.0% 10.2% 80 bps 10.6% 40 bps 11.0% -
Adj PAT 5,084 4,075 24.8% 4,260 19.3% 5,638 -9.8%
Key reasons for deviation: Revenue/EBITDA/Margin nearly nearly matched our estimates, however adjusted PAT of Rs 5.08bn was lower than our estimates of Rs 5.64bn,
by ~10%. This was largely due to higher than expected finance cost & an effective tax rate.
Outlook post results: Exports will continue to improve gradually QoQ as the worst is over. TVS has plans to expand in Latin America markets as the opportunity size is big.
Urban continue to do very well, while need to be patience for rural growth. On EVs, have good products in the pipeline including e3W, which is getting ready. iQube is
making a positive contribution margin. Operating leverage, reducing cell costs will yield better results going forward. Closely working on the PLI scheme and is confident
that TVS will qualify. The outlook on the margin is positive, and confident of keep improving EBITDA going forward led by premiumization, sustained cost reduction, and
scale benefits.
Suprajit Engineering Ltd Target: INR 402 Previous Target: INR 401 (Rating: Retained Reduce)
Revenue 7,089 7,161 -1.0% 6,797 4.3% 6,821 3.9%
EBITDA 698 787 -11.3% 715 -2.4% 765 -8.8%
EBITDA Margin 9.8% 11.0% (120) bps 10.5% (70) bps 11.2% (140) bps
Adj PAT 348 457 -23.9% 331 5.1% 379 -8.2%
Key reasons for deviation: Result was below estimates due to lower than expected margins in the Suprajit Controls Division and Domestic Cables Division, and certain
One-offs.
Outlook post results: 1) SCD: Turnaround is taking time due to global macro factors, there won't be much change in H2. Non-auto impacted due to high inflation &
interest rates. 2) PLD: Part of the restructuring is over, and it supported margins, which will remain in double-digit, the business is stable. Trifa liquidation will get over by
Q4. 3) DCD: Festivals are going good, India business in Q3 is strong, 2nd half will be good. Margins are stable, going beyond cables and 2Ws. 4) SED: It made good
progress, turned EBITDA positive in the 1st year. Cluster business started to ramp up, expect good years ahead. Have an order book of ~Rs 1.5bn.
Steel Strips Wheels Ltd Target: INR 364 Previous Target: INR 262 (Rating: Retained Buy)
Revenue 11,337 10,811 4.9% 10,444 8.6% 11,028 2.8%
EBITDA 1,244 1,172 6.1% 1,130 10.1% 1,208 3.0%
EBITDA Margin 11.0% 10.8% 20 bps 10.8% 20 bps 11.0% -
Adj PAT 524 546 -4.0% 476 10.1% 520 0.8%
Key reasons for deviation: Broadly, numbers matched our estimates.
Outlook post results: Standalone revenue will be Rs 45-47bn in FY24, and Rs 50-51bn in FY25. FY24 export target revenue will be Rs 6bn, 10-15% YoY exports growth in
FY25 owing to alloys & the new customer addition. Total capex will be Rs 4.58bn in FY24 (incl. AMW acquisition). FY25 capex will be on the lower side. AMW will become
commercially operational from Q1FY25, but SSWL will take Rs 1bn debt to fund AMW’s acquisition. Anticipate Rs 1.0-1.5bn AMW's topline in FY25, and large number will
come-in from FY26. On Knuckle casting, the expected topline is Rs 2.5bn in the 1st phase (Rs 350-400mn in FY25, balance in FY26). Margins will be more or less similar to
PV alloy wheels (15-17%). Consolidated EBITDA Margin expansion expected in FY25 due to operating leverage. Effective tax rate: will move to the new tax regime from
FY25.

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SJS Enterprises Ltd Target: INR 747 Previous Target: INR 745 (Rating: Retained Buy)
Revenue 1,632 1,169 39.6% 1,172 39.2% 1,614 1.1%
EBITDA 360 310 16.1% 282 27.7% 415 -13.2%
EBITDA Margin 22.1% 26.5% (443) bps 24.1% (203) bps 25.7% (363) bps
Adj PAT 209 199 5.0% 180 16.1% 254 -17.8%
Key reasons for deviation: Topline matched estimates, however EBITDA Margin and PAT was much lower due to 1) one-off cost of Rs 21.5mn for WPI's acquisition, 2)
sales mix of WPI changed temporarily due to three model changeover with key client (contributing 40% of WPI’s annual topline), 3) increase in low margin tooling
revenue and 4) higher amortization of intangibles of Rs 28.9mn.
Outlook post results: Earlier guidance was 50% topline growth, and 40% PAT growth. It reduced to 45% topline growth and 30% PAT growth (excluding one-off costs in
FY24). Organic growth will be 20% in FY24e. No other potential one-off expected in Q3. On WPI, anticipate 80% normalization to happen in Q3, and full recovery in Q4. On
Exotech, the growth trajectory will be maintained, and the company is working with the revised capacity expansion in CY24. ~Rs 29mn will be additional amortization cost
every quarter.
Swaraj Engines Ltd Target: INR 2,387 Previous Target: INR 2,358 (Rating: Retained Buy)
Revenue 3,889 3,848 1.1% 3,998 -2.7% 3,750 3.7%
EBITDA 521 505 3.2% 552 -5.6% 504 3.4%
EBITDA Margin 13.4% 13.1% 30 bps 13.8% (40) bps 13.4% (3) bps
Adj PAT 377 359 5.0% 409 -7.8% 376 0.3%
Key reasons for deviation: Mostly in-line with the estimates.
Outlook post results: Domestic tractor industry posted 5% CAGR FY14-FY23 vs. Swaraj's engine sales of 7% CAGR & revenue CAGR of 10% for the same period. We believe
this outperformance should continue as Swaraj is known for the quality as per our checks, plus flow of business observed from the Kirloskar to Swaraj (after Kirloskar's
exit from Swaraj Engines) will keep giving additional volumes vs. previous year. Considering sound fundamentals, consistent dividends and possible increase in the
business makes the company a good investment avenue. We have rolled over our valuation multiple to Sept’25E earnings and maintain BUY rating on the stock with a
revised target price of Rs 2,387 apiece (valued at 18x Sept’25 EPS of ~Rs 133).
Mayur Uniquoters Ltd Target: INR 624 Previous Target: INR 617 (Rating: Retained Buy)
Revenue 1,816 1,945 -6.6% 1,919 -5.4% 1,875 -3.1%
EBITDA 376 336 11.9% 386 -2.6% 365 3.0%
Adj PAT 284 254 11.8% 299 -5.0% 277 2.5%
Key reasons for deviation: Mostly in-line performance with positive surprise on margins, stable lower PVC prices supported margin well.
Outlook post results: With volume recovery in footwear, the ramp up of PU plant and businesses from new clients such as VW, Mercedes, and BMW, we expect a much
stronger performance from FY25 onwards. Besides working on high margin export business, the management is focused on the increasing presence at retail front. They
are onboarding dealers across India to increase brand visibility. Considering BS strength and consistent handsome payouts to shareholders, we value Mayur at 18.0x
Sept’25e earnings to arrive at fair value of Rs 624 apiece and maintain BUY.
Gabriel India Ltd Target: INR 409 Previous Target: INR 409 (Rating: Retained Buy)
Revenue 8,644 8,029 7.7% 8,058 7.3% 8,832 -2.1%
EBITDA 738 591 24.9% 690 6.9% 788 -6.4%
EBITDA Margin 8.5% 7.3% 117 bps 8.6% (3) bps 8.9% (39) bps
Adj PAT 470 366 28.4% 425 10.5% 499 -5.8%
Key reasons for deviation: Topline broadly matched our estimates, however PAT was lower on account of 1) higher mix of low margin PV business (+300bps YoY to 25%
of revenue), 2) drop in high margin 2W business (-400bps YoY to 61%) & Exports business (-38bps YoY to 2.7%).
Outlook post results: The Sunroof's production to start from Jan 2024, will add 2nd line and in discussion with other OEMs, received RFQs. Seeing good traction in the
SUV segment. The market share is higher in CVs and will sustain. Export sales to revive in Q3. The aim is to take EBITDA Margin in double-digit & the management is
working on the same. FY24 standalone capex will be Rs 1bn. To introduce one new product in FY25.
Key observation from the sector: Most of the OEMs sounded positive improvement on margins ahead led by the stable to soft
commodities & better mix. Healthy outlook for CVs in FY24 driven by MHCVs & Buses, traction should continue next year as well, in
our view. Premium segment in 2Ws & PVs continue to perform well, demand is healthy specially for PVs. A gradual recovery is
happening in rural, should support entry-level segment, while exports momentum is getting better QoQ. On EVs, a good number of
launches in 2Ws/3Ws/PVs along with network/capacity expansion is on the cards. Our recommendation in large cap names are 1)
Ashok Leyland in CV, 2) Maruti Suzuki in PV, and 3) Hero MotoCorp in 2Ws. While, SJS Enterprises & Steel Strips Wheels should
continue to show impressive performance & are our preferred picks in ancillary names.
Outliner: Eicher Motors in 2W and Maruti Suzuki in PV outperformed estimates by wide range. The outlook remains healthy for both
companies. Maruti has a strong SUV order book with better export outlook in the mid-term, & margin improvement is on the cards.
Eicher is moving up strength-to-strength despite a rise in the serious competition. This is backed by a wide range of products, reach
& a strong bikers community.

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Pharma
Sun Pharmaceuticals Target: INR 1,178 Previous Target: INR 1,080 (Rating: Reduce to Accumulate)
Revenue 1,21,924 1,09,523 11.3% 1,19,408 20.1% 1,21,191 0.6%
EBITDA 31,794 29,566 7.5% 33,318 -4.6% 33,457 -5.0%
EBITDA Margin 26.1% 27.0% (92)Bps 27.9% (183)Bps 27.6% (153)Bps
Adj PAT 23,755 22,622 5.0% 16,997 39.8% 24,472 -2.9%
Key reasons for deviation: Revenue met our estimates, however EBITDA missed by 5% mainly due to higher-than-expected SG&A expense in 2QFY24.
Outlook post results: Company reported good set of numbers and robust growth in the US business along with stabilization in Taro numbers were highlight for the
quarter. However, we believe, competition from gStelara in FY25 could be a threat to Ilumya sales which would lead to lower sales in specialty. Issue at halol and Mohali
still persists which could slow down the revenue growth.
Laurus Labs Target: 460 INR Previous Target: INR 370 (Rating: Accumulate to Buy )
Revenue 12,245 15,759 -22.3% 11,818 3.6% 12,911 -5.2%
EBITDA 1,879 4,489 -58.2% 1,667 12.7% 2,318 -19.0%
EBITDA Margin 15.3% 28.5% (1,314)Bps 14.1% 124 Bps 18.0% (261)Bps
Adj PAT 370 2,328 -84.1% 248 48.7% 758 -51.3%
Key reasons for deviation: Laurus Labs’s Q2FY24 saw improvement on sequential basis. Revenue was below estimates as growth in formulation business was offset by
lower revenue of synthesis and API business. Higher other expenses led to decline in EBITDA Margins.
Outlook post results: We have reduced our PAT estimates by 15% for FY24 primarily on account of lower ARV sales and margins. We expect FY25 would see higher
revenues as synthesis business has started seeing some signs of improvement in terms of order book where company has secured 1 project each in crop science and
animal health business.
Divis Labs Target: INR 4,096 Previous Target: INR 4,041 (Rating: Accumulate to Buy )
Revenue 19,090 18,550 2.9% 17,780 7.4% 18,574 2.8%
EBITDA 4,790 6,210 -22.9% 5,040 -5.0% 5,572 -14.0%
EBITDA Margin 25.1% 33.5% (839)Bps 28.3% 325 Bps 30.0% (491)Bps
Adj PAT 3,480 4,930 -29.4% 3,560 -2.2% 3,914 -11.0%
Key reasons for deviation: Divi’s lab met our revenue estimate but EBITDA was below our estimate due to higher other expenses and employee costs. We have increased
the FY25 revenue, EBITDA PAT estimates by 4.7%/17.4%/17.6% respectively due to better visibility of orders from GLP-1 molecules.
Outlook post results: Going ahead, the margins would improve due to softening of raw material prices and improvement in the logistics costs. However, the full impact
will be by Q4FY24. Divi’s sustainable growth to be led by a strong recovery in generic sales led by base business recovery, new launches and strong growth in custom
synthesis segment. Due to improvement in logistics and RM costs and visibility of strong revenue growth in FY25.
Indoco Remedies Target: INR 425 Previous Target: INR 360 (Rating: Accumulate to Buy )
Revenue 4,817 4,330 11.2% 4,265 12.9% 4,253 13.3%
EBITDA 714 879 -18.8% 612 16.7% 793 -10.0%
Adj PAT 351 497 -29.4% 244 43.8% 397 -11.6%
Key reasons for deviation: Q2FY24 revenue beat the estimates but missed PAT estimates. EBITDA margins missed estimates due to higher other expenses driven by cost
associated with the plant remediation and repairs of machinery. This expense is expected to continue in the next quarter as well.
Outlook post results: The management has maintained its domestic growth guidance of 12% in FY24. On the export front, since there will no dossier income going
forward, we believe the growth rate for export business will be 7% in FY24.
Key observation from the sector: Despite a decline in revenues for CDMO players, attributed to reduced tender business and a
slowdown in the European market, certain players like Gland Pharma have experienced growth, particularly in the US due to dru g
shortages. Anticipating a more favorable second half of FY24, companies such as Divi's and Gland are expected to benefit from lower
raw material costs and reduced logistics expenses.
Pharmaceutical companies with a strong presence in the US are witnessing robust growth, thanks to an improved operating
environment in the country. Generic pharma firms like Sunpharma and Indoco are particularly thriving in the US market. Despite the
challenges posed by the pandemic, the Indian formulations market has displayed resilience and continues to grow.
The IPM industry is projected to achieve an 8-9% revenue growth in FY24. This growth is expected to be driven by a 5% price
increase, a 2% contribution from new product launches, and the remainder from volume growth. Among the sector, Divi's Labs
remains our top pick.

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Healthcare
Apollo Hospitals Target: INR 5,810 Previous Target: INR 5,320 (Rating: Retained Accumulate)
Revenue 48,469 42,511 14.0% 44,178 9.7% 47,741 1.5%
EBITDA 6,275 5,654 11.0% 5,090 23.3% 6,063 3.5%
EBITDA Margin 12.9% 13.3% (35)Bps 11.5% 142 Bps 12.7% 25 Bps
Adj PAT 2,329 2,040 14.2% 1,666 39.8% 2,382 -2.2%
Key reasons for deviation: Q2FY24 results were mainly in-line with our estimates. Hospitals revenue grew 12% YoY (Volume growth of 4%, price and case mix led another
8%) and EBITDA grew by 11% YoY. The overall occupancy for hospitals was at 68% vs 62% Q1FY24, aided by a robust increase in patient flows across hospitals.
Outlook post results: Apollo plans to add 2860 beds by FY27 with capex of Rs.32 Bn, contributing to revenue growth. The pharmacy distribution business aims for a Rs. 32
billion GMV in FY24 due to an expanding customer base. With anticipated declines in the losses of the 24*7 diagnostics business, EBITDA margins are expected to improve
in the future. The next leg of growth will come from 1) Addition of Beds in hospital segment with further improvement in payor and case mix 2) Significant growth in GMV
3) Expansion of offline pharmacy stores (500-600 stores addition in FY24) 4) Cost optimization, reduction in losses of 24*7.
HCGEL Target: INR 440 Previous Target: INR 382 (Rating: Retained Buy )
Revenue 4,869 4,200 15.9% 4,607 5.7% 4,639 5.0%
EBITDA 846 747 13.3% 743 13.9% 854 0.9%
Adj PAT 136 74 83.4% 76 78.3% 92 47.5%
Key reasons for deviation: Revenue met our estimates but PAT surpassed our expectations due to lower tax rate in the quarter.
Outlook post results: Anticipating a 200-300bps EBITDA margin enhancement in the next 6-9 months. Fueled by double-digit revenue growth, consolidation of NCHRI
Nagpur's operations, improved payer mix, and the maturation of new centers contributing to ARPOB growth. We are optimistic that HCG has the potential to enhance its
profitability through a synergy of initiatives focused on enhancing operational efficiency, refining pricing strategies, optimizing cost frameworks, and elevating the fertility
business and new centers' performance.
Narayana Hrudayalaya Target: INR 1,334 Previous Target: INR 1,080 (Rating: Accumulate to Buy )
Sales 13,052 11,416 14.3% 12,334 5.8% 12,368 5.5%
EBITDA 3,081 2,437 26.4% 2,707 13.8% 2,771 11.2%
EBITDA Margin (%) 23.6% 21.3% 226 Bps 21.9% 166 Bps 22.4% 120 Bps
PAT 2,266 1,688 34.2% 1,840 23.2% 2,005 13.0%
Key reasons for deviation: NARH exceeded our expectations due to strong revenue performance in both the Indian and Cayman operations during Q2FY24. This was
driven by improvements in ARPOB and increased foot traffic in both Inpatient (IP) and Outpatient (OP) services. With increased clarity on enhanced ARPP and a robust
performance in the Indian business, we are revising our EV/EBITDA multiple for the Indian segment to 20x, up from the previous 19x, aligning it with industry peers.
Outlook post results: We anticipate a continued upward trajectory in overall group margin. Looking ahead, growth will be fueled by a structural rebound in foot traffic at
flagship hospitals, where the company is streamlining capacities. Combined with improvements in case mix, this is expected to result in an 21% CAGR in EBITDA from FY23
to FY26E.
Fortis Healthcare Target: INR 450 Previous Target: 380 (Rating: Retained Buy )
Revenue 17,700 16,072 10.1% 16,574 6.8% 17,073 3.7%
EBITDA 3,302 3,029 9.0% 2,725 21.2% 3015 9.5%
EBITDA Margin 18.7% 18.8% (19) bps 16.4% 222 bps 17.7% 99 bps
Adj PAT 1,737 2,044 -15.0% 1,118 55.4% 1,444 20.3%
Key reasons for deviation: Fortis delivered results above estimates. This was mainly due to strong revenue growth in hospital segment steady growth in diagnostic
business which is continuously seeing signs of improvement. The EBITDA margins for the hospital business has seen a marginal improvement due to higher occupancy
(despite weak rainy season) and 12% YoY growth on ARPOB to Rs.60,548.
Outlook post results: The company is dedicated to optimizing costs and streamlining its hospital portfolio by divesting underperforming units, a strategy poised to
enhance future profit margins. We expect 17% CAGR in revenue from FY23- FY26E, attributed to heightened hospital occupancy resulting from expanded bed capacity and
an improved case mix, consequently boosting ARPOB. Over the next 3-4 fiscal years, approximately 1500 beds will be added, excluding those in Manesar and Shalimar
Bagh. Occupancy rates are anticipated to rise from 68% in FY23 to a range of 70%-75% by FY26E.
Global Health Target: INR 1,018 Previous Target: INR 742 (Rating: Retained Accumulate )
Revenue 8,439 6,791 24.3% 7,730 9.2% 8,275 2.0%
EBITDA 2,129 1,566 35.9% 1,779 19.7% 1941 9.7%
Adj PAT 1,252 857 46.1% 1,020 22.7% 987 26.8%
Key reasons for deviation: Revenue was in line with our estimates but EBITDA surpassed our expectations due to lower than expected other expenses which was due to
operating leverage. We upgraded our EV/EBITDA multiple by 10% to 23x (21x earlier) due to strong margin expansion and significant volume growth at both mature and
new hospitals.
Outlook post results: Medanta plans to add 50 beds in Patna and 120-150 beds in Lucknow in FY24, it further plans to add 100 beds in Gurgaon unit. Management is
further confident of operationalizing Noida facility in 2 years’ time leveraging its healthy balance sheet & operating cashflows. Going ahead EBITDA margins would expand
1) due to benefits of payor mix in Lucknow, the company has 100% cash and insurance patients 2) Expansion of beds capacity as 1000-1500 beds will be added over a span
of 2 years 3) operating leverage playing out as Medanta has in-house doctors, and large facility of more than 500 beds in single location which will result in EBITDA CAGR
growth of 27% from FY23-FY26E.

5
KIMS Target: INR 2,027 Previous Target: INR 1,971 (Rating: Retained Accumulate)
Revenue 6,525 5,641 15.7% 6,060 13.3% 6,323 3.2%
EBITDA 1,773 1,524 16.3% 1,571 8.6% 1530 15.9%
EBITDA Margin 27.2% 27.0% 15 bps 25.9% (117) bps 24.2% 297 bps
Adj PAT 920 860 7.0% 809 -1.3% 714 28.9%
Key reasons for deviation: Revenue was inline with our estimates, however EBITDA and PAT surpassed our estimates. Deferral of shifting costs of Sunshine hospital to
newer location led to lower operating costs and thus the EBITDA increased.
Outlook post results: The relocation of KIMS Sunshine Hospital from Secunderabad to Begumpet in Hyderabad is poised to boost profitability due to its advantageous
new location. The turnaround of Sunshine Hospital will play a pivotal role in driving KIMS' overall EBITDA, with the potential to increase EBITDA from the current 18% to
28-30% as occupancy levels rise at Sunshine. Additionally, KIMS is actively consolidating its market share by acquiring minority interests.
Rainbow Children’s Medicare Target: INR 1,287 Previous Target: INR 1,123 (Rating: Accumulate to Buy)
Revenue 3,327 3,131 6.3% 2,872 15.8% 3,388 -1.8%
EBITDA 1,176 1,095 7.4% 877 34.1% 1067 10.2%
Adj PAT 629 611 2.9% 410 53.4% 531 18.5%
Key reasons for deviation: Revenue was inline with our estimates, however EBITDA and PAT surpassed our estimates. Favorable mix led to operating leverage and thus
EBITDA missed our expectations.
Outlook post results: In FY2024E, Rainbow is guiding for a 5-6% YoY growth in ARPOB. With an expanded bed capacity, we anticipate a 6.7% ARPOB CAGR for Rainbow
over FY23-26E, even as occupancy declines by 140 bps. Furthermore, we anticipate EBITDA to experience a 17% CAGR from FY23-FY26E, driven by the addition of beds,
synergistic benefits from new hubs, and cost optimization resulting from a shift towards being asset-light.
Key observation from the sector:

While Q2 is typically a robust quarter for the healthcare sector due to favorable seasonal conditions, Q2FY24 experienced a
comparatively weaker rainy season, resulting in lower ARPOB growth than anticipated. Nevertheless, all hospitals observed an
expansion in EBITDA margins attributed to increased surgeries and inpatient volumes, driven by higher cases of dengue and malaria.
The second half (H2) appears to be more promising than the first half (H1), with most hospitals in our coverage expected to deliver
improved ARPOB and occupancy levels. This improvement is anticipated due to the incorporation of various therapies such as
Mother & Child, oncology, and radiation blocks, which have the potential to enhance ARPOB. Rainbow Children's Hospital and
Medanta are our preferred picks for the sector, benefiting from operating leverage advantages and the anticipated revenue growth
driven by the addition of new hospitals.
Demand Outlook: Elevated awareness about health and a rise in lifestyle-related ailments have led to increased occupancies and
utilization rates in hospitals. Although online consultations were already part of the industry, their prevalence has surged
significantly, expanding by four to five times post-pandemic. The convergence of these factors is poised to substantially drive the
demand for hospital services in the foreseeable future.

6
Chemicals
IG Petrochemicals Target: INR 440 Previous Target: INR 505 (Rating: ACCUMULATE to REDUCE)
Revenue 5,018 5,691 -11.8% 5,553 -9.6% 4,770 5.2%
EBITDA 259 854 -69.6% 592 -56.2% 286 -9.4%
Adj PAT 101 554 -81.8% 356 -71.7% 131 -23.1%
Key reasons for deviation: Topline nearly in line with estimates. Lower than anticipated spreads of PAN-Ox led to miss on EBITDA.
Outlook post results: Inching up of non phthalic business revenue share to 15-25% of revenues by FY27E (vs ~7% of H1FY24 revenue) might provide some stability in the margins
which remains a key factor of company’s further expansion in downstream derivatives of non phthalic businesses. The company would witness volume growth largely from Q1FY25
post expansion of its 53,000 tonnes PA 5 plant. The company has also stated its intent to venture into new businesses like green chemicals, ethanol derivatives, CBG etc however
specific details has not been shared. Currently lower PAN-Ox spreads, demand uncertainity & declining MAN realization are a cause of concern. The concerns might continue
H2FY24E, hence, we downgrade to REDUCE rating from earlier ACCUMULATE rating on the stock.
NOCIL Target: INR 208 Previous Target: INR 217 (Rating: Retained REDUCE)
Revenue 3,509 3,892 -9.9% 3,967 -11.5% 3,925 -10.6%
EBITDA 453 620 -27.0% 555 -18.4% 542 -16.4%
Adj PAT 272 357 -24.0% 343 -20.8% 334 -18.7%
Key reasons for deviation: lower than anticipated realization of rubber chemicals led to miss on topline. And, lower than anticpated EBITDA spreads per kg estimate led to miss on
EBITDA.
Outlook post results: Increased competition from imports could be a major concern as imports of accelerator witnessed 20% growth from April to Aug 23 which impacted its gross &
EBITDA spreads in H1FY24. Also, the business does not have protection from ADD which could pose serious threat of injury to margins of Indian rubber chemical players like NOCIL
from Chinese imports. However, On the positive side, latest chinese data witness revival in consumer spending led by government support which might turn the focus of Chinese
manufacturers into their domestic market. The long-term growth story remains structurally positive for NOCIL, led by tyre players expanding capacity & investing to the tune of Rs200
-250bn over FY23-26E which leads to increased usage of rubber chemicals, still competitive intensity might increase with competitors ramping up capacity (For instance. China
Sunshine completed 30,000 TPA anti-oxidant capacity addition) could impact NOCIL & other rubber chemical companies. We maintain our REDUCE rating on the stock.
Bodal Chemicals Target: INR 74 Previous Target: INR 78 (Rating: ACCUMULATE to REDUCE)
Revenue 3,300 4,012 -17.8% 3,325 -0.7% 3,050 8.2%
EBITDA 235 321 -26.8% 222 5.8% 205 14.5%
Adj PAT 12 103 -87.9% 22 -43.7% 21 -40.8%
Key reasons for deviation: Higher than estimated volumes of dye & dye intermediates led to revenue miss. Lower than estimated other income led to miss on PAT.
Outlook post results: The legacy business dye-intermediates and dyestuffs will continue to witness volatility led by China factor & rebound of demand in international markets and
because of this, the company is now foraying into newer businesses which would insulate itself from majorly depending on sectors like textiles, dyes etc. The Sayakha greenfield
project of benzene derivatives is expected to start trial runs from H2FY24E which will increase its presence towards end user industries like pharmaceuticals & agrochemicals. We feel
the company has seen major downturns in the last 2 quarters because of weakeaning of demand in textiles and other allied sectors, and the same if normalized alongwith
commissioning of newer businesses will drive the growth going ahead. Since our last quarterly update, the stock has touched our target price and is trading at the same levels & near
to its fair valuations which left no room on the upside, hence we downgrade to REDUCE rating from earlier ACCUMULATE rating on the stock.
PCBL Target: INR 198 Previous Target: INR 167 (Rating: Retained REDUCE)
Revenue 14,867 16,279 -8.7% 13,475 10.3% 14,139 5.2%
EBITDA 2,381 1,886 26.3% 2,108 13.0% 2,271 4.9%
EBITDA Margin 16.0% 11.6% 443 Bps 15.6% 38 Bps 16.1% (4)Bps
Adj PAT 1,226 1,164 5.4% 1,092 12.3% 1,182 3.8%
Key reasons for deviation: Numbers nearly in line with estimates.
Outlook post results: The company reported best ever overall gross spreads during the quarter, although near flattish sequentially. We feel there is no further headroom left for
gross spreads to increase from hereon over the next 2-3 years and could materially remain flattish from current quarter levels. Over the longer term, growth is expected to be robust
led by expansion in normal and speciality grade CB and rising exports. The company will remain in capex mode even after recently completed expansion and to support the same
there is sufficient land availaible in Chennai & Mundra to support brownfield expansion. The stock has seen sharp rally post Q1FY24 results and we feel there is no room for upside
left factoring flattish gross & operating spreads, we advice investors to book profits at current levels. We maintain our REDUCE rating (valuing 13x Sept 25E EPS).
Aarti Industries Target: INR 611 Previous Target: INR 516 (Rating: ACCUMULATE to BUY)
Revenue 14,540 16,850 -13.7% 14,140 2.8% 15,325 -5.1%
EBITDA 2,340 2,670 -12.4% 2,020 15.8% 1,916 22.1%
EBITDA Margin 16.1% 15.8% 25 Bps 14.3% 181 Bps 12.5% 359 Bps
Adj PAT 910 1,240 -26.6% 700 30.0% NM NM
Key reasons for deviation: Revenue nearly in line with estimates. Sharp miss on EBITDA and EBITDA margin was because of better than anticipated pickup in hydrogenation business
& sharp export market pickup.
Outlook post results: We feel growth should pickup largely from H1CY24E led by inventory restocking & discretionary consumption pickup. The company is in the right phase of
cyclical recovery and with robust capital expenditure in the pipeline, we feel coming years for Aarti would be the best. The only concern is the near term pain faced by Aarti which is
mostly transitory in nature & it is set on a multi-year growth cycle hence we our upgrade our rating to BUY from earlier ACCUMULATE rating

7
Supreme Petrochem Target: INR 468 Previous Target: INR 521 (Rating: BUY to SELL)
Revenue 12,777 12,346 3.5% 12,251 4.3% 12,795 -0.1%
EBITDA 1,063 789 34.7% 905 17.4% 1,769 -39.9%
EBITDA Margin 8.3% 6.4% 193 Bps 7.4% 93 Bps 13.8% (548)Bps
Adj PAT 781 598 30.5% 693 12.7% 1,322 -41.0%
Key reasons for deviation: Revenue almost in line with estimates. We estimated some inventory gains benefit owing to decline in raw material prices, however, no such
benefit was reported which led to miss on our EBITDA estimates during the quarter.
Outlook post results: The recently expanded capacity of PS & EPS is contributing to volumes hence management volume guidance of 12-13% remains intact for FY24E.
The company is also expanding its capacity in other business like XPS, SPC & ABS which will provide further impetus to volume growth. The company is dynamically
shifting its focus from lesser margin PS products to margin accretive businesses like XPS, SPC & ABS. With expansion in existing capacity, the company is well poised to
increase its presence further in international market However, spreads remain weak and further competitive intensity in domestic and international markets with slew of
expansion could lead to weaker profitability than earlier anticipated. Also, the stock has seen sharp run up in price exceeding our previous quarter target of Rs 521.
Considering the negatives & overvaluation, we downgrade to SELL rating.
Apcotex Industries Target: INR 484 Previous Target: INR 442 (Rating: SELL to REDUCE)
Revenue 2,792 2,832 -1.4% 2,777 0.5% 2,590 7.8%
EBITDA 317 452 -29.9% 255 24.2% 236 34.1%
Adj PAT 153 308 -50.3% 121 26.3% 114 34.3%
Key reasons for deviation: Revenue was nearly in line with estimates. EBITDA miss was largely owing to lower than estimated raw material cost.
Outlook post results: As demand & utilization of nitrile latex increase, operating EBITDA in H2FY24 should be better than H1FY24. Since crude prices are on the boil again
backed by heightened geopolitical tensions, supply cut by major OPEC countries & rising demand from China, there has been meaningful rise in downstream chemicals
prices of Acrylonitrile, Butadiene & Styrene. Nitrile latex is showing signs of pickup led by easing oversupply situation but it still remains under our watch. The other latex
segments are performing well with robust demand from paper, carpet and construction sectors. Earlier, we had a SELL rating on the stock for the past few quarters,
however with pickup in demand of nitrile latex & rising exports share & rolling forward our valuation to Sept 25E earnings we upgrade to REDUCE rating from SELL rating
earlier on the stock.
Galaxy Surfactants Target: INR 3,103 Previous Target: INR 3,137 (Rating: BUY to ACCUMULATE)
Revenue 9,831 12,316 -20.2% 9,418 4.4% 10,250 -4.1%
EBITDA 1,249 1,317 -5.2% 1,232 1.4% 1,333 -6.3%
EBITDA Margin 12.7% 10.7% 201 Bps 13.1% (38)Bps 13.0% (30)Bps
Adj PAT 774 839 -7.7% 752 3.0% 798 -3.0%
Key reasons for deviation: Numbers nearly in with estimates.
Outlook post results: Going ahead with subsiding inflation & increasing personal expenditure is likely to continue volume momentum. Also, Galaxy’s has expanded
capacity to cater to increasing demands of large MNCs, local & regional players. We forecast performance & speciality volumes both to rise by ~8-8.5% during FY23-26E.
High single digit volume momentum along with pickup in export market would lead to Galaxy generating ~13% EBITDA margins & ~16% ROCE by FY26E. Near term pain in
some international market is transitory and the same is expected to resolve in the coming quarter. The company’s long-term outlook is bullish considering the FMCG
premiumization undertaken by large MNCs in a bid to supply high quality products to its customers. However recent stock price jump left little room for upside, hence
downgrading to ACCUMULATE rating from earlier BUY.
Key observation from the sector: Our chemical channel checks suggest that exports markets like US & Europe are still struggling
which is keeping demand pace slow however Chinese economy & consumption is witnessing rebound from the bottom however
sustainability is a question. Global agrochemical company FMC has stated that volume headwinds continue because of channel
destocking. They expect market to rebound in H1CY24E. The pickup in demand is slower, material rebound can be witnessed once
supply channel has minimum inventory. United states however has witnessed moderation in demand momentum & European
markets are also weak. The demand recovery which was originally expected in the second half of this calendar year is not yet visible.
Commodity chemical prices are very volatile owing to increase competition especially from China, weaker export market, heightened
geopolitical tensions, supply cut by OPEC impacting crude oil supplies & demand related uncertainties. Despite global headwin ds,
India still remains on a strong footing in chemicals led by increasing interest of global companies to source from India to de-risk their
supply chain, increasing share of speciality chemicals in overall product mix and robust capex aligned by chemical companies to
capture future growth. For Indian chemical companies, recovery in margins should be visible from H2FY24. Pharma segment demand
is flattish with no major uptick, except for the generic space which is the worst hit owing to increased competition. As indicated by
major pharma companies that API prices decline & US price erosion has been over & there are pockets to improvement led by pickup
in demand in global economies. Agrochemicals demand is still weak owing to high channel inventory. Currently, crude oil prices are
also very volatile however have stabilized now in a range which provide some solace for upstream chemical prices but demand
pickup remains a key watch factor. Valuations of most chemical companies have factored in the positives and are trading at near fair
valuations. The cautious approach in chemicals is the impact of the global slowdown amid lingering recession worries which remains

8
Apparel - Innerwear
Page Industries Target: INR 40,853 Previous Target: INR 43,953 (Rating: Retained ACCUMULATE)
Revenue 11,251 12,282 -8.4% 12,324 -8.7% 12,236 -8.1%
EBITDA 2,335 2,379 -1.8% 2,419 -3.5% 2,264 3.1%
Adj PAT 1,503 1,621 -7.3% 1,584 -5.1% 1,459 3.0%
Key reasons for deviation: Company reported EBIDTA and PAT were mostly in line with our estimates. Company reported volume decline of ~8.8% YoY which was also in
line with our estimates.
Outlook post results: Volumes in Q2FY24 and H1FY24 were impacted due to high level of channel inventory and subdued consumer demand in the premium innerwear
segment. Management expect demand to pickup in the festival period. We believe while inventory correction in the channel is underway, it may take further 1-2 quarters
for volumes to pickup in a meaningful manner.
Lux Industries Target: INR 1,524 Previous Target: INR 1,571 (Rating: Retained ACCUMULATE)
Revenue 6,393 6,357 0.6% 5,206 22.8% 6,738 -5.1%
EBITDA 550 647 -15.0% 284 93.7% 540 1.9%
Adj PAT 371 420 -11.7% 167 122.2% 336 10.4%
Key reasons for deviation: Company's reported EBIDTA was in line with our estimates. Company reported sales volume growth of ~20% YoY, however sales in the thermal
wear segment declined YoY which led to lower than expected sales.
Outlook post results: Management expects better demand and profitability in later part of FY24. We expect performance of the company to improve further led by
stability in raw material prices and better demand.
Rupa & Co. Target: INR 287 Previous Target: INR 298 (Rating: Retained ACCUMULATE)
Revenue 3,021 2,856 5.8% 1,954 54.6% 3,213 -6.0%
EBITDA 324 292 11.0% 113 186.7% 251 29.1%
Adj PAT 205 169 21.3% 42 388.1% 145 41.4%
Key reasons for deviation: While sales were mostly in line, EBIDTA and PAT were higher than expected due to good growth and contribution from more profitable
thermal product sales which has better margins and control over employee and other overhead expenditure.
Outlook post results: Management has retained its guidance for sales volume CAGR of ~18%-20% YoY over next three years. Expect EBIDTA margin in the range of ~11-
12% for FY24. Sales value growth will depend on raw material prices. Since raw material prices have now stabilized we expect both sales growth and margins of the
company to improve going forward.
Dollar Industries Target: INR 532 Previous Target: INR 477 (Rating: Retained BUY)
Revenue 4,125 3,404 21.2% 3,282 25.7% 3,745 10.1%
EBITDA 417 303 37.6% 271 53.9% 318 31.1%
Adj PAT 249 173 43.9% 145 71.7% 178 39.9%
Key reasons for deviation: Company's overall performance in Q2FY24 was better than expectation due to higher than expected volume growth and benefit of operating
leverage led to improved margins. In Q2FY24 company reported volume growth of ~39.6% YoY which was much higher than our expectation.
Outlook post results: Management has retained its guidance for a topline growth of ~11%-12% YoY in FY24e with EBIDTA margin in the range of ~11%. New product
launches like Force Nxt Activewear and Women’s Athleisure wear has received good response from the market and management expect to get incremental sales from
these products. We expect company to report sales & volume CAGR of ~13% over FY23-FY26e. We remain positive on the company’s mid-to long term potential
Key observation from the sector: All the three listed innerwear companies except Page Industries reported YoY volume growth.
While demand was good in economy and mid-premium range of products, premium segment continued to remain under pressure. In
Q2FY24 innerwear companies reported expansion in EBIDTA margin due to healthy volume growth, benefit of operating leverage and
stability in raw material prices. We expect performance of the innearwear companies to improve on a YoY basis in H2FY24. Our top
pick in the sector is Dollar Industries and we also like Page Industries at a slightly lower levels than current market prices.

9
Textiles
Nitin Spinners Target: INR 380 Previous Target: INR 380 (Rating: Retained Buy)
Revenue 7,374 5,059 45.8% 6,171 19.5% 6,947 6.2%
EBITDA 820 570 43.8% 761 7.7% 827 -0.8%
Adj PAT 317 207 53.2% 289 9.7% 309 2.5%
Key reasons for deviation: Mostly in-line earnings, with better performance at sales levels as new spinning capcity ramped up swiftly. Subdued demand and weak yarn
prices continue to keep margin under pressure.
Outlook post results: A major portion of new capacity is already commissioned, and rest portion will be on stream by Nov’23. All this will support growth 2HFY24
onwards. With demand recovery, margin should also improve gradually. We assign slightly higher multiple 9.5x PE multiple to Sept’25E earnings (earlier 8.5x) as new
capacity is already commissioned and arrive at a target price Rs380 per share.
Vardhman Textiles INR 378 Previous Target: INR 378 (Rating: Retained Accumulate)
Revenue 23,975 24,696 -2.9% 23,183 3.4% 23,050 4.0%
EBITDA 2,054 3,579 -42.6% 2,154 4.7% 2,190 -6.2%
Adj PAT 1,343 2,049 -34.5% 1,365 -1.6% 1,353 -0.7%
Key reasons for deviation: Mostly in-line earnings, with better performance at sales levels with better-than-expected overall utilizations . Subdued demand and weak yarn
prices continue to keep margin under pressure.
Outlook post results: The management believe current cotton situation in terms of slow arrivals, no possibity of further correction due to MSP, import duty etc can pose
challnages. Despite reaching full utilization at spinning front, they feel the current situation is not favourable and hence, no big capex plan on cards. Considering continued
low yarn prices and subdued margins, we have trimmed down our FY24E and FY25E projections. We have introduced FY26E projection. We have rolled over 10x PE
multiple to Sept’25e earnings and arrive at a target price Rs378 per share, offering 6% upside from current levels.
Key observation from the sector:

1. Continuation of higher utilization in spinning, woven fabric also continue to hold good ground, but overall demand environmen t
remaines subdued with knitting and denim segments are still in slow lane
2. Yarn prices under check with decline in cotton prices as well as higher supplies
3. Cotton prices stablized at lower level, international cotton prices also corrected recently and hence currently we have parity
4. Currently slow arrivals of new cotton crop, there is no consensus of overall crop size exactly what we have witnessed during last
season. As cotton prices are near to MSP level and hence further correction is not expected. Better margins going forward
possible with demand recovery only.
5. As loads of inventory corrections happened in the system recently, hence we can expect better export demand going forward
6. Demand from domestic market is expected to get better with festivals. Woven fabric business is doing well while Knitted fabric is
still under pressure.
7. The demand situation in the US and the UK is now stable but Europe is still subdued and yet to recover towards its normal levels.

10
Building Materials
HIL Target: INR 3,153 Previous Target: INR 3,459 (Rating: Retained BUY)
Revenue 7,232 7,639 -5.3% 10,155 -28.8% 8,427 -14.2%
EBITDA 30 120 -75.0% 872 -96.6% 548 -94.5%
Adj PAT -158 -68 132.4% 401 NA 347 NA
Key reasons for deviation: HIL reported Q2FY24 results were below than our estimates, mainly due to lower margins in the roofing solutions segment and higher than
estimated loss in the flooring solutions segment. In Q2FY24 company reported ~5.3% YoY decline in overall sales mainly due to decline in sales in the flooring solutions
segment. In Q2FY24 revenue declined in Parador largely due to weak market scenario which led to sales volume decline by ~23% YoY.
Outlook post results: We expect performance in Parador segment to improve from Q3FY24 once company starts to get incremental sales from newly entered commercial
segment which accounts for ~40%-60% of the flooring market. We have reduced our profit estimate for FY24e due to weak performance in H1FY24.
Century Plyboards India Target: INR 747 Previous Target: INR 734 (Rating: Retained BUY)
Revenue 9,968 9,086 9.7% 8,910 11.9% 8,651 15.2%
EBITDA 1,443 1,230 17.3% 1,332 8.3% 1,151 25.4%
EBITDA Margin 14.5% 13.5% 94 Bps 14.9% (47)Bps 13.3% 117 Bps
Adj PAT 969 941 3.0% 869 11.5% 832 16.5%
Key reasons for deviation: Company's Q2FY24 results were ahead of our estimates due to higher than estimated volume growth in the plywood segment. In Q2FY24
company reported volume growth of ~10% YoY in the plywood & allied product segment (~55% of Q2FY24 revenue) despite a difficult market situation. EBIDTA margins in
the plywood segment was maintained despite increase in raw material prices which led to better than expected overall performance.
Outlook post results: In H2FY24 management has guided for a revenue growth of ~10% YoY in plywood segment with EBIDTA margin of ~13%-14%, double digit revenue
growth in laminate segment with improvement in margin and in MDF segment raised the revenue growth guidance to ~25% YoY from earlier ~20% YoY with improvement
in margins. Overall management sounded confident for growth in coming quarters. We expect company’s Revenue/EBIDTA/PAT to grow at ~20%/21%/19% over FY23-
FY26E on the back of capacity addition across all the segments.
Greenpanel Industries Target: INR 366 Previous Target: INR 360 (Rating: Retained ACCUMULATE)
Revenue 3,987 4,573 -12.8% 3,862 3.2% 4,390 -9.2%
EBITDA 691 1,167 -40.8% 658 5.0% 746 -7.4%
Adj PAT 410 725 -43.4% 373 9.9% 423 -3.1%
Key reasons for deviation: Greenpanel Q2FY24 reported profits were in-line with our estimates. Company reported YoY decline in volumes in both MDF and plywood
segment in Q2FY24. While volume decline in the MDF segment of ~2% YoY was in-line with our expectation, decline in the plywood volumes was higher at ~19.6% YoY.
Outlook post results: Management has reduced its guidance for volume growth in the MDF segment to now ~3-5% YoY from earlier ~12-15% YoY with EBIDTA margin in
range of ~22%-23% (earlier ~23%-25%) for FY24. Expect flat sales volumes in plywood segment from earlier guidance of ~10% YoY volume growth in in FY24. We expect
company to get traction from the newly launched lower priced commercial grade MDF for OEM segment to start from Q3FY24 onwards. We have assumed volume
growth of ~1% YoY in MDF segment for FY24e.
Greenply Industries Target: INR 183 Previous Target: INR 182 (Rating: Retained ACCUMULATE)
Revenue 6,077 4,947 22.8% 4,761 27.6% 4,751 27.9%
EBITDA 513 489 4.9% 298 72.1% 270 90.0%
Adj PAT 139 236 -41.1% 8 1637.5% 5 2680.0%
Key reasons for deviation: Greenply overall performance in Q2FY24 results were ahead of our estimates. Company reported volume growth of ~11% YoY in plywood
segment which was much higher than our estimates and lower than expected loss in the MDF segment which led to better than expected performance.
Outlook post results: Management has maintained a positive outlook on the plywood industry driven by on-going recovery in real estate sector & has retained its earlier
guidance of ~8-10% YoY volume growth in the plywood business with improvement in margins & MDF sales volume of ~1 lakh cbm for FY24. We expect Sales/EBIDTA/ Adj
PAT CAGR of ~14%/19%/19% over FY23-FY26e driven volume CAGR of ~7% in plywood business and further ramp-up of MDF plant.

11
Greenlam Industries Target: INR 575 Previous Target: INR 558 (Rating: Retained BUY)
Revenue 6,036 5,180 16.5% 5,152 17.2% 5,698 5.9%
EBITDA 756 537 40.8% 644 17.4% 712 6.2%
Adj PAT 415 292 42.1% 329 26.1% 364 14.0%
Key reasons for deviation: Greenlam reported results for Q2FY24 were ahead of our estimates led by a higher than our estimated volume growth in the laminate
segment. In Q2FY24 company reported volume growth of ~16% YoY in laminate segment which was higher than our expectation. Veener & allied segment (~9.5% share)
reported ~23% YoY growth in revenue with lower operating loss also led to better performance.
Outlook post results: Management has guided for a topline growth of ~20% YoY for FY24e. Also sounded positive to maintain the current level of gross margins in a stable
raw material scenario with improved product mix. We expect growth momentum to continue over FY23-FY26e led by commercialisation of new capacities in plywood,
laminate & particle board.
Key observation from the sector: Companies under our coverage in the wood panel sector have reported better than expected
volume growth YoY in Q2FY24 in segments of plywood and laminate. Margins in the laminate segment was supported by lower
chemical prices, while timber prices continue to remain at elevated levels for which plywood companies have taken price incre ase in
Q2FY24 to partly pass on higher timber prices. We expect demand environment to be stable in H2FY24 across all the segments of
wood panel industry led by on-going recovery in the real estate sector and consumer shift towards branded products. We expect
pricing scenario to also remain stable in H2FY24 in all the segments. Our top picks in the sector are Greenlam Ind & Century Ply.

12
Mid/Small Caps
TCI Express Ltd Target: INR 1,557 Previous Target: INR 1,620 (Rating: Retained ACCUMULATE)
Revenue 3,200 3,099 3.3% 3,049 5.0% 3,347 -4.4%
EBITDA 505 515 -1.9% 464 8.8% 536 -5.8%
Adj PAT 356 378 -5.8% 323 10.2% 375 -5.1%
Key reasons for deviation: Company reported slightly lower than expected performance in Q2FY24. Company reported revenue growth of just ~3% YoY (led by volume
growth of ~2% YoY). Volume growth was impacted due to a delay in festive season this year as compared to last year. We had expected volume growth of ~6%-7% YoY.
Lower volume growth led to lower EBIDTA and PAT.
Outlook post results: Management expects performance in H2FY24 to be better compared to H1FY24. We have assumed a volume growth of ~4.5% and ~10% YoY in
FY24e and FY25e respectively. We expect company to report volume CAGR of ~8% over FY23-FY26e which will be backed by growth from existing customers, new
customers, new services, branch expansion and benefits from automisation of sorting center.
Huhtamaki India Target: INR 274 Previous Target: INR 259 (Rating: Retained REDUCE)
Particulars (Rs mn) Q3CY23 Q3CY22 YoY (%) Q2CY23 QoQ (%) Q3CY24E Deviation
Revenue 6,625 7,690 -13.9% 6,217 6.6% 6,150 7.7%
EBITDA 458 230 99.3% 400 14.5% 381 20.1%
Adj PAT 323 0 80575.0% 145 123.2% 159 103.0%
Key reasons for deviation: EBITDA miss was largely because of higher than anticipated decline in raw materials like PET films & BOPP etc. Lower than anticipated interest
cost & tax credit benefit led to sharp miss on PAT.
Outlook post results: The new brand Bueloop is commanding better margins and should materially shift the value added segments going ahead to around ~25% in next 2-
3 years. However, recent run up in stock price left no room for the upside, hence we maintain our REDUCE rating on the stock.

13
Disclaimer
Analyst Certification:
We (Awanish Chandra, Saurabh Ginodia, Amit Hiranandani, Aditya Khetan & Dhara Patwa), the Research Analyst(s) of SMIFS
Limited (in short “SMIFS / the Company”), authors and the names subscribed to this Research Report, hereby certify that all of
the views expressed in this Research Report accurately reflect our views about the subject issuer(s) or securities and
distributed as per SEBI (Research Analysts) Regulations 2014. We also certify that no part of our compensation was, is, or will
be directly or indirectly related to the specific recommendation(s) or view(s) in this Research Report. It is also confirmed that
We/I, the above mentioned Research Analyst(s) of this Research Report have not received any compensation from the subject
companies mentioned in the Research Report in the preceding twelve months and do not serve as an officer, director or
employee of the subject companies mentioned in the Research Report.
Terms & Conditions and Other Disclosures:
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performance. Investors are advised to see Risk Disclosure Document

14
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SMIFS or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of
the Company mentioned in the Research Report as of the last day of the month preceding the publication of the Research
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SMIFS encourages independence in Research Report preparation and strives to minimize conflict in preparation of Research
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of interest at the time of publication of this Research Report or at the time of the Public Appearance, if any.
15
SMIFS or its associates might have managed or co-managed public offering of securities for the subject company or might have
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SMIFS or its associates might have received any compensation from the companies mentioned in the Research Report during
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SMIFS or its associates might have received any compensation for products or services other than investment banking or
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www.mcxindia.com and/or www.icex.com.
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This Research Report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident
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investors. Persons in whose possession this document may come are required to inform themselves of and to observe such
restriction.

16
Specific Disclosures
 SMIFS, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have
equity holdings in the subject company.
 SMIFS, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the
subject company.
 SMIFS, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in
the past 12 months.
 SMIFS, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of
publication of research report.
 Research Analyst has not served as director/officer/employee in the subject company
 SMIFS has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months.
 SMIFS has not received compensation for investment banking/ merchant banking/brokerage services from the subject
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 SMIFS has not received any compensation or other benefits from third party in connection with the research report.
 SMIFS has not engaged in market making activity for the subject company
Analyst holding in stock: NO
Key to SMIFS Investment Rankings
Buy: Return >15%, Accumulate: Return between 5% to 15%, Reduce: Return between -5% to +5% , Sell: Return < -5%
Contact us:
SMIFS Limited. (https://www.smifs.com/)
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Sudipto Datta
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Contact No: (D) +91 33 6634 5408, (B) +91 33 4011 5400
Email Id: smifs.institutional@smifs.com

17

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INSTITUTIONAL RESEARCH

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SMIFS Research is also available on Bloomberg

Revenue 11,337 10,811 4.9% 10,444 8.6% 11,028 2.8%

EBITDA 1,244 1,172 6.1% 1,130 10.1% 1,208 3.0%

EBITDA Margin 11.0% 10.8% 20 bps 10.8% 20 bps 11.0% -

Adj PAT 524 546 -4.0% 476 10.1% 520 0.8%

Key reasons for deviation: Broadly, numbers matched our estimates.