Result Preview: Voltas; Hero Honda; ICRA; Great Offshore:: Emkay

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Contents

n        Research Views

Voltas Q3FY11E result expectations

Post a muted, H1FY11, we expect Voltas to witness improved performance in Q3FY11 – led by improved execution of order backlog.

n    Revenues at Rs11.4 bn (+15% yoy) – led by all 3 divisions EMP (+15% yoy to Rs8.2 bn), UCP (+15% to Rs1.4 bn) and EPS (+17% to Rs1.8 bn)

n    EBITDA margins to decline marginally by 20 bps yoy to 8.9%

n    APAT growth to be muted at 2% yoy to Rs678 mn – due to lower other income.

We will keenly await management outlook on (1) the international business and (2) order inflows.

Hero Honda Motor Ltd. (HH) – Q3FY11 result expectation

3QFY11 will be subdued for HH despite strong volume growth (28% YoY/11% QoQ). 3QFY11 will be featured by margin pressure with EBIDTA margins declining 310 bps YoY to 14.2%. However, margins to improve QoQ by 80 bps. Key things to watch out for (1) Capacity expansion plans and (2) raw material cost pressure

n    We expect net sales to grow by 30.4% YoY and 9.6% QoQ to Rs 49.9bn

n    We expect EBIDTA to increase by 7.2% YoY and 16.5% QoQ to Rs 7.1bn

n    EBIDTA margin are likely to compress by 290 bps YoY but expand 80 bps QoQ to 14.2%

n    We expect APAT to increase by 10.0% YoY and 16.6% QoQ to Rs 5.9bn

ICRA Q3FY11 result estimates

We expect ICRA to report a 28.5% growth in revenues led by rating, consulting and BPO business. The operating leverage and very low base will help ICRA expand OPM by 180bps yoy to 44.2%. Consequently, the net profit is likely to increase by 23.9% yoy to Rs178mn for the quarter.

Trade deficit eases significantly to $2.6bn; export growth seen at 36.4% yoy

n    The month of December saw the trade deficit ease to $2.6bn driven by strong export growth and reduced import momentum.

n    Export growth saw a rise by 36.4% yoy (19.1% mom) , whereas import growth dropped by 11% yoy (9.6% mom), favourably impacting the trade deficit.

n    The month of December saw the rupee depreciate by ~0..3% mom, while oil prices rose by ~6.5% mom, contributing to the ease in oil-import growth.

n    The trade deficit for Q3FY11 stays at around $21.3bn, compared to $35.4bn in Q2FY11 and $29.6bn in Q3FY10. Steady growth in invisibles QoQ, would likely lead to a considerable easing in the current account deficit (CAD) for Q3FY11.

Auto – Jan 2011 volume update

Hero Honda (HH) – on expected lines

n    Total sales increased by 19.7% YoY to 466,524 units.

Maruti Suzuki India Ltd (MSIL) – on expected lines

n    Total sales for January 2011 increased by 14.7% YoY to 109,743 units.

n    Domestic sales grew by only 23.8% YoY to 100,422 units.

n    Export declined by 36% YoY to 9,321 units.

Mahindra & Mahindra (M&M) – Strong set of numbers

n    Total sales increased by 19.7% YoY to 54,670 units.

n    Total automotive sales increase by 18.7%  YoY to 34,171 units.

n    Passenger UVs disappoint marginally with increase of 11.4% YoY to 16,088 units

n    Total tractors sales increase by 21.4%  YoY to 20,499 units.

Tata Motors Ltd (TML) – M&HCV disappoints marginally

n    Total sales increased by 9.1% YoY to 71,447 units.

n    M&HCVs sales increased by only 4.9% YoY to 16,478 units.

n    LCVs sales increased by 17.4% YoY to 23,776 units.

n    UVs and Nano reported good set of numbers, car (ex Nano) declined by 19.4% YoY to 15,080 units

n    Export sales increased by 51% YoY to 4,948 units

TVS Motors Ltd (TVSL) – On expected lines

n    Total sales increased by 29.1% YoY to 165,725 units

n    Motorcycle sales increased by 23.8% YoY to 94,004 units.

n    Scooters/Mopeds increased by 31.5% YoY to 94,004 units.

n    Total domestic sales increased by 30.3% YoY to 145,654 units.

n    Export sales increased by 21.3% YoY to 19,498 units

Great Offhsore Q3FY11 results expectation

GOL Q3FY11 standalone net revenues for the quarter are expected to grow 5% yoy to Rs 2.6bn. EBITDA for the quarter is expected to grow by 1.2% yoy to Rs1.26 bn. EBIDTA margins are expected to shrink by 181bps to 48%. GOL’s net profit for the quarter at Rs376.6 mn is expected to decline 24%yoy.

Glenmark Pharma – Q3FY11 first cut

Below Expectations

Q3FY11 results were below estimates with a) Revenues at Rs7.6bn (est. Rs7.7bn) b) EBITDA at Rs1.7bn (est. Rs1.9bn) and c) APAT at Rs950mn (est. Rs1.1bn )

APAT (net of Rs180mn forex gain) de-grew 9% on account of poor operating performance coupled with higher tax provisioning (19.4% of PBT vs. est. of 16% and 5% of PBT in Q3FY10)

At CMP, Glenmark trades at 15.4xFY12E EPS. We have an ‘Accumulate’ rating on the stock.