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Soft realizations; weak demand. Grasim’s standalone results reflected a similar trend of soft realizations owing to weakness in underlying demand, as was seen in the case of cement results previously. Consolidated revenue growth (12% yoy) was aided by (1) acquisition of cement assets of Jaiprakash Associates and (2) aggressive capacity addition in the chemical business. Inexpensive valuations (5.7X EV/EBITDA) and potential demand recovery lend to our positive stance. Maintain ADD rating with target price of `4,130 (`3,590 previously)
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Steady despite challenging market conditions in VSF Grasim reported standalone revenues of `15.4 bn (6% yoy, -2% qoq), operating profit of `1.7 bn (-15% yoy, -16% qoq) and net income of `0.9 bn (-26% yoy, -69% qoq). VSF revenues were down 4% yoy—absence of volume growth coupled with weak realizations (-4% yoy) led to 25% yoy decline in EBIT on an expanded capacity base. The chemical business was able to capitalize on expanded capacities with 37% yoy growth in volumes and overall 70% yoy growth in revenues, the shining star in an otherwise lackluster revenue performance. Grasim reported consolidated sales of `78.9 bn (12% yoy, flat qoq), operating profit of `10.6 bn (7% yoy, -4% qoq) and net income of `3.3 bn (1% yoy, -20% qoq) against our estimates of `78.8 bn, `11 bn and `4.2 bn respectively. Higher effective tax rate of 34% for the quarter compared to 27% in 1HFY15 resulted in 20% qoq decline in net income. Ultratech – volume growth aided by acquisitions; earnings impacted by weaker realizations Ultratech previously reported strong revenue growth of 20% yoy from 13% yoy volume growth to 11 mn tons aided by contribution from acquired capacities. However, blended realizations were a tad disappointing with `200/ton sequential decline to `5,000/ton during the quarter. EBITDA at `770/ton (-2% yoy, -4% qoq) continues to move in a narrow range as the benefit of lower freight and fuel cost is lost to weak realizations. Maintain ADD with revised TP of `4,130 An improving volume trajectory coupled with price increases (at least in the cement business) and trough margins for the VSF business make us hopeful of better prospects going forward. Our investment thesis is further strengthened by attractive valuations—5.7X EV/EBITDA and 15.6X P/E on FY2016E earnings. We maintain ADD rating and target price of `4,130 (`3,590 earlier). The revision in target price reflects the revised fair value for Ultratech at `2,370/share compared to `2,000/share factored previously.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily02022015ka.pdf
Soft realizations; weak demand. Grasim’s standalone results reflected a similar trend of soft realizations owing to weakness in underlying demand, as was seen in the case of cement results previously. Consolidated revenue growth (12% yoy) was aided by (1) acquisition of cement assets of Jaiprakash Associates and (2) aggressive capacity addition in the chemical business. Inexpensive valuations (5.7X EV/EBITDA) and potential demand recovery lend to our positive stance. Maintain ADD rating with target price of `4,130 (`3,590 previously)
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Steady despite challenging market conditions in VSF Grasim reported standalone revenues of `15.4 bn (6% yoy, -2% qoq), operating profit of `1.7 bn (-15% yoy, -16% qoq) and net income of `0.9 bn (-26% yoy, -69% qoq). VSF revenues were down 4% yoy—absence of volume growth coupled with weak realizations (-4% yoy) led to 25% yoy decline in EBIT on an expanded capacity base. The chemical business was able to capitalize on expanded capacities with 37% yoy growth in volumes and overall 70% yoy growth in revenues, the shining star in an otherwise lackluster revenue performance. Grasim reported consolidated sales of `78.9 bn (12% yoy, flat qoq), operating profit of `10.6 bn (7% yoy, -4% qoq) and net income of `3.3 bn (1% yoy, -20% qoq) against our estimates of `78.8 bn, `11 bn and `4.2 bn respectively. Higher effective tax rate of 34% for the quarter compared to 27% in 1HFY15 resulted in 20% qoq decline in net income. Ultratech – volume growth aided by acquisitions; earnings impacted by weaker realizations Ultratech previously reported strong revenue growth of 20% yoy from 13% yoy volume growth to 11 mn tons aided by contribution from acquired capacities. However, blended realizations were a tad disappointing with `200/ton sequential decline to `5,000/ton during the quarter. EBITDA at `770/ton (-2% yoy, -4% qoq) continues to move in a narrow range as the benefit of lower freight and fuel cost is lost to weak realizations. Maintain ADD with revised TP of `4,130 An improving volume trajectory coupled with price increases (at least in the cement business) and trough margins for the VSF business make us hopeful of better prospects going forward. Our investment thesis is further strengthened by attractive valuations—5.7X EV/EBITDA and 15.6X P/E on FY2016E earnings. We maintain ADD rating and target price of `4,130 (`3,590 earlier). The revision in target price reflects the revised fair value for Ultratech at `2,370/share compared to `2,000/share factored previously.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily02022015ka.pdf
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