Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
United Spirits- Higher RM price factored in
United Spirits’ 3Q recurring earnings grew 6.5% YoY, 12% lower than
estimates due to higher ENA prices. But, we believe that the 16%
underperformance in last three months largely captures the impact. The
company’s current spot ENA px is already down 4% from 3Q and full
impact will be visible in FY12. We now factor in only 2% correction (9%
earlier) in ENA prices from the current levels driving the earnings
downgrade of 10-14%. Our SoTP based target price of Rs1,200/share
implies 20xFY13 earnings. 40% EPS Cagr over FY11-13 is a key positive.
3QFY11 results below expectations
Adjusting for exceptional items and the impact of Balaji merger, United spirits
3QFY11 net profit grew by 6.5% YoY to Rs 1.03bn– 12% lower than
expectations due to higher ENA prices and forex losses. Reported profit were
higher at Rs1.4bn due to exceptional gain of Rs250m (post tax estimated) on
writeback of sales tax liability and Rs20m contribution from the Balaji merger.
ENA price decline eludes; lowering earnings by 10-14%
As compared to our expectation of a flattish trend, ENA costs increased by
4% QoQ to Rs143/case. The company’s current buying price is close to
137/case but the benefit will be visible largely in 1QFY12 onwards only due to
forward contracts. We also raise the FY12 ENA price assumption by 7% - key
reason for the earnings downgrade of 10-14% for FY12 and FY13. The
downgrade also incorporates an impact lower guidance of Whyte & Mackay
ebitda. During 9mFY11, Whyte & Mackay has generated an ebitda of GBp23m
and is on course to achieve FY11 ebitda of GBp30m.
Debt increased by Rs2.4bn QoQ, benefits to be visible from 2HFY12
Acquisition of Pioneer distilleries and ongoing capex has driven up debt by
Rs2.4bn during 3QFY11 to Rs56bn. The benefits from setting up / acquisitions
of distilleries is expected to begin from 3QFY12 and we’ve built-in a
Rs120m/quarter in incremental Ebitda. The company is looking at refinancing
the GBp300m loan on W&M to further push back the maturities by 5-7 years.
Stock price correction factors in worse; upgraded to O-PF
We have raised FY12 ENA cost assumption by 7% to Rs134/case (still down
6% YoY) as against the spot purchase price of c.Rs137/case and believe that
our assumption has a limited downside. Continued strong volume growth,
benefits from capex / acquisition and potential weakening in the raw material
prices should drive an 40% earnings cagr over FY11-13CL. We raise the stock
to O-PF with SoTP based 12m target implies 20xFY13CL earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
United Spirits- Higher RM price factored in
United Spirits’ 3Q recurring earnings grew 6.5% YoY, 12% lower than
estimates due to higher ENA prices. But, we believe that the 16%
underperformance in last three months largely captures the impact. The
company’s current spot ENA px is already down 4% from 3Q and full
impact will be visible in FY12. We now factor in only 2% correction (9%
earlier) in ENA prices from the current levels driving the earnings
downgrade of 10-14%. Our SoTP based target price of Rs1,200/share
implies 20xFY13 earnings. 40% EPS Cagr over FY11-13 is a key positive.
3QFY11 results below expectations
Adjusting for exceptional items and the impact of Balaji merger, United spirits
3QFY11 net profit grew by 6.5% YoY to Rs 1.03bn– 12% lower than
expectations due to higher ENA prices and forex losses. Reported profit were
higher at Rs1.4bn due to exceptional gain of Rs250m (post tax estimated) on
writeback of sales tax liability and Rs20m contribution from the Balaji merger.
ENA price decline eludes; lowering earnings by 10-14%
As compared to our expectation of a flattish trend, ENA costs increased by
4% QoQ to Rs143/case. The company’s current buying price is close to
137/case but the benefit will be visible largely in 1QFY12 onwards only due to
forward contracts. We also raise the FY12 ENA price assumption by 7% - key
reason for the earnings downgrade of 10-14% for FY12 and FY13. The
downgrade also incorporates an impact lower guidance of Whyte & Mackay
ebitda. During 9mFY11, Whyte & Mackay has generated an ebitda of GBp23m
and is on course to achieve FY11 ebitda of GBp30m.
Debt increased by Rs2.4bn QoQ, benefits to be visible from 2HFY12
Acquisition of Pioneer distilleries and ongoing capex has driven up debt by
Rs2.4bn during 3QFY11 to Rs56bn. The benefits from setting up / acquisitions
of distilleries is expected to begin from 3QFY12 and we’ve built-in a
Rs120m/quarter in incremental Ebitda. The company is looking at refinancing
the GBp300m loan on W&M to further push back the maturities by 5-7 years.
Stock price correction factors in worse; upgraded to O-PF
We have raised FY12 ENA cost assumption by 7% to Rs134/case (still down
6% YoY) as against the spot purchase price of c.Rs137/case and believe that
our assumption has a limited downside. Continued strong volume growth,
benefits from capex / acquisition and potential weakening in the raw material
prices should drive an 40% earnings cagr over FY11-13CL. We raise the stock
to O-PF with SoTP based 12m target implies 20xFY13CL earnings.
No comments:
Post a Comment