SBI, Asian Paints, SRF, Kalpataru Projects, Home First Finance Q4 Results Review: HDFC Securities

HDFC Securities Institutional Equities

SBI - Fantastic close to FY24; RoA normalisation ahead

State Bank of India reported its best-ever quarterly profits on the back of strong fee income traction, healthy loan growth, and stable net interest margins.

Strong loan growth (15.8%YOY) came in across asset classes with corporate book also gaining traction. Deposit growth (~11% YoY) lagged loan growth with current account and savings account% (39.5%) being stable on the back of seasonal pick-up in current accounts.

At 75%, the LDR continued to be comfortable for SBI to sustain growth levels. Asset quality improved further with gross slippage run-rate moderating alongside strong recoveries/woffs.

With bulk of the deposit re-pricing behind, we expect a slight moderation in margins assuming a turn in the rate cycle during H2 FY25. We tweak our estimates to account for higher growth and lower credit costs. We maintain Buy with an SOTP-based target price of Rs 970 (core bank at 1.5 times Mar-26 adjusted book value per share).

Asian Paints - Weak print; competitive pressures palpable

Asian Paints Ltd.’s revenue remained largely flat in Q4 at Rs 87.3 billion (our estimate: Rs 89.1 billion). Decorative clocked 10/-1.8% volume/value growth in Q4 and industrial business grew ~9% YoY in Q4. Luxury and economy products grew well.

Growth in urban markets continues to outpace rural markets as the latter remain impacted by inflationary pressures. Gross margin expanded 121 basis points YoY to 43.7% (in-line) courtesy raw material deflation. However,

1. higher advertising and promotion spending (to defend share amid rising competitive intensity) and

2. higher employee expenses led to a 185 bp Ebitdam contraction (19.4% versus our estimate: 21.6%).

We’ve cut our FY25/26 EPS estimates by 6.4/7.4% to account for lower margins as higher supply (led by Birla Opus’ entry plus capacity additions across the sector) meets weak-toaverage demand and in FY25/26.

Maintain Reduce with a DCF-based target price of Rs 2,750/share (earlier: Rs 2,900/share); implying 46 times FY26 P/E.

SRF - Volume-driven growth

We retain our Add ratings on SRF Ltd., with a target price of Rs 2,457 on the back of-

1. deployment of capex for high-growth speciality chemicals business over the next three-four years to tap opportunities emerging from the agrochemical and pharmaceutical industries and

2. a strong balance sheet.

Q4 Ebitda is in line with our expectations.

There was a tax adjustment of RS 1,007 million related to earlier years as the company has reassessed its taxability on income from sales of Carbon Emission Reduction certificates. Thus, profit after tax is 23% above our estimates at Rs 4,222 million.

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