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Revenue beat driven by strong volume growth

Higher RM and freight costs drag margin

* Volumes grew 21% YoY to 83.15k tonne (est. 77.5k tonne).

* Realizations grew 23% YoY to INR327.9k/unit (est. INR318.5k).

* Revenue grew 49% YoY to INR27.3b (est. INR24.7b).

*  Gross margin contracted by 3.8pp YoY and 1.2pp QoQ to 46.6% (est. 46%) due to RM cost inflation. RM costs are expected to cool down in 4QFY23.

*  EBIDTA margin declined by 9.2pp YoY to 19.6% due to higher RM costs and other expenses (freight costs rose 7.2pp as a percentage of sales). EBIDTA grew 1.5% YoY to INR5.35b (est. INR5.4b). Logistic costs are expected to reduce by the end of 3QFY23 or early 4QFY23.

*  Lower other income led to a 11% YoY decline of adjusted PAT to INR3.2b (est. INR3.4b).

* It declared a first interim dividend of INR4/share in FY23.

*  The management expects sluggish demand in 2QFY23 due to macro challenges in Europe, coupled with heat waves and inflationary trends in the US.

*  It has guided at sales volumes of 320,000-330,000MT in FY23.

*  Valuation view: The stock trades at 28.8x/23.6x FY23E/FY24E EPS.

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