Q4FY11 Results Preview: Strong results ahead… Emkay

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Q4FY11 Results Preview: Strong results ahead…

Executive Summary

We expect Emkay Universe’s (ex-Oil & Gas and Banking) earnings to grow by 4.1% for Q4FY11. However, excluding RCom, Bharti, Tata Steel & Ranbaxy (decline of 48% yoy), the growth is expected at 18%.

Ebitda margins for Emkay Universe are expected to contract by 53 bps to 20.2%. The Same are likely to contract by 79 bps to 20.6% and  by 145 bps to 14.3%  for Emkay Large Cap and Small Cap Universe respectively. Ebitda margins for Emkay Mid Cap Universe are likely to improve by 143 bps to 18%. 

Emkay Universe is likely to post Sales growth of 20.3%, EBITDA growth of 17.2% and PAT growth of 4.1% for Q4FY11. Emkay Large Cap Universe is likely to show 20.3%, 15.8% and 2.1% growth in Sales, EBITDA and PAT. Emkay Mid Cap Universe is likely to show  21.5%, 32% and 32% growth in Sales, EBITDA and PAT.

The top performing sectors in terms of sales growth are Telecom (38.4%), Auto Ancillaries (26.5%), Engineering & Capital Goods (25.8%), IT Services (24.5%) and Consumers (21.9%).

EBITDA margins are likely to improve in sectors like Agi Input & Chemicals (355 bps), Power (299 bps), Engineering & Capital Goods (248 bps), Paper (182 bps) and Automobiles (96 bps). The same are likely to contract in case of Pharmaceuticals (641 bps), Metals & Mining (410 bps), Cement (280 bps), Auto Ancillaries (267 bps) and Print Media (241 bps).

Sectors like  Agri Input & Chemicals (48.7%), Engineering & Capital Goods (48.7%), Telecom (29.8%), Automobiles (28.6%) and Consumers (26.4%) are expected to witness better yoy EBITDA growth while sectors like Pharmaceuticals (20%), Offshore Oil Field Services (19%), Metals & Mining (5.8%) and Auto Ancillaries (2.3%) are likely to post YoY decline in EBITDA.

Emkay Universe is likely to post a 16% decline in other income with 16.1%  and 18% decline in other income of Emkay Large Cap and Mid Cap Universe respectively. Other income for Emkay Small Cap Universe is likely to decline by 19% yoy (ex Piramal Glass).

Emkay Universe is likely to post 56.2% growth in interest cost with 64.7%, 31.5% and 39.7% growth in interest cost of Emkay Large Cap, Mid Cap and Small Cap respectively.

PAT growth will be contributed by sectors like Engineering & Capital Goods (54.5%), Automobiles (40.8%), Agri Input & Chemicals (34.2%), Consumers (30%) and Print Media (18.6%). While sectors like Offshore Oil Field Services (62.1%), Telecom (37.4%), Pharmaceuticals (26.3%), Auto Ancillaries (24.3%) and Metals & Mining (17.6%) will witness de-growth in PAT.

Emkay Universe is trading at 13.8x FY12E earnings which is at a discount of 12% to Sensex PE of 15.4x FY12E consensus EPS of Rs 1272.

Q4FY11 Strong Results

Large Caps	Mid Caps	Small Caps
Adani Power	Chambal Fertilisers	EMCO
Allahabad Bank	Eicher Motors	Essel Propack
Bank of India	GNFC	Piramal Glass
Canara Bank	Hexaware Technologies
Petronet LNG	Jubilant FoodWorks
State Bank of India	Madras Cements
Tata Motors	Manappuram General Finance
Titan Industries	Phoenix Mills
	United Bank Of India

Q4FY11 Weak Results

Large Caps	Mid Caps	Small Caps
Jaiprakash Power Ventures	Aban Offshore	Dishman Pharma
JSW Energy	Apollo Tyres	Great Offshore
Ranbaxy Labs	Century Plyboards	HBL Power Systems
Reliance Communications	Jubilant Life Sciences	JK Tyre
Tata Steel	KSK Energy	Tamilnadu Newsprint
	Nava Bharat Ventures
	Sterlite Tech