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

Huhtamaki India Ltd | Q2CY24 Result Update | Premium product to drive growth, Near term issues transitory in nature, ACCUMULATE CMP: Rs 376 | Target Price: Rs 419 | Return: 11.4% | Rating: ACCUMULATE The company reported a good show on topline but miss on EBITDA & PAT. Revenue grew by ~3% YoY & ~5% QoQ. Higher volumes led to revenue growth on both YoY & sequential basis. Gross margin contracted by 99bps YoY & 295bps QoQ to 30.7% in Q2CY24 because of poor product mix & supply chain challenges because of Red sea crisis & geopolitical tensions. Despite revenue growth on YoY & sequential basis, EBITDA dipped by ~20% YoY & 22% QoQ because of lower gross profit & high operational expenses. The company received pending land monetization money of Thane land which has been classified as exceptional gains during the quarter. Management stated the land monetization money is being used for debt reduction & for new capital expenditures in coming years. The company “blueloop” range of products will focus on increasing value added proportion in its product portfolio. The company is banking on this new set of range of 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 next 5-6 years. The stock price has seen good jump in last 3 months & accordingly upside has been capped. We downgrade to ACCUMULATE rating on the stock with a target price of Rs 419 per share. Q2CY24 revenue grew by ~3% YoY & ~5% QoQ; Gross margins declined • The company’s Q2CY24 revenue grew by ~3% YoY & ~5% QoQ. Growth was largely led by volumes, realizations remained flattish. The company has significant room to increase volume as current utilization is mere 60-65% & its new factory of Blueloop will incrementally provide support to volumes alongwith better margins. • Gross margin contracted by 99bps YoY & 295bps QoQ to 30.7% in Q2CY24 because of poor product mix & supply chain challenges because of Red sea crisis & geopolitical tensions. • The employee cost grew by ~1% YoY & ~6% QoQ to Rs653mn and stood at 10.2% of sales in Q2CY24 as compared to 10.4% in Q2CY23 & 10.1% in Q1CY24, while other expenses grew by ~7% YoY & dipped by ~3.4% QoQ to Rs992mn. • The interest cost declined by ~50% YoY & grew by 5% QoQ to Rs50mn because of debt repayment from the land monetisation money; while the depreciation expenses grew by ~3% YoY & 26% QoQ to Rs120mn. Cost savings measures, non core asset monetization & right strategy started yielding results • The company had 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 also provides benefits like reducing input costs, wastage reduction, overhead optimization & improving productivity. Valuation • We value the stock on Sept 26E earnings & we assign price target of Rs 419, valuing the stock on 18x at TTM Sept’26E EPS of Rs 23.3. We have visibility of volume growth, strong balance sheet, cost optimization benefits & leveraging its blueloop brand which will increase its premium portfolio. The stock price has seen good jump in last 3 months which has capped the upside. At our target price, the stock offers upside of ~11.4%, thereby, downgrading to ACCUMULATE rating from earlier BUY rating on the stock.

Supreme Petrochem Ltd. | Q1FY25 Result Update | In-line Q1, Volume guidance maintained, expensive valuation, Maintain SELL CMP: Rs 871 | Target Price: Rs 583 | Return: -33% | Rating: SELL The company reported numbers nearly in line with our estimates. Revenue grew by 28.4% YoY & ~1% QoQ majorly because of realization growth. Realization grew by ~6% YoY & ~4% QoQ. PS & EPS prices inched up because of elevated freight cost owing to Red sea crisis. Volumes grew by 21% YoY but de-grew by 3% QoQ to 93,323 tons. Export volumes were largely affected & dipped by ~30% YoY. Overall gross spreads de-grew by 2.5% QoQ to Rs 27.1 per kg because of lower volume, lower proportion of value-added mix & weak export market owing to recent geopolitical turmoil & Red Sea issues. Cost efficiencies benefit led to EBITDA per kg to grow by ~47% YoY but dipped by ~5% QoQ to Rs 17.3 per kg in Q1FY25. Management stated that expansion in new businesses like ABS & EPS is on track & expected to commence by Q4FY25. Overall, management has retained its volume guidance of 8-10% growth in FY25E despite robust Q1 volumes which means there could be softening of volumes in Q2 & Q3. Once ABS & EPS capacity commences its operations in Q4, stronger volume growth is anticipated in FY26E & FY27E. Also, the company acquired land in Haryana (North India) wherein the company is looking to invest Rs8bn in downstream projects of PS & EPS post commissioning of ABS which indicates that the company will remain in capex mode for the next 4-5 years. This will increase its value added mix & provide stability to the margins in the longer run. At peak utilization levels this capex will incrementally add Rs20bn to the topline with higher margins than traditional businesses. The negative remains largely on heightened geopolitical tensions, higher competitive intensity will could impact its profitability in the short term. The stock is trading at rich valuations, hence, we maintain our SELL rating on the stock. Realization led growth in Q1, Volume guidance maintained for FY25E • Generally, H1 remains seasonally weak because of monsoon effect & softer demand. Despite weak season, volumes grew by 21% YoY & dipped by mere 3% QoQ because of higher volumes from expanded capacity. Added to this benefit, higher realizations of PS & EPS contributed to revenue growth because of higher ocean freight globally. Domestic volumes remained robust but exports volumes contracted 30% YoY led by Red sea crisis. Management has maintained its volume growth guidance of 8-10% in FY25E. Majority of expansion will come into Q4FY25E & in subsequent fiscal year. Thereafter, we expect volume jump of 18%/26% by FY25E/FY26E. • However, we understand that Supreme competitor in domestic market are also expanding capacity in PS & ABS business very aggressively which will increase competitive intensity. However, we feel that robust demand growth & import substitution are the areas which company is targeting coupled with technological tieups & strong R&D will keep it ahead of the curve. Capex intensity to remain high, focus remains on downstream expansion • The company acquired land in Haryana (North India) as 40% of volumes of PS & EPS are from this region & secondly in future the Styrene monomer plant of of IOCL is also coming up near Panipet. Thus, expansion in North India region will give economic benefits & advantage in longer run. • Management has stated that company is looking to set up downstream capacity for PS & EPS. Overall company is looking at an investment of Rs8bn & at peak levels this will generate Rs20bn of topline. Valuation • Currently, the stock is trading at rich valuation on March 26E P/E of ~27x. Lingering issues like uncertain geopolitical tensions, higher competitive intensity & expensive valuations from a 2 year perspective does not make a very good investment case at the current juncture. We maintain our target multiple of 18x & thereby, arrive at target price of Rs 583 p

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

Laurus Labs Ltd | Q1FY25 Result Update | Limited Upside: All Positives Already Priced In CMP: Rs 433 | Target Price: Rs 430| Return: -1% | Rating: Reduce Laurus Labs experienced a challenging Q1FY25, reporting its lowest quarterly PAT in six years. The company saw a significant decline in all business segments except the API business, with FDF, Synthesis, and Bio divisions experiencing double-digit declines. Revenue was below estimate (19% deviation) due to lower-than-expected revenues from FDF and synthesis business which has seen degrowth of 4% and 14% YoY respectively. However, softer raw material costs improved gross margins by 450 bps YoY and 520 bps QoQ to 55.1%. Despite an unfavourable product mix, the company improved its EBITDA margin by 22 bps YoY to 14.3% by reducing COGS. We expect recovery in the synthesis business during the H2FY25. Commercial supplies from the Animal Health project are scheduled to commence in Q4FY25, followed by projects in Crop Science and Gene Therapy in FY26. We expect a good Revenue/EBITDA/ PAT CAGR of 18%/52%/113% from FY24-FY26E due to low base of FY24 and improvement in financials of the company. Based on SOTP valuation, we arrive at a target price of Rs. 430 per share (implied assigned PE of ~28x on FY26E EPS). We downgrade our rating to Reduce from Accumulate. Synthesis business to see significant improvement in H2FY25 Synthesis business has seen degrowth of 9.3% QoQ and 14.4% YoY. The 14% decline was due to prioritized resource allocation for complex projects in their early phases. H2 FY25 is expected to contribute significant revenue growth driven by the Animal health project which will start contributing to revenue from Q4FY25. We expect revenue of 1.8 Mn in FY25 (0.6x asset turnover) from this project. The progress on the construction of the agro chemical contract manufacturing plant remains on schedule, with an expected completion by Q4FY25. Going ahead, we expect revenue from synthesis business to be at Rs 11.5 bn in FY25E and Rs. 16 bn in FY26E from Rs 9.2 Bn in FY24. Overall, despite the recent decline in revenue, the business is positioned for growth, driven by strong client relationships, a robust project pipeline, and strategic investments in infrastructure and R&D. Formulation business was a drag to the business: The FDF business saw a 4% QoQ and 36% YoY decline due to reduced volume in the ARV segment. However, the developed markets showed strong growth despite pricing pressures in the US. A key development is a new multi-year customer agreement with significant Capex funded by the customer. Expansion of granulation and packaging lines is underway, with new lines expected to be operational in the next 12-18 months. API business resumed back to growth In Q1FY25, the company’s API business has shown growth of 11% YoY but saw decline of 11% QoQ due to higher sales in Other API and Onco business. Valuation: We believe the FDF and Synthesis business will only pick up after H2FY25 and major growth will be seen in FY26. At current levels, all positives are priced in. Based on SOTP valuation, we arrive at a target price of 430, which offers no upside. Reduce.

Nitin Spinners Ltd | Q1FY25 Result Update | Margin improvement continues, RIPS approval to boost profits CMP: Rs 415 | Target Price: Rs 532 | Upside: 28% | Rating: Buy Nitin Spinners Ltd (NSPL) continued its decent performance in a still subnormal demand environment during Q1FY25. Recent capacity addition led to ~30%/~56%/~46% growth in sales/EBITDA/PAT on YoY basis. With cotton prices stabilizing at lower levels, margin improvement continues, but profitability is still below normal levels. With continued 90%+ utilization, even on expended capacity basis, in yarn and woven fabric segments, sales performance was good despite struggling knitted fabric business. All new capacity is now on stream with near optimum utilizations except for knitted fabric. With cotton prices stabilising at current rates and expectation of further demand recovery and RIPS incentives approval, we believe QoQ performance improvement should continue here on. We Maintain our BUY with target price of Rs532 per share, 12xFY26e EPS. Good performance in a challenging environment  During Q1FY25, the company posted a growth of 51.5% YoY at Yarn sales volume front as utilizations remained at elevated levels even on expanded capacity, along with low base effect. Knitted fabric sales volume witnessed a growth of ~72% YoY on low base however de-grew by ~7% on sequential basis.  Woven fabric business remained strong with its sales volume de-grew by ~5% YoY. This is due to change in product mix towards thicker products and maintenance shutdown.  Despite correction in cotton prices, realization improved across product profile on QoQ. Textile demand should get better in coming quarters  The Indian textile industry had been facing tough times due to subnormal demand in the international market. But now things are recovering well in various user segments. Demand in the domestic market is also yet to recover to the normal levels. Expected good monsoon and festivals should help on demand side plus keep the RM price under check.  Not much capacity is getting added in spinning industry and hence product pricing comfort should be there in the future  New PLI scheme, textile parks, future FTAs are going to support Indian textile industry. Valuation and risks  Capex plan of Rs9.5bn is now fully executed now and this will propel sales growth in FY25.  FY26 growth would require further capex which management may announce during mid of FY25. And hence, Nitin Spinners’ growth path should be strong.  We assign higher multiple 12x PE multiple to FY26E earnings (earlier 10.5x) as new capacity is now commissioned and hitting good utilization levels along with RIPS approval, and arrive at a target price Rs532 per share, offering ~28% upside from current levels. BUY.  Risk - Volatile situation in European market and any softness in yarn prices.

Indoco Remedies Ltd | Q1FY25 Result Update | Stronger Second Half: Boosted by Export Growth CMP: Rs 322 | Target Price: Rs 349 | Upside: 8% | Rating: Accumulate Q1FY25 results missed the estimates on all fronts primarily due to a weaker respiratory season, which resulted in lower-than-anticipated domestic sales. Additionally, exports were negatively impacted by reduced supply to the US and EU regions, caused by plant remediation efforts and the transition to automated technologies. The company also had higher COGS and employee costs leading to lower EBITDA in the quarter. The revenue witnessed growth of 1.5% YoY but has seen decline of 4% on QoQ basis to Rs 4,315 Mn. Sales from domestic business witnessed growth of 6.6% YoY and 19% QoQ to Rs.2,270 Mn. Higher employee expenses, primarily due to low MR productivity, led to a decrease in EBITDA margins, contracting by approximately 327 bps YoY, though remaining stable QoQ at 11.1%. On the export front, plant remediation efforts are expected to continue until October 2024, after which strong growth of 25-30% is anticipated in the US markets. Due to two quarters of muted growth in FY25, we have reduced our revenue forecast for the export business by 6% for FY25 and expect the business to achieve a CAGR of 13% from FY24 to FY26E. We expect company to deliver revenue/EBITDA CAGR of 10%/22% over FY24-FY26E due to low base in FY24 which has one off expenses for plant remediation and lower revenue in domestic business. We cut our PAT estimates for FY25 by 15%. We maintain our rating to Accumulate with target price of Rs 349 based on 19x FY26E EPS. US business – Company’s US business has witnessed degrowth of 5.5% YoY in Q1FY25 with sales of Rs. 484 Mn in the quarter. The US business was impacted by supply constraints due to ongoing remediation efforts at the Goa Plant 2 and due to transition from out-licensing to establishing a front-end presence in the US resulted in short-term margin compression. We expect the company to deliver revenue growth of 12% in FY25 backed by higher revenues from drugs such as Lacosamide, allopurinol. Additionally, the full contribution from the US subsidiary, FPP, is expected to bolster growth. The company expect to receive approvals for 3-4 oral solids in US in FY25. We expect US revenue to deliver CAGR growth of 20% from FY24 to FY26E. Europe – EU business witnessed degrowth of 10.2% YoY and 6.7% on QoQ basis to Rs. 713 Mn in Q1FY25 due to optimal supplies of drugs led by plant remediation. The company expects consistent supply to the EU market to resume from Q3 onwards, with anticipated growth in the European businesses. We expect the company to deliver revenue growth 5% in FY25 in the EU business. India – The India business witnessed growth of 6.6% YoY and 18.8% QoQ with sales of Rs. 2,270 Mn. This was mainly due to lower sales from anti-infectives (Febrex plus and ATM continues to underperformed) and respiratory segment (Oxipod underperformed). However, the business will return to normalcy in Q2FY25 as due to good monsoon season. Going ahead, we expect CAGR growth of 8% for the business. EBITDA Margins – We expect EBITDA margins for FY25 and FY26 to see sharp pick up from 13.5% in FY24 to 15%-16%. This improvement will be driven by robust revenue growth, the absence of one-off expenses, and a stronger product mix from higher domestic business and US revenue. Valuation offers comfort and discounts execution risks At 16.8x FY26E EPS, Indoco trades at a discount to peers. We value Indoco at 19x FY26E EPS of 18.4 and recommend Accumulate rating on the stock, with a target price of Rs 349 with upside of 8%.

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

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

Mankind Pharma Ltd | Management Visit Update | Increasing chronic share will lead to higher revenue CMP: Rs 2,124 | Target Price: NA | Upside: NA | Rating: NA We met the AVP IR Head and Strategy of Mankind Pharma, key takeaways of the meet are as follows: In licensing deals: Mankind Pharma has secured a license for Novartis’ heart failure therapy, Entresto, in India. Additionally, it has also partnered with AstraZeneca Pharma India to exclusively distribute its anti-asthma drug Symbicort in India. AstraZeneca will retain the intellectual property rights to Symbicort and continue as the marketing authorization holder. Mankind is actively looking out for in licensing deals to expand its presence on the chronic side. DMF quality API: The company has introduced 120 DMF (Drug Master File) quality medicines to the Indian market, leveraging its first-mover advantage. With 75% of the manufacturing done in-house, the company ensures the highest quality standards for its DMF. The Drug Master File contains detailed information about an API, guaranteeing standards for manufacturing, stability, quality, packaging, purity, and impurity profiles. Mankind Pharma's DMF quality API adheres to US Pharmacopeia standards and is produced in USFDA-approved plants, ensuring the quality and efficacy of its medicines. Dydrogesterone: The drug is sold under the brand name Dydroboon and is used to treat female infertility, various menstrual problems. The total market in India is of Rs. 2000 Mn and Mankind has 20% market share in this. The largest player in this market is Abbott. The current capacity utilization for Dydrogesterone plant is 60%. M&A: The company is not looking out for any acquisition and don’t want the burn the cash. Rather it is open for some asset acquisition on the chronic side of the business. Domestic market: The company is mainly focused on increasing its India business and is focusing on increasing its market share in chronic from 36% in FY24 to 40%-50% in coming years. The gross margin in chronic business is 10-12% higher than the consolidated business. Doctors reach: Mankind has one of the highest doctor reach of 5 Lacs doctors in India and it has the highest prescription share as well. The company also has one the highest MR (Medical representative strength of 16000 MR’s with a PCPM of Rs. 6.5 Lacs per month. EBITDA Margin Expansion: The company plans to increase its EBITDA margins further from 24.7% in FY24 to 25%-26% in FY25. The company is seeing an increase in the number of Rs. 100 crore and Rs. 50 crore brands. Once a brand reaches the Rs. 50-100 crore threshold, the incremental effort required decreases, leading to improved productivity and profitability. Also, the growing share of chronic portfolio will aid the margins. Margin profile: Chronic has the highest EBITDA margins, followed by Exports, Acute, and the Consumer business. Currently, the margins for the Consumer business are in the mid-teens, with expectations for further growth. NLEM: The company has a 15% exposure to NLEM compared to 20% for the IPM. However, due to in-house manufacturing of quality DMF and providing affordable drugs, the impact of NLEM on the company is negligible, as most of the drugs are priced below the NLEM limits. Export: The export sales in FY24 of the company stood Rs. 8130 Mn growing has a 175% YoY. This was mainly driven due to increased US business due to certain one-off opportunity due to drug shortages in US. Going ahead, Export business is expected to grow by 10-15% despite a high base in FY24. Outlook: Mankind's robust presence in India is strengthened by its expanding chronic disease offerings and strategic expansions in specialty portfolios through multiple in-licensing agreements. We are confident in Mankind’s operations, supported by its diverse regional presence, improved balance between acute and chronic care segments, and the growth of its Consumer Healthcare division. With competitive p

Apollo Hospitals Enterprise Ltd | Q4FY24 Result Update | Hospitals business to drive growth CMP: Rs 5,840 | Target Price: Rs 7,230 | Upside: 24% | Rating: BUY Q4FY24 revenue was in-line with our estimates, however higher employee cost led to deviation in EBITDA by 4%. Hospitals revenue grew 17% YoY driven by volume growth, network expansion, and improved payer mix. Hospitals EBITDA grew 19% on YoY basis. The overall hospital occupancy remained steady at 65%, supported by a strong increase in patient flows across facilities. This increase in occupancy was achieved even after recalibrating some beds for specific specialty clinical needs and optimized realizations. ARPOB grew by 12% and stood at Rs.59,523. The Pharmacy distribution segment registered a growth of 17% YoY with revenues of Rs 20.2 bn during the quarter due to increased patient’s base and 35% YoY growth in GMV. The pharmacy distribution segment recorded EBITDA of Rs. 117 Mn in the quarter on account of optimization of cost and growth in operational revenue coming from Offline Pharmacy distribution. Apollo plans to add 1860 beds by FY26 with capex of Rs 21.3 Bn, contributing to hospital business revenue growth. With anticipated declines in the losses of the 24*7 diagnostics business, the overall EBITDA margins are expected to improve in the future. The company is implementing cost optimization measures, coupled with the growth in surgical volumes, these measures are expected to improve hospital business margins by 150 bps. 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 maintain our Buy rating on the stock. Decent topline growth lower losses from digital business led to improved margins • The company registered revenue growth of 14.9% on YoY basis and was flat (+1.9%) on sequential basis to Rs. 49.4 Bn. This was mainly due to higher growth hospital business which has witnessed growth of 17% YoY, whereas pharmacy distribution revenue grew 13% YoY to Rs. 20.2 Bn. • EBITDA margin for Q4FY24 increased by 161 bps YoY and by 30 bps QoQ to 13%. The YoY improvement in margins was due to reduced losses of 24*7 from 1.8 Bn in Q4FY23 to loss of Rs. 1.4 Bn in Q4FY24. • Occupancy across the group was 65% in Q4FY24. ARPOB was Rs 59,523 in Q4FY24 as compared to Rs 57,488 in Q4FY23 registering growth of 12%. ALOS was 3.3 days. • Healthcare services posted an EBITDA margin of 23.1%, Pharmacy has margin of 0.6% (after adjusting for 24x7 operating costs) and AHLL—10.1%. • Inpatient volume grew by 6.1% YoY to 142K whereas outpatient volume grew by 4.4% to 479K. 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 7,230 (implied EV/EBITDA multiple of 25.5 on its FY26E EBITDA), offering 24% upside from current levels. Buy.

NOCIL Ltd | Q4FY24 Result Update | High competitive intensity, premium valuations, bumpy road ahead, Maintain SELL CMP: Rs 259 | Target Price: Rs 213 | Downside: ~18% | Rating: SELL NOCIL reported weak operational performance during the quarter. Revenue de-grew by ~9% YoY but grew by ~5% QoQ. Volume grew by 2% YoY & 12% QoQ largely led by strong offtake in export market, although realization remained weak declining by 11% YoY & 7% QoQ. Domestic market remained muted because of heavy imports from China & it is anticipated to continue in the coming quarters as well. Management stated that NOCIL is well placed & will be able to ride the negatives currently faced by rubber chemical players & expects long-term outlook is good because of robust tyre & replacement demand. Higher competition from China is a major concern as imports of accelerator witnessed ~32% YoY growth in FY24 which impacted gross & EBITDA spreads & led to subdued volumes in domestic market. Since, the business does not have protection from ADD which is the major reason why rubber chemical players are struggling to maintain margins. Adding to the tensions, some new rubber chemical supplies globally are coming up in H2FY25E which will further heighten competitive intensity globally, it remains under our watch how demand pans out. Still, the long-term growth story remains structurally positive for NOCIL, led by tyre players expanding capacity & investing to the tune of Rs200-250bn over FY24-26E leading to increased usage of rubber chemicals. However, higher competitive intensity, weak return ratios & premium valuations make NOCIL unattractive at current juncture. Hence, we maintain our SELL rating on the stock. Q4FY24 reported weak EBITDA spreads, Chinese imports a major cause of concern • Realization declined by 11% YoY & 7% QoQ largely because of weak demand from domestic market & higher imports.The company’s gross spread per kg declined by 7% YoY & 15% QoQ to Rs ~107 per kg in Q4FY24. • Considering uncertainity owing to higher imports of rubber chemicals from China & other countries which increases competitive intensity, we remain cautious on operating spreads and volumes of the company. • Accordingly, we model in EBITDA spreads of ~Rs 39/44.5 per kg for FY25/FY26E respectively, factoring in cut of 6%/5% on FY25/26E respectively. • We have witnessed higher imports in FY24 to the tune of 32% YoY of rubber accelerators and with competitors in China dumping along with expanding their capacity coupled with subdued demand in Chinese market is leading to higher dumping in world markets including India. Sequentially volumes higher, mid high single digit volume growth for next 3 years • In Q4FY24, volume grew by ~2% YoY & 12% QoQ. Generally speaking Q4 volumes remains high because of higher stocking by tyre companies. Management stated that domestic volumes remained subdued but export volumes witnessed recovery despite weak & global recessionary trends persisting. With domestic tyre companies increasing capacity and investing close to Rs200-250bn over FY23-26E, we feel there is no worry on incremental demand growth for the next 3 years. • We expect that the company expanded capacity of 55,000 TPA is likely to reach optimum utilization levels in the next 2 years. On the back of this, we expect NOCIL to report volume CAGR growth of mere ~7.5% from FY24-26E. Valuations • We feel that near term concerns like highly competitive intensity led by surge in Chinese imports, global recessionary trends impacting volumes, weaker return ratios, lowering speciality sales & premium valuations make NOCIL unattractive as an investment bet. • We value the stock on P/E multiple maintaining ~20x P/E on March 26E projections and arrive at target price of 213 per share which indicates downside of ~18% from the current level. Hence, we maintain our SELL rating on the stock.

Ahluwalia Contracts (India) Ltd | Q4FY24 Result Update | Weaker on margins, likely to normalize ahead… CMP: Rs 1,210 | Target Price: Rs 1,150 | Upside: 4.9% | Rating: Reduce Ahluwalia Contracts (India) Ltd reported mixed set of numbers for Q4 FY24. The company achieved commendable revenue growth, largely driven by the accelerated progress made on existing contracts and the rising contribution from newer project. Additionally, it has been highlighted that the growth could have been even better if not for a) the shortage of labour, b) the construction bans by NGT in the Delhi-NCR region, and c) the impact on project execution due to the ongoing General Election. However, the lower-than-envisaged topline coupled with higher raw material and sub-contracting expenses has translated into lower operating margin, ultimately resulting in subdued performance at (adj.) net level. Having said that, the net cash position stays with healthy operating cash flow generation and controlled capex. Going forward, barring expectation of subdued performance in Q1 FY25 due to ongoing labour issues, the company is set to experience stronger growth in the future with an expected improvement in the project executions on a strong order backlog. 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 stock is trading at a premium valuation given a significant run-up in the stock price in recent past. Consequently, we see limited potential. With this, we downgrade stock to “Reduce” rating with revised target price of Rs1,150/share. Revenue improved handsomely; however, margin was a letdown. Overall, a mixed bag. • Revenue from operations rose 34.8% y/y to Rs11.6bn driven by the accelerated execution pace on the robust order backlog. On a sequential basis, the revenue improved 13.4 • Gross margin moderated to 17.2% (down 369 bps y/y, 150 bps q/q) mainly impacted by rise in raw material and sub-contracting expenses. This moderation played a crucial role in decline in operating margin to ~9.0%. Higher incidence of employee cost and other expenses has also played a part in subdued margin performance. • The company reported PAT of ~Rs2bn in Q4 FY24. However, it included an exceptional gain of ~Rs1.9bn pertaining to an arbitration award from Emaar MDF (in the Common Wealth Village project case). Adjusted to the one-off, PAT has declined 25.7% y/y and 24.1% q/q (to Rs536mn) – largely impacted by lower operating profitability and higher depreciation expense. Outlook and Valuation: The revenue projection for FY25 has been adjusted downward due to ongoing labour challenges. Conversely, we expect higher growth rate for FY26 on the anticipation of improved execution stemming from strong order backlog. Effectively, revenue to improve at 21.2% CAGR over FY24-26E. Margin to remain favourable despite anticipated pressure in Q1 FY25. As a result, we anticipate 35.5% PAT CAGR. At CMP, the stock (ex. Kota investment) is trading at rich valuation of 19.1x FY26E P/E. We have valued the construction business at 18x FY26E, while the Kota asset is considered at its BV of Rs12/share. Thus, we arrive at the Target price of Rs1,150. Reduce.

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

HealthCare Global Enterprises Ltd | Q4FY24 Result Update | Profitability set to improve further, Maintain Buy CMP: Rs 360 | Target Price: Rs 434 | Upside: 21% | Rating: BUY HealthCare Global Enterprises (HCGEL) revenue were in-line with our estimates; however, EBITDA and PAT surpassed our estimates due to operating leverage playing out well. Most of the centers have been contributing to EBITDA and experiencing growth. Previously, two youngest hospitals, Kolkata, and South Mumbai, negatively impacted the EBITDA margin. However, Kolkata began contributing positively in Q3FY24 onwards and South Mumbai has also reduced its losses. We expect South Mumbai to break even by mid-year 2025. The new centres continued their scale-up trajectory with strong revenue growth of 15% YoY while existing HCG centres registered a growth of 11% YoY. ARPOB has been steadily increasing and has seen growth of 9.1% YoY. Since the occupancy of the new centers has reached 64%, matching that of mature centers, we anticipate further improvements in ARPOB due to enhancements in case and payor mix. Hospitals in Ahmedabad, Indore, Nagpur, and Mumbai continue to witness double-digit growth, further strengthening profitability. We believe that HCG can improve its profitability by combining efforts to enhance operational efficiency, refine pricing strategies, optimize cost structures, and boost performance in new centers. Our outlook on HCGEL is favorable and we continue to maintain our “Buy” rating on the stock. Strong performance due to increased ARPOB and occupancy • HCGEL reported strong topline growth in Q4FY24, which flowed to EBITDA and PAT. Revenue on a YoY basis witnessed growth of 12% YoY and 5.3% QoQ due stable occupancy of 64.9% (despite bed addition, like to like basis occupancy increase by 370 bps to 67.6% in the quarter). • ARPOB was at Rs 42,741 for Q4FY24 as compared to Rs 39,713 for Q4FY23 and Rs. 42,788 in Q3FY24. Overall ARPOB improved by 7.6% due to increased OPD footfalls (19% YoY). The chemo sessions administered in the quarter witnessed growth of 13% YoY to 38,000 sessions. • ESOP cost in the quarter was Rs. 21 Mn and there was an exceptional gain of Rs. 39 Mn in the quarter related to impairment charge for a greenfield project at leased premises. The existing hospitals had an EBITDA margin of 24% while the new centers have EBITDA margin of 14% in the quarter. • The number of IVF cycles for Milann in Q4FY24 was 375 which has seen decline of 18% YoY and 2% QoQ. The nos. are not comparable as the company has closed one centre in Delhi. Milann recorded revenues of Rs 170 Mn in Q4FY24 which has seen degrowth of 19% YoY. Outlook and Valuation: The existing and newly established centers are expected to exhibit strong performance in the future. We expect an EBITDA CAGR of 17% from FY24-FY26E. As the emerging centers would move closer to mature centers, the EBITDA margins would improve from 17% in FY23 to 20-21% in FY26. We value the stock at 15x EV/EBITDA with respect to FY26 EBITDA to arrive at the target price of Rs 434. We maintain our “Buy” rating.