Year: 2008

Tata Teleservices Maharashtra continued to underperform. 4QFY08 revenues of Rs4.56 bn (+3.6% Q/Q; 19.8% Y/Y) were in line but EBITDA of Rs1.15 bn (+5.8%, +30.6%) was 2.5% below our estimate. Net loss of Rs206 mn came in lower (versus JPMe: Rs308 mn) due to higher other income. For the full year (FY08), TTML’s revs were up 21% Y/Y and EBITDA was up 40%.

Revenue momentum was decent despite slowdown in sub-additions to 0.35 MM vs. 0.54 MM in 3Q. ARPU decline (6.5% Q/Q) was lower versus recent trend; we estimate 4Q wireless ARPU
was ~Rs240 (RCOM: Rs320). Margin expansion was only 50 bps as interconnect/network costs were a tad higher. However, SAC (handset subsidy) is on a declining trend (Rs600 in FY08 vs. Rs900 in FY07). Notably, FY08 was TTML’s first ever year of a positive EBIT.

For FY09, the company is expected to be in Red losing Rs 0.28 / share.

Lakshmi Machine Works – LMW reported Q4FY08 results below our expectations. While Net sales grew by 7.4% yoy to Rs6251mn (11% growth in the textile machinery business and a 21% decline in the machine tools & foundry division), Operating profits remained flat at Rs1206mn. (margins declined by 150bps yoy to 19.3% mainly due to the rise in raw material prices ).

APAT (ex one off items) declined by 12.6% yoy to Rs601mn (attributable to the sharp increase in depreciation owing to higher capex). LMW ended FY08 with revenue growth of 18% (as compared to the growth guidance of 30%) and a PAT growth of 15.5%. Although LMW started the year with a strong order backlog of Rs53.3bn, the lower than expected (as well as guided) growth reflects, higher than anticipated slowdown in the textile sector.

The company faces a double whammy in the form of (1) Declining demand (thus impacting revenue growth) and (2) Rising raw material prices (hitting margins, though management indicated an intention for upward revision in prices post Q1FY09)

Mumbai Realty major, HDIL declared bonus in the ration of 2:7. results for Fy2008-08 were inline with our expectations.

HDIL reported revenues of Rs9.8 bn (v/s our expectation of Rs9.7 bn) and PAT of Rs7.1 bn (v/s our expectation of Rs6.7 bn) for 4QFY08. HDIL booked revenues largely from the sale of commercial property in Andheri (Kaledonia) in 4QFY08 for a consideration of Rs9 bn. Also HDIL booked Rs0.5 bn from land development in Vasai-virar region. PAT was 6% higher than our estimates due to our higher construction cost assumptions for the commercial property.

HDIL has various projects under construction in different parts of Mumbai. Prices of HDIL’s projects in following places at Mumbai Motilal Nehru Nagar, Santacruz (W), Andheri, Ghatkopar, Jogeshwari , Malad, Virar, Vasai, Worli, Bandra etc.

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