Morning Update –31st October 2022

SSL Research Morning Update 31 st October 2022

Equity Market Update

Expect a positive start for our market today

The benchmark indices during the previous week ended higher though broader markets continued to underperform.
The rally was supported by strong global cues led by the US markets. Friday’s trade, given the truncated week, was
highly volatile but benchmark indices managed to close in green. FIIs net bought Rs 1568.7 cr while DIIs net sold Rs
613.4 cr in the cash market on Friday. The US market on Friday closed sharply higher as Dow Jones is heading for
best ever October month in history and has registered 14.4% gains so far in October given the strong results from
Industrial and Energy stocks while technology stocks continued to disappoint on account of poor guidance. The Asian
cues are largely in green and hence we expect a positive start for our market today.
Key Actionables

 Zydus Lifesciences: The Company has received approval from the USFDA to market Acetaminophen injection
in the US. Acetaminophen injection is indicated to relieve mild to moderate pain and to reduce fever. It is
also used in combination with opioid (narcotic) medications to relieve moderate to severe pain. The drug
will be manufactured at the group’s injectable manufacturing facility at Vadodara- Positive for Zydus
Life scie nce s in the short te r m
 C entrum Electronics: The Company announced a strategic partnership with Israel headquartered Rafael
Advanced Defense Systems. Both companies will collaborate in the field of electronic warfare systems for
the Indian Navy and the Indian Coast Guards- Positive for Ce ntrum Ele ctronics in the short te rm
 PTC Industries Limited (Mcap: Rs 3,691 cr) signed an agreement with BAE Systems at the recent DefExpo
2022 held in Gandhinagar, Gujarat to manufacture titanium castings for the Indian 155mm M777 Ultra -
Lightweight Howitzer (ULH) at PTC Industries' production facility in Lucknow, Uttar Pradesh, India - Positive
for PTC Industrie s in me dium to long te rm
 Acrysil Limited name changed to 'Carysil Limited'; Aim is to have a brand recall, launch of 'CARYSIL' as a global
brand and to enhance its global presence. - Ne utral in the short te rm for Acrysil

2QFY 23 Result Today

Tata Steel, Larsen & Toubro, Bharti Airtel, Supreme Industries, Motherson Sumi Wiring India, Castrol India, Timken
India, Asahi India Glass, LT Foods, Data Patterns (India), Equitas Small Finance Bank, GHCL, Saregama India, TCI
Express.

2QFY 23 result update

 Maruti Suzuki India Ltd

Net Sales grew 47.9%/12.9% YoY/QoQ to Rs 28,543.5 cr while net profit clocked 333.7%/98.9% YoY/QoQ to
Rs 2,061.5 cr. The easing of chip shortages has helped the company to post the highest -ever quarterly sales.
The YoY comparison, especially on half yearly basis, is not comparable due to massive chip shortages during
the previous year of the same period. The company has posted 36.3% YoY growth in volume to 5.17 lakh
units including the export of 63,195 units.

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 The gross margin improved 100 bps to 23.5% due to a drop in raw material costs and favourable impact of
JPY depreciation. RM as % of sales dropped 390 bps to 76.5% thus helping it in margin expansion. The
realization jumped 8.5%/2.1% YoY/QoQ to Rs 5.51l/unit due to the change in product mix (higher sales in
new Alto, Brezza), and price rise during 1Q which partially shifted during the current quarter

The total vehicle order book as of Sep’22 is 4.12 lakh units including 1.3 lakh units for newly launched models.
A high waiting period has been seen in models like Ertiga and Baleno. The recently launched Grand Vitara
has witnessed strong demand and the company will look to add more models to increase its current SUV
market share of 17% going ahead. The chip shortages, though have eased, but is still impacting the volume
as production was impacted by 35,000 units during the quarter. The foundation stone for the company’s EV
battery plant in Gujarat and at Kharkhoda (Haryana) is laid down and the total estimated capex is pegged at
Rs 30,000 cr. The company, for FY23, has planned to spend Rs 7000 cr.
The overall numbers are in line with street expectations. At the current price, the stock is trading at 37.4x/25.3x
of its FY23E/FY24E earnings. The long-term investors may continue to accumulate the stock for a target of Rs
10,500.
 Seshasayee Paper and Boards Ltd: Revenue up 58% YoY/21% QoQ to Rs 530 cr; PAT up 287% YoY/76% QoQ
to Rs 106 cr - Robust set of results; Trading at less than 10x PE multiple; Stock likely to react positively in the
trade today
 Kirloskar Electric: Revenue up 44% YoY/21% QoQ to Rs 126 cr; PAT up 291% YoY/556% QoQ to Rs 22 cr -
Robust set of re sults; Stock like ly to re act positive ly in the trade today
 Indian Oil C orporation: The oil marketing company posted a standalone loss of Rs 272.35 crore for the
quarter ended September FY23, against profit of Rs 6,360 crore in year-ago period and loss of Rs 1,993 crore
in previous quarter, despite getting Rs 10,800 crore of LPG subsidy from the government. More than 50%
rise in other income helped the company minimise loss for the quarter. Revenue from operations grew by
34.5% YoY to Rs 2.28 lakh crore for the quarter- The stock may trade side ways in the short te r m
 NTPC: The Company has reported a 7.4% YoY decline in consolidated profit at Rs 3,417.7 crore for the quarter
ended September FY23 impacted by higher fuel cost, finance cost, loss at joint ventures and lower other
income. Revenue grew by 36% YoY to Rs 44,175 crore compared to 2QFY22. The average tariff rate at Rs
4.77 per unit for 2QFY23 was up from Rs 3.86 per unit in September 2021.- The stock is expected to
outpe rform in the long te rm
 D r Reddy’s laboratories- The company has reported 9%/12% YoY growth in net sales and profit to Rs 6332
and Rs 1114 cr respectively during 2QFY23. EBITDA margin was at 30% versus 23.5% during the same quarter
the previous year. The global generics sales, which is the bulk of business, jumped 18% YoY to Rs 5,595 crore
driven by the launch of the anemia treatment drug Lenalidomide capsules in the US market and sequential
improvement in Russia sales- The numbers are better than street expectations; The stock may react positively
in today’s trade .
 C CL Products India Ltd: The net sales and profit were up 50.5%/17% YoY/QoQ to Rs 337 cr and Rs 57.8 cr
respectively. The EBITDA margin was at 19% for 2QFY23 was 500 bps lower when compared with 2QFY22
due to 71% YoY increase in the raw material costs. Other expenses too jumped 39% YoY to Rs 409 cr- Overall
the performance is on e xpe cte d line ; The stock may outpe rform in the short to me dium te rm
Pledg e Share D etails

 Max Financial Services: Promoter Max Ventures Investment Holdings created a pledge of 8.96 lakh shares
and revoked a pledge of 12.55 lakh shares on Oct. 28.
 C offee Day Enterprises: Promoter V.G.Siddhartha invoked a pledge of 15.64 lakh shares between Oct. 20 and
Oct. 19, Promoter Group Coffee Day Consolidations invoked a pledge of 24,935 shares on Oct. 20.

Insider Trades

 KPI Green Energ y: Promoter & Director Farukbhai Gulambhai Patel bought 850 shares on Oct. 27

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Trading Tweaks / C orporate actions

 Ex-Date Interim Dividend: Sasken Technologies, Gujarat Fluorochemicals, KPI Green Energy, ICICI Securities,
DCM Shriram, Colgate Palmolive, Symphony, Sonata Software, Asian Paints, Nestle India, Hindustan Unilever,
Birlasoft, NACL Industries, Indian Metals & Ferro Alloys
 Ex-D ate D ividend: Embassy Office Parks REIT
 Ex-D ate Face Value Split : TD Power Systems
 Record-D ate Interim D ividend: IIFL Wealth

Fund Flows – C ash Market

 FII (Rs cr): +1568.8

 DII (Rs cr): -613.4
Source: B SE/NSE/Economic Times/Bloomberg Quint/Business Line/Business Standard/Financial Express/Money
control

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