The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E. Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.
Emkay Global Financial's report on Indraprastha Gas
IGL has faced multiple headwinds, including rising APM gas prices and shortfall, which led to margin concerns. Aggressive RSP hikes, in response, have led to worries about CNG economics and demand outlook amid EV-led developments in Delhi. Q4FY22 results were largely stable with 14% yoy volume growth, despite a ~Rs15/kg CNG RSP hike since Oct’21 and omicron. EBITDA/scm also held up at Rs7.2. Management’s guidance of a 3-year volume CAGR of 13% and Rs7-8/scm EBITDA is also reassuring. The newly launched guidelines and pooled gas raise commodity risks in sourcing, though our bear case of sourced gas linked 100% to oil (term LNG) implies 30% CNG savings to petrol. Diesel usage is already restricted in NCR. We believe a viable case for CNG exists.
Outlook
We retain our FY23E/FY24E EPS but lower our long term volumes and terminal growth rate in DCF, and raise CoE. We cut the TP by 30% to Rs450/sh, but maintain Buy. Correction in global gas prices (crude being stable) and volume strength are upside risks.
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