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Result Previews
L&T
We expect Larsen and Toubro (L&T) to record revenue of `10,524cr, growth of
12.8% yoy, for 2QFY2012. This growth is on account of the company’s large
order book (~`1.4trillion). On the EBITDA front, we expect margin to be flat at
10.8%. We project net profit at `738.1cr, down 3.5% yoy, mainly on account
of higher other income booked in 2QFY2011. We believe the company would
end the quarter with a total order inflow of `13,000cr (`20,464cr) for the
quarter. An important thing to watch out for would be management’s
commentary on the outlook for the sector and how things pan out on the
margin front.
At the CMP of `1,385, the stock is trading at 18.0x FY2013E earnings and
2.9x FY2013E P/BV, on a standalone basis. We have used the SOTP
methodology to value the company to capture all its business initiatives and
investments/stakes in different businesses. Ascribing separate values to its
parent business on a P/E basis and investments in subsidiaries on P/E, P/BV
and mcap basis, our target price works out to `1,857, which provides 34.1%
upside from current levels. We recommend Buy on the stock.
Idea
Idea Cellular (Idea) is slated to announce its 2QFY2012 results. We expect the
company to record revenue of `4,536cr, with merely 0.3% qoq growth as 2Q
is a seasonally weak quarter for telecom companies. This is expected primarily
on the back of a 3.0% qoq decline in MOU to 379min and qoq flat ARPM at
`0.41/month. Idea’s EBITDA margin is expected to decline by 62bp qoq to
26.0%. PAT is expected to come in at `154cr. We maintain our Neutral rating
on the stock.
Asian Paints
Asian Paints (APL) is expected to announce its 2QFY2012 results. For the
quarter, we expect APL to report robust 24.5% yoy growth in its consolidated
top line to `2,255cr, driven by strong pricing power. We expect APL’s bottom
line to register modest growth of 13.2% yoy to `243cr, aided by margin
contraction of 168bp yoy to 16.6% on the back of higher input costs.
We maintain our Neutral view on the stock.
JSW Steel
JSW Steel is slated to announce its 2QFY2012 results. On a consolidated
basis, net revenue is expected to grow by 31.8% yoy to `7,788cr, mainly on
account of increased volumes as well as realization. However, operating
margin is expected to contract by 39bp yoy to 15.8% due to higher
raw-material costs. Net profit is expected to increase by 24.7% yoy to `334cr.
We maintain our Buy rating on the stock with a target price of `717.
GCPL
Godrej Consumer Products (GCPL) is expected to announce its 2QFY2011
results. For the quarter, we expect the company to report 14.5% yoy growth in
the top line to `1,091cr, led by the domestic as well as international business.
Operating margin for the quarter is expected to remain flat at 17.9%, as
raw-material cost pressure still affects the company. As a result, we expect the
company to report modest ~9% yoy growth at the earnings level.
We maintain our Accumulate view on the stock with a target price of `457.
Federal Bank
Federal Bank is scheduled to announce its 2QFY2012 results. We expect the
bank to report moderate NII growth of 5.1% on a yoy basis and marginal
0.3% growth on a qoq basis to `461cr. Non-interest income is expected to
decline by 10.9% yoy (up 9.8% qoq) to `128cr. Cost-to-income ratio is
expected to weaken to 40.0% from 38.6% in 1QFY2012. Pre-provision profit
of the bank is expected to decline by 8.2% yoy to `353cr. Owing to an
expected 29.9% decline in provisioning expenses, net profit is expected to
increase by 12.6% yoy to `158cr. At the CMP, the stock is trading at valuations
of 1.1x FY2013E P/ABV. We maintain our Accumulate rating on the stock with
a target price of `422.
HCC
For Hindustan Construction Company (HCC), we project modest 7% yoy
growth in revenue for 2QFY2012 to `946.5cr (`884.6cr) due to the slowdown
of execution on account of the gloomy macro environment and monsoon
season affecting its hydro power projects. On the EBITDA front, we expect a
marginal improvement of 43bp yoy to 13.2% (12.8%). However, on the
bottom-line front, we expect a loss of `7.4cr against profit of `12.1cr in
2QFY2011 due to its escalating interest cost, which is expected to post a yoy
jump of ~46%. Owing to the uncertainties surrounding the Lavasa project and
other concerns such as subdued order inflow, a deteriorating working capital
situation and high interest cost, we continue to remain Neutral on the stock.
GIPCL
GIPCL is slated to announce its 2QFY2012 results. We expect the company to
register a 40.6% yoy increase in revenue in 2QFY2012 to `301cr due to
higher contribution from SLPP-2 station, which has stabilized completely. The
company’s OPM is set to expand by 1,456bp yoy to 35% due to higher
availability and lower PLFs. The bottom line is expected to improve by 90.3%
yoy to `29cr in 2QFY2012. We maintain our Buy recommendation on the
stock with a target price of `95.
NIIT
NIIT is expected to announce its 2QFY2012 results. We expect the company’s
revenue to grow by 13.3% yoy to `392cr. Revenue for the individual learning
solution (ILS-IT), school learning solution (SLS) and corporate learning solution
(CLS) segments is expected to grow by 16%, 31% and 6% yoy to `187cr, `47cr
and `157cr, respectively. We expect the company’s EBITDA margin to improve
by 39bp yoy to 15.8% on the back of slight improvement in ILS margin by
20bp yoy. PAT is expected to come in at `37cr. We maintain our Buy view on
the stock with an SOTP target price of `61.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Previews
L&T
We expect Larsen and Toubro (L&T) to record revenue of `10,524cr, growth of
12.8% yoy, for 2QFY2012. This growth is on account of the company’s large
order book (~`1.4trillion). On the EBITDA front, we expect margin to be flat at
10.8%. We project net profit at `738.1cr, down 3.5% yoy, mainly on account
of higher other income booked in 2QFY2011. We believe the company would
end the quarter with a total order inflow of `13,000cr (`20,464cr) for the
quarter. An important thing to watch out for would be management’s
commentary on the outlook for the sector and how things pan out on the
margin front.
At the CMP of `1,385, the stock is trading at 18.0x FY2013E earnings and
2.9x FY2013E P/BV, on a standalone basis. We have used the SOTP
methodology to value the company to capture all its business initiatives and
investments/stakes in different businesses. Ascribing separate values to its
parent business on a P/E basis and investments in subsidiaries on P/E, P/BV
and mcap basis, our target price works out to `1,857, which provides 34.1%
upside from current levels. We recommend Buy on the stock.
Idea
Idea Cellular (Idea) is slated to announce its 2QFY2012 results. We expect the
company to record revenue of `4,536cr, with merely 0.3% qoq growth as 2Q
is a seasonally weak quarter for telecom companies. This is expected primarily
on the back of a 3.0% qoq decline in MOU to 379min and qoq flat ARPM at
`0.41/month. Idea’s EBITDA margin is expected to decline by 62bp qoq to
26.0%. PAT is expected to come in at `154cr. We maintain our Neutral rating
on the stock.
Asian Paints
Asian Paints (APL) is expected to announce its 2QFY2012 results. For the
quarter, we expect APL to report robust 24.5% yoy growth in its consolidated
top line to `2,255cr, driven by strong pricing power. We expect APL’s bottom
line to register modest growth of 13.2% yoy to `243cr, aided by margin
contraction of 168bp yoy to 16.6% on the back of higher input costs.
We maintain our Neutral view on the stock.
JSW Steel
JSW Steel is slated to announce its 2QFY2012 results. On a consolidated
basis, net revenue is expected to grow by 31.8% yoy to `7,788cr, mainly on
account of increased volumes as well as realization. However, operating
margin is expected to contract by 39bp yoy to 15.8% due to higher
raw-material costs. Net profit is expected to increase by 24.7% yoy to `334cr.
We maintain our Buy rating on the stock with a target price of `717.
GCPL
Godrej Consumer Products (GCPL) is expected to announce its 2QFY2011
results. For the quarter, we expect the company to report 14.5% yoy growth in
the top line to `1,091cr, led by the domestic as well as international business.
Operating margin for the quarter is expected to remain flat at 17.9%, as
raw-material cost pressure still affects the company. As a result, we expect the
company to report modest ~9% yoy growth at the earnings level.
We maintain our Accumulate view on the stock with a target price of `457.
Federal Bank
Federal Bank is scheduled to announce its 2QFY2012 results. We expect the
bank to report moderate NII growth of 5.1% on a yoy basis and marginal
0.3% growth on a qoq basis to `461cr. Non-interest income is expected to
decline by 10.9% yoy (up 9.8% qoq) to `128cr. Cost-to-income ratio is
expected to weaken to 40.0% from 38.6% in 1QFY2012. Pre-provision profit
of the bank is expected to decline by 8.2% yoy to `353cr. Owing to an
expected 29.9% decline in provisioning expenses, net profit is expected to
increase by 12.6% yoy to `158cr. At the CMP, the stock is trading at valuations
of 1.1x FY2013E P/ABV. We maintain our Accumulate rating on the stock with
a target price of `422.
HCC
For Hindustan Construction Company (HCC), we project modest 7% yoy
growth in revenue for 2QFY2012 to `946.5cr (`884.6cr) due to the slowdown
of execution on account of the gloomy macro environment and monsoon
season affecting its hydro power projects. On the EBITDA front, we expect a
marginal improvement of 43bp yoy to 13.2% (12.8%). However, on the
bottom-line front, we expect a loss of `7.4cr against profit of `12.1cr in
2QFY2011 due to its escalating interest cost, which is expected to post a yoy
jump of ~46%. Owing to the uncertainties surrounding the Lavasa project and
other concerns such as subdued order inflow, a deteriorating working capital
situation and high interest cost, we continue to remain Neutral on the stock.
GIPCL
GIPCL is slated to announce its 2QFY2012 results. We expect the company to
register a 40.6% yoy increase in revenue in 2QFY2012 to `301cr due to
higher contribution from SLPP-2 station, which has stabilized completely. The
company’s OPM is set to expand by 1,456bp yoy to 35% due to higher
availability and lower PLFs. The bottom line is expected to improve by 90.3%
yoy to `29cr in 2QFY2012. We maintain our Buy recommendation on the
stock with a target price of `95.
NIIT
NIIT is expected to announce its 2QFY2012 results. We expect the company’s
revenue to grow by 13.3% yoy to `392cr. Revenue for the individual learning
solution (ILS-IT), school learning solution (SLS) and corporate learning solution
(CLS) segments is expected to grow by 16%, 31% and 6% yoy to `187cr, `47cr
and `157cr, respectively. We expect the company’s EBITDA margin to improve
by 39bp yoy to 15.8% on the back of slight improvement in ILS margin by
20bp yoy. PAT is expected to come in at `37cr. We maintain our Buy view on
the stock with an SOTP target price of `61.
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