Incorporated in 2006, Star Health and Allied Insurance Company Ltd (Star Health) is one of the largest private health insurers in India with a market share of 15.8% in Fiscal 2021.

Rajesh Exports [RJEX_IN; Rs.219 billion/US$2.95 billion market cap; US$2.62 million total average daily value traded] reported a stellar growth in net profit, ahead of our expectations, on a YoY basis, despite a global economic slowdown, indicating that margins are showing sustained improvement. Net profit for the fiscal second quarter [ended September] came in at Rs.2,914 mn, up 69% on a YoY basis. The rise in the gross and operating margins was the primary reason for an increase in the net profit in the second quarter due to sustenance in the Switzerland-based gold refining business. As the company operates at a low-level of absolute gross and operating profit margins, a relatively small increase in margins has contributed to a sharp accretion in EPS in the second quarter, which is expected to sustain in the coming quarters, as business conditions continue to normalize. The stability in the price of gold in the international market continues to make the gold refining business more lucrative, thus leading to the strong increase in net profit. The company continues to focus on the strategy of sale of high margin products to accelerate revenue and profitability growth in the longer term. The growth in order book also indicates that the company will continue to show gradual recovery in profitability in FY03/2022 and beyond [more details below]. For the second quarter, revenue decreased by 60% to Rs.412 bn vs. Rs.1021 bn in Q2 FY2021. The revenue was down drastically on a year-on-year basis due to the accumulated and pending orders that were delivered in the second quarter of the previous year (high base effect). As international air freight and shipping services operations are recovering back to normal levels, Rajesh Exports’ export business from India will continue to recover. The growth is expected to be strong both on a sequential quarter on quarter and year on year basis, considering the low base of the previous quarters given that demand is expected to be strong going forward. Our conversations with the senior management and CEO Rajesh Mehta suggest that the business will post sustained growth YoY in revenue and net profit as the global situation normalizes coupled with higher contribution from the gold refining business. International markets have started to open up and the logistics are also getting back to normalcy. The company is geared up to increase its global market share and also expand in the domestic market. Rajesh Exports has delivered a double-digit growth in net profit for the second quarter on a YoY basis showing absolute resilience amidst a severe crisis situation. Since the bulk of the business of the company comes from refining of gold, we expect revenue and profitability to show significant growth due to the base effect going forward, as supply seems to be back on track running at full scale as the situation continues to stabilize globally. The demand for luxury goods, such as cars [both mass market as well as high-end], apartments and real estate, and gold/jewelry is also expected to recover in the current financial year. The jewelry business of the company, which has higher margins but relatively lower volumes in comparison to the gold refining business, has shown a significant recovery in the second quarter. Our FY03/2023 earnings forecast of Rs. 72.65 per share implies a growth of 153% over the FY03/2021 earnings. The USA end market continues to remain robust with strong consumer spending expected as employment has started to recover sharply. Maintain Estimates and Price Target Rs. 900; 22% Upside We maintain our FY03/2023 earnings estimates at Rs.72.65 per share on account of an expected rise in profitability as the global pandemic situation returns to normalcy in FY03/2022. We maintain our price target at Rs.900 on the stock and expect business conditions to come back to pre-pandemic levels at the end of FY2022 to achieve a robust growth in FY2023. Our price target represents an up

Granules India reported 3.5% YoY (+4.5% QoQ) growth in revenue to INR 8.88 bn in Q2FY22. The company faced challenges in the quarter, such as shortage of raw materials, lower utilization in capacities especially in Paracetamol, and logistic disruption.

Glenmark Pharmaceuticals reported revenue growth of 6.6% YoY (+6.2% QoQ) to INR 31,474 mn, mainly led by strong growth in Rest of the World (RoW), API and EU segments on a YoY basis. It was partially offset by decline in revenue in India and Latin America (LA) segments and flat growth in the US segment on a YoY basis.

In Q2FY22, VOL reported revenue of INR 3,741 Mn (+70.51% YoY / -3.18% QoQ) supported by strong sales from ATBS segment.

Overall performance was marginally below our expectations

• Revenue exceeded estimates due to higher volumes at 72,748 Mt (+19% YoY). Revenue stood at INR 20,722 Mn (+31.3% YoY).

Rs40bn war chest opens doors for expansion beyond core markets

High discounting and input cost pressures led to lower than estimated performance, however QoQ recovery is noticeable, strong growth visibility across MHCVs, LCVs & other businesses is sturdy led by a smart pickup in economic activities. Bada Dost in LCVs supported in gaining share and launches in CNG from Q4 should help Ashok Leyland in regaining its lost share in MHCVs. Exports will further aid in this upcycle due to a wider bouquet of products & expanding reach. Strong recovery ahead will push margins higher. As the stock has run-up ~67% in the last one year and hence, in our opinion, most of the near-term positives looks priced in its rich valuations. We maintain ACCUMULATE rating & suggest to add stock at lower levels to get a better risk-reward in this upcycle. Healthy recovery to continue, H2FY22 to be better than H2FY21 Ashok Leyland recently lost share in MHCVs majorly because 1) the market has swiftly shifted to CNG, where the company has little presence, 2) South was soft where it has a strong foothold, 3) high discounting led to avoidance of a few major transactions, & 4) softness in bus segment. Almost all industries opened & picked-up well along with continued momentum in construction & infrastructure segments should support MHCVs. CNG range of products expected from Q4. Bada Dost supporting in gaining share in LCVs, more launches on the cards. Reopening of education institutions & offices will grow bus segment, while exports has been doing good. Margins to see upward journey, deserving to get better margin in this upcycle There are still some under recoveries as demand was recovering from the bottom and high discounting continued in the market. So, it was difficult to pass on the complete cost impact. Passing on prices will be a little easier now when the market is turning towards upcycle. In our opinion, the company in this upcycle is much better placed due to its value engineering efforts and should get higher operating leverage benefits. Overall, margins in the peak upcycle year will be better than the previous ones. Other key highlights 1) Reduced gross debt from Rs 41.75bn in Q1FY22 to Rs 31.12bn in Q2FY22, this journey of the reduction in debt should continue as the company will generate healthy cash flows in upcycle. 2) Seeing good opportunities in the Defense, Exports, LCVs and Spare parts businesses. 3) Hinduja Leyland Finance is in a better shape now with healthy ratios & provisioning. 4) The CV financing situation has been getting better every month. 5) Hived-off EV completely to Switch Mobility, will raise capital independently. Trading at near fair valuations We have incorporated all the positives about demand growth in domestic, exports and improvement in margins. However, on FY23e EPS the stock is trading at near fair valuations, hence we see limited upside and suggest to wait for the better entry point. Assigned 12x FY23e EBITDA + valued Hinduja Leyland Finance separately to arrive at a target price of Rs 161 per share.