Ashok Leyland Ltd | Q1FY25 Result Update | Massive replacement demand and share gains on cards, Maintain BUY! CMP: Rs 246 | Target Price: Rs 284 | Return: 15.2% | Rating: Buy Q1FY25 PAT was lower than our estimates by ~12%, reaching Rs 5.25bn. This was due to a subdued mix tilted towards LCVs, one-off expenses, and a ~56% drop in other income. However, looking ahead, the guidance remains healthy. There is a massive replacement demand of about 1.8mn units (~5x FY24 MHCV sales in India) expected to emerge in the coming years as the average fleet age exceeds 10 years. The company plans to launch half a dozen new LCVs and has a strong product pipeline for buses and MHCVs, positioning it to outperform the industry. White spaces, especially in the SCV/LCV segments, will be addressed first to increase the company’s LCV coverage from 50% to 70-80%. Exports showing signs of recovery, and the company is entering new markets. The journey of margin improvement should continue due to 1) significant headroom for cost reduction, supported by 2) export traction, 3) scale advantage, 4) lower discounting, 5) stable steel prices, and 6) growth in defense and spare parts. These factors drive towards a mid-teens EBITDA margin target in the medium term. The completion of the DFC has already been delayed, with the new timeline set for Dec’ 2025. However, logistics parks are critical for its success and will take more time to be fully constructed and functional, in our view. Hence, we do not expect any impact on CVs for the next 2-3 years. Despite the huge replacement demand and the rapid filling of white spaces, especially in the SCV/LCV segments, along with a strong infrastructure push, supported by improving profitability of fleet operators, we anticipate total volumes to grow at a CAGR of 7.7% from FY24 to FY26. EBITDA margin is expected to climb to 13% in FY25 and 14% in FY26. We maintain a BUY rating on the stock with a revised higher fair value of Rs 284 per share. Based on our positive on-ground checks and strong management commentary, we anticipate a prolonged CV cycle and significant potential in the stock. Therefore, we have increased the multiple from 10x to 11x FY26e EBITDA. Q1FY25 – Miss due to subdued mix and One-offs • The topline aligned with our estimates; however, the margin and bottom line fell short due to an unfavorable mix, compounded by lower-than-expected other income and one-offs. • QoQ volumes declined by 22% to 43,893 units due to seasonality, though YoY volume growth of 6.2% was reasonable given national elections and heat waves. • Realization decreased by 2.2% QoQ to ~Rs 1.96mn per vehicle as the contribution from MHCVs dropped by 249 bps to 63.5% of total volumes. • Other income is lower by ~56% to Rs 223mn in Q1FY25 as last year Ashok Leyland received higher dividend income and income from the sale of investments. • The EBITDA margin fell by 354 bps QoQ to 10.6% due to reduced operating leverage and a decrease in MHCV contribution in Q1FY25, and one-off expenses related to eTrucks battery, software, and other related costs. • As anticipated, Ashok Leyland transitioned to a new tax regime. PBT increased by approximately 13% YoY to Rs 7.0bn, while PAT dropped by around 9% YoY to Rs 5.25bn. This decline is due to the effective tax rate rising from 7.3% in Q1FY24 to 25.1% in Q1FY25. On-ground feedback indicates positive growth prospects starting October • Recent dealer feedback indicates that the current softness in the market is due to the slack season, heavy monsoons, inauspicious periods in a few states, and soft demand from the eCommerce industry. The decline is primarily in the SCV segment, while MHCVs are experiencing slight growth. • However, dealers are optimistic about a demand pickup starting from Navratri. This confidence is driven by high inquiry levels and a reasonably better macroeconomic situation across industries. There is also an expected gradual increase in replacement demand. • Tata M

Steel Strips Wheels Ltd | Q1FY25 Result Update | Maintained guidance, anticipate robust H2 with better mix, BUY! CMP: Rs 234 | Target Price: Rs 313 | Return: 33.9% | Rating: Buy Q1FY25 PAT is just ~4% below our estimates. However, with an EBITDA margin at 11.1%, this represents one of the best performances in the past six quarters. We project total volumes to increase from 19.0mn in FY24 to 21.6mn units in FY26, indicating a 6.6% CAGR. While the CV segment may experience slower growth, other segments and exports show strong potential (exports temporarily impacted in Q1, but a clear recovery is anticipated). Significant growth in alloy wheels exports, long-term agreements signed with several tractor OEMs, identification of new growth markets for OTR, the initiation of a high-margin knuckle casting project for three OEMs, and consistent growth in export steel wheels are expected to drive volume growth. Due to an improved mix (alloys, exports, tractors/OTR, knuckle casting), we anticipate the EBITDA margin to increase from 10.7% in FY24 to 11.3% in FY26. Consequently, EBITDA per wheel is projected to rise from Rs 244 in FY24 to Rs 268 in FY26. Robust guidance across segments, with an Rs 80-85bn topline target in five years, and high-margin exports will contribute significantly. The CV segment is expected to grow in line with the industry. EBITDA per wheel has grown by ~11% CAGR from FY17 to FY24, and gradual improvement trend should continue. Additionally, prepayment of debt is anticipated starting FY26 due to lower capex requirements and high free cash flow generation. We recommend a strong BUY, with the target price maintained at around Rs 313 per share. Q1FY25 - Strong operational performance, marginal miss at PAT level • The topline is slightly lower than our estimates at Rs 10.2bn, but EBITDA margin is significantly higher at 11.1% (+69bps higher than our est.), marking one of the best performances in the past six quarters. • The margin improvement is primarily due to benefits of a drop in steel prices and visible cost rationalization efforts, reflected in lower other expenses (-7% YoY). • Additionally, a decrease in exports led to reduced freight costs and other related expenses. • Although the finance cost increased by 32% YoY & 11% QoQ to Rs 311mn due to higher interest rates, this was offset by a lower effective tax rate in Q1FY25 at 25.4% vis-a-vis 33.2% in Q1FY24. • The operational performance is commendable, especially considering the poor export mix (-20% YoY to Rs 1.23bn) during the quarter. • Other income in Q4FY24 was unusually high at Rs 72mn vis-à-vis Rs 39mn in Q1FY25 & effective tax rate was just 10.9% in Q4FY24, resulting in a QoQ PAT drop. EBITDA per wheel improved from Rs 116 in FY17 to Rs 248 in Q1FY25 • Steel Strips Wheels Ltd (SSWL) improved EBITDA per unit from Rs 116 in FY17 to Rs 244 in FY24 & Rs 248 in Q1FY25 through better product mix and efficiencies. We expect EBITDA per unit to rise to Rs 256 in FY25 and Rs 268 in FY26 (excluding Knuckle Casting business, which itself is good mid-teens margin business). • On a conservative basis, its high-margin alloy wheels' revenue contribution is projected to increase from ~28% in FY24 to ~29% in FY26. Similarly, exports are expected to grow from 14.6% in FY24 to 15.3% in FY26. • Additionally, mid-teens margin businesses such as Tractors, OTR, and the start of Knuckle casting revenue will further enhance value. • Alloy domestic growth is projected at an ~7% CAGR from FY24 to FY26 due to premiumization, with alloy exports expected to grow at a high double-digit rate (50% CAGR on a low base). • SSWL is targeting existing aftermarket steel wheel customers for cross-selling alloys in international markets, indicating strong growth potential. • The company has signed long-term agreements with several tractor OEMs and identified new international markets for the OTR segment, supporting growth and margins. • It is negotiating price revisio

Swaraj Engines Ltd | Q1FY25 Result Update | A complete shift of business from Kirloskar H2FY25 onwards, BUY! CMP: Rs 3,006 | Target Price: Rs 3,472 | Return: 15.5% | Rating: BUY During Q1FY25, Engine sales significantly outperformed the industry due to market share gains and the shift of business from Kirloskar. This, combined with lower input costs, supported better margins (+14bps YoY and +23bps QoQ). The company continued its strong performance, reporting its ninth successive quarter of YoY engine sales growth. Considering high-capacity utilization and future demand, the company increased its capacity from 150K to 195K units annually through internal accruals. Recent on-ground dealer checks suggest that tractor sales are poised to pick up, driven by expectations of a better monsoon, reopening of subsidies & a low base of H2FY24. Management indicated that there will be a complete shift of business from Kirloskar to Swaraj Engines starting H2FY25, which will boost volumes above the industry average. The company's sales outperformance relative to the industry is expected to continue, as ‘Swaraj’ is recognized for quality in the industry. The additional volume from the business shift will further enhance sales. Considering the company's sound fundamentals, consistent dividends, and potential business growth, SWE presents a good investment opportunity. We have increased our multiple from 20x to 22x, considering the imminent full business shift from Kirloskar to Swaraj Engines. We upgrade to a BUY rating with a revised fair value of Rs 3,472 per share (22x FY26e EPS of Rs 158). Q1FY25 result analysis¬ – marginally below estimates, widely outperformed industry • Q1FY25 Revenue/EBITDA/PAT were slightly below our estimates by ~4%/5%/5% respectively, yet share gains and business migration from Kirloskar were evident. • Despite industry growth of 0.5%, SWE sold 41,849 engines, marking an 8.9% YoY growth, maintaining its outperformance. However, realization dropped by 4.0% YoY to Rs 99,881 per unit due to metal price corrections. • EBITDA Margin stood at 13.9%, 8bps lower than our estimates but higher by 14bps YoY and 23bps QoQ. This was primarily due to a Gross Margin improvement of 53bps YoY to 21.2%, driven by softer input costs and scale advantage. However, this was offset by an increase in Employee Costs and Other Expenses by 17bps and 23bps respectively. • Employee costs increased, likely due to annual salary revisions, while other expenses rose due to higher engine sales and general inflation. • The company reported its ninth successive quarter of YoY PAT growth. Its capacity augmentation program, increasing from 150,000 to 195,000 units per annum, has been completed. • The enhanced engine production capacity is now fully operational to meet future engine demand. On-ground checks indicating greater optimisim in tractor dealers body language • Based on our field checks, the body language of dealers suggests that the tractor industry is poised for double-digit growth starting from Navratri. The second half of FY25 looks promising for the industry. • This optimism is due to several factors: 1) A low base from the previous year, as the industry experienced a sharp decline in the second half of FY24. 2) Normal monsoon in 2024. 3) The reinstatement of subsidies, which are typically paused across India during elections. 4) Additionally, crop prices have remained strong this year. • The current inventory level is near normal at about one month. Swaraj Tractors does not offer any discounts, while dealer discounts have been stable for the past six months. Proved its outperformance over the long period, confident of sustaining the same • The domestic tractor industry posted a 3.2% CAGR from FY14 to FY24, compared to this Swaraj's engine sales CAGR of 6.5% and revenue CAGR of 8.9% over the same period were way better. • We anticipate the continued outperformance of Swaraj due to its recognized quality, market sha

Bajaj Auto Ltd | Q1FY25 Result Update | 2W CNG to taste success, PLI supporting margins, Valuation expensive! CMP: Rs 9,708 | Target Price: Rs 8,482 | Return: -12.6% | Rating: SELL Q1FY25 PAT is ~2% higher than our estimates, primarily as the company started receiving PLI incentives. We continue to believe that Bajaj has a strong presence in the Pulsar portfolio & three-wheelers, and anticipate that the two-wheeler CNG product to succeed based on our on-ground checks, although Platina volumes may be impacted. However, more efforts are needed in other areas such as the commuter segment and premium motorcycles (350cc+) to achieve desired results. We maintain our view that most near-term positives are already reflected in the stock price, and the valuation appears expensive considering the slower-than-expected pickup in exports and rising commodity prices. We anticipate Volumes/Revenue/EBITDA/PAT to grow at a CAGR of ~13%/21%/24%/22% respectively from FY24 to FY26e. Domestic volume drivers include: 1) continued momentum in ICE 2Ws along with growth in two-wheeler CNG, 2) new launches in the Pulsar and premium portfolios, 3) expansion in e3Ws, and 4) increasing touchpoints with the introduction of new products in e2Ws. Although exports are taking longer than expected to pick up, gradual QoQ improvement is guided. Margins are expected to remain at 20.2% in FY25, rising to 20.7% in FY26. Based on our estimates, the stock is trading at an expensive valuation of ~25x FY26e EPS of Rs 395. We maintain SELL rating with a revised fair value of Rs 8,482 per share, as most near-term triggers appear to be priced in. Tweaked estimates marginally. Q1FY25 – Slightly ahead of estimates, PLI incentives supported margins! • Revenue/EBITDA/PAT exceeded our estimates by ~2%/4%/2% respectively. The increase in blended realization occurred despite a lower mix of exports and three-wheelers QoQ basis. • The growth was driven by 1) Price increases, 2) Better mix within two-wheelers, 3) Higher spare parts sales, 4) PLI benefits, which improved the EBITDA margin by about 50 basis points in Q1FY25. • Back-of-the-envelope calculations suggest that the company received ~Rs 900mn in PLI benefits in Q1FY25, with more benefits expected in the coming quarters as the company recently launched a scooter priced under Rs 1 lakh, which has yet to receive the PLI certificate. • In addition to PLI incentives, EBITDA margin improvement was supported by scale benefits, cost reduction, and a favorable mix. These factors were partially offset by the negative margins from the electric two-wheeler business. • Internal metrics are strong, with the highest realization and EBITDA per unit reported. Revenue, EBITDA, and PAT all showed double-digit YoY growth. Additionally, the cash balance of Rs 167.6bn is very healthy and more than sufficient to support new business ventures. 2W hybrid likely to taste success, negative impact on Platina & competitors models • Market Reception: Our checks indicate that the 2W hybrid model (CNG + Petrol) is receiving good inquiries and reasonable bookings, even without potential customers seeing or testing the motorcycles. Inquiries are strong even in states where this model will launch on or after October 2024. • Customer Demographics: The primary customers are shopkeepers, small business owners, and mileage-conscious individuals over the age of 45. Younger customers are not widely preferring the hybrid model, likely due to its simple looks. Delivery executives are mostly preferring e2Ws due to their significantly lower running costs. • Customer Trends: Most Platina customers are inquiring about or booking the 2W hybrid model. There are also marginal walk-ins from customers of listed competitors. • Mileage and Cost Considerations: For most customers of 100-125cc models, mileage and resale value are of utmost importance. According to our back-of-the-envelope calculations, in actual road conditions, the running cost for the 2W

Lumax Auto Technologies Ltd | Q4FY24 Result Update | Robust guidance, adding new clients, winning businesses, Maintain BUY! CMP: Rs 482 | Target Price: Rs 600 | Upside: 24.5% | Rating: BUY The Q4FY24 PAT was ~10% lower than our estimates, primarily due to a slightly lower margin for IAC India and the inclusion of Lumax Ancillary Ltd, which has thin margins. The company has provided robust guidance for consolidated topline growth of 20-25% for FY25 with nearly similar margins. Emerging subsidiaries are expected to grow by 40-60%. This, combined with a strong order book of Rs 9bn, the start of Tata Motors order execution at IAC, and planned debt reduction, positions the company well for accelerated earnings growth. Due to accounting changes, IAC India's EBITDA margin is now guided lower at 16% on a sustainable basis, although the growth outlook remains strong at over 20%. We anticipate a Revenue/EBITDA/PAT CAGR of approximately 20%/21%/32% for FY24-FY26e, which will generate strong cash flows and allow for debt repayment. This will result in increased other income and lower interest costs. Given the strong execution guidance, success in adding new large clients (such as Tata Motors in IAC India), winning new business from anchor customers (such as M&M's 3XO), and continued high double-digit growth in emerging subsidiaries, we are compelled to increase the multiple from 16x to 18x FY26e EPS of Rs 33.3. We maintain BUY rating with a revised fair value of Rs 600 per share. Q4FY24 Result Analysis – Strong show! • Revenue/EBITDA/PAT stood at ~Rs 7.6bn/Rs 919mn/Rs 442mn, reporting YoY growth of around 54%/62%/137% respectively in Q4FY24. • The YoY performance appears impressive due to the inclusion of IAC India, strong performance from key clients, and the acquisition of Lumax Ancillary Ltd (LAL). • LAL will be merged with the company effective April 1, 2024 (pending approvals). This merger aims to simplify the corporate structure, reduce the number of group companies, cut costs, and increase operational efficiencies. • The YoY EBITDA Margin improved by 65bps to 12.1%, mainly due to IAC India and improvements in the standalone business (+37bps YoY to 9.0%). • Strong YoY operational performance, along with higher other income (~+238% YoY to Rs 179mn, mainly dividends from Lumax Mannoh) and a lower effective tax rate (-196bps YoY to 16.9%), boosted the bottom line. • On a yearly basis, LATL posted robust growth of ~53% in topline, an improvement in EBITDA Margin by 220bps YoY to 13.0%, and a consolidated PAT increase of around 40% YoY to Rs 1.3bn. The company generated FCF of Rs 1.17bn in FY24 compared to a negative Rs 3.35bn in FY23. Key growth drivers ahead • IAC India: Anticipates 23% revenue growth in FY25, driven by the addition of new customer Tata Motors and new business wins such as 3XO. Key customers M&M and Maruti Suzuki have a strong model pipeline. EBITDA margin guidance has been revised down to a sustainable level of around 16% due to changes in accounting policies. • Lumax Mannoh: Gradual shift to high-margin automatic gear shifters (3x the realization compared to manual gear shifters) and an increase in export opportunities, expanding from two countries (Indonesia and Malaysia) to five, are expected to drive an 18% revenue increase in FY25, with some margin improvement to 17.3%. • Lumax Cornaglia: With anchor clients outperforming, localization efforts, and the introduction of plastic fuel products, the business is expected to grow. The aim is to increase plastic fuel tank revenue to 40% of Lumax Cornaglia's total in 2-3 years due to significant order wins mainly from Tata Motors. This entity is projected to achieve 22% growth in FY25, with an improvement in EBITDA margin to 18.2%. • Standalone: Increasing contribution from higher-margin aftermarket and LED products, the addition of LAL from FY25, new business wins from Bajaj Auto (including the Chetak model), and the anticipated rebound in Bajaj’s ex

Suprajit Engineering Ltd| Q4FY24 Result Update | Back to growth mode, Maintain BUY! CMP: Rs 437 | Target Price: Rs 503 | Upside: 15.1% | Rating: Buy Q4FY24 PAT exceeded our expectations by 13%, reaching Rs 591mn, primarily due to higher than anticipated Other income and a lower effective tax rate. The management's body language has turned positive, and their commentary across segments indicates robust performance with expected margin improvements. FY24 was relatively soft, mainly due to macroeconomic concerns in export markets and a muted aftermarket. However, the guidance for FY25 is promising: SCD: The company is winning new large contracts globally, with an NDA signed, hinting at a near-future acquisition. The non-auto division is expected to see marginal growth. Projects double-digit revenue growth with improved margins in FY25. DCD: Plans to expand beyond cables, with aftermarket growth anticipated. Anticipate double-digit revenue growth with consistent margins. PLD: Restructuring is complete, achieved the best margins. Foresees double-digit growth and margins. SED: Deliveries of actuators, digital clusters, and throttle position sensors are reaching new highs, with robust new order wins continuing. Aims strong growth with good margins. Overall, consolidated revenue growth is expected to be in double digits for FY25, with margin improvements anticipated. We maintain a BUY rating with an upwardly revised fair value of Rs 503 per share. Q4FY24 Result Analysis – One more outperformance! • Revenue and EBITDA broadly aligned with our estimates, but PAT exceeded expectations due to higher Other income and a lower effective tax rate. • Revenue for Q4FY24 was approximately Rs 7.83bn, marking a 12% YoY increase driven by growth across various segments: DCD (+15% YoY), PLD (+9% YoY), SCD (~+4% YoY), and a robust Q4 performance for SED at Rs 268mn. • The EBITDA margin decreased by 40 basis points YoY to 12.1%, due to lower margins in the SCD (-290bps YoY to 7.3%) and DCD (-104bps YoY to 17.3%). This was offset by significant margin improvement in the PLD (+654bps YoY to 15.1%, the highest ever) and a strong margin for SED at 12.8% in its first year of operations. • Reported PAT was Rs 591mn, a 44% YoY increase driven by a rise in Other income (+247% YoY to Rs 194mn) and a lower effective tax rate (-994bps YoY to 19.5%). • The increase in Other income was due to MTM adjustments and gains from mutual fund investments. Annual growth in FY24 was lower due to a subdued performance in the export market, impacted by macroeconomic concerns, and muted domestic aftermarket growth. However, FCF generation was healthy at approximately Rs 1.58bn in FY24, compared to a negative Rs 1.7bn in FY23. Ready to take-off driven by growth across divisions • Suprajit Control Division (SCD): After a muted FY24 due to macroeconomic concerns, SCD is expected to perform well in FY25, winning large global contracts, particularly in North America. SCD is projected to report a 15% YoY growth to approximately Rs 15.7bn, with margins potentially improving to around 9.0% in the current fiscal year. • Domestic Cables Division (DCD): With the majority of revenue coming from the two-wheeler market, which is on a strong recovery path in FY25, along with growth in the aftermarket and beyond cables, DCD is expected to support a 15% YoY growth to approximately Rs 12.5bn in FY25. The EBITDA margin, already at a respectable 17.5% in FY24, is anticipated to improve slightly to 17.7% in FY25 due to operating leverage. • Phoenix Lamps Division (PLD): Reporting a 15.1% EBITDA margin in Q4FY24, PLD is expected to maintain this level in FY25, benefiting from the positive effects of Trifa and Luxlite restructuring, operating leverage, and a direct exports strategy. A 10% revenue growth to approximately Rs 4.3bn is anticipated for the ongoing fiscal year. • Suprajit Electronics Division (SED): With a remarkable 107% YoY growth to Rs 1.15bn in FY24, SED i

Steel Strips Wheels Ltd | Q4FY24 Result Update | Favourable mix to drive EBITDA per wheel, Maintain BUY! CMP: Rs 218 | Target Price: Rs 315 | Upside: 44.5% | Rating: Buy The Q4FY24 reported PAT exceeded our estimates by approximately 8%, driven by higher other income and a lower effective tax rate. We project total volumes to increase from 19.0mn in FY24 to 21.7mn units in FY26, representing a 7% CAGR. While the commercial vehicle segment may experience slower growth, other segments and exports show strong potential. Significant growth in alloy wheels exports, long-term agreements signed with several tractor OEMs, identification of new growth markets for OTR, the initiation of a high-margin knuckle casting project for three OEMs, and consistent growth in export steel wheels are expected to drive volume growth. Due to improvement in the mix (alloys, exports, tractors/OTR, knuckle casting), we anticipate the EBITDA margin to increase from 10.7% in FY24 to 11.3% in FY26. Consequently, EBITDA per wheel is projected to rise from Rs 244 in FY24 to Rs 267 in FY26. The volume guidance across segments (including exports) is expected to be in the low to mid double-digits, with the exception of commercial vehicles (flattish outlook). We have adjusted our estimates to reflect changing industry dynamics, conservatively revising the fair value to Rs 315 per share (9x FY26e EBITDA). We maintain a BUY rating, anticipating significant upside potential. Q4FY24 – In-line operational performance, PAT higher than estimates • Revenue came in at Rs 10.7bn, higher than estimates by 3.5%, while absolute EBITDA was near in-line at ~Rs 1.1bn in Q4FY24. • Despite QoQ lower contribution from CVs & Export, EBITDA Margin was just dropped by 12bps QoQ to 10.4%. EBITDA per wheel was down by ~5% to Rs 239. • PAT was near flattish QoQ at Rs 603mn in Q4FY24, supported by higher Other income (~+327% QoQ to Rs 72mn) and lower effective tax rate (-497bps QoQ to 10.9%). The bottom line was higher than our estimates by 8.1%. EBITDA per wheel to improve heron • Steel Strips Wheels Ltd (SSWL) improved EBITDA per unit from Rs 116 in FY17 to Rs 244 in FY24 through better product mix and efficiencies. We expect EBITDA per unit to rise to Rs 255 in FY25 and Rs 267 in FY26. • The high-margin alloy wheels' revenue contribution is projected to increase from ~28% in FY24 to ~30% in FY26. Similarly, exports are expected to grow from 14.6% in FY24 to 15.3% in FY26. • Additionally, mid-teens margin businesses such as Tractors, OTR, and the start of Knuckle casting revenue will further enhance value. • Alloy domestic growth is projected at an ~8% CAGR from FY24 to FY26 due to premiumization, with alloy exports expected to grow at a high double-digit rate (50% CAGR on a low base). • SSWL is targeting existing aftermarket steel wheel customers for cross-selling alloys in international markets, indicating strong growth potential. • The company has signed long-term agreements with several tractor OEMs and identified new international markets for the OTR segment, supporting growth and margins. • It is negotiating price revisions with a few car steel wheel customers, which should further boost EBITDA per vehicle. • We believe the company has the potential to achieve EBITDA margin in the low teens, but we conservatively estimate a gradual margin improvement from 10.7% in FY24 to 11.3% by FY26. No major capex, good FCF generation will get use to repay debt • No major capital expenditure is anticipated as AMW has been acquired and alloy wheels capacity has been expanded to nearly 5mn units annually. • FY25e capex will be around Rs 2.25bn, with only Rs 400mn capital expenditure required annually for maintenance starting FY26. • SSWL is expected to generate close to Rs 6bn in free cash flows combined in FY25 and FY26, which we anticipate will be used to repay Rs 4bn in total loans, reducing interest costs and benefiting EPS. • Interest cost is projected to decrea

Ashok Leyland Ltd | Q4FY24 Result Update | The best all-around performance, on clear path to achieve mid-teens margin! CMP: Rs 211 | Target Price: Rs 251 | Upside: 19.2% | Rating: Buy Numbers have exceeded expectations due to significant operational improvements. In Q4FY24, it reported the highest ever Realization, EBITDA per unit, EBITDA Margin, and PAT. Management looks confident on the guidance to achieve mid-teens annual EBITDA Margin in the coming years, with industry growth expected to continue in the medium term. Our on-ground check indicates temporary demand softness due to a national event, with marginal growth anticipated post-election and strong performance in the second half, driven by favorable macro indicators, stable policies, and emerging replacement demand. Ashok Leyland is poised to outperform, supported by network expansion plans and the introduction of new products to fill gaps, especially in the SCV/LCV segments, aiming to gain market share. It achieved a record 14.1% EBITDA Margin in Q4FY24. We conservatively project total volumes to grow by ~6% from FY24 to FY26e, with an estimated EBITDA Margin of 14.0% by FY26. We still see a substantial upside of around 19%, with a fair value of Rs 251 per share, and maintain BUY rating. Growth in Non-vehicle revenue, along with internal measures, operating leverage, stable commodity prices, and pricing discipline, will continue to improve margins. Q4FY24 result analysis – Beat across parameters, robust operational performance • Revenue is nearly in line with expectations, while EBITDA and Adjusted PAT exceeded estimates by approximately 11% and 20%, respectively. The company reported its highest ever Realization, EBITDA per unit, EBITDA Margin, and PAT in Q4FY24. • An increase in the MHCVs contribution (up by 361 basis points to 66% of total volumes) and non-vehicle revenues, combined with softer commodity prices, higher operating leverage, and pricing discipline, improved the EBITDA Margin QoQ. • Strong operational performance, along with a significant increase in Other Income (up ~293% QoQ to Rs 1.18 bn), boosted profitability (Adjusted PAT increased ~64% QoQ to Rs 9.53 bn). • The reported Free Cash Flow was ~Rs 20 bn in FY24, compared to around ~Rs 17 bn in FY23. • Exceptional expenses in Q4 (~Rs 697 mn) mostly included the loss on fair valuation of investment in a subsidiary, offset by obligations related to discontinued products of the LCV division. On-ground check reveals ongoing temporary pause, robust growth in the 2nd half • The industry is currently experiencing a temporary pause due to an ongoing national event. YoY degrowth is expected at the retail level, with marginal growth anticipated ahead. Freight rates have remained relatively stable over the past three months. • Despite the current challenges, dealers across various zones remain confident in a resurgence of growth post-election results. Healthy inquiry levels and the initiation of new government projects starting in June/July are expected to bolster growth. • The industry is forecasted to report single-digit YoY growth in FY25, with significant improvement anticipated in the second half of the year. • QoQ discounts have been decreasing, and inventory levels are within the normal range of 3-4 weeks. Financiers are not imposing strict terms for disbursing loans. Projected conservative volumes ahead, the margin improvement journey to continue • Total volumes are expected to reach ~219K units in FY26, representing a 6% CAGR from FY24 to FY26. • Volume expansion will be driven by: 1) Successful order fulfillment in the bus segment, 2) Sustained demand for MHCVs fueled by infrastructure and construction projects, 3) Expansion into less explored markets in the North, East, and Central regions, 4) Introduction of new products, particularly in the LCV/SCV segments, 5) Increased focus on exports, which will significantly contribute to volume growth in the coming years. • Healthy m

Gabriel India Ltd | Q4FY24 Result Update | Good operational performance, aims double-digit margin, maintain BUY! CMP: Rs 389 | Target Price: Rs 457 | Upside: 17.6% | Rating: Buy Q4 numbers exceeded expectations, with revenue, EBITDA, and PAT figures surpassing our estimates by approximately 5%, 11%, and 16%, respectively. Sustained double-digit revenue growth is anticipated, driven by 1) a rebound in the two-wheeler market, 2) Key clients in electric two-wheelers and passenger vehicles, such as Ola, TVS, Ather, M&M, and Maruti, are showing strength, 3) The company is winning new models, 4) gaining strong traction in the sunroof business, highlighted by the second model win from Hyundai and a Kia model set for production by Q4FY25, 5) The high-margin aftermarket segment is expected to continue growing in the mid-teens. The company aims for a double-digit EBITDA margin by FY26. We have conservatively projected margin reaching 9.5%, supported by product mix improvements and favorable commodity prices. Additionally, two new applications viz. e-bike suspension and Solar dampers are expected to gain strong traction within 2-3 years. We have slightly adjusted our estimates and maintain a BUY rating with a revised upward fair value of Rs 457 per share (22x FY26e consolidated EPS). Q4FY24 result analysis – Margin improvement trajectory continues, FCF doubled • Consolidated Revenue was higher by ~13% QoQ to ~Rs 9.17bn in Q4FY24 driven by ~10% QoQ growth in PV, and ~7% QoQ growth in 2W segments. This is offset by ~3% degrowth in the CV business. • QoQ gross margin dropped by 83bps to 24.7% due to mix, offset by favourable commodities, while EBITDA Margin improved QoQ by 17bps to 8.8% (highest) driven by operating leverage & Core 90 program benefits. • Higher Other income (~+53% QoQ to ~Rs 59mn) along with good operational performance led to ~19% increase in the bottom line QoQ to Rs 490mn. • Standalone FCF doubled from Rs 486mn in FY23 to Rs 972mn in FY24. Posted best ever margin, the journey just started! • Reported the highest consolidated quarterly EBITDA margin of 8.8% in Q4FY24. • The margin improvement ahead will be driven by several factors viz. 1) High-margin FSD technology in PVs, 2) Increasing contribution from 2W EVs, 3) Benefits from the CORE90 program, 4) Anticipated additional compensation from PV OEMs, 5) Winning new business in high-margin SUVs, and 6) Scale benefits. • Management is confident in achieving a double-digit EBITDA margin by FY26. We believe a 9.0% margin is easily achievable in FY25e and conservatively project this to reach 9.5% in FY26e. Key clients in ICE & EV gaining market share, winning new businesses • It’s top clients include TVS ICE (gained share in FY24 by +87bps YoY to 18.9%), M&M (+151bps YoY to 9.6%), and Maruti Suzuki (+82bps YoY to 41.7%). • Similarly, within 2W EVs, Ola Electric (+1378bps YoY to 34.8%), TVS EV (+805bps YoY to 19.3%), and Ather (+94bps YoY to 11.5%) gained retail market share. • Gabriel has been winning new businesses from OEMs viz. TVS Motor, Suzuki, Ola Electric, Bajaj Auto, Tata Motors, Maruti Suzuki, etc. in ICE as well EV platforms. Gabriel has 100% SOB from Ola Electric, and won Ola’s upcoming eMotorcycle business as well. • Growth will be driven by 1) new orders from existing/new clients, 2) key OEMs have aggressive product launch plans including EVs, 3) continued strong show in the Railways business, 4) Pitching new high margin FSD tech, 5) mid-teens growth in Aftermarket, and 6) strong upswing in the two-wheelers industry (60%+ revenue contribution). • We have factored in Revenue to grow by ~12% CAGR FY24-FY26e touching Rs 42.7bn. Outlook and valuations • We are strongly convinced on the company’s competitive position, its key clients gaining market share, new avenues of growth after entering into automotive sunroof, and boosted efforts in the aftermarket, exports & railways. • Gabriel is well placed for the mid-to-long term growth op

Mayur Uniquoters Ltd | Q4FY24 Result Update | FY24 ends on a strong note, Decent earnings growth visible ahead CMP: Rs 550 | Target Price: Rs 679 | Upside: 23.4% | Rating: Buy Mayur Uniquoters came out with a strong set of performance on all counts, and margins would have been much higher if not for some provisions made for slow moving inventories. With good performance at exports and domestic auto OEMs fronts, Mayur Uniquoters Revenue/EBITDA/Adj. PAT was up ~9%/~4%/~19% on YoY basis. With PVC price corrections and stabilization, the company further improved its margin performance, but due to provisions made reported margin slightly subdued. The management highlighted many growth levers especially at auto exports fronts where they have got good order indication for the next several years. With Chinese imports along with the PU issues continues, the company is in talks with several global brands to propel this business. The company has already started working on setting up warehouse in Mexico and look to have manufacturing facilities there to multiply its business from global auto players. We maintain BUY rating on Mayur Uniquoters with a slightly upgraded TP of Rs 679 (18xFY26E EPS), as the company is expected to get traction in higher margin businesses. Mayur is set to get a good amount of new businesses from Ford, Mercedes and BMW in coming years and already in talks with players like Stellantis. Besides getting into new products like marine related leathers, they have got some initial success in their B2C business efforts. A strong set of quarter to end the year on a good note • Standalone revenue came in at Rs 2,161mn, a moderate growth of 8.7% YoY, up 23.7% QoQ, a tad higher than our estimates. This is despite, BIS related issues in the footwear market and new airbag norms continue to hurt the performance. • The management highlighted that FY25 onwards, a good growth should start and FY26 performance will be very strong. Adjusted to provisions, margin has been stabilized above 20% • EBITDA stood at Rs 418mn, with a margin of 19.3% during the quarter compared to 20.2% in Q4FY23 and 21.6% in Q3FY24. • On consolidated level in 4QFY24, the company has posted sales of Rs 2,208mn, up 14.3% YoY and PAT of ~Rs 322mn, up 37.8% YoY. FY25 onwards stronger performance should be visible • The management continues to indicate that export OEMs business to multiply when businesses from new clients reach to guided levels by clients. • Start of BMW business and ramp up of Mercedes business will boost both sales & margins going forward. As per the management, BMW business will start kicking in Q2FY25. Outlook and Valuations • Besides working on high margin export business, the management is focused on the increasing presence at retail front. They are onboarding dealers across India to increase brand visibility. • The management is confident of double-digit growth FY25 onwards. • More-or-less we have maintained both FY25e and FY26e earnings estimates. • Considering BS strength and consistent handsome payouts to shareholders, we value Mayur at 18x FY26e earnings to arrive at fair value of Rs 679 apiece and maintain BUY.

SJS Enterprises Ltd | Q4FY24 Result Update | Outperformed in Q4, Optimistic body language, Maintain BUY! CMP: Rs 695 | Target Price: Rs 841 | Upside: 20.9% | Rating: Buy The consolidated revenue, EBITDA, and PAT have exceeded our estimates by approximately 8%, 6%, and 13% respectively, largely driven by outperformance across all business segments (Standalone, Exotech, and WPI). Management is optimistic about the upcoming fiscal year, citing strong growth momentum from cross-selling opportunities, improving exports, the introduction of new products (especially Cover glass), and a trend towards premiumization. Key OEMs like TVS Motor, M&M, HMSI, Tata Motors, Maruti Suzuki, and Whirlpool are expected to continue driving this outperformance. We believe Exotech will maintain its margin of around 18%+, and WPI is projected to achieve a 26% margin in FY25 before moving towards the 28-30% range. We anticipate a CAGR of approximately 19% in revenue, 23% in EBITDA, and 25% in PAT from FY24 to FY26. Most of the long-term debt is expected to be repaid by Q2FY25. Given the strong Q4 performance and the optimistic outlook for the coming years, we have upgraded the EPS for FY25 and FY26 by approximately 9% and 2% respectively. We maintain a 20x multiple and have revised the fair value upwards to Rs 841 per share, maintaining our BUY rating. Q4FY24 result analysis – Exceeded our estimates across segments • Consolidated Revenue/EBITDA/PAT was approximately Rs 1.9bn/476mn/272mn, respectively, exceeding our estimates by around 8%, 6%, and 13%. • Standalone Revenue/EBITDA/PAT surpassed our estimates by approximately 9%, 2%, and 4%, respectively. The EBITDA Margin was slightly lower at 27.7% compared to our estimate of 29.6%, due to a one-off cost of Rs 25mn for inventory provision (built into the RMC). The adjusted EBITDA Margin is close to 30%. • Exotech & WPI: Revenue/EBITDA/PAT exceeded our estimates by about 6%, 12%, and 24%, respectively. Operational performance was particularly strong for WPI, with the EBITDA Margin improving from 20.4% in Q3FY24 to 25.5% in Q4FY24. • Exotech's EBITDA Margin slightly decreased from 18.4% in Q3FY24 to 18.1% in Q4FY24, though it remained healthy and above the 16.9% margin in Q4FY23. • The EBITDA Margin of subsidiaries improved from 19.3% in Q3FY24 to 22.8% in Q4FY24. • The company achieved its annual growth guidance of 45% in topline and 30% in adjusted PAT for FY24. FCF increased by approximately 40% YoY to Rs 791mn in FY24. Standalone business – Robust momentum continues • We anticipate Revenue, EBITDA, and PAT to grow at a CAGR of approximately 15%, 15%, and 17% respectively from FY24 to FY26e. The EBITDA margin is expected to be slightly lower in FY25e due to strategic reasons, but it should return to normal levels in FY26e. • Growth will be driven by improvements in exports, the introduction of the ‘Cover glass’ product, premiumization, and further supported by the outperformance of key OEMs such as TVS Motor, M&M, HMSI, Whirlpool, among others. Exotech – in its best days, more to come • Exotech has seen a consistent improvement in its EBITDA margin, rising from 10.8% in FY21 to 18.1% in Q4FY24. • We believe Exotech will be able to maintain an EBITDA margin near the ~18% level in the foreseeable future. Higher margins are possible once it achieves significant scale in exports. • We have conservatively projected revenue to grow at a CAGR of approximately 14% from FY24 to FY26e, with the EBITDA margin improving from 16.8% in FY24 to 18.2% in FY26e. • Exotech is operating at full capacity and has started outsourcing to two manufacturers, with a third one identified due to extremely strong order volumes. • In Q4FY24, despite outsourcing part of the manufacturing, the EBITDA margin was an impressive 18.1% (one of the best), driven by scale benefits, a favorable product mix, and lower raw material costs. Walter Pack India (WPI) – Niche, winning orders, getting back to the high m

Eicher Motors Ltd| Q4FY24 Result Update | In-line numbers; limited upside despite strong commentary, Accumulate! CMP: Rs 4,658 | Target Price: Rs 4,894 | Upside: 5.1% | Rating: Accumulate Q4 results aligned with our projections, marking the consolidated entity's all-time high quarterly figures for Realization, EBITDA per unit, Revenue, EBITDA, and PAT in Q4FY24. Guided for double-digit volume growth for the industry, with potential for outperformance due to upcoming new launches. International markets are showing signs of improvement, while stable commodities and an evolving product/geographic mix are favorable factors for margin enhancement. Our extensive field assessments indicate minimal impact from competition on retail operations. VECV is gaining market share, suggesting continued growth momentum in the CV industry driven by strong fundamentals. Encouraging commentary on volumes and margins prompts a 10%/15% EPS upgrade for FY25/FY26, though much of the optimism seems priced into recent stock gains. We maintain an Accumulate rating, revising the fair value to Rs 4,894. Q4FY24 result analysis – In-line numbers · The results closely aligned with our estimates. Domestic volumes saw a 6.5% YoY growth to ~205K units, while exports declined by around 13% to roughly 23K units. · A significant increase in realization by about 7% YoY to ~Rs 187K can be attributed mainly to price hikes. · Topline surged by approximately 12% YoY to around Rs 42.6bn, driven by a 4% increase in volume and a 7% rise in realization. EBITDA Margin improved by 198 basis points YoY to 26.5%, largely supported by soft input costs and operational leverage benefits. · Despite only a 4% increase in volume, the bottom line soared by around 18% YoY to approximately Rs 10.7bn, propelled by significant operational enhancements and higher Other income (up by about 49% YoY to around Rs 3bn), which surged due to higher treasury yields. RE enjoys healthy market positioning, reflected in the satisfaction of its dealers · Royal Enfield dealers are experiencing minimal impact from competition; in fact, they're reporting increased inquiries and walk-ins, thanks to the success of recently launched models such as the Super Meteor, Bullet, Himalayan, etc. · The new Bullet has quickly become one of the top-selling models, and demand for the Himalayan is surpassing expectations, showing exceptional strength. · Refreshers with new color variants have been launched, particularly appealing to a younger demographic, especially for the Hunter model. Inventory levels are well managed, typically at 20-25 days. Probable 50% portfolio expansion to drive double-digit volume growth in domestic, exports getting better · Royal Enfield plans to unveil over six models in FY25 across four displacement categories, as per media. Targeting to surpass the industry's double-digit volume growth guidance. · The lineup includes five brand-new models: Goan Classic 350cc, Scram 440cc, Guerilla 450cc, Interceptor Bear 650cc, and Classic 650cc, alongside refreshing existing models. · This expansion represents nearly a 50% increase in the portfolio, aiming for double-digit growth in the fiscal year. The launch timeline for Guerilla 450cc is slated for Q2FY25, with the others following in H2FY25. · Export volumes took a hit (~-22% YoY in FY24) due to macroeconomic challenges in key markets, but gradual recovery and a favorable base set the stage for double-digit growth. · Targeting high-growth markets like Latin America and Southeast Asia, alongside expanding distribution networks in existing markets and introducing new models in new/existing markets, augurs well for future growth. · The goal is to surpass the previous export peak of 100K units (FY19) by FY26, with an anticipated 20% volume CAGR from FY24 to FY26. · Considering the model expansion

TVS Motor Company Ltd | Q4FY24 Result Update | Strong internal metrics, consistently improving profitability, BUY! CMP: Rs 2,006 | Target Price: Rs 2,336 | Upside: 16.4% | Rating: BUY Q4FY24 Revenue/EBITDA nearly matched our estimates, while Adj. PAT is lower by ~6%. Missed largely due to negative Other income owing to notional loss & higher effective tax rate. The company remain committed to launch multiple EV/ICE products to delight customers, and profitability to improve despite investments in R&D. It reported market share improvement of 119bps/60bps to 17.6%/25.6% in Domestic/Exports respectively in FY24. TVS has been consistently gaining market share in India & its overseas business, this journey should continue due to an attractive product proposition, and many new launches lined-up ahead. Rural showing signs of uptick bodes well for volume growth. Total volumes anticipated to grow at 12.6% CAGR FY23-FY26e to touch ~5.26mn units. This, along with sustained RM cost reduction efforts, premiumization & scale benefits will keep improving its margin as displayed in the past years (gradually scaling-up from 11.1% in FY24 to 12.0% in FY26e). Maintain BUY rating with a revised fair value of Rs 2,336 per share (25x FY26e EPS plus separately valued TVS Credit & EV business). Q4FY24 result analysis – Adj. PAT slightly lower than estimates, internal metrics is strong · Topline growth of ~24% YoY to Rs 81.7bn (near in-line with est. Rs 80.8bn) was lifted up majorly due to ~22% YoY volume growth, while realization growth was ~1% for the same period. · Revenue and EBITDA broadly matched our estimates, however Reported PAT at ~Rs 4.9bn was lower vs est. ~Rs 5.5bn as 1) Other income was negative in Q4FY24 majorly due to fair valuation loss of Rs 470mn vs. notional gain in the base quarter of Rs 620mn, and 2) higher than expected effective tax rate (27.7% vs est. 24.2%). · Adjusted PAT (excluding one-off Other income) was at ~Rs 5.2bn lower by ~6% vs. our estimates. EBITDA Margin is slightly lower vs. estimates on account of higher than expected Employee & Other expenses. · Reported highest EBITDA per unit at Rs 8,717 per unit, and back-to-back improvement in EBITDA Margin since last six quarters despite increasing EV sales. · Annual performance is healthy with Adj. PAT grown at ~38%, and generated strong FCF of Rs 25.62bn (+157% YoY). Strong portfolio, new launches, exports expansion to support higher than industry growth · We have factored in total 2W volumes to grow at ~12% CAGR FY24-FY26e to touch 5.08mn in FY26e, while 3Ws to grow report growth at ~10% CAGR for the same period to touch ~177K units in FY26e. · Within domestic/exports, the growth in the international markets should be higher at ~13% CAGR FY24-FY26e to ~1.3mn units by FY26e, while it should report ~12% CAGR in domestic to touch ~3.96mn units. · Overall, we have incorporated ~12% total volumes CAGR FY24-FY26e to touch 5.3mn units by FY26e. The growth estimates is slightly higher than the industry growth. · Projected higher growth is mainly due to good portfolio reviews/response from dealers, strong product portfolio, plans to keep launching new products including electric 2W/3Ws to delight customers and expansion in new international geographies with special focus on Latin America market. · TVS is very serious in EV play, and we are confident that the company will be able to replicate the exceptional performance as showcased in ICE. Margins improvement trajectory to sustain · TVS has the potential to touch its peer level EBITDA margin in the coming few years. The company has shown continued gradual improvement in the past several years (from 5.7% in FY13 to 11.3% in Q4FY24), and we expect this traction to continue in the foreseeable future. · The margin to scale up from 11.1% in FY24 to 12.0% by FY26e as the company to enjoy opera

Hero MotoCorp Ltd | Q4FY24 Result Update | Strong tailwinds, more new launches & attractive valuations! CMP: Rs 4,624 | Target Price: Rs 5,450 | Upside: 17.9% | Rating: Buy Q4FY24 result is slightly below our estimates mainly due to higher than expected Employee cost and lower Other income. Revenue/EBITDA/PAT is lower than our expectations by ~0.3%/2%/6% respectively. With the new CEO on-board, we have started witnessing Hero’s ‘Changing Gears’ strategy with growth remains the core focus and reaching faster to the market to fill product gaps, premiumizing core portfolio, launching eye-catching premium products, revamping distribution, expansion in EVs, strategic collaborations, more products action are on cards ahead, among other steps. These new models are not less than competitors’ products, and is as per customers’ taste. All these strategic direction to not only lift volumes, but also realization & margins. The full year effect of these new launches are yet to see in the next fiscal, along with an expected rebound in exports, and rural already showing initial strong traction. We anticipate Revenue/EBITDA/Adj. PAT to grow at CAGR ~16%/26%/29% respectively FY23-FY26e. Two wheelers finally gaining ground, recent premium launches have been well acclaimed by customers/dealers, and a new CEO has a clear & sharper focus on growth with portfolio expansion. This, along with convincing valuations are some core reasons to upgrade the stock from Accumulate to Buy. Maintain 16x multiple on FY26e EPS, and valued Fincorp & Ather separately to arrive at a revised fair value of Rs 5,450 per share. Our estimates are largely remain the same. Recommend BUY! Q4FY24 result analysis – Slight miss, however Adj. PAT jump of 40% in FY24 is praiseworthy · Revenue/EBITDA/PAT is lower than our expectations by ~0.3%/2%/6% respectively. Revenue increased by ~15% YoY to ~Rs 95.2bn (broadly matched our estimates) driven by ~10% volume growth & ~5% realization improvement. · EBITDA Margin improved by 124bps YoY to 14.3% (25bps below estimates) was largely owing to gross margin improvement, result of soft input costs, mix & price increase with internal measures. This is offset by increase in employee costs (+57bps QoQ to 6.8% of revenues). EBITDA Margin moved up impressively from 11.15% in Q4FY22 to 14.28% in Q4FY24. · Reported PAT at ~Rs 10.2bn missed estimates by ~6% owing to lower operational performance & Other income than anticipated. · Internal metrics is looking strong as it reported highest ever EBITDA per unit in Q4FY24, and there is a growth of 109% in FCF to Rs 41.96bn in FY24. In FY24, despite lower volume growth, EBITDA Margin improved by 224bps to 14.0% and Adj. PAT jumped higher by 40% is commendable. Filling white spaces faster, sharper focused on growth · Post Mr. Niranjan Gupta taking over the position of the CEO, Hero MotoCorp has been filling white spaces viz. Premium, Exports, EVs & Scooters on fire fighting mode. · Not only this, distribution revamp, targeted sales push, launching products as per customers taste has started showing desired results. · Hero MotoCorp is now sharper focused on growth, reaching faster to the market to fill product gaps. One more round of new launches in FY25 to fill white spaces will trigger growth ahead · New launches planned across scooters, electric vehicles and premium motorcycles. · Xoom 125cc/160cc, a refreshed 110cc Xoom along with 3-4 electric scooters serving premium, mid & mass segments, and a premium motorcycles will help fill white spaces faster. · The key objective is to expand the market share in the 125cc motorcycle segment where Xtreme 125cc along with its core brands are placed well. · Within EVs, foundation work is done in FY24 by expanding reach/charging points, now will see steep growth from FY25 onwards with a few EV launches. · This,

Maruti Suzuki India Ltd | Q4FY24 Result Update | Healthy performance ex-One offs, Accumulate! CMP: Rs 12,687 | Target Price: Rs 13,699 | Upside: 8.0% | Rating: Accumulate Missed expectations slightly due to ~60bps One-offs. Adj. EBITDA Margin is ~12.9% (higher than our estimates of 12.5%). Additionally, supply constraints in CNG product dented ASPs/Margins. Our long-term view on Maruti Suzuki remains positive as the company is committed to launch 10 new models, including six EVs (refreshers are additional) by FY31 with 4mn units capacity, aim of ~800K exports & backward integration/localization in EVs with the support of Suzuki Corp. All these steps are positive to gain market share & remain Numero uno. New models/refreshers to drive volume growth ahead, margin improvement on cards driven by mix & operating leverage. Tweaked our assumptions on the higher side looking at superior Adjusted EBITDA Margin in Q4FY24, better mix and operating leverage benefits on cards ahead. EPS raised higher by ~7%/10% for FY25/FY26 respectively. We strongly believe there is a good value in mid-to-long term however most of the near-term positives factored-in the stock price, and looking at continued affordability challenges in the entry level cars, we downgrade the stock from BUY to ACCUMULATE. Sees limited upside. Maintained 25x multiple on FY26 estimated EPS of Rs 548 to arrive at a revised fair value of Rs 13,699 apiece. Q4FY24 result analysis – Slightly lower than estimates due to One-offs · Revenue/EBITDA/PAT was slightly lower than our estimates by ~4%/7%/3% to ~Rs 382bn/47bn/39bn respectively in Q4FY24. · Realization was lower than estimates by ~440bps to ~Rs 655K per unit was largely due to drop in CNG vehicle contribution from ~30% in Q3FY24 to ~26% in Q4FY24 owing to supply constraints. · Reported EBITDA Margin was lower than estimates by ~29bps to 12.3% was due to small One-offs of about 60bps sitting in different line items related to RM cost, product development expenses & CSR bump-up, among others. Adj. EBITDA Margin was 12.9%. · On YoY, Revenue/EBITDA/PAT increased by ~19%/40%/48% respectively in Q4FY24. · Q4FY24 YoY operational performance was healthy supported by Gross margin improvement owing to mix & input cost benefits. · Increase in Other income (~+51% YoY to Rs 11.2bn) pushed PAT further on the higher side. In FY24, all parameters looks healthy including 175% jump in FCF to ~Rs 82bn. Projected single digit volume growth, SUV/Exports/Green vehicles to drive volumes · Total volumes to grow by 6.8% CAGR FY24-FY26e to touch ~2.4mn units. · Maruti in total grew its domestic volumes by ~33% in the last three years. Hence, domestic volumes anticipated to move ahead by 6.1% CAGR FY24-FY26e to touch ~2.09mn units driven by CNG/Hybrid, SUVs, and new models/refreshers. · Anticipate flattish growth in small cars in FY25, with marginal growth of ~5% in FY26 due to low base, and improvement in the income level. Total order backlog is ~200K units. · Domestic SUV market share handsomely grew by ~608bps YoY to 25.9% in Q4FY24. · We are also in the view that Maruti is best placed among peers in terms of wider CNG portfolio and Hybrid vehicles. As we believe EVs in cars is going to take higher time due to cost & infrastructure challenges, hence Hybrid is the best option available, where Maruti has an edge & is ahead of its peers. This is keeping Maruti in an advantageous position. · The company has ambitious growth targets for exports, which is expected to grow at ~11% CAGR for the same period. · Using an international distribution network of Suzuki, pickup in African & the ME markets, along with opening up of FTAs for new countries to drive growth in the coming years. · Efforts are clearly visible with export market share touching ~47% in Q4FY24 (impressively gained from ~37% in Q4FY23).