6 April 2023

Market snapshot Today’s top research theme

Equities - India Close Chg .% CYTD.% India Strategy - 4QFY23 Preview: India Performers League
Sensex 59,689 1.0 -1.9
 We expect MOFSL earnings to rise 15% YoY while Nifty earnings are likely to
Nifty-50 17,557 0.9 -3.0
grow 14% YoY in 4QFY23. Earnings growth would be fueled by BFSI and Auto
Nifty-M 100 30,160 0.0 -4.3 sectors, which are likely to rise 37% and 70% YoY and contribute ~70% and
Equities-Global Close Chg .% CYTD.% ~20% of incremental YoY earnings for MOFSL Universe in 4QFY23,
S&P 500 4,090 -0.2 6.5 respectively.
Nasdaq 11,997 -1.1 14.6  Earnings performances for both MOFSL Universe as well as Nifty in 4QFY23 are
FTSE 100 7,663 0.4 2.8 likely to be lopsided and led by a few heavyweights. Five companies within
DAX 15,520 -0.5 11.5 MOFSL Universe (SBI, IOC, BPCL, Indigo and Tata Motors) are expected to
Hang Seng 6,875 0.0 2.5 contribute 72% of the incremental YoY accretion in earnings. Similarly within
Nikkei 225 27,813 -1.7 6.6 Nifty, five companies (SBI, ICICI Bank, ONGC, Tata Motors, and BPCL) are likely
Commodities Close Chg .% CYTD.% to contribute 82% of the incremental YoY accretion in earnings.
Brent (US$/Bbl) 85 0.2 0.5  The aggregate performance of MOFSL Universe is likely to be marred by a
Gold ($/OZ) 2,021 1.8 10.8 sharp drag from Metals, which is likely to report a 35% YoY earnings decline.
Cu (US$/MT) 8,785 -1.5 5.0 Excluding global commodities (i.e. Metals and O&G), the MOFSL Universe and
Almn (US$/MT) 2,291 -2.6 -2.5 Nifty should post 31% and 23% YoY earnings growth, respectively, in 4QFY23.
Currency Close Chg .% CYTD.%  We have carried out several important changes in our model portfolio that are
USD/INR 82.0 -0.4 -0.9 detailed below. We maintain our OW stance on Financials, Capex and Autos
USD/EUR 1.1 0.0 1.9 and upgrade Consumption to OW. We are Neutral on IT and Healthcare while
USD/JPY 131.3 -0.9 0.2 we retain our UW stance on Metals, Energy and Utilities even as we reduce
YIELD (%) Close 1MChg CYTD chg our UW view on Energy. We have raised weights in HDFC Bank, ITC and RIL.
10 Yrs G-Sec 7.3 -0.04 -0.1 We have added M&M Financial, Indian Hotels, Vedant Fashions, M&M, Bharat
10 Yrs AAA Corp 7.7 -0.04 0.0 Forge & Godrej Properties in the model portfolio.
Flows (USD b) 5-Apr MTD CYTD
FIIs 0.10 0.17 -2.4 Research covered
DIIs -0.12 -0.16 10.1
Volumes (INRb) 5-Apr MTD* YTD* Cos/Sector Key Highlights
Cash 535 504 527 India Strategy 4QFY23 Preview: India Performers League
F&O 1,65,982 1,78,369 2,14,390 Avenue Supermarts | Godrej Consumer | Cholamandalam Inv. &
Other updates
Note: Flows, MTD includes provisional numbers. Finance | Poonawala Fincorp | Aavas Financials | Equitas Bank
*Average

Chart of the Day: India Strategy | 4QFY23 Preview (India Performers League)
Banks to lead aggregate earnings growth in 4QFY23; while Metals, Telecom, and Cement to drag

31 17 11 7 4 0 0
60 43 30
128 70 67 1 1 3
0 0 1 7 144
2,552

2,408
2,096
MOFSL 4QFY22

Banks-PSU

Consumer

MOFSL 4QFY23
Insurance

Chemicals-Spec

Infra

Metals
Telecom
Auto

Others

Logistics

Staffing
NBFC - Lending

Cement
NBFC - Non
Banks-PVT

Media
Oil & Gas

Retail
Real Estate

Technology

Healthcare

Lending

PAT (INRb)
PAT (INRb)

Research Team (Gautam.Duggad@MotilalOswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 In the news today

Kindly click on textbox for the detailed news link

1 2
Monetary policy: RBI on tight India's 2022-23 steel exports slump to five-year low, imports at
rope to balance between four-year high
inflation, economic growth; India, the world's second-biggest producer of crude steel,shipped 6.7
25% bps rate hike in offing million tonnes of finished steel in 2022/23, adecline of 50.2% on the year
Since May last year, RBI has hiked and the lowest since 2018/19, the data showed
the repo rate six times in a row --
taking the total hike to 250 bps.
The repo rate has shifted from 4%
to a four-year high of 6.50%

3 4
India services growth slows Stagnant milk output: Dairy
down in March after 12-year imports may be allowed after
high in Feb a decade
After more than a decade, India
5
No change in employment seen
neither in services nor in may look at importing dairy Reliance Retail brings Nykaa’s
manufacturing, says PMI survey products, if needed, as there is a competition, launches omni-
supply constraint for such items channel beauty retail
due to milk production remaining platform Tira
stagnant in the last fiscal year, Along with inaugurating the Tira
Animal Husbandry and Dairy app and website, Reliance Retail
Secretary Rajesh Kumar Singh told announced the opening of its
reporters on Wednesday. flagship Tira store at Jio World
Drive in Bandra Kurla Complex in
Mumbai.

6 7
Nykaa expects over 30 pc Office leasing touches 12.6
growth in FY23 revenue million sq ft between
Nykaa had registered about a 33 January-March: CBRE
per cent year-on-year increase in Bangalore, Delhi-NCR and
consolidated revenue to Rs Chennai accounted for 62
1,462.82 crore, while its percent of the overall
consolidated profit plunged by transaction activity during the
70.75 per cent to Rs 8.48 crore quarter.
for the third quarter ended
December last year.

6 April 2023 2
 India Strategy | Indian Performers League

India Strategy
BSE Sensex: 58,992 Nifty 50: 17,360

Indian Performers League

4Q earnings healthy but lopsided; BFSI and Autos to take the lead

FY23 opens up a Pandora's Box of hardships…

A plethora of challenges, e.g., geopolitical tensions with the onset of Russia-Ukraine
conflict, weak global macros, higher inflation, and significant FII outflows from India
plagued FY23 to the core. The fiscal year turned out to be highly volatile and ended
with higher interest rates, reallocation of FII flows from India to other emerging
markets (trading at a discount to India), domestic consumption slowdown in 2HFY23
as well as the US and European banking crises. The intent of the global central banks
to raise interest rates aggressively – to curb inflation and slow down growth – appears
to have started playing out, as evident from the economic growth contraction across
countries even as inflation remains stubbornly high.
PAT growth for the MOFSL …but when things look black, there's always a silver lining
universe (YoY %) The only solace in an otherwise hard time can be derived from the fact that
PAT growth YoY (%) corporate earnings were healthy during 9MFY23. Therefore, despite multiple
14.9 headwinds at play, Nifty outperformed the world markets during the first nine
12.9
months of FY23 and closed flat by end of the fiscal year. This was primarily
underpinned by an expected resilient 12% YoY earnings growth for Nifty in FY23E on
1.5 a high base of 34% YoY growth in FY22.

Value theme remains in vogue; BFSI, Automobiles, and Utilities outperform

In an era of higher interest rates, growth stocks suffered the most – especially the
-8.3 stocks that disappointed on profit expectations and those with long-duration cash
Dec-22
Jun-22

Sep-22

Mar-23E

flows. Hence, this marked the comeback of Value as a theme. Sectors with
reasonable valuations (P/E <20x) and resilient earnings, viz., Financials, Automobiles
and Utilities outperformed while global commodities (Metals and O&G), Healthcare
and Technology dragged. Consumer sector’s performance was disproportionately
led by ITC, the best performing Nifty stock in FY23. Among Nifty companies in FY23:
ITC, M&M, Britannia, NTPC and HUL were the top 5 performers while Wipro, Tech
Mahindra, Divi’s Lab, Hindalco and Bajaj Finserv were the key laggards. Further,
Top 5 MOFSL universe FY23 was a year of reality check for the new age technology companies (Nykaa,
companies to account for 72% Zomato, PB Fintech, Delhivery, etc.) as well, which saw significant price correction in
of incremental PAT in 4QFY23 the range of 20-60% YoY, after the euphoria in FY22.

19% PAT delta (INR b) FY24 offers a challenging pitch for corporate earnings
As we usher in FY24, there are three important variables that will dominate investor
60.5 15% 15%
12% conversations on corporate earnings in our view.
48.0 47.3
38.6
10% First, after a spectacular run for five years where the earnings surged ~5x to INR2.1t in
30.3 FY23 from INR450b in FY18, the growth in BFSI earnings will now normalize as the bulk
of the benefits of lower credit costs from asset quality clean-up and recovery is
behind. This coupled with higher deposit costs and consequent cap on NIMs will result
Interglobe
Aviation
BPCL

Tata Motors
State Bank

IOC

in earnings normalization. Second, the domestic consumption slowdown has become

well-entrenched in both Staples as well as Discretionary sectors with a very few
exceptions. Thus, the onset and progress of monsoon assume importance given the
subdued rural consumption backdrop. Third, the weak global growth and higher

6 April 2023 3
 Five Nifty companies to interest rates coupled with flux in the US and European Banking sectors have earnings
account for 82% of implications for globally-linked sectors such as Commodities and Technology, which
incremental PAT in 4QFY23 together comprised ~40% of Nifty profit pool in FY23.

27% PAT delta (INR b)

FII flows may not reverse in the near term; DII flows resilient
22% FII outflow stood at USD6b in FY23 after an outflow of USD17b in FY22; while DIIs
60.5
48.0 14%
saw an all-time high net inflow of USD31b in FY23 (USD27b inflows in FY22). We do
10% not see any reversal in the direction of FII flows in the near term given the
9%
30.3 challenging global macros coupled with still rising interest rates in the US. Any
21.4 20.7 respite in the US inflation print and pause by the US Fed in the forthcoming policy
meeting can augur well, in our view.
Tata Motors
BPCL

ICICI Bank
State Bank

ONGC

Absolute valuations reasonable; relative premium elevated

After a flat FY23, Nifty now trades at ~18x one-year forward P/E, which is a decent
climb-down from the level of 21x seen at the beginning of FY23. Sectors which began
the year at elevated valuations - IT, Consumer, and select Private Financials – have
THEME 2023 REPORTS seen moderation in the valuations multiples during the year. That said, while absolute
valuations are reasonable and well within the range of long period average (LPA)
India Strategy:
multiples, the relative valuations for MSCI India are still at an 82% premium v/s MSCI
Automobiles – Back from
the brink EM. This compares with the LPA of 67%. While the RBI has raised rates by 250bp, the
10-year yield has increased ~50bp in FY23. Given this context, we believe the relative
equity v/s bond valuations are now far more palatable than at the beginning of FY23.

Earnings highlights – 4QFY23 | BFSI and Autos continue to lead the charge;
Metals remain a drag
 We expect MOFSL earnings to rise 15% YoY while Nifty earnings are likely to
grow 14% YoY in 4QFY23. Earnings growth would be fueled by BFSI and Auto
sectors, which are likely to rise 37% and 70% YoY and contribute ~70% and
~20% of incremental YoY earnings for MOFSL Universe in 4QFY23, respectively.
IT, Consumer and O&G sectors are expected to post 11%, 10% and 16% YoY
growth, respectively, during the quarter.
 Earnings performances for both MOFSL Universe as well as Nifty in 4QFY23 are
likely to be lopsided and led by a few heavyweights. Five companies within
MOFSL Universe (SBI, IOC, BPCL, Indigo and Tata Motors) are expected to
THEME 2023 REPORTS
contribute 72% of the incremental YoY accretion in earnings. Similarly within
India Strategy: Bank v/s IT: Nifty, five companies (SBI, ICICI Bank, ONGC, Tata Motors, and BPCL) are likely
Their roles in alpha creation!
to contribute 82% of the incremental YoY accretion in earnings.
 Sales and EBITDA of MOFSL Universe are likely to grow 9% and 13%, while for
Nifty, we expect Sales and EBITDA to rise 9% and 16%, respectively.
 The aggregate performance of MOFSL Universe is likely to be marred by a sharp
drag from Metals, which is likely to report a 35% YoY earnings decline. Excluding
global commodities (i.e. Metals and O&G), the MOFSL Universe and Nifty should
post 31% and 23% YoY earnings growth, respectively, in 4QFY23.
 Cement and Specialty Chemicals are expected to report 8% and 6% YoY earnings
decline while Healthcare should post a modest 9% YoY growth in 4QFY23.
 EBITDA margin is projected to contract 1000bps YoY for MOFSL Universe (ex-
OMCs and Financials) to 19.6%. The EBITDA margin for Nifty companies,
excluding Financials and OMC, is likely to stay flat YoY to 21.9% during the
quarter.

6 April 2023 4
  FY23 earnings highlights: The MOFSL Universe is likely to post sales/EBITDA/PAT
growth of 23%/7%/10% YoY in FY23. While Auto and BFSI are the key growth
drivers, with 107% and 56% YoY earnings growth, global commodities such as
Metals and O&G will be the prime drags with 44% and 13% earnings decline YoY,
respectively.
 Reduce FY24 Nifty EPS estimate by 1.5%: We have maintained our FY23 Nifty
EPS at INR812 but cut our FY24/FY25 EPS estimates by 1.5%/2.2% to INR978/
INR1,119. We now forecast the Nifty EPS to grow 12% in FY23. Financials alone
are likely to account for 82% of the incremental FY23E earnings growth for Nifty.
Ex-BFSI, we expect Nifty FY23 earnings to grow by a measly 6%; while ex-Metals
and O&G, Nifty FY23 earnings are expected to post 23% YoY growth.
MOFSL Top Ideas:
 Large-caps – ICICI Bank, ITC, L&T, M&M, Infosys, Ultratech and ONGC.
 Mid-caps – Ashok Leyland, Vedant Fashion, Metro Brands, MMFS, APL Apollo,
and Godrej Properties.

Model portfolio: Key changes

The correction and breather in markets, especially broader markets, have thrown up
interesting opportunities and made the risk-reward relatively more favorable. We
have carried out several important changes in our model portfolio that are detailed
below. We maintain our OW stance on Financials, Capex and Autos and upgrade
Consumption to OW. We are Neutral on IT and Healthcare while we retain our UW
stance on Metals, Energy and Utilities even as we reduce our UW view on Energy.
 Financials: We reiterate our OW stance on Financials and remain significantly
OW on PSU Banks. After the underperformance over the last three years, we are
raising weights in HDFCB, which has maintained solid momentum in business
growth. Deposit growth has been particularly impressive and this positions the
bank well ahead of the merger while also enabling healthy growth trends for the
merged entity. Stable CASA ratio amid heightened competition for liabilities and
steady trends in Retail and Commercial Banking will support fee income and
margins. Within NBFC, we are adding Mahindra Financials to the model portfolio.
We believe that the various strategic initiatives undertaken by the management,
if executed correctly, have the potential to script a credible transformation.
 IT: There is no change in our stance. We are neutral with the entire weight being
allocated to large-caps: Infosys, TCS and HCL Tech.
 Consumption: In Staples, we continue to maintain our weights in ITC, Britannia
and GCPL. In discretionary, our long-standing preference with Titan remains. We
are reintroducing Indian Hotels to the portfolio. Hotels’ business cycle remains
favorable and Indian Hotels is poised for strong growth fueled by improvement
in ARR and occupancy, higher income from management contracts and launch
of new brands. We are also adding Vedant Fashions in our model portfolio. It
has established itself as a strong and dominant brand within the highly
underpenetrated and unorganized ethnic wear segment (~20% branded). We
expect the company to report a revenue/PAT CAGR of 21% /22% over FY23-25,
driven by 15% footprint additions, limited competition, growing cultural pull and
a strong brand recall.
 Automobiles: We are adding M&M to the model portfolio since we find its risk-
reward quite attractive as core valuations are cheap at 12.5x/11.0x FY24E/FY25E
Core EPS. While the tractor business may see some near-term headwinds, the

6 April 2023 5
 recent stock price correction is largely factoring in the weak tractor cycle in FY24E.
We are also adding BHFC to the portfolio, which has been expanding its revenue/
profit pool through the addition of aluminum forging, a new industrial and
defense (ex-guns) segment. This will not only diversify its revenue streams further
but also be the key driver of consolidated revenue over the next five years.
 Oil & Gas: We are raising our weights in Reliance Industries as we believe its
valuations now offer a better risk-reward after the recent underperformance.
Petrochem margins (PE/PP/PVC) have improved 3%/10%/9% QoQ on the back
of improved demand from China and would benefit the standalone segment.
 Real Estate: Post-sharp correction and underperformance, we are now adding
Godrej Properties to the model portfolio. With 60% correction in stock price
since Jan’22 and the best ever year from business development perspective, the
risk-reward of the stock is relatively more attractive now, in our view. The
company also expects FY24 to be another strong year for business
development.

6 April 2023 6
 5 April 2023
Update | Sector: Retail

Avenue Supermarts
BSE SENSEX S&P CNX
59,689 17,557 CMP: INR3,654 Neutral
Bloomberg DMART IN
Equity Shares (m) 648
Moderate growth in revenues; 18 new stores added
M.Cap.(INRb)/(USDb) 2368.9 / 28.9 D-Mart released its business update for 4QFY23. Here are the key
52-Week Range (INR) 4606 / 3185 highlights:
1, 6, 12 Rel. Per (%) 6/-20/-9
12M Avg Val (INR M) 1525 Standalone revenue up 20% YoY
Free float (%) 25.0
 Standalone revenue grew 20.1% YoY to INR103.4b, 10.5% below our
Financials Snapshot (INR b) estimate.
Y/E March (Consol) FY23E FY24E FY25E  The revenue growth was largely driven by area additions of ~17% YoY,
Sales 428.9 574.9 675.3 while store growth stood at 14% YoY. Store additions witnessed slower
EBITDA 37.4 53.5 63.1
growth than area additions primarily due to larger store sizes of the
Adj. PAT 24.6 34.5 40.5
EBITDA Margin (%) 8.7 9.3 9.3 newly opened stores.
Adj. EPS (INR) 38.0 53.3 62.5  The blended revenue per sqft (annualized) remained flattish YoY at
EPS Gr. (%) 65.1 40.1 17.3 INR31,685. This was on a lower base of 4QFY22, when the revenue
BV/Sh. (INR) 258.6 313.9 378.8 declined 8% YoY, due to underperformance within the non-food
Ratios
Net D:E -0.2 -0.2 -0.2
category. Our calculation indicates LTL growth of low single digits for
RoE (%) 16.5 19.3 18.7 4QFY23.
RoCE (%) 15.7 17.7 17.0  DMART has seen a strong 73% area addition over FY20-23 (20% CAGR)
Payout (%) 0.0 0.0 0.0 and a standalone revenue growth of 74%. The moderate revenue growth
Valuations
could mainly be attributed to 1) the addition of bigger stores in the last
P/E (x) 89.5 63.9 54.4
EV/EBITDA (x) 58.8 41.0 34.5 couple of years (14% increase in average store size) and 2)
EV/Sales (X) 5.1 3.8 3.2 underperformance within the non-food segment.
Div. Yield (%) 0.0 0.0 0.0
FCF Yield (%) 0.2 0.5 0.8 18 new stores added in 4QFY23
 DMART added 18 stores (in-line) in 4QFY23, taking the total count to 324
stores.
 In FY23, the company has added a total 40 stores.

Valuation based on Dec’24E EBITDA

Methodology Driver (INR b) Multiple Fair Value (INR b) Value/sh (INR)
EBITDA Dec'24 EV/EBITDA 61 40 2,454 3,789
Less Net debt -7 -11
Total Value 2,461 3,800
Shares o/s (m) 648
CMP (INR) 3,654
Upside (%) 4
Source: MOFSL, Company
Trajectory in store additions
Growth –
4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 4QFY20 -
4QFY23
Store count 214 216 220 221 234 246 263 284 294 302 306 324 51%
Store adds 18 2 4 1 13 8 17 21 10 8 4 18
Growth (QoQ) 9% 1% 2% 0% 6% 5% 7% 8% 4% 3% 1% 6%
Total Area (m sq.ft.) 7.8 8 8.2 8.17 8.8 9.44 10.3 11.5 12.1 12.4 12.6 13.5 73%
Growth (QoQ) 12% 3% 2% 0% 8% 7% 9% 12% 5% 2% 2% 7%
Source: MOFSL, Company

6 April 2023 7
 5 April 2023
Update | Sector: Consumer

Godrej Consumer Products

BSE SENSEX S&P CNX
59,689 17,557 CMP: INR970
Bloomberg GCPL IN
Equity Shares (m) 1022
Sales better than expected
M.Cap.(INRb)/(USDb) 991.7 / 12.1 GCPL released its pre-quarterly update for 4QFY23. Here are the key highlights:
52-Week Range (INR) 973 / 709
1, 6, 12 Rel. Per (%) 5/7/28  Macros:
12M Avg Val (INR M) 1115
 Demand trends remained steady during the quarter.
Free float (%) 36.8
 FMCG sector is expected to witness gradual recovery.
Financials Snapshot (INR b)
Y/E Mar 2023E 2024E 2025E  India business:
Sales 132.9 150.3 169.4
 Domestic branded business is likely to report volume and value growth in
Sales Gr. (%) 8.2 13.1 12.7
teens.
EBITDA 25.0 31.6 38.2
Margins (%) 18.8 21.0 22.6  Both Home Care and Personal Care segments may witness double-digit

Adj. PAT 16.7 23.0 27.4 volume and value growth.

Adj. EPS (INR) 16.3 22.5 26.8
EPS Gr. (%) -7.1 38.1 19.3  Indonesia business:
BV/Sh.(INR) 121.3 131.8 139.6  This business may post a constant currency sales growth in mid-single
Ratios
digit.
RoE (%) 13.9 17.8 19.8
 Ex-Hygiene portfolio, the business may see close to double-digit growth.
RoCE (%) 14.9 18.1 20.3
Payout (%) 49.1 53.4 70.8
Valuations  GAUM (Godrej Africa, the US, and the Middle East) business:
P/E (x) 59.5 43.1 36.1  The strong sales momentum was paused during the quarter due to
P/BV (x) 8.0 7.4 6.9 elections and demonetization in Nigeria. However, a strong sales recovery
EV/EBITDA (x) 39.4 30.9 25.4
was witnessed in Mar’23.
Div. Yield (%) 0.8 1.2 2.0
 It is likely to post mid-single digit sales growth on constant currency basis.
Shareholding pattern (%)
As On Dec-22 Sep-22 Dec-21  Consolidated level:
Promoter 63.2 63.2 63.2
 Sales growth in INR terms is expected to be in double digits YoY.
DII 6.7 6.5 5.0
 Volumes to grow in mid-single digits YoY.
FII 24.0 24.4 25.6
Others 6.0 5.9 6.1  EBITDA to grow in high double digits YoY.

FII Includes depository receipts

Valuation and view:
Stock’s performance (one-year)  With investments by the new CEO being focused on boosting growth in the
Godrej Consumer high-margin, high-RoCE domestic business, the company’s medium-term
Nifty - Rebased earnings growth outlook is strong.
1,100
 Valuation at 36x Mar’25E EPS is attractive, given the potential earnings CAGR
900 of ~16% over FY22-25E. Maintain BUY with a TP of INR1,115.
700

500
Apr-22

Apr-23
Oct-22
Jul-22

Jan-23

6 April 2023 8
 5 April 2023
Update | Sector: Financials

Cholamandalam Inv. & Finance

BSE SENSEX S&P CNX
59,689 17,557
CMP: INR782 Buy
Bloomberg CIFC IN Strong disbursement momentum; collections healthy
Equity Shares (m) 820
M.Cap.(INRb)/(USDb) 642.4 / 7.8 4Q billing collections at 130%, but lower 8pp YoY
52-Week Range (INR) 818 / 594
1, 6, 12 Rel. Per (%) 4/4/13 CIFC released its 4QFY23 business update. Here are the key
12M Avg Val (INR M) 1214 takeaways:
Free float (%) 48.5
 CIFC reported total disbursements of ~INR210b (5% beat) for 4QFY23,
growing 65% YoY and 20% QoQ. FY23 total disbursements grew 87% YoY
Financials & Valuations (INR b)
to ~INR665b.
Y/E March FY23E FY24E FY25E
Total Income 71.1 85.7 102.6  This strong disbursement momentum was broad-based across Vehicle
PPP 42.9 53.1 65.5 Finance (VF), LAP, Home Loan, and the three newer lines of businesses.
PAT 25.6 31.2 38.3  Newer businesses contributed ~22% (PY: 12%) to the disbursement mix in
EPS (INR) 31.2 38.0 46.6 4QFY23 and ~21% (PY: 7%) in FY23.
EPS Gr. (%) 19 22 22
 Disbursements for VF, LAP, and Home Loans grew 56%/68% and 102% YoY
BV (INR) 171 206 250
Valuations in FY23. Newer businesses grew by >4x YoY in the year.
NIM (%) 7.2 6.8 6.8  Billing collection efficiency for 4QFY23 stood at 130% (PY: 138%).
C/I ratio (%) 39.7 38.0 36.2  CIFC’s liquidity position continued be strong with cash and cash
RoAA (%) 2.6 2.5 2.6 equivalents at ~INR52b as of Mar’23 (PY: INR55.8b). The total liquidity
RoE (%) 19.9 20.1 20.4
position (including undrawn sanctioned lines) stood at INR67.5b (PY:
Payout (%) 7.4 7.9 7.5
Valuations INR74b).
P/E (x) 25.0 20.5 16.8  CIFC is the best play among asset financiers. It has delivered healthy
P/BV (x) 4.6 3.8 3.1 growth in disbursements/AUM by strategically shifting weights across its
Div. Yield (%) 0.3 0.4 0.4 diversified product segments.
 Its foray into Consumer and MSME lending and the new vigor in SME have
opened up exciting new possibilities. CIFC is expected to continue
delivering strong loan growth, with benign credit costs. We have a positive
outlook on the stock.

Disbursement grew 20% QoQ; CE stood at 130%

Disbursements (INR m) 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 YoY % QoQ %
Total disbursements 1,27,180 1,33,290 1,46,230 1,75,590 2,10,200 65 20
Vehicle Finance 87,850 85,620 85,020 1,04,460 1,21,900 39 17
LAP 18,700 20,360 22,460 22,550 27,620 48 22
Home loans 5,490 6,110 7,430 10,720 14,050 156 31
New businesses 15,140 21,210 31,330 37,860 46,630 208 23
-MSME 9,269 10,300 14,730 17,820 21,040 127 18
-CSEL 10,540 15,790 18,680 23,630 26
-SBPL 370 810 1,370 1,960 43
Collection Efficiency 138% 130% -8pp
Liquidity (INR b) 55.8 52.2 -6%
Total Liquidity (INR b)
74.0 67.5 -9
(incl. Undrawn sanctions)
Source: MOFSL, Company

6 April 2023 9
 Contribution of newer businesses to disbursement mix improving
Disbursements Mix (%) 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23
Vehicle Finance 69.1 64.2 58.1 59.5 58.0
Home Equity 14.7 15.3 15.4 12.8 13.1
Home loans 4.3 4.6 5.1 6.1 6.7
New businesses 11.9 15.9 21.4 21.6 22.2
-MSME 7.7 10.1 10.1 10.0
-CSEL 7.9 10.8 10.6 11.2
-SBPL 0.3 0.6 0.8 0.9
Total 100 100 100 100 100
Source: MOFSL, Company

Disbursements grew 87% YoY

Disbursements (INR m) FY22 FY23 YoY %
Total Disbursements 3,54,890 6,65,320 87%
Vehicle Finance 2,54,390 3,96,990 56%
LAP 55,360 92,990 68%
Home loans 18,960 38,300 102%
New businesses 26,180 1,37,040 423%
-MSME 19,241 63,880 232%
-CSEL 68,650
-SBPL 4,510
Disbursements Mix (%) FY22 FY23
Vehicle Finance 71.7 59.7
Home Equity 15.6 14.0
Home loans 5.3 5.8
New businesses 7.4 20.6
-MSME 5.4 9.6
-CSEL 10.3
-SBPL 0.7
Total 100 100
Source: MOFSL, Company

6 April 2023 10
 5 April 2023
Update | Sector: Financials

Poonawalla Fincorp
BSE SENSEX S&P CNX
59,689 17,557 CMP:INR291 Buy
Bloomberg POONAWAL IN Disbursements and AUM growth robust
Equity Shares (m) 765
M.Cap.(INRb)/(USDb) 223.5 / 2.7 Asset quality in line; credit costs to remain benign
52-Week Range (INR) 344 / 209
Poonawalla Fincorp (PFL) released its 4QFY23 business update. Here are the
1, 6, 12 Rel. Per (%) 0/-9/7
key takeaways:
12M Avg Val (INR M) 1198
Free float (%) 38.0
Standalone
Financials Snapshot (INR b)  Standalone disbursements stood at ~INR63.7b in 4QFY23 (v/s ~INR33.7b
Y/E March FY23E FY24E FY25E
QoQ and INR25.4b in 4QFY22), growing 90% QoQ / 150% YoY with all
Net Total Income 14.2 20.7 28.7
PPOP 6.0 12.9 20.2
disbursements coming through the organic route.
PAT 5.7 9.3 13.1  Standalone disbursements for FY23 stood at INR157.5b, rising 110% YoY.
EPS (INR) 7.5 12.1 17.1  Despite a sharp reduction in discontinued loan book, FY23 standalone AUM
EPS Gr. (%) 95.4 62.0 40.9 grew 37% YoY/16% QoQ to ~INR161b. Discontinued book reduced to
Standalone BV (INR) 82 134 151 INR6.25b as of Mar’23 (v/s INR29.7b in Mar’22).
Ratios
 The healthy 90% QoQ disbursement growth suggests improved traction in
NIM (%) 9.4 10.2 10.2
C/I ratio (%) 57.7 37.5 29.8
customer acquisition. PFL has demonstrated its ability to scale up the loan
RoAA (%) 3.8 4.6 4.8 book while shrinking its discontinued book.
RoE (%) 9.6 11.2 12.0  Direct Digital Program (DDP) continued a healthy trajectory, contributing
Payout (%) 10.7 8.2 11.7 81% of the total disbursements in 4QFY23 v/s 66% in 3QFY23, 54% in
Valuations 2QFY23, 39% in 1QFY23 and 24% in 4QFY22.
P/E (x) 38.9 24.0 17.0
 The company is on track to achieve Vision 2025 even on a standalone basis
P/BV (x) 3.6 2.2 1.9
Div. Yield (%) 0.3 0.3 0.7
with focus on growing loan book in a risk-calibrated manner and delivering
healthy profitability.
 The company reported that consolidated GNPA and NNPA should be below
1.55% and 0.85%, respectively, as of Mar’23. PFL further guided that NNPA
would remain below 1%, in line with the Management Vision 2025.
 Liquidity was healthy and comfortable at ~INR30b (~19% of the standalone
AUM) as of FY23.

Standalone disbursements grew ~90% QoQ… …leading to AUM growth of 16% QoQ
Standalone disbursements (INR b) YoY growth (%) Standalone AUM (INR b) YoY growth (%)
37
1688 28
21
63.7 15 17

25.4 29.0 33.7 102 104 -3

9.4 13.1 31.1 -6
289 170 157 151 -17
-13 57 95 42 -20
14.8 21.9 113 109 118 126 132 139 161
FY21

FY22

FY23
3QFY23

9MFY22

9MFY23
4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

4QFY23

1QFY22

1QFY23
1HFY22

1HFY23

Source: MOFSL, Company Source: MOFSL, Company

6 April 2023 11
 5 April 2023
Update | Sector: Financials

AAVAS Financiers
BSE SENSEX S&P CNX
59,689 17,557
CMP: INR1,672 Neutral
Bloomberg AAVAS IN Strong disbursement momentum leads to better AUM growth
Equity Shares (m) 78 Asset quality in line with GS3 < 1%
M.Cap.(INRb)/(USDb) 132.2 / 1.6
 AAVAS Financiers (AAVAS)’s disbursements were healthy and grew 17% YoY
52-Week Range (INR) 2633 / 1590
1, 6, 12 Rel. Per (%) -8/-26/-32 to ~INR15b in 4QFY23. FY23 disbursements stood at ~INR49.4b, +37% YoY.
12M Avg Val (INR M) 230  AUM grew 24% YoY/8% QoQ to ~INR141b in 4QFY23 (ahead of MOSLe:
Free float (%) 60.9 ~22% YoY). AUM growth was driven by higher disbursements and lower
run-offs during the quarter.
Financials & Valuations (INR b)  The annualized run-off in AAVAS’s loan book moderated to ~15% (v/s run-
INR b FY23E FY24E FY25E
NII 7.9 9.5 11.9
rate of 21% in 4QFY22/3QFY23 each) suggesting BT-OUTs have receded.
PPP 5.4 6.8 9.0  GS3 declined QoQ to 0.96% (PQ: 1.13%) and 1+DPD witnessed minor
PAT 4.2 5.1 6.8 sequential improvement and declined to <4%.
EPS (INR) 53.2 65.1 86.0
 The company added 25 branches in 4QFY23; total branches stood at 346 as
EPS Gr. (%) 18 22 32
BV/Sh. (INR) 409 474 560 of Mar’23.
Ratios (%)  The securitization loan book in 4QFY23 amounted to ~INR2.9b (PY: INR2.2b
NIM 6.3 6.1 6.1
and PQ: INR3.0b).
C/I ratio 46.5 44.2 40.5
Credit cost 0.04 0.20 0.19  AAVAS has maintained healthy liquidity levels of ~INR45b as of FY23.
RoA 3.5 3.5 3.8  Notably, its 1+DPD remains below sub-5% (comfortable level), driven by
RoE 13.9 14.7 16.6 prudent underwriting and efficient collection efforts. The company’s customer-
Valuation
P/E (x) 30.7 25.1 19.0 centric approach with widespread presence has helped it achieve steady
P/BV (x) 4.0 3.4 2.9 disbursement growth.
 As AAVAS invests in sourcing, distribution, and technology, it will embark on a
strong disbursement growth trajectory in FY24E. AAVAS is well poised to take
advantage of the huge opportunity in the low-ticket housing finance space.
 The stock trades at 3.4x FY24E P/BV and captures its strong growth
potential and superior asset quality franchise.

Disbursements grew 17% YoY… …driving AUM growth of 24% YoY

Disbursements (INR b) Growth (%) AUM (INR b) Growth (%)

136 24 24 23 24
117 21 21 21 20 20
17 35 24 27 27 26 17

10.1 4.6 9.0 9.5 12.9 10.9 11.5 12.0 15.0 95 96 101 106 114 119 125 131 141
FY21

FY23
FY22
9MFY22

9MFY23
1QFY22

1QFY23
1HFY22

1HFY23
4QFY22
4QFY21

1QFY22

2QFY22

3QFY22

1QFY23

2QFY23

3QFY23

4QFY23

Source: MOFSL, Company Source: MOFSL, Company

6 April 2023 12
 6 April 2023
Company Update | Sector: Financials

Equitas Small Finance Bank

Bloomberg EQUITASB IN
CMP: INR67 Buy
Equity Shares (m) 1110
M.Cap.(INRb)/(USDb) 74 / 0.9 Robust growth in advances; strong traction in deposit
52-Week Range (INR) 78 / 38
1, 6, 12 Rel. Per (%) -12/32/24 EQUITASB released its business update for 4QFY23. Here are the key
12M Avg Val (INR M) 184 highlights:

Financials & Valuations (INR b)  EQUITASB reported a healthy growth in gross advances at 36.2% YoY and
Y/E March FY23E FY24E FY25E 12.6% QoQ to INR281b. The growth was supported by robust
NII 25.1 31.6 39.4 disbursements, which grew 23.3% QoQ to INR59b (+80.5% YoY).
OP 11.0 14.6 19.1
NP 5.6 8.0 10.6  On the liability front, deposit traction remained strong, growing 33.9% YoY
NIM (%) 8.8 8.7 8.7 and 8.5% QoQ to ~INR254b, with CASA deposits up 8.9% YoY (flat QoQ) and
EPS (INR) 4.8 7.2 9.5 term deposits up 61.0% YoY (16.5% QoQ). Accordingly, the CASA ratio
BV/Sh. (INR) 46 52 60
ABV/Sh. (INR) 43 49 57
moderated to 42.3%% (down 400bp QoQ).
Ratios  Retail term deposits grew 7% QoQ (up 25% YoY) to ~INR89b. Bulk term
RoE (%) 12.1 14.9 17.1 deposits rose 34% QoQ (up 188% YoY) to INR57.6b.
RoA (%) 1.9 2.1 2.2
 The cost of funds increased 25bp QoQ to 6.66% in 4QFY23 from 6.41% in
Valuations
P/E(X) 14.0 9.2 7.0 3QFY23.
P/BV (X) 1.5 1.3 1.1
P/ABV (X) 1.5 1.4 1.2

AUM grew 12.6% QoQ/36.2% YoY to INR281b Disbursements remained strong at INR59b

35 33 37 AUM (INR b) YoY Growth (%) 36 Disbursements (INRb)

31
27 26 27
22 20
19 17 15
13 13 15
24.1

12.7

59.2
20.2

30.8
24.0

19.0
24.6
25.4

31.5
28.6
32.8
32.4
38.5
48.0
167

197

281
123
133
146
154
156

174
179
178
190

206
217
228
249

5.6
2QFY21

3QFY22

4QFY23
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21

3QFY21
4QFY21
1QFY22
2QFY22

4QFY22
1QFY23
2QFY23
3QFY23

2QFY20

1QFY22

4QFY23
1QFY20

3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21

2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23

Source: MOFSL, Company Source: MOFSL, Company

Deposits grew 8.5% QoQ and 34% YoY to INR254b CASA ratio moderated to 42.3% in 4QFY23

Deposit (INR b) YoY growth (%) CASA ratio (%, RHS)

254
234

60
217
204

51 52
190
179

44 45
40
33 29 29 31 34
20 19 20
13 16
25.0

39.7
24.5
22.4
20.9
20.5
20.0
25.2

34.2

45.3
50.8
52.0
51.7
48.1
46.2
42.3
159
164
105

171
100

181
91

118
129
4QFY20 108

3QFY21

1QFY22
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21

4QFY21

2QFY22
3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23
2QFY22
1QFY20
2QFY20
3QFY20

1QFY21
2QFY21
3QFY21
4QFY21
1QFY22

3QFY22
4QFY22
1QFY23
2QFY23
3QFY23
4QFY23

Source: MOFSL, Company Source: MOFSL, Company

6 April 2023 13
 In conversation

Bajaj Auto: Q1FY24 will be better than Q4, see turnaround

happen July onwards; Rakesh Sharma, Executive Director
 Domestic business growth rate could be 6-8% in the next 6 months
 See 10,000 Electric Vehicle units per month eventually in next 3-6 months
 We bottomed-out in Feb & have recovered since March
 Q1FY24 will be better than Q4, see turnaround happen July onwards
 Forex availability is more of an issue than demand
 Have seen a turnaround in the largest export market which is Nigeria
 EV space saw strong sales in March

VST Tillers Tractors: Looking at 15-20% growth in tractors & a

15% growth in the tiller segment. Should be able to do margin of
12-14% in FY23; Antony Cherukara, CEO
 Looking at 15-20% growth in tractors & a 15% growth in the tiller segment. Should
be able to do margin of 12-14% in FY23
 March saw an uptick in numbers due to higher funds from states
 Monthly production rate till February has been 3,000 tillers & 500-600 tractors
 Q1FY24 should be better than Q4FY23
 Looking at margin of 11-13% going forward as we enter new markets
 Capex plan for FY24 is around Rs.70 cr

SpiceJet: Restructuring & Growth Plan Well On Track;

Ajay Singh, CEO
 Long standing demand of bringing ATF under GST ambit will catapult growth in the
sector
 Reduction of VAT on ATF by 19 states is good progress
 Need to work towards making India a hub for global traffic for connecting Asia to
Europe
 Company going through its restructuring and growth plan
 Confident that company will emerge stronger

6 April 2023 14
 NOTES

6 April 2023 15
 Explanation of Investment Rating
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company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that
is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you
solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement
within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such
restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use
of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees
responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex,
New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 71881000. Details of Compliance Officer: Neeraj Agarwal, Email Id: na@motilaloswal.com, Contact No.:022-40548085.
Registration details of group entities.: Motilal Oswal Financial Services Ltd. (MOFSL): INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412 . AMFI: ARN .: 146822. IRDA Corporate
Agent – CA0579. Motilal Oswal Financial Services Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Insurance, Bond, NCDs and IPO products. Customer having any query/feedback/ clarification may write to query@motilaloswal.com. In case of
grievances for any of the services rendered by Motilal Oswal Financial Services Limited (MOFSL) write to grievances@motilaloswal.com, for DP to dpgrievances@motilaloswal.com.

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