Indian Oil, CreditAccess Grameen, Century Plyboards, Ami Organics Q4 Results Review: HDFC Securities

HDFC Securities Institutional Equities

Indian Oil - Higher refining margin drives the beat

Our optimism on Indian Oil Corporation Ltd. is premised on robust refining and marketing margins, offset by elevated debt owing to a rise in working capital requirement and capex. IOCL’s reported Ebitda stood at Rs 153 billion (+30% YoY, +4.3x QoQ), while the adjusted profit after tax stood at Rs 101 billion, coming in well above our estimate. The beat was largely on account of better-than-expected performance from the refining and petchem segments.

CreditAccess Grameen - Classic ‘snowball’ effect at play

CreditAccess Grameen Ltd. sustained its strong operating performance across vectors, driven by steady assets under management growth (+27% YoY), on the back of an uptick in disbursements (24% YoY, 48% QoQ), led by a balanced mix of new customer additions and higher ticket size, especially in the retail portfolio.

Asset quality normalised with PAR-0/gross non-performing asset at 1.5%/1.2% and is likely to drive steady-state credit costs. CreditAccess Grameen is poised to sustain a combination of strong growth (~25% assets under management compound annual growth rate), low credit costs and sustained profitability in the medium term.

Century Plyboards - India Strong show; recovery in ply and MDF margins

We like Century Plyboards India Ltd. for its strong franchise (pan-India distribution, aggressive marketing, and a wide range of stock keeping units), leadership presence in most wood segments, market share gains and healthy return ratios.

In Q4 FY23, Century’s consolidated revenue/ Ebitda/adjusted profit after tax rose by 7/2/30% YoY, mainly driven by a rebound in ply earnings. Its Ebitda rose 27% QoQ, led by a recovery of 350/300 bps margin QoQ in the ply/medium density fibre segments. Despite the expected margin pressure in MDF and particle boards during FY24/25E, we expect Century Plyboards to deliver a 15% Ebitda CAGR during FY23-25E.

Ami Organics - Pricing in positives

We like Ami Organics Ltd. owing to-

1. the expansion of its speciality chemicals portfolio,

2. the rising utilisation of the Gujarat Organics facility and

3. the strong product pipeline in its advanced pharma intermediate business.

Ebitda/adjusted profit after tax were 14/11% above our estimates, mainly owing to lower-than-expected other expenses.

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