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Strong earnings beat led by improved margins

* Net revenue grew ~11% YoY to INR47.9b (est. INR46.2), driven by 14.3% YoY growth in mobility solutions business, while the consumer goods division grew 9% YoY.

* Within mobility solutions, power solutions business was up 13.7% YoY and 2W segment posted 75% growth YoY.

* Gross margins expanded 220bp YoY to 37.7%, driven by a favorable mix and lower raw material costs. This boosted margins despite a sharp rise in other expenses.

* EBITDA margin improved 140bp YoY to 13.4% and was ahead of our estimate of 12.3%.

*? What? came in at 13.4%, up 131bp YoY and 18bp QoQ (est. 12.3%). Absolute EBITDA grew 23% YoY to INR6.4b, aided by revenue growth and improved margins.

* On a segmental basis, auto segment margin improved 70bp YoY to 14.2%. Non-auto segment margin improved 410bp YoY to 12%.

* Other income was also higher at INR2.9b vs. estimate of INR1.9b.

* PAT included a gain from the sale of the “video solutions, access and intrusion, and communication systems” business worth INR5.56b.

* Adj. PAT grew 44% YoY to INR6.7b, ahead of our estimate of INR4.9b.

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