India: Asian Paints, Bajaj Finance Ltd, Ceat Ltd, Bajaj Auto Ltd, Hindustan Unilever, Mastek Ltd, PNB Housing Finance Ltd, Cyient Ltd and more

• Strong volume growth in Tier 1/2 locations aided revenue surprise, while RM inflation hurt profitability in Q3.
• Impact of price hikes and demand revival in Tier 3/4 locations could be the possible catalysts to monitor going into Q4 
• Valuations apart,  Asian Paints (APNT IN) market share gaining ability, strategic positioning and possibility of revenue surprise suggest the trade is best BULLISH and not BEARISH on APNT.

• Bajaj Finance Ltd (BAF IN) reported record quarterly profit of INR 2,125cr on the back of strong growth in AUM and improving asset quality.
• BAF has launched its Phase 1 digital transformation. This quarter, it shared detailed updates around it. It is now working on year-long step-wise Phase 2 launch.
• With liquidity buffer normalizing, asset quality improving, and customer acquisition accelerating led by digital initiatives, we believe BAF is at an interesting inflection point.

CEAT’s revenue grew ~9% YoY (-2% QoQ) to INR24.1b, but EBITDA fell 59% YoY (39% QoQ) in 3QFY22 to INR1.3b (INR2.1b est.). It incurred a first quarterly loss in a decade at INR148m (v/s PAT of INR1.4b in 3QFY21). Its 9MFY22 revenue grew 27% YoY but EBITDA/PAT declined 28%/83.5% YoY. Volumes fell 5.5% YoY (3% QoQ), impacted by a decline in replacement (14% YoY) and OEM (7% YoY) but offset by strong exports (+27% YoY).

Bajaj Auto (BJAUT)’s 3QFY22 beat was driven by lower RM cost pressures and favorable Fx. While exports remained robust and domestic 3W continued to recover, domestic 2Ws are yet to see recovery. In EVs, BJAUT is focusing on aggressively rolling out Chetak after ironing out supply chain issues. The e-3W launch is planned for FY23E. While we maintain our EPS estimates, we cut our P/E multiple to 16x (v/s 18x earlier) to account for hyper-competition in e-2Ws and the EV threat to…

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

NII fell 19% YoY and 11% QoQ to INR4.15b (20% below expectation). Provisions at INR1.3b were below our estimate of INR2.4b. Disbursements declined ~5% QoQ to INR28.3b. Accordingly, AUM decreased 5% QoQ and 14% YoY to ~INR665b. GNPA and NNPA rose ~170bp and 155bp QoQ to 7.6% and 4.9% (as a percentage of loans), respectively, with Stage 3 PCR declining 760bp to 36%. ECL/EAD also declined ~40bp sequentially to 4.4%.

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.

Cyient (CYL)’s 3QFY22 revenue grew 5.2% QoQ in USD terms, above our estimate of 3.6% QoQ growth, led by beat on both Services (+4.4% QoQ CC) and DLM (+12.8% QoQ USD). Services growth was driven by Portfolio (10.0% QoQ), Aerospace (3.9% QoQ), and Communication (3.5% QoQ), while Rail Transportation (-9.5% QoQ) was weak. The 3Q EBIT margin saw a minor 14bps QoQ drop to 13.9% (above expectation), with improvement in Services (+14bp QoQ), compensated by weaker margins in DLM (-80bps QoQ).