Tuesday, August 3, 2010

Result Estimates

GIPCL Q1FY11E Result Estimates

Q1FY11E to reflect part impact of new plant (250MW). Expect revenues to grow 10% yoy to Rs2.8bn. Expect 700bps YoY improvement (led by new plant) in EBITDA margins to lead to EBITDA growth of 43% yoy. APAT is expected to grow by 24% YoY to Rs365mn. Key things to watch - (1) PLF in new plant and impact on profits – mainly of tax grossing up and (2) update on further expansion of 600MW.

Himadri Q1FY11E - Result expectation

Q1FY11E will witness full benefits of commencement of the Carbon Black facility. Consequently, revenues are expected to increase 113.9% YoY to Rs1.8 bn.

The core EBITDA is expected to increase 37.8% YoY to Rs512 mn lower than the growth in revenues. Consequently, the EBITDA margins are expected to decline 1560 bps yoy to 28.2%.

Adjusted net profit is expected to jump 40.0% YoY to Rs286 mn.

Key things to observe are - (1) management feedback on the 50,000 MT Carbon Black plant and 12 MW Power Plant (2) Status of planned capacity expansions of CTP plant (3) any developments on the China joint venture and (4) progress on the Super Plasticizer business.

Punj Lloyd Q1FY11 Result – First Cut Analysis

Weak results

Punj Lloyd's Q1FY11 performance was negatively impacted due to (1) low revenue booking and (2) some provisioning for cost overruns.

n    Revenues declined 2% qoq and 42% yoy to Rs17.3 bn, as against estimate of sequential improvement.

n    Led by low revenue booking and some provisioning, operating margin was below estimates at 7.7% while operating profit stood at Rs1.3 bn.

n    Led by disappointing operational performance, PLL reported net loss of Rs306 mn – below estimates.

n    Order inflows for the quarter stood at Rs32.8 bn while order book declined 8% qoq to Rs255.6 bn. Prima facie, it appears that PLL has excluded some slow moving orders from its order book – we shall seek clarity on the same with the management.

At CMP the stock is trading at 14.7x FY11E and 8.8x FY12E consolidated earnings of Rs8.1 and Rs13.5 per share respectively.

n        Research Update Included

Voltamp Transformers Q1FY11 Result Update; Competition Impact margins; Downgrade to Hold; Target: Rs 955

n    Competition led significant hit (470 bps yoy) in the EBITDA margins to 10.9%, resulted in PAT decline of 28% yoy 

n    Pricing visibility not there, margins to remain under pressure; annual report MDA hints towards much lower margins

n    Downgrade earnings by 15%/14% for FY11E/12E driven by lower margin (-300bps) assumption (14.5%/15% in FY11E/12E)

n    Valuations (EV) not cheap at 7.7x FY11E EBITDA (8% premium to peers); Downgrade to Hold, retain target of Rs955     

GSFC Q1FY11 Result Update; Upgraded price target and recommendation; ACCUMULATE; Target: Rs 368

n    Q1FY11 PAT quadrupled to Rs 1.1 bn, ahead of estimates(Rs 826 mn) driven by strong performance of fertiliser segment

n    EBIT margins of 13.4% in the fertiliser business (6.7% in FY10) benefited from new Nutrient Based Subsidy policy  

n    Chemical business remains satisfactory with EBIT margins of 21.7% versus our expectation of 18%

n    Upgrading recommendation from HOLD to ACCUMULATE and price target from Rs 254 to Rs 368 (8xFY12E EPS)

Madras Cement Q1FY11 Result Update; Earnings surprise, but outlook remains negative; REDUCE; Target: Rs 101

n    Net profit at Rs726 mn (-47.5% yoy) above estimates (Rs 547 mn). Revenues at Rs6.9bn (-6.1%yoy) – above estimated led by higher than expected realizations

n    EBITDA at Rs1.9bn (-33.5% yoy), still higher than estimate (Rs1.6bn). However current profitability unlikely to sustain as July cement price are 11% lower than Q1FY average 

n    June-July cement prices lower than estimates, downgrading earnings by 16.8% for FY11 (EPS of Rs9.6) and FY12 by 22.7% (EPS of Rs11.9)

n    Current valuations (PER 10.4X and EV/ton of USD87 for FY11) do not capture the sharp deterioration in MCL's return ratios. Maintain REDUCE - target of Rs101

DB Corp Q1FY11 Result Update; Results beat est., Upgrade to ACCUMULATE; Target: Rs 284

n    Q1FY11 results with PAT of Rs695mn, ahead of our estimates of Rs523mn, led by healthy advertisement revenue growth

n    Advertisement revenues grew by 18% yoy primarily led by volume growth (90% contribution)

n    Revised EPS estimates to Rs15.1 & Rs14.9 from Rs13 & Rs15.8 for FY11E & FY12E respectively to factor better ad-revenue growth, tax benefit on radio merger and new launch losses

n    Upgrade rating from HOLD to ACCUMULATE post 9% underperformance over last 6 months. Maintain target of Rs284

GNFC Q1FY11 Result Update; Plant shutdown affects results; BUY; Target: Rs 157

n    GNFC reported losses for the 2nd consecutive quarter due to disruptions at its ammonia plant

n    Net revenues declined by 36% to Rs 3.7 bn while the company reported net loss of Rs 227 mn

n    Lower ammonia production adversely affected fertiliser segment which reported losses of Rs 762 mn

n    Reduced FY11 estimates by 42% due to losses in current quarter. Valuations remain attractive, Maintain BUY 

Tata Chemicals Q1FY11 Result Update; Fertiliser business drives earnings; ACCUMULATE; Target: Rs 393

n    APAT at Rs 2.3 bn, +31.9% yoy, was ahead of estimates (Rs 1.7 bn) driven by higher contribution from fertiliser segment   

n    Fertiliser EBIT trebled to Rs 1.7 bn vs expectation of Rs 0.9 bn due to low cost inventory and higher trading margins

n    Management's outlook on soda ash remains cautious however fertiliser business to benefit from new policies  

n    Price target revised to Rs 393 from Rs 321 and upgraded to ACCUMULATE from HOLD    

n        Technical Comments

Range-bound session

Nifty closed flat with a positive bias, after witnessing a range-bound trading session throughout the day. The upper and lower ends of the range are packed at 5450 and 5425, which will act as support and resistance in the coming session. Heavyweights like Reliance Industries, Bharti Airtel, ICICI Bank, SBI and Hero Honda helped Nifty to stay in positive territory. However, we still stick to our bearish view unless the reversal of 5500 is cleared.

BSE Bankex:

BSE Bankex continued its northbound journey and out performed the broader markets. Going forward this index is still looking strong and we maintain our upside target of 12,000 levels.

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