Indian Equity Research and Investment Strategy
The days if unidirectional views on a stock are over. More confusion lies ahead as one fund Manager recommends a BUY and other recommends a SELL.
Shoppers Stop posted Q3 FY08 EBITDA at 4.3%, showing that margin pressure continues to be the most important concern for the stock. Higher operating costs (employees, rents) have taken a toll on margins, and we are now estimating 5.7% EBITDA margin in FY09E from previous 8.6% expectations. (more…)
Reserve Bank of India (RBI) today left key rates – repo, reverse repo, Bank Rate and CRR – unchanged in its third quarter review of annual statement on monetary policy for the year 2007-08. While Bank Rate has been left unchanged at 6%, reverse repo and repo rates have been held steady at 6% and 7.75%, respectively. Cash Reserve Ratio (CRR) has been left unchanged at 7.5%. The market was expecting the Reserve Bank of India to lower the short-term lending rate viz. the repo rate by 25 basis points, after a hefty US rate cut last week.
BSE Bankex slumped 3.27% to 11,144.79. BSE Auto index declined 1.53% to 4,850.77 and BSE Realty index down 1.01% to 10,580.98. Banking stocks plunged. ICICI Bank (down 3.35% to Rs 1,231), HDFC Bank (down 2.65% to Rs 1,535) and State Bank of India (down 1.7% to Rs 2,267) edged lower.
L&T had a solid 3QFY08 with PAT at Rs4.8bn up 40% YoY (8% above consensus estimates of Rs4.5bn and 7% below CIR estimates of Rs5.1bn). This was well supported by net sales growth of 55% YoY and a 48bps YoY margin expansion.
L&T booked Rs130bn of orders in 3QFY08, up 37% YoY, led by the Rs55bn Mumbai Airport and the Rs13bn Cairn Energy orders. L&T ended 3QFY08 with an order backlog of Rs496bn up 39% YoY. Further the company has already booked Rs65bn of orders in the first month of 4QFY08.
Shipbuilding Ready to Roll at Ennore. The BTG (boiler-turbines-generator) facility is likely to be developed in Hazira and L&T is keen to get the clearance and land from the Gujarat government now that elections are over in the state.
Bharti Shipyard:
Bharati Shipyard’s 3Q net income of Rs267m was up 51% yoy but below our expectations primarily due to: 1. lower-than-expected revenue recognition during the quarter, 2. lower subsidy recognition, and 3. operating loss in the windmill division.
EBITDA margins (ex-subsidy), the most important parameter to gauge performance in our view, remained robust at 20%, primarily driven by better utilization at the existing facilities. Subsidies came in a tad lower than expected. However, since Bharati accounts for subsidy on orders only on 70% completion, lower subsidy accounting during 3Q is purely a timing difference, likely to be corrected over the subsequent
quarters.
ABN Amro and Citigroup Research have upgraded the stock of HCL Infosystems from Hold to BUY with aggressive price targets.
HCL Infosystems’ Q2FY08 results came in above our expectations – EBITDA at Rs1.12b was significantly ahead of our expectation (Rs944m). (more…)
Post Q32008 results both Tata Tea and Britannia Industries look good and can be a safe haven considered to the over heated financial and Realty sectors.
Tata Tea:
3Q EBITDA growth of 29% was ahead of estimates – margins have been improving over the last 3 quarters, driven by improving cost management and better product mix. Net profit (pre-exceptional) grew 175% due to decline in interest cost owing to cash inflow from Glaceau sale. (more…)
CCS Infotech has informed us that the company has opened the its first multi brand IT showroom CCS Zone Retail in Velachery, Chennai. The CCS Zone is located at 34, Sakhti Vijayalakshmi Nagar, 2nd street, 100 feet by pass road, Velachery, Chennai. The showroom showcases and retails their products like PCs, laptops, servers and other advanced computer & mobile related accessories.
This showroom was inaugurated by B Surya Narayanan, director, sales & marketing, South, Intel India