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UltraTech Cement
For 1QFY2012, UltraTech’s net sales (based on restated financials considering
Samruddhi’s financials) rose by 9.4% yoy primarily on account of higher realisations.
Realisations improved by ~10.2% yoy to `4,330/tonne. The company’s domestic
dispatches for the quarter (including clinker sales) stood at 9.46mn tonnes, down 1.5%
yoy. The company faced margin pressure during the quarter on account of increased
power and fuel, freight and raw-material costs. OPM for the quarter stood at 27.9%, up
217bp yoy, on account of better realisations. On the bottom-line front, the company’s net
profit stood at `683cr, up 22.5% yoy. We remain Neutral on the stock as we believe it is
fairly priced.
Canara Bank
For 1QFY2012, Canara Bank posted a disappointing set of results, with sharp
compression in NIM and continuance of high slippages. Net profit declined by 28.4% yoy
to `726cr. The results were well below our as well as street’s estimates.
For 1QFY2012, the bank’s overall business momentum moderated in-line with peers.
However, business growth remained ahead of the industry, with advances growing by
23.7% yoy (up 1.2% qoq) and deposits increasing by 25.7% yoy (up 2.1% qoq). With the
widening differential between FD and savings account interest rates, CASA deposit growth
fell sharply to 9.7% yoy. As a result, calculated global CASA ratio came off sharply by
~300bp qoq to 25.4%. With the decline in CASA ratio, the bank’s cost of deposits went up
by a steep 136bp yoy and led to a 59bp yoy decline in reported NIM to 2.4%. Fee income
growth was sluggish at just 6.1% yoy. The bank’s profitability during 1QFY2012 was also
impacted by additional provisions of `285cr for complying with the recent hike in
provisioning requirements and reversal of accrued interest income of `210cr on slippages
recognised during the quarter. Slippages ratio for the quarter remained high at 2.6%
(1.2% in 1QFY2011) but moderated a bit from 4.4% witnessed in 4QFY2011. The sharp
rise in slippages over the past couple of quarters can be partly attributed to switchover to
system-based NPA recognition. The bank is relatively better placed than peers on the
migration front, having migrated all accounts above `2lakhs. The provision coverage ratio
including technical write-offs fell by ~350bp qoq (a sharp ~850bp yoy) to 69.5%.
Post the recent correction in the stock, it is trading at relatively attractive valuations (0.9x
FY2013E ABV) as compared to its historical trading range of 0.9–1.4x one-year forward
ABV with a median of 1.2x. Hence, we recommend Accumulate on the stock with a target
price of `535.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UltraTech Cement
For 1QFY2012, UltraTech’s net sales (based on restated financials considering
Samruddhi’s financials) rose by 9.4% yoy primarily on account of higher realisations.
Realisations improved by ~10.2% yoy to `4,330/tonne. The company’s domestic
dispatches for the quarter (including clinker sales) stood at 9.46mn tonnes, down 1.5%
yoy. The company faced margin pressure during the quarter on account of increased
power and fuel, freight and raw-material costs. OPM for the quarter stood at 27.9%, up
217bp yoy, on account of better realisations. On the bottom-line front, the company’s net
profit stood at `683cr, up 22.5% yoy. We remain Neutral on the stock as we believe it is
fairly priced.
Canara Bank
For 1QFY2012, Canara Bank posted a disappointing set of results, with sharp
compression in NIM and continuance of high slippages. Net profit declined by 28.4% yoy
to `726cr. The results were well below our as well as street’s estimates.
For 1QFY2012, the bank’s overall business momentum moderated in-line with peers.
However, business growth remained ahead of the industry, with advances growing by
23.7% yoy (up 1.2% qoq) and deposits increasing by 25.7% yoy (up 2.1% qoq). With the
widening differential between FD and savings account interest rates, CASA deposit growth
fell sharply to 9.7% yoy. As a result, calculated global CASA ratio came off sharply by
~300bp qoq to 25.4%. With the decline in CASA ratio, the bank’s cost of deposits went up
by a steep 136bp yoy and led to a 59bp yoy decline in reported NIM to 2.4%. Fee income
growth was sluggish at just 6.1% yoy. The bank’s profitability during 1QFY2012 was also
impacted by additional provisions of `285cr for complying with the recent hike in
provisioning requirements and reversal of accrued interest income of `210cr on slippages
recognised during the quarter. Slippages ratio for the quarter remained high at 2.6%
(1.2% in 1QFY2011) but moderated a bit from 4.4% witnessed in 4QFY2011. The sharp
rise in slippages over the past couple of quarters can be partly attributed to switchover to
system-based NPA recognition. The bank is relatively better placed than peers on the
migration front, having migrated all accounts above `2lakhs. The provision coverage ratio
including technical write-offs fell by ~350bp qoq (a sharp ~850bp yoy) to 69.5%.
Post the recent correction in the stock, it is trading at relatively attractive valuations (0.9x
FY2013E ABV) as compared to its historical trading range of 0.9–1.4x one-year forward
ABV with a median of 1.2x. Hence, we recommend Accumulate on the stock with a target
price of `535.
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