Monday, November 15, 2010

Result Update: Lupin; HPCL; Glenmark Pharma; IOCL; Tata Steel; IVRCL Infrastructure & Project

Lupin

Reco: ACCUMULATE

CMP: Rs469

Target Price: Rs496

Robust earnings; Revise target price upwards

·      Strong operating performance largely driven by robust growth momentum in US, Europe, Japan and India coupled with favorable product mix

·      US branded business grew at 24% (adjusted for one time impact of change in accounting treatment for rebates) and India formulations at 22% (adjusted for inventory correction)

·      Both existing and new prescriptions seeing growth in Antara; OC launches in US in Q312 will aid long term revenue visibility

·      On account of improved performance, revise earning estimates and raise target to Rs496; Maintain Accumulate, owing to limited upside

 

 

HPCL

Reco: BUY

CMP: Rs454

Target Price: Rs515

Results above expectation, Maintain BUY

·      HPCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to issuance of oil bonds/Cash receivables during the quarter

·      EBIDTA at Rs.24.8bn, against Rs1.7bn, YoY, mainly due to inventory Gain and issuance of oil bonds/cash receivables from the government of India

·      Average gross refining margin for 1H FY11 was at $3.2/bbl as compared to $3.8/bbl (decline by 18% YoY) below our expectation of $3.7/bbl.

·      Valuations look attractive at 1x FY12E ABV, mainly due to recent change in reforms, Continue BUY rating with TP of Rs.515

 

 

Glenmark Pharma

Reco: ACCUMULATE

CMP: Rs348

Target Price: Rs381

On a comeback trail; Upgrade to Accumulate

·      Adjusted PAT growth of 27% was in-line driven by a) 23% growth in sales at Rs7.4bn (est. of Rs7bn) and b) 11% growth in EBITDA at Rs1.87bn (est. Rs1.77bn)

·      Revenue growth was driven by a) 19% growth in Speciality business (55% contribution to top line) and b) 27% growth in Generics business (45% contribution to top line)

·      Managements conscious effort to clean the balance sheet is a welcome move; further improvement in working capital situation can lead to expansion in valuation

·      Positive Ph-III trials a step forward for Crofelemer launch

·      Tweak earning estimates; raise target price to Rs381 (Rs308 earlier); upgrade to Accumulate from Hold

 

 

IOCL

Reco: ACCUMULATE

CMP: Rs403

Target Price: Rs458

Results above expectation, ACCUMULATE

·      IOCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to inventory gain and issuance of oil bonds/Cash receivables during the quarter

·      EBIDTA at Rs.68.9bn, against Rs.6.1bn a year ago, mainly due to Inventory gain and issuance of oil bonds/cash receivables from the government of India

·      Average gross refining margin for 1H FY11 was at $4.7/bbl as compared to $5.4/bbl (declined by 13% YoY) above our expectation of $3.5/bbl.

·      Valuations look attractive at 1.4x FY12E ABV, mainly due to recent change in reforms, Accumulate rating with TP of Rs.458

 

 

Tata Steel

Reco: ACCUMULATE

CMP: Rs606

Target Price: Rs712

Getting fit for future; Accumulate

·      Higher volume in Indian operations and slightly higher realization in European operation helped revenue growth of 5% to Rs 286.5 bn, in line with our expectations

·      Higher raw material costs (up ~20% QoQ) weighed on the EBITDA margin, which fell 348 bps QoQ to 12.8%. EBITDA/ tonne for Tata Steel Europe remained at ~US$60

·      Higher other income due to stake sales in Tata Motors and Tata Power helped consolidated PAT to grow 8.4% on QoQ to Rs 19.8 bn

·      Revising up our earnings estimates for FY11E and FY12E to Rs 81.4 and Rs 97.8 respectively. We assign Accumulate on the stock

 

 

IVRCL Infrastructure & Project

Reco: HOLD

CMP: Rs139

Target Price: Rs160

Earnings continue to disappoint

·      Q2FY11 PAT at Rs 233 mn sharply below estimates (Rs434 mn) led by revenue decline of 16%. Execution impacted by delays in financial closure of own BOT projects & extended  monsoons

·      EBITDA at Rs 706 mn down 41% margins at 6.7%, contracted 287 bps – as slow execution rate led to poor overhead absorption –impacting margins to an extent of 230 bps

·      Mgmt revenue guidance of ~Rs6.75 bn, lowered to Rs 6.5 bn still implying a steep H2FY11E revenue growth of 42% & EBIDTA growth of 47%

·      We believe IVRCL will continue to face execution headwinds as ~ 40% of order backlog remains slow moving. We cut FY11E/12E EPS by 19.5%/16.5%. Maintain  HOLD - cut target to Rs160

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