Result Update: Sun Pharma; Lakshmi Machine Works; TRF; Glenmark Pharma; Emkay

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Result Update: Sun Pharma; Lakshmi Machine Works; TRF; Glenmark Pharma; and Economy Update

n        Research Update Included

Sun Pharma Q3FY11 Result Update; Reasonably Valued; Maintain Hold; Target: Rs 460

n    Sun Pharma’s Q3’11 results were in-line except on PAT front with a) Revenues at Rs16bn (est. Rs15.9bn) b) EBITDA at Rs4.4bn (est. Rs4.45bn) and c) PAT at Rs3.5bn (est. Rs3.9bn)

n    Taro contributed 29% to the top-line at US$102mn; Caraco continues to disappoint with revenues at US$40mn (down 22% YoY) and loss at the PBT level

n    APAT at Rs3.5bn was lower than our est. of Rs3.9bn on account of higher depreciation and tax outgo largely led by Taro consolidation

n    Taro remains the key to future performance; Maintain Hold and target price of Rs460

Lakshmi Machine Works Q3FY11 Result Update; Margin pressures on increased competition; Accumulate; Target: Rs 2,660

n    Q3FY11 PAT of Rs458mn in line with our estimates led by better than expected rev. growth and higher other income

n    EBITDA margin down 346bps yoy to 15.4% due to significant increase in raw material price

n    Strong demand for yarn continues to attract capex resulting in LMW’s order book rising to Rs41bn from Rs36bn in Q2FY11

n    Post recent price correction -upgrade rating to ACCUMULATE from HOLD. Valuations at 15.4x /13.7x EPS of Rs139.2 /156.2 for FY11/12E

TRF Q3FY11 Result Update; Regains lost ground, Retain Accumulate; Target: Rs 586

n    TRF regains lost ground – posted standalone net profit of Rs174 mn (Vs estimate of Rs80 mn. But, auto business posted net loss of Rs7 mn (Vs net profit of Rs19 mn)

n    Order book at Rs18 bn (-8% qoq) – with NO order wins in Q2FY11 and Q3FY11. Strong order bid pipeline – finalization can spillover in Q1FY12E

n    TRF expects momentum to begin from Q4FY11E and continue in FY12E  – led by execution in large NTPC project orders and commencement of new capacities in Auto business

n    NOT upgrading rating, despite price correction – looking at cues for earnings upgrades. Until then retain ACCUMULATE rating with revised price target of Rs586/Share (10X FY12E)

Economy Update; Fiscal deficit shrinks as spending still at decelerated pace

n    The gross fiscal deficit shrinks to Rs1.7tn, down almost 40% yoy helped by higher tax collections and lower govt spending

n    Tax revenues for the full year may exceed the target by more than 200bn to reach Rs.5.5tn for FY11

n    The govt passed grants aggregating Rs 1,133bn (1st grant Rs683bn; 2nd grant Rs450bn), though a large part remains unspent

n    Spending from the two supplementary demand for grants would bring the fiscal deficit closer to budgeted estimate of 5.5% of GDP