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9am with Emkay; Result Preview: Emco; Sterlite Industries
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
9am with Emkay |
25 January, 2011 |
Contents
9am with Emkay; Result Preview: Emco; Sterlite Industries
Emco Q3FY11E Result Estimates
To end the period of reporting losses assuming mgmt guidance. Expect revenue gr. of 21%, 20% & 35% in transformers, meters & projects - resulting in overall revenue gr. of 27% YoY. EBITDA margins to venture in (+) territory with 8% margins, however a decline of 480bps yoy. Positive PAT of Rs60mn (-40% yoy). Key things to watch - (1) execution & profitability in projects, (2) realizations & margins in transformers order inflows, (3) working capital and (4) update on coal business.
Sterlite Industries Q3FY11 results estimates
Our expectations
n Backed by robust prices for all the base metals we expect Sterlite Industries to post strong performance for Q3FY11.
n Revenue growth is likely to be stronger QoQ (~15%) than on YoY (3.5%) basis.
n EBITDA margin is also expected to grow by 230 bps and 350 bps on YoY and QoQ respectively.
n While, revenue growth would be contributed by all the verticals viz. copper, aluminium and zinc, the margin improvement would mainly be aided by zinc and aluminium
Important things to watch out for
n Update on the power business
n Update on aluminium business- mainly expansion plan and CoP
n Guidance on any plan on bauxite sourcing
n Update on acquision of Anglo Amrican zinc resources
Deepak Fertilisers Q3FY11 Results Expectation : Net Sales Rs 3.5 bn, PAT Rs 456 mn
Due to lower trading and decline in fertiliser sale volumes (~9% yoy), we expect 26% yoy decline in fertiliser segment revenues to Rs 1.2 bn. Chemical revenues are expected increase by 13% yoy to Rs 2.4 bn due to 3% likely increase in chemical volumes and ~11% yoy increase in chemical prices. While chemical segment margins are expected to remain flat yoy at 29%, 300bps expansion in fertiliser margins to 6% is likely to result in expansion in overall EBITDA margins by 550 bps to 24.1%. Consequently we estimate APAT of Rs 456 mn and AEPS of Rs 5.2.
United Phosphorus (Conso) Q3FY11 Results Expectations - Net Sales Rs 12.1 bn, APAT Rs 1.07 bn
United Phosphorus is expected to declare their results today i.e. October 26th, 2010.
We expect strong demand from India and Rest of the World which are likely to grow by 15% and 20% yoy respectively. Europe and North America are expected to remain weak with de-growth of 25% and 5% yoy respectively. Consequently overall revenue growth is likely to remain muted at 5% to Rs 12.1 bn. We estimate EBITDA margin expansion of 160 bps to 18.6% along with 15% yoy growth in overall EBITDA to Rs 2.2 bn. We estimate APAT of Rs 1.07 bn, +10% yoy with AEPS of Rs 2.4.
Dr Reddy’s Q3FY11 Results Estimates
The company is expected to report 20% growth in sales at Rs20.8bn. EBIDTA margins are expected to increase by 5.7% to 22.5% led by favorable product mix. Adj PAT is expected to increase by 62% to Rs 3.8bn. In Q3FY10, PAT was lower on account of write-down of intangibles.
Key Things to watch
n Contribution from Tacrolimus, Lansoprazole, Accolate & Lotrel in US
n Update on Fonaparinux and Allegra-D
n Update on domestic business
n Update on Betapharma operations
n Outlook on margins
Ipca Labs Q3FY11 Results Estimates
The company is expected to report sales growth of 20%. EBIDTA margins are expected to decline by 150bps YoY to 21.3% on account of increase in staff cost arising from recent addition to sales force. Adj PAT is expected to increase by 14.8% to Rs684mn.
Key Things to watch
n Update on the domestic market
n Update on the Emerging Market business
n USFDA approval status
n Outlook on margins
Bharat Bijlee Q3FY11 Results First Cut
Replica of our estimates; on right path to deliver 25%+ earnings growth in FY10-FY12E; at 5.8x 1yr fwd earnings it’s a ‘Bargain Hunt’
n PAT grows by 92% yoy to Rs142mn (our expectations - Rs137mn)
n EBITDA margins at 11.8% (up 320bps yoy) due to low base.
n Revenue growth at 28%, in line.
n Earnings for the quarter stood at Rs25.1/Share.
n 9mFY11 EPS stands at Rs62.2/Share (up 47% yoy)
n Maintain earnings of Rs96.1 and Rs116.4 in FY11E and FY12E with upward bias going into Q4FY11E. Q4FY11E implied number stand at Rs33.9/share (growth of 14% yoy).
n CMP - Rs943. The Stock is a bargain hunt at 5.8xFY12E earnings & 1.3xFY12E Book Value (ex Siemens investment at 40% discount to CMP). ROE of 24% in FY12E. Detailed update to follow….
Asian Paints Q3FY11 Results Meets Expectations, But Ebidta Margin Contraction was higher then Expectation
n Net Sales grew by 29.6% yoy to Rs20.1 bn, ahead of expectation
n Upfront, volume growth of 19-21% in the quarter, balance being price increases
n Ebidta growth at 8.4% yoy to Rs3.44 bn, marginally below expectations
n APAT growth of 11.0% yoy to Rs2.2 bn, meets expectation
n Ebidta margins contraction at 320 bps was higher then expectations
n Rise in rutile and titanium dioxide has offset the price increase on product portfolio
n Estimates would remain unchanged at Rs91.7/Share and Rs104.8/Share for FY11E and FY12E
n Asian Paints trades at expensive valuations with no room for upside, Maintain HOLD rating
Ashok Leyland Q3FY11 Result Update; Quarter of disappointments, Upgrade to Accumulate; Target: Rs 68 (ERRATA: Please ignore previous mail)
n EBIDTA at Rs 1.9bn (est.-Rs 2.1bn) and PAT at Rs 694mn (est.-Rs 965mn) were below est. due to higher staff cost, other expenses, interest cost and depreciation
n EBIDTA margins for the quarter were at 8.6% vs est of 9.8% despite abv est. sales at Rs 22.3bn (est of 21.7bn) as sales mix was adverse (higher share of STU sales and FBS)
n Management reiterates FY11 vol. target of 95000 units. We retain our vol. est. of 92692 units (implied volumes for 4QFY11 at 28264 units, YoY growth of 9.5%)
n Reduce our FY11/FY12 EPS by 8.5%/11.2% to Rs 4.7/Rs 5.7. Upgrade rating to ACCUMULATE due to price correction. 4QFY11 volumes and margins will be the key to stock perf.
Godrej Consumer Products Q3FY11 Result Update; Defy Popular Notion, Maintain Accumulate; Target: Rs 420
n Godrej Consumer Products (GCPL) defies popular notion – no reduction in gross margins alongside robust growth momentum, baring select pre-determined business
n GCPL missed APAT expectation – reports APAT of Rs1.2 bn, up 39.6% yoy, led by lower other income – but meets revenue (Rs9.8 bn, up 90.2% yoy) and Ebidta (Rs1.7 bn, up 69.4% yoy)
n As expected, Godrej Household reports robust performance, offsets negatives from – lower gross margins in Soaps and tepid performance from African and UK business
n Tweak earnings estimates to factor lower other income –FY11E earnings at Rs15.2/Share (-1.8%) and FY12E earnings Rs18.9/Share (-7%)– Maintain ‘ACCUMULATE’ rating
ICICI Bank Q3FY11 Result Update; Strong earnings but cost pressures visible; Hold; Target: Rs1,200
n ICICI Bank’s NII for Q3FY11 grew by 12.3% yoy Rs23.1bn driven by 6.4% qoq growth in advances and stable NIMs. Savings on provisions resulted in 30% yoy growth in profits
n The cost of funds incrementally could have seen sharp rise as it rose by 12bps qoq despite lower deposits. The reset in floating rate investments helped sustain NIMs
n The net addition to ICICI Bank’s NPAs was almost zero during the quarter. Total/retail net slippages at Rs2.6bn/1.7bn only due to BoR merger
n Valuations at 2.2x FY11E/2.0x standalone FY12E ABV not unreasonable. Maintain HOLD rating with TP of Rs1200
Chambal Fertilisers Q3FY11 Result Update; Upgrade in target price; Accumulate; Target: Rs 86
n Q3FY11 results were in line with estimates with APAT of Rs 903 mn (adjusted for Rs 171 mn EO item), +13% yoy
n Shipping business disappoints with EBIT margins of 9% vs 37% due to softening charter rates and lower asset utilization. Fertiliser trading margins remain healthy at 6.6%
n EBITDA margins contraction of 80 bps to 15.7% (vs estimated 18.9%) is on account of higher fertiliser trading and disappointing results of shipping business
n Upgrade price target to Rs 86, based on 10x FY12 eps (as against 15x to complex fertiliser players), maintain ACCUMULATE
Union Bank of India Q3FY11 Result Update; Slippages continues to remain higher; Hold; Target: Rs370
n UBI’s Q3FY11 earnings ahead of expectation led by higher NII growth and lower operating expenses.
n The NII grew by 51.8%yoy to Rs16.2bn led by 7.8% qoq growth in advances and 22bps qoq improvement in margins at 3.4%
n The slippages rate shot up to 0.61% from 0.33% in Q2FY11. Includes one big ticket account of Rs~2.0bn. Slippages in Q4FY11 to remain high at same level
n Valuations fair at 1.9x FY11E and 1.5x FY12 ABV looking at sharp slippages and provision requirements. We Maintain HOLD rating with TP of Rs370
Banking Sector Update; Discussion Paper on Presence of Foreign Banks in India
n Wholly own subsidiary route chosen as way for foreign banks to be present in India. Top five foreign banks like - StanC, Citibank, HSBC, ABN Amro etc. may have to convert into WOS
n Foreign banks to be treated almost at par with new private banks which could get entry once the new licensing norms are implemented
n WOS to have same freedom as SCBs for opening branches except from national security areas. WOS need to adhere to PSL norms but agri subtarget at 10%
n Key negatives for foreign banks - NIMs to compress due to higher PSL requirement, will need to bring in more capital, have to form local management boards
n Technical Comments
Momentum rolls over
Nifty started the week on a positive note and after a steady up move all through the day, manage to close with a gain of 46 points. Moreover, Nifty also managed to close above the key resistance of hourly moving averages, which is a good sign going forward. Also, the daily RSI has given a positive crossover, and hence we still maintain our short term bullish view for the target of 5850 level.
Bank Nifty:
Since Bank Nifty has gone past the resistance of 20-DSMA, the ongoing relief rally in this index is expected to continue upto the next key resistance at 11,400 (i.e. 50-DSMA).
n Results Today
Alstom Projects | Asahi India Glas | Deepak Fert. | Dr Reddy's Labs | Electrost.Cast. | Emco |
Essel Propack | Grasim Inds | Hind. Unilever | I O C L | IDBI Bank | Indiabulls Sec. |
Indian Metals | Ipca Labs. | Jyothy Lab. | SREI Infra. Fin. | Sterlite Inds. | Trent |
UltraTech Cem. | United Phosp. | Usha Martin |
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