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TVS Motor Company Ltd (TVSM) - Q2FY11 Result expectation
We expect TVSM to report strong performance driven by a 33% YoY (13% QoQ) growth in volumes. We expect EBIDTA margins to improve by 140 bps YoY and 50 bps QoQ. Key things to watch out for (1) demand for new products – Wego and Jive (2) export targets and (3) status of Indonesian business
n Net sales are expected to grow by 40.2% YoY and 13.8% QoQ to Rs 15.8bn.
n EBITDA is expected to grow by 74.3% YoY and 21.1% QoQ to Rs 1.1bn
n EBIDTA margin is likely to improve by 140 bps YoY and 50bps sequentially to 6.9%
n APAT is expected to grow by 111.2% YoY and 30.5% QoQ to Rs 526mn..
Corporation Bank Q2FY11 result estimates
The bank is likely to report healthy growth in NII led by healthy advance growth. However the gains will get partially offset by higher MTM loss during the quarter. However lower slippages in past will keep the NPA provision requirements at low levels.
South Indian Bank (SIB) Q2FY11 result estimates
We expect SIB’s NII to grow by 20% driven by robust advances growth. However, the same will be partially offset by lower trading gains this year. We expect the provisions to remain high. However, a very high tax rate of 47% in Q2FY10 will help SIB show 18% growth in profits.
Allahabad Bank Q2FY11 result estimates
Allahabad Bank will report strong 42.1% yoy growth in NII. But high trading gains of Rs1.7bn in Q2FY10 are likely to result in moderate 6% yoy growth in operating profit. Accelerated provisioning during the quarter on account of higher slippage will further put pressure on the net profit growth.
Gujarat Narmada Valley Fertilisers Company (GNFC) Q2FY11 Results – Inline with estimates – First Cut Analysis
Q2FY11 results for GNFC were inline with estimates. Highlight of the results was the return to overall profitability as the company’s plant resumed operations. Revenues for Q2FY11 at Rs 8.02 bn beat our expectations by ~22% yoy driven by higher than expected fertiliser revenues. Revenues from the fertiliser segment at Rs 4.76 bn were ahead of our estimates while chemical segment revenues at Rs 3.13 bn remained inline.
EBITDA margins for the quarter declined by 310 bps yoy to 14.4% and were below estimates of 16.9% mainly due to losses in the fertiliser segment. Fertiliser segment reported EBIT loss of Rs 18 mn vs exp of Rs 34 mn. Margins from the chemical segment also declined by 700 bps yoy to 29.1% but were ahead of our estimates of 25%. Consequently, chemical segment EBIT stood at Rs 911 mn (-15% yoy), ahead of our estimates of Rs 781 mn.
GNFC reported APAT of Rs 639 mn (+5.3% yoy) and AEPS of Rs 4.1 for Q2FY11 as against Rs 3.9 previous year. For H1FY11 the company has reported revenues of Rs 11.7 bn (-13% yoy), EBITDA of Rs 981 mn (-54% yoy) and APAT of Rs 412 mn (-60% yoy). AEPS for H1FY11 stood at Rs 2.6 due to losses incurred in Q1FY11 due to ammonia plant shutdown.
We are likely to maintain our earnings estimates and recommendation (BUY) on the stock.
Gujarat State Fertilizers & Chemicals Limited (GSFC) Q2FY11 Results – Ahead of estimates – First Cut Analysis
n GSFC has posted extraordinary results for Q2FY11 led by strong performance from both the fertiliser and chemical segment
n Revenues for Q2FY11 at Rs 13 bn, +37% yoy, were significantly ahead of estimates of Rs 10.6 bn due to higher than estimated revenues from both fertiliser and chemical divisions
n Fertiliser segment revenues (reflective of the favourable NBS policies) at Rs 9.13 bn (+39% yoy) were above estimates by 24%. Chemical segment revenues too increased by 14% with revenues of Rs 3.9 bn (+31% yoy)
n EBITDA margins for the quarter expanded by 960 bps yoy to 24.4% (ahead of our estimates of 18.2%)
n EBIT margins from the fertiliser segment surprisingly improved by 1060 bps yoy to 19.8% (we estimated 10%) while chemical EBIT margins at 32.6% also exceeded expectations of 26%
n Other Income at Rs 438 mn (our estimates Rs 200 mn) was higher than our estimates while lower interest at Rs 41 mn (we estimated Rs 100 mn) also affected APAT positively
n Driven by strong revenue growth and sharp expansion in operational margins, the company reported PAT of Rs 2.07 bn (1.7x yoy) and a subsequent AEPS of Rs 26.0 as against our estimates of Rs 14.1
n For H1FY11 the company has reported revenues of Rs 23.7 bn (+13% yoy), EBITDA of Rs 5.01 bn (+159% yoy) and APAT of Rs 3.16 bn (+204% yoy). It has reported AEPS of Rs 39.6 versus Rs 13.0 in H1FY10
On account of strong Q2FY11 and H1FY11 results, we are likely to upgrade our earnings estimates by 50%-60% and subsequently our recommendation on the stock.
Cadila Healthcare Q2FY11 Result Update; Results in-line; Downgrade to Accumulate; Target: Rs720
n Robust revenue growth (up 18% YoY) and strong operating performance (up by 19%) resulted in 30% growth in APAT
n Strong revenue growth was driven by 19% growth in domestic branded formulation business and 41% growth in the US
n Management has re-iterated its revenue guidance of US$1bn for FY11E and domestic growth to sustain at 15% level
n Maintain earning estimates; Downgrade to Accumulate
Greaves Cotton Q1FY11 Result Update; Right Direction; Reiterate BUY; Target: Rs505
n Strong all-round performance – (1) Revenues up 27% yoy to Rs3.8 bn (2) 100 bps yoy expansion in EBITDA margins to 15.8% (3) Net profits up 52% yoy to Rs363 mn
n Continued traction in Engines division – Revenues grew 25% yoy to Rs3.2 bn while EBIT margins improved 50 bps yoy
n Infrastructure division heading towards break-even with 46% yoy revenue growth and EBIT loss at a mere Rs0.4 mn
n Maintain our earnings estimates of Rs30.7 for FY11E and Rs36.1 for FY12E. Reiterate BUY with target price of Rs505/Share (at 14X FY12E earnings)
Yes Bank Q2FY11 Result Update; Strong growth but rich on valuations; REDUCE; Target: Rs300
n Yes Bank’s Q2FY11 NII at Rs3.1bn and PAT at Rs1.8bn were better than our expectations driven by 15.6% qoq growth in advances and restricted pressure on NIMs
n Advances grew 15.6% qoq driven by sharp growth in the agriculture and infrastructure loans; deposits grew by 32% qoq, CASA witnessed some pressure with 40bps shrinkage
n Asset quality remained robust with gross NPAs at 0.2% of advances, negligible net NPAs and the provision cover of 75%
n Valuations unattractive at 3.2x FY11E/2.6x FY12E ABV. Maintain REDUCE with TP of Rs300 (2.2xFY12E ABV). Risks to our call – Equity raising and faster than expected growth
Canara Bank Q2FY11 Result Update; Strong operating performance; provisions remain low; REDUCE; Target: Rs636
n Canara Bank’s (CNBK) NII at Rs20.0bn was better than our expectations driven by 29bps qoq expansion in NIMs. Advances book was flat qoq
n However lower than expected other income and higher operating expenditure resulted in flat operating profit yoy
n Provisioning continues to remain low at 0.5% annualized as against an average of 0.8% for FY08-10
n At CMP the stock trades at 1.6x FY12ABV. We downgrade the stock to REDUCE rating with TP of Rs636
HCL Tech Q1FY11 Result Update; Pause to out performance ahead, downgrade to HOLD; Target Price: Rs 430
n Strong revenue growth yet again with revenues at US$ 804 mn (+9% QoQ ) beating est, however balanced with operating margins down ~230 bps QoQ, ~650 bps YoY
n Apps/IMS continue to driven growth (9%QoQ). Rev from Europe were up 18% QoQ with finsvcs /telecom/retail seeing +10%/10%/13% QoQ. Strong Net adds(5k+) for 2nd qtr in a row
n We build in 30.4%/22% rev growth ( V/s 23.3%/20% earlier) for FY11/12, reset currency at 44/$ (V/s 46/$ earlier) driving 5% EPS cut to Rs 23.5 for FY11, FY12E EPS unchanged at Rs 29.8
n Cut rating to HOLD (V/s ACCUMULATE earlier) with an unchanged price target of Rs 430 as we see stall to out performance ahead (+15% in last 6 months)
Transformers & Rectifiers Q2FY11 Result Update; Order Inflows – a positive; ACCUMULATE; Target: Rs448
n Q2FY11 with (1) 29% growth in revenues yoy & (2) 185% yoy growth (on low base) in order inflows continuing momentum from Q1FY11 signaling a gradual turn
n EBITDA margins (-300bps yoy) little subdued but partly due to employee expenses led by new plant in full swing, expect gradual improvement going forward on increasing volumes
n H1FY11 EPS of Rs14.4/Share; implied H2FY11E EPS of Rs30.4/Share (growth of 22% yoy); Expect Q3FY11E to be better on low base; MOU with MNC for 765kv – positive
n Maintain Earnings; Valuations at 7.1xFY12E EPS - 15% discount to peers; Maintain Accumulate
n Dealer Comments
The markets started the day’s session on a negative note with almost 50 odd point’s downward gap on the back of not so encouraging cues from the global markets. After the initial slump markets recovered the earlier lost ground and thereafter kept bouncing between the zones for most part of the day. Recently with FII inflows ebbing back and no clear direction being witnessed in the absence of any major positive trigger, markets are trading lacklustre. Immense volatility seems to roost the market sentiments since past couple of trading sessions. The day’s fall at the closing bell was mainly led by selling pressure in metal, realty, banking and auto stocks to a major extent. It seems markets have entered a much overdue short term correction phase and it would mean a healthier market sentiment going ahead. The overall traded volumes were quite lower compared to the earlier day by almost 10% and were at Rs 1548 bn. While delivery based volumes were higher compared to the earlier day at 40.1% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 3.06 bn while Domestic Funds were net also buyers to the tune of Rs 1.39 bn respectively on 19th October 2010. While on 20th October 2010, FII’s bought shares worth Rs. 0.16 bn in cash segment (provisional) while in the F&O segment they were net buyers to the tune of Rs 2.25 bn whereas Domestic Funds sold shares worth Rs. 0.27 bn (provisional).
n Technical Comments
Below the psychological support of 6000
Nifty maintained downtrend on the back of sell-off in metal, financial, realty, FMCG and auto companies' shares. Also it closed below the 6,000 mark for the first time in last 15 sessions. Moreover, the daily MACD is still in the sell mode and is diverging away from its signal line. Furthermore, the hourly 20- and 50- moving averages of Nifty have given a negative crossover, indicating that the current weakness in Nifty will continue to prevail.
BSE Realty:
BSE Realty has closed below the support of 20-DSMA and hence in the coming day we may see this index sliding back to its 50-DSMA packed at 3681 level.
n Results Today
ACC | Akzo Nobel | Allahabad Bank | Alstom Projects | Ambuja Cem. | Corporation Bank |
eClerx Services | Fres.Kabi Onco. | Indiabulls Fin. | Info Edg.(India) | JM Financial | Novartis India |
Sasken Comm.Tec. | SKF India | South Ind.Bank | SPARC | Sterlite Tech. | TCS |
TVS Motor Co. |
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