Rainbow Children’s Medicare Ltd | Initiating Coverage | Pediatric care: In the sweet spot CMP: Rs 1,029 | Target Price: Rs 1,123 | Upside: 9% | Rating: Accumulate Rainbow Children’s Medicare Ltd (Rainbow) is the largest private multi-speciality pediatric and obstetrics hospital chain in India as it has the highest number of hospital beds amongst comparable players in the maternity and pediatric healthcare delivery sector. Rainbow is operating its business in the regions of North and South India. Rainbow group has a network of 16 hospitals and 3 clinics in 6 cities (Hyderabad, Delhi, Bangalore, Chennai, Visakhapatnam, and Vijayawada). The total bed capacity of Rainbow group is 1,655 beds (1186 operational beds) as of Jun 2023, and the company plans to expand its operational bed capacity by 40% by FY26E. We like Rainbow as 1) It has one of the highest EBITDA margins in the industry (34% vs average of 25% of listed peers) 2) expanding its presence in existing territory (Hyderabad and Bangalore) where they already have strong presence 3) Higher proportion of sales (70%) from pediatrics which is high margin business which resulted in 2x improvement in EBITDA margins from 17% in FY18 to 34% in FY23. Going ahead, as the bed utilisation level would improve in new hospitals, the EBITDA will see CAGR growth of 16% over FY23-FY26E due to improvement in case mix and operating leverage. We assign 22x EV/EBITDA on Sept’25E EBITDA and arrive at a target price of Rs 1,123 per share, translating into an upside of 9% and hence, we assign Accumulate rating on the stock. Largest pediatric player in India – Rainbow is one of the largest pediatric players in India with the highest bed capacity of 1,655 beds. It has the highest operating beds in pediatric and maternity care. The core specialties offered by Rainbow are pediatrics, which includes newborn and pediatric intensive care, pediatric multi-specialty services, pediatric quaternary care (including multi-organ transplants); and obstetrics and gynaecology, which includes normal and complex obstetric care, multi-disciplinary fetal care, perinatal genetic and fertility care. Rainbow distinguishes itself by having a significantly higher bed count in its Neonatal Intensive Care Unit (NICU) (330 Beds as compared to average of 141 of peers) and Pediatric Intensive Care Unit (PICU) (175 Beds as compared to average of 41 beds of peers) compared to other healthcare facilities. This indicates their commitment to providing critical care services for new-borns and children requiring intensive medical support. Hub and Spoke Model – To attract wider patients base Rainbow has adopted hub and spoke model. It first started with this approach in AP/Telangana region and is now replicating the same model in other regions such as Bangalore, Delhi, Chennai etc. which allows for centralized expansion within a cluster leading to synergy benefits. The emphasis on 24/7 doctor engagement is a crucial aspect of Rainbow's business model. Pediatric care often involves emergency procedures, and cases requiring medical attention during night-time hours are frequent. By ensuring round-the-clock doctor availability, Rainbow can provide prompt and efficient care to its young patients whenever it is needed. The asset-light hub-and-spoke model allows for efficient expansion, while the focus on 24/7 doctor engagement aligns with the specific needs of pediatric care. Higher mix of pediatric care is a major reason for high ARPOB and highest margins - Rainbow had high ARPOB of ~50K in FY23 and highest EBITDA Margins in the industry (34%). It is because of higher mix of pediatric care (70% of sales). Rainbow stands out from other mother and child hospitals due to its unique offerings. It has a higher ICU mix (35% of sales), indicating a greater capacity to handle critical cases. This depth of services sets Rainbow apart and creates a competitive advantage compared to its peers. Favourable business mix, higher presence

Galaxy Surfactants Ltd | Initiating Coverage | Strong business model with wider moats, play on FMCG premiumization CMP: Rs 2,658 | Target Price: Rs 3,137 | Upside: 18% | Rating: BUY Galaxy Surfactants is a proxy play on home and personal care (HPC) consumption story as it manufactures chemical ingredients which are used in manufacturing HPC products. Increasing usage of hair care, oral care, skin care etc in daily routine link the company’s growth to consumption story which is set to increase with deeper penetration, growing awareness, rising youth population, increasing per capita income etc. Galaxy’s growth would largely be led by growing volume as the company has expanded the capacity to cater to increasing demands of large MNCs, local & regional players. The company’s 35% of revenue comes from speciality surfactants which has higher margins and, in a bid to increase per kg margin, the company is looking to increase the speciality volumes from here on which remains the key growth driver from a 5-6 year perspective. We forecast speciality volumes to rise by ~8% during FY23-26. Plus, volume growth momentum in performance surfactants led by increasing premiumization in emerging markets would continue. All this would lead to Galaxy generating 12.8% EBITDA margins & ~16% ROCE by FY26E. The company has strong entry barriers like large scale manufacturing, diversified clientele base, strong R&D team, customer stickiness. Near term pain in exports is visible and the same is expected to resolve in a couple of quarters. The company’s long-term outlook is bullish considering the FMCG premiumization undertaken by large MNCs in a bid to supply high quality products to its customers. We assign 27x P/E on Sept 25E EPS and arrive at Rs 3,137 per share and recommend BUY rating on the stock. Strong volume growth on the cards • Historically, the overall company’s volume (performance +speciality) grew by mere ~1% CAGR from FY20-23. The reason for slower growth was due to covid-19 related disruptions & higher prices affecting volume offtake. As the demand outlook remains conservative over 2-3 year horizon, only surfactant players which have stronger balance sheets & wide presence are spending towards capacity additions. • Galaxy, with wider & large presence in surfactants business (performance + speciality) is planning to incur capex of Rs3bn over the next 2 years majorly towards capacity augmentation. • Speciality grades like preservatives & proteins are generally used in mature markets like US & Europe which faced intense pressure in FY23, and with easing of inventory & improvement in demand, will witness rebound in volumes in coming years along with continued performance surfactants volume momentum. • Hence, we expect overall volumes to grow at ~7.2% CAGR from FY23-26E. Strong EBITDA/kg in FY23 aided by better product mix & higher realizations, will normalize going ahead • EBITDA per kg spreads recorded peak numbers of Rs 25 per kg in FY23, owing to higher realizations, better product mix & easing of supply chain, against the average of Rs 16 per kg from FY15-22. Despite weakness in global market, India volumes remained resilient because of improved demand from premium categories. • We anticipate that spreads will normalize in coming year owing to weakness in export market & demand related uncertainties. Hence, we model in EBITDA per kg spreads of Rs 21 per kg, Rs 22.5 per kg & Rs 24 per kg for FY24E, FY25E & FY26E respectively. Increasing product portfolio towards speciality will increase greater visibility in international markets • The company has launched several new grades in the speciality and performance surfactants with milder, safer, non-toxic, bio-degradable in nature. • The company has approved 90 patents and applied for another 16 global patents. • Increasing number of patents has helped in improving its product mix within the specialty care portfolio and thereby higher margins in the recent yea

Nitin Spinners Ltd | Q1FY24 Result Update | Capex on track, Strong fundamentals intact, future growth path is clear CMP: Rs 238 | Target Price: Rs 380 | Upside: 59% | Rating: Buy Nitin Spinners Ltd (NSPL) came out with was in-line performance with some margin improvement in a tough business environment during Q1FY24. Despite QoQ flattish PBT, PAT was down 25% QoQ as now the company is paying full tax. The company had adopted new tax regime in FY23 onwards and the effective tax rate was very low on account of remeasurement of liabilities in FY23. Slowdown in the US market and geo-political situation in the European region are still posing challenges and due to soft demand, profitability is still far from normal levels. With continued better utilization in yarn and woven fabric segments, but slightly lower realization the company registered sequential growth of 7.2% at EBITDA levels with margin improvement. The capex plan of Rs9.5bn in on track which will support strong growth during FY24 & FY25. With cotton prices stabilising at current rates and expectation of demand recovery, we believe QoQ performance would improve. Considering continued pressure on profitability levels, we have toned down our earnings estimates. Maintain BUY rating with target price of Rs380 per share, 8.5xFY25e EPS. Flattish performance in a challenging environment • During the quarter, the company posted a de-growth of 7.1% QoQ on high base at Yarn sales volume front as utilizations remained at elevated levels with some demand recovery. Knitted fabric sales volume continued to be poor with a sequential de-growth of 0.6%. • Woven fabric business remained strong with its sales volume grew by 2.5% QoQ. With economic activities back on track post covid, demand for woven fabric remains good. • With correction in cotton prices, realization moderated further. Realization in Yarn/woven fabric segments was down by 1.4%/1.8% QoQ. In knitted fabric, it was up by 5.2% QoQ. Textile demand should be on track, capacity addition to propel medium term growth • The Indian textile industry has been facing tough times due to a slowdown in demand in the international market and price difference between domestic and international cotton. • Indian cotton prices have stabilized at slightly higher level than desired and hence, spinners are still far from their expected normal margin. Not much capacity is getting added in spinning industry and hence pricing comfort should be there in the future. • Capex plan of Rs9.5bn is on track. The company has already added 2500 MT/PA knitted fabrics and 10 mn Metres woven fabric during Q4FY23. NSPL would be adding 1.5 lakhs spindles by Q2FY24, which will increase yarn capacity from 75,000 MT to 1,10,000 MT. • The company has already started trial production from newly added yarn capacity. Valuation and risks • With new capex, Nitin Spinners growth path is clear from here till FY25. • Increasing share of processed woven fabric will further improve the margin profile. • We assign 8.5x PE multiple to FY25E earnings as new capacity is coming on-stream and arrive at a target price Rs380 per share, offering ~60% upside from current levels. BUY. • Risk to our call is continuation of volatile situation in European market and further softness in yarn prices with stable cotton price.

Bodal Chemicals Ltd | Q1FY24 Result Update | Meaningful recovery by H2FY24, Strong growth outlook from FY26E CMP: Rs 73 | Target Price: Rs 78 | Upside: ~7% | Rating: Accumulate The company reported surprising & very sharp improvement in gross margins, but overall a subdued performance. Revenue de-grew by ~28% YoY & ~15% QoQ. On sequential basis, volumes across segments is almost flattish except for caustic soda but realizations witnessed decline across segments. Inventory correction and slow exports of textile, leather and paper has led to subdued performance of dyestuff which sales declined by 24% YoY. Dye-intermediates also reported 24% decline in sales on YoY basis. Lower volumes along with realizations led to caustic soda business report dip of 19% YoY. However, Lower raw material prices benefitted gross margins which expanded by 451bps YoY & 793bps QoQ to 48.4% in Q1FY24. The company has also signed an agreement with Reliance Industries for sulphur procurement which benefitted with lower contracted prices. The legacy business dye-intermediates and dyestuffs will continue to witness volatility led by China factor, inventory de-stocking & uncertainty of demand in international markets. We feel uptick in demand would largely be witnessed from H2FY24E. The Sayakha greenfield project of benzene derivatives is expected to start trial runs from Q3FY24 which will increase its presence towards end user industries like pharmaceuticals & agrochemicals in order to mitigate its volatility from its traditional end user industries like textiles, dyes, pigments. We feel the company has seen major downturns in the last 2 quarters because of weakeaning of demand in textiles and other allied sectors, and the same if normalized along with commissioning of newer businesses will drive the growth going ahead, but since last quarter the stock has rallied 20% which left limited headroom for upside from current price and therefore we downgrade to ACCUMULATE from earlier BUY rating. Demand remained weak, meaningful recovery is expected by H2FY24E • The dye-intermediates business improved sequentially led by recovery in demand but dyestuffs business remained weak owing to slow exports of textiles, leather & dyes. • The global demand remains weak along with the recent issue of Turkey earthquake is slowing the recovery. Despite headwinds, dyestuff business wherein Chinese presence is limited is showing greenshoots. • We feel the pain is mostly in the numbers and improvement should be visible from the coming quarter but meaningfully it should recover from H2FY24 which seems to be a long affair. Turkish subsidiary Sener Boya reported strong numbers despite global headwinds, is a positive sign • The Turkish subsidiary Sener Boya has performed well on QoQ basis though there was global headwinds in chemicals industry and severe earthquake in Turkey. The subsidiary reported revenue growth of 67% QoQ to Rs110.6mn in Q1FY24. Also, on the operating profit the business has reported profits of Rs 16.6mn in Q1FY24 vs Rs1.4mn in Q4FY23. • Apart from Sener Boya, other subsidiaries like Bodal-China & Bodal-Indonesia slipped into minor losses which is expected to recover in the coming quarters as demand picks up globally. Valuation • The company’s major end users are textiles, leather, dyes & pigments wherein demand had weakened in the last few quarters and is now anticipated to rebound in H2FY24E led by inventory re-stocking & exports market pickup. However, bodal has seen the weakest phase of demand uncertainity, geopolitical issues and with things starting to normalize and improve we feel the best quarters lie ahead of the company. • We value the stock on PE multiple of 13x (earlier 12x) FY25E projections owing to diversification to newer end user industries, anticipated incentive boost & stronger demand pickup and thereby arrive at a target price of Rs 78 per share which is an upside of ~7% from current levels. • Since our last quarterl

Suprajit Engineering Ltd| Q1FY24 Result Update | Weak performance, short-term looks cloudy, Reduce! CMP: Rs 406 | Target Price: Rs 401 | Upside: -1.0% | Rating: Reduce Posted subdued set of numbers whereas Revenue/EBITDA/PAT was lower than our estimates by 8%/25%/33% respectively. This was largely due to the soft export performance, flattish domestic, and this resulted in a hit on the EBITDA Margin (10.5% - one of the lowest). Q2FY24 is seasonally weak in exports, while delayed festivals will also put pressure in domestic. The discretionary spends cut in the US market is not going to come back in a hurry, projected a gradual revival QoQ. Despite the uncertain global environment, the outlook maintained 1) 5-10% higher growth vs. India auto industry, and 2) 12-14% EBITDA Margin band in FY24. We are convinced with hockey-stick growth in the Electronics division, but very low single-digit margin will be a drag. Healthy FY25 on cards due to expectation of pent-up demand. We have projected Revenue/EBITDA/PAT to grow at 11%/19%/29% respectively FY23-FY25e, but not comfortable with the valuation (trading at 22.2x FY25e EPS), hence downgrading the stock from Accumulate to Reduce. Q1FY24 – performance not on the expected lines • Reported lower than estimated performance across parameters. Revenue at Rs 6,797mn (+5% YoY & -3% QoQ) vs. est of Rs 7,405mn. EBITDA Margin at 10.5% (+216bps YoY & -194bps QoQ) vs. est 12.9%. Reported PAT at Rs 331mn (+21% YoY & -19% QoQ) vs est. Rs 498mn. • Suprajit reground its business into four new segments, where margin improved YoY on a low base. Q1FY23 margin was low due to 1) higher gas price impact in Phoenix, 2) lag of passing cost in Non-auto, 3) incorporated LDC in financials which reported negative 4.5% margin. • In Q1FY24, Domestic Cable Division’s revenue was flat YoY at Rs 2,398mn due to weakness in the 2W & aftermarket. • Suprajit Controls Division reported 8% YoY growth in the revenue at Rs 3,494mn. Largely non-auto cables, the US and the Chinese market was slow in Q1, while other markets reported double-digit growth. • Phoenix Lamps division revenue grew by 5% YoY to Rs 877mn. It incurred some one-off expenses related to Trifa Lamps (under liquidation). • Electronics Division reported Rs 28mn in revenue with negative EBITDA Margin of 1.6%. It has Rs 1.5bn of orders in hand, will get executed in 1-2 years’ time. Suprajit Electronics Division (SED) – to drive future growth of Suprajit • Recently incorporated the plant in Bengaluru in Nov ’22, received orders of Rs 1.5bn, mostly from EV customers and majorly for Digital Instrument Clusters. • Orders are executable in 1-2 years time, and the product price is 8-10x higher than the normal cable. Added India’s largest EV maker in the clients list. • We expect it to generate Rs 300mn revenue with +1% EBITDA Margin, however the potential is good & sees this business scaling up to Rs 1.2bn by FY25e with projected 5% EBITDA Margin. Suprajit Controls Division (SCD) – contributes ~50%, but outlook is blurred • It includes auto/non-auto exports and LDC. We estimate revenues of Rs 15.0/16.5bn in FY24e/FY25e respectively with EBITDA Margin of 8.6%/10.6% for the same period. • Non-auto piece of business was a drag in Q1 as customers sharply curtailed production schedules, the weakness to continue in Q2. • LDC was impacted slightly due to softness in the Chinese market. A gradual pickup is anticipated in the overall division in the 2nd half. • Efforts on the LDC business are ongoing to reduce costs, and take its Margin to double-digit level. • The combination of Wescon business improving in FY25, and LDC margin anticipated to touch double-digit, will take the overall segment’s margin at 10.6% in FY25. Domestic cables and Phoenix lamps to grow at a steady pace • Domestic Cables Division and Phoenix Lamps division expected to grow at low double-digit CAGR. • New addition of EV players, EMA in domestic and gradual increase in t

Divi’s Laboratories Ltd | Q1FY24 Result Update | Margin improvement driven by easing of RM prices CMP: Rs 3,731 | Target Price: Rs 4,041 | Upside: 8.3% | Rating: Accumulate Divi’s lab missed the earnings estimate and reported revenue degrowth of 21.2% YoY and 8.9% QoQ to Rs. 17,780mn. The sequential decline was mainly due to 11% QoQ decline in Generic API business and Custom synthesis business. The gross margins have seen improvement on sequential basis due to softening of raw material prices and improvement in the logistics costs. However, the full impact will be by Q4FY24. EBITDA decreased 41% YoY but has witnessed improvement of 3.4% QoQ to Rs.5,040 Mn due to lower revenue. Due to improvement in logistics and RM costs and visibility of strong revenue growth in FY25 we increase the FY25 revenue, EBITDA PAT estimates by 4.7%/17.4%/17.6% resp. Custom Synthesis For Q1FY24, Divi’s 86% of the revenue is from export business, where the export to regulated markets contributed 67% of the total export revenue. The custom synthesis segment, which is a high margin business, accounted for 40% of total revenue, witnessed decline of 30% YoY and 11% QoQ to Rs.7,112 mn. This segment is expected to witness CAGR growth of 15.4% from FY23-FY25E on the back of launch of two fast track projects. Apart from this, there are certain Contrast media projects where the validation is to be completed by Q4FY24 which will contribute to revenue growth in FY24. Generic The generic segment accounted for 50% of total revenue. Revenues grew by 6% YoY but has seen decline of 11.2% QoQ to Rs 8,888 mn. The company is expecting that in FY23-FY25 USD, USD 20 bn worth of drugs will be going off patent which will create huge opportunities for APIs companies. The company has allocated an aggressive capex spend of Rs. 10-20 Bn (including a greenfield Kakinada factory) over the FY23 and FY24 to seize these opportunities. The Kakinada plant is expected to be commercialized by end of FY24, which will help Divi’s to supply API’s in huge volume. We expect revenue CAGR of 18.4% from FY23-FY25E from this segment. Nutraceuticals This segment witnessed decline of 4% YoY and has seen improvement of 18.6% QoQ basis to Rs. 1,780 Mn. Margin The softening of prices of intermediates, solvents, and other raw material prices led to improvement of the gross margin on sequential basis by 373 bps in Q1 FY24 but has seen decline of 269 bps YoY to 61.3%. These margins are sustainable going forward as well. EBITDA margins decreased by ~921 bps YoY but has marginally improved by 335 bps on sequential basis to 28.3% due to significant decrease in logistics costs and other operating expenses (logistics costs have reduced from Rs. 4000 per container to Rs. 2000). Currently, its facilities are operating at 70-80% utilization. Post commercialization of Kakinada plant, several capacities will be free which will help in Debottlenecking. Higher capex spending, launch of new products and volume growth across offerings remain key growth drivers. Valuation Divi excels in tailoring synthesis processes for specific segments, showcasing its expertise in custom synthesis. Its remarkable track record of securing recurring high-volume contracts underscores its specialization. As a result, Divi is strategically poised to capitalize on emerging opportunities presented by recently off-patent molecules. Company is seeing softening of RM and logistics costs which will improve the margins further. We forecast Revenue / EBITDA / PAT CAGR during FY23- 25E at 16.7% /31.5%/27.5%. We value the stock based on SOTP valuation strategy and arrive at a target price of INR 4,041. Accumulate.

Apollo Hospitals Enterprise Ltd | Q1FY24 Result Update | Hospitals business to drive growth CMP: Rs 4,902 | Target Price: Rs 5,320 | Upside: 9% | Rating: Accumulate Q1FY24 saw increase in occupancy levels for the mature and new hospitals of Apollo. Hospitals revenue grew 13% % (Volume growth 6%, price and case mix of 7%) and EBITDA grew by 12%. Higher growth from Cardiac, Onco, Neuro, Nephro, Gastro and Ortho which contributes 63% to Hospital revenues resulted in 11% growth in ARPOB. The patient mix will improve going forward as international patients’ revenue contribution will increase to 10% by FY24 from current levels of 6-7%. The hospital business may see margin expansion of 100 bps yoy in next two years, led by improved payor mix and cost optimization. The Pharmacy distribution segment registered a growth of 22%YoY with revenues of Rs. 18 bn during the quarter due to increased patient’s base. There has been 20% reduction in losses in Q1’ FY24 (Rs 566 Mn) vs Q4’ FY23 (Rs 721 Mn) majorly on account of reduction in digital operating cost. The hospital business is poised to deliver superior growth in the next 1-2 years through better asset utilisation and increase in ARPOBs led by price hike. Apollo is on track to add 2000 beds by FY27 which will aid the revenue growth. The pharmacy distribution business will see increase in GMV to Rs. 15 bn is FY23 and Rs. 32bn in FY24 due to increased customer base. Since, the losses of 24*7 diagnostics business is expected to decline, the EBITDA margins would see improvement going ahead. The next leg of growth will come from 1) Addition of Beds in hospital segment with further improvement in payor and case mix 2) Significant growth in GMV 3) Expansion of offline pharmacy stores (500-600 stores addition in FY24) 4) Cost optimization, reduction in losses of 24*7. On an overall basis, we are positive about the prospects of Apollo and we assign “Accumulate" rating on the stock. Decent topline growth but higher expenses led to decline in margins • The company registered revenue growth of 16.4% on YoY basis and 2.7% on QoQ basis to Rs. 44 Bn. This was mainly due to higher growth from hospitals and Pharmacy distribution segment which has witnessed growth of 13% and 22% YoY. • EBITDA margin for Q1FY24 decreased by 141 bps YoY but marginally increased by 18 bps QoQ to 11.5%. The sequential improvement was due to 20% reduction in losses of Online Pharmacy. • Occupancy across the group was 62% in Q1FY24. ARPOB was Rs 57,760 in Q1FY24 as compared to Rs 51,999 in Q1FY23 registering growth of 11%. ALOS was 3.27 days. • Healthcare services posted an EBITDA margin of 23.6%, Pharmacy has margin of -3.1% (after adjusting for 24x7 operating costs) and AHLL—7.3%. • Mature hospitals delivered EBITDA margin of 26.8% (from 26.4% in Q1FY23) while new hospitals delivered margin of 16.7% from (17.7% in Q1FY23). Outlook and Valuation We hold a positive outlook on Apollo's future, driven by favourable demand dynamics. We anticipate strong performance in both healthcare services and the pharmacy segment. Furthermore, we anticipate AHLL to achieve remarkable outcomes. Based on SOTP valuation we arrive at target price of 5,320 (implied EV/EBITDA multiple of 22 on its FY25E EBITDA), offering 9% upside from current levels. Accumulate.

Global Health Ltd | Q1FY24 Result Update | Positioned for an upward trajectory of enhanced growth CMP: Rs 678 | Target Price: Rs 742 | Upside: 9.4% | Rating: Accumulate Medanta continues to witness robust growth in all its clusters (GHL, Patna and Lucknow). ARPOB expanded by 7.1% to reach INR 63,148. This growth was propelled by tariff adjustments at the Gurgaon unit, a rise in complex procedures at the Lucknow facility, and scale up at Patna hospitals. In the quarter, Medanta has entered in 50:50 partnership with DLF to establish a 400-bed hospital in South Delhi, providing a comprehensive range of 20 specialized medical fields. This strategic step is poised to fortify Medanta's foothold in the Delhi NCR region, amplifying the potential for valuable synergistic advantages to emerge. Management is further confident of operationalizing Noida facility in 2 years’ time leveraging its healthy balance sheet & operating cashflows. Going ahead EBITDA margins would expand 1) due to benefits of payor mix as in Lucknow and Patna, the company has 100% cash and insurance patients 2) Expansion of beds capacity as 1000-1500 beds will be added over a span of 2 years 3) operating leverage playing out as Medanta has in-house doctors which will result in EBITDA CAGR growth of 23.5% from FY23-FY25E. We assign 21x EV/EBITDA on FY25E EBITDA and arrive at a target price of Rs 742 per share, translating into an upside of 9.4% and hence, we assign Accumulate rating on the stock. Strong revenue growth aided by ARPOB growth • Revenue increased 25.2% YoY and 9.9% QoQ to Rs 7,730 mn. This was mainly due to increase in Inpatients admission which saw increase of 19.4% YoY to 34,428 in Q1FY24. Out-patient volume increased by 17.5% to 657,179. • ARPOB (Rs. 63,148- growth of 7.1% YoY) and Occupancy levels (58.1% in Q1FY24 vs 59.6% in Q1FY23) were flat due to addition of beds. • EBITDA for the quarter saw robust growth of 34% YoY and 9.1% on sequential basis to Rs. 1,779 Mn, whereas EBITDA margin was at 23% which witnessed expansion of 154 bps YoY but was flat on sequential basis. • Mature hospitals revenue has seen 20% yoy growth to Rs. 5,778 Mn with 9.7% improvement in ARPOB from Rs. 59,291 in Q1FY23 to 65,067 in Q1FY24, whereas EBITDA margins has improved from 22.6% in Q1FY23 to 24.7% in Q1FY24. The developing hospitals reported revenue growth of 57% to Rs. 2,297 Mn with ARPOB increase of 2% from Rs. 58,004 in Q1FY23 to Rs. 59,227 in Q1FY24. Outlook and Valuation Due to strong execution in new hospitals, we raise the multiple of Medanta at 21x (19x earlier) due to 1) operating leverage due to doctor led model (most of peers are facing inflationary pressure to high talent acquisition cost) 2) 70% of capex in existing territory thereby leading to lower capex/bed 3) continued ramp up in Lucknow and Patna facility 4) continuous improvement in return ratios despite heavy capex. Thereby, we arrive at target price of Rs. 742 per share which offers upside of 9.4% from current valuations. Accumulate.

Hero MotoCorp Ltd | Q1FY24 Result Update | Aggressive launches to drive share & growth, valuation attractive, BUY! CMP: Rs 2,995 | Target Price: Rs 3,520 | Upside: 17.5% | Rating: Buy Adjusted PAT matched our estimates, ex-EV EBITDA Margin is at much superior level at 14.5% (near to the pre-Covid level of 14.7%). The focus is to drive growth & market share improvement. Healthy pipeline of new launches ahead in the 125cc, mid & upper premium will improve showroom footfalls, volumes as well as margins. The outlook on commodities is stable, LEAP-II benefits, new products, higher X-tec sales along with operating leverage to support margin improvement. However, the intent is to reinvest incremental margin improvement in the EVs & new products, hence believe that EBITDA Margin to remain at 13.5-14.0%. Exports too is getting better MoM, response for X440 is higher than expectations, domestic in H2 should be better driven by festivals, improvement in macros & new products. Anticipate ~8% volume CAGR FY23-FY25e, largely maintained estimates and target price. Recommend BUY! Adjusted PAT matched estimates, EBITDA per unit is the highest in any quarter  Revenue growth of 5% YoY largely led by a 7% increase in the realization, offset by 3% drop in volumes for the same period. Pricing & mix resulted in higher realization.  Increase in the topline & soft commodity prices (RMC declined by 341bps YoY to 69.4% of sales) led to 18% YoY growth in gross profit (GM improved by 341bps YoY to 30.6%), offset by ~100bps impact due to EVs. EBITDA per unit is the highest in any quarter at Rs 8,918.  Higher gross profit & LEAP-II savings driven 28% YoY growth in EBITDA, while EBITDA Margin is 55bps higher than estimates to 13.8%. Mix, pricing, operating leverage & softness in commodity prices along with LEAP-II benefits led to margin improvement.  Reported PAT is 13% lower than estimates largely due to one-off ~Rs 1.6bn due to VRS, Adj. PAT of Rs 9,447mn matched our estimates. 319% YoY increase in Other income & better operational performance driven 32% YoY growth in reported PAT. Offset by one-off ~Rs 1.6bn expense towards VRS. Margin target nearly achieved, focus turned to growth & market share  Good operational performance in Q1FY24 as EBITDA Margin was higher than our estimates at 13.8%. Infact, ex-EV business, this number is at much superior level at 14.5% (near to the pre-Covid level of 14.7%). It reached at guidance range of 14-16% band.  We believe the company’s overall margin should improve going ahead led by stability in commodities, new products, higher sales of an X-tec range to provide better operating leverage. However, the incremental improvement will get reinvested in new products and EVs. Hence, believe 13.5-14.0% EBITDA Margin band should sustain till FY25e.  X440 received 25K+ bookings, deliveries to start from Nov ’23. The plan is to ramp up production & will reopen the booking window soon. Talks are ongoing for introducing new products & exports with Harley, should be positive in the mid-term.  Hero to launch a re-badged version of X440, to relaunch iconic Karizma in a new avatar, a lot of variants/new products planned in the 125cc+ segment should drive volume growth.  On EVs, the plan is to expand the distribution reach to 100 cities (from 36 at present) in FY24, to launch a few products for serving different segments in FY25, and post that scale benefits & cost savings to follow. Started working with Ather, & to use its charging network for Hero’s EV customers.  On demand outlook, the management expects 2nd half to be better led by an improvement in macro parameters, festivals, elections & new products. Harley, EV, new products and improvement in the rural to drive ~8% volume CAGR FY23-FY25e. Outlook and Valuations  Conservatively projected, and believe there is a value in the stock. All negatives look to be factored in and suggest it’s worth taking a stake, looking at 360-degree efforts across b

HealthCare Global Enterprises Ltd | Q1FY24 Result Update | Operational efficiency will lead to margin expansion CMP: Rs 330 | Target Price: Rs 382 | Upside: 16% | Rating: Buy HealthCare Global Enterprises (HCGEL) continued to register the highest ever quarterly revenues, however due to high LINAC’s replacement costs (5 LINAC’s were not working) and talent acquisition the EBITDA in Q1FY24 has witnessed a dip of 3% QoQ. The new centres continued their scale-up trajectory with strong revenue growth of 22% YoY and 4% QoQ while existing HCG centres registered a growth of 11% YoY and 4.6% QoQ. ARPOB have been steadily increasing and has seen growth of 3.2% YoY. Going forward, the EBITDA margins would see an improvement of 200-300bps, over the next 18-24 months, driven by i) Operating leverage on the back of double-digit revenue growth; ii) 50 bps improvement due to consolidation of NCHRI Nagpur’s business operation iii) improvement in Payer mix, iii) Fertility business returning to normalcy (As it was struggling due to govt policy in Karnataka), iv) New centres which are growing at double-digit growth are moving to matured centres ARPOB. We are optimistic that HCG has the potential to enhance its profitability through a synergy of initiatives focused on enhancing operational efficiency, refining pricing strategies, optimizing cost frameworks, and elevating the fertility business and new centers performance. Taking all factors into consideration, our outlook on HCGEL is favorable, and we recommend a “Buy" rating on the stock. Continued growth of topline on the back on higher occupancy and ARPOB growth • HCGEL reported strong topline growth for Q1FY24, however, due to high operating costs the numbers did not flow to EBITDA and PAT. Revenue on a YoY basis witnessed robust growth of 13% YoY and 4.3% QoQ due to improvement in occupancy rate (66.9% in Q1FY24 vs 64.6% in Q1FY23). • ARPOB was at Rs 39,686 for Q1FY24 as compared to Rs 38,454 for Q1FY23. Overall ARPOB growth improved by 3.2% due to improvement in case mix. The chemo sessions administered in the quarter has witnessed growth of 9% YoY and 4% QoQ to 35,000 sessions. • The employee cost, medical consultancy exp and others expenses have witnessed a sharp increase of 10-12% in the quarter due to investment in LINAC in 4-5 which have become operational in the quarter. These expenses are expected to normalize in coming quarters. The existing hospitals had an EBITDA margin of 24% while the new centers have EBITDA margin of 8.8% in the quarter. • The number of IVF cycles for Milann in Q1FY24 was 414 as compared to 538 in Q1FY23. However, it was flat on sequential basis. This was due to regulatory issues on surrogacy in Karnataka. Milann recorded revenues of Rs 164 Mn in Q1FY24 which has seen decline of 5% YoY. Outlook and Valuation We are positive about the prospects connected with HCGEL. Both the existing and new centers should perform robustly in the future. We expect EBITDA CAGR of 15% from FY23-FY25. As the emerging centers would move closer to mature centers, the EBITDA margins would improve from 17% in FY23 to 19-20% in FY25. We value the stock at 15x EV/EBITDA with respect to FY25E EBITDA to arrive at a Target Price of Rs 382 and recommend a “Buy” rating on the stock.

Mayur Uniquoters Ltd | Q1FY24 Result Update | High margin exports business to be on higher growth trajectory CMP: Rs 498 | Target Price: Rs 617 | Upside: 24.0% | Rating: Buy Mayur Uniquoters came out with a decent set of performance in Q1FY24, led by good show at exports front on YoY basis. With PVC price stabilization, the company maintained its margin performance ~20%. The management highlighted many growth levers especially at auto exports front where they have received good order indication for the next several years. With Chinese imports contuniung, issues remain on the PU front, and Mayur is in talks with several brands to propel this business. We maintain BUY rating on Mayur Uniquoters with a slightly upgraded TP of Rs 617, as the company is expected to get traction in higher margin business clients. Mayur is set to get good amount of new businesses from Mercedes and BMW in coming years. With volume recovery in footwear, the ramp up of PU plant and businesses from new clients such as VW, Mercedes, and BMW, we expect a much stronger performance from FY24 onwards. Flattish operational performance in Q1, better performance expected from H2 onwards  Revenue came in at Rs 1,919mn, a small de-growth of 4.5% YoY / 3.5% QoQ, in-line with estimates. YoY decline is mostly on account of the realization decline.  With higher business from existing US OEMs clients and the continuation of new Mercedes business, export business has done well. Margin has been stabilized at ~20%, improvement possible in coming quarters  EBITDA stood at Rs 386mn, with a margin of 20.1% during the quarter compared to 18.4% in Q1FY23 and 20.2% in Q4FY23. Decline in the PVC prices is helping at the Gross margin level and the company could maintain decent margin.  On the consolidated level in Q1FY24, it posted sales of Rs 2,009mn, up 0.2% YoY and PAT of ~Rs 305mn, up 12.7% YoY. Several new opportunities to fuel the momentum, strong guidance from the management  Besides, working on BMW business, the company is working on a big opportunity on the Auto PU front, which has huge potential to aid growth. The management indicates an export OEMs business to multiply when businesses from new clients reach to guided levels by clients.  The management has lowered down its guidance for FY24 and guided for 12-15% growth in FY24 with better traction in H2FY24. Overall revenue to grow by 18% CAGR FY23-FY26e.  The company continues to focus on high margin businesses and new client additions in higher margin business will continue in the future. The start of the BMW business and ramp up of Mercedes business will further boost margins going forward. As per the management, BMW business will kick-start from Q4FY24 onwards. Outlook and Valuations  Besides working on high margin exports business, the management is focused on the increasing presence at retail front. They are onboarding dealers across India to increase brand visibility.  On PU front, sales are yet to be ramped up as Chinese imports are still high. The management is in the talk with the government to curb illegal imports. Plus, they are in talk with several brands to supply PU materials.  Considering BS strength and consistent handsome payouts to shareholders, we value Mayur at 18x its FY25e earnings to arrive at a TP of Rs 617 apiece and maintain BUY.

Aarti Industries Ltd | Q1FY24 Result Update | Demand weakness transitory in nature, long term growth story intact CMP: Rs 474 | Target Price: Rs 516 | Upside: ~9% | Rating: Accumulate Q1FY24 revenue of Aarti Industries de-grew by ~12% YoY & ~14.6% QoQ owing to decline in realization in key product categories & volume decline in NCB & PDA business owing to weaker international markets. Gross margin contracted by 275bps YoY & 223bps QoQ to 39.7% in Q1FY24. The contraction in gross margins is because of Inventory correction globally in select segments like Agrochemicals leading to sharp demand contraction impacting exports demand. Excess inventory originating from China is lowering prices globally & increasing competitive intensity. Despite exports revenue dipping by 27% QoQ, domestic revenues remained flattish QoQ indicating domestic demand remained resilient. EBITDA margins reported the lowest in last 12 quarters of 14.3% in Q1FY24 led by china factor and weak demand in end user industries. PAT de-grew by ~48.5% YoY & ~53% QoQ in Q1FY24. We anticipate pickup largely from H2FY24E led by inventory restocking & discretionary consumption pickup. The stock has also corrected by ~15% since last quarter and is now trading at reasonable valuations and we believe near term pain faced by the Aarti is mostly transitory in nature & it is set on a multi-year growth cycle hence we our upgrade our rating to ACCUMULATE from earlier REDUCE rating. Revenue to remain robust from FY25E, margins to remain under pressure owing to focus on non regulated markets • We expect the company’s growth to kick in materially from H2FY24E & FY25E with additional volumes from recently completed NCB capacity expansion picking up alongwith ramp up of long term contracts. The company is investing Rs25-3bn over the next 2 year on Nitro-toluene de-bottlenecking, setting up multipurpose plants & ethylation units debottlenecking, the growth visibility looks good for the next 4-5 years. • Near term outlook remains weak since the company is focussing on non regulated markets which has lower margin profile owing to demand uncertainties. With significant inventory from china getting offloaded in global markets alongwith suppressed demand it remains under our watch how things pan out over the next 3-6 months but the longer term outlook remains strong and unchanged. Operating margins nearly in line with estimates, anticipate better H2FY24E led by pickup in demand • The company reported dip in EBITDA margin by 311bps YoY & 93bps QoQ to 14.3% in Q1FY24 led by weaker international demand & reduced discretionary spending. Also, china offloading inventory in global market at a rapid pace alongwith depreciation of Chinese currency vs Indian rupee impacts competitveness of Indian manufacturers which has also impacted the margins. We anticipate pickup in margins largely from H2FY24E as management indicates that increasing enquiries from customers are in sight. • Since Aarti has almost 70-80% of its product basket as specialized or value added, we feel that as demand picks up speciality segment will pick up much faster & the impact which Aarti is facing in H1FY24E will largely be passed on in H2FY24E. Valuation • Currently, the stock is trading at FY25E P/E of ~24.8x. We value the stock on forward P/E multiple of 27x factoring in demand uptick from H2FY24E & FY25E along with foraying into value added segments which are focussed towards import substitution & provide long term growth impetus to Aarti, and, thereby, arrive at target price of Rs 516 per share which offers upside of ~9% from current valuations. • Therefore, we upgrade to ACCUMULATE rating from earlier REDUCE rating on the stock.

Vardhman Textiles Ltd | Q1FY24 Result Update | Some green shoots visible but no capex decision yet CMP: Rs 345 | Target Price: Rs 378 | Upside: 10% | Rating: Accumulate Vardhman Textiles Ltd (VTL) reported a subdued and lower-than-expected performance in a volatile business environment during Q1FY24. Margin performance deteriorated from lows of 10.5% in Q4FY23 to 9.3% in Q1FY24 as low demand along with higher supplies kept yarn prices under pressure. Spinning utilization remained at almost full levels but in fabric segment it was ~70% and expected to hit 90% in coming quarters. Demand was muted during last two quarters and there was some improvement in recent weeks only. The company continues to defer its capacity expansion decision for some more time and looking for a more opportune moment when there is a higher confidence on profitability. We are positive on prospects of Indian textile sector. But considering current margin pressure and no capacity addition in sight, we have cut down our estimates for FY24 & FY25 and downgrade our rating on the stock from BUY to ACCUMULATE with lower target price of Rs378 per share (10x FY25e EPS). Subdued performance in a challenging demand environment • During the quarter, the company posted a growth of 8.1% YoY at Yarn production volume front. Grey fabric production was down 5.5% YoY. Processed fabric production was also down 13.2% YoY. • Revenue de-grew 17.6% YoY as with cotton price stabilizing at lower level, realization has come down for the products. Textile demand should be on track, but profitability still a near term concern • The Indian textile industry has been facing tough times due to a slowdown in demand but there are some green signals now in terms of lower inventory in the system. • India cotton prices have corrected a lot and now stabilised at lower levels. Overall crop arrival was okay and looking good for the next season as well. • Indian cotton prices have stabilized at slightly higher level than desired and hence, spinners are still far from their expected normal margin. Due to lower demand, yarn prices continue to decline and putting pressure on overall spread. Outlook and Valuation • The management is not much worried on demand side as there are several green shoots, but margins are still far from their comfort level. • Despite reaching full utilization at spinning front, they feel the current situation is not favourable and it is better to wait for few more months for new capex plan. • Considering the tough situation, we have trimmed down our estimates on both overall realization as well as margin front and there was cut in the earnings for FY24 and FY25. • Considering some recovery signals, we have assigned 10x PE multiple to FY25e earnings and arrive at a target price Rs378 per share, offering 10% upside from current levels.

I G Petrochemicals Ltd. | Q1FY24 Result Update | Uncertainity remains, decent valuations, Downgrading to ACCUMULATE CMP: Rs 448 | Target Price: Rs 505 | Upside: 13% | Rating: ACCUMULATE The company reported weak operational performance. Revenue de-grew by ~16% YoY & ~8% QoQ. Sequential decline is largely led by lower volumes. The company witnessed slight improvement of gross margins on sequential basis of 89bps majorly led by flattish spreads on sequential basis. However, spreads have contracted significantly in the month of July 23 and is now witnessing revival from August 23 onwards and will remain volatile from hereon. Inching up of non phthalic business revenue share (i.e 7.2% of FY23 revenue) might provide some stability in the margins, it remains a key factor of company’s further expansion in downstream derivatives which would further magnify the non phthalic business by 2025-26E. The company would witness volume growth largely from Q1FY25 post expansion of its 53,000 tonnes PAN plant. The company has stated its intent to venture into new businesses like green chemicals, ethanol derivatives, CBG etc however specific details has not been shared. Currently volatile PAN-Ox spreads, demand uncertainity & declining MAN realization are a cause of concern, the concerns might subside largely by H2FY24E, hence, we downgrade to ACCUMULATE rating from BUY rating earlier on the stock. Flattish volumes for FY24E, demand uncertainity & higher imports remain concern • Since the current capacity of PAN & MAN is operating at peak utilization levels which leaves no scope for volume growth alongwith volatility in spreads led by demand uncertainty & higher imports from China post uncertain outlook for FY24E. • In Q1FY24, company undertook shutdown for catalyst change which impacted volumes by 5,000-6,000 tons which will normalize in the coming quarter. Contraction in gross margins on YoY basis mainly due to decline in PAN-Ox spreads, might remain volatile in coming quarters owing to demand uncertainty • The company reported gross margin contraction of 506bps YoY & expansion of 89bps QoQ to 22.3% in Q1FY24. The margin contraction on YoY basis is majorly due to decline in the spreads of PAN-Ox. • For the quarter spreads stood at $100-200/ton. The spreads will remain volatile in the coming quarters owing to demand uncertainity, however, we feel there is room for improvement of spreads from H2FY24E considering demand pickup in pigments & inventory restocking. • We believe that PAN-OX spreads will sustain between $150-250/ton in the long term, considering robust demand and wider applications of PAN in end user industries. Valuation • Currently, the stock is trading at FY25E P/E of ~8x. We value the stock on 9x on FY25E EPS of Rs 56.2, thereby, arriving at target price of Rs 505 per share which offers upside of ~13% from current valuations. • Therefore, we downgrade to ACCUMULATE rating from BUY rating earlier on the stock.

Krishna Institute of Medical Sciences Ltd | Q1FY24 Result Update | Acquired clusters to drive growth CMP: Rs 1,819 | Target Price: Rs 1,971 | Upside: 8.4% | Rating: Accumulate KIMS hospital reported decent numbers in the quarter. Major expansion of beds is underway where 1600 bed capacity will be added in regions of Thane, Bangalore, Nashik along with some brownfield expansions. To improve the therapy mix further, KIMS plans to add Mother & Child care unit to 5 out of 7 of its hospitals in Andhra Pradesh. Shifting the KIMS Sunshine hospital from Secunderabad to Begumpet (Hyderabad) holds the potential for increased profitability owing to the advantageous shift in its location. Turnaround of Sunshine will be key driver for KIMS overall EBITDA as there is big room to grow from 18% to 28-30% EBITDA once occupancy picks up at Sunshine. Further it is consolidating its share by acquiring minority interest. The minority share of EBITDA has been further reduced to 12.4% in Q1FY24 from 14% in FY22. Over the longer term, growth is expected to be robust led by expansion of operating beds, increased occupancies, and improved case mix. As new hospitals move towards matured category, revenue and EBITDA margins would gain traction. With bed capacity ramp up over the next few years, the revenue is expected to remain robust. We assign 20x EV/EBITDA on FY25E EBITDA and arrive at Rs 1,971 per share, translating into an upside of 8% and hence, we assign Accumulate rating on the stock. Strong performance across topline and bottom-line • Revenue increased 22.3% YoY and 5.2% QoQ to Rs 6,060 mn. The sequential improvement was due to higher revenue from Sunshine hospitals which has witnessed growth of 15% QoQ. • Occupancy levels has improved to 70.4% in the quarter from 65.5% in Q1FY23 and 70.8% in Q4FY23. • ARPP (5% YoY) and ARPOB (Rs. 31,697- growth of 5% YoY) have shown improvements at the group level. • EBITDA increased by 14.5% YoY but has decline of 3.8% QoQ to Rs. 1,571 Mn, this was due to higher employee cost and other expenses as various recruitment programs are going at Sunshine and Nagpur hospitals. • Sunshine Hospitals have shown an improvement in ARPOB from Rs. 62,706 in Q1FY23 to 68,584 in Q1FY24, (9% yoy) whereas EBITDA has improved from 17% in Q1FY23 to 23% in Q1FY24. • An exclusive single specialty hospital for Gastro Sciences went operational at Vishakhapatnam, Andhra Pradesh, which led to dip in margins for AP acquired cluster by 200 bps to 17% in Q1FY24. Outlook and Valuation The stock is trading at comforting valuation on FY25E EV/EBITDA of 16x. We value the stock at 20x (in line with its historical average) due to capacity and geographical expansion, improved margins, and robust revenue growth, thereby, arrive at target price of Rs 1,971 per share which offers upside of 8.4% from current valuations. Therefore, we assign Accumulate rating on the stock.