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Result Update
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NTPC
Reco: BUY
CMP: Rs 172
Target Price: Rs 199
90%+ PAF structurally coming down; maintain Buy
· 3Q12 PAT of Rs21.3bn
is below est. due to higher R&M exp (preponed from 4Q – will get offset).
APAT stood at Rs21.6bn (adj. for previous yr sales, int. from beneficiaries
and prov.)
· Has commissioned
1820MW (Sipat + Jhajjar), commercialized 1,160MW in YTD12. Mgmt has retained
its capacity addition target with upward bias to 4980MW from 4320MW
· PAF of coal plants at
85.3% and 86.2% for 3Q12 and 9M12. Though 4Q PAF to be significantly higher,
we revise FY12E PAF to 88.5% (90% earlier). We also reduce COD target from
2820MW to 2320MW - cut earnings by 3-4%
· Though PAF
structurally coming down, but do not see it lower than 88%. Core ROE still
remain ~25%. Maintain Buy on reasonable valuations at 1.75x (prices in
negatives)
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Orient
Paper & Industries Ltd
Reco: BUY
CMP: Rs 52
Target Price: Rs 82
Cement performance surprises positively
· EBITDA at Rs892 mn
(+20.4% yoy), above est (Rs723mn) led by cement division. Cement revenues
grew 51% yoy (Rs3.5) bn volumes jump 24% yoy, realizations improve 22%
· Paper division continues
to report losses (Rs153mn).However new CPP of 50 MW to be commissioned in 3
months would drive cost efficiencies & help division turnaround
· Upgrade earnings
estimate for FY12/13 by 8.3%/1.6% led by better performance from cement
division. Higher energy prices in FY13 for paper division cap FY13 upgrade
· De-merger of cement
business to trigger much awaited value unlocking process. Stock trades at
undemanding valuation of 4.5x FY13 PER & EV/E of 2.7X. BUY - target price
of Rs82
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TVS
Motor Ltd
Reco: ACCUMULATE
CMP: Rs 52
Target Price: Rs 61
Gross margins improve, Upgrade to ACCUMULATE
· EBITDA at Rs 1.1 bn
was 5% below est, despite strong gross profit margin (26.6% vs est of 25.1%),
due to higher marketing spend (~ Rs 150mn). APAT at Rs 565 mn was 7%
below est.
· Lower FY12/13 vols by
4.6%/9.7% to 2.2 mn/2.4 mn units and EPS by 6%/10% to 5.4/6.1. Factor in
USD/INR at Rs 49.5 in FY13 vs 47.5 earlier
· Upgrade rating to
ACCUMULATE post stock price correction with a TP of Rs. 61 (10x FY13x PER).
Upside risk arises from volume traction from new launches and exports
· Continue to have
concerns on sustained investment in various subs (can lead to further
derating of valuation multiple). In 3Q, TVS invested Rs 374 mn in subs. (Rs
1.1bn YTDFY12)
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Ipca
Laboratories Ltd
Reco: BUY
CMP: Rs 299
Target Price: Rs 420
Solid performance, Upgrade estimates – Maintain Buy
· IPCA’s Q3FY12 results
were in-line with expectations with a) Revenues at Rs6bn (up 30% YoY), b)
EBITDA at Rs1.5bn (up 66% YoY) and c) APAT at Rs1bn (up 88% YoY)
· Revenue growth was led
by strong growth in exports aided by INR dep. Domestic business continues to
struggle but is expected to recover & grow by 13-15% in Q4’12E &
FY13E
· Gross and EBITDA
margins improved by 235bps and 550bps YoY to 61% and 25% respectively led by
INR dep and strong uptake in institutional business which is expected to
continue going forward
· On back of strong
results and expected USFDA approval for
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Blue
Star
Reco: HOLD
CMP: Rs 171
Target Price: Rs 185
Positive catalysts gain prominence; Retain Hold
· Blue Star reports net
loss of Rs328 mn in Q3FY12 – along expected lines. Loss due to (1) 4% decline
in revenues (2) 680bps yoy fall in gross margins (3) forex loss of Rs138 mn
· Key positive – Net
working capital cycle comes down from +200 days to 180 days. Debt reduces by
Rs1.6 bn qoq to Rs4.6 bn
· Positive catalysts
gain prominence (improvement in profitability from FY13E – EBITDA margin and
ROE, balance sheet strengthening)
· But BLSR expected to
under-perform in near term amidst concern on profitability in near term. Cut
earnings estimates to factor same. Retain Hold rating with price target of
Rs185
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Aban
Offshore
Reco: HOLD
CMP: Rs 445
Target Price: Rs 465
Earnings disappoint-Interest Cost to Intensify
· 3Q12 PAT at Rs731 mn
(-8% qoq) lower than est (Rs1.07bn) dragged by lower operating days for
Aban III & Aban V & higher than expected interest cost (+12% qoq)
· Revenues at Rs8.6bn
(+13% qoq) came in below est (Rs9.2bn) led by lower operating days for
Aban III & Aban leading to lower than expected EBIDTA of Rs5.06bn
(+9.1 qoq)
· 3Q earnings
disappointment & higher interest charge lead to FY12/13 EPS of -9.1%
/-3.8%.
· Though Aban boasts of
revenue backlog of ~$1.9 bn, revenue visibility stands at 65% for FY13 as 6
rigs are due for contract renewal in H2FY13.
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Punjab
National Bank
Reco: ACCUMULATE
CMP: Rs 940
Target Price: Rs 1200
Operating results inline; Stressed assets rise
· PNB Q3FY12 NII at
Rs35.4bn (10%) was inline with estimates. Steep rise in provisions for std
restr assets + MTM lead to lower than expected growth in net profit at 5% yoy
· Key +ves – (1) Strong
advance growth of 19%yoy, (2) stable NIM’s at 3.9%, (3) slippages of Rs9.3bn
(ex aviation) at 7-qtr low
· Key –ves – (1)
reco+upgrades almost half of Q1/Q2FY12 leading to sharp spike in GNPAs, (2)
restructured assets (ex telecom) still high at Rs9.2bn
· Lowered FY12E/FY13E
EPS 8%/1% to take into a/c higher restr and MTM provisions. Policy of
aggressive LLPs is strong point. Maintain ACCUMULATE with TP of Rs1200
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ICICI
Bank
Reco: ACCUMULATE
CMP: Rs 902
Target Price: Rs 1200
Another stable quarter
· ICICI Bank Q3FY12 NII
at Rs27.1bn / PAT Rs17.3bn – much ahead of estimates. Muted growth in non-int
inc compensated by stable operating expenses and lower provisioning
· Asset quality improves
qoq. Gross slippages at Rs8.8bn offset against Rs11.6bn of recovery/up-grade
and w/off. Restructured portfolio stands at Rs30.7bn (1.2% of loans)
· Loan growth aided by
growth in SME + domestic corporate. Mgmt reiterated for stronger traction in
retail segment in coming quarters. Reported NIM at 2.7% was up 9bps qoq
· Despite likely –ve
surprises on NPA / restructuring front in Q4, we believe that valuations at
1.5x/1.3x FY12E/FY13E (banking ops) are reasonable. Maintain ACCUMULATE
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Havells
Reco: BUY
CMP: Rs 482
Target Price: Rs 520
Strong show continues, Retain BUY
· Standalone results
beats estimates - revenues grew 26% yoy to Rs9 bn led by Lighting & ECD
segment; EBIDTA margins jumps 130bps to 14% & APAT at Rs789 mn, up 21%
yoy
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· Revised EBIDTA margins
assumptions upwards by 40bps and 50bps in FY12E and FY13E, thereby revise
earnings by 6.7% (Rs29.2/Share) and 7% (Rs36.1/Share) for FY12E and FY13E
· Rising dealer network
and new product launches continues to drive domestic growth;
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Titan
Industries Ltd
Reco: HOLD
CMP: Rs 202
Target Price: Rs 197
Slide Continues, Maintain Hold
· Titan Q3FY12
performance, revenues meets expectations at Rs 24.4 bn, growth of 25% yoy,
but PAT below estimates at Rs 1.6bn, growth of 19.2% yoy
· As expected, jewellery
volumes de-grew 5% yoy – growth largely driven by high gold prices, jewellery
posted 25% yoy growth to Rs 19.9 bn; PBIT margins fell 50bps yoy to 9%
· Watches segment
reported 17.2% yoy revenue growth to Rs 3.8 bn, led by 11% volume growth.
However, PBIT margins continued its decline to 12.5%, down 590bps yoy
· Titan has multiple
challenges, (1) sagging volume growth in jewellery (2) lower margins in
watches and jewellery business … Retain Negative bias with HOLD rating
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United
Bank of
Reco: ACCUMULATE
CMP: Rs 70
Target Price: Rs 80
Lower than expected provisions drive profits
· UNTDB’s Q3FY12 NII at
Rs6.7bn was inline with expectation, however with lower than expected
provision, net profit at Rs2.3bn was significantly ahead our expectation of
Rs1.3bn
· Key highlights: Strong
advance growth at 8.8%qoq 2) 22bps expansion in NIM’s to 3.4% 3) stable CASA
proportion at 39.8% 4) Net slippages at just Rs693mn lowest in many qtrs
· With tier I at 8.4%
and NPL/ Net worth still higher at 25%, capital could be a constraint for
growth. Expect advances to grow at 16% CAGR over FY12/13
· While strong margins
and deposit profile adds to banks strengths, lower prov despite higher NPL/
Networth is discouraging. Upgrade to Accumulate with price target of Rs80
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