Yatharth Hospital & Trauma Care Services Ltd | Initiating Coverage | Quality Healthcare At Affordable Price CMP: Rs 464 | Target Price: Rs 658 | Upside: 42% | Rating: BUY Yatharth hospital is a large private multi-speciality tertiary care hospital operating in the regions of North India. The group have a network of four hospitals currently in operation (Noida, Noida Extension, Greater Noida and Jhansi-Orchha) with a total bed capacity of 1405 beds as of Dec 2023, and in Feb 2024, it acquired a hospital in Faridabad which will be operationalised in Q1FY25.The company plans to double its bed capacity to 2800 beds in next five years. We like Yatharth due to 1) Good healthcare at affordable pricing 2) expanding its presence in under-penetrated markets such as Noida 3) focusing to improve its therapy offerings (Addition of radiation and oncology block) which will result in superior case mix thus improving the ARPOB and 4) Lean cost structure due to limited dependence on star doctors which will result in improvement in EBITDA margins. Also, the company has single large hospital model wherein they build a large 400-500 bed hospital in a single unit leading to operating leverage benefits. Going ahead, as the occupancy improves, the operating leverage would play out resulting in higher margin. We forecast EBITDA CAGR of 21% over FY24E-FY26E. We assign 20x EV/EBITDA on FY26E EBITDA and arrive at a target price of Rs 658 per share, translating into an upside of 42% and hence, we assign Buy rating on the stock. One of the largest players in Delhi NCR- Yatharth is one of the largest hospital chain in the corporate healthcare sector in Delhi NCR with 1100 beds, first being Max Healthcare with 3400 beds. The area's substantial per capita income of Rs. 243,100 and a low bed density of 2.7 per 1000 people underscore a significant shortage of hospital beds. Yatharth capitalizes on this scenario, leveraging its operational bed share and competitive pricing to secure and maintain its leadership in the competitive healthcare landscape. Headroom to grow in home market Yatharth holds a strong brand positioning in Noida. By leveraging its brand, it can achieve higher sales merely by improving its occupancy and expanding in current market only. Low bed density (2.7 per 1000 people) in its core Delhi-NCR market allows it to remain focused in this market. Unlike, other peers such as KIMS and Medanta, which are exploring into other market, Yatharth plans to expand in its home market only which reduces the execution risks. Affordable Pricing Model Yatharth have successfully implemented its affordable pricing model in the hospitals in Tier 1-2 markets, even though hospitals in different markets face different competitive landscapes and pricing pressures. Yatharth serve patients from different economic backgrounds and offer a different mix of specialty offerings. In Tier 1 cities, the prices across medical procedures are on average 10% to 20% lower than other private hospitals in Delhi NCR. This helps to attract high inpatient volume. Focusing on improving the case mix Company’s 33% of revenues comes from Internal medicine (lifestyle diseases like diabetes, cough, cold, fever, and dengue) which has a low ARPP. To improve the ARPOB, the company is adding radiation therapy and organ transplant in two of its hospital which would lead to higher ARPOB and ARPP for the company. Currently, the company has ARPOB of Rs. 26,538 in FY23, going forward we expect it to grow at a CAGR of 4.5% from FY23-FY26E on the back of improved case mix and price hike. Robust return ratios Yatharth has one of the best return ratios amongst its peers in the range of 20%-22%. Going ahead, these return ratios will be maintained as major capex is through brownfield only which means growth will be achieved without diluting the ROE. Valuation is in comfort zone Currently, the stock is trading at comforting valuation on FY26E EV/EBITDA of 13.8x. Yatharth's s

I G Petrochemicals Ltd. | Q3FY24 Result Update | Bottomed out PAN-Ox spreads, New capex gives visibility beyond FY26E, Upgrade to BUY CMP: Rs 461 | Target Price: Rs 580 | Upside: 26% | Rating: BUY The company reported a very weak operational performance. Revenue de-grew by ~6% YoY & ~3% QoQ. Gross margins contracted by steep 960bps YoY & 618bps QoQ to ~11.7% in Q3FY24. The decline in gross margins was because of sharp decline in spreads of PAN-Ox & MAN. Higher raw material prices of Ox & flat prices of PAN led to sharp contraction in spreads during the quarter. Management stated that despite weak spreads in Q3, current spreads are quoting at $100-110/ton because of upward movement in PAN prices. We feel the company has witnessed the worst ever PAN-Ox spreads & no new negative surprises is further expected. Recently, the company started commercialization on its PA5 capacity of 53,000 tonnes. This capacity addition would witness volume growth in FY25E. Inching up of non phthalic business revenue share to 15-25% of revenues by FY27E (vs ~8.5% of 9MFY24 revenue) might provide some stability in the margins which remains a key factor of company’s further expansion in downstream derivatives of non phthalic businesses. The company has announced new leg of capacity expansion for addition of greenfield expansion of advance plasticizers of 1 lakh tons capacity with a capex of Rs1.65bn (excluding GST). The company has also stated its intent to venture into new businesses like green chemicals, ethanol derivatives, CBG etc however specific details has not been shared. We feel most negatives have been factored in PAN-Ox spreads, new leg of capex gives visibility beyond FY26E, although demand uncertainty & declining MAN realization still remain a cause of concern but we feel it’s mostly transitory in nature. The concerns might subside in a couple of quarter’s post which we see a blue sky scenario, hence, we upgrade to BUY rating on the stock. New brownfield capacity commercialization indicates strong volume growth in FY25E, next leg of new capex announced • Since, the existing capacity of PAN was operating at peak utilization levels, hence, the company resorted for another brownfield expansion of 53,000 TPA at a capex of Rs3.5bn in 2022 which has started commercialization. We anticipate at peak utilization levels this will add Rs4.5-5bn to the topline. • The company has also announced new leg of capacity expansion for setting up new greenfield capacity expansion in plasticizers of 1 lakh tonnes with a capex Rs1.65bn expected to complete in next 15-18 months. At peak utilization, expect Rs5-6bn addition to topline. Sharp contraction in gross margins on YoY & QoQ basis mainly due to decline in PAN-Ox spreads, might remain at the lower end unless material uptick in demand is witnessed • The company reported steep gross margin contraction of 960bps YoY & 618bps QoQ to 11.7% in Q3FY24. The sharp margin contraction was due to decline in the spreads of PAN-Ox. • Despite weakness in spreads in quarter gone by, current month spreads are quoting at $100-100/ton which indicates swift revival compared with Q3. We anticipate that spreads might remain in the same range unless material uptick in demand is witnessed. Factors like inventory re-stocking, improvement in pigments demand & robust exports market might have positive effect on the spreads, which would largely be visible from Q1FY25E. • Management believe that PAN-OX spreads average between $150-250/ton in the long term, however it remains volatile & depends on demand, supply & other factors. Valuation • We roll forward our valuations & value the stock on March 26E earnings. Currently, the stock is trading at March 26E P/E of ~8.7x. We upgrade our forward multiple to 11x (earlier 9x) because of new capex announcement, most negatives factored in PAN-Ox spreads & stronger visibility of volume growth beyond FY26E also. We arrive at a target price of Rs 580, thereby, which offers

Narayana Hrudayalaya Ltd | Q3FY24 Result Update | India business to drive strong growth CMP: Rs 1,366 | Target Price: Rs 1,669 | Upside: 22% | Rating: BUY Narayana Hrudayalaya (NARH) missed our estimates due to weak revenue in the North and West India business accompanied by seasonally weak quarter. Jaipur had the weakest revenue in the quarter affected due to change in govt scheme business and price negotiations, which is expected to normalize going forward. Cayman business registered revenue growth of 5.9% YoY driven improvement in footfalls. The growth prospects for the India business appear promising, thanks to anticipated advancements in case mix, enhanced throughput, and a reduction in ALOS. We expect minimal greenfield Capex, excluding the Kolkata and Bangalore project, the Indian business is poised to raise EBITDA margins to 25%-26% by FY25, surpassing the current 23%. The overall group margin is expected to continue its upward trend. Going ahead, we anticipate growth driven by a structural rebound in footfalls at flagship hospitals, where capacity optimizations are underway with improvement in case mix. We expect EBITDA CAGR of 24% from FY24E to FY26E driven by cost optimizations initiatives and improvement in occupancy. Due to strong performance in the India business, along with a sector re-rating, the EV/EBITDA multiple for the India segment is being revised to 22x, up from the previous 20x, aligning it with industry peers. In the Cayman Islands, the operational oncology unit has initiated patient treatments, and an additional block is scheduled to be introduced in Q1FY25, contributing to sustained revenue growth in the future. On an overall basis, the growth prospects of Narayana look good. We maintain our BUY view with a target price of 1,669 per share. Muted performance affected due to seasonality • In Q3FY24, India business reported revenue growth of 6.9% YoY but has seen decline of 8.9% QoQ to Rs. 9,590 Mn. The sequential decline was mainly due to underperformance of Gurugram and Jaipur hospitals accompanied with festive season. • ARPOB for India business witnessed growth of 10.6% YoY and 5.2% QoQ to Rs. 38,630 with occupancy level of 52%. However, we believe occupancy was flat on YoY basis to 52% in Q3FY24. • Cayman business recorded revenue of 5.9% YoY but has seen decline of 3.1% QoQ to Rs. 2,446 Mn. This was mainly due to 25% decline in ARPP. • ARPP for IP in Cayman was USD 30,700 in Q3FY24 which has witnessed decrease of 25% YoY. Outlook and Valuation: Anticipating positive performance in both Cayman and India operations moving forward, we expect improvements in patient mix and case mix, leading to a rise in EBITDA. The turnaround of previously loss-making facilities and the maturation of recently established hospitals are expected to be key drivers of EBITDA growth. Additionally, a higher surgical mix and enhancements in payor mix are poised to contribute further to overall growth. Due to healthy return ratios as compared to peers and steady growth in India business, we value India business at 22x and Cayman at 14x (EV/EBITDA with respect to FY26E EBITDA to arrive at a target price of Rs 1,669. Buy.

Divi’s Laboratories Ltd | Q3FY24 Result Update | Synthesis: Fuelling Future Growth CMP: Rs 3,651 | Target Price: Rs 4,372 | Upside: 20% | Rating: BUY Divi’s lab result were below our estimates. Revenue witnessed growth of 8.6% YoY but has seen decline of 2.8% QoQ to Rs. 18,550 mn. The YoY increase primarily stemmed from a noteworthy 25% surge in Custom Synthesis business, counterbalanced by a -3% decline in the generic business and a 2% upturn in Nutraceuticals. Due to favourable product mix and softening of raw material prices the gross margin improved by ~397 bps YoY and ~313bps QoQ to 60.7%. The Custom Synthesis business is experiencing growth, especially with two major projects from prominent pharmaceutical companies transitioning into full-scale production. The contribution from synthesis is expected to notably increase from 45% in FY24E to 50% in FY26E. EBITDA increased 19.6% YoY and 2.1% QoQ to Rs.4,890 Mn due to higher gross profit. Due to slower than expected increase API segment and subdued growth in Nutraceuticals business, we cut our growth estimates of Revenue/EBITDA/PAT by 11%/30%/32% for FY25E. Due to red sea situation, logistics cost is expected to rise in coming quarters, along with commissioning cost of Kakinada plant. Custom Synthesis – For Q3FY24, Divi’s 87% of the revenue is from export business, where the export to regulated markets contributed 71% of the total export revenue. The custom synthesis segment, which is a high margin business, accounted for 46% of total revenue, witnessed growth of 25% YoY and 12% QoQ to Rs.8,533 mn. This segment is expected to witness CAGR growth of 36% from FY23-FY26E on the back of launch of two fast track projects. The company is actively engaged in producing peptide building blocks crucial for the development of new anti-diabetic and anti-obesity drugs. The anticipated peak sales for each drug are approx. USD 25 Bn. Divi's strategic focus lies in building a specialized portfolio, leveraging its capex strength. The company is continuously advancing its proficiency in emerging technologies, including peptides, high-potent conjugate drugs, and contrast media products, Divis is also proactively enhancing its commercial capabilities to capitalize on upcoming business opportunities. Generic – The generic segment accounted for 46% of total revenue. Revenues degrew by 3% and 9.8% QoQ to Rs 8,487 mn. The API business has witnessed pricing pressure in old molecules, however has witnessed strong volume growth. However, the pricing situation is expected to get normalize going ahead. Strong growth is expected from peptide and sartans opportunities. We expect revenue CAGR of 19% from FY24E-FY26E from this segment. Nutraceuticals – The growth in this segment remained subdued with revenue at Rs. 1,530 Mn. Margin – Favourable product mix led and low RM costs led to increase in gross margin by 397 bps YoY and 313 bps QoQ to 60.7%. The margins are expected to improve going forward as the synthesis business picks up. The company is also benefitting from softening of raw material prices. Currently, its facilities are operating at 70-80% utilization. Post commercialization of Kakinada plant, several capacities will be free which will help in Debottlenecking. Valuation: Divi excels in tailoring synthesis processes for specific segments, showcasing its expertise in custom synthesis. As a result, Divi is strategically poised to capitalize on emerging opportunities presented by recently off-patent molecules. Company is seeing softening of RM costs and higher revenues from synthesis business will further improve the margins. We value the stock based on SOTP valuation strategy and arrive at a target price of Rs. 4,372. Buy.

Lumax Auto Technologies Ltd | Q3FY24 Result Update | Impressive operational performance & robust guidance, Strong BUY! CMP: Rs 460 | Target Price: Rs 578 | Upside: 25.7% | Rating: BUY Lumax Auto Technologies Ltd (LATL) posted highest Consolidated Revenue/EBITDA/PAT in Q3FY24 driven by exceptional performance at IAC India and Standalone business. The robust outlook given: 1) Consolidated EBITDA Margin will further improve & IAC’s 18% margin is sustainable, 2) Total order book of Rs 11bn, faster order execution for new JVs to start from next fiscal, 3) Lower effective tax rate of 25-26%, 4) Consolidated revenue to grow by 20%, 5) Standalone to grow at double-digit with further improvement in margins. 6) Generating strong CFs, the debt will reduce further. Our belief is strong that LATL is a robust re-rating candidate, supported by its collaboration with eight well-established global partners, a track record of well-executed past financial performance, plans for debt reduction, and a reputation for clean management. In our view, the eight international partners represent hidden gems, providing strong support to LATL with their robust technical capabilities. Some of these partners have proven to be valuable assets, evident in their impressive past performance and business wins. Additionally, the five emerging subsidiaries are poised for significant growth. We maintain BUY rating with a revised fair value of Rs 578 per share (maintained 16x FY26e EPS). Upgraded EPS led by strong execution in Q3, inclusion of Lumax Ancillary Ltd and robust guidance ahead. Strongly recommend BUY! Q3FY24 result analysis – Impressive operational performance! • LATL reported highest Consolidated Revenue/EBITDA/PAT in Q3FY24. • Revenue is lower than our estimates by ~6% to Rs 7,325mn, however EBITDA/PAT numbers surpassed expectations by 7.1%/7.5% respectively. • This is driven by superior improvement in the EBITDA Margin at 14.5% - the highest ever reported in any quarter. • Consolidated EBITDA Margin exceeded our projection by 181bps majorly led by exceptional performance at IAC India and Standalone business. Both the business segments posted its best EBITDA Margin. • Standalone PAT was higher than our estimates by ~5% to Rs 180mn as it showcased on of the best EBITDA Margin at ~9.4%. • Margin improvement was largely because Bajaj/HMSI & other key customers posted high double-digit growth & increase in the higher margin Aftermarket. Key growth drivers ahead • IAC India – the acquisition strengthened LATL’s plastics business, existing clients along with expected new business from anchor clients to support growth, joint sourcing & scale to improve margins. In talks with TaMo for business. • Lumax Mannoh – gradual shifting to high margin automatic gear shifters & further export opportunities from the JV partner bodes well, • Lumax Cornaglia – anchor client TaMo outperforming, along with other clients, coupled with localization, & the introduction of Plastic fuel product to drive business, • Standalone – increasing contribution of higher margin aftermarket, LED and the anticipated rebound in Bajaj’s export to push growth ahead, • Emerging subsidiaries – With a robust order book featuring promising products like Sensors, Telematics, Antennas, among others., the emerging subsidiaries are poised for higher growth in the upcoming years starting FY25. They currently hold strong orders amounting to ~Rs 3bn+, and the potential market size is estimated to be around Rs 93bn. The next partnership is anticipated to focus on pure-play EV components, in our view. Expect higher growth in financials • Financials set to fly higher with the expected Adj. EPS growth of ~35% CAGR FY23-FY26e driven by high margin IAC India & Automatic gear shifters, a rising contribution from emerging subsidiaries, reinforced by the Aftermarket, a rebound in key clients' business momentum, and a reduction in finance costs due to debt repayment. • We have inc

Bodal Chemicals Ltd | Q3FY24 Result Update | Bottomed out, On the Verge of a turnaround, Upgrade to BUY CMP: Rs 77 | Target Price: Rs 91 | Upside: 18.2% | Rating: BUY Bodal Chemicals reported below estimated operational performance. Revenue grew by ~6% YoY & ~3% QoQ (lower than our estimates). YoY & sequential topline growth is because of robust dyestuff & chloralkali volumes. There was a one-month annual shutdown of sulphur products division during the quarter for boiler inspection etc which impacted sulphur volumes which otherwise would haven better. Dye-intermediates revenues declined by 9% QoQ because of cheaper imports from China & weaker export momentum. Gross margins expanded by 400bps YoY & 263bps QoQ to 51.3% during the quarter largely because of lower raw material prices. Despite stronger gross margin expansion, higher employee & other expense led to contraction of 60bps YoY & 6bps in EBITDA margins in Q3FY24, however, the silver lining is prices of some major raw material continue to soften which will support the operating margins in the coming quarters. The legacy business dye-intermediates and dyestuffs continue to witness volatility led by China factor & rebound of demand in international markets and because of this, the company has now forayed into newer businesses which would insulate itself from majorly depending on sectors like textiles, dyes etc. The Sayakha greenfield project of benzene derivatives has started commercial production which will increase its presence towards end user industries like pharmaceuticals & agrochemicals. We feel the company has seen major downturns in the last 3-4 quarters because of weakening of demand in textiles and other allied sectors, and the same if normalized alongwith commissioning of newer businesses will drive the growth going ahead. We feel that the company is standing at the bottom with only chances of a recovery going ahead, hence we upgrade to BUY rating from earlier REDUCE rating on the stock. Demand remained volatile, meaningful recovery is expected from Q1FY25E • The dyestuffs business has shown impressive revenue growth of 22% YoY & 10% QoQ led by recovering textiles demand. However, Dye-intermediates business remained subdued because of cheaper imports. • The global demand is recovering but slowly & gradually. Also, our channel checks & recent interactions with chemical dealers indicate that dyes demand will witness uptick in 2024. Inventory destocking in select segments is nearing end which should support strong volume momentum going ahead. • We feel the pain is mostly already in the numbers and improvement should be visible from Q1FY25E. Turkish subsidiary Sener Boya reported strong numbers despite global headwinds, is a positive sign • The Turkish subsidiary Sener Boya has performed well in 9MFY24 though there were global headwinds in chemicals industry. The subsidiary reported revenue de-growth of 58% YoY to Rs236mn in 9MFY24. Also, on the operating profit the business has reported profits of ~Rs25mn in 9MFY24. • However, 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 slower demand recovery has started and is anticipated to meaningfully recover from Q1FY25E led by inventory re-stocking & exports market pickup. Also, recent commercialization of benzene derivatives business will incrementally add to Revenue & EBITDA with wide exposure in agro & pharma makes the company attractive at current juncture. • We roll forward our valuations to March 26E. We maintain P/E multiple of 13x on March 26E projections and thereby arrive at a target price of Rs 91 per share which indicates upside of ~18.2%. • Hence, we upgrade to BUY rating from earlier REDUCE rating.

Galaxy Surfactants Ltd | Q3FY24 Result Update | Export market pickup remains key, Maintain ACCUMULATE CMP: Rs 2,622 | Target Price: Rs 2,989 | Upside: 14% | Rating: ACCUMULATE The company reported lower than estimated numbers. Overall revenue de-grew by ~13% YoY & 4% QoQ. Volumes reported growth of ~9% YoY & decline of 2% QoQ. Sequential decline in volumes is because of crisis led by escalation of Red Sea conflict which led to spillover volumes in subsequent quarters. Realizations remained subdued declining by 20% YoY & 2% QoQ basis because of weak demand from international markets like North America & Europe. Gross spreads declined by 19% YoY & 1% QoQ to Rs ~47.1 per kg & EBITDA spreads per kg declined by 33% YoY & 8% QoQ to Rs ~17.7 per kg in Q3FY24, much lower than estimated largely because of one-offs & absence of export incentives coupled with weak demand from international markets. Going ahead with subsiding inflation & increasing personal expenditure is likely to continue volume momentum. We forecast performance & speciality volumes both to rise by ~7.5-8.5% during FY23-26E. High single digit volume momentum along with pickup in export market would lead to Galaxy generating ~12.7% EBITDA margins & ~15% post tax ROCE by FY26E. Near term pain in some international market is transitory and the same is expected to resolve in the coming quarter. We roll forward our valuations to March 26E & maintain our 27x P/E on March 26E EPS and arrive at Rs 2989 per share and maintain ACCUMULATE rating on the stock. High single digit volume growth YoY, expect volume to grow in high single digit for the next 3 years • The company reported volume growth of 9% YoY & dip of 2% QoQ. Performance segment reported high single digit growth & speciality segment reported low double-digit growth because of pickup in masstige segments. • Domestic market continues to remain robust with double digit growth of 13-14% YoY & pickup in premiumization. AMET market reported low single digit growth because of Red Sea crisis, however anticipate it to resolve in a couple of months. • We expect both performance & speciality to report high single digit growth of 7.5-8.5% over the next 3 years led by pickup in export market, lowering inflation in developed economies & better purchasing power of consumers. One-offs & volume loss impacted EBITDA per kg, adjusting gives better picture • Management stated that there were some one-offs (Rs70mn) & absence of export incentives (Rs210mn) which led to lower EBITDA per ton during the quarter. Also, because of Red Sea crisis the volume impact was ~2000 tonnes (~3.1% of quarterly volumes) during the quarter. • Adjusting for all one-offs & other adjustments, Gross & EBITDA per kg stood at Rs 48.8 & Rs 21.4 per kg respectively during the quarter, well above the management guidance. Increasing product portfolio in 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. • In Q3FY24, the company has added 2 new patents which has increased its approved patent count to 93 and applied for another 21 global patents. • This has led to a consistent increase in the product basket from 109 products in 2009 to now close to 216 products with new products like sulphate-free cleansers (Galsoft GLI 21), UV filters (GalShield UV Care Plus), waterless cleansing formulations (Galsoft Tils (G)) in the recent years. Valuation • We roll forward our valuations to March 26E. The stock is currently trading at P/E of ~23.7x on March 26E EPS. We maintain our P/E multiple of 27x and arrive at target price of Rs 2989 per share which offers upside of ~14% from current levels. Therefore, we maintain ACCUMULATE rating on the stock.

Huhtamaki India Ltd | Q4CY23 Result Update | Shift in strategy yielding results, On the Verge of a turnaround, Upgrade to ACCUMULATE CMP: Rs 330 | Target Price: Rs 357 | Upside: 8.3% | Rating: ACCUMULATE The company reported better show on operating margins front (much better than our estimate). Revenue declined by ~13% YoY & ~9% QoQ majorly led by lower volume. Gross margin expanded by 629bps YoY & 258bps QoQ to 34.1% in Q4CY23. The expansion in gross margins is majorly because of decline in raw material prices & cost pass on to its end user industries. Despite revenue decline, EBITDA grew by ~18% YoY & ~26% QoQ because of strong gross profit & other operational cost benefits. EBITDA margins expanded by 250bps YoY & 265bps QoQ to 9.6% in Q4CY23. The company received exceptional gains from land monetization of Thane & Ambernath to the tune of Rs3.7bn which will be used for debt reduction & for new capital expenditures in coming years. Adjusting for exceptional items, the company PAT grew by 107% YoY & ~8% QoQ in Q4CY23. The company is focussing on value added segments & is banking on its new set of range “blueloop” to increase its visibility & offer niche products to its customers. This strategy will help the company to regain back its lost glory & achieve double digit margins in the coming years. Accordingly, factoring the positives, we upgrade to ACCUMULATE rating on the stock with a target price of Rs 357 per share. Q4CY23 revenue declined by ~13% YoY & ~9% QoQ; Gross/ EBITDA margins expanded YoY basis • The company’s Q4CY23 revenue declined by ~13% YoY & ~9% QoQ largely led by decline in volumes. Gross margins expanded by 629bps YoY & 258bps QoQ to 24.1% in Q4CY23, majorly led by declining raw material prices of PE films, biaxially oriented polyethylene alongwith better product mix. • The employee cost grew by ~1% YoY & declined by ~8% QoQ to Rs630mn and stood at 10.4% of sales in Q4CY23 as compared to 9.0% in Q4CY22 & 10.4% in Q3CY23, while other expenses grew by ~4.5% YoY but declined by ~10% QoQ to Rs852mn and stood at 14.1% of sales in Q4CY23 as compared to 11.8% in Q4CY22 & 14.3% in Q3CY23. • The interest cost declined by ~27% YoY & 17% QoQ to Rs62mn; while the depreciation expenses dipped by ~47% YoY to Rs112mn. Change in useful life and method of charging depreciation on certain Property, Plant and Equipment led to such steep decline in depreciation. Cost savings measures, non core asset monetization & right strategy started yielding results • The company has embarked on ‘Project Parivartan’ (Transformation Project) which focuses on cost transformation, value added products, stronger price realisation to enhance better quality of growth to turnaround its performance. This strategy has yielded results for the company & we believe Huhtamaki is on the verge of a turnaround. • As the company is focussing on its value-added segment named “Blueloop” which has higher margins & better use case, it is contributing ~25% of sales in CY23. • The company has received the gross consideration of Rs300mn for sale of 7-acre Ambernath land & Rs4bn for sale of Majhiwada land in Thane. This has helped the company to become net debt free. Valuation • We value the stock on CY25E & we assign price target of Rs 357, valuing the stock 16.5x CY25E EPS of Rs 21.7. At our target price, the stock offers upside of 8.3%, thereby, we upgrade to ACCUMULATE rating from earlier REDUCE rating on the stock.

Eicher Motors Ltd| Q3FY24 Result Update | Outperformance continued, happy dealers, attractive valuation, Accumulate! CMP: Rs 3,857 | Target Price: Rs 4,301 | Upside: 11.5% | Rating: Accumulate Q3FY24 Revenue/EBITDA/PAT is higher than estimates by ~3%/3%/7% respectively. Reported highest quarterly Revenue/EBITDA/EBITDA per unit. Margins to see gradual improvement due to new products, increasing exports contribution, no major pain visible in commodities, along with VAVE & scale benefits. New launches to support volume growth, on-ground check reveals ‘happy dealers’. In our view, RE will be able to deal with the competition due to the combination of 1) healthy new product pipeline, 2) recent launches Himalayan, Bullet, Super Meteor received an admirable response, 3) reach & smart expansion of the network, 4) eight strong existing brands & counting, 5) service network, and 6) bikers community will be able to withhold competitive pressures for the initial few years. We strongly believe that the market itself is expanding, but new global competitors have the power to slow down Royal Enfield’s growth (incorporated). Assigned 23x multiple to RE business & 10x to VECV FY26e EBITDA. Broadly maintained estimates. Recommend Accumulate with a revised fair value of Rs 4,301 apiece. Q3FY24 result analysis – Higher than expectations • Revenue/EBITDA/PAT numbers are higher than our estimates by 3%/3%/7% respectively. It reported highest ever Revenue/EBITDA/EBITDA per unit. • Realization improvement is driven majorly by new launches/refreshers, offset by exports degrowth (Exports as % of total volumes dropped by 209bps QoQ to 6.4%). • PAT is higher driven by better operational performance. YoY numbers on all fronts looks healthy despite lower volume growth. • Rs 200mn was One-off expenses owing to new launches, however this should continue as RE has a good launch pipeline. VECV PAT of ~Rs 1.1bn matched our estimates. • The company has been surprising positively back-to-back since last five quarters with better than expected operational performance. RE has strong positioning, dealers are happy! • Royal Enfield dealers are not witnessing any competition impact, infact inquiries/walkins are better due to the success of recently launched models viz. Super Meteor, Bullet, Himalayan, etc. • The new Bullet now is one of the best selling models. Himalayan demand is extremely strong that after Nov launch, the company increased prices in Jan. • Launched refreshers with new colour variants are attracting a young crowd specially for Hunter model. Inventory is under control (15-30 days). • Himalayan, Super Meteor, 650cc twins have a waiting period of 1.5-3 months. Other models are available max within one week due to good supply improvement over the period, while there is no dearth of the demand. Competitors will take time to eat RE’s share due to strong existing/new products & reach • Harley/Triumph are globally aspirational brands, however RE’s existing eight brands, strong new upcoming distinguished products and its premium stores reach in the semi-urban zones (in total 2,007 touch points), along with strong fan base will keep the competitors at a bay. • There are structural changes happening in the upper premium category in 2Ws, but it will take time for the competitors to create number of brands and increase reach to eat away RE’s share, in our view. Estimated ~7% volume CAGR FY25 onwards, realization growth to remain under check • The era of high double-digit growth looks to be over for RE. Projected Domestic/Exports/Total volumes to grow at CAGR 9.5%/-1.5%/8.3% FY23-FY26e. Exports CAGR looks subdued due to ~28% YoY drop anticipated in FY24 (macro challenges). • The total volume growth should remain in mid-single digit from FY25e for Royal Enfield as this time the competition is serious (incorporated in slow volume growth FY25 onwards). • Royal Enfield was earlier enjoying strong pricing power, however that will come u

Ahluwalia Contracts (India) Ltd| Q3FY24 Result Update | Execution rising, Outlook bright, Accumulate! CMP: Rs 999 | Target Price: Rs 1054 | Upside: 6% | Rating: Accumulate Ahluwalia Contracts (India) Ltd has reported strong financial results for Q3 FY24. The company achieved remarkable revenue growth, primarily attributed to the accelerated progress made on earlier contracts and the growing contribution from newer projects. This growth was further accompanied by an expansion in operating margin, ultimately resulting in a healthy performance at the bottom-line. Furthermore, the net cash position improved, thanks to increased cash inflows and controlled capex. At present, the company is reaping the advantages of the favourable ongoing infrastructure development and has witnessed the highest-ever order inflows during YTD FY24, leading to a robust order backlog. Considering L1 position, the backlog is further reinforced and provides >4x assurance. Hence, momentum in revenue growth is likely to persist with expected pick-up in execution. Additionally, favourable project mix, and better cost controls to result in enhanced margins from current level. Cash surplus position is set to strengthen as profitability improves, with no significant increase in exposure to asset-heavy ventures. Overall, outlook remains bright. However, the valuations have now become expensive due to a significant run-up in the stock price. Consequently, the potential for further gains is restricted. We recommend investors with “Accumulate” rating with revised target price of Rs1,054/share. Delivered an impressive performance across all aspects.  Revenue from operations rose 38.1% y/y to Rs10.3bn driven by the accelerated execution pace on the strong order backlog. On a sequential basis, the revenue showed a notable improvement of 13.9%.  EBITDA margin improved 128bps y/y and 94bps q/q (to 10.9%). The expansion in gross margin by 118 bps y/y and 25 bps q/q played a crucial role in driving the growth of the EBITDA margin. Additionally, the reduced incidence of other expenses contributed to the margin expansion.  Higher revenue and improved operating profitability hold the key to a healthy 57.0% y/y net income (at Rs707mn). Earnings growth could have even better were it not for higher depreciation and finance costs (to take care of greater scale), and tax outgo. Sequentially, reported PAT improved 27.8%. Outlook and Valuation: We have revised our revenue forecast higher to ~25.3% CAGR over FY23-26E based on the expectations of improved execution on the strong order book position. Margins are showing signs of improvement and expected to be at ~11.5% for FY26E (compared to 10.7% during FY23). As a result, we anticipate 28.3% PAT CAGR. At CMP, the stock (ex. Kota investment) is trading at rich valuation of 20.5x FY25E and 16.1x FY26E P/E. We have made adjustments to the construction multiple, increasing it to 17x FY26P/E from the previous 16x FY26E, due to the faster-than-anticipated execution pace and growing assurance in profitability, while the Kota asset is considered at its BV of Rs15/share. Consequently, we arrive at the TP of Rs1,054/share (based on SOTP). Downgrades to “Accumulate” due to sharp run-up in stock price.

Divi’s Laboratories Ltd | Q3FY24 Result Update | Synthesis: Fuelling Future Growth CMP: Rs 3,651 | Target Price: Rs 4,372 | Upside: 20% | Rating: BUY Divi’s lab result were below our estimates. Revenue witnessed growth of 8.6% YoY but has seen decline of 2.8% QoQ to Rs. 18,550 mn. The YoY increase primarily stemmed from a noteworthy 25% surge in Custom Synthesis business, counterbalanced by a -3% decline in the generic business and a 2% upturn in Nutraceuticals. Due to favourable product mix and softening of raw material prices the gross margin improved by ~397 bps YoY and ~313bps QoQ to 60.7%. The Custom Synthesis business is experiencing growth, especially with two major projects from prominent pharmaceutical companies transitioning into full-scale production. The contribution from synthesis is expected to notably increase from 45% in FY24E to 50% in FY26E. EBITDA increased 19.6% YoY and 2.1% QoQ to Rs.4,890 Mn due to higher gross profit. Due to slower than expected increase API segment and subdued growth in Nutraceuticals business, we cut our growth estimates of Revenue/EBITDA/PAT by 11%/30%/32% for FY25E. Due to red sea situation, logistics cost is expected to rise in coming quarters, along with commissioning cost of Kakinada plant. Custom Synthesis – For Q3FY24, Divi’s 87% of the revenue is from export business, where the export to regulated markets contributed 71% of the total export revenue. The custom synthesis segment, which is a high margin business, accounted for 46% of total revenue, witnessed growth of 25% YoY and 12% QoQ to Rs.8,533 mn. This segment is expected to witness CAGR growth of 36% from FY23-FY26E on the back of launch of two fast track projects. The company is actively engaged in producing peptide building blocks crucial for the development of new anti-diabetic and anti-obesity drugs. The anticipated peak sales for each drug are approx. USD 25 Bn. Divi's strategic focus lies in building a specialized portfolio, leveraging its capex strength. The company is continuously advancing its proficiency in emerging technologies, including peptides, high-potent conjugate drugs, and contrast media products, Divis is also proactively enhancing its commercial capabilities to capitalize on upcoming business opportunities. Generic – The generic segment accounted for 46% of total revenue. Revenues degrew by 3% and 9.8% QoQ to Rs 8,487 mn. The API business has witnessed pricing pressure in old molecules, however has witnessed strong volume growth. However, the pricing situation is expected to get normalize going ahead. Strong growth is expected from peptide and sartans opportunities. We expect revenue CAGR of 19% from FY24E-FY26E from this segment. Nutraceuticals – The growth in this segment remained subdued with revenue at Rs. 1,530 Mn. Margin – Favourable product mix led and low RM costs led to increase in gross margin by 397 bps YoY and 313 bps QoQ to 60.7%. The margins are expected to improve going forward as the synthesis business picks up. The company is also benefitting from softening of raw material prices. Currently, its facilities are operating at 70-80% utilization. Post commercialization of Kakinada plant, several capacities will be free which will help in Debottlenecking. Valuation: Divi excels in tailoring synthesis processes for specific segments, showcasing its expertise in custom synthesis. As a result, Divi is strategically poised to capitalize on emerging opportunities presented by recently off-patent molecules. Company is seeing softening of RM costs and higher revenues from synthesis business will further improve the margins. We value the stock based on SOTP valuation strategy and arrive at a target price of Rs. 4,372. Buy.

Hero MotoCorp Ltd | Q3FY24 Result Update | With improved volumes & growth outlook, the new CEO is turning tables! CMP: Rs 4,909 | Target Price: Rs 5,400 | Upside: 10.0% | Rating: Accumulate Revenue/EBITDA/PAT broadly met our estimates, reported YoY growth of ~21%/47%/51% respectively. With the new CEO on-board, we have started witnessing Hero’s ‘Changing Gears’ strategy with growth remains the core focus and reaching faster to the market to fill product gaps, premiumizing core portfolio, launching eye-catching premium products, revamping distribution, expansion in EVs, strategic collaborations, more products action are on cards ahead, among other steps. These new models are not less than competitors’ products, and is as per customers’ taste. All these strategic direction to not only lift volumes, but also realization & margins starting FY25. The full year effect of these new launches are yet to see in the next fiscal, along with an expected rebound in exports, and rural already showing initial strong traction. We anticipate Revenue/EBITDA/Adj. PAT to grow at CAGR ~16%/25%/29% respectively FY23-FY26e. Two wheelers finally gaining ground, recent premium launches have been well acclaimed by customers/dealers, and a new CEO has a clear & sharper focus on growth with portfolio expansion. This, along with compelling valuations are some core reasons suggesting to Accumulate the stock. We have rollover from Sept 2025 to Mar 2026, maintain 16x multiple, and valued Fincorp & Ather separately to arrive at a revised fair value of Rs 5,400 per share. Tweaked estimates marginally looking at the strong commentary & launch pipeline ahead. Maintain Accumulate rating. Q3FY24 result analysis – largely met estimates • Revenue/EBITDA/PAT was more or less in-line with our estimates. • Topline growth of ~21% YoY to ~Rs 97.2bn in Q3FY24 was largely led by ~18% YoY volume growth to ~1.46mn units, and realization growth of ~3% YoY to Rs 66,604 per unit. • The realization growth was flattish QoQ despite higher discounts during festivals. • Gross margin improved by 208bps YoY to 32.7% was driven by mix, price increases, & softer commodity prices. • EBITDA Margin inched-up by 250bps YoY to 14.0% supported by gross margin improvement, scale benefits & LEAP program benefits. • PAT was higher by 51% YoY to ~Rs 10.7bn driven by superior operational performance, and higher Other income (+~32% YoY to ~Rs 2.42bn). New CEO filling white spaces faster, sharper focused on growth • Post Mr. Niranjan Gupta taking over the position of the CEO, Hero MotoCorp has been filling white spaces viz. Premium, Exports, EVs & Scooters on fire fighting mode. • Not only this, distribution revamp, targeted sales push, launching products as per customers taste has started showing desired results. • Hero MotoCorp is now sharper focused on growth, reaching faster to the market to fill product gaps. What’s more ahead…? • Premium, Electric vehicles and Digital remain three core areas of focus. • To increase X440 & Karizma’s combined capacity soon to 10K units/month from existing 6K units/month. Bookings for X440 & Karizma are 25K & 13.6K units respectively. • On eScooters, Hero will launch four new products in FY25 serving premium, mainstream and mass market customers. The mid-term plan is to enter global markets, and to improve performance & reduce cost. • The plan is to launch a few eMotorcycles (some with Zero Motorcycle company) from FY26 onwards serving segments viz. Mid, Mid-premium, Premium and Performance motorcycles. Volumes, Realization and Margins started trending higher • The new CEO’s focus is around ‘growth, growth & growth’ with new multiple product launches filling gaps, along with revamping distribution, growing the core, gaining share in the 125cc, more launches ahead in the scooters and EVs should support volumes growth in the coming few years. • New models X440, Karizma, Xtreme 125, Maveric is already taking required attentions. Xpul

PSP Projects Ltd | Q3FY24 Result Update | A mixed bag quarter; Future prospects promising, BUY! CMP: Rs 738 | Target Price: Rs 854 | Upside: 16% | Rating: Buy PSP Projects Ltd (PSP) delivered a mixed set of numbers during Q3FY24. The company witnessed commendable revenue growth attributed to the efficient execution of its earlier orders and the increasing contribution from newer projects. Regrettably, the margin performance fell short, hitting its lowest point in the recent quarters. Leverage rose, but it seems more a function of seasonality in the business; but management expects it to gradually decrease with completion of certain high-value projects and probable receipt of SDB claims. Additionally, the net working capital days showed improvement as a result of reducing debtors and inventory days. The most significant highlight, however, is the substantial increase in order accumulation YTD, which aligns closely with the management's guidance for the year (considering L1 position). Management anticipates further additions with robust order pipeline and continued momentum in project awards. Overall, there is ample assurance, with ongoing healthy additions, strong execution, and promising prospects, indicating a positive outlook for upcoming years. In summary, the company’s future looks bright. Strong revenue growth; However, the margin performance underwhelming.  Revenue rose 40.1% y/y to ~Rs7bn attributed to the accelerated execution pace, fueled by a strong order backlog. The UP-healthcare order played a crucial role in contributing ~Rs2.5bn to the revenues. Furthermore, topline improved 14.7% q/q, on a monsoon impacted base.  The gross margin contracted 149bps y/y, 155bps q/q to 16.3%, primarily due to upped construction cost. The management explained that labor expenses were relatively higher at the UP-healthcare site due to its nearing completion, resulting to a net impact of ~Rs40-50mn.  The lower gross margin holds the key to 214bps y/y and 189bps q/q contracted EBITDA margin (at 10.3%). Besides the movement in gross margin, higher other expense (largely due to ECL provision on trade receivable) too had a role to play in movement in operating margin.  Largely impacted by benign performance at EBITDA level, reported PAT was down 7.9% y/y, 17.5% q/q to ~Rs325mn. Also, higher depreciation (on capex) and finance costs (on greater scale) impacted the bottom-line performance. Outlook and Valuation: The company's fundamental remains intact, supported by a reassuring order backlog, a robust order pipeline, a clear revenue visibility, projected margin enhancements, favourable return ratios, and a well-managed working capital cycle. We anticipate ~17.7% revenue CAGR over FY23-FY26E. However, we have lowered our margin forecast (to ~12% by FY26E) while increased capex estimates to accommodate the growing business demands. Effectively, PAT is likely to improve at 15.5% CAGR. At CMP, the stock is trading at 13x FY26E P/E. We continue to value the stock at 15x FY26E EPS of Rs56.9 (roll forward from Sep'25) to arrive at a TP of Rs854/share and maintain our “Buy” rating.

Apollo Hospitals Enterprise Ltd | Q3FY24 Result Update | Hospitals business to drive growth CMP: Rs 6,432 | Target Price: Rs 7,520 | Upside: 17% | Rating: BUY Q3FY24 revenue was in-line with our estimates, however lower gross profit led to deviation in EBITDA by 6.2%. Hospitals revenue grew 13.2% YoY (largely driven by volume) and hospitals EBITDA was largely flat on YoY basis. The overall occupancy for hospitals was at 66% vs 65% Q3FY23, aided by a robust increase in patient flows across hospitals. 10% growth in ARPOB is driven by significant contributions from Cardiac, Onco, Neuro, Nephro, Gastro, and Ortho services along with payor mix improvement. The Pharmacy distribution segment registered a growth of 17% YoY with revenues of Rs 20.4 bn during the quarter due to increased patient’s base and 21% YoY growth in GMV. The pharmacy distribution segment has turned EBITDA positive in the quarter and have recorded EBITDA of Rs. 19 Mn in the quarter on account of optimization of cost and growth in operational revenue coming from Pharmacy distribution. Apollo plans to add 2860 beds by FY27 with capex of Rs 32 Bn, contributing to revenue growth and a potential 200 bps yoy margin expansion is expected going forward. With anticipated declines in the losses of the 24*7 diagnostics business, EBITDA margins are expected to improve in the future. Due to significant bed expansion and robust growth on a high base with margin improvement on cards, we upgrade the hospital segment EV/EBITDA multiple to 26x (22x earlier). 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) Cost optimization, reduction in losses of 24*7. On an overall basis, we are positive about the prospects of Apollo. We revise our rating upward to Buy. Decent topline growth lower losses from digital business led to improved margins • The company registered revenue growth of 14.0% on YoY basis and was flat on sequential basis to Rs. 48.4 Bn. This was mainly due to higher growth Pharmacy distribution which has witnessed growth of 16% YoY, whereas hospitals revenue grew 12.3% YoY to Rs. 24.6 Bn. • EBITDA margin for Q3FY24 increased by 80 bps YoY but decreased by 29 bps QoQ to 12.7%. The YoY improvement Pharmacy business turned EBITDA positive in Q3FY24 vs loss of Rs. 629 Mn in Q3FY23. • Occupancy across the group was 66% in Q3FY24. ARPOB was Rs 56,368 in Q3FY24 as compared to Rs 51,465 in Q3FY23 registering growth of 10%. ALOS was 3.3 days. • Healthcare services posted an EBITDA margin of 23.8%, Pharmacy has margin of 0.1% (after adjusting for 24x7 operating costs) and AHLL—7.7%. 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 7,520 (implied EV/EBITDA multiple of 25.6 on its FY26E EBITDA), offering 17% upside from current levels. Buy.

Global Health Ltd (Medanta) | Q3FY24 Result Update | Heading towards robust growth and an ascendant trajectory CMP: Rs 1,268 | Target Price: Rs 1,388 | Upside: 10% | Rating: Accumulate Medanta experienced strong and sustained growth across all its clusters (GHL, Patna and Lucknow). ARPOB grew by 4% y-o-y to INR 60,571 in Q3 FY24 primarily driven by increase in realizations at Gurugram unit. Despite weak season in the quarter, the company’s occupancy increased to 64% in Q3FY24 as compared to 59% in Q3FY23. Medanta plans to add 50 beds in Patna and 120-150 beds in Lucknow in FY24, it further plans to add 100 beds in Gurgaon unit. The Noida facility will be operationalized in Q4FY25 leveraging its healthy balance sheet & operating cashflows. Beyond FY26, it plans to add 400 beds in South Delhi where both DLF and Medanta will contribute equally. Going ahead EBITDA margins would expand on account of 1) improved case mix in Patna facility (two new ICU units will be added), 2) Expansion of beds capacity as 1000 beds will be added over a span of 2 years 3) increased ARPOB due to addition of radiation units which will result in EBITDA CAGR growth of 15% from FY24E-FY26E. The substantial revenue surge at Patna and Lucknow hospitals is achieved without any price adjustments, indicating the potential for further accelerated growth. We upgrade our EV/EBITDA multiple by 13% to 26x (closer to Max healthcare) due to strong margin expansion and significant volume growth at both mature and new hospitals. We value the stock at 26x EV/EBITDA on FY26E EBITDA and arrive at a target price of Rs 1,388 per share, translating into an upside of 10% and hence, we retain Accumulate rating on the stock. Strong revenue growth aided by strong volume growth • Revenue increased 19.9% YoY but was flat on QoQ basis to Rs 8,326 mn. This was mainly due to increase in inpatients admission which saw increase of 13% YoY to 39,743 in Q3FY24. Out-patient volume increased by 20% to 662,434. • ARPOB (Rs. 60,571- growth of 4% YoY) and Occupancy levels (64% in Q3FY24 vs 59% in Q3FY23) increased by 500 bps due to volume growth in Lucknow and Patna hospitals. • EBITDA for the quarter saw robust growth of 33% YoY and was flat on sequential basis to Rs. 2,121 Mn, whereas EBITDA margin was at 25.5% which witnessed expansion of 243 bps YoY and 25 bps on sequential basis. • Mature hospitals revenue has seen 17% YoY growth to Rs. 5,875 Mn with 7.4% improvement in ARPOB from Rs. 60,657 in Q3FY23 to Rs. 65,150 in Q3FY24, whereas EBITDA margins has improved from 21.5% in Q3FY23 to 25.3% in Q3FY24. The developing hospitals reported revenue growth of 33% to Rs. 2,742 Mn with flat ARPOB growth to Rs. 53,716 in Q3FY24. Outlook and Valuation: With strong execution in new hospitals and bed additions at new location, we raise the multiple of Medanta at 26x (23x earlier) due to 1) 60% of capex in existing territory thereby leading to lower capex/bed 2) continued ramp up in Lucknow and Patna facility 3) continuous improvement in return ratios despite heavy capex 4) operating leverage playing out well. Thereby, we arrive at target price of Rs. 1388 per share which offers upside of 10% from current valuations. Accumulate.