Category: Equity Research

GMR reported 2Q FY08 results, with revenue up 26%, to INR3.95bn against estimate of INR4.2bn. The revenue growth has been predominately due to the additional contribution from the airport business (INR753mn) and higher PLF of the two power plants (INR223mn). However, the net profit has been down 7.5% yoy, to INR495mn , due to INR343mn loss of Vemagiri power project (VPGL). VPGL has been non-operational since September 2006, due to the non-availability of gas and this will remain a drag on profitability for the full year.

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United Spirits Ltd – USL, despite its dominance and 5x the size of the next competitor, operates at EBITDA margin of merely 14% (in FY08E), far lower than market leaders in other parts of the world. Whyte & Mackay bulk scotch supplier, is benefiting from the up-cycle in scotch prices. We estimate W&M accounts for 1/3rd of Group EBITDA. Expect EPS CAGR of 60% over FY07-09E. USL trades at P/E of 28x FY09E. Expect USL to report an EPS of Rs 32.35 and Rs 62.35 for FY08 and FY09 respectively.
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Suzlon’s EBITDA margin rose to its long term guidance of 16% (7.2% in 1QFY08) led by a 76%YoY growth in volumes led by resolving of law & order issues in the domestic market, improved deliveries in the international market and sell-down of inventory (140MW of the total 683MW). On the back of record deliveries of 683MW and resultant operating leverage, led to 68% YoY growth in PAT at Rs3.9bn, much ahead of the Street estimate of Rs2.5bn. The company also has a strong order book position. (more…)

Citigroup in a recommendation released minutes ago have downgraded the stock of Ultratech Cement and recommend a SELL after reviewing Q2 results.

UltraTech (ULTC) reported net sales of Rs11.7bn (in line) in 2QFY08, driven by 12% higher domestic realizations. PAT (Rs1.86bn) was 11% below our forecasts. A continuing focus on the domestic market helped ULTC’s domestic volumes grow 12.5% yoy to 3.15m tonnes. Exports fell 13% yoy to 0.2m tonnes. Costs were higher as materials, labor and other expenses were all higher than forecasts. Material and labor costs are expected to remain high, the former due to growth in the RMC business.

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Indiainfoline Equity Research recommends a BUY in Great Offhsore Ltd with a price Target of Rs 1,029. Key points for the recommendation are as follows,

Great Offshore Ltd (GOL) reported 19.9% yoy growth in net sales to Rs1,523mn in Q2 FY08 as against Rs1,271mn in Q2 FY07. The jump was primarily on account of higher number of vessels operational. Other income jumped from Rs9mn in Q2 FY07 to Rs173mn in Q2 FY08 on account of implementation of AS-11 with effect from April 1, 2007. (more…)

Indo Borax and Chemicals Ltd. (IBCL), is in the business of manufacturing inorganic chemicals like boric acid, borax and 2 new value-added products – eco borax and glaze bore.

Falling prices of its main raw material – imported boron ore – due to the appreciating Rupee and new mines opening up in East European countries could help IBCL boost its EBIDTA margins. IBCL caters to diversified fast growing user industries like glass, ceramics, pharmaceutical, electroplating, leather, etc, each of which is on a high growth path. IBCL has raised prices of all its products by 15-25% since Oct 01, 2007. This could push its revenues and margins significantly from 2HFY08 onwards. (more…)