Eicher Motors Ltd | Q3FY23 Result Update | Strategies working well, gaining share, more tailwinds ahead! CMP: Rs 3,286 | Target Price: Rs 3,829 | Upside: 16.5% | Rating: Buy Topline matched, EBITDA margin came-in lower due to meagre product & geographic mix, while PAT surpassed estimates owing to higher other income & good performance from VECV. Upgrade the stock from ACCUMULATE to BUY as we believe the company is ticking right boxes for growth by applying the 360-degree approach on products, exports, marketing and correct pricing that’s 1) attracting a wider & younger audience in domestic, and 2) supporting to capture bigger international markets. Expect commodity softness & recent pricing action benefits to flow-in. No more critical supply concerns is a major relief. Q3FY23 result analysis – Revenue matched, PAT surpassed expectations  RE reported volumes at 18 quarters high in Q3FY23 at 220K units. RE market share in Q3FY23 touched highest ever at 8% in domestic (+182bps YoY & +188bps QoQ).  Consolidated Revenues/EBITDA/PAT are at historic highs. Topline matched estimates at Rs 37.21bn in Q3FY23, but the EBITDA margin came in at 23.0%, is lower than expectation of 24.4%. Inferior product (higher share of Hunter 350cc) & geographic mix (lower exports ~9% in Q3 vs. ~12% in Q2) impacted margins.  PAT Rs 7.41bn was higher than est. Rs 6.92bn driven by higher other income of Rs 1.92bn (+109% YoY & 29% QoQ) and higher than expected Share of profits from JV of Rs 639mn vs est. Rs 512mn. Good performance from VECV. Supply is no more a concern, new products supporting growth, gained share  Received good response for newly launched Hunter 350cc & Super Meteor (SM) 650cc. Strong line-up of products are in the pipeline should support growth across nations.  Hunter on one hand is able to pull younger audience; more such launches could wider the target audience. On the other side, SM 650cc along with other options is the right choice for upgraders.  RE is focused on growing internationally with the combination of (building communities, expanding retail network & build CKD facilities).  Export opportunity is good and mid-sized motorcycle market is under-served with a size of 1mn units. RE’s exports have grown at a ~39% CAGR FY13-FY23e. Expect mid-teens growth to continue.  The biggest hurdle ‘supply’ is now resolved. RE is now able to meet the demand prudently. Reasonably attractive valuations  Assigned 27x multiple to RE’s FY25e EPS of Rs143 and 9x to FY25e VECV EBITDA of ~Rs10bn (54.4% Eicher’s share) to arrive at a fair value of 3,829, seeking an upside of 16.5%. Upgrade from ACCUMULATE to BUY! Reduced VECV multiple from 10x to 9x looking at the uncertainty by FY25e on the CV industry.  Revised EPS is lower by ~5%/10%/11% for FY23e/FY24e/FY25e respectively as volumes & EBITDA margin toned down, offset by expected benefits from soft commodities.

Suprajit Engineering Ltd| Q3FY23 Result Update | Slight miss due to external factors, traction is good across division! CMP: Rs 359 | Target Price: Rs 445 | Upside: 23.9% | Rating: Buy Q3 performance was below estimates due to external factors viz. subdued exports, higher interest rates, power cost & MTM. Auto cables, Phoenix Lamps and LDC performance was remarkable, while Non-auto cables division show was poor due to slowdown in the USA. Suprajit Technical Centre (STC) to give additional wing to fly higher as new products have much higher realization & margins. We believe the company is putting good efforts to de-risk and grow beyond cables, this would provide additional growth opportunities. The company is moving up the value chain, rediscovering itself for a profitable growth ahead. It is capable to invest in complex & future-ready products. Maintain BUY rating! Q3FY23 performance – below estimates owing to weak exports, higher interest outgo, other expenses & lower other income • Operational performance was slightly lower than our estimates, but the bottom line impacted a lot due to higher finance cost (+238% YoY & +35% QoQ) due to increase in the interest rates, and substantially lower other income (-36% YoY & -76% QoQ) due to MTM. • Geopolitical concerns impacted revenue performance, while domestic piece was healthy. • EBITDA Margin at 11.7% (+41bps YoY & +70bps QoQ) came in lower than our estimates of 12.3% due to increase in other expenses (+38% YoY & +8% QoQ) owing to power cost increase in EU & the US. Phoenix Lamps – reached at double-digit EBITDA margin, traction to continue • Phoenix Lamps revenue met estimates, EBITDA margin improvement was impressive at 10.9% in Q3. The double-digit margin performance came after seven quarters & we trust that bad days are over double-digit margin performance to continue. • It received price increases from customers and witnessed a significant operational improvement. Additionally, Gas prices have come down that supported further. • 70% revenue comes from aftermarket business, which is moving very strong. • Restructuring exercise started to improve efficiencies & reduce costs. The management decided to voluntarily would-up Trifa subsidiary. This will take one year with no write-downs expected. • Only Luxlite subsidiary will be operational with reduced costs & improved efficiencies. Auto cables division at one of its best level • A very good performance witnessed in Auto cables division, whereas revenue & margin beaten our estimates. Revenue at Rs3.16bn with 17.3% EBITDA margin is healthy. • It received price increases & shipping costs dropped supported overall performance. Auto cables margin is sustainable. • Domestic OEM & Aftermarket performance was robust, while the picture was mixed for exports. New business pipeline remain healthy for the coming years. Light Duty Cable (LDC) – EBITDA margin turned in black, improvement to continue • LDC revenue met our estimates, although margin turned positive at 3.7% due to restructuring exercise & price adjustments received, but margin is slightly lower than our estimates of 5%. We believe margin improvement trajectory will continue. • China plant faced Covid disruption, but team managed it well. The outlook for Hungary plant is positive as stability is returning and performance is expected to improve. • Mexico plant's revenue is stable with margin improvement, expect good traction in the coming years. • Guidance of $100mn revenue in FY24 with double-digit EBITDA margin by Q4FY24 maintained. The next FY will be good for LDC in revenues and margins. Non-auto cables – a temporary blip in the performance due to external factors • Non-auto cables division dragged down overall financials completely. Revenues & margin was much below our anticipation as slowdown in the US market impacted sales. • The US non-auto segment have witnessed slowdown, which led to a few customers reducing business volumes in Q3.

SJS Enterprises Ltd | Q3FY23 Result Update | Q3 – a slight miss, immense growth ahead & valuation is attractive! CMP: Rs 438 | Target Price: Rs 583 | Upside: 33% | Rating: Buy Q3FY23 numbers were slightly lower than our estimates due to external factors including weakness in exports due to geopolitical reasons & one-off expense in Exotech. Despite this, outperformance continued vis-à-vis industry growth, margins maintained at a respectable level, the addition of new customers, geographic expansion & winning businesses from mega accounts continued. SJS raising funds upto Rs3bn for inorganic & Exotech’s expansion purpose. Due to near term challenges in the export markets, reduced revenue guidance from 25% to 20% for FY23e, while maintained mid-term CAGR of 25%/30% in Revenue/PAT respectively. We retain BUY with a fair value of Rs 583 per share as the next leg of growth will come from the combination of 1) cross-selling Exotech-SJS products to each other clients, 2) selling higher realization new generation products developed in-house (2-3x higher price than traditional ones), 3) aims to grow exports faster, 4) premiumization in Auto/Consumer durables, and 5) mining existing accounts along with acquiring new customers in domestic as well as overseas. Q3FY23 performance – a slight miss due to weakness in exports & one-off  Consolidated revenue Rs1.06bn (+16% YoY & -9% QoQ), EBITDA margin 24.5% (-325bps YoY & -200bps QoQ), and PAT at Rs157mn (+15% YoY & -21% QoQ). Revenue/EBITDA/PAT was slightly lower than our estimates by 3%/4%/7% respectively.  Due to seasonality, domestic demand softened in Q3 vs. Q2. Exports continue to remain weak in Q3 and expect weakness to continue in Q4 as well. Owing to one-off in Exotech and subdued demand in high margin export business, its overall EBITDA Margin dropped.  Exotech continue to perform well with 37% YoY growth (flat QoQ) in revenue to Rs349mn, reported EBITDA margin at 12.3% (-147bps YoY & -489bps QoQ), and PAT Rs14mn, (+32% YoY & -50% QoQ). A lot of Exotech’s business comes from cross-selling, gaining market share and launching new products quickly. Hence, revenue growth was very strong. (Exotech financial numbers are derived).  Q3FY23 includes one-off expenses of Rs6mn in Exotech, hence EBITDA margin was lower by 147bps YoY to 12.3%. The one-off is related to pre-acquisition rate amendment request raised from the customer. On a conservative basis, Exotech accounted this in financials. The adjusted EBITDA margin is ~14% in Q3FY23 (+25bps YoY).  Standalone revenue Rs715mn (-13% YoY & -13% QoQ), EBITDA margin 30.5% (-268bps YoY -0.04bps QoQ), PAT Rs143mn (+4% YoY & -16% QoQ). Revenue growth outperformed 2W+PV industry, and margin remains healthy at 30%+ level.  Overall, outperformance continued driven by increasing market share with existing customers, offering new-gen products, acquiring new customers and premiumization. The strategy is to grow mega accounts (focus), offer new products & win new businesses. Outperformance continued in Q3 as well  Its 2W+PV segment (~72% of revenue) grew by ~25% YoY in Q3FY23 surpassed 2W & PV industry production growth of ~4% for the same period.  Outperformance continued as SJS 2W segment grew by 14.1% in Q3 vs. 0.5% for the industry. Similarly, SJS PV segment grew by 43.5% vs. 21.4% industry growth. The similar kind of outperformance witnessed in 9M as well.  The strategy behind this is that SJS keep adding new customers, increase share of business with existing clients, & expand into new geographies, introduction of new-generation products (2-3x higher realization) and premiumization.  SJS added new customers’ viz. Foxconn in e2W, and IFB Industries in consumer appliances. Additionally, won new business with large accounts including M&M, Tata Motors, Toyota, Whirlpool, Electrolux and Royal Enfield.  Geographic expansion strategy continues by adding sales representative in Columbia, thereby expanding presence across Latin

Apollo Hospitals Enterprise Ltd | Q3FY23 Result Update | Ready to take off, hospitals business to take charge CMP: Rs 4,485 | Target Price: Rs 5,280 | Upside: 18% | Rating: Buy Q3FY23 saw decline in occupancy levels for the mature and new hospitals of Apollo due to festive seasons, going ahead this will improve. There has been contraction in EBITDA margins of existing hospitals both on a YoY and QoQ basis, however new hospitals saw muted margins. The patient mix will improve going forward as international patients revenue contribution will increase to 10% by FY23 and 15% in FY24 from current levels of 6-7%. The hospital business may see margin expansion of 100-120 bps yoy in FY25, led by improved payor mix and cost optimization. IP Volumes across the group grew by 7.5% YoY in Q3FY23. Revenue of existing hospitals grew 10.7% yoy while the new hospitals grew by 3%. Diagnostics and Primary care are being ramped up in AHLL (Apollo Health and Lifestyle Limited). The Pharmacy distribution segment registered a growth of 34%YoY with revenues of Rs. 17.5 bn during the quarter due to increased patients base and digital initiatives taken. 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. International revenues should also pick up in the next 1-2 years. 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. Cost optimization, reduction in losses and high revenue growth will improve profitability. On an overall basis, we are positive about the prospects of Apollo and we assign “Buy" rating on the stock. Decent topline growth but higher expenses dented the margins • Apollo reported decent numbers for Q3FY23. The company registered growth of 17.2% on YoY basis but was flat on QoQ basis to Rs. 42 Bn. • EBITDA margin for Q3FY23 decreased by 428 bps YoY and 145 bps QoQ to 11.9%. This was mainly due to higher losses from Apollo 24*7 which dragged the overall profitability. • Occupancy across the group was 65% in Q3FY23. ARPOB (excluding vaccination) was Rs 51,482 in Q3FY23 as compared to Rs 44,374 in Q3FY22 registering growth of 12%. ALOS for Q3FY23 was 3.4 days. • During the quarter, Healthcare services posted an EBITDA margin of 24.7%, Pharmacy has margin of -3.6% (after adjusting for 24x7 operating costs) and AHLL—8.2%. • Mature hospitals delivered EBITDA margin of 27.4% (from 24.3% in Q3FY22) while new hospitals delivered margin of 18.1% from (18.9% in Q3FY22). Outlook and Valuation: We are positive about the prospects connected with Apollo. Both the healthcare services and pharmacy including 24x7 should perform robustly in the future. AHLL should also report superior performance. Based on SOTP valuation we arrive at target price of 5,260 (implied EV/EBITDA multiple of 22 on its FY25E EBITDA), offering 19% upside from current levels. Buy.

Huhtamaki India Ltd | Q4CY22 Result Update | Strong operational performance, Upgrade to ACCUMULATE CMP: Rs 199 | Target Price: Rs 213 | Upside: 7.1% | Rating: ACCUMULATE The company reported strong show on its operational part although revenue was slightly lower than estimates. The revenue declined by 10% QoQ & gross margin expanded by 181bps YoY & 278bps QoQ to 27.8% in Q4CY22. The expansion in gross margins is majorly because of decline in raw material prices & cost pass on to its end user industries. Despite revenue growth of 5% YoY, EBITDA grew by ~351% YoY because of lower raw materials and operational expenses. EBITDA margins expanded by 542bps YoY & 407bps QoQ to 7.1% in Q4CY22. At the PBT level, the company reported profit of Rs161mn in Q4CY22 vs loss of Rs47mn in Q3CY22. The company has also given an approval to monetize the freehold land and building situated at Majiwade, Thane, Maharashtra, subject to necessary formalities being completed. We upgrade to ACCUMULATE rating from earlier SELL rating on the stock with a target price of Rs 213 per share which offers upside of 7.1% from current valuations. Q4CY22 revenue declined by 10% QoQ; Gross/ EBITDA margins expanded QoQ basis • The company’s Q4CY22 revenue declined by ~10% QoQ to Rs 6.92bn (Slightly lower than our estmates of Rs7.11bn). As per our estimates, the de-growth should be led by decline in realization. Gross margins expanded by 181bps YoY & 278bps QoQ to 27.8% for the quarter, majorly led by declining raw material prices of PE films, biaxially oriented polyethylene etc. • The employee cost increased by ~3% YoY & declined by ~5% QoQ to Rs623mn and stood at 9.0% of sales in Q4CY22 as compared to 9.2% in Q4CY21 & 8.5% in Q3CY22, while other expenses declined by ~19% YoY & ~21.6% QoQ to Rs815mn and stood at 11.8% of sales in Q4CY22 as compared to 15.2% in Q4CY21 & 13.5% in Q3CY22. Lower raw material & lower operating expenses led to EBITDA margins witness improvement of 407bps QoQ to 7.1% for Q4CY22. • The interest cost went up by ~6% YoY & declined by 2% QoQ to Rs86mn; while the depreciation expenses were lower by ~7% YoY & flattish on QoQ to Rs210mn. Cost savings measure to help company cut down on fixed cost and stabilize margins • The company has embarked on ‘Project Parivartan’ (Transformation Project) which focuses on cost transformation, stronger price realisation and better quality of growth to turnaround its performance. It focuses on improving efficiency of manufacturing network, labour productivity and reduce wastages from operations to boost company’s long-term competitiveness. • The recent monetization of Thane and Ambernath plant will cut down on fixed cost and will help to stabilize the margins in the long term. Valuation • Post Q3CY22 earnings, we assigned SELL rating on the stock and thereafter the stock has also reached our previous quarters target price. Considering strong performance in current quarters and anticipation of strong quarters ahead, we have upgraded our price target to Rs 213, owing to pass on raw material prices & greenshoots of pickup in demand valuing the stock 14.5x CY24E EPS of Rs 14.7. • At our target price, the stock offers an upside of ~7.1%, thereby, assigning ACCUMULATE rating on the stock.

Bodal Chemicals Ltd | Q3FY23 Result Update | Subdued performance in Q3, weak demand pain persist CMP: Rs 65 | Target Price: Rs 69 | Upside: 5.4% | Rating: ACCUMULATE The company reported very subdued operational performance. Revenue de-grew by 44% YoY & 20% QoQ owing to very weak performance in the dyestuff, dye-intermediates businesses. Dye-intermediates business on YoY basis recorded dip of ~60% in revenue majorly led by both volumes & realization dip. Dyestuff business also dipped by 22% QoQ majorly led by volumes dip of 20% QoQ. Despite weak operational performance, Gross margins expanded by 60bps YoY & 644bps owing to pass on of higher RM prices & decline of some major raw material prices during the quarter. Chlor alkali business revenue dipped by 22.5% QoQ majorly because of realization & also shutdown of 3-4 weeks impacted bit of volumes. This business is expected to rebound as company has completed its technological upgradation which will support volume growth going ahead which is a positive and greenfield expansion of benzene derivatives will drive the growth beyond FY24E. The legacy business dye-intermediates and dyestuffs continue to witness volatility led by weak demand and excess supply and because of this the company is now foraying into newer businesses which would insulate itself from majorly depending on sectors like textiles, dyes etc. However, weak demand in legacy business will continue to weigh on the valuations, and therefore we downgrade to ACCUMULATE from earlier BUY rating on the stock. Weak demand of end user industries & recent issues in Turkey will slow the recovery • The dye intermediates & dyestuffs business reported very weak operational performance because of weak offtake from key end user industries like textiles, dyes, pigments etc. Dyestuffs business has been majorly hit because of weak exports market. • The global demand has also weakenend owing to higher inventory & recent issue of Turkey earthquake will slow the recovery. • We feel the pain in demand would be visible in coming quarter also and recovery should only be visible from Q1FY24 but meaningfully it should recover from H2FY24 which seems to be a long affair. Major subsidiaries continue to report profits, is a positive sign • The Turkish subsidiary Sener Boya has reported revenue decline of 21% YoY to Rs556.5mn in 9MFY23. However, on the bottomline the business has reported profits of Rs68.6mn in 9MFY23 as compared with loss of Rs273.6mn in 9MFY23. • Trion Chemicals reported revenues of Rs174mn in 9MFY23 despite weak volumes. The weak volumes was due to slow offtake in US market. But the major issues regarding hazardous application of TCCA in US market has been resolved and expected ramp up much faster in the coming quarters. Valuation • The company’s major end users are textiles, leather, dyes & pigments wherein demand had weakened significantly and is expected to remain weak for the coming quarters. Export market is also witnessing weak demand and pickup is anticipated by Q1FY24, also, recent turkey earthquake will again put exporters of textile dyes manufacturers in difficult times which will slow the recovery in demand. • We value the stock on PE multiple of 10x FY25E projections and arrive at a target price of Rs 69 per share which is a upside of ~5.4% from current levels. • Therefore, we downgrade to ACCUMULATE rating from earlier BUY rating on the stock.

Fortis Healthcare Ltd | Q3FY23 Result Update | Improvement in patients mix to drive revenue CMP: Rs 272 | Target Price: Rs 380 | Upside: 40% | Rating: Buy Fortis delivered a healthy Q3FY23 results, driven by strength in hospital business. The diagnostic business continues to see pressure due to high covid base, however the EBTDA margins have improved sequentially. We expect strong growth in hospital business to continue with capacity debottlenecking, case mix improvement and increase in ARPOB. We expect revenue CAGR of 13% from FY23-FY25E as the high-end surgeries would continue to increase leading to improved case mix. Around 1500 beds would be added in the next 4-5 financial years. The patients mix and occupancy to improve from 63% in FY22 to 70%-75% by FY25E going forward. The SRL diagnostics business is showing initial signs of stabilization in the aftermath of the covid surge and the challenging industry environment. SRL continues to focus on improving its channel mix and adding to its specialized test menu such as those in the area of genomics On an overall basis, we are positive about the growth prospects of both Hospitals and SRL, and accordingly we recommend an "Buy” rating on the stock. Hospital business boosted by higher international patients • Q3FY23 Hospitals business revenue witnessed growth of 13.4% YoY and degrew 2.4% QoQ to Rs 12,674 Mn mainly due to increased occupancy level (66%), increase in ARPOB by 8.6% YoY at Rs. 55,342. • International patient revenues grew 73% YoY to Rs. 1,140 Mn in Q3FY23. International patient revenue contribution increased to 9.0% of hospital revenues versus 5.9% and 8.4% in Q3FY22 and Q2 FY23 respectively. • EBITDA margins for the hospital business contracted by of 150 bps QoQ and 10 bps YoY to 16.7%. EBITDA in the quarter was Rs. 2,110 Mn for Q3FY23. Diagnostic business continues to show improvement sequentially • Diagnostics business gross revenues declined 14.7% YoY to Rs 3,315 Mn versus Rs 3,885 Mn in Q3FY22. It witnessed decline on sequential basis as well by 5.6%. Diagnostics revenues were impacted by the decline in covid volumes. Non covid revenues however grew 7% YoY for the quarter. • The diagnostics business EBITDA was Rs 711 Mn in Q3FY23 versus Rs 977 Mn in Q3FY22 with margin of 21.4%. SRL’s revenue contribution from the specialized test portfolio (non-covid) increased to 33% from 30% in Q3 FY22. Outlook and Valuation: We are positive about the prospects connected with Fortis. Both the Hospitals business and SRL should perform robustly in the future. We have valued the Hospitals business at 18x on FY25e EV/EBITDA and the Diagnostics business (SRL) at 18x on FY25e EV/EBITDA to arrive at a Target Price of Rs 380. This provides an upside of 40% with respect to the current market price. Accordingly, we recommend a “Buy” rating on the stock.

NOCIL Ltd | Q3FY23 Result Update | Q3 below expectations, Near term pain to weigh on valuations CMP: Rs 212 | Target Price: Rs 223 | Upside: 5% | Rating: ACCUMULATE NOCIL reported a weaker show on all fronts during Q3FY23. Revenue de-grew by ~16% both YoY and QoQ because of lower volumes & lower realization. Domestic market volumes were impacted because of higher inventory & weak demand from replacement segment. Export volumes remained flattish on sequential basis. Despite revenue decline of 16% QoQ, EBITDA declined by 39.4% QoQ owing to higher employee and other expenses which impacted the EBITDA spreads in Q3FY23. We anticipate pickup in volumes from the coming quarters but increased competition from imports could be a near term concern which could impact its EBITDA spreads for the near term. Although, the long-term growth story remains positive for NOCIL, owing to tyre players expanding capacity which leads to increased usage of rubber chemicals, still competitive intensity is set to increase with competitors ramping up capacity (For instance. China Sunshine recently completed 30,000 TPA anti-oxidant capacity addition & planning another 20,000 TPA accelerator capacity addition by end of 2023) could spoil the party for NOCIL. Considering the demand pain in the domestic replacement market & poor product mix (generally value-added portfolio is ~25% of overall volumes majorly catering to exports market, current scenario of lower export sales leading to decline of value added portfolio & thereby, leading to poor product mix). Considering near-term pains, we downgrade stock to ACCUMULATE from earlier BUY rating. Operating margin contracted sequentially, weak demand led to lower performance • The company’s EBITDA or operating margin contracted by 151bps YoY & 439bps QoQ to 11.5% in Q3FY23. This is largely due lower gross margins and increased employee and other expenses. • EBITDA spreads reported decline of 6.7% YoY & 34% QoQ to Rs 34.3 per kg in Q3FY23, which is lower than the average range of last 10 years, majorly led by lower volumes offtake and poor product mix. Considering the improved mix towards specialized/higher value added products and rising exports share over the last few years, we feel the current spreads (reported in Q3FY23) should improve over the next 2-3 years. • Accordingly, we model in EBITDA spreads of Rs 48.6 & Rs 48.1 per kg for FY24E & FY25E respectively. • Since, company works on a competitive pricing model, wherein increase/decrease in input cost would be passed on subject to similar approach adopted by competitors in the market. For the coming quarter, one of the major raw material viz. Aniline prices has witnessed steep decline in prices and will remain volatile due to which the company to adopt similar approach in their product basket. Sequentially volumes contracted steeply, gloomy demand outlook remains a pain • In Q3FY23, volume contracted by 20.7% YoY & 7.5% QoQ majorly because of lower volume offtake in the domestic market, though exports market remained flattish sequentially. However, uncertainty of demand in both domestic and exports market led by weakness in replacement segment and higher channel inventory of tyre players remains a big cause of concern. We anticipate demand weakness might continue along with increase in imports could spoil the party for NOCIL in the short term for the coming quarters. • We expect the company expanded capacity of 55,000 TPA is likely to reach optimum utilization levels by FY24E & debottlenecking to support volume growth beyond FY24 for more than a year. On the back of this, we expect NOCIL to report volume CAGR growth of ~4.2% from FY22-25E. Valuation • We feel that demand weakness in replacement segment could impact domestic tyre market along with slowing export market might remain an overhang in the near term. • Considering pressure on spreads, we have cut down our earnings estimates by 20%-25% for coming years. • We value the stock

Krishna Institute of Medical Sciences Ltd | Q3FY23 Result Update | Acquired clusters to drive growth CMP: Rs 1,438 | Target Price: Rs 1,704 | Upside: 19% | Rating: Buy KIMS, has experienced good growth due to the merger between Sunshine and Kingsway. Additionally, the base business has also shown improvement in terms of EBITDA, indicating that the cost rationalization efforts put in place have been successful. Turnaround of Sunshine will be key driver for KIMS overall EBITDA as there is big room to grow from 18% to 25% EBITDA once occupancy picks up at Sunshine. Management is further confident of operationalizing Bangalore and Nashik facility in 2 years’ time leveraging their healthy balance sheet & operating cashflows. Also, management is looking at increasing its stake in certain subsidiaries, thereby reducing its minority contribution. 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 because 55% of beds capacity is from new and acquired clusters. 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 1,682 per share, translating into an upside of 19% and hence, we assign Buy rating on the stock. Decent performance all around • Revenue increased 42.8% YoY and was flat by 0.3% QoQ to Rs 5,622 mn. This was mainly due to decline in Inpatients admission which saw decline of 1.7% QoQ but has seen rise of 26.5% YoY. • ARPP (12.8% YoY) and ARPOB (Rs. 29,812- growth of 12.8% YoY) have shown improvements at the group level, though IP volume has declined due to the festive season. Going forward, it will show healthy growth. • EBITDA for the quarter reported a healthy growth of 16.5% YoY but was flat on sequential basis to Rs. 1,512Mn, whereas EBITDA margin was at 26.9% which witnessed contraction of 608 bps YoY and 13 bps QoQ. This was mainly due to higher employee and other expenses. Consolidation of Sunshine and Nagpur hospital was another reason for lower margins. • Sunshine Hospitals have shown an improvement in ARPOB from Rs. 60,419 in Q2FY23 to 65,436 in Q3FY23, growth of 8.8% whereas EBITDA has improved from 18% in Q3FY23 to 21% in Q3FY23 Outlook and Valuation: The company plans to add beds capacity of 2200-2300 beds over a span of 3 years which will increase the number of operational beds by 75% from 3064 in FY22 to 5375 beds in FY25E. This will help to boost revenue growth going forward. Currently, the stock is trading at comforting valuation on FY25E EV/EBITDA of 15x. 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 1,704 per share which offers upside of 19% from current valuations. Therefore, we assign BUY rating on the stock.

Narayana Hrudayalaya Ltd | Q3FY23 Result Update | Improvement in payor and case mix will drive growth… CMP: Rs 719 | Target Price: Rs 929 | Upside: 29% | Rating: Buy Narayana Hrudayalaya (NARH) posted highest ever EBITDA and strong numbers in Q3FY23 owing to robust revenue by India business and change in payor mix (increased revenue from insurance). The company's revenue increased 17.5% YoY but remained unchanged on a sequential basis, reaching Rs. 11,282 Mn. This growth was driven by higher revenue from both India and Cayman, which showed YoY growth of 16.3% and 22.7%, respectively. The international patient mix grew to 8% in Q3FY23 from 6% in Q3FY22 which led to improvement in revenues. ARPOB for India business was Rs. 35,068 in Q3FY23 vs Rs. 32,055 in Q3FY22, which has increased 9.4% YoY. A mix of brownfield, greenfield, and acquisition opportunities would be undertaken in India. In India, NARH has a steady expansion plan and is committed to refurbishing its flagship facilities in Bangalore and Kolkata, which will help to improve the quality of healthcare services offered to patients. However, the fact that a large chunk of the growth will come from the newer facilities poses a risk on the margin front. Due to new facilities coming up in Cayman, we expect that EBITDA margin may dip going forward, hence we cut our EPS estimates for FY24E and FY25E by 16% and 32% respectively. Nonetheless, we expect a healthy 16% EBITDA CAGR over FY23-25E, aided by structural recovery in footfalls, improvement in case mix and debottlenecking of capacity. On an overall basis, we are positive about the growth prospects of Narayana. Buy. Strong performance due to growth in ARPOB • India business reported revenue growth of 16.3% YoY but has seen decline of 1.4% QoQ. The sequential decline was due to 5% QoQ decline in inpatient volume which was at 56,500, while OP footfalls were 5,81,700. • Despite lower IP volume growth, the average revenue per patient (ARPP) for India inpatients (IP) was Rs 1,16,500 which has witnessed an increase of 6.5% yoy and 5.3% QoQ, whereas the outpatient’s revenue has witnessed increase of 2.6% yoy. The ARPP for India outpatients (OP) was Rs 4000 in Q3FY23. • ARPP for IP in Cayman was USD 40,700 which has witnessed increase of 67.5% YoY due to low base of covid in Q3 FY22. ARPP for OP in Cayman was USD 1100, a decrease of 31.3% YoY. For Cayman, IP footfalls were 492 (-16.8% yoy) while OP footfalls were 7,647 which has seen increase of 12.8% YoY. Outlook and Valuation: We are positive about the growth prospects connected with Narayana. Both Cayman and India operations should continue to do well in the future. Apart from cardiology, Narayana is exploring other therapies as well such as Oncology and Gastro which would improve the revenue mix. We expect patients mix and case mix to improve which would result in increased EBITDA margins going ahead. We value the stock at 17x EV/EBITDA with respect to FY25e EBITDA to arrive at a target price of Rs 929. Buy.

HealthCare Global Enterprises Ltd | Q3FY23 Result Update | Growth momentum from existing centres to continue… CMP: Rs 281 | Target Price: Rs 361 | Upside: 29% | Rating: Buy HealthCare Global Enterprises (HCGEL) continued to register the highest ever quarterly revenues and EBITDA in Q3FY23 with some regions delivering very high double digit revenue growth on a YoY basis. The new centres continued their scale-up trajectory with strong revenue growth of 29.3% YoY and 7.4% QoQ while existing HCG centres registered a growth of 16.6% YoY but the growth was flat on sequential basis. New centres registered an operating EBITDA of Rs 78 Mn against EBITDA of Rs 76 Mn in Q3FY22. ARPOBs have been steadily increasing on sequential basis but on YoY basis, it has witnessed a decline of 4.6% as management is hiring talents and is now focusing on inpatient volume growth. Due to higher tax rate in FY23E, we cut our EPS estimate for FY23E by 67%. Going ahead, we believe, HCG can increase its profitability through a combination of efforts aimed at improving its operations, pricing, and cost structures, as well as by improving the performance of its fertility business and new centres. By focusing on these areas, it can increase its EBITDA margins by 200-300 bps in the next 18-24 months. On an overall basis, we are positive about the prospects of HCGEL and we recommend a “Buy" rating on the stock. Decent performance on the back on higher occupancy • HCGEL reported decent set of numbers for Q3FY23. While on a YoY basis there was robust growth of 18.6% due to occupancy rate (65.7% in Q3FY23 vs 56.9% in Q3FY22). • ARPOB was Rs 37,014 for Q3FY23 compared to Rs 38,801 for Q3FY22. Overall ARPOB growth declined by 4.6% as the company focuses on first scaling up volumes and then optimizing payer mix over time (which will improve ARPOBs). • Operating leverage and higher contribution from existing hospitals led to expansion of EBITDA margin by 52 bps yoy to 17.8% in the quarter. The existing hospitals has an EBITDA margin of 25.4% while the new centers have EBITDA margin of 7.7% in the quarter. There were certain one-off expenses in the quarter such as consultation cost of Rs. 39 Mn and ESOP’s cost of Rs. 18 Mn. Excluding these, the EBITDA margin in the quarter grew by 110 bps qoq and 162 bps yoy to 18.9%. • The number of IVF cycles for Milann in Q3FY23 was 460 as compared to 508 in Q3FY22. Milann recorded revenues of Rs 167 Mn in Q3FY23 which was flat on YoY and QoQ basis. New registrations were 1,215 in Q3FY23 compared to 796 in Q3FY22. Outlook and Valuation: We are positive about the prospects connected with HCGEL. Both the existing and new centres should perform robustly in the future. We expect EBITDA CAGR of 11% from FY23-FY25e. Due to change in regional mix, there is a scope for EBITDA margin improvement from 17% in FY22 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 361 and recommend a “Buy” rating on the stock.

Aarti Industries Ltd | Q3FY23 Result Update | Robust Q3, Long term growth story intact CMP: Rs 550 | Target Price: Rs 681 | Upside: 24% | Rating: Buy Q3FY23 revenue of Aarti Industries grew by 15.4% YoY & declined by mere 1% QoQ to Rs16.7bn. Higher volumes & ramp up of long-term contracts led to stronger revenue on YoY basis. Also, value added contribution during the quarter stood at 81% which has offsett some decline of weak demand from dyes, pigments, FMCG which led to gross margin decline of mere 46bps on QoQ basis to 41.5% in Q3FY23. Despite gross margin decline of 46bps QoQ, EBITDA margin expanded by 146bps QoQ to 17.3% in Q3FY23 mainly because of lower other expenses. Lower power & freight cost has helped in bringing down overall other expenses. We believe Aarti is on a multi-year growth cycle & new projects like NCB capacity expansion, multipurpose plants will drive growth by FY25 & new chlorotoluene value chain, nitro-toluene capacity expansion, ethylation business expansion will drive growth beyond FY25E with stronger margin profile. Considering the strong growth outlook & reasonable valuation post correction in the stock price provides comfort for investors to ride on the growth story, therefore, we upgrade to BUY rating on the stock. Revenue growth to remain strong going ahead • We expect the company’s long-term growth to remain strong around 19% CAGR from FY22-25E, majorly led by ramp of long-term contracts & new chemistries kicking in. • Core business excluding long term contracts might remain subdued in FY24E but post commercialization of NCB capacity expansion, Nitro-toluene de-bottlenecking, Multipurpose plants & Ethylation units debottlenecking, the growth visibility looks far superior for the next 5 years. Hence, we believe Aarti is on a multi-year growth cycle. Operating margins better than estimates, Cost pass through will improve the margins going ahead • The company reported better than expected EBITDA margin on sequential basis by 146bps to 17.3% in Q3FY23 vs 15.8% in Q2FY22 majorly because of cost pass through of raw material prices & lower other expenses. Although, the recent correction in majority of its raw material prices might benefit the company in the coming quarters, slowdown in demand from dyes & FMCG sector is a key thing to watch out for, however, initial greenshoots in demand is visible which seems positive for the coming quarters. • We feel that Aarti has been successfully able to pass on its raw material cost and has proven its mettle in an environment wherein other players are struggling. • Hence, we expect that the company would be maintaining its gross margins from hereon & even improve to around 50-55% in the coming years on the back of ramp up of long-term contracts & better product mix. Valuation • Currently, the stock is trading at FY25E P/E of ~20x. We value the stock on forward P/E multiple of 25x and, thereby, arrive at target price of Rs 681 per share which offers upside of 24% from current valuations. • Therefore, we upgrade to BUY from earlier REDUCE rating on the stock.

Hero MotoCorp Ltd | Q3FY23 Result Update | Conservatively projected, still found reasonable value! CMP: Rs 2,654 | Target Price: Rs 2,913 | Upside: 9.8% | Rating: Accumulate Q3 performance was slightly higher than our estimates lifted up majorly by a substantial increase in other income. EBITDA margin was slightly on a lower side due to 70bps impact on EV spends. We have conservatively projected financials on the lower side vis-à-vis peers, but still found value in the stock, maintain ACCUMULATE rating for a fair value of Rs 2,913 apiece. Positive triggers ahead are 1) signs of rural uptick as per our checks. 2) higher sales of Xtec range, premiumization & the aim to launch one new product in a year will not only take care of volume/market share growth, but also improve margins. 3) input costs softness to add further in uplifting margins, and 4) not leaving any stone unturned for EVs. Q3FY23 performance – Revenue in-line, PAT higher than our estimates  Revenue at Rs80.3bn (+2% YoY, -12% QoQ) near in-line our estimates. EBITDA margin 11.5% (-67bps YoY, +7bps QoQ) vs estimates of 12.0%. PAT Rs7.1bn (+4% YoY, -0.7% QoQ) higher than estimates of Rs6.6bn.  Realization increase (+6% YoY) is led by an improvement in pricing, Xtec range of products is preferred by customers, offset by an increase in discounts due to festivals & to clear year-end inventory.  Benefits of commodities & mix is visible in gross margins (30.6%, +155bps YoY & +254bps QoQ). Employee & Other costs YoY increased, while QoQ as a % is higher due to operating deleverage.  EBITDA Margin although lower than our estimates, but a gradual improvement is visible since last three quarters. 70bps impact on EBITDA margin was due to EV spends. ICE margin was 12.2% in Q3.  Much higher other income to Rs1.8bn (+51% YoY, +99% QoQ) & lower than expected effective tax rate lifted up the bottom line better than our estimates. Other income in Q3 is at normalized level. Demand – Rural bottomed out, new model launches to support demand  We can see some green shoots in Hero’s premium portfolio looking at popularity of Xpulse 200cc, and increasing acceptance of Xtec range of products. A launch from JV with Harley could possibly support in gaining traction further.  Additionally, rural started picking up, and further momentum should built-up based on our checks, should benefit. Retail sales for the industry in Jan ’23 was good. This, along with new model launches in ICE and focus on EVs should bring in the required momentum.  Exports although have not shown much traction, but remain a key lever for growth in the mid-to-long term. The mid-to-long term target is 10% of revenues from exports, Hero will scale this up.  Overall, we have built-in lower volume growth as compared to its peers as the lower segment of the population is yet to see a revival.  Expect 5.26mn volumes in FY23e, and projected 6-7% growth in the coming two years will take its volumes to 5.97mn by FY25e. Electric vehicles - Special emphasis on EVs, to make products for mass segment  We have no question on Hero’s ability in making premium electric vehicles, and more launches are on cards at lower price covering different segments.  Hero’s EV deal with Zero Motorcycles, USA will add a new wing. The company has been doing collaborations and investments with EV companies (Ather, Gogoro, in-house, collaborations on critical components, etc.), which we believe will be supportive to stay ahead of the competition and produce techno-rich products for Indian markets. Margins are on an upward trajectory, traction should continue  Metals are cooling-off, selling more Xtec range in lower segment (7-10% higher priced) and operating leverage should improve margins further in Q4FY23. Anticipate 11.7% in Q4FY23 & 11.5% in FY23.  Guided range is 14-16% in the mid-term, however we have conservatively projected 12.0% in FY24e, and 12.5% in FY25e.  The company in its golden year clocked 16.

Mayur Uniquoters Ltd | Q3FY23 Result Update | New products, new model wins, recovery at exports front to aid growth CMP: Rs 439 | Target Price: Rs 571 | Upside: 30.1% | Rating: Buy Despite pain from global slowdown and subdued footwear business, Mayur Uniquoters came out with YoY flattish volume performance in Q3FY23, led by good show from auto segment. With PVC price correction and price stabilization, the company witnessed margin recovery as well. Despite loads of challenges like slower traction at footwear and PU fronts, we maintain BUY rating on Mayur Uniquoters with a slightly upgraded TP of Rs 571, 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. A flattish volume, Autos strong but footwear weakness continues  Mayur Uniquoters’ revenue came in at Rs 1,698mn, a marginal growth of 0.3% yoy (down 12.7% qoq), almost in-line with our estimates.  Both volume and realization were almost flat on YoY basis. However, on sequential basis, volume was down ~15% as generally Q3 is weaker than Q2 for the company. Margin expansion was a positive surprise  EBITDA stood at Rs 334mn, with margin of 19.7% during the quarter compared to 19.1% in Q3FY22 and 17.3% in Q2FY23. Sequential improvement in product mix and PVC price correction resulted in better margin performance.  On consolidated level in 3QFY23, the company has posted sales of Rs1,779mn, down marginally 1.4% YoY and PAT of ~Rs266mn, 2.6% YoY growth. Several new opportunities to fuel the momentum  Besides, working on BMW business, the company is working on a big opportunity on Auto PU front which has huge potential to aid growth. The management indicates export OEMs business to multiply when businesses from new clients reach to guided levels by clients.  The management has given a guidance of reaching Rs11-12bn sales by FY25E and we believe Rs10bn sales in FY25 is on cards for the company.  The company continues to focus on high margin businesses and new client additions in high margin business will be continued in the future. Start of BMW business and ramp up of Mercedes business will further boost margins going forward. Valuation  As chip shortage issues waning, more recovery is expected on auto front.  The company has incorporated a new subsidiary to create a brand name and hit the retail business. They are onboarding retailers and expect 1,000 dealers to be added by CY23.  With PU plant ramp up, commencement of Mercedes business and BMW business and much awaited traction at margin front, we estimate good earnings growth in coming years.  Considering BS strength and consistent handsome payouts to shareholders, we value Mayur at 18.0x its FY25e earnings to arrive at a TP of Rs 571 apiece and recommend BUY.

Divi’s Laboratories Ltd | Q3FY23 Result Update | Near term headwinds to continue… CMP: Rs 2,884 | Target Price: Rs 2,819 | Upside: -2% | Rating: Reduce Divi’s lab missed the earnings estimate and reported revenue degrowth of 31.5% YoY and 7.9% QoQ to Rs. 17,077 mn. The decline was due to lower revenue from custom synthesis business which had high base of molnupiravir in Q3FY22. The company has reported lowest ever gross margin since 16 quarters which was a disappointment. The higher input cost price pressure, unfavorable product mix and increased pricing pressure in generics business. EBITDA declined by 62.8% YoY and 34.3% QoQ at Rs. 4,083 Mn mainly due to lower gross margin accompanied with higher other expenses. EBITDA margins contracted by 2010 bps YoY and 958 bps QoQ to 23.9%. The headwinds in the generics business will continue for the next 4-5 quarters, hence we cut our revenue estimates for FY24 and FY25 by 9.8% and 10.2% respectively.Due to cut down in our earnings estimate, we change our rating from accumulate to reduce. Custom Synthesis – Divi’s 87% of the revenue comes from export business, where the export to regulated markets contributes 68% of the total export. In Q3 FY23 the custom synthesis segment, which is a high margin business, accounted for 40% of total revenue, witnessed decline of 54% YoY and 37% QoQ to Rs. 6,830 mn in Q3 FY23 due to high base of Merck’s oral covid pill – molnupiravir in FY22. Custom synthesis business is expected to rebound in Q2FY24 backed by strong orderbook. On the two fast-tracked projects, Divi's highlighted that both are in the commercial stage and expects them to start contributing to the topline from Q1FY24. Generic – The generic segment accounted for 44% of total revenue. Revenues grew by 5% YoY and 4.3% QoQ to Rs.8,746 mn in Q3 FY23 as compared to Rs. 8,388 mn in Q2 FY23 and Rs. 8,323 mn in Q3 FY22. Higher DMF filings and patent expiries of new molecules in FY24 will add more revenue growth going ahead. High margins of the majority of the new generic products are expected to be value accretive. 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. Market share gains in key molecules such as carbidopa, levodopa and mesalamine where company has high market share of 20-30% will lead to higher revenue visibility. Margin – The higher prices of intermediates, solvents and unfavorable product mix impacted the gross margin in Q3 FY23 which slipped by 996 bps YoY and 693 bps QoQ to 56.7%. EBITDA margins decreased by ~2010 bps YoY and by ~958 bps on sequential basis to 23.9% due to a significant increase in the other operating expenses (from 18.8% of revenue in Q3 FY23 to 17.6% in Q2 FY23). The higher operating costs was mainly due to increased power & fuel prices which are impacted due to geo-political tensions. Divi’s has expanded capacity to meet higher demand. Debottlenecking and backward integration also helped it achieve scale and de-risk its dependence on external supply. Higher capex spending, launch of new products and volume growth across offerings remain key growth drivers. Valuation: The long-term growth story is intact as Divi’s focus on custom synthesis segments, and its ability to win repeat, high-tonnage business is clear evidence of its specialization. The company is structurally well positioned in customs synthesis and API even after flattish year ahead on a high base in FY22. Due to the near-term margin pressure which is transitory in nature, we forecast Revenue / EBITDA / PAT CAGR during FY23- 25E at 13.4% /15 %/22.8%. We value the stock based on SOTP valuation strategy on FY25E earnings and arrive at a target price of INR 2,819. Reduce.