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Contents
Emco Q2FY11E Result Estimates
Expect numbers in green assuming positive margins in projects business. Revenue growth of 38%, 31% & 23% in transformers, meters & projects - resulting in overall revenue growth of 32% YoY. Expect 490bps YoY decline in the overall EBITDA margins led by (1) lower margins in transformers and (2) cost overruns in few projects. Consequently expect PAT to decline by 35% yoy to Rs61mn. Key things to watch - (1) realizations & margins in transformers, (2) working capital situation and (3) execution and profitability in projects business.
TNPL Q2FY11 Results Expectation : Net Sales Rs 3.0 bn, PAT Rs 429 mn
TNPL is expected to announce their Q2FY11 results today i.e. October 22nd, 2010.
We estimate strong results for TNPL for Q2FY11. We estimate a 5% yoy increase in sale volumes to 65,000 MT and a 9.6% growth yoy in realisations at Rs 45,000 / MT. Following this, revenues are expected to increase by 10% yoy to Rs 3.0 bn as against Rs 2.7 bn previous year. Benefits of commissioning of TNPL’s pulp plant are likely to reflect by way of high margin levels of 35.6% (+470 bps yoy / +540 bps qoq). Resulting EBITDA is estimated at Rs 1.06 bn with a growth of 26% yoy. Consequently, at PAT levels the company is likely to report a growth of 52% yoy to Rs 429 mn resulting in AEPS of Rs 6.2 as against Rs 4.1previous year.
Ipca Labs (CMP Rs 299, IPCA@IN, Mkt Cap- Rs 37bn)
Ipca is going to report its Q2FY11 results on 22nd Oct. The company is expected to report sales growth of 19.5%. EBIDTA margins are expected to decline by 133bps YoY to 22.4% on account of increase in staff cost arising from recent addition to sales force. Adj PAT is expected to increase by 18% to Rs762mn. At CMP of Rs 299, the stock is trading at 15x FY11E EPS of Rs20 and 12x FY12E EPS of Rs 24.5. We have a Buy rating on the stock with price target of Rs 336.
Key Things to watch
Update on the domestic market
n Ramp up in Anti-Malarial portfolio
n Update on the Emerging Market business
n USFDA approval status
n Outlook on margins
South Indian Bank Q2FY11 Result Update; Flawless performance; Accumulate; Target: Rs30
n SIB reported strong 39.4% growth in NII at Rs2.0bn and 57.4% yoy growth in PAT at Rs770mn, ahead of our expectations
n The growth was driven by 36% growth in advances and 35bps qoq expansion in NIMs
n The gross NPAs remained stable at Rs2.3bn. Slippages controlled at Rs260mn, 0.6% of advances. Provision cover stood strong at 71%.
n Valuations reasonable at 1.6x FY12E ABV. However, leaves ~10% upside to our target price of Rs30 Downgrade from BUY to ACCUMULATE
eClerx Q2FY11 Result Update; Retain ACCUMULATE; set March’12 TP at Rs 670
n Sep’10 results in line with revenues at US$ 18 mn (+7% QoQ). EBITDA margins at 36.2% , down by ~50 bps sequentially (V/s expectations of ~40 bps QoQ increase)
n Rampups in European top clients drives top 5 client revenues up by ~7.1% QoQ. Co exercises call option to expand into 2nd phase of Airoli facility( 600 seats)
n Tweak est for (1) higher revenues, (2) reset in FY12E tax rates to 12% (V/s 16% earlier) , (3) US$/INR reset to Rs 44/$ and (4) building in hedging gains from co’s favorable hedges
n Retain ACCUMULATE with a revised DCF based March’12 TP of Rs 670(V/s Rs 465 earlier), implying ~13.5x/12.5x March’12/March’13 earnings.
Allahabad Bank Q2FY11 Result Update; Robust performance; maintain strong BUY; Target: Rs300
n Superb results for Q2FY11 driven by 14% qoq growth in NII, 16% qoq growth in net profit. The growth was achieved on 8.4% qoq growth in loans and 16bps qoq expansion in NIMs
n The strong growth was achieved despite providing Rs349mn higher than Q2FY10 for pension/gratuity and provisions on the agri debt relief NPAs
n The slippages excluding agri NPAs were at Rs2.3bn, 1.1% annualised. The provision cover stood at 69% for Q2FY11
n Valuations attractive at 1.6x FY11E/1.2x FY12E ABV. We maintain our BUY rating with price target of Rs300 (at 1.5x FY12E ABV). Remains our top pick in mid-sized PSU banks
ACC Q3CY10 Result Update; Expect worst to be over- upgrade to ACCUMULATE; Target: Rs1,035
n APAT at Rs0.9bn (-79.3%yoy) sharply below estimates led by lower realizations. Revenue decline of 16.9% yoy - volumes decline 3.6%yoy, realizations down 13.8%
n Costs increases drag EBITDA to Rs 1.69bn by 74.6%yoy. RM cost/t up 16%yoy due to outside clinker purchases & increase in fly ash prices. EBITDA/t at Rs3512 (-73.6%yoy)
n Downgrade our earnings by 8% for CY10 & 5.9% for CY11. With recent cement prices hikes and pick up in volumes, we expect the worst phase of profitability to be over for ACC
n We upgrade our target price to Rs1050 by upgrading our valuation to EV/ton of USD 130 (earlier USD110/ton) and rolling over to CY11 nos. Upgrade to ACCUMULATE
GNFC Q2FY11 Result Update; Profitability resumes, Maintain estimates; BUY; Target: Rs 157
n GNFC’s ammonia plant resumed operations in Q2FY11 and posted PAT of Rs 639mn after losses in previous two quarters
n Net revenues Rs 8 bn (+4.6%yoy) were ahead of estimates but PAT of Rs 639 mn (+5.3%yoy) was broadly in line
n Fertiliser segment profitability continues to remain nil while chemical segment reported margins of 29% (-700bps yoy)
n Fine tuned revenue estimates but maintain FY11E/12E earnings estimates at Rs 11.6 / 22.4; recommend BUY
Sterlite Tech Q2FY11 Result Update; Short-term hurdles, Cut rating to HOLD; Target Price: Rs100
n Q2FY11 profit of Rs576mn, below our estimate of Rs651mn due to lower conductor volume growth
n Delay in power conductor order in-flows and stabilization of expanded fiber capacity to hit growth.
n Cut EPS estimates by 21% /17% to Rs6.3 /8.3 for FY11E & FY12E respectively mainly due to cut in volume estimates
n Cut Rating to HOLD from BUY earlier with revised target price of Rs100 (from Rs131 earlier)
Ambuja Cement Q3CY10 Result Update; Results below estimates- Maintain HOLD; Target Price: Rs 130
n Net profit at Rs1.52 bn (-44% yoy) below estimates (Rs2.07 bn), led by higher P&F costs & lower other income. Revenue down 2.9%yoy -Volumes +6.1% yoy, realizations - 8.5%yoy
n EBITDA at Rs 2.8bn (-34.2%yoy) (Estimate–Rs3.4 bn). Sharp jump in P&F costs (Rs1017/t up 29.7% yoy) negates benefits of zero clinker purchases. EBITDA/t at Rs651 (-38%yoy)
n Downgrade our earnings by 2.5% for CY10 and 2.9% for CY11. with recent hikes in cement prices and improving demand outlook, we expect the worst to be over for Ambuja
n Upgrade our price target to Rs130 (valued at EV/ton of USD140 for CY11). However Rich valuation at PER of 15.7 & EV/ton of USD151 leaves little upside. Maintain HOLD
Coromandel International Q2FY11 Result Update; Upgrade in earnings and price target; Buy; Target Price: Rs 870
n Strong Q2FY11 results triggered FY11E / FY12E EPS upgrade by 16% / 23% and target price upgrade by 54%
n Q2FY11 revenues at Rs 25.8 bn (+69%yoy), EBITDA margins at 13%, APAT at Rs 2.2 bn (+96%yoy) were ahead of estimates
n Results adjusted for Rs 1.96 bn subsidy related to previous period, reported PAT of Rs 3.5 bn, +88% yoy
n Price tie-up for raw material upto Q3FY11 to ensure margins, maintain BUY with revised price target of Rs 870
Tata Consultancy Services Q2FY11 Result Update; All guns blazing raise TP further to Rs 1,075; ACCUMULATE
n Revenues at US$ 2,004 mn (+11.7% QoQ, +30.3% YoY) beat estimates significantly , propelled by ~10.4% QoQ growth in Int business and ~26% QoQ growth in India business
n Incredible mgn performance yet again with margins improving further by ~70 bps QoQ to 30%, highest ever. Non manpower expenses % is now the lowest ever in co’s history
n Broad based growth across service lines/vertical wise. Europe/UK grow by ~14%/13%. Nearly all verticals record a double digit QoQ increase for the 1st time ever
n Despite higher currency reset, up FY11/12E EPS by 2%/7% to Rs 42.4/47.5 as we build in rev gwth at 28%/21% for FY11/12(V/s 22%/19% earlier).ACCUM, revise TP of Rs 1,075
n Dealer Comments
The markets started the day’s session on a positive note with almost 80 odd point’s upward gap on the back strong overseas global cues particularly the overnight US markets ignoring subdued Asian markets led by cooling Chinese economy figures. Post positive opening markets kept on inching northbound with each passing hour as renewed buying interest kept the momentum going post excellent response to the ongoing Coal India IPO by FII’s and encouraging Q2 results so far. Markets erased the past two day’s losses with all round buying interest in the markets. Today’s rally was mainly led by strong buying in RIL, Bharti Airtel and host of banking stocks. Finally markets closed the day on a strong positive note towards the end at almost day’s highs with Sensex gaining 388 points or 1.92% higher to settle at 20261 levels while Nifty gained 119 points or 2% higher to settle at 6114 levels. The overall traded volumes were quite higher compared to the earlier day by almost 11% and were at Rs 1710 bn. While delivery based volumes were also higher compared to the earlier day at 42% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 1.45 bn while Domestic Funds were net also buyers to the tune of Rs 0.50 bn respectively on 20th October 2010. While on 21st October 2010, FII’s bought shares worth Rs. 8.52 bn in cash segment (provisional) while in the F&O segment they were net buyers to the tune of Rs 16.98 bn whereas Domestic Funds sold shares worth Rs. 2.30 bn (provisional).
n Technical Comments
Just a relief rally
Nifty outperformed global markets on Thursday on the back of buying across all sectors to close above the 6100 mark. The markets bounced back today after witnessing a sell-off since Thursday barring Monday's marginal up move. Moreover, today’s move in Nifty was only a part of a flat correction which is expected to die soon. Also, Nifty is still below the resistance of 50-HSMA and hence in the coming session the downtrend should again resume.
BSE Oil & Gas:
BSE Oil & Gas seems to have resumed its uptrend after finding support at the 20-DSMA and hence in the coming day we will see this index amplify upto 11350 level.
n Results Today
Aptech | Bank of India | Bank of Maha | Binani Cement | Biocon | C P C L |
D B Corp | Dewan Housing | EMCO | Finolex Inds. | Indian Bank | Ipca Labs. |
JSL Stain. | M & M Financial | NIIT | Piramal Health | Redington India | SKS Microfinance |
Sobha Developer. | T N Newsprint | Tata Elxsi | Thomas Cook (I) | Vardhman Textile | Vijaya Bank |
Wipro |
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