Month: July 2008

Hindustan Zinc’s (HZL) 1QFY09 PAT fell 30% yoy to Rs8.5bn on the back of a sharp decline in zinc LME prices. Revenues fell 17% yoy to Rs16.4bn despite higher volumes. EBITDA margins fell to 60% from 73% in 1QFY08 and 65% in 4QFY08.

Zinc volumes rose 38% to 128,000 tonnes and lead volumes rose 27% to 17,300 tonnes. Concentrate sales fell 81% to 10,500dmt due to higher smelter production. The benefit of higher volumes was more than offset by a 42% decline in zinc LME prices to US$2,115/t.

HZL enhanced its zinc capacity by 88,000 tpa to 669,000 tpa in April08. HZL has also announced further capex of Rs36bn, which will hike zinc capacity by 210,000 tpa and lead capacity by 100,000 tpa taking the total to 1.07m tpa by 2010, together with mining and captive power capacities.

The company is expected to report a drop in EPS for FY09 to Rs 93.5 a decline of 10% over FY08.

Shree Renuka Sugars reported better results despite Weak Sugar sector. Renuka sugar’s Q3FY08 net profit for the parent company at Rs230mn is down 27% y-o-y. EBIT of manufacturing division grew 62% y-o-y driven by 329% jump in renewable energy business and despite a 55% drop in profit from sale of sugar.

EBIT growth of the sugar division in Q4FY08 will be further driven by (1) higher sugar sales as 36% of current year production is yet to be sold and (2) sugar refinery commissioned in July08 at Haldia could contribute.

Renuka sugar is looking at crushing over 5mn tonne sugarcane in FY09E, similar to the amount crushed in FY08 despite likely decline of 30-40% in sugarcane production in Maharashtra and Karnataka where its factories are present.

Renuka Sugar is the fifth largest sugar manufacturer of Sugar in India and is expected to report an EPS of Rs 4.13 for 08 and Rs 10 for 09.

Lupin has posted excellent results with 100% growth in core profits. While consolidated revenues at Rs8.6bn are in line with estimates, EBITDA margins at 17.7% are ahead of estimates. Further aided by lower than expected forex losses, PAT at Rs1120mn is ahead of estimates of Rs860mn.

There is continued momentum across all business segments led by the US markets where sales have grown 56% partially driven by Ramipril launch during the quarter. Domestic formulations have grown at a sedate 16% for the quarter after the sharp growth in Q4FY08.

Lupin is all set to file ANDAs for oral contraceptive, an extremely attractive generic space, from Q4FY09 onwards. Lupin is looking to file 30 ANDAs during FY09, nearly 2x its historical filing rate.

Lupin is expected to report revenues of Rs 34.4bn and a PAT of Rs 4.2bn for FY09.

LIC Housing Finance (LICHF) reported strong profits for the fourth consecutive quarter in Q1FY09.

Net interest income grew 43% Y-o-Y to INR 1.5 bn supported by 25% Y-o-Y growth in loan book and 36bps Y-o-Y improvement in net interest margins (NIM). Pre-provision profit grew 57% Y-o-Y to INR 1.5 bn, while operating expenses declined 7% Y-o-Y in Q1FY09. Provisions of INR 97 mn made during Q1FY09 (as against INR 346 mn in Q1FY08). PAT grew 124% Y-o-Y to INR 1 bn.

LICHF reported strong disbursement growth of 24% Y-o-Y in Q1FY09 to INR 15.2 bn – skewed towards residential mortgages.

LICHF is consistently delivering strong profitability quarter after quarter and concerns over stability in business growth and earnings is gradually getting diluted. The company is expected to report a full year EPS of Rs 54.

Maruti Suzuki reported robust volume growth of 13.5% and realization growth of ~7% on favorable change in the product mix. Revenues came in at Rs48.6 bn. Operating margins came in at 11.7%. Depreciation came in at Rs1.7 bn, nearly double last year’s Rs0.9 bn, due to recently announced accelerated depreciation policy.

Net earnings came in at Rs4.7 bn, 7% below last year’s Rs5.0 bn, as higher accelerated depreciation and raw material costs offset the improvement seen in average realization per vehicle.

Maruti’s new model, A-Star, is slated for launch in October. We expect it to clock average monthly sales of 6,000 units and account for 10% of FY10e domestic sales. Consensus estimate the company to report an EPS of Rs 66 to Rs 69 for FY09.