Siemens, Eicher Motors, Bharat Forge, Torrent Power, CESC & More Q3 Results Review: HDFC Securities

HDFC Securities Institutional Equities

Siemens- Strong performance

Siemens India Ltd. delivered robust Q1 FY23 revenue/Ebitda/adjusted profit after tax of Rs 36.5/5.5/4.4 billion, beating our estimate by 0/32/43%. The Ebitda margin expanded both annually and sequentially by 482 basis points and 422 bps respectively. This expansion was on account of lower commodity inflation/better mix (up 135 bps YoY gross margin), improving supply chain and operating leverage advantage. Profitability increase was driven mainly by higher volumes, better price extraction and positive forex and commodity effects.

Eicher Motors - Benefit from lower input costs offset by an adverse mix

Eicher Motors Ltd.'Q3 earnings beat estimates, largely due to higher-than-expected other income and improved performance at VE Commercial Vehicles Ltd., even as its operating performance was lower than our estimates. Royal Enfield targets to launch multiple new products over the next 18-24 months, which would provide an upgrade option to its existing customers.

Bharat Forge - Multiple growth drivers ahead

Bharat Forge Ltd.'s Q3 consolidated earnings missed estimates, largely led by a higher interest burden even as operational numbers (including standalone performance) were in line. Overall, management believes FY24 is expected to be a turnaround year for Bharat Forge, given:

1. the sharp uptick expected in the defense segment from here on, led by its new order wins in exports (worth Rs 20 billion) and the much-awaited order win for advanced towed artillery gun system in coming quarters;

2. huge outsourcing opportunities to Bharat Forge in the renewables segment on the back of its recent acquisitions of Sanghvi Forgings (targeting two times revenues in current fiscal) and JS Autocast Foundry India Pvt. Ltd. (new order wins worth Rs 2.5 billion);

3. turnaround expected in its overseas subsidiaries on the back of ramp-up of new aluminium forgings lines in U.S. and Europe, for whom, capacities are fully booked with confirmed orders;

4. tremendous growth opportunities envisaged in the aerospace segment.

Torrent Power - Sturdy gain from LNG trading boosts profitability

Torrent Power Ltd.'s Q3 FY23 profit after tax grew 86% YoY to Rs 6.8 billion, led by a reduction in franchisee transmission and distribution losses, increased contribution from existing distribution circles and newly-acquired Dadra and Nagar Haveli and Daman and Diu circle and gain from a sturdy sale of liquefied natural gas.

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