ABB India, Nykaa, Gujarat Gas, GSPL, Galaxy Surfactants, Ashoka Buildcon & More Q3 Review: HDFC Securities

HDFC Securities Institutional Equities

ABB India - Positives priced in

ABB India Ltd.'s reported strong revenue/Ebitda/profit after tax at Rs 24.3/3.6/3.0 billion, beating our estimates by 6/57/68%. For CY22, order inflow crossed Rs 100 billion for the first time since the divestment of its power grid, turbocharger and solar business in CY18. ABB is seeing order inflows sustain at this level annually, going forward. During the quarter, the Ebitda margin expanded to 15% (+620/+506bps YoY/QoQ, versus 10.1% estimate). This expansion was on the back of better gross margin in the mix, better capacity utilisation and an improving supply chain.

Nykaa - Misses expectations; thesis on track

Fsn E-commerce Ventures Ltd.’s top line grew 33% YoY to Rs 14.6 billion (our estimate: 15 billion) on account of fewer festive days in Q3 FY23. Adjusting for seasonality (Q2 plus Q3 FY23 performance), beauty and personal care growth seems to have come off (32% YoY).

Gujarat Gas - Volumes remain weak

Our optimism on Gujarat Gas Ltd. is premised on volume growth at 9% CAGR over FY23-25E, and a high spot liquefied natural gas price environment. Q3 FY23 Ebitda/profit after tax at Rs 5.8/3.7 billion came in above our estimate, owing to a higher-than-expected gross spread. Volume declined sharply by 36% YoY, 4% QoQ to 7.29 metric million standard cubic metre per day, mainly impacted by a decline in industrial piped natual gas volumes. However, lower offtake of expensive spot LNG gas by industrial/commercial customers supported margins.

Gujarat State Petronet - Volume declines further

Our optimism on Gujarat State Petronet Ltd. is premised on muted transmission volume over FY22-25E due to a high spot LNG price environment, given the geopolitical issues, low global inventories, and pick-up in demand post reopening of economies and limited upside triggers in the near term. Hence, we believe that, at present, the stock is fairly d with an return on equity of 13.5% in FY24E and a combined free cash flow of Rs 24 billion over FY23-25E.

Galaxy Surfactants - Margin improves on lower input costs

Our recommendation on Galaxy Surfactants Ltd. is premised on the stickiness of business, as over 50% of the revenue mix comes from muti national companies and stable Ebitda margin, since fluctuations in raw material costs are easily passed on to customers. Q3 Ebitda/adjusted profit after tax were 17/25% higher than our estimates, owing to lower-than-expected raw material cost, lower-than-expected other expenses, and lower-than-expected tax outgo, offset by higher-than-expected depreciation.

Ashoka Buildcon - Moving towards being asset light

Ashoka Buildcon Ltd. reported revenue/Ebitda/adjusted profit after tax of Rs 15.6/1.2/0.7 billion, beating/(missing) our estimates by 11.3/(8.9)/(11.5)%. With approvals pending from only a few stakeholders, all the asset monetisation deals are expected to be completed by H1 FY24.

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