Result Update: Thermax, Madras Cement, Berger Paints, Dr. Reddy's Lab ::Emkay

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Result Update

Thermax Reco: HOLD CMP: Rs 522 Target Price: Rs 495 Earnings Overhang; Downgrade to Hold ·      Below estimates – (1) Revenue up 2% yoy to Rs12.7 bn (2) EBITDA% down 110 bps yoy to 10.7% (3) EBITDA down 7% yoy to Rs1.4 bn (4) APAT down 5% yoy to Rs955 mn ·      Order inflows decline 42% qoq to Rs7.5 bn – lower than quarterly run-rate of Rs12 bn. Order book declines 11% qoq to Rs58 bn and order book cover deteriorates to 1.0X revenues ·      Running weak order cover at 1.0X Revenues and ambiguity on near-term order inflows; Also investments in super-critical venture remains an overhang ·      Cut earnings by 7% and 11% for FY12E and FY13E on reduced order book visibility. No near term re-rating catalysts + risks to earnings exist. Downgrade to Hold with target of Rs495

Madras Cement Reco: HOLD CMP: Rs 129 Target Price: Rs 138 Lower costs drive profit beat ·      MCL 3QF12 EBITDA at Rs2.07bn (+40% yoy) significantly ahead of our & street est led by lower RM cost (-3% qoq) & P&F costs (-0.6% qoq). Lower interest & depreciation charge further drove net profit beat (Rs768 mn vs est of Rs392 mn) ·      Volumes up 14.6% yoy while realizations up 13% yoy (Rs4314/t) fuelled 29% yoy growth in cement sales at Rs7.3  bn. EBIDTA/t at Rs1175/t grew by a handsome 28.7% yoy ·      Upgrade FY12/13 EPS by 33%/14% led by better realizations & lower depreciation & interest outgo. Revise target to Rs138 (Rs125 earlier) to factor in earnings upgrade ·      MCL continued is earnings surprise led by firm cement prices. We believe next surprise has to be volume led (south price at Rs290/bag seems to have peaked out) for which sustainable uptick in southern cement demand remains key. Retain HOLD

Berger Paints Reco: ACCUMULATE CMP: Rs 100 Target Price: Rs 109 Core argument intact, Retain Accumulate ·      Berger Paints report 22% yoy growth in standalone APAT to Rs449 mn on expected lines; Lower Ebidta margins (down 50 bps to 9.6%) get offset by strong volume (12-13%) ·      Poland and Nepal operations report Ebidta margin pressure; Consolidated APAT at Rs491 mn was Rs20 mn lower then expectations of Rs514 mn ·      Eyeing price increase in industrial and decorative portfolio in Q4FY12; Would regain Ebidta margins in FY13E ·      Retain our FY12E and FY13E EPS of Rs 5.1/share and Rs 6.2/share, respectively. Maintain ACCUMULATE rating with target price of Rs 109/share

Dr. Reddy’s Lab Reco: HOLD CMP: Rs 1,671 Target Price: Rs 1,650 Para-IV Upsides Priced-in - Maintain Hold ·      Q3FY12 Results – Revenues at Rs2.77bn (up 46%YoY), b) EBITDA at Rs8.7bn (up 129% YoY) and c) APAT at Rs4.9bn (up 82% YoY) ·      Zyprexa contributed USD99mn, excluding this base business grew 22% YoY led by US biz which grew by 29% & INR dep ·      Base biz margins were flat YoY and declined 110bps QoQ led by flat growth in Russia and lower benefit from DEPB. APAT declined 10% YoY and  18% QoQ to Rs2.5bn ·      Going forward, even though lot of Para-IVs are lined up for launch in US, upsides are largely priced in. Unless there is an improvement in base biz, we continue to maintain Hold rating with a price target of Rs1650