HDFC Sec recommends a BUY on Hanung Toys & Textiles from a 6 months perspective.There is a lot of outsourcing opportunities due to lower labour cost in India & companies like HTTL, which are aggressively ramping up capacities, would be able to cater to the growing demand. HTTL’s new Home Furnishings facility at Roorkee with an installed capacity of 35 mn meters of fabrics processing p.a. is expected to contribute 47% to the total revenues by FY09, thus becoming a major growth driver. (more…)
Month: April 2008
Orient Paper Industries
The turnover in Orient’s ‘fans’ business, at Rs1.3bn, grew 27% yoy during 4Q08, followed by cement at 16%. Paper however slipped 18% yoy due to a 10-day unprecedented shutdown. Total turnover for the quarter, at Rs3.8bn, beat our estimates by 4%. Cement aggregate volumes, at 0.65m tons, inched up 2% yoy. Net realizations, at ~Rs2,950 a ton, rose 13% yoy (and 3% qoq).
The company made a provision of Rs 125m for receivables from its Kenya JV, Pan Paper. Adjusting for this, operating profit, at Rs982m, crossed our estimate of Rs 946m. A temporary shutdown at the paper plant reduced its profitability to Rs35m (Rs104m yoy, Rs111m qoq). This led to an overall dip in the OPM yoy and qoq.
However, the company is expected to report no growth in EPS for FY09 and is likely to be Rs 11.
Ultratech Cements – Margin Pressures Due to Costs
Ultratech Cement’s PAT came in at Rs2.8bn,up 22% yoy, but 9% below estimates. While realizations grew in-line with our estimates, costs came in higher. As a result, 4Q EBITDA margins at 30.5% were up only 90bps yoy but down 340bps qoq. FY08 PAT rose 29% to Rs10bn.
Given capacity constraints, ULTC’s cement volumes have remained flattish for both 4Q (4.2mt) and FY08 (15mt). There has been an increasing focus on domestic markets, with cement exports falling 39% in 4Q and 43% in FY08. Realizations have grown 11% yoy
both in 4Q and FY08; however, prices in 4Q were flat qoq in ULTC’s markets.
Rising costs have been the key factor in keeping margins muted during 4Q. Key pressure areas were raw materials, wages and power & fuel costs. The Indian Real Estate Developers have alleged lobby by Cement and Steel companies and the Government’s move to BAN cement exports with immediate effect to bring soaring inflation will impact Ultratech.
Sanghi Industries Results Review
Sanghi Industries has faxed us its results and here is the review from our analyst.
Top-line growth led by higher volumes. Average realizations increased 7.4% qoq (and 16.6% yoy) to Rs3,482 a ton. Aggregate volumes for the quarter, at 0.7m tons were up 14% qoq, though they dipped 20% yoy. Net sales, at Rs2.45bn, came in above our expectations of Rs2.09bn. Higher realizations help margin improvement. EBITDA per ton improved to Rs1,148, compared to ~Rs839 in 3Q08 (~Rs 1,310 in 4Q07). Better realizations and robust volume growth boosted EBITDA growth qoq. OPM rose 710bp qoq on the back of higher realizations.
Export Ban to impact average realizations. Sanghi exported ~35% of its sales volumes in FY08 and a ban on exports will impact it unless its able to sell the same volumes in domestic market without taking any price cuts.
Glaxo Smithkline Result Review
GlaxoSmithKline Pharma’s (GSK Pharma) Q1CY08 results were broadly in line with our expectations. Net sales have decreased by 0.7% YoY to Rs 4.2bn. However, excluding the contribution of the fine chemicals business which was divested in September 2007, net sales have increased by 5.3%, in line with estimates. Priority products witnessed a healthy growth of 9% YoY, while the sales of price-controlled products were affected by pipeline inventory adjustments owing to excise-related price changes. The EBITDA margin has expanded marginally by 30bps YoY to 36.4% while higher non-operational income resulted in 8.9% growth in PAT to Rs 1.2bn
Private Equity in Real Estate
In 2007 and 2008 till date, India has attracted 2.6 billion dollar of private equity investment in the real estate sector. We have collected details of the same and is being presented below.
Date / Investor / Company /Investment [$Mn]
Apr 08 Saffron Capital Parsavnath 47
Sep-07 Deutsche Bank Singapore Lodha Group 425
Nov-07 Merrill Lynch & Brahma Investments DLF 424
Dec-07 Citi Venture Capital & GIC (Singapore) Shapoorji Pallonji 290
Feb-08 DE Shaw HDIL (Mack Star Marketing) 250
Apr-08 Citi Property Investors BPTP 160
Jan-08 Baer Capital Partners & Goldman Sachs Vatika Ltd 150
Feb-08 Infinite India Investment Management Maytas Properties 150
Mar-08 Deutsche Bank Ramprastha Promoters & Developers 80
Jan-08 RREEF Golden Gate Properties 70
Mar-08 Quantum Indiabulls Real Estate 69
Mar-08 TAIB Bank Logix TechnoPark 69
Sep-07 JP Morgan Lodha Group 69
Apr-08 HDFC Real Estate Fund Lodha Group 63
Apr-08 US-based hedge fund Indus Capital Partners Uppal Group 52
Jan-08 Frontline Ventures Futura Infraprojects 40
Nov-07 Yatra Capital and ICICI Ventures Kotle Patil Developers 31
Apr-08 Shinsei Bank & Kotak Realty Fund Lemon Tree 30
Dec-07 Yatra Capital Riverbank Holdings Pvt Ltd 28
Mar-08 Yatra Capital Palladium Construction 28
Sep-07 ICICI Ventures Lodha Group 25
Mar-08 Yatra Capital Platinum Hospitality Services 16
Apr-08 Triangle Realty Fund Prozone 11
Dec-07 Yatra Capital Alliance Hospitality Services 7.2
Nov-07 Yatra Capital Gangetic Developers 5.8
One of the prominent deals Citi-Nitesh Estate for $250 mn is missing in the list above. However, you can check out exclusive coverage of Indian Real Estate Sector and Mumbai Realty Prices here.