RIL, ICICI Bank, Kotak Mahindra Bank, SBI Life, LTIMindtree, JSW Energy & More Q3 Reviews: HDFC Securities

HDFC Securities Institutional Equities

Reliance Industries Ltd. - Our optimism on RIL is premised on- recovery in the oil-to-chemical businesses; Ebitda growth in the digital business, driven by improvement in average revenue per user, subscriber addition, and new revenue streams; and potential for further unlocking in the digital and retail businesses. RIL’s consolidated Ebitda stood at Rs 352 billion, above our estimate, while adjusted profit after tax stood at Rs 158 billion, marginally below our estimate. Earnings were mainly driven by improvement in the O2C and exploration and production segments.

ICICI Bank Ltd. - ICICI Bank reported yet another quarter of all-round impressive balance sheet performance with loan growth, net interest margins and asset quality, reflecting in strong profitability vectors (standalone return on equity of ~18%). Net slippages continued to remain benign; however, the bank further shored up its contingent provisions, taking the stock of contingent provisions prudently to 130 bps.

Kotak Mahindra Bank Ltd. - Kotak Mahindra Bank clocked a strong beat, led by solid loan growth, reflation in NIMs, and lower-than-expected credit cost as the bank continued to marginally absorb its surplus provisions. Loan growth was steady across segments, with continued strong traction in unsecured retail credit (9.3% of loans).

SBI Life Insurance Company Ltd. - SBI Life’s adjusted of new business came in 3% below the estimate at Rs 14.5 billion, as VNB margin moderated 483 bps QoQ to 26.6% on the back of a higher share of unit linked insurance plans in the mix. While the management continues to remain upbeat about growth in the non-participating savings business, we continue to watch out for stronger sequential trends.

LTIMindtree Ltd. - LTIMindtree delivered its first quarterly performance as a combined entity clocking quarterly revenue of $1.05 billion and recording deal bookings of $1.2 billion. We believe that LTIM can take market share from tier-I IT (LTIM 5% of India tier-I IT but 8-10% share of incremental growth). LTIM expects ~$1 billion in revenue synergies over four-five years and ~200 bps cost synergies.

JSW Energy Ltd. - JSW Energy Q3 FY23 sales were 10% above the consensus estimate at Rs 22.5 billion (up 18.7% YoY), driven by higher blended realisation, which was up 30.3% YoY to Rs 5.5/unit. Net generation, however, declined 4.8% YoY to 4.3 billion due to a relatively weaker merchant market as coal prices increased by 37% YoY to $227/tonne during the quarter.

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