In today’s briefing:
- ICICI Bank – Continued Improvement
- Asian Paints: Near Term Volume Sustenance Key Amid RM Inflationary Pressure
- Bajaj Auto: Strong Exports, Premiumisation & EVs to Drive Growth; Outlook Stable
- Asian Paints: Strong Volume Growth Continues
- Mastek Ltd: Deal Wins to Drive Momentum
- VST Industries: Cigarettes Volume Nearly Back to Pre-Covid Levels
- Havells India: Slower Price Hikes Delay Margin Recovery
- Hindustan Unilever: Decelerating Rural Demand A Near Term Concern; Long Term Well Placed
- Biocon: Biosimilar Traction Buoys up Q3, Momentum to Be Key
- ICICI Bank Ltd | Q3FY22 Result Update
ICICI Bank – Continued Improvement
- ICICI reported FY 3Q22 earnings of INR 61.9 bn, increasing INR 6.8 bn (12.4%) linked quarter, driven by net interest and fee improvement and a provision cut;
- Net new NPLs continued to increase 11.4% on an annualized basis at FY 3Q22 versus INR 44.1 bn 43.7% at FY 3Q21; and
- We find that ICICI is short on reserves to the tune of INR 116 bn or just over a half year of ICICI’s core operating result.
Asian Paints: Near Term Volume Sustenance Key Amid RM Inflationary Pressure
- Asian Paints delivered topline for Q3FY22 a shade above our and street estimates
- However, on profitability front it was a mixed bag performacne with Gross Margins continuing to witnesse inflationary headwinds
- We revise our rating to HOLD (BUY earlier) with a revised TP of Rs. 3,200 (Rs. 3,300 earlier) we continue to value the stock at 57x FY24E EPS.
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Bajaj Auto: Strong Exports, Premiumisation & EVs to Drive Growth; Outlook Stable
- Bajaj Auto (BAL) Q3FY22 results stood slightly ahead of our expectations, particularly on the margin front.
- The company reported net revenues of Rs 9,022 Cr (our estimate – Rs 8,928 Cr) v/s Rs 8,910 Cr in Q3FY21, posting a flattish growth YoY
- We maintain our BUY rating on the stock with a revised TP of Rs 4,250/share (Rs 4,500 earlier) (which includes Rs 320/share for the company’s stake in PMAG) as we value the stock at 17x its FY24E EPS.
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Asian Paints: Strong Volume Growth Continues
- Asian Paints (APL) is India’s largest decorative paint company. The company derives ~98% revenue from the paints business
- Strong distribution network of 70,000 dealers, 2x more than the No. 2 player
- We revise our target price to Rs 3870/share and value APL at 66x P/E FY24E EPS
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Mastek Ltd: Deal Wins to Drive Momentum
- Mastek Ltd (Mastek) offers data, apps, cloud services to public & private enterprise in the UK, US, Middle East, Asia Pacific and India
- The company’s recent acquisition of Evosys has enabled Mastek to provide end-to-end solutions and improves margins from ~14% to 21%
- We now assign BUY rating to the stock (from HOLD earlier). We value Mastek at Rs 3,360 i.e. 26x P/E on FY24E EPS
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VST Industries: Cigarettes Volume Nearly Back to Pre-Covid Levels
- VST Industries (VST) is among the oldest cigarette players in India, involved in manufacturing and marketing cigarettes as also trading unmanufactured tobacco
- The company has two cigarettes manufacturing facilities in Hyderabad, AP.
- Target Price and Valuation: We arrive at a revised target price of Rs 3425, valuing the business at 14x FY24 earnings.
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Havells India: Slower Price Hikes Delay Margin Recovery
- Havells India (HIL) is India’s leading electrical appliances & equipment manufacturer with a diversified product portfolio
- In all its business segments, Havells has a strong presence in the organised product category with market share ranging between 6% and 20%
- We value the stock at 53x FY24 EPS and revise the target price to Rs 1515/share
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Hindustan Unilever: Decelerating Rural Demand A Near Term Concern; Long Term Well Placed
- Hindustan Unilever (HUVR IN) performance was in-line with our and street expectations on key performance metrics.
- Reported sales grew by 10.4% yoy at Rs. 13,092Cr with underlying domestic consumer sales growth (USG) of 11% on the back of a 2% UVG (our estimate 2%)
- Maintain BUY with revised TP of Rs. 2,700 (earlier Rs. 2,900) valuing the stock at 56x FY24E EPS. At CMP, risk-reward appears fair from a long-term perspective.
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Biocon: Biosimilar Traction Buoys up Q3, Momentum to Be Key
- Biocon mainly operates in biologics (biosimilars), small molecules (generics), branded formulations and contract research (Syngene)
- Robust biosimilar portfolio with partners like Viatris, Sandoz (for future launches), Adagio among others
- Target Price and Valuation: We value Biocon at Rs 410 on SOTP basis
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ICICI Bank Ltd | Q3FY22 Result Update
Yet another quarter of superior credit growth
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