Result Update
Bank of Baroda
Reco: ACCUMULATE
CMP: Rs734
Target Price: Rs800
Slippages rise but asset quality under control
· BOB's Q1FY11 NII at Rs18.6bn in line with expectations driven by 6% qoq growth in advances and stable NIMs at 2.6%. Net profit at Rs8.6bn was also on expected lines
· Slippages were high as they stood at Rs6.7bn for the quarter; 1.4% annualised vs. 1.0% for FY10. Of total slippages of Rs6.5mn, Rs580mn were from restructured accounts
· The NPA profile still remain better than comparable banks with net NPAs of 0.4% (4.5% NNPA/networth) and provision cover of 73% reported and 86% including technical write off
· Expect to outperform peers on better NPA ratios, strong RoEs and inexpensive valuation at 1.8x FY11E/1.4x FY12E ABV. Continue ACCUMULATE rating with TP of Rs800
Ultratech Cement
Reco: REDUCE
CMP: Rs856
Target Price: Rs880
Costs pressures drags profitability – Maintain REDUCE
· UTCL's Q1FY11 net profit at Rs2.43 bn (-41% yoy) – ahead of estimates (Rs2.19 bn) led by higher other income and lower tax rate
· Revenues at Rs17.9 bn declined 8.3% yoy as cement volumes (5.12 mnt), declined 3.6% and blended realisations decline of 4.9 %yoy in at Rs3496/t
· Lower realisations and severe cost pressures drags EBIDTA down by 43.4% yoy, below est (1400 bps decline in EBIDTA margins to -22.7%). EBITDA/t at Rs792/t declines by 41% yoy
· Downgrade FY11 earnings by 10% (EPS Rs66.8) and target to Rs880. Stock trades at PER of 12.8X & EV/ton of USD98 for its FY11 numbers. Maintain REDUCE
Essel Propack
Reco: BUY
CMP: Rs48
Target Price: Rs76
Europe On Expected Lines; Maintain "BUY"
· Essel Propack (EPL) reported satisfactory performance on like-to-like basis – revenue growth of 15.0% yoy to Rs3.3 bn and adjusted net profit of Rs104.0 mn
· Blended volume growth of 12-13%, driven by 13% growth in laminated tubes, 30% in plastic tubes and 15% in packaging
· Ebit loss reduction in Europe (from Rs103.1 mn to Rs39.8 mn), but Americas continue to report muted performance
· Maintain positive bias with 'BUY' rating and price target of Rs76/Share
Ipca Laboratories
Reco: BUY
CMP: Rs274
Target Price: Rs336
Below expectations; maintain Buy
· High employee and SGA cost impacted operating performance of the company
· Addition in the field force has impacted short term profitability but long term growth visibility
· This quarter performance is an aberration and believes that growth trajectory will be normalizing from next quarter onwards.
· Maintain earning estimates and Buy rating with a price target of Rs336
Titan Industries
Reco: ACCUMULATE
CMP: Rs2,813
Target Price: Rs3,074
All-round Performance; Maintain 'ACCUMULATE'
· Titan performance exceeds expectation – driven by volume growth in Watch (+20% yoy) and Jewellery (+15% yoy) coupled with Other's business turning profitable
· Revenue growth at 41.9% yoy to Rs12.5 bn and APAT growth at 406.7% yoy to Rs813 mn – driven by 49.5% yoy growth in 'Jewellery' and 21.8% yoy growth in 'Watch'
· 'Other' i.e. Eyewear and Precision Engineering sprung positive surprise - reported Ebit of Rs16.7 mn against Ebit loss of Rs78.6 mn – first time in last 12 quarters
· Earnings revised +21% and +32% for FY11E and FY12E - Maintain 'ACCUMULATE' rating with price target of Rs3,074/Share
Emco
Reco: REDUCE
CMP: Rs67
Target Price: Rs60
Huge cost overruns; Maintain negative view
· Emco reported its worst ever quarter with huge cost over-runs in its projects business – our sense is that cost over-runs are across the projects (including 765kv PGCIL order)
· Almost 60% of 765kv order (Rs5.5bn) still unexecuted, cost over-runs likely to continue through FY11E, with P.V.C. built in most of orders, miscalculations in quantity of input needed
· Transformer business also affected due to (1) rescheduling of deliveries from customer side, (2) competition impacting margins by 4-5% minimum and (3) payment delays
· Give benefit of doubt to management, assume positive numbers from Q2FY11 onwards, still reduction in earnings estimates by 97%/50% for FY11/12E; Maintain Reduce
Bharat Petroleum Corp.
Reco: BUY
CMP: Rs642
Target Price: Rs675
Times are getting better
· BPCL reported results which were below our estimates at EBIDTA and PAT Level, primarily due to non-issuance of oil bonds/Cash receivables during the quarter
· EBIDTA loss at Rs.14.1bn), (against our expectation of (Rs. -10.1bn), decline of 283% YoY, mainly due to forex loss of Rs.3.3bn and non-issuance of oil bonds/cash receivables
· Average gross refining margin was at $3.57/bbl as compared to $3.17/bbl (increase of 12.6% YoY) below our expectation of $3.7/bbl.
· Valuations look attractive at 1.2x FY12E ABV, mainly due to recent change in reforms, Continue BUY rating with TP of Rs.675
eClerx
Reco: ACCUMULATE
CMP: Rs445
Target Price: Rs465
Creditable margin performance stands out
· Revenues at US$ 16.8 mn (+6.3% QoQ, +47.4% YoY) beats est. marginally. Mgn performance commendable with flat mgns QoQ at 36.7% despite wage increments
· Profits beat driven by better mgn performance and higher fx. gains. Hiring continues to be strong at 261, taking the total HC to 3,124
· Increasing FY11E/FY12E earnings by ~6.4%/3% to Rs 37.7/43.7driven by marginal increase in revenue estimates
· Remain positive on eClerx though cut rating to ACCUM (V/s BUY earlier) with a revised TP of Rs 465 (V/s 425 earlier) on a/c of sharp stock out performance in the recent past
Orient Paper & Industries
Reco: BUY
CMP: Rs54
Target Price: Rs63
Paper division loss hurts profitability
· Net profit at Rs0.34bn (+ 2.1% yoy) below estimates, on account of higher than estimated losses in paper division
· Revenues at Rs4.42bn grew by an impressive 27.6% yoy driven by 32% growth in cement segment (Rs2.84bn) and 32.3% in electricals segment (Rs1.35bn)
· Paper division reported a loss of Rs233mn (our est Rs111 mn) due to unprecedented shortage of water which led to shutdown at Amlai paper plant for the entire quarter
· Downgrading earnings by 14.3% for FY11 (EPS of Rs8) and introducing FY12 estimates with a EPS of Rs10.3. Maintain BUY with price target of Rs63
Apollo Tyres Ltd.
Reco: BUY
CMP: Rs64
Target Price: Rs80
Inventory accretion drives performance, maintain BUY
· EBIDTA/Profits above expectation due to sharp increase in inventory (7.2% of consolidated sales). Expect margins to decline QoQ despite price hikes
· VBBV reports strong results with margins of 16.5%. Expansion of capacity in FY12 due to strong demand in Europe. Higher rubber prices to affect margins from 3QFY11
· Lower FY11E conso EPS by 15.6% to Rs 7.2 due to lockout at Perambara plant. Assumed that plant will resume operation in 3QFY11. Marginally upgrade FY12 EPS by 2.5% to Rs 9.8
· Maintain BUY but lower target price to Rs 80 (down 9.1%), valuing at FY12E PER of 8.1 and EV/EBIDTA of 5.0. Lower target multiple as contribution from subsidiary to increase
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