Emkay Broking > Heg | Madras cement | Bank of india | Reliance power | Aurobindo
Deepak Vaishnav
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HEG |
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Input costs, forex loss weighed on margins |
ACCUMULATE
CMP: Rs209 Target Price: Rs224
n Q2FY12 topline above estimates at Rs 3,192, up 7% YoY and 14% QoQ, primarily driven by higher volume and INR depreciation that improved realizations in INR term
n EBITDA in line with estimates at Rs 442 mn, down 27% YoY and flat QoQ due to increased domestic input costs and also weak INR that raised landed cost of needle coke
n Reported PAT stood at Rs 135 mn, down 32% QoQ, however, adjusted for forex loss of Rs 116 mn, APAT came at Rs 251 mn, up by 27% QoQ
n Adjusted for share buy back, our FY12E and FY13E EPS stand at Rs 22.5 and Rs 32.9 respectively; Revising our SOTP target price to Rs 224; Maintain Accumulate
Regards,
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Goutam Chakraborty |
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Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com| | Email : goutam.ch...@emkayglobal.com |
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Board No. +91-22-66121212 | Extn. 275 | DID : 66121275 | Mob No. : +919867361765 | |
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Jagdish Agarwal |
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Senior Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com | Email : jagdish...@emkayglobal.com |
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Board No. : +91-22-66121212 | Extn. : 381 | DID : 66121381 | Mob : +919820869499 | |
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Madras Cement |
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Higher realizations boost profitability |
HOLD
CMP: Rs116 Target Price: Rs125
n Q2FY12 EBITDA at Rs2.6bn (+149% yoy) above est led by higher Cement realizations (Rs4347/t , +55% yoy) as southern cement prices held fort. APAT grows 5X on low base
n Ariyalur unit II expected to commission by H2FY12- do not see any meaningful contribution from the unit as Ariyalur I already sub optimally utilized (~70%) owing to weak demand
n Cement price remain firm in south .Post recent momentum seen in prices from Sept-2011, H2FY12 prices expected to be higher leading to EPS upgrade for FY12 by 12.7%
n Revise TP to Rs125 by rolling over to FY13 est but downgrade reco to HOLD as the recent run up in stock already factors in the cement price hikes trigger leaving limited upside
Regards,
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Ajit Motwani |
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Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com | Email : ajit.m...@emkayglobal.com |
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Board No. : +91-22-66121212 | Extn. : 255 | DID : 66121255 | Mob : +919820934229 |
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Bank of India |
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Is the worst behind? |
HOLD
CMP: Rs328 Target Price: Rs320
n BOI’s Q2FY12 NII (Rs19bn) marginally ahead of estimates. Higher non-int inc. and tax w/back compensated for higher provisions. PAT at Rs4.9bn (-20% yoy ) below estimates
n Slippages at Rs45bn (H1FY12) primarily due to system–based NPA recognition and 23% NPA’s from restructured accounts. Management confident of higher recoveries in H2FY12
n Balance sheet expansion of 1.6% qoq led by 15%/10% qoq growth in foreign deposits/advances. On a contrary, domestic deposits/loans were down 0.4%/2% qoq respectively
n Net NPL/networth now stands at 23% with Tier I CAR at 8.3% Lowered our estimates by 23%/16% for FY12E/FY13E driven by growth moderation and higher provisions. Maintain HOLD
Regards,
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Kashyap Jhaveri |
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Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com | Email : kashyap...@emkayglobal.com |
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Board No. : +91-22-6612 1212 | Extn. : 249 | DID : +91-22-6612 1249 | Mob : +91-98202 41712 | Fax : +91-22-6624 2410 | |
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Reliance Power |
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Continues to deliver on timelines; Reiterate buy |
BUY
CMP: Rs103 Target Price: Rs155
n PAT of Rs2.35bn beat est. on other income of Rs2.6bn vs. est. of Rs1.1bn. Higher other income driven by change in a/c ing policy (+Rs700mn) and better yields (8%+ vs. 7% assumed)
n We factor in Samalkot COD from Mar13 vs Mar12 (open cycle) earlier and adjust other income estimates – leading to 21% upgrade and 42% downgrade in FY12E/FY13E earnings
n Building solidity - (1) huge cheap captive coal, (2) merchant capacity in captive coal plants only, (3) plants near load centers (PoC), (4) minimizing cost of capital & (5) low to reasonable tariffs - offtake and payment risk minimized
n Significant progress achieved. Mid-term triggers - 1) COD of 4,260MW by Dec12 (incl 1 unit of Sasan), 2) coal production in Sasan – 2Q13, 3) milestones in Tilaiya & Indonesian mines & 4) gas plant and gas supplies
n Solidity and positive triggers ignored with valuations implying LT merchant rate of Rs1.5/unit, very safe. We foresee RPL as the most sustainable private utility; Reiterate ‘Buy’
Regards,
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Amit Golchha |
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Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com | Email : amit.g...@emkayglobal.com |
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Board No. : +91-22-66121212 | Extn. : 408 | DID : 66242408 | Mob : +919833357365 | |
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Aurobindo Pharma |
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Disappointment continues – Downgrade to Accumulate |
ACCUMULATE
CMP: Rs123 Target Price: Rs136
n Q2FY12 results were disappointing. Net sales down 3% to Rs10.7bn, EBITDA down 55% to Rs1.1bn and APAT (adj. for forex loss of Rs1.85bn) down 70% to Rs291mn
n Revenue growth was mainly driven by 9% growth in API business on account of 100% growth in ARV business. Formulations de-grew by 4% to Rs5.9bn
n Base EBITDA margins declined 835bps YoY & 439bps QoQ due to volume driven sales of ARV in API
n With increasing pressure on margins and low visibility in revenues – we downgrade the stock to Accumulate with a revised target price of Rs136 (10xFY13E Core EPS of Rs13.6)
Regards,
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Deepak Malik |
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Senior Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com | Email : deepak...@emkayglobal.com |
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Board No. : +91-22-66121212 | Extn. : 257 | DID : 66121257 | Mob : +91 9769811227 | |
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