Category: Equity Research

United Phosphorus reported PAT of Rs1.02bn, 35% below Bloomberg consensus estimates, primarily due to 12%/2% declines in revenue in the US and Europe on account of adverse weather conditions. EBITDA margins declined by 200bps, reflecting inability to retain savings from a decline in raw material prices. However, continued to derive revenue growth of 12% from the rest of the world (constitutes about 25% of total sales). Management guided for revenue growth of 10% and EBITDA margins of 19% for FY10E.

The crop protection demand environment (particularly in the US and Europe) should continue to remain uncertain in the near term, (more…)

Punj LLoyd reported Rs529mn PAT below estimates of Rs1.4bn on account of Rs1.0bn of losses in Simon Carves on cost overruns and project disputes on the Ensus bio-ethanol project in the UK. Sales growth was below expectations as despite Rs98bn of orders in Libya the company could not book any sales as the threshold of revenue recognition could not be reached. The company ended 2QFY10 with an order backlog of Rs268bn, up 24% YoY (Rs114bn inflows in 1HFY10).

SABIC project disputes cost Rs4.3bn in FY09. In August 09 ~1,000 workers stopped work over payment disputes between Simon Carves and sub-contractors. Post a small delay work (more…)

ITC reported a robust 26% YOY PAT growth at Rs10bn, above our Rs9.4bn estimate. EBITDA margins expanded >6% YOY to 35.8%, driven by steady cigarette business profitability, lower losses in non cigarette FMCG and benefits of mix improvement in the agricultural commodities business.

Personal care revenues are forecast at ~Rs3-3.2bn for FY10E, based on the current run rate. For soaps, current market share is 3-3.5% – impressive, given the recent (more…)

L&T reported 2QFY10 net profit of Rs 5804 mn, mostly in line with consensus estimate. Execution and, hence, sales growth in the quarter were tepid due to 1) a delay in clearances for infrastructure projects, and 2) lower demand for machinery and industrial products (sales down 26% yoy in 2QFY10).

However, order inflows for the quarter were up 47% yoy, after the 22% dip in 1QFY10. Management raised its order inflow guidance for FY2010 to 30%-35% yoy growth from 25%-30% and reiterated sales guidance of 15%-20% despite the sluggish execution in 1HFY10. (more…)

Hero Honda reported recurring PAT at Rs5.97bn was ~8% ahead of expectations, driven by EBITDA margins that surprised at 18.3% (130bps ahead of expectations) as SG&A costs were slightly lower than expected.

We think margins in the two-wheeler sector are close to peak levels. We expect margins to deteriorate from 4QFY10 on account of input cost pressures. EBITDA growth in FY11E will be driven by volumes (we forecast at ~10% CAGR over FY11/12E).
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The photo on your left is that of a less media savvy Dare Devil promoter of JP Associates – Founder and Chairman – Jaiprakash Gaur. Before you read into the research of JP Hydro and Associates, we recommend you to read the confidence Gaur family had in their company and projects they were executing as they pumped in INR 2,000 Cr into the company at a share value of whopping Rs 397 / share when the market Price was mere Rs 80. All other corporate big names like Kumar Birla canceled preferential allotment in 2008 as the stock price at taken a beating. (more…)