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Overall wholesale volume prints for May 2023 came in steady with a sequential recovery witnessed almost across all segments. 

Quarterly earnings in Q4FY23 were positive and 6% ahead of estimates. Incorporating revised PAT numbers for index constituents post Q4FY23, our forward estimates undergo a minor ~1% downgrade. Over FY23-25E, Nifty earnings are seen growing at a CAGR of 16.5%. Rolling over our valuations, we continue to value the Nifty at 21,500 i.e. 20x PE on FY25E EPS of Rs 1080/share. Corresponding target for the Sensex is at 71,600. These are our rolling 12 months’ index target.

Syngene reported a strong set of numbers driven by incremental orders from existing clients, new contract executions, reflecting revival signs of the CRAMs ecosystem. 

Reliance Jio reported a muted topline performance in Q4FY23 while margins were better on lower network capex. The key highlight, however, was the strong growth outlook spelt out by the management in the communication business (wireless, broadband and enterprise).

In a regulatory exchange filing, Tata Motors said its foreign subsidiary, JLR, is planning to invest £15 billion (~Rs 1.52 lakh crore) over the next five years

Siam reported annual wholesale dispatches for the industry for FY23 wherein total domestic wholesales are seen touching 2.1 crore, up 20.4% YoY. Healthy double digit growth was witnessed across segments with exports coming a tad muted partially tracking global uncertainties and were down 15.2% YoY at 47.6 lakh (primary led by 2-W & 3-W space).

Viacom18 has announced that following the sanction by NCLT Mumbai, the scheme of merger of Reliance Storage (RIL subsidiary which houses Jio Cinema) with itself has become effective and Viacom18 has allotted shares to Bodhi Tree Systems [a platform of James Murdoch's Lupa Systems and Uday Shankar with Qatar Investment Authority (QIA) as investor], and RIL group entities as consideration for the scheme of merger.

The I-direct chemical universe is likely to witness a mixed quarter with agrochem, pharma and some specific specialty players to maintain their growth tempo while packaging, pigments, dyes and polymer players to remain muted. We expect growth of ~11.5% YoY on the revenue front in Q4FY23E.

After witnessing a QoQ increase in EBITDA/tonne in Q3FY23, EBITDA/tonne steel companies is likely to further expand in Q4FY23E.

The I-direct pharma universe (13 coverage companies) is likely to witness a decent quarter with ~11% growth YoY. This could be on the back of strong YoY growth in domestic formulations as well as better traction in the US portfolio.

Our FMCG universe is likely to witness revenue growth led by a mix of volume & pricing in Q4FY23. Lower raw material costs will aid a margin recovery during the quarter. 

Consumer discretionary companies' Q4 performance is likely to remain muted amid inflationary pressure and lower rural demand. However, on a favourable base, paints & AC categories are likely to witness better volume offtake.

Singapore based Temasek Holdings has acquired a controlling share in Bengaluru-based Manipal Health Enterprises after purchasing an additional 41% of the hospital network for Rs 16,500 crore. The deal values the hospital chain at Rs 40,000 crore ($5 billion) of enterprise value, making this transaction one of the biggest in the Indian healthcare sector.

Neogen Chemicals has signed a landmark agreement with Japan's MU Ionic Solutions Corporation (MUIS) to acquire a manufacturing technology license for electrolytes in Dahej, India. Commercial production is likely to commence in 2025. The company aims to meet the growing demand for lithium-ion cell manufacturers in India through this collaboration.

The banking sector remained abuzz led by the MPC pause, strong earnings season expectation across private banks on the basis of initial business updates while PSU banks are seen maintaining their robust recovery path.

The hospitals universe under I-direct coverage is expected to reflect normalised quarter as pandemic driven positive/negative gyrations, festive impact are behind us. I-direct hospitals universe is expected to report sequential revenue growth of 1.6% in Q4FY23 to Rs 9,666 crore.

ARPU growth is expected to be muted across telcos as upgrade benefits will be offset by lower number of days in the quarter.

For broadcasters, Q4 is expected to be a weak quarter on the ad front given the muted ad spending by FMCG and impact of free to air channel exit. For multiplexes, Pathaan headlined the box office amid a muted quarter.

Underlying cement demand is expected to remain healthy in the medium term (8-9% growth) owing to a boost in government spending on infra projects and upcoming general elections in 2024. The commentary from most companies remains buoyant with capacities operating at 85%+ utilisation levels in Q4FY23.

With majority of raw material decline benefits already accrued by OEMs in the past and tyre space set to witness already guided gross margin expansion in Q4FY23 amid a steady rise in key raw material prices, we expect gross margins to largely peak out for our universe in the current quarter (Q4FY23). We expect our coverage universe [ex-Tata Motors (Tamo)] to report 7% QoQ sales growth & flat QoQ margins at 12.7% with PAT expected to grow 9% QoQ. We expect the auto ancillary space to outperform the OEM pack (led by margin recovery particularly by tyre players).

IT companies' growth for the quarter is expected to be muted on fewer working days, extended furloughs in January and some macroeconomic factors. Margins, except TCS, LTIM and Coforge likely to decline sequentially.

Avalon Technologies, an integrated EMS player having a competitive edge in exports market is set to raise Rs 865 crore through its IPO. 

OEMs reported healthy wholesale dispatches for March 2023 with MoM growth witnessed across segments. The CV space outperformed its peers with high double digit MoM volume growth especially in the M&HCV domain while the 2-W space surprised positively with double digit growth for the month. On the other hand, the PV space reported flattish volume readings amid concerns over chip availability. Exports witnessed a comeback for the entire space in March 2023 with most OEMs reporting a healthy MoM recovery in volumes.

Jindal Stainless (JSL) has entered into a collaboration agreement with New Yaking Pte for investment in, development, construction and operation of a nickel pig iron (NPI) smelter facility located in an industrial park in Halmahera Islands, Indonesia.

As per channel checks and feedback, cement companies are likely to announce a Rs 10-30/bag price hike in April 2023. Companies in mid-February had attempted a price hike of Rs 10-15/bag. However, the same was fully rolled back in March through higher discounting. For Q4FY23, cement prices are expected to remain flattish on a QoQ basis.

Rainbow Childrens Medicare (RCML) is a leading paediatric and perinatal focused hospital chain in India. Paediatric services include healthcare services for children from birth throughout its childhood and adolescent years. Perinatal services are probably to extend the ecosystem covering pre-term births and birth related defects besides specifically targeting C-section procedures. As per WHO, India has the highest pre-term growth incidences globally.

The fluorination chemistry space is hotting up with significant investment from existing players and new players vying for the same. This is mainly on account of increasing demand for fluorine molecule in end-user industries like agrochemicals, pharmaceuticals, automobile, coatings, etc and new usage identified in areas like EV, hydrogen fuel cells, solar, 5G, etc.

The Fed hiked its interest rates by a smaller magnitude but signalled a pause in its monetary tightening drive.

NMDC has chalked out plans to increase its iron ore mining capacity notably in the medium term. Over the next couple of years, NMDC plans to enhance its iron ore mining capacity by ~35-45%.

Coal India (CIL) is geared up to meet the needs of the power sector in Q1FY24 amid concerns over a spike in coal demand.

There is a growing fear that the power crisis in the peak summer season may imitate last year's scenario, which may lead to loadshedding and higher power cost during the season. This is further accentuated by the recent India Meteorological forecast of high temperatures between March and May 2023, which may eventually lead peak power demand to exceed the expected level of 230 GW.

Failure of a US bank made investors dial back rate hike expectations by 50 bps in the March meeting.

Tata Technologies, a subsidiary (74.4%) of Tata Motors, has filed a DHRP dated March 9, 2023 with Sebi for an IPO by way of an offer for sale of up to 9.57 crore shares, representing ~23.6% of its paid-up share capital. The IPO comprises an offer for sale of (a) up to 8.1 crore shares by Tata Motors, (b) up to 0.9 crore shares by Alpha TC Holdings Pte Ltd and (c) up to 0.5 crore shares by Tata Capital Growth Fund I, each representing up to 20%, 2.40% and 1.20%, respectively, of Tata Technologies paid-up share capital.

PSU companies, which have consolidated over a decade, have been in the limelight in CY23 with many stocks making way to new 52-week/multi year highs and relatively outperforming over the past couple of months. Is it just a short term phenomenon or a structural turnaround?

The domestic markets have corrected 9% over past three months in the backdrop of resurfaced anxiety around aggressive Fed rate hike. At the current juncture, many participants are puzzled with the question of what lies ahead? Will Nifty retest life time highs?

After Nano Urea, the government has provided approval for Nano DAP (Di-ammonium phosphates) for three years. The government has given IFFCO and Coromandel International permission to begin producing nano-DAP, subject to their respective compliance. Paradeep Plant of IFFCO is expected to commence producing Nano-DAP in the coming months.

The official manufacturing Chinese PMI shot up to 52.6 in February 2023 from 50.1 in January 2023.

Road construction companies have faced dismal order inflows in M9FY23 amid muted NHAI awarding. Now the key question is what’s the way ahead!

Indian Steel companies domestic operations witnessed a sequential increase in EBITDA/tonne in Q3FY23. As prices have witnessed a steady uptick over the last few months, steel companies EBITDA/tonne are likely to further expand in Q4FY23. 

Quarterly results in the auto space were largely ahead of our estimates with gross margin recovery taking centre stage as most of the players benefitted from raw material price decline.

The I-Direct Chemical universe companies in Q3FY23 reported a mixed set of numbers amid contrasting business dynamics. On the bright side, fluorine, bromine, agrochem CSM, and other specialty players performed well while on the other hand pigments, polymers and domestic agrochemical players registered subdued performance. In the commodity space, Tata Chemicals registered decent numbers amid tighter global soda ash demand economics.

Retail sector companies witnessed healthy revenue growth momentum in October 2022 driven by festive season but the momentum waned post the festive season. Companies witnessed deceleration in revenue growth in November and December. Some companies resorted to preponing of the end of season sales (EoSS) to boost revenues.

During CY22, Indian steel export (finished + semis) was at 10.4 million tonnes (MT), down 44% YoY

Aided by optimism around China reopening, global iron ore prices have witnessed a sharp uptick over the last few months.

On an aggregate basis (ex-financials), the Nifty topline for Q3FY23 was largely flat QoQ at Rs 13.4 lakh crore with EBITDA up 16% QoQ at Rs 2.3 lakh crore and PAT by 16.6% QoQ at Rs 1.1 lakh crore. Margin recovery was the key highlight for Q3FY23. Nifty operating margins (ex-financials) rose 230 bps QoQ to 17%, primarily led by savings realised from lower raw material costs as gross margin expanded 230 bps QoQ. This is post a low of 14.7% margin recorded in the last quarter (Q2FY23).

In the backdrop of volatility in earnings due to Covid base effect, US base business pricing pressure and slowdown in CRAMs, the I-Direct Pharma performance was better than expected.  The universe (13 coverage stocks) revenues grew ~13% (against our expectation of 10%) YoY to Rs 51644 crore driven mainly by complex launches in the US by large players, India formulations and APIs.

Cement players in Q3FY23 started witnessing an improvement in the margin curve (on a sequential basis) as power and fuel prices took a breather post the sharp rise during Russian-Ukraine crisis in H1FY23. The pricing environment remained steady as realisations were flattish QoQ to Rs 5737/t (up 4% YoY). With healthy volumes, coupled with declining cost of production (down 3% QoQ), EBITDA/ton improved 29% QoQ to Rs 764/t (but still down 19% YoY). 

Consumer durables companies are likely to witness strong demand of room ACs in Q4 amid expectation of early onset of summer

Minda Corporation, in a regulatory filing, has informed exchanges about acquisition of 15.7% stake (i.e. ~1.9 crore shares) in Pricol Ltd through the open market route for Rs 400 crore at Rs 209/share saying it was a financial investment.

Eicher Motors (EML) reported a mixed performance in Q3FY23 with ASPs at Royal Enfield (RE) as well as profitability at VECV arm surprising positively while a margin improvement did not materialise on expected lines.