Year: 2008

HDFC Bank’s Credit Card division is upbeat on the Credit Card Business and expects to log a growth of 35% this year despite difficult macro environment in the banking industry.

HDFC Bank’s Credit Card is the second largest issuer of Credit Cards [Visa + Mastercard] in India. HDFC has followed a unique business model and has 70% of its customers from its own Bank. It has issued 4.2 million credit cards [ Visa + Mastercard in Gold, Platinum and Signature Series]

Mr. Rao, head of Credit Cards said,

We are number one currently on an incremental basis in the issue of new credit cards and are very positive about this segment growth over the next 24 months.

The bank is treating credit card as an entry level product after savings account and has still managed to have the lowest NPAs in the division and as a bank as whole as well.

Madhucon Projects Ltd (MPL) reported 1QFY09 results at Rs148mn (+60.8% yoy), ahead of estimates (Rs130mn), led mainly by higher revenues and margins. Revenues grew by 67.2% yoy to Rs2.4bn driven by a strong order backlog of Rs47bn as on 30th June 2008 (6.4x FY08 revenues) and scale up in execution of the company’s BOT projects.

Operating margins fell by 50bps to 14% due to the impact of higher material costs in the company’s fixed price captive BOT contracts. Interest expenses jumped 137.6% led by higher debt for equipment financing. Consequently, PAT increased by 60.8% yoy to Rs148mn.

MPL’s coal mine in Indonesia are progressing is an hidden asset to the company. MPL has an outstanding order position of approximately Rs4,850cr. The order book comprises Roads (35%) – mainly Highways and Flyovers – Irrigation (31%), Power (19%) and Real Estate (15%). The company is expected to report a fully diluted EPs of Rs 16 to Rs 18 for FY09.

Vishal Retail’s Q1FY09 net sales grew 18.26% to Rs 396.09 crore in Q1FY09 as compared to Rs 318.42 crore in Q4FY09 due to 10% higher footfalls. The operating profit stood at Rs 49.09 crore with a margin of 12.37% as against 10.88% in Q4FY08. This improvement in operating profit margin was on account of the enhanced contribution of private labels to 13.2% from 10% of sales in Q4FY08. Also, there was a marginal growth of 1.5% in sales per sq ft to Rs 1788 in Q1FY09 from Rs 1762 in Q4FY08. The net profit grew 36.5% to Rs 14 crore in Q1FY09 from Rs 10.4 crore in Q4FY08.

On the flip side, as per mgt, inventory position at the end of 1Q has worsened to Rs2800/sq ft (Rs6.5bn) vs Rs2580/sq ft (Rs5.6bn) as of FY08 end. Further, debt has gone up from Rs5.3bn to Rs6.5bn, pushing the debt-equity ratio beyond 2x.

DSP Merill expects the company to report an EPS of Rs 19 for FY09 while ICICI Sec expects the company to report an EPS of Rs 35. We find ICICI’s expectations are really aggressive to meet in this market.