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3QFY2011 Result Previews
JP Associates
JP Associates (JAL) is expected to announce its third quarter results. On the top-line front, we
expect decent revenue growth of 22% yoy for 3QFY2011 to `3,616cr. On the margins front,
we expect the company to post EBITDAM of 26.6%. Net profit is expected to post a
staggering ~218% jump to `327.7cr for the quarter.
We have valued JAL’s cement business at 6.5x EV/EBITDA (`62.7/share) and construction
division at FY2012E target EV/EBITDA multiple of 8.5x (`78.5/share). We have valued its
power and real estate businesses on market cap basis (giving 20% holding company
discount), contributing `72.8/share to our target price. The treasury shares (`11.1/share)
have been valued at the current market price, whereas net debt is accounted for on a per
share basis in our valuation at `65.1. We maintain Buy on the stock with an SOTP Target
Price of `160.
Crompton Greaves
Crompton Greaves is scheduled to announce its 3QFY2011 results. Net sales are expected
to increase by 7.5% yoy to `2,415cr. On the operating front, we expect margins to compress
by 74.3bp yoy to 13.5%. Net profit is expected to increase by 3.5% yoy to `207cr. The stock
is currently trading at 20.1x FY2011E and 17.3x FY2012E earnings. We will revisit our
estimates post the conference call. Currently, we have a Buy rating on the stock with a Target
Price of `375.
Oriental Bank of Commerce
Oriental Bank of Commerce is scheduled to announce its 3QFY2011 results. We expect
calculated NIM to compress by ~10bp qoq to 3.1% on account of a weak CASA base of
~25.4%. Consequently, NII is expected to go down sequentially by 1.2%, though registering
22.0% yoy growth to `1,065cr. Non-interest income is expected to marginally decline by
1.9% yoy. Operating expenses are expected to remain stagnant, while pre-provision profit is
expected to increase by 29.9% yoy to `809cr. We expect the bank to post healthy profit after
tax growth of 41.6% yoy and marginal sequential growth of 3.0% to `410cr. Post the recent
correction in the stock price, it is trading at 0.9x FY2012E P/ABV. We recommend Buy on the
stock with a Target Price of `437.
Indian Overseas Bank
Indian Overseas Bank (IOB) is scheduled to announce its 3QFY2011 results. The bank is
expected to post NII growth of 21.2% yoy to `963cr. Non-interest income is expected to
improve by 6.0% yoy to `274cr. Operating expenses are expected to be flattish at `633cr.
The cost-to-income ratio is expected to be at 51.1% compared to 50.0% in 2QFY2011 and
61.4% in 3QFY2010. The pre-provision profit of the bank is expected to increase by 48.9%
yoy. Net profit is expected to increase by healthy 79.6% on a yoy basis but decline
sequentially by 11.4% to `183cr. At the CMP, the stock is trading at 0.9x FY2012E P/ABV.
We maintain Buy on the stock with a Target Price of `166.
Federal Bank
Federal Bank is scheduled to announce its 3QFY2011 results. We expect the bank to report
healthy NII growth on a yoy basis of 16.2% to `443cr. Non-interest income is expected to
decline moderately by 4.4% qoq on account of lower treasury gains. The cost-to-income ratio
is expected to decline to 34.5% compared to 33.9% in 2QFY2011 and 33.4% in 3QFY2010.
The pre-provision profit of the bank is expected to increase by 14.7% yoy to `380cr. Net
profit is expected to go up by healthy 31.8% on a yoy basis to `145cr. At the CMP, the stock
is trading at valuations of 1.1x FY2012E P/ABV. We maintain Buy on the stock, valuing it at
1.5x FY2012E P/ABV to arrive at a 12-month Target Price of `505.
UCO Bank
UCO Bank is scheduled to announce its 3QFY2011 results. We expect the bank to report
robust NII growth on a yoy basis of 58.8% to `997cr. Non-interest income is expected to be
muted on account of lower treasury gains. The cost-to-income ratio is expected to be at
44.9% compared to 42.8% in 2QFY2011 and 46.4% in 3QFY2010. The pre-provision profit
of the bank is expected to show a healthy gain of 46.3% yoy to `676cr. However, net profit is
expected to decline by 42.3% yoy to `142cr due to higher NPA provisioning expenses. At the
CMP, the stock is trading at 1.1x FY2012E ABV. We remain Neutral on the stock.
J&K Bank
J&K Bank is scheduled to announce its 3QFY2011 results on Saturday. We expect the bank
to report healthy NII growth on a yoy basis of 28.5% to `377cr. Non-interest income is
expected to decline considerably by 32.3% yoy on account of lower treasury gains. The costto-
income ratio is expected to be steady at 38.7% compared to four-quarter average of
38.4%. The pre-provision profit of the bank is expected to increase by 10.8% yoy to `271cr.
However, net profit is expected to decline by 13.5% on a yoy basis to `121cr on account
higher provisioning expenses.
At the CMP, the stock is trading at 0.9x FY2012E P/ABV. We maintain Buy on the stock with
a Target Price of `1,063, based on 1.3x FY2012E P/ABV, though we may revisit the same
post the bank’s results on Saturday, pending further interaction with the management.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
3QFY2011 Result Previews
JP Associates
JP Associates (JAL) is expected to announce its third quarter results. On the top-line front, we
expect decent revenue growth of 22% yoy for 3QFY2011 to `3,616cr. On the margins front,
we expect the company to post EBITDAM of 26.6%. Net profit is expected to post a
staggering ~218% jump to `327.7cr for the quarter.
We have valued JAL’s cement business at 6.5x EV/EBITDA (`62.7/share) and construction
division at FY2012E target EV/EBITDA multiple of 8.5x (`78.5/share). We have valued its
power and real estate businesses on market cap basis (giving 20% holding company
discount), contributing `72.8/share to our target price. The treasury shares (`11.1/share)
have been valued at the current market price, whereas net debt is accounted for on a per
share basis in our valuation at `65.1. We maintain Buy on the stock with an SOTP Target
Price of `160.
Crompton Greaves
Crompton Greaves is scheduled to announce its 3QFY2011 results. Net sales are expected
to increase by 7.5% yoy to `2,415cr. On the operating front, we expect margins to compress
by 74.3bp yoy to 13.5%. Net profit is expected to increase by 3.5% yoy to `207cr. The stock
is currently trading at 20.1x FY2011E and 17.3x FY2012E earnings. We will revisit our
estimates post the conference call. Currently, we have a Buy rating on the stock with a Target
Price of `375.
Oriental Bank of Commerce
Oriental Bank of Commerce is scheduled to announce its 3QFY2011 results. We expect
calculated NIM to compress by ~10bp qoq to 3.1% on account of a weak CASA base of
~25.4%. Consequently, NII is expected to go down sequentially by 1.2%, though registering
22.0% yoy growth to `1,065cr. Non-interest income is expected to marginally decline by
1.9% yoy. Operating expenses are expected to remain stagnant, while pre-provision profit is
expected to increase by 29.9% yoy to `809cr. We expect the bank to post healthy profit after
tax growth of 41.6% yoy and marginal sequential growth of 3.0% to `410cr. Post the recent
correction in the stock price, it is trading at 0.9x FY2012E P/ABV. We recommend Buy on the
stock with a Target Price of `437.
Indian Overseas Bank
Indian Overseas Bank (IOB) is scheduled to announce its 3QFY2011 results. The bank is
expected to post NII growth of 21.2% yoy to `963cr. Non-interest income is expected to
improve by 6.0% yoy to `274cr. Operating expenses are expected to be flattish at `633cr.
The cost-to-income ratio is expected to be at 51.1% compared to 50.0% in 2QFY2011 and
61.4% in 3QFY2010. The pre-provision profit of the bank is expected to increase by 48.9%
yoy. Net profit is expected to increase by healthy 79.6% on a yoy basis but decline
sequentially by 11.4% to `183cr. At the CMP, the stock is trading at 0.9x FY2012E P/ABV.
We maintain Buy on the stock with a Target Price of `166.
Federal Bank
Federal Bank is scheduled to announce its 3QFY2011 results. We expect the bank to report
healthy NII growth on a yoy basis of 16.2% to `443cr. Non-interest income is expected to
decline moderately by 4.4% qoq on account of lower treasury gains. The cost-to-income ratio
is expected to decline to 34.5% compared to 33.9% in 2QFY2011 and 33.4% in 3QFY2010.
The pre-provision profit of the bank is expected to increase by 14.7% yoy to `380cr. Net
profit is expected to go up by healthy 31.8% on a yoy basis to `145cr. At the CMP, the stock
is trading at valuations of 1.1x FY2012E P/ABV. We maintain Buy on the stock, valuing it at
1.5x FY2012E P/ABV to arrive at a 12-month Target Price of `505.
UCO Bank
UCO Bank is scheduled to announce its 3QFY2011 results. We expect the bank to report
robust NII growth on a yoy basis of 58.8% to `997cr. Non-interest income is expected to be
muted on account of lower treasury gains. The cost-to-income ratio is expected to be at
44.9% compared to 42.8% in 2QFY2011 and 46.4% in 3QFY2010. The pre-provision profit
of the bank is expected to show a healthy gain of 46.3% yoy to `676cr. However, net profit is
expected to decline by 42.3% yoy to `142cr due to higher NPA provisioning expenses. At the
CMP, the stock is trading at 1.1x FY2012E ABV. We remain Neutral on the stock.
J&K Bank
J&K Bank is scheduled to announce its 3QFY2011 results on Saturday. We expect the bank
to report healthy NII growth on a yoy basis of 28.5% to `377cr. Non-interest income is
expected to decline considerably by 32.3% yoy on account of lower treasury gains. The costto-
income ratio is expected to be steady at 38.7% compared to four-quarter average of
38.4%. The pre-provision profit of the bank is expected to increase by 10.8% yoy to `271cr.
However, net profit is expected to decline by 13.5% on a yoy basis to `121cr on account
higher provisioning expenses.
At the CMP, the stock is trading at 0.9x FY2012E P/ABV. We maintain Buy on the stock with
a Target Price of `1,063, based on 1.3x FY2012E P/ABV, though we may revisit the same
post the bank’s results on Saturday, pending further interaction with the management.
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