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Result Reviews
ONGC
For 2QFY2012, ONGC’s top line came in-line with our estimates, while the
bottom line was significantly above our estimates. The company’s top line for the
quarter grew by 24.3% yoy to `22,616cr, in-line with our estimate of `22,991cr.
Oil production during the quarter remained flat yoy at 6.8mn tonnes, while gas
production volume increased by 2.2% yoy to 6.4bcm. However, the company’s
crude oil sales volume decreased by 1.6% yoy to 5.8mn tonnes. ONGC’s top-line
growth was driven by higher net realization, which grew by 33.4% yoy to
US$83.7/bbl. The company shared a subsidy burden of `5,713cr in 2QFY2012
vs. `3,019cr of subsidy shared in 2QFY2011and `12,046cr in 1QFY2012.
Despite a 33.4% increase in crude oil realization, EBITDA margin expanded by
only 174bp yoy to 64.0% on account of a 36.0% yoy increase in royalty expenses
to `2,880cr. EBITDA registered a 27.8% yoy increase to `14,469cr. The company’s
depreciation, depletion and amortization expenses decreased by 25.5% yoy to
`3,337cr due to lower dry well write-offs. Consequently, net profit increased by
60.4% yoy to `8,642cr, significantly above our estimate of `6,161cr. We maintain
our Buy recommendation on ONGC; our target price is under review.
Motherson Sumi Systems
Motherson Sumi Systems (MSS) reported disappointing net profit numbers for
2QFY2012, largely because of weak operating leverage (unutilized domestic and
overseas capacities) and foreign exchange fluctuations (leading to translation loss).
During 2QFY2012, Samvardhana Motherson Reflectec (SMR) reported net loss as
operating margin dropped sharply by 470bp yoy (330bp qoq) to 1.8%.
Consolidated net sales registered strong 19.5% yoy (1.7% qoq) growth
to `2,339cr, driven by a 13.4% (2.5% qoq) and 23.6% yoy (flat qoq) jump in
domestic and overseas sales, respectively. Overseas performance was boosted by
22% yoy (down 2.2% qoq) revenue growth at SMR in INR terms. On the operating
front, margins (ex. foreign exchange differences) reported a 110bp yoy decline to
8.7%, mainly because of weak operating leverage and increased raw-material
costs. While standalone operating margins witnessed a 150bp yoy decline, a sharp
drop in profitability at SMR dragged down the overall performance. Net profit for
2QFY2012 stood at `24cr, registering a substantial decline of 71.8% yoy (62.8%
qoq. The bottom line plunged sharply due to huge volatility in INR/USD and
Euro/USD, as a result of which provision of `61.4cr related to unrealized foreign
exchange translation loss on foreign loans was accounted for during the quarter.
Further, a significant increase in interest cost and abnormally high tax rate
impacted profitability. The stock rating is currently under review. We shall revise
our estimates following conference call interaction with the management and
come up with a detailed result note.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews
ONGC
For 2QFY2012, ONGC’s top line came in-line with our estimates, while the
bottom line was significantly above our estimates. The company’s top line for the
quarter grew by 24.3% yoy to `22,616cr, in-line with our estimate of `22,991cr.
Oil production during the quarter remained flat yoy at 6.8mn tonnes, while gas
production volume increased by 2.2% yoy to 6.4bcm. However, the company’s
crude oil sales volume decreased by 1.6% yoy to 5.8mn tonnes. ONGC’s top-line
growth was driven by higher net realization, which grew by 33.4% yoy to
US$83.7/bbl. The company shared a subsidy burden of `5,713cr in 2QFY2012
vs. `3,019cr of subsidy shared in 2QFY2011and `12,046cr in 1QFY2012.
Despite a 33.4% increase in crude oil realization, EBITDA margin expanded by
only 174bp yoy to 64.0% on account of a 36.0% yoy increase in royalty expenses
to `2,880cr. EBITDA registered a 27.8% yoy increase to `14,469cr. The company’s
depreciation, depletion and amortization expenses decreased by 25.5% yoy to
`3,337cr due to lower dry well write-offs. Consequently, net profit increased by
60.4% yoy to `8,642cr, significantly above our estimate of `6,161cr. We maintain
our Buy recommendation on ONGC; our target price is under review.
Motherson Sumi Systems
Motherson Sumi Systems (MSS) reported disappointing net profit numbers for
2QFY2012, largely because of weak operating leverage (unutilized domestic and
overseas capacities) and foreign exchange fluctuations (leading to translation loss).
During 2QFY2012, Samvardhana Motherson Reflectec (SMR) reported net loss as
operating margin dropped sharply by 470bp yoy (330bp qoq) to 1.8%.
Consolidated net sales registered strong 19.5% yoy (1.7% qoq) growth
to `2,339cr, driven by a 13.4% (2.5% qoq) and 23.6% yoy (flat qoq) jump in
domestic and overseas sales, respectively. Overseas performance was boosted by
22% yoy (down 2.2% qoq) revenue growth at SMR in INR terms. On the operating
front, margins (ex. foreign exchange differences) reported a 110bp yoy decline to
8.7%, mainly because of weak operating leverage and increased raw-material
costs. While standalone operating margins witnessed a 150bp yoy decline, a sharp
drop in profitability at SMR dragged down the overall performance. Net profit for
2QFY2012 stood at `24cr, registering a substantial decline of 71.8% yoy (62.8%
qoq. The bottom line plunged sharply due to huge volatility in INR/USD and
Euro/USD, as a result of which provision of `61.4cr related to unrealized foreign
exchange translation loss on foreign loans was accounted for during the quarter.
Further, a significant increase in interest cost and abnormally high tax rate
impacted profitability. The stock rating is currently under review. We shall revise
our estimates following conference call interaction with the management and
come up with a detailed result note.
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