Research Views with Emkay 19 January, 2011

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n        Research Views

LIC Housing Finance Q3FY11 result estimates

LICHF’s net operating revenue is likely to grow by 39.6%yoy to Rs3.8bn for Q3FY11 driven by strong loan growth (35%yoy) and stable NIM’s at 2.9%. With very negligible NPAs (0.1%) and provisions, the net profit would grow by 54.8% to Rs2.4bn. Key things to watch for – Provision on teaser loans (estimated at around Rs1.1bn) as per NHB guidelines and management guidance on Project loan book.

Bajaj Auto Limited (BAL) – Q3FY11 result expectation

Q3FY11 will be subdued for BAL as compared to 1HFY11 due to slower volume growth (18% YoY/-5% QoQ). 3QFY11 will be featured by margin pressure with EBIDTA margins declining 220 bps YoY and 120 bps QoQ to 19.8%. Key things to watch out for (1) Volume guidance as volumes for last two months have been tab below expectation and (2) raw material cost pressure.

n    We expect net sales to grow by 19.0% YoY but decline 9.7% QoQ to Rs 39.2 bn

n    We expect EBIDTA to grow by 7.5% YoY but decline 14.8% QoQ to Rs 7.8 bn

n    EBIDTA margin are likely to decline by 220bps YoY and by 120bps QoQ to 19.8%

n    We expect APAT to grow by 15% YoY but decline 19.8% QoQ to Rs 5.6 bn

n        Research Update Included

Tulip Telecom Event Update; Heads for an acquisition; Buy; Target: Rs 240

n    Acquires Data Centre facility in Bengaluru from SADA IT Parks Private Limited (SADA) for Rs 2.3bn

n    Facility is spread across an area of 9 lac sq. ft this would take Tulip’s total data centre space to 10 lac sq. ft.

n    This facility will be owned and operated through a newly formed wholly owned subsidiary of Tulip Telecom named ‘Tulip Data Center Private Ltd’

n    Rs 2.3bn paid in cash so net debt/EBITDA remains unchanged at 1.25x as per Q2FY11

Rallis India Q3FY11 Result Update; Future growth drivers remain intact; BUY; Target: Rs 1,800

n    Q3FY11 revenue growth of 31% yoy - driven by strong exports - was ahead of our estimates

n    APAT at Rs 337 mn (+14% yoy) was below estimates due to lower than expected EBITDA margins of 18.9%

n    Adjust FY11E estimates downward by 7% to Rs 72.3 (from Rs 77.3) while maintain FY12E/FY13E at Rs 96.3 / Rs 120.5

n    Entry into seeds business, commissioning of Dahej plant and initiatives to sell pulses are future growth drivers. Maintain BUY