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The Front Page 20250526

The document provides an overview of the Indian stock market as of May 26, 2025, including index movements, top gainers and losers, and market performance metrics. Key indices like Sensex and Nifty showed positive changes, while various stocks experienced significant fluctuations. Additionally, it includes information on bond markets, forex markets, and commodity prices.

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0% found this document useful (0 votes)

139 views133 pages

The Front Page 20250526

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Roshni

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z The Front Page

India | May 26, 2025

Winners & Losers

Since last expiry (24-Apr-2025)
Benchmark Indices Closing Returns (%) OI Chg (%)
Since last expiry (27-Aug-2020)
Nifty Index 24,853 2.5 19.7
Bank Nifty Index 55,398 0.4 (42.4)

Best Performers CMP Returns (%) OI Chg (%) Inference Worst Performers CMP (Rs) Returns (%) OI Chg (%) Inference
Bharat Electron 384 25.5 19.0 Long Buildup Vodafone Idea Lt 7 (14.8) 8.4 Short Buildup
Angel One Ltd 3,080 23.2 (4.4) Short Covering Chambal Fertilis 594 (13.7) 36.8 Short Buildup
Delhivery Ltd 355 17.9 (24.0) Short Covering Patanjali Foods 1,701 (13.6) 74.1 Short Buildup
Max Financial Se 1,470 17.8 (11.8) Short Covering Torrent Power Lt 1,402 (12.4) 28.7 Short Buildup
Solar Industries 15,334 15.8 87.2 Long Buildup Aditya Birla Fas 89 (11.0) (37.7) Long Unwinding
Kei Indus Ltd 3,441 15.4 (38.8) Short Covering Dixon Technologi 15,019 (9.5) 12.1 Short Buildup
Hindustan Aerona 4,962 15.4 13.5 Long Buildup Colgate Palmoliv 2,479 (9.2) (11.7) Long Unwinding
BSE/NSE – Bulk Deals
Company Name of Acquirer / Seller Transaction Date Buy /Sale Quantity Price (Rs) Deal Size (Rs m)
Cartrade Tech Limited First Sentier Investors Icvc-Si Indian Subcontinent Sustainability Fund 23/5/2025 BUY 296,264 1,638.4 485
Gravita India Limited Motilal Oswal Asset Management Co.Ltd. - Ntdop (Pms) 23/5/2025 BUY 733,200 1,991.0 1,460
Gravita India Limited Rajat Agrawal 23/5/2025 SELL 2,500,000 1,991.5 4,979
Interarch Bldng Soltn Ltd Eam Emerging Markets Small Cap Fund Lp 23/5/2025 BUY 92,821 2,147.4 199
Lloyds Engg Work Limited Thriveni Earthmovers Private Limited 23/5/2025 BUY 26,800,000 48.5 1,300
Lloyds Engg Work Limited Lloyds Enterprises Limited 23/5/2025 SELL 26,800,000 48.5 1,300
P S Raj Steels Limited Vikasa India Eif I Fund - Share Class P 23/5/2025 SELL 42,000 139.0 6
Pondy Oxides & Chem Ltd Bandhan Mutual Fund 23/5/2025 BUY 254,347 750.0 191
Pondy Oxides & Chem Ltd Saroj Rajendra Prasad Bansal 23/5/2025 SELL 200,000 750.0 150
Pondy Oxides & Chem Ltd Anil Kumar Bansal 23/5/2025 SELL 400,000 763.3 305
Ramco Cements Ltd. Nippon India Mutual Fund 23/5/2025 BUY 1,950,000 1,005.0 1,960

Earnings calls
Company Ticker Company Name Date Time Domestic Call Num Domestic Call Pin International Call Num International Call Pin
GNP IN Equity Glenmark Pharmaceuticals 26-May-25 08:30 91 22 6280 1298 1 866 746 2133
RAINBOW IN Equity Rainbow Children's Medicare Lt 26-May-25 10:00 91 22 6280 1259 1-866 746 2133
EIH IN Equity EIH 26-May-25 11:00 +1 646 558 8656 889 4182 3427
JKCE IN Equity JK Cement 26-May-25 11:30 91-22-6280 1143 1 866 746 2133
HEG IN Equity HEG 26-May-25 14:00 91 22 6280 1235 18667462133
GNFC IN Equity Gujarat Narmada Valley Fertili 26-May-25 15:00 91 22 6280 1328
ABFRL IN Equity Aditya Birla Fashion and Retai 26-May-25 15:30 91 22 6280 1324 1 866 746 2133
JYOTICNC IN Equity Jyoti CNC Automation 26-May-25 16:00 91 22 6280 1224 18667462133
FNXP IN Equity Finolex Industries 26-May-25 16:00 91 22 7195 0000 161854 18552829747 161854
FIRSTCRY IN Equity BrainBees Solutions 26-May-25 18:00 1 646 558 8656 987 2711 5436, 606747 44 330 088 5830 987 2711 5436, 606747
ARBP IN Equity Aurobindo Pharma 27-May-25 08:30
KECI IN Equity KEC International 27-May-25 10:00 91 22 6280 1213 18667462133
AFCONS IN Equity Afcons Infrastructure 27-May-25 11:00 91 22 6280 1259 18667462133
NARH IN Equity Narayana Hrudayalaya 27-May-25 15:00 13052241968 890 8293 7140, 736807
MDA IN Equity Minda Corp 27-May-25 16:00 91 22 6280 1144 18667462133
MHS IN Equity Maharashtra Seamless 27-May-25 16:00 91 22 6280 1143 18667462133
Earnings calls
Company Ticker Company Name Date Time Domestic Call Num Domestic Call Pin International Call Num International Call Pin
FLUOROCH IN Equity Gujarat Fluorochemicals 27-May-25 16:00 91 22 6280 1384 18667462133
TMKN IN Equity Timken India 27-May-25 17:00 91 22 6280 123 18667462133
SEML IN Equity Sarda Energy & Minerals 27-May-25 17:00 91 22 6280 1256 18667462133
INFOE IN Equity Info Edge India 27-May-25 17:30 1 646 876 9923 857 2232 6714, 991199
EID IN Equity EID Parry India 28-May-25 10:00 91 22 6280 1384
GICRE IN Equity General Insurance Corp of Indi 28-May-25 10:30 91 22 6280 1107 18667462133
GRAN IN Equity Granules India 28-May-25 17:00 91 22 6280 1550 1866 746 2133
COHANCE IN Equity Cohance Lifesciences 28-May-25 18:15 91 22 6280 1141 1 866 746 2133
ELEQ IN Equity Elgi Equipments 29-May-25 10:00
BOS IN Equity Bosch 29-May-25 10:00 91-22-6480-0114 25118817521#, 5646# 1-650-215-5227 25118817521#, 5646#
KKC IN Equity Cummins India 29-May-25 10:00 91 22 6280 1164 18667462133
NTCPH IN Equity Natco Pharma 29-May-25 11:00 91 22 6280 1222 18667462133
DN IN Equity Deepak Nitrite 29-May-25 12:00 91 22 6280 1259 18667462133
SAIL IN Equity Steel Authority of India 29-May-25 12:00
TECHNOE IN Equity Techno Electric & Engineering 29-May-25 15:30 91 22 6280 1317
IRCTC IN Equity Indian Railway Catering & Tour 29-May-25 16:00 91 22 6280 1116 1 866 746 2133
ALKEM IN Equity Alkem Laboratories 29-May-25 16:30 91 22 6280 1149 1 866 746 2133
MOTHERSO IN Equity Samvardhana Motherson Internat 29-May-25 17:00
BJAUT IN Equity Bajaj Auto 29-May-25 19:00 91 22 6280 1510 18667462133
GPPV IN Equity Gujarat Pipavav Port 30-May-25 10:30
KNRC IN Equity KNR Constructions 30-May-25 11:00 91 22 6280 1309 1 866 746 2133
ENGR IN Equity Engineers India 30-May-25 15:00 91 22 7115 8285
SJVN IN Equity SJVN 30-May-25
PEPL IN Equity Prestige Estates Projects 30-May-25
NYKAA IN Equity FSN E-Commerce Ventures 30-May-25 17:00
APHS IN Equity Apollo Hospitals Enterprise Lt 31-May-25 11:00 91 22 6280 1141 1 866 746 2133
BATA IN Equity Bata India 2-Jun-25 16:30 91-22-6280 1366 1 866 746 2133
Events Calendar – May 2025
Monday Tuesday Wednesday Thursday Friday Saturday
1 2 3
SIS Archean, Godrej Prop, Marico, DMart, Kotak Mah Bank,
VMart Netweb, SBI

5 6 7 8 9 10
CAMS, Coforge, M&M Alembic, BoB, CG Power, APL Apollo, Blue Star, Coal, Aarti Inds, Asian Paints, ABB, Aditya Vision, Dr Reddys
Godrej Cons, HPCL, Kajaria, Craftsman, Dabur, MRF, Bharat Forge, Biocon, M Sumi, Navin Fluorine,
Kansai, Mahanagar Gas, Sapphire, Satin Credit, Britannia, Ceigall, Cera, Relaxo Foot, Shyam Metalics,
Manyavar, Polycab, Poly Medic Somany, Tata Chem, Voltas Chambal Fert, Escorts, EPL, Thermax
Ideaforge, Jindal Stainless,
L&T, MCX, Pidilite, SJS, Sula,
Titan, Zee

12 13 14 15 16 17
Bajaj Elect, CARE, KIMS, ASK Auto, Bharti, Bharti Hexa, Apollo Tyre, Berger, Brigade, Abbott, Bikaji, CESC, Delhivery, Emami, Data Patterns, Divis Lab
Jyothy Lab, PVR Inox, SRF, Cipla, GAIL, Hero Moto, Eicher, Hind Aero, JB Chem, Crompton, GR Infra, Eureka Forbes, Heritage Food
Tata Steel, UPL, Vijaya Diagn Metropolis, Sai Life, Siemens, Jubilant, Lupin, Sagility, JSW Energy, Kaynes, LIC Hsg, Hyundai, Kalpataru Projects
Syrma, Tata Motors Sanofi India, Shree Cement, Medanta, Medi Assi, NCC,
Tata Power, V Guard, Westlife Page, PB Fintech, TI India

Mar – IIP Apr - WPI

Apr - CPI Apr Import/Export
s19 20 21 22 23 24
Acme Solar, Bharat Electron, Dixon, Electronics Mart, Colgate, Gokaldas Exports, Barbeque, Deepak Fert, GSPL, AB Fashion, Afcons Infra, JK Cement, NTPC, Rainbow
CMS Info, DLF, Doms, Eris Life Gland Pharma, GSFC, HG Infra, Indigo, Honasa, ITC, Metro Brands, AIA Engg, Anupam Rasayan,
Gujarat Gas, Kaveri Seed, Hindalco, Max Health, NHPC, Indusind Bank, Mankind, Mtartech, Power mech, Ashoka Buildcon, Ashok Leyl,
Petronet LNG, PI Inds, Torrent Pharma, United Spirits NTPC Green, Oil India, ONGC, Ramco Cement, Sun Pharma Balkrishna Inds, Cello,
Power Gird, Quess Updater, Zydus Life Teamlease Devyani, Fusion, Glenmark,
JSW Steel, Standard Glass

Apr – CPI (AL/RL)

26 27 28 29 30 31
Action Const, Aurobindo, Bosch, Entero, Info Edge, Bata, Cummins, Deepak Nitr, Alkem, Amara Raja, Apollo Hosp, Nykaa, PNC Infra
Awfis, Bayer Crops, Capacite, JK Lakshmi, Medplus, NMDC, Heidelberg, IRCTC Bajaj Auto Century Ply,ICRA,
Firstcry, KEC Intl, Nazara, TTK Prestige, Zinka Logistic IPCA, KNR Const,
Rategain Samvardhana, Sobha

Apr CPI (IW)

Black: Quarterly results, Blue: Economic data, Red: India Holiday

Events
Apr-Jun 25 Jul-Sep 25 Oct-Dec 25

Economics / • RBI’s Monetary Policy meeting | May • RBI’s Monetary Policy meeting | Aug • RBI’s Monetary Policy meeting | Aug
Politics
• 4QFY25 Quarterly GDP • 1QFY26 Quarterly GDP • 1QFY26 Quarterly GDP

IIFL Events IIFL Invest India Conference

• London | 24-25 June

Auto • Auto volumes – 1day of the month • Auto volumes – 1day of the month • Auto volumes – 1day of the month
India Strategy - Defence India Strategy –
Defence
26 May 2025

Defence on the front foot gaps in the arms market – esp. among Soviet customers seeking
reliable alternatives. India is tapping into this shift, with exports to
DD MMM YYYY
India’s Defence industry is coming of age – sustained focus on countries like Armenia opening doors to traditionally Russian-aligned
improving indigenisation, thrust on R&D and a burgeoning markets. At the same time, Indian firms are becoming key suppliers
private military complex have aided local development of to global giants like Lockheed Martin and Boeing. Defence exports
several battle-tested end-to-end systems. As the world’s have grown at a ~30% Cagr over FY21–25 to Rs236bn, with a
fourth-largest defence spender, India has a massive multi- Rs500bn target set for 2029.
decade modernisation pipeline – one that is now increasingly Defence pack’s outperformance likely to continue: The NIFTY
converting into executable orders, with a rising share awarded India Defence index has outperformed the NIFTY 50 by >20% in the
to domestic players. Concurrently, rising global defence past month, driven by stronger order visibility, solid financial
budgets are creating export avenues. Strong equity market performance in 4QFY25 (42%/89% YoY Sales/PAT growth for select
performance mirrors global trends – led by 1) growing order defence companies covered in the note) and a robust outlook. Even
books 2) strong financial performance (39%/78% Sales/PAT as valuations appear stretched, near-term momentum may persist
growth in 4Q) 3) potential ramp up in defence budget. We amid structural tailwinds and positive sentiment. A strong long-term
expect the sector’s outperformance to sustain; fundamentals outlook and improving fundamentals justify premium valuations. BHE
will catch up with valuations as execution ramps up. is our preferred pick within the sector.
Upcycle in India’s defence capex to favour domestic industry:
Figure 1: Valuation Summary
India’s defence sector has undergone a structural shift, transitioning
Mcap CMP TP P/E EPS Cagr RoE
from an import-reliant model to a more self-sufficient ecosystem – Company Reco Upside
evidenced by 18% Cagr decline in India’s global arms imports over (US$mn) (Rs) (Rs) FY26E FY27E FY25-27E FY25
2019-23. This has been propelled by sustained indigenisation efforts, HNAL 38,844 4,962 NR - - 38 32 11% 22%
policy reforms, relaxation of FDI norms and a burgeoning private BHE 32,842 384 BUY 427 11% 49 41 13% 27%
industry. Both DPSUs & private players are developing complete SOIL 16,243 15,334 NR - - 80 62 36% 31%
defence systems, with growing preference for indigenous solutions in BDL* 8,192 1,909 NR - - 63 47 36% 18%
domestic procurements. Historically, India’s defence capex has seen PTCIL* 2,706 15,425 NR - - 158 49 145% 8%
multi-year double-digit growth following security crises – suggesting ZEN 2,000 1,892 NR - - 50 34 32% 42%
the recent ~Rs400bn emergency procurement post the Pakistan
BEML 1,821 3,718 NR - - 35 27 41% 10%
standoff could mark the beginning of another spending upcycle, this
DATAPATT 1,782 2,718 ADD 2,922 7% 55 43 27% 14%
time with a rising share directed towards the domestic industry.
ASTM 1,211 1,089 NR - - 53 43 26% 14%
Targets Rs500bn of defence exports in 2029: India’s defence PARAS 772 1,637 NR - - 83 67 25% 12%
ecosystem has come of age, with a growing lineup of end-to-end Source: Company, IIFL Research, E – BBG Estimates, *Yet to report FY25 results
indigenous platforms (like Akash SAM, Pinaka MBRL) – most now
battle-tested in the recent Pakistan conflict, lending global credibility.
This comes as the Ukraine war disrupts Russian supplies, creating

Hardik Rawat G V Giri Karan Kadmawala

hardik.rawat@iiflcap.com gvgiri@iiflcap.com karan.kadmawala@iiflcap.com
91 22 4646 4752 91 22 4646 4676 91 22 4646 4685
India Strategy - Defence

Table of content
Summary of companies ........................................................ 3
India’s defence outlay set to surge ....................................... 4
Global military spending accelerates ...................................... 6
Stellar 4Q performance & outlook .......................................... 8
Sector Overview – key parameters ........................................ 9
Financial Summary ............................................................... 11
Valuation Summary .............................................................. 11

Companies
Hindustan Aeronautics .......................................................... 12
Bharat Electronics ................................................................ 15
Solar Industries ................................................................... 17
Bharat Dynamics. ................................................................. 20
PTC Industries ..................................................................... 22
Zen Technologies ................................................................. 23
BEML .................................................................................. 25
Data Patterns India .............................................................. 26
Astra Microwave Products ..................................................... 28
Paras Defence & Space Technologies ...................................... 30
Premier Explosives ............................................................... 32

h ar dik . ra wa t@i ifl c ap .c o m 2

India Strategy - Defence

Figure 2: Summary of Defence companies covered in the note

MCap 5Y Cagr EPS Cagr P/E EVEBITDA RoE
Company Product Portfolio Guidance
(US$mn) Sales PAT FY25-27E FY26E FY27E FY26E FY25
Fighter/Trainer Aircrafts
Military Helicopters Expects >10% YoY revenue growth with stable operating
HNAL 38,844 8% 25% 12% 38 32 27.5 22%
Aero-engines margins ~31%. No order inflow guidance disclosed.
Maintenance, Repairs & Overhaul (RoH)
Radar & Electronic Warfare (EW) Systems Guides for 15%+ YoY sales growth and OPMs of ~27% in
Missile electronics FY26. Order inflows to grow +200% YoY to Rs570bn,
BHE 32,842 13% 24% 12% 49 41 36.9 27%
Naval SONARS & combat mgmt. including Rs300bn from QRSAM. Ex-QRSAM OI to grow
C4ISR solutions 40% YoY.
Industrial Explosives Sales to grow 30%+ YoY led by defence. Mix of Defence in
SOIL 16,243 Rocket propellants 28% 34% 68% overall sales to increase to 30% vs 18% in FY25. OPMs to 80 62 52.4 31%
Ammunition & Weapon systems be flat YoY at ~27% levels.
Anti-Tank & Surface-to-Air missiles
BDL 8,192 Torpedoes & underwater weapons 1% 7% 33% NA 63 47 69.2 18%
Air-to-Air missiles
Precision titanium/steel castings
PTCIL 2,706 Aerospace propulsion components 41% 108% 145% NA 158 49 92.2 8%
High-precision Valves & Pumps
Guides for 50% sales Cagr over FY25-28, FY26 likely to be
Weapon & Armoured vehicles simulators
muted due to delay in receipt of order inflows. Margins to
ZEN 2,000 Anti-Drone Systems 46% 36% 32% 50 34 35.4 42%
stay flat YoY - 35% OPMs & 25% PAT margins. Expects
Smart firing ranges
inflows of Rs8bn in 1HFY26.
Heavy Duty Trucks
BEML 1,818 6% 36% 41% NA 35 27 25.1 10%
High Mobility Vehicles
Avionics & Radars
EW systems Forecasts 20–25% revenue growth and flat OPMs at 35–
DATAPATT 1,782 35% 60% 27% 55 43 43.4 14%
Test Equipment 40%. Expects Rs10-20bn in order inflows in FY26.
Naval Communication Systems
Radars & EW systems Aims for 20%+ YoY revenue growth with 18% PBT
ASTM 1,211 Missile Electronics 18% 28% 26% margins. Order inflows to surge 30-40% YoY to Rs13014bn 53 43 32.9 14%
Telemetry & Counter Drone Systems in FY26.
Hyper Spectral Cameras Guides for 50% YoY revenue growth. OPMs to improve
PARAS 772 Border Defence Systems 20% 25% 25% YoY from ~27% in FY25. Expects to close FY26 with an 83 67 52.9 12%
Optical Systems, Avionic Suites order book of ~Rs15bn.
Bulk Explosives Revenue expected to rise 25–30% YoY with 15–18% OPMs
PRE 344 Propellants 22% NM NA (100–400bps YoY expansion). FY26 order inflows guidance NA NA NA 22%
Counter-measures implied at Rs6.5bn, flat YoY.
Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 3

India Strategy - Defence

India’s defence outlay set to surge Indo-Pak conflict – catalyst for higher military spending
• Historically, India’s defence spending has demonstrated sharp • The military engagement that followed the Pahalgam terror attack
inflections in the aftermath of military confrontations and threats to was significant for the advanced weaponry and technology both India
national security. Defence spending has seen a multi-year ~20% and Pakistan deployed, marking a new era in their confrontations.
growth Cagr following Kargil War and attack on Indian Parliament in • India’s Operation Sindoor featured precision-guided missile strikes
2001, 26/11 Mumbai attacks in 2008 and the Pulwama attack in 2019. targeting terrorist infrastructure deep within Pakistani territory,
showcasing the effectiveness of its long-range missile systems,
Figure 3: Trend in India’s Defence capex outlay - spikes in spending during & post satellite-based targeting and evade & destroy Pakistani air defences,
incidents of national security threats incl. China-based HQ-9B system.
• However, as per media reports India has likely lost fighter jet/s in the
process, also hinted at in the joint press briefing by the armed forces.
Although which jet/s have been lost is unclear. Media reports confirm
that Pakistan lost >3 jets, including a Dassault Mirage-5.
• Pakistan made extensive use of Turkey-based loitering munitions and
guided rocket artillery systems, most of which, were intercepted by
Indian Air Defence system. This was followed by IAF strikes across
major Pakistani air bases.

Figure 4: Damages done by IAF strikes across key Pak air bases

Source: CMIE, IIFL Research

• Despite the recent ramp-up in defence capex, growth in the budget

has lagged nominal GDP growth, with defence capex declining from
0.7% of GDP in FY21 to 0.5% of GDP in FY25.
• The current crisis has led to the GoI approving EPs worth
~Rs400bn over and above the FY26 defence capex outlay planned in
the budget, this implying 21% upward revision to the FY26BE
defence capex assuming 100% utilisation. It would translate to 36%
YoY growth in defence capex in FY26.
• Going by historical evidence, India’s defence capex outlay should see
sustained growth even in FY27/28.
Source: MAXAR, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 4

India Strategy - Defence

Key platforms that stood out for India –

• Missiles & Loitering munitions – Brahmos, IAI Harop & Heron Implications of the crisis
• Fighter Jet – Sukhoi Su-30 MKI
• Air Defence Systems – Akashteer, Akash Missile Systems, MRSAM, • Defence spending to accelerate – The first-order impact of
S-400 systems the crisis has been a ramp-up in defence spending - Pakistan has
• Anti-Drone Systems – Upgraded L70 guns, D4 Anti-Drone Systems approved 18% YoY increase in its annual FY25 Defence budget
while India has approved ~Rs400bn for EPs (implying 21%
Figure 5: Details of the key platforms increase in FY26BE defence capex budget) by India.
System Details OEMs Indigenisation • Revision of India’s policy increases the risk of future skirmishes
BrahMos Supersonic cruise missile; used for BrahMos ~86% (targeting between the two countries, implying increased use of
Missile precision strikes Aerospace 100% by 2026) consumables incl. artillery shells, missiles, and SAM systems.
IAI Harop • Indigenised systems validated – The conflict validated India’s
Loitering munition; used for SEAD IAI Imported
drones push for defence indigenisation, proving that indigenised
Sukhoi Su- Multirole fighter jet; primary systems like Akash, D4 anti-drone units, and advanced
HAL ~62.6% (latest) surveillance tech can perform effectively in a real combat
30MKI platform for air-launched BrahMos
Air defence command and control scenario. Their success in the conflict showcased India’s ability
Akashteer network; enabled rapid, coordinated BHE 100% to develop & deploy advanced military gear independently -
threat response reinforcing strategic autonomy & export potential.
Akash Missile Indigenous medium-range; highly • Exports set to surge – Success of the reasonably priced Indian
BHE, BDL >96% missiles (esp. BrahMos) & Air defence systems (viz. Akash) has
System mobile, multi-target engagement
found acceptance in the global military circles, faring well for
Medium-range SAM; Indo-Israeli
MRSAM IAI, BHE, BDL ~60-70% export demand of these systems.
joint development
• Key countries considering the afore-mentioned systems are
Long-range air defence system:
S-400 Almaz-Antey Vietnam, Indonesia, Malaysia, among others. While most of
intercepted missiles, provided multi- Imported these discussions were underway even prior to the conflict, their
TRIUMF (Russia)
layered shield recent success has bolstered confidence in the systems’
D4 Anti-Drone Indigenous anti-drone system; capabilities.
BHE 100%
System integrated with air defence network • Mixed bag for Chinese military gear – Chinese military gear
Source: Media reports & PIB publications, IIFL Research used by Pakistan in the conflict faced sharp scrutiny after key
failures. The J-10C performed reasonably, showcasing China’s
• While a ceasefire was declared on 10th May’25 at the request of the aerospace progress, but major systems fell short. The HQ-9B
Pakistani DGMO, India contends that this only serves as a strategic failed to intercept Indian strikes, and the PL-15 missile
pause & revised its policy, stating that any terror attack on Indian reportedly malfunctioned or missed. These issues have raised
territory will now be treated as an act of war. doubts about the reliability of Chinese defence tech in high-
intensity warfare.

h ar dik . ra wa t@i ifl c ap .c o m 5

India Strategy - Defence

Global military spending accelerates Figure 7: Military spending across major countries and globally over 1960-2025

• For over six decades, the world enjoyed a relatively stable geopolitical
environment – anchored by globalisation, trade interdependence, and
multilateral diplomacy. While conflicts did occur, they were sporadic
and often swiftly resolved.
• Today, that globalised order is unravelling. Rising protectionism,
supply chain reshoring, and the emergence of a multi-polar world are
reshaping international dynamics. Alliances are being redrawn and so
are defence partnerships.
• The face of conflict is evolving – marked by loitering munitions,
unmanned systems, and hybrid tactics – while the US retreats from
its traditional role as global peacemaker. This shift is accelerating the
frequency and intensity of military engagements, driving a surge in
global defence spending. Source: World Bank, IIFL Research

Figure 6: No. of active global military confrontations between two or more countries
have been rising ever since the collapse of the Soviet Union in 1990
Re-arming Europe
• Europe is experiencing a ramp-up in defence spending, driven by
Russia-Ukraine conflict, changing security priorities for the US and
renewed emphasis on European strategic autonomy.
• In 2024, military expenditure in Europe surged by 17% to
US$693bn, the highest level since the end of the Cold War, with all
European countries (except Malta) increasing their budgets.
• The EU has unveiled ambitious plans, including an €800–910bn
rearmament initiative, with many member states triggering special
clauses to allow defence spending of up to 1.5% of GDP over the
next four years – well above previous budgetary limits.
• This unprecedented investment aims not only to support Ukraine
but also to modernise European military capabilities, reduce
Source: Media Reports, IIFL Research, Note: Israel-Gaza conflict included
reliance on US imports, and prepare for future security threats.
• Indian defence companies will benefit from direct supply of
ammunition, artillery guns & explosives, and indirectly by supplying
• The afore-mentioned chart only includes conflicts involving > two
components & sub-systems to Western defence majors.
countries and excludes long-drawn confrontations with non-state
actors (like ISIS over 2013-19) or civil wars (like Arab Spring in
2011).

h ar dik . ra wa t@i ifl c ap .c o m 6

India Strategy - Defence

Indian Defence companies stand to benefit

Case study: Armenia
• Over the past decade, India’s defence manufacturing landscape has
undergone a significant transformation. Once dominated by DPSUs • Over the past few years India has rapidly emerged as Armenia’s
and reliant on imports - with limited participation by private players – leading defence supplier, replacing Russia as Yerevan’s primary
the sector now sees Indian companies moving up the value chain to arms partner.
develop and export complete defence solutions. • This shift began after Armenia signed a US$2bn defence
partnership with India in 2020, prompted by delayed Russian
deliveries and growing tensions over the Ukraine war.
• This shift has been enabled by a series of government reforms –
procurement policy overhauls, a strong push for indigenisation and • Armenia has since placed major orders for Indian-made
R&D, and increased FDI limits that have created a more level playing weaponry, including Akash-1S air defence systems, Pinaka rocket
field for private players. launchers, howitzers, anti-tank rockets, and anti-drone equipment
– making it the largest importer of Indian arms by 2024.
• The disruption in Russian military exports due to the Ukraine conflict • India, in turn, views Armenia as a strategic ally in the South
has further accelerated this transition, opening new markets for Caucasus, countering Pakistan-Türkiye influence and enabling
Indian manufacturers that were traditionally serviced by the Soviets. connectivity to Eurasian markets.
• Strengthened by defence attaché appointments and shared
• Additionally, Indian defence firms are increasingly becoming part of geopolitical concerns, the partnership reflects success of India’s
the global supply chains of leading Western defence companies. expanding defense exports.

Figure 8: Key Indian Defence companies & their integration in global supply chains
Indian Company/ Global Defence
Product/Component Supplied
• Indian defence exports rose 12% YoY to Rs236bn in FY25, with the
Joint Venture Partner mix of Private companies & DPSUs at 66:34. India is targeting to ramp
Tata Boeing AH-64 Apache helicopter fuselages (sole up exports to Rs500bn by 2029 (implied Cagr: 16%).
Boeing
Aerospace supplier globally)
Tata Lockheed Lockheed C-130J Super Hercules empennages (sole • In a bid to achieve this the government has taken several steps
Aerostructures Martin supplier globally) including 1) pro-active role of defence attaches at Indian embassies
in promoting Indian defence exports 2) defence credit lines to
Tata Sikorsky Sikorsky S-92 helicopter cabins and aerospace
countries for purchasing Indian military equipment (eg. US$200mn
Aerospace (Lockheed) components
credit line to Angola).
Composite panels and structural assemblies for
L&T Defence Airbus
Airbus aircraft
BAE Systems, Elbit Precision-machined components and artillery
Bharat Forge
Systems, others parts for global platforms
Source: IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 7

India Strategy - Defence

Stellar 4Q performance and outlook Defence rally fuelled by macro tailwinds & strong financial
performance

Figure 9: Listed Defence companies reported strong growth in 4QFY25

• The NIFTY India Defence index has delivered >20% alpha over NIFTY
4QFY25 (Rsbn) 4QFY25 (YoY) 50 over the last month led by a trifecta of tailwinds – improving order
Company
Sales EBITDA OPMs PAT Sales EBITDA OPMs PAT visibility (both domestic & global), strong financial performance and a
HNAL 137.0 53.0 38.7% 39.8 -7% -10% -127 bps -8% robust sector outlook.
BHE 91.5 28.2 30.8% 21.2 7% 24% 404 bps 19% • While Indian defence firms have long had a strong potential pipeline,
SOIL 21.7 5.4 24.9% 3.5 35% 53% 294 bps 41% execution visibility has notably improved led by consistent
GRSE 16.4 2.1 12.8% 2.4 62% 163% 454 bps 119% government push for indigenisation (offsets, positive indigenisation
policy), increased private sector participation, accelerating exports
ZEN 3.2 1.4 44.0% 1.0 130% 166% 598 bps 189%
and efforts to shorten the defence procurement timelines.
BEML 16.5 4.2 25.5% 2.9 9% 14% 106 bps 12%
• We believe this sector-wide rally still has near-term legs driven by
DATAPATT 4.0 1.5 37.7% 1.1 117% 61% -13 pps 60% persistent structural tailwinds, though valuations appear stretched.
ASTM 4.1 1.2 29.3% 0.8 15% 49% 697 bps 49% Long-term investors can look to add selectively on pullbacks but
PARAS 1.1 0.3 26.1% 0.2 36% 131% 1076 bps 117% should be mindful of potential volatility and consolidation in the
PRE 0.7 0.1 12.9% 0.0 -15% -37% -448 bps -45% medium term.
Mean 39% 61% 172 bps 78% • Within our current coverage we like Bharat Electronics (BHE), given
Median 25% 51% 349 bps 49% its exposure to a fast-growing TAM in defence electronics (across
fighter jets, helicopters & submarines), strong track record, shorter
Source: Company, IIFL Research
execution cycle, leaner cost structures and superior return profile.
Figure 10:Together with strong guidance on near-term execution
Company Revenue Margins Order Inflows & Book
HNAL >10% YoY OPMs of ~31% - flat YoY NA
Raises OPMs guidance to +200% YoY (incl. QRSAM
BHE 15%+ YoY
27% for FY26 worth Rs300bn)
SOIL 30%+ YoY OPMs of ~27% - flat YoY NA
50% Cagr over next 35% OPMs and 25% PAT Rs8bn of inflows in 1HFY26
ZEN
3Y, muted FY26 Margins – flat YoY - Rs1.5bn received till date
DATAPATT 20-25% OPMs at 35-40% flat YoY OI of Rs10-20bn in FY26
ASTM 20%+ YoY Marginal decline YoY 30-40% YoY growth in OI
50% YoY, but can OPMs to improve YoY vs OB of ~Rs15bn by FY26-
PARAS
surprise positively 27% OPMs in FY25 end, funnel of Rs20-25bn
15-18% OPMs – 100- Implied OI for FY26 at
PRE 25-30% YoY
400bps YoY expansion Rs6.5bn - flat YoY
Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 8

India Strategy - Defence

Sector overview - key parameters

Figure 11:DPSUs command tall order books set to drive ordering for private suppliers – Figure 13: HNAL leads the defence pack on R&D outlay focused on improving
healthy mix of export orders drive strongest relative order book position for SOIL indigenisation levels and development of new capabilities

Source: Company, IIFL Research, ^Only Defence related Orderbook & OB/TTM Sales Source: Company, IIFL Research

Figure 12: Supply chain challenges impacted 5Y Sales/PAT Cagr for BDL – DATAPATT, Figure 14: NWC cycle remains stretched for defence electronics manufacturers; high
ZEN outperformed customer advances and milestone receipts drive lower NWC intensity for DPSUs

Source: Company, IIFL Research Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 9

India Strategy - Defence

Figure 15: Timely fund-raises ensure high cash levels for the private defence companies; Figure 17: High growth and healthy OPMs profile are key drivers for return ratios of
advances from customers support healthy cash levels for the DPSUs defence companies

Source: Company, IIFL Research Source: Company, IIFL Research

• Higher NWC intensity impacts OCF generation for defence companies,

esp. private players. However, timely fund-raises through QIPs have
made them flush with cash, alleviating concerns of execution delays
due to cash crunch over the medium term.

Figure 16: Defence companies remain net-debt-free as at the end of FY25

Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 10

India Strategy - Defence

Financial Summary
Figure 18: Financial Summary
Revenue (Rs bn) EBITDA Margins PAT (Rs bn) FY25-27E CAGR
Company
FY25 FY26E FY27E FY25 FY26E FY27E FY25 FY26E FY27E Sales EBITDA PAT
HNAL IN 309,810 361,701 431,224 31.1% 29.6% 29.0% 83,641 89,060 104,796 18% 14% 12%
BHE IN 237,688 274,836 322,369 28.8% 26.7% 26.8% 53,214 57,282 67,322 16% 12% 12%
SOIL IN 44,566 100,121 127,535 26.0% 26.4% 27.2% 8,031 17,275 22,602 69% 78% 68%
BDL IN* 31,464 43,289 56,809 22.4% 22.3% 24.3% 7,448 9,889 13,219 34% 40% 33%
PTCIL IN* 4,116 8,361 17,566 27.6% 29.3% 37.8% 787 1,458 4,729 107% 142% 145%
ZEN IN 9,736 12,566 18,988 38.4% 36.4% 36.5% 2,802 3,277 4,895 40% 36% 32%
BEML IN 40,222 48,712 58,776 12.6% 12.8% 14.1% 2,925 4,128 5,445 21% 28% 36%
DATAPATT IN 7,084 8,900 11,100 38.8% 38.2% 38.7% 2,218 2,800 3,600 25% 25% 27%
ASTM IN 10,512 13,008 15,520 25.6% 25.0% 24.5% 1,535 2,020 2,437 22% 19% 26%
PARAS IN 3,647 4,569 5,749 26.7% 26.8% 26.8% 635 795 986 26% 26% 25%
Source: Bloomberg, IIFL Research, *BBG Estimates for FY25 as the companies haven’t reported

Valuation Summary
Figure 19: Valuation Summary
MCap CMP EPS P/E EPS Cagr EV-EBITDA RoE
Company PEG (x)
(US$mn) (Rs) FY25 FY26E FY27E FY25 FY26E FY27E FY25-27E FY26E FY25 FY26E
HNAL IN 38,844 4,962 125.1 130.8 153.0 40 38 32 11% 2.9 27.5 22.0% 23.1%
BHE IN 32,842 384 7.3 7.9 9.3 53 49 41 13% 3.2 36.9 27.2% 26.8%
SOIL IN 16,243 15,334 133.7 191.1 247.4 115 80 62 36% 1.7 52.4 31.4% 34.1%
BDL IN* 8,192 1,909 21.9 30.3 40.6 87 63 47 36% 1.3 69.2 17.8% 21.3%
PTCIL IN* 2,706 15,425 52.6 97.4 315.9 294 158 49 145% 0.3 92.2 7.6% 11.3%
ZEN IN 2,000 1,892 32.1 38.2 56.2 59 50 34 32% 1.1 35.4 41.8% 17.5%
BEML IN 1,821 3,718 70.2 105.6 138.7 53 35 27 41% 0.7
DATAPATT IN 1,782 2,718 39.6 49.7 63.9 69 55 43 27% 1.6 43.4 14.2% 16.9%
ASTM IN 1,211 1,089 16.2 20.6 25.6 67 53 43 26% 1.7 32.9 14.1% 15.4%
PARAS IN 772 1,637 15.8 19.7 24.5 104 83 67 25% 2.7 52.9 12.1% 11.9%
Source: Bloomberg, IIFL Research, *BBG Estimates for FY25 as the companies haven’t reported

h ar dik . ra wa t@i ifl c ap .c o m 11

India Strategy - Defence

Hindustan Aeronautics CMP 4,962 Price performance (%)

Market cap (US$m) 38,844 1M 3M 1Y
[5Y Sales/PAT Cagr: 8%/25%, RoE: 26%, Net D/E: (1.0) x] Enterprise value (US$m) 34,381 Absolute (Rs) 15.2 47.3 0.2
Absolute (US$) 15.5 47.7 (0.7)
Bloomberg HNAL IN
Established in 1940 and headquartered in Bengaluru, HNAL is India’s Rel. to benchmark 11.5 35.3 (6.7)
largest Aerospace & Defence company, specialising in the design, Sector Industrials
development, manufacture, and maintenance of aircraft, helicopters, Stock performance
engines, and avionics for the Indian armed forces and space sector. Over Shareholding pattern (%) 52Wk High/Low (Rs) 5,675/3,046
its eight-decade legacy, HAL has evolved from producing early trainer and Promoters 71.6 Shares o/s (m) 669
fighter aircraft to delivering indigenous platforms such as the Tejas LCA, FIIs 12.1 Del Value 3mth avg (US$ m)
Dhruv and Prachand LCH, and the HTT-40 basic trainer, while also DIIs 8.3 Dividend yield FY24 (%) 0.8
undertaking major upgrade programmes for Jaguar, Mirage and Sukhoi Others 8.0 Free float (%) 28.4
fleets. HNAL has built capabilities through strategic collaborations with
global majors including GE, Boeing and Safran, and leads the domestic
Rsmn FY20 FY21 FY22 FY23 FY24 FY25
defence sector in R&D investments with an annual outlay at ~8-10% of
revenue. Market Capitalisation 173,982 332,699 496,532 913,246 2,225,014 2,793,795
- Cash & Cash Equivalents 3,166 71,774 143,477 203,166 264,316 381,823
+ Preferred & Other 43 39 38 37 36 36
Figure 20:HNAL's historical timeline + Total Debt 57,775 115 25 27 11 12
Year Milestone Enterprise Value 228,634 261,079 353,117 710,144 1,960,746 2,412,020
1940 Founded by Walchand Hirachand as Hindustan Aircraft Ltd.
1942 British Indian Government nationalises the company during World War - II Revenue, Adj 214,382 228,823 246,200 269,275 303,811 309,810
1947-64 Management passed to GoI. Merger of aviation entities gives rise to HNAL Growth %, YoY 7.1 6.7 7.6 9.4 12.8 2.0
HNAL develops indigenous aircrafts like Tejas, Dhruv. Upgrades Mig-21 into the EBITDA, Adj 67,284 57,285 55,257 74,515 90,674 96,532
1980s
Mig-21 Bison - enhancing its life span by >20 years Margin % 31.4 25.0 22.4 27.7 29.8 31.2
Transitions from licensed production to indigenous design, with HNAL becoming Net Income, Adj 28,274 32,907 52,035 62,459 76,315 83,801
2000s
the design authority and OEM for ALH-Dhruv and LCH. Margin % 13.2 14.4 21.1 23.2 25.1 27.0
Tejas enters production, major upgrades to Jaguar, Mirage, and Hawk aircraft. EPS, Adj 42.3 49.2 77.8 93.4 114.1 125.3
2010s
Execution slippages impact delivery timelines Growth %, YoY 12.5 16.4 58.1 20.0 22.2 9.8
Development of new indigenous platforms - LUH, LCH, HTT-40 & engines like
2020s
HTFE-25, HTSE-1200.
TTM P/E
Major contract for indigenous AL-31FP engines for Su-30MKI, targeting 63%
2024
local content, reinforcing HAL's role as a self-reliant designer and manufacturer.
Cash from Operations 13,405 149,908 102,590 95,154 99,460 161,658
2025 Focus on next-gen projects - AMCA, TEDBF, advanced UAVs
Capital Expenditures (8,903) (6,543) (7,993) (7,824) (9,164) (9,301)
Source: Company, IIFL Research
Free Cash Flow 4,502 143,365 94,597 87,329 90,296 152,357
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 12

India Strategy - Defence

Product Portfolio
Figure 23: HNAL’s medium- to long-term Manufacturing order pipeline stands at >Rs7tn
Figure 21: HNAL – Product portfolio
Project Nature Customer Value (Rsbn) Quantity
Platform Portfolio
Tejas Mk-1A Fighter Jets Air Force 1,150 97
Su-30 Upgrade Fighter Jets Air Force 630 84
Tejas Mk-2 Fighter Jets Air Force 1,500 318
Aircrafts
AMCA Fighter Jets Air Force 800 126
LCA Tejas Su-30 MKI HTT-40 Dornier Do-228 TEDBF Fighter Jets Navy 1,450 145
LUH Helicopters Air Force & Army 500 400
NUH Helicopters Navy 220 111
Helicopters IMRH Helicopters Army 1,050 419
Total 7,300
DHRUV LUH LCH IMRH Source: Estimates based on media articles, IIFL Research

• In addition to the Manufacturing order pipeline, the company is poised

Engines to receive RoH inflows worth >Rs200bn annually – pertaining to
platforms it has already delivered.
AL-31 FP RD-33
Source: Company, IIFL Research Execution & guidance
• In addition to the manufacturing product portfolio, HNAL’s offerings
encompass MRO services for a range of platforms. • HNAL operates in four segments – Manufacturing, RoH, Development
and Exports. Former two are the major segments comprising ~90%
Order Book & Pipeline of the revenue.
• Mfg. orders have a long execution cycle of >18-36 months, with
• With the receipt of orders for LCH Prachand (Rs628bn) towards the revenue recognition on delivery basis, while RoH orders are short-
end of FY25, HNAL’s order book closed at Rs1.9tn – 6.1x TTM Sales. cycle and command better margins.
Figure 22: Timeline of key orders received by HNAL • Manufacturing revenue declined at a 3% Cagr over the last 5Y while
Year Particulars Quantity Contract Value (Rsbn) RoH grew at a 13% Cagr during the period, leading to a notable shift
2000-10 Sukhoi Su-30MKI (Licensed production) 221 550.0 in the sales mix.
2006 HAL Tejas Mk1 (IAF, initial orders) 40 80.0
• Going forward, there should be healthy pickup in execution. Mgmt.
expects execution of 12 Mk-1A deliveries (~Rs30bn), 30 AL-31FP
2021 HAL Tejas Mk1A 83 480.0 engines and pending ALH deliveries in FY26. Deliveries of Su-30 MKI
2024 Su-30 MKI 12 135.0 (order for 12 nos.) to begin towards the end of FY26 or early FY27.
2024 AL31FP engines 240 260.0
2025 LCH Prachand 156 627.0
Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 13

India Strategy - Defence

Figure 24: HNAL’s sales mix over the years Investment Rationale

Manufacturing RoH & Spares Development & Others Exports

• Robust order pipeline – With a Rs1.8tn+ order book (~6x TTM
100% sales) and large addressable opportunity, growth visibility remains
strong for the next 10–15 years.
80% • Market leader with strategic moat – HNAL commands a near-
60% monopoly in India’s military aircraft segment & is a key beneficiary of
the government’s indigenisation push.
40% • MRO: steady margin driver – MRO services are set to scale with
execution ramp-up. Alongside defence MRO, HNAL is expanding into
20%
civil (MoU with Airbus for A320 fleet), aiding margin stability.
0% • Capabilities-led Edge – Strategic tie-ups with GE, Boeing, Safran,
and consistent R&D investments (~8–10% of revenue) bolster
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25
indigenous capabilities and support long-term competitiveness.
Source: Company, IIFL Research
Risks

• As deliveries get bunched up, FY26 sales growth is likely to exceed • Import dependency & supply chain risks – Despite improved
the guided 8-10%. However, margins should dilute as the mix of
indigenisation (~65% on some platforms), HNAL relies on foreign
Manufacturing increases in overall sales.
OEMs for critical components like jet engines. This exposes it to supply
chain disruptions, as seen with GE’s F-404 delays, potentially stalling
Management Profile
key programmes like LCA Mk-1A, Mk-II and AMCA.
Figure 25: HNAL – Management profile • Execution gaps & rising competition – Legacy inefficiencies and
bureaucratic delays have hampered HNAL’s execution pace. While
Name Designation Profile
currently dominant, growing calls for private sector entry (aided by
With > 37 years at HAL, Dr. Sunil holds engineering relaxed FDI norms) could challenge its monopoly if delays persist.
Chairman & MD degrees from Osmania University and IIT Madras, and a
Dr. D.K. Sunil • Margin & return headwinds – A shift in revenue mix toward lower-
(CMD) Ph.D. from University of Hyderabad. He has led major
margin manufacturing (vs. MRO) is set to put pressure on OPMs.
R&D and production initiatives across the company.
Coupled with rising working capital needs and a planned Rs140–
Chartered Accountant with 31 years’ experience, 150bn capex over the next 3–5 years, this may strain return ratios
Barenya Director
Senapati has been with HAL since 1995, playing key roles and free cash flow.
Senapati (Finance)
in finance, contracts, and revenue optimisation.
Mechanical Engineer & IIM Ahmedabad alumnus, Ravi K
Director
Ravi K has over 30 years’ experience, leading LCA Tejas
(Operations)
operations and major production expansions at HAL.
Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 14

India Strategy - Defence

Bharat Electronics CMP 384 Price performance (%)

Market cap (US$m) 32,842 1M 3M 1Y
[5Y Sales/PAT Cagr: 13%/24%, RoE: 29%, Net D/E: (0.5) x] Absolute (Rs) 25.5 49.9 33.0
Enterprise value (US$m) 31,735
Absolute (US$) 26.2 50.4 33.0
Reco: BUY l TP: Rs427 l Upside: 11% Bloomberg BHE IN
Rel. to benchmark 22.2 38.0 27.1
Sector Industrials
Established in 1954 & headquartered in Bangalore, Bharat Electronics Stock performance
(BHE) is India’s leading Defence electronics company. Over the past Shareholding pattern (%) 52Wk High/Low (Rs) 390/230
seven decades BHE has evolved from manufacturing basic communication Promoters 51.1 Shares o/s (m) 7,310
equipment to becoming an integrated provider of advanced electronic
FIIs 17.6 Del Value 3mth avg (US$ m)
systems for the Indian armed forces and allied sectors. BHE’s portfolio
DIIs 20.9 Dividend yield FY24 (%) 0.6
includes radars, missile systems, communication and C4I systems,
Others 10.4 Free float (%) 48.9
electronic warfare, avionics, naval and anti-submarine warfare systems,
electro-optics, and tank electronics, as well as strategic components for
Rsmn FY20 FY21 FY22 FY23 FY24 FY25
space & homeland security applications. It has built R&D capabilities and
developed key indigenous solutions like the Akash SAM and coastal Market Capitalisation 181,404 304,818 513,634 713,069 1,472,920 2,202,589
surveillance systems. BHE is our top pick given its exposure to a fast- - Cash & Cash Equivalents 16,605 50,738 75,637 81,116 110,566 95,451
growing TAM in defence electronics (across fighter jets, helicopters & + Preferred & Other 142 150 163 178 179 189
submarines), strong track record, shorter execution cycle, leaner cost + Total Debt - - 527 613 625 612
structure and a superior return profile. Enterprise Value 164,941 254,230 438,687 632,744 1,363,159 2,107,940

Figure 26: BHE – Historical timeline

Revenue, Adj 126,366 138,497 150,847 174,042 199,055 237,688
Year Major Milestone
Growth %, YoY 6.6 9.6 8.9 15.4 14.4 19.4
1954 BHE established in Bangalore to serve the electronic needs of Indian Defence
EBITDA, Adj 27,727 32,105 33,409 40,859 50,464 68,337
Sets up radar manufacturing facility and in-house R&D, marking entry into
1966 Margin % 21.9 23.2 22.1 23.5 25.4 28.8
advanced defence electronics
Net Income, Adj 18,237 20,981 23,986 29,834 39,796 53,197
1973 Began manufacturing naval radars, expanding into maritime defence systems
Margin % 14.4 15.1 15.9 17.1 20.0 22.4
1982 Est. Space Electronics Division to support India’s satellite and space programmes
EPS, Adj 2.5 2.9 3.3 4.1 5.4 7.3
1989 Developed & produced the first batch of EVMs
Growth %, YoY (3.3) 15.1 14.3 24.4 33.4 33.7
2007 Became lead integrator of the Akash Air Defence Weapon System
2010 Delivered Data Link-II communications system for Indian Navy’s P-8I
TTM P/E
Signed MoU with JSR Dynamics to co-develop glide weapons and lightweight
2019
cruise missiles, marking a strategic partnership.
Akashteer Air Defence System contract signed, integrating surveillance & Cash from Operations 26,377 51,476 43,817 15,165 50,950 12,545
2023 Capital Expenditures (7,622) (4,693) (5,546) (5,905) (6,525) (10,113)
command for Army’s air defence units
2025 Signed contract for IDDIS counter drone systems, jointly developed with DRDO Free Cash Flow 18,755 46,783 38,271 9,260 44,424 2,433
Source: Company, IIFL Research Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 15

India Strategy - Defence

Product Portfolio Figure 28: BHE’s order pipeline over the medium term
Programme Value (Rs bn) Timeline
• BHE has a robust portfolio of defence electronics, including radars, QRSAM Rs300bn FY26
missile systems, communication equipment, EW & avionics, naval Electronics for NGCs - from 2 shipyards Rs60-100bn FY26–FY27
systems, and electro-optics.
Project Kusha (Indigenous S-400) Rs200-400bn Post-FY27
• Further, it is actively developing next-generation technologies such as
EW Programmes (Shatrughat, Samaghat) Significant FY26
low-level transportable radars (like Ashwini), EW suites for aircraft &
helicopters, precision electronic fuzes, while also expanding Radar & sensor systems Substantial FY26/27
capabilities in AI, cyber security, and unmanned systems. Source: Company, IIFL Research

• BHE’s current civil portfolio encompasses products like EVMs & Execution & guidance
VVPATs, traffic mgmt. systems, solar power generation solutions, and
medical devices such as oxygen concentrators. • BHE has one of the best execution track records within the DPSU pack
when it comes to consistency of execution – it has delivered average
Figure 27: BHE’s product portfolio - Defence & Civil YoY Sales growth of 13% over the last 10Y.
Portfolio • Furthermore, lower share of nominated orders for the company and
relatively higher competition from private players vs other DPSUs
have driven leaner cost structures for BHE, faring well for OPMs.
• While sales growth is likely to continue in mid-teens, mgmt. guides
for ~27% OPMs in FY26, which we find achievable.
Defence Comm. Land-based Radars Naval Systems EW & Avionics
Investment Rationale
• Leading A&D electronics player with a robust pipeline
• Beneficiary of focus on indigenisation
• Strong execution track record & lean cost structure vs other DPSUs
Electro Optics Tank Electronics Weapon Systems C4ISR
Risks
• Competition from private players integrating forward
• Execution delays
Simulators Fuzes Medical Electronics EVMs
Source: Company, IIFL Research Figure 29: BHE – Management profile
Name Designation Profile
Order Book & Pipeline Electronics & Communication Engineering graduate with 30+
Manoj Jain CMD
years at BHE. He has experience in defence mfg. and BD.
• BHE’s order book stood at ~Rs717bn (3x TTM Sales) at the end of Damodar Director B.Com. graduate from the University of Madras with 34+ years
FY25. With the finalisation of QRSAM (Rs300bn) & other large projects Bhattad (Finance) at BHE. He was appointed as Director (Finance) in 2023.
(~Rs270bn) expected in FY26, and large platform orders up to Director Postgraduate in Elect. Eng., has 30+ years of R&D experience,
~Rs300-400bn lined up for FY27, the company has a strong near- Hari Kumar
(R&D) leading projects in radars, communication & EW.
term pipeline. Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 16

India Strategy - Defence

Solar Industries CMP 15,334 Price performance (%)

Market cap (US$m) 16,243 1M 3M 1Y
[5Y Sales/PAT Cagr: 28%/34%, RoE: 31%, Net D/E: (0.1) x] Enterprise value (US$m) 16,228 Absolute (Rs) 17.2 73.3 51.6
Absolute (US$) 19.2 74.1 50.4
Bloomberg SOIL IN
Established in 1995 as a manufacturer of industrial explosives, Solar Rel. to benchmark 15.2 61.7 44.5
Industries has evolved from an explosives manufacturer into a defence Sector Materials
player, leveraging its expertise in industrial explosives to develop Stock performance
advanced ammunition, warheads, and cutting-edge weapon systems. In Shareholding pattern (%) 52Wk High/Low (Rs) 15,399/7,888
recent years, the company has expanded its portfolio to include the Promoters 73.2 Shares o/s (m) 90
Nagastra-1 loitering munition drone and the Pinaka MBRL. Through FIIs 5.8 Del Value 3mth avg (US$ m)
strategic collaborations Solar has also ventured into UAVs, counter-drone DIIs 14.1 Dividend yield FY24 (%) 0.1
systems and an array of defence products including military explosives, Others 6.9 Free float (%) 26.8
rockets and multi-mode hand grenades. Defence now constitutes a
significant and growing share of Solar’s revenue (18% of FY25 sales, up Rsmn FY20 FY21 FY22 FY23 FY24 FY25
945bps YoY) and order book (Rs150bn, 11.2x TTM Sales), with robust
Market Capitalisation 82,735 116,067 253,055 343,184 794,661 1,017,470
export orders and a client base spanning the MoD, DRDO, and
international customers. - Cash & Cash Equivalents 1,202 1,812 988 2,801 5,007 12,545
+ Preferred & Other 515 627 1,006 1,404 1,217 1,503
Figure 30: SOIL – Historical Timeline + Total Debt 7,208 6,272 8,880 11,947 11,378 9,750
Year Milestone Enterprise Value 89,257 121,154 261,954 353,733 802,249 1,016,178
Solar Explosives was founded by Mr. Satyanarayan Nuwal for manufacturing of
1995
industrial explosives after years of trading experience Revenue, Adj 21,654 25,156 39,476 69,225 60,695 75,403
Started mfg. with a licensed capacity of 6K MT, expands capacity over the years Growth %, YoY (9.4) 16.2 56.9 75.4 (12.3) 24.2
1996
and becomes one of the largest global explosive players eventually
EBITDA, Adj 4,520 5,497 7,348 13,108 16,776 19,604
2004 Executed first export order for explosives; introduced PETN & Cast Boosters
Margin % 20.9 21.8 18.6 18.9 27.6 26.0
Solar Explosives acquired Economic Explosives; name changed to Solar
2005 Net Income, Adj 2,791 3,000 4,323 7,710 9,274 12,094
Industries
Margin % 12.9 11.9 11.0 11.1 15.3 16
2010-11 Solar Industries begins work on defence products
EPS, Adj 30.8 33.2 47.8 85.2 102.5 133.65
2016 Wins first major order for multi-mode hand grenades
Growth %, YoY 3.2 7.5 44.1 78.4 20.3 30.41
Indian Navy successfully tests indigenously developed 30mm ammunition
2024
supplied by the company
CCS clears acquisition of the Pinaka Rocket System; SOIL receives order of TTM P/E
2025
Rs61bn - largest artillery order to a private company in India’s history
2025 Delivered 30mm ammunition to the Indian Navy Cash from Operations 2,726 3,094 2,978 6,625 14,147 24,748
Source: Company, IIFL Research Capital Expenditures (2,419) (2,650) (2,840) (4,791) (5,598) (10,060)
Free Cash Flow 307 444 138 1,833 8,550 14,688
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 17

India Strategy - Defence

Order Book & Pipeline Product Portfolio

• Solar commands a robust order book in defence worth Rs152bn Figure 32: SOIL – Product portfolio
(11.2x TTM Sales) led by orders for Pinaka MBRLS and export demand
Type Products
for grenades, ammunition among others.
• Demand for ammunition, Brahmos boosters, grenades, chafes and
strong international interest in the Pinaka MBRLS, coupled with the
company’s new platforms – drones, loitering munitions, and counter- Non-
UAV systems – underscore a robust and promising order pipeline. Defence
Emulsion
Execution & guidance Explosives Detonators Microdet-1 Explosives

• Solar has predominantly been involved in the industrial explosives

business. It started developing defence products only in 2011 and
received first major contract in 2016.
Figure 31: Share of Defence in overall sales expected to increase to 30% by FY26-end Defence
Nagastra
Pinaka Brahmos Booster Rudrastra

Source: Company, IIFL Research

• Solar Industries’ current defence portfolio is anchored by advanced

munitions and aerospace solutions, with strong focus on indigenous
innovation and large-scale manufacturing.
• Key offerings include the Bhargavastra Counter-UAV, which features
hardkill drone interception. The company is also a major supplier of
loitering munitions, notably the Nagastra-1, India’s first indigenous
loitering munition, with advanced variants under development and a
production capacity of up to 1,000 units p.a.
• Solar Industries is expanding into larger platforms, developing MALE
Source: Company, IIFL Research, FY26E based on management guidance
UAVs with surveillance and strike roles, supported by a new composite
• From negligible share five years ago, mix of defence has risen to 18% manufacturing facility and a dedicated UAV test runway.
of sales in FY25 and is expected to further increase to 30% by the end • Additionally, the company manufactures warheads, grenades, 155mm
of FY26 led by execution of defence export contracts and Pinaka. artillery ammunition and rocket assemblies.
• Higher share of Defence in sales mix has driven improvement in
margins (FY25 OPMs at 26% vs 20% in FY19). However, as the mix
of domestic defence execution increases, there is a risk of higher NWC
intensity (CCC is at 86 days at the end of FY25).

h ar dik . ra wa t@i ifl c ap .c o m 18

India Strategy - Defence

Management Profile Investment Rationale

Figure 33: SOIL – Management profile • Market leader in industrial explosives

Name Designation Profile • Defence business ramping up well
Founder &
Founded Solar Industries in 1995 after decades of • Focus on innovation and new product development
experience in the explosives industry. He has 38 years+ of
Satyanarayan Chairman,
Nuwal Non-Exec
experience in coal, mining, and explosives. He does not hold Risks
a formal education, having left school after class 10 to
Director
pursue business. • Estranged promoter shareholder Kailashchandra Nuwal, brother of Mr.
Manish Nuwal, a qualified Chartered Accountant, joined Satyanarayan Nuwal and holder of ~30% equity in the company has
Solar Industries in the mid-1990s and has been instrumental previously opposed key special resolutions. A recurrence of such
Manish
MD & CEO
in its expanding customer base to 75+ countries and dissent remains a possibility.
Nuwal manufacturing base in 8+ countries. He has served as CEO
since 2012 and holds a leadership role in expanding Solar’s
international and defence business.
B.Tech. (Hons) graduate in Mining Engineering from IIT
Kharagpur, he has been with the Solar Group for >15 years.
Suresh Executive
With 38+ years of experience across coal, mining, and
Menon Director
explosives sectors, he plays a key role in overseeing the
company’s marketing operations both in India and globally.
He holds Commerce degree from Mumbai University (1987)
and MBA from Somaiya Institute of Management (1989).
Milind Executive
Previously he has worked Philips India, Wipro and Credcom.
Deshmukh Director
He has been associated with Solar Group’s African
subsidiaries since 2010.
Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 19

India Strategy - Defence

Bharat Dynamics CMP 1,909 Price performance (%)

Market cap (US$m) 8,192 1M 3M 1Y
[5Y Sales/PAT Cagr: 1%/7%, RoE: 18%, Net D/E: (1.2) x] Enterprise value (US$m) 7,778 Absolute (Rs) 33.8 89.1 35.9
Absolute (US$) 35.0 87.4 41.7
Bloomberg BDL IN
Established in 1970 in Hyderabad, BDL is India’s premier PSU Rel. to benchmark 31.1 75.0 35.7
manufacturer of missiles, ammunition and allied defence equipment. It is Sector Industrials
the country’s sole integrator and supplier of a comprehensive range of Stock performance
advanced missile systems, including surface-to-air missiles (SAMs), anti- Shareholding pattern (%) 52Wk High/Low (Rs) 1,958/890
tank guided missiles (ATGMs), underwater weapons, air-to-air missiles Promoters 74.9 Shares o/s (m) 367
(AAMs) and strategic defence solutions for the Indian Armed Forces. BDL FIIs 3.3 Del Value 3mth avg (US$ m)
operates multiple manufacturing units across Telangana and Andhra DIIs 9.5 Dividend yield FY24 (%) 0.3
Pradesh and has built in-house R&D capabilities, enabling high levels of Others 12.3 Free float (%) 25.1
indigenisation and technology absorption, particularly through close
collaboration with DRDO and other global partners. While supply chain Rsmn FY20 FY21 FY22 FY23 FY24 FY25E
disruptions impacted execution over the last 5Y, sales growth should pick
Market Capitalisation 33,935 60,950 100,676 181,210 321,090
up from FY25 with provisional revenue implying 40% YoY sales growth.
- Cash & Cash Equivalents 6,635 15,610 18,995 38,589 42,285
Figure 34: BDL’s history - key milestones + Preferred & Other - - - - -
Year Key Milestones + Total Debt 99 65 65 52 37
1980s Production of French SS11B1 anti-tank guided missiles Enterprise Value 27,398 45,406 81,746 142,674 278,843
2000s Production of Milan-2T and Konkurs-M missiles
2010 Inducted the Akash SAM system in collaboration with DRDO Revenue, Adj 31,049 19,138 28,174 24,894 23,506 31,464
2013 Commenced production of Light Weight Torpedoes Growth %, YoY 1.2 (38.4) 47.2 (11.6) (5.6) 33.9
2022 Exported countermeasure dispensing systems (CMDS) EBITDA, Adj 7,555 3,447 7,261 4,082 5,366 7,043
Collaborated with Thales UK and Dassault Aviation for co-production Margin % 24.3 18.0 25.8 16.4 22.8 22.4
2023
agreements Net Income, Adj 5,338 2,563 5,022 3,512 6,119 7,448
Source: Company, IIFL Research Margin % 17.2 13.4 17.8 14.1 26.0 23.7
EPS, Adj 14.6 7.0 13.7 9.6 16.7 21.9
Order Book & Pipeline Growth %, YoY 28.2 (52.0) 95.9 (30.1) 74.2 31.2

• BDL’s order book at Rs227bn is 7x TTM Sales and is further supported

TTM P/E
by a robust pipeline of QRSAM (Quick Reaction SAM) – expected to be
fast-tracked, LBRM (Laser Beam Riding MANPAD (LBRM), Helina
ATGM among others. This provides ample growth visibility for the next Cash from Operations 5,363 11,262 5,871 22,356 5,970 8,977
5 years. Capital Expenditures (569) (566) (1,020) (1,083) (809) (683)
Free Cash Flow 4,794 10,696 4,851 21,274 5,161 8,294
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 20

India Strategy - Defence

Execution marred by supply chain challenges in the last 5Y production of advanced systems like MRSAM, Akash, torpedoes, and
CMDS. As the production partner for multiple of these platforms, BDL
• Sales over the last 5Y (FY19-24) declined at 5% Cagr despite order is a key beneficiary of this trend.
book growing at ~22% Cagr. This was on account of supply chain • Evolving into a system integrator: BDL is transitioning from just
challenges emanating from Russia & Israel. manufacturing SAMs, AAMs, torpedoes, and ATGMs to offering
turnkey solutions. Backed by strong DRDO ties and foreign OEM
Figure 35: BDL’s product portfolio collaborations, it’s expanding its domestic footprint and eyeing
Portfolio exports. Over time, BDL has built a robust missile ecosystem -
spanning subsystem integration, QC and end-to-end support.
• Eyeing exports opportunity: BDL’s export prospects are gaining
traction, with FY25 export sales hitting a record Rs12bn. The company
is targeting 25% of revenues from exports, supported by strong
interest from 21 countries for systems like Akash, Astra, and CMDS.
BDL is well-positioned to scale globally.
Unified Launcher Konkurs-M ATGM Akash VLSRSAM
Risks

• Execution challenges & risks of supply chain disruptions

• Growing competition from private players
Figure 36: BDL - KMP Profile
Varunastra MRSAM Anti-Sub Warfare CMDS Name Designation Profile
Source: Company, IIFL Research
Cmde A. Assumed charge as CMD in 2023. Holds degrees in Elec. Eng.,
Chairman &
Madhavarao E&TC, Defence Studies, Finance, and Management. Before
• In a bid to deal with the same, BDL has shored up inventories of (Retd.)
MD (CMD)
joining BDL in 2020, he served >30Y in the Indian Navy.
critical components and focused on local procurement of parts where
Took charge in Aug’23, Mech. Engineer from Osmania
possible. Furthermore, global supply chains have since normalised.
P.V. Raja Director University. Has 34 years+ experience at BDL, contributing to
• As a result, there is potential for the company to post robust growth Ram (Production) Prithvi, Akash, and MR SAM programmes. Previously
in the next 3Y, coming off a low base and amidst rising demand for Executive Director and Head of Kanchanbagh Unit.
missiles for SAM systems.
Appointed in 2024, Commerce graduate and Cost
G. Gayatri Director
Accountant. Joined BDL in 1997 as a Trainee. Has 27 years+
Investment Rationale Prasad (Finance)
experience in finance, taxation, budgeting, and investments.
• Key beneficiary of India’s missile momentum: With defence Source: Company, IIFL Research
capex set to grow in double digits in the near term, DPSUs are staring
at a record order pipeline. Furthermore, recent confrontation is
fuelling demand for weapon upgrades - from fighter overhauls, missile
and submarine programmes to SAM systems - boosting indigenous

h ar dik . ra wa t@i ifl c ap .c o m 21

India Strategy - Defence

PTC Industries CMP 15,425 Price performance (%)

Market cap (US$m) 2,706 1M 3M 1Y
Established in 1963, PTC specialises in high-precision metal components Enterprise value (US$m) 2,635 Absolute (Rs) 8.1 49.0 91.0
and advanced castings for critical and super-critical applications across Absolute (US$) 7.6 47.6 85.3
Bloomberg PTCIL IN
defence, aerospace, energy, and industrial sectors. Over the last six Rel. to benchmark 3.7 35.2 79.3
decades, PTC has evolved from supplying industrial castings to becoming Sector Materials
a key player in the defence and aerospace ecosystem, with strong focus Stock performance
on titanium and superalloy castings for complex defence machinery and Shareholding pattern (%) 52Wk High/Low (Rs) 17,995/7,680
strategic platforms. Backed by a fully integrated manufacturing setup, in- Promoters 59.8 Shares o/s (m) 15
house R&D capabilities, and proprietary process technologies, PTC is one FIIs 3.1 Del Value 3mth avg (US$ m)
of the few Indian firms with end-to-end capabilities in investment casting DIIs 7.6 Dividend yield FY24 (%) 0.0
of titanium alloys. Through its subsidiary, Aerolloy Technologies, PTC Others 29.5 Free float (%) 40.2
supplies aerospace-grade materials and components for both domestic
and export markets, clientele encompassing Rolls Royce, Siemens, GE, Rsmn FY20 FY21 FY22 FY23 FY24 FY25E
HAL and Bharat Dynamics. Market Capitalisation 1,509 7,753 26,263 31,326 105,912
- Cash & Cash Equivalents 34 43 40 302 1,579
Figure 37: PTCIL - Historical Timeline
+ Preferred & Other - - - - -
Year Milestone
+ Total Debt 1,506 1,657 1,962 1,767 1,819
Incorporated as Precision Tools & Castings Private Limited, commenced
1963 Enterprise Value 2,981 9,367 28,185 32,791 106,152
operations in industrial castings
Sachin Agarwal appointed Managing Director, drives rapid technology adoption
2006 Revenue, Adj 1,598 1,634 1,790 2,193 2,569 4,116
and innovation, including Replicast technology.
Growth %, YoY - 2.2 9.6 22.5 17.2 60.2
Established manufacturing facility in Lucknow with titanium casting and robot-
2019 EBITDA, Adj 283 349 421 586 728 1,137
assisted production capabilities
Partnered with major Indian defence entities under DTIS to set up an advanced Margin % 17.7 21.4 23.5 26.7 28.3 27.6
2023
materials testing facility in UP Defence Corridor Net Income, Adj 105 44 128 258 423 787
Secured significant production order from BAE Systems for titanium castings for Margin % 6.6 2.7 7.2 11.8 16.5 19.1
2024
the M777 Howitzer EPS, Adj 8.1 3.3 9.8 19.6 30.4 52.55
Aerolloy Technologies (subsidiary) received major order from Safran Aircraft Growth %, YoY - (58.7) 194.3 99.4 55.3 72.83
2025
Engines for LEAP engine components
Commissioned advanced Titanium VAR (Vacuum Arc Remelting) furnace, striving TTM P/E
2025
for global leadership in titanium alloy production
Source: Company, IIFL Research
Cash from Operations 51 (94) 97 307 (1,054) 2,233
Capital Expenditures (155) (259) (282) (962) (1,165) (2,764)
Free Cash Flow (104) (352) (185) (655) (2,219) (532)
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 22

India Strategy - Defence

Zen Technologies CMP 1,892 Price performance (%)

Market cap (US$m) 2,000 1M 3M 1Y
[5Y Sales/PAT Cagr: 46%/36%, RoE: 26%, Net D/E: (0.5) x] Enterprise value (US$m) 1,900 Absolute (Rs) 31.5 73.9 91.8
Absolute (US$) 29.2 72.2 82.8
Bloomberg ZEN IN
Zen Technologies, established in 1993 and headquartered in Hyderabad, Rel. to benchmark 25.3 59.8 76.8
specialises in the design, development and manufacture of advanced Sector Industrials
combat training simulators and counter-drone solutions. The company Stock performance
has built a diverse portfolio of over 40 indigenously developed products, Shareholding pattern (%) 52Wk High/Low (Rs) 2,628/894
ranging from live and virtual training systems to anti-drone technologies, Promoters 49.1 Shares o/s (m) 90
and has shipped >1,000 simulators worldwide. Further, ZEN has FIIs 6.0 Del Value 3mth avg (US$ m)
expanded into naval simulators, drone components value chain and DIIs 9.5 Dividend yield FY24 (%) 0.1
robotic mules & weapons via inorganic expansions. ZEN is recognised for Others 35.4 Free float (%) 50.9
its strong R&D focus, with over 160 patents filed or granted, and invests
significantly in innovation to stay at the forefront of defence training Rsmn FY20 FY21 FY22 FY23 FY24 FY25
solutions. Its clientele includes the Indian Armed Forces, paramilitary, Market Capitalisation 1,755 6,154 16,300 26,091 80,388 133,498
and police, as well as international defence organisations. - Cash & Cash Equivalents 366 403 829 1,674 1,582 9,658
+ Preferred & Other 66 63 69 141 177 352
Figure 38: ZEN - Historical Timeline
+ Total Debt 26 20 148 68 60 777
Year Milestone
Enterprise Value 1,482 5,833 15,687 24,626 79,044 124,970
1993 Zen Technologies incorporated, focused on defence training simulators
Launched Advanced Weapons Simulator (AweSim), marking a major product
2002 Revenue, Adj 1,493 546 698 2,189 4,399 9,736
breakthrough
Growth %, YoY 61.9 (63.4) 27.7 213.7 101.0 121.4
2012 Launched UAV simulator; received national award for indigenous technology
EBITDA, Adj 627 74 46 726 1,808 3,735
2015 Launched Zen Combat Training Centre, a flagship integrated training solution.
Margin % 42.0 13.5 6.5 33.2 41.1 38.4
Acquired 51% stake in Unistring Tech Solutions Pvt Ltd, strengthening R&D and
2019 Net Income, Adj 589 31 20 427 1,279 2,802
product portfolio.
ZEN launched its first Anti-Drone system, marking entry into the counter-UAV Margin % 39.4 5.7 2.8 19.5 29.1 28.8
2020 EPS, Adj 7.6 0.4 0.3 5.2 15.3 32.07
market
2021 Received first major order for Anti-Drone system from the IAF worth Rs1.5bn+ Growth %, YoY 342.9 (94.9) (35.9) 1,979.7 195.0 109.04
Launched AI-powered defence products and remote-controlled
2024
weapon/surveillance systems for global markets. TTM P/E
Entered agreements to acquire ARI Labs Pvt Ltd and Applied Research
2025
International Pvt Ltd, expanding technological capabilities Cash from Operations 600 74 (414) 1,194 203 (1,028)
Source: Company, IIFL Research Capital Expenditures (52) (20) (43) (132) (298) (323)
Free Cash Flow 548 54 (457) 1,062 (95) (1,351)
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 23

India Strategy - Defence

Product Portfolio
• Mgmt. guides for cumulative revenue of Rs60bn over FY26-28 off the
Figure 39: ZEN – Product portfolio base of sales of Rs9bn in FY25. However, mgmt. indicated that while
Type Products the long-term growth guidance is sustained, delays in order inflows
with awards towards the end of 1HFY26 could impact growth in FY26.

Management Profile
Simulators
Figure 40: ZEN - Management Profile
Container Ranges Mortar Simulator T-72 Simulator L-70 Simulators Name Designation Profile
He co-founded ZEN in 1993. A commerce graduate from
Ashok Chairman & Osmania University with a postgraduate diploma in applied
Anti-Drone Atluri MD computer science, he has completed executive programmes at
Systems top global business schools.
Co-founded Zen Technologies in 1993. He holds a postgraduate
degree in computer applications from the University of
Source: Company, IIFL Research Kishore President &
Hyderabad and has over 21 patents to his name. Kishore leads
Atluri Joint MD
defence marketing and has been pivotal in developing
• Further, by virtue of the recent acquisitions ZEN has expanded into advanced simulators for the armed forces.
naval simulators, drone components value chain and robotic mules & Afzal He joined the company in Jul’22. He is a graduate of Veer
weapons. Harunbhai CFO Narmad South Gujarat University and previously served as CFO
Malkani at Anupam Rasayan India.
Order Book & Pipeline
Source: Company, IIFL Research

• ZEN’s SA book stands at ~Rs7bn (0.7x TTM Sales), with recently Investment Rationale
acquired companies further commanding OB worth ~Rs1bn. The
company expects OI of Rs8bn in 1HFY26 - of which Rs1.5bn has been
received and Rs6.5bn is expected, primarily for simulators. • IP-driven, asset-light business model
• Further, mgmt. expects recent "Operation Sindoor" could activate • Leading player in simulators
orders anti-drone systems amidst focus on acquiring new-age war • Expanding product portfolio through R&D and acquisitions
equipment.
Risks
Execution & guidance
• Diminished order book limits growth visibility for FY26
• The company delivered strong 111% Sales Cagr over the last two • High NWC intensity
years supported by robust demand across simulators and anti-drone
systems – both domestic sales and exports.

h ar dik . ra wa t@i ifl c ap .c o m 24

India Strategy - Defence

BEML CMP 1,892 Price performance (%)

Market cap (US$m) 1,818 1M 3M 1Y
[5Y Sales/PAT Cagr: 6%/36%, RoE: 10%, Net D/E: (0.5) x] Enterprise value (US$m) Absolute (Rs)
Absolute (US$)
Bloomberg BEML IN
BEML operates across three main segments – Aerospace & Defence, Rel. to benchmark
Mining & Construction and Rail & Metro. Currently the revenue mix Is Sector Industrials
dominated by mining, followed by rail and metro and then defence. In Stock performance
FY24, defence accounted for about 19% of revenue, but with a strong Shareholding pattern (%) 52Wk High/Low (Rs) 5,489/2,346
order book, its share is expected to rise to ~30%. Within defence, BEML’s Promoters 54.0 Shares o/s (m) 42
portfolio includes high mobility vehicles (HMVs), recovery vehicles, tank FIIs 7.3 Del Value 3mth avg (US$ m)
transportation trailers, bridge systems, ground support vehicles for DIIs 18.7 Dividend yield FY24 (%) 0.1
missile programmes, mine ploughs, crash fire tenders, aircraft towing Others 20.0 Free float (%) 46.0
tractors and weapon loading trolleys. Key clientele in the defence
segment includes the Indian Army, MoD and other government agencies. Rsmn FY20 FY21 FY22 FY23 FY24 FY25
BEML also exports defence equipment, such as HMVs, to countries like Market Capitalisation 18,809 52,295 75,745 52,364 132,584 134,062
Armenia. Indigenisation is a focus, with several products like pontoon - Cash & Cash Equivalents 273 54 339 393 89 50
bridge systems and tank trailers being fully indigenous, and HMVs
+ Preferred & Other 0 (2) (4) (4) (4) (5)
reaching over 80% indigenous content.
+ Total Debt 2,396 7,517 8,318 3,815 709 2,286
Enterprise Value 20,932 59,757 83,720 55,781 133,200 136,294
Figure 41: BEML - Historical Timeline
Year Milestone Revenue, Adj 30,254 35,566 41,430 38,392 40,543 40,222
1964 Incorporated as Bharat Earth Movers Limited under Ministry of Defence Growth %, YoY (12.9) 17.6 16.5 (7.3) 5.6 -0.8
1980s Entered defence sector with armoured vehicles and equipment collaborations EBITDA, Adj 839 1,780 3,098 3,659 4,423 5,057
2006 Launched Technology Division for advanced product development Margin % 2.8 5.0 7.5 9.5 10.9 12.6
2011 Entered aerospace manufacturing with new complex at Bangalore SEZ Net Income, Adj 637 687 1,284 1,481 2,813 2,925
2020 Received Rs8.4bn order for heavy-duty trucks from Ministry of Defence Margin % 2.1 1.9 3.1 3.9 6.9 7.3
2020 Initiated indigenous 1500 HP tank engine project EPS, Adj 15.3 16.5 30.8 35.6 67.6 70.24
2021 Rolled out first prototype of Mechanical Minefield Marking Equipment MK-II Growth %, YoY 0.9 8.0 86.8 15.3 90.0 3.97
2024 Successfully test-fired India’s first indigenously developed 1500 HP tank engine
2024 Secured order for HMVs from Ministry of Defence TTM P/E
Source: Company, IIFL Research
Cash from Operations 660 (3,433) (8) 5,283 4,212 1,300
Capital Expenditures (522) (459) (346) (310) (971) (1,811)
Free Cash Flow 138 (3,892) (353) 4,973 3,242 (511)
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 25

India Strategy - Defence

Data Patterns India CMP 2,718 Price performance (%)

Market cap (US$m) 1,782 1M 3M 1Y
[5Y Sales/PAT Cagr: 35%/60%, RoE: 16%, Net D/E: (0.3) x] Enterprise value (US$m) 1,729 Absolute (Rs) 25.2 75.0 (12.2)
Absolute (US$) 27.3 75.0 (12.9)
Bloomberg DATAPATT IN
Reco: ADD l TP: Rs2,922 l Upside: 7% Rel. to benchmark 23.3 62.6 (18.9)
Sector Industrials
Data Patterns is a leading, vertically integrated defence and aerospace Stock performance
electronics solutions provider based in Chennai, with >35 years of Shareholding pattern (%) 52Wk High/Low (Rs) 3,655/1,351
experience. It specialises in the design, development, and manufacturing Promoters 42.4 Shares o/s (m) 56
of high-reliability electronic systems, including embedded systems, FIIs 12.8 Del Value 3mth avg (US$ m)
avionics, radars, EW suites and communications intelligence systems. DIIs 7.4 Dividend yield FY24 (%) 0.2
Data Patterns has played a key role in several marquee Indian defence Others 37.4 Free float (%) 57.6
and space programmes, supplying critical subsystems for platforms such
as the LCA Tejas, Light Utility Helicopter, BrahMos and ISRO’s satellite & Rsmn FY20 FY21 FY22 FY23 FY24 FY25
launch vehicle missions. With in-house development & manufacturing Market Capitalisation - - 36,471 77,017 135,593 94,637
capabilities, the company has a strong clientele including DRDO, ISRO, - Cash & Cash Equivalents 15 88 1,771 6,035 6,549 4,530
BEL, HAL and the Indian armed forces. We expect OI during the year to + Preferred & Other - - - - - -
aid FY26 execution, enabling Sales/PAT Cagr of 27%/21% over FY25-27ii.
+ Total Debt 665 372 92 25 35 62
Figure 42: DATAPATT - Historical Timeline Enterprise Value - - 34,792 71,007 129,080 90,169
Year Milestone
Incorporated as Indus Teqsite Private Limited, focusing on high-reliability Revenue, Adj 1,561 2,240 3,109 4,535 5,198 7,084
1998 Growth %, YoY 19.1 43.5 38.8 45.9 14.6 36.3
electronics for defence and aerospace
2001 Rebranded as Data Patterns, expanded into indigenous defence electronics EBITDA, Adj 432 919 1,410 1,746 2,216 2,750
Developed and supplied key subsystems for ISRO’s satellite and launch vehicle Margin % 27.6 41.0 45.4 38.5 42.6 38.8
2016
programmes Net Income, Adj 209 555 940 1,234 1,704 2,218
2018 Delivered critical systems for LCA Tejas & other major defence platforms Margin % 13.4 24.8 30.2 27.2 32.8 31.3
Received major order from DRDO for next-generation wide-band RF front-end EPS, Adj 123.1 326.4 19.5 23.7 30.4 39.62
2022 Growth %, YoY 171.6 165.2 (94.0) 21.6 28.4 30.21
units for electronic warfare systems.
Secured export order for transportable precision approach radar systems from
2023
a NATO country, marking a significant international partnership. TTM P/E
Expanded international business, with export revenues and new partnerships in
2024
the UK and Europe. Cash from Operations 45 420 454 (169) 1,600 (828)
Source: Company, IIFL Research Capital Expenditures (15) (57) (382) (385) (460) (359)
Free Cash Flow 30 363 72 (554) 1,140 (1,187)
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 26

India Strategy - Defence

Product Portfolio Management Profile

Figure 43: DATAPATT’s offerings comprise COTS, EW, Avionics, Radars among others Figure 44: DATAPATT - Management Profile
Name Designation Profile
S. Rangarajan CMD Holds a Bachelor’s in Electronics & Communication
Engineering. Co-founded Data Patterns; over 30 years’
experience in defence electronics. Instrumental in strategic
vision and growth of the company.
Venkata CFO Chartered Accountant with 20+ years’ experience in finance,
Subramanian accounting, and corporate strategy. Prior roles include
finance leadership at manufacturing and tech firms. Joined
Data Patterns in 2021.
P. Chief Electronics & Communication engineer with over 21 years at
Desingurajan Technology Data Patterns. Leads R&D and technology innovation;
Officer specialises in defence and aerospace systems development.
Previously worked in embedded systems.
Source: Company, IIFL Research

Investment Rationale

Source: Company, IIFL Research, COTS – Commercial Off The Shelf, EW – Electronic Warfare • Strong capabilities across the defence electronics spectrum – radars,
Order Book & Pipeline EW, avionics, communication systems and satellites
• Expanding product portfolio through R&D
• The company’s order book stood at Rs7.3bn as at the end of FY25, • Exports potential
~1x TTM Sales. While inflows for FY25 at Rs3.6bn missed guidance of
Rs7-8bn, mgmt. contended that these were on account of delays in
Risks
capex decisions in 1HFY26, continuing through 2H.
• Mgmt. anticipates a healthy ramp-up in inflows in FY26, expecting
• Consistent delays in receipt of order inflows
order awards of Rs10-20bn in the near to medium term. This includes
repeat requirements for single-vendor products, opportunities from • High NWC intensity
EP-6 tenders and orders from DPSUs. We expect the company to
accrue OI of >Rs17bn.
Execution & guidance

• Mgmt. guides for 20-25% revenue Cagr in FY26 while maintaining

OPMs in 35-40% range. We expect the company to deliver towards
the higher band of their guidance led by execution of short-cycle
orders.

h ar dik . ra wa t@i ifl c ap .c o m 27

India Strategy - Defence

Astra Microwave Products CMP 1,089 Price performance (%)

Market cap (US$m) 1,211 1M 3M 1Y
[5Y Sales/PAT Cagr: 18%/28%, RoE: 16%, Net D/E: (0.8) x] Enterprise value (US$m) 1,249 Absolute (Rs) 37.2 82.6 43.4
Absolute (US$) 32.3 82.0 38.7
Bloomberg ASTM IN
Established in 1991 by a team of scientists, Astra Microwave Products Rel. to benchmark 29.1 70.5 33.6
Limited (ASTM) is engaged in the business of designing, developing and Sector Information Technology
manufacturing Defence, Aerospace and Space Electronics systems, sub- Stock performance
systems and components. With over 30 years of experience in radars, Shareholding pattern (%) 52Wk High/Low (Rs) 1,150/584
electronic warfare, and strategic electronics, the company has evolved Promoters 6.5 Shares o/s (m) 95
from supplying components and modules to delivering complex sub- FIIs 5.3 Del Value 3mth avg (US$ m)
systems and integrated systems. Defence is the largest segment, DIIs 15.3 Dividend yield FY24 (%) 0.2
contributing 75-80% of revenue, while space and meteorology make up Others 72.9 Free float (%) 93.5
the balance. Exports made up 30%+ of sales. Key clients include the
Ministry of Defence, DRDO, ISRO, Brahmos, Bharat Electronics, HAL, L&T, Rsmn FY20 FY21 FY22 FY23 FY24 FY25
Thales, and Elbit Systems. ASTM is targeting 25% revenue growth in Market Capitalisation 4,495 11,229 19,483 19,462 56,630 63,836
FY26, supported by a robust order pipeline and increasing international - Cash & Cash Equivalents 663 566 775 1,109 1,309 981
opportunities, particularly in Europe. It is eyeing Rs13-14bn of order
+ Preferred & Other - - - - - -
inflows in FY26.
+ Total Debt 549 1,216 704 1,855 2,376 4,235
Figure 45: ASTM - Historical Timeline Enterprise Value 4,381 11,879 19,413 20,208 57,697 67,089
Year Milestone
Incorporated as Astra Microwave Products, focused on RF and microwave Revenue, Adj 4,672 6,409 7,505 8,155 9,088 10,511
1991 Growth %, YoY 59.2 37.2 17.1 8.7 11.4 15
components for defence and space
1998 Delivered first indigenous microwave sub-systems for DRDO radar projects EBITDA, Adj 825 790 892 1,475 1,916 2,690
Transitioned from component and module supplier to sub-system and systems Margin % 17.7 12.3 11.9 18.1 21.1 25.0
2000s
provider for defence and aerospace projects Net Income, Adj 417 281 375 697 1,211 1,535
Expanded “Build to Specifications” capabilities, delivered mission-critical systems Margin % 8.9 4.4 5.0 8.5 13.3 14
2011
for military and space applications. EPS, Adj 4.8 3.2 4.3 8.1 12.9 16.1
2015 Established Astra Rafael Comsys joint venture to focus on communication & EW Growth %, YoY 1,625.3 (32.6) 33.5 85.9 59.8 25.7
Implemented advanced EW system for Indian Armed Forces; expanded
2023
Hyderabad manufacturing facility by 40%. TTM P/E
Astra Rafael Comsys JV received a Rs2.6bn order from the Ministry of Defence for
2024
Su-30 MKI SDRs
Cash from Operations (333) (388) 996 (431) (1,933) (1,251)
2024 Signed MoU with Premier Explosives to develop & sell advanced defence products
Capital Expenditures (194) (37) (279) (333) (436) (722)
Source: Company, IIFL Research
Free Cash Flow (527) (425) 717 (764) (2,369) (1,974)
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 28

India Strategy - Defence

Product Portfolio Execution & guidance

Figure 46: ASTM – Product portfolio • ASTM guides for ~20% revenue growth in FY26 and beyond,
Products supported by ramp-up in execution of key programmes including LCA
Mk1A Uttam radars, QRSAM and next-gen EW systems.
• Deliveries for some programmes are expected to begin in late FY26,
with additional revenue contribution from its JV, Astra Rafel, targeting
Rs3.5bn in FY26.
X-Band Doppler
Uttam AESA Radar Rx Array for RPA Weather Radar 2 Bay MON Antenna Management Profile

Figure 47: ASTM - Management Profile

Name Designation Profile
Graduate in Science and Mathematics and a Chartered
S. Gurunatha Accountant, currently the MD of ASTM, with 33 years+
MD
Reddy experience in accounting, finance, taxation, and company
Perimeter Intrusion Pulsed Phased Array Integrated GPS Unmanned Ground secretarial functions in the private sector.
Detection Radar Tracking Radar NAVIC Receiver Vehicles Economics graduate and Founding Partner of Frontline
Executive
Source: Company, IIFL Research Strategy Limited, managing India-focused private equity
Director
Atim Kabra and venture capital funds in Mauritius and Singapore. With
(Strategy &
Order Book & Pipeline 25 years+ experience in equity research, sales, and portfolio
BD)
management at firms like ABN AMRO and ANZ Grindlays.
• In FY25 ASTM secured Rs11bn in new standalone orders, with major Electronics Engineer and MBA, currently the Joint Managing
contributions from radars & EW, including for Su-30, Akash. The Dr. Maram Director of ASTM, with 28 years+ experience in marketing
consolidated order book stood at Rs23bn as at the end of FY25, Venkateshwar JMD and business operations across defence, space, and
implying 2.5x OB/TTM sales. Reddy telecom sectors in India and overseas, focusing on the
• ASTM sees a robust order pipeline led by key programmes like Sukhoi strategic electronics industry for private companies.
30 AAU, next-gen EW suites, Kusha, QRSAM, and LCA Mk1A Utam, Source: Company, IIFL Research
with deliveries for some commencing in 2HFY26.
• Emergency procurement has triggered inquiries for counter-drone Investment Rationale
radars, jammers, and Akash-related subsystems, with conversion
expected in 8-18 months. • Vertical integration & global partnerships
• Mgmt. guided for order inflows of Rs13-14bn in FY26, including • R&D-based expansion of product portfolio
Rs3bn+ in exports. TAM is estimated at Rs200-250bn over the next
4–5 years. Risks

• High NWC intensity

h ar dik . ra wa t@i ifl c ap .c o m 29

India Strategy - Defence

Paras Defence & Space Technologies CMP 1,637 Price performance (%)
Market cap (US$m) 772 1M 3M 1Y
[5Y Sales/PAT Cagr: 20%/25%, RoE: 11%, Net D/E: (0.1) x] Enterprise value (US$m) 762 Absolute (Rs) 52.7 83.1 110.1
Absolute (US$) 53.8 84.2 105.2
Bloomberg PARAS IN
Paras Defence specialises in defence electronics, heavy engineering, Rel. to benchmark 49.9 71.8 99.2
optics and electromagnetic pulse protection and recently forayed into Sector Industrials
hydrogen-powered drones in a JV with US-based Heaven Drones. The Stock performance
company’s FY25 revenue was equally split between defence engineering Shareholding pattern (%) 52Wk High/Low (Rs) 1,945/743
and Optics & Optronic Systems. Further, the company has a burgeoning Promoters 57.1 Shares o/s (m) 40
exports business. With an order book of Rs9bn+ (>2.5x TTM sales) at the FIIs 5.2 Del Value 3mth avg (US$ m)
end of FY25, the company is guiding of ~50% growth in FY26 while DIIs 1.5 Dividend yield FY24 (%) 0.0
maintaining OPMs of 27-28%. Submarine periscopes, Air Defence High- Others 36.2 Free float (%) 42.9
Powered Lasers, EOIR systems, Border Defence Surveillance Systems,
and optic products for space missions will be key growth drivers for the Rsmn FY20 FY21 FY22 FY23 FY24 FY25
company. Its clientele comprises the MoD, DRDO, ISRO, Bharat Market Capitalisation - - 24,402 18,344 23,860 38,597
Electronics, HNAL among others. - Cash & Cash Equivalents 44 83 759 403 114 1,108
+ Preferred & Other - 1 4 2 (13) (33)
Figure 48: PARAS - Historical Timeline
+ Total Debt 971 937 311 146 658 240
Year Milestone
Enterprise Value - - 23,958 18,089 24,391 37,696
1979 Founded by Sharad Virji Shah
2009 Incorporated as Paras Flow Form Engineering Limited in Mumbai
Revenue, Adj 1,470 1,433 1,826 2,224 2,535 3,647
Secured first major order for developing electronic control system, marking entry
2015 Growth %, YoY (4.8) (2.5) 27.4 21.8 14.0 43.9
into advanced defence electronics.
EBITDA, Adj 394 434 519 568 510 974
Began developing & manufacturing optics for space applications, becoming the
2016 Margin % 26.8 30.3 28.4 25.5 20.1 26.7
only Indian company to produce large-scale IR optics.
Net Income, Adj 197 157 271 361 321 636
Won order for developing and manufacturing Electromagnetic Pulse (EMP) racks,
2017 Margin % 13.4 11.0 14.8 16.2 12.6 17.4
expanded into protection systems
Expanded operations to Bangalore and completed amalgamation of Mechvac EPS, Adj 6.9 5.6 7.8 9.3 8.2 15.78
2018
India Limited and Concept Shapers & Electronics Growth %, YoY 2.9 (20.0) 40.2 18.9 (11.2) 91.96
2019 Established Paras Aerospace Private Limited to enter drone systems and services
2021 Received DRDO’s ToT for Border Surveillance System TTM P/E
2024 Signed MoU with Israel’s MicroCon Vision to manufacture ISR drone cameras
Awarded order of Rs1.4bn from DRDO’s CHESS to develop a high-powered anti- Cash from Operations (121) (62) 30 436 (471) 431
2025
drone laser system, marking entry into DEW Capital Expenditures (41) (53) (86) (253) (260) (352)
Source: Company, IIFL Research Free Cash Flow (162) (115) (56) 183 (732) 79
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 30

India Strategy - Defence

Figure 49: PARAS – Product portfolio Execution & guidance

Products
• Mgmt. guides for a 40% sales Cagr over the next 3–4 years while
maintaining OPMs over 25%. The growth-driving categories include
Submarine Periscopes, Air Defence High-Powered Lasers, EOIR
systems, Border Defence Surveillance Systems, and optic products for
space missions.
• The company can deliver the guidance with the current manufacturing
capacities and does not envision major capex for FY26.
Mil Grade Control Automated Test
Optics Domes Submarine Winches System Equipment (ATE) Management Profile

Figure 50: PARAS - Management Profile

Name Designation
Munjal Sharad Shah MD
Harsh Dhirendra Bhansali CFO
Amit Mahajan Director (R&D & Technology)
Rugged Command & Turnkey Indigo Avionic Suites Active Array Radar Source: Company, IIFL Research
Control System Simulator System Cooling Assemblies
Source: Company, IIFL Research
Investment Rationale

Order Book & Pipeline • Leadership in Optics & Optronic systems

• Strategic collaborations driving product portfolio expansion
• Current order book is at Rs9bn – 2.5x TTM Sales. Mgmt. is confident • Healthy growth visibility led by strong order pipeline
of robust inflows backed by a strong pipeline of Rs20-25bn and
expects to close FY26 with an order book of Rs15bn. Risks
• While the mix of optics is higher in the order book (60%), the
company expects to receive orders for their defence engineering • High NWC intensity
segment during the year with an average execution timeline of 4-9
months.

h ar dik . ra wa t@i ifl c ap .c o m 31

India Strategy - Defence

Premier Explosives CMP 546 Price performance (%)

Market cap (US$m) 344 1M 3M 1Y
[5Y Sales/PAT Cagr: 22%/NM, RoE: 12%, Net D/E: (0.2) x] Enterprise value (US$m) 337 Absolute (Rs) 38.5 49.2 10.6
Absolute (US$) 37.3 49.0 8.9
Bloomberg PRE IN
Premier Explosives was set up as an industrial explosives and detonators Rel. to benchmark 33.4 36.6 2.9
manufacturer in 1980. Over the years the company ventured into defence Sector Materials
& aerospace, developing propellants and today it is the only private entity Stock performance
in India manufacturing and supplying solid propellants for missiles like Shareholding pattern (%) 52Wk High/Low (Rs) 909/309
Akash, Astra, LRSAM. Other defence offerings include pyros and Promoters 41.3 Shares o/s (m) 54
countermeasures (sole supplier in India). Defence & Aerospace is the FIIs 0.7 Del Value 3mth avg (US$ m)
biggest segment for the company, constituting over 81% of FY24 revenue DIIs 8.0 Dividend yield FY24 (%) 0.1
with commercial explosives and O&M making up the balance. Exports led Others 50.0 Free float (%) 58.7
by sales to Israel, Greece, Turkey, Nepal, etc. Key clientele includes Coal
India, MOIL, DRDO, BHE, cement manufacturers, BDL and ISRO. Rsmn FY20 FY21 FY22 FY23 FY24 FY25
Market Capitalisation 661 1,646 3,369 4,348 16,362 18,098
Figure 51: PRE - Historical Timeline - Cash & Cash Equivalents 159 62 48 70 292 1,013
Year Milestone
+ Preferred & Other 13 13 12 13 13 13
Premier Explosives incorporated by Dr. A.N. Gupta, pioneered indigenous + Total Debt 551 581 779 830 615 406
1980
explosives and detonators manufacturing in India
Enterprise Value 1,067 2,178 4,112 5,120 16,697 17,505
Commenced commercial production of explosives; expanded into site-mixed
1993
slurry (SMS), bulk explosives and detonators
Revenue, Adj 1,645 1,536 1,991 2,020 2,717 4,174
1994 Commissioned PETN and detonating fuse plants, expanding product capabilities
Growth %, YoY (35.0) (6.6) 29.6 1.5 34.5 53
Forayed into defence by developing solid propellants, becoming the only private
2003 EBITDA, Adj (55) 63 201 264 585 579
supplier for missiles like Akash, Astra and LRSAM
Commissioned additional bulk explosive plant at Neyveli and started operations at Margin % (3.3) 4.1 10.1 13.0 21.5 13.0
2009 Net Income, Adj (100) (109) 47 72 284 287
Solid Fuel Complex in Jagdalpur
Became world’s first to commercially manufacture detonators with Nickel Margin % (6.1) (7.1) 2.4 3.6 10.4 6
2013
Hydrazine Nitrate (NHN) as the primary charge EPS, Adj (1.9) (2.0) 0.9 1.3 5.3 5.3
Entered Joint Development Agreement with IIT Madras for research in high- Growth %, YoY NM (8.9) NM 53.6 293.4 1.2
2014
energy materials
2021 Commissioned Katepally Greenfield Project, expanding manufacturing capacity TTM P/E
Dispatched first export shipment of rocket motors for an overseas entity, marking
2023
a milestone in defence exports Cash from Operations (110) 35 (84) 135 689 1,090
Source: Company, IIFL Research Capital Expenditures (295) (130) (144) (143) (234) (134)
Free Cash Flow (404) (95) (228) (8) 455 956
Source: Bloomberg, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 32

India Strategy - Defence

Product Portfolio Execution & guidance

Figure 52: PRE – Product portfolio • Mgmt. guides for revenue of Rs5-5.5bn for FY26 supported by
Type Products capacity enhancements for the RDX & HMX facility set to generate
annual sales of Rs1-1.5bn (scheduled to conclude by Jul’25).
• The company expects to incur capex of Rs8.8bn towards expanding
Commercial raw material and ammunition manufacturing facilities in Orissa.
Explosives
Management Profile
Bulk Explosives Cast Boosters Detonators Detonating Fuse
Figure 54: PRE - Management Profile
Name Designation Profile
Defence and Chemical engineer with33 years+ experience in explosives and
Space TV detonators production, petrochemicals, coal tar pitches and
MD
Counter-measure Chowdary enamels. He has held key roles in manufacturing and project
Propellants flares Explosives execution throughout his career.
Source: Company, IIFL Research Member of Society of Explosives Engineers, US, with extensive
experience in defence technology and research. He has held
Dr. A. N Non-Exec
Figure 53: PRE’s contribution across key missile programmes senior advisory roles in science and technology policy,
Gupta Chairman
Missile Type Client End User PRE’s contribution including Adviser to the Union Science & Technology Minister
Supplied 2,500+ booster and Secretary to the University Grants Commission.
Tactical, IAF and Indian Mechanical engineer with 36 years of experience in
Akash BDL grains and Y. Durga Director
SAM Army manufacture of explosives, propellants and refractories and
450+ sustainer grains Prasad Rao Operations
Tactical, 100% requirements of solid factory management.
MRSAM DRDO / BDL Indian Army Chartered Accountant with 20 years+ experience in accounts,
SAM propellants Srihari
Advanced Systems Strategic Forces Pyrogen igniters and Daisy CFO finance, and leadership roles, having served as CFO at Premier
Agni Ballistic Pakalapati
Laboratory Command 2 Explosives.
IAF, Indian Navy Production & Integration of Source: Company, IIFL Research
Cruise, Air Brahmos
Brahmos and Indian Rocket
launched Aerospace
Army Motors Investment Rationale

LRSAM
Tactical,
DRDO / BDL Indian Navy
100% requirements of solid • Short-cycle proxy to consumables like missiles
SAM propellants • One of the few suppliers of countermeasures in India
Tactical, 100% requirements of solid
Astra DRDO / BDL IAF
SAM propellants Risks
Source: Company, IIFL Research
• Regulatory, Safety & Operational Risks

h ar dik . ra wa t@i ifl c ap .c o m 33

Astral Ltd - NR
Analyst meet
takeaways
26 May 2025

Rebound in sight despite a tough macro

Astral (ASTRA) reported a muted growth performance in FY25 for Price performance (%)
CMP Rs1442
its Plumbing and UK Adhesive business even as Pipe margins
1M 3M 1Y
remained robust. In its analyst meet, mgmt remained hopeful of Market cap (US$m) 4,505
raw material prices stabilising, with regulatory tailwinds from BIS Absolute (Rs) 5.4 4.0 -31.5
implementation in FY26 aiding their growth. ASTRA guided for low- Enterprise value(US$m) 4,442 Absolute (US$) 4.4 4.8 -33.7
double-digit volume growth for FY26 in its pipes business with Relative Perf. 2.1 -6.0 -33.7
upside potential subject to ADD implementation. Mgmt sees margin Bloomberg ASTRA IN
Cagr (%) 3 yrs
improvement potential for UK Adhesives and Paints segment. Mgmt Sector Building Material EPS (Rs) -6.7
is broadly tracking in-line with target of Rs15bn of revenues from
new products like Drain Pro/Fire Pro, Tanks, Paints, and Bathware Shareholding pattern (%) Stock performance
(~Rs10bn currently). Promoter 54.1 Vol('000, LHS) Price (Rs., RHS)
Muted FY25 Pipe performance; India Adhesive on a strong footing: Pledged (as % of promoter shares) 0.0 20,000 3,000
ASTRA reported consolidated revenue growth of 3% yoy to Rs58bn in FY25. FII 20.2 15,000
Plumbing sales volume grew 3.4% yoy. Consolidated Ebitda margins came DII 8.4 2,000
10,000
in at 16.2%, flat yoy. ASTRA’s plumbing business saw margins expand 52Wk High/Low (Rs) 2413/1238 1,000
70bps yoy to 19.8%. ASTRA incurred Rs600-700mn of Inventory loss in 5,000
Shares o/s (m) 269
FY25, well below peers. ASTRA’s India Adhesive business grew 14.4% yoy 0 0
Daily volume (US$ m) 5.4
in FY25 with 16.8% Ebitda margins, while the UK Adhesive business clocked

Nov-24
Nov-23
Jul-23

Jul-24
Sep-23

Sep-24

Jan-25

May-25
May-23

Jan-24
Mar-24
May-24

Mar-25
3% revenue decline and -0.6% margins. The Bathware segment clocked Dividend yield FY26ii (%) 0.0
revenues of Rs1,175mn for FY25 (+51% yoy). ASTRA’s Paint business Free float (%) 45.9
reported 5.7% revenue growth and 5.9% Ebitda margins. Financial summary (Rs m)
Margin leadership further solidifies: Despite adverse macro, ASTRA’s Y/e 31 Mar, Consolidated FY22A FY23A FY24A FY25A
realisation premium vs its closest peer increased to 36% in FY25 vs last 5 Revenues (Rs m) 43,940 51,585 56,414 58,324
yr average of 32%, leading to significantly higher (>90%) Ebitda/kg. Mgmt Ebitda margins (%) 17.2 15.7 16.3 16.2
is targeting 16-18% of Pipes margins on a steady state basis. The expected Pre-exceptional PAT (Rs m) 4,838 4,454 5,461 5,238
enforcement BIS norms from 2QFY26 will phase out non-compliant carbide Reported PAT (Rs m) 4,838 4,342 5,461 5,238
PVC and are expected to trigger a restocking cycle at the dealer level. Pre-exceptional EPS (Rs) 24.1 16.6 20.4 19.5
ASTRA is targeting double-digit pipes volume growth in FY26 with upside Growth (%) 19.6 (31.0) 22.6 (4.1)
risk on account of ADD implementation. PER (x) 59.9 86.8 70.8 73.8
Ramp-up of new businesses to be gradual: Mgmt highlighted that ROE (%) 22.9 17.6 18.5 15.4
value-added products (incl. CPVC) saw good growth in FY25. ASTRA has Net debt/equity (x) (0.2) (0.2) (0.2) (0.1)
clocked ~Rs10bn of revenues in FY25 from new products and plans to reach EV/Ebitda (x) 37.6 47.0 41.5 40.4
Rs15bn in the next 2 years. Valves, Silencio and Drain Pro put together Price/book (x) 12.4 14.3 12.1 10.7
clocked ~Rs5bn revenues in FY25. ASTRA has recently concluded the OCF/Ebitda (x) 0.7 0.7 0.9 0.7
acquisition of Al-Aziz Plastics Private Limited, having expertise in specialised Source: Company, IIFL Research. Priced as on 23 May 2025
fittings.

Mohit Agrawal Saatvik Shetty

mohit.agrawal@iiflcap.com saatvik.shetty@iiflcap.com
91 22 4646 4675 91 22 4646 4653
Astral Ltd - NR

Figure 1: ASTRA reported consolidated revenue growth of 3% yoy in FY25 Figure 3: Consolidated Ebitda margins came in at 16%, flat yoy in FY25

(Rsbn) Consol Sales % YoY (%) (Rsbn) Consol Ebitda Ebitda margin (%) (%)
70 45% 10 21%
40% 9
60 20%
35% 8
50 7 19%
30%
40 6 18%
25%
5
30 20% 17%
4
15% 3
20 16%
10% 2
10 5% 15%
1
0 0% 0 14%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research Source: Company, IIFL Research

Figure 2: Share of Pipes sale was flat at 70% in FY25. Bathware and Paint now account
for 5% of total sales for ASTRA Figure 4: Consolidated working capital days deteriorated to 37 days vs 27 days
(%) Sales mix (No. of days) Working capital days
Bathware Paints Adhesives Plumbing
1% 2% 50
100% 4% 3% 3% 41
25% 25% 22% 23% 23% 40 37
80% 26% 26% 25%
30
60% 30 27 27
21
40% 75% 75% 78% 77% 77% 20
70% 70% 70%
20% 10

0% 0
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY18 FY19 FY20 FY21 FY22 FY23

Source: Company, IIFL Research Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 2

Astral Ltd - NR

Analyst meet takeaways Figure 5: Plumbing capacities have grown at 11% Cagr over FY19-25
(K M.T) Capacity (in MT) % YoY (%)
Plumbing business 450 40%
382
ASTRA’s Plumbing capacities have grown at ~11% Cagr over FY19-25 to 400 35%
334
achieve benefits of decentralisation. Over the last 2 years alone it has 350 30%
290
done capex of Rs10bn. ASTRA’s current average utilisation stands at 55- 300 258 275
239 25%
60%, which the mgmt. expects will improve as the current leg of capex 250 205
gets completed. 20%
200 152
150 15%
ASTRA’s Hyderabad plant is fully operational and will have full range of 100 10%
products in FY26. The Kanpur plant is on the verge of completion, with 50 5%
operations expected to start by 3QFY26, and will become fully operational
0 0%
by FY26-end. The co. has started fitting operations in South, Rajasthan

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25
and will soon start operations in Odisha. ASTRA’s FY26 capex is estimated
to be Rs2.5-3bn max.
Source: Company, IIFL Research

ASTRA has reported lower pipe volume growth compared to Supreme

Figure 6: ASTRA’s Plumbing sales volume grew 3.4% yoy in FY25
Industries for the 13th consecutive quarter in 4Q. For FY25, ASTRA has
delivered volume growth of 3.4% vs 6% for SI. However, the superior (MT) Sales Volume (in MT) % YoY (%)
volume performance for SI seems to have possibly come on the back of 250 220 227 25%
discounting (ASTRA’s realisation premium vs SI increased to 36% in FY25
vs 34% in FY24), leading to significantly higher (>90%) Ebitda/kg for 200 178 20%
ASTRA vs SI. 150
150 132 137 15%
123
Mgmt believes they would’ve incurred Rs600-700mn Inventory loss in 104
FY25 (vs Rs1.5bn for SI/ Rs0.9bn for PRINCP). 100 10%

While SI/PRINCPIP/APOLP have indicated that their CPVC portfolio 50 5%

clocked 21%/double-digit/double-digit volume growth in FY25, ASTRA
mgmt did not quantify its CPVC portfolio growth. Mgmt, however, 0 0%

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25
highlighted that market share and growth of value-added products (incl.
CPVC) have gone up for them.
Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 3

Astral Ltd - NR

Figure 7: Lower polymer prices meant ASTRA’s average realisation declined 3% in FY25 Figure 9: Organised players have reported largely similar volume performance, within
3-6% in FY25, except Apollo Pipes (ex of Kisan) which saw 2% volume decline
(Rs/MT) Avg Realisation (Rs/MT) % growth (%)
250 230 30% (%) Volume Growth YoY
211 25% Supreme Astral Finolex
200 182 185 180 40% Prince Apollo
20%
152 156 155 15%
150 30%
10%
5% 20%
100
0% 10%
50 -5%
0%
-10%
0 -15% -10%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
-20%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research
Source: Company, IIFL Research *Apollo volumes are ex of Kisan Mouldings

Figure 8: Plumbing working capital days deteriorated as ASTRA paid off their creditors
Figure 10: Despite adverse macro, ASTA’s Ebitda/kg was 1% higher yoy in FY25
due to rupee appreciation in March, leading to payable days going down
(Rs/kg) Astral Ebitda/kg trend
(No. of days) Plumbing Working capital days
45
35 32
30 27 40
25 21 35
18 19
20 30
15 12
25
10
20
5
0 15

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25
FY18 FY19 FY20 FY21 FY22 FY23

Source: Company, IIFL Research Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 4

Astral Ltd - NR

Figure 11: ASTRA’s Realisation/kg was 36% higher than its closest peer in FY25
(Rs/kg) Figure 13: Pipe volume market share - SI continues to gain market share largely from
Pipe co's Realisation
250 PRINCPIP and FNXP
Supreme Astral Finolex
230 (%) Pipe Market share by Volume (Top 5 players)
210 Prince Apollo
Apollo Prince Finolex Astral Supreme
190
100% 4% 4% 4% 4% 5% 5% 6% 6% 6% 6% 6%
170
14% 14% 14% 15% 15% 15% 17% 16% 15% 13% 13%
150 80%
130 33% 33% 32% 33% 31% 29% 26% 28% 28% 26% 26%
110 60%
90 16% 16% 17% 17%
40% 13% 12% 14% 14% 15% 15% 18%
70 38% 39%
36% 36% 36% 34% 34% 35% 36% 32% 35%
50 20%
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research *Apollo is calculated ex of Kisan Mouldings #Bathware revenue 0%
excluded for ASTRA FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research *Apollo is calculated ex of Kisan Mouldings
Figure 12: ASTRA’s Ebitda/kg was 93% higher than its closest peer (decadal high) in FY25
(Rs/kg) Ebitda/kg Mgmt highlighted that PVC is a 4.5mn tonne market in FY25 with CPVC
50 being a 0.25mn tonne market (~5% of PVC). Mgmt believes that Fire pipe
Supreme Astral Finolex market pick-up will unlock the next leg of growth in CPVC. Fire pipes have
40
Prince Apollo much higher usage in projects vs plumbing pipes. It is more of a project
business. Mgmt believes that CPVC market would see 10-15% value
30 growth, and this could be much higher if Fire applications come in. PVC
industry could grow at much lower pace of 6-7%.
20
Given the significant increase in PVC price volatility post Covid, mgmt
highlighted that FY26 piping growth for ASTRA depends on ADD
10
implementation. Currently they are looking to clock lower-double-digit
volume growth, but in case ADD implementation takes place, they could
0 clock significantly higher numbers. Mgmt highlighted that typically
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
distributors carry 3-4 weeks inventory but currently they are working with
Source: Company, IIFL Research *Apollo is calculated ex of Kisan Mouldings #Bathware losses 1 week of inventory. If polymer prices increase, inventory levels may go
adjusted for ASTRA
as high as 6-7 weeks.

Further, due to a soft FY25, ASTRA’s base is also getting low, which could
lead to higher growth. Mgmt is targeting 16-18% of Pipes margins on a
steady state basis.

mohit . ag raw al@ iif lcap .c om 5

Astral Ltd - NR

Figure 14: PVC price trends largest player in the space has been talking of adding capacities for the
PVC Price Trend last 4 years, with no actual capacity coming up.
(Rs) Pipe Fittings
OPVC segment: As per estimates by a top OPVC company, the OPVC
160 141.8 149.8147.9147.9 pipes market is Rs2.75bn currently and is projected to expand fivefold to
140 126.8 Rs14bn by FY28. ASTRA mgmt highlighted that OPVC largely has
122.9
141.8141.9141.9 government usage. There is considerable over-capacity in the space.
120 133.8 ASTRA has come up with their own products in OPVC, working closely
122.8 94.4 95.9 94.9 95.6
with a manufacturer in India, which has been approved by ISI. Mgmt also
100 116.9 83.3 88.3 82.3 81.5 83.1 84.1 78.6
allayed investor concerns on the quality of its OPVC products given it is
80 92.6 domestically made, unlike peers who have opted for Spanish technology
88.4 89.9 88.9
60 80.4 85.4 79.4 78.5 80.1 81.1 75.6 (Molecor). They have already received orders worth Rs180mn of OPVC.
According to them, it is just a segment of the product and is not likely to
Apr'21

Dec'21

Dec'22

Dec'23

Dec'24
Jun'21

Mar'22
Jun'22

Mar'23
Jun'23

Mar'24
Jun'24

Mar'25
Sep'21

Sep'22

Sep'23

Sep'24
become the next CPVC. It has very limited usage, in Water distribution
and replacing Ductile Iron pipes.
Source: Company, IIFL Research
Figure 15: Known OPVC capacities in India
New product introduction: The new range of Valves (incl. Ball valves) (M.T) Upcoming Current
is complete, and other specialised valves used in Industrial and Plumbing 40,000
segment are set to be completed by FY26-end. ASTRA has added capacity
35,000
in Silent Pipe (more than double). The capacity for Drain Pro has also 36,000
30,000
been increased. ASTRA has become the first company in India to get UL 23,500
approvals for fire applications for pipes and fittings, which is very difficult 25,000
to get. For UL approvals, products are kept at a certain temperature for 20,000 9,000
18 months, and if nothing happens to the product, only then you get 15,000
approvals. ASTRA is also getting its Aluminium Pex machine around 10,000 14,000
Diwali, and it will become the first company to start Aluminium Pex (used 5,000 9,000 8,000 9,000
in high-end villas, bungalows) from India, giving the best material for 0
composite pipes. ASTRA’s Channel drain is gaining good traction in the Prayag India Supreme Chemfab Astral Apollo
market as ASTRA has come up with an indigenous product that is cheaper Alkalis
than imported products.
Source: Company, IIFL Research
Upcoming CPVC capacities: Mgmt highlighted that CPVC capex is
typically very expensive. Chlorination is a very complex process, and it Apart from the above, the segment has players like Ashirvad Pipes, Delta,
requires a special type of reactors. These reactors get worn out very Optiflux, Oriplast, Sintex BAPL (Welspun Group).
quickly and need to be replaced every few years. Given the same, mgmt.
believes that the CPVC market will never be a PVC market, and they will
require sustainable margins. Also, mgmt. highlighted that the announced
CPVC capacities will take at least 4-5 years to come on-stream. The

mohit . ag raw al@ iif lcap .c om 6

Astral Ltd - NR

ASTRA’s acquisition of Al-Aziz

PVC ADD update
ASTRA entered definitive agreements to acquire 100% stake in Al-Aziz
Plastics Private Limited (Al-Aziz) for Rs330mn. The company currently In Mar’24, the Directorate General of Trade Remedies (DGTR) initiated
has capacity of 4,690MT. The company is engaged in following wide an anti-dumping investigation into imports of PVC suspension resins
range of products in which at present ASTRA is not engaged. With this from countries including China, Indonesia, Japan, Korea, Taiwan,
acquisition, ASTRA will increase its products portfolio and get huge Thailand, and the US. This action was prompted by complaints from
advantage not only in India but in International market due to ASTRA’s Indian PVC manufacturers alleging these imports were harming the
reach pan-India and in more than 31 countries. domestic industry.
• Electro Fusion Fittings for Water, Gas and Fuel Applications
• Compression Fittings for Water Applications Epigral Ltd., a major producer of CPVC in India, contested the inclusion
of specialised grades of PVC used in CPVC manufacturing within the
• Clamp Saddles and Integrated Clamp Saddles for Water scope of the investigation, arguing that these grades are not produced
Applications
domestically and are essential for safe potable water applications.
• Composite Strap-on Saddles and Integrated Strap-on Saddles for Given the same, Epigral filed a writ petition in the Gujarat High Court,
Water Applications seeking exclusion of its specialised PVC grades from ADD. On 27th
• Flow Control Valves & Brass Ferrules for Water Applications Mar’25, the court restrained the Indian government from imposing any
• Electrical Products for Domestic Electrical Market final ADD on PVC resin used for CPVC manufacturing for four weeks,
citing procedural lapses and the potential prejudice to Epigral.
• PVC Conduit Fittings for Concealed Wiring System
• PPR Pipe Fittings for Domestic and Industrial Applications Subsequently, on 7th May’25, the Gujarat High Court ordered the
• Irrigation Sprinklers and Filters exclusion of specialty-grade PVC resins imported by Epigral for CPVC
• Entry Boots, Hotneck and Monoblock Saddles production from the scope of the ADD investigation. The court noted
that these specialty grades are not produced by the domestic industry
The co. had complete PEPP product line, which would have taken ASTRA and are neither technically nor commercially substitutable with locally
5-6 years to make and get approved. Al Aziz also has a gas fittings line produced grades.
approved by German authority for use of gas in Europe, industrial
piping systems. ASTRA is targeting exports markets for Al-Aziz Indian PVC manufacturers, however, challenged the Gujarat High
products. Mgmt believes that Gas business is a big opportunity for India Court's order, arguing that excluding Epigral's specialty-grade PVC
as it is connected very thinly currently. from ADD could undermine the domestic industry's protection. The case
was scheduled for a hearing on 9th May’25, just before the DGTR's
Figure 16: Key numbers for Al-Aziz internal deadline for final findings on 13th May’25.
Particulars (Rsmn) FY23 FY24 FY25
An adverse Supreme Court verdict against Epigral could eventually lead
Sales 929 1,066 515
to imposition of ADD on the entire PVC basket without any exemption.
Ebitda 126 158 97
Ebitda margins 14% 15% 19%
Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 7

Astral Ltd - NR

• Rural and infrastructure-led demand, along with urban housing

growth, will remain key structural drivers.
Pipes Industry outlook • In-house innovation, such as the new channel drain range, will
• The pipes and fittings industry is witnessing early signs of recovery in improve cost competitiveness and broaden the product portfolio.
PVC prices after a year of high volatility and sharp decline. While ADD • The shift from unorganised to organised players is expected to
on CPVC is already announced and extended till FY29, entire PVC accelerate, driven by regulatory changes and rising quality
basket can also come under ADD. awareness.
• The extension of anti-dumping duties on CPVC imports till FY29 will • New product launches across fittings, specialty pipes, and value-
help maintain domestic market stability and pricing discipline. added solutions will continue to drive incremental growth.
• Dealer destocking, triggered by falling raw material prices, is expected • The company will focus on expanding infrastructure, decentralising
to reverse, with restocking likely to drive volume growth in the coming manufacturing, and widening its dealer and distributor base to deepen
quarters. market penetration and improve service levels.
• Product quality and certification are becoming critical differentiators
as the market shifts towards value-added and specialised solutions. New business segments
Government infrastructure spending and the National Infrastructure ASTRA had earlier guided to Rs15bn of revenues being contributed from
Pipeline continue to underpin long-term demand, despite near-term new products like Drain Pro/Fire Pro, Tanks, Paints, and Bathware over
macro headwinds. the medium term. ASTRA has clocked Rs10bn of revenues in FY25 from
• Biggest problem for PVC is the dumping of Carbide-based PVC in new products in 3 years and will get it to Rs 15bn in the next 2 years,
India. Enforcement of BIS norms for PVC is expected in FY26, which including Silencio, Drain Pro, Valves and Tanks. Valves, Silencio and Drain
is under serious discussions at the government level, which will phase Pro put together would’ve clocked Rs5bn in revenues in FY25. Drain Pro,
out non-compliant carbide-based pipes, benefitting organised players Silencio and Valves are a very fast-growing category for ASTRA. There is
like ASTRA. If the government implements BIS norms for PVC and no other player in the Drain Pro & Silencio segments. While there are
enforces anti-dumping duties, the industry is likely to witness high- some imports, they are miniscule.
single-digit growth in FY26.

Pipe revenue drivers for next 5 years

• Capacity expansion, with the Hyderabad plant fully operational and
ongoing investments in fittings and new product lines, will support
sustained volume growth.
• The acquisition of Al-Aziz Plastics adds electrofusion, compression,
and PPR Pipe Fittings, opening new segments in water, gas, and power
distribution.
• Regulatory tailwinds from BIS implementation and anti-dumping
duties are set to favour compliant, branded players and support
margin resilience.
• Increased focus on value-added products such as UL-certified FirePro
fittings and ISI-approved O-PVC pipes will enhance realisations and
export potential.

mohit . ag raw al@ iif lcap .c om 8

Astral Ltd - NR

Adhesives business Figure 17: Consol Adhesive revenue saw 3% decline yoy in FY25 with 90bps decline in
ASTRA’s India Adhesive business has delivered strong performance with Ebitda margins
14.4% yoy growth in FY25 and 16.8% Ebitda margins even as pain in the
(Rsmn) Consol Adhesive Revenue % growth (%)
UK Adhesive business continued with 3% revenue decline and -0.6%
16,000 14,994 14,413 50%
margins. Margins in India Adhesive business may not improve hereon, 13,910
while it expects margin improvement in the UK business. Mgmt expects 14,000 40%
consol adhesive margins to be 14-16%. 12,000
10,091 30%
10,000
ASTRA’s Dahej plant is fully operational for two chemistries - Epoxy and 7,345 20%
White glue. ASTRA is adding two more plants in Dahej in FY26 and FY27. 8,000 6,347
5,266 5,830 10%
Solvent cement plant work has commissioned, and they are coming up 6,000
with a fully automated plant. Mgmt highlighted that hardly 25-30% of 4,000 0%
Dahej’s capacity has been utilised by them. Electric tapes and Teflon
2,000 -10%
tapes are being made in Kanpur. The company has received good
response for its Teflon tape exports to US. 0 -20%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Though the UK Adhesive business is facing challenging times, it is in the Source: Company, IIFL Research
11th year of operations and has scaled up from Rs0.6bn revenues (at time
of acquisition) to ~Rs3bn currently. Mgmt believes that the results of the Figure 18: ASTRA’s India Adhesive business has reported a revenue Cagr of 18% over
initiatives they’ve taken will soon start coming through in next 2 quarters. FY22-25
Mgmt believes that the biggest advantage of that geography is that
significant chemistries have come up from UK and US. (Rsmn) India Adhesives Revenue % growth (%)
12,000 10,982 50%
There are a few pockets in which ASTRA is not present in Adhesives, 9,600 40%
particularly in the Southern market. Further, mgmt. sees a lot of scope 10,000
8,239
for adhesive business in Gulf markets. On competition from Cera Chem 8,000
30%
and MYK Laticrete in the Adhesive segments, mgmt. highlighted that MYK 6,729
20%
has very good products. MYK product range will be entered by ASTRA in 6,000 4,747
FY26 with the Construction chemicals range. On the Adhesive Retail side, 4,370 10%
3,786 3,771
ASTRA has completed the entire range– including Wood working and 4,000
0%
Sealants. In the Construction Chemical space, ASTRA still has some parts
2,000 -10%
of the market which are untapped in terms of product range, which will
be completed by FY26. 0 -20%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 9

Astral Ltd - NR

Figure 19: UK Adhesive business reported 3.4% revenue decline with negative margins Bathware
The Bathware segment clocked revenues of Rs1,175mn for FY25 (+51%
(Rsmn) U.K Adhesives Revenue % growth (%)
yoy), but the segment is yet to achieve breakeven. Most of ASTRA’s
4,000 3,550 40% dealers have started distributing its Bathware products. ASTRA has also
3,513 3,430
3,500 3,277 35% started PTMT metal tapware range, which has seen good response.
30%
3,000 2,647
25% Figure 21: The Bathware segment reported strong revenue off a low base while Ebitda
2,500 2,095 20%
1,977 losses continued
2,000 15%
1,480 (Rsmn) Bathware Revenue (Rs m) Ebitda Margin (%) (%)
1,500 10%
5% 1,400 0%
1,000 -13%
0% 1,200 -10%
500 -23%
-5% 1,000 -20%
0 -10% -30%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 800
-40%
Source: Company, IIFL Research 600
-50%
400 -60%
Figure 20: Long-term Adhesives margin trend - India and UK business
200 -75% -70%
(%) Ebitda margins
0 -80%
India Adhesive SEAL IT (U.K + USA) FY23 FY24 FY25
20.0%
Source: Company, IIFL Research
15.0%
Paints
10.0% ASTRA’s Paint segment has seen revenue growth of 6% yoy in FY25 and
Ebitda margins declined from 15% in FY24 to 6% in FY25. Post
5.0% acquisition, ASTRA has done no additional capex in the Paint business.
One of ASTRA’s motives of entering the paint business was also to
0.0% increase its adhesives and construction chemical business. ASTRA Paints
has already been launched in Gujarat, Maharashtra and Rajasthan, while
-5.0% in South India, ASTRA will continue with GEM paints. Mgmt is hopeful of
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
margin improvement in this segment in FY26.
Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 10

Astral Ltd - NR

Figure 22: ASTRA’s Paint business continued to struggle with FY25 growth of 5.7% and Figure 23: Employee cost as % of sales is inching up largely because of muted value
5.9% Ebitda margins. growth amid weak polymer prices
(Rsmn) Gem Paints Revenue Ebitda margin (%) (%) (Rsbn) Employee Cost % of sales (%)
2,300 18% 6 10%

2,200 16% 5 8%
15% 14%
2,100 15% 4
12%
6%
2,000 10% 3
1,900 8% 4%
6% 2
1,800
6% 4% 1 2%
1,700 2%
1,600 0% 0 0%
FY23 FY24 FY25 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research
Source: Company, IIFL Research

Figure 24: ASTRA maintained a net cash position of Rs4.6bn

Others
• ASTRA’s employee attrition of 25% is quite high as they did manpower (Rsmn) Net debt
corrections at the lower end. ASTRA needed more manpower in 4,000
Faucets and in Paint business. These would be one-time costs to 1,438 1,760
scale-up the business. Attrition for Senior personnel, however, is on 2,000 541
the lower end. 0
• A&P spends have not increased for ASTRA in FY25 and are expected
to remain at similar levels. (2,000)

(4,000)
(4,094)
(6,000) (4,644)
(5,567) (6,048) (5,132)
(8,000)
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

Source: Company, IIFL Research

mohit . ag raw al@ iif lcap .c om 11

Astral Ltd - NR

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY22A FY23A FY24A FY25A Y/e 31 Mar, Consolidated FY22A FY23A FY24A FY25A
Revenues 43,940 51,585 56,414 58,324 Cash & cash equivalents 6,418 6,821 6,096 6,083
Ebitda 7,553 8,099 9,183 9,459 Inventories 7,334 8,746 9,134 10,111
Depreciation and amortisation (1,269) (1,781) (1,976) (2,434) Receivables 2,691 3,545 3,758 4,353
Ebit 6,284 6,318 7,207 7,025 Other current assets 1,237 3,853 1,491 1,737
Non-operating income 349 267 421 413 Creditors 7,484 8,000 8,719 8,589
Financial expense (129) (400) (291) (413) Other current liabilities 1,492 4,960 2,651 3,054
PBT 6,504 6,185 7,337 7,025 Net current assets 8,704 10,005 9,109 10,641
Exceptionals 0 (112) 0 0 Fixed assets 13,625 17,641 21,367 25,130
Reported PBT 6,504 6,073 7,337 7,025 Intangibles 2,567 3,125 3,133 3,146
Tax expense (1,581) (1,557) (1,880) (1,836) Investments 0 0 0 0
PAT 4,923 4,516 5,457 5,189 Other long-term assets 0 0 0 0
Minorities, Associates etc. (85) (174) 4 49 Total net assets 24,896 30,771 33,609 38,917
Attributable PAT 4,838 4,342 5,461 5,238 Borrowings 851 773 964 1,439
Other long-term liabilities 679 2,886 764 1,308
Ratio analysis Shareholders equity 23,366 27,112 31,881 36,170
Y/e 31 Mar, Consolidated FY22A FY23A FY24A FY25A Total liabilities 24,896 30,771 33,609 38,917
Per share data (Rs)
Pre-exceptional EPS 24.1 16.6 20.4 19.5 Cash flow summary (Rs m)
DPS 1.8 2.3 2.3 2.3 Y/e 31 Mar, Consolidated FY22A FY23A FY24A FY25A
BVPS 116.3 101.1 118.9 134.9 Ebit 6,284 6,318 7,207 7,025
Growth ratios (%) Tax paid (1,678) (1,654) (1,772) (1,701)
Revenues 38.3 17.4 9.4 3.4 Depreciation and amortization 1,269 1,781 1,976 2,434
Ebitda 17.2 7.2 13.4 3.0 Net working capital change (1,410) (2,052) 1,000 (1,718)
EPS 19.6 (31.0) 22.6 (4.1) Other operating items 966 1,176 (177) 256
Profitability ratios (%) Operating cash flow before interest 5,431 5,569 8,234 6,296
Ebitda margin 17.2 15.7 16.3 16.2 Financial expense (123) (366) (267) (342)
Ebit margin 14.3 12.2 12.8 12.0 Non-operating income 349 267 421 413
Tax rate 24.3 25.6 25.6 26.1 Operating cash flow after interest 5,657 5,470 8,388 6,367
Net profit margin 11.2 8.8 9.7 8.9 Capital expenditure (3,446) (3,099) (5,502) (5,394)
Return ratios (%) Long-term investments 4,043 (1,500) 1,524 0
ROE 22.9 17.6 18.5 15.4 Others (4,350) 519 (4,319) (419)
ROIC ex goodwill 0.0 0.0 0.0 0.0 Free cash flow 1,904 1,390 91 554
Solvency ratios (x) Equity raising 0 0 0 0
Net debt-equity (0.2) (0.2) (0.2) (0.1) Borrowings 205 (384) 191 440
Net debt to Ebitda (0.7) (0.7) (0.6) (0.5) Dividend (451) (603) (1,007) (1,007)
Interest coverage 48.7 15.8 24.8 17.0 Net chg in cash and equivalents 1,658 403 (725) (13)
Source: Company data, IIFL Research Source: Company data, IIFL Research

mohit . ag raw al@ iif lcap .c om 12

Devyani International – ADD
Recommendation
downgrade
26 May 2025

KFC most impacted format; SSSG recovery key Result update

Devyani (DIL) reported 15.8% yoy sales growth with 8.9% pre-IndAS CMP Rs179 Price performance (%)
Ebitda margin in 4QFY25, which was below our estimates. On India 1M 3M 1Y
12-mth TP (Rs) 185 (3%)
level (excl. international and intercompany transactions), the sales
Absolute (Rs) 2.1 1.5 17.5
grew 5.6% yoy with 23% pre-IndAS Ebitda decline. KFC performance Market cap (US$m) 2,232
was weak at -6% SSSG (-1% SSSG for Sapphire). Markets such as AP Absolute (US$) 2.3 3.3 14.8
Enterprise value(US$m) 2,619
and Telangana were affected by a bird flu outbreak that lasted for 70– Relative Perf. (2.4) (9.7) 11.2
Bloomberg DEVYANI IN
75 days, while Kerala and West Bengal were impacted by ongoing Cagr (%) 3 yrs 5 yrs
geopolitical tensions. We also note that SSSG for KFC as a format has Sector QSR EPS (Rs) NA NA
been under pressure lately with other formats like Dominos, McDonalds
outperforming. Thailand business continued its strong performance Shareholding pattern (%) Stock performance
relative to other business; management also mentioned they have Promoter 62.7 Vol('000, LHS) Price (Rs., RHS)
improved margins and maintained SSSG at healthy levels since Pledged (% of promoter shares) 0.0 50,000 250
acquisition. Recently acquired business from SkyGate (Biryani By Kilo, FII 12.4 40,000 200
Goila Butter Chicken and The Bhojan) is expected to turn profitable in DII 12.2 30,000 150
next 1 year. We downgrade our FY26ii adj Ebitda estimates by 6% and 20,000 100
2% for FY27ii, moderating SSSG and margin assumptions. Downgrade 52Wk High/Low (Rs) 222/141
Shares o/s (m) 1206 10,000 50
to ADD. 0 0
Del Value 3mth avg (US$ m) 2.3
Sapphire outperformance continues (Figure 1): Sapphire outperformed

Nov-23

Nov-24
Jul-23

Jul-24
Sep-23

Sep-24
Jan-24
Mar-24
May-24
May-23

Jan-25
Mar-25
May-25
Dividend yield FY26ii (%) 0.0
DIL in KFC format, while DIL outperformed Sapphire in PH. Sapphire KFC sales
Free float (%) 37.3
growth/SSSG stood at 11.9%/-1% vs 3.4%/-6% for DIL, while margins for
Sapphire came in at 15.7% (~300bps yoy decline) and DIL at 16.2% (~270bps Financial summary (Rs m)
yoy decline). DIL performed better in PH in terms of overall growth at 8.2% vs Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
5.1% for Sapphire, while SSSG was similar for both at 1%. DIL PH margin came Revenues (Rs m) 29,977 35,563 49,511 56,185 64,597
in at 0.7%, vs -4.6% for Sapphire. Ebitda margins (%) 21.9 18.3 17.0 16.5 17.2
KFC under pressure; PH revival underway: KFC SSSG for 4QFY25 stood at Pre-exceptional PAT (Rs m) 2,853 5,897 696 239 1,008
Rs82k, lowest in last 12+ quarters, and Rs94k for FY25 with 17.4% contribution Reported PAT (Rs m) 2,620 (38) 159 239 1,008
margins. Management mentioned Rs100-105k ADS would be required to clock Pre-exceptional EPS (Rs) 2.4 4.9 0.6 0.2 0.8
20% margins. Factors like store size changes, craving out space in exceptionally Growth (%) 65.2 106.7 -88.2 -65.7 NM
large stores to accommodate independent brands, rationalising labour and IIFL vs consensus (%) 0.0 0.0
other overheads and negotiation for rental cost would aid margin improvement. PER (x) 75.7 36.6 NM NM NM
Management aims to open 100-110 stores in KFC, while there is no clarity in ROE (%) 34.7 51.0 5.3 1.8 7.4
PH, as discussion plans for PH revival with YUM are underway. Net debt/equity (x) 0.0 0.5 0.6 0.7 0.6
Downgrade to ADD: We downgrade our FY26-27 adj Ebitda estimates by 2- EV/Ebitda (x) 32.9 34.2 26.5 24.3 20.2
6%, moderating SSSG and margin assumptions. While recovery is built into the Price/book (x) 22.4 16.0 16.8 16.5 15.4
numbers, there is a risk of downside skew, and valuations appear expensive. OCF/Ebitda (x) 0.9 1.2 1.1 0.5 0.6
We therefore, downgrade to ADD. Source: Company, IIFL Research. Priced as on 23 May 2025

Percy Panthaki Sameer Gupta Harsh V Shah

percy.panthaki@iiflcap.com sameer.gupta@iiflcap.com harshv.shah@iiflcap.com
91 22 4646 4662 91 22 4646 4672 91 22 4646 4788
Devyani International – ADD

Figure 1: Sapphire outperforms Devyani

Parameters (4QFY25) KFC Pizza Hut Overall
Devyani Sapphire Devyani Sapphire Devyani Sapphire
Sales (Rsm) 5,109 4,793 1,754 1,248 12,126 7,113
Sales growth % 3.4% 11.9% 8.2% 5.1% 15.8% 12.6%
SSSG -6% -1% 1% 1%
ADS Rs 83,000 108,000 31,000 41,000
ADS growth YoY -10.8% -5.3% -3.1% 0.0%
ADS growth QoQ -13.5% -6.1% -11.4% -14.6%
Restaurant operating margin 16.2% 15.7% 0.7% -4.6% 13.8% 12.1%
change bps YoY -272 -300 -364 -190 22 -162
change bps QoQ -97 -250 -136 -930 -52 -336
Pre IND AS Ebitda margin NA NA NA NA 8.9% 7.1%
change bps YoY NA NA NA NA -24 -147
change bps QoQ NA NA NA NA -117 -358
Post IND As Ebitda margin NA NA NA NA 16.6% 14.9%
change bps YoY NA NA NA NA -4 -136
change bps QoQ NA NA NA NA -37 -282
No. of stores 696 502 630 334 2039 963
Additions QoQ 7 6 -14 -5 7 3
Sales mix
Off-premise 45% 43% 56% 52%
On-premise 55% 57% 44% 48%
Source: Company, IIFL Research

pe rcy. p anth aki@ iif lc ap. com 2

Devyani International – ADD

Figure 2: 4QFY25 below estimates

P&L 4QFY24 4QFY25 % YoY
Revenue from operations 10,471 12,126 15.8%
Expenses (8,732) (10,117) 15.9% Revenue grew 15.8%, 3% below our estimates, led by 3.4% growth in
Ebitda 1,739 2,008 15.5% KFC, 8.2% in PH and 16% in Costa Coffee, while international business
Ebitda margin % 16.6% 16.6% 0bp continued its strong performance
Ebitda (pre IND AS) 959 1,081 12.7%
Ebitda margin % 9.2% 8.9% -20bp
Pre-IndAS Ebitda margin declined ~20bps yoy and was 50bps below
Depreciation & Amortisation (1,259) (1,518) 20.6% our estimates
Finance cost (567) (695) 22.7%
Impairment of non-financial assets (16) (136)
Other income 146 132 -9.9%
Profit before tax before exceptionals 44 (208) -575.0%
PBT margin % 0.4% -1.7% -210bp
Exceptional item (424) (13)
Profit before tax (380) (221) -41.7%
Total tax expense -110 56
as % of PBT -28.9% 25.2%
Profit after tax -489 -165 -66.2%
Adj. Pat -66 -153 132.0%

Rs m 4QFY24 4QFY25 % YoY

Cost of materials consumed -3226 -3819 18.4%
as % of sales -30.8% -31.5% -70bp
Employee benefit expenses -1546 -1706 10.4% Gross margins came in 68.5% vs 69.2% yoy, ~130bps above IIFLe
as % of sales -14.8% -14.1% 70bp
Other expenses -3959 -4592 16.0%
as % of sales -37.8% -37.9% -10bp
Source: Company, IIFL Research

pe rcy. p anth aki@ iif lc ap. com 3

Devyani International – ADD

Earnings call: Key takeaways Figure 3: KFC performance matrix

KFC 4QFY24 4QFY25 % YoY

• Current QSR environment is marked by a slowdown in growth, weak Revenue from operations 4,941 5,109 3.4%
urban consumption, and inflationary pressures on input costs. SSSG % -7.1% -6.1%
However government measures such as tax benefits aimed at per store revenue (annualised) 33.3 29.5 -11.5%
boosting individual consumption are expected to support recovery. Brand contribution 937 830 -11.4%
• Management believes Strategic acquisitions such as Sky Gate Contribution margin % 19.0% 16.2% -270bp
Hospitality Pvt Ltd (operator of the ‘Biryani By Kilo’ brand) are
expected to strengthen the overall portfolio and diversify revenue Net store addition 106 100
streams Source: Company, IIFL Research

• Average Daily Sales (ADS) declined from Rs93k to Rs83k (4QFY24 vs

4QFY25) & SSSG stood at negative -6.1% for 4QFY25 largely due to
regional disruptions like emergence of Bird flu cases in Andhra Figure 4: PH performance matrix
Pradesh & Telangana and geopolitical headwinds in Kerala & West Pizza Hut 4QFY24 4QFY25 % YoY
Bengal. Revenue from operations 1621 1754 8.2%
• In KFC, Gross Margin for 4QFY25 stood at 68.3%, marking decline of SSSG % -14.0% 1.0%
160bps vis-à-vis 4QFY24; decline in Gross Margin was attributable per store revenue (annualised) 11.46 11.0 -3.9%
largely due to increase in prices of inputs like palm oil, flour and
Brand contribution 71 13 -81.7%
chicken.
• The company plans to leverage its existing infrastructure in Thailand Contribution margin % 4.4% 0.7% -360bp
for integrating its diverse brand portfolio and has planned store Net store addition 61 63
expansions in both India and Thailand. Source: Company, IIFL Research
• The company is currently on course to discuss a brand turnaround
strategy with Yum Brands through innovation and pricing for PH, and Figure 5: Costa performance matrix
would shed more light on the same in 1QFY26. Costa Coffee 4QFY24 4QFY25 % YoY
• The company believes that though the Biryani market is fragmented, Revenue from operations 451 523 16.0%
it offers significant consolidation potential, especially for established SSSG % 7.0% 3.5%
players like ‘Biryani By Kilo’, which has witnessed high repeat orders.
per store revenue (annualised) 10.1 9.5 -5.6%
• The company is expected to infuse Rs900mn to turnaround the Biryani
business into profitability within 1 year by implementing various Brand contribution 81 92 13.6%
operational efficiencies in terms of material sourcing, labour Contribution margin % 18.0% 17.6% -40bp
deployments, rental management. Net store addition 67 41
Source: Company, IIFL Research

pe rcy. p anth aki@ iif lc ap. com 4

Devyani International – ADD

Figure 6: International matrix

International 4QFY24 4QFY25 % YoY
Revenue from operations 2961 4195 41.7%
per store revenue (annualised) 182.2 243.2 33.5%
Brand contribution 298 600 101.3%
Contribution margin % 10.1% 14.3% 420bp
Source: Company, IIFL Research

Figure 7: Pre-IndAs Financials

Y/e 31 Mar, Consolidated FY24 FY25 FY26ii FY27ii FY28ii
Revenues 35,563 49,511 56,185 64,597 74,105
EBITDA 3,807 4,943 5,695 7,140 8,693
margins % 10.7% 10.0% 10.1% 11.1% 11.7%
Depreciation and amortisation (2,092) (3,592) (4,011) (4,384) (4,760)
Ebit 1,714 1,351 1,684 2,755 3,933
Non-operating income 326 370 407 448 492
Financial expense (120) (461) (467) (467) (467)
PBT 1,921 1,260 1,624 2,736 3,958
Exceptionals -1,037 -89 0 0 0
Reported PBT 884 1,170 1,624 2,736 3,958
Tax expense 3,204 1,757 (409) (717) (1,077)
PAT 4,088 2,928 1,215 2,019 2,882
Attributable PAT 9,454 3,308 1,215 2,019 2,882
Source: Company, IIFL Research

pe rcy. p anth aki@ iif lc ap. com 5

Company snapshot Devyani International – ADD

Background: Devyani International is the non-exclusive franchisee of YUM! Brands in India, Nigeria and Nepal. It is also the franchisee partner of Costa
Coffee in India in addition to its own brands like Vaango and Food Street. Classified as its core brands, it has more than 650 KFC and Pizza Hut outlets and
40+ Costa Coffee stores in India. In its own brands, the company has 50+ outlets in the country. Internationally, it operates 40+ KFC and Pizza Hut
outlets.

Management
Ebitda margin (%) pre Ind as SSS growth
Name Designation 16 14.4 14.5 60%
50%
Virag Joshi CEO 14 40%
KFC

12 10.7 30% 49%

Manish Dawar CFO
10 8.1
20%
7.3 10% 5%
Pradeep Das CEO-KFC 8 3% 16%
0%
6
3.8 -10% -34% -5%
4 -20%
2 -30%
-40%
0

FY19

FY20

FY21

FY22

FY23

FY24
FY19

FY20

FY21

FY22

FY23

FY24
Assumptions EV/Ebitda
12m fwd EV/EBITDA Avg +/- 1SD
Y/e 31 Mar,
FY23A FY24A FY25ii FY26ii FY27ii
Consolidated
SSS growth (%)- KFC 16.0 (4.6) (6.4) 3.0 5.0 39.0 (x)
SSS growth (%)- Pizza Hut 4.4 (10.9) (3.8) 4.0 6.0 35.0
Number of stores 1,243.0 1,782.0 2,039.0 2,344.0 2,649.0 31.0
Tax rate (%) 8.5 (362.6) (150.2) 25.2 26.2
27.0
Source: Company data, IIFL Research
23.0
19.0
15.0
Aug-21 May-22 Feb-23 Nov-23 Aug-24 May-25

pe rcy. p anth aki@ iif lc ap. com 6

Devyani International – ADD

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
Revenues 29,977 35,563 49,511 56,185 64,597 Cash & cash equivalents 851 1,808 1,814 87 734
Ebitda 6,551 6,524 8,422 9,275 11,103 Inventories 1,290 1,310 1,482 1,585 1,822
Depreciation and amortisation (2,788) (3,848) (5,699) (6,505) (7,310) Receivables 289 527 413 533 613
Ebit 3,763 2,675 2,723 2,770 3,793 Other current assets 668 1,212 1,021 1,539 1,770
Non-operating income 326 326 370 407 448 Creditors 2,419 3,756 4,411 4,926 5,663
Financial expense (1,475) (1,869) (2,648) (2,858) (2,874) Other current liabilities 1,851 2,057 3,593 3,079 3,540
PBT 2,614 1,132 445 319 1,366 Net current assets (1,172) (956) (3,274) (4,260) (4,264)
Exceptionals (200) (1,037) (89) 0 0 Fixed assets 11,518 21,082 22,879 23,146 23,078
Reported PBT 2,414 96 356 319 1,366 Intangibles 644 4,287 4,581 4,581 4,581
Tax expense 206 (133) (197) (80) (358) Investments 0 0 0 0 0
PAT 2,620 (38) 159 239 1,008 Other long-term assets 14,594 19,098 21,196 23,965 26,490
Minorities, Associates etc. 0 0 0 0 0 Total net assets 25,584 43,511 45,382 47,432 49,884
Attributable PAT 2,620 (38) 159 239 1,008 Borrowings 774 9,102 9,318 9,318 9,318
Other long-term liabilities 15,169 20,923 23,248 25,059 26,503
Ratio analysis Shareholders equity 9,642 13,486 12,816 13,055 14,063
Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Total liabilities 25,584 43,511 45,382 47,432 49,884
Per share data (Rs)
Pre-exceptional EPS 2.4 4.9 0.6 0.2 0.8 Cash flow summary (Rs m)
DPS 0.0 0.0 0.0 0.0 0.0 Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
BVPS 8.0 11.2 10.6 10.8 11.7 Ebit 3,763 2,675 2,723 2,770 3,793
Growth ratios (%) Tax paid (256) 3,204 1,757 (409) (717)
Revenues 43.8 18.6 39.2 13.5 15.0 Depreciation and amortization 2,788 3,848 5,699 6,505 7,310
Ebitda 37.6 (0.4) 29.1 10.1 19.7 Net working capital change 1,743 742 2,323 (740) 651
EPS 65.2 106.7 (88.2) (65.7) 322.6 Other operating items 0 0 0 0 0
Profitability ratios (%) Operating cash flow before interest 5,836 7,753 9,023 4,546 7,074
Ebitda margin 21.9 18.3 17.0 16.5 17.2 Financial expense (75) (120) (461) (467) (467)
Ebit margin 12.6 7.5 5.5 4.9 5.9 Non-operating income 326 326 370 407 448
Tax rate (8.5) 139.5 55.4 25.2 26.2 Operating cash flow after interest 6,087 7,959 8,932 4,486 7,054
Net profit margin 8.7 (0.1) 0.3 0.4 1.6 Capital expenditure (4,477) (21,541) (5,682) (4,279) (4,316)
Return ratios (%) Long-term investments 0 0 0 0 0
ROE 34.7 51.0 5.3 1.8 7.4 Others (674) (3,403) (2,699) (1,934) (2,092)
ROIC ex goodwill 24.6 7.1 4.2 5.1 8.0 Free cash flow 936 (16,984) 550 (1,727) 647
Solvency ratios (x) Equity raising 176 3,371 (761) 0 0
Net debt-equity 0.0 0.5 0.6 0.7 0.6 Borrowings (551) 8,328 216 0 0
Net debt to Ebitda 0.0 1.1 0.9 1.0 0.8 Dividend 0 0 0 0 0
Interest coverage 2.6 1.4 1.0 1.0 1.3 Net chg in cash and equivalents 561 (5,285) 5 (1,727) 647
Source: Company data, IIFL Research Source: Company data, IIFL Research

pe rcy. p anth aki@ iif lc ap. com 7

Devyani International – ADD

Date Rating Close price Target price Upside Date Rating Close price Target Upside
Devyani Intl: 3 year price and rating history (Rs) price (Rs)
(Rs) (Rs) (%) (%)
(Rs) Price TP/Reco changed date 12 Feb 2025 BUY 179 195 8.9 25 Jan 2023 REDUCE 160 160 0.0
07 Jan 2025 BUY 198 220 11.1 04 Nov 2022 ADD 183 210 14.8
250 12 Nov 2024 BUY 175 200 14.3 14 Sep 2022 ADD 192 215 12.0
200 03 Oct 2024 BUY 193 220 14.0 04 May 2022 ADD 171 200 16.9
150 06 Aug 2024 BUY 181 195 7.7
100 08 Apr 2024 BUY 155 175 12.9
50 05 Feb 2024 BUY 173 200 15.6
0 09 Jan 2024 BUY 186 215 15.6
15 Nov 2023 REDUCE 183 180 -1.6

May-25
May-22

May-23

May-24
Aug-24
Aug-22

Aug-23
Nov-22

Nov-23

Nov-24
Feb-25
Feb-23

Feb-24
08 Nov 2023 REDUCE 188 170 -9.6
07 Aug 2023 REDUCE 189 180 -4.8
18 May 2023 REDUCE 174 165 -5.2

pe rcy. p anth aki@ iif lc ap. com 11

United Spirits – ADD
26 May 2025

Enhanced focus on innovation Result update

UNSP reported revenue growth of 10.5% yoy driven by 13% CMP Rs1579 Price performance (%)
growth in P&A. GM expanded by 110bps, while Ebitda grew 12-mth TP (Rs) 1600 (1%) 1M 3M 1Y
40%—driven by lower ad-spends, reduced staff costs, and Absolute (Rs) (0.1) 20.8 34.5
Market cap (US$m) 13,463
better GM. Looking ahead, the company aims to accelerate Absolute (US$) 0.1 23.0 31.4
growth through innovation, targeting doubling of its growth Enterprise value(US$m) 12,807
through innovation-led portfolio over 3–5 years, but expects Relative Perf. (2.2) 10.8 24.3
Bloomberg UNITDSPR IN
only modest margin expansion due to limited pricing growth. We Cagr (%) 3 yrs 5 yrs
raise EPS estimates for FY26/27 by 3.6/5.4% and maintain ADD Sector Consumer Discretionary EPS (Rs) 19.6 21.2
rating with an SOTP-based target price of Rs1600.
Shareholding pattern (%) Stock performance
Beat on margin: Standalone Revenue grew 10.5% yoy (vs IIFLe of Promoter 56.7 Vol('000, LHS) Price (Rs., RHS)
Pledged (% of promoter shares)
11%) led by P&A sales growth of 13% yoy vs IIFLe of 12.3% while P&A 1.2 10,000 2,000
volumes grew 9%. GM expanded 110bps yoy. Ebitda grew 40% yoy (vs FII 16.0 8,000 1,500
IIFLe of 23%) and Ebitda margin came in at 17.1%, up 350bps yoy (vs DII 13.0 6,000
1,000
IIFLe of 15% margin). Beat on margin was driven by ad-spends coming 52Wk High/Low (Rs) 1684/1150 4,000
500
in 100bps lower than our estimate, Staff costs coming in 60bps lower Shares o/s (m) 727
2,000
0 0
than our estimate and GM being 50bps higher than our estimate. PAT Del Value 3mth avg (US$ m) 6.9

Nov-24
Nov-23
Jul-23

Jul-24
Sep-23

Sep-24

May-25
May-23

May-24

Jan-25
Jan-24
Mar-24

Mar-25
grew 10% yoy (vs IIFLe of 30% decline); PAT growth was lower than Dividend yield FY26ii (%) 0.6
Ebitda growth largely on account of Other income being down 26%, Free float (%) 43.3
attributable to inter-company dividend from RCB.
Financial summary (Rs m)
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Innovation to accelerate growth; expect modest margin
Revenues (Rs m) 113,210 120,690 135,233 150,880 165,679
expansion: The company said it is focusing on innovation to accelerate
Ebitda margins (%) 17.7 18.6 18.8 19.3 19.7
growth. It aims to double the contribution of its innovation portfolio to
Pre-exceptional PAT (Rs m) 14,209 16,302 17,881 20,768 23,503
overall growth over the next 3–5 years. Currently, innovation
Reported PAT (Rs m) 14,080 15,820 17,881 20,768 23,503
contributes high-single-digit percentage to growth. However, the
Pre-exceptional EPS (Rs) 20.0 23.0 25.2 29.3 33.1
company tempered margin expansion expectations despite benefits
Growth (%) 44.8 14.7 9.7 16.1 13.2
from cost saving initiatives as it expects pricing growth to be minimal
IIFL vs consensus (%) 2.1 3.1 10.4
going forward. The aspiration is to achieve modest margin expansion
PER (x) 78.9 68.7 62.7 54.0 47.7
while focusing on growth.
ROE (%) 21.7 21.4 20.5 20.8 20.4
Net debt/equity (x) (0.3) (0.4) (0.4) (0.5) (0.5)
Upgrade EPS by 4-5%, maintain ADD, TP Rs1600: We upgrade our
EPS estimates for FY26/27 by 3.6/5.4% as we expect slightly better EV/Ebitda (x) 55.1 48.7 42.6 36.8 32.4
margin delivery on the back of cost saving initiatives. We maintain ADD Price/book (x) 15.7 13.8 12.0 10.5 9.1
with an SOTP-based value of Rs1600. OCF/Ebitda (x) 0.4 0.9 0.7 0.7 0.7
Source: Company, IIFL Research. Priced as on 23 May 2025

Percy Panthaki Sameer Gupta Rakshit Desai

percy.panthaki@iiflcap.com sameer.gupta@iiflcap.com rakshit.desai@iiflcap.com
91 22 4646 4662 91 22 4646 4672 91 22 4646 4743
United Spirits – ADD

Figure 1: 4QFY25-Result snapshot

Standalone (Rs m) 4QFY24 4QFY25 % YoY
Standalone Revenue grew 10.5% yoy (vs IIFLe of 11%); volumes grew 7%, P&A
Total sales 26,660 29,460 10.5% sales grew 13% yoy vs IIFLe of 12.3%, while P&A volumes grew 9%
Total Expenditure (23,040) (24,410) 5.9%
EBITDA 3,620 5,050 39.5%
EBITDA Margin (%) 13.6 17.1 356bps Ebitda grew 40% yoy (vs IIFLe of 23%) and Ebitda margin came in at 17.1%, up
350bps yoy (vs IIFLe of 15% margin)
Interest (290) (220) -24.1%
Depreciation (710) (680) -4.2%
Other Income 2,290 1,700 -25.8%
PBT before exceptionals 4,910 5,850 19.1%
Non-recurring items (310) - NA
Reported PBT 4,600 5,850 27.2%
Provision for taxation (760) (1,340) 76.3%
Tax Rate (%) 15.5 22.9 743bps
Reported PAT 3,840 4,510 17.4% PAT grew 10% yoy (vs IIFLe of 30% decline); PAT growth was lower than
Adj PAT 4,102 4,510 9.9% Ebitda growth largely on account of Other income being down 26%,
Net Profit Margin (%) 15.4 15.3 -8bps attributable to inter-company dividend from RCB
Cost details 4QFY24 4QFY25 % YoY
Raw materials costs 15,110 16,360 8.3%
As a % of sales 56.7 55.5 -114bps
Staff Cost 1,340 1,370 2.2%
As a % of sales 5.0 4.7 -38bps
Ad & Sales promotion 3,260 3,170 -2.8% Ad-spends (as a % of sales) declined 150bps yoy
As a % of sales 12.2 10.8 -147bps
Others 3,330 3,510 5.4%
As a % of sales 12.5 11.9 -58bps

Gross margin 43.3 44.5 114bps

Source: Company, IIFL Research

pe r c y.p an th aki @ii fl c ap. c om 2

United Spirits – ADD

Key takeaways from conference call • Commodity Cost Environment: The current commodity cost
environment is stable, with inflation in Extra Neutral Alcohol (ENA)
and deflation in glass prices effectively balancing each other out. The
• Current Business Landscape: There are several opportunities on
government is expected to announce ethanol price revisions in
the horizon, including the India-UK FTA, which is expected to enhance
September-October.
market accessibility and drive deeper penetration. The reopening of
Andhra Pradesh and Uttar Pradesh markets, with the approval of • Supply Agility Programme Update: The supply agility programme
composite hubs (beer + spirits), along with the rationalisation of is progressing well, with approximately two-thirds of the initiatives
excise rates in Karnataka and Madhya Pradesh, also present growth already completed. The remaining interventions are expected to be
potential. However, challenges persist, such as a tough demand implemented over the next 2–3 years.
environment, restrictive market access in Delhi, regulatory roadblocks
in certain states, and tax uncertainty in Uttarakhand. Figure 3: 2/3rd of initiatives under supply agility programme are already complete
• Building Innovation Capability: The company aims to double the
contribution of its innovation portfolio to overall growth over the next
3–5 years. Currently, innovation contributes a high-single-digit
percentage to growth.

Figure 2: Innovations in FY25

Source: Company, IIFL Research

• Progress on McDowell’s X Series: Rollout in India has been a slow

process due to the unique regulatory requirements of each state,
Source: Company, IIFL Research
necessitating legislative approvals. Currently, the X Series is available
in five markets, with plans to expand to additional states over the
• UK FTA: Parent company Diageo has stated that the duty cut benefits next four months, within the coming couple of quarters. The new
will be passed on to the end customer, resulting in a high-single-digit innovation, particularly the rum variant, is performing well.
reduction in consumer prices. This is expected to drive high-single-
• Upper and Lower Prestige Performance: In the upper prestige
digit volume growth. Additionally, the price reduction for BII could be
segment, the Signature brand continues to show sustained strength,
around 4-5%. This development also creates opportunities to explore
while Antiquity has been refreshed with a renovated design and new
the global portfolio.

pe r c y.p an th aki @ii fl c ap. c om 3

United Spirits – ADD

packaging. In the mid-prestige segment, American Pride has been Figure 5: Growth across categories
actively promoted through targeted marketing events. Royal
Challenge has seen strong visibility through high-impact campaigns
and the introduction of convenient pocket packs.
• Margin Guidance: The goal is to maintain the current high-teens
margin. Headline pricing has been lumpy historically. From 2017 to
2022, pricing was only 0.2-0.3% p.a., but in the last three years, 2%
p.a. pricing was taken. Pricing improvements have typically been
uneven and may decline in the coming years. The aspiration is to
achieve modest margin expansion while focusing on growth.

Figure 4: Current company portfolio

Source: Company, IIFL Research

Figure 6: P&A volumes grew 9.2% yoy

m cases Prestige segment volumes % growth (RHS)
%
16.0 12%
14.0 10%
12.0 8%
10.0 6%
4%
8.0
Source: Company, IIFL Research 2%
6.0 0%
4.0 -2%
2.0 12.8 12.0 11.0 13.4 13.4 12.4 11.5 12.9 14.9 13.6 -4%
0.0 -6%
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY23 FY24 FY25
Source: Company, IIFL Research

pe r c y.p an th aki @ii fl c ap. c om 4

United Spirits – ADD

Figure 7: Popular volumes declined 2.2% Figure 9: Ebitda margin expanded ~350bps yoy driven by GM expansion, lower ad-
spends and staff costs
m cases Popular segment volumes % growth (RHS) %
4.5 10% (%) Ebitda margin (%) - LHS Expansion (bps) - RHS
(bps)
4.0 0% 25.0 600
3.5 -10%
3.0 -20% 20.0 500
2.5 -30% 400
2.0 -40% 15.0
1.5 -50% 300
10.0
1.0 -60% 200
0.5 4.0 3.1 2.3 2.8 3.1 3.2 2.2 2.5 3.2 3.1 -70% 5.0
0.0 -80% 100
17.7 16.4 16.4 13.6 19.5 17.8 17.1 17.1
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0.0 0
FY23 FY24 FY25 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Source: Company, IIFL Research FY24 FY25
Source: Company, IIFL Research
Figure 8: Gross margin was up 110bps yoy
(%) Gross margin (%) - LHS Expansion (bps) - RHS
(bps)
46.0 500
45.0 400
44.0 300
43.0 200
100
42.0
0
41.0 -100
40.0 -200
39.0 40.6 45.4 43.6 43.4 43.4 43.3 44.5 45.2 44.7 44.5 -300
38.0 -400
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY23 FY24 FY25
Source: Company, IIFL Research

pe r c y.p an th aki @ii fl c ap. c om 5

Company snapshot United Spirits – ADD

Background: Headquartered in Bengaluru, Diageo India has one of the largest manufacturing footprints in alcobev with 36 facilities across India. It
manufactures, sells and distributes Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, The Singleton, Royal Challenge, McDowell’s
No1, Smirnoff, Ketel One, Tanqueray, Captain Morgan and Godawan.

Management
Net Sales (Rs m) Prestige Segment Volumes (m
Name Designation cases)
120,000 103,737 106,920
Praveen Someshwar MD & CEO 60.0
100,000 94,237 50.2
47.7
Pradeep Jain ED & CFO 78,892 50.0
42.7
80,000 37.2
40.0
Ruchira Jaitly Chief Marketing Officer
60,000
30.0
40,000
20.0
20,000
10.0
- 0.0

FY21

FY22

FY23

FY24
FY21 FY22 FY23 FY24

Assumptions PE Chart EV/Ebitda

Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii 12m fwd EV/EBITDA Avg +/- 1SD
12m fwd PE Avg +/- 1SD

Prestige segment 49.0

50.2 52.9 56.6 60.0 63.0 (x) (x)
Volume (m cases) 93.0 45.0
Realization growth (%) 6.5 6.5 5.0 6.0 5.0
83.0 41.0
Regular segment
73.0 37.0
Volume (m cases) 11.3 11.0 11.7 12.2 12.7
9.7 2.7 1.0 1.0 1.0 63.0 33.0
Realization growth (%)
Source: Company data, IIFL Research 53.0 29.0
43.0 25.0
33.0 21.0
Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25 Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25

pe r c y.p an th aki @ii fl c ap. c om 6

United Spirits – ADD

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Revenues 113,210 120,690 135,233 150,880 165,679 Cash & cash equivalents 18,680 29,030 39,019 50,705 65,797
Ebitda 20,010 22,430 25,405 29,100 32,558 Inventories 20,630 23,050 29,640 33,070 36,313
Depreciation and amortisation (2,750) (2,830) (3,039) (3,237) (3,436) Receivables 34,210 37,500 38,527 42,985 47,201
Ebit 17,260 19,600 22,366 25,863 29,122 Other current assets 3,990 5,840 6,544 7,301 8,017
Non-operating income 2,250 3,360 2,172 2,606 3,076 Creditors 19,540 22,390 25,088 27,991 30,736
Financial expense (760) (890) (1,111) (1,277) (1,452) Other current liabilities 18,210 23,370 25,240 27,259 29,439
PBT 18,750 22,070 23,427 27,193 30,746 Net current assets 39,760 49,660 63,403 78,811 97,153
Exceptionals (170) (650) 0 0 0 Fixed assets 12,300 12,510 12,369 12,125 11,777
Reported PBT 18,580 21,420 23,427 27,193 30,746 Intangibles 10 10 10 10 10
Tax expense (4,490) (5,530) (5,522) (6,396) (7,208) Investments 1,760 1,250 1,250 1,250 1,250
PAT 14,090 15,890 17,905 20,797 23,537 Other long-term assets 20,190 23,290 23,736 24,088 24,344
Minorities, Associates etc. (10) (70) (24) (29) (35) Total net assets 74,020 86,720 100,768 116,284 134,534
Attributable PAT 14,080 15,820 17,881 20,768 23,503 Borrowings 260 0 0 0 0
Other long-term liabilities 2,550 5,680 7,524 9,368 11,212
Ratio analysis Shareholders equity 71,210 81,040 93,244 106,916 123,322
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Total liabilities 74,020 86,720 100,768 116,284 134,534
Per share data (Rs)
Pre-exceptional EPS 20.0 23.0 25.2 29.3 33.1 Cash flow summary (Rs m)
DPS 9.0 12.0 10.0 10.0 10.0 Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
BVPS 100.3 114.2 131.4 150.7 173.8 Ebit 17,260 19,600 22,366 25,863 29,122
Growth ratios (%) Tax paid (4,490) (5,530) (5,522) (6,396) (7,208)
Revenues 6.7 6.6 12.0 11.6 9.8 Depreciation and amortization 2,750 2,830 3,039 3,237 3,436
Ebitda 41.2 12.1 13.3 14.5 11.9 Net working capital change (5,346) 450 (3,754) (3,723) (3,250)
EPS 44.8 14.7 9.7 16.1 13.2 Other operating items (1,741) 1,840 446 351 256
Profitability ratios (%) Operating cash flow before interest 8,433 19,190 16,576 19,333 22,356
Ebitda margin 17.7 18.6 18.8 19.3 19.7 Financial expense (760) (890) (1,111) (1,277) (1,452)
Ebit margin 15.2 16.2 16.5 17.1 17.6 Non-operating income 2,250 3,360 2,172 2,606 3,076
Tax rate 24.2 25.8 23.6 23.5 23.4 Operating cash flow after interest 9,923 21,660 17,637 20,663 23,980
Net profit margin 12.4 13.2 13.2 13.8 14.2 Capital expenditure 1,477 (1,750) (1,500) (1,500) (1,500)
Return ratios (%) Long-term investments (1,323) (2,590) (446) (351) (256)
ROE 21.7 21.4 20.5 20.8 20.4 Others (180) (720) (24) (29) (35)
ROIC ex goodwill 25.8 27.8 32.2 35.8 39.2 Free cash flow 9,897 16,600 15,666 18,783 22,188
Solvency ratios (x) Equity raising (26) 397 0 0 0
Net debt-equity (0.3) (0.4) (0.4) (0.5) (0.5) Borrowings 257 (260) 0 0 0
Net debt to Ebitda (0.9) (1.3) (1.5) (1.7) (2.0) Dividend (2,839) (6,387) (5,677) (7,096) (7,096)
Interest coverage 22.7 22.0 20.1 20.3 20.1 Net chg in cash and equivalents 7,289 10,350 9,989 11,686 15,092
Source: Company data, IIFL Research Source: Company data, IIFL Research

pe r c y.p an th aki @ii fl c ap. c om 7

United Spirits – ADD

Date Rating Close price Target price Upside

United Spirits: 3 year price and rating history
(Rs) (Rs) (%)
(Rs) Price TP/Reco changed date 27 Jan 2025 ADD 1470 1500 2.0
06 Jan 2025 ADD 1682 1650 -1.9
2,000 25 Oct 2024 ADD 1460 1500 2.7
1,500 01 Oct 2024 ADD 1590 1600 0.6
25 Jul 2024 ADD 1383 1450 4.8
1,000
05 Jul 2024 ADD 1259 1300 3.3
500
0
May-23
May-22

May-24

May-25
Nov-24
Aug-22

Aug-23

Aug-24
Nov-22

Nov-23
Feb-23

Feb-24

Feb-25

pe r c y.p an th aki @ii fl c ap. c om 11

NTPC – BUY
Result review

26 May 2025

Q4 misses; coal capacity pipeline crosses 25GW Result update

NTPC’s 4QFY25 adj. consol. PAT of Rs52.3bn missed IIFLe of CMP Rs345 Price performance (%)
Rs59.8bn due to lower disincentive reversals, weak incentive 1M 3M 1Y
12-mth TP (Rs) 405 (18%)
income and higher operational expenses. New coal project
Market cap (US$m) 39,212 Absolute (Rs) (5.3) 5.6 (7.4)
pipeline has expanded to 26GW (+4GW), company announced
Absolute (US$) (5.0) 7.5 (9.5)
30GW nuclear capacity target and FY25 DPS increased to Enterprise value(US$m) 70,603
Rs8.35/sh (up Rs0.6/sh yoy) – all in-line with our thesis. Stock Relative Perf. (7.3) (3.1) (14.5)
Bloomberg NTPC IN
offers c.10% steady earnings compounding + div. yield at 1.7x Cagr (%) 3 yrs 5 yrs
FY27E P/BV. Buy (TP: Rs405/sh; 20% upside). Sector Utilities EPS (Rs) 7.7 8.6

Shareholding pattern (%) Stock performance

Coal capacity pipeline expands: With the net addition of 4GW coal
capacity in company’s execution pipeline, growth visibility has increased Govt. of India 51.1 Vol('000, LHS) Price (Rs., RHS)
Pledged (as % of promoter share) 0.0
to 28GW (26GW coal), which will potentially increase NTPC’s regulated 100,000 500
equity to Rs2trn (from Rs1.1trn at end-FY25). We believe there could FII 17.8 80,000 400
be further additions to company’s coal capacity pipeline (albeit at a DII 27.2 60,000 300
slower pace), as the sheer quantum of India’s incremental annual peak 52Wk High/Low (Rs) 437/296 40,000 200
demand cannot be sustainably met by imported batteries. Shares o/s (m) 9697 20,000 100
0 0
Del Value 3mth avg (US$ m) 33.2

Nov-23

Nov-24
Sep-23
Jul-23

Jul-24
Sep-24
May-23

Jan-24
Mar-24
May-24

Jan-25
Mar-25
May-25
30GW nuclear target to alleviate terminal growth concerns: We Dividend yield FY26ii (%) 2.9
view this announcement as NTPC’s first steps towards a ‘post-coal’ Free float (%) 48.9
future. Nuclear’s high capex requirement and long gestation suit NTPC’s Financial summary (Rs m)
cost-plus model, as we estimate incremental regulated equity from this Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
nuclear capacity target to be higher than the cumulative equity base of Revenues (Rs m) 1,795,011 1,918,053 1,960,248 2,145,579 2,259,774
company’s traditional c.90GW operational and pipeline capacities. Ebitda margins (%) 28.3 30.1 31.1 31.3 33.3
Pre-exceptional PAT (Rs m) 191,837 202,874 234,933 237,879 257,254
Further dividend increase possible on rising FCF: With NTPC’s 208,119 234,225 234,933 237,879 257,254
Reported PAT (Rs m)
equity investment requirement reduced post NTPC Green IPO, we
Pre-exceptional EPS (Rs) 19.8 20.9 24.2 24.5 26.5
anticipate further increase in dividend payout as company’s annual
Growth (%) 19.2 5.8 15.8 1.3 8.1
standalone FCF will likely cross Rs400bn.
IIFL vs consensus (%) (0.6) 6.4 1.7 0.0
PER (x) 17.4 16.5 14.2 14.0 13.0
Buy for steady 10% earnings Cagr + dividend yield: Our SoTP-
ROE (%) 12.5 11.8 12.3 11.6 11.8
based FY27E TP of Rs405/sh (Rs400/sh previously) values NTPC at an
Net debt/equity (x) 1.6 1.5 1.3 1.3 1.4
implied P/BV of 1.9x, above its long-term median of 1.0x, to account
EV/Ebitda (x) 11.6 10.4 9.8 9.1 8.7
for longer growth runway & emerging optionalities. Delay in execution,
Price/book (x) 2.1 1.8 1.7 1.6 1.5
reduction in regulated returns and operational underperformance are
OCF/Ebitda (x) 0.6 0.7 0.8 0.8 0.8
the key risks to our earnings and fair value estimates.
Source: Company, IIFL Research. Priced as on 23 May 2025

Apoorva Bahadur Siddharth

apoorva.bahadur@iiflcap.com siddharth@iiflcap.com
91 22 4646 4674 91 22 4646 4791
NTPC – BUY

Figure 1: 4QFY25 - consolidated result review

(Rs mn) Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25 IIFLe YoY (%) QoQ (%) vs. IIFLe (%)
Sales 476,221 485,206 446,963 450,528 498,337 465,231 4.6 10.6 7.1
Regulatory deferral (2,114) (5,872) 23,362 (3,431) 22,960 (1,059) NM NM NM
Revenue 474,107 479,334 470,325 447,097 521,297 464,172 10.0 16.6 12.3

Fuel cost 251,275 278,448 242,253 245,314 249,134 243,670 (0.9) 1.6 2.2
Power purchase cost 13,912 14,408 12,130 12,921 15,716 15,875 13.0 21.6 (1.0)
Employee cost 18,568 16,297 15,383 16,231 20,050 19,652 8.0 23.5 2.0
Other expenses 50,514 35,887 60,645 39,391 65,897 35,082 30.5 67.3 87.8

EBITDA 139,838 134,293 139,915 133,240 170,500 149,892 21.9 28.0 13.7
EBITDA margin (%) 29.5 28.0 29.7 29.8 32.7 32.3 321bps 291bps 41bps

Depreciation 42,708 42,042 42,156 43,183 46,631 44,504 9.2 8.0 4.8
Finance cost 29,553 31,359 36,206 27,635 36,480 27,192 23.4 32.0 34.2
Other income 11,945 4,611 5,015 5,451 12,514 9,079 4.8 129.6 37.8

Core PBT 79,523 65,503 66,567 67,873 99,903 87,275 25.6 47.2 14.5
Exceptionals - - - - - - NM NM NM
PBT 79,523 65,503 66,567 67,873 99,903 87,275 25.6 47.2 14.5

Total tax 16,737 17,782 16,662 20,751 27,256 27,387 62.9 31.3 (0.5)
Tax rate (%) 21.0 27.1 25.0 30.6 27.3 31.4 624bps -329bps -410bps

Share of JV PAT 2,114 7,340 3,898 4,575 6,325 2,618 199.2 38.3 141.6
Minority interest 3,213 319 1,057 1,072 2,859 2,691 (11.0) 166.8 6.3

PAT 61,687 54,741 52,746 50,625 76,112 59,815 23.4 50.3 27.2

Adjustments (7,662) (3,160) (3,113) (1,275) (23,802) - NM NM NM

Adj. PAT 54,026 51,581 49,633 49,350 52,310 59,815 (3.2) 6.0 (12.5)
Source: Company, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 2

NTPC – BUY

Figure 2: Consolidated/standalone regulated equity increased to Figure 3: Company reported Rs40mn fixed cost under-recovery reversal in 4QFY25,
Rs1,088bn/Rs909bn by end-FY25 taking the total fixed cost under-recovery to Rs4.6bn

Standalone Consolidated 6.0 (Rs bn) Ficed cost under recovery 5.0
1,200 (Rs bn) 1,088
1,050 1,050 1,050 1,059 3.8
996 987
1,000 942 943 903 909 4.0
877 877 894 2.6 2.4
781 815 821
776
800 2.0 1.0
0.4
600 -
(0.0)
400 (2.0)
(1.5)
200 (2.4)
(4.0)

Q4FY23

Q1FY24

Q2FY24

Q3FY24

Q4FY24

Q1FY25

Q2FY25

Q3FY25

4QFY25
-
Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 4QFY25

Source: Company, IIFL Research Source: Company, IIFL Research

Figure 4: Quarterly PAF trend – 310bps yoy improvement in coal PAF in 4QFY25 Figure 5: Quarterly PLF trend - 147bps yoy improvement in coal PLF in 4QFY25

(%) (%)
Coal Gas Coal Gas
100 90 80 80 80 81
96 96 77 76 76 76
80 72
94 94 94
95 93
92 92 93
92 93 93 70
91
90 89 90 60
90
86 50
85 40
85
30 24
18
80 20 10 8 7
10 3 3 3 2
75 -
Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 4QFY25 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 4QFY25

Source: Company, IIFL Research Source: Company, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 3

NTPC – BUY

Figure 6: Standalone/Group commercial capacity increased by 0.3GW/4.0GW in FY25 Figure 8: Generation increased to 95BU in 4QFY25
(BU) (%)
(GW) Standalone Group Generation Calculated PLF (RHS)
90 80 100 80
76 77 98
80 74 74 76 76 98
72 72
70 96 76 95
58 58 59 59 59 59 59 75
56 56 74 93 74
60 94
72 71 72 91
50 92 70 71
90 90 70
40 90 89 89 88 68
30 88
20 86 65
10 84
- 82 60
Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 4QFY25 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 4QFY25

Source: Company, IIFL Research Source: Company, IIFL Research

Figure 7: Coal accounts for 78% of group's operation portfolio Figure 9: RE sources account for 50% of under-construction portfolio of NTPC group
Solar Wind
Group
8% 1%
operational
Hydro portfolio of
5% NTPC (80GW)
Gas
8%

Coal
78%

Source: Company, IIFL Research Source: Company, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 4

NTPC – BUY

Figure 10:Change in estimates

Revised estimates Previous estimates Change (%)
FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E
Revenue 1,960,248 2,145,579 2,259,774 1,985,784 2,150,233 2,262,010 (1.3) (0.2) (0.1)
EBITDA 610,362 672,179 753,619 628,840 677,439 754,066 (2.9) (0.8) (0.1)
PAT 234,933 237,879 257,254 240,602 243,564 262,400 (2.4) (2.3) (2.0)
Source: Company, IIFL Research

Figure 11:IIFLe vs. consensus

Estimates Consensus Difference (%)
FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E
Revenue 1,960,248 2,145,579 2,259,774 2,012,000 2,150,000 2,260,000 (2.6) (0.2) (0.0)
EBITDA 610,362 672,179 753,619 613,310 672,309 769,736 (0.5) (0.0) (2.1)
PAT 234,933 237,879 257,254 237,020 257,250 277,059 (0.9) (7.5) (7.1)
Source: Bloomberg, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 5

NTPC – BUY

Figure 12:NTPC – SoTP table

FY27E regulated
FY27E core RoE Previous
Particulars equity (NTPC's Growth (%) CoE (%) P/BV (x) Value (Rs mn) TP (Rs/sh)
(%) TP (Rs/sh)
share)
Standalone - Generation 880,414 18.3 3.5 11.2 1.9 1,702,436 176 177
Standalone - FGD & Mining 129,720 8.0 - 11.2 0.7 93,227 10 9
NGEL (RE business) FY27E fair value est. at 20% holdco discount on fully diluted share count 634,123 65 66
THDC 115,357 17.3 3.0 11.2 1.7 201,573 21 21
NEEPCO 59,998 17.9 3.0 11.2 1.8 109,072 11 11
BRBCL 23,459 15.6 - 11.2 1.4 32,661 3 3
Meja 16,232 16.1 - 11.2 1.4 23,339 2 2
Aravali 12,459 26.7 - 11.2 2.4 29,816 3 3
Vallur 14,003 19.0 - 11.2 1.7 23,833 2 2
NTPC-SAIL 8,814 22.8 - 11.2 2.0 17,954 2 2
RGPPL 18,644 3.1 - 11.2 0.3 5,159 1 1
Patratu 41,443 10.4 11.2 0.9 38,458 4 4
Maitree 22,304 16.4 11.2 1.5 32,722 3 3
NVVN 10x FY27E target P/E 20,747 2 2
HURL 53,847 1 1
Jhabua 10x FY27E target P/E 17,238 2 2
Standalone CWIP - post FY26E 545,110 1.2 502,196 52 47
Consol. CWIP - post FY26E 110,134 adj. for NTPC's stake 1.2 101,464 10 10
Additional coal capacity optionality 157,627 Identified for expansion & other optionalities 0.9 145,218 15 15
PSP optionality 233,681 0.5 112,661 12 12
NPCIL JV 157,500 0.1 14,080 1 1
+ cash & cash equivalents 72,095 7 6
- non-core debt - - -
Total 3,983,918 405 400
Source: IIFL Research

6
ap oorv a. bah adu r@ iif lc ap .c om
NTPC – BUY

Figure 13:Deferral of peak power shortages could test NTPC’s valuation multiples over the next 12-18 months

1yr fwd P/BV Peak shortage (GW) - RHS

(x) (GW)

2.50 40

2.00 30

1.50 20

1.00 10

0.50 0

- -10

Source: Bloomberg, IIFL Research

7
ap oorv a. bah adu r@ iif lc ap .c om
NTPC – BUY

Figure 14: Income statement (consolidated)

(Rs mn) FY24 FY25AE FY26E FY27E FY28E
Total revenue 1,785,009 1,881,034 1,948,409 2,137,482 2,255,691

- fuel cost 1,034,626 1,083,773 1,063,444 1,167,824 1,176,345

- electricity purchase cost 56,828 55,176 63,695 69,290 72,253
- employee cost 65,920 67,961 76,535 81,038 86,678
- other expense 129,786 133,195 146,211 155,248 170,880

EBITDA 497,850 540,929 598,524 664,082 749,535

EBITDA margin (%) 27.9 28.8 30.7 31.1 33.2

- depreciation 162,036 174,012 196,052 220,832 242,098

- finance cost 119,407 131,681 146,288 169,407 197,057
+ other income 26,650 27,591 30,452 25,435 22,891
+ regulatory deferral a/c movement 10,002 37,019 11,839 8,097 4,084

Core PBT 253,058 299,846 298,475 307,375 337,355

- Forex (12,380) - - - -
- MTM 377 - - - -
+ exceptional item - - - - -

Reported PBT 265,061 299,846 298,475 307,375 337,355

- Tax 68,092 82,452 78,080 83,855 92,484

Tax rate (%) 25.7 27.5 26.2 27.3 27.4

Reported PAT 196,969 217,394 220,395 223,520 244,871

- Minority Interest 5,206 5,307 9,065 10,411 13,153

+ Share in JV PAT 16,356 22,137 23,603 24,770 25,536
Reported PAT post minority & JV PAT 208,119 234,225 234,933 237,879 257,254
+ Adjustments (16,282) (31,350) - - -

Recurring PAT 191,837 202,874 234,933 237,879 257,254

Source: Company, IIFL Research, *AE: - Annual Report awaited

8
ap oorv a. bah adu r@ iif lc ap .c om
NTPC – BUY

Figure 15: Balance sheet (consolidated)

(Rs mn) FY24 FY25AE FY26E FY27E FY28E
GFA 3,745,456 4,044,498 4,326,732 4,663,423 5,345,414
Accumulated depreciation 1,156,120 1,330,132 1,526,183 1,747,015 1,989,113
NFA 2,589,336 2,714,366 2,800,548 2,916,408 3,356,301
CWIP 976,163 1,108,111 1,093,195 1,201,061 1,339,827
Total Fixed Assets 3,565,499 3,822,477 3,893,743 4,117,469 4,696,128
Investment - LT 158,346 196,536 220,139 244,909 270,445
Investment - ST 500 500 500 500 500
Regulatory deferral balance 135,562 178,679 190,517 198,614 202,698
Other non-current assets 67,752 86,831 86,831 86,831 86,831

Inventory 180,191 187,223 180,600 194,736 202,005

Receivables 456,299 457,433 451,384 476,425 483,209
Cash & bank 68,473 114,571 90,687 125,556 128,236
Loans & advances 8,413 11,209 11,209 11,209 11,209
Other current assets 136,234 168,115 168,115 168,115 168,115
Total current assets 849,610 938,551 901,996 976,042 992,775
Payables 113,380 111,600 111,369 118,960 122,195
Provisions 91,444 98,555 98,555 98,555 98,555
Other current liabilities 91,146 64,194 64,194 64,194 64,194
Net current assets 553,641 664,203 627,878 694,333 707,830

Total Assets 4,481,299 4,949,224 5,019,608 5,342,656 5,964,432

Share capital 96,967 96,967 96,967 96,967 96,967

Reserves & surplus 1,510,126 1,743,745 1,880,738 2,013,774 2,149,226
Net worth 1,607,093 1,840,712 1,977,704 2,110,741 2,246,192
Minority interest 44,130 70,515 79,580 89,991 103,144
LT debt 2,425,855 2,558,718 2,513,043 2,662,644 3,135,816
ST debt 203,587 231,410 201,410 231,410 231,410
Total debt 2,629,443 2,790,127 2,714,453 2,894,054 3,367,226
Other non-current liabilities 60,015 67,325 67,325 67,325 67,325
Deferred tax liabilities 140,619 180,546 180,546 180,546 180,546
Total Liabilities 4,481,299 4,949,224 5,019,608 5,342,656 5,964,432
Source: Company, IIFL Research, *AE: - Annual Report awaited

9
ap oorv a. bah adu r@ iif lc ap .c om
NTPC – BUY

Figure 16: Cash flow statement (consolidated)

(Rs mn) FY24 FY25AE FY26E FY27E FY28E
Adjusted PAT 191,837 202,874 234,933 237,879 257,254
Add:
Depreciation & Amortisation 162,036 174,012 196,052 220,832 242,098
Minority interest & profit from associates (11,150) (16,830) (14,538) (14,359) (12,383)
Finance cost 119,407 131,681 146,288 169,407 197,057
Deferred tax 25,131 41,740 - - -
Less:
Other income 26,650 27,591 30,452 25,435 22,891
Regulatory income / (expense) 10,002 37,019 11,839 8,097 4,084
Net extra-ordinary income (16,282) (31,350) - - -
Operating cash flow before WC change 466,891 500,217 520,443 580,227 657,051
Change in Inventories (37,788) (7,031) 6,622 (14,136) (7,269)
Change in Receivables (68,595) (1,134) 6,049 (25,041) (6,784)
Change in Other current assets (6,618) (34,677) - - -
Change in Current Liab. (3,574) (21,621) (230) 7,590 3,236
Working Capital Inflow / (Outflow) (116,575) (64,464) 12,441 (31,586) (10,817)
Cash flow from Operating Activities 350,316 435,753 532,884 548,640 646,234
% of operating cash flow 75.0 87.1 102.4 94.6 98.4
Purchase of Fixed Assets (338,596) (430,990) (267,318) (444,558) (820,757)
Purchase of Investments (3,142) (16,053) - - -
Cash flow from capital commitments (341,737) (447,043) (267,318) (444,558) (820,757)
FCF after Capital Commitments 8,579 (11,290) 265,566 104,082 (174,522)
(Purchase) / sale of ST Investments - - - - -
Other Income 26,650 27,591 30,452 25,435 22,891
Cash flow from Investing Activities 26,650 27,591 30,452 25,435 22,891
Issue of share capital during the year - - - - -
Net proceeds from fresh borrowings 168,915 160,685 (75,674) 179,601 473,171
Dividend paid including tax (72,725) (80,967) (97,940) (104,843) (121,803)
Finance cost (119,407) (131,681) (146,288) (169,407) (197,057)
Reserve adjustments 23,258 113,110 - - -
Cash flow from Financing Activities 41 61,147 (319,902) (94,649) 154,312
Net extra-ordinary income (16,282) (31,350) - - -
Total Increase / (Decrease) in Cash 18,988 46,098 (23,884) 34,869 2,680
Source: Company, IIFL Research, *AE: - Annual Report awaited

10
ap oorv a. bah adu r@ iif lc ap .c om
Company snapshot NTPC – BUY

Background: NTPC, India’s largest power generation company, was set up in 1975 to accelerate Power development in the country. It currently operates
80GW capacity generation capacity across coal, gas, hydro & RE. The company accounts for 17% of India’s total installed capacity and almost a fourth of
India’s total generation. To ensure fuel availability for its upcoming plants, NTPC and its JV have been awarded captive coal mines with ~5bnte reserves
and a mining capacity of 92mtpa.

Management
Core generation RoE (%) Regulated Equity (Rs bn) - JV
Name Designation & Subs
18.8 18.7 1,600
Gurdeep Singh CMD 18.5
18.6 1,400
18.3 18.3
Jaikumar Srinivasan Director (Finance) 18.4 1,200
18.2 1,000
Ravindra Kumar Director (Operations)
18.0 17.9 800
600
17.8 400
17.6 200
17.4 -

FY24

FY25

FY26E

FY27E

FY28E

FY24

FY25

FY26E

FY27E

FY28E
PE Chart EV/Ebitda
Assumptions
12m fwd PE Avg +/- 1SD 12m fwd EV/EBITDA Avg +/- 1SD
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Commercial capacity 18.0
75,958 79,930 84,282 81,361 101,756 21.0
(MW) (x) (x)
18.0 16.0
NGEL capacity (MW) 2,925 3,779 6,561 11,486 20,581
Generation regulated 15.0 14.0
807 840 858 880 904
equity (Rs bn)
12.0 12.0
Capex (Rs bn) 353 299 282 337 682
Minority interest (Rs bn) 5 5 9 10 13 9.0 10.0
Share of JV PAT 16 22 24 25 26 8.0
6.0
FCF (ex-capex, Rs bn) 143 278 289 274 327
3.0 6.0
Dividend per share (Rs/sh) 8 8 10 11 13
Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25 Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25
Source: Company data, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 11

NTPC – BUY

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Revenues 1,795,011 1,918,053 1,960,248 2,145,579 2,259,774 Cash & cash equivalents 68,473 114,571 90,687 125,556 128,236
Ebitda 507,852 577,948 610,362 672,179 753,619 Inventories 180,191 187,223 180,600 194,736 202,005
Depreciation and amortisation (162,036) (174,012) (196,052) (220,832) (242,098) Receivables 456,299 457,433 451,384 476,425 483,209
Ebit 345,815 403,936 414,311 451,347 511,521 Other current assets 144,647 179,324 179,324 179,324 179,324
Non-operating income 38,652 27,591 30,452 25,435 22,891 Creditors 113,380 111,600 111,369 118,960 122,195
Financial expense (119,407) (131,681) (146,288) (169,407) (197,057) Other current liabilities 182,590 162,749 162,749 162,749 162,749
PBT 265,061 299,846 298,475 307,375 337,355 Net current assets 553,641 664,203 627,878 694,333 707,830
Exceptionals 0 0 0 0 0 Fixed assets 3,565,499 3,822,477 3,893,743 4,117,469 4,696,128
Reported PBT 265,061 299,846 298,475 307,375 337,355 Intangibles 0 0 0 0 0
Tax expense (68,092) (82,452) (78,080) (83,855) (92,484) Investments 158,846 197,036 220,639 245,409 270,945
PAT 196,969 217,394 220,395 223,520 244,871 Other long-term assets 203,314 265,509 277,348 285,445 289,529
Minorities, Associates etc. 11,150 16,830 14,538 14,359 12,383 Total net assets 4,481,299 4,949,224 5,019,608 5,342,656 5,964,432
Attributable PAT 208,119 234,225 234,933 237,879 257,254 Borrowings 2,629,443 2,790,127 2,714,453 2,894,054 3,367,226
Other long-term liabilities 244,764 318,385 327,450 337,861 351,014
Ratio analysis Shareholders equity 1,607,093 1,840,712 1,977,704 2,110,741 2,246,192
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Total liabilities 4,481,299 4,949,224 5,019,608 5,342,656 5,964,432
Per share data (Rs)
Pre-exceptional EPS 19.8 20.9 24.2 24.5 26.5 Cash flow summary (Rs m)
DPS 7.5 8.4 10.1 10.8 12.6 Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
BVPS 165.7 189.8 204.0 217.7 231.6 Ebit 345,815 403,936 414,311 451,347 511,521
Growth ratios (%) Tax paid (42,961) (40,712) (78,080) (83,855) (92,484)
Revenues 2.1 6.9 2.2 9.5 5.3 Depreciation and amortization 162,036 174,012 196,052 220,832 242,098
Ebitda 4.7 13.8 5.6 10.1 12.1 Net working capital change (116,575) (64,464) 12,441 (31,586) (10,817)
EPS 19.2 5.8 15.8 1.3 8.1 Other operating items (21,152) (53,849) (26,377) (22,456) (16,467)
Profitability ratios (%) Operating cash flow before interest 327,163 418,923 518,346 534,281 633,851
Ebitda margin 28.3 30.1 31.1 31.3 33.3 Financial expense (119,407) (131,681) (146,288) (169,407) (197,057)
Ebit margin 19.3 21.1 21.1 21.0 22.6 Non-operating income 33,521 13,070 44,990 39,794 35,274
Tax rate 25.7 27.5 26.2 27.3 27.4 Operating cash flow after interest 241,277 300,313 417,048 404,668 472,068
Net profit margin 11.0 11.3 11.2 10.4 10.8 Capital expenditure (338,596) (430,990) (267,318) (444,558) (820,757)
Return ratios (%) Long-term investments (3,142) (16,053) 0 0 0
ROE 12.5 11.8 12.3 11.6 11.8 Others 23,258 113,110 0 0 0
ROIC ex goodwill 6.5 6.8 6.7 6.9 7.2 Free cash flow (77,202) (33,620) 149,730 (39,890) (348,688)
Solvency ratios (x) Equity raising 0 0 0 0 0
Net debt-equity 1.6 1.5 1.3 1.3 1.4 Borrowings 168,915 160,685 (75,674) 179,601 473,171
Net debt to Ebitda 5.0 4.6 4.3 4.1 4.3 Dividend (72,725) (80,967) (97,940) (104,843) (121,803)
Interest coverage 2.9 3.1 2.8 2.7 2.6 Net chg in cash and equivalents 18,988 46,098 (23,884) 34,869 2,680
Source: Company data, IIFL Research Source: Company data, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 12

NTPC – BUY

Date Rating Close price Target price Upside

NTPC: 3 year price and rating history
(Rs) (Rs) (%)
(Rs) Price TP/Reco changed date 01 Apr 2025 BUY 358 400 11.7
23 Jan 2024 BUY 308 340 10.4
500 30 Oct 2023 BUY 237 270 13.9
400 14 Jun 2022 BUY 149 200 34.2
300
200
100
0

May-25
May-22

May-23

May-24
Aug-24
Aug-22

Aug-23
Nov-22

Nov-23

Nov-24
Feb-25
Feb-23

Feb-24

ap oorv a. bah adu r@ iif lc ap .c om 16

NTPC Green Energy – ADD
Result review

26 May 2025

FY25 execution misses but FY26/27 targets Result update

maintained CMP Rs111 Price performance (%)

NTPC Green’s (NGEL) 4QFY25 adj. consolidated PAT of Rs2.3bn 12-mth TP (Rs) 105 (-6%) 1M 3M 1Y
(vs. Rs810mn yoy) was ahead of IIFLe of Rs1.4bn, with the Market cap (US$m) 11,000 Absolute (Rs) 3.7 5.4 0.0
outperformance being led by higher generation, lower finance Absolute (US$) 4.0 7.2 0.0
Enterprise value(US$m) 15,906
cost on partial repayment of debt from IPO proceeds and higher Relative Perf. 1.5 (3.3) 0.0
other income yoy. Company missed FY25 3GW organic capacity Bloomberg NTPCGREE IN
Cagr (%) 3 yrs 5 yrs
addition target but expects to catch up in FY26/27. 2.1GW Sector Utilities EPS (Rs) 71.1
Ayana portfolio was consolidated (50:50 JV with ONGC Green)
and 17GW+ capacity is under execution. We find the risk-reward Shareholding pattern (%) Stock performance
largely balanced; maintain Add. Promoter 89.0 Vol('000, LHS) Price (Rs., RHS)
Pledged (as % of promoter share) 0.0 400,000 200
FY25 execution slippages on land & transmission issues; mgmt. FII 2.0
300,000 150
confident of making up in FY26/27: NGEL has already secured land DII 4.9
bank for 6GW and is in process of adding another 8GW, to de-risk its 200,000 100
52Wk High/Low (Rs) 149/87
execution. Grid connectivity is in place for c.14GW capacity addition 100,000 50
Shares o/s (m) 8426
with applications for more. Company also intends to utilise state JVs to 0 0
Del Value 3mth avg (US$ m) 6.8
fastrack execution by leveraging state transmission network and state

Nov-24

Jan-25

Mar-25
Dividend yield FY26ii (%) 0.0
government support in land acquisition.
Free float (%) 11.0

Debt repricing could boost IRRs: Bulk of NGEL’s long-term debt is Financial summary (Rs m)
priced b/w 7.5% and 8.25% vs. NTPC’s avg. finance cost of 6.6% in Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
9MFY25. It appears lower optically due to presence of capital credit. We Revenues (Rs m) 19,626 22,096 32,899 55,925 120,239
foresee a potential IRR improvement for NGEL from future debt re- Ebitda margins (%) 89.0 86.7 85.5 84.4 86.8
pricing, but build a gradual reduction in our base case. Upfront repricing Pre-exceptional PAT (Rs m) 3,447 4,741 2,890 (2,385) 14,104
can materially boost NGEL’s equity IRR as every 100bps reduction in Reported PAT (Rs m) 3,447 4,741 2,890 (2,385) 14,104
finance cost drives 150-200bps IRR improvement. Pre-exceptional EPS (Rs) 0.4 0.6 0.3 (0.3) 1.7
Growth (%) -24.5 37.5 -39 NM NM
Risk reward balanced even though equity dilution seems IIFL vs consensus (%) 0.0 0.0 0.0
imminent; Add: We ascribe a TP of Rs105/sh (unchanged), valuing PER (x) NM 197.7 NM NM 66.5
NGEL at c.13x implied FY32E EV/Ebitda, factoring its steep growth ROE (%) 6.2 3.8 1.6 NM 7.3
curve. While we do not build it in our base case, we expect NGEL to Net debt/equity (x) 2.8 1.1 2.0 3.7 6.1
raise equity for growth. Our target price is calculated on diluted share EV/Ebitda (x) 68.8 70.7 54.9 39.2 22.9
count, taking a weighted average of fund-raise price across multiple Price/book (x) 15.0 5.1 5.0 5.1 4.7
scenarios. OCF/Ebitda (x) NM 0.9 NM 0.1 0.7
Source: Company, IIFL Research. Priced as on 23 May 2025

Apoorva Bahadur Siddharth

apoorva.bahadur@iiflcap.com siddharth@iiflcap.com
91 22 4646 4674 91 22 4646 4791
NTPC Green Energy – ADD

Figure 1: 4QFY25 - Result review

(Rs mn) Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25 IIFLe YoY (%) QoQ (%) vs. IIFLe (%)
Revenue 5,081 5,784 5,039 5,051 6,223 5,482 22.5 23.2 13.5

Employee cost 121 148 159 189 147 200 20.8 (22.5) (26.7)
Other expenses 592 507 680 626 473 700 (20.1) (24.4) (32.4)

EBITDA 4,368 5,130 4,200 4,235 5,603 4,582 28.3 32.3 22.3
EBITDA margin (%) 86.0 88.7 83.4 83.9 90.0 83.6 408bps 618bps 645bps

Depreciation 1,732 1,754 1,825 1,946 2,059 2,003 18.9 5.8 2.8
Finance cost 1,813 1,831 1,947 2,061 1,768 2,180 (2.5) (14.2) (18.9)
Other income 449 290 215 764 1,292 1,500 187.7 69.2 (13.8)

Core PBT 1,272 1,834 643 992 3,069 1,899 141.2 209.2 61.6

Exceptionals - - - - - - NM NM NM
PBT 1,272 1,834 643 992 3,069 1,899 141.2 209.2 61.6

Total tax 463 448 262 336 738 475 59.5 119.5 55.5
Tax rate (%) 36 24 41 34 24.1 25 -1232bps -984bps -95bps

Share of JV PAT - (14) (14) - 2 - NM NM NM

Minority interest - - (14) - (0) - NM NM NM

PAT 810 1,372 380 656 2,332 1,424 188.1 255.5 63.8

Adjustments - - - - - - NM NM NM

Adj. PAT 810 1,372 380 656 2,332 1,424 188.1 255.5 63.8
Source: Company, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 2

NTPC Green Energy – ADD

Figure 2: NGEL added 304MW of capacity and consolidated the 2.1GW Ayana portfolio Figure 4: Organic capacity addition was limited to 854MW vs. 3GW target
in 4QFY25 3500 (MW)
Organic addition Inorganic addition
7,000 (MW NGEL Ayana operational portfolio 3000
6,000 2500
5,000 2,123 2000 2123
4,000 1500
3,000 1000
2,000 3,779 1166
3,320 3,475 500 854
2,761 2,925 2,925
1,000 314
0
- FY23 FY24 FY25
Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25
Source: Company, IIFL Research
Source: Company, IIFL Research

Figure 5: Average realisation has declined 11% yoy as projects with lower tariffs were
Figure 3: Generation increased 38% yoy in 4QFY25 commissioned during FY25
2,500 (MU) 4.0 (Rs/kWhr)
3.5
2,000
3.0
1,500 2.5
2.0
2,086 3.6 3.4 3.4 3.4
1,000 1.5 3.3 3.0
1,513 1,697 1,545 1,500
1,226 1.0
500
0.5
- -
Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25

Source: Company, IIFL Research Source: Company, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 3

NTPC Green Energy – ADD

Figure 6: 32GW+ of operational + contracted & awarded + pipeline portfolio of NTPC Green

Source: Company, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 4

NTPC Green Energy – ADD

Figure 7: Change in estimates

(Rs mn) Revised estimates Previous estimates Change (%)
FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E
Revenue 32,899 55,925 120,239 32,899 55,925 120,239 - - -
EBITDA 28,132 47,209 104,344 27,806 46,256 102,599 1.2 2.1 1.7
PAT 2,890 (2,385) 14,104 3,223 (4,828) 10,209 (10.3) NM 38.1
Source: Company, IIFL Research

Figure 8: Estimate vs consensus numbers of NTPC Green earnings

Estimates Consensus Difference (%)
FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E
Revenue 32,899 55,925 120,239 50,760 86,290 128,682 (35.2) (35.2) (6.6)
EBITDA 28,132 47,209 104,344 44,610 76,330 113,236 (36.9) (38.2) (7.9)
PAT 2,890 (2,385) 14,104 8,546 12,146 14,985 (66.2) (119.6) (5.9)
Source: Bloomberg, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 5

NTPC Green Energy – ADD

Figure 9: NTPC Green - valuation details

Base case - no Dilution @ Dilution @ Dilution @ Dilution @ Weighted
(Rs mn)
dilution Rs110/sh Rs120/sh Rs130/sh Rs140/sh scenario
NGEL attributable EBITDA - FY32E 272,559 272,559 272,559 272,559 272,559

Average gross debt 1,790,344 1,790,344 1,790,344 1,790,344 1,790,344

Average cash balance 30,234 146,414 169,209 192,005 214,800

Target EV/EBITDA (x) 12.9 12.9 12.9 12.9 12.9

Calculated EV 3,502,380 3,502,380 3,502,380 3,502,380 3,502,380
Equity value 1,742,270 1,858,450 1,881,245 1,904,041 1,926,836

Scenario probability (%) 20 20 20 20 20

Probability adjusted Equity value - FY32 348,454 371,690 376,249 380,808 385,367 1,862,568

Equity value - discounted to FY27E 1,056,871

No. of full diluted shares (mn) 10,006
TP (Rs/sh) 105
Source: IIFL Research

6
ap oorv a. bah adu r@ iif lc ap .c om
NTPC Green Energy – ADD

Figure 10: Implied EV/EBITDA at CMP

(Rs mn) FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32
Standalone EBITDA 19,167 28,132 47,209 104,344 167,728 219,847 240,372 258,052
+ IOCL JV attributable EBITDA - - - 3,222 6,537 7,797 7,654 7,511
+ ONGC JV attributable EBITDA - 7,724 9,293 14,353 15,216 15,108 14,999 14,889
- DVC JV minority EBITDA - (544) (872) (1,058) (1,139) (1,116) (1,092) (1,069)
- Maharashtra JV minority EBITDA - - - - (3,001) (3,954) (3,881) (3,808)
- UP JV minority EBITDA - - - - (2,377) (3,132) (3,074) (3,016)
NGEL attributable EBITDA 19,167 35,313 55,630 120,860 182,964 234,551 254,978 272,559

Average gross debt 203,088 327,466 566,770 972,376 1,437,383 1,684,049 1,742,519 1,790,344
Average cash balance 19,948 37,952 30,259 21,672 22,943 21,282 21,057 30,234

Mcap 937,345 937,345 937,345 937,345 937,345 937,345 937,345 937,345

EV 1,120,485 1,226,859 1,473,856 1,888,049 2,351,785 2,600,113 2,658,807 2,697,455
CMP Implied EV/EBITDA (x) 58.5 34.7 26.5 15.6 12.9 11.1 10.4 9.9
Source: IIFL Research

7
ap oorv a. bah adu r@ iif lc ap .c om
NTPC Green Energy – ADD

Figure 11: Income statement (consolidated)

(Rs mn) FY24 FY25AE FY26E FY27E FY28E
Total revenue 19,626 22,096 32,899 55,925 120,239
- fuel cost
- electricity purchase cost
- employee cost 370 643 1,135 2,185 3,944
- other expense 1,791 2,287 3,633 6,530 11,952
EBITDA 17,465 19,167 28,132 47,209 104,344
EBITDA margin (%) 89.0 86.7 85.5 84.4 86.8

- depreciation 6,428 7,583 10,827 18,145 32,333

- finance cost 6,906 7,607 17,646 33,605 59,819
+ other income 751 2,561 4,647 3,833 3,056
+ regulatory deferral a/c movement
Core PBT 4,882 6,539 4,306 (708) 15,247
- Forex - - - - -
- MTM - - - - -
+ exceptional item - - - - -
Reported PBT 4,882 6,539 4,306 (708) 15,247
- Tax 1,435 1,785 969 - 3,431
Tax rate (%) 29.4 27.3 22.5 - 22.5

Reported PAT 3,447 4,754 3,337 (708) 11,817

- Minority Interest 0 (14) 60 146 198
+ Share in JV PAT (0) (26) (387) (1,531) 2,485
Reported PAT post minority & JV PAT 3,447 4,741 2,890 (2,385) 14,104
+ Adjustments - - - - -
Recurring PAT 3,447 4,741 2,890 (2,385) 14,104
Source: Company, IIFL Research, *AE: - Annual Report awaited

8
ap oorv a. bah adu r@ iif lc ap .c om
NTPC Green Energy – ADD

Figure 12: Balance sheet (consolidated)

(Rs mn) FY24 FY25AE FY26E FY27E FY28E
GFA 199,503 249,515 391,615 682,865 1,231,840
Accumulated depreciation 23,773 31,356 42,182 60,327 92,660
NFA 175,730 218,159 349,433 622,538 1,139,180
CWIP 82,910 151,363 131,363 111,363 91,363
Total Fixed Assets 258,640 369,523 480,796 733,901 1,230,543
Investment - LT 0 31,994 31,607 40,100 49,835
Investment - ST - - - - -
Regulatory deferral balance - - - - -
Other non-current assets 886 9,650 9,650 9,650 9,650
Inventory 245 317 317 317 317
Receivables 7,048 5,165 7,338 12,292 25,966
Cash & bank 4,721 35,174 40,730 19,788 23,555
Loans & advances - - 77,241 115,091 131,086
Other current assets 523 2,391 2,391 2,391 2,391
Total current assets 12,538 43,047 128,017 149,879 183,316
Payables 625 891 891 891 891
Provisions 1 3 3 3 3
Other current liabilities 2,311 64 64 64 64
Net current assets 9,602 42,089 127,060 148,921 182,358
Total Assets 269,128 453,257 649,113 932,574 1,472,387

Share capital 57,196 84,263 84,263 84,263 84,263

Reserves & surplus 5,125 100,140 103,030 100,645 114,749
Net worth 62,321 184,403 187,294 184,909 199,012
Minority interest 1 918 978 1,124 1,322
LT debt 175,163 224,306 415,227 696,077 1,211,252
ST debt - 6,707 8,693 13,543 23,879
Total debt 175,163 231,013 423,920 709,620 1,235,132
Other non-current liabilities 19,344 22,837 22,837 22,837 22,837
Deferred tax liabilities 12,300 14,085 14,085 14,085 14,085
Total Liabilities 269,128 453,257 649,113 932,574 1,472,387
Source: Company, IIFL Research, *AE: - Annual Report awaited

9
ap oorv a. bah adu r@ iif lc ap .c om
NTPC Green Energy – ADD

Figure 13: Cash flow statement (consolidated)

(Rs mn) FY24 FY25AE FY26E FY27E FY28E
Adjusted PAT 3,447 4,741 2,890 (2,385) 14,104
Add:
Depreciation & Amortisation 6,428 7,583 10,827 18,145 32,333
Minority interest & profit from associates 0 13 447 1,677 (2,287)
Finance cost 6,906 7,607 17,646 33,605 59,819
Deferred tax 1,435 1,785 - - -
Less:
Other income 751 2,561 4,647 3,833 3,056
Regulatory income / (expense) - - - - -
Net extra-ordinary income - - - - -
Operating cash flow before WC change 17,465 19,167 27,163 47,209 100,913
Change in Inventories (152) (72) - - -
Change in Receivables (3,793) 1,883 (2,173) (4,954) (13,674)
Change in Other current assets 3,341 (1,868) (77,241) (37,850) (15,995)
Change in Current Liab. (30,969) (1,978) - - -
Working Capital Inflow / (Outflow) (31,574) (2,035) (79,414) (42,804) (29,669)
Cash flow from Operating Activities (14,109) 17,132 (52,251) 4,405 71,244
% of operating cash flow (80.8) 89.4 (192.4) 9.3 70.6
Purchase of Fixed Assets (89,847) (118,466) (122,100) (271,250) (528,975)
Purchase of Investments (0) (32,020) (0) (10,025) (7,250)
Cash flow from capital commitments (89,847) (150,485) (122,100) (281,275) (536,225)
FCF after Capital Commitments (103,956) (133,353) (174,351) (276,870) (464,981)
(Purchase) / sale of ST Investments - - - - -
Other Income 751 2,561 4,647 3,833 3,056
Cash flow from Investing Activities 751 2,561 4,647 3,833 3,056
Issue of share capital during the year 10,000 100,000 (0) - -
Net proceeds from fresh borrowings 98,033 51,754 192,906 285,700 525,512
Dividend paid including tax - - - - -
Finance cost (6,906) (7,607) (17,646) (33,605) (59,819)
Reserve adjustments 2,507 17,097 - - -
Cash flow from Financing Activities 103,634 161,245 175,260 252,095 465,692
Net extra-ordinary income - - - - -
Total Increase / (Decrease) in Cash 429 30,452 5,556 (20,942) 3,768
Source: Company, IIFL Research, *AE: - Annual Report awaited

ap oorv a. bah adu r@ iif lc ap .c om 10

Company snapshot NTPC Green Energy – ADD

Background: NTPC Green (NGEL) is a majority-owned subsidiary of NTPC and the largest renewable energy (RE) public sector enterprise (excluding
hydro) in terms of installed capacity. It has a target of achieving 60GW RE capacity by 2032, from its current installed capacity of <4GW. The company
has established various JVs and done multiple MoUs with state governments and other PSUs to co-develop RE capacity. Additionally, NGEL plans to establish
Green Hydrogen (GH2) and Green Chemicals capacities and is currently developing a GH2 hub at Pudimadka.

Management
Installed RE capacity (MW) GFA/ Ebitda (x)
Name Designation
25000 20581 14
Sarit Maheshwari CEO 11.4 11.4
20000 12 10.4
11.7
Neeraj Sharma CFO 15000 11486 10 9.2

10000 6561 8
2925 3779
5000 6

0 4

FY24

FY25

FY26E

FY27E

FY28E
2
0

FY25
FY24

FY26E

FY27E

FY28E
Assumptions PE Chart EV/Ebitda
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Solar capacity (MW) 2,825 3,679 6,361 9,786 16,931 12m fwd EV/EBITDA Avg +/- 1SD
12m fwd PE Avg +/- 1SD
Wind capacity (MW) 100 100 200 1,700 3,650
Portfolio CUF (%) 23.9 22.2 25.1 25.4 27.7 500 70.0 (x)
Average Realisation 3.2 3.3 2.9 2.8 3.1 450 (x) 66.0
(Rs/kWhr) 400 62.0
O&M cost per MW (Rs 1.1 0.9 0.9 1.0 1.0 350
58.0
mn) 300
250 54.0
Cost of debt (%) 6.8 5.3 6.9 6.7 6.5
200 50.0
Net gearing (%) 73 52 67 79 86
Source: Company data, IIFL Research 150 46.0
42.0
Nov-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25

ap oorv a. bah adu r@ iif lc ap .c om 11

NTPC Green Energy – ADD

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Revenues 19,626 22,096 32,899 55,925 120,239 Cash & cash equivalents 1,156 35,174 40,730 19,788 23,555
Ebitda 17,465 19,167 28,132 47,209 104,344 Inventories 245 317 317 317 317
Depreciation and amortisation (6,428) (7,583) (10,827) (18,145) (32,333) Receivables 7,048 5,165 7,338 12,292 25,966
Ebit 11,037 11,585 17,305 29,065 72,010 Other current assets 4,089 2,391 79,632 117,482 133,478
Non-operating income 751 2,561 4,647 3,833 3,056 Creditors 625 891 891 891 891
Financial expense (6,906) (7,607) (17,646) (33,605) (59,819) Other current liabilities 2,311 67 67 67 67
PBT 4,882 6,539 4,306 (708) 15,247 Net current assets 9,602 42,089 127,060 148,921 182,358
Exceptionals 0 0 0 0 0 Fixed assets 258,640 369,523 480,796 733,901 1,230,543
Reported PBT 4,882 6,539 4,306 (708) 15,247 Intangibles 0 0 0 0 0
Tax expense (1,435) (1,785) (969) 0 (3,431) Investments 0 31,994 31,607 40,100 49,835
PAT 3,447 4,754 3,337 (708) 11,817 Other long-term assets 886 9,650 9,650 9,650 9,650
Minorities, Associates etc. 0 (13) (447) (1,677) 2,287 Total net assets 269,128 453,257 649,113 932,574 1,472,387
Attributable PAT 3,447 4,741 2,890 (2,385) 14,104 Borrowings 175,163 231,013 423,920 709,620 1,235,132
Other long-term liabilities 31,644 37,840 37,900 38,045 38,243
Ratio analysis Shareholders equity 62,321 184,403 187,294 184,909 199,012
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Total liabilities 269,128 453,257 649,113 932,574 1,472,387
Per share data (Rs)
Pre-exceptional EPS 0.4 0.6 0.3 (0.3) 1.7 Cash flow summary (Rs m)
DPS 0.0 0.0 0.0 0.0 0.0 Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
BVPS 7.4 21.9 22.2 21.9 23.6 Ebit 11,037 11,585 17,305 29,065 72,010
Growth ratios (%) Tax paid 0 0 (969) 0 (3,431)
Revenues 35.4 12.6 48.9 70.0 115.0 Depreciation and amortization 6,428 7,583 10,827 18,145 32,333
Ebitda 33.4 9.7 46.8 67.8 121.0 Net working capital change (31,574) (2,035) (79,414) (42,804) (29,669)
EPS (24.5) 37.5 (39.0) (182.5) (691.3) Other operating items 0 13 447 1,677 (2,287)
Profitability ratios (%) Operating cash flow before interest (14,109) 17,145 (51,804) 6,083 68,957
Ebitda margin 89.0 86.7 85.5 84.4 86.8 Financial expense (6,906) (7,607) (17,646) (33,605) (59,819)
Ebit margin 56.2 52.4 52.6 52.0 59.9 Non-operating income 750 2,548 4,200 2,155 5,343
Tax rate 29.4 27.3 22.5 0.0 22.5 Operating cash flow after interest (20,264) 12,086 (65,250) (25,367) 14,481
Net profit margin 17.6 21.5 10.1 (1.3) 9.8 Capital expenditure (89,847) (118,466) (122,100) (271,250) (528,975)
Return ratios (%) Long-term investments 0 (32,020) 0 (10,025) (7,250)
ROE 6.2 3.8 1.6 (1.3) 7.3 Others 2,507 17,097 0 0 0
ROIC ex goodwill 4.4 2.7 2.8 3.1 4.9 Free cash flow (107,604) (121,302) (187,350) (306,642) (521,744)
Solvency ratios (x) Equity raising 10,000 100,000 0 0 0
Net debt-equity 2.8 1.1 2.0 3.7 6.1 Borrowings 98,033 51,754 192,906 285,700 525,512
Net debt to Ebitda 10.0 10.2 13.6 14.6 11.6 Dividend 0 0 0 0 0
Interest coverage 1.6 1.5 1.0 0.9 1.2 Net chg in cash and equivalents 429 30,452 5,556 (20,942) 3,768
Source: Company data, IIFL Research Source: Company data, IIFL Research

ap oorv a. bah adu r@ iif lc ap .c om 12

NTPC Green Energy – ADD

Date Rating Close price Target price Upside

NTPC Green: 3 year price and rating history
(Rs) (Rs) (%)
(Rs) Price TP/Reco changed date 01 Apr 2025 ADD 101 105 4.0
160
140
120
100
80
60
40
20
0
Nov-24

Feb-25

ap oorv a. bah adu r@ iif lc ap .c om 16

Metro Brands – BUY
Result review

26 May 2025

Confident of getting back to mid-teens Cagr Result update

CMP Rs1213 Price performance (%)
Metro Brands (MBL) reported a robust 4QFY25 performance with
Ebitda growth of 24% (9% above our estimates). Management 12-mth TP (Rs) 1315 (8%) 1M 3M 1Y
is confident of getting back to mid-teens revenue Cagr in the Market cap (US$m) 3,886 Absolute (Rs) 10.2 6.6 8.0
medium term, in-line with historical performance. We broadly Absolute (US$) 10.5 8.5 5.5
Enterprise value(US$m) 3,787
maintain our estimates and forecast adj EPS Cagr of 21% over Relative Perf. 7.2 (4.1) 4.5
FY25-28ii. MBL remains our preferred pick in this space, given Bloomberg METROBRA IN
Cagr (%) 3 yrs 5 yrs
an apt portfolio, consistent track record of growth, best-in-class Sector Retail EPS (Rs) 20.5 18.5
ROIC and strong near-term outlook. Maintain BUY rating with a
target price of Rs1,315. Shareholding pattern (%) Stock performance
Above estimates: MBL reported a robust 4QFY25 performance with Promoter 71.9 Vol('000, LHS) Price (Rs., RHS)
Pledged (% of promoter shares) 0.0
sales growth of 10.3% (in-line) and Ebitda growth of 24% (9% above 5,000 1,500
our estimate). The company added 13 stores on a net basis in 4Q, FII 3.5 4,000
DII 7.4 1,000
driven by Metro and Mochi formats. Ebitda margin expanded 347bps to 3,000
30.7%, driven primarily by reduction in FILA losses. We estimate pre- 52Wk High/Low (Rs) 1360/1011 2,000
500
IndAS Ebitda margin at 20.7% with pre-IndAS Ebitda growth of 6% for Shares o/s (m) 272 1,000
FY25. Del Value 3mth avg (US$ m) 0.6 0 0

Nov-24
Nov-23
Jul-23

Jul-24
Sep-23

Sep-24

Jan-25

May-25
May-23

Jan-24
Mar-24
May-24

Mar-25
Dividend yield FY26ii (%) 0.6
Confident of getting back to mid-teens Cagr: FY25 has been a tale
Free float (%) 28.1
of two halves for MBL with revenue growth of 2% in 1HFY25 (impacted
by multiple factors), accelerating to 10% in 2HFY25. Store additions Financial summary (Rs m)
have moderated in FY25 and are expected to accelerate in FY26 with Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
signs of rental levels coming off from their peak. Management is Revenues (Rs m) 23,567 25,074 28,673 33,313 38,634
confident of accelerating EBO additions in FILA in 2HFY26 but maintains Ebitda margins (%) 29.7 30.2 31.7 32.2 32.5
a cautious approach in Foot Locker (3 store additions by next festive Pre-exceptional PAT (Rs m) 4,125 3,756 4,568 5,551 6,700
season) given short-term challenges around BIS. Reported PAT (Rs m) 4,125 3,506 4,568 5,551 6,700
Pre-exceptional EPS (Rs) 15.1 13.8 16.8 20.4 24.6
Broadly maintain EPS estimates: We upgrade our EPS estimates by Growth (%) 14 -8.7 21.6 21.5 20.7
2%/1% for FY26/27, factoring in the 4Q beat. We estimate a sales Cagr IIFL vs consensus (%) (2.5) (2.2) (4.6)
of 15.5% over FY25-28, driven by steady performance in core portfolio 80.3 87.9 72.3 59.5 49.3
PER (x)
and acceleration in FILA/Foot Locker. We forecast Ebitda margin 24.2 21.0 24.7 25.8 26.6
ROE (%)
expansion of 275bps over FY25-28, driven by reduction in FILA losses
Net debt/equity (x) (0.5) (0.4) (0.5) (0.5) (0.5)
and operating leverage. Even as valuations remain rich (65.6x FY26 adj
EV/Ebitda (x) 46.1 42.6 35.3 29.7 25.2
EPS), MBL remains our preferred pick in this space, with an apt portfolio,
Price/book (x) 17.8 19.3 16.7 14.3 12.2
consistent track record of growth, best-in-class ROIC and a strong near-
OCF/Ebitda (x) 0.5 0.6 0.5 0.5 0.5
term outlook. We maintain BUY rating with a target price of Rs1,315.
Source: Company, IIFL Research. Priced as on 23 May 2025

Sameer Gupta Percy Panthaki Rakshit Desai

sameer.gupta@iiflcap.com percy.panthaki@iiflcap.com rakshit.desai@iiflcap.com
91 22 4646 4672 91 22 4646 4662 91 22 4646 4743
Metro Brands – BUY

Figure 1: Metro Brands – 4QFY25 – Above estimates

Consolidated (Rs m) 4QFY24 4QFY25 YoY Net sales grew 10.3% and were in-line with our estimate
Net sales 5,830 6,428 10.3%
Operating costs (4,244) (4,456) 5.0%
Ebitda 1,586 1,972 24.3%
Ebitda Margin 27.2 30.7 347 bps Ebitda increased 24.3% and was 9% above our estimate
Depreciation (591) (701) 18.7%
Other income 244 231 -5.3%
Interest expense (203) (244) 20.1%
PBT 1,036 1,258 21.4%
Tax 508 (309) -160.8% PBT grew 21.4% and was 9% above our estimate
% tax rate (49.0) 24.5 7357 bps
Share of associate / minority interest 7.8 (1.6) PAT declined 39% and was 10% above our estimate. Decline in PAT was
PAT 1,552 947 -38.9% due to utilisation of tax assets and reversal of deferred tax liability in the
% margin 26.6 14.7 -1188 bps base quarter
Costs (Rs m) 4QFY24 4QFY25 YoY
Cost of materials 2,542 2,734 8% Gross margin expanded by 107bps vs. our estimate of 10bps expansion
% of sales 43.6 42.5 -107 bps
Employee expenses 591 626 6%
Employee costs increased 6% and were in-line with our estimate
% of sales 10.1 9.7 -40 bps
Other expenses 1,111 1,096 -1%
% of sales 19.1 17.0 -201 bps Other expenses decreased 1% and were 6% below our estimate
Source: Company, IIFL Research

s amee r. gu pt a@i if lcap .c om 2

Metro Brands – BUY

Figure 2: Operational parameters • Store additions during the year were impacted by higher rentals (for
4QFY24 1QFY25 2QFY25 3QFY25 4QFY25 new stores), which may have resulted in sub-optimal store economics
Revenue psf 4,800 4,500 4,300 5,150 4,750 going forward. As a result, management went slow towards store
additions during the year.
% YoY -5.0% -10.0% -3.4% -1.0% -1.0%
• While rentals currently have not moderated back to earlier levels,
these are coming off their peak and getting more favourable for the
No of stores company to open more stores.
Metro 317 324 332 338 345 • Revenue per sq ft was down 1% in the past two quarters, impacted
Mochi 237 240 249 253 256 by new stores and store mix. Management expects this to remain
Crocs 208 211 213 217 219 flattish with some inflation going forward.
Walkway 66 67 67 70 70 • With continued momentum in existing stores and acceleration in new
store additions, management is confident of getting back to the mid-
Fitflop 8 9 10 11 12 teens revenue Cagr in the medium term.
FILA stores 3 3 2 2 2
Foot Locker - - - 1 1 FILA and Foot Locker
New Era - - - 3 3 • Management has a clear plan around repositioning of FILA brand in
Total 839 854 873 895 908 India.
• However, the repositioning requires a specific width of assortment,
which has taken longer than expected due to BIS-related challenges.
Channel mix
• While management has been able to duplicate a large amount of
In-store 93% 89% 87% 88% 88% production in India, gaps still exist.
Omni channel 2% 3% 3% 3% 3% • Management is pursuing means to get these products via BIS-certified
E-commerce 4% 7% 9% 8% 8% factories abroad, till the ecosystem in India evolves.
Others 1% 1% 1% 1% 1% • Management is confident of accelerating store additions in FILA in
Source: Company, IIFL Research 2HFY26.
• FILA losses have halved in FY25 from Rs580mn in FY24.
Conference call: Key take-aways • The company remains cautious on Foot Locker expansion and
currently has visibility of adding 3 Foot Locker stores before the start
Committed to getting back to mid-teens Cagr of festive season in 3QFY26.
• After a weak 1H (2% growth yoy), which was impacted by fewer
weddings, muted election-related spending and extreme weather Others
conditions, growth has come back to double-digit levels in the past • Average realisation: ASP in FY25 grew 3% to Rs1,550, driven by
two quarters. mix. ASP for footwear (excluding accessories) was Rs2,400.
• The company added 66 stores in FY25, moderating from 97 stores Management doesn’t have plans to take price hikes in the near term.
added in FY24 on net basis (excluding FILA, Foot Locker and New Era). • Net working capital: Net working capital for the company
historically has been in the range of 70-75 days and witnessed an
increase in the past two years due to front-loading of inventory, driven

s amee r. gu pt a@i if lcap .c om 3

Metro Brands – BUY

by BIS-related challenges. It has normalised in FY25, and

management expects it to remain at ~70-75 days in the medium
term. Figure 3: Changes in estimates
• Increase in other financial assets to Rs1.8bn in FY25 is driven FY26 Old New % change
primarily by fixed deposit investments. Sales 28,590 28,673 0.3%
• South as a market has witnessed some softness, driven probably by Adj Ebitda 6,292 6,421 2.1%
multiple factors, including slowdown in IT sector, public works in cities
like Hyderabad, etc. Adj EPS 18.1 18.5 2.1%
• Capex of Rs400mn pertaining to the new warehouse has been pushed FY27 Old New % change
to 1HFY26. Sales 33,264 33,313 0.1%
Adj Ebitda 7,614 7,694 1.1%
Result highlights Adj EPS 21.7 21.9 1.0%
Source: Company, IIFL Research
• Metro Brands reported 4QFY25 results above our estimates. Net
sales/Ebitda/PBT grew 10.3%/24.3%/21.4% and were 1%/9%/9% Figure 4: Financial summary – adjusted for IndAS 116
above our estimates. Y/e 31 Mar FY24 FY25 FY26ii FY27ii FY28ii
• PAT declined 39% due to utilisation of tax assets and reversal of Revenues (Rs m) 23,567 25,074 28,673 33,313 38,634
deferred tax liabilities in the base. EBITDA margins (%) 20.8 20.7 22.4 23.1 23.4
• Ebitda beat was driven higher gross margin and lower other expenses. Pre-exceptional PAT (Rs m) 4,454 3,901 5,030 5,966 6,975
• Revenue per sq ft at Rs4,750 declined 1% yoy, similar to the previous Reported PAT (Rs m) 4,454 3,901 5,030 5,966 6,975
quarter. Pre-exceptional EPS (Rs) 16.3 14.3 18.5 21.9 25.6
• The company opened 18 new stores and closed 5 stores during the Growth (%) 16.9 (12.2) 29.0 18.6 16.9
quarter.
PER (x) 74.3 84.7 65.6 55.3 47.3
• Net sales grew 10.3% vs 10.6% reported in the previous quarter.
ROIC (%) 31.7 31.7 37.1 40.1 42.9
• Ebitda margin expanded 347bps to 30.7%, driven by better cost
ROE (%) 24.2 21.0 24.7 25.8 26.6
control, reduction in losses in FILA and restructuring of FILA’s royalty
with FILA global, in-line with medium-term expectations. Net debt/equity (x) (0.5) (0.4) (0.5) (0.5) (0.5)
• We estimate pre-IndAS Ebitda growth of 15% in 2HFY25 with pre- EV/EBITDA (x) 65.8 62.2 50.0 41.5 35.0
IndAS Ebitda margin at 22.1%. Price/book (x) 17.8 19.3 16.7 14.3 12.1
• We estimate pre-IndAS Ebitda growth of 6% in FY25 with pre-IndAS Source: Company, IIFL Research
Ebitda margin at 20.7%.
• PBT grew 21.4%, lower than Ebitda growth, due to lower other
income.

s amee r. gu pt a@i if lcap .c om 4

Company snapshot Metro Brands – BUY

Background: Metro Brands Ltd (MBL) is a leading footwear retailer in India, with a portfolio of brands straddling various price points, sub-categories and
occasions. MBL primarily follows the company owned and company operated model of retailing through own multi-brand outlets (MBOs) and exclusive
brand outlets (EBOs). MBL operates MBOs under the brands Metro, Mochi and Walkway and EBOs for global footwear brands such as Crocs and FitFlop. It
also has tie-ups with global brands such as FILA and Foot Locker.

Management
Name Designation Channel salience - standalone MRP wise salience - In-store + omni
revenues - FY24 channel sales - FY24
Rafique Malik Chairman
Omnicha Less than Rs
Farah Malik Bhanji Managing Director nnel, 2% Others, 500, 4%
Online, Rs501 -
1% Rs1,500,
Nissan Joseph CEO 7%
9% More
Kaushal Parekh CFO than Rs
3,000,
In-store,
50%
90% Rs 1,501-
Rs 3,000,
37%

PE Chart EV/Ebitda
Assumptions
Y/e 31 Mar, 12m fwd PE Avg +/- 1SD 12m fwd EV/EBITDA Avg +/- 1SD
FY24A FY25A FY26ii FY27ii FY28ii
Consolidated
No of stores ex FILA 96.0
(x) (x)
and FootLocker 836 902 1,015 1,133 1,265 47.0
87.0
Sales per sq ft 20,091 18,901 19,279 19,664 20,057
No of FILA stores 78.0 39.0
2.0 2.0 15.0 35.0 60.0
No of FootLocker 69.0
stores - 1.0 5.0 10.0 15.0 60.0 31.0
Pre IND AS Ebitda 51.0 23.0
margin (%) 20.8 20.7 22.4 23.1 23.4
42.0
33.0 15.0
Source: Company data, IIFL Research Dec-21 Aug-22 Apr-23 Dec-23 Sep-24 May-25
Dec-21 Aug-22 Apr-23 Dec-23 Sep-24 May-25

s amee r. gu pt a@i if lcap .c om 5

Metro Brands – BUY

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Revenues 23,567 25,074 28,673 33,313 38,634 Cash & cash equivalents 8,840 7,604 8,989 11,071 13,666
Ebitda 6,996 7,574 9,097 10,735 12,543 Inventories 7,102 6,369 7,283 8,462 9,813
Depreciation and amortisation (2,291) (2,580) (2,989) (3,370) (3,780) Receivables 757 912 1,043 1,212 1,405
Ebit 4,705 4,994 6,108 7,365 8,764 Other current assets 585 798 913 1,061 1,230
Non-operating income 708 930 1,020 1,119 1,228 Creditors 2,570 2,258 2,582 3,000 3,479
Financial expense (789) (905) (1,023) (1,067) (1,038) Other current liabilities 1,031 1,428 1,633 1,897 2,200
PBT 4,624 5,019 6,105 7,418 8,953 Net current assets 13,682 11,998 14,013 16,908 20,436
Exceptionals 0 (250) 0 0 0 Fixed assets 4,804 5,028 5,823 6,325 6,880
Reported PBT 4,624 4,769 6,105 7,418 8,953 Intangibles 409 409 409 409 409
Tax expense (499) (1,241) (1,537) (1,867) (2,254) Investments 135 151 151 151 151
PAT 4,125 3,528 4,568 5,551 6,700 Other long-term assets 10,896 12,073 11,706 11,291 10,838
Minorities, Associates etc. 1 (22) 0 0 0 Total net assets 29,926 29,659 32,102 35,084 38,715
Attributable PAT 4,125 3,506 4,568 5,551 6,700 Borrowings 0 0 0 0 0
Other long-term liabilities 11,289 12,568 12,270 11,922 11,532
Ratio analysis Shareholders’ equity 18,637 17,091 19,832 23,162 27,182
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Total liabilities 29,926 29,659 32,102 35,084 38,715
Per share data (Rs)
Pre-exceptional EPS 15.1 13.8 16.8 20.4 24.6 Cash flow summary (Rs m)
DPS 5.0 20.0 6.7 8.2 9.8 Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
BVPS 68.3 62.8 72.8 85.1 99.8 Ebit 4,705 4,994 6,108 7,365 8,764
Growth ratios (%) Tax paid (499) (1,241) (1,537) (1,867) (2,254)
Revenues 10.8 6.4 14.4 16.2 16.0 Depreciation and amortization 2,291 2,580 2,989 3,370 3,780
Ebitda 3.1 8.3 20.1 18.0 16.8 Net working capital change (304) 448 (631) (813) (932)
EPS 14.0 (8.7) 21.6 21.5 20.7 Other operating items (542) (221) 70 66 63
Profitability ratios (%) Operating cash flow before interest 3,554 4,172 4,324 5,080 5,931
Ebitda margin 29.7 30.2 31.7 32.2 32.5 Financial expense (3) (5) 0 0 0
Ebit margin 20.0 19.9 21.3 22.1 22.7 Non-operating income 674 901 1,020 1,119 1,228
Tax rate 10.8 26.0 25.2 25.2 25.2 Operating cash flow after interest 4,225 5,067 5,344 6,199 7,159
Net profit margin 17.5 14.1 15.9 16.7 17.3 Capital expenditure (740) (844) (1,514) (1,341) (1,517)
Return ratios (%) Long-term investments 0 0 0 0 0
ROE 24.2 21.0 24.7 25.8 26.6 Others (323) (406) (618) (556) (367)
ROIC ex goodwill 31.7 31.7 37.1 40.1 42.9 Free cash flow 3,163 3,817 3,212 4,302 5,275
Solvency ratios (x) Equity raising 399 393 0 0 0
Net debt-equity (0.5) (0.4) (0.5) (0.5) (0.5) Borrowings (15) 0 0 0 0
Net debt to Ebitda (1.3) (1.0) (1.0) (1.0) (1.1) Dividend (1,365) (5,445) (1,827) (2,220) (2,680)
Interest coverage 6.0 5.5 6.0 6.9 8.4 Net chg in cash and equivalents 2,182 (1,236) 1,384 2,082 2,595
Source: Company data, IIFL Research Source: Company data, IIFL Research

s amee r. gu pt a@i if lcap .c om 6

Metro Brands – BUY

Date Rating Close price Target price Upside

Metro Brands: 3 year price and rating history
(Rs) (Rs) (%)
(Rs) Price TP/Reco changed date 14 Oct 2024 BUY 1226 1425 16.2
1,600
1,400
1,200
1,000
800
600
400
200
0

May-25
May-22

May-23

May-24
Aug-24
Aug-22

Aug-23
Nov-22

Nov-23

Nov-24
Feb-25
Feb-23

Feb-24

s amee r. gu pt a@i if lcap .c om 10

Ashok Leyland – ADD
Result review

26 May 2025

Strong margins in 4Q, but outlook is moderate Result update

CMP Rs240 Price performance (%)
Ashok’s 4Q results were ahead of our estimates (5% Ebitda beat)
due to sharp expansion in gross margin. However, there are cost 12-mth TP (Rs) 255 (6%) 1M 3M 1Y
pressures such as rise in price of steel, regulatory costs (mandatory Absolute (Rs) 3.9 7.7 12.8
Market cap (US$m) 8,254
a/c cabins), etc. due to which, the beat cannot be extrapolated into Absolute (US$) 4.1 9.6 10.3
FY26. MHCV demand situation in FY26 would be better than FY25. Enterprise value(US$m) 7,757
Relative Perf. 1.1 (3.1) 5.7
We forecast 5% growth for MHCV (trucks + bus) in FY26, after 0% Bloomberg AL IN
growth in FY25. Our EPS estimates are largely unchanged. We Cagr (%) 3 yrs 5 yrs
forecast 5% EPS Cagr over FY25-27. Retain ADD with TP of Rs 255 Sector Auto EPS (Rs) 369.1 51.9
(6% upside).
Shareholding pattern (%) Stock performance
4QFY25 margins much higher than expected: Ashok’s 4Q rev grew 6% Hinduja Group 51.5 Vol('000, LHS) Price (Rs., RHS)
Pledged (as % of promoter share) 41.2
yoy on 5% volume growth. Rev came in 2% below expectations due to 250,000 300
lower realisations. Gross margin (GM) expanded 90bp qoq to 29.4% (160bp FIIs 23.5 200,000
Domestic MFs 14.1 200
beat). Ebitda margin improved 230bp qoq to 15.0% (100bp beat). Absolute 150,000
Ebitda beat was 5%. Adj. PAT beat our estimate by 13%. 52Wk High/Low (Rs) 255/193 100,000
100
Shares o/s (m) 2937 50,000
High-growth period of CV cycle is done; Yet, FY26 may be better Del Value 3mth avg (US$ m) 8.1 0 0
than FY25: The best of MHCV cycle is behind us, after ~50% growth each

Nov-23

Nov-24
Sep-23
Jul-23

Jul-24
Sep-24
May-23

Jan-24
Mar-24
May-24

Jan-25
Mar-25
May-25
Dividend yield FY26ii (%) 2.7
in FY22 and FY23. In previous cycles, each peak was 15-20% higher vs
Free float (%) 48.5
preceding peak. FY25 MHCV truck volumes were at 88% of FY19 (previous
peak). In tonnage terms, FY25 is 3% higher vs FY19, as average tonnage Financial summary (Rs m)
is 17% higher. In FY25, truck volumes declined 4% yoy, due to weakness Y/e 31 Mar, Parent FY24A FY25A FY26ii FY27ii FY28ii
in consumption (haulage segment) and Govt capex (tipper segment). Revenues (Rs m) 383,670 387,527 414,409 421,759 453,862
Mgmt. is optimistic on growth in FY26, driven by i) good levels of fleet Ebitda margins (%) 12.0 12.7 12.4 12.7 12.9
utilisation, ii) higher freight rates, iii) rise in Govt. capex. We forecast 5% Pre-exceptional PAT (Rs m) 27,116 31,996 33,578 34,975 38,951
growth in FY26. Reported PAT (Rs m) 26,179 33,033 33,578 34,975 38,951
Pre-exceptional EPS (Rs) 9.2 10.9 11.4 11.9 13.3
1QFY26 may be soft; pick-up from 2Q: Mgmt. guided to a weak 1QFY26, Growth (%) 109.3 18 4.9 4.2 11.4
due to high base of last year. Mgmt. expects strong yoy growth from IIFL vs consensus (%) 5.4 (1.3) (7.9) 0.0
2QFY26. In Jul-Dec 2024, truck sales had seen avg. decline of 10% yoy.
PER (x) 25.9 22.0 20.9 20.1 18.1
Mgmt. cautioned with respect to margins due to rise in price of steel, and
ROE (%) 33.2 32.9 28.4 26.1 25.8
regulatory costs such as a/c cabins. These would be partly offset by fall in
Net debt/equity (x) (0.2) (0.4) (0.3) (0.3) (0.4)
price of other commodities. Overall, we believe that the sharp gross margin
expansion seen in 4QFY25 may not sustain in FY26. As a result, our Ebitda EV/Ebitda (x) 15.0 13.4 12.9 12.3 10.9
margin estimate for FY26 is slightly lower than FY25. This limits EPS growth Price/book (x) 8.4 6.4 5.6 5.0 4.4
in FY26 to about 5%. OCF/Ebitda (x) 0.9 1.3 0.6 0.8 0.8
Source: Company, IIFL Research. Priced as on 23 May 2025

Joseph George Harsh Shah Ankit Ruparel

joseph.george@iiflcap.com harsh.shah@iiflcap.com ankit.ruparel@iiflcap.com
91 22 4646 4667 91 22 4646 4656 91 22 4646 4696
Ashok Leyland – ADD

Conference call: Key takeaways

Figure 1:4QFY25 Ebitda came in 5% above estimate, led by higher GM
(Rsmn) 4QFY24 3QFY25 4QFY25 % YoY % QoQ 1. Mgmt. expects CV industry to clock single-digit growth in FY26 after
Total volumes 56,269 46,404 59,176 5.2 27.5 a flattish FY25. Growth is expected across segments with supportive
macro (fleet utilisations holding up, good freight rates, positive
Net Sales 112,667 94,787 119,067 5.7 25.6
outlook for monsoon, govt. push on infra). Bus, Tractor trailer and
Raw Material 80,906 67,743 84,028 3.9 24.0 Tippers are expected to perform well (in descending order of growth).
Employee costs 5,535 6,064 6,515 17.7 7.4
Other Expenditure 10,305 8,866 10,614 3.0 19.7 2. Mgmt. expects strong growth in exports in coming years.
Ebitda 15,921 12,114 17,910 12.5 47.8 3. The AC cabin regulation is expected to result in increased costs to the
Depreciation 1,797 1,923 1,789 (0.5) (7.0) tune of 0.5-2.0%.
Ebitda 14,124 10,191 16,121 14.1 58.2
4. Major margin headwind in the near term is increase in steel prices
Interest 592 501 471 (20.4) (5.9)
(safeguard duty). However, it will be partly mitigated by softening of
Other income 1,179 247 1,059 (10.2) 328.7 other commodities (such as natural rubber).
Recurring PBT 14,711 9,938 16,709 13.6 68.1
Exceptional items (697) 0 (137) (80.4) NM 5. Company is focused on increasing net realisations, while it continues
to be the industry cost leader (lowest cost per vehicle).
Reported PBT 14,014 9,938 16,573 18.3 66.8
Tax 5,010 2,320 4,114 (17.9) 77.3 6. Capex guidance for FY26 stands at Rs10bn. Further investments in
Reported PAT 9,004 7,617 12,459 38.4 63.6 subsidiaries is expected to be in the range of Rs5.0-7.5bn.
Exceptional items (697) 0 (137) (80.4) NM 7. Defence vertical revenues were flat yoy in FY25; however, order book
Adjusted PAT 9,701 7,617 12,595 29.8 65.3 is healthy. Mgmt. expects defence revenues to double over the next
2-3 years.
Margins
Gross margin 28.2% 28.5% 29.4% 124 bps 90 bps 8. Mgmt. highlighted that average age of truck fleet is 10 years vs
historical average of 7-8 years. There is scope for strong replacement
Ebitda margin 14.1% 12.8% 15.0% 91 bps 226 bps
demand.
Ebit margin 12.5% 10.8% 13.5% 100 bps 279 bps
Source: Company, IIFL Research 9. Switch India clocked double-digit Ebitda margin in 4QFY25. Mgmt.
expects Switch India to turn positive at the PAT level in FY26.

j ose ph. george@ iif lcap .c om 2

Ashok Leyland – ADD

Figure 2: MHCV industry hasn’t seen much growth in the past 12 months Figure 4: MHCV Industry retails holding up vs wholesales
MHCV Industry vol - LHS YoY growth (%) - RHS MHCV Industry - Retails vs Wholesales (12mma)
60,000 40%
100%
50,000 30% 95%
90%
40,000 20% 85%
80%
30,000 10% 75%
20,000 0% 70%
65%
10,000 -10% 60%
55%
0 -20% 50%

Jul-23

Jul-24
Jul-23

Jul-24

Oct-23

Oct-24
Jan-23

Aug-23

Aug-24

Dec-24
Feb-23
Mar-23
Apr-23
May-23

Sep-23
Oct-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24

Sep-24
Oct-24

Jan-25
Feb-25
Mar-25
Apr-25

Apr-23
May-23
Jun-23

Aug-23

Dec-23

Aug-24

Dec-24
Sep-23

Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24

Sep-24

Jan-25
Feb-25
Mar-25
Apr-25
Jun-23

Nov-23

Jun-24

Nov-24

Nov-23

Nov-24
Source: SIAM, IIFL Research Source: Vahan, SIAM, IIFL Research; Note: Based on aggregate of Tata, Ashok, VECV; Aggregate
retails less than 100% of wholesales due to non-inclusion of Telangana State in Vahan

Figure 3: MHCV SAAR has improved close to 400k from lows of 2HCY24 Figure 5: Ashok’s Market share has marginally improved in 4Q
MHCV industry SAAR (rolling 3 months)
500,000 Tata Ashok VECV Daimler
50%
400,000 40%

300,000 30%

200,000 20%

10%
100,000
0%

Jul-23

Jul-24
Apr-23
May-23

Aug-23

Dec-23
Sep-23
Oct-23

Jan-24
Feb-24
Mar-24
Apr-24
May-24

Aug-24

Dec-24
Sep-24
Oct-24

Jan-25
Feb-25
Mar-25
Apr-25
Jun-23

Nov-23

Jun-24

Nov-24
0
Jul-22

Jul-23

Jul-24
Jan-22

Aug-24
Feb-22
Mar-22
Apr-22
May-22

Aug-22
Sep-22
Oct-22
Dec-22
Jan-23

Dec-23
Feb-23
Mar-23
Apr-23
May-23

Aug-23
Sep-23
Oct-23

Jan-24
Feb-24
Mar-24
Apr-24
May-24

Sep-24
Oct-24
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
Jun-22

Nov-22

Jun-23

Nov-23

Jun-24

Nov-24

Source: SIAM, IIFL Research Source: Vahan, IIFL Research

j ose ph. george@ iif lcap .c om 3

Ashok Leyland – ADD

Figure 6: MHCV – Big cyclical recovery has played out; now in low-growth phase Figure 8:Ebitda margin expanded 230bps qoq to 15.0% in 4QFY25 (est. 14.1%)
MHCV industry volumes EBITDA margin Gross margin
450,000 36%
400,000 30%
350,000 24%
300,000
18%
250,000
200,000 12%
150,000 6%
100,000 0%
50,000 -6%

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25
0
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26ii
FY27ii
Source: SIAM, IIFL Research Source: Company, IIFL Research

Figure 7: Truck sales declined 4% yoy in FY25; we expect 5% growth in FY26 Figure 9: AL’s Ebitda margin is at cyclical peak; mgmt. margin target is mid-teen %
MHCV - Truck sales yoy growth Ebitda margin (%)
400,000 60%
14%
350,000 40% 12%
300,000
20% 10%
250,000
200,000 0% 8%
150,000 6%
-20%
100,000 4%
50,000 -40%
2%
0 -60% 0%
2018

2019

2020

2021

2022

2023

2024

2025

2026ii

FY26ii
FY27ii
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
Source: SIAM, IIFL Research Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 4

Ashok Leyland – ADD

Figure 10: AL’s earnings have seen ups and downs based on CV cycles Figure 12: Ashok Leyland – Summary of estimates
EPS Financials (Rsmn) FY24 FY25 FY26ii FY27ii FY28ii
14 MHCV volumes 124,885 126,031 131,513 129,203 136,355
12 YoY growth 0.7% 0.9% 4.3% -1.8% 5.5%
10 LCV volumes 69,800 69,066 72,906 74,568 79,180
8 2.4% -1.1% 5.6% 2.3% 6.2%
YoY growth
6
Revenues 383,670 387,527 414,409 421,759 453,862
4
Ebitda 46,066 49,306 51,492 53,368 58,772
2
Ebitda margin 12.0% 12.7% 12.4% 12.7% 12.9%
0
PAT 27,116 31,996 33,578 34,975 38,951
(2)
EPS (Rs) 9.2 10.9 11.4 11.9 13.3
(4)
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26ii
FY27ii
EPS growth 109.3% 18.0% 4.9% 4.2% 11.4%
Source: Company, IIFL Research
Source: Company, IIFL Research

Figure 11: In CV up-cycles, FCF improves; Balance sheet has been net cash since FY23
Net debt (Rs mn)
50,000

30,000

10,000

(10,000)

(30,000)

(50,000)

(70,000)
FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25

FY26ii

FY27ii

Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 5

Company snapshot Ashok Leyland – ADD

Background: Ashok Leyland (AL), part of the Hinduja Group, is one of India's leading manufacturers of commercial vehicles such as trucks, buses, tippers,
trailers and Defence vehicles. It is the second-largest player in the medium & heavy trucks segment in India, with market share of ~31%. AL is one of the
leading players in heavy buses with market share of ~43%. The company also manufactures and sells engines for industrial and marine applications, spare
parts and special alloy castings. AL operates 9 manufacturing plants – 7 in India, a bus manufacturing facility in Ras Al Khaimah (UAE) and one at Leeds,
United Kingdom. AL also entered into a JV with the Alteams Group for the manufacture of high-press die-casting extruded aluminium components for the
automotive and telecommunications sectors.
Management
AL’s volume mix by segments
(FY24)
MHCV industry volume trend
Name Designation
Dheeraj G. Hinduja Executive Chairman
Shenu Agarwal MD & CEO Domestic
LCVs
K.M.Balaji CFO 34%

Domestic
MHCVs Exports
60% 6%

PE Chart EV/Ebitda
Assumptions 12m fwd EV/EBITDA Avg +/- 1SD
Y/e 31 Mar FY24A FY25A FY26ii FY27ii FY28ii 12m fwd PE Avg +/- 1SD
Domestic MHCVs 116,199 114,793 118,934 115,366 121,134
% Growth 1.7 (1.2) 3.6 (3.0) 5.0 (x) 42.0 (x)
90.0
Export MHCVs 8,686 11,238 12,579 13,837 15,221
75.0 34.0
% Growth (11.5) 29.4 11.9 10.0 10.0
Total MHCVs 60.0 26.0
124,885 126,031 131,513 129,203 136,355
% Growth 0.7 0.9 4.3 (1.8) 5.5 45.0
18.0
Source: Company, IIFL Research 30.0
10.0
15.0
0.0 2.0
Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25 Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25

j ose ph. george@ iif lcap .c om 6

Ashok Leyland – ADD

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Parent FY24A FY25A FY26ii FY27ii FY28ii Y/e 31 Mar, Parent FY24A FY25A FY26ii FY27ii FY28ii
Revenues 383,670 387,527 414,409 421,759 453,862 Cash & cash equivalents 36,872 57,247 56,103 62,886 76,508
Ebitda 46,066 49,306 51,492 53,368 58,772 Inventories 31,907 29,573 32,914 33,416 35,920
Depreciation and amortisation (7,178) (7,193) (7,642) (8,241) (8,808) Receivables 35,699 28,873 34,718 35,333 38,023
Ebit 38,888 42,112 43,850 45,128 49,965 Other current assets 16,339 20,084 20,994 21,367 22,993
Non-operating income 2,466 2,503 3,000 3,300 3,800 Creditors 76,164 76,930 82,266 83,725 90,098
Financial expense (2,494) (2,169) (1,778) (1,482) (1,482) Other current liabilities 43,293 42,845 40,589 39,270 42,131
PBT 38,859 42,446 45,071 46,946 52,283 Net current assets 1,360 16,002 21,874 30,007 41,216
Exceptionals (937) 1,037 0 0 0 Fixed assets 48,165 48,910 51,268 52,028 52,220
Reported PBT 37,922 43,483 45,071 46,946 52,283 Intangibles 9,530 9,530 9,530 9,530 9,530
Tax expense (11,743) (10,450) (11,493) (11,971) (13,332) Investments 53,107 56,543 63,543 70,543 77,543
PAT 26,179 33,033 33,578 34,975 38,951 Other long-term assets 0 0 0 0 0
Minorities, Associates etc. 0 0 0 0 0 Total net assets 112,162 130,985 146,215 162,107 180,508
Attributable PAT 26,179 33,033 33,578 34,975 38,951 Borrowings 22,994 14,817 14,817 14,817 14,817
Other long-term liabilities 5,563 5,479 5,479 5,479 5,479
Ratio analysis Shareholders equity 83,605 110,689 125,919 141,811 160,212
Y/e 31 Mar, Parent FY24A FY25A FY26ii FY27ii FY28ii Total liabilities 112,162 130,985 146,215 162,107 180,508
Per share data (Rs)
Pre-exceptional EPS 9.2 10.9 11.4 11.9 13.3 Cash flow summary (Rs m)
DPS 5.0 6.3 6.5 7.0 7.5 Y/e 31 Mar, Parent FY24A FY25A FY26ii FY27ii FY28ii
BVPS 28.5 37.7 42.9 48.3 54.6 Ebit 38,888 42,112 43,850 45,128 49,965
Growth ratios (%) Tax paid (6,245) (9,407) (11,493) (11,971) (13,332)
Revenues 6.2 1.0 6.9 1.8 7.6 Depreciation and amortization 7,178 7,193 7,642 8,241 8,808
Ebitda 57.2 7.0 4.4 3.6 10.1 Net working capital change (694) 22,872 (7,016) (1,350) 2,414
EPS 109.3 18.0 4.9 4.2 11.4 Other operating items 621 1,121 0 0 0
Profitability ratios (%) Operating cash flow before interest 39,747 63,891 32,982 40,047 47,854
Ebitda margin 12.0 12.7 12.4 12.7 12.9 Financial expense (2,661) (2,084) (1,778) (1,482) (1,482)
Ebit margin 10.1 10.9 10.6 10.7 11.0 Non-operating income 1,432 880 3,000 3,300 3,800
Tax rate 31.0 24.0 25.5 25.5 25.5 Operating cash flow after interest 38,518 62,687 34,204 41,866 50,172
Net profit margin 6.8 8.5 8.1 8.3 8.6 Capital expenditure (4,815) (9,243) (10,000) (9,000) (9,000)
Return ratios (%) Long-term investments (14,869) (6,669) (7,000) (7,000) (7,000)
ROE 33.2 32.9 28.4 26.1 25.8 Others 2,006 1,982 0 0 0
ROIC ex goodwill 79.5 162.5 149.3 121.7 135.0 Free cash flow 20,840 48,757 17,204 25,866 34,172
Solvency ratios (x) Equity raising 17 17 0 0 0
Net debt-equity (0.2) (0.4) (0.3) (0.3) (0.4) Borrowings (8,896) (7,760) 0 0 0
Net debt to Ebitda (0.3) (0.9) (0.8) (0.9) (1.0) Dividend (7,634) (20,408) (18,348) (19,082) (20,550)
Interest coverage 15.6 19.4 24.7 30.5 33.7 Net chg in cash and equivalents 4,327 20,606 (1,144) 6,783 13,622
Source: Company data, IIFL Research Source: Company data, IIFL Research

j ose ph. george@ iif lcap .c om 7

Ashok Leyland – ADD

Date Rating Close price Target price Upside Date Rating Close price Target Upside
Ashok Leyland: 3 year price and rating history (Rs) price (Rs)
(Rs) (Rs) (%) (%)
(Rs) Price TP/Reco changed date 13 Feb 2025 ADD 219 240 9.6 23 May 2022 BUY 123 160 30.1
11 Nov 2024 ADD 222 250 12.6
300 29 Jul 2024 REDUCE 246 200 -18.7
250 27 May 2024 REDUCE 211 175 -17.1
200 07 Feb 2024 REDUCE 180 160 -11.1
150
25 Jul 2023 ADD 182 180 -1.1
100
50 25 May 2023 ADD 150 165 10.0
0 11 Apr 2023 BUY 138 170 23.2
03 Feb 2023 BUY 152 180 18.4

May-25
May-22

May-23

May-24
Aug-24
Aug-22

Aug-23
Nov-22

Nov-23

Nov-24
Feb-25
Feb-23

Feb-24
20 Dec 2022 BUY 144 176 22.2
14 Nov 2022 BUY 148 177 19.6
05 Jul 2022 BUY 145 175 20.7

j ose ph. george@ iif lcap .c om 11

Balkrishna Inds – ADD
Recommendation
downgrade
26 May 2025

Long-gestation project to weigh on earnings Result update

CMP Rs2671 Price performance (%)
Balkrishna’s (BKT) 4Q results were above estimates. This was over-
shadowed by new plans to enter Indian TBR/PCR segments, which 12-mth TP (Rs) 2650 (-1%) 1M 3M 1Y
are inherently lower margin/ROCE compared to BKT’s existing core Absolute (Rs) 3.6 (1.4) (12.5)
Market cap (US$m) 6,059
OHT business. We expect BKT’s earnings, margins, ROCE and FCF Absolute (US$) 3.9 0.3 (14.5)
to be weighed down by this new venture. Meanwhile, demand Enterprise value(US$m) 6,049
Relative Perf. 0.9 (11.2) (15.3)
environment for BKT’s core OHT segment is volatile, due to US Bloomberg BIL IN
tariffs and macro uncertainty. We have cut FY26/FY27 EPS Cagr (%) 3 yrs 5 yrs
estimates by 12%/15% due to slight cut to core volume growth, Sector Tyre EPS (Rs) 4.8 11.5
and more importantly due to initial losses of the new venture. We
Shareholding pattern (%) Stock performance
downgrade the stock from BUY to ADD with 12-month TP of Rs2650.
Promoter 58.3 Vol('000, LHS) Price (Rs., RHS)
4Q results better than expected: Off-highway tyre (OHT) volumes grew Pledged (as % of promoter share) 0.0 4,000 4,000
7.5% qoq driving a 9.5% beat on our rev estimate. The big beat on revenue FII 11.5
3,000 3,000
did not translate into magnified beat on Ebitda (9% above est.), as gross DII 23.8
margin contraction offset benefit of operating leverage. Gross margin (GM) 2,000 2,000
contracted 120bp qoq (110 miss vs est.). Ebitda margin was flattish qoq at 52Wk High/Low (Rs) 3332/2273
1,000 1,000
24.8%, largely in line with estimate. PAT beat was 8%. Shares o/s (m) 193
0 0
Del Value 3mth avg (US$ m) 4.6

Nov-24
Nov-23
Jul-23

Jul-24
Sep-23

Sep-24

Jan-25

May-25
May-23

Jan-24
Mar-24
May-24

Mar-25
Core OHT segment may be volatile in near-term but expect rebound Dividend yield FY26ii (%) 0.8
in a few quarters: OHT volumes surprised positively in 4Q, with 7.5% qoq Free float (%) 41.7
jump. Yet, mgmt. refrained from providing its customary volume guidance
for FY26, citing a volatile business environment globally. US tariff levy of Financial summary (Rs m)
10% will be negative for volumes, at the margin. The cost of 10% tariff Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
would be shared between BKT and customers, implying some impact on Revenues (Rs m) 94,459 106,490 117,319 139,295 165,292
BKT’s margins. We have cut OHT volume growth assumption for FY26 from Ebitda margins (%) 25.1 25.0 25.3 24.4 23.3
8% to 5%. Yet, after 2 years of weak demand, we believe it is a question Pre-exceptional PAT (Rs m) 14,715 16,540 17,987 20,385 22,387
of when, rather than if the volumes would recover. Reported PAT (Rs m) 14,715 16,540 17,987 20,385 22,387
Pre-exceptional EPS (Rs) 76.1 85.6 93.1 105.5 115.8
Entry into TBR/PCR segments dilutive for margins/earnings/ROCE:
Growth (%) 39.2 12.4 8.7 13.3 9.8
BKT is planning to enter the Indian Truck & bus radial (TBR) and Pass car
IIFL vs consensus (%) (3.3) (8.7) (10.1) 0.0
radial (PCR) segments in 4QFY26 and 3QFY27, respectively. These are
inherently lower margin and lower ROCE businesses, compared to BKT’s PER (x) 35.1 31.2 28.7 25.3 23.1
core OHT segment. Mgmt. expects these segments to contribute 20% to ROE (%) 17.9 17.2 16.2 16.1 15.6
rev by FY30. We expect this segment to be dilutive to Net debt/equity (x) 0.0 0.0 0.0 0.0 0.0
margins/earnings/ROCE. We expect EPS growth to be muted at ~10% over EV/Ebitda (x) 21.9 19.4 17.4 15.3 13.4
FY25-28, as our projected cyclical upturn in OHT segment (FY27 onwards) Price/book (x) 5.8 5.0 4.3 3.8 3.4
is offset by initial losses from this new venture. FCF generation would be OCF/Ebitda (x) 0.9 0.7 0.7 0.6 0.6
very low in FY26/FY27. Source: Company, IIFL Research. Priced as on 23 May 2025

Joseph George Harsh Shah Ankit Ruparel

joseph.george@iiflcap.com harsh.shah@iiflcap.com ankit.ruparel@iiflcap.com
91 22 4646 4667 91 22 4646 4656 91 22 4646 4696
Balkrishna Inds – ADD

Figure 1:4QFY25 Ebitda 9% above our estimates. Conference call: Key takeaways
(Rsmn) 4QFY24 3QFY25 4QFY25 % YoY % QoQ
Net sales 26,971 25,716 28,376 5.2 10.3 1. BKT is planning a modular entry into premium PCR tyres and CV radial
tyres with focus on Indian replacement market. CV radial tyres pilot
Raw material 12,595 12,235 13,840 9.9 13.1
shall be launched by 4QFY26 and PCR tyres by 3QFY27.
Employee costs 1,106 1,309 1,280 15.7 (2.2)
Other expenditure 6,277 5,781 6,219 (0.9) 7.6 2. Mgmt. expects these new segments to contribute ~20% to revenue
Ebitda 6,993 6,391 7,037 0.6 10.1 by FY30, thereby achieving 5% market-share. Capex for these new
segments and investment in expansion of Carbon Black capacity and
Depreciation 1,724 1,708 1,764 2.3 3.3
Rubber tracks would be Rs35bn over 3 years (FY26-FY28), funded
Ebit 5,269 4,683 5,273 0.1 12.6 through internal accruals.
Interest 299 150 489 63.6 225.9
3. Once the new segments commercialize and scale up to a decent size,
Other income 875 237 550 (37.1) 132.3
mgmt. expects blended margins (incl. existing business) to be at 23-
Forex income/(loss) 491 1,120 (580) (218.1) (151.8) 25%. Blended ROCE would be lower compared to existing off-highway
Extraordinary items 0 0 0 tyres (OHT) business but not by much.
PBT 6,336 5,890 4,754 (25.0) (19.3)
4. BKT’s global OHT market share is ~6%; mgmt. expects to reach 8%
Tax 1,528 1,496 1,133 (25.8) (24.3)
market share soon. Mgmt.’s aspirational target of 10% global mkt-
Reported PAT 4,809 4,394 3,621 (24.7) (17.6) share stays. Revenue contribution of OHT segment is expected to
Pre-exceptional PAT 4,809 4,394 3,621 (24.7) (17.6) come off to 70% by FY30, as new segments scale up.
5. Board has approved plan to increase Carbon Black capacity from
Gross margin 53.3% 52.4% 51.2% (208) bps (120) bps
200,000 MTPA to 360,000 MTPA, along with capex for cogeneration
Ebitda margin 25.9% 24.9% 24.8% (113) bps (5) bps power plant.
Ebit margin 19.5% 18.2% 18.6% (96) bps 37 bps
6. Mgmt. expects ~10% revenue contribution from carbon black
Tax rate 24.1% 25.4% 23.8% (28) bps (156) bps
segment in FY30. Advanced carbon black plant commenced
PAT margin 17.8% 17.1% 12.8% (507) bps (433) bps operations in 2HFY25 and samples are being tested. This plant should
Source: Company, IIFL Research reach optimum utilization in FY27.
7. Mgmt. targets overall revenue of Rs 230bn by FY30.
8. Dealer inventory in overseas market is at normal levels.
9. On US tariffs, mgmt. mentioned that the impact of 10% tariffs would
be shared partly by BKT and partly by customers.
10. Commodity basket is expected to come off slightly by around 100bps
in 1QFY26. Freight rates shall sustain at these levels.
11. New OTR capacity of 35,000MT would become operational in 2HFY26.

j ose ph. george@ iif lcap .c om 2

Balkrishna Inds – ADD

Figure 2: In 4QFY25, total volumes were flat yoy but higher qoq Figure 4: Ebitda margin was largely flat qoq at 24.8% (20bps miss)
Standalone volumes (MT) YoY growth (%) Ebitda margin
90,000 30% 36%
80,000 33%
20%
70,000 30%
60,000 10% 27%
50,000 24%
0%
40,000 21%
30,000 -10%
18%
20,000
-20% 15%
10,000
12%
0 -30%

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25
4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25
Source: Company, IIFL Research Source: Company, IIFL Research

Figure 3: ASP improved 2.7% qoq in 4QFY25 Figure 5: Freight cost as % of revenue moderated further in 4Q
ASP including Forex (Rs) Freight cost as a % of revenue
400,000 15%
360,000
320,000 12%
280,000
240,000 9%
200,000
160,000 6%
120,000
80,000 3%
40,000
0 0%

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25
4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25

Source: Company, IIFL Research Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 3

Balkrishna Inds – ADD

Figure 6: Natural Rubber (India) price has moderated from peak in Sep’24 Figure 8: Crude price has been below $70 since April
Natural rubber prices (Rs/100kg) Brent Crude Price (US$/bbl)
26,000 140
24,000 120
22,000 100
20,000
80
18,000
60
16,000
14,000 40
12,000 20
10,000 0
Jul-23

Jul-24

Jul-23

Jul-24
Jan-23

Aug-23

Dec-23
Feb-23
Mar-23
Apr-23
May-23

Sep-23
Oct-23

Jan-24
Feb-24
Mar-24
Apr-24
May-24

Aug-24

Dec-24
Sep-24
Oct-24

Jan-25
Feb-25
Mar-25
Apr-25
May-25

Jan-23

Dec-23

Aug-24

Dec-24
Feb-23
Mar-23
Apr-23
May-23

Aug-23
Sep-23
Oct-23

Jan-24
Feb-24
Mar-24
Apr-24
May-24

Sep-24
Oct-24

Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-23

Nov-23

Jun-24

Nov-24

Jun-23

Nov-23

Jun-24

Nov-24
Source: Bloomberg, IIFL Research Source: Bloomberg, IIFL Research

Figure 7: Rubber price (International) has moderated from peak Figure 9: 4Q EPS (ex Fx) higher qoq due to higher volumes
International rubber prices (INR/kg) Quarterly EPS (excluding forex)(Rs)
280 28

240 24

200 20
16
160
12
120
8
80
4
40
0
0

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25
Jul-23

Jul-24
Feb-23
Mar-23
Apr-23
May-23

Aug-23
Sep-23
Oct-23

Feb-24
Mar-24
Apr-24
May-24

Aug-24
Sep-24
Oct-24

Feb-25
Mar-25
Apr-25
May-25
Jan-23

Jun-23

Nov-23
Dec-23
Jan-24

Jun-24

Nov-24
Dec-24
Jan-25

Source: Bloomberg, IIFL Research Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 4

Balkrishna Inds – ADD

Figure 10: India volume has seen strong growth in recent years Analysis of FY30 targets and business pivot
(Volumes by Geography) FY22 FY23 FY24 FY25 Figure 11: Mgmt. target of FY30 revenue and break-down
200,000 Rev. (Rs bn) FY25 Rev share FY30 target FY30 share Cagr
OHT 97.7 92% 161.0 70% 10.5%
150,000 Carbon black 8.5 8% 23.0 10% 22.0%
TBR + PCR - - 45.0 20%
100,000 Total 106.2 100% 230.0 100% 16.7%
Source: Company, IIFL Research; Note: Revenue is Balkrishna Industries (Standalone)

50,000
Figure 12: Details on planned entry into PCR and TBR segments
Particulars
0 New segments should contribute ~20% to revenue by FY30 by achieving 5% market share.
Europe Americas RoW India
Supply shall be for Indian replacement market.
Source: Company, IIFL Research Capex for Carbon Black, Rubber tracks and New Category Tires - Rs35bn over next 3 years
CV and PV radial tyres sales will commence from 4QFY26 and 3QFY27, respectively
Expect blended margins post commercialization of new segments in range of 23-25%
Mgmt. does not anticipate a significant decline in ROCE once scale-up is achieved
Source: Company, IIFL Research

Figure 13: Ebitda margin comparison – BKT vs. traditional tyre-makers

5year average Ebitda margin (%)
30%
25%
20%
15%
10%
5%
0%

MRF

APTY

CEAT
BKT

(S)
Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 5

Balkrishna Inds – ADD

Figure 14: ROCE comparison – BKT vs. traditional tyre-makers Figure 16: Earnings growth to stay relatively muted over FY25-FY28
5 yr average ROCE (ex-cash) PAT (Rs mn) - LHS YoY growth (%) - RHS
35,000 25%
25%
30,000
20%
20% 25,000
20,000 15%
15%
15,000 10%
10%
10,000
5%
5% 5,000
0 0%
0%

FY25

FY26ii

FY27ii

FY28ii

FY29ii

FY30ii
MRF

APTY

CEAT
BKT

(S)
Source: Company, IIFL Research Source: Company, IIFL Research

Figure 15: BKT’s margin to come off, despite cyclical volume uptick in FY27-FY28 Figure 17: Capex as % of revenue to be higher in FY26/FY27
Ebitda margin (%) Capex (Rs mn) - LHS as % of sales - RHS
36% 27,000 25%
33% 24,000
30% 21,000 20%
27% 18,000
24% 15%
15,000
21% 12,000
10%
18% 9,000
15% 6,000 5%
12% 3,000
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26ii
FY27ii
FY28ii
FY29ii
FY30ii

0 0%

FY26ii

FY27ii

FY28ii

FY29ii

FY30ii
FY20

FY21

FY22

FY23

FY24

FY25
Source: Company, IIFL Research Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 6

Balkrishna Inds – ADD

Figure 18: FCF to stay muted in the near-term Figure 20:Balkrishna Industries – Summary of estimates
FCF (Rs mn) Financials (Rsmn) FY24 FY25 FY26ii FY27ii FY28ii
15,000 Total volumes (MT) 292,628 315,273 331,037 384,003 453,123
Volume growth -2.8% 7.7% 5.0% 16.0% 18.0%
10,000
ASP growth -4.2% 5.1% 5.0% 2.4% 0.6%
5,000 Revenue 94,459 106,490 117,319 139,295 165,292
Revenue growth -5.7% 12.7% 10.2% 18.7% 18.7%
0 Ebitda 23,734 26,596 29,689 34,055 38,593
Ebitda margin 25.1% 25.0% 25.3% 24.4% 23.3%
(5,000)
PAT 14,715 16,540 17,987 20,385 22,387
(10,000) PAT growth 39.2% 12.4% 8.7% 13.3% 9.8%

FY26ii

FY27ii

FY28ii

FY29ii

FY30ii
FY20

FY21

FY22

FY23

FY24

FY25
EPS (Rs) 76.1 85.6 93.1 105.5 116
Source: Company, IIFL Research
Source: Company, IIFL Research

Figure 19: ROCE unlikely to reach previous peak, despite volume uptick in FY27-FY28
ROE ROCE
25%

20%

15%

10%

0%
FY26ii
FY27ii
FY28ii
FY29ii
FY30ii
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25

Source: Company, IIFL Research

j ose ph. george@ iif lcap .c om 7

Company snapshot
Balkrishna Inds – ADD

Background: Headquartered in Mumbai, India, Balkrishna Industries (BKT) is a leading manufacturer in the Off-Highway tyre market. Since its founding
in 1987, BKT has successfully focussed on specialist segments such as agricultural, construction and industrial vehicles as well as earthmoving, port and
mining, ATV, and gardening applications. As a result, the company has developed into a global player in the Off-Highway tyre industry, with a 6% market
share. Presently, it has four subsidiaries in Europe and North America, assisting in sales and marketing activities. It sells products in 130 countries
worldwide, through a network of national distributors. It has five state-of-the-art production sites − in Aurangabad, Bhiwadi, Chopanki, Dombivali and
Bhuj − which employ more than 7,000 people.

Management
Volume Trend
Geographical revenue mix (FY24)
Volumes (Ton) YoY growth (RHS)
Name Designation North 400,000 30%
America
Arvind Poddar Chairman and Managing Director 17%
300,000 20%
Rajiv Poddar Joint Managing Director RoW
9% 200,000 10%
M S Bajaj President Commercial & CFO

100,000 0%
Europe India
47% 27% 0 -10%

FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
Assumptions PE Chart EV/Ebitda
Y/e 31 Mar FY24A FY25A FY26ii FY27ii FY28ii
Tyre volumes (MT) 292,628 315,273 331,037 384,003 453,123 12m fwd PE Avg +/- 1SD 12m fwd EV/EBITDA Avg +/- 1SD
YoY growth (%) (2.8) 7.7 5.0 16.0 18.0 27.0
45.0
Realisation (Rs/MT) 320,397 336,720 353,401 361,883 364,054 (x) 24.0 (x)
YoY growth (%) (4.2) 5.1 5.0 2.4 0.6 39.0
21.0
Ebitda/MT (Rsmn) 79,352 84,862 90,163 89,098 85,521 33.0 18.0
Source: Company, IIFL Research
27.0 15.0
12.0
21.0
9.0
15.0 6.0
9.0 3.0
Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25 Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25

j ose ph. george@ iif lcap .c om 8

Balkrishna Inds – ADD

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
Revenues 94,459 106,490 117,319 139,295 165,292 Cash & cash equivalents 27,657 33,506 30,933 27,797 25,617
Ebitda 23,734 26,596 29,689 34,055 38,593 Inventories 13,315 17,819 18,042 21,307 25,169
Depreciation and amortisation (6,507) (6,807) (7,459) (8,310) (10,090) Receivables 14,454 14,945 17,341 20,817 24,930
Ebit 17,227 19,789 22,229 25,745 28,503 Other current assets 8,800 10,806 11,322 11,807 12,380
Non-operating income 3,312 3,358 3,195 2,855 2,624 Creditors 4,639 5,230 5,761 6,841 8,117
Financial expense (1,129) (1,283) (1,638) (1,638) (1,513) Other current liabilities 9,184 10,004 11,180 13,249 15,696
PBT 19,410 21,864 23,786 26,962 29,614 Net current assets 50,404 61,844 60,697 61,639 64,284
Exceptionals 0 0 0 0 0 Fixed assets 72,572 79,223 95,263 110,453 120,364
Reported PBT 19,410 21,864 23,786 26,962 29,614 Intangibles 47 47 47 47 47
Tax expense (4,695) (5,324) (5,799) (6,577) (7,227) Investments 0 0 0 0 0
PAT 14,715 16,540 17,987 20,385 22,387 Other long-term assets 0 0 0 0 0
Minorities, Associates etc. 0 0 0 0 0 Total net assets 123,023 141,114 156,007 172,140 184,695
Attributable PAT 14,715 16,540 17,987 20,385 22,387 Borrowings 30,994 32,675 32,675 32,675 27,675
Other long-term liabilities 3,490 4,563 4,563 4,563 4,563
Ratio analysis Shareholders equity 88,538 103,876 118,770 134,903 152,457
Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii Total liabilities 123,023 141,114 156,007 172,140 184,695
Per share data (Rs)
Pre-exceptional EPS 76.1 85.6 93.1 105.5 115.8 Cash flow summary (Rs m)
DPS 16.0 16.0 22.0 25.0 28.0 Y/e 31 Mar, Consolidated FY24A FY25A FY26ii FY27ii FY28ii
BVPS 458.0 537.4 614.4 697.9 788.7 Ebit 17,227 19,789 22,229 25,745 28,503
Growth ratios (%) Tax paid (4,235) (4,833) (5,799) (6,577) (7,227)
Revenues (5.7) 12.7 10.2 18.7 18.7 Depreciation and amortization 6,507 6,807 7,459 8,310 10,090
Ebitda 17.5 12.1 11.6 14.7 13.3 Net working capital change 1,536 (4,437) (1,426) (4,078) (4,825)
EPS 39.2 12.4 8.7 13.3 9.8 Other operating items (208) 315 (2,620) (2,620) (2,620)
Profitability ratios (%) Operating cash flow before interest 20,826 17,641 19,843 20,780 23,921
Ebitda margin 25.1 25.0 25.3 24.4 23.3 Financial expense (1,022) (1,127) (1,638) (1,638) (1,513)
Ebit margin 18.2 18.6 18.9 18.5 17.2 Non-operating income 627 1,449 5,815 5,475 5,244
Tax rate 24.2 24.4 24.4 24.4 24.4 Operating cash flow after interest 20,432 17,963 24,020 24,617 27,652
Net profit margin 15.6 15.5 15.3 14.6 13.5 Capital expenditure (10,814) (14,484) (23,500) (23,500) (20,000)
Return ratios (%) Long-term investments 0 0 0 0 0
ROE 17.9 17.2 16.2 16.1 15.6 Others 1,905 4,034 0 0 0
ROIC ex goodwill 14.1 14.8 14.4 14.4 14.2 Free cash flow 11,523 7,513 520 1,117 7,652
Solvency ratios (x) Equity raising 0 0 0 0 0
Net debt-equity 0.0 0.0 0.0 0.0 0.0 Borrowings (1,902) 1,432 0 0 (5,000)
Net debt to Ebitda 0.1 0.0 0.1 0.1 0.1 Dividend (3,095) (3,095) (3,093) (4,253) (4,833)
Interest coverage 15.3 15.4 13.6 15.7 18.8 Net chg in cash and equivalents 6,526 5,850 (2,573) (3,136) (2,180)
Source: Company data, IIFL Research Source: Company data, IIFL Research

j ose ph. george@ iif lcap .c om 9

Balkrishna Inds – ADD

Date Rating Close price Target price Upside Date Rating Close price Target Upside
Balkrishna Inds: 3 year price and rating history (Rs) price (Rs)
(Rs) (Rs) (%) (%)
(Rs) Price TP/Reco changed date 28 Jan 2025 BUY 2565 3000 16.9 16 May 2022 REDUCE 1888 1830 -3.1
28 Oct 2024 BUY 2908 3425 17.8
4,000 12 Aug 2024 BUY 3059 3280 7.2
3,500
3,000 21 May 2024 BUY 2799 3325 18.8
2,500 29 Jan 2024 BUY 2527 2800 10.8
2,000
1,500 25 Oct 2023 BUY 2531 2730 7.9
1,000 10 Jul 2023 BUY 2389 2600 8.8
500 30 May 2023 BUY 2281 2560 12.2
0
14 Feb 2023 BUY 2052 2450 19.4

May-25
May-22

May-23

May-24
Aug-24
Aug-22

Aug-23
Nov-22

Nov-23

Nov-24
Feb-25
Feb-23

Feb-24
20 Dec 2022 REDUCE 2134 1940 -9.1
16 Nov 2022 REDUCE 1900 1850 -2.6
08 Aug 2022 REDUCE 2163 1790 -17.2

j ose ph. george@ iif lcap .c om 13

AIA Engineering – REDUCE
Result review

26 May 2025

Uncertain outlook Company update

AIAE posted in-line weak 4Q, with customer addition remaining CMP Rs3315 Price performance (%)
lacklustre. Management refrained from a quantified guidance for
12-mth TP (Rs) 3666 (11%) 1M 3M 1Y
FY26 amid continued uncertainties exacerbated by US tariffs
Absolute (Rs) 5.8 (2.3) (11.1)
and incremental anti-dumping duties (over interim). Gross Market cap (US$m) 3,669
margin expanded but was negated by lower operating leverage. Absolute (US$) 6.1 (0.6) (13.2)
Enterprise value(US$m) 3,308
We await volume revival but upgrade FY26-27 EPS by 5% on Relative Perf. 3.0 (12.1) (14.0)
Bloomberg AIAE IN
higher NSR and other income. Retain REDUCE. Cagr (%) 3 yrs 5 yrs
Sector Capital Goods EPS (Rs) 26.1 17.3
In-line 4Q with 4% yoy volume decline: AIAE reported 4QFY25
volume offtake of 68,741t – down 4% yoy – with mining volume Shareholding pattern (%) Stock performance
growing 3.4% yoy while non-mining volume declined 16% yoy. FY25 Promoter 58.5 Vol('000, LHS) Price (Rs., RHS)
mining volume was down 18.5% yoy and non-mining volume declined Pledged (as % of promoter share) 0.0 800 6,000
4.6% yoy, with total volume coming at 255kt (down 14% yoy). Ebitda FII 18.2
600
margin was up 21bps qoq for 4Q (26.1%) and down 70bps yoy for FY25 DII 20.5 4,000
400
(26.8%), impacted by negative operating leverage even as gross 52Wk High/Low (Rs) 4797/3091 2,000
margin saw yoy improvement. 4Q and FY25 PAT benefited from strong Shares o/s (m) 93
200
other income, which includes forex gain even as treasury income was Del Value 3mth avg (US$ m) 1.2 0 0
strong.

Nov-24
Nov-23
Jul-23

Jul-24
Sep-23

Sep-24

Jan-25

May-25
May-23

Jan-24
Mar-24
May-24

Mar-25
Dividend yield FY26ii (%) 0.5
Free float (%) 41.5
Uncertainty on volume growth continues: Management highlighted
that uncertainty on the pace of customer addition continues. While the Financial summary (Rs m)
goal to add 20-25kt in FY26 on FY25 base remains, certainty on the Y/e 31 Mar, Consolidated FY23A FY24A FY25A FY26ii FY27ii
same is missing. Incremental duties in US under section 232, as well as Revenues (Rs m) 49,088 48,538 42,874 46,108 51,179
post finalisation of ADD investigation (9.76% including CVD of 3.16% Ebitda margins (%) 25.3 27.5 26.8 26.2 25.5
vs interim duty totalling 7.66%), have so far not impacted volumes in Pre-exceptional PAT (Rs m) 10,559 11,341 10,490 10,961 11,679
US but would be closely watched. AIAE had lost 8-10kt volumes in FY25
Reported PAT (Rs m) 10,559 11,341 10,490 10,961 11,679
due to customer move to consumption-based billing, and these should
Pre-exceptional EPS (Rs) 112.0 120.2 112.4 117.5 125.1
come back on a rolling basis over the next few quarters.
Growth (%) 70.4 7.4 -6.5 4.5 6.5
Healthy gross margins offset by negative operating leverage: PER (x) 29.6 27.6 29.5 28.2 26.5
AIAE saw gross margin improving 230bps yoy in FY25, likely benefiting ROE (%) 20.2 18.3 15.4 14.8 13.9
from minimal new customer addition, and pass-through of freight costs. Net debt/equity (x) (0.4) (0.5) (0.5) (0.6) (0.6)
However, Ebitda margin fell 70bps yoy in FY25 due to negative EV/Ebitda (x) 23.1 21.1 23.6 21.9 19.6
operating leverage (14% volume decline). Incrementally, we expect
Price/book (x) 5.5 4.7 4.5 3.9 3.5
margin to remain stable till volume growth revives through new
OCF/Ebitda (x) 0.6 0.5 1.2 0.6 0.6
customer addition.
Source: Company, IIFL Research. Priced as on 23 May 2025
Anupam Gupta Mudit Bhandari
anupam.gupta@iiflcap.com mudit.bhandari@iiflcap.com
91 22 4646 4641 91 22 4646 4715
AIA Engineering – REDUCE

Figure 1: Consolidated results snapshot

Rs m 4QFY24 3QFY25 4QFY25 %YoY FY24 FY25 %YoY Figure 2: Volume growth has been lacklustre
Mining volume 44,932 42,919 46,452 3.4 203,677 166,053 (18.5) ton Non mining Mining
Non-mining volume 26,501 22,861 22,289 (15.9) 93,668 89,390 (4.6) 90,000
Total volume 71,434 65,780 68,741 (3.8) 297,345 255,443 (14.1) 80,000
Realisations (Rs/t) 158,322 159,631 166,033 4.9 160,481 165,462 3.1 70,000
60,000
Revenues 11,502 10,662 11,570 0.6 48,538 42,874 (11.7)
50,000
RM costs 5,037 4,334 4,759 (5.5) 20,727 17,377 (16.2) 40,000
Employee costs 442 465 464 5.0 1,714 1,855 8.2 30,000
Other expenditure 3,049 3,032 3,331 9.2 12,760 12,150 (4.8) 20,000
10,000
Total expense 8,528 7,832 8,554 0.3 35,200 31,382 (10.8) 0
EBITDA 2,974 2,831 3,016 1.4 13,338 11,492 (13.8) 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
EBITDA margin 25.9 26.5 26.1 21bps 27.5 26.8 -67bps
FY19 FY20 FY21 FY22 FY23 FY24 FY25
Depreciation 245 262 279 13.9 1,003 1,031 2.8
Source: Company, IIFL Research
Interest expense 64 10 85 32.4 284 211 (25.7)
Other income 765 673 922 20.6 2,814 3,316 17.8 Figure 3: Margins have been strong, aided by lack of new customer addition
PBT 3,430 3,232 3,574 4.2 14,865 13,567 (8.7)
Gross margins Ebitda margins
PBT margin 30 30 31 31 32
70%
Tax expense 832 685 778 (6.6) 3,510 3,084 (12.2)
60%
Tax rate 24.3 21.2 21.8 -251bps 23.6 22.7 -89bps
50%
Minority interest (1) (3) 1 (307.4) 14 (7) (146.7)
40%
PAT 2,598 2,550 2,795 7.6 11,341 10,490 (7.5)
30%
PAT margin 22.6 23.9 24.2 157bps 23.4 24.5 110bps
20%
EPS 27.5 27.0 29.6 7.6 120.4 113.7 (5.6)
Source: Company, IIFL Research 10%
0%
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
FY19 FY20 FY21 FY22 FY23 FY24 FY25
Source: Company, IIFL Research

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AIA Engineering – REDUCE

Figure 4: Power & fuel and freight have been stable, but other expenses have inched
up on per-tonne basis
Power & fuel Frieght Other expenses
30,000
Rs/tonne
25,000
20,000
15,000
10,000
5,000
0
1Q22 3Q22 1Q23 3Q23 1Q24 3Q24 1Q25 3Q25
Source: Company, IIFL Research

Figure 5: Working capital cycle saw an improvement in FY25

FY21 FY22 FY23 FY24 FY25
Inventory days 96 125 91 91 87
Debtor days 81 82 64 66 70
Loans and advances days 24 22 28 46 32
Current liability days 32 31 28 22 25
Provision days 3 2 2 2 2
NWC days 166 197 154 179 162
Source: Company, IIFL Research

anu pam. gu pt a@i if lcap .c om 3

Company snapshot AIA Engineering – REDUCE

Background: AIA Engineering is a manufacturer of high chrome mill internal products used by cement, mining and utility industries serving both
replacement as well as new capacity demand from these industries. AIAE is one of the leading suppliers of high chrome cast grinding media globally and
competes largely with Magotteaux and larger forged media suppliers for mining industry volumes. The products are marketed under the Vega brand in
more than 75 countries. Current manufacturing capacity of 390kt is primarily based in Gujarat. Ongoing and planned expansion will increase manufacturing
capacity to 520kt by end-FY24.

Management
(tonne Total volumes (LHS)
Name Designation Mining Non mining
350,000
s) YoY growth (RHS) 20%
Bhadresh Shah Managing Director 300,000 15%
Independent Non-executive 250,000 10%
Sanjay Majmudar
Director 5%
200,000
Viren K Thakkar CFO 0%
150,000
-5%
100,000 -10%
50,000 -15%
- -20%

FY19

FY24
FY18

FY20
FY21
FY22
FY23

FY25
Key competitor: Megatteaux International, Belgium

Assumptions PE Chart EV/Ebitda

Y/e 31 Mar, 12m fwd EV/EBITDA Avg +/- 1SD
FY23A FY24A FY25A FY26ii FY27ii 12m fwd PE Avg +/- 1SD
Consolidated
Mining vol 192,352 203,677 166,053 184,319 217,497 48.0
(tonnes) (x) (x)
34.0
Non mining 98,990 93,668 89,390 92,837 90,147 42.0
vol (tonnes) 36.0 27.0
Total volume 291,342 297,345 255,443 277,156 307,643
(tonnes) 30.0
20.0
Volume 11.9 2.1 (14.1) 8.5 11.0 24.0
growth (%) 13.0
Realisation 166,060 160,481 165,462 164,000 164,000. 18.0
(Rs/tonne) 12.0 6.0
Source: Company data, IIFL Research Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25 Apr-17 Nov-18 Jun-20 Feb-22 Sep-23 May-25

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AIA Engineering – REDUCE

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY23A FY24A FY25A FY26ii FY27ii Y/e 31 Mar, Consolidated FY23A FY24A FY25A FY26ii FY27ii
Revenues 49,088 48,538 42,874 46,108 51,179 Cash & cash equivalents 30,595 35,302 42,626 50,211 58,068
Ebitda 12,406 13,338 11,492 12,080 13,051 Inventories 12,180 12,047 10,168 10,935 12,138
Depreciation and amortisation (930) (1,003) (1,031) (1,168) (1,307) Receivables 8,609 8,810 8,267 8,890 9,868
Ebit 11,476 12,335 10,461 10,912 11,744 Other current assets 3,810 6,094 3,710 3,990 4,429
Non-operating income 2,345 2,814 3,316 3,500 3,600 Creditors 3,739 2,902 2,959 3,182 3,532
Financial expense (201) (284) (211) (150) (150) Other current liabilities 212 243 195 210 233
PBT 13,620 14,865 13,567 14,262 15,194 Net current assets 51,244 59,108 61,617 70,634 80,738
Exceptionals 0 0 0 0 0 Fixed assets 11,102 12,025 12,520 13,352 13,545
Reported PBT 13,620 14,865 13,567 14,262 15,194 Intangibles 0 0 0 0 0
Tax expense (3,055) (3,510) (3,084) (3,307) (3,522) Investments 8 665 935 665 665
PAT 10,565 11,355 10,483 10,955 11,672 Other long-term assets 0 0 0 0 0
Minorities, Associates etc. (6) (14) 7 7 7 Total net assets 62,354 71,797 75,073 84,652 94,948
Attributable PAT 10,559 11,341 10,490 10,961 11,679 Borrowings 4,960 4,546 4,850 4,850 4,850
Other long-term liabilities 391 571 852 852 852
Ratio analysis Shareholders equity 57,003 66,680 69,371 78,950 89,246
Y/e 31 Mar, Consolidated FY23A FY24A FY25A FY26ii FY27ii Total liabilities 62,354 71,797 75,073 84,652 94,948
Per share data (Rs)
Pre-exceptional EPS 112.0 120.2 112.4 117.5 125.1 Cash flow summary (Rs m)
DPS 16.0 16.0 16.0 16.0 16.0 Y/e 31 Mar, Consolidated FY23A FY24A FY25A FY26ii FY27ii
BVPS 604.4 707.0 743.4 846.0 956.3 Ebit 11,476 12,335 10,461 10,912 11,744
Growth ratios (%) Tax paid (3,055) (3,510) (3,084) (3,307) (3,522)
Revenues 37.6 (1.1) (11.7) 7.5 11.0 Depreciation and amortization 930 1,003 1,031 1,168 1,307
Ebitda 72.1 7.5 (13.8) 5.1 8.0 Net working capital change (1,434) (3,157) 4,814 (1,432) (2,247)
EPS 70.4 7.4 (6.5) 4.5 6.5 Other operating items 0 0 0 0 0
Profitability ratios (%) Operating cash flow before interest 7,917 6,671 13,223 7,341 7,283
Ebitda margin 25.3 27.5 26.8 26.2 25.5 Financial expense (201) (284) (211) (150) (150)
Ebit margin 23.4 25.4 24.4 23.7 22.9 Non-operating income 2,345 2,829 3,434 3,618 3,718
Tax rate 22.4 23.6 22.7 23.2 23.2 Operating cash flow after interest 10,061 9,216 16,446 10,808 10,850
Net profit margin 21.5 23.4 24.5 23.8 22.8 Capital expenditure (2,058) (1,917) (1,527) (2,000) (1,500)
Return ratios (%) Long-term investments (3) (657) (270) 270 0
ROE 20.2 18.3 15.4 14.8 13.9 Others 345 (12) 0 0 0
ROIC ex goodwill 29.6 28.0 23.9 25.7 25.9 Free cash flow 8,345 6,630 14,649 9,078 9,350
Solvency ratios (x) Equity raising 0 0 (2) 0 0
Net debt-equity (0.4) (0.5) (0.5) (0.6) (0.6) Borrowings 4,932 (414) 304 0 0
Net debt to Ebitda (2.1) (2.3) (3.3) (3.8) (4.1) Dividend (1,509) (1,509) (1,493) (1,493) (1,493)
Interest coverage NM 43.5 49.6 NM NM Net chg in cash and equivalents 11,767 4,707 13,458 7,585 7,857
Source: Company data, IIFL Research Source: Company data, IIFL Research

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AIA Engineering – REDUCE

Date Rating Close price Target price Upside

AIA Engineering: 3 year price and rating history
(Rs) (Rs) (%)
(Rs) Price TP/Reco changed date 13 Mar 2025 REDUCE 3141 3433 9.3
31 Oct 2024 REDUCE 3902 3706 -5.0
6,000 13 Aug 2024 REDUCE 4813 4511 -6.3
5,000 15 May 2024 ADD 3775 3967 5.1
4,000 05 Mar 2024 ADD 3715 4241 14.2
3,000
07 Nov 2023 BUY 3637 3770 3.6
2,000
1,000 03 Aug 2023 BUY 3465 3512 1.4
0 30 Jan 2023 BUY 2599 3011 15.8
19 Jan 2023 BUY 2414 2693 11.6

May-25
May-22

May-23

May-24
Aug-24
Aug-22

Aug-23
Nov-22

Nov-23

Nov-24
Feb-25
Feb-23

Feb-24
15 Nov 2022 BUY 2745 2921 6.4
24 Aug 2022 BUY 2508 2625 4.7

anu pam. gu pt a@i if lcap .c om 9

nts
E ve
L
IIF

Rainbow Children’s Medicare Ltd

Earnings Conference Call
Monday, 26th May 2025, 10:00 am (IST)

IIFL is pleased to invite you to join a conference call with the management of Rainbow Children’s Medicare Ltd (RAINBOW IN) to
discuss the company’s business strategy and outlook post the declaration of its Q4FY25 financial results.
Dr. Ramesh Kancharla – Chairman and MD
Management participants Mr. Vikas Maheshwari – Group Chief Financial Officer
Mr. Saurabh Bhandari – Head IR & Business Intelligence

Monday, 26th May 2025, 10:00 am (IST)

Date / Time
(HK/Singapore – 12:30 pm, UK – 5:30 am, USA – 12:30 am ET)

Conference dial-in numbers

Pre-registration link Diamond Pass Registration
India
Primary Number +91 22 6280 1259 / +91 22 7115 8160
International Toll-free number
USA 1-866 746 2133
UK 0-808 101 1573
Singapore 800-101 2045
Hong Kong 800-964 448

For further information, please contact:

IIFL - 24th floor, One Lodha Place, Senapati Bapat Marg, Lower Parel (W), Mumbai 400 013, Tel: (91-22) 4646 4600, Fax: (91-22) 4646 4700
s
ent
Ev
FL
II

Afcons Infrastructure Ltd

Earnings Conference Call
Tuesday, 27th May 2025, 11:00 am IST
We are organising a conference call with the management of Afcons Infrastructure Ltd to discuss earnings
performance followed by an interactive Question & Answer session post the declaration of its Q4 & FY25 results.

Mr. Subramanian Krishnamurthy, Executive Vice Chairman

Mr. Paramasivan Srinivasan, Managing Director
Management participants
Mr. Ramesh Kumar Jha, Chief Financial Officer
Mr. Hitesh Singh, Head Corporate Strategy

27th May 2025 (Tuesday) – 11:00am IST

Date / Time
(HK/Singapore – 1:30pm, UK – 6:30am, New York – 1:30am)

Diamond Pass Events Link

India
Universal Access +91 22 6280 1259 / +91 22 7115 8160
International Toll-free number International Toll
USA 18667462133 13233868721
UK 08081011573 442034785524
Singapore 8001012045 6531575746
Hong Kong 800964448 85230186877

For further information, please contact:

Anupam Gupta | Tel: +91 22 4646 4641 | Email: anupam.gupta@iiflcap.com
IIFL - 24th Floor, One LodhaPlace, SenapatiBapatMarg, Lower Parel(W), Mumbai 400 013, Tel: (91-22) 4646 4600, Fax: (91-22) 4646 4700
Zinka Logistics Solutions Limited
Earnings Conference Call | Q4 & FY 2025

You are cordially invited to the post result Earnings Conference Call of Zinka Logistics Solutions Ltd to
discuss Q4 & FY25 updates

The management would be represented by:

Mr. Rajesh Kumar Naidu Yabaji – CMD and CEO

Mr. Satyakam GN – CFO

Conference Call Details

Date: Tuesday, 27 May 2025 | Time: 05:00 PM IST

Express Join with Diamond Pass™ No Wait Time

Diamond Pass Link

Webcast Link

Universal Dial In +91 22 6280 1533 / +91 22 7115 8219

USA 18667462133 Singapore 8001012045
UK 08081011573 Hong Kong 800964448

About Zinka Logistics Solutions Ltd:

Founded in 2015, BlackBuck is a platform providing payments, telematics, loads marketplace and vehicle
financing services. These solutions aim to digitally empower truck operators and help them operate their
business effectively and efficiently. Our customers rely on the BlackBuck app for running the day-to-day
operations of their business, including tolling and fueling payments, vehicle and fuel levels tracking and loads
matching.

For further details, please get in touch with:

IIFL Capital Services Ltd.
Rishi Jhunjhunwala| Tel: +91 99300 55449 | Email: rishi.jhunjhunwala@iiflcap.com
Ankur Pant | Tel: +91 98199 16603 | Email: ankur.pant@iiflcap.com
Kenil Doshi | Tel: +91 80809 09912 | Email: kenil.doshi@iiflcap.com
nts
E ve
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IIF

Entero Healthcare Solutions Ltd

Earnings Conference Call
Wednesday, 28th May 2025
2:30 pm (IST)
IIFL is pleased to invite you to join a conference call with the management of Entero Healthcare Solutions Ltd (ENTERO IN) to
discuss the company’s business strategy and outlook post the declaration of its Q4FY25 financial results.

Mr. Prabhat Agrawal - Managing Director & CEO

Management participants Mr. Prem Sethi – Whole Time Director & COO
Mr. Balakrishnan Kaushik - Chief Financial Officer

28th May 2025 (Wednesday) – 2:30 pm IST

Date / Time
(HK/Singapore – 5:00 pm, UK – 10:00 am, USA – 5:00 am ET)

Conference dial-in numbers

For further information, please contact:

Rahul Jeewani | Tel: +91 22 4646 4673 | Email: rahul.jeewani@iiflcap.com
Naman Bagrecha | Tel: +91 22 4646 4718 | Email: naman.bagrecha@iiflcap.com
Vivek Pandey | Tel: +91 22 4646 4705 | Email: vivek.pandey@iiflcap.com
IIFL - 24th floor, One Lodha Place, Senapati Bapat Marg, Lower Parel (W), Mumbai 400 013, Tel: (91-22) 4646 4600, Fax: (91-22) 4646 4700
Deepak Nitrite Ltd
Conference Call
Thursday, 29th May 2025, 12:00PM IST
We are organising a conference call with the management of Deepak Nitrite Ltd, to discuss the company’s business
strategy and outlook post the declaration of its 4QFY25 results.

Mr. Maulik Mehta - Executive Director and Chief Executive Officer

Management participants Mr. Sanjay Upadhyay - Director, Finance & Group CFO
Mr. Somsekhar Nanda - Chief Financial Officer

Thursday, 29th May 2025, 12:00PM IST

Date / Time
(HK/Singapore – 2:30pm, UK – 7:30am, New York – 2:30am)

Diamond Pass Event Link

India
Universal Access +91 22 6280 1259 / +91 22 7115 8160

International Toll-free number

USA 18667462133
UK 08081011573
Singapore 8001012045
Hong Kong 800964448

For further information, please contact:

Ranjit Cirumalla | Tel: +91 22 4646 4654 | Email: ranjit.cirumalla@iiflcap.com

IIFL – 24th floor, One Lodha Place, Senapati Bapat Marg, Lower Parel (W), Mumbai 400 013, Tel: (91-22) 4646 4600, Fax: (91-22) 4646 4700
Published in 2025, © IIFL Capital Services Limited (Formerly known as IIFL Securities Limited)

IIFL Capital Services Limited (Formerly known as IIFL Securities Limited) is registered with the Securities & Exchange Board of India (SEBI) as “Research Analyst” with SEBI-registration number
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FINRA or required to otherwise comply with US rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
The non-US Company will refrain from initiating follow-up contacts with any recipient of this research report that does not qualify as a Institutional Investor, or seek to otherwise induce or attempt to induce the purchase
or sale of any security addressed in this research report by such recipient.

A graph of daily closing prices of securities is available at http://www.nseindia.com, www.bseindia.com (Choose a company from the list on the browser and select the “three years” period in the price chart).
IIFL Capital Services Limited (Formerly known as IIFL Securities Limited), CIN No.: L99999MH1996PLC132983, Corporate Office – IIFL Securities Ltd. 24th Floor, One Lodha Place, Senapati Bapat Marg, Lower Parel,
Mumbai – 400013 Tel: (91-22) 4249 9000 Fax: (91-22) 4060 9049, Regd. Office – IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, MIDC, Thane Industrial Area, Wagle Estate, Thane – 400604 Tel: (91-22)
39294000. Fax: (91-22) 25806654 Website: https://www.iiflcapital.com/,please click here to know about IIFLCAP’s organisational structure and its associates Details of pending Enquiry Proceedings of IIFL Capital
Services Limited (Formerly known as IIFL Securities Limited)and Investor Charter are available on the website at https://ttweb.indiainfoline.com/trade/frmInformation2customer.aspx

Compliance Officer: Ms. Chaitali Shah, email id – chaitali.shah@iiflcap.com; contact no. +91-22-46464658

Grievance Redressal Cell: email id - cs@iiflcapital.com; contact no. +91-22-40071000. Click here for Escalation Matrix

If not satisfied with the response of the research analyst, you can lodge your grievances with SEBI at https://scores.sebi.gov.in or you may also write to any of the offices of SEBI. (In absence of response/complaint not
addressed to your satisfaction, you may lodge a complaint with SEBI at SEBI, NSE, BSE, Investor Service Center | NCDEX, MCX. Please quote your Service Ticket/Complaint Ref No. while raising your complaint at SEBI
SCORES/Exchange portal at https://scores.sebi.gov.in and for online dispute Resolution platform - Smart ODR- https://smartodr.in/login )

For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575.

Registration Details: Stock Broker SEBI Regn: INZ000164132(BSE/NSE/MCX/NCDEX), CDSL & NSDL SEBI Regn.: IN-DP-185-2016, PMS SEBI Regn. No. INP000002213, IA SEBI Regn. No.
INA000000623, RA SEBI Regn. No. INH000000248, Merchant Banking SEBI Regn. No. INM000010940, AMFI Regn. No. ARN - 47791

Key to our recommendation structure

BUY - Stock expected to give a return 10%+ more than average return on a debt instrument over a 1-year horizon.
SELL - Stock expected to give a return 10%+ below the average return on a debt instrument over a 1-year horizon.
Add - Stock expected to give a return 0-10% over the average return on a debt instrument over a 1-year horizon.
Reduce - Stock expected to give a return 0-10% below the average return on a debt instrument over a 1-year horizon.

Distribution of Ratings: Out of 305 stocks rated in the IIFL coverage universe, 158 have BUY ratings, 5 have SELL ratings, 102 have ADD ratings, 1 have NR ratings and 38 have REDUCE ratings

Price Target: Unless otherwise stated in the text of this report, target prices in this report are based on either a discounted cash flow valuation or comparison of valuation ratios with companies seen by the analyst as
comparable or a combination of the two methods. The result of this fundamental valuation is adjusted to reflect the analyst’s views on the likely course of investor sentiment. Whichever valuation method is used there
is a significant risk that the target price will not be achieved within the expected timeframe. Risk factors include unforeseen changes in competitive pressures or in the level of demand for the company’s products. Such
demand variations may result from changes in technology, in the overall level of economic activity or, in some cases, in fashion. Valuations may also be affected by changes in taxation, in exchange rates and, in certain
industries, in regulations. Investment in overseas markets and instruments such as ADRs can result in increased risk from factors such as exchange rates, exchange controls, taxation, and political and social conditions.
This discussion of valuation methods and risk factors is not comprehensive – further information is available upon request.

i. Investments in securities market are subject to market risks. Read all the related documents carefully before investing.
ii. Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing.
iii. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary
or provide any assurance of returns to investors
Strategy & Economy Banking Capital Goods, Electricals, Midcaps Real Estate, Building Materials,
G.V. Giri (91 22 4646 4676) Rikin Shah (91 22 4646 4668) Electronics Manufacturing (EMS) Vishal Mehta (91 22 4646 4649) Hotels, Politics
Karan Kadmawala (91 22 4646 4685) Viral Shah (91 22 4646 4781) Renu Baid (91 22 4646 4651) Mohit Agrawal (91 22 4646 4675)
Soham Dalal (91 22 4646 4659) Heet Khimawat (91 22 4646 4652) Hardik Rawat (91 22 4646 4752) NBFCs Saatvik Shetty (91 22 4646 4653)
Ryan Daniel (91 22 4646 4655) Akshit Gangwal (91 22 4646 4661) Viral Shah (91 22 4646 4781) Vinay Agrawal (91 22 4646 4644)
Agriculture, Chemicals, Midcaps Shalin Kapadia (91 22 4646 4760) Rikin Shah (91 22 4646 4668) Jay Kant Beria (91 22 4646 4762)
Ranjit Cirumalla (91 22 4646 4654) Defense Shalin Kapadia (91 22 4646 4760)
Disha Arora (91 22 4646 4774) Broking Hardik Rawat (91 22 4646 4752) Heet Khimawat (91 22 4646 4652) Rating companies, Telecom,
Aakash Maji (91 22 4646 4742) Viral Shah (91 22 4646 4781) Renu Baid (91 22 4646 4651) Ryan Daniel (91 22 4646 4655) Textiles,
Akshit Gangwal (91 22 4646 4661) Himanshi Narang Balaji Subramanian (91 22 4646 4644)
Apparel Retail, Footwear, Media Business Services Siddharth Zabak (91 22 4646 4687)
Sameer Gupta (91 22 4646 4672) Siddharth Zabak (91 22 4646 4687) FMCG, Consumer Discretionary Oil & Gas, Logistics
Percy Panthaki (91 22 4646 4662) Balaji Subramanian (91 22 4646 4644) Percy Panthaki (91 22 4646 4662) Balaji Subramanian (91 22 4646 4644) Utilities, Power
Siddhesh Deshmukh (91 22 4646 4657) Sameer Gupta (91 22 4646 4672) Yash Nandwani (91 22 4646 4670) Apoorva Bahadur (91 22 4646 4674)
Harsh V Shah (91 22 4646 4788) Cement, Exchanges, AMCs Siddhesh Deshmukh (91 22 4646 4657) Siddharth (91 22 4646 4791)
Rakshit Desai (91 22 4646 4743) Devesh Agarwal (91 22 4646 4647) Harsh V Shah (91 22 4646 4788) Pharmaceuticals, Healthcare
Vedant Agarwal (91 22 4646 4688) Rakshit Desai (91 22 4646 4743) Rahul Jeewani (91 22 4646 4673)
Automobiles, Airlines Sayyam Ranka (91 22 4646 4706) Kaivalya Baing Naman Bagrecha (91 22 4646 4718)
Joseph George (91 22 4646 4667) Infrastructure, Metal, Mining Vivek Pandey (91 22 4646 4651)
Harsh Shah (91 22 4646 4656) Anupam Gupta (91 22 4646 4641)
Ankit Ruparel (91 22 4646 4696) Mudit Bhandari (91 22 4646 4715)
Yash Upadhyay (91 22 4646 4761)

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Top Research Stories Market Front Page

Winners & Losers

Mar – IIP Apr - WPI

Apr – CPI (AL/RL)

Apr CPI (IW)

Black: Quarterly results, Blue: Economic data, Red: India Holiday

IIFL Events IIFL Invest India Conference

Hardik Rawat G V Giri Karan Kadmawala

h ar dik . ra wa t@i ifl c ap .c o m 2

Figure 2: Summary of Defence companies covered in the note

h ar dik . ra wa t@i ifl c ap .c o m 3

Source: CMIE, IIFL Research

• Despite the recent ramp-up in defence capex, growth in the budget

h ar dik . ra wa t@i ifl c ap .c o m 4

Key platforms that stood out for India –

h ar dik . ra wa t@i ifl c ap .c o m 5

h ar dik . ra wa t@i ifl c ap .c o m 6

Indian Defence companies stand to benefit

h ar dik . ra wa t@i ifl c ap .c o m 7

Figure 9: Listed Defence companies reported strong growth in 4QFY25

h ar dik . ra wa t@i ifl c ap .c o m 8

Sector overview - key parameters

Source: Company, IIFL Research Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 9

Source: Company, IIFL Research Source: Company, IIFL Research

• Higher NWC intensity impacts OCF generation for defence companies,

Figure 16: Defence companies remain net-debt-free as at the end of FY25

Source: Company, IIFL Research

h ar dik . ra wa t@i ifl c ap .c o m 10

h ar dik . ra wa t@i ifl c ap .c o m 11

Hindustan Aeronautics CMP 4,962 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 12

• In addition to the Manufacturing order pipeline, the company is poised

h ar dik . ra wa t@i ifl c ap .c o m 13

Manufacturing RoH & Spares Development & Others Exports

h ar dik . ra wa t@i ifl c ap .c o m 14

Bharat Electronics CMP 384 Price performance (%)

Figure 26: BHE – Historical timeline

h ar dik . ra wa t@i ifl c ap .c o m 15

h ar dik . ra wa t@i ifl c ap .c o m 16

Solar Industries CMP 15,334 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 17

Order Book & Pipeline Product Portfolio

• Solar has predominantly been involved in the industrial explosives

Source: Company, IIFL Research

• Solar Industries’ current defence portfolio is anchored by advanced

h ar dik . ra wa t@i ifl c ap .c o m 18

Management Profile Investment Rationale

Figure 33: SOIL – Management profile • Market leader in industrial explosives

h ar dik . ra wa t@i ifl c ap .c o m 19

Bharat Dynamics CMP 1,909 Price performance (%)

• BDL’s order book at Rs227bn is 7x TTM Sales and is further supported

h ar dik . ra wa t@i ifl c ap .c o m 20

• Execution challenges & risks of supply chain disruptions

h ar dik . ra wa t@i ifl c ap .c o m 21

PTC Industries CMP 15,425 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 22

Zen Technologies CMP 1,892 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 23

h ar dik . ra wa t@i ifl c ap .c o m 24

BEML CMP 1,892 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 25

Data Patterns India CMP 2,718 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 26

Product Portfolio Management Profile

• Mgmt. guides for 20-25% revenue Cagr in FY26 while maintaining

h ar dik . ra wa t@i ifl c ap .c o m 27

Astra Microwave Products CMP 1,089 Price performance (%)

h ar dik . ra wa t@i ifl c ap .c o m 28

Product Portfolio Execution & guidance

Figure 47: ASTM - Management Profile

• High NWC intensity

h ar dik . ra wa t@i ifl c ap .c o m 29

h ar dik . ra wa t@i ifl c ap .c o m 30