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ICICI Bank: Transition challenges from value to growth [Dipankar Choudhury]
We maintain Hold on ICICI with TP revised to INR1,090 from INR1,025. ICICI has
vastly improved its deposit franchise and reduced credit costs, and is now firmly
back on a loan growth path. However, the margin buffer is relatively low and there
is likelihood of some attractive metrics attained during the zero-growth period
retracing with return of balance sheet growth. In that context, it appears to be
fairly priced – in P/E terms, it is as expensive as other frontline private banks that
are growing faster and have higher margins.
BHEL: Roadblocks yet be cleared; maintaining Buy [Manish Saxena]
Notwithstanding a weak order inflow growth, BHEL's 3Q (year-end March)
revenue booking and profit were a positive surprise. Management's post earnings
comments were also upbeat, suggesting an order pick-up. While we agree nearterm earnings growth will likely be strong, the stock performance may continue to
be hurt by ‘lumpiness’ in order inflow and volatility in quarterly earnings. Given the
17% underperformance to the Sensex in the last six months, we maintain Buy
with a revised target price of INR 2,550.
ITC: 17% cigarette EBIT growth, 21% earnings growth [Harrish Zaveri]
A 17% cigarette EBIT growth and 2% volume growth were the highlight of ITC's
Q3FY11 results. A 35% growth in agricultural EBIT over a 107% growth last year,
led by higher soya and leaf tobacco prices, an INR736m loss in FMCG and steady
growth in hotels drove ITC's 21% earnings growth. With their demonstrated
strength in pricing power, cigarettes enhance visibility of per share earnings of
INR6.20 in FY11 and INR8.10 in FY12. We maintain Buy with a TP of INR196.
Sesa Goa: 3Q'FY11 results in line with expectations [Anuj Singla]
Sesa Goa’s 3QFY11 results came in line with our estimates. Iron ore realizations
(+14% QoQ, in line with our expectations) continued to closely follow the trend in
the iron ore spot prices (up15% QoQ). Iron ore sales volumes were down ~20%
QoQ (in line with our expectations) on account of volume declines across the
mining locations.
Asian Paints Ltd: 30% volume growth, higher other expenses lower PAT
growth [Harrish Zaveri]
Asian Paints reported a strong topline (37% growth in India operations and 30%
on consolidated basis vs our expectations of 26% consolidated). This reflected the
strong festive demand and has been driven by volume growth of ~30%. We had
expected consolidated gross margins to decline by 1.6% factoring in lower oil
prices (the company reported 3.4% decline). The better than expected topline
helped Asian Paints report INR 8.5 bn of gross profit (DBe INR 8.6 bn).
Idea Cellular Ltd: 3QFY11: In line results, tariffs remain stable [Srinivas Rao]
Idea’s results are strong, in line with our estimates and reflecting the company's
successful efforts at defending its revenue and traffic market share with limited
impact on margins. The rate of decline in revenue/min has been slowing over the
last three quarters, which we believe is a positive sign as it indicates tariff-based
competitive intensity is decreasing.
Sobha Developers: Marginally lower than expected 3Q, maintain TP & BUY
[Abhay Shanbhag]
Sobha reported growth in revenue, EBIDTA, and PAT excluding land sale of 30%,
35% and 23% on a yoy basis as against expected 38%, 50% and 31%
respectively.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank: Transition challenges from value to growth [Dipankar Choudhury]
We maintain Hold on ICICI with TP revised to INR1,090 from INR1,025. ICICI has
vastly improved its deposit franchise and reduced credit costs, and is now firmly
back on a loan growth path. However, the margin buffer is relatively low and there
is likelihood of some attractive metrics attained during the zero-growth period
retracing with return of balance sheet growth. In that context, it appears to be
fairly priced – in P/E terms, it is as expensive as other frontline private banks that
are growing faster and have higher margins.
BHEL: Roadblocks yet be cleared; maintaining Buy [Manish Saxena]
Notwithstanding a weak order inflow growth, BHEL's 3Q (year-end March)
revenue booking and profit were a positive surprise. Management's post earnings
comments were also upbeat, suggesting an order pick-up. While we agree nearterm earnings growth will likely be strong, the stock performance may continue to
be hurt by ‘lumpiness’ in order inflow and volatility in quarterly earnings. Given the
17% underperformance to the Sensex in the last six months, we maintain Buy
with a revised target price of INR 2,550.
ITC: 17% cigarette EBIT growth, 21% earnings growth [Harrish Zaveri]
A 17% cigarette EBIT growth and 2% volume growth were the highlight of ITC's
Q3FY11 results. A 35% growth in agricultural EBIT over a 107% growth last year,
led by higher soya and leaf tobacco prices, an INR736m loss in FMCG and steady
growth in hotels drove ITC's 21% earnings growth. With their demonstrated
strength in pricing power, cigarettes enhance visibility of per share earnings of
INR6.20 in FY11 and INR8.10 in FY12. We maintain Buy with a TP of INR196.
Sesa Goa: 3Q'FY11 results in line with expectations [Anuj Singla]
Sesa Goa’s 3QFY11 results came in line with our estimates. Iron ore realizations
(+14% QoQ, in line with our expectations) continued to closely follow the trend in
the iron ore spot prices (up15% QoQ). Iron ore sales volumes were down ~20%
QoQ (in line with our expectations) on account of volume declines across the
mining locations.
Asian Paints Ltd: 30% volume growth, higher other expenses lower PAT
growth [Harrish Zaveri]
Asian Paints reported a strong topline (37% growth in India operations and 30%
on consolidated basis vs our expectations of 26% consolidated). This reflected the
strong festive demand and has been driven by volume growth of ~30%. We had
expected consolidated gross margins to decline by 1.6% factoring in lower oil
prices (the company reported 3.4% decline). The better than expected topline
helped Asian Paints report INR 8.5 bn of gross profit (DBe INR 8.6 bn).
Idea Cellular Ltd: 3QFY11: In line results, tariffs remain stable [Srinivas Rao]
Idea’s results are strong, in line with our estimates and reflecting the company's
successful efforts at defending its revenue and traffic market share with limited
impact on margins. The rate of decline in revenue/min has been slowing over the
last three quarters, which we believe is a positive sign as it indicates tariff-based
competitive intensity is decreasing.
Sobha Developers: Marginally lower than expected 3Q, maintain TP & BUY
[Abhay Shanbhag]
Sobha reported growth in revenue, EBIDTA, and PAT excluding land sale of 30%,
35% and 23% on a yoy basis as against expected 38%, 50% and 31%
respectively.
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