Dalal Street

Punj Lloyd: After 1HFY08 PAT growth of 138% YoY, Punj Lloyd’s 3QFY08 Recurring PAT at Rs613mn up 27% YoY was substantially lower than CIR estimates of Rs1.0bn on the back of losses on legacy projects in Semb E&C to the tune of Rs680mn. Reported PAT was higher at Rs917mn on the back of sale of investments of Rs371mn.

In 3QFY08 Semb E&C substantially completed certain low-margin legacy orders in which there were cost overruns due to delays and design changes, which led to a booking of losses of Rs680mn. The Punj + Semb combine ended 3QFY08 with an order backlog of Rs160bn up a tepid 12% YoY. Though the Semb backlog at Rs62bn is up 35% YoY, Punj backlog at Rs98bn, down 13% YoY, is a concern given that the margins are higher on the Punj orders than on the Semb orders.

Nagarjuna Constructions: Nagarjuna posted recurring PAT of Rs396mn, up 5% YoY, and largely in-line with our expectations of Rs389mn for Q308. While margins were in-line with estimates, revenue growth of 11% YoY was well below our estimate of 21% growth. PAT was boosted by lower-than-expected interest costs and taxes and higher than expected other income.

The company mentioned that the land delays were resolved and the projects were back on track, but revised down its revenue guidance by 8% from Rs37.5bn to Rs34.5bn. Management maintained that it will clock top-line growth of at least 30%-35% CAGR for the next 2 years.

Order booking has continued at a steady pace – Nagarjuna has won Rs15bn worth of orders in Q308 and has guided for an order backlog of Rs100bn for FY08E.

Kishore Biyani’s Future Capital Holdings saw a modest gain of 12% on listing. The current price of Rs 866 discounts its year ended March 2007 EPS of Rs 0.60, by a PE multiple of 1443.

Future Capital Holdings (FCH) had priced its IPO at Rs 765, at the top end of the Rs 700 to Rs 765 price band. At the IPO price of Rs 765, the issue was priced 1275 times its year ended March 2007 EPS of Rs 0.60 (based on consolidated financial performance).

The company’s IPO was subscribed a huge 133.44 times. The qualified institutional buyers (QIBs) portion was subscribed 180.72 times, the non-institutional investors portion 84.38 times and the retail investors portion 55.21 times.

Asian Paints:ASPN is one of the best plays on domestic consumption demand in India and is firing on all cylinders – its domestic paints business is growing in excess of 20%, international business improvement is running ahead of management guidance. Potential duty cuts expected on raw material imports and price hikes are likely to drive margin expansion – management has indicated that a 1%-2% price hike is imminent.

ASPN’s domestic sales growth has been growing by 15%-25% over the last 8 quarters, demonstrating a strong improvement over the 10%-15% growth range earlier. Growth in the international business has also picked up, and margins have started to improve, driven by the Middle-East and South Asian markets. International business net margins are already in excess of 3%, ahead of management targets to achieve 3% in FY09E.

Dabur India:
Dabur 3QFY08 consolidated net profit growth of 19% was ahead of estimates; driven by a 14% sales growth. While flat EBITDA margins disappointed, sales growth was slightly ahead of estimates.

Foods and Consumer care division grew by 15%. In addition, consumer health business has shown improvement with growth increasing to 7%. Despite a 160bps reduction in raw material costs, margin were flat in 3QFY08 due to higher advertising and other expenses, mainly as other expenses were incurred for the H & B store rollout.

Dabur’s health & beauty stores are expected to start operations by March this year. Management has earmarked funds of Rs1.4bn over the next three years with a target RoE of 30-40%. Management is also working on expanding its skin care portfolio with some launches expected over the next 2-3 quarters.

Bank of BarodaBoB’s 3Q08 net profit is up 52% yoy, well ahead of expectations and likely driven by strong treasury and asset recovery gains. Qualitatively, the quarter appears fairly robust in terms of both P&L and balance sheet quality and growth. While margins are down a bit yoy and qoq, this was expected with no meaningful surprises.

BoB continues to grow loans rapidly, up 23% yoy and almost 6% qoq, and impressively continues to maintain asset quality. Deposits show fair momentum, 4% qoq growth, suggesting balanced balance sheet growth.

Yes Bank
Yes Bank’s profits were driven by stable and relatively high margins, continued growth in fees – especially in treasury and a reduction in costs. Yes Bank’s NIMs have remained largely stable at 290bps, helped by a stable interest rate and liquidity environment. Yes’ high pace of asset accretion (14% qoq), with stable margins, nil NPLs (especially commendable given its mid-market exposure) suggests strong management focus on quality.

Overall, it was a strong quarter with Yes consistently delivering revenues, growth and quality ahead of estimates, supported by a benign funding environment.