In today’s briefing:
- Tata Motors – Earnings Flash – Q4 FY 2021-22 Results – Lucror Analytics
- Poonawalla Fincorp – Execution & Asset Quality Improve; Upgrade to Buy
- Bharat Forge – Strong All-Round Performance Drives Beat
- Bharat Forge (Initiating Coverage): Multiple Growth Drivers in Place. BUY
- Result Update – Bharat Forge
- Eris Lifesciences – Niche Launches to Aid Growth over the Medium Term
- GSK Pharma – Muted 4QFY22; Focus Remains on Key Brands to Revitalize Growth
- Kalpataru Power – All Eyes on Merger
- 4QFY22 Result Update – Triveni Turbine
- Affle India: Seasonally Weak Quarter; Outlook Remains Healthy
Tata Motors – Earnings Flash – Q4 FY 2021-22 Results – Lucror Analytics
Tata Motors’ Q4 and FY 2021-22 results were better than expected. The company delivered lower than estimated losses and q-o-q improvement in cash flows. That said, the financial risk profile deteriorated significantly due to decreased earnings, albeit partly cushioned by lower debt (driven by cash release from working capital). Liquidity remains sound.
We expect the operating environment to remain difficult in and perhaps even beyond FY 2022-23. We derive comfort from the increasing order book, even though it currently only accounts for c. 50% of full-year deliveries and is hence insufficient for firm revenue visibility. That said, the expanding order book indicates that demand for Jaguar Land Rover exceeds the company’s ability to deliver.
Poonawalla Fincorp – Execution & Asset Quality Improve; Upgrade to Buy
- Organic disbursements at Rs22bn and inorganic disbursements stood at Rs11.4bn.
- March’22 disbursement of pre-owned cars stood at Rs1.65bn (entered leadership position); LTP March’22 disbursements stood at Rs1bn (entered leadership position) and SME LAP March’22 disbursement stood at Rs1bn.
- Added digital consumption loan product to the retail product portfolio through the partnership mode.
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Bharat Forge – Strong All-Round Performance Drives Beat
- Core businesses to see sustained recovery in FY23; geographical expansion on the cards
- Non-auto business grows both in the domestic and export markets
- Highlights from the management interaction – In FY22, the Indian operations have received new orders of ~INR10b p.a. and the US operations have won new orders worth USD150m p.a.
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Bharat Forge (Initiating Coverage): Multiple Growth Drivers in Place. BUY
- Domestic business sees strong growth momentum in key segments
- New order wins to drive strong export growth – BHFC’s strong export momentum is likely to continue over FY22-24E, (1) strong demand in CV segment, both in the US and Europe, which would be visible in BHFC numbers as the chip shortage impact gradually wanes away in the coming quarters; (2) new order wins in PVs (management has guided for 30% growth in FY23E); (3) huge opportunities in renewable business globally in multiple sectors and stable demand from oil and gas segment.
- Subsidiary business performance likely to improve further – Post the restructuring of overseas subsidiaries, its margin has improved to 10% in FY22, from 5% in FY21.
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Result Update – Bharat Forge
- What we like? 1) In FY22, the Indian operations secured new orders worth ~Rs10bn across automotive and industrial applications.
- EBITDA above estimates: Revenue grew by 28% yoy to Rs16.7bn (est.: Rs15bn), above estimates due to higher sales in the domestic industrials and overseas auto segments.
- Maintain Buy with a TP of Rs810, based on 24x P/E for the standalone business on Jun’24E EPS.
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Eris Lifesciences – Niche Launches to Aid Growth over the Medium Term
- Promising start for Drolute and Xsulin – The Dydrogesterone market is at an interesting phase, with an improvement in demand due to better access, affordability, and technical superiority over Progesterone.
- Favorable demand-supply and marketing efforts to drive ‘Drolute’ sales for ERIS
- Well-positioned to gain market share in the Insulin market – ERIS has expanded its Anti-Diabetic offering, with the recent launch of human/premix Insulin
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GSK Pharma – Muted 4QFY22; Focus Remains on Key Brands to Revitalize Growth
- Slower offtake witnessed in the Vaccine segment – GLXO delivered a lower-than-expected performance in 4QFY22. Subdued YoY growth in sales and higher raw material cost affected profitability.
- One-off tax provision leads to a quarterly loss – Revenue was up 9% YoY to INR8.1b (est. of INR9.2b).
- Key takeaways – Secondary sales data from AIOCD indicates that Pain therapy/Anti-Infective/ Dermatology (~12%/~25%/~28% of overall sales) saw a growth of ~39%/ 21%/5% YoY in 4QFY22, driving the outperformance against IPM.
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Kalpataru Power – All Eyes on Merger
- KPTL results highlights: A lower order book and delays in dispatch led to an 8% revenue decline in FY22, with a margin decline of ~130bps.
- JMC Projects results highlights: JMC Projects delivered 45% revenue growth on the back of a very strong order book (Book-to-bill of ~4x), better than management’s guidance of 20% growth.
- Large projects: KPTL has been bidding for large projects in the recent past and recently bagged a large HVDC order worth Rs32bn.
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4QFY22 Result Update – Triveni Turbine
- Domestic market update: In FY22, the domestic market under 30MW is estimated to have grown by 71% YoY in MW terms.
- Exports update: The international market under 30MW is estimated to have declined by 24% YoY in FY22 in MW terms.
- mpact of Russia-Ukraine conflict: TTL has reduced orderbook by Rs400mn due to the Russia-Ukraine conflict as it took out certain orders from steel mills in Ukraine due to lack of visibility.
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Affle India: Seasonally Weak Quarter; Outlook Remains Healthy
- Affle Ltd. (Affle) reported a strong growth backed by robust device addition. The company’s Q4FY21 revenue stood at Rs 315 Cr, decline 7.2% QoQ and grew 123% YoY due to seasonally weak demand during the quarter.
- Its Operating Margins decline by 130bps QoQ to 18.6% (in line with the management expectations) due higher inventory and data cost
- We recommend a BUY on the stock and assign a 32x P/E multiple to its FY24E earnings of Rs 35.94/share which gives a TP of Rs 1,140/share, implying an upside potential of 18% from CMP.
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