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Thermax Q2FY11E Result Estimates
Expect 2nd consecutive quarter of strong performance by Thermax on the back of robust order backlog and pick up in industrial capex
n Expect revenue growth at 36% YoY to Rs9.2 bn - led by Energy (+40% YoY to Rs7.3 bn) and Environment (+28% YoY to Rs2.1 bn).
n Expect EBITDA robust growth at 40% YoY to Rs1.1 bn and 40 bps YoY improvement in operating margins to 12%
n Led by strong operational performance, expect APAT to grow by 37% YoY to Rs739 mn.
Ability to sustain order inflows momentum and progress in boilers venture will be watched keenly
Elecon Engineering Q2FY11E Result Estimates
Expect Elecon Engineering to report muted operational performance during Q2FY11E – attributed to dismal order inflows in FY10. But, expect EEL to report healthy growth in net profits despite muted operational performance.
n Expect revenue growth at 6% YoY to Rs2703 mn led by 18% YoY growth in TE division. MHE division to decline by 4% YoY on back of low order book cover
n EBITDA margins to decline by 40 bps YoY to 14.1%. Consequently, lower EBITDA growth at 3% YoY to Rs381 mn.
n Despite muted operational performance, expect net profits to grow by 14% YoY to Rs123 mn - due to 12% YoY decline in interest costs.
Key thing to watch out will be (1) management outlook for FY11E (2) granular details of recent acquisition in the gear / gearboxes business and (2) developments on Bramhani Steel order
Union Bank of India (UBI) Q2FY11 result estimates
The bank is likely to report strong 56% growth in NII, benefiting from low base. However the benefit will be offset by lower trading gains and higher provisioning. Provisioning costs to remain high as provision coverage ratio has fallen to 58%. Restructured assets are key thing to watch out for.
Deepak Fertilisers Q2FY11 Results – Below estimates – First Cut
Q2FY11 results for Deepak Fertilisers remained marginally below estimates. Revenues at Rs 4.1 bn (+15.7% yoy) were ahead of estimates due to higher than expected revenues in both fertilisers and chemicals. Aggregate revenues have been adjusted for a one time EO of Rs 33.5 mn pertaining to loss on fertiliser subsidy. Fertiliser revenues (post appropriate adjustment of Rs 33.5 mn) were ahead of estimates at Rs 1.9 bn (+29% yoy). Chemical segment revenues surprised at Rs 2.3 bn (+11.6% yoy) and were ahead of estimates.
The company reported EBITDA margins of 19.3% % (-100 bps yoy) which were below estimates of 22.8%. Resultant EBITDA of Rs 800 mn (versus estimates of Rs 886 mn) improved by 11% yoy. Fertiliser segment EBIT margins remained inline with estimates at 7.9% (adjusted for fertiliser subsidy EO) while chemical segment EBIT margins at 26.2% were below estimates and remained muted compared to ~30% + being witnessed in the last 4 quarters.
APAT for Q2FY11 stood at Rs 448 mn (+23.4% yoy) and remained inline with estimates of Rs 469 mn resulting in AEPS of Rs 5.1 versus estimates of Rs 5.3. The company reported profit of at Rs 415 mn. Adjusting for one time EO of Rs 33.5 m in Q2FY11, for H1FY11 the company reported revenues of Rs 7.6 bn (+28% yoy), EBITDA of Rs 1.3 bn (+32.7% yoy) and APAT of Rs 970 mn (+28.7% yoy). AEPS for H1FY11 stood at Rs 11.0 as against Rs 8.5 in H1FY10.
NTPC Q2FY11 results – Below estimates after adjustments (First cut analysis)
n Revenue grew by 24% to Rs130bn – higher than estimates mainly due to higher fuel cost.
n EBITDA grew by 5% to Rs30bn, lower than estimates mainly due to lower depreciation and interest recovery in revenues. The EBITDA margins stood at 23.2% (decline of 400bps due to same reasons).
n Reported Net profit of Rs21.1bn (down 2% yoy). Adjusted net profit stood at Rs17.6bn, down 6% yoy. We have adjusted for Advance against depreciation recognized as sales and Provisions made in the qtr.
n EPS for the qtr – Rs2.6/Share. We need to understand further extraordinary items in the tomorrow’s concall.
n During H1FY11, company has reported earnings of Rs4.8/Share, down 9% yoy.
n For FY11E and FY12E respectively, our estimates stand at Rs11.2 and Rs12.8/Share. The book value at the end of FY11E and FY12E is expected to be Rs82 and Rs89/Share. We have not considered any impact of merchant sales in our numbers.
n NTPC is currently trading at reasonable valuations of 2.3xFY12E Book Value and 16.0xFY12E earnings. We maintain ‘Accumulate’ rating with price target of Rs220/Share on the back of (1) huge underperformance in past one year and consequently reasonable valuations, (2) core project level ROE of 28% and (3) likely upside from merchant sales.
n We will come out with a detailed note after the concall tomorrow.
TRF Q2FY11 Results – First Cut Analysis
Standalone net loss at Rs226 mn
TRF (Standalone) reported dismal performance in Q2FY11 with a net loss of Rs226 mn – attributed to combined effect of low revenue booking and full cost booking on the project.
n Standalone revenues decreased 19% yoy to Rs1080 mn – led by 33% yoy decline in Projects division to Rs760 mn. Products division reported healthy growth at 22% yoy to Rs589 mn.
n TRF reported an EBITDA loss of Rs263 mn – we attribute this to full cost booking on projects without corresponding revenue booking.
n Led by a dismal operational performance, TRF reported a net loss of Rs226 mn – sharply below estimates.
n The auto components business surprised positively with a net loss of merely Rs3 mn – marginally ahead estimates.
Thus the auto components division did not contribute to TRF’s dismal performance during the quarter – in fact it was the core MHE division which put a dent on the overall performance.
We shall seek more clarity on the results from the management in post-earnings conference call.
Voltas Q2FY11 Result First Cut Analysis
Marginally Below Estimates
n Voltas Q2FY11 results were marginally below estimates with net profits declining 17% yoy – attributed to low revenue booking
n Revenues declined 3% yoy to Rs10.7 bn – below estimates. Decline in revenues was led by 8% yoy decline in Electro-Mechanical Projects division to Rs7.1 bn – since order inflows back-loaded towards end of FY10. Both Engineering Products & Services and Unitary Cooling Products reported healthy growth at 8% yoy (to Rs1267 mn) and 16% yoy (to Rs2281 mn) respectively.
n Led by lower order booking EBITDA margins declined 140 bps yoy to 10.1% and EBITDA decreased 14% yoy to Rs1075 mn.
n Led by below expectations operational performance, net profits decreased 17% yoy to Rs746 mn – marginally below estimates.
n Order inflows for the quarter stood at Rs6.7 bn – up 46% yoy (down 31% qoq). Order book stood at Rs49.75 bn.
We maintain our consolidated earning estimates of Rs11.3 and Rs13.3 per share for FY11E and FY12E respectively. At CMP, the stock is trading at 21.4X FY11E and 18.1X FY12E consolidated earnings. We have a positive bias on Voltas.
United Bank of India Q2FY11 Result Update; Results inline; slippages surprise positively; HOLD; Target Price: Rs150
n UNTDB’s Q2FY11 earnings were in line with our estimates with NII at Rs5.3bn and PAT at Rs1.1bn
n Other income growth strong at 26%qoq to Rs1.5bn; the bank has used robust other income for provisions
n The slippages have surprised positively at Rs2bn (Rs2.5bn in Q1FY11, our exp – Rs2.5bn). The NPAs have remained largely stable during the quarter. PCR at 50%, 71.8% as per RBI norm
n Valuations not unreasonable at 1.7x FY11E/1.3x FY12E ABV. We downgrade to HOLD with TP of Rs150, 1.4x FY12E ABV; 15% discount to our valuations for mid-tier PSU banks
Lakshmi Machine Works Q2FY11 Result Update; Results beat estimate, growth priced in; Hold; Target: Rs2660
n Q2FY11 PAT of Rs459mn ahead of estimates led by better than expected revenue growth and higher other income
n Strong demand for yarn continues to attract capex resulting in LMW’s order book rising to Rs36bn
n Upgrade EPS estimates by 6% /12% to Rs122 /Rs142 for FY11E /12E respectively
n Valuations at 22.4x /19.2x EPS of Rs123.5 /143.9 for FY11/12E fully factor growth. Retain HOLD rating with target Rs2660
Emco Q2FY11 Result Update; Cost overruns continue; Maintain negative view; REDUCE; Target Price: Rs60
n Emco reported yet another huge cost over-runs in its projects business – reieterate that cost over-runs are across the projects (including 765kv PGCIL order – 45% unexecuted)
n Though mgmt mentioned all the cost over-runs provision is over in this quarter, we do not rule out further negative surprises
n Transformer business also affected due to (1) rescheduling of deliveries from customer side, (2) competition impacting margins by 7-8%
n Give benefit of doubt once again to mgmt, assume positive numbers from Q3FY11E onwards; Reiterate negative view on the stock
Titan Industries Q2FY11 Result Update; Earning Upgrade Continues, Maintain ACCUMULATE; Target: Rs3762
n Titan reported good performance in ‘Watches’ and ‘Jewellery’ largely propelled by volume growth
n Q2FY11 headline numbers - revenue growth 33.9% yoy to Rs15.4 bn, Operating Profit growth 60% yoy to Rs1.7 bn and APAT growth of 64.6% yoy to Rs1.3 bn
n Key segments posted robust performance – ‘Watches’ grew 19.7% yoy to Rs3.6 bn and Jewellery grew 36.7% yoy to Rs11.2 bn
n 10% earnings upgrade to FY11E (Rs87/Share) and FY12E (Rs112/Share) – Maintain ‘ACCUMULATE’ rating with revised target price of Rs3762/Share
Madras Cement Q2FY11 Result Update; Results marginally below estimates. Maintain REDUCE; Target: Rs113
n APAT at Rs185 mn (-89% yoy) below estimates (Rs210 mn). Revenues at Rs6.42bn (-24.3%yoy) – Cement volumes (2.07 mt) down 1.9%, realisation (Rs2780/t) down 24.7% yoy
n EBITDA at Rs1.06bn (-68.2% yoy), marginally below estimates on account of higher RM costs(Rs577/t, +10.6%yoy). EBITDA/t at Rs195 down 84.6%
n Downgrade earnings by 6.1% for FY11 & 9.3% for FY12 on account of partial divestment of wind mills (MCL sold 26.4 MW out of ~186 MW capacity) and lower volumes
n Though recent price hikes would mean that the worst is possibly over for MCL, valuations at PER 10.5X and EV/t of USD88 leaves little upside. Maintain REDUCE
Idea Cellular Q2FY11 Result Update; Results disappoint, retain SELL; Target: Rs60
n Q2FY11 PAT at Rs1.8bn (v/s our est. Rs22bn) and EBIDTA at Rs8.8bn (v/s our est. 9.2bn) misses our estimates due to absence of sequential revenue growth
n ARPU falls by sharp 8.3% QoQ to Rs167 as MOUs drop by 5.1% to 394 minutes. Traffic growth muted at just 3% QoQ
n Net debt reduces on lower capex in 1H due to lack of equipment imports. But 2H capex to compensate
n Valuations expensive at 9.4x & 7.8x EV/EBIDTA for FY11E & FY12E respectively. Prefer Bharti Airtel available at 6.9x FY12E EV/EBIDTA. Retain SELL rating with target Rs60
Tech Mahindra Q2FY11 Result Update; Marginal beat on estimates, retain HOLD; Target: Rs810
n Rev(ex H/W) at US$ 265 mn(+5.4% QoQ) beat exp marginally. Mgns (ex H/W) at 21.5%, were up by ~280 bps QoQ driven by favorable currency, higher utilization & lower employee count
n Top client rev were flat in constant currency terms at ~GBP 75 mn while revenues(ex BT, SI ) were up by 8.5% sequentially to US$ 150 mn
n Tweak FY11/12E conso EPS up by ~2.8%/0.3% to Rs 69.6/77.5 despite higher rev est. driven by higher currency reset helped by lower FY12 tax assumptions at 21%(V/s 23% earlier)
n Maintain HOLD with a revised TP of Rs 810(based on 11.5x 1 yr fwd P/E). See near term upsides driven by possibility of a favorable merger ratio( for TechM) with Mah Satyam
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