Dalal Street

Godrej Consumer Products
Net profit for the quarter came at Rs430m, up 8.7% YoY driven by a 14.6% sales growth. On the EBITDA margin, GCP did well to absorb increased raw material costs. The soaps division outperformed the industry yet again this quarter driven by a 5-6% price hike and strong volume growth.

Keyline, GCP’s UK business recovered after a poor performance last quarter, posting a 6.6% sales growth and 20% growth in net profit. Rapidol, GCP’s subsidiary in South Africa showed flat growth, impacted adversely by the rupee appreciation.

ITC Ltd:
ITC’s pricing strategy, loading price hikes in favor of mid-end cigarettes and not leaving any ‘pricing gaps’ across its cigarette portfolio, is paying off. Its cigarette EBIT profits increased 16% in 3QFY08 and 13.7% in 9mFY08 despite declining volumes. Volume trend is also improving, with 3Q volumes declining less than 1%.

3QFY08 net profit growth of 15.8% yoy were in-line with estimates. Positive surprise was 16% growth in cigarette EBIT profits, while growth hotels and agri-business have recovered.

ITC’s foods portfolio (excluding ‘Bingo‘ brand) has broken even in 3Q. EBIT loss margins for new FMCG business continue to decline, despite scaling up of expenses related to the launch of new personal care products under the ‘Fiama di Willis‘ brand in 3Q.

Ranbaxy:
Following a steady 4Q (sales up 7%; EBIDTA margins up 65bps), it ended up with 9% and 20% YoY growth in sales
& operating PAT respectively. This came about despite multiple hurdles – viz. a stronger rupee, regulatory issues in Romania & growing competition – thus reflecting the benefits of Ranbaxy’s restructuring & improved business model.

As Ranbaxy’s strong guidance for CY08 indicates, it
looks well set to continue the recovery process that commenced last year.Ranbaxy guided to 18-20% growth in US$ sales, 17.5-18% EBIDTA margins & 20-25% growth in reported PAT.

Biocon Ltd:
Biocon’s revenues declined 4% YoY in 3Q, primarily due to the sale of its enzymes business. However, continuing business growth was also tepid at 2%. Research services degrew 24% YoY; while this is due to a quarterly skew in licensing fees, it puts the high growth in 1H in the right
context. Biopharma continued to disappoint growing 11% YoY & declining 13% QoQ, as it felt the pinch of a rising rupee and the lack of product launches.

EBIDTA margins declined 665bps despite the sale of the low margin enzymes business, hit by rupee appreciation and increase in fixed costs. Although gross margins improved by 303bps YoY (on lower outsourcing), it declined by 291bps QoQ due to rupee appreciation.

Nicholas Piramal:
A 13% YoY growth in sales translated into a 43% YoY growth in net profit on the back of a 237bps expansion in EBIDTA margins – excluding NCE R&D spend from both periods. NPIL appears well on course to achieving its FY08 guidance on EBIDTA margins (18.7%) and EPS (Rs17.5) despite a shortfall on the revenues front (set to end with 16% growth vs. 20% guidance).

3Q results were strong, with margin improvement being much higher than anticipated. We expect this trend to continue on the back of aggressive restructuring in UK operations and help completely offset a shortfall in FY08 revenues.

HCL Technologies:
Revenue for the quarter was $461m (exp: $462m), growth of 7.5% qoq. Net profit came in at Rs3.11 b (exp: Rs3.08 b), an increase of 9.6% qoq. On margins, HCL Tech did well to absorb the negative impact of the customer summit related costs and bonus amendment adjustment.

IT Services did well again with a growth of 8.4% qoq. Volumes increased ~7.4% qoq while pricing was up ~2% sequentially. EBIT margins improved slightly qoq to ~18.1%. HCL Tech’s US revenues increased 9% qoq while BFSI revenues were up 9.3% qoq.

Wipro:
Wipro reported revenues of Rs.56.4b (our exp: Rs.56.6b), up ~11% QoQ and net profit of Rs.8.3b (our exp: Rs.8.4b), up ~2% QoQ. Global IT Services reported revenues of $910m, up 14% QoQ with a ~150bp EBIT margin decline (primarily due to Infocrossing integration).

Organic growth of 7.4% in Global IT – Organic revenues rose 7.4% QoQ; volumes increased 6.5% while pricing was up 0.5%. Onsite realizations were up 1.3% QoQ while offshore realizations remained stable in the quarter. Better pricing realization and employee mix resulted in stable margins for organic business – despite wage hikes and rupee appreciation.

Guidance of 5% revenue growth – Wipro Global IT Services revenue guidance for 4QFY08 is $955m, an increase of ~5% – is in line with the Infosys guidance for the quarter.

The board of Chowgule Steamships has passed an enabling resolution for making investment over a period of time up to Rs 28 crore in Chowgule Ports & Infrastructure, which proposes to undertake port and ship repair infrastructure projects in Jaigad.

Unity Infraprojects has received the letter of intent dated 16 January 2008 from Magarpatta Retail for civil construction works of the proposed building for Magarpatta Retail Mall Project at Magarpatta City, Hadapsar, Pune. The contract value is Rs 102.14 crore (exclusive of VAT (WCT) & service tax) and the project is to be completed with 9.5 months from commencement of work.