A handful of companies including Aurobindo Pharma Ltd, Voltas Ltd, APL Apollo Tubes Ltd, Vinati Organics, Metro Brands Ltd, Nalco Ltd and Campus Activewear Ltd recently came out with June quarter results. Post the first quarter earnings, MOFSL has suggested 'Buy' ratings on five of these seven stocks. It remained ‘Neutral’ on two other stocks.
Aurobindo Pharma Aurobindo Pharma delivered an in-line operational performance in the June quarter. The robust execution across key markets was partly offset by seasonality and higher remediation costs for the quarter, MOFSL said as it largely maintained its earnings estimates for FY25 and FY26. The domestic brokerage valued Aurobindo Pharma at 18 times 12-month forward earnings to arrive at the target price of Rs 1,500. "Aurobindo Pharma is progressing well on: a) scaling up its Pen-G production, b) resolving regulatory issues at the Eugia site III, c) clinical development of the biosimilar portfolio, and d) strengthening the US generic pipeline. We model 15 per cent earnings CAGR over FY24-26. Considering limited upside from the current level, we reiterate our Neutral rating on the stock," it said.
Voltas MOFSL said Voltas’ 1QFY25 performance was well above its estimates, led by higher-than-estimated revenue growth in the UCP and EMPS segments, and a profit in EMPS against its estimate of a loss. Revenue stood at Rs 4,920 crore against an estimate of Rs 3,940 crore. Ebitda came in at Rs 420 crore against an estimate of Rs 260 crore. Operating profit margin (OPM) surged 3.1 percentage points YoY to 8.6 per cent (estimate 6.6 per cent). Adjusted PAT jumped 159 per cent YoY to Rs 330 crore against an estimate of Rs 190 crore.
"We raise our EPS estimates by 19 per cent/4 per cent for FY25/FY26 led by strong revenue growth and 1Q performance. We also introduce FY27 estimates. We would keenly monitor the continuity of profitability in the EMPS segment. We reiterate our BUY rating on the stock with a revised target price of Rs 1,800 against Rs 1,670) based on 50 times Sep’26E EPS for the UCP segment, 35 times Sep’26E EPS for the PES and EMPS segments, and Rs 38 per share for Voltbek," it said.
APL Apollo Tubes APL Apollo Tubes Ltd reported healthy sales volume of 721kmt in Q1, up 9 per cent YoY or 6 per cent QoQ. This was led by the a ramp-up of its Raipur and Dubai plants. However, Ebitda per tonne fell 10 per cent YoY to Rs 4,183, due to high operational expenses. MOFSL said the incremental capacity from the upcoming plants and debottlenecking, along with the addition of high-margin products from the Raipur and Dubai units, should result in strong volume growth and margin expansion going forward.
"We expect a CAGR of 23 per cent/28 per cent/36 per cent in revenue/Ebitda/PAT over FY24-26. We cut our FY25E/FY26E earnings by 13 per cent/12 per cent primarily due to lower Ebitda per tonne (reduced by 8 per cent for both years). We value the stock at 35 times FY26E EPS to arrive at a target price of Rs 1,720. Reiterate BUY," MOFSL said.
Metro Brands Metro Brands revenue declined 1 per cent YoY, which was a miss of 9 per cent, thanks to weak same-store sales (SSS). That said, the store additions supported revenues. A higher contribution of Rs 3,000-plus ASP products and own-brand products boosted gross margins. Controlled costs and higher gross margins restricted the decline in Ebitda/PAT to only 3 per cent/2 per cent, which was (11 per cent miss).
"In the near term, we believe that soft demand, delayed BIS implementation (which delayed FILA’s repositioning), and margin contraction could weigh on growth. However, in the long term, healthy store economics, steady store additions, and a growth opportunity in Fila/Foot Locker should drive a CAGR of 16 per cent/19 per cent in revenue/PAT over FY24-26. We reiterate our BUY rating on the stock," MOFSL said.
Nalco Nalco’s Q1 revenue missed MOFSL's estimates due to the weak operational performance in the chemical business. Ebitda margin came in at 32.7 per cent against MOFSL's estimate of 26 per cent, supported by healthy operating margin from the aluminum segment. Adjusted profit at about Rs 590 crore was lower than MOFSL's estimate of Rs 740 crore.
"The recent exploration and lithium mining agreement with Argentina’s CAMYEN SE, will help NACL establish its presence, diversify product offerings, and enhance the supply chain for critical and strategic minerals. Until the fifth stream of alumina comes on stream, we expect NACL to operate at full capacity, leaving little room for capacity expansion over the next two years. The next phase of growth is anticipated once the additional 1mt capacity of the alumina refinery comes on stream by May’25," the brokerage said.
MOFSL said the Utkal D coal block will fulfill 25-28 per cent of the coal requirements for the Angul smelter, which will enhance raw material security and boost the margins until the augmented capacity comes on stream. "At the prevailing share price, NACL trades at 6.6 times on EV/Ebitda and 1.8 times on P/B and appears to be largely priced at current levels. We reiterate our Neutral rating on the stock with a target price of Rs 185, valuing it at 7 times FY26E EV/Ebitda," MOFSL said.
Vinati Organics Vinati Organics’ Q1 revenue came in below our estimate. Gross margin declined 270 bps YoY to 44.9 per cent, while Ebitda margin was up 100 bps YoY at 23.8 per cent. The management noted that Q1FY24 results were restated to give effect to the scheme of merger approved by NCLT. Veeral Organics, a wholly-owned subsidiary, has commissioned a plant for MEHQ and Guaiacol with other products, which will come online in FY25. Vinati Organics has 3ktpa capacity (combined) for MEHQ and Guaiacol, 5ktpa for Anisole, 30ktpa Iso Amylene and 1ktpa for 4-MAP. These products will be the key growth drivers for Vinati Organics going forward, MOFSL said.
"We continue to believe that Vinati Organics' long-term growth outlook is healthy. We value the company at 45 times FY26E EPS to arrive at a target price of Rs 2,425. We reiterate our BUY rating on the stock," MOFSL said.
Campus Activewear Campus Activewear posted a revenue decline of 4 per cent, which missed the MOFSL estimates by 9 per cent. Campus Activewear reported weak performance in both the trade distribution channel (TD) and D2C online channel. The growth in open footwear was a silver lining in 1QFY25, MOFSL said. Weak revenue led to 22 per cent YoY decline in Ebitda and 19 per cent YoY fall in PAT (21 per cent/22 per cent miss) for the quarter.
"We broadly maintain our estimates, factoring in 14 per cent/38 per cent revenue/PAT CAGR over FY24-26. The stock has corrected sharply; however, Campus’s strong market position, stabilization of D2C online/TD channels, and a long runway for growth should result in a market recovery in 2HFY25E. Reiterate BUY with a target price of Rs 335.