Buy-rated Paisalo Digital [PAISALO_IN; Rs. 55 bn & US$ 800 mn market cap] reported another strong set of results for Q4 [ended March], which helped to drive stellar +91% EPS for the full fiscal year 03/2024. For Q4, revenues [primarily interest income] increased +65% YoY and diluted EPS surged +72%. For the full fiscal year, revenues increased +39%, leading to the sharp earnings gain, driven by increased margins and positive operating leverage. Importantly, in addition to the strong income statement and balance sheet growth, internal operating metrics and the quality of earnings were impressive, with high capital adequacy and liquidity, and consistently low [almost negligible] NPA levels. Paisalo indicated that, “given the AUM growth momentum, robust portfolio metrics and scalability, we are confident about growth and portfolio metrics for FY 03/2025.”

Supreme Petrochem Ltd. | Q4FY24 Result Update | Strong Q4, Slower volume growth in FY25E & expensive valuation, Downgrade to SELL CMP: Rs 670 | Target Price: Rs 569 | Downside: 15% | Rating: SELL The company reported strong set of numbers. Revenue grew by 13% YoY & 32% QoQ majorly because of stronger volume growth. Volumes grew by ~18% YoY & 36% QoQ because of seasonally strong quarter led by stocking of consumer durables inventory in domestic market. Despite stronger volume growth, overall gross spreads de-grew by 21% YoY but grew by 11% QoQ to Rs 27.8 per kg because of lower proportion of value added mix & weak export market owing to recent geopolitical turmoil & Red sea issues. Management stated that expansion in new businesses of ABS has been delayed citing material procurement issues & is now expected to commence its phase 1 by Q4FY25. Also, brownfield expansion of SPC, EPS & XPS has been delayed & majority capacity commissioning is expected in H2FY25E. With such delay its volume growth is expected to grow by 8-10% in FY25E vs reported 14% in FY24 indicating slower growth for coming fiscal but subsequently very strong volume growth is anticipated in FY26E & FY27E. Also, the company has acquired land in Haryana (North India) & potentially 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 company exports mix to sales is ~11% in FY24 vs 6% in FY23 indicating steep jump in exports & with further expansion it has potential to reach 15-20% in the coming years. But, lingering issue of spreads remaining subdued, heightened geopolitical tensions, higher competitive intensity will impact profitability in the short term coupled with expensive valuations. Hence, we downgrade to SELL rating from earlier REDUCE on the stock. Volume led growth momentum in Q4, weak volume guidance in FY25E, expect pickup in FY26E • Seasonally strong quarter becasue of robust domestic demand led volumes to grow by 18% YoY & 36% QoQ. Exports volumes grew by 44% YoY. Delay in expansion timelines of ABS, XPS & SPC will lead to slower volume growth of 8-10% in FY25E. Majority of expansion will come into H2FY25E. Thereafter, we expect volume jump of 18%/26% by FY26E/FY27E. • 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 has 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 March 26E P/E of ~21x. We upgrade our target multiple to 18x (earlier 15x) factoring in higher capex intensity & stronger volume growth beyond FY26E but lingering issues like subdued spreads, higher competitive intensity & expensive valuations from 2 year perspective, thereby, arriving at target price of Rs 569 per share which offers downside of 15% from c

Huhtamaki India Ltd | Q1CY24 Result Update | One-offs impacted profitability in Q1, On the verge of a Turnaround, Upgrade to BUY CMP: Rs 307 | Target Price: Rs 434 | Upside: 41% | Rating: BUY The company reported good show excluding the one-offs. Revenue declined by ~8% YoY but grew by mere ~1% QoQ. Lower volumes on YoY basis impacted the topline. Gross margin expanded by 332bps YoY but declined by 44bps QoQ to 33.7% in Q1CY24. The expansion in gross margins on YoY basis is majorly because of decline in raw material prices & cost pass on to its end user industries. Despite revenue growth of 1% on sequential basis, EBITDA dipped by ~29% QoQ because of higher other expenses which grew by 14% YoY & 20.5% QoQ. Higher other expense is because of credit impairement which is a one-off. Adjusting for one-offs, EBITDA margins stood at 9.2% vs the reported 6.7% in Q1CY24. Last quarter the company received exceptional gains from land monetization of Thane & Ambernath to the tune of Rs3.7bn which has been 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 the coming years. Accordingly, factoring the positives, we upgrade to BUY rating on the stock with a target price of Rs 434 per share. Q1CY24 revenue declined by ~8% YoY & grew ~1% QoQ; Gross margins expanded on YoY basis The company’s Q1CY24 revenue declined by ~8% YoY & grew by mere ~1% QoQ. YoY decline is because of volumes which is expected to pickup in the subsequent quarters as demand starts to pick up. The company has significant room to increase volume as current utilization is mere 55-60% & its new factory of Blueloop will incrementally provide support to volumes alongwith better margins. The employee cost grew by ~4% YoY & declined by ~2% QoQ to Rs617mn and stood at 10.1% of sales in Q1CY24 as compared to 9% in Q1CY23 & 10.4% in Q4CY23, while other expenses grew by ~14% YoY & ~20.5% QoQ to Rs1.02bn. Higher other expense is because of credit impairement (one-offs). Adjusting for one-offs, EBITDA margins stood at ~9.2% vs reported 6.7% in Q1CY24. The interest cost declined by ~30% YoY & 24% QoQ to Rs48mn because of debt repayment from the land monetisation money received last quarter; while the depreciation expenses dipped by ~39% YoY & 15% QoQ to Rs95mn. Change in useful life and method of charging depreciation on certain Property, Plant and Equipment led to decline in depreciation. 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 CY25E & we assign price target of Rs 434, valuing the stock 18x (earlier 16.5x) CY25E EPS of Rs 24.1. We upgraded out multiple because of increased visibility of volume growth, strong balance sheet, cost optimization benefits & leveraging its blueloop brand which will increase its premium portfolio. At our target price, the stock offers upside of ~41%, thereby, we upgrade to BUY rating from earlier ACCUMULATE rating on the stock.

Maruti Suzuki India Ltd | Q4FY24 Result Update | Healthy performance ex-One offs, Accumulate! CMP: Rs 12,687 | Target Price: Rs 13,699 | Upside: 8.0% | Rating: Accumulate Missed expectations slightly due to ~60bps One-offs. Adj. EBITDA Margin is ~12.9% (higher than our estimates of 12.5%). Additionally, supply constraints in CNG product dented ASPs/Margins. Our long-term view on Maruti Suzuki remains positive as the company is committed to launch 10 new models, including six EVs (refreshers are additional) by FY31 with 4mn units capacity, aim of ~800K exports & backward integration/localization in EVs with the support of Suzuki Corp. All these steps are positive to gain market share & remain Numero uno. New models/refreshers to drive volume growth ahead, margin improvement on cards driven by mix & operating leverage. Tweaked our assumptions on the higher side looking at superior Adjusted EBITDA Margin in Q4FY24, better mix and operating leverage benefits on cards ahead. EPS raised higher by ~7%/10% for FY25/FY26 respectively. We strongly believe there is a good value in mid-to-long term however most of the near-term positives factored-in the stock price, and looking at continued affordability challenges in the entry level cars, we downgrade the stock from BUY to ACCUMULATE. Sees limited upside. Maintained 25x multiple on FY26 estimated EPS of Rs 548 to arrive at a revised fair value of Rs 13,699 apiece. Q4FY24 result analysis – Slightly lower than estimates due to One-offs · Revenue/EBITDA/PAT was slightly lower than our estimates by ~4%/7%/3% to ~Rs 382bn/47bn/39bn respectively in Q4FY24. · Realization was lower than estimates by ~440bps to ~Rs 655K per unit was largely due to drop in CNG vehicle contribution from ~30% in Q3FY24 to ~26% in Q4FY24 owing to supply constraints. · Reported EBITDA Margin was lower than estimates by ~29bps to 12.3% was due to small One-offs of about 60bps sitting in different line items related to RM cost, product development expenses & CSR bump-up, among others. Adj. EBITDA Margin was 12.9%. · On YoY, Revenue/EBITDA/PAT increased by ~19%/40%/48% respectively in Q4FY24. · Q4FY24 YoY operational performance was healthy supported by Gross margin improvement owing to mix & input cost benefits. · Increase in Other income (~+51% YoY to Rs 11.2bn) pushed PAT further on the higher side. In FY24, all parameters looks healthy including 175% jump in FCF to ~Rs 82bn. Projected single digit volume growth, SUV/Exports/Green vehicles to drive volumes · Total volumes to grow by 6.8% CAGR FY24-FY26e to touch ~2.4mn units. · Maruti in total grew its domestic volumes by ~33% in the last three years. Hence, domestic volumes anticipated to move ahead by 6.1% CAGR FY24-FY26e to touch ~2.09mn units driven by CNG/Hybrid, SUVs, and new models/refreshers. · Anticipate flattish growth in small cars in FY25, with marginal growth of ~5% in FY26 due to low base, and improvement in the income level. Total order backlog is ~200K units. · Domestic SUV market share handsomely grew by ~608bps YoY to 25.9% in Q4FY24. · We are also in the view that Maruti is best placed among peers in terms of wider CNG portfolio and Hybrid vehicles. As we believe EVs in cars is going to take higher time due to cost & infrastructure challenges, hence Hybrid is the best option available, where Maruti has an edge & is ahead of its peers. This is keeping Maruti in an advantageous position. · The company has ambitious growth targets for exports, which is expected to grow at ~11% CAGR for the same period. · Using an international distribution network of Suzuki, pickup in African & the ME markets, along with opening up of FTAs for new countries to drive growth in the coming years. · Efforts are clearly visible with export market share touching ~47% in Q4FY24 (impressively gained from ~37% in Q4FY23).

Laurus Labs Ltd | Q4FY24 Result Update | Anticipating a Time-Consuming Revival Process CMP: Rs 425 | Target Price: Rs 450 | Upside: 6% | Rating: Accumulate Laurus Labs’s Q4FY24 witnessed good set of numbers where the API and FDF business uplifted the overall performance. Revenue was above estimates (+14% deviation) due to higher-than-expected revenues from API business (ARV and Onco API) which has seen growth of 4% YoY and 30% QoQ. Despite a decline in gross margins by 451 bps QoQ to 49.8% due an unfavourable product mix, the company managed to improve EBITDA margins by 159 bps QoQ to 16.8% through reduced employee costs and other expenses (as % of sales). The business is poised for improvement, driven by a robust order book in the synthesis business, supported by the Animal Health project and a 21% YoY growth in the FDF segment in FY25. 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 CAGR of Revenue/EBITDA/ PAT CAGR of 18.7%/50%/118% 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. 450 per share (implied assigned PE of ~28x on FY26E EPS). Accumulate. Synthesis business to significant improvement Synthesis business has shown growth on QoQ showcasing growth of 11% QoQ and 4% YoY due to large volume projects to Rs. 2.3 Bn. For FY24, the synthesis segment has seen growth of 24% (Ex Paxlovid) to Rs. 9.2 Bn. The Animal Health project 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. These significant advancements are positioned to have a favourable impact on the company's growth trajectory, both in the short term and the long term. · Going ahead, we expect revenue from synthesis business to be at Rs 12.3 bn in FY25E and Rs. 17 bn in FY26E from Rs 9.2 Bn in FY24. We expect revenue contribution from the synthesis business to increase from 18% in FY24 to 24% in FY26E. Formulation business growing strongly · The FDF business has maintained its growth momentum, growing significantly by 17% QoQ and 9% YoY in Q4FY24. This is mainly driven by the stable pricing of ARV molecules. For FY24, attributed to the consistent performance of the ARV segment and ongoing volume expansion. Going ahead, price stability is anticipated alongside continued volume growth resulting into a revenue CAGR of 19% from FY24 to FY26E. API business resumed back to growth In Q4FY24, the company’s API business has shown growth of 30% QoQ and 4% on YoY basis due to higher sales in ARV and Onco business. For FY24, API business has seen 2.5% degrowth due to decreased ARV prices in H1 FY24. Valuation: Despite a lacklustre performance in FY24, the company's future prospects seem promising due to expected growth in various business segments. We expect the synthesis and formulations business to grow strongly from here on. Based on SOTP valuation, we arrive at a target price of 450. Accumulate.

Bajaj Auto Ltd | Q4FY24 Result Update | Most of the positives factored-in, valuation expensive, maintain SELL! CMP: Rs 9,018 | Target Price: Rs 8,427 | Downside: -6.6% | Rating: SELL Revenue/EBITDA/PAT is higher than our estimates by ~4%/5%/4% respectively in Q4FY24. The beat was largely on the Gross margin side vs. our estimates (healthier by 81bps, received the benefits of soft commodity prices & mix), and better realization (3.6% higher than our estimates) was supportive for the margin. On the guidance, domestic volumes continue to remain healthy, new launches in ICE/EVs including 3Ws & CNG 2W will sustain outperformance in FY25 across segments. Mix, Scale, PLI benefits & operating leverage to improve EBITDA Margin going ahead. Exports improvement is on the cards as markets are gradually recovering. Total volume growth is anticipated at 12.4% CAGR FY24-FY26e to touch ~5.48mn units. Domestic/Exports volume is expected to grow by 11.5%/13.9% respectively. We expect Volumes/Revenue/EBITDA/PAT to grow at a CAGR ~12%/20%/23%/21% respectively FY24-FY26e. Volumes will be driven by continued strong momentum in 2W domestic, gradual recovery in exports, and this is followed by a ramp-up in Chetak and Triumph models. Based on our estimates, the stock is trading expensive at ~23x FY26e EPS of Rs 394. We maintain SELL rating with a revised fair value of Rs 8,427 per share as most of the near term triggers looks to be priced-in. Domestic 2W industry is on uptrend, momentum to sustain, Bajaj to outperform Domestic two-wheeler industry is in the cyclical recovery phase, anticipated to grow in low double-digit in FY25, before it cools-off to high single digit in FY26. As per our on-ground checks, inquiries/walk-ins are healthy, further lifted by wedding season in some parts of the country. Bajaj Auto should able to outperform the industry led by 1) good performance in the 125cc+ portfolio, 2) expectation of the success of upcoming CNG motorcycle which can disrupt the entry-level market, 3) the launch of the Pulsar 400cc is on cards, 4) pick-up in Triumph models, and 5) fast gaining share in e2W driven by network expansion & new model launches ahead. We have projected domestic two-wheeler volumes to report 12.0% CAGR FY24-FY26e to touch ~2.8mn units by FY26. It improved market share in the total 2W industry by 109bps YoY to 12.4% in FY24 due to superior show of the 125cc+ portfolio and excellent performance of Chetak (retail share improved from ~4% in FY23 to ~11% in FY24). Exports 2Ws should gradually get better, but still away from FY22 peak Currency depreciation, FX availability and high inflation remain key concerns specially in the African countries and South Asian region, while recovery is visible in other markets. However, we trust that the worst seems to be behind with the expectation of continued QoQ recovery on cards. YoY growth will be higher on a low base of last year. Bajaj Auto is expanding in newer markets viz. Brazil and Europe to diversify, de-risk & growth. This, along with Triumph’s exports pick-up will be supportive in growing 2W export volumes. We have factored in monthly ~145K 2W exports in FY25 vs. ~123K units in FY24, and will touch ~160K units in FY26, but still far away from its peak of ~183K units clocked in FY22. Electric vehicles, Three-wheelers, Triumph and Quadricycle Chetak is well accepted by customers, the company gained share in FY24 and anticipate to continue this trend driven by new launches/refreshers ahead along with expansion of touch points (from 200 to 600 showrooms in H1FY25). We have projected Chetak will be able to increase sales from 9.6K units per month in FY24 to 15K/20K per month in FY25/FY26 respectively. On three-wheelers, expect 3W industry to see mid-to-single digit growth on a high base, while Bajaj’s 3W should outperform led by eAutos expansion and CNG network increase. The company targets to replace e-ricks in North/East/Central India w

Swaraj Engines Ltd | Q4FY24 Result Update | Extensively outperformed industry, Accumulate! CMP: Rs 2,396 | Target Price: Rs 2,713 | Upside: 13.2% | Rating: ACCUMULATE Swaraj Engines Ltd.’s (SWE) FY24 ended on a strong note and Q4 numbers are much stronger vs. estimates, driven by some market share gains, and shift of business from Kirloskar may have played its part. This, along with softer input costs supported in getting margins better YoY. The company continued its good performance and reported 8th successive quarter of engine sales growth (YoY). Considering high-capacity utilization and future demand scenario, the company plans to increase the capacity from 150K units annually to 195K units through internal accruals. Recent on ground dealers check suggests that tractors are on the edge of picking-up driven by expectation of better monsoon ahead & subsidies. We anticipate a gradual possible shift of business from Kirloskar to SWE in the coming years. The company’s sales outperformance vs. the industry should continue going forward as ‘Swaraj’ is known among quality names in the industry & higher flow of business due to shift will keep giving additional volumes. Considering sound fundamentals, consistent dividends and possible increase in the business makes SWE a good investment avenue. We have increased multiple from 18x to 20x considering the shift from Kirloskar to Swaraj Engine has already started, maintained Accumulate rating with a revised fair value of Rs 2,713 per share (20x FY26e EPS of Rs 136). Q4FY24 result analysis­ – strong numbers, widely outperformed industry Q4FY24 revenue, EBITDA, and PAT exceeded our estimates by 25%, 42%, and 41%, respectively, driven by market share gains and business migration from Kirloskar. Despite industry degrowth of 18.1%, SWE sold 35,344 engines, marking a 1.4% YoY growth, maintaining its outperformance. However, realization dropped by 3.8% YoY to ~Rs 99K per unit due to metal price corrections. EBITDA Margin stood at 13.7%, surpassing our estimates by 165bps. This was primarily due to a Gross Margin improvement of around 108bps YoY to ~21.4%, driven by softer input costs. However, this was offset by an increase in Other Expenses by ~70bps YoY to around 4.9%. On-ground checks indicating change in the body language of tractor dealers Despite ongoing challenges in the tractor market on a YoY basis, such as lower crop production and gradual increases in tractor prices, recent indications show a more positive outlook. Tractor dealers have displayed improved confidence recently, likely due to expectations of above-normal monsoon this year. Consequently, earlier negative YoY growth guidance for the ongoing peak season has been revised to flat YoY growth. Anticipated growth in the tractor market will be fuelled by subsidies, with rural areas expected to see a resurgence if the 2024 rainfall is normal and well-distributed across regions. Stable crop prices and discounts, coupled with improving inventory levels at the start of this peak season (from Holi through June), further support this optimistic outlook. Proved its outperformance over the long period, confident of sustaining the same Domestic tractor industry posted 3.2% CAGR FY14-FY24 vs. Swaraj's engine sales of 6.5% CAGR & revenue CAGR of 8.9% for the same period. We anticipate the continued outperformance of Swaraj due to its recognized quality, supported by the observed shift in business from Kirloskar to Swaraj following Kirloskar's exit from Swaraj Engines, leading to increased volumes compared to the previous year. Outlook and Valuations Tweaked estimates marginally, however increased multiple from 18x to 20x considering the shift from Kirloskar to Swaraj Engine has already started, maintained Accumulate rating with a revised fair value of Rs 2,713 per share (20x FY26e EPS of Rs 136). Considering the promising future demand, Swaraj Engines plans to boost engine capacity from