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1QFY2012 Result Reviews
L&T
Larsen and Toubro (L&T) posted broadly in-line numbers for 1QFY2012. The company
reported top-line growth of 20.3% yoy to `9,483cr (`7,885cr), marginally below our
estimates. EBITDA came in at 11.9% (12.8%), slightly above our estimates of 11.6%.
Adjusting for dividend from subsidiaries, the bottom line grew by 9.2% yoy to `690cr and
surpassed our estimate of `674.0cr. As of 1QFY2012, L&T stands tall on an order backlog
of `1,36,172cr. Order inflow for 1QFY2012 stands at `16,190cr, up 3.6% yoy, which is
in-line with our expectations of `16,000cr. The company has given revenue guidance of
25% for FY2012, which we believe is aggressive considering that the headwinds are still
plaguing the sector. On the order inflow front, the company has given a guidance of
15–20%, which we believe is achievable considering L&T’s leadership position and
diversification.
We believe that in the current uncertain times investors would take a flight to safety and
L&T being the market leader and fundamentally the strongest infrastructure company
would get a preference over its peers. Hence, L&T continues to remain our top pick in the
sector. We maintain our Buy rating on L&T. We will be releasing a detailed note with a
revised target price during the day.
Mahindra and Mahindra
For 1QFY2012, Mahindra and Mahindra (M&M) reported net sales of `6,734cr, up by
strong 30.5% yoy (down 0.7% qoq). Growth was aided by robust 22.6% yoy (down 2.9%
qoq) growth in total volumes and a 6.2% yoy (2.9% qoq) increase in average net
realisation led by better product mix and price hikes. Volume growth in the automotive and
farm equipment segments maintained its strong momentum, registering growth of 24.2%
and 19.9% yoy, respectively. In the passenger UV segment, M&M posted 14.3% yoy
growth, retaining its dominant position with a market share of 56.2%. Domestic tractor
volumes also registered strong 20% yoy growth, enabling M&M to increase its market
share to 43% as compared to 40.7% in 1QFY2011.
The company’s EBITDA margin came in 43bp below our estimate at 13.3%, posting a
contraction of 170bp yoy (up 61bp qoq). The decline in margin can be attributed to the
increase in purchase of finished products from the manufacturing subsidiary, MVML, and
raw-material cost pressures. Raw-material cost for the quarter increased by 236bp yoy and
77bp on a qoq basis to 72.4% of sales. However, cost rationalisation measures coupled
with an 8bp and 39bp yoy decline in staff cost and other expenses, respectively, provided
some respite on the margin front. Net profit reported 7.6% yoy (flat qoq) growth to `605cr,
5% lower than our estimates primarily due to higher tax rate and lower other income.
We broadly, maintain our volume and earnings estimates for the company. At `666, M&M
is trading at 14.2x FY2012E and 12.9x FY2013E standalone earnings. We retain our Buy
rating on the stock; however, our target price is under review.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
1QFY2012 Result Reviews
L&T
Larsen and Toubro (L&T) posted broadly in-line numbers for 1QFY2012. The company
reported top-line growth of 20.3% yoy to `9,483cr (`7,885cr), marginally below our
estimates. EBITDA came in at 11.9% (12.8%), slightly above our estimates of 11.6%.
Adjusting for dividend from subsidiaries, the bottom line grew by 9.2% yoy to `690cr and
surpassed our estimate of `674.0cr. As of 1QFY2012, L&T stands tall on an order backlog
of `1,36,172cr. Order inflow for 1QFY2012 stands at `16,190cr, up 3.6% yoy, which is
in-line with our expectations of `16,000cr. The company has given revenue guidance of
25% for FY2012, which we believe is aggressive considering that the headwinds are still
plaguing the sector. On the order inflow front, the company has given a guidance of
15–20%, which we believe is achievable considering L&T’s leadership position and
diversification.
We believe that in the current uncertain times investors would take a flight to safety and
L&T being the market leader and fundamentally the strongest infrastructure company
would get a preference over its peers. Hence, L&T continues to remain our top pick in the
sector. We maintain our Buy rating on L&T. We will be releasing a detailed note with a
revised target price during the day.
Mahindra and Mahindra
For 1QFY2012, Mahindra and Mahindra (M&M) reported net sales of `6,734cr, up by
strong 30.5% yoy (down 0.7% qoq). Growth was aided by robust 22.6% yoy (down 2.9%
qoq) growth in total volumes and a 6.2% yoy (2.9% qoq) increase in average net
realisation led by better product mix and price hikes. Volume growth in the automotive and
farm equipment segments maintained its strong momentum, registering growth of 24.2%
and 19.9% yoy, respectively. In the passenger UV segment, M&M posted 14.3% yoy
growth, retaining its dominant position with a market share of 56.2%. Domestic tractor
volumes also registered strong 20% yoy growth, enabling M&M to increase its market
share to 43% as compared to 40.7% in 1QFY2011.
The company’s EBITDA margin came in 43bp below our estimate at 13.3%, posting a
contraction of 170bp yoy (up 61bp qoq). The decline in margin can be attributed to the
increase in purchase of finished products from the manufacturing subsidiary, MVML, and
raw-material cost pressures. Raw-material cost for the quarter increased by 236bp yoy and
77bp on a qoq basis to 72.4% of sales. However, cost rationalisation measures coupled
with an 8bp and 39bp yoy decline in staff cost and other expenses, respectively, provided
some respite on the margin front. Net profit reported 7.6% yoy (flat qoq) growth to `605cr,
5% lower than our estimates primarily due to higher tax rate and lower other income.
We broadly, maintain our volume and earnings estimates for the company. At `666, M&M
is trading at 14.2x FY2012E and 12.9x FY2013E standalone earnings. We retain our Buy
rating on the stock; however, our target price is under review.
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