28 april 2021 hsie results daily hsie results daily

28 April 2021 HSIE Results Daily

HSIE Results Daily

HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters

Contents

Results Review

Bajaj Finance: BAF’s P&L performance was below expectations on account

of higher opex (employee expenses due to collection efforts etc.) and

elevated LLPs (~3.4%) from accelerated write-offs. The company reported

net AUM growth at pre-COVID levels amidst a quarterly customer

acquisition run rate of ~2.2mn, suggesting that BAF is poised to deliver

strong AUM growth going forward. With improving credit quality across

segments (except 2/3 wheelers and B2C loans), the management is upbeat

about portfolio growth driving operating leverage and profitability.

Maintain ADD with revised TP of INR4,928.

Axis Bank: Axis Bank reported an in-line operational performance with

PPOP growth of 17% YoY, steady growth on both sides of balance sheet and

gradual improvement in asset quality. The bank continues to build on its

surplus provisions at ~2% of loans despite evidence of stability in the

stressed pool. Loan growth continues to be driven by focus on high-rated

corporates and mid-corporates on the wholesale side and ETB customers on

the retail front. Conservative provisioning and likely speed bumps from the

second wave of the pandemic are likely to defer credit cost normalisation to

FY23E, despite healthy PCR (~72%). Maintain BUY with revised SOTP-based

TP of INR758.

Maruti Suzuki: Maruti reported a weak 4QFY21 as PAT of INR 11.7bn (-

10% YoY) was affected by a 400bps YoY impact of higher commodity

prices/sharply lower other income. Maruti’s order backlog though remains

healthy at 200k units due to sustained demand for personal mobility. We

believe the OEM will address white spaces in the SUV segment

(management has acknowledged gaps in its product portfolio). We reiterate

BUY with a target price of INR 7,750 (at 27x FY23E EPS). Our estimates are

lowered by ~9% over FY22-23E to factor in the 4QFY21 results.

Britannia Industries: Britannia clocked an in-line revenue while EBITDA

margin was lower than our as well as street’s expectation. Revenue growth

remained moderated in 2HFY21 and clocked 6/8% in 3Q/4QFY21, after

posting 18% in 1HFY21. Domestic volume growth at 8% (negligible price

hike) was much slower than ~17% in 1HFY21. Demand for essentials and in-

home categories remained benign in 2HFY21 as consumer buying saw a

shift from essentials to non-essentials. EBITDA margin expansion of 30bps

YoY saw a sharper moderation after clocking a robust 400bps YoY

expansion in 9MFY21. Commodity inflation and resumption of other

variable costs (particularly marketing spend) impacted margins. EBITDA

grew by 11% (HSIE 25%). Amidst COVID-led localised lockdown, there can

be near-term acceleration in packaged food category but it will be unlike

that in the previous year. We maintain our EPS estimate for FY22/23. High

debt, inter group transactions, and modest FY22 earnings growth will keep

the valuation in check. We value Britannia at 40x P/E on Mar-23 EPS to

derive a target price of INR 3,589. Maintain REDUCE.

HSIE Research Team

[email protected]

Page | 2

HSIE Results Daily

Nippon Life India Asset Management: NAM has been able to stabilize its

market share in the high-margin equity segment over the past two quarters

at 7%. We expect it to focus on improving performance to continue

recouping its lost market share. Additionally, we expect the company to

benefit from increased credibility to raise HNI/institutional capital. Driven

by cost optimization, we expect the company to deliver an FY21-23E

revenue/NOPLAT CAGR of 12.7/17.5%. We maintain our ADD rating on the

stock with a target price of INR360, valuing the stock at 36x Mar-23E

NOPLAT + Mar-22E cash and investments. The stock is currently trading at

FY22E/23E EV/NOPLAT of 39.9/32.8 and P/E of 34.4/28.9x.

Symphony: Symphony clocked an all-round recovery with domestic,

exports and subsidiaries revenues seeing beat in expectation. High trade

inventory impacted domestic revenue during 9MFY21 (down by 50% YoY)

while the strong 28% YoY growth in 4QFY21 (despite a firm base) reflects

positive sentiment of trade partners. RoW revenue grew by 46% YoY, owing

to robust exports (delay in shipment in 3Q) and recovery of CT, Australia

(up 85% YoY). Thereby, consolidated revenue saw robust 36% growth.

Domestic EBIT margin contracted by >650bps YoY, owing to high

commodity inflation and delay in price hike. RoW EBIT margin saw sharp

improvement (18% vs. 2% YoY) due to margin recovery in CT, Australia

(EBITDA margin of 17% vs. -2% YoY). We are encouraged by an all-round

recovery (key rationale for our stock upgrade in Jan-21); however, localised

lockdown has raised concerns on summer-2021 performance for cooling

products. As peak summer season is still left for Symphony, we would await

further clarity on COVID-led restrictions before evaluating the potential

impact on domestic business. With improving operating performance of

subsidiaries, we increase EPS for FY22/FY23 by 5%. We value Symphony at

35x P/E on Jun-23E EPS and derive a TP of Rs 1,250. Maintain ADD.

Gateway Distriparks: Gateway Distriparks (GDL) reported strong 4QFY21

results, with PAT at INR 461mn (+41% QoQ) while EBITDA margin

expanded 90bps QoQ to 27.2% and interest costs reduced to INR 173mn (-

30% YoY). GDL’s share in the NCR region has risen by 11% as CONCOR has

increased prices (due to higher LLF fees). We raise our EBITDA estimates by

~11% over FY22/23E and maintain BUY with an SOTP-based TP of INR 235

(rail business is valued at 10x FY23E EV/EBITDA). We reiterate our

preference for GDL over CONCOR (ADD) as the former will gain market

share due to pricing distortions for the market leader.

Page | 3

HSIE Results Daily

Bajaj Finance

Bold on growth once agains

BAF’s P&L performance was below expectations on account of higher opex

(employee expenses due to collection efforts etc.) and elevated LLPs (~3.4%)

from accelerated write-offs. The company reported net AUM growth at pre-

COVID levels amidst a quarterly customer acquisition run rate of ~2.2mn,

suggesting that BAF is poised to deliver strong AUM growth going forward.

With improving credit quality across segments (except 2/3 wheelers and B2C

loans), the management is upbeat about portfolio growth driving operating

leverage and profitability. Maintain ADD with revised TP of INR4,928.

Muted P&L performance: Bajaj Finance reported muted P&L performance

(PPOP at ~11% below expectations) primarily on account of higher

employee expenses. LLP provisions remained elevated at ~3.4% of AUM as

the company took accelerated write-offs of COVID-related stress of

INR15.3bn bringing its GNPA down to 1.79%. NIM on AUM has begun to

inch up sequentially and is likely to reflate further with the reduction of

surplus liquidity on the balance sheet.

Poised for strong AUM growth: AUM grew sequentially by 6.5% as the

quarterly net AUM addition reached pre-COVID levels, alongside new

customer acquisitions (19% YoY, 3% QoQ) at 2.2mn. With new initiatives

around business transformation and a likely pick-up in economic activity,

the management is upbeat about converging towards its long-term growth

guidance in FY22. The company remains cautious in the Auto (2/3 wheeler)

and Consumer B2C businesses based on portfolio behaviour.

Comfortable buffers to withstand second-wave impact: On the back of the

prudent and accelerated write-offs during the quarter, we believe that BAF's

loan book is poised to see limited incremental markdowns, driving

normalised credit costs. We also expect normalization in opex-to-NIM

metrics on the back of steady-state AUM growth. However, a protracted

lockdown in key states or a nation-wide lockdown poses risks to earnings

estimates. Maintain ADD with revised TP of INR4,928.

Financial summary

(INR bn) 4Q

FY21

4Q

FY20

YoY

(%)

3Q

FY21

QoQ

(%) FY20 FY21P FY22E FY23E

NII 38.4 37.5 2.2 33.6 14.3 135.0 138.9 169.1 211.3

PPOP 30.5 32.3 (5.5) 29.1 5.1 112.5 119.6 146.1 177.2

PAT 13.1 8.2 60.7 11.9 10.5 52.6 44.2 84.9 106.4

EPS (INR) 21.8 13.6 60.3 19.8 10.3 87.7 73.5 141.2 176.8

ROAE (%)

20.2 12.8 20.7 21.3

ROAA (%)

3.65 2.63 4.49 4.63

ABVPS (INR)

523.5 594.8 725.3 888.6

P/ABV (x)

9.33 8.21 6.74 5.50

P/E (x) 55.7 66.5 34.6 27.6

Change in estimates

INR bn FY22E FY23E

Old New Chg Old New Chg

Loan 1,813 1,851 2.12% 2,259 2,304 1.98%

NIM (%) 10.0 10.0 -3 bps 10.2 10.2 -3 bps

NII 168 169 0.80% 208 211 1.75%

PPOP 148 146 -1.34% 177 177 0.35%

PAT 84 85 1.40% 105 106 1.06%

ABVPS (INR) 720 725 0.78% 886 889 0.31%

Source: Company, HSIE Research

BUY

CMP (as on 27 Apr 2021) INR 4,873

Target Price INR 4,928

NIFTY 14,653

KEY

CHANGES OLD NEW

Rating BUY BUY

Price Target INR 4,858 INR 4,928

EPS % FY22E FY23E

0.8% 0.3%

KEY STOCK DATA

Bloomberg code BAF IN

No. of Shares (mn) 603

MCap (INR bn) / ($ mn) 2,937/39,463

6m avg traded value (INR mn) 17,733

52 Week high / low INR 5,922/1,783

STOCK PERFORMANCE (%)

3M 6M 12M

Absolute (%) 0.6 41.1 138.4

Relative (%) (2.6) 20.3 84.2

SHAREHOLDING PATTERN (%)

Dec-20 Mar-21

Promoters 56.2 56.1

FIs & Local MFs 7.7 7.8

FPIs 23.9 24.1

Public & Others 12.2 12.1

Pledged Shares - -

Source : BSE

Pledged shares as % of total shares

Krishnan ASV

[email protected]

+91-22-6171-7328

Deepak Shinde

[email protected]

+91-22-6171-7323

Punit Bahlani

[email protected]

+91-22-6171-7354

Page | 4

HSIE Results Daily

Axis Bank

A good quarter; treading cautiously

Axis Bank reported an in-line operational performance with PPOP growth of

17% YoY, steady growth on both sides of balance sheet and gradual

improvement in asset quality. The bank continues to build on its surplus

provisions at ~2% of loans despite evidence of stability in the stressed pool.

Loan growth continues to be driven by focus on high-rated corporates and

mid-corporates on the wholesale side and ETB customers on the retail front.

Conservative provisioning and likely speed bumps from the second wave of

the pandemic are likely to defer credit cost normalisation to FY23E, despite

healthy PCR (~72%). Maintain BUY with revised SOTP-based TP of INR758.

Good P&L performance with steady balance sheet growth: Axis Bank

delivered a healthy operating performance with 15% YoY fee income

growth, 17% YoY PPoP growth, balanced loan growth (9% YoY) and credit

costs at 1.2% (adjusted for prudent provisioning for CBG portfolio). The

bank continued its focus towards strengthening its granular liability

franchise (average CASA at ~43%) driving down its cost of deposits (3.9%).

Stress pool beginning to stabilize with adequate provisioning: Axis Bank’s

stressed pool (BB & below book) is beginning to exhibit signs of stability at

~2% of loan book, with restructured book at ~0.3% of loans (largely

corporate). Provisioning remains adequate with PCR of 72% and surplus

provisioning at ~2% of loan book. However, retail slippages surprised

negatively (4% annualized) compared to total slippages (3.4% annualized).

Road to normalised credit costs key to re-rating: Axis Bank has been a

laggard in terms of stabilizing its stressed pool and normalization in

provisions compared to its peer, ICICI Bank. With emerging evidence of a

steady stressed pool, we remain watchful of this trend. The stressed pool

normalization, along with conservative provisioning and likely speed

bumps from second wave of pandemic remain the key for normalization of

credit costs and its return to steady-state profitability. Maintain BUY with

revised SOTP-based TP of INR758.

Financial summary

(INR bn) 4Q

FY21

4Q

FY20

YoY

(%)

3Q

FY21

QoQ


NII 75.5 68.1 11.0% 73.7 2.5% 252.1 292.4 332.1 372.8

PPOP 68.6 58.5 17.3% 61.0 12.6% 234.4 257.0 289.9 324.0

PAT 26.8 (13.9) NA 11.2 139.8% 16.3 65.9 126.8 155.4

EPS (INR) 8.7 (4.9) NA 3.6 139.6% 5.8 21.5 41.4 50.7

ROAE (%)

2.1 7.1 11.8 12.9

ROAA (%)

0.19 0.69 1.23 1.37

ABVPS (INR)

268 309 352 399

P/ABV (x)

2.55 2.21 1.93 1.72

P/E (x) 118.6 31.7 16.4 13.5

Change in estimates

INR bn FY22E FY23E

Old New Chg Old New Chg

Loan 6,883 6,956 1.1% 7,891 7,977 1.1%

NIM (%) 3.7 3.7 1 bps 3.8 3.8 3 bps

NII 324.7 332.1 2.3% 366.4 372.8 1.8%

PPOP 283.8 289.9 2.2% 317.3 324.0 2.1%

PAT 121.1 126.8 4.7% 152.9 155.4 1.7%

ABVPS (INR) 348 352 1.2% 396 399 0.6%


BUY

CMP (as on 27 Apr 2021) INR 700

Target Price INR 758

NIFTY 14,653

KEY

CHANGES OLD NEW

Rating BUY BUY

Price Target INR 751 INR 758

EPS % FY22E FY23E

4.7% 1.7%

KEY STOCK DATA

Bloomberg code AXSB IN

No. of Shares (mn) 3,064

MCap (INR bn) / ($ mn) 2,143/28,801


52 Week high / low INR 800/333


3M 6M 12M

Absolute (%) 10.7 37.7 63.7

Relative (%) 7.4 16.9 9.5


Dec-20 Mar-21

Promoters 13.9 13.6


FPIs 55.3 55.7


Pledged Shares - -

Source : BSE


Krishnan ASV

[email protected]

+91-22-6171-7328

Deepak Shinde

[email protected]

+91-22-6171-7323

Punit Bahlani

[email protected]

+91-22-6171-7354

Page | 5

HSIE Results Daily

Maruti Suzuki

Margins disappoint; order backlog remains healthy

Maruti reported a weak 4QFY21 as PAT of INR 11.7bn (-10% YoY) was

affected by a 400bps YoY impact of higher commodity prices/sharply lower

other income. Maruti’s order backlog though remains healthy at 200k units

due to sustained demand for personal mobility. We believe the OEM will

address white spaces in the SUV segment (management has acknowledged

gaps in its product portfolio). We reiterate BUY with a target price of INR

7,750 (at 27x FY23E EPS). Our estimates are lowered by ~9% over FY22-23E to

factor in the 4QFY21 results.

4QFY21 financials: Volumes at 492k units were flattish QoQ as demand

trends remained encouraging. Revenue grew 32/2% YoY/QoQ to INR 240bn

as realisations improved 3% YoY/QoQ. EBITDA margin was below

estimates, at 8.3% (-20/-120bps YoY/QoQ), owing to commodity cost

pressure (RM ratio was up 360/135bps YoY/QoQ). PAT declined 10% QoQ,

40% YoY, due to cost pressures and lower other income (-90% YoY) on

account of mark-to-market losses.

Key takeaways: (1) Healthy order backlog: Maruti currently has pending

booking of 200k units. We believe that demand will benefit from the

requirement for personal mobility. The company has a limited network

stock of 85k units currently. (2) Retail market share has sustained at ~50%:

The OEM’s retail share has sustained due to improved sales of CNG vehicles

as well as dominant share in cars (above 60%). (3) SUV launches ahead? The

management acknowledged the need to ramp up its presence in this

segment – especially the mid-sized SUVs – as the response to the S-Cross has

been below par. Maruti is working on new launches to address the gaps. (4)

Hybrids/EVs: The OEM has a lithium-ion battery plant in Gujarat and is

currently testing larger-sized battery packs. However, timelines on BEV

launches are awaited. (5) Commodities inflation: The impact of the sharp

increase in metal prices was felt in 4QFY21, with a 400bps YoY and 300bps

QoQ impact on margins. The OEM is adopting cost reduction initiatives

such as lowering the usage of precious metals. Further, to offset the higher

cost impact, Maruti has taken a price hike in Apr-21 of 1.25% and 0.8% was

taken in Jan-21, which will partially alleviate margin pressures.

Financial Summary YE March

(INR mn)

4Q

FY21

4Q

FY20

YoY

(%)

3Q

FY21

QoQ

(%) FY19 FY20 FY21 FY22E FY23E

Net Sales 240,237 181,987 32 234,578 2 860,203 756,106 703,325 852,497 994,080

EBITDA 19,911 15,464 29 22,261 (11) 109,993 73,026 53,453 82,351 107,659

APAT 11,661 12,917 (10) 19,414 (40) 75,006 56,506 42,297 66,300 86,808

Adj. EPS (Rs) 38.6 42.8 (10) 64.3 (40) 248.4 187.1 140.1 219.5 287.4

APAT Gr (%)

(2.9) (24.7) (25.1) 56.7 30.9

P/E (x)

26.4 35.1 46.8 29.9 22.8

RoE (%)

17.1 11.9 8.5 12.4 14.7


Change in Estimates

INR mn New Old Change (%)

FY22E FY23E FY22E FY23E FY22E FY23E

Net Sales 852,497 994,080 841,582 981,151 1 1

EBITDA 82,351 107,659 86,346 112,146 (5) (4)

EBITDA margin (%) 9.7 10.8 10.3 11.4 -60 bps -60 bps

Adj PAT 66,300 86,808 73,989 94,376 (10) (8)

Adj EPS (in Rs) 219.5 287.4 245.0 312.5 (10) (8)


BUY

CMP (as on 27 April 2021) INR 6,569


NIFTY 14,653

KEY

CHANGES OLD NEW

Rating BUY BUY


EPS % FY22E FY23E

-10% -8%

KEY STOCK DATA

Bloomberg code MSIL IN


MCap (INR bn) / ($ mn) 1,984/26,665




3M 6M 12M

Absolute (%) (16.5) (8.2) 29.9

Relative (%) (19.8) (29.0) (24.3)


Dec-20 Mar-21

Promoters 56.4 56.4


FPIs 23.1 23.1


Pledged Shares 0.0 0.0

Source : BSE

Aditya Makharia

[email protected]

+91-22-6171-7316

Mansi Lall

[email protected]

+91-22-6171-7357

Page | 6

HSIE Results Daily

Britannia Industries Uninspiring show Britannia clocked an in-line revenue while EBITDA margin was lower than

our as well as street’s expectation. Revenue growth remained moderated in

2HFY21 and clocked 6/8% in 3Q/4QFY21, after posting 18% in 1HFY21.

Domestic volume growth at 8% (negligible price hike) was much slower than

~17% in 1HFY21. Demand for essentials and in-home categories remained

benign in 2HFY21 as consumer buying saw a shift from essentials to non-

essentials. EBITDA margin expansion of 30bps YoY saw a sharper moderation

after clocking a robust 400bps YoY expansion in 9MFY21. Commodity

inflation and resumption of other variable costs (particularly marketing

spend) impacted margins. EBITDA grew by 11% (HSIE 25%). Amidst COVID-

led localised lockdown, there can be near-term acceleration in packaged food

category but it will be unlike that in the previous year. We maintain our EPS

estimate for FY22/23. High debt, inter group transactions, and modest FY22

earnings growth will keep the valuation in check. We value Britannia at 40x

P/E on Mar-23 EPS to derive a target price of INR 3,589. Maintain REDUCE.

In-line revenue: Consolidated revenue grew by 8% YoY (+2% in 4QFY20

and +6% in 3QFY21), vs. HSIE 8% growth. Standalone revenue clocked 9%

YoY growth (flat in 4QFY20 and +5% in 3QFY21). Volume growth was close

to 8% YoY (flat in 4QFY20 and 4% in 3QFY21). General trade continued to

grow well, driven by rural and recovery in urban. E-commerce channel saw

4x jump in FY21. Britannia continued to focus on expanding its distribution

reach, especially in rural areas, and resumed investing in its brands.

Miss in margin, company remains watchful for FY22: GM saw sharp

moderation and was up by only 80bps YoY to 40.5% (-152bps in 4QFY20 and

+224bps in 3QFY21) vs. HSIE +333bps YoY. RM inflation was at 3% YoY

(high palm oil) and delayed price hike impacted margin. Employee cost was

up by 3% and other expenses were up 13% YoY, owing to increase in A&P

spends. EBITDA margin expanded by a slow 30bps YoY to 16.1% (+24bps in

4QFY20 and +248bps in 3QFY21) vs. expectation of +230bps YoY expansion.

EBITDA grew by a slow 11% YoY. With sharp EBITDA margin expansion in

9MFY21, we expect margin pressure in FY22 (several costs will be restored).

Call and BS/CF takeaways: (1) Domestic revenue and volume growth are

similar, while a price hike was taken at the end of the quarter; (2) company

is focusing on distribution expansion (particularly in rural); (3) commodity

inflation was at 3% (INR 1bn QoQ incremental raw material pressure); (4)

company launched a new marketing campaign for Milk Bikis to make it a

pan-India brand (as of now, it is south-focused); (5) Milk+Glucose is a INR

73bn market where Britannia has a mere 4% share; (6) FY21 EBITDA margin

of 19% will be difficult to sustain in FY22, while it will be higher than that in

FY20 (16%); (7) lockdown has accelerated demand for packaged food but the

trend could be unlike last year’s; (8) Group level ICDs are at a similar range

as last year’s; (9) FCF was at INR16bn vs. INR 12bn in FY20.

Quarterly/Annual Financial summary YE Mar (INR

mn)

4Q

FY21

4Q

FY20

YoY

(%)

3Q

FY21

QoQ


Net Sales 31,307 28,677 9.2 31,656 (1.1) 115,996 131,361 142,445 155,630

EBITDA 5,054 4,543 11.2 6,115 (17.4) 18,432 25,093 26,075 28,468

APAT 3,601 3,724 (3.3) 4,526 (20.5) 14,061 18,506 19,742 21,606

Diluted EPS (Rs) 15.0 15.5 (3.3) 18.8 (20.3) 58.5 76.8 82.0 89.7

P/E (x)

60.6 46.1 43.2 39.5

EV / EBITDA (x)

45.0 33.4 31.7 28.9

RoCE (%)

42.5 59.2 65.7 70.8


REDUCE

CMP (as on 27 Apr 2021) INR 3,540


NIFTY 14,653

KEY

CHANGES OLD NEW

Rating REDUCE REDUCE


EPS % FY22E FY23E

0% 0%

KEY STOCK DATA

Bloomberg code BRIT IN


MCap (INR bn) / ($ mn) 853/11,458




3M 6M 12M

Absolute (%) (2.0) (0.9) 9.2

Relative (%) (5.2) (21.7) (45.0)


Dec-20 Mar-21

Promoters 50.55 50.55


FPIs 17.66 17.96


Pledged Shares - -

Source : BSE


Varun Lohchab

[email protected]

+91-22-6171-7334

Naveen Trivedi

[email protected]

+91-22-6171-7324

Page | 7

HSIE Results Daily

Nippon Life India Asset Management

Market share recovery remains key! NAM has been able to stabilize its market share in the high-margin equity

segment over the past two quarters at 7%. We expect it to focus on improving

performance to continue recouping its lost market share. Additionally, we

expect the company to benefit from increased credibility to raise

HNI/institutional capital. Driven by cost optimization, we expect the company

to deliver an FY21-23E revenue/NOPLAT CAGR of 12.7/17.5%. We maintain

our ADD rating on the stock with a target price of INR360, valuing the stock at

36x Mar-23E NOPLAT + Mar-22E cash and investments. The stock is currently

trading at FY22E/23E EV/NOPLAT of 39.9/32.8 and P/E of 34.4/28.9x.

4QFY21 highlights: Revenue was in-line (+1.1% vs. estimates) at INR3.01bn

(+10.0%/+12.5% YoY/QoQ). Revenue yields improved 2bps sequentially to

52.8bps as the share of equity improved 200bps. The company has been able

to arrest its falling equity market share (-4bps QoQ) as well as the debt

market share (-6bps QoQ) over the past 2 quarters. Core operating profit at

INR 1.58bn (+3.6/14.2% YoY/QoQ) was 4% below estimates, mainly as a

result of higher admin and operating costs. Management attributed higher

operating costs as one-offs towards digital and technological infrastructure.

Recovery in equity markets resulted in treasury gains of INR600mn (vs.

INR1.25bn loss in 4QFY20) and drove APAT to INR1.67bn (2Y CAGR +10%/

-21% QoQ).

NAM’s SIP market share dipped 41bps sequentially to 8%. The management

is focussed on addressing its equity performance through diversification

and improved risk management. The company launched 4NFOs on the

passive and ETF side during 4QFY21.

Outlook: While we remain constructive on FY22E from an AUM growth

perspective, NAM's improving equity performance remains key to drive any

market share gains. For FY22E, we expect revenue/EBIT to grow 13/18% YoY

respectively.

Financial Summary

(INR bn) 4Q

FY21

4Q

FY20

YoY

(%)

3Q

FY21

QoQ

(%) FY19 FY20 FY21P FY22E FY23E

Revenue 3.02 2.75 10.0 2.68 12.5 14.8 12.0 10.6 12.0 13.5

Operating profits 1.58 1.52 3.6 1.38 14.2 5.3 5.7 5.2 6.1 7.4

OP Margin (%) 52.6 55.6 -306bps 51.8 74bps 35.8 47.3 48.9 51.2 54.7

APAT 1.67 0.04 4,383.1 2.12 -21.3 4.9 4.2 6.8 6.2 7.4

EV/NOPLAT (x)

52.6 46.1 47.0 39.9 32.8

P/E (x)

42.9 51.4 31.4 34.4 28.9

ROE (%)

19.5 16.1 23.9 19.6 21.9


Change in estimates

(INR bn) FY22E FY23E

Revised Old Change (%) Revised Old Change (%)

Revenues 12.0 11.9 0.8 13.5 13.5 0.0

EBIT 6.2 6.1 1.1 7.4 7.4 0.0

EBIT margin (%) 51.7 51.5 12bps 55.1 55.1 -3bps

NOPLAT 4.6 4.6 1.0 5.6 5.6 0.0

APAT 6.2 6.1 2.2 7.4 7.4 0.0

RoE (%) 19.6 20.3 -68bps 21.9 22.8 -90bps


ADD

CMP (as on 27 Apr 2021) INR 341


NIFTY 14,653

KEY

CHANGES OLD NEW

Rating ADD ADD


EPS % FY21E FY22E

+2.2% +0.0%

KEY STOCK DATA

Bloomberg code NAM IN


MCap (INR bn) / ($ mn) 210/2,822

6m avg traded value (INR mn) 346



3M 6M 12M

Absolute (%) 7.2 24.7 41.5

Relative (%) 4.0 3.9 (12.7)


Dec-20 Mar-21

Promoters 75.8 74.5


FPIs 5.4 5.9


Pledged Shares Nil Nil

Source : BSE

Krishnan ASV [email protected]

+91-22-6171-7328 Sahej Mittal [email protected]

+91-22-6171-7325

Page | 8

HSIE Results Daily

Symphony All-round recovery, all eyes on seasonal pickup Symphony clocked an all-round recovery with domestic, exports and

subsidiaries revenues seeing beat in expectation. High trade inventory

impacted domestic revenue during 9MFY21 (down by 50% YoY) while the

strong 28% YoY growth in 4QFY21 (despite a firm base) reflects positive

sentiment of trade partners. RoW revenue grew by 46% YoY, owing to robust

exports (delay in shipment in 3Q) and recovery of CT, Australia (up 85% YoY).

Thereby, consolidated revenue saw robust 36% growth. Domestic EBIT

margin contracted by >650bps YoY, owing to high commodity inflation and

delay in price hike. RoW EBIT margin saw sharp improvement (18% vs. 2%

YoY) due to margin recovery in CT, Australia (EBITDA margin of 17% vs. -2%

YoY). We are encouraged by an all-round recovery (key rationale for our stock

upgrade in Jan-21); however, localised lockdown has raised concerns on

summer-2021 performance for cooling products. As peak summer season is

still left for Symphony, we would await further clarity on COVID-led

restrictions before evaluating the potential impact on domestic business. With

improving operating performance of subsidiaries, we increase EPS for

FY22/FY23 by 5%. We value Symphony at 35x P/E on Jun-23E EPS and derive a

TP of Rs 1,250. Maintain ADD.

Robust revenue recovery: Standalone revenue up by 38% YoY (+12% in

4QFY20 and -40% in 3QFY21), vs HSIE 23% YoY. Domestic revenue up by

28% YoY (HSIE +9%) while exports saw a 111% YoY growth (HSIE +125%)

due to delay in shipment in 3Q. Positive trade sentiment and rising

distribution reach supported domestic recovery. RoW was up by 46% YoY

owing to recovery in CT, Australia and exports. CT clocked 85/21% YoY

growth in 4Q/FY21. IMPCO declined by 19% (-25% in FY21) while GSK

China posted 100% growth (-7% in FY21).

Miss in margins: Standalone GM declined by 726bps YoY to 48.6% (+729bps

in 4QFY20 and -8bps in 3QFY21) vs expectation of -500bps YoY.

Employee/ASP/other expenses up by -8/+100/0% YoY. EBITDA margin

contracted by 350bps YoY to 28.3% (+211bps in 4QFY20 and -414bps in

3QFY21). Standalone EBITDA was up by 22% YoY (HSIE +25%). Lower

other income and higher taxes resulted in 6% growth in standalone APAT.

RoW posted EBIT of INR 300mn vs INR 20mn last year. CT, Australia

recovered its operational margin (17% vs. -2% YoY).

Call and BS/CF takeaways: (1) Channel inventory in India is now at a

normal level; (2) trade sentiment was positive up to Mar-21, with lockdown

giving rise to concerns for summer-2021 but the lockdown is not as stringent

as last year’s; (3) company is still hopeful of recovery if lockdown eases out

by mid-May; (4) focus is on expanding reach in rural and semi-urban

market; (5) value market share is at 50% of branded air cooler; (6)

commodity inflation and delay in price hike impacted domestic margin; (7)

consolidated FCF was at INR 0.7bn vs. INR 1.4bn in FY20.

Quarterly/Annual Financial summary YE Mar (INR mn) 4QFY21 4QFY20 YoY (%) 3QFY21 QoQ (%) FY21P FY22E FY23E FY24E

Net Sales 2,120 1,540 37.7 1,240 71.0 9,000 12,114 13,656 15,179

EBITDA 600 490 22.4 350 71.4 1,390 2,570 3,009 3,344

APAT 490 464 5.6 350 40.0 1,119 1,969 2,341 2,719

Diluted EPS (Rs) 7.0 6.6 5.6 5.0 40.0 16.0 28.1 33.4 38.8

P/E (x) 81.0 46.0 38.7 33.3

EV / EBITDA (x)

63.0 33.3 27.9 24.6

RoCE (%)

24.5 44.8 58.6 70.4

Source: Company, HSIE Research * Quarter numbers are standalone

ADD

CMP (as on 27 Apr 2021) INR 1,296


NIFTY 14,653

KEY

CHANGES OLD NEW

Rating ADD ADD


EPS % FY22E FY23E

5% 5%

KEY STOCK DATA

Bloomberg code SYML IN


MCap (INR bn) / ($ mn) 91/1,218


52 Week high / low INR 1,530/756


3M 6M 12M

Absolute (%) 25.5 48.0 42.7

Relative (%) 22.3 27.2 (11.5)


Dec-20 Mar-21

Promoters 73.25 73.25


FPIs 3.55 4.33



Source : BSE


Naveen Trivedi

[email protected]

+91-22-6171-7324

Page | 9

HSIE Results Daily

Gateway Distriparks

Market share gains in NCR as CONCOR raises prices

Gateway Distriparks (GDL) reported strong 4QFY21 results, with PAT at INR

461mn (+41% QoQ) while EBITDA margin expanded 90bps QoQ to 27.2% and

interest costs reduced to INR 173mn (-30% YoY). GDL’s share in the NCR

region has risen by 11% as CONCOR has increased prices (due to higher LLF

fees). We raise our EBITDA estimates by ~11% over FY22/23E and maintain

BUY with an SOTP-based TP of INR 235 (rail business is valued at 10x FY23E

EV/EBITDA). We reiterate our preference for GDL over CONCOR (ADD) as

the former will gain market share due to pricing distortions for the market

leader.

4QFY20 financials: GDL’s revenue at INR 3.5bn grew 17/12% YoY/QoQ,

owing to 15/16% growth in rail volumes. CFS volumes were up 7/11%.

EBITDA margin at 27.2% surprised positively (+90bps QoQ, 570 bps YoY) as

the company benefitted from higher volumes and rebate on container

volumes (5% on haulage and 25% on empty running) offered by IR till Apr-

21. The company has been repaying its debt post the fundraise and, hence,

the interest cost is down 30% YoY. APAT grew 41% QoQ to INR 461mn

(partially aided by lower tax rate of 5% in 4QFY21, on availing of MAT

credit).

Call takeaways: (1) Market share gains: The company gained an 11% share

in the NCR region as CONCOR has taken a price hike in its TKD terminal

due to the LLF increase. Even though the market has declined by 5%, GDL’s

volumes have risen due to the above. The company reported its highest ever

monthly rail volumes of 26,426 TEUs in March. (2) Deleveraging: The

company’s net debt stands reduced at INR 4.4bn (vs INR 6.81bn in FY20) as

it has prepaid debt from funds raised (via its right issue). Further, high cost

NCDs of INR 2.8bn are likely to be prepaid as cash flows improve. (3) DFC

progress: The 306km stretch from Rewari to Madar was inaugurated in Jan-

21, while trial runs have commenced on the 342-km stretch of Madar-

Palanpur. The complete stretch will commence in 2HFY22 (link to our

report: Indian Railways - getting aggressive). (4) Snowman: The company

plans to create 200k of new palate capacity with a Capex of INR 4bn, of

which INR 2-2.5bn will be raised via a QIP. Pharma and e-com segments are

in focus currently and are growing at 25% CAGR (QSR at 15% CAGR).

Financial Summary (Consolidated) YE March

(INR mn)

4Q

FY21

4Q

FY20

YoY

(%)

3Q

FY21

QoQ

(%) FY19 FY20 FY21 FY22E FY23E

Net Sales 3,503 2,991 17 3,138 12 4,306 12,372 11,794 13,496 15,681

EBITDA 953 644 48 826 15 824 2,586 3,130 3,378 3,870

APAT 461 112 310 327 41 1,688 983 943 1,149 1,593

Adj. EPS (INR) 3.7 0.9 310 2.6 41 15.5 9.0 7.6 9.2 12.8

P/E (x)

12.6 21.7 25.9 21.3 15.4

EV/EBITDA (x)

35.2 11.7 9.8 8.7 7.2

RoE (%)

14.5 7.4 6.8 7.8 10.5


Change in estimates

INR mn NEW OLD % change

FY22E FY23E FY22E FY23E FY22E FY23E

Net Revenue 13,496 15,681 12,938 14,972 4 5

EBITDA 3,378 3,870 3,100 3,432 9 13

EBITDA margin (%) 25.0 24.7 24.0 22.9 107 bps 176 bps

PAT 1,149 1,593 783 1,047 47 52

EPS 9.2 12.8 6.3 8.4 47 52


BUY

CMP (as on 27 April 2021) INR 196


NIFTY 14,653

KEY

CHANGES OLD NEW

Rating BUY BUY


EPS % FY22E FY23E

47% 52%

KEY STOCK DATA

Bloomberg code GDPL IN


MCap (INR bn) / ($ mn) 24/328




3M 6M 12M

Absolute (%) 18.3 112.1 113.5

Relative (%) 15.0 91.4 59.3


Dec-20 Mar-21

Promoters 32.1 32.1


FPIs 25.5 27.8



Source : BSE

Aditya Makharia

[email protected]

+91-22-6171-7316

Mansi Lall

[email protected]

+91-22-6171-7357

https://www.hdfcsec.com/hsl.docs/Logistics%20-%20Indian%20Railways%20-%20getting%20aggressive%20-%20HSIE-202101151138017162311.pdf

Page | 10

HSIE Results Daily

Rating Criteria

BUY: >+15% return potential

ADD: +5% to +15% return potential

REDUCE: -10% to +5% return potential

SELL: > 10% Downside return potential

Disclosure:

Analyst Company Covered Qualification Any holding in the stock

Krishnan ASV

Bajaj Finance, Axis Bank,

Nippon Life India Asset

Management

PGDM NO

Deepak Shinde Bajaj Finance, Axis Bank. PGDM NO

Punit Bahlani Bajaj Finance, Axis Bank ACA NO

Aditya Makharia Maruti Suzuki CA NO

Mansi Lall Maruti Suzuki MBA NO

Varun Lohchab Britannia Industries PGDM NO

Naveen Trivedi Britannia Industries, Symphony MBA NO

Sahej Mittal Nippon Life India Asset

Management ACA NO

Aditya Makharia Gateway Distriparks CA YES

Mansi Lall Gateway Distriparks MBA NO

Page | 11

HSIE Results Daily

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28 april 2021 hsie results daily hsie results daily

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