The Q2FY10 results were a combination of some positive while some negative surprises. The end-result was that PAT degrowth was 5.8% as against expectation of 5.6% degrowth. It seems that the Q2 expectations had factored in improvement in earnings seen in Q1FY10 results.
We expected 3.3% and 6.2% growth in Net Sales and EBITDA from Emkay Universe*, the actual turned out to be a growth of 2.4% and 6.6% respectively. We expected EBITDA margin to improve by 64bps, the actual turned out to be increase of 93bps. PAT declined by 5.8% as against our expectation of 5.6%
Emkay Universe PAT growth was at negative 5.8% as against BSE 500 at negative 3.0%.
Emkay Large Cap, Emkay Mid Cap and Emkay Small Cap showed a decline of 6.1%, 4.3% and 5.1% respectively.
EBITDA margins of Emkay Universe Companies improved by 93 bps YoY as against 184 bps increase in BSE 500. EBITDA margins improved amongst Emkay Universe Companies, for Cement (736 bps), Offshore Oil Field Services (710 bps), Automobiles (535 bps), FMCG (317 bps) and Chemicals & Fertilizers (253 bps). EBITDA margins declined for Real estate (701 bps), Metals & Mining (625 bps), Logistics (132 bps) and Construction (74 bps).
EBITDA of Emkay Universe Companies improved by 6.6% against 10.1% of BSE 500. EBITDA increased in Emkay Universe in sectors like Automobiles (92.1%), Cement (45.7%), FMCG (38.3%), Construction (28.2%) and Pharmaceuticals (11.7%). EBITDA declined in sectors like Real Estate (51.3%), Chemicals & Fertilizers (31.3%), Metals & Mining (28.0%) and Logistics (11.1%).
Interest cost increased by 40.8% YoY for Emkay Universe as compared to 6.7% of BSE 500. Interest cost rose sharply for Emkay Universe Companies in Construction (110%), Real Estate (66%), Telecom (64%), Engineering & Capital Goods (56%) and Automobiles (51%).
Other Income declined by 1.5% YoY for Emkay Universe as compared to 6.7% of BSE 500. Other income fall for Emkay Universe Companies in IT Services (62%), Offshore Oil Field Services (61%), and Paper (55%) While it rose sharply in Telecom (243%), FMCG (90%) and Engineering & Capital Goods (60%).
PAT for Emkay Universe Companies showed a decline of 5.8% YoY as against 3.0% of BSE 500*. Top sectors with significant PAT growth in Emkay Universe Companies are Automobiles (92.7%), Cement (44.5%), FMCG (41.8%), Engineering & Capital Goods (13.5%) and Pharmaceuticals (8.1%). PAT declined for Real Estate (67.2%), Chemicals & Fertilizers (42.8%), Metals & Mining (38.1%), Offshore Oil Field Services (24.3%) and Paper (22.5%).
17% of Emkay Universe Companies have shown 0-15% EBITDA growth with 39% showing negative EBITDA growth. 15% of Emkay Universe Companies have shown EBITDA growth of 15-30% while 10% of Emkay Universe Companies have shown EBITDA growth of 30-50%. 19% of Emkay Universe Companies have shown EBITDA growth of >50%.
9% of Emkay Universe Companies have shown 0-15% PAT growth with 52% showing negative PAT growth. 11% of Emkay Universe Companies have shown PAT growth of 15-30% while 6% of Emkay Universe Companies have shown EBITDA growth of 30-50%. 22% of Emkay Universe Companies have shown EBITDA growth of >50%.
Post Q2 results; we have revised earnings of 47 companies (33 upwards, 14 downwards). We have also changed recommendation for 23 companies (8 upwards, 15 downwards) and changed target prices of 59 companies (49 upwards, 10 downwards).
Emkay Universe companies are estimated to show -1.2%, 9% and 3.2% growth in sales, EBITDA and PAT respectively for FY10E.
Emkay Universe is currently trading at 14.4X FY10E and 12.6xFY11E earnings which is at a discount of 32% and 23% respectively to consensus Sensex PE.
*All numbers are Ex- oil & gas and banking except for PE.
Q2FY10 Strong Results
| Large Caps | Mid Caps | Small Caps |
| ACC | Allahabad Bank | ABG Shipyard |
| Asian Paints | Ashok Leyland | JK Paper |
| Bajaj Auto | Bhushan Steel | Mcnally Bharat Engineering |
| Bank of Baroda | Chambal Fertilisers |
|
| BHEL | Godrej Consumer Products |
|
| Dr. Reddy's Lab | Great Offshore |
|
| Grasim Industries | IRB Infrastructure |
|
| Hero Honda | Madras Cements |
|
| Idea Cellular | Marico |
|
| Mah & Mah | Orbit Corporation |
|
| Maruti Suzuki India | Shree Cements |
|
| Punjab National Bank | Sterlite Tech |
|
| Tata Motors | Torrent Pharma |
|
| Ultratech Cement | TVS Motor |
|
Q2FY10 Weak Results
| Large Caps | Mid Caps | Small Caps |
| Bank of India | Aban Offshore | Advanta India |
| Divi's Lab | Ballarpur Inds | Elecon Engineering |
| DLF | Coromandel Fertilisers | Garware Offshore |
| HDIL | Dishman Pharma | Godawari Power |
| Jaiprakash Associates | Gateway Distriparks | ICRA |
| Punj Lloyd | Glenmark Pharma | Indo Tech |
| Reliance Communications | GSFC | Kalindee Rail |
| Sesa Goa | Phoenix Mills | Tamilnadu Newsprint |
| State Bank of India | Tata Chemicals | Voltamp Transformers |
| Tata Steel |
|
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| Unitech |
|
|
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