Result Update: Petronet LNG Ltd, Divi's Lab, LIC Housing Finance, Allahabad Bank, United Phosphorus, NTPC, Glenmark Pharma: Emkay

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Result Update

Petronet LNG Ltd

Reco: ACCUMULATE

CMP: Rs 164

Target Price: Rs 180

Volume growth continue

·      Results were above our and street estimates at bottom line, mainly due to higher volume growth of 7.3% to 144.9tbtu during the quarter ·      EBIDTA margin declined marginally by 157bps YoY to 7.9% (-40.4bps QoQ), mainly on account of higher input cost and increase in other expenditure ·      Company is planning to setup 3rd LNG terminal at Gangavaram port, Andhra Pradesh, with the total capacity of 5mntpa, While Kochi terminal will start from end of CY12 ·      The recent news on proposed cap on gas marketing margin which is to be decided by PNGRB would keep the stock under pressure until any clarity emerges. Maintain accumulate with TP of Rs.180

Divi’s Lab

Reco: BUY

CMP: Rs 818

Target Price: Rs 927

Subdued quarter, Growth story remains intact - Maintain Buy

·      Divi’s Q3FY12 performance was below expectations with (a) Revenue at Rs4.2bn (up 33% YoY); (b) EBIDTA at Rs1.5bn (up 22% YoY)  & (c) PAT at Rs1.23bn (up 21% YoY) ·      Top-line growth was aided by INR depreciation, which contri-buted 13% to the top-line growth. Capacity utilization at Vizag plant remained flat QoQ, expected to scale up from Q1’13 ·      EBITDA margins at 36.2% were lower than expectations in spite of INR depreciation led by increase in expenses due to commissioning of Vizag plant & higher proportion of API sales ·      Growth story remains intact – Maintain Buy with a target price of Rs927 on the stock (20x FY13 EPS of Rs46.3)

LIC Housing Finance

Reco: HOLD

CMP: Rs 246

Target Price: Rs 250

Unfavorable base and shrinking spread take toll

·      LICHF’s Q3FY12 NII (Rs3.3bn) and APAT (Rs2.5bn) below our expectations. Lower than expected numbers driven by sharper 20bps contraction in NIMs ·      Individual disbursements at 8.4% yoy, due to unfavorable base effect. However, mgmt still confident of 20% growth in disbursement implying 27% yoy growth in Q4FY12 ·      NIMs at 2.3%, down 20bps qoq (est 12bps). Provisions write back (Rs780mn) helps as RPAT grows 45%. However, PCR dips back to 51%. ·      Intended QIP and teaser rate loan provisions, key upside risk to our numbers. Valuations have seen sharp run up to 2.4x/1.9x FY12E/FY13E ABV. Recommend Hold

Allahabad Bank

Reco: ACCUMULATE

CMP: Rs 156

Target Price: Rs 200

Strong performance; aggressive provs add comfort

·      ALBK results ahead of estimates with NII at Rs13.8bn (est Rs12.7bn). Net profit at Rs5.6bn (est Rs5.6bn) further aided by higher trading gains and lower tax rate of 8% ·      Strong NII growth (31.3%yoy) driven by stable NIMs vs our exp of 20bps dip. Advances grew 5% qoq in line with expectations ·      Slippages at Rs5.9bn vs our est of Rs5.5bn. However, fresh restructuring of Rs10.5bn was a –ve surprise. Net stressed asset stand at 4.8% of advances vs 3.8% in Q2FY12 ·      Upgraded FY12E/FY13E numbers by 17.7%/12.2 for largely lower tax rate. Aggressive provisioning policy provides comfort. Remains our top pick amongst mid-size PSU banks

United Phosphorus

Reco: BUY

CMP: Rs 144

Target Price: Rs 200

Bottomline disappoints, downgrade estimates

·      Q3FY12 revenues / EBITDA were above est driven by currency impact however higher tax outgo squeezed APAT at Rs 1.15bn,4% yoy, below est of Rs 1.5bn ·      58%yoy growth in sales is primarily driven by recent acquisitions in Brazil (~25%) and exchange fluctuation (19%) while organic volume growth remains muted at ~6%  ·      Despite higher revenue growth, EBITDA margins remain subdued at 18.1%. Higher tax rates at 33% and losses from Brazilian JV (SIPchem) suppressed PAT growth at mere 4% ·      Downgrade FY12/13 est by 10%/7% to Rs 16 / 19.9 and subsequently downgrade price target to Rs 200 (10xFY13 EPS), however maintain BUY due to attractive valuations

NTPC

Reco: BUY

CMP: Rs 172

Target Price: Rs 204

90%+ PAF structurally coming down; maintain Buy

·      3Q12 PAT of Rs21.3bn is below est. due to higher R&M expenses & under recovery on water charges. Adjusted net profit stood at  Rs21.7bn (assuming PY sales as recurring) ·      Has commissioned 1320MW (Sipat) and commercialized 1,160MW in YTD12. Mgmt has retained its capacity addition target ·      Highlights - (1) PAF of coal plants low at 85.3% and 86.2% for 3Q12 and 9M12 period and (2) Revised PAF and COD assumption, FY12E/FY13E EPS reduced by 3.4%/3.9% ·      Valuations still remain reasonable. Positives to continue (1) COD of another 1160MW, (2) FY12/13 grossing & (3) acquiring distressed plants in medium term. Maintain Buy;

Glenmark Pharma

Reco: HOLD

CMP: Rs 312

Target Price: Rs 360

Margins under pressure – Downgrade to Hold

·      Q3FY12 Results - Revenues at Rs10.3bn (up 38%YoY), b) Adj. EBITDA at Rs1.8bn (up 35% YoY), and c) APAT at Rs1.33bn (up 41% YoY) ·      Revenue growth was driven by 11% in India, 56% in US, 58% in Europe and 48% in Latam ·      Despite INR dep. by 13%, gross margins declined 300bps YoY & 120bps QoQ due to higher growth in Latam, Europe, US where margins are lower and lower growth in high margin India business ·      On account of near term growth pressure in India business & margin pressure overall, we downgrade the stock to Hold with a TP of Rs360 (15x FY13 Base EPS of Rs21+ Adj NPV of Rs47)