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Bank of Baroda + Andhra Bank Outlook

Tuesday, July 29, 2008

Bank of Baroda reported 1Q09 profits up 12% YoY ahead of estimates. Key highlights are - Flat margins QoQ, strong fee income growth and no significant deterioration in asset quality. BOB's core fee incomes increased substantially (over 40% YoY). NIMs were flat QoQ (down 26bps YoY) with pressures building up on the domestic business. Expect moderate reductions in margins.

Loan growth (42% YoY) was aggressive, especially offshore (+68% YoY), now 23% of book. Management suggests will continue to grow this strongly, though could scale back on domestic growth to 20-25% (+36% in 1Q09). Growth is fairly broad-based (retail, SME, agriculture), profitable for now.

Asset quality of the bank remains a positive - the coverage of the bank remains comfortable at around 72%. Reported NPL grew 6% QoQ in the quarter - however, adjusted for farm loan waiver, NPL grew 11% QoQ. Going forward Bank of Baroda is expected to report negative growth in EPS for FY09 - Rs 32 to Rs 35.

Andhra Bank: Andhra's 1Q09 profits down 45% YoY. Margins contracted significantly over the year and its relatively mid-market loan book is increasingly at risk. QoQ margins were stable; Andhra's relatively lower CASA ratio suggests that margins will continue to be under pressure. Key positive for the quarter though was the sustained growth in fee incomes (+28% YoY).

NPLs have increased a little (+5.5% QoQ); reported asset quality is still fine with Gross NPLs at 1.2% and over 90% loan-loss coverage levels. Andhra's loan book is relatively more exposed to agriculture and mid-market focused. Andhra Bank is expected to report flat EPS growth of Rs 11 to Rs 12 for FY09.

Published by Sunil K @ 10:46 AM IST.


PNB + HDFC Bank - Result Analysis

Punjab National Bank (PNB) has reported a net profit of Rs5.1bn. NII at Rs14.4bn, up 11% yoy and operating profit at Rs9.8bn, up 5.3% yoy, were inline with estimates. The NII growth was mainly led by healthy advances growth (up 19.6% yoy). The NIM's contracted by 39bps yoy. Nevertheless, lower provisioning and controlled Opex resulted in 20.3% yoy growth in net profit to Rs5.1bn.

The asset quality improved further with GNPA and NNPA having declined to 2.8% (3.8% Q1FY08) and 0.6% (0.98% Q4FY08) respectively. Overall NPLs reduced in 1Q09, gross slippages were at 2% levels (management suggests this is temporary and expects improvements ). PNB's loan book, however, is relatively more exposed to agriculture and SMEs - susceptible to spillovers from the loan waivers and further environmental deterioration.

Analysts expect PNB to report flat EPS growth for FY09 at Rs 65.18.

HDFC Bank - HDBK’s profit and quality performance is largely along expected lines. HDFC Bank's earnings (up 45% YoY factoring impact of CBOP merger) ; driven by a 75% rise in top line (NII) and 40% jump in operating profits. Credit costs were up only 8% YoY; but the bank continues to keep its NPL coverage at 65-70% (specific) and at >100% (incl. general). This is in line with levels HDFC Bank maintained even earlier. Core fee income growth at 37% was lower than est. as there was minimal contribution from CBOP.

HDBK continues to grow aggressively. Loan book is up almost 15% qoq (ex-centurion), and asset behaviour beyond acquired NPA’s remains in line with historical trends. Centurion's acquisition has been expensive - in the actual price paid, the step down in operating and profit measures and the time consumed.

HDFC Bank is expected to report a fully diluted EPS of Rs 55 to Rs 57 for FY09.

Published by Sunil K @ 10:33 AM IST.


SBI + Union Bank Resulst Review

Monday, July 28, 2008

SBI reported 15% growth in its net profits to Rs16.4 bn that came in line with consensus forecast. SBI's operating P&L seems to cope well with rising rates.

Pre-provisioning profits (ex treasury, one-offs) are up 28% YoY; with a 45% growth in fee incomes, 300+bps on margins (though down), and controlled costs.This, with a little help from provision write-backs, offset a relatively large MTM charge.

SBI's asset quality appears to have actually improved over the quarter. This would suggest a sharp turnaround from the previously weak quarter and is impressive. Management stays its high growth and market share gains course; appears to be working for now, though the environment suggests risks of this strategy are rising. SBI's sustains aggressive growth (30%yoy), market share gain strategy. Growth also appears fairly broad-based - across segments and offshore.

SBI is expected to report FY09 EPS of Rs 109, slightly below FY08 levels but still impressive with the challenging global financial scenario.

Union Bank of India: Union Bank reported NII of Rs8.1b v/s our est. of Rs7.8b. Adjusted NII growth is 21% QoQ and 13% YoY. Interest expense declined QoQ in absolute amount despite 3% growth in deposits. While reported margins are stable QoQ at 2.63%; we believe adjusted margins have increased by >40bp QoQ to 2.7% in 1QFY09.

Both loans and deposits grew at a reasonable pace; more important, it has continued to improve the loan mix towards higher yielding loans (SME, retail) and deposit mix toward more CASA. While there is scope for further improvement, Union has shown consistent progress over the last 3-4 quarters.

Union's asset quality was stable (ex-loan waiver impact), delinquencies contained and coverage remained high. UBI is set to increases its SME, retail and agri loan portfolios - segments that are currently under most pressure. Union Bank is expected to report FY09 EPS of Rs 28 to Rs 29.

Published by Komal M @ 10:57 AM IST.


ICICI Bank Results Below Expectations

India's worst private bank, ICICI Bank has reported results below expectations. ICICI reported 6% yoy decline in net profits to Rs7.3 bn. Slower than expected loan growth and a sharper than expected decline in non-interest income [NII] were the key factors.

ICICI reported further deterioration in credit quality lead largely by uncollateralized lending. Gross and net NPA rose significantly on qoq and yoy basis. The increase in loan loss provisions is not commensurate with the level of increase in NPA.

Loan growth and NIM outlook would likely remain challenged by rising funding costs due to adverse asset-liability mismatch and dependence on wholesale deposits. All of the above would likely drive significant moderation in NII growth, in our view. Fee income growth will see further moderation due to anticipated slowdown in international banking business as well as retail banking fee income. Deterioration in credit quality would likely prompt the bank loan loss reserve ratio to rise going forward.

The difference between ICICI and HDFC or between K.V.Kamath and Deepak Parekh is evident - Kamath runs after top line without a second thought on quality of business while Parekh is behind bottomline with major focus on business quality. Parekh's HDFC Bank has beaten Citi and SBI to be the second largest credit card issuer in India with an enitrely new business model of lending.

Published by Webmaster @ 9:34 AM IST.


Ambuja Cements + Grasim - Quarterly Results Outlook

Saturday, July 26, 2008

Ambuja Cements: Ambuja's adj PAT came in at Rs3.4bn, 20% lower yoy on the back of a sharp rise in costs. Revenues grew 8% to Rs15.7bn on higher realizations. Margin pressures continued with EBITDA margins at 30% vs 38% last year and 31% in 1QCY08.

Volumes were almost flat at 4.4m tonnes. While domestic volumes grew 5%, exports fell 70% to 76,000 tonnes as a result of the export ban during the quarter. Realizations increased 9% yoy to Rs3,587/t (4% qoq). There was a significant jump in raw material, power and fuel and staff costs. Raw material costs increased 65% yoy. Power and fuel costs rose 35% yoy and 25% qoq to Rs730/t. With 30% of its coal requirements being met via imports.

According to consensus estimates, future looks bleak for Ambuja cements as it is likely to witness negative growth in EPS to Rs 7.2.

Grasim Industries: Grasim's PAT came in at Rs5.1bn. EBITDA fell 5% yoy to Rs7.5bn and margins fell to 29% vs 32.5% last year. Cement & VSF margins declined yoy, while chemicals & sponge iron improved.

The cement division saw a decline in margins to 30% from 36% in 1QFY08, impacted by rising costs. Volumes grew marginally to 4m tonnes and realizations rose 9% yoy to Rs3,366/t (3% qoq) VSF's margins fell to 31% from 36% in 1QFY08. Chemicals benefited from an increase in realizations (+30%) and volumes (+11%). Sponge Iron business EBITDA margins rose to 30% from 16% on the back of strong realizations (+62% yoy).

In-line with Ambuja Cements, Grasim is also likely to witness negative growth in EPS as it is likely to report an EPS of Rs 248 for FY09.

Published by Sunil K @ 4:50 PM IST.


Tata Power + ABB - Powering CAPEX

Tata Power Company reported Q1 FY09 profits of INR 1.9 bn which is flat y-o-y. However, adjusting for the incentive gains, tax provisions and forex gains, the earnings would be lower by ~ INR 120 mn. This fall can be attributed to lower other income which fell from INR 685 mn to 483 mn y-o-y. The revenues increased 34% y-o-y to INR 20.5 bn on account of higher fuel costs which are passed through to tariff. Fuel cost increased 45% to 12,894 for the quarter on y-o-y basis.

Tata Power's subsidiary have done exceptionally well in Q1. NDPL PAT is up 20% YoY to Rs339mn. Powerlinks PAT has increased 12% YoY to Rs90mn. Power trading subsidiary has increased its revenue by 160% to Rs4.13bn and PAT by 96% to Rs14.1mn.

All capacity expansion projects are running on time. Specifically Mundra UMPP - Construction is on in full swing and work on boiler and turbine for Unit 1 and 2 has started; Maithon - Ordering of equipment is complete and civil work has started; 250MW Mumbai - CoD will be achieved by October 2008 and Haldia expansion is being commissioned now. Tata Power is expected to report an EPS of Rs 28.8 for FY09.

ABB Ltd:
ABB's 2QCY08 PAT at Rs1.3bn up 21% YoY was expectations of Rs1.5bn primarily on account of slow sales growth of 15% YoY, led by execution of long cycle orders. Margins have held up well in an inflationary commodity price environment.

Order inflow growth was disappointing at 11% YoY, a clear sign of the difficult macro environment led by double-digit inflation, rising energy costs, volatile commodity prices and high interest rates.

Brokerages have cut earnings estimate for ABB by 8-10% and the company is now expected to report an EPS of Rs 28.77 for year ending Dec-2008.

Published by Webmaster @ 3:53 PM IST.


Hindustan Unilever + Marico - Facing FMCG Margin Pressure

Hindustan Unilever Q2 revenue growth accelerated to 21% Y/Y, driven by 21% growth in soaps and detergents and 19% in personal care. Recurring PAT rose c20% Y/Y, buoyed by sharp increase in other operational income (includes F/X gains and cost recoveries on R&D / offshore activities for Unilever). Revenue growth was primarily mix / price driven (overall FMCG volumes grew 8.3%).

Reported EBITDA margin declined 10bps to 15.1%; sans other operational income, margins declined 130bps Y/Y. Price hikes / mix improvements have mitigated cost pressures. Gross margins declined 43bps Y/Y, but encouragingly, increased 95bs Q/Q. A recurring trend across all FMCG results this quarter. Expenses rose c30%Y/Y and 15% increase in media rates.

Management brushed off concerns on the weak monsoons - indicated there is no slowdown as yet in rural demand. We believe, though, that there could be a lag impact. HUL is expected to report an EPS of Rs 11.7.

Marico has recorded 28.1% y-o-y revenue growth. Despite a price hike of around 10%, it was able to record 15% volume growth. Both the major brands, Parachute and Saffola, have reported healthy volume growth of 8% and 26%, respectively. Perfumed hair oils have also showed strong volume growth of 26%.

To offset raw material price inflation, the company has raised prices of most of its products. It is further planning to increase prices in 2QFY09. Rising revenues of perfumed hair oils are also expected to help maintain margins. Though it is confident of maintaining profit per unit, it expects margins to be under pressure.

Kaya Life revenues +62% yoy on a small base. At present, there are 69 outlets - management targets roll-out of 95 by end-FY10. Rising real estate rentals (an average 10-12% increase YoY) and high manpower costs are key concerns. Marico is expected to report an EPS of Rs 3 for FY09.

Published by Sunil K @ 3:51 PM IST.


NIIT + Educomp - Result Analysis

Friday, July 25, 2008

NIIT DelhiNIIT reported revenue of Rs2.6b up 15% YoY was marginally below expectation of Rs2.7b while EBITDA Rs187m up 29% YoY was significantly below expectation of Rs289m. While Retail training was in line, corporate business was much below expectations despite INR weakness.

IT training business is late cyclical and would get impacted with a lag, in our view. No fees hike during this academic season indicates waning pricing power. Hiring in IT services sector has slowed and we do not expect a quick recovery - this is likely to impact retail training business with a lag. Corporate business revenue were flat while margin declined by 350bps to 0.2%. NIIT is expected to report an EPS of Rs 31.7 for FY09.

Educomp Solutions reported revenue of Rs694m (up 152% yoy) and net profit of Rs168m (up 181% yoy). It also reported headline consolidated numbers - revenue of Rs860m and net profit of Rs166m for 1Q. Smart-class revenue was Rs472m, while ICT revenue was Rs81m.

Company currently has 8 operational schools with 7,000 student enrolled. It plans to add 16 more schools during this financial year. Company acquired 51% stake in Learning.com for US$24.5m in May'08. Two JVs with Raffles Education for the Indian and Chinese markets - both companies plan to invest US$100-150m over next 2-3 years into these JVs.

Educomp has maintained its FY09 guidance for revenue of Rs5.4-5.5b and net profits of Rs1.35-1.4b for stand-alone entity.

Published by Komal M @ 2:50 PM IST.


Zee Entertainment Enterprises - Spectacular Results

Zee Entertainment Enterprises had an excellent 1QFY09 with 33%YoY growth Rec. PAT (19% ahead of MLe) led by 37%YoY growth in ad revenues & robust international / DTH pay-tv revenues. Robust Ad growth despite IPL Cricket and competition (NDTV, 9X) was commendable. Despite the provision of Rs290mn of one-time bonuses and Rs398mn loss on Zee Next, rec. PAT grew 33%YoY.

Z TV sustained its relative shares in 1Q09 with ~21% channel share amongst GECs despite competition (9X & NDTV). This led ad revs at 37%YoY. INR depreciation helped global pay revs grow +18%YoY and doubling of DTH revs led India pay revs.

Catalysts are, full impact of 15-20% ad rate hike in 1QFY09 on Zee TV to monetize ratings and lack of clear #3 channel in GEC market and uptick in pay-tv revs from DTH & International markets.

The company is expected to report a full year EPS of Rs 11.56 on an income of Rs 501.3 crore.

Published by Webmaster @ 10:22 AM IST.


Indraprastha Gas - Results Powered by CNG

Thursday, July 24, 2008

Indraprastha Gas Ltd (IGL) reported 1Q operating results, with revenues of Rs 1.9bn and net profit up 13%q/q to Rs 437Mn. Lower gas margins due to higher costs were offset by higher-than expected volumes (CNG growth at 17% y/y). CNG volume rose by 17% y/y compared to ~ 11% y/y growth over the past six quarters.

Private car conversions during the quarter were over 5,500/month due to higher fuel prices which buoyed CNG volumes. The Petroleum Ministry, Delhi government has requested IGL to open 50 more stations in two years. The Petroleum Ministry also expressed its full support in letting IGL expand into the neighbouring areas of UP and Haryana.

IGL is expected to report a full year EPS of Rs 14-15 for FY09.

Published by Webmaster @ 2:07 PM IST.


Hindustan Zinc - Hit by Falling Prices

Hindustan Zinc's (HZL) 1QFY09 PAT fell 30% yoy to Rs8.5bn on the back of a sharp decline in zinc LME prices. Revenues fell 17% yoy to Rs16.4bn despite higher volumes. EBITDA margins fell to 60% from 73% in 1QFY08 and 65% in 4QFY08.

Zinc volumes rose 38% to 128,000 tonnes and lead volumes rose 27% to 17,300 tonnes. Concentrate sales fell 81% to 10,500dmt due to higher smelter production. The benefit of higher volumes was more than offset by a 42% decline in zinc LME prices to US$2,115/t.

HZL enhanced its zinc capacity by 88,000 tpa to 669,000 tpa in April08. HZL has also announced further capex of Rs36bn, which will hike zinc capacity by 210,000 tpa and lead capacity by 100,000 tpa taking the total to 1.07m tpa by 2010, together with mining and captive power capacities.

The company is expected to report a drop in EPS for FY09 to Rs 93.5 a decline of 10% over FY08.

Published by Komal M @ 2:02 PM IST.


Better Quarter from Shree Renuka Sugars

Shree Renuka Sugars reported better results despite Weak Sugar sector. Renuka sugar's Q3FY08 net profit for the parent company at Rs230mn is down 27% y-o-y. EBIT of manufacturing division grew 62% y-o-y driven by 329% jump in renewable energy business and despite a 55% drop in profit from sale of sugar.

EBIT growth of the sugar division in Q4FY08 will be further driven by (1) higher sugar sales as 36% of current year production is yet to be sold and (2) sugar refinery commissioned in July08 at Haldia could contribute.

Renuka sugar is looking at crushing over 5mn tonne sugarcane in FY09E, similar to the amount crushed in FY08 despite likely decline of 30-40% in sugarcane production in Maharashtra and Karnataka where its factories are present.

Renuka Sugar is the fifth largest sugar manufacturer of Sugar in India and is expected to report an EPS of Rs 4.13 for 08 and Rs 10 for 09.

Published by Komal M @ 1:55 AM IST.


Lupin Labs - Great Going

Wednesday, July 23, 2008

Lupin has posted excellent results with 100% growth in core profits. While consolidated revenues at Rs8.6bn are in line with estimates, EBITDA margins at 17.7% are ahead of estimates. Further aided by lower than expected forex losses, PAT at Rs1120mn is ahead of estimates of Rs860mn.

There is continued momentum across all business segments led by the US markets where sales have grown 56% partially driven by Ramipril launch during the quarter. Domestic formulations have grown at a sedate 16% for the quarter after the sharp growth in Q4FY08.

Lupin is all set to file ANDAs for oral contraceptive, an extremely attractive generic space, from Q4FY09 onwards. Lupin is looking to file 30 ANDAs during FY09, nearly 2x its historical filing rate.

Lupin is expected to report revenues of Rs 34.4bn and a PAT of Rs 4.2bn for FY09.

Published by Webmaster @ 9:44 PM IST.


LIC Housing Finance - Can Profitability Sustain ?

LIC Housing Finance (LICHF) reported strong profits for the fourth consecutive quarter in Q1FY09.

Net interest income grew 43% Y-o-Y to INR 1.5 bn supported by 25% Y-o-Y growth in loan book and 36bps Y-o-Y improvement in net interest margins (NIM). Pre-provision profit grew 57% Y-o-Y to INR 1.5 bn, while operating expenses declined 7% Y-o-Y in Q1FY09. Provisions of INR 97 mn made during Q1FY09 (as against INR 346 mn in Q1FY08). PAT grew 124% Y-o-Y to INR 1 bn.

LICHF reported strong disbursement growth of 24% Y-o-Y in Q1FY09 to INR 15.2 bn - skewed towards residential mortgages.

LICHF is consistently delivering strong profitability quarter after quarter and concerns over stability in business growth and earnings is gradually getting diluted. The company is expected to report a full year EPS of Rs 54.

Published by Komal M @ 1:36 PM IST.


Maruti Suzuki - Below Expectations

Maruti Suzuki reported robust volume growth of 13.5% and realization growth of ~7% on favorable change in the product mix. Revenues came in at Rs48.6 bn. Operating margins came in at 11.7%. Depreciation came in at Rs1.7 bn, nearly double last year's Rs0.9 bn, due to recently announced accelerated depreciation policy.

Net earnings came in at Rs4.7 bn, 7% below last year's Rs5.0 bn, as higher accelerated depreciation and raw material costs offset the improvement seen in average realization per vehicle.

Maruti's new model, A-Star, is slated for launch in October. We expect it to clock average monthly sales of 6,000 units and account for 10% of FY10e domestic sales. Consensus estimate the company to report an EPS of Rs 66 to Rs 69 for FY09.

Published by Komal M @ 1:29 AM IST.


United Spirits - White & Mackay getting stronger

Tuesday, July 22, 2008

United Spirits reported June stand-alone profit grew 34% to Rs1.1bn. Domestic sales grew ~25-26% led by vol. gr of 19% and balance thru price and mix. Volume growth was higher than trend growth rate of 11-12%. Key premium brands grew 17%, again higher than trend. Mgmt expects key premium brands to grow 12-13% in FY09 but tactical moves to tap the low price brands may lead to stronger volume growth.

June EBITDA grew 27% & margins declined 90bp led by 55% jump in advertising (IPL expenses). The company is expected to report an EPS of Rs 46.55 for FY09. Whyte & Mackay sales grew 40% and EBITDA grew 70% led by new business opportunity of own labels and tactical sales of younger scotch. W&M constitute 21% of United Spirits' sales.

United Spirits is India's largest spirits player. In FY08 it sold 74mn cases which gives it a volume share of 52%.

Published by Sunil K @ 9:49 AM IST.


Chennai Petroleum - Banking on Gross Refining Margins

Monday, July 21, 2008

Chennai Petroleum reported an extremely strong set of numbers for 1Q, with net income of Rs7.03bn. The performance was led by strong GRMs, which at US$15.9/bbl were well ahead of Singapore (US$8.2/bbl) and 4Q (US$9.6/bbl).

CHPC reported a stronger-than-historical US$2.2/bbl premium (ex-inventory gains) over 1Q Singapore GRMs of US$8.2/bbl. Headline GRMs of US$15.9/bbl were further boosted by inventory gains of Rs4.5bn, which amounts to US$5.5/bbl.

Chennai Petroleum has a High dividend yield of 6%. The company is expected to report a fully diluted EPS of Rs 75.06 for FY09.

We don't understand the Government of India's logic to let Oil Marketing Companies like HPCL / BPCL and IOC run under a loss as they have to SELL fuel below their cost of acquisition and live at the mercy of the Government for subsidies while ONGC, Chennai Petroleum, Bongaigaon Refinery etc continue to make hefty profits on the back of rising oil prices and GRMs. Still worse governance by Dr. Manmohan Singh is letting private refiners like Reliance, Essar etc to export when India is starving for fuel.

Published by Webmaster @ 10:25 AM IST.


IDFC - Good Quarter but Challenges on the Road Ahead

IDFC's 1Q09 profits were up 20%.The quarter itself was strong - characterized by high loan growth, expanding margins, strong asset quality and supported by growing AUMs and gains on equity investments.

Loan growth at 42% was strong and complemented by equally strong asset quality (no delinquencies in the quarter). NIMs expanded slightly (+10bps QoQ) - ahead of expectations in a difficult quarter.

Management, however, warned of macro headwinds and a rise in risk aversion that would significantly impact the trajectory of loan growth going forward. Management clearly indicated a shift in focus from growth to capital preservation, containing asset risks and maintaining spreads. Cost control will also be a key focus area.

IDFC is expected to report a full year EPS of Rs 6.16.

Published by Sunil K @ 6:53 AM IST.


UltraTech Cement - No Slowdown yet

Saturday, July 19, 2008

UltraTech Cement reported a Net sales at Rs15.0bn for Q1FY09 and a PAT of Rs Rs2.65bn. UltraTech's average 1Q09 realizations increased 15% y-o-y and 5% q-o-q to Rs3,503 per ton. Aggregate volume in 1Q09 declined 4% y-o-y and 11% q-o-q to 4.27m ton.

EBITDA per ton came in at Rs1,044 compared to Rs982 in 1Q08 and Rs1,016 in 4Q08. Power and fuel cost per ton rose to Rs891, up 31% y-o-y and 16% q-o-q, reflecting the rise in international coal prices.

The split grinding capacity in Karnataka will be commissioned in 2Q09, raising its capacity to 23.1m tons. Being India's largest cement exporter, its performance was impacted by the six-week export ban.

Published by Webmaster @ 8:51 AM IST.


Reliance Health Ventures - ADAG's Entry into Healthcare

Friday, July 18, 2008

Medybiz is developing a home-based disease management programme for the treatment of chronic ailments

The Anil Dhirubhai Ambani Group (ADAG) is all set to enter the personalised healthcare services through its Reliance Health Ventures, Medybiz,

Medybiz, the unit of ADAG engaged in the healthcare services is in the final stages of developing a home-based disease management programme for the treatment of chronic ailments like, coronary heart diseases, hypertension, diabetes, obesity, cancer, neurological disorders.

The first of its kind healthcare services will help people change unhealthy lifestyles and improve self-care skills during an illness or chronic diseases.

Published by Sunil K @ 12:34 PM IST.


Wipro reports Weak Results

Wipro has reported a net profit of Rs 546 crore for the June 2008 quarter as against Rs 671.4 crore during the year-ago period. The company's total income stands at Rs 4,807.4 crore for the reporting quarter as against Rs 3,776.8 crore for the June 2007 quarter.

On a consolidated basis, the group has reported a net profit of Rs 907.8 crore for the June 2008 quarter as compared to Rs 725.6 crore in the corresponding previous period. The group's total income is pegged at Rs 6,087.1 crore for the quarter ended June 2008 as compared to Rs 4,303.2 crore during the year-ago period.

Wipro guided for 2Q IT services revenues of $1089m which implies growth of ~2% qoq. The guidance is muted compared to that of Infosys (~5-6% growth guidance). Management cited the environment as the reason for cautious stance in the near term and expects the second half to witness a recovery.

Wipro's global IT services headcount declined by 725 employees in the quarter. Management indicated that hiring was slower in the quarter because they had hired ~2,000 employees towards the end of the previous quarter.

Published by Komal M @ 10:50 AM IST.


Satyam Computer - Results Analysis

Satyam Computer Services has posted a profit after taxation of Rs 575.91 crore for the June 2008 quarter as against Rs 389.14 crore during the year-ago period.

The company's total income has moved up from Rs 1,820.93 crore for the June 2007 quarter to Rs 2,556.52 crore for the June 2008 quarter.

Nipuna lost animation business ($8m - as per management) and some voice-based BPO business. Management indicated that this was unexpected, but it was more a quarterly aberration and they expected this to recover going forward.

Satyam guided to ~3.5-4.5% $-term revenue growth in 2Q - which is decent given the environment. FY09 guidance remained unchanged at 24-26% revenue growth yoy ($ terms). EPS guidance was revised upwards by ~8% to Rs.31.8-32.3 (32- 34% growth yoy) - due primarily to INR depreciation. Satyam expects to post an EPS of Rs 32.35 for FY09.

Published by Komal M @ 10:49 AM IST.


Biocon - Growth stagnant

Biocon's revenues for the quarter were at INR 2,639 mn showing a de-growth of 2.5% (on a like to like basis the revenues have increased by 7%), EBITDA has gone down by ~25% to INR 576 mn. Net profit for the quarter was INR 150 mn.

Biocon had no licensing income in this quarter and hence the EBITDA margins at 21.8% were significantly lower than 28.2% in Q1FY08 and 31.1% in Q4FY08. Adding to the company's woes was MTM forex loss of Rs 255mn. Other income of INR 126 mn was at INR 14 mn for Q1FY08.

Licensing income is going to be uneven across the quarters hence in the next few quarters as the company records licensing income, the performance of the next three quarters would be better than 1QFY09. We believe lack of revenue growth in contract research services is a cause of concern. The revenues from this segment have stagnated over the last 6 quarters or so.

Published by Webmaster @ 8:55 AM IST.


Colgate Palmolive India - Analysis

Colgate Palmolive (India) reported net sales of Rs 4.1bn (up 16%), EBITDA of Rs 661mn (up 7.6%) and adj. PAT of Rs 719mn (up 16%) in Q1FY09.

Pre exceptional profit growth was marginally ahead of expectations, driven by 16% revenue growth, and buoyed by 49% rise in other income. Revenues were supported by strong 11.5% volume growth, with toothpaste and toothbrushes recording 11% and 32% growth in the quarter respectively.

Overall EBITDA growth was 8%. Margins tend to be volatile on account of aggressive brand-building spends. Gross margins expanded 50bps Y/Y (up 220 bps QoQ) as cost pressures were offset by price hikes and excise benefits at the Baddi production facility.

Colgate continues to dominate across key segments - toothpastes, toothbrushes and toothpowder - with market shares of c48%, 37% and 46%, respectively

Colgate has the highest dividend yield of c5% and FCF yield of 6.5% in the India Consumer Universe and should provide downside support at these levels.

Published by Webmaster @ 8:45 AM IST.


TCS - Q1 Analysis - Flat Revenues

Thursday, July 17, 2008

India's number one IT Services and Consulting Company, TCS reported flat revenues $1,525m which were below consensus estimates. EBITDA margins were 22.1%. TCS reported lower than expected forex loses boosting Net Profit for Q! FY09 to Rs 12.4b.

Volumes increased 1.3% while blended pricing declined ~90bp qoq. Decline in pricing was due to lower product revenues and less revenues from transformational deals. The company said that it has signed ~12 large deals in Q1 and is working on 20 more such deals which are still in the pipeline.

The management does expect growth to revert in the coming quarters. TCS trades at ~13x FY09E, which is close to historic lows and at ~18% discount to Infosys. For FY09 the company is expected to report an EPS of Rs 60.

Published by Sunil K @ 6:54 AM IST.


BGR Energy bags order worth Rs 4,900 crore

Wednesday, July 16, 2008

BGR Energy System's Power Projects Division has secured an EPC contract from Rajasthan Rajya Vidyut Utpadan Nigam (RRVUNL) for the 2 x 600 MW Kalisindh Thermal Power Project.

The EPC order from the RRVUNL is for Kalisindh Thermal Power Project. The EPC contract worth Rs 4,900.06 crore will be executed over 39 months for Unit I and 42 months for Unit II.

Published by Komal M @ 11:21 AM IST.


Tanla Solutions - Q1 Growth Saga

Tanla Solutions Limited's (TSL) Q1FY09 performance was better than our expectations. TSL Net sales stood at Rs 1688.6mn in Q1FY09 against Rs 894mn in QFY08, grew by 88.9% YoY. TSL Profit stood at Rs 564mn in Q1FY09 against Rs 332mn in Q1FY08, grew by 69.9% YoY. TSL posted a Basic EPS of Rs 5.64 in Q1FY09.

Some of the moves in Q1 that will have a positive impact on the company in the forthcoming quarters are,
We prefer Tanla Solutions over OnMobile in the Mobile Value Added Services space in India.

Published by Komal M @ 10:02 AM IST.


Sintex Industries - Disappointing Results

Tuesday, July 15, 2008

Sintex Industries (Sintex) has reported disappointing Q1FY09 numbers due to lower volumes in the BT Shelter business and below-expected textiles revenues. The results on QoQ basis are really bad.

Net sales increased 108% YoY [9.2bn Q4FY08] to Rs 7.1bn, this was spurred by the acquisitions of Bright AutoPlast, Nief Plastics and Wausaukee rather than growth in core operations. Sintex's net profit grew at 68% YoY to Rs 567mn.

Higher employee costs and other expenditure shaved 590bps off the EBITDA margin to 11%. Order book totalled Rs 15bn at the end of the quarter with an execution period of two years.

EPS for Q1FY09 is Rs 3.8 compared to Rs 6.4 in Q4FY08.

Published by Sunil K @ 12:32 PM IST.


Indian IT Sector on Caution due to Indymac bank Closure

With the closure of Indymac bank in California, Morgan Stanley has downgraded the Indian IT sector to be cautious. The outlook for outsourcing and tech spending in the US is likely to remain challenging in the coming quarters. Any more events like further bank closures, mergers, or seizures could further aggravate the situation for offshore
outsourcing vendors.

A rising interest rate environment coupled with prospects of an imminent recession is likely to lead to lower P/E multiples, in our view.

Furthermore, specific factors like the imposition of tax rates post F2010 for STPs, the inability of smaller vendors to migrate to SEZs, and rising offshore wage costs due to increasing competition would imply significantly lower profitability.

Published by Webmaster @ 11:01 AM IST.


Axis Bank - Result Analysis

Axis Bank's results were ahead of expectations. Axis Bank reported a bottom line of Rs330.1 crore for Q1FY2009. The same grew by a whopping 88.6% on a year-on-year (y-o-y) basis.The net interest income (NII) for the quarter came in at Rs810.5 crore, up 81.4% year on year (yoy). The non-interest income too recorded a strong growth of 82.5% yoy and reached Rs624.8 crore. This was on the back of a robust growth in the fee income (up 80%) and the forex income. treasury income (excluding customer forex earnings) registered a decline of 17.7%.

Axis' pre-provisioning profits are up 118% YoY on a mix of accelerating 80%+ fee income growth (broad-based), some cost control, and 90% NII growth (boost by capital, margins fall). Market expectations of Axis' asset risks have been modest. This quarter does not provide the answers. Overall, asset quality is better than expected and remains on the 'keenly watch', rather than worry, list.

Analysts expect Axis to report a full year EPS of Rs 37.75 to Rs 38.50.

Published by Webmaster @ 6:17 AM IST.


How Arvind Mills Plans to Cut its Debt Burden ?

Monday, July 14, 2008

Apparel major Arvind Ltd has come up with a four-point plan in order to reduce its mounting debt burden. The total debt of the company stood at Rs 1172 crore as on March 31 2007.

As per the plan, along with concentrating on more profitable fabrics and apparel business, the company will also focus on retail business and popular brands. The company also plans to unlock value in non strategic assets and use cash flows to de-leverage the balance sheet.

The company expects to get the shareholders' approval for the plan at the upcoming annual general meeting to be held on July 31. Arvind ventured in to production of denim in 1987 and became the world’s largest producer by 1998. However, as a change in strategy, the company is now looking to reduce its capacity of denim production and concentrate more on retail segment. The company has been undergoing restructuring since 2003.

Published by Webmaster @ 12:16 PM IST.


Contract from BHEL fails to lift Era Infra

Era Infra Engineering has failed to make a mark on the BSE despite the company bagged a contract worth Rs 95.5 crore from Bharat Heavy Electricals (BHEL). The company will be responsible for the civil, structural & architectural work for main power block along with its auxiliaries and BOP for 1x500 MW thermal power station, extension unit # 6, Gujarat State Electricity Corporation at Ukai in Gujarat.

The scrip is currently trading at Rs 555 per share, down 7.6 points or 1.35% on the BSE.

The stock opened at Rs 545 per share as compared to its previous close of Rs 562.60 per share on Friday.

Published by Webmaster @ 12:12 PM IST.


Ranbaxy Labs hammered on US FDA Manufacturing Concerns

Ranbaxy Laboratories stock was hammered on the bourses by 10% on concerns raised by the US FDA which has filed a motion in a US court seeking access to certain privileged documents related to Ranbaxy's manufacturing operations as part of an ongoing investigation.

Ranbaxy has stated that the allegations are baseless & intends to file a response on 14 July 08. It has denied media reports of prosecution proceedings being initiated or that its executives have been asked to depose. It maintains that this is a part of an investigation that's been on for 3 years during which the FDA tested over 200 randomly collected samples of its products without finding any evidence of non compliance.

Thinking out of the box, could Pfizer have had a say in this FDA investigation to derail the Japanese takeover of Ranbaxy ?Last month Ranbaxy promoters sold their stake to Daiichi-Sankyo thus giving the Japanese company the management control of Ranbaxy Labs - India's largest Pharma company.

Published by Komal M @ 10:17 AM IST.


Edelweiss Capital - Result analysis

It was slowdown in the entire Indian stock broking industry. Edelweiss Capitals' volumes were down 26% QoQ, slightly higher than the industry (-17% QoQ). Higher decline in revenues (-38% QoQ) was due to: a) higher derivatives proportion (an industry trend), and b) sharper decline in investment banking revenues (-75% QoQ).

Operating costs (after adjusting for treatment of STT) have declined 55% QoQ. This is significantly higher than the drop in volumes. The company reported a net profit of Rs 63.8 cr a 22.7% decline QoQ and 24.3% below consensus estimates on the street. For the full year, Edelweiss is espected to report EPS of Rs 42.13.

Published by Sunil K @ 8:02 AM IST.


Financial Modelling - BSE Training Institute

Friday, July 11, 2008

An Exclusive Computer Based Interactive Training Programme for 2 days on July 25th and 26th in Mumbai.

Target Audience: Managers and Executives working with Banks, Financial Services, AMC, Hedge Funds, Mutual Funds, Investment Banking, Brokerage Houses, Financial Market Intermediaries, Research Analyst, Portfolio Managers, Risk Managers, Accountants, Project Managers, Managers and Executives in the finance department of manufacturing firms & IT firms. The programme is particularly focused at managers who wish to have an insight for using spreadsheets.

Programme Contents:
Fees: Rs. 12000/- Plus 12.36% Service Tax (Includes tuition fees, study material, refreshments, lunch and participation certificate)

Contact:
E-mail: training@bseindia.com
Phone: 022-22721126 / 27,022-22721233 / 34,
Ext: 8813, 8246, 8464, 8175, 8303

Published by Webmaster @ 7:09 AM IST.


Colors - from Viacom18 commences on 21 July

Thursday, July 10, 2008

GEC ViacomColors, the new GEC (General Entertainment Channel) from Viacom 18 (50:50 JV between IBN18 and Viacom, not listed), is commencing from 21 July.This channel is expected to have four hours of original programming in the first leg and like other channels sources programmes from various local production houses.

With this launch the GEC space that commands a Rs 4,500 crore of annual ad revenues would now have 11 serious competitors (Ex Music, movie channels). Apart from this, near-term competition is set to increase with the introduction of a host of new programmes by incumbents. With near-term competition increasing, expect TRPs to remain volatile, leading to a range bound performance for the GEC stocks.

Published by Webmaster @ 8:52 AM IST.


Motilal Oswal - Q1FY09 Difficult Quarter

Wednesday, July 09, 2008

Motilal Oswal reported 25% Q-o-Q decline in Q1FY09 in revenues to INR 1.4 bn (15% Y-o-Y growth), primarily led by 27% fall in brokerage and related income. Increase in margin funding book to INR 3.4 bn and revenue booking from 7 investment banking deals provided some support to the topline.

Motilal Oswal witnessed ~6% sequential decline in average daily trading volumes to INR 29 bn, as against industry wide decline of 15%. However, blended commission yields seem to have came off significantly due to change in proportion of cash and derivative volumes.

The company reported a PAT for Q1FY09 at Rs 262 mn.

Published by Webmaster @ 1:44 AM IST.


Tanti Group's Honiton buy in China no significant impact on Suzlon Energy

Tuesday, July 08, 2008

The Tanti Group, promoters of Suzlon Energy have bought Honiton Energy Holdings plc (Honiton) which develops and operates wind farms in China with an installed capacity of 50MW. The deal is routed through Singapore-based holding company (Colossus Holding), in JV partnership with Arcapita Bank, Bahrain.

Honiton's acquisition is not routed via Suzlon's books of account. Honiton's 50 MW wind farm is composed of 40 units of Suzlon's 1.25MW turbine Honiton also owns 16.65% interest in REpower North (China) Ltd., a JV with REpower Systems AG (50.01% stake) and North Heavy Industrial Corp (33.34% stake) licensed to manufacture & supply 2MW wind turbines to wind developers in North China, including Honiton.

Tanti Group's ownership in Honiton (which plans to ramp up capacity to 1650MW by 2012) could potentially provide captive orderbook for Suzlon in future.

Published by Webmaster @ 3:06 PM IST.


Anil Ambani Punches Mukesh - All set to Derail Mukesh's Gas & Energy Dreams ?

Monday, July 07, 2008

The Squabbling between the Ambani brothers which was off for few years is all set to take the center stage again. Guess, Mukesh Ambani shot himself into his foot by unnecessarily dragging Anil Ambani into a new controversy surrounding Reliance Communications and MTN deal. Mukesh who had to part with Reliance's Telecom venture to Anil after the family division was jealous of Anil's success had the latter been able to takeover MTN of South Africa which would give the combined entity [RCOM + MTN] higher EBITDA than RIL - Mukesh's cash cow.

This time around Anil Ambani was very lucky and made the right move at the right time to influence the Government of India led by the Prime Minister Dr. Singh and Congress President Sonia Gandhi through his trusted lieutenant - Amar Singh.

Amar Singh has raised the issue of Reliance Petroleum enjoying EOU benefits when India as a nation is in deep Oil crisis. The Government under pressure from various other parties is seriously considering to levy a Tax / Duty on such refineries [Reliance Ind, Cairn and Essar] to offset for the losses incurred by PSU refineries and Oil companies. This led to unloading of RIL stock on the Mumbai Stock Exchange and the stock has hit a day's low of Rs 1,997 breaking the psychological Rs 2,000 support level.

Instead of fighting over family business and supremacy, get into the wonderful world of R&D and innovation and sky is the limit to your business.

Published by Webmaster @ 3:09 PM IST.


Expecations from Indian Banks + Indian Brokerages - Negative

For the Indian Banks, this quarter is expected to be a leg down in net profits with 2.7% YoY growth for the sector. headline numbers is likely to be hurt, but keep an eye on deterioration in asset quality which will be the key operational parameter. Pre-provisioning profit growth should, however, remain relatively stable at 26.6%, driven by 25% loan growth, reasonable fee growth (23% YoY) and capital support for margins.

This quarter will be a test of the banks' operational performance in the face of further rise in interest rates leading to lower growth and higher asset quality risks. Additionally, the impact of farm loan waivers shall also be seen in PSU banks.

In the private banking sector, profit growth is likely to be sharply lower at 17.2% YoY on slower capital market related fees, sustained cost pressures and loan loss provisions. Net interest margins should be supported by the sheer weight of capital and should drive pre-provisioning profit growth of 35% YoY.

Indian Brokerage houses are highly likely to report a decline in net profits QoQ. High pressure is seen in the following segments, retail brokerage (vs institutional); b) primary markets (vs secondary); and c) margin finance
portfolio (vs asset based lending). Retail volumes have shown a sharp decline - overall volumes down 54% from peak (-60% in derivatives). Cash volumes have fared better YoY (+40% vs +25% for derivatives) while QoQ they are relatively similar with declines of 16.8% vs 16.6%, respectively.

Brokerage and investment banking related fees to decline 18% QoQ due to the
weaker environment, both in the secondary and primary markets. Mutual Fund and other product distribution fees will also witness a decline.

Published by Sunil K @ 9:00 AM IST.


Inflation Hits New High - 11.63%

Friday, July 04, 2008

Breaking NewsThe Indian Inflation as measured by the WPI rose to 11.63% for the week ending Jun 21 v/s 11.42% last week and 4.32% a year ago.

Of the headline 11.63% WPI number, 2.42% is attributed to primary articles, 5.7% to manufacturing and 3.5% to the fuel index. The worst part of this Inflation Saga is Upward revisions to the index has continued, with the April 26 data being revised up ~70bps from 7.61% to 8.27%.

Inflation is likely to remain in double digits and we expect RBI to hike the repo rate by another 25bps.

Published by Sunil K @ 12:52 PM IST.


NHAI says No funding issues

In a pre-election year, in the midst rampant market concerns of an infrastructure capex slowdown NHAI has indicated that it does not foresee any slowdown in spending.

NHAI indicated that public funding is a non-issue due to contributions from various sources 1] Cess on oil bill 2] Funding from multilateral agencies, and 3] Issuance of capital-gains tax exempt bonds under Section 54EC. Moreover as per NHAI, big players like Macquarie, L&T, IDFC and other Middle-Eastern companies have continued to bid and win road projects despite the sharp slowdown in equity markets.

L&T with its healthy balance sheet and superior execution skills is likely to bid and win projects from NHAI. Punj Lloyd in the midcap space is likely to be a tough competitor.

Published by Komal M @ 12:09 PM IST.


Simplex Infrastructures Ltd - Result + Guidance

Thursday, July 03, 2008

Simplex Infrastructures Ltd reported a Net sales for the full year FY08 at Rs28.12bn, increase by 64% over the previous year. For the quarter ended Q4FY08, sales at Rs9.48bn increased by 72% on a yoy basis and 34.8% on a qoq basis. For the full year FY08, operating margin of the company has remained flat at 9.5% while it has seen a decline in the fourth quarter at 8.6% from 9.5% in Q4FY07 and 10.0% in Q3FY08. The Net profit for the full year FY08 at Rs900mn.

With over 150 projects currently being undertaken and an order book position of the company over Rs100bn, the management has guided capex plans (machinery and equipments) of Rs2.0bn for FY09E to gear for the execution of the projects. The overseas business accounted for 17% of the FY08 revenues and 27% of the order book.

The power plant construction segment is expected to be a strong area in the future. The company has a diversified business model, which acts as a hedge against slowdown or project delays in any particular construction segment.

Published by Webmaster @ 10:05 AM IST.


Indian Auto Sales for June - No Speed Breakers Yet

Wednesday, July 02, 2008

Indian Auto ShowThis is truly amazing, the Indian Auto sector didn't witness the expected slowdown despite rising Inflation and Interest rates on Automobile Loans. Two wheeler sales of the three majors were impressive (up +10% Y/Y). Motorcycle sales were also strong (+12% YoY) in the backdrop of low base last year and strong performance by 125cc bikes. However, for CY2009, managements have cautioned single digit sales growth.

Maruti Udyog reported muted sales due to stiff base effect and a slowdown in the key compact segment. Swift sales were robust (+42% Y/Y), excluding Swift A2 segment declined 6% Y/Y. Dezire volumes remained robust which aided growth in the A3 segment. Inventory levels saw very slight increase at dealers end.

M&M June sales rose 13% YoY driven by a strong growth in tractor sales (+19% YoY) and decent growth in UV sales (+7% YoY) albeit a low base. Scorpio sales (+1% YoY) were muted while non-Scorpio sales (+9% YoY) continued to show decent growth.

Published by Sunil K @ 11:06 AM IST.


Navneet Publications - Result Analysis

Navneet Publications (NPL) Q4FY08 revenues grew 29.5% YoY to INR 607 mn. EBITDA grew 16% YoY to INR 55 mn, whereas net profit grew 55.2% Y-o-Y to INR 21 mn. For the year, NPL posted revenue growth of 23.7% to INR 4.1 bn, while EBITDA and net profit grew 14.4% and 27.2% to INR 829 mn and INR 542 mn, respectively.

EBITDA margins declined 160bps to 20.2% for FY08 on account of higher sales promotion expenses of INR 61.7 mn for the domestic stationery business and export debtor write-offs (stationery segment) of INR 26 mn during the year.

Publications segment grew 23% to INR 2.62 bn in FY08 on the back of syllabus changes in Maharashtra and Gujarat. Stationery segment grew 24.5% to INR 1.36 bn on account of higher growth in the domestic market and introduction of non-paper stationery products.

Published by Webmaster @ 6:24 AM IST.


Market waves and behavior

According to Elliot Wave by Frost and Pretcher.
We are almost in 5C.

Published by Webmaster @ 6:15 AM IST.


Ganesh Housing - Results

Tuesday, July 01, 2008

Ganesh Housing Corporation Ltd (GHCL) reported revenue growth of 180.4% for FY08 to Rs1.3b. Net profit grew 229.5% to Rs1.1b. EBITDA margins were 82.9% v/s 43.1% in FY07. For 4QFY08, revenue declined 53.9% YoY to Rs147m and net profit declined 61.8% YoY to Rs40m.

In 4QFY08, GHCL acquired 21.2msf land from promoter group companies for the Ognaj Township. This is part of the ~33msf land that was to be transferred from promoter group companies to GHCL.

The management is considering strategic tie-ups for development of key projects like - Million Minds IT SEZ (~13msf), and (b) Ognaj Township (~21msf). We believe this is a positive move, as these projects are vast and have an embedded execution challenge.

Published by Komal M @ 11:03 AM IST.


Balance of Payment - Favorable Trends Unlikely to Continue in FY09

India's current account deficit in FY08 rose to 1.5% of GDP, the highest since FY96. Despite a major rise in services exports and private transfers, the strong import growth widened the current account deficit.
Incorporating the latest BoP data, Analysts expect India's CAD to widen to US$45 to $50bn or 3.6% to 3.9% of GDP which is a serious concern on the macro front.

Published by Komal M @ 9:55 AM IST.