Month: July 2008

Simplex Infrastructures Ltd reported a Net sales for the full year FY08 at Rs28.12bn, increase by 64% over the previous year. For the quarter ended Q4FY08, sales at Rs9.48bn increased by 72% on a yoy basis and 34.8% on a qoq basis. For the full year FY08, operating margin of the company has remained flat at 9.5% while it has seen a decline in the fourth quarter at 8.6% from 9.5% in Q4FY07 and 10.0% in Q3FY08. The Net profit for the full year FY08 at Rs900mn.

With over 150 projects currently being undertaken and an order book position of the company over Rs100bn, the management has guided capex plans (machinery and equipments) of Rs2.0bn for FY09E to gear for the execution of the projects. The overseas business accounted for 17% of the FY08 revenues and 27% of the order book.

The power plant construction segment is expected to be a strong area in the future. The company has a diversified business model, which acts as a hedge against slowdown or project delays in any particular construction segment.

This is truly amazing, the Indian Auto sector didn’t witness the expected slowdown despite rising Inflation and Interest rates on Automobile Loans. Two wheeler sales of the three majors were impressive (up +10% Y/Y). Motorcycle sales were also strong (+12% YoY) in the backdrop of low base last year and strong performance by 125cc bikes. However, for CY2009, managements have cautioned single digit sales growth.

Maruti Udyog reported muted sales due to stiff base effect and a slowdown in the key compact segment. Swift sales were robust (+42% Y/Y), excluding Swift A2 segment declined 6% Y/Y. Dezire volumes remained robust which aided growth in the A3 segment. Inventory levels saw very slight increase at dealers end.

M&M June sales rose 13% YoY driven by a strong growth in tractor sales (+19% YoY) and decent growth in UV sales (+7% YoY) albeit a low base. Scorpio sales (+1% YoY) were muted while non-Scorpio sales (+9% YoY) continued to show decent growth.

Navneet Publications (NPL) Q4FY08 revenues grew 29.5% YoY to INR 607 mn. EBITDA grew 16% YoY to INR 55 mn, whereas net profit grew 55.2% Y-o-Y to INR 21 mn. For the year, NPL posted revenue growth of 23.7% to INR 4.1 bn, while EBITDA and net profit grew 14.4% and 27.2% to INR 829 mn and INR 542 mn, respectively.

EBITDA margins declined 160bps to 20.2% for FY08 on account of higher sales promotion expenses of INR 61.7 mn for the domestic stationery business and export debtor write-offs (stationery segment) of INR 26 mn during the year.

Publications segment grew 23% to INR 2.62 bn in FY08 on the back of syllabus changes in Maharashtra and Gujarat. Stationery segment grew 24.5% to INR 1.36 bn on account of higher growth in the domestic market and introduction of non-paper stationery products.

According to Elliot Wave by Frost and Pretcher.

• Wave 1 – Up – Rebound from recent Bottom. Mass pessimism ebbs here.
• Wave 2 – Down – Test of Lows. But previous lows not hit.
• Wave 3 – Up – Powerful Wave.Strength, Breadth, Easy-Credit , Real prosperity
• Wave 4 – Down – Surprising disappointment. Signals that best part of growth over.
• Wave 5 – Up – Final Advance.Psychology creates overvaluation. Leverage at highest.
• Wave 5A – Down – Breakdown. Inexplicable fall. Viewed as buying opportunity [This is Probably the Jan-08 Fall ?]
• Wave 5B – Up – Narrow, Emotional Advance. Aggressive euphoria+ denial
• Wave 5C – Down. Worst of Bear market. Strength, Breadth, Fundamentals collapse

We are almost in 5C.

Ganesh Housing Corporation Ltd (GHCL) reported revenue growth of 180.4% for FY08 to Rs1.3b. Net profit grew 229.5% to Rs1.1b. EBITDA margins were 82.9% v/s 43.1% in FY07. For 4QFY08, revenue declined 53.9% YoY to Rs147m and net profit declined 61.8% YoY to Rs40m.

In 4QFY08, GHCL acquired 21.2msf land from promoter group companies for the Ognaj Township. This is part of the ~33msf land that was to be transferred from promoter group companies to GHCL.

The management is considering strategic tie-ups for development of key projects like – Million Minds IT SEZ (~13msf), and (b) Ognaj Township (~21msf). We believe this is a positive move, as these projects are vast and have an embedded execution challenge.