Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Interest cost remains a concern…
Bajaj Hindusthan reported its Q1SY11 results that were above our
expectations. Net sales surged ~140% to | 1475.7 crore against | 615.4
crore in Q1SY10 led by higher sales volume though realisations
witnessed a dip. The company’s raw material costs during the quarter
increased considerably to 73% of sales (| 1077.4 crore) compared to
53% (| 324.1 crore) in Q1SY10, consequently pulling down margins to
18.2% from 34.8% in Q1SY10. Further, the company’s interest cost in
Q1SY11 increased to | 106.9 crore (~134% rise) against | 45.6 crore in
Q1SY10. Therefore, in spite of higher sales the exceptional increase in
costs dragged the bottomline by ~32% to | 57.9 crore.
Operational Highlights
The company’s sugar sales volume increased by ~95% to 3.62 lakh
tonnes (lt) with realisations dipping to | 27.5/kg against | 31.6/kg in
Q1SY10. The total distillery sales also jumped significantly to
3,11,240 kilo litres (kl) against 57,780 kl in the corresponding quarter
last year. Average realisation from distillery was at the same level of
|26/litre though particularly ethanol realisations rose to | 27/litre
against | 22/litre in Q1SY10. The total units of power sold also
increased to 5.02 crore units from 2.83 crore units.
Valuation
At the current price of | 79, the stock is trading at 10.3x its SY11E EPS of
| 7.7 and 8.4x its FY12E EPS of |9.4. With steadily rising domestic sugar
prices and stable sugarcane cost, we believe margins from the sugar
business will improve in SY11. Also, higher ethanol prices at | 27 per litre
and power realisations at | 4 per unit would further aid margins.
However, the company would be unable to leverage on the improved
fundamentals of the industry as the high interest cost due to the large
debt on the books would continue to haunt the bottomline. Hence, we
have maintained our REDUCE rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Interest cost remains a concern…
Bajaj Hindusthan reported its Q1SY11 results that were above our
expectations. Net sales surged ~140% to | 1475.7 crore against | 615.4
crore in Q1SY10 led by higher sales volume though realisations
witnessed a dip. The company’s raw material costs during the quarter
increased considerably to 73% of sales (| 1077.4 crore) compared to
53% (| 324.1 crore) in Q1SY10, consequently pulling down margins to
18.2% from 34.8% in Q1SY10. Further, the company’s interest cost in
Q1SY11 increased to | 106.9 crore (~134% rise) against | 45.6 crore in
Q1SY10. Therefore, in spite of higher sales the exceptional increase in
costs dragged the bottomline by ~32% to | 57.9 crore.
Operational Highlights
The company’s sugar sales volume increased by ~95% to 3.62 lakh
tonnes (lt) with realisations dipping to | 27.5/kg against | 31.6/kg in
Q1SY10. The total distillery sales also jumped significantly to
3,11,240 kilo litres (kl) against 57,780 kl in the corresponding quarter
last year. Average realisation from distillery was at the same level of
|26/litre though particularly ethanol realisations rose to | 27/litre
against | 22/litre in Q1SY10. The total units of power sold also
increased to 5.02 crore units from 2.83 crore units.
Valuation
At the current price of | 79, the stock is trading at 10.3x its SY11E EPS of
| 7.7 and 8.4x its FY12E EPS of |9.4. With steadily rising domestic sugar
prices and stable sugarcane cost, we believe margins from the sugar
business will improve in SY11. Also, higher ethanol prices at | 27 per litre
and power realisations at | 4 per unit would further aid margins.
However, the company would be unable to leverage on the improved
fundamentals of the industry as the high interest cost due to the large
debt on the books would continue to haunt the bottomline. Hence, we
have maintained our REDUCE rating on the stock.
No comments:
Post a Comment