Monday, November 9, 2009

[Investors Please Listen] Mixed Bag : Q2FY10 Results Review

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

 

 

Unitech

 

 

 


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