NTPC, DCB Bank, Kajaria Ceramics, Aditya Birla Sun Life AMC, United Spirits Q3 Reviews: HDFC Securities

HDFC Securities Institutional Equities

NTPC Ltd. - Profit after tax above consensus, strong capex ahead

Generation/sales increased materially by 8.3%/7.7% YoY to 78.6/72.9 billion units in Q3 FY23, led by higher demand. Plant availability factor also improved for both coal/gas in Q3 to 92.7/98.5%, versus 85.9/89.9% YoY, led by better fuel availability. While revenue increased 39.3% YoY to Rs 414 billion, adjusted PAT was up by 17.7% YoY to Rs 44.2 billion, 12% above the consensus estimate. NTPC has a total of 18.2 giga watt under construction segregated into 11.3 mega watt of coal capacity, 2.3 mw of hydro capacity and 4.7 mw of renewable energy capacity. NTPC has targeted to add 5-6 gw of RE capacity per annum. Further, the company plans to venture into the nuclear segment by forming a joint venture with Nuclear Power Corporation of India Ltd., under which it aims to add 4.2 gw capacity by 2035.

DCB Bank Ltd. - Opex continues to hold back return on asset accretion

DCB Bank’s Q3 FY23 earnings beat our estimates, on the back of strong loan growth (up 19% YoY), net interest margin expansion (14 bps QoQ), and moderate credit costs (60 bps - annualised). While gross slippages remained elevated at 5.3%, healthy upgrades and recoveries led to a 27 bps sequential improvement in gross non performing asset, at 3.6%.

Stressed book (net non-performing asset plus restructured book) continues to remain sticky at ~7% of loans; however, management expects it to taper off in the next couple of quarters, led by healthy collection efficiencies and a granular secured loan book (~95%).

Kajaria Ceramics Ltd. - Weak demand impacts margin expansion

We continue to like Kajaria Ceramics for its strong brand positioning and distribution, which are driving its market share gains. Kajaria Ceramics delivered weak results in Q3 FY23, led by weak offtake and continued supply pressure from Morbi. This also prevented margin expansion despite a 5% QoQ fall in gas prices.

Aditya Birla Sun Life AMC Ltd. - Market share loss remains a drag on growth

Aditya Birla Sun Life AMC reported a weak quarter, with a sequentially flat top line (4% miss), primarily due to elevated outflows and weak performance in the equity segment. While systematic investment plan flows (up 1% QoQ) are holding up, growth in the SIP book lagged the industry by a mile (up 6% QoQ). We are constructive on Aditya Birla Sun Life AMC’s strong and diversified distribution network; however, given the rising competitive intensity, we are concerned about its inability to arrest the equity market-share loss in the near term.

United Spirits Ltd. - Inline revenue, miss on Ebitda margin

United Spirits Ltd. delivered an inline net revenue of Rs 27.8 billion versus the expectation of Rs 27.6 billion. Like-for-like revenue growth was 9.7% YoY. Prestige and above revenue was at Rs 23.7 billion (our estimate Rs 23.6 billion), up 12% YoY. Scotch has sustained strong double-digit growth during the quarter. P&A volume growth was at 3% (three-year compound annual growth rate at 4%, our estimate: 9%), impacted by route-to-market changes. P&A realisation was at an all-time high at Rs 1,867/case (up 8% YoY). Popular (on rebased) saw /volume YoY growth of 2/3%.

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