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Rallis India Q3FY11 Results – Below estimates
Despite higher than estimated topline, Q3FY11 results for Rallis were below estimates – mainly due to lower than estimated operating margins. The company surprised with a strong revenue growth of 31% yoy to Rs 2.7 bn (we estimated Rs 2.4 bn). However, EBITDA margins for the quarter at 18.9% were disappointing and significantly below estimates resulting in overall EBITDA of Rs 512 mn (+20% yoy). Due to lower than estimated operating performance, APAT remained below estimates at Rs 337 mn, +14% yoy (we estimated Rs 388 mn). AEPS for the quarter stood at Rs 17.3 versus Rs 12.4 in Q3FY10.
RPAT for the quarter at Rs 337 mn, increased by 40% over previous year, as the company reported EO loss of Rs 55 mn (on account of ex gratia ammortisation).
For 9MFY11 the company has reported revenues of Rs 8.4 bn (+21% YoY), EBITDA of Rs 1.6 bn (+18% YoY) and APAT of Rs 1.07 bn (+21% YoY). AEPS for 9MFY11 stood at Rs 55.2.
On the back of lower than estimated Q3FY11 results, we are likely to downgrade our earnings for FY11E by ~7% from Rs 77.7, while broadly maintaining our FY12E and FY13E EPS at Rs 96.3 and Rs 120.5 respectively.
We maintain our positive bias on the stock and re-iterate BUY recommendation with a target price of Rs 1,800.
Emkaynomics; Dec 31, 2010; Fortnightly round up of key banking and economic indicators
n The growth in non food credit has moved up to 24.3% for the week ended December 31, 2010 as growth in deposit mobilisation saw an increase to 16.6%
n The CD ratio has marginally inched down to 75.7% for the week ended December 31, 2010 with TTM CD ratio down to 105%. The incr. CD ratio has moderated to 108%
n Money supply growth has increased to 17.3% and the money multiplier grew to 5x
n Call money rates have risen to 6.29% as on January 17, 2011 from 5.65% last fortnight
n The shortage of liquidity in the system eased and stood at Rs179bn. The net repo balances stood at ~ Rs843bn for the week ended January 07, 2011
n The spread between the long and short end OIS has risen to 44bps as opposed to 30 bps last fortnight
Unichem Labs Q3FY11 Result Update; Disappointing quarter; Downgrade estimates; Accumulate; Target: Rs 234
n Unichem’s Q3FY11 results were disappointing with a) Revenues at Rs1.97bn (estd. Rs1.93) b) EBITDA at Rs394mn (estd. Rs405mn) and c) PAT at Rs 256mn (estd. Rs269mn)
n Revenue growth was driven by 11% growth in domestic formulations (branded business up 12%, chronic portfolio up 14%) and 36% growth in export formulations
n EBITDA margins at 20% (down 692bps) was on account of a) higher raw material cost b) increase in sales and marketing cost and b) commissioning of new plants at Sikkim & Baddi
n Revise FY11/FY12 earnings downwards; cut target price to Rs243 (earlier Rs268); Downgrade to Accumulate
Axis Bank Q3FY11 Result Update; Upgrade as concerns on slippages allayed; Hold; Target: Rs1,300
n Axis Bank (AXSB) Q3FY11 earnings at Rs8.9bn was better than our as well as street expectation driven by better than expected NIMs and NII
n Key highlights: (1) NII growth of 28.5% led by 45.7% growth in advances (2) 13bps qoq expansion in NIMs and (3) lower slippage rate during the quarter to 1.1%
n We believe that NIMs may contract by 12-15bps in Q4FY11 due to PSL loans but our key concerns on NPAs and provisions are allayed
n With slippages coming under control we believe that AXSB could trade at its historic average valuations at 2.5x 1-year forward. Upgrade to HOLD with TP of Rs1,300
Larsen & Toubro Q3FY11 Result Update; Favorable Risk-to-Reward; Upgrade to ‘BUY’; Target: Rs 2,015
n Q3FY11 performance ahead of EMKAY and consensus estimates – revenues up 41% yoy to Rs114 bn and APAT up 32% yoy to Rs8.1 bn
n Notable disappointment is muted order inflows (-25% yoy to Rs134 bn) – implied run-rate jumps to Rs287 bn or 21% yoy for Q4FY11
n L&T reiterates guidance for FY11E – revenues growth 20% and stable operating margins – retain FY11E earnings of Rs69.1, but revise FY12E earnings by -3% to Rs82.4
n Risk-to-reward is favorable, post 21% fall in stock price in last 2 months – Upgrade from ‘ACCUMULATE’ to ‘BUY’ with revised target price of Rs2,015/Share (Rs2,129/Share earlier)
Tata Consultancy Services Q3FY11 Result Update; Moving from strength to strength; Accumulate; Target: Rs 1,275
n Inline revenues at US$ 2,144 mn(+7% QoQ). Margins improve further by ~20 bps QoQ to 30.2%, despite currency appreciation, normalization of rentals and strong hiring
n Profits at Rs 23.3 bn (+10.6% QoQ,+29.6% YoY) driven by better margins and higher other income(include Rs 522 mn of forex gains)
n Solid operating metrics show with strong hiring(~12k+ net additions coupled with campus hiring targets of ~37k lend support to volume momentum thesis
n Tweak estimates marginally driving a 0.5/0.3/2.4% upgrade in FY11/12/13E EPS to Rs 43.8/51.3/61.6 respectively. Retain ACCUMULATE with TP upped to Rs 1,275(V/s Rs 1,250 earlier)
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