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India Equity Research Reports, IPO and Stock News
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India Oil & Gas: Back to high oil prices and strong downstream margins
[Harshad Katkar]
We expect oil prices above US$95/bbl and higher refining margins on strong
demand growth during 2011. Petchem margins should also improve on better
capacity utilisation. Natural gas demand and LNG imports in India should rise. Our
sectoral top picks are Petronet LNG and GAIL on the gas consumption theme and
RIL on strong downstream margins. We also like Cairn India as a play on high
crude oil prices.
LIC Housing Finance: Stable operating performance, upgrading to Hold
[Manish Shukla]
We upgrade LICHF to Hold with a revised target price of INR190. Loan growth
momentum could slow as retail loan growth mean-reverts and LICHF goes slow
on developer loans. Incrementally spreads are likely to contract as cost of funds
rises. However, valuations already seem to factor in a lot of negatives. The stock is
down 35% in the past three months and is trading at 1.7x FY12E, which is back to
the June 2009 levels and appears fairly valued.
YES Bank: Profitable growth with stable asset quality [Manish Shukla]
We maintain Buy on YES Bank and lower our target price to INR380 from INR410.
We believe YES Bank should continue to grow at a rapid clip with profitability
among the best in the sector and stable asset quality. We cut our target price
despite an earnings upgrade to factor in a possible sector valuation compression
due to a sharp reversal in the interest rate cycle. The stock trades at attractive
valuations of 2x FY12E P/B and 10x FY12E P/E after factoring in potential
headwinds to margins and growth which the bank has the ability to overcome.
TVS Motor: Robust results underline our investment thesis; Buy [Amyn
Pirani]
TVS’ 3QFY11 results are robust (in line with our estimates) and management
guidance on three-wheelers (3W) is positive. This echoes our investment thesis for
the company – rising revenue share of higher margin three-wheelers should drive
profits. We believe the recent underperformance (12% vs. Sensex in the last three
months) and inexpensive valuations (P/E of 10x FY12E) provide an attractive entry
point for investors. We are cutting our target price by 8% to factor in the delay in
the turnaround of the Indonesian operations. We maintain Buy.
Biocon: Excluding licensing income, 3Q interims have been poor [Abhay
Shanbhag]
Revenue of INR 7.3bn (+15% yoy, DBe – INR 7.1bn) was driven by Biopharma
(INR 3.5bn, +22%, DBe - INR 3.3bn) and Licensing fee (INR 768m, +339% yoy,
INR 250m), but constrained by Axicorp (German trading business, -16%).
Biopharma was driven by 32% growth in India formulations and launch of
tacrolimus in US & Europe. Axicorp revenues declined with the 16% compulsory
rebate imposed by German government. Recognition of milestones from Pfizer
deal drove licensing fee and 220% spurt in R&D costs.
Kotak Mahindra: Solid bank performance, capital markets drag profitability
[Dipankar Choudhury]
Kotak's Q3FY11 results were a continuation of a trend for several quarters now.
Net profit at INR3.83bn was in line with our estimates with the banking business
performing robustly whereas the others continued to disappoint. YoY growth in
consolidated net profit was 14.4% whereas the bank standalone did 32% better
yoy. We believe the stock could still perform indifferently relative to the sector and
maintain Hold
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
India Oil & Gas: Back to high oil prices and strong downstream margins
[Harshad Katkar]
We expect oil prices above US$95/bbl and higher refining margins on strong
demand growth during 2011. Petchem margins should also improve on better
capacity utilisation. Natural gas demand and LNG imports in India should rise. Our
sectoral top picks are Petronet LNG and GAIL on the gas consumption theme and
RIL on strong downstream margins. We also like Cairn India as a play on high
crude oil prices.
LIC Housing Finance: Stable operating performance, upgrading to Hold
[Manish Shukla]
We upgrade LICHF to Hold with a revised target price of INR190. Loan growth
momentum could slow as retail loan growth mean-reverts and LICHF goes slow
on developer loans. Incrementally spreads are likely to contract as cost of funds
rises. However, valuations already seem to factor in a lot of negatives. The stock is
down 35% in the past three months and is trading at 1.7x FY12E, which is back to
the June 2009 levels and appears fairly valued.
YES Bank: Profitable growth with stable asset quality [Manish Shukla]
We maintain Buy on YES Bank and lower our target price to INR380 from INR410.
We believe YES Bank should continue to grow at a rapid clip with profitability
among the best in the sector and stable asset quality. We cut our target price
despite an earnings upgrade to factor in a possible sector valuation compression
due to a sharp reversal in the interest rate cycle. The stock trades at attractive
valuations of 2x FY12E P/B and 10x FY12E P/E after factoring in potential
headwinds to margins and growth which the bank has the ability to overcome.
TVS Motor: Robust results underline our investment thesis; Buy [Amyn
Pirani]
TVS’ 3QFY11 results are robust (in line with our estimates) and management
guidance on three-wheelers (3W) is positive. This echoes our investment thesis for
the company – rising revenue share of higher margin three-wheelers should drive
profits. We believe the recent underperformance (12% vs. Sensex in the last three
months) and inexpensive valuations (P/E of 10x FY12E) provide an attractive entry
point for investors. We are cutting our target price by 8% to factor in the delay in
the turnaround of the Indonesian operations. We maintain Buy.
Biocon: Excluding licensing income, 3Q interims have been poor [Abhay
Shanbhag]
Revenue of INR 7.3bn (+15% yoy, DBe – INR 7.1bn) was driven by Biopharma
(INR 3.5bn, +22%, DBe - INR 3.3bn) and Licensing fee (INR 768m, +339% yoy,
INR 250m), but constrained by Axicorp (German trading business, -16%).
Biopharma was driven by 32% growth in India formulations and launch of
tacrolimus in US & Europe. Axicorp revenues declined with the 16% compulsory
rebate imposed by German government. Recognition of milestones from Pfizer
deal drove licensing fee and 220% spurt in R&D costs.
Kotak Mahindra: Solid bank performance, capital markets drag profitability
[Dipankar Choudhury]
Kotak's Q3FY11 results were a continuation of a trend for several quarters now.
Net profit at INR3.83bn was in line with our estimates with the banking business
performing robustly whereas the others continued to disappoint. YoY growth in
consolidated net profit was 14.4% whereas the bank standalone did 32% better
yoy. We believe the stock could still perform indifferently relative to the sector and
maintain Hold
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