M&M, Info-Edge, Motherson Sumi Wiring, Berger Paints, LIC Housing Finance Q4 Results Review: HDFC Securities

HDFC Securities Institutional Equities

M&M - Good performance despite a weak market

Mahindra and Mahindra Ltd.'s Q4 FY24 profit after tax at Rs 21.6 billion beat our estimate of Rs 17.9 billion, aided by better realisation and soft commodity prices. M&M has shared its investment plan for FY25-27. The total investment planned in the auto division is Rs 270 billion, of which Rs 85 billion is for SUV ICE, Rs 40 billion for commercial vehicle, and sustenance investment of Rs 15 billion. Additional investment planned in the electric vehicle subsidiary is Rs 120 billion, and investment in other subsidiaries is Rs 10 billion.

The investment in the auto division will be funded through internal accruals.

The details of investment in farm equipment segment: total investment plan of Rs 50 billion, of which Rs 28 billion is for new product development, Rs 15 billion for regulatory and sustenance, Rs 7 billion for capacity building.

The regulatory investment includes Rs 6 billion investment for Trem V required only in case regulation becomes mandatory.

We continue to remain positive on the business momentum, given:

1. a strong order backlog for UVs may help it further gain share;

2. recent new launches may help gain share in tractors;

3. focused strides taken to achieve a strong position in EVs.

We increase the PE multiple for the standalone business to 21 times (from 16 times) and revise the SoTP price target to Rs 2,318/share (earlier at Rs 1,862/share). Downgrade to Add.

Info-Edge - Strong recovery in billings

Info-Edge India Ltd. reported flat revenue but the healthy growth in total billings (+43/10% QoQ/YoY) was encouraging. The growth in recruitment billings (+7% YoY) was led by a recovery in IT hiring (~50% of recruitment, +11% YoY) and ~12% YoY growth in non-IT sectors like BFSI, manufacturing, infra and healthcare.

We expect recruitment billings to grow at ~15% in FY25E, which is in line with the pre-Covid average. The margin for the recruitment segment has moderated to ~57% in Q4 and will remain in the range of 55-60% for a 15-20% YoY billings growth.

The non-core segments like 99acres/Jeevansathi posted billing growth of 26.4/25.9% YoY which improves growth visibility.

The combined loss of 99acres and Jeevansathi narrowed to Rs 0.25 billion (-40% YoY) led by growth and lower advertisement expenses. The recovery in the recruitment segment will continue, led by early signs of recovery in IT hiring and 99 acres and Jeevansathi should move towards breakeven.

We maintain our Buy rating with a SoTP-based target price of Rs 7,000, valuing Naukri at 40 times enterprise /Ebitda (~60% of SoTP), 99acres/Jeevansathi+Shiksha at 5/3 times P/S, while Zomato and Policybazaar have been assigned the market (~30% of SoTP at ~15% discount).

The core recruitment business is trading at 27 times FY26E EV/Ebitda versus the average of >35 times.

Motherson Sumi Wiring - India Margin improvement continues

Motherson Sumi Wiring India Ltd.’s Q4 FY24 PAT at Rs 1.9 billion came in ahead of our estimates of Rs 1.6 billion, led by better-than-expected margins.

The margin growth is attributed to higher content per vehicle in premium models. Motherson Sumi Wiring is emerging as one of the major beneficiaries of the evolving trends (premiumisation + EVs) in the auto sector in India wherein content is set to rise in the range of 1.1x-8x.

The company has developed a sustainable competitive advantage in India, given its scale advantage, backward integration capabilities, and localisation efforts.

In India wiring harness, it supplies to 10 of the top 12 passenger vehicle OEMs, two of the top three EV OEMs in PVs, and two of the top five EV OEMs in the two-wheeler segment.

Also, it has been part of 23 new launches and 17 facelifts in FY23 across various segments highlighting its strong position across segments. With the steady ramp-up of new facilities and aided by cost pass-through, we expect MSWIL’s margins to improve 110 bps over FY24-26E.

Given its strong franchise with superior returns, we believe the stock deserves a premium valuation relative to peers. Maintain Add with a target price of Rs 68 (d at 34 times FY26 EPS).

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