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What analysts say on PVR, Aarti Industries, Indoco Remedies & Mishra Dhatu

What analysts say on PVR, Aarti Industries, Indoco Remedies & Mishra Dhatu

Aarti Industries' Q2 adjusted Ebitda at Rs 270 crore (up 31.5 per cent YoY) stood largely in‐line with YES Securities’ estimate. The YoY growth stemmed from adjustment for shortfall fee of Rs 52 crore in the in base quarter, it said

Indoco Remedies expects the US and European markets to continue to deliver strong growth on the back of robust order book of Rs 150 crore each and margin expansion, Nirmal Bang said Indoco Remedies expects the US and European markets to continue to deliver strong growth on the back of robust order book of Rs 150 crore each and margin expansion, Nirmal Bang said

A couple of midcap and smallcap stocks namely PVR, Aarti Industries, Mishra Dhatu Nigam and Indoco Remedies have seen rating updates by domestic brokerages.. Except for Mishra Dhatu Nigam, three others have received 'Buy' ratings by brokerages. ICICI Securities has re-initiated coverage on Mishra Dhatu Nigam, but with a 'Hold' rating.

Indoco Remedies | Nirmal Bang Institutional Equities | Buy

Nirmal Bang Institutional Equities hosted the Indoco Remedies management at the NBIE Annual Investor Conference to discuss the company’s future business outlook. Nirmal Bang said Indoco Remedies expects the US and European markets to continue to deliver strong growth on the back of robust order book of Rs 150 crore each and margin expansion. For India, the management has guided for double-digit market beating growth FY24 onwards, driven by deeper market penetration, market share gains in key segments, new launches, and inorganic opportunities. Overall, Nirmal Bang said, the company aspires to achieve Rs 5,000 crore revenue (Rs 1,500 crore in FY22) in less than five years through both organic as well as inorganic routes. On the margin front, Nirmal Bang said, the company expects 23-24 per cent Ebitda margin in the next three years.

"We remain positive about the company’s future growth prospects mainly due to high domestic contribution, robust complex products portfolio for the export markets and reasonable valuation. We raised our multiple to 16x (from 15x), while maintaining a a BUY on Indoco with a revised target price (TP) of Rs 452, valuing it at 16 times Sept’24E earnings," it said.

Mishra Dhatu Nigam | ICICI Securities | Hold | Target Rs 230

ICICI Securities said Mishra Dhatu Nigam’s (Midhani) Q2FY23 performance was steady led by higher scrap utilisation. Among the key takeaways,  Ebitda margin came in at 32.4 per cent, despite firm raw material and power costs, owing to higher scrap utilisation. Orderbook rose to Rs 1,500 crore and H1FY23 value of production (VoP) rose 41.8 per cent YoY to Rs 480 crore. The company launched six new products at Def Expo-22. Also, 8te vacuum induction melt furnace has fully started at Rohtak (in Haryana) for producing armour plates.

"Going ahead, while we see exciting prospects from wide plate mill and Rohtak plant, at Rs 500 crore each in steady state, near-term margin pressure is likely to keep stock performance constrained. Besides, revenue target of Rs10bn for FY23 looks daunting. We re-initiate coverage on Midhani, valuing the stock at 14x FY24E Ebitda, capturing the potential upside from ramp up of wide plate mill and Rohtak armour plant, resulting in target price of Rs 230, implying 4 per cent upside from the CMP," ICICI Securities said.

Aarti Industries | YES Securities | Buy | Target Rs 845

YES Securities said Aarti Industries' Q2 adjusted Ebitda at Rs 270 crore (up 31.5 per cent YoY) stood largely in‐line with its estimates. The YoY growth stemmed from adjustment for shortfall fee of Rs 52 crore in the in base quarter. Higher raw material volatility, lower volume due to maintenance shutdown at Jhagadia  and muted demand for discretionary products (dyes & pigments) coupled with sequential higher operating expense led to sequential drop in operating profits, it said,

"Going ahead, while Ebitda for 2HFY23 could remain flat (vs H1), a stronger 25 per cent CAGR is expected over FY24‐25e driven by an expansion in NCB and Ethylation capacities, ramp‐up in LT‐2 (revenue potential : Rs 550 crore), commissioning and ramp‐up of  LT‐3 (revenue potential: Rs 94 crore) and launch of 50+ molecules currently under R&D," it said.

PVR | Nuvama Institutional Equities | Buy | Target Rs 2,161

Nuvama Institutional Equities said after a decent October, Uunchai in November marked a step forward. But it is the Ajay Devgn-starrer Drishyam 2 that has made the picture clearer for multiplexes with likely collections of Rs62 crore in the first three days. It also raised the hope for a good Q3FY22 after a muted Q2FY23, it said.

"Footfalls for Drishyam 2 have been robust – also broad-based – on the back of good content. We highlight the robust pipeline: Bhediya slated for 25th November, Cirkus for 23rd December and Avatar on 16th December (high ATP). Watch out for sustainability of the trend though given false starts earlier for the Hindi box office. Retain ‘BUY’ on PVR," Nuvama said.

Nuvama said it continues to track the PVR and Inox merger (expected by January), which shall yield synergies. It also expects a potential revival in footfalls due a robust pipeline: Bhediya on November 25 (Varun Dhawan and good VFX), Cirkus on December 23 (Rohit Shetty film starring Ranveer Singh, Deepika Padukone) and Avatar: The Way of Water on December 16 (high ATP due to strong pull). Sustainability needs to be seen though as false starts were seen earlier for Hindi box office, it said.

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