India Daily

March 13, 2025 NIFTY50 [Mar 12]: 22,471

Contents

Special Reports
Theme Report
InterGlobe Aviation: Timing apt to accelerate Europe entry

Daily Alerts
Company Alerts
LIC: Trying times ahead
The Ramco Cements: Most impacted by Tamil Nadu (TN) mining tax
Sector Alerts
Automobiles & Components: Revving down: Domestic two-wheeler demand moderates
Economy Alerts
Economy: Space opening up for deeper rate cut cycle

Private Circulation Only.

This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
 THEME

InterGlobe Aviation (INDIGO) BUY

Transportation
CMP(₹): 4,729 Fair Value(₹): 5,700 Sector View: Attractive NIFTY-50: 22,471 March 12, 2025

Timing apt to accelerate Europe entry Company data and valuation summary
We envisage Indigo adding many more long-haul international destinations Stock data
to Europe beyond the recent additions announced. The timing is apt given
CMP(Rs)/FV(Rs)/Rating 4,729/5,700/BUY
large capacity voids in key European airlines; them diverting capacity to the
52-week range (Rs) (high-low) 5,035-3,079
transatlantic routes (strong yields) away from Asia-Pacific (Russian airspace
Mcap (bn) (Rs/US$) 1,827/21.0
ban) and a marked change in customer preference for direct connections.
ADTV-3M (mn) (Rs/US$) 3,655/41.9
Indigo has several aces up its sleeve—experience gained through
codeshares, impending aircraft additions beyond regular narrow-bodied and Shareholding pattern (%)
strength of a domestic network to pool volumes. We increase P/E multiple to
22X and FV to Rs5,700 (Rs5,400 earlier). International long-haul is a large, 3.3
6.0
2.1
unaddressed market for Indigo and can yield meaningful gains over time.
14.5
49.3
Indigo’s new international routes largely making or breaking monopolies
Indigo has added several international routes over the past years, most of which 24.8

remain monopolistic or duopolistic in manner (see Exhibit 1). Of late, Indigo has
entered the long-haul international segment with destinations such as Promoters FPIs MFs BFI s Retail Others

Manchester and Amsterdam. Manchester is the largest unaddressed market for

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
Price performance (%) 1M 3M 12M
direct connection between the UK and India, and Amsterdam has seen the
Absolute 9 6 46
biggest contraction in hub-connectivity versus pre-pandemic levels. These two
Rel. to Nifty 12 14 45
additions potentially suggest business voids that Indigo would explore more Rel. to MSCI India 12 17 46
across European airports.
Forecasts/Valuations 2025E 2026E 2027E
We envisage Indigo adding more European direct destinations in the near term EPS (Rs) 158.7 236.3 259.2
The overall connectivity for European airports in June 2024 was closer to 2014 EPS growth (%) (25.7) 48.9 9.7
levels and a 14% dip versus pre-pandemic levels (see Exhibits 6-7). A decline in P/E (X) 29.8 20.0 18.2
direct connectivity makes Munich, Vienna and Copenhagen good additions for P/B (X) 22.4 10.6 6.7
Indigo (see Exhibit 10). A sharp decline in hub connectivity makes Paris and EV/EBITDA (X) 8.8 6.5 4.8
Frankfurt good additions for Indigo beyond Amsterdam (see Exhibit 11). Marked RoE (%) 120.7 71.8 44.9
preferences for direct connections by customers (see Exhibits 13-14) will push Div. yield (%) 0.0 0.0 0.0
Indigo to continue adding to the list of cities such as Manchester within Europe. Sales (Rs bn) 799 906 1,028
EBITDA (Rs bn) 165 204 248
Key European airlines focusing more on transatlantic and less on Asia-Pacific Net profits (Rs bn) 61 90 99
Our reading of recent results and commentary of European majors (especially
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
the Lufthansa group) suggests a marked preference for shifting capacities to
Prices in this report are based on the market close of
transatlantic routes, where yields have strengthened meaningfully over the past March 12, 2025
year (see Exhibits 8-9). This is coming at the expense of Asia-Pacific, where
yields are falling given unfair competition from Asian majors (they can fly over
Russian airspace and thus give a better price point).

Indigo has several aces up its sleeve to grow share in international long-haul
Indigo’s codeshare with Qatar Airways (2022) and Turkish Airlines (2022) has
Related Research
given it access to the European market, a learning that it will leverage to expand
in Europe and then potentially to the US (codeshare started late 2023). It is → InterGlobe Aviation: Battles to be fought—
adding wide-bodied aircraft on wet lease and will get access to its own some defense, some offense
A321XLRs (2025) and wide-bodied aircraft (2027). Note that it has the option to
source up to 100 wide-bodied aircraft from Airbus. Lastly, its domestic network
connectivity would also play a key role in long-haul international (see Exhibit 2).
Full sector coverage on KINSITE

Aditya Mongia Deepak Krishnan Sai Siddhardha P Naman Jain

 3

We increase FV for Indigo to Rs5,700

We increase our multiple for Indigo to 22X from 21X, factoring in 10% upside to FY2027E EPS (versus
5% earlier) coming from long-haul international travel. We note that 10% of existing US$8 bn revenue line
of Indigo or US$800 mn revenues is equivalent to the revenues Air India group has added in long-haul
international travel through share gains over the past three years. The same equates to a 5% market
share gain in the current US$18 bn international long-haul travel market involving India (see Exhibits 4-
5). The market is currently split 80:20 in terms of share in favor of overseas carriers with Air India group
the lone Indian carrier. Indigo continues to gain pax market share in international away from Air India in
January (see Exhibit 15) in spite of it yet to start on its long-haul international foray.

Exhibits 1-5 bring out progress and prospects for Indigo to grow the international business in long-haul
international travel.

Majority of the new international routes by Indigo operate in monopolistic or duopolistic manner
International routes commenced by IndiGo since May 2024
Commencement
date by IndiGo Departure Destination travel Frequency Competition
Jul-25 India Manchester direct long-haul 3x weekly Monopoly
Jul-25 India Amsterdam direct long-haul 3x weekly KLM Royal Dutch, Air India
Mar-25 Trichy Jaffna direct long-haul 7x weekly Monopoly
Mar-25 Mumbai Krabi direct short-haul 6x weekly Monopoly
Air India Express, Air Arabia, SpiceJet,
Mar-25 Kochi Ras Al Khaimah direct short-haul 7x weekly
Emirates
Mar-25 Mumbai Seychelles direct short-haul 4x weekly Monopoly
Mar-25 Delhi Bangkok direct long-haul 7x weekly Air India, SpiceJet, Thai Airways
Feb-25 Hyderabad Madinah direct short-haul 3x weekly Monopoly
Dec-24 Chennai Penang direct short-haul 7x weekly Monopoly
Dec-24 Bangalore Langkawi direct short-haul 7x weekly Monopoly
Nov-24 Kolkata Phuket direct short-haul 6x weekly Thai AirAsia
Nov-24 Pune Dubai direct short-haul 7x weekly SpiceJet
Sep-24 Chennai Jaffna direct short-haul 7x weekly Monopoly
Aug-24 Coimbatore Singapore direct short-haul 7x weekly Scoot
Aug-24 Mangaluru Abu Dhabi direct short-haul 7x weekly Air India Express
Aug-24 Coimbatore Abu Dhabi direct short-haul 3x weekly Air India
Etihad Airways, Air India Express, Air Arabia,
Aug-24 Bangalore Abu Dhabi direct short-haul 6x weekly
Akasa Air
Aug-24 Mumbai Jeddah direct short-haul 7x weekly Flynas, Akasa Air, Air India, Saudia
Aug-24 Delhi Tashkent direct short-haul 3x weekly Uzbekistan Airways
Aug-24 Delhi Almaty direct short-haul 4x weekly Air Astana
Aug-24 Delhi Tbilisi direct short-haul 4x weekly Monopoly
Jun-24 Delhi Phuket direct short-haul 7x weekly Air India
May-24 Chennai Bangkok direct short-haul 4x weekly Thai AirAsia, Thai Lion Air, Thai Airways
May-24 Chandigarh Abu Dhabi direct short-haul 7x weekly Monopoly

Legend
Only Indigo flies
Only one other airline flies

Source: Company, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 4

Manchester-India is a larger market (with no direct flights) versus Birmingham-India (with direct flights)
Annual pax volumes (two-way) between key city/region pairs involving India (#)
450,000
390,000
400,000

350,000

300,000

250,000
210,000
200,000

150,000
90,000
100,000 75,000
57,000
37,000 32,000 30,000 29,000
50,000

-
Birmingham - Manchester - Manchester - Manchester - Manchester - Manchester - Manchester - Manchester - Manchester -
India India Delhi Mumbai Kochi Bengaluru Hyderabad Chennai Goa

Source: simpleflying.com, Kotak Institutional Equities

Share of direct flights is limited and so is share of stopover flights involving a major airport in India
Spread of long-haul international travel involving India (%)

90
80
80
70 65
60
50
40
30
20
20 15
10
0
International traffic International traffic International traffic International traffic
direct with stopover with stopover in with stopover at an
Indian metro airport airport outside India

Source: Air India, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 5

Long-haul international is a very large market and even a 5% share for Indigo would add 10% to its
consolidated revenues
Split of air travel market revenues involving India (US$ bn)

20

15

10
18.0 8.0 8.0
2.0
3.9
5 10.0
8.0 1.2
6.0
3.0
0
Domestic market International International Interglobe Air India
short-haul long-haul market Aviation (including
market revenues Express)

Source: Air India, Kotak Institutional Equities estimates

Tata group of airlines have grown market share in international long-haul traffic by 5% to 21% in recent
times and is the lone Indian carrier
Share in international long-haul traffic of Tata group of airlines (%)

25
21
20
16
15

10

0
Jan-22 Current

Source: Air India, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 6

Exhibits 6-14 bring out the case for Indigo accelerating entry into the European travel market given
capacity constraints in Europe, shift away of capacities from Asia-Pacific to transatlantic and shift of
customers toward more direct travel.

There is a meaningful dip in total connectivity for European airports to almost 2014 levels of flights
Annual total air connectivity of European airports

Source: Airports Council International Europe, Kotak Institutional Equities

There is a meaningful 14% dip in total connectivity for European airports versus pre-pandemic levels
Comparison of direct connectivity of European airports versus pre-Covid levels

Source: Airports Council International Europe, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 7

Asia-Pacific and Latin America have seen the biggest decline in direct connectivity from European airports
Direct connectivity from European airports

Source: Airports Council International Europe, Kotak Institutional Equities

Lufthansa will cut capacities in Asia-Pacific and divert capacities of Intra-Europe and North Atlantic markets
Outlook of Lufthansa group for various regions

Source: Company, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 8

Indigo may consider launching direct flights into Copenhagen, Paris and Vienna beyond Amsterdam
Direct connectivity across European airports

Source: Airports Council International Europe, Kotak Institutional Equities

Indigo may consider launching direct flights into Frankfurt, London and Paris beyond Amsterdam
Hub connectivity across major European hubs

Source: Airports Council International Europe, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 9

Indigo is well-placed from a profitability perspective versus Lufthansa and Air-France KLM
Key financials of European airline majors, December calendar year-ends (%)

Yield growth ASK growth ASK growth PAT margin

(2024) (2024) (2025) (2024)
Lufthansa group (includes
(2.6) 9.0 4 3
Swiss, Austrian Airlines)
Air France-KLM 1.0 3.6 4-5 2
British Airways 1.8 4.4 2 14
Indigo 2.2 11.2 13 10

Notes
(a) Indigo's financials are taken for year ending December to make it comparable
(b) ASK growth for 2025 for Indigo is KIE estimate
(c) Strong growth in ASK for Lufthansa group in 2024 mans less as it happens over low base;
2024 capacity is still at 90% of pre-pandemic levels

Source: Companies, Kotak Institutional Equities estimates

LCCs in Europe are making a strong comeback offering more direct connections using narrow-bodied aircraft
Direct connectivity from European airports

Source: Airports Council International Europe, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 10

LCCs (read narrow-bodied aircraft) have not been able to make an impact in the North American routes
Direct connectivity from European airports on short and long-haul travel

Source: Airports Council International Europe, Kotak Institutional Equities

Exhibits 15-18 bring out strong market share gain for Indigo and for Indian carriers in international travel
involving India.

Indigo has been making meaningful inroads in market share in recent months including January 2025
Market share of Indigo versus Air India group

International market share (%)

IndiGo Air India group
80
65.7 66.9
70 63.9

60
50
40 32.0
29.3
30 24.6
20
10
0
Jun-23

Jun-24
Nov-23

Nov-24
Sep-23

Sep-24
Dec-23

Dec-24
May-23

May-24
Apr-23

Apr-24
Oct-23

Oct-24
Jul-23

Jul-24
Feb-23

Feb-24
Aug-23

Aug-24
Jan-23

Jan-24

Jan-25
Mar-23

Mar-24

Source: DGCA, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 11

Indigo appears to have breached the 20% market share handle in recent months
Indigo's market share in international operations, March fiscal year-ends, 2015-25 (%)

Indigo international market share (%)

24.0
20.7 20.7
21.0 19.2
18.8 18.5 18.2 18.3
17.7 17.2
18.0 16.9

15.0
11.5
12.0

9.0 7.4
5.3
6.0
3.2 3.3 3.5
3.0

-
2015 2016 2017 2018 2019 2020 2024 1H25 Oct- 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 Oct-
Nov Nov

Source: DGCA, PIB, Kotak Institutional Equities

Indian carriers have grown toward parity share in recent months

Market share split of international travel involving India, March fiscal year-ends, 2015-8M25 (%)

Foreign carriers Domestic carriers

100%

80% 37 37 38 39 40 38
44 46 49

60%

40%
63 63 62 61 60 62
56 54 51
20%

0%
2015 2016 2017 2018 2019 2020 2024 1H25 Oct-Nov

Source: DGCA, PIB, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 12

International volumes of Indian carriers are growing 12% yoy; international carriers report yoy decline
Comparison of recovery in domestic and international passenger levels, March fiscal year-ends

International passengers (mn) Domestic passengers

Indian Foreign Total (mn)
1Q20 5.4 10.2 15.6 35
2Q20 5.7 10.1 15.7 35
3Q20 6.4 10.0 16.4 38
4Q20 5.2 7.4 12.6 33
1Q21 0.3 0.1 0.4 2
2Q21 1.0 0.5 1.5 9
3Q21 1.8 1.0 2.7 19
4Q21 2.3 1.8 4.1 23
1Q22 1.1 1.1 2.2 11
2Q22 1.7 1.8 3.5 19
3Q22 3.6 3.7 7.2 31
4Q22 3.8 4.2 8.0 25
1Q23 5.8 7.4 13.2 33
2Q23 5.8 7.4 13.2 30
3Q23 6.3 8.2 14.5 36
4Q23 6.8 8.3 15.1 38
1Q24 6.8 8.7 15.6 38
2Q24 7.1 8.8 15.8 37
3Q24 7.7 9.6 17.3 39
4Q24 8.0 9.9 17.9 39
1Q25 8.1 9.6 17.7 40
2Q25 8.2 9.3 17.5 39
2Q25 growth yoy (%) 16.1 6.3 10.7 6.5
Oct-Nov 5.5 5.9 11.5 28
Yoy growth (%) 11.7 (4.2) 3.7 11.1

Source: DGCA, PIB, Kotak Institutional Equities

Exhibits 19-20 bring out our unchanged financial assumptions and estimates for Indigo, bringing out
tepid profitability uptick in FY2026 (may need to absorb some cost increases) and sharp uptick in
profitability in FY2027.

We assume 1.9% CAGR in pricing driving a Rs0.46 per ASK RASK less CASK (ex-forex, ex-other income) in FY2027
Key assumptions for Indigo, March fiscal year-ends (Rs mn)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
USD/INR rate 61 61 66 67 65 70 71 74 75 80 83 85 88 89
Crude price, Dated Brent (US$/bbl) 108 86 47 49 57 70 61 43 78 95 83 79 80 80
Indigo's fleet size 77 94 107 131 159 218 262 285 275 305 367 417 467 517
Indigo's ASKs (mn units) 29,968 35,327 42,826 54,583 63,510 81,028 96,200 45,481 70,414 114,330 139,305 157,415 177,879 201,003
Yoy growth (%) 20 18 21 27 16 28 19 (53) 55 62 22 13 13 13
Indigo RPKs (mn units) 23,135 28,177 35,968 46,288 55,524 69,811 82,500 31,600 51,700 93,900 119,700 135,219 152,976 172,661
Yoy growth (%) 14 22 28 29 20 26 18 (62) 64 82 27 13 13 13
Load factor (%) 77 80 84 85 87 86 86 69 73 82 86 86 86 86
Average ticket price (Rs) 5,071 4,882 4,248 3,721 3,825 3,886 4,190 4,041 4,706 5,682 5,700 5,746 5,861 5,966
Yoy growth (%) 4 (4) (13) (12) 3 2 8 (4) 16 21 0 1 2 2
Yield (Rs per RPK) 4.3 4.4 3.9 3.5 3.6 3.6 3.8 3.8 4.2 5.1 5.1 5.1 5.2 5.3
Yoy growth (%) 5 2 (10) (10) 3 0 6 (2) 13 21 (1) (0) 2 2
Ancilliary revenues (as % of ticket
11.6 12.8 14.2 14.0 12.9 12.0 12.5 22.6 16.8 11.3 10.8 11.4 11.4 11.2
revenues)
RASK-CASK (Rs) 0.05 0.41 0.54 0.25 0.34 (0.12) (0.03) (1.55) (0.85) 0.11 0.46 0.34 0.36 0.46
EBITDAR margins ex-fuel cost (%) 69.2 68.7 64.5 62.5 62.0 58.7 47.5 29.5 40.6 55.9 59.9 57.2 58.9 59.4

Source: Company, Kotak Institutional Equities

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 13

We assume ~Rs260 EPS in FY2027

Financial summary for Indigo, March fiscal year-ends (Rs mn)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model (Rs mn)
Sales 139,253 161,399 185,805 230,209 284,968 357,560 149,669 259,309 544,466 689,043 798,800 906,080 1,028,452
EBITDAR 38,219 56,247 52,687 65,151 47,940 45,348 5,812 8,420 68,153 173,928 194,293 228,419 267,357
EBITDA 18,697 30,125 21,432 29,049 (3,424) 40,382 3,008 5,303 64,895 163,176 165,169 204,205 247,951
Other income 3,838 5,151 7,891 9,469 13,249 15,362 10,363 7,245 14,327 23,268 32,188 38,812 44,769
Interest (1,155) (3,041) (3,308) (3,398) (5,090) (18,759) (21,420) (23,580) (31,317) (41,693) (50,094) (55,158) (60,776)
Depreciation (3,022) (5,055) (4,573) (4,369) (7,596) (39,736) (46,987) (50,678) (51,022) (64,257) (83,777) (95,161) (104,691)
Profit before tax 18,357 27,181 21,443 30,751 (2,860) (2,751) (55,035) (61,710) (3,117) 80,493 63,487 92,698 127,253
Tax expense (5,402) (8,373) (4,852) (8,843) 3,052 269 — — — 1,232 (2,743—) (2,266) (28,052)
PAT 12,956 18,807 16,591 21,908 192 (2,482) (55,035) (61,710) (3,117) 81,725 60,744 90,432 99,201
Year-end number of shares 307 360 360 383 383 383 383 383 383 383 383 383 383
Fully diluted number of shares 344 351 360 383 383 383 383 383 383 383 383 383 383
EPS-fully diluted (Rs) 38 54 46 57 1 (6) (144) (161) (8) 214 159 236 259
Balance sheet (Rs mn)
Equity 4,207 27,232 37,792 70,774 69,448 58,624 709 (60,353) (62,465) 19,964 80,708 171,140 270,342
Total borrowings 39,262 30,071 23,957 22,414 21,937 3,466 25,056 38,968 22,523 18,917 18,917 18,917 18,917
Deferred incentives 17,516 15,832 21,838 26,017 51,883 2,682 2,206 1,730 1,254 778 18,278 35,778 53,278
Other long term liabilities 24,784 20,302 25,602 36,297 37,605 256,627 305,204 368,909 531,183 657,453 738,140 831,550 927,143
Current liabilities and provisions 21,914 32,750 42,908 55,791 69,245 99,085 96,567 109,348 99,202 125,133 137,646 151,411 166,552
Total liabilities 107,682 126,187 152,098 211,293 250,117 420,485 429,742 458,602 591,698 822,245 993,690 1,208,797 1,436,232
Net fixed assets 48,765 47,794 38,190 46,113 56,857 169,184 188,872 214,073 276,792 361,550 416,836 484,845 555,036
Investments 27,237 22,318 19,443 18,865 12,228 27,186 34,718 43,056 53,419 102,164 118,380 134,597 150,813
Cash & cash equivalent 25,161 47,048 83,459 129,245 151,229 203,286 185,171 181,490 233,977 322,917 396,411 519,015 650,591
Loans and advances/other current assets 6,519 9,027 11,005 17,070 29,804 20,829 20,982 19,981 27,510 35,614 62,129 70,473 79,991
Total assets 107,682 126,187 152,098 211,293 250,117 420,485 429,742 458,600 591,698 822,245 993,756 1,208,929 1,436,431
Cash flow statement (Rs mn)
Operating cash flow prior to Working capital changes 16,074 28,076 16,686 23,935 2,814 53,506 (5,214) 13,181 95,953 168,674 162,427 201,940 219,899
Working capital changes 7,765 3,081 21,135 15,097 28,786 15,927 (10,928) 7,461 31,326 43,502 29,462 48,884 49,087
Capital expenditure (10,171) (2,486) (2,372) (12,202) (17,116) (10,872) (4,369) (3,457) (5,698) (11,026) (16,716) (16,716) (16,716)
Free cash flow 13,668 28,671 35,448 26,829 14,485 58,561 (20,511) 17,184 121,581 201,149 175,172 234,107 252,269
Ratios (%)
EBITDAR 27.4 34.8 28.4 28.3 16.8 12.7 3.9 3.2 12.5 25.2 24.3 25.2 26.0
EBITDA margin 13.4 18.7 11.5 12.6 (1.2) 11.3 2.0 2.0 11.9 23.7 20.7 22.5 24.1
Net debt/equity (X) 6.6 0.3 (0.5) (0.7) (1.0) (1.7) (74.8) 0.6 1.7 (9.9) (3.4) (2.3) (1.9)
Book value (R/share) 12.2 77.7 104.9 184.9 181.5 153.2 1.9 (157.7) (163.2) 52.2 210.9 447.2 706.3
ROAE 312.8 126.4 51.0 40.4 2.2 NM NM NM NM NM NM NM NM
ROACE 32.3 51.4 68.9 70.1 NM NM NM NM NM NM NM NM NM

Source: Company, Kotak Institutional Equities estimates

InterGlobe Aviation
Transportation India Research

k.kathirvelu-kotak.com
 UPDATE

LIC (LICI) BUY

Insurance
CMP(₹): 745 Fair Value(₹): 1,175 Sector View: Attractive NIFTY-50: 22,471 March 12, 2025

Trying times ahead Company data and valuation summary

The correction in equities and a severe slowdown in business, following the Stock data
surrender value guidelines, continue to weigh on the prospects of LIC. Trends
CMP(Rs)/FV(Rs)/Rating 745/1,175/BUY
in (equity) markets have high sensitivity and drive over 50% of its EV. The
52-week range (Rs) (high-low) 1,222-715
slowdown in APE and management’s stance on dealing with the same are
Mcap (bn) (Rs/US$) 4,709/54.0
monitorable; we cut FV to Rs1,175 (Rs1,250 earlier); inexpensive valuations
ADTV-3M (mn) (Rs/US$) 992/11.4
support our BUY rating.
Shareholding pattern (%)
Sharp decline in equity investment book
0.4
1.8
0.1
1.1
0.1
Exhibit 1 shows LIC’s equity investment book has declined by 6.9% since
December 31, 2025, after a 5.3% fall in 3QFY25. On an FYTD basis, the overall
equity investment book is up 2.2%. In the above calculations, we have considered
LIC’s last published holdings (>1%) in BSE 200 companies to calculate the latest
96.5
market value of its investments. We estimated investment variance at Rs518 bn
Promoters FPIs MFs BFIs Retail Others
in 1HFY25; we now estimate a loss of Rs50 bn in 2HFY25E (we estimated a gain
of Rs250 bn earlier), with lower unwind due to reduced expectation of excess Price performance (%) 1M 3M 12M
real-world return over risk-free rates. We build in unwinding at 6.1% for 2HFY25E Absolute (5) (20) (25)

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
(8.2% for FY2025E, 9% in FY2024 and 9.5% in 1HFY25). Rel. to Nifty (2) (11) (25)
Rel. to MSCI India (2) (8) (24)

Business momentum weak

Forecasts/Valuations 2025E 2026E 2027E
LIC reported a 24% yoy decline in APE in 3QFY25, following growth of 24% in
EPS (Rs) 67.0 69.6 72.0
1HFY25. The company reported an 11% decline in January and a 21% decline in EPS growth (%) 3.5 3.9 3.5
February. March is typically a heavy month and hence has a high ask rate; the P/E (X) 11.1 10.7 10.3
company has launched multiple non-par products over the past few quarters P/B (X) 4.1 3.2 2.6
and recently launched a pension product (link) to drive high-margin business. BVPS (Rs) 181.4 233.6 287.6
RoE (%) 42.9 33.6 27.6
LIC changed commission structure, repriced products and tweaked product Div. yield (%) 0.0 0.0 0.0
design to improve persistency from 3QFY25, i.e., post-implementation of Nll (Rs bn) 6,319 6,911 7,895
surrender value guidelines, similar to peers. Unconfirmed media sources suggest PPOP (Rs bn) 6,677 7,349 8,425
some backlash on new commission structures in October 2024 (link); this seems Net profits (Rs bn) 424 440 456
to have led to a slowdown in business for LIC. We anxiously watch trends in its
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
growth and LIC management’s next steps of action to arrest the decline. We are
Prices in this report are based on the market close of
cutting our FY2025 and FY2026 APE estimates to a 5% decline and a 6% decline March 12, 2025
from a 2% decline and 2% growth, respectively; this reflects weakness in business
(35% decline in March 2025E, 20% decline in 1HFY26E and 10% growth in
2HFY26E). We are already factoring in a VNB margin of 16.5% in FY2026E, down
from 17.4% in FY2025E, reflecting the impact of surrender value guidelines.

Cut estimates and FV; retain BUY

We are revising down our EV estimates by 4.4-4.5% to reflect lower invest
return/variance, following the recent correction in equities; a cut in VNB
estimates by 3.1-10.7% reflects lower APE growth. Current valuations at 0.58X
(trailing) September 2025E EV factors in weak momentum and possible
correction/weakness; we retain our BUY rating with a revised FV of Rs1,175; we
value LIC at core EV+5X VNB and a 50% haircut to equity MTM.

Full sector coverage on KINSITE

Nischint Chawathe M B Mahesh, CFA Varun Palacharla Abhijeet Sakhare Ashlesh Sonje, CFA

Nikhil Suresh
k.kathirvelu-kotak.com
 15

Change in management
We expect major senior management changes at LIC over the next few months (link and link to media
articles). This includes superannuation of two MDs—M Jagannath and Tablesh Pandey in May—and end
in term of Sidharth Mohanty, MD/CEO in June. The new management team will need to cut out a concrete
strategy to deal with lower business volumes, if business remains weak till then.

LIC’s equity holdings up 2% since Mar 2024 and down 12% since Sep 2024 and 7% since Dec 2024
MTM value of LIC’s equity investments, March 2022-November 2024 (Rs bn)

(Rs bn) Equity book of LIC (LHS) % chg in equity book from Mar-24 (RHS) (%)
15.9
30,000 16

11.1
24,000 9.8 12

18,000 15,584 8
14,931 14,763
13,441 13,739
12,223
10,710 11,056
12,000 9,501 9,764 2.2 4

6,000 -

0 (4)
Mar-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25

Notes:
(a) LIC’ shareholding in BSE-200 + KIE coverage universe considered for calculating value of equity book.
(b) Nov-24 data is calculated by ascribing market price as on 8th November 2024 to LIC’s holdings as on 30th September 2024.

Source: Company, Bloomberg, Kotak Institutional Equities

High sensitivity of EV to equity markets

Sensitivity analysis of EV and VNB margin, March fiscal year-ends, 2021-24, 1HFY25 (%)
Change in EV (%) Change in VNB margin (%)
2021 2022 2023 2024 1HFY25 2021 2022 2023 2024 1HFY25
Reference rates and assets
Reference rates up 100 bps 4.4 (0.4) (0.2) (0.4) (0.5) 3.7 1.8 2.6 4.2 4.6
Reference rates down 100 bps (7.3) (0.3) 0.0 0.3 0.2 (5.3) (4.7) (3.8) (7.7) (7.7)
Equity markets down 10% (5.7) (6.5) (7.0) (7.2) (7.2) (0.3) (0.4) (0.1) (2.2) (2.1)
Expenses
Maintenance expenses up 10% (2.5) (0.4) (0.4) (0.5) (0.4) (0.5) (0.6) (0.5) (0.7) (0.8)
Maintenance expenses down 10% 2.5 0.4 0.4 0.5 0.4 0.5 0.5 0.5 0.7 0.8
Policy/premium discontinuance rates and partial withdrawn rates (proportionate)
Discontinuance up 10% (0.7) (0.2) (0.3) (0.1) (0.1) (0.4) (0.3) (0.5) (0.6) (0.7)
Discontinuance down 10% 0.7 0.2 0.3 0.1 0.1 0.4 0.3 0.5 0.7 0.8
Insurance risks
Mortality/morbidity rates up 5% 0.4 (0.0) (0.1) 0.0 0.0 0.0 (0.1) (0.0) (0.1) (0.1)
Mortality/morbidity rates down 5% (0.4) 0.0 0.1 0.0 (0.0) 0.0 (0.1) 0.0 0.1 0.1
Taxation
Assumed tax rate increased to 34.94% (27.3) (24.3) (11.7) (11.1) (10.8) (4.3) (4.8) (2.6) (2.2) (2.1)

Source: Company, Kotak Institutional Equities

LIC
Insurance India Research

k.kathirvelu-kotak.com
 16

Change in estimates, March fiscal year-ends, 2025-27E (Rs bn)

New estimates Old estimates Change (%)

2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Opening EV 7,273 7,914 8,517 7,273 8,275 8,914 — (4.4) (4.5)
VNB 94 84 84 97 94 94 (3.1) (10.7) (10.7)
Expected return in force 596 570 613 655 596 642 (8.9) (4.4) (4.5)
Operating variance 50 — — 50 — — — NM NM
Others (100) (50) (50) 200 (50) (50) (150.3) — —
Closing EV 7,914 8,517 9,164 8,275 8,914 9,600 (4.4) (4.5) (4.5)
APE 541 509 519 558 569 581 (3.1) (10.7) (10.7)
EVOP 741 653 698 802 689 736 (7.6) (5.2) (5.3)
VNB margin (%) 17.4 16.5 16.3 17.4 16.5 16.3 0 bps 0 bps 0 bps
RoEV (%) 8.8 7.6 7.6 13.8 7.7 7.7 -497 bps -10 bps -10 bps
Operating RoEV (%) 10.2 8.3 8.2 11.0 8.3 8.3 -84 bps -7 bps -7 bps
Unwinding rate (%) 8.2 7.2 7.2 9.0 7.2 7.2 -80 bps 0 bps 0 bps
EV/share (Rs) 1,257 1,352 1,455 1,314 1,415 1,524 (4.4) (4.5) (4.5)

Source: Kotak Institutional Equities estimates

We expect operating RoEV of ~8% over the medium term

EV walk, March fiscal year-ends, 2021-27E (Rs bn)

2021 2022 2023 2024 2025E 2026E 2027E

Opening EV 465 956 5,415 5,822 7,273 7,914 8,517
Bifurcation impact — 3,742 — — — — —
VNB 42 76 92 96 94 84 84
Expected return in force 95 227 416 522 596 570 613
Operating variance 22 307 61 (125) 50 — —
Change in operating assumption 14 (52) 21 48 — — —
Economic variance 252 57 (172) 955 (50) — —
Change in economic assumption 41 102 — — — — —
ESOPs and dividend payouts 27 — (9) (44) (50) (50) (50)
Closing EV 956 5,415 5,822 7,273 7,914 8,517 9,164
EVOP 172 558 589 541 741 653 698
Unwinding rate (%) 8.2 5.0 4.3 7.2 8.2 7.2 7.2
RoEV (%) 105.6 466.4 7.5 24.9 8.8 7.6 7.6
Operating RoEV (%) 36.9 58.3 10.9 9.3 10.2 8.3 8.2
APE 422 504 567 570 541 509 519
VNB 42 76 92 96 94 84 84
VNB margin (%) 9.9 15.1 16.2 16.8 17.4 16.5 16.3

Source: Company, Kotak Institutional Equities estimates

LIC
Insurance India Research

k.kathirvelu-kotak.com
 17

We value LIC at 1.1X core EV and take 50% haircut to MTM gains
Valuation of LIC, March fiscal year-end, December 2026E (Rs bn)
EV (Rs bn) 8,366
MTM (Rs bn) 3,933
Core EV (Rs bn) 4,433
VNB multiple (X) 3.0 5.0 7.0 10.0
VNB (Rs bn) 84 84 84 84
SV (Rs bn) 252 421 589 842
AV (SV+Core EV, Rs bn) 5,322 5,490 5,659 5,911
EVOP (Rs bn) 403
AV/Core EV (X) 1.0 1.1 1.1 1.2
AV/EVOP (X) 13.2 13.6 14.0 14.7
MTM gains at various levels of discount (Rs bn)
0% 3,933 3,933 3,933 3,933
25% 2,950 2,950 2,950 2,950
50% 1,966 1,966 1,966 1,966
FV (AV+MTM, Rs bn)
0% 9,255 9,423 9,591 9,844
25% 8,271 8,440 8,608 8,861
50% 7,288 7,457 7,625 7,877
FV/share (Rs)
0% 1,470 1,496 1,523 1,563
25% 1,313 1,340 1,367 1,407
50% 1,157 1,184 1,211 1,251

Source: Kotak Institutional Equities estimates

LIC – key growth rate and ratios. March fiscal year-ends, 2021-27E
2021 2022 2023 2024 2025E 2026E 2027E
Key growth rates (%)
Gross premium 6.0 6.0 10.8 0.2 10.5 10.7 10.8
APE (5.0) 10.5 12.5 0.5 (5.0) (6.0) 2.0
Net cash flows (11.9) (82.6) 641.1 (82.6) 291.1 22.3 21.2
Profit after tax 9.6 38.8 772.7 13.7 3.5 3.9 3.5
Policyholders' funds 19.0 11.5 7.2 15.6 14.6 14.8 14.0
Net assets (3.0) (14.0) (16.6) 7.0 9.0 9.0 9.0
Key calculated ratios (%)
Commission/gross premium 5.5 5.4 5.4 5.5 5.1 4.9 4.7
Expenses/gross premium 12.0 9.1 10.2 10.1 9.5 9.1 8.8
Net cash flows/net premium 10.8 1.8 11.8 2.0 7.2 8.0 8.7
Solvency (%)
Solvency 176 185 187 198 NA NA NA
Key performance metrics
APE considered for EV calculation (Rs bn) 422 504 567 570 541 509 519
Reported VNB (Rs bn) 42 76 92 96 94 84 84
VNB margin (%) 9.9 15.1 16.2 16.8 17.4 16.5 16.3
Indian embedded value (Rs bn) 956 5,415 5,822 7,273 7,914 8,517 9,164
Operating ROEV (%) 36.9 58.3 10.9 9.3 10.2 8.3 8.2
ROEV (%) 105.6 466.4 7.5 24.9 8.8 7.6 7.6

Source: Company, Kotak Institutional Equities estimates

LIC
Insurance India Research

k.kathirvelu-kotak.com
 18

LIC – financial summary, March fiscal year-ends, 2021-27E

2021 2022 2023 2024 2025E 2026E 2027E
Income statement (Rs bn)
Net premium 4,054 4,295 4,760 4,768 5,261 5,822 6,452
Operating expenses and commissions 711 624 741 745 771 814 876
Benefits paid 2,885 3,555 3,425 3,897 4,109 4,542 5,012
Net cash flows 436 76 561 97 381 466 564
Net surplus/deficit 39 57 373 350 423 445 467
Shareholders' share of surplus 30 39 356 402 398 417 436
Total income 0 3 13 39 39 40 40
Other expenses and provisions 0 0 1 3 5 8 12
Profit before tax 30 42 361 411 432 449 465
Tax — — 1 1 9 9 9
Profit after tax 30 41 360 409 424 440 456
Balance sheet (Rs bn)
Share capital 1 63 63 63 63 63 63
Reserves and surplus 67 49 401 766 1,084 1,414 1,756
Shareholders' funds 68 112 464 829 1,147 1,477 1,819
Policyholders' funds 37,393 41,692 44,684 51,677 59,243 68,023 77,575
Total liabilities 37,394 41,711 44,725 51,694 59,247 68,027 77,580
Investment 35,318 39,406 42,600 49,931 51,076 58,073 66,149
Shareholders' funds 4 52 282 626 626 626 626
Policyholders' investments 34,984 39,114 42,055 48,952 50,029 56,939 64,910
Assets to cover linked liabilities 330 240 263 353 420 508 613
Loans 1,088 1,110 1,170 1,217 1,278 1,342 1,409
Fixed assets 35 36 38 41 44 48 53
Current assets 1,854 1,988 1,977 1,971 7,300 9,283 10,961
Current liabilities 831 715 596 638 695 758 826
Net assets 37,464 41,825 45,189 52,523 60,394 69,504 79,398

Source: Company, Kotak Institutional Equities estimates

LIC trades at 0.6X FY2026E core EV

Valuation summary, March fiscal year-ends, 2024-27E
VNB CAGR
FV Price Market cap. Embedded value (Rs bn) Price/EV (X) Price/VNB (X) Operating RoEV (%) (2024-27E)
Rating (Rs) (Rs) (Rs bn) (US $bn) 2024 2025E 2026E 2027E 2024 2025E 2026E 2027E 2024 2025E 2026E 2027E 2024 2025E 2026E 2027E (%)
HDFC Life BUY 850 632 1,361 16 475 557 649 756 2.9 2.4 2.1 1.8 39 34 29 24 17.5 17.0 16.9 17.0 17
ICICI Prudential Life BUY 825 545 788 9 423 486 557 643 1.9 1.6 1.4 1.2 35 32 26 22 14.1 13.8 14.5 15.1 18
LIC BUY 1,175 745 4,709 54 7,273 8,275 8,914 9,600 0.6 0.6 0.5 0.5 49 48 50 50 9.3 11.0 8.3 8.3 (1)
LIC core 241 1,527 18 3,291 4,042 4,681 5,367 0.5 0.4 0.3 0.3 16 16 16 16 NA NA NA NA (1)
Max FS BUY 1,425 1,062 366 4 195 254 299 352 2.6 2.0 1.7 1.4 26 24 20 17 20.2 19.2 18.2 18.2 15
SBI Life ADD 1,800 1,409 1,412 16 583 708 836 987 2.4 2.0 1.7 1.4 25 24 20 17 21.8 19.5 18.2 18.2 14

Source: Company, Bloomberg, Kotak Institutional Equities estimates

LIC
Insurance India Research

k.kathirvelu-kotak.com
 UPDATE

The Ramco Cements (TRCL) SELL

Construction Materials
CMP(₹): 820 Fair Value(₹): 570 Sector View: Cautious NIFTY-50: 22,471 March 12, 2025

Most impacted by Tamil Nadu (TN) mining tax Company data and valuation summary
The TN government has imposed Rs160/ton mining tax on limestone mining. Stock data
TRCL is the most impacted, with 50% of total clinker capacity in TN. We
CMP(Rs)/FV(Rs)/Rating 820/570/SELL
estimate a ~10% impact on FY2026E EBITDA; however, we expect price hikes
52-week range (Rs) (high-low) 1,060-700
to partially offset higher costs. The bill comes following the July 2024
Mcap (bn) (Rs/US$) 194/2.2
Supreme Court judgment, which upheld the states' right to levy taxes on
ADTV-3M (mn) (Rs/US$) 399/4.6
mineral rights, and other states may follow suit. We trim earnings and FV.
Maintain SELL on expensive valuations. Shareholding pattern (%)
8.2
Tamil Nadu introduces mineral tax
11.7
The southern state of Tamil Nadu has enacted the ‘Tamil Nadu Mineral Bearing 42.8
10.5
Land Tax Act 2024,’ introducing a flat per unit tax (‘mineral bearing land tax’) on
a list of specified minerals mined within the state. The Act introduces a tax of 20.0
6.9
Rs160/ton on limestone, collected in advance before dispatch. This tax will
Promoters FPIs MFs BFIs Retail Others
increase production costs for limestone miners in the state and is subject to
revisions by the government up to a maximum of Rs240/ton. Price performance (%) 1M 3M 12M
Absolute (5) (18) 1
TRCL to be most impacted

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
Rel. to Nifty (3) (9) 1
Ramco would be the most impacted company in listed coverage. TRCL has 8 Rel. to MSCI India (3) (6) 2
mtpa clinker capacity in TN, contributing ~50% of its total installed clinker
capacity. Total limestone mined (and consequent impact) may be even higher. Forecasts/Valuations 2025E 2026E 2027E
Regional concentration of TRCL places it at a disadvantage versus other listed EPS (Rs) 9.4 17.6 25.1

peers like Dalmia/UTCEM/ACEM, which have 25%/3%/1% of aggregate clinker EPS growth (%) (38.4) 87.1 42.9

capacity in TN. We expect cement companies to pass a part of the cost P/E (X) 87.3 46.7 32.7

escalation with price hikes. Nonetheless, challenges in the south region on P/B (X) 2.5 2.3 2.2

account of recent M&A and tepid realizations may limit the quantum of price EV/EBITDA (X) 17.3 14.9 12.6

hikes. Further, TRCL’s growth capex over FY2024-27E should only lead to RoE (%) 3.0 5.2 6.9
Div. yield (%) 0.1 0.2 0.3
gradual reduction in net debt/EBITDA from 3.3X in FY2025E to 2.2X in FY2027E.
Sales (Rs bn) 92 102 114
Other states may follow suit with mineral taxes EBITDA (Rs bn) 14 16 19
The introduction of this tax follows similar actions by other states, including (1) Net profits (Rs bn) 2.2 4.2 5.9
Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill 2024, which is
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
pending the Governor’s assent and (2) Jharkhand Mineral Bearing Land Cess
Prices in this report are based on the market close of
Bill 2024. These bills come following the July 2024 Supreme Court judgment, March 12, 2025
which upheld the states’ right to levy taxes on mineral rights and mineral-
bearing lands in addition to the royalty imposed by the Center. The Tamil Nadu
mineral tax may portend additional taxation by other states on mined minerals.

In the mining sector, NMDC has created a contingent liability of Rs135 bn

pending the proposed Karnataka Mineral Tax Bill. Future earnings also face
significant downside risks (Link).

We cut earnings and Fair Value to Rs570, maintain SELL Related Research

We cut EBITDA estimates by 5%/4% for FY2026/27E led by higher costs, → NMDC: Rising headwinds: Both at home and
partially offset by pass-through in realizations. Our Fair Value is revised to → away
NMDC: Facing regulatory uncertainty
Rs570 (Rs600 earlier) at unchanged 8X EV/EBITDA. TRCL trades at an → The Ramco Cements: Disappointing margins,
expensive 14.9X EV/EBITDA and US$116/ton on FY2026E basis. Maintain SELL. regional headwinds to persist

Full sector coverage on KINSITE

Sumangal Nevatia Siddharth Mehrotra Keshav Kumar

 20

Tamil Nadu (TN) has enacted flat per unit tax on a list of specified minerals
Exhibit 1: Rate of mineral bearing land tax for different minerals as per TN Mineral Bearing Land Tax Act
2024 (Rs/ton)

Name of mineral Tax rate (in Rs/ ton)

Lignite. 250
Limestone. 160
Marl. 160
Magnesite. 260
Graphite. 40
Vermiculite. 250
Garnet. 1,250
Ilmenite. 950
Rutile. 5,500
Zircon. 6,600
Monazite. 250
Sillimanite. 7,000
Leucoxene. 3,500

Source: Company, Kotak Institutional Equities estimates

We expect Ramco to be the most impacted player in listed universe due to TN mineral tax
Exhibit 2: Estimated margin impact due to higher costs on listed players with clinker capacities in Tamil Nadu, FY2025E
Clinker capacity - Tamil Nadu Clinker capacity - Total % clinker capacity impacted Impact FY2026E EBITDA Impact on EBITDA
Group mtpa mtpa Rs/ton Rs/ton %
Adani 0.8 66 1 2 963 0.2
Dalmia 6.0 24 26 41 930 4.4
Ramco 8.0 16 50 81 815 9.9
Ultratech 3.6 109 3 5 1,156 0.5

Source: Company, Kotak Institutional Equities estimates

TRCL has bulk of its clinker capacity in TN TRCL has bulk of its cement grinding capacity in TN
Exhibit 3: State-wise mix of clinker capacities for TRCL, Exhibit 4: State-wise mix of grinding capacities for TRCL,
FY2025E FY2025E

Tamil Nadu , Andhra Andhra Pradesh, 33% Tamil Nadu , 51%

51% Pradesh, 49%

Odisha, 8%

West Bengal , 8%

Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates

The Ramco Cements

Construction Materials India Research

k.kathirvelu-kotak.com
 21

Exhibit 5: Quarterly, annual EBITDA/ton for TRCL, March fiscal year-ends, 3QFY22-25, 2025-27E (Rs/ton)

1,200

1,000

800

600

991
924

908

880
876

828
799
778

775
763
400 761

735

726
700

639
560
200

-
3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

2025E

2027E
2026E
Source: Company, Kotak Institutional Equities estimates

Leverage to remain above 2X and come down only gradually over FY2025-27E
Exhibit 6: Net debt and net debt/EBIDTA, March fiscal year-ends, 2019-27E (Rs bn, X)

Net debt (Rs bn) Net debt/EBITDA (X, RHS)

60.0 3.7 4.0
3.5 3.5
3.2 3.3 3.5
50.0 3.1
2.9
2.7 3.0
2.6 2.2
40.0
2.5
1.9
30.0 2.0
1.5
1.5
20.0
1.0
10.0
0.5
- -
2021

2024
2019

2020

2022

2023

1QFY25

2QFY25

3QFY25

2025E

2027E
2026E

Source: Company, Kotak Institutional Equities estimates

The Ramco Cements

Construction Materials India Research

k.kathirvelu-kotak.com
 22

South region pricing remains weak: Prices increased qoq across regions (ex-south) in 3Q/4QFY25E
Exhibit 7: Quarterly trend in cement prices in India across geographies, March fiscal year-ends, 4QFY23-25E (Rs per 50 kg bag)
4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25 4QFY25E
North 382 384 394 400 380 364 353 357 366
Central 378 379 386 390 373 379 376 382 385
East 385 388 385 398 374 371 363 364 375
West 392 396 400 407 389 377 370 376 380
South 381 378 373 394 362 357 343 336 336
All India average 383 384 385 397 373 368 359 359 363
Change per bag (%, qoq)
North 1.6 0.6 2.5 1.5 (5.1) (4.1) (2.9) 1.2 2.3
Central 2.0 0.3 1.8 1.1 (4.5) 1.6 (0.6) 1.4 0.8
East 1.5 0.6 (0.6) 3.4 (6.1) (0.8) (2.2) 0.3 3.1
West 1.6 1.2 0.9 1.9 (4.5) (3.0) (1.9) 1.7 1.0
South (4.3) (0.8) (1.2) 5.5 (8.0) (1.6) (3.7) (2.3) 0.0
All India average (0.3) 0.2 0.5 3.0 (6.0) (1.6) (2.4) 0.1 1.2
Change per bag (%, yoy)
North 1.3 (6.2) 4.5 6.3 (0.7) (5.3) (10.3) (10.6) (3.6)
Central 2.3 (5.5) 2.4 5.3 (1.4) (0.1) (2.5) (2.2) 3.3
East 10.5 4.6 7.4 5.0 (2.9) (4.2) (5.8) (8.6) 0.3
West 8.0 1.9 6.6 5.7 (0.7) (4.8) (7.4) (7.6) (2.3)
South (0.8) (2.5) (5.9) (1.0) (4.9) (5.6) (8.0) (14.8) (7.3)
All India average 3.0 (2.1) 1.3 3.3 (2.5) (4.2) (7.0) (9.6) (2.7)

Source: Company, Kotak Institutional Equities estimates

Exhibit 8: TRCL, changes in estimates, March fiscal year-ends, 2025-27E

Revised estimate Previous estimate Change %

2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Volume and realizations (mn tons, Rs/ton)
Cement sales (mn tons) 19.0 20.5 22.5 19.0 20.5 22.5 — — —
Realization (Rs/ton) 4,834 4,979 5,079 4,834 4,931 5,030 — 1 1
Costs (Rs/ton) 4,108 4,204 4,251 4,108 4,116 4,168 — 2 2
EBITDA (Rs/ton) 726 775 828 726 815 862 — (5) (4)
Earnings estimates (Rs mn)
Revenues 92,063 101,936 114,373 92,063 100,947 113,262 — 1 1
EBITDA 13,834 15,875 18,643 13,834 16,685 19,405 — (5) (4)
PAT 2,219 4,150 5,930 2,219 4,756 6,543 — (13) (9)
EPS 9.4 17.6 25.1 9.4 20.1 27.7 — (13) (9)

Source: Company, Kotak Institutional Equities estimates

The Ramco Cements

Construction Materials India Research

k.kathirvelu-kotak.com
 23

Our EBITDA estimate is 4%/14%/13% below consensus for FY2025/26/27E

Exhibit 9: TRCL - KIE versus consensus estimates for EBITDA and EPS, FY2025-27E

EBITDA EPS
2025E 2026E 2027E
-
(2)
(4)
(6) (4)

(8)
(10)
(10)
(12)
(14) (13)
(14)
(16)
(18)
(20) (18) (19)

Source: Company, Kotak Institutional Equities estimates

We expect TRCL’s volumes growth to be constrained by capacity in FY2025/26E

Exhibit 10: TRCL, assumptions, March fiscal year-ends, 2019-27E (Rs mn)
% change yoy
2019 2020 2021 2022 2023 2024 2025E 2026E 2027E 2025E 2026E 2027E
Cement capacity (mn tons) 16.5 18.6 19.5 19.5 21.0 22.9 23.8 24.8 29.8 4 4 20
Utilization (%) 67.5 60.3 51.2 57.2 71.6 80.4 80.1 82.6 75.6 (0) 3 (8)
Volumes (mn tons) 11.1 11.2 10.0 11.1 15.0 18.4 19.0 20.5 22.5 3 8 10
Realization (Rs/ton) 4,641 4,811 5,303 5,389 5,429 5,096 4,834 4,979 5,079 (5) 3 2
EBITDA (Rs/ton) 939 1,024 1,561 1,158 789 850 726 775 828 (15) 7 7
Cost/ton 3,702 3,786 3,742 4,231 4,640 4,246 4,108 4,204 4,251 (3) 2 1
Revenues (Rs mn) 51,623 53,893 52,910 60,037 81,573 93,764 92,063 101,936 114,373 (2) 11 12
EBITDA (Rs mn) 10,445 11,475 15,573 12,901 11,856 15,646 13,834 15,875 18,643 (12) 15 17
PAT (Rs mn) 5,107 6,042 7,836 8,815 3,145 3,600 2,219 4,150 5,930 (38) 87 43
Net debt (Rs mn) 15,421 29,299 29,979 37,860 43,510 48,216 45,129 42,755 40,753 (6) (5) (5)
Costs (Rs/ton)
Raw materials 752 780 858 799 894 934 959 1,055 1,043 3 10 (1)
Power costs 950 938 797 1,247 1,771 1,386 1,178 1,131 1,154 (15) (4) 2
Freight costs 1,068 1,016 1,028 1,090 1,067 1,062 1,083 1,115 1,149 2 3 3
Employee costs 304 340 420 429 321 300 319 327 328 6 3 0
Other expenses 628 713 639 667 586 564 569 575 578 1 1 1
Total 3,702 3,786 3,742 4,231 4,640 4,246 4,108 4,204 4,251 (3) 2 1

Source: Company, Kotak Institutional Equities estimates

The Ramco Cements

Construction Materials India Research

k.kathirvelu-kotak.com
 24

Our Fair Value of Rs570 is based on 8X EV/EBITDA March 2027E financials

Exhibit 11: TRCL, valuation details, March 2027E basis

Multiple EV
Rs mn (X) (Rs mn) Rs/share
Valuation
EBITDA (Rs mn) 18,643 8.0 149,145 631
Net debt (Rs mn) 40,753 172
CWIP 26,429 112
Equity value (Rs mn) 134,820 570
Fair Value (Rs/share) 570

Source: Company, Kotak Institutional Equities estimates

The Ramco Cements

Construction Materials India Research

k.kathirvelu-kotak.com
 25

Exhibit 12: TRCL, financial summary (consolidated), March fiscal year-ends, 2019-27E (Rs mn)
2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model (Rs mn)
Net sales 51,623 53,893 52,910 60,037 81,573 93,764 92,063 101,936 114,373
EBITDA 10,445 11,475 15,573 12,901 11,856 15,646 13,834 15,875 18,643
Other income 250 335 304 280 329 389 359 1,229 993
Interest (514) (721) (876) (1,124) (2,405) (4,155) (4,385) (4,325) (3,925)
Depreciation (3,000) (3,165) (3,566) (4,022) (5,060) (6,463) (6,843) (7,233) (7,786)
Pretax profits 7,181 7,923 11,435 8,034 4,720 5,417 2,965 5,546 7,925
Tax (2,106) (1,879) (3,799) 894 (1,300) (1,481) (746) (1,396) (1,995)
Adjusted Net profits 5,075 6,044 7,636 8,929 3,420 3,935 2,219 4,150 5,930
Extraordinary items 0 0 0 0 0 0 2,500 2,500 0
Net Profit 5,075 6,044 7,636 8,929 3,420 3,935 4,719 6,650 5,930
Earnings per share (Rs) 21.7 25.6 33.2 37.3 13.3 15.2 9.4 17.6 25.1
Balance sheet (Rs mn)
Equity 236 236 236 236 236 236 236 236 236
Reserves and surplus 45,134 49,778 57,081 65,950 68,374 72,143 76,639 82,874 88,211
Borrowings 16,369 30,241 31,417 39,645 45,213 49,585 56,168 51,168 46,168
Deferred tax liability 8,646 9,122 10,835 8,223 9,274 10,299 10,299 10,299 10,299
Currrent liabilities 11,318 11,446 14,403 16,755 21,889 29,402 29,221 30,267 31,585
Total liabilities and equity 82,038 101,328 114,549 131,585 145,947 162,727 173,627 175,908 177,563
Net fixed assets 51,834 58,464 67,761 75,755 99,760 115,320 112,477 120,244 124,458
Capital work in progress 8,307 18,143 23,255 29,922 19,269 13,292 21,292 18,292 16,292
Cash 948 942 1,438 1,785 1,703 1,369 11,040 8,413 5,415
Current assets 12,857 14,816 13,151 15,289 17,165 21,131 20,797 22,734 25,173
Investments 2,320 2,755 3,070 2,971 2,727 3,190 1,595 798 798
Other Non Current assets 5,008 5,388 5,005 4,776 3,822 3,997 1,999 999 999
Total assets 82,038 101,328 114,549 131,584 145,947 162,727 173,627 175,908 177,563
Net debt 15,421 29,299 29,979 37,860 43,510 48,216 45,129 42,755 40,753
Free cash flow (Rs mn)
Operating cash flow, excl. working capital 8,339 9,596 11,774 13,795 10,556 14,165 13,087 14,479 16,649
Working capital (975) (2,934) 5,068 (163) 2,510 3,657 153 (891) (1,122)
Net finance cost/ income (265) (386) (573) (844) (2,076) (3,766) (4,026) (3,096) (2,932)
Cash flow from operations 7,100 6,276 16,269 12,788 10,990 14,056 9,215 10,492 12,594
Capital expenditure (12,017) (19,195) (17,659) (18,166) (17,658) (19,225) (12,000) (12,000) (10,000)
Free cash flow (4,917) (12,919) (1,390) (5,378) (6,668) (5,170) (2,785) (1,508) 2,594
Ratios
P/E 38.1 32.0 25.3 21.7 56.7 49.2 41.1 29.1 32.7
EV/EBITDA 20.0 19.4 14.3 18.0 20.0 15.5 17.3 14.9 12.6
EV (US$/ton) 181 169 155 160 140 131 122 116 96
P/B 4.3 3.9 3.4 2.9 2.8 2.7 2.5 2.3 2.2
Net debt/equity (X) 0.3 0.6 0.5 0.6 0.6 0.7 0.6 0.5 0.5
FCF Yield % (2.5) (6.7) (0.7) (2.8) (3.4) (2.7) (1.4) (0.8) 1.3
Book value per share 193 212 243 280 290 306 325 352 374
Net debt/EBITDA (X) 1.5 2.6 1.9 2.9 3.7 3.1 3.3 2.7 2.2
RoAE (%) 11.7 12.7 14.2 14.5 5.1 5.6 6.3 8.3 6.9
RoACE (%) 9.2 8.9 9.5 10.1 4.5 5.7 4.1 4.8 6.0
CRoCI (%) 10.2 11.3 12.8 9.6 9.0 10.1 7.6 8.1 8.7

Source: Company, Kotak Institutional Equities estimates

The Ramco Cements

Construction Materials India Research

k.kathirvelu-kotak.com
 UPDATE

Automobiles & Components

India
Sector View: Cautious NIFTY-50: 22,471 March 12, 2025

Revving down: Domestic two-wheeler demand moderates

The domestic 2W segment has witnessed demand moderation post-festive
season, especially in the domestic motorcycle segment, owing to a weak
consumer sentiment and financing challenges. As a result, we expect
domestic 2W industry growth to moderate to 8.5% yoy in FY2025E (versus
11% earlier). Domestic motorcycles will continue to underperform scooters.
We expect HMCL and BJAUT to lose market share in domestic 2W segment.
Retain SELL on HMCL and BJAUT and upgrade TVS to REDUCE (from SELL).

Shifting gears: Demand moderation in domestic motorcycle segment

After the festive season, the domestic 2W segment has seen demand
moderation, especially driven by the motorcycle segment, owing to (1) weak
consumer sentiment, (2) financing challenges resulting in credit tightening ,
especially in entry-level motorcycle segment, (3) marginal price increases
owing to OBD-II Phase II (b) norms and (4) base effect. Domestic wholesale
three-month rolling average growth has sharply moderated with a decline in the
first two months of CY2025 on a yoy basis, driven by a sharp decline in the

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
motorcycle segment. As a result, FYTD25 growth for the domestic 2W segment
has moderated to 8% versus low-teens growth before the festive period.

Building 6.2% volume CAGR for domestic 2W industry over FY2025-27E

We expect the recent demand environment to persist in the coming quarters,
especially in the motorcycle segment. As a result, we have trimmed down our
volume growth assumptions to 8.5% yoy (11% yoy earlier) for the domestic 2W
segment for FY2025E and expect 6-6.5% CAGR over FY2026-27E (from around
7.5-8% CAGR earlier). We expect scooter segment trends to remain healthy,
driven by (1) urbanization resulting in higher penetration and (2) income tax
cuts announced in the budget. In terms of sub-segments, we expect motorcycle
segment volumes to grow by 4.2% CAGR over FY2025-27E and scooter segment
volumes to grow by 10% over the same period.

Long-term growth expectations remain unchanged for the domestic 2W industry

We believe the demand and growth for the domestic 2W market in the long term
will be driven by (1) growing per capita income levels and rising middle class
population, (2) growing urbanization and (3) a favorable demography with a
higher younger and working population. Recent demand moderation following
two years of strong growth is in line with our expectations, given higher
penetration levels of the 2W segment. We expect overall domestic 2W industry
volumes to grow by mid-single-digit volume CAGR over the medium term.

Retain our cautious stance on 2W OEMs despite stock price correction

We retain our cautious stance on HMCL, TVS and BJAUT despite an 8-26% price
correction over the past six months (22-40% from its highs), given deteriorating
demand trends in the domestic motorcycle segment. We believe domestic 2W
industry growth will come down to long-term average growth of 5-6% in the
coming quarters, which should result in multiples converging with long-term
averages. Retain SELL on BJAUT and HMCL and upgrade TVS to REDUCE. Full sector coverage on KINSITE

Rishi Vora
 27

Slowdown in 110 cc motorcycle segment will continue to weigh on Hero MotoCorp

Given persistent price increases owing to multiple headwinds (emissions, safety, insurance and
commodity inflation) along with a shift toward 125 cc segment owing to changing consumer preference,
demand trends in 110 cc motorcycle segment have witnessed significant pressure over the past few
years. Over FY2018-24, 110 cc motorcycle segment volumes have declined at a CAGR of 4.4% versus
domestic motorcycle segment volume CAGR decline of 1.3%, resulting in the mix declining to 46.5% in
10MFY25 versus 59% in FY2018. We expect the 110 cc segment underperformance to continue and
weigh on the overall growth trends for HMCL, given that it derives 85% of the domestic motorcycle
volumes from the 110 cc motorcycle segment.

Expect steady growth in 125 cc motorcycle segment; Bajaj Auto to lose market share
We expect 125 cc motorcycle segment to continue to grow steadily at 6-7% volume CAGR, driven by (1)
new product launches by OEMs and (2) shift from 110 cc to 125 cc motorcycle segment. Given strong
growth witnessed by the category over the past couple of years, we have seen increased competitive
intensity in this segment, which was dominated by Bajaj Auto and Honda. With decent product offerings
by TVS Motor and Hero MotoCorp and competitive pricing by Honda, we expect Bajaj Auto to continue
to lose market share in this category over the coming quarters. Also, CNG motorcycle launch has failed
to shift the customers toward cost-effective solution owing to higher upfront cost and lack of
infrastructure, making it challenging for Bajaj Auto to improve its market share in 125 cc segment.

Expect BJAUT and HMCL to lose market share in motorcycle segment; TVS to benefit from higher
scooter saliency
Overall, we expect BJAUT and HMCL to continue to lose market share in the motorcycle segment, driven
by (1) increase in competitive intensity in 110 cc and 125 cc motorcycle segments (Bajaj Auto) and (2)
decline in saliency of 110 cc motorcycle segment (Hero MotoCorp). Also, given lower market share in
scooter and premium motorcycle segments, we believe it will continue to weigh on HMCL’s overall
market share. As a result, we expect HMCL’s market share in motorcycle segment to decline to 41.4% in
FY2027E from 43.1% in FY2024 (50.7% in FY2019) and BJAUT’s market share in motorcycle segment to
decline to 16.5% in FY2027E from 18.2% in FY2024 (18.7% in FY2019). We expect TVS Motor’s market
share to remain steady in motorcycle segment; however, expect overall market share to improve to 18.3%
in FY2027E from 17.1% in FY2024. We expect HMCL’s overall market share to decline by 300 bps from
FY2024 levels to 26.4% in FY2027E and BJAUT’s overall market share to decline by 30 bps from FY2024
levels to 11.4% in FY2027E (partly offset by gain in scooter segment due to higher share in EVs).

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 28

Domestic retail trends have softened post festive season

Exhibit 1: Domestic retail 2W industry retail trends, March fiscal year-ends, 2024-25 (units, %)
FYTD
Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 2025 2024
Player-wise retail volumes (units)
Hero MotoCorp 412,898 448,629 511,710 444,146 394,740 396,224 355,298 267,798 570,667 909,639 327,970 409,455 383,728 4,971,375 4,944,255
Bajaj Auto 159,799 163,446 188,746 166,272 144,839 143,882 128,601 117,816 191,428 266,341 120,911 146,673 128,118 1,743,627 1,838,088
TVS Motors 235,863 228,922 274,238 252,651 223,409 232,694 219,816 203,956 323,282 395,420 196,922 264,689 236,859 2,823,936 2,564,574
Honda 356,315 356,496 395,494 392,106 352,564 370,029 353,957 334,838 555,980 656,143 316,671 372,787 328,387 4,428,956 3,738,348
Royal Enfield 65,945 65,631 73,511 64,553 56,443 58,634 56,247 58,556 97,710 95,341 54,357 76,439 70,085 761,876 717,033
Classic Legends 2,620 2,546 2,835 2,506 2,094 2,201 2,121 2,173 4,309 4,218 2,352 2,752 2,284 29,845 28,446
Others 130,917 132,427 138,756 141,256 127,621 139,273 135,658 127,729 179,143 165,106 107,728 150,487 125,986 1,538,743 1,372,920
Total ICE 2W 1,364,367 1,398,111 1,585,306 1,463,520 1,301,751 1,343,004 1,251,965 1,113,758 1,923,550 2,492,303 1,126,911 1,423,282 1,275,447 16,298,358 15,203,664
Yoy change (%) 13.1 2.2 35.6 5.0 2.5 13.9 4.5 (11.2) 33.3 15.0 (18.3) 2.9 (6.5) 7.2
Total EV 2W 82,741 140,334 65,554 77,328 79,997 107,639 89,031 90,376 139,417 119,671 73,363 97,677 90,072 1,030,125 808,028
Yoy change (%) 25.2 62.5 (2.0) (26.8) 73.5 97.1 41.8 41.0 85.5 30.0 (3.3) 18.9 8.9 27.5
Total domestic 2W 1,447,108 1,538,445 1,650,860 1,540,848 1,381,748 1,450,643 1,340,996 1,204,134 2,062,967 2,611,974 1,200,274 1,520,959 1,365,519 17,328,483 16,011,692
Yoy change (%) 13.7 5.7 33.6 2.7 5.0 17.6 6.3 (8.7) 35.9 15.6 (17.5) 3.8 (5.6) 8.2
Player-wise retail market share - ICE segment (%)
Hero MotoCorp 30.3 32.1 32.3 30.3 30.3 29.5 28.3 24.0 29.6 36.3 29.1 28.8 30.1 30.5 32.5
Bajaj Auto 11.7 11.7 11.9 11.4 11.1 10.7 10.6 11.0 10.5 11.1 10.7 10.3 10.0 10.7 12.1
TVS Motors 17.3 16.4 17.3 17.3 17.2 17.3 17.5 18.2 16.7 15.8 17.5 18.6 18.6 17.3 16.9
Honda 26.1 25.5 24.9 26.8 27.1 27.5 28.2 30.0 28.8 26.2 28.1 26.2 25.7 27.2 24.6
Royal Enfield 4.8 4.7 4.6 4.4 4.3 4.4 4.5 5.1 4.9 3.8 4.8 5.4 5.5 4.7 4.7
Classic Legends 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Others 9.6 9.5 8.8 9.7 9.8 10.4 10.8 11.5 9.3 6.6 9.6 10.6 9.9 9.4 9.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Player-wise retail market share - ICE + EV segment (%)
Hero MotoCorp 28.7 29.4 31.1 29.0 28.8 27.7 26.8 22.6 28.0 35.1 27.4 27.0 28.3 28.9 31.0
Bajaj Auto 11.9 11.8 11.9 11.4 11.1 11.1 10.8 11.4 10.7 11.2 11.6 11.0 10.9 11.1 12.0
TVS Motors 17.3 16.6 17.1 17.2 17.2 17.4 17.7 18.4 17.1 16.2 17.8 19.0 18.7 17.4 16.9
Honda 24.6 23.2 24.0 25.4 25.5 25.5 26.4 27.8 27.0 25.1 26.4 24.5 24.0 25.6 23.3
Royal Enfield 4.6 4.3 4.5 4.2 4.1 4.0 4.2 4.9 4.7 3.7 4.5 5.0 5.1 4.4 4.5
Classic Legends 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Others 12.8 14.6 11.4 12.7 13.1 14.1 13.9 14.7 12.3 8.6 12.0 13.2 12.7 12.5 12.2
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Note:
(1) Retail sales do not include sales from Telangana and Lakshadweep

Source: Parivahan, Kotak Institutional Equities

Domestic 3-month rolling average growth has sharply moderated over the past two months
Exhibit 2: Domestic 2W retail 3-month rolling average trends, March fiscal year-ends, 2024-25 (%)

2W retails - 3 month rolling average growth (%)

25
21.5
20 18.5
16.1
14.2
15 13.1 13.5
11.9 11.5
10.1 10.9 10.5
9.2 9.7
10 6.7 7.2 6.9 6.9
4.4
5 2.4 2.4 2.3 2.6
0.3 1.2
0

(5)

(10) (7.2)
Jun-23

Jun-24
Sep-23

Nov-23

Nov-24
Sep-24
May-23

May-24
Jul-23

Jul-24
Oct-23

Dec-23

Oct-24

Dec-24
Apr-23

Apr-24
Jan-24

Jan-25
Mar-23

Aug-23

Mar-24

Aug-24
Feb-23

Feb-24

Feb-25

Source: Parivahan, Kotak Institutional Equities

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 29

Domestic 3-month rolling average growth has sharply moderated, in line with retail trends
Exhibit 3: Domestic 2W wholesale three-month rolling average trends, March fiscal year-ends, 2024-25 (%)

2W wholesales - 3 month rolling average growth (%)

30
25.8 25.9 26.6
24.6
25
21.3
19.0
20 17.6
14.9 14.4 14.9
15 12.1 12.6 13.3
9.9
10
6.2
4.4
5 2.9

(5) (1.9) (1.6) (2.9)

Jun-23

Jun-24
Sep-23

Sep-24
Nov-23

Nov-24
Dec-23

Dec-24
May-24
Oct-23

Oct-24
Jul-23

Jul-24
Apr-24
Aug-23

Jan-24

Aug-24

Jan-25
Mar-24
Feb-24

Source: SIAM, Kotak Institutional Equities

Domestic motorcycle segment has witnessed sharp deacceleration over the past three months
Exhibit 4: Domestic motorcycle wholesale three-month rolling average trends, March fiscal year-ends, 2024-25 (%)

Motorcycle - 3 month rolling average growth (%)

35
30.3
30 27.0
25 22.1 22.8 22.7
19.0
20 17.6 16.8
13.8
15 12.0
10.2
7.5 8.7
10 6.9 6.3 7.0
5
0
(5) (1.1) (1.9)
(2.9)
(10) (8.0)
Jun-23

Jun-24
Nov-23

Nov-24
Sep-23

Sep-24
May-24
Dec-23

Dec-24
Apr-24

Jul-24

Oct-24
Jul-23

Oct-23
Aug-23

Feb-24

Aug-24

Jan-25
Jan-24

Mar-24

Source: SIAM, Kotak Institutional Equities

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 30

Domestic scooter trends have moderated although remains at healthy levels

Exhibit 5: Domestic scooter wholesale three-month rolling average trends, March fiscal year-ends, 2024-25 (%)

Scooter - 3 month rolling average growth (%)

35 31.7
30 27.9 28.1 26.8
25.1
25 23.4
21.3
19.4
20 16.6 15.8 15.8
15.2
15 12.5
10.3 10.3
10 6.3 6.3
5
0.6
0
(0.1)
(5)
(3.8)
(10)
Jun-23

Jun-24
Nov-23

Nov-24
Sep-23

Sep-24
Dec-23

Dec-24
Jul-23

Apr-24

May-24

Jul-24
Oct-23

Oct-24
Feb-24
Jan-24

Jan-25
Mar-24
Aug-23

Aug-24
Source: SIAM, Kotak Institutional Equities

Domestic motorcycle mix continues to decline over the past couple of years
Exhibit 6: Domestic 2W segmental mix, March fiscal year-ends, 2023-25 (%)

Scooters Motorcycles Mopeds

100 2.9 2.5 2.6 2.9 2.5 2.5 2.8 2.7 2.4 2.6 2.6
90
80
70
63.1 63.3 63.3 61.7 64.1 62.5 63.7 62.3 62.9 61.1 60.7
60
50
40
30
20 35.3 36.3 36.6
33.9 34.2 34.1 33.4 35.0 33.5 35.1 34.6
10
0
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25

Source: SIAM, Kotak Institutional Equities

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 31

Demand trends in 75-110 cc segment remain under stress

Exhibit 7: Domestic cc-wise motorcycle mix, March fiscal year-ends, 2017-25 (%)
2017 2018 2019 2020 2021 2022 2023 2024 10MFY25
cc-wise motorcycle mix
75-110 58.5 59.0 61.9 56.8 53.7 55.3 51.2 48.5 46.5
110-125 17.1 17.4 14.3 21.1 24.2 24.5 26.3 27.4 29.4
125-150 11.5 8.8 10.1 8.3 5.3 4.1 4.0 4.6 5.9
150-200 5.3 6.7 6.5 6.7 9.7 8.7 10.3 10.4 9.0
200-250 1.6 1.4 1.0 1.0 1.0 0.9 0.6 1.0 1.1
250-350 5.5 6.1 5.7 5.5 5.7 5.7 7.0 7.0 6.8
350-500 0.6 0.6 0.4 0.3 0.3 0.5 0.5 0.8 1.0
500-800 0.0 0.0 0.1 0.2 0.1 0.2 0.2 0.3 0.4
800-1000 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
>1000 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total volumes 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: SIAM, Kotak Institutional Equities

We expect income tax changes to benefit scooter segment from 2HFY25E onwards
Exhibit 8: Estimate of benefits of proposed income tax changes to salaried individuals, March
fiscal year-end, 2026
Tax slab Average tax payable Average benefit Estimated filers Estimated tax forgone
(Rs mn) (Rs) (Rs) (mn) (Rs bn)
Below 0.7 0 0 58 —
0.7-0.8 0 15,000 3 45
0.8-1 0 40,000 5 214
1-1.2 0 65,000 2 132
1.2-1.6 90,000 65,000 3 224
1.6-2 160,000 70,000 2 108
2-2.4 250,000 100,000 1 75
2.4-5 690,000 110,000 2 174
Total 18 971

Notes:
(a) We project total 2026 salaried income tax filers, based on growth rates of FY2023-24.
(b) We assume uniform distribution of filers among income tax slabs.
(c) We assume that 80% of filers are in the new tax regime.

Source: Income tax department, Union budget, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 32

We expect domestic 2W volumes to grow at 7% CAGR over FY2024-27E; expect motorcycle segment growth to moderate to 4% yoy in
FY2026E
Exhibit 9: Segment-wise 2W volume projections, March fiscal year-ends, 2017-27E (mn units, %)
2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Domestic volumes (mn units)
Scooters (includes EVs) 5.6 6.7 6.7 5.6 4.5 4.2 5.6 6.3 7.2 8.0 8.7
Motorcycles 11.1 12.6 13.6 11.2 10.0 9.0 10.2 11.7 12.3 12.7 13.4
Mopeds 0.9 0.9 0.9 0.6 0.6 0.5 0.4 0.5 0.5 0.5 0.5
Total domestic volumes 17.6 20.2 21.2 17.4 15.2 13.7 16.3 18.4 20.0 21.3 22.6
Scooters
Honda 3.2 3.8 3.7 3.1 2.3 2.0 2.0 2.4 2.9 3.1 3.4
Hero Motocorp 0.8 0.9 0.7 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4
TVS Motors 0.8 1.1 1.2 1.0 0.9 0.9 1.2 1.5 1.8 2.0 2.2
Bajaj Auto — — — 0.0 0.0 0.0 0.0 0.0 0.3 0.3 0.4
Other EV OEMs — — — — 0.0 0.2 0.6 0.6 0.6 0.7 0.8
Others 0.8 0.9 1.1 1.0 1.0 1.1 1.4 1.4 1.3 1.5 1.5
Total scooter volumes 5.6 6.7 6.7 5.6 4.7 4.2 5.6 6.3 7.2 8.0 8.7
Motorcycles
Hero Motocorp 5.7 6.5 6.9 5.8 5.2 4.3 4.8 5.0 5.2 5.3 5.5
Bajaj 2.0 1.9 2.5 2.1 1.8 1.6 1.8 2.1 2.1 2.1 2.2
Honda 1.5 2.0 1.8 1.6 1.5 1.4 1.6 2.0 2.5 2.5 2.7
TVS Motors 0.8 0.9 1.0 0.8 0.6 0.7 0.9 1.2 1.2 1.3 1.4
Royal Enfield 0.7 0.8 0.8 0.7 0.6 0.5 0.7 0.8 0.9 0.9 1.0
Others 0.5 0.5 0.5 0.3 0.3 0.3 0.4 0.5 0.5 0.5 0.6
Total motorcycle volumes 11.1 12.6 13.6 11.2 10.0 9.0 10.2 11.7 12.3 12.7 13.4
Total two-wheelers
Hero Motocorp 6.5 7.4 7.6 6.2 5.6 4.6 5.2 5.4 5.6 5.7 6.0
Bajaj 2.0 1.9 2.5 2.1 1.8 1.6 1.8 2.2 2.3 2.5 2.6
Honda 4.7 5.8 5.5 4.7 3.8 3.4 3.6 4.4 5.3 5.7 6.0
TVS Motors 2.5 2.9 3.1 2.4 2.2 2.0 2.6 3.2 3.5 3.8 4.1
Royal Enfield 0.7 0.8 0.8 0.7 0.6 0.5 0.7 0.8 0.9 0.9 1.0
Others 1.3 1.4 1.6 1.3 1.2 1.4 2.4 2.4 2.4 2.7 2.9
Total two-wheeler volumes 17.6 20.2 21.2 17.4 15.2 13.7 16.3 18.4 20.0 21.3 22.6
Yoy growth (%)
Scooters (includes EVs) 11.3 20.0 (0.3) (16.9) (18.8) (6.6) 32.3 12.7 14.0 12.0 8.0
Motorcycles 3.7 13.7 7.8 (17.6) (10.6) (10.3) 13.9 13.9 5.6 3.6 5.0
Mopeds 23.0 (3.4) 2.4 (27.6) (3.1) (23.3) (6.7) 9.2 5.0 — —
Domestic two wheelers 6.9 14.8 4.9 (17.8) (12.9) (9.7) 18.9 13.4 8.5 6.5 6.0

Source: SIAM, Kotak Institutional Equities estimates

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 33

We expect domestic motorcycle volumes to grow at 5% CAGR over FY2024-27E; expect economy segment underperformance to
continue
Exhibit 10: Segment-wise motorcycle volume projections, March fiscal year-ends, 2017-27E (mn units, %)
2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Economy 2.6 3.2 3.9 3.3 2.6 2.1 1.9 2.1 1.9 1.9 2.0
Executive 6.0 6.5 6.5 5.3 4.8 4.6 5.4 5.9 6.6 6.8 7.2
Premium 2.5 2.9 3.2 2.7 2.7 2.3 2.9 3.6 3.7 4.0 4.2
Total volumes 11.1 12.6 13.6 11.2 10.0 9.0 10.2 11.7 12.3 12.7 13.4
Yoy change (%)
Economy 6.2 23.0 22.7 (15.5) (21.4) (17.7) (10.9) 10.7 (8.0) — 2.0
Executive (0.6) 9.3 (0.9) (18.8) (9.8) (3.5) 17.7 10.2 11.6 3.2 5.2
Premium 12.6 14.7 11.3 (17.6) 1.1 (15.3) 29.4 22.9 3.7 6.0 6.0
Total 3.7 13.7 7.8 (17.6) (10.6) (10.3) 13.9 13.9 5.6 3.6 5.0
Playerwise volumes (mn units)
Economy 2.6 3.2 3.9 3.3 2.6 2.1 1.9 2.1 1.9 1.9 2.0
Hero 1.4 1.9 2.2 2.1 1.7 1.2 1.1 1.0 1.0 1.0 1.0
Bajaj 0.8 0.9 1.4 1.1 0.7 0.8 0.6 0.6 0.5 0.5 0.5
TVS 0.3 0.4 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Honda — — — — — — — 0.3 0.3 0.3 0.2
Others — — — — — — 0.0 0.0 — — —
Executive 6.0 6.5 6.5 5.3 4.8 4.6 5.4 5.9 6.6 6.8 7.2
Hero 4.2 4.5 4.7 3.7 3.4 3.1 3.7 3.9 4.1 4.3 4.5
Bajaj 0.3 0.2 — — — — — — — — —
Honda 1.2 1.5 1.4 1.3 1.2 1.3 1.4 1.4 1.9 1.9 2.0
TVS 0.2 0.1 0.2 0.2 0.1 0.2 0.4 0.6 0.6 0.6 0.7
Others 0.1 0.1 — — — — — — — — —
Premium 2.5 2.9 3.2 2.7 2.7 2.3 2.9 3.6 3.7 4.0 4.2
Hero 0.1 0.1 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Bajaj 0.8 0.8 1.0 1.0 1.1 0.9 1.1 1.5 1.5 1.6 1.6
Honda 0.3 0.4 0.4 0.3 0.3 0.2 0.2 0.3 0.4 0.4 0.4
Yamaha 0.3 0.3 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.5
Royal Enfield 0.7 0.8 0.8 0.7 0.6 0.5 0.7 0.8 0.9 0.9 1.0
TVS 0.3 0.4 0.5 0.4 0.3 0.3 0.4 0.4 0.5 0.5 0.5
Others 0.1 0.1 0.1 0.0 0.0 0.1 0.0 0.0 0.1 0.1 0.1
Total volumes 11.1 12.6 13.6 11.2 10.0 9.0 10.2 11.7 12.3 12.7 13.4
Hero 5.7 6.5 6.9 5.8 5.2 4.3 4.8 5.0 5.2 5.3 5.5
Bajaj 2.0 1.9 2.5 2.1 1.8 1.6 1.8 2.1 2.1 2.1 2.2
Honda 1.5 2.0 1.8 1.6 1.5 1.4 1.6 2.0 2.5 2.5 2.7
TVS 0.8 0.9 1.0 0.8 0.6 0.7 0.9 1.2 1.2 1.3 1.4
Royal Enfield 0.7 0.8 0.8 0.7 0.6 0.5 0.7 0.8 0.9 0.9 1.0
Others 0.5 0.5 0.5 0.3 0.3 0.3 0.4 0.5 0.5 0.5 0.6

Source: SIAM, Kotak Institutional Equities estimates

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India Research

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 34

HMCL continues to dominate the segment with steady market share at >75%
Exhibit 11: Domestic 75-110 cc motorcycle market share trends, March fiscal year-ends, 2023-25 (%)

Hero MotoCorp Bajaj Auto Honda Others

90 85.0
82.2 80.2
79.5 79.3 79.5
80 76.6 75.2 76.4 76.8
72.9
70

60

50

40

30
17.2

11.9
11.5

10.4
10.3

10.0
20

9.1
8.9

8.3
7.9

7.6
7.3

7.3

7.3

6.8
6.6
6.5
4.3

4.0
3.8

2.7

10
0.4

0
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25

Source: SIAM, Kotak Institutional Equities

HMCL has gained market share over the past one year driven by launch of Xtreme 125; Bajaj Auto and TVS Motor have lost market
share
Exhibit 12: Domestic 110-125 cc motorcycle market share trends, March fiscal year-ends, 2023-25 (%)

Hero MotoCorp Bajaj Auto Honda TVS Motors

60.0
50.8

49.4
46.8

46.0
45.3

50.0 42.4

42.4
41.5

41.0
35.6

40.0
32.6

31.4

29.2
28.4

25.9

25.7
25.1

24.7
24.6

24.3
23.9

30.0
22.2

22.1
21.8

21.5

20.5
20.5
19.9

19.9
19.9
17.5

15.9

15.4
15.3
14.5

14.4

13.3
13.1

12.9

20.0
11.4

11.3
9.8
7.2

10.0
2.2

-
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25

Source: SIAM, Kotak Institutional Equities

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 35

BJAUT has lost market share over the past one year driven by increase in competitive intensity; TVS Motor has gained market share
Exhibit 13: Domestic 125-250 cc motorcycle market share trends, March fiscal year-ends, 2023-25 (%)

Hero MotoCorp Bajaj Auto Honda TVS Motors Yamaha Others

36.7
35.5
40.0

35.0
34.2
33.0

32.2

32.1

32.0
31.8
35.0

28.0

27.0
26.8

25.9
30.0

23.2
23.1

22.6
22.0

21.8
21.6

21.3
25.0
19.2

16.1
20.0

15.0
8.8

10.0
4.9

4.1
4.0
3.9

3.2

3.2
3.0

2.8

1.7

1.6
5.0

-
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25

Source: SIAM, Kotak Institutional Equities

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 36

We expect Bajaj Auto and Hero MotoCorp to lose market share in the domestic motorcycle segment over FY2024-27E
Exhibit 14: OEM-wise segment-wise market share trend, March fiscal year-ends, 2017-27E (%)
2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Segmental market share (%)
Domestic economy motorcycle market share (%)
Hero Motocorp 55.1 59.5 55.8 62.4 64.3 54.8 55.5 49.3 49.8 50.4 50.9
Bajaj Auto 32.5 28.5 35.2 32.2 28.4 36.1 34.0 28.0 26.7 26.1 26.1
TVS Motors 12.5 12.1 9.0 5.4 7.3 9.1 10.4 10.0 9.6 10.2 10.6
Honda — — — — — — — 12.6 14.0 13.3 12.4
Others — — — — 0.0 0.0 0.0 — — — —
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Domestic executive motorcycle market share (%)
Hero Motocorp 69.5 69.4 72.1 71.0 71.8 67.7 68.1 65.6 62.3 62.4 61.8
Bajaj Auto 5.1 3.2 2.1 0.6 — — — — 1.2 1.2 1.2
Honda 20.8 23.6 21.8 24.0 25.9 28.3 25.2 24.1 28.0 27.5 27.9
TVS Motors 2.6 2.0 3.0 4.0 2.3 4.0 6.7 10.3 8.5 8.9 9.2
Others 2.1 1.8 — — — — — — — — —
Total 100.0 100.0 99.0 99.5 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Domestic premium motorcycle market share (%)
Hero Motocorp 4.3 2.5 1.4 1.5 3.1 2.9 2.4 2.4 2.2 2.0 2.0
Bajaj Auto 32.6 28.0 32.3 37.3 40.0 38.0 38.2 42.5 39.0 39.1 38.3
Honda 11.4 14.0 13.2 11.1 10.8 6.8 8.4 8.4 9.7 9.5 9.5
Yamaha 11.1 10.6 11.8 9.9 10.6 12.1 13.2 11.6 10.8 10.8 10.8
Royal Enfield 25.8 27.7 25.0 24.7 21.4 22.9 25.0 23.1 23.6 23.8 23.7
TVS Motors 11.8 13.8 14.6 13.8 12.3 14.5 12.0 11.1 12.5 12.8 13.0
Others 3.1 3.5 1.8 1.6 1.8 2.7 0.8 0.9 2.2 2.0 2.6
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Domestic motorcycle market share (%)
Hero Motocorp 51.3 51.5 50.7 52.0 51.5 48.3 46.9 43.1 42.0 41.8 41.4
Bajaj Auto 17.7 15.2 18.7 18.5 18.1 18.3 17.7 18.2 16.7 16.8 16.5
Honda 13.8 15.5 13.5 13.9 15.2 16.1 15.7 17.2 20.2 19.8 19.8
TVS Motors 7.0 7.3 7.4 6.7 6.3 7.9 8.9 10.5 9.9 10.3 10.6
Royal Enfield 5.9 6.4 5.9 5.9 5.7 5.8 7.2 7.2 7.2 7.4 7.5
Others 4.3 4.2 3.7 3.0 3.3 3.6 3.7 3.9 3.9 4.0 4.2
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Domestic scooter market share (%)
Honda 56.9 56.9 54.9 56.6 49.6 47.0 35.5 38.4 39.7 39.0 39.0
Hero Motocorp 14.1 13.1 10.7 7.2 9.4 7.2 6.4 6.4 5.3 5.0 4.9
TVS Motors 14.7 16.4 18.5 18.3 19.6 20.5 22.3 23.0 24.9 24.9 25.3
Bajaj Auto — — — 0.0 0.0 0.2 0.1 0.6 3.8 4.0 4.3
Other EV OEMs — — — — 0.5 5.6 11.0 10.2 8.4 8.6 9.2
Others 14.2 13.6 15.8 17.9 20.8 25.5 24.7 21.5 17.9 18.5 17.3
Total 100.0 100.0 100.0 100.0 100.0 106.0 100.0 100.0 100.0 100.0 100.0
Overal 2W market share (%)
Hero Motocorp 36.9 36.6 35.9 35.8 36.9 33.9 31.7 29.4 27.8 26.9 26.4
Bajaj Auto 11.1 9.5 12.0 11.9 11.9 12.0 11.1 11.7 11.6 11.6 11.4
Honda 26.9 28.6 26.1 27.0 25.4 25.1 22.1 24.0 26.7 26.6 26.8
TVS Motors 14.2 14.2 14.8 13.8 14.3 15.0 16.0 17.1 17.6 17.9 18.3
Royal Enfield 3.7 4.0 3.8 3.8 3.8 3.8 4.5 4.5 4.4 4.4 4.4
Others 7.3 7.1 7.4 7.6 7.7 10.2 14.6 13.3 11.9 12.6 12.7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: SIAM, Kotak Institutional Equities estimates

We retain SELL/REDUCE ratings on 2W OEMs

Exhibit 15: Change in FVs for 2W OEMs
Rating FV (Rs) EPS (Rs per share) P/E (X)
Stock CMP (Rs) Old New Old New 2025E 2026E 2027E 2025E 2026E 2027E
Bajaj Auto 7,515 SELL SELL 7,800 7,000 302.8 336.3 369.6 24.8 22.3 20.3
Hero MotoCorp 3,610 SELL SELL 4,000 3,400 228.9 239.8 260.9 15.8 15.1 13.8
TVS Motors 2,259 SELL REDUCE 2,200 2,200 52.8 63.0 76.1 42.8 35.8 29.7

Source: Parivahan, Kotak Institutional Equities

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 37

Bajaj Auto—underperformance in domestic motorcycle market to continue; retain SELL

We have cut our FY2025-27 EPS estimates by 1-2% driven by mid-single digit cut in domestic motorcycle
volumes estimates. Revise our FV to Rs7,000 (Rs7,800 earlier) and retain SELL rating.

In terms of the company’s portfolio, we expect export and e-scooter segments to continue on their
growth trajectory. However, we expect the company to underperform in the domestic 2W motorcycle
market, owing to (1) increased competitive intensity in the 125-cc motorcycle segment due to multiple
launches and (2) pricing war in the 110-cc motorcycle segment, from which it is deliberately staying
away. Overall, we expect the domestic 2W industry volumes to report 6-7% volume CAGR over FY2025-
27E versus double-digit CAGRs over the past three years. We expect the export momentum to continue;
however, there can be downside risks pertaining to Trump tariffs in Mexico, which can lead to slowdown
in the economy and impact the 2W growth. Mexico market has become the largest market by value in
the export segment for Bajaj Auto and any slowdown will have negative impact on Bajaj Auto’s earning
growth. We believe margins have peaked out and will not materially increase from these levels, led by
(1) a recovery in export volumes led by Africa (lower ASPs and margin-neutral), (2) an increase in the mix
of the EV 2W segment (margin-dilutive segment) and (3) moderation in growth for the 3W segment
(margin-accretive segment) offset by a favorable FX.

We have cut our FY2025-27 EPS estimates by 1-2% on lower volume assumptions
Exhibit 16: Earnings estimates revision, March fiscal year-ends, 2025-27E (Rs mn, units)
New estimates Old estimates % change
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Total volumes (units) 4,691,520 5,114,345 5,426,717 4,734,619 5,211,949 5,557,099 (0.9) (1.9) (2.3)
Including PLI
Average net realization (Rs per vehicle) 107,574 108,413 111,865 107,537 108,137 111,339 0.0 0.3 0.5
Net sales (incl. operating income) (Rs mn) 504,686 554,459 607,060 509,145 563,607 618,722 (0.9) (1.6) (1.9)
EBITDA (Rs mn) 102,837 113,225 124,734 103,553 114,559 127,628 (0.7) (1.2) (2.3)
EBITDA margin (%) 20.4 20.4 20.5 20.3 20.3 20.6
EBITDA per vehicle (Rs per vehicle) - including PLI 21,920 22,139 22,985 21,871 21,980 22,967
Profit after tax (Rs mn) 84,549 93,895 103,183 85,183 94,909 105,383 (0.7) (1.1) (2.1)
EPS (Rs/share) 302.8 336.3 369.6 305.1 340.0 377.5 (0.7) (1.1) (2.1)
Excluding PLI
Average net realization (Rs per vehicle) 106,260 106,775 110,120 106,235 106,531 109,635 0.0 0.2 0.4
Net sales (incl. operating income) (Rs mn) 498,523 546,086 597,593 502,982 555,233 609,255 (0.9) (1.6) (1.9)
EBITDA (Rs mn) 96,674 104,852 115,267 97,390 106,186 118,161 (0.7) (1.3) (2.4)
EBITDA margin (%) 19.4 19.2 19.3 19.4 19.1 19.4
EBITDA per vehicle (Rs per vehicle) - excluding PLI 20,606 20,501 21,241 20,570 20,374 21,263
Profit after tax (Rs mn) 78,386 85,522 93,716 79,020 86,536 95,916 (0.8) (1.2) (2.3)
EPS (Rs/share) 280.8 306.3 335.7 283.0 310.0 343.6 (0.8) (1.2) (2.3)

Source: Company, Kotak Institutional Equities estimates

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 38

We have Bajaj Auto’s standalone business at Rs6,781 per share based on DCF methodology
Exhibit 17: DCF valuation of Bajaj Auto, March fiscal year-ends, 2024-40E (Rs mn)
CAGR (%)
2024 2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E 2024-40E
Bajaj Auto assumptions
Domestic two-wheeler volumes ('000 units) 2,237 2,327 2,461 2,585 3,202 3,573 3,920 5,312 5,390 8.9
Domestic ICE two-wheeler volumes ('000 units) 2,121 2,057 2,137 2,212 2,644 2,755 2,795 2,517 1,126 2.3
Domestic ICE two-wheeler market share (%) 12.1 10.8 10.7 10.7 12.5 13.2 13.7 19.1 23.2
Domestic EV two-wheeler volumes ('000 units) 116 270 324 373 558 819 1,125 2,794 4,264 40.8
Domestic EV two-wheeler market share (%) 12.1 21.1 14.4 11.9 13.3 13.8 14.3 14.5 15.1
Domestic three-wheeler ('000 units) 464 478 498 517 558 586 616 763 929 7.8
Domestic total volumes ('000 units) 2,701 2,805 2,958 3,102 3,760 4,159 4,536 6,075 6,319 8.7
Export two-wheeler ('000 units) 1,477 1,699 1,954 2,110 2,321 2,553 2,809 4,127 6,063 8.0
Export three-wheeler ('000 units) 159 187 202 215 227 241 256 326 397 4.8
Export total volumes ('000 unit) 1,636 1,886 2,156 2,325 2,549 2,794 3,064 4,453 6,460 7.7
Total volumes ('000 units) 4,338 4,692 5,114 5,427 6,309 6,954 7,600 10,528 12,779 7.0
Domestic ICE 2W ASPs (Rs per vehicle) 83,923 83,860 84,510 84,215 85,899 87,617 89,370 98,671 108,941 2.0
Domesitc EV 2W ASPs (Rs per vehicle) 126,964 125,217 109,565 109,565 109,565 109,565 109,565 127,016 147,246 (2.2)
Domestic 3W ASPs (Rs per vehicle) 115,019 117,320 123,186 129,345 131,932 134,570 137,262 150,062 157,717 2.2
Export 2W ASPs (Rs per vehicle) 69,751 69,053 67,672 69,026 71,097 73,230 75,426 87,440 101,367 2.9
Export 3W ASPs (Rs per vehicle) 166,344 158,026 151,705 154,739 157,834 160,991 164,211 181,302 200,172 1.6
Other operating revenue 61,552 72,702 86,794 102,808 111,032 119,915 129,508 190,290 279,598 9.9
Net revenue 446,852 498,523 546,086 597,593 673,889 755,633 840,865 1,328,119 1,870,663 9.4
Tota EBIT 84,730 92,746 100,554 110,489 125,602 140,364 155,848 231,047 317,758 8.6
Total EBIT margin (%) 19.0 18.6 18.4 18.5 18.6 18.6 18.5 17.4 17.0
EBIT per vehicle (Rs per vehicle) 19,534 19,769 19,661 20,360 19,909 20,185 20,507 21,946 24,866 1.5
EBIT (1-tax) 63,548 69,560 75,415 82,867 94,202 105,273 116,886 173,285 238,319
Depreciation/amortisation 3,498 3,927 4,298 4,778 5,492 6,318 6,992 10,018 12,388
(Increase)/decrease in working capital 10,171 (6,733) 2,002 2,729 1,463 7,778 2,335 2,722 3,425
Capital expenditure (8,077) (6,500) (8,000) (8,000) (15,259) (12,262) (10,228) (10,930) (13,752) 3.4
Free cash flows 69,140 60,254 73,715 82,374 85,898 107,107 115,986 175,095 240,380 8.1
Discounted cash flow 82,374 76,353 84,628 81,460 68,242 51,989

WACC used (%) 12.5

Terminal growth rate (%) 4.0
Capitalization rate (%) 8.5
Cash flow in terminal year 51,989
Terminal value 636,105
Sum of free cash flows till terminal year 987,744
EV 1,623,849
Net cash 294,995
Equity value 1,918,844
Equity value per share 6,781

Source: Company, Kotak Institutional Equities estimates

We value BJAUT at Rs7,000 per share

Exhibit 18: SoTP valuation of Bajaj Auto, March fiscal year-ends, 2025-26E (Rs mn, Rs per share)
EPS/BPS (Rs) Multiple (X) Value per share (Rs) Comments
Standalone business 6,781 DCF methodology
Stake in KTM 69 8X March 2027E net subsidiary profits
Bajaj Auto Credit Limited 150.4 1.0 150 1X FY2026E book value
KIE fair value 7,000
Implied multiple of standalone business based on FY2027E EPS 18.3

Source: Company, Kotak Institutional Equities estimates

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India Research

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 39

We expect Bajaj Auto’s total volumes to grow by 7.8% CAGR over FY2024-27E
Exhibit 19: Bajaj Auto volume projections, March fiscal year-ends, 2018-27E (units, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Sales volume (units)
Total two-wheelers 3,369,334 4,236,873 3,947,568 3,605,893 3,836,856 3,442,839 3,714,531 4,025,979 4,414,284 4,695,105
Domestic 1,974,577 2,541,320 2,078,348 1,809,375 1,641,084 1,805,883 2,237,193 2,327,041 2,460,505 2,585,023
Platina 435,180 626,781 578,237 451,685 575,847 534,017 502,934 442,582 433,730 442,405
CT 466,897 742,199 480,204 283,027 192,483 110,940 84,163 71,539 70,108 71,510
Discover/Freedom 125 244,315 133,786 29,495 — — — — 80,000 80,000 84,000
Pulsar/Avenger/KTM 828,185 1,038,554 990,200 1,073,268 864,567 1,124,615 1,534,394 1,462,920 1,552,667 1,614,508
EV scooters — — 212 1,395 8,187 36,311 115,702 270,000 324,000 372,600
Export two-wheelers 1,394,757 1,695,553 1,869,220 1,796,518 2,195,772 1,636,956 1,477,338 1,698,939 1,953,780 2,110,082
Total two-wheelers 3,369,334 4,236,873 3,947,568 3,605,893 3,836,856 3,442,839 3,714,531 4,025,979 4,414,284 4,695,105
RE 60 — — — — — — — — — —
Domestic three-wheelers 369,637 399,453 365,759 109,292 160,723 300,734 464,138 478,071 497,594 516,998
Passenger three-wheelers 346,846 368,825 335,656 81,606 130,296 262,111 411,607 363,071 347,594 341,498
Goods three-wheelers 22,791 30,628 30,103 27,686 30,427 38,623 52,531 50,000 55,000 60,500
EV three-wheelers — — — — — — — 65,000 95,000 115,000
Export three-wheelers 267,820 383,177 301,885 257,729 310,854 184,284 158,872 187,469 202,466 214,614
Total three-wheelers 637,457 782,630 667,644 367,021 471,577 485,018 623,010 665,540 700,061 731,612
Total standalone volumes 4,006,791 5,019,503 4,615,212 3,972,914 4,308,433 3,927,857 4,337,541 4,691,520 5,114,345 5,426,717
Growth (yoy %)
Domestic two-wheelers 0.7 28.7 (18.2) (12.9) (9.3) 10.0 23.9 4.0 5.7 5.1
Platina 13.5 44.0 (7.7) (21.9) 27.5 (7.3) (5.8) (12.0) (2.0) 2.0
CT 3.1 59.0 (35.3) (41.1) (32.0) (42.4) (24.1) (15.0) (2.0) 2.0
Discover/Freedom 125 (19.4) (45.2) (78.0) (100.0) NA NA NA NA - 5.0
Pulsar/Avenger/KTM 0.8 25.4 (4.7) 8.4 (19.4) 30.1 36.4 (4.7) 6.1 4.0
EV scooters 344 219 133 20 15
Export two-wheelers 14.5 21.6 10.2 (3.9) 22.2 (25.4) (9.8) 15.0 15.0 8.0
Total two-wheelers 6.0 25.7 (6.8) (8.7) 6.4 (10.3) 7.9 8.4 9.6 6.4
Domestic three-wheelers 46.0 8.1 (8.4) (70.1) 47.1 87.1 54.3 3.0 4.1 3.9
Export three-wheelers 40.0 43.1 (21.2) (14.6) 20.6 (40.7) (13.8) 18.0 8.0 6.0
Total three-wheelers 43.4 22.8 (14.7) (45.0) 28.5 2.9 28.5 6.8 5.2 4.5
Total vehicles 10.5 25.3 (8.1) (13.9) 8.4 (8.8) 10.4 8.2 9.0 6.1

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 40

We expect Bajaj Auto’s earnings (excluding PLI) to grow at 7.8% CAGR over FY2024-27E
Exhibit 20: Bajaj Auto financial summary, March fiscal year-ends, 2018-27E (Rs mn, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model (Rs mn) - Including PLI
Net sales 252,189 303,576 299,187 277,411 331,447 364,276 446,852 504,686 554,459 607,060
EBITDA 48,374 51,925 50,962 49,285 52,586 65,491 88,228 102,837 113,225 124,734
Other income 12,933 14,389 17,336 12,765 12,092 11,814 14,025 13,876 15,119 16,311
Interest (13) (45) (32) (67) (87) (395) (535) (800) (500) (500)
Depreciation (3,148) (2,657) (2,464) (2,593) (2,692) (2,824) (3,498) (3,927) (4,298) (4,778)
Profit before tax 58,146 63,612 65,802 59,390 61,901 74,086 98,220 111,985 123,546 135,768
Extra-ordinary items (320) 3,420 — — 3,153 — — (2,113) — —
Taxes (17,145) (20,280) (14,802) (13,844) (14,865) (17,810) (23,432) (27,436) (29,651) (32,584)
Net profit 40,681 46,752 51,000 45,546 50,189 56,276 74,787 82,436 93,895 103,183
Adjusted net profit 40,905 44,366 51,000 45,546 47,756 56,276 74,787 84,549 93,895 103,183
Adjusted earnings per share (Rs) 141.3 153.3 176.2 157.4 165.0 198.9 267.9 302.8 336.3 369.6
Profit model (Rs mn) - Excluding PLI
Net sales 252,189 303,576 299,187 277,411 331,447 364,276 446,852 498,523 546,086 597,593
EBITDA 48,374 51,925 50,962 49,285 52,586 65,491 88,228 96,674 104,852 115,267
EBITDA margin (%) 19.2 17.1 17.0 17.8 15.9 18.0 19.7 19.4 19.2 19.3
Adjusted net profit 40,905 44,366 51,000 45,546 47,756 56,276 74,787 78,386 85,522 93,716
Adjusted earnings per share (Rs) 141.3 153.3 176.2 157.4 165.0 198.9 267.9 280.8 306.3 335.7
Balance sheet (Rs mn)
Equity 191,039 217,799 199,255 252,023 266,688 254,259 248,605 265,515 284,294 304,930
Deferred tax liability 3,234 5,427 3,464 5,221 4,033 3,452 5,069 5,069 5,069 5,069
Total borrowings — — — — — — 8,341 8,341 8,341 8,341
Current liabilities 43,922 50,578 45,014 58,058 48,498 53,567 80,492 77,648 88,117 99,992
Total liabilities 238,195 273,804 247,733 315,302 319,219 311,277 342,507 356,573 385,821 418,333
Net fixed assets 19,349 18,120 17,592 16,809 19,108 27,979 32,262 34,834 38,536 41,758
Investments 175,883 191,594 181,960 226,310 238,233 229,256 244,946 249,841 268,921 289,878
Cash 7,780 9,228 3,083 5,274 5,883 2,858 5,366 8,075 6,074 5,260
Other current assets 35,184 54,863 45,099 66,910 55,994 51,184 59,933 63,823 72,290 81,436
Miscellaneous expenditure — — — — — — — — — —
Total assets 238,195 273,804 247,733 315,302 319,219 311,277 342,507 356,573 385,821 418,333
Free cash flow (Rs mn)
Operating cash flow excl. working capital 32,157 31,925 34,855 36,247 36,070 47,889 64,612 70,302 70,289 68,755
Working capital changes 10,451 (7,030) 3,763 (5,108) 6,006 7,230 10,171 (6,733) 2,002 2,729
Net financial income 12,919 14,344 17,304 12,698 12,006 11,419 13,490 13,076 14,619 15,811
Cash flow from operations 55,527 39,239 55,922 43,837 54,082 66,538 88,272 76,644 86,910 87,295
Capital expenditure (1,826) (1,635) (2,828) (2,410) (5,507) (9,433) (8,077) (6,500) (8,000) (8,000)
Free cash flow 53,701 37,604 53,094 41,426 48,575 57,105 80,195 70,144 78,910 79,295
Ratios - Including PLI
Gross margin (%) 31.0 28.2 29.8 29.3 26.6 28.5 29.0 29.2 29.0 28.9
EBITDA margin (%) 19.2 17.1 17.0 17.8 15.9 18.0 19.7 20.4 20.4 20.5
PAT margin (%) 16.2 14.6 17.0 16.4 14.4 15.4 16.7 16.8 16.9 17.0
Book Value (Rs/share) 660 753 689 871 922 898 890 951 1,018 1,092
RoAE (%) 22.1 22.4 23.9 19.8 19.0 21.3 29.2 31.4 33.5 34.4
CRoCI (%) 93.5 78.2 93.4 72.6 75.5 96.5 165.2 145.2 143.8 145.6
Gross profit per vehicle (Rs/vehicle) 19,489 17,053 19,307 20,467 20,460 26,408 29,837 31,448 31,492 32,303
EBITDA per vehicle (Rs/vehicle) 12,073 10,345 11,042 12,405 12,205 16,674 20,341 21,920 22,139 22,985

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 41

TVS Motor: Higher scooter mix will aid in strong volume growth; upgrade to REDUCE (from SELL)
We have fine-tuned our FY2025-27 EPS estimates. We keep our FV unchanged at Rs2,200 and upgrade
the stock to REDUCE (from SELL) due to the recent correction in stock price.

The company continues to outperform in the domestic ICE segment; we expect newer launches in EV to
aid it in gaining market share. Income stimulus will further boost scooter segment sales, which will
benefit the company given its higher exposure in that segment. Slowdown in LATAM region and
increases losses in overseas subsidiaries remain a key risk in the near term. While we believe its medium-
term growth prospects remain strong, led by (1) strong growth in EV 2W volumes on new launches and
expansion of its network, (2) steady demand trends in the ICE 2W and 3W segments and (3) a recovery
in export volumes, the valuation remains a tad expensive at 34X FY2026E standalone core EPS
(excluding finance subsidiary).

We have fine-tuned our FY2025-27E estimates

Exhibit 21: Earnings revision table for standalone entity, March fiscal year-ends, 2025-27E (Rs mn)
New estimates Old estimates % change
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Standalone
Volumes (units) 4,735,780 5,222,083 5,668,159 4,742,055 5,246,789 5,692,946 (0.1) (0.5) (0.4)
ASPs (Rs per vehicle) 75,675 76,040 77,459 75,515 75,904 77,330 0.2 0.2 0.2
Net sales 358,378 397,085 439,053 358,096 398,250 440,237 0.1 (0.3) (0.3)
EBITDA 42,208 49,886 57,949 42,134 50,197 57,839 0.2 (0.6) 0.2
EBITDA margin (%) 11.8 12.6 13.2 11.8 12.6 13.1
EBITDA per vehicle 8,913 9,553 10,224 8,885 9,567 10,160 0.3 (0.1) 0.6
Adjusted net profit 25,091 29,943 36,175 25,277 30,015 36,335 (0.7) (0.2) (0.4)
EPS 52.8 63.0 76.1 53.2 63.2 76.5 (0.7) (0.2) (0.4)

Source: Company, Kotak Institutional Equities estimates

We value TVS Motor at Rs2,200/share

Exhibit 22: SoTP valuation, March fiscal year-end, 2025E
Value per share (Rs) Comments
Standalone business 2,016 DCF methodology
TVS Credit 185 Valued at 2X FY2026E P/B
KIE fair value 2,200
Implied multiple of standalone business based on March 2027E 26.5

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 42

We value TVS Motor’s standalone business at Rs2,016 per share

Exhibit 23: DCF valuation of TVS Motor, March fiscal year-ends, 2023-40E (Rs mn, %)
CAGR (%)
2023 2024 2025E 2026E 2027E 2028E 2035E 2040E 2024-40E
TVS Motors Assumptions
Domestic two-wheeler volumes (units) 2,597,936 3,157,320 3,512,401 3,820,604 4,121,822 4,112,219 5,630,996 6,108,753 4.2
Domestic ICE two-wheeler volumes (units) 2,501,282 2,967,424 3,237,401 3,420,604 3,055,579 3,182,712 1,505,875 507,355
Domestic ICE two-wheeler market share (%) 15.9 17.0 17.0 17.1 14.7 15.0 11.4 10.5
Domestic EV two-wheeler volumes (units) 96,654 189,896 275,000 400,000 1,066,243 929,508 4,125,122 5,601,397 23.6
Domestic EV two-wheeler market share (%) 13.2 19.9 21.5 17.8 34.1 22.1 21.5 19.9
Two-wheeler exports (units) 915,018 887,672 1,093,540 1,252,546 1,377,442 1,542,735 3,289,780 5,201,892 11.7
Domestic three-wheeler volumes (units) 16,075 20,791 27,028 33,785 42,232 46,455 75,222 89,693 9.6
Export three-wheeler volumes (units) 153,039 125,379 102,811 115,148 126,663 135,529 199,905 243,215 4.2
Total three-wheeler volumes (units) 169,114 146,170 129,839 148,933 168,895 181,984 275,128 332,908 5.3
Overall volumes (units) 3,682,068 4,191,162 4,735,780 5,222,083 5,668,159 5,836,939 9,195,903 11,643,553 6.6
Domestic ICE two-wheeler ASPs 60,680 64,632 65,737 66,772 68,269 69,634 79,988 88,313 2.0
Domestic EV two-wheeler ASPs 145,833 125,000 118,750 109,250 103,788 98,598 109,960 121,404 (0.2)
Export two-wheeler ASPs 55,692 58,160 56,787 55,120 55,677 56,791 65,235 72,024 1.3
Domestic three-wheeler ASPs 106,593 106,593 106,593 107,659 109,812 113,106 139,106 161,262 2.6
Export three-wheeler ASPs 118,828 133,088 133,088 133,088 133,088 135,750 155,934 172,163 1.6
Other operating revenues 27,051 31,705 34,242 36,981 21,603 23,763 46,308 74,580 5.5
Net sales 263,781 317,764 358,378 397,085 439,053 448,301 876,600 1,230,419 8.8
YoY (%) 26.9 20.5 12.8 10.8 10.6 2.1 7.7 6.8
ICE segment EBITDA (Rs mn) 29,566 38,702 45,474 50,979 57,949 47,073 59,220 82,558 4.8
ICE segment EBITDA margin (%) 11.2 12.2 12.7 12.8 13.2 13.2 14.0 15.0
EV segment EBITDA (Rs mn) (2,819) (3,561) (3,266) (1,093) — 4,582 54,432 98,605
EV segment EBITDA margin (%) (20.0) (15.0) (10.0) (2.5) — 5.0 12.0 14.5
Total EBITDA (Rs mn) 26,747 35,141 42,208 49,886 57,949 51,655 113,652 181,163 10.8
EBITDA Margin (%) 10.1 11.1 11.8 12.6 13.2 11.5 13.0 15.0
EBITDA per vehicle (Rs per vehicle) 7,264 8,385 8,913 9,553 10,224 8,850 12,359 15,559 3.9
Depreciation 6,312 7,004 7,368 8,282 9,212 10,375 20,168 26,825 8.8
EBIT 20,435 28,138 34,840 41,604 48,736 41,280 93,484 154,337 11.2
EBIT margin (%) 7.7 8.9 9.7 10.5 11.1 9.2 10.7 12.5
EBIT (1-tax) 15,203 20,934 25,921 30,953 36,260 30,712 69,552 114,827 11.2
Capex (9,968) (11,767) (13,000) (10,000) (10,000) (10,311) (20,162) (29,161) 5.8
Change in WC (2,080) 6,544 2,868 2,944 3,192 8,250 6,303 7,805
Free cash flow 9,467 22,715 23,157 32,180 38,664 39,027 75,862 120,297 11.0
Discounted free cash flow - 38,664 35,001 31,756 29,220

WACC (%) 11.5

Terminal growth (%) 5.5
Terminal value 513,785
Discounted free cash flow 447,989
Enterprise value 961,773
Net debt 4,206
Equity value 957,567
Equity value per share of standalone (Rs/share) 2,016
TVS Credit Services value 185
Equity value per share of consol business (Rs/share) 2,200

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 43

We expect company’s volumes to grow by ~10-11% CAGR over FY2024-27E

Exhibit 24: TVS Motor, volume break-down across segments, March fiscal year-ends, 2018-27E (units, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Volumes (units)
Domestic volumes
Motorcycles 916,811 1,012,868 755,275 627,654 707,563 910,376 1,223,838 1,220,991 1,314,967 1,416,238
Economy (Star City) 383,065 348,984 177,976 189,504 193,404 197,314 210,425 185,174 196,284 208,062
Executive (Victor & Raider) 133,067 194,870 209,768 109,127 183,963 359,641 611,740 565,860 611,128 660,019
Premium (Apache, BMW and Ronin) 399,035 469,014 367,531 329,023 330,196 353,421 401,673 469,957 507,554 548,158
Scooters 1,099,135 1,241,366 1,018,427 919,325 866,851 1,245,993 1,451,409 1,785,233 1,999,461 2,199,407
ICE 1,099,135 1,241,366 1,018,427 918,372 856,078 1,149,339 1,261,513 1,510,233 1,599,461 1,649,407
EV — — — 953 10,773 96,654 189,896 275,000 400,000 550,000
Mopeds 859,820 880,243 636,940 617,247 473,150 441,567 482,073 506,177 506,177 506,177
Total domestic 2W 2,875,766 3,134,477 2,410,642 2,164,226 2,047,564 2,597,936 3,157,320 3,512,401 3,820,604 4,121,822
3 Wheelers 16,429 16,715 11,934 8,266 8,823 16,075 20,791 27,028 33,785 42,232
Total domestic 2,892,195 3,151,192 2,422,576 2,172,492 2,056,387 2,614,011 3,178,111 3,539,429 3,854,390 4,164,054
Export volumes
Motorcycles 438,765 545,596 608,188 714,105 1,024,166 822,880 769,113 999,847 1,149,824 1,264,806
Scooters 35,783 59,749 56,792 41,621 55,727 87,932 115,831 86,873 95,561 105,117
Mopeds 17,412 16,674 13,859 8,313 10,246 4,206 2,728 6,820 7,161 7,519
Total exports 2W 491,960 622,019 678,839 764,039 1,090,139 915,018 887,672 1,093,540 1,252,546 1,377,442
3 Wheelers 82,255 139,491 161,887 115,330 163,052 153,039 125,379 102,811 115,148 126,663
Total exports 574,215 761,510 840,726 879,369 1,253,191 1,068,057 1,013,051 1,196,351 1,367,694 1,504,105
Total volumes 3,466,410 3,912,702 3,263,302 3,051,861 3,309,578 3,682,068 4,191,162 4,735,780 5,222,083 5,668,159
YoY growth (%)
Domestic volumes
Motorcycles 18.0 10.5 (25.4) (16.9) 12.7 28.7 34.4 (0.2) 7.7 7.7
Economy (Star City) 17.9 (8.9) (49.0) 6.5 2.1 2.0 6.6 (12.0) 6.0 6.0
Executive (Victor & Raider) (14.5) 46.4 7.6 (48.0) 68.6 95.5 70.1 (7.5) 8.0 8.0
Premium (Apache, BMW and Ronin) 34.6 17.5 (21.6) (10.5) 0.4 7.0 13.7 17.0 8.0 8.0
Scooters 33.0 12.9 (18.0) (9.7) (5.7) 43.7 16.5 23.0 12.0 10.0
ICE 34.3 9.8 19.7 5.9 3.1
EV 797.2 96.5 44.8 45.5 37.5
Mopeds (3.4) 2.4 (27.6) (3.1) (23.3) (6.7) 9.2 5.0 0.0 0.0
Total domestic 2W 15.3 9.0 (23.1) (10.2) (5.4) 26.9 21.5 11.2 8.8 7.9
3 Wheelers 33.8 1.7 (28.6) (30.7) 6.7 82.2 29.3 30.0 25.0 25.0
Total domestic 15.4 9.0 (23.1) (10.3) (5.3) 27.1 21.6 11.4 8.9 8.0
Export volumes
Motorcycles 46.6 24.3 11.5 17.4 43.4 (19.7) (6.5) 30.0 15.0 10.0
Scooters (19.7) 67.0 (4.9) (26.7) 33.9 57.8 31.7 (25.0) 10.0 10.0
Mopeds (13.6) (4.2) (16.9) (40.0) 23.3 (58.9) (35.1) 150.0 5.0 5.0
Total exports 2W 35.1 26.4 9.1 12.6 42.7 (16.1) (3.0) 23.2 14.5 10.0
3 Wheelers 44.4 69.6 16.1 (28.8) 41.4 (6.1) (18.1) (18.0) 12.0 10.0
Total exports 36.4 32.6 10.4 4.6 42.5 (14.8) (5.2) 18.1 14.3 10.0
Total volumes 18.4 12.9 (16.6) (6.5) 8.4 11.3 13.8 13.0 10.3 8.5

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 44

We expect overall revenues to grow at 11% CAGR over FY2024-27E led by 10-11% CAGR in volumes
Exhibit 25: TVS Motor revenue break-down across segments, March fiscal year-ends, 2018-27E (Rs mn, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Revenues (Rs mn)
Domestic revenues
Motorcycles 40,147 47,225 38,649 38,259 45,297 58,459 81,318 85,295 92,876 101,869
Economy 11,639 10,816 5,737 7,435 8,346 8,287 9,015 8,092 8,663 9,320
Executive 5,756 8,599 9,811 6,195 11,488 22,460 39,349 37,490 40,894 44,828
Premium 22,751 27,810 23,101 24,628 25,462 27,712 32,955 39,714 43,320 47,721
Scooters 43,855 51,874 45,963 47,925 49,257 92,282 117,278 142,400 161,090 180,560
ICE 78,186 93,541 109,744 117,390 123,477
EV 14,095 23,737 32,656 43,700 57,083
Mopeds 19,309 20,756 15,997 17,971 15,153 15,132 16,933 17,779 18,135 18,498
Total domestic 2W 103,311 119,855 100,608 104,155 109,707 165,872 215,529 245,474 272,101 300,926
3 Wheelers 1,479 1,504 1,117 815 913 1,713 2,216 2,881 3,637 4,638
Total domestic 104,790 121,360 101,725 104,970 110,620 167,585 217,745 248,355 275,738 305,564
Export revenues
Motorcycles 20,403 25,370 25,453 32,067 52,659 46,540 45,674 57,595 64,248 71,379
Scooters 1,503 2,494 2,134 1,642 2,462 4,274 5,855 4,260 4,545 5,049
Mopeds 496 475 355 222 306 145 97 244 248 263
Total exports 2W 22,402 28,340 27,942 33,931 55,427 50,959 51,627 62,099 69,041 76,692
3 Wheelers 8,637 14,856 15,775 11,239 18,178 18,185 16,686 13,683 15,325 16,857
Total exports 31,038 43,196 43,717 45,169 73,605 69,144 68,313 75,782 84,366 93,549
Total vehicle revenues 135,828 164,555 145,442 150,139 184,225 236,730 286,058 324,137 360,104 399,113
Accessories and spare parts 15,926 17,544 18,791 17,369 23,680 27,051 31,705 34,242 36,981 39,940
Total revenues 151,754 182,099 164,233 167,505 207,905 263,781 317,764 358,378 397,085 439,053
YoY growth (%) 25.0 20.0 (9.8) 2.0 24.1 26.9 20.5 12.8 10.8 10.6
Revenue mix (%)
Motorcycles 26.5 25.9 23.5 22.8 21.8 22.2 25.6 23.8 23.4 23.2
Economy 7.7 5.9 3.5 4.4 4.0 3.1 2.8 2.3 2.2 2.1
Executive 3.8 4.7 6.0 3.7 5.5 8.5 12.4 10.5 10.3 10.2
Premium 15.0 15.3 14.1 14.7 12.2 10.5 10.4 11.1 10.9 10.9
Scooters 28.9 28.5 28.0 28.6 23.7 35.0 36.9 39.7 40.6 41.1
ICE 29.6 29.4 30.6 29.6 28.1
EV 5.3 7.5 9.1 11.0 13.0
Mopeds 12.7 11.4 9.7 10.7 7.3 5.7 5.3 5.0 4.6 4.2
Total domestic 2W 68.1 65.8 61.3 62.2 52.8 62.9 67.8 68.5 68.5 68.5
3 Wheelers 1.0 0.8 0.7 0.5 0.4 0.6 0.7 0.8 0.9 1.1
Total domestic 69.1 66.6 61.9 62.7 53.2 63.5 68.5 69.3 69.4 69.6
Export revenues
Motorcycles 13.4 13.9 15.5 19.1 25.3 17.6 14.4 16.1 16.2 16.3
Scooters 1.0 1.4 1.3 1.0 1.2 1.6 1.8 1.2 1.1 1.2
Mopeds 0.3 0.3 0.2 0.1 0.1 0.1 0.0 0.1 0.1 0.1
Total exports 2W 14.8 15.6 17.0 20.3 26.7 19.3 16.2 17.3 17.4 17.5
3 Wheelers 5.7 8.2 9.6 6.7 8.7 6.9 5.3 3.8 3.9 3.8
Total exports 20.5 23.7 26.6 27.0 35.4 26.2 21.5 21.1 21.2 21.3
Total vehicle revenues 89.5 90.4 88.6 89.6 88.6 89.7 90.0 90.4 90.7 90.9
Accessories and spare parts 10.5 9.6 11.4 10.4 11.4 10.3 10.0 9.6 9.3 9.1
Total revenues 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 45

We expect standalone net profit to grow at 20% CAGR over FY2024-27E

Exhibit 26: TVS Motor standalone financial summary, March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model (Rs mn)
Net sales 151,754 182,099 164,233 167,505 207,905 263,781 317,764 358,378 397,085 439,053
EBITDA 11,750 14,333 13,459 14,286 19,617 26,747 35,141 42,208 49,886 57,949
Other income 990 75 321 330 190 1,006 1,485 697 810 1,124
Interest (566) (806) (1,022) (1,416) (1,259) (1,407) (1,816) (1,629) (1,950) (975)
Depreciation (3,387) (3,993) (4,890) (4,937) (6,114) (6,312) (7,004) (7,368) (8,282) (9,212)
Exceptional income — — (323) — (302) — — — — —
Profit before tax 8,786 9,610 7,544 8,262 12,132 20,034 27,807 33,907 40,463 48,885
Tax expense (2,161) (2,908) (1,622) (2,142) (3,197) (5,123) (6,977) (8,816) (10,520) (12,710)
Reported PAT 6,626 6,701 5,922 6,120 8,936 14,910 20,830 25,091 29,943 36,175
Adjusted net profit 6,626 6,701 6,175 6,120 8,936 14,910 20,830 25,091 29,943 36,175
Earnings per share (Rs) 13.9 14.1 13.0 12.9 18.8 31.4 43.8 52.8 63.0 76.1
Balance sheet (Rs mn)
Equity 28,804 33,473 36,181 41,710 48,220 60,479 77,310 75,874 96,834 122,157
Deferred tax liability 1,482 2,126 1,581 1,955 1,979 1,982 1,871 1,871 1,871 1,871
Total Borrowings 11,892 14,000 20,219 11,064 16,006 22,446 15,134 35,000 25,000 5,000
Current liabilities 28,227 32,912 33,790 45,321 50,361 52,273 62,812 69,346 75,574 82,325
Other liabilities 1,158 1,183 1,763 1,925 2,458 2,744 3,495 3,495 3,495 3,495
Total liabilities 71,562 83,694 93,533 101,975 119,023 139,924 160,622 185,586 202,773 214,848
Net fixed assets 25,030 28,365 30,819 31,762 33,921 38,399 42,998 48,630 50,347 51,135
Investments 20,354 23,007 26,059 33,145 45,858 54,920 68,281 85,281 97,281 107,281
Cash 109 439 4,192 9,298 5,315 4,339 6,942 5,607 5,794 3,521
Other current assets 26,070 31,883 32,464 27,769 33,929 42,267 42,402 46,068 49,351 52,910
Total assets 71,562 83,694 93,533 101,975 119,023 139,924 160,622 185,586 202,773 214,848
Free cash flow (Rs mn)
Operating cash flow excl. working capital 9,306 12,235 11,011 12,691 15,937 22,009 29,629 33,392 39,366 45,238
Working capital changes 3,668 (1,257) 2,926 12,918 (962) (2,080) 6,544 2,868 2,944 3,192
Net financial income 424 (730) (701) (1,086) (1,069) (401) (331) (933) (1,140) 149
Cash flow from operations 13,397 10,248 13,236 24,523 13,906 19,528 35,842 35,328 41,170 48,580
Capital expenditure and investments (11,391) (10,089) (13,178) (9,625) (22,153) (23,190) (19,697) (30,000) (22,000) (20,000)
Free cash flow 2,006 159 58 14,898 (8,247) (3,662) 16,145 5,328 19,170 28,580
Ratios
Gross margin (%) 26.6 24.0 26.1 24.0 24.0 24.2 26.3 28.6 29.0 29.2
EBITDA margin (%) 7.7 7.9 8.2 8.5 9.4 10.1 11.1 11.8 12.6 13.2
PAT margin (%) 4.4 3.7 3.8 3.7 4.3 5.7 6.6 7.0 7.5 8.2
ASPs per vehicle (Rs/vehicle) 43,778 46,541 50,327 54,886 62,819 71,639 75,818 75,675 76,040 77,459
Gross profit per vehicle (Rs/vehicle) 11,662 11,163 13,138 13,194 15,054 17,342 19,917 21,643 22,051 22,618
EBITDA per vehicle (Rs/vehicle) 3,390 3,663 4,124 4,681 5,927 7,264 8,385 8,913 9,553 10,224
Net debt/equity (X) 0.4 0.4 0.4 0.0 0.2 0.3 0.1 0.4 0.2 0.0
Book Value (Rs/share) 60.6 70.5 76.2 87.8 101.5 127.3 162.7 159.7 203.8 257.1
RoAE (%) 25.1 21.5 17.7 15.7 19.9 27.4 30.2 32.8 34.7 33.0
RoACE (%) 18.1 17.7 14.4 14.2 20.1 25.4 27.2 29.1 29.9 31.3
CRoCI (%) 23.2 24.6 22.6 32.4 40.9 42.3 62.4 60.7 63.5 66.3

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 46

Hero MotoCorp: Underperformance of entry level segment to weigh on market share; retain SELL
We have cut our FY2025-27E EPS estimates by 2-6% led by lower domestic 2W segment volumes
assumptions especially in the 110-cc domestic motorcycle segment. Revise our FV to Rs3,400 (from
Rs4,000 earlier) and retain our SELL rating.

Given the company derives majority of its volumes from 110 cc motorcycle segment, we see limited
benefits as we believe the consumer earning profile would be between Rs150k-Rs600k on per annum
basis, where there is no benefit from income tax perspective. Also, increased delinquencies in financing
will continue to weigh negatively on HMCL’s key segment growth. The company has weaker presence in
scooter and premium motorcycle segments, which continues to remain a cause of concern. Also, with
resignation of its current CEO, Mr. Niranjan Gupta, we will await clarity from the new management on the
steps, which they will be taking to arrest market share decline in the domestic 2W segment. The company
continues to lose market share across most of its categories and has been unsuccessful in gaining
market share in scooter and premium motorcycle segments.

We have cut our FY2025-27E EPS estimates by 2-6% led by lower volume assumptions
Exhibit 27: HMCL change in estimates, March fiscal year-ends, 2025-27E (Rs mn, %)
New estimates Old estimates change (%)
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E
Volumes (units) 5,818,415 6,031,464 6,299,031 5,914,366 6,295,936 6,686,294 (1.6) (4.2) (5.8)
Average net realization 68,595 70,653 72,699 68,431 70,184 71,980 0.2 0.7 1.0
Net sales 399,112 426,144 457,934 404,729 441,875 481,279 (1.4) (3.6) (4.9)
EBITDA 57,323 60,329 65,939 58,371 64,113 69,835 (1.8) (5.9) (5.6)
EBITDA per vehicle 9,852 10,002 10,468 9,869 10,183 10,445
EBITDA margin (%) 14.4 14.2 14.4 14.4 14.5 14.5
Adjusted net profit 45,761 47,942 52,150 46,553 50,799 55,092 (1.7) (5.6) (5.3)
EPS 228.9 239.8 260.9 232.9 254.1 275.6 (1.7) (5.6) (5.3)

Source: Company, Kotak Institutional Equities estimates

We value HMCL at Rs3,400 per share

Exhibit 28: Valuation of HMCL, March fiscal year-end, 2025E (Rs per share)

Value per share (Rs) Comments

Standalone business 3,219 DCF methodology
Stake in Ather Energy 121 4X FY2026E EV/sales - 40.8% stake
Stake in Hero FinCorp 61 1X FY2024 P/B - 41.2% stake
Fair value 3,400

Source: Company, Kotak Institutional Equities estimates

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 47

We value HMCL standalone business at Rs3,219 per share based on DCF methodology
Exhibit 29: DCF analysis of HMCL standalone business, March fiscal year-ends, 2022-40E (Rs per share)
CAGR (%)
2022 2023 2024 2025E 2026E 2027E 2028E 2029E 2030E 2040E 2024-2040E
Domestic volumes (mn units) 4.6 5.2 5.4 5.6 5.7 6.0 6.7 7.1 7.5 8.2 3.0
Export volumes (mn unit) 0.3 0.2 0.2 0.3 0.3 0.3 0.4 0.4 0.4 0.8 9.9
Total volumes (mn units) 4.9 5.3 5.6 5.8 6.0 6.3 7.1 7.5 7.9 9.0 3.3
Net revenue 292,455 338,057 374,557 399,112 426,144 457,934 522,662 566,557 604,194 823,663 5.7
EBIT 27,190 33,293 45,443 49,491 51,955 57,072 62,719 67,987 72,503 78,248 5.5
EBIT (1-tax) 20,338 24,770 33,810 36,821 38,655 42,462 46,663 50,582 53,942 58,216
Depreciation/amortisation 6,498 6,570 7,114 7,832 8,374 8,867 8,763 9,497 10,047 10,404
(Increase)/decrease in working capital (6,825) (5,832) 10,747 (4,685) 327 (79) (355) (241) (206) (113)
Capital expenditure (5,240) (5,675) (7,102) (12,000) (10,000) (10,000) (19,418) (13,169) (11,291) (11,357) 4.4
Free cash flows 14,771 19,832 44,569 27,969 37,356 41,250 35,654 46,670 52,492 57,151 6.8
Discounted cash flow 41,250 31,692 36,875 36,867 12,361

WACC used (%) 12.5

Terminal growth rate (%) 2.0
Capitalization rate (%) 10.5
Cash flow in terminal year 12,361
Terminal value 120,075
Sum of free cash flows till terminal year 367,801
EV 487,875
Net cash 154,911
Equity value 642,786
Equity value per share 3,219

Source: Company, Kotak Institutional Equities estimates

We expect Hero MotoCorp’s volumes to grow by 4% CAGR over 2024-27E

Exhibit 30: Hero MotoCorp volumes estimates, March fiscal year-ends, 2018-27E (mn units, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Motorcycles 6,677,207 7,080,787 5,990,349 5,328,364 4,627,765 4,959,249 5,190,666 5,405,221 5,592,824 5,833,365
Domestic 6,499,051 6,893,602 5,828,782 5,156,401 4,337,634 4,797,347 5,020,079 5,173,020 5,325,792 5,539,630
< 125 cc 6,427,773 6,849,749 5,788,661 5,071,887 4,270,214 4,727,399 4,934,511 5,092,415 5,245,188 5,454,995
> 125 cc 71,278 43,853 40,121 84,514 67,420 69,948 85,568 80,604 80,604 84,634
Exports 178,156 187,185 161,567 171,963 290,131 161,902 170,587 232,202 267,032 293,735
< 125 cc 139,786 153,714 125,178 106,702 160,652 110,724 95,466 130,788 150,407 165,447
> 125 cc 38,370 33,471 36,389 65,261 129,479 51,178 75,121 101,413 116,625 128,288
Scooters 909,986 739,958 419,370 458,010 316,383 369,297 430,789 413,193 438,640 465,666
Domestic 883,667 719,087 402,676 443,458 305,892 358,447 400,453 380,430 403,256 427,452
ICE 443,458 305,892 356,983 380,648 330,430 315,756 296,202
EV 1,464 19,805 50,000 87,500 131,250
Exports 26,319 20,871 16,694 14,552 10,491 10,850 30,336 32,763 35,384 38,215
Total 2-wheelers 7,587,193 7,820,745 6,409,719 5,786,374 4,944,148 5,328,546 5,621,455 5,818,415 6,031,464 6,299,031
Growth (yoy %)
Motorcycles 14.4 6.0 (15.4) (11.1) (13.1) 7.2 4.7 4.1 3.5 4.3
Domestic 14.1 6.1 (15.4) (11.5) (15.9) 10.6 4.6 3.0 3.0 4.0
< 125 cc 14.9 6.6 (15.5) (12.4) (15.8) 10.7 5.5 3.2 3.0 4.0
> 125 cc (27.5) (38.5) (8.5) 110.6 (20.2) 3.7 22.3 (5.0) — 5.0
Exports 26.7 5.1 (13.7) 6.4 68.7 (44.2) 5.4 36.1 15.0 10.0
< 125 cc 16.9 10.0 (18.6) (14.8) 50.6 (31.1) (13.8) 37.0 15.0 10.0
> 125 cc 82.3 (12.8) 8.7 79.3 98.4 (60.5) 46.8 35.0 15.0 10.0
Scooters 9.7 (18.7) (43.3) 9.2 (30.9) 16.7 16.7 (4.1) 6.2 6.2
Domestic 11.9 (18.6) (44.0) 10.1 (31.0) 17.2 8.0 (5.0) 6.0 6.0
ICE 11.9 (18.6) (44.0) 10.1 (31.0) 16.7 6.6 (13.2) (4.4) (6.2)
EV 1,253 152 75 50
Exports (33.9) (20.7) (20.0) (12.8) (27.9) 3.4 179.6 8.0 8.0 8.0
Total 2-wheelers 13.9 3.1 (18.0) (9.7) (14.6) 7.8 5.5 3.5 3.7 4.4

Source: Company, Kotak Institutional Equities

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 48

We expect Hero MotoCorp’s adjusted EPS to grow at 8% CAGR over 2024-27E

Exhibit 31: Hero MotoCorp profit model, balance sheet and cash flow model, March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model (Rs mn)
Net sales 322,352 336,505 288,361 308,006 292,455 338,057 374,557 399,112 426,144 457,934
EBITDA 52,849 49,301 39,580 40,192 33,688 39,862 52,557 57,323 60,329 65,939
Other income 5,211 6,913 7,783 5,799 5,569 5,596 8,830 11,320 11,745 12,201
Interest (63) (86) (220) (218) (258) (199) (185) (200) (200) (200)
Depreciation (5,556) (6,020) (8,180) (6,769) (6,498) (6,570) (7,114) (7,832) (8,374) (8,867)
Profit before tax 52,442 50,107 38,963 39,004 32,501 38,690 54,088 60,611 63,500 69,073
Current tax (14,470) (16,010) (10,841) (9,249) (7,979) (9,419) (12,610) (14,850) (15,557) (16,923)
Deferred tax (999) (248) 1,437 (113) 208 (221) (295) — — —
Net profit 36,974 33,849 31,794 29,642 24,730 29,050 40,790 45,761 47,942 52,150
Earnings per share (Rs) 185.1 169.5 159.2 148.4 123.8 145.4 204.1 228.9 239.8 260.9
Balance sheet (Rs mn)
Equity 117,689 128,571 141,364 151,984 157,829 167,051 179,862 193,590 207,973 223,618
Deferred tax liability 5,117 5,365 3,928 4,041 3,833 4,054 4,348 4,348 4,348 4,348
Total Borrowings — — — — — — — — — —
Current liabilities 44,583 42,476 42,201 65,585 55,478 61,527 71,506 73,616 78,092 82,772
Total liabilities 167,388 176,412 187,493 221,611 217,140 232,631 255,716 271,554 290,413 310,738
Net fixed assets 49,729 51,604 60,438 60,203 58,511 58,322 59,429 63,597 65,223 66,356
Investments 75,252 59,686 82,227 104,997 106,523 110,104 130,861 127,438 137,438 147,438
Cash 1,413 1,365 2,419 2,572 1,751 3,455 6,089 14,388 17,472 21,905
Other current assets 40,993 63,757 42,410 53,840 50,355 60,751 59,336 66,131 70,280 75,038
Total assets 167,388 176,412 187,493 221,611 217,140 232,631 255,716 271,554 290,413 310,738
Free cash flow (Rs mn)
Operating cash flow excl. working capital 38,208 28,979 42,074 31,027 27,028 31,622 38,319 42,474 44,772 49,016
Working capital changes 1,601 (19,189) 12,027 10,700 (6,825) (5,832) 10,747 (4,685) 327 (79)
Net financial income 5,149 6,827 7,563 5,580 5,311 5,397 8,645 11,120 11,545 12,001
Cash flow from operations 44,957 16,617 61,664 47,307 25,514 31,188 57,710 48,909 56,644 60,938
Capital expenditure (7,992) (9,179) (13,586) (5,141) (5,240) (5,675) (7,102) (12,000) (10,000) (10,000)
Free cash flow 36,965 7,438 48,078 42,166 20,274 25,513 50,608 36,909 46,644 50,938
Ratios
Gross profit per vehicle (Rs/unit) 13,708 13,212 14,258 15,620 17,028 18,668 21,391 23,069 23,311 23,939
EBITDA per vehicle (Rs/unit) 6,966 6,304 6,175 6,946 6,814 7,481 9,349 9,852 10,002 10,468
Gross margin (%) 32.2 30.6 31.1 28.9 29.0 28.8 32.6 33.6 33.0 32.9
EBITDA margin (%) 16.4 14.7 13.7 13.0 11.5 11.8 14.0 14.4 14.2 14.4
PAT margin (%) 11.5 10.1 12.6 9.6 8.5 8.6 10.6 11.5 11.3 11.4
Book Value (Rs/share) 615 671 727 781 809 856 922 990 1,062 1,140
RoAE (%) 32.4 26.4 26.0 19.7 15.6 17.5 22.3 23.9 23.4 23.7
CRoCI (%) 35.9 26.4 23.6 25.2 19.7 21.6 29.2 28.5 28.3 29.1

Source: Company, Kotak Institutional Equities

Automobiles & Components

India Research

k.kathirvelu-kotak.com
 UPDATE

Economy
Prices
March 12, 2025

Space opening up for deeper rate cut cycle Summary of key macro metrics for India
CPI inflation in February softened to 3.6%, due to moderation in food prices. 2023 2024 2025E 2026E
We expect inflation to remain around the RBI’s 4% target for most of FY2026 Real economy
and average around 4.1% in FY2026E. Based on our growth-inflation mix and Real GDP growth (%) 7.0 8.2 6.1 6.4
the RBI’s focus on growth, we expect another 50 bps of rate cuts by the June Nominal GDP growth (%) 14.2 9.6 9.7 10.5

policy with room for another 25-50 bps of cuts contingent on how the adverse CPI Inflation (avg., %) 6.7 5.4 4.7 4.1
Public finance
domestic and global risks pan out.
Center's GFD/GDP (%) 6.4 5.6 4.8 4.4
Monetary policy
Food price inflation moderates to 3.7% Repo Rate (%, eop) 6.50 6.50 6.25 5.50
February CPI inflation decelerated to 3.6% (Kotak: 3.8%; Consensus: 3.8%; SDF Rate (%, eop) 6.25 6.25 6.00 5.25
January: 4.3%). Headline CPI fell by 0.5% mom led by a sharp fall in food prices. CRR (%, eop) 4.5 4.5 4.0 4.0
External sector
Food inflation moderated to 3.7%, led by sharp decline in prices of vegetables,
Current Account Balance (% of GDP) (2.0) (0.7) (1.0) (1.4)
eggs, pulses, spices and meat and fish. Durable food inflation remained benign Brent crude oil price (avg., USD/bbl) 95.4 82.9 80.0 80.0
at 2.9% while volatile food inflation also declined to 6.3%. CPI excluding USD/INR (avg.) 80.3 82.8 84.6 87.6
vegetables was stable at 3.9% (see Exhibits 1-4). High frequency data shows a
Source: CEIC, Bloomberg, RBI, Kotak Economics Research estimates
mixed picture, but we do not expect sharp moves. Urban and rural inflation have
eased, though rural inflation continued to be relatively higher (see Exhibit 5).

Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
Core inflation accelerates
Quick Numbers
Core inflation (CPI excluding food, beverages and fuel) inched up to 4% (Kotak:
3.7%; January: 3.7%). Core inflation increased 0.5% mom driven by a sharp
February headline CPI inflation at 3.6%; core CPI
increase in personal effects prices (mostly gold). Gold prices increased 7.2% inflation at 4%
mom in February, and the momentum is expected to continue in March. Various
core inflation metrics indicate similar hardening (see Exhibit 6). We estimate Retain our FY2025 and FY2026 average inflation
average core inflation at 3.5% in FY2025E and 4.5% in FY2026E. estimates at 4.7% and 4.1%, respectively

Expect RBI to cut rates by 50 bps by June policy, with

IIP growth picks up in January room for another 25-50 bps of cuts
IIP growth in January improved to 5% (December: 3.5%), due to a pick-up in the
manufacturing sector. According to the sectoral classification, the IIP growth
was led by the manufacturing sector at 5.5%, followed by mining (4.4%), and
electricity (2.4%). In terms of the use-based classification, most categories
registered positive growth, led by capital goods (7.8%) and consumer durables
(7.2%), barring consumer non-durables ((-)0.2%) (see Exhibits 7-8).

On track for another 50 bps rate cut by June; room open for 25-50 bps more
We marginally reduce our inflation estimates to 4.1% in FY2026E (earlier 4.2%)
after 4.7% in FY2025E (see Exhibits 9-10). We continue to expect a repo rate cut
of 25 bps each in April and June policies given the (1) RBI’s growth concerns
visible in steady liquidity infusion and gradual easing of regulatory headwinds,
(2) inflation staying around the 4% mark, and (3) RBI’s tolerance for two -way
INR moves. We expect the RBI to change its policy stance to accommodative Related Research
and continue liquidity injection. In case growth headwinds intensify (from US → CPI inflation continues to decline
growth slowdown, tariff-driven disruptions, and downside to domestic growth
→ December CPI inflation softens as expected
from muted capex, etc.), we see scope for additional 25-50 bps of rate cuts
→ Inflation decelerates on lower food prices
post-June policy, given the comfortable inflation trajectory.

Full sector coverage on KINSITE

Suvodeep Rakshit Upasna Bhardwaj Harsh Doshi Swarupjit Palit

 50

Inflation declines sequentially in February

Trend in momentum, base effect, and monthly change in CPI inflation (%)

Momentum Base effect Monthly change in CPI inflation

4

(1)

(2)
Jul-22

Jul-23

Jul-24

Jul-25
Apr-22

Apr-23

Apr-24

Apr-25
Oct-22

Oct-23

Oct-24
Jan-24

Jan-25
Jan-22

Jan-23

Source: CEIC, Kotak Economics Research

Headline inflation softening led by moderation in food prices

Contribution to CPI inflation by major segments (%)

Food and beverages Misc. Others CPI inflation

8

0
Nov-24
Nov-22

Nov-23
May-22

May-23

May-24
Feb-23

Feb-24

Feb-25
Feb-22

Aug-22

Aug-23

Aug-24

(1)

Source: CEIC, Kotak Economics Research

Economy
India Research
k.kathirvelu-kotak.com
 51

Food inflation moderates due to decline in prices of vegetables, eggs, pulses, spices, meat and fish
Contribution to CPI food inflation by major segments (%)

Cereals and products Milk and milk product Vegetables

Prepared meals, snacks, sweets, etc Meat and fish Oils and fats
Others Food and beverages
14
12
10
8
6
4
2
0
(2)
(4)
Jun-22

Jun-24
Jun-23

Nov-23
Nov-22

Nov-24
Sep-22

Sep-24
Sep-23
Dec-22

Dec-24
Dec-23
May-22

May-24
Jul-23
Jul-22

Apr-23
May-23

Jul-24
Apr-22

Oct-23

Apr-24
Oct-22

Oct-24
Feb-22

Feb-24
Feb-23

Feb-25
Jan-23

Jan-24

Jan-25
Mar-22

Mar-23

Aug-23

Mar-24

Aug-24
Aug-22

Source: CEIC, Kotak Economics Research

Both durable and volatile food inflation decelerated

Trend in various measures of food inflation

CPI F&B - durable CPI F&B - non-durable CPI F&B excl. vegetables and fruits
CPI excl. vegetables
30
10
25 9
20 8
7
15
6
10 5
5 4
3
0
2
(5) 1
(10) 0
Sep-18

Jun-20
Nov-19
Dec-16

Dec-23
Oct-15
May-16

Jul-17

Oct-22
May-23

Jul-24
Apr-19
Feb-18

Feb-25
Aug-14

Jan-21
Aug-21
Mar-15

Mar-22
Jun-20
Nov-19
Sep-18

Dec-23
Dec-16
May-16
Oct-15

Jul-17

Oct-22
May-23

Jul-24
Apr-19
Feb-18

Feb-25
Jan-21
Aug-14

Aug-21
Mar-22
Mar-15

Notes:
(a) F&B represents food and beverages.
(b) Durable food items include cereals, pulses, milk, meat & fish, spices, non-alcoholic beverages, and prepared meals & snacks. Non-durable are the remaining
items including vegetables, fruits, etc.

Source: CEIC, Kotak Economics Research

Economy
India Research
k.kathirvelu-kotak.com
 52

Rural inflation continues to outpace urban inflation though declining

Rural and urban CPI inflation (%)

Rural CPI inflation Urban CPI inflation

10

0
Feb-19

Feb-20

Feb-23

Feb-24

Feb-25
Feb-21

Feb-22
Aug-20

Aug-21

Aug-22
Aug-19

Aug-23

Aug-24
Source: CEIC, Kotak Economics Research

Core inflation continues to inch up

Trend in various measures of core CPI inflation (%)

Core inflation Core inflation (excl. pan tobacco)

Core-core inflation Super-core inflation
7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
Aug-19

Aug-20

Aug-22

Aug-24
Aug-21

Aug-23
Feb-19

Feb-20

Feb-22

Feb-23

Feb-25
Feb-21

Feb-24

Notes:
(a) Core is defined as headline excluding food and fuel.
(b) Core-core is defined as core excluding petrol and diesel.
(c) Super-core is defined as core-core excluding gold and silver.

Source: CEIC, Kotak Economics Research

Economy
India Research
k.kathirvelu-kotak.com
 53

Industrial activity growth picked up in January

Sectoral classification of IIP growth, March fiscal year-ends, 2023-25 (%)

Mining (%) Manufacturing (%) Electricity (%) General (%)
2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025
April 8.4 5.1 6.8 5.6 5.5 4.2 11.8 (1.1) 10.2 6.7 4.6 5.2
May 11.2 6.4 6.6 20.7 6.3 5.1 23.5 0.9 13.7 19.7 5.7 6.3
June 7.8 7.6 10.3 12.9 3.5 3.5 16.4 4.2 8.6 12.6 4.0 4.9
July (3.3) 10.7 3.8 3.1 5.3 4.7 2.3 8.0 7.9 2.2 6.2 5.0
August (3.9) 12.3 (4.3) (0.5) 10.0 1.2 1.4 15.3 (3.7) (0.7) 10.9 0.0
September 5.2 11.5 0.2 2.0 5.1 4.0 11.6 9.9 0.5 3.3 6.4 3.2
October 2.6 13.1 0.9 (5.8) 10.6 4.4 1.2 20.4 2.0 (4.1) 11.9 3.7
November 9.7 7.0 1.9 6.7 1.3 5.5 12.7 5.8 4.4 7.6 2.5 5.0
December 10.1 5.2 2.7 3.6 4.6 3.4 10.4 1.2 6.2 5.1 4.4 3.5
January 9.0 6.0 4.4 4.5 3.6 5.5 12.7 5.6 2.4 5.8 4.2 5.0
February 4.8 8.1 5.9 4.9 8.2 7.6 6.0 5.6
March 6.8 1.3 1.5 5.9 (1.6) 8.6 1.9 5.5
Average 5.7 7.9 5.0 5.6 9.2 7.2 5.5 6.0

Source: CEIC, Kotak Economics Research

Improvement in industrial activity across the board

Use-based classification of IIP growth, March fiscal year-ends, 2023-25 (%)
Primary goods Capital goods Intermediate goods Infra and construction Consumer durables Consumer non-durables
2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025
April 10.3 1.9 7.0 12.0 4.4 2.8 7.1 1.7 3.8 4.0 13.4 8.5 7.2 (2.3) 10.5 (0.8) 11.4 (2.5)
May 17.8 3.6 7.3 53.3 8.1 2.6 17.5 3.4 3.5 18.4 13.0 7.6 59.1 1.5 12.6 1.4 8.9 2.8
June 13.8 5.3 6.3 28.6 2.9 3.6 10.5 5.2 3.2 9.4 13.3 8.2 25.2 (6.8) 8.8 2.9 0.5 (1.0)
July 2.5 7.7 5.9 5.1 5.1 11.7 3.7 3.2 7.0 4.8 12.6 5.5 2.3 (3.6) 8.2 (2.9) 8.3 (4.2)
August 1.7 12.4 (2.6) 4.3 13.1 0.0 1.3 7.4 3.1 3.0 15.7 2.7 (4.4) 6.0 5.4 (9.0) 9.9 (4.4)
September 9.5 8.0 1.8 11.4 8.4 3.5 1.7 6.1 4.3 8.2 10.1 3.5 (5.5) 1.0 6.3 (5.7) 2.7 2.2
October 2.1 11.4 2.5 (2.9) 21.7 2.9 (2.3) 9.5 4.8 1.7 12.6 4.7 (18.1) 15.9 5.5 (13.0) 9.3 2.8
November 4.8 8.4 2.7 20.7 (1.1) 8.8 3.5 3.4 4.8 14.3 1.5 8.1 5.0 (4.8) 14.1 10.0 (3.4) 0.4
December 8.5 4.8 3.8 7.8 3.7 10.4 1.5 3.7 6.4 11.0 5.5 7.4 (11.2) 5.2 8.3 7.9 3.0 (7.5)
January 9.8 2.9 5.5 10.5 3.2 7.8 1.4 5.3 1.4 11.3 5.5 7.0 (8.2) 11.6 7.2 6.5 0.3 (0.2)
February 7.0 5.9 11.0 1.7 1.0 8.6 9.0 8.3 (4.1) 12.6 12.5 (3.2)
March 3.3 3.0 10.0 7.0 1.8 6.1 7.2 7.4 (8.0) 9.5 (1.9) 5.2
Average 7.6 6.3 14.3 6.5 4.1 5.3 8.5 9.9 3.3 3.8 0.7 4.4

Source: CEIC, Kotak Economics Research

Economy
India Research
k.kathirvelu-kotak.com
 54

We estimate FY2025 and FY2026 average headline inflation at 4.7% and 4.1%, respectively
Trend in headline CPI and core inflation (%)

CPI inflation Core CPI inflation

8

1
Sep-18

Sep-19

Sep-21

Sep-22

Sep-25
Sep-20

Sep-23

Sep-24
Mar-18

Mar-19

Mar-22

Mar-23

Mar-25

Mar-26
Mar-20

Mar-21

Mar-24
Source: CEIC, Kotak Economics Research

RBI projects CPI inflation estimate at 4.8% in FY2025, 4.2% in FY2026

RBI’s estimates for CPI inflation across various policies, March fiscal year-ends (%)

CPI inflation estimate in RBI policy (%)

Feb-24 Apr-24 Jun-24 Aug-24 Oct-24 Dec-24 Feb-25 Kotak
3QFY25 4.6 4.6 4.6 4.7 4.8 5.7 5.6 5.6
4QFY25 4.7 4.5 4.5 4.3 4.2 4.5 4.4 3.9
FY2025 4.5 4.5 4.5 4.5 4.5 4.8 4.8 4.7
1QFY26 4.4 4.3 4.6 4.5 4.0
2QFY26 4.0 4.0 3.8
3QFY26 3.8 4.0
4QFY26 4.2 4.6
FY2026 4.2 4.1

Source: RBI, Kotak Economics Research estimates

Economy
India Research
k.kathirvelu-kotak.com
 55

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Automobiles & Components
Amara Raja Energy & Mobility SELL 978 950 (3) 179 2.1 183 58 62 68 17 16 14 2.3 2.1 1.8 10 9 8 15 14 14 0.6 0.6 0.7 9 4
Apollo Tyres SELL 407 385 (5) 259 3.0 638 21 26 29 20 16 14 1.8 1.6 1.5 7 6 6 9 11 11 1.5 1.7 1.7 8 4
Ashok Leyland ADD 196 240 22 576 6.6 2,936 11 11 12 19 17 16 5.2 4.4 3.9 11 11 10 31 28 26 2.2 2.3 3.1 19 8
Bajaj Auto SELL 7,515 7,000 (7) 2,099 24 279 303 336 370 25 22 20 7.9 7.4 6.9 19 17 15 33 34 35 3.2 3.6 3.9 42 22
Balkrishna Industries SELL 2,544 2,400 (6) 492 5.6 193 87 92 104 29 28 24 4.8 4.2 3.7 18 16 14 18 16 16 0.7 0.8 0.8 7 3
Bharat Forge SELL 1,090 1,000 (8) 521 6.0 478 22 29 38 49 38 29 6.7 5.9 5.1 21 19 16 14 17 19 0.6 0.7 0.8 15 8
CEAT SELL 2,604 2,600 (0) 105 1.2 40 124 152 162 21 17 16 2.4 2.2 2.0 8 7 7 12 13 13 1.2 1.4 1.5 6 2
CIE Automotive SELL 382 400 5 145 1.7 378 22 24 27 18 16 14 2.2 2.0 1.8 10 9 8 13 13 13 1.8 1.9 2.1 1 1
Eicher Motors SELL 5,017 4,250 (15) 1,376 15.8 272 170 180 198 30 28 25 7.5 6.5 5.7 26 23 21 27 25 24 1.1 1.2 1.4 30 16
Endurance Technologies REDUCE 1,899 1,900 0 267 3.1 141 55 65 75 34 29 25 4.8 4.2 3.7 17 15 13 14 15 15 0.6 0.7 0.8 2 1
Escorts Kubota SELL 2,923 2,925 0 327 3.7 112 96 106 124 30 28 24 3.2 2.9 2.6 26 23 19 10 10 11 0.5 0.5 0.6 8 3
Exide Industries SELL 341 300 (12) 290 3.3 850 13 15 17 26 22 20 2.1 1.9 1.8 15 13 12 8 9 9 0.7 0.7 0.7 12 4
Hero Motocorp SELL 3,610 3,400 (6) 722 8.3 200 229 240 261 16 15 14 3.7 3.5 3.2 10 9 8 25 24 24 4.4 4.7 5.1 30 16
Hyundai Motor ADD 1,653 2,000 21 1,343 15.4 813 69 79 91 24 21 18 8.9 7.1 5.7 14 12 10 37 34 32 0.8 1.9 2.2 27 16
Mahindra & Mahindra BUY 2,653 3,500 32 3,299 37.8 1,159 105 119 131 25 22 20 4.9 4.1 3.5 19 17 15 21 20 19 0.6 0.7 0.7 105 56
Maruti Suzuki ADD 11,640 13,500 16 3,660 42.0 314 483 530 581 24 22 20 4.0 3.6 3.2 16 14 12 17 17 17 1.7 1.8 2.0 56 30
MRF SELL 107,116 106,500 (1) 454 5.2 4 4,225 5,227 5,917 25 20 18 2.5 2.2 2.0 11 9 8 10 11 12 0.2 0.2 0.3 9 3
Ola Electric REDUCE 51 65 27 225 2.6 4,411 (4) (3) (2) NM NM NM 4.0 5.2 6.5 NM NM NM NM NM NM 0.0 0.0 0.0 31 9
Samvardhana Motherson ADD 125 140 12 883 10.1 7,036 5 6 7 23 21 17 2.6 2.3 2.1 9 9 8 12 12 13 0.7 0.7 0.8 26 13
Schaeffler India REDUCE 3,309 3,100 (6) 517 5.9 156 60 68 76 55 49 44 9.7 8.8 7.9 35 31 27 19 19 19 0.1 0.0 0.0 2 1
SKF ADD 3,706 4,150 12 183 2.1 49 100 124 150 37 30 25 6.2 5.6 5.0 28 22 17 17 19 20 1.0 1.3 1.5 2 1
Sona BLW Precision ADD 505 585 16 314 3.6 618 10 12 14 53 41 35 5.5 5.0 4.4 30 24 21 14 13 13 0.4 0.5 0.6 13 7
Tata Motors ADD 668 750 12 2,460 28.2 3,677 58 67 82 12 10 8 2.4 2.0 1.6 5 5 4 23 22 22 1.0 1.5 2.2 117 42
Timken ADD 2,585 3,175 23 194 2.2 75 54 67 84 48 39 31 6.9 5.9 5.0 33 26 21 16 16 18 0.0 0.0 0.0 4 2
TVS Motor REDUCE 2,259 2,200 (3) 1,073 12.3 475 53 63 76 43 36 30 14.1 11.1 8.8 26 22 19 33 35 33 0.6 0.7 0.8 23 12
Uno Minda SELL 861 930 8 494 5.7 572 17 19 21 52 45 41 8.4 7.2 6.1 27 23 21 16 16 15 0.3 0.3 0.3 9 4
Varroc Engineering SELL 422 500 18 64 0.7 153 7 25 33 59 17 13 3.7 2.7 2.2 9 7 6 6 16 17 — — — 3 1
Automobiles & Components Cautious 22,522 258.2 23.9 21.0 18.2 4.3 3.8 3.3 12.8 11.5 10.0 18.1 18.1 18.2 1.2 1.5 1.7 619 286
Banks
AU Small Finance Bank ADD 507 650 28 378 4.3 744 29 36 50 18 14 10 2.3 2.0 1.7 — — — 13 14 17 — — — 20 10
Axis Bank BUY 1,011 1,500 48 3,131 35.9 3,087 84 91 104 12 11 10 1.8 1.6 1.4 — — — 16 15 15 1.2 1.3 1.5 108 71
Bandhan Bank BUY 142 225 59 228 2.6 1,611 18 23 25 8 6 6 1.0 0.9 0.8 — — — 12 15 14 2.0 2.6 2.8 17 6
Bank of Baroda ADD 202 270 33 1,047 12.0 5,178 35 33 33 6 6 6 0.9 0.8 0.7 — — — 15 13 12 3.5 3.3 3.3 28 12
Canara Bank ADD 82 105 27 748 8.6 9,071 17 17 16 5 5 5 0.8 0.7 0.7 — — — 17 14 12 4.2 4.1 3.9 24 9
City Union Bank ADD 149 180 21 110 1.3 741 15 16 19 10 9 8 1.3 1.1 1.0 — — — 13 12 13 1.6 1.7 2.0 4 2
DCB Bank BUY 104 160 53 33 0.4 313 19 22 32 5 5 3 0.7 0.6 0.5 — — — 11 12 15 1.7 2.4 4.0 2 1
Equitas Small Finance Bank BUY 59 85 45 67 0.8 1,139 2 6 9 34 9 6 1.1 1.0 0.9 — — — 3 11 15 — — — 3 1
Federal Bank BUY 178 225 26 437 5.0 2,435 16 17 20 11 11 9 1.4 1.2 1.1 — — — 12 12 13 1.3 1.4 1.7 18 9
HDFC Bank BUY 1,711 1,900 11 13,091 150.1 7,597 87 101 114 20 17 15 2.7 2.4 2.2 — — — 14 15 15 1.2 1.4 1.6 212 137
ICICI Bank BUY 1,244 1,500 21 8,786 100.7 7,023 66 67 74 19 18 17 3.2 2.8 2.5 — — — 18 16 16 1.1 1.1 1.2 151 95
IndusInd Bank REDUCE 685 850 24 533 6.1 778 52 91 113 13 7 6 0.8 0.8 0.7 — — — 6 10 12 1.1 1.9 2.4 74 36
Karur Vysya Bank BUY 193 260 35 154 1.8 804 23 24 27 8 8 7 1.4 1.2 1.1 — — — 17 16 16 3.1 3.2 3.6 4 2
Punjab National Bank ADD 87 110 27 999 11.5 11,493 14 13 13 6 7 6 0.9 0.8 0.7 — — — 14 11 11 3.3 3.0 3.1 30 11
SBI Cards and Payment Services BUY 835 850 2 795 9.1 951 21 29 39 39 29 21 5.7 4.9 4.1 — — — 16 18 21 0.4 0.4 0.5 16 7
State Bank of India BUY 723 975 35 6,453 74.0 8,925 70 70 87 10 10 8 1.7 1.5 1.3 — — — 16 14 15 2.0 2.2 2.3 102 46
Ujjivan Small Finance Bank BUY 35 50 42 68 0.8 1,935 4 4 6 9 10 6 1.1 1.0 0.9 — — — 13 11 16 2.5 2.3 3.8 5 2
Union Bank BUY 114 155 36 867 9.9 7,634 22 20 21 5 6 5 0.8 0.7 0.7 — — — 16 13 12 4.0 3.6 3.7 17 6
Utkarsh Small Finance Bank ADD 22 30 36 24 0.3 1,102 (2) 1 4 NM 36 5 0.9 0.9 0.8 — — — NM 2 16 — — — 1 0
YES Bank SELL 16 17 5 506 5.8 28,768 1 1 2 22 13 9 1.1 1.0 0.9 — — — 5 8 10 — — — 20 7
Banks Attractive 38,456 440.9 13.3 12.5 11.0 1.9 1.7 1.5 14.0 13.2 13.5 1.5 1.6 1.8 853 471

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research

k.kathirvelu-kotak.com
 56

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Capital goods
ABB ADD 5,140 5,350 4 1,089 12.5 212 88 95 102 58 54 50 15.4 13.3 11.7 45 42 39 29 26 25 0.6 0.7 0.8 30 13
Bharat Electronics SELL 277 260 (6) 2,024 23.2 7,310 7 8 9 40 34 29 10.4 8.8 7.5 29 24 21 29 28 28 1.0 1.2 1.4 64 27
BHEL SELL 194 115 (41) 674 7.7 3,482 1 5 11 139 35 17 2.7 2.5 2.1 NM 22 12 2 7 13 (0.0) (0.2) (0.7) 34 11
Carborundum Universal BUY 962 980 2 183 2.1 190 20 25 33 49 38 29 5.3 4.8 4.2 24 22 17 12 13 16 0.4 0.5 0.7 2 1
CG Power & Industrial SELL 608 520 (15) 930 10.7 1,527 6 8 10 95 72 58 25.0 20.1 16.1 69 53 43 26 28 28 (0.3) (0.4) (0.5) 27 13
Cochin Shipyard SELL 1,282 830 (35) 337 3.9 263 32 31 38 41 41 34 6.0 5.5 4.9 28 26 23 16 14 15 0.7 0.8 0.9 11 6
Cummins India BUY 2,819 3,700 31 781 9.0 277 70 80 93 40 35 30 11.2 9.9 8.7 37 32 27 30 30 31 1.4 1.6 1.8 24 13
G R Infraprojects SELL 991 1,090 10 96 1.1 97 72 84 103 14 12 10 1.2 1.1 1.0 11 9 7 9 10 11 0.0 0.0 0.0 1 0
IRB Infrastructure ADD 44 63 44 264 3.0 6,039 2 3 3 27 17 15 1.4 1.3 1.3 9 8 7 6 8 9 3.9 5.3 6.0 12 4
Kalpataru Projects BUY 878 1,260 43 150 1.7 160 44 71 92 20 12 10 2.4 2.1 1.7 9 7 6 13 18 20 0.5 0.7 1.0 6 3
KEC International REDUCE 715 880 23 190 2.2 257 25 43 58 29 16 12 3.3 2.8 2.4 13 9 7 13 19 21 0.4 0.7 0.9 10 4
L&T REDUCE 3,194 3,400 6 4,392 50.4 1,375 104 125 151 31 26 21 5.5 4.8 4.2 20 17 14 19 20 21 0.8 0.9 1.1 81 47
Praj Industries BUY 523 740 42 96 1.1 184 12 14 21 44 36 25 6.4 5.5 4.5 — — — 16 16 20 0.0 0.0 0.0 8 3
Siemens REDUCE 4,906 4,700 (4) 1,747 20.0 356 78 92 108 63 53 45 10.0 8.8 7.7 77 65 56 17 18 18 0.4 0.5 0.6 32 15
Thermax ADD 3,262 3,600 10 389 4.5 113 58 75 88 56 44 37 7.5 6.6 5.8 43 34 28 14 16 17 0.4 0.5 0.5 6 3
Capital goods Cautious 13,342 153.0 41.0 32.7 26.4 6.2 5.5 4.8 26.2 21.4 17.6 15.2 17.0 18.3 0.7 0.8 0.9 349 163
Capital Markets
360 One REDUCE 846 1,150 36 329 3.8 391 26 32 37 33 26 23 5.2 4.6 4.1 — — — 21 19 19 1.2 1.5 1.8 11 6
ABSL AMC ADD 607 780 29 175 2.0 288 31 33 35 19 18 17 5.0 4.5 4.1 — — — NM NM NM 3.1 3.3 3.5 3 2
Computer Age Management Services ADD 3,324 4,000 20 164 1.9 49 95 102 119 35 33 28 14.6 12.2 10.3 — — — 46 41 40 1.7 1.8 2.1 23 10
CRISIL SELL 4,386 4,300 (2) 321 3.7 73 94 112 128 47 39 34 12.5 11.2 10.1 — — — 29 30 31 1.3 1.7 1.9 5 2
HDFC AMC ADD 3,758 4,300 14 803 9.2 213 113 129 141 33 29 27 10.6 9.9 9.2 — — — 33 35 36 2.4 2.8 3.0 19 10
ICRA REDUCE 5,424 6,400 18 52 0.6 10 179 207 235 30 26 23 4.7 4.4 37.4 — — — 16 17 34 0.2 0.3 0.3 0 0
Kfin Technologies SELL 920 1,000 9 158 1.8 171 20 24 28 47 39 33 12.2 10.5 9.1 — — — 22 22 23 0.9 1.0 1.2 24 9
Nippon AMC ADD 524 660 26 332 3.8 630 20 23 25 26 23 21 8.0 7.8 7.5 — — — 32 34 36 3.5 3.9 4.2 8 4
UTI AMC BUY 942 1,300 38 121 1.4 127 62 55 59 15 17 16 2.6 2.6 2.5 — — — 18 15 16 5.3 4.7 5.0 2 1
Capital Markets Cautious 2,456 28.2 30.3 26.9 24.3 7.6 7.0 6.6 25 26 27 2.0 2.3 2.5 95 282
Commercial & Professional Services
SIS ADD 302 350 16 44 0.5 147 18 20 23 17 15 13 1.7 1.5 1.3 8 7 7 10 10 11 — — — 0 0
TeamLease Services SELL 1,973 2,500 27 33 0.4 17 76 90 117 26 22 17 3.6 3.1 2.6 19 14 11 14.7 15.1 16.7 — — — 2 1
Commercial & Professional Services Cautious 77 0.9 19.6 17.2 14.4 2.1 1.9 1.7 10.3 9.0 7.8 10.9 11.0 11.6 0.0 0.0 0.0 2 1
Commodity Chemicals
Asian Paints REDUCE 2,251 2,250 (0) 2,159 24.8 959 43 47 52 52 48 43 10.4 9.4 8.5 35 33 30 21 21 21 0.9 1.0 1.2 35 19
Berger Paints SELL 483 465 (4) 563 6.5 1166 10 11 12 48 45 42 9.2 8.2 7.4 30 29 27 20 19 19 0.7 0.9 1.1 6 2
Indigo Paints REDUCE 1,004 1,200 20 48 0.5 48 29 30 34 34 33 29 4.7 4.2 3.8 20 19 16 14 13 14 0.5 0.7 0.9 1 1
Kansai Nerolac REDUCE 228 250 10 184 2.1 808 8 9 10 27 25 24 3.1 2.9 2.7 16 16 15 12 12 12 1.8 2.0 2.1 1 1
Tata Chemicals SELL 806 750 (7) 205 2.4 255 19 25 27 42 32 30 0.9 0.9 0.9 8 7 6 2 3 3 1.9 1.9 1.9 10 4
Commodity Chemicals Cautious 3,160 36.2 47.5 43.8 39.4 5.6 5.3 4.9 27.2 25.2 23.2 11.8 12.1 12.5 1.0 1.1 1.3 53 27
Construction Materials
ACC REDUCE 1,866 2,025 9 350 4.0 188 70 102 116 27 18 16 2.0 1.9 1.7 13 9 8 8 11 11 0.7 1.1 1.2 7 3
Ambuja Cements SELL 489 370 (24) 1,205 13.8 2,463 9 13 16 54 36 30 2.2 2.1 2.0 22 16 12 5 6 7 0.3 0.4 0.4 15 7
Dalmia Bharat SELL 1,641 1,500 (9) 308 3.5 187 38 50 69 43 33 24 1.8 1.7 1.6 13 11 9 4 5 7 0.3 0.5 0.6 7 4
Grasim Industries REDUCE 2,399 2,500 4 1,632 18.7 680 67 97 126 36 25 19 1.8 1.7 1.5 13 10 9 5 7 8 0.5 0.5 0.6 17 9
J K Cement SELL 4,351 2,875 (34) 336 3.9 77 90 118 150 49 37 29 5.7 5.0 4.3 20 16 13 12 14 16 0.3 0.3 0.3 6 3
Nuvoco Vistas Corp. REDUCE 297 350 18 106 1.2 357 (2) 4 7 NM 66 40 1.2 1.2 1.1 11 10 8 NM 2 3 0.0 0.0 0.0 1 0
Shree Cement SELL 27,511 18,000 (35) 993 11.4 36 259 400 443 106 69 62 4.7 4.4 4.2 26 21 18 5 7 7 0.1 0.2 0.2 10 5
The Ramco Cements SELL 820 570 (30) 194 2.2 236 9 18 25 87 47 33 2.5 2.3 2.2 17 15 13 3 5 7 0.1 0.2 0.3 5 2
UltraTech Cement SELL 10,494 7,100 (32) 3,030 34.7 295 203 285 357 52 37 29 4.4 4.1 3.7 26 19 16 9 12 13 0.5 0.7 0.9 45 25
Construction Materials Cautious 8,154 93.5 49.3 33.9 27.0 2.8 2.6 2.4 17.8 13.9 11.8 5.6 7.7 8.9 0.4 0.6 0.7 113 58

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research

k.kathirvelu-kotak.com
 57

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Consumer Durables & Apparel
Aditya Birla Fashion and Retail REDUCE 243 250 3 297 3.4 1,220 (6) (3) (1) NM NM NM 3.3 3.4 3.4 16 13 10 NM NM NM — — — 8 3
Campus Activewear ADD 250 290 16 76 0.9 304 4 5 6 62 49 41 9.8 8.5 7.3 31 26 22 17 18 19 — 1— 0.6 4 2
Cello World ADD 538 815 52 119 1.4 221 15 18 20 36 30 26 5.6 5.1 4.6 22 20 17 20 18 18 0.9 1.2 1.5 1 1
Crompton Greaves Consumer BUY 358 390 9 230 2.6 643 9 11 13 42 33 27 6.9 6.1 5.4 26 21 18 17 20 21 1.0 1.3 1.6 9 5
Eureka Forbes BUY 503 750 49 97 1.1 209 7 10 14 67 49 36 2.4 2.3 2.2 37 28 21 4 5 6 — — — 1 1
Havells India SELL 1,480 1,450 (2) 928 10.6 628 23 28 34 64 53 43 11.2 9.9 8.7 43 35 28 19 20 21 0.6 0.8 0.9 18 9
Page Industries SELL 40,123 38,000 (5) 448 5.1 11 641 758 890 63 53 45 23.1 19.3 16.3 42 36 31 40 40 39 0.9 1.1 1.3 17 8
Polycab SELL 5,009 4,750 (5) 753 8.6 151 125 144 176 40 35 28 7.9 6.7 5.7 27 23 19 21 21 22 0.6 0.8 1.0 42 17
Vedant Fashions REDUCE 778 950 22 189 2.2 243 18 20 23 44 39 34 10.1 8.7 7.4 26 23 19 25 24 23 — — — 3 2
Voltas SELL 1,445 1,100 (24) 478 5.5 331 26 30 38 55 47 38 7.4 6.7 6.0 42 37 31 14 15 16 0.5 0.6 0.8 31 15
Whirlpool ADD 940 1,225 30 119 1.4 127 27 33 39 35 28 24 3.1 2.9 2.6 18 14 12 9 10 11 0.7 0.9 1.1 5 3
Consumer Durables & Apparel Cautious 3,735 42.8 60.8 47.9 38.1 7.2 6.6 5.9 30.4 25.2 20.8 11.9 13.7 15.5 0.6 0.7 0.9 138 65
Consumer Staples
Britannia Industries ADD 4,792 5,275 10 1,154 13.2 241 88 99 112 54 49 43 26.9 25.7 24.7 37 33 29 51 54 59 1.9 2.2 2.4 22 12
Colgate-Palmolive (India) REDUCE 2,433 2,750 13 662 7.6 272 54 57 62 45 43 39 34.4 32.9 31.3 32 30 28 77 79 82 2.1 2.3 2.5 14 8
Dabur India ADD 500 570 14 886 10.2 1,772 10 12 13 48 43 38 8.4 7.8 7.2 36 32 28 18 19 20 1.3 1.4 1.6 14 8
Godrej Consumer Products ADD 1,044 1,300 25 1,068 12.2 1,023 19 23 27 54 45 39 7.9 7.3 6.7 36 32 28 15 17 18 1.0 1.2 1.5 19 12
Hindustan Unilever ADD 2,193 2,635 20 5,152 59.1 2,350 43 48 53 51 46 42 10.0 9.6 9.3 35 32 29 20 21 23 1.7 1.9 2.1 47 29
Honasa Consumer ADD 215 250 17 70 0.8 322 2 4 6 109 58 39 5.8 5.1 4.4 106 40 25 6 9 12 0.0 0.0 0.0 3 2
ITC ADD 412 500 21 5,160 59.2 12,428 16 17 19 25 24 22 6.8 6.6 6.3 20 18 16 26 27 29 3.4 3.6 3.9 80 50
Jyothy Labs SELL 330 400 21 121 1.4 367 10 11 12 32 30 28 6.1 5.6 5.2 23 22 20 20 19 19 1.7 1.8 2.1 3 1
Marico REDUCE 600 650 8 778 8.9 1,290 13 14 15 48 44 40 18.8 17.5 16.3 36 32 28 41 41 42 1.7 1.9 2.1 13 7
Nestle India ADD 2,196 2,420 10 2,117 24.3 964 31 36 40 70 62 55 47.6 38.0 33.3 46 40 36 78 69 65 0.9 1.1 1.5 22 13
Sula Vineyards ADD 250 400 60 21 0.2 84 8 10 11 30 25 22 3.5 3.2 2.9 15 13 12 12 13 14 0.8 1.2 1.4 2 1
Tata Consumer Products ADD 945 1,070 13 936 10.7 989 13 17 21 70 55 45 4.8 4.6 4.4 37 32 27 7 8 10 0.9 1.1 1.3 19 10
United Breweries REDUCE 1,911 1,875 (2) 505 5.8 264 18 28 36 104 68 53 11.4 10.4 9.5 59 41 33 11 16 19 0.6 0.9 1.2 7 3
United Spirits ADD 1,336 1,480 11 972 11.1 727 19 22 25 71 61 53 12.0 10.7 9.6 48 41 36 18 19 19 0.5 0.7 0.8 14 8
Varun Beverages ADD 478 585 22 1,618 18.5 3,382 8 10 11 62 48 42 9.7 8.3 7.1 34 29 25 22 19 18 0.1 0.3 0.4 50 28
Consumer Staples Attractive 21,219 243.3 43.6 39.1 35.0 9.7 9.1 8.6 30.8 27.6 24.7 22 23 25 1.8 2.0 2.2 331 191
Diversified Financials
Aadhar Housing Finance BUY 425 560 32 183 2.1 427 21 27 33 20 16 13 2.8 2.4 2.0 — — — 17 17 17 — — — 3 1
Aavas Financiers BUY 1,816 1,925 6 144 1.6 79 74 88 109 25 21 17 3.3 2.8 2.4 — — — 14 15 16 — — — 6 4
Aptus Value Housing Finance ADD 300 370 23 150 1.7 499 15 17 20 20 18 15 3.5 3.1 2.7 — — — 18 18 19 1.4 1.7 2.0 3 2
Bajaj Finance ADD 8,484 8,500 0 5,259 60.3 618 266 335 414 32 25 21 5.7 4.8 4.0 — — — 20 20 21 0.4 0.5 0.6 113 59
Bajaj Finserv BUY 1,819 2,000 10 2,905 33.3 1,593 67 84 102 27 22 18 6.1 5.0 4.2 — — — 24 25 26 0.1 0.1 0.1 37 17
Bajaj Housing Finance REDUCE 116 100 (14) 965 11.1 8,318 3 3 4 45 35 28 4.8 4.2 3.7 — — — 13 13 14 0.0 0.0 0.0 17 8
Cholamandalam ADD 1,439 1,500 4 1,210 13.9 840 50 61 76 29 23 19 5.1 4.0 3.4 — — — 19 19 19 0.1 0.3 0.4 29 16
Five Star Business Finance ADD 650 890 37 191 2.2 291 36 42 50 18 16 13 3.0 2.5 2.1 — — — 18 18 18 — — — 9 4
Home First Finance BUY 1,000 1,375 38 90 1.0 89 44 54 68 23 19 15 3.6 3.1 2.6 — — — 17 18 19 — 0.5 0.7 6 3
India Shelter BUY 764 850 11 82 0.9 107 36 41 48 21 19 16 3.1 2.6 2.3 — — — 15 15 15 — — — 1 1
L&T Finance ADD 140 155 11 350 4.0 2,480 11 13 16 13 11 9 1.4 1.3 1.1 — — — 11 12 13 2.3 2.8 3.3 9 3
LIC Housing Finance BUY 524 750 43 288 3.3 550 100 100 106 5 5 5 0.8 0.7 0.6 — — — 16 14 13 2.0 2.0 2.1 10 4
Mahindra & Mahindra Financial ADD 270 320 18 334 3.8 1,234 19 21 25 14 13 11 1.7 1.6 1.5 — — — 12 13 14 3.2 3.5 4.1 6 2
Muthoot Finance BUY 2,209 2,400 9 887 10.2 401 130 169 193 17 13 11 3.1 2.7 2.3 — — — 20 22 21 1.4 1.8 2.1 15 8
SBFC ADD 84 95 13 91 1.0 1,107 3 4 5 27 21 17 3.2 2.8 2.4 — — — 12 13 14 — — — 2 1
Shriram Finance BUY 637 730 15 1,198 13.7 1,879 53 52 65 12 12 10 2.1 1.9 1.6 — — — 16 16 17 1.2 1.2 1.5 45 22
Diversified Financials Attractive 14,327 164.3 22.5 19.0 15.7 3.8 3.2 2.7 16.7 16.9 17.5 0.5 0.6 0.8 310 153

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research

k.kathirvelu-kotak.com
 58

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Electric Utilities
Acme Solar Holdings BUY 197 320 62 119 1.4 605 5 13 4 41 15 54 2.3 2.0 1.9 - - - 8 14 4 0.0 0.0 0.0 4 2
CESC SELL 140 145 4 185 2.1 1,326 10 12 13 14 11 10 1.5 1.4 1.3 7 6 6 12 13 13 3.2 3.4 3.6 10 4
JSW Energy SELL 515 385 (25) 900 10.3 1,744 10 21 27 52 24 19 3.3 2.9 2.6 25 11 9 7 13 15 0.4 0.4 0.4 32 13
NHPC SELL 78 72 (8) 787 9.0 10,045 4 5 7 21 15 12 1.9 1.8 1.6 20 10 7 9 12 14 1.9 2.7 3.4 17 6
NTPC SELL 330 305 (8) 3,201 36.7 9,895 22 24 26 14.8 13.7 13 1.7 1.6 1.5 10 9 8 12 12 12 2.3 2.6 2.6 51 29
Power Grid SELL 267 275 3 2,484 28.5 9,301 17 19 21 15.8 13.8 13 2.7 2.5 2.3 9 8 8 17 19 19 3.8 4.2 4.5 42 24
Tata Power SELL 356 330 (7) 1,138 13.1 3,196 13 18 22 27 20 16 3.1 2.7 2.3 12 11 9 12 15 15 — — — 36 13
Electric Utilities Cautious 8,816 101.1 18.0 14.9 13.4 2.2 2.0 1.8 10.8 8.9 8.0 12.1 13.3 13.5 2.2 2.5 2.7 191 90
Electronic Manufacturing Services
Amber Enterprises ADD 6,522 7,720 18 221 2.5 34 77 134 169 85 49 39 9.4 7.8 6.5 31 24 20 12 18 18 — — — 72 14
Avalon Technologies SELL 681 600 (12) 45 0.5 65 10 16 22 70 43 31 7.3 6.2 5.2 42 27 20 11 16 18 — — — 7 3
Cyient DLM SELL 409 560 37 32 0.4 79 8 16 23 50 25 18 3.3 2.9 2.5 24 15 11 7 12 14 — — — 2 1
Dixon Technologies REDUCE 13,079 14,770 13 786 9.0 60 170 215 274 76.9 60.8 48 28.3 18.6 12.8 53 33 25 38 37 32 — — — 78 27
Kaynes Technology ADD 4,330 5,270 22 277 3.2 58 44 67 96 99.4 64.4 45 9.1 7.9 6.6 66 43 29 11 14 18 — — — 61 14
Syrma SGS Technology ADD 418 550 32 74 0.9 176 9 13 19 46 31 22 4.2 3.7 3.1 25 17 12 9 12 15 — — — 10 3
Electronic Manufacturing Services Cautious 1,435 16.5 83.6 53.1 40.1 12.8 10.2 8.1 45.0 30.2 22.5 15.3 19.3 20 0.0 0.0 0.0 230 62
Fertilizers & Agricultural Chemicals
Bayer Cropscience ADD 4,711 5,400 15 212 2.4 45 113 174 216 42 27 22 7.2 7.0 6.7 33 21 17 17 26 31 2.0 3.1 3.9 2 1
Godrej Agrovet ADD 734 840 15 141 1.6 192 24 27 33 31 27 22 4.7 4.5 4.0 18 16 13 15 17 19 1.6 1.8 2.2 1.5 0.7
Rallis India SELL 212 210 (1) 41 0.5 195 7 9 11 29 25 20 2.2 2.1 1.9 12— 10— 9— 7 9 10 1.4 1.7 1.9 1 1
UPL SELL 608 510 (16) 456 5.2 774 17 26 39 37 23 15 1.6 1.5 1.4 8 7 5 5 8 10 0.2 0.2 0.2 17 8
Fertilizers & Agricultural Chemicals Cautious 850 9.7 32.9 21.9 16.0 2.2 2.0 1.8 10.8 8.7 7.2 6.8 9.2 11.5 0.9 1.3 1.5 21 10
Gas Utilities
GAIL (India) SELL 159 145 (9) 1,047 12.0 6,575 14 12 12 11 13 13 1.5 1.4 1.3 9 9 9 14 11 11 3.8 4.1 4.4 28 14
Indraprastha Gas SELL 188 150 (20) 264 3.0 1,400 11 12 13 17 15 15 3.2 3.2 3.3 14 13 13 19 21 22 5.6 5.8 6.1 18 6
Mahanagar Gas SELL 1,300 1,030 (21) 128 1.5 99 98 90 91 13 14 14 2.2 2.0 1.9 8 9 8 18 15 13 2.6 2.4 2.4 10 4
Petronet LNG SELL 285 235 (18) 428 4.9 1,500 28 28 30 10 10 10 2.1 1.8 1.6 6 7 6 23 19 18 1.8 0.9 1.8 10 5
Gas Utilities Cautious 2,021 23.2 12.0 12.9 12.6 1.7 1.6 1.5 8.6 8.7 8.5 14.5 12.6 12.1 3.4 3.4 3.7 70 30
Health Care Services
Apollo Hospitals BUY 6,140 8,180 33 883 10.1 144 100 132 174 61 47 35 10.8 8.9 7.2 30 24 19 19 21 23 0.2 0.2 0.2 28 15
Dr Lal Pathlabs ADD 2,523 3,275 30 211 2.4 84 53 61 69 47 42 36 10.2 9.2 8.2 29 25 21 23 23 24 1.1 1.3 1.5 7 4
Global Health ADD 1,168 1,285 10 314 3.6 268 19 21 28 62 54 42 9.4 8.2 7.0 34 30 23 16 16 18 0.2 0.3 0.4 5 3
KIMS ADD 550 660 20 220 2.5 400 9 10 16 61 55 35 10.0 8.5 6.8 31 26 19 18 17 22 0.0 0.0 0.0 4 2
Max Healthcare REDUCE 990 1,020 3 962 11.0 971 14 19 25 69 52 39 9.2 7.9 6.6 43 33 25 14 16 18 0.1 0.1 0.2 30 18
Metropolis Healthcare ADD 1,645 2,000 22 84 1.0 51 32 41 51 51 40 32 6.9 6.1 5.5 24 20 17 14 16 18 0.4 0.5 0.9 4 2
Narayana Hrudayalaya ADD 1,573 1,490 (5) 322 3.7 204 38 47 56 41 34 28 8.8 7.0 5.6 27 21 18 24 23 22 — — — 15 7
Rainbow Children's Medicare ADD 1,242 1,500 21 126 1.4 102 24 29 35 52 43 36 8.6 7.4 6.3 25 21 18 18 19 19 0.3 0.4 0.5 2 1
Health Care Services Neutral 3,338 38.3 58.8 46.2 35.6 8.9 7.6 6.4 31.8 25.6 20.4 15.2 16.5 18.0 0.2 0.3 0.3 100 54

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research

k.kathirvelu-kotak.com
 59

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Hotels & Restaurants
Chalet Hotels ADD 781 885 13 171 2.0 218 7 27 42 105 28 19 5.7 4.8 3.9 25 17 12 7 18 23 (0.2) (0.3) (0.3) 6 3
Devyani International ADD 156 175 12 188 2.2 1,204 (0) (0) 0 NM NM 426 18.1 18.2 17.8 24 20 17 NM NM 4 0.0 0.0 0.0 7 3
Indian Hotels ADD 749 860 15 1,067 12.2 1,423 13 17 21 60 45 36 9.5 8.0 6.7 34 26 20 17 19 21 0.3 0.3 0.4 31 17
Jubilant Foodworks ADD 603 680 13 398 4.6 660 3 5 7 187 127 90 17.0 15.6 13.7 34 28 23 9 13 16 0.2 0.2 0.3 18 7
Lemon Tree Hotels REDUCE 127 135 6 101 1.2 792 2 3 5 51 37 26 9.7 8.6 7.4 19 15 12 20 25 31 1.0 1.2 1.6 7 3
Restaurant Brands Asia REDUCE 62 82 32 31 0.4 495 (2) (2) (1) NM NM NM 1.8 1.8 1.9 12 9 8 NM NM NM — — — 1 1
Samhi Hotels BUY 141 255 81 31 0.4 220 4 8 12 37 18 12 2.8 2.4 2.1 12 10 9 8 15 19 0.0 0.0 0.0 4 2
Sapphire Foods ADD 315 375 19 101 1.2 320 0 1 2 846 322 147 7.5 7.3 6.9 21 17 15 1 2 5 — — — 3 1
Westlife Foodworld REDUCE 689 700 2 107 1.2 156 1 4 7 896 172 102 17.9 16.5 14.6 33 25 20 2 10 15 — — — 2 1
Hotels & Restaurants Attractive 2,194 25.2 94.7 58.5 42.4 9.4 8.3 7.1 28.2 21.9 17.5 9.9 14.1 16.8 0.2 0.2 0.3 80 37
Insurance
HDFC Life Insurance BUY 632 850 34 1,361 15.6 2,020 8 10 11 75 65 56 8.8 8.3 7.8 — — — 12 13 14 0.3 0.4 0.4 23 13
ICICI Lombard ADD 1,666 2,150 29 825 9.5 493 54 61 70 31 27 24 5.8 4.9 4.2 — — — 20 19 19 0.5 0.6 0.6 15 9
ICICI Prudential Life BUY 545 825 51 788 9.0 1,441 7 9 10 75 64 54 6.6 6.1 5.5 — — — 9 10 11 0.6 0.6 0.6 9 5
LIC BUY 745 1,175 58 4,709 54.0 6,325 67 70 72 11 11 10 4.1 3.2 2.6 — — — 43 34 28 — — — 11 4
Max Financial Services BUY 1,062 1,425 34 366 4.2 345 2 2 3 569 496 423 — — — — — — 1 1 1 — — — 10 5
PB Fintech REDUCE 1,406 1,600 14 646 7.4 456 7 14 22 204 104 63 — — — 4 9 13 — — — 33 17
SBI Life Insurance ADD 1,409 1,800 28 1,412 16.2 1,005 24 27 29 59 53 49 8.5 7.5 6.7 — — — 15 15 14 0.3 0.3 0.3 23 14
Star Health and Allied Insurance REDUCE 353 425 20 207 2.4 585 10 15 22 34 23 16 3.0 2.6 2.3 — — — 9 12 15 — — — 5 3
Insurance Attractive 10,314 118.2 20.1 18.9 17.7 5.3 4.4 3.7 27 23 21 0.1 0.1 0.1 129 71
Internet Software & Services
Brainbees Solutions BUY 380 540 42 197 2.3 523.4 (3) (4) (0) NM NM NM 4.1 4.1 4.0 79 67 31 NM NM NM — — — 4 2
Cartrade Tech SELL 1,533 900 (41) 73 0.8 51.5 24 27 34 65 56 45 3.6 3.4 3.1 42 34 27 5.7 6.2 7.2 — — — 9 4
FSN E-commerce Ventures REDUCE 164 170 3 470 5.4 2,875.0 0 1 2 594 150 83 35.2 28.5 21.2 101 59 40 6.1 21 29 — — — 16 7
Indiamart REDUCE 1,935 2,350 21 116 1.3 59.9 87 99 108 22 20 18 5.4 4.5 3.8 15 12 10 27 25 23 1.3 1.3 1.3 7 4
Info Edge ADD 6,507 8,300 28 843 9.7 129.1 77 95 114 84 69 57 3.2 3.1 3.0 71 58 47 3.9 4.6 5.3 0.3 0.4 0.4 29 15
Just Dial BUY 826 1,330 61 70 0.8 85.0 67 66 72 12 13 12 1.5 1.4 1.2 6 4 2 13.2 11.5 11.2 — — — 4 1
Swiggy BUY 349 500 43 796 9.1 2,489 (12) (9) (3) NM NM NM 8.2 9.4 9.5 (27) (41) 365 NM NM NM 0.0 0.0 0.0 81 22
Zomato BUY 205 275 34 1,983 22.7 9,131 1 2 3 301 131 70 6.2 5.9 5.5 257 110 51 2.5 4.6 8.1 0.0 0.0 0.0 178 80
Internet Software & Services Attractive 4,548 52.1 NM 262 82 5.5 5.3 5.0 478 120 49 NM 2.0 6.1 0.1 0.1 0.1 329 134
IT Services
Coforge BUY 7,400 9,000 22 495 5.7 67 143 209 267 52 35 28 8.2 7.5 6.8 25 19 15 20 23 26 1.0 1.3 2.2 56 27
Cyient REDUCE 1,212 1,300 7 135 1.5 112 56 72 82 21 17 15 2.8 2.6 2.4 11 9 8 13 16 17 2.9 3.7 4.6 16 7
HCL Technologies REDUCE 1,541 1,650 7 4,181 47.9 2,716 64 69 76 24 22 20 5.9 5.5 5.1 15 14 13 25 25 26 3.6 3.8 3.9 60 37
Indegene BUY 523 750 44 125 1.4 240 17 21 25 31 25 21 4.8 4.0 3.4 19 16 13 20 18 18 0.0 0.0 0.0 4 2
Infosys BUY 1,591 2,000 26 6,606 75.7 4,151 64 71 79 25 22 20 7.0 6.5 6.2 16 15 13 29 30 31 3.0 3.3 4.2 131 82
KPIT Technologies SELL 1,234 1,170 (5) 338 3.9 274 28 34 42 44 36 29 12.1 9.8 7.9 26 21 17 31 30 30 0.7 0.9 1.1 19 8
L&T Technology Services REDUCE 4,391 4,750 8 465 5.3 106 122 146 170 36 30 26 7.7 6.7 5.9 22 19 16 23 24 24 1.0 1.2 1.5 10 4
LTIMindtree ADD 4,486 5,300 18 1,329 15.2 296 157 185 214 29 24 21 5.9 5.3 4.7 18 16 14 22 23 24 1.8 2.0 2.5 24 11
Mphasis REDUCE 2,225 2,300 3 423 4.8 189 90 102 116 25 22 19 4.5 4.3 4.0 15 14 12 19 20 21 2.9 3.1 3.4 18 9
Persistent Systems SELL 5,185 4,750 (8) 808 9.3 156 91 110 133 57 47 39 13.7 11.6 9.7 38 31 26 26 27 27 0.6 0.8 0.9 38 17
RateGain REDUCE 467 630 35 55 0.6 119 18 19 22 26 24 22 3.3 2.9 2.5 21 18 15 13 13 13 — — — 2 1
Tata Elxsi SELL 5,304 5,100 (4) 330 3.8 62 128 136 163 41 39 33 11.9 11.0 10.0 30 27 22 31 29 32 1.6 1.9 2.2 13 5
Tata Technologies SELL 642 550 (14) 260 3.0 406 17 19 22 39 33 29 7.3 6.6 6.0 26 23 20 20 21 22 1.3 1.5 1.7 9 5
TCS BUY 3,506 4,100 17 12,686 145.4 3,619 136 149 164 26 24 21 12.7 11.6 10.6 18 16 15 51 51 52 3.3 3.5 3.9 109 67
Tech Mahindra BUY 1,438 1,800 25 1,272 14.6 890 46 63 83 31 23 17 4.8 4.5 4.2 17 13 11 15 20 25 2.7 2.8 3.6 34 18
Wipro SELL 269 265 (1) 2,812 32.2 10,457 12 13 14 22 20 19 3.4 3.3 3.1 14 13 12 17 17 17 2.2 3.5 3.8 43 20
IT Services Neutral 32,320 370.6 26.2 23.5 21.0 7.3 6.8 6.3 17.2 15.4 13.8 27.9 28.8 29.9 2.8 3.1 3.6 586 294

Source: Company, Bloomberg, Kotak Institutional Equities estimates

India Research

k.kathirvelu-kotak.com
 60

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Media
PVR INOX BUY 917 1,200 31 90 1.0 98 (17) 9 34 NM 101 27 1.1 1.1 1.0 28 14 9 NM 1 4 - 0.0 0.0 9 3
Sun TV Network REDUCE 574 660 15 226 2.6 394 42 44 46 14 13 12 1.9 1.8 1.6 9 8 7 15 14 14 2.5 2.7 2.9 3 1
Zee Entertainment Enterprises REDUCE 105 125 19 101 1.2 960 9 10 11 12 11 10 0.9 0.8 0.8 6 5 5 7 8 8 2.4 2.9 3.3 15 6
Media Neutral 417 4.8 18.1 15.2 13.1 1.3 1.3 1.2 10.2 8.1 6.9 7.4 8.3 9.0 1.9 2.2 2.4 27 11
Metals & Mining
Gravita India ADD 1,606 2,400 49 119 1.4 74 41 59 72 39 27 22 5.7 4.8 4.1 26.9 21.6 17.4 21 19 20 0.4 0.6 1.1 8 3
Hindalco Industries BUY 690 725 5 1,550 17.8 2,220 68 64 65 10 11 11 1.3 1.2 1.1 5.9 5.8 5.6 13 11 10 1.0 0.9 0.9 43 22
Hindustan Zinc SELL 428 385 (10) 1,807 20.7 4,225 25 27 28 17 16 16 13.5 13.5 13.5 10.3 9.4 9.0 73 85 87 6.8 6.3 6.5 7 4
Jindal Steel and Power BUY 903 980 9 921 10.6 1,020 42 57 85 22 16 11 1.9 1.7 1.5 10.6 8.7 6.4 9 11 15 0.2 0.3 0.5 25 11
JSW Steel REDUCE 1,011 975 (4) 2,473 28.4 2,445 23 61 80 44 17 13 3.0 2.6 2.2 12.9 8.8 7.1 7 17 19 0.3 0.9 1.2 24 11
National Aluminium Co. REDUCE 192 200 4 352 4.0 1,837 26 22 22 7 9 9 2.0 1.7 1.5 4.3 5.3 4.9 29 21 19 4.0 4.5 4.6 28 9
NMDC SELL 65 55 (15) 570 6.5 8,792 8 7 7 8 9 10 1.9 1.7 1.5 5.7 6.2 6.5 24 20 17 4.8 4.4 4.1 21 8
SAIL SELL 107 55 (48) 441 5.1 4,130 2 4 5 51 26 23 0.8 0.7 0.7 8.9 8.1 8.0 1 3 3 0.6 1.1 1.3 24 7
Tata Steel SELL 150 120 (20) 1,876 21.5 12,486 3 11 14 55 14 11 2.0 1.8 1.6 11.0 7.3 6.4 4 13 16 0.6 1.8 2.3 52 20
Vedanta REDUCE 445 465 5 1,740 19.9 3,913 33 44 49 14 10 9 4.3 3.8 3.3 5.6 4.5 4.1 36 40 38 7.9 6.5 7.0 49 21
Metals & Mining Cautious 11,848 135.8 18.4 13.2 11.4 2.3 2.1 1.9 8.3 6.9 6.1 12.6 15.9 16.5 2.9 2.9 3.2 282 112
Oil, Gas & Consumable Fuels
BPCL SELL 266 240 (10) 1,155 13.2 4,273 26 26 25 10 10 11 1.4 1.3 1.2 6.1 6.0 6.4 14 13 12 3.3 3.2 3.2 29 13
Coal India REDUCE 381 370 (3) 2,346 26.9 6,163 52 57 59 7 7 6 2.4 2.0 1.7 7.2 5.2 4.8 35 32 28 6.6 6.6 6.6 33 16
HPCL SELL 327 210 (36) 697 8.0 2,128 25 34 34 13 10 10 1.6 1.4 1.3 9.5 8.2 8.0 12 15 14 2.3 3.2 3.2 25 10
IOCL SELL 125 90 (28) 1,769 20.3 14,121 4 14 13 29 9 10 1.0 0.9 0.9 8.9 5.6 5.6 3 10 9 1.7 4.5 4.4 22 10
Oil India SELL 367 360 (2) 597 6.8 1,627 40 50 51 9 7 7 1.2 1.1 1.0 6.7 5.4 5.1 14 16 15 3.5 4.7 4.8 18 7
ONGC BUY 224 310 38 2,823 32.4 12,580 40 48 50 6 5 4 0.8 0.7 0.6 3.7 2.8 2.7 14 15 14 5.5 6.2 6.3 35 16
Reliance Industries BUY 1,257 1,400 11 17,011 195.0 13,532 51 59 69 25 21 18 2.0 1.8 1.7 11.8 10.0 8.3 8 9 10 — 0.4 0.5 179 107
Oil, Gas & Consumable Fuels Neutral 26,398 302.7 14.7 11.9 11.1 1.6 1.4 1.3 8.5 6.8 6.1 10.7 12.0 11.7 1.8 2.2 2.2 341 179
Pharmaceuticals
Alivus Life Sciences BUY 1,017 1,360 34 125 1.4 123 39 48 54 26 21 19 4.7 4.1 3.6 18 15 13 19 21 20 1.5 1.5 1.6 2 1
Aurobindo Pharma SELL 1,108 1,145 3 643 7.4 586 63 71 76 18 16 15 2.1 1.9 1.7 10 9 8 12 13 12 1.6 2.0 2.4 14 6
Biocon REDUCE 325 360 11 390 4.5 1,202 (1) 9 13 NM 35 24 1.6 1.5 1.4 17 12 10 NM 4 6 0.9 1.0 1.4 19 6
Blue Jet Healthcare ADD 838 710 (15) 145 1.7 173 17 23 27 50 36 31 13.0 9.7 7.5 40 27 23 29 31 27 0.1 0.1 0.2 4 2
Cipla BUY 1,454 1,700 17 1,175 13.5 806 62 64 65 23 23 22 3.8 3.4 3.0 16 14 14 18 16 14 1.0 1.0 1.0 28 16
Concord Biotech ADD 1,622 1,820 12 170 1.9 105 33 41 52 49 39 31 9.6 8.1 6.9 35 28 23 21 22 22 0.6 0.7 0.9 5 2
Divis Laboratories SELL 5,667 4,550 (20) 1,504 17.2 265 82 101 130 69 56 44 10.2 9.2 8.2 50 40 31 15 17 20 0.6 0.8 0.9 28 15
Dr Reddy's Laboratories REDUCE 1,105 1,195 8 922 10.6 832 67 67 59 16 17 19 2.8 2.4 2.2 10 10 11 18 16 12 0.9 0.9 0.9 35 20
Emcure Pharmaceuticals BUY 926 1,515 64 175 2.0 189 38 47 56 25 20 16 4.1 3.5 3.0 12 10 9 20 19 20 1.0 1.3 1.5 1 1
Gland Pharma REDUCE 1,579 1,525 (3) 260 3.0 164 46 61 76 35 26 21 2.9 2.7 2.5 18 15 12 8 11 12 1.5 1.6 1.8 5 2
JB Chemicals & Pharma BUY 1,504 2,170 44 234 2.7 157 42 54 62 36 28 24 6.9 5.8 4.8 22 18 15 21 22 22 0.7 0.7 0.8 4 2
Laurus Labs SELL 584 420 (28) 315 3.6 536 6 9 12 101 63 49 7.1 6.4 5.6 33 25 21 7 11 12 - - - 20 7
Lupin ADD 1,967 2,245 14 898 10.3 455 71 84 80 28 23 25 5.3 4.4 3.9 17 14 14 21 21 17 0.6 0.8 0.7 24 12
Mankind Pharma ADD 2,166 2,530 17 894 10.2 412 47 56 72 46 39 30 6.5 5.8 5.1 30 23 19 17 16 18 0.6 0.8 1.0 20 11
Sun Pharmaceuticals ADD 1,677 1,875 12 4,023 46.1 2,399 49 54 62 34 31 27 5.5 4.8 4.2 25 22 19 17 17 17 0.6 0.6 0.7 42 25
Torrent Pharmaceuticals REDUCE 3,102 3,060 (1) 1,050 12.0 338 58 74 87 53 42 35 13.4 11.5 9.8 28 24 21 27 29 30 1.0 1.1 1.3 13 8
Pharmaceuticals Neutral 12,924 148.2 33.4 28.7 25.9 4.7 4.2 3.8 20.4 17.6 16.0 14.2 14.7 14.5 0.6 0.7 0.8 263 135

Source: Company, Bloomberg, Kotak Institutional Equities estimates

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Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Real Estate
Brigade Enterprises BUY 976 1,380 41 239 2.7 244 28 34 48 35 29 20 4.1 3.7 3.1 18 13 9 15 13 17 0.3 0.3 0.3 4 2
Brookfield India Real Estate Trust ADD 290 340 17 176 2.0 608 3 6 9 112 48 34 1.2 1.3 1.4 15 13 12 1 2 3 4.9 5.5 6.0 1 1
DLF BUY 669 1,000 50 1,655 19.0 2,475 17 22 32 39 31 21 3.9 3.6 3.2 99 43 28 11 12 16 0.9 1.0 1.2 32 13
Embassy Office Parks REIT ADD 365 410 — 346 4.0 948 22 9 13 17 39 27 1.5 1.6 1.7 16 13 12 9 4 6 6.1 6.7 7.1 3 3
Godrej Properties SELL 2,018 2,260 12 608 7.0 301 59 57 92 34 36 22 3.4 3.1 2.7 272 91 38 13 9 13 — — — 26 11
Macrotech Developers BUY 1,082 1,360 26 1,079 12.4 995 27 36 48 40 30 23 5.3 4.5 3.8 28 21 15 14 16 18 — — — 25 11
Mindspace REIT ADD 361 410 14 214 2.5 593 10 11 16 37 33 22 1.5 1.6 1.6 15 15 13 4 5 7 5.9 6.5 6.9 4 4
Nexus Select Trust ADD 133 152 15 201 2.3 1,515 3 5 5 40 28 24 1.4 1.5 1.6 16 14 13 3 5 6 6.4 6.8 7.2 2 1
Oberoi Realty REDUCE 1,571 1,850 18 571 6.5 364 61 82 118 26 19 13 3.6 3.0 2.4 18 13 9 15 17 20 0.6 0.8 0.9 21 9
Phoenix Mills REDUCE 1,602 1,600 (0) 573 6.6 357 28 46 50 56 35 32 5.5 4.8 4.2 25 19 17 10 15 14 0.2 0.2 0.2 14 7
Prestige Estates Projects ADD 1,119 1,680 50 482 5.5 408 18 24 44 63 46 25 2.7 2.7 2.5 19 16 11 5 6 10 0.2 0.2 0.3 18 9
Signature Global BUY 1,075 1,520 41 151 1.7 141 7 42 77 162 26 14 21.0 11.6 6.3 215 19 10 14 58 58 — — — 10 2
Sobha ADD 1,217 1,450 19 130 1.5 107 11 36 58 114 34 21 2.8 2.7 2.4 41 17 11 3 8 12 0.3 0.4 0.4 6 2
Sunteck Realty BUY 376 650 73 55 0.6 140 12 40 55 32 9 7 1.6 1.4 1.2 24 7 5 5 16 18 0.3 0.3 0.3 2 1
Real Estate Attractive 6,479 74.3 37.9 30.3 21.2 3.2 3.0 2.7 28.4 20.0 14.6 8.4 9.8 12.8 1.2 1.3 1.4 166 77
Renewable Energy
Premier Energies SELL 895 840 (6) 404 4.6 451 20 30 36 45 29 25 13.3 9.2 6.7 23 15 12 48 37 31 — — — 30 8
Waaree Energies REDUCE 2,118 2,280 8 608 7.0 288 61 101 171 34 21 12 6.2 5.0 3.5 22 12 8 25 27 33 — — — 56 13
Renewable Energy Cautious 6,883 11.6 39.2 23.7 15.5 8.1 6.1 4.4 22.2 13.4 9.6 21 26 28 0.0 0.0 0.0 86 21
Retailing
Avenue Supermarts SELL 3,674 3,450 (6) 2,391 27.4 651 44 52 64 83 71 58 11.1 9.6 8.2 51 43 36 14 15 15 — — — 36 19
Metro Brands REDUCE 1,069 1,130 6 291 3.3 272 13 17 21 84 62 51 14.0 12.2 10.5 38 31 26 18 21 22 1— 0.6 0.7 2 1
Titan Company REDUCE 3,019 3,225 7 2,680 30.7 888 42 50 59 72 60 51 23.4 18.5 14.9 45 39 34 36 34 32 0.5 0.5 0.6 37 20
Trent REDUCE 5,015 5,150 3 1,783 20.4 356 46 62 80 108 81 63 31.4 22.6 16.6 66 50 39 34 32 31 — — — 81 35
Vishal Mega Mart ADD 102 110 8 462 5.3 4,727 1 2 2 79 61 50 7.7 6.8 6.0 31 25 21 10 12 13 — — — - #VALUE!
Retailing Neutral 5,362 87.2 82.6 67.5 55.4 16.2 13.4 11.1 49.0 40.8 34.1 19.6 19.9 20 0.2 0.2 0.2 156 75
Specialty Chemicals
Aarti Industries SELL 392 380 (3) 142 1.6 363 9 11 16 44 34 25 2.5 2.4 2.2 18 15 12 6 7 9 0.2 0.4 0.6 10 3
Aether Industries ADD 908 890 (2) 120 1.4 133 12 17 21 75 53 43 5.4 4.9 4.4 52 34 27 8 10 11 - - 0.0 1 0
Atul SELL 5,548 5,140 (7) 163 1.9 29 170 222 257 33 25 22 3.0 2.7 2.5 16 13 11 9 11 12 0.6 0.8 0.9 4 2
Castrol India ADD 240 200 (17) 237 2.7 989 9 11 12 26 22 21 10.4 9.5 8.6 18 16 14 42 44 44 3.3 3.5 3.8 17 6
Clean Science & Technology ADD 1,192 1,490 25 127 1.5 106 25 33 45 47 36 26 9.0 7.5 6.2 32 26 19 21 23 26 0.5 0.6 0.9 2 1
Deepak Nitrite ADD 1,957 2,020 3 267 3.1 136 49 55 66 40 35 30 4.9 4.4 3.9 26 24 21 13 13 14 0.3 0.3 0.4 8 3
Navin Fluorine REDUCE 4,108 3,590 (13) 204 2.3 50 56 85 120 74 48 34 7.9 7.0 6.0 43 29 22 11 15 19 0.3 0.5 0.6 13 5
Neogen Chemicals ADD 1,626 2,090 29 43 0.5 26 18 27 62 91 60 26 5.4 5.0 4.3 36 29 13 6 9 18 0.2 0.2 0.5 1 1
Pidilite Industries ADD 2,749 3,125 14 1,398 16.0 509 41 47 54 67 58 51 14.9 13.5 12.3 45 40 36 24 24 25 0.8 1.0 1.3 12 7
PI Industries REDUCE 3,334 3,210 (4) 506 5.8 152 115 126 143 29 26 23 4.9 4.3 3.7 21 18 16 18 17 17 0.4 0.6 0.6 15 8
S H Kelkar and Company BUY 175 360 106 24 0.3 138 8 11 15 21 17 12 1.9 1.7 1.6 10 8 7 9 11 14 1.3 3.2 3.4 1 0
SRF SELL 2,959 2,130 (28) 877 10.1 296 43 61 86 69 48 35 7.1 6.4 5.5 34 26 21 11 14 17 0.4 0.5 0.5 24 12
Vinati Organics SELL 1,580 1,270 (20) 164 1.9 104 37 46 57 43 34 28 5.9 5.1 4.4 30 23 18 14 16 17 0.3 0.4 0.5 1 1
Specialty Chemicals Neutral 4,273 49.0 48.8 39.9 32.6 6.9 6.2 5.5 29.9 24.9 20.7 14.2 15.5 16.8 0.7 0.8 1.0 109 50

Source: Company, Bloomberg, Kotak Institutional Equities estimates

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 62

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 12-Mar-25 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Telecommunication Services
Bharti Airtel ADD 1,643 1,800 10 9,833 112.7 5,753 40 52 68 41 31 24 9.6 7.7 6.6 12 10 8 25 28 29 0.9 1.3 1.7 108 68
Indus Towers SELL 325 355 9 856 9.8 2,638 22 24 27 15 14 12 2.7 2.6 2.6 6 5 5 19 19 21 2.3 6.5 7.4 31 16
Vodafone Idea SELL 7 7 (1) 505 5.8 69,645 (4) (4) (3) NM NM NM NM NM NM 16 15 12 NM NM NM — — — 45 12
Tata Communications SELL 1,508 1,600 6 430 4.9 285 41 58 73 37 26 21 16.6 11.4 8.3 11 10 8 53 52 47 1.1 1.5 1.9 7 3
Telecommunication Services Attractive 11,624 133.3 654.6 100.9 46.6 50 32 25 11.8 9.8 8.2 7.6 32 53 1.0 1.7 2.1 190 99
Transportation
Adani Ports and SEZ BUY 1,128 1,570 39 2,437 27.9 2,160 50 60 66 22 19 17 3.9 3.3 2.9 15 13 11 19 19 18 0.7 0.8 0.9 43 17
Container Corp. SELL 647 730 13 394 4.5 609 22 26 32 29 25 21 3.2 3.0 2.8 18 15 13 11 12 14 1.5 1.8 2.2 9 4
Delhivery BUY 240 420 75 179 2.1 747 2 4 5 109 65 47 1.9 1.9 1.8 39 23 17 2 3 4 — — — 9 4
Gateway Distriparks ADD 60 90 50 30 0.3 500 5 5 6 13 11 10 1.4 1.3 1.2 9 8 7 11 12 13 3.1 3.4 3.7 1 1
GMR Airports ADD 74 83 13 777 8.9 6,036 (2) (0) 1 NM NM 145 NM NM NM 28 19 17 NM 14 NM — — — 10 5
Gujarat Pipavav Port REDUCE 130 140 7 63 0.7 483 8 9 10 16 14 13 2.5 2.1 1.8 9 8 7 17 16 15 — — — 2 1
InterGlobe Aviation BUY 4,729 5,700 21 1,827 21.0 383 159 236 259 30 20 18 22.4 10.6 4.8 9 7 5 121 72 45 — — — 42 25
JSW Infrastructure REDUCE 263 250 (5) 551 6.3 2,119 6 8 9 41 34 31 6.1 5.4 22.4 26 23 22 16 17 16 0.5 0.6 0.6 7 3
Transportation Attractive 6,259 71.8 32.3 23.9 21.2 5.9 4.9 4.0 14.6 11.7 9.7 18.4 20 19.0 0.4 0.5 0.6 124 60
KIE universe 282,126 3,235 24.3 20.7 18.0 3.5 3.1 2.8 14.8 12.3 10.8 14.3 15.0 15.5 1.4 1.6 1.8

Notes:
(a) We have used adjusted book values for banking companies.
(b) 2024 means calendar year 2023, similarly for 2025 and 2026 for these particular companies.
(c) Exchange rate (Rs/US$)= 87.2

Source: Company, Bloomberg, Kotak Institutional Equities estimates

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 63

DISCLAIMERS, DISCLOSURES & LEGAL

Distribution of ratings/investment banking relationships
Kotak Institutional Equities Research coverage universe

Percentage of companies covered by Kotak Institutional

70%
Equities, within the specified category.

60%
Percentage of companies within each category for which
50% Kotak Institutional Equities and or its affiliates has
provided investment banking services within the previous
12 months.
40%
34.3% * The above categories are defined as follows: Buy = We
expect this stock to deliver more than 15% returns over
30% 27.4% the next 12 months; Add = We expect this stock to deliver
21.3% 5-15% returns over the next 12 months; Reduce = We
20% expect this stock to deliver -5-+5% returns over the next
17.0%
12 months; Sell = We expect this stock to deliver less than
-5% returns over the next 12 months. Our target prices
10% 6.1% 5.4% are also on a 12-month horizon basis. These ratings are
4.0%
1.8% used illustratively to comply with applicable regulations. As
of 31/12/2024 Kotak Institutional Equities Investment
0%
BUY ADD REDUCE SELL Research had investment ratings on 277 equity securities.

Source: Kotak Institutional Equities

As of December 31, 2024

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our Fair Value estimates are also on a 12-month horizon basis.Our Ratings System does not take into account short-term volatility in stock prices related
to movements in the market. Hence, a particular Rating may not strictly be in accordance with the Rating System at all times.

Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the
following designations: Attractive, Neutral, Cautious.

Other ratings/identifiers
NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable
regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or
strategic transaction involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a
sufficient fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in
effect for this stock and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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