India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Industrials
Potential result outperformers: Suzlon
Potential result underperformers: BHEL, IVRC, NJCC
E&C
We expect 19%YoY growth in rec. PAT of Indian Engineering & Construction
(E&C) majors (ex-Suzlon) led by improved execution (ABB, BHEL, L&T) and
better margin (ABB, BHEL, L&T) despite a) higher fixed costs (interest and
depreciation) – ABB, IVRC, L&T, NJCC and b) higher tax – ABB. We expect
Suzlon to substantially narrow rec. loss of Rs2.6bn (vs Rs7.3bn of loss in
1Q11) on rebound in domestic wind markets and that represents 30% of the
YoY swing required to report PAT of Rs5.2bn for FY12E.
We expect double digit growth in order backlog for most E&C companies.
The key issues to watch-out for in the E&C sector is likely improved
execution and on-ground execution challenges such as land acquisition.
We expect the Indian E&C Sector, represented by BHEL, L&T, Suzlon, ABB,
IVRCL and NJCC to report (ex - Suzlon) sales growth of 16%YoY, EBITDA
growth of 21%YoY and Recurring PAT growth of 19%YoY.
L&T: We expect a good growth in L&T’s 1Q12 order inflows led by big ticket
projects win in power, oil & gas, metallurgical and building & factories
domains and customers such as PPN Power Rs35bn, GSPC Rs14.5bn and
Tata Steel Rs13.7bn. Assuming the 1Q11 ratio of actual order inflows vs
order announced we expect L&T order inflows to grow by ~15%YoY
(Rs120bn announced) which is inline with its lower limit growth guidance in
FY12E inflows. We expect L&T to post one of the better financials with
rebound in sales growth (19%YoY) on a low base (+6%) and PAT (24%YoY)
in our universe. Markets would also be more focused on any change in the
guidance for new orders in FY12E.
BHEL remains our preferred pick on visible and sustainable growth led by a
well priced order backlog of Rs1.64tn/US$36bn in FY11. Order inflows likely
weak as many large ticket orders of ~Rs65bn are shifted to 2QFY12. Markets
may likely be more concerned about the order inflows. We remain convinced
that large orders are linked-up in 2-3Q FY12 and hence, any fall in the stock
on weak 1Q orders, would present a particular opportunity to Buy. Strong
sales growth, fall in the labor costs as % to sales & provision for contracts
would be the key number to look for in 1Q12.
Meanwhile, ABB’s 2QCY11 rec. earnings would be Rs738mn (+37%YoY) on
37%YoY growth in EBITDA on 18%YoY sales growth on low base in
2QCY10 (-3%YoY). The deteriorating visibility and rich valuation drive our
under-perform rating.
Suzlon – turnaround story: In 1QFY12 Suzlon could narrow consolidated
rec. loss to Rs2.6bn vs rec loss of Rs7.3bn on +60%YoY domestic sales
volumes. Mix change in favor of India should drive to a positive EBITDA of
Rs1.3bn in 1Q12 vs EBITDA loss of Rs4bn in 1Q11.
IVRC: We expect IVRCL to report a weak 1Q12 with rec. PAT -23%YoY and
EBITDA +11%YoY on slow execution sales +12%YoY accompanied by high
depreciation and interest costs. It has announced Rs8.9bn of orders led by
buildings (Rs5.2bn) and water (Rs2.9bn) domains.
Expect NJCC’s to report a slow growth in sales at 12%YoY on a low base
and EBITDA growth of 12%YoY in 1QFY12. This along with high
depreciation and interest could lead to a 30%YoY fall in rec. PAT.
Infra Developer
JPA: JPA likely to report 31%YoY growth in 1QFY12 Rec PAT led by
Rs578mn of dividend from JP Infratech and +10%YoY realty revenue on a
high base despite weak E&C execution, likely slow growth of +8%YoY in
cement dispatch to 4.2mmt v/s 3.9mmt and higher fixed costs of cement
expansion. E&C revenue to remain flat on farmers’ agitation on Yamuna
Expressway, on higher base led by execution at Karcham HEP and start of
realty build-out for JP Infra. We expect 2%YoY growth in revenue, 8%YoY
growth in EBITDA while Rec. PAT (ex-dividend from JP Infratech) would be
fell by 24%YoY.
Adani Enterprises to report a Rs9.5bn of Cons. Rec. PAT +84%YoY on
start of 1.98GW (vs 660MW) of Power plant at Mundra and a strong growth
of 50%YoY in coal trading volume.
Mundra Port and SEZ to have 16%YoY growth in 1QFY12 Rec PAT on
higher depreciation, lower treasury income and higher tax on applicability of
MAT on SEZ. While sales to grow by 30%YoY on +28%YoY port traffic led
by coal, fertilizer and container.
No comments:
Post a Comment