Reviews with Emkay 4 February, 2011

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n        Research Update Included

 Result Update: ICRA; Voltas; Ambuja Cement; Greaves Cotton; DB Corp

ICRA Q3FY11 Result Update; Disappointing numbers; Downgrade earnings; Accumulate; Target: Rs 1,370

n    ICRA’s Q3FY11 results were below expectations led by slower growth in rating business coupled with higher employee expenditure

n    The rating business grew by a lower 9.7%yoy to Rs300mn led by sluggish debt market issuance and decline in structured finance volumes during the quarter

n    The adjusted operating margin declined by 390bps to 38.5% during the quarter led by substantial fall in margins in rating business

n    Downgrade earnings for FY11/12/13 by 4-8% to factor in slower growth in revenues. Maintain ACCUMULATE with TP of Rs1,370

Greaves Cotton Event Update; A Sequel, Reiterate BUY; Target: Rs 111

n    Greaves Cotton enters into a 5-year supply agreement with M&M for supply of single cylinder engines for latter’s 3-wheeled vehicles

n    Shifting of engine sourcing from other suppliers to Greaves Cotton creates room for 2-3% upgrade in FY11E and FY12E earnings

n    M&M’s 4-Wheeler’s continues to remain out of ambit – but case strengthens in favour of Greaves Cotton

n    Currently, maintain earnings estimates of Rs6.4/Share and Rs7.9/Share for FY11E and FY12E, Reiterate BUY rating

DB Corp Event Update; Set to cross another language barrier; Hold; Target: Rs 284

n    DB Corp announces entry into Marathi land to cross another language barrier after success in Gujarati

n    To launch Marathi daily during CY11 and deferred Bihar launch to end of FY12. Management est. Marathi ad market at ~Rs7.0bn, growing at 15-20% annually 

n    The management has guided with the initial capex of Rs600-700mn for Maharashtra launch

n    Given the healthy cash on balance sheet and further dilution of promoters’ stake to 75% (currently 86.3%) by FY13E (mandated by Sebi) would keep the funding intact for further  expansions

Voltas Q3FY11 Result Update; Sharp Reaction; Retain BUY; Target: Rs 250

n    Voltas reports weak performance - (1) revenue up 5% yoy to Rs10.4 bn (2) 140 bps yoy drop in Ebidta margins to 7.6% and (3) 17% yoy decline in APAT to Rs551 mn

n    2nd quarter back-to-back weak performance in Electro Mechanical & Projects (EMP) -  revenues down 3% yoy to Rs6.9 bn, Ebit margins fall 260 bps yoy to 6.4%

n    Earnings revised by -7% and -4% for FY11E and FY12E  - Rs10.5/Share and Rs12.8/Share

n    At 14.0X FY12E- trades 10% lower then Minimum PER of 15.6X FY06-08 cycle – Trading at attractive valuations - Maintain ‘BUY’ with target price of Rs250/Share

Ambuja Cement Q4CY10 Result Update; Realisations lower than expected; Hold; Target: Rs 130

n    APAT at Rs2.14bn (-11.3% yoy ) below est of Rs2.52 bn, led by lower than expected realizations (Rs3584/t). Revenue grew 0.9%yoy- volume growth of 3.3%, realisation down 2.4% yoy 

n    EBITDA at Rs 3.14bn (-27.7%yoy, below est–Rs4.2 bn) -  EBITDA/t at Rs629 down 30%yoy, 3.3% qoq – Downgrade CY11 EPS by 10.7%. Introduce CY12 EPS at Rs9.6

n    Cement offtake improves in Jan – prices hiked Rs15-20/bag in Jan-Feb. Sustainability of cement price over medium term remains uncertain, as demand yet to see significant pick up

n    Stock down 13% in last one month – however valuations at PER of 15.6X & EV/ton of USD133 still not in comfort zone. Maintain HOLD with price target of Rs130