INTEREST RATE | ||||
6Months | 12Months | 24Months | 36Months | |
Cummulative | - | 11.00 | 11.50 | - |
Non Cummulative | 11.50 | |||
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IRB Infrastructure Developers Ltd
Margins positively surprise
ACCUMULATE
CMP: Rs 245 Target Price: Rs 250
IRB's Q3FY10 net profit (after minority interest) at Rs914.4 (+139% yoy) mn is above expectations (Rs635 mn) on account of higher than expected EBIDTA margins in Construction as well as BOT segment and lower than expected tax rate. Revenues for the quarter grew by 81% yoy to Rs4.33bn (our estimates Rs4.21bn), driven by 70.8% growth in construction revenues (Rs2.3 bn) and 94.3% growth in BOT revenues (Rs2.03 bn). BOT revenue growth was driven by addition of two new concessions of Surat Bharuch & Surat Dahisar where as growth in construction segment was driven by peak execution in new projects like Surat Dahisar, and Kolhapur project. EBIDTA for the quarter at Rs2.27 bn (our estimates- Rs2.01bn) grew 123.7% yoy, driven by 105.8% growth in BOT EBIDTA and staggering 248.3% growth in Construction EBIDTA.
IRB, an ideal play on India's continued focus on developing road infrastructure through PPP model, is on a verge of steep growth trajectory with expected earnings CAGR of 63%. Also the proposed fund raising exercise (enabling resolution of Rs12 bn) will equip IRB with a war chest of Rs65-70 bn to capitalize on huge opportunity in road BOT space in India and also significantly scale up its construction business. These two factors we believe will continue to fuel stock outperformance - Maintain our ACCUMULATE rating -price target Rs250.
--Hindustan Unilever
Facing CONUNDRUM, Maintain HOLD
HOLD
CMP: Rs 244 Target Price: Rs 276
The highlights of Hindustan Unilever (HUL) Q310 performance as under - (1) 4.9% YoY growth in revenues to Rs42.8 bn – marginally below our estimates (2) operating profit growth of 5.8% yoy to Rs8.0 bn – in line with estimates and (3) adjusted net profit declined by 8.8% YoY Rs6.0 bn – below estimates. The 5% growth in volumes in Q310 was in line with our estimates - surprise to consensus expectations. Business segments like - Personal Products, Beverages and Processed Foods registered robust volume and value growth during the quarter. Soap and Detergent segment continued with muted performance owing to deflation- but experienced an improvement in volume growth.
During Q210 results – we had downgraded HUL from "ACCUMULATE' to 'HOLD' in lieu of (1) closing window of the cost gains and concurrent expansion in margins and (2) negative impact of corrective actions on the earnings growth for ensuing years. We reiterate our view that – Q410 onwards- risks and challenges will be higher in consumer sector. Even, HUL for that matter is likely to face 'CONUNDRUM' to maintain volumes or profitability. But, given the favorable base effects in volume growth for next two quarters, we have downgraded earnings by only 4% for FY10E and FY11E respectively. With HUL underperformance to broader indices for last 12 month and below average valuations of 21.3X FY11E earnings and discount to consumer peers like Dabur, Asian Paints and Colgate- we maintain HOLD rating with revised target price of Rs276/Share (Rs290 earlier).
--| DB Realty Ltd Price Band: Rs.468 to Rs.486 Issue Opens on: January 29, 2010 | Issue Closes on: February 02, 2010
*Data source: ENAM | ||||||||||||||||
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Highlights of third quarter review of the monetary policy
Godrej Consumer Products
Fall of Cliff, Upgrade to 'HOLD'
HOLD
CMP: Rs 247 Target Price: Rs 246
GCPL reported impressive performance in Q3FY10 - with – (1) 53.3% yoy growth in revenues to Rs5.2 bn – in line with estimates (2) operating profit grew 131.2% yoy to Rs1.0 bn – ahead of our estimate and (3) 112.5% yoy growth in APAT to Rs851 mn – ahead of our estimates. The strong performance is attributed to (1) 16.2% YoY growth in the domestic business to Rs3.2 bn- 13-14% volume led and 2-3% price led (2) 23.2% YoY growth in the international business to Rs816 mn- led by African business of Kinky Pty and Rapidol Pty and (3) Rs1.2 bn contribution from Godrej Sara Lee – on account of consolidation.
Post Q2FY10 results and hoopla surrounding the acquisition of Sara Lee business - the wind has settled. GCPL has fallen off the cliff - now trading at Rs247/Share versus its all-time high of Rs303.8/Share. The stock has corrected by 19% in last 3 months from Rs280/Share (@ Q2FY10 results) to Rs247/Share- since we downgraded the rating from 'ACCUMULATE' to 'REDUCE' rating. With valuations being more comforting at 20.1X FY11E earnings against rich valuations during Q2FY0 and probable upsides from corporate actions- we upgrade the rating from 'REDUCE' to 'HOLD' with revised price target of Rs246/Share (against Rs230/Share earlier)- discounting at 20.0X FY11E earnings.
--Mahindra and Mahindra Ltd
Margins surprise positively, maintain ACCUMULATE
ACCUMULATE
CMP: Rs 1,072 Target Price: Rs 1,265
M&M's 3QFY10 standalone performance was a mixed bag. Net sales at Rs 44.9bn was below our expectation of Rs 47bn due to lower other operating income (engine sales). EBIDTA of Rs 6.9bn was in line with expectation. EBIDTA margins at 15.2% surprised us positively vis a vis our expectation of 14.5% due to lower staff and other expenses. Our EBIDTA margin estimates were significantly below consensus. However, higher depreciation and tax rate (better outlook on profitability) resulted in net profits lower 11% below expectation at Rs 4.3bn.
We are marginally downgrading our FY10 and FY11 estimates by 2% and 4% to Rs 64 and Rs 66.5 per share to factor in higher than expected tax rate in 3QFY10. We have increased effective tax rate by 3% to 27% for FY11. We maintain our ACCUMULATE rating and retain our target price of Rs 1265 (Standalone business at Rs 940 (9x EV/EBIDTA) and subsidiaries at Rs 325).
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Investment Ideas
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BUY
CMP: Rs 136 Target Price: Rs 150
Allahabad Bank reported a net profit of Rs3.5bn for Q3FY10, in line with our expectations. However, NII at Rs6.8bn was much ahead of our estimate of Rs6.0bn, driven by 13bps qoq expansion in NIMs. Core income got further boost from fee income which grew by 36% yoy.
While we like recent improvements in Allahabad Bank like braodbasing of the deposits (88.2% retail), and pick up in fee income, the asset quality was marginally disappointing. The slippages till date were at 0.9% (1.3% annualized) despite addition of further Rs5.5bn in restructured assets. The total restructured assets till date stood at Rs36.3bn. Also, 30% of the investment in AFS portfolio exposes ALBK to interest rates risk.
Nonetheless, looking at strong earning performance and RoE of ~18% over FY10-11E we believe that the current valuations of 0.9x FY11E ABV are quite attractive. We maintain our BUY rating on the stock with price target of Rs150 with P/ABV multiple of 1.0x FY11E ABV.
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JK Tyre & Industries Ltd.
EBIDTA margins surprise positively
BUY
CMP: Rs 170 Target Price: Rs 200
JK Tyre (JKT) reported a strong operating performance in 3QFY10. Standalone EBIDTA margins at 12.1% against expectation of 11.2% despite sales being 16% lower than expectation of Rs 9.4bn. This was due to strike at one of its plants during the quarter. More importantly, the plant produces truck and bus bias tyres, the most profitable business segment. We underestimated the loss of revenue due to strike. Net profits at Rs 365mn was 5% lower than our expectation. Consolidated debt was lower by Rs 3.3bn to Rs 10.5bn as compared to FY09.
We are upgrading our FY10 and FY11 consolidated earnings by 4% to Rs 56 per share and Rs 40.1 (YOY decline of 29%) per share respectively. We are upgrading our target price by 4% to Rs 200 per share. We are conservative in our estimates considering the high rubber prices as well as the fact that MRF has not raised prices in the month of January 2010. We are factoring in 200 bps QoQ decline in EBIDTA margins in 4QFY10 due to rising rubber prices.
--Yes Bank
Results inline with estimates
REDUCE
CMP: Rs 278 Target Price: Rs 200
Yes Bank's Q3FY10 results were inline with our expectations with NII growth of 75.2% yoy (Rs2.0bn) and net profit growth of 19.0%yoy (Rs1.3bn). The NII growth was driven by 71.1% yoy growth in advances (14.8% qoq) and 30bps expansion in margins to 3.0% as expected. However, the operating income grew by a moderate 17.2%, led by very high trading gains in Q3FY09 and a sharp 56.5% decline in wealth management revenues.
The bank asset quality remained stable during the quarter as the gross and net NPA stood at 0.30% and 0.1%. However the provision cover has declined sequentially by 478bps to 70.1% during the quarter.
Yes Bank has announced a QIP of USD150mn which we have already factored in our numbers. The stock is currently quoting at 3.4x FY10E and 2.8x FY11E ABV which we do not find attractive. We maintain our REDUCE rating on the stock with price target of Rs200.
--HDIL Q3FY10E Result Estimates (Result on 20th January, 2010)
We expect HDIL's revenue to grow by 16.1% to Rs.3.6bn. We expect EBITDA to grow by 73% to Rs.1.8bn, EBITDA margin of 50.9% during the quarter. We estimate PAT for the quarter to be Rs.1.5bn which is an increase of 75.9% on a YOY basis. Key things to watch a) TDR volume during the quarter b) sales in the new projects launched during the quarter c) Progress on the Mumbai airport project.
--Ultratech Cement Ltd.
Price pains
ACUMULATE
CMP: Rs 1,002 Target Price: Rs 980
Ultratech Cement Ltd (UTCL) Q3FY10 net profit at Rs1.96 bn (-17.8% yoy) is below our expectation (Rs2.34 bn), primarily on account of lower than expected cement realization. Revenues grew 1.3% yoy (Rs16.51 bn) as benefits of 12% volume growth (5.05mt) were negated by a sharp 9% decline in blended realizations (Rs3272) (our expectation Rs3322) as UTCL's key markets of West and South faced heat of lower offtake and excess supply in the regions. Sequentially also realization fell by Rs484/ton or Rs24/bag. EBITDA for the quarter followed the trend in realization and declined 11% yoy and 18% sequentially. Power & Fuel cost fell 39% yoy and 7% sequentially as UTCL benefited from low cost inventory of imported coal and also from its newly commissioned CPPs. To factor in the recent pricing pressure in UTCL's key markets, we are down grading our FY2010 & FY2011 earnings estimates by 4.1% (EPS Rs90.4) and 4.2% (Rs77) respectively. Ultratech stock outperformed sensex by 20% over last 3 months on the back of recent news of price hikes in western and southern region. However after the recent run up the stock looks fairly valued at 13X FY2011 earnings and USD 120 EV/ton. We would be looking to ACCUMULATE the stock at lower levels.
-- Canara Robeco are declaring a 70% (Re 7.00 per unit) dividend in our Canara Robeco Balance Fund. The record date for dividend distribution is 22nd JAN '10. ( NAV Rs. 54.86 As on 18th Jan 10 )
Consistent Performance:
Upside Move Continued
Nifty continued to maintain its winning streak closed at 5252 with a gain of 0.15% on w-o-w basis. BSE Oil & Gas, BSE IT outperformed the broader markets on w-o-w basis. Going further Nifty is still looking strong and we maintain our upside target of 5415, however downside level of 5160 will play as a strong support.Trading Ideas
Investment Ideas
Lupin: CMP @ Rs 1,421 (Target Rs. 1,550)Initial Public Offering (IPO) of Aqua Logistics Ltd (Company). The salient features of the Company and the IPO are as under.
About Aqua Logistics
1. Leading full service 3rd Party Logistics Service Provider (3PL) with end to end execution and consulting capabilities;
2. Asset light, technology enabled business model - greater efficiency and timely delivery;
3. Offerings include - Multimodal Transportation, Contract Logistics, Project Logistics and Supply chain consulting, last mile project execution, specialized transport and IT enabled solutions- offered through associate companies;
4. Vertical focused approach – Domain expertise in Automotives, Pharma, Retail, Telecom, Heavy Engineering, Power, Sports and Events;
5. Pan India Network - Presence in Mumbai, New Delhi, Chennai, Bangalore, Ludhiana, Baroda, Cochin and Pune and Strong network of overseas agents; and
6. Generated investor interest - equity investments by Enam Shares & Securities Pvt. Ltd., HT Media Ltd., Carwin Mercantiles Pvt. Ltd and Subhkam Ventures
Issue Summary
| Price Band | Rs. 220-Rs. 230 per equity share |
| Face Value | Rs. 10 per equity share |
| Retail Discount | Rs. 5 per Equity Share to Retail Individual Bidders on allotment |
| Issue Opens on | Monday, January 25, 2010 |
| Issue Closes on | Thursday, January 28, 2010 |
| Issue Size | Rs. 150 Crores |
| Bid Lot | 25 shares and in Multiples thereof |
Trading Ideas
Investment Ideas
Axis Bank Q3FY10 result estimates (Results Today)
We are expecting Axis Bank to report a net profit of Rs6.8bn for Q3FY10. The NII is expected to grow by 39.5% to Rs12.9bn and total net income to grow by 41.0% at Rs23.4bn. The operating profit is likely to grow by 59.6% yoy to Rs14.5bn. Key things to watch out movement of NPA's and provisions.
Jubilant Foodworks Limited IPO
BRLM: KOTAK
Issue Period: January 18 – January 20, 2010
Price Band: Rs.135/- to Rs.145/-
Lot Size: 40 Shares and multiple of 40 Shares
Registrar: Link Intime
Net offer to Public 20,403,403 Equity Shares
QIB Book 10,201,702 shares (50% of Net issue size)
Retail Book 7,141,191 shares (35% of Net issue size)
HNI Book 3,060,510 shares (15% of Net issue size)
Investors Please Listen !
More than 100 kinds of Insurance products from more than
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Call: 9818269396
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