Category: Breaking Corporate India Earnings News

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.

According to Elliot Wave by Frost and Pretcher.

• Wave 1 – Up – Rebound from recent Bottom. Mass pessimism ebbs here.
• Wave 2 – Down – Test of Lows. But previous lows not hit.
• Wave 3 – Up – Powerful Wave.Strength, Breadth, Easy-Credit , Real prosperity
• Wave 4 – Down – Surprising disappointment. Signals that best part of growth over.
• Wave 5 – Up – Final Advance.Psychology creates overvaluation. Leverage at highest.
• Wave 5A – Down – Breakdown. Inexplicable fall. Viewed as buying opportunity [This is Probably the Jan-08 Fall ?]
• Wave 5B – Up – Narrow, Emotional Advance. Aggressive euphoria+ denial
• Wave 5C – Down. Worst of Bear market. Strength, Breadth, Fundamentals collapse

We are almost in 5C.

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.

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.

• Due to higher oil prices, India’s CAD widened to US$17.4bn v/s US$ 9.7bn in FY07. This was slightly higher than our estimate of US$14.4bn.
• Remittances (classified under invisibles) touched a record high of US$40.8bn
• Capital flows led by strong portfolio flows (US$29.2bn) and loans (US$41.9bn were up by US$108bn.
• Including valuation changes, the overall accretion to reserves was US$110.5bn v/s US$47.6bn in FY07

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.

India has introduced a plan to encourage investments in Wind power clean energy by giving generation-linked incentives of 50paise/kWh, in case investors can’t claim accelerated depreciation incentive. This scheme, is likely encourage those Independent Power Producers (IPPs) / foreign financial investors who have been either limited or absent from the market due to tax anomalies. This plan improves IPP project IRRs by 175-210bps. If successful, it could rejuvenate growth in the world’s 5th largest market with less than 20% potential tapped of the 45GW.

You should note that India has been an early adopter of renewable energy, with wind accounting for ~6% of installed capacity. More importantly, in 2007, 16% of new generation capacity add
was through wind turbines.

Panacea Biotec’s Q4 PAT (Rs249mn) was 3% lower than estimates. Revenues were 26% lower than estimates. While gross margin improved significantly by 450bps which reflects the price increase in polio vaccines, EBITDA margin (16.8% vs 18.7% last year) was lower on account of forex loss, and higher than expected personnel and R&D costs. Q4 PAT was saved largely by other income due to reversal of sales tax liability.

Expect Panacea to drive growth in FY09 through pentavalent combination and other vaccines launches. Likely progress on Anthrax vaccine tender award Dec’09, potential M&A activity, launches of IPV vaccine, Pharma NDDS dossier filings.