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Angel Broking, :: 3QFY2011 Previews: Reliance Industries, ITC, Wipro, BHEL, PNB, BoI, TechM, Corp Bank, HCC
3QFY2011 Result Previews
Reliance Industries
Reliance Industries Ltd. (RIL) is scheduled to announce its results today. We expect the
company’s top line to increase by 20.2% yoy to `68,347cr (`56,856cr) during the quarter,
largely on account of increased refining and petchem product prices. OPM is expected to
expand by 120bp yoy to 15% (13.8%) on account of higher refining and petrochemical
margins. Higher top-line growth and OPM expansion will result in operating profits
increasing by 30.7% yoy to `10,252cr (`7,844cr). PAT is also expected to increase at a
healthy rate of 38.1% yoy to `5,535cr (`4,008cr). We expect the company to report GRM of
US $9.3/bbl for the quarter v/s US $7.9/bbl in 2QFY2011. The spurt in GRMs could be
attributed to higher middle distillates crack and wider heavy-light crude oil spread. Petchem
margins are expected to improve due to better polymer cracks over naphtha and higher
polyester prices on account of tighter cotton markets globally. Higher petchem and refining
margins are expected to offset the dip in natural gas production (55mmscmd v/s
60mmscmd) qoq from KG-D6. We maintain our positive outlook on the stock; however, the
target price is currently under review.
ITC
ITC is expected to announce its 3QFY2011 results. For the quarter, we expect ITC to report
19.0% yoy growth in its top line to `5,388cr, impacted by strong growth in its hotels,
paperboards and packaging and cigarettes segments. The company’s earnings for the
quarter are expected to grow by 20.6% yoy to `1,341.2cr, largely driven by the top line. We
maintain our Neutral view on the stock.
Wipro
Wipro is set to announce its 3QFY2011 results today. We expect the company’s IT services
segment to post revenue of US $1,350mn, up 6.0% qoq on the back of 4.9% volume growth
and cross-currency benefit of 1.1%. At the consolidated level, we expect Wipro to record
revenue of `7,972cr, up 3.1% qoq. The company is expected to post a 110bp qoq
expansion in EBIT margins for the IT services segment on the back of better utilisations qoq;
however, at a consolidated level, Wipro is expected to record only an 81bp qoq expansion to
19.0% on account of good growth in the IT products segment, which is a thin-margin
business. PAT is expected to come in at `1,348cr, up 4.9% qoq. At the CMP of `478, the
stock is trading at 19.7x FY2012E EPS of `24.3. We maintain Accumulate on the stock with
a Target Price of `515.
BHEL
BHEL is scheduled to announce its 3QFY2011 results. The top line is expected to grow by
30% yoy to `9,398cr. On the operating front, we expect margins to contract by 360bp yoy to
around 18%. Net profit is expected to increase by 5.8% yoy to `1,135cr. Currently, we
remain Neutral on the stock and will revisit our estimates post the conference call.
PNB
Punjab National Bank (PNB) is scheduled to announce its 3QFY2011 results. We expect the
bank to report healthy NII growth of 30.9% yoy (2.4% qoq). Non-interest income is expected
to remain flat. The operating profit of the bank is expected to register growth of 23.4% yoy.
Net profit growth is expected to be moderate at around 8.8% on a yoy basis to `1,100cr. At
the CMP, the stock is trading at 1.5x FY2012E ABV. We have a Buy rating on the stock with a
Target Price of `1,341.
Bank of India
Bank of India is slated to announce its 3QFY2011 results. We expect the bank to report
healthy NII growth of 23.1% yoy to `1,840cr. Non-interest income is expected grow
marginally by 3.5% yoy. The cost-to-income ratio is expected to decline sequentially by
~75bp to 40.8% from 41.6%. Growth in pre-provision profit is expected to be healthy at
27.4% yoy. Net profit is expected to increase by robust 65.0% yoy to `669cr, primarily on
account of lower provisioning expenses. At the CMP, the stock is trading at valuations of 1.3x
FY2012E ABV. We have an Accumulate rating on the stock with a Target Price of `483.
Tech Mahindra
Tech Mahindra is set to report its 3QFY2011 results today. We expect the company to record
4.5% qoq growth in USD revenue to US $276.7mn v/s US $264.7mn (excluding
US $63.8mn of one-time pass through revenue from a managed services contract for the
procurement of hardware and software as part of a multi-year deal) in 2QFY2011. This is on
the back of strong volume growth of 7% qoq in non-BT account, flat revenue from BT and a
cross-currency benefit of 1% qoq. EBITDA margins are expected to dip by 77bp qoq to 21%
v/s 21.8% (excl. impact of pass through revenue) in 2QFY2011 on the back of onshore wage
hike taken in 3QFY2011. PAT, excl. earnings from Mahindra Satyam, is expected to settle at
`169.2cr. We maintain Buy on the stock with an SOTP-based Target Price of `855.
Corporation Bank
Corporation Bank is slated to announce its 3QFY2011 results. We expect calculated NIM to
compress by ~10bp qoq on account of high bulk deposit percentage of ~42.3% and a low
CASA base of ~25.0%. Consequently, NII is expected to decline marginally by 0.3%
sequentially to `713cr. Non-interest income is expected to remain flattish at `249cr. On a
yoy basis, pre-provision profit is expected to increase marginally by 3.1%, while provisioning
expenses are expected to decline by 27.3%, resulting in net profit growth of 6.2% to `324cr.
At the CMP, the stock is trading at 1.0x FY2012E ABV of `542. We maintain our Buy rating
on the stock with a Target Price of `705.
HCC
HCC is expected to announce its third quarter results. We project modest ~10.1% yoy
growth in revenue to `994.1cr, impacted by the AP crisis and high exposure to longer
gestation period orders. We project stable EBITDA margins at 12.6% and net profit growth of
19.2% to `17.6cr for the quarter, primarily due to the low base effect. Due to the
uncertainties surrounding the Lavasa project, the stock is under review. We will come out
with a rating and detailed note post the result and interaction with management
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Angel Broking, :: 3QFY2011 Previews: Reliance Industries, ITC, Wipro, BHEL, PNB, BoI, TechM, Corp Bank, HCC
3QFY2011 Result Previews
Reliance Industries
Reliance Industries Ltd. (RIL) is scheduled to announce its results today. We expect the
company’s top line to increase by 20.2% yoy to `68,347cr (`56,856cr) during the quarter,
largely on account of increased refining and petchem product prices. OPM is expected to
expand by 120bp yoy to 15% (13.8%) on account of higher refining and petrochemical
margins. Higher top-line growth and OPM expansion will result in operating profits
increasing by 30.7% yoy to `10,252cr (`7,844cr). PAT is also expected to increase at a
healthy rate of 38.1% yoy to `5,535cr (`4,008cr). We expect the company to report GRM of
US $9.3/bbl for the quarter v/s US $7.9/bbl in 2QFY2011. The spurt in GRMs could be
attributed to higher middle distillates crack and wider heavy-light crude oil spread. Petchem
margins are expected to improve due to better polymer cracks over naphtha and higher
polyester prices on account of tighter cotton markets globally. Higher petchem and refining
margins are expected to offset the dip in natural gas production (55mmscmd v/s
60mmscmd) qoq from KG-D6. We maintain our positive outlook on the stock; however, the
target price is currently under review.
ITC
ITC is expected to announce its 3QFY2011 results. For the quarter, we expect ITC to report
19.0% yoy growth in its top line to `5,388cr, impacted by strong growth in its hotels,
paperboards and packaging and cigarettes segments. The company’s earnings for the
quarter are expected to grow by 20.6% yoy to `1,341.2cr, largely driven by the top line. We
maintain our Neutral view on the stock.
Wipro
Wipro is set to announce its 3QFY2011 results today. We expect the company’s IT services
segment to post revenue of US $1,350mn, up 6.0% qoq on the back of 4.9% volume growth
and cross-currency benefit of 1.1%. At the consolidated level, we expect Wipro to record
revenue of `7,972cr, up 3.1% qoq. The company is expected to post a 110bp qoq
expansion in EBIT margins for the IT services segment on the back of better utilisations qoq;
however, at a consolidated level, Wipro is expected to record only an 81bp qoq expansion to
19.0% on account of good growth in the IT products segment, which is a thin-margin
business. PAT is expected to come in at `1,348cr, up 4.9% qoq. At the CMP of `478, the
stock is trading at 19.7x FY2012E EPS of `24.3. We maintain Accumulate on the stock with
a Target Price of `515.
BHEL
BHEL is scheduled to announce its 3QFY2011 results. The top line is expected to grow by
30% yoy to `9,398cr. On the operating front, we expect margins to contract by 360bp yoy to
around 18%. Net profit is expected to increase by 5.8% yoy to `1,135cr. Currently, we
remain Neutral on the stock and will revisit our estimates post the conference call.
PNB
Punjab National Bank (PNB) is scheduled to announce its 3QFY2011 results. We expect the
bank to report healthy NII growth of 30.9% yoy (2.4% qoq). Non-interest income is expected
to remain flat. The operating profit of the bank is expected to register growth of 23.4% yoy.
Net profit growth is expected to be moderate at around 8.8% on a yoy basis to `1,100cr. At
the CMP, the stock is trading at 1.5x FY2012E ABV. We have a Buy rating on the stock with a
Target Price of `1,341.
Bank of India
Bank of India is slated to announce its 3QFY2011 results. We expect the bank to report
healthy NII growth of 23.1% yoy to `1,840cr. Non-interest income is expected grow
marginally by 3.5% yoy. The cost-to-income ratio is expected to decline sequentially by
~75bp to 40.8% from 41.6%. Growth in pre-provision profit is expected to be healthy at
27.4% yoy. Net profit is expected to increase by robust 65.0% yoy to `669cr, primarily on
account of lower provisioning expenses. At the CMP, the stock is trading at valuations of 1.3x
FY2012E ABV. We have an Accumulate rating on the stock with a Target Price of `483.
Tech Mahindra
Tech Mahindra is set to report its 3QFY2011 results today. We expect the company to record
4.5% qoq growth in USD revenue to US $276.7mn v/s US $264.7mn (excluding
US $63.8mn of one-time pass through revenue from a managed services contract for the
procurement of hardware and software as part of a multi-year deal) in 2QFY2011. This is on
the back of strong volume growth of 7% qoq in non-BT account, flat revenue from BT and a
cross-currency benefit of 1% qoq. EBITDA margins are expected to dip by 77bp qoq to 21%
v/s 21.8% (excl. impact of pass through revenue) in 2QFY2011 on the back of onshore wage
hike taken in 3QFY2011. PAT, excl. earnings from Mahindra Satyam, is expected to settle at
`169.2cr. We maintain Buy on the stock with an SOTP-based Target Price of `855.
Corporation Bank
Corporation Bank is slated to announce its 3QFY2011 results. We expect calculated NIM to
compress by ~10bp qoq on account of high bulk deposit percentage of ~42.3% and a low
CASA base of ~25.0%. Consequently, NII is expected to decline marginally by 0.3%
sequentially to `713cr. Non-interest income is expected to remain flattish at `249cr. On a
yoy basis, pre-provision profit is expected to increase marginally by 3.1%, while provisioning
expenses are expected to decline by 27.3%, resulting in net profit growth of 6.2% to `324cr.
At the CMP, the stock is trading at 1.0x FY2012E ABV of `542. We maintain our Buy rating
on the stock with a Target Price of `705.
HCC
HCC is expected to announce its third quarter results. We project modest ~10.1% yoy
growth in revenue to `994.1cr, impacted by the AP crisis and high exposure to longer
gestation period orders. We project stable EBITDA margins at 12.6% and net profit growth of
19.2% to `17.6cr for the quarter, primarily due to the low base effect. Due to the
uncertainties surrounding the Lavasa project, the stock is under review. We will come out
with a rating and detailed note post the result and interaction with management
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