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L&T, SRF, Apollo Tyres, Nuvoco Vista, Birla Corp, Mahanagar Gas & More Q4 Results Review: HDFC Securities

Larsen and Toubro reported Q4 FY23 revenue/Ebitda/adjusted profit after tax at Rs 583.4/68.3/39.9 billion, inline with estimates.

<div class="paragraphs"><p>(Source: Freepik)</p></div>
(Source: Freepik)

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HDFC Securities Institutional Equities

L&T - Record high inflow; strong net working capital management

Larsen and Toubro Ltd. reported Q4 FY23 revenue/Ebitda/adjusted profit after tax at Rs 583.4/68.3/39.9 billion, inline/(missing) with our estimates by 0.1/(8.4)/(7.5)% respectively. Ebitda margin: 11.7% (-65/+78bps YoY/QoQ) versus our estimate of 12.8%. The margin was impacted largely by higher input prices in projects and manufacturing portfolio. The Hyderabad metro saw ridership improving to 408k per day from 394k per day in Q3 FY23.

SRF - In-line performance

We are optimistic on SRF Ltd., on the back of-

  1. continued healthy performance from the speciality chemicals business;

  2. strong balance sheet; and

  3. deployment of capex for high-growth speciality chemicals business over the next three-four years to tap opportunities emerging from the agrochemical and pharma industries.

Q4 Ebitda/adjusted profit after tax were in line with our estimates.

Apollo Tyres - Well on track to achieve mid-term targets

Apollo Tyres Ltd.’s consolidated earnings, at Rs 4.1 billion, beat our estimate of Rs 3.3 billion, led by better-than-expected performance, both in India and Europe.

In India, Apollo Tyres continues to work on profitable growth that has seen it raise prices ahead of the industry. Its focus on profitable growth is also visible in the fact that Apollo has let go of some market share in the provision coverage ratio segment to maintain pricing.

Nuvoco Vistas - Weak pricing moderates margin recovery QoQ

In Q4 FY23, Nuvoco Vista Corporation Ltd.’s sales volume recovered 16% QoQ but net sales realisation fell 2% QoQ. However, as cement opex too decreased by 5% QoQ (cool-off in fuel cost and op-lev gain), unitary Ebitda recovered by Rs 130 per metric tonne QoQ to Rs 750 per metric tonne. Nuvoco reduced its debt on books in FY23 and remains committed to reducing gearing before taking up the south expansion.

Mahanagar Gas - Strong margins drive earnings

Our optimism on Mahanagar Gas Ltd. is premised on-

  1. lower volume growth compared to peers and

  2. long-term volume growth visibility remaining low since no new geographical areas were won in the 9/10/11th round of city gas distribution bids.

However, their recent acquisition of Unison Enviro’s three GAs remains a key monitorable. Q4 FY23 Ebitda, at Rs 3.9 billion, and adjusted profit after tax, at Rs 2.7 billion, came well above our estimates, owing to higher-than-expected realisation and lower opex. Volumes came broadly in line.

Birla Corporation - Margin recovery as Mukutban hits Ebitda breakeven

We continue to like Birla Corporation Ltd. for its large retail presence in the lucrative north/central regions. We expect a recovery in margins as Mukutban ramps up and it starts accruing its incentive benefit from H2 FY24 onwards. Unitary Ebitda improved by Rs 235 per metric tonne QoQ in Q4 FY23 to Rs 600 per metric tonne, aided by higher volume, Mukutban loss reduction, and better realisation. With no major near-term capex, gearing should reduce from FY24 onwards

Kansai Nerolac - Broadly in-line

Kansai Nerolac Paints Ltd.’s standalone revenue grew 13.6% to Rs 16.1 billion (four-year compound annual growth rate: 9%; our estimate: Rs 16.2 billionn). The industrial segment continues to drive performance, backed by strong automotive demand. Kansai Nerolac’s decorative market share is estimated at 9-10%; it has lost its share in the past three years.

Click on the attachment to read the full report:

HDFC Securities Institutional Equities - L&T, SRF, Apollo Tyres, Nuvoco Vista,Birla Corp etc. Q4FY23 Results Review.pdf
Opinion
L&T Q4 Results: Profit Rises 10.9% On Higher Sales, Project Execution

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