Year: 2008

Hindustan Construction (HCC) reported strong turnover growth of 38% YoY. EBITDA improved by 43% YoY, on the back of rising margins. However, the rise in interest costs by 133% YoY resulted in adjusted PAT declining by 3% YoY to Rs213 mn.

HCC’s EBITDA margins have improved YoY by 40 bps and QoQ by 170 bps. Management has indicated that since HCC is no longer booking losses in Bandra-Worli Sea Link project, EBITDA margins will be on an improving trend.

Sales of apartments at Lavasa during October 2007 have clocked Rs3.21 bn. The management indicated that discussions are continuing for a possible private equity deal in Lavasa. Regarding the disputed Sawalkote hydropower project order of Rs19.4 bn, it is expected be settled by a favourable court verdict by the end of February 2008.

Union Bank of India’s 3Q08 profits were strong and 16% ahead of estimates. Key highlights of the quarter were operational improvements – pick up in margins, continued fee income growth and strong asset quality, even as trading gains and recoveries boosted reported profits.

Net interest margins improved to 283bps (+20bps qoq), while still lower than industry averages and off a disappointing quarter; this has not come at the cost of growth (loan growth at 27% yoy is above industry trends).

Union’s core fee income growth remained strong and ahead of peers at 27% yoy, though overall non interest incomes increased sharply by 109% on higher trading gains and recoveries. Absolute reductions in NPLs; higher provisioning have reduced NPLs to 2.1% of loans.

Reliance Energy in consortium with CAF of Spain has been awarded the Airport Metro Express Line, Delhi project on BOOT basis for a concession period of 30 years. The proposed 22.7 km of high speed metro rail link shall connect New Delhi railway station and New Delhi international airport through connaught place.

The project has been awarded by Delhi Metro Rail Corporation (DMRC) through an international competitive bidding process. The estimated project cost for is about Rs 2,500 crore; the project is scheduled to be operational in July 2010.

Reliance Energy is already implementing the Mumbai Metro Line 1 Project (Versova – Andheri – Ghatkopar) in Mumbai in association with Mumbai Metropolitan Region Development Authority (MMRDA); in the Metro Sector. Mumbai Metro Line 1 and Airport Metro Express Line, Delhi are the only Projects to be undertaken on a PPP framework.

EKC’s consolidated 3QFY08 net profit of Rs294m was up 44% yoy and exactly in line with expectations. EBITDA margin came in at 37%, substantially higher than the previous two quarters (28-31% range).

Average realizations on a consolidated basis remained strong at Rs8.0K/cyl, relatively flat on a qoq basis. CNG cylinders accounted for c.70% of sales. Total sales volumes from Dubai were sequentially higher and accounted for 30% of overall sales (typically 20-25%), primarily owing to inter-segmental transfers from Tarapur.

Citi reiterates a target of Rs 437 on Everest Kanto Cylinder on the back of 47% EPS CAGR. Our Analyst recommends a BUY with a Target Price of Rs 360.