SBI, Titan, Gujarat Gas, Relaxo Footwears, Orient Electric Q2 Results Review: HDFC Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.SBI - Maxed on NIMs; efficiency gains key to RoA reflation State Bank of India’s Q2 FY24 outcomes missed estimates because of lower-than-expected non-interest income and higher opex stemming from wage arrears, partly offset by a provision reversal. Loan growth moderated (+12.4% YoY) as domestic margins stabilised at 3.45% (-2 basis points sequentially). Gross slippages clocked in at 0.5% annualised, partly offset by healthy recoveries/written-offs, resulting in gross non-performing assets trending further lower (2.6%). SBI continued to maintain surplus statutory liquidity ratio and a comfortable loan-to-deposit ratio (~71%), which helped offset sluggish deposit growth; however, a further 5-6 bps impact from deposit repricing is expected to restrict net interest margins at current levels. We tweak our estimates for a lower credit cost, offset by higher opex and watch out for reversal in cost-to-income trajectory; maintain 'Buy' with a SOTP-based target price of Rs 790 (core bank at 1.4 times March-25 adjusted book value per share)..Titan - Core operational performance is broadly in line While Titan Company Ltd.'s top line grew 36.7% YoY to Rs 125.3 billion, ex-bullion sales grew 16.9% YoY to Rs 107.1 billion (inline; our estimate: ~108 billion).Consolidated Ebitdam (ex-bullion) contracted 119 bps YoY to 13.2% (our estimate: 12.9%). Jewellery sales (ex-bullion) grew 23% YoY to Rs 92.65 billion (in-line). Buyer base and ticket sizes both grew in double-digits. Jewellery Ebitm contracted by 134 bps to 13.1% (normalised levels as per management). Non-jewellery marginally fell short of expectations. We largely maintain our FY25/26 earnings per share estimates; however, downgrade the stock to 'Sell' as the recent stock run-up (~19% in six milliion) keeps valuations punchy. Our discounted cash flow-based target price stands at Rs 2,675/share (implying 50 times Sep-25 price/earning)..Gujarat Gas - Decline in input gas cost improves the margin Our 'Add' recommendation on Gujarat Gas Ltd., with a price target of Rs 453, is premised on- volume growth of only ~9% compound annual growth rate over FY24-26E compared to ~18% volume growth seen over FY19-22;increased pricing competition from alternate fuel in the industrial/commercial segment; andlow visibility on spot liquefied natural gas prices in the medium term.Q2 FY24 Ebita/profit after tax at Rs 5/3 billion came in above our estimates, owing to a higher-than-expected per unit Ebitda margin and volume. Volume stood at 9.32 million metric standard cubic metre per day (22% YoY, +1% QoQ)..Orient Electric - Margin delivery continues to disappoint Orient Electric Ltd. continues to disappoint both on the revenue and margin fronts. Revenue grew 11% YoY with electrical consumer durable clocking 17% growth on a low base of -26% (two-year CAGR at -7%). Fans have seen a rating change impact in the last 12 months. ECD revenue in last twelve months for Orient was at Rs 19 billion (up +3.5%) versus Crompton Greaves Consumer Electricals Ltd.’s at Rs 50 billion (up +6%) and Havells India Ltd.’ at Rs 33 billion (down 2%). Fans clocked 25% growth and management looks for 20% growth in FY24. Delays in the festive season and slow pick-up in demand impacted other consumer products. Lighting clocked 1% growth as price erosion (tech-based) in B2C continued to drag while B2B sustained double-digit growth. Gross margin expanded by 400 bps YoY to 30.3% on a better mix and stable raw material basket. Ebitda margin print continued to be uninspiring and clocked less than 4% margin (-250 bps QoQ) in Q2. ECD Ebit margin remained weak at 8% (Havells/Crompton at 11.6/14%); growth and margin both are missing. Given the consistent miss in the margin, we cut FY24/FY25 EPS by 5/3%. We value the stock on 28 times Sep-25 EPS to arrive at a target price of Rs 240. Maintain 'Reduce'..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

SBI, Titan, Gujarat Gas, Relaxo Footwears, Orient Electric Q2 Results Review: HDFC Securities

SBI’s Q2 outcomes missed estimates because of lower-than-expected non-interest income, higher opex stemming from wage arrears

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