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ICICIdirect Research 08 Aug 2025 DISCLAIMER

ITC: FMCG Business to improve (Target Price 525)
ITC’s net revenues (including other operating income) grew by 20.6%yoy to Rs19,749.9crore driven by 8%yoy growth in the cigarette business revenues and 39% growth in the agribusiness revenues. 
Cigarette business volume growth stood at ~6% ahead of our and street expectation of 4-5% for the quarter (third consecutive quarter of 5-6% volume growth).
Non-cigarette FMCG business revenues grew by 5%yoy to Rs5494.6crore.
Gross margins decreased by 748BPS yoy to 49.7% while EBIDTA margins decreased by 547BPS yoy to 31.7%. The decline in the margins are mainly on account of higher input prices and change in revenue mix with contribution of agri business contribution going up by 600bps on yoy basis in Q1.
Overall EBIDTA grew by 3%yoy to Rs6,261.3crore and the adjusted PAT grew by 2%yoy to Rs4,912.4 crore
Outlook:
Management has in its press release has indicated that moderation in leaf tobacco procurement prices in the current crop cycle might benefit release stress on cigarette business margins.
FMCG business growth is expected to improve in the quarters ahead with improving consumer sentiments. Inflationary pressure in FMCG business is receding with the business margins seeing sequential improvement.
The company has maintained its thrust of investing in FMCG and other businesses to improve the growth prospects in long run.
View: Discounted valuations (21-22x FY27E EPS) and management thrust on sustain investment in improving growth prospects in long run, makes it a better play in large FMCG companies. We retain Buy on the stock with price target of Rs525.

Titan : Broad based performance with resilient margin (Target Price: 4150)
Titan Q1FY26 performance – broad growth across segments with resilient margin performance
Titan’s net revenues grew by 21.2%yoy to Rs14,814crore driven by 17% growth in the jewellery biz, 39% growth in the Caratlane business, strong 24% growth in the watches business and 48% growth in the international business. Total revenues including bullion & digi gold grew by 25%yoy to Rs16,523crore.
Despite higher gold prices, the gross margins improved by 40bps yoy to 22.5%. Excluding exceptional elements of gold hedging and revaluation of watches (combining to Rs107crore), the EBIDTA margins improved by 104bps yoy to 10.4% (largely in-line with our and street expectation of 10.2-10.5%). However if we include exceptional elements, EBIDTA margins would have been 11.1%. However these exceptional items are tend to reverse in quarters ahead and might lead to lower margins.
EBIDTA grew by 38% YoY to Rs1,725cr and adjusted PAT grew by 42%yoy to Rs1,013.5crore (ahead of our and street expectation of Rs915.7 cr). Adjusted PAT grew by stood ahead of expectation largely on higher bullion and digi-gold sales.
View:
In the backdrop rising gold price scenario, Titan has registered a resilient performance with improved margins across key businesses. In Q2 jewellery biz might growth will be slightly lower due to high bas of Q2FY25. However the same is expected to revive the quarters ahead also helped by better festive season (EBIT margins guidance of 11-11.5%). US biz contributes just 2% of overall revenues and is unlikely to have any major impact on earnings due to Tariff uncertainties.
In jewellery biz, studded segment grew by 11%, the management expects gradual recovery in the studded segment with uptick in sales of Rs1-2lakh jewellery category. Jewellery category above Rs5lakh is registering strong growth along with jewellery segment in Rs50thousand-Rs1lakh.
Watches segment is expected to clocking strong double digit growth with EBIT margins at mid-teens (better on back of improved mix) while eyecare segment business model is improving aiding better profitability.
In studded segment Caratlane will continue clock strong performance with better margins. Overall steady outlook for quarters ahead and the company is keenly monitoring gold price scenario. We maintain Buy on Titan.

Bharti Airtel: Healthy Performance (Target Price 2250)
Strong Performance: Airtel reported another decent performance with India wireless revenues were up 2.9% QoQ (up 21.6% YoY) at ₹ 27397 crore, driven by heathy Average Revenues per User (ARPU), which came at ₹ 250, 2.1% QoQ and up ~18.8% YoY and modest subscriber addition (1.2 mn). Note that ARPU growth higher than Jio which had 1.3% QoQ ARPU growth. It witnessed healthy 4G+5G Net adds of 3.9 mn during the quarter, with 4G/5G data sub base at 280.7 mn. The post-paid subscriber base also saw robust addition of ~688k subscribers at 26.6 mn. Africa Revenues at ₹ 12083 crore, were up 6.2% QoQ.
Margins steady and Deleveraging: Consolidated EBITDA came in at ₹ 27839 crore, with margins of 56.3%, down 13 bps QoQ, with decline owing to non-wireless business. India wireless margins at 59.4%, was up 22 bps QoQ, while Africa Margins at 48.1% was up 83 bps QoQ. The net debt (excl. lease liabilities) at ₹ 1.25 lakh crore was down by ₹13019 crore QoQ, given the strong cashflow generation.
Remains superior growth play in the sector: Airtel has reported relatively stronger performance on Indian wireless business front with superior APRU, sustained post-paid/4G subscribers’ addition, and margins expansion. Also, it has long term value unlocking opportunities including 1) Airtel Money – a US$ 1 bn+ revenue business in Africa where the company has intention for an IPO. 2) Payment Bank – regulatory requirement for listing, and may go public in next 2–3 years. 3) Data centre (Nxtra) – where it has room to grow revenues by 2-3x and expect going public only after that. We will maintain BUY on the company.

Siemens Energy India (SEIL)(Buy)
SEIL reported strong performance for Q3FY25 (Sep 25 is Year-end). Revenues, EBITDA and PAT grew 20%, 60% and 80% YoY to ₹1785, ₹340 and ₹263 crore.
EBITDA and PAT Margins expanded 469 and 448 bps YoY to 19% and 14.3% respectively.
On a segmental basis Power Transmission (55% of revenue mix) and Power Generation (45%) grew 35% and 6% YoY respectively. As a result of significant rise in transmission revenue leading to operational efficiency, The EBIT margins for power transmission business expanded 860 bps YoY to 18.7% whereas EBIT margin for generation business remained flat at 16%.
Company received orders worth ₹3290 crore, a substantial increase of 94% YoY due to large orders in the quarter. Total order inflow in 9MFY25 is ~₹10765 crore (~2.26x FY24 Revenue).
To capture opportunities, SEIL announced investment of ₹280 crore to expand the High Voltage Switchgear product manufacturing capacity. In FY24 it had announced ₹460 crore and ₹330 crore investment in transformer and GIS factory capacity expansion.
Siemens energy is benefiting from energy transition and capacity build-up (need for HV and grid stability equipment going up) taking place globally. With ₹1.6 trillion orders awarded in FY25 in power transmission and ~₹1 trillion expected annually over the medium term. It is well positioned with quality transmission equipment offerings to support the energy transition and capacity buildup at the global level.
We believe Siemens Energy to continue to deliver strong performance (~27% revenue CAGR) on the back of transmission business; With strong industry tailwinds and operational excellence, healthy EBITDA and PAT margins of ~18-20% and ~14% looks sustainable resulting in EBITDA and PAT CAGR of 24% and 27% respectively over FY25-FY27E. 

Divi’s Q1FY26 - Strong Custom Synthesis momentum continues, preparing for future projects
Revenues were up ~14% YoY at ₹ 2410 crore driven by ~23% growth in Custom Synthesis (CS) to ₹1280 crore, Nutraceuticals also witnessed growth of 40% YoY to ₹ 250 crore, whereas generics for the quarter de-grew 2.2% YoY to ₹883 crore mainly due to price erosion.
EBITDA improved ~17% YoY to ₹ 730 crore, whereas EBITDA margins increased 88 bps to 30.2% due to lower total expenses and GPM margins improvement of 61 bps to 60.3%.
The company continues to witness incremental inquiries from global players and has multiple opportunities in various stages of drug development. The management believes that the company is better placed to tap GLP-1 opportunities due to capability of producing both Solid phase Peptide Synthesis and Liquid phase Peptide Synthesis.
The company will also be looking to execute three projects in CS, each with almost ₹ 650-700 crore of investment over the next few years which should maintain the CS growth momentum intact (for FY28 and beyond).
On the API front, the company is facing some issues due to pricing pressure which, the management believes are expected to normalise after a couple of quarters.
The company is smartly keeping its manufacturing capacities ready for future opportunities. It is transferring the KSM manufacturing operations from the existing two plants to a new facility, thus freeing the existing facilities for final products to cater to the incremental demand.
We continue to have positive views on Divi’s given its capabilities and capacities in the CS business with a target price ₹6700.

Bajaj Auto: Reports steady performance in Q1FY26, EV portfolio gaining traction
Bajaj Auto reported steady performance in Q1FY26. Sales volume were flattish on YoY basis at 11.11 lakh units while EBITDA margins came in at 19.7% (down 50 bps QoQ).
Margins miss was largely attributed to lower forex (USD:INR) realisation on QoQ basis and was also impacted to the tune of 70bps due to commodity inflation.
Bajaj Auto’s electric vehicle portfolio continues to do good. Chetak electric scooters more than doubled volumes YoY in Q1, accounting for nearly 50% of the industry’s incremental volume and increasing its market share to 21% (vs 12% YoY) and is leading the market in above ₹1 lakh segment with 31% share.  
In e3W space, BAL leads with a 35% market share while announcing entry into the e-rickshaw (ERIC) segment, a ~40,000 units/month market, with a phased launch starting mid-August.
The EV portfolio now contributes ~20% of Bajaj auto’s domestic revenues (~₹ 1560 crores in Q1FY26) and in sum total clocking near double digit EBITDA margins.
Robust export outlook, strong leadership in domestic EV segment and a differentiated product pipeline are expected to drive sustained growth for Bajaj Auto in years ahead. With comfort on valuations, we have upgraded the stock to BUY with revised target price of ₹ 9,500, valuing it at 26x PE on FY27E
 
Adani Ports & SEZ : FY26 Guidance retained (PT - ₹ 1670, Rating - Buy)
Adani Ports & SEZ ltd (APSEZ) is the largest commercial port operator in the country, handling more than 27% of the total cargo volume as on FY25. It owns more than 15 Ports & Terminals, with a combined capacity of ~633 MTPA, across seven states. Its other businesses include logistics and marine.
The company reported healthy cargo volume growth of 11% YoY in Q1FY26 despite the interim disruptions caused at its flagship Mundra Port led by war-like situation with neighbouring country. The company retained its cargo volume guidance of 505-515 MMT (12-14% YoY growth) for FY26, which is expected to be driven by recovery in volumes at Mundra Port and recovery in coal demand.
The company retained its Revenue/EBITDA/Capex guidance for FY26 at ₹ 36000-38000 crore/₹ 21000-22000 crore/₹ 11000-12000 crore respectively. It also reaffirmed its FY29 guidance of achieving 1 billion MT port volumes (Domestic – 850MMT, International – 150MMT). Over the longer term as India targets 10 billion MT cargo volumes in 2047, the company eyes 33% market share to achieve 3.5 billion MT.
Its Logistics and Marine businesses have grown by 2x YoY and 2.9x YoY during Q1FY26 and have increased their combined revenue share to 21% from 10% in Q1FY25. It is targeting ~5x growth in Logistics (revenue of ₹14,000 crore by FY29 from ₹2,881 Cr in FY25). Marine revenues are slated to grow by 3x+ by FY29 from ₹1,144 crore in FY25).
With expanding Trucking and International Freight Network services and fast growing, diversified marine fleet in the MEASA region, it is deepening its integrated transport utility approach and extending its value chain from port gate to customer gate.
We estimate its consolidated Revenues/EBITDA/PAT to grow at ~16%/14%/19% CAGR over FY2025-FY2027E. We have a BUY rating with Target Price of ₹ 1670/- i.e. 16x EV/EBITDA on FY27E.

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