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.

With the effects of the second wave of the pandemic subsiding, Narayana’s Indian operations staged a decent recovery during the quarte rgone by. With new Covid-19 cases waning across the country, Narayana remains encouraged by the business momentum revival across the network. However, the profitability of its flagship Health City, Bengaluru centres remain affected, as compared to the pre-Covid times, given the erosion in international patient mix as well as high-end cardiac sciences based elective work. Overall, Narayana reported record profitability during the period on the back of recovery in Indian operations aided by its international ventures at Cayman Islands and hospital project management at St. Lucia. Traction of international patients continue to be low. This has more to do with the confidence of the patients as well as the prevailing situation in terms of restricted flights. The consumable expenses as a percentage of India revenue at 26 %( ex vaccination revenue and costs impact) is still a bit higher than the long term average of 25%. This is because a lot of material prices has gone up. Besides, in many high-end cases original molecular drugs were administered instead of their cheaper generic counterparts as the Procurement team at Narayana failed to give the necessary attention to this aspect. Further, Covid appropriate protocols are still continuing in Indian hospitals, which are adding up to the costs. On an overall basis, we are positive about the growth prospects of Narayana and we maintain an “Accumulate" rating on the stock Decent performance across top line and bottom-line Narayana reported decent set of numbers for Q2FY22. While on a YoY basis there was huge growth of 56.5% because of the low base effect, on a sequential basis the growth was 9.4%. There was a sequential increase in EBITDA and EBITDA margin as Manpower Expenses and Other Expenses increased sequentially by 5% and 3.5% respectively compared to QoQ Gross Profit increase of 9.1%. Existing hospitals in India recorded discharges, ARPOB and EBITDAR Margin of 39622, Rs 11.9 mln, and 20.4% respectively. New hospitals in India recorded discharges, ARPOB and EBITDAR margin of 4576, Rs 15.9 mln, and –1.2% respectively. Cardiac sciences contributed to 31% of India revenue, Gastro –13%, Oncology –13%, Renal sciences—10%, Neuro sciences—7%, Orthopaedics—4% and Others—22%. 52% of India revenue was contributed by domestic walk in patients, 24% by insured patients, 23% through government schemes and 1% by international patients. The average revenue per person (ARPP) for India inpatients (IP) was Rs 110000. ARPP for India outpatients (OP) was Rs 4000 ARPP for IP in Cayman was USD 21500. ARPP for OP in Cayman was USD 900. IP footfalls were 49500 for the quarter while OP footfalls were 526300 for the India business. For Cayman, IP footfalls were 594 while OP footfalls were 7451. Outlook and Valuation We are positive about the growth prospects connected with Narayana. Both Cayman and India operations should continue to do well in the future unless there is an adverse impact of the third wave of Covid-19. International patients should come back soon. Decent EBITDA margins should be maintained. We value the stock at 15x EV/EBITDA with respect to FY23e EBITDA to arrive at a target price of Rs 588 and maintain an “Accumulate” rating on the stock

CESC’s electricity sales volume for the Kolkata circle grew at a modest pace of ~5% YoY at 2,733 MU during Q2FY22, despite a low base YoY as Q2FY21 sales volume was down ~10.9% YoY at 2,603 MU. Revenue grew in line wih volume at Rs 2,091 crore EBITDA rose ~22.7% YoY due to decline in operational expenses. However, net profit growth was limited at ~3.1% due to higher tax outgo during Q2FY22. Consolidated revenue grew ~4.3% YoY at Rs 3,494 crore, while the net profit fell ~12.1% YoY at Rs 340 crore, due to increase in tax rate. The overall performance at subsidiary level was subdued, as net profit fell ~23.5% YoY at Rs 124 crore, led by poor performance at HEL, Noida Power, Rajasthan DF and Malegaon DF. Dhariwal and Crescent Power+SVL reported ~47.8 and 14.3% growth in bottom-line, respectively. Q2FY22 standalone performance Standalone power generation was up ~2.5% YoY at 1,578 MU, of which ~98% was contributed by Budge Budge plant, which operated at PLF of ~93% (vs 93% YoY). The total electricity sales for Kolkata circle grew ~5% YoY at 2,733 MU. Average realizations stood flat at Rs 7.65/kwh leading to ~5.1% YoY growth in Net revenues at Rs 2,091 crore. EBITDA margins improved ~352bps YoY at ~24.6%, mainly due to decline in employee cost (-8.3% YoY at Rs 233 crore) and other expenses (-2% YoY at Rs 245 crore). A modest increase in depreciation (+2.7% YoY at Rs 116 crore) and interest (+2.5% YoY at Rs 124 crore), along with a ~128.6% YoY jump in other income at Rs 32 crore led to ~53.8% YoY growth in PBT at Rs 306 crore. However, due to tax outgo of Rs 71 crore against an add-back YoY, net profit increase just 3.1% YoY at Rs 235 crore. Q2FY22 subsidiaries performance HEL’s PLF higher at ~92.1% (~91.3% YoY) on strong demand from CESC. Volume and revenue were up ~1% YoY at 1,124 MU and Rs 606 crore, respectively. PAT fell ~9% YoY at Rs 100 crore. Dhariwal’s PLF was down at ~75.1% (~77.5% YoY). Revenue stood flat at Rs 355 crore, despite ~2.1% decline in volumes at 920 MU. PAT jumped ~47.8% YoY at Rs 34 crore. The Unit 1 Case 4 PPA with MSPGCL for supply of 185 MW has been extended till Mar-22. Rajasthan DF’s revenue grew ~2.2% YoY at Rs 474 crore. Bharatpur and Bikaner circle performed well. However, the DF reported loss at Rs 10 crore (vs PAT Rs 1 crore) due to losses at Kota. Noida Power’s revenues grew ~11% YoY at Rs 581 crore; PAT fell ~23.3% YoY at Rs 23 crore. Malegaon DF’s revenue declined ~17.5% YoY at Rs 104 crore, due to ~Rs 20 crore writeoff taken against prior period bills. The losses widened to Rs 31 crore in Q2FY22 vs Rs 9 crore YoY. Outlook & Valuation Demand is expected to improve with easing of lockdown restrictions. We expect Rajasthan and Malegaon DF to achieve break even in FY22, though Kota circle may still report losses. We maintain “Accumulate” on the stock, with a revised price target of Rs 101.5, derived on SOTP based valuation by independently valuing CESC standalone business and its individual material subsidiaries, implying an upside of 11% over a period of 12-18 months.

HCGEL registered the highest ever quarterly revenues and EBITDA in Q2FY22 with some regions delivering triple digit revenue growth on a YoY basis. The new centres continued their scale-up trajectory with strong revenue growth of 56.7% YoY while existing HCG centres registered a growth of 37.3% YoY. New centres including Milann broke even during the quarter and registered an operating EBITDA of Rs 19.4 million against a loss of Rs (29) million in Q2FY21. ARPOB to the tune of Rs 36,000+ per day for all centres is definitely sustainable. The Centre of Excellence (CoE) generated an ARPOB of Rs 58,000 compared to Rs 50,000 in Q1FY22 and the Management believes that this is not a one off and it is indeed a sustainable trend as high end cases are rising with significant contribution from robotic and cyber knife surgeries. International revenues would further boost the ARPOB of CoE going forward. As international revenues come back, new centres ramp up and Milann reverts to its original level, margins will show an upward trajectory. HCGEL has institutionalized tumour boards, research and academics across its centres and continue to bring globally comparable outcomes to every patient along with creating last mile access and better quality of life. It has formed an alliance with Microsoft to deliver offerings using virtual/augmented reality. HCGEL is also working with pharmaceutical companies in terms of sharing clinical data. On an overall basis, we are positive about the prospects of HCGEL, however, on the basis of valuation, we recommend a “Reduce" rating on the stock. Strong performance despite the second wave of Covid HCGEL reported decent set of numbers for Q2FY22. While on a YoY basis there was huge growth of 42% because of the low base effect, on a sequential basis the growth was 8.9%. There was a sequential increase in EBITDA and EBITDA margin as Employee Expenses. Medical Consultancy Charges and Other Expenses increased sequentially by 0.6% ,4.2% and 10.8% respectively compared to QoQ Gross Profit increase of 8.6%. PBT and PAT improved widely on a sequential basis to Rs 1419 mln and Rs 1031 mln compared to Rs –89 mln and Rs –96 mln respectively in Q1FY21. PBT included Exceptional Items of Rs 1401 mln. Karnataka contributed to 34% of Q2FY22 hospitals revenue, Gujarat –26%, Maharashtra—19%, East India and Andhra Pradesh—9% and 8% while Tamil Nadu and North India contributed to 2% each. The occupancy rate was 53.8% in Q2FY22 compared to 49.8% in Q2FY21. For the existing centres, the occupancy for Q2FY22 was 50.3% compared to 46.9% in Q2FY21. Aggregate ARPOB was Rs 38345 for Q2FY22 compared to Rs 30984 for Q2FY21. ALOS for Q2FY22 was 2.27 days compared to 2.42 days in Q2FY21. The number of IVF cycles for Milann in Q2FY22 was 431 compared to 373 in Q2FY21. Milann recorded revenues of Rs 174 million in Q2FY22 compared to Rs 111 million in Q2FY21. New registrations were 1014 in Q2FY22 compared to 797 in Q2FY21. Outlook and Valuation: We are positive about the prospects connected with HCGEL. Both the existing and new centres should perform robustly in the future. Further, HCGEL’s focus on consolidation of existing operations would ensure the strength of the balance sheet. We value the stock at 15x EV/EBITDA with respect to FY23e EBITDA to arrive at a Target Price of Rs 257, and recommend a “Reduce” rating on the stock

As recovery in demand scenario getting better and chip shortage related auto production issues expected to subside gradually, we maintain BUY rating on Mayur Uniquoters (Mayur) with a TP of Rs 607, as the company is getting traction in high margin business clients and PU business started making small contributions. Mayur’s Q2FY22 sales/PAT was up by 48%/38% QoQ with relatively lower margin of 18.4%, hurt by higher PVC prices. Mayur is set to get good amount of new businesses from Mercedes and VW India as and when we get some respite from chip shortage issue. They have also got approval from BMW and business should start in CY22. PU business has also started getting some tractions. With volume recovery in footwear, ramp up of PU plant and businesses from new clients such as VW, Mercedes, BMW; we expect a much stronger performance in coming years. Recommend ‘Buy’ for a target price of Rs 607 a piece. A good performance in challenging environment Mayur Uniquoters’ standalone revenue came in at Rs 1,877mn, a growth of ~48% QoQ (up ~70% yoy), higher than our estimates. The company witnessed a volume growth of ~60% QoQ as both crucial user industries for the company, India autos and footwear witnessed sequential recovery. The company’s sales would have been higher if not for chip shortage issues. Margin contraction due to lower level of operations EBITDA stood at Rs 345mn, with a margin of 18.4% compared to 18.6% in Q1FY22 and 19.7% in Q2FY21. Despite positive operating leverage, margin profile did not get any boost as higher RM costs continue to hurt. Also, product mix was not favourable during the quarter. Employee cost was higher on YoY basis as the company increased headcounts for new production line and hired few people in top management. Consolidated sales/PAT was up by 56% QoQ/48% QoQ to Rs 1,960 mn/295 Mn. Several new opportunities to fuel the momentum The PU plant has made a low contribution in FY21 as due to pandemic issues, everything got delayed. Mayur is set to grow this business as clients would look to have alternate options for China. Increase of import duty on PU leather has brightened the prospects. The company continue to focus on high margin businesses and new client additions in high margin business will be continued in the future. Start of BMW business and ramp up of Mercedes business will further boost margins going forward. Valuation and Risk Delay in PU business set-up and lower margins should be totally behind now. Product approval from BMW is already done and Mercedes business has already started. The company is all set to maintain its growth momentum from here on with better margins. With PU plant ramp up, commencement of Mercedes & BMW business in future, VW India business getting traction, and the ability to pass on higher RM costs, we estimate strong earnings growth in coming years. Considering good return ratios, strong cash position and consistent handsome payouts to shareholders, we value Mayur at 20x its FY23e earnings to arrive at a TP of Rs 607 and recommend BUY

In spite of challenging environment and decline of 1% QoQ in extruded snacks industry, company posted growth of 33.2% QoQ. Despite unprecedented commodity inflation, company posted stable material margins at 37.3% (39% QoQ basis - excluding new categories) through a companywide cost management programme and grammage reduction. Moreover, DFM gained over 130 bps share on QoQ basis in the focus geographies; gained 50 bps QoQ & 125 bps YoY share at pan India level supported by significant in-vestments in brand building and go to market initiatives. Despite challenges DFM grew its market share, improved its distribution metrics, launched new variants, entered a new product category and launched new price points. Further, new management’s focus on multi-product, multi-channel and multi-geography approach would drive profitable growth ahead. With CAPEX initiatives in place and a strong balance sheet position DFM is in a healthy position to deliver sustained growth over the medium to long term. Q2FY22 Earnings Key Highlights Company continued its investment in brand with advertising spend increasing to 9.1% of sales in Q2FY22 vs. 2.9% in Q2FY21. Investment in go to market expansion increased to 2.4% of net sales in Q2FY22 vs 0.8% in Q2FY21. Other expenditure increased primarily due to consulting charges for cost management programme, freight, automation and travel expenses. In Q2FY22 impact of increase in raw material prices was ~Rs. 230 mn, of which it was able to reduce to ~Rs. 30 mn by way of cost saving initiatives and grammage reduction. Out of the above savings Rs. 40 mn was led by reduction in grammage. DFM incurred capex of Rs. 164 mn in Q2FY22 for investment in capacity addition and automation. Outlook and Valuation: DFM is one of the leading brands in extruded snacks segment in the country. There would be an expected uptick in the consumption of packaged snacks as there has been considerable easing of restrictions in most parts of the country and general improvement in economic activities. Expected re-opening of primary schools and opening of schools, colleges & other institutions would re-invigorate demand for products of DFM which are primarily out-of-home consumption. Therefore, we maintain our valuation for the stock at 40x FY23E EPS of Rs. 11.6 to arrive at a Target Price of Rs. 464, implying upside of ~38% based on the CMP. We thus maintain a ‘Buy’ rating on the stock.

Posted near in-line set of numbers and stable outlook provided for existing businesses. Expect new acquisition and new products from STC to be new gems in the coming few years for Suprajit, that will increase export growth opportunities & will further reduce dependency on domestic 2Ws. Despite input cost pressures, the company managed to maintain margin at 16%+, passing on RMC & other costs is expected to support atleast a similar level of margin in the coming quarters. In LDC, low hanging fruits are visible on the costs side and multiple synergies in terms of manufacturing, engineering & business development to support continuation of the company’s outperformance in the coming years. We maintain ACCUMULATE rating and target price of Rs 405 per share. Transformational LDC acquisition, outperformance expected • LDC will help Suprajit to diversify further from two-wheelers and will emerge as a global leader in mechanical cables with wider footprints across the USA, EU, China and other major nations. • The management is confident of turning around Kongsberg automotive business/financials by enhancing scale, productivity improvement and cross selling products to clients. • Apart from visible low hanging fruits on the cost side, significantly superior growth expected in the coming years from a combined LDC & Suprajit business. Exports expected to further improve. Suprajit Technical Centre (STC) started yielding results • The STC work of the last few years on new products has now started yielding better results. It has now 15 patents, developed new products viz. Digital speedometer, Throttle position sensor, Rotary sensor, CBS mechanisms & Seeder gear boxes with electromechanical clutches. • They are in the final stage of commercial launch & Rs 1bn of business is visible from new products. Stable business performance from existing three segments • Auto cable exports done well & winning new businesses, despite chip shortage issues. Domestic cables business expects to rebound due to improvement in chips in PVs, while 2Ws to see gradual improvement. Phoenix lamps business numbers expected to remain consistent in coming quarters. • Non-auto volumes picked up, expect good growth as a change in the strategy is yielding results. Margin consistency remained despite input cost pressures • Despite higher gas prices, key raw materials costs, freight/container costs, chip issues, etc the company managed to prove its consistency by reporting 16%+ margin in these tough times • The company at one go is unable to pass-on the complete cost pressures specially to export clients and it’s an ongoing process. We expect Q2FY22 level of margin to continue in Q3 & Q4 Valuations • Suprajit should get a scarcity premium for its dominant leadership position and its year-on-year outperformance is noticeable. Assigned multiple of 21x FY23e EPS of Rs 19.3 to arrive at a TP of Rs 405 per share. Recommend Accumulate!

Page Industries Ltd’s (PAGE), delivered a strong all-round performance in Q2FY22, with revenue up by ~46% YoY backed by volume growth of 44% YoY. The growth was backed by an increase in distribution channels, recovery in modern-trade channel, good demand traction in EBOs & e-commerce, respectively.We believe PAGE is on track to deliver double‐digit top-line growth led by higher athleisure mix, increased distribution reach, contribution from kids/women wear and a recovery in larger cities. With the company getting its marketing investments back on track with an emphasis on POS reach‐out, kids business and -commerce channel, growth should come given penetration levels are still very low. Company’s future plans include: (1) expansion of new categories such as Jockey Junior (kids wear)/ women wear, (2) geographical expansion into Tier 3/4 and rural areas, and (3) launch category specific EBOs. Ongoing capex towards doubling capacity in 5‐6 years give increased confidence towards strong long‐term growth. Margins should also get back to the ~20‐22% range from next year given strong brand equity and positioning coupled with product innovation. Cash and cash equivalents at Rs 5,333 mn at the end of Q2FY22, up ~33% YoY. Despite robust performance and healthy growth outlook, the recent run up in stock price provides little room for valuation comfort, therefore, we assign “REDUCE” rating on the stock.Given the earnings visibility, steady return ratios and lack of credible/relevant competitor in the premium space, we expect the premium valuations to sustain. Q2FY22 earnings key highlights • In Q2FY22, the company reported a ~46.4% YoY increase in sales to Rs 10,840 mn, aided by demand recovery off a weak base. Company has reported a volume growth of 43.6% YoY driven by network expansion, higher footfalls and strong online growth. • Gross margin for Q2FY22 decreased by 82 bps YoY to 51% due to higher input cost pressure. Company has been able to contain the impact of steep increases in raw material prices with better cost control & a ~4% price hike. • EBITDA margin for Q2FY22 decreased by 80 bps YoY to 21.5% due to under absorption of selling and corporate overheads. Q2FY22 EBITDA increased by 41% YoY to 2,334 mn. • Reported PAT stood at Rs 1605 mn, against Rs 1,109 mn YoY. Outlook and Valuation • PAGE having significant pricing power and, consequently, stability in margins, along with working capital, its outlook and hence valuations have primarily been function of sales growth. Considering the strong financials and robust revenue growth trajectory, PAGE has always traded at rich multiples. Apart from the robust and consistent top-line growth, the company has also consistently rewarded its shareholders. We believe widening product and brand portfolio, coupled with distribution expansion will aid market share expansion and drive multiple years of growth. • At the current price of Rs 40,187, the stock is trading at 58.8x FY23e EPS. We have assigned a P/E multiple of 55x on FY23e EPS of Rs 682.4 to arrive at a target price of Rs 37,534.

Nitin Spinners Ltd (Nitin) came out with an excellent set of numbers with highest quarterly profit, way above estimates for Q2FY22 as demand was strong, especially on the export front, with firm yarn prices. Outperformance was boosted by RoDTEP benefits. Supported by a well-diversified geographical reach the company registered a sales growth of 55.7% YoY to Rs6,647 Mn on account of strong growth across all segments, well supported by strong realization growth. Led by both volume and realization growth, the company posted 20.1% QoQ growth at sales front. Adjusted to RoDTEP benefits of prior periods, the company maintained its high margin profile despite continuous rise in cotton price. Nitin is set to continue hitting ~95%-100% capacity utilization in coming quarters. Given yarn prices are still firm, strong margin performance should continue in coming quarters. RoDTEP benefits can offset some of expected margin pressure due to high RM costs. We continue to maintain our BUY rating on the stock of the company with a target price of Rs418 per share, 8.5xFY23e EPS. Excellent performance, results beat all expectations, boosted by RoDTEP benefits • During the quarter, the company posted decline of 10% YoY at Yarn sales volume front due to internal consumption. Knitted fabric sales volume was higher by 33.5% YoY. • Woven fabric sales declined by 4.4% YoY but on QoQ it was up by 51% as India demand improved as covid wave impacts subside. • The company has some scope to increase business from woven fabric in coming quarters. • Realization was higher 60.3% YoY/6.4% QoQ in yarn business whereas it was up by 63.5% YoY/7.5% QoQ in knitted fabric as the company continues to pass on higher cotton prices. Cotton textile industry to maintain its growth momentum • The industry is getting loads of support from the government. Due to recent decline in overall capacity of Yarn production, existing players will continue to benefit. • With 2nd wave subsiding, demand is picking up in the domestic market as well. Export demand is already strong and hence, overall demand environment to remain good in coming quarters as well. This is supporting well in passing on higher cotton prices. Valuation and risks: • We believe going ahead the company should keep doing well with Yarn prices remained firmed up. Increasing share of processed woven fabric will further support the company’s overall sales growth and margin profile. • Nitin has plans to increase its capacity in value added products such as processed woven fabrics in future as existing capacities are getting nearly fully utilized. • We assign 8.5x PE multiple to FY23E earnings and arrive at a target price Rs418, offering 54% upside from current levels. Hence, we maintain our Strong Buy rating.

Q2FY22 revenue of NOCIL Ltd grew by 69.3% YoY & 8.9% QoQ to Rs3.75bn in Q2FY22 (Almost similar with our expectation). Sequentially volume growth is around 5% and realization growth is ~4% for the quarter. Gross margin contracted by steep 753bps YoY & 889bps QoQ to 40.5% in Q2FY22 majorly led by higher inventory cost. EBITDA grew by 57.4% YoY & declined by 31.8% QoQ to Rs503mn (Lower than our expectation). EBITDA margins contracted by 102bps YoY & 800bps QoQ to 13.4% in Q2FY22 (Lower than our expectation). PAT grew by 78.3% YoY & declined by 36.7% QoQ to Rs300mn in Q2FY22 (Lower than our expectation). Considering the strong earnings growth visibility, we assign BUY rating on the stock. Steep decline in gross margin on sequential basis majorly led by higher inventory cost The company reported gross margin contraction of 753bps YoY & 889bps QoQ to 40.5% in Q2FY22. The contraction is majorly due to higher raw material inventory cost. However, certain raw material like Aniline has started witnessing price rise and we expect this can put pressure on the margins in the coming quarters. Since, the company works on a competitive pricing model, increase in input cost prices would be passed on subject to similar approach adopted by competitors in the market. Considering the recent surge in raw material prices management is currently focussed on protecting the absolute operating profit. However, it could be noteworthy to consider the finished product price increase also, if at all increased further could offset the recent surge in raw material prices. Considering absence of such high inventory loss and possibility of price hikes, we expect margin to improve sequentially from here on, despite some RM cost pressure. Expanded capacity to lead healthy volume growth going ahead As on FY21, the company has nearly completed its capacity expansion and is now well equipped to serve domestic and global customer with increased supply. Management seems confident of ramping upto peak utilization levels by Sept 2023 and this would be led by increasing penetration in the newer geographies, robust tyre demand, increase in personal mobility trends and rising disposable incomes. Post expansion, management is focussed on increasing its volume and market share in the domestic & exports front. Increasing wallet share from their existing clients post entire expanded capacity comes on stream would be the key focus of the company. Valuation We feel that impact of de-growth in auto sector, ADD removal impact and operating deleverage which led to margin decline are behind now. As the company operates in niche product segment with high entry barriers having market leadership, there is huge possibility of growth with reasonable profitability. We value the stock using EV/EBITDA multiple and arrive at target price of 303 per share (assigning ~13.5x EV/EBITDA to FY23 projections) which indicates upside of 16.6% from current level. Hence, we assign BUY rating on the stock.