A handful of companies have come out with quarterly results towards the end of the earnings season. Among them are Bharat Forge, Gujarat State Petronet (GSPL), CESC, Titagarh Wagons, Bosch. The December quarter numbers for these companies were mostly in line with expectations. Analysts have buy ratings on three of these stocks: CESC, Titagarh Wagons and GSPL. They are neutral on Bharat Forge and Bosch.
Bharat Forge
Nuvama Institutional Equities said Bharat Forge’s Q3 Ebitda was in line with its estimate. A miss on the tonnage front was compensated for by better per unit metric, it said. Bharat Forge’s domestic business has showed sequential pressure due to lower production by OEMs. Subsidiary performance suffered from macro issues with utilisation at 50 per cent level, the brokerage said.
The key highlight for the quarter was traction in defence (exports) with orders worth Rs 2,000 crore to be executed over 30 months.
“This should offset any weakness in international business. On balance, maintain ‘HOLD’ with a target of Rs 884 against Rs 844 earlier while rolling over the valuation to March 2025E,” it said.
Bharat Forge has been focusing on diversifying revenue streams. Nuvama said it likes the company’s strong positioning, but it is cautious given the adverse macros and their impact on volumes.
Gujarat State Petronet
Nirmal Bang Institutional Equities said GSPL’s standalone revenue (net of transmission charges) for December quarter was a tad miss while PAT missed its estimate by 9 per cent. PAT miss against Nirmal Bang’s estimate was due to the 5.2 per cent miss on volume and 4 per cent miss on unit Ebitda/scm amid higher opex.
Nirmal Bang said it maintained its ‘Buy’ rating on the stock but has trimmed its price target to Rs 416 post changes to estimates. The new target, it said, has been derived after reducing 20 per cent for execution/gas market risk and policy risk in GSPL/GIGL
standalone transportation valuation. The target price also includes the revised value of GSPL’s 54.17 per cent stake in GGL at Rs270 per share, based on its latest reduced GGL target price of Rs5 83, a 30 per cent holding company discount.
CESC
Emkay Global said CESC’s standalone PAT grew 1 per cent YoY for December quarter. Sales volume grew 2.5 per cent. As the circle did not see any tariff hike, profit growth remained marginal, it said adding that the Kolkata distribution-business witnessed over 3 per cent demand growth for the quarter and 10 per cent growth YTD 9MFY23.
In its bear-case valuation, Emkay assumes nil expansion (growth) in the Kolkata license area, thus capping the valuation of the distribution circle. As per its bear-case calculations, Emkay has arrive at SoTP-based value of Rs 70 per share for the stock.
“We cut our FY23E/FY24E EPS by 3-4 per cent, to factor-in the slower improvement in performance of distribution franchisees. In Rajasthan, while sales have seen a good increase, loss levels have not yet narrowed down. We maintain BUY on the stock, with Dec-23 TP of Rs 101 per share. The key issue with the stock is earnings growth. While the better performance at Dhariwal and Noida Power is encouraging, poor performance at DFs has been disappointing,” Emkay said.
Key triggers include standalone tariff increase and performance of distribution franchisees, i said.
Titagarh Wagons
Titagarh Wagons reported a 99 per cent YoY jump in December quarter revenue at about Rs 770 crore, its highest-ever. While Ebitda margin decreased 240 bps YoY to 9.5 per cent, higher other income lifted adjusted PAT 112 per cent YoY. The company ended Q3FY23 with an order book of Rs 10,100 crore. The management expects execution on Indian Railways’ (IR) wagon order to improve going ahead while the Pune Metro order is likely to be completed by H1CY24, said Nuvama.
“Titagarh Wagons is benefiting from surging railway capex. We maintain ‘BUY’ with a revised target of Rs 273 against Rs 206 earlier, based on a valuation rollover to Q3FY25E. Order accretion remains the key variable to monitor,” Nuvama said.
Bosch
Motilal Oswal said Bosch delivered a healthy performance with stronger-than-estimated revenue and in turn, margins. It would be outperforming the underlying auto industry growth with new order wins, though visibility for margin recovery (to 15-17 per cent) is bleak, the brokerage said.
MOtilal Oswal said Bosch needs to transit its strong ICE presence to EVs, journey of which has started but competitive intensity is very high in EV components.
“We raise our FY23/FY24 EPS estimates by 5 per cent/4 per cent to factor in better operating performance and higher other income. Maintain Neutral with a target of Rs 18,125 (premised on 25 times Mar’25E EPS),” it said.
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