HUL Q1FY10E - Result expectation (28 July)
We expect muted revenue growth at 4.9% to Rs44.3 bn in Q1FY10 based on (1) 2% price led growth and (2) 2% volume growth
Core EBITDA is expected to jump 16.8% YoY to Rs6.5 bn, ahead of revenue growth primarily attributed to benefits from lower raw material costs.
Operating margin is expected to improve by 150 bps yoy to 14.6%.
Adjusted net profit is likely to increase 2.9% YoY to Rs5.6 bn in Q1FY10.
Key things to observe are - (1) management comments on pricing environment (2) extend of input cost drop and (3) outlook shared on volume growth especially in soaps, detergent and HPC segment.
Gujarat Narmada Fertilisers (GNFC) Q1FY10 results expectations- Net Sales Rs 4.3 bn, PAT Rs 278 mn
We expect fertiliser revenues to decline by 19% to Rs 2.3 bn and chemicals to decline by 20% to Rs 2 bn. Fertiliser revenue is expected to fall despite expected 24% increase in urea sales volume (158 thousand mt) due to fall in furnace oil prices. Chemical revenues are expected to decline due to fall in chemical prices. Company's key chemicals like acetic acid saw price decline of 18% YoY, Aniline 34%, Methanol 51% etc.
We expect margins in chemical segment at 25% as compared to 19.4% in previous year. Previous year margins were lower on account of ammonia plant shut down due to technical problems. We expect fertiliser segment margins to remain negative at 3%.
We expect EBITDA margins to increase sharply by 800 bps to 16.7% and EBITDA to increase by 55% to Rs 728 mn.
Driven by higher margins, despite lower revenues, we expect PAT to remain flat at Rs 278 mn with estimated EPS of Rs 1.8.
Gujarat State Fertilisers (GSFC) Q1FY10 results expectations- Net Sales Rs 9.2 bn, PAT Rs 344 mn
We expect revenues from the fertiliser segment to come down 31% YoY to Rs 7 bn. We expect urea sales volumes to increase by 140% and DAP to increase by 44% to 367 mt while due to sharp fall in realisation, fertiliser revenues are expected to decline.
Revenues from the chemical segment are also expected decline by 20% to Rs 2.3 bn mainly due to fall in prices.
EBIT margins in chemicals segment is expected to decline sharply from 18.5% to mere 2% in Q1FY09. Fertiliser segment margins are expected to decline marginally by 100bps to 6%.
Overall, EBITDA margins are expected to decline by 190 bps to 9.1% from 11.0% and EBITDA is estimated decline 40% to Rs 846 mn. We expect PAT of Rs 344 mn, -53% YoY resulting in an EPS of Rs 4.3 as against Rs 9.2 previous year.
HT Media Q1FY10 results – Revenue growth continues to remain muted
HT media reported 3.2% YoY growth in revenues to Rs 3350.6 mn led by (1) 24% growth in circulation revenue to Rs 444 mn due to increase in cover price and (2) addition of Rs 88.3mn from radio business (Nil in Q1FY09, merger effective from Jan 09). However Advertising revenue declined by 1% YoY to Rs 2781mn. On like to like basis (excl. radio business) the revenues remained flat YoY.
EBITDA grew by 4.1% YoY to Rs 690.3mn despite inclusion of losses from radio business. However, sequentially EBITDA increased by 57.4% due to sharp reduction of 292bps in Advertisement & sales promotion expenses. Despite 292 bps and 18 bps YoY decline in sales promotion cost and raw material cost respectively, EBITDA margin improved by mere 18 bps YoY to 20.6% due to 322 bps YoY increase in staff cost.
Surprisingly on QoQ basis raw material expenses as a % of sales declined by only 40 bps, though average international newsprint cost declined by 13.1% sequentially to $626. However, on strict check over all other expenses (excluding raw material cost) resulted into 760 bps sequential improvement in EBITDA margin. We believe company is still carrying a high cost inventory and impact of declining news print cost is yet to reflect in its financials.
Net profit declined by 14.1% to Rs 324mn because of 27.2% and 52.5% increase in depreciation and interest rate. Also Company has accounted a provision for Rs 45 mn for diminution in value of a joint venture of the company. However on adjustment of exceptional item APAT declined by 2.2% YoY to Rs 369 mn
Con call for the company is scheduled at 1 PM on 28 July 09(access number: (022) 66290101 and 30651010). Major factors to watch in con call (1) outlook on advertisement revenue (2) Impact of fall in news print prices in the financial performance (3) performance of radio business. (4) Composition of barter revenues (non cash)
Overall, the results reflect continued pressure on growth in advertisement revenues, which remain key trigger for the earnings growth of the print media sector overall. At CMP of Rs113 the stock trades at expensive valuations of 17x FY11E consensus EPS of Rs6.5. Stock Not Rated.
Punj Lloyd Q1FY10 Result – First Cut Analysis
Punj Llyod (PLL) reported strong performance during Q1FY10 with revenue growth of 12% yoy and net profit growth of 30% yoy, as against our estimate of a decline.
Consolidated revenue growth was above estimates at 12.2% yoy to RS29,728 mn, although lowest in past 8 quarters. We had estimated for a 13% yoy decline in revenues – attributed to order book composition and low opening order book cover at 1.7X FY09 revenues.
Operating margins improved 50 bps yoy to 10.4%, as against our estimate of 110 bps drop, primarily due to lower than expected increase in raw material costs. Consequently operating profits increased 18.3% yoy to Rs3094 mn, above estimates.
Led by strong revenue growth, improvement in operating margins and high other income, adjusted net profits increased 30.3% yoy to Rs1272 mn, above estimates. PLL had reported forex loss of Rs500 mn in Q1FY09 (Included in other income).
PLL's order book increased 38% yoy to Rs278.9 bn led by Rs100 bn (up 86% yoy) worth orders bagged during the quarter. PLL bagged most of its orders in the infrastructure segment, with infrastructure now contributing 56% (37%) of total order book followed by Process, plants & others at 22% (42%) and Pipelines at 20% (19%).
The auditors marginally increased their qualification with respect to deductions and recoveries amounting in total to Rs696 mn (As on March 2009 – Rs536 mn)
We have a Reduce rating on the stock.
Tata Motors – Q1FY10 result update
Tata Motors reported 7.6% YoY decline in net sales to Rs 64.0 bn, against our expectation of 62.bn
Adj EBITDA grew by 37.2% YoY to Rs 7.1bn against our expectation of Rs 5bn. The key reason for the storng performance has been signfcaint reduction in raw mataerial (RM) cost. RM as a % of sales declined by 520 bps YoY to 66.8%.
APAT declined by 30.1% YoY to Rs 2.0bn, against our expectation of Rs 2.7 bn. The strong operation al performance failed to tricke down at net profit level due to significant increase in interext cost. Interest cost stood at Rs 2.5 bn, against our expectation of 1.8 bn.
View:While we appreciate the significant improvement in operational performance of TML in Q1FY10, we continue to have a concern over the leveraged balance sheet. This will restrict the healthy operating performance to percolate into strong PAT. Also, the concern with respect to JLR have not changed (FY09 – JLR loss –£306, conso D/E of 2.2x with debt (conso) of Rs 323bn excluding TMFL's loan of Rs 52.1bn). We do not rule out the risk of further dilution in equity considering the cash burn at JLR in the near term. We believe, that at current price of Rs 375, the stock does not provide cushion against negative surprises. We maintain our REDUCE rating on the stock. Target price under review.
Bharat Bijlee Q1FY10E Result Estimates (Result on 29th July)
We expect low base of Q1FY09 to drive Q1FY10E numbers. Expect revenue growth of 5.3% YoY to Rs1.1bn. The EBITDA margins to improve by 230 bps resulting into EBITDA growth of 25% YoY. Higher depreciation and interest to result in slightly lower growth in APAT by 11% YoY. The key things to watch out in Q1FY10E - (1) order inflow in the transformers business, (2) performance of motors business and (3) drop in transformer realizations.
NTPC – Q1FY10 results – Above estimates (First cut analysis)
Revenue grew by 26% to Rs120bn – Above estimates mainly because of higher realizations of Rs2.30/Unit (Rs2.03/Unit our estimate) driven by higher fuel cost of Rs 1.48/Unit (Rs1.27/Unit our estimate).
EBITDA grew by 31% to Rs31.8bn. The EBITDA margins improved by 110bps yoy to 26.5% (lower than expectations of 27.2%).
NTPC's reported net profit of Rs21.9bn, up 27% yoy. The net profit was higher by Rs2.7bn compared with our estimate of Rs19.2bn.
Our estimate for the net profit was based on the fact that company commercialized 2000MW of capacity between Q1FY09 and Q1FY10. The capital cost and equity for these projects are Rs100bn and Rs30bn respectively. Considering that NTPC makes project level ROE of 27%, the 2000MW would earn NTPC an additional Rs8.0bn for the full year and Rs2.0bn for the qtr.
Therefore we added Rs2.0bn to the Q1FY09 net profit of Rs17.2bn and arrived at Rs19.2bn, our net profit estimate for Q1FY10.
However, the reported net profit was higher by Rs2.7bn compared with our estimate of Rs19.2bn.
Higher other income resulted in Rs0.7bn higher net profit.
The remaining difference of Rs2bn could be because of (1) adjustments not yet disclosed by the company, (2) higher availability during the qtr due to lower planned maintenance.
If the net profit is higher because of any of the above reasons, we believe it would normalize going forward.
However, if the above mentioned reasons are not there then this could be due to the impact of new CERC regulations.
We await more clarity from the management.
LMW 1QFY10 – Results ahead led by other income, but troubles still persist
LMW reported 1QFY10 results in line with expectations. Net sales fell by 59% YoY to Rs1925mn (v/s our estimate of Rs1844mn). EBIDTA declined by 77% yoy to Rs210mn and PAT also declined by 77% yoy to Rs111mn (v/s our estimate of a net loss of Rs2mn). The PAT for the quarter is driven by lower depreciation charge similar to Q4FY09 (50% lower) and other income of Rs142mn. While order book of over Rs32bn remains healthy, but order deferrals continue to impact the financial performance of the company. With continued strong headwinds on the sector, growth revival in the textile industry doesn't look visible in the near-term. Recent stock performance reflects much higher expectations, which we believe are highly unlikely.
We have ACCUMULATE rating on the stock with Target price of Rs810. While we retain our target price on the stock, we believe that recent stock performance is unjustified in absence of any improvements in the outlook.
JK Paper Q1FY10 Results Update : results above estimates
JK Paper Q1FY10 results were better than our expectations at bottomline. Company reported net revenues of Rs 2.6 bn for Q1FY10 (in line with our expectation of Rs 2.7 bn), down by 0.9% YoY. EBITDA margins improved by 420 bps to 23.3% mainly on account of :
- Higher sales from the high end segment in the Packaging Board
- Use of pulp inventory acquired at significantly lower prices last quarter
- Higher Realizations from the Packaging Board business on account of stable prices and strong demand
Overall EBITDA increased by 21% to Rs 608 mn while adjusted profit increased by 31.4% YoY to Rs 202 mn. AEPS for the quarter stood at Rs 2.6 over Rs 2.0 for Q1FY09.
We will review our target price and rating shortly.
n Research Update Included
ICICI Bank Q1FY10 Result Update ; Operational improvement continues ; HOLD ; Target : Rs750
ICICI Bank' Q1FY10 results were in line with expectations. Although NII at Rs19.9bn was below expectations, (1) higher provisions, (2) better CASA and (3) low restructured assets were welcome features. Driven by high treasury gains, the reported net profit has grown by 20.6% yoy to Rs8.8bn. The bank has also used higher treasury gains to provide for NPAs (provisions at Rs13bn) and kept gross and net NPAs almost flat.
Although the additions to NPAs (estimated) at Rs13.2bn were slightly higher than earlier quarters, we believe that the same will moderate in coming quarters. The restructured assets added during the quarter were also limited to Rs14.5bn (0.7% of advances).
The profitability in UK and Canada subsidiary has remained stable during the quarter with UK subsidiary witnessing write back of USD68mn of MTM provisions.
We are leaving our estimates unchanged for FY10 and FY11. However, we believe that at current market price, the stock is currently fairly valued. We downgrade our rating to HOLD with price target to Rs750.
CRISIL Q2CY09 Result Update ; IREVNA/advisory show smart bounce back ; ACCUMULATE ; Target: Rs 4,200
CRISIL's Q2CY09 net profit of Rs389mn was in line with our expectations. The revenues grew by 4.3% to Rs1.3bn. However, the revenue growth was much stronger at 16.9% yoy adjusted for discontinued operations. The highlights of the quarter were research (read IREVNA) and advisory business where the revenues grew by 6.5% and 100% sequentially. Driven by better volumes, the margins in advisory business also bounced back sharply.
With turnaround in research and advisory business, CRISIL's business model is now ready to fire on all cylinders. We are upgrading our estimates for CY09E by ~4% to Rs231 on back of traction in research and advisory business and introducing our CY10E estimates. We are also upgrading our price target on the stock to Rs4,200 which values the stock at 14x CY10E core EPS plus cash of Rs600 per share in CY10E. However, with just 13% upside to the current market price, we downgrade the stock from BUY to ACCUMULATE.
ICRA Q1FY10 Result Update ; Subdued performance ; REDUCE ; Target: Rs 820
Though ICRA's reported net profit of Rs151mn for Q1FY10 was ahead of our expectations, the operational performance was weaker as the operating margins contracted by 350bps yoy. The revenue growth during the quarter was strong at 30.5% driven by all businesses except consultancy businesses. However driven by sharper 37% rise in costs, the EBIDTA grew by slower 15.6% yoy.
We are downgrading our earning estimates for FY10 and FY11 by 5% each to Rs56 and Rs67 each. However, we are upgrading our price target on the stock to Rs820 valuing the company at 12.0x core EPS of FY12 (Rs53) plus FY11 cash equivalents of Rs183/per share. We are also downgrading our rating to REDUCE as our TP implies negative return of 6% to CMP.
Madras Cement Q1FY10 Result Update ; Cost benefits fuel performance - Upgrading earnings ; ACCUMULATE ; Target: Rs 130
MCL's Q1FY2010 net profit at Rs1.38 bn is ahead of our expectation (Rs119 bn) on account of lower than estimated power and fuel cost. Cement revenues increased by 24.2% yoy to Rs7.26 bn driven by 14.7% volume growth (1.8 mn t) while realizations grew by 8.3% (Rs4034/ton). Helped by improvement in realisation and reduction in P&F cost EBITDA grew by 29.8% to Rs2.89bn. On cost front P&F cost at Rs782/ton on a sequential basis was down Rs160/ton. This clearly reflects that MCL is gradually exhausting its high cost coal inventory as it starts reaping benefits of fall in prices of international coal and pet coke. The company has entered into contract to source international coal/pet coke requirement at USD40-50 for deliver in June-July onwards. This shall further help MCL to improve on P&F cost. We are upgrading our earnings estimates by 4.7% to Rs19.7/share and also upgrading our rating from HOLD to ACCUMULATE with a revised price target to Rs130. We have valued MCL on average of 7X PER and EV/ton of USD for its FY2010 and FY2011 numbers. We agree that MCL high leverage and adverse demand supply situation in Southern region is a cause of concern, but we believe our target multiple PER of 7X factors in these concerns.
Ambuja Cements Q2CY2009 Result Update ; Upgrading earnings ; ACCUMULATE ; Target: Rs105
ACL's Q2CY2009 net profit at Rs3.24 bn is below our expectation primarily because of higher clinker purchases from the market (on account of plant shutdowns) which resulted in lower value addition. Revenues at Rs18.47bn grew by 18.2% yoy driven by increase in cement realisation by 7.1% yoy (Rs3,833/ton) and 10.3% yoy increase in volumes (4.82 mn tons). However on account of higher clinker purchases from the market ACL's EBIDTA for the quarter grew by a mere 3.8% yoy. ACL has commissioned grinding units earlier than the completion of new clinker capacities at Rauri and Bhatapara. Hence in order to maintain market share it resorted to higher clinker purchases. However this phenomenon is expected to reverse as ACL commissions its Rauri and Bhatapara clinkerisation units end of CY2009. We would like to highlight that if we assume ACL's raw material cost at Rs380/ton as reflected in Q1CY2009, its EBIDTA for the quarter would have stood at Rs6.04 bn, a yoy growth of 30.6% and PAT for the quarter would stood at Rs4 bn i.e. a growth of 33% yoy. As ACL's cement realisation for the quarter at Rs3833/ton are higher than our estimates of Rs3757/ton we are upgrading our earnings estimates for ACL by 15.4% for CY2009 to Rs8.4 and by 14.4% for CY2010 to Rs8.14. We are also upgrading our recommendation to ACCUMULTE and price target for ACL to Rs105.
Cadila Healthcare Q1FY10 Result Update ; Yet Again Stellar Performance ; BUY ; Target : Rs460
Cadila continued to maintain strong momentum in revenues and earnings growth for Q1FY10. 28% growth in revenue is mainly driven by a) 81% growth in US b) 31% growth in France and c) 13% growth in Domestic formulation business. During this quarter the Hospira JV commenced operation and reported revenue of Rs234mn and PAT of Rs64mn (Cadila's share). EBIDTA margins for the quarter improved by 110 bps to 20.5%, driven by a) Higher contribution from formulation segments b) 260 bps reduction in the Raw material cost and c) 130 bps reduction in employee cost. Higher revenue growth and expansion in operating margins led to 39% increase in RPAT to Rs 1247mn. However, adjusting to forex loss/gain, the APAT increased by 31% to Rs 1312mn. Despite generic launch of Pantoprazole, Nycomed JV continued to maintain strong traction and grew by 7% YoY to Rs294mn (PAT of Rs205mn). Management believe that they will easily surpass their annual guidance of Rs600mn revenue and Rs350mn PAT in FY10E from Nycomed JV & Hospira JV should provide incremental contribution. We strongly believe that company will continue to maintain strong growth momentum going forward and maintain our earning estimates of Rs32 (consensus EPS of Rs29.1) and Rs38.7 (consensus EPS of Rs34.8) for FY10E and FY11E respectively. Cadila is currently trading at 30% discount to its comparable peers in all valuations parameters. We revised our target price upwards from Rs368 to Rs 460 and reiterate our best pick in mid-cap Pharma universe.
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