Titan Company (NS:)

Titan’s top-line growth remains healthy. Revenue grew 26% YoY to INR 119bn. Ex-bullion sales grew 22% YoY to INR97.5bn (in-line) as both buyers’ growth (+14% YoY) and ticket sizes (+6% YoY) aided growth. The key take from the Q1 print was the preference for market share gain over margins. Growth investments via (1) aggressive exchange offers (2) price rationalization and (3) brand building led to a decline in jewellery margins (ex-bullion jewellery margins contracted 212bps to 10.5% HSIE: 12.5%).

Note: The base quarter also had a one-time diamond price inventory gain. We suspect that consumer demand normalization amid rising competition will keep jewellery margins under pressure. Hence, we cut FY24/25 EPS estimates by ~3% each and maintain our REDUCE rating with a DCF-based TP of INR2,600/sh (implying 49x Sep-25 P/E).

Ambuja Cements Ltd. (NS:)

We assign ADD rating on Ambuja Cements (NS:) with a revised TP INR 460/share. For standalone, it delivered strong volume growth of 23/12% YoY/QoQ (a 7% beat) in Q1FY24. Ongoing cool-off in fuel costs further drove up standalone unit EBITDA by INR 70/110 per MT QoQ/YoY to INR 1042 per MT (in line with the estimate).

Ambuja remains committed to doubling its consolidated capacity by FY28. Its planned expansion will start getting operational FY26E onwards. It is working on various cost-reduction exercises to boost margins by INR 300-400 per MT YoY in FY24E. Opex reduction and major capacity expansion remain key catalysts for valuation rerating.

Cholamandalam  Investment and Finance Company (NS:) 

Chola’s Q1FY24 earnings were marginally below our estimates due to a larger-than-anticipated spike in borrowing costs and higher provisions (credit costs at 150bps). AUM growth continued to top our expectations (+40% YoY) on the back of sustained traction in disbursements (+50% YoY) across asset segments. Given rising portfolio diversification (vehicle finance at 62% of AUM) and increasing penetration of non-vehicle segments in existing branches, the company remains upbeat about its growth prospects despite intense competition.

The management attributed the higher provisions to higher standard asset provisioning for new businesses and seasonality and remains upbeat on the potential profitability of new businesses, which remains a key monitorable. We tweak our FY24/FY25 earnings estimates to factor in higher opex intensity and funding costs, offset by higher loan growth. While Chola remains a prolific franchise, the recent steep rally leaves little room for error (medium-term RoEs of 22%) to maintain BUY with a revised TP of INR1,205 (implying 5.4x Mar-25 ABVPS).

Aditya Birla Capital (NS:)

Aditya Birla Capital’s (ABCL) disparate performance continued as the lending businesses sustained accelerated growth momentum (+43% YoY) on the back of simultaneous build-up in balance sheet granularity (67% of the NBFC AUM is towards retail + SME + HNI 42% of the HFC AUM is towards affordable loans) and stable asset quality. This is reflected in sustained improvement in franchise earnings (RoE of NBFC/HFC at 17.9%/13.2%).

The non-leveraged businesses (AMC, life insurance and health insurance) continued to be sluggish on account of seasonality, competitive intensity and policy headwinds. While we have upped our multiple for the NBFC business to 2.5x Mar-25 ABVPS (earlier 2.2x) to factor in improving visibility on potential profitability, we downgrade our stance to ADD with a revised SOTP-based TP of INR205 (earlier INR186). The lending businesses account for two-thirds of our SOTP valuation, reflecting the difficult environment for each of the non-leveraged businesses.

Godrej Properties (NS:)

Godrej Properties Ltd (GPL) reported subdued presales worth INR 22.5bn (-11/-44% YoY/QoQ), with a booking area of 2.3msf (-21/-57% YoY) with sustenance sales contributing 80%. The price realisation, however, was healthy at INR 10,018psf (+12.5%/+30% YoY/QoQ). It reiterated its target of achieving INR 140bn of presales in FY24, with 20msf of launches planned (1.09msf launched in Q1FY24). GPL added four new projects with a gross development value of INR 64.5bn in Q1FY24.

The implied realization of these new projects is INR 17,671psf. Net debt as a result of higher BD activity increased significantly to INR 53bn (INR 36.5bn in Mar’23), exacerbated by a lower collection of INR 19.5bn (+26/-48% YoY/QoQ), which in turn was low because of subdued launches during the quarter. The total GDV addition target for FY24 is INR 150bn to be funded through improving cash flow as launches pick up and there is more available headroom to increase its net D/E to 0.5x-1x.

We reiterate ADD with a higher SOTP valuation of INR 1,664/sh (to account for higher BD activity and improving price realization 5-10% more than the estimate).

ACC (NS:)

We maintain BUY on ACC, with a revised TP of INR 2,325/share (11x its Mar-25E consolidated EBITDA). It reported strong 23% YoY volume growth. Cement opex fell by 8% QoQ owing to a cool-off in input cost and lower fixed expense its benefit was partially offset by a 2% dip in realisation. Thus, unit EBITDA recovered INR 270/MT each QoQ/YoY to INR 811/MT. The long-pending Ametha integrated plant is expected in Q2FY24E. The management is yet to announce major expansions in ACC. However, it is taking up various green energy initiatives, which should drive margin expansion.

Thermax (NS:)

Thermax Ltd (TMX) reported revenue/EBITDA/APAT of INR 19/1.3/1.1bn, missing our estimates by 2.6/17/9%. EBITDA margin was a negative surprise at 6.8% vs. our estimate of 8% on account of project mix. Base orders formed 70-75% of the order inflow and annual growth was in double digits. Within segments, industrial products is strong and driven by the megatrend of robust domestic economy, energy transition and water treatment, as more manufacturing units are set up in the country.

Heating solution in particular is driving this segment. Refining sub-segment is particularly weak with an expectation of order pick-up in the near future. TMX stands to benefit from the investment in clean energy, sustainability, decarbonisation, normalisation of the international market and impetus on cleaner air and water. We maintain ADD, with an increased TP of INR 2,702 (40x Jun-FY25E EPS).

Aptus Value Housing Finance India Ltd (NS:)

APTUS’s Q1FY24 earnings were marginally lower than our estimates due to a higher-than-expected spike in funding costs. AUM growth remained robust at 29% YoY and largely in line with management guidance of ~30% for FY24. Asset quality witnessed marginal QoQ deterioration, adjusted for a seasonally weak quarter, with GS-II/GS-III at 5%/1.3% (FY23: 4.8%/1.2%), along expected lines as bounce rates reverted to pre-Covid levels, as per management.

APTUS continues to focus on the LIG, self-employed, rural-based customers for home loans and small business loans in its core markets, with gradual geographical expansion in Odisha during FY24. Borrowing costs witnessed an uptick at 8.3%, with limited asset-side repricing due to a largely fixed-rate loan book (~77% of AUM). APTUS is gradually leveraging its equity-heavy balance sheet, capping peak-potential RoEs and capital allocation challenges with the management.

We tweak our FY24/FY25 estimates to factor in higher-than-expected AUM growth, offset by higher opex intensity, and maintain REDUCE with a revised RI-based TP of INR230 (implying 2.7x Mar-25 ABVPS).

Sapphire Foods India Ltd (BO:)

Sapphire’s Q1FY24 performance was largely in-line, led by resilient performance in KFC despite a tough demand environment. India revenue growth of 19% was store addition-led (+28%) as SSSG remained weak for both KFC (flat) and PH (-9%). Aided by the softening RM basket, price hikes (April 23) and cost control, KFC ROM expanded both YoY/QoQ to 20.8%.

However, weaker PH saw a sharp contraction (580bps) in ROM to 9% as weak SSSG led to negative op-lev. Given weak demand trends, management has lowered its store opening target for PH in FY24 however, they have maintained their medium-term guidance of doubling store count (over 3-4 years) in both brands. We maintain our EPS estimates and value Sapphire at 50x P/E on Sep’25 EPS to arrive at a TP of INR 1,000. Maintain REDUCE.