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HDFC Securities
Mahindra & Mahindra Financial Services: MMFS reported a mixed quarter with steady asset quality and healthy loan growth (+25% YoY), offset by sustained pressure on NIMs (~6.6%) and subdued disbursem*nts (+7% YoY). Credit costs normalised in Q3 to ~1.5% and remain on track at ~1.5-1.7% in FY24, although the volatility in credit costs remains a concern. MMFS remains focused on building customer (greater affluence) and product diversification (SME, etc.), along with forging partnerships to drive fee income. However, the rising cost of funds amidst a tight liquidity environment and investments in tech and distribution are likely to provide a downside risk to a RoA of ~2.5% by FY25. We reduce our FY24/FY25E earnings estimates by 14%/4% to factor in NIM compression and higher credit costs, maintain ADD with a revised SOTP-based TP of INR290 (standalone at 1.7x Sep-25 ABVPS). Indraprastha Gas: We maintain our BUY recommendation on Indraprastha Gas (IGL) with a target price of INR 490, given (1) strong volume growth of ~11% CAGR over FY24-26E, (2) healthy margins supported by higher allocation of gas from the high-pressure, high-temperature (HPHT) fields to the priority sector, and (3) a strong portfolio of new geographical areas (GAs) ensuring volume growth visibility. Q3FY24 EBITDA/APAT at INR 5.6/3.9bn were up 32/41% YoY respectively but below our estimates, owing to lower-than-expected margins, partially offset by the higher-than-expected volume of 8.5mmscmd (+4% YoY, +2% QoQ). Nuvoco Vistas Corporation: We reiterate a BUY rating for Nuvoco Vistas, maintaining an unchanged TP of INR 515/share (based on 10x its consolidated Mar-26E EBITDA). In...
Buy
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HSIE Results Daily: Reliance Industries, SBI Cards and Payment Services, Indian Hotels, MMFS, IndiaMART InterMESH, Aavas …
HDFC Securities
IndiaMART InterMESH: IndiaMART posted revenue growth of 4.5% QoQ with strong cash collections (+28% YoY). The paid supplier addition was weak (~2K), impacted by a price hike in the entry-level segment and higher churn in the silver monthly bucket (monthly churn at ~7% vs 5% earlier). The management has refrained from giving any guidance for the net paid supplier addition and is working on reducing the churn (the impact of the price hike is for two quarters). The revenue growth is driven by strong collections and an increase in realisations (+3.8% QoQ). The ARPU improvement is led by migration to a higher price/tenure bucket and lower churn in gold and platinum paid suppliers (~50% of paid suppliers and ~75% of revenue and monthly churn is ~1%). Strong cash collections provide growth visibility for FY24E but the margin expansion will be slower than what we anticipated earlier (range of 28-30%) as the investments are ongoing. We maintain our positive view on IndiaMart, based on (1) growth visibility led by strong collections, (2) lower churn in plat/gold client buckets, (3) gradual margin expansion, and (4) an increase in ARPU. We lower our EPS estimate by ~7% for FY25/26E due to slower-than-expected margin expansion. We maintain our BUY rating with a DCF-based TP of INR 3,200 (~44x Sep-25E EPS), supported by revenue/EPS CAGR of 23/30% over FY23-26E. Aavas Financiers: AAVAS's earnings marginally missed our estimates on the back of lower-than-expected loan growth and pressure on yields, reflected in the 30bps compression in spreads sequentially. Business momentum continued to be...
Buy
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HDFC Securities
Mahindra & Mahindra Financial Services: MMFS reported a mixed performance, with strong loan growth and reduction in the stress pool, offset by sharp NIM compression (-60bps QoQ) and higher-than-expected provisions. Loan growth continued to be strong (+28% YoY), driven by healthy disbursals (+28% YoY). Asset quality remained steady in a seasonally weak quarter with a stressed pool (GS-II + GS-III) at 10.7% (FY23: 10.4%), led by improving economic activity. However, credit costs were elevated at 2.7%, due to a revision in the ECL model, as per management. NIMs came off by ~60bps sequentially driven by higher costs of funds and moderation in yields. MMFS remains on course for its FY25 roadmap to build customer (greater affluence) and product diversification, alongside stable asset quality. We tweak our FY24/FY25E estimates for higher loan growth maintain ADD with a revised SOTP-based TP of INR330 (implying standalone entity at 2x Mar-25 ABVPS). JK Lakshmi Cement: We downgrade our rating on JK Lakshmi (JKLC) to ADD from BUY with a lower target price of INR 700/share (7x Mar-25E consolidated EBITDA). While JKLC is yet to see its margin recover, media articles suggest JKLC is in a race for a major inorganic expansion. This, in our view, could potentially spike leverage on books for the next few years (as against its strengthened balance sheet in the past three years) and pull down return ratios. In Q1FY24, JKLC delivered a sharp earnings miss, owing to margin contraction. It delivered subdued 6% YoY volume growth, while unit EBITDA fell INR 75/235 per MT QoQ/YoY...
Buy
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HDFC Securities
Aditya Birla Sun Life AMC: ABSLAMC reported a washout quarter, with 14% sequentially lower core operating profits, driven by heightened yield compression, continued equity market share loss, and elevated marketing spends. While we are constructive on ABSLAMC's strong and diversified distribution network, given rising competitive intensity, we believe yields will plummet faster than AUM growth, posing a high risk to earnings from negative operating leverage. We cut our FY24E/25E earnings by 7.3%/12.5% to factor in the loss of equity market share, sharp yield compression and low visibility on opex rationalisation, and expect 6.4/6.0% revenue/operating profit CAGRs respectively over FY23-25E. We downgrade our rating to ADD with a lower TP of INR355 (implying 14.5x Mar-25E NOPLAT + Mar-24E cash and investments). RBL Bank: RBL Bank (RBK) reported its highest-ever quarterly PAT led by healthy loan growth (+17% YoY) and stronger margins (5%), partly offset by elevated opex. Loan growth witnessed strong traction in retail credit (~54% of loans), led by credit cards/MFI and new segments (such as home loans, and tractors). Management continues to focus on the mobilisation of granular deposits reflecting in sequential improvement in CASA (+6% QoQ), but we watch out for sustained execution, given the tight liquidity environment and aggressive pricing. Management has guided for an aspirational business growth (+20% CAGR over FY23-26E), which we argue is a tall ask. Given RBK is in an investment phase, opex (branches, people, new businesses) and lagged deposit repricing are likely to keep return ratios muted maintain REDUCE with revised TP of INR135 (0.6x Mar-25 ABVPS). Motilal...
Buy
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Growth and asset quality performance continues to be robust; Vision 2025 unfolding well
ICICI Securities Limited
Strong AUM growth and improvement in asset quality continued for Mahindra and Mahindra Financial Services (MMFSL) in Q4FY23. NIMs however declined by 23bps QoQ due to slightly lower yield and higher funding cost.
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HDFC Securities
Birla Corporation: We maintain our BUY rating on Birla Corporation (BCORP), with an unchanged target price of INR 1,400/share (8.5x Mar-25E consolidated EBITDA). We continue to like BCORP for its large retail presence in the lucrative north/central regions and various cost-cutting initiatives. BCORP reported healthy 11/5% volume/NSR growth YoY. However, unit EBITDA fell 43% YoY on elevated fuel prices and operating losses at the Mukutban plant. On QoQ basis, Mukutban losses narrowed and BCORP also benefited from slight fuel cost reduction driving consolidated unit EBITDA recovery by ~INR 135/MT QoQ. We expect margin recovery to gain pace as fuel prices continue to trend down, continued ramp-up of the Mukutban plant and incentive accruals H2FY24E onwards. These along with no major near-term Capex should reduce gearing from FY24 onwards. Mahindra Lifespaces: Mahindra Lifespaces Developers Ltd (MLDL) reported stable presales of INR 4.5bn (+80/+30% YoY/QoQ, a tad below our estimate of INR 5bn), with the volume at 0.61msf (+90/+30% YoY/QoQ) on the back of 1.11msf of launches. 9MFY23 presales stand at INR 14.5bn (FY22 presales were at INR 10.2bn). Within IC&IC, the company leased 24.5acres for INR 690mn (-50%/+2% YoY/QoQ). On the back of strong demand for the projects Eden Kanakpura in Bengaluru and Happinest MWC in Chennai, MLDL took price hikes of 14% and 20% respectively on their new phase launches. In Jan'23, MLDL added INR 5bn of GDV from a society redevelopment project in Santacruz and INR 4bn from land in Hosur road, Bengaluru. With this FYTD23, GDV addition stands at INR 32bn. The BD pipeline...
