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Equity Research

Grasim Industries – Strength from Cement and Fibers

November 1, 20072 min read

Grasim Industries Ltd is drawing strength from almost all its business verticals. Q2 consolidated PAT (Rs6.2bn) grew 50% YoY, driven by Ultratech’s strong performance. Grasim’s H1 FY08 consolidated PAT was Rs12.9bn (up 52% YoY); that is, an EPS of Rs140.70. This is 48% of FY08 consensus EPS estimate of Rs293.50, implying that estimate is reasonable, as H2 is traditionally stronger than H1 for cement and VSF businesses. Q2 was characterised by strong earnings growth in all divisions -VSF (EBITDA growth +82% YoY), cement (25%) and sponge iron (+418%).

Grasim’s total capex plan is Rs61.2bn for FY08 and Rs18.2bn for FY09. In addition to 95KTPA VSF capacity expansion in Kharach (Gujarat) and Harihar (Karnataka), Grasim is planning an 88KTPA greenfield VSF plant in Vilayat (Gujarat). For cement, the company expects Shambhupura (4.4mt) and Ultratech’s Tadipatri (4.9mt) be commissioned by end-FY08 and Kotputli (4.4mt) by Q1FY09.

Macquarie and UBS have upgraded Grasim’s earnings expectations. (more…)

Economy, Markets and Macro Views

Jai Hind Projects, Initiating Coverage

November 1, 20072 min read

SBI Cap Securities has initiated coverage on Jai Hind Projects Ltd [JPL]. JPL operates as an engineering, procurement and construction (EPC) company. The company is involved in the construction and laying of onshore and horizontal directional drilling (HDD) pipelines, urban infrastructure development projects like construction of water systems, gas distribution projects and other environmental projects, corrosion protection services and engineering & turnkey projects.

JPL has an order backlog worth Rs.2142.4 mn as on FY07, which is 179.4% higher than FY06. Average ticket size has improved to Rs.235 mn, from Rs.125 mn in FY06. In order to support big ticket size projects, JPL has planned capital expenditure of Rs.400 million in span of two years. JPL is planning to enter into global EPC contracts for which it has tied up with Thiess of Australia, Naftogaz of Ukraine.

Valuations and Target for JPL (more…)

Breaking Corporate India Earnings News

Parsvnath Developers + Tata Chemicals

October 31, 20071 min read

North India’s realty major, Parsvnath Developers records 110.05% increase in net profit at Rs 102.77 crore Consolidated Revenue at Rs 412.71 crore, an increase of 40.67%. For the quarter ended Sept-07, the company reported – Consolidated revenue at Rs 412.71 crore, an increase of 40.67% from Rs 293.34 crore, Consolidated EBIDTA at Rs 161.22 crore, up by 114.09% from Rs 75.31 crore, Consolidated PAT at Rs 102.77 crore, an increase of 110.05% from Rs 48.93 crore and an EPS (non-annualized) at Rs 5.56.

Tata Chemicals Q2 results at a glance:
Income from operations (net of excise) up 11% at Rs. 1,255 crore compared Rs. 1,126 crore. Profit from Operations improves 9% to Rs. 209 crore from Rs. 191 crore. PBT at Rs. 207 crore compared to Rs 221 crore – PBT for the quarter is lower than the corresponding quarter last year mainly because of higher dividend income and foreign exchange gain in Q2 FY07. Diluted EPS (for the quarter): Rs. 5.61

Breaking Corporate India Earnings News

Idea Cellular + Cairn Energy in Nifty

October 31, 20071 min read

Its a very wise decision to include Idea Cellular and Cairn India Energy in the National stock exchange’s Nifty-50 index. PSU telecom giant, MTNL and oil distribution company HPCL are the outgoing stocks.

Aditya Birla group firm Idea Cellular is a wireless telecom company, operating in various states of India. Idea Cellular was the first to offer flexible tariff plans for prepaid customers.

Cairn India is oil and gas exploration and production company. Cairn UK Holdings has 68.99% in the company.

Breaking Corporate India Earnings News

McNally Bharat + Numeric Power Systems

October 31, 20071 min read

McNally Bharat Engineering Company engaged in providing turnkey solutions in the areas of power, steel, alumina, material handling, mineral beneficiation, coal washing, reported a rise in net profit of 87.5% to Rs 6 crore on 1.97% rise in sales to Rs 115.21 crore in Q2 September 2007 over Q2 September 2006.

At the current price of Rs 232.40, the scrip trades at a PE multiple of 35.53, based on Q1 June 2007 annualised EPS of Rs 6.54.

Numeric Power Systems India’s number one uninterrupted power supply (UPS) company, reported 135.50% jump in net profit to Rs 10.62 crore on 71.10% rise in net sales to Rs 101.69 crore.

The current market price of Rs 746.90 discounts its Q2 September 2007 annualised EPS of Rs 84.12 by a PE multiple of 8.87.

Equity Research

Lehman Overweight on Redington India

October 31, 20072 min read

Lehman Brothers equity research which was the first to boldly come out and downgrade the Indian IT Outsourcing companies is overweight on the prospects of Redington India Ltd. Redington is the second-largest IT distributor in India and the largest IT distributor in the Middle East. It has a very good Supply Chain expertise.

The company is poised to exploit the strong and secular growth of IT industry in India and Middle-East. Robust systems and stable management team have led to impressive track record in operating performance. Inventory write-downs have been only 0.03-0.04% for last couple of years whereas bad debts have averaged only 0.08% of sales in last five years. PC market in India is witnessing faster growth of branded computers. High value segments like storage & networking equipments are growing faster (47% growth in FY07) than the industry average (19% growth in FY07). The services business with much higher margins (OPM of around 15%) will continue to gradually increase its share of revenues.

The company has opportunities (more…)

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