Cipla reported strong Q2 FY24 performance on the back of sustained momentum in US sales and healthy sales in India and South Africa. During Q2 FY24, the revenue growth was driven by US business which grew by 31.8 percent YoY and 3.6 percent sequentially. In the US, quarterly revenue scaled to USD 229 million and management expects that the sustainable sales run rate for the US market on a quarterly basis would be in the range of USD 220-225 million.
In Lanreotide injection, Cipla has reached a market share of 20 per cent during Q2 FY24 versus 18 per cent in Q1 FY24. It also gained market share in Albuterol, which improved by 90 bps sequentially to 12.9 per cent. Overall, in the US, the company has benefited from supply-side factors like drug shortages in the last few quarters.
During Q2 FY24, the India division reported revenue growth of 10 per cent YoY driven by strong execution across Branded prescription and Trade generics businesses. In the domestic branded generics space, the contribution of the higher margin chronic segment increased by 100 bps YoY to 60 per cent during Q2 FY24 and that aided the overall EBITDA margin improvement of 361 bps YoY and 236 bps QoQ during the quarter to 26 per cent.The management has upgraded its near-term EBITDA margin guidance to 24-25 per cent. Management expects India business to grow 12 percent annually in the next three years.
At CMP, the scrip is valued at P/E multiple of 21.9x on FY25E Bloomberg consensus EPS of Rs 54.63.
Aptus Value Housing Finance (APTUS) is a retail focused housing finance company, which primarily serves low-income and middle-income self-employed customers in rural and semi-urban markets. Currently, it operates in five states namely Tamil Nadu, Karnataka, Andhra Pradesh, Telangana and Odisha through 231 branches.
APTUS primarily focuses on non-salaried category, which forms 71 per cent of its portfolio and majorly comes from Tier-III/IV centers having no income proof like ITR and salary slip etc. In fact, 38 percent of the customers are new to credit who are excluded by other large HFCs and banks.
At the CMP, the scrip trades at 3.01x FY25E BV. We believe the HFC offers favorable long-term risk-reward given APTUS is an excellent growth play in underpenetrated low-cost housing finance space and is well-placed to sustain growth over the long-term, led by strong capital base and a scalable business model. It has proven business credentials on credit underwriting and risk management front and highest return ratios with RoA of in the excess of 8 per cent. Thus, we recommend our investors to buy the scrip for a target of Rs 330 from a 12 months investment perspective.
Indian Energy Exchange: CMP: Rs 125 | Target: Rs 145 | Upside: 20%
For Q2 FY24, IEX achieved 26533 MU resulting in 15 per cent YoY growth across market segments. The Day-Ahead Market (DAM) segment registered total volumes of 11253 MU during Q2FY24, an increase of 1.4 per cent over Q2FY23. The Real-Time Electricity Market (RTM) segment registered volume of 8201 MU during Q2 FY24, increasing 24 per cent over Q2 FY23.
The total volume on the Term-Ahead Market (TAM) segment during the quarter was 4605 MU, growth of 125 percent over Q2 FY23. During Q2FY24, the Green Day-Ahead Market (G-DAM) segment achieved volumes of 513 MU.
Trading volume on the Indian Gas Exchange (IGX) has surged, with 50 mmbtu of gas traded in FY23, marking a 319 percent increase. IGX currently has a 15 per cent share in the country’s natural gas spot market. It is poised to benefit from the government’s target to double the share of natural gas in India’s energy mix to 15 per cent by CY30.
At CMP, the scrip is valued at P/E multiple of 27.6x on FY25E Bloomberg consensus EPS of Rs 4.5.
Net revenue of the company increased by 246 per cent YoY and 8.6 percent QoQ to Rs 370.6 crore despite Q2 being a subdued quarter for the wind industry due to the impact of monsoons. EBITDA turned positive YoY to Rs 48.3 crore against loss of Rs 23.5 crore in Q2 FY23 and on QoQ basis it increased by 90.7 per cent.
EBITDA Margin came in at 13 per cent while interest costs fell 29 per cent YoY and 8 per cent QoQ to Rs. 64 crores. Net Loss declined YoY to Rs 29.2 crore against Rs 129.3 crore in Q2 FY23 and on QoQ basis it declined to Rs 63.2 crore in Q1 FY24. Cash Profit at Rs 5 crore in Q2 FY24 against loss of Rs 112 crore in Q2 FY23.
Wind capacity addition and the RE sector overall are likely to benefit from the Gujarat and Maharashtra RE policies which came into effect in October 2023. At CMP, the scrip is valued at P/E multiple of 19.8x on FY25E Bloomberg consensus EPS of Rs 10.7.
Avalon Technologies is a global, vertically integrated electronic manufacturing services (EMS) company, thus providing solutions in manufacturing from design, analysis to mass production. Through a unique global delivery model, Avalon provides a full stack product and solution suite, right from printed circuit board (PCB) design and assembly to the manufacture of complete electronic systems (Box Build), to certain global original equipment manufacturers (OEMs)located in the United States, China, Netherlands and Japan.
Avalon generates 41 per cent revenues from domestic sales while exports contribute the majority portion of 59 per cent (as of FY23), which is all from the US. Margins of the company is firm considering that out of 59 percent of Avalon’s revenue from the US, 72 per cent of their manufacturing is done in India leveraging the high value markets and optimal cost manufacturing in India. Besides, it has a long-term relationship with a marquee customer base, with 80 per cent of their revenue coming from customers with 8 years of relationship.
At the CMP, the scrip trades at a P/E of 26.74x FY25E EPS and investors are advised to ‘BUY’ from a 12-month perspective.
Rishabh Instruments is a global energy efficiency solution company focused on electrical automation, metering and measurement, precision engineered products, etc., with diverse applications across industries including power, automotive and industrial sectors.
It provides comprehensive solutions to its customers looking for cost effective ways to measure, control, record, analyze and optimize energy and processes through its array of products. It also provides complete aluminum high pressure die casting solutions for customers requiring close tolerance fabrication, machining and finishing of precision components.
The company’s domestic and export revenue mix is 50:50. Export gives better margin than domestic and thus the company is expecting more export business.
The company has a wide customer base and is not dependent on specific customers for revenue generations. Company has long-standing relationships including blue chip customers such as ABB India, Siemens, Pronutec S.A., Lucy Electric India Pvt. and Perel OY, which provides strong future revenue growth visibility.
During Q2 FY24, the company reported strong revenue growth of 38 per cent YoY, however ESOP cost impacted EBITDA and PAT growth during the quarter. The management expects 22-25 per cent topline growth and 18-20 per cent bottomline through organic route. At CMP, the scrip is valued at a P/E multiple of 25.8x on FY25 estimated EPS.
The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk.Please consult with a financial advisor before making any investment decisions.