Buy, Sell Or Hold Stock Ideas Post Quarterly Results: Prabhudas Lilladher Analysts

Prabhudas Lilladher has done a few "first cut" reports post the quarterly numbers. Here are a few stocks, where the brokerage has either no rating or has a neutral or buy rating.

1) First Cut - UPL 2QFY23 Result - Himanshu Binani - Research Analyst, Prabhudas Lilladher Pvt Ltd

First Cut - UPL 2QFY23 Result - Margins surprise positively; however, debt levels remain elevated

(CMP-Rs718; Mcap-Rs548bn; BUY; Target price - Rs1020)

UPL reported 2QFY23 revenue/EBITDA/PAT of Rs125.0bn/Rs27.6bn/Rs8.5bn (+18%/+35%/+27% YoY) and were better than our (+3%/+24%/+14%) and Cons. Estimates (+4%/+17%/-7%).

Gross margins improved by 320bps YoY to 53.6% primarily led by price hikes taken in the recent past to mitigate the RM cost. While, lower employee and higher opex cost down 30bps and up 80bps YoY has resulted into EBITDA margins expansion of270 bps YoY to 22.1% (Our/Cons. Est of18.4%/19.7%)

Key highlights are:

(1) Volume and price growth of-7% and +21% YoY respt. Fx up +4% YoY.

(2) LATAM/Europe/NAFTA/RoW/India posted +20%/+1%/+24%/+21%/+22% YoY growth in2QFY23.

(3) NWC has increased by 10 days YoY to 124 days led by a) robust growth of 22% in sales, b) short-term inventory build-up due to strong demand and uncertainties in supply-chain.

(4) Net debt stood at Rs314.9bn (including perpetual bond of Rs29.8bn) up Rs20.3bn QoQ and Rs42.3bn YoY.

(5) Maintained Guidance for FY23E expect to achieve revenue growth of 12-15% and EBITDA growth of 15-18% earlier citing robust demand scenario globally. While Debt repayment guidance now stands at USD650mn for FY23 (largely led by recent restructuring of business verticles) vs earlier USD300-400mn.

2) First Cut - LICHF Q2FY23 - Gaurav Jani - Research Analyst, Prabhudas Lilladher Pvt Ltd

LICHF Q2FY23-Weak set of numbers

--NII was lower at Rs9.8bn (PLe Rs16.4bn) as NIM was lower at 2.3% (PLe 2.63%).
--There seems to be a one-off in the interest income and total expenses which has led to a decline in NII
--Loan growth was in-line at 10.4% YoY (PLe 10%) as repayments were lower at 16.2%.Credit offtake was largely led by retail home which was up 15% YoY, other two segments de-grew.
--Opex was higher at Rs2.6bn (PLe Rs2.1bn) driven by employees. PPoP was lower at Rs7.5bn (PLe Rs14.6bn) led by lower NII and higher opex.
--Provisions were a miss at Rs3.7bn (PLe Rs3.3bn). PCR on stage-3 increased QoQ from 40.4% to 43.6%
--Combined coverage on stage 1&2 was maintained at 34bps.
--PAT missed estimates at Rs3.05bn (PLe Rs9.8bn).
--The stock trades at 0.7x Sep'24 ABV.

3) First Cut - Kansai Nerolac 2Q23: Amnish Aggarwal - Head of Research, Prabhudas Lilladher Pvt Ltd

First Cut - Kansai Nerolac 2Q23: Miss on estimates across all fronts

CMP: 486

• Revenues grew by 19.3% YoY to Rs18.1bn (PLe: Rs20.2bn)
• Gross margins contracted by 32bps/132bps YoY/QoQ to 28.6% (Ple: 31.3%)
• EBITDA grew by 19.8% YoY to Rs2bn (PLe: Rs3.0bn); Margins expanded by 5bps YoY and contracts 227bps QoQ to 10.9% (PLe:14.7%).
• Adjusted PAT grew by 19% YoY to Rs1.2bn (PLe:Rs1.9bn)
• Demand for Auto was positive with ease in supply chain challenges while Decorative was subdued due to extended rains.
• Input prices saw gradual cooling as the quarter progressed.
• Price hikes taken prices in Decorative and Industrial in 2Q23.
• Co remains in discussion with OEMs for further price hikes.

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KNPL has reported numbers below our estimates on all fronts. Demand trends are expected to remain strong in 3Q. We expect margins to recover from 2HFY23 due to price hikes across portfolio & some price correction in RM basket. We will revisit our numbers post earnings call. We have an Accumulate rating on the stock with a target price of Rs 558. The stock trades at 32.2x/26.6x FY24/FY25 EPS.