Monday, August 2, 2010

Result Update: ICICI Bank; Bank of India; Torrent Pharma; Jubilant FoodWorks; Grasim Industries; Elecon Engineering; Jagran Prakashan; India Cements

Result Update

 

ICICI Bank

Reco: HOLD

CMP: Rs904

Target Price: Rs900

Slippages under control

·      ICICI Bank's Q1FY11 NII at Rs19.9bn was in line with our estimates. With lower than expected provisions, PAT at Rs10.3bn was better than expected

·      As expected the slippages have come down during the quarter. Net slippages were down to Rs3.5bn with retail slippages at Rs2bn

·      Provision cover stood at 65%, guidance to take it to 70% by FY11. Earning asset growth of 15% for FY11, domestic to contribute with 20% growth

·      Valuations at 2.0x FY11E/1.8x FY12E ABV not very attractive. Maintain HOLD rating

 

 

Bank of India

Reco: REDUCE

CMP: Rs410

Target Price: Rs350

Slippages come under control

·      BOI's Q1FY11 NII at Rs17.4bn better than expected led by 3% qoq growth in advances and 14bps qoq expansion in NIMs. With lower provisions, PAT at Rs7.3bn better than expected

·      Slippages come under control at Rs6.2bn for the quarter; 2.0% annualised vs. 2.5% for FY10. We expect FY11 slippages at 1.2-1.4%

·      The NPA profile still remains uncomfortable with net NPAs of 1.2% (14% NNPA/networth) and provision cover of 57%

·      Expect to underperform peers with no significant discount in valuation despite lower asset quality. Valuations at 1.7x FY11E/1.4x FY12E ABV. Continue REDUCE rating

 

 

Torrent Pharma

Reco: BUY

CMP: Rs565

Target Price: Rs650

Raise target price; maintain Buy

·      Revenue growth is marginally below our estimates on account of 12% decline in CMO business and lower than expected growth in domestic formulation business

·      Despite higher employee cost, company's OPM was better than expected (21.4% vs. est. of Rs20.4%)

·      PBT in line with estimates. Higher tax provision impacted PAT (Rs777mn vs. est. of Rs802mn)

·      Maintain earnings; role-over valuation on FY12; raise target price to Rs650; re-iterate Buy

 

 

Jubilant FoodWorks

Reco: ACCUMULATE

CMP: Rs370

Target Price: Rs400

Going Strong; Maintain 'ACCUMULATE'

·      Jubilant FoodWorks (JFL) performance exceed expectation – revenue growth of 59.5% yoy to Rs1355 mn and  adjusted net profit growth  tripled to Rs153 mn

·      Same store sales growth at 37% yoy (30% volume-led growth and 5% price-led growth) – 2nd consecutive quarter of positive surprise

·      Revised our assumptions on same store sales growth from 10% to 16% in FY11E and 6% to 10% for FY12E

·      Upgrade earnings by 31% and 21% for FY11E and FY12E -  Maintain 'ACCUMULATE' rating with revised price target of Rs400/Share

 

 

Grasim Industries

Reco: ACCUMULATE

CMP: Rs1,857

Target Price: Rs2,340

Cement business restricts EBIDTA growth

·      Grasim's Q1FY11 like to like net profit at Rs5.38 bn (1.6% yoy) ahead of est. Like to like revenue growth of 6.9% - driven by 19.5% growth in VSF-subdued 3.2% growth in cement

·      Like to like EBIDTA at Rs9.6 bn (-0.7%) - better than est (Rs9.5 bn)-impressive 53.6% growth in VSF EBIDTA (Rs3.0 bn) was negated by 14.7% decline in Cement EBIDTA (Rs6.3 bn)  

·      Management cautious on VSF demand due to  uncertainty in Eurozone and built up of inventory. Cement business to face margins pressure led by price weakness

·      Downgrade FY11 earnings by 5% and FY12 by 14.5% & target Price to Rs2340. Believe lot of negatives already in price -Stock implying 56% holdco discount- Maintain ACCUMULATE

 

 

Elecon Engineering

Reco: HOLD

CMP: Rs93

Target Price: Rs96

Interest cost propels earnings, Maintain 'Hold'

·      Elecon Q1FY11 performance meets expectation at operating level, but net profit growth at 57% yoy to Rs133 mn was above estimates (propelled by lower interest cost)

·      MHE division grew by 16% yoy to Rs1.5 bn with EBIT margins at 12.8% and TE division grew by 11% yoy to Rs1.0 bn with EBIT margins of 15.1% - in line with estimates

·      Sequential decline in order inflows arrested - order inflows grew 160% qoq to Rs6 bn and order book grew 27% qoq to Rs15.8 bn

·      Upgrade FY11E and FY12E earnings by 12% and 9% respectively. Maintain HOLD rating with price target revised from Rs86/Share versus Rs96/Share (at 10X FY12E earnings)

 

 

Jagran Prakashan

Reco: BUY

CMP: Rs121

Target Price: Rs155

Profits beat estimates, Retain BUY

·      PAT up 12.4% YoY to Rs556mn, ahead of our estimate of Rs496mn led by a healthy 18% advertisement revenue growth

·      EBIDTA margins expand by healthy 304bps despite cover price cut, employee cost rise of 20% and pagination increase of 3-4%

·      Industry wide new launches & increased competition begins to result in cover price cuts

·      We retain EPS estimate of Rs 7.0 & Rs 8.6 for FY11E & FY12E respectively. Retain BUY rating with target price of Rs155. Jagran remains our top-pick in Indian print media sector

 

 

India Cements

Reco: SELL

CMP: Rs105

Target Price: Rs98

Disastrous quarter- Maintain SELL

·      APAT at Rs108 mn (-91.3% yoy) sharply below estimates (Rs586 mn). Revenues at Rs8.8 bn (-7.6% yoy) – below estimates. IPL revenues not fully booked during the quarter

·      EBIDTA at Rs1 bn down 65% yoy – below estimates (Rs1.6bn) – led by higher than estimated P&F cost and IPL loss of Rs80 mn (on account of lower revenues)

·      Downgrade FY11 earnings by 38.5% for FY11E (EPS of Rs5.4) and by 38.3% for FY12 (EPS of Rs6.5)& target Price to Rs98

·      Maintain SELL – current valuation of 20x PER & EV/t of USD86 for FY11, does not capture deteriorating balance sheet & suboptimal return ratios (FY11E-RoCE 5.2% & RoE of 4.6%)

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