Q3FY12 Result Update :: Sintex Industries; South Indian Bank; Dewan Housing Finance :: Emkay

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Q3FY12 Result Update (January 17, 2012)

Result Update Sintex Industries Ltd Reco: BUY CMP: Rs 70 Target Price: Rs 93 Cut earnings; maintain buy on valuations ·      Sintex’s 3Q12 APAT was lower than est. due to lower monolithic (25% yoy revenue decline and fall in EBITDA margins) and subsidiaries performance (59% drop in PAT) ·      Given FCCB repayment next year and working capital requirements increasing, Mgmt in the call sounded cautious on growth and has reserved its comments on FY13E for now    ·      Working capital has gone up by Rs2.5bn vs. Sep11 (mainly due to monolithic), cash has gone down by Rs1.9bn vs. sep11 and debt remains at the same level. We Adj. FY12 capex to Rs4bn vs. Rs5bn earlier….   ·      Estimates cut by 23/28% for FY12/13E. Current valuations pricing in negatives - free cash-flow, part FCCB repayment likely through debt, business momentum. Maintain buy with revised TP of Rs93/Share   South Indian Bank Reco: HOLD CMP: Rs 23 Target Price: Rs 25 Risk to margins; Downgrade to HOLD ·      SIB’s Q3FY12 results inline with expectation with NII at Rs2.7bn and Net profit at Rs1.02bn. The growth was also aided by 20.4%yoy growth in Non interest income to Rs599mn ·      The NII grew by 33.5%yoy to Rs2.7bn led by strong ~30.6%yoy growth in advances, and 8bps qoq expansion in NIM’s to 3.05% ·      High concentration of gold loan at 26% of the book, a concern. Change in mgmt strategy to shift focus from gold loan to corp loan, could put pressure on margins ·      Elevated risks coming out of concentration in gold loan portfolio in terms of loan growth as well as NIMs. Downgrade to HOLD with revised PT of Rs25 Dewan Housing Finance Reco: BUY CMP: Rs 205 Target Price: Rs 275 Growth momentum continues ·      Dewan Housing Q3FY12 NII at Rs1.8bn and PAT at Rs750mn – as expected. Healthy loan growth with improvement in asset quality reaffirms our +ve stance on the business model ·      40%+ growth in sanctions/disbursements depicts resilience to interest rates / property prices. Higher dependence on bank term loans remains a key catalyst ·      First Blue Home Finance (FBHF) – Inorganic growth well on track with 18% loan growth, improved leverage and stable asset quality. Merger of DHFL+ FBHF around the corners ·      Strong business model with immense growth potential, stable asset quality and decent return ratios remain key positives. Maintain BUY with target price of Rs275