Monday, November 1, 2010

Result Update: Maruti Suzuki India; Jaiprakash Associates; Grasim Industries; Voltamp Transformers; Jagran Prakashan; Century Plyboards (India); Godrej Consumer Products

Maruti Suzuki India

Reco: HOLD

CMP: Rs1,551

Target Price: Rs1,600

Yen depreciation/price hike the key, downgrade to HOLD

·      Results marginally below est. due to lower sales and higher tax rate. APAT at Rs 6.2bn (est. Rs 6.4bn). Adj EBIDT at Rs 9.9bn (es. -Rs 10.3bn), margins at 10.8% (est. 11.0%)

·      Yen depreciation/price hike crucial for margin upgrades/stock performance. Lower JPY/Re est. for FY12 to 1.85 (from 1.9). 2HFY11 margins to be lower by 70 bps due to currency

·      Upgrade FY11E/FY12E volumes est. by. 2.6% to 1.26mn/1.44mn units. Lower FY11E/FY12E EPS by 3.5% to Rs 85.7/Rs 98.Price hike not assumed, due to lack of intent

·      Downgrade rating to HOLD, however raise TP to Rs 1600 (up 10%) due to valuation upgrade (8.5x EV/EBIDTA) due to strong volume outlook and higher return ratios

 

 

Jaiprakash Associates

Reco: ACCUMULATE

CMP: Rs120

Target Price: Rs150

Construction rebounds sharply-Numbers in line

·      JPA Q2FY11 numbers ahead of estimates at EBITDA level, 3X increase in deferred tax leads to in line PAT.  Topline growth of 62.3% - construction up 73%, cement up 43%

·      Construction segment rebounds sharply with 83% growth in EBIT, margins at ~21% (v/s ~7.3% in Q1FY11). Realty segment delivers a whopping 356% growth in EBIT

·      JPA is on strong growth path across all its segments- plans to reach a cement capacity of 37 mtpa by end FY12. Expect significant order accretion from New HPPs like lower Siang

·      Stock trades at 22.6X its FY12 standalone earnings and 7.6X EBIDTA. Maintain our earnings, ACCUMULATE rating and price target

 

 

Grasim Industries

Reco: ACCUMULATE

CMP: Rs2,240

Target Price: Rs2,600

Net profit above estimates- EBIDTA disappoints

·      Grasims's Q2FY11 net profit at Rs2.79bn (-5.2%yoy) ahead of estimates (led by high other income earned through dividends from subsidiaries). Core VSF EBIDTA below estimates

·      Revenue decline 1.3%qoq due to 1.2% fall in VSF realization and lower volumes due to plant shutdowns. EBITDA for the quarter at Rs2.64bn declined 22.1%yoy and 12.4%qoq

·      Expect VSF performance to improve in subsequent quarter driven by better realisations & pick up in volumes. Introducing earnings post de-merger of cement business

·      Upgrade price target to Rs2,600 driven by upgrade in Ultratech's Target price and growing VSF demand. Stock implying 44% holding co discount-Maintain ACCUMULATE

 

 

Voltamp Transformers

Reco: HOLD

CMP: Rs862

Target Price: Rs840

Margins go down further

·      Competition led significant hit (780 bps yoy) in the EBITDA margins to 10.1%, resulted in PAT decline of 46% yoy 

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

·      Downgrade earnings by 21/19% for FY11E/12E driven by lower margin (-250bps) assumption (12/13% in FY11E/12E)

·      Valuations (EV) not cheap at 6.7x FY12E EBITDA (30% premium to peers); Maintain Hold, Reduce target to Rs839

 

 

Jagran Prakashan

Reco: BUY

CMP: Rs129

Target Price: Rs155

Slightly below estimates, Reiterate BUY

·      PAT up 10.4% YoY to Rs555mn, below our estimate of Rs599mn due to lower than expected ad-revenue growth during the quarter

·      Advertisement revenue growth was at just 12.7% yoy impacted by floods, Ayodhya verdict and shift of festive season to Q3 in FY11 v/s Q2 in FY10

·      Ad-revenue growth fully led by realization growth - mix of yield improvement and rate hike

·      Retain EPS estimate of Rs 7.0 and Rs 8.6 for FY11E and FY12E respectively. Retain BUY rating with target Rs 155

 

 

Century Plyboards (India)

Reco: BUY

CMP: Rs68

Target Price: Rs80

Results above estimates. Maintain BUY

·      Q2FY11 PAT at Rs420 mn ahead of expectations (Rs276 mn) - led by better than expected profitability of cement & Plywood division

·      Revenue (Rs3.41 bn) growth of +20.2%- aided by 36.1% growth in plywood & laminates (P&L) segment and 262% growth in Ferro alloys segment. Cement declines 5% yoy  

·      CPL commissions new CFS at Kolkata. 3X expansion in cement capacity by Q3FY12.  Kick-start of volume led growth in cement and CFS in FY12 to drive 23% earnings CAGR

·      Management examining proposal of de-merger of CPL into three entities-Valuations at PER of 7.4X FY12E earnings remain attractive. Maintain BUY with a target of Rs80

 

 

Godrej Consumer Products

Reco: ACCUMULATE

CMP: Rs421

Target Price: Rs477

Led By Consolidation, Maintain Accumulate

·      Godrej Consumer Products (GCPL) Q2FY11 performance exceeds expectation – APAT growth of 40% yoy to Rs1.3 bn

·      New drivers like GHPL and Megasari reported strong traction, erstwhile drivers Africa, UK and Standalone operations witness pressures

·      Upgrade growth assumptions for GHPL and Megasari, Downgrade growth assumptions for Keyline

·      Upgrade earnings by 7% for FY11E (Rs19.5/Share) and FY12E (Rs20.3/Share) – Maintain 'ACCUMULATE' rating with revised target price of Rs447/Share

 

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