Month: May 2008

Ceat Tyres: Ceat’s Q4FY2008 results are ahead of our expectations, mainly on the sales front. The net sales of the company grew by 14.8% to Rs646.2 crore in the quarter. The original equipment (OE) sales continued to decline whereas the replacement sales grew strongly by 28.2% in Q4FY2008.

The operating profit margin (OPM) declined by 180 basis points to 6.0% as a result of a higher raw material cost. Consequently, the operating profit declined by 12.3% to Rs38.5 crore.

For FY2008, the sales grew by 9.2% to Rs2,329 crore and the adjusted profit after tax (PAT) increased by 80.7% to Rs67.7 crore. Ceat sold a small part of its Bhandup plant and realised a value of Rs130 crore during the year. So, the reported PAT grew by 294% to Rs147.6 crore.

Apollo Tyres: Apollo Tyres’ (ATL) Q4FY08 results were in line with projections, though raw material prices increased more than expected. Net profit grew by 38.7% YoY to Rs 593m, aided by a 10% growth in revenue and a 140bps rise in the EBITDA margin. The company has announced major capacity programmes for the next three years involving an investment of Rs 11.5bn towards a greenfield project in Tamil Nadu and for increasing existing radial capacities for passenger car as well as truck & bus tyres at its Baroda plant.

Higher CAPEX and investment would impact the company’s cash flow in the medium term. EPS growth is expected to be flat for Fy2009.

K S Oils (KSO) has reported above-expected revenue growth for Q4FY08, at 107% YoY to Rs 6.7bn. The quarter’s performance was backed by higher branded and retail sales coupled with stronger average realizations. While net profit came in slightly below estimates, growth was nevertheless robust at 91% YoY to Rs 402mn.

During FY08, KSO witnessed a sharp rise in the average sales price of edible oils. There is a cut back on sales volume expectations for crude mustard oil for these two years, anticipating pressure due to price hikes. In addition, we expect the company to encounter procurement cost pressures, which would have an impact on margins. Subsequent to these adjustments, earnings estimates for FY09 and FY10 stand reduced by 15% and 17% respectively

Recurring parent PAT at Rs 683m (+6% Y/Y), was in-line with estimates. EBITDA margin rose 70 bps y/y (50 bps above estimates) led by stronger growth in exports, and (we reckon) the attendant beneficial DEPB impact. However, slower growth in domestic demand, margin pressures due to rise in input costs, a volatile currency, and slower-than-expected turnaround in operations of subsidiaries and JV operations are a dent on its bottom line.

Although subsidiary operations are expected to improve over the next two years, parent PAT is forecast to account for c80-85% of consolidated PAT over the next 2 years – and parent operations are thus the key to long-term growth and profitability. We forecast strong earnings CAGR of 26% in standalone PAT over the next two years, driven by steady improvement in export sales (notably in non auto segment).

Bharat Forge’s EPS for FY09 is expected to be mere Rs 14.3 while that of FY10 is expected to hit Rs 20.25.

The board of Shipping Corporation of India has considered the proposal to issue 1 bonus share for every 2 shares held, to the shareholders and it was decided to recommend the proposal to the administrative ministry i.e. ministry of shipping, road transport & highways for their approval in terms of the articles of association of the company.