Monday, May 25, 2009

[Investors Please Listen] Research Views


Emco Transformers Q4FY09E Result Estimates (Result on 27th May)

We expect net sales to grow 2.7% yoy to Rs3.5bn.  Expect Volume growth of 6% yoy to 4027 MVA. Expect realizations per MVA to drop by 10% yoy to Rs0.47mn.  Expect 10% yoy decline in meter revenues and 16% yoy growth in project revenues. We expect operating margins to be at 12.3% (drop of 180 bps yoy) and operating profits to decline 10.6% yoy to Rs432mn. We expect net profits to decline by 36.5% YoY to Rs183mn.  The key things to watch out - (1) order inflows from industrial segment as well as SEBs, (2) guidance on realizations/margins going forward, (3) Delay in dispatches / payment and 4) update on power generation business especially funding.


TRF Q4FY09 Result Update ; Maintain 'BUY' ; BUY ; Target: Rs692

TRF gave positive surprise in Q4FY09 with better-than expected operational performance – (1) revenues grew by 41% yoy to Rs2.4 bn led by sustained pick up in order booking in Project division (2) operating margins up 210 bps yoy to 15.5% (3) net profit growth at 55% yoy to Rs239 mn. However, York reported disappointing results due to adverse impact of forex movement and challenging business environment – its revenues down 61% yoy and net loss of Rs32 mn. Strong performance in H2FY09 following robust order booking allayed investor concerns. TRF has good quality order backlog of Rs13.6 bn, least likely to give negative surprise in FY10E. Benign commodity prices could yield savings in raw material expenses and trigger margin expansion. Amidst above, we revise our consolidated FY10E earnings upwards by 10.7% to Rs104.9/Share and introduce FY11E earnings of Rs125.9/Share. We maintain our 'BUY' rating with revised target price of Rs692, valuing at 6X 1-year forward PER.


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