Banswara Syntex – Highlights of Q3FY11 Conf Call – Highly Positive Views

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Banswara Syntex – Highlights of Q3FY11 Conf Call – Highly Positive Views
Banswara Syntex’s conference call after Q3FY11 has brought to light highly
positive views of the management. While margins of the Company are set to
improve going ahead as it passes on increasing raw material cost, the revenues
are likely to nearly double over the next two years to Rs1500-1600Cr without huge
capex. Besides, the high value added businesses of garments and technical
textiles are set to achieve huge scale over next two years. Key highlights from the
conference call are stated below:

Shri Lakshmi Cotsyn ; target Rs 150; Q2FY11 Result Update :: Crisil

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Shri Lakshmi Cotsyn Ltd -Q2FY11 Result Update

Shri Lakshmi Cotsyn Ltd
Going steady
Fundamental Grade 2/5 (Moderate fundamentals)
Valuation Grade 5/5 (CMP has strong upside)
Industry Textiles, Apparels & Luxury Goods
Fair Value Rs 150
CMP Rs 90

Time Technoplast - Q3FY11 Result Update; Target Rs 71; Crisil

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Time Technoplast Ltd
Results in line; outlook positive
Fundamental Grade 4/5 (Superior fundamentals)
Valuation Grade 5/5 (CMP has strong upside)
Industry Containers & Packaging
Fair Value Rs 71
CMP Rs 54

Mphasis Ltd - Dismal performance writ all over:: Emkay

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Mphasis Ltd

Dismal performance writ all over

REDUCE

CMP: Rs 455                                       Target Price: Rs 450

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n     Mphasis’s results have sparked a sharp pull down in share price and we see no respite to co’s woes given 24% EPS cuts for FY12/13  given patchy disclosures in the recent past

n     We factor in 5.5%/16% YoY rev growth for FY12/13 (V/s 23.5/19.5% earlier)  and build in lower op mgns at 19.5%/19.6%(despite lower currency resets) driving a 24%/25% cut in Oct’11/Oct’12 EPS to Rs 37.8/41.3 

n     Mphasis’ s Jan’11 results vindicate our downgrade on stock in Nov’09 with co continuing to surprise both on revenues/margins in atleast 4 of the past 5 quarters

n     Lower ratings to REDUCE with a revised TP of Rs 450, based on ~11x Oct’12 EPS with a possible open offer from HP remaining a key upside risk to our call

Aban Offshore ‘Deep Venture’ litigation finally settled:: Emkay

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Aban Offshore

‘Deep Venture’ litigation finally settled

ACCUMULATE

CMP: Rs 542                                       Target Price: Rs 680

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n     Venture Drilling (Aban’s 50% JV through Sinvest) settles litigation issue on drillship Deep Venture – gets USD138 for early re-delivery of the rig to the owners

n     Aban to get ~USD 65 mn – 50% of cash inflows to VD. Aban management expect minimal losses on BV of USD65 mn

n     Based on annual cash flow of USD 34.4 mn, we estimate NPV of the entire charter period to be USD192 mn (CoE -15%). Compensation 28% lower than the NPV

n     We treat compensation to VD as one off -downgrade our FY12E earnings by 2.6%. Sharp correction makes valuation attractive (5.4X PER & 6.0X EV/E). Maintain ACCUMULATE

Reduce Man Industries; Target :Rs57 : ICICI Securities,

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S t e a d y   p e r f o r m a n c e   b ut   c o n c e r n s   p e r s i s t


Man Industries reported its Q3FY11 numbers better than our estimates.
The topline was at | 439 crore (flat YoY and ~5% QoQ) as against our
expectation of  |  382 crore. Flattish growth was mainly attributable to
lower blended realisations (down ~25% YoY) despite strong volume
growth (~25% YoY). Blended realisations in Q3FY11 were  |
53874/tonne against  | 70473/tonne in the similar period last quarter.
The raw material cost in Q3FY11 has increased ~19% YoY and ~7%
QoQ, mainly due to increase in steel prices, thus taking away the sheen
from an otherwise good performance. Lower realisations and higher
input cost have led to erosion in EBITDA margin by 336 bps YoY.
However, sequentially margins were marginally down ~9.6 bps. Net
profit of the company  declined ~17% YoY with marginal growth of
~1% QoQ partially due to unrealised forex gains of  | 49.69 crore.
Interest cost of the company has steeply declined by 32% YoY due to
better management of working capital. However, this has not led to an
improvement in bottomline due to higher cost of raw materials that
dented the overall profitability. We remain concerned on the order book
growth and execution. However, a slow uptick in the order book is a
concern in the piping industry. Thus, we have maintained our REDUCE
rating with a target price at | 57.
ƒ Slow up-tick in order book
The order book of the company at the end of Q3FY11 stands at  |
1500 crore. This gives us visibility for the next 12-15 months. The
order book of the company has declined as compared to  | 2000
crore as on September 30, 2010.  The company has bid for various
projects and is expecting to obtain new orders in the next few
months.
V a l u a t i o n
At the CMP of  | 60, the stock is trading at 4.7x FY12E EPS of  | 12.8.
Despite a stable order book position, concerns remain on the margin and
execution front. We would like to remain cautious at this point of time.
We have valued the stock at 4.5x FY12E EPS to arrive at a target price of |
57 per share and assigned a REDUCE rating to the stock.

ICICI Sec: Strong Buy on Tata Motors; 20% Upside; target Rs 1,523

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	Stock Name      Stock Code Potential Upside Rating  Tata Motors      TELCO 1209.00 1523.00 26% Strong Buy **Recommended Price
	Strong Buy : Expected return of 20% or more

Railway Budget - Populist expectations, No freight hike:: Emkay

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Railway Budget – Populist expectations, No freight hike

Mamata Banerjee, facing assembly elections in West Bengal in two months will like to focus on WB, could also announce a slew of projects for her state. We expect no hike in Freight or passenger fares barring for a few selected segments.

Railways is expected to miss the FY11E freight targets by 2.5% and Revenue targets by 2.8%

Railway’s has carried 756 MT on 10M FY11 which is 80% of FY11E budget estimates (944MT). Railway’s is expected to achieve a freight tonnage of 920MT. Major reasons for railways missing the target due to 18%yoy decline in iron ore trade.

The Railways have generated Rs. 761.9 bn of revenue earnings from commodity-wise freight traffic during April 2010-January 2011 as compared to Rs. 945.7 bn of overall expected Revenues for FY11E and has achieved ~81% of the annual target. We expect due to shortage in overall targeted freight movement Railways will be able to achieve an overall revenues of Rs 919 bn.

							Already	Emkay Estimates
Revenues (Rs Bn)	2006-07	2007-08	2008-09	2009-10	FY11 (BE)	10MFY11	achieved	FY11E	FY12E
Passengers	172.2	198.4	219.3	234.9	261.3	213.4	82%	255.0	285.0
Other Coaching	17.2	18.0	19.7	22.4	27.8	20.9	75%	25.0	30.0
Goods Income	417.2	474.4	534.3	585.0	624.9	509.0	81%	615.1	668.1
Growth		14%	13%	9%	7%			5%	9%
Sundry Income	17.1	25.7	25.0	28.8	31.7	18.6	59%	24.0	25.0
Total Earnings	623.7	716.5	798.4	871.1	945.7	761.9	81%	919.1	1008.1
Growth		15%	11%	9%	9%			6%	10%
Freight MT	727.8	793.9	833.4	887.9	944.0	756.0	80%	920.0	975.2
Growth		9%	5%	7%	6%			4%	6%

Our expectation for FY12E

We expect the FY12E targets by Railways will be ~975 MT a 6% yoy growth.

Rail freight expected to grow by 6% to 975 MT in FY12E

Source: Indian Railway, Emkay Research

Capital expenditure for Railways is expected to increase by 5% to Rs 435 bn in FY12E from the budgeted Rs 414 bn in FY11E.

Capital outlay to remain subdued

Source: Indian Railway, Emkay Research

Key Takeaways

Freight rates not likely to be hiked as Railways has sought a hike in Dec 10 of approximately 4%. No hike expected on the Freight side – Little impact on Concor or GDL major.

Railways budgeted procurement of 18,000 wagons in FY11E, we expect similar levels of procurement for FY12E. Companies to watch out -Texmaco, Titagarh Wagons,

We expect the increase in plan outlay will benefit companies like - L&T, Kernex Microsystem, BEML, Kalindee Rail, ARSS Infra, Hindustan Rectifier.