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3QFY2011 Result Reviews
NTPC
For 3QFY2011, NTPC reported top-line growth of 19.3% yoy to `13,964cr, aided by higher
volumes due to ~2,000MW of additional capacity operational during the current quarter as
against 3QFY2010. The company currently has 33,194MW of operational capacity. On the
operating front, OPM declined by 243bp yoy to 30.8% on account of higher fuel costs. Net
profit for the quarter remained flat at `2,371cr, aided by tax recoveries of `351cr included in
sales during the quarter. The company’s bottom line was also boosted due to lower
depreciation charges despite an increase in capacity on account of low depreciation rates as
per the new depreciation policy. Further, there were depreciation write-backs and advance
against depreciation of `75cr during the quarter, which were included in sales. We maintain
Buy on the stock with a Target Price `230, but we might revise our numbers post the
conference call.
Sun Pharma
For 3QFY2011, Sun Pharma reported 56.8% yoy growth in net sales to `1,601cr (`1,021cr),
higher than our estimates of `1,513cr majorly led by higher-than-expected exports at
`954.8cr (`478.3cr), an increase of 99.6% during the quarter. The formulation segment on
the export front reported robust growth of 137.4% to `866.1cr (`364.8cr). Net sales for Taro
for October–December 2010 stood at US $102mn, growth of 23% over the same period last
year, while net profit for the quarter stood at US $4.4mn, lower by 95% when compared to
the same quarter last year. This fall can primarily be attributed to the large tax expense
during the quarter. In December 2010, Taro completed the audit for CY2008 and filed its
audited financials for that year. The difference between audited net profit and unaudited net
profit disclosed earlier is significant. Audited net profit at US $30.6mn is lower by 31% when
compared to the unaudited net profit of US $44.4mn announced earlier. This can be largely
attributed to lower net sales of US $7.7mn and higher expenses of US $6.2mn. Caraco, the
other listed subsidiary in the US, for its 3QFY2011 reported sales of US $40.4mn, down 22%
from the same quarter last year. Caraco recorded net loss of US $3.0mn for 3QFY2011. For
the first nine months of FY2011, Caraco reported sales of US $268.2mn and net loss of
US $3.3mn. Domestic formulations sales came in at `640.3cr (`532.6cr), an increase of
20.2%. The company reported flat gross margins of 73% (72%) for the quarter. However,
employee and other expenses grew by 137% to `275cr (`116cr) and 124% to `453cr
(`203cr), respectively. As a result, OPM contracted to 27.5% (36.1%). Net profit came in at
`350cr (`339cr), mere growth of 3%, mainly impacted by the 124% increase in depreciation
at `80.5cr (`36cr) and the tax outgo of `54.5cr (`26.1cr), an increase of 109%.
The stock is currently trading at 28.1x FY2011E and 20.8x FY2012E earnings. We
recommend Neutral on the stock.
DLF
DLF’s 3QFY2011 results were in line with our expectations. The company reported moderate
revenue growth of 4.7% qoq (22.4% yoy) to `2,480cr, driven by strong leasing volumes and
non-asset sales of `403cr. Residential volumes continued to remain subdued at 2.48mn sq.
ft., down 20.5% yoy (up 19.2% qoq), despite the festive season due to delay in approvals,
which delayed new launches. Operating margins came in at 47.5%, up 830bp qoq and
590bp yoy. Consequently, operating profit grew by 39.6% yoy and 26.8% qoq to `1,178cr.
Interest costs grew by 78.0% yoy and 1.7% qoq to `458cr because of increased leverage due
to the DLF-DAL integration. The tax rate stood at 28.9% in 3QFY2011 (against 26.6% in
3QFY2010 and 14.9% in 2QFY2011). Consequently, reported PAT came in at `466cr, down
0.4% yoy (up 11.4% qoq), marginally below our estimates (`474.6cr). We continue to
maintain our Neutral rating on the stock.
Dabur
Dabur posted a good set of numbers for the quarter, though below our estimates (on
account of timing difference of integration of Namaste Group into the financials by the
company and our estimates). The top line grew by 17% yoy to `1,080cr (`925.8cr), primarily
driven by volume growth. Earnings grew by 11% yoy to `154.4cr (`139.3cr), aided by higher
other income and modest margin expansion, despite higher interest expense, depreciation
cost and tax rate. At the operating front, Dabur recorded a margin expansion of 41bp yoy,
aided by a 282bp gross margin expansion (impressive given the ensuing inflationary
pressures), cushioned by cut in ad spends (down 210bp yoy). In terms of segmental
performance, CCD registered growth of 16.7% yoy, CHD grew by 13.8% yoy and IBD
posted growth of 14.2% yoy for the quarter. The stock is under review.
Colgate
Colgate reported a weak performance for the quarter, below our estimates. Top-line growth
stood at 13.8% yoy at `558cr (`490cr), 1.2% below our estimates, driven completely by
volumes. Earnings declined by 43% yoy to `66cr (`116cr), owing to a sharp contraction in
OPM and lower deduction in tax from the manufacturing plant in Baddi. Operating margins
contracted by 719bp yoy on account of spike in ad spends, other expenses and higher staff
cost. The stock is under review.
Lakshmi Machine Works
Lakshmi Machine Works reported top-line growth of 46.9% yoy with sales of `491cr
(`336cr), which was more or less in line with our estimates of `505cr. Net profit increased by
50.2% yoy to `45.8cr (`30.5cr). PAT margins stood flat at 9.3%, compared to our estimates
of 9.6%. OPM declined by 141bp to 15.4% (16.8%), mainly because of higher raw-material
costs. Currently, the stock is under review and we may revise our numbers post the
management call.
KEC International
KEC International announced its 3QFY2011 results, which were broadly in line with our
estimates. The top line grew by 9.7% yoy to `1,071cr (`949cr). EBITDA margin for the
quarter improved by 138bp to 11.6% (10.3%), the highest during the past six quarters. As a
result, EBITDA grew by 28% yoy to `125cr (`97cr), largely reflecting the combined effect of
revenue growth and margin expansion. Consequently, PAT also grew by 25% yoy to `58cr
(`46cr). Currently, we recommend Buy on the stock with a Target Price of `130.
Hotel Leela
Hotel Leela reported disappointing performance for 3QFY2011. The top line reported
growth of 11.4% yoy, with sales of `142cr (`128cr), which were much below our estimates of
`175cr. Net profit declined by 23.6% yoy to `22.0cr (`28.9cr). PAT margins stood at 15.7%,
again below our estimates of 17.4%. OPM declined by 96bp to 39.1% (40.0%), mainly
because of higher other expenses, even as all other major costs reduced as a percentage to
sales. Interest costs rose sharply to `20.1cr (`4.8cr), mainly because of higher cost debt to
buy back its Euro-denominated FCCBs and interest cost related to Udaipur hotel being
booked. We have revised our FY2011 and FY2012 sales and profit estimates downwards.
We maintain Neutral on the stock.
Madhucon Projects
Madhucon Projects (MPL) reported a mixed performance for 3QFY2011. On the top-line
front, the company reported growth of 25.6% on a yoy basis to `352.1cr (`280.3cr), against
our estimate of `411cr. On the margin front, MPL’s performance was better than
expectations, up 390bp on a yoy basis, as OPM stood at 12.7% against our estimate of
8.8%. We had estimated margins to be weaker due problems in Andhra Pradesh and higher
share of the power segment, where MPL subcontracts majority of the work, which dilutes
margins. On the bottom-line front, the company reported growth of 5.7% to `11.5cr (`10.9)
on a yoy basis v/s our estimate of `9.1cr. We maintain Buy on the stock. The target price is,
however, under review.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
3QFY2011 Result Reviews
NTPC
For 3QFY2011, NTPC reported top-line growth of 19.3% yoy to `13,964cr, aided by higher
volumes due to ~2,000MW of additional capacity operational during the current quarter as
against 3QFY2010. The company currently has 33,194MW of operational capacity. On the
operating front, OPM declined by 243bp yoy to 30.8% on account of higher fuel costs. Net
profit for the quarter remained flat at `2,371cr, aided by tax recoveries of `351cr included in
sales during the quarter. The company’s bottom line was also boosted due to lower
depreciation charges despite an increase in capacity on account of low depreciation rates as
per the new depreciation policy. Further, there were depreciation write-backs and advance
against depreciation of `75cr during the quarter, which were included in sales. We maintain
Buy on the stock with a Target Price `230, but we might revise our numbers post the
conference call.
Sun Pharma
For 3QFY2011, Sun Pharma reported 56.8% yoy growth in net sales to `1,601cr (`1,021cr),
higher than our estimates of `1,513cr majorly led by higher-than-expected exports at
`954.8cr (`478.3cr), an increase of 99.6% during the quarter. The formulation segment on
the export front reported robust growth of 137.4% to `866.1cr (`364.8cr). Net sales for Taro
for October–December 2010 stood at US $102mn, growth of 23% over the same period last
year, while net profit for the quarter stood at US $4.4mn, lower by 95% when compared to
the same quarter last year. This fall can primarily be attributed to the large tax expense
during the quarter. In December 2010, Taro completed the audit for CY2008 and filed its
audited financials for that year. The difference between audited net profit and unaudited net
profit disclosed earlier is significant. Audited net profit at US $30.6mn is lower by 31% when
compared to the unaudited net profit of US $44.4mn announced earlier. This can be largely
attributed to lower net sales of US $7.7mn and higher expenses of US $6.2mn. Caraco, the
other listed subsidiary in the US, for its 3QFY2011 reported sales of US $40.4mn, down 22%
from the same quarter last year. Caraco recorded net loss of US $3.0mn for 3QFY2011. For
the first nine months of FY2011, Caraco reported sales of US $268.2mn and net loss of
US $3.3mn. Domestic formulations sales came in at `640.3cr (`532.6cr), an increase of
20.2%. The company reported flat gross margins of 73% (72%) for the quarter. However,
employee and other expenses grew by 137% to `275cr (`116cr) and 124% to `453cr
(`203cr), respectively. As a result, OPM contracted to 27.5% (36.1%). Net profit came in at
`350cr (`339cr), mere growth of 3%, mainly impacted by the 124% increase in depreciation
at `80.5cr (`36cr) and the tax outgo of `54.5cr (`26.1cr), an increase of 109%.
The stock is currently trading at 28.1x FY2011E and 20.8x FY2012E earnings. We
recommend Neutral on the stock.
DLF
DLF’s 3QFY2011 results were in line with our expectations. The company reported moderate
revenue growth of 4.7% qoq (22.4% yoy) to `2,480cr, driven by strong leasing volumes and
non-asset sales of `403cr. Residential volumes continued to remain subdued at 2.48mn sq.
ft., down 20.5% yoy (up 19.2% qoq), despite the festive season due to delay in approvals,
which delayed new launches. Operating margins came in at 47.5%, up 830bp qoq and
590bp yoy. Consequently, operating profit grew by 39.6% yoy and 26.8% qoq to `1,178cr.
Interest costs grew by 78.0% yoy and 1.7% qoq to `458cr because of increased leverage due
to the DLF-DAL integration. The tax rate stood at 28.9% in 3QFY2011 (against 26.6% in
3QFY2010 and 14.9% in 2QFY2011). Consequently, reported PAT came in at `466cr, down
0.4% yoy (up 11.4% qoq), marginally below our estimates (`474.6cr). We continue to
maintain our Neutral rating on the stock.
Dabur
Dabur posted a good set of numbers for the quarter, though below our estimates (on
account of timing difference of integration of Namaste Group into the financials by the
company and our estimates). The top line grew by 17% yoy to `1,080cr (`925.8cr), primarily
driven by volume growth. Earnings grew by 11% yoy to `154.4cr (`139.3cr), aided by higher
other income and modest margin expansion, despite higher interest expense, depreciation
cost and tax rate. At the operating front, Dabur recorded a margin expansion of 41bp yoy,
aided by a 282bp gross margin expansion (impressive given the ensuing inflationary
pressures), cushioned by cut in ad spends (down 210bp yoy). In terms of segmental
performance, CCD registered growth of 16.7% yoy, CHD grew by 13.8% yoy and IBD
posted growth of 14.2% yoy for the quarter. The stock is under review.
Colgate
Colgate reported a weak performance for the quarter, below our estimates. Top-line growth
stood at 13.8% yoy at `558cr (`490cr), 1.2% below our estimates, driven completely by
volumes. Earnings declined by 43% yoy to `66cr (`116cr), owing to a sharp contraction in
OPM and lower deduction in tax from the manufacturing plant in Baddi. Operating margins
contracted by 719bp yoy on account of spike in ad spends, other expenses and higher staff
cost. The stock is under review.
Lakshmi Machine Works
Lakshmi Machine Works reported top-line growth of 46.9% yoy with sales of `491cr
(`336cr), which was more or less in line with our estimates of `505cr. Net profit increased by
50.2% yoy to `45.8cr (`30.5cr). PAT margins stood flat at 9.3%, compared to our estimates
of 9.6%. OPM declined by 141bp to 15.4% (16.8%), mainly because of higher raw-material
costs. Currently, the stock is under review and we may revise our numbers post the
management call.
KEC International
KEC International announced its 3QFY2011 results, which were broadly in line with our
estimates. The top line grew by 9.7% yoy to `1,071cr (`949cr). EBITDA margin for the
quarter improved by 138bp to 11.6% (10.3%), the highest during the past six quarters. As a
result, EBITDA grew by 28% yoy to `125cr (`97cr), largely reflecting the combined effect of
revenue growth and margin expansion. Consequently, PAT also grew by 25% yoy to `58cr
(`46cr). Currently, we recommend Buy on the stock with a Target Price of `130.
Hotel Leela
Hotel Leela reported disappointing performance for 3QFY2011. The top line reported
growth of 11.4% yoy, with sales of `142cr (`128cr), which were much below our estimates of
`175cr. Net profit declined by 23.6% yoy to `22.0cr (`28.9cr). PAT margins stood at 15.7%,
again below our estimates of 17.4%. OPM declined by 96bp to 39.1% (40.0%), mainly
because of higher other expenses, even as all other major costs reduced as a percentage to
sales. Interest costs rose sharply to `20.1cr (`4.8cr), mainly because of higher cost debt to
buy back its Euro-denominated FCCBs and interest cost related to Udaipur hotel being
booked. We have revised our FY2011 and FY2012 sales and profit estimates downwards.
We maintain Neutral on the stock.
Madhucon Projects
Madhucon Projects (MPL) reported a mixed performance for 3QFY2011. On the top-line
front, the company reported growth of 25.6% on a yoy basis to `352.1cr (`280.3cr), against
our estimate of `411cr. On the margin front, MPL’s performance was better than
expectations, up 390bp on a yoy basis, as OPM stood at 12.7% against our estimate of
8.8%. We had estimated margins to be weaker due problems in Andhra Pradesh and higher
share of the power segment, where MPL subcontracts majority of the work, which dilutes
margins. On the bottom-line front, the company reported growth of 5.7% to `11.5cr (`10.9)
on a yoy basis v/s our estimate of `9.1cr. We maintain Buy on the stock. The target price is,
however, under review.
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