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HDFC Securities Institutional Equities
Hindustan Unilever Ltd. – HUL reported marginally better revenue growth at 16% (our estimate: 14%), with volume growth of 5% (our estimate: 5%). Three-year revenue and volume compound annual growth rates stand at 11% and 3.5%. Home care remained the showstopper, revenue/Ebit grew by 32/23% YoY. Beauty and personal care clocked revenue/Ebit YoY growth of 10.5 %/flat and foods and refreshments reported 7/2% YoY growth.
Asian Paints Ltd. – Asian Paints’ top line grew 1.3% YoY (three-year CAGR: 16.8%); fell short of expectations. The decorative business was largely flat (0/1% volume/value growth YoY in Q3 FY23 due to an extended monsoon and shortened Diwali season and a high volume base impacting growth.
Havells India Ltd. – Havells registered 13% YoY growth (predominantly volume-led), healthy in the current demand environment but lower than our expectation. The fan industry is undergoing a BEE rating change (implemented from Jan 01, 2023); hence, non-rated fans have seen pre-buying by channel partners.
AU Small Finance Bank Ltd. – AU SFB posted its highest-ever quarterly earnings on the back of lower-than-expected credit costs (30 bps annualised), partly offset by elevated operating expenses. The bank calibrated its loan growth (up 38% YoY) to mirror the growth in deposits (~400 bps QoQ rundown in current account and savings account), resulting in moderation across segments such as wheels, home loans, and commercial banking.
L&T Technology Services Ltd. – L&T Tech posted weak revenue performance, resulting in a guidance cut, but an in-line operating performance. Revenue growth was flat sequentially, impacted by higher-than expected furloughs in the plant engineering vertical and weakness in the telecom and hi-tech vertical.
Persistent Systems Ltd. – Persistent Systems posted an in-line revenue and a slightly better operating performance. Key positives include- deal bookings, which were at an all-time high—both renewals and net-new total contract value, which provides adequate growth visibility and positive commentary on Q4 order bookings; focus on larger deals with annuity and progress in client mining, reflected in $5 million plus client count increasing from 30 in Q2 to 34 in Q3 and continued increase in revenue per account (up 50% since pre-Covid);
ICICI Securities Ltd. – ICICI Securities printed a 4% sequential de-growth in retail broking revenues on a weak base (Q2 FY23: down 20% YoY), on the back of softness in cash volumes (high elasticity) and a sharp dip in derivative yields.
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