External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

External broker reports(aggregated public sources)

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Thematic (Sector/Industry)

<ul><li>The auto sector has outperformed the Nifty Index by about 14% over the last six months on the back of the expectation of rural revival and continued margin benefit from weak input costs</li><li>In this scenario, given valuations are no longer in a comfortable zone, we believe companies with a strong product pipeline or healthy order backlog would be able to outperform the market in the coming quarters.</li><li>Our top picks for the sector are Maruti Suzuki, Mahindra &amp; Mahindra and TVS Motors. In auto ancillaries, our top pick is Bharat Forge.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The auto sector has outperformed the Nifty Index by about 14% over the last six months on the back of the expectation of rural revival and continued margin benefit from weak input costsIn this scenario, given valuations are no longer in a comfortable zone, we believe companies with a strong product pipeline or healthy order backlog would be able to outperform the market in the coming quarters.Our top picks for the sector are Maruti Suzuki, Mahindra &amp; Mahindra and TVS Motors. In auto ancillaries, our top pick is Bharat Forge.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Auto Preview Q1FY24 - Growth Tapers but Margins Will Remain Strong

Equity Bottom-Up

<ul><li>Investor concerns around a slowdown in US Class8 in CY24 to derail BHFC’s growth momentum seem overdone, given that the company has multiple growth drivers to offset this slowdown, which include (1) new defence orders which are likely to see this segment revenue ramp up to INR 17bn by FY25E from INR 3.5bn in FY23, (2) strong order backlog in aerospace which would help boost revenues to INR 5bn from INR 1.7bn over next 4 years; (3) steady growth expected in PVs and from industrial exports (4) huge ramp-up potential at JS-Auto Cast, given its capacity is expected to increase by 2x and there is huge demand for AL castings, both in India and abroad</li><li>Also, overseas subs would cease to be a drag on its consolidated performance as it ramps up the new Al forgings facilities in the US and Europe, which would in turn help recover their margins back to 10% by FY25E.</li><li>Management has set targets for FY30, which include: 1) revenue growth of 12-15% CAGR 2) sustainable consolidated EBIDTA margin above 20% 3) consolidated RoCE at 25%.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Investor concerns around a slowdown in US Class8 in CY24 to derail BHFC’s growth momentum seem overdone, given that the company has multiple growth drivers to offset this slowdown, which include (1) new defence orders which are likely to see this segment revenue ramp up to INR 17bn by FY25E from INR 3.5bn in FY23, (2) strong order backlog in aerospace which would help boost revenues to INR 5bn from INR 1.7bn over next 4 years; (3) steady growth expected in PVs and from industrial exports (4) huge ramp-up potential at JS-Auto Cast, given its capacity is expected to increase by 2x and there is huge demand for AL castings, both in India and abroadAlso, overseas subs would cease to be a drag on its consolidated performance as it ramps up the new Al forgings facilities in the US and Europe, which would in turn help recover their margins back to 10% by FY25E.Management has set targets for FY30, which include: 1) revenue growth of 12-15% CAGR 2) sustainable consolidated EBIDTA margin above 20% 3) consolidated RoCE at 25%.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bharat Forge: Diversifying Away from Its Cyclicality. Maintain BUY

<ul><li>Britannia Industries: Britannia’s Q4FY23 net revenue grew by 11% YoY vs our expectation of 14%</li><li>Volume growth was c.3% (four-year CAGR at 4%)</li><li>BRIT continued to strengthen its market leadership, led by (1) distribution and marketing initiatives (2) portfolio innovation and (3) cost efficiencies</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Britannia Industries: Britannia’s Q4FY23 net revenue grew by 11% YoY vs our expectation of 14%Volume growth was c.3% (four-year CAGR at 4%)BRIT continued to strengthen its market leadership, led by (1) distribution and marketing initiatives (2) portfolio innovation and (3) cost efficienciesContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Britannia Industries, ABB India, Marico, Bharat Forge, DCB Bank

<ul><li>BFSI Strong credit growth reported by banks while deposit growth remained a challenge</li><li>Asset quality continued to improve and NIM expanded resulting into strong earnings growth</li><li>NBFCs have also shown healthy loan growth with improved asset quality</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

BFSI Strong credit growth reported by banks while deposit growth remained a challengeAsset quality continued to improve and NIM expanded resulting into strong earnings growthNBFCs have also shown healthy loan growth with improved asset qualityContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Quarterly tracker (Q3FY23): Commodity pressure easing, margin expansion on the cards

<ul><li>Q3FY23 earnings season saw an overall in-line performance, with wide divergences across sectors and companies</li><li>Aggregate revenue/PAT grew by 19%/6% YoY across the HSIE coverage universe (~208 stocks), their three-year CAGR being 15%/15%</li><li>Our coverage universe saw strong YoY growth in auto, lending financials, capital goods, staples and power sectors</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Q3FY23 earnings season saw an overall in-line performance, with wide divergences across sectors and companiesAggregate revenue/PAT grew by 19%/6% YoY across the HSIE coverage universe (~208 stocks), their three-year CAGR being 15%/15%Our coverage universe saw strong YoY growth in auto, lending financials, capital goods, staples and power sectorsContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

India Equity Strategy: Commodity pressure easing, margin expansion on the cards

India

Bharat Forge Limited manufactures steel forgings and machined components for the automotive, diesel engine, railway, earthmoving, cement, sugar, steel, coal, ship building and oilfield industries. The Company specializes in Closed Die as well as Open Die Forgings.

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Bharat Forge (BHFC IN)

Auto Preview Q1FY24 - Growth Tapers but Margins Will Remain Strong

The auto sector has outperformed the Nifty Index by about 14% over the last six months on the back of the expectation of rural revival and...

HDFC Securities

Bharat Forge: Diversifying Away from Its Cyclicality. Maintain BUY

Management has set targets for FY30, which include: 1) revenue growth of 12-15% CAGR 2) sustainable consolidated EBIDTA margin above 20% 3)...

HDFC Securities

HSIE Results Daily: Britannia Industries, ABB India, Marico, Bharat Forge, DCB Bank

Britannia Industries: Britannia’s Q4FY23 net revenue grew by 11% YoY vs our expectation of 14%. Volume growth was c.3% (four-year CAGR at 4%)

HDFC Securities

Quarterly tracker (Q3FY23): Commodity pressure easing, margin expansion on the cards

BFSI Strong credit growth reported by banks while deposit growth remained a challenge. Asset quality continued to improve and NIM expanded...

HDFC Securities

India Equity Strategy: Commodity pressure easing, margin expansion on the cards

Aggregate revenue/PAT grew by 19%/6% YoY across the HSIE coverage universe (~208 stocks), their three-year CAGR being 15%/15%

HDFC Securities

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