Results Review for IOCL, Godrej Consumers, Ambuja Cement, Gail, ACC, CDSL, V-Guard
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Indian Oil (NS:) Corporation: Our ADD rating on Indian Oil Corporation (IOCL), with a target price of INR 100, is premised on robust refining and marketing margins, partially offset by muted petchem earnings and elevated debt. IOCL reported EBITDA of INR 213bn (+11x YoY, -4% QoQ), which was broadly in line, while APAT came in at INR 130bn, marginally below estimate. Earnings were supported by strong performance from the refining segment. Marketing gross margins saw a sequential decline to INR 3.3/ltr. Reported GRMs stood at USD 18.1/bbl (-2% YoY, +2.2x QoQ), coming in line. Crude throughput came in lower-than-expected at 17.8mmt (-5% QoQ, HSIE: 18.5mmt).
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Godrej Consumer (NS:): GCPL’s Q2FY24 operating print was largely in line with consolidated revenue/EBITDA growing by 6/26%. The organic India growth was modest at 2% (volume 4%) as HI performance was flattish due to poor monsoons while the additional Shravan month impacted hair color sales. Management remains confident of delivering high single-digit growth in HI in the medium-long term. Internationally, all regions exhibited healthy CC growth, however, the reported growth was 2% due to currency devaluation. Indonesian business (both revenue/EBITDA) continues to witness recovery. The softening RM basket aided GM recovery, which expanded by 700bps to 54.9% while EBITDAM expanded by 315bps YoY to 20.1% as GCPL stepped up media spends (+180bps YoY). GCPL will continue to focus on (1) category development in the existing portfolio, (2) expanding TAM in India, and (3) simplifying international operations, which shall aid volume growth & margin expansion. We cut EPS by 6/3% owing to the increase in ETR guidance. We value the stock at 42x on Sep-25 EPS to derive a TP of INR 1,050. Maintain ADD.
Ambuja Cements (NS:): We upgraded our rating on Ambuja Cement to BUY from ADD earlier, with an unchanged TP of INR 480/share (SOTP-based). We like the company for its healthy operating and growth outlook. During Q2FY24, both standalone and consolidated volume growth suffered owing to floods in Himachal Pradesh and muted demand in the eastern region. Standalone volume fell 17% QoQ. Op-lev loss and seasonally high maintenance expense moderated the benefits of fuel and logistics cost savings and unit EBITDA fell INR 20/MT QoQ to INR 1020/MT. Ambuja remains committed to doubling its consolidated capacity by FY28. Its planned expansion will start getting operational from late FY25E onwards. It is working on various cost-reduction exercises to boost the margin by INR 300-400 per MT by FY25E-end.
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Gail (NS:): Our BUY recommendation on GAIL with a target price of INR 145 is based on (1) an increase in gas transmission volume to 129mmscmd by FY25 on the back of an increase in domestic gas production, (2) completion of major pipelines in eastern and southern India, and (3) expectation of improvement in earnings from the petchem segment. Q2FY24 reported EBITDA/PAT at INR 35/24bn, came in above our estimates, driven by an improvement in transmission volumes and higher marketing margins. Depreciation at INR 7.5bn (+21% YoY, +18% QoQ) came above expectation.
ACC (NS:): We maintain BUY on ACC, with an unchanged TP of INR 2,440/share (11x its Sep-25E consolidated EBITDA). Cement volume rose 18% YoY in Q2FY24 on a low base from last year. However, it declined 14% QoQ, impacted by heavy rains in Himachal and muted demand in central and eastern regions. NSR fell 1% QoQ due to muted pricing. Opex rose 2% QoQ owing to op-lev loss and higher other expenses. The impact is cushioned by lower freight costs (INR 70/MT) and input costs (INR 20/MT). Thus, unit EBITDA contracted INR 140/MT QoQ to INR 668/MT. The long-pending Ametha clinker 3.3mn MT capacity started in Q2FY24, and its 1mn MT cement/16MW WHRS plant will start soon. Management is taking on various green initiatives to boost margins.
CDSL (NS:): CDSL delivered a solid quarter (significant beat vs. estimates) with a 39% QoQ revenue growth (highest ever), led by market-linked revenue growth and a stable annuity stream. The growth was driven by a jump in transaction revenue, IPO/corporate action, KYC fetch/creation and seasonally strong e-voting revenue. The Demat account addition recovered, and CDSL added ~8mn accounts in the quarter, which is a seven-quarter high. CDSL maintains its leadership position with a 74% market share and 89% incremental share. We expect the growth to recover in FY24E, supported by (1) recovery in BO account addition, (2) higher transaction revenue, driven by growth in delivery volume, and (3) stable annuity revenue. The insurance opportunity remains an option value and will aid growth subject to regulatory push. The compulsory Demat of non-small private limited companies will provide immense growth opportunities. There are a total of 1.4mn private limited companies and MCA has given Sep-24 as the deadline. The investments in technology and rising regulatory and people costs will keep EBITDA margins in the 60-62% range. We increase our FY25/26E EPS estimates by ~2% and maintain our BUY rating with a target price of INR 1,700, based on 37x Dec-25E PAT. Stock is trading at a P/E of 38/31x FY25/26E EPS.
V Guard Industries (NS:): V-Guard reported an operationally in-line Q2 with revenue/EBITDA up by 15/27% vs our estimate of 13/25% YoY. Organic revenue (excluding Sunflame) grew by 9%. Electronic segment revenue grew by 12% with healthy demand for stabilizers. Electrical segment (high wire mix) growth at 10% was below peers (KEI up 22%). CD segment grew by a modest 5% owing to a shift in the festive season, slow demand uptake, and extended summer impacting water heater. South revenue grew by 7%, while non-south by 11% YoY. GM expanded by 450/125bps YoY/QoQ to 33.8%, aided by a softening RM and increasing manufacturing mix (65%). With consistent reinvesting in manufacturing, distribution and marketing, the EBITDA margin could only expand by 75bps to 8.2% (inline). V-Guard remains optimistic about margin expansion on the back of increasing scale and underpins pricing action (fans and water heaters). V-Guard’s EBITDA margin has been hovering at
Nuvoco Vistas (NS:) Corporation: We maintain BUY on Nuvoco Vistas, with a revised TP of INR 485/share (10x its consolidated Sep-25E EBITDA). In Q2FY24, Nuvoco delivered weak 1% YoY volume growth, given muted demand in the eastern region. Cement NSR rose 6/3% YoY/QoQ, owing to stable pricing in the north and a late price uptick in the east. Cement opex rose 4% QoQ, led by a rise in slag prices, op-lev loss and maintenance expenses. The impact is cushioned through lower fuel and freight costs QoQ. Overall, unit EBITDA fell INR 30/MT QoQ to INR 712/MT. Its net debt to EBITDA marginally cooled off to 3.6x at Sep-23 vs 3.8x at Mar-23. The company reiterated that it would take up major Capex only after its net debt fell below INR 40bn.
PNC Infratech (NS:): PNC Infratech (PNC) reported Q2FY24 revenue/EBITDA/APAT of INR 16.9/2.3/1.4bn, missing our estimates by 5.7/3.9/7.4%. EBITDA margin: 13.4% (+18/+28bps YoY/QoQ, vs. our estimate of 13.2%, owing to lower input and raw material prices, partly offset by higher employee expenses). The order book (OB) as of Sep’23 stood at INR 171.4bn (~2.4x FY23 revenue, including L1 of INR 37.1bn excluding GST), with the road EPC segment contributing 62% of the total OB. It maintained its FY24 revenue growth guidance of 15% YoY (INR 20bn+ from the water segment), with an EBITDA margin of 13.3-13.5%, an order inflow (OI) of INR 100bn and capex of INR1.2bn. The company plans to infuse INR 1.0/4.5/4.3bn in H2FY24/25/26. The monetization plan of 11/1 HAM/BOT assets is expected to materialize by FY24-end. PNC has a net debt position of INR 2bn as of Sep’23. Given better margins and a robust balance sheet, we maintain BUY, with an unchanged TP of INR 452/sh (13x Sep-25E rolled over, 1.2x P/BV for HAM equity investment).
Greenlam Industries (NS:): We maintain our REDUCE rating on Greenlam Industries, with a revised target price of INR 540/share (33x its Sep’25E consolidated APAT). In Q2FY24, it reported strong 17/41/28% YoY growth in consolidated revenue/EBITDA/APAT. It is driven by a robust 16% YoY volume uptick and cool-off in raw material prices. We like Greenlam for its leadership positioning in laminates. The upcoming laminate expansions should drive a consolidated volume CAGR of 13% during FY23-26E, in our view. Plywood/particle board will boost revenues from FY24/FY25 respectively. Huge Capex should keep net debt to EBITDA elevated at ~2-3x during FY23-26E. Overhang to ramp up plants in new segments remains key monitorable.
Greenpanel Industries (NS:): We maintain our BUY rating on Greenpanel with a lower target price of INR 435/share (20x its Sep’25E APAT). We like Greenpanel for its leadership positioning in the high-growth MDF segment, its large retail presence (85% in FY23), healthy margin, and working capital profile. In Q2FY24, Greenpanel’s revenue/EBITDA/ APAT fell 13/41/38% YoY owing to a surge in both imports as well as domestic capacity additions and soaring timber prices. These impacted both sales volume (down 2% YoY decline) and gross margin compression. Greenpanel expects the pressure to ease off from FY25 onwards. Its MDF capacity expansion by 35% is expected to be operational by Q3FY25.
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Indian Oil (NS:) Corporation: Our ADD rating on Indian Oil Corporation (IOCL), with a target price of INR 100, is premised on robust refining and marketing margins, partially offset by muted petchem earnings and elevated debt. IOCL reported EBITDA of INR 213bn (+11x YoY, -4% QoQ), which was broadly in line, while APAT came in at INR 130bn, marginally below estimate. Earnings were supported by strong performance from the refining segment. Marketing gross margins saw a sequential decline to INR 3.3/ltr. Reported GRMs stood at USD 18.1/bbl (-2% YoY, +2.2x QoQ), coming in line. Crude throughput came in lower-than-expected at 17.8mmt (-5% QoQ, HSIE: 18.5mmt).
Godrej Consumer (NS:): GCPL’s Q2FY24 operating print was largely in line with consolidated revenue/EBITDA growing by 6/26%. The organic India growth was modest at 2% (volume 4%) as HI performance was flattish due to poor monsoons while the additional Shravan month impacted hair color sales. Management remains confident of delivering high single-digit growth in HI in the medium-long term. Internationally, all regions exhibited healthy CC growth, however, the reported growth was 2% due to currency devaluation. Indonesian business (both revenue/EBITDA) continues to witness recovery. The softening RM basket aided GM recovery, which expanded by 700bps to 54.9% while EBITDAM expanded by 315bps YoY to 20.1% as GCPL stepped up media spends (+180bps YoY). GCPL will continue to focus on (1) category development in the existing portfolio, (2) expanding TAM in India, and (3) simplifying international operations, which shall aid volume growth & margin expansion. We cut EPS by 6/3% owing to the increase in ETR guidance. We value the stock at 42x on Sep-25 EPS to derive a TP of INR 1,050. Maintain ADD.
Ambuja Cements (NS:): We upgraded our rating on Ambuja Cement to BUY from ADD earlier, with an unchanged TP of INR 480/share (SOTP-based). We like the company for its healthy operating and growth outlook. During Q2FY24, both standalone and consolidated volume growth suffered owing to floods in Himachal Pradesh and muted demand in the eastern region. Standalone volume fell 17% QoQ. Op-lev loss and seasonally high maintenance expense moderated the benefits of fuel and logistics cost savings and unit EBITDA fell INR 20/MT QoQ to INR 1020/MT. Ambuja remains committed to doubling its consolidated capacity by FY28. Its planned expansion will start getting operational from late FY25E onwards. It is working on various cost-reduction exercises to boost the margin by INR 300-400 per MT by FY25E-end.
Gail (NS:): Our BUY recommendation on GAIL with a target price of INR 145 is based on (1) an increase in gas transmission volume to 129mmscmd by FY25 on the back of an increase in domestic gas production, (2) completion of major pipelines in eastern and southern India, and (3) expectation of improvement in earnings from the petchem segment. Q2FY24 reported EBITDA/PAT at INR 35/24bn, came in above our estimates, driven by an improvement in transmission volumes and higher marketing margins. Depreciation at INR 7.5bn (+21% YoY, +18% QoQ) came above expectation.
ACC (NS:): We maintain BUY on ACC, with an unchanged TP of INR 2,440/share (11x its Sep-25E consolidated EBITDA). Cement volume rose 18% YoY in Q2FY24 on a low base from last year. However, it declined 14% QoQ, impacted by heavy rains in Himachal and muted demand in central and eastern regions. NSR fell 1% QoQ due to muted pricing. Opex rose 2% QoQ owing to op-lev loss and higher other expenses. The impact is cushioned by lower freight costs (INR 70/MT) and input costs (INR 20/MT). Thus, unit EBITDA contracted INR 140/MT QoQ to INR 668/MT. The long-pending Ametha clinker 3.3mn MT capacity started in Q2FY24, and its 1mn MT cement/16MW WHRS plant will start soon. Management is taking on various green initiatives to boost margins.
CDSL (NS:): CDSL delivered a solid quarter (significant beat vs. estimates) with a 39% QoQ revenue growth (highest ever), led by market-linked revenue growth and a stable annuity stream. The growth was driven by a jump in transaction revenue, IPO/corporate action, KYC fetch/creation and seasonally strong e-voting revenue. The Demat account addition recovered, and CDSL added ~8mn accounts in the quarter, which is a seven-quarter high. CDSL maintains its leadership position with a 74% market share and 89% incremental share. We expect the growth to recover in FY24E, supported by (1) recovery in BO account addition, (2) higher transaction revenue, driven by growth in delivery volume, and (3) stable annuity revenue. The insurance opportunity remains an option value and will aid growth subject to regulatory push. The compulsory Demat of non-small private limited companies will provide immense growth opportunities. There are a total of 1.4mn private limited companies and MCA has given Sep-24 as the deadline. The investments in technology and rising regulatory and people costs will keep EBITDA margins in the 60-62% range. We increase our FY25/26E EPS estimates by ~2% and maintain our BUY rating with a target price of INR 1,700, based on 37x Dec-25E PAT. Stock is trading at a P/E of 38/31x FY25/26E EPS.
V Guard Industries (NS:): V-Guard reported an operationally in-line Q2 with revenue/EBITDA up by 15/27% vs our estimate of 13/25% YoY. Organic revenue (excluding Sunflame) grew by 9%. Electronic segment revenue grew by 12% with healthy demand for stabilizers. Electrical segment (high wire mix) growth at 10% was below peers (KEI up 22%). CD segment grew by a modest 5% owing to a shift in the festive season, slow demand uptake, and extended summer impacting water heater. South revenue grew by 7%, while non-south by 11% YoY. GM expanded by 450/125bps YoY/QoQ to 33.8%, aided by a softening RM and increasing manufacturing mix (65%). With consistent reinvesting in manufacturing, distribution and marketing, the EBITDA margin could only expand by 75bps to 8.2% (inline). V-Guard remains optimistic about margin expansion on the back of increasing scale and underpins pricing action (fans and water heaters). V-Guard’s EBITDA margin has been hovering at
Nuvoco Vistas (NS:) Corporation: We maintain BUY on Nuvoco Vistas, with a revised TP of INR 485/share (10x its consolidated Sep-25E EBITDA). In Q2FY24, Nuvoco delivered weak 1% YoY volume growth, given muted demand in the eastern region. Cement NSR rose 6/3% YoY/QoQ, owing to stable pricing in the north and a late price uptick in the east. Cement opex rose 4% QoQ, led by a rise in slag prices, op-lev loss and maintenance expenses. The impact is cushioned through lower fuel and freight costs QoQ. Overall, unit EBITDA fell INR 30/MT QoQ to INR 712/MT. Its net debt to EBITDA marginally cooled off to 3.6x at Sep-23 vs 3.8x at Mar-23. The company reiterated that it would take up major Capex only after its net debt fell below INR 40bn.
PNC Infratech (NS:): PNC Infratech (PNC) reported Q2FY24 revenue/EBITDA/APAT of INR 16.9/2.3/1.4bn, missing our estimates by 5.7/3.9/7.4%. EBITDA margin: 13.4% (+18/+28bps YoY/QoQ, vs. our estimate of 13.2%, owing to lower input and raw material prices, partly offset by higher employee expenses). The order book (OB) as of Sep’23 stood at INR 171.4bn (~2.4x FY23 revenue, including L1 of INR 37.1bn excluding GST), with the road EPC segment contributing 62% of the total OB. It maintained its FY24 revenue growth guidance of 15% YoY (INR 20bn+ from the water segment), with an EBITDA margin of 13.3-13.5%, an order inflow (OI) of INR 100bn and capex of INR1.2bn. The company plans to infuse INR 1.0/4.5/4.3bn in H2FY24/25/26. The monetization plan of 11/1 HAM/BOT assets is expected to materialize by FY24-end. PNC has a net debt position of INR 2bn as of Sep’23. Given better margins and a robust balance sheet, we maintain BUY, with an unchanged TP of INR 452/sh (13x Sep-25E rolled over, 1.2x P/BV for HAM equity investment).
Greenlam Industries (NS:): We maintain our REDUCE rating on Greenlam Industries, with a revised target price of INR 540/share (33x its Sep’25E consolidated APAT). In Q2FY24, it reported strong 17/41/28% YoY growth in consolidated revenue/EBITDA/APAT. It is driven by a robust 16% YoY volume uptick and cool-off in raw material prices. We like Greenlam for its leadership positioning in laminates. The upcoming laminate expansions should drive a consolidated volume CAGR of 13% during FY23-26E, in our view. Plywood/particle board will boost revenues from FY24/FY25 respectively. Huge Capex should keep net debt to EBITDA elevated at ~2-3x during FY23-26E. Overhang to ramp up plants in new segments remains key monitorable.
Greenpanel Industries (NS:): We maintain our BUY rating on Greenpanel with a lower target price of INR 435/share (20x its Sep’25E APAT). We like Greenpanel for its leadership positioning in the high-growth MDF segment, its large retail presence (85% in FY23), healthy margin, and working capital profile. In Q2FY24, Greenpanel’s revenue/EBITDA/ APAT fell 13/41/38% YoY owing to a surge in both imports as well as domestic capacity additions and soaring timber prices. These impacted both sales volume (down 2% YoY decline) and gross margin compression. Greenpanel expects the pressure to ease off from FY25 onwards. Its MDF capacity expansion by 35% is expected to be operational by Q3FY25.
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