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Results: RIL, NTPC, Sterlite,
BOI; Lupin settlement
Reliance Industries: Q1FY12 results in line with estimates [Harshad Katkar]
RIL’s Q1FY12 reported net profit of INR56.6bn was in line with our estimates.
Management said that it will take 30-36 months to start gas production from new
wells in KG D6. While the KG D6 production ramp-up is likely some time away, we
expect RIL to benefit from robust refining and petrochemical margins. Approval of
the BP deal also benchmarks RIL's E&P valuation and provides downside support.
RIL is trading at 6.9x FY12e EV/EBITDA, at the bottom end of its historical range
and at a 10-15% discount to regional peers. We reiterate Buy.
NTPC Limited: Tax arbitrage unable to offset fuel shortage [Manish Saxena]
NTPC’s 1QFY12 results were below our and street expectations. For the quarter,
Net sales was at INR 141.7bn (+9% YoY), EBITDA at INR 28.6 bn (-4% YoY) and
Net income at INR 20.8 bn (+13% YoY) on a very low base of last year. Fuel
sourcing continues to hamper company’s generation volume growth (25% of AllIndia generation) at negative 1.6%, despite All-India power generation for the
quarter being up by 9% YoY. Apart from lower generation, company's earnings
also seem to be impacted by lower availability. Continue to favour long coal plays
such as JSPL and Coal India among Indian utilities and would recommend switch
from NTPC to JSPL and Coal India.
Sterlite Industries: Zinc shines while Aluminum and Power disappoint
[Abhay Laijawala]
Sterlite’s 1Q’FY12 consolidated EBITDA came in 10% above DBe and 9% above
consensus primarily driven by better-than-expected performance by international
zinc (+26% vs DBe) and copper (+36% vs DBe) businesses--maintain Buy. Indian
zinc business (Hindustan Zinc) also benefited from higher-than-expected sale of
silver-rich lead concentrate.
Bank of India: High NPLs and lower NIMs drag down profit [Manish Shukla]
1QFY12 results again demonstrate that improving asset quality continues to be a
challenge for the bank. There is at least one more quarter of high NPL slippages
with agricutlure loans yet to move to system-based NPL recognition method. NIM
continues to be under pressure due to rising cost of funds and reversal of income
from NPL accounts.
Lupin: Limited upside from US settlement on minocycline ER [Abhay
Shanbhag]
Lupin settles on minocycline-ER in US allowing it to sell generic versions of (a) 45,
90 & 135mg from Nov’11, (b) 65 & 115mg from Feb’18 & (c) 55, 80 & 105mg from
Feb’19, or earlier under certain conditions. Solodyn, available in 8 dosages, is an
oral antibiotic taken once-a-day to treat acne pimples.
Lupin: Gets USD 20m upfront under JDA or a settlement [Abhay Shanbhag]
After settling with Medicis Pharma (mkt cap of USD 2.3bn) for launch of generic
minocycline-ER (branded Solodyn by Medicis, a USD 750m drug in US), Lupin
enters into a Joint Development Agreement (JDA) with Medicis.
Thermax Limited: "A few bold customers have started ordering…" [Anup
Kulkarni]
Clearly, the tone was sounding more positive with suggestions of FY12 order
inflow exceeding FY12 sales turnover, even if the orders from the power sector do
not pick up in the next two quarters. From our standpoint, we continue to rate
Thermax as a very good business model, but at rich valuations as the stock is
currently more expensive than BHEL (Hold; INR1972.85) based on FY12E P/Es.
Reiterate Sell with a revised target price of INR 535.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Results: RIL, NTPC, Sterlite,
BOI; Lupin settlement
Reliance Industries: Q1FY12 results in line with estimates [Harshad Katkar]
RIL’s Q1FY12 reported net profit of INR56.6bn was in line with our estimates.
Management said that it will take 30-36 months to start gas production from new
wells in KG D6. While the KG D6 production ramp-up is likely some time away, we
expect RIL to benefit from robust refining and petrochemical margins. Approval of
the BP deal also benchmarks RIL's E&P valuation and provides downside support.
RIL is trading at 6.9x FY12e EV/EBITDA, at the bottom end of its historical range
and at a 10-15% discount to regional peers. We reiterate Buy.
NTPC Limited: Tax arbitrage unable to offset fuel shortage [Manish Saxena]
NTPC’s 1QFY12 results were below our and street expectations. For the quarter,
Net sales was at INR 141.7bn (+9% YoY), EBITDA at INR 28.6 bn (-4% YoY) and
Net income at INR 20.8 bn (+13% YoY) on a very low base of last year. Fuel
sourcing continues to hamper company’s generation volume growth (25% of AllIndia generation) at negative 1.6%, despite All-India power generation for the
quarter being up by 9% YoY. Apart from lower generation, company's earnings
also seem to be impacted by lower availability. Continue to favour long coal plays
such as JSPL and Coal India among Indian utilities and would recommend switch
from NTPC to JSPL and Coal India.
Sterlite Industries: Zinc shines while Aluminum and Power disappoint
[Abhay Laijawala]
Sterlite’s 1Q’FY12 consolidated EBITDA came in 10% above DBe and 9% above
consensus primarily driven by better-than-expected performance by international
zinc (+26% vs DBe) and copper (+36% vs DBe) businesses--maintain Buy. Indian
zinc business (Hindustan Zinc) also benefited from higher-than-expected sale of
silver-rich lead concentrate.
Bank of India: High NPLs and lower NIMs drag down profit [Manish Shukla]
1QFY12 results again demonstrate that improving asset quality continues to be a
challenge for the bank. There is at least one more quarter of high NPL slippages
with agricutlure loans yet to move to system-based NPL recognition method. NIM
continues to be under pressure due to rising cost of funds and reversal of income
from NPL accounts.
Lupin: Limited upside from US settlement on minocycline ER [Abhay
Shanbhag]
Lupin settles on minocycline-ER in US allowing it to sell generic versions of (a) 45,
90 & 135mg from Nov’11, (b) 65 & 115mg from Feb’18 & (c) 55, 80 & 105mg from
Feb’19, or earlier under certain conditions. Solodyn, available in 8 dosages, is an
oral antibiotic taken once-a-day to treat acne pimples.
Lupin: Gets USD 20m upfront under JDA or a settlement [Abhay Shanbhag]
After settling with Medicis Pharma (mkt cap of USD 2.3bn) for launch of generic
minocycline-ER (branded Solodyn by Medicis, a USD 750m drug in US), Lupin
enters into a Joint Development Agreement (JDA) with Medicis.
Thermax Limited: "A few bold customers have started ordering…" [Anup
Kulkarni]
Clearly, the tone was sounding more positive with suggestions of FY12 order
inflow exceeding FY12 sales turnover, even if the orders from the power sector do
not pick up in the next two quarters. From our standpoint, we continue to rate
Thermax as a very good business model, but at rich valuations as the stock is
currently more expensive than BHEL (Hold; INR1972.85) based on FY12E P/Es.
Reiterate Sell with a revised target price of INR 535.
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