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Below our estimate; big miss in India due to weaker mix, EU in line

* Consolidated revenue grew 25% YoY to INR21.1b (est. INR20.4b) in 1QFY23. EBITDA/adjusted PAT declined by 2%/8% YoY to INR2.4b/INR1.1b (est. INR2.8b/INR1.4b)

* India business: Revenue grew 40% YoY to INR16.2b (est. INR15.2b), as against a production growth of ~38% YoY in the underlying 2W industry in 1QFY23. EBITDA margin fell 260bp YoY and 190bp QoQ to 10.8% (est. 14%), impacted by higher RM cost, weaker mix, and greater staff and other cost. Adjusted PAT grew 11% YoY to INR887m (est. ~INR1.26b).

* EU businesses: Revenue from the EU fell 8% YoY to INR5b (est. INR5.2b), impacted by semiconductor shortages and a depreciation of ~2% in the EUR:INR. EBITDA margin fell 350bp YoY and 170bp QoQ to 13.2% (est. 12.5%). Adjusted PAT declined by 43.5% YoY to INR225m (est. INR155m)

*  Aftermarket sales from Indian operations grew 54% to INR963m.

* Sale of premium Two-Wheelers was impacted by semiconductor shortages, impacting mix in the India business.

* Adjusted for RM cost pass through benefit, revenue fell 5% YoY in 1QFY23, as against a 16% decline in PV registrations in the EU (including the UK).

* Valuation and view: The stock trades at 31.3x/24.4x FY23E/FY24E consolidated EPS. We maintain our Buy rating

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