03 August 2013

Dish TV India Ltd (Dish) : Microsec Research

Dish TV India Ltd (Dish) announced its Standalone Q1 FY2014 results on 26 July 2013. While the company’s top line came in line with our as well as Bloomberg consensus estimates, it reported higher than expected losses during the quarter. A glimpse of the same is as follows:


Regards,

Team Microsec Research

Hindustan Unilever (HUL) its Q1 FY14 results : Microsec Research

Hindustan Unilever (HUL) announced its Q1 FY14 results on 26 July 2013

Q1 FY14 Result Analysis
The company’s Total Income increased by 7% YOY to INR6809 crore YOY and its EBITDA increased by 12% YOY to INR1086 crore.EBITDA Margin of the company increased from 15.2% to 15.9% YOY which was above estimates.  Volume Growth came at 4% which was below estimates. Adjusted PAT (Excl EO) increased by 6% YOY to INR913 crore. PAT incl EO decreased by 23% to INR1019crore YOY after taking considering of Exception Item and Taxes.

Soaps and Detergent segment registered a sales growth of 8% with EBIT growth of 14%. Personal products grew by 2% YOY which was disappointing. Beverages registered a sales growth of 16% YOY, EBIT growth of 46% YOY and margin improvement from 14.5% to 18.3% which was encouraging.

We had earlier advised booking profit in the counter at our Target price of INR676 (Buy Call Recommended at INR575). At the Current level of INR661 the stock is trading at a P/E of 40.5x its FY14E EPS of 16.4. We remain Neutral at the current level.

DESCRIPTION
Jun-13
Mar-13
Jun-12
QOQ
YOY
Net Sales
6687
6367
6250
5%
7%
OPI
122
99
129


Total Income
6809
6466
6379
5%
7%
Total Expenditure
5723
5494
5412


PBIDT (Excl OI)
1086
972
966
12%
12%
EBITDA (%)
15.9%
15.0%
15.2%


Other Income
177
106
219


Operating Profit
1262
1078
1185


Interest
6
6.01
5


PBDT
1256
1072
1180


Depreciation
66
61
58


PBT
1190
1010
1122


Tax (adjusted)
277
232
258


Profit After Tax (adj)
913
778
864
17%
6%
PAT (%)
13.4%
12.0%
13.5%


Exceptional Items
106
9
605


Tax Adjustment
0
0
-138


PAT incl EO
1019
787
1331
29%
-23%






Equity Capital
216.2
216.2
216.18


Face Value (In Rs)
1
1
1


No. of shares
216.2
216.2
216.18








EPS
4.22
3.60
4.00
17%
6%


Regards,

Team Microsec Research

Wipro - Consolidated Q1 FY2014 results : Microsec Research

Wipro Ltd announced its Consolidated Q1 FY2014 results on 26 July 2014. A glimpse of the same is as follows:
While the company’s top line increased 1.2% sequentially to `9,733.2 Crores, its bottom line grew 3.0% q-o-q to `1,631.7 Crores in Q1 FY2014. Growth in the company’s revenues was mainly driven by expansion in IT Services business, which garnered the benefits from depreciation of ` versus $. However, in $ terms the segment’s sequential revenue growth remained at meager 0.2%. As expected, Wipro remained a laggard in the industry based on its Q1 FY2014 performance. Both of its larger peers INFY and TCS have reported significantly higher growth in top line during the quarter. The company also provided a muted $ revenue guidance of $1,620 to $1,650 Mn for Q2 FY2014, which remains a seasonally strong quarter for the IT firms. With this, we expect Wipro to remain a laggard in the upcoming quarters as well. As a result, we continue to prefer TCS and HCL Tech in the sector and suggest an avoid for Wipro at current juncture.    

Regards,

Team Microsec Research

Is bad news ever good for stocks? JPMorgan

 The more hawkish shift in Fed communication complicates the
relationship between the stock market and economic data. Is rising jobs
growth good for stocks, as we would normally expect, because it
signals a stronger economy? Or is it counter-intuitively bad for
stocks, because it brings monetary tightening closer?
 In this note, we examine how the impact of economic data on markets
varies over the economic cycle, by constructing Economic Sensitivity
Indices, measuring the changing reaction of US stock and bond markets
to economic surprises over time (see Figure 1).
 We find that: (i) it is quite unusual for good data to be bad for stock
prices, or for bad data to be good for stocks, over a sustained period, (ii)
the notable exception is that the stock market reaction to economic
data has tended to be limited or even negative during Fed tightening
cycles, and (iii) stock markets have been increasingly less sensitive to
economic data over the course of this year. This shift is likely to
continue as we move further along the path towards tightening.
 The bond market reaction to economic data is much more consistent
over time than the stock market reaction. This divergence underpins
the positive bond-equity correlation observed around the last two Fed
tightening cycles, in contrast to the negative correlation more typical in
recent years. And it means that short duration positions are likely to be a
more effective way of expressing a positive view on economic data
releases than equity longs.

Havells India A Trio of Positives: Dealer Franchise, Brand Strength, and Demand Growth; OW ::Morgan Stanley Research,

Havells India
A Trio of Positives: Dealer
Franchise, Brand Strength,
and Demand Growth; OW
We think Havells is in a sweet spot in the domestic
FMEG market – with its leading dealer franchise,
strong brand, and diversified product lineup.
Sylvania's reduced debt is a tailwind. We think the
stock deserves a premium to its historical P/E, on
consistently high domestic EPS CAGR and ROE.
AlphaWise dealer survey confirms Havells’ dealer
strategy is bearing fruit: Our pan-India survey of 503
dealers in the competitive fast-moving electrical goods
(FMEG) market shows that Havells has a leading
franchise and the highest revenue share at dealers
surveyed, and that dealers expect to increase its share in
their business. However, market fragmentation and lower
penetration in India’s south and west are challenges.
Solid play on rising FMEG demand in India: We
expect strong FMEG growth amid increasing household
numbers, greater access to electricity, and rising income.
Havells is gaining market share across key categories
and generating strong revenue growth.
Gradual recovery at Sylvania; reduced consolidated
debt and lower interest cost gives comfort: We
expect modest revenue momentum in tough macro
conditions, but we like the margin focus. Lower interest
costs on lower consolidated net debt is earnings
positive.
P/E premium warranted: We use a P/E-based sum of the
parts to value the stock. We think the premium to Havells’
15x five-year average P/E in our 19x (consolidated 1-year
forward EPS) target P/E is justified, because of Havells’
strengthening domestic franchise, consistent domestic EPS
delivery, 20-25% domestic ROE, and Sylvania’s improved
balance sheet.
Key risks: Slower-than-expected domestic growth;
weakening margins at Sylvania.

Magma Fincorp Steady growth, better NIM and productivity; Buy:: Anand Rathi

Key takeaways
Steady credit growth continues. While Magma’s overall AUM grew
27.8%, adjusting for the buyout of its mortgage portfolio, its AUM grew
20% yoy (3.8% qoq), led by robust disbursements in the utility vehicles,
tractor and used-CV divisions. Disbursements have slowed down on
account of negligible fresh lending to the higher-ticket CV and CE
segments; however utility vehicles, tractors and used CV growth is healthy.
We expect steady loan growth (a 25% CAGR in FY13-16) to continue,
driven by a diversifying product-mix and deeper rural penetration.
NIM improvement continues on larger share of high-yield assets.
Calculated NIM (on AUM), at 5.2%, was 80bps higher yoy (10bps lower
qoq), led by the greater share of high-yielding assets like passenger vehicles
(31%) and tractor finance (13%) in its AUM (up from a combined 39% a
year ago). With the product mix tilting more towards higher-yielding assets,
we expect further NIM expansion of 20bps over FY14-15.
Asset quality slips on stress in CE and CV. The NBFC has tightened its
NPA-recognition policy and recognizes NPA on 120 days overdue (from
180 earlier) according to the RBI’s draft recommendations. As a result
GNPA increased 33.3% qoq. Collection efficiencies, too, declined to 95.5%,
but are likely to improve. Further, the NBFC has raised standard-asset
provisioning to 30bps (from 25bps earlier). We expect some pressure on
asset quality given the challenging macro environment, and have built in
higher credit costs than those seen in the past.
Our take. We reduce FY14/15 PAT 4.8%/2.8% due to higher credit costs.
We expect the robust loan growth, improving NIM and better productivity
to lead to the RoA expanding to 1.9% by FY16 (from 1.3% in FY13). We
maintain a Buy. At our target the stock would trade at 1.3x FY14e and 1.1x
FY15e BV. Our target is based on the two-stage DDM (CoE: 18.5%; beta:
1.2; Rf: 8%). Risk. Higher-than-expected credit cost