Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Aditya Birla Nuvo
3QF11: Insurance Profits Drive Overall Beat
ABNL reported better than expected 3QF11 profits:
Revenue, EBITDA and net profit were Rs47.5bn,
Rs6.9bn and R2.75bn respectively, vs. our estimates of
Rs56bn, Rs5.2bn and Rs1.4bn. Revenues were lower
than expected due to a 15% decline in insurance
business (vs. MSe 5% growth). EBIT growth of 156%
was driven by continuing profitability of life insurance
business, garments and better absorption of overall
fixed costs. Manufacturing business in Q3F11 had
strong top-line growth of 25% YoY while operating profit
declined 11% (driven by agri, carbon black and rayon).
Life Insurance profitable for three quarters in a row:
Insurance business reported profits of Rs1.2bn vs. loss
of Rs1.4bn in 3QF10. According to the management,
profitability was driven by 1) MTM of ULIP policies
(change in valuation of liability), 2) persistency (83% for
last 13months), 3) lower new business strain and 4)
better expense management. Net premium income was
down 16% driven by 59% decline in first year premiums
and only partly offset by 55% growth in renewal
premiums during the quarter. Overall, private sector new
business premiums declined 40% in Q3F11 with
majority of the players suffering in their ULIP portfolio
post the new guidelines. AUM grew 30% in Q3F’11
(55% equity portfolio). Non-ULIP contributed to 38% of
new business. In 9MF11: 1) Operating and commission
expenses reduced by 30bps and 300bps respectively; 2)
ABNL launched 5 traditional and 7 ULIPs (as per new
guidelines).
Reiterate OW: Our SOTP analysis suggests that a
significant gap exists between the intrinsic value and
current market price of Aditya Birla Nuvo (ABNL). In our
view, investors are deterred by its conglomerate
structure – but we think 3QF11 results depict the true
potential of the ABNL business model. We recommend
accumulating the stock at current levels.
Financial Services
Total average assets under management (AUM) grew
decreased by 12% YoY and decreased 13% QoQ to Rs615bn
in 3QF11. The proportion of equity assets to domestic AUM
increased by 670 bps YoY and 300 bps QoQ. Revenues (fee
income) for the quarter increased by 16% YoY and (-)8% QoQ.
Birla Sun Life asset management has ~5.75% market share in
December 2010.
Telecom (excerpt from note published by Indian
Telecom team, dated January 24, 2011)
Idea Cellular reported better than expected F3Q11 results:
Overall revenues grew 26% YoY and 8% QoQ; while absolute
EBITDA grew 16% YoY and 8% QoQ. EBITDA margins were
flat QoQ at 24%, largely in line with expectations; however,
they were down 188bps YoY. Lower interest costs and lower
effective tax rate led to higher than expected profits, which
grew 43% YoY and 35% QoQ. Overall revenue and EBITDA
were 3% and 2% above our expectations respectively due to
higher minutes of use (MOU) and lesser fall in average revenue
per minute (ARPM). Profits were 18% ahead of expectations.
Key Positives
1) Our thesis of stable tariffs seems to be playing out. ARPM
declined by 1.2% QoQ to Rs0.42/min, the lowest fall in
eight quarters. This coupled with MOU growth of 2% to
401 min/sub/month led to stable ARPU at Rs168/month.
Thus overall wireless revenues grew 8% QoQ. Cumulative
minutes grew 10% QoQ to 93.5bn during the quarter or
over 1bn minutes/day.
2) Passive division EBITDA grew 8% QoQ and margins
improved 365bps to 45.8%.
3) Capex guidance was revised to Rs30bn from Rs40bn
suggested last quarter. This reflects savings and some
spillover into the next quarter. The company has so far
spent Rs17.5bn in F2011E.
Key Negatives
1) Passive Division revenues were down marginally vs. our
expectation of 7% QoQ growth.
Business Process Outsourcing (BPO)
Aditya Birla Minacs has sold a contract worth ~USD 625 million
in 9MF11 (56% is new business). The company has added
>5000 employees in the past year and >2000 employees in
Q3F11. Margins improved by 160bps driven by rationalized
cost structure
Garments
Branded garments revenues grew by 60% YoY driven by
SSSG of 35%. Retail channel sales grew by 55% YoY (45%
contribution to revenues). ABNL has launched 54 new EBO’s
in Q3F11. The margins for the business improved 900 bps YoY
driven by a combination of improved consumer sentiment,
lower discounting and improved product mix. Margins have
been improving sequentially for the past three quarters since
break-even was achieved in 1QF11.
Value Businesses
Carbon Black
Hi-Tech Carbon business revenues increased 33% YoY,
driven primarily by 29% volume growth (recent capacity
expansion) and 4% realization improvement (movement in
CBFS prices in line with crude oil prices). According to the
management, tyre production in India overall grew by 26%
during Apr-Nov’10. Margins declined by 900bps yoy as Q3F10
margins had benefitted from low cost inventory. The
management is planning to augment capacity by a further
85,000 MTPA each at Patalganga and second phase in
Southern India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Aditya Birla Nuvo
3QF11: Insurance Profits Drive Overall Beat
ABNL reported better than expected 3QF11 profits:
Revenue, EBITDA and net profit were Rs47.5bn,
Rs6.9bn and R2.75bn respectively, vs. our estimates of
Rs56bn, Rs5.2bn and Rs1.4bn. Revenues were lower
than expected due to a 15% decline in insurance
business (vs. MSe 5% growth). EBIT growth of 156%
was driven by continuing profitability of life insurance
business, garments and better absorption of overall
fixed costs. Manufacturing business in Q3F11 had
strong top-line growth of 25% YoY while operating profit
declined 11% (driven by agri, carbon black and rayon).
Life Insurance profitable for three quarters in a row:
Insurance business reported profits of Rs1.2bn vs. loss
of Rs1.4bn in 3QF10. According to the management,
profitability was driven by 1) MTM of ULIP policies
(change in valuation of liability), 2) persistency (83% for
last 13months), 3) lower new business strain and 4)
better expense management. Net premium income was
down 16% driven by 59% decline in first year premiums
and only partly offset by 55% growth in renewal
premiums during the quarter. Overall, private sector new
business premiums declined 40% in Q3F11 with
majority of the players suffering in their ULIP portfolio
post the new guidelines. AUM grew 30% in Q3F’11
(55% equity portfolio). Non-ULIP contributed to 38% of
new business. In 9MF11: 1) Operating and commission
expenses reduced by 30bps and 300bps respectively; 2)
ABNL launched 5 traditional and 7 ULIPs (as per new
guidelines).
Reiterate OW: Our SOTP analysis suggests that a
significant gap exists between the intrinsic value and
current market price of Aditya Birla Nuvo (ABNL). In our
view, investors are deterred by its conglomerate
structure – but we think 3QF11 results depict the true
potential of the ABNL business model. We recommend
accumulating the stock at current levels.
Financial Services
Total average assets under management (AUM) grew
decreased by 12% YoY and decreased 13% QoQ to Rs615bn
in 3QF11. The proportion of equity assets to domestic AUM
increased by 670 bps YoY and 300 bps QoQ. Revenues (fee
income) for the quarter increased by 16% YoY and (-)8% QoQ.
Birla Sun Life asset management has ~5.75% market share in
December 2010.
Telecom (excerpt from note published by Indian
Telecom team, dated January 24, 2011)
Idea Cellular reported better than expected F3Q11 results:
Overall revenues grew 26% YoY and 8% QoQ; while absolute
EBITDA grew 16% YoY and 8% QoQ. EBITDA margins were
flat QoQ at 24%, largely in line with expectations; however,
they were down 188bps YoY. Lower interest costs and lower
effective tax rate led to higher than expected profits, which
grew 43% YoY and 35% QoQ. Overall revenue and EBITDA
were 3% and 2% above our expectations respectively due to
higher minutes of use (MOU) and lesser fall in average revenue
per minute (ARPM). Profits were 18% ahead of expectations.
Key Positives
1) Our thesis of stable tariffs seems to be playing out. ARPM
declined by 1.2% QoQ to Rs0.42/min, the lowest fall in
eight quarters. This coupled with MOU growth of 2% to
401 min/sub/month led to stable ARPU at Rs168/month.
Thus overall wireless revenues grew 8% QoQ. Cumulative
minutes grew 10% QoQ to 93.5bn during the quarter or
over 1bn minutes/day.
2) Passive division EBITDA grew 8% QoQ and margins
improved 365bps to 45.8%.
3) Capex guidance was revised to Rs30bn from Rs40bn
suggested last quarter. This reflects savings and some
spillover into the next quarter. The company has so far
spent Rs17.5bn in F2011E.
Key Negatives
1) Passive Division revenues were down marginally vs. our
expectation of 7% QoQ growth.
Business Process Outsourcing (BPO)
Aditya Birla Minacs has sold a contract worth ~USD 625 million
in 9MF11 (56% is new business). The company has added
>5000 employees in the past year and >2000 employees in
Q3F11. Margins improved by 160bps driven by rationalized
cost structure
Garments
Branded garments revenues grew by 60% YoY driven by
SSSG of 35%. Retail channel sales grew by 55% YoY (45%
contribution to revenues). ABNL has launched 54 new EBO’s
in Q3F11. The margins for the business improved 900 bps YoY
driven by a combination of improved consumer sentiment,
lower discounting and improved product mix. Margins have
been improving sequentially for the past three quarters since
break-even was achieved in 1QF11.
Value Businesses
Carbon Black
Hi-Tech Carbon business revenues increased 33% YoY,
driven primarily by 29% volume growth (recent capacity
expansion) and 4% realization improvement (movement in
CBFS prices in line with crude oil prices). According to the
management, tyre production in India overall grew by 26%
during Apr-Nov’10. Margins declined by 900bps yoy as Q3F10
margins had benefitted from low cost inventory. The
management is planning to augment capacity by a further
85,000 MTPA each at Patalganga and second phase in
Southern India.
No comments:
Post a Comment