Result Update: Mahindra Satyam, Ashok Leyland Ltd, Bhushan Steel, Hexaware Technologies, Corporation Bank, Prestige Estates Projects, Andhra Bank, TRF:: Emkay

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Result Update

Mahindra Satyam Reco: HOLD CMP: Rs 76 Target Price: Rs 80 Currency and other income drive profit beat ·      MSat reported another qtr of beat on op profits & net profits aided by weak currency ,other income, however composition of the numbers continues to disappoint us    ·      Rev at US$ 325 mn (-1.5% QoQ, flat in c.c terms) missed est and was weaker than peers. HC addition was somber for the 2nd qtr in a row with co adding <200 people during the qtr ·      Rev from US were down sharply by ~6% QoQ. Clients metrics performance mixed with good growth in top 10/20 clients, however no of US$ 10 mn+ clients declined QoQ by 5 to 30 ·      While we cut our rev est (16/13% US$ YoY growth V/s 19/16% earlier), lower currency resets, Q3 beat drive 16/6%raise in FY12/13E EPS to Rs 8.5/8. HOLD, TP unchanged at Rs 80

Ashok Leyland Ltd Reco: HOLD CMP: Rs 27 Target Price: Rs 29 Changing product mix to impact margins ·      Results significantly below est. with Adj. EBIDTA at Rs 2.4bn (est.-Rs 2.9bn), APAT at Rs 979mn (est-Rs1.1bn) ·      Mgmt. expects industry growth at ~4-6% in FY13 with AL market share at ~25%. We factor in ~9% YoY for AL in FY13 ·      Factor in Nissan LCV vols at 6,300/28,000 units in FY12/13. Lower EPS by 2.9%/2.7% in FY12/13 due to lower margins ·      Retain HOLD rating and lower our TP to Rs 29 (10x FY13 PER)

Bhushan Steel Reco: HOLD CMP: Rs 354 Target Price: Rs 315 Operating performance marred by fixed costs ·      APAT at Rs 2.78 bn flat YoY even as EBITDA rose by 35% to Rs 7.2 bn. This was primarily on account of higher interest  (up 125%) and depreciation (up 166%) costs ·      EBITDA margin at 30%, up 241 bps YoY, on account of fall in raw material costs (208 bps) and employee costs (24bps). EBITDA/ tonne during the quarter at Rs 14118 (US$277)        ·      Topline at Rs 24.1 bn up 24% YoY aided by volume growth (10%) and realizations increase (13%). However on QoQ basis increase in realization (7%) was offset by volume drop (5%) ·      Increasing fixed costs to restrict PAT growth going forward. With net D/E of 3X and overall uncertainty regarding ramp up, valuations look expensive. Maintain Hold with TP of Rs 315

Hexaware Technologies Reco: ACCUMULATE CMP: Rs 97 Target Price: Rs 110 Blockbuster show, retain ACCUMULATE ·      Dec’11 show vindicates positive thesis.Rev at US$ 84.1 mn (+6.7% QoQ) beat exp (ahead of guidance of US$ 82-82.5 mn) with mgns improving by ~430 bps QoQ to 23% ·      Strong op performance coupled with lower taxes drove handsome beat on profits (Rs 881 mn, +36% QoQ, Emkay est Rs 673 mn). Op metrics performance remains decent ·      Co’s CY12 revenue guidance encouraging at ‘atleast 20% YoY growth at US$ 370 mn. March’12 revenue guidance of US$ 87.5 mn (+4% QoQ) , better than Tier I peers ·      We tweak US$ rev estimates higher which drives a 6.6%/9% raise in CY12/13E EPS to Rs 10.3/11. Valuations attractive for ~5% dividend yield at<10x P/E. ACCUMULATE, TP Rs 110

Corporation Bank Reco: ACCUMULATE CMP: Rs 427 Target Price: Rs 520 Results inline; lower recoveries and LLP negative ·      CRPBK’s NII/PPoP at Rs8.6/8.3bn significantly ahead of est. Driven by higher provisions on NPLs and restr, the PAT at Rs4bn was inline ·      Continues to suffer from sharp rise in costs as CoD went up by another 8bps on high of 7.5%. However expansion in CDR by 500bps to 73%, aided 23bps expansion in NIM’s to 2.7% ·      The GNPLs (1.4%) remained under check driven by write offs. Key –ves – sharp drop in reco+upgrades and lower LLPs at 50% of incremental net NPLs ·      Sharp improvement in margins over last two quarters is positive, the sustainability of the same is under doubt given lower CASA levels. Maintain ACC with PT of Rs520

Prestige Estates Projects Reco: HOLD CMP: Rs 86 Target Price: Rs 81 Collections ramp-up needed ·      Prestige Estates Projects’ (PEPL) Q3FY12 results are below expectations; Gross Margins on residential segment fell substantially QoQ and is expected to stabilize at 35-40% ·      Collections from large completed projects remain subdued, PEPL expects to collect 75% over 2 quarters. Net Core Working Capital from residential segment was stable QoQ. ·      PEPL sold 1.0msf in Q3FY12, of which 0.9msf was in Residential space and balance in Commercial. Company leased 0.07msf (own share) in the quarter, as expected ·      We maintain our Hold rating with TP of Rs 81. We would re-rate stock positively once company generates composite +ve operating cashflows and reduce debt in absolute terms

Andhra Bank Reco: BUY CMP: Rs 109 Target Price: Rs 140 Strong numbers; but not yet out of woods ·      Andhra Bank Q3FY12 NII at Rs9.8bn / non-int inc at Rs2.4bn -ahead of estimates. Hence, despite higher std  asset provisioning, PAT at Rs3bn was in line ·      Slippages tap out at Rs3.8bn, more towards normalized levels. Surprised +vely by large upswing in recoveries. But LLPs remain low at 0.5% vs net slippages of 1.8% ·      Loan portfolio grew 21% yoy (7% qoq). Reported NIM at 3.8% was flat qoq and was aided by 50bps qoq rise in CASA ratio (27%) and + 200bps qoq rise in LDR to 80% ·      NPL ratios improve with PCR up by 370bps and NNPL/net worth at 12%. The stock trades at 0.8x/0.7x FY12 / FY13ABV. Upgrade to BUY with target price of Rs140

TRF Reco: HOLD CMP: Rs 345 Target Price: Rs 282 Investor concerns unresolved; Retain Hold ·      Above estimates – (1) Strong standalone revenue growth (+89% yoy) – led by Projects div. (2) EBITDA margins  down 570 bps qoq to 4.8% - negative surprise (3) APAT at Rs48 mn ·      Auto components disappoints – (1) Revenue growth at 1% yoy (2) EBITDA margins at 3.6% - negative surprise (3) forex loss of Rs56 mn (4) Net loss of Rs57 mn ·      Order inflows remain dismal - secures Rs1.9 bn orders. Order book cover down to 1.5X. L1 orders worth Rs5 bn – expect finalization in 2 quarters. DER deteriorates to 3.0X ·      Cut earnings by 47% & 10% for FY12E & FY13E. Investor concerns on sustainable operational performance unresolved. See no upside catalysts. Retain Hold with target of Rs282