Category: Equity Research

BOFA Merrill has initiated coverage on IPCA Labs with a BUY Rating.

Expect 19% sales CAGR over FY10-12E, driven by both, domestic (18% CAGR, 39% of sales) and export (26% CAGR, 35% of sales) formulations. Domestic formulations should sustain high growth on 30% addition to fieldforce in FY10 with thrust on high-growth chronic segments. Export formulation growth to be led by US (8% of sales by FY12E vs 3% now). API business should grow a modest (more…)

ITC India’s leading Tobacco Giants reported PAT at Rs10.28bn. Despite steady cigarette profitability and lower losses in other FMCG segment, EBITDA margins contracted ~150bps YoY to 30.5%, reflecting lower margins of agri business (revenues surged to ~Rs10bn, Rs2.5bn ahead of expectations, but mix deteriorated). Paper profitability was a tad lower.

Volumes rose 8.5% YoY, driving 14% YoY revenue growth. Margins expanded ~30bps YoY. Weighted avg. price hikes of ~13-15% in the last 3 months would aid revenue growth. After a ~8% growth in volumes in FY10, we forecast 2%/4% volume growth in (more…)

India’s Largest Bank, SBI reported a PAT of Rs18.7bn down 32% y/y and significantly lower than our and street estimates of Rs26-28bn. Higher than expected NPA provisions and operating expenses led to the large miss. Though coverage did improve by ~400bps, it was proportionately lower than the P&L hit taken. For FY10 net profit was almost flat y/y at Rs91.6bn.

NPA – NPL’s do go up and so do restructured assets, but it is not dramatic, not concentrated and both the mix and management talk suggests asset quality will probably stay at these levels, rather than deteriorate. (more…)

JISL reported 4QF10 results with revenue, EDITDA, and adjusted PAT growing at 37%, 28% and 150%, respectively. Revenue growth was driven by 46% and 74% growth in the MIS – Micro Irrigation and Fruit processing businesses, respectively. EDITDA margins contracted by 160 bps, primarily because of a sharp dip in the profitability of agro processing business.

Micro irrigation grew 46% yoy despite flat performance in Andhra Pradesh. Margins were stable at 32.3% vs last year. (more…)

Bajaj reported 4QFY10 PAT of Rs5.3 bn, comfortably beating our PAT estimate of Rs4.5 bn. The upside was largely operational with EBITDA margins coming in at 22.9% for the quarter compared
to our estimate of 21.5%. The margin upside was driven by better-than-expected realizations and lower other expenditure. Net realizations increased 4% qoq, higher than our expectation of 2%, driven by higher mix of Pulsar brand sales and price increases.

Other expenditure declined 18% sequentially, which the company attributed to better cost control and lower advertisement spend. (more…)

Ranbaxy reported 1Q PAT of Rs9.6bn, on exclusivity sales of Valtrex, US$50m (Rs2.3bn) income from Flomax settlement & forex gains of Rs4.5bn. Besides one-offs, base biz trends appear strong with most markets growing, despite a 6% INR appreciation. While EBITDA margins were skewed by exclusivity sales, cost containment measures seem to have borne fruit as SG&A costs declined QoQ.11.

Ranbaxy’s 1Q results reflect its ability to monetize its FTF pipeline despite its issues in the US. Both Valtrex & Flomax have (more…)