Indian Equity Research and Investment Strategy
Techno Electric company has posted its Q4FY08 performance, which saw an improvement in all its divisions. The stock is in for a re-rating on the back of continued strong order inflow, huge order backlog and timely execution capability.
Techno Electric order backlog stood at Rs. 8,500 mn as on FY08. The total backlog is 2x of FY08 revenues. The company has bid for more than Rs. 2,500 mn till date. (more…)
Todays Writing Products Limited’s (TWPL’s) Q4FY08 results were in line with our expectations. The company is currently consolidating its business, both in the writing products segment and in its subsidiaries namely, Todays Stationery Mart Limited.
During Q4FY08, TWPL registered a 14% QoQ increase in its topline, driven by strong export growth and stable domestic demand.
Nelcast Ltd reported 37.2% YoY top line growth to Rs 1139.2 mn for quarter ended March 2008 compared to corresponding quarter last year. For FY08, Net sales reported growth of 16.6% YoY to Rs. 3564.5 mn as compared to Rs 3057.6 mn in corresponding period last year. The company reported 10.1% YoY growth in EBDITA in Q4FY08 to Rs 127.1 mn compared to corresponding quarter last year. For FY08, EBITDA witnessed growth of 18% YoY. Total expenditure witnessed increase of 43.8% YoY during the fourth quarter mainly due to increase in raw material costs and other expenses. The company reported decline in its EBDITA margins by 410 basis points to 9.7% in Q4FY08 compared to 13.8% in Q4FY07.However for full year FY08, It maintained its EBDITA margins at around 13%.
Nelcast is set to be major beneficiary of accelerating trend of sourcing of auto components due to its high skilled labors, lower wage costs and proven track record.
Domestic sales were muted (up 1% YoY) offset by a significant decline in export sales (-57% YoY). Truck sales grew by 5% YoY aided by low base effect last year. Bus sales fell 29% YoY primarily due to high base effect, we believe base effect will remain challenging for bus sales over the next 4-5 months.
Domestic MHCV goods sales grew by 7% YoY. Our channel checks indicate that retail offtake is not very buoyant but growth is being aided by a low base last year. Freight rates remain reasonably buoyant: +2%Y/Y, +1%MoM – the recent hike in diesel prices has been partially passed on.
Management maintained its outlook of 8-10% growth in truck sales for the industry and ~15% growth for Ashok Leyland in FY09E. We believe market share gains for Ashok Leyland will be extremely difficult as Tata Motors launches its new products over the next two years.
Allahabad Bank reported a net profit of Rs1.6bn for Q4FY08, below expectations. However the NII at Rs4.4bn was inline with expectations. The operating performance deteriorated during the quarter with NII falling by 5%yoy. The fee income remained flat at Rs1.1bn due to high base effect on last year. With sharp jump in the Opex, the core operating profit has declined by 19.0% yoy. However, with higher treasury gains and lower tax rate, the net profit has grown by 35% yoy.
The asset quality continued to improve with gross NPA declining to 2.0% of assets (2.6% last year) and net NPA of less than 0.8 %
The Oil has scaled to a record high and Indian Oil Marketing companies [HPCL, BPCL, Indian Oil Corp] are losing $12 million everyday for selling subsidized Petrol / Diesel / LPG. With stream of elections across India and no political party willing to risk their fortunes by raising oil prices, the Government’s subsidy bill is simply out of control now. All the noises about 30% plus growth in Tax collection will now be utilized for Oil Bonds and Government subsidies. (more…)