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Result Update
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Jaiprakash
Power
Reco: HOLD
CMP: Rs 45
Target Price: Rs 45
Fairly
valued now; Downgrade to Hold
· 3Q12
PAT at Rs595mn – ahead of expectations driven by higher income from sale of
VERs (Rs292mn) and higher merchant realizations (Rs4.7/unit) from
Karcham
· Issues/overhang
on JPVL - (1) huge funding gap for equity inv and to repay corporate debt, (2)
uncertainty on Karcham offtake, (3) fuel availability and (4) captive mine
under no-go
· Issues
addressed - (1) few projects on hold - lower funding & fuel needs,
(2) high court’s order on Karcham & healthy internal accruals - easing of
cash flows, (3) forest clearance of Nigrie mine in few mths & (4) use of
captive coal for Bina
· Upgraded
the stock to Buy post last qtr, it has outperformed nifty by 23% since. Do
not see upside from these levels unless clarity emerges on (1) funding NCD
repayment, (2) forest clearance for Dongri-tal II & (3) use of captive
coal in Bina
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India Cements
Reco: HOLD
CMP: Rs 94
Target Price: Rs 101
Operating
performance in line. Maintain HOLD
· EBITDA
at Rs1.95bn (+54% yoy) in line. P&F costs up 9% qoq led by SCCL strike
& INR appreciation (imports 60% of coal). Lower tax drove net profit beat
(Rs563 mn, est of Rs451 mn)
· Volumes
up 7% yoy while realizations up 16% yoy (Rs4243/t) fuelled 24% yoy growth in
cement sales at Rs9.3 bn. EBIDTA/t at Rs862/t grew by a handsome 53%
yoy
· Nov–Dec
demand growth in south encouraging. (AP:+12%, TN:+18%). Additionally ICL to
benefit with favorable currency movement & as supplies from SCCL mines
resumed
· Upgrade
FY12/13 EPS by 44%/22% led by better realizations & volume upgrade.
Revise target to Rs101 (Rs86 earlier) to factor in earnings upgrade
· Stock
at PER 12.7x, EV/EBIDTA of 5.7X and EV/ton of USD90 for its FY13E numbers-
leaves little upside considering that ICL’S RoCE is still below the cost of
capital - Maintain HOLD
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ICRA
Reco: ACCUMULATE
CMP: Rs 946
Target Price: Rs 1,100
Stellar
performance, Upgrade to ACCUMULATE
· ICRA’s
Q3FY11 stellar results with revenue at Rs542mn (vs our est. Rs497mn) and adj
net profit at Rs170mn (vs our est. Rs112mn)
· Traction
continues in rating business with revenues at Rs369mn up 23% yoy (5% qoq).
EBIDTA margins too came in healthy at 52%. Performance at other businesses
came flat
· Lower
professional expenses aided EBIDTA margins as they expanded 405bps qoq. Cost
pressures continue to build up on the employee costs
· Consecutive
quarters of growth in rating business comes in as +ve. Raise EPS estimates by
25/%14% each for FY12/13E. Upgrade to ACCUMULATE with target price of Rs1,100
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Nava Bharat
Ventures Ltd
Reco: ACCUMULATE
CMP: Rs 185
Target Price: Rs 204
‘Power’
less performance, Maintain Accumulate
· 3Q12
APAT of Rs378mn (down 22% yoy) is below estimates of Rs401mn; led by Power -
lower PLF (71% vs 85% yoy) and higher generation cost (Rs3.1/unit vs.
Rs2.1/unit yoy)
· Ferro
chrome supply to TISCO at conversion price of Rs27000/ton (including power
cost); Realizations for Silico manganese stood at ~Rs55000/ton
· Zambia coal trading to start from
Apr’12 with production to ramp-up from initially 30000MT/month to
50000MT/month by end of FY13; 64MW COD still pending - deferred to 1Q13
· Earnings
cut by 20%/26% for FY12E/FY13E respectively on delay in Zambia, lower
volumes, higher fuel cost and lower MAT credit; Maintain Accumulate
with revised TP of Rs204
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Cadila
Healthcare
Reco: HOLD
CMP: Rs 660
Target Price: Rs 720
No
Earnings Catalyst - Maintain Hold
· Q3FY12
Results – Revenues at Rs13.8bn (up 19% YoY), EBITDA at Rs2.6bn (up 3% YoY)
& APAT at Rs1.77bn (up 9% YoY)
· Inorganic
growth drives revenues but drags margins – acquired Biochem in India,
Nesher in US and Bremer in Animal healthcare segment
· EBITDA
margins contracted 288bps YoY and 269bps QoQ to 19.1% due to lower margins in
acquired businesses, higher R&D cost and pressure in Wellness business
· Going
forward, pressure on margins will continue and earnings momentum will slow
down – we maintain Hold on the stock with a target price of Rs720 (18xFY13
EPS of Rs40)
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HEG
Reco: ACCUMULATE
CMP: Rs 203
Target Price: Rs 230
Higher
utilizations with lower costs boost margins
· PAT
at Rs 240 mn was up 78% QoQ was well above our and market estimates on higher
volume and realizations and lower tax rate due to better performance in power
segment
· EBITDA
rose 93% QoQ to Rs 851 mn. QoQ fall in RM costs to sales by 546 bps on better
product mix helped EBITDA margin to improve by 652 bps QoQ to 20.4%
· Growth
(of 35% YoY and 31% QoQ) in topline (at Rs 4.2 bn) was due to more than 100%
capacity utilizations coupled with impact of better realizations during the
quarter
· Factoring
in improved operating performance with better margins our FY12 and FY13 EPS
stand revised at Rs 38 and Rs 46 respectively; Maintain Accumulate with TP of
Rs 230
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Hindustan Unilever
Reco: HOLD
CMP: Rs 382
Target Price: Rs 359
Optically
Strong, Retain HOLD
· Optically,
Q3FY12 performance remains strong on all counts- (1) Revenue Rs59.4 bn +15.8%
yoy (2) 9.1% yoy volume growth (3) APAT Rs7.7 bn +33.3% yoy
· Soaps
and Detergents continue to outshine; revenues Rs26.5 bn +20.7% yoy, Ebit
Rs3.6 bn +110.2% and Ebit margin +580 bps yoy led by volume growth and
pricing increases
· Personal
Products takes a short break, moderate revenue growth at 14% yoy to Rs18.9 bn
and Ebit growth of 2.4% yoy to Rs4.9 bn
· Reckon
quality of performance is weak; All levers playing out and earnings upgrades
peaking, Retain negative bias with HOLD rating and target price of Rs
359/share
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Ballarpur
Industries
Reco: ACCUMULATE
CMP: Rs 24
Target Price: Rs 35
Sabah shutdown affected results
· Q2FY12
results disappointed due to continued margin pressures. Consol revenues of Rs
12bn, +7% yoy were above est however APAT at Rs 136mn, -72% was below est
· Consol
EBITDA margins at 15.7% (-360 bps yoy / -270bps qoq) are at their all time
low. Margin decline is primarily on account of shutdown at SFI Plant
· Paper
realisation remain flat at Rs 44,752/mt, however companies have started
taking price increase (recent increase of 3-4%) due to cost pressure (mainly
coal)
· Reduce
FY12 est by 31% to Rs 2.1 due to weak Q2FY12 results & continued margin
pressure in paper industry. Maintain Accumulate with target of Rs 35
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Mahindra &
Mahindra Ltd
Reco: BUY
CMP: Rs 689
Target Price: Rs 815
In
line results, MVML clarity emerges, Retain BUY
· M&M+MVML
performance in line with Adj. EBITDA at Rs 10.9bn (est. Rs 10.7bn). APAT at
Rs 6.8bn (est. Rs 6.9bn) was impacted by higher depreciation and tax rates
· Mgmt.
expects subdued tractor demand in 4QFY12 and there after momentum to pick up.
Scorpio maintains upward momentum with no cannibalization seen from XUV
· Lower
M&M vol. est. by 2%/6% and lower EBITDA margins by 10bps/90 bps in
FY12/13. We factor in 5% growth in tractors and 17% for Auto segment, driven
by XUV5OO
· Lower
TP to
Rs. 815. Valued standalone business at Rs. 603, MVML at Rs. 65 and listed
subs at Rs. 147. Key risks – newsflow on acquisition and Ssangyong
performance
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