Month: April 2008

HDFC Bank has reported a net profit of Rs. 4.71bn (37 % yoy growth), ahead of our estimate of Rs 4.61bn. The key takeaways from the quarter: Strong NII growth, slower non- fund income growth, higher provisioning expenses as the bank set aside for contingencies and a lower tax rate. Sequentially the advance portfolio has declined: a function of securitization carried out during the quarter.

Non-fund income growth has been relatively slower this quarter at ~39% yoy, primarily due to decline in forex/derivative revenues. Lower tax outflow on account of tax free income booked during the quarter allowed the bank to make a higher provision on contingencies (for derivative related issues). On the positive side, sequentially there has been a decline in the provisions on NPA and standard assets (NPA provision to average loan down to 1.66% from 1.87% in Q3FY08)

Expect HDFC Bank to report a fully diluted EPS of Rs 54, post centurion bank of punjab merger with itself.

Net sales grew at 38.9% YoY (Vs estimate of 26.3%) to Rs3,014 MM, as the realization per MVA remained stable at Rs0.5 MM. The net sales for Q4FY08 stood at Rs1,066 MM (YoY not comparable, as the company got listed recently).

EBITDA increased by an impressive 69.3% YoY (Vs 53.3% YoY) to Rs552 MM. The EBITDA margins stood at 18.3% (improvement of 70 bps YoY). For Q4FY08 the EBITDA margins stood at 17.6%.

PAT grew by 98% YoY (Vs 70% YoY) to Rs331 MM owing to higher EBITDA margins, thereby leading to net margins being higher at 11.0% (Vs 10.3%) compared to 7.7% in FY07. The net margins for Q4FY08 were at 10.3%.

The management for FY09, has guided for revenues of Rs5 Bn with an EBITDA and net profit margins of 20% and 10% respectively. They expect similar realizations in FY09 and some moderation in FY10, as they are planning to enter in higher MVA transformer segment.

Jubilant’s recurring 4QFY08 results were in-line with expectations, with a robust trend in revenues as well as profitability. The high margin PLSPS business (especially CRAMS) was the key growth driver and now contributes c62% of revenues.

Sales growth of 38% YoY (22% organic) and 443 bps expansion in EBIDTA margins led to an 87% increase in recurring PAT. Reported PAT was buoyed by translation gains (Rs1bn). CRAMS was the key growth driver, up 86% YoY (46% organic), while industrial products benefited from lower molasses prices (down 20% YoY) and higher selling prices. Jubilant also guided to a 35% organic revenue growth and higher EBIDTA margins.

Jubilant indicated that organic capex for FY09 would be cRs7.5bn – higher than our estimates by cRs3bn – funded through debt and internal accruals. Company hopes to report an EPS of Rs 22 in FY07.

Do not take these results of Oriental Bank of Commerce only at face value – Rs1b quarterly loss is on account of accelerated write-off of acquisition costs. Operationally, pre-provisioning profits are flat yoy and up 10% qoq – ahead of expectations, and suggest some signs of a bounce-back, albeit off a pretty modest base.

OBC has pushed up margins about 10bp qoq; should better peer government banks. But this comes off a fairly low base; while this offers upside, the low 225bps margin level remains a fundamental drag on profitability.

OBC continues to maintain industry level growth – about 21% for the year, balanced, with some acceleration over the quarter. Its asset book, however, does see some increased pressure – not significant, but along with a provision write-back to support the bottom line, has eroded loan loss coverage.

Going forward, company should report an EPS Of Rs 29.88 for FY09.