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ABG Shipyard Q2FY11 Result – First Cut Analysis
Above estimates
n ABG Shipyard (ABGS) delivered strong performance during Q2FY11 was above estimates.
n Revenues (including subsidy income) grew by 38% yoy to Rs5555 mn – above estimates.
n Operating margins (including subsidy income) declined 100 bps yoy to 26.2% - though above estimates. Expansion in operating margins was due to higher raw material costs. Consequently growth in operating profits was lower at 33% yoy to Rs1454 mn – marginally above estimates.
n Led by strong operational performance, adjusted net profits increased 39% yoy to Rs637 mn – above estimates. After accounting for losses on sale of investments of Rs74 mn, ABGS reported net profit of Rs563 mn
n At CMP, the stock is trading at 10.2X FY11E and 9.5X FY12E earnings of Rs44.4 and Rs47.5 per share respectively.
Inflation eases by 4bps to 8.58%, core inflation inches up to 5.1%
n Headline inflation for the month of October eased marginally by 4bps to 8.58%.
n Primary articles inflation has eased to 16.7%, driven mainly by the presence of a high base.
n Inflation in primary articles showed a broad based increase on a MoM basis, led by price increases in potatoes (9.4% MoM), onions (24.2% MoM), fruits (4.7% MoM) and fibres (8.5% MoM).
n Fuel inflation saw a drop by 10bps, but also saw the price of petrol increase by 1.7% MoM.
n Manufactured products inflation inched up to 4.8% in the month of October from 4.6% last month.
n Core inflation that has been trending downwards has made a slight northward move to 5.1% from 4.9% last month.
n With YTD inflation for FY11 at 4.3%, the broad downtrend in inflation would probably stay unaffected.
n The month of November is likely to see primary articles inflation easing considerably owing to a favourable base effect. This in turn would bring about a significant drop in headline inflation.
Lupin Pharma Q2FY11 Result Update; Robust earnings; Revise target price upwards; Accumulate; Target: Rs496
n Strong operating performance largely driven by robust growth momentum in US, Europe, Japan and India coupled with favorable product mix
n US branded business grew at 24% (adjusted for one time impact of change in accounting treatment for rebates) and India formulations at 22% (adjusted for inventory correction)
n Both existing and new prescriptions seeing growth in Antara; OC launches in US in Q312 will aid long term revenue visibility
n On account of improved performance, revise earning estimates and raise target to Rs496; Maintain Accumulate, owing to limited upside
HPCL Q2FY11 Result Update; Results above expectation, Maintain BUY; Target: Rs.515
n HPCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to issuance of oil bonds/Cash receivables during the quarter
n EBIDTA at Rs.24.8bn, against Rs1.7bn, YoY, mainly due to inventory Gain and issuance of oil bonds/cash receivables from the government of India
n Average gross refining margin for 1H FY11 was at $3.2/bbl as compared to $3.8/bbl (decline by 18% YoY) below our expectation of $3.7/bbl.
n Valuations look attractive at 1x FY12E ABV, mainly due to recent change in reforms, Continue BUY rating with TP of Rs.515
Glenmark Pharma Q2FY11 Result Update; On a comeback trail; Upgrade to Accumulate; Target: Rs381
n Adjusted PAT growth of 27% was in-line driven by a) 23% growth in sales at Rs7.4bn (est. of Rs7bn) and b) 11% growth in EBITDA at Rs1.87bn (est. Rs1.77bn)
n Revenue growth was driven by a) 19% growth in Speciality business (55% contribution to top line) and b) 27% growth in Generics business (45% contribution to top line)
n Managements conscious effort to clean the balance sheet is a welcome move; further improvement in working capital situation can lead to expansion in valuation
n Positive Ph-III trials a step forward for Crofelemer launch
n Tweak earning estimates; raise target price to Rs381 (Rs308 earlier); upgrade to Accumulate from Hold
IOCL Q2FY11 Result Update; Results above expectation, ACCUMULATE; Target: Rs.458
n IOCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to inventory gain and issuance of oil bonds/Cash receivables during the quarter
n EBIDTA at Rs.68.9bn, against Rs.6.1bn a year ago, mainly due to Inventory gain and issuance of oil bonds/cash receivables from the government of India
n Average gross refining margin for 1H FY11 was at $4.7/bbl as compared to $5.4/bbl (declined by 13% YoY) above our expectation of $3.5/bbl.
n Valuations look attractive at 1.4x FY12E ABV, mainly due to recent change in reforms, Accumulate rating with TP of Rs.458
Tata Steel Q2FY11 Result Update; Getting fit for future; Accumulate; Target: Rs 712
n Higher volume in Indian operations and slightly higher realization in European operation helped revenue growth of 5% to Rs 286.5 bn, in line with our expectations
n Higher raw material costs (up ~20% QoQ) weighed on the EBITDA margin, which fell 348 bps QoQ to 12.8%. EBITDA/ tonne for Tata Steel Europe remained at ~US$60
n Higher other income due to stake sales in Tata Motors and Tata Power helped consolidated PAT to grow 8.4% on QoQ to Rs 19.8 bn
n Revising up our earnings estimates for FY11E and FY12E to Rs 81.4 and Rs 97.8 respectively. We assign Accumulate on the stock
IVRCL Infrastructure Q2FY11 Result Update; Earnings continue to disappoint; Hold; Target: Rs160
n Q2FY11 PAT at Rs 233 mn sharply below estimates (Rs434 mn) led by revenue decline of 16%. Execution impacted by delays in financial closure of own BOT projects & extended monsoons
n EBITDA at Rs 706 mn down 41% margins at 6.7%, contracted 287 bps – as slow execution rate led to poor overhead absorption –impacting margins to an extent of 230 bps
n Mgmt revenue guidance of ~Rs6.75 bn, lowered to Rs 6.5 bn still implying a steep H2FY11E revenue growth of 42% & EBIDTA growth of 47%
n We believe IVRCL will continue to face execution headwinds as ~ 40% of order backlog remains slow moving. We cut FY11E/12E EPS by 19.5%/16.5%. Maintain HOLD - cut target to Rs160
Mahindra Satyam Q2FY11 Result Update; ‘Growth+ cost’ pangs= Margin pressures; REDUCE; Target Price: Rs 70
n Mahindra Satyam’s result continue to indicate the ‘Hard toil’ faced by the company as Sep’10 qtr revenues decline by ~2% QoQ, margins falling by ~380 bps QoQ to 5.9%
n Result vindicate our negative stance on the company as it faces stiff challenges from both weaker competitive positioning in erstwhile areas of strength
n Cut our FY11E/12E/13E margins to 8.4%/14%/14.7% (V//s 15.2%/17.1%/17% earlier) driving a 48%/24%/19% in EPS to Rs 2.7/4.9/6(V/s Rs 5.1/6.4/7.5 earlier)
n Maintain REDUCE rating with a revised March’12 DCF based TP of Rs 70(V/s Rs 81 earlier, implying ~12.5x 1 yr forward P/E)
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