However, the valuation looks expensive at INR318 (RoE - ~8.9%, FY25 P/E - 28.5x, P/BV - 2.4x) thus, we maintain SELL with a revised SoTP of INR186 (vs INR160 earlier). The company is generating INR24-25bn per annum in cash profit, which is sufficient to fund its pipeline projects and aims to maintain debt/EBITDA level below 4-5x. Further, JSW Energy is also planning to vertically integrate and venture into the polysilicon market with the Utkal Ind-Bharath Project having 700MW capacity, whose resolution plan the NCLT has approved. Acquisition of Mytrah Energy is expected to be completed in Q3FY23, which along with the phase wise commissioning of SECI IX-810MW and X-450 MW will take the total operational capacity to 9.1GW by FY24 (65% RE). Over and above this, the company has ventured into BESS, winning 1GWh in SECI tender. Committed pipeline of 10GW by FY25 is well on time. Receivables were down to 66 days vs 81 YoY but were up QoQ (45 days) due to the seasonality factor in hydro business. Accordingly, revenue increased 14.4% YoY to INR23.9bn, while PAT was up 35.6% YoY to INR4.6bn. However, blended realisation was up 17.8% YoY to INR3.8/unit andit was down 29.9% QoQ. JSW Energy: Net generation declined 1.7% YoY to 6.7bn in the quarter due to weak merchant market and maintenance shutdown at the Ratnagiri station. We increase our IITS revenue estimate by 4/5% for FY24/25E but lower IITS. DPS growth was strong (+21% YoY), supported by growth in cloud licenses and annuity revenue. The margins will continue to be under pressure due to wage hikes (Q4) and continued sales investments the operating leverage will be visible in H2FY24E. The IITS EBITDA margin contracted 172bps QoQ to 21.8% (missed estimate) due to investments. The focus is to pivot to large annuity-based managed services contracts and build a large deal pipeline the recent deal wins indicate improved sales focus. The management remains optimistic and plans to double IITS revenue (hit half a billion) in four years (organic CAGR of ~15%), supported by higher investments in new verticals and geographies and expanding partnerships beyond Microsoft. The growth was led by Microsoft (ISV and Dynamics) and deal ramp-up. Sonata Software: Sonata delivered a better-than-expected IT services (IITS) growth (+3.9% QoQ CC) and investments in the business will sustain the momentum. We expect the recent cool-off in resin prices (which is getting passed on) to boost demand. For FY23, SIL has increased its overall volume growth guidance to 25% (pipes: ~35%) with a ~12.5% EBITDA margin. The pipe segment margin was 13.5% in Q3 (suffered 2% due to inventory loss) in Q4, an inventory gain is expected. Supreme reported healthy performance in Q3FY23, driven by a strong volume uptick (in pipes and industrial segments) and stabilisation in resin prices. Supreme Industries: We maintain ADD on Supreme Industries (SIL) with an unchanged TP of INR 2,580/share (SOTP-based). The company invested in a sales engine in FY23, which has moderated margins but accelerated. The growth was led by strong supplier addition (~9K) and improving realisations (+2.3% QoQ). IndiaMART InterMESH: IndiaMART posted a strong 4Q with better-than-expected revenue growth (+6.9% QoQ) and impressive cash collections (+31% YoY). Maintain ADD with a TP of INR 2,010, based on 20x Dec-24E EPS. Despite continued risk on Digital Risk and DXC combined (USD 173mn on Q4 annualised run-rate), net new TCV bookings average of >USD 1bn+ (5Y avg) can support USD 120mn+ incremental revenue over FY23-25E. The increase in deal pipeline by 35% YoY including higher growth in non-BFSI deal pipeline is a sign of portfolio diversification and/or relative stress in BFSI (60% of revenue). While MPHL has historically gained a share from peers (especially in BFSI), the tighter spends and lower conversions limit the share gains as well as increase the ask-rate for bookings (which was lower in Q4 adj. Even the stronger Direct International (ex-Digital Risk) declined and the outlook is for soft Q1 and sequential recovery subsequently. The residual business of Digital Risk and DXC still accounts for 10.5% of revenue, which remains in a state of decline and will be a drag on overall growth even for FY24E (4.5% drag even if business remains at Q4 rate). FY23 growth of 9.7% CC was impacted by -4% from a decline in Digital Risk and -1.6% from a decline in DXC business. Mphasis: Mphasis (MPHL) posted weak revenue print, yet maintained its margin.
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