Indian Equity Research and Investment Strategy
MPSEZ 2QFY10 recurring PAT grew +22%YoY despite slow growth in port income +5%YoY on rebound in high margin SEZ income +41% & 30% lower tax on SEZ benefit on port income. Adani Power has scaled-up its Mundra Project by 70% to 7.9GW, which will drive long-term assured volume for MPSEZ’s new coal terminal.
Mundra Port was one of the few Asian ports to report 2QFY10 cargo volume growth of +9%YoY to 10.1mmT led by liquid cargo +55% and crude cargo +43%, Coal cargo +19% despite Minerals (more…)
Shoppers Stop Limited (SSL) on a consolidated asis reported a growth of 9.1% yoy in its revenues during 2QFY2010 to Rs382.2cr (Rs350.1cr). SSL clocked the growth on the back of SSS growth of 2.3% for Shoppers Stop departmental stores and 1.8% growth for all formats on yoy basis,thus ending the declining trend posted for the last three quarters. SSL’s Bottom-line improved significantly thereby posting a profit of Rs8.7cr in 2QFY2010 against a loss of Rs18.3cr in 2QFY2009.
The performance is significantly impressive on qoq basis as in 1QFY2010 the company had posted a 6.3% decline in departmental stores sales and a 7.5% decline in all (more…)
ICICI Bank‘s profits for Q2FY10 grew 3% YoY and 18% QoQ driven by 18% fall in operating expenses. Net revenues (adjusting for trading gains) declined 15% YoY due to 5% decline in NII as loan book shrunk 13% YoY in Q2. Fee income continued to decline YoY (26% in Q2). Demand deposits grew 9% YoY and 14% QoQ.
ROA set to increase to 1.3% by FY11e, led by improving margins. Core RoE of the bank could rise to ~17% by FY12 v/s 11% (more…)
State Bank of India, the largest bank and banker to every Indian reported a 2Q FY10 net profit of INR24.9bn, up 10% y-o-y and 7% q-o-q. Even though NII growth was muted on a y-o-y basis on a q-o-q basis it was encouraging. The net interest margin recovered by 25bp q-o-q to 2.6%, led by the retiring of high-cost bulk deposits.
Key positives: margins, fees and costs have moved in the right direction – together. Margins were up 25bps qoq (from a low 230bps), but management’s guidance of a 10bp per quarter expansion will likely disappoint possibly higher market expectations. (more…)
Ashok Leyland reported lower financial income and a higher tax rate than expected. Operationally, EBITDA was ~7% below forecasts. Sales were ~2% above estimates due to higher realizations.
Mgmt. guided to ~15% volume growth (upped from single-digits in 1QFY10), driven by confluence of recovery in industrial activity, better utilisation of trucking fleet. Margin guidance of 350 bps improvement was not stated this Q (as it was in 1Q) but mgmt noted that 10.5% EBITDA margin in 2Q could be improved on slightly.
On the back of sharp increase in earnings is driven by a) lower tax rates (benefits at the Uttaranchal plant) and b) mgmt guidance on profitability is better than anticipated, Citi revised EPS estimates to 2.91 and 3.46 for fy 10 and fy11 respectively.
JP Morgan expects EPS of Rs 2 and Rs 2.7 for fy10 and fy11 respectively.
Anand Rathi pegs EPS estimates at Rs 2.6 and Rs 2.95 for fy10 and fy11.
Morgan Stanley is expecting 2.45 and 3.62 for fy10 and fy11 [Remember, Morgan’s underlying tone on India is extremely bullish and hence EPS estimates will be higher than the rest]
Green Energy Infrastructure Company, Suzlon’s 2Q FY10 continued to disappoint, with shipments much lower than expected. At the Suzlon Wind level (parent level), 2Q FY10 wind shipments totalled 283MW, for a 1H FY10 figure of 406MW (17% of our FY10F estimate), and gross margin narrowed from 31% last quarter to 27%.
Suzlon had a disastrous 2QFY10 with Rec. Loss of Rs3.4bn vs Rec. PAT of Rs2.6bn in 2QFY09 and 3x BofAMLe. This was led by uneconomical operations resulting from (more…)