Result Preview: with Emkay 28 January, 2011

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Contents

 Result Preview: Allahabad Bank; Bank of Baroda; JK Paper; GNFC; Transformers and Rectifiers; GSFC

n        Research Views

Allahabad Bank Q3FY11 result estimates

Allahabad Bank to report strong 48.7 % yoy growth in NII led by strong growth in advances (34%yoy) and stable NIM’s at 3.0%. However, higher trading gains of Rs1.3bn and lower tax rate of 14.5% in Q3FY10, to result in relatively lower growth in operating profit and PAT. Lower slippage rate and CDR of Ramsarup Industries to result in better asset quality.

Bank of Baroda Q3FY11 result estimates

Net interest income likely to be strong led by robust advance growth (31%yoy) and swift increase in lending rates. The slippages to remain under check with minimal exposure to sectors recently in news for wrong reasons. BOB to start providing pension liability from this quarter. We expect the provisions in range of Rs2-3bn for Q3FY11.

JK Paper Q3FY11 Results Expectation : Net Sales Rs 3.05 bn, PAT Rs 250 mn

We estimate 15% yoy increase in overall revenues for Q3FY11 to Rs 3.05 bn for JK Paper. We estimate paper sale volumes to increase by 5% yoy to 66,500 MT while paper realisations are expected to grow by 10% yoy to Rs 45,895 / MT. We expect contraction in EBITDA margins by 130 bps yoy to 21.5% due to rising pulp cost. Overall EBITDA is likely to increase by 8% yoy to Rs 656 mn. We estimate APAT of Rs 250 mn, +23% yoy with AEPS of Rs 3.2.

GNFC Q3FY11 Results Expectations : Net Sales Rs 7.5 bn, APAT of Rs 764 mn

GNFC is expected to announce their Q3FY11 results on Saturday i.e. January 29th, 2011.

We estimate net revenues to decline marginally by 1% yoy to Rs 7.5 bn. Decline in fertiliser volumes by ~12% is likely to result in lower fertiliser segment revenues by 6% over previous year to Rs 4.06 bn. We expect chemical segment revenues to increase by 5% yoy to Rs 3.4 bn. We expect aggregate EBITDA margins to decline by 100 bps yoy to 18.7% resulting in aggregate EBITDA of Rs 1.4 bn. We estimate APAT at Rs 764 mn (-8.6% yoy) resulting in AEPS of Rs 4.9.

Transformers and Rectifiers Q3FY11E Result Estimates

Expect volume growth of 13% and realization increase of 9% to result in revenue growth of 23% YoY.  Expect EBITDA margins to improve by 344 bps yoy (led by low base) to result in EBITDA growth of 60% yoy to 231mn. Led by higher depreciation, interest and tax rate, Reported PAT growth expected to be slightly lower at 30% yoy. Adjusting for Q3FY10 extraordinary income of Rs15mn, APAT to grow at 43% yoy.  Key things to watch - (1) order inflows especially export orders, (2) realizations/margins in order inflow and (3) order pipeline. 

Gujarat State Fertilisers (GSFC) Q3FY11 Results Expectations: Net Sales Rs 12.2 bn, PAT Rs 1.8 bn

GSFC is expected to report their Q3FY11 results on Saturday i.e. January 29th, 2011.

We expect GSFC to benefit from rising caprolactam prices - likely to result in overall revenue growth of 7% yoy to Rs 12.2 bn. While we estimate fertiliser segment revenues to dip marginally by 2% over previous year to Rs 8.2 bn, chemical segment revenue growth is likely to be robust at 30% yoy to Rs 3.97 bn.

Overall EBITDA margins are estimated to surge by 800 bps yoy to 24.7% driven by favourable spread in chemicals (finished product - Caprolactam vs Raw material - Benzene). As a result, chemical segment EBIT is estimated to increase by 4.5x to Rs 1.4 bn with EBIT margins of 34% vs 10 % previous year. For the fertiliser segment, we estimate EBIT margins at 17% (-130 bps yoy / -280 bps qoq).

Overall APAT is expected to increase by 61% yoy to Rs 1.8 bn resulting in AEPS of Rs 23.0.