India Daily

January 08, 2024 NIFTY-50 [Jan 05]: 21,711

Contents

Daily Alerts
Change in Reco
IRB Infrastructure: Well-placed with growth capital
Company Alerts
Titan Company: Another good quarter
PVR INOX: Not out of the woods yet
Sula Vineyards: WIPS continuation a re-rating event
Economy Alerts
Economy: NSO estimates FY2024 real GDP growth at 7.3%

Private Circulation Only.

This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
 CHANGE IN RECO.

IRB Infrastructure (IRB) ADD

Capital Goods
CMP(₹): 42 Fair Value(₹): 46 Sector View: Cautious NIFTY-50: 21,711 January 05, 2024

Well-placed with growth capital Company data and valuation summary

We downgrade IRB to ADD from BUY, after the strong rally over the past 6 Stock data
months (60%+ returns). We increase our FV to Rs46 (from Rs38) due to (1)
CMP(Rs)/FV(Rs)/Rating 42/46/ADD
new TOT project wins, (2) increased estimates and (3) roll-forward. Road
52-week range (Rs) (high-low) 44-23
sector awarding has shifted to TOT and BOT projects, with NHAI’s focus on
Mcap (bn) (Rs/US$) 256/3.1
managing its debt levels. With a Rs444 bn BOT pipeline for FY2024 and two
ADTV-3M (mn) (Rs/US$) 1,470/17.7
more TOT projects expected to be awarded, we see players such as IRB, with
its strong balance sheet, best placed to benefit. Shareholding pattern (%)

NHAI’s focus shifting toward BOT and monetization—IRB best-placed

NHAI’s awarding has remained pretty weak in FY2024 so far (309 km in 9MFY24
versus 2,430 km in FY2023). Due to ballooning debt levels, NHAI has shifted its 34.4
44.2
focus toward asset monetization (multiple TOT bundles have been awarded in
the past quarter), with more bundles expected to be awarded in FY2024. IRB,
5.5
with a strong balance sheet, has won multiple TOT projects over the past couple 3.9
8.6 3.5
of months—1) Hyderabad ORR and 2) TOT bundles 12 and 13. The total project
cost of Rs155 bn added Rs200 bn to IRB’s order book. Overall, IRB now has a Promoters FPI s MFs BFIs Retail Others

38% share of the TOT segment, with the private InvIT’s ability to self-fund

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
projects that would open up prospects for IRB to participate in upcoming Price performance (%) 1M 3M 12M
Absolute 14 37 38
projects.
Rel. to Nifty 10 26 17

IRB’s market share at 38%, with the recent TOT-13 bundle win Rel. to MSCI India 9 24 17

IRB was awarded the TOT-13 bundle at the end of December. The TOT-13 Forecasts/Valuations 2024E 2025E 2026E
bundle is a ~110 km (441 lane km) project comprising the Gwalior-Jhansi
EPS (Rs) 1.3 2.1 2.4
section on NH-44 and Kota Bypass on NH 76. IRB would be making an upfront
EPS growth (%) 10.0 59.3 16.1
payment of Rs16.33 bn to the National Highways Authority of India (NHAI). The
P/E (X) 32.0 20.1 17.3
company would undertake this project in private InVIT, with a 51% share in the
P/B (X) 1.9 1.9 1.9
project. The project would have a concession period of 20 years and would add
EV/EBITDA (X) 11.4 9.9 8.9
Rs18 bn to IRB’s order book (EPC+O&M order book). Traffic on this route will
RoE (%) 6.0 9.5 11.0
have an annual tariff revision of 3% fixed escalation + 40% of WPI change. The
Div. yield (%) 3.9 4.8 5.4
company expects the project to be cash flow positive from the first year.
Sales (Rs bn) 77 85 91
Rs444 bn BOT pipeline provides strong near-term visibility for order EBITDA (Rs bn) 36 40 43

BOT projects have started making a comeback after years of focus on EPC and Net profits (Rs bn) 8 13 15

HAM projects, as developers bear 100% of the construction cost. The NHAI has Source: Bloomberg, Company data, Kotak Institutional Equities estimates
identified 15 projects worth Rs444 bn, which are expected to be awarded in the
Prices in this report are based on the market close of
coming months. The key question is whether there are sufficient players in the January 05, 2024
market to participate in incremental BOT ordering or not. Players who are active
in this space or have sufficient balance sheet strength may be keen to
participate in BOT projects. We see players such as IRB, with a strong balance
sheet, as potential key beneficiaries that could garner a healthy market share.

Revise estimates by 6% and 8% for FY2024-26 and Fair Value to Rs46

We revise our estimates by 6% to 8% for FY2024-26 owing to improved toll
collection and higher execution on account of increased order book due to
recent TOT wins. We revise our Fair Value to Rs46 owing to (1) new TOT
projects, (2) increased estimates and (3) roll-forward (core construction
business continues to be valued at 6X EV/EBITDA unchanged).
Full sector coverage on KINSITE

Sai Siddhardha
Deepak Krishnan Aditya Mongia
Pasupuleti
 3

NHAI has increased focus on monetization, with IRB being the leading player and having a 38% share
Due to ballooning debt levels, NHAI has shifted its focus toward asset monetization (multiple TOT
bundles have been awarded in the past quarter), with further bundles expected to be awarded in FY2024.
IRB, with its strong balance sheet, has won multiple TOT projects over the past couple of months—1)
Hyderabad ORR and 2) TOT bundles 12 and 13. The total project cost of Rs 155bn added Rs 200bn to
IRB’s order book. Overall, IRB now has a 38% share of the TOT segment, with the private InvIT’s ability to
self-fund projects that would further open up prospects for IRB to participate in upcoming projects.

TOT bundle-13
TOT bundle-13 is a ~110 km (441 lane km) project comprising the Gwalior-Jhansi section on NH-44 and
Kota Bypass on NH 76. IRB would be making an upfront payment of Rs16.33 bn to the NHAI. The
company would undertake this project in private InVIT, with a 51% share in the project. The project would
have a concession period of 20 years and would add Rs18 bn to IRB’s order book (EPC+O&M order book).

Traffic on this route will have an annual tariff revision of 3% fixed escalation + 40% of WPI change. The
company expects the project to be cash flow positive from the first year.

IRB share in the project is 51% and will contribute nearly Rs2.4 bn to equity requirements
Funding structure of the project (Rs bn)

Particulars Amount (Rs bn)

Concession fee NHAI 16.8
Other costs & capex 2.1
Project cost 18.9

Sponsor's contribution 4.7

IRB's share at 51% 2.4
Term loans from banks 12.3
Total 18.9

Source: Company, Kotak Institutional Equities

Lalitpur-Lakhnadon: TOT bundle-12

The Lalitpur-Lakhnadon project (TOT bundle-12) is a ~316 km, 4-lane continuous highway on the North-
South corridor of NH44 present in Uttar Pradesh and Madhya Pradesh. The project is part of the North-
South corridor, connecting Srinagar and Kanyakumari; hence, it sees significant commercial traffic (90%
traffic comes from CV vehicles).

IRB would be making an upfront payment of Rs44.3 bn to the NHAI. The company would undertake this
project in private InVIT, with a 51% share in the project. The project would have a concession period of
20 years and would add Rs39 bn to IRB’s order book (Rs6 bn toward EPC and Rs33 bn toward the O&M
order book).

In addition to the current commercial traffic, the future key drivers of traffic on this route would be (1)
the Hyderabad-Nagpur Industrial Corridor, (2) the Hyderabad-Bangalore Industrial Corridor, (3) the
Hyderabad-Warangal Industrial Corridor and (4) the Multi Model Logistic Park at Nagpur.

Traffic on this route has increased at a CAGR of 9% historically, with management expecting a CAGR of
4.33% for the 20-year concession period. The company expects the first year’s traffic to be Rs4.7 bn, with
the project being cash flow positive from the first year.

IRB Infrastructure
Capital Goods India Research
 4

Location of the Lalitpur-Lakhnadon project (TOT bundle-12)

Source: Company, Kotak Institutional Equities

IRB’s share in the project is 51% and will contribute nearly Rs9 bn to equity requirements
Funding structure of the project (Rs bn)

Particulars Amount (Rs bn)

Concession fee NHAI 44.3
Other costs & capex 7.4
Project cost 51.7

Sponsor's contribution 18.1

IRB's share at 51% 9.2
Term loans from banks 33.6
Total 51.7

Source: Company, Kotak Institutional Equities

IRB Infrastructure
Capital Goods India Research
 5

IRB now has 38% share in the TOT segment, aided by recent wins
IRB has added three key projects, i.e., HYD ORR, TOT-12, TOT-13, over the recent couple of months

Particular Name of the Awardee Value (in Rs bn)

TOT-1 Macquaire-Ashoka Buildcon JV 97
TOT-3 Cube Highways 50
TOT-5(A-1) Adani 10
TOT-5(A-2) DP Jain 13
TOT-7 Indian Highway Concessions Trust (CDPQ) 63
TOT-9 NIF 31
TOT-11 Cube Highways 22
MP-TOT IRB 83
HYD ORR IRB 74
TOT-12 IRB 44
TOT-13 IRB 17
TOT-14 Cube Highways 77
TOT-15 To be bid out in FY24
TOT-16 To be bid out in FY24
T ot al 580
IRB's share 218
IRB's share % 38%

Source: NHAI, Company, Kotak Institutional Equities

Recent TOT wins now takes IRB order book to Rs380 bn (2.6X of FY2021 levels)

O&M EPC TOT-13

450
400
18
350
IRB Order in Rs bn

93
300 76
250
200
150 88
251 272
100 77 105

50 118
68 56
0
FY21 FY22 FY23 1HFY24 9MFY24

Source: Company, Kotak Institutional Equities

IRB Infrastructure
Capital Goods India Research
 6

BOT projects now provide a strong near pipeline for IRB

15 BOT projects worth Rs444 bn are expected to be awarded over the next couple of months

BOT Projects expected to be awarded in FY24

Sr No Project Project cost (in Rs bn) Project Length (in Km)
1 Guwahati Ring Road 55 65
2 Chennani-Nashri Tunnel 18.8 9
3 Agra Gwalior Greenfield 37.38 88.4
4 Karmala-Tembhurni 9.83 60
5 Sangli-Kolhapur 7.49 33.8
6 Kasarwadi-Rajgurunagar 59.54 30
7 Ahmendnagar Solapur section Pkg 1 of Surat Chennai Expressway 22.89 62
8 Ahmendnagar Solapur section Pkg 2 of Surat Chennai Expressway 20.26 65.5
9 Ahmendnagar Solapur section Pkg 3 of Surat Chennai Expressway 21.93 70.5
10 Ahmendnagar Solapur section Pkg 4 of Surat Chennai Expressway 15.74 56.1
11 Pune-Shirur 61.7 56
12 Talegoan-Chakan-Shikarapur 42.02 54
13 4L of Balance length in Chennai -Tirupathi 25 83
14 Armoor-Mancherial 31.75 131.3
15 4 Lane Aligarh -Tappal section of NH 334(D) 14.79 72.4
Total 444 937

Source: NHAI

With NHAI awarding yet to pick up in FY2024, BOT projects could be the key driver of awarding
for 4QFY24

NHAI awarding NHAI construction

8,000 7,396
7,000 6,306
6,003
6,000
4,788 4882
5,000 4,344 4,355 4325
3979 4184
4,000 3380 3,211
3071
3,000 2628 2430
2,222
1988
2,000

1,000 309
-
2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD

Source: NHAI, Kotak Institutional Equities

IRB Infrastructure
Capital Goods India Research
 7

NHAI is now increasingly moving to TOT (asset monetization) and BOT projects to manage its overall debt position, which should be
favorable for IRB
Details of NHAI debt, March fiscal year-ends (Rs bn)

NHAI Debt (Rs bn)

4,000
3,480 3,492
3,500
3,070
3,000
2,490
2,500

2,000 1,794

1,500 1,225

1,000 754
453
500 186 241 249
174
56 51 68
-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E

Source: NHAI, Rajya Sabha questions

Debt servicing forms nearly 18-20% of total allocation for NHAI

Details of total allocation and debt servicing from NHAI, March fiscal year-ends (Rs bn)

Project based Total Debt Debt servicing as %

Year Budgetary Allocation IEBR InVIT financing allocation servicing of total allocation
2019 312 612.2 924 144.0 15.6
2020 277 749.9 1,027 193.5 18.8
2021 460 651.0 97.3 1,208 254.9 21.1
2022 730 651.0 73.5 140.0 1,595 401.9 25.2
2023RE 1,583 8.0 100.0 150.0 1,841 324.4 17.6
2024BE 1,622 0.0 1,622 332.6 20.5
2025E 1,870 1,870 316.3 16.9
2026E 2,200 2,200 408.4 18.6
2027E 2,500 2,500 421.0 16.8
2028E 2,600 2,600 532.4 20.5

Source: Budget documents, NHAI, Kotak Institutional Equities

IRB Infrastructure
Capital Goods India Research
 8

We revise our estimates by 7%/8%/6% for FY2024-26 on higher execution and higher toll revenue
Change in estimates for IRB (consolidated), March fiscal year-ends (Rs mn)
New estimates Old estimates % revision
2020 2021 2022 2023 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Income statement
Total operating income 68,522 52,987 58,037 64,016 76,748 85,159 91,336 74,335 80,107 87,384 3 6 5
Construction 50,156 36,334 40,162 42,786 51,549 57,656 61,314 49,481 53,067 58,056 4 9 6
Toll collection BOT 18,366 16,652 17,875 21,230 25,199 27,504 30,022 24,854 27,040 29,328 1 2 2
Total operating costs (38,808) (27,859) (30,061) (31,724) (40,820) (45,600) (48,563) (39,242) (42,122) (46,064) 4 8 5
Construction expenses (36,529) (26,282) (28,368) (29,985) (38,661) (43,242) (45,985) (37,111) (39,800) (43,542) 4 9 6
BOT expenses (2,279) (1,577) (1,694) (1,739) (2,159) (2,359) (2,577) (2,131) (2,322) (2,522) 1 2 2
EBITDA 29,714 25,127 27,976 32,292 35,928 39,559 42,773 35,093 37,986 41,320 2 4 4
Other income 1,949 1,889 5,517 3,017 4,291 4,510 5,068 4,374 4,583 5,139
PBDIT 31,664 27,016 33,494 35,309 40,218 44,069 47,841 39,467 42,569 46,459 2 4 3
Financial charges (15,643) (16,924) (18,906) (15,146) (16,058) (14,653) (15,600) (16,220) (14,677) (15,725) (1) (0) (1)
Depreciation (4,683) (5,817) (6,828) (8,321) (9,674) (11,648) (12,137) (9,536) (11,658) (12,063) 1 (0) 1
Pre-tax profit 11,338 4,275 7,760 11,841 14,487 17,769 20,104 13,711 16,234 18,671 6 9 8
Taxation (4,543) (1,445) (1,882) (3,569) (4,432) (4,983) (5,752) (4,001) (4,276) (5,054)
PAT 6,794 2,830 5,877 8,272 10,055 12,785 14,352 9,710 11,959 13,617 4 7 5
Share of profit/loss from SPVs 415 (1,658) (2,262) (1,070) (2,132) (166) 305 (2,310) (310) 198
Adjusted PAT 7,210 1,172 3,616 7,202 7,923 12,619 14,657 7,400 11,649 13,815 7 8 6
EPS (Rs) 2.1 0.3 0.6 1.2 1.3 2.1 2.4 1.2 1.9 2.3
Key ratios (%)
EBITDA margin 43.4 47.4 48.2 50.4 46.8 46.5 46.8 47.2 47.4 47.3
PAT margin 10.5 2.2 6.2 11.3 10.3 14.8 16.0 10.0 14.5 15.8
RoE 11.1 1.7 3.7 5.6 6.0 9.5 11.0 5.6 8.8 10.4
Yoy growth (%)
Revenues 3.7 (22.7) 9.5 10.3 19.9 11.0 7.3 16.1 7.8 9.1
EBITDA 1.2 (15.4) 11.3 15.4 11.3 10.1 8.1 8.7 8.2 8.8
PAT (15.2) (83.7) 79.5 99.2 10.0 59.3 16.1 2.8 57.4 18.6

Source: Company, Kotak Institutional Equities estimates

We revise our SOTP-based Fair Value to Rs46 on incorporating recent projects and roll-forward
SOTP analysis of IRB, March fiscal year-ends (Rs/share)
Per share
Net asset Value IRB's stake Value of IRB's stake contribution to IRB
Roads (Rs mn) (%) (Rs mn) (Rs) Asset valuation methodology
Ahmedabad Vadodara (6,665) 100 (6,665) (1.1) Two-year forward FCFE
Mumbai-Pune 24,680 100 24,680 4.1 Two-year forward FCFE
3 HAM Projects 8,730 60 5,238 0.9
Project will generate nearly Rs10 bn PBT from EPC
Ganga Expressway 42,881 51.0 21,869 3.6 of Rs60 bn and will take care of remaining equity
requirements
Palsit Dankuni 10,594 51.0 5,403 0.9 Two-year forward FCFE
Hyderabad ring road 49,829 51.0 25,413 4.2 Two-year forward FCFE
Samkhayali Santalpur BOT 4,020 51.0 2,050 0.3 1.2X book value
Lalitpur Lakhnadon TOT 27,150 51.0 13,847 2.3 1.2X book value
TOT-13 21,960 51.0 11,200 1.9 1.2X book value
InVIT
Equity value 107,800 51.0 54,978 9.1
Discounting is due to a) holding in the form of
InVITs units having lower liquidity b) comparable
Holding company discount 8,247 with listed InVIT c) pending receivables of Rs32 bn
from the InVIT for IRB d) in line with holding
company discount taken for other companies
Net value of IRB's stake 46,731 7.7
Other investment in Sindhudurg, InVIT, real estate 12,529 100.0 12,529 2.1 1X book value
6X two-year forward EV/EBITDA bakes in recovery
Construction 80,135 100.0 80,135 13.3 in order inflows from FY2024, 8% revenue CAGR
over next 3 years along with debt reduction
Internal loan given to private invIT 30,000 100.0 30,000 5.0 1X book value
Total 240,097 46.0

Source: Company, Kotak Institutional Equities estimates

IRB Infrastructure
Capital Goods India Research
 9

Consolidated financials of IRB Infrastructure, March fiscal year-ends, 2013-26E (Rs mn)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Income statement
Total operating income 36,872 37,319 38,475 51,279 58,459 55,072 56,941 66,070 68,522 52,987 58,037 64,016 76,748 85,159
Construction 25,988 25,364 20,029 30,049 34,675 34,675 38,047 44,142 50,156 36,334 40,162 42,786 51,549 57,656
Toll collection BOT 10,884 11,955 18,356 21,231 23,784 20,397 18,894 21,928 18,366 16,652 17,875 21,230 25,199 27,504
Total operating costs (20,540) (19,782) (16,358) (24,676) (27,976) (27,510) (30,147) (36,697) (38,808) (27,859) (30,061) (31,724) (40,820) (45,600)
Construction expenses (19,126) (18,189) (13,871) (21,694) (24,540) (24,540) (27,190) (34,121) (36,529) (26,282) (28,368) (29,985) (38,661) (43,242)
BOT expenses (1,414) (1,593) (2,487) (2,983) (3,436) (2,970) (2,957) (2,576) (2,279) (1,577) (1,694) (1,739) (2,159) (2,359)
EBITDA 16,333 17,537 22,117 26,603 30,483 27,562 26,794 29,373 29,714 25,127 27,976 32,292 35,928 39,559
Other income 1,301 1,214 1,130 1,271 1,232 588 1,687 1,955 1,949 1,889 5,517 3,017 4,291 4,510
Financial charges (6,153) (7,561) (9,312) (10,639) (13,327) (6,650) (9,667) (11,200) (15,643) (16,924) (18,906) (15,146) (16,058) (14,653)
Depreciation (4,415) (4,770) (7,071) (8,533) (8,548) (4,067) (5,440) (5,395) (4,683) (5,817) (6,828) (8,321) (9,674) (11,648)
Pre-tax profit 7,066 6,419 6,865 8,702 9,840 17,433 13,373 14,733 11,338 4,275 7,760 11,841 14,487 17,769
Taxation (1,530) (1,823) (1,441) (2,306) (2,685) (2,635) (5,444) (6,233) (4,543) (1,445) (1,882) (3,569) (4,432) (4,983)
Net profit 5,536 4,596 5,424 6,396 7,155 14,798 7,930 8,500 6,794 2,830 5,877 8,272 10,055 12,785
Share of profit/(loss) from 9 SPVs or ext income — — — — — — — — 415 (1,658) (2,262) (1,070) (2,132) (166)
Minority interest 31 (5) 6 4 1 — — — — — — — — —
Adjusted PAT 5,567 4,591 5,429 6,400 7,155 14,799 7,930 8,500 7,210 1,172 3,616 7,202 7,923 12,619
EPS (Rs) 1.7 1.4 1.5 1.8 2.0 2.3 2.4 2.1 0.3 0.6 1.2 1.3 2.1 2.4
Balance sheet
Share holder's funds 32,556 35,607 43,609 48,363 52,716 56,925 63,151 66,829 69,008 125,656 133,789 131,886 132,453 133,473
Minority interest 1,092 356 351 355 — — — — — — — — — —
Loan funds 87,761 110,841 125,762 156,261 139,631 138,256 165,931 85,240 180,851 166,853 167,397 169,447 148,837 143,922
Total sources of funds 121,667 146,947 385,391 407,759 449,306 347,787 362,124 290,382 373,946 404,258 408,398 405,872 382,709 375,180
Net block 104,248 130,411 365,991 390,565 310,826 367,115 367,320 280,657 277,673 273,336 264,798 258,363 246,054 233,130
Investments 620 145 88 1,483 2,574 9,533 6,532 41,537 48,078 49,042 51,409 76,089 76,089 76,089
Cash & bank balances 14,710 15,012 15,798 15,008 13,077 12,678 15,603 22,707 23,380 17,438 24,171 15,883 12,519 20,161
Net current assets (ecl. cash) 2,089 1,379 3,515 703 (4,006) (41,539) (27,330) (54,519) 24,815 64,441 68,019 55,537 48,047 45,800
Total application of funds 121,667 146,947 385,391 407,759 449,306 347,787 362,124 290,382 373,947 404,257 408,398 405,872 382,709 375,180
Cash flow
Operating profit before working capital changes 16,104 16,928 21,806 25,568 29,030 23,037 25,095 27,536 23,914 29,349 30,669 33,655 38,920 42,394
Change in working capital / other adjustments 239 710 (2,136) 2,812 4,709 37,533 (14,209) 27,189 (79,334) (39,625) (3,579) 12,483 7,490 2,247
Net cashflow from operating activites 16,343 17,638 19,671 28,380 33,739 60,570 10,885 54,725 (55,420) (10,276) 27,091 46,137 46,410 44,641
Capex (29,149) (30,459) (27,092) (43,889) 22,740 (71,633) (24,017) 51,466 (23,484) (16,044) (7,759) (30,591) (2,459) (2,847)
Free cash flow (12,806) (12,821) (7,421) (15,508) 56,479 (11,063) (13,131) 106,190 (78,904) (26,320) 19,332 15,547 43,950 41,794

Yoy growth (%)

Revenues 17.7 1.2 3.1 33.3 14.0 (2.6) 16.0 3.7 (22.7) 9.5 10.3 19.9 11.0 7.3
EBITDA 19.3 7.4 26.1 20.3 14.6 (12.1) 9.6 1.2 (15.4) 11.3 15.4 11.3 10.1 8.1
PAT 11.1 (17.5) 18.2 17.9 11.8 10.8 7.2 (15.2) (83.7) 208.4 99.2 10.0 59.3 16.1
Key ratios (%)
EBITDA margin 44.3 47.0 57.5 51.9 52.1 47.1 44.5 43.4 47.4 48.2 50.4 46.8 46.5 46.8
PAT margin 15.1 12.3 14.1 12.5 12.2 26.9 13.9 12.9 10.5 2.2 6.2 11.3 10.3 14.8
Net debt: Equity (X) 2.2 2.7 2.5 2.9 2.4 2.2 2.4 0.9 2.3 1.2 1.1 1.2 1.0 0.9
RoE 18.2 13.5 13.7 13.9 14.2 14.5 14.2 11.1 1.7 3.7 5.6 6.0 9.5 11.0
RoCE 9.3 7.5 4.8 3.6 3.9 3.4 4.2 5.1 3.7 4.6 4.4 4.7 5.9 6.8

Source: Company, Kotak Institutional Equities estimates

IRB Infrastructure
Capital Goods India Research
 UPDATE

Titan Company (TTAN) ADD

Retailing
CMP(₹): 3,713 Fair Value(₹): 3,775 Sector View: Neutral NIFTY-50: 21,711 January 08, 2024

Another good quarter Company data and valuation summary

Titan’s 3Q business update indicates 23% yoy growth (KIE: 19%) in Stock data
standalone jewelry sales (recurring, excl. bullion sales), implying a 4-yr CAGR
CMP(Rs)/FV(Rs)/Rating 3,713/3,775/ADD
of 21.3%. Store additions picked up pace, with 21 net new Tanishq stores in
52-week range (Rs) (high-low) 3,750-2,269
3Q, taking the total count to 466 (+43 in 9M). Plain gold and wedding jewelry
Mcap (bn) (Rs/US$) 3,296/39.7
grew faster than studded jewelry. We estimate that the standalone jewelry
ADTV-3M (mn) (Rs/US$) 2,761/33.2
EBIT margin will be flat yoy at 13%, as we expect the impact of lower studded
sales, rationalization of the gold rate markup and higher consumer offers to Shareholding pattern (%)
be offset by operating leverage and the reduction in franchisee commission.
We increase FY2024-26E EPS by 1-3%, roll over and revise FV to Rs3,775 (60X 3.5
15.7
FY2026E PE) from Rs3,350.
3.6
5.3 52.9
3Q update: Jewelry sales grew 23%, store additions pick up pace
Titan’s standalone recurring jewelry sales (ex-bullion) grew 23% yoy (above our 19.1

estimate of 19%) to Rs117 bn, led by 21% yoy growth in the domestic business
(DD growth in buyers, moderate ASP growth). It implies a 21.3% 4-yr CAGR, the Promoters FPI s MFs BFIs Retail Others
third consecutive quarter of 20%+ CAGR. Gold (plain) jewelry and coins grew
Price performance (%) 1M 3M 12M

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
ahead of studded jewelry despite gold price increase/volatility (gold prices up
Absolute 5 15 45
3%/16% qoq/yoy in 3Q). Wedding jewelry salience was up yoy. Overall, well-
Rel. to Nifty 1 4 24
rounded growth despite the late ‘Shradh’ (inauspicious period). Store addition
Rel. to MSCI India (0) 3 24
picked up pace: Titan added 21 Tanishq stores in 3Q (18 in India, two in the US
and one in SG), taking total count to 466 (+43 in 9M, in line with the guidance Forecasts/Valuations 2024E 2025E 2026E
of 40+ stores in FY2024). EPS (Rs) 41.4 50.3 62.4
EPS growth (%) 12.4 21.3 24.2
Management has called out continued investments in exchange programs and P/E (X) 89.6 73.9 59.5
consumer offers. This, coupled with the rationalization of gold rate markup and P/B (X) 34.6 26.3 20.0
lower studded share (yoy), are margin headwinds. We expect operating leverage EV/EBITDA (X) 59.6 47.7 39.2
and lower franchisee commissions to offset these headwinds, and expect RoE (%) 34.4 40.4 38.1
standalone jewelry EBIT margin (recurring) to be 13% (flat yoy). Div. yield (%) 0.4 0.4 0.5
Sales (Rs bn) 494 552 643
Other businesses: Watches grow well, Eyewear segment disappoints EBITDA (Rs bn) 56 69 84
Watches/wearables grew 23% yoy (KIE: 18% yoy), led by 18%/64% growth in Net profits (Rs bn) 37 45 55
analog/wearables. Eyecare sales declined 3% yoy (KIE: 18% growth). Taneira’s
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
sales grew by 61% yoy. Fragrances/fashion accessories declined 9% yoy.
Prices in this report are based on the market close of
January 05, 2024
We raise EPS estimates 1-3%, roll over and revise FV to Rs3,775
We incorporate 3Q beat and raise our FY2024-26 revenue forecast and margin
assumptions. We estimate an 18% consolidated recurring jewelry sales CAGR
over FY2024-26E, led by (1) a 15% domestic CAGR on ~10% store CAGR, (2)
69% CAGR in international business and (3) a 30% CAGR in CaratLane (Exhibit
3). Titan's LT attractiveness comes from (1) low market share (7%) in a large
addressable market and (2) steady investments and progress on multiple fronts
(customer base expansion, regional markets, especially successful inroads in
TN, wedding segment, international, high-value segment and omnichannel) that
would enable share gains. We would keep an eye on the progress/adoption of
lab-grown diamonds—a potential risk to TTAN. We roll over and revise DCF-
based FV to Rs3,775 (Rs3,350 earlier) implying 60X Mar-2026E PE (58X earlier). Full sector coverage on KINSITE
ADD.

Jaykumar Doshi Umang Mehta Praneeth Reddy

 11

Exhibit 1: Titan - Key changes to earnings model, March fiscal year-ends, 2024-26E (Rs mn)
Revised Earlier Change (%)
2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Net revenues 493,958 552,240 643,288 488,068 545,845 636,065 1.2 1.2 1.1
Revenue growth (%) 21.7 11.8 16.5 20.3 11.8 16.5
EBITDA 55,808 69,447 83,967 55,187 68,527 81,761 1.1 1.3 2.7
PAT 36,785 44,622 55,421 36,380 44,007 53,810 1.1 1.4 3.0
EPS (Rs/share) 41.4 50.3 62.4 41.0 49.6 60.6 1.1 1.4 3.0
EBITDA margin (%) 11.3 12.6 13.1 11.3 12.6 12.9 -1 bps 2 bps 19 bps

Jewellery segment (Consolidated)

Revenues 435,184 483,513 564,273 429,635 477,514 557,503 1.3 1.3 1.2
Revenue growth (%) 21.2 11.1 16.7 19.6 11.1 16.8
Recurring revenues 408,254 483,513 564,273 402,705 477,514 557,503 1.4 1.3 1.2
Recurring growth (%) 21.1 18.4 16.7 19.5 18.6 16.8
EBIT margin (ex-bullion) (%) 12.2 12.8 13.2 12.1 12.6 12.8 5 bps 13 bps 36 bps

Standalone EBIT margin (ex-bullion) (%) 12.7 12.9 13.2 12.7 12.8 13.1 4 bps 5 bps 9 bps

Source: Company, Kotak Institutional Equities estimates

Exhibit 2: Titan- jewelry segment sales, March fiscal-year ends (Rs mn)
CAGR (%)
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024E FY2025E FY2026E 2020-23 2019-232023-26E
Consolidated
Jewellery sales (reported) 163,901 173,192 193,200 255,230 359,140 435,184 483,513 564,273
Less: non-recurring sales 2,000 0 17,250 10,450 22,080 26,930 0 0
Jewellery recurring sales 161,901 173,192 175,950 244,780 337,060 408,254 483,513 564,273
Jewel. recur. sales growth (%) 22.1 7.0 1.6 39.1 37.7 21.1 18.4 16.7 24.6 20.1 18.5

Jewellery EBIT 19,080 20,508 17,010 30,550 43,870 49,756 61,769 74,490
Jewellery EBIT (excl one-offs) 19,080 20,508 17,010 30,550 43,870 49,756 61,769 74,490
Jewel. EBIT growth (ex one-offs) (%) 30.4 7.5 (17.1) 79.6 43.6 13.4 24.1 20.6 28.5 23.1 19.1

Jewellery EBIT margin 11.8 11.8 9.7 12.5 13.0 12.2 12.8 13.2
Jewel. EBIT margin (excl one-offs) 11.8 11.8 9.7 12.5 13.0 12.2 12.8 13.2

Standalone
Jewellery sales (reported) 160,296 167,382 186,310 243,130 341,050 410,000 450,513 520,273
Less: Non-recurring sales 2,000 0 17,250 10,450 22,080 26,930
Jewellery recurring sales 158,296 167,382 169,060 232,680 318,970 383,070 450,513 520,273
Jewel. recurring sales growth (%) 21.4 5.7 1.0 37.6 37.1 20.1 17.6 15.5 23.7 19.1 17.5

Jewellery EBIT 19,480 20,613 16,860 30,270 43,630 48,756 58,000 68,500
Jewellery EBIT (excl one-offs) 19,480 20,613 16,860 30,270 41,600 48,756 58,000 68,500
Jewel. EBIT growth (ex one-offs) (%) 26.2 5.8 (18.2) 79.5 37.4 17.2 19.0 18.1 26.1 20.9 17.9

Jewellery EBIT margin 12.3 12.3 10.0 13.0 13.7 12.7 12.9 13.2
Jewel. EBIT margin (ex one-offs) 12.3 12.3 10.0 13.0 13.0 12.7 12.9 13.2

Caratlane (72.3% subsidiary)

Jewelry sales 4,160 6,210 7,160 12,560 21,880 29,200 38,000 49,000
Jewelry EBIT (432) (184) 150 590 1,670 1,850 3,050 4,900
Jewellery sales growth (%) 43.4 49.3 15.3 75.4 74.2 33.5 30.1 28.9 51.5 51.4 30.5
Jewellery EBIT growth (%) (10.4) (3.0) 2.1 4.7 7.6 6.3 8.0 10.0 NA NA 42.6

Standalone 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24E4QFY24E
Jewellery 40,474 35,278 54,087 37,544 17,830 38,370 65,890 64,220 28,910 62,980 86,170 65,070 79,560 76,850 98,330 86,310 100,080 103,300 117,071 89,549
-Non-recurring sales 0 0 0 0 6,010 3,900 3,340 4,000 4,240 1,920 540 3,750 3,560 4,820 3,150 10,550 9,380 17,550
Jewellery recurring sales 40,474 35,278 54,087 37,544 11,820 34,470 62,550 60,220 24,670 61,060 85,630 61,320 76,000 72,030 95,180 75,760 90,700 85,750 117,071 89,549
Jewel recur. sales growth (yoy %) (70.8) (2.3) 15.6 60.4 108.7 77.1 36.9 1.8 208.1 18.0 11.2 23.5 19.3 19.0 23.0 18.2
Jewel. recur. sales (4-yr CAGR %) 21.7 24.4 16.8 20.8 19.1 19.4 17.4 22.4 24.9 21.3 24.3

Jewellery EBIT 4,420 3,841 7,013 5,339 (540) 2,850 7,520 7,030 2,070 7,930 12,600 7,670 10,270 11,030 12,360 9,970 9,990 12,060 15,219 11,487
Jewellery EBIT (excl one-offs) 4,420 3,841 7,013 5,339 (540) 2,850 7,520 7,030 2,070 7,930 12,600 7,670 9,690 9,580 12,360 9,970 9,990 12,060 15,219 11,487
Jewel. EBIT (ex-one-offs) growth (yoy %) 12.4 (2.0) 7.8 4.2 (112.2) (25.8) 7.2 31.7 (483.3) 178.2 67.6 9.1 368.1 20.8 (1.9) 30.0 3.1 25.9 23.1 15.2
Jewellery EBIT (4-yr CAGR %) 24.9 33.6 24.7 26.6 NA 6.9 22.5 25.6 (11.6) 21.2 34.5 14.1 25.3 25.0 17.4 18.1 22.6 33.1 21.4 21.1

Jewellery EBIT margin 10.9 10.9 13.0 14.2 (4.6) 8.3 12.0 11.7 8.4 13.0 14.7 12.5 13.5 15.3 13.0 13.2 11.0 14.1 13.0 12.8
Jewellery EBIT margin (excl one-offs) 10.9 10.9 13.0 14.2 (4.6) 8.3 12.0 11.7 8.4 13.0 14.7 12.5 12.8 13.3 13.0 13.2 11.0 14.1 13.0 12.8

Source: Company, Kotak Institutional Equities estimates

Titan Company
Retailing India Research
 12

Exhibit 3: Titan - Key assumptions driving our growth forecast, March fiscal year-ends, 2022-27E (Rs mn)
CAGR (%)
2022 2023 2024E 2025E 2026E 2027E 2022-27E 2023-27E
Consolidated jewelry sales (recurring) 244,780 337,060 408,254 483,513 564,273 654,393 22 18
Growth (yoy %) 37.7 21.1 18.4 16.7 16.0
Standalone jewelry sales (recurring) 232,680 318,970 383,070 450,513 520,273 598,143 21 17
Growth (yoy %) 37.1 20.1 17.6 15.5 15.0
Domestic jewelry sales (recurring) 231,100 311,160 368,554 425,513 485,273 553,143 19 15
Growth (yoy %) 34.6 18.4 15.5 14.0 14.0
Overseas jewelry sales 1,120 4,020 10,500 20,000 30,000 40,000 104 78
Growth (yoy %) 258.9 161.2 90.5 50.0 33.3
Caratlane 12,560 21,880 29,200 38,000 49,000 61,250 37 29
Growth (yoy %) 74.2 33.5 30.1 28.9 25.0
Notes:
(1) Standalone jewelry sales = Domestic jewelry sales + Primary sales (exports) to overseas subsidiaries (includes initial store-level inventory)

Source: Company, Kotak Institutional Equities estimates

Titan Company
Retailing India Research
 13

Exhibit 4: Titan - Consolidated profit model, balance sheet and cash flows, March fiscal year-ends, 2017-26E (Rs mn)
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit model (Rs mn)
Net sales 132,608 161,198 197,785 210,515 216,440 287,990 405,750 493,958 552,240 643,288
EBITDA 11,555 16,447 21,365 24,666 17,240 33,410 48,790 55,808 69,447 83,967
Other income 705 889 1,829 1,532 1,860 2,340 3,080 4,082 2,798 3,755
Interest (377) (529) (525) (1,662) (2,030) (2,180) (3,000) (5,204) (6,058) (6,212)
Depreciation (1,105) (1,314) (1,628) (3,480) (3,750) (3,990) (4,410) (5,317) (6,089) (6,870)
Pretax profits 10,777 15,492 21,041 21,057 13,320 29,580 44,460 49,369 60,097 74,641
Tax (3,099) (4,334) (6,117) (6,090) (3,530) (7,060) (11,730) (12,589) (15,475) (19,220)
PAT 7,679 11,158 14,923 14,967 9,790 22,520 32,730 36,780 44,622 55,421
Share of associate earnings (18) (28) (22) (40) (50) — 10 5 — —
PAT after Associates 7,661 11,131 14,902 14,927 9,740 22,520 32,740 36,785 44,622 55,421
Extraordinary items (688) (112) (1,015) — — (540) — — — —
Net profit (reported) 6,973 11,019 13,887 14,927 9,740 21,980 32,740 36,785 44,622 55,421
Earnings per share (Rs) 8.6 12.5 16.8 16.8 11.0 25.4 36.9 41.4 50.3 62.4
Balance sheet (Rs mn)
Total equity 42,587 50,881 60,842 66,732 75,020 93,330 119,040 95,133 125,551 164,992
Total borrowings — 790 401 7,229 1,650 5,180 21,950 46,950 46,950 46,950
Deferred tax liabilities (net) (33) (329) (688) (1,528) (970) (3,180) (3,060) (3,060) (3,060) (3,060)
Total liabilities and equity 42,555 51,342 60,555 72,432 75,700 95,330 137,930 139,023 169,441 208,882
Net fixed assets (Incl CWIP) 10,071 11,677 12,353 13,208 12,590 12,880 14,770 17,398 20,157 23,338
Intangible assets 3,337 3,495 3,631 3,960 3,790 3,680 3,800 3,800 3,800 3,800
Investments 4,307 360 1,084 1,579 28,240 2,790 3,510 3,515 3,515 3,515
Cash 7,789 6,179 10,665 3,811 5,600 15,730 35,070 15,238 30,165 49,026
Net current assets (excl cash) 17,050 29,631 32,822 49,873 25,480 60,250 80,780 99,072 111,804 129,203
Total assets 42,555 51,342 60,555 72,432 75,700 95,330 137,930 139,023 169,441 208,882
Free cash flow (Rs mn)
Operating cash flow (excl working capital) 8,101 11,970 15,976 18,563 13,760 23,740 36,260 39,091 47,386 58,673
Working capital 9,158 (12,368) (3,036) (22,715) 26,210 (32,200) (24,130) (18,292) (12,732) (17,399)
Net finance cost/Income (136) (113) (512) 677 1,420 1,220 1,570 (694) 1,252 270
Cash flow from operations 17,123 (511) 12,429 (3,474) 41,390 (7,240) 13,700 20,105 35,906 41,544
Capital expenditure (6,251) (2,993) (2,635) (3,456) (1,390) (2,160) (4,200) (4,940) (5,522) (6,433)
Free cash flow 10,872 (3,504) 9,795 (6,930) 40,000 (9,400) 9,500 15,166 30,383 35,111
Key assumptions, growth, %
Net revenue growth 17.6 21.6 22.7 6.4 2.8 33.1 40.9 21.7 11.8 16.5
EBITDA growth 23.6 42.3 29.9 15.5 (30.1) 93.8 46.0 14.4 24.4 20.9
EPS growth 13.6 45.3 33.9 0.2 (34.7) 131.2 45.4 12.4 21.3 24.2
Gross margin (%) 21.0 20.6 20.8 21.1 18.4 19.4 20.4 19.4 20.6 21.0
A&P (% of sales) 3.6 3.1 3.0 2.7 1.3 2.0 2.4 2.4 2.4 2.4
Employee cost (% of sales) 5.9 5.5 5.2 5.7 4.9 4.7 4.1 4.0 4.0 4.0
EBITDA margin (%) 8.7 10.2 10.8 11.7 8.0 11.6 12.0 11.3 12.6 13.1
Tax rate (% of PBT) 28.8 28.0 29.1 28.9 26.5 23.9 26.4 25.5 25.8 25.8
Segment revenue assumptions, growth, %
Jewellery 21.5 25.1 23.6 5.7 11.6 32.1 40.7 21.2 11.1 16.7
Watches 4.4 3.4 14.8 7.1 (39.5) 46.0 42.9 17.4 16.4 14.3
Others 15.7 7.7 31.2 12.5 (27.0) 29.3 39.1 20.0 18.0 16.2
Ratios (%)
ROE (%) 19.7 23.8 26.7 23.4 13.7 26.8 30.8 34.4 40.4 38.1
ROCE (%) 18.2 22.5 24.2 20.0 11.0 22.0 24.1 23.5 26.8 27.2

Source: Company, Kotak Institutional Equities estimates

Titan Company
Retailing India Research
 UPDATE

PVR INOX (PVRINOX) ADD

Media
CMP(₹): 1,649 Fair Value(₹): 1,700 Sector View: Attractive NIFTY-50: 21,711 January 08, 2024

Not out of the woods yet Company data and valuation summary
Even as Bollywood content performance has improved in the past six months, Stock data
the recovery in occupancy is not up to the anticipated level. FY2024E
CMP(Rs)/FV(Rs)/Rating 1,649/1,700/ADD
occupancy is likely to be around 27%, an improvement from 25.2% in FY2023
52-week range (Rs) (high-low) 1,880-1,336
but below our base case (28%) and much below pre-pandemic normalized
Mcap (bn) (Rs/US$) 162/1.9
occupancy of 32%. Select tentpole movies are hitting new NBOC highs, but
ADTV-3M (mn) (Rs/US$) 919/11.1
the aggregate contribution of smaller movies is falling short of expectations.
We cut FY2024-26E EBITDA by 15-19%, roll over and revise FV to Rs1,700 Shareholding pattern (%)
(from Rs1,850), valuing PVR INOX at 12.5X (unchanged) pre-Ind AS
EV/EBITDA. 8.4
2.9

4.4 27.8
BO collections fall short of expectations in 3QFY24E
Box office collections in 3Q failed to build on 2Q’s strong momentum despite
32.0
the success of select movies such as Animal (NBOC: Rs5.5 bn), Salaar (Rs3.7 24.4
bn in 3Q) and Leo (Rs3.4 bn) and the moderate performance of Tiger 3 (Rs2.8
bn) and Dunki (Rs2 bn). Consequently, PVR INOX’s ticket sales/EBITDA in 3Q is Promoters FPIs MFs BFIs Retail Others
estimated to be 25-30%/55-60% down qoq. We attribute the shortfall in NBOC
Price performance (%) 1M 3M 12M

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
versus expectations to the Cricket World Cup (first half of 3Q) and the
Absolute (4) (3) (2)
inadequate contribution of smaller movies. The pipeline for 4QFY24E appears
Rel. to Nifty (8) (14) (22)
weak (Exhibit 4) and presents downside risk to consensus estimates.
Rel. to MSCI India (9) (16) (23)

Volatility in BO collections underlines structural change in consumer behavior

Forecasts/Valuations 2024E 2025E 2026E
PVR INOX’ occupancy in the past six quarters has varied in the range of 22% to
EPS (Rs) 18.5 40.7 56.0
32% (versus 30-36% in the six quarters prior to the pandemic). We believe that EPS growth (%) 178.0 120.3 37.4
OTT has raised the bar, reducing the tolerance for poor content and perhaps P/E (X) 89.2 40.5 29.5
reducing footfalls for smaller movies. An emerging trend post-pandemic: P/B (X) 1.9 1.9 1.8
good/tentpole films are tracking well (blockbusters have surpassed all-time EV/EBITDA (X) 21.0 14.9 12.0
high NBOC in their respective genres), but subpar content has few takers. While RoE (%) 2.2 4.7 6.1
Bollywood has stepped up its focus on content quality, a full recovery in Div. yield (%) 0.1 0.2 0.3
occupancy to pre-pandemic levels looks unlikely. Given this, we believe that Sales (Rs bn) 63 72 81
PVR INOX’s management should renegotiate rental contracts for properties, EBITDA (Rs bn) 8 12 14
where the rent-to-revenue ratio is 20%+ (quite a few properties in North/West Net profits (Rs bn) 2 4 5
India fall in this category), with the intent of making rental costs as variable as
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
possible so as to reduce margin volatility in weak quarters. Further, it should
Prices in this report are based on the market close of
also focus on scaling up the F&B business in the delivery ecosystem, an January 05, 2024
opportunity that merits investment.

We cut FY2024/25E EBITDA by 15-19%, roll over and cut FV to Rs1,700

PVR INOX’s occupancy in FY2024E is now likely to settle at 27% (+180 bps yoy),
100 bps below our earlier estimate. Every 100 bps drop in occupancy impacts
EBITDA margin by 150 bps and EBITDA by 8-10%. Hollywood actors/writers’
Related Research
strike in CY2023 had pushed releases of several movies; a stronger pipeline
(due to backlog) could partly aid PVR INOX’ occupancy in FY2025/26E (KIE → PVR INOX: Well-rounded quarter
28.5%). We cut FY2024-26E pre-Ind AS 116 EBITDA by 15-19%, earnings by 25- → PVR INOX: Consumer behavior normalizing
45%, roll over and revise FV to Rs1,700 (from Rs1,850). We value the company → PVR INOX: Another weak quarter
at 12.5X March 2026E pre-Ind AS 116 EV/EBITDA (unchanged); it implies 30X
FY2026E PE. Full sector coverage on KINSITE

Jaykumar Doshi Umang Mehta Praneeth Reddy

 15

PVR INOX—key changes to earnings model, March fiscal year-ends, 2024-26E (Rs mn)
Revised Previous Change (%)
2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Ticket sales (net) 34,297 39,563 44,071 34,792 40,453 44,557 (1.4) (2.2) (1.1)
F&B sales 20,115 23,204 25,847 21,173 24,855 27,639 (5.0) (6.6) (6.5)
Ad revenues 4,595 5,220 5,991 4,837 5,866 6,407 (5.0) (11.0) (6.5)
Convenience fees 1,632 1,952 2,214 1,718 2,091 2,367 (5.0) (6.6) (6.5)
Other operating income 2,175 2,259 2,418 2,100 2,259 2,418 3.6 0.0 0.0
Total revenues 62,815 72,198 80,542 64,621 75,524 83,389 (2.8) (4.4) (3.4)
Film hire charges (14,919) (17,210) (19,171) (15,048) (17,496) (19,382) (0.9) (1.6) (1.1)
F&B consumption (4,948) (5,743) (6,397) (5,399) (6,338) (7,048) (8.4) (9.4) (9.2)
Employee costs (6,550) (6,954) (7,308) (6,300) (6,629) (6,934) 4.0 4.9 5.4
Rent (12,000) (13,192) (14,749) (12,150) (13,240) (14,664) (1.2) (0.4) 0.6
Other operating costs (16,050) (17,500) (18,800) (16,000) (17,500) (18,800) 0.3 0.0 0.0
Total operating costs (54,468) (60,599) (66,425) (54,897) (61,203) (66,828) (0.8) (1.0) (0.6)
EBITDA 8,347 11,600 14,117 9,724 14,321 16,561 (14.2) (19.0) (14.8)
PAT 1,811 3,990 5,482 3,294 6,097 7,389 (45.0) (34.6) (25.8)
EPS (Rs/share) 18.5 40.7 56.0 33.6 62.2 75.4 (45.0) (34.6) (25.8)

Key assumptions
EBITDA margin (%) 13.3 16.1 17.5 15.0 19.0 19.9
Screen additions (#) 120 140 130 150 125 100 (20.0) 12.0 30.0
Footfalls (mn) 156 171 182 164 183 194 (5.0) (6.6) (6.5)
ATP gross (Rs) 262 275 289 253 263 273 3.8 4.8 5.8
SPH gross (Rs) 133 140 147 133 140 147 — — —
Ad revenue growth (%) 59 14 15 67 21 9
Occupancy (%) 27.0 28.5 28.8 28.0 29.4 29.4
F&B revenue growth (%) 76.6 15.4 11.4 77.4 17.4 11.2
F&B gross margin (%) 75.4 75.3 75.3 74.5 74.5 74.5
F&B gross profit (Rs mn) 15,167 17,461 19,450 15,774 18,517 20,591 (3.9) (5.7) (5.5)

Source: Company, Kotak Institutional Equities estimates

PVR INOX
Media India Research
 16

The belly (movies #6-25) disappointed in Dec-23 quarter but performed well on a full-year basis
Net box office collections of top-25 movies (across genres), Calendar year-ends, 2022-23
2022 2023 Change
Movie NBOC Movie NBOC %
Top-5 movies (Rs mn) (Rs mn)
1 KGF Chapter 2 8,597 Jawan 6,403
2 RRR 7,822 Animal 5,475
3 Avatar: The Way of Water 3,914 Pathan 5,431
4 Kantara 3,096 Gadar 2 5,257
5 Brahmastra Part One: Shiva 2,672 Salaar: Cease Fire - Part 1 3,738
Total top-5 movies 26,101 26,303 0.8
Top 6-25 movies
6 Ponniyin Selvan - Part 1 2,665 Jailer 3,486
7 The Kashmir Files 2,523 Leo 3,410
8 Vikram 2,473 Adipurush 2,882
9 Drishyam 2 2,397 Tiger 3 2,828
10 Bhool Bhulaiyaa 2 1,843 The Kerala Story 2,417
11 Sarkaru Vaari Paata 1,377 Dunki 2,039
12 Gangubhai Kathiawadi 1,320 Ponniyin Selvan - Part 2 1,820
13 Doctor Strange in the Multiverse of Madness 1,311 Varisu 1,781
14 Beast 1,303 Waltair Veerayya 1,611
15 Bheemla Nayak 1,126 Rocky Aur Rani Ki Prem Kahani 1,536
16 Valimai 1,061 OMG 2 1,512
17 Thor: Love and Thunder 1,047 Tu Jhoothi Main Makkar 1,473
18 Radhe Shyam 1,044 Oppenheimer 1,317
19 Karthikeya 2 868 Thunivu 1,219
20 JugJugg Jeeyo 854 Kisi Ka Bhai Kisi Ki Jaan 1,109
21 777 Charlie 848 Mission Impossible - Dead Reckoning Part 1 1,103
22 Vikrant Rona 801 Fast X 1,098
23 Vikram Vedha 789 Dream Girl 2 1,067
24 Don 779 Veera Simha Reddy 976
25 Thiruchitrambalam 771 Fukrey 3 960
Total top 6-25 movies 27,200 35,643 31.0

Total top 25 movies 53,302 61,946 16.2

Source: sacnilk.com, Kotak Institutional Equities

PVR INOX
Media India Research
 17

3QFY24 had no movies in the Rs1-2 bn bucket versus five in 2Q

Net box office collections (NBOC) of key movies, March fiscal year-ends, 2022-24E
FY2022 FY2023 FY2024E
NBOC NBOC NBOC
Movie (Rs mn) Movie (Rs mn) Movie (Rs mn)
KGF Chapter 2 (overall) 8,597 The Kerala Story 2,391
Vikram (overall) 2,473 Fast X 1,098
Bhool Bhulaiyaa 2 1,856 2018 929
SVP (overall 1,377 Zara Hatke Zara Bachke 884
Doctor Strange 1,269 Satyaprem Ki Katha 839
Hits
777 Charlie (overall) 1,028 Dasara 819
JugJugg Jeeyo 853 Gaurdians of Galaxy Vol 3 600
Jurassic World: Dominion 695 Carry on Jatta 3 476
Top Gun: Maverick 418
1Q
18,976 8,034
Beast 1,303 Adipurush (overall) 2,880
Samrat Prithviraj 660 PS-2 (Overall) 1,820
Runway 34 320 Kisi Ka Bhai Kisi Ki Jaan 1,100
Heropanti 2 265 Bholaa 900
Flops
Jersey 205 IB71 225
Jayeshbhai Jordaar 175 1920: Horrors of the Heart 177
Attack 150 Gumraah 49
3,146 7,151
Ponniyin Selvan: Par 1 (overall) 2,665 Jawan 6,403
Brahmastra Part One: Shiva 2,440 Gadar 2 5,256
Thor: Love and Thunder 1,047 Jailer (overall) 3,486
Karthikeya 2 (overall) 868 Rocky Aur Rani Ki Prem Kahaani 1,536
Vikrant Rona (overall) 801 OMG 2 1,512
Vikram Vedha 775 Oppenheimer 1,306
Hits Sita Ramam (overall) 655 Mission Impossible: Dead Reckoning Part One 1,102
Bimbisara (overall) 492 Dream Girl 2 1,067
Rocketry 260 Bro (overall) 827
2Q Baipan Bhari Deva 763
Mark Antony 729
Baby (overall) 640
10,004 28,669
Bell Bottom 265 Laal Singh Chaddha 587 Kushi 483
Shang-Chi and the Legend of the Ten Rings
153 Shamshera 430 Bhola Shankar 306
Fast & Furious 9 136 Ek Villain Returns 415 Insidious: The Red Door 181
Flops
Chehre 35 Raksha Bandhan 444 King of Kotha 175
Thalaivii 3 Liger (Hindi) 212 Subhedar 141
591 2,527 1,457
Spider-Man: No Way Home 2,120 Avatar: The Way of Water 3,914 Animal 5,475
Sooryavanshi 1,950 Kantara (overall) 3,096 Salaar (overall) 3,738
Pushpa (Hindi) 1,060 Dhrishyam 2 2,389 Leo (overall) 3,410
Black Panther Wakanda Forever 715 Tiger 3 2,828
Bhediya 658 Dunki 2,039
Hits
Black Adam 487 Fukrey 3 960
Sam Bahadur 907
Bhagavanth Kesari 848
3Q
12th Fail 539
5,130 11,260 21,611
83 1,020 Ram Setu 640 Skanda 416
Antim 376 Uunchai 317 Chandramukhi 2 392
Chandigarh Kare Aashiqui 285 Thank God 308 Tiger Nageswara Rao 377
Flops
Tadap 248 Doctor G 300 Mission Raniganj 342
Eternals 217 Cirkus 209 The Vaccine War 103
2,537 2,121 1,631
RRR (overall) 7,822 Pathaan 5,432
The Kashmir Files 2,525 Varisu (overall) 1,781
Gangubai Kathiawadi 1,289 Waltair Veerayya (overall) 1,602
The Batman 481 Tu Jhoothi Main Makkaar 1,345
Bheemla Nayak (overall) 1,126 Thunivu (overall) 1,219
Hits
Valimai 1,061 VSR (overall) 976
Bholaa 900
Vaathi (overall) 773
4Q
John Wick: Chapter 4 509
14,304 14,537
Bachchhan Paandey 503 Ant-man and the Wasp 420
Badhai Do 195 Shehzada 325
Radhe Shyam (overall) 893 Mrs Chatterjee vs Norway 193
Flops
Jhund 173 Selfiee 165
Valimai (Hindi) 15
1,778 1,176

Source: sacnilk.com, Kotak Institutional Equities

PVR INOX
Media India Research
 18

PVR INOX: Movie-wise estimate of NBOC for 4QFY24E (Rs mn)

Movie Release date Industry India NBOC (Rs mn) PVR INOX share (%) PVR INOX NBOC (Rs mn)
4QFY24
Dunki 22-Dec-23 Bollywood 500 40 200
Salaar 22-Dec-23 Regional 1,000 18 180
Merry Christmas 12-Jan-24 Bollywood 1,000 40 400
Captain Miller 12-Jan-24 Regional 1,500 18 270
Ayalaan 12-Jan-24 Regional 500 18 90
Saindhav 12-Jan-24 Regional 500 18 90
Hanuman 12-Jan-24 Regional 1,000 18 180
Guntur Kaaram 12-Jan-24 Regional 1,500 18 270
Lal Salaam 12-Jan-24 Regional 500 18 90
The Beekeeper 19-Jan-24 Hollywood 500 60 300
Fighter 25-Jan-24 Bollywood 3,500 40 1,400
Thangalan 25-Jan-24 Regional 500 18 90
Start Up 16-Feb-24 Bollywood 800 40 320
Operation Valentine 16-Feb-24 Regional 500 18 90
Yodha 15-Mar-24 Bollywood 500 40 200
Dune 2 15-Mar-24 Hollywood 1,000 60 600
Kung Fu Panda 4 29-Mar-24 Hollywood 500 60 300
Others 1,937
Total 15,800 7,007

Source: sacnilk.com, Kotak Institutional Equities estimates

The strike of Hollywood actors and writers in CY2023 has pushed releases of several key movies to FY2025/26E
Key upcoming releases in Hollywood
Movie Release date
Madame Web Feb-24
Dune: Part Two Mar-24
Ghostbusters: Afterlife 2 Mar-24
Mickey 17 Mar-24
Godzilla x Kong: The New Empire Apr-24
Challengers Apr-24
The Fall Guy May-24
Furiosa May-24
Kingdom of the Planet of the Apes May-24
Ballerina Jun-24
Twisters Jul-24
Borderlands Aug-24
Alien: Romulus Aug-24
Kraven the Hunter Aug-24
Captain America: Brave New World Jul-24
Deadpool 3 Jul-24
Beetlejuice 2 Sep-24
Transformers One Sep-24
Joker: Folie a Deux Oct-24
Venom Sequel Nov-24
Gladiator 2 Nov-24
The Lord of the Rings: The War of the Rohirrim Dec-24
The Karate Kid Dec-24
Nosferatu Dec-24
Dirty Dancing sequel Summer 2025
Spider-Man 4 Summer 2025
Thunderbolts Jul-25
Blade Nov-25
Avatar 3 Dec-25
Fantastic Four May-25
Avengers: The Kang Dynasty May-26
Star Wars May-26
Spider-Man: Beyond the Spider-Verse TBD

Source: media articles, Kotak Institutional Equities

PVR INOX
Media India Research
 19

Key Bollywood and Hollywood movies expected to be released until April 2024E
Rel Date Movie Language Cast
Bollywood- key titles
Jan-24 Lathal Trip Hindi Rishabh Jain,Sareh Far,Lada Lucky,Sanjay Sujitabh ,Siddharth Jain,Deepika Pareek, Kabir Khan,Kushaljeet
Jan-24 Tauba Tera Jalwa Hindi Jatin Khurana, Ameesha Patel, Angela Krislinzki, Rajesh Sharma , Neeraj Sood
Jan-24 Fire Of Love Red Hindi Krushna Abhishek, Payal Ghosh, Kamlesh Swant
Jan-24 Ruslaan Hindi Aayush Sharma, Sudhrii Shreya, Jagapati Babu
Jan-24 Merry Christmas Hindi, Telugu, Tamil Katrina Kaif, Vijay Sethupathi
Jan-24 Main Atal Hoon Hindi Pankaj Tripathi
Jan-24 Dashmi Hindi Vardhan Puri, Sanjay Pandey
Hindi, Tamil, Telugu,
Jan-24 Fighter - Imax, Ice Hrithik Roshan, Deepika Padukone, Anil Kapoor
Malayalam
Feb-24 Section 108 Hindi Nawazuddin Siddiqui, Regina Cassandra
Feb-24 The Buckingham Murder Hindi Kareena Kapoor, Keith Allen, Chris Wilson
Feb-24 Untitled Hindi Ajay Devgn, Aaman Devgan, Rasha Thadani
Feb-24 Untitled Hindi Shahid Kapoor, Kriti Sanon, Dharmendra, Dimple Kapadia.
Feb-24 Startup (Tbd) Hindi Akshay Kumar, Radhika Madan, Paresh Rawal
Feb-24 Love Sex Aur Dhokha 2 Hindi Nimrit Ahluwalia, Anupam Joardar
Feb-24 Crakk Jeetega…. Toh Jiyegaa Hindi Vidyut Jammwal, Nora Fatehi
Mar-24 Laapataa Ladies Hindi Chhaya Kadam, Ravi Kishan, Sparsh Srivastav
Mar-24 Untitled - Ajay Devgn - Vash/Shaitaan Hindi Ajay Devgn, R Madhavan, Jyotika
Mar-24 Yodha Hindi Sidharth Malhotra, Disha Patani, Raashi Khanna
Mar-24 The Crew Hindi Kareena Kapoor, Diljit Dosanjh, Tabu, Kriti Sanon
Mar-24 Munjhya Hindi Abhay Verma, Sharvari Wagh, Mona Singh, S Satyaraj.
Mar-24 Metro In Dino Hindi Aditya Roy Kapoor, Sara Ali Khan, Ali Fazal, Fatima Sana Shaikh, Konkona Sen Sharma, Anupam Kher
Apr-24 Bastar : The Naxal Story Hindi Adah Sharma, Anupam Joardar
Hindi, Tamil, Telugu,
Apr-24 Bade Miyan Chote Miyan/10Th April Eid Akshay Kumar, Tiger Shroff
Kannada, Malayalam
Apr-24 Mr And Mrs Mahi Hindi Rajkummar Rao, Janhvi Kapoor
Apr-24 Tehran Hindi John Abraham, Manushi Chillar, Neeru Bajwa
Apr-24 Auron Mein Kahan Dum Tha Hindi Ajay Devgn, Tabu, Jimmy Sheirgill, Saiee Manjrekar

Hollywood (English)
Jan-24 Renaissance : A Film By Beyonce ( 5 To 7) Imax English Beyonce
Jan-24 Dream Scenario English Lily Bird, Nicolas Cage, Julianne Nicholson, Jessica Clement, Star Slade, David Klein, Kaleb Horn, Liz Adjei
Jan-24 Renaissance : A Film By Beyonce ( 11 To 14) Imax English Beyonce
Jan-24 Night Swim - Ice, Dbox English Wyatt Russell And Kerry Condon.
Jan-24 The Beekeeper- Imax , Dbox , 4Dx, Screen X English Jason Statham, Emmy Raver-Lampman, Bobby Naderi, Jeremy Irons
Feb-24 Argylle - Imax , Dbox, 4Dx, Screen X English Henry Cavill, Dua Lipa, John Cena, Bryce Dallas Howard, Catherine O'Hara
Feb-24 Beautiful Wedding English Dylan Sprouse, Virgina Gardner, Rob Estes, Libe Barer
Feb-24 The Book Of Clarence English Lakeith Stanfield, Omar Sy, Rj Cyler, Benedict Cumberbatch
Feb-24 The Holdovers English Paul Giamatti, Da'Vine Joy Randolph, Dominic Sessa
Feb-24 It Ends With Us English Blake Lively, Brandon Sklenar, Jenny Slate
Feb-24 Dune Part One Reissue - Imax English, Hindi Rebecca Ferguson, Timothee Chalamet , Zendaya
English, Hindi, Tamil,
Feb-24 Madame Web - Imax, Ice, 4Dx, Screen X Dakota Johnson
Telugu
Feb-24 Bob Marley: One Love English Kingsley Ben - Adir, Lashana Lynch
Mar-24 Imaginary English Dewanda Wise, Tom Payne, Pyper Braun
Mar-24 Dune Part Two - Imax, 4Dx, Mx4D, Screen X, Ice English, Hindi Rebecca Ferguson, Timothee Chalamet , Zendaya
Mar-24 The Color Purple English Danny Glover, Whoopi Goldberg, Oprah Winfrey
Mar-24 Demon Slayer Omnibus - Imax Japanese, English Awaiting Info
Mar-24 Arthur The King English Mark Wahlberg, Nathalie Emmanuel, Simu Liu
Mar-24 One Life English Anthony Hopkins, Helena Bonham Carter, Jonathan Pryce
Mar-24 Kung Fu Panda 4 - Ice English Jack Black, Angelina Jolie, Seth Rogen
Mar-24 Ghostbusters : Frozen Empire - Ice English Mckenna Grace, Paul Rudd, Carrie Coon
Mar-24 Mickey 17 English Steven Yeun, Toni Collette, Robert Pattinson
Apr-24 Untitled Disney English To Be Confirmed
English,Hindi,
Apr-24 Godzilla X Kong: The New Empire - Imax, 4Dx, Screen X, Ice Dan Stevens, Rebecca Hall, Brian Tyree Henry, Kaylee Hottle, Fala Chen
Tamil,Telugu
Apr-24 Challengers English Zendaya, Mike Faist , Josh O'Connor

Source: Company, Kotak Institutional Equities

PVR INOX
Media India Research
 20

Key regional movies expected to be released until April 2024E

Rel Date Movie Language Cast
Regional
Jan-24 Koina Konda Xil Assamese Upakul Bordoloi,Bimol Jyoti Bordoloi,Mihiram Bordoloi
Jan-24 Danny Jigar - Ek Matra Gujarati Yash Soni, Tarjanee Bhadla, Jitendra Thakkar, Chetan Daiya
Jan-24 Aattam Malayalam Vinay Forrt, Zarin Shihab, Kalabhavan Shanjohn
Jan-24 Palayalam Pc Malayalam Binu Adimali
Jan-24 Mango Mury Malayalam Jaffer Idukki, Srikant Murali, Sibi Thomas
Jan-24 Raastha Malayalam Anagha Narayanan, Aradhya Ann, Sudheesh
Jan-24 Ole Aale Marathi Nana Patekar, Makarand Anaspure, Siddharth Chandekar, Sayali Sanjeev
Jan-24 Panchak Marathi Bharti Achrekar, Satish Alekar, Deepti Devi, Anand Ingle, Vidyadhar Joshi, Addinath Kothare, Aashish Kulkarni
Jan-24 Satyashodhak Marathi Rajshri Deshpande, Jayshree Gaikwad, Ganesh Yadav, Ravi Patwardhan, Ravindra Mankani
Jan-24 Samaya Kahiba Kie Kahara Odia Amlan Das,Om Acharya
Jan-24 Jatta Dolie Naa Punjabi Kirandeep Rayat, Prabh Grewal, Shivendra Mahal
Jan-24 Mansooba Punjabi Rana Ranbir, Sardar Sohi, Malkeet Rauni
Jan-24 Aranam Tamil Piriyan, Varsha Saravanakumar
Jan-24 Kumbaari Tamil John Vijay, Saravanan, Mahana Sanjeevi
Jan-24 Double Engine Telugu Muni Myatari, Ahith Mohan, Rohit Narsimha, Raju Shivaratri, Viswender Reddy, Sai Kiran, Kumar Pawan
Jan-24 Deenamma Jeevitham Telugu Dev, Priya Chohan, Saritha Chohan, Bunny, Shannu, Lucky
Jan-24 Raghava Reddy Telugu Siva Katamneni, Nandita Swetha, Raasi, Bithiri Sathi, Srinivas Reddy
Jan-24 14 Days Love Telugu Manoj Puttur, Chandini Bhagawanani, Raja Ravindra, Sana Shanoor
Jan-24 Shaan(Love War) Telugu Busa Kumar Yadav, Priya Deshpag, Busa Sreyan Yadav, Busa Ram Charan, Velagandhula Suchitra
Jan-24 Abraham Ozler Malayalam Jayaram, Anaswara Rajan, Arya Salim, Dileesh Pothan
Jan-24 Badami Hyenar Kobole Bengali Abir Chatterjee, Shruti Das, Goutam Halder
Jan-24 Munda Rockstar Punjabi Mohmmad Nazi, Yuvraj Hans And Aditi Arya
Jan-24 Mission : Chapter 1 Tamil Arun Vijay, Amy Jackson
Jan-24 Ayalaan Tamil, Telugu Shiva Karthikeyan, Rakul Preet Singh, Karunakaran, Yogi Babu
Tamil, Telugu, Hindi,
Jan-24 Captain Miller - Imax Dhanush, Shiva Rajkumar, Sundeep Kishan, Priyanka Arul Mohan
Kannada, Malayalam
Jan-24 Guntur Kaaram Telugu Mahesh Babu, Meenakshi Chaudhary,Samyuktha Menon, Sree Leela
Telugu, Hindi,Tamil,
Jan-24 Hanuman - Ice Teja Sajja, Varalaxmi Sarathkumar, Vinay Rai
Kannada, Malayalam
Jan-24 Eagle Telugu Ravi Teja, Anupama Parameswaran, Kavya Thapar, Srinivas Avasarala, Madhubala, Navdeep
Jan-24 Saindhav Telugu Venkatesh Daggubati, Arya, Ruhani Sharma, Shradha Srinath, Andrea, Nawazuddin Siddque
Jan-24 Naa Saami Ranga Telugu Nagarjuna Akkineni
Jan-24 Oti Uttam Bengali Anindya Sengupta, Gourab Chatterjee , Roshni Bhattacharya
Jan-24 Hubba Bengali Indraneil Sengupta, Lokhant Day, Mosharraf Karim
Jan-24 Ittaa Kittaa Gujarati Manasi Parekh, Raunaq Kamdar, Jai Vaidya, Alpana Buch
Jan-24 Drame Aale Punjabi Sardar Kamal, Sukhwinder Chahal, Rubi Anam
Jan-24 Mafia Kannada,Tamil,Telugu Prajwal, Aditi Prabhudeva, Devaraj
Jan-24 Malaikottai Vaaliban Malayalam Mohan Lal , Sonali Kulkarni, Danish Sait, Katha Nandi
Jan-24 Akad Bakad Baby Boo Punjabi Vikram Chouhan, Prabh Gerwal, Rupinder Rupi, Gurpreet Bhangu
Jan-24 Lambran Da Lana Punjabi Babal Rai, Sara Gurpal, Yasir Husssain
Feb-24 Lagan Special Gujarati Malhar Thakar, Puja Joshi
Feb-24 Sridevi Prasanna Marathi Sai Tamhankar, Siddharth Chandekar
Feb-24 Warning 2 Punjabi Gippy Grewal, Prince Kj, Dheeraj Kumar
Feb-24 Kamthaan Gujarati Hitu Kanodia, Sanjay Goradia, Arvind Vaidya, Darshan Jariwala,
Feb-24 Yatra 2 Telugu Mammootty, Jeeva
Feb-24 Khadari Punjabi Gurnam Bhullar, Kartar Cheema, Surbhi Jyoti
Feb-24 Tillu Square 2 Telugu Siddhu Jonnalagadda
Feb-24 Ooru Peru Bhairavakona Telugu Sundeep Kishan, Kavya Thappar
Feb-24 Kasoombo Gujarati Raunaq Kamdar, Shraddha Dangar, Dharmendra Gohil, Darshan Pandya, Monal Gajjar
Feb-24 Shivrayancha Chhava Marathi Chinmay Mandlekar, Trupti Toradmal, Prasanna Ketkar, Abhijeet Shwetachandra,Mrinal Kulkarni
Feb-24 Jee Ve Sohneya Jee Punjabi Simi Chahal, Imran Abbas
Feb-24 Operation Valentine Telugu, Hindi Varun Tej, Manushi Chhillar
Feb-24 Je Paisa Bolda Hunda Punjabi Hardeep Grewal, Ihana Dhillon, Raj Dhaliwal
Mar-24 Ni Main Sass Kuttni 2 Punjabi Mehtab Virk, Tanvi Nagi, Gurpreet Ghuggi , Karamjit Anmol, Anita Devgan
Mar-24 Booo Main Dargi Punjabi Roshan Prince, Isha Rikhi, Karamjit Anmol, Yograj Singh
Mar-24 Hit The Third Case Telugu Nani
Mar-24 Karateka Damanaka Kannada Shivarajkumar, Prabhu Deva, Rockline Venkatesh
Mar-24 Blackia 2 Punjabi Japji Khaira, Aarushi Sharma, Raj Singh Jhinjar, Sukhi Chahal
Mar-24 Gangs Of Godavari Telugu Vishwak Sen, Anjali, Neha Shetty
Telugu, Hindi, Tamil,
Mar-24 Double Ismart Ram Pothineni
Malayalam, Kannada
Mar-24 Jatt Nuu Chudail Takri Punjabi Gippy Grewal, Sargun Mehta
Mar-24 Vadda Ghar Punjabi Jobanpreet Singh, Mandy Takhar, Nirmal Rishi , Sardar Sohi
Mar-24 Yuva Kannada Yuva Rajkumar, Sapthami Gowda
Mar-24 Parahuna 2 Punjabi Ranjit Bawa, Aditi Sharma
Apr-24 Powder Kannada Diganth Manchale, Dhanya Ramkumar , Sharmila Mandre
Apr-24 Devara Part 1 Telugu, Tamil, Hindi Jr Ntr, Janhvi Kapoor , Saif Ali Khan
Apr-24 Kanguva (Sankranti)(38 Languages) / Tbd Tamil Suriya, Disha Patani
Apr-24 Shayar Punjabi Neeru Bajwa, Satinder Sartaj,
Apr-24 Par Channa De Punjabi Mandy Thakar, Tania, Dilpreet Dhiilon, Gitaj Bindrakhia
Apr-24 Chel Jindiye 2 Punjabi Neeru Bajwa, Kulwinder Billa, Jas Bajwa

Source: Company, Kotak Institutional Equities

PVR INOX
Media India Research
 21

Condensed consolidated financials of PVR INOX, March fiscal year-ends, 2017-26E (Rs mn)
PVR INOX
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit model
Revenues 21,628 23,478 30,947 34,170 2,704 13,310 37,506 62,815 72,198 80,542
Ticket sales (net) 11,256 12,471 16,354 17,312 1,019 6,699 18,940 34,297 39,563 44,071
F&B sales 5,794 6,250 8,584 9,605 756 4,133 11,932 20,115 23,204 25,847
Ad revenues 2,518 2,969 3,535 3,759 178 721 2,898 4,595 5,220 5,991
Other operating income 2,060 1,788 2,474 3,495 752 1,758 3,736 3,807 4,211 4,632
EBITDA 3,570 4,155 5,955 5,799 (4,641) (2,328) 3,202 8,347 11,600 14,117
Other income 189 177 240 352 401 777 684 750 650 650
Depreciation 1,384 1,537 1,913 2,324 2,383 2,642 3,029 4,814 5,274 5,897
Interest expense 806 837 1,280 1,521 1,490 1,546 1,589 1,882 1,656 1,561
Pretax profits 1,528 1,952 3,002 2,305 (8,113) (5,737) (840) 2,401 5,320 7,309
Tax 570 704 1,096 978 (1,463) (1,548) 1,589 590 1,330 1,827
PAT before minority interest 958 1,247 1,906 1,327 (6,651) (4,189) (2,429) 1,811 3,990 5,482
Minority interest 1 0 — 1 4 — — — — —
PAT 958 1,247 1,906 1,326 (6,655) (4,189) (2,429) 1,811 3,990 5,482
Diluted earnings per share (Rs) 20.5 26.7 40.8 27.1 (118.7) (68.8) (37.3) 18.5 40.7 56.0
Balance sheet
Total equity 9,650 10,754 12,395 22,482 27,301 23,829 82,146 83,739 87,249 92,072
Deferred taxation liability 9 6 955 14 7 25 32 32 32 32
Total borrowings 8,196 8,305 12,824 12,947 11,013 15,052 17,926 17,926 16,926 15,926
Minority interest 405 8 2,566 3 0 (3) (7) (7) (7) (7)
Current liabilities 3,925 4,316 7,896 7,069 7,675 6,858 10,557 12,365 13,323 14,249
Total liabilities and equity 22,257 23,488 39,090 44,257 47,481 46,477 111,019 114,420 117,888 122,637
Cash and cash equivalents 309 339 352 3,246 7,323 5,786 3,618 4,841 5,463 8,026
Other current assets 5,363 5,880 5,861 6,834 5,308 6,087 11,456 12,501 13,593 14,606
Tangible fixed assets 10,447 11,270 14,900 16,358 14,903 15,179 29,431 30,747 32,685 34,040
Goodwill and Intangibles 4,640 4,629 13,108 12,455 12,294 12,110 58,908 58,725 58,542 58,359
CWIP 1,056 1,017 2,208 1,547 2,172 645 2,473 2,473 2,473 2,473
Total assets 22,257 23,488 39,090 44,257 47,481 46,477 111,019 114,420 117,888 122,637
Free cash flow
Operating cash flow, excl. working capital 3,442 3,880 5,312 10,518 (3,323) 1,234 10,608 7,757 10,270 12,289
Working capital changes (246) 582 2,984 (2,647) (803) 434 (1,969) 763 (134) (87)
Interest expense (net) (617) (660) (1,041) (1,169) (1,090) (768) (905) (1,132) (1,006) (911)
Capital expenditure (3,024) (3,287) (4,362) (3,851) (1,167) (1,249) (6,360) (5,947) (7,029) (7,069)
Free cash flow (445) 516 2,894 2,851 (6,384) (349) 1,375 1,441 2,101 4,223
Key ratios and assumptions
Footfalls (mn) 75.2 76.1 99.3 101.7 6.8 33.5 95.1 155.8 171.1 181.6
Average Ticket Price (ATP) (Rs) 196 210 207 204 180 235 240 262 275 289
F&B spends per head (SPH) (Rs) 81 89 91 99 96 124 128 133 140 147
Ad revenue growth (%) 17.3 17.9 19.1 6.3 (95.3) 304.9 302.1 58.6 13.6 14.8
Screens (#) 579 625 763 845 842 854 1,680 1,800 1,940 2,070
EBITDA margin (%) 16.5 17.7 19.2 17.0 (171.6) (17.5) 8.5 13.3 16.1 17.5
Net debt/equity (X) 0.8 0.7 1.0 0.4 0.1 0.4 0.2 0.2 0.1 0.1
RoAE (%) 10.4 12.2 16.5 7.6 (26.7) (16.4) (4.6) 2.2 4.7 6.1
RoACE (%) 9.1 9.2 11.8 7.0 (18.2) (11.3) 0.8 2.8 4.9 6.2

Notes:
(1) FY2020-24E estimates above are underlying financials without adoption of Ind-AS 116.
(2) PVR INOX starting Jan 2023.

Source: Company, Kotak Institutional Equities estimates

PVR INOX
Media India Research
 UPDATE

Sula Vineyards (SULA) ADD

Consumer Staples
CMP(₹): 554 Fair Value(₹): 600 Sector View: Attractive NIFTY-50: 21,711 January 08, 2024

WIPS continuation a re-rating event Company data and valuation summary

As per news articles, the Maharashtra government, in a state cabinet Stock data
meeting, has decided to extend the WIPS (Wine Industry Promotion Scheme),
CMP(Rs)/FV(Rs)/Rating 554/600/ADD
under which 80% of VAT is refunded as a subsidy, for five years and a
52-week range (Rs) (high-low) 568-316
government regulation would be passed to this effect following approval in
Mcap (bn) (Rs/US$) 47/0.6
the upcoming state cabinet meeting. The continuation of WIPS would
ADTV-3M (mn) (Rs/US$) 195/2.3
address a key investor concern; it would remove the regulatory uncertainty,
offering better earnings visibility that merits a re-rating. We raise FV to Rs600, Shareholding pattern (%)
valuing Sula at 40X FY2026E PE (37X earlier), partly factoring in the upside.
Reiterate ADD.
23.1 26.3
Event: Maharashtra state government decides to continue WIPS for five years
According to news articles (link), the Maharashtra government, in a state
20.8 12.3
cabinet meeting, has decided to extend the WIPS (Wine Industry Promotion
Scheme) for five years and approved the refund for the past four years (FY2021- 1.1 16.5

24), to offer support to the grape-growing farmers of Maharashtra. This

Promoters FPIs MFs BFIs Retail Others
decision/discussion recorded as the minutes of meeting is expected to be
approved in the upcoming state cabinet meeting (this week or the next), Price performance (%) 1M 3M 12M

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
following which a government regulation would be passed with details of the Absolute 17 17 0

scheme extension for it to become actionable. Rel. to Nifty 13 6 0

Rel. to MSCI India 13 4 (21)
WIPS continuation would address a key investor concern/regulatory overhang
Maharashtra accounts for 45-50%/~60% of Sula’s topline/EBITDA. Favorable Forecasts/Valuations 2024E 2025E 2026E

regulatory policies, such as WIPS (VAT in MH is 20%, of which 16 percent points EPS (Rs) 11.1 12.7 14.9

are refunded as a subsidy under WIPS) and low excise duty (Rs10 per liter) have EPS growth (%) 11.2 14.1 17.6
P/E (X) 49.9 43.8 37.2
helped domestic wine manufacturers. VAT refunds of Rs439 mn accounted for
P/B (X) 7.7 6.8 6.1
28% of Sula’s overall EBITDA in FY2023. A complete/phased removal of WIPS
EV/EBITDA (X) 27.3 24.2 21.3
would have necessitated price hikes to the tune of 3-14% to protect EBITDA
RoE (%) 16.5 16.6 17.3
(Exhibit 4), resulting in a reduction in the price gap between domestic and
Div. yield (%) 0.5 0.6 0.8
imported wines (WIPS is not applicable to imports). Sula’s government grants
Sales (Rs bn) 6 7 7
(VAT refund) receivables stood at ~Rs1.3 bn as of Sep-23. We note that the
EBITDA (Rs bn) 2 2 2
proposal to continue WIPS failed to get state cabinet approval in December
Net profits (Rs bn) 1 1 1
2022, creating regulatory uncertainty/overhang. Given this backdrop, last
week’s decision to revive WIPS (approval and government regulation pending) Source: Bloomberg, Company data, Kotak Institutional Equities estimates

addresses a key investor concern. Prices in this report are based on the market close of
January 05, 2024
We raise FV to Rs600, valuing Sula at 40X FY2026E PE (37X earlier)
Sula, a category creator for wines in India, enjoys a 50%+ share in the domestic
grape wine market. The company’s strong brand equity, comprehensive product
portfolio, operational and financial discipline, wide distribution network,
secured RM sourcing contracts and robust manufacturing footprint position it
well to benefit from rising wine consumption in India. Sula’s execution in the Related Research
past four quarters after the listing has been steady and on guided lines. The
→ Sula Vineyards: Premium wines continue to
stock traded at 25%-35% discount (before Friday’s 12% move) to UNSP/UB
→ shine
Sula Vineyards: Strong growth in seasonally
partly due to a weak return profile and regulatory overhang (WIPS). The
weakVineyards:
→ Sula quarter Leading India’s grape escape
continuation of WIPS would remove regulatory uncertainty, offering better
earnings visibility, and it merits a re-rating. We raise FV to Rs600, valuing Sula
at 40X Mar-2026E PE (from 37X) partly factoring in this re-rating. Reiterate ADD. Full sector coverage on KINSITE

Jaykumar Doshi Umang Mehta Praneeth Reddy

 23

Maharashtra accounts for ~45-50% of Sula’s topline Maharashtra accounts for ~60% of Sula’s EBITDA
Sula – revenue mix by geography, March fiscal year- Sula – EBITDA mix by geography, March fiscal year-
ends, 2023 (%) ends, 2023 (%)

Rest of
Maharashtra India, 20%
, 47%
Rest of Maharashtra
India, 39% , 60%

Karnataka,
20%

Karnataka,
14%

Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities

About Rs0.4 bn of government grants received accounts for 28% of overall EBITDA for FY2023
Sula: Government grants and its contribution to overall EBITDA, March fiscal year-ends, 2020-23
(Rs mn, %)

Government grants (Rs mn, LHS) Government grants as % of EBITDA (%, RHS)
600 70
59.3
500 60
439
44.9 50
400 353
40
290
300 273 31.2
27.9
30
200
20

100 10

0 0
2020 2021 2022 2023

Source: Company

Sula Vineyards
Consumer Staples India Research
 24

Favorable taxation in Maharashtra enables higher realization and profitability

EWP (ex-winery price or net sales value) of Sula’s two top selling wines across select states (Rs/750 ml bottle)
Sula Cabernet Shiraz (750 ml )
States MH KA Goa Delhi Haryana WB
MRP (Rs) 995 950 935 820 880 920
Taxes (Rs) 173 41 327 359 85 394
Taxes (% of EWP) 26.7 5.0 65.7 91.8 16.7 88.9
Wholesaler/distributor margin (Rs) 66 5 66 20 59 27
Wholesaler/distributor margin (% of EWP) 10.2 0.6 13.3 5.1 11.6 6.1
Retailer margin (Rs) 107 86 44 50 227 57
Retailer margin (% of EWP) 16.5 10.5 8.8 12.8 44.6 12.9
Net sales (EWP in Rs) 649 818 498 391 509 443
VAT refund (Rs) 133 ― ― ― ― ―
Net sales including VAT refund (Rs) 782 818 498 391 509 443
As % of MRP 79 86 53 48 58 48

Dindori Reserve Shiraz (750 ml )

States MH KA Goa Delhi Haryana WB
MRP (Rs) 1,295 1,250 1,085 1,280 1,080 1,195
Taxes (Rs) 224 41 357 539 97 501
Taxes (% of EWP) 26.4 3.8 59.3 82.0 15.4 85.2
Wholesaler/distributor margin (Rs) 86 7 76 34 73 32
Wholesaler/distributor margin (% of EWP) 10.2 0.6 12.6 5.2 11.6 5.4
Retailer margin (Rs) 139 114 51 50 280 75
Retailer margin (% of MRP) 16.4 10.5 8.5 7.6 44.4 12.8
Net sales (EWP in Rs) 847 1,089 602 657 630 588
VAT refund (Rs) 173 ― ― ― ― ―
Net sales including VAT refund (Rs) 1,020 1,089 602 657 630 588
As % of MRP 79 87 55 51 58 49
Note:
(1) Taxes for Maharashtra are not adjusted for VAT refunds

Source: Company, Kotak Institutional Equities estimates

Price increase required to protect EBITDA if WIPS were to be discontinued (complete/phased withdrawal)
Scenario-1 Scenario-2 Scenario-3 Scenario-4 Scenario-5
Sula Shiraz Cabernet (Rs/750 ml) VAT refund unchanged at 80% VAT refund dropped to 60% VAT refund dropped to 40% VAT refund dropped to 20% VAT refund dropped to 0%
MRP (Rs/750 ml) 995 1,025 1,060 1,095 1,132
Price increase required to maintain EBITDA (%) 3.0 6.5 10.1 13.8
Taxes (Rs/750 ml) 173 178 184 190 196
Excise (Rs/750 ml) 7 7 7 7 7
VAT at 20% (Rs/750 ml) 166 171 177 183 189
Retailer and distributor margin (Rs/750 ml) 173 168 163 158 153
As % of net sales (%) 26.7 24.7 22.9 21.1 19.5
Net sales (Rs/ 750 ml) 649 679 713 747 783
VAT refund (Rs/750 ml) 133 103 71 37 0
Overall net sales after VAT refund (Rs/750 ml) 782 782 784 784 783
EBITDA margin (%) 40.0 40.0 40.0 40.0 40.0
EBITDA (Rs/750 ml) 313 313 314 314 313

Note:
(1) For every 20% drop in VAT refund, we expect Sula to penalize distributor and retailer together by Rs5 per bottle sold

Source: Company, Kotak Institutional Equities estimates

Sula Vineyards
Consumer Staples India Research
 25

Financials of Sula Vineyards, March fiscal year-ends, 2020-26E (Rs mn)

2020 2021 2022 2023 2024E 2025E 2026E
Profit model
Net revenues 4,852 3,859 4,244 5,162 5,841 6,598 7,440
EBITDA 489 609 1,133 1,574 1,771 1,980 2,245
Depreciation (350) (257) (236) (259) (336) (384) (414)
Other income 16 36 28 35 26 44 53
Interest expense (329) (334) (229) (211) (199) (200) (192)
PBT (174) 54 695 1,139 1,262 1,440 1,694
Tax 15 (2) (174) (299) (328) (374) (440)
Extraordinary items — (22) — — — — —
Reported PAT (154) 30 521 840 934 1,065 1,253
Recurring PAT (159) 53 521 840 934 1,065 1,253
Recurring EPS (diluted) (Rs) (2.1) 0.7 6.8 10.0 11.1 12.7 14.9
Balance sheet
Total equity 3,023 3,047 3,952 5,320 6,021 6,820 7,697
Total borrowings 3,683 3,013 2,290 1,918 2,068 1,968 1,718
Other liabilities 1,604 1,484 1,343 1,575 1,616 2,052 2,187
Total equity and liabilities 8,311 7,544 7,586 8,813 9,704 10,840 11,602
Cash and cash equivalents 375 408 102 164 300 691 603
Net other current assets ex-cash 4,056 3,696 3,603 4,081 4,439 4,925 5,460
Net fixed assets 3,311 3,053 3,529 4,058 4,395 4,588 4,828
Other non-current assets 568 386 351 511 570 636 711
Total assets 8,311 7,544 7,586 8,813 9,704 10,840 11,602
Cash flow
Operating cash flow excl. w-cap 429 715 1,017 1,324 1,444 1,613 1,808
W-cap changes 561 1,124 1,041 1,160 1,417 1,625 1,857
Operating cash flow 990 1,838 2,058 2,484 2,861 3,238 3,665
Interest expense (283) (315) (202) (175) (199) (200) (192)
Capital expenditure (453) (165) (550) (691) (625) (525) (600)
Free cash flow 8 1,040 415 194 465 733 820
Key metrics and ratios
Revenue growth (%) (3.0) (20.5) 10.0 21.6 13.1 13.0 12.8
Gross margin (%) 53.1 59.2 72.4 74.2 75.3 75.2 75.3
EBITDA margin (%) 10.1 15.8 26.7 30.5 30.3 30.0 30.2
PAT margin (%) (3.3) 1.4 12.3 16.3 16.0 16.1 16.8
Net debt 3,307 2,605 2,188 1,754 1,768 1,277 1,115
Net debt/equity (X) 1.1 0.9 0.6 0.3 0.3 0.2 0.1
Book value (Rs/share) 40.2 40.5 51.5 63.2 71.5 81.0 91.4
RoAE (%) (5.1) 1.7 14.9 18.1 16.5 16.6 17.3
RoAIC (%) 1.8 4.8 10.0 13.6 13.1 12.8 13.4

Source: Company, Kotak Institutional Equities estimates

Sula Vineyards
Consumer Staples India Research
 UPDATE

Economy
National Accounts
January 06, 2024

NSO estimates FY2024 real GDP growth at 7.3% Macro Table

The estimated FY2024 real GDP at 7.3% implies 7% growth in 2HFY24, as 2022 2023 2024E 2025E
Real economy
against 7.7% in 1HFY24. We revise up our FY2024E real GDP growth estimate Real GDP growth (%) 9.1 7.2 7.0 6.3
to 7% (from 6.8%), while retaining GVA growth at 6.7%. Headwinds to growth Nominal GDP growth (%) 18.4 16.1 9.5 10.8
CPI Inflation (avg., %) 5.5 6.7 5.4 4.7
remain from weak consumption and moderation in global growth. We Public finance
Center's GFD/GDP (%) 6.8 6.4 5.9 5.4
maintain our FY2025 real GDP growth estimate at 6.3%. Monetary policy
Repo Rate (%, eop) 4.00 6.50 6.50 6.00
SDF Rate (%, eop) 3.35 6.25 6.25 5.75
2HFY24 growth to be driven by investments; private consumption muted CRR (%, eop) 4.0 4.5 4.5 4.5
External sector
The NSO estimates FY2024 real GDP growth at 7.3%, as against 7.2% in FY2023 Current Account Balance (% of GDP) (1.2) (2.0) (1.4) (1.4)
Brent crude oil price (avg., USD/bbl) 80.0 95.4 85.0 85.0
(Exhibit 1). With 1HFY24 GDP growth at 7.7%, the implied 2HFY24 GDP growth USD/INR (avg.) 74.5 80.3 82.9 83.4

is at 7% (Exhibit 2). The key driver is expected to be investments (GFCF) at 11%

Source: Company data, Kotak Institutional Equities estimates
growth (9.5% in 1HFY24). However, private consumption growth is expected to
remain broadly unchanged at a muted 4.4% in 2HFY24 (1HFY24: 4.5%).

FY2024 real GVA growth estimated at 6.9%

Quick Numbers
The NSO estimates FY2024 real GVA growth at 6.9%, as against 7% in FY2023.
Implied 2HFY24 growth is at 6.2%, given 7.6% growth in 1HFY24 (Exhibit 3). We

1933
FY2024 real GDP growth advance estimate at 7.3%;
maintain our FY2024E GVA growth at 6.7%, while awaiting quarterly releases

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of
GVA growth at 6.9%
and without major divergence from NSO’s estimate. The estimated difference
of 60 bps between GVA and GDP growth is due to a favorable base effect for 2HFY24 implied GDP growth at 7%; GVA growth at 6.2%
net indirect taxes (indirect taxes—subsidies). The net indirect taxes growth
Revise up FY2024E real GDP growth to 7; maintain
could be lower due to (1) lower-than-budgeted excise duty collections (likely
FY2025E growth at 6.3%
shortfall of Rs360 bn) and (2) higher-than-budgeted subsidies in food and
fertilizer (Rs200 bn higher). With a slightly lower net indirect tax growth, we
pencil in FY2024E GDP growth at 7% (earlier 6.8%).

Nominal GDP growth expected at 8.9%

Nominal GDP growth is expected at 8.9%, implying a GDP deflator of around
1.6%. In absolute terms, nominal GDP is pegged at Rs297 tn (compared with
FY2024BE of Rs302 tn). This will be the FY2024 GDP used in the FY2025 interim
budget to be presented on February 1. With FY2024BE GFD at Rs17.9 tn, the
GFD/GDP considering the FY2024AE nominal GDP will be at 6%, though we
expect the government to restrict GFD/GDP to the budgeted 5.9%.

Revise up FY2024E real GDP to 7%; maintain FY2025E real GDP growth at 6.3%
We revise up our FY2024E real GDP growth to 7% (6.8% earlier). While high-
frequency activity indicators remain resilient, headwinds to growth remain
mainly from: (1) some fatigue in urban demand, which could be exacerbated by
tightening lending regulations, while excess savings wane, fading momentum
in formal employment and softening wage growth, (2) uncertain rural demand,
(3) lagged impact of cumulative rate hikes and financial tightening and (4)
moderation in global growth over the next few quarters. We maintain our
FY2025E real GDP growth at 6.3%, assuming some global slowdown in 1HFY25,
followed by recovery in global and domestic demand conditions (Exhibit 4).
FY2025 growth will also be shaped by some easing in financial conditions,
monsoon outlook and government’s capex (albeit at a much slower pace).
Full sector coverage on KINSITE

Suvodeep Rakshit Upasna Bhardwaj Anurag Balajee

 27

NSO estimates real GDP growth at 7.3% in FY2024

Real GDP and components growth, March fiscal-year ends, 2017-24AE (%)
2017 2018 2019 2020 2021 2022 2023 2024AE
Real GDP 8.3 6.8 6.5 3.9 (5.8) 9.1 7.2 7.3
Private consumption 8.1 6.2 7.1 5.2 (5.2) 11.2 7.5 4.4
Government consumption 6.1 11.9 6.7 3.9 (0.9) 6.6 0.1 4.1
Gross fixed capital formation 8.5 7.8 11.2 1.1 (7.3) 14.6 11.4 10.3
Inventory (49) 68 27 (59) (85) (688) (2.7) (4.6)
Valuables (18.6) 40.2 (9.7) (14.2) 26 34 (18.9) (12.5)
Exports 5.0 4.6 11.9 (3.4) (9.1) 29 13.6 1.4
Imports 4.4 17.4 8.8 (0.8) (13.7) 22 17.1 13.2

Source: CEIC, NSO estimates, Kotak Economics Research

NSO expects 2HFY23 growth to be driven by investments; private consumption growth muted at 4.4%
Real GDP and components growth, March fiscal-year ends (%)
2HFY24AE
2023 1HFY23 2HFY23 2024AE 1HFY24 (implied)
Real GDP 7.2 9.5 5.3 7.3 7.7 7.0
Private consumption 7.5 13.6 2.5 4.4 4.5 4.4
Government consumption 0.1 (0.9) 1.0 4.1 5.1 3.1
Gross fixed capital formation 11.4 14.7 8.5 10.3 9.5 11.0
Inventory (2.7) 2.2 3.1 (4.6) 7.7 1.7
Valuables (18.9) (8.5) (32) (12.5) (8.1) (19.9)
Exports 13.6 15.8 11.5 1.4 (1.7) 4.4
Imports 17.1 28.0 7.7 13.2 13.5 12.8

Source: CEIC, NSO, Kotak Economics Research

NSO estimates FY2024 real GVA growth at 6.9%; we maintain it at 6.7%

Real GVA and components growth, March fiscal-year ends (%)
2HFY24AE
2023 1HFY23 2HFY23 2024AE 1HFY24 (implied) 2HFY24E 2024E
Real GVA 7.0 8.6 5.6 6.9 7.6 6.2 5.8 6.7
Agriculture and allied 4.0 2.4 5.1 1.8 2.4 1.4 0.9 1.5
Industry 4.4 4.3 4.5 7.9 9.3 6.7 6.6 7.9
Mining 4.6 5.1 4.2 8.1 7.6 8.4 7.9 7.8
Manufacturing 1.3 0.9 1.7 6.5 9.3 3.9 4.5 6.8
Electricity 9.0 10.3 7.5 8.3 6.4 10.3 9.7 8.0
Construction 10.0 10.7 9.5 10.7 10.5 10.9 9.6 10.0
Services 9.5 12.6 6.5 7.7 8.0 7.5 6.9 7.4
Trade, hotel, transport, communication 14.0 20.1 9.3 6.3 6.6 6.1 5.5 6.0
Financial, real estate, professional services 7.1 7.8 6.4 8.9 9.0 8.7 7.9 8.5
Public admin, defence, and others 7.2 12.6 2.6 7.7 7.7 7.7 7.3 7.5
Real GDP 7.2 9.5 5.3 7.3 7.7 7.0 6.3 7.0

Source: CEIC, NSO, Kotak Economics Research estimates

Economy
India Research
 28

We now expect FY2024E real GDP growth at 7%; FY2025E growth maintained at 6.3%
Real GVA and components growth, March fiscal-year ends, 2017-25E (%)

2017 2018 2019 2020 2021 2022 2023 2024AE 2024E 2025E
Real GVA 8.0 6.2 5.8 3.9 (4.2) 8.8 7.0 6.9 6.7 6.2
Agriculture and allied 6.8 6.6 2.1 6.2 4.1 3.5 4.0 1.8 1.5 3.7
Industry 7.7 5.9 5.3 (1.4) (0.9) 11.6 4.4 7.9 7.9 5.7
Mining 9.8 (5.6) (0.8) (3.0) (8.6) 7.1 4.6 8.1 7.8 6.8
Manufacturing 7.9 7.5 5.4 (3.0) 2.9 11.1 1.3 6.5 6.8 4.9
Electricity 10.0 10.6 7.9 2.3 (4.3) 9.9 9.0 8.3 8.0 7.2
Construction 5.9 5.2 6.5 1.6 (5.7) 14.8 10.0 10.7 10.0 6.8
Services 8.5 6.3 7.2 6.4 (8.2) 8.8 9.5 7.7 7.4 7.0
Trade, hotel, transport, communication 7.7 10.3 7.2 6.0 (19.7) 13.8 14.0 6.3 6.0 6.9
Financial, real estate, prof. services 8.6 1.8 7.0 6.8 2.1 4.7 7.1 8.9 8.5 7.7
Public admin, defence, and others 9.3 8.3 7.5 6.6 (7.6) 9.7 7.2 7.7 7.5 6.1
Real GDP 8.3 6.8 6.5 3.9 (5.8) 9.1 7.2 7.3 7.0 6.3

Source: CEIC, NSO estimates, Kotak Economics Research estimates

Economy
India Research
 29

December 2023: Results calendar

Mon Tue Wed Thu Fri Sat
8-Jan 9-Jan 10-Jan 11-Jan 12-Jan 13-Jan
HDFC AMC HCL Technologies Avenue Supermarts
Infosys HDFC Life Insurance
TCS Wipro
15-Jan 16-Jan 17-Jan 18-Jan 19-Jan 20-Jan
Angel One HDFC Bank Asian Paints 360 One Atul ICICI Bank
Jio Financial Services ICICI Lombard ICICI Prudential Life Polycab CreditAccess Gramin J K Cement
ICICI Securities LTIMindtree Poonawalla Fincorp One 97 Communications Persistent Systems
L&T Technology Services Supreme Industries
UltraTech Cement
22-Jan 23-Jan 24-Jan 25-Jan 26-Jan 27-Jan
Coforge Axis Bank Bajaj Auto Cholamandalam Capri Global
Zensar Technologies ICRA Blue Dart Expres Cipla YES Bank
Indus Towers Container Corp. Cyient
Pidilite Industries Exide Industries JSW Steel
Tech Mahindra Syngene International
29-Jan 30-Jan 31-Jan 1-Feb 2-Feb 3-Feb
Bajaj Finance Bajaj Finserv Amara Raja Batteries Castrol India Bikaji Foods
Bharat Electronics Bajaj Holdings & Investment Dabur India Mphasis
Nippon AMC Blue Star IDFC
Petronet LNG Dr Reddy's Laboratories Jubilant Foodworks
UTI AMC KPIT Technologies Motherson Sumi Wiring
Mahindra & Mahindra Financial Shree Cement
Star Health and Allied Insurance
5-Feb 6-Feb 7-Feb 8-Feb 9-Feb 10-Feb
Kansai Nerolac Endurance Technologies Nestle India
Max Financial Services
Navin Fluorine
12-Feb 13-Feb 14-Feb 15-Feb 16-Feb 17-Feb
GlaxoSmithkline Pharma Bosch
Lakshmi Machine Works Hindalco Industries
19-Feb 20-Feb 21-Feb 22-Feb 23-Feb 24-Feb
ABB

Source: BSE, NSE, Kotak Institutional Equities

India Research
 30

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Automobiles & Components
Apollo Tyres SELL 461 345 (25) 292 3.5 638 27 27 28 17 17 17 2.1 1.9 1.7 7 7 7 13 11 11 1.1 1.3 1.5 16 7
Ashok Leyland REDUCE 179 170 (5) 527 6.3 2,936 9 9 9 19 19 19 5.1 4.4 3.8 11 12 12 29 25 21 2.1 2.1 2.1 27 14
Bajaj Auto SELL 6,979 4,900 (30) 2,019 24 283 258 270 295 27 26 24 7.3 7.0 6.6 21 20 18 28 28 29 3.0 3.1 3.4 36 19
Balkrishna Industries SELL 2,579 1,900 (26) 498 6.0 193 68 78 89 38 33 29 5.8 5.2 4.5 22 19 16 16 17 17 0.7 0.8 0.8 9 4
Bharat Forge SELL 1,267 760 (40) 590 7.1 466 24 34 40 52 38 32 7.8 6.7 5.7 24 20 18 16 19 19 0.5 0.5 0.6 14 7
CEAT SELL 2,443 1,400 (43) 99 1.2 40 149 118 117 16 21 21 2.5 2.3 2.1 8 8 8 16 12 11 1.5 1.2 1.1 9 4
CIE Automotive SELL 485 470 (3) 184 2.2 378 22 26 29 22 19 17 3.1 2.7 2.4 13 11 10 15 15 16 1.1 1.3 1.5 4 2
Eicher Motors SELL 3,877 2,900 (25) 1,061 12.8 272 145 147 160 27 26 24 6.9 6.1 5.4 23 21 19 28 25 24 1.2 1.3 1.5 27 13
Endurance Technologies SELL 2,116 1,280 (40) 298 3.6 141 46 57 65 46 37 32 6.1 5.4 4.7 23 19 16 13 14 15 0.5 0.6 0.7 3 2
Escorts Kubota SELL 2,805 2,100 (25) 310 3.7 111 98 107 111 29 26 25 3.3 3.0 2.7 24 22 20 12 11 11 0.5 0.6 0.6 14 5
Exide Industries REDUCE 329 250 (24) 280 3.4 850 12 15 16 27 23 20 2.3 2.1 2.0 15 13 11 9 10 10 0.8 0.8 0.8 10 4
Hero Motocorp REDUCE 3,990 3,475 (13) 798 9.6 200 205 227 240 19 18 17 4.5 4.2 3.9 13 11 10 24 25 24 3.6 4.0 4.2 32 14
Mahindra & Mahindra BUY 1,642 1,680 2 2,042 24.6 1,159 89 90 103 18 18 16 3.6 3.1 2.7 15 13 11 22 18 18 0.8 0.8 0.9 47 27
Maruti Suzuki SELL 10,017 8,450 (16) 3,149 37.9 314 377 385 420 27 26 24 4.7 4.2 3.8 18 17 15 19 17 17 1.5 1.5 1.7 66 39
MRF SELL 132,401 77,500 (41) 562 6.8 4 4,961 4,567 4,935 27 29 27 3.4 3.0 2.8 13 13 12 13 11 11 0.3 0.3 0.3 10 3
Samvardhana Motherson ADD 104 100 (4) 705 8.5 6,776 4 5 6 29 20 18 2.9 2.6 2.3 10 8 7 10 14 14 0.7 0.8 0.8 15 8
Schaeffler India SELL 3,226 2,720 (16) 504 6.1 156 61 69 78 53 47 42 10.5 9.3 8.2 36 31 27 21 21 21 0.1 0.1 0.0 3 2
SKF SELL 4,590 3,925 (14) 227 2.7 49 107 138 158 43 33 29 8.5 7.3 6.2 31 24 21 20 22 21 0.7 0.9 1.0 2 1
Sona BLW Precision REDUCE 647 520 (20) 379 4.6 583 9 12 14 72 55 45 14.0 11.7 9.8 41 32 28 21 23 23 0.3 0.4 0.5 12 7
Tata Motors REDUCE 791 630 (20) 3,029 36.4 3,829 52 64 67 15 12 12 4.8 3.4 2.6 6 5 4 37 32 25 0.3 0.3 0.3 96 40
Timken SELL 3,248 2,450 (25) 244 2.9 75 55 69 88 59 47 37 10.0 8.4 6.9 40 32 25 19 19 20 0.1 0.1 0.0 4 3
TVS Motor SELL 1,979 1,150 (42) 940 11.3 475 42 47 53 47 42 38 12.6 10.4 8.7 27 24 22 30 27 25 0.5 0.6 0.7 21 10
Uno Minda ADD 701 600 (14) 402 4.8 571 15 17 19 48 42 37 8.2 6.9 5.9 27 23 21 17 17 16 0.3 0.4 0.4 4 2
Varroc Engineering SELL 561 420 (25) 86 1.0 153 16 25 30 36 22 19 6.9 5.3 4.1 12 10 9 19 24 22 — — — 5 2
Automobiles & Components Cautious 19,369 233.1 24.4 22.2 20.3 4.9 4.2 3.7 12.5 11.4 10.2 20 19.2 18.1 1.1 1.2 1.3 490 239
Banks
AU Small Finance Bank SELL 801 615 (23) 536 6.4 667 24 33 44 33 25 18 4.3 3.6 3.0 — — — 14 16 18 — — — 17 8
Axis Bank BUY 1,137 1,100 (3) 3,506 42.2 3,077 79 84 94 14 13 12 2.4 2.1 1.8 — — — 18 17 16 1.0 1.1 1.2 109 59
Bandhan Bank BUY 252 270 7 405 4.9 1,611 23 26 30 11 10 9 1.9 1.6 1.4 — — — 17 17 17 1.4 1.5 1.8 28 13
Bank of Baroda ADD 235 250 7 1,213 14.6 5,178 30 29 32 8 8 7 1.2 1.1 1.0 — — — 15 13 13 2.6 2.5 2.8 48 20
Canara Bank ADD 462 500 8 838 10.1 1,814 79 91 100 6 5 5 1.2 1.0 0.8 — — — 18 18 17 3.5 4.1 4.4 36 13
City Union Bank ADD 153 140 (9) 113 1.4 740 12 14 17 12 11 9 1.5 1.3 1.2 — — — 12 12 13 1.6 1.8 2.2 10 5
DCB Bank BUY 158 150 (5) 49 0.6 312 19 21 26 8 8 6 1.1 1.0 0.9 — — — 12 12 14 1.2 1.6 2.4 6 3
Equitas Small Finance Bank ADD 115 110 (4) 130 1.6 1,122 7 10 12 16 12 10 2.3 2.0 1.7 — — — 15 17 19 — — — 7 4
Federal Bank BUY 155 170 10 376 4.5 2,419 13 16 18 12 10 8 1.4 1.2 1.1 — — — 13 13 13 1.7 2.0 2.4 23 11
HDFC Bank BUY 1,682 1,800 7 12,772 153.7 7,580 87 99 113 19 17 15 3.0 2.7 2.4 — — — 19 16 16 1.1 1.3 1.5 312 192
ICICI Bank BUY 994 1,150 16 6,971 83.9 6,984 53 56 61 19 18 16 3.1 2.7 2.4 — — — 17 16 15 1.1 1.1 1.2 161 89
IndusInd Bank BUY 1,643 1,600 (3) 1,278 15.4 776 110 123 141 15 13 12 2.1 1.9 1.7 — — — 15 14 15 1.0 1.1 1.3 67 32
Karur Vysya Bank BUY 167 170 2 133 1.6 802 17 20 23 10 8 7 1.4 1.3 1.1 — — — 15 16 16 2.7 3.1 3.6 7 4
Punjab National Bank REDUCE 97 95 (2) 1,071 12.9 11,011 8 13 14 13 8 7 1.2 1.0 0.9 — — — 8 13 13 2.3 3.7 4.2 57 16
SBI Cards and Payment Services BUY 772 925 20 734 8.8 946 25 31 46 31 25 17 6.1 5.0 3.9 — — — 22 22 26 0.4 0.5 0.6 17 10
State Bank of India BUY 642 760 18 5,729 68.9 8,925 61 63 71 11 10 9 1.7 1.5 1.3 — — — 16 14 14 1.8 1.8 1.8 110 50
Ujjivan Small Finance Bank ADD 58 58 (0) 114 1.4 1,928 6 6 7 10 9 9 2.1 1.7 1.4 — — — 24 20 18 0.0 0.0 0.0 13 5
Union Bank ADD 124 135 9 920 11.1 7,412 18 22 23 7 6 5 1.1 1.0 0.8 — — — 16 16 15 3.6 4.3 4.5 30 13
YES Bank REDUCE 24 17 (29) 690 8.3 31,315 0 1 1 85 28 17 1.8 1.7 1.5 — — — 2 6 9 0.0 0.0 0.0 69 21
Banks Attractive 37,580 452.2 14.5 13.0 11.5 2.1 1.9 1.6 14.5 14.3 14.3 1.4 1.5 1.7 1,126 564

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 31

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Building Products
Astral SELL 1,841 1,600 (13) 495 6.0 269 23 29 35 79 63 53 15.2 12.6 10.5 47 39 33 21 22 22 0.2 0.2 0.3 11 6
Building Products Cautious 495 6.0 79.0 63.4 52.5 15.2 12.6 10.4 47.1 39.1 33.1 19.2 19.9 19.9 0.2 0.2 0.3 11 6
Capital goods
ABB REDUCE 4,832 4,200 (13) 1,024 12.3 212 58 66 80 84 73 61 16.9 14.0 11.5 66 58 47 22 21 21 0.1 0.1 0.1 14 6
Bharat Electronics SELL 186 118 (37) 1,359 16.4 7,310 5 5 6 39 37 33 8.8 8.0 7.2 29 26 23 24 23 23 1.2 1.3 1.4 33 18
BHEL SELL 196 65 (67) 682 8.2 3,482 (1) (0) 2 NM NM 96 2.5 2.6 2.5 (9,895) 101 37 NM NM 3 0.0 0.0 (0.1) 64 20
Carborundum Universal REDUCE 1,146 1,120 (2) 218 2.6 190 24 32 41 48 36 28 6.8 5.9 5.1 29 23 18 15 18 20 0.4 0.6 0.7 3 2
Cochin Shipyard REDUCE 1,363 1,060 (22) 179 2.2 132 46 48 64 30 29 21 3.7 3.5 3.1 21 17 12 13 13 15 1.0 1.1 1.2 37 9
Cummins India ADD 1,998 2,040 2 554 6.7 277 51 59 68 39 34 29 9.4 8.5 7.6 37 32 27 25 26 27 1.4 1.6 1.9 11 6
Dixon Technologies SELL 6,378 4,200 (34) 382 4.6 59 76 99 129 84 64 49 21.8 16.3 12.2 48 38 29 30 29 28 0.0 0.0 0.0 37 12
G R Infraprojects SELL 1,105 1,010 (9) 107 1.3 97 77 81 99 14 14 11 1.8 1.6 1.4 10 9 8 13 12 13 0.0 0.0 0.0 1 1
IRB Infrastructure ADD 42 46 8 256 3.1 6,039 1 2 2 32 20 17 1.9 1.9 1.9 11 10 9 6 10 11 3.8 4.7 5.3 18 7
Kalpataru Projects BUY 753 745 (1) 122 1.5 160 37 55 68 20 14 11 2.3 2.0 1.7 8 7 6 12 16 17 0.4 0.6 0.7 4 2
KEC International REDUCE 604 610 1 155 1.9 257 19 34 47 33 18 13 3.7 3.1 2.6 13 9 7 12 19 22 0.3 0.6 0.8 3 2
L&T REDUCE 3,522 2,700 (23) 4,841 58.2 1,373 93 111 131 38 32 27 6.9 6.1 5.4 25 21 19 18 21 21 0.8 0.9 1.1 70 42
Siemens SELL 4,077 3,500 (14) 1,452 17.5 356 62 75 84 65 54 49 9.9 8.7 7.7 49 41 37 16 17 17 0.4 0.5 0.5 17 8
Thermax REDUCE 3,210 3,150 (2) 382 4.6 113 53 63 77 61 51 42 49.2 38.7 29.6 49 39 30 15 16 17 0.4 0.4 0.5 4 2
Capital goods Cautious 11,714 140.9 46.0 38.0 31.4 6.5 5.9 5.2 28.4 23.8 20.3 14.0 15.4 16.7 0.7 0.8 1.0 316 136
Commercial & Professional Services
SIS BUY 460 500 9 67 0.8 147 23 28 35 20 16 13 2.5 2.2 1.9 12 10 9 13 14 15 0.0 0.0 0.0 1 0
TeamLease Services REDUCE 3,265 2,430 (26) 55 0.7 17 70 96 125 47 34 26 6.6 5.5 4.6 40 29 23 14.4 17.8 19.2 — — — 2 1
Commercial & Professional Services Neutral 122 1.5 27.0 21.2 16.9 3.5 3.0 2.5 17.3 14.0 11.6 12.9 14.1 15.1 0.0 0.0 0.0 3 1
Commodity Chemicals
Asian Paints REDUCE 3,356 3,050 (9) 3,219 38.7 959 59 60 62 57 56 54 17.2 15.0 13.4 39 38 36 32 29 26 0.9 1.0 1.0 34 19
Berger Paints SELL 596 500 (16) 695 8.4 1166 11 11 12 55 53 50 13.3 11.7 10.2 34 34 32 26 23 22 0.8 0.8 0.8 8 3
Indigo Paints REDUCE 1,499 1,375 (8) 71 0.9 48 33 37 40 46 40 38 7.9 6.9 6.1 28 25 23 19 18 17 0.5 0.6 0.9 2 1
Kansai Nerolac REDUCE 337 295 (12) 272 3.3 808 9 9 10 37 37 35 5.4 5.0 4.7 23 24 22 15 14 14 1.0 1.4 1.4 1 1
Tata Chemicals SELL 1,105 790 (28) 281 3.4 255 53 39 42 21 28 26 1.4 1.3 1.3 8 9 9 7 5 5 1.7 1.3 1.4 13 5
Commodity Chemicals Cautious 4,539 54.6 49.7 50.5 48.5 9.0 8.2 7.6 30.5 30.6 29.1 18.0 16.3 15.7 0.9 1.0 1.0 58 30
Construction Materials
ACC REDUCE 2,377 1,970 (17) 446 5.4 188 92 111 130 26 21 18 2.9 2.6 2.3 14 12 10 12 13 13 0.8 0.9 1.1 14 6
Ambuja Cements SELL 542 350 (35) 1,077 13.0 2,463 14 19 20 38 29 27 2.7 2.5 2.3 12 10 9 9 9 9 0.4 0.5 0.6 21 10
Dalmia Bharat ADD 2,391 2,350 (2) 448 5.4 185 55 102 126 44 23 19 2.7 2.4 2.2 15 10 9 6 11 12 0.3 0.6 0.8 11 5
Grasim Industries NR 2,080 - (100) 1,369 16.5 658 124 133 145 17 16 14 1.6 1.5 1.3 8 8 6 10 10 10 0.5 0.7 0.8 15 8
J K Cement SELL 3,931 2,600 (34) 304 3.7 77 103 127 152 38 31 26 5.7 4.9 4.2 16 14 12 16 17 17 0.4 0.4 0.4 5 2
Nuvoco Vistas Corp ADD 367 365 (1) 131 1.6 357 5 11 15 71 33 25 1.5 1.4 1.3 10 9 8 2 4 5 0.0 0.0 0.0 2 1
Orient Cement REDUCE 279 200 (28) 57 0.7 205 11 14 16 25 20 18 3.2 2.8 2.5 11 9 8 14 15 15 0.7 0.7 0.7 5 2
Shree Cement SELL 27,023 17,900 (34) 975 11.7 36 643 753 867 42 36 31 4.8 4.3 3.9 21 18 16 12 13 13 0.4 0.5 0.6 7 3
The Ramco Cements SELL 1,028 690 (33) 243 2.9 236 27 36 48 38 29 21 3.3 3.0 2.6 15 13 11 9 11 13 0.3 0.3 0.5 7 3
UltraTech Cement SELL 10,016 7,200 (28) 2,892 34.8 289 277 357 405 36 28 25 4.8 4.2 3.7 21 17 15 14 16 16 0.4 0.5 0.2 40 23
Construction Materials Cautious 7,942 95.6 29.9 24.2 21.3 2.9 2.6 2.4 13.6 11.6 10.0 9.8 10.9 11.2 0.5 0.6 0.5 127 64

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 32

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Consumer Durables & Apparel
Aditya Birla Fashion and Retail REDUCE 238 200 (16) 226 2.7 998 (8) (6) (4) NM NM NM 6.0 5.1 5.5 18 12 11 NM NM NM — — — 9 3
Campus Activewear ADD 290 290 0 88 1.1 304 4 5 6 79 64 49 13.3 11.0 9.3 35 31 25 18 19 20 — — 0.5 4 2
Eureka Forbes BUY 500 670 34 97 1.2 208 4 6 10 116 78 51 2.5 2.4 2.3 55 41 28 2 3 5 — — — 1 0
Havells India SELL 1,406 1,140 (19) 881 10.6 628 20 25 30 69 56 47 12.1 10.9 9.7 46 38 32 18 20 22 0.6 0.7 0.8 12 6
Page Industries SELL 38,908 34,500 (11) 434 5.2 11 539 663 778 72 59 50 26.1 21.5 18.0 45 37 31 40 40 39 0.7 0.9 1.1 11 5
Polycab SELL 5,401 4,120 (24) 811 9.8 150 116 128 149 47 42 36 10.3 8.7 7.5 32 29 25 24 22 22 0.5 0.6 0.6 38 16
TCNS Clothing Co. REDUCE 400 420 5 25 0.3 69 (3) 1 4 NM 472 114 4.4 4.1 3.8 19 15 12.4 NM 1 3 — — — 1 0
Vedant Fashions REDUCE 1,210 1,200 (1) 294 3.5 248 18 22 27 67 55 45 17.9 14.6 11.8 41 34 28 29 29 29 — — — 3 2
Voltas SELL 1,009 770 (24) 334 4.0 331 11 22 27 95 47 37 5.9 5.4 4.9 67 35 30 6 12 14 0.4 0.6 0.8 17 8
Whirlpool SELL 1,364 1,020 (25) 173 2.1 127 20 28 39 68 49 35 4.7 4.3 3.9 36 27 19 7 9 11 0.3 0.3 0.4 3 1
Consumer Durables & Apparel Cautious 3,566 42.9 79.6 58.9 46.6 8.9 7.8 7.1 36.9 29.0 24.3 11.1 13.3 15.19 0.5 0.6 0.7 107 51
Consumer Staples
Britannia Industries ADD 5,272 4,800 (9) 1,270 15.3 241 88 98 110 60 54 48 32.4 29.2 26.3 42 38 34 57 57 58 1.5 1.7 1.9 18 11
Colgate-Palmolive (India) ADD 2,520 2,075 (18) 685 8.2 272 46 51 55 54 50 46 37.8 35.9 34.0 37 34 31 71 74 77 1.7 1.9 2.1 12 6
Dabur India ADD 569 590 4 1,008 12.1 1,772 11 13 14 51 45 40 10.1 9.1 8.1 40 35 31 21 21 21 1.0 1.1 1.2 13 9
Godrej Consumer Products ADD 1,220 1,150 (6) 1,248 15.0 1,023 19 23 26 64 53 46 8.2 7.5 6.9 43 36 32 13 15 16 0.6 0.9 1.1 12 8
Hindustan Unilever ADD 2,620 2,775 6 6,156 74.1 2,350 45 50 57 59 52 46 12.0 11.5 11.0 41 36 32 21 23 24 1.5 1.7 1.9 49 33
ITC ADD 474 470 (1) 5,913 71.1 12,428 16 18 20 29 27 24 8.4 8.0 7.7 22 20 18 27 30 32 2.9 3.2 3.5 57 35
Jyothy Labs REDUCE 518 370 (29) 190 2.3 367 10 11 13 50 45 41 10.8 9.6 8.5 38 35 31 23 22 22 0.9 1.1 1.2 6 2
Marico REDUCE 546 550 1 706 8.5 1,290 12 13 14 47 43 39 15.6 13.3 11.4 34 31 27 36 33 32 1.1 1.2 1.3 9 6
Nestle India ADD 2,666 24,500 819 2,571 30.9 96 312 367 415 9 7 6 8.9 8.4 8.2 57 49 43 112 119 129 10.4 13.1 15.2 27 14
Sula Vineyards ADD 554 600 8 47 0.6 84 11 13 15 50 44 37 7.8 6.8 6.1 27 24 21 16 17 17 0.5 0.6 0.8 2 1
Tata Consumer Products ADD 1,123 915 (19) 1,043 12.6 929 15 18 20 77 63 55 6.2 6.0 5.7 46 39 35 8 10 11 0.8 0.9 1.0 18 10
United Breweries ADD 1,888 1,675 (11) 499 6.0 264 19 31 38 100 61 49 11.7 10.6 9.8 58 39 32 12 18 21 0.8 1.2 1.5 6 3
United Spirits ADD 1,101 1,075 (2) 801 9.6 727 16 19 22 71 57 51 11.3 10.3 9.5 46 38 34 17 19 19 0.2 0.9 1.1 13 7
Varun Beverages ADD 1,279 1,250 (2) 1,662 20.0 1,299 16 20 24 82 66 52 24.1 18.2 14.0 47 37 30 34 32 30 0.1 0.2 0.2 29 17
Consumer Staples Attractive 23,800 286.4 49.8 43.7 39.0 12.0 11.3 10.5 35.6 31.0 27.5 24 26 27 1.5 1.8 2.0 273 162
Diversified Financials
360 One BUY 662 750 13 237 2.9 355 21 24 30 32 28 22 6.9 6.5 6.1 — — — 23 24 28 2.4 2.7 3.3 5 3
Aavas Financiers BUY 1,566 2,025 29 124 1.5 79 64 78 95 25 20 17 3.3 2.8 2.4 — — — 14 15 16 0.0 0.0 0.0 5 3
ABSL AMC REDUCE 476 480 1 137 1.6 288 24 25 27 20 19 18 4.9 4.4 4.0 — — — NM NM NM 3.0 3.2 3.4 1 0
Aptus Value Housing Finance ADD 331 330 (0) 165 2.0 498 12 14 17 28 24 20 4.4 3.7 3.1 — — — 17 17 17 1.2 0.0 0.0 3 2
Bajaj Finance REDUCE 7,711 7,400 (4) 4,766 57.3 617 234 294 363 33 26 21 6.3 5.2 4.3 — — — 22 22 22 0.4 0.5 0.6 100 48
Bajaj Finserv ADD 1,710 1,725 1 2,727 32.8 1,593 67 84 98 26 20 17 5.0 4.3 3.9 — — — 21 22 23 0.1 0.1 0.1 29 13
Cholamandalam ADD 1,258 1,250 1,056 12.7 839 40 50 61 32 25 21 5.7 4.8 3.8 — — — 20 20 20 0.2 0.2 0.3 26 15
Computer Age Management Services ADD 2,748 2,800 2 135 1.6 49 67 79 93 41 35 29 14.8 12.8 11.0 — — — 39 40 40 1.6 1.9 2.2 16 9
CRISIL SELL 4,121 3,300 (20) 301 3.6 73 87 93 105 48 44 39 — — — 33 32 32 1.4 1.5 1.7 3 1
Five Star Business Finance ADD 734 840 14 214 2.6 291 26 32 39 28 23 19 4.2 3.6 3.0 — — — 16 17 17 — — — 7 4
HDFC AMC ADD 3,304 3,500 6 705 8.5 214 82 98 109 40 34 30 10.6 9.8 9.1 — — — 27 30 31 1.9 2.2 2.5 19 9
Home First Finance BUY 950 1,175 24 84 1.0 88 33 40 49 29 24 19 4.0 3.5 3.0 — — — 15 16 17 — — 0.5 5 3
ICRA REDUCE 5,650 5,100 (10) 55 0.7 10 162 180 201 35 31 28 — — — 15 16 17 — — 0 0 0
Kfin Technologies ADD 507 520 3 87 1.0 169 13 15 18 38 33 28 8.0 6.6 5.8 — — — 17 17 18 — 0.9 1 8 4
L&T Finance Holdings SELL 171 100 (41) 425 5.1 2,480 8 10 12 21 17 14 1.9 1.7 1.6 — — — 9 10 12 1.5 1.8 2.1 18 8
LIC Housing Finance BUY 575 650 13 316 3.8 550 88 82 85 7 7 7 1.2 1.1 0.9 — — — 17 14 13 2.5 2.3 2.4 14 6
Mahindra & Mahindra Financial ADD 277 310 12 342 4.1 1,234 14 20 26 19 14 11 2.0 1.8 1.7 — — — 10 13 15 1.0 1.5 1.9 14 6
Muthoot Finance ADD 1,500 1,500 0 602 7.2 401 100 122 144 15 12 10 2.5 2.1 1.8 — — — 18 19 19 1.3 1.6 1.9 9 4
Nippon AMC ADD 481 500 4 301 3.6 623 15 17 19 33 28 26 8.3 8.1 8.3 — — — 26 29 32 2.7 3.2 3.5 7 3
SBFC REDUCE 90 75 (17) 96 1.2 1,091 2 3 3 43 32 26 4.0 3.5 3.1 — — — 10 10 12 0.0 0.0 0.0 3 2
Shriram Finance BUY 2,172 2,300 6 816 9.8 376 187 224 263 12 10 8 1.7 1.5 1.3 — — — 15 16 17 1.3 1.6 1.8 29 17
UTI AMC REDUCE 876 900 3 111 1.3 127 46 42 46 19 21 19 2.8 2.7 2.6 — — — 15 13 14 4.2 3.8 4.2 2 1
Diversified Financials Attractive 13,804 166.1 24.5 20.3 17.0 4.1 3.5 3.1 16.7 17.4 18.0 0.7 0.8 1.0 322 161

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 33

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Electric Utilities
CESC BUY 139 105 (24) 184 2.2 1,326 11 14 14 13 10 10 1.3 1.3 1.2 7 7 6 11 13 13 3.7 3.8 4.1 15 6
JSW Energy SELL 420 225 (46) 691 8.3 1,640 10 15 18 43 28 23 3.5 3.1 2.8 17 12 11 8 12 13 0.5 0.5 0.5 23 9
NHPC ADD 72 55 (24) 723 8.7 10,045 4 5 6 16 15 12 1.9 1.8 1.6 17 10 8 12 12 14 3.2 3.5 4.2 19 8
NTPC ADD 315 260 (18) 3,054 36.7 9,895 19 22 24 16.2 14.2 13 1.9 1.8 1.6 11 9 8 12 13 13 2.3 2.5 2.7 47 26
Power Grid ADD 241 220 (9) 2,244 27.0 9,301 18 19 20 13.1 12.7 12 2.5 2.3 2.1 8 7 7 20 19 18 4.5 4.7 4.9 46 29
Tata Power SELL 341 245 (28) 1,089 13.1 3,196 9 8 10 39 42 33 3.4 3.2 2.9 15 14 12 9 8 9 — — — 64 25
Electric Utilities Attractive 7,984 96.1 17.2 15.6 14.2 2.2 2.1 1.9 10.5 9.2 8.3 13.0 13.3 13.4 2.6 2.8 3.0 214 104
Fertilizers & Agricultural Chemicals
Bayer Cropscience REDUCE 5,592 5,080 (9) 251 3.0 45 188 210 232 30 27 24 8.8 8.4 8.0 21 18 17 30 32 34 2.9 3.2 3.5 2 1
Godrej Agrovet ADD 565 530 (6) 109 1.3 192 17 23 30 34 25 19 3.7 3.4 3.0 19 15 12 11 14 17 1.2 1.7 2.3 1.6 0.8
Rallis India REDUCE 262 210 (20) 51 0.6 195 9 11 13 29 24 21 2.8 2.6 2.4 15 13 12 10 11 12 1.3 1.5 1.7 4 2
UPL REDUCE 581 550 (5) 436 5.2 751 27 40 52 21 15 11 1.5 1.4 1.3 7 6 5 7 10 12 1.0 1.5 2.0 17 9
Fertilizers & Agricultural Chemicals Cautious 847 10.2 24.9 18.5 14.6 2.3 2.2 2.0 9.3 8.0 6.8 9.4 11.7 13.4 1.6 2.0 2.5 25 13
Gas Utilities
GAIL (India) SELL 164 125 (24) 1,076 12.9 6,575 12 13 13 13 13 12 1.8 1.7 1.7 11 10 9 14 14 14 4.6 4.9 5.2 38 18
GSPL BUY 334 375 12 188 2.3 564 22 17 19 15 19 18 1.9 1.8 1.7 8 10 9 13 9 10 2.5 2.7 2.8 4 2
Indraprastha Gas REDUCE 431 375 (13) 302 3.6 700 30 28 30 14 15 14 3.7 3.3 2.9 10 11 10 27 23 21 2.3 2.4 2.6 14 7
Mahanagar Gas REDUCE 1,238 975 (21) 122 1.5 99 111 88 85 11 14 15 2.5 2.2 2.0 7 9 9 24 17 15 2.9 2.5 2.4 8 3
Petronet LNG SELL 229 175 (23) 343 4.1 1,500 23 23 24 10 10 10 2.0 1.8 1.5 6 6 6 21 19 17 4.4 2.2 1.1 15 9
Gas Utilities Cautious 2,031 24.4 12.8 13.0 12.5 2.1 1.9 1.8 9.2 9.0 8.6 16.0 14.6 14.2 3.9 3.7 3.7 78 40
Health Care Services
Apollo Hospitals BUY 5,754 5,900 3 827 10.0 144 64 103 135 90 56 43 11.9 10.1 8.4 35 26 21 14 19 21 0.2 0.3 0.4 28 14
Aster DM Healthcare ADD 417 415 (1) 209 2.5 498 9 13 16 46 31 26 4.3 3.9 3.4 12 10 8 10 13 14 — — — 4 2
Dr Lal Pathlabs SELL 2,598 1,850 (29) 217 2.6 83 42 49 56 62 53 46 11.8 10.7 9.6 34 30 25 20 21 22 0.9 1.0 1.1 8 3
Global Health REDUCE 1,002 885 (12) 269 3.2 268 18 20 25 57 49 40 9.5 8.2 7.0 31 27 23 18 18 19 0.3 0.3 0.4 4 2
KIMS ADD 2,000 2,075 4 160 1.9 80 45 55 68 44 36 29 7.9 6.5 5.3 23 19 15 20 20 20 0.0 0.0 0.0 2 2
Max Healthcare REDUCE 715 630 (12) 695 8.4 971 13 16 20 54 46 36 7.4 6.4 5.5 37 30 24 15 15 17 0.2 0.2 0.2 11 7
Metropolis Healthcare REDUCE 1,674 1,425 (15) 86 1.0 51 30 43 52 56 39 32 7.9 7.0 6.1 28 23 19 15 19 20 0.5 0.8 0.9 8 3
Narayana Hrudayalaya REDUCE 1,217 1,170 (4) 249 3.0 204 39 42 49 31 29 25 8.5 6.6 5.2 21 18 15 31 26 24 — — — 5 3
Rainbow Children's Medicare REDUCE 1,251 1,100 (12) 127 1.5 102 22 28 31 56 44 40 10.2 8.6 7.3 29 23 21 20 21 20 0.3 0.4 0.4 3 2
Health Care Services Cautious 2,838 34.1 56.7 44.3 35.7 8.6 7.3 6.2 28.0 22.6 18.7 15.1 16.6 17.4 0.2 0.3 0.3 74 37
Hotels & Restaurants
Chalet Hotels ADD 685 660 (4) 141 1.7 205 12 19 29 56 37 24 7.8 6.4 5.1 26 20 15 15 19 24 0.0 0.0 0.0 2 1
Devyani International ADD 186 195 5 225 2.7 1,204 1 2 3 131 88 70 20.5 18.4 16.2 31 24 21 17 22 25 0.0 0.0 0.0 6 3
Indian Hotels ADD 456 460 1 648 7.8 1,420 9 14 17 50 34 27 7.0 5.9 4.9 29 20 16 15 19 19 0.1 0.1 0.2 14 8
Jubilant Foodworks REDUCE 556 500 (10) 367 4.4 660 5 8 10 103 71 58 15.8 13.4 11.2 30 24 21 16 20 21 0.2 0.3 0.4 15 8
Lemon Tree Hotels REDUCE 129 105 (19) 102 1.2 792 3 5 6 40 27 23 10.6 8.6 7.1 18 13 11 28 36 34 1.1 1.3 1.5 10 5
Restaurant Brands Asia REDUCE 113 110 (3) 56 0.7 495 (1) (1) 0 NM NM 1,438 3.0 3.1 3.1 22 16 13 NM NM 0 0.0 0.0 0.0 3 2
Samhi Hotels BUY 177 230 30 39 0.5 218 (8) 6 9 NM 29 19 3.6 3.2 2.8 21 12 11 NM 11 15 0.0 0.0 0.0 2
Sapphire Foods BUY 1,414 1,700 20 90 1.1 64 15 20 26 97 69 54 6.7 6.1 5.5 18 15 13 7 9 11 0.0 0.0 0.0 3 2
Westlife Foodworld REDUCE 823 845 3 128 1.5 156 7 9 12 118 89 66 19.6 16.8 14.1 31 25 21 18 20 23 0.0 0.0 0.0 2 1
Hotels & Restaurants Attractive 1,796 21.6 78.6 46.7 36.5 8.8 7.6 6.4 26.7 19.8 16.4 11.3 16.3 17.6 0.1 0.2 0.2 57 29

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 34

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Insurance
HDFC Life Insurance BUY 647 830 28 1,391 16.7 2,020 8 9 10 85 71 62 10.1 9.5 8.9 — — — 12 14 15 0.3 0.4 0.4 24 13
ICICI Lombard REDUCE 1,396 1,300 (7) 687 8.3 491 41 49 57 34 29 25 5.8 5.0 4.3 — — — 18 19 19 0.7 0.9 1.0 9 5
ICICI Prudential Life BUY 541 650 20 779 9.4 1,439 6 7 8 91 80 67 7.2 6.7 6.2 — — — 8 9 10 0.6 0.6 0.6 13 7
LIC BUY 844 1,040 23 5,341 64.3 6,325 47 47 51 18 18 16 7.8 5.9 4.6 — — — 51 37 31 — — — 29 14
Max Financial Services BUY 948 1,100 16 327 3.9 345 2 2 2 572 508 443 — — — — — — 1 1 1 — — — 9 5
PB Fintech ADD 799 850 6 360 4.3 450 0 6 12 7,679 139 66 — — — 0 5 9 — — — 13 9
SBI Life Insurance BUY 1,454 1,625 12 1,456 17.5 1,004 19 20 21 77 74 69 11.2 10.0 8.9 — — — 15 14 14 0.2 0.2 0.2 19 11
Star Health and Allied Insurance ADD 549 550 0 321 3.9 582 12 18 23 45 31 24 5.2 4.4 3.8 — — — 12 16 17 — — — 4 3
Insurance Attractive 10,662 128.3 29.0 27.6 25.0 7.8 6.4 5.4 27 23 22 0.1 0.1 0.1 121 66
Internet Software & Services
Cartrade Tech SELL 716 460 (36) 34 0.4 51.5 8 11 13 85 64 56 1.8 1.7 1.7 51 32 25 2.1 2.7 3.0 0.0 0.0 0.0 3 1
FSN E-commerce Ventures ADD 173 170 (2) 495 6.0 2,875.0 0 1 2 477 184 107 33.9 28.8 22.7 129 77 52 7.3 16.9 24 — — — 13 6
Indiamart SELL 2,743 2,700 (2) 165 2.0 60.7 57 70 83 48 39 33 8.8 7.1 5.9 39 30 25 17.6 20.0 19.6 0.1 0.1 0.1 8 4
Info Edge ADD 5,251 5,360 2 679 8.2 129.0 62 69 81 85 76 65 5.9 5.6 5.3 69 61 51 7.1 7.5 8.4 0.3 0.3 0.4 16 7
Just Dial BUY 815 920 13 69 0.8 85.0 39 47 54 21 17 15 1.7 1.6 1.4 14 9 6 8.7 9.4 10.0 — — — 2 1
Zomato BUY 133 130 (2) 1,160 14.0 9,131 0 1 3 801 99 48 6.1 5.6 5.0 (20,630) 92 42 0.8 5.9 10.9 0.0 0.0 0.0 104 46
Internet Software & Services Attractive 2,602 31.3 146 80 51 6.3 5.9 5.3 124 65 42 4.3 7.4 10.3 0.1 0.1 0.1 145 65
IT Services
Cyient BUY 2,235 2,400 7 248 3.0 111 70 87 98 32 26 23 5.4 4.9 4.4 18 16 14 19 20 20 1.6 2.1 2.4 12 5
HCL Technologies ADD 1,433 1,600 12 3,888 46.8 2,714 57 65 72 25 22 20 5.7 5.5 5.2 15 14 12 24 25 27 3.5 3.8 4.0 40 23
Infosys BUY 1,533 1,870 22 6,361 76.5 4,146 60 69 78 26 22 20 7.8 7.2 6.6 17 15 13 31 34 35 2.9 3.4 3.8 104 63
KPIT Technologies SELL 1,507 940 (38) 413 5.0 273 21 28 36 71 54 42 18.7 14.9 11.8 41 32 26 30 31 31 0.4 0.5 0.7 25 10
L&T Technology Services SELL 5,218 4,600 (12) 552 6.6 106 123 142 161 42 37 32 9.6 8.4 7.4 28 25 22 24 24 24 0.8 1.0 1.2 11 4
LTIMindtree REDUCE 5,948 5,910 (1) 1,760 21.2 296 166 197 233 36 30 26 9.1 7.7 6.5 24 21 18 27 28 28 1.2 1.3 1.5 27 11
Mphasis REDUCE 2,638 2,590 (2) 498 6.0 188 83 97 114 32 27 23 5.9 5.5 5.1 20 17 15 19 21 23 2.3 2.5 2.7 16 7
Persistent Systems REDUCE 7,351 6,985 (5) 565 6.8 77 145 183 227 51 40 32 12.1 10.1 8.4 32 25 21 26 28 28 0.7 0.9 1.1 41 16
RateGain ADD 735 650 (12) 87 1.0 109 12 15 17 61 49 42 9.5 7.8 6.6 44 36 29 17 18 17 0.0 0.0 0.0 5 2
Tata Elxsi SELL 8,646 5,450 (37) 538 6.5 62 132 157 185 65 55 47 21.9 18.6 15.9 48 40 34 36 37 37 0.8 1.0 1.2 16 7
TCS ADD 3,738 4,115 10 13,677 164.6 3,649 127 142 157 29 26 24 14.2 12.7 11.5 21 18 17 49 51 51 1.5 3.0 3.4 92 55
Tech Mahindra REDUCE 1,248 1,300 4 1,098 13.2 890 35 59 72 36 21 17 4.0 3.9 3.7 19 12 10 11 19 22 2.4 3.6 3.7 31 15
Wipro REDUCE 457 430 (6) 2,385 28.7 5,287 21 23 25 21 20 18 3.3 2.8 2.5 13 12 10 15 15 15 0.2 0.2 2.0 35 16
IT Services Neutral 32,071 385.9 28.6 24.9 22.2 8.1 7.4 6.7 18.7 16.4 14.6 28.4 29.5 30.1 1.9 2.7 3.1 454 236
Media
PVR INOX ADD 1,649 1,700 3 162 1.9 98 18 41 56 89 40 29 1.9 1.9 1.8 21 15 12 2 5 6 0.1 0.2 0.3 11 5
Sun TV Network BUY 721 725 1 284 3.4 394 49 52 55 15 14 13 2.8 2.5 2.3 10 9 8 20 19 19 3.5 3.8 4.2 9 3
Zee Entertainment Enterprises REDUCE 283 275 (3) 272 3.3 960 7 8 9 40 34 32 2.5 2.4 2.3 22 20 19 6 7 7 1.1 1.4 1.4 50 18
Media Attractive 718 8.6 25.6 22.0 20.1 2.4 2.3 2.2 15.6 13.5 12.1 9.5 10.4 10.8 1.8 2.1 2.3 70 26
Metals & Mining
Hindalco Industries ADD 587 535 (9) 1,319 15.9 2,220 38 41 45 15 14 13 1.3 1.2 1.1 7.3 6.7 6.0 9 9 9 0.7 0.7 0.8 36 16
Hindustan Zinc SELL 319 265 (17) 1,346 16.2 4,225 20 20 20 16 16 16 10.4 10.4 10.4 9.4 9.1 8.8 65 64 66 6.3 6.2 6.4 3 1
Jindal Steel and Power BUY 736 800 9 751 9.0 1,020 48 60 83 15 12 9 1.7 1.5 1.3 8.1 7.1 5.4 12 13 16 0.3 0.8 1.7 19 7
JSW Steel REDUCE 829 820 (1) 2,028 24.4 2,417 53 69 89 16 12 9 2.6 2.2 1.8 8.5 7.0 5.7 18 20 22 1.0 1.3 1.6 20 8
National Aluminium Co. SELL 128 75 (41) 235 2.8 1,837 7 7 7 19 19 19 1.7 1.6 1.5 9.9 9.5 9.0 9 9 8 2.1 2.1 2.1 29 12
NMDC ADD 223 200 (10) 653 7.9 2,931 20 20 20 11 11 11 2.6 2.3 2.1 7.3 7.3 7.1 24 21 20 4.5 4.4 4.5 35 15
SAIL SELL 117 60 (49) 483 5.8 4,130 4 6 7 27 20 17 0.8 0.8 0.8 8.7 8.2 7.9 3 4 5 1.4 1.8 2.1 38 15
Tata Steel REDUCE 134 145 8 1,644 19.8 12,224 5 11 16 26 12 8 1.6 1.5 1.3 9.9 6.7 5.5 6 13 17 0.9 2.1 3.0 50 24
Vedanta SELL 266 220 (17) 988 11.9 3,717 17 20 21 16 13 13 2.4 2.3 2.2 5.4 5.0 4.7 15 18 18 5.5 6.6 6.8 29 13
Metals & Mining Cautious 9,446 113.7 16.9 13.3 11.0 2.0 1.8 1.6 7.9 6.8 6.0 11.8 13.7 14.9 2.4 2.8 3.2 260 113

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 35

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Oil, Gas & Consumable Fuels
BPCL SELL 453 400 (12) 983 11.8 2,093 121 47 49 4 10 9 1.4 1.3 1.2 3.0 6.1 5.6 43 14 14 12.0 4.7 4.8 38 18
Coal India REDUCE 384 275 (28) 2,368 28.5 6,163 33 28 31 11 14 12 3.6 3.4 3.1 11.0 15.2 13.1 34 26 26 5.2 5.2 5.2 54 24
HPCL SELL 420 310 (26) 596 7.2 1,419 100 59 57 4 7 7 1.6 1.4 1.3 4.8 7.7 7.7 44 21 19 9.5 5.6 5.4 38 15
IOCL SELL 133 100 (25) 1,874 22.5 14,121 24 15 14 6 9 10 1.2 1.2 1.1 4.3 5.6 5.6 23 14 12 8.9 5.8 5.2 38 18
Oil India ADD 380 335 (12) 413 5.0 1,084 53 55 56 7 7 7 1.1 1.0 0.9 5.9 5.5 5.3 16 15 14 3.5 5.3 5.6 18 9
ONGC ADD 216 210 (3) 2,723 32.8 12,580 41 41 39 5 5 6 0.9 0.8 0.7 3.3 3.2 3.1 17 15 13 5.7 6.0 5.6 31 16
Reliance Industries BUY 2,608 2,725 4 17,644 212.3 6,766 109 130 138 24 20 19 2.3 2.0 1.9 12.4 10.6 9.5 10 11 10 — 0.3 0.4 179 112
Oil, Gas & Consumable Fuels Neutral 26,600 320.1 11.9 13.1 13.0 1.8 1.7 1.5 7.4 7.7 7.2 15.4 12.6 11.7 2.6 2.1 2.0 396 211
Pharmaceuticals
Aurobindo Pharma SELL 1,124 840 (25) 659 7.9 586 52 60 69 22 19 16 2.3 2.1 1.9 12 10 9 11 12 12 1.4 1.6 1.9 25 11
Biocon REDUCE 291 235 (19) 350 4.2 1,202 4 9 16 67 32 18 1.5 1.5 1.4 16 12 9 2 5 8 0.5 1.1 1.9 12 6
Cipla ADD 1,287 1,320 3 1,039 12.5 806 49 55 59 26 23 22 3.9 3.4 3.1 16 14 13 16 16 15 0.9 1.0 1.1 26 14
Concord Biotech REDUCE 1,550 1,300 (16) 162 2.0 105 29 38 49 53 41 32 10.7 8.9 7.4 37 29 23 22 24 25 0.5 0.6 0.8 3 2
Divis Laboratories SELL 4,015 2,775 (31) 1,066 12.8 265 64 83 102 62 48 39 7.9 7.3 6.6 44 34 27 13 16 18 0.9 1.0 1.2 20 9
Dr Reddy's Laboratories REDUCE 5,836 5,375 (8) 973 11.7 166 323 339 322 18 17 18 3.5 3.0 2.6 11 10 10 21 18 15 0.7 0.8 0.8 30 16
Gland Pharma SELL 1,990 1,365 (31) 328 3.9 164 54 65 72 37 31 28 3.7 3.3 2.9 22 18 16 11 11 11 - - - 8 4
Laurus Labs SELL 427 270 (37) 230 2.8 536 7 12 16 61 35 26 5.2 4.5 3.9 23 17 14 9 14 16 - - - 10 4
Lupin SELL 1,389 1,005 (28) 633 7.6 455 39 45 56 36 31 25 4.5 4.0 3.6 17 15 13 13 14 15 0.5 0.6 0.7 20 9
Mankind Pharma ADD 2,058 2,000 (3) 824 9.9 401 45 56 69 46 37 30 9.4 7.9 6.6 33 26 21 22 23 24 0.5 0.7 0.8 23 13
Sun Pharmaceuticals ADD 1,300 1,280 (2) 3,120 37.5 2,399 38 46 53 34 28 25 4.9 4.3 3.8 22 18 16 15 16 16 0.6 0.7 0.8 27 16
Torrent Pharmaceuticals REDUCE 2,350 1,950 (17) 795 9.6 338 49 60 76 48 39 31 10.5 8.6 7.0 23 21 17 24 24 25 0.4 0.4 0.6 8 4
Pharmaceuticals Neutral 10,264 123.5 33.0 27.7 24.2 4.4 4.0 3.5 19.4 16.6 14.3 13.5 14.2 14.5 0.5 0.6 0.7 216 108
Real Estate
Brigade Enterprises BUY 942 780 (17) 217 2.6 231 14 21 28 69 44 33 6.2 5.6 4.8 21 14 11 9 13 16 0.3 0.3 0.3 5 2
Brookfield India Real Estate Trust ADD 245 280 14 108 1.3 439 6 12 17 44 20 14 1.0 1.1 1.2 17 12 11 2 4 6 7.6 9.2 10.2 1 1
DLF ADD 753 590 (22) 1,864 22.4 2,475 13 16 20 59 47 39 4.6 4.3 3.9 67 53 42 8 10 10 0.3 0.3 0.3 34 15
Embassy Office Parks REIT ADD 333 360 8 315 3.8 948 10 14 17 34 23 19 1.4 1.4 1.5 15 12 11 4 6 8 6.7 7.7 8.8 17 15
Godrej Properties SELL 2,244 1,370 (39) 624 7.5 278 21 43 50 106 52 44 6.3 5.7 5.0 (273) 175 202 6 11 12 — — — 18 7
Macrotech Developers ADD 1,091 910 (17) 1,052 12.7 964 17 50 59 62 22 18 7.3 5.5 4.2 41 16 12 12 29 26 — — — 20 9
Mindspace REIT ADD 326 350 7 194 2.3 593 10 13 15 32 26 22 1.3 1.3 1.4 14 13 12 4 5 6 6.3 6.7 7.2 1 1
Nexus Select Trust ADD 134 135 1 203 2.4 1,515 5 5 6 28 25 22 6.8 8.5 11.1 16 14 13 28 30 44 6.9 6.9 7.4 1 1
Oberoi Realty REDUCE 1,519 1,080 (29) 552 6.6 364 47 57 103 32 26 15 4.0 3.5 2.8 23 17 9 13 14 21 0.1 0.1 0.1 13 6
Phoenix Mills ADD 2,489 2,190 (12) 445 5.4 179 49 74 85 51 34 29 4.8 4.3 3.7 21 16 15 10 13 14 0.1 0.2 0.2 9 5
Prestige Estates Projects ADD 1,330 910 (32) 533 6.4 401 41 14 22 32 96 60 4.6 4.4 4.1 24 22 18 15 5 7 0.1 0.1 0.1 17 7
Signature Global ADD 1,056 910 (14) 148 1.8 141 14 24 30 76 44 35 17.5 12.5 9.2 57 32 23 44 33 30 — — — 4— 2
Sobha BUY 1,269 835 (34) 120 1.4 95 29 66 50 43 19 25 4.4 3.6 3.2 23 11 11 11 21 14 0.3 0.3 0.4 13 4
Sunteck Realty BUY 458 520 13 67 0.8 140 20 23 58 23 20 8 2.1 1.9 1.5 18 15 6 10 10 22 0.2 0.2 0.2 6 3
Real Estate Attractive 6,442 77.5 48.9 33.9 26.3 4.0 3.7 3.4 31.0 21.1 16.6 8.2 11.0 12.9 1.0 1.1 1.2 158 77
Retailing
Avenue Supermarts SELL 3,864 3,600 (7) 2,514 30.3 648 41 54 68 94 71 57 13.4 11.2 9.4 59 46 37 15 17 18 — — — 18 11
Metro Brands REDUCE 1,260 1,250 (1) 342 4.1 272 14 17 21 92 72 59 18.9 15.9 13.3 45 37 30 22 24 24 — — 1— 2 1
Titan Company ADD 3,713 3,775 2 3,296 39.7 888 41 50 62 90 74 59 34.6 26.3 20.0 60 48 39 34 40 38 0.4 0.4 0.5 33 17
Trent ADD 3,066 2,700 (12) 1,090 13.1 356 25 36 51 121 84 60 31.2 22.8 16.5 63 46 35 30 31 32 — — — 21 11
Retailing Neutral 6,152 87.1 95.2 74.3 58.6 21.6 17.3 13.8 59.0 46.0 37.1 23 23 24 0.2 0.2 0.2 75 41

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 36

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 5-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Specialty Chemicals
Aarti Industries SELL 629 540 (14) 228 2.7 363 11 16 25 59 39 25 4.3 4.0 3.5 26 21 15 8 11 15 0.3 0.4 0.8 13 6
Atul SELL 7,029 4,070 (42) 207 2.5 30 134 167 203 52 42 35 4.1 3.8 3.5 29 24 20 8 9 11 0.3 0.4 0.6 4 2
Castrol India ADD 188 150 (20) 186 2.2 989 9 10 10 22 19 18 9.1 8.4 7.8 15 13 12 43 45 45 3.7 4.2 4.5 11 5
Clean Science & Technology ADD 1,572 1,480 (6) 167 2.0 106 18 32 53 87 50 30 14.3 11.6 8.8 62 36 22 18 26 34 0.2 0.4 0.6 3 1
Deepak Nitrite REDUCE 2,448 2,120 (13) 334 4.0 136 60 69 79 41 35 31 7.0 5.9 5.0 28 25 22 18 18 18 0.3 0.3 0.3 12 4
Navin Fluorine ADD 3,823 3,620 (5) 190 2.3 50 69 99 143 55 39 27 7.6 6.4 5.3 34 24 17 15 18 22 0.2 0.2 0.3 10 5
Pidilite Industries ADD 2,723 2,750 1 1,385 16.7 508 38 45 52 71 61 53 16.9 14.9 13.4 48 42 36 25 26 27 0.7 0.9 1.1 12 7
PI Industries ADD 3,461 3,630 5 525 6.3 152 103 110 124 33 31 28 6.1 5.2 4.5 26 23 20 20 18 17 0.4 0.4 0.6 18 10
SRF BUY 2,481 2,660 7 735 8.8 296 50 73 102 49 34 24 6.4 5.5 4.6 26 20 15 14 17 21 0.5 0.6 — 12 6
Vinati Organics SELL 1,741 1,530 (12) 179 2.2 104 36 49 62 48 36 28 6.8 5.8 5.0 35 25 20 15 18 19 0.3 0.4 0.5 1 1
Specialty Chemicals Neutral 4,136 49.8 49.5 39.8 31.7 8.0 7.0 6.0 31.6 25.6 20.8 16.2 17.6 19.1 0.6 0.8 0.8 96 47
Telecommunication Services
Bharti Airtel ADD 1,047 1,050 0 6,146 74.0 5,967 26 39 51 41 27 21 7.1 5.4 4.4 10 8 6 18 23 23 0.5 0.5 0.6 61 40
Indus Towers ADD 222 200 (10) 599 7.2 2,695 19 21 13 11 10 17 2.3 1.9 1.9 5 4 5 22 20 11 0.7 5.9 3.4 21 8
Vodafone Idea RS 17 — — 832 10.0 48,680 (7) (6) (7) NM NM NM NM NM NM 20 19 22 NM NM NM — — — 66 17
Tata Communications SELL 1,758 1,400 (20) 501 6.0 285 37 44 64 47 40 27 25.5 17.8 12.0 14 12 10 61 52 53 0.8 0.9 1.3 23 11
Telecommunication Services Attractive 8,078 97.2 NM 5,024.7 262.2 85 60 109 10.7 8.9 8.1 NM 1.2 41 0.5 0.9 0.7 171 76
Transportation
Adani Ports and SEZ BUY 1,154 1,340 16 2,493 30.0 2,160 44 52 62 26 22 19 4.6 3.9 3.3 17 14 12 19 19 19 0.3 0.3 0.5 78 30
Container Corp. SELL 896 660 (26) 546 6.6 609 21 24 28 43 37 32 4.6 4.4 4.1 27 23 20 11 12 13 1.1 1.3 1.5 12 6
Delhivery BUY 403 410 2 296 3.6 729 (5) (1) 1 NM NM 283 3.2 3.2 3.0 1,523 72 40 NM NM 1 — — — 8 5
Gateway Distriparks BUY 111 98 (11) 55 0.7 500 6 6 7 20 17 15 2.8 2.5 2.2 14 12 10 15 16 16 1.5 1.7 1.8 2 1
GMR Airports REDUCE 84 55 (34) 506 6.1 6,036 (1) (0) 0 NM NM 403 NM NM NM 27 15 13 83 16 NM — — — 36 15
Gujarat Pipavav Port ADD 157 140 (11) 76 0.9 483 8 9 10 20 18 15 3.1 3.0 2.8 12 10 9 16 17 19 3.3 3.8 4.3 6 3
InterGlobe Aviation BUY 2,955 3,300 12 1,140 13.7 383 179 175 199 17 17 15 190.5 15.5 3.3 6 4 3 NM 170 68 — — — 24 14
Mahindra Logistics REDUCE 448 340 (24) 32 0.4 71 3 10 20 139 43 23 5.6 5.1 4.3 14 11 8 4 12 21 — — — 2 1
Transportation Attractive 5,146 61.9 29.9 25.6 21.6 6.5 5.2 4.3 14.6 11.5 9.6 22 20 19.9 0.3 0.4 0.5 168 74
KIE universe 261,834 3,150 24.2 21.7 19.3 3.8 3.4 3.0 14.2 12.8 11.5 15.7 15.6 15.7 1.3 1.5 1.6

Notes:
(a) We have used adjusted book values for banking companies.
(b) 2022 means calendar year 2021, similarly for 2023 and 2024 for these particular companies.
(c) Exchange rate (Rs/US$)= 83.1

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research
 37

Distribution of ratings/investment banking relationships

Kotak Institutional Equities Research coverage universe

Percentage of companies covered by Kotak Institutional

70%
Equities, within the specified category.

60%
Percentage of companies within each category for which
Kotak Institutional Equities and or its affiliates has
50%
provided investment banking services within the previous
12 months.
40% * The above categories are defined as follows: Buy = We
expect this stock to deliver more than 15% returns over
29.0% the next 12 months; Add = We expect this stock to deliver
30% 25.3%
24.5% 5-15% returns over the next 12 months; Reduce = We
21.2%
expect this stock to deliver -5-+5% returns over the next
20% 12 months; Sell = We expect this stock to deliver less than
-5% returns over the next 12 months. Our target prices
10% 6.1% are also on a 12-month horizon basis. These ratings are
3.7% 2.4% used illustratively to comply with applicable regulations. As
0.4%
of 30/09/2023 Kotak Institutional Equities Investment
0%
Research had investment ratings on 245 equity securities.
BUY ADD REDUCE SELL

Source: Kotak Institutional Equities

As of September 30, 2023
Ratings and other definitions/identifiers
Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our Fair Value estimates are also on a 12-month horizon basis.Our Ratings System does not take into account short-term volatility in stock prices related
to movements in the market. Hence, a particular Rating may not strictly be in accordance with the Rating System at all times.

Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the
following designations: Attractive, Neutral, Cautious.

Other ratings/identifiers
NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable
regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or
strategic transaction involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a
sufficient fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in
effect for this stock and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

India Research
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