Author: CP

Commodity price forecasts are strong on the back of continued strong global demand growth and limited supply response from the mining
industry. The headwind in the US is unlikely to precipitate a sharp slowdown in demand because of the “decoupling” of the US economy from BRICs and other economies.

Tata Steel:
Estimates on greater visibility of synergy benefits from Corus and lower than expected equity dilution from the proposed equity issuances. This results in 1.3%, 8.2% and 20.7% higher net profit estimates for FY2008/09/10E estimates respectively. Following a sharp re-rating of regional steel peers, revise SOTP based 12-month Target Price (more…)

GMR reported 2Q FY08 results, with revenue up 26%, to INR3.95bn against estimate of INR4.2bn. The revenue growth has been predominately due to the additional contribution from the airport business (INR753mn) and higher PLF of the two power plants (INR223mn). However, the net profit has been down 7.5% yoy, to INR495mn , due to INR343mn loss of Vemagiri power project (VPGL). VPGL has been non-operational since September 2006, due to the non-availability of gas and this will remain a drag on profitability for the full year.

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United Spirits Ltd – USL, despite its dominance and 5x the size of the next competitor, operates at EBITDA margin of merely 14% (in FY08E), far lower than market leaders in other parts of the world. Whyte & Mackay bulk scotch supplier, is benefiting from the up-cycle in scotch prices. We estimate W&M accounts for 1/3rd of Group EBITDA. Expect EPS CAGR of 60% over FY07-09E. USL trades at P/E of 28x FY09E. Expect USL to report an EPS of Rs 32.35 and Rs 62.35 for FY08 and FY09 respectively.
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