Oil & Gas 3QFY15E Results Preview :: HDFC Securities

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Buy BPCL between 660 and 675; target 760.0 :: HDFC Securities

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Bharat Petroleum Corporation (2QFY15) : At fair value. Downgrade to NEUTRAL :: HDFC Sec, link

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Bharat Petroleum Corporation - Diesel Margins Surge 43%; Further Expansion Likely; Result Update Q2FY15:: Edelweiss

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India Refining & Marketing Window of opportunity emerges; prefer BPCL:: JPMorgan

Falling commodity prices, and regular diesel price hikes have created a
more benign environment that has seen a window of opportunity open for
the state-owned refining & marketing companies. The government’s
resolve to push through monthly hikes thus far is admirable – we do not
expect this to last the whole year, but see this contributing to a reduction
in subsidies. We continue to prefer BPCL, which adds its E&P portfolio
and more stable refining

BPCL- Government compensation for H1 leads to profitability in Q2:: Centrum

Government compensation for H1 leads to
profitability in Q2
Government compensation of Rs300bn for the under-recoveries incurred
during H1FY13 led to profitability of all OMCs including BPCL. The
company bettered its Q2 operational performance with US$6.4/bbl in
GRMs and higher throughput of 5.94mmt. Bina refinery throughput was
lower at 1.0mmt due to operational issues but GRMs remained healthy at
US$7.7/bbl. With the revision in petrol prices during Q2, the company has
stopped incurring any losses on petrol. Although, BPCL reported PAT of
Rs50.3bn in Q2, under-recoveries’ absorption of Rs61.3bn during H1 led
to a loss Rs38.0bn for H1FY13. We like BPCL due to its E&P success and
hence maintain our ‘Buy’ rating on the stock.
Lower market sales yet rupee depreciation leads to higher revenues:
BPCL’s revenues jumped by 34.5% YoY at Rs568.9bn backed by 10.4%
increase in market sales at 7.8mmt and higher product prices due to
rupee depreciation. Throughput also inched up 6.5% YoY and 0.5% QoQ
at 5.9mmt.
Forex and inventory gains further support profitability: BPCL’s
operational performance was better with average GRMs of US$6.4/bbl in
Q2 and US$4.6/bbl in H1. The company had inventory gains of Rs4.4bn
while favourable exchange rate led to Rs11.7bn in forex gains. Upstream
companies offered Rs36.2bn in discounts to BPCL while government
compensation for H1FY13 was at Rs72.4bn which led to BPCL posting PAT
of Rs50.3bn. However, due to absorption of Rs61.3bn in under-recoveries
during H1, the company incurred a loss of Rs38.0bn during H1FY13. The
company holds a debt of Rs256.0bn of which over 80% is foreign currency
debt. BPCL also holds oil bonds of Rs64.8bn.

India Refining & Marketing Troubled waters downstream; Prefer BPCL :: JPMorgan

We remain cautious on the SOE R&M space. Elevated subsidy losses
(c$33bn), despite reform, will be a drag on earnings delivery, leaving
BPCL/HPCL/IOCL dependent on government/upstream support. Refining
performance has been volatile, compounded by large inventory losses. We
prefer BPCL – while earnings are sensitive to subsidies, we think an
emerging E&P portfolio will lead to value creation. HPCL remains the
least preferred, with high sensitivity to policy measures.

BPCL: Surprisingly positive GRMs in Q1::Centrum

Surprisingly positive GRMs in Q1
Unlike other OMCs and standalone refiners, BPCL reported positive GRMs for
Q1 at US$2.6/bbl owing to better inventory management. However, the
company suffered a loss of Rs88.4bn due to lack of support from the
government, forex losses and higher interest burden. BPCL’s Bina refinery
utilisation was at 1.4mmt (over 96% capacity utilisation) and the company is
confident of utilising the capacity fully in FY13E. We remain positive on
BPCL’s E&P success and hence maintain ‘Buy’ rating on the stock.
Revenue jump by 18.2% YoY: BPCL reported 18.2% YoY jump in revenues at
Rs545.5bn primarily on account of both higher product prices and 8.6% YoY
jump in volumes. Throughput during Q1 jumped by 13.7% YoY at 5.9mmt as
during 1QFY12, BPCL had taken a shut down in its Kochi refinery. Petroleum
product sales jumped by 8.6% YoY at 8.5mmt on the back of strong demand
for diesel (15.4% YoY increase) and LPG (8.5% YoY increase).
Better inventory management leads to positive GRMs yet no
compensation from the government; forex losses and higher interest
cost impact the PAT: Unlike other OMCs and standalone refiners, BPCL
reported US$2.6/bbl (positive) average GRMs on the back of better inventory
management. The company had 50% less crude inventory at the end of March
2012 compared to its normal levels. It was thus able to report US$1.6/bbl and
US$4.0/bbl GRMs for its Mumbai and Kochi refineries respectively. The
company received a benefit of US$1.0/bbl due to octroi reversal for its
Mumbai refinery. BPCL received subsidies of Rs36.6bn from upstream
companies. However, devoid of any compensation from the government, it
had to absorb losses of Rs79.6bn, impacting profitability. The company also
incurred forex loss of Rs16.0bn due to the wide fluctuation in rupee-dollar
exchange rate during the quarter. Borrowings surged to Rs286bn thus
pushing up interest cost by 55.4% YoY at Rs5.2bn. Thus BPCL reported a huge
loss of Rs88.4bn in Q1FY13.

BPCL – BUY Exploration upside in Brazil ::IIFL

We hosted BPCL at our investor conference in Singapore. The
management indicated the possibility of further reserve
accretion in Mozambique as the unexplored southern part of
the block will be drilled in 2HCY12. Appraisal drilling in Barra
and Wahoo in Brazil may establish reserves by mid-CY2013.
The company intends to increase upstream capex from Rs8.5bn
in FY12 to Rs20bn in FY14. We revise our target price upward
to Rs865/share to factor in exploration upside from Brazil and
upgrade our rating to BUY

BPCL - Upside case of 1.0bn boe : Edelweiss, PDF link

Bharat Petroleum (BPCL) announced another gas discovery in the Atum well in Offshore Mozambique block, taking its total tally of gross recoverable reserves from the block to 30-60 tcf; the company’s share in the same is 3.0-6.0 tcf (500mn-1.0bn barrels of oil equivalent). The Atum discovery well encountered more than 300 net feet (92 meters) of natural gas pay in two high-quality Oligocene fan systems and was found to be an extension of the Golfinho discovery. The Atum-Golfinho complex on its own is expected to hold 10-30 tcf of recoverable reserves. With more exploration drilling planned for the year (Orca, Black-Pearl) along with multiple drill-stem appraisal wells, we see upside risk to our base case numbers for the Mozambique block. We maintain our bullish stance on BPCL’s E&P assets and retain ‘BUY’ with TP of INR843/share. BPCL remains our favourite among the three OMCs.

BPCL: Q4FY12 Result update : Centrum

Bharat Petroleum - Golfinho discovery: Nearing bull-case of 50 tcf; Buy : Edelweiss PDF link

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Bharat Petroleum (BPCL IN, INR 728, Buy)

Bharat Petroleum’s (BPCL) upstream venture (Bharat Petroresources, BPRL) recently reported yet another discovery - 59 metres net pay of natural gas in the Rovuma Area 1 offshore block in Mozambique. The discovery, termed as ‘Golfinho’, is estimated to hold 7-20 tcf of recoverable gas (13-45 tcf of in-place gas reserves). Additionally, the company also announced third successful drill stem test (DST) at Barquentine-1 well (located in the prosperidade complex). Including Tubaro discovery, the total recoverable reserves estimate for the Mozambique block now stands at 25.5–51.5 tcf, the lower band of reserves now nearing our base case assumption of 30 tcf. With more exploration drilling planned for the year (Atum, Orca, Black-Pearl), we see upside risk to our base case numbers. We maintain our bullish stance on BPCL’s E&P assets and retain ‘BUY’ on the stock with TP of INR 843/share. BPCL remains our favourite among the three OMCs.

Oil Refining & Marketing - Sing GRM at 15-week low; RIL up US$1/bbl WoW but weak 􀂄 :: BofA Merrill Lynch

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Oil Refining & Marketing
Sing GRM at 15-week low; RIL
up US$1/bbl WoW but weak
􀂄 Singapore GRM halved over last seven weeks to US$5.1/bbl
Reuters’ Singapore GRM has fallen by 51% since the week ended January 27
from US$10.3/bbl to US$5.1/bbl last week. Singapore GRM last week is at the
lowest level in 15 weeks. Singapore GRM in 4QTD is now at US$8.0/bbl. It has
been hit by a fall in diesel, jet fuel and fuel oil cracks. Fuel oil cracks have
declined the most (US$10.7/bbl) in the last seven weeks. Jet fuel and diesel
cracks are also down from peak levels in 4Q by US$3.7-5.0/bbl to US$13.7-
13.9/bbl. In the last 2-3 weeks diesel and jet fuel cracks are at the lowest level
since Nov-Dec’10.
RIL’s theoretical GRM up US$1.0/bbl WoW at US$4.5-5.7/bbl
RIL’s theoretical GRM last week at US$4.5-5.7/bbl is up US$1.0/bbl WoW with
higher end of the estimate being at US$0.6/bbl premium to Singapore GRM. RIL
has gained from Arab heavy being at US$0.4/bbl discount to Dubai and not
producing fuel oil (cracks down sharply). However, RIL’s GRM was boosted most
by our assumption that its new refinery uses Souedie crude (API of 24), which
was at US$6.3/bbl discount to Dubai. If use of Oriente crude (also API of 24) is
assumed, RIL’s GRM last week would be lower at US$3.6-4.7/bbl.
RIL’s theoretical GRM in Mar’12 lowest since Dec’09
RIL’s theoretical GRM to date in March 2012 at US$3.9-5.0/bbl is at the lowest
level since December 2009.
RIL’s 4QTD GRM below Singapore GRM and down YoY
RIL’s theoretical GRM in 4QTD at US$5.3-6.5/bbl is down US$2.7-3.9/bbl YoY
(US$9.2/bbl in 4Q FY11). It is also US$1.5-2.7/bbl below Reuters’ Singapore
GRM of US$8.0/bbl. RIL’s gain from QoQ product cracks rise is less than that of
Reuters’ product slate. Discount to Dubai of crude RIL uses is also QoQ lower.
RIL’s 4Q profit down 20-30% YoY at 4QTD GRM
RIL’s 4Q profit works out to Rs37.4-43.1bn at 4QTD theoretical GRM of US$5.3-
6.5/bbl and blended petrochemical margin of US$427/t (down 22% YoY in rupee
terms). It would mean 20-30% YoY fall in 4Q profit (4Q FY11: Rs53.8bn).
Downside to RIL’s FY13 EPS 10-20% if GRM at 4QTD level
Our FY13 EPS estimate for RIL assumes its GRM at US$8/bbl. If RIL’s FY13
GRM is at 4QTD FY12 level (ignoring shutdown) of US$5.7-6.8/bbl, its FY13 EPS
would be 10-20% below our estimate of Rs66.9.
R&M companies GRM up WoW and QoQ
BPCL and HPCL’s theoretical GRM last week was up WoW at US$3.1-3.
2/bbl. Their 4QTD theoretical GRM (including inventory gain) is also up QoQ at
US$5.8-5.9/bbl.

BPCL - Hold Namaste India conference highlights :Deutsche Bank

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We met BPCL at the Deutsche Bank Namaste India conference. The key
takeaways from the meeting were:
** Upstream business: i) Mozambique (Area 1 in Rovuma Basin): BPCL
estimates 2P recoverable gas reserve of 15-30 tcf in the block. BPCL expects
its share of exploration capex in Mozambique at US$100m each in
FY13 and FY14 - 5 exploration and 3 appraisal wells in FY13 and 4 exploration
and appraisal wells each in FY14. BPCL holds 10% stake in the block.
ii) Brazil (Block BM-C-30): BPCL estimates its share of exploration capex
in the block at US$170m in FY13 (5 exploration wells and 3 appraisal wells)
and US$60m in FY14 (2 exploration wells and 1 appraisal well). BPCL holds
12.5% stake in the block.
** Bina refinery (BPCL 49% stake): Capacity utilization at the 6mmtpa Bina
refinery is currently at 80% and is expected to reach 100% in the next few
months. All the secondary units have also been commissioned, and the final
capex for the project is INR122bn (US$2.4bn).
** Kochi refinery expansion: BPCL plans to expand the Kochi refinery from
9.5mmtpa to 15.5mmtpa and also upgrade it from a Nelson Complexity of
6 to 9.1. The estimated capex for the project is INR120bn (US$2.4bn) and
it is expected to be commissioned in FY17. The company also plans to set
up a niche specialty chemicals production facility in Kochi with an estimated
capex of INR60bn (US$1.2bn).
** Capex: BPCL estimates capex spend of INR35-40bn (US$700-800m) in
FY13, with cINR18bn (US$360m) being spent on upstream business and
the rest on refining and marketing infrastructure. The total capex spend on
upstream business over the next five years is expected at INR100bn (US
$2bn).
** Debt: Gross debt currently stands at INR220bn (US$4.4bn), down from
INR250bn (US$5bn) in Dec 2011, after the receipt of Government compensation
for 1HFY12 subsidy losses in Jan/Feb 2012.
We rate BPCL a Hold as high oil prices without an increase in regulated
product prices are likely to lead to higher losses from sales of subsidized
petroleum fuels.

Bharat Petroleum Corporation - Anadarko call reiterates our positive outlook on Mozambique;Buy ::Edelweiss, PDF link

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Bharat Petroleum Corporation (BPCL IN, INR 685, Buy)

We hosted a conference call with Anadarko Petroleum Corp today to get latest update on the company’s Mozambique and Brazilian assets (BPCL has stakes of 10.0-12.5% in these blocks). Anadarko management’s confident tone reiterates our positive stance on the exploration upsides from Mozambique. With rise in exploration activity in 2012, we expect more news flow related to higher reserves. As we move towards FID in late 2013 (reserve certification, gas price contracts, government approvals), uncertainties on the operational front will diminish.  We maintain ‘BUY’ on BPCL with TP of INR843/share valuing upstream at INR166/share (bull case at INR389/share).

Investment Focus: BPCL - Buy ::Business Line

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Investors with a long-term perspective can consider buying shares of BPCL, the country's second largest public sector oil refiner and marketer.

Although high subsidy burden continues to negatively impact oil marketing companies, BPCL's overseas investments in exploration and production (E&P) assets seem to be paying off handsomely. Also, a possible increase in the price of petrol and diesel should ease under-recovery pressure.

BHARAT PETROLEUM Large upsides from E&P investments :Edelweiss

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Recent developments in Bharat Petroleum’s (BPCL) upstream venture
(Bharat Petroresources, BPRL), especially in Mozambique (10% stake),
have catapulted BPCL in the global E&P map. After incorporating increase
in reserves and potential upsides, we raise our estimate of BPCL’s E&P
business to INR 166/share. We also note that a bull case may lead to
further upside by INR 223/share. BPCL remains our favourite among the
three OMCs. We retain ‘BUY’ on the stock with TP of INR 843/share.
Mozambique discoveries catapult BPCL in global oil & gas map
Recent successes in the Rovuma offshore block, Mozambique, have catapulted BPCL in
the global oil & gas map. With total nine successful wells, Anadarko (operator)
estimates recoverable reserves at 16.5‐31.5+ tcf of gas. With a hectic exploration
programme of eight wells in FY13 and potential oil‐bearing targets in the block’s
southern area, we see further rise in news flows with potential upgrade in reserves
estimates. Reserves are expected to be certified in mid‐CY13 as Anadarko expects FID
to be announced in CY13. At 13% WACC, we assign a value of INR130/BPCL share with
bull case, pegging the same at INR298. The recently announced Cove Energy bid of
USD1.7bn implies BPCL value at INR240/share (assigning 80% value to Mozambique).
Drilling activity in Brazil to intensify; news flows every 1‐2 months
Drilling activity in Brazil is expected to intensify as the company plans to drill nine
wells in FY13 (six in past 3.5 years). BPCL is excited on potential targets, especially in
the Espiritos Santos basin (discoveries present in all four corners of blocks; close to
Jubarte complex of ~2.0 bn bbls) and Sergipe Alagoas basin (appraisal of recent large
discovery + exploration targets). Triggers: News flows every 1‐2 months. At USD
5.0/boe, we value Brazilian assets at INR 45/share and bull case of INR 95/share.
Outlook & valuations: Increasing TP to INR843/share; ‘BUY’
We peg BPCL’s E&P assets at INR166/sh (base case) and bull case at INR389/sh. As a
result, we raise our TP to INR843/sh (INR753/sh earlier). Our confidence of substantial
value in E&P asset stems from recently announced bid of USD1.7bn for Cove Energy
(8.5% in Mozambique block). Apart from E&P, we also like BPCL due to trigger of
potential increase in diesel prices post parliament session (April end). Triggers: Newsflows
every month from Mozambique and Brazilian blocks. Maintain ‘BUY’.

BPCL - Large upsides from E&P investments; company update; Buy (Edelweiss PDF link)

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BPCL (BPCL IN, INR 666, Buy)

Recent developments in Bharat Petroleum’s (BPCL) upstream venture (Bharat Petroresources, BPRL), especially in Mozambique (10% stake), have catapulted BPCL in the global E&P map. After incorporating increase in reserves and potential upsides, we raise our estimate of BPCL’s E&P business to INR 166/share. We also note that a bull case may lead to further upside by INR 223/share. BPCL remains our favourite among the three OMCs. We retain ‘BUY’ on the stock with TP of INR 843/share.

BPCL: Counter bids for Cove Energy’s assets a long-term positive ::Systematix research

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As per press reports (not confirmed by the companies), Indian state-owned companies GAIL and ONGC (through its overseas E&P subsidiary OVL) plan to bid ~US$2bn for Cove Energy’s African assets. This follows the bids of SHELL and PTTEP made for these assets last week. Although, these counter bids underscore the high E&P potential attached to these assets, the long-tailed nature of this business (first gas in 2018) would make value creation a gradual process. Further, near-term concerns on high crude prices, lack of clarity on subsidy sharing, high under-recoveries would cloud the earnings outlook of BPCL. Maintain HOLD.

Result Update: DLF, BPCL, Infinite Computer Solutions :: Emkay

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Click in link to read report: Result Update

DLF Reco: REDUCE CMP: Rs 231 Target Price: Rs 220 Tough times continues ·      Weak quarter of core operations, cash outflows towards land acquisition and high interest costs depleted the objective of non-core asset sale i.e debt reduction (down by just Rs 1.7bn) ·      DLF adds land parcels in Chennai and Mumbai valued at Rs 35-40bn to the non-core assets list. Sale of Aman Resorts is delayed to Q1FY13 & monetization of wind power on cards ·      DLF intends to launch 2msf of group housing in New Gurgaon by FY12 & 2.5msf in Golf links, Gurgaon. We believe these launches will give much abated boost to core operations ·      We maintain our Reduce rating with TP of Rs 220. Cut our bottomline estimates by 22% / 15% for FY12E /13E. At TP, stock would trade at P/BV of 1.4x on FY13E

BPCL Reco: ACCUMULATE CMP: Rs 589 Target Price: Rs 655 In black on additional govt support ·      BPCL reported results which were above our and street estimates with EBIDTA at Rs.37bn and Net profit at Rs31.3bn, while revenue grew by 60.4% YoY to Rs.588bn ·      During the quarter company received budgetary support of Rs69.9bn from the government, while discount from upstream company was Rs.35.7bn ·      Average gross refining margin for Q3 FY12 was at $3.6/bbl as compared to $1.6/bbl, growth of 118% QoQ, mainly led by higher product spread in heavy distillates segment especially in FO ·      Lowered our earnings for FY12E on account of higher under recovery and increased earnings for FY13E on higher Bina thruput. At CMP stock provides limited upside, maintain ACCUMULATE with revised TP of Rs.655

Infinite Computer Solutions Reco: BUY CMP: Rs 83 Target Price: Rs 120 Profit beat aided by strong margin improvement ·      While Infinite’s rev at US$ 53 mn (-6% QoQ) missed est, mgns improved by ~310 bps QoQ to 20% aided by ~11.5% currency depreciation and reduction in employee count ·      Pfts at Rs 393 mn (+28% QoQ) beat exp aided by strong mgn show and hedging gains( Rs 64 mn V/s est of ~Rs 40 mn losses). Top 1/5/10 clients declined by ~15%/5%/8% QoQ ·      Mgmt indicates revival in business from key telecom client. Co currently pursuing 2 large rev sharing deals. Cash generation continues to improve along thesis  ·      Raise FY12/13E EPS by 13%/6% aided by Q3 beat and lower currency resets while we cut our US$ revenues. Retain BUY, TP Rs 120 on inexpensive valuations at <3x 1 yr forward P/E

Tata Chemicals Reco: ACCUMULATE CMP: Rs 363 Target Price: Rs 400 Cautious outlook; maintain Accumulate ·      Q3FY12 consol results were in line with revenues of Rs 38 bn, +32% yoy and EBITDA of Rs 5.6bn, 26% yoy (with margins of 14.6%). TCL reported APAT of Rs 2.3 bn, +70% yoy ·      US subsidiary reported strong results driven by higher topline. However, European business disappointed due to lower margins. Standalone performance remained strong ·      Though demand remained strong across most products, however rising input costs exerted cost pressures  ·      Management maintained cautious outlook. Increased soda ash supply in China will put pressure on prices; decline in phos acid prices will impact IMACID. Maintain Accumulate

McNally Bharat Engineering Reco: HOLD CMP: Rs117 Target Price: Rs 135 No re-rating catalysts, Downgrade to Hold ·      Standalone revenues up 30% yoy to Rs4.9 bn. EBITDA margins stable at 6.5%. Net profit growth at Rs10% yoy to Rs125 mn – ahead estimates ·      MSE disappoints with revenue decline of 28% yoy, EBITDA loss of Rs29 mn and net loss of Rs98 mn. CMT business net profit ahead estimates at Rs32 mn ·      Order inflows dismal at Rs1.4 bn. Order book down 8% qoq to Rs36 bn. But L1 in orders worth Rs8.6 bn. Debt continues to rise – up 46% over Mar’11 to Rs4.2 bn ·      Cut earning estimates by 20% for FY12E and 8% for FY13E. Foresee no re-rating catalysts in near term. Downgrade to Hold with revised target of Rs135 per share

Reliance Power Reco: BUY CMP: Rs 107 Target Price: Rs 155 Continues to deliver on timelines; Reiterate buy ·      PAT of Rs2.04bn above estimates on better profitability at Rosa and higher other income ·      Factor in better profitability from Rosa and higher other income in FY12E (upgrade earnings by 16%) but maintain our FY13E earnings ·      3Q progress – (1) Rosa unit 3 commissioned, (2) Sasan coal mine- own equipments also put to work; considerable overburden removed, (3) Indo mines - JORC report for IInd block and trial barge transportation and (4) Tilaiya mine R&R initiated and section 24 notification in exp. In next 2 months ·      Building solidity - (1) huge cheap captive coal, (2) merchant capacity in captive coal plants only, (3) plants near load centers (PoC), (4) minimizing cost of capital & (5) low to reasonable tariffs - offtake and payment risk minimized  ·      Solidity & positive triggers ignored with stock at 30% discount to fair value. Foresee RPL as the most sustainable private power utility; Reiterate ‘Buy’ with TP of Rs155/Share

Cipla Ltd Reco: SELL CMP: Rs 342 Target Price: Rs 318 No Earnings Catalyst – Downgrade to Sell ·      Cipla’s Q3FY12 results were below expectation with a) Revenues up 14% to Rs17.1bn b) EBITDA up 23% to Rs3.9bn and c) APAT up 16% to Rs2.7bn  ·      Revenues were driven by 18% growth in domestic biz. EBITDA margins declined 215bps QoQ despite strong growth in domestic biz and INR dep ·      Going forward with no favorable impact of currency, we believe gross margins will return to ~55% from current levels of 58%, thereby restricting EBITDA margins to 21-22% ·      On account of delay in Indore SEZ ramp-up and weakening in margins going ahead – we downgrade the stock to Sell with a target price of Rs318 (18xFY13 EPS of Rs17.6)

Eicher Motors Ltd Reco: HOLD CMP: Rs 1,705 Target Price: Rs 1,915 Mixed bag, Downgrade to HOLD ·      EBIDTA at 1.5bn (4% below est). APAT at Rs 854mn (in line). CV business surprised positively, while two wheeler performance was below est. ·      Waiting list for two wheelers continues despite capacity increase. Strong CV performance will be driven by expansion in HD ·      Fine tune CY12 est. by -2% to Rs 137.8. Introduce CY13 with EPS of Rs 161. See downside risk to vol. est. due to macro environment/capacity constraints ·      Downgrade to HOLD with a TP of Rs 1,915 (current business value – Rs 1,762, NPV of engine business – Rs 153). Key triggers – faster capacity addition of two wheelers

Sun Pharma Reco: ACCUMULATE CMP: Rs 552 Target Price: Rs 586 Strong Performance - Maintain Accumulate ·      Sun Pharma’s Q3FY12 results - Revenues at Rs21bn (up 34% YoY), EBITDA at Rs9.6bn (up 119% YoY) and RPAT at Rs6.6bn (up 91% YoY) ·      Strong performance was led by 63% growth in US which was driven by ramp-up in market share of recently launched products, increase in selling prices of select products in Taro and INR dep. Domestic biz grew 17% ·      Going forward in FY13E, growth will be driven by Para-IV launch of Lexapro, Plavix, Eloxatin and Stalevo in US and continued momentum in domestic biz ·      With strong traction from US market and a stable domestic business – we maintain Accumulate rating with a revised target price of Rs586 at 21x FY13E EPS of Rs28

Motherson Sumi Systems Ltd Reco: ACCUMULATE CMP: Rs 174 Target Price: Rs 210 In line, Retain ACCUMULATE ·      EBIDTA at Rs 2.6bn was in line (est. Rs 2.5bn). APAT at Rs 1.2bn was above est. of Rs 885mn due to lower tax rate. SMR reports 150bps QoQ margins expansion with higher utilization ·      Peguform reports Sales/Adj. EBITDA/APAT of Rs11.5bn/Rs 43mn/ Rs -156mn for 38 days. Peguform to be EPS accretive but not assigning value due to limited information ·      Concerns with Debt overdone. Net Debt (ex Peguform) is Rs 16bn (marginally up QoQ).  Of the total gross debt of Rs 29bn of Peguform, debt attributable to MSSL is only Rs 11bn ·      Retain ACCUMULATE with a TP of Rs 210.  SMR margins to further improve with increase in utilization. Major benefit visible from 2QFY13

State Bank of India Reco: HOLD CMP: Rs 2,129 Target Price: Rs 1,950 Slippages remain higher; capital infusion inadequate ·      SBI Q3FY12 – NII at Rs114bn ahead of estimates aided by higher loan growth and strong NIM at 4.1%. However, with lower other inc, PAT at Rs32.6bn came in line with our est ·      Asset quality continues to disappoint with gross slippages at Rs81bn (3.6% ann). Further, despite equity infusion, Net NPL / networth would stand at high 20%+ for FY12 ·      Loan growth at 7% qoq came in as a surprise. With 3% qoq growth in deposits, LDR inched 330bps qoq to 85%. Mgmt guided for 16% yoy loan growth for FY12 ·      Capital infusion + plough back of PAT would raise tier I CAR to 9%.  Also, with lower accretion in net slippages, pressure on asset quality to ease. Upgrade to Hold with PT of 1,950