Dalmia Bharat, Sundaram Finance, Apollo Tyres, Aarti Industries, MCX, Emami Q3 Results Review: HDFC Securities

We continue to like Dalmia Bharat Ltd. for its robust volume and margin outlook.

<div class="paragraphs"><p>Stock chart, graphs displayed on a monitor. (Source: Unsplash)</p></div>
Stock chart, graphs displayed on a monitor. (Source: Unsplash)

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HDFC Securities Institutional Equities

Dalmia Bharat - Solid all-round performance

We continue to like Dalmia Bharat Ltd. for its robust volume and margin outlook. Dalmia reported strong volume growth and healthy unit Ebitda recovery to solid Rs 1,021 per metric tonne, driven by both realisation firm-up and cost reduction. Dalmia will be acquiring 5.2 million metric tonne Jaiprakash Associates' cement plants in the central region by H2 FY24E, expanding its pan-India footprint. This along with the ongoing expansion will increase its capacity to 54 million metric tonne by FY24E-end (versus 36 million metric tonne at FY22-end).

Sundaram Finance - Sustained business traction drives steady P&L outcomes

Sundaram Finance Ltd.’s earnings were largely in line with estimates, with lower other income offset by steady credit costs (48 bps annualised). Business momentum sustained strong traction, with disbursement growth at up 44% YoY (up 8% QoQ), driven by the medium and heavy commercial vehicle portfolio (~96% YoY for 9MFY23) and passenger vehicles (up 38% YoY).

Apollo Tyres - Focus on returns clearly visible

Apollo Tyres Ltd. posted a strong 31% YoY growth in Q3 profit after tax on the back of improved margin in India, led by softening of input costs, even as demand remained weak, both in India and Europe. In India, Apollo continues to work on profitable growth that has seen it raise prices ahead of the industry (8% in Q1 and 5% in Q2) in truck-bus-radial. It is now a price leader in the passenger car radial category as well, having taken a 3% price hike in Q3, ahead of the industry.

Aarti Industries - Well-placed for strong growth

Aarti Industries Ltd.'s constant focus on capex and reasearh and development will enable it to remain competitive and expand its customer base. The toluene segment in India is mainly untapped and catered to through imports; Aarti Industries will benefit in the long term by entering this segment. Ebitda/adjusted profit after tax were 7/10% above our estimates, owing to lower-than-expected employee expenses and lower-than estimated total tax.

Emami - Growth weakness continues

Emami Ltd. delivered 1% YoY revenue growth, with organic domestic revenue declining by ~2%. Growth pressure was witnessed across the brands, with Boroplus/Navratana/Kesh King/Healthcare/Fair & Handsome clocking YoY growth of -3/-6/- 1/+2/-1%. International business too witnessed growth deceleration, registering 7% growth (20% in nine months).

MCX - Tech transition remains the key

Multi Commodity Exchange of India Ltd. reported a better-than-expected revenue performance but margins dipped due to higher payments to the technology vendor. The technology transition remains the key challenge/focus area and the company has indicated that the shift will be done before the extended deadline of June-23.

Click on the attachment to read the full report:

HDFC Securities Institutional Equites - Dalmia Bharat, Apollo Tyres, Aarti Industries, MCX etc. Q3FY23 Results Review.pdf
Emami Q3 Results Review - Performance Expected To Improve: Dolat Capital


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