Q2FY12 Results Review; Negatives > Positives n Emkay

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Q2FY12 Results Review

Negatives > Positives

n     ‘Funnel Impact’ continues for Emkay Universe as indicated in earlier communication. Foreign exchange impact took center stage, swinging earnings in the quarter. On aggregate basis, Q2FY12 performance was below expectations - disappointment does not abate.

n     Nothing to cheer about; Price-led benefits drives 19.8% yoy growth in revenues for Emkay universe. But, ‘Funnel Impact’ and foreign exchange impact resulted in APAT decline of 0.7% yoy. The Ebidta margins decline 134 bps yoy and Ebit margin decline 142 bps yoy. Consequently, Ebidta grows 11.6% yoy, despite robust revenue growth.

n     Even, Nifty 50 and BSE 500 APAT growths have moderated to 5.3% yoy and 6.2% yoy respectively.

n     Expectations missed; Emkay universe disappoints 2% on revenues, 16% on Ebidta and 35% on APAT. Also, reports 250 bps lower Ebidta margin versus expectations.

n     Expectations missed; Emkay universe (excluding Banks, Financial Services, and Oil & Gas) disappoints 1% on Ebidta and 4% on APAT. Also, reports 83 bps lower Ebidta margin versus expectations.

n     Disappointments were reported by Capital Goods, Paper, Metals, Oil & Gas and Power.

n     Negative Surprise –BPCL, HPCL, IOC, JSW Energy, JSW Steel, Lanco Infratech, Ranbaxy Lab, Sesa Goa, Sterlite Industries, Tata Steel, Voltas

n     Positive Surprise – Corporation Bank, Grasim Industries, Hindustan Unilever, India Cements, IRB Infra, Reliance Power

n     Revision in earnings, Downgrades higher then Upgrades; In Q2FY12, revised earnings of 86 companies, of which Downward revision for 53 companies and Upward revision for 33 companies.

n     Highest Earnings Upgrades (FY12E) – Bajaj Auto, Hindustan Unilever, Honda Motocorp, India Cements, Reliance Power, Tata Chemicals, TVS Motor

n     Highest Earnings Downgrades (FY12E) – Adani Power, Bank Of India, Bharti Airtel, Canara Bank, Cummins, GSK Pharma, Maruti Suzuki, Sesa Goa, Sterlite Industries, Voltas

n     Concerns didn’t subside; Ratings downgrades outpace Ratings upgrades. 30 companies undergo rating changes, 18 downgrades and 12 upgrades.

n     Management commentary highlights risks and challenging business conditions (1) rising inflation and impact on spending (2) higher interest rates and rising cost of capital (3) uncertainty in global markets and (4) weak political scenario, hurting clearance of infrastructure projects and corporate expansion projects

n     Downward revision in consensus earnings continues. Sensex EPS for FY12E is revised downwards to Rs1160 against Rs1203 in August 2011. Sensex EPS for FY13E is revised downwards to Rs1326 against Rs1407 in August 2011

n     On portfolio basis

n     Top Buys – ACC, Bharti Airtel, Divi’s Lab, Glenmark, Hind Zinc, Infosys, IPCA, Jubilant Life, LIC Housing, Marico, Nestle, NHPC, Reliance Power, Tata Chemicals, Tata Motors, United Phosphorous,

n     Top Sells – Adani Power, Asian Paints, Ambuja, BHEL, Bhushan Steel, BOI, BPCL, Cadilla, HPCL, PTC, SBI

Surprises

Positive	Negative	Negative
Century Plyboards	Aurobindo Pharma	Sterlite Industries
Coromandel International	Ballarpur Inds	Tamilnadu Newsprint
Corporation Bank	Blue Star	Tata Steel
Grasim Industries	BPCL	TRF
HBL Power Systems	EMCO	TRIL
HEG	Essel Propack	Union Bank of India
ICRA	Glenmark Pharma	Voltas
IL&FS Transportation	HPCL
India Cements	Indian Oil
Ipca Lab	Jaiprakash Associates
IRB Infrastructure	JK Paper
IVRCL	JSW Energy
Jubilant Life Sciences	JSW Steel
Madras Cements	KSK Energy
Mindtree	Lanco Infratech
NIIT Tech	Nava Bharat Ventures
Punj Lloyd	Panacea Biotec
Reliance Communications	Ranbaxy Labs
Reliance Power	Sesa Goa